Final Results
Jardine Matheson Hldgs Ld
07 March 2007
To: Business Editor 7th March 2007
For immediate release
The following announcement was today issued to a Regulatory Information Service
approved by the Financial Services Authority in the United Kingdom.
Jardine Matheson Holdings Limited
2006 Preliminary Announcement of Results
Highlights
• Underlying earnings per share* up 14%
• Full-year dividend up 11%
• Good profit growth from most Group businesses
• Astra impacted by weak Indonesian markets
• Hongkong Land property portfolio value increases 21%
'The outlook for the majority of our markets remains promising. Following the
excellent result in 2006, it may, however, be demanding to match the level of
growth in 2007 that has been seen in recent years.'
Henry Keswick, Chairman
7th March 2007
__________________________________________________________________________
Year ended 31st December
2006 2005 Change
US$m US$m %
__________________________________________________________________________
Underlying profit attributable to
shareholders* 533 463 +15
Profit attributable to shareholders 1,348 1,244 +8
Shareholders' funds 6,594 4,998 +32
__________________________________________________________________________
US$ US$ %
__________________________________________________________________________
Underlying earnings per share* 1.52 1.33 +14
Earnings per share 3.83 3.58 +7
Dividends per share 0.50 0.45 +11
Net asset value per share 18.65 14.27 +31
__________________________________________________________________________
* The Group uses 'underlying business performance' in its internal
financial reporting to distinguish between the underlying profits and
non-trading items, as more fully described in note 7 to the financial
statements. Management considers this to be a key measure and has
provided this analysis as additional information in order to provide
greater understanding of the Group's underlying business performance.
__________________________________________________________________________
The final dividend of USc40.00 per share will be payable on 16th May 2007,
subject to approval at the Annual General Meeting to be held on 10th March 2007,
to shareholders on the register of members at the close of business on 23rd
March 2007 and will be available in cash with a scrip alternative. The ex-
dividend date will be on 21st March 2007, and the share registers will be closed
from 26th to 30th March 2007, inclusive.
Jardine Matheson Holdings Limited
Preliminary Announcement of Results
For The Year Ended 31st December 2006
Performance
A generally favourable economic environment and good performances from a number
of Group companies in 2006 enabled Jardine Matheson to achieve a record
underlying profit of US$533 million, an increase of 15%. The turnover of the
Group including 100% of the turnover of associates and joint ventures was
US$27.1 billion, compared to US$24.1 billion in 2005.
Among the Group's associates and subsidiaries, Hongkong Land, Jardine Pacific,
Jardine Motors and Dairy Farm all produced good profit increases, but Jardine
Cycle & Carriage's earnings were lower. The investment in Rothschilds
Continuation made a valuable first contribution, and a first dividend was
received from Tata Industries.
The Group's financial position has continued to improve. Despite active
investment programmes, consolidated net debt excluding finance companies fell by
31% to US$1.2 billion, due to proceeds from disposals and careful cash flow
management. Property values again rose strongly in 2006, although not quite
matching the increases of the previous year, and together with the gains on
disposals led to a higher net profit of US$1,348 million. Shareholders' funds
increased 32% to US$6.6 billion.
The Board is recommending a final dividend of USc40.00 per share, representing
an overall increase of 11% for the full year.
Business Activity
Business confidence in Asia remained strong in 2006, driven in large part by the
continued growth in the Chinese economy. Moreover, the increasing sophistication
of China's markets is expanding the opportunities in sectors that are attractive
to the Group's service businesses, such as commercial and residential property,
hotel management, retail stores, motor dealerships and insurance broking.
The stability of the Group's earnings benefits from its broad business mix, not
only by commercial sector but also by geographic spread. Southeast Asia, for
example, accounted for some 40% of underlying profit in 2006, having more than
doubled its share over five years.
The removal of fuel subsidies in Indonesia in late 2005 led to a sharp increase
in inflation, higher interest rates and a fall in consumer confidence, which
affected Astra's motor related activities. Sentiment began to improve towards
the end of 2006, and the medium-term outlook remains positive. The steadiness of
the currency throughout the year was an encouraging feature.
In 2007 Jardine Matheson will mark the 175th anniversary of its founding as a
partnership in Canton in 1832. The Firm has experienced many business cycles and
political changes as it has survived and prospered in the region's volatile
markets, and the past twenty-five years have been no exception. The globalization
of commerce has led to Asia's markets maturing, making redundant the agency role
that was once the mainstay of many of the Group's operations. Jardine Matheson
has responded by investing in businesses where it could control its own destiny,
and has today established a portfolio of focused companies that are at the forefront
of their chosen markets; each well financed and possessing sound growth prospects.
These companies have continued to build their businesses over the past year.
Among the more notable examples, Hongkong Land expanded its property activities
on a substantial scale both regionally and into the residential sector; Dairy
Farm extended its banners across its Asian markets and has promising opportunities
in India and Vietnam; and the development of Mandarin Oriental's hotel portfolio
gathered pace with a record number of new developments and the reopening of the
refurbished Mandarin Oriental, Hong Kong.
Outlook
In conclusion, the Chairman, Henry Keswick said, 'The outlook for the majority
of our markets remains promising. Following the excellent result in 2006, it
may, however, be demanding to match the level of growth in 2007 that has been
seen in recent years.'
'Looking further ahead, Hongkong Land will recognize profits in the three years
from 2008 upon completion of residential properties already sold, and most of
our other businesses are also expected to perform well as they grow their
operations.'
Managing Director's Review
Jardine Matheson's underlying profit in 2006 was US$533 million, an increase of
15%, which was helped by property and pension gains in Jardine Motors and a
first dividend from Tata Industries. Underlying earnings per share rose 14% to
US$1.52.
