CELEBRATING
110
YEARS OF INNOVATION
ANNUAL REPORT AND ACCOUNTS 2023
WELCOME
Aston Martin is an iconic, globally recognised brand, with a unique
position transcending ultra-luxury and high performance.
For more than a century, our brand has symbolised exclusivity,
elegance, power, beauty, sophistication, innovation, performance
and an exceptional standard of styling and design.
STR ATEGIC REPORT
CORPOR ATE GOVERNANCE
FINANCIAL STATEMENTS
FURTHER INFORMATION
What’s under the bonnet
18
06
12
13
14
Strategic Pillars
At a glance
Business highlights
Executive Chairman’s
Statement
Chief Executive Officer’s
Statement
22 Our market
24
28
30
32
34
36
Stakeholder engagement
Section 172 Statement
Business model
Strategy
Key performance indicators
Chief Financial Officer’s
Statement
38 Group Financial Review
42
58
64
70
71
Environmental, social
and governance
Task Force on
Climate-related Financial
Disclosures
Risk management
Viability Statement
Non-financial and
sustainability information
statement
207 Glossary
208 Shareholder information
132
Independent Auditor’s
Report
142 Consolidated Financial
Statements
147 Notes to the Financial
Statements
200 Parent Company Statement
of Financial Position
202 Notes to the Parent
Company Financial
Statements
74
75
76
80
82
86
89
90
92
Governance at a glance
Executive Chairman’s
introduction to governance
Board of Directors
Executive Committee
Leadership and governance
Board activities
Board and workforce
engagement
Investor engagement
Board and Committee
evaluation
94 Nomination Committee
98
Report
Audit and Risk Committee
Report
106 Sustainability Committee
Report
108 Directors’ Remuneration
Report
123 Directors’ Report
129 Statement of Directors’
Responsibilities
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION T
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A STORY
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ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
STR ATEGIC REPORT
A STORY 110 YEARS IN THE MAKING
Over a century of pursuing
perfection and finding
intensity. At every turn
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Broken in at Brooklands
Our wheels rolled their first race here
in the 1920s. Spinning all the way to
record-breaking heights.
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A new name to the legacy
The war is gone and as the nation returns to normal
life, the search for new owners accelerates. When
David Brown, a wealthy industrialist, is looking for a
new investment opportunity, he sees an advert for a
high-end motor business. It is Aston Martin, and the
first lines of a new chapter are written.
1913
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Bonjour to victory
Voila. In 1959 the DBR1 takes the top
two places in the famous Le Mans
24 hours, just weeks after the debut of
the DBR4 single seat car in Formula
One. Aston Martin are back on track.
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Breaching 100mph
The highlight of the 3rd Series cars came
in 1934 with the Ulster. Designed from the
shape of a Works racing car, with a modified
engine to produce 85bhp. Unholstering
a top speed that tops 100mph.
3
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9
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Two icons form one legend
15 January 1913. Robert Bamford and Lionel
Martin set up shop in premises previously
belonging to Hesse & Savory. Severely
underwhelmed by the cars they sell and
service, they clench their jaws, hoist their
sleeves and decide to make their own.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION 3
6
9
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Bonded to Bond
With the evolving desire for luxury
and power, the charismatic 4.0 litre
DB5 was born. An icon forever
immortalised in the Bond movies,
Goldfinger and Thunderball.
Enter the mighty V12
As the end of the 90s draws near,
the now legendary V12 engine,
in its original 420bhp form pushed
the DB7 even further.
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A 170mph arrival
With a top speed of 170mph the arrival of
the V8 Vantage bursts onto the scene,
cementing Aston Martin as the first and
only British supercar maker.
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Royalty driven
The future King Charles III becomes the proud
owner of a Seychelles blue DB6 Volante,
commencing a lifelong passion for Aston Martin.
The car has since been converted to run on
by-products of the wine and cheese industries.
Vanquish
We unveil a new car in 2001, the V12 Vanquish. Using
aluminium and carbon fibre along with traditional
craftsmanship to construct its body and chassis.
The first in a new evolution of cars that will set hearts
racing and Aston Martin on a path to success.
1
0
0
2
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STR ATEGIC REPORT
A STORY 110 YEARS IN THE MAKING CONTINUED
3
0
0
2
Made in Gaydon
After 50 years, we change gear and
move to our global headquarters in
Gaydon. Our first purpose-built
facility. A cutting edge, needle-eyed
precise, state-of-the-art
manufacturing centre.
9
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0
2
Welcome to Wales
Behold the opening of the gates
of St Athan. A new purpose-built
facility in South Wales. This site
will be the home of the all new,
all conquering, DBX ultra luxury
performance SUV.
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One with Formula One®
We make our return to Formula One®
and take our rightful place in the pit
lane. At the peak of the pinnacle of
the epitome of the sport.
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Impossible. Driven.
The Valkyrie. As close as possible
to being a Formula One ® car without
being restricted to the track. Space-age
technology, handcrafted beauty and
gravity-defyingly fast. Limitless luxury.
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A four-door supercar
A surprise in the shape of a four-door coupe.
The Rapide is the first Aston Martin to have
four doors since the 1930s. The world’s most
elegant four-door that will forever be a cult
modern classic.
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The world’s first super tourer
DB12. Redefining and reinventing what it means to
be a tourer. An icon risen from 73 years of category
defining marvels. Cutting through continents,
bruising benchmarks and taming tradition.
2023
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110 years. 110 Aston Martins.
One very special lap.
A celebration of Aston Martin’s past, present and future.
A parade without parallel.
110 Aston Martins. One for every year of our rich history.
110 years. 110 cars.
Driving as one, for one lap.
At the Formula One® Aramco British Grand Prix 2023.
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FOUR
PILLARS HAVE
CONSISTENTLY
FUELLED
OUR WINNING
BLOODLINE…
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STR ATEGIC REPORT
OUR STR ATEGIC PILLARS
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…THESE FOUNDATIONS
ARE OUR KEY
STRENGTHS WHICH
DRIVE OUR
STRATEGY AND FUTURE
GROWTH AMBITIONS.
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READ MORE ABOUT OUR STR ATEGY ON PAGES 32-33
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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STR ATEGIC REPORT
OUR STR ATEGIC PILLARS CONTINUED
1. Our iconic brand
INTENSITY
Aston Martin is an iconic, globally recognised brand,
transcending ultra-luxury and high performance.
For more than a century, our brand has been
synonymous with style, luxury, performance, and
exclusivity. Our renown for delivering beautiful,
awe-inspiring vehicles, matched with the best of
British advanced engineering defines Aston Martin as
something truly unique within the automotive industry.
Our brand exposure, perception and desirability are
strengthened by a strong, passionate, and loyal
customer base, which has been significantly broadened
by the successful return of the Aston Martin brand to
the pinnacle of motorsport in Formula One®.
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2. Our relentless pursuit of innovation
VANGUARD
Driven by our ongoing commitment to innovation, we
are expanding our breathtaking portfolio of ultra-luxury
high performance sports cars, including the ongoing
introduction of our next generation of sports cars,
continued amplification of our critically acclaimed DBX
SUV range, and our entry into the mid-engine sports car
segment. The arrival of significant and innovative new
models is further boosted by our continued investment
in establishing Aston Martin as an ultra-luxury, high
performance brand supercharged with the association,
technology, and knowledge of Formula One®.
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STR ATEGIC REPORT
OUR STR ATEGIC PILLARS CONTINUED
3. Our promise, Racing. Green.
PROGRESS
Aston Martin is embracing a new, driving ambition: to
be a world-leading sustainable ultra-luxury automotive
business. A key pillar of our overall corporate strategy,
the Racing. Green. sustainability strategy is built on five
core priority areas that reflect Aston Martin’s approach
to sustainability. Fully aligned with the UN’s Sustainable
Development Goals, our strategy reflects a deep
understanding of the priorities that our customers,
employees and wider stakeholders care about. These
five areas are tackling climate change; creating a better
environment; investing in people and opportunity;
exporting success; and delivering the highest standards.
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4. Our world-class talent
MASTERY
A key element of Aston Martin’s future growth strategy
is investing in our people. Led by our world-class
experienced management team that spans all functions
from engineering, operational to commercial, we are
focused on building an inclusive, collaborative and
functional way of working that inspires innovation and
develops a high-performance culture. Committed to
making Aston Martin a Great Place to Work®, we are
establishing company values, creating high quality
employment opportunities, and investing in early
careers, training, and skills.
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ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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STR ATEGIC REPORT
AT A GLANCE
Stronger than the
sum of our parts
Our purpose guides us
Our purpose is to create vehicles with the ultimate technology,
precision and craftsmanship that deliver thrilling performance
and a bespoke, class-leading experience.
Our vision lights the way
Our vision is to be the world’s most desirable, ultra-luxury
British performance brand, creating the most exquisitely
addictive performance cars.
Our values steer us
Our strategy drives us
Our values are Unity, Openness, Trust, Ownership, and Courage.
At the core of our values is one single guiding tenet: No one
builds an Aston Martin on their own.
Our strategy is built on our key strengths of brand, product
innovation, sustainability, and our people, which are the pillars
that drive our strategy and future growth ambitions.
Our positioning in the market
and product portfolio
Aston Martin is an iconic, globally recognised brand, with a unique position
transcending ultra-luxury and high-performance. For over 110 years our brand
has symbolised exclusivity, elegance, power, beauty, sophistication, innovation,
performance and an exceptional standard of styling and design. Our rich and
prestigious heritage of delivering beautiful, awe-inspiring vehicles defines
Aston Martin as something truly unique within the automotive industry.
READ MORE ABOUT OUR MARKET ON PAGES 22-23
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Our business highlights
REVENUE
OPER ATING LOSS
£1.6bn
2022: £1.4bn
£111m
2022: £142m
TOTAL AVER AGE
SELLING PRICE (ASP)
£231k
2022: £201k
ADJUSTED EBITDA
WHOLESALE VOLUMES
NET DEBT
£306m
2022: £190m
6,620
2022: 6,412
£814m
2022: £766m
Where we operate
UK
ASTON MARTIN
DEALERS1
20
2022: 21
WHOLESALE VOLUME
1,141
2022: 1,110
1 All dealers are third-party
dealers, with the exception
of one in the UK
AMERICAS
ASTON MARTIN
DEALERS
44
2022: 4 4
WHOLESALE VOLUME
2,037
2022: 1,980
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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TOTAL SCOPE 1 & 2
EMISSIONS
13,617
2022: 14,843
ACCIDENT FREQUENCY
R ATE
0.4
2022: 0.5
EMEA 2
ASTON MARTIN
DEALERS
54
2022: 52
WHOLESALE VOLUME
1,994
2022: 1,508
2 EMEA includes Europe, Middle
East and Africa (excluding the
UK and South Africa)
ASIA PACIFIC
ASTON MARTIN
DEALERS
45
2022: 48
WHOLESALE VOLUME
1,448
2022: 1,814
STR ATEGIC REPORT
EXECUTIVE CHAIRMAN’S STATEMENT
Accelerating forward
in our vision
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CHAIRMAN T
In 2023, Aston Martin delivered
significant strategic milestones and
further financial progress, driven
by continued strong demand
for our ultra-luxury,
high-performance products.”
he historic year of our 110th anniversary, 2023 marked an important
crossroads for Aston Martin Lagonda. An opportunity to reflect on
our rich heritage and progress to date, whilst accelerating forward
in our vision for the Company.
It’s now almost four years since I became Executive Chairman. As
I outlined at our Capital Markets Day in June 2023, we have made
tremendous progress within that time, transforming our brand, our
product portfolio, and our balance sheet.
In 2023, Aston Martin delivered significant strategic milestones and
further financial progress, driven by continued strong demand for
our ultra-luxury, high-performance products.
As a high-performance car enthusiast myself, I take immense personal
pride in the collection of stunning new models we’ve introduced to our
community of owners and enthusiasts around the world. From our
critically acclaimed DBX707 luxury SUV, through to our instantly
iconic new front-engine sports cars and groundbreaking mid-engine
programme.
In 2023, the rich mix of sales from this breathtaking product portfolio,
driven by our ongoing commitment to innovation, supported growth
in average selling prices to record levels. This, combined with our
ongoing portfolio transformation, resulted in a significantly enhanced
gross margin, remaining on track to achieve our longstanding target
of around 40% gross margin in 2024.
Aligned to our vision of creating the most comprehensive product
portfolio in our segment, we launched the highly acclaimed DB12
in 2023. We have seen a clear demonstration of DB12 and our other
ultra-luxury vehicles addressing the growing demand for unique
personalised products, driving increased options revenue while
also attracting new customers to the brand.
This arrival of important and innovative new products is further
boosted by our continued investment in establishing Aston Martin
as an ultra-luxury, high-performance brand – supercharged by our
successful return to the pinnacle of motorsport, Formula One®.
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EXECUTIVE CHAIRMAN’S STATEMENT CONTINUED
Our fantastic partnership with the Aston Martin F1® Team sits at
the heart of our brand, with other key marketing activities in 2023
including the global celebration of our historic 110th anniversary and
continued implementation of our renewed corporate identity across
our network.
A key landmark in that ultra-luxury retail strategy was achieved in June
2023, with the opening of our first global flagship location, Q New
York, on one of the most prominent corners of Midtown Manhattan.
Where Savile Row meets Park Avenue, the new showroom brings
the highest levels of our Q by Aston Martin bespoke service to
North America for the very first time, providing the most sophisticated
luxury specification experience available anywhere in the world.
Looking ahead to 2024, it is a year that promises to be a significant
and exciting one for the brand, with the highly anticipated arrival of
thrilling new products. This includes the future development of our
portfolio with the completion of our line-up of next generation, front-
engine sports cars, following the recent unveil of Vantage, and
the continuation of our Specials programmes. These and other
advancements will support the delivery of the Company’s near- and
medium-term financial targets, as we unleash the power of our
brand and continue our growth trajectory.
Alongside my fellow leaders and consortium members, I couldn’t
be more enthusiastic about the opportunities ahead for Aston Martin.
I thank you for joining us on our exciting journey as we continue to
deliver our strategy and move forward on the pathway we’ve now
forged towards our targets.
LAWRENCE STROLL
EXECUTIVE CHAIRMAN
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In the 2023 season, Aston Martin experienced a 20%
increase in on-line configurations sent to dealers on
race weekends compared with non-race weekends.
Looking ahead to 2024, it is a year that
promises to be a significant and exciting one
for the brand, with the highly anticipated
arrival of thrilling new products.”
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88%of luxury car buyers interested in Formula One® are more likely to buy
an Aston Martin because of the brand’s involvement in the sport.
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IN CONVERSATION WITH OUR CEO
Aligning the organisation for
its positive future direction
CHIEF EXECUTIVE
OFFICER
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We’ve also introduced a host of
new processes to improve our
product development,
engineering, and manufacturing
capabilities, while importantly
continuing to invest in people,
skills, and our facilities.”
medeo Felisa was appointed as Chief Executive Officer of Aston Martin
in May 2022, with a focus on leading a new phase of growth and
development for the Company.
A former CEO of Ferrari with three decades of experience within the
ultra-luxury automotive segment, Amedeo
is one of the most
highly regarded leaders and engineering professionals in the sector.
Formerly a Non-executive Director of Aston Martin, he previously
served as Chairman of the Company’s Product Strategy Committee.
He reflects on an important year for the business in 2023.
IT’S NOW APPROACHING TWO YEARS SINCE YOU BECAME
CEO. HOW MUCH PROGRESS HAS BEEN MADE DURING
THAT PERIOD?
When I first became CEO in 2022, I identified immediate priorities
across three key areas; our product, processes, and people. I think
we’ve made considerable progress on all fronts.
From a product perspective, I’m very pleased at how the business
capitalised commercially on the strength of DBX707, which really
marked the start of our heightened focus on ultra-luxury and
high-performance. That has now been followed up with the first of our
next generation of sports cars, DB12, and the introduction of
magnificent new Specials which have generated high demand from
our top customers and supported our gross margin and incredibly
strong average selling price and growth in total options revenue.
We’ve also introduced a host of new processes to improve our product
development, engineering, and manufacturing capabilities, while
importantly continuing to invest in people, skills, and our facilities.
These combined, will make Aston Martin a Great Place to Work®
and truly align the organisation for accelerated growth.
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IN CONVERSATION WITH OUR CEO CONTINUED
2023 SAW ASTON MARTIN CELEBR ATE ITS 110 TH
ANNIVERSARY. HOW IMPORTANT WAS THAT MILESTONE
FOR THE BR AND?
At the start of 2023, we said that we wanted our 110th year to be just as
exciting as our first, and I believe we’ve firmly lived up to that promise!
The anniversary itself has been a fantastic opportunity to celebrate
not just our unique heritage and brand equity, but also look firmly
to the future through the new products we’ve launched and the
global series of events that have taken place to bring our community
of customers even closer to the brand.
Our 110th anniversary special edition Valour has proved to be a
monumental commercial success and demonstrated our unique
ability to operate at the very highest levels of the luxury automotive
segment and attract new customers and collectors to the brand.
IT HAS BEEN ANOTHER YEAR OF EXCITING NEW PRODUCT
LAUNCHES FOR ASTON MARTIN. HOW SIGNIFICANT IS
PRODUCT INNOVATION TO THE OVER ALL
TR ANSFORMATION OF THE COMPANY?
It’s essential. We know that to achieve our growth ambitions for the
Company we must have leading products in all of the fastest growing
segments of the ultra-luxury market. The introduction of DB12, and
now Vantage, has driven huge reappraisal of Aston Martin amongst
new audiences, as well as engaged and excited loyal customers
who have always adored the brand.
2024 now sees us begin to complete our vision to have a world-class
product portfolio, with an incredible line-up of new front-engine
sports cars to be completed by the end of this year, joining the best
performance SUV in our segment. Then to complement the portfolio
we have an incredible, mid-engine supercar in Valhalla on the horizon,
with prototype testing already taking place and the model currently
on course to enter production before the end of 2024.
WHAT INSIGHTS AND LEARNINGS HAVE THE DB12 LAUNCH
PRESENTED FOR THE BUSINESS AS YOU PREPARE TO
REVEAL FURTHER SPORTS CARS IN 2024?
Commercially, I think the successful launch of DB12 has reinforced the
market opportunity we saw in our new positioning at the crossroads
of ultra-luxury and high-performance. Media and customer feedback
about the design, performance and driving dynamics of the car have
been incredible, while the new interior and bespoke infotainment
system have been viewed as a huge positive for our future product
direction. The model was recently awarded “Car of the Year” for 2024 by
Robb Report and confirmed by Autocar magazine as a true “Super GT”.
On an operational level, clearly, during Q3 readiness and EE platform
integration issues caused initial production ramp up delays of DB12,
which led to slightly lower wholesale volumes than we originally
expected for the year. We have built stronger resilience in our supply
chain and product development processes over the last 18 months
through increased alignment and investment in our relationships with
suppliers. However, as we bring new products to the market in 2024
and navigate a challenging global environment, we must continue
to build even more resilience.
OVER ALL , HOW DO YOU ASSESS THE COMPANY’S
FINANCIAL PERFORMANCE IN 2023?
At our Capital Markets Day in June 2023, we spoke about accelerating
progress and I think we have demonstrated our ability to execute
improved financial performance this year. This has been
with
supported by continued demand for our new and existing ultra-luxury
high-performance vehicles.
The rich mix of sales, driven by our ongoing commitment to product
innovation, supported growth in total and core average selling prices.
Combined with ongoing business transformation efforts, this provided
a significantly improved gross margin, continuing progress towards
our mid-40s% gross margin target in 2027/28.
THE FOURTH QUARTER HELD HUGE SIGNIFICANCE FOR
ASTON MARTIN, WITH RECORD Q4 ADJUSTED EBITDA.
DOES THIS SHOW THE POTENTIAL OF THE BUSINESS?
As expected, due to the timing of new models, Q4 was very strong
with around a third of the year’s wholesales recorded in the period.
Despite the slight delay to the DB12 ramp up, we saw strong ASP
growth due to the pricing of our next generation sports cars and
Specials, supporting record adjusted EBITDA in Q4.
Whilst pleased at our overall operational performance and ability to
adapt, clearly the longer-term opportunity for our business from 2025
onwards is to deliver greater consistency across the year, underpinned
by our product planning.
HOW IMPORTANT HAS INVESTMENT IN PEOPLE
BEEN IN 2023?
Driving forward investment in our people and culture has been one of
my key priorities since becoming CEO. In 2023, we launched new
company values which are at the heart of our commitment to making
Aston Martin a Great Place to Work®. We’ve also completed phase
one of our plans to enhance communal facilities at our Gaydon
headquarters and expanded our employee engagement programme
with new internal initiatives and events, including a family weekend,
which saw more than 10,000 employees and their friends and families
attend.
As part of our efforts to deepen our colleagues relationship with the
Company, during 2023 we also successfully launched our first
all-employee share plan, “Sharing Success”, which awarded 425 free
shares to 2,541 employees.
This year we also welcomed a breadth of new talent to complement
our skilled and passionate team. This ranges from an enhanced early
careers intake through to the recruitment of more than 100 people to
new manufacturing positions at Gaydon and senior appointments
in areas such as electrification. Supported by our Electrification
Centre of Excellence, we continued our journey towards the first
battery electric Aston Martin, with 205 colleagues completing over
2,377 hours of specialist EV-related instructor-led training.
AMEDEO FELISA
CHIEF EXECUTIVE OFFICER
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new manufacturing positions at Gaydon and senior appointments
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OUR MARKET
Positioned to address demand for
ultra-luxury high-performance
The Global Luxury Market
Sustainable long-term growth in demand for luxury goods globally
as the world’s Ultra High Net Worth Individual (UHNWI) population
is expected to increase by 29% between 2022 and 2027*
WHAT THIS MEANS FOR OUR BUSINESS
– Operating as an ultra-luxury brand with a demand-led strategy
– Investing in our brand and international marketing, events and
sponsorship to grow our appeal to ultra-luxury consumers
– Investing in our ultra-luxury customer journey and retail
experience in partnership with our dealer network
– Creating limited and special models to cater for our most
exclusive customers
HOW WE’RE RESPONDING
LINK TO STR ATEGY:
1 2
LINK TO RISKS:
1 2 3 7 8 9 12
*2023 Knight Frank Wealth Report
Market Expansion
Opportunity to expand Aston Martin’s brand presence and market
share for ultra-luxury cars in both established and expanding regions
across a broader demographic
WHAT THIS MEANS FOR OUR BUSINESS
– Continuing product innovation to develop portfolio plans as well
as brand strategy and creative identity that give Aston Martin
significant presence in ultra-luxury market segments
– Strengthening regional leadership, including appointment of a
new Regional President and Managing Director in China
– Connecting with dealers and customers through targeted events
– Growing our brand awareness and desirability through the global
platform of Formula One®
HOW WE’RE RESPONDING
LINK TO STR ATEGY:
1 2 3 4
LINK TO RISKS:
1 2 3 5 7 8 9 11 12
Personalisation and Customisation
Growing demand for unique and bespoke personalised products
amongst ultra-luxury consumers
HOW WE’RE RESPONDING
WHAT THIS MEANS FOR OUR BUSINESS
– Expanding our Q by Aston Martin offering – our ultimate bespoke
personalisation service, with an increase in options revenue in 2023
– Opening Q New York, our first global ultra-luxury flagship location
providing the most sophisticated luxury specification experience
available anywhere in the world
– Launching limited-edition Specials for our most distinguished
customers including Valour in 2023
– Expanding our award-winning online configurator
LINK TO STR ATEGY:
1 2
LINK TO RISKS:
2 3 7 9 12
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SEE MORE ON PAGES 32-33
1. our iconic
brand
2. our relentless
pursuit of
innovation
3. Our promise,
Racing. Green. 4. our world class
talent
PRINCIPAL RISKS
SEE MORE ON PAGES 65-68
1 Macroeconomic and political instability
2 Brand/reputational damage
3 Technological advancement
4 Climate change
5 Liquidity
6 Impairment of capitalised development costs
7 Compliance with laws and regulations
8 Talent acquisition and retention
9 Programme delivery
10 Achieving financial and cost-reduction targets
11 Cyber security and IT resilience
12 Supply chain disruption
Geopolitical and Macroeconomic Environment
Continued global political and economic uncertainty in a post-
COVID-19 era of inflationary pressures and higher interest rates
HOW WE’RE RESPONDING
WHAT THIS MEANS FOR OUR BUSINESS
– Maintaining our production and business operations through
diligent workplace health and safety practices
– Deleveraging our balance sheet to accelerate net leverage
reduction and support longer-term growth
– Working in close partnership with suppliers to identify supply
chain improvements and recovery tactics
– Supporting our colleagues with the higher cost of living through
pay rises and industry-leading employee wellbeing initiatives
LINK TO STR ATEGY:
2 3 4
LINK TO RISKS:
1 2 5 6 7 8 9 10 11 12
Vehicle Electrification
Transition away from the internal combustion engine (ICE) to a
range of technologies that use electricity to propel vehicles
WHAT THIS MEANS FOR OUR BUSINESS
– Signed our strategic supplier agreement with Lucid Group Inc
(Lucid) for access to industry-leading technologies in a long-term
relationship whereby Lucid will supply select powertrain components
for initial and future battery electric vehicles (BEV) models
– Investing in new electrification skills across our business
– Project ELEVATION, a six-partner collaborative research and
development project led by Aston Martin awarded £9 million
– Preparing for our first plug-in hybrid elecric vehicle (PHEV),
Valhalla, which is on course to enter production in 2024
HOW WE’RE RESPONDING
LINK TO STR ATEGY:
1 2 3 4
LINK TO RISKS:
2 3 4 5 7 8 9 12
Sustainability
The need for businesses to act responsibly in order to protect the
planet, their people and local communities
WHAT THIS MEANS FOR OUR BUSINESS
– Continuing our Racing. Green. sustainability strategy with
ambitious commitments to become a world-leading sustainable
luxury automotive business
– Investing in key initiatives and setting ambitious targets to achieve
improved biodiversity and net-zero manufacturing facilities
– Enhancing our gender diversity aspiration, targeting women in
25% of leadership positions by 2025 and in 30% of leadership
positions by 2030
HOW WE’RE RESPONDING
LINK TO STR ATEGY:
2 3 4
LINK TO RISKS:
2 3 4 7 8 12
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STR ATEGIC REPORT
STAKEHOLDER ENGAGEMENT
Engaging our
stakeholders
We believe that stakeholder engagement is a key element
of delivering a sustainable business and this activity is
undertaken across our business at different levels of the
organisation.
A summary of who our key stakeholders are, what matters
to them, how we engage with them and the outcome of
our engagement is set out on the following pages and is
reinforced throughout this Report. Engagement at Board
level is highlighted with B.
Our Section 172 statement which sets out how the Board
has taken into account the interests of the Company’s
stakeholders in its decision-making is set out on pages 28-29.
Through effective engagement
with our stakeholders we
can understand what matters
to them and what their
priorities are.”
Customers and Enthusiasts
Customers and enthusiasts are key to our brand and our business
success. Their emotional connection with the brand enables us to
build a strong and loyal customer community.
WHAT MATTERS TO THEM?
– Quality and safety of products
– Car design and performance
– Brand strength
– Exclusivity and scarcity
– Ultra-luxury customer experience
– Cost of ownership
– Environmental commitment
– Sense of community
HOW WE ENGAGE
– Bespoke customer communications and customer relationship
management strategy
– Investment in ultra-luxury customer journey
– Innovative and engaging content across our website and social
media channels
– Major brand campaigns, including our high-profile campaign on
Sphere at the Las Vegas Grand Prix
– Relaunch of Aston Martin’s luxury customer magazine
– Bespoke customer events, such as car reveals and driving
experiences B
– Dealership events
– Customer rallies and community gatherings, including our 110th
anniversary celebration lap at the British Grand Prix and Aston Martin
Arcadia event in Tokyo B
– Formula One® hospitality and events programmes B
– Executives actively meeting customers at leading luxury automotive
events such as Pebble Beach and Goodwood Festival of Speed B
– Global communications strategy, driving coverage across
automotive and lifestyle media
– Launch of ultra-exclusive, special products such as Valour, limited
to 110 examples
– Opening of first ultra-luxury flagship store in New York B
OUTCOMES OF ENGAGEMENT
– Strong Net Promoter Score amongst customers
– More than 10,000 attendees for global DB12 events
– Growing customer community on social media channels
– Largest-ever Formula One® marketing programme at the Las Vegas
Grand Prix
– 60% of sales in 2023 were customers new to the brand
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Suppliers and Other Partnerships
Our third-party dealerships are the direct contact point for our brand
to our customers. They enable us to maintain control over our brand
positioning and luxury customer service in a cost-effective way.
Our suppliers are fundamental to our business. Carefully chosen
partnerships provide us with an important source of technical
expertise and brand enhancement.
WHAT MATTERS TO THEM?
– Brand awareness and desirability
– Brand strength and Company support
– Programmes to identify and generate sales opportunities
– Increased customer satisfaction and retention targeting ultra-luxury
segment
– Ultra-luxury product and product refresh
– Return on investment
HOW WE ENGAGE
– CEO and Board engagement to strengthen dealer relationships
and support demand-driven strategy B
– Strengthening and alignment of central and regional senior
management, supporting closer dealer relationship and
communications
WHAT MATTERS TO THEM?
– Responsible procurement, trust, ethics and open dialogue
– Operational improvement
– Competitiveness
– Strong relationships
– Financial performance
– Building capability and expertise
– Design and technical expertise
HOW WE ENGAGE
– Continuous engagement to create partners, not suppliers
– Strategic Cooperation Agreement with Mercedes-Benz AG securing
access to technologies critical to our long-term plans B
– Strategic supply arrangement with Lucid to create industry-leading
ultra-luxury high performance electric vehicles B
– Attendance (physical or virtual) at local dealer conferences held
– Sponsorship of Aston Martin Aramco Formula One® Team to provide
during the year B
– Rollout of dealer network programmes and systems to monitor
performance aligned to growth opportunities across all sales and
after sales areas
– Implementation of Dealer Operating and new Corporate Identity
standards to drive dealers to consistent ultra-luxury behaviour
– Introduce new models and maximise launch activities to fully
support ultra-luxury brand positioning
a direct global marketing platform targeting key customers and
enhancing the brand B
– Dedicated Supplier Quality Development team to manage supplier
quality and performance
– Cross functional team working closely with suppliers to resolve
issues
– Commodity team structure established and being used effectively
– Supplier risk meeting cadence working cross-functionally to mitigate
– Development of in-house training team to carry out in-dealer
potential risks to production
product training through the addition of a training content creator
– Continued development of digital platforms, supporting increased
– Collaboration with suppliers to deliver innovation and economic
improvement
engagement and elevated brand representation
– Supplier scorecards to identify areas for performance improvement
OUTCOMES OF ENGAGEMENT
– Higher levels of customer engagement and satisfaction
– Increased brand awareness driving greater level of customer
OUTCOMES OF ENGAGEMENT
– Improved Responsible Procurement Policy to redefine our standards
and minimum expectations to suppliers
enquiries, resulting in increased sales and market share
– Implementation of a leading automotive sustainability platform to
– Increased demand for Aston Martin products delivering more
profitable business for dealers and Aston Martin, across all areas of
the business
– Increased enquiries from ultra-luxury automotive groups wishing to
represent Aston Martin
collate validated sustainability and governance data from suppliers.
The platform is a pivotal change to strategically embed
Environmental, Social and Governance (‘ESG’) into Procurement due
diligence and sourcing activity, to enhance supplier data
management and risk identification and subsequently enable
collaboration with all suppliers to strengthen their sustainabililty
performance and scoring.
– Rollout of new 2024 Responsible Procurement Policy aims to help
suppliers identify and improve their own sustainability goals
– Strong relationships with Mercedes-Benz AG and Lucid
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STAKEHOLDER ENGAGEMENT CONTINUED
Our People
Investors
Our people are the key to our success. Our performance depends on
our passionate, knowledgeable, experienced and creative people.
WHAT MATTERS TO THEM?
– Personal development and career opportunities
– Health and safety
– Engagement
– Feeling listened to and valued
– Reward and benefits
– Equity, Diversity and Inclusion
– Environmental and social responsibility
HOW WE ENGAGE
– Family open day in Gaydon
– C-Suite roundtables with employees B
– Employee Town Halls B
– Dedicated Independent Non-executive Director to gather views
of the workforce and report back to the Board B
– Employee engagement survey
– Consultation on employee benefits
– Trade Union Business review
– Health and Safety review
– Listening sessions supporting our culture and to deep dive
engagement topics B
Continued access to capital is vital to the long-term performance of
our business. Our focus is to ensure investors understand our strategy,
value drivers, performance, ambition and culture and for us to
understand their priorities.
WHAT MATTERS TO THEM?
– Consistent delivery of the Company’s strategy
– Financial performance relative to expectations
– Demonstrate that the Company is a responsible and effective
steward of capital
– Sustainability
– Governance and transparency
– Confidence in the leadership team
– Stability and predictability
HOW WE ENGAGE
– Webcasts, presentations and meetings by the Executive Chair, Chief
Executive Officer, Chief Financial Officer and the Investor Relations
team B
– Capital Markets Day at Gaydon headquarters for equity analysts and
large investors held in June, to showcase our strategic and financial
progress and future priorities including electrification programme B
– Focused investor relations programme delivered both remotely and
in person B
– Aston Martin internal communications platform and AM
– Retail shareholders engaged via direct communications, our website,
People newsletter
– Aston Martin’s Inclusion Network
– Local Health and Safety Committees
– Local trade union meetings
OUTCOMES OF ENGAGEMENT
– Several initiatives implemented including mental health training
and support for all employees
– New peer recognition programme
– New Code of Conduct for employees
– Launched first ever all employee share plan
press activities, Annual Reports and general meetings B
– For more information see Investor Engagement on page 90
OUTCOMES OF ENGAGEMENT
– Received support from largest shareholders along with strong
appetite from institutional and retail investors for a £216m placing to
facilitate the early redemption of part of the Company’s debt and to
support capital investments related to our electrification strategy
– Shareholders approved the related party transaction and issue of shares
in respect of the strategic supply agreement with Lucid to create
industry-leading ultra-luxury high performance electric vehicles
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26
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Non-Governmental Organisations
We aim to build positive relationships with local communities and
organisations interested in our business.
WHAT MATTERS TO THEM?
– Trust and ethics
– Safety
– Sustainability and non-financial performance including the
environmental impact of our products
– Career opportunities for members of the local community
– Local operational impact
HOW WE ENGAGE
– Outreach programmes with local schools, including initiatives to
promote Science, Technology, Engineering and Mathematics and
careers in the automotive industry
– Philanthropic activities to contribute social and societal benefits
– Meetings, site visits and dialogue with Non-Governmental
Organisations including organisations representing industry,
social and environmental interests
OUTCOMES OF ENGAGEMENT
– 54 visits to local schools, colleges and universities, more than double
the total in 2022
– Engagement on a range of matters including new opportunities for
trade and growth, industry challenges, and Aston Martin’s essential
contribution to local economies and communities
Government and Regulators
We engage with government and regulators given public policy
and regulatory impacts on our business.
WHAT MATTERS TO THEM?
– Compliance with regulations and the law
– Sustainable operations
– Employment and economic impacts
– Contribution to achieving public policy objectives
HOW WE ENGAGE
– The Board is committed to proactive engagement with key
stakeholders in government at local, regional and national level B
– We aim to engage positively, constructively and consistently through
various channels, including meetings, site visits, contributing to
public policy development and responding to consultations
– We welcomed numerous senior politicians to Gaydon and St Athan
– We hosted a Parliamentary reception at the Speakers House
attended by over 100 members of Parliament and UK Government
ministers B
OUTCOMES OF ENGAGEMENT
– We were selected to be part of the UK Government’s Global
Investment Summit to showcase British design and engineering
excellence
– We worked with the UK Government to support the GREAT
campaign, targeting UK export growth in the USA
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SECTION 172 STATEMENT
Key decisions and
stakeholder engagement
KEY STAKEHOLDERS
1 Customers and enthusiasts 2 Dealer network 3 Our people 4 Investors 5 Suppliers and other partnerships
6 Government and regulators 7 Local communities and Non-Governmental Organisations
The Board is pleased to provide a statement that supports Section 172 of
the Companies Act 2006. This requires that Directors promote the success
of the Company for the benefit of the members as a whole, taking into
account the interests of the Company’s stakeholders in its decision-
making. A description of the Company’s key stakeholders, what matters to
them and how the Group, including the Board engages with them is set
out on pages 24-27. Some of the key decisions that the Board made during
the year and how it took the interests of stakeholders into account in
making those decisions are set out on the following pages.
The Board recognises that there will sometimes be competing priorities
and interests between the stakeholder groups but aims to assess and
balance those interests to make decisions which are conducive to the long-
term success of the business, in line with the Company’s reputation for high
standards of business conduct and the Company’s values.
Further information on how Section 172(1) has been applied by
the Directors can be found throughout the Report
SECTION 172 MATTERS
A. The likely consequences of any decision in the long term
Our strategy
Business model
B. The interests of the Company’s employees
Our strategy
Investing in people and opportunity
C. The need to foster the Company’s business relationships
with suppliers, customers and others
Our strategy
Exporting success
D. The impact of the Company’s operations on the community
and the environment
Tackling climate change
Creating a better environment
E. The desirability of the Company maintaining a reputation
for high standards of business conduct
Leadership and governance
Risk management
Delivering the highest standards
F. The need to act fairly as between members of the Company
Investor engagement
Leadership and governance
32
30
32
50
32
54
44
48
82
64
56
90
82
Investment by Geely
Section 172 matters
Stakeholders considered
A, C, E, F
4
5
PRINCIPAL DECISION
The Board approved the issue of 28 million new ordinary shares at
335 pence per share equating to £95m in cash. The Board further
approved the Company entering into a new Relationship Agreement
with Geely giving it the right to appoint a Shareholder
Representative Non-executive Director to the Board.
CONSIDERING OUR STAKEHOLDERS
Investors: Whilst the issue of shares to Geely was dilutive to our
shareholders, the Board considered the transaction to be in the best
interests of shareholders as a whole for creation of long-term value.
Suppliers and partnerships: The relationship with Geely provides the
Company with the opportunity to better understand the strategic
growth market that China represents, as well as the opportunity to
access Geely’s range of technologies and components.
OUTCOME
Geely’s stake increased from 7% to 16%.
A Relationship Agreement is in place between the Company and
Geely with a Geely Shareholder Representative Non-executive
Director being an important part of the strategic relationship .
The Company’s relationship with Geely provides better access to
understanding the growth market of China.
The relationship provides the potential for future use of Geely’s
products.
This transaction enables the creation of
a long-term partnership with Geely and
the exploration of joint technology
synergies and new growth
opportunities”
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
28
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Placing and reduction of debt
Strategic arrangement with Lucid
Section 172 matters
Stakeholders considered
A, C, E, F
1
3
4
Section 172 matters
A, B, C, D, E, F
Stakeholders considered
1
4
5
6
PRINCIPAL DECISION
The Board approved a £216m placing to facilitate the early
redemption of the Group’s existing second lien split coupon notes.
CONSIDERING OUR STAKEHOLDERS
Investors: The Company consulted with a number of its major
shareholders prior to the share offering and respected the principles
of pre-emption through the allocation process insofar as possible.
While the placing was structured as a non-pre-emptive offer within
the Company’s existing authorities from shareholders to minimise
cost and time to completion, the Company was pleased to provide
retail investors with the opportunity to participate in line with the
Pre-Emption Group guidelines. After consideration of the various
options, the Company concluded that the separate retail offer was
in the best interests of shareholders, as well as wider stakeholders in
the Company.
Customers: The additional funding allows investment in product
innovation for the benefit of our customers.
People: Supporting our electrification journey includes attracting
new talent and providing training for new skills in electrification.
OUTCOME
58 million new ordinary shares were issued raising gross proceeds
of £216m which allowed the Company to further deleverage its
balance sheet, provided an accelerated pathway towards achieving
its net leverage ratio targets and supported capital investments
related to the Company’s electrification strategy.
The tremendous backing from our
largest shareholders along with the
strong appetite from institutional and
retail investors demonstrates the
continued confidence in Aston Martin
and our future direction.”
PRINCIPAL DECISION
The Board approved a strategic supply agreement with Lucid to
create electric vehicles and approved the issue of 28 million ordinary
shares to Lucid as part of the consideration.
CONSIDERING OUR STAKEHOLDERS
Customers: The alignment of Aston Martin’s iconic brand with
Lucid’s advanced technologies will re-define the customer
experience for future Aston Martin BEV products.
Investors: Irrevocable undertakings were obtained from the other
strategic shareholders to confirm their support. In the interests of
the Company’s bondholders, a bond fairness opinion was sought
before entering into the transaction.
Suppliers and partners: The Board approved a restated commitment
with Mercedes-Benz AG.
People: The Company needs to attract new talent and provide
training for new skills in electrification. The Board considered the
impact on the Company’s defined benefit pension scheme and
concluded that it would have a minimal impact in the short term
and over time a positive impact on the scheme.
OUTCOME
Lucid now holds a 3.44% shareholding in the Company. The
Company’s shareholders voted overwhelmingly in favour of the
transaction, with the share issue reducing the future cash costs to the
Company. The agreement provides for a long-term relationship with
Lucid and access to Lucid’s industry-leading technologies.
The supply agreement with Lucid is a
game changer for the future EV-led
growth of Aston Martin.”
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
29
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
STR ATEGIC REPORT
OUR BUSINESS MODEL
Creating long-term sustainable value
Our value chain
OUR ICONIC BRAND
OUR RELENTLESS PURSUIT
OF INNOVATION
OUR WORLD CLASS TALENT
OUR PROMISE, RACING. GREEN.
W
H
A
T
W
E
P
U
T
I
N
Product
portfolio
Engineering
Performance-driven product
portfolio, covering a wide
segment of the ultra-luxury
high-performance market
through core models and
special editions
Clear product advantage
and desirability utilising the
finest high quality materials,
enhanced through our Q by
Aston Martin personalisation
service, driving average selling
price and margins
Core product portfolio
comprises of front-engine
sports cars synonymous with
timeless styling, assertive
driving dynamics and
exhilarating performance, and
an SUV range that boasts the
world’s fastest, most powerful
and best handling luxury SUV,
DBX707, representing the very
pinnacle of its segment
In-house engineering expertise
with well-established teams
for Product Development,
Innovation & Advanced
Technology, Vehicle
Engineering, ICE Powertrain,
ePowertrain, Software &
Electronics Technology,
Value Engineering and Project
Management & Planning
Teams work in a
cross-functional structure
to encourage a collaborative
way of working, greater
efficiency and foster cutting
edge innovation with a strong
focus on design
Development processes
optimised to maximise
cross carline component
sharing and drive sustainability,
thereby reducing complexity,
improving quality and delivering
engineering efficiencies
Exclusive limited volume special
editions, which are typically
oversubscribed and are highly
sought after amongst the
active global community of
automotive collectors and
enthusiasts
Network of strategic partners
to co-develop world-class
technology and vehicle
systems, enhance quality and
deliver technical excellence,
whilst building all our products
in the UK
OUR SUSTAINABLE APPROACH
EMBEDDED ACROSS OUR
BUSINESS MODEL
READ MORE ON OUR STRATEGY ON PAGES 32 AND 33
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
30
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Operational
excellence
Go-to-
market
“No one builds
an Aston Martin
on their own”
Quality organisation
transformed and strengthened
with highly experienced
management hires
complementing a vastly
experienced team
New model launch function
transformed to lead the overall
build strategy and product
introduction
Culture of continuous
improvement embedded,
enhancing efficiency, cost and
quality, including the utilisation
of a pilot line and additional
quality inspection points
throughout the build process
New practices adopted with
suppliers to optimise the supply
chain and mitigate disruption to
production
Renewed supply strategy in
place to develop strategic and
sustainable partnerships to
improve supply chain resilience,
quality and performance
Intensity. Driven. brand identity
positions the brand at the
crosshairs of ultra-luxury and
high-performance; supported
by strategic marketing
initiatives intended to drive
new levels of brand awareness,
attract new customers, increase
loyalty and exclusivity, and build
a stronger community
Building on strong retail
distribution, and an ultra-luxury
blend of physical and digital
customer experience
Experienced dealer partners
with knowledge of the
ultra-luxury segment in all key
growth markets globally, with
the consistent application of our
corporate identity aligned to
ultra-luxury environment and
product portfolio
Leveraging a demand-
driven business model that
strengthens the order book,
supports stronger pricing
dynamics and controls
inventory
Building cross-functional,
multi-project teams and
consistent one-team “Ways of
Working” across the business
that encourage collaboration
and innovation across
organisational boundaries
Building a performance driven,
ultra-luxury focused workforce,
culture and mindset, harnessing
agility, efficiency and speed
supported by a company-wide
performance bonus approach,
incorporating key financial and
quality targets
Creating a fulfilling and
rewarding experience that
attracts and retains talent,
unlocking the potential of our
people to grow and deliver
excellence
Strengthening workforce skills,
knowledge and capability
through ongoing investment
in our people and training.
Fostering engineering
excellence and passion within
our corporate DNA
Creating long-term
sustainable value
for our stakeholders
Our business is focused on delivering
shareholder value and continuing our
purpose to create vehicles with the ultimate
technology, precision and craftsmanship
that deliver thrilling performance and a
bespoke, class-leading customer experience
READ MORE ON OUR STAKEHOLDERS
ON PAGES 24-27
We are committed to our ambition on tackling climate change
and the Science Based Targets Initiative (‘SBTi’) Net-Zero
Standards. We have a goal of becoming a world-leading
sustainable ultra-luxury business as we develop alternatives to
ICE with a blended drivetrain approach between 2025 and 2030,
including PHEV and BEV, with a clear plan to have a line-up of
electric sports cars and SUV.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
31
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STR ATEGIC REPORT
OUR STR ATEGY
Delivering our
growth ambitions
O
U
R
O
U
R
P
I
L
L
A
R
S
G
O
A
L
S
T
H
I
S
Y
E
A
R
S
T
R
A
T
E
G
I
C
A
C
H
I
E
V
E
M
E
N
T
S
F
O
C
U
S
F
O
R
2
0
2
4
+
Our iconic brand
Our relentless
pursuit of innovation
Underpinned by a strong and loyal customer base, and unique
position transcending ultra-luxury and high-performance, we
have a clear vision to become the world’s most desirable
ultra-luxury British performance brand
Create a breathtaking and comprehensive core portfolio across
front-engine, SUV and mid-engine, enhanced by a strategically
aligned Specials programme
– Impactful brand repositioning and Intensity. Driven. creative
– Introduced the first of our next generation of sports cars, DB12,
identity heightened desirability and drove brand reappraisal, with
60% of customers new to the brand and driving increased options
revenue
to significant customer and media excitement, with Aston Martin’s
first-ever in-house, bespoke infotainment system
– Delivered the most powerful production Aston Martin ever,
– Opened our first ultra-luxury flagship, Q New York, providing the
the limited edition DBS 770 Ultimate
most sophisticated luxury specification experience globally
– Introduced new enhancements to our award-winning digital
configurator, bringing luxury digital experiences to customers
– Launched our 110th anniversary ultra-exclusive special, Valour,
and delivered the stunning open cockpit DBR22, celebrating the
10th anniversary of the Q by Aston Martin bespoke service
– Completed a year-long global celebration of Aston Martin’s
– Continued our enhanced technology agreement with
110th anniversary highlighting the brand’s past, present and future
Mercedes-Benz AG
– Connected with dealers and customers globally through
significant presence at the world’s most prestigious luxury
automotive event
– Aston Martin F1® Team continued to connect the brand with
engaged audiences, with market research indicating that 60% of
luxury car buyers strongly agree they are more likely to buy an
Aston Martin because of its association with Formula One®
– Delivered global activations across the 2023 Formula One®
calendar, including the brand’s biggest-ever marketing campaign
for the Las Vegas Grand Prix
– Invested in electrification skills across our business that will be
used to electrify our model range with a blended drivetrain
approach between 2025 and 2030 including PHEV and BEV, as
well as the use of alternative sustainable materials within vehicles
– Established a landmark new supply agreement with world-leading
EV technologies company, Lucid
– Intensified development of Valhalla supercar, via the use of
Formula One® methodologies, experience and technologies
– Commenced our Aston Martin Valkyrie endurance motorsport
programme
– Introduced new additions to our world-class events sponsorship
– Commenced production of Vantage, the second of our next
portfolio, and new licensing and design collaborations
generation sports car, unveiled in February 2024
– Maintain strong visibility and brand desirability through strategic
– Drive innovation and deliver products that create desire and
high-profile product launches and campaigns progression,
aligned with our ultra-luxury, demand-led strategy
– Further enhance our Q by Aston Martin bespoke personalisation
service, including strategic expansion of our ultra-luxury retail
strategy and new Q flagships
excitement, progressing our vision to have a world-class portfolio
of models in the most significant luxury growth segments
– Work closely with Apple to introduce the next generation of
Apple CarPlay to models from 2024
– Successfully launch further next generation front-engine sports
– Drive digital innovation including continual enhancements to our
cars, and new iconic Specials
digital estate and configurator
– Drive maximum brand value and commercial benefit from our
unique association with Formula One®, including launch of the
new Official Safety Car of Formula One®
– Commence production of our first PHEV, Valhalla, in 2024
– Optimise product development processes to maximise
cross-carline component sharing, reduce complexity and drive
engineering efficiencies
– Unleash commercial potential of Aston Martin through new
– Continue work with our strong network of strategic partners to
strategic licensing and partnerships activities
– Capitalise on Aston Martin’s unique historic milestones
co-develop world-class technology and vehicle systems, enhance
quality, and maximise supply chain resilience, with efficiencies
LINK TO KPIS:
1 2 3 4 7
LINK TO KPIS:
1 2 7 8
LINK TO RISKS:
2 5 9 11
LINK TO RISKS:
3 4 6 8 9 10 11 12
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
32
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
OUR KEY PERFORMANCE INDICATORS
PRINCIPAL RISKS AND UNCERTAINTIES
1 Revenue
2 Wholesale volumes
3 Operating profit
4 Adjusted EBITDA
5 Net Debt
6 Net Debt to adjusted EBITDA
7 Free cash flow
8 Quality
9 Health & Safety Accident Frequency Rate
1 Macroeconomic and political instability
2 Brand/reputational damage
3 Technological advancement
4 Climate change
5 Liquidity
6 Impairment of capitalised development costs
7 Compliance with laws and regulations
8 Talent acquisition and retention
9 Programme delivery
10 Achieving financial and cost-reduction targets
11 Cyber security and IT resilience
12 Supply chain disruption
O
U
R
P
I
L
L
A
R
S
G
O
A
L
S
T
H
I
S
Y
E
A
R
S
T
R
A
T
E
G
I
C
A
C
H
I
E
V
E
M
E
N
T
S
F
O
C
U
S
F
O
R
2
0
2
4
+
Our promise, Racing. Green.
Our world class talent
O
U
R
Deepen the integration of sustainability into our business and
improving our performance through our Racing. Green. strategy
– Signed a strategic supplier agreement with Lucid for access to
industry-leading technologies in a long-term relationship
whereby Lucid will supply select powertrain components for
initial and future BEV models
– Project ELEVATION, a six-partner collaborative research and
development project led by Aston Martin received £9 million
– Continued our commitment to the SBTi
– Achieved carbon neutral manufacturing at our Gaydon and
St Athan facilities
– The Company’s sustainability strategy Racing. Green. now
expands to offsetting Scope 1 and Scope 2 emissions through
Gold Standard verified projects
– Made progress in reducing our environmental impact, following
business-wide initiatives to reduce CO2 emissions from its
manufacturing processes and wider supply chain
– Continued our commitments to only use renewable electricity at
Gaydon and St Athan manufacturing facilities, and installed solar
panels at Newport Pagnell
– Started the decarbonisation of our UK supply chain with the use
of Bio-LNG trucks
Attract and retain a talented and skillful team with experience
and understanding of the ultra-luxury automotive sector,
focused on building a collaborative and cross-functional way
of working
– Launched new Company Values of Unity, Openness, Trust,
Ownership and Courage through an internal and external
campaign, with training delivered for 1,972 employees and
181 contractors
– Supporting our colleagues with the higher cost of living through
pay rises approved by the Remuneration Committee
– Held Aston Martin’s first-ever Leadership Conference, aligning
senior management on the Company’s strategy and direction
– Made changes to our organisational structure and operational
improvements focused on enhancing quality and overall
efficiencies
– Increased employment at our Gaydon headquarters, with the
creation of more than 100 jobs in our manufacturing facility
supporting the launch of our next generation of sports cars
– Continued to invest in our world-class team supporting our
strategic pillars, including the appointment of a Chief Industrial
Officer, Chief Procurement Officer, and BEV Chief Engineer
– Expanded our employee communications and listening
programme including the staging of regular all-company
Town Halls and leadership roundtables
– Held employee Open Weekend at Gaydon headquarters,
attended by more than 10,000 employees, family and friends
– Work towards net-zero manufacturing facilities and a 30%
– Strengthen workforce skills, knowledge and capability and
reduction in supply chain emissions by 2030
– By 2025 we aim to achieve zero single-use plastic packaging from
our manufacturing facilities and to reduce our water consumption
by 15% compared to 2019
– Enhancing our gender diversity aspiration, targeting women in
25% of leadership positions by 2025 and in 30% of leadership
positions by 2030
fostering engineering excellence and passion within our corporate
DNA
– Increase the culture of inclusion leveraging the Aston Martin
values, building awareness through education and measuring
through qualitative data
– Improve colleague engagement and alignment by becoming a
“Great Place to Work” by 2025
– Improving biodiversity at our manufacturing facilities
– Continue building a workplace and culture where all our people
feel connected to Aston Martin’s purpose, where they have a voice
and can develop to reach their full potential
LINK TO KPIS:
3 4 8 9
LINK TO KPIS:
8 9
LINK TO RISKS:
1 3 4 7 9 10 11 12
LINK TO RISKS:
5 8 9 10 11
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
33
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
STR ATEGIC REPORT
KEY PERFORMANCE INDICATORS
Precision measurement
meets performance
A REMINDER OF
OUR STR ATEGIC
PILLARS
1.our iconic
brand
2.our relentless
pursuit of
innovation
3.Our promise,
Racing. Green.
4.our world
class talent
Financial
REVENUE – £’m
1,632.8
1,381.5
1,095.3
WHOLESALE VOLUMES
– units
OPER ATING PROFIT/
(LOSS) – £’m
ADJUSTED EBITDA
– £’m
NET DEBT – £’m
FREE CASHFLOW – £’m
QUALITY – CUSTOMER
HEALTH & SAFETY –
NET DEBT TO
ADJUSTED EBITDA –
“adjusted leverage”
Non-financial
PERCEPTION AUDIT
(CPA) – quality score
ACCIDENT FREQUENCY
R ATE – (AFR)
6,620
6,412
6,178
305.9
190.2
(76.5)
137.9
3
2
0
2
2
2
0
2
1
2
0
2
3
2
0
2
2
2
0
2
1
2
0
2
Description
Revenue measures the
appeal of our brands, our
ability to build and sustain
brand equity and increase
market share through
product expansion
Definition
Revenue is defined in note 2
of the Financial Statements
Remuneration linkage
None
Target
The Company expects to
generate revenue of
c. £2.5bn by 2027/28
Description
This measures sales from
the Company to its dealers
and direct customers
Definition
Number of vehicles,
including Specials, sold by
the Company to its dealers
and direct customers
Remuneration linkage
Represents 7.5% of the
Group scorecard of
performance measures for
the annual bonus
Target
High single-digit % growth
in 2024 with continued
focus on value
(111.2)
(141.8)
2
2
0
2
3
2
0
2
1
2
0
2
Description
Operating profit/(loss)
measures our actual,
reported operating
profitability
Definition
Net revenue, less Cost
of Sales, less all other
operational expenses
(See note 4 of the Financial
Statements)
Remuneration linkage
None
Target
Not applicable
3
2
0
2
2
2
0
2
1
2
0
2
Description
This measures our
underlying operating
profitability, stripping out
the impact of adjusting
items from operating
profit/(loss) and interest,
tax, depreciation and
amortisation
Definition
Adjusted EBITDA is defined
in note 34 of the Financial
Statements
Remuneration linkage
Represents 50% of the
Group scorecard of
performance measures for
the annual bonus
Target
The Company expects to
generate c. £800m
adjusted EBITDA by
2027/28
Description
Description
Net debt measures the
Adjusted leverage
Description
This measures the
Description
Description
This is an internal measure
The AFR is the number of
amount of total
indebtedness at the
and cash equivalents
measures our indebtedness
generation and usage of
of the quality of each
accidents per 100 workers
compared to one year’s
cash, including the impact
completed car at the end of
and measures work related
Company, net of any cash
worth of profitability
the production line
recordable injuries or
Definition
Net debt divided by
Definition
Definition
Definition
The CPA score is
Total value of all current
adjusted EBITDA over the
Cash inflow/(outflow) from
determined through the
and non-current
last 12 months (See note 34
operating activities plus the
audit of each car at the point
borrowings, inventory
of the Financial Statements)
cash used in investing
that it has completed all the
Definition
illnesses (as defined by the
Occupational Health and
Safety Administration
(OHSA))
of all investment and
financing decisions
Remuneration linkage
None
Target
Below 1.0x in 2027/28
repurchase arrangements
and lease liabilities, less
cash and cash equivalents
and cash not available for
short-term use (See note
34 of the Financial
Statements)
Remuneration linkage
None
Target
None
activities (excluding
production processes and is
The AFR measure is
interest received) plus
intercepted as it would be
calculated by the number
interest paid in the year,
handed over to the outbound
of work related recordable
transport company
injuries or illnesses (defined
less interest received
(See note 34 of the
Financial Statements)
Remuneration linkage
Represents 20% of the
Group scorecard of
the annual bonus
Target
performance measures in
bonus
Remuneration linkage
Quality measures, including
CPA score, represent 15%
of the Group scorecard of
measures for the annual
Target
Ambition for continuous
The Company expects to
year-on-year improvement
be sustainably free
cashflow positive from
in CPA scores for GT/
sports cars and DBX
H2 2024
* Significant progress made
but stretching target level
not fully achieved.
** One of two targets achieved
by the OHSA definition)
divided by the number of
hours worked over a
12-month period ending on
31 December each year
Remuneration linkage
None. However for 2024
health and safety will
represent 5% of the Group
scorecard of measures for
the annual bonus
Target
Ambition for continuous
year-on-year reduction
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
1 2
1 2
1 2
1 2
1 2
1 2
1 2
1 3 4
1 2 4
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
34
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Financial
REVENUE – £’m
WHOLESALE VOLUMES
OPER ATING PROFIT/
ADJUSTED EBITDA
– units
(LOSS) – £’m
– £’m
NET DEBT – £’m
NET DEBT TO
ADJUSTED EBITDA –
“adjusted leverage”
FREE CASHFLOW – £’m
Non-financial
QUALITY – CUSTOMER
PERCEPTION AUDIT
(CPA) – quality score
HEALTH & SAFETY –
ACCIDENT FREQUENCY
R ATE – (AFR)
Description
Description
Description
Description
Revenue measures the
This measures sales from
Operating profit/(loss)
This measures our
appeal of our brands, our
the Company to its dealers
measures our actual,
underlying operating
ability to build and sustain
and direct customers
reported operating
profitability, stripping out
brand equity and increase
market share through
product expansion
Definition
profitability
Number of vehicles,
Definition
including Specials, sold by
Net revenue, less Cost
the Company to its dealers
of Sales, less all other
Revenue is defined in note 2
and direct customers
operational expenses
(See note 4 of the Financial
Definition
Definition
of the Financial Statements
Remuneration linkage
None
Target
The Company expects to
generate revenue of
c. £2.5bn by 2027/28
Remuneration linkage
Represents 7.5% of the
Group scorecard of
Statements)
Remuneration linkage
performance measures for
None
the annual bonus
Target
Not applicable
Target
High single-digit % growth
in 2024 with continued
focus on value
the impact of adjusting
items from operating
profit/(loss) and interest,
tax, depreciation and
amortisation
Adjusted EBITDA is defined
in note 34 of the Financial
Statements
Remuneration linkage
Represents 50% of the
Group scorecard of
performance measures for
the annual bonus
Target
The Company expects to
generate c. £800m
adjusted EBITDA by
2027/28
891.6
6.5
**
*
NM
1.01
814.3
765.5
4.0
2.7
(123.2)
0.53
0.40
3
2
0
2
2
2
0
2
1
2
0
2
3
2
0
2
2
2
0
2
1
2
0
2
Description
Adjusted leverage
measures our indebtedness
compared to one year’s
worth of profitability
Definition
Net debt divided by
adjusted EBITDA over the
last 12 months (See note 34
of the Financial Statements)
Remuneration linkage
None
Target
Below 1.0x in 2027/28
Description
Net debt measures the
amount of total
indebtedness at the
Company, net of any cash
and cash equivalents
Definition
Total value of all current
and non-current
borrowings, inventory
repurchase arrangements
and lease liabilities, less
cash and cash equivalents
and cash not available for
short-term use (See note
34 of the Financial
Statements)
Remuneration linkage
None
Target
None
(298.8)
(360.0)
3
2
0
2
2
2
0
2
1
2
0
2
Description
This measures the
generation and usage of
cash, including the impact
of all investment and
financing decisions
Definition
Cash inflow/(outflow) from
operating activities plus the
cash used in investing
activities (excluding
interest received) plus
interest paid in the year,
less interest received
(See note 34 of the
Financial Statements)
Remuneration linkage
Represents 20% of the
Group scorecard of
performance measures in
the annual bonus
Target
The Company expects to
be sustainably free
cashflow positive from
H2 2024
3
2
0
2
2
2
0
2
1
2
0
2
3
2
0
2
2
2
0
2
1
2
0
2
Description
This is an internal measure
of the quality of each
completed car at the end of
the production line
Definition
The CPA score is
determined through the
audit of each car at the point
that it has completed all the
production processes and is
intercepted as it would be
handed over to the outbound
transport company
Remuneration linkage
Quality measures, including
CPA score, represent 15%
of the Group scorecard of
measures for the annual
bonus
Target
Ambition for continuous
year-on-year improvement
in CPA scores for GT/
sports cars and DBX
* Significant progress made
but stretching target level
not fully achieved.
** One of two targets achieved
Description
The AFR is the number of
accidents per 100 workers
and measures work related
recordable injuries or
illnesses (as defined by the
Occupational Health and
Safety Administration
(OHSA))
Definition
The AFR measure is
calculated by the number
of work related recordable
injuries or illnesses (defined
by the OHSA definition)
divided by the number of
hours worked over a
12-month period ending on
31 December each year
Remuneration linkage
None. However for 2024
health and safety will
represent 5% of the Group
scorecard of measures for
the annual bonus
Target
Ambition for continuous
year-on-year reduction
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
LINK TO STR ATEGY:
1 2
1 2
1 2
1 2
1 2
1 2
1 2
1 3 4
1 2 4
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
35
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STR ATEGIC REPORT
CHIEF FINANCIAL OFFICER’S STATEMENT
Significant progress towards
near- and medium-term
financial targets
G
U
O
D
CHIEF FINANCIAL
OFFICER
Y
T
R
E
F
F
A
L
T
Through continuous engagement
with our stakeholders during the
year I was pleased to see the
development of both new and
existing strategic relationships as
we progress to deliver long-term
value to all of our shareholders.”
hroughout 2023 Aston Martin continued to execute its financial goals,
with significant progress towards our near- and medium-term financial
targets. During a year in which we commenced the transition to our
next generation of sports cars, our full year financial results are largely
in line with expectations, driven by robust volumes, records ASPs,
gross margin improvement and an enriched product portfolio.
As we approached the final quarter of the year on track to deliver
against full year guidance, delays in the initial ramp up phase of the
new DB12 marginally impacted on volume performance. Despite this,
we delivered a strong Q4 performance with a record gross margin,
and adjusted EBITDA, supported by DB12 and the ongoing Specials
programmes. 2023 free cash outflow of £360m reflects anticipated
higher year-on-year capital expenditure primarily related to the
development of our next generation of sports cars and electrification
programme, as well as the timing of DB12 and Valour deliveries at
the end of the year, with related receivables unwinding in January 2024.
As we transition to the full range of our next generation of sports cars
and develop our electrification programme, investment in the product
pipeline and innovation continues, ensuring Aston Martin delivers
the ultra-luxury high-performance products in the future that our
customers expect.
longer term growth, and
In August we completed a £216m share placing to accelerate net
in
leverage reduction and support
consideration of a wide range of factors, we redeemed 50% of the
outstanding second lien notes in November 2023. At the end of
2023 our net leverage ratio reduced to 2.7x from 4.0x in 2022. Further
to this, we expect to undertake the refinancing exercise of our
outstanding debt during the first half of 2024.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
36
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
37
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STR ATEGIC REPORT
FINANCIAL REVIEW
Through continuous engagement with our stakeholders during the
year, I was pleased to see the development of both new and existing
strategic relationships as we progress to deliver long-term value to all
of our shareholders. This included increased investment by Geely
Holding Group to become our third largest shareholder as part of a
new relationship agreement, a new strategic supply arrangement with
Lucid to propel Aston Martin’s high-performance electrification
strategy, and
investment by Yew Tree Consortium,
demonstrating their continuing confidence and belief in the future
of Aston Martin.
increased
Overall, 2023 has been a significant year of financial and strategic
progress for Aston Martin. I am pleased with the steps we have made
towards achieving our near- and medium-term financial targets, which
are underpinned by the exciting product transformation that we are
undertaking. I thank all the teams that have supported the business
to deliver our objectives this year and I’ll continue to work closely
with the Board to ensure we deliver value to all of our stakeholders.
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER
2023 has been a significant
year of financial and strategic
progress for Aston Martin.”
2023 FULL YEAR FINANCIAL SUMMARY
– Delivered robust wholesale volumes during a period of ongoing
product portfolio transformation:
• FY 2023 wholesale volumes increased 3% to 6,620 (FY 2022:
6,412); driven by 14% Sport/GT growth, reflecting growth in
DB12 and DBS 770 Ultimate volumes in H2’23, despite slight
delays to the initial production ramp up of DB12
• As expected, Q4 2023 wholesale volumes increased 54%
sequentially compared with Q3 2023; decreased 6% to 2,222
compared to prior year period (Q4 2022: 2,352) due to elevated
Q4 2022 wholesales
– FY 2023 revenue increased 18% to £1,633m reflecting continued
execution of our growth strategy; enhanced positioning of our
ultra-luxury brand and enriched product portfolio driving growth
in volumes and record average selling prices (ASPs):
• Strong pricing dynamics in the core portfolio and favourable
mix from DBS 770 Ultimate, DBX707, V12 Vantage Roadster
and new DB12:
– FY 2023 core ASP of £188k, up 6% (FY 2022: £177k)
– Q4 2023 core ASP of £196k, up 7% (Q4 2022: £184k)
• Higher year-on-year Specials volumes with consistent delivery
of Aston Martin Valkyrie (87 compared to 80 in FY 2022)
including deliveries of the first Aston Martin Valkyrie Spiders,
DBR22 and Valour limited edition models:
– FY 2023 total ASP of £231k, up 15% (FY 2022: £201k)
– Q4 2023 total ASP of £255k, up 20% (Q4 2022: £213k);
reflecting richer mix
– Significant increase in gross profit and margin progressing towards
longstanding c. 40% target in FY 2024/25; reflecting benefits from
the ongoing portfolio transformation, driving favourable pricing
dynamics, product mix and volumes:
• FY 2023 gross profit increased by 42% to £639m (FY 2022:
£451m); gross margin at 39% (FY 2022: 33%)
• Q4 2023 gross profit increased by 63% to £268m
(Q4 2022: £165m); gross margin at 45% (Q4 2022: 31%)
– FY 2023 adjusted EBITDA increased 61% to £306m (FY 2022:
£190m) translating to an adjusted EBITDA margin increase of
490 basis points to 18.7%; primarily driven by higher gross profit,
partially offset by 26% increase in adjusted operating expenses,
including reinvestments into brand and marketing activities
and inflationary impacts on the cost base, while recognising
£11m relating to upward revaluation of investment in AMR
GP Holdings Limited
– FY 2023 operating loss decreased by 22% to £111m (FY 2022:
£142m loss), including £78m year-on-year increase in depreciation
and amortisation; Q4 2023 operating profit increased to £34m
(Q4 2022: £7m)
– Net cash inflow from operating activities of £146m
(FY 2022: £127m); Free cash outflow of £360m (FY 2022:
£299m outflow) reflecting:
• Q4 free cash outflow of £63m (Q4 2022: £37m inflow) impacted
by timing of DB12 and Valour deliveries in December 2023 with
related receivables unwinding in January 2024
• Higher year-on-year capital expenditure of £397m (FY 2022:
£287m), primarily related to new models and next generation
sports car developments, as well as development of the
Company’s electrification programme including the initial $33m
(£27m) payment to Lucid Group, Inc. (Lucid) relating to the new
strategic supply agreement
• Net cash interest payments of £109m (FY 2022: £139m)
• Working capital outflow of £86m (FY 2022: £15m outflow)
reflecting timing of December deliveries and the unwinding of
customer deposits on delivery of Special wholesales, partially
offset by a reduction in inventory and payables
– Year-end cash of £392m (2022: £583m), following the redemption
of 50% of the outstanding second lien notes in November 2023
– Net debt of £814m (2022: £766m), including a positive £61m
impact of non-cash FX revaluation of US dollar-denominated debt
as sterling strengthened against the US dollar during 2023;
disciplined strategic delivery supported ongoing deleveraging
with net leverage ratio improving to 2.7x (2022: 4.0x)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
38
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FINANCIAL REVIEW
Wholesale and revenue analysis
Number of vehicles
FY 2023 FY 2022 Change Q4 2023 Q4 2022 Change
Total wholesale
Core (excluding
Specials)
By region:
UK
Americas
EMEA ex. UK1
APAC1
By model:
Sport/GT
SUV
Specials
6,620
6,469
6,412
6,323
3% 2,222 2,352
2%
2,139
2,313
(6%)
(8%)
1,141
1,110
2,037
1,980
3%
3%
1,994
1,508
32%
1,448
1,814
(20%)
367
620
727
508
416
828
628
480
(12%)
(25%)
16%
6%
3,530
2,939
151
3,104
3,219
14% 1,440
920
57%
(9%)
699
1,393
(50%)
89
70%
83
39
113%
Note: Sport/GT includes Vantage, DB11, DB12, and DBS; 1 2022 numbers restated.
Total wholesales of 6,620 increased by 3% year-on-year (FY 2022:
6,412), driven by high demand for DBS 770 Ultimate and DB12, despite
expected impacts of the ongoing product portfolio transition. This
included 151 Specials in FY 2023 (FY 2022: 89), comprised of a mature
cadence of 87 Aston Martin Valkyries (FY 2022: 80), as well as DBR22
and initial Valour deliveries, demonstrating the Company’s unique
ability to operate at the very highest levels of the luxury automotive
segment and attract new customers and collectors to the brand.
As expected, total wholesales of 2,222 units in Q4 2023 increased by
54% compared to Q3 2023, though decreased by 6% year-on-year,
due to elevated Q4 2022 SUV wholesales following the resolution of
supply chain and logistics disruptions in Q2 and Q3 2022.
SUV wholesales remained robust in FY 2023, with ASPs benefiting
from the planned change in mix to DBX707 in line with the Company’s
ultra-luxury high-performance strategy. The DBX707 is now clearly
established as the benchmark in the ultra-luxury SUV segment and
represented 71% of SUV wholesales in FY 2023 (FY 2022: 52%), with
volumes increasing 25% in 2023 compared with the prior year. SUV
wholesales decreased both on a FY 2023 and Q4 2023 year-on-year
basis (9% and 50% decreases, respectively), reflecting portfolio
transition and the previously mentioned elevated Q4 2022 wholesales
following disruptions earlier in 2022.
Q4 2023 Sport/GT wholesales of 1,440 units increased by 57%
(Q4 2022: 920), reflecting considerable contribution from DB12.
The temporary peak in DB12 wholesales reflected partial delays in
Q3 2023 deliveries due to supplier readiness and EE platform
integration issues.
Aston Martin continues to operate a demand-led approach, aligned
with its ultra-luxury high performance strategy. Prior to the initial
production ramp up delays of DB12, retail volumes (retails) were
ahead of wholesale volumes (wholesales) for the year. However,
similar to the profile experienced at the end of 2022, and as a direct
result of the timing of DB12 deliveries in December 2023, wholesales
were temporarily ahead of retails at the end of the year. Following
the unwinding of this position, the Company expects to see retails
outpace wholesales in FY 2024 as it continues the transition to its next
generation of sports cars.
Geographically, wholesale volumes remained well balanced across all
regions. The Americas and EMEA excluding UK were the largest
regions in FY 2023, collectively representing 61% of total wholesales,
driven by strong demand for DBX707, DBS 770 Ultimate and DB12. In
our home market, the UK, wholesales grew 3% year-on-year, driven by
DBS 770 Ultimate and DB12 deliveries. Finally, FY 2023 wholesale
volumes in APAC were impacted by lower sales in China, which
decreased by 47% compared to 2022, which more than offset growth
in wholesale volumes including DBX707 and DBS 770 Ultimate outside
of China. China continues to be a market where we see significant
opportunity for long-term growth. Wholesale volumes in APAC
excluding China were up 12% year-on-year (FY 2022: 10%).
Revenue by category
£m
Sale of vehicles
Sale of parts
Servicing of vehicles
Brand and motorsport
Total
FY 2022
% Change
FY 2023
1,531.9
80.0
9.8
11.1
1,291.5
70.8
9.3
9.9
1,632.8
1,381.5
19%
13%
5%
12%
18%
FY 2023 revenue increased by 18% to £1.6bn (FY 2022: £1.4bn),
primarily due to strong wholesale ASP growth, with both core and
total ASP reaching record levels and, to a lesser extent, due to higher
wholesale volumes. Total ASP of £231k (FY 2022: £201k) increased
by 15% year-on-year, reflecting richer mix including deliveries of the
full range of Aston Martin Valkyrie models and the 110th anniversary
Special, Valour, and DBR22, as well as higher core ASPs. Core ASP
of £188k (FY 2022: £177k) increased by 6% year-on-year driven by
strong pricing and favourable mix dynamics, despite some foreign
exchange headwinds.
Q4 2023 revenue increased by 13% to £593m (Q4 2022: £524m),
driven by strong ASP growth. Total Q4 2023 ASP of £255k (Q4 2022:
£213k) increased by 20%, reflecting 113% increase in Special edition
wholesale volumes. Q4 2023 core ASP of £196k (Q4 2022: £184k)
increased by 7%, driven by strong pricing and favourable mix dynamics
from new DB12 and exclusive DBS 770 Ultimate, and despite foreign
exchange headwinds in Q4 2023.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
39
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Summary income statement and analysis
£m
FY 2023
FY 2022
STR ATEGIC REPORT
FINANCIAL REVIEW CONTINUED
Q4 2023
Q4 2022
The operating loss of £111m compared to a £142m loss in the prior
year. The 22% decrease year-on-year was primarily driven by:
Revenue
Cost of sales
Gross profit
Gross margin %
1,632.8
1,381.5
593.3
524.3
(993.6)
(930.8)
(324.9)
(359.8)
639.2
39.1%
450.7
32.6%
268.4
45.2%
164.5
31.4%
Adjusted operating expenses1
(718.9)
(568.6)
(213.0)
(154.2)
of which depreciation &
amortisation
Adjusted EBIT2
Adjusting operating items
Operating (loss)/profit
385.6
308.1
119.4
100.1
(79.7)
(31.5)
(117.9)
(23.9)
(111.2)
(141.8)
55.4
(21.3)
34.1
10.3
(3.7)
6.6
Net financing (expense)/income
(128.6)
(353.2)
of which adjusting financing
(expense)/income
(36.5)
(20.1)
(14.1)
(8.2)
9.7
(39.1)
(Loss)/profit before tax
(239.8)
(495.0)
Tax credit/(charge)
13.0
(32.7)
(Loss)/profit for the period
(226.8)
(527.7)
20.0
13.2
33.2
Adjusted EBITDA1,2
Adjusted EBITDA margin
Adjusted (loss)/profit
before tax1
305.9
18.7%
190.2
13.8%
(171.8)
(451.0)
174.8
29.5%
49.5
16.3
(26.0)
(9.7)
110.4
21.1%
59.1
EPS (pence)
Adjusted EPS (pence)
(30.5)
(124.5)
(21.4)
(114.1)
1 Excludes adjusting items.
2 Alternative Performance Measures are defined in note 34 on page 198.
transformation strategy, driving
In FY 2023, gross profit of £639m increased by £189m, or 42%
(FY 2022: £451m). This translated to a gross margin of 39%, expanding
by 650 basis points compared to the prior year (FY 2022: 33%).
The gross margin performance reflected benefits from the ongoing
portfolio
favourable pricing
dynamics, product mix and volumes, which was particularly strong in
Q4 2023 with a gross margin of 45% (Q4 2022: 31%). Throughout FY
2023 this was partially offset by higher manufacturing, logistics and
other costs, as well as FX headwinds. The Company continues to
target over 40% gross margin from future products, aligned with
the Company’s ultra-luxury strategy.
Adjusted EBITDA increased by 61% year-on-year to £306m in FY 2023
(FY 2022: £190m), or by £116m. This translated to an adjusted EBITDA
margin of 19% (FY 2022: 14%), a year-on-year expansion of
approximately 490 basis points. The year-on-year increase in adjusted
EBITDA was primarily due to higher year-on-year revenue and
gross profit, as described above, partially offset by 26% increase in
adjusted operating expenses including reinvestments into brand and
marketing activities and inflationary impacts on the cost base, while
recognising £11m relating to upward revaluation of investment in
AMR GP Holdings Limited.
– Higher year-on-year gross profit as described above
These factors were partially offset by:
– A £78m year-on-year increase in depreciation and amortisation,
primarily related to cadence of Specials delivery, DBS 770 Ultimate
and DB12 launch, as well as full year DBX707 charges
– Increased investment in brand and product launches such as
V12 Vantage, DBS 770 Ultimate, DB12, Valhalla and Valour, and
marketing activities at events such as the Goodwood Festival
of Speed, Pebble Beach, and Las Vegas Grand Prix
– Higher general costs, including inflationary pressures
Net financing costs of £129m were down from £353m in 2022,
comprising a positive non-cash FX revaluation impact of £61m, as
sterling strengthened against the US dollar (FY 2022: negative
£156m). Adjusting operating
items of £32m (FY 2022: £24m)
predominantly related to ERP implementation costs and one-off legal
expenses. The £37m net adjusting finance charge (FY 2022: £20m)
was due to movements in fair value of outstanding warrants, and
financing expenses associated with the partial repayment of the
second lien notes.
The loss before tax was £240m (FY 2022: £495m loss), an improvement
of £255m year-on-year and the loss for the period was £227m
(FY 2022: £528m), an improvement of £301m year-on-year, both
impacted by the significant reduction in net financing costs related
to the US dollar-denominated Senior Secured Notes.
The tax credit on the adjusted loss before tax was £13m, and the total
effective tax rate for the period to 31 December 2023 was 5.4% which
is predominantly due to recognising deferred tax on accelerated
capital allowances and UK tax losses, as well as movements in deferred
tax on the amount of interest the Group can deduct for tax purposes.
The weighted average share count at 31 December 2023 was
748 million, following the placing of new ordinary shares to
Lucid Group, Inc. in November and to Geely International (Hong Kong)
Limited in May. 66 million shares in relation to the warrants remain
outstanding and are exercisable until 2027, giving an adjusted EPS
of (21.4)p (2022: (114.1)p).
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
40
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION £m
Loan notes
Inventory financing
Bank loans and overdrafts
Lease liabilities (IFRS 16)
Gross debt
Cash balance
Cash not available for short term use
Net debt
31-Dec-23
31-Dec-22
(980.3)
(1,104.0)
(39.7)
(89.4)
(97.3)
(38.2)
(107.1)
(99.8)
(1,206.7)
(1,349.1)
392.4
–
583.3
0.3
(814.3)
(765.5)
Cash as at 31 December 2023 includes the remaining £106m of
proceeds from August’s share placing, following the redemption
of a portion of the outstanding second lien notes in November, and
£95m proceeds from the new shares issued to Geely International
(Hong Kong) Limited in May.
Net debt of £814m (2022: £766m), including a positive £61m impact of
non-cash FX revaluation of US dollar-denominated debt as the sterling
strengthened against the US dollar during the year. Disciplined
strategic delivery and EBITDA growth supported ongoing
deleveraging with net leverage ratio improving to 2.7x (2022: 4.0x).
Cash flow and net debt
£m
Cash generated from
operating activities
Cash used in investing activities
(excl. interest)
FY 2023
FY 2022
Q4 2023
Q4 2022
145.9
127.1
114.5
184.0
(396.9)
(286.9)
(121.9)
(73.5)
Net cash interest paid
(109.0)
(139.0)
Free cash (outflow)/inflow
(360.0)
(298.8)
(55.8)
(63.2)
(73.7)
36.8
Cash inflow/(outflow)
from financing activities
(excl. interest)
(Decrease)/increase
in net cash
Effect of exchange rates
on cash and cash equivalents
182.2
456.2
(80.6)
(210.5)
(177.8)
157.4
(143.8)
(173.7)
(13.1)
7.0
(7.6)
(14.8)
Cash balance
392.4
583.3
392.4
583.3
Net cash inflow from operating activities was £146m (FY 2022: £127m).
