Aston Martin Lagonda Global Holdings plc (LON:AML) has announced that it is filing for civil legal proceedings against Nebula Project AG and, with the support of a group of its customers, criminal proceedings against its board members in order for the prosecutor to investigate any potential criminal behaviour following the failure to pay some customer deposits for Aston Martin Valkyrie programme orders received by Nebula Project AG to the Company. The Company has also terminated the underlying commercial agreement with Nebula Project AG.
Both Aston Martin and its customers have been impacted by Nebula Project AG’s and its board members’ behaviour. Aston Martin is fully committed to supporting and working with those customers affected to ensure that they will still receive delivery of their Valkyrie programme vehicles as scheduled, prioritising customer relationships, despite the Company not having received all the deposited funds. There are no other agreements like this in place and going forward the Company will ensure that all deposits for special vehicles are received directly by Aston Martin, not through a third party.
In 2016, the prior management team of Aston Martin entered into an arrangement with Nebula Project AG to underpin the development of the Aston Martin Valkyrie and certain other mid-engine programmes. Under the terms of this agreement Nebula Project AG was to receive royalty payments, which could have been significant over time, linked to production volumes of these programmes and Nebula Project AG meeting its funding commitments. As a result of the termination of this commercial agreement with Nebula Project AG, Aston Martin is no longer liable for any of these potential royalty payments.
The Company is today also terminating the dealership arrangements it had with AF Cars AG, a company operating Aston Martin St.Gallen in Switzerland and managed by the same board members as Nebula Project AG, after learning that vehicles have been sold in breach of terms of the dealership agreement. The Company is focused on maintaining service for customers as a priority with the four other dealers it has in Switzerland operating as usual.
The net financial impact to Aston Martin of this extraordinary event is expected to be positive over time, as the financial impact of not having received all the deposited funds, is expected to be outweighed by the benefit from the termination of the Nebula agreement and associated potential royalty payments. However, for the year ending 31 December 2021 it is expected to reduce both cashflow and EBITDA by up to £15 million, including a provision of up to £5m of trade debtors. The Company expects to book the provision in the second quarter and for the remaining impact on cash flow and EBITDA to arise primarily in the fourth quarter. The Company is confident that the net negative impact for 2022 can be managed within current expectations.
Aston Martin has performed well year-to-date during 2021, following the successful completion of the supply to demand rebalance for GT/Sport cars, continuing excellent progress on Project Horizon and with good forward visibility for both GT/Sport and DBX. Aston Martin Valkyrie is on track for first deliveries in the second half of the year.
Other than the short term negative financial impact of this issue, Aston Martin is on course to achieve its financial guidance for 2021 and remains confident in achieving its medium-term targets of c.10,000 wholesales, c.£2bn revenue and c.£500m adjusted EBITDA by 2024/25.
The Company will provide further updates on this issue and the legal proceedings as appropriate.