INTERIM RESULTS
McLAREN HOLDINGS LIMITED Unaudited Consolidated Financial statements Registered number 10756310 3 months ended 31 March 2019 McLaren Holdings Limited Interim financial statements 31 March 2019
TABLE OF CONTENTS
Business review and outlook ...... 3
Recent developments and factors affecting comparability ...... 8
Consolidated profit and loss account ...... 11
Consolidated statement of comprehensive income ...... 11
Consolidated balance sheet ...... 12
Consolidated statement of changes in equity ...... 13
Consolidated statement of cash flows ...... 14
Notes to the financial statements ...... 15
McLaren Holdings Limited Interim financial statements 31 March 2019
Business review and outlook
Principal Activities
McLaren Holdings Limited (the “Group”) is a global leader in luxury automotive high-performance sports and super cars, motorsport and technology. The Group is constituted from three divisions: Automotive, Racing and Applied Technologies. Founded in 1963, the Racing division has been one of the most successful teams in motorsport history. Since its foundation, the team have won 20 Formula 1 World Championships, the Indy 500 three times and the Le Mans 24 Hour race. The Automotive division first produced the iconic McLaren F1 road car in 1992 and more recently launched its new series of products in 2011 starting with the McLaren MP4-12C. Today, Automotive has a range of luxury high performance cars across three defined product families: Sports Series, Super Series and Ultimate Series. It has produced further ground-breaking cars such as the McLaren P1TM, the McLaren 600LT and the McLaren Senna. 2018 was an extraordinary year for Automotive, not least because it reached the production rates required to achieve the c5,000 units per year originally promised in Track22. Further to this, Automotive put the McLaren Senna into production and revealed and launched the McLaren 600LT. 2019 has got off to a promising start and has already included the launches or reveals of Spider versions of the McLaren 600LT and 720S as well as the reveal of the new McLaren GT. All current and future models continue to command premium pricing and a strong order bank. The Applied Technologies division focuses on the application of McLaren’s technological know-how in a wide variety of fields. Starting from a successful motorsports division which to this day is still the sole supplier of electronic components to Formula 1, NASCAR, Indycar and Formula E. Applied Technologies has expanded to focus on three further market segments: automotive, public transport and health. Success in these areas has included taking McLaren know-how in high speed data transmission from Formula 1 and applying it to public transport where it has worked with several train operating companies to design, test and introduce new systems that enable reliable high speed WIFI on trains. Applied Technologies is also working with new entrants to the connected and autonomous vehicle sectors. The development of the new McLaren Group Limited
The Group has continued to develop during Q1 2019, a process that started in 2017 with the consolidation of the McLaren Technology Group (holding the Racing and the Applied Technologies divisions) and McLaren Automotive under the ownership of McLaren Holdings Limited. This transaction was completed on 20 July 2017. At the same time, the Group issued a sterling Bond of £370m and a dollar Bond of $250m traded on The International Stock Exchange. The Group is now managed along the three business lines of Automotive, Racing and Applied Technologies and the Group’s legal structure has been changed to reflect this. During 2018 and completed on 2 January 2019, the assets and liabilities of McLaren Marketing Limited and Team McLaren Limited were hived into McLaren Racing Limited to form one single racing company. The ownership of McLaren Racing Limited and McLaren Applied Technologies Limited were also transferred to McLaren Holdings Limited from McLaren Technology Group Limited. McLaren Technology Group Limited was then renamed McLaren Services Limited and continues to provide IT, Facilities Management and similar services to the operating entities. 2019 will see the completion of this reorganisation with further dormant subsidiaries wound up. In addition, during Q1 2019, the management team of the Group was further strengthened with the announcement that Anthony Murray was joining as the CEO of Applied Technologies and that Paul Buddin would take up the role of Group CFO on a full-time basis.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Business review and outlook (continued)
Group results The performance for Q1 2019 continues the same positive trend reported in 2018. Turnover has increased by 18% from £241.2m in Q1 2018 to £284.3m. In addition, the Group has reported an EBITDA of £22.0m compared to an EBITDA of £8.0m in 2018. Both these are driving a reduction in the Operating loss from £26.7m in Q1 2018 to £15.1m in Q1 2019 and the Loss before tax which has reduced from £24.8m in Q1 2018 to £18.4m in Q1 2019. The improvement in the Q1 results is driven by the Automotive division which has built on the success of 2018 by not only continuing to build cars at a rate of 20 units per day, but also now includes Ultimate series cars in the sales mix. Further, the losses from the Racing division have begun to reduce, largely reflecting the improved finishing position in the 2018 Formula One World Constructors’ Championship.
