Tata Motors Ltd (TTM) 2015 Q4 法說會逐字稿

Thank you, and good afternoon, and good evening to everyone who's taken the time to join us on the call. I appreciate your time. What we've got here is the full year presentation of results for bondholders in Jaguar Land Rover Automotive Plc. And I'll in normal fashion run through the presentation relatively quickly, so that we have some time for Q&A at the end.

I'm onto slide 5 in the presentation to really discuss some talking points about full year. Obviously, we're also talking about Q4 ended March as well as the full year ended March. But I think the overall highlight is we've concluded and [into] a strong year for Jaguar Land Rover in FY15 and a very solid Q4 to close that year. The volumes 462,000, up 6.5% with Land Rover up 9%, Jaguar flattish and I'll talk about that, down about 4.5%. Strong growth in revenue, up 10% to GBP22 billion and the EBITDA, strong performance all year really including Q4 on the EBITDA margin, which averaged out in the full year to just a touch under 19% with the higher revenue driving EBITDA itself up GBP0.7 billion to GBP4.1 billion.

The headline PBT impacted by some non-cash financial accounting items which I'll talk about in a second related to FX about GBP2.6 billion. That's up GBP0.1 billion year-over-year and the profit after tax, up a bit more to GBP2 billion. Particularly pleased by the cash flow performance which was GBP0.8 billion, positive cash flow and that's after higher investment for the year which was GBP3.1 billion, actually a little bit lower than the product investment that we've guided this time last year. And that was partly the reason the free cash flow was a bit stronger than we planned, but the other part of it was the strong profit performance and all of that together, the strong cash flow coming from those sources and also the financings we've done during the year have left us with a very healthy balance sheet with cash and financial deposits just over GBP4 billion, as well as the uncommitted revolving credit facility that we have. And we have declared GBP150 million dividend, which we will pay to Tata Motors in June, consistent with last year and our expectations for this year.

Just turning to slide 6, which has some of the metrics. You can see the volumes for the quarter, retail volumes are 124,000 units, basically flat year-over-year for the quarter and I'll talk a bit more about why that is largely relates to some model run outs of the Freelander and the change over in China from the import of Evoque to the locally-produced Evoque, those two things have impacted the quarter a little bit. But as you can see when you get to the full year number, 28,000 units, up to 462,000 units.

This also has some of the other quarterly figures, so you can see the EBITDA for the quarter, just over GBP1 billion pounds for the quarter up just under GBP100 million and you can see year-over-year for Q4, the EBITDA margin slightly ahead of same quarter year ago 17.4% versus 17.2%, so actually pretty pleased with that. On the EBITDA margin for Q4, I'm holding up well and you can see how that's helped bring the full year average to 18.9% which itself was 1.5 points higher than the same year a year ago.

I think probably easier when I go to the income statement to talk about some of the FX effects, but we basically got quite a large revaluation of two aspects, a revaluation of foreign currency debt and other liabilities and also mark to market of hedges not qualifying for hedge accounting treatment under IAS 39 in the quarter. And those have been amplified by what was quite a big weakening of sterling through Q4, where it closed at the end of the quarter about $1.47 to sterling.

And so we've got a couple of big revalue effects, which are impacting the headline profit before tax hence that stand year-over-year from the GBP576 million a year ago to GBP396 million in this quarter, largely because of those FX effects that you'll see more clearly in a couple of slides time and that's also impacted the headline PBT year-over-year for the 12 months where it's up GBP113 million. But basically the underlying profits up much more and I think as therefore probably encourage you to look at the EBITDA to understand clearly the underlying performance of the business both in the quarter and in the full year. Remember the cash flow there on the Page 2, positive cash flow in Q4 as well as therefore supporting of GBP335 million, supporting just under GBP800 million of cash flow that we had in the full year, down year-on-year largely because of the higher investment. But I think to be honest, I am actually very pleased that we have managed to produce positive cash flow in the 12 month -- in the quarter and the 12 months ended March given the higher investment that we were planning.

