Jardine Intnl Motors-Interims
JARDINE MATHESON HOLDINGS LIMITED
7 September 1999
JARDINE INTERNATIONAL MOTORS
1999 INTERIM RESULTS ANNOUNCEMENT
The following press release was issued 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)
David Dodwell (852) 2501 7902 (direct)
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
INTERIM REPORT 1999 HIGHLIGHTS
* Zung Fu outperforms weak Hong Kong market
* Disappointing results in UK
* UK and India joint ventures fully operational
Results
(unaudited)
Six months ended 30th June
1999 1998 Change
US$m US$m %
--------------------------------------------------------------
Revenue 1,457 1,860 -22
Net profit 25 29 -13
--------------------------------------------------------------
USc USc %
--------------------------------------------------------------
Earnings per share 5.25 6.01 -13
Interim dividend per share 1.20 1.20 -
--------------------------------------------------------------
'In Hong Kong the effect on Zung Fu of continued market
weakness will be only partly mitigated by increased market
share, while in the United Kingdom further costs are expected
to be incurred in turning around problem operations. Against
this background, the Group's full year performance should,
nevertheless, be in line with last year.'
A J L Nightingale, Chairman
7th September 1999
The interim dividend of USc1.20 per share will be payable on
20th October 1999 to Shareholders on the register of members
at the close of business on 24th September 1999. The share
registers will be closed from 27th September to 1st October
1999, inclusive.
JARDINE INTERNATIONAL MOTOR HOLDINGS LIMITED
INTERIM REPORT 1999
PERFORMANCE
Jardine International Motors today announced that the Group,
including its associates and joint ventures, sold and
delivered some 77,600 new and used motor vehicles in the first
half of 1999, representing an increase of 12% over the same
period in 1998.
Revenue, excluding associates and joint ventures, exceeded
US$1,400 million. This represented an underlying reduction of
7%, excluding the revenue of the Polar Motor Group in the 1998
comparative as it became a joint venture in the second half of
that year.
The unaudited consolidated net profit for the six months ended
30th June 1999 was US$25 million, a decrease of 13% over the
comparable figure for 1998. Earnings per share for the half
year, at USc5.25, also decreased by 13%.
The Board has declared an unchanged interim dividend of
USc1.20 per share.
GROUP REVIEW
Turning to the operations, the Chairman, Anthony Nightingale,
said that Hong Kong operations performed well in a difficult
environment, continuing their focus on raising market share
and providing excellent customer service. In the United
Kingdom, the specialist franchises continued to achieve good
results and the joint venture with Ford is making progress,
but certain of the Group's other dealerships have performed
poorly. The Indian joint venture with the Tata Group is now
fully operational. In Japan, the small Stern Zushi Mercedes-
Benz business was disposed of in the period on satisfactory
terms.
Hong Kong SAR and Mainland China
In Hong Kong, the strong demand for the new S-class models
enabled Zung Fu to increase its market share for Mercedes-Benz
in an overall passenger car market which suffered from a 31%
decline in unit sales. However, lower unit deliveries of new
Mercedes-Benz passenger cars compared with the same period
last year, a weaker demand for after-sales service and
decreased activity in the commercial vehicle market led to a
reduction in Zung Fu's profits, despite the continued tight
management of costs. Nevertheless, the results showed some
improvement compared to the second half of 1998, and continued
customer interest has maintained the order book at levels
close to those at the year-end.
Preliminary discussions are taking 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 and that Zung Fu
will continue to play the leading role in sales and
after-sales service of Mercedes-Benz vehicles in Hong Kong, in
a long term partnership with DaimlerChrysler.
In Mainland China, Southern Star's performance has been
affected by the limited availability of import permits, while
the joint venture workshops experienced lower trading volumes
in a slack market.
Southeast Asia
P.T. Tunas Ridean, the Group's 30%-held associate in
Indonesia, continued to operate in extremely difficult and
uncertain market conditions. Tight control over costs,
consumer finance receivables and foreign exchange exposures
led to a slightly improved result.
In Malaysia, Cycle & Carriage Bintang, the Group's 13%-owned
affiliate, saw a sharp increase in unit sales in a fast
improving market, but the dividend accounted for in the first
half reflected the prior year's result.
India
Concorde Motors incurred an increased loss following
completion of its dealership infrastructure in anticipation of
the new Indica production coming fully on stream. The
Mercedes-Benz business in Mumbai continued to operate
satisfactorily.
