NOTES TO THE FINANCIAL STATEMENTS CONTINUED S S 2 ACCOUNTING POLICIES CONTINUED Amortisation TR2 ACCOUNTING POLICIES CONTINUED Right-of-use assets and lease liabilities – IFRS 16 TR Intangible assets continued Following initial recognition, the historical cost model is applied, with AInvestments in equity instruments Leases under which the Group acts as lessee A Purchased intellectual property intangible assets being carried at cost less accumulated amortisation and TEUpon initial recognition, the Group can elect to classify irrevocably its The Group is a party to lease contracts for buildings, plant and machinery TE G G I I Purchased intellectual property that is not integral to an item of property, accumulated impairment losses. Amortisation of these capitalised costs Cequity investments as equity instruments designated at fair value through and IT equipment. The Group recognises a right-of-use asset and a lease C plant and equipment is recognised separately as an intangible asset begins when the asset is available for use. Intangible assets with a finite ROCI when they meet the definition of equity under IAS 32 Financial liability at the lease commencement date. The right-of-use asset is R E E stated at cost less accumulated depreciation. life have no residual value and are amortised on a straight-line basis over PInstruments: Presentation and are not held for trading. The classification initially measured at cost, which comprises the initial amount of the P O O their expected useful lives as follows: Ris determined on an instrument-by-instrument basis. Gains and losses on lease liability adjusted for any lease payments made at or before the R Brands T these financial assets are never recycled to profit or loss. Dividends are commencement date, plus any initial direct costs incurred and an T An acquired brand is only recognised in the Statement of Financial recognised as other income in the statement of profit or loss when the estimate of costs to dismantle and remove the underlying asset or to Position as an intangible asset where it is supported by a registered Years Purchased intellectual property 5 Gright of payment has been established, except when the Group benefits restore the underlying asset or the site on which it is located, less any G trademark, is established in the marketplace, the brand could be sold Ofrom such proceeds as a recovery of part of the cost of the financial asset, lease incentives received. O separately from the rest of the business and where the brand achieves Development costs 1 to 10 VEin which case, such gains are recorded in OCI. Equity instruments VE R R earnings in excess of those achieved by unbranded products. Technology 10 The right-of-use asset is subsequently depreciated using the straight-line Software and other 3 to 10 NANdesignated at fair value through OCI are not subject to impairment method from the commencement date to the earlier of the end of the NAN The value of an acquired brand is determined by allocating the purchase assessment. The Group elected to classify irrevocably its non-listed Dealer network 20 C useful life of the right-of-use asset or the end of the lease term. If the C price consideration of an acquired business between goodwill and the Eequity investments under this category. Group is reasonably certain to exercise a purchase option, the right-of- E underlying fair values of the tangible assets, brands and other intangible Government grants use asset is depreciated over the underlying asset’s useful life. The assets acquired, using an income approach following the multi-period The useful lives and residual values of capitalised development costs are F Government grants are recognised in the Income Statement, either on estimated useful lives of right-of-use assets are determined on the same F excess earnings methodology. Acquired brands have an indefinite life determined at the time of capitalisation and are reviewed annually for I I when there is no foreseeable limit to the period over which the asset is appropriateness and recoverability. NANa systematic basis when the Group recognises the related costs that the basis as those of property, plant and equipment. Moreover, the right-of-NAN grants are intended to compensate for, or immediately if the costs have use asset is periodically reduced by impairment losses, if any, and expected to generate cash inflows. C C Amortisation of special vehicle development costs are spread evenly IALalready been incurred. adjusted for certain remeasurements of the lease liability. IAL Development costs across the limited quantity of vehicles produced and charged to the SGovernment grants related to assets are deducted from the cost of the The lease liability is initially measured at the present value of the lease S Expenditure on internally developed intangible assets, excluding Income Statement at the point of sale for each vehicle. T T A asset and amortised over the useful life of the asset. Government grants payments unpaid at the commencement date, discounted using the A T T development costs, is taken to the Income Statement in the year in which E E it is incurred. Clearly defined and identifiable development costs are Property, plant and equipment Mare recognised when there is reasonable assurance that the Group will interest rate implicit in the lease or, if that rate cannot be readily M Property, plant and equipment is stated at cost less accumulated E E N comply with the relevant conditions and the grant will be received. determined, an estimate of the Group’s incremental borrowing rate at N capitalised under IAS 38 ‘Intangible Assets’ after the following criteria T T have been met: depreciation and accumulated impairment losses. Cost comprises the SResearch and development tax relief in the form of the Research and that point in time. S aggregate amount paid, and