Ladies and gentlemen, thank you for standing by, and welcome to the Aston Martin Q1 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the Q&A session, you will need to press star and one on your telephone. I would now like to hand the conference over to the first speaker today, Ms. Charlotte Cowley. Thank you. Please go ahead.
Good morning, everyone, and welcome to the Aston Martin Lagonda Q1 2020 results call. Firstly, I hope that you and all your families are safe and well. I'm Charlotte Cowley, Head of IR, and I'm joined today by Vikram Bhatia, our Interim CFO, who joined the business just three weeks ago on the 20th of April. First, Vikram is going to run through the presentation. This is also available on our IR section of our website, and then we're both very happy to take your questions. Over to you, Vikram.
Good morning, ladies and gentlemen. As Charlotte has mentioned, I joined Aston Martin about three months ago. I have been at Aston Martin before in 2015, so I know the business, and I am delighted to be back working with the team, some of whom I know quite well. Slide one. As for all businesses, the ongoing COVID-19 pandemic has had a substantial impact on Aston Martin Lagonda during this quarter, and it certainly increases the uncertainty and risks to the financial performance in 2020. The company is in the process of implementing its strategic plan to decrease dealer inventory towards a luxury norm, and the advance of COVID-19 impacted dealer demand for cars, which added to the planned wholesale unit decline. With retail sales outpacing wholesales in unit terms, we significantly destocked the dealer network by 428 units.
For context, this compares to circa 190 units that the company destocked in the full year 2019. As you know, another key focus has been the continued development towards start of production for DBX, which I'll come back to later in this presentation. Finally, amidst the uncertainty of COVID-19, we were able to successfully complete the capital raise of GBP 536 million on the 20th of April, significantly increasing the company's liquidity and strength of the balance sheet. Alongside this, we also welcome our new Executive Chairman, Mr. Lawrence Stroll, to the business with his wealth of luxury brand and auto experience and his passion for racing in F1. Slide two. Turning to the wholesales in detail, the core decline of 44% was impacted by the COVID-19 pandemic, but equally importantly, by our strategic destocking plan. Our most significant regional decrease was seen in APAC, down 74% or 267 units.
Within APAC, China was down 86%. We had planned for no wholesales in January and February to rebalance dealer inventory, and during March, of course, we felt a significant impact from COVID-19. The U.K. was the best-performing market, with a decline of only 3% year-on-year, benefiting from lower dealer stock at the start of the year, enabling pull-through of wholesales to meet retail demand. The chart on the top left highlights that we had no specials in the quarter as planned, compared with 32 in the same period in 2019, which is an additional headwind for us this quarter and will continue into quarter two. Turning to average selling price, which is bottom left here, there was a GBP 98,000. This was GBP 98,000 for both cars and total given, no specials.
In support of the strategic destock, our most significant headwind to ASP was the elevated customer and financing support for retail sales. This we have agreed to support the destocking strategy and the brand and the retailer network. With the relative proportion of high retails to lower-end wholesales, this had a significant impact in the quarter. Core geographic and product mix were also ASP headwinds, with lower China volumes and higher Vantage sales as a proportion of overall units. On the next slide, we talk about EBITDA and EBIT. Moving to the key profit matrix of adjusted EBITDA and adjusted EBIT. Looking at the EBITDA walk, the low wholesale volumes had the biggest impact of GBP 47 million, compounded by no specials in the quarter. Price mix was also a headwind, as I had said when discussing ASP.
Non-vehicle declines of GBP 9 million were primarily due to decreases in other revenue streams, such as brands and motorsport, servicing of vehicles, and aftermarket parts. The lower cost reflects some volume-related flow-through, but also rephasing of marketing spend. Finally, FX was a GBP 7 million headwind to adjusted EBITDA. Over to EBITDA on the right. DNA of GBP 29 million was slightly lower than the prior year, reflecting the lack of specials this year, and the adjusted operating loss was GBP 76 million. Net interest costs of GBP 42 million were up from GBP 14 million in the prior year, reflecting the GBP 340 million of new notes issued in 2019, and given the USD denomination of these notes, there was an FX impact of GBP 17 million in the P&L charge. The loss before tax was GBP 119 million.
Turning to cash, a key focus for all of us and all companies at this time of uncertainty, cash at the end of the period was GBP 172 million, up from GBP 108 million at the end of December. The biggest movement was the net financing inflow of GBP 156 million, with the GBP 171 million placing to the Lawrence Stroll-led consortium on the 31st of March. The consortium had provided GBP 75.5 million of short-term working capital financing during the quarter, which was refunded at the placing. CapEx was lower than guidance at GBP 85 million, with spending primarily focused on St Athan, DBX, and Aston Martin Valkyrie, and some rephasing to later in the year, although we do expect investment to be H1-weighted. The smallest net cash movement was from operations, with the cash operating loss in the period largely offset by working capital movements and inflow of GBP 48 million.
