Interim Results
Jardine Matheson Hldgs Ld
04 August 2004
To: Business Editor 4th August 2004
For immediate release
The following announcement was today issued to the London Stock Exchange.
Jardine Matheson Holdings Limited
Interim Report 2004
Highlights
• First half underlying earnings per share up 70%
• Good results from Dairy Farm, Jardine Pacific and Astra
• Hongkong Land property portfolio value increases 15%
• Interim dividend up 9% to USc8.50 per share
'The Group's businesses are trading well. We expect good growth in earnings for
the full year, though the rate of increase will be lower than in the first half,
which benefited from comparison with a relatively difficult first half in 2003.'
Henry Keswick, Chairman
4th August 2004
The basis of calculation of underlying earnings is set out in note 6.
The interim dividend of USc8.50 per share will be payable on 20th October 2004
to shareholders on the register of members at the close of business on 27th A
ugust 2004 and will be available in cash with a scrip alternative. The
ex-dividend date will be on 25th August 2004, and the share registers will be
closed from 30th August to 3rd September 2004, inclusive.
Jardine Matheson Holdings Limited
Interim Report 2004
Overview
The improving economic environment enabled Jardine Matheson to produce a good
first half result for 2004, maintaining the momentum achieved in the second half
of 2003. A partial recovery in property values in Hongkong Land's portfolio
after the recent years of decline has provided additional strength to the
Company's balance sheet.
Performance
The Company achieved an underlying net profit for the first six months of 2004
of US$194 million, an increase of 64% over the same period last year. As a
number of exceptional challenges were encountered in the first half of 2003, the
10% increase over last year's second half profit of US$176 million makes a
fairer comparison. Underlying earnings per share for the first six months of
2004 were further enhanced by the effect of share repurchases and reached
USc54.86, an increase of 70% over the first half of 2003.
Of the Company's wholly-owned subsidiaries, Jardine Pacific benefited from a
much improved trading environment, and Jardine Motors Group achieved further
gains in its United Kingdom operations. Of the Company's major quoted
subsidiaries, Dairy Farm produced another strong result with good performances
from most of its businesses; Mandarin Oriental's result reflected improved
occupancy levels, although some weakness in room rates remains and it incurred
start-up costs in its new Washington hotel; and Jardine Cycle & Carriage was
again buoyed by an excellent performance from its Indonesian affiliate, Astra.
Of the Company's principal equity-accounted affiliates, Hongkong Land's
contribution was supported by profits on residential sales, more than offsetting
a decline in rental income; and Jardine Lloyd Thompson's contribution benefited
from translation gains due to the strength of Sterling.
A 15% increase in the value of Hongkong Land's investment property portfolio was
recorded at the half year. In accordance with International Financial Reporting
Standards, the Company's share of the non-cash gain arising of US$227 million
has been taken through the profit and loss account resulting in a net profit
attributable to shareholders of US$441 million for the six months.
An increased interim dividend of USc8.50 per share has been declared.
Business Developments
Good progress continues to be made in building our businesses as industry
leaders with a clear focus on their chosen markets. At the same time, a
selective programme of selling businesses and assets is being undertaken,
enabling the Group to take advantage of development opportunities elsewhere.
Jardine Pacific's encouraging performance reflects the upturn in most economies
in the region over the last nine months, and especially in Hong Kong where the
majority of its interests are located, although the engineering and construction
sector remains weak. The group has continued to refine its business portfolio
with the sale of its Caterpillar dealerships in Hawaii and Taiwan and its
interest in United Terminal in Taiwan.
Jardine Motors Group has disposed of its remaining business in the United States
and a joint-venture interest with Ford in the United Kingdom. It also sold to
Jardine Cycle & Carriage its investments in listed motor companies in Indonesia
and Malaysia, the latter subject to regulatory approval. The group will
concentrate on its prime operations in the United Kingdom and Southern China,
including Hong Kong. Following these disposals, however, there will be a
reduction in recurring earnings in the short term.
Dairy Farm is strengthening its leading retail positions in Asia through
acquisition and organic growth. Recent acquisitions in Malaysia and Singapore
have enhanced an already improving trend in those countries, and there has been
further expansion of its hypermarket operations in Southeast Asia. Progress is
also being made in Southern China where 7-Eleven ended the half-year with 168
outlets and Mannings, the health and beauty chain, is planning its first store
opening in the fourth quarter. Dairy Farm continues to dispose of assets with
the sale of its ice manufacturing and cold store operation and properties in
Hong Kong.
Jardine Cycle & Carriage, in which the Group now has a 58% interest, made
progress in focusing its motor activities on Southeast Asia with the sale of its
New Zealand operations and the acquisition of Jardine Motors Group's interests
in Indonesia and, in due course, Malaysia. In Singapore, agreement was reached
with DaimlerChrysler to extend the group's retail exclusivity for Mercedes-Benz
to the end of 2010. The company's property arm, MCL Land, is pursuing a strategy
of selling investment properties to focus on development, and has recently
announced the sale of a commercial property in Singapore for US$88 million.