The year-on-year change in cash flow from operating activities was
primarily driven by a £116m increase in adjusted EBITDA, as explained
above, and mostly offset by a working capital outflow of £86m
(FY 2022: £15m outflow). The largest driver was an £82m increase in
receivables (FY 2022: nil movement), driven by timing on the delivery
of DB12 and Specials, as well as higher volumes in December 2023.
This was partially offset by a decrease in inventories of £12m (FY 2022:
£78m increase) due to reduced work-in-progress and finished goods,
and a £51m increase in payables (FY 2022: £82m) due to higher
production in December 2023. Due to the high volume of Specials
delivered in Q4 2023, there was a £66m decrease (FY 2022: £18m
decrease) in deposits held, as balances on accounts unwound in the
quarter, partially offset by ongoing Valour deposit collections.
Capital expenditure was £397m in 2023, an increase of £111m 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 including a $33m
(£27m) payment to Lucid in Q4 2023 relating to the new strategic
supply agreement.
Free cash outflow of £360m in 2023 compared to a £299m outflow
in 2022, is due to an increase in capital expenditure as detailed
above, partially offset by the improvement in cash flow from
operating activities.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
41
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STR ATEGIC REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Building a sustainable
ultra-luxury business
Our journey building a world-leading sustainable ultra-luxury automotive business continues. It is a key
focus of our corporate strategy and the central objective of our sustainability strategy, Racing. Green.
Racing. Green. is built on five priority areas that reflect Aston Martin’s approach to sustainability aligned
with the United Nation’s Sustainable Development Goals, and a deep understanding of the priorities that
our customers, employees and other stakeholders care about.
These five areas are tackling climate change; creating a better environment; investing in people
and opportunity; exporting success; and delivering the highest standards.
2023 highlights
23.3%
11.2%
63.6%
Fall in CO2 emissions per car manufactured
in 2023 compared with 2022 (tCO2e)*
Decrease in total energy consumption
between 2022 and 2023 (MWh)
Waste recycled in 2023, compared
with 58.8% in 2022 (tonnes)
100%
Renewable electricity powering
all manufacturing sites
~£2bn
Planned investment in advanced technologies
over the next 5 years, with investment shifting
to BEV
~£2m
Sale value of vehicles donated
by Aston Martin to auction for charity
50%
89.07
54
Increase in the proportion of women
in our early careers intake
Biodiversity score for Gaydon,
compared with 88.87 in 2022
Visits to local schools, colleges and universities,
more than double total in 2022
24.5%
Improvement in Accident Frequency Rate
compared with 2022
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
42
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION 2023 TARGETS AND GOALS
01
TACKLING
CLIMATE
CHANGE
02
CREATING
A BETTER
ENVIRONMENT
03
INVESTING IN
PEOPLE AND
OPPORTUNITY
04
EXPORTING
SUCCESS
05
DELIVERING
THE HIGHEST
STANDARDS
SEE PAGE 4 4
SEE PAGE 48
SEE PAGE 50
SEE PAGE 54
SEE PAGE 56
Working with government
– Continue to work with
the UK Government
to showcase the very
best in advanced
British engineering
and design worldwide
– Maintain engagement
with government to
support sustainable
growth across the UK
automotive sector,
including expansion
of the UK-based
supply chain
– Help achieve the UK
Government’s aim to
increase UK exports
to £1tn
Embracing industry
best practice
– Continue commitment
to the Science Based
Targets initiative (‘SBTi’)
– Continue commitment
to the Task Force on
Climate-related
Financial Disclosures
(‘TCFD’)
– Understand and
engage in emerging
areas of sustainability
best practice
Pioneering leadership
– Understand and engage
in emerging areas of best
practice such as the
Science Based Targets
Network for Nature
and the Taskforce
on Nature-related
Financial Disclosures
(‘TNFD’)
Transforming products
– Next generation Plug-In
Hybrid Electric Vehicle
(PHEV) commencing
delivery in 2024
Minimising impacts
– Zero single-use plastic
packaging waste from
our manufacturing
facilities by 2025
– First Battery Electric
– Zero waste to landfill
Employee wellbeing
– Target zero accidents
– Continue to deliver
industry-leading
initiatives to support
employee wellbeing
from our manufacturing
operations
– 15% reduction in water
consumption at our
manufacturing
operations by 2025
(compared with 2019)
Maximising sustainable
materials
– Continue to work with
supply chain partners to
enable the use of more
sustainable materials
Boosting biodiversity
– Improve Biodiversity
at our manufacturing
facilities
Advancing diversity
and inclusion
– Women in 25% of
leadership positions
by 2025 and in 30%
of leadership positions
by 2030.
– Increase the culture of
inclusion by leveraging
the Aston Martin Values
– Improve workplace
engagement and culture,
and secure accreditation
as a Great Place to Work®
by 2025
Growing talent and
raising aspirations
– Sustain new apprenticeship
recruitment
– Update skills and training
to support transition to
electric vehicle production
– Continue commitment
to promoting STEM
Vehicle (BEV) targeted
for launch in 2025
– Fully electrified sports
cars and SUV portfolio
by 2030
Transforming production
– Carbon neutral
manufacturing facilities
– Net Zero manufacturing
facilities by 2030
– 100% use of renewable
electricity in our
manufacturing facilities
– Reduce CO2 emissions
from our manufacturing
operations by 2.5%
year-on-year*
– Reduce CO2 emissions
intensity and energy
consumption per car
by 2.5% year-on-year*
– Implement ISO 50001
Energy Management
Systems at key
manufacturing
facilities by 2025
– 30% reduction in supply
chain CO2 emissions
by 2030 (compared
to 2020)
– Net zero across our
supply chain by 2039.
*
Scope 1 CO2 emissions
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
01
Tackling climate change
Introduction
The automotive industry continues on a
journey of transformation driven by the
expectations of customers, employees,
investors and policymakers focused on
the need to tackle climate change. We
continued to act on climate change,
focussing on two key areas:
– Transforming products.
– Transforming production.
In 2023, key activities included:
– Progressing the Electric Vehicle
transformation programme,
supported by strategic partners.
– Action taken to reduce emissions
from manufacturing operations and
supply chain including the completion
of the UK Government’s mandatory
Energy Saving Opportunities Scheme
(‘ESOS’) which requires large UK
businesses to identify ways to
conserve energy and decrease CO2
emissions.
– Work on establishing a pathway to
reduce CO2 emissions and achieve our
net-zero targets, intensifying our
focus on Scope 3 emissions.
Highlights
23.3%
fall in CO2 emissions per car
manufactured in 2023 compared with
2022 (tCO2e)*
11.2%
decrease in total energy consumption
between 2022 and 2023 (MWh)
~£2bn
investment in advanced technologies
over the next 5 years, with investment
shifting to battery electric vehicles
UN Sustainable Development Goals
* Scope 1 CO2 emissions
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The automotive industry continues a journey of transformation driven
by the expectations of customers, employees,
investors and
policymakers focused on the need to tackle climate change. We
understand society’s expectations of the need for urgent action to
limit the average rise in global temperatures to 1.5°C by 2100 as
highlighted by the United Nations Framework Convention on
Climate Change.
Governments at both a national and local level are continuing to
introduce legislation to reduce emissions from transport to address
both climate change and local air quality. Around the world, many
governments are introducing legislation which will end the sale of
internal combustion engine vehicles (‘ICEs’) in the coming years. For
example, the UK Government will require all new vehicles sold in
the UK to be zero emission at the tailpipe by 2035.
Our 2023 materiality assessment indicates that climate change
remains a top priority for stakeholders. Climate change-related
risks are also deemed capable of causing a significant financial impact
over the medium to long-term, centring around the EV transition
and supply chain. These are risks that the Company continues to
manage as it works to seize the opportunities presented by vehicle
electrification.
Policy and standards
In 2023 we introduced our new Code of Conduct which reflects our
values in action, particularly in areas with key ethical or legal
considerations, marking what we stand for and what we expect
from each other. Outlining the key policies and behaviours that
everyone should follow, the Code is intended to guide the way that the
business and our people operate. We believe that high integrity,
delivers high performance and includes managing our environmental
commitments.
Our Environment Policy ensures that we comply with all relevant
legislation and commits to ongoing reductions
in our carbon
footprint as well as assessing through a risk-based approach the
threats and opportunities of climate change to the Company.
For more information see
www.astonmartinlagonda.com/sustainability/policies.
TR ANSFORMING PRODUCTS
2023 TARGETS AND GOALS
PROGRESS
Next generation Plug-In Hybrid
Electric Vehicle (‘PHEV’)
commencing delivery in 2024
First Battery Electric Vehicle
(‘BEV’) targeted for launch in
2025
Electrified line-up of sports
cars and SUVs by 2030
– First PHEV mid-engined supercar,
Valhalla, on course to enter
production in 2024.
– First BEV now targeted for launch
in 2026.
– 205 colleagues completed
2,377 hours of EV-related
instructor-led training.
– Aston Martin approved to deliver
Institute of the Motor Industry-
approved Electric Vehicle (‘EV’)
Level 2 and 3 training in-house.
– Project ELEVATION, a six-partner
collaborative research and
development project led by Aston
Martin awarded £9m supporting
development of innovative
modular BEV platform.
TR ANSFORMING PRODUCTION
2023 TARGETS AND GOALS
PROGRESS
Carbon Neutral
manufacturing facilities
Net-Zero manufacturing
facilities by 2030
100% use of renewable
electricity in our
manufacturing facilities
– Aston Martin Lagonda Ltd & Aston
Martin Works Ltd certified by the
Carbon Trust as carbon neutral for
2022 in accordance with PAS 2060.
All manufacturing operations at
Gaydon, St Athan and Newport
Pagnell locations carbon neutral.
– Certification based on offsetting
Scope 1 and Scope 2 emissions
through Gold Standard verified
projects.
– Solar Photovoltaic (‘PV’)
generation installation at Newport
Pagnell complete.
– All manufacturing facilities at
Aston Martin continue to be
powered by 100% renewable
electricity since 2019.
Reduce CO2 emissions from our
manufacturing operations by
2.5% year -on-year*
– 16.8% reduction in CO2 emissions
from our manufacturing
operations compared with 2022.
Reduce CO2 emissions intensity
and energy consumption per
car by 2.5% year-on-year*
Implement ISO 50001 Energy
Management Systems at key
manufacturing facilities by 2025
– 23.3% reduction in CO2 emissions
intensity and energy consumption
per car manufactured compared
with 2023.
– Work ongoing.
30% reduction in supply
chain CO2 emissions by 2030
(compared to 2020)
– Responsible Procurement Policy
signed by 94% of production and
indirect suppliers.
– 8 bio-LNG trucks introduced
by DHL Supply Chain to replace
diesel trucks supporting the
Company’s supply chain.
Net-zero across our supply
chain by 2039
– Work ongoing.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
MANUFACTURING FACILITIES
Our manufacturing facilities are powered by 100% renewable
electricity, using supplies backed by Renewable Energy Guarantees of
Origin. However, to reduce our dependency on the national electricity
distribution network and increase the supply of renewable electricity
to others, we continued to advance renewable electricity generation
projects across our sites. In 2023, we completed the installation of
Solar PV generation at our historic works at Newport Pagnell. We
continue to progress our plans for solar PV generation at St Athan and
Gaydon. An agreement to secure access to the national electricity
distribution network to enable the St Athan Solar PV project has
taken longer than expected and discussions with the local planning
authority are continuing.
We continue to invest in advanced energy management systems
as we aim to achieve ISO 50001 accreditation for all our key
manufacturing facilities.
Certified
carbon
neutral
During 2023, Aston Martin Lagonda Ltd and Aston Martin Works
Ltd were certified by the Carbon Trust as carbon neutral for 2022
in accordance with PAS 2060. This covered several sites including
main manufacturing sites at Gaydon and St Athan, heritage works
at Newport Pagnell, and multiple additional support sites utilised
for supply chain operations and prototype testing.
Carbon neutral status was achieved by offsetting Scope 1 and
Scope 2 emissions through Gold Standard verified projects that
are making a difference in tackling climate change. Working in
partnership with Climate Impact Partners, specialists in carbon
market solutions for climate action, Aston Martin’s offsetting
commitment is financing projects that reduce CO2 emissions
now, while supporting the transition to a low carbon global
economy. Specifically, the Company is proud to support a wind
power portfolio project in Turkey, which has seen more than 120
wind turbines installed, generating approximately 575,000 MWh
of clean electricity every year to a nation heavily reliant on natural
gas and oil, with infrastructure severely damaged by devastating
earthquakes in 2023.
Living Wall
A new Living Wall installed in
Gaydon and planted with 30
varieties of plants will act as a
natural CO2 sink in support of
our biodiversity efforts.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Total greenhouse gas emissions (tCO2e)
GHG Emissions Under Scope 1
GHG Emissions Under Scope 2 – Location based
GHG Emissions Under Scope 2 – Market based
GHG Emissions Under Scope 3
UK Total Gross Scope – Scope 1 & Scope 2 – Location based
Rest of World Total Gross Scope – Scope 1 & Scope 2 – Location based
Total Gross Scope – Scope 1 & Scope 2 – Location based
^ Values assured by ERM CVS
Greenhouse gas emissions per unit
Manufactured Volume (units)
Total Scope 1 Emissions per unit
Total Scope 2 Emissions per unit
^ Values assured by ERM CVS
Total energy consumption within organisation (MWh)
Electricity
Gas
Diesel
Gasoline
LPG
UK Total Consumption
Rest of World Total Consumption
Total
^ Values assured by ERM CVS
2020
9,200.67
7,545.86
687.28
6,620.37
16,642.17
104.36
16,746.53
2021
8,705.35
7,366.72
192.38
6,446.74
15,984.15
101.82
2022
8,831.22
6,011.58
251.63
11,187.29
2023
7,327.74^
6,289.76^
178.38^
8,478.32
14,779.22
13,416.81^
182.37
200.68^
16,085.97
14,842.80
13,617.49^
2020
3,343
2.75
2.26
2021
5,778
1.51
1.27
2022
6,404
1.45
0.92
2023^
6,587
1.11
0.95
2020
33,973.01
43,574.51
14.92
2,712.98
563.60
80,839.02
–
80,839.02
2021
32,144.15
44,796.00
4.34
1,779.25
43.52
78,573.14
194.11
78,767.26
2022
30,764.90
40,518.26
530.81
4,717.14
371.28
2023^
30,073.08
32,255.10
512.86
5,121.31
367.50
76,313.45
67,658.44
588.95
671.41
76,902.39
68,329.85
2022 data has been updated following additional work carried out by the Carbon Trust.
The fall in Scope 1 CO2 emissions between 2022 and 2023 was principally driven by the use of actual instead of estimated data on gas consumption.
During 2023 we have developed our full scope 3 inventory using a baseline of 2022. The results of this data are included on page 27 of the Sustainability Report. Further work will be carried
out to update our scope 3 emissions total for 2023; this and our scope 3 emissions for 2024 will both be reported in our 2024 sustainability report, published in 2025.
GREENHOUSE GAS EMISSIONS
Our greenhouse gas (‘GHG’) emissions reported are in accordance
with the Greenhouse Gas Protocol Corporate Standard for the year
to 31 December 2023. The intensity ratio is measured as tonnes of
CO2 equivalent per car manufactured.
METHODOLOGY
We calculate our GHG emissions in the following way:
Scope 1 – Includes emissions of gas, petrol on site, diesel used for
emergency heating and firing pumps, refrigerant refill, LPG and fuel
from Company pool cars. Figures are obtained through utility bills,
direct from suppliers and through the Company’s internal systems.
Scope 2 – Includes indirect emissions from the generation of purchased
energy. Emissions are reported using the location-based methodology
and market-based methodology. Location based methodology refers
to the average emissions
intensity of grids on which energy
consumption occurs (using mostly grid-average emission factor data).
A market-based methodology refers emissions from electricity that
companies have purposefully chosen (or their lack of choice).
Scope 3 – Includes emissions from business air travel, management
car miles, personal car mileage, employee commute figures, water
consumed, and supply chain logistics from our main logistics provider.
For further information on methodology, including emission factors
used to calculate the scope 1, 2 and 3 figures, please see our 2023
Sustainability Report.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
02
Creating a better environment
Introduction
Our natural world continues to endure
the impact of human activity in many
areas, such as plastic waste pollution,
water scarcity, and habitat destruction.
Businesses are expected, by society, to
help combat these challenges. As well as
tackling climate change, our work to
create a better environment centres on:
– Minimising impacts.
– Maximising sustainable materials.
– Boosting biodiversity.
In 2023, key activities included:
– Starting a dedicated project
to eliminate single-use plastic
packaging waste.
– Continuing research into the use
of more sustainable materials in
our products.
– Completing 3-year biodiversity
management plans for Gaydon and
St Athan.
Highlights
63.6%
of waste recycled in 2023, compared
with 58.8% in 2022 (tonnes)
100%
of wood used in vehicles Forest
Stewardship Council (‘FSC’) certified
2
biodiversity management plans for
Gaydon and St Athan
UN Sustainable Development Goals
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2023 TARGETS AND GOALS
PROGRESS
Zero single-use plastic
packaging waste from our
manufacturing facilities by
2025
– Dedicated project underway to
identify opportunities to eliminate
single-use plastic packaging
waste.
Zero waste to landfill from our
manufacturing operations
– 0.002% (0.009 tonnes) of waste
was discharged to landfill
15% reduction in water
consumption at our
manufacturing operations by
2025 (compared with 2019)
– Exploring further approaches to
asset-use optimisation and options
for rainwater harvesting.
– Water consumption 11.4% higher
in 2023 compared to 2019.
BOOSTING BIODIVERSITY
2023 TARGETS AND GOALS
PROGRESS
Improve Biodiversity at our
manufacturing facilities
– Biodiversity management plans
now in place for Gaydon and
St Athan.
MAXIMISING SUSTAINABLE MATERIALS
2023 TARGETS AND GOALS
PROGRESS
Continue to work with supply
chain partners to enable
the use of more sustainable
materials
– Specialists investigating further
options such as recycled carbon
fibre from Formula One cars and
bio-based leather.
– Using low carbon leather to create
ultra-luxury interiors.
BUSINESS CONTEXT
As well as tackling climate change, creating a better environment
means reducing our use of water, creating less waste, embracing the
circular economy, and enhancing biodiversity.
Our natural world continues to endure the impacts of human activity
in many areas, such as plastic waste pollution, water scarcity, and
habitat destruction. Businesses are, rightly, expected to help combat
these challenges and Aston Martin is no exception.
Policy and standards
Our Environment Policy ensures that we comply with all relevant
legislation and commit to ongoing reductions in energy, water and
other resource consumption in the manufacture and operation of our
vehicles and an ongoing reduction in our carbon footprint.
For more information see
www.astonmartinlagonda.com/sustainability/policies.
WASTE
The management of Aston Martin’s waste is governed by a stringent
regulatory framework and our facilities at Gaydon, Wellesbourne and
Wolverton Mill are certified to ISO 14001:2015, an international
standard for environmental management systems. We continue to
focus on reducing waste as part of a wider commitment to minimising
our impact on the environment and are working with suppliers to help
us achieve zero single-use plastic packaging waste by 2025.
In 2023, the volume of waste generated by the Company increased
by 46.8%. This increase was the result of several strategic waste and
other one-off projects such as asset replacement. In 2023, the
Company’s recycling rate was 63.6%, rising from 58.8% in 2022.
Waste (Tonnes)
Total Waste
Total Waste*
Reused*
Recycled*
Recovered – Waste to
Energy*
2020
2021
2022
2023
2,830.97
4,155.60^
394.39 858.62
2,366.21
4,075.81^
8.72
6.40
–**
–**
243.82 380.60
1,391.44
2,591.61^
141.85 471.62
972.88
1,478.51^
Incineration – Not recovered*
-
-
0.54***
Non-hazardous landfilll
Hazardous Waste (tonnes)^^
Recovered
Incineration-Not recovered*
Treatment
Recycled
5.64^
0.09
-
504.74
887.39
0.85
0.50
0.00
0.05
189.55
318.39
^ Total waste values per waste stream ERM CVS assured. Assurance does not cover
landfill.
^^ Breakdown of 2022 & 2023 hazardous waste data included to show proportion of
hazardous in reported total waste figures.
* Data excludes Newport Pagnell. See page 73 of the Sustainability Report.
** No data available due to transition of new waste contractor.
*** Re-stated following further data review.
Notes:
In 2023, we expanded the scope of our waste reporting and introduced new processes
to optimise the management of waste streams including temporary contractor waste
from facilities and maintenance projects. We also undertook several strategic waste
projects at key sites including at Wolverton Mill and St Athan to address legacy waste
on those sites. Several improvements projects were implemented, including at
Wolverton Mill, where we installed a new racking system which meant large volumes of
metal waste were sent for scrap. We undertook large scale building projects at Gaydon,
which created additional waste, this included an updated VIP reception area, an
overhaul of the Gaydon canteen and work to improve around 5,000m2 of office space in
Gaydon.
The weight of clinical (sanitary) waste has been estimated using an established waste
management method.
In 2023, a small amount of waste went to landfill. A review of waste management and
controls will be carried out in 2024.
WATER
We aim to reduce water consumption by 15% by 2025 (compared
with 2019). We continue to investigate a range of measures to
deliver savings, including rainwater harvesting systems. Reported
water consumption in 2023 remained broadly stable at 66,004.9 m3,
a slight decrease compared to 2022.
Water use (m3)
2020
2021
2022
2023^
34,477.65
64,681.40
66,279.99 66,004.90
^ Values assured by ERM CVS
Notes:
Water is supplied by water utility companies after abstraction via licence from the
Environment Agency. The used water is discharged after treatment by the relevant
water utility company via a foul sewer for which consents for various discharges to
be maintained.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
03
Investing in people and opportunity
Introduction
‘Investing in people and opportunity’
covers a range of areas that are critical
to the Company’s human and social
capital, and therefore important for its
success and sustainability. To achieve
our objectives, we focus on:
– Employee wellbeing.
– Advancing equity, diversity and
inclusion.
– Growing talent and raising aspirations.
In 2023, key activities included:
– Completing the procurement of a new
safety management system.
– Inclusion training was delivered as
part of 110 Aston Martin Values
training sessions.
– STEM engagement activity
programme more than doubled, with
over 50 visits to local schools,
colleges and universities
in 2023.
Highlights
32%
of early careers intake made up of
women, compared to 21% in 2022.
20%
increase in number of hours dedicated to
training, rising to 23,515 hours in 2023.
~£2m
sale value of cars donated by Aston
Martin to help raise money for charity.
UN Sustainable Development Goals
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‘Investing in people and opportunity’ covers a range of areas that are
critical to the Company’s human and social capital, and therefore
important for its success and sustainability. Ensuring health and safety
of employees is paramount. We want everyone who works at Aston
Martin to get home safely every day.
Maximising employee wellbeing, promoting mental health, ensuring a
diverse and inclusive workplace, and delivering industry-leading
training are all key to strengthening business performance, including
by enhancing the Company’s appeal to socially conscious consumers.
Supporting relevant and local charities and communities is important
for a socially responsible business like ours.
The results of our 2023 materiality assessment highlighted the
growing importance of ‘Employee engagement, talent retention,
welfare, and benefits’ among stakeholders. This shift in priorities
compared to 2022 indicates that stakeholders are placing greater
emphasis on how a company treats its employees and the impact it
has on their wellbeing. The materiality assessment also indicated
the potential for employee engagement, talent retention, welfare
and benefits to have potentially significant financial impacts over the
short- to medium-term.
Policy and standards
At Aston Martin we expect everyone to comply with the law, act with
integrity and do what is right. In 2023, we introduced our new Code
of Conduct which reflects our values in action, particularly in areas
with key ethical or legal considerations marking what we stand for
and what we expect from each other. Outlining the key policies and
behaviours that everyone should follow, the Code is intended to guide
the way that the business and our people operate. We believe that
high integrity, delivers high performance.
Our Code of Conduct incorporates many of our key policies including:
Diversity and Inclusion, Health and Safety, Anti-Bribery, Gifts and
Hospitality and Confidential Reporting.
For more information see
www.astonmartinlagonda.com/code of conduct.
EMPLOYEE WELLBEING
2023 TARGETS AND GOALS
PROGRESS
Target zero accidents
– Successful procurement of new
safety reporting system.
– In 2023, the Company’s Accident
Frequency Rate (‘AFR’) improved
by 25%, falling from 0.53
recordable incidents per 100
employees in 2022 to 0.40.
Continue to deliver industry-
leading initiatives to support
employee wellbeing
– Several initiatives implemented
including mental health training
and support for all employees.
ADVANCING DIVERSITY AND INCLUSION
2023 TARGETS AND GOALS
PROGRESS
Women in 25% of leadership
positions by 2025 and in 30% of
leadership positions by 2030
– 2023 early careers intake 37%
women compared with 21% in
2022.
Increase the culture of
inclusion by leveraging the
Aston Martin Values
– Various initiatives delivered
including International Women’s
Day.
– Inclusion immersion part of 110
Aston Martin Values training
sessions.
– 1,972 employees and 181
contractors trained in inclusive
behaviours, totalling 4,306 training
hours.
Improve workplace
engagement and culture, and
secure accreditation as a Great
Place to Work® by 2025
– New peer recognition programme.
– Employee engagement survey
completed and survey insight
driving action.
– All directors participating in new
Director-level development
programme, ‘Accelerate’.
– All first line managers engaged in
new training programme, ‘Ignite’.
GROWING TALENT AND R AISING ASPIR ATIONS
2023 TARGETS AND GOALS
PROGRESS
Sustain new apprenticeship
recruitment
Update skills and training to
support transition to electric
vehicle production
Continue commitment
to promoting Science,
Technology, Engineering and
Mathematics (STEM)
– 19 apprentices recruited
compared with 20 in 2022.
– 12 graduate trainees recruited
compared with 23 in 2022.
– Aston Martin approved to deliver
Institute of the Motor Industry-
approved Electric Vehicle (‘EV’)
safety training in-house.
– 2,377 hours of EV-related training.
– EV-related training delivered to
205 colleagues, compared with
149 in 2022.
– Visits to schools, colleges and
universities more than doubled
from 20 in 2022 to 54 in 2023.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
APPROACH
We are committed to a workplace and culture where our people feel
connected to Aston Martin’s purpose, that they have a voice, are
listened to and will receive equal treatment to develop and reach their
full potential irrespective of their age, disability, gender reassignment,
marriage and civil partnership, pregnancy and maternity, race, sex and
sexual orientation, identity or expression, or any other characteristic
protected by law. In 2023, we continued to focus on delivering our
Equity, Diversity and Inclusion (‘EDI’) strategy. Activities during 2023
included events and engagement coinciding with Black History Month,
International Women’s Day, National Inclusion Week, Pride and
Transgender Week.
Our vision.
Our values.
We aim to create a fulfilling and rewarding experience that
enables our people to flourish.
Our People Strategy has been developed to accelerate progress
in creating and sustaining a world-class employee experience.
We deliver our strategy
three strategic pillars:
Organisation, Culture, and Personal and Career Development.
Our EDI approach encompasses all these pillars.
through
At the core of our values is one single guiding tenet: No one builds
an Aston Martin on their own. Our values are: Unity, Openness,
Trust, Ownership and Courage. These values set the tone for how
we do things and the culture we want to establish. This is supported
by our New Code of Conduct, which sets out a decision-making tool
for situations where colleagues aren’t sure whether they would
be doing the right thing.
I AM Inclusion
Our Inclusion Network meets monthly to support employees and seeks to
break potential stigma across the organisation by talking about issues that
affect our employees. We have five dedicated strands within our network
who focus on different areas of equity, diversity, and inclusion. The strands are
I AM Gender, I AM Pride, I AM Ability, I AM Embraced, I AM Well. Our network
and our strands are voluntary groups that are made up of people who are
passionate about inclusion, challenging how things are done and supporting
people to have a voice.
I AM Embraced – Addresses racial
justice, multiculturalism and bias
I AM Pride – Connects LGBTQ+
employees, celebrates pride events
and advocates for equality and
acceptance
I AM Well – Focus on physical and
mental health, self-care, stress
management
I AM Ability – Support for disability,
chronic illness and neurodivergence
I AM Ability – Focus on gender
identity, equality, work-life balance
At the core of our values is one single
guiding tenet: No one builds an
Aston Martin on their own. Our
values are: Unity, Openness, Trust,
Ownership and Courage.”
e d
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b
I A M E m
I A
M G
e
I
A
M
P
r
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I AM Inclusion
I AM W e l
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I A
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Male
10
75
288
1,995
2,368
Male
24
62
2,253
29
2,368
Female
% Female
0
14
63
387
464
0.0%
15.7%
18.0%
16.3%
16.4%
Female
% Female
24
9
419
12
464
Male
6.7
50.0%
12.7%
15.7%
29.3%
16.4%
Female
4.9
Male
8.2%
Female
10.1%
Company
8.6%
Male
475
Female
132
Employees by gender (as at 31 December 2023)^
Senior management team
Senior leadership team
Other leadership
Other employees
Total
Employees by region (as at 31 December 2023)^
Asia Pacific
EMEA
UK
Americas
Total
Average employee tenure by gender (as at 31 December 2023) (Years)
Average employee turnover by gender during 2023 (%)
New hire employees in 2023
Note: Data by gender and region is shown for 2,832 permanent Company employees only ^ Values assured by ERM CVS
GENDER PAY GAP
The difference between men and women’s average pay (expressed
as a percentage of the men’s pay) was a mean pay gap of 10.3% and
a median pay gap of 5.2% in 2023, favouring men. These have
increased very slightly compared to 2022 (mean pay gap of 9.9%
and median pay gap of 4.9%, also favouring men). Our mean pay
gap is largely due to the make-up of the senior team (which includes
significantly more men) and working patterns, particularly in
Production roles, where shifts (that more men than women choose
to work) command shift premium and overtime payments.
We are working to improve gender equality which will contribute
to narrowing the gap, with the ultimate aim to close it completely.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
04Exporting success
Introduction
Aston Martin sells its world-class
products in more than 50 countries
worldwide and represents the very best
of British advanced engineering and
design. As we continue to serve as a flag
bearer for British industry and exporters,
we are committed to supporting the
wider success of UK exporters and the
UK automotive industry by working with
government.
In 2023, key activities included:
– High-profile product launch events
worldwide.
– Support for the UK Government’s
GREAT campaign featuring their
ambassador, Katherine Jenkins OBE.
– Parliamentary reception attended by
over 100 parliamentarians and UK
Government ministers.
Highlights
83%
of total wholesale cars exported
53
countries with Aston Martin dealerships
~1.3bn
estimated value of wholesale cars
exported in 2023
UN Sustainable Development Goals
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2023 TARGETS AND GOALS
PROGRESS
Continue to work with the
UK Government to showcase
the very best in advanced
British engineering and design
worldwide
Help achieve the UK
Government’s aim to increase
UK exports to £1 tn per year
by 2030
Maintain engagement with
government to support
sustainable growth across
the UK automotive sector,
including expansion of the UK-
based supply chain
– Supported the UK Government’s
GREAT campaign featuring
campaign ambassador, Welsh
singer, Katherine Jenkins OBE.
– Worked with the UK Consulate
in New York to support a VIP
celebration of the coronation of
HM King Charles III.
– Delivered high-profile product
launch events worldwide.
– 5,515 wholesale cars exported
in 2023.
– Parliamentary reception hosted in
the Speaker’s House attended by
over 100 parliamentarians and UK
Government ministers.
– Selected to showcase British
engineering and design at the UK
Global Investment Summit.
BUSINESS CONTEXT
Aston Martin is a global business and leading UK exporter with 145
dealerships overseas in 53 countries. Since 2020, the number of Aston
Martin cars wholesaled internationally has more than doubled. In
2023, we exported 83% of our production, with export volumes rising
3.6% to 5,515 wholesale cars, supporting UK exports to the value of
around £1.3bn. Nine out of the top ten Aston Martin dealerships are
located overseas, with our Tokyo dealership emerging as the number
one location for new car sales globally in 2023. As a flag bearer for
British industry and innovation, we are committed to supporting the
wider success of UK exporters and the UK automotive industry by
working with government. This plays a key role in advancing our
positive social and economic impact. The Company’s success as
an exporter currently helps underpin 2,672 direct jobs in the UK
and further jobs across the wider supply chain, with the Company
spending more than £200m in the UK procuring components and
services every year.
Global
Investment Summit
In November, Aston Martin was delighted to be part of the UK
Government’s Global Investment Summit. Speaking alongside
the Secretary of State for Business and Trade, Rt Hon Kemi
Badenoch MP and other automotive industry leaders, Aston
Martin Executive Chairman Lawrence Stroll discussed the
strength of the UK’s engineering talent, the unrivalled quality of
British luxury craftsmanship and why the future is bright for the
country’s advanced manufacturing sector.
Apprentices from our Gaydon and St Athan manufacturing
facilities proudly showcased DBX707 and DB12 at Hampton
Court Palace, sharing their Aston Martin journey with attendees
including the Secretary of State for Transport, Rt Hon Mark
Harper MP, Rt Hon David Davies MP, Secretary of State for Wales
and Automotive Minister Nusrat Ghani MP.
Policy and standards
We are committed to building a responsible supply chain with our
partners. Our approach and expectations of our suppliers is set out in
the Aston Martin Responsible Procurement Policy which was revised
in 2023 by defining our business values, the expected behaviours &
minimum requirements of all Aston Martin suppliers. The policy will
be rolled out in 2024.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
05Delivering the
highest standards
Introduction
A commitment to delivering the highest
standards forms the bedrock of our
business, focused on:
– Embracing industry best practice.
– Pioneering leadership.
In 2023, key activities included:
– Responding to the Science Based
Targets initiative (‘SBTi’) consultation
on a new draft pathway for
automakers to cut their scope 1, 2 and
3 CO2 emissions.
– Continuing to monitor new
developments and engage with
specialist consultants on topics such
as biodiversity.
Highlights
30
Sustainability Working Group meetings
97%
of production suppliers compliant with
ISO 14001:2015 environmental
management standard
New
Code of Conduct
UN Sustainable development goals
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2023 TARGETS AND GOALS
PROGRESS
Continue commitment to the
Science Based Targets initiative
Continue commitment to the
Task Force on Climate-related
Financial Disclosures
Understand and engage
in emerging areas of
sustainability best practice
– Work continues towards
developing short- and medium-
term targets to support pathway
to net zero.
– Continue to report according to
requirements set out by the Task
Force on Climate-related Financial
Disclosures.
– Continue to monitor and explore
best practice across areas
including growing requirements
around physical resilience to
Climate Change.
PIONEERING LEADERSHIP
2023 TARGETS AND GOALS
PROGRESS
Understand and engage
in emerging areas of best
practice such as the Science
Based Targets Network for
Nature and the Taskforce
on Nature-related Financial
Disclosures
– Continue to monitor new
developments, supported by
specialist consultants where
appropriate.
BUSINESS CONTEXT
Delivering the highest standards defines everything we do. We are
striving to meet international best-practice standards in areas such as
occupational health and safety, environmental management systems and
energy management systems. We operate in a heavily regulated sector
and work hard towards ensuring compliance with legal and regulatory
obligations in areas ranging from anti-slavery to vehicle safety.
In 2023, our materiality assessment highlighted that stakeholders
continue to regard product quality and product safety as the most
significant sustainability issue for the business. It also revealed a
significant increase in the importance stakeholders attach to corporate
governance and risk management, ranking it the third most important
out of 22 sustainability topics (this compared to 12th position last year).
Other key governance topics regarded as significant and growing
priorities included sustainability governance and management, supply
chain and sourcing, cyber security and fair and ethical conduct.
Policy and standards
Our policy is to conduct all our business in accordance with all relevant
laws and regulations. We have a zero tolerance approach to bribery
and corruption. We encourage staff to speak up using our confidential
reporting processes if they have any concerns that our Code of
Conduct, its underlying policies or our values are not being adhered to.
For more information see
www.astonmartinlagonda.com/code of conduct.
New Code of Conduct
In 2023, we introduced our new Code of Conduct which reflects our
values in action, particularly in areas with key ethical or legal
considerations, marking what we stand for and what we expect
from each other.
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
Task Force on Climate-Related
Financial Disclosures
OVERVIEW
Our Task Force on Climate-related Financial Disclosures (‘TCFD’)
statement has been produced to address the requirements of Listing
Rule 9.8.6R(8) and the TCFD Recommendations and Recommended
Disclosures set out in Implementing the Recommendations of the
Task Force on Climate-related Financial Disclosures published
in October 2021.
This statement details the risks and opportunities arising from climate
change, the potential impact on the business and the actions we’re
taking to respond. We also integrate climate related disclosures
throughout this report including in our ‘Tackling Climate Change’
report on pages 44-47. A detailed breakdown of our emissions can be
found on page 47.
We have structured our statement in line with the four key thematic
TCFD pillars:
– Governance
– Strategy
– Risk Management
– Metrics and Targets
GOVERNANCE OF CLIMATE RELATED RISKS
Aston Martin is committed to doing business in an ethical and
transparent manner, overseen by good corporate governance. In 2021
the Board established our Board Sustainability Committee to oversee
and monitor the delivery of our Racing. Green. strategy. The
Committee is chaired by Anne Stevens, Independent Non-executive
Director, in 2023 the Committee met quarterly. It provides strategic
guidance and scrutiny of management’s assessment and management
of climate-related risks, opportunities, targets and environmental
matters with reporting to the Board following each Committee. The
work of the Sustainability Committee influences Board strategic
decisions in areas such as the development of the future product
portfolio such as the planned move towards an electrified line-up of
sports cars and SUVs by 2030. In addition to the Non-executive
Directors, the Committee is also attended by members of the
Executive Committee including the Chief Executive Officer, Chief
Financial Officer, Chief People Officer, Chief
Industrial Officer,
Executive Consultant to the CEO and General Counsel.
A full report on the Sustainability Committee is included on page 106.
Some of the relevant topics included on the agenda during 2023
included:
– Environmental performance review including energy data
– Net zero plan update
– Working Group updates
– Carbon neutral facilities plan
– ESG risk
RISK
MANAGEMENT
COMMITTEE
Key sustainability issues are
listed on the Company’s risk
register and regularly
reviewed by the Risk
Management Committee
ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC
BOARD SUSTAINABILITY COMMITTEE
Sustainability Committee has delegated Board authority to approve
Environmental, Social and Governance (‘ESG’) strategy and act on
ESG-related matters
EXECUTIVE COMMITTEE
WORKING GROUPS
ENERGY AND WATER
MODERN SLAVERY
ENVIRONMENT
WASTE
ELECTRIC VEHICLES
SUSTAINABLE
SUPPLY CHAIN
SUSTAINABILITY
COMMUNICATIONS
DIVERSITY AND
INCLUSION
HEALTH AND SAFETY
(ISO 450 01)
DESIGN AND
SUSTAINABILITY
INNOVATION
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION is supported by ten dedicated
The Sustainability Committee
sustainability working groups focused on areas ranging from energy
management to development of a sustainable supply chain. The role
of these groups is to develop and execute credible action plans to
achieve clear targets in their respective areas. At each meeting, the
Sustainability Committee receives performance updates on key
indicators from each of the Working Group leads to monitor progress.
In addition, deep dive sessions are held as required to provide greater
visibility and discussion.
We also have a specialist sustainability team, reporting into the Chief
Financial Officer. This team supports the working groups and wider
business divisions in developing relevant sustainability strategies
including climate change whilst also driving external advocacy and
partnerships. In addition, included within key functions such as
procurement and facilities we have experts who are focused on the
sustainability agenda including climate related matters. Their activities
include developing relevant policies and procedures.
Significant climate-related risks are reviewed by the Company’s Risk
Management Committee and managed using our business-wide
enterprise risk management procedures. Climate-related risks are
incorporated into the corporate risk register where appropriate.
Significant climate-related risks are assigned to functional Risk
Champions to develop appropriate risk mitigation plans. Each function
maintains a risk register which is reviewed twice a year by the
Company’s Risk Management Committee. The Audit and Risk
Committee then provides oversight of the corporate climate-related
and other risks.
To date, management remuneration has not been linked to climate-
related performance objectives. The Remuneration Report provides
further detail as this is being considered for the financial year ending
31 December 2024.
CLIMATE-RELATED STR ATEGY
The automotive industry is having to rapidly respond to address
the regulatory, customer and stakeholder demands resulting from
the need to combat climate change. Some of the solutions being
implemented include shifting to the production of more fuel-efficient
vehicles, use of cleaner fuels and a move towards electrified
powertrains.
In line with the recommendations of the TCFD we categorise climate-
related risks and opportunities using the TCFD recommended
classifications as follows:
Physical risks: Relate to the physical impacts of climate change over
time (e.g., increased rainfall, sea level rise, prolonged drought,
increased frequency and severity of extreme weather events
Transition risks: Relate to the transition to a lower carbon economy
over time (eg policy, legal, technology and market changes to address
mitigation and adaptation requirements related to climate change)
Opportunities: Climate change presents opportunities in several
areas including resource efficiency, transition to renewable energy
sources, new products and services, new markets and customer
groups.
Climate change has been identified as a risk factor impacting many of
the key risks faced by our business. In the short to medium term (the
next five years) we face transition risks arising from changing policy
and regulations, changing consumer preferences and accelerated
technology change as the move to electrification and other non-
carbon solutions intensifies. Physical risks arise in the short term due
to disruption linked to extreme weather events but also continue to
be relevant in the longer term (beyond five years) with the potential
impact of more severe and frequent weather events on our supply
chain and distribution network. The potential impacts of climate
change are taken into account in developing our overall business
strategy and supported by our Racing. Green. strategy which
incorporates both short and long term environmental targets.
In 2023, we established the baseline inventory for our Scope 3
emissions (see page 27 of our Sustainability Report 2023) and will
develop a full transition plan in 2024 across all Scopes. Our targets
towards tackling climate change are included on page 45 and through
our wider environmental focus on pages 48-49.
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES CONTINUED
RISK MANAGEMENT
The Board is ultimately responsible for ensuring that the Company has
an effective Enterprise Risk Management Framework and System
(‘ERMFS’) implemented across the business to facilitate delivery of its
strategic objectives. For further information on this refer to the Risk
and Viability Report on pages 64-70 and the Audit and Risk Committee
Report on pages 98 to 105, where we outline how risks and
opportunities, including those specifically related to climate change,
are identified, assessed and managed through the deployment of
the Aston Martin ERMFS.
As part of our annual risk assessment activity we have considered how
the impact of climate change affects our existing corporate risks, as
well as identified any new and emerging climate-related risks and
opportunities. We also engage with external risk management
networks to develop a broader understanding of the global impact
of climate change.
In 2021 we engaged a third-party consultancy to build our scenario
analysis model which we have used to evaluate the potential impact
of both transitional and physical risks and opportunities on Aston
Martin, with risks being categorised in accordance with the TCFD
Recommendations in three warming pathways, as depicted in the
table below. We plan to re-review the scenario analysis in 2024.
Key inputs into the model included the physical geographical footprint
of the Company; supply chain and global dealer network; historical
and predicted sales volumes by market; Scope 1, 2 as well as available
Scope 3 GHG emissions data; and vehicle material content. We used
the Representative Concentration Pathways (RCPs) as our framework
for modelling different emissions pathways and the associated impact
on the climate. To explore the associated market and customer trends
underpinning our commercial resilience we also considered different
socioeconomic futures, known as the Shared Socioeconomic
Pathways (SSPs).
When considering climate-related risks and opportunities we assess
their potential impact over three time horizons, short term (< 2 years),
medium term (2–5 years), covering the five year business plan period,
and long term (beyond 5 years and up to 2050). All risks included
within the corporate risk register are assigned a Risk Owner responsible
for performing periodic likelihood and impact risk assessments and
developing formal documented risk management plans.
A summary of the key significant risks and opportunities which have
been assessed and incorporated within the scenario analysis has been
presented on the next page and a summary of some of the key
mitigating activities that have been taken, or are planned to be taken
to manage the significant climate-related risks are disclosed in the
table on page 62.
We further categorise climate-related risks and opportunities using
the TCFD recommended classifications for transition risks and
physical risks:
Transition Risks
– Policy and legal risk
– Technology Risk
– Market Risk
– Reputation Risk
Physical Risks
– Acute
– Chronic
Our key risks are grouped according to these. Whilst physical risks
have been identified in the short term related to supply chain and
distribution impacts, we have focused on transition risks as these
represent the material risks identified within the short and medium
term for our company, these are highlighted in the following table. In
summary, we are transforming our products and the way they are
manufactured to help tackle climate change. In 2024 Aston Martin is
on course to enter production of Valhalla, our first PHEV, followed by
our first BEV targeted for launch in 2026 and a clear plan to have a line-
up of electric sports cars and SUVs by 2030. Whilst embracing
electrification, we also believe our sustainability ambitions must be
broader than just producing tailpipe emissions-free vehicles. We want
to ensure our manufacturing footprint is sustainable enabling the
production of our vehicles with a reduced environmental impact.
SCENARIO PATHWAYS
Scenario
Steady path to sustainability
SSP/RCP*
Description
SSP 1/RCP 2.6
Globally coordinated efforts to reduce
emissions to
net-zero by 2050 and avert the worst effects of
climate change
Middle of the road
SSP 2/RCP 3.4
Imperfect efforts to reduce emissions lead to
moderate progress but exacerbate inequalities
Fossil-fuelled global growth
SSP 5/RCP 8.5
Global collaboration focused on protecting
the population from a changing climate (as
opposed to reducing human-induced climate
change)
Societal response Proactive
Proactive
Reactive
Global
dynamics
Open, collaborative, global
Independent, regional
Open, collaborative, global
Temperature rise
1.5°C
Likelihood
Low
2–2.4°C
High
4°C
Medium
* SSP – Shared Socioeconomic Pathway, RCP – Representative Concentration Pathway
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Our key material risks are included below:
KEY
S
Supply chain
M
Manufacturing
& distribution
C
Customer
S
Short term
M
Medium term
L
Long term
Physical
Risks arise across all warming scenarios 1.5°C, 2°C & 4°C.
As we see the frequency and severity of extreme weather events
increase as a result of climate change, the potential impact of these on
our distribution chain through increasing delays in deliveries of our
cars though to our dealership network, but also through disruption in
the supply chain, exacerbated by our reliance on single source vendors.
Risks
Risk type
Potential financial
impact
Time
horizon
TCFD risk
classification
Supply chain
disruption
Distribution
disruption
S
M
M
C
Increasing
insurance costs
M
– Increased
costs
– Decreased
revenue
– Increased
costs
– Decreased
revenue
– Increased
operating
costs
S
S
L
Physical
Acute &
Chronic
Physical
Acute &
Chronic
Physical
Acute
Transitional
Risks arise across warming scenarios 1.5°C and 2°C and also in a 4°C
scenario in the case of risk related to the EV transition.
As we transition to a lower carbon economy our technological
advancements and ability to remain competitive will need to keep
pace with the change, linking with the potential need to create a more
diverse product portfolio that is price competitive and manages to
convert a traditional ICE customer base to alternative propositions
based on a blended drivetrain approach between 2025 and 2030,
including Plug-in Hybrid Electric Vehicle (‘PHEV’) and Battery Electric
Vehicle (‘BEV’), with a clear plan to have a line-up of electric sports
cars and SUVs. As regulations move to mitigate and adapt to the
challenges of climate change the need to keep pace will become key,
as well as the ability to adapt to the potential emergence of carbon
markets and taxes. Brand and reputation damage as a result of not
keeping pace and association with potentially unethical supply chain
activities is a core risk in this changing landscape.
Opportunities
Opportunities arise across all warming scenarios 1.5°C, 2°C & 4°C.
Climate change also presents opportunities for the Company, in
particular linked to securing operational cost efficiencies through the
reduction and more efficient use of materials and resources including
energy, water and waste, which links back to decreased operating
costs. Alongside this, potential for increased revenues as a result
of building a reputation and strong ESG narrative across our whole
value chain.
Risk type
Potential financial
impact
Time
horizon
TCFD risk
classification
Risks
Inability to
maintain
pace with
innovation
Brand and
reputation
damage
EV transition –
access to skills,
increased market
segmentation,
market disruption)
Increasing
regulation
and policy
S
M
C
S
M
C
S
M
C
C
M
Customer base
and market
changes
C
– Increased
costs
– Decreased
revenue
– Increased
costs
– Decreased
revenue
– Increased
costs
– Decreased
revenue
– Increased
costs
– Decreased
revenue
– Increased
costs
– Decreased
revenue
S
S
Technology
Reputation
S
M
Market
S
S
Policy and
Legal
Market
Opportunity
type
Potential financial
impact
Time
horizon
Opportunities
Cost efficiencies
linked to reduced
resource use
S
M
Stronger ESG
narrative building
brand reputation
Maximise revenue
and profit from
last generation
core ICE vehicles
C
C
– Decreased
operating
costs
– Increased
revenue
– Increased
revenues
S
M
S
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STR ATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES CONTINUED
POLICY
Managing our exposure to changes in
legislation
– R&D investment to develop lower fleet emissions portfolio
– Maintenance of small volume derogation status exemptions where available
– Establishment of emissions-pooling agreements with third parties to manage exposure to carbon pricing
– Consideration of forward purchasing of carbon offsets to manage exposure to increased pricing and reduced capacity
TECHNOLOGY
Modifying our product offering
– R&D investment in EV technology
– Improving energy efficiency in our manufacturing plants
– Selection of a strategic partner to provide access to EV powertrain technology
– Investment in use of alternative sustainable materials within vehicles
MARKET
Adapt to meet customer needs and desires
– Launch of our Racing. Green. sustainability strategy
– Continued focus on waste reduction and elimination with zero single-use plastic waste target to be achieved by 2025
– Working with our supply chain to reduce global emissions and waste
– Development of electrified powertrain options within the product portfolio and increased use of sustainable materials
REPUTATION
Positioning Aston Martin as an ultra-luxury
sustainable brand
to meet customers’ evolving requirements
– Development of our Racing. Green. sustainability strategy to respond proactively to climate change
– Transparent disclosure of our GHG emissions through publication of our Sustainability Report
– Enhanced communication of actions already taken to address climate change
– Development of credible plans to achieve net zero carbon emissions within our plants by 2030
– Deployment of our bold new brand strategy
– Clear strategy to electrify our product portfolio and increase use of sustainable materials (including green aluminium)
METRICS AND TARGETS
Our sustainability strategy Racing. Green. incorporates a number
of climate-related metrics and targets which demonstrate the Company’s
commitment to tackling climate change in the short-, medium- and
longer-term as well as assessing and managing these risks.
unit (tCO2e per car manufactured) as a metric for a normalizing our
emissions data. This emission intensity metric showed a 23.3% drop
compared with 2022. Our progress in 2023 section on page 45
highlights the key accomplishments in 2023 related to minimising our
emissions impact.
We listen to our stakeholders and monitor developments from
regulatory and governance bodies to provide input into our materiality
assessment for climate-related disclosure purposes. The targets and
metrics disclosed have been identified by the Sustainability Committee
as being those that have a material impact on our business due to their
nature, size or complexity. Our Scope 1, 2 and limited Scope 3 metrics
as well as energy consumption data are included on page 49 of this
report and form part of this TCFD disclosure.
In summary total Scope 1 and 2 emissions during 2023 amounted to
13,617.49 tCO2e, a 25% drop from 2022, reflecting a all in total energy
use of 11.2%. To provide greater clarity over our actions and the results
of energy saving and efficiency measures we use GHG emissions per
We previously committed to the SBTi Net-Zero Standard and this year
have developed our full Scope 3 inventory and are in the process of
setting near and long term Company-wide emissions reduction
targets in line with the standard. In November 2023 we responded
to the SBTi consultation on the automaker sectors pathway and
await SBTi reopening validation for automakers.
We continue to enhance our data collection methods, working across
our value chain, and seek to obtain external assurance to validate a
number of our reportable metrics as outlined in our Sustainability
Report. We continually review our processes and will do so as we
develop our targets aligned with the SBTi Net-Zero standard, our
current relevant climate change targets include:
KEY TARGETS – TACKLING CLIMATE CHANGE
100%
Use of renewable
electricity to power
our manufacturing
operations
Our first PHEV enters
production
Net-Zero
manufacturing
facilities
30%
Reduction in supply
chain CO2 emissions
(from 2020 baseline)
Clear plan to have
a line up of
electric sports
cars and SUVs
2019
2022
2024
2025
2030
2039
2.5%
Reduce CO2 emissions
from our manufacturing
operations by 2.5%
year-on-year*
Zero single-use
plastic packaging
waste
15%
Reduction in water
consumption (from
2019 baseline)
Target for launch
of our first BEV
in 2026
Net-Zero across
our supply chain
* Scope 1 emissions as per Racing. Green. strategy.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
62
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION TCFD Disclosure Overview
Disclosure level
F Full
P Partial O Omitted
Pillar
Recommended Disclosures and disclosure level
Response
Governance
Disclose the
organisation’s
governance
around climate-
related risks and
opportunities.
Strategy
Disclose the actual
and potential
impacts of climate-
related risks and
opportunities on
the organisation’s
businesses,
strategy, and
financial planning
where such
information is
material.
Risk Management
Disclose how
the organisation
identifies, assesses,
and manages
climate-related
risks.
Metrics and
Targets Disclose
the metrics and
targets used to
assess and manage
relevant climate-
related risks and
opportunities
where such
information is
material.
a) Describe the board’s oversight
of climate-related risks and
opportunities
b) Describe management’s role in
assessing and managing climate-
related risks and opportunities.
F
F
The Board is responsible for climate ambition, strategy and risk and has
established the Sustainability Committee to oversee delivery of the
Group’s Racing. Green. strategy.
The Executive Committee members are responsible for managing
risks and opportunities within their functions by deploying the ERMFS.
They are supported by Functional Risk Champions who attend the Risk
Management Committee on a quarterly basis.
The Head of Government Affairs and Sustainability holds management
responsibility for the Sustainability Committee.
Disclosure locations
Pages 58, 60 and
64-66
Pages 58 and
64-66
a) Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long term.
F We face multiple climate-related risks, primarily arising from the
Pages 60-61
transition to a low-carbon economy and the need for us to address
technological, legal, market and reputational risks.
Physical risks pose a lesser threat to our direct operations, whilst we do
recognise their potential impact on our supply chain.
b) Describe the impact of climate-
F We are investing in electrification of our product portfolio to mitigate
Pages 60-61
related risks and opportunities on the
organisation’s businesses, strategy,
and financial planning.
the technological and regulatory risks associated with transition to a
low carbon economy together with investment in sustainable materials.
We are also investing in our manufacturing facilities to drive increased
energy efficiency and reduced waste.
c) Describe the resilience of the
P Our business plan takes into account planned investment and capital
Pages 58-62
organisation’s strategy, taking into
consideration different climate-
related scenarios, including a 2°C or
lower scenario.
expenditure to electrify our powertrains, and capital projects to reduce
carbon emissions from within our facilities and operations. Disclosures
regarding the resilience of our strategy in each of the warming
scenarios will be further enhanced in 2024.
a) Describe the organisation’s processes
for identifying and assessing climate-
related risks.
F Our ERMFS is used to identify, assess and manage all types of risks
across the business. This includes specific consideration of both
transitional and physical climate-related risks.
b) Describe the organisation’s processes
for managing climate-related risks.
F
In 2021 we identified and disclosed a new principal risk relating to
climate change and the need for the business to transition its product
portfolio to electrified powertrains over the medium term and reduce
our carbon footprint.
c) Describe how processes for
F
Climate-related risks are considered and managed within our ERMFS.
identifying, assessing, and managing
climate-related risks are integrated
into the organisation’s overall risk
management.
a) Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with
its strategy and risk management
process.
b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related
risks.
P We have identified and disclosed a wide range of climate-related
metrics in order to manage our exposure to climate risks and
opportunities. Additional interim targets will be developed for our
longer-term ambitions during 2024.
P We have disclosed our Scope 1 and Scope 2 emissions for our own
operations and made partial disclosure in relation to our Scope 3
emissions (covering business travel). We recognise that our current
Scope 3 disclosures are not sufficient to fully comply with the TCFD
Recommendations. During 2023 we have collated our baseline
inventory for Scope 3, however due to the timing of this data collation
exercise we have chosen not to fully report the data within this years
report.
Pages 60, 61, 64
and 66
Pages 60-61
and 64
Pages 58-62 and
64-66
Pages 47 and 62
Page 47,
Sustainability
Report page 27
c) Describe the targets used by the
organisation to manage climate-
related risks and opportunities and
performance against targets.
F We are in the process of establishing interim targets, to enable us to
track progress towards our stated longer term net-zero targets Current
targets are disclosed in the Sustainability section of this Annual Report
and Accounts with further detail in the Sustainability Report.
Pages 47 and 62,
Sustainability
Report page 27
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STR ATEGIC REPORT
RISK AND VIABILIT Y REPORT
Risk Management
RISK GOVERNANCE
We deploy our Enterprise Risk Management Framework and System
(‘ERMFS’) to manage risks and provide the Board, the Audit and Risk
Committee and the Executive Committee with a robust assessment of
our principal and emerging risks. The Board is ultimately responsible
for oversight of our risk management and internal control systems
and determines our risk appetite.
The Board has delegated
its responsibility for monitoring the
effectiveness of the Group’s risk management and internal control
systems to the Audit and Risk Committee. The Committee fulfils this
responsibility by directing and reviewing the work of executive
management and the key governance functions within the Group,
including the Internal Audit & Risk Management team (‘IA&RM’)
and the Risk Management Committee. The Chair of the Audit and
Risk Committee updates the Board on the Committee’s activities in
this regard as appropriate.
HOW WE MANAGE RISK
Our
IA&RM team maintains the ERMFS and coordinates risk
management activities across the Group, leveraging a network of
functional Risk Champions embedded within management (our first
line of defence). Each principal risk has a risk mitigation plan
incorporating management’s assessment of gross, net and target
risk together with an assessment of the effectiveness of mitigating
controls and activities currently implemented, and those which need
to be implemented in order to reduce the risk to the target level
commensurate with the Group’s risk appetite. These plans are updated
routinely throughout the year with any changes being incorporated
into the corporate risk register.
THE KEY ELEMENTS AND ACTIVITIES SUPPORTING
OUR ERMFS INCLUDE:
– annual review and approval of the ERMFS and Risk Management
Policy;
– bi-annual review of principal risks to assess the gross, net and
target risks for potential impact and likelihood;
– maintenance of corporate and functional risk registers;
– undertaking top-down/bottom-up risk assessments including
horizon scanning to identify emerging risks;
– creating formal risk mitigation plans for all principal risks; and
– provision of independent and objective assurance by the Internal
Audit team over the effectiveness of principal risk mitigation plans
to the Audit and Risk Committee.
CHANGES TO ASTON MARTIN’S RISK PROFILE
The most significant changes to the Group’s principal and emerging
risks in the year were:
– Talent acquisition and retention – risk reducing due to the positive
impact of investment in the talent acquisition team and improved
employee engagement driving lower levels of employee churn.
– Programme Delivery – risk increasing reflecting the volume of
programme activity planned for 2024 and the importance of
launching programmes on time and within budget.
– Macroeconomic uncertainty and political instability – risk
increasing reflecting growing societal and political polarisation,
ongoing conflicts, cost of living crisis and remaining inflationary
challenges.
– Inadequate protection against cybersecurity threats – risk
increasing due to increasing technological content in connected
cars, presenting greater opportunities for attack which need to be
appropriately mitigated against.
Our Internal Audit & Risk Management
team maintains the ERMFS and
coordinates risk management activities
across the Group, leveraging a network
of functional Risk Champions embedded
within management.”
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION RISK APPETITE
The Board determines the amount of risk the Group is willing to accept
in pursuit of the Group’s strategic objectives. This varies dependent on
the type of risk and may change over time. In exploring risks and
opportunities, we prioritise the interests and safety of our customers
and employees and seek to protect the long-term value and reputation
of the brand, while maximising commercial benefits to support
responsible and sustained growth.
Risk category
Compliance
Financial
Climate change
Strategic
Operational
Risk appetite
Zero tolerance
Low tolerance
Low tolerance
Moderate tolerance
Moderate tolerance
OUR PRINCIPAL RISKS
Our risk management system is designed to identify a broad range of
risks and uncertainties which could adversely impact the profitability
or prospects of the Group. Our principal and emerging risks are those
which could have the most significant effect on the achievement of our
strategic objectives, our financial performance and our long-term
sustainability.
The following pages set out the Group’s principal and emerging risks,
how they align to our strategy, example risk factors and the primary
mitigating actions implemented for each risk during the year ended
31 December 2023. Principal risks evolve over time as some risks
assume greater importance and others may become less significant.
We categorise principal risks within one of the following categories:
Strategic, Operational, Compliance, Climate Change and Financial,
and link each risk to one or more of our strategic pillars that underpin
our business plan.
RISK MANAGEMENT GOVERNANCE
INTERNAL AUDIT & RISK MANAGEMENT
– Co-ordinates deployment of the ERMFS
– Maintains the corporate risk register
– Presents Board, Audit and Risk Committee and Executive
Committee risk status updates
– Provides resources and training to support risk management
activities and support Functional Risk Champions
– Evaluates the design and operating effectiveness of principal
risk mitigation plans on a rotational basis
FUNCTIONAL RISK CHAMPIONS AND RISK OWNERS
– Responsible for risk management at a functional level
– Maintain functional (bottom-up) risk registers and manage and
develop risk mitigation plans for principal risks
– Champion adherence to ERMFS principles and guidance within
their functions
– Consider emerging risks and escalate to the Risk Management
Committee as appropriate
RISK MANAGEMENT
COMMITTEE
BOARD AND AUDIT
AND RISK COMMITTEE
– Identifies and assesses new
and emerging risks
– Performs deep-dive reviews
of risk mitigation plans
– The Board has delegated
oversight of the ERMFS
to the Audit and Risk
Committee
– Meets quarterly and reports
– The Board has ultimate
to the Audit and Risk
Committee and Executive
Committee
– Representation from
all functions across the
business
– Ensures risks are managed in
accordance with the Board’s
defined risk appetite
– Champions effective risk
management and control
across the business
responsibility for
establishing a framework
of prudent and effective
controls which enable risk to
be assessed and managed
– Determine risk appetite
– Review effectiveness of
risk mitigation plans and
assurance activity
– Monitor status of risk
management activity and
reporting
– Review outputs of principal
risk mitigation plan reviews
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STR ATEGIC REPORT
PRINCIPAL RISK SUMMARY
STR ATEGIC RISKS
Macroeconomic and
political instability
Brand / reputational
damage
Technological
advancement
Climate
change
CLIMATE CHANGE RISKS
Exposure to multiple political and
economic factors could impact
customer demand or affect the
markets in which we operate.
Our brand and reputation are critical
in securing demand for our vehicles
and in developing additional revenue
streams.
It is essential to maintain pace with
technological development to meet
evolving customer expectations,
remain competitive and stay ahead of
regulatory requirements.
The impact of climate change could
significantly impact demand for our
vehicles, our ability to sell within
certain markets or have financial
consequences through increased
carbon pricing, taxes and other
regulatory restrictions on ICE
vehicles.
Risk movement
Risk appetite
MODERATE
Risk movement
Risk appetite
LOW
Risk movement
Risk appetite
LOW
Risk movement
Risk appetite
LOW
Link to strategy
1
2
3
Link to strategy
1
2
3
Link to strategy
2
3
4
Link to strategy
1
2
3
4
– Global economic slowdown
– Product recall or quality issues
reducing demand for vehicles
– Unfavourable movement in
exchange rates increasing
input costs or affecting price
competitiveness
– Adverse economic global
could impact customer confidence
and result in reduced demand
– Late delivery of new models /
variants could impact customer
confidence and loyalty and delay
sales
conditions could adversely impact
our dealer network or supply
chain
– Dealer network may not be
effective in raising, maintaining and
promoting brand awareness
– Commodity price increases and
other inflationary pressure
– Increasing interest rates
impacting the affordability of
finance for customers
– Inadequate dealer training in new
products and technologies could
impair the customer experience
– A slower transition to alternative
powertrain vehicles could affect
the Group’s ability to target new
customer groups
– The Group is reliant on strategic
partnerships with third parties to
support development of new and
emerging technologies
– Competitors may have better
access to funding to develop new
technology faster and be first to
market
– Changing and more stringent
regulations may make current
technology obsolete and increase
the risk of future non-compliance
– Failure to incorporate new
technology into vehicles may affect
our ability to remain competitive
– Regular operational and financial
– Standardised embedded quality
reviews of the business
– £216m proceeds from August
2023 Share Offering
– Business plan developed
taking account of current
macroeconomic environment
– Monitoring global market trends
to target areas for future growth
– Routine monitoring of dealer
stock levels to support build-to-
order strategy
– Dealer network development
strategy to target growth in
emerging markets
procedures (e.g., 300 Call
Procedure, Customer Perception
Audit, Parts Approval Process) to
maintain focus on vehicle quality
– Expanded dealer network and
improved training to ensure delivery
of a luxury customer experience
– Strategic arrangements with key
partners, including the strategic
supply agreement with Lucid
and the Strategic Co-operation
Agreement with Mercedes-Benz
AG, to provide powertrain and
electrical architecture
– Development of commodity
– Regional marketing plans
strategy plans
developed quarterly to drive sales
pipeline
– Investment in Electrical Engineering
team
– Fixed marketing investment
– Development of new interiors
programme to drive increased
brand awareness and salience,
including sponsorship of the Aston
Martin Aramco Formula One® Team
– Quality-led production ramp up for
new vehicle programmes
for new sports cars commencing
with DB12 in 2023 and Vantage in
early 2024
– Establishment of Connected Car
team to develop stronger customer
proposition for in-car technology
– Opening of the Q New York Flagship
– Creation of an Innovation and
brand store in June 2023
Advanced Technology group with
dedicated budget and process to
advance innovative technology
in advance of programme
requirements
LEGEND
1 Brand 2 Product innovation 3 Sustainability 4 Team
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
66
Transition risks
– Policy – new tailpipe emissions
reduction targets or loss of small
volume derogation status could
lead to increased carbon taxes and
import tariffs
– Market – customer preferences
may move towards non-ICE
powertrain options faster than
anticipated
– Technology – disruption from
new technologies or new market
entrants together with increased
demand for sustainable products
– Reputation – inability to create a
credible sustainability proposition
as we manage the transition from
ICE to EV powertrains, or brand
damage caused by activist activity
Physical risks
– Increased frequency / severity of
extreme weather events causing
supply chain disruption
– Potential increased insurance costs
as more claims are made due to
climate-related physical damage /
business disruption
– Progress on activities supporting
our Racing. Green. sustainability
strategy and ongoing oversight
by the Board Sustainability
Committee
– Strategic co-operation
agreements in place with various
suppliers providing access to new
powertrain technology
– Investment in R&D to develop
PHEV and BEV powertrain
capabilities to support delivery of
electrified powertrains
– Investment in R&D to reduce
average fleet GHG emissions
– Forward purchase / pooling of
carbon credits to reduce exposure
to carbon-related financial
penalties and taxes and carbon
offsetting
– Sourcing of 100% renewable
electricity for our manufacturing
operations
– Committing to the SBTi to establish
and track GHG reduction targets
to establish a credible roadmap
to net-zero in our manufacturing
facilities by 2030 and our supply
chain by 2039
– Setting target to increase
biodiversity at our operations.
– Setting annual 2.5% reduction in
Scope 1 emissions targets
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
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FINANCIAL RISKS
Liquidity
Impairment of capitalised
development costs
Compliance with laws
and regulations
Talent acquisition
and retention
COMPLIANCE RISKS
OPER ATIONAL RISKS
The Group may not be able to
generate sufficient cash to fund its
capital expenditure, service its debt
or sustain its operations.
The value of capitalised development
costs continues to grow as we invest in
and expand our product portfolio.
Non-compliance with local laws
or regulations could damage our
corporate reputation and subject
the Group to significant financial
penalties and / or trading sanctions /
restrictions.
We may fail to retain, engage and
develop a productive workforce or
develop key talent.
Risk movement
Risk appetite
LOW
Risk movement
Risk appetite
LOW
Risk movement
Risk appetite
ZERO
Risk movement
Risk appetite
MODERATE
Link to strategy
Link to strategy
1
2
2
Link to strategy
2
3
4
Link to strategy
1
3
4
– Significant leverage levels
– Vehicle sales volumes fall below
– Non-compliance with product
– Failure to build the right
may inhibit our ability to raise
additional capital
– Significant debt servicing
requirements reduce cash
available to support other
operational needs
– Liquidity restrictions could impact
planned R&D investment
– Delays in payment to suppliers
to manage short-term cash
requirements could result in
supply chain disruption
lifecycle plans and targets
as a result of the impact of
macroeconomic factors such as
the current cost of living crisis
and continuing global economic
uncertainty and inflationary
pressure or rising interest costs
– Vehicle pricing and contribution
reduce to levels which no longer
support the carrying value of the
attributable capitalised costs
– Uncertainty of ‘Carry Over – Carry
Across’ utilisation on future vehicle
models and derivatives
– Rapid pace of technological change
results in technology being made
obsolete earlier than anticipated
regulations (including emissions,
noise, connected car security etc.)
could inhibit the Group’s ability to
sell in certain markets
– Non-compliance with corporate
conduct laws and regulations
(including data protection
laws, supply chain laws, human
rights laws etc.) could result in
financial penalties and / or brand /
reputational damage
– Failure to keep pace with increasing
stakeholder expectations to go
beyond evolving ESG reporting
requirements could result in brand
/ reputational damage which could
ultimately affect our sales pipeline
and planned growth
capabilities and behaviours in our
leadership team
– Failure to engage or equip our
teams to deliver our strategy or
address key capability gaps
– Inability to fill key open positions
may inhibit our ability to electrify
our product portfolio in line with
published timeframes
– Annual review and approval
of Capitalisation policy and
procedures
– Impairment reviews performed
where triggering events have been
identified
– Regular vehicle line reviews
undertaken to monitor sales volume
and contribution performance
for all car lines with any concerns
communicated to Finance
for consideration of potential
impairment
investment targets of 40% minimum
contribution levels
– £216m of proceeds received from
Equity capital raise in August 2023
– £654m equity capital raise and
$200m debt tender in prior year
– Renewed wholesale financing
facilities implemented to facilitate
faster cash collection
– New products targeting minimum
contribution levels of 40% to drive
profit and cash generation
– Regular management review of
cash and working capital balances
– Regular expenditure reviews held
with the CEO and CFO and regular
liquidity-focused Board reviews
– Monthly Treasury Committee
– Ongoing transformation activity
to deliver targeted cost savings
and efficiencies
– Cash pooling and repatriation of
cash to ensure funds are available
for Group priorities
LEGEND
1 Brand 2 Product innovation 3 Sustainability 4 Team
– Procedures are in place to
– Remuneration Committee
obtain Vehicle Type Approval
and homologation for all new
production vehicles from the
appropriate vehicle certification
agencies to ensure that vehicles
meet the required performance
standards for the markets they are
sold in
– Processes in place to track and
monitor compliance with emissions
reduction targets and other
regulatory standards
standards of behaviour in relation
to key compliance areas (including
anti-bribery and corruption,
data protection, responsible
procurement, health and safety,
anti-slavery and human trafficking,
environmental). These policies have
been significantly updated and
reissued in 2023 and a new Code of
Conduct developed.
– Refreshed campaign to promote
Speak-Up, our confidential
reporting system, overseen by
the Audit and Risk Committee,
which enables the reporting of
any suspected breach of policy or
misconduct
oversight of senior leadership
remuneration to ensure it is aligned
to the strategy and appropriate for
staff retention
– Regular review of talent and
resource risks leveraging
succession plans and employee
engagement survey results
– Benchmarking of bonus and
remuneration packages to drive
employee performance and
behaviours and remain attractive
to external candidates in a buoyant
UK job market
– Embedding Company values;
Unity, Openness, Trust, Ownership
and Courage, based around the
concept that “no-one builds an
Aston Martin on their own”
– Talent review exercise undertaken
for senior management and above
population
– Company-wide performance
bonus scheme to drive
performance, embedding key
finance and quality measures and
targets
– Successful recruitment of key
senior leadership positions in 2023
– New product set entry level
– Corporate policies define our
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STR ATEGIC REPORT
PRINCIPAL RISK SUMMARY CONTINUED
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OPER ATIONAL RISKS
Programme delivery
Achieving financial and
cost-reduction targets
Cyber security
and IT resilience
Supply chain
disruption
Failure to implement major
programmes on time, within
budget and to the right technical
specification and quality could
jeopardise delivery of our strategy
and have significant adverse financial
and reputational consequences.
The Group’s size and low-volume
demand-led strategy may inhibit
its ability to deliver targeted cost
reductions or work within budget
constraints while delivering the
planned vehicle programme.
Breach of cyber security could result
in a system outage, impacting core
operations and / or result in a major
data loss leading to reputational
damage and financial loss.
Supply chain disruption could result in
production stoppages, delays, quality
issues and increased costs.
Risk movement Risk appetite
Risk movement
MODERATE
Risk appetite
LOW
Risk movement
Risk appetite
LOW
Risk movement
Risk appetite
LOW
Link to strategy
2
3
4
Link to strategy
2
3
4
Link to strategy
Link to strategy
1
3
– Insufficient funds to support
current programme investment
requirements
– Inability to manage third-party
delivery in line with programme
timelines and milestones
– Failure to adhere to the “Mission”
programme delivery governance
framework could result in delayed
launch of vehicles or unforeseen
quality issues
– Delays in new Enterprise Resource
Planning (“ERP”) system go-live
dates could expose the Group
to increased risk of IT failure and
resultant disruption to production
and engineering activities
– High levels of complexity across
car lines can drive increased
engineering requirements with
associated increased resource and
cash requirements
– Inflationary pressure on key
input costs (e.g., raw materials,
commodities, energy, labour)
makes achievement of targeted
reductions more challenging
– Instability in the supply base due
to economic volatility may reduce
opportunities to identify cost
savings
– Ultra-luxury positioning demands
the necessary marketing spend
to generate brand and product
awareness to build desirability and
create future demand
– Increased logistics costs associated
with disruption due to conflict (e.g.
Red Sea shipping route disruption)
can lead to unforseen inflationary
pressures
– Cyber attack resulting in disruption
to operational services, possible
data loss and related business
outages
– Legacy systems reaching end of life
may no longer be supported and
become more susceptible to breach
– Insufficient investment in
systems and resource leads to
limited protection with critical
vulnerabilities not being addressed
in a timely manner
– Suppliers may be unable to meet
delivery schedules due to being in
financial distress
– Unforeseen supplier failures, or
disruption, can lead to production
stoppages caused by delays in
sourcing parts
– Raw material shortages (including
semi-conductors) due to increased
demand and global supply chain
issues could impact Aston Martin’s
ability to meet planned production
volumes
– Disruption caused by ongoing
global conflicts (e.g. Russia /
Ukraine, Gaza / Israel, Red Sea
activity) can result in longer lead
times and increased freight costs
– Deployment of an established
– Cross functional team
– Project continuing to deliver a
– Cross functional weekly risk
programme delivery
methodology and regular Product
Committee status reporting and
oversight
– Restructure of business to Project
Team focus with a Team Leader
responsible for financials/quality/
timing
– Enhanced focus on R&D financial
forecasting for all capital
expenditure
– Addition of innovation team
to create new technologies to
an appropriate Technology/
Manufacturing Readiness Level
– New model pilot production line
established in Gaydon to facilitate
new product development
– Establishment of New Model
Quality and Quality Business
Planning teams to improve quality
management activity
transformation activity with agreed
cost target process and regular
CEO-led cost reviews
– Development of commodity
strategy with strategic suppliers to
drive resilience and cost efficiency
– Synergies from leveraging common
commodity strategies across
platforms
– Increased focus on supply chain
risk analysis and proactive risk
management
– Targeted marketing activity with
support from key external agencies
to ensure the necessary return
on investment is obtained from
marketing spend
– Budget and business planning
activity reassessed in consideration
of current inflationary headwinds
new ERP system through 2023 to
transition away from end-of-life
legacy systems and drive efficiency
within the IT infrastructure
– Enhanced IT general controls for
access management, network
access controls, remote access (e.g.,
multi-factor authentication) and
password management
– 24/7 vulnerability monitoring using
security tools including Darktrace,
SentinelOne and cyber incident
response procedures
– Significant investment in in-house
Information Security team to
mature cyber security control
framework
– Benchmarking of cyber security
controls against the National
Institute of Standards & Technology
(“NIST”) governance framework
reviews with key departments to
identify current supply issues and
actions to resolve
– Supplier scorecards and
performance metrics developed to
drive improvement and encourage
best practice
– Internal Customs team established
to manage and mitigate
procedural/policy changes
– Periodic due diligence performed
on key suppliers including Dun &
Bradstreet financial health checks
– Supplier strategy implemented to
develop strategic and sustainable
partnerships to improve supply
chain resilience
– Supply chain and logistics
transformation project
commenced
LEGEND
1 Brand 2 Product innovation 3 Sustainability 4 Team
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
RISK MANAGEMENT ACTIVITIES IN 2023 AND PLANS
FOR 2024
Identification of risks
We identify and manage risk using a top-down bottom-up approach.
– Top-down – Identification, assessment, prioritisation, mitigation,
monitoring and reporting of risk at a corporate level. Overseen by
the Audit and Risk Committee and the Risk Management
Committee.
– Bottom-up – Identification, assessment, prioritisation, mitigation
and monitoring of risk across all operational and functional areas.
The corporate and functional risk registers have been maintained and
updated to reflect changes
in the business and the external
environment. These continue to be periodically reviewed by the Risk
Management Committee. The updated corporate risk register is
reviewed and formally re-evaluated at the half and full year to identify
any changes required to the disclosed principal risks. These changes
and the summary of principal and emerging risks are then presented
to the Audit and Risk Committee for review and approval.
Risk management system
The Aston Martin ERMFS continues to be deployed across the Group.
This was subject to an annual review and approved by the Executive
Committee and the Audit and Risk Committee in July 2023. The Risk
Management Committee met three times during 2023.
Management actions and deep dives
The IA&RM team incorporates independent validation reviews of the
principal risk mitigation plans within its annual Audit Plan, the purpose
being to provide independent assurance to management, the Audit
and Risk Committee and the Board on the effectiveness and sufficiency
of management actions to mitigate risks down to an acceptable level.
The team works with functional Risk Champions to maintain formal
risk mitigation plans to clearly articulate the nature and extent of
the principal risks and their associated mitigating actions. These are
used to provide the Board and Audit and Risk Committee with
management self-assessments on the effectiveness of risk mitigation
plans and activities.
During 2023 the following key risk management activities have
been undertaken:
– Three Risk Management Committee meetings with focus on the
following areas:
– Electric vehicle transition plan and associated risks
– Legal and certification compliance risk management
– Supply chain resilience
– Emerging risks and horizon scanning
– Fraud risk assessment
– Independent cyber security risk and control maturity assessment
and benchmarking against the NIST global framework
– Engagement with a third-party and key supply chain stakeholders
to develop a tool to provide enhanced visibility of the DB12 supply
chain and associated interdependencies
– Executive Committee review and agreement of the Group’s
principal and emerging risks
– Annual review of ERMFS and Risk Management Policy
The following principal risk mitigation plan reviews have been
included within the 2024 Internal Audit plan:
– Talent acquisition and retention
– Program delivery
– Supply chain disruption
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PRINCIPAL RISK SUMMARY CONTINUED
VIABILITY STATEMENT
The Directors have carried out a robust review of the principal risks of
the Group, which are set out on pages 65-68, identifying the nature and
potential impact of those risks on the viability of the Group, together
with the likelihood of them materialising.
This analysis has then been used to carry out an assessment of the ability
of the Group to continue in operation and meet its obligations. The
assessment covers the five-year period from January 2024 to December
2028. This was considered appropriate by the Directors because it aligns
with the business plan and the Group’s normal planning horizon and is
indicative of the investment and development cycle of new products in
the luxury car market. The assessment includes the costs anticipated in
relation to our strategy and our views of the impact of climate change
(see note 1 of the Financial Statements). Inevitably, the degree of
certainty decreases over this period.
The assessment process consisted of stress testing the base case in the
business plan for scenarios designed to reflect the potential impact of
the principal risks materialising in a compound scenario, including the
following:
– A severe but plausible reduction in sales volumes as a result of factors
such as a material reduction in the size of the luxury market due to
external factors (such as delayed product launches, a decrease in
demand from High Net Worth Individuals, increased direct and
indirect taxation and changes in consumer habits away from luxury
vehicles)
– Incremental fixed and variable costs
– Incremental working capital requirements such as increased
inventory during product launches reduced deposit inflows or
increased deposit outflows
– The impact of strengthening sterling:dollar exchange rates
In the event of one or more risks occurring which has a particularly
severe effect on the Group, the assessment assumed that all appropriate
actions would be taken in a timely manner by management to mitigate
as far as possible the impact of the risks. Potential mitigating actions
include constraining capital spending, seeking additional funding and/or
a number of other adjustments to operations in the normal course of
business.
In all scenarios it is assumed that any borrowings that mature in the
review period will be renewed or replaced with facilities of similar size.
The projections show that, even in stressed conditions, the Group
should be able to refinance these facilities on commercially acceptable
terms, assuming that debt markets continue to operate as currently.
In addition, we have assumed that no additional legislative action will be
taken that impacts the sale of our products within the Viability
Statement timeframe.
The Directors have assessed the viability of the Group over the five-year
period to 31 December 2028 and, based on this assessment and the
assumptions stated above, the Directors have a reasonable expectation
that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period to 31 December 2028.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION NON-FINANCIAL INFORMATION STATEMENT
Non-financial and sustainability
information statement
This section of the Strategic Report constitutes the Non-Financial and
Sustainability Information Statement of the Company, produced to
comply with sections 414CA and 414CB of the Companies Act 2006.