Automotive
The Automotive division forecast sales growing to c5,000 units per annum within the 7-year Track22 strategy which was first announced at the Geneva motor show in 2015. 2018 saw 4,829 vehicles delivered, as planned, which was the achievement of this objective. 2019 is about consolidating this performance and the division plans to deliver around 4,800 vehicles once again with the Q1 2019 negative variance of 111 vehicles compared to Q1 2018 merely due to the timing of deliveries quarter-on-quarter. Total wholesales in Q1 2019 are 953 compared to 1,064 in Q1 2018.
Wholesale volumes by region are:
Region Q1 2019 Q1 2018 YoY Growth Europe North America Asia Pacific China RoW Global
However, the mix of products delivered in Q1 2019 verses Q1 2018 was stronger; there were no Ultimate Series vehicles delivered in Q1 2018 whereas there were in Q1 2019. The mix difference is the key driver behind the improved financial performance verses 2018 in the Automotive division. This trend is expected to continue to the full year where, despite the guidance on volume being to deliver a similar number to 2018, it is expected that the mix will contribute to an improved financial performance over 2018.
Automotive continued to announce and launch new products in 2019. Having revealed the McLaren 720S Spider to the world in December 2018, it announced a second Spider in Q1 2019: the McLaren 600LT Spider. Both cars were reviewed by the world’s press in February 2019 and both received numerous 5-star accolades from the global media. Automotive has already begun to add orders on these vehicles to the order bank.
Following this, in May 2019, the McLaren GT was revealed. Sleek, elegant and muscular, the superlight new GT challenges the conventions of the Grand Tourer category with a compelling blend of beautiful design, high-quality innovative materials, true supercar performance and McLaren driving dynamics and engagement. Positioned alongside the established Sports, Super and Ultimate Series families, this is a new McLaren for a new audience and provides an alternative to existing products in an expanding market segment.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Business review and outlook (continued)
Automotive (continued)
Further emphasising the rapid growth in Automotive, the division also announced in May that it had produced its 20,000th car during May 2019. This latest milestone represents a further significant achievement for the British marque and comes eight years after the first McLaren road car left the Production Centre in July 2011.
The order book continues to be strong. The order book totalled 1,855 units at 31 March 2019, with Ultimate Series sold out, Super Series orders taken into Q3 2019 and with Sports Series 600LT Coupe sold out into Q4 and 600LT Spider orders for delivery into Q3 2019. The demand will be further enhanced with the addition of the new McLaren GT. This, along with the delivery of the remaining McLaren Senna’s and Senna GTRs in 2019, is expected to contribute to further growth in revenue and EBITDA from the Automotive division in 2019 and further demonstrates that Automotive is on plan to deliver the targets set out in Track25.
McLaren Racing
The 2019 Formula One season is now well underway. The team have had an excellent start to the new season scoring 22 points in the first five races and lie fourth in the Formula One World Constructors Championship. The car is big step forward from the 2018 model and the team are confident that this positive start can be maintained.