United Kingdom
In the United Kingdom, the passenger car market has shown
growth in the first half year. The group's specialist
franchises, performing ahead of expectations, maintained their
levels of profitability. But some of the volume franchises
disappointed due to a poor performance by Rover and a number
of specific problem operations in the former Appleyard
business.
The Polar Motor Group joint venture, which includes Dagenham
Motors acquired in March 1999, made a positive contribution to
the Group results.
Appleyard Vehicle Contracts, in which the Group has a 50%
shareholding, produced a reduced return due to lower vehicle
disposal profits and the adoption of a more conservative
revenue recognition policy.
France
Cica achieved better results with both volume and margin
improvement in a buoyant national market.
United States
In the United States the Group's operations increased revenues
but suffered some reduction in margin and a higher tax charge
following the utilisation of earlier tax losses.
YEAR 2000
The Company has adopted the Year 2000 compliance standard
issued by the British Standards Institution as its definition
of compliance.
The Group's businesses have taken a number of actions in order
to achieve readiness. They have prepared an inventory of all
business critical information technology systems and equipment
which, if non-compliant, could have a material adverse impact
on the business and operations of the Group. All such systems
have been assessed and tested. Assurance has also been sought
on Year 2000 compliance from key suppliers. Business
continuity plans have been put in place in the event of any
material system or supplier failure due to previously
undetected problems.
The actions required to attain Year 2000 readiness and put
business continuity plans in place are now complete in all
material respects.
The Audit Committee has been monitoring progress and reporting
to the Board.
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.
While the Group have made appropriate system changes and put
in place appropriate business continuity plans, there can be
no absolute assurance that the Year 2000 programme will be
completely successful due to the inherent unpredictability and
scope of the Year 2000 issue.
OUTLOOK
In conclusion, Mr Nightingale said, 'In Hong Kong the effect
on Zung Fu of continued market weakness will be only partly
mitigated by increased market share, while in the United
Kingdom further costs are expected to be incurred in turning
around problem operations. Against this background, the
Group's full year performance should, nevertheless, be in line
with last year.'
--------------------------------------------------------------------
Jardine International Motor Holdings Limited
Condensed Consolidated Profit and Loss Account
--------------------------------------------------------------------
Year ended
(unaudited) 31st
Six months ended 30th June December
1999 1998 1998
US$m US$m US$m
--------------------------------------------------------------------
Revenue (note 2) 1,457.2 1,860.1 3,555.5
Net operating costs (1,419.2) (1,812.0) (3,475.3)
------- ------- -------
Operating profit (note 3) 38.0 48.1 80.2
Net financing charges (8.5) (11.9) (24.7)
Share of results of associates
and joint ventures 1.5 1.3 (4.1)
------- ------- -------
Profit before tax 31.0 37.5 51.4
Tax (note 4) (5.8) (8.7) (12.0)
------- ------- -------
Profit after tax 25.2 28.8 39.4
Outside interests (0.1) (0.1) (0.3)
------- ------- -------
Net profit 25.1 28.7 39.1
======= ======= =======
--------------------------------------------------------------------
USc USc USc
--------------------------------------------------------------------
Earnings per share (note 5)
- basic 5.25 6.01 8.18
- diluted 5.25 6.01 8.18
--------------------------------------------------------------------
--------------------------------------------------------------------
Jardine International Motor Holdings Limited
Condensed Consolidated Balance Sheet
--------------------------------------------------------------------
(unaudited) At 31st
At 30th June December
1999 1998 1998
US$m US$m US$m
--------------------------------------------------------------------
Net operating assets
Goodwill 10.1 12.9 11.4
Tangible assets 296.6 354.2 303.5
Associates and joint ventures 114.5 72.2 96.3
Other investments 21.2 21.3 21.2
Other non-current assets 19.5 17.6 19.5
------- ------- -------
Non-current assets 461.9 478.2 451.9
------- ------- -------
Stocks 375.5 514.9 420.9
Debtors and prepayments 188.4 201.5 189.7
Deposits with a group treasury
company - 54.3 -
Bank balances and deposits 177.4 42.8 204.9
------- ------- -------
Current assets 741.3 813.5 815.5
------- ------- -------
Creditors, accruals and
provisions (379.7) (447.3) (403.3)
Borrowings (74.7) (110.1) (137.9)