The information listed in the table below is incorporated by cross
references to other areas of the Annual Report, Sustainability Report
information can be
and the Company website where further
found. The majority of policies can be found on our website:
www.astonmartinlagonda.com.
The policies mentioned below form part of the Company’s Group
policies which are brought together in our Code of Conduct and act
as the strategic link between our Purpose and Values and how we
manage our day-to-day business.
The Strategic Report was approved by the Board and signed on its
behalf by:
AMEDEO FELISA
CHIEF EXECUTIVE OFFICER
27 February 2024
Reporting requirements
Policies and standards which govern our approach
Where material information can be found
Climate-related financial disclosures
Environmental Matters
– Environmental Policy
– Code of Conduct
– Diversity and Inclusion Policy
– Group Health and Safety Policy
– Confidential Reporting Policy
– Gender Pay Gap Report
– Code of Conduct
– Anti-Bribery and Corruption Policy
– Group Conflicts of Interest Policy
– Hospitality and Gifts Policy
– Anti-Money Laundering Policy
– Code of Conduct
– Anti-Slavery and Human Trafficking Policy
– Modern Slavery Statement
– Code of Conduct
– Responsible Procurement Policy
– Data Protection Policy
– Code of Conduct
– Environmental Policy
– Code of Conduct
Employees
Anti-Bribery and Corruption
Human Rights
Stakeholder
Social
Non-Financial Key
Performance Indicators
Principal Risks
Business Model
– TCFD report pages 58-63
– Risk Management pages 64-69
– Creating a better environment pages 48-49
– Stakeholder engagement, pages 24-27
– TCFD report pages 58-63
– Sustainability Report www.astonmartinlagonda.com
– Investing in people and opportunity pages 50-53
– Audit and Risk Committee Report, pages 98-105
– Directors’ Remuneration Report, pages 108-122
– Gender Pay Gap Report, page 53 and
www.astonmartinlagonda.com
– Delivering the highest standards pages 56-57
– Audit and Risk Committee Report, pages 98-105
– www.astonmartinlagonda.com
– www.astonmartinlagonda.com
– Exporting success pages 54-55
– Stakeholder engagement, pages 24-27
– s.172 Statement, pages 28-29
– www.astonmartinlagonda.com
– Creating a better environment pages 48-49
– Exporting success pages 54-55
– Stakeholder engagement, pages 24-27
– Key performance indicators, pages 34-35
– Strategic Report, pages 1-70
– Risk management pages 64-69
– Business model, pages 30-31
– Business model, pages 30-31
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02
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION GOVERNANCE
Leadership and governance
74 Governance at a glance
75 Executive Chairman’s introduction to governance
76 Board of Directors
80 Executive Committee
82
86 Board activities
89 Board and workforce engagement
90
92 Board and Committee evaluation
94 Nomination Committee Report
98 Audit and Risk Committee Report
106 Sustainability Committee Report
108 Directors’ Remuneration Report
123 Directors’ Report
129 Statement of Directors’ Responsibilities
Investor engagement
3
2
0
2
Annual General
Meeting
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GOVERNANCE AT A GLANCE
Governance
at a glance
Governance is essential to building a successful business that is
sustainable for the longer term. Aston Martin is committed to ensuring
and maintaining high standards of corporate governance to enhance
performance and strengthen stakeholder confidence.
BOARD GENDER STATISTICS
27%
of our total Board is female (2022: 30%)
50%
of Board positions which are
not shareholder nominated
are held by women
67%
of our Independent Non-
executive Directors are
women
2 0 2 3
2 0 2 2
50%
38%
2 0 2 3
2 0 2 2
67%
50%
BOARD NATIONALITY STATISTICS
OUR BOARD COMPOSITION
British
American
Canadian
Italian
Saudi Arabian
Chinese
7
4
1
2
1
1
Shareholder Representative
Directors (including the
Executive Chairman)
Executive Directors
Independent
Non-executive Directors
7
3
6
Natalie Massenet has dual British and American nationality
BOARD SECTOR EXPERIENCE
OUR MAJOR SHAREHOLDERS %
2
3
6
4
Engineering
Automotive
Luxury brand
Finance/banking
Marketing/
commercial
3
Legal
1
Human Resources 1
Yew Tree
Consortium*
25.32
Public
Investment Fund*
Geely*
Mercedes-Benz*
Invesco
Lucid
17.06
16.09
8.90
3.62
3.44
Some members of the Board have sector experience in more than
one category
* Denotes a major shareholder with Board representation
in accordance with the respective Relationship Agreement
entered into between the Company and that shareholder.
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EXECUTIVE CHAIRMAN’S INTRODUCTION TO GOVERNANCE
In October we announced the appointment of Jean Tomlin as an
Independent Non-executive Director and member of the Nomination
Committee. Jean’s HR background combined with her luxury and
automotive sector experience will be of great benefit to the Board and
I look forward to working with Jean in the year ahead.
BOARD INDEPENDENCE
The composition of our Board is unique. With the Board changes
during the year, we now have seven Shareholder Representative
Directors on the Board. As a result, we no longer meet the
independence requirements of the UK Corporate Governance Code.
However, I am comfortable that this does not present a governance
issue. Our Shareholder Representative Directors are diverse and act
independently of one another and all our Independent Non-executive
Directors are highly experienced. To comply with the independence
requirements of the Code would make our Board unwieldy and we
need to maintain the Board at such a size to continue to promote
effective discussion and decision making.
BOARD DIVERSITY
Recognising the unique composition of our Board, our Board Diversity
Policy states that we seek to achieve and maintain 40% of Board
positions which are not subject to shareholder appointments to be
held by women. That percentage is currently 50%. Of our total Board
positions, 27% are held by women. The Board is committed to
achieving and maintaining diversity at Board level and throughout the
business and will continue to monitor the progress being made.
BOARD EVALUATION
Due to the composition of the Board significantly changing again this
year, we decided to undertake an internal Board evaluation again with
the assistance of a third-party provider which assisted with the
questionnaires and the analysis of the results and provided external
benchmark data. More information on our Board evaluation is set out
on pages 92-93.
I would like to thank all the members of the Board for their significant
efforts and valuable contributions during the year and take this
opportunity to thank our employees, our customers, our shareholders
and all our other stakeholders for your continued support.
Yours sincerely,
LAWRENCE STROLL
EXECUTIVE CHAIRMAN
LAWRENCE
STROLL
EXECUTIVE CHAIRMAN
DEAR SHAREHOLDER
I am pleased to introduce the Governance section of this year’s Annual
Report. In this section we provide detail on the Board’s roles and
responsibilities, an overview of the activities of the Board and our
Committees over the year and our compliance with the UK Corporate
Governance Code.
Our commitment to effective corporate governance supports the
decisions we make to create long-term sustainable value for the
benefit of all our stakeholders. Good governance also provides a
platform for us to achieve cultural change and creates a balance of
accountability and empowerment, in line with our values.
BOARD CHANGES
The composition of our Board has continued to evolve this year. We
have welcomed two new Shareholder Representatives to the Board.
As a result of Geely’s investment in the Company, Daniel Li joined the
Board in July. Cyrus Jilla joined the Board in October as a representative
of Ernesto Bertarelli, a significant member of the Yew Tree Consortium.
important part of the Company’s
Both appointments are an
relationships with our strategic shareholders and
I value the
contribution and perspective that Daniel and Cyrus bring to our Board
discussions.
Antony Sheriff stepped down from the Board at our Annual General
Meeting in May to focus on his other directorships and commitments.
As a result, Sir Nigel Boardman became our Senior Independent
Director. I am very grateful for the support that Sir Nigel provides
me in my role as Executive Chairman and his leadership of the
Non-executive Directors.
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BOARD OF DIRECTORS
Leading from
the front
EXECUTIVE DIRECTORS
LAWRENCE STROLL
Executive Chairman
N R W
Appointed: April 2020
Nationality: Canadian
AMEDEO FELISA
Chief Executive Officer
W
Appointed: May 2022
Nationality: Italian
DOUG LAFFERTY
Chief Financial Officer
W
Appointed: May 2022
Nationality: British
Skills and relevant experience
Lawrence joined the Company as Executive
Chairman after leading the Yew Tree Consortium
investment in the Company in April 2020.
Lawrence has a long career of acquiring and
building luxury brands including Polo Ralph
Lauren, Tommy Hilfiger and Michael Kors and
brings his wealth of leadership and executive
experience to the Board. He has also been an
active investor in the automotive and motorsport
sectors, leading a consortium to acquire the
Force One India racing F1® team in 2018, which
was subsequently rebranded as the Aston Martin
F1® Team.
Lawrence is a shareholder representative of the
Yew Tree Consortium.
External appointments
– Co-owner Aston Martin Aramco Formula
One® Team
– AMR GP Services Limited (Director)
– AMR GP Limited (Director)
– AMR Performance Group Limited (Director)
Skills and relevant experience
Amedeo was appointed Chief Executive Officer
in May 2022 having previously served on the
Board as a Non-executive Director since July
2021. Amedeo brings to the Board his extensive
automotive industry and technical and
commercial experience. Amedeo spent 26 years
of his career with Ferrari S.p.A in senior
management roles, the last eight years of which
as the Chief Executive Officer.
Prior to joining Ferrari, Amedeo was a product
development team leader at Alfa Romeo S.p.A.
Amedeo was awarded a degree in mechanical
engineering from the Milan Polytechnic
University.
External appointments
– Atop S.p.A (Chairman)
– IMA Group (Senior Advisor to the Chairman)
Skills and relevant experience
Doug was appointed Chief Financial Officer in
May 2022. Prior to joining Aston Martin, Doug
was the Chief Financial Officer of FTSE 250-listed
fuel retailer Vivo Energy plc. He previously spent
three years as Chief Financial Officer for Williams
Grand Prix Holdings plc and 16 years in a wide
range of senior finance and leadership roles at
British American Tobacco.
Doug is a member of CIMA and holds a BSc Hons
in Management Studies from Royal Holloway,
University of London.
External appointments
– None
Key
Chair Observer
A Audit and Risk Committee N Nomination Committee R Remuneration Committee S Sustainability Committee W Warrant Share Committee
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SIR NIGEL BOARDMAN
Senior Independent
Non-executive Director
A N S
Appointed: October 2022
Nationality: British
ROBIN FREESTONE
Independent Non-executive
Director
A N R
Appointed: February 2021
Nationality: British
DAME NATALIE
MASSENET, DBE
Independent Non-executive
Director
R
Appointed: July 2021
Nationality: British/American
MARIGAY MCKEE, MBE
Independent Non-executive
Director
S N
Appointed: July 2021
Nationality: British
Skills and relevant experience
Sir Nigel joined the Board in
October 2022 and became Senior
Independent Non-executive
Director in May 2023. Sir Nigel was
partner at the law firm Slaughter
and May from 1982 until 2019
specialising in mergers and
acquisitions and corporate advisory
and remained a consultant at the
firm until 2022. Sir Nigel was
awarded a Knighthood in the
Queen’s Birthday Honours List in
June 2022 for services to the legal
profession. Sir Nigel is Chair of Help
for Heroes, a military veterans
charity, is Trustee and Chair
designate of The Medical College
of Saint Bartholomew’s Hospital
Trust, is Trustee Emeritus and
member of the audit committee for
the British Museum and is Deputy
Chair of the London Philharmonic
Orchestra.
External appointments
– Arbuthnot Latham (Chair)
– Arbuthnot Banking Group
(Non-executive Director)
– Mile Group Unlimited (Chair)
– Glyde Group Unlimited (Chair)
Skills and relevant experience
Robin is a qualified chartered
accountant, with significant
financial, management, business
transformation and diversification
experience within leading UK-listed
global businesses. Previously, Robin
held a number of senior executive
finance roles in the industrial sector
(1985-2004) with ICI plc,
Amersham International plc and
Henkel Ltd where he was the Chief
Financial Officer. He subsequently
joined the publishing company
Pearson plc in 2004, the last nine
years of which he served as its Chief
Financial Officer.
Robin has wide Non-executive
Director experience and was
previously a Non-executive
Director at eChem Limited, Chair of
the 100 Group and Senior
Independent Director and Chair of
the Audit Committee of Cable &
Wireless Communications plc.
Robin holds a BA in Economics
from Manchester University.
External appointments
– Moneysupermarket.com (Chair
and Nomination Committee
Chair)
– Capri Holdings Limited
(Lead Director)
Skills and relevant experience
Natalie brings her wealth of luxury
retail sales, marketing and
commercial experience to the
Board. Natalie is the co-founder
and managing partner of Imaginary
Ventures, a capital firm focusing on
innovations at the intersection of
retail and technology. Previously,
Natalie revolutionised luxury retail
when she founded Net-a-Porter in
1999, and subsequently, the Outnet
and Mr Porter growing the group of
brands into one of the world’s most
influential fashion businesses.
Natalie has also held several
non-executive and advisory
positions as a Director of NuOrder
Inc (2021), a Director and Co-
Chairman of Farfetch Inc (2017-
2020) and the Chairman of British
Fashion Council (2012-2017).
In 2016 Natalie was made Dame
Commander of the British Empire in
recognition of her contributions to
the UK fashion and retail industry.
External appointments
– Imaginary Ventures
(Managing Partner)
– Everlane Inc (Director)
– EON Group Holdings Inc
(Non-executive Director)
Skills and relevant experience
Marigay has extensive retail sales,
marketing and luxury brand
experience. In 2018, Marigay
co-founded Fernbrook Capital LLC,
a venture fund based in New York
and Los Angeles, specialising in
consumer tech. Marigay started her
career at Estée Lauder in Europe,
and then joined Harrods in 1999 as
Head of its beauty department. In
her 14 years at Harrods, she spent
the last six years as Chief Merchant
Officer where she developed and
executed a strategic vision to make
Harrods the gold standard for the
exclusive launch of luxury and
premium brands. In 2013, Marigay
joined Saks Fifth Avenue in New
York as its President rebuilding
Saks’ luxury launch platform for
new and emerging and
international brands.
In the 2022 Queen’s New Year
Honours List, Marigay was awarded
an MBE in recognition of her
services to British retail overseas.
External appointments
– Fernbrook Capital LLC (Director)
– EShopWorld (Advisory Council
Member)
– The Webster (Board Member)
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BOARD OF DIRECTORS CONTINUED
INDEPENDENT NON-EXECUTIVE DIRECTORS CONTINUED
SHAREHOLDER REPRESENTATIVE DIRECTORS
DR. ANNE STEVENS
Independent Non-executive
Director
A N R S
Appointed: February 2021
Nationality: American
JEAN TOMLIN, OBE
Independent Non-executive
Director
N
Appointed: October 2023
Nationality: British
MICHAEL DE PICCIOTTO
Non-executive Director,
Representative of the Yew Tree
Consortium
A W
Appointed: April 2020
Nationality: Italian
FR ANZ REINER
Non-executive Director,
Representative of Mercedes-
Benz AG
A N R
Appointed: July 2021
Nationality: American
WORKFORCE ENGAGEMENT
DIRECTOR
Skills and relevant experience
Anne brings to the Board significant
operational, commercial and
transformational experience in
global businesses. Anne is an
engineer and started her career in
the chemical industry with Exxon
Corporation before moving to
automotive with the Ford Motor
Company (1990-2006). During her
16-year tenure at Ford, Anne held a
number of senior positions,
culminating in her being the Chief
Operating Officer for the Americas.
On retiring from Ford, Anne joined
Carpenter Technology Corporation
(2006-2009) as its Chairman,
President and Chief Executive
Officer. Anne has extensive
Non-executive Director experience
and has previously served as
Chairman, CEO and Principal of SA
IT (2011-2014), as a Non-executive
Director on the board of XL Group
and Lockheed Martin before joining
GKN plc as a Non-executive
Director where she was briefly CEO
during the hostile takeover by
Melrose plc in 2018. Anne received
a BS in Materials and Mechanical
Engineering from Drexel University
in 1980 and was elected to the
National Academy of Engineering
in 2004.
External appointments
– Harbour Energy plc
(Non-executive Director and
Remuneration Committee Chair)
Key
Chair Observer
Skills and relevant experience
Jean joined the Board in October
2023 as an Independent
Non-executive Director.
Jean is the founder and CEO of
Chanzo Limited, a firm that
provides consulting, operational
delivery and international
recruitment services to major event
and sport sectors.
Jean served as Director of Human
Resources of the London
Organising Committee of the
Olympic and Paralympic Games
from 2006 to March 2013. Jean was
also the Group HR Director at
Marks & Spencer plc and prior to
that she spent 15 years at
Prudential plc and nine years at
Ford Motor Company in various
human resources management
positions.
External appointments
– Chanzo Limited (CEO)
– Capri Holdings Limited
(Non-executive Director)
– Hakluyt & Company Ltd
(Non-executive Director)
Skills and relevant experience
Franz has been the CEO of
Mercedes-Benz Mobility AG since
June 2019. The company finances
and leases every second vehicle
delivered by Mercedes-Benz.
Under his management,
Mercedes-Benz Mobility has
established itself viable for the
future with its three core financial
services activities, fleet
management and digital mobility
solutions. Since joining the
company in 1992, the industrial
engineer has held various positions,
including Head of Sales &
Marketing and Member of the
Board of Management for the
private and corporate customer
business of Mercedes-Benz Bank.
In 2009, Franz Reiner was appointed
to the Management Board of
Mercedes-Benz Mobility – initially
responsible for the Americas
region, and from 2011 for the
Europe region.
External appointments
– Mercedes-Benz Mobility AG
(CEO and Chairman of the
Board)
– VfB Stuttgart 1983 AG
(Supervisory Board Member)
– Mercedes-Benz Leasing
Deutschland GmbH (Supervisory
Board member)
– Allianz Global Corporate and
Speciality SE (Advisory Council)
Skills and relevant experience
Michael is a prominent investor and
businessman who has extensive
experience in investments,
management and finance.
Michael started his career at RBC
Dominion Securities, a global
Canadian investment bank before
joining Union Bancaire Privée (UBP),
a family-owned Swiss private bank
in London and Geneva where he
worked for 27 years until 2015.
During his tenure at UBP, Michael
held a number of senior leadership
positions including responsibility
for UBP’s global financial activities.
He also served as a long-standing
member of the Executive Board
of UBP.
In March 2016 Michael became a
large shareholder and the
Vice-Chairman of the Supervisory
Board of Engel & Volkërs AG, a
Hamburg-based leading global
real estate group, which was sold in
August 2021 to the investment fund
Permira.
In 2018, Michael joined a
consortium of investors to buy out
what would become the Aston
Martin Formula One team and in
2020 joined the Yew Tree
Consortium in the acquisition of its
stake in Aston Martin.
Michael studied at the Ecole des
Hautes Etudes Commerciales at the
University of Lausanne.
External appointments
– AMR GP Holdings Limited
(Director)
– AMR Performance Group
Limited (Director)
A Audit and Risk Committee N Nomination Committee R Remuneration Committee S Sustainability Committee W Warrant Share Committee
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AHMED AL-SUBAEY
Non-executive Director:
Representative of the
Public Investment Fund
Appointed: November 2022
Nationality: Saudi
SCOTT ROBERTSON
Non-executive Director:
Representative of the
Public Investment Fund
A N R
Appointed: November 2022
Nationality: American
DANIEL LI
Non-executive Director:
Representative of Geely
A N
Appointed: 28 July 2023
Nationality: Chinese
CYRUS JILLA
Non-executive Director:
Representative of Ernesto
Bertarelli
Appointed: 27 October 2023
Nationality: British
Skills and relevant experience
Ahmed joined the Board as
Representative Non-executive
Director of the Public Investment
Fund in November 2022.
Skills and relevant experience
Scott joined the Board as
Representative Non-executive
Director of the Public Investment
Fund in November 2022.
Ahmed is Chief Executive Officer of
Bahri, the National Shipping
Company of Saudi Arabia, which is
listed on the Saudi Stock Exchange.
He was previously the CEO of S-Oil
in South Korea and has held various
leading roles in Saudi Aramco, most
recently Vice President for
Marketing, Sales and Supply
Planning. Ahmed holds a BSc and
Masters degree in electrical
engineering from the University of
Arizona and an executive MBA from
Stanford University.
External appointments
– Bahri (CEO)
He is a Senior Director and the
Head of Public Investments in the
International Investments Division
at the Public Investment Fund (PIF)
of the Kingdom of Saudi Arabia.
Prior to joining the Public
Investment Fund in 2018, Scott
worked in various investment
positions at Soros Fund
Management, Paulson & Co. and
Stonepeak Partners. Scott holds a
Bachelor of Arts in Economics from
Cornell University, where he
graduated Phi Beta Kappa.
External appointments
– Public Investment Fund
(Senior Director)
Skills and relevant experience
Daniel joined the Board as
Representative Non-executive
Director of Geely in July 2023.
Daniel is currently the Chief
Executive Officer of Geely Holding
Group having joined Geely in April
2011 as Vice President and Chief
Financial Officer. Daniel is also a
member of the Board of Volvo Cars
and Polestar.
External appointments
– Geely Automotive Holdings Co.
Limited (CEO)
– Polestar Automotive Holding UK
PLC (Member of the Board)
– Volvo Car AB (Member of the
Board)
– Lotus Technology Inc. (Chairman
of the Board)
– YTO International Express and
Supply Chain Technology
Limited (Independent Non-
executive Director)
Skills and relevant experience
Cyrus joined the Board in October
2023 representing Ernesto
Bertarelli, a significant member of
the Yew Tree Consortium.
Cyrus is Group Managing Partner at
B-FLEXION, a private investment
firm, overseeing their portfolio of
operating businesses and
investment partnerships.
Prior to joining B-FLEXION, Cyrus
was, most recently, a President and
Officer at Fidelity International
Limited (FIL), where he had primary
responsibility for FIL’s proprietary
investments.
External appointments
– B-FLEXION (Group Managing
Partner)
COMPANY SECRETARY
LIZ MILES
Company Secretary
Appointed: June 2022
Nationality: British
Skills and relevant experience
Liz joined Aston Martin as Company
Secretary in June 2022. Liz is a
solicitor and company secretary
with significant experience of listed
company governance and
compliance.
Prior to joining Aston Martin, Liz
was Company Secretary at
Landsec, a FTSE 100 property
investment and development
company, having previously
worked at Vodafone Group Plc in a
variety of legal and company
secretariat roles and prior to that in
private practice at Linklaters. Liz is a
Fellow of the Chartered
Governance Institute.
The Company Secretary provides
advice and support to the Board, its
Committees and the Chairman, and
is responsible for corporate
governance across the Group.
The appointment and removal of
the Company Secretary is a matter
for the Board as a whole.
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EXECUTIVE COMMITTEE
Our Executive Committee is made up of our Executive Chairman, Chief Executive Officer, Chief Financial Officer
(details of whom are set out on page 76) and the Chief roles set out below.
MICHAEL STR AUGHAN,
OBE
Executive Consultant
to the CEO
Appointed: December 2020
Nationality: British
Michael joined the business in
December 2020 and having
previously served as the Chief
Operating Officer responsible for
all manufacturing operations for
the Company, is now Executive
Consultant to the CEO.
Michael has over 30 years of
automotive experience, holding
senior positions in Nissan, Volvo
Cars, LDV and Jaguar Land Rover,
then joining the Board of Bentley
Motors before becoming the Chief
Operating Officer of luxury yacht
manufacturer Sunseeker in 2017.
Michael has a proven track record
of delivery, turnaround and
restructuring, creating shareholder
value.
Michael has a BSc in Engineering
and is a Fellow of the Institution of
Engineering and Technology. He
received an OBE in the King’s
Birthday Honours list in 2023 for
Services to the UK Automotive
Industry.
MAREK REICHMAN
Chief Creative Officer
Appointed: May 2005
Nationality: British
MARCO MATTIACCI
Chief Global Brand and
Commercial Officer
Appointed: October 2021
Nationality: Italian
VINCENZO REGAZZONI
Chief Industrial Officer
Appointed: April 2023
Nationality: Italian
Vincenzo is Chief Industrial Officer
of Aston Martin and was appointed
in 2023 to oversee all
manufacturing operations.
Working as an advisor to Aston
Martin prior to his appointment,
Vincenzo has more than two
decades of experience in the low
volume, ultra-luxury automotive
segment, including his most recent
position as Chief Manufacturing
Officer of Ferrari.
Marek joined Aston Martin
Lagonda in 2005 and is the Chief
Creative Officer responsible for all
design developments for the
Company. During his professional
career he has held design roles at
Ford, BMW, Land Rover, Rover Cars
and Nissan and Chief Designer for
the reinvention of Rolls-Royce
Motor Cars. Prior to joining Aston
Martin Lagonda, he was Design
Director at Ford North America.
Marek holds a BA in Industrial
Design from Teesside University
and an MDes in Vehicle Design
from the Royal College of Art,
London. In 2011, Marek received an
honorary doctorate from Teesside
University.
Marco joined the business in
October 2021 and is the Chief
Global Brand and Commercial
Officer of Aston Martin Lagonda,
responsible for all sales and
marketing and communications for
the Company.
Marco has over 30 years of
automotive experience gained all
over the world. Marco spent the
first ten years of his career at
Jaguar Cars in the UK and then
moved to Ferrari, where he spent
over 15 years in the roles of CEO of
Ferrari North America, CEO of
Ferrari Asia Pacific and Managing
Director and Team Principal of the
Scuderia Ferrari Formula One™
racing team. In 2016, Marco joined
Faraday Future in the USA, as its
Global Chief Brand Officer and
Chief Commercial Officer. Upon
leaving Faraday in 2017, Marco
advised automotive clients with
McKinsey & Company.
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Group Chief Technology
Officer
Appointed: June 2022
Nationality: Italian
Roberto is Group Chief Technology
Officer at Aston Martin Lagonda,
leading the engineering team,
having joined the Company in June
2022.
Roberto is a proven leader in the
luxury high-performance sports
cars sector. He is considered the
creator of Ferrari LaFerrari, the
Italian company’s first hybrid
supercar as well as some of its most
iconic models during his 26 year
tenure.
Roberto brings his extensive
knowledge, passion for innovation
and his most recent experiences in
the implementation of
electrification technologies during
his time at BMW.
Roberto holds a Master’s degree in
Aerospace.
GIORGIO LASAGNI
Chief Procurement Officer
MICHAEL MARECKI
General Counsel
SIMON SMITH
Chief People officer
Appointed: January 2023
Nationality: Italian
Appointed: July 2007
Nationality: American
Appointed: April 2022
Nationality: British
Simon joined Aston Martin
Lagonda in April 2022 as Chief
People Officer.
Simon has extensive HR experience
across the engineering and
manufacturing sector, starting his
career with Peugeot and spending
a significant part of his career at
both Alstom and Rolls-Royce. More
recently Simon has held
transformation and strategy
leading HR roles at Johnson
Matthey and Legal and General
Modular Homes.
Simon is a fellow of the CIPD, is a
qualified Executive Coach and
holds a BA Hons in Politics and
International Relations from
Lancaster University.
Giorgio joined Aston Martin in
January 2023 to lead the
procurement function. Giorgio has
extensive experience of
procurement and supply chain
management and strategy.
Michael joined Aston Martin
Lagonda in July 2007 and is the
General Counsel. Michael is
responsible for all legal and
regulatory matters for the
Company.
Prior to his current position,
Michael worked for the Ford Motor
Company Inc (1988-2007), latterly
as the Assistant General Counsel,
Environment and Safety.
Michael holds a Juris Doctor from
Georgetown University Law Center
and a Bachelor of Arts from
Fordham University.
Giorgio joined Aston Martin from
Zoppas Industries S.p.A, an Italian
heating element company where
he was Global Purchasing and
Supplier Development Director
and redesigned the purchasing and
supplier development functions.
Prior to that Giorgio was at Robur
S.p.A, and Candy Hoover Group
S.p.A, holding a number of Business
Unit Director and procurement
positions.
Giorgio spent just under eight years
of his career at Ferrari S.p.A,
holding a variety of roles including
Purchasing and Supplier
Development Director and Ferrari
& Maserati Engine Manufacturing
Director.
Giorgio holds a Master’s degree in
Architecture from the Politecnico
of Milan.
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LEADERSHIP AND GOVERNANCE
Leadership and governance
OVERVIEW
This Report sets out the Board’s corporate governance structures and
work from 1 January 2023 to 31 December 2023. Together with the
Directors’ Remuneration Report on pages 108-122, it includes details
of how the Company has applied and complied with the principles and
provisions of the 2018 UK Corporate Governance Code (the “Code”).
The Code is published by the Financial Reporting Council (“FRC”) and
further information can be found on its website (www.frc.org.uk). The
Code is supported by the FRC’s Guidance on Board Effectiveness,
which the Board uses to support its approach to governance and
decision-making.
COMPLIANCE WITH THE UK CORPOR ATE GOVERNANCE
CODE
The Code requires companies to describe in their annual report how
they have applied the main principles of the Code and also any areas
where companies do not comply with the Code provisions. The
Directors consider that the Company has been compliant with the
Code provisions as applied during the year ended 31 December 2023,
other than the exceptions as set out below. It is noted that the
composition of the Board is impacted by the rights of the significant
shareholders under their respective Relationship Agreements (see the
Directors’ Report, page 126).
Code provision 9 recommends that the chair should be independent
on appointment. Lawrence Stroll assumed the position of Executive
Chairman in April 2020 and was not independent on appointment as
he is a member of the Yew Tree Consortium, a major shareholder. His
appointment was a condition of the Yew Tree Consortium’s investment
in accordance with the Relationship
in the Company and was
Agreement entered into between the Company and the Yew Tree
Consortium. The Nomination Committee and the Board consider that
Lawrence Stroll has demonstrated objective judgement throughout
his tenure and him continuing in the role of Executive Chairman for the
foreseeable future is in the best interests of the Group and its
stakeholders in order to utilise his proven leadership qualities and his
significant experience in building luxury brands. He has offered himself
for re-election every year since his appointment and shareholders
have overwhelmingly voted in favour of his re-election. In the Board’s
opinion, the Company’s governance checks and balances are strong
and effective:
– the Executive Chairman is subject to challenge from the Company’s
Senior Independent Director, the Executive Directors and the
Independent Non-executive Directors; and
– there is a clear division between the responsibilities of the
Executive Chairman, the Senior Independent Director, the
Executive Directors and the Independent Non-executive Directors,
which ensures accountability and oversight.
Code provision 11 recommends that at least half the Board, excluding
the Chair, should be independent. Excluding the Chair, 43% of
the Board is independent which falls below the recommended
threshold of the Code. This was as a result of two further
Shareholder Representatives (Daniel Li representing Geely and
Cyrus Jilla representing Ernesto Bertarelli, a significant member of the
Yew Tree Consortium) joining the Board in 2023. The Board needs to
balance the independence requirement with the overall size of the
Board in order to ensure that effective discussion and decision making
is facilitated. The Board is now comprised of 15 Directors and the
Board has concluded, upon recommendation of the Nomination
Committee, that to add further Independent Non-executive Directors
could negatively impact the Board’s effectiveness. The Board is
confident that the independent decision making of the Board is not
impacted by its Board composition as the Shareholder Representatives
are diverse and act independently of one another and the Independent
Non-executive Directors are all highly skilled and experienced. The
composition of all the Board Committees are compliant with the
independence requirements of the Code.
Code provision 21 recommends that the chair should consider having
a regular externally facilitated board evaluation. In FTSE 350
companies this should happen at
least every three years.
The Board evaluation was due to be externally facilitated in 2021 but
with the extensive number of Board changes in the year it was
considered that this would be of limited benefit. Due to more Board
changes in 2022, with a new Chief Executive Officer, a new Chief
Financial Officer, a new Independent Non-executive Director and two
new Shareholder Representative Directors joining the Board, the
Board concluded once again there would be little value in an externally
facilitated evaluation. Therefore it was agreed that a rigorous internal
evaluation would be carried out for 2022, with the assistance of a
third-party survey which provided a platform for more meaningful
analysis of results. Due to the further changing dynamics of the Board
during 2023 with two more Shareholder Representatives joining the
Board and a new Independent Non-executive Director, the Board
concluded to repeat an internal evaluation in 2023 using the same
third-party platform for the survey. Further details can be found on
pages 92-93. During 2024, the Board will take a decision, upon the
recommendation of the Nomination Committee, as to the best
method of Board evaluation for 2024, taking all relevant factors at
the time into account.
EFFECTIVE BOARD AND ITS ROLE
The Board is composed of highly skilled professionals who bring a
range of skills, perspectives and corporate experience to the Board.
The Directors and their biographies and skills and experience are set
out on pages 76-79. Details of the changes to the Board during 2023
are set out on page 75. At the date of this Report the Board comprised
15 members: the Executive Chairman, the Chief Executive Officer, the
Chief Financial Officer and 12 Non-executive Directors, of whom six
are considered independent for the purposes of the Code.
The Directors are appointed by the Board and are subject to annual
re-election by shareholders. The Company’s significant shareholder
groups, in line with the respective Relationship Agreements, have
nominated Directors who have been appointed to the Board; further
details of these arrangements are set out on page 126 of the Directors’
Report. The Board is satisfied that there is a sufficient balance between
Executive and Non-executive Directors on the Board to ensure that
no one individual has unfettered decision-making powers and that
Directors are able to discharge their duties and responsibilities.
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The Company’s corporate governance framework is set out on pages
85-87 and provides an overview of the roles of the Board, its
Committees and members of the Executive Committee which
provides clear lines of accountability and responsibility. The Board
and its Committees have established terms of reference that set out
specific responsibilities and matters for approval. The terms of
reference are available for review on the Company’s website at
www.astonmartinlagonda.com. Reports
these
Committees are provided in this governance report.
from each of
A total of ten Board meetings were held during the year: six
scheduled and four unscheduled. Attendance is set out below.
Lawrence Stroll1
Amedeo Felisa2
Doug Lafferty
Ahmed Al-Subaey3
Sir Nigel Boardman4
Michael de Picciotto5
Robin Freestone
Natalie Massenet6
Marigay McKee
Franz Reiner7
Scott Robertson
Anne Stevens8
New Directors
Daniel Li9
Cyrus Jilla
Jean Tomlin
Former Directors
Antony Sheriff10
10/10
9/10
10/10
8/10
9/10
9/10
10/10
6/10
10/10
9/10
10/10
9/10
1/3
3/3
3/3
2/3
1 Lawrence Stroll was recused from one meeting due to a conflict of interest.
2 Amedeo Felisa missed one unscheduled Board meeting due to the meeting being
called at very short notice.
3 Ahmed Al-Subaey missed two unscheduled Board meetings due to the meetings
being called at very short notice.
4 Sir Nigel Boardman missed one unscheduled Board meeting due to the meeting
being called at very short notice.
5 Michael de Picciotto missed a scheduled Board meeting in December due to
disrupted travel. He was also recused from one meeting due to a conflict of interest.
6 Natalie Massenet missed three unscheduled Board meetings due to the meetings
being called at very short notice and the Board Strategy Day due to personal
circumstances.
7 Franz Reiner missed one unscheduled Board meeting due to the meeting being
called at very short notice.
8 Anne Stevens missed one unscheduled Board meeting due to the meeting being
called at very short notice.
9 Daniel Li missed one unscheduled Board meeting due to the meeting being called at
very short notice and one scheduled Board meeting due to other commitments
which were pre-existing prior to Daniel joining the Board.
10 Antony Sheriff was absent for one scheduled Board meeting.
THE BOARD’S TERMS OF REFERENCE STATE THAT IT
MUST CONSIDER AND APPROVE THE FOLLOWING:
The Group’s strategic aims, objectives and commercial strategy
Review of performance relative to the Group’s business plans and
budgets
Major changes to the Group’s corporate structure,
including acquisitions and disposals
The system of internal controls and Risk Management Policy
Major changes to the capital structure including tax and treasury
management
Major changes to accounting policies or practices
Financial statements and the Group dividend policy including
any recommendation of a final dividend
The Group’s corporate governance and compliance arrangements
The Group’s risk appetite
In instances where unscheduled Board meetings were called upon
short notice, following the meeting the Company Secretary updated
any Board members unable to attend and the Directors were invited to
provide any comments or observations to the Executive Chairman.
An agenda and accompanying pack of detailed papers are circulated
to the Board in advance of each Board meeting. All Directors are able
to request additional information on any of the items to be discussed.
Additionally, Directors have access to the advice and services of the
Company Secretary and independent and professional advice at the
Company’s expense should they determine that this is necessary to
discharge their duties.
All Board and Committee meetings are minuted and formally
approved at the next meeting. Board minutes contain details of the
Directors’ decision-making processes and any follow-up actions or
concerns raised by the Directors. The Executive Chairman works
closely with the Company Secretary to plan and schedule Board and
Committee meetings and to make quality information available in
a timely fashion.
DISCLOSURE COMMITTEE
The Board delegates responsibility for the final approval of its financial
results disclosures and Annual Report to the Disclosure Committee.
The Disclosure Committee is also responsible for the identification
and disclosure of inside information. The Disclosure Committee is
chaired by the Chief Financial Officer with the Chief Executive Officer,
General Counsel, Company Secretary, Head of Investor Relations,
Director of Internal Audit & Risk, Group Financial Controller and
the Director of Financial Planning & Analysis as members of
the Committee.
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LEADERSHIP AND GOVERNANCE CONTINUED
GOVERNANCE STRUCTURE
THE BOARD
The role of the Board is to promote the long-term success of the Company, generating value for shareholders and contributing to wider society by providing
effective leadership and direction to the business as a whole. It sets the Group’s strategy and ESG strategy, having regard to stakeholders, while maintaining a
balanced approach to risk within a framework of effective controls. It has also established the Company’s purpose and values and monitors culture to ensure
alignment. It sets the tone and approach to corporate governance and is responsible for the overall financial performance of the Group.
BOARD COMMITTEES
Nomination Committee
Reviews Board composition
and diversity, proposes new
Board appointments and
reviews succession planning
and talent development.
EXECUTIVE COMMITTEE
Audit and Risk Committee
Oversees the Group’s
financial reporting and
reviews the integrity of the
Group’s Financial Statements,
the adequacy and
effectiveness of the Group’s
systems of internal control
and risk management, and
maintains the relationship
with the External Auditor.
Warrant Share Committee
Responsible for approval
of the allotment and the
issue of Warrant Shares in
accordance with the terms of
the Warrant Instrument. The
Warrant Share Committee
meets as required. For
information on warrants
exercised during the year, see
page 206.
Remuneration Committee
Determines the Directors’
Remuneration Policy and
sets remuneration for
the Executive Chairman,
Executive Directors and
Group Executive Committee
taking into account wider
Group remuneration policies.
Approves performance-
linked pay schemes and share
incentive plans.
Sustainability Committee
Oversees the Company’s
ESG strategy and broader
stakeholder engagement on
behalf of the Board.
The Board delegates the execution of the Company strategy and the day-to-day running of the business to the Executive Committee.
The Executive Committee meets twice a month. One meeting is focused on operations and the other meeting is focused on performance.
TR ANSACTION COMMITTEES OF THE BOARD
For practical reasons, the Board delegated authority for final approval
of the Geely investment, the placing and the Lucid strategic supply
arrangement to a Transaction Committee of the Board consisting of
Lawrence Stroll, Sir Nigel Boardman, Doug Lafferty and Michael de
Picciotto. The Transaction Committee met a total of seven times to
discuss and ultimately approve these transactions.
INDEPENDENCE OF THE BOARD
The Board has identified which Directors are considered to be
independent on pages 77-79. As at 31 December 2023, 43% of the
Board (excluding the Chair) are Independent Non-executive Directors.
The Independent Non-executive Directors play an important role in
ensuring that no individual or group dominates the Board’s decision-
making. The Board has reconfirmed that the Independent Non-
executive Directors remain independent from executive management
and free from any business or other relationship which could materially
interfere with the exercise of their judgement. For further information
on independence of the Board please refer to pages 95-96 in the
Nomination Committee Report.
Relationship Agreements
At the start of the financial year, the Company had three groups of
significant shareholder, the Yew Tree Consortium, Mercedes-Benz AG
and the Public Investment Fund. In May 2023, Geely became a
significant shareholder. The relationships between the Company
and each of these significant shareholder groups are governed by
separate Relationship Agreements. The purpose of these Relationship
Agreements is to ensure that the Company can carry on its business
independently and for the benefit of shareholders as a whole.
Each of the Relationship Agreements provides that each significant
shareholder group is entitled to nominate Director(s) to the Board and
the Nomination Committee and an observer to each of the
Remuneration and Audit and Risk Committees subject to the size of its
interest in the voting rights of the Company. The Relationship
Agreements also provide that the Company will not take any action in
relation to certain significant matters without the prior approval of at
least two-thirds of members of the Board present and entitled to vote.
Further information on the Relationship Agreements is set out in the
Directors’ Report on page 126.
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There is clear division between Executive and Non-executive responsibilities which ensures accountability and oversight. The roles of Chairman
and Chief Executive Officer are separately held and their responsibilities are well defined, set out in writing and regularly reviewed by the Board.
EXECUTIVE CHAIRMAN
The Executive Chairman, Lawrence Stroll, is responsible for
leading and managing the business of the Board primarily
focused on strategy, performance, value creation and
accountability, setting and sustaining the culture and purpose
of the Company and ensuring the Board’s overall effectiveness,
governance and Director succession planning. He also ensures
the effective communication between the Board, management,
shareholders and
stakeholders.
The Executive Chairman works collaboratively with the
Chief Executive Officer, Amedeo Felisa,
in constructively
challenging and helping to develop proposals on strategy,
setting the Board agenda and ensuring that any actions agreed
by the Board are effectively implemented.
the Company’s wider
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer, Amedeo Felisa, is responsible for
developing, implementing and delivering the agreed strategy
and for the operational and strategic management of the
Company. He is also responsible for supporting Directors’
induction
into the business by providing the necessary
resources for developing and updating their knowledge and
capabilities concerning the Company, including access to
Company operations and members of the workforce.
CHIEF FINANCIAL OFFICER
The Chief Financial Officer, Doug Lafferty, is a member of the
Executive Committee team and reports to the Chief Executive
Officer. His role is to lead the financial management, risk,
investor relations and internal control teams and to oversee the
Company’s relationship with the investment community.
SENIOR INDEPENDENT DIRECTOR
The Senior Independent Director, Sir Nigel Boardman, supports
the Executive Chairman in his role and leads the Non-executive
Directors. The Senior Independent Director is also available as
an additional point of contact for shareholders.
WORKFORCE NON-EXECUTIVE DIRECTOR
The designated Non-executive Director gathering the views of
the workforce during the year was Anne Stevens. Views are
gathered by attendance at key employee and business events,
reviewing the outcome of employee surveys and monitoring
the effectiveness of employee engagement programmes.
COMPANY SECRETARY
The Company Secretary, Liz Miles, acts as secretary to the
Board and each of the Committees. She is responsible for
supporting the Executive Chairman and the Board in delivering
the Company’s corporate governance agenda.
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BOARD ACTIVITIES
Board activities
The Board met during the year for six scheduled Board meetings,
including a Board Strategy Day and an additional four unscheduled
meetings. The four unscheduled Board meetings, were convened to
discuss the investment in the Company by Geely, the placing and
repayment of debt and the strategic arrangement with Lucid.
Transaction Committees of the Board were established to discuss
these transactions in further detail and the Board delegated authority
to the Transaction Committee to provide final approval for the
transactions.
At every Board meeting the Board receives a report from the CEO
it on brand, marketing, communications and sales,
updating
operations, procurement, engineering and people. The CFO also
provides a report at every meeting on latest financial performance.
The Chairs of the Committees update the Board on significant
matters discussed at their Committees.
The Board’s key activities during the year are set out over the next
two pages. The Company’s Section 172 Statement can be found on
pages 28-29.
Board attendance for 2023 is set out on page 83.
2023
Y
R
A
U
R
B
E
F
Full year results
– Approval of preliminary results
announcement, including going concern
and viability analysis
– Approval of Investor Presentation
– Approval of Annual Report
Y
A
M
Annual General Meeting
Annual General Meeting of shareholders held
providing an overview of 2022 financial and
operational performance.
Articles of Association amended to allow
general meetings, including annual general
meetings to be held electronically as well as
physically.
Q1 Results
– Approval of the Q1 results announcement
and investor presentation
– Update on Geely proposed investment
– Plans for Annual General Meeting
Y
A
M
Investment by Geely
The Board approved investment by Geely
to become the third largest shareholder
in Aston Martin and entry into a Relationship
Agreement between the Company and
Geely which provided Geely with a right
to nominate a Shareholder Representative
Director to the Board.
Board Strategy Day
The Board met in Gaydon for in-depth
discussions with management on brand and
product, engineering, procurement,
manufacturing, people, ESG and finance.
The Board also enjoyed a design studio tour
and a tour of the factory.
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N
U
J
Strategic arrangement with Lucid
The Board approved the Company entering into a strategic supply
agreement with Lucid to support its future battery electric vehicle,
subject to shareholder approval and the satisfaction of certain
regulatory and other conditions.
Related to this, the Board approved an amendment and restatement of
the Strategic Co-operation Agreement with Mercedes-Benz AG, under
which the original agreement to issue additional Aston Martin shares to
Mercedes-Benz in exchange for access to further technology was
replaced with a restated commitment to the existing strategic
collaboration allowing the parties to discuss future access to
technology for cash.
Capital Markets Day
Aston Martin’s senior management team showcased its exciting new
and upcoming product range and gave presentations covering
operational excellence, supplier strategy, sustainability, vehicle
platforms, electrification, commercial strategy and branding.
Y
L
U
J
Half year results
– Approval of half year financial results
announcement and investor presentation
– Update on Lucid transaction
R
E
B
M
E
T
P
E
S
General Meeting to approve
Lucid transaction
Shareholder meeting to approve the related
party transaction and issue of shares to Lucid.
This was the first General Meeting to be held
virtually following the amendment to the
Company’s Articles of Association at the
AGM in May.
R
E
B
O
T
C
O
Q3 results
– Approval of Q3 results announcement
and presentation
– Approval of part repayment of second
lien debt
– Government affairs strategy update
– Approval of 2023/24 insurance programme
R
E
B
M
E
C
E
D
Governance and
preparations for year end
– Reviewed and adopted revised Committee
Terms of Reference and Matters Reserved
for the Board
– Conducted the annual Board evaluation in
respect of the effectiveness of the Board
and its Committees and discussed the
output of the review
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BOARD ACTIVITIES CONTINUED
R
E
B
M
E
T
P
E
S
Board visit to the
Monza Grand Prix
In September, the Board met informally at the
Monza Grand Prix. The Board enjoyed two
days at the track and a Board dinner on the
Saturday evening.
Spending time with other
members of the Board informally
is extremely valuable to build
relationships and understanding
of individual Board members’ skills
and experience”
NON-EXECUTIVE DIRECTOR
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Board and
workforce engagement
H
C
R
A
M
Board/Employee
coaching sessions
In conjunction with International Women’s Day
in March, members of the Board offered their
time for 1-1 coaching sessions with employees
of all levels. This was a great opportunity for
employees to hear about Board members’
careers and experiences and to gain some
tips on how to navigate the challenges and
opportunities of the corporate world.
It also enabled the Board members involved
to get an insight into employee experience at
Aston Martin and a sense of culture.
2024
Y
A
M
Board Strategy Day
Holding the Board Strategy Day at Gaydon in
May allowed the Board to engage with a
number of employees below Executive
Committee level, many of these individuals
formally presenting to the Board and there was
also time to informally meet with the Board.
During the tours of the Design Studio and
Factory, the Board was able to see employees in
their work environment and ask any questions.
4
2
0
2
H
C
R
A
M
Designated workforce
Non-executive Director
With effect from March 2024, Jean Tomlin
has taken over from Anne Stevens as our
designated Workforce Non-executive
Director. We are working with Jean to
establish a programme of Board/employee
engagement events for 2024 which we will
report on in next year’s report. For further
information on workforce engagement see
pages 50-53.
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GOVERNANCE
INVESTOR ENGAGEMENT
SHAREHOLDER ENGAGEMENT
The Board is committed to maintaining good communications with
existing and potential shareholders. Shareholders play a valuable role in
safeguarding the Group’s governance through, for example, the annual
re-election of Directors, monitoring and rewarding their performance and
engagement and constructive dialogue with the Board. The Group aims to
be as transparent as possible with the information it provides to investors
and welcomes face-to-face interaction, as well as virtual meetings and
conferences.
The Board’s primary contact with existing and prospective institutional
shareholders is through the Head of Investor Relations who is responsible
for all primary contact with shareholders, potential investors and equity
research professionals. The Executive Chairman, Chief Executive Officer
and Chief Financial Officer provide regular engagement support together
with other executive management team members. Details of shareholder
engagement activities in 2023 are set out in the table opposite.
There is a regular programme of meetings with major institutional
shareholders to consider the Group’s performance and prospects. The
Group’s investor reach is global, and the Company liaised with investors in
the UK, USA, Canada, France, Italy, Germany, Switzerland, Ireland, the
Netherlands, Norway, Hong Kong, Singapore, Malaysia, South Africa
and Australia during the last financial year.
GEOGR APHIC DISPERSION %
UK
Europe (ex UK)
North America
Asia
Rest of World
Unknown
10.8
16.3
38.0
34.0
0.1
0.8
SHAREHOLDER TYPES %
Corporate stakeholders 53.8
Foreign institutions
30.2
Private stakeholders/
investors
Domestic institutions
Hedge funds
Domestic brokers
Foreign brokers
Employees etc
Unknown
0.1
6.3
0.7
4.4
3.8
0.2
0.5
MAIN METHODS OF ENGAGEMENT WITH
SHAREHOLDERS IN 2023
Shareholder consultation
The Executive Chairman, Chief Executive Officer and Chief
Financial Officer met a large number of shareholders after each
financial results announcement. The Executive Chairman has also
engaged with institutional shareholders to discuss the Company’s
performance and Board governance matters and communicated
their views to the Board. The Company will always seek to engage
with shareholders when considering material changes to either our
Board, strategy or remuneration policies.
Investor meetings
The Company held almost 230 investor meetings with almost 170
individual existing and potential investors and analysts. These were a
blend of physical and virtual meetings. The meetings were attended
by a combination of the Executive Chairman, Chief Executive
Officer, Chief Financial Officer and Investor Relations team and
some members of the Executive Committee. The Head of Investor
Relations was a regular Board attendee to provide feedback from
these meetings and updates on other market matters. In June a
number of investors and analysts met the management team at a
Capital Markets Day at Gaydon, to see at first hand the Company’s
progress towards its medium-term targets, and progress on its
product and electrification strategy. For further information about
this investor visit, please see page 91.
Investor presentations
The Group hosted virtual webcasts for all reported results and
market updates and took questions from investors and analysts
ensuring an open dialogue with the market. In addition, investor
roadshows were held following the full year and half year results.
Investor conferences
The Investor Relations team presented to investors at six conferences
during 2023, with the Chief Financial Officer attending five of them,
leading group and 1 on 1 meetings about the Company.
General meetings
The AGM provides an opportunity for private shareholders in
particular to question the Directors and the Chairs of each of the
Board Committees. Information on the 2024 AGM is on page 208.
The Notice of AGM is issued at least 20 working days in advance
of the AGM date, to provide shareholders with the appropriate
time to consider matters, as set out in the FRC’s Guidance on Board
Effectiveness.
A further General Meeting was held in September 2023 to approve
the related party transaction and issue of shares to Lucid.
Annual Report
The Company’s Annual Report is available to all shareholders.
Through our electronic communication initiatives, we look to make
our Annual Report as accessible as possible. Shareholders can opt
to receive a hard copy in the post or PDF copies via email or from
our website.
Corporate website
The corporate website, www.astonmartinlagonda.com, has a
dedicated Investors section which includes our Annual Reports,
results presentations (which are made to analysts and investors at
the time of the interim and full year results) along with all results and
other regulatory announcements as well as further information for
investors including our financial calendar for the upcoming year.
Senior Independent Director
If shareholders have any concerns, which the normal channels of
communication to the Chief Executive Officer, Chief Financial Officer
or Executive Chairman have failed to resolve, or for which contact is
inappropriate, then our Senior Independent Director is available to
address them.
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The event marked the
beginning of a new era where
the Company now has a
competitive and up-to-date
GT/Sports and SUV portfolio”
CAPITAL MARKETS DAY ATTENDEE
E
N
U
J
Capital Markets Day in Gaydon
In June, the Company hosted a Capital Markets Day at its
headquarters in Gaydon for institutional investors and
sellside analysts. The Company’s senior management
team showcased its exciting new and upcoming product
range and gave presentations covering operational
excellence, supplier strategy, talent management,
sustainability, vehicle platforms, electrification,
commercial strategy and branding.
The day included presentations from and opportunities for
Q&A with the Executive Chairman, Chief Executive Officer,
Chief Financial Officer, Chief Global Brand & Commercial
Officer, Chief Technology Officer, Chief Creative Officer
and Head of Product and Market Strategy.
Participants were provided with a hands-on opportunity
with upcoming products, Gaydon’s bespoke Q
personalisation experience, and further details on the
Company’s strategic suppliers and partners over the next
five years, including the strategic supplier agreement
with Lucid for its electrification strategy.
The Company confirmed that
it expects to substantially achieve
its 2024/25 financial targets in
2024, which aims to deliver
c. £2bn in revenue and c. £500m
of adjusted EBITDA by 2024/25.”
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BOARD AND COMMITTEE EVALUATION
Board and Committee evaluation
The Board recognises the importance of continually monitoring and
improving its performance. The annual performance evaluation
provides the opportunity for the Board to reflect on the effectiveness
of its activities, its decision making, the contribution of individual
members of the Board and how it operates as a whole.
In line with the recommendations of the Code, the 2021 evaluation
process should have been the Company’s first externally facilitated
evaluation. However, the Board concluded, given the appointment of
all the Independent Non-executive Directors to the Board during the
year, that an externally facilitated evaluation was unlikely to provide
any benefit.
Given the further significant changes to Board composition during
2022, including a new Chief Executive Officer, Chief Financial Officer,
two Shareholder Representative Directors and one Independent Non-
executive Director, last year the Board took the decision that an
external evaluation for 2022 would again not be of value. Therefore,
the Board agreed to carry out a more rigorous internal evaluation,
using BoardClic, a third-party (with no connection to the Company or
the individual Directors) platform to assist with the provision of the
questionnaire and analysis of results. With the continuing changes of
Board dynamics
in 2023, two new Shareholder Representative
appointments and an additional Independent Non-executive Director,
the Board concluded to repeat the internal evaluation using the same
third party provider for the 2023 evaluation. The benefit of using this
third-party platform was that it enabled the data to be broken down
between Executive Directors, Independent Non-executive Directors
and Shareholder Representative Directors so that alignment between
the three groups of directors could be assessed. It also enabled
the results to be benchmarked against the results of other FTSE
companies. Using the same survey for 2023 as for 2022 allowed a
comparison of results year-on-year which provided additional value.
The conclusions of the evaluation were very positive, concluding that
the Board is highly effective and there is alignment between the views
of the Shareholder Representative Directors, Independent Directors
and Executive Directors.
The Chairman is doing an excellent
job of pushing our business
forward with investments in people
and product, positioning us for
growth today and in the future.”
NON-EXECUTIVE DIRECTOR
Two improvements were introduced during the year to increase the
flow of information from management to the Board. The Chairman
hosted informal update calls on occasions when there was a longer
gap between Board meetings and the CFO circulated a monthly
finance dashboard to keep the Board updated on financial
performance. This enhanced communication flow was welcomed
by the Board.
AREAS OF EXCELLENCE IDENTIFIED FROM
2023 EVALUATION
The Board has the knowledge and experience required to
support delivery of the strategy.
The Board is confident that the Company has the right strategy
to fulfil its purpose.
There is good alignment between the Board and the
management team regarding core strategic priorities
Overall, it was the collective view of the Directors that the Board
is effective in discharging its responsibilities, operating with an open
culture that allows challenge and debate.
AREAS IDENTIFIED FROM THE EVALUATION WHICH
COULD ENHANCE THE BOARD’S EFFECTIVENESS
IN 2024
Balance of strategy and operational discussions
Carefully monitor the balance of time spent at the Board
discussing operational matters as opposed to strategic matters
Succession planning
More focus on succession planning for key roles in the
management team
Governance
The provision of more concise and timely Board papers should
facilitate more effective and focused discussion at Board
meetings. This is particularly important given the size of the
Board to ensure that there is sufficient time for all Board
members to engage in discussion and debate
Board interaction
It is appreciated by the members of the Board that as the Board
has grown in size, it is more challenging to hold meetings in
person. However, the Board would welcome more in person
interaction, both in formal meetings and informally in the year
ahead
These suggestions will be addressed in the year ahead and
progress made will be reported in the 2024 report.
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The output of last year’s internal evaluation and progress made is set out below.
BOARD EVALUATION OUTPUT 2022
Risk
More discussion time on risk
would be beneficial.
Succession planning
More focus on succession
planning for key roles in the
management team.
Culture and purpose
Continue to monitor progression
of cultural change and talent
development.
Strategy
More time for focused discussion
by the Board on strategy would
enhance effectiveness of the
Board to help drive the strategy
forward.
PROGRESS MADE DURING 2023
The Board held a strategy day in
May to discuss strategy for all
aspects of the business.
Progression on execution of
strategy is discussed at every
Board meeting and the balance
between strategic and
operational discussions at Board
meetings is monitored closely.
The Audit and Risk Committee
has oversight of risk appetite and
management and significant
areas of risk are further discussed
at the Board. Transaction
Committees of the Board were
utilised for the Board’s significant
decisions to ensure that
associated risks were discussed.
The Nomination Committee has
focused on succession planning
for management and reported
back to the Board. The Board
acknowledges that more focus on
succession planning for all
management roles will continue
in the year ahead.
The Board received regular
updates on equity, diversity and
inclusion activities, monitored
attrition rates and trends,
reviewed the output of employee
engagement and learning and
development initiatives. The
Board intends to increase its
focus further on culture and
employees in the year ahead.
The Board is large but is well
managed and represents diverse
groups. The skill set of the
Independent Non-executive
Directors is high and the
Shareholder Representative
Directors are diverse and act
independently of one another.”
INDEPENDENT NON-EXECUTIVE DIRECTOR
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GOVERNANCE
NOMINATION COMMITTEE REPORT
DEAR SHAREHOLDER
On behalf of the Nomination Committee I am pleased to present the
Committee’s Report for the year ended 31 December 2023. The
Report details the role of the Committee and describes how the
Committee has carried out its responsibilities during the year.
BOARD COMPOSITION AND APPOINTMENTS
During the year, the Committee oversaw the process for the
appointment of Jean Tomlin as an Independent Non-executive
Director. Jean has also joined the Nomination Committee and I know
that given Jean’s HR background, she will be a very valuable addition
to the Committee.
LAWRENCE
STROLL
CHAIR, NOMINATION COMMITTEE
2023 OVERVIEW
– Assessment of composition and independence of the Board
– Appointment of Jean Tomlin as Independent Non-executive
Director and member of Nomination Committee
– Appointment of Sir Nigel Boardman as Senior Independent
Director and member of Sustainability Committee
– Appointment of Marigay McKee to Nomination Committee
Nomination Committee membership
Committee members
Lawrence Stroll (Chair)
Sir Nigel Boardman
Robin Freestone
Marigay McKee
Jean Tomlin
Anne Stevens
Franz Reiner
Scott Robertson
Daniel Li
Meeting attendance
5/5
5/5
5/5
3/3
1/1
5/5
5/5
5/5
0/21
1 Daniel Li was unable to attend due to pre-existing commitments having only
joined the Board in July 2023
The Committee has carefully monitored the composition of the Board
as it has evolved over the year and debated the impact that the
additional two Shareholder Representative Director appointments
has on the overall independence of the Board. The Committee
concluded that meeting the independence requirements of the UK
Corporate Governance Code needed to be balanced with not
increasing the Board to such a size that could become unwieldy and
hinder effective debate and decision making. The Board does not
therefore currently meet the independence requirements of the Code.
the Shareholder
However,
Representatives act independently of one another and of management
and the powers of decision making are unfettered.
the Committee
is satisfied
that
DIVERSITY
The Board remains committed to increasing and maintaining diversity
in the broadest sense, not just gender and ethnicity but also experience,
skills and professional background and on this basis our Board is very
diverse. This is important as diversity at Board level sets the tone for
diversity throughout the business. Diversity brings new ideas and
fresh perspectives and will position us to achieve our strategy and
long-term growth.
In terms of gender diversity, our Board Diversity Policy reflects the
unique composition of our Board and sets the Company’s target to
achieve and maintain at least 40% of members of the Board who are
not Shareholder Representatives as female. Currently 50% of our
Board, excluding Shareholder Representatives, are female which is
above our target. 27% of the whole Board (Executive Directors,
Shareholder Representatives Directors and Independent Directors)
are female.
The Board recognises that the gender balance across the leadership
positions in the Company remains an area for further improvement,
and the Company has set itself a target that at least 30% of leadership
positions will be occupied by women by 2030.
LOOKING AHEAD
In 2024, the Committee will continue to focus on succession planning
for the executive and senior management positions together with
promoting diversity of the senior management in the Company and
the Board. I look forward to reporting on our further progress in 2024.
LAWRENCE STROLL
CHAIR, NOMINATION COMMITTEE
27 February 2024
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The Committee’s role is to provide oversight of the leadership needs
of the business, both Executive and Non-executive, with a view to
ensuring the continued ability of the Company to compete effectively
in the marketplace, to implement the strategy and achieve the
Company’s objectives. The Committee takes
into account the
challenges and opportunities facing the Company and the skills,
experience and knowledge required for the future.
Key responsibilities
– Reviewing the structure, size and composition of the Board
to ensure it has the proper balance of skills, experience,
independence, and diversity, and of its Committees and
making recommendations to the Board on any changes
required to meet current and future needs
– Succession planning for Directors and senior executives and
ensuring that plans and processes are in place for the orderly
succession of Directors, Executive Committee and other key
members of the senior management team
– Overseeing the development of a diverse talent pipeline for
succession, considering the challenges and opportunities
facing the Company and the skills, experience and knowledge
required of the Board in the future
– Identifying and nominating candidates to fill Board vacancies
for approval by the Board and ensuring that the procedure
for appointing Directors is formal, rigorous, transparent,
objective, merit-based and has regard for diversity
– Reviewing the Non-executive Directors’ time commitment,
independence and external appointments, and the annual
performance evaluation results relating to the composition
of the Board
– Keeping under review potential conflicts of interests of
Directors disclosed to the Company and reviewing annually
any conflict declarations by the Directors and any conflict
authorisations granted by the Board
– Making recommendations for the re-election by shareholders
of each Director having due regard to their performance,
ability and contribution to the Board in the light of their skills,
experience and knowledge
Freestone, Anne
COMMITTEE MEMBERSHIP AND COMMITTEE MEETINGS
The Committee currently consists of the Executive Chairman Lawrence
Independent
Stroll who
is Chair of the Committee and five
Non-executive Directors: Robin
Stevens,
Sir Nigel Boardman, Marigay McKee (who was appointed to the
Committee in May 2023) and Jean Tomlin (who was appointed to the
Committee in October 2023). In addition, the Relationship Agreements
with the significant shareholder groups (see page 126) provide that
each may appoint a Director to the Committee. Franz Reiner represents
Mercedes-Benz AG, Scott Robertson represents the Public Investment
Fund and in July Daniel Li joined the Committee as representative of
Geely. The Executive Chairman represents the Yew Tree Consortium.
Attendance at each meeting comprises the Committee members, the
Company Secretary who is secretary to the Committee and, at the
request of the Committee, the Chief Executive Officer, General
Counsel, Chief People Officer, Director of Reward, and other members
of the senior management team and external advisors who may be
invited to attend all or part of any meeting, as and when appropriate.
The Committee meets at least twice a year and has formal terms
of reference which can be viewed on the Company’s website,
www.astonmartinlagonda.com.
The Committee met five times during 2023. The Committee members‘
attendance for the period is set out on page 94. Committee meetings
usually take place prior to a Board meeting. The activities of the
Committee and any matters of particular relevance were reported by
the Committee Chair to the subsequent Board meeting.
Key activities of the Committee during the year
– Considered the appointment of additional Independent
Non-executive Directors and made a recommendation to
the Board for approval for the appointment of Jean Tomlin
– Considered and recommended to the Board for its approval
the appointment of Sir Nigel Boardman as Senior Independent
Director
– Reviewed the size, structure and composition of the Board
and the Executive Committee with respect to the needs of
the business
– Discussed Executive succession
– Discussed Board independence
Board independence and conflicts of interest
The independence, effectiveness and commitment of each of the
Non-executive Directors has been reviewed by the Committee. The
Committee is satisfied with the contributions and time commitment of
all the Non-executive Directors during the year. The Committee will
always discuss the additional commitments of all Directors (including
the Chairman) before recommending their approval to the Board. It
considers potential conflict issues as part of that assessment. This
process is supported by an annual conflicts review by the Committee
whereby the Committee reviews the Directors’ conflicts of interest
register and seeks confirmation from each Director of any changes or
updates to their position. No new conflicts were declared during
the year.
Following discussion with the Committee, Antony Sheriff stepped
down from the Board due to the potential conflict of interest presented
by his appointment as Chairman of the Supervisory Board at Rimac
Group and at Bugatti-Rimac. The Committee considered that this
presented a potential significant conflict of interest that could not
be easily managed. Antony Sheriff therefore took the decision to
resign from the Board to focus on his Rimac appointments.
In considering Jean Tomlin’s appointment to the Board, the Committee
discussed the current cross-directorship that Jean shares with Robin
Freestone. Jean and Robin both sit on the Board of Capri Holdings
Limited. However, Capri Holdings Limited is in the process of being
sold to Tapestry Inc. and the sale is expected to complete during
2024. The Committee further noted that a cross-directorship is just
one potential
impaired
and concluded that in these circumstances, the independence of Jean
and Robin was not impacted.
independence could be
indication that
The Committee is confident that each of the Non-executive Directors
remains independent and will be in a position to discharge their duties
and responsibilities in the coming year.
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NOMINATION COMMITTEE REPORT CONTINUED
Y
A
D
N
O
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impact of the additional two
The Committee discussed the
Shareholder Representative Director appointments during the year on
the overall independence of the Board. The Committee concluded
that appointing an additional three Independent Non-executive
Directors to comply with the independence requirements of the Code
would take the Board up to a total of 18 Directors which could be
detrimental to the effective operation of the Board. Ensuring that the
Board is kept at a manageable size so as to continue to facilitate
effective discussion and decision making needs to be balanced with
the benefits that independence brings. The Committee also noted the
Shareholder Representative Directors act independently of one
another so there is no dominant collective voice in the boardroom.
The Board has a high calibre of experienced
Independent
Non-executive Directors who ensure effective independent challenge
and debate at Board meetings. Therefore, despite not being in
compliance with the independence requirements of the Code, the
Committee is comfortable that the Board operates with sufficient
independence of thought and power.
The composition of the Committee meets the
independence
requirements of the Code, as does the Audit and Risk Committee and
the Remuneration Committee.
Overboarding
The Board follows the Institutional Shareholder Services (ISS) proxy
voting guidelines on overboarding and accordingly deems all its
Non-executive Directors to be within these guidelines. The Board
appreciates that other proxy bodies and institutional investors impose
more stringent guidelines than ISS and that each individual’s portfolio
of appointments must be considered on a case-by-case basis, which
the Board duly does before approving any appointments and then, on
an annual basis, to assess whether each member of the Board is able to
continue contributing effectively. The Board was not asked to approve
any additional significant external appointments for any of our
Directors during the year.
Election and re-election of Directors
The election, in accordance with the Company’s Articles of Association,
of Daniel Li, Jean Tomlin and Cyrus Jilla will be proposed for
shareholder approval at the Annual General Meeting in May 2024. All
the other Directors will stand for re-election at the Annual General
Meeting in May 2024 with the support of the Board. The Board
considers all Directors to be effective and committed to their roles
and to have sufficient time to perform their duties.
Director induction and training
Following appointment, all Directors receive a comprehensive and
tailored induction programme which is designed through discussion
with the Chair and the Company Secretary having regard to existing
expertise and any prospective Board Committee roles. The induction
includes but is not limited to face-to-face meetings with Board
members and the Executive Committee as appropriate, briefings on
the Company’s strategy, investor relations, Board and Company
policies, processes and procedures and training on the role of a
director of a listed company.
Jean Tomlin spent a day in Gaydon as part of her induction. Jean had
a tour of the Design Studio, the factory and spent time with the
CEO, CFO and other members of senior management.
All new Directors are also provided with access to the Company
electronic Board paper system which provides easy and immediate
access to all key governance documents, including Board and
Committee papers, and terms of reference.
institutional
Where appropriate, new Directors also meet with
Internal Auditors and
investors, the Company’s External and
remuneration consultants. Continuing
training and education
opportunities are available to all Directors to support the fulfilment of
their individual duties or collective Board role and to develop their
understanding of the business. The arrangements are overseen by the
Company Secretary and can be internally or externally facilitated.
Directors are also encouraged to participate in seminars and events
hosted by external organisations in different sectors to keep abreast
of broader societal trends, expectations and issues with a view to
developing broader perspectives and insights and developing wider
debate within Board discussions.
SUCCESSION PLANNING
The Board has a duty to ensure the long-term success of the Company,
which includes ensuring that it has a steady supply of talent for
executive positions and established succession plans for Board
positions. Throughout the year the Committee has reviewed and
assessed the composition of the Board and its aggregate skills,
experience and knowledge and the current and future needs of the
Board as new appointments to the Board have been made.
The Committee will continue to consider the Group’s succession
planning on a regular basis to ensure that any further changes to the
Board are proactively planned and coordinated. The Committee
monitors the development of the Executive Committee’s direct
reports team to ensure that there is a diverse supply of senior
executives in the talent pipeline. The Committee intends to focus
more on Executive Committee succession planning in the year ahead.
During the year, the Executive Committee was strengthened by the
appointments of Giorgio Lasagni as Chief Procurement Officer and
Vincenzo Regazzoni as Chief Industrial Officer. Their biographies and
those of the other members of the Executive Committee can be found
on pages 80-81. As at 31 December 2023, the Executive Committee
consists of the three Executive Directors and eight other Chief
roles. Further information on the role of the Executive Committee is on
page 84.
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DIVERSITY AND INCLUSION
The Board acknowledges that the Board’s perspective and approach
can be greatly enhanced through diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths, tenure and relevant
experience. There is also a recognition that to deliver the Company’s
strategy it is important to promote a high-performing culture,
characterised by a diverse and inclusive workforce. Diversity and
inclusion bring new ideas and fresh perspectives which fuel innovation
and creativity. The Committee considers diversity, in its widest sense
(and not limited to gender), during Board composition reviews and
the development of recruitment specifications in connection with
appointment of new Board members.
The Committee notes the new Listing Rule targets on diversity which
we are required to report on for the first time in our Annual Report this
year. The targets are: (i) at least 40% of the Board should be women;
(ii) at least one of the senior board positions (the Chair, Chief Executive
Officer, Senior Independent Director and/or Chief Financial Officer)
should be a woman; and (iii) at least one member of the board should
be from a minority ethnic background.
Taking each target in turn:
(i) We do not meet the requirement that 40% of the Board are women.
Our Board currently stands at 27% female. The composition of our
Board is unique, with seven Shareholder Representative Directors
appointed. Therefore, we state in our Board Diversity Policy that
we seek to maintain as a minimum, 40% of Board members not
subject to significant shareholder appointments to be women,
provided this is consistent with the prevailing skills and diversity
requirements of the Company as and when seeking to appoint a
new Director. Consequently, under our Board Diversity Policy, as at
the date of this Report, there are four women out of eight relevant
Board members (being the two Executive Directors and six
BOARD AND EXECUTIVE MANAGEMENT DIVERSITY
Prepared in accordance with UK Listing Rule 9.8.6R(10) as at 31 December 2023.
Independent Non-executive Directors), thereby comprising 50%.
67% of our Independent Non-executive Directors are female.
(ii) None of our senior Board positions are filled by women. When the
vacancy for a Chief Executive Officer, Chief Financial Officer, Chair
or Senior Independent Director arises, a diverse search will be
undertaken and a selection made on all relevant criteria.
(iii) We exceed the requirement that at least one Director should be
from a minority ethnic background. Our Board is diverse in
background and includes Chinese and Saudi Arabian Directors.
The Board will continue to promote diversity at Board and Executive
Committee level and throughout the business. The Company
acknowledges that it needs to improve diversity at leadership level
and this will be a continued focus for the Committee. For gender
balance of senior management and their direct reports, please see
page 53. The Committee monitors the talent pipeline to ensure we
have a diverse succession pool of talent being developed and
importantly maintained at all levels of the business. Maintaining a
diverse workforce is as important as diverse recruitment and the
Committee will focus on overseeing the work being carried out by the
business to achieve this.
COMMITTEE PERFORMANCE EVALUATION
The Committee was evaluated as part of the internal effectiveness
review of the Board and its Committees (details of which can be found
on pages 92-93).
The Committee also reviewed its own performance and was satisfied
that it continued to perform effectively and was rated highly by the
members. A key continued focus for the Committee for the year ahead
is succession planning at Executive Committee level.
Gender identity or sex1
Men
Women
Other categories
Not specified/prefer not to say
Ethnic background
White British or other White (including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specific/prefer not to say
Notes:
1 The data reported is on the basis of gender identity.
2 Excludes Executive Directors.
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management2
Percentage of
executive
management
11
4
–
–
73%
27%
–
–
4
0
–
–
8
0
–
–
100%
0%
–
–
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management2
12
–
1
1
1
–
80%
–
6.7%
6.7%
6.7%
–
4
–
–
–
–
–
8
–
–
–
–
–
Percentage of
executive
management
100%
–
–
–
–
–
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AUDIT AND RISK COMMITTEE REPORT
Audit and Risk Committee Report
ROBIN
FREESTONE
CHAIR, AUDIT AND RISK COMMITTEE
2023 OVERVIEW
– Review and assessment of full year and half year financial
reporting
– Monitoring of internal audits and remediation plans
– Oversight of risk management
– Overview of compliance activities
– Monitoring confidential reporting reports, investigations and
processes
– Review of progress of ERP implementation
– Deep dive on cyber and information security strategy
– Responding to Financial Reporting Council review of 2022
Annual Report
Audit and Risk Committee membership
Committee members
Robin Freestone (Chair)
Sir Nigel Boardman
Anne Stevens
Antony Sheriff
Meeting attendance
4/4
4/4
4/4
2/2
DEAR SHAREHOLDER
On behalf of the Audit and Risk Committee, I am pleased to present
the Committee’s Report for the year ended 31 December 2023. This
Report details the role of the Committee and describes how the
Committee has carried out its responsibilities during the year and
provided assurance on the integrity of the 2023 Annual Report
and Accounts.
FINANCIAL REPORTING
The Committee monitors the integrity of the Company’s reporting
processes and financial management, reviewing and discussing in
detail the half year and full year financial results and the conclusions of
the External Auditor. The Committee reviews and discusses the critical
judgements made and sources of estimation and
accounting
uncertainty when applying the Group’s significant accounting policies,
the going concern and viability analysis and any other significant
matters which impact financial reporting.
RISK MANAGEMENT
On behalf of the Board, the Committee oversees the process by which
risks are identified, assessed and managed. The Committee considered
the principal risks contained in the Group’s corporate risk register as
the basis for its activity during the year and leverages the three lines of
defence model and assurance mapping to monitor how the Company
manages these risks and obtains assurance over its principal risks.
TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD)
The Committee recognises the importance of the disclosures required
in accordance TCFD framework. Our TCFD report which is largely
consistent with the recommendations of the TCFD and the new
climate regulations required by the Non Financial and Sustainability
Information Statement, can be found on pages 58-63 and the
statement of compliance is on page 71.
INTERNAL AUDIT
This year, the Internal Audit plan incorporated a number of audits
including human resources core activities, finished vehicle inventory
and sales logistics procedures, Aston Martin China key financial
controls and ESG reporting governance procedures. The Committee
reviews all Internal Audit findings and monitors the implementation of
remediation actions that are identified.
AUDIT AND FINANCIAL REPORTING REFORM
The Committee has monitored the proposals of the Financial
Reporting Council (FRC) for audit reform and received updates at
every meeting on the Company’s progress to design, implement,
embed and test enhanced internal controls across finance and IT
operations in preparation for the new financial reporting regime.
Finally, I would like to thank the members of the Committee, the
management team, Internal Audit and our External Auditor for their
continued commitment throughout the year, for the open discussions
that take place in our meetings and for the contribution they all
provide in support of the Committee’s work.
ROBIN FREESTONE
CHAIR, AUDIT AND RISK COMMITTEE
27 February 2024
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Independent
The Committee
currently
Non-executive Directors: Robin Freestone who
is Chair of the
Committee, Anne Stevens and Sir Nigel Boardman. The Committee
therefore meets the requirements of the Code.
comprises
three
In accordance with the Relationship Agreements with the significant
shareholder groups (see page 126), each may appoint an observer of
the Committee with no voting rights. Michael de Picciotto, Franz
Reiner, Scott Robertson and Daniel Li currently serve as observers.
The Committee meets at least three times a year at appropriate
intervals in the financial reporting and audit cycle and otherwise as
required. The Committee has formal terms of reference which can be
viewed on the Company’s website, www.astonmartinlagonda.com.
This year the Committee met four times. The Committee members’
attendance for the period is set out on page 98. The activities of the
Committee and any matters of particular relevance were reported by
the Committee Chair to the subsequent Board meeting. There is time
made available at the end of each meeting for private sessions for the
Committee to discuss matters with the External Auditor and the
Director of Internal Audit & Risk without members of management
being present.
Effective governance over financial
reporting and risk management,
together with a robust system of
internal controls, are critical to
achieving our strategy.”
Attendees at each meeting comprise the Committee members, the
observers and the Company Secretary who is secretary to the
Committee. The Chief Executive Officer, the Chief Financial Officer,
the General Counsel, the Director of Internal Audit & Risk, the External
Auditor, Ernst & Young LLP (“EY”), and other senior members of the
finance team also routinely attend meetings upon invitation by the
Chairman.
The Code stipulates that the Committee, as a whole, shall have
competence relevant to the sector in which the Company operates. All
Committee members have past employment experience of financial
reporting and/or international business or engineering and collectively
have a broad range of expertise that enables them to provide oversight
of both financial and risk matters, and to advise the Board accordingly.
As such the Board is satisfied that the Committee, as a whole, has the
competence relevant to the business sector. At least one Committee
member should have recent and relevant financial experience and
Robin Freestone meets this requirement having previously held the
position of Chief Financial Officer of Pearson plc and as a qualified
chartered accountant. Details of the Committee members’ experience
can be found in their biographies on pages 77-79.
Key responsibilities of the Committee
– Reviewing and assessing the integrity of the Group’s financial
and narrative statements, formal announcements of the
Group’s performance and significant financial reporting issues
and judgements which they may contain and recommending
these for approval by the Board
– Advising the Board on whether the Annual Report and
Accounts, taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company’s performance, business
model and strategy
– Ensuring compliance with accounting standards and policies,
and reviewing and challenging the application of such
standards and policies and, if unsatisfied, reporting its views
to the Board
– Reviewing for approval by the Board the Company’s going
concern and viability statements and providing advice to the
Board on how the Company’s prospects have been assessed,
taking into account the Company’s position and principal risks
– Receiving and reviewing reports from the Company’s External
Auditor, monitoring its effectiveness and independence and
making recommendations to the Board in respect of its
remuneration and appointment
– Overseeing policies on the engagement of the External
Auditor for the supply of non-audit services and assessing
whether non-audit services have a direct or a material effect
on the audited financial statements
– Reviewing the Group’s internal financial, operational and
compliance controls and Enterprise Risk Management
Framework and system and considering Group policies for
identifying and assessing risks and arrangements for
employees to raise concerns using the “Speak Up”
Confidential Reporting process about possible improprieties
while ensuring appropriate safeguards are in place
– Reviewing and approving the annual Internal Audit plan and
discussing the findings of any internal investigations and
management’s response
KEY ACTIVITIES OF THE COMMITTEE DURING THE YEAR
Financial reporting
– Considered and reviewed the UK Corporate Governance Code
requirements relating to year-end matters including, among others,
the review of the Group’s accounting policies, key accounting
estimates, significant financial reporting matters, principal risks,
going concern and viability, the effectiveness of the Group’s risk
management and internal control systems and “fair, balanced and
understandable” reporting in the 2022 Annual Report
– Reviewed the half year accounts, including the material
judgements and estimates
– Received and considered reports from the External Auditor on the
full year and half year audits
– Reviewed the Financial Statements, announcements and other
financial reporting matters including the approval of the interim
results announcement, trading updates and the review of the 2022
Annual Report
– Considered the correspondence from the FRC which raised a
number of questions relating to the Company’s 2022 Annual
Report and reviewed management’s responses
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AUDIT AND RISK COMMITTEE REPORT CONTINUED
External audit
– Assessed the External Auditor’s independence, objectivity and
effectiveness
– Considered and recommended to the Board the reappointment
of the External Auditor
– Considered External Auditor fees and their terms of engagement
– Reviewed the Non-Audit Services Policy
– Reviewed the External Auditor non-audit services and fees
Risk management and internal controls
– Monitored the Company’s corporate risk register, including the
identification and assessment of the Group’s principal and
emerging risks and movement in such exposures
– Reviewed the effectiveness of the Group’s Enterprise Risk
Management Framework and System and internal control systems
– Considered responses, and their timeliness, to audit findings and
recommendations for control improvements
– Reviewed the risk management and internal controls disclosures in
the half year accounts and Annual Report
– Reviewed and approved the updated Confidential Reporting
Policy, including an analysis of investigations undertaken during the
year
– Received regular reports related to the implementation of the new
ERP system and reviewed the key challenges and risks associated
with the project
– Received regular reports on the developments of the FRC’s
proposals for corporate governance and audit reform ahead of
the proposed new financial reporting regime
– Reviewed the Annual Fraud Risk Assessment and related fraud
prevention and detection control activities
– Received updates on material litigation
Internal Audit
– Approved the annual Internal Audit plan and approach for 2024,
including its alignment to the principal risks, emerging areas of risk,
coverage across the Group and continuing review of the Group’s
processes and controls
– Monitored and reviewed the effectiveness and independence of
the Internal Audit function including consideration of key Internal
Audit reports, and the implementation of Internal Audit
recommendations
– Provided oversight of delivery of the 2023 Internal Audit plan,
reviewing Internal Audit reports and findings issued during the year
and the status of implementation of recommended corrective actions
Other areas
– Reviewed and recommended to the Board for approval the revised
Committee terms of reference
– Reviewed the results of the evaluation of the effectiveness of the
Committee
– Approved TCFD disclosures for the Annual Report
– Received an update on tax matters for the Group and reviewed and
recommended to the Board approval of the Group’s annual tax
strategy and publication on the Company website
– Received a treasury update
– Received a pension strategy update
Financial reporting and significant financial judgements and
estimates
One of the Committee’s principal responsibilities is to review and
report to the Board on the clarity and accuracy of the Group’s Financial
Statements, including the Annual Report and the Interim Results
Statement. The Annual Report seeks to provide the information
necessary to enable an assessment of the Company’s position and
performance, business model and strategy. The Committee assists
the Board with the effective discharge of its responsibilities for
financial reporting, and for ensuring that appropriate accounting
policies have been adopted and that management has made
appropriate estimates and judgements. In preparing the Financial
Statements for the period, there were a number of areas requiring the
exercise of a high degree of estimation. These areas have been
discussed with the External Auditor to ensure the Group reaches
appropriate conclusions and provides the required level of disclosure.
