Notes (forming part of the condensed consolidated interim financial statements)
Basis of preparation
The financial information in these
interim financial statements is unaudited and does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The condensed consolidated interim financial statements of Jaguar Land Rover Automotive plc have been
prepared in accordance with International Accounting Standard 34, Interim Financial Reporting in accordance with the requirements of UK-adopted international accounting standards. The balance sheet
and accompanying notes as at 30 June 2021 have been disclosed solely for the information of the users.
The condensed consolidated interim financial
statements have been prepared on a historical cost basis except for certain financial instruments held at fair value as highlighted in note 20.
The
condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 March 2022, which were prepared in accordance with
UK-adopted international accounting standards.
The condensed consolidated interim financial statements have been
prepared on the going concern basis as set out within the directors report of the Groups 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
Groups accounting policies and the key sources of estimate uncertainty were the same as those applied to the consolidated financial statements for the
year ended 31 March 2022.
Going concern
The
Condensed Interim Financial Statements have been prepared on a going concern basis, which the Directors consider appropriate for the reasons set out below.
The Directors have assessed the financial position of the Group as at 30 June 2022, and the projected cash flows of the Group for the twelve-month period
from the date of authorisation of the condensed, consolidated interim financial statements (the going concern assessment period).
The Group
had available liquidity of £3.7 billion at 30 June 2022, entirely as cash. Notice to cancel the previous £2.0 billion revolving credit facility was issued on 29 June 2022 with the new £1.5 billion forward
start facility becoming available for new drawings on 4 July 2022. Within the going concern assessment period there is a £1 billion minimum quarter-end liquidity covenant attached to the
Groups UKEF loans and forward start RCF facility.
The Group has assessed its projected cash flows over the going concern assessment period. This
base case uses most of the same assumptions as the Groups assessment as at 31 March 2022 including the Groups expectations of the continued supply chain challenges related to semiconductor shortages and prevailing financial
conditions including the impact of inflationary pressures on material costs. The assumptions have been adjusted to reflect the Groups latest wholesale volume expectations for FY23, and extended to include twelve months from the date of
authorisation of these condensed, consolidated interim financial statements.
The base case assumes an increase in wholesale volumes in the going concern
assessment period compared to the previous twelve months, and management of supply to maximise production of higher margin products. Continued supplier engagement is expected to bring gradual improvements to supply through the rest of the financial
year, although the situation remains uncertain.
Details of the scenarios and assumptions used in the assessment as at 31 March 2022 are set out in
note 2 to the consolidated financial statements of the Groups Annual Report for the year ended 31 March 2022.
The Group has also carried out a
reverse stress test against the base case to determine the decline in wholesale volumes over a twelve-month period that would result in a liquidity level that breaches financing covenants. The reverse stress test assumes continued supply constraints
resulting in demand that exceeds supply over the twelve-month period and assumes optimisation of supply to maximise production of higher margin products.
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