SEC Form 6-K filed by Tata Motors Ltd Tata Motors Limited

 

 

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 2023

Commission File Number: 001-32294

 

 

 

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

 

 

 

TABLE OF CONTENTS

 

Item 1		2024 FY Q2 Interim Financial Statements

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 6, 2023

  

Jaguar Land Rover Automotive plc

Interim Report

For the three and six-month period ended

30 September 2023

Company registered number: 06477691

Contents

 

Market environment and business developments			4
Revenue and profits			4
Cash flow, liquidity and capital resources			5
Sales volumes			6
Funding and liquidity			7
Risks and mitigating factors			8
Acquisitions and disposals			8
Off-balance sheet financial arrangements			8
Personnel			8
Board of directors			8
Condensed consolidated interim financial statements			9

Group, Company, Jaguar Land Rover, JLR plc and JLR refers to Jaguar Land Rover Automotive plc and its subsidiaries. Note 2 to the Condensed consolidated interim financial statements 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 FY24		3 months ended 30 September 2023
Q1 FY24 Q2 FY23 H1 FY24 H1 FY23		3 months ended 30 June 2023 3 months ended 30 September 2022 6-months ending 30 September 2023 6-months ending 30 September 2022
China Joint Venture		Chery Jaguar Land Rover Automotive Co., Ltd.

 

3

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

Revenue was £6.9 billion in Q2 FY24, up 30% year-on-year from Q2 FY23 reflecting higher volume and model mix, favourable pricing and FX, offset partially by planned marketing, selling expenses and inflationary costs. Wholesale volumes (excluding China Joint Venture) of 96,817 up 28.6% year-on-year and up 3.8% compared to the prior quarter. The order book remained strong with over 168,000 client orders at quarter end, reducing from 185,000 at 30 June 2023 in line with expectations, as chip and other supply constraints continue to improve. Range Rover, Range Rover Sport and Defender demand remains particularly strong, representing 77% of the order book.

Market environment and business developments

 

•

Wholesale volumes continued to increase significantly year-on-year reflecting continuing improvement in supply, allowing JLR to deliver more vehicles to clients.

 

•

Strong order book of 168,000 client orders at quarter end, a reduction of c. 17,000 units since 30 June 2023 in line with expectations; 77% of the order book is for our three most profitable models, the Range Rover, Range Rover Sport and Defender.

 

•

Chip supply is expected to continue to gradually improve, and partnership agreements put in place with key chip suppliers are continuing to provide greater visibility over near-term supply. General supply is being monitored with the help of AI analytics tools. We expect production and wholesale volumes to increase in the second half of the financial year.

 

•

The UK has experienced market volatility during the quarter, with the GBP weakening vs USD by 3% from 30 June 2023 to 30 September 2023.

 

•

Interest rates (including the UK, USA and Europe) seem to have stabilised somewhat but are expected to remain at elevated levels for the foreseeable future. The impact of these higher rates will flow through into financing costs for consumers and could impact future demand.

Revenue and profits, quarter ending 30 September 2023

 

•

Revenue was £6.9 billion in Q2 FY24, up 30.4% from Q2 FY23 reflecting favourable volumes, model mix, pricing and FX

 

•

Adjusted EBITDA1 was £1,021 million (EBITDA margin: 14.9%) in Q2 FY24, up from £557 million (EBITDA margin: 10.6%) in Q2 FY23

 

•

Adjusted EBIT1 was £501 million (7.3%) in Q2 FY24, up from £54 million (1.0%) in Q2 FY23

 

•

The profit before tax and exceptional items was £442 million in Q2 FY24 compared to a loss before tax and exceptional items of £(173) million in Q2 FY23. The year-on-year improvement primarily reflects the following factors:

 

•

£425 million favourable volume and mix

 

•

£199 million favourable pricing, offset slightly by £(24) million higher variable marketing costs

 

•

£14 million reduction in material and manufacturing costs as a result of some lower commodity prices YoY, offset by a £(39) million increase in warranty costs

 

•

£(77) million increase in structural costs, reflecting SG&A (up £(96)m primarily for planned marketing & selling expenses) and depreciation and amortisation up by £(32)m, slightly offset by £51m favourable engineering & capitalisation

 

•

£107 million for FX and commodities, which includes £(251) million adverse impact of operational exchange caused by the strengthening of GBP year-on-year, largely offset by £210 million of favourable realised derivatives as a result of the hedging policy as well as £105 million of favourable revaluation and £43 million of unrealised commodity derivatives.