Slide 7, see if I can run through this without repeating myself. The Land Rover performance up 9%, quite pleased with that. It's a year of transition on Freelander which has gone out and we have introduced the Discovery Sport which will be more of feature for FY16 than it's been in FY15 in terms of just the normal sort of ramp up of a new model launch. And as I said already, you've also got the changeover of the ramp down of imported Evoque in China and the ramp up again, just ramping up as we get into the locally produced Evoque in China. So are focusing on the quality of the car and those deliveries building.

And Jaguar, a bit in the year of transition, I think, as I had talked about in the prior calls, although F-TYPE is up, XF and XJ are down. Safe to say we've have announced, you'd have seen we've announced at the New York Auto Show back in April, the new XF which starts production in the summer here in the UK and with deliveries to showrooms, round about August-September time. And so the XF is down a bit year-over-year as that product runs out. And we've also launched the new Jaguar XE and the launch of that in terms of the press reactions being very positive, the production ramp up is happening in the normal way to get actually retail deliveries starting back end of this month. So feeling quite positive about that. But of course it doesn't feature in the retail volumes for the period that we're talking about. So bit of a year of transition for Jaguar, a lots of new product coming this year with the XE, the XF and F-PACE at the back end of the year.

On the financial pieces on this slide, I've talked about the EBITDA margin and the EBITDA being up year-on-year. What's going on there? I mean, overall, the higher revenues clearly have been driven by the higher wholesale volumes that's understandable. Solid product makes Range Rover, Range Rover Sport and the Jaguar F-TYPE have all performed well during the year and that's helped support the EBITDA margin and a decent market mix as well, as you see when you look at the full year figures that the China volume was up in the full year and we've also got sales growth in the UK, the US, Europe and Asia Pacific. So really across the board in the full year.

FX is a little bit of a complicated picture in the full year. It's fair to say sterling started the year by strengthening significantly up to, over $1.70 to the pound in August of last year and then spend most of the rest of the year weakening as we got through to March and as I said already at $1.47 to the pound. And although, funny enough, of course, it's also the euro had been very weak, gradually getting weaker during the year. So both sterling and euro weak as at the end of March, sterling on the back, of course, the general election worries, which following the general election results has subsequently strengthened a bit more again, back up to about $1.57 as we speak and the euro being weak largely as a result of the quantitative easing and just general worries about the Euro zone.

So quite a mixed picture on foreign exchange, it's fair to say, which does make understanding the results just a -- you have a few questions, I'm sure but if I just cut through, in terms of the financial impact on EBITDA in the full year, so I'm now talking about FX effects above the EBITDA line, it's -- by and large it's about a negative impact of GBP150 million of net of FX -- net of realized hedges in the EBITDA number in the full year. And in Q4, however, it's a positive effect in EBITDA of about GBP50 million in Q4 compared to the same period a year ago, because sterling was so weak in Q4. And there are a whole mixture effects, but those are two headline numbers I picked just to help understand the pound millions numbers in EBITDA both for the full year and the Q4.

When you get to the PBT, there are other effects, which we'll see on the income statement in a second, which are impacting the PBT, I have already mentioned the revaluation of foreign currency, that mark-to-market of unrealized hedge is not eligible for hedge accounting treatment under the relevant standard which was IAS 39. Perhaps I'll talk more about that when you get to the income statement, because it's easier to talk with the figures.

Turning to the volume page on slide 8. So this is for Q4 and as I said already, the 124,000 units is flat overall year-on-year for the quarter and what you can see is actually some contrasting pictures with the UK, North America, Europe and Asia Pacific all being up compared to the same quarter a year ago. China being down 20% and all other markets being down 22%. And just for those you who are interested in the China picture, which was the case that the 20% reduction is impacted by two features. One is the changeover from import to localize Evoque where there's a bit of a ramp up happening of the localized Evoque that's about half of the volume changed and the other half of the volume change is relates to the run out of Freelander which is run outs year-over-year and the replacement with Discovery Sport and Discovery Sport is very much in ramp up, that feature is actually there in all of these markets, but in China you've got the added impact of Evoque.

