Interim Results
Jardine Matheson Hldgs Ld
27 July 2005
27th July 2005
For immediate release
The following announcement was today issued to the London Stock Exchange.
Jardine Matheson Holdings Limited
Interim Report 2005
Highlights
• First half underlying earnings per share up 21% to USc67.21
• Good results from Dairy Farm and Astra
• Hongkong Land net assets per share up 21%
• Jardine Strategic to acquire 20% stake in Rothschilds Continuation
• Interim dividend up 10% from USc8.50 to USc9.35 per share
'If the current momentum is maintained, Jardine Matheson is expected to produce
a satisfactory growth in earnings for the full year.'
Henry Keswick, Chairman
27th July 2005
The basis of calculation of underlying earnings is set out in note 6.
The interim dividend of USc9.35 per share will be payable on 12th October 2005
to shareholders on the register of members at the close of business on 19th August
2005 and will be available in cash with a scrip alternative. The ex-dividend date
will be on 17th August 2005, and the share registers will be closed from 22nd to
26th August 2005, inclusive.
Jardine Matheson Holdings Limited
Interim Report 2005
Overview
Against a background of strengthening economies across Asia, the Group's
businesses performed well in the first half of the year.
Performance
The Company's underlying net profit for the first six months of 2005 was US$232
million, an increase of 18% over the same period last year; earnings per share
for the period, benefiting from the effect of share repurchases, rose 21% to
USc67.21.
Of the Group's wholly-owned subsidiaries, Jardine Pacific saw a reduction in
profit, due partly to lost revenue following disposals in 2004. The reduced
profit contribution from Jardine Motors also reflected prior-year disposals. Of
the Group's major quoted subsidiaries, Dairy Farm produced another strong result
with a good performance across its operations; Mandarin Oriental gained from
improved travel markets, strengthening rates and contributions from its new
hotels; while Jardine Cycle & Carriage's continued growth was again attributable
to an excellent performance from its Indonesian affiliate, Astra, in which it
now holds nearly 50%. Of the Group's principal equity-accounted affiliates,
Hongkong Land's contribution rose modestly, helped by lower financing charges
and an increased Group shareholding, while Jardine Lloyd Thompson's earnings
declined in softer markets.
The net profit attributable to shareholders was US$672 million. This includes
the Company's US$375 million share of the non-cash gain arising from the
increase in value of Hongkong Land's investment property portfolio, which was
taken to profit in accordance with International Financial Reporting Standards.
An increased interim dividend of USc9.35 per share has been declared.
Business Developments
The Group's operations continue to develop their businesses actively and to seek
suitable opportunities for expansion by acquisition.
Many of Jardine Pacific's businesses benefited from improved trading conditions,
especially in Hong Kong where the majority of its interests are located,
although losses in Gammon restricted its overall profitability. The company has
agreed the sale of its 50% stake in Pacific Finance, a Hong Kong-based consumer
finance operation, for US$60 million, which will give rise to an exceptional
profit of some US$22 million upon completion in the second half of the year.
Jardine Motors is concentrating its operations in the United Kingdom, Hong Kong
and Southern China, having disposed of its remaining US business and sold its
Southeast Asian interests to Jardine Cycle & Carriage in 2004. Its Mercedes-Benz
dealership in Hong Kong enjoyed a good first half, and a respectable result was
achieved in the United Kingdom despite a weakening new car market. Progress is
continuing with the development of its service centre network in Southern China.
Favourable markets sustained Dairy Farm's earnings growth in the first half of
2005, and the strength of its balance sheet enabled it to return US$334 million
to shareholders in May by way of a special dividend. The company continues to
build its established retail operations in Asia organically, as well as seeking
acquisition opportunities. A restructuring of Dairy Farm's property portfolio in
Malaysia, through a sale and leaseback transaction, is expected to take place in
the second half of 2005.
Jardine Cycle & Carriage, in which Jardine Strategic now has a 61% interest,
increased its stake in Astra from 47% to nearly 50% during the first six months
of the year at a cost of US$124 million. Astra is experiencing strong consumer
and industrial demand in Indonesia, where it has a broad range of manufacturing,
service and agricultural businesses and accounts for nearly half of the market
in new motor vehicles and motorcycles. Jardine Cycle & Carriage's other
activities in Southeast Asia, however, including its motor business, produced
mixed results.
There were improved performances from Mandarin Oriental's new US hotels, and the
sale of its interest in its Hawaiian hotel produced a US$48 million pre-tax
gain. The group's development strategy is progressing with hotel openings in
Hong Kong and Tokyo scheduled in the second half and two more new projects
announced. Overall market conditions remain favourable, but Mandarin Oriental's
second-half result will be affected by pre-opening costs, while next year's
earnings will reflect the temporary closure of Mandarin Oriental, Hong Kong for
refurbishment.