The largest part of this was GBP 63 million receivables inflow, reflected as an unwind of the quarter 2019 overhang of GBP 35 million and lower wholesales. An inventory outflow of GBP 35 million was primarily due to build-up of parts supply for products due to deliver in the second half. In terms of deposits, they increased slightly due to V12 Speedster. Turning to debt, now we have a year of comparable data. We are presenting this, including leases, as per IFRS 16. The fair value movement of GBP 41 million of the SSNs offset some of the GBP 64 million net cash inflow. Net debt was GBP 32 million lower than the year-end at GBP 956 million. The last 12 months' adjusted EBITDA for leverage was significantly lower, resulting in adjusted leverage of 16.2 x. However, the timing of closing the equity raise was split over the quarter-end.
Reflecting the full GBP 536 million equity raise, proforma cash would have been GBP 514 million, and adjusted net debt would have been GBP 614 million and leveraged at 10.4 x. As with everyone, we've been managing through the impacts of the spread of COVID-19, firstly ensuring the health and safety of our employees, our partners, and local communities in which we operate. We've also taken action to manage proactively across our supply chain and businesses more broadly. We temporarily suspended production at our manufacturing facilities on the 25th of March. At St Athan, we reopened on the 5th of May as we worked with the Welsh government and health officials to ensure a safe working environment and protect the well-being of our employees, which includes providing appropriate PPE and social distancing measures. Gaydon will follow as we use learnings from St Athan's reopening to apply the required health and safety measures for Gaydon's restart. We have a number of staff volunteering to support frontline NHS workers, making gowns, scrubs, and other much-needed PPE at our sites, as well as providing maintenance and repair services for NHS worker cars at our Newport Pagnell workshop. In terms of our dealers, at points, 93% of our network were either closed or running with limited capacity. However, we are happy to report that this number is improving, with all 18 Chinese dealers open and more than 15% of dealers fully open globally as I talk to you today.
Turning to cash conservation, I've talked about some of the rephasing of spend in the financial review, but in addition to that, most of our employees were furloughed prior to the reopening of St Athan and have been using the financial support offered by the government's job retention scheme. As reported a few weeks ago, for three months from April 1st, our senior team have volunteered to waive some of their salaries and/or fees. Our key focus, of course, is delivering the two pivotal cars that will provide a platform for the future. Firstly, the DBX, a key new product launch for us as we diversify and enter the luxury SUV segment of the market. Despite the temporary suspension of operation at St Athan, with the site reopened last week, we are still on track for summer deliveries and start of production scheduled in the next few weeks, a testament to the strength and the measures made by the team as we prepared for this key delivery. The order book continues to build and extends into 2021.
Building on this strength, new derivatives will be unveiled from 2021. Some of you may have seen some of our test fleet out and about on the roads recently, some of which were making deliveries of the equipment we have been providing to support the NHS. Top right is the Aston Martin Valkyrie, which will pave the way for our mid-engine platform, which, as you know, will be further supported by our in-house works F1 team from next year. The development schedule for Aston Martin Valkyrie was impacted by the closure of test facilities in the last month, so deliveries will now start later than originally planned in the second half year. Finally, on this slide, the other cars coming in this year are the Vantage Roadster, bottom left, which launched at our virtual Geneva reveal in March.
Both Roadster and Coupe are now available with either our iconic Vaned Grille or the track-inspired Hunter Grille. We are particularly pleased with strong order book already for this. There are the two specials, the DBS GT Zagato and the Goldfinger DBS Continuation, both coming in in the second half on plan. Before we open up for questions, 2020 is the year in which the business is being reset to enable it to operate as a true luxury company. What we and no one else had planned was for COVID-19. The uncertainty surrounding the duration and the impact of the virus on the global economy increases uncertainty for financial results for the year and makes determining a full firm year outlook not possible at this time.
We are planning on the assumption that training remains challenging and are therefore implementing measures to take further action on operating costs and focus on controlling cash. We are also, as is prudent, continuing to review all future funding and refinancing options to increase our liquidity. Having just completed the capital raise, we are clearly in a stronger position than we were, but as announced last month, we are looking at additional options to increase liquidity, including retaining the option to draw up to $100 million of delayed draw notes, assessing additional working capital facilities, and we are exploring options on further support from the government. While it is a varying time, there is a lot going on in the business as we execute our plan to build Aston Martin Lagonda into one of the preeminent luxury car brands globally.
This includes a strong front-engine sports car offering where we are taking action on to destock the dealer network and rebalance supply to demand and regain price positioning. A strong SUV offering with the DBX production due to start in the next few weeks and deliveries in the summer, with orders growing and the order book extended into 2021. A strong mid-engine offering starting with the Aston Martin Valkyrie, deliveries this year, followed by the Valhalla, and then the Vanquish. Our mid-engine platform will further be supported by our own F1 team from 2021, giving us a fantastic marketing platform to further build the brand. 2020 is a year of reset, and yes, 2020 has additional challenges with COVID-19, but our enthusiasm and ambition for the future remain significant. Thank you for your attention, and we will now be happy to take your questions.