The significant issues considered by the Committee in respect of the
Annual Report are set out on page 101.
Management are responsible for establishing and maintaining
adequate
internal controls over financial reporting. These are
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of Financial Statements for
external reporting purposes. The financial reporting internal control
system covers the financial reporting process and the Group’s process
for preparing consolidated accounts.
includes policies and
procedures which require the following:
It
– The maintenance of records that, in reasonable detail, accurately
and fairly reflect transactions including the acquisition and disposal
of assets
– Reasonable assurance that transactions are recorded as necessary
to permit preparation of Financial Statements in accordance with
International Financial Reporting Standards
– Reasonable assurance regarding the prevention or timely
detection of unauthorised use of the Group’s assets
There are also specific disclosure controls and procedures around the
approval of the Group’s Financial Statements.
Fair, balanced and understandable
The Board recognises its duty to ensure that the Annual Report and
Accounts, taken as a whole, are fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy. To
enable the Board to have confidence in making this statement, it
requested that the Committee undertake a review and report to the
Board on its assessment. The key elements of the assurance framework
which supports the assessment by the Committee were:
– the process by which the Annual Report and Accounts were
prepared, including detailed project planning and a
comprehensive review process;
– review of the drafting and verification processes for the Annual
Report and Accounts by the Disclosure Committee;
– comprehensive reviews undertaken by the Executive Directors,
members of the Executive Committee and other members of
senior management comprising the Annual Report and Accounts
drafting team to consider content accuracy, regulatory
compliance, messaging and balance;
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION – the review of the Annual Report and Accounts by the Audit and
Risk Committee placing reliance on the experience of the
Committee members;
– reports prepared by senior management regarding critical
accounting judgements, estimates and key financial areas; and
– discussions with, and reports prepared by, the External Auditor.
The Committee received confirmation from management that the
assurance framework had been adhered to for the preparation of the
2023 Annual Report and Accounts. The Committee provided a
recommendation to the Board that the
fair, balanced and
understandable statement could be given on behalf of the Directors.
The Board’s confirmation is set out on page 129.
Significant matters for the year ended 31 December 2023
and how the Committee addressed these matters
Impairment of finite life intangible assets
The Committee considered the Group’s process in determining
whether any asset, covered within the scope of IAS 36 Impairment
of Assets, requires impairment. The Committee considered whether
there were any indicators of impairment of assets with a finite life
and concluded that the assumptions made, conclusions reached and
disclosures given were appropriate.
Recognition and measurement of deferred tax assets
The Group has considered the forecasts presented by management
that indicated the capability of the Group to generate future taxable
profits to recover the deferred tax asset of £156.3m. The Committee
concluded that the recognition of the deferred tax asset and the
disclosures given were appropriate.
Going concern and viability statement reporting
The Committee discussed the Group’s considerations in assessing
the appropriateness of adopting the going concern basis of
accounting and considered the financial statement disclosures
in respect of adopting the going concern basis in preparing the
financial information. The Committee concluded that adopting the
going concern basis and the disclosures given were appropriate.
The Committee discussed the key assumptions used in evaluating
the long-term viability of the Group, the time period for the Viability
Statement and the stress and reverse stress testing used as a basis
for conducting the overall assessment. The Committee concluded
that the assumptions made and the wording included in the viability
statement were appropriate.
Other matters
At the November 2023 and February 2024 meetings, the Committee
also considered management’s papers on the following subjects and
concluded that the assumptions made and the approaches adopted
were appropriate:
– the Group’s revenue recognition policies;
– accounting for defined benefit pension obligations;
– recognition and measurement of the Group’s warranty provision;
– recognition and measurement of adjusting items;
– accounting for the placing and debt repurchase;
– accounting for the exercise of the AMR GP warrants; and
– accounting for the Lucid transaction
Financial Reporting Council (FRC)
In July 2023, the Company received a letter from the FRC requesting
additional information and explanations on two principal areas of
disclosure in the Company’s 2022 Annual Report and Accounts. The
FRC requested information on how the claims filed against the
Company by Nebula Project AG were reflected in the accounts, and as
a result of the Company’s response, this query was closed. The FRC
also asked for further information on how the Company satisfied the
requirements of IAS 36 in determining that the Parent Company
carrying value of the investment was not impaired at 31 December
2022. A full review of the disclosures within the Parent Company
accounts and discussion with the Company’s External Auditor and
review by the Committee, concluded there were three adjustments
required to the Parent Company financial statements for the year
ended 31 December 2022:
(i) Impairment of the Parent Company investment in subsidiaries
(ii) Reversal of the Expected Credit Loss provision made against the
intercompany receivable balance between the Company and
Aston Martin Lagonda Limited; and
(iii) Reclassification of the intercompany receivable from current to
non-current.
Each of these adjustments relate to technical accounting matters with
no impact on the Group’s results or Group financial statements. The
prior year restatement can be found on page 158. The FRC confirmed
its agreement to this restatement and the matter has now been closed.
The Company acknowledges that the FRC’s review of its Annual
Report 2022 provided no assurance that the Annual Report is correct
in all material respects and that the FRC’s role is not to verify
information provided but to consider compliance with reporting
requirements. The FRC accepts no liability for reliance on its letters by
the Group or any third party, including but not limited to investors and
shareholders.
In February 2024, the FRC’s Audit Quality Review Team (AQRT)
completed a review of EY’s audit of the Company’s financial statements
for the period ended 31 December 2022. The Committee considered
the final inspection report findings, noted the area of good practice
and discussed the results with the lead audit partner including the
actions the audit team have taken in conducting the 2023 audit. The
Committee noted the overall assessment by the AQRT, as part of
its assessment of the quality and effectiveness of the external audit.
Committee’s oversight of external audit
The Committee oversees the work undertaken by EY. EY was
appointed as External Auditor with effect from 24 April 2019, following
an audit tender process. Shareholders approved EY’s re-appointment
at the Company’s Annual General Meeting on 17 May 2023. The
Committee’s responsibilities include making a recommendation on
the appointment, re-appointment and removal and remuneration of
the External Auditor. The Committee assesses the qualifications,
expertise, resources and independence of the External Auditor and
the effectiveness of the audit process. The Committee Chair also has
regular contact with the external audit partner outside of Committee
meetings without the presence of management. During the period the
Committee approved the External Audit plan, the proposed audit fee
and terms of engagement of EY for FY 2023. It has reviewed the audit
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process and the quality of the audit delivery and the quality and
experience of the audit partner engaged in the audit and has also
considered the extent and nature of challenge demonstrated by the
External Auditor in its work and interactions with management. The
Committee has considered the objectivity of the External Auditor
including the nature of other work undertaken for the Group as set
out below.
Independence and re-appointment of the External Auditor
The Committee reviewed the independence and objectivity of the
External Auditor during the year and confirmed that it considers EY to
remain independent. The Committee also considers that the Company
has complied with the Statutory Audit Services for Large Companies
Investigation (Mandatory Use of Competitive Tender
Market
Processes and Audit Committee Responsibilities) Order 2014 for the
financial year under review.
The External Auditor is required to rotate the audit engagement
partner every five years. The current engagement partner, Simon
O’Neill, began his appointment at the commencement of the 2019
financial year and therefore a new audit engagement partner will be
appointed with effect from the 2024 financial year. Based on the
Committee’s recommendation, the Board is proposing that EY be
re-appointed to office at the Annual General Meeting on 8 May 2024.
Non-audit services
The Committee recognises that the independence of the External
Auditor is an essential part of the audit framework and the assurance
that it provides. The Committee adopted a policy which sets out a
framework for determining whether it is appropriate to engage the
Group’s auditors for permissible non-audit services and for
pre-approving non-audit fees. The overall objective of the policy is to
ensure that the provision of non-audit services does not impair the
External Auditor’s independence or objectivity. This includes, but is
not limited to, assessing:
– any threats to independence and objectivity resulting from the
provision of such services;
– any safeguards in place to eliminate or reduce these threats to
a level where they would not compromise the Auditor’s
independence and objectivity;
– the nature of the non-audit services; and
– whether the skills and experience of the audit firm make it the most
suitable supplier of the non-audit service.
The total value of non-audit services that can be billed by the External
Auditor is restricted by a cap set at 70% of the average audit fees for
the preceding three years which produced a cap for the 2023 financial
year of c.£400,000.
The approval of the Committee must be obtained before the External
Auditor is engaged to provide any permitted non-audit services. For
permitted non-audit services that are clearly trivial, the Committee
has pre-approved the use of the External Auditor for cumulative
amounts totalling less than £200,000 on the approval of the Chief
Financial Officer and Chair of the Committee.
During FY 2023 the following permitted audit-related services have
been approved in accordance with this policy:
– Review of the Company’s interim financial statements for the
period ended 30 June 2023 – £59,125.
In granting approval for these services, the Chief Financial Officer and
Chair of the Committee considered the nature and level of non-audit
services provided by the External Auditor and was satisfied that the
independence of the External Auditor was not
objectivity and
compromised by the non-audit work undertaken during the year.
Details of the fees paid to the External Auditor during the financial year
can be found in note 4 to the Financial Statements.
internal control
Internal controls and risk management
The Board is ultimately responsible for the Group’s system of internal
controls and risk management and it discharges its duties in this area
by determining the nature and extent of the principal risks it is willing
to accept in pursuit of the Group’s strategic objectives (the Board’s
risk appetite); and challenging management’s implementation of
effective systems of risk identification, assessment and mitigation.
The Committee is responsible for reviewing the effectiveness of the
risk management
Group’s
arrangements. The system of internal controls is designed to manage
rather than eliminate the risk of not achieving business objectives and
can only provide reasonable and not absolute assurance against
material misstatement or loss. This process complies with the
Guidance on Risk Management, Internal Control and Related Financial
and Business Reporting issued by the FRC. It also accords with the
provisions of the Code. Details of the Group’s risk management
process and the management and mitigation of principal risks
together with the Group’s Viability Statement can be found in the Risk
and Viability Report on page 70.
framework and
The Board, through the Committee, has carried out a robust
assessment of the principal risks facing the Group and agreed the
nature and extent of the principal risks it is willing to accept in delivering
the Group’s strategy (the Board’s risk appetite). It has considered the
effectiveness of the system of internal controls in operation across the
Group for the period covered by the Annual Report and up to the date
of its approval by the Board. This review covered the material controls,
including financial, operational and compliance controls and risk
management arrangements.
Control environment – internal control framework
The internal control framework is built upon established entity-level
controls. The Group defines its processes and ways of working
through documented standards and procedures which guide the way
the Group operates, based on a set of Group Framework Policies,
which establish the core principles of conduct of the Group and its
employees. These Group Framework Policies address a number of
topics including compliance laws, quality, responsible procurement,
equity diversity and inclusion, IT and cyber-security, intellectual
property, conflicts of interest and confidential reporting.
On joining the Group all employees are provided with the Group
Framework Policies and are asked to confirm that they have read and
understood them. Focused training is then provided on these topics at
regular intervals, on a targeted basis.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION The Group Framework Policies are supplemented by functional
policies, procedures and standards which move away from principles
to address specific actions and requirements. These are added to and
enhanced as laws change and practice evolves.
There are established procedures for the delegation of authority to
ensure that decisions are made at an appropriate level within the
business dependent on either the magnitude or nature of the decision.
In particular, access to the Company IT systems and applications is
provided subject to formal access provisioning processes with the
objective being to limit access, as appropriate, to enable an individual
to perform their role and to enforce appropriate segregation of duties
within business processes. The delegations of authority policy was
updated during the year to reflect good practice and incorporate
some new key elements.
The Company maintained its ISO 9001 accreditation for its quality
management system which ensures that policies, standards and
procedures are appropriate for the business, that they are reviewed on
a regular basis and made available to applicable employees and
contractors through the Group intranet.
Code of Conduct
The Group launched a new Code of Conduct in 2023, which was
developed in collaboration with colleagues across the business and
approved by the Executive Committee. It applies to all companies
within the Group and to all directors, employees, temporary workers
and contractors.
The Code and the Group Framework Policies referenced within it are
the foundation of the Company’s governance model, but the Code
also sets the tone of the Company’s expectations of high ethical
standards in all business conduct. Building on the Company’s Values to
address expected behaviours in specific areas, the Code of Conduct
sets out a decision-tree to help colleagues make the right choices,
even where there is not a policy to provide guidance. This is an
important part of our mission to drive a culture defined by integrity,
which the Company sees as equal to its drive for high performance.
Compliance
Led by our Corporate Compliance team, reporting to the Executive
Committee and the Audit and Risk Committee, the Company has
embarked on a programme to review and enhance our compliance
management system. In 2023, we have prioritised policies, governance
and training which set the foundations for effective compliance.
All corporate compliance policies underwent a significant review and
update in the year, with additional risk areas being added to the
framework to reflect regulatory change and focus. In anticipation of
the coming into force of the new UK “failure to prevent fraud” offence,
fraud risk and prevention has been incorporated into a Framework
Policy. Compliance training courses have been reviewed and new
programmes put in place, tailored to the specific audiences.
The Company is committed to conducting all business in an honest
and ethical manner. The Company expects all employees – and anyone
carrying out work on behalf of the Company – to not only comply with
the law but also to always maintain the highest standards of ethical
business conduct and personal behaviour.
CODE OF CONDUCT: HIGH INTEGRITY.
HIGH PERFORMANCE
Two corporate compliance topics have had particular focus in 2023.
(i) Data protection and cyber-security
Aston Martin complies with the UK and EU GDPR and other applicable
national data privacy laws, when it comes to the processing of
customer, employee and other individuals’ personal data. As the
Company develops its “connected cars” programme, data protection
becomes increasingly relevant to the design, engineering, production
and on-going management of vehicles. This area, alongside the
vehicle cyber-security standards, has been an area of particular focus
as we strive to ensure that customer and third party personal
information is managed responsibly and compliantly.
(ii) Economic and trade sanctions
In light of the increase in sanctions being imposed by the UK, EU, UN
and other nations (as a result mainly of the on-going conflict in the
Ukraine), the Company has had a particular focus on evaluating and
reviewing its dealings with third parties, including suppliers and
customers. Some sanctions prohibit dealings with designated
individuals, others are directed at the nature and origin of materials.
There has been an increase in anti-circumvention sanctions measures
which place greater emphasis on assurance down the supply chain
as to the origin of supply of parts. As a consequence, the Company
has increased the scrutiny on supplies, as well as enhanced its ‘know
your customer/supplier’ checks. The Company also adopted a new
Sanctions Compliance Policy in 2023.
Enterprise Risk Management Framework and System
The Group continues to strengthen the control environment by
embedding the Enterprise Risk Management Framework and System
which is supported by Risk Champions within each function. A
summary of the key risk management activities undertaken by the
Group is included within the Risk and Viability Report on page 70. The
Internal Audit & Risk Management function
is responsible for
administering the Enterprise Risk Management Framework and
System and for providing independent assurance to the Board, the
Committee and senior management.
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AUDIT AND RISK COMMITTEE REPORT CONTINUED
The Group uses a three lines of defence assurance model with the
objective of embedding effective risk management and control
throughout the business and providing assurance to the Board and the
Committee of the effectiveness of
internal controls and risk
management across the organisation. This comprises the following:
FIRST LINE OF DEFENCE
Functional management who are responsible for embedding risk
management and internal control systems into their business
processes.
–
SECOND LINE OF DEFENCE
Functions which oversee or specialise in risk management and
compliance-related activity. They monitor and facilitate the
implementation of effective risk management and control
activities by the first line. These functions include Financial
Internal Control, Quality Audit, Security, IT, Health and Safety,
Environmental, Corporate Compliance and the risk management
activities performed by the Internal Audit & Risk Management
team.
–
THIRD LINE OF DEFENCE
Functions which provide independent objective assurance to the
Board, Audit and Risk Committee and senior management
regarding the effectiveness of the first and second lines of
defence. This includes Internal Audit & Risk Management and the
External Auditor and other external providers of assurance
including those which provide assurance over dealer adherence
to operating standards and assurance over data within our
Sustainability Report.
Internal Audit
The Internal Audit & Risk Management function provides independent,
objective assurance and advice to the Board, the Committee and
senior management on whether the existing control and governance
frameworks are operating effectively to meet the Group’s strategic
objectives and to help the Company identify and mitigate any potential
control weaknesses and identify any emerging risks.
The Director of Internal Audit & Risk reports to the Chief Financial
Officer with an independent reporting line to the Committee Chair.
The Director provides regular reports to the Committee on the
function’s activities, which detail significant audit findings, progress of,
and any changes to, the Internal Audit plan and updates on agreed
rectify control weaknesses. Where
management actions
appropriate, the Director will provide a deep dive into an issue where
either the Committee has requested more information or the Director
considers it pertinent.
to
The Committee assesses the effectiveness of the Internal Audit & Risk
Management function on an annual basis. To ensure that it is meeting
its objectives, the Internal Audit & Risk Management function has an
annual work plan comprising risk-based cyclical audits, reviews of risk
mitigation plans and assessments of emerging risks and business
change activity, together with work mandated for compliance
purposes. At the November 2023 Committee meeting the Internal
Audit plan for 2024 was approved by the Committee and the
Committee will monitor progress against the plan in the coming year,
as well as whether the plan remains focused on the evolving key risks
facing the business. Such reviews will consider any changes to risk
registers, current hot topics and emerging risks in the industry as well
as changes based on engagement with the business.
During the year, 16 internal audits were carried out including human
resource core activities, gifts and hospitality policy adherence,
finished vehicle inventory and sales logistics procedures and key
financial controls in Aston Martin Lagonda China. The conclusions of
the audits were discussed by the Committee and remediation actions
were agreed where required.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION The investigation reports are received and reviewed by the Chief
Executive Officer, the General Counsel, the Chief People Officer and
the Chair of the Committee. The investigation outcomes, significant
findings and status are reported to the Committee on a regular basis,
with all significant matters being reported directly to the Board.
During the year, 17 new reports were submitted via the confidential
reporting facilities. The Committee monitored and assessed the
outcome of the resulting investigations.
The Group has established
procedures to ensure there is an
appropriate mechanism for
employees and other stakeholders
to report any concerns regarding
suspected wrongdoing or
misconduct.”
Committee performance evaluation
The Committee was evaluated as part of the internal effectiveness
review of the Board and its Committees (details of which can be found
on pages 92-93) and concluded that it continued to perform effectively
and was rated highly by all the members. There were no areas flagged
for improvement, but the Committee requested that reducing the
level of detail in the papers and distributing the papers to allow more
reading time in advance of the meeting would increase effective
discussion at the meetings. This will be addressed in the year ahead.
Confidential reporting
The Group has established procedures to ensure there are appropriate
mechanisms for employees and other stakeholders to report any
concerns regarding suspected wrongdoing or misconduct. The
Confidential Reporting Policy sets out the procedures and mechanisms
for raising concerns in strict confidence. This policy has been revised
during the year and is made available to all employees on joining the
business, it is included within the new Code of Conduct and the details
are published on the Group intranet and employee noticeboards. The
systems for confidential reporting are promoted in all new compliance
eLearning programmes.
Any concerns raised under this Policy are managed by the Director of
Internal Audit & Risk Management and investigated with support from
Human Resources and/or Compliance teams depending on the nature
of the concern.
Multiple options have been provided to enable the workforce to
“Speak Up” and raise concerns, including through their line manager,
senior management and through a third-party managed confidential
reporting system. This system enables web, telephone and app based
reporting of concerns confidentially, even anonymously if desired,
through the third party hotline, which are available throughout the
year and across the globe. A poster campaign has been rolled out
during the year at all sites to increase awareness of the “Speak Up”
confidential reporting hotline.
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SUSTAINABILIT Y COMMITTEE REPORT
Sustainability Committee Report
DR. ANNE
STEVENS
CHAIR, SUSTAINABILITY COMMITTEE
2023 OVERVIEW
– Deep dive on sustainable design and innovation
– Focus on diversity and inclusion
– Discussion on CO2 emissions reduction plan
– Close monitoring of progress being made on Racing. Green.
targets
Sustainability Committee membership
Committee members
Anne Stevens (Chair)
Marigay McKee
Sir Nigel Boardman
Antony Sheriff
Meeting attendance
4/4
4/4
2/2
1/1
DEAR SHAREHOLDER
On behalf of the Sustainability Committee, I am pleased to present the
Committee’s Report for the year ended 31 December 2023. Achieving
Aston Martin’s ambition to become a world-leading sustainable ultra-
luxury automotive business requires an ongoing commitment to
deliver our Racing. Green. strategy. Throughout 2023 and into 2024,
we continue to execute plans to deliver our commitments to tackle
climate change.
Our progress in developing alternatives to the Internal Combustion
Engine continues, enabled by an expanding Electric Vehicle
transformation programme, including partnerships with Mercedes-
Benz and Lucid.
Alongside this, we continue to focus on minimizing the impact from
our operations. Our manufacturing facilities at Gaydon, St Athan and
Newport Pagnell are now carbon neutral. We are aiming to achieve
net-zero manufacturing facilities by 2030 and across our supply
chain by 2039.
Aston Martin continues to focus on minimizing its impact on the
environment, grow its positive contribution to society and embrace
strong governance.
Our customers are key to our brand and our success. For the ultra
luxury experience, vehicle design, performance, safety and quality are
critical but corporate ethos, as global sustainability, is becoming
equally important.
Achieving Aston Martin’s ambition
to become a world-leading
sustainable ultra-luxury
automotive business requires an
ongoing commitment to deliver
our Racing. Green. strategy.”
In 2023, Aston Martin celebrated its 110th anniversary, reflecting on a
proud history that has seen the Company firmly established as an
iconic brand in British automotive manufacturing. In the same year, it
has been great to see Aston Martin advance so positively towards a
new era, where success is increasingly defined by strong sustainability
commitment and performance. Our customers, staff, shareholders
and other stakeholders expect us to lead in sustainability just as we
already do in areas such as design, performance and innovation.
Progress must continue in the years ahead.
DR. ANNE STEVENS
CHAIR, SUSTAINABILITY COMMITTEE
27 February 2024
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION COMMITTEE MEMBERSHIP AND COMMITTEE MEETINGS
The Committee currently comprises three
Independent Non-
executive Directors: Anne Stevens who is Chair of the Committee, Sir
Nigel Boardman and Marigay McKee. Antony Sheriff stepped down
from the Committee upon leaving the Board in May 2023. Sir Nigel
Boardman joined the Committee upon Antony Sheriff’s departure.
The Chief Financial Officer, Chief Executive Officer, Chief People
Officer, General Counsel, Chief Industrial Officer and Executive
Consultant to the Chief Executive Officer attend the Committee
meetings along with the Head of Government Affairs and Sustainability,
the Director of Internal Audit and Risk and the Head of Investor
Relations.
The Committee meets at least twice a year and has formal terms of
reference which can be viewed on the Company’s website,
www.astonmartinlagonda.com. This year the Committee met four
times. The Committee members’ attendance for the period is set out
on page 106. The activities of the Committee and any matters of
particular relevance were reported by the Committee Chair to the
subsequent Board meeting.
KEY RESPONSIBILITIES OF THE COMMITTEE
The role of the Committee is to oversee, on behalf of the Board, the
Company’s sustainability strategy, which focuses on five strategic
pillars:
– Tackling climate change
– Creating a better environment
– Investing in people and opportunity
– Exporting success
– Delivering the highest standards
The Sustainability Committee is supported by ten dedicated working
groups focused on areas ranging from energy management to
development of a sustainable supply chain. For further information,
see page 58.
COMMITTEE PERFORMANCE EVALUATION
The Committee was evaluated as part of the internal effectiveness
review of the Board and its Committees (details of which can be found
on pages 92-93). The report is very positive highlighting that the
Committee is highly effective, with outstanding leadership. The
Committee concluded that to increase its effectiveness further, it
would benefit from greater visibility of what other companies in the
automotive industry are doing to promote sustainability and increase
the time dedicated at meetings to deep dive topics.
Key responsibilities of the Committee
– Reviewing and making a recommendation to the Board to
approve the Sustainability Report and the Modern Slavery
Statement
– Reviewing periodically the sustainability strategy and
considering whether there should be any changes, including
to the targets detailed in the sustainability strategy and
making a recommendation to the Board for approval
– Monitoring the progress of the sustainability strategy
– Reviewing the annual Sustainability Materiality Assessment
and providing comments and guidance
– Considering and making a recommendation to the Board to
approve the Company’s Sustainability Report and where
relevant recommending to the Board any other public
documents to be approved for disclosure concerning
sustainability-related matters
– Receiving regular updates from the various ESG working
groups which are executing the sustainability strategy
– Receiving updates on and reviewing (on an ongoing basis) the
Company’s external sustainability ratings and accreditations
– Receiving updates on (and reviewing on an ongoing basis)
sustainability reporting requirements and changes to
government strategy, policies and laws impacting
sustainability
– Monitoring external trends, developments and emerging best
practices that may affect the Company’s reputation or
sustainability and ESG strategy, objectives and targets
– Monitoring the level of resource, competence and
commitment applied to the management of sustainability and
ESG issues
– Receiving relevant sustainability audit findings and details of
sustainability-related assurance activity
Key activities of the Committee during the year
– Reviewed and recommended to the Board for approval the
2022 Sustainability Report
– Reviewed reports from the Company’s sustainability working
groups
– Monitored safety performance
– Discussed the Company’s gender diversity plan
– Carried out deep dives on sustainable design and innovation,
environment strategy, procurement and communications
– Discussed the Company’s proposed CO2 emissions reduction
plan
– Discussed and reviewed progress being made on Racing.
Green. targets and requested enhancements to the
dashboard reporting of the targets
Further information on sustainability can be found on pages 42-63
and also
the Company’s 2023 Sustainability Report at
www.astonmartinlagonda.com.
in
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DIRECTORS’ REMUNER ATION REPORT
Directors’ Remuneration Report
DR. ANNE
STEVENS
CHAIR, REMUNER ATION COMMITTEE
CONTENTS
110 Executive Directors’ Remuneration At a Glance
111 Annual Report on Remuneration
Salary, pension, and benefits
111 FY 2023 total single figure remuneration
111
112 Annual bonus
113 Long-term incentive plan
116 Share interests and shareholding guidelines
117 CEO remuneration relative to employees
119 Non-Executive Directors’ remuneration
121 Remuneration Committee in FY 2023
DEAR SHAREHOLDER
I am pleased to present the Directors’ Remuneration Report (DRR) for
the year ending 31 December 2023, which has been approved by both
the Remuneration Committee (the Committee) and the Board.
As set out by both the Executive Chairman and CEO in their statements,
2023 – the historic year of our 110th anniversary – represented another
important year for Aston Martin, with the efforts of our people
ensuring significant strategic milestones and financial progress were
delivered. The team has worked incredibly hard on our journey to
strengthen Aston Martin’s position as an ultra-luxury brand and key
2023 achievements included the successful launches of the DB12 and
DB12 Volante, the global celebration of our historic 110th anniversary
and the opening of our first global flagship location, Q New York.
We successfully launched our first
all-employee share plan, “Aston
Martin Sharing. Success.”, awarding
425 free shares to 2,541
employees, giving everyone the
chance to share in the future
success of the Company.”
FY 2023 annual bonus approach and outcome
The Company-wide annual bonus that operated in 2023 included a
Group scorecard of performance measures that applied to annual
bonus for all employees, providing strong alignment of focus to best
reflect annual progress on our business plan and KPIs. For 2023, the
scorecard was weighted 85% on financial measures (including a 50%
weighting on Adjusted EBITDA, 20% on Free Cash Flow and 15% on
volumes) and 15% on Quality performance.
All elements of the bonus operated independently, and with our
FY 2023 Adjusted EBITDA outcome of £306m just ahead of the target
set, a payment of 34% of maximum bonus (68% of target) will be paid
based on Adjusted EBITDA, wholesale volumes and quality metrics
achieved (and no payment with respect to the FCF or retail volumes
measures, where outcomes were below the threshold set). Full details
of performance against the 2023 annual bonus targets are set out on
page 112. Against the backdrop of the overrall business performance
for FY 2023, including the strategic milestones and financial progress
delivered, the Committee was comfortable that the formulaic
outcome was fair and appropriate, therefore no discretion was
exercised in relation to the 2023 annual bonus.
FY 2021 Long-Term Incentive Plan (LTIP) outcome
Neither the CEO nor CFO held awards under the 2021 operation of the
LTIP, as they were both appointed to their current roles during
FY 2022.
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FY 2024 REMUNERATION APPROACH
FY 2024 executive director salaries
The Committee reviewed the CEO and CFO’s salaries for 2024 and
decided to apply an increase of 3%, taking their salaries to £925,000
and £485,000 respectively from 1 April 2024. This level of increase
is lower than the 2024 average pay increases that will apply for
employees across the workforce.
FY 2024 annual bonus
The Committee has decided to broadly maintain the existing approach
to the annual bonus. However, for 2024, we are making some important
changes to the Group KPI scorecard to incorporate an additional
non-financial performance element focused on ESG.
We have successfully launched and continue to embed and develop
our Sustainability strategy, Racing. Green., across Aston Martin. We
strongly believe that an increased focus on ESG performance will help
to improve operational excellence and drive innovation across the
Company. Our ESG ambitions are central to our business and
sustainability strategy, and are of critical importance to Aston Martin
as we focus on developing our culture and improving engagement
across the workplace. The Committee believes that now is the right
time for us to take our first steps to linking our incentives to ESG
measures aligned with our strategy.
The 2024 Group KPI scorecard will therefore include an 80% weighting
on financial measures, down from 85% last year (including a 50%
weighting on Adjusted EBITDA, 20% on Free Cash Flow and 10% on
volumes). The non-financial element will continue to focus on our
Quality performance (with a 15% weighting) and the new ESG element,
weighted at 5%, will focus on achieving metrics linked to the safety
of our people. Whilst the Committee recognises that a weighting of
5% is relatively low compared to market practice, we believe it is
appropriate as we continue to embed our Racing. Green. strategy
throughout the business and to also ensure focus is maintained on our
critical financial and quality priorities. Looking ahead, we will review the
weighting and type of ESG measures in our incentive plans, including
whether they should be incorporated in the annual bonus and LTIP, as
we further develop and embed Racing. Green. within the organisation.
There is no change to the bonus opportunity for the executive
directors. Full details of the 2024 annual bonus approach are set out
on page 113.
FY 2024 LTIP
The Committee has decided to maintain the existing approach to the
LTIP, with updated Adjusted EBITDA targets for 2024 awards
(accounting for 80%) which reflect the new three-year period
(1 January 2024 to 31 December 2026) of the business plan. The
remaining 20% will payout based on relative TSR performance. There
is no change to the LTIP opportunity for the executive directors, and
awards will be subject to a 2-year post vesting holding period, in-line
with our 2022 remuneration policy. Full details of the 2024 LTIP
approach are set out on page 115.
Broader workforce reward
Passionate, motivated and professional people are critical to the
success of Aston Martin and, to attract and retain the best talent
available, our pay and benefits must be competitive. When considering
the remuneration of the executive directors and executive committee,
the Committee considers remuneration across the whole Company.
The Committee was kept informed of the key areas of focus around
Aston Martin’s people during 2023. The leadership team continued to
demonstrate their commitment to improving workplace engagement
and culture, setting the goal to secure accreditation as a Great Place
to Work® by 2025. Significant investment into our facilities, culture
and organisation could be seen by our employees during 2023, and
detailed information on our People and progress during the year is set
out on page 50.
On workforce reward more specifically, during the year the Committee
considered information on the policies and practices which are in
place throughout the Company. In particular, during 2023, we
successfully launched our first all-employee share plan, “Aston Martin
Sharing. Success.”, awarding 425 free shares to 2,541 employees. The
2023 free share awards were incredibly well-received, with significant
engagement from participants, giving everyone the chance to share in
the future success of the Company. An annual award of free shares will
be made to all employees once again in 2024, which we believe will
continue to build engagement across the workforce and a culture
where our employees feel and behave like owners.
In respect of the 2023 bonus, the Committee noted that the Group KPI
scorecard applied to bonuses for all employees and that the outcome
at 34% of maximum (68% of target) was considered a positive result,
recognising how hard the team had worked and the significant
continued progress made on the business plan and achievements
during 2023, including the DB12 launch.
We also discussed our approach to, and results of, Aston Martin’s
Gender Pay Gap (GPG) reporting. Our aim is to foster a culture where
everybody feels valued, motivated and rewarded to achieve their best
work – detailed information on our People, including our Gender Pay
Gap figures and ED&I strategy, can be found on pages 50 to 53. There
is also information on the Board’s engagement with our workforce in
the People section and with our other stakeholders in the Governance
section on page 26.
I would like to thank shareholders for the feedback and views shared
with the Committee and for your continued support. If you have
any questions on any element of this report, please email
company.secretary@astonmartin.com in the first instance and I hope
we can rely on your support at our forthcoming AGM.
DR. ANNE STEVENS
CHAIR, REMUNER ATION COMMITTEE
27 February 2024
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DIRECTORS’ REMUNER ATION REPORT CONTINUED
Executive Directors’ remuneration at a glance
Our Remuneration Policy was approved by shareholders at the AGM on 25 May 2022 and is set out in full in the 2021 DRR. This can be found in the Annual
Report FY 2021 at www.astonmartinlagonda.com.
This section explains the outcomes from the implementation of our Policy during FY 2023.
REMUNER ATION OUTCOMES FOR FY 2023
FY 2023 Total Single Figure Remuneration for Executive Directors
The table below sets out the 2023 single figure of total remuneration received by the Executive Directors.
Element
Salary
Benefits
Pension
Annual bonus
LTIP
Total
Amedeo Felisa
CEO (£’000s)
Doug Lafferty
CFO (£’000s)
900
1,288
95
608
n/a
2,891
470
133
50
238
n/a
891
Benefits for the CEO include the 2022 and 2023 cost of private flights for travel between Italy and the UK – full details are set out on page 112.
2023 Annual bonus approach and outcome
The CEO and CFO were eligible to receive an annual bonus of up to 200% and 150% of salary respectively, subject to performance. The table below sets out
the Group KPI targets that applied for the 2023 annual bonus, the achieved performance and the level of payout as a % of maximum for each element.
Performance measure (weighting)
Adjusted EBITDA (50%)
Free Cash Flow (20%)
Wholesale Volumes (7.5%)
Retail Volumes (7.5%)
Quality (15%)
Total (100%)
Threshold
(20%)
£250m
– £290m
6,400
6,900
Target
(50%)
£300m
– £240m
6,900
7,400
Maximum
(100%)
£350m
– £200m
7,300
7,800
Internal:
CPA – Customer Perception Audit – an audit of a car
that has completed all the production processes and is
intercepted as it would be handed over to the outbound
transport company
External – Warranty at 3 and 12 months in service:
(1) CPU – Cost Per Unit
(2) DPU – Defects Per Unit
FY 2023
achieved
£306m
– £360m
6,620
5,918
1 of 2 targets
achieved
3 of 8 targets
achieved
FY 2023
bonus payment
(% of maximum)
28%
0%
2.5%
0%
1.9%
1.4%
34%
ALIGNMENT BETWEEN EXECUTIVE DIRECTORS AND SHAREHOLDERS
The CEO and CFO are subject to shareholding guidelines of 300% and 200% of salary respectively, which drives long-term alignment with investors. Having
taken up their executive director positions during FY 2022, the CEO held 35,820 shares (value of £81k) and the CFO held 370,990 shares (value of £838k or
178% of salary) as at 31 December 2023.
The Committee noted that the CFO had met his shareholding guideline of 200% of salary based on the average share price over the full FY 2023 (which was
£2.55).
REMUNER ATION POLICY AND IMPLEMENTATION IN FY 2024
The implementation of our Remuneration Policy for FY 2024 is set out in the following section (Annual Report on Remuneration).
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
110
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Annual report on remuneration
FY 2023 TOTAL SINGLE FIGURE REMUNER ATION FOR EXECUTIVE DIRECTORS (AUDITED)
The table below sets out the single figure of total remuneration received by the Executive Directors in respect of FY 2023 (and the prior financial year).
The subsequent sections detail additional information for each element of remuneration.
Shown in £’000s
Salary
Benefits
Pension
Total
fixed
Annual
bonus
LTIP
Total
variable
Total
Prior
company
incentive
buyout
Executive director
Lawrence Stroll(1)
Year to 31 December 2023
Year to 31 December 2022
Amedeo Felisa(2)
Year to 31 December 2023
Year to 31 December 2022
Doug Lafferty(3)
Year to 31 December 2023
Year to 31 December 2022
£1 (one)
£1 (one)
900
577
470
299
£1 (one)
£1 (one)
2,283
697
653
346
1,288
60
133
16
95
60
50
31
608
58
238
23
n/a
n/a
n/a
n/a
608
58
238
23
2,891
755
891
369
–
–
–
1,313
Total
£1 (one)
£1 (one)
2,891
755
891
1,682
Notes:
1. Lawrence Stroll has elected to receive a nominal salary only, of £1 per annum, and receives no other elements of remuneration
2. 2022 remuneration for Amedeo Felisa relates to the period since becoming CEO, 4 May to 31 December 2022. The 2023 benefits figure for Amedeo Felisa includes both the 2022 and 2023
cost of commuting flights between Italy and the UK, the Company also met the tax payable on these flights – full details are set out on page 112
3. 2022 remuneration for Doug Lafferty relates to the period since joining, 1 May to 31 December 2022. As compensation for incentives he forfeited on leaving his previous employer, Doug
Lafferty received buyout awards in 2022 and full details of these are set out in the Annual Report FY 2022
SALARY (AUDITED)
The Executive Directors’ 2023 salaries were as follows (effective from 1 January 2023)
– Amedeo Felisa (CEO) – £900,000
– Doug Lafferty (CFO) – £470,000
The Committee reviewed the CEO and CFO’s salaries for 2024 and decided to apply an increase of 3%, taking their salaries to £925,000 and £485,000
respectively from 1 April 2024. This level of increase is lower than the average 2024 pay increases that will apply for employees across the workforce.
The Committee recognises that the CEO and CFO salaries appear high in a UK FTSE 250 context and continues to benchmark remuneration against global
automotive and luxury companies, as these are the most relevant peers. The Committee considers the salary levels to be appropriate, as they:
– reflect the experience these executives have as proven talented automotive and manufacturing leaders
– value the skills required to deliver the Company’s strategic objectives and financial targets
– recognise the size of the task to deliver the turnaround of Aston Martin to achieve its full potential
In his role as Executive Chairman, Lawrence Stroll has elected to receive a nominal salary only, of £1 per annum, and receives no other elements of remuneration.
PENSION (AUDITED)
Each Executive Director receives a cash allowance in lieu of participation in the defined contribution scheme. They receive an allowance of 12% of salary with
a deduction for an amount equal to the employer’s National Insurance contribution.
As disclosed in our Remuneration Policy, the Executive Directors’ pension allowances are in line with the majority of employees. The maximum level of
employer pension contribution throughout the organisation is the same regardless of seniority (at 12% of salary for UK employees).
No Director has a prospective entitlement to receive a defined benefit pension.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
111
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION GOVERNANCE
DIRECTORS’ REMUNER ATION REPORT CONTINUED
ALLOWANCES AND BENEFITS (AUDITED)
Shown in £’000s
Amedeo Felisa
Year to 31 December 2023
Year to 31 December 2022
Doug Lafferty
Year to 31 December 2023
Year to 31 December 2022
Travel
Car allowance and
personal mileage
Life
assurance
Insurance
(private medical,
dental and travel)
Location
allowance
£1,183
–
–
–
£14
–
£39
£13
–
–
£5
£2
–
£2
£1
£91
£60
£87
–
Total
£1,288
£60
£133
£16
Amedeo Felisa (CEO) and other members of the leadership team have been commuting from their homes in Italy on a weekly basis to be present at Aston
Martin’s UK sites. Recognising the efficiency advantages around valuable time saved, productive time working (both as individuals and a team), as well as
privacy, flexibility and convenience, the Committee considered the use of private flights for the commute.
After careful consideration, and with full support from the Executive Chairman, during 2023 the Committee approved the Company to covering the cost
(including any tax payable) of private flights for the commute between Italy and the UK for individuals including the CEO. The CEO will also receive
reimbursement for the cost of flights associated with his commute since his appointment in 2022. As the decision was made during 2023, the cost related to
2023 (at £814k) and 2022 (at £369k) is included in the FY 2023 single figure and above table.
As previously disclosed, the CEO receives an annual cash allowance of £50,000 as location assistance, intended to cover his accommodation and subsistence
in the UK while he is away from his home in Italy during the working week. The Company also meets the tax payable on this allowance.
The Committee considered the working pattern of the CFO and approved the introduction of a location assistance allowance to recognise that he had a
significant commute and was therefore renting accommodation away from home during the working week to be present on location at Aston Martin’s
Gaydon headquarters. This allowance was set at £48,000 p.a. from 1 January 2023, with the Company also meeting the tax payable.
ANNUAL BONUS
Annual bonus outcomes for FY 2023 (audited)
The annual bonus in 2023 operated in-line with the Company-wide approach first introduced in 2021, including a Group scorecard of performance measures
to best reflect annual progress on our business plan and KPIs. The Group scorecard was cascaded throughout the Company to apply to annual bonus for all
employees, providing strong alignment of focus.
For 2023, the scorecard was weighted 85% on financial measures (including a 50% weighting on Adjusted EBITDA, 20% on Free Cash Flow and 15% on
volumes) and 15% on Quality performance. The performance targets for each measure were set by the Committee at the start of the year, considering the
business plan for 2023 and market expectations. The table below sets out the Group KPI targets, the achieved performance and the level of pay out of the
bonus as a % of maximum for each element.
2023 Group KPI targets
Performance measure (weighting)
Adjusted EBITDA (50%)
Free Cash Flow (20%)
Wholesale Volumes (7.5%)
Retail Volumes (7.5%)
Quality (15%)
Total (100%)
Threshold
(20%)
£250m
– £290m
6,400
6,900
Target
(50%)
£300m
– £240m
6,900
7,400
Maximum
(100%)
£350m
– £200m
7,300
7,800
Internal:
CPA – Customer Perception Audit – an audit of a car
that has completed all the production processes and is
intercepted as it would be handed over to the outbound
transport company
External – Warranty at 3 and 12 months in service:
(1) CPU – Cost Per Unit
(2) DPU – Defects Per Unit
FY 2023
achieved
£306m
– £360m
6,620
5,918
1 of 2 targets
achieved
3 of 8 targets
achieved
FY 2023
bonus payment
(% of maximum)
28%
0%
2.5%
0%
1.9%
1.4%
34%
For 2023, all elements of the bonus operated independently, and with our FY 2023 Adjusted EBITDA outcome of £306m just ahead of the target set, a
payment of 34% of maximum bonus (68% of target) will be paid based on Adjusted EBITDA, wholesale volumes and quality metrics achieved (and no payment
with respect to the FCF or retail volumes measures).
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
112
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION The CEO’s 2023 bonus payment will be delivered 50% in cash and 50% in shares, deferred for three years (as he is yet to meet his shareholding guideline). As
set out on page 116, the CFO had met his shareholding guideline during the year and so the Committee determined that his bonus would be paid 100% in cash.
Annual bonus for FY2023
Amedeo Felisa*
Doug Lafferty
Maximum bonus
opportunity
(% of salary)
Performance
measures/
targets
Level of 2023
achievement
2023
bonus payment
(% of maximum)
2023
bonus payment
(% of salary)
2023
bonus payment
(£’000s)
200%
150%
Group KPI
targets
See table on
previous page
34%
34%
68%
51%
£608
£238
* 50% of Amedeo Felisa’s net 2023 bonus payment will be delivered in shares, deferred for three years
In determining this outcome, the Committee noted that the Group KPI scorecard applied to the 2023 bonus for all employees and that the outcome at 34%
of maximum was considered a positive result, recognising how hard the team had worked and the significant continued progress made on the business plan
and achievements during 2023, including the DB12 launch.
ANNUAL BONUS FOR FY 2024
As detailed in the Committee Chair’s letter, the 2024 annual bonus will include a Group scorecard of performance measures aligned with our business plan.
For 2024, we are making some important changes to the Group KPI scorecard to incorporate an additional ESG performance measure focused on the safety
of our people. The Board spent time considering what would be the most appropriate ESG metric, and decided to focus on our safety performance as the
starting point, with safety being the foundation of any high performing manufacturing business and the importance of everyone across the workforce
focusing on keeping each other safe.
While we recognise that the weighting on ESG is relatively low compared to market practice, we believe that this is the right approach as we continue to
embed our approach to ESG across the business. We are committed to demonstrating progress over time given its strategic importance and so we will
continue to keep the weighting, measures and inclusion of ESG metrics in the annual bonus and / or LTIP under review as we evolve our approach.
The 2024 Group KPI scorecard is set out in the table below, the actual targets remain commercially sensitive and will be disclosed retrospectively in the 2024
DRR, when the 2024 performance year is complete.
Area
Measure
Weighting
Group KPI scorecard to apply to 2024 annual bonus
Profit
Adjusted
EBITDA
50%
Cash
Free Cash Flow
(FCF)
20%
Volumes
Wholesale
volumes
10%
Quality
In-house (CPA)
External (warranty)
ESG
Safety (AFR)
15%
5%
These Group KPI measures are aligned with our Company KPIs as set out in the Strategic Report on pages 34 and 35. The Committee has selected the ESG
measure of Accident Frequency Rate (AFR) – this is a reported, well-established KPI which ensures we are able to define a target that is quantifiable and
measurable, and clearly aligned with our strategy and the goals we have committed to in our 2024 Sustainability Report.
We believe this Group KPI scorecard includes the right balance of measures to make progress during 2024 towards delivering our long-term strategy.
Full details of our Sustainability strategy, Racing. Green., including our ESG goals can be found in our 2024 Sustainability Report at www.astonmartinlagonda.
com.
The Committee will continue to have the discretion to adjust bonus outcomes to ensure they are appropriate and reflect underlying business performance/
any other relevant factors.
LONG-TERM INCENTIVE PLAN
The following section sets out details of:
– 2023 LTIP awards granted during FY 2023
– 2023 DBSP awards granted during FY 2023
– Approach to 2024 LTIP awards
– CEO 2022 LTIP share award – adjustment to take account of the 2022 open offer
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
113
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION GOVERNANCE
DIRECTORS’ REMUNER ATION REPORT CONTINUED
2023 LTIP AWARDS GR ANTED DURING FY 2023 (AUDITED)
The CEO was not granted an LTIP award in 2023.
2023 LTIP share award – CFO
The approach to 2023 LTIP awards was set out in detail in the 2022 DRR, ahead of the grant date (in May 2023). The table below summarises the LTIP share
award that was granted to the CFO during FY 2023.
FY 2023
Doug Lafferty
Type of award
Basis of award
LTIP share award
200% of salary
Number
of shares
awarded
352,852
Face value
at grant
(£’000s)
£940
Notes:
(1) The LTIP shares were granted on 24 May 2023 and will vest subject to the performance conditions and vesting schedule set out below
(2) The award was granted in the form of nil-cost options
(3) The face value of the award was calculated using the 3-day average price prior to the date of grant (£2.66)
The 2023 LTIP award granted to the CFO is subject to the performance conditions detailed below.
2023 LTIP performance measures and targets
Adjusted EBITDA
(£m in FY25)
(80% of award)
Relative TSR**
(vs. luxury peers)
(20% of award)
Threshold
Stretch
Maximum
Threshold
Maximum
2023 LTIP
targets
400
475
550
Rank 6th
(median)
Rank 3rd
or above
(80th percentile)
Vesting*
(as a % of
maximum)
20%
80%
100%
20%
100%
* Vesting will be on a straight-line basis between each of threshold and stretch, and stretch and maximum for the EBITDA element and threshold and maximum for the TSR element.
** TSR performance will be measured on a ranked basis against the following luxury companies: Burberry, Capri Holdings, Compagnie Financiere Richemont, Ferrari, Hermes International,
Kering, LVMH, Moncler, Prada and Ralph Lauren.
The Remuneration Committee retains discretion to adjust the vesting levels to ensure they reflect underlying business performance and any other relevant
factors to ensure that the value at vesting is fully reflective of the performance delivered and executives do not receive unjustified windfall gains.
Performance period
Performance for both measures will be measured over three financial years to 31 December 2025. Subject to performance, awards will vest 3 years from
grant, following the announcement of results for 2025 but subject to a further 2-year holding period post vest (net of tax).
The CFO will be required to hold at least 75% of any shares that vest (net of tax) unless he has met his shareholding guidelines under the shareholding policy
at that time.
2023 DBSP awards granted during FY 2023
In accordance with the rules of the Aston Martin Lagonda Deferred Share Bonus Plan 2018 (“DBSP”), the Directors named below were granted nil-cost options
over Shares as follows:
– Amedeo Felisa (CEO) – 5,820 shares
– Doug Lafferty (CFO) – 12,221 shares
The DBSP awards are in relation to the 2022 annual bonus which, as disclosed in the 2022 Directors’ Remuneration Report, was to be delivered 50% in cash
and 50% in deferred shares. The number of shares granted reflects the net bonus amount (post tax and NI). Shares under the DBSP awards are deferred for a
period of 3 years from grant and will be released, subject to continued employment, on 24 May 2026.
Malus and Clawback:
– Malus and clawback provisions will be operated at the discretion of the Remuneration Committee in respect of awards granted under the LTIP and DBSP
where it considers that there are exceptional circumstances. Such exceptional circumstances may include serious reputational damage, a failure of risk
management, an error in available financial information, which led to the award being greater than it would otherwise have been or personal misconduct.
– Clawback may be applied for a period of up to three years for any LTIP and DBSP awards.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
114
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION APPROACH TO 2024 LTIP AWARDS
The Committee decided that Adjusted EBITDA continues to be the most appropriate measure of profit for the 2024 LTIP, given market and internal focus on
this key metric, which is used to manage the business. The Committee believes strong performance in Adjusted EBITDA is key to delivering strong shareholder
returns. The Adjusted EBITDA targets have been carefully calibrated based on Aston Martin’s latest business plan and external expectations. The range has
been set to be stretching (extremely so at the maximum vesting level) yet motivating in the context of our business plan and the continued uncertainty in the
current environment.
Relative Total shareholder return (TSR) as the second measure, recognises the importance of shareholder alignment and also the self-calibrating nature of
TSR as an objective measure of performance. TSR will be measured on a relative basis, against a select group of luxury companies, which aims to incentivise
further elevation of the Aston Martin brand, by out-performance of these high-end luxury companies. Ultimately, the successful delivery of our business plan
and strategy (detailed on pages 32 and 33) will be reflected in our Adjusted EBITDA and TSR performance.
It is anticipated that 2024 LTIP awards will be granted in May 2024, with awards at the following levels:
– Amedeo Felisa (CEO) – 300% of salary
– Doug Lafferty (CFO) – 200% of salary
2024 LTIP performance measures and targets
Adjusted EBITDA
(£m in FY26)
(80% of award)
Relative TSR**
(vs. luxury peers)
(20% of award)
Threshold
Stretch
Maximum
Threshold
Maximum
2024 LTIP
targets
450
550
650
Rank 6th
(median)
Rank 3rd
or above
(80th percentile)
Vesting*
(as a % of
maximum)
20%
80%
100%
20%
100%
* Vesting will be on a straight-line basis between each of threshold and stretch, and stretch and maximum for the EBITDA element and threshold and maximum for the TSR element
** TSR peers as per 2023 LTIP, detailed on page 114
The Remuneration Committee retains discretion to adjust the vesting levels to ensure they reflect underlying business performance and any other relevant
factors to ensure that the value at vesting is fully reflective of the performance.
Performance period
Performance for both measures will be measured over three financial years to 31 December 2026. Subject to performance, awards will vest 3 years from
grant, following the announcement of results for 2026 but subject to a further 2 year holding period post vest (net of tax).
The CEO and CFO will be required to hold at least 75% of any shares that vest (net of tax) until they have met their shareholding guidelines under the
shareholding policy at that time.
CEO 2022 LTIP share award – adjustment to take account of the 2022 open offer
In line with standard practice in the event of an equity raise, the share price targets were adjusted during the year to reflect the dilutive effect of the 2022 open
offer using the market-standard theoretical ex-rights price (“TERP”) approach (no adjustments were made in respect of the firm placing). This neutralises the
dilutive effect of the open offer ensuring the stretch of the targets is maintained, making the revised targets no easier or harder to achieve than when they
were originally set. This approach means the CEO’s 2022 LTIP award would continue to meet the incentive objectives for which it was originally granted.
The share price performance measure and targets are set out below.
2022 LTIP performance measures and targets (CEO)
– Share price performance will be assessed based on the share price of the Company during any period of 30 consecutive days during the performance
period (from 13 June 2022 to 12 June 2024)
– The shares under the award will commence vesting if the share price exceeds £3.71 and will vest as follows:
Share price of the Company to exceed £x for 30 consecutive days
* Vesting will be on a straight-line basis between threshold and maximum
Threshold
Maximum
2022 LTIP targets
Pre-adjustment
Post-adjustment
£10 (or less)
£3.71 (or less)
£18
£6.67
Vesting*
(as a % of
maximum)
0%
100%
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
115
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION GOVERNANCE
DIRECTORS’ REMUNER ATION REPORT CONTINUED
SHARE INTERESTS AND SHAREHOLDING GUIDELINES (AUDITED)
The CEO and CFO are subject to shareholding guidelines of 300% and 200% of salary respectively, which drives long-term alignment with investors.
The following table sets out the total beneficial interests of the executive directors (and their connected persons) in ordinary shares of the Company as at
31 December 2023, as well as the status against the shareholding guidelines. The table also summarises conditional interests in share or option awards.
As at 31 December 2023
Amedeo Felisa
Doug Lafferty
Lawrence Stroll6
Shares owned
outright
30,000
358,769
208,581,263
Shares vested
but subject
to future release1
Total shares
owned outright
or vested2
5,820
12,221
35,820
370,990
–
208,581,263
As a %
of salary3
9.0%
178.4%
n/a
Shareholding
guideline
(as % of salary)
300%
200%
Guideline
met?
No
No5
LTIP award
shares unvested
and subject to
performance4
872,828
652,107
n/a
Notes:
(1) These shares were awarded under the deferred bonus plan in respect of 50% of the net (post tax and NI) 2022 annual bonus payment
(2) There have been no changes in the period up to and including 27 February 2024
(3) Based on the closing share price on 31 December 2023 of £2.26
(4) These shares were granted under the 2022 and 2023 LTIP awards
(5) The Committee noted that the CFO had met his shareholding guideline of 200% of salary based on the average share price over the full FY 2023 (which was £2.55)
(6) The number of shares shown for Lawrence Stroll includes both direct and indirect interests
TSR PERFORMANCE GR APH AND CEO REMUNER ATION
The Company’s shares started trading on the London Stock Exchange’s main market for listed securities on 8 October 2018.
The graph below shows the TSR performance of £100 invested in the Company’s shares since listing, compared to the FTSE 250 index which has been chosen
because the Company has been a constituent of this index since listing.
TSR vs. the FTSE250
140
120
100
80
60
40
20
0
8-Oct-18
31-Dec-18
31-Dec-19
31-Dec-20
31-Dec-21
31-Dec-22
31-Dec-23
AML
FTSE 250
The table below shows the total remuneration earned by the incumbent CEO over the same period, along with the percentage of maximum opportunity
earned in relation to each type of incentive. The total amounts are based on the same methodology as used for the single figure of total remuneration for
FY 2023 on page 111.
CEO total remuneration
FY
Total remuneration (£’000s)
Bonus (% of maximum)
LTIP (% of maximum)
2018(1)
(AP)
407
0%
n/a
2018(2)
(AP)
1,347
0%
n/a
2019
(AP)
1,353
0%
n/a
2020
(AP)
476
0%
n/a
2020
(TM)
1,341
20%
n/a
2021
(TM)
1,055
0%
n/a
2022
(TM)
402
5.05%
0
2022
(AF)
755
5.05%
n/a
2023
(AF)
2,891
34%
n/a
Notes:
(1) FY 2018 remuneration shown is for the period 8 October to 31 December 2018, annual bonus was restated to zero as set out in the 2019 DRR
(2) The amounts shown for FY 2018 in the second column have been annualised, as if the Remuneration Policy operated since IPO had been in place for the full year (as disclosed in the 2018 DRR,
with bonus restated to zero)
(3) Amedeo Felisa (AF, CEO from 4 May 2022), Tobias Moers (TM, CEO from 1 August 2020 to 4 May 2022), Dr Andy Palmer (AP, CEO to 25 May 2020)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
116
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION DIRECTOR REMUNER ATION RELATIVE TO EMPLOYEES
The table below shows the percentage change in Directors’ remuneration and average remuneration of employees on an annual basis. For comparison
purposes, only Directors who had periods of service in both 2023 and 2022 have been included and amounts have been adjusted in all years to reflect a full
year equivalent to enable a meaningful reflection of year-on-year change.
Year-on-year change (%)
Average employee
Executive Directors
Lawrence Stroll
Amedeo Felisa
Doug Lafferty
Non-Executive Directors
Ahmed Al-Subaey
Nigel Boardman
Robin Freestone
Natalie Massenet
Marigay McKee
Franz Reiner
Scott Robertson
Anne Stevens
Former Non-Executive Directors
Antony Sheriff
Salary/ fees
12.8%
0.0%
3.0%
5.5%
6.8%
35.0%
10.6%
6.0%
19.0%
9.2%
6.1%
9.9%
–26.2%
2023
Bonus
569%
–
593%
595%
–
–
–
–
–
–
–
–
–
Benefits
Salary/ fees
0.0%
6.0%
–
0.0%
1,317%
457%
–
–
–
–
–
–
–
–
–
–
–
–
–
0.0%
1.0%
2.0%
0.0%
–
19.0%
60.0%
2022
Bonus
23.0%
Benefits
Salary/ fees
Bonus
Benefits
2021
0.0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Notes:
(1) The comparator group includes all UK employees. This group represents the majority of Aston Martin employees and is the same group used for the pay ratio reporting below.
(2) For the comparator group of employees, the salary year-on-year change is shown includes the annual salary review from 1 January 2023 but excludes any additional changes made in the
year, for example on promotion
(3) For benefits, there were no changes to benefit policies or levels during the year. The 2023 benefits figure for Amedeo Felisa includes both the 2022 and 2023 cost of commuting flights
between Italy and the UK, the Company also met the tax payable on these flights – full details are set out on page 112
(4) NED fees were increased for the 2023 year, as set out in last year’s report. Nigel Boardman took on the role of SID during 2023 and Marigay McKee became a member of the Nomination
Committee during the year – the increases shown reflect fees for these additional roles
CEO PAY R ATIOS
The ratios, set out in the table below, compare the total remuneration of the incumbent CEO (as included in the single figure table on page 111) to the
remuneration of the median UK employee as well as employees at each of the lower and upper quartiles.
Salary of employee identified (FY 23)
Total remuneration of employee identified (FY 23)
CEO pay ratios (Option A)
FY 23
FY 22
FY 21
FY 20
FY 19
25th percentile
(P25)
Median
(P50)
75th percentile
(P75)
£42k
£49k
59 to 1
26 to 1
27 to 1
53 to 1
34 to 1
£42k
£49k
50 to 1
22 to 1
23 to 1
45 to 1
29 to 1
£42k
£49k
41 to 1
18 to 1
19 to 1
37 to 1
24 to 1
The ratios are calculated using ‘option A’ as set out in the disclosure regulations. The employees at the lower quartile, median and upper quartile (P25, P50
and P75) were determined based on total remuneration for FY 2023 using a calculation approach consistent with that used for the incumbent CEO in the
single figure table on page 111. The Committee chose to use option A on the basis that it would provide the most accurate approach to identifying the median,
lower and upper quartile employees.
The Committee considers pay ratios as one of many reference points when considering remuneration. Throughout Aston Martin, pay is positioned to be fair
and market competitive in the context of the relevant talent market for each role.
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DIRECTORS’ REMUNER ATION REPORT CONTINUED
RELATIVE IMPORTANCE OF SPEND ON PAY FOR FY 2023
The table below sets out the total payroll costs for all employees for FY 2023 compared to distributions to shareholders by way of dividend and share
buyback. Adjusted EBITDA is also shown as context.
Adjusted EBITDA
Distributions to shareholders
Payroll costs for all employees
£m
% change
£m
% change
£m
% change
FY 2023
306
+61%
0
0%
221.7
+17.1%
FY 2022
190
n/a
0
0%
189.4
SERVICE AGREEMENTS
The table below sets out information on service agreements for the executive directors.
Executive Director
Lawrence Stroll
Title
Executive Chairman
Amedeo Felisa
Doug Lafferty
Chief Executive Officer
Chief Financial Officer
Effective date of service agreement
Notice period to and from the Company
20 April 2020
24 May 2022
13 January 2022
Mr Stroll’s appointment is terminable
in accordance with the Yew Tree
Relationship Agreement
12 months
12 months
The service agreements for Executive Directors are available for inspection by shareholders at the registered office of the Company.
EXTERNAL APPOINTMENTS
It is recognised that Non-Executive Directorships can provide a further level of experience that can benefit the Company. As such, Executive Directors may
usually take up one Non-Executive Directorship (broadly equivalent in terms of time commitment to a FTSE 350 Non-Executive Directorship role) subject to
the Board’s approval as long as there is no conflict of interest. A Director may retain any fee received in respect of such Non-Executive Directorship. Neither
the CEO nor the CFO has any Non-Executive Directorships.
PAYMENTS FOR LOSS OF OFFICE
No payments for loss of office were made during the financial year.
PAYMENTS TO PAST DIRECTORS
No payments were made to past Directors during the year.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION NON-EXECUTIVE DIRECTORS’ REMUNER ATION (AUDITED)
The Policy on remuneration for Non-Executive Directors is set out in the Directors’ Remuneration Report FY 2021 (which can be found in the Annual Report
FY 2021 at www.astonmartinlagonda.com).
The table below sets out the single figure of total remuneration received or receivable by the Non-Executive Directors in respect of FY 2023 (and the prior
financial year).
Total fees
65
10
90
17
–
–
94
85
–
29
71
67
75
63
71
65
71
11
111
101
13
40
145
Shown in £’000s
Non-Executive Directors
Ahmed Al-Subaey
Year to 31 December 2023
Year to 31 December 2022
Nigel Boardman
Year to 31 December 2023
Year to 31 December 2022
Michael de Picciotto
Year to 31 December 2023
Year to 31 December 2022
Robin Freestone
Year to 31 December 2023
Year to 31 December 2022
Cyrus Jilla
Year to 31 December 2023
Daniel Li Donghui
Year to 31 December 2023
Natalie Massenet
Year to 31 December 2023
Year to 31 December 2022
Marigay McKee
Year to 31 December 2023
Year to 31 December 2022
Franz Reiner
Year to 31 December 2023
Year to 31 December 2022
Scott Robertson
Year to 31 December 2023
Year to 31 December 2022
Anne Stevens
Year to 31 December 2023
Year to 31 December 2022
Jean Tomlin
Year to 31 December 2023
Former Non-Executive Directors
Antony Sheriff
Year to 31 December 2023
Year to 31 December 2022
Notes:
(1) Nigel Boardman became the SID on 1 October 2022
(2) Cyrus Jilla joined the Board on 27 October 2023
(3) Daniel Li Donghui joined the Board on 28 July 2023
(4) Marigay McKee became a member of the Nomination Committee on 17 May 2023
(5) Jean Tomlin joined the Board on 27 October 2023
(6) Antony Sheriff stepped down from the Board on 17 May 2023
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DIRECTORS’ REMUNER ATION REPORT CONTINUED
SUMMARY OF NON-EXECUTIVE DIRECTORS’ FEES FOR FY 2024
The table below sets out the annual fee structure for the NEDs for 2024 (there are no changes to the fee levels that applied in 2023).
NED role
Basic NED fee
SID fee
Committee Chair
Committee member
FY 2023 fee
(£’000s)
FY 2024 fee
(£’000s)
65
17
17
6
65
17
17
6
NON-EXECUTIVE DIRECTOR SHAREHOLDINGS (AUDITED)
The table below summarises the total interests of the Non-Executive Directors (and their connected persons) in ordinary shares of Aston Martin Lagonda
Global Holdings plc as at 31 December 2023 (or at the date of stepping down, if earlier).
Non-Executive Directors
Ahmed Al-Subaey
Nigel Boardman
Michael de Picciotto2
Robin Freestone
Cyrus Jilla
Daniel Li Donghui
Natalie Massenet
Marigay McKee
Franz Reiner
Scott Robertson
Anne Stevens
Jean Tomlin
Former Non-Executive Directors
Anthony Sheriff3
Total number
of shares owned1
704,312
50,376
6,285,660
38,929
–
–
20,000
–
13,477
–
35,000
–
–
Notes:
(1) Other than those stated below, there have been no changes in the period up to and including 27 February 2024
(2) Held via St James Invest SA
(3) Antony Sheriff stepped down from the Board on 17 May 2023 – shareholding shown is as at this date
LETTERS OF APPOINTMENT
The Non-Executive Directors have letters of appointment. All Non-Executive Directors’ appointments and subsequent re-appointments are subject to annual
re-election at the AGM. Dates of the letters of appointment of the Non-Executive Directors as at the date of this report are set out in the table below.
Non-Executive Directors
Ahmed Al-Subaey
Nigel Boardman
Michael de Picciotto
Robin Freestone
Natalie Massenet
Marigay McKee
Cyrus Jilla
Daniel Li Donghui
Franz Reiner
Scott Robertson
Anne Stevens
Jean Tomlin
Date of appointment
1 November 2022
1 October 2022
24 April 2020
1 February 2021
8 July 2021
8 July 2021
27 October 2023
28 July 2023
8 July 2021
1 November 2022
1 February 2021
27 October 2023
Notice period
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
The terms and conditions of appointment for Non-Executive Directors are available for inspection by shareholders at the registered office of the Company.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION REMUNER ATION COMMITTEE IN FY 2023
Committee membership
The following Directors served as members of the Committee during FY 2023:
– Anne Stevens (Chair)
– Robin Freestone
– Antony Sheriff (until 17 May 2023 when he stepped down from the Board)
– Natalie Massenet
Committee remit
The Committee’s Terms of Reference are published on www.astonmartinlagonda.com.
In addition to setting the remuneration of the Executive Directors, the Committee continues to directly oversee the remuneration arrangements for the other
Chief level roles (including Chief Creative Officer, Chief Global Brand and Commercial Officer, Chief Industrial Officer, Executive Consultant to the CEO,
General Counsel, Chief Technology Officer, Chief People Officer and Chief Procurement Officer).
SUMMARY OF MEETINGS
The Committee typically meets four to six times a year. During FY 2023, the Committee met six times and the agenda items discussed at these meetings are
summarised below.
Early February
– 2022 quality metrics – review of performance and outcome
– 2022 annual bonus – expected outcome
– 2023 approach to incentives – financial measure targets
– Review of draft FY 2022 DRR
Late February
– Approval of 2022 annual bonus payment
– 2020 LTIP – outcome of Adjusted EBITDA element
– Approval of 2023 incentives – performance measures and targets
– Approval of 2023 LTIP awards
– Approval of 2022 Directors’ Remuneration Report
– Approval of 2022 Gender Pay Gap report
– Approval of all employee share plan (SIP) – rule amendments
– Approval of Chief Industrial Officer remuneration
– Approval of Chief population 2023 remuneration
– Approval of Chief population retention awards
– Approval of Chief Procurement Officer remuneration
– Approval of Chief Global Brand and Commercial Officer remuneration
– Update on external reward environment
– Approval of Chief population – Commuting flights
– Approval of adjustment to share price targets for CEO 2022 LTIP award
– Approval of Chief Creative Officer remuneration
– Update on external reward environment and latest investor guidelines
– Update on broader employee reward, including TU pay negotiations
– Expected 2023 annual bonus and 2021 LTIP outcomes
– FY 2024 incentives approach
– Approval of 2024 all-employee share award
– Remuneration Committee annual evaluation
– Approval of updated Remuneration Committee terms of reference
March
July
October
December
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DIRECTORS’ REMUNER ATION REPORT CONTINUED
ATTENDANCE AT COMMITTEE MEETINGS
The following table sets out the number of meetings attended by each Committee member during FY 2023
Director
Robin Freestone
Natalie Massenet
Antony Sheriff
Anne Stevens
Meetings Attended
6/6
6/6
3/6
6/6
Committee performance evaluation
The Committee was evaluated as part of the internal effectiveness review of the Board and its Committees (details of which can be found on pages 92 and 93).
The Committee also reviewed its own performance and was satisfied that it continued to perform effectively and had worked constructively and collaboratively
in year of many committee changes and business activities and was rated highly by the members and other respondents to the evaluation survey.
The focus of the Committee for the forthcoming year will be to review the adequacy of the maintenance of dialogue with key institutional investors and their
representatives and to improve the dialogue with and visibility of the external advisors and the Committee.
Advice to the Committee
The Chair of the Board and members of the management team are invited to attend Committee meetings where appropriate, except when their own
remuneration is being discussed. During the year the Executive Chairman, CEO, CFO, VP and General Counsel, Company Secretary, Chief People Officer,
Executive Consultant to the CEO and Director of Reward attended meetings at the Committee’s invitation.
The Committee has received independent advice on remuneration from Willis Towers Watson (WTW). WTW is a member of the Remuneration Consultants’
Group and, as such, voluntarily operates under the Remuneration Consultants’ Group Code of Conduct in relation to executive remuneration consulting in the
UK. The Committee is satisfied that the advice provided by WTW is independent and objective. WTW has no other connection with the Company. Total fees
received by WTW in relation to remuneration advice provided that materially assisted the Committee during FY 2023 were £38,250, which had been charged
on a time spent basis.
Freshfields also provided legal advice to the Committee in relation to the operation of the Company’s share plans, employment law considerations and
compliance with legislation.
REMUNER ATION VOTING RESULTS
The table below shows the results of the shareholder votes at the 2023 AGM on the DRR and at the 2022 AGM on the Directors’ Remuneration Policy.
AGM voting results
2023 AGM: To approve the DRR for the year ending 31 December 2022
2022 AGM: To approve the 2022 Directors’ Remuneration Policy
APPROVAL
This report has been approved by the Board and signed on its behalf by:
DR. ANNE STEVENS
CHAIR, REMUNER ATION COMMITTEE
27 February 2024
Votes for
Votes against
Votes withheld
543,945,821
18,677,537
(96.68%)
(3.32%)
67,922,049
1,772,525
(97.46%)
(2.54%)
6,884
4,251
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
122
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION DIRECTORS’ REPORT
ABOUT THE DIRECTORS’ REPORT
This Directors’ Report sets out the information required to be disclosed by the Company in compliance with the Companies Act 2006, the UK Listing Rules
and the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules (DTRs). It forms part of the management report as required under the
DTR, along with the Strategic Report (pages 4-71) and other sections of this Annual Report and Accounts including the Corporate Governance Report (pages
72-122) all of which are incorporated by reference, as outlined in the table below.
Information
Business model
Corporate governance framework
Community and charitable giving
Credit market and liquidity risks
Directors’ conflicts of interest
Reported in
Strategic Report
Corporate Governance Report
Strategic Report
Financial Statements (note 23)
Corporate Governance Report
Directors’ share interests and remuneration
Directors’ Report on Remuneration
Director training and development
Equity, Diversity and Inclusion
Employee engagement
Financial instruments
Corporate Governance Report
Strategic Report
Nomination Committee Report
Strategic Report
Governance Report
Financial Statements (note 23)
Future developments and strategic priorities
Strategic Report
Going concern statement
Greenhouse gas emissions
Health and safety
Human rights
Modern Slavery Statement
Principal risks and risk management
Non-financial and sustainability information
Non-pro rata allotments for cash
Results
Risk management and internal control
Section 172 Statement
Stakeholder engagement
Statement of Directors’ Responsibilities
Viability Statement
Workforce engagement
Financial Statements (note 1)
Strategic Report
Strategic Report
Directors’ Report
Strategic Report
Strategic Report
Strategic Report
Financial Statements (note 27)
Consolidated Income Statement
Strategic Report
Strategic Report
Strategic Report
Directors’ Report
Strategic Report
Governance Report
Strategic Report
Pages
30-31
83-85
27 and 42
176-185
95-96
108-122
96
50-53
97
50-53
89
176-185
32-33
147-148
47
51
127
71
64-69
71
191
142
64-69
28-29
24-27
129
70
89
50-53
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
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DIRECTORS’ REPORT CONTINUED
DIRECTORS
Details of Directors who served throughout the year are set out in the table below. Daniel Li, Jean Tomlin and Cyrus Jilla will be offering themselves for
election in accordance with the Company’s Articles of Association at the 2024 AGM and all the remaining existing Directors will be offering themselves for
re-election.
Name
Lawrence Stroll
Amedeo Felisa
Doug Lafferty
Ahmed Al-Subaey
Sir Nigel Boardman
Michael de Picciotto
Robin Freestone
Cyrus Jilla
Daniel Li
Dame Natalie Massenet, DBE
Marigay McKee, MBE
Franz Reiner
Scott Robertson
Antony Sheriff
Dr. Anne Stevens
Jean Tomlin, OBE
Date of appointment
20 April 2020
4 May 2022 as CEO1
1 May 2022
1 November 2022
1 October 2022
24 April 2020
1 February 2021
27 October 2023
28 July 2023
8 July 2021
8 July 2021
8 July 2021
1 November 2022
1 February 2021
1 February 2021
27 October 2023
Date of cessation
17 May 2023
1 Amedeo Felisa was appointed an Independent Non-executive Director on 8 July 2021 and was appointed Chief Executive Officer on 4 May 2022.
DIRECTORS’ INSUR ANCE AND INDEMNITIES
The Company’s Articles of Association provide for the Directors and
officers of the Company to be appropriately indemnified subject to
the provisions of the Companies Act 2006. In addition, the Company
maintains Directors’ and Officers’ liability insurance, which provides
cover for legal actions brought against its Directors and officers.
Neither the Company’s indemnity nor insurance covers claims arising
from dishonesty or fraud. In addition, each Director of the Company
also has the benefit of prospectus liability insurance which provides
cover for liabilities incurred by Directors in the performance of their
duties or powers in connection with the issue of the following
documents (as applicable):
– The Company’s prospectus dated 20 September 2018 in relation to
the Company’s listing on the premium listing segment of the
Financial Conduct Authority’s Official List and admission to trading
on the Main Market for listed securities of the London Stock
Exchange.
– The Company’s combined prospectus and circular dated 27
February 2020 (together with the two supplementary
prospectuses) in relation to the placing of ordinary shares and the
rights issue.
– The Company’s prospectus dated 5 September 2022 in relation to
the placing of ordinary shares and the rights issue.
No amount was paid under any of these indemnities or insurances
during the year other than the applicable insurance premiums.
In accordance with Section 236 of the Companies Act 2006, qualifying
third-party indemnity provisions are in place for the Directors in
respect of liabilities incurred as a result of their office, to the extent
permitted by law. Both the
indemnities applied
throughout the year ended 31 December 2023 and up to the date of
this Report.
insurance and
ANNUAL GENER AL MEETING
The Company’s Annual General Meeting (AGM) will be held
electronically by audio webcast at 10.30am on Wednesday 8 May
2024. The Notice of the AGM will be available on the Company’s
website at www.astonmartinlagonda.com/investors.
ARTICLES OF ASSOCIATION
The Articles of Association set out the internal regulation of the
Company and cover such matters as the rights of shareholders, the
appointment or removal of Directors, and the conduct of the Board
and general meetings. Copies are available from the Company
Secretary. In accordance with the Articles, Directors can be appointed
or removed by the Board or by shareholders in a general meeting.
Amendments to the Articles must be approved by at least 75% of
those voting in person or by proxy at a general meeting of the
Company. Subject to UK company law and the Articles, the Directors
may exercise all the powers of the Company, may delegate authorities
to Committees, and may delegate day-to-day management and
decision-making to individual Executive Directors. Details of the
Board Committees can be found on page 84.
The rules governing the appointment and removal of a Director are
set out in the Company’s Articles of Association. Specific details
relating to the significant shareholder groups and their right to appoint
Directors are set out on page 126.
CORPOR ATE GOVERNANCE STATEMENT
Under the Disclosure and Transparency Rules, a requirement exists for
a Corporate Governance Statement to be included in this Directors’
Report. The corporate governance statement, explaining how the
Group complies with the Governance Code, is set out on page 82. A
description of the composition and operation of the Board and its
Committees is set out on pages 84-122. Other than the areas of non-
compliance identified on page 82, the Company has complied
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
124
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION throughout the accounting period with the 2018 UK Corporate
Governance Code.
GOING CONCERN
After due enquiry, 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.
For these reasons, they continue to adopt the going concern basis in
preparing the Financial Statements. Further details of the going
concern statement for the Group are set out in note 1 to the Financial
Statements and the Viability Statement is set out on page 70.
DIVIDEND AND RESULTS
Revenue from the continuing business during the period amounted to
£1.6bn (2022: £1.4bn). A review of the Group’s consolidated results is
set out from page 142.
It is the Directors’ intention to retain the Group’s cash flow to finance
growth and to focus on delivery of its new business plan. The Directors
intend to review, on an ongoing basis, the Company’s dividend policy
and will consider the payment of dividends as the Group’s strategy
matures, depending upon the Group’s Free Cash Flow, financial
condition, future prospects and any other factors deemed by the
Directors to be relevant at the time. The Directors are not
recommending any dividend for the 2023 financial year.
SHARE CAPITAL
Details of the issued share capital, together with details of movements
in the issued share capital of the Company during the year, are shown
in note 27 to the Financial Statements. This is incorporated by
reference and deemed to be part of this Report.
At 31 December 2023, the Company had one class of ordinary shares
which carries no right to fixed income. Each share carries the right to
one vote at general meetings of the Company. The ordinary shares are
listed on the premium listing segment of the Financial Conduct
Authority’s Official List and traded on the Main Market for listed
securities of the London Stock Exchange.
As at 31 December 2023, the Company had 823,663,785 ordinary
shares of £0.10 in issue. The Company does not hold any shares in
treasury. Specific powers relating to the allotment and issuance of
ordinary shares and the ability of the Company to purchase its own
securities are included within the Articles and such authorities must be
submitted for approval by the shareholders, at the AGM each year
(and were submitted and approved at the 2023 AGM).
Following shareholder approval at the general meeting on
4 December 2020 and pursuant to the Warrant Instrument dated
7 December 2020, as amended on 28 September 2022 (Warrant
Instrument), the Company issued 126,647,852 warrants granting
rights to subscribe for up to 37,994,356 ordinary shares of £0.10. Each
warrant entitles a warrantholder to subscribe for 0.3 warrant shares at
the subscription price of £1.67 per warrant share. Warrants are
exercisable during the period starting on 1 July 2021 and ending on
7 December 2027. The Warrant Instrument sets out the rights of
warrantholders, including the right to receive shareholder documents
and notifications and the right to requisition the Company to convene
a meeting of warrantholders. Further information on the warrants is
in the Prospectus dated 5 September 2022 and the
set out
announcement by the Company on 28 September 2022 which can be
found on the Company’s website. A total of 29,969,919 warrants
were exercised during 2023, converting into a total of 8,990,975
ordinary shares.
On 31 December 2023 the Employee Benefit Trust held a total of
372,862 ordinary shares (5,872 unallocated shares and 366,990 shares
allocated from prior share awards, held as Nominee Shares). The right
to receive any dividend has been waived by the Trustee of the
Employee Benefit Trust over the entire unallocated shares and we note
that any dividend due to be paid over allocated shares would be paid
directly to the Company (as the Trustee Paying Agent) for onward
distribution to the respective individuals. The Trustee has the right to
exercise any voting rights in respect of the unallocated shares it holds
and will vote in accordance with the voting instructions received from
the beneficial owners of the allocated shares.
