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Form 6-K TATA MOTORS LTD/FI For: Jul 29

July 29, 2022 3:59 PM EDT
Table of Contents

 

 

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 July 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 Q1 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: July 29, 2022


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LOGO

Jaguar Land Rover Automotive plc Interim Report
For the three-month period ended
30 June 2022
Company registered number: 06477691


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Table of Contents

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.
Q1 FY23    3 months ended 30 June 2022
Q1 FY22    3 months ended 30 June 2021
China JV    Chery Jaguar Land Rover Automotive Co., Ltd.

 

2


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

Despite strong demand and a record order book, sales continued to be constrained by the global chip shortage, compounded by the new Range Rover Sport ramp up and the impact of Covid lockdowns in China, leading to a loss for the quarter.

Market environment and business developments

 

 

Semiconductor supply continued to restrict production in the quarter

 

 

The ramp up of New Range Rover and Range Rover Sport production was slower than expected due to the timing of the run out of the prior Range Rover Sport and the two new being on an all-new platform (MLA) produced in a new facility in Solihull

 

 

Covid lock downs in China impacted on production in our China Joint Venture, global parts supply from China and also led to some temporary restrictions on some dealers opening in the market

 

 

Inflation remains at elevated levels, exacerbated by the Ukraine conflict and post Covid supply disruption, while central banks are responding globally with increases in interest rates Demand for our products, particularly Range Rover, Range Rover Sport and Defender, remains strong with an order book of 200,000 units

 

 

Financial performance is expected to improve significantly over the year with chip supply expected to improve through enhanced supplier engagement including long term partnership agreements, as well as ramping up New Range Rover and Range Rover Sport production

Revenue and profits

 

 

Revenue was £4.4 billion in Q1 FY23, down 11.3% from Q1 FY22 reflecting the impact of semiconductor production constraints and a weaker mix as volumes of Range Rover & Range Rover Sport were reduced due to the ramp up in production

 

 

Adjusted EBITDA1 was £279 million in Q1 FY23, down from £449 million on Q1 FY22

 

 

Adjusted EBITDA1 margin was 6.3% in Q1 FY23, down from 9.0% in Q1 FY22

 

 

Adjusted EBIT1 was £(196) million in Q1 FY23, down from £(46) million on Q1 FY22

 

 

Loss after tax was £(482) million (including tax charge of £(113) million) for Q1 FY23, down from £(286) million in Q1 FY22 (including a tax charge of £(176) million)

 

 

Free cash flow1 in the quarter was £(769) million compared to £(996) million in Q1 FY22

 

 

The loss before tax in the quarter was £(524) million before a £155m favourable pension related exceptional item1, compared to a loss of £(110) million in Q1 FY22. The year-on-year decline primarily reflects the following factors:

 

   

£(300) million unfavourable volume and mix offset by £126 million net pricing improvements

 

   

£(165) million increase in material and manufacturing costs, which includes £(161) million relating to inflation on commodity prices, other material costs and energy prices

 

   

£59 million improvement in structural costs primarily attributable to non-recurrence of one-off items in Q1 FY22

 

   

£(134) million for FX and commodities, including £(236) million related to FX and commodity rate related revaluation

 

1 

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

 

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Cash flow

 

 

Free cashflow2 turned negative in the quarter to £(769) million, primarily reflecting £(616) million of unfavourable working capital movements

 

 

Working capital movements in the quarter were £(616) million with £(358) million driven by increasing inventory as the level of goods in transit to markets increased

 

 

Investment spending of £(489) million in the quarter includes £(349) million spending, of which 25% was capitalised, and £(140) 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, compounded by the New Range Rover and Range Rover Sport ramp up and the impact of Covid lockdowns in China.

Retail sales3 in Q1 FY23 were 78,825 units, broadly flat (183 units lower) compared with the last quarter ended 31 March 2022 and down 37% (46k units) from the same quarter a year ago ended 30 June 2021.

Wholesale volumes3 in Q1 FY23 were 71,815 units (excluding our China Joint Venture), down 6% compared to the last quarter ended 31 March 2022 and down 20% compared to the same quarter a year ago ended 30 June 2021.

 

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 June 2022 were £3.7 billion (comprising £3.4 billion of cash and cash equivalents and £0.3 billion of short-term deposits and other investments). The cash and financial deposits include an amount of £384 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. This facility replaces the £2.015 billion revolving credit facility which was cancelled ahead of its scheduled maturity on 28 July 2022.

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

     412        412        —    

$700m 7.750% Senior Notes due Oct 2025

     577        577        —    

$500m 4.500% Senior Notes due Oct 2027

     412        412        —    

$650m 5.875% Senior Notes due Jan 2028

     535        535        —    

€650m 2.200% Senior Notes due Jan 2024

     559        559        —    

€500m 5.875% Senior Notes due Nov 2024

     430        430        —    

€500m 6.875% Senior Notes due Nov 2026

     430        430        —    

€500m 4.500% Senior Notes due Jul 2028

     430        430        —    

$500m 5.500% Senior Notes due Jul 2029

     412        412        —    

€500m 4.500% Senior Notes due Jan 2026

     430        430        —    

$800m Syndicated Loan due Jan 2025

     657        657        —    

$200m Syndicated Loan due Oct 2022

     164        164        —    

China RMB 5,000m revolving facility due Jun 20231

     615        615        —    

UKEF amortising loan due Oct 2024

     292        292        —    

UKEF amortising loan due Dec 2026

     563        563        —    
  

 