 

•

Profit after tax was £272 million (after a tax charge of £(170) million) for Q2 FY24, an improvement from a loss of £(98) million in Q2 FY23 (including a tax rebate of £75 million)

Revenue and profits, fiscal year to date

 

•

Revenue was £13.8 billion for the six months to 30 September 2023, up 42.4% compared to the same period a year ago reflecting improvements in volumes, model mix and pricing

 

•

Adjusted EBITDA2 was £2,144 million (EBITDA margin: 15.6%), up from £850 million (EBITDA margin: 8.8%) for the same period a year ago

 

•

Adjusted EBIT1 was £1,096 million (8.0%) for H1 FY24, up from a loss of £142 million (-1.5%) for the six months to 30 September 2022

 

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

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

 

4

•

The profit before tax and exceptional items was £877 million for H1 FY24 compared to a loss before tax and exceptional items of £(697) million in the prior year. The year-on-year improvement primarily reflects the following factors:

 

•

£1,158 million favourable volume and mix

 

•

£372 million favourable pricing and lower variable marketing costs

 

•

£(46) million increase in material and manufacturing costs as a results of inflationary pressures, plus a £(57) million increase in warranty costs

 

•

£(195)m increase in structural costs, reflecting £(196) million increase in FME and selling, admin expenses up by £(85) million, £134 million favourable engineering and capitalisation, £(88)m depreciation and amortisation, £39 million increase in interest earned due to higher cash balances and market rates and £1 million of other.

 

•

£236 million for FX and commodities, including £230 million FX revaluation, £(316) million of the strengthening pound on revenue and costs offset by £247 million realised derivatives and £75 million unrealised commodities derivatives

 

•

Profit after tax was £595 million (after a tax charge of £(282) million) for the six month period to 30 September 2023, an improvement from a loss of £(580) million in H1 FY23 (including a tax charge of £38 million)

Cash flow

 

•

Free cash flow1 was £300 million in Q2 FY24 compared to negative free cashflow of £(15) million in Q2 FY23

 

•

Working capital movements in the quarter were £(76) million (vs £(1401) million in Q2 FY23) with a decrease in inventories of £184 million offset by higher receivables of £(176) million, a decrease in payables of £(80) million and other of £(4) million since 30 June 2023

 

•

Investment spending of £775 million in the quarter was up from £526 million in Q2 FY23 and includes £577 million of engineering spend, of which 64% was capitalised, and £197 million of capital investments

 

 

 

1	Restated from £(124)m due to a change in definition of free cash flow

 

5

Sales volumes

Retail sales for the second quarter were 106,561 units, up 20.9% compared to the same quarter a year ago and up 4.5% compared to the prior quarter ending 30 June 2023.

Wholesale volumes in the period were 96,817 units (excluding the Chery Jaguar Land Rover China JV), up 28.6% compared to the same quarter a year ago, and up 3.8% compared to the quarter ended 30 June 2023, notwithstanding the annual two-week summer plant shutdown. Wholesale volumes for the first half of the financial year were 190,070, up 29.2% compared to the prior year.

 

 

Range Rover brand includes the models Range Rover, Range Rover Sport, Range Rover Velar and Range Rover Evoque. Defender brand includes Defender 90, Defender 110 and Defender 130. Discovery brand includes the models Discovery and Discovery Sport. Jaguar brand includes the Jaguar XE, XF, F-Type, E-Pace, F-Pace and I-Pace models.