Jardine Pacific produced a creditable improvement in earnings following good
performances from a number of its operations, most notably its construction
business. Jardine Motors also achieved an excellent result, benefiting from
property disposals and changes in pension liabilities in the United Kingdom,
while Jardine Lloyd Thompson's result was little changed in a year of
restructuring.
Among the Group's listed affiliates, Dairy Farm posted another good result with
all its major operations performing well, and Hongkong Land increased its
contribution as it benefited from rising net rental income and the acquisition
of MCL Land. At Mandarin Oriental, healthy markets and income from new hotels
offset the impact of the closure for renovation of its major Hong Kong property.
Jardine Cycle & Carriage's contribution, however, fell due to a reduction in
Astra's earnings. The Group's results also reflect a US$21 million contribution
from its 20% investment in Rothschilds Continuation and a dividend received by
Jardine Strategic from Tata Industries.
The Company's share of a 21% upward revaluation of Hongkong Land's portfolio in
2006 amounted to US$599 million, compared with US$647 million in 2005, and a
US$70 million increase was also recorded by Jardine Pacific. In accordance with
International Financial Reporting Standards, such revaluations of investment
properties are taken through the profit and loss account. The net profit of
US$1,348 million includes these revaluations together with non-trading items
such as gains on disposals in Jardine Motors, Jardine Pacific and Mandarin
Oriental as well as the advance disposal of shares in JPMorgan Chase underlying
the Company's exchangeable bond. This disposal produced a non-trading profit of
US$69 million, after allowing for the cost of ensuring availability of stock to
meet any conversions prior to bond redemption in September 2007.
In December, Hongkong Land raised US$269 million through the sale by its
wholly-owned subsidiary of some 3% of Hongkong Land's existing share capital to
Jardine Strategic at the prevailing market price. Jardine Strategic now has a
direct interest of 46% in Hongkong Land.
Jardine Pacific
Jardine Pacific's underlying profit from continuing businesses in 2006 increased
27% to US$103 million as the majority of its operations performed well,
particularly Gammon. In addition, an upward revaluation of the group's
residential property investment portfolio produced a gain of US$70 million. The
company's net profit was US$191 million. Shareholders' funds rose 10% to US$363
million at the year end, producing an underlying return of 30%. During 2006,
Jardine Pacific sold its interest in a Hong Kong mid-stream cargo handling joint
venture and minority shareholdings in both BALtrans and the River Trade
Terminal.
Financial information of Jardine Pacific's larger businesses is summarized
below:
Underlying profit Shareholders' funds
2006 2005 2006 2005
US$m US$m US$m US$m
____________________________________________________________________
Gammon 14 1 49 43
HACTL 33 33 100 109
Jardine Aviation Services 9 9 22 16
JEC 12 10 26 27
JOS 11 6 19 18
Jardine Property Investment 3 3 187 116
Jardine Restaurants 14 13 8 5
Jardine Schindler 12 13 29 29
Jardine Shipping Services 4 7 15 13
Other 3 - 15 11
Corporate (12) (14) (105) (91)
____________________________________________________________________
Continuing Businesses 103 81 365 296
Discontinued Businesses - 9 (2) 34
____________________________________________________________________
103 90 363 330
____________________________________________________________________
HONG KONG AIR CARGO TERMINALS ('HACTL') enjoyed record cargo volumes, but its
profit contribution was little changed at US$33 million due to higher operating
costs. HACTL has expressed its interest in developing a new cargo terminal at
Hong Kong International Airport and believes it is well qualified to deliver the
Airport Authority's requirements. JARDINE AVIATION SERVICES also benefited from
the increased activity at Hong Kong's airport producing a 7% increase in profit.
Weaker shipping freight rates led to a lower contribution of US$4 million from
JARDINE SHIPPING SERVICES.
Claims income from contracts completed in prior years and good progress in
projects in Macau enabled GAMMON to achieve a significantly improved result,
Jardine Pacific's share of which was US$14 million. The profit contribution from
JARDINE SCHINDLER of US$12 million was slightly down on 2005 due mainly to
increased losses in its subsidiary in Korea. JEC's earnings rose 13% to nearly
US$12 million as its operations in Hong Kong and Thailand performed well,
although it continued to face challenging markets in mainland China. In 2006 it
sold its 30% interest in Thorn Lighting to its joint venture partner.
JARDINE RESTAURANTS continued to achieve good earnings growth, up 12% at some
US$14 million, with a strong performance from its Pizza Hut operation in Hong
Kong. In Taiwan, it opened its first Long John Silver's restaurant. JOS recorded
a higher profit of US$11 million with an 8% increase in sales. RoomPlus, a self
storage business in Hong Kong, completed its first full year of operation and
recorded a small loss. COLLIERS HALIFAX produced an improved contribution from
its property activities in Japan.
Jardine Pacific will incur higher financing charges in 2007 and a number of its
businesses are facing more challenging conditions. Despite this, the group is
expected to maintain an excellent return on shareholders' funds.
Jardine Motors
Jardine Motors' continuing operations produced commendable performances
achieving an underlying net profit of US$63 million, up 62%. The result was
enhanced by gains from property sales and a change in pension and tax law in the
United Kingdom. The group's net profit for the year of US$104 million included a
non-trading gain of US$38 million arising from the sale of its 50% interest in
Appleyard Vehicle Contracts in the United Kingdom.
Deliveries by Zung Fu of the new S-Class, following its well received launch in
late 2005, increased the Mercedes-Benz share of the new car market in Hong Kong,
which reached 15% in 2006. The market for commercial vehicles in Hong Kong,
however, was softer, while competitive pressures led to a small loss from
Hyundai. The contributions from Zung Fu's service centres remained healthy and
its car parks business was steady. The Mercedes-Benz dealership in Macau
recorded increased deliveries. Zung Fu continued to expand its dealership
network in Southern China and achieved good growth in profitability with higher
sales volumes and service income. A new Mercedes-Benz centre was opened in
Foshan in January 2007, bringing the total to 11, and three additional sites
have been secured for further expansion in 2007.