Vacancy in Hong Kong's Central District continued to fall, reducing to 4% in
Hongkong Land's portfolio at the end of June. Office values and rents again
rose, although positive rent reversions will not impact earnings this year and
will be offset next year by a lack of residential completions. The company's
joint-venture development in Singapore has been 50% pre-let ahead of its
completion in 2006, and it has successfully tendered with the same partners for
an adjacent three and a half hectare site. It is also progressing well with its
residential developments in Mainland China.
Jardine Lloyd Thompson made a steady start to the year, but the soft insurance
markets and dollar weakness continued to affect the profitability of its risk
and insurance operations. Nevertheless, the underlying business remains
resilient.
Jardine Strategic is acquiring for US$185 million, subject to regulatory
approval, a 20% shareholding in Rothschilds Continuation Holdings, a holding
company within the Rothschild group and the parent company of N M Rothschild &
Sons. In addition to its core investment banking business, the Rothschild group
is involved in commercial banking, private banking and the private equity
sector.
Outlook
In conclusion, the Chairman, Henry Keswick said, 'If the current momentum is
maintained, Jardine Matheson is expected to produce a satisfactory growth in
earnings for the full year.'
Operating Review
Jardine Pacific
Jardine Pacific produced an underlying profit for the half year of US$38
million, a decrease of 23%, although excluding the loss of contributions from
businesses sold in 2004 the decrease was 7%. The result was impacted by
continued weakness in the construction sector. Overall, the operating
environment remains positive and the earnings outlook for the second half is
more promising.
HACTL continued to perform well with a further 6% increase in cargo throughput
in the half year, but JARDINE SHIPPING began to see cargo rates weaken from the
highs of 2004. JARDINE AVIATION had a good first half and the summer schedules
are evidence that this trend should continue. River Trade Terminal, in which the
group has a 14% investment, is no longer permitted to berth interasia vessels
and this will impact its business going forward.
GAMMON suffered from losses from poor contracts in the first half, however, the
outlook for the remainder of the year is more encouraging. JEC produced
increased earnings, and JARDINE SCHINDLER'S earnings and order intake were
substantially up on last year.
JOS's profit was flat as improvements in its hardware operations were offset by
further pressure on margins in the service element of its business. JARDINE
RESTAURANTS' continuing business performed well with sales and profits up on 2004 by
16% and 12%, respectively, but its overall result was lower following the sale
of its Hawaiian operations at the end of last year. EASTPOINT's earnings were
maintained at a similar level.
PACIFIC FINANCE's profit was slightly down due to higher interest rates and
doubtful debt provisions. Agreement has been reached for the sale of the group's
50% stake in this business, subject to regulatory approvals, for a consideration
of US$60 million, which will give rise to a profit of some US$22 million in the
second half of the year.
Jardine Pacific's remaining interests produced a reduced contribution, primarily
due to lower leasing revenue in Colliers Halifax. Central overheads were lower,
but finance costs rose due to higher interest rates and dividend withholding
taxes.
Jardine Motors Group
Jardine Motors' underlying net profit from continuing businesses for the first
half of 2005 was US$26 million, an increase of 6%. In 2004 the company disposed
of its remaining US business and its stake in a joint venture with Ford in the
United Kingdom, and also sold its Southeast Asian interests to Jardine Cycle &
Carriage. It is now focusing on developing its businesses in Hong Kong, Mainland
China and the United Kingdom.
In Hong Kong, Zung Fu increased its new car market share with strong passenger
car deliveries, and aftersales performed well. Start-up losses arising from the
Hyundai passenger car sales were also reduced. In Southern China, the
Mercedes-Benz distribution joint venture recorded lower margins in a competitive
market, while the Zung Fu service network continued to achieve an overall
profit.
In the United Kingdom, notwithstanding a decline in the registration of new
passenger cars, the group saw an increase in new car deliveries from existing
dealerships that led to an improvement in their contribution. The vehicle
leasing business also produced another strong result. The net profit from
continuing businesses, however, showed a slight decline as the 2004 comparative
had included the benefit of gains from property disposals.
Jardine Lloyd Thompson
Jardine Lloyd Thompson made a steady start to the year, although soft insurance
markets and dollar weakness again impacted profitability. Turnover increased by
3% to £251 million, up 6% at constant rates of exchange. Underlying trading profit
was £42 million in the first half, down from £59 million in the same period in 2004, and
profit before tax was £48 million, compared to £64 million in the prior year.
