Interim Results
Jardine Matheson Hldgs Ld
12 September 2006
To: Business Editor 12th September 2006
For immediate release
The following announcement was today issued to the London Stock Exchange.
Jardine Matheson Holdings Limited
Interim Results for the Six Months ended 30th June 2006
Highlights
• Good performances from most Group businesses
• Astra's result affected by weak Indonesian motor markets
• Hongkong Land property portfolio value increases 10%
• Interim dividend up 7% to USc10.00 per share
'The majority of Jardine Matheson's businesses are expected to perform well
during the remainder of the year, though the extent of an improvement in Astra's
motor and consumer finance operations in Indonesia remains unclear.'
Henry Keswick, Chairman
12th September 2006
Results
________________________________________________________________________________
(unaudited)
Six months ended 30th June
2006 2005 Change
US$m US$m %
________________________________________________________________________________
Underlying profit attributable to
shareholders* 228 232 -2
Profit attributable to shareholders 550 672 -18
Shareholders' funds+ 5,710 4,999 +14
________________________________________________________________________________
US$ US$ %
________________________________________________________________________________
Underlying earnings per share* 0.65 0.67 -3
Earnings per share 1.57 1.95 -19
Net asset value per share+ 16.18 14.27 +13
________________________________________________________________________________
USc USc %
________________________________________________________________________________
Interim dividend per share 10.00 9.35 +7
________________________________________________________________________________
* The basis of calculation is set out in note 6 to the condensed financial
statements.
+ At 30th June 2006 and 31st December 2005, respectively. Net asset value per
share is based on the book value of shareholders' funds.
The interim dividend of USc10.00 per share will be payable on
22nd November 2006 to shareholders on the register of members at the close of
business on 29th September 2006 and will be available in cash with a scrip
alternative. The ex-dividend date will be on 27th September 2006, and the
share registers will be closed from 2nd to 6th October 2006, inclusive.
- more -
Jardine Matheson Holdings Limited
Interim Results for the Six Months ended 30th June 2006
Overview
The first half of 2006 saw most of the Group's businesses produce good results
despite rising interest rates and a high oil price creating challenges in the
business environment. The overall result was, however, affected by a reduced
contribution from Astra.
Results
The Group's revenue for the first six months of 2006 was 71% higher at US$7.9
billion, primarily due to the consolidation of Astra, which became a subsidiary
in the second half of 2005. The Company's underlying net profit was US$228
million, a decline of 2% over the same period in 2005. Underlying earnings per
share were 3% lower at US$0.65. The 2005 figures were, however, flattered by
gains on mark to market foreign exchange hedging contracts, excluding which
underlying net profit in the first half of 2006 grew 8%.
In accordance with International Financial Reporting Standards, the Company's
share of any revaluations in Hongkong Land's investment property portfolio is
taken through the profit and loss account. A 10% upward revaluation of the
portfolio was recorded at the half year, compared with a 19% increase in the
same period in 2005.
Of the Group's wholly-owned subsidiaries, Jardine Pacific achieved strong
earnings growth as profitability improved in its construction business. Jardine
Motors also produced an excellent result. Among the Group's major quoted
subsidiaries, Dairy Farm posted another good result with all its major
operations performing well; Mandarin Oriental benefited from healthy markets and
contributions from new hotels, although its profit was lower due to the closure
for renovation of its major Hong Kong property; while Jardine Cycle & Carriage's
earnings performance suffered from the reduced contribution from Astra. Of the
Group's principal equity-accounted affiliates, Hongkong Land's increased
contribution was due mainly to its rising net rental income and the acquisition
of MCL Land. Jardine Lloyd Thompson turned in a little changed performance in
difficult conditions. The Group's results were also enhanced by an encouraging
first contribution from its 20% investment in Rothschilds Continuation and by
lower financing charges.
An increased interim dividend of USc10.00 per share has been declared.
Business Performance
The marked improvement in profitability at Gammon was the main reason for
Jardine Pacific's profit growth. The longer-term future of HACTL is still
uncertain due to the continuing discussions on the future cargo handling
capacity requirements at Hong Kong's international airport. Jardine Pacific
streamlined its portfolio further with the sale of its minority interests in BA
Ltrans and River Trade Terminal during the period and its joint-venture interest
in a mid-stream cargo handling operation in August 2006.
In Southern China, Jardine Motors has continued its development of Mercedes-Benz
dealerships, which has led to a significant improvement in profitability, while
in Hong Kong it is benefiting from good demand for the new Mercedes-Benz
S-Class. In July, it sold its joint-venture vehicle contracts business in the
United Kingdom.
There was a further expansion of Dairy Farm's South Asian operations where it is
maximizing the growth potential of the 'Giant' hypermarket format. Progress is
also being made with the remodelling of its formats in India, and opportunities
are being pursued in Thailand, Vietnam and Brunei. In North Asia, its 7-Eleven
chain in Guangdong Province continues to expand and has reached 250 outlets. The
IKEA business in Taiwan is incurring costs in its expansion programme as it
opens further large stores. Dairy Farm's Hong Kong restaurant associate,
Maxim's, did well to produce a good profit recovery.
