Interim Results

JARDINE MATHESON HOLDINGS LIMITED 14 September 1999 JARDINE MATHESON HOLDINGS LIMITED INTERIM REPORT 1999 HIGHLIGHTS - Consumer demand remains weak - Continued focus on reshaping businesses - Dairy Farm to improve capital structure with US$178 million special dividend Results ----------------------------------------------------------------- (unaudited) Six months ended 30th June 1999 1998 Change US$m US$m % ----------------------------------------------------------------- Revenue 5,221 5,703 -8 Net profit excluding non- recurring items 89 105 -16 Net profit 93 107 -13 ----------------------------------------------------------------- USc USc % Earnings per share 15.42 18.25 -16 ----------------------------------------------------------------- Earnings per share excluding non-recurring items 14.66 17.82 -18 Interim dividend per share 7.80 7.80 - ----------------------------------------------------------------- 'We believe that the signs of recovery we are now seeing herald an eventual return to economic health in Asia and we remain confident of the strategic direction of the Group. Work has continued on improving our organisational structures and implementing cost savings that are designed to equip our businesses to compete effectively in today's global markets.' Henry Keswick, Chairman 14th September 1999 The interim dividend of USc7.80 per share will be payable on 23rd November 1999 to Shareholders on the register of members at the close of business on 1st October 1999 and will be available in cash with a scrip alternative. The ex-dividend date will be on 27th September 1999, and the share registers will be closed from 4th to 8th October 1999, inclusive. JARDINE MATHESON HOLDINGS LIMITED INTERIM REPORT 1999 PERFORMANCE Jardine Matheson Holdings Limited today announced that the first half of 1999 saw the lingering effects of the economic downturn that has beleaguered Asian markets for the past two years, although an improving trend is now becoming apparent in the region. The more positive macro economic indicators have prompted a revival in stockmarkets, and the Group has also seen a recovery in some of its businesses. The improved financial markets are directly benefiting the results of Robert Fleming, while the residential property market in Singapore has strengthened and car sales in Malaysia have also shown a substantial increase. In the Group's major market of Hong Kong, however, the underlying economy is lagging behind stockmarket expectations. Retail sales remain weak and competitive pressures have produced price deflation in many sectors, which has affected the Group's consumer-oriented businesses. In addition, Dairy Farm's Hong Kong supermarket operations are now facing an intense surge of competitive pricing. In the Hong Kong commercial property sector market rents appear to have found a floor, but Hongkong Land will be affected for some time by the current cycle of negative rent reversions. Lower than forecast levels of activity at the new airport, compounded by an environment of increased competition, have also depressed Jardine Pacific's aviation businesses. The Group's results for the first half inevitably reflect these trends. The net profit for the period was US$93 million, compared with US$107 million in 1998. Excluding non- recurring items from both periods, profit declined by 16% to US$89 million. Earnings per share were USc15.42, compared to USc18.25 in the first half of 1998. Excluding non-recurring items, earnings per share were USc14.66, down 18%. An unchanged interim dividend of USc7.80 per share has been declared. However, it is believed that the signs of recovery now being seen herald an eventual return to economic health in Asia and the Group remains confident of its strategic direction. Work has continued on improving the Group's organisational structures and implementing cost savings that are designed to equip its businesses to compete effectively in today's global markets. The efficient use of capital across the Group also remains a priority, and to this end Dairy Farm has proposed a special dividend, returning some US$178 million to shareholders, while maintaining its comprehensive investment programme. The Company has increased its shareholdings in certain Group companies in order to concentrate resources on its core businesses and is also targeting bolt-on acquisitions. These will be funded in part by the disposal of businesses where the Company does not see the prospects of profitable market leadership. JOS Technology Group has expanded its operations in Malaysia with the acquisition of a leading IT distributor and Dairy Farm has announced the acquisition of 90% of the Giant supermarket group in Malaysia and a supermarket joint venture in India. At the same time, the Company has agreed the sale of