Operating profits improved in the United Kingdom, despite a weaker car market,
due to a resilient sales performance, higher earnings from services and further
reductions in central overheads. In January 2007, a group of four Audi
dealerships was acquired, which is expected to be earnings enhancing.
Jardine Motors continues to build its market position in the United Kingdom,
Hong Kong and mainland China, but in 2007 its underlying profit will not benefit
from the same level of property gains.
Jardine Lloyd Thompson
Jardine Lloyd Thompson ('JLT') achieved a creditable performance in 2006 against
the background of challenging trading conditions and further weakening of the US
dollar. The turnover of its continuing operations, following disposals in the
United States, rose modestly to US$851 million. Underlying profit was maintained
at US$91 million, although net profit was lower at US$86 million. Non-trading
items included a curtailment gain following the closure of a defined benefit
scheme to reduce the group's pension exposure in the United Kingdom, offset by a
loss on the sale of the group's discontinued US operations.
The Risk & Insurance group, which accounts for more than 80% of JLT's revenue,
faced insurance rates under pressure and intense competition for market share.
Good performances from most of its retail operations, however, produced a 2%
growth in turnover despite the adverse dollar movement. In May, approval was
received to start operations in a 51%-owned subsidiary as an insurance and
re-insurance broker across mainland China. After the year end, the group's
associate SIACI announced a merger which should significantly strengthen its
position in France.
The Employee Benefits business in the United Kingdom performed well. Turnover
was 8% higher at US$141 million and the trading profit rose 15% to US$24
million. The business is developing product categories in response to market
changes as companies seek alternatives to defined benefit pension schemes.
In 2006, progress was made in the repositioning of JLT with the strengthening of
its senior management, the sale of underperforming operations in the United
States and the reorganization of its London market activities. Steps were also
taken to reduce costs. The benefits from these actions should begin to be seen
in 2007 and more fully in 2008.
Hongkong Land
Hongkong Land's net rental income from commercial property increased by 25% in
2006 as broad-based demand and reduced supply in Hong Kong's Central district
produced higher rents and capital values. Vacancy in its commercial portfolio
was maintained at 4.5% despite having added 2.8% with the completion of York
House. Earnings from residential property were higher, largely due to a first
contribution from the company's 77%-held affiliate in Singapore, MCL Land.
Overall, underlying profit for 2006 rose 31% to US$245 million.
The value of Hongkong Land's investment assets again rose in 2006 ending the
year 21% higher at US$11.7 billion, resulting in an adjusted net asset value per
share of US$4.76, up 23%. The group's net profit for 2006, including the
revaluation, was US$1,901 million.
Hongkong Land's strategy of broadening its commercial business regionally gained
momentum as it significantly increased its portfolio in Singapore. Its joint
venture development at One Raffles Quay in Singapore was fully let on completion
in October 2006, while at the adjacent Marina Bay Financial Centre joint venture
development, construction has begun on the first phase that includes 180,000 sq.
m of office space and 428 residential units. A 194,000 sq. m second phase is
also to be developed by the consortium.
Hongkong Land's reputation for quality in the commercial sector is also being
recognized in the residential market, as was demonstrated in the excellent
response to its new joint venture developments in Macau and Singapore. The
developments of MCL Land have also attracted strong interest. Response to the
launch of the final phase of Hongkong Land's joint venture development at
Central Park in Beijing was more subdued following measures announced by the
Government designed to dampen certain market sectors, while elsewhere in
mainland China construction began on the 650-unit Phase I of Bamboo Grove, a
joint venture in Chongqing.
The prospects for Hongkong Land are encouraging as the office leasing reversion
cycle in its Hong Kong portfolio will continue to enhance earnings, while the
retail element is expected to remain strong. This will be complemented in the
coming years by the recognition of profits on residential sales.
Dairy Farm
Dairy Farm's strategy has been to build leading retail businesses in Asia's
growing consumer markets, and it now has 27 operations in nine countries. The
group had another good year in 2006 with increases in both sales and earnings as
its operations benefited from its investment progamme and favourable economic
conditions in its major markets. Sales, including 100% of those of associates,
were up 9% to US$6.0 billion, and its underlying profit for the year rose by 11%
to US$211 million.
In North Asia, sales were 4% higher in 2006, and operating profit rose by 6%.
All major retail formats in Hong Kong produced improved operating results. In
Southern China, the group's 7-Eleven operation increased sales and reduced
losses. It ended the year with 284 stores, including the first franchised
outlets, and acquired a further 110 in March 2007. In Taiwan, IKEA incurred
significant pre-opening costs for two new large stores, but has laid the
foundation for future growth. Most divisions of Hong Kong restaurant associate,
Maxim's, achieved good results, with excellent progress being made by the Genki
Sushi chain.
In South Asia, Dairy Farm's businesses generally performed well. Sales rose 15%,
but profits were only 3% higher due to costs associated with the repositioning
of the Giant hypermarkets in Singapore. Active expansion programmes are being
pursued in Malaysia by Giant and the Guardian health and beauty stores, both of
which enjoyed substantial increases in sales and operating profit. The group's
operations in Indonesia have yet to produce the required returns, but are
showing some improvement and the medium-term prospects remain attractive. There
was an encouraging growth in sales in India in what is becoming an increasingly
competitive market. Dairy Farm acquired a small supermarket chain in Vietnam
following the receipt of a license to operate a number of stores on a
wholly-owned basis.
Dairy Farm's financial position remains sound and it has ample cash flow to fund
its ongoing investment requirements in its Asian markets.
Mandarin Oriental
Continued improvement in Mandarin Oriental's key markets and the contribution
from new hotels offset the impact on earnings arising from the nine month
closure for renovation of its Hong Kong flagship property. Underlying earnings
were US$45 million, compared with US$41 million in 2005 when Mandarin Oriental,
Hong Kong was open throughout the year.