Jardine Cycle & Carriage saw its results impacted by the economic slowdown in
Indonesia, which had a severe effect on Astra's motor sales and related consumer
finance operations. The recent lowering of interest rates in Indonesia was a
positive move, but it is too early to predict the extent of a recovery in
consumer confidence. Nevertheless, the medium-term outlook for Astra remains
promising. Jardine Cycle & Carriage's motor operations in Singapore are
performing well, but its dealership interests in Malaysia and Indonesia are
facing challenging markets.
The earnings of Mandarin Oriental were impacted by the temporary closure of
Mandarin Oriental, Hong Kong for renovation during the first half of 2006,
although the effect was mitigated in part by good performances elsewhere. Its
balance sheet was strengthened following the completion of the sale of The Mark
hotel in New York. Mandarin Oriental's development strategy remains on course
with three new hotel management contracts announced in the period, and the group
now has 21 hotels in operation and another ten under development.
Hongkong Land benefited from further rises in Hong Kong office rents and values
in the first half of the year, and its rental reversions are set to remain
positive. Its latest office building in Hong Kong's Central district, York
House, will be ready for occupancy in the fourth quarter, and its joint-venture
commercial developments in Singapore are progressing well. The acquisition of a
77% interest in Singapore-listed residential property developer, MCL Land, was
completed in February and income from its development projects will start to
benefit Hongkong Land's earnings fully in 2007. Elsewhere, the group is active
with residential development projects in mainland China, Hong Kong and Macau.
The new management team at Jardine Lloyd Thompson has made progress with the
review of operations and strategic positioning of its businesses instigated in
response to regulatory and structural changes in the industry. Some changes are
already being made, including the agreed sale of most of its businesses in the
United States, and the benefits should begin to be seen in 2007 and 2008.
The group received approval in May to commence activities as an insurance and
reinsurance broker across mainland China in a 51%-owned joint venture.
Rothschilds Continuation's investment banking operations took full advantage of
active demand for their advice on mergers and acquisitions, enabling the group
to produce a satisfactory overall performance.
Outlook
In conclusion, the Chairman, Henry Keswick said, 'The majority of Jardine
Matheson's businesses are expected to perform well during the remainder of the
year, though the extent of an improvement in Astra's motor and consumer finance
operations in Indonesia remains unclear.'
Operating Review
Jardine Pacific
Jardine Pacific's underlying profit for the first half increased by 24% to US$46
million, due largely to a marked improvement at Gammon. Excluding businesses
sold in 2005 the increase would have been 38%. Overall, the operating
environment for Jardine Pacific's businesses remains positive and its outlook
for the second half is encouraging.
HACTL performed in line with last year as cargo throughput remained steady at
Hong Kong's international airport, although the longer-term prospects for the
business remain uncertain due to the continuing discussions over proposed
increases in cargo handling capacity at the airport. JARDINE AVIATION SERVICES
had a good first half as flight frequencies increased by over 10%, but JARDINE
SHIPPING SERVICES continued to suffer from the downward trend in freight rates.
The group sold its minority shareholdings in BALtrans and River Trade Terminal
during the period and its interest in a mid-stream cargo handling joint venture
in August 2006.
GAMMON benefited from the receipt of claims income from contracts completed in
prior periods as well as from good progress in its projects in Macau. JARDINE
SCHINDLER's earnings were at a similar level to last year, although a strong
order book means that the outlook for the remainder of the year is positive.
JARDINE ENGINEERING CORPORATION's earnings were slightly down due to slower
sales in mainland China.
JARDINE ONESOLUTION recorded an improved profit, and JARDINE RESTAURANTS
continued to achieve good earnings growth from its Pizza Hut operations in Hong
Kong and Taiwan. A good performance from its leasing division led to a higher
result for Colliers Halifax in Japan. Central finance costs rose slightly due to
higher interest rates.
Jardine Motors Group
Jardine Motors' underlying net profit from continuing businesses for the six
months rose 27% to US$28 million.
In Hong Kong, Zung Fu benefited from the deliveries of new Mercedes-Benz models
launched towards the end of 2005 and increased its market share. Its service
centres also continued to do well. The performance of its Hyundai passenger car
franchise was steady despite tough competition in the product segment. A
significant improvement in profitability was achieved in its Mercedes-Benz
operations in Southern China where a strong growth in volumes was a reflection
of the buoyant market.
Despite a weaker new car market in the United Kingdom, the group's dealerships
produced increased earnings helped by a good used car performance, further
overhead reductions and lower financing charges. The net profit, however, was
lower than the first half of 2005, which had benefited from the release of
property provisions. The vehicle leasing joint venture, Appleyard Vehicle
Contracts, performed in line with the prior year, and in July 2006 the business
was sold at a profit of some US$35 million, which will be recognized in the
results for the full year.