 

6

Funding and liquidity

Total cash and cash equivalents, deposits and investments at 30 September 2023 were £4.3 billion (£4.0 billion at 30 June 2023) comprising £4.1 billion of cash and cash equivalents and £236 million of short-term deposits and other investments. The cash and financial deposits include an amount of £442 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 following table shows details of the Company’s financing arrangements at 30 September 2023:

 

£ millions		Facility amount				Amount outstanding				Undrawn amount
€650m 2.200% Senior Notes due Jan 2024			563				563				—
€500m 5.875% Senior Notes due Nov 2024			433				433				—
$700m 7.750% Senior Notes due Oct 2025			572				572				—
€500m 4.500% Senior Notes due Jan 20265			433				433				—
€500m 6.875% Senior Notes due Nov 2026			433				433				—
$500m 4.500% Senior Notes due Oct 2027			408				408				—
$650m 5.875% Senior Notes due Jan 20285			531				531				—
€500m 4.500% Senior Notes due Jul 2028			433				433				—
$500m 5.500% Senior Notes due Jul 20295			408				408				—
$800m Syndicated Loan due Jan 2025			652				652				—
China RMB 5,000m revolving facility due Mar 20241			561				561				—
UKEF amortising loan due Oct 2024			135				135				—
UKEF amortising loan due Dec 2026			406				406				—
Subtotal			5,968				5,968				—
Lease obligations2			693				693				—
Other3			36				36				—
Prepaid costs			(19	)			(19	)			—
Fair value adjustments4			(136	)			(136	)			—
Total			6,542				6,542				—
Undrawn RCF			1,520				—				1,520
Total including RCF			8,062				6,542				1,520

 

1	The China RMB 5 billion 3-year syndicated revolving loan facility is subject to an annual confirmatory review in January each year. RMB 2 billion was repaid on 12/10/2023 (not reflected in the above)

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

5	These series of notes were tendered for buy back on 06/10/2023. Settlement of the tendered amount - totalling $400m equivalent across the three series of notes (not reflected in the above) - took place on 18/10/2023

 

7

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 46-49 of the Annual Report 2022/23 of the Group (available at www.jaguarlandrover.com/annual-report-2023) along with mitigating factors. The principal risks discussed in the Group’s Annual Report FY23 are competitive business efficiency, global economic and geopolitical environment, brand positioning, rapid technology change, environmental regulations and compliance, litigation / regulatory, supply chain disruptions, information security, client service delivery, manufacturing operations, and human capital.

Acquisitions and disposals

There were no material acquisitions or disposals in Q2 FY24.

Off-balance sheet financial arrangements

At 30 September 2023, Jaguar Land Rover Limited (a subsidiary of the Company) had sold £491 million equivalent of receivables under a $900 million invoice discounting facility signed in March 2023.

Personnel

At 30 September 2023, Jaguar Land Rover employed 42,560 people worldwide, including agency personnel, compared to 38,880 at 30 September 2022.

Board of directors

The following table provides information with respect to the members of the Board of Directors of Jaguar Land Rover Automotive plc as at 30 September 2023:

 

Name		Position		Year appointed
Natarajan Chandrasekaran		Chairman and Director		2017
Adrian Mardell		Chief Executive Officer and Director		2022
Prof Sir Ralf D Speth1		Vice Chairman and Director		2020
Mr P B Balaji		Director		2017
Hanne Sorensen		Director		2018
Charles Nichols		Director		2022
Al-Noor Ramji		Director		2022

 

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

 

8

Condensed Consolidated Income Statement

 