SUBSTANTIAL SHAREHOLDINGS
The Company has received notifications of major interests in its issued
ordinary share capital in accordance with Rule 5 of the DTRs. Details of
the position as at the end of the financial year are as follows:
Shareholder
Lawrence Stroll1
The Public Investment Fund
Li Shufu (Geely)
Ernesto Bertarelli
Yew Tree Overseas Ltd
Mercedes-Benz AG
Invesco Limited
Lucid Group Inc
Number of
ordinary shares
208,581,263
140,504,260
132,530,859
112,559,889
80,458,305
73,320,195
29,832,865
28,352,273
% of total
voting rights
25.32
17.06
16.09
13.67
9.77
8.90
3.62
3.44
1
Includes 80,458,305 shares also disclosed by Yew Tree Overseas Ltd and
112,559,889 shares also disclosed by Ernesto Bertarelli.
There have been no changes notified to the Company in accordance
with Rule 5 of the DTRs to the holdings disclosed above.
RESTRICTIONS ON TR ANSFER OF ORDINARY SHARES
The Articles do not contain any restrictions on the transfer of ordinary
shares in the Company other than the usual restrictions applicable where
any amount is unpaid on a share. All issued share capital of the Company
at the date of this Annual Report is fully paid. Certain restrictions are also
imposed by laws and regulations (such as insider trading and marketing
requirements relating to closed periods) and requirements of the Market
Abuse Regulation whereby Directors and certain employees of the
Company require prior approval to deal in the Company’s securities.
SHAREHOLDERS’ RIGHTS
Holders of ordinary shares have the rights accorded to them under UK
company law, including the rights to receive the Company’s Annual
Report and Accounts, attend and speak at general meetings, appoint
proxies and exercise voting rights. No shareholder holds ordinary
shares carrying special rights relating to the control of the Company
and, other than as previously publicly disclosed in relation to the Yew
Tree Consortium, the voting rights of which are exercised in accordance
with instructions of Lawrence Stroll, the Directors are not aware of any
agreements between holders of the Company’s shares that may result
in restrictions on voting rights.
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125
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DIRECTORS’ REPORT CONTINUED
Significant
shareholder group
% of voting
rights to nominate
two directors
% of voting
rights to nominate
one director
Yew Tree
Consortium
Public
Investment
Fund
Mercedes-
Benz AG
Geely
10% or above
10% or above
Between 7%
and 10%
Between 7%
and 10%
15% or above
Between 7.5%
and 15%
-
7%
% of voting rights
to nominate
one director as
a member of
the Nomination
Committee and
an observer to
the Remuneration
and Audit and Risk
Committees
7%
7%
7.5%
7%
TR ANSACTIONS WITH RELATED PARTIES
Details of Related Party Transactions which have been undertaken in
the year ended 31 December 2023 are included within note 31 to the
Financial Statements.
SIGNIFICANT CONTR ACTS
At 31 December 2023, the Group had a Revolving Credit Facility of
£99.4m which contains a change of control clause. The Group also had
US$1,143.7m of 10.50% Senior Secured Notes due 2025, and
US$121.7m Second Lien Split Coupon Notes which contain change of
control provisions. In aggregate, these financing arrangements are
considered significant to the Group and, in the event of a takeover (i.e.
a change of control) of the Company, the amounts outstanding under
the Revolving Credit Facility may be cancelled or become immediately
payable and the holders of the Senior Secured Notes and Second Lien
Notes may require the Group to repurchase their notes.
All the Company’s share plans contain provisions relating to a change
of control. In the event of a change of control or winding up of the
Company (other than an internal reorganisation), LTIP awards will vest
subject to the extent to which the performance conditions have been
satisfied. Pro rating for service will apply unless the Remuneration
Committee decides otherwise. Outstanding deferred bonus awards
will vest in full as soon as practicable. In the event of an internal
corporate reorganisation, deferred bonus and LTIP awards may (with
consent from any acquiring company) be replaced by equivalent
awards. Alternatively, the Remuneration Committee may decide that
deferred bonus and LTIP awards will vest as in the case of a change of
control described above. In the event of a demerger, special dividend
or other corporate event that will materially impact the share price the
Committee may, at its discretion, allow deferred bonus and LTIP
awards to vest on the same basis as for a change of control as described
above. Alternatively, an adjustment may be made to the number of
shares if considered appropriate.
The Company currently has four groups of significant shareholders,
namely the Yew Tree Consortium, The Public Investment Fund, Geely
and Mercedes-Benz AG (‘MBAG’). The relationship between the
Company and each of these significant shareholder groups is governed
(“Relationship
four
by
Agreements”).
agreements
relationship
separate
The purpose of these Relationship Agreements is to ensure that the
Company can carry on its business independently and for the benefit
of shareholders as a whole. The Relationship Agreements also provide
that the Company will not take any action in relation to certain
significant matters without the prior approval of at least two-thirds of
the members of the Board present and entitled to vote. The
Relationship Agreements will terminate upon the relevant significant
shareholder group ceasing to have the entitlement to exercise a
minimum percentage of the voting rights in the Company or the
Company’s shares ceasing to be admitted to the Official List of the
Financial Conduct Authority and traded on the Main Market for listed
securities of the London Stock Exchange.
Each of the Relationship Agreements provides that each significant
shareholder group is entitled to nominate director(s) to the Board and
the Nomination Committee and an observer to the Remuneration and
Audit and Risk Committees, subject to the size of its respective interest
in the voting rights of the Company as set out in the table above.
On 26 June 2023, the Company announced it had entered into an
amendment and restatement of its Strategic Co-operation Agreement
with MBAG which was originally entered into on 27 October 2020.
Under the amended agreement, the Company and MBAG will continue
long-term strategic co-operation, supporting the delivery of current
and future generation Aston Martin vehicles. Under the original
agreement the Company would issue additional Aston Martin shares
to MBAG in exchange for access to further technology replaced and
this has now been replaced with a restated commitment to the existing
strategic collaboration allowing the parties to discuss future access
to technology for cash. No further consideration shares, or related
cash top up payments, will be issued or paid to MBAG under the
restated agreement.
In addition to the terms agreed
in the Strategic Cooperation
Agreement, the Group has a long-standing technical partnership with
MBAG for the provision of engines, electrical architecture and
entertainment systems. This partnership began in 2013, when MBAG
became one of Aston Martin Holdings (UK) Limited’s shareholders.
The agreements governing our relationship with MBAG provide that
under certain circumstances MBAG may be entitled to terminate
operational agreements on three or four years’ prior notice (depending
on the operational agreement) if a strategic MBAG competitor
acquires a sufficient
in AML, acquires certain board
appointment rights, or enters into certain strategic arrangements with
AML without MBAG’s consent.
interest
In early 2020, the Group entered into a sponsorship agreement, as
amended in 2022, for a ten-year initial term under which the Racing
Point Formula One® team was re-launched as the Aston Martin
Cognizant Formula One® team with effect from the 2021 season,
bringing an Aston Martin team back to the Formula One® grid for
the first time since 1960. The agreement included a sponsorship
arrangement effective
to 2025 with expenses
commensurate with the Group’s previous annual Formula One®
expenditure. In March 2023, the parties agreed to sponsorship fees for
the period from 2026 to 2030. From 2030, the sponsorship
arrangements will be renewable at the Board’s discretion for additional
ten year periods up to the end of 2060. The Group anticipates that this
from 2021
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION its brand presence without being
agreement will strengthen
associated with the direct costs of owning an Formula One® team.
Under the agreement, the Group has enhanced its presence by
providing the chassis and the team name Aston Martin.
employment practices, are intended to ensure that individuals are
treated equitably and consistently regardless of age, race, creed,
colour, gender, marital or parental status, sexual orientation, religious
beliefs and nationality.
On 29 July 2022, the Company entered into a placing agreement with
The Public Investment Fund (Placing Agreement). The Company
provided certain customary
representations, warranties and
undertakings in favour of The Public Investment Fund pursuant to the
Placing Agreement, including an undertaking that, between the date
of the Placing Agreement and 180 calendar days after the settlement
date of the 2022 capital raise (being 29 March 2023), inclusive, it would
not without the prior written consent of The Public Investment Fund,
enter into certain transactions involving or relating to ordinary shares,
subject to certain carve-outs and waivers, including the issue of any
ordinary shares or options or the grant of any right to acquire ordinary
shares pursuant to any employees’ share schemes that existed at the
date of the Placing Agreement, which were disclosed in the Prospectus
dated 5 September 2022.
On 26 June 2023 the Company announced its intention to enter into a
supply arrangement with Lucid to access Lucid’s powertrain
components to promote the Company’s electrification strategy
and long term growth. The arrangement was subject to shareholder
approval and regulatory clearance and became unconditional
in November 2023. For further information on the transaction see
page 194.
TAX STR ATEGY
The Group is committed to complying with its statutory obligations in
relation to the payment of tax including full disclosure of all relevant
facts to the appropriate tax authorities. In managing its tax affairs, the
Group recognises its responsibilities as a taxpayer and the need to
protect the corporate reputation inherent in the brand. The Board has
ultimate responsibility for the Group’s tax strategy although the day-
to-day management rests with the Executive Committee, which
comprises the senior operational personnel of the Group. The Chief
Financial Officer is the Executive Committee member with ultimate
responsibility for tax matters and is the Senior Accounting Officer of
the Group.
The Chief Financial Officer advises the Board on the tax affairs and risks
of the Group to ensure:
– the proper control and management of tax risk;
– the tax position is planned in line with the Group’s strategic
objectives;
– the tax charge is correctly stated in the statutory accounts and tax
returns; and
– all tax compliance is completed in a timely manner to HMRC and
other tax authorities.
Further information on the Group’s tax strategy is available on the
Company’s website.
Applications for employment by persons with disabilities are always
fully considered, bearing in mind the respective aptitudes and abilities
of the applicant concerned. In the event of employees becoming
disabled, every effort is made to ensure their employment with the
Group is continued and that the appropriate training is arranged. It is
the policy of the Group that the training, career development and
promotion of a persons with disabilities should, as far as possible, be
identical to that of a person who does not have a disability.
HEALTH AND WELLBEING
The health and wellbeing of employees is central to operating an
effective and successful business. The Group also relies on the health
and stability of the communities in which it operates. The Group
recognises its responsibility and the opportunity to make a positive
contribution and is actively engaged with local areas to foster a sense
of partnership with the Group. The Group continues to educate
employees on its approach to, and specific requirements of, human
rights in business operations. In 2023, no human rights violations
within the Group were reported, nor were any relevant reports
received regarding the supply network. The health and safety of its
workforce, visitors and the local community
is of paramount
importance. The Group aims to be a centre of excellence and for the
Aston Martin Health and Safety Management System to be aligned
with best practice within the automotive industry.
POLITICAL DONATIONS
It is the Company’s policy not to make political donations and no such
political donations were made during the period. In line with 2023 and
reflecting the practice of many other London-listed companies, the
Board will be seeking shareholder approval for political donations
at the forthcoming AGM. This is a precautionary measure, for the
Company and its subsidiaries to be able to make donations and/or
incur expenditure which may be construed as “political” by the wide
definition of that term included in the relevant legislation. Further
details will be provided in the Notice of this year’s AGM.
RESEARCH AND DEVELOPMENT
The Group spent £299m (2022: £246m) on research and development
during the year. See note 4 to the Financial Statements.
STR ATEGIC REPORT
Aston Martin Lagonda Global Holdings plc is required by the
Companies Act 2006 to prepare a Strategic Report that includes a fair
review of the Company’s business, the development and performance
of the Company’s business during the period, the position of the
Company at the end of the year ended 31 December 2023, and a
description of the principal risks and uncertainties faced by the
Company. The Strategic Report on pages 4 to 71 is incorporated by
reference and shall be deemed to form part of this Directors’ Report.
EQUAL OPPORTUNITIES AND EMPLOYMENT OF PERSONS
WITH DISABILITIES
The Group has policies on equal opportunities and the employment of
persons with disabilities which, through the application of fair
DISCLOSURE OF INFORMATION TO THE COMPANY’S
AUDITOR
Each person who is a Director at the date of approval of this Report
and of the Financial Statements confirms that:
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DIRECTORS’ REPORT CONTINUED
(i) so far as such Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware; and
(ii) such Director has taken all the steps that they ought to have taken
as a Director, in order to make themselves aware of any relevant
audit information and to establish that the Company’s Auditor is
aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
DISCLAIMER
As set out in more detail on the inside back cover of this agreement,
the purpose of this Annual Report is to provide information to the
members of the Company and it has been prepared for and only for,
the members of the Company as a body, and no other persons. The
Company, its Directors and officers, employees and advisors do not
accept or assume responsibility to any other person to whom this
document is shown or into whose hands it may come and any such
responsibility or liability is expressly disclaimed.
A cautionary statement in respect of forward-looking statements
contained in this Annual Report appears on the inside back cover of
this document.
The Strategic Report (from pages 4 to 71) and the Directors’ Report
(as described above) have been approved by the Board on 27 February
2024.
By order of the Board
LIZ MILES
COMPANY SECRETARY
Aston Martin Lagonda Holdings Plc
Registered Office: Banbury Road, Gaydon, Warwick, CV35 0DB
Registered in England and Wales.
Registered Number: 11488166.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION STATEMENT OF DIRECTORS’ RESPONSIBILITIES
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report which
includes the Strategic Report, the Directors’ Report, the Directors’
Remuneration Report and the Group and parent Company Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent
Company Financial Statements for each financial year. Under that law
the Directors have elected to prepare the Group Financial Statements
in accordance with UK-adopted international accounting standards
(IFRSs) and have elected to prepare the parent Company Financial
Statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law), including Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (FRS 101). Under company law the Directors
must not approve the Financial Statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group
and parent Company and of their profit or loss for that period.
In preparing each of the Group and parent Company Financial
Statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent Company’s
and Group’s transactions and disclose with reasonable accuracy at any
time the financial position of the parent Company and the Group and
enable them to ensure that the parent Company and Group Financial
Statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and parent
Company and for taking reasonable steps for the prevention and
detection of fraud and other irregularities. Under applicable law and
regulations, the Directors are also responsible for preparing a
Strategic Report, Directors’ Report, Directors’ Remuneration Report
and Corporate Governance Statement that comply with that law and
those regulations. The Directors are responsible for the maintenance
and integrity of the corporate and financial information included
on the Company’s website.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES UNDER
THE DISCLOSURE AND TR ANSPARENCY RULES
Each of the Directors at the date of this Report whose names and
functions are listed on pages 76-79, confirm to the best of their
knowledge:
– select suitable accounting policies in accordance with International
– that the consolidated Financial Statements, prepared in
Accounting Standard 8 ‘Accounting Policies, Changes in
Accounting Estimates and Errors’ and then apply them
consistently;
– make judgements and estimates that are reasonable and prudent;
– present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
– provide additional disclosures when compliance with the specific
requirements in IFRSs and, in respect of the parent Company
Financial Statements, FRS 101 is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group and Company financial position and
financial performance;
– for the Group Financial Statements, state whether UK-adopted
international accounting standards have been followed, subject to
any material departures disclosed and explained in the Financial
Statements;
– for the parent Company Financial Statements, state whether
applicable UK accounting standards, including FRS 101, have been
followed, subject to any material departures disclosed and
explained in the parent Company Financial Statements; and
– prepare the Financial Statements on the going concern basis unless
it is inappropriate to presume that the Company and/or the Group
will continue in business.
accordance with UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings included in
the consolidation taken as a whole;
– that the Annual Report and Accounts, including the Strategic
Report, includes a fair review of the development and performance
of the business and the position of the Company and undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face;
and
– that they consider the Annual Report and Accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
These statements were approved by the Board on 27 February 2024
and signed on its behalf by:
AMEDEO FELISA
CHIEF EXECUTIVE OFFICER
DOUG LAFFERTY
CHIEF FINANCIAL OFFICER OFFICE
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03
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FINANCIAL
STATEMENTS
Independent Auditor’s Report
132
142 Consolidated Financial Statements
147 Notes to the Financial Statements
200 Company Statement of Financial Position
202 Notes to the Company Financial Statements
1
2
0
2
One with Formula One®
We make our return to Formula One® as
a full works team and take our rightful place
in the pit lane. At the peak of the pinnacle of
the epitome of sport
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC
OPINION
In our opinion:
– Aston Martin Lagonda Global Holdings plc’s group financial statements and parent company financial statements (the “financial statements”) give a
true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2023 and of the group’s loss for the year then
ended;
– the group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
– the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Aston Martin Lagonda Global Holdings plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2023 which comprise:
Group
Parent company
Consolidated statement of financial position
as at 31 December 2023
Consolidated statement of comprehensive income
for the year then ended
Consolidated statement of changes in equity
for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 34 to the financial statements,
including material accounting policy information
Parent company statement of financial position
as at 31 December 2023
Parent company statement of changes in equity
for the year then ended
Related notes 1 to 6 to the financial statements
including material accounting policy information.
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted international
accounting standards. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable
law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting
Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
INDEPENDENCE
We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the
group and the parent company in conducting the audit.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt the going concern basis
of accounting included the following procedures:
– Understanding and walking through management’s process for and controls related to assessing going concern including discussion with management
to ensure all key factors were taken into account;
– Obtaining management’s going concern assessment, which covers the period to 30 June 2025, and which includes cashflow and liquidity forecasts,
details of facilities available, forecast covenant calculations and the results of management’s downside scenarios, and testing the integrity of the model,
including clerical accuracy;
– Confirming to the debt agreements both the maturity profile of the debt and the covenants that are required to be met within the going concern period;
– Confirming the Group forecasts demonstrate sufficient financial resources to repay the current RCF when it matures in August 2025 such that the going
concern period does not need to be extended;
– Assessing the reasonableness of forecasts underpinning the going concern model which are based on the Board-approved budget and the Board-
approved strategic plan. To do this we specifically considered forecast wholesale volumes compared to historical volumes, current confirmed orders and
competitor volumes, sales margins and capital expenditure plans;
– Ensuring that these forecasts appropriately reflect the assessed impact of the current macroeconomic circumstances and the disclosed climate change
commitments of the group;
– Analysing the historical accuracy of forecasting by comparing management’s forecasts to actual results, both for 2020, 2021, 2022 and 2023 as well as
through the subsequent events period and performing inquiries to the date of this report to determine whether forecast cash flows are reliable based on
past experience;
– Considering external factors that could impact liquidity/forecasts including reliance on suppliers, recoverability of debtors, the current macroeconomic
climate, and the threat of potential litigations and claims;
– Considering the downside scenario identified by management in their assessment on pages 147-148, assessing whether there are any other scenarios
which should be considered, and assessing whether the quantum of the impact of the downside scenario modelled in the going concern period is
realistic;
– Performing reverse stress testing on the going concern model by independently determining what reduction in wholesale volumes would be required
before liquidity would be exhausted. This included comparing this scenario to the downside scenario contemplated by management and considering the
likelihood of the events required to exhaust available liquidity;
– Evaluating the Group’s ability to undertake mitigating actions should it experience a severe downside scenario, considering likely achievability of both
timing and quantum particularly with respect to constraining capital spending if required; and
– Assessing the going concern disclosures in the financial statements to ensure they are in accordance with International Financial Reporting Standards.
We observed that while the group achieved lower than forecast total core wholesale volumes than it was originally targeting in 2023, this was driven by
supplier readiness and integration of the new infotainment system impacting the timing of production and the related vehicle wholesale. The forecast core
wholesale volumes for the going concern assessment period are reasonable compared to historic performance and the those reported by comparable
brands in the luxury automotive sector. We observed in previous periods the control exercised over capital expenditure in comparison to amounts forecast
which corroborates management’s assertion that in the event of the modelled downside occurring capital expenditure could be deferred. Further, the Group
has the borrowings disclosed in note 23 which includes details of the maturities of those facilities. We observed that the group forecasts demonstrate
sufficient financial resources to repay the current RCF when it matures in August 2025 such that the going concern period does not need to be extended.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may
cast significant doubt on the group and parent company’s ability to continue as a going concern for a period to 30 June 2025.
In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue as a going concern.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC CONTINUED
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
– We performed an audit of the complete financial information of four components and audit procedures on specific balances for a further
three components.
– The components where we performed full or specific audit procedures accounted for 100% of Adjusted EBITDA, 100% of Revenue and
100% of Total assets.
Key audit matters
– Revenue recognition, specifically:
– There is a risk that revenue is overstated due to errors in cut-off, including bill and hold arrangements; and
– There is also a risk of overstatement of revenue through inappropriate manual journal entries
– Capitalisation and amortisation of development costs
– Impairment of capitalised development costs
– Deferred tax asset valuation
– Parent Company Investment Impairment
Materiality
– Overall Group materiality of £7.5m which represents 2.5% of Adjusted Earnings before interest, tax, depreciation and amortisation (‘EBITDA’).
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company within
the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the organisation
of the group and effectiveness of group-wide controls, changes in the business environment, the potential impact of climate change and other factors such
as recent Internal audit results when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant accounts
in the financial statements, of the 8 reporting components of the Group, we selected 7 components covering entities within the UK, Europe, USA, Japan and
China, which represent the principal business units within the Group.
Of the 7 components selected, we performed an audit of the complete financial information of four components (“full scope components”) which were
selected based on their size or risk characteristics. For the remaining three components (“specific scope components”), we performed audit procedures on
specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in the financial statements
either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 100% (2022: 100%) of the Group’s Adjusted EBITDA, 100% (2022: 100%) of
the Group’s Revenue and 100% (2022: 100%) of the Group’s Total assets. For the current year, the full scope components contributed 98% (2022: 98%) of the
Group’s Adjusted EBITDA, 96% (2022: 97%) of the Group’s Revenue and 98% (2022: 98%) of the Group’s Total assets. The specific scope component
contributed 2% (2022: 2%) of the Group’s Adjusted EBITDA, 4% (2022: 3%) of the Group’s Revenue and 2% (2022: 2%) of the Group’s Total assets. The audit
scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of significant
accounts tested for the Group.
Of the remaining one components that together represent 0% of the Group’s Adjusted EBITDA, we performed other procedures, including analytical review
to respond to any potential risks of material misstatement to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
ADJUSTED EBITDA
REVENUE
TOTAL ASSETS
98% Full scope components
2% Specific scope components
96% Full scope components
4% Specific scope components
98% Full scope components
2% Specific scope components
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In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as
the primary audit engagement team, or by component auditors from other EY global network firms operating under our instruction. Of the four full scope
components, audit procedures were performed on three of these directly by the primary audit team. For the three specific scope components, audit
procedures were performed directly by the primary audit team. For the component not audited by the primary team, we determined the appropriate level of
involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.
The Group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior Statutory Auditor or his designate
visits full scope component audited by the EY global network firm each year. During the current year’s audit cycle, visits were undertaken by the primary audit
team to the component team in China and these visits continued to be conducted virtually in line with prior periods. These sessions involved meeting with our
local component team to discuss and direct their audit approach, understanding the significant audit findings in response to the key audit matters and
reviewing key audit working papers. The primary team interacted regularly with the component team where appropriate during various stages of the audit,
reviewed relevant working papers and were responsible for the scope and direction of the audit process. This, together with the additional procedures
performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.
CLIMATE CHANGE
Stakeholders are increasingly interested in how climate change will impact Aston Martin Lagonda Global Holdings plc. The Group has determined that the
most significant future impacts from climate change on its operations will be from the transition to EV (‘Electric vehicle’) powertrains, managing the financial
impact of increasing carbon related costs in response to changes in legislation and managing the brand/reputational impact of continuing to sell ICE (‘Internal
combustion engine’) powered vehicles in the short to medium term. These are explained on pages 58-63 in the required Task Force On Climate Related
Financial Disclosures and on pages 64-69 in the principal risks and uncertainties. They have also explained their climate commitments on pages 44-49. All of
these disclosures form part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore
consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential material impact on
its financial statements.
The Group has explained in Note 1 how they have reflected the impact of climate change in their financial statements including how this aligns with their
commitment to the aspirations of the Paris Agreement to achieve net zero emissions by 2050. Significant judgements or estimates relating to climate change
have been factored into the Directors impairment assessments of the carrying value of capitalised development cost intangible assets, parent company
investment impairment assessment and recoverability of deferred tax assets in the notes to the financial statements. These considerations did not have a
material impact on the financial reporting judgements and estimates, consistent with the assessment that climate change is not expected to have a significant
impact on the Group’s going concern assessment to 30 June 2025 nor the viability of the Group over the next five years.
Our audit effort, in considering the impact of climate change on the financial statements, was focused on evaluating management’s assessment of the impact
of climate risk, both physical and transition, managements climate commitments and the effects of material climate risks disclosed on pages 61-62. We
focused on whether these have been appropriately reflected in asset values where these are impacted by future cash flows, being the impairment testing of
capitalised development costs, impairment of parent company investments and deferred tax asset recoverability and associated sensitivity disclosures (see
notes 9 and 13 in the group financial statements and note 3 in the parent company financial statements) following the requirements of UK adopted international
accounting standards for the group and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice) for the parent company. As part of this evaluation, we performed our own risk assessment, supported by our
climate change internal specialists, to determine the risks of material misstatement in the financial statements from climate change which needed to be
considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and associated disclosures. Where
considerations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work we have considered the impact of climate change on the financial statements to impact certain key audit matters. Details of our procedures
and findings are included in our explanation of key audit matters below.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
135
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC CONTINUED
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period
and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on
these matters.
Risk
Our response to the risk
Revenue Recognition
(2023: £1,632.8m; 2022: £1,381.5m)
Refer to the Audit Committee Report (pages
98-101); Accounting policies (pages 148 to
149); and Note 3 of the Consolidated Financial
Statements (page 157)
There is a risk that revenue is overstated due
to errors in cut-off, including bill and hold
arrangements whereby revenue is recognised
on a completed vehicle before delivery is
made to the customer based on the customer’s
request.
In the current year the business and industry
has experienced supply chain challenges and as
a result there is an increased risk that revenue
is recognised ahead of the vehicle build being
complete.
There is also a risk of overstatement of revenue
through inappropriate manual journal entries.
Capitalisation and amortisation
of development costs (Net book value
of capitalised development costs: £848.4m,
2022: £843.9m)
(Amounts capitalised in the year: £268.5m,
2022: £232.0m) (Amortisation charge:
£264.0m, 2022: £221.4m)
Refer to Accounting policies (page 150);
and Note 12 of the Consolidated Financial
Statements (page 165)
There is a risk that costs are capitalised which
do not meet the criteria set out within IAS 38 or
that the amortisation period is inappropriate.
There is also a risk of overstatement of
capitalised development costs through
inappropriate manual journal entries.
– We confirmed the existence and the design effectiveness of controls
within the sales process, paying particular attention to those around
cut-off and bill and hold transactions.
– For a sample of sales transactions, we considered the terms per the
contracts and deliveries to ensure revenue has been recognised in
accordance with IFRS 15 and is recorded in the correct period.
– For a sample of bill and hold sales we have confirmed the vehicle was
completed before year end by obtaining the signed quality check
documentation. For that sample we also confirmed the transfer of
control had occurred by confirming the transaction directly with the
third-party dealer and by obtaining the customer requests to hold the
vehicles on their behalf.
– We performed physical verification on the finished vehicles and agreed
these to either the inventory or the bill and hold listings. We ensured for
a sample of vehicles the manufacturing process was complete and that
the vehicle was not double counted in revenue and inventory.
– We performed cut-off testing by tracing a sample of transactions
around the period end to third party delivery note documentation.
– We performed data analytical procedures of the double entries in the
general ledger to test the postings from Revenue to Cash, correlating
the cash conversion of sales. We investigated and obtained evidence
for any unusual items identified.
– We performed journal testing procedures to identify unusual journal
entry postings. We obtained audit evidence for unusual and/or material
revenue journals.
– We performed audit procedures over this risk area in the full and
specific scope locations.
– We confirmed the existence and the design effectiveness of controls
around the intangibles process and in particular around the approval of
capitalised development expenditure.
– For a sample of costs capitalised we confirmed that the costs incurred
were; capitalised against the correct project; measured correctly;
eligible for capitalisation, and the timing of the expense capitalisation
was appropriate.
– For a sample of projects we compared the actual spend against the
budgeted spend to ensure the projects continue to meet the IAS 38
criteria for capitalisation and remain commercially viable.
– For capitalised development costs we confirmed the amortisation
period was aligned to the period over which commercial benefits are
expected to be received and is consistent with the Group’s business
plan.
– We considered the appropriateness of the amount/percentage of costs
which are transferred between models as a result of the carry over
carry across principle (‘COCA’).
– We recalculated the amortisation recognised to confirm this was in line
with expectations.
– We performed journal testing procedures to identify unusual journal
entry postings. We obtained audit evidence for any unusual journals
related to capitalised development costs.
– We performed full scope audit procedures over this risk area in one
location, which covered 100% of the risk amount.
Key observations communicated
to the Audit Committee
Our audit procedures did not
identify evidence of material
misstatements in revenue
recognition arising from the
risk of cut-off, bill and hold or
management override through
journal entries.
Our audit procedures did not
identify evidence of material
misstatement in the amounts of
development costs capitalised in
the year or through inappropriate
manual journal entries.
Our audit procedures did not
identify evidence of material
misstatement of the amortisation
charge for development costs
recorded in the period.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
136
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Our year end audit procedures
did not identify evidence of
material misstatement regarding
the carrying value of capitalised
development costs.
Our year end audit procedures did
not identify evidence of material
misstatement regarding the
valuation of deferred tax assets.
Impairment of capitalised development costs
(Net book value of capitalised development
costs: £848.4m, 2022: £843.9m)
(Impairment charge: £nil, 2022 £nil)
– We confirmed the existence and the design effectiveness of controls
around management’s impairment assessment for capitalised
development costs.
– We have examined management’s methodology and impairment
Refer to the Audit Committee Report (pages
98-101); Accounting policies (pages 151-152);
and Note 13 of the Consolidated Financial
Statements (page 166)
There is a risk that the value of development
costs is not supported by the future forecast
cashflows from the sale of vehicles to which the
costs relate.
Deferred Tax Asset Valuation
(Deferred Tax Asset: £156.3m, 2022: £133.7m)
Refer to the Audit Committee Report (pages
98-101); Accounting policies (page 154);
and Note 9 of the Consolidated Financial
Statements (page 161-163)
The extent of recognition of deferred tax
assets is subject to significant estimation
and assumptions particularly in respect of
deferred tax assets recognised in respect
of carried forward losses based on forecast
future taxable profits.
models for assessing the recoverability of the capitalised development
costs to understand the composition of management’s future cash
flow forecasts, and the process undertaken to prepare them. This
includes confirming the underlying cash flows are consistent with the
Board approved business plan and reflect appropriately the effects of
material climate risks as disclosed on pages 61-62.
– We have re-performed the calculations in the model to test the
mathematical integrity.
– We have assessed the discount rate used by obtaining the underlying
data used in the calculation and benchmarking it against comparable
organisations and market data with the support of our valuation
specialists.
– We have analysed the historical accuracy of budgets to actual results
to determine whether forecast cash flows are reliable based on past
experience.
– We considered market data and the results of wider procedures in our
audit in contemplation of whether any contra evidence existed.
– We calculated the degree to which the key assumptions would need to
fluctuate before an impairment arose and considered the likelihood of
this occurring.
– We have audited the disclosures in respect of impairment of capitalised
development costs with reference to the requirements of IAS 36 and
IAS 1 and confirmed their consistency with the audited impairment
models.
– We performed audit procedures over this risk area in one full scope
location, which covered 100% of the risk amount.
– We confirmed the existence and the design effectiveness of controls
around management’s assessment of the deferred tax asset valuation.
– We considered and challenged the convincing evidence that the group
will make future taxable profits against which to recognize carried
forward losses.
– We ensured the forecasts used are consistent with those used for
going concern, viability and impairment assessments. This included
confirming the underlying cash flows are consistent with the Board
approved business plan and appropriately reflect the effects of
material climate risks as disclosed on pages 61-62.
– We tested the adjustments made to forecast profit before tax to arrive
at forecast taxable profits.
– For forecasts beyond the board approved budget, we considered
how these forecasts had been prepared and challenged the forecast
profitability.
– We considered and challenged the level of Deferred Tax Asset
recognised for both trade and non-trade losses including the
timeframe in which these Deferred Tax Assets will be recovered and
whether these forecast profits are considered probable.
– We also considered and challenged the rational for the level of
Deferred Tax Assets which remain unrecognised.
– We performed and considered sensitivities on managements’ future
forecasts, both upside and downside, to challenge whether the
forecasts used are the best estimate for use in calculation of the
deferred tax asset recognised.
– We audited the disclosures relating to the Deferred Tax Asset to ensure
they are compliant with the requirements of IAS 12.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
137
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC CONTINUED
Parent Company Investment impairment
(Investment: £1,051.6m, 2022: £497.3m)
(Impairment reversal: £460.1m, 2022
Impairment charge: £460.1m)
Refer to the Audit Committee Report (pages
98-101); Accounting policies (page 203);
and Note 3 of the Parent Company Financial
Statements (page 205)
There is a risk that the parent company
investment impairment/impairment reversal
is not supported by the subsidiaries future
forecast cashflows.
Our year end audit procedures
did not identify evidence of
material misstatement regarding
the reversal of the impairment in
investment in subsidiaries.
The prior year adjustment related
to the 2022 balance sheet is
materially stated.
– We confirmed the existence and the design effectiveness of controls
around management’s impairment assessment for investment in
subsidiaries.
– We considered the indicators of investment reversal, being the new
medium term targets announced by management at the capital
markets day as well as the increase in the Groups market capitalisation
in the year.
– We examined management’s methodology and model for assessing
the VIU for investment in subsidiaries. This included assessing the cash
flow forecasts relating to the repayment of intercompany payables to
the parent company.
– We confirmed the underlying cash flows are consistent with the
Board approved business plan and appropriately reflect the effects of
material climate risks as disclosed on pages 61-62.
– We re-performed the calculations in the model to test the
mathematical integrity.
– We calculated the degree to which the key assumptions would need
to fluctuate before there is a change in the impairment/impairment
reversal.
– We assessed the discount rate used by obtaining the underlying data
used in the calculation and benchmarking it against comparable
organisations and market data with the support of our valuation
specialists.
– We have further reviewed managements cash flow forecasts used
to support the repayment of intercompany payables to the parent
company (outside of the Group VIU).
– We considered sensitivity analysis about what changes in assumptions
could individually lead to a different conclusion.
– We audited the disclosures in respect of impairment of investments and
confirm their consistency with the audited impairment models.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our
audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the
users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £7.5 million (2022: £4.75 million), which is 2.5% (2022: 2.5%) of Adjusted EBITDA. We believe that Adjusted
EBITDA provides us with an appropriate basis for materiality as it is a key metric used by investors and management in assessing the performance of the
Group.
We determined materiality for the Parent Company to be £25.4 million (2022: £30.8 million), which is 1% (2022: 1.5%) of Equity. We have reduced the
percentage applied to determine materiality in the current year as a result of the prior year adjustments identified. When auditing balances included within to
the Group financial statements we reduced this to the Group materiality.
Starting basis
– Loss before Tax – £239.8m
Adjustments
– Adjusting items – £68.0m
– Adjusted net finance
expense – £92.1m
– Depreciation and
Amortisation – £385.6m
Materiality
– EBITDA – £305.9m
– Materiality of £7.5m (2.5% of
materiality basis)
During the course of our audit, we reassessed initial materiality and updated this for actual results.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
138
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance
materiality was 50% (2022: 50%) of our planning materiality, namely £3.75m (2022: £2.4m). We have set performance materiality at this percentage due to
the level of audit adjustments identified in the prior year.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a
percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component
to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of performance materiality allocated
to components was £0.75m to £3.7m (2022: £0.47m to £2.4m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.38m (2022: £0.24m), which is set at 5%
of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative
considerations in forming our opinion.
OTHER INFORMATION
The other information comprises the information included in the annual report set out on pages 1 to 208 other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 20 06
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent
with the financial statements; and
– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not
visited by us; or
– the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
139
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC CONTINUED
CORPOR ATE GOVERNANCE STATEMENT
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating
to the group and company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set
out on pages 147-148;
– Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is appropriate set out on
page 70;
– Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its liabilities set out on
pages 70 and 147-148;
– Directors’ statement on fair, balanced and understandable set out on pages 100-101 and 129;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 102;
– The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages 102-103;
– The section describing the work of the audit committee set out on page 98-105.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 129, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting irregularities, including fraud is detailed below.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
140
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the most significant are
frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework (UK adopted
international accounting standards, FRS 101, the Companies Act 2006 and UK Corporate Governance Code).
– We understood how Aston Martin Lagonda Global Holdings plc is complying with those frameworks by making enquiries of management, internal audit,
those responsible for legal and compliance procedures and the company secretary. We corroborated our enquiries through our review of board minutes,
papers provided to the Audit Committee and correspondence received from regulatory bodies.
– We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur by meeting with
management and internal audit to understand where they considered there was susceptibility to fraud. We also considered performance targets and the
potential incentives or opportunities to manage earnings or influence the perceptions of analysts. We considered the programmes and controls that the
Group has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those
programs and controls. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These
procedures included testing manual journals and were designed to provide reasonable assurance that the financial statements were free from material
fraud.
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved
understanding management’s internal controls over compliance with laws and regulations; enquiries of legal counsel, Group management, internal audit,
and full and specific scope management; reading internal audit reports and whistleblowing summaries provided to the Audit Committee and performing
focused testing, as referred to in the key audit matters section above.
– Specific enquiries were made with the component team to confirm any non-compliance with laws and regulations and this was reported through their
audit deliverables based on the procedures detailed in the previous paragraph.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.
org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
– Following the recommendation from the audit committee we were appointed by the company on 24 July 2019 to audit the financial statements for the
year ending 31 December 2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is five years, covering the years ending 2019 to 2023.
– The audit opinion is consistent with the additional report to the audit committee.
USE OF OUR REPORT
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
SIMON O’NEILL (SENIOR STATUTORY AUDITOR)
FOR AND ON BEHALF OF ERNST & YOUNG LLP, STATUTORY AUDITOR
Birmingham
27 February 2024
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
141
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative and other operating expenses
Operating loss
Finance income
Finance expense
Loss before tax
Income tax credit/(charge)
Loss for the year
Loss attributable to:
Owners of the Group
Non-controlling interests
Other comprehensive income
Items that will never be reclassified to the Income Statement
Remeasurement of Defined Benefit liability
Taxation on items that will never be reclassified to the
Income Statement
Items that are or may be reclassified to the Income Statement
Foreign currency translation differences
Fair value adjustment – cash flow hedges
Amounts reclassified to the Income Statement – cash flow hedges
Taxation on items that may be reclassified to the Income Statement
Other comprehensive (loss)/income for the year, net of income tax
Total comprehensive loss for the year
Total comprehensive (loss)/income for the year attributable to:
Owners of the Group
Non-controlling interests
Earnings per ordinary share
Basic loss per share
Diluted loss per share
Notes
Adjusted
£m
3
1,632.8
2023
Adjusting
items*
£m
–
–
–
–
(31.5)
(31.5)
–
(36.5)
(68.0)
–
Total
£m
Adjusted
£m
1,632.8
1,381.5
(993.6)
(930.8)
639.2
(143.8)
(606.6)
(111.2)
74.3
(202.9)
(239.8)
13.0
450.7
(113.0)
(455.6)
(117.9)
3.0
(336.1)
(451.0)
(32.7)
2022
Adjusting
items*
£m
–
–
–
–
(23.9)
(23.9)
12.5
(32.6)
(44.0)
–
Total
£m
1,381.5
(930.8)
450.7
(113.0)
(479.5)
(141.8)
15.5
(368.7)
(495.0)
(32.7)
(993.6)
639.2
(143.8)
(575.1)
(79.7)
74.3
(166.4)
(171.8)
13.0
(158.8)
(68.0)
(226.8)
(483.7)
(44.0)
(527.7)
(228.1)
1.3
(226.8)
(0.1)
–
(4.0)
0.7
(5.4)
1.2
(7.6)
(234.4)
(235.7)
1.3
(234.4)
(30.5p)
(30.5p)
(528.6)
0.9
(527.7)
6.8
(1.7)
3.8
(6.1)
2.9
0.8
6.5
(521.2)
(522.1)
0.9
(521.2)
(124.5p)
(124.5p)
4
7
8
9
33
26
9
23
23
9
33
11
11
All operations of the Group are continuing.
* Adjusting items are defined in note 2 with further detail shown in note 5.
The notes on pages 147 to 199 form an integral part of the Financial Statements.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
142
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Notes
Adjusted
£m
3
1,632.8
Total
£m
Adjusted
£m
1,632.8
1,381.5
(993.6)
(930.8)
2023
Adjusting
items*
£m
–
–
–
–
–
–
(31.5)
(31.5)
(36.5)
(68.0)
(993.6)
639.2
(143.8)
(575.1)
(79.7)
74.3
(166.4)
(171.8)
13.0
2022
Adjusting
items*
£m
–
–
–
–
(23.9)
(23.9)
12.5
(32.6)
(44.0)
–
450.7
(113.0)
(455.6)
(117.9)
3.0
(336.1)
(451.0)
(32.7)
(158.8)
(68.0)
(226.8)
(483.7)
(44.0)
(527.7)
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative and other operating expenses
Operating loss
Finance income
Finance expense
Loss before tax
Income tax credit/(charge)
Loss for the year
Loss attributable to:
Owners of the Group
Non-controlling interests
Other comprehensive income
Items that will never be reclassified to the Income Statement
Remeasurement of Defined Benefit liability
Taxation on items that will never be reclassified to the
Income Statement
Items that are or may be reclassified to the Income Statement
Foreign currency translation differences
Fair value adjustment – cash flow hedges
Amounts reclassified to the Income Statement – cash flow hedges
Taxation on items that may be reclassified to the Income Statement
Other comprehensive (loss)/income for the year, net of income tax
Total comprehensive loss for the year
Total comprehensive (loss)/income for the year attributable to:
Owners of the Group
Non-controlling interests
Earnings per ordinary share
Basic loss per share
Diluted loss per share
4
7
8
9
33
26
9
23
23
9
33
11
11
All operations of the Group are continuing.
* Adjusting items are defined in note 2 with further detail shown in note 5.
The notes on pages 147 to 199 form an integral part of the Financial Statements.
639.2
(143.8)
(606.6)
(111.2)
74.3
(202.9)
(239.8)
13.0
(228.1)
1.3
(226.8)
(0.1)
–
(4.0)
0.7
(5.4)
1.2
(7.6)
(234.4)
(235.7)
1.3
(234.4)
(30.5p)
(30.5p)
Total
£m
1,381.5
(930.8)
450.7
(113.0)
(479.5)
(141.8)
15.5
(368.7)
(495.0)
(32.7)
(528.6)
0.9
(527.7)
6.8
(1.7)
3.8
(6.1)
2.9
0.8
6.5
(521.2)
(522.1)
0.9
(521.2)
(124.5p)
(124.5p)
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Consolidated Statement of Changes in Equity as at 31 December 2023
Group
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Capital
reserve
£m
Translation
reserve
£m
Hedge
reserves
£m
Retained
earnings
(restated*)
£m
Non-
controlling
interest
£m
Total
Equity
(restated*)
£m
At 1 January 2023 (restated*)
69.9
1,697.4
143.9
9.3
6.6
6.5
4.3
(1,233.9)
19.5
723.5
Total comprehensive loss for
the year
(Loss)/profit for the year
Other comprehensive income
Foreign currency translation
differences
Fair value movement – cash flow
hedges (note 23)
Amounts reclassified to the
Income Statement – cash flow
hedges (note 23)
Remeasurement of Defined
Benefit liability (note 26)
Tax on other comprehensive loss
(note 9)
Total other comprehensive loss
Total comprehensive
(loss)/income for the year
Transactions with owners,
recorded directly in equity
Issuance of new shares (note 27)
Issue of shares to Share Incentive
Plan (note 27)
Warrant options exercised (note
27)
Credit for the year under equity-
settled share-based payments
(note 29)
Tax on items credited to equity
(note 9)
Total transactions with owners
At 31 December 2023
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.5
0.1
383.0
–
0.9
14.1
–
–
397.1
–
–
12.5
82.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(228.1)
1.3
(226.8)
–
(4.0)
–
–
–
–
–
–
0.7
(5.4)
–
–
–
–
(0.1)
1.2
–
(4.0)
(4.0)
(3.5)
(3.5)
(0.1)
(228.2)
–
–
–
–
–
–
(4.0)
0.7
(5.4)
(0.1)
1.2
(7.6)
1.3
(234.4)
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.1)
18.6
5.4
0.5
24.4
–
–
–
–
–
–
394.5
–
33.6
5.4
0.5
434.0
923.1
2,094.5
143.9
9.3
6.6
2.5
0.8
(1,437.7)
20.8
* Detail on the restatement is disclosed in note 2.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
143
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
Group
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Capital
reserve
£m
Translation
reserve
£m
Hedge
reserves
£m
Retained
earnings
(restated*)
£m
Non-
controlling
interest
£m
Total
Equity
(restated*)
£m
At 1 January 2022 (restated*)
11.6
1,123.4
143.9
9.3
6.6
2.7
6.7
(711.4)
18.6
611.4
Total comprehensive loss for
the year
(Loss)/profit for the year
Other comprehensive income
Foreign currency translation
differences
Fair value movement – cash flow
hedges (note 23)
Amounts reclassified to the
Income Statement – cash flow
hedges (note 23)
Remeasurement of Defined
Benefit liability (note 26)
Tax on other comprehensive
income (note 9)
Total other comprehensive
income/(loss)
Total comprehensive
income/(loss) for the year
Transactions with owners,
recorded directly in equity
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Issuance of new shares (note 27)
58.3
574.0
Credit for the year under equity-
settled share-based payments
(note 29)
–
–
Total transactions with owners
58.3
574.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(528.6)
0.9
(527.7)
3.8
–
(6.1)
2.9
–
–
–
–
6.8
0.8
(1.7)
(2.4)
5.1
–
–
–
–
–
–
3.8
(6.1)
2.9
6.8
(0.9)
6.5
(2.4)
(523.5)
0.9
(521.2)
–
–
–
–
1.0
1.0
–
–
–
632.3
1.0
633.3
–
–
–
–
3.8
3.8
–
–
–
At 31 December 2022
(restated*)
69.9
1,697.4
143.9
9.3
6.6
6.5
4.3
(1,233.9)
19.5
723.5
* Detail on the restatement is disclosed in note 2.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
14 4
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
Total comprehensive loss for
the year
(Loss)/profit for the year
Other comprehensive income
Foreign currency translation
differences
Fair value movement – cash flow
hedges (note 23)
Amounts reclassified to the
Income Statement – cash flow
hedges (note 23)
Remeasurement of Defined
Benefit liability (note 26)
Tax on other comprehensive
income (note 9)
Total other comprehensive
income/(loss)
Total comprehensive
income/(loss) for the year
Transactions with owners,
recorded directly in equity
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Issuance of new shares (note 27)
58.3
574.0
Credit for the year under equity-
settled share-based payments
(note 29)
–
–
Total transactions with owners
58.3
574.0
At 31 December 2022
(restated*)
* Detail on the restatement is disclosed in note 2.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(528.6)
0.9
(527.7)
3.8
–
(6.1)
2.9
–
–
–
–
6.8
0.8
(1.7)
(2.4)
5.1
–
–
–
–
1.0
1.0
–
–
–
–
–
–
–
3.8
3.8
–
–
–
–
–
–
–
–
–
3.8
(6.1)
2.9
6.8
(0.9)
6.5
632.3
1.0
633.3
(2.4)
(523.5)
0.9
(521.2)
69.9
1,697.4
143.9
9.3
6.6
6.5
4.3
(1,233.9)
19.5
723.5
Group
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
At 1 January 2022 (restated*)
11.6
1,123.4
143.9
Capital
redemption
reserve
£m
9.3
Capital
reserve
£m
6.6
Translation
Hedge
Retained
earnings
Non-
controlling
reserve
reserves
(restated*)
interest
(restated*)
£m
2.7
£m
6.7
£m
(711.4)
£m
18.6
Total
Equity
£m
611.4
Consolidated Statement of Financial Position at 31 December 2023
31 December
2023
£m
31 December
2022 (restated*)
£m
1 January
2022 (restated*)
£m
Notes
Non-current assets
Intangible assets
Property, plant and equipment
Investments in equity interests
Right-of-use lease assets
Trade and other receivables
Other financial assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Income tax receivable
Other financial assets
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Trade and other payables
Income tax payable
Other financial liabilities
Lease liabilities
Provisions
Non-current liabilities
Borrowings
Trade and other payables
Lease liabilities
Provisions
Employee benefits
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Share capital
Share premium
Merger reserve
Capital redemption reserve
Capital reserve
Translation reserve
Hedge reserves
Retained earnings
Equity attributable to owners of the Group
Non-controlling interests
Total shareholders’ equity
* Detail on the restatement is disclosed in note 2.
12
14
15
16
18
9
17
18
20
19
23
21
22
16
25
23
21
16
25
26
9
27
27
23
1,577.6
353.7
18.2
70.4
5.3
–
156.3
2,181.5
272.7
322.2
0.9
3.3
392.4
991.5
3,173.0
89.4
840.4
2.1
25.2
8.8
20.2
986.1
980.3
122.3
88.5
23.7
49.0
–
1,263.8
2,249.9
923.1
82.4
2,094.5
143.9
9.3
6.6
2.5
0.8
1,394.6
369.9
–
74.4
6.3
–
133.7
1,978.9
286.2
245.7
1.4
8.8
583.3
1,125.4
3,104.3
107.1
891.2
6.3
26.2
7.4
18.6
1,056.8
1,384.1
355.5
–
76.0
2.1
0.5
156.4
1,974.6
196.8
243.4
1.5
7.3
418.9
867.9
2,842.5
114.3
735.9
5.5
34.8
9.7
19.9
920.1
1,104.0
1,074.9
43.2
92.4
22.5
61.2
0.7
1,324.0
2,380.8
723.5
69.9
1,697.4
143.9
9.3
6.6
6.5
4.3
43.9
93.7
19.0
78.7
0.8
1,311.0
2,231.1
611.4
11.6
1,123.4
143.9
9.3
6.6
2.7
6.7
(1,437.7)
(1,233.9)
(711.4)
902.3
20.8
923.1
704.0
19.5
723.5
592.8
18.6
611.4
The Financial Statements were approved by the Board of Directors on 27 February 2024 and were signed on its behalf by
A M E D E O F E L I S A
C H I E F E X E C U T I V E O F F I C E R
Company Number: 11488166
D O U G L A F F E R T Y
C H I E F F I N A N C I A L O F F I C E R
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
145
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Consolidated Statement of Cash Flows for the year ended 31 December 2023
Operating activities
Loss for the year
Adjustments to reconcile loss for the year to net cash inflow from operating activities
Tax (credit)/charge on operations
Net finance costs
Depreciation of property, plant and equipment
Depreciation of right-of-use lease assets
Amortisation of intangible assets
Loss on sale/scrap of property, plant and equipment
Difference between pension contributions paid and amounts recognised in Income Statement
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Decrease in advances and customer deposits
Movement in provisions
Other non-cash movements
Other non-cash movements – Movements in hedging position and foreign exchange derivatives
Other non-cash movements – Increase in other derivative contracts
Other non-cash movements – Movements in deferred tax relating to RDEC credit
Cash generated from operations
Decrease in cash held not available for short-term use
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Repayment of loan assets
Payments to acquire property, plant and equipment
Cash outflow on technology and development expenditure
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Proceeds from equity share issue
Proceeds from issue of warrants
Proceeds from financial instrument utilised during refinancing transactions
Principal element of lease payments
Repayment of existing borrowings
Premium paid upon redemption of borrowings
Proceeds from inventory repurchase arrangement
Repayment of inventory repurchase arrangement
Proceeds from new borrowings
Transaction fees paid on issuance of shares
Transaction fees paid on financing activities
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the end of the year
Notes
2023
£m
2022
£m
(226.8)
(527.7)
9
4
4
4
9
19
9
7
18
28
27
27
7
28
28
28
21
21
28
28
(13.0)
128.6
90.3
9.3
283.4
2.6
(15.0)
11.9
(82.3)
50.9
(66.0)
3.4
(0.3)
(7.2)
(11.2)
(7.4)
151.2
0.3
(5.6)
145.9
13.5
0.5
(91.1)
(306.3)
(383.4)
(122.5)
310.9
15.0
–
(7.9)
(129.7)
(8.0)
38.0
(40.0)
11.5
(7.6)
–
59.7
(177.8)
583.3
(13.1)
392.4
32.7
353.2
77.8
11.0
219.3
–
(12.1)
(78.4)
0.1
81.5
(17.9)
0.7
1.2
(3.2)
(2.3)
(3.5)
132.4
1.5
(6.8)
127.1
2.2
–
(58.6)
(228.3)
(284.7)
(141.2)
653.9
–
4.1
(10.0)
(172.7)
(14.3)
75.7
(60.0)
–
(18.6)
(1.9)
315.0
157.4
418.9
7.0
583.3
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
146
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Consolidated Statement of Cash Flows for the year ended 31 December 2023
Adjustments to reconcile loss for the year to net cash inflow from operating activities
Notes
2023
£m
2022
£m
(226.8)
(527.7)
Difference between pension contributions paid and amounts recognised in Income Statement
Other non-cash movements – Movements in hedging position and foreign exchange derivatives
Other non-cash movements – Increase in other derivative contracts
Other non-cash movements – Movements in deferred tax relating to RDEC credit
Operating activities
Loss for the year
Tax (credit)/charge on operations
Net finance costs
Depreciation of property, plant and equipment
Depreciation of right-of-use lease assets
Amortisation of intangible assets
Loss on sale/scrap of property, plant and equipment
Decrease/(increase) in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Decrease in advances and customer deposits
Movement in provisions
Other non-cash movements
Cash generated from operations
Decrease in cash held not available for short-term use
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Repayment of loan assets
Payments to acquire property, plant and equipment
Cash outflow on technology and development expenditure
Net cash used in investing activities
Cash flows from financing activities
Interest paid
Proceeds from equity share issue
Proceeds from issue of warrants
Principal element of lease payments
Repayment of existing borrowings
Premium paid upon redemption of borrowings
Proceeds from inventory repurchase arrangement
Repayment of inventory repurchase arrangement
Proceeds from new borrowings
Transaction fees paid on issuance of shares
Transaction fees paid on financing activities
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the end of the year
Proceeds from financial instrument utilised during refinancing transactions
9
4
4
4
9
19
9
7
18
28
27
27
7
28
28
28
21
21
28
28
(13.0)
128.6
90.3
9.3
283.4
2.6
(15.0)
11.9
(82.3)
50.9
(66.0)
3.4
(0.3)
(7.2)
(11.2)
(7.4)
151.2
0.3
(5.6)
145.9
13.5
0.5
(91.1)
(306.3)
(383.4)
(122.5)
310.9
15.0
–
(7.9)
(129.7)
(8.0)
38.0
(40.0)
11.5
(7.6)
–
59.7
(177.8)
583.3
(13.1)
392.4
32.7
353.2
77.8
11.0
219.3
–
(12.1)
(78.4)
0.1
81.5
(17.9)
0.7
1.2
(3.2)
(2.3)
(3.5)
132.4
1.5
(6.8)
127.1
2.2
–
(58.6)
(228.3)
(284.7)
(141.2)
653.9
–
4.1
(10.0)
(172.7)
(14.3)
75.7
(60.0)
–
(18.6)
(1.9)
315.0
157.4
418.9
7.0
583.3
NOTES TO THE 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”).
Climate change considerations have been factored into the Directors’
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.
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.
Climate change
In preparing the Consolidated Financial Statements, management have
considered the impact of climate change, particularly in the context of the
disclosures included in the Strategic Report this year and the 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 30 June 2025 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 developing alternatives to the Internal Combustion
Engine (‘ICE’) with a blended drivetrain approach between 2025 and
2030, including Plug-in Hybrid Electric Vehicle (‘PHEV’) and Battery
Electric Vehicle (‘BEV’), with a clear plan to have a line-up of electric
sports cars and SUVs. This is supported by significant planned capital
investment of around £2bn in advanced technologies over the 5 year
period from 2024 to 2028, with investment shifting from ICE to
BEV technology.
– The Group has formed a landmark new supply agreement with world-
leading electric vehicle technologies company, Lucid Group, Inc. which
will help drive the Group’s high-performance electrification strategy
and its long-term growth. The agreement will see Lucid, a world-
leader in the design and manufacture of advanced electric powertrains
and battery systems, supply industry-leading electric vehicle
technologies. Access to Lucid’s current and future powertrain and
battery technology will support the creation of a bespoke, singular BEV
platform, suitable for all product types from hypercar to SUV.
– The Group is leading a six-partner collaborative research and
development project, Project ELEVATION, that was awarded £9.0m of
government funding through the Advanced Propulsion Centre, further
supplementing the research and development of its innovative
modular BEV platform.
– The Group’s first hybrid supercar, Valhalla, is on course to enter
production in 2024, with its first BEV targeted for launch in 2026.
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 the conclusions reached.
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 the
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 First
Lien notes at 10.5% which mature in November 2025, $121.7m of Second
Lien split coupon notes at 15% per annum (8.89 % cash and 6.11%
Payment in Kind) which mature in November 2026, a Revolving Credit
Facility (£99.6m) which matures August 2025, facilities to finance
inventory, a bilateral RCF facility and a wholesale vehicle financing facility
(as described in note 18). As previously announced, the Group expects to
refinance the outstanding debt during the first half of 2024, however,
the going concern assessment is not dependent on this occurring.
Under the RCF the Group is required to comply with a leverage covenant
tested quarterly. Leverage is calculated as the ratio of adjusted EBITDA
to net debt, after certain accounting adjustments are made. Of these
adjustments, the most significant is to account for lease liabilities under
“frozen GAAP”, i.e. under IAS17 rather than IFRS 16. Details of this
adjustment are included in note 16. The Group has complied with its
covenant requirements for the year ended 31 December 2023 and
expects to do so for the Going Concern period.
The amounts outstanding on all the borrowings are shown in note 23.
The Directors have developed trading and cash flow forecasts for the
period from the date of approval of these Financial Statements through
30 June 2025 (the going concern review period). These forecasts show
that the Group has sufficient financial resources to meet its obligations as
they fall due, including repayment of the current RCF were it needing to
be repaid on 30 June 2025 and to comply with covenants for the going
concern review period. The forecasts reflect the Group’s 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 that 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.
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FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 BASIS OF ACCOUNTING CONTINUED
Going concern continued
The Directors have considered a severe but plausible downside scenario
that includes considering the impact of a 15% reduction in DBX volumes
and a 10% reduction in sports volumes from forecast levels covering,
although not exclusively, instances of reduced volume due to delayed
product launches, 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
more than 15% 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
Basis of consolidation
The Consolidated Financial Statements consist of the Financial
Statements of the Group and all entities controlled by the Group. All
intercompany balances and transactions, including unrealised profits
arising, are eliminated.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. In assessing control, the Group takes
into consideration potential voting rights that are currently exercisable.
The acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in the
Group Financial Statements from the date that control commences until
the date that control ceases. The financial statements of subsidiaries used
in the preparation of the Consolidated Financial Statements are prepared
for the same reporting year as the Group and are based on consistent
accounting policies.
Foreign currency translation
Transactions in foreign currencies are initially recorded in the functional
currency of the operation by applying the exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the reporting
date. All differences are taken to the Income Statement except for the
translational differences on monetary items that form part of designated
hedge relationships.
The assets and liabilities of foreign operations are translated into sterling
at the rate of exchange ruling at the reporting date. Income and expenses
are translated at average exchange rates for the period. The resulting
exchange differences are taken through Other Comprehensive Income
to the translation reserve. On disposal of a foreign entity, the deferred
cumulative amount recognised in the translation reserve relating to the
foreign operation is recognised in the Income Statement.
Non-monetary items that are measured in terms of historical cost in a
foreign currency are translated using the exchange rates as at the dates
of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when
the fair value was determined.
Revenue recognition
Revenue is recognised when the Group satisfies its performance
obligation to supply a product or service to the customer. Revenue is
measured at the fair value of the consideration receivable, deducting
dealer incentives, VAT and other sales taxes or duty. The following
criteria must also be met before revenue is recognised.
Sale of vehicles
Revenue from the sale of vehicles is recognised when control of
the vehicle is passed to the dealer or individual, thus evidencing the
satisfaction of the associated performance obligation under that contract.
Control is passed when the buyer can direct the use of and obtain
substantially all of the benefits of the vehicle which is typically at the point
of despatch. When despatch is deferred at the formal request of the
buyer and a written request to hold the vehicle until a specified delivery
date has been received, revenue is recognised when the vehicle is ready
for despatch and the Group can no longer use or direct the vehicle to an
alternative buyer.
The Group estimates the consideration to which it will be entitled in
exchange for satisfaction of the performance obligation as part of the
sale of a vehicle. Revenue is recognised at the wholesale selling price
net of dealer incentives (variable marketing expense or “VME”). VME is
estimated and accrued for at the time of the wholesale sale to the dealer
where no other obligations exist. For those elements of VME connected
with retail sales by the dealer where there is also a contractual
requirement for the dealer to make additional wholesale purchases
at that time to receive the incentive, the incentive is accrued at the time
of the retail sale by the dealer to the end customer.
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1 BASIS OF ACCOUNTING CONTINUED
Foreign currency translation
Going concern continued
Transactions in foreign currencies are initially recorded in the functional
The Directors have considered a severe but plausible downside scenario
currency of the operation by applying the exchange rate ruling at the date
that includes considering the impact of a 15% reduction in DBX volumes
of the transaction. Monetary assets and liabilities denominated in foreign
and a 10% reduction in sports volumes from forecast levels covering,
currencies are retranslated at the rate of exchange ruling at the reporting
although not exclusively, instances of reduced volume due to delayed
date. All differences are taken to the Income Statement except for the
product launches, operating costs higher than the base plan, incremental
translational differences on monetary items that form part of designated
working capital requirements such as a reduced deposit inflows or
hedge relationships.
increased deposit outflows and the impact of the strengthening of the
sterling dollar exchange rate.
The assets and liabilities of foreign operations are translated into sterling
at the rate of exchange ruling at the reporting date. Income and expenses
The Group plans to make continued investment for growth in the period
are translated at average exchange rates for the period. The resulting
and, accordingly, funds generated through operations are expected to be
exchange differences are taken through Other Comprehensive Income
reinvested in the business mainly through new model development and
to the translation reserve. On disposal of a foreign entity, the deferred
other capital expenditure. To a certain extent, such expenditure is
cumulative amount recognised in the translation reserve relating to the
discretionary and, in the event of risks occurring which could have a
foreign operation is recognised in the Income Statement.
substantial mitigating actions, such as reducing capital spending to
Sale of vehicles
preserve liquidity.
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
more than 15% 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
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
Basis of consolidation
The Consolidated Financial Statements consist of the Financial
Statements of the Group and all entities controlled by the Group. All
intercompany balances and transactions, including unrealised profits
arising, are eliminated.
Subsidiaries
Non-monetary items that are measured in terms of historical cost in a
foreign currency are translated using the exchange rates as at the dates
of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when
the fair value was determined.
Revenue recognition
Revenue is recognised when the Group satisfies its performance
obligation to supply a product or service to the customer. Revenue is
measured at the fair value of the consideration receivable, deducting
dealer incentives, VAT and other sales taxes or duty. The following
criteria must also be met before revenue is recognised.
Revenue from the sale of vehicles is recognised when control of
the vehicle is passed to the dealer or individual, thus evidencing the
satisfaction of the associated performance obligation under that contract.
Control is passed when the buyer can direct the use of and obtain
substantially all of the benefits of the vehicle which is typically at the point
of despatch. When despatch is deferred at the formal request of the
buyer and a written request to hold the vehicle until a specified delivery
date has been received, revenue is recognised when the vehicle is ready
for despatch and the Group can no longer use or direct the vehicle to an
alternative buyer.
The Group estimates the consideration to which it will be entitled in
exchange for satisfaction of the performance obligation as part of the
sale of a vehicle. Revenue is recognised at the wholesale selling price
net of dealer incentives (variable marketing expense or “VME”). VME is
estimated and accrued for at the time of the wholesale sale to the dealer
Subsidiaries are entities controlled by the Group. The Group controls an
where no other obligations exist. For those elements of VME connected
entity when it is exposed to, or has rights to, variable returns from its
with retail sales by the dealer where there is also a contractual
involvement with the entity and has the ability to affect those returns
requirement for the dealer to make additional wholesale purchases
through its power over the entity. In assessing control, the Group takes
at that time to receive the incentive, the incentive is accrued at the time
into consideration potential voting rights that are currently exercisable.
of the retail sale by the dealer to the end customer.
The acquisition date is the date on which control is transferred to the
acquirer. The financial statements of subsidiaries are included in the
Group Financial Statements from the date that control commences until
the date that control ceases. The financial statements of subsidiaries used
in the preparation of the Consolidated Financial Statements are prepared
for the same reporting year as the Group and are based on consistent
accounting policies.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 ACCOUNTING POLICIES CONTINUED
Revenue recognition continued
Warranties are issued on new vehicles sold with no separate purchase
option available to the customer and, on this basis, are accounted for in
accordance with IAS 37. Service packages sold as part of the supply of a
vehicle are accounted for as a separate performance obligation with the
revenue deferred, based on the term of the package, at the original point
of sale. The deferred revenue is released to the Income Statement over
the shorter of the period that the service package covers or the number
of vehicle services that the end user is entitled to.
Where a sale of a vehicle(s) includes multiple performance obligations,
the Group determines the allocation of the total transaction price by
reference to their relative standalone selling prices.
Sales of parts
Revenue from the sale of parts is recognised upon transfer of control to
the customer, generally when the parts are released to the carrier
responsible for transporting them. Where the dealer is Aston Martin
Works Limited, an indirect subsidiary of the Company, revenue is
recognised upon despatch to a customer outside of the Group.
Servicing and restoration of vehicles
Revenue is recognised upon completion of the service /restoration
typically when the service or restoration is completed in accordance with
the customers’ requirements.
Brands and motorsport
Revenue from brands and motorsport is recognised when the performance
obligations, principally use of the Aston Martin brand name or supply of a
motorsport vehicle, are satisfied. Revenue is recognised either at a point in
time or over a period of time in line with IFRS 15 according to the terms of
the contract.
Customer advance payments
The Group receives advance cash payments from customers to secure
their allocation of a vehicle produced in limited quantities, typically with
a lead time of greater than 12 months. The value of the advance, both
contractually refundable or non-refundable, is held as a contract liability
in the Statement of Financial Position. Upon satisfaction of the
performance obligation, the liability is released to revenue in the Income
Statement. If the deposit is returned to the customer prior to satisfaction
of the performance obligation, the contract liability is derecognised.
Where a significant financing component exists, the contract liability
is increased over the same period of time as the contract liability is held
to account for the time value of money. A corresponding charge is
recognised in the Income Statement within finance expenses. Upon
satisfaction of the linked performance obligation, the liability is released
to revenue.
The Group applies a practical expedient for short-term advances
received from customers whereby the advanced payment is not adjusted
for the effects of a significant financing component.
Finance income
Finance income comprises interest receivable on invested funds
calculated using the effective interest rate method, interest income and
currency gains arising on foreign currency denominated borrowings
(not designated under a hedge relationship) that are recognised in the
Income Statement.
Finance expense
Finance expense comprises interest payable on borrowings calculated using
the effective interest rate method, interest expense on the net Defined
Benefit pension liability, gains and losses on financial instruments that
are recognised at fair value through the Income Statement and foreign
exchange losses on foreign currency denominated financial liabilities.
Interest incurred on lease liabilities accounted for under IFRS 16, interest
charged in relation to significant financing components on customer
advance payments, and the unwind of discounting on long term liabilities
are all recognised within finance expense.
Current/non-current classification
Current assets include assets held primarily for trading purposes, cash
and cash equivalents, and assets expected to be realised in, or intended
for sale or consumption as part of the Group’s normal identifiable
operating cycle which is assumed to be 12 months. All other assets
are classified as non-current assets.
Current liabilities include liabilities held primarily for trading purposes in
line with the Group’s identifiable normal operating cycle. These liabilities
are expected to be settled as part of the Group’s normal course of
business. All other liabilities are classified as non-current liabilities.
Customer deposits and advances are typically presented as current,
although, due to the timing between deposit payment and a sale
completing, can take longer than 12 months to unwind.
Goodwill
For acquisitions on or after 1 January 2010, the Group measures goodwill
at the acquisition date as:
– the fair value of the consideration transferred; plus
– the recognised amount of any non-controlling interests
in the acquiree; plus
– the fair value of the existing equity interest in the acquiree; less
– the net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed.
Costs related to the acquisition, other than those associated with the issue
of debt or equity securities, are expensed as incurred.
For the purpose of impairment testing, goodwill is allocated to the
related cash-generating unit. The only cash-generating unit of the Group
is that of Aston Martin Lagonda Group as there are no smaller groups of
assets that can be identified with certainty which generate specific cash
flows independent of the inflows generated by other assets or groups
of assets. Where the recoverable amount of the cash-generating unit is
less than the carrying amount, an impairment loss is recognised in the
Income Statement.
Intangible assets
Intangible assets acquired separately from a business are carried initially
at cost. An intangible asset acquired as part of a business combination is
recognised outside of goodwill if the asset is separable or arises from
contractual or other legal rights and its fair value can be measured reliably.
Fair value adjustments are considered to be provisional at the first year-
end date after the acquisition to allow the maximum time to elapse for
management to make a reliable estimate.
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FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 ACCOUNTING POLICIES CONTINUED
Intangible assets continued
Purchased intellectual property
Purchased intellectual property that is not integral to an item of property,
plant and equipment is recognised separately as an intangible asset
stated at cost less accumulated depreciation.
Brands
An acquired brand is only recognised in the Statement of Financial
Position as an intangible asset where it is supported by a registered
trademark, is established in the marketplace, the brand could be sold
separately from the rest of the business and where the brand achieves
earnings in excess of those achieved by unbranded products.
The value of an acquired brand is determined by allocating the purchase
price consideration of an acquired business between goodwill and the
underlying fair values of the tangible assets, brands and other intangible
assets acquired, using an income approach following the multi-period
excess earnings methodology. Acquired brands have an indefinite life
when there is no foreseeable limit to the period over which the asset is
expected to generate cash inflows.
Development costs
Expenditure on internally developed intangible assets, excluding
development costs, is taken to the Income Statement in the year in which
it is incurred. Clearly defined and identifiable development costs are
capitalised under IAS 38 ‘Intangible Assets’ after the following criteria
have been met:
– The project’s technical feasibility and commercial viability, based on an
estimate of future cash flows, can be demonstrated when the project
has reached a defined milestone according to the Group's established
product development model.
– Technical and financial resources are available for the project.
– An intention to complete the project has been confirmed.
– The correlation between development costs and future revenues has
been established.
Technology
Patented and unpatented technology acquired in business combinations
is valued using the cost approach. The obsolete element is determined by
reference to the proportion of the product lifecycle that had expired at
the acquisition date. Technology acquired from third parties is measured
at the acquisition date fair value using the cost approach.
Dealer network
Save for certain direct sales of some special edition and buyer-
commissioned vehicles, the Group sells its vehicles exclusively through
a network of dealers. All dealers in the dealer network are independent
dealers with the exception of Aston Martin Works Limited. To the extent
that the Group benefits from the network, the dealer network has been
valued based on costs incurred by the Group. The existing Dealer
Network asset arose as part of a business combination.
Amortisation
Following initial recognition, the historical cost model is applied, with
intangible assets being carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation of these capitalised costs
begins when the asset is available for use. Intangible assets with a finite
life have no residual value and are amortised on a straight-line basis over
their expected useful lives as follows:
Purchased intellectual property
Development costs
Technology
Software and other
Dealer network
Years
5
1 to 10
10
3 to 10
20
The useful lives and residual values of capitalised development costs are
determined at the time of capitalisation and are reviewed annually for
appropriateness and recoverability.
Amortisation of special vehicle development costs are spread evenly
across the limited quantity of vehicles produced and charged to the
Income Statement at the point of sale for each vehicle.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and accumulated impairment losses. Cost comprises the
aggregate amount paid, and the fair value of any other consideration
given, to acquire the asset, including directly attributable costs to make
the asset capable of operation. Borrowing costs directly attributable to
assets under construction are capitalised.
Depreciation is provided on all property, plant and equipment, other than
land, on a straight-line basis to its residual value over its expected useful
life as follows:
Freehold buildings
Plant and machinery
Fixtures and fittings
Tooling
Motor vehicles
Years
30
5 to 30
3 to 12
1 to 15
3 to 5
Tooling is depreciated over the life of the project. Assets in the course
of construction are included in their respective category but are not
depreciated until available for use. The carrying values of property,
plant and equipment are reviewed for impairment if events or changes in
circumstances indicate the carrying value may not be recoverable and are
written down immediately to their recoverable amount. Useful lives and
residual values are reviewed annually and where adjustments are required
these are made prospectively.
An item of property, plant and equipment is derecognised upon disposal.
Any gain or loss arising on the derecognition of the asset is included in the
Income Statement in the period of derecognition.
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2 ACCOUNTING POLICIES CONTINUED
Amortisation
Intangible assets continued
Purchased intellectual property
Following initial recognition, the historical cost model is applied, with
intangible assets being carried at cost less accumulated amortisation and
Purchased intellectual property that is not integral to an item of property,
accumulated impairment losses. Amortisation of these capitalised costs
plant and equipment is recognised separately as an intangible asset
begins when the asset is available for use. Intangible assets with a finite
stated at cost less accumulated depreciation.
life have no residual value and are amortised on a straight-line basis over
their expected useful lives as follows:
Brands
An acquired brand is only recognised in the Statement of Financial
Position as an intangible asset where it is supported by a registered
trademark, is established in the marketplace, the brand could be sold
separately from the rest of the business and where the brand achieves
earnings in excess of those achieved by unbranded products.
The value of an acquired brand is determined by allocating the purchase
price consideration of an acquired business between goodwill and the
underlying fair values of the tangible assets, brands and other intangible
assets acquired, using an income approach following the multi-period
excess earnings methodology. Acquired brands have an indefinite life
expected to generate cash inflows.
Development costs
Purchased intellectual property
Development costs
Technology
Software and other
Dealer network
The useful lives and residual values of capitalised development costs are
determined at the time of capitalisation and are reviewed annually for
Amortisation of special vehicle development costs are spread evenly
across the limited quantity of vehicles produced and charged to the
when there is no foreseeable limit to the period over which the asset is
appropriateness and recoverability.
Expenditure on internally developed intangible assets, excluding
Income Statement at the point of sale for each vehicle.
development costs, is taken to the Income Statement in the year in which
it is incurred. Clearly defined and identifiable development costs are
capitalised under IAS 38 ‘Intangible Assets’ after the following criteria
have been met:
– The project’s technical feasibility and commercial viability, based on an
estimate of future cash flows, can be demonstrated when the project
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and accumulated impairment losses. Cost comprises the
aggregate amount paid, and the fair value of any other consideration
given, to acquire the asset, including directly attributable costs to make
the asset capable of operation. Borrowing costs directly attributable to
has reached a defined milestone according to the Group's established
assets under construction are capitalised.
Depreciation is provided on all property, plant and equipment, other than
land, on a straight-line basis to its residual value over its expected useful
product development model.
– Technical and financial resources are available for the project.
– An intention to complete the project has been confirmed.
– The correlation between development costs and future revenues has
been established.
Technology
Patented and unpatented technology acquired in business combinations
is valued using the cost approach. The obsolete element is determined by
reference to the proportion of the product lifecycle that had expired at
the acquisition date. Technology acquired from third parties is measured
at the acquisition date fair value using the cost approach.
Dealer network
Save for certain direct sales of some special edition and buyer-
commissioned vehicles, the Group sells its vehicles exclusively through
a network of dealers. All dealers in the dealer network are independent
dealers with the exception of Aston Martin Works Limited. To the extent
that the Group benefits from the network, the dealer network has been
valued based on costs incurred by the Group. The existing Dealer
Network asset arose as part of a business combination.
life as follows:
Freehold buildings
Plant and machinery
Fixtures and fittings
Tooling
Motor vehicles
Tooling is depreciated over the life of the project. Assets in the course
of construction are included in their respective category but are not
depreciated until available for use. The carrying values of property,
plant and equipment are reviewed for impairment if events or changes in
circumstances indicate the carrying value may not be recoverable and are
written down immediately to their recoverable amount. Useful lives and
residual values are reviewed annually and where adjustments are required
these are made prospectively.
An item of property, plant and equipment is derecognised upon disposal.
Any gain or loss arising on the derecognition of the asset is included in the
Income Statement in the period of derecognition.
Years
5
1 to 10
3 to 10
10
20
Years
30
5 to 30
3 to 12
1 to 15
3 to 5
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 ACCOUNTING POLICIES CONTINUED
Investments in equity instruments
Upon initial recognition, the Group can elect to classify irrevocably its
equity investments as equity instruments designated at fair value through
OCI when they meet the definition of equity under IAS 32 Financial
Instruments: Presentation and are not held for trading. The classification
is determined on an instrument-by-instrument basis. Gains and losses on
these financial assets are never recycled to profit or loss. Dividends are
recognised as other income in the statement of profit or loss when the
right of payment has been established, except when the Group benefits
from such proceeds as a recovery of part of the cost of the financial asset,
in which case, such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment
assessment. The Group elected to classify irrevocably its non-listed
equity investments under this category.
Government grants
Government grants are recognised in the Income Statement, either on
a systematic basis when the Group recognises the related costs that the
grants are intended to compensate for, or immediately if the costs have
already been incurred.
Government grants related to assets are deducted from the cost of the
asset and amortised over the useful life of the asset. Government grants
are recognised when there is reasonable assurance that the Group will
comply with the relevant conditions and the grant will be received.
Research and development tax relief in the form of the Research and
Development Expenditure Credit (“RDEC”) is recognised in the Income
Statement over the periods in which the qualifying expenditure giving rise
to the RDEC claim is recognised, as the Group’s assessment of the
conditions of receipt of the RDEC concludes that it meets the definition
of a Government grant. Certain expenses within the scope of RDEC are
capitalised as part of the Groups development costs. Where this is the
case, the Group defers the income associated with the claim to deferred
income and releases it to the Income Statement in line with the
amortisation profile of the associated asset. Claims are submitted
annually based on the qualifying expenditure for a given accounting
period. The cash benefit from the claim is received in the year of the
claim and presented in operating cash flows.
If the subsidiary submitting the claim is loss-making, the RDEC claim is
restricted by an amount equal to the current rate of UK corporation tax.
The restricted amount can be applied in discharging any liability of the
subsidiary to pay corporation tax in any subsequent tax period and has
been accounted for as an unused tax credit in accordance with IAS 12
and is included within deferred tax assets.
Movements in government grants are presented within operating cashflows.
Carbon credits
The production and import of vehicles into certain jurisdictions can trigger
a requirement to eliminate negative carbon credits, which gives rise to a
liability. From time to time, the Group enters into contracts to purchase
positive credits to offset the liability. The annual liability is currently
immaterial to the Group.
Right-of-use assets and lease liabilities – IFRS 16
Leases under which the Group acts as lessee
The Group is a party to lease contracts for buildings, plant and machinery
and IT equipment. The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the
lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any
lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term. If the
Group is reasonably certain to exercise a purchase option, the right-of-
use asset is depreciated over the underlying asset’s useful life. The
estimated useful lives of right-of-use assets are determined on the same
basis as those of property, plant and equipment. Moreover, the right-of-
use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments unpaid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, an estimate of the Group’s incremental borrowing rate at
that point in time.
The Group estimates the incremental borrowing rate by taking a credit
risk adjusted risk-free rate in addition to making other specific
adjustments to account for certain characteristics in the lease such as
geography, type of asset and security pledged.
Lease payments included in the measurement of the lease liability
comprise either fixed lease payments or lease payments subject to
periodic fixed increases. The lease liability is measured at amortised cost
using the effective interest rate method. Lease payments are allocated
between principal and interest cost with the interest costs charged to the
Income Statement over the lease period.
The liability is remeasured when there is an increase/decrease in future
lease payments arising from a change in an index or rate specified.
Short-term leases and leases of low-value assets
The Group does not recognise right of-use-assets and lease liabilities
for short-term leases that have a lease term of fewer than 12 months
and leases of low-value assets. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis in the
Income Statement over the lease term.
Impairment of assets
The Group assesses at each reporting date whether there is an indication
that an asset may be impaired. If any such indication exists, or when
annual impairment testing for an asset is required, the Group makes an
estimate of the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset, or cash-generating unit’s, fair value less
costs to sell and its value-in-use.
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FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 ACCOUNTING POLICIES CONTINUED
Impairment of assets continued
Where the carrying amount of an asset exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable
amount. In assessing value-in-use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset. Impairment losses on continuing operations are
recognised in the Income Statement.
For goodwill, brands and other intangible assets that have an indefinite
life, the recoverable amount is estimated annually or more frequently
when there is an indication that the asset is impaired.
For intangible assets, property, plant and equipment, and right-of-use
lease assets that have a finite life, the recoverable amount is estimated
when there is an indication that the asset is impaired.
