Interims-Jardine Intnl.Motor

Jardine Matheson Hldgs Ld 2 August 2000 Jardine International Motors Interim Report 2000 Highlights * Jardine Matheson offers to purchase minority interests Results _____________________________________________________________ (unaudited) Six months ended 30th June 2000 1999 Change US$m US$m % _____________________________________________________________ Revenue 1,399 1,457 -4 Net profit excluding non-recurring items 24 25 -6 Net profit 19 25 -25 _____________________________________________________________ USc USc % _____________________________________________________________ Earnings per share 3.93 5.25 -25 Earnings per share excluding non-recurring items 4.94 5.25 -6 _____________________________________________________________ 'The profitability of our continuing operations for the year, with the exception of the United Kingdom, should be satisfactory. The overall result will, however, be impacted by the substantial non-recurring costs being incurred in exiting problem franchises and resolving property problems in the United Kingdom.' A J L Nightingale, Executive Chairman 2nd August 2000 Jardine International Motor Holdings Limited Interim Report 2000 Performance Jardine International Motor Holdings Limited today announced that the Group, including its associates and joint ventures, sold some 88,500 new and used motor vehicles in the first half of 2000, representing an increase of 14% over the same period in 1999. Revenue, excluding associates and joint ventures, was US$1.4 billion, a reduction of 4%. The unaudited consolidated net profit for the six months ended 30th June 2000 was US$19 million, a decrease of 25% over the comparable figure for 1999. Excluding non-recurring items earnings declined by 6%. Earnings per share for the first half year, at USc3.93, also decreased by 25%. Excluding non-recurring items earnings per share declined by 6% to USc4.94. Corporate Developments Turning to the significant developments, the Executive Chairman, Anthony Nightingale, said that the Company and its parent, Jardine Matheson Holdings Limited, jointly announced on 27th June 2000 the proposed privatisation of Jardine International Motors by way of a scheme of arrangement. The offer price will be approximately HK$4.295 in cash for each share, to be paid as to HK$4.10 per share by Jardine Matheson and as to USc2.50 per share by the Company in the form of a special dividend. The detailed terms of the proposals are included in a circular to shareholders, which will be posted shortly. The Group has reached agreement with DaimlerChrysler AG on the future arrangements for the distribution of Mercedes-Benz motor vehicles in the Hong Kong and Macau markets. With effect from 1st July 2002, DaimlerChrysler will assume the role of distributor and Zung Fu will continue as exclusive dealer in Hong Kong and Macau. While the new arrangements allow a key relationship to continue, they will have a significant adverse impact on the future profitability of Jardine International Motors. As part of the ongoing restructuring of the Group's loss- making operations in the United Kingdom, substantial non- recurring costs have been, and will continue to be, incurred in exiting onerous leases and closure of dealerships. It is anticipated that much of this restructuring will be completed by the end of 2000, with further costs to be incurred in 2001. In France, Cica has consolidated a number of its Internet- compatible business ventures in the fields of car procurement, marketing and sales into one subsidiary, Exlinea. The Group holds 50% of the equity of the new company, the balance being held by a venture capitalist and the company's executives. The Group will also continue to seek other e-commerce development opportunities to support its business in its principal market sectors. Group Review * Hong Kong SAR, Macau SAR and Mainland China In Hong Kong, Zung Fu continued to perform well and has maintained its market share for Mercedes-Benz in a passenger car market that has grown by 28%. The environment, however, is becoming increasingly competitive. After-sales activities produced a reduced contribution on lower margins despite improved revenues. Good profit growth was achieved in Macau with increased car sales revenues. In Mainland China, a stringent programme of cost control and some margin improvement in Southern Star led to an improvement in earnings. The workshop operations in Mainland China saw a higher level of activity but an increase in losses due to reorganisation costs. * Southeast Asia PT Tunas Ridean, the Group's 30%-held associate in Indonesia, has benefited from a significant uplift in demand for motor vehicles and associated consumer finance. Increased vehicle supply to meet this demand and internally funded expansion of consumer lending, together with a continued regime of tight