I think those two car lines out, actually the China volumes very slightly up on all the other car lines in Q4. And the all other markets down 20% is really -- I think the biggest single impact in there is Russia. And we could talk a bit more about that if you wish in Q&A. And then the way that plays for the full year if we bring the other three quarters on slide 9 in, I think overall, I'm pretty pleased with the way the year has ended at 462,000 units, up 6%; and we should see China up 12%, North America up 4%, UK up 13%, Europe up 6%, Asia Pacific up 17%, all other markets down 9% again is really down to -- Russia has been the single biggest reason for why all other markets are down. And again, we'll come back to that, if you've got any specific detailed questions.

The income statement on slide 10, just a look at more detail here and you can see the things about being alluding to in -- I have already talked about of the most of the things down to EBITDA. If I go, in Q4, you could see, some of that I didn't talk about already and if there is a future that you should keep looking out for as we talk about some prior quarters which is growth in depreciation, amortization, obviously we're investing very heavily and have done over the past few years. And we've got therefore growth in depreciation, that's happening but also a growth in amortization as the engineering capitalization that we are doing and started from and became a subsidiary of Tata Motors is then catching up in the income statement versus the cash expense it's going through. So that's grown GBP72 million in the quarter year-on-year, really reflecting the introduction of new models in particular the Discovery Sports probably a single biggest reason for the increase in the depreciation and amortization in the quarter. And in the full year, you've got that plus we got a bit of XE which started production in the quarter and you've got full-year of Range Rover Sports in the 12 months through March 2015. And then debt and unrealized hedges, mark-to-market you've got, in the quarter the GBP220 million is actually almost split exactly about GBP100 million in revaluation of foreign currency debt, dollar debt in other words, the dollar bonds that a good number of you in the call are invested in and the other GBP100 million is mark to market of those hedges that doesn't -- which we always have, we always have a portion of our hedge book that doesn't qualify for hedge accounting treatment under IAS 39; and this quarter, the size of the FX move in the quarters magnified the mark-to-market effect that you've got because of timing effect, of course.

And we can talk a bit more about that situation, but that's the other GBP100 billion happening in the quarter. To get that effect, which when you look year-over-year in quarters of GBP242 million movement added to that, the GBP72 million movement depreciation and amortization, if you start to understand why the heading PBT is down GBP180 million. And then, that has magnified itself when you look for the 12 months ended March where that mark to marketers that we had in Q4 has aggregated with mark to market effects that we already had in the first nine months and then compounded to [sub] by comparing we think the mark to market that we had in the full -- and revaluation of foreign currency debt that we had in the full year ended March 31, 2014. So we have actually ended up with a pretty large swing of GBP500 million in the full year on these debt and unrealized hedges mark to market as I said before. I do feel the best way to underline -- understand the underline performance of the business is to look at the EBITDA line and those things are impacting the PBT. What else on there, I think I'm probably done on that slide.

The cash flow slide 11, you can see that in the quarter that GBP335 million of positive cash flow is down year-over-year, but also been contributing to the GBP790 million on a positive cash flow in the 12 months ended March, down GBP359 million. And I guess if you just go up a couple of lines, you can see that's -- for the full year that's more than explained by the increase in investments in fixed and intangible assets, in other words in our overall product investments and this piece on this line is the portion that's capitalized which is why it's lower than the GBP3.1 billion I quoted earlier which includes the non-capitalized fees. So the cash flow before that investment for the full year higher year-over-year by GBP200 million. So I think we are pretty pleased with the cash flow performance of the business and the overall underlying profitability of the business in both the quarter and in the full year. Driving that cash flow which at the end of the day is what we need to in order to continue to grow the investment which is and continues to be part of our core strategy.

The balance sheet is reflecting the strength of that cash flow position plus the financing that we did during the year that you are all aware of. So I perhaps won't belabor than that, other than you can see the net cash position now GBP1.7 billion at the end of March 2015, producing some solid-looking debt-to-EBITDA, debt-to-equity metrics.

Turning away from the financial numbers now at slide 14, I have touched on most of these things, Discovery Sports in ramp up phase and the press -- and the picture there is from the press launch we did in Iceland which is really super way to showcase the capability of the car. I think we're feeling quite positive about the opportunity for Discovery Sport, of course, time will tell, but FY16 will have a full year of that car and it's had a good reception.