Jardine Cycle & Carriage's principal affiliate, Astra, benefited in its motor
vehicle and motorcycle markets from strong consumer demand in Indonesia. Astra's
financial position continues to improve from good operating cash flows, and
United Tractors, now 53% owned, raised over US$70 million through a rights issue
as part of a comprehensive debt restructuring programme. Astra also took the
opportunity to increase its shareholding in its agribusiness, Astra Agro
Lestari, from 63% to 80%. Jardine Cycle & Carriage increased its stake in Astra
from 37% to 42% during the period at a cost of some US$120 million, and is
benefiting from the company's resumption of dividend payments.
Mandarin Oriental's expansion strategy has continued with the launch of its
latest hotel, the 80%-owned Mandarin Oriental, Washington D.C., in March 2004.
Development projects are progressing in Hong Kong, Tokyo and Boston. Mandarin
Oriental has also announced that it is to manage the Hotel Royal Monceau in
Paris and two new luxury resorts in Thailand and Mexico.
The recovery in the Hong Kong office market, which began in mid-2003, has led to
some improvements in values and occupancy in Hongkong Land's portfolio. The
rental reversion pattern will, however, delay the benefit to earnings of a still
restrained rise in rents. The group's retail portfolio continued to perform well
with average rents rising further. The refurbishment of The Landmark complex in
Hong Kong is making progress, and the joint-venture development in Singapore at
One Raffles Quay is attracting leasing interest ahead of its completion in early
2006. The group has also achieved good contributions from its residential
developments in Hong Kong and Beijing.
Jardine Lloyd Thompson made a satisfactory start to the year, although dollar
weakness and changing reinsurance market conditions offset improvements
elsewhere, resulting in a flat year-on-year earnings comparison in Sterling
terms. At mid-year the company announced the acquisition of a number of
operations in Latin America.
Outlook
In conclusion, the Chairman, Henry Keswick said, 'The Group's businesses are
trading well. We expect good growth in earnings for the full year, though the
rate of increase will be lower than in the first half, which benefited from
comparison with a relatively difficult first half in 2003.'
Operating Review
Jardine Pacific
Jardine Pacific increased its underlying profit for the first half by 90% to
US$49 million as it benefited from the economic recovery in the region over the
last nine months, and especially in its primary Hong Kong markets. The principal
exception to this trend was in the engineering and construction sector, which
remained weak. It is expected that the group's earnings will stabilize in the
second half of the year.
HACTL reported a 16% increase in cargo throughput in the first half as the Pearl
River Delta continued to grow as a sourcing centre for the world. Jardine
Shipping Services enjoyed strong cargo rates as well as an increase in new
business. Jardine Aviation Services had a stronger first half with flight
frequencies ahead of expectations, a trend likely to continue.
Gammon's profit rose from last year, but was still well down on previous years
and relatively little new business was won in the first half. Jardine
Engineering Corporation also saw some improvement in earnings, and Jardine
Schindler's order intake was healthy and spread across the region.
Jardine OneSolution's hardware business improved, but this was not mirrored in
the service side of the business. Jardine Restaurants performed strongly with
increased sales and margins in all three of its major operations. Pacific Fina
nce benefited from low interest rates and reduced doubtful debt provisions.
EastPoint's earnings fell as two key contracts expired, but underlying business
remained strong. The group's remaining interests performed slightly ahead of
last year.
Central overheads were flat, while finance costs benefited from low interest
rates and debt levels. Jardine Pacific's Caterpillar dealerships in Hawaii and
Taiwan have now been sold, as has its interest in United Terminal in Taiwan. A
programme to sell non-strategic residential properties in Hong Kong is
substantially complete.
Jardine Motors Group
Jardine Motors Group's underlying profit in the first half increased 27% to
US$26 million as improvements in the United Kingdom offset the loss of
contribution from the Hawaiian operations that were sold at the end of 2003.
In Hong Kong, margins were under pressure despite an increase in the new car
market. Zung Fu achieved a good order intake for Mercedes-Benz passenger cars,
although revenues were lower due to the timing of the arrival of new cars, and
its after-sales performance remained strong. Initial losses were incurred on the
start-up of the Hyundai franchise. In Southern China, the Mercedes-Benz
distribution joint venture produced stronger volumes and margins, while an
overall profit was also achieved by Zung Fu's service operations.
There was a further improvement in results in the United Kingdom as the core
dealerships produced a higher contribution that offset the costs associated with
franchise reorganizations and the integration of new dealerships. Reductions in
overheads, however, failed to compensate for the effect of the amortization of a
pension fund deficit. The better trading result was supplemented by gains on
property disposals and an improved contribution from its vehicle leasing joint
venture.
A number of disposals were made in the first six months. The sale of Polar Motor
Group to the joint venture partner in April produced a loss on the recognition
of a pension deficit. In the United States, an increasingly competitive market
led to a lower contribution from Beverly Hills prior to the group completing the
profitable disposal of this operation in July. As part of a rationalization of
interests in Southeast Asia, Jardine Cycle & Carriage acquired the group's 34%
stake in PT Tunas Ridean in Indonesia in March, and has agreed to acquire the
group's 12% interest in Cycle & Carriage Bintang, subject to the necessary
regulatory approval. These disposals will, however, reduce recurring earnings in
the short term.
