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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the Month of November 2022

Commission File Number: 001-32294

 

 

 

LOGO

TATA MOTORS LIMITED

(Translation of registrant’s name into English)

 

 

BOMBAY HOUSE

24, HOMI MODY STREET,

MUMBAI 400 001, MAHARASHTRA, INDIA

Telephone # 91 22 6665 8282 Fax # 91 22 6665 7799

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒ Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐ No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐ No  ☒

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes  ☐ No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g 3-2(b): Not Applicable

 

 

 


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TABLE OF CONTENTS

 

Item 1

  

2023 FY Q2 Interim Financial Statements


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

 

Tata Motors Limited
By:   /s/ Mr Maloy Kumar Gupta
Name:   Mr Maloy Kumar Gupta
Title:   Company Secretary

Dated: November 9, 2022


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LOGO

Jaguar Land Rover Automotive plc

Interim Report

For the three and six-month period ended

30 September 2022

Company registered number: 06477691


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Group, Company, Jaguar Land Rover, JLR plc and JLR refers to Jaguar Land Rover Automotive plc and its subsidiaries. Note 2 to the accounts defines a series of alternative performance measures some of which are stated below, along with certain abbreviations.

 

Adjusted EBITDA margin    measured as adjusted EBITDA as a percentage of revenue.
Adjusted EBIT margin    measured as adjusted EBIT as a percentage of revenue.
Net debt/cash    defined by the Company as cash and cash equivalents plus short-term deposits and other investments less total balance sheet borrowings.
Q2 FY23    3 months ended 30 September 2022
Q1 FY23    3 months ended 30 June 2022
Q2 FY22    3 months ended 30 September 2021
H1 FY23    6-months ending 30 September 2022
H1 FY22    6-months ending 30 September 2021
China JV    Chery Jaguar Land Rover Automotive Co., Ltd.

 

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Management’s discussion and analysis of financial condition and results of operations

Revenue was £5.3 billion in Q2 FY23, up 36% year-on-year from Q2 FY22 reflecting strong model mix and pricing with wholesale volumes (excluding China JV) of 75,307 up 17.6% year-on-year and 4.9% on the prior quarter. Despite strong demand and a record order book, however, sales continued to be constrained by the global chip shortage.

Market environment and business developments

 

 

Semiconductor supply continued to restrict production in the quarter but the production ramp up of New Range Rover and New Range Rover Sport improved with 13,537 units wholesaled in the quarter, up from 5,790 in Q1. Partnership agreements with several semiconductor suppliers and more in progress are expected to enable improving volumes in the second half of financial year ending March 2023 and beyond.

 

 

Inflation remains at elevated levels, exacerbated by the Ukraine conflict and post Covid supply disruption. We are working to offset this through Refocus cost reductions.

 

 

Central banks are responding to inflation globally with increases in interest rates which may lead to increased costs for consumers who purchase our vehicles using finance.

 

 

Market volatility in the UK has been high during September and the GBP has weakened vs USD by 8% from 30 June 2022 to 30 September 2022.

 

 

Strong demand continuing with client order book now at 205,000 units; our three most profitable models, the New Range Rover, New Range Rover Sport and Defender account for over 70% of the order book

Revenue and profits, quarter ending 30 September 2022

 

 

Revenue was £5.3 billion in Q2 FY23, up 35.9% from Q2 FY22 reflecting strong model mix, pricing and increased wholesale volumes

 

 

Adjusted EBITDA1 was £541 million (10.3%) in Q2 FY23, up from £283 million (7.3%) in Q2 FY22

 

 

Adjusted EBIT1 was £54 million (1%) in Q2 FY23, up from £(181) million (-4.7%) in Q2 FY22

 

 

The loss before tax was £(173) million in Q2 FY23 compared to a loss of £(302) million in Q2 FY22. The year-on-year decline primarily reflects the following factors:

 

   

£372 million favourable volume and mix offset by £(65) million emissions charges

 

   

£141 million favourable pricing and lower variable marketing costs

 

   

£(158) million increase in material and manufacturing costs as a result of inflationary pressures

 

   

£(188) million increase in structural costs, primarily £(83) million of higher SG&A costs, £(38) million increase in engineering costs expensed and £(45) million due to non-recurrence of favourable changes to battery end of life reserves in Q2 FY22

 

   

£(38) million for FX and commodities, including £244 million impact of a generally weaker pound on revenue and costs partially offset by £(189) million of realised hedges

 

 

Loss after tax was £(98) million (after tax credit of £75 million) for Q2 FY23, an increase from £(381) million in Q2 FY22 (including a tax charge of £(79) million)

 

 

Free cash flow1 was £(15) million in Q2 FY23 compared to £(664) million in Q2 FY22

Revenue and profits, fiscal year to date

 

 

Revenue was £9.7 billion in H1 FY23, up from £8.8 billion in H1 FY22 reflecting strong model mix and pricing

 

 

Adjusted EBITDA1 was £820 million (8.5%) in H1 FY23, up from £732 million in H1 FY22 (8.3%)

 

 

Adjusted EBIT1 was £(142) million in H1 FY23, up from £(227) million in H1 FY22

 

 

The loss before tax was £(542) million in H1 FY23 compared to a loss of £(412) million in H1 FY22. The year-on-year decline primarily reflects the following factors:

 

   

£71 million favourable volume and mix

 

   

£268 million favourable pricing and lower variable marketing costs

 

   

£(323) million increase in material and manufacturing costs as a result of inflationary pressures

 

   

£(129) million increase in structural costs, including £(109) million increase in engineering costs expensed, £(10)m higher SG&A costs and £(45)m due to non-recurrence of favourable changes to battery end of life reserves in Q2 FY22

 

   

£(172) million for FX and commodities, including £462 million impact of a generally weaker pound on revenue and costs partially offset by £(305) million of realised hedges and £(212) million of revaluation

 

   

£155 million exceptional item related to changes to the defined benefit pension scheme

 

 

Loss after tax was £(580) million (including tax charge of £(38) million) for H1 FY23, an increase from £(667) million in H1 FY22 (including a tax charge of £(255) million)

 

1 

Please see note 2 of the financial statements for alternative performance measures

 

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Free cash flow1 was £(784) million in H1 FY23 compared to £(1,660) million in H1 FY22

Cash flow

 

 

Free cashflow2 in Q2 FY23 was £(15) million, while free cashflow excluding £(124) million of working capital movements was £109 million

 

 

Working capital movements in the quarter were £(124) million after reductions in payables and increases in inventory since 30 June 2022

 

 

Investment spending of £(526) million in the quarter includes £(392) million of engineering spend, of which 40% was capitalised, and £(134) million of capital investments

 

 

LOGO

 

2 

Please see note 2 of the financial statements for alternative performance measures

 

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Sales volumes

Sales volumes were constrained by production levels in the quarter driven by the global chip shortage while production of the new Range Rover and Range Rover Sport is still ramping up. Retail sales3 in Q2 FY23 were 88,121 vehicles, an increase of 11.8% compared with the previous quarter ending 30 June 2022 and down 5% from the same quarter a year ago ending 30 September 2021.

Wholesale volumes3 in Q2 FY23 were 75,307 units in the period (excluding our China Joint Venture), up 18% compared to the same quarter a year ago ending 30 September 2021 and 5% compared to the quarter ending 30 June 2022. This improvement was lower than planned, primarily due to a lower than expected supply of specialised chips from one supplier which could not be readily re-sourced in the quarter. This was mitigated partially by further prioritisation of production to the highest margin products.

 

 

LOGO

 

LOGO

 

3 

Please see note 2 of the financial statements for alternative performance measures

 

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Funding and liquidity

Total cash and cash equivalents, deposits and investments at 30 September 2022 were £3.7 billion (comprising £3.56 billion of cash and cash equivalents and £161 million of short-term deposits and other investments). The cash and financial deposits include an amount of £412 million held in subsidiaries of Jaguar Land Rover outside of the United Kingdom. The cash in some of these jurisdictions may be subject to impediments to remitting cash to the UK other than through annual dividends.

