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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