Net profit in 2006 was US$80 million, including a gain of US$35 million on the
sale of The Mark hotel in New York. This compares with US$77 million in 2005,
which included a US$36 million gain on the disposal of a property interest in
Hawaii. A further gain of some US$16 million was realized in March 2007
following completion of the sale of half of the group's 50% equity interest in
Mandarin Oriental, New York.
There were strong results from the group's owned hotels as The Excelsior, Hong
Kong and its European properties benefited from higher room rates and increases
in occupancy. Its Tokyo hotel also improved significantly as its 2005 result had
included pre-opening costs. Mandarin Oriental, Hong Kong has been well received
since its reopening in September 2006, achieving a 50% increase in its average
room rate. The contribution from associates and joint ventures also rose,
largely due to impressive performances in Singapore and New York.
Mandarin Oriental's international expansion accelerated in 2006 with the
announcement of five new management contracts and the opening of its latest
hotel in Prague. In the first two months of 2007, luxury hotel developments were
announced in Guangzhou, Paris and Taipei. The group's portfolio now comprises 20
hotels with a further 14 under development, giving a total of 9,500 rooms in 20
countries.
Market demand is expected to remain strong in 2007, and Mandarin Oriental's
results will benefit from its renovated Hong Kong property. Over the longer
term, the group will see increasing contributions from its many hotels currently
under development.
Jardine Cycle & Carriage
Jardine Cycle & Carriage's underlying profit for 2006 fell by 29% to US$211
million. The prior year comparative included 13 months' contribution from Astra
required to align its accounting period and US$19 million from the group's
shareholding in MCL Land, which was distributed in specie in early 2006. Without
these elements, the decline would have been 18%.
Jardine Cycle & Carriage's consolidated net debt, excluding borrowing within
Astra's financial services operations, was slightly lower at US$600 million with
the proceeds from disposal of properties in Malaysia and the removal of MCL
Land's net debt being substantially offset by capital expenditure in Astra.
Poor market conditions in Indonesia, particularly in the automotive sector, led
to a material reduction in earnings at Astra, although the effect of the decline
on Jardine Cycle & Carriage's results was lessened by the strengthening of the
Rupiah against the US dollar. Astra's contribution, on a comparable 12 month
basis, was 18% lower at US$208 million.
The contribution from Jardine Cycle & Carriage's directly-held motor interests
increased marginally to US$32 million. Profits from its operations in Singapore
improved strongly with Mitsubishi and Mercedes-Benz performing well, offsetting
declines in Cycle & Carriage Bintang in Malaysia and PT Tunas Ridean in
Indonesia and the cessation of contribution from Australia. The new National
Automotive Policy in Malaysia impacted Cycle & Carriage Bintang, although the
efficiency of its balance sheet was enhanced following the payment of a special
dividend in October. Tunas Ridean suffered from the difficult conditions in
Indonesia.
Astra International
The Indonesian economy was affected by a sharp increase in inflation and high
interest rates following the removal of fuel subsidies in late 2005. Towards the
end of 2006 interest rates were lowered, leading to improvements in consumer
confidence. Within Astra's automotive operations, motor vehicle sales in 2006
were down 32%, although market share rose from 49% to 55% with a number of new
model launches. The decline in Astra's motorcycle sales was less severe at 12%
as volumes increased in the second half, albeit at lower margins, and its market
share was stable at some 53%.
Astra's financial services businesses, which primarily support its automotive
operations, declined in line with the market and recorded increases in doubtful
debt provisions. Its automotive component manufacturing and trading operations
were similarly affected. Earnings from Astra's agribusiness improved in US
dollar terms, but in Rupiah were flat as higher costs offset a 11% increase in
crude palm oil sales volumes and firmer prices. Nevertheless, the prospects
remain promising, and Astra is continuing to source land for new oil palm and
rubber plantations.
Its heavy equipment business, United Tractors, produced satisfactory growth in
contract mining with 20% increases achieved in both overburden removal and coal
extraction, although additional provisions for doubtful debts were required for
mining contracts. The company's overall profit was also affected by lower sales
of Komatsu equipment despite its market share remaining at 48%. In January
2007, its mining subsidiary acquired for US$34 million the rights to mine and
market the coal from concessions located in South Kalimantan.
In September, Astra increased its shareholding in Bank Permata from 31.6% to
44.5% in tandem with its partner, Standard Chartered Bank. Bank Permata produced
a marginal increase in profit, but further steps are being taken to improve
productivity and profitability to an acceptable level. In infrastructure,
Astra's investment in a toll road project performed satisfactorily. In July, it
acquired a 30% interest in the franchise for the Western Jakarta water utility
and is considering further infrastructure investments.
Astra's performance is expected to show improvement as Indonesian markets
continue to recover, although competitive pressures remain significant. In the
medium term, Astra's leadership in the automotive sector, its established market
positions in financial services, agribusiness and heavy equipment, and its
infrastructure investments, provide excellent opportunities for growth.
Further Interests
Rothschilds Continuation
In late 2005 Jardine Strategic acquired a 20% interest in Rothschilds
Continuation, an unlisted financial services holding company within the
Rothschild group whose interests include the investment bank N M Rothschild &
Sons. It contributed US$21 million to the Group's earnings in 2006 as its
investment banking operations benefited from the high level of M&A activity in
the London market. The group's other activities also showed improvement under a
new management team.
Tata Industries
Tata Industries is an unlisted Indian investment company in which Jardine
Strategic has a 20% shareholding. In June 2006, Tata Industries sold its largest
strategic investment, a 48% holding in IDEA Cellular Ltd., realizing a
substantial gain. The net proceeds were applied in part to debt reduction and to
the payment of a first dividend, of which Jardine Strategic's share was US$16
million, with the balance being retained for future investment.