Thank you, ladies and gentlemen. We will now begin the question-and-answer session. For those who wish to ask a question over the telephone lines, please press star one and wait for your name to be announced. Once again, star one if you wish to ask a question. Thank you. All right. Your first question comes from the line of Kai Mueller from Bank of America. Please ask your question.
Hi. Thank you very much for taking the call and running through it, given you've been only there for a couple of months. The first question is really on your inventory level. You obviously outlined quite well the reduction in dealer inventory you've done, 430 units, and the incentive programs you've done in terms of supporting that.
Can you give us a little bit of color in terms of how much more is there to do to get where you want to get to, or even give us some sort of idea how much overhang in terms of inventory there still is, i.e., how much longer should we be expecting a massive undershooting in your wholesale numbers compared to retail going forward? The second point is, when you started now, obviously, Q1, you said the dealership network in China was closed in January and February, basically. We probably had the same thing in April in the Western world. When we think about Q2 versus Q1, can you give us a little bit of color in terms of the magnitude of impact that should have on your business?
I think that, in particular, with regards to the commentary you've made, if we run a couple of numbers, are you happy with this GBP 500 million in cash you have that that can sustain you through a more prolonged period of slowdown, or does it really mean you need to go and pull the other credit line and ask the government for support?
On the destock, we destocked 428 cars, our wholesale cars, and this was more than double of what we did in 2019. We will continue destocking during the course of 2020 because, as you know, our strategic plan is to become a luxury brand, and we will therefore build cars to order once we've completed our destock of cars.
Kai, thanks , I think you were asking, "What do we think looking forward into Q2?" Now, clearly, as you know, we'd never comment on current trading. What we can say, yes, all the dealers have opened in China, and we're pleased with what we're seeing in China. Now, the uncertainty around the duration and the impact of COVID makes it really difficult to determine what the full year looks like. What is clear is that a number of our major markets were not in lockdown for most of Q1, and they have been so for all of Q2 so far. Of course, you would expect that the impact would be more severely felt in Q2. It really does just depend on when and how lockdown measures are eased in our key markets. Beyond that, it's quite difficult for me to be able to help, I'm afraid.
Okay. We go to the next question, please.
All right. Thank you. Your next question comes from the line of George Galliers from Goldman Sachs. Please ask your question.
Thank you. Thank you for taking my questions. The first question I had was whether you could just confirm where you finished in terms of cash at the end of April. Obviously, there is a little bit of kind of movement around the quarter because of the closing of the equity. If you could provide the cash balance at the end of April, I think that would be extremely helpful to the market.
As I mentioned in my earlier statement, the pro forma cash balance at the end of April was GBP 514 million. Big apartment. At the end of March, it was GBP 514 million. That is what brought the ratio down to 10.3 x.
Would you be willing to disclose the end-of-April number? I guess you are monitoring this on a daily basis given the environment we are in.
Yeah, George, I am not sure it would help you very much because we do not tend to report monthly cash balances ever in a year. We have tried to give you at least the step that you can see that net debt and the cash, including the full rights issue proceeds.
Okay. Secondly, just on the ASP evolution, clearly, if we take the 98,000 and we apply sales tax, we end up at a price point which would appear to be below the kind of base price for the Vantage. Can you give us some indication of the quantum of discounts or sales incentives you are providing on the vehicles you are destocking?
What should we expect for ASPs in the second half of this year, excluding the DBX?
Yeah. George, the key thing to think about on the ASPs is, of course, that the negative impact of the retail financing support is clearly linked into the retail sales. You have this quarter really pleasing to see retail significantly ahead of wholesales, which has allowed us to do that 428-unit destock. You have that retail incentive on those sort of higher-than-wholesale retail numbers spread across a lower number of wholesales. You have a disproportionate impact on that lower wholesale number, which is clearly all aligned to the strategy of reducing to the luxury norm. You have your wholesales at a level, retails ahead of that, and hence why you have that negative impact of the financing.
I would expect that to continue as we do still have work to do on the destock as we go through the year. Now, when you think about through the second half, of course, you'll have DBX coming in on the second half and that being built to the order book, as will all new Aston Martins just built to order. You are not going to have a headwind coming in from DBX in terms of any sort of any retail financing support on that in the second half. The other thing to think about is, of course, if you do not track straight across from a retail price of a car, because, of course, you have got a dealer margin in there that you have got to think about as well. You have got tax to think about as well.
Don't get too tied and knot in terms of trying to do those calculations.