Jardine Lloyd Thompson
Jardine Lloyd Thompson's turnover for the first six months was up 4% at £260
million (US$467 million). Underlying profit before tax was largely unchanged at
£47 million (US$84 million) as higher investment income compensated for the
effect of lower trading profits. Underlying diluted earnings per share were 8%
lower.
Management has made progress in a review of the operations and strategic
positioning of the group's businesses, of which the full benefits should be
achieved progressively over the next two years. Agreement has already been reached
for the sale of most of the group's businesses in the United States, which is
expected to complete by 31st October. The group is also addressing its pension
deficit and is proposing to replace its defined benefit pension scheme
in the United Kingdom with a defined contribution scheme.
Risk & Insurance increased its turnover by 5%, but the trading margin fell due
to declining premium rates and intense competition for market share. Turnover
was stable in Risk Solutions, where margins are also under pressure and a new
management team is now in place. Most of the group's other operations produced
satisfactory performances, with strong showings from the specialist wholesale
and Asian operations. In May, approval was received to commence business as an
insurance and reinsurance broker across mainland China in a 51%-owned joint
venture.
Employee Benefits in the United Kingdom performed well. Client retention
remained strong and turnover increased 9%, while the trading margin again
improved.
Dairy Farm
Dairy Farm achieved good results in most of its major markets in the first six
months in a trading environment that was generally favourable. Sales, including
associates, increased by 8% to US$2.9 billion, while net profit rose 13% to
US$86 million. Most of Dairy Farm's businesses are continuing to trade well and
the prospects are positive for the remainder of the year.
The South Asian businesses achieved good growth in sales and profit, up 16% and
12% respectively, as Malaysia and Singapore performed well and Indonesia
continued to improve. Dairy Farm now operates 44 Giant hypermarkets in the
region, and a further 16 are planned for the second half. In Malaysia,
regulatory approvals received for additional hypermarket and health and beauty
outlets allow for further growth in that market, while 7-Eleven in Singapore is
to operate convenience stores located at Shell petrol stations. The group is
making progress in India with the remodelling and expansion of its operations,
while its fledgling health and beauty venture in Thailand opened seven new
stores to finish the period with ten outlets. Opportunities are also being
pursued in Vietnam and Brunei.
Sales in North Asia increased by 5%. There were good performances from its
operations in Hong Kong, and its supermarkets in Taiwan produced an improved
result. In Guangdong Province, 7-Eleven continued to expand and reached 250
stores at the end of June. The group's South Korean associate, Olive Young,
achieved satisfactory gains in like-for-like sales. IKEA increased its profit in
Hong Kong, but the result from Taiwan was held back by significant pre-opening
expenses for a new large store in Taipei. Dairy Farm's Hong Kong-based
restaurant associate, Maxim's, enjoyed a strong profit increase as a recovery in
its Chinese restaurants was complemented by good contributions from Starbucks
and the newly-acquired Genki Sushi business.
Hongkong Land
Hongkong Land's underlying profit rose 11% to US$117 million in the first half
of 2006 as net rental income rose strongly on positive reversions. Residential
profits from existing projects were lower on fewer completions, although this
was more than compensated for by the first contribution from MCL Land. The
overall result also reflected higher interest rates and increased debt levels
following the investment in MCL Land. The value of the group's portfolio
increased by a further 10% during the period to US$10.8 billion, although the
pace of growth is slowing.
High levels of occupancy continued to underpin the commercial property market in
Hong Kong's Central district and although the rate of rental increase is
moderating Hongkong Land's rent reversions are set to remain strongly positive.
At the end of June the vacancy in its office portfolio was below 5% and its
retail portfolio was fully let. The prospects are good for the letting of York
House, due to complete in the fourth quarter. In Singapore, the group's
one-third owned development, One Raffles Quay, is now almost entirely committed
prior to full completion in the fourth quarter. The neighbouring Business and
Financial Centre site, acquired by the same consortium, has received approval of
its masterplan and construction should begin later in the year.
MCL Land made a useful profit contribution and has reported good progress in
both sales and site acquisitions.
Construction of the third phase of the group's joint-venture residential
development in Beijing is nearing completion, the profits from which will be
recognized when the units are handed over next year; work has also begun on the
fourth phase. In Macau, Hongkong Land's joint-venture residential and commercial
development has also begun construction, with completion projected for 2008/
2009.
Mandarin Oriental
Market conditions remained favourable for Mandarin Oriental as room rates
benefited from growing demand and limited new supply. Profit attributable to
shareholders, excluding gains from disposals, was US$14 million in the first
half of 2006 compared with US$19 million in the same period in 2005. The
temporary closure for renovation of Mandarin Oriental, Hong Kong, has affected
results, although the impact was partly offset by growing contributions from
other properties. The completion of the sale of The Mark hotel in New York at a
profit of US$35 million enhanced the group's financial position. Revenues will
continue to be affected by the Hong Kong renovation for the remainder of 2006,
but overall market conditions are expected to remain good.