cost and financial controls, has enabled the company to increase earnings significantly. The economic environment, however, remains fragile. Cycle & Carriage Bintang, the Group's 13%-owned affiliate in Malaysia, has continued to benefit from improved market conditions. * India Concorde Motors, the Group's 50%-owned joint venture with the Tata Group, has incurred start-up losses at a higher rate than planned. This is a result of a slower than expected production rate of the Telco Indica, following its launch in early 1999, and higher property costs in certain major cities. Indica production is now running at improved rates, the property portfolio is being realigned to bring down costs and the increased on-road population of Indica is producing a growing demand for after-sales service. The Mercedes-Benz operation in Mumbai continued to operate satisfactorily. * United Kingdom The United Kingdom passenger car market rose in the first half year by 2.1% over the same period in 1999, but this growth was achieved at the expense of margin. Overall, the Group's United Kingdom operations produced a disappointing performance. Revenues decreased and operating profits were poorer than those in the comparable period last year. All sectors of the Group's United Kingdom operations were adversely affected by the ongoing controversy over manufacturers' pricing levels compared to those prevailing in Continental Europe. This matter has been taken up by the United Kingdom government, through a market review by the Competition Commission, and by the European Commission. The outcome is uncertain and may influence the deliberations of the European authorities in connection with the expiry, at end 2002, of the block exemption granted to the motor industry from European competition law. Within the businesses, operating losses at Rover dealerships have been contained and Volkswagen Audi operations have returned to profit, however, other mid- market franchises have seen weaker results. The Polar Motor group joint venture produced a break-even result, having been profitable in the same period in 1999. * France Cica produced an overall improved result but underlying dealership operations saw a reduction in earnings. The translated earnings have been adversely affected by weakness of the Euro in 2000. * United States The Group's United States operations benefited from a continuing strong demand for premium imported product and saw revenues and operating results improve. Year 2000 Year 2000 readiness was completed in 1999 and the change of year was handled without significant interruption of business systems. Outlook In conclusion, Mr Nightingale said, 'The profitability of our continuing operations for the year, with the exception of the United Kingdom, should be satisfactory. The overall result will, however, be impacted by the substantial non-recurring costs being incurred in exiting problem franchises and resolving property problems in the United Kingdom.' __________________________________________________________________ Jardine International Motor Holdings Limited Consolidated Profit and Loss Account __________________________________________________________________ Year (unaudited) ended Six months ended 30th June 31st December 2000 1999 1999 US$m US$m US$m __________________________________________________________________ Revenue (note 2) 1,399.4 1,457.2 2,806.6 Cost of sales (1,214.0) (1,279.8) (2,467.3) ________ ________ ________ Gross profit 185.4 177.4 339.3 Other operating income 4.8 4.9 10.7 Selling and distribution costs (92.3) (87.1) (182.9) Administrative expenses (55.6) (56.4) (110.4) Other operating expenses (5.8) (0.8) (11.3) ________ ________ ________ Operating profit (note 3) 36.5 38.0 45.4 Net financing charges (8.2) (8.5) (17.4) Share of results of associates and joint ventures (3.5) 1.5 (1.1) ________ ________ ________ Profit before tax 24.8 31.0 26.9 Tax (note 4) (5.9) (5.8) (12.4) ________ ________ ________ Profit after tax 18.9 25.2 14.5 Outside interests (0.1) (0.1) (0.4) ________ ________ ________ Net profit 18.8 25.1 14.1 ======== ======== ======== ___________________________________________________________________ USc USc USc ___________________________________________________________________ Earnings per share (note 6) - basic and diluted 3.93 5.25 2.95 Earnings per share excluding non-recurring items (note 6) - basic 4.94 5.25 4.44 - diluted 4.94 5.25 4.43 ___________________________________________________________________ Jardine International Motor Holdings Limited Consolidated Balance Sheet ___________________________________________________________________ (unaudited) At 31st At 30th June December 2000 1999 1999 US$m US$m US$m ___________________________________________________________________ Net operating assets Goodwill 8.2 10.1 9.3 Tangible assets 288.7 296.6 305.1 Associates and