Form 6-K
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 February 2017

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 theinformation 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

TABLE OF CONTENTS

 

Item 1:

   2017FY Q3 Investor presentation
   2017FY Q3 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/ Hoshang K Sethna
Name:   Hoshang K Sethna
Title:   Company Secretary

Dated: February 15, 2017


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LOGO

JAGUAR
LAND ROVER
Jaguar Electrifies
JAGUAR LAND ROVER
RESULTS FOR THE THREE MONTHS ENDED 31 DECEMBER 2016
14th FEBRUARY 2017


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LOGO

DISCLAIMER
JAGUAR LAND ROVER
Statements in this presentation describing the objectives, projections, estimates and expectations of Jaguar Land Rover Automotive plc and its direct and indirect subsidiaries (the “Company”, “Group” or “JLR”) may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include, among others, economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws and other statutes and incidental factors.
- Q4 FY17 represents the 3 month period from 1 January 2017 to 31 March 2017
- Q3 FY17 represents the 3 month period from 1 October 2016 to 31 December 2016
- Q3 FY16 represents the 3 month period from 1 October 2015 to 31 December 2015
- 9M FY17 represents the 9 month period from 1 April 2016 to 31 December 2016
- 9M FY16 represents the 9 month period from 1 April 2015 to 31 December 2015
Consolidated results of Jaguar Land Rover Automotive plc and its subsidiaries contained in the presentation are unaudited and presented under IFRS as approved in the EU.
Retail volume data includes and wholesale volume excludes sales from the Company’s unconsolidated Chinese joint venture.
-2-


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LOGO

PARTICIPANTS
JAGUAR LAND ROVER
Kenneth Gregor
CFO, Jaguar Land Rover
Bennett Birgbauer
Treasurer, Jaguar Land Rover
C. Ramakrishnan
Group CFO, Tata Motors
-3-


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LOGO

Q3 FY17 FINANCIAL RESULTS
JAGUAR LAND ROVER
• Retail sales of 149.3k units, 8.5% up on Q3 FY16
• Wholesale volumes 130.9k units, 4.9% lower — more than explained by the run-out of Discovery in advance of the all-new model going on sale in Q4 FY17
• Revenue of £6.5b, up from £5.8b with the weaker Pound
• PBT £255m, down from £499m a year ago primarily reflecting:
• Lower wholesale volumes with less favourable product mix partially offset by favourable market mix (including the run-out of Discovery)
• Higher marketing expense, including extended 16MY run-out cost in the US
• Higher depreciation and amortisation
• Unfavourable unrealised FX and commodity hedge revaluation
• Offset partially by further recoveries related to Tianjin
• Positive free cashflow of £54m after £926m of total investment spending
• Cash and deposits of £3.8b and an undrawn revolving credit facility of £1.9b – before a € 650m 7 year bond and a £300m 4 year bond issued in January 2017 with coupons of 2.20% and 2.75% respectively
-4-


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LOGO

KEY FINANCIAL METRICS
JAGUAR LAND ROVER
Quarter ended 31 December 9 months ended 31 December
(£ millions, unless stated) 2016 2015 Change 2016 2015 Change
Retail volumes (‘000 units) 149.3 137.7 11.6 424.5 362.8 61.7
Wholesale volumes (‘000 units)1 130.9 137.6 (6.7) 375.9 359.4 16.5
Revenues 6,537 5,781 756 17,951 15,614 2,337
EBITDA2 611 834 (223) 1,898 2,244 (346)
EBITDA% 9.3% 14.4% (5.1 ppt) 10.6% 14.4% (3.8 ppt)
Profit before tax and exceptional item 170 469 (299) 799 1,195 (396)
Exceptional item — Tianjin recoveries 85 30 55 135 (215) 350
Profit before tax 255 499 (244) 934 980 (46)
Profit after tax 167 440 (273) 715 840 (125)
Free cash flow (before financing) 54 454 (400) (509) (602) 93
Cash 3,841 3,408 433 3,841 3,408 433
1) Excludes Chery Jaguar Land Rover – Q3 FY17 21,335 units; Q3 FY16 12,830, 9M FY17 46,936 units; 9M FY16 22,219
2) EBITDA defined to include the revaluation of current assets and liabilities and realised FX and commodity hedges but excludes the revaluation of foreign currency debt, unrealised FX and commodity hedges, as well as exceptional items
-5-


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LOGO

RECORD Q3 RETAIL SALES OF 149.3k UP 8%
CHINA, NORTH AMERICA AND EUROPE UP
JAGUAR LAND ROVER
Units in ‘000
North America UK China*
Up 20% Down (3)% Up 38%
28.1 33.6 25.0 24.2 26.3 36.4
24.6 21.7 19.0 15.9 9.0 19.4
12.3 11.1
3.5 11.9 6.0 8.4 5.0 5.9
Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17
Europe Overseas
Up 7% Down (21)%
31.8 34.1 26.5 21.0
26.3 24.3 22.5 15.3
Land Rover
Jaguar 5.5 9.7 3.9 5.7
CJLR Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17
* Total volumes includes sales from Chery Jaguar Land Rover – Q3 FY17 19,395 units; Q3 FY16 9,010
Q3 FY17
North
America,
23%
UK, 16%
Europe (ex.
Russia),
23%
China
Region,
24%
Overseas,
14%
Units
149,288
Q3 FY16
North
America,
20%
UK, 18%
Europe (ex.
Russia),
23%
China
Region, 19%
Overseas,
19%
137,653 Units
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LOGO

Q3 WHOLESALES OF 130,910 DOWN 5%
MORE THAN EXPLAINED BY DISCOVERY RUN-OUT
JAGUAR LAND ROVER
Units in ‘000
11.4 12.5 10.0 5.2 2.7 2.6 20.9 2.9 2.8
XE XF* XJ F-PACE F-TYPE
24.9 22.6 15.3 5.7 23.9 25.0 23.1 20.0 17.5 18.4 5.8 0.1
Discovery Sport* Discovery Range Rover Evoque* Range Rover Sport Range Rover Discontinued (Defender, Freelander)
Total JLR
137.6 130.9
27.0 44.1
110.6 86.8
Q3 FY16
Q3 FY17
Land Rover
Jaguar
* Total volumes excludes sales from Chery Jaguar Land Rover – Q3 FY17 21,335 units. Q3 FY16 12,830
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LOGO

KEY PROFIT DRIVERS
JAGUAR LAND ROVER
• Revenue of £6.5b up from £5.8b in Q3 FY16, primarily reflecting the weaker Pound partially offset by lower wholesale volumes
• EBITDA of £611m (9.3% margin) compared to £834m (14.4%) a year ago, primarily reflecting:
• Lower wholesale volumes and less favourable product mix partially offset by favourable market mix
(2.0%, including the run-out of Discovery)
• Unfavourable variable marketing expense (1.7%, including extended 16MY runout expense in the US)
• Higher new model launch costs (0.3%) and biennial pay negotiation settlement (0.4%)
• Favourable operating exchange offset by realised hedges
• EBITDA margin, analytically adjusting revenue to include FX hedging gains and losses included in EBITDA
10.1%
• PBT £255m, down from £499m a year ago reflecting:
• Lower EBITDA (£223m) and higher depreciation and amortisation (£52m)
• Unfavourable unrealised FX and commodity hedge revaluation and USD debt revaluation (£42m)
• Higher China JV profits (£13m) and lower net finance expense (£5m)
• Further recoveries related to Tianjin (£55m)
-8-


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LOGO

CASH FLOW
POSITIVE FREE CASH FLOW AFTER INVESTMENT
JAGUAR LAND ROVER
Quarter ended 31 December 9 months ended 31 December
(£ millions, unless stated) 2016 2015 Change 2016 2015 Change
EBITDA 611 834 (223) 1,898 2,244 (346)
Working capital (incl. non cash accruals)* 204 376 (172) (281) (584) 303
Tax paid (9) (12) 3 (109) (117) 8
Cash flow from operations 806 1,198 (392) 1,508 1,543 (35)
Investment in fixed and intangible assets (830) (765) (65) (2,133) (2,177) 44
Finance income and other (includes FX revaluation) 78 21 57 116 32 84
Free cash flow (before financing) 54 454 (400) (509) (602) 93
Changes in debt (24) 18 (42) (56) (4) (52)
Finance expenses and fees (26) (24) (2) (95) (99) 4
Dividends paid - - - (150) (150) -
Net change in cash & financial deposits 4 448 (444) (810) (855) 45
*Includes £68m dividend received from CJLR
-9-