£ millions		Note				Three months ended								Six months ended
						30 September 2023				30 September 2022 Restated*				30 September 2023				30 September 2022 Restated*
Revenue			3				6,857				5,260				13,760				9,666
Material and other cost of sales							(4,166	)			(3,212	)			(8,192	)			(5,974	)
Employee costs			4				(713	)			(604	)			(1,429	)			(1,174	)
Other expenses			9				(1,425	)			(1,180	)			(2,801	)			(2,189	)
Exceptional items			4				—				—				—				155
Engineering costs capitalised			5				368				155				688				245
Other income			6				94				78				168				144
Depreciation and amortisation							(525	)			(509	)			(1,063	)			(1,000	)
Foreign exchange and fair value adjustments			7				31				(55	)			(87	)			(204	)
Finance income			8				41				11				74				18
Finance expense (net)			8				(125	)			(123	)			(256	)			(237	)
Share of profit of equity accounted investments							5				6				15				8
Profit/(loss) before tax							442				(173	)			877				(542	)
Income tax (expense)/credit			17				(170	)			75				(282	)			(38	)
Profit/(loss) for the period							272				(98	)			595				(580	)

 

*	See note 1 for details of restatement as a result of a change in accounting policy.

The notes on pages 14 to 37 are an integral part of these condensed consolidated financial statements.

 

9

Condensed Consolidated Statement of Comprehensive Income and Expense

 

		Three months ended								Six months ended
£ millions		30 September 2023				30 September 2022				30 September 2023				30 September 2022
Profit/(loss) for the period			272				(98	)			595				(580	)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit obligation			3				58				(127	)			437
Income tax related to items that will not be reclassified			(1	)			(14	)			32				(109	)
			2				44				(95	)			328
Items that may be reclassified subsequently to profit or loss:
(Loss)/gain on cash flow hedges (net)			(369	)			(841	)			282				(1,492	)
Currency translation differences			17				26				(25	)			44
Income tax related to items that may be reclassified			67				(140	)			44				21
			(285	)			(955	)			301				(1,427	)
Other comprehensive (expense)/income net of tax			(283	)			(911	)			206				(1,099	)
Total comprehensive (expense)/income attributable to shareholder			(11	)			(1,009	)			801				(1,679	)

The notes on pages 14 to 37 are an integral part of these condensed consolidated financial statements.

 

10

Condensed Consolidated Balance Sheet

 

As at (£ millions)		Note				30 September 2023				31 March 2023 Restated*				30 September 2022 Restated*
Non-current assets
Investments in equity accounted investees							324				329				346
Other non-current investments							51				43				43
Other financial assets			14				144				149				372
Property, plant and equipment			11				5,851				5,842				6,213
Intangible assets			12				5,068				4,864				4,872
Right-of-use assets			13				620				635				646
Pension asset			25				552				659				1,062
Other non-current assets			16				170				75				70
Deferred tax assets							384				357				337
Total non-current assets							13,164				12,953				13,961
Current assets
Cash and cash equivalents							4,057				3,687				3,555
Short-term deposits and other investments							236				105				161
Trade receivables							1,117				1,013				810
Other financial assets			14				498				375				487
Inventories			15				3,509				3,238				3,227
Other current assets			16				606				607				529
Current tax assets							2				16				29
Assets classified as held for sale							60				62				28
Total current assets							10,085				9,103				8,826
Total assets							23,249				22,056				22,787
Current liabilities
Accounts payable							6,040				5,891				5,216
Short-term borrowings			21				1,341				1,478				1,908
Other financial liabilities			18				944				923				1,385
Provisions			19				1,097				1,089				1,089
Other current liabilities			20				925				590				749
Current tax liabilities							137				110				102
Total current liabilities							10,484				10,081				10,449
Non-current liabilities
Long-term borrowings			21				4,508				4,600				5,574
Other financial liabilities			18				984				1,123				1,974
Provisions			19				1,188				1,091				1,121
Retirement benefit obligation			25				22				22				27
Other non-current liabilities			20				863				772				662
Deferred tax liabilities							159				128				113
Total non-current liabilities							7,724				7,736				9,471
Total liabilities							18,208				17,817				19,920
Equity attributable to shareholders
Ordinary shares							1,501				1,501				1,501
Capital redemption reserve							167				167				167
Other reserves			23				3,373				2,571				1,199
Equity attributable to shareholders							5,041				4,239				2,867
Total liabilities and equity							23,249				22,056				22,787

 

*	See note 1 for details of restatement as a result of a change in accounting policy.

