Jaguar Land Rover Automotive plc – Annual report – 31 March 2018
2 ACCOUNTING POLICIES (extract)
Inventories are valued at the lower of cost and net realisable value. Cost of raw materials and consumables are ascertained on a first-in, first-out basis. Costs, including fixed and variable production overheads, are allocated to work-in-progress and finished goods, determined on a full absorption cost basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated cost of completion and selling expenses.
Inventories include vehicles sold subject to repurchase arrangements. These vehicles are carried at cost to the Group and are amortised in changes in stocks and work-in-progress to their residual values (i.e. estimated second-hand sale value) over the term of the arrangement.
Inventories of finished goods include £436 million (2017: £326 million, 2016: £250 million), relating to vehicles sold to rental car companies, fleet customers and others with guaranteed repurchase arrangements.
Cost of inventories (including cost of purchased products) recognised as an expense during the year amounted to £19,152 million (2017: £17,615 million, 2016: £15,437 million).
During the year, the Group recorded an inventory write-down expense of £55 million (2017: £16 million, 2016: £230 million), excluding a reversal of a write-down recorded in a previous period in relation to the Tianjin incident of £1 million (2017: £94 million, 2016: £nil). The write-down excluding this reversal is included in ‘Material and other cost of sales’.
33 COMMITMENTS AND CONTINGENCIES (extract)
Inventory of £nil (2017, 2016: £nil) and trade receivables with a carrying amount of £155 million (2017: £179 million, 2016: £116 million) and property, plant and equipment with a carrying amount of £nil (2017, 2016: £nil) and restricted cash with a carrying amount of £nil (2017, 2016: £nil) are pledged as collateral/security against the borrowings and commitments.