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LOGO

EXCITING NEW PRODUCTS
RECENT & UPCOMING NEW MODELS TO DRIVE GROWTH
JAGUAR LAND ROVER
F-PACE (May 2016) Evoque convertible (Jun 2016) XFL (Sep 2016)
All new Discovery (Q4 FY17) Watch this space! I-PACE concept (2018)
-10 -


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LOGO

JAGUAR I-PACE CONCEPT
JLR’S FIRST BATTERY ELECTRIC VEHICLE
JAGUAR LAND ROVER
I-PACE concept
All-wheel-drive from twin electric motors
• 500km range (NEDC cycle)
0-60mph in 4 seconds
• 90kWh lithium-ion battery
• Rapid charging takes 2 hours
• On the road in 2018


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LOGO

LOOKING AHEAD
CONTINUING TO INVEST TO DRIVE PROFITABLE GROWTH
JAGUAR LAND ROVER
• JLR’s strategy continues to be to invest in new products, technology and manufacturing capacity to grow profitably.
• Jaguar Land Rover plans to continue to build on recent successful product launches with the continued sales ramp up of the Jaguar F-PACE, XF long wheel base in China, the all new Land Rover Discovery and others to be announced this year.
• The start of new Discovery wholesales, peak March UK sales and other seasonal factors should support a solid final quarter.
• JLR continues to have a balanced sales profile and will continue to closely monitor and assess market conditions in key regions.
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LOGO

JAGUAR LAND ROVER
Thank You
Kenneth Gregor
CFO, Jaguar Land Rover
C. Ramakrishnan
Group CFO, Tata Motors
Bennett Birgbauer
Treasurer, Jaguar Land Rover
Jaguar Land Rover Investor Relations
investor@jaguarlandrover.com
Tata Motors Investor Relations
Ir_tml@tatamotors.com
Jaguar Land Rover
Abbey Road, Whitley, Coventry CV3 4LF
Jaguarlandrover.com
-13 -


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LOGO

Jaguar Land Rover
ADDITIONAL SLIDES


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LOGO

INCOME STATEMENT
Jaguar Land Rover
Quarter ended 31 December 9 months ended 31 December
(£ millions, unless stated) 2016 2015 Change 2016 2015 Change
Revenues 6,537 5,781 756 17,951 15,614 2,337
Material and other cost of sales (3,869) (3,496) (373) (10,623) (9,318) (1,305)
Employee costs (648) (582) (66) (1,838) (1,673) (165)
Other (expense) /income(1) (1,788) (1,192) (596) (4,664) (3,323) (1,341)
Product development costs capitalised 379 323 56 1,072 944 128
EBITDA 611 834 (223) 1,898 2,244 (346)
Depreciation and amortisation (409) (357) (52) (1,207) (1,040) (167)
Undesignated debt/unrealised hedges MTM(2) (62) (20) (42) 19 15 4
Net finance (expense) / income and other (5) (10) 5 (24) (39) 15
Share of profit / (Loss) from Joint Venture 35 22 13 113 15 98
Profit before tax and exceptional item 170 469 (299) 799 1,195 (396)
Exceptional item 85 30 55 135 (215) 350
Profit before tax 255 499 (244) 934 980 (46)
Income tax expense (88) (59) (29) (219) (140) (79)
Profit after tax 167 440 (273) 715 840 (125)
1) Includes mark to market of current assets and liabilities and realised gains/losses on matured FX and commodity hedges
2) Includes mark to market of unrealised FX options (time value) and commodity hedges and revaluation of foreign currency debt
-15 -


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LOGO

Jaguar Land Rover
RECORD Q3 RETAIL SALES OF 149.3k UP 8%
STRONG F-PACE, XF AND DISCOVERY SPORT SALES
Units in ‘000
11.4 10.9 6.8 9.7 3.0 3.0 19.3 2.6 2.4
XE XF* XJ F-PACE F-TYPE
26.6 30.8 13.8 8.0 28.4 27.7 22.4 22.7 16.6 14.7 6.0 0.1
Discovery Sport* Discovery Range Rover Evoque* Range Rover Sport Range Rover Discontinued (Defender, Freelander)
TOTAL JLR
137.7 23.8 113.8 Q3 FY16
149.3 45.4 103.9 Q3 FY17
Land Rover
Jaguar
* Total volumes includes sales from Chery Jaguar Land Rover – Q3 FY17 19,395 units; Q3 FY16 9,010
- 16 -


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LOGO

RECORD 9M RETAIL SALES OF 424.5k UP 17%
LED BY F-PACE, XE, XF AND DISCOVERY SPORT
Jaguar Land Rover
Units in ‘000
23.6 31.3 23.2 25.6 8.8 8.4 46.0 8.7 7.7 0.2 0.0
XE XF* XJ F-PACE F-TYPE Discontinued (XK)
61.6 88.2 35.8 33.7 77.6 79.5 62.7 63.5 43.8 39.6 17.2 1.2
Discovery Sport* Discovery Range Rover Evooque* Range Rover Sport Range Rover Discountinued (Defender, Freelander)
Total JLR
362.8 64.6 298.2 9M FY16
424.5 118.9 305.6 9M FY17
Land Rover Jaguar
* Total volumes includes sales from Chery Jaguar Land Rover – 9M FY17 46,926 units; 9M FY16 19,398
- 17 -


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LOGO

RECORD 9M RETAIL SALES OF 424.5k UP 17%
ALL REGIONS UP EXCEPT OVERSEAS
Jaguar Land Rover
Units in ‘000
North America UK China*
Up 25% Up 14% Up 35%
88.4 71.9 82.1 91.6
70.8 59.5 53.0 56.1 67.7 19.4 46.9
59.7 37.7 29.2
11.1 28.9 19.0 26.0 10.7 15.5
9M FY16 9M FY17 9M FY16 9M FY17 9M FY16 9M FY17
Europe Overseas
Up 17% Down (6)%
83.8 97.8 68.5 64.6
69.6 69.4 58.9 48.9
Land Rover
Jaguar 14.3 28.4 9.6 15.7
CJLR 9M FY16 9M FY17 9M FY16 9M FY17
* Total volumes includes sales from Chery Jaguar Land Rover – 9M FY17 46,926 units; 9M FY16 19,398
9M FY17
North
America,
21%
UK, 19%
Europe (ex.
Russia),
23%
China
Region,
22%
Overseas,
15%
424,499 Units
9M FY16
North
America,
20%
UK, 20%
China
Region, 19%
Europe (ex.
Russia),
23%
Overseas,
19%
362,758 Units
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LOGO

JAGUAR LAND ROVER
Q3 WHOLESALES OF 130,910 DOWN 5%
NORTH AMERICA AND CHINA UP
Units in ‘000
North America UK China*
Up 23% Down (9)% Up 5%
37.6 26.0 15.3 16.1
30.5 23.7
21.8 10.0
18.3 17.0 10.1
26.1
15.8 7.7 6.7 5.2 6.1
4.4
Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17
Europe Overseas
Down (14)% Down (26)%
37.2
32.1 28.7
21.4
32.0 22.7 24.2
15.3
Jaguar Land Rover 5.2 9.4 4.6 6.1
Q3 FY16 Q3 FY17 Q3 FY16 Q3 FY17
* Total volumes excludes sales from Chery Jaguar Land Rover – Q3 FY17 21,335 units. Q3
FY16 12,830
Q3 FY17
UK, 18%
North
America,
29%
China
Region,
12%
Europe (ex.
Russia),
25%
Overseas,
16%
130,910 Units
Q3 FY16
North
America,
22%
UK, 19%
China
Region, 11%
Europe (ex.
Russia),
27%
Overseas,
21%
137,631 Units
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JAGUAR LAND ROVER
9M WHOLESALES OF 375.9k UP 5%
STRONG SALES OF F-PACE, XE AND EVOQUE
Units in ‘000
29.1 33.4 23.8 18.8 7.4 7.1 52.9 9.5 8.4 0.1 0.0
XE XF* XI F-PACE F-TYPE Discontinued (XK)
61.6 59.5 37.0 28.5 64.0 68.1 63.8 59.8 44.8 38.8 18.3 0.6
Discovery Sport* Discovery Range Rover Evooque* Range Rover Sport Range Rover Discountinued (Defender, Freelander)
Total JLR
359.4 69.9 289.5 9M FY16
375.9 120.6 255.3 9M FY17
* Total volumes excludes sales from Chery Jaguar Land Rover – 9M FY17 49,936 units. 9M FY16 22,219
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LOGO