Jardine Lloyd Thompson
Jardine Lloyd Thompson made encouraging progress in the first half of the year
against the background of continued weakness in the United States dollar, a
changing reinsurance environment and a softening of insurance rates. Brokerage
and fees grew by 8% to £243 million, and profit before tax (excluding
exceptional items and goodwill amortization) under United Kingdom accounting
standards was £68 million, up 3%. The reported figures for 2004 and prior year
comparatives reflect the adoption of revised accounting standards.
The Risk & Insurance Group, covering worldwide insurance and reinsurance broking
and risk services activities, recorded a turnover of £203 million, up 10% (13%
at constant rates of exchange). The results were, however, impacted by the
challenging market conditions and Risk Solutions was particularly affected, but
the underlying business produced strong performances including its new Aviation
and Property teams. The retail operations also performed well, including
operations in the United States where the specialty life, accident and health
broking business that had been acquired in December made good progress.
The Employee Benefits Group, comprising pension administration, outsourcing,
employee benefits, consultancy and US group marketing, claims and benefits
administration activities, continued to develop with a modest increase in
turnover and improved trading margins. Prospects in the United Kingdom remain
good with new business wins and a healthy pipeline.
In July, the company announced that it is to establish an insurance and
reinsurance broking presence in certain territories in Latin America, initially
focusing on Mexico, Colombia and Peru. This is an important market with the
potential for the group to benefit from its specialty expertise.
Hongkong Land
Hongkong Land's first half underlying net profit rose by 24% to US$104 million
as the decline in commercial revenue was more than offset by profits arising
from residential sales. The group's investment property portfolio increased in
value by some 15% since 31st December 2003, producing a valuation surplus of
US$810 million.
The first half of 2004 saw further recovery in the Hong Kong office market,
although the market remains competitive and rentals are only rising gradually.
Hongkong Land continues to retain existing tenants and attract new ones, with
vacancy in its portfolio falling to 6.2%. Its rental reversion pattern, however,
is expected to remain negative for some time, delaying the benefit of the market
recovery on underlying earnings. The group's retail portfolio continued to
perform well with average rents rising further. The refurbishment of The
Landmark complex is making good progress and the first phase of new luxury
flagship stores are opening. Outside Hong Kong, the group's joint-venture
development in Singapore at One Raffles Quay is attracting leasing interest
ahead of its completion in early 2006.
Profit has been recognized on the first phase of the group's residential
joint-venture development in Beijing, and the second phase is now under
construction with over 90% pre-sold. Despite a slowing in the Hong Kong
residential market, almost 80% of the units of the group's development in
Western District were also pre-sold.
Of Hongkong Land's remaining infrastructure assets, its 37.5%-owned Tradeport
logistics terminal at Hong Kong International Airport added customers, albeit at
a slow pace, and 28.5%-held Asia Container Terminals took delivery of its two
berths at CT8 West in May.
Dairy Farm
Dairy Farm remains focused on strengthening its leading retail positions in A
sia. Its sales for the period, including associates, increased 16% to US$2.5
billion, and underlying net profit rose by 40% to US$62 million. Its businesses
benefited from the stable economic environment in Asia and from acquisitions
made in recent years.
Significant profit growth was achieved in Dairy Farm's North Asia operations,
particularly in Hong Kong. Mannings health and beauty stores remain one of the
group's best performing businesses and there was a gradual improvement at
Wellcome supermarkets. 7-Eleven, which was adversely affected last year by SARS,
rebounded strongly, but restaurant associate, Maxim's, is taking longer to
recover. IKEA performed well in Hong Kong and Taiwan, and there are plans for
store expansion in the second half. Development also continued in Southern China
where 7-Eleven ended the half-year with 168 stores and Mannings plans to open
its first store in Guangzhou in the fourth quarter.
The group's Southeast Asia operations again performed strongly, building on the
benefits arising from recent acquisitions in Malaysia and Singapore. Seven Giant
hypermarkets, Dairy Farm's main growth vehicle in the region, were opened, and
the profitable Guardian health and beauty store format continued to be rolled
out. Results in the Indonesian supermarkets, however, have yet to come through,
and the performance in India remains disappointing.
Further selective disposals of operations and properties were made during the
period, and agreement was also reached for the sale of a warehouse in Hong Kong,
which completed in July. An exceptional gain of US$84 million arose on these
disposals, of which US$61 million will be recognized in the second half.
Mandarin Oriental
A rebound in international travel following the impact of SARS in Asia in the
first half of 2003 helped to increase occupancy levels at Mandarin Oriental,
although room rates have lagged in some properties. Profit attributable to
shareholders for the first six months of 2004 was US$5.6 million, compared with
a loss of US$10.7 million in the first half of 2003. This improvement, coupled
with the recent addition of new properties in New York and Washington D.C.,
makes the first half of 2004 a significant milestone for the group.