In respect of drivers, for 2019 the team have the experienced Carlos Sainz Junior driving alongside Lando Norris. Lando has been part of the McLaren Young Driver Programme since early 2017, when he officially joined the team as a Test and Simulator Driver. He graduated to a race seat in 2019 having been the McLaren Test and Reserve Driver in 2018 as well as contesting the 2018 FIA Formula 2 Championship. In addition, Sergio Sette Camara takes Lando’s place as Test and Development driver for 2019.
Off the track, the team have also been successful in acquiring new sponsorship for the 2019 season. In particular, McLaren has added British American Tobacco, Huski Chocolate, Coca Cola, Dell Estrella Galicia and Arrow Electronics to its impressive list of partners. Further, a number of the key appointments announced by Zak Brown (CEO, McLaren Racing) in 2018 as part of his restructure of the Racing team have now started. This includes James Key (Technical Director) and Andreas Seidl (Managing Director of McLaren F1).
In respect of the wider Formula 1 commercial environment, McLaren continues to work with the FIA and Formula 1 Management to create a more sustainable sport. The current commercial framework for Formula 1 ends at the end of 2020 and all parties are looking to sign a long-term agreement that will both improve the sport and the financial returns for all parties involved. The aim of these changes is to grow the size of Formula 1 as a business and ultimately the value of the team franchises from 2021 and beyond.
The final proposals have been put forward to the teams and these cover:
• the control of costs and cost capping • more equitable revenue distribution of prize money • the growth of Formula 1 as a business with a wider fan base reaching new markets • exploitation of digital channels and environments such as e-sports.
The Group’s strategy is to build performance in the team, looking forward to the new regulations which are due to come into force from 2021. McLaren is playing its full part in agreeing these regulations and welcomes the measures to control costs and improve revenues for teams. As a result, the Group plans to reduce the net cost of competing in Formula 1 over the next five years but at the same time take advantage of the new regulations to improve the competitiveness of the team.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Business review and outlook (continued)
Intangible Investment
The Group continued to invest in new products and services, investing £81m in Q1 2019. The majority of this was invested by the Automotive division in new road car projects including new Ultimate, Super and Sports Series models. These new models are part of the commitments made in the Track25 plan and are part of taking the Company to volumes over 6,000 units by 2025.
New Equity Issued
On the 14 May 2018, McLaren Holdings issued £100.0m of new shares to McLaren Group Limited. On the 16 November 2018, McLaren Holdings issued £50.0m of new shares to McLaren Group Limited. On the 1 February 2019, McLaren Holdings issued £49.3m of new shares to McLaren Group Limited. The new capital, which is part of the Group’s simplification over the last 12 months, will significantly strengthen the Group’s balance sheet and underpins its ambitious growth plans laid out in its five-year business plan.
Key performance indicators The Directors consider turnover, sales and production volumes, position in the FIA Formula 1 World Championship, earnings before interest and tax, profit before tax, cash flow and performance against engineering programme milestones to be the principal Key Performance Indicators (KPIs). These are used to assess progress towards achieving the Group’s strategies over the medium term and performance against these measures is reviewed regularly.
Principal risks and uncertainties The risks associated with the manufacture of luxury road cars relate primarily to the costs associated with the development of future vehicles, the ability of McLaren Automotive to leverage a competitive advantage, demand for the brand and also the economic position of key markets into which cars are sold.
Further, the Group is exposed to the performance of Formula 1 as a global sports entertainment business and on-track performance. On-track performance impacts income from prize money and the renewal and acquisition of sponsorship.
As with any company active on a global stage, foreign exchange volatility presents a risk. Currency exposure will remain high as 66 per cent of worldwide sales revenues are denominated in non-Sterling currencies. The Group operates in an international environment with revenues denominated primarily in US dollars, Japanese Yen, Chinese Yuan and Euros. Purchases are transacted primarily in Sterling and Euros. The principal risks, however, are exposure to the US Dollar and Euro. The Group operates under a treasury policy and accordingly has a hedging portfolio in place to cover a proportion of these cash flows.