9M WHOLESALES OF 375.9k UP 5%
NORTH AMERICA, UK AND EUROPE UP
Jaguar Land Rover
Units in ‘000
North America UK China*
Up 26% Up 1% Down (4)%
74.7 75.3 45.1 43.2
98.4
78.0
61.3 52.2 53.1 35.0 27.1
66.6
37.1 22.4 22.3 10.2 16.2
11.4
9M FY16 9M FY17 9M FY16 9M FY17 9M FY16 9M FY17
Europe
Overseas
Up 8%
Down (14)%
72.3
89.3
96.9
62.0
73.8
67.9
61.9
45.9
Jaguar Land Rover
15.5
28.9
10.4
16.2
9M FY16
9M FY17
9M FY16
9M FY17
9M FY17
North
America,
26%
UK, 20%
China
Region,
12%
Europe (ex.
Russia),
26%
Overseas,
17%
375,870 Units
9M FY16
North
America,
22%
UK, 21%
China
Region, 13%
Europe (ex.
Russia),
25%
Overseas,
20%
359,439 Units
* Total volumes excludes sales from Chery Jaguar Land Rover – 9M FY17 49,936 units. 9M FY16 22,219
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FINANCING STRUCTURE
STRONG LIQUIDITY
JAGUAR LAND ROVER
£ million (Face value)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
16%
5,278
1,870
3,408
860
Q3 FY16
16%
5,710
1,870
3,840
1,119
Q3 FY17
1,870
807
570
407
407
400
CY17
CY18
CY19
CY20
CY21
CY22
CY23
CY24
Total Balance Sheet Debt as at
31 December 2016
£mn
16%
Bonds
2,591
Short term borrowings
139
Finance lease obligations
8
Pre paid financing costs
(16)
Total
2,722
Cash and financial deposits Bonds* Undrawn RCF Net Cash Cash/LTM revenue %
*Excludes €650m 7 year and £300m 4 year bonds issued in January at coupons of 2.20% and 2.75% respectively
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PRODUCT AND OTHER INVESTMENT
CAPITAL EXPENDITURE TO GROW THE BUSINESS
JAGUAR LAND ROVER
(£ millions, unless stated)
R&D expense
Capitalised
Expensed
Total R&D expense
Investment in tangible and other
intangible assets
Total product and other investment
Capital investment as % of revenue
Of which capitalised
Quarter ended 31 December
2016
379
96
475
451
926
14.2%
830
2015
323
77
400
442
842
14.6%
765
Change
56
19
75
9
84
(0.4 ppt)
65
9 months ended 31 December
2016
1,072
269
1,341
1,061
2,402
13.4%
2,133
2015
944
216
1,160
1,233
2,393
15.3%
2,177
Change
128
53
181
(172)
9
(1.9 ppt)
(44)
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FOREIGN EXCHANGE
IMPACT ON PROFITABILITY
JAGUAR LAND ROVER
(£ millions, unless stated)
Operational exchange1
Realized FX Hedges and other2
Revaluation of Current Assets/Liabilities3
Total FX impacting EBITDA
Revaluation of Undesignated Debt3
Unrealised FX Hedges3
Total FX below EBITDA
Total FX impact on PBT
Total FX Revaluation (included above)
Unrealised commodities
Realised commodities
End of Period Exchange Rates
GBP:USD
GBP:EUR
GBP:CNY
Quarter ended 31 December
2016
n/a
(455)
(2)
n/a
(54)
(13)
(67)
n/a
(69)
5
(11)
1.229
1.168
8.565
Q-o-Q
5.1%
0.9%
1.0%
2015
n/a
(71)
2
n/a
(36)
43
7
n/a
9
(27)
(18)
1.483
1.357
9.740
Change
438
(384)
(4)
50
(18)
(56)
(74)
(24)
(78)
32
7
Q-o-Q
2.1%
0.6%
1.3%
Memo:
1 The year-on-year operational exchange is an analytical estimate, which may differ from the actual  impact
2 Realised hedge gains/(losses) are driven by the difference between executed hedging exchange  rates compared to accounting exchange rates
3 Exchange revaluation gains/(losses) reflects the estimated impact of the change in end of  period exchange rates as applied to relevant balances
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JAGUAR LAND ROVER
Jaguar Land Rover Automotive plc Interim Report
For the three month and nine month period ended
31 December 2016
Company registered number: 06477691


Table of Contents

Contents

 

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

  

Market environment

     2   

Q3 FY17 key metrics

     2   

Total automotive industry volumes

     2   

Jaguar Land Rover volume performance

     2   

Revenue and profits

     3   

Cash flow, liquidity and capital resources

     4   

Debt

     4   

Acquisitions and disposals

     5   

Off-balance sheet financial arrangements

     5   

Post balance sheet items

     5   

Business risks and mitigating factors

     5   

Employees

     5   

Board of directors

     5   

Condensed consolidated financial statements

  

Income statement

     6   

Statement of comprehensive income and expense

     6   

Balance sheet

     7   

Statement of changes in equity

     8   

Cash flow statement

     9   

Notes

     10   

Group, Company, Jaguar Land Rover and JLR refers to Jaguar Land Rover Automotive plc and its subsidiaries.

 

EBITDA   defined as profit for the period before income tax expense, finance expense (net of capitalised interest), finance income, depreciation and amortisation, foreign exchange gains/losses on financing and unrealised derivatives, gains/losses on unrealised commodity derivatives, share of profits/losses from equity accounted investments and exceptional items.
EBITDA margin   measured as EBITDA as a percentage of revenue.
PBT   profit before tax.
PAT   profit after tax.
Net cash   measured as cash and cash equivalents plus short-term deposits less total balance sheet borrowings (including secured and unsecured borrowings, short-term invoice discounting facilities and finance leases).
Free cash flow   reflects net cash generated from operating activities less net cash used in investing activities (excluding investments in short-term deposits) and includes foreign exchange gains/losses on short term deposits.
Total investment   reflects net cash used in investing activities and expensed R&D (not included in net cash used in investing activities) but excluding movements in other restricted deposits, movements in short-term deposits, finance income received and proceeds from the sale of property, plant and equipment.
FY17   12 months ending 31 March 2017.
FY16   12 months ended 31 March 2016.
CY16   12 months ended 31 December 2016.
Q3   3 months ended 31 December.
China JV   Chery Jaguar Land Rover Automotive Co., Ltd.


Table of Contents

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

Jaguar Land Rover achieved record third quarter retail sales with higher volumes in China (including China JV sales), North America and Europe led by strong sales of Discovery Sport, F-PACE and the new long wheel base Jaguar XFL in China. However, profits and margins were lower primarily reflecting lower wholesale volumes (excluding sales from the China JV), more than explained by the run-out of Discovery, and higher marketing expense. Key Q3 FY17 results are as follows:

Key metrics for Q3 FY17 results, compared to Q3 FY16, are as follows:

 

  Retail sales of 149.3k units (including the China JV), up 8.5%.

 

  Wholesales of 130.9k units (excluding the China JV), down 4.9%

 

  Revenue of £6.5 billion, up from £5.8 billion.

 

  EBITDA of £611 million (9.3% margin; 10.1% analytically adjusting revenue to include gains and losses on revenue hedges included in EBITDA), down from £834 million (14.4% margin).

 

  PBT of £255 million, down from £499 million.

 

  PAT of £167 million, down from £440 million.

 

  Free cash flow before financing was £54 million after total investment spending of £926 million.

Market environment

The economic environment remained generally positive in most markets in Q3 FY17. Strong consumer spending in the UK supported solid economic performance overall, whilst sterling weakened further on Brexit concerns. Rising employment in the US drove strong economic growth and expectations for fiscal stimulus, following the election of Donald Trump, have buoyed market confidence whilst the US Federal Reserve increased rates by 0.25% in December 2016. China reported growth of 6.7% for CY16 as ongoing government stimulus supported economic performance. Growth in Europe was solid with labour markets improving. However, conditions in emerging markets remained generally challenging.

