Jaguar Land Rover PLC (previously JaguarLandRover Limited)
Directors' report and financial statements
Year ended 31 March 2011
The company's design and engineering centres, in Whitley and Gaydon, are being reorganised to
maximise efficiency in design and development.
The company could experience disruption to its manufacturing, design and engineering capabilities for a
variety of reasons, including, among others, extreme weather, fire, theft, system failures, natural
calamities, mechanical or equipment failures and similar risks. Any significant disruptions could adversely
affect the company's ability to design, manufacture and sell the company's products and, if any of those
events were to occur, the company cannot be certain that the company would be able to shift its design,
engineering and manufacturing operations to alternative sites in a timely manner or at all. Any such
disruption could therefore materially affect the company's business, financial condition or results of
operations.
Regulation of production facilities
The company's production facilities are subject to a wide range of environmental, health and safety
requirements. These requirements address, among other things, air emissions, wastewater discharges,
accidental releases into the environment, human exposure to hazardous materials, the storage,
treatment, transportation and disposal of wastes and hazardous materials, the investigation and clean-up
of contamination, process safety and the maintenance of safe conditions in the workplace. Many of the
company's operations require permits and controls to monitor or prevent pollution. The company has
incurred, and will continue to incur, substantial ongoing capital and operating expenditures to ensure
compliance with current and future environmental, health and safety laws and regulations or their more
stringent enforcement. Other environmental, health and safety laws and regulations could impose
restrictions or onerous conditions on the availability or the use of raw materials the company need for the
company's manufacturing process.
The company's manufacturing process results in the emission of greenhouse gases such as carbon
dioxide. The EU Emissions Trading Scheme, an EU-wide system in which allowances to emit greenhouse
gases are issued and traded, is anticipated to cover more industrial facilities and become progressively
more stringent over time, including by reducing the number of allowances that will be allocated free of
cost to manufacturing facilities. In addition, a number of further legislative and regulatory measures to
address greenhouse gas emissions, including national laws and the Kyoto Protocol, are in various phases
of discussion or implementation. These measures could result in increased costs to: (i) operate and
maintain the company's production facilities; (ii) install new emissions controls; (iii) purchase or otherwise
obtain allowances to emit greenhouse gases; and (iv) administer and manage the company's greenhouse
gas emissions programme.
Many of the company's sites have an extended history of industrial activity. The company may be
required to investigate and remediate contamination at those sites, as well as properties the company
formerly operated, regardless of whether the company caused the contamination or the activity causing
the contamination was legal at the time it occurred. In connection with contaminated properties, as well as
the company's operations generally, the company also could be subject to claims by government
authorities, individuals and other third parties seeking damages for alleged personal injury or property
damage resulting from hazardous substance contamination or exposure caused by the company's
operations, facilities or products. The company could be required to establish or substantially increase
financial reserves for such obligations or liabilities and, if the company fails to accurately predict the
amount or timing of such costs, the related impact on the company's business, financial condition or
results of operations could be material.
The company has a reasonable good health and safety record. The company maintains its plant and
facilities well with a view to meeting these regulatory requirements and has also in place a compliance
reporting and monitoring process which should help to mitigate risk.
Input prices
Prices of commodities used in manufacturing automobiles, including steel, aluminium, copper, zinc,
rubber, platinum, palladium and rhodium, have become increasingly volatile over the past two years.
Further, with the global economy coming out of recession and increasing consumption in the emerging
markets, prices of these commodities are likely to remain high and may rise significantly.
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