Matheson Investment Limited, a London based financial services subsidiary, which will contribute to earnings in the second half. Jardine International Motors has begun discussions with DaimlerChrysler with regard to their participation in the distribution of Mercedes-Benz vehicles in Hong Kong. It is expected that the group will continue to play a leading role in the sales and service of Mercedes-Benz vehicles in long term partnership with DaimlerChrysler. YEAR 2000 Work has proceeded on schedule to ensure that the Group is Y2K ready in all business critical activities by the year end. Both internal and external risks have been assessed by the individual business units, and business continuity plans are being put in place. The audit committees of the Group's principal businesses have been monitoring progress and reporting to the Board. Costs relating to resolving this issue are expensed as incurred. Excluding the Group's share of costs of associates, US$11 million was charged in the first half of the year, and the total projected costs are still estimated to be some US$40 million. While the Group continues to make satisfactory progress and is making every effort to reduce the risks of the Y2K issue, there can be no absolute assurance that the Y2K programmes will be completely successful due to the inherent unpredictability and scope of the Y2K problem. LOOKING AHEAD In conclusion, Henry Keswick said, 'We do not envisage any improvement in the overall performance of the Group companies during the remainder of the year as it will take some time for the nascent recovery in regional economies to translate into a sustained increase in consumer demand. The result for the full year will reflect the competitive challenges faced by Dairy Farm, but will benefit from the profit on sale of the United Kingdom financial services business. We will continue to shape our businesses so as to achieve sustained profit growth and enhanced shareholder value.' OPERATING REVIEW Jardine Pacific recorded a profit before non-recurring items of US$21 million in the first half, a decline of 28%. This fall was largely due to the sharply reduced profit contribution from HACTL following the move to the new Hong Kong International Airport in the middle of last year. Within marketing and distribution, Jardine Pacific's two principal businesses are Restaurants and JOS Technology. Restaurants' results weakened in the first half due to intense competition in the fast food markets in Hong Kong and Taiwan. JOS Technology, which is working to keep abreast of its rapidly changing industry, experienced a small reduction in profit due to margin pressure on hardware sales. Jardine Engineering performed well with a significant increase in profit due in part to the elimination of losses on the contracting side and to an improved return from the Caterpillar dealerships. Gammon's profit declined by 40% as a result of problem contracts in its civil division in Hong Kong. Jardine Schindler performed satisfactorily, although its profits were held back by the opening of the new factory in Malaysia. HACTL's reduced contribution reflected the low trading volumes and substantial financing costs of the investment at the new airport, although there have been benefits from improved operating efficiencies. The move to the new airport also impacted the results of the group's other aviation interests. The largest element of the group's property and financial services sector is its Hong Kong residential property portfolio, the earnings from which were steady with a yield of 5%. The performance of the instalment finance business strengthened and there was little further increase in non- performing loans. Jardine International Motors produced an interim profit of US$25 million, a decrease of 13% over 1998. Sales of new and used vehicles by the group during the period rose 12% to 77,600. The Hong Kong operations performed well in the difficult environment due to the good demand for the new S- Class. Despite recording an overall profit decline, Zung Fu's result showed some improvement on the second half of 1998 and its order book has remained steady. Preliminary discussions are taking place with DaimlerChrysler with regard to their participation in the distribution of Mercedes-Benz vehicles in Hong Kong. The group expects to arrive at a mutually satisfactory arrangement and that Zung Fu will continue to play the leading role in sales and after-sales service of Mercedes-Benz vehicles in Hong Kong, in a long term partnership with DaimlerChrysler. In the United Kingdom the group's specialist franchises continued to achieve good results, and the joint venture with Ford is making progress. But some of the other dealerships, particularly Rover, performed poorly and further costs will be incurred in turning around problem