Total automotive industry car volumes (units)

 

     Q3 FY17      Q3 FY16      Change (%)  

China

     7,606,600         6,575,800         15.7

Europe (excluding UK)

     2,348,616         2,301,200         2.1

UK

     542,291         536,617         1.1

US

     4,418,700         4,401,100         0.4

Other markets (Including Russia and Brazil)

     3,282,894         3,337,546         (1.6 )% 

The total industry car volume data above has been compiled using relevant data available at the time of publishing this interim report, compiled from national automotive associations such as the Society of Motor Manufacturers and Traders in the UK and the ACEA in Europe, according to their segment definitions, which may differ from those used by JLR.

Jaguar Land Rover volume performance

Q3 FY17 total retail sales for the third quarter were 149,288 units (including the China JV), up 8.5% compared to Q3 FY16, primarily driven by the new Jaguar F-PACE as well as strong sales of the Land Rover Discovery Sport and long wheel base Jaguar XFL in China. Retail sales growth year-on-year was strong in China, North America and Europe but down in the UK and in other overseas markets. Land Rover retailed 103,924 units in Q3 FY17, down 8.7% compared to Q3 FY16 as the run-out of Discovery and discontinuation of Defender outweighed continuing strong sales of Discovery Sport. Jaguar retailed 45,364 units, up 90.3% as sales of the F-PACE and long wheel base XFL in China continue to grow.

Wholesales totalled 130,910 units (excluding China JV) in Q3 FY17, down 4.9% compared to the same quarter a year ago. By brand, Jaguar wholesales in Q3 FY17 were 44,099 units, up 63.2% compared to Q3 FY16 driven by F-PACE and XE, and Land Rover wholesales were 86,811 units, down 21.5% primarily reflecting the run-out of Discovery, discontinuation of Defender, and production of the Discovery Sport at the China JV, as well as 2017 model year changeover of Range Rover and Range Rover Sport. By region, wholesales were up in North America (23.5%) and China (5.2%) but down in the UK (8.8%), Europe (13.6%) and in other Overseas markets (25.6%)

 

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Table of Contents

Jaguar Land Rover’s Q3 FY17 retail sales (including the China JV) by key region and model compared to Q3 FY16 is detailed in the following table:

 

     Q3 FY17      Q3 FY16      Change (%)  

UK

     24,227         24,994         (3.1 %) 

North America

     33,630         28,073         19.8

Europe

     34,060         31,828         7.0

China2

     36,408         26,308         38.4

Overseas

     20,963         26,450         (20.7 %) 
  

 

 

    

 

 

    

 

 

 

Total JLR

     149,288         137,653         8.5
  

 

 

    

 

 

    

 

 

 

F-PACE

     19,336         —           n/a   

F-TYPE

     2,356         2,616         (9.9 %) 

XE

     10,878         11,420         (4.7 %) 

XF2

     9,745         6,802         43.3

XJ

     3,049         2,991         1.9

XK1

     —           12         n/a   
  

 

 

    

 

 

    

 

 

 

Jaguar2

     45,364         23,841         90.3
  

 

 

    

 

 

    

 

 

 

Discovery Sport2

     30,787         26,588         15.8

Discovery1

     8,009         13,844         (42.1 %) 

Range Rover Evoque2

     27,688         28,406         (2.5 %) 

Range Rover Sport

     22,723         22,386         1.5

Range Rover

     14,656         16,567         (11.5 %) 

Defender1

     59         5,997         (99.0 %) 

Freelander1

     2         24         (91.7 %) 
  

 

 

    

 

 

    

 

 

 

Land Rover2

     103,924         113,812         (8.7 %) 
  

 

 

    

 

 

    

 

 

 

Total JLR

     149,288         137,653         8.5
  

 

 

    

 

 

    

 

 

 

 

1  Production of the Jaguar XK, Land Rover Freelander, Defender and Discovery models have now been discontinued.
2  China JV retail volume in Q3 FY17 was 19,395 units (10,406 units of Discovery Sport, 5,186 units of Evoque and 3,803 units of Jaguar XFL).

Revenue and profits

Q3 FY17 revenue was £6.5 billion, up from the £5.8 billion in Q3 FY16 as favourable foreign exchange movements more than offset lower wholesale volumes. Revenue for the 9 months to 31 December 2016 was £18.0 billion, up

£2.3 billion compared to the same period a year ago.

EBITDA of £611m (9.3% margin) compared to £834m (14.4%) a year ago, primarily reflecting:

 

    Lower wholesale volumes and less favourable product mix partially offset by favourable market mix (including the run-out of Discovery)

 

    Unfavourable variable marketing expense (including extended 16MY run-out expense in the US)

 

    Higher new model launch costs and Biennial pay negotiation settlement

 

    Favourable operating exchange offset by realised hedges

The EBITDA margin analytically adjusting revenue for the inclusion of FX hedging gains and losses included in EBITDA was 10.1%.

EBITDA for the 9 months to 31 December 2016 was £1.9 billion (10.6% margin), down £346 million compared to the same 9 month period last year.

PBT was £255 million in Q3 FY17, down from £499 million a year ago predominantly reflecting:

 

    Lower EBITDA (£223 million) and higher depreciation and amortisation (£52 million)

 

    Unfavourable unrealised FX and commodity hedge revaluation as well as USD debt revaluation (£42 million)

 

    Higher China JV profits (£13 million) and lower net finance expense (£5 million)

 

    Further £85 million of exceptional recoveries related to Tianjin (£55 million)

 

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PBT for the 9 months to 31 December 2016 was £934 million, down £46 million compared to the same period last year.

PAT for Q3 FY17 was £167 million, compared to £440 million in the same period last year. PAT for the 9 months to 31 December 2016 was £715 million, down £125 million compared to last year.

EBITDA reconciliation

 

Quarter ended 31 December (£ millions)    2016     2015  

EBITDA Margin

     9.3     14.4

EBITDA

     611        834   

Adjustments:

    

Depreciation and amortisation

     (409     (357

Foreign exchange losses - financing

     (54     (36

Foreign exchange losses - unrealised derivatives

     (13     43   

Commodity losses - unrealised derivatives

     5        (27

Finance income

     7        9   

Finance expense (net)

     (12     (19

Share of profit from equity accounted investments

     35        22   
  

 

 

   

 

 

 

Profit before tax and exceptional item

     170        469   
  

 

 

   

 

 

 

Exceptional item

     85        30   
  

 

 

   

 

 

 

Profit before tax

     255        499   
  

 

 

   

 

 

 

Income tax expense

     (89     (59
  

 

 

   

 

 

 

Profit after tax

     166        440   
  

 

 

   

 

 

 

Cash flow, liquidity and capital resources

Free cash flow before financing in Q3 FY17 was £54 million after £926 million of total investment spending with £282 million of favourable working capital, non-cash accrual and other movements (including the c.£68 million dividend received from the China JV in November 2016). In the quarter, £830 million of investment spending was capitalised and £96 million was expensed in EBITDA.

After the free cash flow of £54 million, finance expenses/fees paid of £26 million and a £24 million decrease in the utilisation of a short-term debt facility, cash and financial deposits at 31 December 2016 stood at £3.8 billion (comprising £1.9 billion of cash and cash equivalents and £1.9 billion of financial deposits). This includes an amount of £567 million held in subsidiaries of Jaguar Land Rover outside of the United Kingdom. The cash in some of these jurisdictions is subject to impediments to remitting cash to the UK other than through annual dividends. As at 31 December 2016, the Company also had an undrawn revolving credit facility totalling £1.9 billion, all maturing in July 2020, and £146 million of undrawn short-term committed credit facilities.