The Excelsior, Hong Kong and the group's European properties benefited from
rising average rates and strong demand. The contribution from its associates and
joint ventures also increased with stronger performances in Macau, Bangkok and
New York, while its Singapore hotel also produced significantly improved results
following extensive renovations that were completed in the first half of 2005.
Mandarin Oriental, Hong Kong is scheduled to reopen partially in late September
with most of the public areas complete and the full complement of rooms becoming
available in stages by the year end. A 99-room hotel in Prague will also be
opened in September. A further three new management projects were announced by
Mandarin Oriental in the first half. A luxury resort on Hainan Island in China
is scheduled to open in 2007, followed by properties in Barcelona and Dallas.
Further opportunities are under consideration as Mandarin Oriental continues to
develop as one of the world's leading luxury hotel groups.
Jardine Cycle & Carriage
Jardine Cycle & Carriage's underlying profit after tax and minority interests
for the period declined by 38% to US$96 million. Astra's results were impacted
by weak consumer demand for motors and its contribution was 32% lower at US$99
million. Earnings from the group's other motor operations at US$13 million were
23% down due to a reduced profit in PT Tunas Ridean, its 37%-owned Indonesian
associate, and the absence of a contribution from Australia. The contribution
from property also ceased following the distribution in specie in January 2006
of the group's interest in MCL Land.
Weak demand in Indonesia saw the market for motor cars decline by 49% and for
motorcycles by 26%. Astra's market share for motor cars rose from 46% to 56%,
supported by Toyota's strong range and the introduction of new models, but its
market share for motorcycles was slightly lower at 50%. Astra's related consumer
finance activities experienced a similar decline and have increased their
provisions for doubtful debts.
Within Astra's non-automotive activities, United Tractors' contract coal mining
operations performed well, increasing overburden removal by 32% and coal
extraction by 23%, but sales of Komatsu heavy equipment fell 25% on lower demand
from the mining sector. Net income from agribusiness grew 8% as Astra Agro
Lestari raised its crude palm oil sales by 23% and benefited from firmer prices.
In infrastructure, the result from Astra's small investment in a toll road was
satisfactory. On 7th September 2006, Astra announced that in partnership with
Standard Chartered Bank, each is investing a further US$97 million to acquire
additional shares in PT Bank Permata Tbk, thereby increasing their respective
shareholdings from 31.6% to 44.5%.
Jardine Cycle & Carriage's Malaysian motor operation, Cycle & Carriage Bintang,
saw its sales impacted by the introduction of a new national automotive policy
that caused considerable disruption to the market. PT Tunas Ridean also suffered
from weak demand and additional doubtful debt provisions. The Singapore motor
operations, however, performed well with good growth from Mitsubishi as
passenger car sales increased by 41%. Sales of Mercedes-Benz benefited from the
launch of the new S-Class and rose 6%. Sales of Kia also rose 6%. The group has
been appointed as the distributor for Citroen in Singapore with effect from 1st
October 2006.
_____________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
_____________________________________________________________________________________
Year
(unaudited) ended
Six months ended 31st
30th June December
2006 2005 2005
US$m US$m US$m
___________________________________________________
Revenue (note 2) 7,878 4,608 11,929
Cost of sales (6,046) (3,555) (9,131)
________ ________ ________
Gross profit 1,832 1,053 2,798
Other operating income 228 148 356
Selling and distribution costs (978) (682) (1,593)
Administration expenses Other (436) (227) (695)
operating expenses (64) (11) (56)
________ ________ ________
Operating profit (note 3) 582 281 810
Financing charges (110) (53) (154)
________ ________ ________
Share of results of associates
and joint ventures excluding
change in fair value of
investment properties 208 276 523
Increase in fair value of
investment properties 360 471 814
________ ________ ________
Share of results of
associates and joint
ventures (note 4) 568 747 1,337
________ ________ ________
Profit before tax 1,040 975 1,993
Tax (note 5) (157) (56) (173)
________ ________ ________
Profit for the period 883 919 1,820
________ ________ ________
Attributable to:
Shareholders of the Company 550 672 1,245
Minority interests 333 247 575
________ ________ ________
883 919 1,820
________ ________ ________
___________________________________________________
US$ US$ US$
___________________________________________________
Earnings per share (note 6)
