SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer

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

of the Securities Exchange Act of 1934

For the Month of November 2022

Commission File Number: 001-32294

 

 

 

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		2023 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 9, 2022

    

 

Jaguar Land Rover Automotive plc

Interim Report

For the three and six-month period ended

30 September 2022

Company registered number: 06477691

Contents

 

Market environment and business developments			3
Revenue and profits			3
Cash flow, liquidity and capital resources			4
Sales volumes			5
Funding and liquidity			6
Risks and mitigating factors			7
Acquisitions and disposals			7
Off-balance sheet financial arrangements			7
Personnel			7
Board of directors			7
Condensed consolidated financial statements			8

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

 

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

 

2

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

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

Market environment and business developments

 

•

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

 

•

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

 

•

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

 

•

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

 

•

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

Revenue and profits, quarter ending 30 September 2022

 

•

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

 

•

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

 

•

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

 

•

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

 

•

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

 

•

£141 million favourable pricing and lower variable marketing costs

 

•

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

 

•

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

 

•

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

 

•

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

 

•

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

Revenue and profits, fiscal year to date

 

•

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

 

•

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

 

•

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

 

•

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

 

•

£71 million favourable volume and mix

 

•

£268 million favourable pricing and lower variable marketing costs

 

•

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

 

•

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

 

•

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

 

•

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

 

•

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

 

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

 

3

•

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

Cash flow

 

•

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

 

•

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

 

•

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

 

 

 

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

 

4

Sales volumes

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

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

 

 

 

 

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

 

5

Funding and liquidity

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

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

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

 

£ millions		Facility amount				Amount outstanding				Undrawn amount
£400m 3.875% Senior Notes due Mar 2023			400				400				—
$500m 5.625% Senior Notes due Feb 2023			448				448				—
$700m 7.750% Senior Notes due Oct 2025			627				627				—
$500m 4.500% Senior Notes due Oct 2027			448				448				—
$650m 5.875% Senior Notes due Jan 2028			582				582				—
€650m 2.200% Senior Notes due Jan 2024			572				572				—
€500m 5.875% Senior Notes due Nov 2024			440				440				—
€500m 6.875% Senior Notes due Nov 2026			440				440				—
€500m 4.500% Senior Notes due Jul 2028			440				440				—
$500m 5.500% Senior Notes due Jul 2029			448				448				—
€500m 4.500% Senior Notes due Jan 2026			440				440				—
$800m Syndicated Loan due Jan 2025			715				715				—
$200m Syndicated Loan due Oct 2022			179				179				—
China RMB 5,000m revolving facility due Jun 20231			632				632				—
UKEF amortising loan due Oct 2024			260				260				—
UKEF amortising loan due Dec 2026			531				531				—
Subtotal			7,602				7,602				—
Finance lease obligations2			734				734				—
Other3			35				35				—
Prepaid costs			(29	)			(29	)			—
Fair value adjustments4			(126	)			(126	)			—
Total			8,216				8,216				—
Undrawn RCF (available from 04 July 2022)			1,500				—				1,500
Total including RCF			9,716				8,216				1,500

 

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

2	Lease obligations accounted for as debt under IFRS 16

3	Primarily an advance as part of a sale and leaseback transaction

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

 

6

Risks and mitigating factors

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

Acquisitions and disposals

There were no material acquisitions or disposals in Q2 FY23.

Off-balance sheet financial arrangements

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

Personnel

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

Board of directors

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

 

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

 

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

 

7

Condensed Consolidated Income Statement

 