The £1.5 billion forward start revolving facility maturing in March 2024 became effective on 04 July 2022 and is undrawn.

The following table shows details of the Company’s financing arrangements:

 

£ millions

   Facility
amount
     Amount
outstanding
     Undrawn
amount
 

£400m 3.875% Senior Notes due Mar 2023

     400        400        —    

$500m 5.625% Senior Notes due Feb 2023

     448        448        —    

$700m 7.750% Senior Notes due Oct 2025

     627        627        —    

$500m 4.500% Senior Notes due Oct 2027

     448        448        —    

$650m 5.875% Senior Notes due Jan 2028

     582        582        —    

€650m 2.200% Senior Notes due Jan 2024

     572        572        —    

€500m 5.875% Senior Notes due Nov 2024

     440        440        —    

€500m 6.875% Senior Notes due Nov 2026

     440        440        —    

€500m 4.500% Senior Notes due Jul 2028

     440        440        —    

$500m 5.500% Senior Notes due Jul 2029

     448        448        —    

€500m 4.500% Senior Notes due Jan 2026

     440        440        —    

$800m Syndicated Loan due Jan 2025

     715        715        —    

$200m Syndicated Loan due Oct 2022

     179        179        —    

China RMB 5,000m revolving facility due Jun 20231

     632        632        —    

UKEF amortising loan due Oct 2024

     260        260        —    

UKEF amortising loan due Dec 2026

     531        531        —    
  

 

 

    

 

 

    

 

 

 

Subtotal

     7,602        7,602        —    
  

 

 

    

 

 

    

 

 

 

Finance lease obligations2

     734        734        —    

Other3

     35        35        —    

Prepaid costs

     (29      (29      —    

Fair value adjustments4

     (126      (126      —    
  

 

 

    

 

 

    

 

 

 

Total

     8,216        8,216        —    
  

 

 

    

 

 

    

 

 

 

Undrawn RCF (available from 04 July 2022)

     1,500        —          1,500  
  

 

 

    

 

 

    

 

 

 

Total including RCF

     9,716        8,216        1,500  
  

 

 

    

 

 

    

 

 

 

 

1 

The China RMB 5 billion 3-year syndicated revolving loan facility is subject to an annual confirmatory review in June each year

2 

Lease obligations accounted for as debt under IFRS 16

3 

Primarily an advance as part of a sale and leaseback transaction

4 

Fair value adjustments relate to hedging arrangements for the $500m 2027 Notes and €500m 2026 Notes

 

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Risks and mitigating factors

There are a number of potential risks which could have a material impact on the Group’s performance and could cause actual results to differ materially from expected and/or historical results, particularly those risks relating to continuing supply shortages of semiconductors, and those discussed on pages 36-39 of the Annual Report 2021/22 of the Group (available at www.jaguarlandrover.com/annual-report-2022) along with mitigating factors. The principal risks discussed in the Group’s Annual Report FY22 are competitive business efficiency, environmental regulations and compliance, supply chain disruptions, global economic and geopolitical environment, distribution channels/retailer performance, IT systems and security, manufacturing operations, brand positioning, rapid technology change and human capital.

Acquisitions and disposals

There were no material acquisitions or disposals in Q2 FY23.

Off-balance sheet financial arrangements

At 30 September 2022, Jaguar Land Rover Limited (a subsidiary of the Company) had sold £337 million equivalent of receivables under a $499.975 million invoice discounting facility signed in March 2021.

Personnel

At 30 September 2022, Jaguar Land Rover employed 38,880 people worldwide, including agency personnel, compared to 35,350 at 30 September 2021.

Board of directors

The following table provides information with respect to the current members of the Board of Directors of Jaguar Land Rover Automotive plc:

 

Name    Position    Year appointed
Natarajan Chandrasekaran    Chairman and Director    2017
Thierry Bolloré    Chief Executive Officer and Director    2020
Prof Sir Ralf D Speth*    Vice Chairman and Director    2020
Mr P B Balaji    Director    2017
Hanne Sorensen    Director    2018
Charles Nichols    Director    2022
Al-Noor Ramji    Director    2022

 

*

Previously appointed as CEO and Director in 2010 and subsequently Vice Chairman and Director in 2020

 

7


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Condensed Consolidated Income Statement

 

£ millions

          Three months ended     Six months ended  
   Note      30 September
2022
    30 September
2021
    30 September
2022
    30 September
2021
 

Revenue

     3        5,260       3,871       9,666       8,837  

Material and other cost of sales

        (3,212     (2,500     (5,974     (5,649

Employee costs

     4        (604     (513     (1,174     (1,105

Other expenses

     9        (1,180     (793     (2,189     (1,779

Exceptional items

     4        —         —         155       —    

Engineering costs capitalised

     5        155       119       245       251  

Other income

     6        62       55       114       108  

Depreciation and amortisation

        (493     (467     (970     (952

Foreign exchange and fair value adjustments

     7        (55     14       (204     53  

Finance income

     8        11       1       18       3  

Finance expense (net)

     8        (123     (92     (237     (172

Share of profit/(loss) of equity accounted investments

        6       3       8       (7
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss before tax

        (173     (302     (542     (412
     

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

     14        75       (79     (38     (255
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss for the period

        (98     (381     (580     (667
     

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

           

Owners of the Company

        (98     (380     (580     (664

Non-controlling interests

        —         (1     —         (3
     

 

 

   

 

 

   

 

 

   

 

 

 

The notes on pages 13 to 32 are an integral part of these condensed consolidated financial statements.

 

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Condensed Consolidated Statement of Comprehensive Income and Expense

 

     Three months ended     Six months ended  

£ millions

   30 September
2022
    30 September
2021
    30 September
2022
    30 September
2021
 

Loss for the period

     (98     (381     (580     (667

Items that will not be reclassified subsequently to profit or loss:

        

Remeasurement of net defined benefit obligation

     58       9       437       (62

Income tax related to items that will not be reclassified

     (14     (2     (109     100  
  

 

 

   

 

 

   

 

 

   

 

 

 
     44       7       328       38  
  

 

 

   

 

 

   

 

 

   

 

 

 

Items that may be reclassified subsequently to profit or loss:

        

Loss on cash flow hedges (net)

     (841     (286     (1,492     (345

Currency translation differences

     26       11       44       19  

Income tax related to items that may be reclassified

     (140     69       21       72  
  

 

 

   

 

 

   

 

 

   

 

 

 
     (955     (206     (1,427     (254
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive expense net of tax

     (911     (199     (1,099     (216
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive expense attributable to shareholder

     (1,009     (580     (1,679     (883
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

        

Owners of the Company

     (1,009     (579     (1,679     (880

Non-controlling interests

     —         (1     —         (3
  

 

 

   

 

 

   

 

 

   

 

 

 

The notes on pages 13 to 32 are an integral part of these condensed consolidated financial statements.

 

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Condensed Consolidated Balance Sheet

 

As at (£ millions)

   Note      30 September
2022
     31 March 2022      30 September
2021
 

Non-current assets

           

Investments in equity accounted investees

        346        321        319  

Other non-current investments

        43        30        27  

Other financial assets

     11        372        185        216  

Property, plant and equipment

     15        6,133        6,253        6,262  

Intangible assets

     15        4,634        4,866        5,159  

Right-of-use assets

        646        568        611  

Pension asset

     23        1,062        434        —    

Other non-current assets

     13        70        35        66  

Deferred tax assets

        337        336        398  
     

 

 

    

 

 

    

 

 

 

Total non-current assets

        13,643        13,028        13,058  
     

 

 

    

 

 

    

 

 

 

Current assets

           

Cash and cash equivalents

        3,555        4,223        3,537  

Short-term deposits and other investments

        161        175        258  

Trade receivables

        810        722        535  

Other financial assets

     11        487        394        465  

Inventories

     12        3,227        2,781        2,455  

Other current assets

     13        529        493        386  

Current tax assets

        29        20        104  

Assets classified as held for sale

        28        4        29  
     

 

 

    

 

 

    

 

 

 

Total current assets

        8,826        8,812        7,769  
     

 

