Good morning. Welcome to Aston Martin First Half 2023 Result Presentation. I am Amedeo Felisa, CEO, and I am joined today by Doug Lafferty, our CFO. In term of our prepared remarks, I will start with some of our highlights from H1. Doug will take you through the financial and our outlook. The first half of the year has seen Aston Martin accelerate the pace of execution across the company, start the transformation of our sport car lineup, update our EV strategy, as well as provide a new ambitious financial target, all focused on delivering values to our shareholders. Doug will take you through the details of our results. In the summary, the first half of 2023 saw us deliver a strong revenues growth as well as margin expansion, consistent with our strategy.
Our adjusted EBITDA and free cash flow performances were ahead of the outlook we provided last quarter. During the first half of the year, we have also continued to invest in our people and improve our ways of working. This has included new senior appointment in areas such procurement, manufacturing, engineering, which we will complement the extraordinary internal talent we have across the company. Overall, I am pleased with the progress we have made, and along with the team, I am focused on ensuring we continue to drive new levels of operational excellence to support our growth.
This year sees us celebrate Aston Martin 110th anniversary with a series of event to mark the historic occasion, including a reception at the Houses of Parliament in London, a spectacular celebration lap at the Silverstone Circuit with an incredible lineup of 110 Aston Martin cars representing the past, present, and future, and the launch of Goodwood Festival of Speed, this month of Valour, a unique special model to celebrate this landmark year. From a product perspective, 2023 is expected to be a transformational year, starting with the launch of the first of our next generation of sports car, the DB12 Super Tourer, marking the start of a new era for Aston Martin.
We have seen a fantastic initial response from customer and review in the media, highlighting the step change improvement in performance and vehicle dynamics, as well as the transformation of the interiors and our new bespoke infotainment system. Unveiled in May, we expect the first customer deliveries to start in Q3. We are now in the process of accelerating our production ramp-up to support the deliveries of this highly anticipated sports car amid the strong demand we have already seen. As I referenced earlier, to celebrate our 110 years, we have also unveiled the spectacular, ultra-exclusive V12 engine, manual transmission, special edition model. The Valour is a celebration of our passion for driving and rich heritage of incredible front-engine sports car. The last of an era, Valour fuses unmistakable looks, pure and relentless performances with intense dynamic character.
Inspired by the iconic muscle car of our past, the Valour also combine the very latest technology, method, and materials with timeless analog experience. Within two weeks, all 110 units have been sold with a growing waiting list. We are also continuing to invest in our brand and go-to-market strategy, as well as building on the transformational partnership with the Aston Martin Aramco Cognizant Formula One team. During the second quarter, we have opened the Q New York, our first ultra-luxury flagship in the heart of New York City, which will provide an unrivaled customer experience, as well as the most sophisticated luxury specification experience available anywhere in the world. We will also be bringing flagship store to selected location around the world, including London, the key city in Asia, Europe, and North America.
At the end of Q2, we have updated our EV strategy to support the creation of the industry-leading ultra-luxury, high-performance electric vehicle and our target of launching our first BEV in 2025. This included a new strategic supply agreement with Lucid, along with an amendment to our strategic operation and agreement with Mercedes-Benz, all underpinned by our modular BEV platform. The proposed alignment of our iconic brand, ultra-luxury, craftsmanship, and high-performance in-house engineering excellence with Lucid advanced technology and expertise in luxury electric vehicle, will create an unrivaled combination with the capability to redefine the customer experience for future Aston Martin BEV product.
The supply agreement would also complement the development of a single bespoke Aston Martin BEV platform that will be utilized across our future electrified product portfolio, all the way from hypercar to sport car and SUV, and support our target to launch our first BEV in 2025. In addition to leveraging the significant investment Lucid have made, we will further differentiate what it means to drive an Aston Martin through the work our team are already developing, providing unique and thrilling performances level, combined with the intense driving experience we know that our customers love and expect. I am also delighted to continue our long-term partnership with Mercedes-Benz. I would like to thank them for their continued support and belief in Aston Martin. With Lucid and Mercedes-Benz, these two world-class supplier to support the internal development and investment we are making to deliver our electrification strategy.
With the recently announced long-term partnership with Geely, we will also gain the opportunity to access their range of technology and component, as well as their deep expertise on the key strategic market on China. We also ended Q2 by hosting a Capital Markets Day in Gaydon. In addition to meeting with many of you, it also gave us the opportunity to demonstrate the progress we have made over the last three years and why we are so confident in the future. As you have heard, 2023 is shaping up to be a transformational year for Aston Martin. The first half has seen us accelerate the pace of the execution across the company, aligned with our ultra-luxury, high-performance strategy. In the second half of the year, we see this transformation continue as we deliver a range of new products across cores and special.
I will now hand over to Doug to take you through the financial and our targets.