£ millions						Three months ended								Six months ended
		Note				30 September 2022				30 September 2021				30 September 2022				30 September 2021
Revenue			3				5,260				3,871				9,666				8,837
Material and other cost of sales							(3,212	)			(2,500	)			(5,974	)			(5,649	)
Employee costs			4				(604	)			(513	)			(1,174	)			(1,105	)
Other expenses			9				(1,180	)			(793	)			(2,189	)			(1,779	)
Exceptional items			4				—				—				155				—
Engineering costs capitalised			5				155				119				245				251
Other income			6				62				55				114				108
Depreciation and amortisation							(493	)			(467	)			(970	)			(952	)
Foreign exchange and fair value adjustments			7				(55	)			14				(204	)			53
Finance income			8				11				1				18				3
Finance expense (net)			8				(123	)			(92	)			(237	)			(172	)
Share of profit/(loss) of equity accounted investments							6				3				8				(7	)
Loss before tax							(173	)			(302	)			(542	)			(412	)
Income tax expense			14				75				(79	)			(38	)			(255	)
Loss for the period							(98	)			(381	)			(580	)			(667	)
Attributable to:
Owners of the Company							(98	)			(380	)			(580	)			(664	)
Non-controlling interests							—				(1	)			—				(3	)

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

 

8

Condensed Consolidated Statement of Comprehensive Income and Expense

 

		Three months ended								Six months ended
£ millions		30 September 2022				30 September 2021				30 September 2022				30 September 2021
Loss for the period			(98	)			(381	)			(580	)			(667	)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit obligation			58				9				437				(62	)
Income tax related to items that will not be reclassified			(14	)			(2	)			(109	)			100
			44				7				328				38
Items that may be reclassified subsequently to profit or loss:
Loss on cash flow hedges (net)			(841	)			(286	)			(1,492	)			(345	)
Currency translation differences			26				11				44				19
Income tax related to items that may be reclassified			(140	)			69				21				72
			(955	)			(206	)			(1,427	)			(254	)
Other comprehensive expense net of tax			(911	)			(199	)			(1,099	)			(216	)
Total comprehensive expense attributable to shareholder			(1,009	)			(580	)			(1,679	)			(883	)
Attributable to:
Owners of the Company			(1,009	)			(579	)			(1,679	)			(880	)
Non-controlling interests			—				(1	)			—				(3	)

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

 

9

Condensed Consolidated Balance Sheet

 

As at (£ millions)		Note				30 September 2022				31 March 2022				30 September 2021
Non-current assets
Investments in equity accounted investees							346				321				319
Other non-current investments							43				30				27
Other financial assets			11				372				185				216
Property, plant and equipment			15				6,133				6,253				6,262
Intangible assets			15				4,634				4,866				5,159
Right-of-use assets							646				568				611
Pension asset			23				1,062				434				—
Other non-current assets			13				70				35				66
Deferred tax assets							337				336				398
Total non-current assets							13,643				13,028				13,058
Current assets
Cash and cash equivalents							3,555				4,223				3,537
Short-term deposits and other investments							161				175				258
Trade receivables							810				722				535
Other financial assets			11				487				394				465
Inventories			12				3,227				2,781				2,455
Other current assets			13				529				493				386
Current tax assets							29				20				104
Assets classified as held for sale							28				4				29
Total current assets							8,826				8,812				7,769
Total assets							22,469				21,840				20,827
Current liabilities
Accounts payable							5,216				5,144				4,136
Short-term borrowings			19				1,908				1,779				1,153
Other financial liabilities			16				1,385				870				775
Provisions			17				1,089				989				1,168
Other current liabilities			18				688				674				487
Current tax liabilities							102				116				87
Liabilities directly associated with assets classified as held for sale							—				—				17
Total current liabilities							10,388				9,572				7,823
Non-current liabilities
Long-term borrowings			19				5,574				5,248				5,801
Other financial liabilities			16				1,974				871				717
Provisions			17				1,121				1,112				1,089
Retirement benefit obligation			23				27				25				412
Other non-current liabilities			18				405				404				435
Deferred tax liabilities							113				105				116
Total non-current liabilities							9,214				7,765				8,570
Total liabilities							19,602				17,337				16,393
Equity attributable to shareholders
Ordinary shares							1,501				1,501				1,501
Capital redemption reserve							167				167				167
Other reserves			21				1,199				2,835				2,760
Equity attributable to shareholders							2,867				4,503				4,428
Non-controlling interests							—				—				6
Total equity							2,867				4,503				4,434
Total liabilities and equity							22,469				21,840				20,827