 

    

 

 

    

 

 

 

Total assets

        22,469        21,840        20,827  
     

 

 

    

 

 

    

 

 

 

Current liabilities

           

Accounts payable

        5,216        5,144        4,136  

Short-term borrowings

     19        1,908        1,779        1,153  

Other financial liabilities

     16        1,385        870        775  

Provisions

     17        1,089        989        1,168  

Other current liabilities

     18        688        674        487  

Current tax liabilities

        102        116        87  

Liabilities directly associated with assets classified as held for sale

        —          —          17  
     

 

 

    

 

 

    

 

 

 

Total current liabilities

        10,388        9,572        7,823  
     

 

 

    

 

 

    

 

 

 

Non-current liabilities

           

Long-term borrowings

     19        5,574        5,248        5,801  

Other financial liabilities

     16        1,974        871        717  

Provisions

     17        1,121        1,112        1,089  

Retirement benefit obligation

     23        27        25        412  

Other non-current liabilities

     18        405        404        435  

Deferred tax liabilities

        113        105        116  
     

 

 

    

 

 

    

 

 

 

Total non-current liabilities

        9,214        7,765        8,570  
     

 

 

    

 

 

    

 

 

 

Total liabilities

        19,602        17,337        16,393  
     

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders

           

Ordinary shares

        1,501        1,501        1,501  

Capital redemption reserve

        167        167        167  

Other reserves

     21        1,199        2,835        2,760  
     

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders

        2,867        4,503        4,428  
     

 

 

    

 

 

    

 

 

 

Non-controlling interests

        —          —          6  
     

 

 

    

 

 

    

 

 

 

Total equity

        2,867        4,503        4,434  
     

 

 

    

 

 

    

 

 

 

Total liabilities and equity

        22,469        21,840        20,827  
     

 

 

    

 

 

    

 

 

 

The notes on pages 13 to 32 are an integral part of these condensed consolidated financial statements.

These condensed consolidated interim financial statements were approved by the JLR plc Board and authorised for issue on 9 November 2022.

Company registered number: 06477691

 

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Condensed Consolidated Statement of Changes in Equity

 

£ millions

   Ordinary
shares
     Capital
redemption
reserve
     Other
reserves
    Total
equity
 

Balance at 1 April 2022

     1,501        167        2,835       4,503  

Loss for the period

     —          —          (580     (580

Other comprehensive expense for the period

     —          —          (1,099     (1,099
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive expense

     —          —          (1,679     (1,679
  

 

 

    

 

 

    

 

 

   

 

 

 

Amounts removed from hedge reserve and recognised in inventory

     —          —          53       53  

Income tax related to amounts removed from hedge reserve and recognised in inventory

     —          —          (10     (10
  

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 30 September 2022

     1,501        167        1,199       2,867  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

£ millions

   Ordinary
shares
     Capital
redemption
reserve
     Other
reserves
    Equity
attributable to
shareholder
    Non-
controlling
interests
    Total
equity
 

Balance at 1 April 2021

     1,501        167        3,586       5,254       9       5,263  

Loss for the period

     —          —          (664     (664     (3     (667

Other comprehensive expense for the period

     —          —          (216     (216     —         (216
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive expense

     —          —          (880     (880     (3     (883
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Amounts removed from hedge reserve and recognised in inventory

     —          —          66       66       —         66  

Income tax related to amounts removed from hedge reserve and recognised in inventory

     —          —          (12     (12     —         (12
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2021

     1,501        167        2,760       4,428       6       4,434  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

The notes on pages 13 to 32 are an integral part of these condensed consolidated financial statements.

 

11


Table of Contents

Condensed Consolidated Cash Flow Statement

 

£ millions

          Three months ended     Six months ended  
   Note      30 September
2022
    30 September
2021
    30 September
2022
    30 September
2021
 

Cash flows from operating activities

           

Cash generated from/(used in) operations

     26        416       (215     82       (679

Income tax paid

        (26     (71     (127     (127
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated from/(used in) operating activities

        390       (286     (45     (806
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities

           

Purchases of other investments

        (3     (1     (3     (2

Investment in other restricted deposits

        (11     (21     (17     (22

Redemption of other restricted deposits

        2       10       14       18  

Movements in other restricted deposits

        (9     (11     (3     (4

Investment in short-term deposits and other investments

        (40     (254     (308     (726

Redemption of short-term deposits and other investments

        172       678       352       1,472  

Movements in short-term deposits and other investments

        132       424       44       746  

Purchases of property, plant and equipment

        (122     (171     (252     (408

Purchases of other assets acquired with view to resale

        (12     —         (24     —    

Proceeds from sale of property, plant and equipment

        —         1       —         4  

Net cash outflow relating to intangible asset expenditure

        (164     (113     (264     (258

Finance income received

        9       2       15       4  

Disposal of subsidiaries (net of cash disposed)

        —         —         2       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in)/generated from investing activities

        (169     131       (485     82  
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities

           

Finance expenses and fees paid

        (116     (97     (216     (196

Proceeds from issuance of borrowings

        —         829       594       1,436  

Repayment of borrowings

        (63     (109     (719     (763

Payments of lease obligations

        (17     (18     (35     (36
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in)/generated from financing activities

        (196     605       (376     441  
     

 

 

   

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in cash and cash equivalents

        25       450       (906     (283

Cash and cash equivalents at beginning of period

        3,411       3,040       4,223       3,778  

Cash reclassified as held for sale

        —         —         —         (16

Effect of foreign exchange on cash and cash equivalents

        119       47       238       58  
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

        3,555       3,537       3,555       3,537  
     

 

 

   

 

 

   

 

 

   

 

 

 

The notes on pages 13 to 32 are an integral part of these condensed consolidated financial statements.

 

12


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

1

Accounting policies

Basis of preparation

The financial information in these interim financial statements is unaudited and does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The information for the year ended 31 March 2022 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement section 498(2) or (3) of the Companies Act 2006. The condensed consolidated interim financial statements of Jaguar Land Rover Automotive plc have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’ under International Financial Reporting Standards (‘IFRS’) and UK-adopted international accounting standards. The balance sheet and accompanying notes as at 30 September 2021 have been disclosed solely for the information of the users.

The condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments held at fair value as highlighted in note 20.

The condensed consolidated interim financial statements have been prepared on the going concern basis as set out within the directors’ report of the Group’s Annual Report for the year ended 31 March 2022.

The accounting policies applied are consistent with those of the annual consolidated financial statements for the year ended 31 March 2022, as described in those financial statements.

Estimates and judgements

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimate uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 March 2022.

Going concern

The condensed consolidated interim financial statements have been prepared on a going concern basis, which the Directors consider appropriate for the reasons set out below.

The Directors have assessed the financial position of the Group as at 30 September 2022, and the projected cash flows of the Group for the twelve-month period from the date of authorisation of the condensed consolidated interim financial statements (the ‘going concern assessment period’).

The Group had available liquidity of £5.2 billion at 30 September 2022, £3.7 billion of which is cash with the remainder the undrawn RCF facility. Within the going concern assessment period there is a £1 billion minimum quarter-end liquidity covenant attached to the Group’s UKEF loans and forward start RCF facility. There is £1.9 billion of maturing debt in the going concern assessment period, and no new funding is assumed.

The Group has assessed its projected cash flows over the going concern assessment period. The base case uses an updated version of the assumptions used at 31 March 2022.

Details of the scenarios and assumptions used in the assessment as at 31 March 2022 are set out in note 2 to the consolidated financial statements of the Group’s Annual Report for the year ended 31 March 2022.

Base volumes have been adjusted downwards when compared to the 31 March 2022 assessment to reflect continued supply chain challenges related to semiconductor shortages and the optimisation of production.

The base case assumes a gradual increase in wholesale volumes in each quarter of the going concern assessment period as a result of a production ramp up of the New Range Rover and New Range Rover Sport. New agreements with semiconductor suppliers are also expected to enable sales improvements in the second half of the fiscal year.