Debt

The following table shows details of the Company’s financing arrangements as at 31 December 2016:

 

(£ millions)    Facility
amount
     Outstanding      Undrawn  

Committed

        

£400m 5.000% Senior Notes due Feb 2022**

     400         400         —     

£400m 3.875% Senior Notes due Mar 2023**

     400         400         —     

$500m 5.625% Senior Notes due Feb 2023*

     407         407         —     

$700m 4.125% Senior Notes due Dec 2018**

     570         570         —     

$500m 4.250% Senior Notes due Nov 2019**

     407         407         —     

$500m 3.500% Senior Notes due Mar 2020**

     407         407         —     

Revolving 5 year credit facility

     1,870         —           1,870   

Receivable factoring facilities***

     285         139         146   

Finance lease obligations

     8         8         —     
  

 

 

    

 

 

    

 

 

 

Subtotal

     4,754         2,738         2,016   
  

 

 

    

 

 

    

 

 

 

Prepaid costs

     —           (16      —     
  

 

 

    

 

 

    

 

 

 

Total

     4,754         2,722         2,016   
  

 

 

    

 

 

    

 

 

 

 

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* Issued by Jaguar Land Rover Automotive plc and guaranteed on a senior unsecured basis by Jaguar Land Rover Limited, Jaguar Land Rover Holdings Limited, Land Rover Exports Limited, JLR Nominee Company Limited and Jaguar Land Rover North America LLC.
** Issued by Jaguar Land Rover Automotive plc and guaranteed on a senior unsecured basis by Jaguar Land Rover Limited and Jaguar Land Rover Holdings Limited.
*** $350 million committed receivables factoring facility issued by Jaguar Land Rover Limited and guaranteed by Jaguar Land Rover Holdings Limited. A bilateral $200 million uncommitted receivables factoring facility, also issued by Jaguar Land Rover Limited and guaranteed by Jaguar Land Rover Holdings Limited, is also available which remained undrawn as at 31 December 2016.

Acquisitions and disposals

There were no material acquisitions or disposals in the period.

Off-balance sheet financial arrangements

The Company has no off-balance sheet financial arrangements other than to the extent disclosed in the condensed consolidated financial statements.

Post balance sheet items

On 17 January 2017 the Company issued a €650 million bond maturing in 2024 paying an annual coupon of 2.200%. Subsequently, on 24 January 2017 the company issued a £300 million bond maturing in 2021 paying an annual coupon of 2.750%.

Business risks and mitigating factors

As discussed on pages 46-53 of the Annual Report 2015-16 of the Company, Jaguar Land Rover’s principal risks and mitigating factors are documented.

Employees

At the end of Q3 FY17, Jaguar Land Rover employed 39,758 people worldwide including agency personnel. This compared to 37,730 at the end of Q3 FY16.

Board of directors

On 19 December 2016 Cyrus Mistry resigned from the Board of Directors of Jaguar Land Rover Automotive plc. An announcement naming his successor will be made in due course.

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 as Director,
Chief Executive Officer

Andrew M. Robb

  

Director

   2009

Dr. Ralf D. Speth

  

Chief Executive Officer and Director

   2010

Nasser Mukhtar Munjee

  

Director

   2012

Chandrasekaran Ramakrishnan

  

Director

   2013

 

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Table of Contents

Condensed Consolidated Income Statement

For the three and nine months ended 31 December 2016 (unaudited)

 

            Three months ended     Nine months ended  

(£ millions)

   Note      31 December 2016
(unaudited)
    31 December 2015
(unaudited)
    31 December 2016
(unaudited)
    31 December 2015
(unaudited)
 

Revenue

        6,537        5,781        17,951        15,614   

Material cost of sales excluding exceptional item

        (3,869     (3,496     (10,623     (9,318

Exceptional item

     2         85        30        135        (215

Material and other cost of sales

        (3,784     (3,466     (10,488     (9,533

Employee cost

        (648     (582     (1,838     (1,673

Other expenses

        (1,388     (1,153     (3,841     (3,241

Net impact of commodity derivatives

        (6     (44     33        (117

Development costs capitalised

     3         379        323        1,072        944   

Other income

        70        48        190        177   

Depreciation and amortisation

        (409     (357     (1,207     (1,040

Foreign exchange loss

        (526     (63     (1,027     (127

Finance income

     4         7        9        24        27   

Finance expense (net)

     4         (12     (19     (48     (66

Share of profit from equity accounted investments

        35        22        113        15   
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit before tax

        255        499        934        980   

Income tax expense excluding tax on exceptional item

        (60     (52     (181     (194

Tax on exceptional item

        (28     (7     (38     54   

Income tax expense

     9         (88     (59     (219     (140
     

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the period

        167        440        715        840   
     

 

 

   

 

 

   

 

 

   

 

 

 

Condensed Consolidated Statement of Comprehensive Income and Expense

For the three and nine months ended 31 December 2016 (unaudited)

 

     Three months ended     Nine months ended  

(£ millions)

   31 December 2016
(unaudited)
    31 December 2015
(unaudited)
    31 December 2016
(unaudited)
    31 December 2015
(unaudited)
 

Profit for the period

     167        440        715        840   

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

        

Remeasurement of defined benefit obligation

     14        (86     (1,279     349   

Income tax related to items that will not be reclassified

     (16     (1     201        (88
  

 

 

   

 

 

   

 

 

   

 

 

 
     (2     (87     (1,078     261   
  

 

 

   

 

 

   

 

 

   

 

 

 

Items that may be reclassified subsequently to profit or loss:

        

(Loss)/gain on effective cash flow hedges

     (621     (341     (2,715     328   

Cash flow hedges reclassified to ‘Foreign exchange loss’ in profit or loss

     448        55        827        173   

Currency translation differences

     4        (3     34        (17

Income tax related to items that may be reclassified

     29        53        356        (104
  

 

 

   

 

 

   

 

 

   

 

 

 
     (140     (236     (1,498     380   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive (expense)/income net of tax

     (142     (323     (2,576     641   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income/(expense) attributable to shareholders

     25        117        (1,861     1,481   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Condensed Consolidated Balance Sheet

 

As at (£ millions)

   Note      31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Non-current assets

        

Investments

        416         339   

Other financial assets

        334         185   

Property, plant and equipment

        5,672         5,175   

Intangible assets

        5,997         5,497   

Other non-current assets

        132         45   

Deferred tax assets

        603         354   
     

 

 

    

 

 

 

Total non-current assets

        13,154         11,595   
     

 

 

    

 

 

 

Current assets

        

Cash and cash equivalents

        1,944         3,399   

Short-term deposits and investments

        1,897         1,252   

Trade receivables

        961         1,078   

Other financial assets

     6         223         137   

Inventories

     7         3,584         2,685   

Other current assets

     8         443         411   

Current tax assets

        8         10   
     

 

 

    

 

 

 

Total current assets

        9,060         8,972   
     

 

 

    

 

 

 

Total assets

        22,214         20,567   
     

 

 

    

 

 

 

Current liabilities

        

Accounts payable

        5,811         5,758   

Short-term borrowings

     14         139         116   

Other financial liabilities

     11         2,086         962   

Provisions

     12         627         555   

Other current liabilities

     13         489         427   

Current tax liabilities

        147         57   
     

 

 

    

 

 

 

Total current liabilities

        9,299         7,875   
     

 

 

    

 

 

 

Non-current liabilities

        

Long-term borrowings

     14         2,575         2,373   

Other financial liabilities

     11         1,620         817   

Provisions

     12         914         733   

Retirement benefit obligation

     18         1,843         567   

Other non-current liabilities

        314         204   

Deferred tax liabilities

        46         384   
     

 

 

    

 

 

 

Total non-current liabilities

        7,312         5,078   
     

 

 

    

 

 

 

Total liabilities

        16,611         12,953   
     

 

 

    

 

 

 

Equity attributable to shareholders

        

Ordinary shares

        1,501         1,501   

Capital redemption reserve

        167         167   

Reserves

     16         3,935         5,946   
     

 

 

    

 

 

 

Equity attributable to shareholders

        5,603         7,614   
     

 

 

    

 

 

 

Total liabilities and equity

        22,214         20,567   
     

 

 

    

 

 

 

These condensed consolidated interim financial statements were approved by the Board of Directors.