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

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

Company registered number: 06477691

 

10

Condensed Consolidated Statement of Changes in Equity

 

£ millions		Ordinary shares				Capital redemption reserve				Other reserves				Total equity
Balance at 1 April 2022			1,501				167				2,835				4,503
Loss for the period			—				—				(580	)			(580	)
Other comprehensive expense for the period			—				—				(1,099	)			(1,099	)
Total comprehensive expense			—				—				(1,679	)			(1,679	)
Amounts removed from hedge reserve and recognised in inventory			—				—				53				53
Income tax related to amounts removed from hedge reserve and recognised in inventory			—				—				(10	)			(10	)
Balance at 30 September 2022			1,501				167				1,199				2,867

 

£ millions		Ordinary shares				Capital redemption reserve				Other reserves				Equity attributable to shareholder				Non- controlling interests				Total equity
Balance at 1 April 2021			1,501				167				3,586				5,254				9				5,263
Loss for the period			—				—				(664	)			(664	)			(3	)			(667	)
Other comprehensive expense for the period			—				—				(216	)			(216	)			—				(216	)
Total comprehensive expense			—				—				(880	)			(880	)			(3	)			(883	)
Amounts removed from hedge reserve and recognised in inventory			—				—				66				66				—				66
Income tax related to amounts removed from hedge reserve and recognised in inventory			—				—				(12	)			(12	)			—				(12	)
Balance at 30 September 2021			1,501				167				2,760				4,428				6				4,434

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

 

11

Condensed Consolidated Cash Flow Statement

 

£ millions						Three months ended								Six months ended
		Note				30 September 2022				30 September 2021				30 September 2022				30 September 2021
Cash flows from operating activities
Cash generated from/(used in) operations			26				416				(215	)			82				(679	)
Income tax paid							(26	)			(71	)			(127	)			(127	)
Net cash generated from/(used in) operating activities							390				(286	)			(45	)			(806	)
Cash flows from investing activities
Purchases of other investments							(3	)			(1	)			(3	)			(2	)
Investment in other restricted deposits							(11	)			(21	)			(17	)			(22	)
Redemption of other restricted deposits							2				10				14				18
Movements in other restricted deposits							(9	)			(11	)			(3	)			(4	)
Investment in short-term deposits and other investments							(40	)			(254	)			(308	)			(726	)
Redemption of short-term deposits and other investments							172				678				352				1,472
Movements in short-term deposits and other investments							132				424				44				746
Purchases of property, plant and equipment							(122	)			(171	)			(252	)			(408	)
Purchases of other assets acquired with view to resale							(12	)			—				(24	)			—
Proceeds from sale of property, plant and equipment							—				1				—				4
Net cash outflow relating to intangible asset expenditure							(164	)			(113	)			(264	)			(258	)
Finance income received							9				2				15				4
Disposal of subsidiaries (net of cash disposed)							—				—				2				—
Net cash (used in)/generated from investing activities							(169	)			131				(485	)			82
Cash flows from financing activities
Finance expenses and fees paid							(116	)			(97	)			(216	)			(196	)
Proceeds from issuance of borrowings							—				829				594				1,436
Repayment of borrowings							(63	)			(109	)			(719	)			(763	)
Payments of lease obligations							(17	)			(18	)			(35	)			(36	)
Net cash (used in)/generated from financing activities							(196	)			605				(376	)			441
Net increase/(decrease) in cash and cash equivalents							25				450				(906	)			(283	)
Cash and cash equivalents at beginning of period							3,411				3,040				4,223				3,778
Cash reclassified as held for sale							—				—				—				(16	)
Effect of foreign exchange on cash and cash equivalents							119				47				238				58
Cash and cash equivalents at end of period							3,555				3,537				3,555				3,537

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

 

12

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

 

1	Accounting policies

Basis of preparation

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

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

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

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

Estimates and judgements

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

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

Going concern

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

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

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

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

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

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

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

 

13

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

 

1	Accounting policies (continued)

 

Going concern (continued)

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

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

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

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

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

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

 

14

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

 

2	Alternative Performance Measures

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

The APMs used by the Group are defined below.