 

13


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

1

Accounting policies (continued)

 

Going concern (continued)

The base case assumes optimisation of supply to prioritise production to the highest margin products and the Group’s expectations relating to prevailing financial conditions, including inflationary pressures on material costs.

The Group has also carried out a reverse stress test against the base case to determine the decline in wholesale volumes over a twelve-month period that would result in a liquidity level that breaches financing covenants. The Group’s order book remains very strong and so the reverse stress test assumes continued supply constraints resulting in demand that exceeds supply over the twelve-month period and assumes optimisation of supply to maximise production of higher margin products.

In order to reach a liquidity level that breaches covenants, it would require a sustained decline in wholesale volumes of more than 55% compared to the base case over a twelve-month period. The reverse stress test reflects the variable profit impact of the wholesale volume decline, and assumes all other assumptions are held in line with the base case. It does not reflect other potential upside measures that could be taken in such a reduced volume scenario; nor any new funding.

The Group does not consider this scenario to be plausible given that the stress test volumes are significantly lower than the volumes achieved during both the peak of the COVID-19 pandemic and the worst quarter of semiconductor shortages. The Group has a strong order bank and is confident that it can significantly exceed reverse stress test volumes.

The Group has considered the impact of severe but plausible downside scenarios, including scenarios that reflect a decrease in variable profit per unit compared with the base case to include additional increases in material and other related production costs. The expected wholesale volumes under all of these scenarios is higher than under the reverse stress test.

The Directors, after making appropriate enquiries and taking into consideration the risks and uncertainties facing the Group, consider that the Group has adequate financial resources to continue operating throughout the going concern assessment period, meeting its liabilities as they fall due. Accordingly, the Directors continue to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

 

14


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

2

Alternative Performance Measures

In reporting financial information, the Group presents alternative performance measures (‘APMs’) which are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business.

The APMs used by the Group are defined below.

 

Alternative Performance
Measure

  

Definition

Adjusted EBITDA    Adjusted EBITDA is defined as profit before: income tax expense; exceptional items; finance expense (net of capitalised interest) and finance income; gains/losses on debt and unrealised derivatives, realised derivatives entered into for the purpose of hedging debt, and equity or debt investments held at fair value; foreign exchange gains/losses on other assets and liabilities, including short-term deposits and cash and cash equivalents; share of profit/loss from equity accounted investments; depreciation and amortisation.
Adjusted EBIT    Adjusted EBIT is defined as for adjusted EBITDA but including share of profit/loss from equity accounted investments, depreciation and amortisation.
Loss before tax and exceptional items    Loss before tax excluding exceptional items.
Free cash flow    Net cash generated from operating activities less net cash used in automotive investing activities, excluding investments in consolidated entities and movements in financial investments, and after finance expenses and fees paid. Financial investments are those reported as cash and cash equivalents, short-term deposits and other investments, and equity or debt investments held at fair value.
Total product and other investment    Cash used in the purchase of property, plant and equipment, intangible assets, investments in equity accounted investments and other trading investments, acquisition of subsidiaries and expensed research and development costs.
Working capital    Changes in assets and liabilities as presented in note 26. This comprises movements in assets and liabilities excluding movements relating to financing or investing cash flows or non-cash items that are not included in adjusted EBIT or adjusted EBITDA.
Total cash and cash equivalents, deposits and investments    Defined as cash and cash equivalents, short-term deposits and other investments, marketable securities and any other items defined as cash and cash equivalents in accordance with IFRS.
Available liquidity    Defined as total cash and cash equivalents, deposits and investments plus committed undrawn credit facilities.
Net debt    Total cash and cash equivalents, deposits and investments less total interest-bearing loans and borrowings.
Retail sales    Jaguar Land Rover retail sales represent vehicle sales made by dealers to end customers and include the sale of vehicles produced by our Chinese joint venture, Chery Jaguar Land Rover Automotive Company Ltd.
Wholesales    Wholesales represent vehicle sales made to dealers. The Group recognises revenue on wholesales.

The Group uses adjusted EBITDA as an APM to review and measure the underlying profitability of the Group on an ongoing basis for comparability as it recognises that increased capital expenditure year-on-year will lead to a corresponding increase in depreciation and amortisation expense recognised within the consolidated income statement.

The Group uses adjusted EBIT as an APM to review and measure the underlying profitability of the Group on an ongoing basis as this excludes volatility on unrealised foreign exchange transactions. Due to the significant level of debt and currency derivatives, unrealised foreign exchange distorts the financial performance of the Group from one period to another.

 

15


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

2

Alternative Performance Measures (continued)

 

Free cash flow is considered by the Group to be a key measure in assessing and understanding the total operating performance of the Group and to identify underlying trends.

Total product and other investment is considered by the Group to be a key measure in assessing cash invested in the development of future new models and infrastructure supporting the growth of the Group.

Working capital is considered by the Group to be a key measure in assessing short-term assets and liabilities that are expected to be converted into cash within the next 12-month period.

Total cash and cash equivalents, deposits and investments and available liquidity are measures used by the Group to assess liquidity and the availability of funds for future spend and investment.

Exceptional items are defined in note 4.

Reconciliations between these alternative performance measures and statutory reported measures are shown below and on the next two pages.

Adjusted EBIT and Adjusted EBITDA

 

£ millions

          Three months ended     Six months ended  
   Note      30 September
2022
    30 September
2021
    30 September
2022
    30 September
2021
 

Adjusted EBITDA

        541       283       820       732  

Depreciation and amortisation

        (493     (467     (970     (952

Share of profit/(loss) of equity accounted investments

        6       3       8       (7
     

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBIT

        54       (181     (142     (227
     

 

 

   

 

 

   

 

 

   

 

 

 

Foreign exchange on debt, derivatives and balance sheet revaluation*

     26        (116     (17     (230     (18

Unrealised loss on commodities

     26        (8     (15     (117     (1

Finance income

     8        11       1       18       3  

Finance expense (net)

     8        (123     (92     (237     (172

Fair value gain on equity investments

     26        9       2       11       3  
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss before tax and exceptional items

        (173     (302     (697     (412
     

 

 

   

 

 

   

 

 

   

 

 

 

Exceptional items

     4        —         —         155       —    
     

 

 

   

 

 

   

 

 

   

 

 

 

Loss before tax

        (173     (302     (542     (412
     

 

 

   

 

 

   

 

 

   

 

 

 

 

*

FY22 comparatives have been represented to align with the FY23 presentation change to combine foreign exchange on debt, derivatives and balance sheet revaluation into a single line. This has not resulted in any change to reported ‘loss before tax and exceptional items’ or ‘loss before tax’.

 

16


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

2

Alternative Performance Measures (continued)

 

Free cash flow

 

            Three months ended     Six months ended  

£ millions

                 30 September
2022
    30 September
2021
    30 September
2022
    30 September
2021
 

Net cash generated from/(used in) operating activities

        390       (286     (45     (806

Purchases of property, plant and equipment

        (122     (171     (252     (408

Net cash outflow relating to intangible asset expenditure

        (164     (113     (264     (258

Proceeds from sale of property, plant and equipment

        —         1       —         4  

Purchases of other assets acquired with view to resale

        (12     —         (24     —    

Disposal of subsidiaries (net of cash disposed)

        —         —         2       —    

Finance expenses and fees paid

        (116     (97     (216     (196

Finance income received

        9       2             15       4  
     

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

        (15     (664     (784     (1,660
     

 

 

   

 

 

   

 

 

   

 

 

 

Total product and other investment

 

            Three months ended     Six months ended  

£ millions

   Note      30 September
2022
    30 September
2021
    30 September
2022
    30 September
2021
 

Purchases of property, plant and equipment

        122       171       252       408  

Net cash outflow relating to intangible asset expenditure

        164       113       264       258  

Engineering costs expensed

     5        237       199       496       387  

Purchases of other investments

        3       1       3       2  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total product and other investment

         526          484         1,015          1,055   
     

 

 

   

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents, deposits and investments

 

                                                       

As at (£ millions)

                 30 September
2022
     31 March
2022
     30 September
2021
 

Cash and cash equivalents

        3,555        4,223        3,537  

Short-term deposits and other investments

        161        175        258  
     

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents, deposits and investments

