Subsid's Final Results

Jardine Matheson Hldgs Ld 23 February 2000 JARDINE INTERNATIONAL MOTORS 1999 PRELIMINARY ANNOUNCEMENT OF RESULTS The following press release was released today by the Company's 75%-held subsidiary, Jardine International Motor Holdings Limited. For further information please contact: Forrest International Limited Tel: (852) 2522 6475 (office) Sue Gourlay (852) 2501 7936 (direct) Full text of this and other Group announcements can be accessed through the Internet at 'http://www.irasia.com/listco/hk/jim'. JARDINE INTERNATIONAL MOTORS 1999 PRELIMINARY ANNOUNCEMENT OF RESULTS * UK business hit by weak market and restructuring * Ford joint venture makes positive contribution * Market share increased in Hong Kong * Strong profit growth in France Results Year ended 31st December 1999 1998 Change US$m US$m % _____________________________________________________________ Revenue 2,807* 3,556 -21 Net profit excluding non-recurring items 21 36 -40 Net profit 14 39 -64 _____________________________________________________________ USc USc % _____________________________________________________________ Earnings per share 2.95 8.18 -64 Earnings per share excluding non-recurring items 4.44 7.43 -40 Interim dividend per share 1.20 1.20 - Proposed final dividend per share 1.80 4.80 -62 * Excludes the Polar Motor Group which became a joint venture in 1998 'Overall 2000 will be a challenging year for the Group, and our results will depend on a recovery in the United Kingdom business, the extent and timing of which is unpredictable.' A J L Nightingale, Chairman 23rd February 2000 The final dividend of USc1.80 per share will be payable on 31st May 2000, subject to approval at the Annual General Meeting to be held on 25th May 2000, to Shareholders on the register of members at the close of business on 10th March 2000. The share registers will be closed from 13th to 17th March 2000, inclusive. JARDINE INTERNATIONAL MOTOR HOLDINGS LIMITED PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST DECEMBER 1999 PERFORMANCE Jardine International Motor Holdings Limited today announced that the Group, including its associates and joint ventures, sold and delivered some 161,000 new and used motor vehicles in 1999, representing an increase of 22% over 1998. Revenue, excluding associates and joint ventures, was some US$2,807 million, a reduction of 9% excluding the Polar Motor Group from the comparison which became a joint venture in late 1998. Operating profit for 1999 was US$45 million, a decrease of 43% compared to 1998. The consolidated net profit for the year was US$14 million, a decrease of 64% over the comparable figure for 1998. Excluding the non-recurring items in both years, the decline was 40%. Earnings per share declined by 64% to USc2.95. Excluding the non-recurring items, earnings per share were USc4.44 compared with USc7.43 in 1998. The Board recommends a final dividend of USc1.80 per share, which, together with the interim dividend of USc1.20 per share, will make a total dividend of USc3.00 compared with USc6.00 for 1998. GROUP REVIEW Turning to the operations, the Chairman, Anthony Nightingale said that the operations in Hong Kong held up well in a challenging market, and the Group is confident that current negotiations with DaimlerChrysler will lead to a continuation of a long relationship, although there will be an impact on future profitability. The United Kingdom business has suffered both from problem franchises and from the prevailing adverse market sentiment arising from the controversy over new car pricing. Elsewhere in the Group, the businesses are making good progress. While it is concentrating on resolving the problems in the United Kingdom, efforts and resources are also being devoted to cost saving programmes, a shared services initiative in the United Kingdom, and the development of e-commerce initiatives, which are being led by the French operations. * Hong Kong SAR and Mainland China In Hong Kong, Zung Fu achieved an increased market share in the year and saw deliveries of Mercedes-Benz increase by 25%, significantly outperforming both the general market and the luxury sector. A strong demand for the new S- class, A-class and M-class models helped to maintain this market leading position. Reduced demand for after-sales service in the passenger car market and lower activity in the commercial vehicle sector led to a small decline in profits at Zung Fu, although revenues held steady. The company has continued to manage costs tightly, and customer interest in new models has sustained a healthy order book. As previously advised, preliminary