joint ventures 109.2 114.5 115.2 Other investments 21.2 21.2 21.2 Deferred tax assets 8.2 11.2 12.2 Pension assets 9.4 8.3 9.0 _______ _______ ______ Non-current assets 444.9 461.9 472.0 Stocks 308.7 375.5 362.4 Debtors and prepayments 166.1 188.4 172.5 Bank balances and deposits 186.2 177.4 171.6 _______ _______ ______ Current assets 661.0 741.3 706.5 Creditors and accruals (331.8) (377.1) (391.4) Borrowings (121.0) (74.7) (103.7) Current tax liabilities (6.4) (7.1) (6.7) Provisions (10.1) (2.6) (8.4) _______ _______ ______ Current liabilities (469.3) (461.5) (510.2) _______ _______ ______ Net current assets 191.7 279.8 196.3 Long-term borrowings (198.0) (290.6) (225.9) Deferred tax liabilities (12.3) (15.4) (14.7) Pension liabilities (1.2) (1.0) (1.3) Other non-current liabilities (7.5) (12.7) (7.6) _______ _______ _______ 417.6 422.0 418.8 ======= ======= ======= Capital employed Share capital 11.9 11.9 11.9 Share premium 57.2 57.2 57.2 Revenue and other reserves 344.1 348.7 345.3 _______ _______ _______ Shareholders' funds 413.2 417.8 414.4 Outside interests 4.4 4.2 4.4 _______ _______ _______ 417.6 422.0 418.8 ======= ======= ======= __________________________________________________________________ Jardine International Motor Holdings Limited Consolidated Statement of Changes in Shareholders' Funds __________________________________________________________________ Year (unaudited) ended Six months ended 30th June 31st December 2000 1999 1999 US$m US$m US$m __________________________________________________________________ At beginning of period 414.4 427.7 427.7 Property revaluation - - 14.0 Deferred tax on property revaluation - - (0.3) Net exchange translation differences (11.4) (12.1) (12.5) Net (losses)/gains not recognised in consolidated profit and loss account (11.4) (12.1) 1.2 Net profit 18.8 25.1 14.1 Dividends (note 7) (8.6) (22.9) (28.6) ________ _______ _______ At end of period 413.2 417.8 414.4 ======== ======= ======= ___________________________________________________________________ Jardine International Motor Holdings Limited Consolidated Cash Flow Statement ___________________________________________________________________ (unaudited) Year ended Six months ended 30th June 31st December 2000 1999 1999 US$m US$m US$m ___________________________________________________________________ Operating activities Operating profit 36.5 38.0 45.4 Depreciation and other non-cash items 11.5 9.6 30.6 (Increase)/decrease in working capital (7.7) 3.2 44.0 Interest received 6.0 4.5 9.5 Interest and other financing charges paid (14.7) (13.4) (27.6) Tax paid (5.4) (2.1) (11.3) _______ _______ _______ 26.2 39.8 90.6 Dividends from associates and joint ventures 0.6 0.5 0.5 Cash flows from operating activities 26.8 40.3 91.1 Investing activities Purchase of subsidiaries - - (0.7) Investment in joint ventures (6.8) (21.6) (21.6) Purchase of tangible assets (14.9) (22.6) (45.5) Sale of subsidiaries 2.2 1.6 3.1 Sale of tangible assets 12.5 5.6 21.4 Cash flows from investing activities (7.0) (37.0) (43.3) Financing activities Drawdown of borrowings 12.5 33.3 65.7 Repayment of borrowings (19.6) (26.8) (82.4) Dividends paid by the Company (8.6) (22.9) (28.6) Dividends paid to outside shareholders (0.2) (0.2) (0.3) Cash flows from financing activities (15.9) (16.6) (45.6) Effect of exchange rate changes 0.7 2.4 0.4 _______ _______ _______ Net increase/(decrease) in cash and cash equivalents 4.6 (10.9) 2.6 Cash and cash equivalents at beginning of period 153.3 150.7 150.7 _______ _______ _______ Cash and cash equivalents at end of period 157.9 139.8 153.3 ======= ======= ======= _________________________________________________________________ USc USc USc _________________________________________________________________ Cash flow per share from operating activities 5.61 8.43 19.07 _________________________________________________________________ _______________________________________________________________ Jardine International Motor Holdings Limited Notes _______________________________________________________________ 1. Accounting Policies and Basis of Preparation The unaudited interim condensed financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting. The accounting policies used in the preparation of the interim condensed financial statements are consistent with those used in the annual financial statements for the year ended 31st December 1999. 