the fair value of any other consideration Development Expenditure Credit (“RDEC”) is recognised in the Income The Group estimates the incremental borrowing rate by taking a credit – The project’s technical feasibility and commercial viability, based on an given, to acquire the asset, including directly attributable costs to make F Statement over the periods in which the qualifying expenditure giving rise risk adjusted risk-free rate in addition to making other specific F estimate of future cash flows, can be demonstrated when the project the asset capable of operation. Borrowing costs directly attributable to U U R to the RDEC claim is recognised, as the Group’s assessment of the adjustments to account for certain characteristics in the lease such as R has reached a defined milestone according to the Group's established assets under construction are capitalised. T T H conditions of receipt of the RDEC concludes that it meets the definition geography, type of asset and security pledged. H product development model. E E Depreciation is provided on all property, plant and equipment, other than Rof a Government grant. Certain expenses within the scope of RDEC are R – Technical and financial resources are available for the project. land, on a straight-line basis to its residual value over its expected useful INFcapitalised as part of the Groups development costs. Where this is the Lease payments included in the measurement of the lease liability INF – An intention to complete the project has been confirmed. comprise either fixed lease payments or lease payments subject to – The correlation between development costs and future revenues has life as follows: ORcase, the Group defers the income associated with the claim to deferred periodic fixed increases. The lease liability is measured at amortised cost OR been established. Years Mincome and releases it to the Income Statement in line with the using the effective interest rate method. Lease payments are allocated M A A T amortisation profile of the associated asset. Claims are submitted T Freehold buildings 30 I between principal and interest cost with the interest costs charged to the I Technology Plant and machinery 5 to 30 ONannually based on the qualifying expenditure for a given accounting Income Statement over the lease period. ON Patented and unpatented technology acquired in business combinations period. The cash benefit from the claim is received in the year of the is valued using the cost approach. The obsolete element is determined by Fixtures and fittings 3 to 12 claim and presented in operating cash flows. The liability is remeasured when there is an increase/decrease in future reference to the proportion of the product lifecycle that had expired at Tooling 1 to 15 If the subsidiary submitting the claim is loss-making, the RDEC claim is lease payments arising from a change in an index or rate specified. the acquisition date. Technology acquired from third parties is measured Motor vehicles 3 to 5 restricted by an amount equal to the current rate of UK corporation tax. Short-term leases and leases of low-value assets at the acquisition date fair value using the cost approach. The restricted amount can be applied in discharging any liability of the The Group does not recognise right of-use-assets and lease liabilities Dealer network Tooling is depreciated over the life of the project. Assets in the course subsidiary to pay corporation tax in any subsequent tax period and has for short-term leases that have a lease term of fewer than 12 months Save for certain direct sales of some special edition and buyer-of construction are included in their respective category but are not been accounted for as an unused tax credit in accordance with IAS 12 and leases of low-value assets. The Group recognises the lease payments commissioned vehicles, the Group sells its vehicles exclusively through depreciated until available for use. The carrying values of property, and is included within deferred tax assets. associated with these leases as an expense on a straight-line basis in the a network of dealers. All dealers in the dealer network are independent plant and equipment are reviewed for impairment if events or changes in Income Statement over the lease term. dealers with the exception of Aston Martin Works Limited. To the extent circumstances indicate the carrying value may not be recoverable and are Movements in government grants are presented within operating cashflows. that the Group benefits from the network, the dealer network has been written down immediately to their recoverable amount. Useful lives and Carbon credits Impairment of assets valued based on costs incurred by the Group. The existing Dealer residual values are reviewed annually and where adjustments are required The production and import of vehicles into certain jurisdictions can trigger The Group assesses at each reporting date whether there is an indication Network asset arose as part of a business combination. these are made prospectively. a requirement to eliminate negative carbon credits, which gives rise to a that an asset may be impaired. If any such indication exists, or when liability. From time to time, the Group enters into contracts to purchase annual impairment testing for an asset is required, the Group makes an An item of property, plant and equipment is derecognised upon disposal. estimate of the asset’s recoverable amount. An asset’s recoverable Any gain or loss arising on the derecognition of the asset is included in the positive credits to offset the liability. The annual liability is currently amount is the higher of an asset, or cash-generating unit’s, fair value less Income Statement in the period of derecognition. immaterial to the Group. costs to sell and its value-in-use. ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023 151