 

    

 

 

    

 

 

 

Subtotal

     7,318        7,318        —    
  

 

 

    

 

 

    

 

 

 

Finance lease obligations2

     666        666        —    

Other3

     35        35        —    

Prepaid costs

     (33      (33      —    

Fair value adjustments4

     (90      (90      —    
  

 

 

    

 

 

    

 

 

 

Total

     7,897        7,897        —    
  

 

 

    

 

 

    

 

 

 

Undrawn RCF (available from 04 July 2022)

     1,500        —          1,500  
  

 

 

    

 

 

    

 

 

 

Total including RCF

     9,397        7,897        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 Q1 FY23.

Off-balance sheet financial arrangements

At 30 June 2022, Jaguar Land Rover Limited (a subsidiary of the Company) had sold £354 million equivalent of receivables under a $499.975 million invoice discounting facility signed in March 2021.

Personnel

At 30 June 2022, Jaguar Land Rover employed 37,020 people worldwide, including agency personnel, compared to 35,472 at 30 June 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

Andrew M. Robb and Nasser Mukhtar Munjee resigned as directors during the quarter ended 30 June 2022.

 

7


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Condensed Consolidated Income Statement

 

            Three months ended  

£ millions

   Note      30 June
2022
    30 June
2021
 

Revenue

     3        4,406       4,966  

Material and other cost of sales

        (2,762     (3,149

Employee costs

     4        (570     (592

Other expenses

     9        (1,009     (986

Exceptional items

     4        155       —    

Engineering costs capitalised

     5        90       132  

Other income

     6        52       53  

Depreciation and amortisation

        (477     (485

Foreign exchange and fair value adjustments

     7        (149     39  

Finance income

     8        7       2  

Finance expense (net)

     8        (114     (80

Share of profit/(loss) of equity accounted investments

        2       (10
     

 

 

   

 

 

 

Loss before tax

        (369     (110
     

 

 

   

 

 

 

Income tax expense

     14        (113     (176
     

 

 

   

 

 

 

Loss for the period

        (482     (286
     

 

 

   

 

 

 

Attributable to:

       

Owners of the Company

        (482     (284

Non-controlling interests

        —         (2
     

 

 

   

 

 

 

The notes on pages 13 to 31 are an integral part of these condensed consolidated financial statements.

 

8


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Condensed Consolidated Statement of Comprehensive Income and Expense

 

     Three months ended  

£ millions

   30 June
2022
    30 June
2021
 

Loss for the period

     (482     (286

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

    

Remeasurement of net defined benefit obligation

     379       (71

Income tax related to items that will not be reclassified

     (95     102  
  

 

 

   

 

 

 
     284       31  
  

 

 

   

 

 

 

Items that may be reclassified subsequently to profit or loss:

    

Loss on cash flow hedges (net)

     (651     (59

Currency translation differences

     18       8  

Income tax related to items that may be reclassified

     161       3  
  

 

 

   

 

 

 
     (472     (48
  

 

 

   

 

 

 

Other comprehensive expense net of tax

     (188     (17
  

 

 

   

 

 

 

Total comprehensive expense attributable to shareholder

     (670     (303
  

 

 

   

 

 

 

Attributable to:

    

Owners of the Company

     (670     (301

Non-controlling interests

     —         (2
  

 

 

   

 

 

 

The notes on pages 13 to 31 are an integral part of these condensed consolidated financial statements.

 

9


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Condensed Consolidated Balance Sheet

 

As at (£ millions)

   Note      30 June
2022
     31 March 2022      30 June
2021
 

Non-current assets

           

Investments in equity accounted investees

        330        321        307  

Other non-current investments

        32        30        24  

Other financial assets

     11        229        185        278  

Property, plant and equipment

     15        6,233        6,253        6,364  

Intangible assets

     15        4,731        4,866        5,297  

Right-of-use assets

        625        568        612  

Pension asset

     23        987        434        —    

Other non-current assets

     13        53        35        51  

Deferred tax assets

        339        336        360  
     

 

 

    

 

 

    

 

 

 

Total non-current assets

        13,559        13,028        13,293  
     

 

 

    

 

 

    

 

 

 

Current assets

           

Cash and cash equivalents

        3,411        4,223        3,040  

Short-term deposits and other investments

        280        175        680  

Trade receivables

        836        722        606  

Other financial assets

     11        358        394        512  

Inventories

     12        3,131        2,781        2,754  

Other current assets

     13        525        493        405  

Current tax assets

        51        20        100  

Assets classified as held for sale

        28        4        31  
     

 

 

    

 

 

    

 

 

 

Total current assets

        8,620        8,812        8,128  
     

 

 

    

 

 

    

 

 

 

Total assets

        22,179        21,840        21,421  
     

 

 

    

 

 

    

 

 

 

Current liabilities

           