Interest exposure is governed by the rate at which long-term loans are agreed and the rate contracted with high-yield bond holders and the banking group supporting the revolving credit facility. The interest rate on the revolving credit facility is linked to LIBOR whereas the rate contracted with the high-yield bond holders is fixed.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Business review and outlook (continued)
Brexit considerations
The current uncertainty regarding the way the UK leaves the EU makes it very difficult to plan for, with multiple scenarios having to be considered and addressed. The Group continues to keep the progress of the exit discussions under review but considers the impact of the UK’s exit on the financial results of the Group to be low. However, the Management Team have considered the risks that exiting the EU poses and established that the following risks exist:
• The Group sources approximately 50% of supplies from the EU, in terms of value, and is therefore dependent on the movement of goods into the UK to maintain production. The Group could be required to hold additional stocks of parts or slow production during the Brexit period which would have a short, temporary impact on cash flow. • The Group’s imports could become subject to tariffs due to the cessation of free trade arrangements as a result of Brexit. This could have an impact on the Group’s input costs. • There is uncertainty over the rights of EU nationals to work in the UK which could increase the risk of hiring talent. • Exchange rate volatility could impact the Group’s revenues, profits and cash flows.
However, the Management Team have taken a number of actions in order to mitigate any potential impact. These actions include:
• Establishing a cross-functional team of subject matter experts to monitor the impact of Brexit and report their findings to the Management team and, ultimately, the board. • The Group has ensured that it has sufficient cash reserves forecast to be in place through the Brexit period in order to allow additional stocks to be held or production to be slowed or to cover any additional costs. This has been further helped by the receipt of equity earlier than planned on 1 February 2019. • Through the Group’s Government Affairs department, the Group has strong engagement with Government through bodies such as the Automotive Council and the Society of Motor Manufacturers and Traders. • The Automotive division has worked towards obtaining AEO accreditation. • The Group has continued to follow its hedging policy, as described elsewhere in these accounts, in order to mitigate any short-term volatility in exchange rates.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Recent developments and factors affecting comparability Income statement
Revenue
Revenue was £284.3m for the 3 months ended 31 March 2019, an increase of £43.1m or 17.9% on the 3 months ended 31 March 2018.
Automotive saw a 17.1% increase in revenue driven primarily by a change in sales mix between comparative periods. The key driver is due to the success of the Ultimate Series in Q1 2019, with 112 Senna wholesales compared to nil in Q1 2018. However, there were also positive shifts in the other series. In the Sports Series, there was a shift away from the 570S and 570S Spider models towards the 600LT. In the Super Series, there was a shift away from the 720S Coupe following the introduction of the 720S Spider.
Racing reported revenue of £35.0m for the 3 months ended 31 March 2019, an increase of £7.3m or 26.4% on the 3 months ended 31 March 2018. This increase was primarily in Formula 1 prize money reflecting the ranking in Constructor’s championship position of 6th in 2018, compared to 9th in 2017 (as Formula 1 prize money is paid retrospectively). There was also higher revenue from Heritage car sales in Q1 2019 compared to Q1 2018.
Applied Technologies revenue was £16.4m for the 3 months ended 31 March 2019, an increase of £0.8m or 5.1% due predominantly from the Formula E battery project moving from product development to product supply for season 5 races.
Gross profit
Gross profit was £73.9m for the 3 months ended 31 March 2019, an increase of £19.4m on the 3 months ended 31 March 2018. Gross profit as a percentage of revenue improved from 22.6% in 2018 to 26.0% in 2019.
Automotive reported an increase in gross profit in line with revenue performance and the Ultimate Series sales in Q1 2019 (Q1 2018: nil).
Racing reported a lower gross loss, and an improved margin, in the 3 months ended 31 March 2019, compared to the 3 months ended 31 March 2018, due to the improved revenues as detailed above.