The results for both periods have been prepared in accordance with International
Financial Reporting Standards and the prior year figures have been restated accordingly.
Turnover for Risk & Insurance Group was £205 million, an increase of 2% or
5% at constant rates of exchange. Underlying trading profit for the period was £45
million, compared to £60 million in the prior year. While the results were held
back by adverse market conditions, particularly within Risk Solutions, the
underlying business continued to be resilient and some encouraging new business
wins were achieved. Acquisitions in Latin America concluded at the end of 2004
performed well in their first six months of operation.
Employee Benefits Group achieved 14% growth in turnover to £44 million. Underlying
trading profit for the period was £6 million, up from £5 million in the prior year.
There was good growth in the United Kingdom with significant new business
coupled with improved margins. In the United States, the business was
restructured following the disposal of non-core operations and work is
continuing to improve its profitability.
Hongkong Land
The office market in Hong Kong's Central District maintained its strong
performance in the first half of 2005. Vacancy in Hongkong Land's portfolio fell
to 4%, and rental reversions began to turn positive. Net rental income rose
compared with the second half of 2004, but fell short of the comparable first
half result. Retail rents in the group's properties continued to rise,
reflecting both market demand and portfolio enhancements. The lack of
completions in the residential business has meant a reduction in the profit
contribution from this segment. The overall decline in trading profit was,
however, offset by lower financing charges, and the underlying net profit was 2%
higher at US$105 million. The group's investment property portfolio increased in
value by some 19%, producing a valuation surplus of US$1,306 million.
The refurbishment of The Landmark complex in Hong Kong will culminate in the
launch of The Landmark Mandarin Oriental Hotel in August followed by a series of
major store openings in the second half of the year. In Singapore, One Raffles
Quay is now close to 50% pre-let, ahead of its completion in 2006. The
consortium which is developing this site, in which Hongkong Land has a one-third
interest alongside Cheung Kong Group and Keppel Land, has also won the tender to
develop the neighbouring three and a half hectare Business and Financial Centre
site.
Hongkong Land's Central Park joint-venture development in Beijing has moved on
to the construction of phase three, with some 80% of the units already pre-sold.
In Hong Kong, the residential market saw some slowing of activity due to higher
pricing and interest rate rises, although most of the group's available
properties have been sold. The longer-term prospects for residential development
remain encouraging.
Dairy Farm
Dairy Farm achieved further growth in sales and underlying earnings in the first
six months of 2005 as favourable economic conditions prevailed in most of its
major markets. Sales, including associates, increased by 9% to US$2.7 billion.
Underlying net profit increased by 23% to US$76 million, and earnings per share
also rose 23% to USc5.73. In a return of value to shareholders, a special
dividend of USc25.00 per share, totalling US$334 million, was paid in May 2005.
The group's North Asian operations produced good profit growth. Hong Kong
operations performed well in an improved economy, but restaurant associate,
Maxim's, was affected by strong competition and closure costs. IKEA in Hong Kong
and Taiwan recorded a decline in underlying profit in a challenging environment.
The development programme in Taiwan is continuing with a third and fourth store
scheduled to open in 2006. In Southern China, 7-Eleven expanded to 209 stores by
the end of June, while Mannings reached nine stores. Olive Young, the South
Korean associate, opened five new stores and now has 24 in operation.
In Southeast Asia both Singapore and Malaysia performed well, and Indonesia
produced significantly improved results. Three Giant hypermarkets were opened in
the first six months, bringing the total to 32, and there are plans to open
eight more hypermarkets and over 80 other stores across the region in the second
half. Further shares were acquired in PT Hero Supermarket in Indonesia, giving a
direct interest of 32.6% and a further indirect interest through exchangeable
bonds of 24.6%. There has also been progress towards reaching agreement for the
group's joint-venture partner in India to sell its interest in Health and Glow
and Foodworld to another Indian investor. The restructuring of Dairy Farm's
property portfolio in Malaysia, through a sale and leaseback transaction, is
expected to take place in the second half.
Mandarin Oriental
Mandarin Oriental's first half earnings benefited from strengthening room rates
as the recovery in global travel continued and improved performances from new
hotels in the United States. Earnings from operations before interest, tax,
depreciation and amortization for the first six months were US$63 million
compared with US$42 million in 2004, which had included US$7 million of initial
operating losses in Washington D.C. There was also a US$48 million pre-tax gain
on disposal of the group's 40% partnership interest in the Kahala Mandarin
Oriental in Hawaii, which Mandarin Oriental will continue to manage. Profit
attributable to shareholders was US$55 million for the six months, compared with
US$6 million in the first half of 2004.