Accounts payable

        5,291        5,144        4,814  

Short-term borrowings

     19        1,839        1,779        1,178  

Other financial liabilities

     16        1,103        870        717  

Provisions

     17        964        989        1,218  

Other current liabilities

     18        691        674        550  

Current tax liabilities

        88        116        102  

Liabilities directly associated with assets classified as held for sale

        —          —          26  
     

 

 

    

 

 

    

 

 

 

Total current liabilities

        9,976        9,572        8,605  
     

 

 

    

 

 

    

 

 

 

Non-current liabilities

           

Long-term borrowings

     19        5,392        5,248        4,968  

Other financial liabilities

     16        1,325        871        678  

Provisions

     17        1,100        1,112        1,175  

Retirement benefit obligation

     23        26        25        445  

Other non-current liabilities

     18        397        404        449  

Deferred tax liabilities

        102        105        119  
     

 

 

    

 

 

    

 

 

 

Total non-current liabilities

        8,342        7,765        7,834  
     

 

 

    

 

 

    

 

 

 

Total liabilities

        18,318        17,337        16,439  
     

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders

           

Ordinary shares

        1,501        1,501        1,501  

Capital redemption reserve

        167        167        167  

Other reserves

     21        2,193        2,835        3,307  
     

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders

        3,861        4,503        4,975  
     

 

 

    

 

 

    

 

 

 

Non-controlling interests

        —          —          7  
     

 

 

    

 

 

    

 

 

 

Total equity

        3,861        4,503        4,982  
     

 

 

    

 

 

    

 

 

 

Total liabilities and equity

        22,179        21,840        21,421  
     

 

 

    

 

 

    

 

 

 

The notes on pages 13 to 31 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 28 July 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

     —          —          (482     (482

Other comprehensive expense for the period

     —          —          (188     (188
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive expense

     —          —          (670     (670
  

 

 

    

 

 

    

 

 

   

 

 

 

Amounts removed from hedge reserve and recognised in inventory

     —          —          35       35  

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

     —          —          (7     (7
  

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 30 June 2022

     1,501        167        2,193       3,861  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

£ 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

     —          —          (284     (284     (2     (286

Other comprehensive expense for the year

     —          —          (17     (17     —         (17
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive expense

     —          —          (301     (301     (2     (303
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Amounts removed from hedge reserve and recognised in inventory

     —          —          27       27       —         27  

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

     —          —          (5     (5     —         (5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2021

     1,501        167        3,307       4,975       7       4,982  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

The notes on pages 13 to 31 are an integral part of these condensed consolidated financial statements.

 

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Condensed Consolidated Cash Flow Statement

 

            Three months ended  

£ millions

   Note      30 June
2022
    30 June
2021
 

Cash flows from operating activities

       

Cash used in operations

     26        (334     (464

Income tax paid

        (101     (56
     

 

 

   

 

 

 

Net cash used in operating activities

        (435     (520
     

 

 

   

 

 

 

Cash flows from investing activities

       

Purchases of other investments

        —         (1

Investment in other restricted deposits

        (6     (1

Redemption of other restricted deposits

        12       8  

Movements in other restricted deposits

        6       7  

Investment in short-term deposits and other investments

        (268     (472

Redemption of short-term deposits and other investments

        180       794  

Movements in short-term deposits and other investments

        (88     322  

Purchases of property, plant and equipment

        (130     (237

Purchases of other assets acquired with view to resale

        (12     —    

Proceeds from sale of property, plant and equipment

        —         3  

Net cash outflow relating to intangible asset expenditure

        (100     (145

Finance income received

        6       2  

Disposal of subsidiaries (net of cash disposed)

        2       —    
     

 

 

   

 

 

 

Net cash used in investing activities

        (316     (49
     

 

 

   

 

 

 

Cash flows from financing activities

       

Finance expenses and fees paid

        (100     (99

Proceeds from issuance of borrowings

        594       607  

Repayment of borrowings

        (656     (654

Payments of lease obligations

        (18     (18
     

 

 

   

 

 

 

Net cash used in financing activities

        (180     (164
     

 

 

   

 

 

 

Net decrease in cash and cash equivalents

        (931     (733

Cash and cash equivalents at beginning of period

        4,223       3,778  

Cash reclassified as held for sale

        —         (16

Effect of foreign exchange on cash and cash equivalents

        119       11  
     

 

 

   

 

 

 

Cash and cash equivalents at end of period

        3,411       3,040  
     

 

 

   

 

 

 

The notes on pages 13 to 31 are an integral part of these condensed consolidated financial statements.

 

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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 435 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’ in accordance with the requirements of UK-adopted international accounting standards. The balance sheet and accompanying notes as at 30 June 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 should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2022, which were prepared in accordance with UK-adopted international accounting standards.

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 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 June 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 £3.7 billion at 30 June 2022, entirely as cash. Notice to cancel the previous £2.0 billion revolving credit facility was issued on 29 June 2022 with the new £1.5 billion forward start facility becoming available for new drawings on 4 July 2022. 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.

The Group has assessed its projected cash flows over the going concern assessment period. This base case uses most of the same assumptions as the Group’s assessment as at 31 March 2022 including the Group’s expectations of the continued supply chain challenges related to semiconductor shortages and prevailing financial conditions including the impact of inflationary pressures on material costs. The assumptions have been adjusted to reflect the Group’s latest wholesale volume expectations for FY23, and extended to include twelve months from the date of authorisation of these condensed, consolidated interim financial statements.