Applied Technologies gross profit margin was also improved as a result of the Formula E battery lease margins and the mix of product sales being made.
Administrative expenses
Administrative expenses were £62.4m for the 3 months ended 31 March 2019, an increase of £6.0m or 10.6% on the 3 months ended 31 March 2018.
Automotive reported an increase in administrative expenses with investment in headcount and marketing in particular, to match the business growth with the company now producing c5,000 cars per annum.
Other operating income
Other operating income was £8.7m for the 3 months ended 31 March 2019, an increase of £2.7m on the comparative period. The increase is primarily attributed to higher Automotive grant income recognised in the 3 months ended 31 March 2019, and an increase in R&D expenditure credits across the Group.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Recent developments and factors affecting comparability (continued)
Income statement (continued)
Depreciation
Depreciation was £6.1m for the 3 months ended 31 March 2019, an increase of £1.4m on the same period in 2018. The most significant movement is from Formula E batteries being capitalised and depreciated in line with accounting standards as the product is leased to the teams, as well as additional equipment needed to manage the service.
Amortisation
Amortisation was £29.3m for the 3 months ended 31 March 2019, an increase of £3.2m compared to the 3 months ended 31 March 2018. This increase is driven by the shift in sales mix towards the Ultimate Series cars which receive a higher amortisation charge per car, compared to the Sports and Super Series.
Finance costs
Finance costs were £3.3m for the 3 months ended 31 March 2019, compared to net finance income of £1.9m in the equivalent period in the prior year. Underlying interest costs were comparable, with the main reason for the variance being due to reduced FX gains in Q1 2019 on remeasurement of the USD high yield bond and other currency balance sheet positions.
Income tax
The income tax charge was £1.7m for the 3 months ended 31 March 2019 which is £5.2m higher than the corresponding period in 2018. The increase has arisen as a result of higher overseas profits where the rate of corporation tax is higher than the current UK tax rate of 19% and a lower forecast Group loss for 2019 resulting in a reduction to the deferred tax asset.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Recent developments and factors affecting comparability (continued) Cash flow statement
The three months to 31 March 2019 saw a net cash outflow of £(67.0)m, compared to a net cash outflow of £(58.7)m in the 3 months to 31 March 2018. The cash balance at 31 March 2019 was £29.0m, compared to £40.1m as at 31 March 2018.
Cash flow from operating activities
Cash used in operating activities was £(16.0)m in the 3 months to 31 March 2019 compared to £(2.8)m in the equivalent 3-month period to 31 March 2018. The impact of improvement in operating loss has been offset with an increased working capital position. Excluding timing variances, the underlying increase is predominantly in the Automotive finished goods stock balance which has increased due to lower sales volumes combined with higher build rate in Q1 2019 compared to Q1 2018. This is timing only and soley recognises vehicles in the outward supply chain. The stock balance also includes McLaren Sennas, which have a higher per unit carrying value, whereas it did not in Q1 2018. There is also the build-up of Motorsport parts ahead of GT3 production, and parts and WIP build up on the 600LT Spider (new launch in H2 2018). These differences are all due to timing within the year.
Cash flow from investing activities
Net cash used in investing activities increased to £(84.6)m for the period ended 31 March 2019 compared to £(50.3)m in the same period for 2018. This is primarily due to increased expenditure in 2019 on intangible assets as a result of continued growth in new product development in the Automotive business. The increase is due to the phasing of the spend in the year due the launces of the various products; Automotive is launching four new products in 2019 as opposed to two in 2018. The expectation for the full year is that the spend on intangible and fixed assets will be in line with the prior year.