The Jaguar XE, just gone on sale and that's the picture from Spain, I believe where we did the press launch of the car and today positively received number of five star reviews and it's probably exceeded our expectations in fact in terms of the press reception of that car, of course the judgment that really matters is out in the marketplace and we will find out through the next 12 months, but actually we're cautiously optimistic that Jaguar XE is going to get a good reception in the marketplace, it's a nice car which blends the -- really does a good job of blending the emotional appeal of the Jaguars have always had with some really good rationale appeal in terms of headline CO2 grams per kilometer figure of 99 grams per kilometer of CO2 and cost of ownership figures, which liable to competition, which gave a good chance of it albeit having a successful launch in the marketplace. The localized Evoque is in ramp up that went on sale in February. We are in a bit of ramp up phase for that now. So you do see an impact in Q4, but I think in the full year we're optimistic -- cautiously optimistic about that product and the reception it will get through the balance of the full year since the case of the China markets evolving overall. I know somebody will ask some questions about that, but I think the locally producible Evoque has been important part of the evolution of the China markets and the pricing pressures et cetera that we see there, which has enabled us to lower the price of Evoque in the marketplace, which I think in fullness of time will be a positive thing.

And then beyond the cars that we've launched, we're also in the launch up phase of our new engine factory in -- just outside Wolverhampton, which is in England and the launch of that engineer engine, which I guess is first launched in the Jaguar XE and we'll get -- we'll roll out into other products, Discovery Sport, Range Rover, Evoque later on this year. That's performing really well. With the state-of-the-art engine factory and with the state-of-the-art engine really enabling us to as we put it into products like the Jaguar XE, with its aluminum, lightweight architecture, delivering class-leading CO2 figures, so quite positive about that.

And slide 15, there's no shortage of new products coming to showrooms near you in the balance of this year and the next couple of years. And just in this year, the XF, which is also sharing the aluminium architecture that the XE also has goes on sale later this year. And that's again really going to enable us to make a good step forward in that segment, I believe with again blending that emotional appeal that Jaguars have always had with the rationale appeal of great CO2 figures, great rear-package in the car and great driving attributes to the car. So feeling quite positive about that as opposed to head to head with competitors in the premium D-E segments around the world.

Another emotional product is the Evoque Convertible, which goes on sale 2016. The Evoque has always been around -- has always had a strong design element and fun element to the products. And I think the Convertible is really going to add to that for those customers that just love to drive for the top-down, really quite optimistic about that Car, those will be relatively modest volume I think, but I think it adds a halo effect to the Evoque lineup. And the Jaguar F-PACE performance crossover from Jaguar which goes on sale in 2016. We're well on track with the delivery of that product, just to see preview of the rear lamp which base some similarity to the F-TYPE sports car. And I think that's going to be a very important product for Jaguar, really taking it outside of where it's been in past sports cars and sedan cars into the crossover market, a real break-through product for Jaguar. And hence feeling quite optimistic about that, although really it got to be something we'd be talking about next year and not this year.

What else? Slide 16. I think we are proud of our engineering heritage and the way we've developed that; and in fact, that resulted us winning a Queen's Award for Sustainable Development in 2015, which we're really proud of and the investment in our aluminum technology, the engine technology and also our CO2 performance, not just in our products, but also in our factories, reducing energy consumption, water and waste usage at manufacturing sites in the UK, generating that Queen's Award. And I guess, I am showcasing that because clearly the world becomes ever more CO2 conscious, that's a core part of our products and business strategies to address that head-on, and I think this award is evident of the progress that we're making in that direction.

And our [core] investment which you're all familiar with is, you see it in the investments we're making in our factories as well as in the products and Solihull and Castle Bromwich we have made GBP600 million of new investments announced in the UK, so far this year including GBP400 million that we launched in Castle Bromwich, which is where the new Jaguar XF is going to be built. We are also partnering with the UK government and Warwick University in the creation of a National Automotive Innovation Center on the Warwick University Campus which we will open in spring 2017.