Current tax liabilities (7.1) (10.1) (5.1)
------- ------- -------
Current liabilities (461.5) (567.5) (546.3)
------- ------- -------
Net current assets 279.8 246.0 269.2
Borrowings (290.6) (221.2) (253.9)
Other non-current liabilities (29.1) (47.7) (35.1)
------- ------- -------
422.0 455.3 432.1
======= ======= =======
Capital employed
Share capital 11.9 11.9 11.9
Share premium 57.2 57.2 57.2
Revenue and other reserves 348.7 381.8 358.6
------- ------- -------
Shareholders' funds 417.8 450.9 427.7
Outside interests 4.2 4.4 4.4
------- ------- -------
422.0 455.3 432.1
======= ======= =======
--------------------------------------------------------------------
Jardine International Motor Holdings Limited
Condensed Consolidated Statement of Changes in Equity
--------------------------------------------------------------------
Year ended
(unaudited) 31st
Six months ended 30th June December
1999 1998 1998
US$m US$m US$m
--------------------------------------------------------------------
At beginning of period
- as previously reported 396.4 423.2 423.2
- change in accounting
policies (note 1) 31.3 37.1 37.1
------- ------- -------
- as restated 427.7 460.3 460.3
Property revaluation - - (38.0)
Deferred tax on property
revaluation - 0.2 2.0
Net exchange translation
differences
- amount arising in period (11.6) (8.2) 0.1
- disposal of subsidiary (0.5) - -
------- ------- -------
Net losses not recognised in
consolidated profit and
loss account (12.1) (8.0) (35.9)
Net profit 25.1 28.7 39.1
Dividends (note 6) (22.9) (30.1) (35.8)
------- ------- -------
At end of period 417.8 450.9 427.7
======= ======= =======
--------------------------------------------------------------------
Jardine International Motor Holdings Limited
Condensed Consolidated Cash Flow Statement
--------------------------------------------------------------------
Year ended
(unaudited) 31st
Six months ended 30th June December
1999 1998 1998
US$m US$m US$m
--------------------------------------------------------------------
Operating activities
------- ------- -------
Operating profit 38.0 48.1 80.2
Depreciation and other non-cash
items 9.6 11.5 21.4
Decrease/(increase) in working
capital 3.2 (34.5) (31.0)
Interest received 4.5 5.2 10.9
Interest paid and other
financing charges (13.4) (16.4) (35.4)
Tax paid (2.1) (4.0) (10.7)
------- ------- -------
39.8 9.9 35.4
Dividends from associates and
joint ventures 0.5 1.9 3.1
------- ------- -------
Cash flows from operating
activities 40.3 11.8 38.5
Investing activities
Purchase of subsidiaries - (4.9) (6.3)
Investment in joint ventures
(note 7) (21.6) (10.9) (10.9)
Purchase of tangible assets (22.6) (16.5) (44.8)
Restructuring of Polar Motor
Group - - 47.7
Sale of subsidiary 1.6 - -
Sale of tangible assets 5.6 4.7 16.2
------- ------- -------
Cash flows from investing
activities (37.0) (27.6) 1.9
Financing activities
------- ------- -------
Drawdown of term loans 16.1 13.5 71.9
Repayment of term loans (7.2) (39.6) (52.4)
Dividends paid by the Company (22.9) (30.1) (35.8)
Dividends paid to outside
shareholders (0.2) (0.2) (0.4)
------- ------- -------
Cash flows from financing
activities (14.2) (56.4) (16.7)
Effect of exchange rate changes 2.4 (0.2) (1.6)
------- ------- -------
Net (decrease)/increase in cash
and cash equivalents (8.5) (72.4) 22.1
Cash and cash equivalents at
beginning of period 136.3 114.2 114.2
------- ------- -------
Cash and cash equivalents at
end of period 127.8 41.8 136.3
======= ======= =======
--------------------------------------------------------------------
USc USc USc
--------------------------------------------------------------------
Cash flow per share from
operating activities 8.43 2.47 8.06
--------------------------------------------------------------------
--------------------------------------------------------------------
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.
In 1999, the Group implemented IAS 14 (revised) - Segment
Reporting, IAS 17 (revised) - Leases, IAS 19 (revised) -
Employee Benefits and IAS 35 - Discontinuing Operations.
The provisions of IAS 10 (revised) - Events After the
Balance Sheet Date, IAS 16 (revised) - Property, Plant and
Equipment, IAS 22 (revised) - Business Combinations, IAS 28
(revised) - Accounting for Investments in Associates, IAS 31
(revised) - Financial Reporting of Interests in Joint
Ventures, IAS 36 - Impairment of Assets, IAS 37 -
Provisions, Contingent Liabilities and Contingent Assets and
IAS 38 - Intangible Assets are applied in advance of their
effective dates.
In accordance with IAS 10 (revised), dividends proposed or
declared after the balance sheet date are not recognised as
a liability at the balance sheet date. 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 31st December 1997 and 1998 by
US$30.1 million and US$22.9 million respectively.