        3,716        4,398        3,795  
     

 

 

    

 

 

    

 

 

 

Available liquidity

 

                                                       

As at (£ millions)

   Note      30 September
2022
     31 March
2022
     30 September
2021
 

Cash and cash equivalents

        3,555        4,223        3,537  

Short-term deposits and other investments

        161        175        258  

Committed undrawn credit facilities

     19        1,500        2,015        2,098  
     

 

 

    

 

 

    

 

 

 

Available liquidity

        5,216        6,413        5,893  
     

 

 

    

 

 

    

 

 

 

 

17


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

2

Alternative Performance Measures (continued)

 

Net debt

 

As at (£ millions)

   Note      30 September
2022
     31 March
2022
     30 September
2021
 

Cash and cash equivalents

        3,555        4,223        3,537  

Short-term deposits and other investments

        161        175        258  

Interest-bearing loans and borrowings

     19        (8,216      (7,597      (7,556
     

 

 

    

 

 

    

 

 

 

Net debt

        (4,500      (3,199      (3,761
     

 

 

    

 

 

    

 

 

 

Retails and wholesales

 

     Three months ended      Six months ended  

Units

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Retail sales

     88,121        92,710        166,946        217,247  
  

 

 

    

 

 

    

 

 

    

 

 

 

Wholesales*

     75,307        64,032        147,122        148,474  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Wholesale volumes exclude sales from Chery Jaguar Land Rover – Q2 FY23: 14,589 units, Q2 FY22: 14,219 units, H1 FY23: 25,361 units, H1 FY22: 26,918 units.

 

18


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

3

Disaggregation of revenue

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Revenue recognised for sales of vehicles, parts and accessories

     5,122        3,581        9,335        8,255  

Revenue recognised for services transferred

     82        78        156        153  

Revenue - other

     220        178        415        374  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue excluding realised revenue hedges

     5,424        3,837        9,906        8,782  
  

 

 

    

 

 

    

 

 

    

 

 

 

Realised revenue hedges

     (164      34        (240      55  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

     5,260        3,871        9,666        8,837  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

4

Exceptional items

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Employee costs excluding exceptional items

     604        513        1,174        1,105  

Impact of:

           

Past service credit

     —          —          (155      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Including exceptional items

     604        513        1,019        1,105  
  

 

 

    

 

 

    

 

 

    

 

 

 

The exceptional item recognised in the six months ended 30 September 2022 is comprised of a pension past service credit of £155 million due to a change in inflation index from RPI to CPI. There was no exceptional item recognised in the six months ended 30 September 2021.

 

5

Engineering costs capitalised

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Total engineering costs incurred

     392        318        741        638  

Engineering costs expensed

     (237      (199      (496      (387
  

 

 

    

 

 

    

 

 

    

 

 

 

Engineering costs capitalised

     155        119        245        251  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest capitalised in engineering costs capitalised

     2        14        7        27  

Research and development grants capitalised

     (8      (29      (12      (19
  

 

 

    

 

 

    

 

 

    

 

 

 

Total internally developed intangible additions

     149        104        240        259  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

6

Other income

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Grant income

     35        10        59        15  

Commissions

     7        1        13        6  

Other

     20        44        42        87  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other income

     62        55        114        108  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

19


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

7

Foreign exchange and fair value adjustments

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Foreign exchange loss and fair value adjustments on loans

     (279      (89      (533      (94

Foreign exchange gain on economic hedges of loans

     186        58        334        79  

Foreign exchange loss on derivatives

     (23      (4      (36      (3

Other foreign exchange gain

     57        44        107        31  

Realised gain on commodities

     3        18        30        38  

Unrealised loss on commodities

     (8      (15      (117      (1

Fair value gain on equity investments

     9        2        11        3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Foreign exchange and fair value adjustments

     (55      14        (204      53  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

8

Finance income and expense

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Finance income

     11        1        18        3  

Total finance income

     11        1        18        3  

Interest expense on lease liabilities

     (14      (12      (26      (23

Interest expense on financial liabilities measured at amortised cost other than lease liabilities

     (104      (94      (205      (177

Interest (expense)/income on derivatives designated as a fair value hedge of financial liabilities

     (4      2        (4      4  

Unwind of discount on provisions

     (3      (5      (11      (5

Interest capitalised

     2        17        9        29  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total finance expense (net)

     (123      (92      (237      (172
  

 

 

    

 

 

    

 

 

    

 

 

 

The capitalisation rate used to calculate borrowing costs eligible for capitalisation during the six month period ended 30 September 2022 was 5.1% (six month period ended 30 September 2021: 4.6%).

 

9

Other expenses

 

     Three months ended      Six months ended  

£ millions

   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Stores, spare parts and tools

     25        17        48        41  

Freight cost

     144        109        296        225  

Works, operations and other costs

     593        382        1,106        914  

Power and fuel

     58        29        96        50  

Write-down of intangible assets

     —          2        —          9  

Product warranty

     234        166        403        345  

Publicity

     126        88        240        195  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other expenses

     1,180        793        2,189        1,779  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

20


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

10

Allowances for trade and other receivables

 

     Six months ended  

£ millions

   30 September
2022
     30 September
2021
 

At beginning of period

     4        6  

Charged during the period

     2        3  

Unused amounts reversed

     (1      —    

Foreign currency translation

     —          (1
  

 

 

    

 

 

 

At end of period

     5        8  
  

 

 

    

 

 

 

 

11

Other financial assets

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Non-current

        

Restricted cash

     11        10        9  

Derivative financial instruments

     291        98        127  

Warranty reimbursement and other receivables

     54        63        71  

Other

     16        14        9  
  

 

 

    

 

 

    

 

 

 

Total non-current other financial assets

     372        185        216  
  

 

 

    

 

 

    

 

 

 

Current

        

Restricted cash

     17        13        19  

Derivative financial instruments

     208        185        260  

Warranty reimbursement and other receivables

     90        72        74  

Accrued income

     47        39        28  

Other

     125        85        84  
  

 

 

    

 

 

    

 

 

 

Total current other financial assets

     487        394        465  
  

 

 

    

 

 

    

 

 

 

 

12

Inventories

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Raw materials and consumables

     139        135        115  

Work-in-progress

     737        488        467  

Finished goods

     2,345        2,129        1,851  

Inventory basis adjustment

     6        29        22  
  

 

 

    

 

 

    

 

 

 

Total inventories

     3,227        2,781        2,455  
  

 

 

    

 

 

    

 

 

 

 

13

Other assets

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Non-current

        

Prepaid expenses

     26        24        25  

Research and development credit

     36        2        31  

Other

     8        9        10  
  

 

 

    

 

 

    

 

 

 

Total non-current other assets

     70        35        66  
  

 

 

    

 

 

    

 

 

 

Current

        

Recoverable VAT

     237        204        159  

Prepaid expenses

     216        208        141  

Research and development credit

     61        63        64  

Other

     15        18        22  
  

 

 

    

 

 

    

 

 

 

Total current other assets

     529        493        386  
  

 

 

    

 

 

    

 

 

 

 

21


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

14

Taxation

Recognised in the income statement

Income tax for the six month periods ended 30 September 2022 and 30 September 2021 is charged at the estimated effective tax rate expected to apply for the applicable financial year ends and adjusted for relevant deferred tax amounts where applicable.

Despite a loss in the six month period ended 30 September 2022, a tax charge of £38 million was incurred. This is in part as a result of the inability to recognise a net UK deferred tax asset such that (i) £179 million tax assets arising in the period cannot be provided and, (ii) offset by decreasing tax assets recognised through OCI leads to an offsetting interaction with other tax assets and a resultant £99 million tax credit (£20 million of which arises as a consequence of the announced increase in UK corporation tax rate from 19% to 25% as at 1 April 2023). In addition, a tax charge of £106 million arises in relation to profitable overseas subsidiary entities.