And we do also plan to increase the size of our advanced engineering and design center in the UK in order to enable us to continue to invest in all the product engineering and hybrid technology in light weighting technology and electrification and battery electric vehicles that we're investing in right now and we'll talk about in future calls. And therefore that's -- and also the new products, replacements for the Defender, the Discovery and those are the new products that we'll talk about in future meetings. All of that requiring us to increase the size of our engineering facilities in the UK.

And that's part and parcel of what we've already announced to be honest in terms of the headline figure growing from the GBP3.1 billion that we've spent in FY15, growing to the GBP3.7 billion that we're likely to spend in FY16 like growth in investment is some of these things are part of that growth in investment.

I've talked about the XE and F-PACE. And beyond that, of course, you guys know we got bond issues that we did. I mean for us, part of that was for refinancing our debt cost and I think we were pleased to hit a low point from interest rates or high point from the bond market in terms of locking in those rates, which for us is important in terms of managing our -- the cost of interest going forward. So that we're able to improve our profitability and drive cash flow to invest in the product investment.

And lookout for our products, just a nice (inaudible) lookout for our products in the new James Bond movie when that comes out, Spectre. So I'm almost done. I've given a slightly longer presentation than normal, but it's the both quarter and then the full year. So I'll try to cover both.

Looking ahead and this -- looking ahead, I've got a little bit of guidance as to which we expect some of our figures to be for FY16. To be honest, there isn't anything new really built on the guidance we already provided back when we did the Q3 earnings call and then re-emphasized when we did the bond investment calls back in February, March. But the short answer is, we are very much focused on continuing to roll out more great products in FY16, ramping up sales with the Jaguar XE in May. Looking forward to the launch of the XF and the convertible and the F-PACE.

And of course, as I said, we gave guidance, but would estimate our overall investment in FY16 would be in the GBP3.6 billion to GBP3.8 billion range. So I'm confirming that remains our estimate for the full year. And of course, we are very focused on generating robust operating cash flows to support that investment this year, just possible the cash flow could be negative -- slightly negative in FY16 as a result, but we are very focused on driving strong operating cash flows to fund the majority of that products investment and of course, strong balance sheet and access to the capital markets that means that we're very confident that our ability to fund our way through that investment this year. And if it is the case that we're closely following all the macroeconomic developments around the world, it is the case that market conditions in China are evolving, we are seeing a changing market there with relatively more pricing pressure happening in various segments than we've experienced in the past. And so that is part of our expectation going forward, but we will have to face up to that.

So we do expect to see, for example, as we were doing our budget planning for FY16, we did plan to have largely more incentive support globally, but for China in particular, which I've talked about in the prior call. And that remains our expectation that we will see slightly lower margins in China in FY16 compared to FY15 as that develops and that remains the case.

And Russia continues to be unfortunately down year-on-year. The ruble is perhaps not quite as weak as it was and -- but it's still substantially weaker than it was this time a year ago. So unfortunately, the Russian situation will cause our volumes in Russia to be lower year-over-year.

And also Brazil -- it's not the largest market for us, but it's an important market and economic situation in Brazil coupled with the weak real is having an impact on our results year-over-year. So when you take all of that together, what do we expect? I mean -- and again this is really just re-emphasizing guidance we gave already, which is that lots of new products and the launch of the China joint venture I think in the fullness of time that will support our continued growth, and we do expect our EBITDA margins to continue to be in the range we have experienced over the last four or five years.

And as we previously indicated, mix of -- model mix and also some launch cost that we'll have this year, especially for all that new product and also be reported back to the China joint venture where the -- our share of the profits of the China joint venture will fall out to what we define as EBITDA.

And as well as the more mixed economic conditions may result in our EBITDA margins in FY16 being somewhat lower than we saw in FY15, but still within the range that we've experienced over the last four to five years.

So overall, a strong year and a solid quarter unless they're impacted by some accounting for revaluation of FX or foreign currency, that's an important quarter and the full year, but a solid underlying result, very solid underlying result, nevertheless. And I think altering market situation in FY16 to look forward to which we do, but what we also have going in our favor is the investments that was made in those new products. So we look forward to the launch of those.

And with that, of course, there left some time for questions.

Thank you very much. We will now begin the question-and-answer session. (Operator Instructions) Adit Makh, JP Morgan.