Others
Edaran Otomobil Nasional, the Malaysian motor dealership group in which Jardine
Strategic holds a 20% interest, experienced a difficult year in 2006 reporting
only a modest net profit after tax of US$2.5 million. With the new National
Automotive Policy leading to increased competition, the group's operations were
impacted by the fall in market share of the Proton. The company is reviewing a
number of options to reposition the business, but in the short term its
prospects remain challenging.
Of Jardine Strategic's smaller investments, its 7% interest in The Bank of N. T.
Butterfield & Son in Bermuda has performed well and the valuation of the stake
has increased significantly. The value of the company's 7% shareholding in
Vietnamese bank, Asia Commercial Bank, has also enjoyed strong growth. The bank,
which was floated on the Hanoi Securities Trading Center in November 2006,
focuses on consumers and SMEs and has a network of 80 branches.
Anthony Nightingale
Managing Director
7th March 2007
______________________________________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2006
______________________________________________________________________________________________________________
Restated
2006 2005
_______________________________________ _______________________________________
Underlying Non- Underlying Non-
business trading business trading
performance items Total performance items Total
US$m US$m US$m US$m US$m US$m
_______________________________________ _______________________________________
Revenue (note 2) 16,281 - 16,281 11,929 - 11,929
Net operating costs (note 3) (15,274) 302 (14,972) (11,331) 155 (11,176)
_________ _________ _________ _________ _________ _________
Operating profit 1,007 302 1,309 598 155 753
Financing charges (234) - (234) (176) - (176)
Financing income 102 - 102 79 - 79
Net financing charges (132) - (132) (97) - (97)
Share of results of associates
and joint ventures (note 4) 439 748 1,187 499 837 1,336
_________ _________ _________ _________ _________ _________
Profit before tax 1,314 1,050 2,364 1,000 992 1,992
Tax (note 5) (252) (58) (310) (160) (13) (173)
_________ _________ _________ _________ _________ _________
Profit after tax 1,062 992 2,054 840 979 1,819
_________ _________ _________ _________ _________ _________
Attributable to:
Shareholders of
the Company 533 815 1,348 463 781 1,244
Minority interests 529 177 706 377 198 575
_________ _________ _________ _________ _________ _________
1,062 992 2,054 840 979 1,819
_________ _________ _________ _________ _________ _________
US$ US$ US$ US$
_________ _________ _________ _________ _________ _________
Earnings per share (note 6)
- basic 1.52 3.83 1.33 3.58
- diluted 1.51 3.75 1.32 3.55
_________ _________ _________ _________ _________ _________
______________________________________________________________________________________________________________
________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Balance Sheet
at 31st December 2006
________________________________________________________________________________
Restated
2006 2005
US$m US$m
________________________________________
Assets
Intangible assets 1,825 1,689
Tangible assets 2,931 2,404
Investment properties 271 179
Plantations 460 383
Associates and joint ventures 6,476 5,062
Other investments 597 686
Financing and other debtors 1,052 1,349
Deferred tax assets 119 103
Pension assets 174 152
_________ _________
Non-current assets 13,905 12,007
_________ _________
Stocks and work in progress 1,478 1,491
Trade, financing and other debtors 2,262 2,382
Current investments 3 -
Current tax assets 142 56
Bank balances and other liquid funds
- non-finance companies 2,355 1,503
- finance companies 173 187
2,528 1,690
_________ _________
6,413 5,619
Non-current assets classified as held
for sale (note 8) 60 690
_________ _________
Current assets 6,473 6,309
_________ _________
Total assets 20,378 18,316
_________ _________
Equity
Share capital 154 151
Share premium and capital reserves 29 21
Revenue and other reserves 7,303 5,607
Own shares held (892) (781)
_________ _________
Shareholders' funds (note 9) 6,594 4,998
Minority interests 4,509 3,876
_________ _________
Total equity 11,103 8,874
_________ _________
Liabilities
Long-term borrowings
- non-finance companies 2,074 2,631
- finance companies 723 1,005
2,797 3,636
Deferred tax liabilities 557 459
Pension liabilities 151 176
Non-current provisions 20 16
Other non-current liabilities 190 151
_________ _________
Non-current liabilities 3,715 4,438
_________ _________
Creditors and accruals 2,920 2,838
Current borrowings
- non-finance companies 1,522 619
- finance companies 954 1,169
2,476 1,788
Current tax liabilities 101 128
Current provisions 63 54
_________ _________
5,560 4,808
Liabilities directly associated with non-current
assets classified as held for sale (note 8) - 196
_________ _________
Current liabilities 5,560 5,004
_________ _________
Total liabilities 9,275 9,442
_________ _________
Total equity and liabilities 20,378 18,316
_________ _________
________________________________________________________________________________
________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Statement of Recognized Income and Expense
for the year ended 31st December 2006
________________________________________________________________________________
Restated
2006 2005
US$m US$m
_______________________________
Surpluses on revaluation of intangible assets - 458
Surpluses on revaluation of properties 120 77
Gains on revaluation of other investments 306 48
Actuarial gains on defined benefit pension plans 40 14
Net exchange translation differences 393 (84)
(Losses)/gains on cash flow hedges (13) 24
Tax on items taken directly to equity (71) (170)
________ _________
Net income recognized directly in equity 775 367
Transfer to profit and loss on disposal of other
investments (91) (20)
Transfer to profit and loss on disposal of subsidiary
undertakings, associates and joint ventures (3) (1)
Transfer to profit and loss in respect of
cash flow hedges 4 -
Profit after tax 2,054 1,819
________ _________
Total recognized income and expense for the year 2,739 2,165
________ _________
Attributable to:
Shareholders of the Company 1,681 1,399
Minority interests 1,058 766
________ _________
2,739 2,165
________ _________
Surpluses on revaluation of intangible assets represent the increase in fair
value attributable to the Group's previously held interests in Astra and PT Hero
Supermarket on the date they became subsidiary undertakings.