Thank you, Amedeo. Over the next 10 minutes or so, I'll take you through our H1 financial performance before spending some time on our outlook for the second half of the year, as well as touching on the updated 2027, 2028 targets, which we shared at our recent Capital Markets Day. Starting with a high-level overview of our results for the first half of the year. As Amedeo referenced, the first half of the year has seen us continue to make good progress in the execution of our strategy. This has also been reflected in our financial performance, with H1 adjusted EBITDA and free cash flow ahead of the outlook I provided in early March, supported by some timing benefits from the phasing of costs and working capital. Our full-year outlook is unchanged.
As disclosed in our results statement, we are nearly sold out for the balance of the year, which is a good place to be. As mentioned in previous quarters, both I and Amedeo remain focused on ensuring that we continue to execute our plans, mitigate risks, and deliver value to shareholders. Starting at the top left of the slide, wholesales increased by 10% in the first half to 2,954 units, with an acceleration in growth in Q2. As expected, wholesale growth was driven by a 43% increase in DBX volumes, which more than offset lower sports car sales, given the ongoing transitions within the portfolio. ASP development continues to be strong, aligned with our strategy, which, combined with the volume growth, saw us deliver revenues of GBP 677 million, up a healthy 25% year-on-year.
Adjusted EBITDA of GBP 81 million increased by 38% year-on-year, delivering 110 basis points of year-on-year margin expansion, with approximately GBP 50 million of adjusted EBITDA generated in Q2. Moving to the top right, adjusted operating loss of GBP 87 million essentially reflects a GBP 36 million year-on-year increase in depreciation and amortization. Free cash flow was slightly improved on H1 2022, as higher operating cash flow was largely offset by higher CapEx. Finally, net debt was reduced by around 1/3 compared to H1 last year, and also declined compared to the end of Q1 this year. Turning to the next slide, which provides some more detail on our wholesale volumes for the period. We continue to see strong demand across the portfolio in H1, with retails outpacing wholesales aligned with our strategy.
The chart on the left of the slide gives you a sense of the balance of our wholesales between DBX and GT and sports. DBX represented slightly more than 50% of the volumes in the first half, driven by strong growth of the DBX707, which is now clearly established as a benchmark in the ultra-luxury SUV segment. As expected, given the ongoing transitions in the portfolio, GT and sports volume declined in the first half, ahead of the initial deliveries of the DB12 and the ramp-up of the DBS 770 Ultimate in Q3. On the right is wholesale average selling price, which continues to be one of the highlights of our performance and a key metric to support our future growth. Core was GBP 184,000 in H1, up an impressive 12% from last year, primarily driven by favorable pricing and mix dynamics.
When we include the 38 specials delivered in the half, all of which were Valkyries, total ASP increased to GBP 212,000, up 14% year-on-year. Moving to our regional split on the next slide. The Americas was our largest and strongest growth region in the first half, representing 36% of overall wholesales, primarily driven by strong DBX and V12 Vantage growth. EMEA also saw strong growth in H1, primarily driven by higher DBX volumes and overall GT and sports growth, most notably V12 Vantage Roadster volumes. The U.K. saw lower year-on-year volumes, driven by the ongoing transition of sports car sales ahead of new launches later in the year, which more than offset higher year-on-year DBX volumes.
Finally, APAC volumes declined year on year, following what had been a strong growth in Q2 2022, as well as ongoing transitions in both sports cars and DBX, following the peak in straight-six volumes in China last year. This was partially offset by strong growth in Japan. APAC continues to be a region where we see significant opportunity for long-term growth, particularly in China, where we will also benefit from Geely's deep understanding of this key strategic growth market. Moving to gross margin, which remains a key building block of our financial targets. The first half of the year saw us continue to make solid underlying progress, particularly in the core portfolio, given a richer mix of high-margin products such as the V12 Vantage and DBX707. This drove more than 350 basis points of overall gross margin improvement.
This was somewhat offset by higher manufacturing and logistics costs, as well as FX headwinds. Specials had a broadly neutral impact on gross margin, as higher Valkyrie contribution was offset by the lapping of high-margin V12 Speedster volumes delivered last year. Looking ahead, we expect gross margin tailwinds from specials in the second half of the year as we deliver new models such as the Valkyrie Spider, DBR22, and the Valour, particularly in Q4. Our second-half gross margin performance is expected to be supported by deliveries of the DB12, consistent with my prior comments. This should result in us continuing to make meaningful progress towards a 40% gross margin aligned with our 2024 target. Turning to adjusted EBITDA, which increased to GBP 81 million in the first half, delivering approximately 110 basis points of margin expansion.
H1 EBITDA was ahead of our prior outlook, benefiting from some rephasing of costs, which we now expect to incur in the second half of the year. The biggest positive drivers in the half were higher volumes and improved mix, as well as strong pricing dynamics, partially offset by higher operating expenses, including reinvestments into brand and marketing activities, as well as inflationary impacts on general costs. The table on the right-hand side of the slide sets out the movements below EBITDA. As previously guided, D&A increased year-on-year, principally related to higher Aston Martin Valkyrie production and deliveries, as well as the launch of new models. Net adjusted finance expense decreased significantly versus the first half of 2022, supported by a GBP 62 million non-cash FX gain on the revaluation of our U.S. dollar-denominated debt.