Thank you. Just quickly, two housekeepings. I think you've guided for full-year CapEx of GBP 285 million, and you said around half of that would come in in Q1. You obviously came in lower than that. Does the GBP 285 million for the full year still stand, or does the rephasing actually lead to some deferral into 2021? Just on net interest expense, again, I think you guided for the full year to be something in the region of GBP 90 million, but we've seen GBP 42 million in Q1. Are there some incremental costs in that Q1 number, or is GBP 90 million not the right number for the full year? Thank you.
Okay. George, given the timing of the key 2020 programs of DBX and the Valkyrie, we still expect CapEx to be first half weighted, first half year weighted. We are continuing to investigate efficiencies and cost savings in both operating costs and capital expenditure.
Back to what we said in the statement, George, of course, just given the uncertainty at the moment. Any previous guidance, we will come back to you when we have got a firm view on any firm numbers. Just on the net interest quickly, you will have picked up in the statement that there was GBP 17 million of FX in that interest, that P&L interest charge in the quarter.
Depending on where FX rates move for the rest of the year, that will be a variable against that GBP 90 million guidance, but nothing to change in terms of the GBP 90 million constant currency guidance.
Okay. Great. Just to summarize, GBP 90 million remains for the net interest, and CapEx will be H1 weighted, but you are updated on the full-year number at Q2.
Yes, on the CapEx, but on the interest, that GBP 90 million is in the mythical constant currency world. Of course, we have booked an additional GBP 17 million on top of that because of FX in the quarter. If that GBP 17 million happens to be held for the whole of the rest of the year, then do the GBP 90 million plus GBP 17 million, but of course, FX rates will move around.
Great. Thank you very much. All right. Thank you.
Your next question comes from the line of Giulio Pescatore from HSBC. Please ask your question.
Hi. Thanks for taking my question. The first one on the DBX, can you just share maybe some details around the order book in terms of regional exposure? I think it'd be interesting to see where the order book is going. The second one on the Speedster, I know you were meant to be selling 88. Maybe can you give us an update on how many have you already sold and how many are still? I mean, you mentioned the order book is still building, right? Maybe can you give us a percentage of how much have you already sold versus how much you still plan to sell? The last one on the Valkyrie. I read in the press release that the Valkyrie was pushed back in H2.
Maybe can you share how much do you think you can produce and sell this year, and how does that compare in terms of previous plan?
Okay. I think in the previous guidance, we did say that we have a very strong order book on the DBX, and we are still picking up orders for the DBX going into 2021. Production, the manufacturing of the DBX has now started at St Athan, and the first cars should be rolling off pretty quickly and then will be delivered to the customers via the dealers in the summer. We have made that clear in various statements. Yeah. That is on the Valkyrie. I was going to take that.
On the Valkyrie, really simply put, some of the test facilities have been closed due to COVID, so it has nudged us back a little bit. It will be coming later in H2 than we originally planned.
Yeah, some of that will clearly shift into 2021, and we'll work that through as we get closer through to the end of the year. The other special, of course, we've said that we're pleased with the response to the V12 Speedster that launched in March.
Okay. Can I squeeze in maybe one other one? On the Formula 1, can you maybe go back on the rationale behind going back into the competition? I understand the marketing point, but from a cost perspective, can you really afford to run your own team? How is that changing in terms of cost base? Will that increase your operating leverage, for example?
Yeah. Giulio , remember, there's actually no difference in the financial impact to us going with the new team and our own team than the relationship we currently have.
I think we said at the time that the financial terms were commensurate with that that we have at the minute. Of course, the benefit that we get is that we get the team name, chassis name. It is an Aston Martin Works team. Significant benefit from that that we can use to leverage the whole brand globally and use those moments to engage with our customers and drive significant value from that.
Okay. Thank you.
Thank you. Your next question comes from the line of Charles Coldicott from Redburn. Please ask your question.
Morning. Thanks. I've just got two questions, please. Firstly, on Q2 and the working capital, is there anything you can say on that? I think you previously said that you would have GBP 100 million of inventory build in H1 because of the DBX in St Athan.
Should we still expect that to happen? That is 65 in Q2. Maybe you could just also comment on the receivables inflow in Q1. Is that all explained by the unwind of overhang from Q4, or does that reverse a bit in Q2? Secondly, I wanted to ask about residual values. Could you comment on anything you have seen, I guess, particularly in the U.S., given the high degree of leasing there? Have you seen that your financing partners, FCA and JPMorgan, have changed their terms at all?
Q2, yeah. Inventory, we would still expect to have some inventory build through into the second quarter because whilst St Athan has started production of the bodies of DBX today, we start full production in the next few weeks. Yes, there will still be some inventory build in Q2 and also for Valkyrie.
I can't give you a firm number, but certainly, I would expect it to build from where we were at the end of Q1. In terms of the receivables inflow, about GBP 35 million of it was associated with the Q4 overhang. That is almost entirely unwind. There is still a little bit more of that to go, though. That was mostly attributed to trade receivables in late December 2019. Of course, just the trading impact by the fact we had low year-on-year sales in March as we had COVID-19 starting to impact meant that our actual sort of ending balance at the end of March was relatively low. That is probably on the working capital piece.