____________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2006
____________________________________________________________________________
Restated
2006 2005
US$m US$m
_______________________________
Operating activities
Operating profit 1,309 753
Depreciation and amortization 403 249
Other non-cash items (138) (21)
Decrease/(increase) in working capital 478 (377)
Interest received 95 55
Interest and other financing charges paid (212) (165)
Tax paid (362) (179)
_________ _________
1,573 315
Dividends from associates and joint ventures 377 303
Cash flows from operating activities 1,950 618
Investing activities
Purchase of Astra - 320
Purchase of other subsidiary undertakings
(note 11(a)) (55) (101)
Purchase of associates and joint ventures
(note 11(b)) (465) (302)
Purchase of other investments (note 11(c)) (94) (12)
Purchase of land use rights (17) (12)
Purchase of other intangible assets (6) -
Purchase of tangible assets (725) (458)
Purchase of investment properties (2) (18)
Purchase of plantations (22) (6)
Loans to associates, joint ventures and other - (13)
Sale of subsidiary undertakings (note 11(d)) 231 80
Sale of associates and joint ventures (note 11(e)) 101 181
Sale of other investments (note 11(f)) 480 40
Sale of land use rights 26 33
Sale of tangible assets 75 63
Sale of investment properties - 49
Cash flows from investing activities (473) (156)
Financing activities
Issue of shares 3 13
Capital contribution from minority shareholders 13 4
Drawdown of borrowings 7,611 9,735
Repayment of borrowings (8,008) (9,516)
Dividends paid by the Company (91) (76)
Dividends paid to minority shareholders (243) (199)
Cash flows from financing activities (715) (39)
Effect of exchange rate changes 45 (2)
_________ _________
Net increase in cash and cash equivalents 807 421
Cash and cash equivalents at 1st January 1,684 1,263
_________ _________
Cash and cash equivalents at 31st December 2,491 1,684
_________ _________
____________________________________________________________________________
____________________________________________________________________________
Jardine Matheson Holdings Limited
Analysis of Profit Contribution
for the year ended 31st December 2006
____________________________________________________________________________
2006 2005
US$m US$m
_______________________________
Group contribution
Jardine Pacific 103 90
Jardine Motors Group 67 47
Jardine Lloyd Thompson 28 29
Hongkong Land 85 65
Dairy Farm 131 118
Mandarin Oriental 27 21
Jardine Cycle & Carriage 16 23
Astra 101 127
Corporate and other interests (25) (57)
_________ _________
Underlying profit 533 463
Increase in fair value of investment properties 671 664
Other non-trading items 144 117
_________ _________
Profit attributable to shareholders 1,348 1,244
_________ _________
Analysis of Jardine Pacific's contribution
Gammon 14 1
HACTL 33 33
Jardine Aviation Services 9 9
JEC 12 10
JOS 11 6
Jardine Property Investment 3 3
Jardine Restaurants 14 13
Jardine Schindler 12 13
Jardine Shipping Services 4 7
Other interests 3 -
Corporate (12) (14)
_________ _________
103 81
Discontinued businesses - 9
_________ _________
103 90
_________ _________
Analysis of Jardine Motors Group's contribution
Hong Kong and Mainland China 36 24
United Kingdom 29 16
Corporate (2) (1)
_________ _________
63 39
Discontinued businesses 4 8
_________ _________
67 47
_________ _________
____________________________________________________________________________
____________________________________________________________________________
Jardine Matheson 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 2006 which have been prepared
in conformity with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by the
International Accounting Standards Board.
In 2006, the Group adopted the following amendments and interpretation to
existing standards which are relevant to its operations:
____________________________________________________________________________
IAS 21 (amended 2005), Net Investment in a Foreign Operation
IAS 39 (amended 2005), Cash Flow Hedge Accounting of Forecast Intragroup
Transactions
IAS 39 (amended 2005), The Fair Value Option
IAS 39 and IFRS 4 (amended 2005), Financial Guarantee Contracts
IFRIC 4, Determining whether an Arrangement contains a Lease
____________________________________________________________________________
There have been no changes to the accounting policies as a result of adoption of
the above amendments and interpretation.
Following completion of the initial accounting in respect of the acquisition of
Astra and Rothschilds, the comparative figures for 2005 have been restated
principally to reflect revisions to the provisional fair value of franchise
rights in Astra determined at the date of acquisition, and the consequential
change in the surplus on revaluation attributable to the Group's previously held
interest.
The Group's reportable segments are set out in note 2.
Certain comparative figures have been reclassified to conform with the current
year presentation.
2. Revenue
2006 2005
US$m US$m
________________________
By business:
Jardine Pacific 1,082 1,024
Jardine Motors Group 2,352 2,078
Dairy Farm 5,175 4,749
Mandarin Oriental 405 399
Jardine Cycle & Carriage 1,119 1,087
Astra 6,143 2,590
Other activities 5 2
_________ _________
16,281 11,929
_________ _________
3. Net Operating Costs
2006 2005
US$m US$m
________________________
Cost of sales (12,507) (9,131)
Other operating income 537 299
Selling and distribution costs (1,995) (1,593)
Administration expenses (854) (695)
Other operating expenses (153) (56)
_________ _________
(14,972) (11,176)
_________ _________
Net operating costs included the following gains/
(losses) from non-trading items:
Increase in fair value of investment properties 91 19
Sale and closure of businesses 127 96
Sale of investments 80 20
Revaluation of properties - 3
Sale of property interests 10 1
Restructuring of businesses (5) -
Other (1) 16
_________ _________
302 155
_________ _________
4. Share of Results of Associates and Joint Ventures
2006 2005
US$m US$m
________________________
By business:
Jardine Pacific 80 64
Jardine Motors Group 3 8
Jardine Lloyd Thompson 27 47
Hongkong Land 856 900
Dairy Farm 28 29
Mandarin Oriental 13 12
Jardine Cycle & Carriage 3 193
Astra 151 82
Corporate and other interests 26 1
_________ _________
1,187 1,336
_________ _________
Share of results of associates and joint ventures
included the following gains/(losses) from
non-trading items:
Increase in fair value of investment properties 752 814
Sale and closure of businesses (13) 6
Sale of investments 4 -
Pension curtailment 13 1
Buyout of minority interests in Jardine Lloyd - 18
Thompson
Revaluation of properties - 4
Restructuring of businesses (5) (2)
Other (3) (4)
_________ _________
748 837
_________ _________
Results are shown after tax and minority interests.