I just had two questions on Europe. Firstly, how you're seeing the demand environment you have there because we're hearing our sales growing off a low base? And certainly with the euro weakening, how does that benefit our other competitors, because obviously you've seen that the euro has fallen sharply versus the dollar? Thank you.

Yes, couple of good questions on Europe. I mean if I -- it's an interesting one on the FX effects because for our Jaguar Land Rover, the impacts of the euro weakening is actually a positive one financially for us in terms of FX exposures where we basically have more material cost purchases denominated euros than we have to revenue in euros. So we do actually get a positive effect in our financial results from that weak euro and that's part of -- and that's running through our results year-on-year.

So that's a good effect, but you're right. At the same time as it benefits us, it benefits the competition because they have a much exposure in foreign currency to the euro. So I think overall that is enabling them to -- our competitors to be competitive in markets outside of Europe, in the US, in China, in the UK and other places.

So, it's a mixed effect I think overall. A positive effect, if I just look at the financial effects for us where we benefit, but of course our competitors are benefiting as well, so it probably balances out to be honest and where it impacts us. I think overall, my personal view is I'm quite positive about Europe for Jaguar Land Rover for FY16. I think all of you will have probably and perhaps a better view than me of or different views, different perspective blend of views on how you see Europe economically, but my gut instinct is that the impact of the weak euro together with the quantitative easing that's being done in Europe will help Europe have a bit of economic recovery this year and going forward. So I think overall, economic [wise], I see a stronger economic picture for Europe this year than last and going forward, that's just my view.

And in terms of for Jaguar Land Rover, our products portfolio with the Jaguar XE and the launch of the Discovery Sport, those are both smaller products in our lineup compared to our other products, compared to our larger products, which by definition make them a bit more relevant for Europe and also the UK, which is really positive. So I think the new product launches that we've got are quite well timed in terms of giving us the opportunity to have some important products for Europe just going to help restart to see some economic recovery in Europe as a whole in FY16. So on balance I'm relatively positive about Europe to be honest.

Amin Pirani, Deutsche Bank.

Hi, thanks for the opportunity. I actually have a question on the JLR volumes in China, obviously because of the ramp up in the local facility, we would be losing out on some potential volumes on the Evoque. So just wanted to get a sense because of this slow production ramp up, are you seeing an increase in order book or is there a waiting period for the Evoque in China or are customers waiting for the performance of the locally produced Evoque before putting in their orders?

That's a good question. I don't know if I could talk to exactly what's in customers' minds in China, but in terms of raw figures in the quarter for Evoque in China just so you have the numbers, this quarter last year we did just under 8,000 units of Evoque that was obviously all imported products. And this quarter, this year in Q4, we did just under 5,000 units, which is a mixture of imported and locally produced volumes, was down year-on-year by 3,000 units in that changeover phase.

Yes, I think, there's probably a mixture of factors, I mean, I think we're just in the launch phase ourselves as we ramp up production. So as we work through Q2, I think we'll see the volume of the locally produced Evoque build in showrooms, and our priority first and foremost is get the quality rights and obviously assure customers of the quality of that and locally produced car. I think maybe somehow we can see how that's possible, but certainly our communications in the marketplace are very much focused on the new car having just good quality as the imported product which it does do and also at a more attractive price.

So I think it may take a few months to build, back up to the level that we saw the important to go running it. But I think there is a bit of water to flow under the bridge until we see the true running level for the locally produced car compared to the imported car. So I think we'll probably talk about that more as we see a few more months of sales performance over this quarter and the next quarter.

Teo Lasarte from Bank of America.

Hi, just another question on China, but at this point, are you forecasting overall volumes in the financial year to be down or do you think that you expect to recover sales in the coming quarters?

Yes. It's a good question. I mean we try not to give sales forecasts overall because the one rule about sales forecast is on going wrong, but overall at this point, I am still cautiously optimistic that we will see volumes in China being up year-on-year as a consequence of the launch of locally produced Evoque. We've also got Discovery Sport launching in the market this year, which will also be locally produced, and we've got a strong product line up in terms of Range Rover, Range Rover Sport, Discovery are supporting the other car lines. So it's early in the year. So time will tell, but I think we do have the opportunity with the product and the local production to grow our business in China this year.