The notes on pages 14 to 37 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 2 November 2023.

Company registered number: 06477691

 

11

Condensed Consolidated Statement of Changes in Equity

 

£ millions		Ordinary shares				Capital redemption reserve				Other reserves				Total equity
Balance at 1 April 2023			1,501				167				2,571				4,239
Profit for the period			—				—				595				595
Other comprehensive income for the period			—				—				206				206
Total comprehensive income			—				—				801				801
Amounts removed from hedge reserve and recognised in inventory			—				—				2				2
Income tax related to amounts removed from hedge reserve and recognised in inventory			—				—				(1	)			(1	)
Balance at 30 September 2023			1,501				167				3,373				5,041
£ 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

The notes on pages 14 to 37 are an integral part of these condensed consolidated financial statements.

 

12

Condensed Consolidated Cash Flow Statement

 

						Three months ended								Six months ended
£ millions		Note				30 September 2023				30 September 2022				30 September 2023				30 September 2022
Cash flows from operating activities
Cash generated from operations			28				965				416				2,109				82
Dividends received							—				—				2				—
Income tax paid							(40	)			(26	)			(140	)			(127	)
Net cash generated from/(used in) operating activities							925				390				1,971				(45	)
Cash flows from investing activities
Purchases of other investments							(1	)			(3	)			(3	)			(3	)
Investment in other restricted deposits							(13	)			(11	)			(15	)			(17	)
Redemption of other restricted deposits							3				2				14				14
Movements in other restricted deposits							(10	)			(9	)			(1	)			(3	)
Investment in short-term deposits and other investments							(143	)			(40	)			(285	)			(308	)
Redemption of short-term deposits and other investments							92				172				156				352
Movements in short-term deposits and other investments							(51	)			132				(129	)			44
Purchases of property, plant and equipment							(182	)			(122	)			(342	)			(252	)
Purchases of other assets acquired with view to resale							—				(12	)			—				(24	)
Proceeds from sale of property, plant and equipment							6				—				6				—
Net cash outflow relating to intangible asset expenditure							(383	)			(164	)			(715	)			(264	)
Issuance of loans to related parties							—				—				(20	)			—
Repayment of loans to related parties							20				—				20				—
Finance income received							38				9				68				15
Disposal of subsidiaries (net of cash disposed)							9				—				9				2
Net cash used in investing activities							(554	)			(169	)			(1,107	)			(485	)
Cash flows from financing activities
Finance expenses and fees paid							(124	)			(116	)			(237	)			(216	)
Proceeds from issuance of borrowings							—				—				—				594
Repayment of borrowings							(62	)			(63	)			(195	)			(719	)
Payments of lease obligations							(18	)			(17	)			(35	)			(35	)
Net cash used in financing activities							(204	)			(196	)			(467	)			(376	)
Net increase/(decrease) in cash and cash equivalents							167				25				397				(906	)
Cash and cash equivalents at beginning of period							3,829				3,411				3,687				4,223
Effect of foreign exchange on cash and cash equivalents							61				119				(27	)			238
Cash and cash equivalents at end of period							4,057				3,555				4,057				3,555

The notes on pages 14 to 37 are an integral part of these condensed consolidated financial statements.

 

13

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 September 2022 have been disclosed solely for the information of the users.

The comparative figures for the financial year ended 31 March 2023 are not the company’s statutory accounts for that financial year but are derived from those accounts. Those accounts have been reported on by the company’s auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

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 22.

The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2023, 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 2023.

The accounting policies applied are consistent with those of the annual consolidated financial statements for the year ended 31 March 2023, as described in those financial statements, except as described below.

Change in accounting policy

During the six months ended 30 September 2023, the Group reviewed its accounting policy choice over the net presentation of grants relating to property, plant and equipment and intangible assets.