discussions have taken place with DaimlerChrysler with regard to their participation in the distribution of Mercedes-Benz vehicles in Hong Kong. The Group expects to arrive at a mutually satisfactory arrangement, with Zung Fu continuing to play the leading role in sales and after-sales of Mercedes-Benz vehicles in Hong Kong, in long-term partnership with DaimlerChrysler. In Mainland China, while underlying demand remains strong, sales have been constrained by the restrictions on issuing import permits. The Group's joint venture workshops have seen a lower level of activity but further investment in these operations continued reflecting the Group's long-term confidence in the Mainland China market following WTO membership. * Southeast Asia Tunas Ridean, the Group's 30%-held associate in Indonesia, achieved improved car sales and a recommencement of instalment finance activities as the new car market in Indonesia began to recover. In Malaysia, Cycle and Carriage Bintang, the Group's 13%- owned affiliate, saw a significant improvement in market conditions and produced a sharp increase in profits. * India Concorde Motors, the Group's 50%-held joint venture with Tata Group, incurred start up losses. Delivery volumes of the new Indica increased steadily as the year progressed reaching 9,300 units. The required production rate is now being achieved and further growth in sales will be generated by planned new products. Concorde is now building a better than expected after-sales business. The Mercedes-Benz business in Mumbai continues to operate satisfactorily. * United Kingdom The United Kingdom motor vehicle market deteriorated sharply in the second half of 1999 as negative news coverage regarding pricing compared to other European Union countries affected consumer sentiment. In addition to reducing new car revenues and margins in most franchises, the uncertainty has led to a significant decrease in residual values of used cars, affecting both the dealership and contract hire operations. The group's dealerships produced results far below expectations. Despite a satisfactory performance by certain specialist franchises, substantial losses were incurred in the Rover businesses and other volume franchises. The Polar Motor Group joint venture, which includes Dagenham Motors acquired in March 1999, made a positive contribution to Group results. Appleyard Vehicle Contracts, a 50%-held joint venture with Barclays Bank, suffered from lower vehicle disposal profits and reduced incentive payments from manufacturers resulting in a loss for the year after goodwill amortisation. The group has embarked on a programme of strict cost control and working capital management. In the short-term it is incurring additional significant costs in the reorganisation of its retail network, including the cost of closing underperforming operations. Combined with the poor trading results these charges, which included lease exit provisions, have produced a significant loss in 1999. The Group expects to benefit in the long term from a consolidation of the United Kingdom motor market. * France The French motor car market saw sustained growth in the year, and Cica produced a healthy increase in profit. The creation of a dedicated used car brand, O'Plus, and the building of strategic relationships covering internet and auction products have positioned Cica well for future developments in the French market. * United States In the United States, the market for imported luxury vehicles was very strong. The Beverly Hills dealership achieved record levels of sales and market share for Mercedes-Benz passenger cars. The Group's operations in Hawaii, where a portfolio of premium brands is represented, achieved good sales and profit growth in a rising market. OUTLOOK In conclusion, Mr Nightingale said, 'Our principal challenge remains to restore profitability to our United Kingdom business. We will continue to focus on building sales through excellent customer service, while pursuing cost efficiencies and turnaround programmes at our underperforming dealerships which will inevitably result in further restructuring costs. 'In Hong Kong we expect satisfactory results for Zung Fu and to finalise new arrangements for our important relationship with DaimlerChrysler. 