On residual values, clearly, by reducing the inventory, then we'll be able to reduce the amount of sort of customer and retail financing support that we'll have to put into the market. We can see that already. We've got a better picture in Q1 than we had in Q4. It will continue. I'm not saying that it is zero, but it's certainly in better shape in Q1 than it was in Q4. We would expect ASPs to gradually rise. Clearly, later on now, as we get through the destock and then that, as you say, will feed through into residual values.
Thank you. Okay. Thanks.
All right. Thank you. Your next question comes from the line of Sanjay Jha from Panmure Gordon . Please ask your question.
Good morning. Thank you. I just wanted to get my head around the working capital again.
I know you talked about inventories and receivables. Can you talk about payables? Because I thought that you had quite a bit of payables to deal with in the first half. Can you sort of throw some light on that?
Yes. The payables are there, and the payables have increased slightly because we are buying stock in for or stock in for the build of the DBX. We are paying our suppliers on time as we build our stocks up. I do not see a problem as far as where I sit with the payables at all. Sorry. You said your payables are going up, so that means you are not paying on time. I am sorry. I am slightly confused here. We are paying in line with the terms of the payables. The payables are going up because we are buying materials for the DBX.
If they go up, then we've got terms with suppliers. We pay suppliers on time in line with their terms. Yeah. When are these payables due to be paid?
Sorry. What I'm trying to figure out is if they're going to be, because there's nothing been happening for the last few weeks, I'm guessing at some stage you are paying these payables. I just wanted to get a sense of working capital movement in this quarter two.
We pay all payables on time. We run our payable runs twice a month, in the middle of the month and at the end of the month. In line with the terms that have been set up on our system, we pay suppliers.
Okay. My second question is, could you give us some idea about what's happening with the supply chain?
Particularly, I know some of your suppliers are in Italy. I just wanted to get a feel for where you are in terms of I know last time you had a call, you talked about the fact that you could see supply chain up to June or something. Was it up to end of March? I can't remember. What's it looking like now?
You can imagine, Sanjay, our supply chain team are working very closely with all of our suppliers. One of the reasons we were able to start production of DBX yesterday was the fact that our supply chain team had ensured with secured supply for DBX. That factory is, as I say, you start a full production starts in a few weeks. They are very busy, but we're in a good place. Thanks.
Thank you.
Thank you. The next question comes from the line of Thomas Besson from Kepler Cheuvreux. Please ask your question.
Thank you very much. Sorry if I'm French, but I'm going to try and ask precise questions if I can. Could you give us an idea of how many DBX you believe you can deliver in 2020? You're suggesting your order intake has built up into 2021, but I don't think we've had a figure. Apparently, you mean summer start for delivery. It can be July or September. Could we have an idea of whether it's going to be 500, 1,500 DBX deliveries in 2020, please? Could you as well confirm the number of specials you think you're going to be able to deliver in 2020, including the Valkyrie number, please?
Hi, Thomas. Okay. I'll take the DBX.
I mean, clearly, when we said that the order book had exceeded 2,000 and we were covered for our retail demand for 2020, that gives you an indication in terms of numbers. I do not think we have given a specific target on DBX wholesales for the year, but that will probably give you a bit of scope, I suppose, to help. Apologies, I cannot be exactly precise for you, but that is probably as precise as I can be. In terms of specials, of course, we have got the 19 of the DBS Zagatos coming through. They are coming through, I think it is Q4, those cars come in. Of course, they are the other half of that Centurion pair that we started to deliver with the continuations Q4 last year. We have then got, I think it is 25 of the DB5 Continuations.
The majority of those I would expect to go in the second half of this year as well. Valkyrie, clearly, I do not think we have ever shared a number on that, but with the testing facility delay, then slightly fewer of those Valkyries expected to be delivered than our original expectation for the second half. Those, of course, we picked up in 2021.
Broadly, we can count on approximately 50 specials, I guess, and whatever number of DBX. Okay. Thank you. Second question, please. Your aspirational Italian peer has talked about some cancellations in its order intake in the quarter. Can you comment on whether you have seen as well cancellations at Aston? Specifically, I have been a bit surprised, I must say, by the strength of your U.K. business, knowing the situation in the country.
Could you talk about group cancellations and make a specific comment on the U.K. market and what we should expect for the next three quarters after such a strong Q1, please? Thank you.
Yeah. I can make a comment on the cancellations. There have been one or two on the specials, all of which have been backfilled by other customer orders. Nothing to call out there. In terms of call cards, the DBX order book has continued to build. I can't sit here hand on heart and say that a dealer hasn't had a cancellation from a customer. As you know, the orders to us are placed by the dealers, and we haven't had anything coming through. We've just had that order book increasing over the last few weeks and now extending, as I think we said, into 2021.