Understood. And the second question is, there's been quite a lot of headlines recently regarding a possible plant in Europe. I think before that, there were some comments about the plant in the US, you have confirmed that you have a plant in -- well, your present plant needs to confirm that. You are building a plant in Brazil. I mean, the current CapEx guidance you have provided would that include other plants apart from the ones that have been announced by the Company. Any color there would be helpful?

Yes, sure. You're right, we are building a plant in Brazil, the overall investments on that was around about GBP250 million spread over a little bit last year, probably the bulk of it in terms of capital spending in FY16 and probably a little bit more in FY17 just in the target of CapEx spend. So some of the year-on-year growth from FY15 to FY16 in terms of CapEx growth is absolutely down to that Brazil facility in FY16. And you're right, there's been a fair amount of speculation around what our plans are. It is the case that we are studying a number of potential locations for a manufacturing facility for Jaguar Land Rover outside of the UK and I actually don't have any official comment to make other than that we are studying a number of locations.

In terms of -- because there are factors, there's a bit of water to flow under the bridge in terms of where we decide to go and there's obviously, a number of pros and cons but we are evaluating as we speak in terms of those possible different locations. And in terms of spending in FY16, yes, we've got a place holder for some modest amount of spend in relation of that extra manufacturing facility that we're studying the location of, but it's not a large amount in FY16 because we haven't selected the location yet. So by the time we get around to spending the money, it's physically quite difficult to spend it that fast [basically], but that would be something to look forward to in FY17, FY18, FY19 assuming we decide to select the location and then go ahead with our plans, but we are studying it. So there is something to look forward to over the next two to three years, I'd say.

And then I'll say at that point, you've got balancing that, you've got a bit of a ramp down in facility investment in Brazil, that would be a big feature in FY16, but then that ramps down a bit in FY17, FY18 and our investments in our China joint venture would probably ramp down a bit in FY17, FY18 depending on what we decide on product launches there I guess to -- if we decide to localize more production, it may stabilize but there is a number of moving pieces. Yes, we are studying the plant, one extra plant. We'll talk more about the location of that when we selected it and we can talk (inaudible) solving speculative.

Maggie O'Neill, Deutsche Bank.

Just a quick question on China. In terms of what you said regarding the decline so far, are you stripping out the effects of the Evoque and Discovery? Are you seeing fairly strong demand because a lot of competitors seem to be experiencing challenging or did I misunderstand?

No. What I said was that if I strip those effects out in Q4, the volume in China apart from those changeover effects was actually marginally up in Q4 year-over-year compared to Q4 of last year. But I think it's fair to say that when we look at China, it's evolving right now. So I wouldn't like my comments to say that we're not cognizance of the evolving China marketplace, which we do see and we do feel and I think mostly that's in a -- to be honest, I think there's a bit more (inaudible) difference in terms what it means, but I think overall there's still the potential for the overall car markets in China to grow this year in line with the economic growth and I think there's the substantial for the premium car market to grow in China this year.

I think what happens to that growth whether it does happen in line with economic growth, slightly ahead of or slightly behind it, I think there's absolutely water to flow into the bridge to see the pattern of that this year. I think also what we'll see is -- what we see already is increased pricing pressure, which comes in a number of features. I think those of you who have followed China closely know it's a very transparent market in terms of pricing.

So you can go onto any number of websites and see cars we advertised for lower than the retail price in China and that varies month-in, month-out based on levels of supply and demand. And if this is the case that we've seen levels of discounts offered by dealers this time this year being higher than they were at this time last year, for example. So that is a feature that's happening and as that happens that's partly from the bias in terms of the higher incentive support that we put behind our products and support -- and the dealers who make those retail sales happen in China.

So that is the feature that we've seen happening over the last three months in the last quarter, and we're seeing it happening in this quarter. And as I say, I think that's part of our general expectation for China over time is that we will see pricing levels normalize over time and China will come down over time.