In accordance with IAS 19 (revised), pension 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
flows by reference to market yields on high quality
corporate bonds which have terms to maturity approximating
the terms of the related liability. 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 six months ended
30th June 1998 and for the year ended 31st December 1998 by
US$0.7 million and US$1.4 million respectively, and the
Shareholders' funds at 31st December 1997 and 1998 by US$7.0
million and US$8.4 million respectively.
With the exception of IAS 10 (revised) and IAS 19 (revised),
there are no changes in accounting policy that affect profit
or Shareholders' funds resulting from the adoption of the
above standards in these condensed financial statements, as
the Group was already following the recognition and
measurement principles in those standards. There have been
no other changes to the accounting policies described in the
1998 financial statements.
The disclosure requirements of IAS 1 (revised) -
Presentation of Financial Statements will be complied with
in the Group's 1999 annual financial statements.
2. REVENUE
Six months ended 30th June
1999 1998
US$m US$m
--------------------------
By geographical area:
Hong Kong and Mainland China 135.4 150.0
United Kingdom 886.1 1,312.1
France 301.1 267.6
United States 134.6 125.5
Other - 4.9
------- -------
1,457.2 1,860.1
======= =======
3. OPERATING PROFIT
Six months ended 30th June
1999 1998
US$m US$m
--------------------------
By geographical area:
Hong Kong and Mainland China 19.4 25.6
United Kingdom 9.0 16.3
France 3.9 2.3
United States 3.5 3.7
Corporate and other interests 2.2 0.2
------- -------
38.0 48.1
======= =======
4. TAX
Six months ended 30th June
1999 1998
US$m US$m
--------------------------
Company and subsidiaries 4.6 7.7
Associates and joint ventures 1.2 1.0
------- -------
5.8 8.7
======= =======
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$2.4 million (1998: US$4.7
million).
5. EARNINGS PER SHARE
Basic earnings per share are calculated on the net profit of
US$25.1 million (1998: US$28.7 million) and on the weighted
average number of 477.8 million (1998: 477.8 million) shares
in issue during the period.
Diluted earnings per share are calculated on the weighted
average number of 477.9 million (1998: 477.8 million) shares
after adjusting for the number of shares which are deemed to
have been issued for no consideration under the Executive
Share Option Scheme based on the average share price during
the period.
6. DIVIDENDS
Six months ended 30th June
1999 1998
US$m US$m
--------------------------
Final dividend in respect of 1998
of USc4.80 (1997:USc6.30) per share 22.9 30.1
======= =======
An interim dividend in respect of 1999 of USc1.20 (1998:
USc1.20) per share amounting to a total of US$5.7 million
(1998: US$5.7 million) is declared and will be accounted for
as an appropriation of revenue reserves in the year ending
31st December 1999.
7. INVESTMENT IN JOINT VENTURES
Investment in joint ventures includes the additional
investment of US$21.3 million in Polar Motor Group Limited
to finance the acquisition of Dagenham Motors Group plc in
the United Kingdom.
8. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
At 31st
At 30th June December
1999 1998 1998
US$m US$m US$m
------------------------------------
Capital commitments 7.2 13.1 11.0
======= ======= =======
Guarantees of borrowings
and other liabilities of
joint ventures 8.4 7.1 27.9
======= ======= =======
9. 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.
10. INTERIM REPORT
The Interim Report will be posted to Shareholders on or
about 27th September 1999. Copies may be obtained from
Central Registration Hong Kong Limited, 19th Floor, Hopewell
Centre, 183 Queen's Road East, Hong Kong.
The interim dividend of USc1.20 per share will be payable on
20th October 1999 to Shareholders on the register of members
at the close of business on 24th September 1999. The share
registers will be closed from 27th September to 1st October
1999, 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 6th
October 1999.
Issued by Forrest International Limited on behalf of Jardine
International Motors Management Limited. For further information,
please contact:
Jardine International Motors
Peter Ward (852) 2895 7281 (direct)
Sam Houston (852) 2895 7343 (direct)
Matheson & Co. Ltd (0171) 816 8135 (office)
Martin Henderson
Forrest International (852) 2522 6475 (office)
Sue Gourlay (852) 2501 7936 (direct)
Ludgate Communications (0171) 253 2252 (office)
Richard Hews
Full text of this and other Group announcements can be accessed
through the Internet at 'http://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 1998, the Group's
combined businesses achieved revenue in excess of US$3.5 billion and
employed more than 10,000 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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