FFIINANNANCCIALIAL S STTAATTEEMMEENNTTSS NOTES TO THE FINANCIAL STATEMENTS CONTINUED S 23 FINANCIAL INSTRUMENTS CONTINUED TR Borrowings continued A Derivative option over own shares continued TE G I The warrants can be exercised from 1 July 2021 through to 7 December 2027. The issuance of debt with attached warrants required the Group to assess C separately the fair value of the warrants and the debt. The fair value of the warrants was determined using a binomial model used to predict the behaviour R E of the warrant holders and when they might exercise their holdings. The derivative option liability was initially recognised as a derivative forward at fair value P O with changes in the fair value being recognised in the Consolidated Income Statement until issuance of the warrants on 7 December 2020 resulting in an R initial valuation of £34.6m. Upon issuance of the $335m SSNs, the carrying value of the debt was reduced by the same amount. The debt will be increased T via an effective interest charge over the term of the SSNs. During the year ended 31 December 2023, changes to the fair value of the derivative option have resulted in a debit to the Consolidated Income Statement of £19.0m (2022: £8.4m credit to the Consolidated Income Statement) which is presented in G adjusting items. A total of 29,969,927 (2022: nil warrants) were exercised, resulting in a £18.6m reduction to the liability (2022: no change to the associated O liability). VE R NAN Interest rate risk C The Group is exposed interest rate risk on the RCF attached to the SSNs and on the bilateral RCF facility with HSBC when drawn, whereby Chinese renminbi E have been deposited in a restricted account with HSBC in China in exchange for a sterling overdraft facility with HSBC in the UK. The interest rate charged on both facilities is based on SONIA and compounded in arrears. F I Profile NAN At 31 December the interest rate profile of the Group’s interest-bearing financial instruments was: C 2023 2022 IAL £m £m S Fixed rate instruments T A T Financial liabilities 980.3 1,104.0 E M E N T Variable rate instruments S Financial liabilities 89.4 107.1 F U The SSNs, are at fixed interest rates. The rate of interest on the RCF, which is attached to the SSNs, and the bilateral RCF are based on SONIA plus a R T percentage spread. As SONIA varies on a daily basis both the RCF and bilateral RCF are considered to be variable rate instruments. The bilateral is now H E drawn as at 31 December 2023. R INF In 2023 and 2022, the Group entered into an inventory repurchase arrangement (not included within the financial liabilities noted above). The interest charged on this arrangement is determined as the difference between the sales and repurchase value and is therefore fixed at the time of entering into OR the arrangement. The repayment terms of this arrangement are not in excess of 270 days. M A T I Surplus cash funds, when appropriate, are placed on deposit and attract interest at variable rates. ON Interest rate risks – sensitivity The following table demonstrates the sensitivity, with all other variables held constant, of the Group’s loss after tax to a reasonably possible change in interest rates on the bilateral RCF with HSBC and the RCF attached to the SSNs. 2023 2022 £m £m Increase/ Effect Effect (decrease) in on loss on loss interest rate after tax after tax SONIA (3.0%) (2.1) (2.6) SONIA 3.0% 2.1 2.6 ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023 178