2. Revenue Six months ended 30th June 2000 1999 US$m US$m ___________________ By geographical area: Hong Kong and Mainland China 151.9 135.4 United Kingdom 788.8 886.1 France 290.0 301.1 United States 168.7 134.6 _______ _______ 1,399.4 1,457.2 ======= ======= 3. Operating Profit Six months ended 30th June 2000 1999 US$m US$m ____________________ By geographical area: Hong Kong and Mainland China 25.2 19.4 United Kingdom 6.4 9.0 France 4.7 3.9 United States 4.7 3.5 ________ ________ 41.0 35.8 Corporate and other interests 0.3 2.2 Non-recurring items (note 5) (4.8) - ________ ________ 36.5 38.0 ======== ======== 4. Tax Six months ended 30th June 2000 1999 US$m US$m ___________________ Company and subsidiaries 5.2 4.6 Associates and joint ventures 0.7 1.2 _______ _______ 5.9 5.8 ======= ======= Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates and includes Hong Kong tax of US$4.1 million (1999: US$2.4 million). 5. Non-recurring Items Non-recurring items relate to the restructuring costs in the United Kingdom. 6. Earnings Per Share Basic earnings per share are calculated on the net profit of US$18.8 million (1999: US$25.1 million) and on the weighted average number of 477.8 million (1999: 477.8 million) shares in issue during the period. Diluted earnings per share are calculated on the weighted average number of 477.8 million (1999: 477.9 million) shares after adjusting for the number of shares which are deemed to have been issued for no consideration under the Executive Share Option Schemes based on the average share price during the period. Earnings per share excluding non-recurring items are calculated on the net profit after adjusting for non- recurring losses of US$4.8 million (1999: Nil). 7. Dividends Six months ended 30th June 2000 1999 US$m US$m ___________________ Final dividend in respect of 1999 of USc1.80 (1998: USc4.80) per share 8.6 22.9 ======= ======= No interim dividend in respect of 2000 is declared by the Board (1999: USc1.20 per share). 8. Capital Commitments and Contingent Liabilities At 31st At 30th June December 2000 1999 1999 US$m US$m US$m ________________________________ Capital commitments 6.6 7.2 6.3 ======== ======== ======= Guarantees of borrowings and other liabilities of joint ventures 6.5 8.4 8.6 ======== ======== ======= 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 interim financial statements. 9. Post Balance Sheet Events On 27th June 2000, Jardine Matheson Holdings Limited, the ultimate holding company, requested the Company to put forward a proposal to the minority shareholders regarding the proposed privatisation of the Company by way of a scheme of arrangement involving the cancellation of all issued shares held by the minority shareholders in exchange for cash to be paid by Jardine Matheson Holdings Limited and the Company. The cancellation price for each share of the Company comprises of HK$4.10 from Jardine Matheson Holdings Limited and USc2.50 from the Company by way of a special dividend. Upon the scheme becoming effective, the listing of the shares of the Company on the Hong Kong Stock Exchange will be withdrawn. The proposal is conditional on the fulfilment of various conditions. If all the conditions are fulfilled or waived, as applicable, it is expected that the scheme will become effective on or before 28th September 2000. 10. Purchase of Own Shares Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of its listed securities during the period under review. 11. Interim Report The Interim Report will be posted to shareholders on or about 25th August 2000. Copies may be obtained from Central Registration Hong Kong Limited, 19th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong. Issued by Forrest International Limited on behalf of Jardine International Motors Management Limited. For further information, please contact: Jardine International Motors A J L Nightingale (852) 2843 8540 Sam Houston (852) 2895 7343 Matheson & Co. Limited (office) Martin Henderson (44) 207 816 8135 Forrest International Leslie Fung (852) 2501 7905 Golin/Harris Ludgate Richard Hews/Victoria Martin (44) 207 253 2252 This and other Group announcements can be accessed through the Internet at 'www.irasia.com/listco/hk/jim'. Note to Editors Jardine International Motors invests in and operates businesses engaged in the distribution, sales and service of motor vehicles and in related activities including financing and contract hire. In Hong Kong, the Group's Mercedes-Benz franchise enjoys a strong position in the luxury market. The Group's other principal interests are in the United Kingdom, France and the United States. In 1999, the Group's businesses achieved consolidated revenue in excess of US$2.8 billion and, including associates and joint ventures, employed more than 11,500 people. The parent company, Jardine International Motor Holdings Limited, is incorporated in Bermuda and listed on the Stock Exchange of Hong Kong. Jardine International Motors Management Limited manages the Group's activities from Hong Kong. Jardine International Motors is committed to delivering long- term value to its shareholders by careful selection of the franchises and the territories in which it operates, while ensuring the highest standards of service to customers.

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