In Hong Kong, profitability was enhanced by increases of some 30% in room rates
in Mandarin Oriental's two wholly-owned hotels. Results from Europe were also
better as both occupancy and room rates strengthened. In North America, the
revival in corporate and leisure travel gathered pace and the group's new hotel
in Washington D.C. showed a marked improvement, while Mandarin Oriental, New
York, achieved occupancy of 70% at an average rate of over US$600.
Mandarin Oriental's development strategy made progress with the announcement of
management contracts for a 250-room luxury hotel in Chicago, to open in 2008,
and a 114-room 'hideaway' resort on Grand Cayman Island that will open in 2007.
Mandarin Oriental's next addition is a new hotel at The Landmark in Hong Kong,
which it will manage when it opens in late August this year. This will be
followed in December 2005 by the opening of Mandarin Oriental, Tokyo, to be
operated under a long-term lease. Pre-opening expenses in the second half of the
year are expected to be some US$10 million. Preparation for the renovation of
Mandarin Oriental, Hong Kong continues with a planned temporary closure from the
end of 2005.
Jardine Cycle & Carriage
Jardine Cycle & Carriage recorded an underlying profit for the period of US$156
million, up 27%, and underlying earnings per share grew by 25% to USc46.73.
Astra's strong contribution, enhanced by an increased shareholding interest,
more than offset the reduction in profit from the group's other interests.
Jardine Cycle & Carriage has increased its shareholding in Astra from 47.2% to
nearly 50% in the first half at a cost of US$124 million. Astra's contribution
to the group's underlying profit rose 46% to US$146 million. Consumer demand
within Indonesia remained buoyant in the first five months of 2005, and the
motor vehicle market grew by 34% to 246,000 units and the motorcycle market grew
by 29% to 2.1 million units. Astra's market share for motor vehicles showed a
modest decline to 46%, while its share for motorcycles increased marginally to
49%. Astra will open a new Honda motorcycle factory, adding an annual capacity
of over one million units in the second half of the year. Astra's consumer
finance operations also benefited from the strong market, and its component
business performed satisfactorily. Of Astra's non-auto related operations,
United Tractors, now 58% owned, more than doubled its sales of Komatsu units due to
the improved economy and good growth in the mining sector. Astra Agro Lestari's
palm oil production increased by 11% to 342,000 tonnes in the first five months,
but the improvement was offset by a 19% decline in selling prices.
The contribution from Jardine Cycle & Carriage's motor operations fell by 15% to
US$17 million primarily due to the sale of businesses in 2004 and reduced
earnings in Singapore. The new Mercedes-Benz flagship showroom in Singapore
remains on schedule to open in early 2006. The contribution from Cycle &
Carriage Bintang in Malaysia was marginally lower, while 37%-owned PT Tunas
Ridean performed well in Indonesia. MCL Land made progress on a number of
development projects, but as none were completed in the period no profit was
recognized in line with its new accounting policy. Only one small project is due
for completion in the second half of 2005. The group is increasing its presence
in Malaysia with a US$21 million joint-venture investment in a company that has
238 acres of leasehold land on the outskirts of Kuala Lumpur suitable for
mixed-development.
--------------------------------------------------------------------------------
Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
--------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
Restated
2005 2004 2004
US$m US$m US$m
------- ------- -------
Revenue (note 2) 4,608 4,423 8,970
Cost of sales (3,555) (3,423) (6,871)
Gross profit 1,053 1,000 2,099
Other operating income 148 86 330
Selling and distribution costs (682) (645) (1,305)
Administration expenses (227) (219) (442)
Other operating expenses (11) (29) (198)
Operating profit (note 3) 281 193 484
Financing charges (53) (53) (138)
Share of results of associates and
joint ventures excluding change
in fair value of investment
properties 276 240 526
Increase in fair value of
investment properties 471 287 611
Share of results of associates and
joint ventures (note 4) 747 527 1,137
Profit before tax 975 667 1,483
Tax (note 5) (56) (38) (100)
------- ------- -------
Profit for the period 919 629 1,383
------- ------- -------
Attributable to:
Shareholders of the Company 672 450 947
Minority interests 247 179 436
------- ------- -------
919 629 1,383
------- ----------- ---------
--------------------------------------------------------------------------------
USc USc USc
--------------------------------------------------------------------------------