The base case assumes an increase in wholesale volumes in the going concern assessment period compared to the previous twelve months, and management of supply to maximise production of higher margin products. Continued supplier engagement is expected to bring gradual improvements to supply through the rest of the financial year, although the situation remains uncertain.

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.

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 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.

 

13


Table of Contents

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

 

1

Accounting policies (continued)

Going concern (continued)

 

In order to reach a liquidity level that breaches covenants, it would require a sustained decline in wholesale volumes of more than 60% 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 other than the £1.5 billion RCF facility which was available for new drawings from 4 July 2022.

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 and the expected wholesale volumes under each of these scenarios is much 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 consolidated 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.
Profit/(loss) before tax and exceptional items    Profit/(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 page.

Adjusted EBIT and Adjusted EBITDA

 

            Three months ended  

£ millions

   Note      30 June
2022
     30 June
2021
 

Adjusted EBITDA

        279        449  

Depreciation and amortisation

        (477      (485

Share of profit/(loss) of equity accounted investments

        2        (10
     

 

 

    

 

 

 

Adjusted EBIT

        (196      (46
     

 

 

    

 

 

 

Foreign exchange on debt, derivatives and balance sheet revaluation*

     26        (114      (1

Unrealised (loss)/gain on commodities

     26        (109      14  

Finance income

     8        7        2  

Finance expense (net)

     8        (114      (80

Fair value gain on equity investments

     26        2        1  
     

 

 

    

 

 

 

Loss before tax and exceptional items

        (524      (110
     

 

 

    

 

 

 

Exceptional items

     4        155        —    
     

 

 

    

 

 

 

Loss before tax

        (369      (110
     

 

 

    

 

 

 

 

*

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’.

Free cash flow

 

     Three months ended  

£ millions

   30 June
2022
     30 June
2021
 

Net cash used in operating activities

     (435      (520

Purchases of property, plant and equipment

     (130      (237

Net cash outflow relating to intangible asset expenditure

     (100      (145

Proceeds from sale of property, plant and equipment

     —          3  

Purchases of other assets acquired with view to resale

     (12      —    

Disposal of subsidiaries (net of cash disposed)

     2        —    

Finance expenses and fees paid

     (100      (99

Finance income received

     6        2  
  

 

 

    

 

 

 

Free cash flow

     (769      (996
  

 

 

    

 

 

 

 

16


Table of Contents

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

 

2

Alternative Performance Measures (continued)

 

Total product and other investment

 

            Three months ended  

£ millions

   Note      30 June
2022
     30 June
2021
 

Purchases of property, plant and equipment

        130        237  

Net cash outflow relating to intangible asset expenditure

        100        145  

Engineering costs expensed

     5        259        188  

Purchases of other investments

        —          1  
     

 

 

    

 

 

 

Total product and other investment

        489        571  
     

 

 

    

 

 

 

Total cash and cash equivalents, deposits and investments

 

As at (£ millions)

   30 June
2022
     31 March
2022
     30 June
2021
 

Cash and cash equivalents

     3,411        4,223        3,040  

Short-term deposits and other investments

     280        175        680  
  

 

 

    

 

 

    

 

 

 

Total cash and cash equivalents, deposits and investments

     3,691        4,398        3,720  
  

 

 

    

 

 

    

 

 

 

Available liquidity

 

As at (£ millions)

   Note      30 June
2022
     31 March
2022
     30 June
2021
 

Cash and cash equivalents

        3,411        4,223        3,040  

Short-term deposits and other investments

        280        175        680  

Committed undrawn credit facilities*

     19        —          2,015        1,978  
     

 

 

    

 

 

    

 

 

 

Available liquidity

        3,691        6,413        5,698  
     

 

 

    

 

 

    

 

 

 

 

*

The £1.5 billion forward start revolving facility maturing in March 2024 became effective on 04 July 2022 and is undrawn. This facility replaces the £2.015 billion revolving credit facility which was cancelled ahead of its scheduled maturity on 28 July 2022.

Net debt

 

As at (£ millions)

   Note      30 June
2022
     31 March
2022
     30 June
2021
 

Cash and cash equivalents

        3,411        4,223        3,040  

Short-term deposits and other investments

        280        175        680  

Interest-bearing loans and borrowings

     19        (7,897      (7,597      (6,740
     

 

 

    

 

 

    

 

 

 

Net debt

        (4,206      (3,199      (3,020
     

 

 

    

 

 

    

 

 

 

Retails and wholesales

 

     Three months ended  

Units

   30 June
2022
     30 June
2021
 

Retail sales

     78,825        124,537  
  

 

 

    

 

 

 

Wholesales*

     71,815        84,442  
  

 

 

    

 

 

 

 

*

Wholesale volumes exclude sales from Chery Jaguar Land Rover – Q1 FY23: 10,772 units, Q1 FY22: 12,699 units.