Cash flow from financing activities
Net cash inflow from financing activities was £33.6m for the 3 months ended 31 March 2019, compared to an outflow of £(5.6)m in 3 months to 31 March 2018. Proceeds of £49.3m were received in Q1 2019 from the issuance of new shares to McLaren Group Limited, compared to a receipt of £10.0m in Q1 2018 drawn on the revolver loan facility. Interest payments were comparable in the two periods under review.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Consolidated profit and loss account for the three months ended 31 March 2019
Note 2019 2018
£000 £000
Turnover 4 284,259 241,177 Cost of Sales (210,345) (186,642)
Gross profit 73,914 54,535
Administrative expenses (62,396) (56,406) Other operating income 8,735 6,009
Operating profit before depreciation and 20,253 4,138 amortisation Depreciation (6,078) (4,744) Amortisation (29,255) (26,059)
Operating loss (15,080) (26,665)
Finance costs (net) (3,337) 1,884
Loss before taxation (18,417) (24,781) Tax on loss 5 (1,734) 3,506
Loss for the financial period (20,151) (21,275)
Consolidated statement of comprehensive income for the three months ended 31 March 2019
2019 2018
£000 £000
Loss for the financial period (20,151) (21,275) Other comprehensive income/(expense): Deferred tax movement on revaluation reserve 71 - Gain/(loss) on cash flow hedges arising during the 8,204 (3,211) period (Loss)/gain on foreign currency translation reserve (3,625) 5,017
Total comprehensive expense for the period (15,501) (19,469)
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McLaren Holdings Limited Interim financial statements 31 March 2019
Consolidated balance sheet
As at 31st As at 31st
March December 2019 2018 Note £000 £000
Fixed assets Intangible assets 6 744,345 693,424 Tangible assets 7 286,526 288,034 Heritage assets 8 58,111 58,186
1,088,982 1,039,644
Current assets Inventories 9 206,501 155,393 Debtors 10 323,696 296,329 Cash at bank and in hand 28,965 97,216
559,162 548,938 Creditors: Amounts falling due within one year 11 (703,185) (671,374)
Net current liabilities (144,023) (122,436)
Total assets less current liabilities 944,959 917,208
Creditors: Amounts falling due after more than one 12 (566,832) (572,564) year
Provisions for liabilities (8,989) (8,413)
Deferred capital funding 13 (99,235) (100,150)
Net assets 269,903 236,081
Capital and reserves Called-up share capital 89 87 Share premium account 199,314 149,993 Revaluation reserve 52,500 52,804 Capital contribution reserve 2,039 2,039 Merger reserve 218,547 218,547 Foreign currency translation reserve (10,051) (14,630) Accumulated losses (192,535) (172,759)
Total Equity 269,903 236,081
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McLaren Holdings Limited Interim financial statements 31 March 2019
Consolidated statement of changes in equity for the three months ended 31 March 2019
Foreign Called up Share Capital currency share premium Merger contribution translation Revaluation Retained Total capital account reserve reserve reserve reserve earnings equity
£000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2018 80 - 218,547 2,039 4,753 56,109 (116,663) 164,865
Loss for the financial ------(60,196) (60,196) year Other comprehensive (expense)/income for the - - - - (19,383) (3,305) 4,100 (18,588) year
Total comprehensive - - - - (19,383) (3,305) (56,096) (78,784) expense
Issue of share capital 7 149,993 - - - 150,000
At 31 December 2018 87 149,993 218,547 2,039 (14,630) 52,804 (172,759) 236,081
At 1 January 2019 87 149,993 218,547 2,039 (14,630) 52,804 (172,759) 236,081
Loss for the financial ------(20,151) (20,151) period Other comprehensive income/(expense) for the - - - - 4,579 (304) 375 4,650 period
Total comprehensive - - - - 4,579 (304) (19,776) (15,501) income/(expense)
Issue of share capital 2 49,321 - - - - - 49,323
At 31 March 2019 89 199,314 218,547 2,039 (10,051) 52,500 (192,535) 269,903
In February 2019 McLaren Holdings Limited issued 206,313 ordinary 1p shares for £49,323k.