As a result, it was considered more appropriate to adopt a policy to present grants related to property, plant and equipment and intangible assets gross as separate liabilities instead of deducting them from the cost of the assets; and to present the unwind of the grant over the useful economic lives of the assets in ‘Other income’, rather than a reduction of ‘Depreciation and amortisation’.

Separate disclosure of amounts received for grants in relation to capital assets more closely aligns the presentation of assets in the consolidated balance sheet with the Group’s reported cash flows from investing activities; and improves transparency of the financial statements by allowing users to better understand the extent of grant income supporting investments. The policy is also aligned to that of the Group’s ultimate parent company and therefore enhances comparability with its other subsidiaries.

The prior period comparatives have been represented on this basis. The impact on the consolidated income statement for the three and six months ended 30 September 2022, and on the consolidated balance sheet at 30 September 2022 and 31 March 2023 are shown below:

Consolidated income statement (extract)

 

		Three months ended 30 September 2022												Six months ended 30 September 2022
£ millions		As reported				Restatement				Restated				As reported				Restatement				Restated
Other income			62				16				78				114				30				144
Depreciation and amortisation			(493	)			(16	)			(509	)			(970	)			(30	)			(1,000	)

 

14

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

 

1	Accounting policies (continued)

Change in accounting policy (continued)

 

Consolidated balance sheet (extract)

 

		As at 31 March 2023												As at 30 September 2022
£ millions		As reported				Restatement				Restated				As reported				Restatement				Restated
Non-current assets
Property, plant and equipment			5,759				83				5,842				6,133				80				6,213
Intangible assets			4,600				264				4,864				4,634				238				4,872
Current liabilities
Other current liabilities			(528	)			(62	)			(590	)			(688	)			(61	)			(749	)
Non-current liabilities
Other non-current liabilities			(487	)			(285	)			(772	)			(405	)			(257	)			(662	)

There is no impact to profit/loss before or after taxation, reported equity, or net assets in any of the previous financial periods.

The revised accounting policy is given below.

Government grants

Government grants are recognised when there is reasonable assurance that the Group will comply with the relevant conditions and the grant will be received.

Government grants are recognised in the consolidated income statement, either on a systematic basis when the Group recognises, as expenses, the related costs that the grants are intended to compensate or immediately, if the costs have already been incurred.

Government grants related to income are presented as an offset against the related expenditure except in cases where there are no ongoing performance obligations to the Group, in which case the government grant is recognised as other income in the period in which the Group becomes entitled to the grant.

Government grants related to assets are presented gross as separate liabilities and unwound over the useful economic lives of the assets as other income.

Cash flows arising from grants related to income and assets are presented within cash flows from operating activities in the consolidated cash flow statement.

The terms and treatment of each grant is assessed on a case by case basis.

Sales tax incentives received from governments are recognised in the consolidated income statement at the reduced tax rate, and revenue is reported net of these sales tax incentives.

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 2023.

 

15

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

 

1	Accounting policies (continued)

 

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 2023, and the projected cash flows of the Group for at least 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 £5.8 billion at 30 September 2023, £4.3 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 £1.7 billion of maturing debt in the going concern assessment period, comprising UKEF and CNY loan repayments, EUR bond repayments and early repayment of EUR and USD bonds in October 2023 (see note 30). No new funding is assumed.

The Group has assessed its projected cash flows over the going concern assessment period. This base case uses the most recent Board-approved forecasts that include the going concern assessment period; taking into account the Group’s expectations of improved semiconductor supply, optimisation of production to prioritise the highest margin products along with the expectations relating to prevailing economic conditions, including the impact of inflationary pressures on material costs and environmental, social and governance (“ESG”) commitments.

The base case assumes a steady improvement in wholesale volumes, with associated increases in EBIT, in the going concern assessment period compared to the previous 12 months as semiconductor supply related production constraints progressively ease, supported by new partnership agreements with key semiconductor suppliers.

The Group has 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 the £1 billion liquidity financing covenant. The reverse stress test assumes continued supply constraints over the 12-month period and optimisation of production 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 65% compared to the base case over a 12-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.