Where an impairment loss subsequently reverses, the carrying amount of
the asset (or cash-generating unit) is increased to the revised estimate of
the recoverable amount, but such that the increased carrying amount
does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised in the Income Statement
as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. For
service and restoration projects, net realisable value is the price at which
the project can be invoiced in the normal course of business after
allowing for the costs of completion.
Cost includes all costs incurred in bringing each product to its present
location and condition, as follows:
– Raw materials, service parts and spare parts – purchase cost on a first-
in, first-out basis.
– Work in progress and finished vehicles – cost of direct materials and
labour plus attributable overheads based on a normalised level of
activity, excluding borrowing costs.
Provisions are made, on a specific basis, for obsolete, slow-moving and
defective stocks and if the cost of the service or restoration project
cannot be fully recovered. Inventories held under financing arrangements
are recognised when control is transferred to the Group.
Cash and cash equivalents
Cash and cash equivalent in the Statement of Financial Position comprise:
– cash, being cash at banks and in hand as well as demand deposits.
– cash equivalents, being short-term deposits with an original maturity
of three months or less, subject to insignificant changes in value,
which are readily convertible to known amounts and held to meet
short-term commitments.
Derivative financial instruments
Derivative financial assets and liabilities are recognised in the Statement
of Financial Position at fair value when the Group becomes a party to the
contractual provisions of the instrument. The Group uses derivative
instruments to manage its exposure to foreign exchange risk arising from
operating activities. Movements in the fair value of foreign exchange
derivatives not qualifying for hedge accounting are recognised in finance
income or expense. The accounting policy on derivatives that are
designated as hedging instruments in hedging relationships is detailed in
the hedge accounting policies. A financial asset or liability is derecognised
when the contract that gives rise to it is settled, sold, cancelled or expires.
Financial assets and liabilities
Financial assets are cash or a contractual right to receive cash or another
financial asset from another entity or to exchange financial assets or
liabilities with another entity under conditions that are potentially
favourable to the entity. In addition, contracts that result in another
entity delivering a variable number of its own equity instruments are
financial assets.
Derivative financial instruments, including equity options, are held at fair
value. All other financial instruments are held at amortised cost.
Trade and other receivables
Trade and other receivables are carried at the lower of their original
invoiced value and recoverable amount. A trade receivable loss
allowance is measured at an amount equal to the lifetime expected credit
loss at initial recognition and throughout the life of the receivable.
Receivables are not discounted, as the time value of money is not
considered to be material.
Trade and other payables
Trade and other payables are recognised and carried at their original
invoiced value. Trade payables are not discounted to consider the time
value of money as the impact is immaterial.
Refundable and non-refundable customer deposits are held as contract
liabilities within current trade and other payables.
Inventory sale and repurchase arrangements, which are in substance
financing transactions, are included in other payables. The difference
between the sale and repurchase value is accounted for as part of the
effective interest calculation. The effective interest is charged to the
Income Statement over the period from sale to repayment.
Hedge accounting
The Group uses derivative financial instruments in the form of forward
currency contracts, and certain US dollar denominated borrowings, to
hedge the foreign currency risk of sales (including inter-Group sales)
of finished vehicles and external purchases of component parts. For the
purpose of hedge accounting, hedges are classified as cash flow hedges
when hedging the exposure to variability in cash flows either attributable
to a particular risk associated with a recognised asset or liability, or a
highly probable forecast transaction, or the foreign currency risk of an
unrecognised firm commitment.
At the inception of the hedge relationship, the Group formally designates
and documents the hedge relationship and the risk management
objectives and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item, the
nature of the risk being hedged and how the Group will assess hedge
effectiveness. A hedging relationship qualifies for hedge accounting if
it meets all the following effectiveness requirements:
– There is an economic relationship between the hedged item and the
hedging instrument.
– The effect of credit risk does not dominate the value changes resulting
from that economic relationship.
– The theoretical hedge ratio of the hedging relationship is the same
as practically occurs.
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2 ACCOUNTING POLICIES CONTINUED
Impairment of assets continued
designated as hedging instruments in hedging relationships is detailed in
the hedge accounting policies. A financial asset or liability is derecognised
Where the carrying amount of an asset exceeds its recoverable amount,
when the contract that gives rise to it is settled, sold, cancelled or expires.
the asset is considered impaired and is written down to its recoverable
amount. In assessing value-in-use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset. Impairment losses on continuing operations are
recognised in the Income Statement.
Financial assets and liabilities
Financial assets are cash or a contractual right to receive cash or another
financial asset from another entity or to exchange financial assets or
liabilities with another entity under conditions that are potentially
favourable to the entity. In addition, contracts that result in another
entity delivering a variable number of its own equity instruments are
For goodwill, brands and other intangible assets that have an indefinite
financial assets.
life, the recoverable amount is estimated annually or more frequently
when there is an indication that the asset is impaired.
For intangible assets, property, plant and equipment, and right-of-use
lease assets that have a finite life, the recoverable amount is estimated
when there is an indication that the asset is impaired.
Derivative financial instruments, including equity options, are held at fair
value. All other financial instruments are held at amortised cost.
Trade and other receivables
Trade and other receivables are carried at the lower of their original
invoiced value and recoverable amount. A trade receivable loss
Where an impairment loss subsequently reverses, the carrying amount of
allowance is measured at an amount equal to the lifetime expected credit
the asset (or cash-generating unit) is increased to the revised estimate of
loss at initial recognition and throughout the life of the receivable.
the recoverable amount, but such that the increased carrying amount
Receivables are not discounted, as the time value of money is not
does not exceed the carrying amount that would have been determined
considered to be material.
had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised in the Income Statement
Trade and other payables
as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. For
service and restoration projects, net realisable value is the price at which
the project can be invoiced in the normal course of business after
allowing for the costs of completion.
Cost includes all costs incurred in bringing each product to its present
location and condition, as follows:
Trade and other payables are recognised and carried at their original
invoiced value. Trade payables are not discounted to consider the time
value of money as the impact is immaterial.
Refundable and non-refundable customer deposits are held as contract
liabilities within current trade and other payables.
Inventory sale and repurchase arrangements, which are in substance
financing transactions, are included in other payables. The difference
between the sale and repurchase value is accounted for as part of the
effective interest calculation. The effective interest is charged to the
– Raw materials, service parts and spare parts – purchase cost on a first-
Income Statement over the period from sale to repayment.
in, first-out basis.
– Work in progress and finished vehicles – cost of direct materials and
labour plus attributable overheads based on a normalised level of
activity, excluding borrowing costs.
Hedge accounting
The Group uses derivative financial instruments in the form of forward
currency contracts, and certain US dollar denominated borrowings, to
hedge the foreign currency risk of sales (including inter-Group sales)
Provisions are made, on a specific basis, for obsolete, slow-moving and
of finished vehicles and external purchases of component parts. For the
defective stocks and if the cost of the service or restoration project
purpose of hedge accounting, hedges are classified as cash flow hedges
cannot be fully recovered. Inventories held under financing arrangements
when hedging the exposure to variability in cash flows either attributable
are recognised when control is transferred to the Group.
to a particular risk associated with a recognised asset or liability, or a
Cash and cash equivalents
Cash and cash equivalent in the Statement of Financial Position comprise:
– cash, being cash at banks and in hand as well as demand deposits.
– cash equivalents, being short-term deposits with an original maturity
of three months or less, subject to insignificant changes in value,
which are readily convertible to known amounts and held to meet
short-term commitments.
Derivative financial instruments
Derivative financial assets and liabilities are recognised in the Statement
of Financial Position at fair value when the Group becomes a party to the
contractual provisions of the instrument. The Group uses derivative
instruments to manage its exposure to foreign exchange risk arising from
operating activities. Movements in the fair value of foreign exchange
derivatives not qualifying for hedge accounting are recognised in finance
income or expense. The accounting policy on derivatives that are
highly probable forecast transaction, or the foreign currency risk of an
unrecognised firm commitment.
At the inception of the hedge relationship, the Group formally designates
and documents the hedge relationship and the risk management
objectives and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item, the
nature of the risk being hedged and how the Group will assess hedge
effectiveness. A hedging relationship qualifies for hedge accounting if
it meets all the following effectiveness requirements:
– There is an economic relationship between the hedged item and the
hedging instrument.
– The effect of credit risk does not dominate the value changes resulting
from that economic relationship.
– The theoretical hedge ratio of the hedging relationship is the same
as practically occurs.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 ACCOUNTING POLICIES CONTINUED
Hedge accounting continued
Derivative financial instruments
The effective portion of the gain or loss on the hedging instrument is
recognised in Other Comprehensive Income in the cash flow hedge
reserve, while any ineffective portion is recognised immediately in the
Income Statement. The Group designates only the spot element of
forward contracts as a hedging instrument. The forward element is
recognised in Other Comprehensive Income and accumulated in a
separate component of equity under cost of hedging reserve.
Financial liability as a hedge
Foreign currency differences arising on the retranslation of a financial
liability designated as a cash flow hedge are recognised directly in Other
Comprehensive Income to the extent that the hedge is effective. To the
extent that the hedge is ineffective, such differences are recognised in the
Income Statement.
Subsequent accounting
The amounts accumulated in both the cash flow hedge reserve and the cost
of hedging reserve are accounted for depending on the nature of the
underlying hedged transaction. If the hedged transaction subsequently
results in the recognition of a non-financial item, the amount accumulated
in the hedge reserve is removed and included in the initial cost of the hedge
item. For any other cash flow hedges, the amount accumulated in the
hedge reserve is reclassified to the Income Statement as a reclassification
adjustment in the same period or periods during which the hedged cash
flow affects profit or loss.
If hedge accounting is discontinued, the amount that has been
accumulated in the hedge reserve must remain in equity if the hedged
future cash flows are still expected to occur. Otherwise, the amount will
be immediately reclassified to the Income Statement as a reclassification
adjustment. After discontinuation, once the hedged cash flow occurs, any
amount remaining in the hedge reserve is accounted for depending
on the nature of the underlying transaction.
Borrowings
Borrowings are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, borrowings are
stated at amortised cost with any difference between the amount
initially recorded and redemption value being recognised in the Income
Statement as a finance expense over the period of the borrowings on an
effective interest basis.
Pensions
The Group operates a Defined Contribution pension plan under which the
Group pays fixed contributions into a separate entity and has no legal or
constructive obligation to pay further amounts. Obligations for
contributions to Defined Contribution pension plans are recognised as an
expense in the Income Statement in the periods during which services are
rendered by employees.
The Group operates a Defined Benefit pension plan, which is contracted
out of the state scheme. The Group’s net obligation in respect of Defined
Benefit plans is calculated for the plan by estimating the amount of the
future benefit that employees have earned in the current and prior
periods, discounting that amount and deducting the fair value of any
plan assets.
The calculation of Defined Benefit obligations is performed annually
by a qualified actuary using the projected unit credit method. When the
calculation results in a potential asset for the Group, the recognised asset
is limited to the present value of economic benefits available in the form
of any future refunds from the plan or reductions in future contributions
to the plan. When the calculation results in a deficit for the Group, the
recognised liability is adjusted for the discounted value of future deficit
reduction contributions in excess of the calculated deficit.
Remeasurements of the net Defined Benefit asset or liability, which
comprise actuarial gains and losses, the interest on plan assets, and the
effect of the asset ceiling or minimum funding requirements, are
recognised immediately in Other Comprehensive Income. The Group
determines the net interest expense (income) on the net Defined Benefit
asset or liability, considering any changes in the net defined asset or
liability during the period as a result of contributions and benefit
payments. Net interest expense and other expenses related to Defined
Benefit plans are recognised in the Income Statement.
When the benefits of the plan are changed or when a plan is curtailed, the
resulting change in benefit that relates to past service cost or the gain or
loss on curtailment is recognised immediately in the Income Statement.
The Group recognises gains and losses on the settlement of a Defined
Benefit plan when the settlement occurs.
Share-based payment transactions
The fair value of equity-classified share-based awards with both market
and non-market-based performance conditions is recognised as an
expense within administrative and other expenses in the Income
Statement, with a corresponding increase in equity over the period that
the employees become unconditionally entitled to the shares.
The amount recognised as an expense is adjusted to reflect both non-
market-based conditions, such as continued employment and profit-
related metrics, in addition to market-based conditions driven by an
estimation of the quantum of awards expected to vest at the date
of grant.
Where the Group obtains goods or services in exchange for the issuance
of shares, these are accounted for as equity-settled share-based
payments in accordance with IFRS 2. Where the fair value of the goods or
services can be estimated reliably, these are recorded at fair value with a
corresponding increase in equity.
In the instance of a scheme modification, the number of shares comprised
in an award is adjusted to reflect equity changes in the Group and will
therefore not impact underlying charges.
Provisions
The Group provides product warranties on all new vehicle sales. Warranty
provisions are recognised when vehicles are sold or when new warranty
programmes are initiated. Based on historical warranty claim experience,
assumptions are made on the type and extent of future warranty claims,
including non-contractual warranty claims as well as on possible recall
campaigns. These assessments are based on the frequency and extent
of vehicle faults and defects in the past. In addition, the estimates include
assumptions on the potential repair costs per vehicle and the effects of
possible time or mileage limits. The provisions are regularly adjusted to
reflect new information.
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FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 ACCOUNTING POLICIES CONTINUED
Provisions continued
Restructuring provisions are recognised only when the Group has a
constructive obligation, which is when:
– there is a detailed formal plan that identifies the business or part of the
business concerned, the location and number of employees affected,
the detailed estimate of the associated costs, and the timeline; and
– the employees affected have been notified of the plan’s main features.
Income taxes
Tax on the profit or loss for the period represents the sum of the tax
currently payable and deferred tax. Tax is recognised in the Income
Statement except to the extent that it relates to items recognised directly
in equity or Other Comprehensive Income whereby the tax treatment
follows that of the underlying item.
Current tax assets and liabilities are measured at the amount expected to
be recovered from or paid to the taxation authorities, based on tax rates
and laws that are enacted or substantively enacted by the reporting date.
The Group is subject to corporate taxes in a number of different
jurisdictions and judgement is required in determining the appropriate
provision for transactions where the ultimate tax determination is
uncertain. In such circumstances, the Group recognises liabilities for
anticipated taxes based on the best information available and where the
anticipated liability is both probable and can be estimated. Any interest
and penalties accrued, if applicable, are included in income taxes in both
the Consolidated Income Statement and the Consolidated Statement of
Financial Position. Where the final outcome of such matters differs from the
amount recorded, any differences may impact the income tax and deferred
tax provisions in the period in which the final determination is made.
Deferred tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
Financial Statements, with the following exceptions:
– Where the temporary difference arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination that at the time of the transaction affects neither
accounting nor taxable profit or loss.
– In respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
– Deferred income tax assets are recognised only to the extent that it is
probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax
losses can be utilised.
Deferred tax assets and liabilities are measured on an undiscounted basis
at the tax rates that are expected to apply when the related asset is
realised or liability is settled. Deferred tax assets and liabilities are
disclosed on a net basis where a right of offset exists.
The Group applied the exception under IAS 12 to recognising and
disclosing information about deferred tax assets and liabilities related to
Pillar Two income taxes.
Equity instruments
An equity instrument is any contract that evidences a residual interest in
the assets of the Group after deducting all of its liabilities. Equity
instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs. Dividends and distributions relating to equity
instruments are debited direct to equity.
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.
Critical accounting assumptions and key sources of estimation
uncertainty estimates
The preparation of Financial Statements requires management to make
estimates and assumptions that affect the amounts reported for assets
and liabilities as at the reporting date and the amounts reported for
revenues and expenses during the period. The nature of estimation means
that actual outcomes could differ from those estimates.
In the process of applying the Group’s accounting policies, which are
described in this note, management have made estimates. Other than
as set out below, variations in the remaining estimates are not considered
to give rise to a significant risk of a material adjustment to the carrying
amounts of assets and liabilities within the next financial year. The Group
considers it appropriate to identify the nature of the estimates used in
preparing the Group Financial Statements and the main sources
of estimation uncertainty are:
– impairment of finite life intangible assets; and
– the recognition of deferred tax assets
Impairment of finite life intangible assets
For intangible assets that have a finite life, the recoverable amount
is estimated when there is an indication that the asset is impaired.
The result of the calculation of the value-in-use is sensitive to the
assumptions made and is a subjective estimate (note 13).
Recognition of deferred tax assets
Deferred tax assets are first recognised against deferred tax liabilities
relating to the same taxation authority and the same taxable company
which are expected to reverse in the same period.
Net deferred tax assets remaining are then only recognised to the extent
that it is probable that sufficient future taxable profits will be available
against which the deductible temporary difference or unused tax losses
or credits can be recovered or utilised. The Group reviews the same
underlying assumptions and future forecasts used for impairment testing,
going concern and viability assessments to evaluate the level of
estimated future taxable profits and the associated level of net deferred
tax assets which are supportable for recognition at the reporting date.
In considering recoverability of the deferred tax assets, the Group relies
upon future forecasts, which inherently increases the level of significant
estimation uncertainty in the later periods. Note 9 provides information
on the inherent sensitivities.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2 Accounting policies continued
New accounting standards
The following standards, amendments and interpretations were
applicable for the period beginning 1 January 2023 and were adopted by
the Group for the year to 31 December 2023. They have not had a
significant impact on the Group’s result for the year, equity or disclosures:
– Definition of Accounting Estimates – Amendments to IAS 8.
– Deferred Tax related to Assets and Liabilities arising from a Single
of Comprehensive Income where the quantum, nature or volatility of such
Transaction – Amendments to IAS 12.
– Disclosure of Accounting Policies – Amendments to
IAS 1 and IFRS Practice Statement 2.
The following are new accounting standards and amendments to existing
standards that have been published and are applicable for the Group’s
accounting periods beginning 1 January 2024 onwards, which the Group
has not adopted early:
– Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants – Amendments to IAS 1.
– Lease Liability in a Sale and Leaseback – Amendments to IFRS 16.
– Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7.
The adoption of these standards and amendments is not expected to
have a material impact on the Group’s Consolidated Financial Statements.
2 ACCOUNTING POLICIES CONTINUED
Equity instruments
Provisions continued
An equity instrument is any contract that evidences a residual interest in
Restructuring provisions are recognised only when the Group has a
the assets of the Group after deducting all of its liabilities. Equity
constructive obligation, which is when:
– there is a detailed formal plan that identifies the business or part of the
business concerned, the location and number of employees affected,
the detailed estimate of the associated costs, and the timeline; and
Adjusting items
instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs. Dividends and distributions relating to equity
instruments are debited direct to equity.
– the employees affected have been notified of the plan’s main features.
An adjusting item is disclosed separately in the Consolidated Statement
Income taxes
Tax on the profit or loss for the period represents the sum of the tax
currently payable and deferred tax. Tax is recognised in the Income
Statement except to the extent that it relates to items recognised directly
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.
in equity or Other Comprehensive Income whereby the tax treatment
Details in respect of adjusting items recognised in the current and prior
follows that of the underlying item.
year are set out in note 5.
Current tax assets and liabilities are measured at the amount expected to
Critical accounting assumptions and key sources of estimation
be recovered from or paid to the taxation authorities, based on tax rates
uncertainty estimates
and laws that are enacted or substantively enacted by the reporting date.
The preparation of Financial Statements requires management to make
The Group is subject to corporate taxes in a number of different
jurisdictions and judgement is required in determining the appropriate
provision for transactions where the ultimate tax determination is
uncertain. In such circumstances, the Group recognises liabilities for
estimates and assumptions that affect the amounts reported for assets
and liabilities as at the reporting date and the amounts reported for
revenues and expenses during the period. The nature of estimation means
that actual outcomes could differ from those estimates.
anticipated taxes based on the best information available and where the
In the process of applying the Group’s accounting policies, which are
anticipated liability is both probable and can be estimated. Any interest
described in this note, management have made estimates. Other than
and penalties accrued, if applicable, are included in income taxes in both
as set out below, variations in the remaining estimates are not considered
the Consolidated Income Statement and the Consolidated Statement of
to give rise to a significant risk of a material adjustment to the carrying
Financial Position. Where the final outcome of such matters differs from the
amounts of assets and liabilities within the next financial year. The Group
amount recorded, any differences may impact the income tax and deferred
considers it appropriate to identify the nature of the estimates used in
tax provisions in the period in which the final determination is made.
preparing the Group Financial Statements and the main sources
Deferred tax is recognised on all temporary differences arising between
of estimation uncertainty are:
the tax bases of assets and liabilities and their carrying amounts in the
– impairment of finite life intangible assets; and
Financial Statements, with the following exceptions:
– the recognition of deferred tax assets
– Where the temporary difference arises from the initial recognition of
Impairment of finite life intangible assets
goodwill or of an asset or liability in a transaction that is not a business
For intangible assets that have a finite life, the recoverable amount
combination that at the time of the transaction affects neither
is estimated when there is an indication that the asset is impaired.
accounting nor taxable profit or loss.
– In respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the reversal of the
The result of the calculation of the value-in-use is sensitive to the
assumptions made and is a subjective estimate (note 13).
temporary differences can be controlled and it is probable that the
Recognition of deferred tax assets
temporary differences will not reverse in the foreseeable future.
Deferred tax assets are first recognised against deferred tax liabilities
– Deferred income tax assets are recognised only to the extent that it is
relating to the same taxation authority and the same taxable company
probable that taxable profit will be available against which the
which are expected to reverse in the same period.
Deferred tax assets and liabilities are measured on an undiscounted basis
against which the deductible temporary difference or unused tax losses
deductible temporary differences, carried forward tax credits or tax
losses can be utilised.
at the tax rates that are expected to apply when the related asset is
realised or liability is settled. Deferred tax assets and liabilities are
disclosed on a net basis where a right of offset exists.
The Group applied the exception under IAS 12 to recognising and
disclosing information about deferred tax assets and liabilities related to
Pillar Two income taxes.
Net deferred tax assets remaining are then only recognised to the extent
that it is probable that sufficient future taxable profits will be available
or credits can be recovered or utilised. The Group reviews the same
underlying assumptions and future forecasts used for impairment testing,
going concern and viability assessments to evaluate the level of
estimated future taxable profits and the associated level of net deferred
tax assets which are supportable for recognition at the reporting date.
In considering recoverability of the deferred tax assets, the Group relies
upon future forecasts, which inherently increases the level of significant
estimation uncertainty in the later periods. Note 9 provides information
on the inherent sensitivities.
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FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
PRIOR YEAR RESTATEMENT
The Consolidated Statement of Financial Position as at 1 January 2022 and 31 December 2022 has been restated to reflect a prior period adjustment in
respect of the deferral of tax relief income received under the Research and Development Expenditure Credit (‘RDEC’) regime. The Group previously
recognised the income within Administrative and other operating expenses in the Consolidated Income Statement, in the period in which the qualifying
expenditure giving rise to the RDEC claim was incurred. The Group has reassessed the treatment under IAS 20 in respect of income from RDEC claims where
the qualifying expenditure has been capitalised. For these capitalised expenses, the RDEC income earned has been deferred to the Consolidated Statement
of Financial Position and will be released to the Consolidated Income Statement over the same period as the amortisation of the costs capitalised to which
the RDEC income relates. Where the qualifying expenditure is not capitalised, the RDEC income will continue to be recognised in the Consolidated Income
Statement in the year the expenditure is incurred, as has previously been the approach.
The impact of this adjustment is that as at 1 January 2022 and 31 December 2022, £49.0m of deferred income has been recognised on the balance sheet
split between current £14.9m and non-current £34.1m Trade and Other Payables with a corresponding adjustment to retained earnings. There is no
adjustment to the Consolidated Income Statement for the year ended 31 December 2022 as the impact of the adjustment is not material to that individual
year. There is no change to the Consolidated Statement of Cash Flows as, whilst the accounting impact of the claim is deferred, there is no change to the
timing of the cash receipt. No change in the corporation tax position is recognised for the year ended 31 December 2022 in either the Consolidated Income
Statement or Consolidated Statement of Financial Position, as the recoverability assessment of the Group’s deferred tax position has not been materially
changed by this restatement. As there is no adjustment to the Consolidated Income Statement and no change in the income tax position, there is no impact
on earnings per share.
Where the notes included in these Consolidated Financial Statements provide additional analysis in respect of amounts impacted by the above restatement,
the comparative values presented have been re-analysed on a consistent basis. The following tables detail the impact on the Consolidated Statement of
Financial Position as at 31 December 2022 and 2021, respectively.
Liabilities
Non-current liabilities
Trade and other payables
Current liabilities
Trade and other payables
Capital and reserves
Retained Earnings
Liabilities
Non-current liabilities
Trade and other payables
Current liabilities
Trade and other payables
Capital and reserves
Retained Earnings
As previously reported
31 December 2022
£m
9.1
Adjustment
£m
34.1
Restated balance
31 December 2022
£m
43.2
876.3
14.9
891.2
(1,184.9)
(49.0)
(1,233.9)
As previously reported
1 January 2022
£m
9.8
Adjustment
£m
34.1
Restated balance
1 January 2022
£m
43.9
721.0
14.9
735.9
(662.4)
(49.0)
(711.4)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
156
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
PRIOR YEAR RESTATEMENT
The Consolidated Statement of Financial Position as at 1 January 2022 and 31 December 2022 has been restated to reflect a prior period adjustment in
respect of the deferral of tax relief income received under the Research and Development Expenditure Credit (‘RDEC’) regime. The Group previously
recognised the income within Administrative and other operating expenses in the Consolidated Income Statement, in the period in which the qualifying
expenditure giving rise to the RDEC claim was incurred. The Group has reassessed the treatment under IAS 20 in respect of income from RDEC claims where
the qualifying expenditure has been capitalised. For these capitalised expenses, the RDEC income earned has been deferred to the Consolidated Statement
of Financial Position and will be released to the Consolidated Income Statement over the same period as the amortisation of the costs capitalised to which
the RDEC income relates. Where the qualifying expenditure is not capitalised, the RDEC income will continue to be recognised in the Consolidated Income
Statement in the year the expenditure is incurred, as has previously been the approach.
The impact of this adjustment is that as at 1 January 2022 and 31 December 2022, £49.0m of deferred income has been recognised on the balance sheet
split between current £14.9m and non-current £34.1m Trade and Other Payables with a corresponding adjustment to retained earnings. There is no
adjustment to the Consolidated Income Statement for the year ended 31 December 2022 as the impact of the adjustment is not material to that individual
year. There is no change to the Consolidated Statement of Cash Flows as, whilst the accounting impact of the claim is deferred, there is no change to the
timing of the cash receipt. No change in the corporation tax position is recognised for the year ended 31 December 2022 in either the Consolidated Income
Statement or Consolidated Statement of Financial Position, as the recoverability assessment of the Group’s deferred tax position has not been materially
changed by this restatement. As there is no adjustment to the Consolidated Income Statement and no change in the income tax position, there is no impact
on earnings per share.
Where the notes included in these Consolidated Financial Statements provide additional analysis in respect of amounts impacted by the above restatement,
the comparative values presented have been re-analysed on a consistent basis. The following tables detail the impact on the Consolidated Statement of
Financial Position as at 31 December 2022 and 2021, respectively.
Liabilities
Non-current liabilities
Trade and other payables
Current liabilities
Trade and other payables
Capital and reserves
Retained Earnings
Liabilities
Non-current liabilities
Trade and other payables
Current liabilities
Trade and other payables
Capital and reserves
Retained Earnings
As previously reported
31 December 2022
Adjustment
Restated balance
31 December 2022
£m
34.1
£m
43.2
876.3
14.9
891.2
(1,184.9)
(49.0)
(1,233.9)
As previously reported
1 January 2022
Adjustment
Restated balance
1 January 2022
£m
43.9
£m
34.1
£m
9.1
£m
9.8
721.0
14.9
735.9
(662.4)
(49.0)
(711.4)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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.
Revenue
Analysis by category
Sale of vehicles
Sale of parts
Servicing of vehicles
Brands and motorsport
Revenue
Analysis by geographical location
United Kingdom
The Americas1
Rest of Europe, Middle East and Africa2
Asia Pacific3
2023
£m
2022
£m
1,531.9
1,291.5
80.0
9.8
11.1
70.8
9.3
9.9
1,632.8
1,381.5
2023
£m
309.9
452.8
547.0
323.1
2022
£m
366.0
401.8
260.2
353.5
1,632.8
1,381.5
1. Within The Americas geographical segment, material revenue of £409.9m (2022: £363.9m) is generated in the United States of America
2. Within Rest of Europe, Middle East and Africa geographical segment, material revenue of £167.4m (2022: £87.5m) is generated in Germany
3. Within Asia Pacific geographical segment, material revenue of £91.8m (2022: £205.1m) is generated in China and £134.5m (2022: £68.9m) is generated in Japan
Non-current assets other than financial instruments and deferred tax assets by geographical location
As at 31 December 2023
United Kingdom
The Americas
Rest of Europe
Asia Pacific
Right-of-use
lease asset
£m
Property, plant,
equipment
£m
59.0
6.3
1.7
3.4
70.4
269.0
6.8
77.6
0.3
353.7
Goodwill
£m
85.4
–
–
–
Intangible
assets1
£m
1,160.3
188.5
143.4
–
85.4
1,492.2
Other
receivables
£m
–
3.3
2.0
–
5.3
Total
£m
1,575.2
204.9
223.2
3.7
2,007.0
1. Within Intangible assets located in Europe, £143.4m is located in Germany. Within Intangible assets located in the Americas, £188.5m is located in the United States of America. These assets
relate to the technology sharing agreements with Mercedes Benz AG and Lucid Group, Inc. respectively.
As at 31 December 2022
United Kingdom
The Americas
Rest of Europe
Asia Pacific
Right-of-use
lease asset
£m
Property, plant,
equipment
£m
60.7
8.3
0.1
5.3
74.4
301.6
4.0
64.3
–
369.9
Goodwill
£m
85.4
–
–
–
Intangible
Assets1
£m
1,155.8
–
153.4
–
85.4
1,309.2
Other
receivables
£m
–
4.3
2.0
–
6.3
Total
£m
1,603.5
16.6
219.8
5.3
1,845.2
1. Within Intangible assets located in Europe, £153.4m is located in Germany. This asset relates to the technology sharing agreements with Mercedes Benz AG.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
157
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
4 OPERATING LOSS
The Group’s operating loss is stated after charging/(crediting):
Depreciation of property, plant and equipment (note 14)
Depreciation absorbed into inventory under standard costing
Loss on sale/scrap of property, plant and equipment
Depreciation of right-of-use lease assets (note 16)
Amortisation of intangible assets (note 12)
Amortisation released from/(absorbed into) inventory under standard costing
Depreciation, amortisation and impairment charges included in administrative and other operating expenses
(Decrease)/increase in trade receivable loss allowance – administrative and other operating expenses (note 23)
Research and development expenditure tax credit
Net foreign currency differences
Cost of inventories recognised as an expense
Write-down of inventories to net realisable value
Increase in fair value of other derivative contracts
Lease payments (gross of sub-lease receipts)
Plant, machinery and IT equipment*
Sub-lease receipts
Land and buildings
Auditor’s remuneration:
Audit of these Financial Statements
Audit of Financial Statements of subsidiaries pursuant to legislation
Audit-related assurance
Services related to corporate finance transactions
Research and development expenditure recognised as an expense
* Election taken by the Group to not recognise right-of-use lease assets and equivalent lease liabilities for short-term and low-value leases.
Total research and development expenditure
Capitalised research and development expenditure (note 12)
Research and development expenditure recognised as an expense
2023
£m
91.2
(0.9)
2.6
9.3
280.4
3.0
385.6
(1.3)
(23.8)
0.3
844.0
24.2
(11.2)
0.3
(0.4)
0.3
0.5
0.1
–
30.7
2023
£m
299.2
(268.5)
30.7
2022
£m
80.7
(2.9)
–
11.0
227.4
(8.1)
308.1
0.6
(18.4)
8.7
798.0
8.9
(2.3)
0.7
(0.6)
0.3
0.4
0.1
0.2
14.1
2022
£m
246.1
(232.0)
14.1
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
158
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Amortisation released from/(absorbed into) inventory under standard costing
Depreciation, amortisation and impairment charges included in administrative and other operating expenses
(Decrease)/increase in trade receivable loss allowance – administrative and other operating expenses (note 23)
4 OPERATING LOSS
The Group’s operating loss is stated after charging/(crediting):
Depreciation of property, plant and equipment (note 14)
Depreciation absorbed into inventory under standard costing
Loss on sale/scrap of property, plant and equipment
Depreciation of right-of-use lease assets (note 16)
Amortisation of intangible assets (note 12)
Research and development expenditure tax credit
Net foreign currency differences
Cost of inventories recognised as an expense
Write-down of inventories to net realisable value
Increase in fair value of other derivative contracts
Lease payments (gross of sub-lease receipts)
Plant, machinery and IT equipment*
Sub-lease receipts
Land and buildings
Auditor’s remuneration:
Audit of these Financial Statements
Audit of Financial Statements of subsidiaries pursuant to legislation
Audit-related assurance
Services related to corporate finance transactions
Research and development expenditure recognised as an expense
* Election taken by the Group to not recognise right-of-use lease assets and equivalent lease liabilities for short-term and low-value leases.
Total research and development expenditure
Capitalised research and development expenditure (note 12)
Research and development expenditure recognised as an expense
2023
£m
91.2
(0.9)
2.6
9.3
280.4
3.0
385.6
(1.3)
(23.8)
0.3
844.0
24.2
(11.2)
0.3
(0.4)
0.3
0.5
0.1
–
30.7
2023
£m
299.2
(268.5)
30.7
2022
£m
80.7
(2.9)
–
11.0
227.4
(8.1)
308.1
0.6
(18.4)
8.7
798.0
8.9
(2.3)
0.7
(0.6)
0.3
0.4
0.1
0.2
14.1
2022
£m
246.1
(232.0)
14.1
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5 ADJUSTING ITEMS
Adjusting operating expenses:
ERP implementation costs1
Defined Benefit pension scheme closure costs2
Director settlement and incentive arrangements7
Legal settlement and costs3
Adjusting finance income:
Foreign exchange gain on financial instrument utilised during refinance transactions4
Gain on financial instruments recognised at fair value through Income Statement5
Adjusting finance expenses:
Premium paid on the early redemption of Senior Secured Notes4
Write-off of capitalised borrowing fees and discount upon early settlement of Senior Secured Notes4
Professional fees incurred on refinancing expensed directly to the Income Statement4
Loss on financial instruments recognised at fair value through Income Statement5
Total adjusting items before tax
Tax charge on adjusting items6
Adjusting items after tax
2023
£m
(14.5)
(1.0)
–
(16.0)
2022
£m
(6.9)
(13.5)
(3.5)
–
(31.5)
(23.9)
–
–
(8.0)
(9.5)
–
(19.0)
(36.5)
(68.0)
–
(68.0)
4.1
8.4
(14.3)
(16.4)
(1.9)
–
(20.1)
(44.0)
–
(44.0)
Summary of 2023 adjusting items
1.
In the year ended 31 December 2023, 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. £14.5m (2022: £6.9m) of costs have been incurred in the period under the service contract and expensed to the Consolidated Income Statement during the business
readiness phase of the project. The project continued to undergo a phased rollout during 2023, which included HR, ordering and dealer management, and limited aspects of purchasing,
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 £2.8m. Under the terms of the closure agreement, employees were
granted cash payments both in the current year and the following two financial years totalling £8.7m. These costs have been fully accrued. In addition, the affected employees were each
granted 185 shares incurring a share-based payment charge of £1.0m during 2022. 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 as the share price at 1 February 2024 did not meet this value. The charge associated
with this portion was £1.0m in the year ended 31 December 2022 and is being accounted for in accordance with IFRS2 as a cash settled share-based payment scheme. A cost of £1.0m in the
year ended 31 December 2023 relates to the ongoing minimum guaranteed value which will crystallise in early 2024.
3. During the year ended 31 December 2023, the Group was involved in two High Court cases against entities ultimately owned by a former significant shareholder of the Group. The first
involved AMMENA, Aston Martin’s distributor in the Middle East, North Africa and Turkey region. AMMENA brought a number of claims against the Group, including claims for debts arising
between 2019-2021 when Aston Martin was acting as AMMENA’s agent and several claims that the Group had acted in bad faith when AMMENA resumed its obligations as distributor. The
Group successfully defended all the bad faith claims and AMMENA’s 2021 debt claim was dismissed. Aston Martin, however, was unsuccessful in its claim to set off its own counter-claim that
AMMENA (as the region’s distributor) should indemnify the Group in relation to costs incurred in the termination of a retail dealer, so is required to pay AMMENA’s debt claims for 2019 and
2020 (totalling £5.3m plus interest of £0.6m). The Group incurred costs of £5.7m in defending AMMENA’s claims and must pay opposition costs of £1.7m. The cash impact of these costs is a
cash outflow in February 2024 as well as working capital movements during the year ended 31 December 2023 for costs already incurred. The second case involves claims against a retail
dealership, which is ultimately owned by entities that are shareholders in one of the Group’s subsidiary entities, including for unpaid debts relating to two agreements from 2015 and 2016. The
final judgement has been handed down (and is in AML’s favour on all material issues), but the consequences of that judgement (including quantification of the final judgment sum, interest, and
costs) has not yet been determined or ordered by the Court. The Group has incurred costs of £2.7m in the year which in conjunction with the other costs above are considered non-recurring in
nature as these are related to historic disputes with former shareholders and not related to the ongoing business of the Group.
Whilst disputes and legal proceedings pending are often in the normal course of the Group’s business, in both these cases the opposing party has links to companies that were former
significant shareholders of the Group. On that basis the Group has classified these costs as non-recurring in nature.
4. During the year ended 31 December 2023, the Group repaid $121.7m of Second Lien Senior Secured Notes (“SSNs”). In repaying the notes prior to their redemption date, a redemption
premium of £8.0m was incurred, of which the cash impact was incurred in the year ended 31 December 2023. Accelerated amortisation of capitalised borrowing costs and discount of £10.1m
was recognised which is a non-cash item.
In the year ended 31 December 2022, the Group paid down $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs. The early settlement of these notes incurred a redemption premium
of £14.3m and transaction fees of £1.9m and resulted in the acceleration of capitalised borrowing costs of £16.4m. 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 in of the SSNs in 2022, the Group placed a forward currency contract to purchase US dollars. Due to favourable movements in the exchange rates, a gain of
£4.1m was realised in the Consolidated Income Statement at the transaction date. The repayment made in 2023 was not hedged.
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 £34.6m.
6.
The movement in fair value of the liability in the year ended 31 December 2023 resulted in a net loss, including warrant exercises, of £19.0m (2022: gain of £8.4m) being recognised in the
Consolidated Income Statement. There is no cash impact of this adjustment.
In 2023, nil tax has been recognised as an adjusting item (2022: nil tax) which is not in line with the standard rate of income tax for the Group of 23.5% (2022: 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). These have not been
recognised to the extent that sufficient taxable profits are not forecast (under the defined planning cycle applied for the recognition of deferred tax assets) against which the unused tax losses
and interest amounts disallowed under the corporate interest restriction legislation would be utilised.
Summary of 2022 adjusting items
7. 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 £3.5m, of which £1.8m represents joining incentives,
£0.7m represents severance (note 6), and £1.0m 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.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
159
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
6 STAFF COSTS AND DIRECTORS’ EMOLUMENTS
(a) Staff costs (including Directors)
Wages and salaries
Social security costs
Expenses related to post-employment Defined Benefit plan1
Contributions to Defined Contribution plans
2023
£m
188.0
19.4
–
20.9
228.3
2022
£m
139.4
16.4
16.0
17.6
189.4
1. The year ended 31 December 2022 includes Defined Benefit plan closure costs of £12.5m as separately described in note 5 alongside the total in-year service costs of £3.5m separately
disclosed in note 26.
The average monthly number of employees during the year were:
By activity
Production
Selling and distribution
Administration
(b) Directors’ emoluments and transactions
Directors’ emoluments
Company contributions to pension schemes
Share related awards
Compensation for loss of office
2023
Number
1,238
342
1,160
2,740
2023
£m
4.4
0.1
–
–
4.5
2022
Number
1,123
276
1,138
2,537
2022
£m
3.1
0.1
0.8
0.7
4.7
All Directors benefited from qualifying third-party indemnity provisions. Further information relating to Directors’ remuneration is set out in the Directors’
Remuneration Report on pages 108-122.
(c) Compensation of key management personnel (including Executive Directors)
Short-term employee benefits
Post-employment benefits
Compensation for loss of office
Share related awards
7 FINANCE INCOME
Bank deposit and other interest income
Foreign exchange gain on borrowings not designated as part of a hedging relationship
Finance income before adjusting items
Adjusting finance income items:
Foreign exchange gain on financial instrument utilised during refinance transactions
Gain on financial instruments recognised at fair value through Income Statement (note 23)
Total adjusting finance income
Total finance income
2023
£m
11.0
0.5
–
0.2
11.7
2023
£m
13.5
60.8
74.3
–
–
–
74.3
2022
£m
5.6
0.4
0.7
0.8
7.5
2022
£m
3.0
–
3.0
4.1
8.4
12.5
15.5
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
160
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
1. The year ended 31 December 2022 includes Defined Benefit plan closure costs of £12.5m as separately described in note 5 alongside the total in-year service costs of £3.5m separately
6 STAFF COSTS AND DIRECTORS’ EMOLUMENTS
(a) Staff costs (including Directors)
Wages and salaries
Social security costs
Expenses related to post-employment Defined Benefit plan1
Contributions to Defined Contribution plans
The average monthly number of employees during the year were:
disclosed in note 26.
By activity
Production
Selling and distribution
Administration
(b) Directors’ emoluments and transactions
Directors’ emoluments
Company contributions to pension schemes
Share related awards
Compensation for loss of office
Short-term employee benefits
Post-employment benefits
Compensation for loss of office
Share related awards
7 FINANCE INCOME
Bank deposit and other interest income
Finance income before adjusting items
Adjusting finance income items:
Total adjusting finance income
Total finance income
Foreign exchange gain on borrowings not designated as part of a hedging relationship
Foreign exchange gain on financial instrument utilised during refinance transactions
Gain on financial instruments recognised at fair value through Income Statement (note 23)
2023
£m
188.0
19.4
–
20.9
228.3
2023
Number
1,238
342
1,160
2,740
2023
£m
4.4
0.1
–
–
4.5
2023
£m
11.0
0.5
–
0.2
11.7
2023
£m
13.5
60.8
74.3
–
–
–
74.3
2022
£m
139.4
16.4
16.0
17.6
189.4
2022
Number
1,123
276
1,138
2,537
2022
£m
3.1
0.1
0.8
0.7
4.7
2022
£m
5.6
0.4
0.7
0.8
7.5
2022
£m
3.0
–
3.0
4.1
8.4
12.5
15.5
All Directors benefited from qualifying third-party indemnity provisions. Further information relating to Directors’ remuneration is set out in the Directors’
Remuneration Report on pages 108-122.
(c) Compensation of key management personnel (including Executive Directors)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
8 FINANCE EXPENSE
Bank loans, overdrafts and senior secured notes
Foreign exchange loss on borrowings not designated as part of a hedging relationship
Interest on lease liabilities (note 16)
Net interest expense on the net Defined Benefit liability (note 26)
Interest on contract liabilities held (note 21)
Effect of discounting on long-term liabilities
Finance expense before adjusting items
Adjusting finance expense items:
Loss on financial instruments recognised at fair value through Income Statement (note 23)
Premium paid on the early redemption of Senior Secured Notes
Write-off of capitalised borrowing fees upon early settlement of Senior Secured Notes
Professional fees incurred on refinancing expensed directly to the Income Statement
Total adjusting finance expense
Total finance expense
9 TAXATION
UK corporation tax on result
Overseas tax
Prior period movement
Total current income tax charge
Deferred tax credit
Origination and reversal of temporary differences
Prior period movement
Total deferred tax (credit)/charge
Total income tax (credit)/charge in the Income Statement
Tax relating to items (charged)/credited to other comprehensive income
Deferred tax
Actuarial movement on Defined Benefit plan
Fair value adjustment on cash flow hedges
2023
£m
151.3
–
4.1
2.7
7.7
0.6
2022
£m
166.0
156.2
4.5
1.4
8.0
–
166.4
336.1
19.0
8.0
9.5
–
36.5
202.9
2023
£m
0.3
1.7
(0.1)
1.9
(15.1)
0.2
(14.9)
(13.0)
–
(1.2)
(1.2)
–
14.3
16.4
1.9
32.6
368.7
2022
£m
0.2
7.4
–
7.6
29.4
(4.3)
25.1
32.7
1.7
(0.8)
0.9
Tax relating to items charged in equity – deferred tax
Effect of equity settled share based payment charge
(0.5)
–
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
161
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9 TAXATION CONTINUED
(a) Reconciliation of the total income tax (credit)/charge
The tax credit (2022: charge) in the Consolidated Statement of Comprehensive Income for the year is lower (2022: higher) than the standard rate of
corporation tax in the UK of 23.5% (2022: 19%). The differences are reconciled below:
Loss from operations before taxation
Loss from operations before taxation multiplied by standard rate of corporation tax in the UK of 23.5% (2022: 19.0%)
Difference to total income tax (credit)/charge due to effects of:
Expenses not deductible for tax purposes
Movement in unprovided deferred tax
Derecognition of deferred tax assets
Irrecoverable overseas withholding taxes
Adjustments in respect of prior periods
Difference in UK tax rates
Difference in overseas tax rates
Other
Total income tax (credit)/charge
2023
£m
(239.8)
(56.3)
1.2
43.4
–
–
0.1
(0.7)
0.2
(0.9)
(13.0)
2022
£m
(495.0)
(94.0)
2.0
100.3
25.6
0.8
(4.3)
1.1
1.2
–
32.7
(b) Tax paid
Total net tax paid during the year was £5.6m (2022: £6.8m).
(c) Factors affecting future tax charges
The UK’s main rate of corporation tax increased from 19% to 25%, effective from 1 April 2023.
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. The legislation will be effective for the
Group's financial year beginning 1 January 2024. The Group has performed an assessment of the Group's potential exposure to Pillar Two income taxes.
The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting and financial
statements for the constituent entities in the Group. Based on the assessment, the Pillar Two Transitional Safe Harbour provisions are expected to apply in
each jurisdiction the Group operates in, and management is not aware of any circumstance under which this might change. Therefore, the Group does not
expect a potential exposure to Pillar Two top-up taxes. The Group has applied the exception in IAS 12 ’Income Taxes’ to recognising and disclosing
information about deferred tax assets and liabilities related to Pillar Two income taxes.
(d) Deferred tax
Recognised deferred tax assets and liabilities.
Deferred tax assets and liabilities are attributable to the following:
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
RDEC credit1
RDEC deferred income2
Losses and other deductions3
Share-based payments
Other
Deferred tax (assets)/liabilities
Offset of tax liabilities/(assets)
Total deferred tax (assets)/liabilities
Assets
2023
£m
(108.5)
–
(12.7)
(10.4)
(23.5)
(13.8)
Assets
2022
£m
(76.2)
–
(15.5)
(8.4)
(16.1)
–
(168.3)
(198.6)
(2.0)
–
(339.2)
182.9
(156.3)
(0.2)
–
(315.0)
181.3
(133.7)
Liabilities
2023
£m
–
182.9
Liabilities
2022
£m
–
181.3
–
–
–
–
–
–
182.9
(182.9)
–
–
–
–
–
–
–
0.7
182.0
(181.3)
0.7
1 Deferred tax assets categorised as ‘RDEC credit’ relate to the cumulative restricted amount of the payable tax credits which can be applied or surrendered in discharging any future corporation
tax liability of the claimant company, as detailed in the Government Grants section of the Accounting Policies (Note 2).
2 Deferred tax assets categorised as ‘RDEC deferred income’ relate to expenditure deferred to the Consolidated Statement of Financial position which has previously been included within filed
RDEC claims and subject to corporation tax. Any future release of the RDEC deferred income to the Consolidated Income Statement will not be subject to corporation tax for a second time.
3 Deferred tax assets categorised as ‘Losses and other deductions’ relate to tax losses and tax interest amounts disallowed under the corporate interest restriction legislation.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
162
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
9 TAXATION CONTINUED
(a) Reconciliation of the total income tax (credit)/charge
The tax credit (2022: charge) in the Consolidated Statement of Comprehensive Income for the year is lower (2022: higher) than the standard rate of
corporation tax in the UK of 23.5% (2022: 19%). The differences are reconciled below:
Loss from operations before taxation
Loss from operations before taxation multiplied by standard rate of corporation tax in the UK of 23.5% (2022: 19.0%)
Difference to total income tax (credit)/charge due to effects of:
(b) Tax paid
Total net tax paid during the year was £5.6m (2022: £6.8m).
(c) Factors affecting future tax charges
The UK’s main rate of corporation tax increased from 19% to 25%, effective from 1 April 2023.
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. The legislation will be effective for the
Group's financial year beginning 1 January 2024. The Group has performed an assessment of the Group's potential exposure to Pillar Two income taxes.
The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting and financial
statements for the constituent entities in the Group. Based on the assessment, the Pillar Two Transitional Safe Harbour provisions are expected to apply in
each jurisdiction the Group operates in, and management is not aware of any circumstance under which this might change. Therefore, the Group does not
expect a potential exposure to Pillar Two top-up taxes. The Group has applied the exception in IAS 12 ’Income Taxes’ to recognising and disclosing
information about deferred tax assets and liabilities related to Pillar Two income taxes.
(d) Deferred tax
Recognised deferred tax assets and liabilities.
Deferred tax assets and liabilities are attributable to the following:
Expenses not deductible for tax purposes
Movement in unprovided deferred tax
Derecognition of deferred tax assets
Irrecoverable overseas withholding taxes
Adjustments in respect of prior periods
Difference in UK tax rates
Difference in overseas tax rates
Other
Total income tax (credit)/charge
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
RDEC credit1
RDEC deferred income2
Losses and other deductions3
Share-based payments
Other
Deferred tax (assets)/liabilities
Offset of tax liabilities/(assets)
Total deferred tax (assets)/liabilities
1 Deferred tax assets categorised as ‘RDEC credit’ relate to the cumulative restricted amount of the payable tax credits which can be applied or surrendered in discharging any future corporation
tax liability of the claimant company, as detailed in the Government Grants section of the Accounting Policies (Note 2).
2 Deferred tax assets categorised as ‘RDEC deferred income’ relate to expenditure deferred to the Consolidated Statement of Financial position which has previously been included within filed
RDEC claims and subject to corporation tax. Any future release of the RDEC deferred income to the Consolidated Income Statement will not be subject to corporation tax for a second time.
3 Deferred tax assets categorised as ‘Losses and other deductions’ relate to tax losses and tax interest amounts disallowed under the corporate interest restriction legislation.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9 Taxation continued
(d) Deferred tax continued
Where the right exists in certain jurisdictions, deferred tax assets and liabilities have been offset.
2023
£m
(239.8)
(56.3)
1.2
43.4
–
–
0.1
(0.7)
0.2
(0.9)
(13.0)
2022
£m
(495.0)
(94.0)
2.0
100.3
25.6
0.8
(4.3)
1.1
1.2
–
32.7
Movement in deferred tax in 2023
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
RDEC credit
RDEC deferred income
Losses and other deductions
Share-based payments
Other
Movement in deferred tax in 2022
Property, plant and equipment
Intangible assets
Employee benefits
Provisions
RDEC credit
Losses and other deductions
Share-based payments
Other
1 January
2023
£m
(76.2)
181.3
(15.5)
(8.4)
(16.1)
–
(198.6)
(0.2)
0.7
(133.0)
1 January
2022
£m
(111.1)
186.8
(19.9)
(6.3)
(12.6)
(192.6)
(0.7)
0.8
Net tax
recognised
in Income
Statement
£m
Net tax
recognised
in OCI
£m
Net tax
recognised in
equity
£m
Other
movement
£m
31 December
2023
£m
(32.4)
1.6
2.8
(1.4)
–
(13.8)
30.2
(1.2)
(0.7)
(14.9)
Net tax
recognised
in Income
Statement
£m
34.9
(5.5)
2.7
(0.9)
–
(6.4)
0.5
(0.1)
–
–
–
(1.2)
–
–
–
–
–
(1.2)
–
–
–
–
–
–
–
(0.5)
–
(0.5)
–
–
–
0.6
(7.4)
–
0.1
–
–
(108.5)
182.9
(12.7)
(10.4)
(23.5)
(13.8)
(168.3)
(2.0)
–
(6.7)
(156.3)
Net tax
recognised
in OCI
£m
Net tax
recognised in
equity
£m
Other
movement
£m
31 December
2022
£m
–
–
1.7
(1.2)
–
0.4
–
–
0.9
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.5)
–
–
–
(76.2)
181.3
(15.5)
(8.4)
(16.1)
(198.6)
(0.2)
0.7
(3.5)
(133.0)
(155.6)
25.2
Assets
2023
£m
(108.5)
–
(12.7)
(10.4)
(23.5)
(13.8)
(168.3)
(2.0)
–
(339.2)
182.9
(156.3)
Assets
2022
£m
(76.2)
(15.5)
(8.4)
(16.1)
–
–
–
(198.6)
(0.2)
(315.0)
181.3
(133.7)
Liabilities
2023
£m
Liabilities
2022
£m
182.9
181.3
–
–
–
–
–
–
–
–
182.9
(182.9)
–
–
–
–
–
–
–
0.7
182.0
(181.3)
0.7
The losses and other deductions of £168.3m (£673.8m gross) comprises of UK tax losses totalling £117.3m (£469.2m gross), China tax losses totalling
£1.9m (£8.3m gross) and disallowed interest amounts of £49.1m (£196.3m gross).
Net deferred tax assets have been recognised to the extent that it is considered probable that future taxable profits will be available against which the
deductible temporary differences or unused tax losses or credits can be recovered or utilised. In evaluating the level of probable future taxable profits
the Group reviews the same underlying assumptions and future forecasts used for impairment testing, going concern and viability assessments.
Given the recent history of accumulating tax losses, the Group has evaluated whether there is convincing other evidence that sufficient taxable profit will be
available in determining the supportable level of net deferred tax assets which have been recognised at the reporting date. The significant progress made
both strategically and financially in the past couple of years provides convincing evidence that the current business plan, as set out by the Executive team,
will start generating the forecast taxable profits in the UK in the short term in order to support the recognition of deferred tax assets.
The future forecasts cover an extended period, which inherently increases the level of significant estimation uncertainty in the later periods. Specifically in
this context, for the deferred tax assets held by the main UK trading entity, a defined look-out period for Internal Combustion Engine (‘ICE’) and Plug-In
Hybrid Vehicle (‘PHEV’) to 31 December 2030 was selected on the basis that this timeframe correlates to existing vehicle life cycles. A longer defined-look
out period of two vehicle life cycles was selected for the recognition of UK tax losses carried forward by the non-trading entities. The extended look out
period is considered appropriate on the basis that the utilisation of these UK tax losses is only reliant on a relatively low level of future forecast profits
generated by the Group beyond 2030. The Group has gross deferred tax assets unrecognised at the reporting date totalling £1,253.0m comprised of
£541.2m tax losses, £196.8m accelerated capital allowances, £8.1m US provisions and £506.9m of disallowed tax interest amounts.
The aggregate amount of temporary differences associated with investments in subsidiaries and branches for which deferred tax liabilities have not been
recognised is £1.5m for the financial year ended 31 December 2023 (2022: £38.4m). An increase/decrease of £50m in forecast taxable UK profits by 2030
would increase/decrease the level of deferred tax asset that would be recognised on losses by £6.3m under current UK tax legislation.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
163
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
10 DIVIDENDS
No dividends were declared or paid by the Company in the year ended 31 December 2023 (2022: £nil).
11 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. 1,017,505 ordinary shares were issued under the Group’s share investment plan (note 29). As these shares are held in trust on
behalf of the Group’s employees and the Group controls the trust they have been excluded from the calculation of the weighted average number of shares.
Continuing and total operations
Basic earnings per ordinary share
Loss available for equity holders (£m)
Basic weighted average number of ordinary shares (million)
Basic loss per ordinary share (pence)
2023
2022
(228.1)
748.2
(30.5p)
(528.6)
424.7
(124.5p)
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.
Continuing and total operations
Diluted earnings per ordinary share
Loss available for equity holders (£m)
Basic weighted average number of ordinary shares (million)
Basic loss per ordinary share (pence)
Diluted weighted average number of ordinary shares is calculated as:
Basic weighted average number of ordinary shares (million)
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)
2023
2022
(228.1)
748.2
(30.5p)
(528.6)
424.7
(124.5p)
2023
Number
2022
Number
748.2
424.7
–
–
–
–
–
–
748.2
424.7
1 The number of ordinary shares issued as part of the long-term incentive plans and the potential number of ordinary shares issued as part of the 2020 issue of share warrants 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 (note 30). During the year ended
31 December 2023, the agreement was amended and the Group is no longer required to issue further shares to MBAG.
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 ended 31 December 2022 (note 27) 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 2023, 66,159,325 options, each entitled to
0.3 ordinary shares, remain unexercised. 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 34 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.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
164
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
10 DIVIDENDS
No dividends were declared or paid by the Company in the year ended 31 December 2023 (2022: £nil).
11 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. 1,017,505 ordinary shares were issued under the Group’s share investment plan (note 29). As these shares are held in trust on
behalf of the Group’s employees and the Group controls the trust they have been excluded from the calculation of the weighted average number of shares.
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
Continuing and total operations
Basic earnings per ordinary share
Loss available for equity holders (£m)
Basic weighted average number of ordinary shares (million)
Basic loss per ordinary share (pence)
share value.
Continuing and total operations
Diluted earnings per ordinary share
Loss available for equity holders (£m)
Basic weighted average number of ordinary shares (million)
Basic loss per ordinary share (pence)
Diluted weighted average number of ordinary shares is calculated as:
Basic weighted average number of ordinary shares (million)
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)
2023
2022
(228.1)
748.2
(30.5p)
(528.6)
424.7
(124.5p)
2023
2022
(228.1)
748.2
(30.5p)
(528.6)
424.7
(124.5p)
2023
Number
2022
Number
748.2
424.7
–
–
–
–
–
–
748.2
424.7
1 The number of ordinary shares issued as part of the long-term incentive plans and the potential number of ordinary shares issued as part of the 2020 issue of share warrants 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 (note 30). During the year ended
31 December 2023, the agreement was amended and the Group is no longer required to issue further shares to MBAG.
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 ended 31 December 2022 (note 27) 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 2023, 66,159,325 options, each entitled to
0.3 ordinary shares, remain unexercised. 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 34 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.
12 INTANGIBLE ASSETS
Cost
Balance at 1 January 2022
Additions
Balance at 31 December 2022
Balance at 1 January 2023
Additions
Balance at 31 December 2023
Amortisation
Balance at 1 January 2022
Charge for the year
Balance at 31 December 2022
Balance at 1 January 2023
Charge for the year
Balance at 31 December 2023
Net book value
At 1 January 2022
At 31 December 2022
At 1 January 2023
At 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Goodwill
£m
Brands
£m
Technology
£m
Capitalised
development cost
£m
Dealer
network
£m
Software
and other
£m
85.4
–
85.4
85.4
–
85.4
–
–
–
–
–
–
85.4
85.4
85.4
85.4
297.6
–
297.6
297.6
–
297.6
–
–
–
–
–
–
297.6
297.6
297.6
297.6
163.5
–
163.5
163.5
188.5
352.0
9.9
1.9
11.8
11.8
9.8
21.7
153.6
151.7
151.7
330.4
1,613.9
232.0
1,845.9
1,845.9
268.5
2,114.4
780.6
221.4
1,002.0
1,002.0
264.0
1,266.0
833.3
843.9
843.9
848.4
15.4
–
15.4
15.4
–
15.4
10.8
0.8
11.6
11.6
0.7
12.3
4.6
3.8
3.8
3.1
67.1
5.9
73.0
73.0
6.4
79.4
57.5
3.3
60.8
60.8
5.9
66.7
9.6
12.2
12.2
12.7
Total
£m
2,242.9
237.9
2,480.8
2,480.8
463.4
2,944.2
858.8
227.4
1,086.2
1,086.2
280.4
1,366.7
1,384.1
1,394.6
1,394.6
1,577.6
On 7 December 2020, the Company issued 224,657,287 shares to MBAG as consideration for access to the first tranche of powertrain and electronic
architecture via a Strategic Cooperation Agreement. The Group was required to undertake a valuation exercise to measure the fair value of the access to the
MBAG technology upon its initial capitalisation. The Group selected the ‘With and Without’ income approach which compares the net present value of cash
flows from the Group’s business plan prior to (‘Without’) and after (‘With’) the access to the technology. This methodology estimates the present value of
the net benefit associated with acquiring the access to the technology. In the Group’s assessment, the fair value of access to this technology is £142.3m.
The £142.3m represents the assumed cost at acquisition from which point the cost model has been adopted. Amortisation commenced during the year
ended 31 December 2023 and the carrying value of the technology asset is £134.2m.
On 26 June 2023, the Aston Martin Lagonda Global Holdings plc confirmed a strategic supply arrangement with Lucid Group, Inc. (“Lucid”) providing the
Group with access to select powertrain components for future BEV vehicles (collectively the “technology”). The consideration paid by the Group was a
mixture of cash and 28,352,273 newly issued shares in Aston Martin Lagonda Global Holdings plc. The Group was required to undertake a valuation exercise
to measure the fair value of the access to the Lucid technology upon its initial capitalisation. The Group selected the ‘With and Without’ income approach
which compares the net present value of cash flows from the Group’s business plan prior to (‘Without’) and after (‘With’) the access to the technology. This
methodology estimates the present value of the net benefit associated with acquiring the access to the technology. In the Group’s assessment, the fair value
of access to this technology is £188.5m. The £188.5m represents the assumed cost at acquisition from which point the cost model has been adopted.
Amortisation is aligned to when the asset is available for use – i.e. when it is in the location and condition necessary for it to be capable of operating in the
manner intended by management.
Amortisation of capitalised development costs commences when the programme to which the expenditure relates is available for use. As at 31 December 2023,
£253.2m (2022: £259.4m) of capitalised development costs were not yet within the scope of amortisation.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
165
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
13 IMPAIRMENT TESTING
Indefinite useful life non-current assets
Goodwill and brands acquired through business combinations have been allocated for impairment testing purposes to one cash-generating unit – the Aston
Martin Lagonda Group business. This represents the lowest level within the Group at which goodwill and brands are monitored for internal purposes.
The Group has considered the carrying value of its assets in the context of the Group’s market capitalisation. At this level, it was concluded that the net
assets of the Group are recoverable owing to the Group’s market capitalisation of £1.9bn at 31 December 2023.
Finite useful life non-current assets
Recoverability of non-current assets with finite useful lives include property, plant and equipment, right-of-use lease assets and certain intangible assets.
Intangible assets with finite useful lives mainly consist of capitalised development costs and technology.
The Group reviews the carrying amount of non-current assets with finite useful lives when events and circumstances indicate that an asset may be impaired.
Impairment tests are performed by comparing the carrying amount and the recoverable amount of the assets. The recoverable amount is the higher of the
assets’ fair value less costs of disposal and its value-in-use. Where non-current assets with finite useful lives are not yet available for use, these are tested for
impairment annually.
In assessing the value-in-use, the estimated future cash flows relating to the forecast usage period of the asset, or group of assets, are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks.
Key assumptions used in value-in-use calculations
Where there are indicators of impairment, the calculation of value-in-use for the assets is most sensitive to the following assumptions:
– Cash flows are projected based on actual operating results and the current five-year plan.
– Discount rates are calculated using a weighted average cost of capital approach. They reflect the individual nature and specific risks relating to the
business and the market in which the Group operates. The pre-tax discount rate used was 14.0% (2022: 14.0%).
– A long-term growth rate of 2% (2022: 2%)
Sensitivity analysis
– As at 31 December 2023, the gross margin would need to decrease by 36% before any of the finite life assets become impaired.
The Group has considered the carrying value of its assets in conjunction with the trading and cash flow forecasts for the Group including factors related
to the Group’s ongoing climate commitments (see note 1). The Group is satisfied no impairment is required at 31 December 2023. No reasonably possible
change in an assumption could result in a material impact on the impairment assessment in the next twelve months.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
166
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
13 IMPAIRMENT TESTING
Indefinite useful life non-current assets
Goodwill and brands acquired through business combinations have been allocated for impairment testing purposes to one cash-generating unit – the Aston
Martin Lagonda Group business. This represents the lowest level within the Group at which goodwill and brands are monitored for internal purposes.
The Group has considered the carrying value of its assets in the context of the Group’s market capitalisation. At this level, it was concluded that the net
assets of the Group are recoverable owing to the Group’s market capitalisation of £1.9bn at 31 December 2023.
Finite useful life non-current assets
Recoverability of non-current assets with finite useful lives include property, plant and equipment, right-of-use lease assets and certain intangible assets.
Intangible assets with finite useful lives mainly consist of capitalised development costs and technology.
The Group reviews the carrying amount of non-current assets with finite useful lives when events and circumstances indicate that an asset may be impaired.
Impairment tests are performed by comparing the carrying amount and the recoverable amount of the assets. The recoverable amount is the higher of the
impairment annually.
In assessing the value-in-use, the estimated future cash flows relating to the forecast usage period of the asset, or group of assets, are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks.
Key assumptions used in value-in-use calculations
Where there are indicators of impairment, the calculation of value-in-use for the assets is most sensitive to the following assumptions:
– Cash flows are projected based on actual operating results and the current five-year plan.
– Discount rates are calculated using a weighted average cost of capital approach. They reflect the individual nature and specific risks relating to the
business and the market in which the Group operates. The pre-tax discount rate used was 14.0% (2022: 14.0%).
– A long-term growth rate of 2% (2022: 2%)
Sensitivity analysis
– As at 31 December 2023, the gross margin would need to decrease by 36% before any of the finite life assets become impaired.
The Group has considered the carrying value of its assets in conjunction with the trading and cash flow forecasts for the Group including factors related
to the Group’s ongoing climate commitments (see note 1). The Group is satisfied no impairment is required at 31 December 2023. No reasonably possible
change in an assumption could result in a material impact on the impairment assessment in the next twelve months.
assets’ fair value less costs of disposal and its value-in-use. Where non-current assets with finite useful lives are not yet available for use, these are tested for
Balance at 1 January 2023
14 PROPERTY, PLANT AND EQUIPMENT
Cost
Balance at 1 January 2022
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 December 2022
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 December 2023
Depreciation
Balance at 1 January 2022
Charge for the year
Disposals
Effect of movements in exchange rates
Balance at 31 December 2022
Balance at 1 January 2023
Charge for the year
Disposals
Effect of movements in exchange rates
Balance at 31 December 2032
Net book value
At 1 January 2022
At 31 December 2022
At 1 January 2023
At 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Freehold
land and
buildings
£m
Plant, machinery,
fixtures
and fittings
£m
Tooling
£m
Motor
vehicles
£m
71.5
2.9
–
0.3
74.7
74.7
9.1
(0.1)
(0.4)
83.3
32.3
2.7
–
0.1
35.1
35.1
3.8
(0.1)
(0.1)
38.7
39.2
39.6
39.6
44.6
547.6
64.1
–
–
238.5
27.8
(0.6)
0.1
611.7
265.8
611.7
265.8
45.0
(2.8)
–
23.8
(1.7)
(0.1)
653.9
287.8
363.7
60.5
–
–
106.7
17.3
(0.6)
0.1
424.2
123.5
424.2
67.9
(0.9)
–
491.2
183.9
187.5
187.5
162.7
123.5
19.5
(1.0)
(0.1)
141.9
131.8
142.3
142.3
145.9
0.8
0.1
(0.2)
–
0.7
0.7
-
(0.1)
–
0.6
0.2
0.2
(0.2)
–
0.2
0.2
–
(0.1)
–
0.1
0.6
0.5
0.5
0.5
Total
£m
858.4
94.9
(0.8)
0.4
952.9
952.9
77.9
(4.7)
(0.5)
1,025.6
502.9
80.7
(0.8)
0.2
583.0
583.0
91.2
(2.1)
(0.2)
671.9
355.5
369.9
369.9
353.7
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
167
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Property, plant and equipment provides security for a fixed and floating charge in favour of the Aston Martin Lagonda Limited pension scheme.
Assets in the course of construction at a cost of £37.4m (2022: £32.9m) are not depreciated until available for use and are included within tooling, plant and
machinery. The gross value of freehold land and buildings includes freehold land of £6.1m (2022: £6.1m) which is not depreciated. Capital commitments
are disclosed in note 30.
The tables below analyse the net book value of the Group’s property, plant and equipment by geographical location.
At 31 December 2023
Freehold land and buildings
Tooling
Plant, machinery, fixtures and fittings, and motor vehicles
At 31 December 2022
Freehold land and buildings
Tooling
Plant, machinery, fixtures and fittings, and motor vehicles
United Kingdom
£m
Rest of Europe
£m
The Americas
£m
Asia Pacific
£m
38.7
83.7
146.6
269.0
1.9
73.7
2.0
77.6
5.7
0.9
0.2
6.8
–
0.3
–
0.3
United Kingdom
£m
Rest of Europe
£m
The Americas
£m
Asia Pacific
£m
36.6
120.3
144.7
301.6
1.8
61.8
0.7
64.3
2.9
1.1
–
4.0
–
–
–
–
Total
£m
46.3
158.6
148.8
353.7
Total
£m
41.3
183.2
145.4
369.9
15 INVESTMENTS IN EQUITY INTERESTS
On 15 November 2023, the Group subscribed for shares in AMR GP Holdings Limited by exercising its primary warrant option and subscribing for reward
shares it was entitled to under the initial sponsorship term. The primary warrant became exercisable following the Group entering an agreement with AMR
GP for a second sponsorship term running from 2026 to 2030.
At the point of subscription, a valuation exercise was undertaken to determine the fair value of the derivatives with a gain being recognised in the
Consolidated Income Statement (see note 20). As the subscription was sufficiently close to the year-end date, and no material changes have occurred in
underlying business, the same valuation was used to determine the fair value as at 31 December 2023. The fair value of the warrant equity option and
reward shares was established by applying the proportion of equity represented by the derivatives to an assessment of the equity value of AMR GP Limited,
which is then adjusted to reflect marketability and control commensurate with the size of the investment.
The Group has made the election to carry the investment at fair value through other comprehensive income and will continue to fair value the investment in
line with the requirements of IFRS 9 at future balance sheet dates. This election was made to reduce volatility due to movements in fair value within the
Consolidated Income Statement.
Investments
As at 1 January
Additions
As at 31 December
2023
£m
–
18.2
18.2
2022
£m
–
–
–
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
168
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Property, plant and equipment provides security for a fixed and floating charge in favour of the Aston Martin Lagonda Limited pension scheme.
16 LEASES
The Group holds lease contracts for buildings, plant and machinery and IT equipment.
Assets in the course of construction at a cost of £37.4m (2022: £32.9m) are not depreciated until available for use and are included within tooling, plant and
a) Right-of-use lease assets
machinery. The gross value of freehold land and buildings includes freehold land of £6.1m (2022: £6.1m) which is not depreciated. Capital commitments
The tables below analyse the net book value of the Group’s property, plant and equipment by geographical location.
United Kingdom
Rest of Europe
The Americas
Asia Pacific
are disclosed in note 30.
At 31 December 2023
Freehold land and buildings
Tooling
Plant, machinery, fixtures and fittings, and motor vehicles
At 31 December 2022
Freehold land and buildings
Tooling
Plant, machinery, fixtures and fittings, and motor vehicles
£m
38.7
83.7
146.6
269.0
£m
36.6
120.3
144.7
301.6
£m
1.9
73.7
2.0
77.6
£m
1.8
61.8
0.7
64.3
£m
5.7
0.9
0.2
6.8
£m
2.9
1.1
–
4.0
£m
0.3
–
–
0.3
£m
–
–
–
–
Total
£m
46.3
158.6
148.8
353.7
Total
£m
41.3
183.2
145.4
369.9
United Kingdom
Rest of Europe
The Americas
Asia Pacific
15 INVESTMENTS IN EQUITY INTERESTS
On 15 November 2023, the Group subscribed for shares in AMR GP Holdings Limited by exercising its primary warrant option and subscribing for reward
shares it was entitled to under the initial sponsorship term. The primary warrant became exercisable following the Group entering an agreement with AMR
GP for a second sponsorship term running from 2026 to 2030.
At the point of subscription, a valuation exercise was undertaken to determine the fair value of the derivatives with a gain being recognised in the
Consolidated Income Statement (see note 20). As the subscription was sufficiently close to the year-end date, and no material changes have occurred in
underlying business, the same valuation was used to determine the fair value as at 31 December 2023. The fair value of the warrant equity option and
reward shares was established by applying the proportion of equity represented by the derivatives to an assessment of the equity value of AMR GP Limited,
which is then adjusted to reflect marketability and control commensurate with the size of the investment.
The Group has made the election to carry the investment at fair value through other comprehensive income and will continue to fair value the investment in
line with the requirements of IFRS 9 at future balance sheet dates. This election was made to reduce volatility due to movements in fair value within the
Consolidated Income Statement.
Investments
As at 1 January
Additions
As at 31 December
2023
£m
–
18.2
18.2
2022
£m
–
–
–
Cost
Balance at 1 January 2022
Additions
Modifications
Disposals
Effect of movements in exchange rates
Balance at 31 December 2022
Balance at 1 January 2023
Additions
Modifications
Disposals
Effect of movements in exchange rates
Balance at 31 December 2023
Depreciation
Balance at 1 January 2022
Charge for the year
Disposals
Effect of movements in exchange rates
Balance at 31 December 2022
Balance at 1 January 2023
Charge for the year
Disposals
Effect of movements in exchange rates
Balance at 31 December 2023
Carrying value
At 1 January 2022
At 31 December 2022
At 1 January 2023
At 31 December 2023
Properties
£m
Plant and
machinery
£m
IT equipment
£m
89.2
4.0
3.3
(5.5)
1.2
92.2
92.2
4.4
0.6
(3.5)
(1.5)
92.2
24.3
9.9
(5.5)
(0.7)
28.0
28.0
8.3
(3.4)
(0.7)
32.2
64.9
64.2
64.2
60.0
15.6
–
–
(4.5)
–
11.1
11.1
–
–
(0.1)
–
11.0
5.1
0.6
(4.5)
–
1.2
1.2
0.4
(0.1)
–
1.5
10.5
9.9
9.9
9.5
6.5
–
0.2
(5.8)
–
0.9
0.9
1.4
–
(0.1)
(0.1)
2.1
5.9
0.5
(5.8)
–
0.6
0.6
0.6
(0.1)
0.1
1.2
0.6
0.3
0.3
0.9
Total
£m
111.3
4.0
3.5
(15.8)
1.2
104.2
104.2
5.8
0.6
(3.7)
(1.6)
105.3
35.3
11.0
(15.8)
(0.7)
29.8
29.8
9.3
(3.6)
(0.6)
34.9
76.0
74.4
74.4
70.4
Income from the sub-leasing of right-of-use assets in the year 31 December 2023 was £0.4m (2022: £0.6m). The Group recognises the lease payments
received on a straight-line basis over the lease term within administrative and other operating expenses in the Consolidated Income Statement.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
169
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16 LEASES CONTINUED
b) Obligations under leases
The maturity profile of undiscounted lease cash flows accounted for under IFRS 16 is:
Less than one year
One to five year
More than five years
The maturity profile of discounted lease cash flows accounted for under IFRS 16 is:
Less than one year
One to five years
More than five years
Analysed as:
Current
Non-current
2023
£m
12.7
40.3
82.8
2022
£m
9.9
39.1
90.1
135.8
139.2
2023
£m
8.8
28.5
60.0
97.3
8.8
88.5
97.3
2022
£m
7.4
26.8
65.6
99.8
7.4
92.4
99.8
A reconciliation of the lease liability from 1 January to 31 December for the current and prior year is disclosed within note 28.
The total lease interest expense for the year ended 31 December 2023 was £4.1m (2022: £4.5m). Total cash outflow for leases accounted for under IFRS 16
for the current year was £7.9m (2022: £10.0m). Expenses charged to the Consolidated Income Statement for short-term leases for the year ended 31
December 2023 were £0.3m (2022: £0.7m). The portfolio of short-term leases at 31 December 2023 is representative of the expected annual short-term
lease expense in future years.
The following disclosure has been included to facilitate the understanding of the impact of adopting IFRS 16 on the Group due to covenants in the Group’s
finance arrangements that continue to use IAS 17.
The impact of IFRS 16 on the Consolidated Income Statement, excluding tax, for the year ended 31 December 2023 is:
As reported
31 December
2023
£m
Add back
IFRS 16
interest
charge
£m
Add back
IFRS 16
depreciation
charge
£m
Less
amortisation
of legal fees
£m
Less lease
incentives
£m
Less
IAS 17
lease cost
£m
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative and other
operating expenses
Operating loss
Finance income
Finance expense
(Loss)/profit before tax
1,632.8
(993.6)
639.2
(143.8)
(606.6)
(111.2)
74.3
(202.9)
(239.8)
Adjusted EBITDA (note 34)
305.9
–
–
–
–
–
–
–
4.1
4.1
–
–
–
–
–
9.3
9.3
–
–
9.3
–
–
–
–
–
(0.1)
(0.1)
–
–
(0.1)
(0.1)
–
–
–
–
1.1
1.1
–
–
1.1
1.1
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
170
Excluding
impact of
IFRS 16
31 December
2023
£m
1,632.8
(993.6)
639.2
(143.8)
(608.0)
(112.6)
74.3
(198.8)
(237.1)
–
–
–
–
(11.7)
(11.7)
–
–
(11.7)
(11.7)
295.2
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
16 LEASES CONTINUED
b) Obligations under leases
The maturity profile of undiscounted lease cash flows accounted for under IFRS 16 is:
16 LEASES CONTINUED
b) Obligations under leases continued
The impact of IFRS 16 on the Consolidated Income Statement, excluding tax, for the year ended 31 December 2022 is:
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
As reported
31 December
2022
£m
Add back
IFRS 16
interest
charge
£m
Add back
IFRS 16
depreciation
charge
£m
Less
amortisation
of legal fees
£m
Less lease
incentives
£m
Less
IAS 17
lease cost
£m
A reconciliation of the lease liability from 1 January to 31 December for the current and prior year is disclosed within note 28.
The total lease interest expense for the year ended 31 December 2023 was £4.1m (2022: £4.5m). Total cash outflow for leases accounted for under IFRS 16
for the current year was £7.9m (2022: £10.0m). Expenses charged to the Consolidated Income Statement for short-term leases for the year ended 31
December 2023 were £0.3m (2022: £0.7m). The portfolio of short-term leases at 31 December 2023 is representative of the expected annual short-term
Parts for resale, service parts and production stock
Work in progress
Finished vehicles
2023
£m
157.7
33.2
81.8
272.7
The following disclosure has been included to facilitate the understanding of the impact of adopting IFRS 16 on the Group due to covenants in the Group’s
Finished vehicles include Group-owned service cars at a net realisable value of £49.0m (2022: £44.4m).
The impact of IFRS 16 on the Consolidated Income Statement, excluding tax, for the year ended 31 December 2023 is:
During the years ended 31 December 2023 and 2022, inventory repurchase arrangements were entered for certain parts for resale, service parts and
production stock. These inventories were sold and subsequently repurchased – see note 21 for further details.
The maturity profile of discounted lease cash flows accounted for under IFRS 16 is:
Less than one year
One to five year
More than five years
Less than one year
One to five years
More than five years
Analysed as:
Current
Non-current
135.8
139.2
2023
£m
12.7
40.3
82.8
2023
£m
8.8
28.5
60.0
97.3
8.8
88.5
97.3
2022
£m
9.9
39.1
90.1
2022
£m
7.4
26.8
65.6
99.8
7.4
92.4
99.8
lease expense in future years.
finance arrangements that continue to use IAS 17.
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative and other
operating expenses
Operating loss
Finance income
Finance expense
(Loss)/profit before tax
2023
£m
1,632.8
(993.6)
639.2
(143.8)
(606.6)
(111.2)
74.3
(202.9)
(239.8)
As reported
31 December
Add back
IFRS 16
interest
charge
£m
Add back
IFRS 16
depreciation
charge
£m
Less
amortisation
of legal fees
£m
Less lease
incentives
£m
Less
IAS 17
lease cost
£m
–
–
–
–
–
–
–
–
4.1
4.1
9.3
9.3
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.1)
(0.1)
–
–
–
–
1.1
1.1
–
–
1.1
1.1
9.3
(0.1)
(11.7)
Excluding
impact of
IFRS 16
31 December
2023
£m
1,632.8
(993.6)
639.2
(143.8)
(608.0)
(112.6)
74.3
(198.8)
(237.1)
–
–
–
–
–
–
(11.7)
(11.7)
Adjusted EBITDA (note 34)
305.9
(0.1)
(11.7)
295.2
Excluding
impact of
IFRS 16
31 December
2022
£m
1,381.5
(930.8)
450.7
(113.0)
(482.0)
(144.3)
15.5
(364.2)
(493.0)
–
–
–
–
(14.5)
(14.5)
–
–
(14.5)
(14.5)
176.6
2022
£m
152.2
48.5
85.5
286.2
2022
£m
137.0
42.5
46.8
19.4
245.7
2023
£m
216.2
43.8
46.6
15.6
322.2
5.3
6.3
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative and other
operating expenses
Operating loss
Finance income
Finance expense
(Loss)/profit before tax
Adjusted EBITDA (note 34)
17 INVENTORIES
1,381.5
(930.8)
450.7
(113.0)
(479.5)
(141.8)
15.5
(368.7)
(495.0)
190.2
–
–
–
–
–
–
–
4.5
4.5
–
–
–
–
–
11.0
11.0
–
–
11.0
–
–
–
–
(0.1)
(0.1)
–
–
(0.1)
–
(0.1)
–
–
–
–
1.1
1.1
–
–
1.1
1.1
18 TRADE AND OTHER RECEIVABLES
Amounts included in current assets
Trade receivables
Indirect taxation
Prepayments
Other receivables
Amounts included in non-current assets
Other receivables
Trade and other receivables for non-vehicle receivables are non-interest bearing and generally have terms of less than 60 days. Due to their short
maturities, the fair value of trade and other receivables approximates to their book value. Certain vehicle trade receivables are financed through a wholesale
finance facility (see below). Where vehicle trade receivables remain a part of the Group’s Consolidated Statement of Financial Position, these receivables
bear interest after 60 days. Credit terms for such trade receivables vary between 0 and 180 days.