Improved occupancy in most destinations led to higher revenues from the group's
subsidiary hotels. In particular, operating profit recovered in Hong Kong where
both Mandarin Oriental and The Excelsior achieved strong occupancy levels, at
80% and 88%, respectively. Mandarin Oriental, Hyde Park in London continued to
perform well. At the group's associate and joint venture hotels, operating
profits increased with growth in Asia and the leisure markets in Hawaii and
Miami. Meanwhile, Mandarin Oriental, New York is establishing itself as the
leading hotel in the city and is beginning to perform in line with expectations.
The group's latest hotel, Mandarin Oriental, Washington D.C., was well received
when it opened in late March, although its results were adversely affected by
start-up costs. The construction of Mandarin Oriental, Tokyo, remains on track
to open in early 2006, and progress is also being made on new hotel developments
at The Landmark in Hong Kong and in Boston. Over the past six months, the
group's development strategy has gathered momentum with the announcement that it
is to manage two luxury resorts under construction in northern Thailand and
Mexico, and agreement has also been reached to manage the Hotel Royal Monceau in
Paris, which will undergo a significant renovation.
Jardine Cycle & Carriage
Improved performances from most operations enabled Jardine Cycle & Carriage to
produce a good increase in earnings with underlying profit after tax and
minorities for the period rising 38% to US$129 million. The effect of its rights
issue in 2003 meant that underlying earnings per share increased at the lower
rate of 12%.
Jardine Cycle & Carriage increased its shareholding in Astra in the half-year
from 37% to its current 42% at a cost of some US$120 million. Astra's
contribution to the group's underlying profit for the period was US$100 million,
up 33%. There was good growth in Astra's motor vehicle and motorcycle markets in
Indonesia due to continued buoyant consumer demand. The strong sales also
benefited Astra's consumer finance operations. Astra's affiliate, United
Tractors, now 53% held, raised over US$70 million through a rights issue in May,
which it used to repurchase debt. Astra also increased its shareholding in its
agribusiness, Astra Agro Lestari, from 63% to 80%.
Underlying profit from its motor operations improved by 61% to US$20 million due
to the elimination of the losses from Australia and good performances by all
operations except Malaysia. The New Zealand motor activities traded well prior
to their sale in June 2004, which produced a gain of US$24 million. Agreement
has been reached with DaimlerChrysler to extend the group's retail exclusivity
in Singapore to the end of 2010. The group has expanded its Indonesian motor
interests with the acquisition of a 34% shareholding in PT Tunas Ridean for
US$20 million and is to acquire further 12% stake in Cycle & Carriage Bintang
for US$11 million, subject to regulatory approval, which will increase its
shareholding to 59%.
The underlying contribution from property was US$13 million, 26% higher than the
same period last year. MCL Land is selling investment properties to focus on
development. Agreement has been reached for the sale of 78 Shenton Way for US$88
million, although a write-down in value of US$19 million by MCL Land has been
required prior to disposal.
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Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
----------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
2004 2003 2003
US$m US$m US$m
---------------------------------------------
Revenue (note 2) 4,410 4,201 8,452
Cost of sales (3,392) (3,256) (6,496)
---------------------------------------------
Gross profit 1,018 945 1,956
Other operating income 83 43 122
Selling and distribution costs (645) (634) (1,280)
Administration expenses (222) (222) (446)
Other operating expenses (31) (31) (71)
---------------------------------------------
Operating profit (note 3) 203 101 281
Net financing charges (54) (60) (113)
Share of results of associates and joint
ventures excluding change in fair
value of investment properties 234 172 390
Increase/(decrease) in fair value of
investment properties 287 (356) (315)
Share of results of associates and joint
ventures (note 4) 521 (184) 75
---------------------------------------------
Profit/(loss) before tax 670 (143) 243
Tax (note 5) (42) (29) (63)
---------------------------------------------
Profit/(loss) for the period 628 (172) 180
---------------------------------------------
Profit/(loss) attributable to shareholders 441 (178) 65
Profit attributable to outside interests 187 6 115
---------------------------------------------
628 (172) 180
---------------------------------------------
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USc USc USc
----------------------------------------------------------------------------------------
Earnings/(loss) per share (note 6)
- basic 124.40 (48.60) 17.87
- diluted 123.27 (48.60) 17.42
---------------------------------------------
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Jardine Matheson Holdings Limited
Consolidated Balance Sheet
----------------------------------------------------------------------------------------
(unaudited) At 31st
At 30th June December
2004 2003 2003
US$m S$m US$m
-------------------------------------------------
Net operating assets
Goodwill 318 117 151
Tangible assets 1,433 1,397 1,521
Investment properties 158 401 359
Leasehold land payments 470 478 484