Earnings per share (note 6)
- basic 194.50 126.71 269.45
- diluted 192.90 125.53 266.62
--------------------------------------------------------------------------------
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Jardine Matheson Holdings Limited
Consolidated Balance Sheet
-------------------------------------------------------------------------------------------------
(unaudited) At 31st
At 30th June December
Restated
2005 2004 2004
US$m US$m US$m
---------------------------------------------------------
Net operating assets
Intangible assets 411 318 377
Tangible assets 1,428 1,433 1,423
Investment properties 157 158 153
Leasehold land payments 474 470 476
Associates and joint ventures 4,653 3,302 4,059
Other investments 627 705 688
Deferred tax assets 57 60 58
Pension assets 135 95 136
Other non-current assets 6 1 1
------- ------- -------
Non-current assets 7,948 6,542 7,371
------- ------- -------
Properties for sale 391 422 286
Stocks and work in progress 812 696 800
Debtors and prepayments 672 562 656
Current tax assets 14 12 18
Bank balances and other liquid funds 1,542 847 1,300
------- ------- -------
3,431 2,539 3,060
Non-current assets classified as
held for sale (note 7) 149 210 149
------- ------- -------
Current assets 3,580 2,749 3,209
------- ------- -------
Creditors and accruals (1,850) (1,743) (1,807)
Current borrowings (522) (372) (507)
Current tax liabilities (74) (55) (79)
Current provisions (48) (56) (68)
(2,494) (2,226) (2,461)
Liabilities directly associated
with non-current assets classified
as held for sale (note 7) (1) (32) (1)
------- ------- -------
Current liabilities (2,495) (2,258) (2,462)
------- ------- -------
Net current assets 1,085 491 747
Long-term borrowings (2,667) (2,166) (2,382)
Deferred tax liabilities (182) (147) (159)
Pension liabilities (138) (135) (153)
Non-current provisions (5) (7) (6)
Other non-current liabilities (19) (21) (33)
------- ------- -------
6,022 4,557 5,385
------- ------- -------
Total equity
Share capital 150 150 148
Share premium and capital reserves 11 4 4
Revenue and other reserves 4,781 3,561 4,164
Own shares held (756) (675) (677)
------- ------- -------
Shareholders' funds (note 8) 4,186 3,040 3,639
Minority interests 1,836 1,517 1,746
------- ------- -------
6,022 4,557 5,385
------- ------- -------
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Jardine Matheson Holdings Limited
Consolidated Statement of Recognized Income and Expense
-------------------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
Restated
2005 2004 2004
US$m US$m US$m
-----------------------------------------------------
Surpluses on revaluation of
intangible assets 2 - -
Surpluses on revaluation of properties 2 2 62
(Losses)/gains on revaluation of other
investments (27) 32 63
Actuarial gains on defined benefit
pension plans - - 34
Net exchange translation differences (100) (88) (24)
Gains/(losses) on cash flow hedges 19 7 (8)
Tax on items taken directly to equity (1) - (28)
------- ------- -------
Net (expense)/income recognized
directly in equity (105) (47) 99
Transfer to profit and loss on
disposal and impairment of other
investments (20) 14 124
Transfer to profit and loss on
disposal of subsidiary undertakings,
associates and joint ventures (1) (2) 36
Transfer to profit and loss in respect
of cash flow hedges 3 3 5
Profit for the period 919 629 1,383
------- ------- -------
Total recognized income and expense for
the period 796 597 1,647
------- ------- -------
Attributable to:
Shareholders of the Company 597 457 1,178
Minority interests 199 140 469
------- ------- -------
796 597 1,647
------- ------- -------
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Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
-------------------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
Restated
2005 2004 2004
US$m US$m US$m
-----------------------------------------------------
Operating activities
Operating profit 281 193 484
Interest income (18) (5) (14)
Depreciation and amortization 83 78 161
Other non-cash items (76) (18) (9)
(Increase)/decrease in working
capital (111) 21 27
Interest received 21 6 16
Interest and other financing
charges paid (67) (53) (111)
Tax paid (37) (33) (65)
------- ------- -------
76 189 489
Dividends from associates and
joint ventures 110 95 241
Cash flows from operating activities 186 284 730
Investing activities
Purchase of subsidiary undertakings
(note 10(a)) (25) (71) (169)
Purchase of associates and joint
ventures (note 10(b)) (134) (131) (388)
Purchase of other investments (16) (15) (20)
Purchase of tangible assets (90) (98) (194)
Purchase of investment properties (8) - (1)
Purchase of leasehold land (1) - (10)
Sale of subsidiary undertakings
(note 10(c)) (6) 111 210
Sale of associates and joint ventures
(note 10(d)) 112 43 49