How that happens, how fast that happens, in which segment that happens, I think that will play out. But we see it, we are reacting to it. It will have an effect in our financial results as I've already talked about in FY16 compared to FY15. That's one of the reasons we expect EBITDA margins to be a bit lower this year than last year, but we are also planning for it.

So it's a feature that we've seen coming in as part of our planning. Taking into account financial planning for this year and I think the other thing I would say is the actions with the joint venture are well timed to be honest, because it gives us the opportunity to localize production in China, the first phase of patent issues, two Land Rover products, the Evoque plus the Discovery Sport, plus the Jaguar products, which will be a story for next year.

And that localization of production does give us the opportunity to benefit from lower material cost and (inaudible) and therefore offer a lower price to our customers and pass -- and basically pass those savings through to our customers. And that's part of -- that local production of the joint venture is part of our planned response to what we expect to see, which is a more competitive environment in China in 2016.

And you know exactly how that is going to pan out for us and for our competitors. I think watch the space, I think it will be something we'll talk about each quarter this year. I'm not sure I could add much more than that right now, but absolutely I think it will evolve.

(inaudible).

I am going to go on about China (multiple speakers). But may I just ask, of your volumes that you did into China with Land Rover last year, can you give me an idea of how that broke down across the range? What I'm trying to get a sense for is how does this transition from imported vehicles to what flows through the JV which obviously going to be accounted differently.

Sure. So if I take our full year FY15 and guys on the line -- we're actually in different places, but if I get some of these numbers wrong then jump in and correct me. But in FY15, 116,000 units compared to 103,000 units in FY14, I think I got that right and of that in FY15, 31,000 units in FY15 were Evoque and 29,000 units in FY14, so now talking full year where Evoque; and if I then work down, the other piece of it is in FY15 full year between Freelander and Discovery Sport there were 21,000 units which was about the same as in FY14, 21,000 units. And then all the other products made up the balance of that. So between Freelander and Discovery Sport, I think what I just said is that we are roundabout 50,000 units, 51,000 units in both FY15 and FY14, actually that 116,000 in FY15 and 103,000 in FY14.

Okay. So going forward, those are going to be sold. I mean you mentioned I think maybe a few imports left of the (multiple speakers)?

There will be a few imports of both Discovery Sport and Evoque I think in FY16 booked. And the vast majority of those sales going forward will be through the joint venture.

Okay. So the revenues from China going forward are likely to come down a lot, given that these are going to go through the JV?

Yes. So hence what I said when we provided the earnings guidance back in January and reiterated February, et cetera, et cetera that there is an impact on our EBITDA and EBITDA margins in FY16 compared to FY15 as a result of this impact of seeing those volumes shift from being accounted for in our export volumes out to the UK compared to accounted for as a share of our joint venture profit.

Okay. Have you got any idea how we should think about the [type of torque] contribution per vehicle within the JV? I'm assuming that if you get the money in two ways that would just have the JV's profitability and also some kind of royalty payments.

Yes, that's true, but the margins in -- I mean, I'm probably going to have to -- I think, I'm probably not going to be able to go much further than what I'm about to say on the call. And maybe that if you got any particularly detailed questions we take up them on one on one. But the margins per unit of the products in the China JV are quite similar to the margins per unit that are achieved through exporting with basically lower material costs than [QC] is offset by the lower revenue. So the margins per unit are similar and then, yes, there is a per unit royalty that we earn on the sale of every car in China, which actually does come above EBITDA, just to confuse matters in our results going forward. So we do own our revenue from both sources with the 50% share of the JV profit plus the royalty, which is really reflecting the fact that we engineer the car and it's our intellectual property, our brand, et cetera.

Okay. Alright, I'll leave you there. Thank you.

Alright. Thank you, James.

Thank you. Ladies and gentlemen, due to time constraints, no further questions can be taken. And now, I would like to hand the floor back to Mr. Ken Gregor for closing comments.

Alright, guys. Longer call than most. I really appreciate you guys taking the time to join us from the US, from the UK and Europe and also from India and I appreciate your support as investors also in Jaguar Land Rover. Thank you.

Thank you. On behalf of Jaguar Land Rover that concludes this conference. Thank you for joining us and you may now disconnect your lines.