In terms of the U.K. specifically, I don't think I have any great color there. I mean, the performance, clearly, it was the best region. It started the year with kind of the best stock position. That certainly helped that. We'll have to wait and see how the easing of the current lockdown restrictions really impact the demand. As per I can't remember whose question it was, the Q2, it really will just depend on how and when lockdown fully eases in each market. That will be as relevant for the U.K. as it is for any other market.
Okay. Thank you. I have a very easy one to finish, please. Do you have a date in mind for the new team to present a plan that would replace, I guess, the pre-existing one and would set up midterm targets within the new setup, please?
I'm not entirely sure that people will be expecting us to present a new plan, per se, given we gave the plan, which centers around getting supply and demand rebalanced for sports cars and destocking the sports car network. We've made good progress on that in the first quarter and still more work to do there. Getting an SUV launched, you've heard today that DBX has started production yesterday. The reviews for that car and the strength of the order book is making us feel confident about that. The investment in the mid-engines, starting with Aston Martin Valkyrie coming later this year and then Valhalla and Vanquish thereafter, that is the plan. That's what we're out delivering. I'm not quite sure.
Sorry, Charlotte. If I wasn't clear, I meant financial targets. I understand what you're trying to do. There is no financial targets.
Yeah. Sorry.
It's my French.
I think, yes. No, I think at the minute, I mean, you've got to just please bear with us. I don't think we're alone in not putting specific targets out for this year. Let us get through the uncertainty, have a clear view for this year. Once we're in a position to be able to update that, then I should think we might be able to give some appropriate new guidance into the market. I can't give you a date. As I say, we don't know how different markets are going to perform over the next few weeks. You'll just have to bear with us, I'm afraid.
Great. Thank you.
Thank you. The next question comes from the line of Christoph [ Wellinger]. Please ask your question.
Hi.
Good morning. I would have a follow-up question on liquidity. You mentioned that liquidity at the end of March on a pro forma basis is at GBP 514 million. Could you help us understand what is the additional available liquidity that you have as well at the end of March? I'm talking about on-drawn facilities like the RCF and so on. That's the first question. I would have two follow-up questions as well.
Yes, we have additional facilities which we are reviewing every day. We have the $100 million DDNs, which are available to us. We are also talking to government for support if there is any support available. We are also looking at additional access to working capital facilities. That's as much as I can say today. We have these facilities and our requirements very much in our focus.
On the RCF, is it fully drawn?
The RCF is, yes. And it's there, very much so.
So you mean it's there. Is it available?
A small amount is available, but we've drawn quite a lot of it.
Can you share with us how much is available?
About GBP 20 million.
GBP 20 million. Okay. Okay. The second question is really to try to understand the pace of cash burn and how flexible you are in the structure. First, do you have any figures you can share with us in terms of monthly cash burn rate on zero production? If not, what is the share of your variable versus fixed cost?
Yeah. On that, I mean, you've seen that we've taken some action on costs in terms of taking advantage of the government scheme in terms of the job retention scheme for our staff who are furloughed.
Because you can imagine in terms of numbers of employees, our manufacturing colleagues are a high proportion of employee costs. We have taken action there to mitigate spend. You can imagine that we have been thinking carefully about what we are placing in terms of building the inventory and planning on what inventory we are bringing in while we have not been manufacturing in plants, but ensuring that we do have the supply that we need for when we do start, as we have done in St Athan. I think we are looking at, and you have seen the senior team waive some of their fees. All of these are incremental factors that we can levers that we can pull to control spend. You have also seen the outlook statement that we have made a specific comment about looking for further actions on costs and being extremely focused on cash conservation.
You have seen some of that with some of the rephasing of CapEx as well in the quarter that we have just reported.
Do you have a broad percentage you could give me in terms of variable cost based on all what you said here?
Yeah. There has been some flow-through of manufacturing costs, clearly, because if you have not been manufacturing, then you have got variable manufacturing costs that have supported in the quarter. You would expect that to be doing so in April. Looking at all other areas of variable spend, there has been some rephasing of marketing spend in the quarter. Some of that, we said, was about Formula One sponsorship given some of the timings of those races this year. We have already said that we are looking at our site footprint. We will be looking to close six of our sites.
A proper deep dive looking through different lines on the operating cost base.
Okay. Maybe thank you. The last question is really on the DBX. Can you maybe share with us what would be a ball number of DBX delivery for 2020?
I think somebody else already asked us that, and I gave really as much help as I can. I'm afraid I haven't got any more to add.
Thanks. All right. Maybe for the last two months, what has been the pace of order book growth for the DBX? Have you seen a slowdown compared to, let's say, December and January for February and March?
Yeah. I mean, naturally, given we had, I think it was 93% of our dealer network that was closed at some points, then obviously you would have expected somewhat of a slowdown.