operations. In India, the joint venture with the Tata group has completed its dealership infrastructure in anticipation of the new Indica production coming fully on stream. Jardine Lloyd Thompson announced record results for the six months with turnover increasing 6% to £126 million. Pre-tax profit, before exceptional items, was up 9% at £33 million; exceptional items gave rise to a net credit of £2 million. These results reflect the inherent strengths of JLT as the United Kingdom's largest independent listed broker and its leading position in key markets. The group's recent reorganisation into core businesses - Risk Solutions, Corporate Risks and Services - has worked well. JLT Risk Solutions generated strong growth in new business wins, with revenues rising 13% to £56 million. Corporate Risks & Services saw more modest growth, with revenues up 3% to £70 million, reflecting a broader spread of business. These results have been achieved in continuing soft markets, and the momentum of the past two years, coupled with a focused innovative approach, has provided a platform for further growth in each segment of the business. Robert Fleming became an associated company in the period when, in response to the increasing globalisation of financial markets, it was merged with Jardine Fleming to create an integrated global asset management and investment banking group. Jardine Matheson now has a direct interest of approximately 14% of the enlarged Flemings, with a further 4% being held by Jardine Strategic. The stake in Robert Fleming continues to give the Group an exposure to Asian financial markets as well as a more broadly based exposure to global financial markets. Robert Fleming reported a decline in pre- tax profits for the year ended 31st March 1999 from £136 million to £70 million, although the profit performance for the first four months of its new financial year has been much stronger, reflecting in particular the improved market conditions in Asia. Jardine Strategic's 19% held investment, Edaran Otomobil Nasional, benefited from a significant improvement in motor sales in Malaysia and moved from a loss in 1998 to record a RM220 million profit in the first half of 1999. Its share price also made a strong recovery and is now well in excess of the written down carrying value. Connaught Investors saw a strong growth in its net assets which rose by 40% to US$758 million at the period end, based on the market value of its investments. Overall, however, Jardine Strategic's net profit declined by 22% to US$85 million for the half year. Dairy Farm's trading conditions became more difficult in 1999, resulting in a disappointing performance in the first half. Recurring trading profit of US$46 million is 28% down on the first half of 1998. Sales from continuing activities for the six months were US$2.8 billion, a slight decline from the same period last year. In Hong Kong, the supermarket business suffered from an expansion in rival retail space and constrained consumer spending, requiring steps to be taken to improve market share, and more recently from an intense surge in competitive pricing. The recovery at Franklins in Australia was also set back by increased competition. In Singapore, however, the group's businesses have done well, and in Indonesia Hero increased both its profit and market share. The group continues to expand its supermarket interests in South Asia with the recent acquisition of a 90% stake in Giant in Malaysia and a new joint venture in India. Dairy Farm is also seeking a more efficient use of its capital and is proposing to repay some US$178 million to shareholders by way of a special dividend and capital consolidation, while maintaining its investment in enhancing fresh food sales, developing new formats and improving operational effectiveness. It is, however, expected to be at least another year before Franklins adds economic value, and the increased competitive activity in Hong Kong's supermarket sector will also impact the current year's result. Hongkong Land has maintained high levels of occupancy in its portfolio throughout the downturn and good progress has been made in letting properties under development. However, the effect of negative rent reversions working through the Hong Kong portfolio led to a 25% decline in underlying earnings, giving a net profit for the period of US$149 million. The rate of decline of rents in Hong Kong has slowed significantly in 1999 and the new supply in Central is progressively letting up. The group's investment and development properties are believed to have maintained their year-end values and, overall, Hongkong Land remains in a strong financial position. Work on the substructure of the group's new development at 11 Chater Road, Hong Kong will soon commence, following completion of the demolition of