- basic 1.57 1.95 3.59
- diluted 1.53 1.93 3.55
Underlying earnings per
share (note 6)
- basic 0.65 0.67 1.33
- diluted 0.65 0.67 1.32
____________________________________________________
_____________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Balance Sheet
_____________________________________________________________________________________
(restated)
(unaudited) At 31st
At 30th June December
2006 2005 2005
US$m US$m US$m
___________________________________________________
Assets
Intangible assets 1,743 885 1,690
Tangible assets 2,610 1,428 2,404
Investment properties 179 157 179
Plantations 413 - 383
Associates and joint ventures 5,498 4,614 5,062
Other investments 877 615 686
Financing and other debtors 1,141 57 1,347
Deferred tax assets 116 57 103
Pension assets 150 135 152
________ ________ ________
Non-current assets 12,727 7,948 12,006
________ ________ ________
Properties for sale - 391 -
Stocks and work in progress 1,447 812 1,491
Trade, financing and other debtors 2,441 672 2,384
Current tax assets 83 14 56
Bank balances and other
liquid funds ________ ________ ________
- non-finance companies 1,693 1,542 1,503
- finance companies 189 - 187
________ ________ ________
1,882 1,542 1,690
________ ________ ________
5,853 3,431 5,621
Non-current assets
classified as held for
sale (note 7) 39 149 690
________ ________ ________
Current assets 5,892 3,580 6,311
________ ________ ________
Total assets 18,619 11,528 18,317
________ ________ ________
(Consolidated Balance Sheet continued on page 12)
_____________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Balance Sheet (continued)
_____________________________________________________________________________________
(restated)
(unaudited) At 31st
At 30th June December
2006 2005 2005
US$m US$m US$m
___________________________________________________
Equity
Share capital 153 150 151
Share premium and capital reserves 25 11 21
Revenue and other reserves 6,405 4,781 5,608
Own shares held (873) (756) (781)
________ ________ ________
Shareholders' funds (note 8) 5,710 4,186 4,999
Minority interests 4,070 1,836 3,876
________ ________ ________
Total equity 9,780 6,022 8,875
________ ________ ________
Liabilities
Long-term borrowings
________ ________ ________
- non-finance companies 2,375 2,667 2,631
- finance companies 825 - 1,005
________ ________ ________
3,200 2,667 3,636
Deferred tax liabilities 466 182 459
Pension liabilities 191 138 176
Non-current provisions 17 5 16
Other non-current liabilities 154 19 151
________ ________ ________
Non-current liabilities 4,028 3,011 4,438
________ ________ ________
Creditors and accruals 2,779 1,850 2,838
Current borrowings
________ ________ ________
- non-finance companies 806 522 619
- finance companies 1,027 - 1,169
________ ________ ________
1,833 522 1,788
Current tax liabilities 145 74 128
Current provisions 53 48 54
________ ________ ________
4,810 2,494 4,808
Liabilities directly associated
with non-current assets
classified as held for sale
(note 7) 1 1 196
________ ________ ________
Current liabilities 4,811 2,495 5,004
________ ________ ________
Total liabilities 8,839 5,506 9,442
________ ________ ________
Total equity and liabilities 18,619 11,528 18,317
________ ________ ________
_____________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Statement of Recognized Income and Expense
_____________________________________________________________________________________
(restated)
(unaudited) Year
Six months ended
ended 31st
30th June December
2006 2005 2005
US$m US$m US$m
_____________________________________________
Surpluses on revaluation of
intangible assets - 2 458
Surpluses on revaluation of properties - 2 77
Gains/(losses)on revaluation of other
investments 208 (27) 48
Actuarial (losses)/gains on defined
benefit pension plans (10) - 14
Net exchange translation differences 225 (100) (84)
Gains on cash flow hedges 2 19 24
Tax on items taken directly to equity 3 (1) (170)
________ ________ ________
Net income/(expense) recognized
directly in equity 428 (105) 367
Transfer to profit and loss on
disposal of other investments (8) (20) (20)
Transfer to profit and loss on
disposal of subsidiary undertakings,
associates and joint ventures 1 (1) (1)
Transfer to profit and loss in
respect of cash flow hedges 2 3 -
Profit for the period 883 919 1,820
________ ________ ________
Total recognized income and
expense for the period 1,306 796 2,166
________ ________ ________
Attributable to:
Shareholders of the Company 777 597 1,401
Minority interests 529 199 765
________ ________ ________
1,306 796 2,166
________ ________ ________
Surpluses on revaluation of intangible assets represent the increase in fair
value attributable to the Group's previously held interests in Astra and PT Hero
Supermarket on the date they became subsidiary undertakings.