Credit risk is discussed further in note 23.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
171
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18 TRADE AND OTHER RECEIVABLES CONTINUED
The carrying amount of trade and other receivables at 31 December, converted into sterling at the year-end exchange rates, are denominated in the
following currencies (excluding prepayments):
Sterling
Chinese renminbi
Euro
US dollar
Japanese yen
Other
2023
£m
78.6
38.3
87.9
17.0
41.0
18.1
2022
£m
75.6
15.2
50.8
21.7
31.0
11.4
280.9
205.7
Wholesale finance facility
Sales to third-party Aston Martin franchised dealers are eligible, subject to individual dealer approved credit limits, to be financed through a wholesale
finance facility.
In the year ended 31 December 2022, the Group entered into a multi-currency wholesale finance facility with CA Auto Bank S.p.A. (“CAAB”) and its regional
designates. Under the facility, the Group finances dealer trade receivables with CAAB around the time a sale has been made under the Group’s revenue
recognition policy and receives consideration equal to the value of the trade receivable financed. The Group has the option to subvent the dealer financing
cost which provides the dealer network an interest-free period. The cost of this subvention is presented as a financing expense in the Consolidated Income
Statement. The Group has considered the IFRS 9 criteria for asset derecognition in respect of the trade receivables financed through CAAB. The Group is
satisfied that substantially all the risks are transferred to CAAB. As a result, the wholesale finance facility is off balance sheet. Due to this classification,
financing costs of £2.5m (2022: £0.3m) associated with the scheme are presented in operating cash flows (note 28). As at 31 December 2023, £83.8m was
financed under the facility (2022: £65.2m).
The Group’s previous wholesale finance facility was with Velocitas Funding Designated Activity Company (“Velocitas”) a special purpose vehicle established
for the purpose and financed by a panel of banks led by JPMorgan Chase Bank, N.A., London Branch. At 31 December 2022 the multi-currency facility was
closed to new financing, and wound down in the first half of 2023. The remaining senior loan of £0.1m and subordinated loan of £0.5m was received by the
Group in the year ended 31 December 2023.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
172
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
2023
£m
78.6
38.3
87.9
17.0
41.0
18.1
2022
£m
75.6
15.2
50.8
21.7
31.0
11.4
280.9
205.7
Sterling
Chinese renminbi
Euro
US dollar
Japanese yen
Other
Wholesale finance facility
finance facility.
Sales to third-party Aston Martin franchised dealers are eligible, subject to individual dealer approved credit limits, to be financed through a wholesale
In the year ended 31 December 2022, the Group entered into a multi-currency wholesale finance facility with CA Auto Bank S.p.A. (“CAAB”) and its regional
designates. Under the facility, the Group finances dealer trade receivables with CAAB around the time a sale has been made under the Group’s revenue
recognition policy and receives consideration equal to the value of the trade receivable financed. The Group has the option to subvent the dealer financing
cost which provides the dealer network an interest-free period. The cost of this subvention is presented as a financing expense in the Consolidated Income
Statement. The Group has considered the IFRS 9 criteria for asset derecognition in respect of the trade receivables financed through CAAB. The Group is
satisfied that substantially all the risks are transferred to CAAB. As a result, the wholesale finance facility is off balance sheet. Due to this classification,
financing costs of £2.5m (2022: £0.3m) associated with the scheme are presented in operating cash flows (note 28). As at 31 December 2023, £83.8m was
financed under the facility (2022: £65.2m).
The Group’s previous wholesale finance facility was with Velocitas Funding Designated Activity Company (“Velocitas”) a special purpose vehicle established
for the purpose and financed by a panel of banks led by JPMorgan Chase Bank, N.A., London Branch. At 31 December 2022 the multi-currency facility was
closed to new financing, and wound down in the first half of 2023. The remaining senior loan of £0.1m and subordinated loan of £0.5m was received by the
Group in the year ended 31 December 2023.
The carrying amount of trade and other receivables at 31 December, converted into sterling at the year-end exchange rates, are denominated in the
18 TRADE AND OTHER RECEIVABLES CONTINUED
following currencies (excluding prepayments):
19 CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2023
£m
392.4
2022
£m
583.3
Cash at bank when placed on deposit earns interest at floating rates based on daily bank deposit rates. The book value of cash and cash equivalents
approximates to their fair value.
Cash is held in the following currencies; those held in currencies other than sterling have been converted into sterling at year-end exchange rates:
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Sterling
Chinese renminbi
Euro
US dollar
Japanese yen
Other
Included within the above:
Restricted cash
2023
£m
143.2
21.6
38.7
166.5
15.9
6.5
392.4
2022
£m
336.8
59.8
26.1
130.5
4.5
25.6
583.3
–
32.8
During 2021, the Group entered into a bilateral Revolving Credit Facility with HSBC Bank plc (“HSBC”), whereby Chinese renminbi with an initial value of
£31.9m were deposited in a restricted account with HSBC in China in exchange for a £30.0m sterling overdraft facility with HSBC in the UK. The restricted
cash was revalued at 31 December 2022 to £32.8m and is shown in the cash and cash equivalents value above. The cash in China cannot be withdrawn whilst
the loan remains in place. During the year ended 31 December 2023, the loan was repaid and the restricted cash was released.
20 OTHER FINANCIAL ASSETS
Forward currency contracts held at fair value
Loan assets
Cash held not available for short-term use
Other derivative contracts
Analysed as:
Current
Non-current
2023
£m
3.3
–
–
–
3.3
3.3
–
3.3
2022
£m
2.3
0.6
0.3
5.6
8.8
8.8
–
8.8
The Group uses forward currency contracts to partly manage the risk associated with fluctuations in exchange rates on future sales contracts. At the
reporting date these cash flow hedges are marked-to-market and any assets are shown as other financial assets in the Statement of Financial Position.
At 31 December 2022, £0.3m held in certain local bank accounts had been frozen in relation to local arbitration proceedings and the cash held in these
accounts did not meet the definition of cash and cash equivalents, and therefore was classified as an other financial asset. During 2023, all amounts have
been unfrozen.
At 31 December 2022, the Group held £0.5m of subordinated loan and £0.1m of senior loan assets relating to a wholesale financing facility (note 18).
The facility fully closed during the year ended 31 December 2023 and the amounts were repaid to the Group. The subordinated loan is presented within
financing cashflows owing to its longer term deposit time whereas movements in the senior loan are included in operating cashflow.
Other derivative contracts comprise warrant options and non-option derivatives both of which entitle the Group to subscribe for equity in AMR GP Holdings
Limited, the immediate parent company of AMR GP Limited. The warrant options were recorded as an embedded option derivative asset at £2.9m on initial
recognition on 31 March 2020. The fair value movement in the options for the year ended 31 December 2023 was a £7.4m increase (2022: £1.6m increase) and
is recognised within the Consolidated Income Statement in administrative expenses. A corresponding liability was recognised on inception of the arrangement
(see note 22) which represented an accrual for that element of future sponsorship payments.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
173
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
20 OTHER FINANCIAL ASSETS CONTINUED
The fair value of the warrant equity option above has been established by applying the proportion of equity represented by the derivative to an assessment
of the enterprise value of AMR GP Limited, which is then adjusted to reflect marketability and control commensurate with the size of the investment.
There is a further embedded derivative in the agreement in respect of an additional economic interest in the equity of AMR GP Holdings Limited which was
assessed as having a carrying value of £nil at inception. This derivative entitled the Group to subscribe for further share capital in AMR GP Limited in the
event that the sponsorship agreement is extended for a further five-year period. The fair value movement in this derivative for the year ended 31 December
2023 was a £3.8m increase (2022: £0.7m increase) and is recognised within the Consolidated Income Statement in administrative expenses. The movement
in the value of this derivative has been estimated using the same method as the warrant equity option disclosed above. There is no corresponding liability
recorded as it is a non-option embedded derivative.
The Group exercised its option and subscribed for equity in AMR GP Holdings Limited during the year ended 31 December 2023. The Group holds one
further warrant which is exercisable in the event of the Group agreeing a third period of sponsorship for the period 2031 to 2035. The fair value of this
warrant option is currently assessed as £nil owing to the uncertainty that the sponsorship will be renewed so far in the future.
21 TRADE AND OTHER PAYABLES
Current trade and other payables
Trade payables
Repurchase liability
Customer deposits and advances
Accruals and other payables
Deferred income – tax relief*
Deferred income – service packages
Deferred income – other
* Detail on the restatement is disclosed in note 2
2023
£m
143.2
39.7
272.1
356.5
13.8
4.7
10.4
840.4
2022
£m (restated*)
151.2
38.2
335.7
346.0
14.9
5.2
–
891.2
Trade payables are non-interest bearing, and it is the Group’s policy to settle the liability within 90 days.
Accruals and other payables consist of product development and capital accruals of £115.4m (2022: £135.7m), sales and marketing accruals of £70.4m
(2022: £59.0m), manufacturing accruals of £44.4m (2022: £40.7m) and administrative and other accruals of £126.3m (2022: £110.6m).
At 31 December 2023, a repurchase liability of £39.7m including accrued interest of £1.7m, has been recognised in trade and other payables and net debt
(see note 24). In 2023, £31.4m of parts for resale, service parts and production stock were sold for £38.0m (gross of indirect tax) and subsequently
repurchased. Under this repurchase agreement, the Group will repay a total of £40.0m (gross of indirect tax). As part of the arrangement, legal title to the
parts was surrendered, however, control remained with the Group. During 2023, £40.0m had been repaid relating to the liability of £38.2m as at 31
December 2022 following further interest accrual.
Contract liabilities
Changes in the Group’s contract liabilities during the year are summarised as follows:
Customer deposits and advances
Deferred income – service packages
Customer deposits and advances
Deferred income – service packages
At 1 January
2023
£m
335.7
13.7
Additional
amounts arising
during the
period
£m
122.7
4.2
At 1 January
2022
£m
342.6
14.9
Additional
amounts arising
during the
period
£m
108.5
3.2
Significant
financing
component for
which an interest
charge is
recognised
£m
7.7
–
Amounts
recognised
within
revenue
£m
(156.1)
(5.2)
Amounts
recognised
within
revenue
£m
(111.0)
(4.7)
Significant
financing
component for
which an interest
charge is
recognised
£m
8.0
–
Amounts
returned
and other
changes
£m
(37.9)
(0.2)
Amounts
returned
and other
changes
£m
(12.4)
0.3
At 31
December
2023
£m
272.1
12.5
At 31
December
2022
£m
335.7
13.7
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
174
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
20 OTHER FINANCIAL ASSETS CONTINUED
The fair value of the warrant equity option above has been established by applying the proportion of equity represented by the derivative to an assessment
of the enterprise value of AMR GP Limited, which is then adjusted to reflect marketability and control commensurate with the size of the investment.
There is a further embedded derivative in the agreement in respect of an additional economic interest in the equity of AMR GP Holdings Limited which was
assessed as having a carrying value of £nil at inception. This derivative entitled the Group to subscribe for further share capital in AMR GP Limited in the
event that the sponsorship agreement is extended for a further five-year period. The fair value movement in this derivative for the year ended 31 December
2023 was a £3.8m increase (2022: £0.7m increase) and is recognised within the Consolidated Income Statement in administrative expenses. The movement
in the value of this derivative has been estimated using the same method as the warrant equity option disclosed above. There is no corresponding liability
recorded as it is a non-option embedded derivative.
The Group exercised its option and subscribed for equity in AMR GP Holdings Limited during the year ended 31 December 2023. The Group holds one
further warrant which is exercisable in the event of the Group agreeing a third period of sponsorship for the period 2031 to 2035. The fair value of this
warrant option is currently assessed as £nil owing to the uncertainty that the sponsorship will be renewed so far in the future.
21 TRADE AND OTHER PAYABLES
Current trade and other payables
Trade payables
Repurchase liability
Customer deposits and advances
Accruals and other payables
Deferred income – tax relief*
Deferred income – service packages
Deferred income – other
* Detail on the restatement is disclosed in note 2
2023
£m
143.2
39.7
272.1
356.5
13.8
4.7
10.4
840.4
2022
£m (restated*)
151.2
38.2
335.7
346.0
14.9
5.2
–
891.2
Trade payables are non-interest bearing, and it is the Group’s policy to settle the liability within 90 days.
Accruals and other payables consist of product development and capital accruals of £115.4m (2022: £135.7m), sales and marketing accruals of £70.4m
(2022: £59.0m), manufacturing accruals of £44.4m (2022: £40.7m) and administrative and other accruals of £126.3m (2022: £110.6m).
At 31 December 2023, a repurchase liability of £39.7m including accrued interest of £1.7m, has been recognised in trade and other payables and net debt
(see note 24). In 2023, £31.4m of parts for resale, service parts and production stock were sold for £38.0m (gross of indirect tax) and subsequently
repurchased. Under this repurchase agreement, the Group will repay a total of £40.0m (gross of indirect tax). As part of the arrangement, legal title to the
parts was surrendered, however, control remained with the Group. During 2023, £40.0m had been repaid relating to the liability of £38.2m as at 31
December 2022 following further interest accrual.
Contract liabilities
Changes in the Group’s contract liabilities during the year are summarised as follows:
Customer deposits and advances
Deferred income – service packages
Customer deposits and advances
Deferred income – service packages
At 1 January
2023
£m
335.7
13.7
Additional
amounts arising
during the
period
£m
122.7
4.2
At 1 January
2022
£m
342.6
14.9
Additional
amounts arising
during the
period
£m
108.5
3.2
Amounts
component for
recognised
which an interest
Significant
financing
charge is
recognised
£m
7.7
–
Significant
financing
charge is
recognised
£m
8.0
–
within
revenue
£m
(156.1)
(5.2)
within
revenue
£m
(111.0)
(4.7)
Amounts
component for
recognised
which an interest
Amounts
returned
and other
changes
£m
(37.9)
(0.2)
Amounts
returned
and other
changes
£m
(12.4)
0.3
At 31
December
2023
£m
272.1
12.5
At 31
December
2022
£m
335.7
13.7
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21 TRADE AND OTHER PAYABLES CONTINUED
Customer deposits and advances are recognised in revenue when the performance obligation, principally the supply of a Limited-Edition vehicle or service
of a vehicle, is met by the Group. As part of the operating cycle of Special Vehicle projects, to which these customer deposits primarily relate, the Group
expects to derecognise a significant proportion over the next three years with approximately £167.1m expected to be recognised in 2024. This unwind
relates to the balance held as at 31 December 2023 and does not take into consideration any additional deposits and advances arising during 2024.
In the year ended 31 December 2023, a finance expense of £7.7m (see note 8) was recognised as a significant financing component on contract liabilities
held for greater than 12 months (2022: £8.0m). Upon satisfaction of the linked performance obligation, the liability is released to revenue so that the total
amount taken to the Consolidated Income Statement reflects the sales price the customer would have paid for the vehicle at that point in time.
The Group applies a practical expedient for short-term advances received from customers whereby the advanced payment is not adjusted for the effects of
a significant financing component. According to the individual terms of the Special Vehicle contract and the position of the customer in the staged deposit
and vehicle specification process, some deposits are contractually refundable. At 31 December 2023, the Group held £132.8m of contractually refundable
deposits (before the impact of significant financing components) (2022: £102.9m). The Special Vehicle programmes are typically oversubscribed and, in the
event that a customer requests reimbursement of their advanced payment, the newly created allocation is then given to an alternative customer who is
required to make an equivalent advanced payment. The cumulative significant financing component associated with a reimbursed advance payment is
credited in arriving at the net significant finance charge for the year. Further liquidity risk considerations are disclosed in note 23.
Deferred service package income is recognised in revenue over the service package period.
Non-current trade and other payables
Trade payables**
Deferred income – tax relief*
Deferred income – service packages
Other payables
* Detail on the restatement is disclosed in note 2
** Trade payables consists of discounted deferred payments relating to technology purchases in the year (see note 12).
22 OTHER FINANCIAL LIABILITIES
Forward currency contracts held at fair value (see note 23)
Other derivative contracts (see note 20)
Derivative option over own shares (see note 23)
Analysed as:
Current
Non-current
2023
£m
71.7
42.0
7.8
0.8
122.3
2023
£m
2.1
–
23.1
25.2
25.2
–
25.2
2022
£m (restated*)
–
34.1
8.5
0.6
43.2
2022
£m
0.7
2.9
22.6
26.2
26.2
–
26.2
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
175
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS
Group
The Group's principal financial instruments comprise cash and cash equivalents, Senior Secured Notes (“SSNs”), a Revolving Credit Facility (“RCF”), a finished
vehicle financing facility, a bilateral RCF, loan assets, derivative options, and forward currency contracts. Additionally, the Group has trade payables and
trade receivables which arise directly from its operations. Included in trade and other payables is a liability relating to an inventory repurchase arrangement.
These short-term assets and liabilities are included in the currency risk disclosure. The main risks arising from the Group's financial instruments are credit
risk, interest-rate risk, currency risk and liquidity risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk
management framework. The Group's risk policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and monitor adherence to limits. The Board of Directors oversees how management monitor compliance with the Group risk management policies
and procedures and reviews the adequacy of the risk management framework in relation to specific risks faced by the Group.
Credit risk
The Group sells vehicles through a global dealer network. Dealers outside of North America are required to pay for vehicles in advance of their despatch or
use the wholesale financing scheme (see note 18). Credit risk on receivables purchased by CAAB under the wholesale finance facilities is borne by CAAB.
The Group has no credit risk associated with the CAAB facility. The Group’s remaining vehicle sales to territories where there is currently no wholesale
financing are made on credit terms ranging from 30 to 180 days. The Group manages the default risk of such sales via a credit risk insurance policy. Dealers
within North America are allowed ten-day credit terms from the date of invoice. In certain circumstances, after thorough consideration of the credit history
of an individual dealer, the Group may sell vehicles outside of the credit risk insurance policy or on deferred payment terms. Parts sales, which represent a
smaller element of total revenue, are made to dealers on net 30-day credit terms. Servicing receivables are due for payment on collection of the vehicle.
Trade and other receivables are only written off when the Group has exhausted all options to recover the amounts due and provided for in full when there is
no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the failure of the debtor to
engage in a repayment plan with the Group and a failure to make contractual payments. An expected credit loss provision is then calculated on the
remaining trade and other receivables. The expected credit loss related to default of other receivables (note 18) is assessed as zero.
In generating the expected credit loss provision for trade receivables, historical credit loss rates for the preceding five years are calculated, including
consideration given to future factors that may affect the ability of customers to settle receivables, and applied to the trade and other receivable ageing
buckets at the year end. The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables. The Group has no material contract assets.
Current
1 – 30 days past due
31 – 60 days past due
61+ days past due
As at 31 December 2023
As at 31 December 2022
Expected
loss rate
%
Gross carrying
amount
£m
Loss
allowance
£m
Expected
loss rate
%
Gross carrying
amount
£m
Loss
allowance
£m
*
*
*
52.2%
180.1
28.2
3.7
8.8
220.8
–
–
–
4.6
4.6
*
*
*
93.8%
129.1
5.8
1.7
6.5
143.1
–
–
–
6.1
6.1
* The expected loss rates for these specific ageing categories are not disclosed, as no material loss allowance is generated when applied against the gross carrying value. The expected loss rate
has reduced following the settlement of previously provided receivables.
Opening loss allowance as at 1 January
(Reduction)/increase in loss allowance recognised in the Income Statement – administrative and other operating expenses
Receivables written off during the year as uncollectible
Effect of foreign exchange
At 31 December
2023
£m
6.1
(1.3)
(0.2)
–
4.6
2022
£m
24.6
0.6
(19.2)
0.1
6.1
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
176
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
23 FINANCIAL INSTRUMENTS
Group
The Group's principal financial instruments comprise cash and cash equivalents, Senior Secured Notes (“SSNs”), a Revolving Credit Facility (“RCF”), a finished
vehicle financing facility, a bilateral RCF, loan assets, derivative options, and forward currency contracts. Additionally, the Group has trade payables and
trade receivables which arise directly from its operations. Included in trade and other payables is a liability relating to an inventory repurchase arrangement.
These short-term assets and liabilities are included in the currency risk disclosure. The main risks arising from the Group's financial instruments are credit
risk, interest-rate risk, currency risk and liquidity risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk
management framework. The Group's risk policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and monitor adherence to limits. The Board of Directors oversees how management monitor compliance with the Group risk management policies
and procedures and reviews the adequacy of the risk management framework in relation to specific risks faced by the Group.
Credit risk
The Group sells vehicles through a global dealer network. Dealers outside of North America are required to pay for vehicles in advance of their despatch or
use the wholesale financing scheme (see note 18). Credit risk on receivables purchased by CAAB under the wholesale finance facilities is borne by CAAB.
The Group has no credit risk associated with the CAAB facility. The Group’s remaining vehicle sales to territories where there is currently no wholesale
financing are made on credit terms ranging from 30 to 180 days. The Group manages the default risk of such sales via a credit risk insurance policy. Dealers
within North America are allowed ten-day credit terms from the date of invoice. In certain circumstances, after thorough consideration of the credit history
of an individual dealer, the Group may sell vehicles outside of the credit risk insurance policy or on deferred payment terms. Parts sales, which represent a
smaller element of total revenue, are made to dealers on net 30-day credit terms. Servicing receivables are due for payment on collection of the vehicle.
Trade and other receivables are only written off when the Group has exhausted all options to recover the amounts due and provided for in full when there is
no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the failure of the debtor to
engage in a repayment plan with the Group and a failure to make contractual payments. An expected credit loss provision is then calculated on the
remaining trade and other receivables. The expected credit loss related to default of other receivables (note 18) is assessed as zero.
In generating the expected credit loss provision for trade receivables, historical credit loss rates for the preceding five years are calculated, including
consideration given to future factors that may affect the ability of customers to settle receivables, and applied to the trade and other receivable ageing
buckets at the year end. The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables. The Group has no material contract assets.
Current
1 – 30 days past due
31 – 60 days past due
61+ days past due
As at 31 December 2023
Gross carrying
Expected
loss rate
As at 31 December 2022
Gross carrying
Expected
loss rate
%
*
*
*
52.2%
amount
£m
180.1
28.2
3.7
8.8
220.8
Loss
allowance
£m
–
–
–
4.6
4.6
%
*
*
*
93.8%
* The expected loss rates for these specific ageing categories are not disclosed, as no material loss allowance is generated when applied against the gross carrying value. The expected loss rate
has reduced following the settlement of previously provided receivables.
(Reduction)/increase in loss allowance recognised in the Income Statement – administrative and other operating expenses
Opening loss allowance as at 1 January
Receivables written off during the year as uncollectible
Effect of foreign exchange
At 31 December
amount
£m
129.1
5.8
1.7
6.5
143.1
2023
£m
6.1
(1.3)
(0.2)
–
4.6
Loss
allowance
£m
–
–
–
6.1
6.1
2022
£m
24.6
0.6
(19.2)
0.1
6.1
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Borrowings
The following table analyses Group borrowings:
Current
Bank loans and overdrafts
Non-current
Senior Secured Notes
Total borrowings
Total borrowings are denominated in the following currencies, in sterling at the year-end exchange rates:
Sterling
US dollar
Total borrowings
2023
£m
2022
£m
89.4
107.1
980.3
1,069.7
1,104.0
1,211.1
2023
£m
89.4
980.3
1,069.7
2022
£m
107.1
1,104.0
1,211.1
Current borrowings
The Group has a RCF attached to the SSNs (see Non-current borrowings below). The carrying amount net of unamortised arrangement fees included in
current borrowings relating to the RCF at 31 December 2023 was £89.4m (2022: £77.1m). At 31 December 2023 £90.0m of the £99.6m RCF was drawn as
cash (2022: £78.5m of the £90.6m facility).
At 31 December 2022, the Group had entered into a bilateral revolving credit facility with HSBC Bank plc (“HSBC”), whereby Chinese Renminbi were
deposited in a restricted account with HSBC in China in exchange for a £30.0m Sterling overdraft facility with HSBC Bank plc in the United Kingdom. The
restricted cash was revalued at 31 December 2022 to £32.8m and is shown in the cash and cash equivalents. At 31 December 2022, the facility of £30.0m
was shown within borrowings in current liabilities on the Statement of Financial Position. During the year ended 31 December 2023, the bilateral revolving
credit facility was repaid, but remains available.
Non-current borrowings
In December 2020, the Group took out First Lien and Second Lien SSNs at $1085.5m and $335.0m, respectively. All SSNs are secured by fixed and floating
charges over certain assets of the Group. In March 2021, the Group issued an additional £70.7m equivalent of 10.5% First Lien SSNs with a nominal value of
$98.5m at a premium of £6.3m. Transaction costs of £1.7m and the premium are amortised using the effective interest rate. In October 2022, the Group
repurchased $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs. The portion of unamortised fees and the redemption premium was charged to the
Consolidated Income Statement at the point of redemption as an accelerated charge and presented within adjusting items (note 5). Transaction costs of
£1.9m relating to the repurchase are included in adjusting items (note 5). The US dollar amounts have been converted to sterling equivalents for reporting
purposes.
At 31 December 2023, the Group held £980.3m of SSNs (2022: £1,104.0m) comprising First Lien SSNs of $1,143.7m (2022: $1,143.7m) at 10.5% cash
interest and Second Lien SSNs of $121.7m (2022: $229.1m) at 8.89% cash interest and 6.11% Payment in Kind (“PIK”) interest respectively. The Second Lien
Notes were issued at a 2% discount and include detachable share warrants (see below). The First Lien Notes are repayable in November 2025 and the
Second Lien Notes in November 2026. Transaction costs and discounts on issuance are amortised using the effective interest rate. Early repayments of both
First and Second Lien SSNs in the year ended 31 December 2022 and Second Lien SSNs in the year ended 31 December 2023 resulted in one off premium
costs and the acceleration of transaction costs and discounts (see note 5).
Derivative option over own shares
The Second Lien SSNs include detachable warrants enabling the warrant holders to subscribe for a number of ordinary shares in the Company at the
subscription price of £1.67 (previously £10 per share prior to the rights issue in September 2022). The warrant holders have the right to exchange their
warrant options for a reduced number of warrant shares, resulting in no cash being paid to receive the shares. The ratio at which this exchange can be
transacted is determined by the share price at execution of the options. A derivative option liability was initially recorded at 31 December 2020 due to the
uncertain number of shares which will be issued under the agreement, which is subsequently remeasured at fair value through the Consolidated Income
Statement.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
177
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Borrowings continued
Derivative option over own shares continued
The warrants can be exercised from 1 July 2021 through to 7 December 2027. The issuance of debt with attached warrants required the Group to assess
separately the fair value of the warrants and the debt. The fair value of the warrants was determined using a binomial model used to predict the behaviour
of the warrant holders and when they might exercise their holdings. The derivative option liability was initially recognised as a derivative forward at fair value
with changes in the fair value being recognised in the Consolidated Income Statement until issuance of the warrants on 7 December 2020 resulting in an
initial valuation of £34.6m. Upon issuance of the $335m SSNs, the carrying value of the debt was reduced by the same amount. The debt will be increased
via an effective interest charge over the term of the SSNs. During the year ended 31 December 2023, changes to the fair value of the derivative option have
resulted in a debit to the Consolidated Income Statement of £19.0m (2022: £8.4m credit to the Consolidated Income Statement) which is presented in
adjusting items. A total of 29,969,927 (2022: nil warrants) were exercised, resulting in a £18.6m reduction to the liability (2022: no change to the associated
liability).
Interest rate risk
The Group is exposed interest rate risk on the RCF attached to the SSNs and on the bilateral RCF facility with HSBC when drawn, whereby Chinese renminbi
have been deposited in a restricted account with HSBC in China in exchange for a sterling overdraft facility with HSBC in the UK. The interest rate charged on
both facilities is based on SONIA and compounded in arrears.
Profile
At 31 December the interest rate profile of the Group’s interest-bearing financial instruments was:
Fixed rate instruments
Financial liabilities
Variable rate instruments
Financial liabilities
2023
£m
2022
£m
980.3
1,104.0
89.4
107.1
The SSNs, are at fixed interest rates. The rate of interest on the RCF, which is attached to the SSNs, and the bilateral RCF are based on SONIA plus a
percentage spread. As SONIA varies on a daily basis both the RCF and bilateral RCF are considered to be variable rate instruments. The bilateral is now
drawn as at 31 December 2023.
In 2023 and 2022, the Group entered into an inventory repurchase arrangement (not included within the financial liabilities noted above). The interest
charged on this arrangement is determined as the difference between the sales and repurchase value and is therefore fixed at the time of entering into
the arrangement. The repayment terms of this arrangement are not in excess of 270 days.
Surplus cash funds, when appropriate, are placed on deposit and attract interest at variable rates.
Interest rate risks – sensitivity
The following table demonstrates the sensitivity, with all other variables held constant, of the Group’s loss after tax to a reasonably possible change in
interest rates on the bilateral RCF with HSBC and the RCF attached to the SSNs.
SONIA
SONIA
Increase/
(decrease) in
interest rate
(3.0%)
3.0%
2023
£m
Effect
on loss
after tax
(2.1)
2.1
2022
£m
Effect
on loss
after tax
(2.6)
2.6
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
178
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
23 FINANCIAL INSTRUMENTS CONTINUED
Borrowings continued
Derivative option over own shares continued
The warrants can be exercised from 1 July 2021 through to 7 December 2027. The issuance of debt with attached warrants required the Group to assess
separately the fair value of the warrants and the debt. The fair value of the warrants was determined using a binomial model used to predict the behaviour
of the warrant holders and when they might exercise their holdings. The derivative option liability was initially recognised as a derivative forward at fair value
with changes in the fair value being recognised in the Consolidated Income Statement until issuance of the warrants on 7 December 2020 resulting in an
initial valuation of £34.6m. Upon issuance of the $335m SSNs, the carrying value of the debt was reduced by the same amount. The debt will be increased
via an effective interest charge over the term of the SSNs. During the year ended 31 December 2023, changes to the fair value of the derivative option have
resulted in a debit to the Consolidated Income Statement of £19.0m (2022: £8.4m credit to the Consolidated Income Statement) which is presented in
adjusting items. A total of 29,969,927 (2022: nil warrants) were exercised, resulting in a £18.6m reduction to the liability (2022: no change to the associated
The Group is exposed interest rate risk on the RCF attached to the SSNs and on the bilateral RCF facility with HSBC when drawn, whereby Chinese renminbi
have been deposited in a restricted account with HSBC in China in exchange for a sterling overdraft facility with HSBC in the UK. The interest rate charged on
both facilities is based on SONIA and compounded in arrears.
At 31 December the interest rate profile of the Group’s interest-bearing financial instruments was:
The SSNs, are at fixed interest rates. The rate of interest on the RCF, which is attached to the SSNs, and the bilateral RCF are based on SONIA plus a
percentage spread. As SONIA varies on a daily basis both the RCF and bilateral RCF are considered to be variable rate instruments. The bilateral is now
drawn as at 31 December 2023.
In 2023 and 2022, the Group entered into an inventory repurchase arrangement (not included within the financial liabilities noted above). The interest
charged on this arrangement is determined as the difference between the sales and repurchase value and is therefore fixed at the time of entering into
the arrangement. The repayment terms of this arrangement are not in excess of 270 days.
Surplus cash funds, when appropriate, are placed on deposit and attract interest at variable rates.
Interest rate risks – sensitivity
The following table demonstrates the sensitivity, with all other variables held constant, of the Group’s loss after tax to a reasonably possible change in
interest rates on the bilateral RCF with HSBC and the RCF attached to the SSNs.
2023
£m
2022
£m
980.3
1,104.0
89.4
107.1
Increase/
(decrease) in
interest rate
(3.0%)
3.0%
2023
£m
Effect
on loss
after tax
(2.1)
2.1
2022
£m
Effect
on loss
after tax
(2.6)
2.6
liability).
Interest rate risk
Profile
Fixed rate instruments
Financial liabilities
Variable rate instruments
Financial liabilities
SONIA
SONIA
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Foreign currency exposure
The Group’s exposure to the risk of changes in foreign currency exchange relates primarily to US dollar sales (including inter-Group sales), Chinese renminbi
sales, Japanese yen sales and Euro denominated purchases.
At 31 December 2023, the Group hedged 25% for 2024 (2022: 29% for 2023) of its US dollar denominated highly probable inter-Group sales, 53% for 2024
of its Japanese yen sales (2022: 19% for 2023) and 0% of its Euro denominated purchases for 2024 (2022: 15% for 2023). These foreign currency risks are
hedged by using foreign currency forward contracts.
The Group’s sterling equivalents of financial assets and liabilities (excluding borrowings analysed by currency above) denominated in foreign currencies at
31 December were:
At 31 December 2023
Financial assets
Trade and other receivables
Foreign currency contracts
Cash balances
Financial liabilities
Trade and other payables
Lease liabilities
Customer deposits and advances
Foreign currency contracts
Net balance sheet exposure
At 31 December 2022
Financial assets
Trade and other receivables
Loan assets
Foreign currency contracts
Cash held not available for short-term use
Cash balances
Financial liabilities
Trade and other payables
Lease liabilities
Customer deposits and advances
Foreign currency contracts
Net balance sheet exposure
Euros
£m
US dollars
£m
Chinese
renminbi
£m
Japanese yen
£m
94.8
–
38.7
133.5
(172.5)
(2.0)
(33.8)
–
(208.3)
(74.8)
22.2
3.3
166.5
192.0
(274.0)
(7.7)
(54.6)
–
(336.3)
(144.3)
38.8
–
21.6
60.4
(27.6)
(0.3)
(5.6)
–
(33.5)
26.9
41.2
–
15.9
57.1
(16.3)
(3.4)
(7.4)
(2.1)
(29.2)
27.9
Euros
£m
US dollars
£m
Chinese
renminbi
£m
Japanese yen
£m
50.8
0.2
0.8
–
26.1
77.9
(153.1)
(0.1)
(17.8)
–
(171.0)
(93.1)
21.7
–
1.5
–
130.5
153.7
(134.3)
(9.5)
(44.3)
(0.1)
(188.2)
(34.5)
15.2
–
–
0.3
59.8
75.3
(34.2)
(0.7)
(7.6)
–
(42.5)
32.8
31.0
–
–
–
4.5
35.5
(9.5)
(5.0)
(4.8)
(0.6)
(19.9)
15.6
Other
£m
17.2
–
6.5
23.7
(11.6)
–
(8.7)
–
(20.3)
3.4
Other
£m
11.4
0.1
–
–
25.6
37.1
(5.4)
(0.1)
(1.9)
–
(7.4)
29.7
Total
£m
214.2
3.3
249.2
466.7
(502.0)
(13.4)
(110.1)
(2.1)
(627.6)
(160.9)
Total
£m
130.1
0.3
2.3
0.3
246.5
379.5
(336.5)
(15.4)
(76.4)
(0.7)
(429.0)
(49.5)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
179
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Foreign currency exposure continued
The following significant exchange rates applied:
Euro
Chinese renminbi
US dollar
Japanese yen
Average rate
2023
Average rate
2022
Closing rate
2023
Closing rate
2022
1.15
8.75
1.23
1.17
8.26
1.25
1.15
9.04
1.27
1.13
8.36
1.20
172.09
160.24
179.72
158.72
Currency risk – sensitivity
The following table demonstrates the sensitivity to a change in the US dollar, Euro, Chinese renminbi and Japanese yen exchange rates, with all other
variables held constant, of the Group’s result after tax (due to changes in the fair value of monetary assets and liabilities) assuming that none of the US dollar
or Euro exposures are used as hedging instruments.
US dollar
US dollar
Euro
Euro
Chinese renminbi
Chinese renminbi
Japanese yen
Japanese yen
(Increase)/
decrease
in rate
Effect on result
after tax
2023
£m
Effect on result
after tax
2022
£m
(5%)
5%
(5%)
5%
(5%)
5%
(5%)
5%
(7.3)
8.1
8.5
(9.4)
(0.3)
0.4
(3.4)
3.8
(7.8)
8.6
12.5
(13.8)
(4.3)
4.8
(1.7)
1.9
$1,085.5m and $335m Senior Secured Notes
In December 2020, the Group took out First Lien and Second Lien SSNs at $1085.5m and $335m, respectively. The Group has not hedged the SSNs since
inception. Foreign currency gains/(losses) on these SSNs, due to exchange rate movements between the US dollar and sterling, are charged to the
Consolidated Income Statement within finance income/(expense). A corresponding change in the translated sterling value of these SSNs is reflected in the
Consolidated Statement of Financial Position. In March 2021, the Group issued additional First Lien SSNs of $98.5m. During the year ended 31 December
2023, the Group paid down $121.7m of Second Lien SSNs (year ended 31 December 2022: $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs).
No hedging relationship has been established in 2022 or 2023.
$400m Senior Secured Notes
The Group had designated $400m of SSNs as a hedging instrument in respect of $400m of highly probable forecast US dollar sales that are not already
hedged with forward contracts. These SSNs were repaid in December 2020 and hedge accounting was discontinued from the date of repayment. As the
forecast transactions are still expected to occur, the amount accumulated in the cash flow hedge reserve at the repayment date has been fully released
to the Consolidated Income Statement in line with the profile of the US dollar sales to which it related.
Hedge accounting
The Group is primarily exposed to US dollar currency variations on the sale of vehicles and parts, and Euro currency variations on the purchase of raw
material parts and services. As part of its risk management policy, the Group uses derivative financial instruments in the form of currency forward contracts
to manage the cash flow risk resulting from these exchange rate movements. The Group had designated the foreign exchange movement on $400m of
repaid SSNs as part of a cash flow hedging relationship, to manage the exchange rate risk resulting from forecast US dollar intercompany sales. Together,
these are referred to as cash flow hedges. The cash flow hedges give certainty over the transactional values to be recognised in the Consolidated Income
Statement, and in the case of the forward contracts, certainty around the value of cash flows arising as foreign currencies are exchanged at predetermined
rates. The Group hedges significant foreign currency exposures as follows:
– Firstly, when practical, with currency forward contracts on a reducing basis with the highest coverage in the year immediately following the year-end
date. When practicable, the Group places additional hedges on a regular basis so that the percentage of the foreign currency exposure hedged increases
as the time to maturity of the foreign currency exposure reduces.
– Secondly, the Group has designated $400m of repaid SSNs as a hedging instrument in respect of $400m of highly probable forecast US dollar sales that
are not already hedged with forward contracts. These SSNs were repaid in December 2020. The Group currently has no active currency forward contract
cash flow hedges beyond 2024. The Group does not mitigate all transactional foreign currency exposures, with the unhedged proportion converted at
exchange rates prevailing on the date of the transaction.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
180
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
The following table demonstrates the sensitivity to a change in the US dollar, Euro, Chinese renminbi and Japanese yen exchange rates, with all other
variables held constant, of the Group’s result after tax (due to changes in the fair value of monetary assets and liabilities) assuming that none of the US dollar
or Euro exposures are used as hedging instruments.
23 FINANCIAL INSTRUMENTS CONTINUED
Foreign currency exposure continued
The following significant exchange rates applied:
Euro
Chinese renminbi
US dollar
Japanese yen
Currency risk – sensitivity
US dollar
US dollar
Euro
Euro
Chinese renminbi
Chinese renminbi
Japanese yen
Japanese yen
Average rate
Average rate
Closing rate
Closing rate
2023
1.15
8.75
1.23
2022
1.17
8.26
1.25
2023
1.15
9.04
1.27
2022
1.13
8.36
1.20
172.09
160.24
179.72
158.72
Effect on result
Effect on result
(Increase)/
decrease
in rate
after tax
2023
£m
after tax
2022
£m
(5%)
5%
(5%)
5%
(5%)
5%
(5%)
5%
(7.3)
8.1
8.5
(9.4)
(0.3)
0.4
(3.4)
3.8
(7.8)
8.6
12.5
(13.8)
(4.3)
4.8
(1.7)
1.9
$1,085.5m and $335m Senior Secured Notes
In December 2020, the Group took out First Lien and Second Lien SSNs at $1085.5m and $335m, respectively. The Group has not hedged the SSNs since
inception. Foreign currency gains/(losses) on these SSNs, due to exchange rate movements between the US dollar and sterling, are charged to the
Consolidated Income Statement within finance income/(expense). A corresponding change in the translated sterling value of these SSNs is reflected in the
Consolidated Statement of Financial Position. In March 2021, the Group issued additional First Lien SSNs of $98.5m. During the year ended 31 December
2023, the Group paid down $121.7m of Second Lien SSNs (year ended 31 December 2022: $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs).
No hedging relationship has been established in 2022 or 2023.
$400m Senior Secured Notes
The Group had designated $400m of SSNs as a hedging instrument in respect of $400m of highly probable forecast US dollar sales that are not already
hedged with forward contracts. These SSNs were repaid in December 2020 and hedge accounting was discontinued from the date of repayment. As the
forecast transactions are still expected to occur, the amount accumulated in the cash flow hedge reserve at the repayment date has been fully released
to the Consolidated Income Statement in line with the profile of the US dollar sales to which it related.
Hedge accounting
The Group is primarily exposed to US dollar currency variations on the sale of vehicles and parts, and Euro currency variations on the purchase of raw
material parts and services. As part of its risk management policy, the Group uses derivative financial instruments in the form of currency forward contracts
to manage the cash flow risk resulting from these exchange rate movements. The Group had designated the foreign exchange movement on $400m of
repaid SSNs as part of a cash flow hedging relationship, to manage the exchange rate risk resulting from forecast US dollar intercompany sales. Together,
these are referred to as cash flow hedges. The cash flow hedges give certainty over the transactional values to be recognised in the Consolidated Income
Statement, and in the case of the forward contracts, certainty around the value of cash flows arising as foreign currencies are exchanged at predetermined
rates. The Group hedges significant foreign currency exposures as follows:
– Firstly, when practical, with currency forward contracts on a reducing basis with the highest coverage in the year immediately following the year-end
date. When practicable, the Group places additional hedges on a regular basis so that the percentage of the foreign currency exposure hedged increases
as the time to maturity of the foreign currency exposure reduces.
– Secondly, the Group has designated $400m of repaid SSNs as a hedging instrument in respect of $400m of highly probable forecast US dollar sales that
are not already hedged with forward contracts. These SSNs were repaid in December 2020. The Group currently has no active currency forward contract
cash flow hedges beyond 2024. The Group does not mitigate all transactional foreign currency exposures, with the unhedged proportion converted at
exchange rates prevailing on the date of the transaction.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Hedge accounting continued
Derivative financial instruments
Derivative financial instruments are recorded at fair value. The hedging instruments of the cash flow hedge relationship have been designated as the spot
element of forward foreign exchange contract, and the forward points are excluded from the hedge relationship. The hedged items have been designated
as highly probable forecast net sales or purchases denominated in foreign currencies.
Where the value of the hedging instrument matches the value of the hedged item in a 1:1 hedge ratio, the hedge is effective, and changes in the fair value
of the hedging instrument attributable to the spot risk are considered an effective hedge and recognised in the cash flow hedge reserve within Other
Comprehensive Income. Changes in fair value attributable to forward points are recognised in the cost of hedging reserve within Other Comprehensive
Income. Where the value of hedging instrument is greater than the value of the hedged item, the excess portion is recognised as the ineffective portion
of the gain or loss on the hedging instrument and is recorded immediately in the Consolidated Income Statement.
When the expected volume of hedged highly probable forecast transactions is lower than the designated volume, and a portion of the hedged item is
no longer highly probable to occur, hedge accounting is discontinued for that portion. If the hedged future cash flows are still expected to occur, then
the accumulated amount in cash flow hedge reserve relating to the discontinued portion remains in the cash flow hedge reserve until the future cash flows
occur. If the hedged future cash flows are no longer expected to occur, then that amount is immediately reclassified from the cash flow hedge reserve to the
Consolidated Income Statement as a reclassification adjustment.
$400m Senior Secured Notes
The $400m SSNs were repaid in December 2020. Prior to repayment they were recorded at amortised cost and translated into sterling at the year-end or
repayment date closing rates with movements in the carrying value due to foreign exchange movements offset by movements in the value of the highly
probable forecast sales when translated from US dollars to sterling. When the hedge ratio is 1:1, the value of the hedging instrument matches the value
of the hedged item. In this case, the change in the carrying value of these SSNs, arising as a result of exchange differences, is recognised through Other
Comprehensive Income into the hedge reserve instead of within finance income/(expense).
When the value of the hedging instrument is greater than the value of the hedged item, the excess portion is recognised as ineffective and is recorded
immediately to finance expense in the Consolidated Income Statement.
The amounts recorded within the hedge reserve, including the cost of hedging reserve, are reclassified to the Consolidated Income Statement when the
hedged item affects the Consolidated Income Statement. Due to the nature of the hedged items, all amounts reclassified to the Consolidated Income
Statement are recorded in cost of sales (2022: all cost of sales), except for ineffective amounts relating to the $400m SSNs which would be recorded as
finance expense in the Consolidated Income Statement.
Main sources of hedge ineffectiveness
Other than previously described, in relation only to forward contracts designated as a hedge, the main sources of potential hedge ineffectiveness relate to
potential differences in the nominal value of hedged items and the hedging instrument should they occur.
The impact of hedging instruments on the Statement of Financial Position is as follows:
Foreign exchange forward contracts –
other financial assets
Foreign exchange forward contracts –
other financial liabilities
$400m Senior Secured Notes – hedge instrument
31 December 2023
31 December 2022
Notional
value
£m
Carrying
value
£m
Change in fair
value used for
measuring
ineffectiveness
£m
Notional
value
£m
Carrying
value
£m
Change in fair
value used for
measuring
ineffectiveness
£m
94.1
52.9
75.2
3.3
(2.1)
–
3.3
96.1
(2.1)
–
33.1
105.6
2.3
(0.7)
–
2.3
(0.7)
–
The impact of hedged items on the Statement of Financial Position is as follows:
Foreign exchange forward contracts
$400m Senior Secured Notes – hedge instrument
Tax on fair value movements recognised in OCI
31 December 2023
31 December 2022
Cash flow hedge
reserve
£m
Cost of hedging
reserve
£m
Cash flow hedge
reserve
£m
Cost of hedging
reserve
£m
1.9
–
(0.5)
(0.8)
–
0.2
2.9
3.9
(1.8)
(0.9)
–
0.2
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
181
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Hedge accounting continued
Main sources of hedge ineffectiveness continued
The effect of the cash flow hedge in the Consolidated Income Statement and Other Comprehensive Income is:
Year ended 31 December 2023
Foreign exchange forward contracts
$400m Senior Secured Notes – hedge instrument
Tax on fair value movements recognised in OCI
Year ended 31 December 2022
Foreign exchange forward contracts
$400m Senior Secured Notes – hedge instrument
Tax on fair value movements recognised in OCI
Total hedging
(loss)/gain
recognised
in OCI
£m
Ineffectiveness
recognised in the
Income
Statement
£m
(0.8)
(3.9)
1.2
–
–
–
Income
Statement
line item
Cost of sales
Cost of sales
–
Total hedging
gain/(loss)
recognised
in OCI
£m
Ineffectiveness
recognised in the
Income Statement
£m
Income
Statement
line item
1.7
(4.9)
0.9
(0.3)
Cost of sales
–
–
Cost of sales
–
Fair value
movement
on cash flow
hedges
£m
0.7
–
(0.2)
Fair value
movement
on cash flow
hedges
£m
(6.1)
–
1.5
Amount
reclassified
from OCI to
the Income
Statement
£m
Income
Statement
line item
(1.5)
Cost of sales
(3.9)
Cost of sales
1.4
–
Amount
reclassified
from OCI to
the Income
Statement
£m
Income
Statement
line item
7.8
Cost of sales
(4.9)
Cost of sales
(0.7)
–
Hedge ineffectiveness recognised within the Consolidated Income Statement relates to differences in the nominal value of the hedged items and the
hedging instrument. At 31 December 2023 and 2022, there were no balances remaining in the cash flow hedge reserve from hedging relationships for
which hedge accounting is no longer required.
All hedging instruments recognised by the Group at 31 December 2023 have a maturity date of less than one year.
Liquidity risk
The Group seeks to manage liquidity risk to ensure sufficient liquidity is available to meet foreseeable needs and, when appropriate, allow placement of
cash on deposit safely and profitably. During 2023, the Group undertook a share placing and retail offer to strengthen the liquidity of the business.
At 31 December 2022, the Group had entered into a bilateral revolving credit facility with HSBC Bank plc (“HSBC”), whereby Chinese Renminbi were
deposited in a restricted account with HSBC in China in exchange for a £30.0m Sterling overdraft facility with HSBC Bank plc in the United Kingdom. The
restricted cash was revalued at 31 December 2022 to £32.8m and is shown in the cash and cash equivalents. At 31 December 2022, the facility of £30.0m
was shown within borrowings in current liabilities on the Statement of Financial Position. During the year ended 31 December 2023, the bilateral revolving
credit facility was repaid. The facility remains available until 31 August 2025 and the total facility size is £50m.
At 31 December 2023 the Group held £972.7m of SSNs (2022: £1,104.0m). In November 2023, the Group repurchased $121.7m of Second Lien SSNs.
In October 2022 the Group repurchased $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs. The premium paid on redemption was £8.0m
(2022: £14.3m). The First Lien Notes are repayable in November 2025 and the Second Lien Notes in November 2026. The portion of unamortised fees
and the redemption premium was charged to the Consolidated Income Statement at the point of redemption as an accelerated charge and presented
within adjusting items (note 5). Transaction costs of £Nil (2022: £1.9m) relating to the repurchase are included in adjusting items (note 5). The US dollar
amounts have been converted to sterling equivalents for reporting purposes.
Attached to the SSNs is a £99.6m (2022: £90.6m) RCF of which £90.0m (2022: £78.5m) was drawn in cash at the reporting date. The amount recorded in the
Statement of Financial Position is net of unamortised transaction costs. £4.4m (2022: £5.2m) of the remaining ancillary facility has been utilised through the
issuance of letters of credit and guarantees. The RCF attached to the SSNs is available until August 2025.
As part of the normal operating cycle of the Group, customers make advanced payments to secure their allocation of Special Vehicles produced in limited
numbers. The cash from these advance payments is primarily used to fund upfront costs of the Special Vehicle project, including raw materials and
components required in manufacture. In certain circumstances, according to the individual terms of the Special Vehicle contract and the position of the
customer in the staged deposit and vehicle specification process, the advanced payments are contractually refundable. At 31 December 2023, the Group
held refundable deposits of £132.8m (2022: £102.9m). The Special Vehicle programmes are typically oversubscribed and, in the event that a customer
requests reimbursement of their advanced payment, the newly created allocation is then given to an alternative customer, who is required to make an
equivalent advanced payment.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
182
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
23 FINANCIAL INSTRUMENTS CONTINUED
Hedge accounting continued
Main sources of hedge ineffectiveness continued
The effect of the cash flow hedge in the Consolidated Income Statement and Other Comprehensive Income is:
Year ended 31 December 2023
Foreign exchange forward contracts
$400m Senior Secured Notes – hedge instrument
Tax on fair value movements recognised in OCI
Year ended 31 December 2022
Foreign exchange forward contracts
$400m Senior Secured Notes – hedge instrument
Tax on fair value movements recognised in OCI
Total hedging
Ineffectiveness
(loss)/gain
recognised in the
recognised
in OCI
£m
Income
Statement
£m
Income
Statement
line item
Cost of sales
Cost of sales
(0.8)
(3.9)
1.2
£m
1.7
(4.9)
0.9
–
–
–
£m
–
–
Total hedging
gain/(loss)
recognised
Ineffectiveness
recognised in the
in OCI
Income Statement
Income
Statement
line item
(0.3)
Cost of sales
Cost of sales
Fair value
movement
on cash flow
hedges
£m
0.7
–
(0.2)
Fair value
movement
on cash flow
hedges
£m
(6.1)
–
1.5
Amount
reclassified
from OCI to
the Income
Statement
£m
Income
Statement
line item
(1.5)
Cost of sales
(3.9)
Cost of sales
1.4
–
Amount
reclassified
from OCI to
the Income
Statement
£m
7.8
Income
Statement
line item
Cost of sales
(4.9)
Cost of sales
(0.7)
–
–
–
Hedge ineffectiveness recognised within the Consolidated Income Statement relates to differences in the nominal value of the hedged items and the
hedging instrument. At 31 December 2023 and 2022, there were no balances remaining in the cash flow hedge reserve from hedging relationships for
which hedge accounting is no longer required.
All hedging instruments recognised by the Group at 31 December 2023 have a maturity date of less than one year.
Liquidity risk
The Group seeks to manage liquidity risk to ensure sufficient liquidity is available to meet foreseeable needs and, when appropriate, allow placement of
cash on deposit safely and profitably. During 2023, the Group undertook a share placing and retail offer to strengthen the liquidity of the business.
At 31 December 2022, the Group had entered into a bilateral revolving credit facility with HSBC Bank plc (“HSBC”), whereby Chinese Renminbi were
deposited in a restricted account with HSBC in China in exchange for a £30.0m Sterling overdraft facility with HSBC Bank plc in the United Kingdom. The
restricted cash was revalued at 31 December 2022 to £32.8m and is shown in the cash and cash equivalents. At 31 December 2022, the facility of £30.0m
was shown within borrowings in current liabilities on the Statement of Financial Position. During the year ended 31 December 2023, the bilateral revolving
credit facility was repaid. The facility remains available until 31 August 2025 and the total facility size is £50m.
At 31 December 2023 the Group held £972.7m of SSNs (2022: £1,104.0m). In November 2023, the Group repurchased $121.7m of Second Lien SSNs.
In October 2022 the Group repurchased $40.3m of First Lien SSNs and $143.8m of Second Lien SSNs. The premium paid on redemption was £8.0m
(2022: £14.3m). The First Lien Notes are repayable in November 2025 and the Second Lien Notes in November 2026. The portion of unamortised fees
and the redemption premium was charged to the Consolidated Income Statement at the point of redemption as an accelerated charge and presented
within adjusting items (note 5). Transaction costs of £Nil (2022: £1.9m) relating to the repurchase are included in adjusting items (note 5). The US dollar
amounts have been converted to sterling equivalents for reporting purposes.
Attached to the SSNs is a £99.6m (2022: £90.6m) RCF of which £90.0m (2022: £78.5m) was drawn in cash at the reporting date. The amount recorded in the
Statement of Financial Position is net of unamortised transaction costs. £4.4m (2022: £5.2m) of the remaining ancillary facility has been utilised through the
issuance of letters of credit and guarantees. The RCF attached to the SSNs is available until August 2025.
As part of the normal operating cycle of the Group, customers make advanced payments to secure their allocation of Special Vehicles produced in limited
numbers. The cash from these advance payments is primarily used to fund upfront costs of the Special Vehicle project, including raw materials and
components required in manufacture. In certain circumstances, according to the individual terms of the Special Vehicle contract and the position of the
customer in the staged deposit and vehicle specification process, the advanced payments are contractually refundable. At 31 December 2023, the Group
held refundable deposits of £132.8m (2022: £102.9m). The Special Vehicle programmes are typically oversubscribed and, in the event that a customer
requests reimbursement of their advanced payment, the newly created allocation is then given to an alternative customer, who is required to make an
equivalent advanced payment.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Liquidity risk continued
The maturity profile of the Group’s financial liabilities at 31 December 2023 based on contractual undiscounted payments, was as follows.
On demand
£m
Less than 3
months
£m
Non-derivative financial liabilities
Bank loans and overdrafts
Senior Secured Notes
Trade and other payables
–
–
–
Refundable customer deposits and advances
132.8
Derivative financial liabilities
Forward exchange contracts
–
132.8
90.6
–
441.5
–
0.3
532.4
3 to 12
months
£m
–
102.8
120.2
–
1.8
224.8
1 to 5
years
£m
–
1,133.9
79.5
–
–
1,213.4
>5 years
£m
Contractual Cash
Flows Total
£m
–
–
0.8
–
–
0.8
90.6
1,236.7
642.0
132.8
2.1
2,104.2
Included in the tables above and below are interest bearing loans and borrowings at a carrying value of £1,061.8m (2022: £1,211.1m). The liquidity profile
associated with leases accounted under IFRS 16 is detailed in note 16.
The maturity profile of the Group’s financial liabilities at 31 December 2022 based on contractual undiscounted payments, was as follows.
On demand
£m
Less than 3
months
£m
Non-derivative financial liabilities
Bank loans and overdrafts
Senior Secured Notes
Trade and other payables
–
–
–
Refundable customer deposits and advances
102.9
Derivative financial liabilities
Forward exchange contracts
–
102.9
109.0
–
443.1
–
0.5
552.6
3 to 12
months
£m
–
117.0
138.1
–
1 to 5
years
£m
–
1,462.4
8.6
–
0.2
255.3
–
1,471.0
>5 years
£m
Contractual Cash
Flows Total
£m
–
–
0.6
–
–
0.6
109.0
1,579.4
590.4
102.9
0.7
2,382.4
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
183
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Estimation of fair values
Included in assets
Level 2
Forward foreign exchange contracts
Loan assets
Level 3
Investments
Other derivative contracts
Included in liabilities
Level 1
$1,143.7m (2022: $1,143.7m) 10.5% US dollar
First Lien Notes
$121.7m (2022: $229.1m) 15.0% US dollar
Second Lien Split Coupon Notes
Level 2
Forward exchange contracts
Derivative option over own shares
As at 31 December 2023
As at 31 December 2022
Nominal value
£m
Book value
£m
Fair value
£m
Nominal value
£m
Book value
£m
Fair value
£m
–
–
–
–
–
3.3
–
18.2
–
21.5
3.3
–
18.2
–
21.5
–
0.6
–
–
0.6
2.3
0.6
–
5.6
8.5
2.3
0.6
–
5.6
8.5
897.2
890.0
906.7
950.8
935.0
893.0
95.4
90.3
103.6
190.5
169.0
194.4
–
33.1
2.1
23.1
2.1
23.1
–
48.1
0.7
22.6
0.7
22.6
1,025.7
1,005.5
1,035.5
1,189.4
1,127.3
1,110.7
The nominal value, book value and fair value of the Second Lien SSNs includes $9.8m, $10.5m, $10.8m, $6.8m, $7.0m and $7.2m of PIK notes issued in April 2021, November 2021, April 2022,
November 2022, April 2023 and November 2023 respectively. The total number of Second Lien SSNs in issuance has been reduced by repayments of $143.8m and $121.7m in 2022 and 2023
respectively. The book value includes accrued PIK notes not issued at each reporting date.
Under IFRS 7, such assets and liabilities are classified by the way in which their fair value is calculated. The interest-bearing loans and borrowings are
considered to be level 1 liabilities with forward exchange contracts being level 2 assets and liabilities. IFRS 7 defines each level as follows:
– Level 1 assets and liabilities have inputs observable through quoted prices.
– Level 2 assets and liabilities have inputs observable, other than quoted prices, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
– Level 3 assets and liabilities are those with inputs not based on observable market data.
Trade and other receivables, current borrowings and trade and other payables are deemed to have the same fair value as their book value and, as such, the
table above only includes assets and liabilities held at fair value, and borrowings. The forward currency contracts are carried at fair value based on pricing
models and discounted cash flow techniques derived from assumptions provided by third-party banks. Loan assets are held at cost less any expected credit
loss provision (note 18). The SSNs are all valued at amortised cost retranslated at the year-end foreign exchange rate. The fair value of these SSNs at the
current and comparative period ends are determined by reference to the quoted price on The International Stock Exchange Authority in St Peter Port,
Guernsey. The fair value and nominal value exclude the impact of transaction costs.
The other derivative contracts related to one option and one issuable derivative for the Group to acquire a minority shareholding in AMR GP Holdings
Limited (see note 20). Two derivatives were exercised in the period giving rise to an investment (note 15).
The derivative option over own shares reflects the detachable warrants issued alongside the Second Lien SSNs (see borrowings section of note 23) enabling
the warrant holders to subscribe for a number of ordinary shares in the Company. The fair value is calculated using a binomial model and updated at each
period end, reflecting the latest market conditions. The inputs used in the valuation model include the quoted share price, market volatility, exercise ratio
and risk-free rate. The reduction in nominal value represents options exercised by warrant holders during the year.
For all other receivables and payables, the carrying amount is deemed to reflect the fair value.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
184
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
23 FINANCIAL INSTRUMENTS CONTINUED
Estimation of fair values
Forward foreign exchange contracts
Included in assets
Level 2
Loan assets
Level 3
Investments
Other derivative contracts
Included in liabilities
Level 1
$1,143.7m (2022: $1,143.7m) 10.5% US dollar
First Lien Notes
$121.7m (2022: $229.1m) 15.0% US dollar
Second Lien Split Coupon Notes
Level 2
Forward exchange contracts
Derivative option over own shares
As at 31 December 2023
As at 31 December 2022
Nominal value
Book value
Fair value
Nominal value
£m
£m
£m
£m
Book value
£m
Fair value
£m
–
–
–
–
–
3.3
–
18.2
–
21.5
3.3
–
18.2
–
21.5
–
0.6
–
–
0.6
2.3
0.6
–
5.6
8.5
2.3
0.6
–
5.6
8.5
897.2
890.0
906.7
950.8
935.0
893.0
95.4
90.3
103.6
190.5
169.0
194.4
–
33.1
2.1
23.1
2.1
23.1
–
48.1
0.7
22.6
0.7
22.6
1,025.7
1,005.5
1,035.5
1,189.4
1,127.3
1,110.7
The nominal value, book value and fair value of the Second Lien SSNs includes $9.8m, $10.5m, $10.8m, $6.8m, $7.0m and $7.2m of PIK notes issued in April 2021, November 2021, April 2022,
November 2022, April 2023 and November 2023 respectively. The total number of Second Lien SSNs in issuance has been reduced by repayments of $143.8m and $121.7m in 2022 and 2023
respectively. The book value includes accrued PIK notes not issued at each reporting date.
Under IFRS 7, such assets and liabilities are classified by the way in which their fair value is calculated. The interest-bearing loans and borrowings are
considered to be level 1 liabilities with forward exchange contracts being level 2 assets and liabilities. IFRS 7 defines each level as follows:
– Level 1 assets and liabilities have inputs observable through quoted prices.
– Level 2 assets and liabilities have inputs observable, other than quoted prices, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
– Level 3 assets and liabilities are those with inputs not based on observable market data.
Trade and other receivables, current borrowings and trade and other payables are deemed to have the same fair value as their book value and, as such, the
table above only includes assets and liabilities held at fair value, and borrowings. The forward currency contracts are carried at fair value based on pricing
models and discounted cash flow techniques derived from assumptions provided by third-party banks. Loan assets are held at cost less any expected credit
loss provision (note 18). The SSNs are all valued at amortised cost retranslated at the year-end foreign exchange rate. The fair value of these SSNs at the
current and comparative period ends are determined by reference to the quoted price on The International Stock Exchange Authority in St Peter Port,
Guernsey. The fair value and nominal value exclude the impact of transaction costs.
The other derivative contracts related to one option and one issuable derivative for the Group to acquire a minority shareholding in AMR GP Holdings
Limited (see note 20). Two derivatives were exercised in the period giving rise to an investment (note 15).
The derivative option over own shares reflects the detachable warrants issued alongside the Second Lien SSNs (see borrowings section of note 23) enabling
the warrant holders to subscribe for a number of ordinary shares in the Company. The fair value is calculated using a binomial model and updated at each
period end, reflecting the latest market conditions. The inputs used in the valuation model include the quoted share price, market volatility, exercise ratio
and risk-free rate. The reduction in nominal value represents options exercised by warrant holders during the year.
For all other receivables and payables, the carrying amount is deemed to reflect the fair value.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 FINANCIAL INSTRUMENTS CONTINUED
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain the future development of the
business. Given this, the objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and
maximise shareholder value. The capital structure of the Group consists of debt which includes the borrowings disclosed in this note, cash and cash
equivalents and equity attributable to equity holders of the parent, comprising share capital and reserves as disclosed in the Consolidated Statement of
Changes in Equity.
24 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. The additional cash flow disclosures required under IAS 7 are made in note 28.
Cash and cash equivalents
Cash held not available for short-term use
Inventory repurchase arrangement
Lease liabilities – current
Lease liabilities – non-current
Loans and other borrowings – current
Loans and other borrowings – non-current
Net debt
Movement in net debt
Net (decrease)/increase in cash and cash equivalents
Add back cash flows in respect of other components of net debt:
New borrowings
Proceeds from inventory repurchase arrangement
Repayment of existing borrowings
Repayment of inventory repurchase arrangement
Lease liability payments
Movement in cash held not available for short-term use
(Increase)/decrease in net debt arising from cash flows
Non-cash movements:
Foreign exchange gain/(loss) on secured loan
Interest added to debt
Borrowing fee amortisation
Lease liability interest charge
Lease modifications
New leases
Foreign exchange gain and other movements
(Increase)/decrease in net debt
Net debt at beginning of the year
Net debt at the end of the year
2023
£m
392.4
–
(39.7)
(8.8)
(88.5)
(89.4)
(980.3)
(814.3)
2022
£m
583.3
0.3
(38.2)
(7.4)
(92.4)
(107.1)
(1,104.0)
(765.5)
(190.9)
164.4
(11.5)
(38.0)
129.7
40.0
7.9
(0.3)
(63.1)
60.8
(14.2)
(26.9)
(4.1)
(0.6)
(5.8)
5.1
(48.8)
(765.5)
(814.3)
–
(75.7)
172.7
60.0
10.0
(1.5)
329.9
(156.2)
(15.7)
(25.4)
(4.5)
(3.5)
(2.2)
3.7
126.1
(891.6)
(765.5)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
185
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
25 PROVISIONS
At the beginning of the year
Charge for the year
Utilisation
Effect of movements in exchange rates
Release to the Income Statement
At the end of the year
Analysed as:
Current
Non-current
2023
£m
2022
£m
Warranty
Total
Restructuring
Warranty
41.1
29.7
(27.4)
0.7
(0.2)
43.9
20.2
23.7
43.9
41.1
29.7
(27.4)
0.7
(0.2)
43.9
20.2
23.7
43.9
0.4
–
(0.4)
–
–
–
–
–
–
38.5
30.9
(26.5)
(1.5)
(0.3)
41.1
18.6
22.5
41.1
Total
38.9
30.9
(26.9)
(1.5)
(0.3)
41.1
18.6
22.5
41.1
In the year ended 31 December 2020, the Group launched a consultation process to reduce employee numbers reflecting lower than originally planned
production volumes resulting in an exceptional charge to the Consolidated Income Statement in 2020. The restructuring was substantially completed
during 2021, with the final amounts being utilised during the year ended 31 December 2022.
The warranty provision is calculated based on the level of historical claims and is expected to be substantially utilised within the next three years.
26 PENSION OBLIGATIONS
Defined contribution scheme
The Group opened a Defined Contribution scheme in June 2011. The total expense relating to this scheme in the year ended 31 December 2023 was
£20.9m (2022: £17.6m). Outstanding contributions at the 31 December 2023 were £1.9m (2022: £1.5m). Contributions are made by the Group to other
pension arrangements for certain employees of the Group.
Defined Benefit scheme
The Group operates a Defined Benefit Pension Scheme. During 2017, it was agreed and communicated to its members that the scheme’s benefits would be
amended from a final pensionable salary basis to a career average revalued earnings (CARE) basis with effect from 1 January 2018. The scheme was closed
to new entrants on 31 May 2011. The benefits of the existing members were not affected by the closure of the scheme. The assets of the scheme are held
separately from those of the Group. On 31 January 2022, the scheme was closed to future accrual resulting in a curtailment loss of £2.8m (note 5).
In constructing the investment strategy for the scheme, the Trustees take due account of the liability profile of the scheme along with the level of disclosed
surplus or deficit. The investment strategy is reviewed on a regular basis and, at a minimum, on a triennial basis to coincide with actuarial valuations. The
primary objectives are to provide security for all beneficiaries and to achieve long-term growth sufficient to finance any pension increases and ensure the
residual cost is held at a reasonable level.
The pension scheme operates under the regulatory framework of the Pensions Act 2004. The Trustee has the primary responsibility for governance of the
scheme. Benefit payments are from Trustee-administered funds and scheme assets are held in a Trust which is governed by UK regulation. The Trustee
comprises representatives of the Group and members of the scheme and an independent, professional Trustee was appointed during 2019.
The pension scheme exposes the Group to the following risks:
– Asset volatility – the scheme’s Statement of Investment Principles targets around 22% return-enhancing assets and 78% risk-reducing assets. The Trustee
monitors the appropriateness of the scheme’s investment strategy, in consultation with the Group, on an ongoing basis.
– Inflation risk – the majority of benefits are linked to inflation and so increases in inflation will lead to higher liabilities (although in most cases there are
caps in place which protect against extreme inflation).
– Longevity – increases in life expectancy will increase the period over which benefits are expected to be payable, which increases the value placed on the
scheme’s liabilities.
– Changes in bond yields – A decrease in corporate bond yields will increase the value placed on the Scheme liabilities, although this will be partially offset
by an increase in the value of the Scheme’s bond holdings.
The projected unit method has been used to determine the liabilities.
The pension cost is assessed in accordance with the advice of an independent qualified actuary. The latest completed actuarial valuation of the scheme had
an effective date of 6 April 2020. The assumptions that make the most significant effect on the valuation are those relating to the rate of return on
investments, the rate of increase in salaries and pensions and expected longevity. It was assumed that the investment return would be based on the Bank of
England gilt curve plus 0.5% per annum and that salary increases would be equivalent to CPI inflation plus 1.0% per annum. At the 6 April 2020 actuarial
valuation, the actuarial value of the scheme assets was £314.6m, sufficient to cover 76% of the benefits which had accrued to members.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
186
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
25 PROVISIONS
At the beginning of the year
Charge for the year
Utilisation
Effect of movements in exchange rates
Release to the Income Statement
At the end of the year
Analysed as:
Current
Non-current
2023
£m
2022
£m
Warranty
Total
Restructuring
Warranty
41.1
29.7
(27.4)
0.7
(0.2)
43.9
20.2
23.7
43.9
41.1
29.7
(27.4)
0.7
(0.2)
43.9
20.2
23.7
43.9
0.4
(0.4)
–
–
–
–
–
–
–
38.5
30.9
(26.5)
(1.5)
(0.3)
41.1
18.6
22.5
41.1
Total
38.9
30.9
(26.9)
(1.5)
(0.3)
41.1
18.6
22.5
41.1
In the year ended 31 December 2020, the Group launched a consultation process to reduce employee numbers reflecting lower than originally planned
production volumes resulting in an exceptional charge to the Consolidated Income Statement in 2020. The restructuring was substantially completed
during 2021, with the final amounts being utilised during the year ended 31 December 2022.
The warranty provision is calculated based on the level of historical claims and is expected to be substantially utilised within the next three years.
The Group opened a Defined Contribution scheme in June 2011. The total expense relating to this scheme in the year ended 31 December 2023 was
£20.9m (2022: £17.6m). Outstanding contributions at the 31 December 2023 were £1.9m (2022: £1.5m). Contributions are made by the Group to other
26 PENSION OBLIGATIONS
Defined contribution scheme
pension arrangements for certain employees of the Group.
Defined Benefit scheme
The Group operates a Defined Benefit Pension Scheme. During 2017, it was agreed and communicated to its members that the scheme’s benefits would be
amended from a final pensionable salary basis to a career average revalued earnings (CARE) basis with effect from 1 January 2018. The scheme was closed
to new entrants on 31 May 2011. The benefits of the existing members were not affected by the closure of the scheme. The assets of the scheme are held
separately from those of the Group. On 31 January 2022, the scheme was closed to future accrual resulting in a curtailment loss of £2.8m (note 5).
In constructing the investment strategy for the scheme, the Trustees take due account of the liability profile of the scheme along with the level of disclosed
surplus or deficit. The investment strategy is reviewed on a regular basis and, at a minimum, on a triennial basis to coincide with actuarial valuations. The
primary objectives are to provide security for all beneficiaries and to achieve long-term growth sufficient to finance any pension increases and ensure the
residual cost is held at a reasonable level.
The pension scheme operates under the regulatory framework of the Pensions Act 2004. The Trustee has the primary responsibility for governance of the
scheme. Benefit payments are from Trustee-administered funds and scheme assets are held in a Trust which is governed by UK regulation. The Trustee
comprises representatives of the Group and members of the scheme and an independent, professional Trustee was appointed during 2019.
The pension scheme exposes the Group to the following risks:
– Asset volatility – the scheme’s Statement of Investment Principles targets around 22% return-enhancing assets and 78% risk-reducing assets. The Trustee
monitors the appropriateness of the scheme’s investment strategy, in consultation with the Group, on an ongoing basis.
– Inflation risk – the majority of benefits are linked to inflation and so increases in inflation will lead to higher liabilities (although in most cases there are
– Longevity – increases in life expectancy will increase the period over which benefits are expected to be payable, which increases the value placed on the
– Changes in bond yields – A decrease in corporate bond yields will increase the value placed on the Scheme liabilities, although this will be partially offset
caps in place which protect against extreme inflation).
scheme’s liabilities.
by an increase in the value of the Scheme’s bond holdings.
The projected unit method has been used to determine the liabilities.
The pension cost is assessed in accordance with the advice of an independent qualified actuary. The latest completed actuarial valuation of the scheme had
an effective date of 6 April 2020. The assumptions that make the most significant effect on the valuation are those relating to the rate of return on
investments, the rate of increase in salaries and pensions and expected longevity. It was assumed that the investment return would be based on the Bank of
England gilt curve plus 0.5% per annum and that salary increases would be equivalent to CPI inflation plus 1.0% per annum. At the 6 April 2020 actuarial
valuation, the actuarial value of the scheme assets was £314.6m, sufficient to cover 76% of the benefits which had accrued to members.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26 PENSION OBLIGATIONS CONTINUED
Defined Benefit scheme continued
On 18 December 2020, the Group agreed to increase the recovery plan contributions from £7.1m per annum to £15.0m per annum effective from
1 January 2021 through to 30 June 2027. Estimated contributions for the year ending 31 December 2024 are £15.0m, although this is subject to
consideration as part of the 6 April 2023 valuation, due by July 2024.
The 6 April 2020 valuation was updated by an independent qualified actuary to 31 December 2022 for the 2022 year-end disclosures in accordance with
IAS 19R. The initial results of the 6 April 2023 valuation were updated by an independent qualified actuary to 31 December 2023 for the 2023 year-end
disclosures in accordance with IAS 19R. The ongoing valuation as at 6 April 2023 is due to be completed by July 2024 in line with the scheme-specific
funding requirements of the Pensions Act 2004. As part of that valuation the Trustee and the Group will review the adequacy of the contributions being
paid into the scheme.
Following the High Court ruling in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others in June 2023, it was held that section 37
of the Pension Schemes Act 1993 operates to make void any amendment to the rules of a contracted out pension scheme without written actuarial
confirmation under Regulation 42(2) of the Occupational Pension Schemes (Contracting Out) Regulations 1996, in so far that the amendment relates
to members’ section 9(2B) rights. An appeal is due to be heard on 26 June 2024 which, it is hoped, will provide further clarity on the issue.
The Trustees of the Scheme and the Plan (collectively the “Pension Schemes”) have confirmed that;
– The Pension Schemes were contracted out of the additional state pension between 1997 and 2016; and
– It was possible that amendments were made to the Pension Schemes that may have impacted on the members’ section 9(2B) rights.
The Trustees of the Pension Schemes and the Directors work closely together and take appropriate legal and professional advice when making
amendments to the Pension Schemes. However, at 31 December 2023, it is not currently possible to determine whether any amendments to section 9(2B)
rights were made to the Pension Schemes that were not in accordance with section 37 of the Pension Schemes Act 1993 requirements. Further, it is not
currently possible to reliably estimate the possible impact to the defined benefit obligations of the Pension Schemes if these amendments were not in
accordance with section 37 of the Pension Schemes Act 1993 requirements.
Assumptions
The principal assumptions used by the actuary were:
Discount rate
Rate of increase in salaries
Rate of revaluation in deferment
Rate of increase in pensions in payment attracting Limited Price Indexation
Expected return on scheme assets
RPI Inflation assumption
CPI Inflation assumption
31 December
2023
31 December
2022
4.7%
N/A
2.4%
2.85%
4.7%
2.9%
2.4%
4.85%
N/A
2.45%
2.95%
4.85%
3.00%
2.45%
The Group’s inflation assumption reflects its long-term expectations and has not been amended for short-term variability. The mortality assumptions allow
for expected increases in longevity. The ‘current’ disclosures below relate to assumptions based on the longevity (in years) following retirement at each
reporting date, with “future” relating to an employee retiring in 2043 (2023 assumptions) or 2042 (2022 assumptions).
Projected life expectancy at age 65
Male
Female
Average duration of the liabilities in years as at 31 December 2023
Average duration of the liabilities in years as at 31 December 2022
Future
Currently
aged 45
2023
22.3
25.1
Current
Currently
aged 65
2023
21.1
23.7
Future
Currently
aged 45
2022
22.5
25.3
Current
Currently
aged 65
2022
21.3
23.9
Years
19
19
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
187
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26 PENSION OBLIGATIONS CONTINUED
Assumptions continued
The following table provides information on the composition and fair value of the assets of the scheme:
31 December
2023
Quoted
£m
31 December
2023
Unquoted
£m
31 December
2023
Total
£m
31 December
2022
Quoted
£m
31 December
2022
Unquoted
£m
31 December
2022
Total
£m
Asset class
Overseas equities
Private debt
Asset-Backed Securities
Liability driven investment
Corporate bonds
Absolute return bonds
Diversified alternatives
Cash
Insurance policies
Total
5.6
–
4.3
133.3
–
–
–
30.9
4.7
178.8
–
30.7
–
3.3
–
–
–
–
–
34.0
5.6
30.7
4.3
136.6
–
–
–
30.9
4.7
212.8
25.9
–
37.7
26.3
24.5
–
–
12.8
3.6
130.8
The scheme assets and funded obligations at 31 December are summarised below:
Total fair value of scheme assets
Present value of funded obligations
Funded status at the end of the year
Adjustment to reflect minimum funding requirements
Liability recognised in the Statement of Financial Position
–
34.6
–
9.5
–
11.2
0.9
–
–
25.9
34.6
37.7
35.8
24.5
11.2
0.9
12.8
3.6
56.2
187.0
2023
£m
212.8
2022
£m
187.0
(215.9)
(188.9)
(3.1)
(45.9)
(49.0)
(1.9)
(59.3)
(61.2)
The adjustment to reflect minimum funding requirements represents the excess of the present value of contractual future recovery plan contributions,
discounted using the assumed scheme discount rate, over the funding status established through the actuarial valuation.
Amounts recognised in the Consolidated Income Statement during the year ended 31 December were as follows:
Amounts charged to operating loss:
Current service cost
Past service cost
Amounts charged to finance expense:
Net interest expense on the net Defined Benefit liability
Interest expense on the adjustment to reflect minimum funding requirements
Total expense recognised in the Income Statement
2023
£m
–
–
–
0.2
(2.9)
(2.7)
2022
£m
(0.7)
(2.8)
(3.5)
0.1
(1.5)
(4.9)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
188
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Asset class
Overseas equities
Private debt
Asset-Backed Securities
Liability driven investment
Corporate bonds
Absolute return bonds
Diversified alternatives
Insurance policies
Cash
Total
The scheme assets and funded obligations at 31 December are summarised below:
Total fair value of scheme assets
Present value of funded obligations
Funded status at the end of the year
Adjustment to reflect minimum funding requirements
Liability recognised in the Statement of Financial Position
Amounts charged to operating loss:
Current service cost
Past service cost
Amounts charged to finance expense:
Net interest expense on the net Defined Benefit liability
Interest expense on the adjustment to reflect minimum funding requirements
Total expense recognised in the Income Statement
31 December
31 December
31 December
31 December
31 December
31 December
2023
Quoted
£m
2023
Unquoted
£m
2022
Quoted
£m
2022
Unquoted
£m
2023
Total
£m
5.6
30.7
4.3
136.6
–
–
–
30.9
4.7
212.8
25.9
–
37.7
26.3
24.5
–
–
12.8
3.6
130.8
5.6
–
4.3
133.3
–
–
–
30.9
4.7
178.8
30.7
3.3
–
–
–
–
–
–
–
34.0
56.2
187.0
(215.9)
(188.9)
2022
Total
£m
25.9
34.6
37.7
35.8
24.5
11.2
0.9
12.8
3.6
2022
£m
187.0
(1.9)
(59.3)
(61.2)
2022
£m
(0.7)
(2.8)
(3.5)
0.1
(1.5)
(4.9)
34.6
9.5
11.2
0.9
–
–
–
–
–
2023
£m
212.8
(3.1)
(45.9)
(49.0)
2023
£m
–
–
–
0.2
(2.9)
(2.7)
26 PENSION OBLIGATIONS CONTINUED
Assumptions continued
26 PENSION OBLIGATIONS CONTINUED
Assumptions continued
The following table provides information on the composition and fair value of the assets of the scheme:
Changes in present value of the Defined Benefit pensions obligations are analysed as follows:
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
At the beginning of the year
Current service cost
Past service cost
Interest cost
Experience losses
Actuarial (losses)/gains arising from changes in financial assumptions
Distributions
Actuarial gains arising from changes in demographic assumptions
Obligation at the end of the year
Changes in the fair value of plan assets are analysed below:
At the beginning of the year
Interest on assets
Employer contributions
Return on scheme assets excluding interest income
Distributions
Fair value at the end of the year
The adjustment to reflect minimum funding requirements represents the excess of the present value of contractual future recovery plan contributions,
discounted using the assumed scheme discount rate, over the funding status established through the actuarial valuation.