Company registered number: 06477691

 

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Table of Contents

Condensed Consolidated Statement of Changes in Equity

 

(£ millions)

   Ordinary share
capital
     Capital redemption
reserve
     Other reserves     Total equity  

Balance at 1 April 2016 (audited)

     1,501         167         5,946        7,614   

Profit for the period

     —           —           715        715   

Other comprehensive expense for the period

     —           —           (2,576     (2,576
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive expense

     —           —           (1,861     (1,861
  

 

 

    

 

 

    

 

 

   

 

 

 

Dividend paid

     —           —           (150     (150
  

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 31 December 2016 (unaudited)

     1,501         167         3,935        5,603   
  

 

 

    

 

 

    

 

 

   

 

 

 

(£ millions)

   Ordinary share
capital
     Capital redemption
reserve
     Other reserves     Total equity  

Balance at 1 April 2015 (audited)

     1,501         167         4,372        6,040   

Profit for the period

     —           —           840        840   

Other comprehensive income for the period

     —           —           641        641   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive income

     —           —           1,481        1,481   
  

 

 

    

 

 

    

 

 

   

 

 

 

Dividend paid

     —           —           (150     (150
  

 

 

    

 

 

    

 

 

   

 

 

 

Balance at 31 December 2015 (unaudited)

     1,501         167         5,703        7,371   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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Condensed Consolidated Cash Flow Statement

For the three and nine months ended 31 December 2016 (unaudited)

 

            Three months ended     Nine months ended  

(£ millions)

   Note      31 December 2016
(unaudited)
    31 December 2015
(unaudited)
    31 December 2016
(unaudited)
    31 December 2015
(unaudited)
 

Cash flows from/(used in) operating activities

           

Cash generated from operations

     21         747        1,210        1,549        1,660   

Dividends received

        68        —          68        —     

Income tax paid

        (9     (12     (109     (117
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated from operating activities

        806        1,198        1,508        1,543   
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from/(used in) investing activities

           

Investment in other restricted deposits

        (3     (4     (21     (12

Redemption of other restricted deposits

        32        11        47        23   

Movements in other restricted deposits

        29        7        26        11   

Investment in short-term deposits and investments

        (1,251     (1,116     (3,023     (2,604

Redemption of short-term deposits and investments

        851        1,001        2,443        2,675   

Movements in short-term deposits and investments

        (400     (115     (580     71   

Purchases of property, plant and equipment

        (422     (412     (1,032     (1,139

Proceeds from sale of property, plant and equipment

        —          —          1        —     

Cash paid for intangible assets

        (408     (353     (1,101     (1,038

Finance income received

        7        9        24        29   
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

        (1,194     (864     (2,662     (2,066
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from/(used in) financing activities

           

Finance expenses and fees paid

        (26     (24     (95     (99

Proceeds from issuance of short-term borrowings

        127        141        345        413   

Repayment of short-term borrowings

        (150     (122     (341     (413

Repayments of long-term borrowings

        —          —          (57     —     

Payments of finance lease obligations

        (1     (1     (3     (4

Dividends paid

        —          —          (150     (150
     

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated used in financing activities

        (50     (6     (301     (253
     

 

 

   

 

 

   

 

 

   

 

 

 

Net (decrease)/increase in cash and cash equivalents*

        (438     328        (1,455     (776

Cash and cash equivalents at beginning of period

        2,382        2,104        3,399        3,208   
     

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

        1,944        2,432        1,944        2,432   
     

 

 

   

 

 

   

 

 

   

 

 

 

 

* Included in ‘Net (decrease)/increase in cash and cash equivalents’ in the three month period is an increase of £15 million (three months ended 31 December 2015: decrease of £7 million) and in the nine month period is an increase of £89 million (nine months ended 31 December 2015: decrease of £49 million) arising from the impact of foreign exchange rate changes on cash and cash equivalents.

 

9


Table of Contents

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

 

1 Accounting policies

Basis of preparation

The information for the three and nine month periods ended 31 December 2016 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’ under International Financial Reporting Standards (‘IFRS’) as adopted by the European Union (‘EU’).

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 15.

The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2016, which were prepared in accordance with IFRS as adopted by the EU.

The condensed consolidated interim financial statements have been prepared on the going concern basis as set out within the directors’ statement of responsibilities section of the Group’s annual report for the year ended 31 March 2016.

The accounting policies applied are consistent with those of the annual consolidated financial statements for the year ended 31 March 2016, as described in those financial statements.

 

2 Exceptional item

The exceptional item of £85 million for the quarter ended 31 December 2016 relates to the continuing impact of the explosion at the port of Tianjin (China) in August 2015. The exceptional credit to the income statement for the quarter relates to the recovery of import duties and taxes and to an updated assessment of the condition of the remaining vehicles, which led to a reversal of the initial provision recorded in the quarter ended 30 September 2015.

The process for finalising ongoing insurance claims and other recoveries may take some months to conclude, so further insurance and other potential recoveries will only be recognised in future periods when received or virtually certain to be received. Due to the size of the provision recorded, the charge together with the associated tax impact was disclosed as an exceptional item in the year ended 31 March 2016, as such any future recoveries will similarly be recognised as a reversal of that charge through exceptional items.

 

3 Research and development

 

     Three months ended      Nine months ended  

(£ millions)

   31 December 2016
(unaudited)
     31 December 2015
(unaudited)
     31 December 2016
(unaudited)
     31 December 2015
(unaudited)
 

Total research and development costs incurred

     475         400         1,341         1,160   

Research and development expensed

     (96      (77      (269      (216
  

 

 

    

 

 

    

 

 

    

 

 

 

Development costs capitalised

     379         323         1,072         944   
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest capitalised

     25         19         67         55   

Research and development expenditure credit

     (24      (23      (64      (59
  

 

 

    

 

 

    

 

 

    

 

 

 

Total internally developed intangible additions

     380         319         1,075         940   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

10


Table of Contents

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

 

4 Finance income and expense

Recognised in net income

 

     Three months ended      Nine months ended  

(£ millions)

   31 December 2016
(unaudited)
     31 December 2015
(unaudited)
     31 December 2016
(unaudited)
     31 December 2015
(unaudited)
 

Finance income

     7         9         24         27   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total finance income

     7         9         24         27   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest expense on financial liabilities measured at amortised cost

     (34      (33      (107      (107

Unwind of discount on provisions

     (4      (5      (12      (15

Interest capitalised

     26         19         71         56   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total finance expense (net)

     (12      (19      (48      (66
  

 

 

    

 

 

    

 

 

    

 

 

 

The capitalisation rate used to calculate borrowing costs eligible for capitalisation during the nine month period was 4.4% (nine months ended 31 December 2015: 4.6%).

 

5 Allowances for trade and other receivables

Changes in the allowances for trade and other receivables are as follows:

 

(£ millions)

   Nine months ended
31 December 2016
(unaudited)
     Year ended
31 March 2016
(audited)
 

At beginning of period/year

     60         11   

Charged during the period/year

     —           49   

Utilised during the period/year

     —           —     

Unused amounts reversed

     (13      —     

Foreign currency translation

     13         —     
  

 

 

    

 

 

 

At end of period/year

     60         60   
  

 

 

    

 

 

 

 

6 Other financial assets – current

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Advances and other receivables recoverable in cash

     4         8   

Derivative financial instruments

     165         73   

Accrued income

     28         12   

Other

     26         44   
  

 

 

    

 

 

 

Total current other financial assets

     223         137   
  

 

 

    

 

 

 

 

7 Inventories

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Raw materials and consumables

     87         92   

Work-in-progress

     383         379   

Finished goods

     3,114         2,214   
  

 

 

    

 

 

 

Total inventories

     3,584         2,685   
  

 

 

    

 

 

 

 

8 Other current assets

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Recoverable VAT

     173         218   

Prepaid expenses

     189         111   

Other

     81         82   
  

 

 

    

 

 

 

Total other current assets

     443         411   
  

 

 

    

 

 

 

 

11


Table of Contents

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

 

9 Taxation

Recognised in the income statement

The income tax for the three and nine month periods ended 31 December 2016 is charged at the estimated effective tax rate expected to apply for the applicable financial year end.

 

10 Capital expenditure

Capital expenditure in the nine month period was £1,058 million (nine month period to 31 December 2015: £1,107 million) on property, plant and equipment and £1,152 million (nine month period to 31 December 2015: £1,089 million) was capitalised as intangible assets (excluding research and development tax credits). There were no impairments, material disposals or changes in use of assets.