Associates and joint ventures 3,340 2,628 2,793
Other investments 705 640 696
Deferred tax assets 36 34 37
Pension assets 79 84 79
Other non-current assets 1 15 16
-------------------------------------------------
Non-current assets 6,540 5,794 6,136
Properties for sale 335 344 340
Stocks and work in progress 696 811 832
Debtors and prepayments 562 562 603
Current tax assets 12 11 11
Bank balances and other liquid funds 847 1,077 955
-------------------------------------------------
2,452 2,805 2,741
Non-current assets classified as
held for sale (note 7) 210 - -
-------------------------------------------------
Current assets 2,662 2,805 2,741
-------------------------------------------------
Creditors and accruals (1,602) (1,492) (1,687)
Borrowings (372) (577) (362)
Current tax liabilities (55) (49) (57)
Current provisions (56) (46) (65)
-------------------------------------------------
(2,085) (2,164) (2,171)
Liabilities directly associated with
non-current assets classified as
held for sale (note 7) (32) - -
-------------------------------------------------
Current liabilities (2,117) (2,164) (2,171)
-------------------------------------------------
Net current assets 545 641 570
Long-term borrowings (2,166) (2,386) (2,408)
Deferred tax liabilities (150) (158) (158)
Pension liabilities (16) (13) (16)
Non-current provisions (7) (29) (12)
Other non-current liabilities (21) (39) (27)
-------------------------------------------------
4,725 3,810 4,085
-------------------------------------------------
Total equity
Share capital 150 153 151
Share premium 3 1 2
Revenue and other reserves 3,698 2,969 3,199
Own shares held (675) (670) (670)
-------------------------------------------------
Shareholders' funds 3,176 2,453 2,682
Outside interests 1,549 1,357 1,403
-------------------------------------------------
4,725 3,810 4,085
-------------------------------------------------
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Jardine Matheson Holdings Limited
Consolidated Statement of Changes in Equity
----------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
2004 2003 2003
US$m US$m US$m
-------------------------------------------------
Total equity at beginning of period 4,085 4,056 4,056
Change in accounting policy for goodwill 249 - -
-------------------------------------------------
4,334 4,056 4,056
Attributable to outside interests (1,446) (1,463) (1,463)
-------------------------------------------------
Shareholders' funds at beginning of period 2,888 2,593 2,593
Revaluation of properties
- net revaluation surplus/(deficit) 2 (2) (12)
- deferred tax - (1) (3)
Revaluation of other investments
- fair value gain 28 96 171
- transfer to consolidated profit and
loss account on disposal 10 - (4)
- deferred tax - - (1)
Net exchange translation differences
- amount arising in the period (86) 53 103
- transfer to consolidated profit and loss
account (2) 3 14
Cash flow hedges
- fair value gain 11 5 9
- transfer to consolidated profit and loss
account 7 3 6
-------------------------------------------------
Net (loss)/profit recognized directly in equity (30) 157 283
Profit/(loss) for the period 628 (172) 180
-------------------------------------------------
Total recognized profit/(loss) 598 (15) 463
Attributable to outside interests (147) (32) (176)
451 (47) 287
Dividends (note 8) (90) (82) (110)
Employee share option schemes
- value of employee services 1 - 1
- proceeds from shares issued 12 2 9
Scrip issued in lieu of dividends 22 16 22
Repurchase of shares (101) (27) (119)
Change in attributable interests (2) (2) (1)
Increase in own shares held (5) - -
-------------------------------------------------
Shareholders' funds at end of period 3,176 2,453 2,682
-------------------------------------------------
Total equity 4,725 3,810 4,085
Attributable to outside interests (1,549) (1,357) (1,403)
-------------------------------------------------
Shareholders' funds 3,176 2,453 2,682
-------------------------------------------------
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Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
----------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
2004 2003 2003
US$m US$m US$m
-------------------------------------------------
Operating activities
Operating profit 203 101 281
Depreciation and amortization 78 82 172
Other non-cash items (24) 27 29
Decrease/(increase) in working capital 12 (4) 155
Interest received 6 13 15
Interest and other financing charges paid (53) (67) (132)
Tax paid (33) (28) (59)
-------------------------------------------------
189 124 461
Dividends from associates and joint ventures 95 118 214
Cash flows from operating activities 284 242 675
Investing activities
Purchase of subsidiary undertakings (note 9(a)) (71) (217) (338)
Purchase of associates and joint ventures
(note 9(b)) (131) (93) (176)
Repayment of amounts due to associates
and joint ventures - (59) (78)
Purchase of other investments (15) (23) (28)
Purchase of tangible assets (98) (101) (219)
Sale of subsidiary undertakings (note 9(c)) 111 10 100
Sale of associates and joint ventures
(note 9(d)) 43 22 51
Sale of other investments (note 9(e)) 56 40 56
Sale of tangible assets 21 16 64
Sale of investment properties 74 2 25
Sale of leasehold land 13 4 2
Cash flows from investing activities 3 (399) (541)
Financing activities
Issue of shares 12 2 9
Repurchase of shares (101) (27) (119)
Capital contribution from outside shareholders 4 4 70
Grants received - 3 4
Drawdown of borrowings 2,486 3,066 6,408