Actual return on scheme assets
Amounts recognised in the Consolidated Income Statement during the year ended 31 December were as follows:
Analysis of amounts recognised in the Statement of Financial Position:
Liability at the beginning of the year
Net expense recognised in the Income Statement
Employer contributions
(Loss)/gain recognised in Other Comprehensive Income
Liability recognised in the Statement of Financial Position at the end of the year
Analysis of amount taken to Other Comprehensive Income:
Return on scheme assets excluding interest income
Experience losses arising on funded obligations
(Losses)/gains arising due to changes in financial assumptions underlying the present value of funded obligations
Gains arising as a result of adjustment made to reflect minimum funding requirements
Gains arising due to changes in demographic assumptions
Amount recognised in Other Comprehensive Income
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
189
2023
£m
2022
£m
(189.0)
(368.4)
–
–
(9.1)
(20.4)
(3.5)
4.2
1.9
(0.7)
(2.8)
(7.2)
(14.7)
190.7
11.3
2.8
(215.9)
(189.0)
2023
£m
187.0
9.3
15.0
5.6
(4.1)
212.8
2023
£m
14.9
2023
£m
(61.2)
(2.7)
15.0
(0.1)
(49.0)
2023
£m
5.6
(20.4)
(3.5)
16.3
1.9
(0.1)
2022
£m
363.9
7.3
15.6
(188.5)
(11.3)
187.0
2022
£m
(181.2)
2022
£m
(78.7)
(4.9)
15.6
6.8
(61.2)
2022
£m
(188.5)
(14.7)
190.7
16.5
2.8
6.8
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26 PENSION OBLIGATIONS CONTINUED
Sensitivity analysis of the principal assumptions used to measure scheme liabilities
At 31 December 2023 the present value of the benefit obligation was £215.9m (2022: £189.0m) and its sensitivity to changes in key assumptions were:
Discount rate
Rate of inflation*
Life expectancy increased by approximately 1 year
Change in
assumption
Decrease by 1.00%
Increase by 0.25%
Increase by one year
Present value
of benefit
obligations at
31 December
2023
£m
Present value
of benefit
obligations at
31 December
2022
£m
260.3
222.5
223.2
228.7
196.7
194.7
* This sensitivity allows for the impact on all inflation-related assumptions (salary increases, deferred revaluation and pension increases).
Funding levels are monitored on a regular basis by the Trustee and the Group to ensure the security of members’ benefits. The next triennial valuation, as at
6 April 2023, is due to be completed by July 2024 in line with the scheme-specific funding requirements of the Pensions Act 2004. As part of that valuation
the Trustee and the Group will review the adequacy of the contributions being paid into the scheme.
Sensitivity analysis of the principal assumptions used to measure scheme liabilities continued
Expected future benefit payments
Year 1 (2023/2024)
Year 2 (2024/2025)
Year 3 (2025/2026)
Year 4 (2026/2027)
Year 5 (2027/2028)
Years 6 to 10 (2029 to 2033)
History of scheme experience
Present value of the scheme liabilities (£m)
Fair value of the scheme assets (£m)
Deficit in the scheme before adjusting to reflect minimum funding requirements (£m)
Experience gains/(losses) on scheme assets excluding interest income (£m)
Percentage of scheme assets
Return on scheme liabilities (£m)
Percentage of the present value of the scheme liabilities
Total amount recognised in Other Comprehensive Income (£m)
Percentage of the present value of the scheme liabilities
2023
£m
10.6
10.9
11.2
11.6
11.9
63.7
2023
(215.9)
212.8
(3.1)
5.6
2.6%
(20.4)
9.4%
(0.1)
0.0%
2022
£m
11.2
11.6
11.9
12.3
12.6
67.9
2022
(188.9)
187.0
(1.9)
(188.5)
(100.8%)
(14.7)
7.8%
6.8
(3.6%)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
190
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
26 PENSION OBLIGATIONS CONTINUED
27 SHARE CAPITAL AND OTHER RESERVES
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Allotted, called up and fully paid
Opening balance at 1 January 2022
Private placing1
Rights issue2
Number of
shares
116,459,513
23,291,902
559,005,660
Balance as at 31 December 2022 and 1 January 2023
698,757,075
Private placing3
Issuance of shares to SIP4
Exercise of warrant options5
Placing6
Consideration shares7
28,300,000
1,017,505
8,990,975
58,245,957
28,352,273
Nominal
value
£
0.1
0.1
0.1
0.1
0.1
0.1
0.1
Share
capital
£m
11.6
2.4
55.9
Share
premium
£m
1,123.4
75.7
498.3
Merger
reserve
£m
143.9
–
–
69.9
1,697.4
143.9
2.8
0.1
0.9
5.9
2.8
91.7
–
14.1
206.9
84.4
–
–
–
–
–
Capital
redemption
reserve
£m
9.3
–
–
9.3
–
–
–
–
–
Closing balance at 31 December 2023
823,663,785
82.4
2,094.5
143.9
9.3
1. On 9 September 2022, the Company issued 23,291,902 ordinary shares by way of a private placing. The shares were issued at 335p raising gross proceeds of £78.1m, with £2.4m recognised as
share capital and the remaining £75.7m recognised as share premium.
2. On 28 September 2022, the Company issued 559,005,660 ordinary shares by way of a rights issue. The shares were issued at 103p raising gross proceeds of £575.8m, with £55.9m recognised
as share capital and the remaining £519.9m recognised as share premium. Share premium is reduced by £21.6m, reflecting transaction fees paid, of which £2.9m 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 11) has been adjusted accordingly.
3. On 26 May 2023, the Company issued 28,300,000 ordinary shares by way of a private placing. The shares were issued at 335p raising gross proceeds of £94.8m with £2.8m recognised as share
capital and the remaining £92.0m recognised as share premium. Transaction fees of £0.3m were deducted from share premium.
4. On 30 May 2023, the Company issued 1,017,505 ordinary shares under the Company’s Share Incentive Plan at nominal value. A transfer from retained earnings of £0.1m took place, with £0.1m
recognised in share capital.
5. On 4 July 2023, 3,686,017 ordinary shares were issued to satisfy the redemption of certain warrant options. Further issuances of 3,980,921 ordinary shares on 12 July 2023 and 1,324,037
ordinary shares on 31 July 2023 took place. These transactions resulted in the recognition of £0.9m of share capital with the balance of £14.1m being recognised in share premium.
6. On 3 August 2023, the Company issued a total of 58,245,957 ordinary shares comprising 56,750,000 placing shares, 1,078,168 retail offer shares and 417,789 Director subscription shares. The
shares were issued at 371p raising gross proceeds of £216.1m, with £5.9m recognised as share capital, the remaining £210.2m as share premium, offset by £3.3m of fees.
7. On 6 November 2023, the Company issued consideration shares to Lucid Group, Inc. in part payment for access to technology. The fair value of technology was evaluated (see note 12) which
determined the issue price of the shares. £2.8m was recognised in share capital with an initial £85.8m in share premium. £1.4m of transaction fees were then deducted from share premium.
28 ADDITIONAL CASH FLOW INFORMATION
Reconciliation of movements of select liabilities to cash flows arising from financing activities
The tables below reconcile movements of liabilities classified within net debt (note 24) to cash flows arising from financing activities for the years ended
31 December 2023 and 2022.
Sensitivity analysis of the principal assumptions used to measure scheme liabilities
At 31 December 2023 the present value of the benefit obligation was £215.9m (2022: £189.0m) and its sensitivity to changes in key assumptions were:
Present value
of benefit
obligations at
31 December
Present value
of benefit
obligations at
31 December
Change in
assumption
Decrease by 1.00%
Increase by 0.25%
Increase by one year
2023
£m
260.3
222.5
223.2
2022
£m
228.7
196.7
194.7
Discount rate
Rate of inflation*
Life expectancy increased by approximately 1 year
* This sensitivity allows for the impact on all inflation-related assumptions (salary increases, deferred revaluation and pension increases).
Funding levels are monitored on a regular basis by the Trustee and the Group to ensure the security of members’ benefits. The next triennial valuation, as at
6 April 2023, is due to be completed by July 2024 in line with the scheme-specific funding requirements of the Pensions Act 2004. As part of that valuation
the Trustee and the Group will review the adequacy of the contributions being paid into the scheme.
Sensitivity analysis of the principal assumptions used to measure scheme liabilities continued
Expected future benefit payments
Year 1 (2023/2024)
Year 2 (2024/2025)
Year 3 (2025/2026)
Year 4 (2026/2027)
Year 5 (2027/2028)
Years 6 to 10 (2029 to 2033)
History of scheme experience
Present value of the scheme liabilities (£m)
Fair value of the scheme assets (£m)
Deficit in the scheme before adjusting to reflect minimum funding requirements (£m)
Experience gains/(losses) on scheme assets excluding interest income (£m)
Percentage of scheme assets
Return on scheme liabilities (£m)
Percentage of the present value of the scheme liabilities
Total amount recognised in Other Comprehensive Income (£m)
Percentage of the present value of the scheme liabilities
2023
£m
10.6
10.9
11.2
11.6
11.9
63.7
2023
(215.9)
212.8
(3.1)
5.6
2.6%
(20.4)
9.4%
(0.1)
0.0%
2022
£m
11.2
11.6
11.9
12.3
12.6
67.9
2022
(188.9)
187.0
(1.9)
(188.5)
(100.8%)
(14.7)
7.8%
6.8
(3.6%)
Other borrowings
and inventory
arrangements
£m
Lease
Liabilities
£m
$1,184.0m 10.5%
First Lien Notes
£m
$335m 15%
Second Lien
Notes
£m
Total
£m
145.3
99.8
935.0
169.0
1,349.1
(97.9)
(16.9)
(122.5)
Liabilities
At 1 January 2023
Changes from financing cash flows
Interest paid
Principal lease payment
Proceeds from new borrowings
Repayment of existing borrowings
Premium paid on the early redemption of Senior Secured Notes
Inventory repurchase repayment
Inventory repurchase drawdown
Total changes from financing cash flows
Effect of changes in exchange rates
New leases under IFRS 16
Modifications to existing leases
Interest expense
Movement in accrued interest
Financing expense in the Income Statement classified as operating cash flow
Balance at 31 December 2023
(3.6)
–
11.5
(30.0)
–
(40.0)
38.0
(24.1)
–
–
–
11.0
(0.6)
(2.5)
129.1
(4.1)
(7.9)
–
–
–
–
–
(12.0)
(1.0)
5.8
0.6
4.1
–
–
–
–
–
–
–
–
(97.9)
(54.0)
–
–
106.4
0.5
–
–
–
(99.7)
(8.0)
–
–
(124.6)
(6.8)
–
–
51.4
1.3
–
90.3
(7.9)
11.5
(129.7)
(8.0)
(40.0)
38.0
(258.6)
(61.8)
5.8
0.6
172.9
1.2
(2.5)
1,206.7
97.3
890.0
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
191
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
28 ADDITIONAL CASH FLOW INFORMATION CONTINUED
Reconciliation of movements of select liabilities to cash flows arising from financing activities continued
Liabilities
At 1 January 2022
Changes from financing cash flows
Interest paid
Principal lease payment
Repayment of existing borrowings
Premium paid on the early redemption of Senior Secured Notes
Inventory repurchase repayment
Inventory repurchase drawdown
Transaction costs paid
Total changes from financing cash flows
Effect of changes in exchange rates
New leases under IFRS 16
Modifications to existing leases
Interest expense
Movement in accrued interest
Financing expense in the Income Statement classified as operating cash flow
Balance at 31 December 2022
Other borrowings
and inventory
arrangements
£m
Lease
Liabilities
£m
$1,184.0m 10.5%
First Lien Notes
£m
$335m 15%
Second Lien Notes
£m
Total
£m
134.0
103.4
852.5
222.4
1,312.3
(4.6)
–
(7.8)
–
(60.0)
75.7
–
3.3
–
–
–
12.3
0.9
(5.2)
145.3
(4.5)
(10.0)
–
–
–
–
–
(14.5)
0.7
2.2
3.5
4.5
–
–
(96.3)
–
(36.1)
–
–
–
(1.9)
(134.3)
113.5
–
–
103.5
(0.2)
–
(35.8)
–
(128.8)
(14.3)
–
–
–
(178.9)
42.7
–
–
(141.2)
(10.0)
(172.7)
(14.3)
(60.0)
75.7
(1.9)
(324.4)
156.9
2.2
3.5
82.8
203.1
–
–
0.7
(5.2)
99.8
935.0
169.0
1,349.1
29 SHARE-BASED PAYMENTS
Long-term incentive schemes
On 24 May 2023, Executive Directors and certain other employees were granted conditional share awards under the Company’s Long-Term Incentive Plan
(“2023 LTIP”). On 12 December 2023, additional employees were granted conditional share awards under an extension to the same plan. The total charge
recognised in the Consolidated Income Statement in relation to this scheme was £3.4m (2022: £nil).
On 13 and 14 June 2022, Executive Directors and certain other employees were granted conditional share awards under the Company’s Long-Term
Incentive Plan (“2022 LTIP”). On 15 December 2022, additional employees were granted conditional share awards under an extension to the same plan. The
total charge recognised in the Consolidated Income Statement in relation to this scheme was £1.6m (2022: £0.9m).
On 14 June 2021, Executive Directors and certain other employees were granted conditional share awards under the Company’s Long-Term Incentive Plan
(“2021 LTIP”). On 14 December 2021, additional employees were granted conditional share awards under an extension to the same plan. The total charge
recognised in the Consolidated Income Statement in relation to this scheme was £nil (2022: £0.4m).
Awards made under the 2020 LTIP lapsed during the year as the remaining qualifying criteria were not met.
The fair value of equity-settled share options and share awards granted is estimated at the date of grant using share option valuation models. The schemes
are valued using the Monte Carlo model.
The following tables list the inputs to the models for share based payment costs in the year:
Aggregate fair value at measurement date (£m)
Exercise price (p)
Expected volatility (%)
Dividend yield (%)
Risk free interest rate (%)
2023 grant
of 2023 LTIP
2022 grant
of 2022 LTIP
2021 grant
of 2021 LTIP
18.6
£nil
70.0%
N/A
4.25%
6.1
£nil
50.0%
N/A
2.16%
7.3
£nil
50.0%
N/A
0.15%
The expected volatility is wholly based on the historical volatility of the Company’s share price over a period from listing in 2018 to date.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
192
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Premium paid on the early redemption of Senior Secured Notes
Liabilities
At 1 January 2022
Changes from financing cash flows
Interest paid
Principal lease payment
Repayment of existing borrowings
Inventory repurchase repayment
Inventory repurchase drawdown
Transaction costs paid
Total changes from financing cash flows
Effect of changes in exchange rates
New leases under IFRS 16
Modifications to existing leases
Interest expense
Movement in accrued interest
29 SHARE-BASED PAYMENTS
Long-term incentive schemes
Other borrowings
and inventory
arrangements
Lease
$1,184.0m 10.5%
$335m 15%
Liabilities
First Lien Notes
Second Lien Notes
£m
852.5
£m
222.4
£m
134.0
(4.6)
(7.8)
(60.0)
75.7
–
–
–
–
–
–
12.3
0.9
(5.2)
145.3
£m
103.4
(4.5)
(10.0)
–
–
–
–
–
0.7
2.2
3.5
4.5
–
–
3.3
(14.5)
Total
£m
1,312.3
(141.2)
(10.0)
(172.7)
(14.3)
(60.0)
75.7
(1.9)
(324.4)
156.9
2.2
3.5
0.7
(5.2)
(96.3)
(35.8)
(36.1)
(128.8)
(14.3)
–
–
–
–
–
–
–
(1.9)
(134.3)
113.5
103.5
(0.2)
–
–
–
–
–
–
–
–
(178.9)
42.7
82.8
203.1
On 24 May 2023, Executive Directors and certain other employees were granted conditional share awards under the Company’s Long-Term Incentive Plan
(“2023 LTIP”). On 12 December 2023, additional employees were granted conditional share awards under an extension to the same plan. The total charge
recognised in the Consolidated Income Statement in relation to this scheme was £3.4m (2022: £nil).
On 13 and 14 June 2022, Executive Directors and certain other employees were granted conditional share awards under the Company’s Long-Term
Incentive Plan (“2022 LTIP”). On 15 December 2022, additional employees were granted conditional share awards under an extension to the same plan. The
total charge recognised in the Consolidated Income Statement in relation to this scheme was £1.6m (2022: £0.9m).
On 14 June 2021, Executive Directors and certain other employees were granted conditional share awards under the Company’s Long-Term Incentive Plan
(“2021 LTIP”). On 14 December 2021, additional employees were granted conditional share awards under an extension to the same plan. The total charge
recognised in the Consolidated Income Statement in relation to this scheme was £nil (2022: £0.4m).
Awards made under the 2020 LTIP lapsed during the year as the remaining qualifying criteria were not met.
The fair value of equity-settled share options and share awards granted is estimated at the date of grant using share option valuation models. The schemes
are valued using the Monte Carlo model.
The following tables list the inputs to the models for share based payment costs in the year:
Aggregate fair value at measurement date (£m)
Exercise price (p)
Expected volatility (%)
Dividend yield (%)
Risk free interest rate (%)
2023 grant
of 2023 LTIP
2022 grant
of 2022 LTIP
2021 grant
of 2021 LTIP
18.6
£nil
70.0%
N/A
4.25%
6.1
£nil
50.0%
N/A
2.16%
7.3
£nil
50.0%
N/A
0.15%
The expected volatility is wholly based on the historical volatility of the Company’s share price over a period from listing in 2018 to date.
28 ADDITIONAL CASH FLOW INFORMATION CONTINUED
Reconciliation of movements of select liabilities to cash flows arising from financing activities continued
29 SHARE-BASED PAYMENTS CONTINUED
Long-term incentive schemes continued
The following table details the outstanding options under the LTIP schemes:
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Options outstanding at 1 January
Granted
Forfeited
Adjustment for rights issue
Lapsed due to non-attainment of conditions
Options outstanding at 31 December
2023
Number
2022
Number
5,267,164
1,019,892
8,329,424
2,177,076
(499,228)
(139,533)
–
1,930,663
(413,234)
–
12,684,126
5,267,164
Free employee shares
On 19 May 2023, all UK employees of the Group were awarded up to 425 free shares in the Company under a Share Incentive Plan. A total of 1,017,505
shares were issued to the Aston Martin Employee Share Trust and immediately vested (see note 26). Employees must remain employed for a period of
three years to earn the shares, otherwise they are forfeited. Employees within the Group not domiciled in the UK were awarded 425 free options under the
LTIP rules. A total of 57,322 options were granted to these employees. Provided those employees remain employed by the Company for three years, the
nil-cost options will vest with no other performance conditions.
The following table details the outstanding shares under both the UK and non-UK scheme combined:
Financing expense in the Income Statement classified as operating cash flow
Balance at 31 December 2022
99.8
935.0
169.0
1,349.1
Awards/options outstanding at 1 January
Granted
Forfeited
Awards/options outstanding at 31 December
2023
Number
–
1,074,827
(50,411)
1,024,416
2022
Number
–
–
–
–
Other share-based payments
On 31 January 2022, the Group’s Defined Benefit Pension Scheme was closed to future accrual. As part of the closure cost, the affected employees were
each granted 185 shares incurring a share-based payment charge of £1.0m during the year ended 31 December 2022. A cash-settled share-based payment
charge is also recognised associated with the guaranteed future value of the shares awarded to the employees (note 5). In the year ended 31 December
2023, a total charge of £1.0m (2022: £1.0m) was recognised in the Consolidated Income Statement.
On 8 November 2022, a Group Director was granted 659,113 shares for nil consideration in relation to forfeited awards at a previous employer and
therefore securing his employment with the Group. The award is subject to clawback provisions for a period of 12 months from the award date. The total
cost incurred related to this award was £0.8m.
The total expense arising from equity-settled share-based payments is as follows:
2023 LTIP share option charge
2022 LTIP share option charge
2021 LTIP share option charge
2020 LTIP share option credit
Grant of shares upon closure of the Defined Benefit Pension Scheme (notes 5, 26)
Group Director buyout
Employee Share Incentive Plan
2023
£m
3.4
1.6
–
–
–
–
0.4
5.4
2022
£m
–
0.9
0.5
(1.4)
1.0
0.8
–
1.8
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
193
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 CAPITAL COMMITMENTS
On 27 October 2020, the Group announced that it had entered into an enhanced strategic cooperation arrangement (the “Strategic Cooperation
Agreement”) with one of its existing shareholders, MBAG. Under the Strategic Cooperation Agreement, the Group has agreed, over the period of time
between December 2020 and July 2024 and in several tranches, to issue 458,942,744 ordinary shares of £0.009039687 each (22,947,138 ordinary shares
of £0.10 each following the share consolidation in December 2020) to MBAG in exchange for access to certain technology and intellectual property to be
provided to the Group by MBAG in several stages.
The first tranche of 224,657,287 ordinary shares of £0.009039687 each (11,232,864 ordinary shares of £0.10 each following the share consolidation) was
issued to MBAG on 7 December 2020. A total of 11,714,274 ordinary shares remained unissued at 31 December 2022. During the year ended 31 December
2023 the Group agreed with MBAG that no further shares would be issued and no additional technology as part of the original agreement would be taken.
This announcement was concurrent with entering into an agreement with Lucid Group, Inc. for access to certain aspects of BEV technology (see note 12).
Property, plant and equipment expenditure contracts to the value of £37.3m (2022: £10.8m) have been committed but not provided for as at 31 December 2023.
Contracts to the value of £61.3m (2022: £51.4m) have been committed for the acquisition of intangible assets but not provided for as at 31 December 2023.
Certain contracts contain financial commitments, in particular purchase commitments and guarantees, which are of a magnitude typical for the industry.
31 RELATED PARTY TRANSACTIONS
Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and accordingly are not disclosed.
Transactions with Directors and related undertakings
Transactions during 2023
During the year ended 31 December 2023, a net marketing expense amounting to £19.4m of sponsorship has been incurred in the normal course of
business with AMR GP Limited (“AMR GP”), an entity indirectly controlled by a member of the Group’s Key Management Personnel (“KMP”). AMR GP
and its legal structure is separate to that of the Group and the Group does not have control or significant influence over AMR GP or its affiliates. £0.7m
remains due from AMR GP at 31 December 2023 relating to these transactions.
During the year ended 31 December 2023 the Group extended its sponsorship arrangements with AMR GP for a further period of five years commencing
in 2026. Amounts under this arrangement are due within each financial year from 2026. The Group also exercised its primary warrant option and subscribed
for reward shares under the terms of the original sponsorship arrangement giving the Group a minority stake in AMR GP Holdings Limited, the immediate
parent company of AMR GP limited. The Group paid nominal value for the shares of which £nil was outstanding at year end. Further detail is included in
notes 15 and 20. Under the terms of the sponsorship agreement the Group is required to provide one fleet vehicle to the two AMR GP racing drivers free of
charge. This arrangement is expected to continue for the life of the contract and is not expected to materially affect the financial position and performance
of the Group. One of the racing drivers is an immediate family member of one of the Group’s KMP. A separate immediate family member of one of the
Group's KMP incurred costs of less than £0.1m relating to the export and transport of a vehicle. The services were provided by a Group company. £nil was
outstanding at 31 December 2023.
In addition, the Group incurred costs of £8.5m associated with engineering design on two upcoming vehicle programmes from Aston Martin Performance
Technologies Limited (“AMPT”) of which £2.8m is outstanding to AMPT at 31 December 2023. AMPT is an associated entity of AMR GP.
During the year ended 31 December 2023, Classic Automobiles Inc. purchased a vehicle for £1.8m of which £nil was outstanding at 31 December 2023.
Classic Automobiles Inc. is controlled by a member of the Group’s KMP.
During the year ended 31 December 2023, a separate member of the Group’s KMP and Non-executive Director purchased a vehicle for £1.8m, having paid
a deposit to the Group in the first half of the year. £nil was outstanding at 31 December 2023.
On 26 June 2023, the Group announced a strategic supply arrangement with Lucid Group, Inc. (“Lucid”) for future access to powertrain components for
future BEV models. The arrangement is considered a Related Party Transaction owing to the substantial ownership of Lucid by the Public Investment Fund
(“PIF”). PIF are also a substantial shareholder of the Group and two members of the Group’s KMP & Non-executive Directors are members of PIF’s KMP. The
Group recognised an asset of £188.5m in relation to the supply agreement. The agreement is part-settled in equity, which was issued to Lucid in November
2023. An outstanding cash liability of £71.7m relating to the supply arrangement remains at 31 December 2023, all of which is due in more than one year.
The supply arrangements, commit to an effective future minimum spend with Lucid on powertrain components of £177.0m.
During the year ended 31 December 2023, the Group incurred costs of £2.0m for design and engineering work from Pininfarina S.p.A. A member of the
Group’s KMP and Non-executive Director is also a member of Pininfarina S.p.A’s KMP. As of 19 May 2023 the individual ceased to be a member of the
Group’s KMP and therefore any future spend under the contract will not be disclosed as a related party transaction. £nil is outstanding as at 31 December
2023.
During the year ended 31 December 2023, the Group incurred a rental expense of £1.2m from Michael Kors (USA), Inc., a Company which is owned by
Capri Holdings Limited. A member of the Group’s KMP and Non-executive Director is also a member of Michael Kors (USA), Inc.’s KMP.
During the year ended 31 December 2023, the Group incurred consultancy costs of £0.2m from a member of the Group’s KMP and Non-executive Director in
relation to the oversight of two significant legal claims which the Group has been party to. £0.1m was outstanding as at 31 December 2023. Owing to the unique
experience of the individual involved and the specifics of the legal claims, no detailed market price assessment was performed when engaging this service.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
194
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
30 CAPITAL COMMITMENTS
On 27 October 2020, the Group announced that it had entered into an enhanced strategic cooperation arrangement (the “Strategic Cooperation
Agreement”) with one of its existing shareholders, MBAG. Under the Strategic Cooperation Agreement, the Group has agreed, over the period of time
between December 2020 and July 2024 and in several tranches, to issue 458,942,744 ordinary shares of £0.009039687 each (22,947,138 ordinary shares
of £0.10 each following the share consolidation in December 2020) to MBAG in exchange for access to certain technology and intellectual property to be
provided to the Group by MBAG in several stages.
The first tranche of 224,657,287 ordinary shares of £0.009039687 each (11,232,864 ordinary shares of £0.10 each following the share consolidation) was
issued to MBAG on 7 December 2020. A total of 11,714,274 ordinary shares remained unissued at 31 December 2022. During the year ended 31 December
2023 the Group agreed with MBAG that no further shares would be issued and no additional technology as part of the original agreement would be taken.
This announcement was concurrent with entering into an agreement with Lucid Group, Inc. for access to certain aspects of BEV technology (see note 12).
Property, plant and equipment expenditure contracts to the value of £37.3m (2022: £10.8m) have been committed but not provided for as at 31 December 2023.
Contracts to the value of £61.3m (2022: £51.4m) have been committed for the acquisition of intangible assets but not provided for as at 31 December 2023.
Certain contracts contain financial commitments, in particular purchase commitments and guarantees, which are of a magnitude typical for the industry.
Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and accordingly are not disclosed.
31 RELATED PARTY TRANSACTIONS
Transactions with Directors and related undertakings
Transactions during 2023
During the year ended 31 December 2023, a net marketing expense amounting to £19.4m of sponsorship has been incurred in the normal course of
business with AMR GP Limited (“AMR GP”), an entity indirectly controlled by a member of the Group’s Key Management Personnel (“KMP”). AMR GP
and its legal structure is separate to that of the Group and the Group does not have control or significant influence over AMR GP or its affiliates. £0.7m
remains due from AMR GP at 31 December 2023 relating to these transactions.
During the year ended 31 December 2023 the Group extended its sponsorship arrangements with AMR GP for a further period of five years commencing
in 2026. Amounts under this arrangement are due within each financial year from 2026. The Group also exercised its primary warrant option and subscribed
for reward shares under the terms of the original sponsorship arrangement giving the Group a minority stake in AMR GP Holdings Limited, the immediate
parent company of AMR GP limited. The Group paid nominal value for the shares of which £nil was outstanding at year end. Further detail is included in
notes 15 and 20. Under the terms of the sponsorship agreement the Group is required to provide one fleet vehicle to the two AMR GP racing drivers free of
charge. This arrangement is expected to continue for the life of the contract and is not expected to materially affect the financial position and performance
of the Group. One of the racing drivers is an immediate family member of one of the Group’s KMP. A separate immediate family member of one of the
Group's KMP incurred costs of less than £0.1m relating to the export and transport of a vehicle. The services were provided by a Group company. £nil was
outstanding at 31 December 2023.
In addition, the Group incurred costs of £8.5m associated with engineering design on two upcoming vehicle programmes from Aston Martin Performance
Technologies Limited (“AMPT”) of which £2.8m is outstanding to AMPT at 31 December 2023. AMPT is an associated entity of AMR GP.
During the year ended 31 December 2023, Classic Automobiles Inc. purchased a vehicle for £1.8m of which £nil was outstanding at 31 December 2023.
Classic Automobiles Inc. is controlled by a member of the Group’s KMP.
During the year ended 31 December 2023, a separate member of the Group’s KMP and Non-executive Director purchased a vehicle for £1.8m, having paid
a deposit to the Group in the first half of the year. £nil was outstanding at 31 December 2023.
On 26 June 2023, the Group announced a strategic supply arrangement with Lucid Group, Inc. (“Lucid”) for future access to powertrain components for
future BEV models. The arrangement is considered a Related Party Transaction owing to the substantial ownership of Lucid by the Public Investment Fund
(“PIF”). PIF are also a substantial shareholder of the Group and two members of the Group’s KMP & Non-executive Directors are members of PIF’s KMP. The
Group recognised an asset of £188.5m in relation to the supply agreement. The agreement is part-settled in equity, which was issued to Lucid in November
2023. An outstanding cash liability of £71.7m relating to the supply arrangement remains at 31 December 2023, all of which is due in more than one year.
The supply arrangements, commit to an effective future minimum spend with Lucid on powertrain components of £177.0m.
During the year ended 31 December 2023, the Group incurred costs of £2.0m for design and engineering work from Pininfarina S.p.A. A member of the
Group’s KMP and Non-executive Director is also a member of Pininfarina S.p.A’s KMP. As of 19 May 2023 the individual ceased to be a member of the
Group’s KMP and therefore any future spend under the contract will not be disclosed as a related party transaction. £nil is outstanding as at 31 December
2023.
During the year ended 31 December 2023, the Group incurred a rental expense of £1.2m from Michael Kors (USA), Inc., a Company which is owned by
Capri Holdings Limited. A member of the Group’s KMP and Non-executive Director is also a member of Michael Kors (USA), Inc.’s KMP.
During the year ended 31 December 2023, the Group incurred consultancy costs of £0.2m from a member of the Group’s KMP and Non-executive Director in
relation to the oversight of two significant legal claims which the Group has been party to. £0.1m was outstanding as at 31 December 2023. Owing to the unique
experience of the individual involved and the specifics of the legal claims, no detailed market price assessment was performed when engaging this service.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31 RELATED PARTY TRANSACTIONS CONTINUED
Transactions with Directors and related undertakings continued
Transactions during 2023 continued
During the year ended 31 December 2023, an immediate family member of the Group’s KMP & Non-executive Director provided event services at the
opening of Q New York totalling less than £0.1m of expense. £nil was outstanding at 31 December 2023. No detailed market price assessment was
performed when engaging this service.
Transactions during 2022
During the year ended 31 December 2022, a net marketing expense amounting to £20.2m of sponsorship has been incurred in the normal course of
business with AMR GP Limited (“AMR GP”), an entity indirectly controlled by a member of the Group’s Key Management Personnel (“KMP”). AMR GP
and its legal structure is separate to that of the Group and the Group does not have control or significant influence over AMR GP or its affiliates. In addition,
the Group incurred costs of £2.0m associated with engineering design on an upcoming vehicle programme from Aston Martin Performance Technologies
Limited (“AMPT”) of which £2.0m is outstanding to AMPT at 31 December 2022. AMPT is an associated entity of AMR GP. In addition, AMR GP acquired a
vehicle from the Group at a total cost of £0.7m. Less than £0.1m remains due from AMR GP at 31 December 2022 relating to these transactions. Under the
terms of the sponsorship agreement the Group is required to provide one fleet vehicle to the two AMR GP racing drivers free of charge. This arrangement
is expected to continue for the life of the contract and is not expected to materially affect the financial position and performance of the Group. One of the
racing drivers is an immediate family member of one of the Group’s KMP. A separate immediate family member of one of the Group’s KMP purchased two
vehicles from a Group company for £0.4m. £nil is outstanding at 31 December 2022. During the year ended 31 December 2022, Classic Automobiles Inc.
placed a deposit of £0.5m with a Group company for the future purchase of a Group vehicle. Classic Automobiles Inc. is controlled by a member of the
Group’s KMP.
During the year ended 31 December 2022, a separate member of the Group’s KMP and Non-executive Director placed a deposit of £1.5m with a Group
company for the future purchase of a vehicle.
During the year ended 31 December 2022, a further separate member of the Group’s KMP and Non-executive Director transacted with a Group company
to undertake service work on a vehicle for a total cost of less than £0.1m. £nil was outstanding at 31 December 2022.
During the year ended 31 December 2022, the Group incurred costs of £1.3m for design and engineering work from Pininfarina S.p.A. A member of the
Group’s KMP and Non-executive Director is also a member of Pininfarina S.p.A’s KMP.
During the year ended 31 December 2022, the Group incurred a rental expense of £0.7m from Michael Kors (USA), Inc., a Company which is owned by
Capri Holdings Limited. A member of the Group’s KMP and Non-executive Director is also a member of Michael Kors (USA), Inc.’s KMP.
Terms and conditions of transactions with related parties
Sales and purchases between related parties were made at normal market prices unless otherwise stated. Outstanding balances with entities other
than subsidiaries are unsecured and interest free and cash settlement is expected within 60 days of invoice. Terms and conditions for transactions with
subsidiaries are the same, with the exception that balances are placed on inter-company accounts. The Group has not provided or benefited from any
guarantees for any related party receivables or payables.
32 CONTINGENT LIABILITIES
In the normal course of the Group’s business, claims, disputes, and legal proceedings involving customers, dealers, suppliers, employees or others are
pending or may be brought against Group entities arising out of current or past operations. There is presently a dispute between the Group and the other
shareholders of one of its subsidiary entities, which is ongoing and from which a future obligation may arise. The Group denies the claims made and is
working to resolve the matter.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
195
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
33 GROUP COMPANIES
In accordance with Section 409 of the Companies Act 2006, a full list of entities in which the Group has an interest of greater than or equal to 20%, the
registered office and effective percentage of equity owned as at 31 December 2023 are disclosed below.
Investments in subsidiary undertakings
Subsidiary undertakings
Holding
Proportion of
voting rights
and shares held
Nature of business
Aston Martin Holdings (UK) Limited*
Ordinary
100%
Dormant company
Aston Martin Capital Holdings Limited**◊
Ordinary
100%
Financing company holding the Senior Secured Notes
Aston Martin Investments Limited**
Aston Martin Capital Limited**◊
Ordinary
100%
Holding company
Ordinary
100%
Dormant company – financing company that held Senior
Secured Notes that were repaid in 2017
Aston Martin Lagonda Group Limited**
Ordinary
100%
Holding company
Aston Martin Lagonda of North America Incorporated**^
Ordinary
100%
Luxury sports car distributor
Lagonda Properties Limited**
Ordinary
100%
Dormant company
Aston Martin Lagonda Pension Trustees Limited**
Ordinary
100%
Aston Martin Lagonda Limited**
Ordinary
100%
Trustee of the Aston Martin Lagonda Limited
Pension Scheme
Manufacture and sale of luxury sports cars, the sale of
parts, brand licensing and motorsport activities
AM Brands Limited**◊
Ordinary
100%
Non-trading company
Aston Martin Lagonda of Europe GmbH**>
Ordinary
100%
Provision of engineering and sales and marketing services
AML Overseas Services Limited**
Ordinary
100%
Dormant company
Aston Martin Lagonda (China) Automobile Distribution Co., Ltd**√
Ordinary
100%
Luxury sports car distributor
AM Nurburgring Racing Limited**
Aston Martin Japan GK**<<
Ordinary
100%
Dormant company
Ordinary
100%
Operator of the sales office in Japan and certain other
countries in the Asia Pacific region
Operator of the sales function in Singapore and certain
other countries in the Asia Pacific region
Aston Martin Lagonda – Asia Pacific PTE Limited**>>
Ordinary
100%
AMWS Limited**◊
Aston Martin Works Limited**
Ordinary
50%***
Holding company
Ordinary
50%***
Sale, servicing and restoration of Aston Martin cars
All subsidiaries are incorporated in England and Wales unless otherwise stated.
Incorporated in Jersey (tax resident in the UK)
Incorporated in the USA
Incorporated in Germany
◊
^
>
<< Incorporated in Japan
>> Incorporated in Singapore
√
* Held directly by Aston Martin Lagonda Global Holdings plc
** Held indirectly by Aston Martin Lagonda Global Holdings plc
*** The Group exercises management control of these legal entities and therefore the results, assets and liabilities have been wholly included in the Consolidated Financial Statements.
Incorporated in the People’s Republic of China
The individual results, aggregate assets and aggregate liabilities included within the Consolidated Financial Statements are summarised on pages 142-146.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
196
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
33 GROUP COMPANIES
33 GROUP COMPANIES CONTINUED
In accordance with Section 409 of the Companies Act 2006, a full list of entities in which the Group has an interest of greater than or equal to 20%, the
registered office and effective percentage of equity owned as at 31 December 2023 are disclosed below.
Investments in subsidiary undertakings
Subsidiary undertakings
Holding
and shares held
Nature of business
Aston Martin Holdings (UK) Limited*
Ordinary
100%
Dormant company
Proportion of
voting rights
Aston Martin Capital Holdings Limited**◊
Ordinary
100%
Financing company holding the Senior Secured Notes
Aston Martin Investments Limited**
Aston Martin Capital Limited**◊
Ordinary
100%
Holding company
Ordinary
100%
Dormant company – financing company that held Senior
Secured Notes that were repaid in 2017
Aston Martin Lagonda Group Limited**
Ordinary
100%
Holding company
Aston Martin Lagonda of North America Incorporated**^
Ordinary
100%
Luxury sports car distributor
Lagonda Properties Limited**
Ordinary
100%
Dormant company
Aston Martin Lagonda Pension Trustees Limited**
Ordinary
100%
Trustee of the Aston Martin Lagonda Limited
Pension Scheme
Aston Martin Lagonda Limited**
Ordinary
100%
Manufacture and sale of luxury sports cars, the sale of
Total assets
Total liabilities
Net assets
Revenue
Profit before tax
Group’s share of profit
Registered addresses
Aston Martin Holdings (UK) Limited
Aston Martin Capital Holdings Limited
Aston Martin Investments Limited
Aston Martin Capital Limited
Aston Martin Lagonda Group Limited
Aston Martin
Works Limited
2023
£m
AMWS Limited
2023
£m
Aston Martin
Works Limited
2022
£m
AMWS Limited
2022
£m
45.3
(4.1)
41.2
42.0
2.5
1.3
–
–
–
–
–
–
42.5
(3.8)
38.7
40.6
1.7
0.9
–
–
–
–
–
–
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
28 Esplanade, St Helier, JE2 3QA, Jersey
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
28 Esplanade, St Helier, JE2 3QA, Jersey
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
AM Brands Limited**◊
Ordinary
100%
Non-trading company
Lagonda Properties Limited
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
Aston Martin Lagonda of Europe GmbH**>
Ordinary
100%
Provision of engineering and sales and marketing services
Aston Martin Lagonda Pension Trustees Limited
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
parts, brand licensing and motorsport activities
Aston Martin Lagonda of North America Incorporated
Floor 22, 11 West 42nd Street, New York, NY, 10036-8002, United States of America
AML Overseas Services Limited**
Ordinary
100%
Dormant company
Aston Martin Lagonda (China) Automobile Distribution Co., Ltd**√
Ordinary
100%
Luxury sports car distributor
Aston Martin Lagonda – Asia Pacific PTE Limited**>>
Ordinary
100%
Operator of the sales function in Singapore and certain
AM Nurburgring Racing Limited**
Aston Martin Japan GK**<<
AMWS Limited**◊
Aston Martin Works Limited**
Ordinary
100%
Dormant company
Ordinary
100%
Operator of the sales office in Japan and certain other
countries in the Asia Pacific region
other countries in the Asia Pacific region
Ordinary
50%***
Holding company
Ordinary
50%***
Sale, servicing and restoration of Aston Martin cars
All subsidiaries are incorporated in England and Wales unless otherwise stated.
Incorporated in Jersey (tax resident in the UK)
◊
^
>
Incorporated in the USA
Incorporated in Germany
<< Incorporated in Japan
>> Incorporated in Singapore
√
Incorporated in the People’s Republic of China
* Held directly by Aston Martin Lagonda Global Holdings plc
** Held indirectly by Aston Martin Lagonda Global Holdings plc
*** The Group exercises management control of these legal entities and therefore the results, assets and liabilities have been wholly included in the Consolidated Financial Statements.
The individual results, aggregate assets and aggregate liabilities included within the Consolidated Financial Statements are summarised on pages 142-146.
Aston Martin Lagonda Limited
AM Brands Limited
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
28 Esplanade, St Helier,JE2 3QA, Jersey
Aston Martin Lagonda of Europe GmbH
Gottlieb-Daimler-Strasse 30, 53520 Meuspath, Germany
AML Overseas Services Limited
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
Aston Martin Lagonda (China) Automobile Distribution Co., Ltd
AM Nurburgring Racing Limited
Aston Martin Japan GK
Aston Martin Lagonda – Asia Pacific PTE Limited
AMWS Limited
Aston Martin Works Limited
Unit 2901, Raffles City Office Tower, No. 268 Xi Zang Middle Road, Huangpu District,
Shanghai, China 200001
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
1-2-3 Kita-Aoyama, Minato-ku, Tokyo 107-0061, Japan
Baker & McKenzie Singapore – 8 Marina Boulevard, #05-02 Marina Bay Financial
Centre, Singapore 018981
28 Esplanade, St Helier, JE2 3QA, Jersey
Banbury Road, Gaydon, Warwickshire, CV35 0DB, England
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
197
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
34 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 profit/(loss) before tax and adjusting items as shown in the Consolidated Income Statement.
ii) Adjusted EBIT is operating profit/(loss) before adjusting items.
iii) Adjusted EBITDA removes depreciation, profit/(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 profit/(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 inflow/(outflow) from operating activities less the cash used in investing activities (excluding interest received)
plus interest paid in the year less interest received.
Consolidated Income Statement
Loss before tax
Adjusting operating expenses (note 5)
Adjusting finance income (notes 5, 7)
Adjusting finance expense (notes 5, 8)
Adjusted loss before tax (EBT)
Adjusted finance income (note 7)
Adjusted finance expense (note 8)
Adjusted operating loss (EBIT)
Adjusted operating margin
Reported depreciation
Reported amortisation
Adjusted EBITDA
Adjusted EBITDA margin
2023
£m
2022
£m
(239.8)
(495.0)
31.5
–
36.5
(171.8)
(74.3)
166.4
(79.7)
(4.9%)
102.2
283.4
305.9
18.7%
23.9
(12.5)
32.6
(451.0)
(3.0)
336.1
(117.9)
(8.5%)
88.8
219.3
190.2
13.8%
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
198
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
34 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 profit/(loss) before tax and adjusting items as shown in the Consolidated Income Statement.
ii) Adjusted EBIT is operating profit/(loss) before adjusting items.
iii) Adjusted EBITDA removes depreciation, profit/(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 profit/(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 inflow/(outflow) from operating activities less the cash used in investing activities (excluding interest received)
plus interest paid in the year less interest received.
Consolidated Income Statement
Loss before tax
Adjusting operating expenses (note 5)
Adjusting finance income (notes 5, 7)
Adjusting finance expense (notes 5, 8)
Adjusted loss before tax (EBT)
Adjusted finance income (note 7)
Adjusted finance expense (note 8)
Adjusted operating loss (EBIT)
Adjusted operating margin
Reported depreciation
Reported amortisation
Adjusted EBITDA
Adjusted EBITDA margin
(239.8)
(495.0)
2023
£m
31.5
–
36.5
(171.8)
(74.3)
166.4
(79.7)
(4.9%)
102.2
283.4
305.9
18.7%
2022
£m
23.9
(12.5)
32.6
(451.0)
(3.0)
336.1
(117.9)
(8.5%)
88.8
219.3
190.2
13.8%
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
34 ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Earnings per share
Adjusted earnings per ordinary share
Loss available for equity holders (£m)
Adjusting items (note 5)
Adjusting items before tax (£m)
Tax on adjusting items (£m)
Adjusted loss (£m)
Basic weighted average number of ordinary shares (million)
Adjusted loss per ordinary share (pence)
Adjusted diluted earnings per ordinary share
Adjusted loss (£m)
Diluted weighted average number of ordinary shares (million)
Adjusted diluted loss per ordinary share (pence)
Net debt
Opening cash and cash equivalents
Cash inflow from operating activities
Cash outflow from investing activities
Cash inflow from financing activities
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at 31 December
Cash held not available for short-term use
Borrowings
Lease liabilities
Inventory repurchase arrangement
Net debt
Adjusted EBITDA
Adjusted leverage
Free cash flow
Net cash inflow from operating activities
Cash used in investing activities (excluding interest received)
Interest paid less interest received
Free cash flow
2023
£m
2022
£m
(228.1)
(528.6)
68.0
–
(160.1)
748.2
(21.4p)
(160.1)
748.2
(21.4p)
2023
£m
583.3
145.9
(383.4)
59.7
(13.1)
392.4
–
44.0
–
(484.6)
424.7
(114.1p)
(484.6)
424.7
(114.1p)
2022
£m
418.9
127.1
(284.7)
315.0
7.0
583.3
0.3
(1,069.7)
(1,211.1)
(97.3)
(39.7)
(814.3)
305.9
2.7x
2023
£m
145.9
(396.9)
(109.0)
(360.0)
(99.8)
(38.2)
(765.5)
190.2
4.0x
2022
£m
127.1
(286.9)
(139.0)
(298.8)
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
199
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
Parent Company Statement of Financial Position
as at 31 December 2023
Non-current assets
Investments
Debtors: amounts falling due after one year
Current assets
Debtors: amounts falling due within one year
Total assets
Current liabilities
Creditors: amounts falling due within one year
Net assets
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Capital reserve
Merger reserve
Retained earnings
Shareholder equity
* Details of the restatement are presented in note 1.
Notes
31 December 2023
£m
31 December
2022 (restated*)
£m
1 January 2022
(restated*)
£m
3
4
4
5
6
6
6
6
1,051.5
1,699.7
497.3
1,382.1
957.4
749.7
–
0.3
–
2,751.2
1,879.7
1,707.1
(212.8)
2,538.4
(213.5)
1,666.2
(219.1)
1,488.0
82.4
2,094.5
9.3
2.0
143.9
206.3
2,538.4
69.9
11.6
1,697.4
1,123.4
9.3
2.0
143.9
(256.3)
1,666.2
9.3
2.0
143.9
197.8
1,488.0
The Financial Statements were approved by the Board of Directors on 27 February 2024 and were signed on its behalf by
A M E D E O F E L I S A
C H I E F E X E C U T I V E O F F I C E R
Company Number: 11488166
D O U G L A F F E R T Y
C H I E F F I N A N C I A L O F F I C E R
The profit on ordinary activities after taxation amounts to £438.7m (2022 (restated): loss of £454.1m).
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
200
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
PARENT COMPANY FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
Parent Company Statement of Financial Position
as at 31 December 2023
Parent Company Statement of Changes in Equity
for the year ended 31 December 2023
31 December 2023
2022 (restated*)
(restated*)
Notes
£m
£m
£m
31 December
1 January 2022
3
4
4
5
6
6
6
6
1,051.5
1,699.7
497.3
1,382.1
957.4
749.7
–
0.3
–
2,751.2
1,879.7
1,707.1
(212.8)
2,538.4
(213.5)
1,666.2
(219.1)
1,488.0
82.4
2,094.5
9.3
2.0
143.9
206.3
2,538.4
69.9
11.6
1,697.4
1,123.4
9.3
2.0
143.9
(256.3)
1,666.2
9.3
2.0
143.9
197.8
1,488.0
Non-current assets
Investments
Debtors: amounts falling due after one year
Debtors: amounts falling due within one year
Creditors: amounts falling due within one year
Current assets
Total assets
Current liabilities
Net assets
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Capital reserve
Merger reserve
Retained earnings
Shareholder equity
* Details of the restatement are presented in note 1.
A M E D E O F E L I S A
C H I E F E X E C U T I V E O F F I C E R
Company Number: 11488166
The Financial Statements were approved by the Board of Directors on 27 February 2024 and were signed on its behalf by
D O U G L A F F E R T Y
C H I E F F I N A N C I A L O F F I C E R
The profit on ordinary activities after taxation amounts to £438.7m (2022 (restated): loss of £454.1m).
Company
At 1 January 2023
Total comprehensive income
for the year
Profit for the year
Total comprehensive income
for the year
Transactions with owners recorded
directly in equity
Issuance of new shares
Issuance of new shares to SIP
Warrant options exercised
Group share based payment cost
Total transactions with owners
Share
capital
£m
69.9
Share
premium
£m
1,697.4
Capital
redemption
reserve
£m
9.3
Capital
reserve
£m
2.0
Merger
reserve
£m
143.9
Retained
earnings
£m
Total
equity
£m
(256.3)
1,666.2
–
–
11.5
0.1
0.9
–
12.5
383.0
–
14.1
–
397.1
–
–
–
–
–
–
–
–
–
–
–
–
–
438.7
438.7
438.7
438.7
–
–
–
–
–
–
(0.1)
18.6
5.4
23.9
394.5
–
33.6
5.4
433.5
At 31 December 2023
82.4
2,094.5
9.3
2.0
143.9
206.3
2,538.4
Company
At 1 January 2022 (restated*)
Total comprehensive income
for the year
Loss for the year (restated*)
Total comprehensive income
for the year
Transactions with owners recorded
directly in equity
Issuance of new shares
Total transactions with owners
Share
capital
£m
11.6
Share
premium
£m
1,123.4
Capital
redemption
reserve
£m
9.3
Capital
reserve
£m
2.0
Merger
reserve
£m
143.9
Retained
earnings
£m
197.8
Total
equity
£m
1,488
–
–
–
–
58.3
58.3
574.0
574.0
–
–
–
–
–
–
–
–
–
–
–
–
(454.1)
(454.1)
(454.1)
(454.1)
–
–
632.3
632.3
At 31 December 2022 (restated*)
69.9
1,697.4
9.3
2.0
143.9
(256.3)
1,666.2
*Details of the restatement are presented in note 1.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
201
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
Authorisation of Financial Statements and statement of compliance with
FRS 101
The Parent Company Financial Statements of Aston Martin Lagonda Global
Holdings plc (the “Company”) for the year were authorised for issue by the
Board of Directors on 27 February 2024 and the Statement of Financial
Position was signed on the Board’s behalf by Amedeo Felisa and Doug
Lafferty. The Company is a public limited company incorporated and
domiciled in the UK. The Company’s ordinary shares are traded on
the London Stock Exchange and it is not under the control of any
single shareholder.
An overview of the business activities of Aston Martin Lagonda Global
Holdings plc, including a review of the key business risks that the Group
faces, is given in the Strategic Report on pages 2-70. The debt facilities
available to the Group and the maturity profile of this debt are shown in
note 23 to the Group Financial Statements.
Going concern
The Group meets its day-to-day working capital requirements and medium
term funding requirements through a mixture of $1,143.7m First Lien notes
at 10.5% which mature in November 2025, $121.7m of Second Lien split
coupon notes at 15% per annum (8.89 % cash and 6.11% Payment in Kind)
which mature in November 2026, a Revolving Credit Facility (£99.6m) which
matures August 2025, facilities to finance inventory, a bilateral RCF facility
and a wholesale vehicle financing facility (as described in note 18 of the
Group Financial Statements). As previously announced, the Group expects
to refinance the outstanding debt during the first half of 2024, however, the
going concern assessment is not dependent on this occurring. Under the
RCF the Group is required to comply with a leverage covenant tested
quarterly. Leverage is calculated as the ratio of adjusted EBITDA to net debt,
after certain accounting adjustments are made. Of these adjustments, the
most significant is to account for lease liabilities under “frozen GAAP”, i.e.
under IAS17 rather than IFRS 16. Details of this adjustment are included in
note 16 of the Group Financial Statements. The Group has complied with its
covenant requirements for the year ended 31 December 2023 and expects
to do so for the Going Concern period.
The amounts outstanding on all the borrowings are shown in note 23 of the
Group Financial Statements.
The Directors have developed trading and cash flow forecasts for the period
from the date of approval of these Financial Statements through 30 June
2025 (the going concern review period). These forecasts show that the
Group has sufficient financial resources to meet its obligations as they fall
due, including repayment of the current RCF were it needing to be repaid on
30 June 2025 and to comply with covenants for the going concern review
period. The forecasts reflect the Group’s 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 that 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 15% reduction in DBX volumes and
a 10% reduction in sports volumes from forecast levels covering, although
not exclusively, instances of reduced volume due to delayed product
launches, 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 more
than 15% 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.
The Parent Company Financial Statements are presented in sterling.
These Financial Statements have been prepared in accordance with
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS
101”). No Income Statement is presented for the Company as permitted
by Section 408 of the Companies Act 2006. There were no gains or losses
in the year (2022: £nil) in Other Comprehensive Income. The fee relating to
the audit of these Financial Statements of £0.3m was borne by the Company
(2022: £0.3m).
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
202
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
1 ACCOUNTING POLICIES
The nature of the Group's business is such that there can be variation in the
Authorisation of Financial Statements and statement of compliance with
timing of cash flows around the development and launch of new models. In
FRS 101
addition, the availability of funds provided through the vehicle wholesale
The Parent Company Financial Statements of Aston Martin Lagonda Global
finance facility changes as the availability of credit insurance and sales
Holdings plc (the “Company”) for the year were authorised for issue by the
volumes vary, in total and seasonally. The forecasts take into account these
Board of Directors on 27 February 2024 and the Statement of Financial
factors to the extent that the Directors consider them to represent their best
Position was signed on the Board’s behalf by Amedeo Felisa and Doug
estimate of the future based on the information that is available to them at
Lafferty. The Company is a public limited company incorporated and
the time of approval of these Financial Statements.
domiciled in the UK. The Company’s ordinary shares are traded on
the London Stock Exchange and it is not under the control of any
single shareholder.
The Directors have considered a severe but plausible downside scenario that
includes considering the impact of a 15% reduction in DBX volumes and
a 10% reduction in sports volumes from forecast levels covering, although
An overview of the business activities of Aston Martin Lagonda Global
not exclusively, instances of reduced volume due to delayed product
Holdings plc, including a review of the key business risks that the Group
launches, operating costs higher than the base plan, incremental working
faces, is given in the Strategic Report on pages 2-70. The debt facilities
capital requirements such as a reduced deposit inflows or increased deposit
available to the Group and the maturity profile of this debt are shown in
outflows and the impact of the strengthening of the sterling dollar exchange
note 23 to the Group Financial Statements.
rate.
1 ACCOUNTING POLICIES CONTINUED
Basis of preparation
The Parent Company Financial Statements have been prepared in
accordance with FRS 101, as applied in accordance with the provisions of
the Companies Act 2006. FRS 101 sets out a reduced disclosure framework
for a ‘qualifying entity’ as defined in the standard which addresses the
financial reporting requirements and disclosure exemptions in the individual
Financial Statements of qualifying entities that otherwise apply this
recognition, measurement and disclosure requirements of UK adopted IFRS.
FRS 101 sets out amendments to UK adopted IFRS that are necessary to
achieve compliance with the Companies Act and related Regulations. The
following disclosures have not been included as permitted by FRS 101:
– A Cash Flow Statement and related notes as required by IAS 7 ‘Statement
of Cash Flows’.
– Disclosures in respect of transactions with wholly-owned subsidiaries as
required by IAS 24 ‘Related Party Disclosures’.
Going concern
The Group plans to make continued investment for growth in the period
– Disclosures in respect of capital management as required by paragraphs
The Group meets its day-to-day working capital requirements and medium
and, accordingly, funds generated through operations are expected to be
134 to 136 of IAS 1 ‘Presentation of Financial Statements’.
term funding requirements through a mixture of $1,143.7m First Lien notes
reinvested in the business mainly through new model development and
at 10.5% which mature in November 2025, $121.7m of Second Lien split
other capital expenditure. To a certain extent, such expenditure is
coupon notes at 15% per annum (8.89 % cash and 6.11% Payment in Kind)
discretionary and, in the event of risks occurring which could have a
which mature in November 2026, a Revolving Credit Facility (£99.6m) which
particularly severe effect on the Group, as identified in the severe but
matures August 2025, facilities to finance inventory, a bilateral RCF facility
plausible downside scenario, actions such as constraining capital spending,
and a wholesale vehicle financing facility (as described in note 18 of the
working capital improvements, reduction in marketing expenditure and the
– The effects of new but not yet effective IFRSs as required by paragraphs
30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates
and Errors’.
– Disclosures in respect of the compensation of key management
personnel as required by paragraph 17 of IAS 24 ‘Related
Party Disclosures’.
Group Financial Statements). As previously announced, the Group expects
continuation of strict and immediate expense control would be taken to
– The requirements of paragraphs 88C and 88D of IAS 12 Income Taxes in
to refinance the outstanding debt during the first half of 2024, however, the
safeguard the Group’s financial position.
respect of the impact of Pillar Two legislation.
going concern assessment is not dependent on this occurring. Under the
RCF the Group is required to comply with a leverage covenant tested
quarterly. Leverage is calculated as the ratio of adjusted EBITDA to net debt,
after certain accounting adjustments are made. Of these adjustments, the
most significant is to account for lease liabilities under “frozen GAAP”, i.e.
under IAS17 rather than IFRS 16. Details of this adjustment are included in
note 16 of the Group Financial Statements. The Group has complied with its
covenant requirements for the year ended 31 December 2023 and expects
to do so for the Going Concern period.
The amounts outstanding on all the borrowings are shown in note 23 of the
Group Financial Statements.
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 more
than 15% 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
The Directors have developed trading and cash flow forecasts for the period
operational existence for the foreseeable future and to comply with its
from the date of approval of these Financial Statements through 30 June
financial covenants, therefore, the Directors continue to adopt the going
2025 (the going concern review period). These forecasts show that the
concern basis in preparing the Financial Statements.
Group has sufficient financial resources to meet its obligations as they fall
due, including repayment of the current RCF were it needing to be repaid on
The Parent Company Financial Statements are presented in sterling.
30 June 2025 and to comply with covenants for the going concern review
These Financial Statements have been prepared in accordance with
period. The forecasts reflect the Group’s ultra-luxury performance-oriented
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS
strategy, balancing supply and demand and the actions taken to improve
101”). No Income Statement is presented for the Company as permitted
cost efficiency and gross margin. The forecasts include the costs of the
by Section 408 of the Companies Act 2006. There were no gains or losses
Group's environmental, social and governance (“ESG”) commitments and
in the year (2022: £nil) in Other Comprehensive Income. The fee relating to
make assumptions in respect of future market conditions and, in particular,
the audit of these Financial Statements of £0.3m was borne by the Company
wholesale volumes, average selling price, the launch of new models, and
(2022: £0.3m).
future operating costs.
As the Financial Statements of the Group include the equivalent disclosures,
the Company has also taken the exemptions under FRS 101 available in
respect of the following disclosures:
– The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 ‘Share-
based Payment’ in respect of group-settled shared based payments.
– The requirements of paragraphs 91 to 99 of IFRS 13 ‘Fair Value
Measurement’ and the disclosures required by IFRS 7 ‘Financial
Instruments: Disclosures’.
The accounting policies set out herein have, unless otherwise stated, been
applied consistently to all periods presented in these Financial Statements.
Investments
The Company recognises investments in subsidiaries at cost less impairment in
its individual Financial Statements. The Company assesses at each reporting
date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required,
the Company makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s fair
value less costs to sell and its value-in-use and is determined for an individual
asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount.
In assessing value-in-use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses on continuing operations are recognised in the Income
Statement in those expense categories consistent with the function of the
impaired asset.
Where an impairment loss subsequently reverses, the carrying amount of
the asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (or cash-generating unit)
in prior periods. A reversal of an impairment loss is recognised as
income immediately.
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 the conclusions reached.
Climate change considerations have been factored into the Directors’
impairment assessments of the carrying value of non-current assets (such as
the parent company investment) 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.
Amounts due to Group undertakings
Amounts due to Group undertakings are initially recognised at fair value.
Subsequent to initial recognition they are measured at amortised cost using
the effective interest method.
Amounts due from Group undertakings
Amounts due from Group undertakings are initially recognised at fair value
and subsequently measured at amortised cost on an effective interest basis.
The Company assess the loans for recoverability from surplus undiscounted
cashflows from the operating Group and determined no loss provision
necessary. The Company does not expect to receive payment within the
next 12 months and therefore presents the loan as non-current.
Financial assets and liabilities
Financial assets are cash or a contractual right to receive cash or another
financial asset from another entity or to exchange financial assets or
liabilities with another entity under conditions that are potentially
favourable to the entity. In addition, contracts that result in another
entity delivering a variable number of its own equity instruments are
financial assets.
Derivative financial instruments including equity options are held at fair
value. All other financial instruments are held at amortised cost.
Auditors remuneration
Auditors remuneration has been included in the group accounts. The Group
accounts are required to comply with regulation 5(1)(b) of the Companies
(Disclosure of Auditor Remuneration and Liability Limitation Agreements)
Regulations 2008.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
203
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
Prior year restatement
Following a review by the Financial Reporting Council (“FRC”), the Company revisited its assumptions used in determining the recoverability of the carrying
value of the investment in subsidiaries. The original assessment had not considered the recoverability of the intercompany balances within the Company
prior to assessing the recoverability of the investment valuation. When updating for this assumption, the net recoverable value of the investment is reduced
from £957.4m to £497.3m at 31 December 2022. The impairment of £460.1m is reflected in the Parent Company Income Statement for the prior year.
As part of the same review it was identified the intercompany receivable was presented as current, however, the Company did not expect to receive
repayment within 12 months from the balance sheet date. The intercompany receivable balance has therefore been restated as a non-current asset in the
prior year Company Balance Sheet. In addition, the Expected Credit Loss provision recognised against the intercompany receivable is deemed not required.
This is due to the balance being intercompany in nature and the parent company can allow the benefit of time to its subsidiary in order to recover the
receivable in full from the future cashflows of the subsidiary. As there is no anticipated shortfall in repayment of the receivable over time, no expected
credit loss provision is required. An opening reserves adjustment of £36.0m is made to reflect removing the provision as at 1 January 2022. A £11.2m charge
is reflected in the Income Statement for the year ended 31 December 2022, reflecting the movement in the provision previously recognised between
1 January 2022 and 31 December 2022.
The restatements noted above have no impact on the previous, current or future results of the Group. The FRC’s review does not benefit from detailed
knowledge of our business or an understanding of the underlying transactions entered into and therefore provides no assurance that the Annual Report
is correct in all material aspects.
Liabilities
Non-current assets
Investments
Debtors: amounts falling due in more than one year
Current assets
As previously reported
31 December 2022
£m
Adjustment
£m
Restated balance
31 December 2022
£m
957.4
–
(460.1)
1,382.1
497.3
1,382.1
Debtors: amounts falling due within one year
1,357.6
(1,357.3)
0.3
Capital and reserves
Retained Earnings
179.0
(435.3)
(256.3)
The loss on ordinary activities after taxation amounts to £454.1m (previously reported profit of £17.2m).
Liabilities
Non-current assets
As previously reported 1
January 2022
£m
Adjustment
£m
Restated balance
1 January 2022
£m
Debtors: amounts falling due in more than one year
–
749.7
749.7
Current assets
Debtors: amounts falling due within one year
Capital and reserves
Retained Earnings
713.7
(713.7)
–
161.8
36.0
197.8
The profit on ordinary activities after taxation amounts to £70.9m (previously reported profit of £34.9m).
2 DIRECTORS’ REMUNERATION
The Company has no employees other than the Directors. Full details of the Directors’ remuneration is given in the Directors’ Remuneration Report.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
204
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
Prior year restatement
Following a review by the Financial Reporting Council (“FRC”), the Company revisited its assumptions used in determining the recoverability of the carrying
value of the investment in subsidiaries. The original assessment had not considered the recoverability of the intercompany balances within the Company
prior to assessing the recoverability of the investment valuation. When updating for this assumption, the net recoverable value of the investment is reduced
from £957.4m to £497.3m at 31 December 2022. The impairment of £460.1m is reflected in the Parent Company Income Statement for the prior year.
As part of the same review it was identified the intercompany receivable was presented as current, however, the Company did not expect to receive
repayment within 12 months from the balance sheet date. The intercompany receivable balance has therefore been restated as a non-current asset in the
prior year Company Balance Sheet. In addition, the Expected Credit Loss provision recognised against the intercompany receivable is deemed not required.
This is due to the balance being intercompany in nature and the parent company can allow the benefit of time to its subsidiary in order to recover the
receivable in full from the future cashflows of the subsidiary. As there is no anticipated shortfall in repayment of the receivable over time, no expected
credit loss provision is required. An opening reserves adjustment of £36.0m is made to reflect removing the provision as at 1 January 2022. A £11.2m charge
is reflected in the Income Statement for the year ended 31 December 2022, reflecting the movement in the provision previously recognised between
1 January 2022 and 31 December 2022.
The restatements noted above have no impact on the previous, current or future results of the Group. The FRC’s review does not benefit from detailed
knowledge of our business or an understanding of the underlying transactions entered into and therefore provides no assurance that the Annual Report
is correct in all material aspects.
Debtors: amounts falling due within one year
1,357.6
(1,357.3)
0.3
The loss on ordinary activities after taxation amounts to £454.1m (previously reported profit of £17.2m).
As previously reported
31 December 2022
Adjustment
£m
£m
Restated balance
31 December 2022
£m
957.4
–
(460.1)
1,382.1
497.3
1,382.1
179.0
(435.3)
(256.3)
As previously reported 1
Adjustment
January 2022
£m
Restated balance
1 January 2022
£m
£m
Debtors: amounts falling due in more than one year
Liabilities
Non-current assets
Investments
Current assets
Capital and reserves
Retained Earnings
Liabilities
Non-current assets
Current assets
Debtors: amounts falling due within one year
Capital and reserves
Retained Earnings
Debtors: amounts falling due in more than one year
–
749.7
749.7
The profit on ordinary activities after taxation amounts to £70.9m (previously reported profit of £34.9m).
2 DIRECTORS’ REMUNERATION
The Company has no employees other than the Directors. Full details of the Directors’ remuneration is given in the Directors’ Remuneration Report.
161.8
36.0
197.8
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
3 INVESTMENTS
Cost
At 1 January 2022
Additions
At 31 December 2022 and 1 January 2023
Additions
At 31 December 2023
Impairment
At 1 January 2022
Impairment during 2022 (restated*)
At 31 December 2022 and 1 January 2023 (restated*)
Reversal of impairment during 2023
At 31 December 2023
Carrying value
At 31 December 2022 (restated)
At 31 December 2023
*Details of the restatement are presented in note 1.
£m
957.4
–
957.4
94.1
1,051.5
–
(460.1)
(460.1)
460.1
–
497.3
1,051.5
The Company directly owns 100% of the share capital of Aston Martin Holdings (UK) Limited, a non-trading intermediate holding company registered in
England and Wales. A full list of subsidiary and other related undertakings is given in note 33 to the Group Financial Statements. Additions in the year
represent £88.7m for the issuance of shares to Lucid Group, Inc. in respect of the Technology sharing agreement and £5.4m in relation to Group share
based payment charges for which the Company will issue shares on behalf of employees in subsidiary companies.
Impairment testing
The Company reviews the carrying amount of its investment when events and circumstances indicate that an asset may be impaired. Impairment tests are
performed by comparing the carrying amount and the recoverable amount of the assets. The recoverable amount is the higher of the assets’ fair value less
costs of disposal and its value-in-use.
In assessing the value-in-use, the estimated future cash flows relating to the forecast usage period of the asset, or group of assets, are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks. In performing this analysis
the Company’s value-in-use calculation supports the recoverability of the full cost of the Company’s investment in subsidiary undertakings and therefore
a reversal of the impairment recognised in the prior year has been recognised in the year ended 31 December 2023. The Group forecast and business plan
as at 31 December 2023 give an increased cash flow when compared to twelve months ago, resulting in a higher value-in-use therefore supporting the
reversal of the impairment.
Key assumptions used in value-in-use calculations
Where there are indicators of impairment, the calculation of value-in-use for the assets is most sensitive to the following assumptions:
– Cash flows are projected based on actual operating results and the current five-year plan.
– Discount rates are calculated using a weighted average cost of capital approach. They reflect the individual nature and specific risks relating to the
business and the market in which the Group operates. The pre-tax discount rate used was 14.0% (2022: 14.0%).
– A long-term growth rate of 2% (2022: 2%)
713.7
(713.7)
–
Sensitivity analysis
– As at 31 December 2023 the discount rate would need to increase by 1.1% before the investment in subsidiary undertakings is impaired.
4 DEBTORS
Amounts due from Group undertakings
Other receivables
Total
Analysed as:
Current
Non-current
*Details of the restatement are presented in note 1.
2023
£m
2022
£m
(restated*)
1,699.7
1,382.1
–
0.3
1,699.7
1,382.4
–
1,699.7
1,699.7
0.3
1,382.1
1,382.4
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
205
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FINANCIAL STATEMENTS
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
4 DEBTORS CONTINUED
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand. The Company does not
expect to receive repayment of the loan due from Group undertakings within the next 12 months and has therefore presented the loan as non-current.
5 CREDITORS
Amounts due to Group undertakings
Accrued expenses
Derivative option over own shares
2023
£m
187.9
1.8
23.1
212.8
2022
£m
187.9
2.9
22.7
213.5
Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Share warrants
As part of the issue of the Second Lien SSNs by Aston Martin Capital Holdings Limited, the Company issued share warrants enabling warrant holders to
subscribe for a number of ordinary shares in the Company at the subscription price of £1.67 per share (previously £10 per share prior to the rights issue in
September 2022). The warrants can be exercised from 1 July 2021 through to 7 December 2027. The fair value of the warrants is determined at each period
end. A charge to the Income Statement of £19.0m has been recognised in the year ended 31 December 2023 (2022: credit of £8.4m). A total of 29,969,927
warrants were exercised in the year ended 31 December 2023 (2022: no warrants exercised), resulting in the issuance of 8,990,975 ordinary shares (note 6).
6 CAPITAL AND RESERVES
Allotted, called up and fully paid
823,663,785 shares of 10.0p each (2022: 698,757,075 ordinary shares of 10.0p each)
2023
£m
82.4
2022
£m
69.9
A full reconciliation of the Company’s movement in share capital is presented in note 27 of the Group accounts.
Merger reserve
On 26 June 2020, the Company issued 304.0m ordinary shares through a non-pre-emptive placing and retail offer. The shares were issued at 50p raising
gross proceeds of £152.1m, with £2.7m recognised as share capital and the remaining £149.4m recognised as merger reserve. The merger reserve is used
where more than 90% of the shares in a subsidiary are acquired and the consideration includes the issue of new shares by the Company, thereby attracting
merger relief under the Companies Act 2006. The merger reserve value was reduced by £5.4m of transaction costs associated with the equity raise.
Capital reserve
The capital reserve of £2.0m arose from the share-for-share exchange on the acquisition of the entire share capital of Aston Martin Holdings (UK) Limited in 2018.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
206
FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION
FURTHER INFORMATION
GLOSSARY
ADJUSTED EBITDA
Removes depreciation, loss/(profit) on sale of fixed
assets and amortisation from adjusted operating
profit/(loss)
ADJUSTED EBITDA MARGIN
Adjusted EBITDA divided by revenue
ADJUSTED EBT
Profit/(loss) before tax and adjusting items as
shown in the Consolidated Income Statement
ADJUSTED EARNINGS PER SHARE
Profit/(loss) after income tax before adjusting
items, divided by the weighted average number of
ordinary shares in issue during the reporting period
ADJUSTED OPER ATING MARGIN
Adjusted operating profit/(loss) divided by revenue
ADJUSTED OPER ATING PROFIT/(LOSS)
Profit/(loss) from operating activities before
adjusting items
AGM
Annual General Meeting
FRC
Financial Reporting Council
FREE CASH FLOW
Cash inflow/(outflow) from operating activities
plus the cash used in investing activities (excluding
interest received) plus interest paid in the year less
interest received
FTSE
Financial Times Stock Exchange
FY
Financial year, full year
GHG
Greenhouse gas
GPG
Gender Pay Gap
GT
Grand Tourer, a sports car with two front seats
plus smaller rear seats
HNWIs
High Net Worth Individuals
APM
Alternative Performance Measures; for detail
of the measures adopted see note 34 to the
Financial Statements
HY
Half year
ASP
Average selling price
BEV
Battery Electric Vehicle
CARBON NEUTR AL
Carbon neutral means that any CO2 released into
the atmosphere from a company’s activities is
balanced by an equivalent amount being removed
CORE
The Company’s models in ongoing production
excluding Specials. These currently comprise
Vantage, DB11, DB12, DBS and DBX
EBITDA
Earnings before interest, tax, depreciation
and amortisation
EPS
Earnings per share
ERP
Enterprise resource planning
ESG
Environmental, social and governance
EY
Ernst & Young LLP, the Company’s current
External Auditor
FIXED MARKETING OR FM
Explicit marketing costs incurred directly by
the Company, such as hosting launch events
ICE
Internal combustion engine
IFRS
International Financial Reporting Standards
IPO
Initial Public Offering
KPIs
Key Performance Indicators
LTIP
Long Term Incentive Plan
MATERIALITY ASSESSMENT
An assessment which determines an organisation’s
material sources of environmental, social and
governance risk and opportunity to inform
sustainability reporting processes
MBAG
Mercedes-Benz AG
NED
Non-executive Director
NET DEBT
Current and non-current borrowings in addition
to inventory financing arrangements and lease
liabilities recognised following the adoption of
IFRS 16, less cash and cash equivalents, cash held
not available for short term use
NET-ZERO
Reducing Scope 1, 2, and 3 emissions to zero or
to a residual level that is consistent with reaching
net-zero emissions at the global or sector level in
eligible 1.5°C-aligned pathways and neutralising
any residual emissions at the net-zero target year
and any GHG emissions released into the
atmosphere thereafter
PHEV
Plug-in Hybrid Electric Vehicle
PIK
Payment-in-kind interest, whereby interest on
a bond is paid by scrip issuance of further bonds,
rather than in cash
R&D
Research and development
RCF
Revolving Credit Facility
RELATIONSHIP AGREEMENTS
Relationship Agreements between the Company
and the Yew Tree Consortium dated 27 February
2020, MBAG dated 27 October 2020, the Public
Investment Fund dated 29 July 2022 and Geely
dated 18 May 2023 which govern the relationship
between the Company and each of these
shareholder groups
RETAILS
A volume measure of unit sales of vehicles by
dealers to customers; and/or Company sales
of certain Specials direct to customers
SBTi
Science Based Targets initiative
SECTION 172 OR S.172
Section 172 of the Companies Act 2006 requires
the Board to consider a number of factors in
its decision-making, including the interests
of its stakeholders
SID
Senior Independent Director
SONIA
Sterling Overnight Index Average
SPECIALS
Vehicles produced in limited numbers
V8, V12
An eight-cylinder internal combustion engine;
a twelve-cylinder internal combustion engine
WHOLESALES
A volume measure of unit sales of vehicles by
the Company to dealers; and/or company
sales of certain specials direct to customers
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
207
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATIONSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION FURTHER INFORMATION
SHAREHOLDER INFORMATION
GENER AL SHAREHOLDER ENQUIRIES
Enquiries relating to shareholdings, such as the transfer of shares,
change of name or address, lost share certificates or dividend cheques,
should be referred to the Company’s registrar:
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99
6DA, United Kingdom.
Equiniti offers a range of shareholder information and services online
at www.shareview.co.uk.
SHARE WARR ANTS
The Company issued warrants granting rights to subscribe for ordinary
shares in accordance with the terms of the Warrant Instrument dated
7 December 2020. Warrants are exercisable during the period
starting on 1 July 2021 and ending on 7 December 2027. A total of
29,969,919 warrants were exercised during the financial year ended
31 December 2023.
Further information on the warrants is set out in the combined
prospectus and circular dated 18 November 2020.
ANNUAL GENER AL MEETING
Information on the Annual General Meeting, together with the Notice
of Meeting containing details of the business to be conducted, will be
posted on our website, www.astonmartinlagonda.com.
The voting results for the 2024 Annual General Meeting will also be
accessible on www.astonmartinlagonda.com shortly after the
meeting.
ELECTRONIC COMMUNICATION
Shareholders may at any time choose to receive all shareholder
documentation in electronic form via the internet, rather than in paper
format. Shareholders who decide to register for this option will receive
an email each time a shareholder document is published on the
in
internet. Shareholders who wish to receive documentation
electronic form should register online at www.shareview.co.uk.
SHARE DEALING
Aston Martin Lagonda Global Holdings plc shares can be traded
through most banks, building societies or stockbrokers. Equiniti offers
a telephone and internet dealing service. Terms and conditions and
details of the commission charges are available on request.
For telephone dealing, please telephone 03456 037 037 between
8.00am and 4.30pm, Monday to Friday, and for internet dealing visit
www.shareview.co.uk/dealing.
Shareholders will need their reference number which can be found on
their share certificate.
SHAREGIFT
Shareholders with a small number of shares, the value of which makes
them uneconomic to sell, may wish to consider donating their shares
to charity through ShareGift, a donation scheme operated by The Orr
Mackintosh Foundation. A ShareGift donation form can be obtained
from Equiniti. Further information is available at www.sharegift.org
or by telephone on 020 7930 3737.
SHARE PRICE INFORMATION
The latest Aston Martin Lagonda Global Holdings plc share price is
available on the Company’s website at www.astonmartinlagonda.com.
UNAUTHORISED BROKERS (BOILER ROOM SCAMS)
Shareholders are advised to be very wary of any unsolicited advice,
offers to buy shares at a discount or offers of free company reports.
These are typically from overseas-based ‘brokers’ who target UK
shareholders offering to sell them what often turn out to be worthless
or high-risk shares in US or UK investments. These operations are
commonly known as boiler rooms.
If you receive any unsolicited investment advice, get the correct name
of the person and organisation, and check that they are properly
authorised by the FCA before proceeding any further. This can be
done by visiting www.fca.org.uk/register/.
If you deal with an unauthorised firm, you will not be eligible to receive
payment under the Financial Services Compensation Scheme if things
go wrong. If you think you have been approached by an unauthorised
firm, you should contact the FCA consumer helpline on 0800 111 6768.
More detailed information can be found on the FCA website at
www.fca.org.uk/consumers/protect-yourself/unauthorised-firms.
REGISTERED OFFICE
Aston Martin Lagonda Global Holdings plc, Banbury Road, Gaydon
Warwick, CV35 0DB, United Kingdom.
Registered in England and Wales Registered Number: 11488166
www.astonmartinlagonda.com
WEBSITE
This Annual Report and other information about Aston Martin Lagonda
Global Holdings plc, including share price information and details of results
announcements, are available at www.astonmartinlagonda.com.
ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023
208
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION DISCLAIMER
The purpose of this Annual Report is to provide information to the
members of Aston Martin Lagonda Global Holdings plc. This
document contains certain statements with respect to the operations,
performance and financial condition of the Group including, among
other things, statements about expected revenues, margins, earnings
per share or other financial or other measures. Forward-looking
statements appear in a number of places throughout this document
and include statements regarding our intentions, beliefs or current
expectations and those of our officers, Directors and employees
concerning, among other things, our results of operations, financial
condition, liquidity, prospects, growth, strategies and the business
we operate. By their nature, these statements involve uncertainty and
are subject to a number of risks since future events and circumstances
can cause actual results and developments to differ materially from
those anticipated.
The forward-looking statements reflect knowledge and information
available at the date of preparation of this document and, unless
otherwise required by applicable law, the Company undertakes no
obligation to update or revise these forward-looking statements.
Nothing in this document should be construed as a profit forecast. All
members, wherever located, should consult any additional disclosures
that the Company may make in any regulatory announcements or
documents which it publishes. The Company and its Directors accept
no liability to third parties in respect of this document save as would
arise under English law. This document does not constitute an
invitation to underwrite, subscribe for or otherwise acquire or dispose
of any Aston Martin Lagonda Global Holdings plc shares, in the
UK, or in the USA, or under the USA Securities Act 1933 or any
other jurisdiction.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFURTHER INFORMATION ASTONMARTINLAGONDA.COM