C O N F I D E N T I A L Q2 2017 Results September 29, 2017 0
C O N F I D E N T I A L One outstanding luxury and technology group Highlights Sales and car volume split Sales by division Car volumes by region Global leader in high-performance luxury and technology Applied RoW Technologies 11% 55 year history dominated by technical excellence 5% North China America Racing 7% Revenue visibility via automotive order book and F1 contracts 35% 25% APAC ex. Q2 2017 LTM normalized PF revenue: £999m China Automotive 17% 70% Europe Q2 2017 LTM normalized PF EBITDA: £167m 30% 2016: £898m 2 2016: 3,286 units Automotive Racing Applied Technologies 2016 Revenues: £650m 2016 Revenues: £225m 2016 Revenues: £52m Award winning high performance luxury cars Unique brand platform with global visibility Cutting-edge tech solutions and data analysis “Experience” -led customer proposition 20 F1 World Championships Track record of exceptional & profitable growth Notes: 1 Normalised pro-forma revenue is calculated using the same approach as normalised pro-forma EBITDA, adjusting for the impact of the SAP implementation, the 720S ramp-up and cost synergies. 2 Exclusive of intercompany transactions 10 1
C O N F I D E N T I A L Highlights Individual McLaren businesses brought together under a single brand with unified and supportive shareholders to create one outstanding luxury and technology group Accelerating car volumes from June 2017 following successful launches of iconic 720S and 570S Spider Continued strong order book, with both 720S and 570S Spider sold out into 2018 720S production ramp-up complete, currently producing 40 cars per week Q2 2017 group revenues of £189m (vs. £130m in Q1 2017), with the increase mainly driven by continued ramp-up of 720S production Q2 2017 normalised EBITDA of £23m (vs. £11m in Q1 2017) and reported EBITDA of £(3)m LTM normalised EBITDA of £167m Revenue and profitability in-line with plan driven by timing of 720S ramp-up in H1 2017 and 570S Spider launch in June 2017 New engine supply partnership agreed with Renault for 2018, 2019 and 2020 F1 seasons Continued growth in Applied Technologies underpins disruptive technology offering in attractive end markets Optimised capital structure and strong liquidity supported by £650m refinancing 8 2
C O N F I D E N T I A L Unified McLaren Group under a simplified ownership structure New McLaren Group Structure Shareholders Integration progressing well Bahrain Mumtalakat TAG Group Minority Areas for synergies identified Holding Limited shareholders Company Task forces established across 63% 16% 21% key disciplines On track to deliver announced cost synergies of £12m in McLaren Group Limited 2018 £6m synergies already secured £90 million McLaren Holdings Super Senior Limited RCF McLaren Automotive McLaren Technology McLaren Finance PLC Ltd Group Ltd £564 million Senior Secured Notes 10 3
C O N F I D E N T I A L Successful product launches – 720S already sold out into Q2 2018 “ The 720S is magnificent, but also surprisingly nuanced for such an adrenalised “Yet another amazing leap for a brand that seems to have proposition: it takes time to work out the full scale of its, and its creators, achievements” come a very long way in a relatively short space of time” Top Gear magazine Auto Express, 03/05/17 “McLaren wants it all with the 720S: more power, more performance, smarter aero, better “ The 720S is the clearest expression yet of comfort, cooler gadgets and the moon on a stick. And you know what? Aiming high has paid off” McLaren’s approach to the art of the supercar ” CAR magazine MotorTrend 02/05/17 Sold out Into Q2 2018 341 km/h top speed 720 PS engine 720 PS engine, one-piece carbon fibre MonoCage and luxurious interior are class leading 13 4
C O N F I D E N T I A L Successful product launches – 570S Spider getting stellar reviews Sold out into 2018 “It’s the best sports car we’ve driven in a decade”. Deliveries commenced British GQ in August 2017 “More fun and engagement than 570S. No dynamic compromise.” EVO “The 570S has shed its roof, but its massive talent remains intact.” AUTOCAR 14 5