 

11 Other financial liabilities

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Current

     

Finance lease obligations

     2         5   

Interest accrued

     31         25   

Derivative financial instruments

     1,715         666   

Liability for vehicles sold under a repurchase arrangement

     338         266   
  

 

 

    

 

 

 

Total current other financial liabilities

     2,086         962   
  

 

 

    

 

 

 

Non-current

     

Finance lease obligations

     6         6   

Derivative financial instruments

     1,612         809   

Other payables

     2         2   
  

 

 

    

 

 

 

Total non-current other financial liabilities

     1,620         817   
  

 

 

    

 

 

 

 

12 Provisions

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Current

     

Product warranty

     494         441   

Legal and product liability

     116         99   

Provisions for residual risk

     7         6   

Provision for environmental liability

     8         8   

Other employee benefits obligations

     2         1   
  

 

 

    

 

 

 

Total current provisions

     627         555   
  

 

 

    

 

 

 

Non-current

     

Product warranty

     820         688   

Legal and product liability

     41         —     

Provision for residual risk

     19         13   

Provision for environmental liability

     24         23   

Other employee benefits obligations

     10         9   
  

 

 

    

 

 

 

Total non-current provisions

     914         733   
  

 

 

    

 

 

 

 

12


Table of Contents

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

 

12 Provisions (continued)

 

Nine months ended 31 December 2016 (unaudited) (£ millions)

   Product
warranty
    Legal and
product
liability
    Residual
risk
    Environmental
liability
     Total  

Opening balance

     1,129        99        19        31         1,278   

Provision made during the period

     531        94        9        1         635   

Reclassification from accounts payable

     —          19        —          —           19   

Provision used during the period

     (406     (19     (4     —           (429

Unused amounts reversed in the period

     (23     (37     —          —           (60

Impact of discounting

     12        —          —          —           12   

Foreign currency translation

     71        1        2        —           74   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Closing balance

     1,314        157        26        32         1,529   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Product warranty provision

The Group offers warranty cover in respect of manufacturing defects, which become apparent one to five years after purchase, dependent on the market in which the purchase occurred.

Legal and product liability provision

A legal and product liability provision is maintained in respect of compliance with regulations, contractual obligations and known or potential litigations or claims which impact the Group.

Residual risk provision

In certain markets, the Group is responsible for the residual risk arising on vehicles sold by dealers 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.

 

13 Other current liabilities

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Liabilities for advances received

     65         139   

Deferred revenue

     141         93   

VAT

     208         131   

Other taxes payable

     54         35   

Other

     21         29   
  

 

 

    

 

 

 

Total current other liabilities

     489         427   
  

 

 

    

 

 

 

 

13


Table of Contents

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

 

14 Interest bearing loans and borrowings

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Short-term borrowings

     

Bank loans

     139         116   
  

 

 

    

 

 

 

Short-term borrowings

     139         116   
  

 

 

    

 

 

 

Long-term borrowings

     

EURO MTF listed debt

     2,575         2,373   
  

 

 

    

 

 

 

Long-term borrowings

     2,575         2,373   
  

 

 

    

 

 

 

Finance lease obligations

     8         11   
  

 

 

    

 

 

 

Total debt

     2,722         2,500   
  

 

 

    

 

 

 

 

15 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 level 2 fair value measurements, as defined by IFRS 13, being those derived from inputs other than quoted prices which are observable. There have been no changes in the valuation techniques used or transfers between fair value levels from those set out in note 34 to the annual consolidated financial statements for the year ended 31 March 2016.

The following tables show the carrying amounts and fair value of each category of financial assets and liabilities.

 

     31 December 2016      31 March 2016  

As at (£ millions)

   Carrying value
(unaudited)
     Fair value
(unaudited)
     Carrying value
(audited)
     Fair value
(audited)
 

Cash and cash equivalents

     1,944         1,944         3,399         3,399   

Short-term deposits

     1,897         1,897         1,252         1,252   

Trade receivables

     961         961         1,078         1,078   

Other financial assets - current

     223         223         137         137   

Other financial assets - non-current

     334         334         185         185   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

     5,359         5,359         6,051         6,051   
  

 

 

    

 

 

    

 

 

    

 

 

 
     31 December 2016      31 March 2016  

As at (£ millions)

   Carrying value
(unaudited)
     Fair value
(unaudited)
     Carrying value
(audited)
     Fair value
(audited)
 

Accounts payable

     5,811         5,811         5,758         5,758   

Short-term borrowings

     139         139         116         116   

Long-term borrowings

     2,575         2,679         2,373         2,398   

Other financial liabilities - current

     2,086         2,086         962         962   

Other financial liabilities - non-current

     1,620         1,620         817         817   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

     12,231         12,335         10,026         10,051   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

14


Table of Contents

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

 

16 Other reserves

The movement of reserves is as follows:

 

(£ millions)

   Translation
reserve
     Hedging
reserve
     Retained
earnings
     Total reserves  

Balance at 1 April 2016 (audited)

     (363      (873      7,182         5,946   

Profit for the period

     —           —           715         715   

Remeasurement of defined benefit obligation

     —           —           (1,279      (1,279

Loss on effective cash flow hedges

     —           (2,715      —           (2,715

Currency translation differences

     34         —           —           34   

Income tax related to items recognised in other comprehensive income

     —           521         201         722   

Cash flow hedges reclassified to ‘Foreign exchange loss’ in profit or loss

     —           827         —           827   

Income tax related to items reclassified to profit or loss

     —           (165      —           (165

Dividend paid

     —           —           (150      (150
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 31 December 2016 (unaudited)

     (329      (2,405      6,669         3,935   
  

 

 

    

 

 

    

 

 

    

 

 

 

(£ millions)

   Translation
reserve
     Hedging
reserve
     Retained
earnings
     Total reserves  

Balance at 1 April 2015 (audited)

     (362      (910      5,644         4,372   

Profit for the period

     —           —           840         840   

Remeasurement of defined benefit obligation

     —           —           349         349   

Gain on effective cash flow hedges

     —           328         —           328   

Currency translation differences

     (17      —           —           (17

Income tax related to items recognised in other comprehensive income

     —           (70      (88      (158

Cash flow hedges reclassified to ‘Foreign exchange loss’ in profit or loss

     —           173         —           173   

Income tax related to items reclassified to profit or loss

     —           (34      —           (34

Dividend paid

     —           —           (150      (150
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at 31 December 2015 (unaudited)

     (379      (513      6,595         5,703   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

17 Dividends

During the three months ended 31 December 2016, no ordinary share dividend was proposed and paid (three months to 31 December 2015: £nil).

During the nine months ended 31 December 2016, an ordinary share dividend of £150 million was proposed and paid (nine months to 31 December 2015: £150 million).

 

18 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 fund. The following table sets out the disclosure pertaining to employee benefits of Jaguar Land Rover Limited and overseas subsidiaries which operate defined benefit pension plans.

 

15


Table of Contents

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

 

18 Employee benefits (continued)

 

(£ millions)

   Nine months ended
31 December 2016
(unaudited)
     Year ended
31 March 2016
(audited)
 

Change in defined benefit obligation

     

Defined benefit obligation at beginning of the period

     7,668         7,883   

Current service cost

     148         224   

Interest expense

     206         263   

Actuarial (gains)/losses arising from:

     

- Changes in demographic assumptions

     (76      (36

- Changes in financial assumptions

     2,364         (569

- Experience adjustments

     13         63   

Exchange differences on foreign schemes

     6         3   

Member contributions

     1         2   

Benefits paid

     (156      (165
  

 

 

    

 

 

 

Defined benefit obligation at end of period

     10,174         7,668   
  

 

 

    

 

 

 

Change in plan assets

     

Fair value of plan assets at beginning of the period

     7,103         6,997   

Interest income

     194         233   

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

     1,020         (52

Administrative expenses

     (7      (8

Exchange differences on foreign schemes

     4         1   

Employer contributions

     172         95   

Member contributions

     1         2   

Benefits paid

     (156      (165
  

 

 

    

 

 

 

Fair value of scheme assets at end of period

     8,331         7,103   
  

 

 

    

 

 

 

Amount recognised in the consolidated balance sheet consist of

     

Present value of defined benefit obligations

     (10,174      (7,668

Fair value of scheme assets

     8,331         7,103   

Restriction on asset and onerous obligation

     —           (2
  

 

 

    

 

 

 

Net liability

     (1,843      (567
  

 

 

    

 

 

 

Non-current liabilities

     (1,843      (567
  

 

 

    

 

 

 

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

 

     Nine months ended
31 December 2016
(unaudited)
    Year ended
31 March 2016
(audited)
 

Discount rate

     2.7     3.6

Expected rate of increase in compensation level of covered employees

     3.8     3.5

Inflation rate

     3.3     3.0

For the valuations at 31 December 2016 and 31 March 2016, the mortality assumptions used are the SAPS base table, in particular S2NxA tables and the Light table for members of the Jaguar Executive Pension Plan. A scaling factor of 120% for males and 110% for females has been used for the Jaguar Pension Plan, 115% for males and 105% for females for the Land Rover Pension Scheme, and 95% for males and 85% for females for the Jaguar Executive Pension Plan. There is an allowance for future improvements in line with the CMI (2014) projections with an allowance for long-term improvements of 1.25% per annum.