The foreign currency translation reserve represents a combination of the movement on the effective portion of cash flow hedges and revaluation of foreign subsidiaries.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Consolidated statement of cash flows for the three months ended 31 March 2019
2019 2018 Note £000 £000
Net cash flows from operating activities 14 (16,018) (2,807)
Taxation paid - -
Net cash outflow from operating activities (16,018) (2,807)
Cash flow from investing activities Addition of intangible assets (81,091) (48,394) Addition of tangible assets (3,979) (2,074) Proceeds from disposal of tangible assets - 55 Interest received 468 106
Net cash outflow from investing activities (84,602) (50,307)
Cash flow from financing activities Repayments of obligations under finance lease (245) (157) Receipts from revolver loan facility - 10,000 Interest paid (15,460) (15,410) Proceeds from issue of ordinary share capital 49,323 -
Net cash inflow/(outflow) from financing activities 33,618 (5,567)
Net decrease in cash and cash equivalents (67,002) (58,681)
Cash and cash equivalents at beginning of period 96,738 99,316
Effect of foreign exchange rate changes (771) (544)
Cash and cash equivalents at end of period 28,965 40,091
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McLaren Holdings Limited Interim financial statements 31 March 2019
Notes to the financial statements
1. General Information McLaren Holdings Limited (“the Company”) and its subsidiaries (together “the Group”) is privately owned and incorporated in the United Kingdom. The address of the registered office is McLaren Technology Centre, Chertsey Road, Woking, Surrey, GU21 4YH.
2. Basis of preparation The condensed consolidated interim financial information for the three months ended 31 March 2019 has been prepared with reference to FRS 104, ‘Interim financial reporting’, and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. This condensed consolidated interim financial information has not been audited or reviewed.
3. Accounting Policies The accounting policies applied are consistent with those of the annual financial statements of McLaren Group Limited for the year ended 31 December 2018.
4. Turnover by class of business 3 months ended 31st
March
Turnover 2019 2018 £000 £000 Automotive 233,226 199,128 Racing 35,045 27,711 Applied Technologies 16,419 15,557 284,690 242,396 Less: Inter-segmental turnover (431) (1,219) 284,259 241,177
5. Tax on loss 3 months ended 31st
March
Tax (expense)/income included in profit or 2019 2018 loss £000 £000 Current tax (4,676) (1,432) Deferred tax 2,942 4,938 Total tax (1,734) 3,506
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McLaren Holdings Limited Interim financial statements 31 March 2019
Notes to the financial statements (continued)
6. Intangible assets
New production IT systems Internally Other development development developed development costs costs software costs Total £000 £000 £000 £000 £000 Cost: At 1 January 2019 1,087,562 67,496 9,822 14,979 1,179,859 Additions 77,405 442 140 3,104 81,091 Disposals - (364) - - (364)
At 31 March 2019 1,164,967 67,574 9,962 18,083 1,260,586
Accumulated amortisation: At 1 January 2019 463,718 20,900 - 1,817 486,435 Charge for the period 27,810 1,883 246 231 30,170 Disposals - (364) - - (364)
At 31 March 2019 491,528 22,419 246 2,048 516,241
Net book value: At 31 March 2019 673,439 45,155 9,716 16,035 744,345
At 31 December 2018 623,844 46,596 9,822 13,162 693,424
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McLaren Holdings Limited Interim financial statements 31 March 2019
Notes to the financial statements (continued)
7. Tangible assets
Leasehold Premises Plant, Fixtures, Assets Freehold and machinery, Fittings in the land and Improve- tools and Motor and office course of buildings ments equipment vehicles equipment construction Total £000 £000 £000 £000 £000 £000 £000 Cost: At 1 January 2019 279,119 19,824 111,872 8,782 79,453 7,687 506,737 Additions - 95 973 - 2,312 1,197 4,577 Disposals - (3,060) (14) - (27) - (3,101) Exchange adjustment - - - - (10) - (10)