 

17


Table of Contents

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

 

3

Disaggregation of revenue

 

     Three months
ended
 

£ millions

   30 June
2022
     30 June
2021
 

Revenue recognised for sales of vehicles, parts and accessories

     4,213        4,674  

Revenue recognised for services transferred

     74        75  

Revenue - other

     195        196  
  

 

 

    

 

 

 

Total revenue excluding realised revenue hedges

     4,482        4,945  
  

 

 

    

 

 

 

Realised revenue hedges

     (76      21  
  

 

 

    

 

 

 

Total revenue

     4,406        4,966  
  

 

 

    

 

 

 

 

4

Exceptional items

 

     Three months
ended
 

£ millions

   30 June
2022
     30 June
2021
 

Employee costs excluding exceptional items

     (570      (592

Impact of:

     

Past service credit

     155        —    
  

 

 

    

 

 

 

Including exceptional items

     (415      (592
  

 

 

    

 

 

 

The exceptional item recognised in the three months ended 30 June 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 three months ended 30 June 2021.

 

5

Engineering costs capitalised

 

     Three months
ended
 

£ millions

   30 June
2022
     30 June
2021
 

Total engineering costs incurred

     349        320  

Engineering costs expensed

     (259      (188
  

 

 

    

 

 

 

Engineering costs capitalised

     90        132  
  

 

 

    

 

 

 

Interest capitalised in engineering costs capitalised

     5        13  

Research and development grants capitalised

     (3      10  
  

 

 

    

 

 

 

Total internally developed intangible additions

     92        155  
  

 

 

    

 

 

 

 

6

Other income

 

     Three months
ended
 

£ millions

   30 June
2022
     30 June
2021
 

Grant income

     24        5  

Commissions

     6        5  

Other

     22        43  
  

 

 

    

 

 

 

Total other income

     52        53  
  

 

 

    

 

 

 

 

7

Foreign exchange and fair value adjustments

 

     Three months
ended
 

£ millions

   30 June
2022
     30 June
2021
 

Foreign exchange loss and fair value adjustments on loans

     (254      (5

Foreign exchange gain on economic hedges of loans

     148        21  

Foreign exchange (loss)/gain on derivatives

     (13      1  

Other foreign exchange gain/(loss)

     50        (13

Realised gain on commodities

     27        20  

Unrealised (loss)/gain on commodities

     (109      14  

Fair value gain on equity investments

     2        1  
  

 

 

    

 

 

 

Foreign exchange and fair value adjustments

     (149      39  
  

 

 

    

 

 

 

 

18


Table of Contents

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

 

8

Finance income and expense

 

     Three months ended  

£ millions

   30 June
2022
    30 June
2021
 

Finance income

     7       2  
  

 

 

   

 

 

 

Total finance income

     7       2  
  

 

 

   

 

 

 

Interest expense on lease liabilities

     (12     (11

Total interest expense on financial liabilities measured at amortised cost other than lease liabilities

     (101     (83

Interest income on derivatives designated as a fair value hedge of financial liabilities

     —         2  

Unwind of discount on provisions

     (8     —    

Interest capitalised

     7       12  
  

 

 

   

 

 

 

Total finance expense (net)

     (114     (80
  

 

 

   

 

 

 

The capitalisation rate used to calculate borrowing costs eligible for capitalisation during the three month period ended 30 June 2022 was 5.0% (three month period ended 30 June 2021: 4.6%).

 

9

Other expenses

 

     Three months ended  

£ millions

   30 June
2022
     30 June
2021
 

Stores, spare parts and tools

     23        24  

Freight cost

     152        116  

Works, operations and other costs

     513        539  

Power and fuel

     38        21  

Product warranty

     169        179  

Publicity

     114        107  
  

 

 

    

 

 

 

Total other expenses

     1,009        986  
  

 

 

    

 

 

 

 

10

Allowances for trade and other receivables

 

     Three months
ended
 

£ millions

   30 June
2022
     30 June
2021
 

At beginning of period

     4        6  

Charged during the period

     1        1  
  

 

 

    

 

 

 

At end of period

     5        7  
  

 

 

    

 

 

 

 

19


Table of Contents

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

 

11

Other financial assets

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Non-current

        

Restricted cash

     11        10        9  

Derivative financial instruments

     149        98        190  

Warranty reimbursement and other receivables

     56        63        71  

Other

     13        14        8  
  

 

 

    

 

 

    

 

 

 

Total non-current other financial assets

     229        185        278  
  

 

 

    

 

 

    

 

 

 

Current

        

Restricted cash

     7        13        3  

Derivative financial instruments

     106        185        304  

Warranty reimbursement and other receivables

     77        72        72  

Accrued income

     57        39        37  

Other

     111        85        96  
  

 

 

    

 

 

    

 

 

 

Total current other financial assets

     358        394        512  
  

 

 

    

 

 

    

 

 

 

 

12

Inventories

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Raw materials and consumables

     140        135        109  

Work-in-progress

     623        488        412  

Finished goods

     2,347        2,129        2,211  

Inventory basis adjustment

     21        29        22  
  

 

 

    

 

 

    

 

 

 

Total inventories

     3,131        2,781        2,754  
  

 

 

    

 

 

    

 

 

 

 

13

Other assets

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Non-current

        

Prepaid expenses

     26        24        25  

Research and development credit

     18        2        15  

Other

     9        9        11  
  

 

 

    

 

 

    

 

 

 

Total non-current other assets

     53        35        51  
  

 

 

    

 

 

    