5. Tax
2006 2005
US$m US$m
_______________________
Current tax
- charge for the year (298) (147)
- over/(under) provision in prior years 3 (15)
Deferred tax (15) (11)
_________ _________
(310) (173)
_________ _________
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$15
million (2005: US$2 million).
6. Earnings Per Share
Basic earnings per share are calculated on profit attributable to shareholders
of US$1,348 million (2005: US$1,244 million) and on the weighted average number
of 352 million (2005: 347 million) shares in issue during the year. 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$1,324 million (2005: US$1,242 million), which is after adjusting for the
effects of the conversion of dilutive potential ordinary shares of subsidiary
undertakings, associates or joint ventures, and on the weighted average number
of 353 million (2005: 350 million) shares after adjusting for the number of
shares which are deemed to be issued for no consideration under the Senior
Executive Share Incentive Schemes based on the average share price during the
year.
Additional basic and diluted earnings per share are also calculated based on
underlying profit attributable to shareholders. A reconciliation of earnings is
set out below:
2006 2005
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per per per per
share share share share
US$m US$ US$ US$m US$ US$
___________________________________________________________________________
Profit attributable
to shareholders 1,348 3.83 3.75 1,244 3.58 3.55
Non-trading items (note 7) (815) (781)
________ _________
Underlying profit
attributable to
shareholders 533 1.52 1.51 463 1.33 1.32
________ _________
7. Non-trading Items
Non-trading items are separately identified to provide greater understanding of
the Group's underlying business performance. Items classified as non-trading
items include fair value gains or losses on revaluation of investment properties;
gains and losses arising from the sale of businesses, investments and properties;
impairment of non-depreciable intangible assets and other investments; provisions
for the closure of businesses; and other credits and charges of a non-recurring
nature that require inclusion in order to provide additional insight into
underlying business performance.
An analysis of non-trading items after interest, tax and minority interests is
set out below:
2006 2005
US$m US$m
________________________
Increase in fair value of investment
properties
- Hongkong Land 599 647
- other 72 17
671 664
Sale and closure of businesses
- Appleyard Vehicle Contracts 38 -
- EastPoint - 23
- Pacific Finance - 22
- The Mark 21 -
- Kahala Mandarin Oriental - 22
- motor operations 2 5
- insurance broking (8) 1
- other 6 6
59 79
Sale of investments 83 16
Pension curtailment 13 1
Buyout of minority interests in
Jardine Lloyd Thompson - 18
Revaluation of properties - 5
Sale of property interests 2 (1)
Restructuring of businesses (10) (2)
Other (3) 1
_________ _________
815 781
_________ _________
8. Non-current Assets Classified as Held for Sale
The major classes of assets and liabilities classified as held for sale are set
out below:
2006 2005
US$m US$m
______________________________
Intangible assets - 7
Tangible assets 4 72
Investment properties 2 24
Associates and joint ventures 14 34
Other investments - 28
Financing and other debtors 31 -
Deferred tax assets - 1
Current assets* 9 524
_________ _________
Total assets 60 690
_________ _________
Long-term borrowings - 81
Deferred tax liabilities - 1
Other non-current liabilities - 2
Current liabilities - 112
_________ _________
Total liabilities - 196
_________ _________
Non-current assets held for sale at 31st December 2006 principally related to
Mandarin Oriental's 25% interest in Mandarin Oriental, New York of US$14 million
and its mezzanine loan to the hotel of US$40 million. Non-current assets held
for sale at 31st December 2005 principally related to Mandarin Oriental's
interest in The Mark, New York, and Jardine Cycle & Carriage's interest in MCL
Land.
* Carrying amount in 2005 included bank balances and other liquid funds of US$26
million.
9. Shareholders' Funds
2006 2005
US$m US$m
________________________
At 1st January
- as previously reported 5,020 3,639
- revision of fair value adjustments (22) -
_________ _________
- as restated 4,998 3,639
Recognized income and expense attributable to
shareholders 1,681 1,399
Dividends (note 10) (160) (141)
Employee share option schemes
- value of employee services 8 7
- exercise of share options 3 13
Scrip issued in lieu of dividends 175 167
Equity component of convertible bonds
issued by an associate - 22
Change in attributable interests - (4)
Increase in own shares held (111) (104)
_________ _________
At 31st December 6,594 4,998
_________ _________
10. Dividends
2006 2005
US$m US$m
______________________
Final dividend in respect of 2005 of USc35.65
(2004: USc31.50) per share 216 187
Interim dividend in respect of 2006 of USc10.00
(2005: USc9.35) per share 61 56
_________ _________
277 243
Less Company's share of dividends paid on the
shares held by subsidiary undertakings (117) (102)
_________ _________
160 141
_________ _________
A final dividend in respect of 2006 of USc40.00 (2005: USc35.65) per share
amounting to a total of US$246 million (2005: US$216 million) is proposed by the
Board. The dividend proposed will not be accounted for until it has been
approved at the Annual General Meeting. The net amount after deducting the
Company's share of the dividends payable on the shares held by subsidiary
undertakings of US$104 million (2005: US$91 million) will be accounted for as an
appropriation of revenue reserves in the year ending 31st December 2007.