Sale of other investments
(note 10(e)) 37 56 66
Sale of tangible assets 8 21 36
Sale of investment properties 45 74 183
Sale of leasehold land - 13 79
------- ------- -------
Cash flows from investing activities (78) 3 (159)
Financing activities
Issue of shares 7 12 15
Repurchase of shares - (101) (204)
Capital contribution from
minority shareholders 4 4 7
Drawdown of borrowings 4,801 2,486 5,636
Repayment of borrowings (4,435) (2,708) (5,578)
Dividends paid by the Company (59) (52) (68)
Dividends paid to minority
shareholders (152) (37) (64)
Cash flows from financing activities 166 (396) (256)
Effect of exchange rate changes (4) (6) 8
------- ------- -------
Net increase/(decrease) in cash and
cash equivalents 270 (115) 323
Cash and cash equivalents at
beginning of period 1,263 940 940
------- ------- -------
Cash and cash equivalents at end
of period 1,533 825 1,263
------- ------- -------
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Jardine Matheson Holdings Limited
Analysis of Profit Contribution
-------------------------------------------------------------------------------------------------
Year
(unaudited) ended
Six months ended 31st
30th June December
Restated
2005 2004 2004
US$m US$m US$m
---------------------------------------------------------
Group contribution
Jardine Pacific 38 49 94
Jardine Motors Group 26 28 36
Jardine Lloyd Thompson 19 25 37
Hongkong Land 36 34 66
Dairy Farm 48 38 101
Mandarin Oriental 11 3 10
Jardine Cycle & Carriage 74 52 130
------- ------- -------
Profit from core businesses 252 229 474
Corporate and other interests (20) (32) (80)
------- ------- -------
Underlying profit 232 197 394
Value added tax recovery in
Jardine Motors Group 3 - 46
------- ------- -------
235 197 440
Increase in fair value of
investment properties 375 227 503
Other adjustments 62 26 4
------- ------- -------
Profit attributable to
shareholders 672 450 947
------- ------- -------
Analysis of Jardine Pacific's contribution
EastPoint 2 2 3
Gammon (5) 2 (8)
HACTL 14 13 29
Jardine Aviation Services 4 4 8
Jardine Engineering Corporation 4 3 11
Jardine OneSolution 3 3 8
Jardine Property Investment 1 1 3
Jardine Restaurants 6 11 20
Jardine Schindler 8 6 11
Jardine Shipping Services 4 4 9
Pacific Finance 2 3 4
Other interests 1 2 5
------- ------- -------
44 54 103
Corporate (6) (5) (9)
------- ------- -------
38 49 94
------- ------- -------
Analysis of Jardine Motors Group's
contribution
Hong Kong and Mainland China 15 13 23
United Kingdom 12 12 15
Corporate (1) (1) (2)
------- ------- -------
26 24 36
Discontinued businesses - 4 4
------- ------- -------
26 28 40
Leasehold land payments written off - - (4)
------- ------- -------
26 28 36
------- ------- -------
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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.
There have been no changes to the accounting policies described in the 2004
annual financial statements. In 2005, the Group early adopted two amendments
to IAS 39, Financial Instruments: Recognition and Measurement - Cash Flow
Hedge Accounting of Forecast Intragroup Transactions, and The Fair Value
Option, neither of which has had a significant impact on the Group's
financial statements. The comparative figures for the six months ended 30th
June 2004 have been restated to reflect changes in accounting policies for
defined benefit pension plans and recognition of revenue in pre-completion
contracts for the sale of residential properties, which were adopted in the
preparation of the 2004 annual financial statements, and the reversal of the
negative carrying amount in respect of Jardine Lloyd Thompson's investment in
a French associate as described in note 11 to the 2004 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
2005 2004
US$m US$m
--------- ---------
By business:
Jardine Pacific 471 526
Jardine Motors Group 1,118 1,091
Dairy Farm 2,282 1,919
Mandarin Oriental 193 151
Jardine Cycle & Carriage 543 735
Other activities 1 1
--------- ---------
4,608 4,423
--------- ---------
3. Operating Profit
Six months ended 30th June
2005 2004
US$m US$m
--------- ---------
By business:
Jardine Pacific 20 20
Jardine Motors Group 39 16
Dairy Farm 97 97
Mandarin Oriental 82 18
Jardine Cycle & Carriage 21 30
--------- ---------
259 181
Corporate and other interests 22 12
--------- ---------
281 193
--------- ---------
4. Share of Results of Associates and Joint Ventures
Six months ended 30th June
2005 2004
US$m US$m
--------- ---------
By business:
Jardine Pacific 26 34
Jardine Motors Group 4 9
Jardine Lloyd Thompson 37 24
Hongkong Land 46 44
Dairy Farm 8 5
Mandarin Oriental 2 1
Jardine Cycle & Carriage 153 123
--------- ---------
276 240
Increase in fair value of investment properties 471 287
--------- ---------
747 527
--------- ---------
Results are shown after tax and minority interests.