'Overall 2000 will be a challenging year for the Group, and our results will depend on a recovery in the United Kingdom business, the extent and timing of which is unpredictable.' Jardine International Motor Holdings Limited Consolidated Profit and Loss Account for the year ended 31st December 1999 ______________________________________________________________ 1999 1998 US$m US$m ______________________________________________________________ Revenue (note 2) 2,806.6 3,555.5 Cost of sales (2,467.3) (3,158.2) _______ _______ Gross profit 339.3 397.3 Other operating income 10.7 11.2 Selling and distribution costs (182.9) (213.3) Administrative expenses (110.4) (107.0) Other operating expenses (11.3) (8.0) _______ _______ Operating profit (note 3) 45.4 80.2 Net financing charges (17.4) (24.7) Share of results of associates and joint ventures (1.1) (4.1) _______ _______ Profit before tax 26.9 51.4 Tax (note 4) (12.4) (12.0) _______ _______ Profit after tax 14.5 39.4 Outside interests (0.4) (0.3) _______ _______ Net profit 14.1 39.1 ======= ======= ______________________________________________________________ USc Usc ______________________________________________________________ Earnings per share (note 6) - basic 2.95 8.18 - diluted 2.95 8.18 Earnings per share excluding non-recurring items (note 6) - basic 4.44 7.43 - diluted 4.43 7.43 Dividends per share (note 7) - interim 1.20 1.20 - proposed final 1.80 4.80 ______________________________________________________________ Jardine International Motor Holdings Limited Consolidated Balance Sheet at 31st December 1999 ______________________________________________________________ 1999 1998 US$m US$m ______________________________________________________________ Net operating assets Goodwill 9.3 11.4 Tangible assets 305.1 303.5 Associates and joint ventures 115.2 96.3 Other investments 21.2 21.2 Deferred tax assets 12.2 12.1 Pension assets 9.0 7.4 _______ _______ Non-current assets 472.0 451.9 Stocks 362.4 420.9 Debtors and prepayments 172.5 189.7 Bank balances and deposits 171.6 204.9 _______ _______ Current assets 706.5 815.5 _______ _______ Creditors and accruals (391.4) (402.4) Borrowings (103.7) (137.9) Current tax liabilities (6.7) (5.1) Provisions (8.4) (0.9) _______ _______ Current liabilities (510.2) (546.3) _______ _______ Net current assets 196.3 269.2 Long-term borrowings (225.9) (253.9) Deferred tax liabilities (14.7) (16.1) Pension liabilities (1.3) (0.5) Other non-current liabilities (7.6) (18.5) _______ _______ 418.8 432.1 ======= ======= Capital employed Share capital 11.9 11.9 Share premium 57.2 57.2 Revenue and other reserves 345.3 358.6 _______ _______ Shareholders' funds 414.4 427.7 Outside interests 4.4 4.4 _______ _______ 418.8 432.1 ======= ======= Jardine International Motor Holdings Limited Consolidated Statement of Changes in Shareholders' Funds for the year ended 31st December 1999 ______________________________________________________________ 1999 1998 US$m US$m ______________________________________________________________ At 1st January - as previously reported 396.4 423.2 - change in accounting policies (note 1 31.3 37.1 _______ _______ - as restated 427.7 460.3 Property revaluation 14.0 (38.0) Deferred tax on property revaluation (0.3) 2.0 Net exchange translation differences (12.5) 0.1 Net gains/(losses) not recognised in consolidated profit and loss account 1.2 (35.9) Net profit 14.1 39.1 Dividends (note 7) (28.6) (35.8) _______ _______ At 31st December 414.4 427.7 ======= ======= Jardine International Motor Holdings Limited Consolidated Cash Flow Statement for the year ended 31st December 1999 ______________________________________________________________ 1999 1998 US$m US$m ______________________________________________________________ Operating activities Operating profit 45.4 80.2 Depreciation and amortisation 24.0 25.3 Other non-cash items 6.6 (1.9) Decrease/(increase) in working capital 44.0 (33.0) Interest received 9.5 10.9 Interest and other financing charges paid (27.6) (35.4) Tax paid (11.3) (10.7) _______ _______ 90.6 35.4 Dividends from associates and joint ventures 0.5 3.1 Cash flows from operating activities 91.1 38.5 Investing activities Purchase of subsidiaries (0.7) (6.3) Investment in joint ventures (note 8) (21.6) (10.9) Purchase of tangible assets (45.5) (44.8) Restructuring of Polar Motor Group - 47.7 Sale of subsidiaries 3.1 - Sale of tangible assets 21.4 16.2 Cash flows from investing activities (43.3) 1.9 Financing activities Drawdown of borrowings 65.7 57.6 Repayment of borrowings (82.4) (60.5) Dividends paid by the Company (note 7) (28.6) (35.8) Dividends paid to outside shareholders (0.3) (0.4) Cash flows from financing activities (45.6) (39.1) Effect of exchange rate changes 0.4 (1.6) _______ _______ Net increase/(decrease) in cash and cash equivalents 2.6 (0.3) Cash and cash equivalents at beginning of year 150.7 151.0 _______ _______ Cash and cash equivalents at end of year 153.3 150.7 ======= ======= ______________________________________________________________ Jardine International Motor Holdings Limited Notes ______________________________________________________________ 1 ACCOUNTING POLICIES AND BASIS OF PREPARATION The financial information contained in this announcement has been based on the audited results for the year ended 31st December 1999 which have been prepared in conformity with International Accounting Standards. In 1999 the Group implemented IAS 1 (revised 1997), Presentation of Financial Statements; IAS 10 (revised 1999), Events After the Balance Sheet Date; IAS 14 (revised 1997), Segment Reporting; IAS 16 (revised 1998), Property, Plant and Equipment; IAS 17 (revised 1997), Leases; IAS 19 (revised 1998), Employee Benefits; IAS 22 (revised 1998), Business Combinations; IAS 28 (revised 1998), Accounting for Investments in Associates; IAS 31 (revised 1998), Financial Reporting of Interests in Joint Ventures; IAS 35, Discontinuing Operations; IAS 36, Impairment of Assets; IAS 37, Provisions, Contingent Liabilities and Contingent Assets; and IAS 38, Intangible Assets. With the exception of IAS 10 (revised 1999) and IAS 19 (revised 1998), there are no changes in accounting policy that affect profit or Shareholders' funds resulting from the adoption of the above standards in these financial statements, as the Group was already following the recognition and measurement principles in those other standards. In accordance with IAS 10 (revised 1999), dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date. This is a change in accounting policy as in previous years dividends proposed or declared after the balance sheet date were recognised as a liability at the balance sheet date. The effect of this change has been to increase the Shareholders' funds at 1st January 1998 and 1999 by US$30.1 million and US$22.9 million respectively. In accordance with IAS 19 (revised 1998), the pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under this method, pension obligations are measured as the present value of the estimated future cash outflows by reference to market yields on high quality corporate bonds which have terms to maturity approximating the terms of the related liability. Plan assets are measured at fair value. This is a change in accounting policy as in previous years certain pension plans used the attained age normal method and pension obligations were discounted at the expected rate of return on plan assets. The comparative figures for 1998 have been restated to reflect the change in policy. The effect of this change has been to increase net profit for the year ended 31st December 1998 by US$1.4 million, and the Shareholders' funds at 1st January 1998 and 1999 by US$7.0 million and US$8.4 million respectively. Other than described above, there have been no other changes to the accounting policies described in the 1998 financial statements. Comparative figures have been adjusted or extended to conform with changes in presentation in the current year to take into account the disclosure requirements of the revised or new International Accounting Standards which the Group implemented in 1999. 2 REVENUE 1999 1998 US$m US$m _______ _______ By geographical area: Hong Kong and Mainland China 264.9 261.2 United Kingdom 1,635.3 2,465.1 France 608.5 563.5 United States 297.9 255.4 Other - 10.3 _______ _______ 2,806.6 3,555.5 ======= ======= 3 OPERATING PROFIT 1999 1998 US$m US$m _______ _______ By geographical area: Hong Kong and Mainland China 38.3 40.5 United Kingdom (8.2) 24.2 France 11.7 7.6 United States 8.5 7.6 _______ _______ 50.3 79.9 Corporate and other interests 2.6 (1.4) Non-recurring items (refer note 5) (7.5) 1.7 _______ _______ 45.4 80.2 ======= ======= 4 TAX 1999 1998 US$m US$m _______ ________ Company and subsidiaries 11.0 11.1 Associates and joint ventures 1.4 0.9 _______ _______ 12.4 12.0 _______ _______ 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$4.9 million (1998: US$5.3 million). 5 NON-RECURRING ITEMS 1999 1998 Gross Net Gross Net US$m US$m US$m US$m _______ _______ _______ _______ Impairment of tangible assets (1.6) (1.1) - - Onerous lease and lease exit costs (4.2) (3.8) - - Deficit on revaluation of properties (2.7) (2.2) (4.9) (3.0) Restructuring of Polar Motor Group - - 5.0 5.0 Write-back on loan for investment in Indonesia - - 1.6 1.6 _______ _______ _______ _______ (8.5) (7.1) 1.7 3.6 ======= ======= ======= ======= By geographical area: United Kingdom (8.0) (6.6) 5.0 5.0 France - - (0.9) (0.5) United States - - (4.0) (2.5) Corporate and other interests (0.5) (0.5) 1.6 1.6 _______ _______ _______ _______ (8.5) (7.1) 1.7 3.6 ======= ======= ======= ======= Included in: Operating profit (7.5) 1.7 Share of results of associates and joint ventures (1.0) - _______ _______ (8.5) 1.7 ======= ======= Gross non-recurring items are shown before net financing charges and tax. Net non-recurring items are shown after tax and outside interests. 