Repayment of borrowings (2,708) (2,978) (6,567)
Dividends paid by the Company (52) (51) (69)
Dividends paid to outside shareholders (37) (49) (173)
Cash flows from financing activities (396) (30) (437)
Effect of exchange rate changes (6) (4) (2)
-------------------------------------------------
Net decrease in cash and cash equivalents (115) (191) (305)
Cash and cash equivalents at beginning of
period 940 1,245 1,245
-------------------------------------------------
Cash and cash equivalents at end of period 825 1,054 940
-------------------------------------------------
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Jardine Matheson Holdings Limited
Analysis of Profit Contribution
------------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
2004 2003 2003
US$m US$m US$m
-------------------------------------------------
Group contribution
Jardine Pacific 49 26 74
Jardine Motors Group 26 22 44
Jardine Lloyd Thompson 24 20 31
Hongkong Land 34 30 62
Dairy Farm 37 24 72
Mandarin Oriental 3 (4) 6
Jardine Cycle & Carriage 55 37 81
Profit from core businesses 228 155 370
Corporate and other interests (34) (36) (75)
-------------------------------------------------
Underlying profit attributable to shareholders 194 119 295
Increase/(decrease) in fair value of
investment properties 227 (283) (247)
Other adjustments 20 (14) 17
-------------------------------------------------
Profit/(loss) attributable to shareholders 441 (178) 65
-------------------------------------------------
Further analysis of Jardine Pacific
EastPoint 2 2 4
Gammon 2 1 1
HACTL 13 9 22
Jardine Aviation Services 4 1 4
Jardine Engineering Corporation 3 (2) 4
Jardine OneSolution 3 1 4
Jardine Property Investment 1 2 4
Jardine Restaurants 11 4 12
Jardine Schindler 6 6 12
Jardine Shipping Services 4 3 6
Pacific Finance 3 1 2
Other interests 2 5 10
54 33 85
Corporate (5) (7) (11)
-------------------------------------------------
49 26 74
-------------------------------------------------
Further analysis of Jardine Motors Group
Hong Kong and Mainland China 13 13 22
United Kingdom 13 5 15
United States - 3 6
Corporate and other interests - - (1)
26 21 42
Adjustment for amortization of goodwill - 1 2
-------------------------------------------------
26 22 44
-------------------------------------------------
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Jardine Matheson Holdings Limited
Notes
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1. Accounting Policies and Basis of Preparation
The unaudited interim condensed financial statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting.
In 2004, the Group early adopted the following International Financial Reporting
Standards (IFRS):
IFRS 2 Share-based Payment
IFRS 3 Business Combinations
IFRS 4 Insurance Contracts
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IAS 36 (revised 2004) Impairment of Assets
IAS 38 (revised 2004) Intangible Assets
IAS 39 (amended 2004) Financial Instruments: Recognition and Measurement
The early adoption of IFRS 2 has resulted in a change in the accounting policy
for share-based payments. Until 31st December 2003, the provision of share
options to employees did not result in a charge in the profit and loss account.
Subsequent to that date, the Group charges the cost of share options to the
profit and loss account.
The early adoption of IFRS 3, IAS 36 (revised 2004) and IAS 38 (revised 2004)
resulted in a change in the accounting policy for goodwill. Until 31st December
2003, goodwill was amortized on a straight line basis over a period ranging from
5 to 20 years and assessed for an indication of impairment at each balance sheet
date. In accordance with the provisions of IFRS 3, the Group ceased amortization
of goodwill from 1st January 2004. Accumulated amortization as at 31st December
2003 has been eliminated with a corresponding decrease in the cost of goodwill.
The carrying amount of negative goodwill as at 31st December 2003 has been
derecognized with a corresponding adjustment to the opening balance of equity.
From the year ending 31st December 2004 onwards, goodwill is tested annually for
impairment, and when there are indications of impairment.
The early adoption of IFRS 5 has resulted in a change in the accounting policy
for non-current assets (or disposal groups) held for sale. The non-current
assets (or disposal groups) held for sale were previously neither classified nor
presented as current assets or liabilities. The application of IFRS 5 does not
impact on the prior-period financial statements.
2004 2003
US$m US$m
--------- --------
The adoption of IFRS 2 resulted in:
Six months ended 30th June
Increase in administration expenses 1 -
Decrease in basic earnings per share (USc) 0.25 0.04
Decrease in diluted earnings per share (USc) 0.25 0.04
The adoption of IFRS 3 resulted in:
At 1st January
Increase in total equity 249 -
Following a change in the accounting standards in the United Kingdom, an
associate revised its revenue recognition policy for insurance contracts settled
by instalments. This revision has resulted in an acceleration of revenue
recognition, offset by a deferral of a portion of revenue to recognize post
placement contractual obligations. The effect of this change has been to
increase profit attributable to shareholders for the six months ended 30th June
2003 and 2004 by US$3 million and US$6 million respectively.
Other than described above, there have been no other changes to the accounting
policies described in the 2003 annual financial statements.