 

 

 

Current

        

Recoverable VAT

     196        204        134  

Prepaid expenses

     252        208        165  

Research and development credit

     60        63        86  

Other

     17        18        20  
  

 

 

    

 

 

    

 

 

 

Total current other assets

     525        493        405  
  

 

 

    

 

 

    

 

 

 

 

14

Taxation

Recognised in the income statement

Income tax for the three month periods ending 30 June 2022 and 30 June 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 three month period ending 30 June 2022, a tax charge of £113 million was incurred as a result of inability to recognise UK deferred tax assets arising in the period due to the group’s current UK loss profile and non-recognition of UK deferred tax assets relating to pension and hedging movements in other reserves, £14 million of which arises in consequence of the recently announced increase in future UK corporation tax rate to 25% from 1 April 2023 (currently 19%).

 

20


Table of Contents

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

 

15

Capital expenditure

Capital expenditure on property, plant and equipment in the three month period to 30 June 2022 was £198 million (three month period to 30 June 2021: £114 million) and on intangible assets (excluding research and development expenditure credits) was £102 million (three month period to 30 June 2021: £167 million). There were no material disposals or changes in the use of assets.

 

16

Other financial liabilities

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Current

        

Lease obligations

     62        62        64  

Interest accrued

     104        95        80  

Derivative financial instruments

     659        445        185  

Liability for vehicles sold under a repurchase arrangement

     265        267        388  

Other

     13        1        —    
  

 

 

    

 

 

    

 

 

 

Total current other financial liabilities

     1,103        870        717  
  

 

 

    

 

 

    

 

 

 

Non-current

        

Lease obligations

     604        508        530  

Derivative financial instruments

     694        338        147  

Other

     27        25        1  
  

 

 

    

 

 

    

 

 

 

Total non-current other financial liabilities

     1,325        871        678  
  

 

 

    

 

 

    

 

 

 

 

17

Provisions

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Current

        

Product warranty

     606        604        642  

Legal and product liability

     302        252        282  

Provision for residual risk

     12        12        23  

Provision for environmental liability

     4        3        4  

Other employee benefits obligations

     —          —          2  

Restructuring

     40        118        265  
  

 

 

    

 

 

    

 

 

 

Total current provisions

     964        989        1,218  
  

 

 

    

 

 

    

 

 

 

Non-current

        

Product warranty

     1,007        1,026        1,029  

Legal and product liability

     45        40        80  

Provision for residual risk

     17        19        38  

Provision for environmental liability

     27        23        23  

Other employee benefits obligations

     4        4        5  
  

 

 

    

 

 

    

 

 

 

Total non-current provisions

     1,100        1,112        1,175  
  

 

 

    

 

 

    

 

 

 

 

21


Table of Contents

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

 

17

Provisions (continued)

 

£ millions

   Product
warranty
    Legal
and
product
liability
    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

     185       104       1       5        1       7       303  

Provisions used during the period

     (180     (85     —         —          (1     (80     (346

Unused amounts reversed in the period

     (30     —         (4     —          —         (5     (39

Impact of unwind of discounting

     8       —         —         —          —         —         8  

Foreign currency translation

     —         36       1       —          —         —         37  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 30 June 2022

     1,613       347       29       31        4       40       2,064  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Product warranty provision

The Group offers warranty cover in respect of manufacturing defects, which become apparent in the stipulated policy period dependent on the market in which the vehicle purchase occurred. 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 and product liability provision

A legal and product liability provision is maintained in respect of compliance with regulations and known litigations that impact the Group. The provision primarily relates to motor accident claims, consumer complaints, retailer terminations, 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.

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.

 

22


Table of Contents

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

 

18

Other liabilities

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Current

        

Liabilities for advances received

     170        122        113  

Ongoing service obligations

     297        286        310  

VAT

     82        95        3  

Other taxes payable

     129        161        111  

Other

     13        10        13  
     

 

 

    

 

 

    

 

 

 

Total current other liabilities

     691        674        550  
     

 

 

    

 

 

    

 

 

 

Non-current

        

Ongoing service obligations

     388        395        439  

Other

     9        9        10  
     

 

 

    

 

 

    

 

 

 

Total non-current other liabilities

     397        404        449  
     

 

 

    

 

 

    

 

 

 

 

19

Interest bearing loans and borrowings

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Short-term borrowings

        

Bank loans

     615        599        584  

Current portion of long-term EURO MTF listed debt

     811        779        399  

Current portion of long-term loans

     413        401        195  
     

 

 

    

 

 

    

 

 

 

Short-term borrowings

     1,839        1,779        1,178  
     

 

 

    

 

 

    

 

 

 

Long-term borrowings

        

EURO MTF listed debt

     4,108        3,953        3,931  

Bank loans

     1,249        1,260        1,003  

Other unsecured

     35        35        34  
     

 

 

    

 

 

    

 

 

 

Long-term borrowings

     5,392        5,248        4,968  
     

 

 

    

 

 

    

 

 

 

Lease obligations

     666        570        594  
     

 

 

    

 

 

    

 

 

 

Total debt

     7,897        7,597        6,740  
     

 

 

    

 

 

    

 

 

 

Undrawn facilities

As at 30 June 2022, the Group has a fully undrawn revolving credit facility of £nil (31 March 2022: £2,015 million, 30 June 2021: £1,935 million). The £1.5 billion forward start revolving facility maturing in March 2024 became effective on 04 July 2022 and is undrawn. This facility replaces the £2.015 billion revolving credit facility which was cancelled ahead of its scheduled maturity on 28 July 2022.