_____________________________________________________________________________________
Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
_____________________________________________________________________________________
(unaudited) Year
Six months ended
ended 31st
30th June December
2006 2005 2005
US$m US$m US$m
_____________________________________________
Operating activities
Operating profit 582 281 810
Interest income (46) (18) (56)
Depreciation and amortization 194 83 249
Other non-cash items 7 (74) (38)
Decrease/(increase)in working capital 185 (119) (361)
Interest received 45 21 55
Interest and other financing charges paid (105) (67) (165)
Tax paid (185) (37) (179)
________ ________ ________
677 70 315
Dividends from associates and
joint ventures 236 110 303
________ ________ ________
Cash flows from operating activities 913 180 618
Investing activities
________ ________ ________
Purchase of subsidiary undertakings
(note 10(a)) (31) (25) 219
Purchase of associates and
joint ventures (note 10(b)) (45) (133) (302)
Purchase of other investments (5) (4) (12)
Purchase of land use rights (4) (1) (12)
Purchase of tangible assets (363) (90) (458)
Purchase of investment properties (2) (8) (18)
Purchase of plantations (8) - (6)
Loans to associates, joint
ventures and other - (13) (13)
Sale of subsidiary undertakings
(note 10(c)) 272 (6) 80
Sale of associates and joint ventures
(note 10(d)) 10 118 181
Sale of other investments (note 10(e)) 46 37 40
Sale of land use rights 8 - 33
Sale of tangible assets 28 8 63
Sale of investment properties - 45 49
________ ________ ________
Cash flows from investing activities (94) (72) (156)
Financing activities
________ ________ ________
Issue of shares 2 7 13
Capital contribution from minority
shareholders 10 4 4
Drawdown of borrowings 4,629 4,801 9,735
Repayment of borrowings (5,171) (4,435) (9,516)
Dividends paid by the Company (71) (59) (76)
Dividends paid to minority shareholders (77) (152) (199)
________ ________ ________
Cash flows from financing activities (678) 166 (39)
Effect of exchange rate changes 20 (4) (2)
________ ________ ________
Net increase in cash and cash
equivalents 161 270 421
Cash and cash equivalents at beginning
of period 1,684 1,263 1,263
________ ________ ________
Cash and cash equivalents at end
of period 1,845 1,533 1,684
________ ________ ________
_________________________________________________________________________________________
Jardine Matheson Holdings Limited
Analysis of Profit Contribution
_________________________________________________________________________________________
(unaudited) Year
Six months ended
ended 31st
30th June December
2006 2005 2005
US$m US$m US$m
_______________________________________________
Group contribution
Jardine Pacific 46 38 90
Jardine Motors Group 31 26 47
Jardine Lloyd Thompson 18 19 29
Hongkong Land 39 36 65
Dairy Farm 53 48 118
Mandarin Oriental 8 11 21
Jardine Cycle & Carriage 6 8 23
Astra 46 70 127
Corporate and other interests (19) (24) (57)
_______ _______ _______
Underlying profit 228 232 463
Increase in fair value
of investment properties 287 375 664
Other net gains 35 65 118
_______ _______ _______
Profit attributable to shareholders 550 672 1,245
_______ _______ _______
Analysis of Jardine Pacific's contribution
Gammon Construction 6 (5) 1
HACTL 14 14 33
Jardine Aviation Services 4 4 9
Jardine Engineering Corporation 3 4 10
Jardine OneSolution 5 3 6
Jardine Property Investment 1 1 3
Jardine Restaurants 8 6 13
Jardine Schindler 8 8 13
Jardine Shipping Services 2 4 7
Other interests 1 1 2
Corporate (6) (6) (14)
_______ _______ _______
46 34 83
Discontinued businesses - 4 7
_______ _______ _______
46 38 90
_______ _______ _______
Analysis of Jardine Motors Group's contribution
Hong Kong and Mainland China 21 13 24
United Kingdom 8 10 16
Corporate (1) (1) (1)
_______ _______ _______
28 22 39
Discontinued businesses 3 4 8
_______ _______ _______
31 26 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 unaudited interim condensed financial statements, which have been
prepared in accordance with IAS 34, Interim Financial Reporting.
In 2006, the Group adopted the following amendments and interpretation to
existing standards which are relevant to its operations.
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 described in the 2005
annual financial statements as a result of adoption of the above amendments
and interpretation.
Following revision of the initial accounting in respect of the acquisition
of Astra in 2005, the consolidated balance sheet at 31st December 2005 and
the consolidated statement of recognized income and expense for the year
ended 31st December 2005 have been restated to reflect adjustments to the
provisional fair values of identifiable assets and liabilities determined at
the date of acquisition, and the consequential change in the surplus on
revaluation of intangible assets attributable to the Group's previously held
interest in that company. These adjustments have no impact on the
consolidated profit and loss account.
The Group's reportable segments are set out in note 2 and are described
on pages 5 to 9.
2. Revenue
Six months ended 30th June
2006 2005
US$m US$m
_____________________________
By business:
Jardine Pacific 472 471
Jardine Motors Group 1,185 1,118
Dairy Farm 2,496 2,282
Mandarin Oriental 183 193
Jardine Cycle & Carriage 558 543
Atra 2,980 -
Other activities 4 1
________ ________
7,878 4,608
________ ________
3. Operating Profit
Six months ended 30th June
2006 2005
US$m US$m
_____________________________
By business:
Jardine Pacific 29 20
Jardine Motors Group 44 39
Dairy Farm 104 97
Mandarin Oriental 97 82
Jardine Cycle & Carriage 19 25
Astra 286 -
________ ________
579 263
Corporate and other interests 3 18
________ ________
582 281
________ ________
4. Share of Results of Associates and Joint
Ventures
Six months ended 30th June
2006 2005
US$m US$m
_____________________________
By business:
Jardine Pacific 39 26
Jardine Motors Group 3 4
Jardine Lloyd Thompson 18 37
Hongkong Land 46 46
Dairy Farm 10 8
Mandarin Oriental 6 2
Jardine Cycle & Carriage 2 7
Astra 70 146
Corporate and other interests 14 -
________ ________
208 276
Increase in fair value of investment
properties 360 471
________ ________
568 747
________ ________
Results are shown after tax and minority interests.