The Group's reportable segments are set out in note 2 and are described in the
Operating Review.
2. Revenue
Six months ended 30th June
2004 2003
US$m US$m
--------- --------
By business:
Jardine Pacific 526 580
Jardine Motors Group 1,091 954
Dairy Farm 1,919 1,660
Mandarin Oriental 151 90
Jardine Cycle & Carriage 722 916
Other activities 1 1
--------- --------
4,410 4,201
--------- --------
3. Operating Profit
Six months ended 30th June
2004 2003
US$m US$m
--------- --------
By business:
Jardine Pacific 20 13
Jardine Motors Group 7 28
Dairy Farm 97 46
Mandarin Oriental 18 3
Jardine Cycle & Carriage 47 32
--------- --------
189 122
Corporate and other interests 14 (21)
--------- --------
203 101
--------- --------
4. Share of Results of Associates and Joint Ventures
Six months ended 30th June
2004 2003
US$m US$m
--------- --------
By business:
Jardine Pacific 34 24
Jardine Motors Group 9 4
Jardine Lloyd Thompson 23 20
Hongkong Land 44 38
Dairy Farm 5 5
Mandarin Oriental 1 -
Jardine Cycle & Carriage 118 81
--------- --------
234 172
Increase/(decrease) in fair value of investment
properties 287 (356)
--------- --------
521 (184)
--------- --------
Results are shown after tax and outside interests. In 2003, results are also
shown after amortization of goodwill.
5. Tax
Tax on profits has been calculated at rates of taxation prevailing in the
territories in which the Group operates and includes United Kingdom tax of US$2
million (2003: US$2 million).
6. Earnings Per Share
Basic earnings per share are calculated on profit attributable to shareholders
of US$441 million (2003: loss of US$178 million) and on the weighted average
number of 355 million (2003: 367 million) shares in issue during the period. The
weighted average number excludes the Company's share of the shares held by
subsidiary undertakings and the shares held by the Trustee under the Senior
Executive Share Incentive Schemes.
Diluted earnings per share are calculated on profit attributable to shareholders
of US$441 million (2003: loss of US$179 million), which is after adjusting for
the effects of the conversion of dilutive potential ordinary shares of
subsidiary undertakings, associates or joint ventures, and on the weighted
average number of 358 million (2003: 369 million) shares after adjusting for the
number of shares which are deemed to be issued for no consideration under the
Senior Executive Share Incentive Schemes based on the average share price during
the period.
Additional basic and diluted earnings per share are also calculated based on
underlying earnings attributable to shareholders of US$194 million (2003: US$119
million and US$118 million respectively). A reconciliation of earnings is set
out below:
Six months ended 30th June
2004 2003
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per per per per
share share share share
US$m USc USc US$m USc USc
---------------------------------------------------------------------------------
Underlying profit 194 54.86 54.28 119 32.29 31.92
Increase/ (decrease)
in fair value of
investment properties 227 (283)
Other adjustments 20 (14)
247 (297)
----------- ------------
Profit/(loss)
attributable to
shareholders 441 124.40 123.27 (178) (48.60) (48.60)
----------- ------------
A fuller analysis of the adjustments made to the profit attributable to
shareholders in arriving at the underlying profit is set out below:
Six months ended 30th June
2004 2003
US$m US$m
--------- ---------
Increase/(decrease) in fair value of
investment properties
- Hongkong Land 227 (280)
- other - (3)
227 (283)
Sale and closure of businesses
- New Zealand motor operations 10 -
- other 1 1
11 1
Asset impairment - (7)
Fair value loss on conversion option component of
4.75% Guaranteed Bonds due 2007 - (7)
Sale of leasehold properties 4 -
Sale of investments 5 -
Debt buyback in an associate - 3
Adjustments for depreciation,
amortization and deferred tax* - (4)
--------- ---------
247 (297)
--------- ---------
* Representing difference between depreciation and amortization of
owner-occupied leasehold interests calculated on a valuation and on a cost
basis, and changes in tax rates in respect of deferred tax on the surplus
arising on the valuation of owner-occupied leasehold interests upon an increase
in holdings in subsidiary undertakings.
7. Non-current Assets Held for Sale
The major classes of assets and liabilities classified as held for sale are set
out below:
At 30th June
2004
US$m
-----------
Tangible assets 48
Investment properties 123
Leasehold land payments 7
Stocks and work in progress 21
Debtors and prepayments 9
Bank balances and other liquid funds 2
-----------
Total assets 210
-----------
Creditors and accruals (21)
Current borrowings (4)
Deferred tax liabilities (5)
Pension liabilities (2)
-----------
Total liabilities (32)
-----------
The assets and liabilities related to Jardine Pacific's restaurant business in
Hawaii and interest in United Terminal, Jardine Motors Group's motor operations
in Beverly Hills, a leasehold property in Dairy Farm, and certain investment
properties in Jardine Cycle & Carriage.