11. Notes to Consolidated Cash Flow Statement
2006 2005
(a) Purchase of other subsidiary undertakings US$m US$m
_______________________
Intangible assets 6 27
Tangible assets 15 47
Deferred tax assets - 5
Current assets 18 99
Long-term borrowings - (9)
Deferred tax liabilities (1) (8)
Pension liabilities (1) (9)
Current liabilities (9) (85)
Minority interests - 13
________ ________
Net assets 28 80
Adjustment for minority interests - (27)
________ ________
Net assets acquired 28 53
Goodwill 12 39
________ ________
Total consideration 40 92
Adjustment for deferred consideration and
carrying value of associates and joint ventures (7) (23)
Adjustment to fair values relating to previously
held interests - (4)
Cash and cash equivalents of subsidiary
undertakings acquired - (5)
________ ________
Net cash outflow 33 60
Purchase of shares in Jardine Cycle & Carriage 22 41
________ ________
55 101
________ ________
Net cash outflow in 2006 of US$33 million included US$6 million for Jardine
Motors Group's acquisition of dealerships in the United Kingdom, and US$17
million for Dairy Farm's store acquisitions in Malaysia and Vietnam.
Net cash outflow in 2005 of US$60 million included US$39 million for acquisition
of an additional 32.3% interest in PT Hero Supermarket in Dairy Farm, and US$7
million for an additional 30% interest in Republic Auto and US$8 million for an
additional 30% interest in Century Gardens in Jardine Cycle & Carriage.
(b) Purchase of associates and joint ventures in 2006 included US$26 million,
US$26 million, US$19 million and US$98 million for Astra's interest in Toyota
Astra Financial Services, PT PAM Lyonnaise Jaya, Astra Daihatsu Motor and an
additional 12.95% interest in Bank Permata respectively, and Jardine Strategic's
increased interest in Hongkong Land of US$289 million. Purchase of associates
and joint ventures in 2005 included US$21 million for increased interest in
Landmarks Land and Properties in Jardine Cycle & Carriage, US$15 million for
Astra's interest in PT Marga, US$71 million for increased interest in Hongkong
Land and US$187 million for a 20% interest in Rothschilds in Jardine Strategic.
(c) Purchase of other investments in 2006 included US$80 million for
Astra's purchase of securities.
2006 2005
(d) Sale of subsidiary undertakings US$m US$m
_______________________
Intangible assets 12 4
Tangible assets 94 -
Investment properties 24 -
Associates and joint ventures 35 -
Financing and other debtors 1 -
Deferred tax assets 1 -
Current assets 626 167
Long-term borrowings (100) -
Deferred tax liabilities (2) -
Current liabilities (207) (57)
________ ________
Net assets 484 114
Adjustment for minority interests (262) -
________ ________
Net assets disposed of 222 114
Cumulative exchange translation differences (8) -
Profit on disposal 88 25
________ ________
Sale proceeds 302 139
Adjustment for deferred consideration 1 -
Adjustment for carrying value of
associates and joint ventures (14) -
Tax and other expenses paid on disposals - (7)
Cash and cash equivalents of subsidiary
undertakings disposed of (58) (52)
________ ________
Net cash inflow 231 80
________ ________
Sale proceeds in 2006 of US$302 million included US$99 million from Mandarin
Oriental's sale of its interest in The Mark, New York, US$28 million from
Astra's partial sale of its interest in Aisin and US$163 million from Jardine
Strategic's sale of its interest in MCL Land.
Sale proceeds in 2005 of US$139 million included US$29 million from Jardine
Pacific's sale of its interest in EastPoint and US$96 million from Dairy Farm's
sale of its interest in Hartanah Progresif, a property-owning subsidiary
undertaking.
(e) Sale of associates and joint ventures in 2006 included US$72 million from
Jardine Motors Group's sale of its interest in Appleyard Vehicle Contracts. Sale
of associates and joint ventures in 2005 included US$59 million from sale of
Pacific Finance in Jardine Pacific and US$97 million from sale of Kahala
Mandarin Oriental in Mandarin Oriental.
(f) Sale of other investments in 2006 included US$31 million from Jardine
Pacific's sale of its interest in BALtrans, US$27 million from Astra's sale of
securities and US$407 million from sale of the Group's interest in JPMorgan
Chase. Sale of other investments in 2005 included US$36 million from Jardine
Strategic's sale of its interest in EON Capital.
12. Capital Commitments, Financial Guarantees and Contingent Liabilities
2006 2005
US$m US$m
_________________________
Capital commitments 202 310
________ ________
Financial guarantees in respect of facilities
made available to associates and joint ventures 70 78
________ ________
Financial guarantees in respect of facilities made available to associates and
joint ventures are stated at their total respective contracted amounts. It is
probable that the Group has no obligations under such guarantees.
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.
13. Post Balance Sheet Event
In December 2006, Mandarin Oriental announced that it had entered into an
agreement to sell half of its investment in Mandarin Oriental, New York reducing
its interest in the hotel from 50% to 25%. The sale was completed in March 2007
resulting in a profit after tax of approximately US$16 million.
The final dividend of USc40.00 per share will be payable on 16th May 2007,
subject to approval at the Annual General Meeting to be held on 10th May 2007,
to shareholders on the register of members at the close of business on 23rd
March 2007, and will be available in cash with a scrip alternative. The
ex-dividend date will be on 21st March 2007, and the share registers will be
closed from 26th to 30th March 2007, 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 27th April 2007. The Sterling equivalent of
dividends declared in United States Dollars will be calculated by reference to a
rate prevailing on 2nd May 2007. 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., Limited
Philip Hawkins 020 7816 8136
GolinHarris
Kennes Young (852) 2501 7987
Weber Shandwick
Richard Hews/ Helen Thomas 020 7067 0700
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31st December 2006 can be accessed
through the Internet at 'www.jardines.com'.
This information is provided by RNS
The company news service from the London Stock Exchange
FR SSUSAWSWSEED