 

16

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 joint ventures, associates and subsidiaries 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 and accruals		Changes in assets and liabilities as presented in note 28. 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.

 

17

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.

During the year ended 31 March 2023, the definition of ‘Free cash flow’ was amended to exclude investments in associates, joint ventures and subsidiaries. The Group considers the amended Free cash flow measure to be more useful as it provides a clearer view of recurring cash flows that is not distorted by the impact of one-off transactions. Free cash flow for the three and six month periods ended 30 September 2022 prior to the change was £(15) million and £(784) million respectively.

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 and accruals is considered by the Group to be a key measure in assessing assets and liabilities that are expected to be converted into cash within the next 12-month period; as well as over the longer term.

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								Six months ended
£ millions		Note				30 September 2023				30 September 2022 Restated*				30 September 2023				30 September 2022 Restated*
Adjusted EBITDA							1,021				557				2,144				850
Depreciation and amortisation							(525	)			(509	)			(1,063	)			(1,000	)
Share of profit of equity accounted investments							5				6				15				8
Adjusted EBIT							501				54				1,096				(142	)
Foreign exchange on debt, derivatives and balance sheet revaluation			28				(11	)			(116	)			2				(230	)
Unrealised gain/(loss) on commodities			28				35				(8	)			(43	)			(117	)
Finance income			8				41				11				74				18
Finance expense (net)			8				(125	)			(123	)			(256	)			(237	)
Fair value gain on equity investments			28				1				9				4				11
Profit/(loss) before tax and exceptional items							442				(173	)			877				(697	)
Exceptional items			4				—				—				—				155
Profit/(loss) before tax							442				(173	)			877				(542	)

 

*	See note 1 for details of restatement as a result of a change in accounting policy.

 

18

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 2023				30 September 2022				30 September 2023				30 September 2022 Restated*
Net cash generated from/(used in) operating activities			925				390				1,971				(45	)
Purchases of property, plant and equipment			(182	)			(122	)			(342	)			(252	)
Net cash outflow relating to intangible asset expenditure			(383	)			(164	)			(715	)			(264	)
Proceeds from sale of property, plant and equipment			6				—				6				—
Issuance of loans to related parties			—				—				(20	)			—
Repayment of loans to related parties			20				—				20				—
Purchases of other assets acquired with view to resale			—				(12	)			—				(24	)
Finance expenses and fees paid			(124	)			(116	)			(237	)			(216	)
Finance income received			38				9				68				15
Free cash flow			300				(15	)			751				(786	)

 

*	Comparative information has been restated for the change in definition explained on the previous page.

Total product and other investment

 

						Three months ended								Six months ended
£ millions		Note				30 September 2023				30 September 2022				30 September 2023				30 September 2022
Purchases of property, plant and equipment							182				122				342				252
Net cash outflow relating to intangible asset expenditure							383				164				715				264
Engineering costs expensed			5				209				237				412				496
Purchases of other investments							1				3				3				3
Total product and other investment							775				526				1,472				1,015

Total cash and cash equivalents, deposits and investments

 

As at (£ millions)		30 September 2023				31 March 2023				30 September 2022
Cash and cash equivalents			4,057				3,687				3,555
Short-term deposits and other investments			236				105				161
Total cash and cash equivalents, deposits and investments			4,293				3,792				3,716

Available liquidity

 

As at (£ millions)		Note				30 September 2023				31 March 2023				30 September 2022
Cash and cash equivalents							4,057				3,687				3,555
Short-term deposits and other investments							236				105				161
Committed undrawn credit facilities			21				1,520				1,520				1,500
Available liquidity							5,813				5,312				5,216

Net debt

 

As at (£ millions)		Note				30 September 2023				31 March 2023				30 September 2022
Cash and cash equivalents							4,057				3,687				3,555
Short-term deposits and other investments							236				105				161
Interest-bearing loans and borrowings			21				(6,542	)			(6,788	)			(8,216	)
Net debt							(2,249	)			(2,996	)			(4,500	)

 

19