 

15

Capital expenditure

Capital expenditure on property, plant and equipment in the six month period ended 30 September 2022 was £301 million (six month period ended 30 September 2021: £224 million) and on intangible assets (excluding research and development expenditure credits) was £258 million (six month period ended 30 September 2021: £264 million). There were no material disposals or changes in the use of assets.

 

16

Other financial liabilities

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Current

        

Lease obligations

     65        62        63  

Interest accrued

     111        95        97  

Derivative financial instruments

     967        445        242  

Liability for vehicles sold under a repurchase arrangement

     242        267        373  

Other

     —          1        —    
  

 

 

    

 

 

    

 

 

 

Total current other financial liabilities

     1,385        870        775  
  

 

 

    

 

 

    

 

 

 

Non-current

        

Lease obligations

     669        508        539  

Derivative financial instruments

     1,276        338        177  

Other

     29        25        1  
  

 

 

    

 

 

    

 

 

 

Total non-current other financial liabilities

     1,974        871        717  
  

 

 

    

 

 

    

 

 

 

 

17

Provisions

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Current

        

Product warranty

     623        604        629  

Legal, product liability and third party

     425        252        279  

Provision for residual risk

     11        12        23  

Provision for environmental liability

     4        3        4  

Other employee benefits obligations

     —          —          1  

Restructuring

     26        118        232  
  

 

 

    

 

 

    

 

 

 

Total current provisions

     1,089        989        1,168  
  

 

 

    

 

 

    

 

 

 

Non-current

        

Product warranty

     1,023        1,026        997  

Legal, product liability and third party

     53        40        33  

Provision for residual risk

     13        19        33  

Provision for environmental liability

     26        23        23  

Other employee benefits obligations

     6        4        3  
  

 

 

    

 

 

    

 

 

 

Total non-current provisions

     1,121        1,112        1,089  
  

 

 

    

 

 

    

 

 

 

 

22


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

17

Provisions (continued)

 

£ millions

   Product
warranty
    Legal,
product
liability
and
third
party
    Residual
risk
    Environmental
liability
    Other
employee
benefits
obligations
    Restructuring     Total  

Balance at 1 April 2022

     1,630       292       31       26       4       118       2,101  

Provisions made during the period

     431       289       1       14       3       17       755  

Provisions used during the period

     (355     (137     —         (1     (1     (94     (588

Unused amounts reversed in the period

     (71     (10     (9     (9     —         (15     (114

Impact of unwind of discounting

     11       —         —         —         —         —         11  

Foreign currency translation

     —         44       1       —         —         —         45  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2022

     1,646       478       24       30       6       26       2,210  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Product warranty provision

The Group offers warranty cover in respect of manufacturing defects, which become apparent one to five years after purchase, dependent on the market in which the purchase occurred and the vehicle purchased. The Group offers warranties of up to eight years on batteries in electric vehicles. The estimated liability for product warranty is recognised when products are sold or when new warranty programmes are initiated. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future warranty claims, customer goodwill and recall complaints. The discount on the warranty provision is calculated using a risk-free discount rate as the risks specific to the liability, such as inflation, are included in the base calculation. The timing of outflows will vary as and when a warranty claim will arise, being typically up to eight years.

Legal, product liability and third party provision

A legal and product liability provision is maintained in respect of compliance with regulations and known litigations that impact the Group. The provision includes legal and constructive obligations to third parties and suppliers. The provision also comprises motor accident claims, consumer complaints, retailer terminations, supplier claims, employment cases, personal injury claims and compliance with emission regulations. The timing of outflows will vary as and when claims are received and settled, which is not known with certainty.

Residual risk provision

In certain markets, the Group is responsible for the residual risk arising on vehicles sold by retailers on leasing arrangements. The provision is based on the latest available market expectations of future residual value trends. The timing of the outflows will be at the end of the lease arrangements, being typically up to three years.

Environmental liability provision

This provision relates to various environmental remediation costs such as asbestos removal and land clean-up. The timing of when these costs will be incurred is not known with certainty.

Other employee benefits obligations

This provision relates to the LTIP scheme for certain employees and other amounts payable to employees.

 

23


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

17

Provisions (continued)

 

Restructuring provision

The restructuring provision includes amounts for third party obligations arising from Group restructuring programmes. This includes amounts payable to employees following the announcement of the Group’s Reimagine strategy in the year ended 31 March 2021 as well as other Group restructuring programmes. Amounts are also included in relation to legal and constructive obligations made to third parties in connection with cancellations under the group’s Reimagine strategy.

The estimated liability for restructuring activities is recognised when the group has reason to believe there is a legal or constructive obligation arising from restructuring actions taken. The amount provided at the reporting date is calculated based on currently available facts and certain estimates for third party obligations. These estimates are established using historical experience based on the settlement costs for similar liabilities, with proxies being used where no direct comparison exists.

The amounts and timing of outflows will vary as and when restructuring obligations are progressed with third parties.

 

18

Other liabilities

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Current

        

Liabilities for advances received

     80        122        99  

Ongoing service obligations

     310        286        293  

VAT

     95        95        34  

Other taxes payable

     199        161        50  

Other

     4        10        11  
  

 

 

    

 

 

    

 

 

 

Total current other liabilities

     688        674        487  
  

 

 

    

 

 

    

 

 

 

Non-current

        

Ongoing service obligations

     397        395        425  

Other

     8        9        10  
  

 

 

    

 

 

    

 

 

 

Total non-current other liabilities

     405        404        435  
  

 

 

    

 

 

    

 

 

 

 

19

Interest bearing loans and borrowings

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Short-term borrowings

        

Bank loans

     632        599        598  

Current portion of long-term EURO MTF listed debt

     848        779        400  

Current portion of long-term loans

     428        401        155  
  

 

 

    

 

 

    

 

 

 

Short-term borrowings

     1,908        1,779        1,153  
  

 

 

    

 

 

    

 

 

 

Long-term borrowings

        

EURO MTF listed debt

     4,294        3,953        4,773  

Bank loans

     1,245        1,260        994  

Other unsecured

     35        35        34  
  

 

 

    

 

 

    

 

 

 

Long-term borrowings

     5,574        5,248        5,801  
  

 

 

    

 

 

    

 

 

 

Lease obligations

     734        570        602  
  

 

 

    

 

 

    

 

 

 

Total debt

     8,216        7,597        7,556  
  

 

 

    

 

 

    

 

 

 

Undrawn facilities

As at 30 September 2022, the Group has a fully undrawn revolving credit facility of £1,500 million (31 March 2022: £2,015 million, 30 September 2021: £2,015 million).

The Group’s fleet buyback facility matured in December 2021 and had £83 million undrawn as at 30 September 2021.

 

24


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

20

Financial instruments

The condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments held at fair value. These financial instruments are classified as either level 2 fair value measurements, as defined by IFRS 13, being those derived from inputs other than quoted prices which are observable, or level 3 fair value measurements, being those derived from significant unobservable inputs. There have been no changes in the valuation techniques used or transfers between fair value levels from those set out in note 35 to the annual consolidated financial statements for the year ended 31 March 2022.

The tables below show the carrying amounts and fair value of each category of financial assets and liabilities, other than those with carrying amounts that are reasonable approximations of fair values.