Adjusting items included a GBP 38 million charge related to movements in the fair value of outstanding warrants. Moving on to cash flow. Free cash outflow of GBP 218 million in the first half of the year was slightly ahead of H1 2022 and our prior outlook. This included GBP 180 million of CapEx, up by more than GBP 40 million year-on-year, with investments focused on the future product pipeline, particularly the next generation of sports cars, as well as the development of our electrification program. First half CapEx was slightly lower than expected, which helped to support the improved year-on-year free cash flow performance, with some rephasing of spend into the second half aligned with our full-year outlook. Working capital was a GBP 37 million outflow in H1, but a GBP 17 million inflow in Q2.
The first half outflow was primarily driven by an increase in work-in-progress inventories to support our upcoming launches, partially offset by more efficient cash collections. Demand for specials remained strong in the first half of the year, with deposit intake for Valhalla, Valour, and DBR22, offset by the unwinding of customer deposits due to higher Valkyrie deliveries. Looking into the second half of the year, we expect to see new deposits increase following the public unveiling of Valour and as we continue to take Valhalla deposits. Finally, first half free cash flow was also impacted by GBP 56 million of net interest paid in Q2. Turning to cash and debt, we ended H1 with approximately GBP 400 million of cash, more than GBP 240 million higher than the end of H1 2022, and essentially flat versus the end of Q1.
On a year-on-year basis, the increase in cash was primarily driven by the proceeds of last summer's equity capital raise, of which GBP 187 million was used to repurchase first and second lien notes in Q4, 2022, with a further GBP 50 million used to reduce our usage of our available RCF. Our RCF capacity and our cash balance together provide around GBP 460 million of overall liquidity. When compared to the end of Q1, our stable cash balance was essentially driven by the free cash outflow I described earlier, offset by the GBP 95 million of proceeds from the shares issued to Geely during the second quarter.
From a net debt perspective, we ended the half with just under GBP 850 million of net debt, a reduction of more than GBP 400 million from the end of the first half of 2022. This reduction included the GBP 62 million favorable non-cash revaluation of our dollar-denominated notes. Looking ahead to our outlook. Our outlook for 2023 is unchanged, and we continue to expect a significant improvement in profitability and free cash flow in the second half of the year, primarily due to the timing and related contribution of new product launches. The second half of 2023, and especially Q4, is expected to see the delivery of a number of new products across the core and specials ranges, all with improved profitability.
In addition to the ramp-up of the already sold-out DBS 770 Ultimate, we expect deliveries of the first of our next generation of sports cars, the DB12, to commence in Q3 and accelerate into Q4. Within specials, we plan to commence deliveries of the sold-out Aston Martin Valkyrie Spider and the ultra-luxury DBR22 in the second half of the year. Finally, in conjunction with our historic 110th anniversary, we plan to commence deliveries of the ultra-exclusive Valour in Q4. In order to help you with your modeling, I wanted to provide some additional comments on the expected phasing of our second half performance. As I mentioned, our Q2 performance was ahead of expectations, supported by some timing benefits from the phasing of costs and working capital.
In relation to Q3, we expect to achieve a similar level of adjusted EBITDA as compared to Q2 2023, with a significant increase in adjusted EBITDA in Q4 this year, primarily due to the timing and related contribution of the new product launches. From a free cash flow perspective, our full-year expectations are also unchanged, despite the slightly better performance in H1. We continue to target positive free cash flow in the second half, but excluding the initial $33 million, or roughly GBP 26 million, technology access cash payment to Lucid.
Looking further ahead and consistent with our comments at the recent Capital Markets Day, we remain well on track to deliver our 2024, 2025 financial targets, originally provided in 2020, which aim to deliver roughly GBP 2 billion in revenue and roughly GBP 500 million of adjusted EBITDA by 2024, 2025. We expect to substantially achieve these financial targets in 2024, and with continued strong momentum, are likely to exceed them in 2025. In terms of cash flow, we continue to see 2024 as the year in which we will reach the inflection point for turning sustainably free cash flow positive.
We also shared our new midterm targets for 2027, 2028, focused on growth through value and delivering sustainable free cash flow. The targets and framework are built around revenue growth, continued improvement in gross margin, EBITDA growth, coupled with EBITDA margin expansion, and sustainably positive free cash flow. These should result in a net leverage ratio of approximately 1x . From a revenue perspective, we expect to deliver approximately GBP 2.5 billion in revenue in 2027, 2028, predominantly driven through continued ASP improvements aligned with our strategy. For gross margin, we expect to continue to drive improvement to the mid-40s level, driven by the new product launches across core and specials, which all target a minimum 40% gross margin.
Moving to adjusted EBITDA and EBITDA margin, we expect to generate approximately GBP 800 million of adjusted EBITDA and a margin of circa 30%. This should all result in us continuing to deliver positive free cash flow while continuing to invest in our future growth. In closing, our first half has been executed to plan, and we are fully focused on repeating this in the second half, driven by the continuing transition in our portfolio. Achieving this will allow us to exit 2023 with strong momentum to support the delivery of our longer-term targets. Thank you.