Jaguar Land Rover PLC
Directors' report and financial statements
Year ended 31 March 2012
Credit and liquidity risks
The company's main sources of liquidity are cash generated from operations and external debt, including
term debt, revolving credit factoring and working capital facilities. During the economic downturn in 2009
the company also received financial support in the form of loans and preference shares from the
company's parent company TML. Adverse changes in the global economic and financial environment
may result in lower consumer demand for vehicles, and prevailing conditions in credit markets may
adversely affect both consumer demand and the cost and availability of finance for the company's
business and operations. If the global economy goes back into recession and consumer demand for the
company's vehicles drops, as a result of higher oil prices, excessive public debt or for any other reasons,
and the supply of external financing becomes limited, the company may again face significant liquidity
risks.
At 31 March 2012, the company had £2,430 million of cash and cash equivalents, of which £540 million
was cash held in subsidiaries outside the United Kingdom. Certain of the company’s subsidiaries are
subject to restrictions on their ability to transfer funds to the company. For example, JLRC is subject to
foreign exchange controls and thereby is generally restricted from transferring cash to other companies of
the group outside China, but can pay annual dividends, which are subject to regulatory approval and
withholding tax. JLRC paid its first dividend in September 2011. Brazil, Russia and South Africa also
restrict the ability of local subsidiaries to participate in daily cash pooling arrangements but allow
dividends and, in the case of Russia and Brazil, discrete loans. The company believes that these
restrictions have not had and are not expected to have any impact on the company's ability to meet the
company's cash obligations.
Labour relations
In general, the company considers its labour relations with all of its employees, a substantial portion
belong to unions, to be good. However, in the future the company may face labour unrest, at the
company's own facilities or those of the company's suppliers, which may delay or disrupt the company's
operations in the affected regions, including the sourcing of raw materials and parts, the manufacture,
sales and distribution of vehicles and the provision of services. If work stoppages or lock-outs at the
company's facilities or at the facilities of the company's major suppliers occur or continue for a long period
of time, the company's business, financial condition and results of operations may be materially affected.
The company manages union relations with proactive consultation.
Key personnel
The company believes that the company's growth and future success depend in large part on the skills of
the company's workforce, including executives and officers, as well as the designers and engineers. The
loss of the services of one or more of these employees could impair the company's ability to continue to
implement its business strategy. The company's success also depends, in part, on the company's
continued ability to attract and retain experienced and qualified employees, particularly qualified
engineers with expertise in automotive design and production. The competition for such employees is
intense, and the company's inability to continue to attract, retain and motivate employees could adversely
affect its business and plans to invest in the development of new designs and products.
Pension obligations
The company provides post-retirement and pension benefits to the company's employees, some of which
are defined benefit plans. The company's pension liabilities are generally funded and the pension plan
assets are particularly significant. As part of the company's Strategic Business Review process, the
company closed the Jaguar Land Rover defined benefit pension plans to new joiners as at 19 April 2010.
All new employees have joined a new defined contribution pension plan.
Under the arrangements with the trustees of the defined benefit pension schemes, an actuarial valuation
of the assets and liabilities of the schemes is undertaken every three years. The most recent valuation, as
at April 2009 and completed in 2010, indicated a shortfall in the assets of the schemes as at that date,
versus the actuarially determined liabilities as at that date, of £403.0 million.
As part of the valuation process the company agreed a schedule of contributions, together with the
expected investment performance of the assets of the schemes, expected to eliminate the deficit by 2018.
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