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$4 million (2004: US$2 million).
6. Earnings Per Share
Basic earnings per share are calculated on profit attributable to shareholders of US$672 million
(2004: US$450 million) and on the weighted average number of 346 million (2004: 355 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$671 million
(2004: US$449 million), which is after adjusting for the effects of the conversion of dilutive
potential ordinary shares of subsidiary undertakings, associates or joint ventures, and on the
weighted average number of 348 million (2004: 358 million) shares after adjusting for the number of
shares which are deemed to be issued for no consideration under the Senior Executive Share Incentive
Schemes based on the average share price during the period.
Additional basic and diluted earnings per share are also calculated based on underlying earnings
attributable to shareholders. A reconciliation of earnings is set out below:
Six months ended 30th June
2005 2004
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per share per share per share per share
US$m USc USc US$m USc USc
---------------------------------------------------------------------------
Underlying profit 232 67.21 66.58 197 55.48 54.89
Value added tax recovery
in Jardine Motors Group 3 -
----- -----
235 67.96 67.33 197 55.48 54.89
Increase in fair value of
investment properties 375 227
Other adjustments 62 26
437 253
----- -----
Profit attributable to
shareholders 672 194.50 192.90 450 126.71 125.53
A fuller analysis of the adjustments made to the profit attributable to
shareholders in arriving at the underlying profit is set out below:
Six months ended 30th June
2005 2004
US$m US$m
--------- ---------
Increase in fair value of investment properties in
Hongkong Land 375 227
Sale and closure of businesses
- Kahala Mandarin Oriental 21 -
- New Zealand motor operations - 10
- other 7 7
28 17
Dilution of interest in Jardine Lloyd Thompson 17 -
Fair value gain on conversion option component of
4.75% Guaranteed Bonds due 2007 1 -
Sale of leasehold properties - 4
Sale of investments 16 5
--------- ---------
437 253
--------- ---------
7. Non-current Assets Classified as Held for Sale
The major classes of assets and liabilities classified as held for sale are set out
below:
At 31st
At 30th June December
2005 2004 2004
US$m US$m US$m
------- ------- -------
Tangible assets 112 48 108
Investment properties - 123 41
Leasehold land payments - 7 -
Associates and joint ventures 37 - -
Stocks and work in progress - 21 -
Debtors and prepayments - 9 -
Bank balances and other liquid funds - 2 -
------- ------- -------
Total assets 149 210 149
------- ------- -------
Creditors and accruals - (21) (1)
Current borrowings - (4) -
Deferred tax liabilities (1) (5) -
Pension liabilities - (2) -
------- ------- -------
Total liabilities (1) (32) (1)
------- ------- -------
Tangible assets held for sale at 30th June 2005 included Dairy Farm's property
portfolio in Malaysia and certain properties in Indonesia of US$110 million, the
sale of which is expected to be completed in the second half of the year at an
amount not materially different from the carrying value. Associates and joint
ventures comprise Jardine Pacific's interest in Pacific Finance in respect of
which a sale and purchase agreement was entered into in June 2005, with
completion subject to the necessary regulatory approvals.
8. Shareholders' Funds
Six months ended 30th June
2005 2004
US$m US$m
---------- ----------
At 1st January
- as previously reported 3,639 2,888
- changes in accounting policies - (142)
---------- ----------
- as restated 3,639 2,746
Recognized income and expense attributable to
shareholders 597 457
Dividends (note 9) (108) (90)
Employee share option schemes
- value of employee services 2 1
- exercise of share options 7 12
Scrip issued in lieu of dividends 128 22
Repurchase of shares - (101)
Change in attributable interests - (2)
Increase in own shares held (79) (5)
---------- ----------
At 30th June 4,186 3,040
---------- ----------
Changes in acccounting policies related to recognition of net actuarial losses on
defined benefit pension plans of US$142 million and adjustment of revenue recognized
on pre-completion contracts for sale of residential properties of US$11 million,
offset by reversal of the negative carrying amount in respect of Jardine Lloyd
Thompson's investment in a French associate of US$11 million (refer note 1).
9. Dividends
Six months ended 30th June
2005 2004
US$m US$m
---------- ----------
Final dividend in respect of 2004 of USc31.50
(2003: USc25.20) per share 187 152
Less Company's share of dividends paid on the
shares held by subsidiary undertakings (79) (62)
---------- ----------
108 90
---------- ----------
An interim dividend in respect of 2005 of USc9.35 (2004: USc8.50) per share
amounting to a total of US$56 million (2004: US$51 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$24 million (2004: US$21 million)
will be accounted for as an appropriation of revenue reserves in the year ending
31st December 2005.