C O N F I D E N T I A L Historical financials overview Pro forma normalised Group Revenue 1 (£m) Pro forma normalised Group EBITDA (£m) Margin 2 16.7% 2 13.5% 16.3% 16.5% 999 Automotive margin 2 140 Revenues Adjustments 24.0% 22.1% 21.8% 23.6% 2 EBITDA Adjustments 167 898 859 735 728 70 148 119 99 97 2014A 2015A 2016A LTM 2Q17 2014A 2015A 2016A LTM 2Q17 Continued growth in normalised EBITDA Track record of sustained revenue growth Reported profitability impacted in H1 2017 from drop-through of lower H1 2017 revenue impacted by planned shut down in automotive production automotive and sponsorship revenues (SAP implementation) and anticipated gap in Super Series line-up Racing margin further impacted by increased costs of 2017 Formula 1 car following regulatory changes implemented for 2017 season Net debt 3 (£m) Automotive volume (units) 3,286 3,184 432 1,649 1,612 2014A 2015A 2016A LTM 2Q17 June 2017 Strong volume performance despite 720S not being delivered until June 2017 Net debt position reflects July 2017 bond issuance of £564m and £90m RCF Strong sales of Sports Series maintained (undrawn) refinancing 720S ramp-up complete Note: 1 Inclusive of intercompany transactions at revenue level for 2014 and 2015, exclusive of intercompany transactions for 2016 (c. £28m) and LTM normalised PF 2Q17 revenue (calculated using the same approach as normalised PF EBITDA, adjusting for the impact of the SAP implementation , the 720S ramp-up and cost synergies) 2 LTM Group margin based on normalised revenues and EBITDA of £999m and £167m; LTM Automotive margin based on normalised automotive revenues and EBITDA of £743m and £175m 3 Pro forma combined net senior financial debt represents the senior financial debt of the Group after giving Pro forma effect to the Transactions, less Pro forma combined cash at bank and in hand of £132 million, which represents Pro forma combined cash at bank and in hand before the Financing of £29 million as adjusted for the Transactions, including all associated costs 39 6
C O N F I D E N T I A L Q2 2017 summary Automotive volumes Revenue (£m) EBITDA (£m) 193 733 189 15 727 453 (3) 130 (29) Q2 2016A Q1 2017A Q2 2017A Q2 2016A Q1 2017A Q2 2017A Q2 2016A Q1 2017A Q2 2017A Strong volume performance despite 720S not Weaker y-o-y Q2 automotive revenues Profitability in-line with plan driven by timing of being delivered until June 2017 impacted by shift in sales mix from Super model launches and production ramp-up Series to Sports Series Strong Super Series and Sports Series order Q2 2017 EBITDA loss reflects reduced Revenue growth vs. Q1 2017 reflects continued book and dealer allocations reflects exceptional automotive and sponsorship revenues, further customer demand ramp-up of 720S production impacted by increased cost of 2017 racing car 720S sold out into Q2 2018 Racing revenues and other revenues up 4% y- Significant improvement in Q2 EBITDA o-y with increased prize fund partially offset by momentum vs. Q1 2017 (£(29)m) lower sponsorship income Applied Technology revenue flat y-o-y due to timing of project income, but up 28% in H1 2017 9 7
C O N F I D E N T I A L Q2 2016 – 2017 EBITDA bridge 167 McLaren Automotive 97 (7) 15 (2) (10) (3) Q2 2016 Sales Mix SG&A Racing & Applied Q2 2017 LTM LTM adjusted Technologies Shift in Automotive sales mix from Super Series to Sports Series Increased SG&A costs driven by timing vs. 2016 – flat for H1 2017 vs. prior year Racing EBITDA affected by drop in sponsorship income and increased cost of 2017 racing car following regulatory changes implemented for 2017 season, partially offset by increased prize money for 2016 Constructors Championship EBITDA in Applied Technologies broadly stable 2 8
C O N F I D E N T I A L Normalised EBITDA bridge Normalised EBITDA bridge £167m £6m £49m £16m £97m Q2 2017 LTM EBITDA Impact of SAP implementation Impact of ramp-up Cost synergies Normalised Q2 2017 LTM (Q1 and Q2) EBITDA Developing Normalised EBITDA Reported (and unadjusted) LTM Q2 2017 EBITDA LTM Q2 2017 Adjustment for lost volumes in January 2017 when a new SAP system was installed at McLaren Technology Centre, and SAP Implementation production was shut down during the implementation period Reflects impact of production gap due to timing of new 720S launch compared to other models One-off 720S ramp-up in Q1 and Q2 Reflects McLaren transition to a complete product line-up following product portfolio build up during recent years Representing 50% of £12m run-rate cost synergies to be achieved by 2018 mainly by removing duplicate cost post Cost synergies in Q2 business integration Normalised EBITDA at Reflects Company’s underlying LTM performance LTM Q2 2017 40 9
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