6 EARNINGS PER SHARE Basic earnings per share are calculated on the net profit of US$14.1 million (1998: US$39.1 million) and on the weighted average number of 477.8 million (1998: 477.8 million) shares in issue during the year. Diluted earnings per share are calculated on the weighted average number of 478.2 million (1998: 477.8 million) shares after adjusting for the number of shares which are deemed to have been issued for no consideration under the Executive Share Option Scheme based on the average share price during the year. Earnings per share excluding non-recurring items are calculated on the net profit after adjusting for non- recurring losses of US$7.1 million (1998: profits of US$3.6 million). 7 DIVIDENDS 1999 1998 US$m US$m _______ _______ Final dividend in respect of 1998 of USc4.80 (1997: USc6.30) per share 22.9 30.1 Interim dividend in respect of 1999 of USc1.20 (1998: USc1.20) per share 5.7 5.7 _______ _______ 28.6 35.8 ======= ======= A final dividend in respect of 1999 of USc1.80 (1998: USc4.80) per share amounting to a total of US$8.6 million (1998: US$22.9 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the Annual General Meeting and the amount will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2000. 8 NOTES TO CONSOLIDATED CASH FLOW STATEMENT Investment in joint ventures in 1999 includes the additional investment of US$21.4 million in Polar Motor Group Limited to finance the acquisition of Dagenham Motors Group plc in the United Kingdom. 9 YEAR 2000 COMPLIANCE The Company has adopted the Year 2000 compliance standard issued by the British Standards Institution as its definition of compliance. The Group's businesses took a number of actions in order to achieve readiness. These actions included preparation of an inventory of all business critical systems, the assessment and testing of those systems, obtaining Year 2000 compliance assurances from key suppliers and the preparation of business continuity plans in the event of a system failure due to previously undetected problems. Year 2000 readiness was completed in 1999, as advised in the interim announcement, and the change of year was handled without significant interruption of business systems. The Year 2000 readiness project has been monitored by the Audit Committee. The costs specifically associated with Year 2000 projects are not considered material to the Group. No material amounts have been authorised or contracted for solely in respect of the Year 2000 issue. 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 year ended 31st December 1999. 11 ANNUAL REPORT The Annual Report will be posted to Shareholders on or about 18th April 2000. Copies may be obtained from Central Registration Hong Kong Limited, 19th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong. The final dividend of USc1.80 per share will be payable on 31st May 2000, subject to approval at the Annual General Meeting to be held on 25th May 2000, to Shareholders on the register of members at the close of business on 10th March 2000. The share registers will be closed from 13th to 17th March 2000, inclusive. The dividend, declared in United States Dollars, will also be available in Hong Kong Dollars calculated by reference to a rate prevailing five business days prior to the payment date. Shareholders on the principal register will receive United States Dollars while Shareholders on the Hong Kong branch register will receive Hong Kong Dollars, unless they elect for the alternative currency by notifying the Company's registrars by 19th May 2000. Issued by Forrest International Limited on behalf of Jardine International Motors Management Limited. For further information, please contact: Jardine International Motors Anthony Nightingale (852) 2843 8540 (office) Sam Houston (852) 2895 7343 (office) Matheson & Co., Ltd Martin Henderson (44) 171 816 8135 (office) Forrest International Limited (852) 2522 6475 (office) Sue Gourlay (852) 2501 7936 (direct) Ludgate Communications Richard Hews (44) 171 253 2252 (office) Full text of the Preliminary Announcement of Results and the Preliminary Financial Statements for the year ended 31st December 1999 can be accessed through the Internet at 'http://www.irasia.com/listco/hk/jim'.

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