10. Notes to Consolidated Cash Flow Statement
Six months ended 30th June
2005 2004
(a) Purchase of subsidiary undertakings US$m US$m
Intangible assets 8 -
Tangible assets 71 4
Current assets 84 5
Current liabilities (70) (2)
Long-term borrowings (9) -
Deferred tax liabilities (15) -
Other non-current liabilities (9) -
--------- ---------
Fair value at acquisition 60 7
Adjustment for minority interests (25) -
Adjustment for carrying value of an associate (26) -
--------- ---------
Share of fair value at acquisition 9 7
Goodwill attributable to subsidiary undertakings 10 4
--------- ---------
Total consideration 19 11
Cash and cash equivalents of subsidiary
undertakings acquired 1 -
--------- ---------
Net cash outflow 20 11
Purchase of shares in Jardine Strategic - 25
Purchase of shares in Dairy Farm - 21
Purchase of shares in Jardine Cycle & Carriage 5 14
--------- ---------
25 71
--------- ---------
Net cash outflow in 2005 of US$20 million included US$13 million for
Dairy Farm's acquisition of an additional 20.4% interest in PT Hero Supermarket.
(b) Purchase of associates and joint ventures for the six months ended 30th
June 2005 included Jardine Strategic's increased interest in Hongkong
Land of US$9 million (2004: US$5 million) and Jardine Cycle & Carriage's
increased interest in Astra of US$124 million (2004: US$124 million).
Six months ended 30th June
2005 2004
(c) Sale of subsidiary undertakings US$m US$m
--------- ---------
Tangible assets - 33
Leasehold land payments - 1
Deferred tax assets - 1
Current assets 1 109
Current liabilities (1) (50)
Long-term borrowings - (2)
Deferred tax liabilities - (6)
--------- ---------
Net assets disposed of - 86
Cumulative exchange translation differences - (2)
Profit on disposal - 31
--------- ---------
Sale proceeds - 115
Adjustment for deferred consideration 1 4
Tax paid on disposals in prior periods (7) (7)
Cash and cash equivalents of subsidiary
undertakings disposed of - (1)
--------- ---------
Net cash (outflow)/inflow (6) 111
--------- ---------
Net cash inflow in 2004 of US$111 million included US$49 million from
Jardine Pacific's sale of its Caterpillar dealerships in Hawaii and
Taiwan, US$20 million from Dairy Farm's sale of its interest in Hong
Kong Ice & Cold Storage and US$45 million from Jardine Cycle & Carriage's
sale of its New Zealand motor operations.
(d) Sale of associates and joint ventures for the six months ended 30th
June 2005 included US$87 million from Mandarin Oriental's sale of its
interest in Kahala Mandarin Oriental. Sale of associates and joint
ventures for the six months ended 30th June 2004 included US$30 million
from Jardine Motors Group's sale of its interest in Polar Motor Group.
(e) Sale of other investments for the six months ended 30th June 2005
included US$36 million from Jardine Strategic's sale of its interest
in EON Capital. Sale of other investments for the six months ended 30th June
2004 included US$20 million from Jardine Strategic's sale of its interest
in Hap Seng Consolidated.
11. Capital Commitments and Contingent Liabilities
At 31st
At 30th June December
2005 2004 2004
US$m US$m US$m
-------- -------- --------
Capital commitments 232 78 197
-------- -------- --------
Contingent liabilities
Guarantees in respect of
facilities made available to
associates and joint ventures 78 78 79
-------- -------- --------
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.
12. Post Balance Sheet Event
In June 2005, Jardine Strategic announced that it had agreed to purchase a 20%
interest in Rothschilds Continuation Holdings for US$185 million. Completion of
the transaction is subject to the receipt of necessary regulatory consents.
The interim dividend of USc9.35 per share will be payable on 12th October 2005 to
shareholders on the register of members at the close of business on 19th August 2005,
and will be available in cash with a scrip alternative. The ex-dividend date will be
on 17th August 2005, and the share registers will be closed from 22nd to 26th August
2005, 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 22nd September 2005. The
Sterling equivalent of dividends declared in United States Dollars will be calculated
by reference to a rate prevailing on 28th September 2005. 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
James Riley (852) 2843 8229
Matheson & Co Ltd
Martin Henderson (44) 207 816 8135
GolinHarris
Kennes Young (852) 2501 7987
Weber Shandwick Square Mile
Richard Hews/Helen Thomas (44) 207 067 0700
This and other Group announcements can be accessed through the Internet at
'www.jardines.com'.
This information is provided by RNS
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