Net net, we have more orders now than we had when we last updated you. What's really interesting is the social media interaction is extremely high. The configurator usage is extremely high. We are pleased with what we're seeing with those dealers. We've got more than 15% of them are open today. We are pleased with what we're hearing from those dealers on the ground. In China, following the reopening there, have you seen a pickup in order intake on the DBX? Was it by two weeks?
Yeah. Okay. Thank you very much for your answer. Cheers.
All right. Thank you. Your next question comes from the line of Stephanie Vincent from JPMorgan. Please ask your question.
Thank you. I have two, if I may.
Just on the production cadence for this year, I think it would be helpful, given we're in such an uncertain time, if you can talk about the breakdown of parts supply coming from the various regions, so specifically U.K., EU, US, and China. This is longer term, but how can a non-marketing person look at the marketing effort for your products going into the new normal? How successful can social media and online marketing be? It would be really helpful to talk about KPIs, something that we can get into our heads to maybe track this going forward, given the marketing experience will be quite different.
Hi, Stephanie. In terms of where the parts are coming from, it's quite a big bit of work that we did when we were very focused clearly on country of origin.
I do not really want to bring out the B word, but when we did all our Brexit contingency planning. We have a very high percentage that is U.K., although we do also then have quite high by value European parts. You will have seen that in terms of some of the big chunk of that GBP 7 million FX headwind in this quarter was associated with the COGS, where we are bringing high-value parts in from Europe. We do have suppliers clearly in other regions. I think the stats are over 60% is U.K. local content and 95% of our parts are Europe or U.K. Hopefully that helps on that. In terms of the marketing effort, it is a great start. I am not quite sure what you are going to do with it, but we had a 700% increase on our social media engagement. There is a stat for you.
You can imagine that Pete and his marketing team are very focused on how do we ensure that we are spending our money appropriately given we're not running events, which are normally quite a high proportion of our spend. Ensuring that we're maximizing that as are all our dealers. That's our brand marketing, but also all our dealer partners supporting them in the "new normal" of engagement as we work through this.
Do you mind if I toss in another question just in terms of the maybe percentage or sort of KPIs you look at as percentage of orders that you believe come from these automotive shows and events?
It's very difficult to track, Stephanie.
With any marketing funnel, of course, you've got your reach and engagement right at the top of it, and then you work down through the funnel in terms of working through from interests into leads, into active engagement, then working all the way through in terms of people coming into active interest, processing an order, and then booking an order with us. We've got our in-house sort of system that logs that in terms of dealers registering interest or registering footfall and then actually getting through to that point of contract with the customer. There is no necessarily hard and fast rule. I think if I knew that, I'd be making a fortune in a marketing role. Key is often the test drive moment and converting that sort of test drive into orders.
That's great. Thank you.
Thank you. The next question comes from the line of Angus Tweedie from Citigroup. Please ask your question.
Hi. Thank you. My questions were on liquidity, actually. Can you just talk about the $100 million of delayed draw notes and whether you're relying on those to get through your kind of Q2 liquidity needs? Then secondly, on those, can you confirm if there is any sort of material adverse change clause that's in there and how confident are you that that money will be available if it's required?
We have no problem with the DDNs at all. We've got them. If we need the money, we'll draw on them. We don't need the money at the moment. There is no intention of drawing on them. We have enough liquidity.
As I mentioned earlier on, we are looking at other working capital facilities as any good firm would do in the current climate that we live in. We are also exploring options on additional support from the government. We have stated this quite openly today, and we will see how we go. We do look at these things because we are a responsible company.
Okay. Just on the government point, can you give us any idea sort of vaguely what you think that could entail or what you would like to receive?
We are speaking to them. We have a person in-house who liaises with government on our behalf. We are hoping to take advantage of any facilities that the government is willing to offer, provided it suits us. That is where we are. How long it will take, I honestly do not know.
The wheels of government move very slowly, and that's a fact.
Okay. Perfect. Thank you.
All right. Thank you. The next question comes from the line of Mike Dean from Bloomberg. Please ask your question.
Good morning, everybody. I hope you're all well. Just another follow-up question on the $100 million of DDNs. When's this facility available until? And then just on Gaydon, sorry if you mentioned this earlier, but when do you expect to resume production there? Thank you.
The facility on the DDN is available till July. That is a given unless we decide to renew it. The facility at Gaydon has already started. We have people working in Gaydon, but Gaydon is a smaller site than St Athan. We have to be very careful on social distancing, etc., in Gaydon. We are planning on how we restart the site fully.
You are actually producing cars at Gaydon at the moment?
No, we are not producing cars at the moment. We are trying to assess how we can go about that. Because it is a smaller site, it is a tighter line. Therefore, we are assessing that.
Okay. Very clear. Thank you.
All right. Thank you. The next question comes from the line of Phil Bagguley from Bank of America. Please ask your question.
Thank you. Good morning. Thank you for taking my questions. I have two. The first one is with respect to any and all of the bonds. Has there been any bond purchases either by the company or by any of the principal shareholders? The second question is on the delayed draw notes. Is there any kind of, I mean, you have mentioned the potential to extend that option. Can you just remind us on the terms of that?