Results of Astra for the six months ended 30th June 2006 represents Astra's
share of the results of its joint ventures. The comparative figure for 2005
represents Jardine Cycle & Carriage's share of the results of Astra when it was
an associate.
5. Tax
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$5
million (2005: US$4 million).
6. Earnings Per Share
Basic earnings per share are calculated on profit attributable to shareholders of
US$550 million (2005: US$672 million) and on the weighted average number of 350
million (2005: 346 million) shares in issue during the period. 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$537 million (2005: US$671 million), which is after adjusting for the effects of
the conversion of dilutive potential ordinary shares of subsidiary undertakings,
associates or joint ventures, and on the weighted average number of 352 million
(2005: 348 million) shares after adjusting for the number of shares which are
deemed to be issued for no consideration under the Senior Executive Share Incentive
Schemes based on the average share price during the period.
Additional basic and diluted earnings per share are also calculated based on
underlying earnings attributable to shareholders. A reconciliation of earnings is
set out below:
Six months ended 30th June
2006 2005
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per share per share per share per share
US$m US$ US$ US$m US$ US$
_________________________________________________________________
Underlying profit 228 0.65 0.65 232 0.67 0.67
______ ______
Increase in fair value of
investment properties 287 375
Other net gains 35 65
______ ______
322 440
______ ______
Profit attributable to
shareholders 550 1.57 1.53 672 1.95 1.93
______ ______
A fuller analysis of the adjustments made to the profit attributable to
shareholders in arriving at the underlying profit is set out below:
Six months ended 30th June
2006 2005
US$m US$m
_____________________________
Increase in fair value of investment properties in
Hongkong Land 287 375
Sale and closure of businesses
__________ _________
- The Mark 21 -
- Kahala Mandarin Oriental - 21
- other 1 7
__________ _________
22 28
Buyout of minority interests in Jardine Lloyd Thompson - 17
Value added tax recovery in Jardine Motors Group - 3
Fair value gain on conversion option component of
4.75% Guaranteed Bonds due 2007 - 1
Sale of investments 15 16
Asset impairment (2) -
__________ __________
322 440
__________ __________
7. Non-current Assets Classified as Held for Sale
The major classes of assets and liabilities classified as held for sale are set out
below:
At 31st
At 30th June December
2006 2005 2005
US$m US$m US$m
______________________________________________________
Intangible assets - - 7
Tangible assets 11 112 72
Investment properties - - 24
Associates and joint ventures 28 37 34
Other investments - - 28
Deferred tax assets - - 1
Current assets - - 524
_______ _________ _________
Total assets 39 149 690
_______ _________ _________
Long-term borrowings - - 81
Deferred tax liabilities 1 1 1
Other non-current liabilities - - 2
Current liabilities - - 112
________ __________ _________
Total liabilities 1 1 196
_________ __________ _________
The non-current assets classified as held for sale at 30th June 2006 included
certain of Jardine Motors Group's properties in the United Kingdom and its
interest in Appleyard Vehicle Contracts with carrying amounts of US$9 million and
US$28 million respectively.
The non-current assets classified as held for sale at 31st December 2005
principally comprised Jardine Pacific's investment in BALtrans, Mandarin
Oriental's interest in The Mark and Jardine Cycle & Carriage's interest in MCL
Land. The Group's interests in BALtrans and The Mark were disposed of during the
period, resulting in gains of US$11 million and US$77 million respectively, which
were included in other operating income. Jardine Cycle & Carriage's interest in
MCL Land was distributed to its shareholders by way of a dividend in specie.
Jardine Strategic subsequently disposed of its 40.9% interest in MCL Land that it
received through the distribution to Hongkong Land for US$163 million, which
approximates its carrying amount.
8. Shareholders' Funds
Six months ended 30th June
2006 2005
US$m US$m
_____________________________
At 1st January
- as previously reported 5,020 3,639
- consequential change arising from
adjustments to provisional fair values
on acquisition of Astra (21) -
________ _______
- as restated 4,999 3,639
Recognized income and expense attributable
to shareholders 777 597
Dividends (note 9) (125) (108)
Employee share option schemes
- value of employee services 4 2
- exercise of share options 2 7
Scrip issued in lieu of dividends 144 128
Change in attributable interests 1 -
Increase in own shares held (92) (79)
________ _______
At 30th June 5,710 4,186
________ _______
9. Dividends
Six months ended 30th June
2006 2005
US$m US$m
______________________________
Final dividend in respect of 2005 of USc35.65
(2004: USc31.50) per share 216 187
Less Company's share of dividends paid on
the shares held by subsidiary undertakings (91) (79)
________ _______
125 108
________ _______
An interim dividend in respect of 2006 of USc10.00 (2005: USc9.35) per share
amounting to a total of US$61 million (2005: US$56 million) is declared by
the Board. The net amount after deducting the Company's share of the
dividends payable on the shares held by subsidiary undertakings of US$26
million (2005: US$24 million) will be accounted for as an appropriation of
revenue reserves in the year ending 31st December 2006.