 

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

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

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

 

15

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

 

2	Alternative Performance Measures (continued)

 

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

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

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

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

Exceptional items are defined in note 4.

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

Adjusted EBIT and Adjusted EBITDA

 

£ millions						Three months ended								Six months ended
		Note				30 September 2022				30 September 2021				30 September 2022				30 September 2021
Adjusted EBITDA							541				283				820				732
Depreciation and amortisation							(493	)			(467	)			(970	)			(952	)
Share of profit/(loss) of equity accounted investments							6				3				8				(7	)
Adjusted EBIT							54				(181	)			(142	)			(227	)
Foreign exchange on debt, derivatives and balance sheet revaluation*			26				(116	)			(17	)			(230	)			(18	)
Unrealised loss on commodities			26				(8	)			(15	)			(117	)			(1	)
Finance income			8				11				1				18				3
Finance expense (net)			8				(123	)			(92	)			(237	)			(172	)
Fair value gain on equity investments			26				9				2				11				3
Loss before tax and exceptional items							(173	)			(302	)			(697	)			(412	)
Exceptional items			4				—				—				155				—
Loss before tax							(173	)			(302	)			(542	)			(412	)

 

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

 

16

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

 

2	Alternative Performance Measures (continued)

 

Free cash flow

 

						Three months ended								Six months ended
£ millions						30 September 2022				30 September 2021				30 September 2022				30 September 2021
Net cash generated from/(used in) operating activities							390				(286	)			(45	)			(806	)
Purchases of property, plant and equipment							(122	)			(171	)			(252	)			(408	)
Net cash outflow relating to intangible asset expenditure							(164	)			(113	)			(264	)			(258	)
Proceeds from sale of property, plant and equipment							—				1				—				4
Purchases of other assets acquired with view to resale							(12	)			—				(24	)			—
Disposal of subsidiaries (net of cash disposed)							—				—				2				—
Finance expenses and fees paid							(116	)			(97	)			(216	)			(196	)
Finance income received							9				2				15				4
Free cash flow							(15	)			(664	)			(784	)			(1,660	)

Total product and other investment

 

						Three months ended								Six months ended
£ millions		Note				30 September 2022				30 September 2021				30 September 2022				30 September 2021
Purchases of property, plant and equipment							122				171				252				408
Net cash outflow relating to intangible asset expenditure							164				113				264				258
Engineering costs expensed			5				237				199				496				387
Purchases of other investments							3				1				3				2
Total product and other investment							526				484				1,015				1,055

Total cash and cash equivalents, deposits and investments

 

As at (£ millions)						30 September 2022				31 March 2022				30 September 2021
Cash and cash equivalents							3,555				4,223				3,537
Short-term deposits and other investments							161				175				258
Total cash and cash equivalents, deposits and investments							3,716				4,398				3,795

Available liquidity

 

As at (£ millions)		Note				30 September 2022				31 March 2022				30 September 2021
Cash and cash equivalents							3,555				4,223				3,537
Short-term deposits and other investments							161				175				258
Committed undrawn credit facilities			19				1,500				2,015				2,098
Available liquidity							5,216				6,413				5,893

 

17

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

 

2	Alternative Performance Measures (continued)

 

Net debt

 

As at (£ millions)		Note				30 September 2022				31 March 2022				30 September 2021
Cash and cash equivalents							3,555				4,223				3,537
Short-term deposits and other investments							161				175				258
Interest-bearing loans and borrowings			19				(8,216	)			(7,597	)			(7,556	)
Net debt							(4,500	)			(3,199	)			(3,761	)

Retails and wholesales

 

		Three months ended								Six months ended
Units		30 September 2022				30 September 2021				30 September 2022				30 September 2021
Retail sales			88,121				92,710				166,946				217,247
Wholesales*			75,307				64,032				147,122				148,474

 

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

 

18