 

     30 September 2022      31 March 2022      30 September 2021  

As at (£ millions)

   Carrying
value
     Fair value      Carrying
value
     Fair value      Carrying
value
     Fair value  

Cash and cash equivalents

     3,555        3,555        4,223        4,223        3,537        3,537  

Short-term deposits and other investments

     161        161        175        175        258        258  

Trade receivables

     810        810        722        722        535        535  

Other non-current investments

     43        43        30        30        27        27  

Other financial assets - current

     487        487        394        394        465        465  

Other financial assets - non-current

     372        372        185        185        216        216  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     5,428        5,428        5,729        5,729        5,038        5,038  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Accounts payable

     5,216        5,216        5,144        5,144        4,136        4,136  

Short-term borrowings

     1,908        1,887        1,779        1,778        1,153        1,158  

Long-term borrowings

     5,574        4,779        5,248        5,216        5,801        5,962  

Other financial liabilities - current

     1,385        1,385        870        870        775        775  

Other financial liabilities - non-current

     1,974        1,837        871        901        717        808  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

     16,057        15,104        13,912        13,909        12,582        12,839  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

21

Other reserves

The movement in reserves is as follows:

 

£ millions

   Translation
reserve
    Hedging
reserve
    Cost of
hedging
reserve
    Retained
earnings
    Total
other
reserves
 

Balance at 1 April 2022

     (333     (454     19       3,603       2,835  

Loss for the period

     —         —         —         (580     (580

Remeasurement of defined benefit obligation

     —         —         —         437       437  

Loss on effective cash flow hedges

     —         (1,743     (1     —         (1,744

Income tax related to items recognised in other comprehensive income

     —         64       4       (109     (41

Cash flow hedges reclassified to profit and loss

     —         260       (8     —         252  

Income tax related to items reclassified to profit or loss

     —         (48     1       —         (47

Amounts removed from hedge reserve and recognised in inventory

     —         48       5       —         53  

Income tax related to amounts removed from hedge reserve and recognised in inventory

     —         (9     (1     —         (10

Currency translation differences

     44       —         —         —         44  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2022

     (289     (1,882     19       3,351       1,199  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

25


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

21

Other reserves (continued)

 

£ millions

   Translation
reserve
    Hedging
reserve
    Cost of
hedging
reserve
    Retained
earnings
    Total
other
reserves
 

Balance at 1 April 2021

     (357     136       1       3,806       3,586  

Loss for the period

     —         —         —         (664     (664

Remeasurement of defined benefit obligation

     —         —         —         (62     (62

(Loss)/gain on effective cash flow hedges

     —         (289     8       —         (281

Income tax related to items recognised in other comprehensive income

     —         62       (2     101       161  

Cash flow hedges reclassified to profit and loss

     —         (56     (8     —         (64

Income tax related to items reclassified to profit or loss

     —         10       1       —         11  

Amounts removed from hedge reserve and recognised in inventory

     —         60       6       —         66  

Income tax related to amounts removed from hedge reserve and recognised in inventory

     —         (11     (1     —         (12

Currency translation differences

     19       —         —         —         19  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2021

     (338     (88     5       3,181       2,760  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

22

Dividends

During the three and six month periods ended 30 September 2022 and 30 September 2021, no ordinary share dividends were proposed or paid.

 

23

Employee benefits

The Group has pension arrangements providing employees with defined benefits related to pay and service as set out in the rules of each scheme. The following table sets out the disclosure pertaining to employee benefits of the JLR Automotive Group plc which operates defined benefit pension schemes.

 

     Six months ended  
£ millions    30 September 2022      30 September 2021  

Change in present value of defined benefit obligation

     

Defined benefit obligation at beginning of period

     7,522        8,432  

Current service cost

     43        61  

Past service credit

     (155      —    

Interest expense

     104        88  

Actuarial (gains)/losses arising from:

     

Changes in demographic assumptions

     —          26  

Changes in financial assumptions

     (2,484      340  

Experience adjustments

     115        —    

Exchange differences on foreign schemes

     2        1  

Member contributions

     1        1  

Benefits paid

     (253      (237
  

 

 

    

 

 

 

Defined benefit obligation at end of period

     4,895        8,712  
  

 

 

    

 

 

 

Change in fair value of scheme assets

     

Fair value of schemes’ assets at beginning of period

     7,931        8,045  

Interest income

     117        85  

Remeasurement (loss)/gain on the return of plan assets, excluding amounts included in interest income

     (1,932      304  

Administrative expenses

     (14      (2

Employer contributions

     80        104  

Member contributions

     1        1  

Benefits paid

     (253      (237
  

 

 

    

 

 

 

Fair value of schemes’ assets at end of period

     5,930        8,300  
  

 

 

    

 

 

 

 

26


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

23

Employee benefits (continued)

 

The range of assumptions used in accounting for the pension plans in the periods is set out below:

 

Six months ended

   30 September 2022     30 September 2021  

Discount rate

     5.2     2.0

Expected rate of increase in benefit revaluation of covered employees

     2.1     2.2

RPI inflation rate

     3.4     3.3

CPI inflation rate

     2.8     3.6

Amounts recognised in the condensed consolidated balance sheet consist of:

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Present value of defined benefit obligations

     (4,895      (7,522      (8,712

Fair value of schemes’ assets

     5,930        7,931        8,300  
  

 

 

    

 

 

    

 

 

 

Net asset/(liability)

     1,035        409        (412
  

 

 

    

 

 

    

 

 

 

Non-current assets

     1,062        434        —    

Non-current liabilities

     (27      (25      (412

For each of the valuations at 30 September 2022, 31 March 2022 and 30 September 2021 the mortality assumptions used are the SAPS base table, in particular S3 tables and the Light table for members of the Jaguar Executive Pension Plan. For the Jaguar Pension Plan, scaling factors of 101 per cent to 115 per cent have been used for male members and scaling factors of 103 per cent to 118 per cent have been used for female members. For the Land Rover Pension Scheme, scaling factors of 105 per cent to 117 per cent have been used for male members and scaling factors of 100 per cent to 116 per cent have been used for female members. For the Jaguar Executive Pension Plan, an average scaling factor of 93 per cent to 97 per cent has been used for male members and a scaling factor of 91 per cent to 96 per cent has been used for female members.

At 30 September 2022 and 31 March 2022 there is an allowance for future improvements in line with the CMI (2021) projections and an allowance for long-term improvements of 1.25 per cent per annum and a smoothing parameter of 7.5.

At 30 September 2021 there was an allowance for future improvements in line with the CMI (2020) projections and an allowance for long-term improvements of 1.25 per cent per annum and a smoothing parameter of 7.5.

 

24

Commitments and contingencies

In the normal course of business, the Group faces claims and assertions by various parties. The Group assesses such claims and assertions and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel wherever necessary. The Group records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its financial statements, if material. For potential losses that are considered possible, but not probable, the Group provides disclosure in the consolidated financial statements but does not record a liability unless the loss becomes probable. Such potential losses may be of an uncertain timing and/or amount.

The following is a description of claims and contingencies where a potential loss is possible, but not probable. Management believes that none of the contingencies described below, either individually or in aggregate, would have a material adverse effect on the Group’s financial condition, results of operations or cash flows.

 

27


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

24

Commitments and contingencies (continued)

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Contingencies:

        

Litigation and product related matters

     26        25        24  

Taxes and duties

     82        75        60  

Other

     500        470        386  

Commitments:

        

- Plant and equipment

     750        735        915  

- Intangible assets

     17        15        16  

Pledged as collateral/security against the borrowings and commitments:

        

- Inventory

     —          —          38  

- Trade receivables

     —          —          23  

- Other financial assets

     14        13        19  
  

 

 

    

 

 

    

 

 

 

Litigation and product related matters

The Group is involved in legal proceedings, both as plaintiff and as defendant. There are claims and potential claims against the Group which management has not recognised, as settlement is not considered probable. These claims and potential claims pertain to motor accident claims, consumer complaints, employment and dealership arrangements, replacement of parts of vehicles and/or compensation for deficiency in the services by the Group or its dealers.

The Group has provided for the estimated cost of repair following the passenger safety airbag issue in the United States, China, Canada, Korea, Taiwan, Australia and Japan. The Group recognises that there is a potential risk of further recalls in the future and considers such events on a case-by-case basis as the relevant facts and circumstances materialise, provided it can reliably estimate the amount and timing of any potential future costs associated with this warranty issue

Taxes and duties

Contingencies and commitments include tax contingent liabilities which mainly relate to tax audits and tax litigation claims.                

Other

Contingencies also include other contingent liabilities, the timing of any outflow will vary as and when claims are received and settled, which is not known with certainty.

Commitments

The Group has entered into various contracts with vendors and contractors for the acquisition of plant and equipment and various civil contracts of capital nature and the acquisition of intangible assets.

The remaining financial commitments, in particular the purchase commitments and guarantees, are of a magnitude typical for the industry.