 

16


Table of Contents

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

 

19 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 on-going basis, with the assistance of external legal counsel wherever necessary. The Group recognises 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 a disclosure in the financial statements, if material, but does not recognise a liability.

The following is a description of claims and assertions where a potential loss is possible, but not probable. Management believe 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.

Litigation and product related matters

The Group is involved in legal proceedings, both as plaintiff and as defendant. There are claims and potential claims of £6 million (31 March 2016: £6 million) against the Group which management have not recognised as they are not considered probable, along with other claims which at this stage cannot be reliably estimated. These claims and potential claims pertain to motor accident claims, consumer complaints, employment and dealership arrangements, personal injury claims and/or compensation for deficiency in the goods and services provided by the Group and/or its dealers.

The Group has provided for the estimated costs of repair following the passenger safety airbag issue in the United States, Japan and Korea. The Group recognises that there is a potential risk of further recalls in other countries in the future, however, the Group are unable at this point in time to reliably estimate the amount and timings of any potential future costs associated with this warranty issue.

Other taxes and dues

During the year ended 31 March 2015, the Group’s Brazilian subsidiary received a demand for 167 million Brazilian Real (£42 million at 31 December 2016 exchange rates) in relation to additional indirect taxes (PIS and COFINS) claimed as being due on local vehicle and parts sales made in 2010. The matter is currently being contested before the Brazilian appellate authorities. Professional legal opinions obtained in Brazil fully support that the basis of the tax authority’s assertion is incorrect and, as a result, the likelihood of any settlement ultimately having to be made is considered remote. Accordingly, no provision has been recognised in the financial statements and the matter is disclosed here purely for the purposes of completeness.

Commitments and contingencies

The Group has entered into various contracts with vendors and contractors for the acquisition of plant and machinery, equipment and various civil contracts of capital nature aggregating £1,832 million (31 March 2016: £797 million) and £13 million (31 March 2016: £12 million) relating to the acquisition of intangible assets.

Commitments and contingencies also includes contingent liabilities of £85 million (31 March 2016: £28 million).

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

Inventory of £Nil (31 March 2016: £Nil) and trade receivables with a carrying amount of £139 million (31 March 2016: £116 million) and property, plant and equipment with a carrying amount of £Nil (31 March 2016: £Nil) and restricted cash with a carrying amount of £Nil (31 March 2016: £Nil) are pledged as collateral/security against the borrowings and commitments.

The Group’s share of capital commitments of its joint ventures at 31 December 2016 is £99 million (31 March 2016: £102 million) and contingent liabilities of its joint ventures at 31 December 2016 is £4 million (31 March 2016: £nil).

 

17


Table of Contents

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

 

20 Capital Management

The Group’s objectives when managing capital are to ensure the going concern operation of its entities and to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and to meet shareholder expectations.

The Group’s policy is to borrow primarily through capital market debt issues 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 swept (where practicable) and invested to satisfy security, liquidity and yield requirements.

The capital structure is governed according to Group policies approved by the Board and is monitored by various metrics such as interest cover, as per the debt covenants. Funding requirements are reviewed periodically with any debt issuances and capital distributions approved by the Board.

The following table summarises the capital of the Group:

 

As at (£ millions)

   31 December 2016
(unaudited)
     31 March 2016
(audited)
 

Short-term debt

     141         121   

Long-term debt

     2,581         2,379   
  

 

 

    

 

 

 

Total debt*

     2,722         2,500   
  

 

 

    

 

 

 

Equity

     5,603         7,614   
  

 

 

    

 

 

 

Total capital (debt and equity)

     8,325         10,114   
  

 

 

    

 

 

 

 

* Total debt includes finance lease obligations of £8 million (31 March 2016: £11 million).

 

18


Table of Contents

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

 

21 Notes to the consolidated cash flow statement

Reconciliation of profit for the period to cash generated from operations

 

     Three months ended      Nine months ended  

(£ millions)

   31 December 2016
(unaudited)
     31 December 2015
(unaudited)
     31 December 2016
(unaudited)
     31 December 2015
(unaudited)
 

Cash flows from/(used in) operating activities

           

Profit for the period

     167         440         715         840   

Adjustments for:

           

Depreciation and amortisation

     409         357         1,207         1,040   

Loss on sale of assets

     2         1         5         4   

Foreign exchange loss/(gain) on loans

     54         36         114         (4

Income tax expense

     88         59         219         140   

Finance expense (net)

     12         19         48         66   

Finance income

     (7      (9      (24      (27

Foreign exchange loss/(gain) on derivatives

     13         (43      (61      (94

Foreign exchange (gain)/loss on short-term deposits and investments

     (42      (5      (65      8   

Foreign exchange gain on other restricted deposits

     (1      —           (7      —     

Unrealised (gain)/loss on commodities*

     (5      27         (72      83   

Share of profit from equity accounted investments

     (35      (22      (113      (15

Exceptional item

     (85      (30      (135      215   

Other non-cash adjustments

     (4      1         1         1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from operating activities before changes in assets and liabilities

     566         831         1,832         2,257   
  

 

 

    

 

 

    

 

 

    

 

 

 

Trade receivables

     79         (71      117         67   

Other financial assets*

     (15      (5      6         2   

Other current assets

     (32      9         (32      7   

Inventories

     (105      170         (764      (458

Other non-current assets

     (22      (11      (45      (25

Accounts payable

     34         157         (43      (456

Other current liabilities

     131         11         62         (7

Other financial liabilities*

     1         (2      68         60   

Other non-current liabilities and retirement benefit obligations

     26         87         107         228   

Provisions

     84         34         241         (15
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash generated from operations

     747         1,210         1,549         1,660   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* Comparatives have been revised for the amendment made in the current year to separately disclose ‘Unrealised (gain)/loss on commodities’, which has resulted in a reclassification of amounts from ‘Other financial liabilities’ and ‘Other financial assets’. There is no impact on ‘Cash generated from operations’ as previously reported for the three and nine months ended 31 December 2015.

 

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Table of Contents

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

 

22 Related party transactions

The Group’s related parties principally consist of Tata Sons Limited, subsidiaries, associates and joint ventures of Tata Sons Limited which includes Tata Motors Limited (the ultimate parent company), subsidiaries, associates and joint ventures of Tata Motors Limited. The Group routinely enters into transactions with these related parties in the ordinary course of business including transactions for sale and purchase of products and services. Transactions and balances with the Group’s own subsidiaries are eliminated on consolidation.

The following table summarises related party transactions and balances not eliminated in the consolidated condensed interim financial statements.

 

     2016      2015*  
     (unaudited)      (unaudited)  

Nine months ended 31 December (£ millions)

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

Sale of products

     526         2         32         211         —           35   

Purchase of goods

     —           —           52         —           —           78   

Services received

     94         91         73         73         106         78   

Services rendered

     80         —           2         31         —           —     

Trade and other receivables

     90         1         27         45         —           25   

Accounts payable

     1         36         20         —           4         39   

Dividends received/receivable

     68         —           —           —           —           —     

Dividend paid

     —           —           150         —           —           150   

 

* The 2015 comparative balances have been restated, in order to fully reflect the transactions with all of the Group’s related parties.

Compensation of key management personnel

 

Nine months ended 31 December (£ millions)

   2016
(unaudited)
     2015
(unaudited)
 

Key management personnel remuneration

     16         12   

 

23 Subsequent events

On 17 January 2017 the company issued a €650 million bond maturing in 2024 and paying an annual coupon of 2.200%. Subsequently, on 24 January 2017 the company issued a £300 million bond maturing in 2021 paying an annual coupon of 2.750%. The company intends to use net proceeds from the issue of bonds for general corporate purposes, including support for the on-going growth and capital spending plan.

 

20