10. Notes to Consolidated Cash Flow Statement
Six months ended 30th June
2006 2005
(a) Purchase of subsidiary undertakings US$m US$m
___________________________
Intangible assets - 8
Tangible assets 4 71
Current assets 15 84
Long-term borrowings (1) (9)
Deferred tax liabilities - (15)
Pension liabilities (1) -
Other non-current liabilities - (9)
Current liabilities (9) (70)
Minority interests (2) -
________ ________
Fair value of net assets 6 60
Adjustment for minority interests 4 (25)
________ ________
Fair value of net assets acquired 10 35
Goodwill 3 10
________ ________
Total consideration 13 45
Adjustment for carrying value of (2) (26)
associates and joint ventures
Cash and cash equivalents of subsidiary
undertakings acquired - 1
________ ________
Net cash outflow 11 20
Purchase of shares in Jardine Cycle
& Carriage 20 5
________ ________
31 25
________ ________
Net cash outflow in 2006 of US$11 million included US$6 million for
Jardine Motors Group's acquisition of dealerships in the United
Kingdom. Net cash outflow in 2005 of US$20 million included US$13
million for Dairy Farm's acquisition of an additional 20.4% interest in
PT Hero Supermarket.
(b) Purchase of associates and joint ventures for the six months ended 30th
June 2006 included US$26 million for Astra's interest in Toyota Astra
Financial Services and Jardine Strategic's increased interest in Hongkong
Land of US$13 million. Purchase of associates and joint ventures for the
six months ended 30th June 2005 included Jardine Cycle & Carriage's
increased interest in Astra of US$124 million and Jardine Strategic's
increased interest in Hongkong Land of US$9 million.
Six months ended 30th June
2006 2005
(c) Sale of subsidiary undertakings US$m US$m
___________________________
Intangible assets 12 -
Tangible assets 92 -
Investment properties 24 -
Associates and joint ventures 35 -
Deferred tax assets 1 -
Current assets 615 1
Long-term borrowings (100) -
Deferred tax liabilities (1) -
Current liabilities (163) (1)
_______ ______
Net assets 515 -
Adjustment for minority interests (261) -
_______ ______
Net assets disposed of 254 -
Cumulative exchange translation
differences (3) -
Profit on disposal 83 -
Adjustment for deferred
consideration - 1
Adjustment for carrying value of
associates and joint ventures (13) -
_______ ______
Sale proceeds 321 1
Closure and related costs (1) -
Tax paid on disposals - (7)
Cash and cash equivalents of subsidiary
undertakings disposed of (48) -
_______ ______
Net cash inflow/(outflow) 272 (6)
_______ ______
Sale proceeds in 2006 of US$321 million included US$143 million from
Mandarin Oriental's sale of its interest in The Mark, New York, US$13
million from Astra's partial sale of its interest in Aisin and US$163
million from the sale of the Group's interest in MCL Land.
(d) Sale of associates and joint ventures for the six months ended 30th June
2006 included a repayment of shareholder's loan from HACTL of US$9 million
in Jardine Pacific. Sale of associates and joint ventures for the six
months ended 30th June 2005 included US$97 million from Mandarin Oriental's
sale of its interest in Kahala Mandarin Oriental.
(e) Sale of other investments for the six months ended 30th June 2006 included
US$31 million from Jardine Pacific's sale of its interest in BALtrans. Sale
of other investments for the six months ended 30th June 2005 included US$36
million from Jardine Strategic's sale of its interest in EON Capital.
11. Capital Commitments and Contingent Liabilities
At 31st
At 30th June December
2006 2005 2005
US$m US$m US$m
______________________________________________
Capital commitments 315 232 310
_____ _____ _____
Contingent liabilities
Guarantees in respect of facilities made
available to associates and joint ventures 71 78 78
_____ _____ _____
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.
The interim dividend of USc10.00 per share will be payable on 22nd November 2006
to shareholders on the register of members at the close of business on 29th
September 2006, and will be available in cash with a scrip alternative. The ex-
dividend date will be on 27th September 2006, and the share registers will be
closed from 2nd to 6th October 2006, 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 3rd November 2006. The Sterling equivalent
of dividends declared in United States Dollars will be calculated by reference
to a rate prevailing on 8th November 2006. 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
Martin Henderson (44) 207 816 8135
GolinHarris
Kennes Young (852) 2501 7987
Weber Shandwick Square Mile
Richard Hews / Helen Thomas (44) 207 067 0700
This and other Group announcements 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
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