Joint venture

Stipulated within the joint venture agreement for Chery Jaguar Land Rover Automotive Co. Ltd, and subsequently amended by a change to the Articles of Association of Chery Jaguar Land Rover Automotive Co. Ltd. is a commitment for the Group to contribute a total of CNY 5,000 million of capital. Of this amount, CNY 3,475 million has been contributed as at 30 September 2022. The outstanding commitment of CNY 1,525 million translates to £193 million at the 30 September 2022 exchange rate.

At 30 September 2021, the outstanding commitment was CNY 1,525 million (£175 million at the 30 September 2021 exchange rate).

The Group’s share of capital commitments of its joint venture at 30 September 2022 is £16 million (31 March 2022: £16 million, 30 September 2021: £16 million) and contingent liabilities of its joint venture 30 September 2022 is £nil (31 March 2022: £nil, 30 September 2021: £nil).

 

28


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

25

Capital Management

The Group’s objectives when managing capital are to ensure the going concern operation of all subsidiary companies within the Group and to maintain an efficient capital structure to support ongoing and future operations of the Group and to meet shareholder expectations.

The Group issues debt, primarily in the form of bonds, to meet anticipated funding requirements and maintain sufficient liquidity. The Group also maintains certain undrawn committed credit facilities to provide additional liquidity. These borrowings, together with cash generated from operations, are loaned internally or contributed as equity to certain subsidiaries as required. Surplus cash in subsidiaries is pooled (where practicable) and invested to satisfy security, liquidity and yield requirements.

The capital structure and funding requirements are regularly monitored by the JLR plc Board to ensure sufficient liquidity is maintained by the Group. All debt issuance and capital distributions are approved by the JLR plc Board.

The following table summarises the capital of the Group:

 

As at (£ millions)

   30 September 2022      31 March 2022      30 September 2021  

Short-term debt

     1,973        1,841        1,216  

Long-term debt

     6,243        5,756        6,340  
  

 

 

    

 

 

    

 

 

 

Total debt*

     8,216        7,597        7,556  
  

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders

     2,867        4,503        4,428  
  

 

 

    

 

 

    

 

 

 

Total capital

     11,083        12,100        11,984  
  

 

 

    

 

 

    

 

 

 

 

*

Total debt includes lease obligations of £734 million (31 March 2022: £570 million, 30 September 2021: £602 million).

 

29


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

26

Notes to the consolidated cash flow statement

Reconciliation of loss for the period to cash generated from/(used in) operations

 

£ millions

   Three months ended      Six months ended  
   30 September
2022
     30 September
2021
     30 September
2022
     30 September
2021
 

Cash flows from operating activities

           

Loss for the period

     (98      (381      (580      (667

Adjustments for:

           

Depreciation and amortisation

     493        467        970        952  

Write-down of intangible assets

     —          2        —          9  

Loss on disposal of assets

     —          4        2        4  

Income tax expense

     (75      79        38        255  

Finance expense (net)

     123        92        237        172  

Finance income

     (11      (1      (18      (3

Foreign exchange on debt, derivatives and balance sheet revaluation*

     116        17        230        18  

Foreign exchange gain on other restricted deposits

     —          (1      —          (2

Unrealised loss on commodities

     8        15        117        1  

Share of (profit)/loss of equity accounted investments

     (6      (3      (8      7  

Fair value gain on equity investments

     (9      (2      (11      (3

Exceptional items

     —          —          (155      —    

Other non-cash adjustments

     (1      (2      —          1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from operating activities before changes in assets and liabilities

     540        286        822        744  
  

 

 

    

 

 

    

 

 

    

 

 

 

Trade receivables and other assets*

     (9      109        (529      383  

Other financial assets

     15        20        1        2  

Inventories

     (110      300        (468      573  

Accounts payable, other liabilities and retirement benefit obligations*

     (218      (742      112        (2,226

Other financial liabilities

     23        (18      67        (25

Provisions

     175        (170      77        (130
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash generated from/(used in) operations

     416        (215      82        (679
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

FY22 comparatives have been represented to align with the FY23 presentation changes to combine foreign exchange on debt, derivatives and balance sheet revaluation into a single line; and to group certain working capital movements. This has not resulted in any change to reported ‘cash flows from operating activities before changes in assets and liabilities’ or ‘cash generated from/(used in) operations”.

 

30


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

26

Notes to the consolidated cash flow statement (continued)

 

Reconciliation of movements of liabilities to cash flows arising from financing activities

 

£ millions

   Borrowings     Lease
obligations
    Interest
accrued
    Total  

Balance at 1 April 2021

     6,178       519       84       6,781  

Cash flows

        

Proceeds from issue of financing

     1,436       —         —         1,436  

Repayment of financing

     (763     (36     —         (799

Arrangement fees paid

     (7     —         —         (7

Interest paid

     —         (23     (140     (163

Non-cash movements

        

Issue of new leases

     —         112       —         112  

Interest accrued

     —         23       151       174  

Foreign exchange

     116       7       2       125  

Fee amortisation

     5       —         —         5  

Fair value adjustment on loans

     (11     —         —         (11
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2021

     6,954       602       97       7,653  
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 April 2022

     7,027       570       95       7,692  

Cash flows

        

Proceeds from issue of financing

     594       —         —         594  

Repayment of financing

     (719     (35     —         (754

Interest paid

     —         (26     (152     (178

Non-cash movements

        

Issue of new leases

     —         175       —         175  

Interest accrued

     —         26       157       183  

Foreign exchange

     633       25       11       669  

Lease terminations

     —         (1     —         (1

Fee amortisation

     6       —         —         6  

Fair value adjustment on loans

     (59     —         —         (59
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 September 2022

     7,482       734       111       8,327  
  

 

 

   

 

 

   

 

 

   

 

 

 

Included within ‘finance expenses and fees paid’ in the condensed consolidated cash flow statement is £38 million in the six months ended September 2022 (six months ended 30 September 2021: £26 million) of cash interest paid relating to other assets and liabilities not included in the reconciliation above.

 

31


Table of Contents

Notes (forming part of the condensed consolidated interim financial statements)

 

27

Related party transactions

Tata Sons Private Limited is a company with significant influence over the Group’s ultimate parent company Tata Motors Limited. The Group’s related parties therefore include Tata Sons Private Limited, subsidiaries and joint ventures of Tata Sons Private Limited and subsidiaries, joint ventures and associates of Tata Motors Limited. The Group routinely enters into transactions with its related parties in the ordinary course of business, including transactions for the sale and purchase of products with its joint ventures and associates.

All transactions with related parties are conducted under normal terms of business and all amounts outstanding are unsecured and will be settled in cash. Transactions and balances with the Group’s own subsidiaries are eliminated on consolidation.

The following tables summarise related party transactions and balances not eliminated in the consolidated condensed interim financial statements. The amounts outstanding are unsecured and will be settled in cash.

 

Six months ended 30 September 2022 (£ millions)

   With joint
ventures of the
Group
     With associates
of the Group
and their
subsidiaries
     With Tata Sons
Private Limited
and its
subsidiaries and
joint ventures
     With immediate
or ultimate
parent and its
subsidiaries,
joint ventures
and associates
 

Sale of products

     144        —          1        14  

Purchase of goods

     50        32        —          45  

Services received

     —          —          91        44  

Services rendered

     50        —          —          2  

Trade and other receivables

     52        —          —          25  

Accounts payable

     11        1        17        19  

Six months ended 30 September 2021 (£ millions)

   With joint
ventures of the
Group
     With associates
of the Group
and their
subsidiaries
     With Tata Sons
Private Limited
and its
subsidiaries and
joint ventures
     With immediate
or ultimate
parent and its
subsidiaries,
joint ventures
and associates
 

Sale of products

     138        —          —          14  

Purchase of goods

     —          —          —          44  

Services received

     —          —          72        35  

Services rendered

     41        —          —          1  

Trade and other receivables

     57        —          —          19  

Accounts payable

     —          —          16        30  

Compensation of key management personnel

 

     Six months ended  
£ millions    30 September
2022
     30 September
2021
 

Key management personnel remuneration

     9        11  

 

32

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