Is there any kind of MAC clause that the counterparties might try and exercise in that agreement?
Yeah. On the bonds, no. There is nothing to report on them. We are not doing anything on the bonds that are there. On the delayed draw notes, we have a maturity date of July. That is as far as we know at the moment. We have not drawn on them.
There is no MAC clause to worry about.
Nothing like that.
Great. Thanks so much.
Thank you. The last question comes from the line of Kai Mueller from Bank of America. Please ask your question.
Hi. Sorry. It is me again. I was on mute earlier when I was wanting to ask a follow-up question. The point, it was sort of mentioned earlier in terms of the incentives, obviously, you have given to drive sales.
Can you remind us as well on this residual risk sharing agreement that you have, when we think about your leased vehicles that you've pushed last year and maybe even the leased vehicle that you are pushing this year, when would you see that to materialize? You obviously are giving incentives right now to make the sale, but how do we have to think about the time the car comes back to the dealer and potentially the residual values below what had been assumed? Who takes the hit or how does that agreement work between you and your lenders or the financing companies?
Yeah. There's nothing more to come through from our perspective. You're seeing that in the ASP headwind at the minute, Kai.
We've got clearly different individual arrangements with the different financing companies in each market, but it's their balance sheet that's taking that risk, not ours.
Okay. If vehicles that, as soon as the lease has been signed, your risk is off the table. In order to get it signed, you are giving better terms in terms of the original price at the initial point. There's no risk that they could come back when they come back to the dealers that you are also taking a write-down or a hit on the residual value differential.
No, that's correct. That's why it's called subventing the lease. Basically, we do that first upfront, and then the relationship is with that financing partner through to the customer rather than us.
Okay.
Maybe just to follow up anyway, I know you've been tracking from the ITO, sort of your residual value market. Obviously, since you launched some of the new DB11, the residual values held much better than the DB9s. Obviously, over the last year, the residual values and volumes have been the issue. Can you give us an update on sort of what your latest tracking tells you in terms of where residual values are heading?
I mean, clearly, I think when I was talking to Charlie, we were talking about the fact that it will take a bit of time for this action to work through the system. As we are seeing kind of that support improving as we go through the quarters, as we saw this sort of better picture set in Q1 than we have in Q4, that should start to feed through.
If you think average lease lengths run for a reasonable period of time, I think it will take a little bit of time to work through for residual values. Honestly, that's one of the things I did not check in my massive facts book in terms of current read on residual values. I have not got a number to share with you, I'm afraid. Sorry.
Okay. No, that's great. Thank you very much.
Thank you. The next question comes from the line of Dominic Convey from Peel Hunt. Please ask your question.
Good morning, Chief. I might have missed it earlier, but can you just be clear on how many vehicles you still need to take out of the dealer network to achieve your stated objectives?
Obviously, you've done over 600 in the last 15 months, but it's clearly critical as to the way we think and model average selling price going forward and perhaps give us a little bit on that same theme. How quickly do you expect to get to that stated target?
On the target, I mean, clearly, we're going for a luxury best-in-class position, which is lower than where we are. We haven't put a number on it. The fact that we've destocked by that 428 this quarter, we still think we've got work to do. We're flagging that we do expect that work to continue. In terms of how quickly we'll take to get there, I mean, that's sort of we'll have to wait and see how quickly do consumers' buying patterns return once we get through lockdown in different markets.
I'd certainly expect it to take at least the second quarter, if not a bit longer, to work through to get to that lower level of dealer stock. Although I would say in some markets, we are certainly in pretty good shape already in terms of dealer stock, some of those markets that you've seen better performance from in terms of the numbers that we posted this morning.
Can we infer from that? U.K., you're where you want to be. Europe probably getting close to it. Americas and Asia-Pac is where you still work to do. I just guess, looking for some sense as to how many vehicles that is to get you down in those other territories to where you are in the U.K.
Yeah. I'm really sorry. I'm not trying to be difficult, but we haven't put a number on it.
We are, I don't know, it's a pretty meaningful destock, that 428 that we've achieved. There is still work to do against that number. What's really great, I think it ended up going and still staying in the release, but nearly half of that destock was Vantage. So pleased with the progress that we're seeing there. Regionally, you can take a bit of a steer in terms of the different regional performances. I certainly would, I don't want to build any expectation that we feel we're done in terms of that inventory position yet.
Understood. Thank you.
Thank you. There are no further questions at this time. Please continue.
Super. Thank you very much for your questions. I think.
Thank you very much.
We will look forward to keeping you updated on our progress in due course.
Apologies to those who were trying to talk to us and were on mute, Kai. We did not mean to make you have to cut through the queue. Thanks, all. Bye-bye.
Thank you. That does conclude our conference for today. Thank you all for participating. You may all disconnect.