The Group’s fleet buyback facility matured in December 2021 and had £43 million undrawn as at 30 June 2021.

 

23


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 June 2022      31 March 2022      30 June 2021  

As at (£ millions)

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

Cash and cash equivalents

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

Short-term deposits and other investments

     280        280        175        175        680        680  

Trade receivables

     836        836        722        722        606        606  

Other non-current investments

     32        32        30        30        24        24  

Other financial assets - current

     358        358        394        394        512        512  

Other financial assets - non-current

     229        229        185        185        278        278  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     5,146        5,146        5,729        5,729        5,140        5,140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Accounts payable

     5,291        5,291        5,144        5,144        4,814        4,814  

Short-term borrowings

     1,839        1,818        1,779        1,778        1,178        1,188  

Long-term borrowings

     5,392        4,822        5,248        5,216        4,968        5,220  

Other financial liabilities - current

     1,103        1,103        870        870        717        717  

Other financial liabilities - non-current

     1,325        1,252        871        901        678        759  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

     14,950        14,286        13,912        13,909        12,355        12,698  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

21

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

     —         —         —         (482     (482

Remeasurement of defined benefit obligation

     —         —         —         379       379  

Loss on effective cash flow hedges

     —         (713     (14     —         (727

Income tax related to items recognised in other comprehensive income

     —         171       4       (95     80  

Cash flow hedges reclassified to profit and loss

     —         80       (4     —         76  

Income tax related to items reclassified to profit or loss

     —         (15     1       —         (14

Amounts removed from hedge reserve and recognised in inventory

     —         32       3       —         35  

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

     —         (7     —         —         (7

Currency translation differences

     18       —         —         —         18  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2022

     (315     (906     9       3,405       2,193  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

24


Table of Contents

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

 

21

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

     —         —         —         (284     (284

Remeasurement of defined benefit obligation

       —         —         (71     (71

Loss on effective cash flow hedges

     —         (37     (2     —         (39

Income tax related to items recognised in other comprehensive income

     —         —         —         102       102  

Cash flow hedges reclassified to profit and loss

     —         (18     (2     —         (20

Income tax related to items reclassified to profit or loss

     —         3       —         —         3  

Amounts removed from hedge reserve and recognised in inventory

     —         24       3       —         27  

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

     —         (4     (1     —         (5

Currency translation differences

     8       —         —         —         8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2021

     (349     104       (1     3,553       3,307  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

22

Dividends

During the three-month periods ended 30 June 2022 and 30 June 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.

 

     Three months ended  
£ millions    30 June 2022      30 June 2021  

Change in present value of defined benefit obligation

     

Defined benefit obligation at beginning of period

     7,522        8,432  

Current service cost

     25        33  

Past service credit

     (155      —    

Interest expense

     50        44  

Actuarial (gains)/losses arising from:

     

Changes in demographic assumptions

     —          26  

Changes in financial assumptions

     (1,537      337  

Experience adjustments

     105        —    

Member contributions

     —          1  

Benefits paid

     (130      (113
  

 

 

    

 

 

 

Defined benefit obligation at end of period

     5,880        8,760  
  

 

 

    

 

 

 

Change in fair value of scheme assets

     

Fair value of schemes’ assets at beginning of period

     7,931        8,046  

Interest income

     54        43  

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

     (1,053      292  

Administrative expenses

     (7      (1

Employer contributions

     46        47  

Member contributions

     —          1  

Benefits paid

     (130      (113
  

 

 

    

 

 

 

Fair value of schemes’ assets at end of period

     6,841        8,315  
  

 

 

    

 

 

 

 

25


Table of Contents

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

 

23

Employee benefits (continued)

 

The principal assumptions used in accounting for the pension schemes are set out below:

 

Three months ended

   30 June 2022     30 June 2021  

Discount rate

     3.9     1.9

Expected rate of increase in benefit revaluation of covered employees

     2.0     2.1

RPI inflation rate

     3.0     3.0

CPI inflation rate

     2.5     2.3

Amounts recognised in the condensed consolidated balance sheet consist of:

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Present value of defined benefit obligations

     (5,880      (7,522      (8,760

Fair value of schemes’ assets

     6,841        7,931        8,315  
  

 

 

    

 

 

    

 

 

 

Net Asset

     961        409        (445
  

 

 

    

 

 

    

 

 

 

Non-current assets

     987        434        —    

Non-current liabilities

     (26      (25      (445

For the valuations at 30 June 2022 and at 31 March 2022 the mortality assumptions used are the SAPS base table, in particular S2PxA 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 each date 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.

For the valuations at 30 June 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 were used for male members and 104 per cent to 118 per cent for female members. For the Land Rover Pension Scheme, scaling factors of 105 per cent to 117 per cent were used for male members and 100 per cent to 116 per cent for female members. For the Jaguar Executive Pension Plan, scaling factors of 93 per cent to 97 per cent were used for male members and 91 per cent to 96 per cent for female members. 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.