At 31 March 2019 279,119 16,859 112,831 8,782 81,728 8,884 508,203
Accumulated depreciation: At 1 January 2019 71,276 5,354 73,286 7,113 61,674 - 218,703 Charge for the period 1,491 32 2,987 116 1,452 - 6,078 Disposals - (3,060) (12) - (27) - (3,099) Exchange adjustment - - - - (5) - (5)
At 31 March 2019 72,767 2,326 76,261 7,229 63,094 - 221,677
Net book value: At 31 March 2019 206,352 14,533 36,570 1,553 18,634 8,884 286,526
At 31 December 2018 207,843 14,470 38,586 1,669 17,779 7,687 288,034
8. Heritage assets
Historic
Cars £000 Cost and Net book value: At 1 January 2019 58,186 Transfer to inventory (75)
At 31 March 2019 58,111
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McLaren Holdings Limited Interim financial statements 31 March 2019
Notes to the financial statements (continued)
9. Inventories
As at 31 As at 31 March December 2019 2018 £000 £000
Raw materials and consumables 63,251 53,851 Work in progress 57,903 53,881 Finished goods and goods for resale 85,347 47,661
206,501 155,393
10. Debtors
As at 31 As at 31 March December 2019 2018 £000 £000
Trade debtors 130,305 132,974 Amounts owed by related parties 170 735 Taxation 25,415 22,319 Other debtors 34,230 20,545 Deferred tax asset 78,769 75,346 Derivative financial assets 4,664 2,803 Prepayments and accrued income 50,143 41,607
323,696 296,329
11. Creditors – amounts falling due within one year
As at 31 As at 31 March December 2019 2018 £000 £000
Bank loans and overdrafts - 478 Obligations under finance leases 994 862 Amounts owed to related parties 1,146 - Trade creditors 103,189 75,881 Taxation and social security 12,876 9,700 Other creditors 199,718 184,646 Derivative financial liabilities 17,402 22,451 Accruals and deferred income 367,860 377,356
703,185 671,374
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McLaren Holdings Limited Interim financial statements 31 March 2019
Notes to the financial statements (continued)
11. Creditors – amounts falling due within one year (continued) Other creditors includes £102,906K (31 Dec 2018: £109,052K) of Trade Finance which is used to support wholesales to McLaren dealers.
12. Creditors – amounts falling due after more than one year
As at 31 As at 31 March December 2019 2018 £000 £000
Senior secured notes 546,404 549,653 Obligations under finance leases 897 852 Amounts owed to related parties 16,282 16,976 Derivative financial liabilities 3,249 5,083
566,832 572,564
13. Deferred capital funding
£000
Cost:
At 1 January 2019 100,150 Amortisation credit for the period (915)
At 31 March 2019 99,235
Funding received to build the McLaren Technology Centre is treated as deferred income and is credited to the profit and loss account in annual instalments over the estimated useful lives of the fixed assets concerned.
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McLaren Holdings Limited Interim financial statements 31 March 2019
Notes to the financial statements (continued)
14. Statement of cash flows Reconciliation of profit to net cash flow from operating activities
As at 31 As at 31 March March 2019 2018 £000 £000
(20,151) (21,275) Loss for the financial period Adjustments for: Tax on loss 1,734 (3,506) Net interest expense 3,337 (1,884) (15,080) (26,665) Operating loss Depreciation and amortisation charges 35,333 30,803 R&D expenditure credits (5,422) (2,118) Foreign exchange loss (3,794) (3,991) Increase in stocks and work in progress (51,033) (29,852) (Increase)/decrease in debtors (25,664) 16,941 Increase in creditors 47,318 12,406 Increase/(decrease) in amounts owed to related 1,711 (2,019) parties Increase in provisions 577 1,693 Trade receivable impairment losses 34 - Loss/(profit) on disposal of fixed assets 2 (5) Cash flow from operating activities (16,018) (2,807)
20