8. Dividends
Six months ended 30th June
2004 2003
US$m US$m
------------ -----------
Final dividend in respect of 2003 of USc25.20
(2002: USc22.20) per share 152 136
Less Company's share of dividends paid on the
shares held by subsidiary undertakings (62) (54)
------------ -----------
90 82
------------ -----------
An interim dividend in respect of 2004 of USc8.50 (2003: USc7.80) per share
amounting to a total of US$51 million (2003: US$48 million) is declared by the
Board. The net amount after deducting the Company's share of the dividends
payable on the shares held by subsidiary undertakings of US$21 million (2003:
US$19 million) will be accounted for as an appropriation of revenue reserves in
the year ending 31st December 2004.
9. Notes to Consolidated Cash Flow Statement
Six months ended 30th June
2004 2003
(a) Purchase of subsidiary undertakings US$m US$m
------------ -----------
Purchase of shares in Jardine Strategic 25 -
Purchase of shares in Dairy Farm 21 178
Purchase of shares in Mandarin Oriental - 7
Purchase of shares in Jardine Cycle & 14 -
Carriage
Store acquisitions in Dairy Farm 3 27
Other 8 5
------------ -----------
71 217
------------ -----------
(b) Purchase of associates and joint ventures in the six months ended 30th June
2004 included Jardine Strategic's increased interest in Hongkong Land of US$5
million (2003: US$4 million) and Jardine Cycle & Carriage's increased interest
in Astra of US$124 million (2003: US$87 million).
Six months ended 30th June
2004 2003
(c) Sale of subsidiary undertakings US$m US$m
------------ -----------
Goodwill - 2
Tangible assets 33 9
Leasehold land payments 1 -
Associates and joint
ventures - 1
Deferred tax assets 1 -
Pension assets - 3
Current assets 109 65
Current liabilities (50) (46)
Long-term borrowings (2) -
Deferred tax liabilities (6) (1)
------------ -----------
Net assets disposed of 86 33
Cumulative exchange
translation differences (2) -
Profit/(loss) on disposal 31 (2)
------------ -----------
Sale proceeds 115 31
Adjustment for deferred
consideration 4 -
Adjustment for carrying
value in other investments - (20)
Tax paid on disposal in
prior period (7) -
Cash and cash equivalents of subsidiary
undertakings disposed of (1) (1)
------------ -----------
Net cash inflow 111 10
------------ -----------
Net cash inflow in 2004 of US$111 million included Jardine Pacific's sale of its
Caterpillar dealerships in Hawaii and Taiwan of US$49 million, Dairy Farm's sale
of Hong Kong Ice & Cold Storage of US$20 million and Jardine Cycle & Carriage's
sale of its New Zealand motor operations of US$45 million.
Net cash inflow in 2003 of US$10 million included Jardine Motors Group's sale of
dealerships in the United Kingdom of US$8 million.
(d) Sale of associates and joint ventures in the six months ended 30th June
2004 included Jardine Motors Group's interest in Polar Motor Group of US$30
million.
(e) Sale of other investments in the six months ended 30th June 2004
included Jardine Strategic's interest in Hap Seng of US$20 million.
Sale of other investments in the six months ended 30th June 2003 included a
distribution from Edaran Otomobil Nasional of US$36 million following its asset
divestment in 2002.
10. Capital Commitments and Contingent Liabilities
At 31st
At 30th June December
2004 2003 2003
US$m US$m US$m
--------------------------------------
(a) Capital commitments 78 229 105
--------- -------- ---------
(b) Contingent liabilities
- guarantees in respect of facilities
made available to associates and joint
ventures 78 115 70
--------- -------- ---------
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed outstanding claims and
taking into account legal advice received, the Directors are of the opinion that
adequate provisions have been made in the financial statements.
The interim dividend of USc8.50 per share will be payable on 20th October 2004 to
shareholders on the register of members at the close of business on 27th August
2004, and will be available in cash with a scrip alternative. The ex-dividend
date will be on 25th August 2004, and the share registers will be closed from
30th August to 3rd September 2004, inclusive. Shareholders will receive their
cash dividends in United States Dollars, unless they are registered on the
Jersey branch register where they will have the option to elect for Sterling.
These shareholders may make new currency elections by notifying the United
Kingdom transfer agent in writing by 30th September 2004. The Sterling
equivalent of dividends declared in United States Dollars will be calculated by
reference to a rate prevailing on 6th October 2004. Shareholders holding their
shares through The Central Depository (Pte) Limited ('CDP') in Singapore will
receive United States Dollars unless they elect, through CDP, to receive
Singapore Dollars or the scrip alternative.
- end -
For further information, please contact:
Jardine Matheson Limited
Norman Lyle (852) 2843 8216
Matheson & Co Limited
Martin Henderson (44) 20 7816 8135
Golin/Harris Forrest
C T Hew (852) 2501 7963
Weber Shandwick Square Mile
Richard Hews/ Katie Hunt/ Helen Thomas (44) 20 7067 0700
This and other Group announcements can be accessed through the Internet at
'www.jardines.com'.
This information is provided by RNS
The company news service from the London Stock Exchange LBBD
Friday, 31st May 2024
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