 

26


Table of Contents

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

 

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.

 

As at (£ millions)

   30 June 2022      31 March 2022      30 June 2021  

Litigation and product related matters

     24        25        24  

Other taxes and duties

     75        75        58  

Commitments:

        

- Plant and equipment

     709        735        874  

- Intangible assets

     17        15        22  

- Other

     532        470        329  

Pledged as collateral/security against the borrowings and commitments:

        

- Inventory

     —          —          88  

- Trade receivables

     —          —          24  

- Other financial assets

     14        13        25  
  

 

 

    

 

 

    

 

 

 

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.

Other taxes and duties

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

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

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

 

27


Table of Contents

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

 

24

Commitments and contingencies (continued)

 

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 June 2022. The outstanding commitment of CNY 1,525 million translates to £188 million at the June 2022 exchange rate.

At 30 June 2021, the outstanding commitment was CNY 1,525 million (£171 million at the 30 June 2021 exchange rate).                

The Group’s share of capital commitments of its joint venture at 30 June 2022 is £16 million (31 March 2022: £16 million, 30 June 2021: £19 million) and contingent liabilities of its joint venture at 30 June 2022 is £nil (31 March 2022: £nil, 30 June 2021: £nil).

 

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 June 2022      31 March 2022      30 June 2021  

Short-term debt

     1,901        1,841        1,242  

Long-term debt

     5,996        5,756        5,498  
  

 

 

    

 

 

    

 

 

 

Total debt*

     7,897        7,597        6,740  
  

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders

     3,861        4,503        4,975  
  

 

 

    

 

 

    

 

 

 

Total capital

     11,758        12,100        11,715  
  

 

 

    

 

 

    

 

 

 

 

*

Total debt includes lease obligations of £666 million (31 March 2022: £570 million, 30 June 2021: £594 million).

 

28


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 used in operations

 

     Three months ended  

£ millions

   30 June
2022
     30 June
2021
 

Cash flows from operating activities

     

Loss for the period

     (482      (286

Adjustments for:

     

Depreciation and amortisation

     477        485  

Write-down of intangible assets

     —          7  

Loss on disposal of assets

     2        —    

Income tax expense

     113        176  

Finance expense (net)

     114        80  

Finance income

     (7      (2

Foreign exchange on debt, derivatives and balance sheet revaluation*

     114        1  

Foreign exchange gain on other restricted deposits

     —          (1

Unrealised loss/(gain) on commodities

     109        (14

Share of (profit)/loss of equity accounted investments

     (2      10  

Fair value gain on equity investments

     (2      (1

Exceptional items

     (155      —    

Other non-cash adjustments

     1        3  
  

 

 

    

 

 

 

Cash flows from operating activities before changes in assets and liabilities

     282        458  
  

 

 

    

 

 

 

Trade and other assets*

     (520      274  

Other financial assets

     (14      (18

Inventories

     (358      273  

Accounts payable, other liabilities and retirement benefit obligations*

     330        (1,484

Other financial liabilities

     44        (7

Provisions

     (98      40  
  

 

 

    

 

 

 

Cash used in operations

     (334      (464
  

 

 

    

 

 

 

 

*

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 used in operations”.

 

29


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

     607       —         —         607  

Repayment of financing

     (654     (18     —         (672

Interest paid

     —         (11     (76     (87

Non-cash movements

        

Issue of new leases

     —         91       —         91  

Interest accrued

     —         11       71       82  

Foreign exchange

     12       2       1       15  

Fee amortisation

     2       —         —         2  

Fair value adjustment on loans

     1       —         —         1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2021

     6,146       594       80       6,820  
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 1 April 2022

     7,027       570       95       7,692  

Cash flows

        

Proceeds from issue of financing

     594       —         —         594  

Repayment of financing

     (656     (18     —         (674

Interest paid

     —         (12     (87     (99

Non-cash movements

        

Issue of new leases

     —         104       —         104  

Interest accrued

     —         12       90       102  

Foreign exchange

     286       11       6       303  

Lease terminations

     —         (1     —         (1

Fee amortisation

     3       —         —         3  

Fair value adjustment on loans

     (23     —         —         (23
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at 30 June 2022

     7,231       666       104       8,001  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

30


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 IT and consultancy services received from subsidiaries of Tata Sons Private Limited.

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.

 

Three months ended 30 June 2022 (£ millions)

   With joint
ventures of the
Group
     With associates
of the Group
     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

     73        —          1        8  

Purchase of goods

     21        —          —          22  

Services received

     —          —          44        20  

Services rendered

     6        —          —          —    

Trade and other receivables

     39        —          —          22  

Accounts payable

     8      —          16        27  

Three months ended 30 June 2021 (£ millions)

   With joint
ventures of the
Group
     With associates
of the Group
     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

     63        —          2        8  

Purchase of goods

     —          —          5        16  

Services received

     —          —          32        19  

Services rendered

     7        —          —          —    

Trade and other receivables

     44        —          —          22  

Accounts payable

     —          —          16        34  

 

Compensation of key management personnel

 

     Three months ended  
£ millions    30 June
2022
     30 June
2021
 

Key management personnel remuneration

     3        7  

 

31



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