the old property. The group's new office and retail development in Singapore is nearing completion, and leasing interest has been encouraging. While there are signs of stability in the regional property markets where Hongkong Land operates, negative reversions will continue to affect its results. Mandarin Oriental continued to be affected by highly competitive pricing for hotel rooms in almost all Asian destinations in the first six months, leading to a decline in the trading profit of 16% to US$20 million. A reduced tax charge, however, limited the fall in net profit to 3%. Increased visitor arrivals in Hong Kong improved occupancies, but the benefit was more than offset by declines in room rates. A similar picture was seen in most of the group's other hotels in Asia, although in Kuala Lumpur their new property has done well to establish its leadership position. The restoration of Mandarin Oriental Hyde Park in London will include additional new facilities, which will necessitate an overhaul of the back-of-house infrastructure. It has, therefore, been decided to close the hotel for five months from November to avoid significant disruption to guests. Overall, the outlook for the Asian markets remains difficult for the remainder of the year, and the costs associated with the London renovation will also depress profits in the second half. The group continues to respond vigorously to the twin challenge of the current difficult market conditions in Asia and the long-term development of a global brand. Cycle & Carriage reported an attributable profit of S$58 million for the first half, compared to S$9 million in 1998. This result was arrived at after a reversal of S$3 million of the exceptional charge of S$68 million made in 1998 for foreseeable losses on development properties in Singapore and after an extraordinary gain of S$2 million from the sale of shares in a subsidiary. The results reflect a recovery in all major markets other than the Singapore motor sector, which suffered from continuing pressure on margins. Both Cycle & Carriage Bintang's motor operations in Malaysia and the group's Australian motor business returned to profitability. Despite the recovery in the Singapore property market, however, trading profits from property development declined due to the completion of comparatively fewer projects in the period. ------------------------------------------------------------------- Jardine Matheson Holdings Limited Condensed Consolidated Profit and Loss Account ------------------------------------------------------------------- (unaudited) Year ended Six months ended 31st December 30th June 1999 1998 1998 US$m US$m US$m ------------------------------------------------------------------- Revenue (note 2) 5,220.9 5,702.7 11,233.5 Net operating costs (5,133.2) (5,537.6) (10,977.8) Exceptional item - - (128.6) -------- -------- -------- Operating profit (note 3) 87.7 165.1 127.1 Net financing charges (28.7) (36.5) (68.3) Share of results of associates and joint ventures 134.2 134.1 175.8 -------- -------- -------- Profit before tax 193.2 262.7 234.6 Tax (note 4) (39.3) (61.8) (116.6) -------- -------- -------- Profit after tax 153.9 200.9 118.0 Outside interests (60.8) (93.6) (67.5) -------- -------- -------- Net profit (note 5) 93.1 107.3 50.5 ======== ======== ======== ------------------------------------------------------------------- USc USc USc ------------------------------------------------------------------- Earnings per share (note 7) - basic 15.42 18.25 8.49 - diluted 15.41 18.24 8.49 Earnings per share excluding non-recurring items (note 7) - basic 14.66 17.82 32.69 - diluted 14.65 17.81 32.68 ------------------------------------------------------------------- Jardine Matheson Holdings Limited Condensed Consolidated Balance Sheet ------------------------------------------------------------------- (unaudited) At At 30th June 31st December 1999 1998 1998 US$m US$m US$m ------------------------------------------------------------------- Net operating assets Goodwill 34.3 22.5 27.4 Tangible assets 2,437.6 2,805.6 2,424.4 Associates and joint ventures 2,897.5 4,144.4 2,833.4 Other investments 393.3 577.4 485.8 Other non-current assets 122.3 117.8 122.4 -------- -------- -------- Non-current assets 5,885.0 7,667.7 5,893.4 Stocks and work in progress 999.2 1,070.2 1,050.5 Debtors and prepayments 952.2 976.6 868.0 Bank balances and other liquid funds 1,687.7 1,935.0 1,770.6 -------- -------- -------- Current assets 3,639.1 3,981.8 3,689.1 -------- -------- -------- Creditors, accruals and provisions (2,183.0) (2,135.0) (2,095.2) Borrowings (808.4) (549.0) (787.4) Current tax liabilities (29.8) (42.7) (35.1) -------- -------- -------- Current liabilities (3,021.2) (2,726.7) (2,917.7) -------- -------- -------- Net current assets 617.9 1,255.1 771.4 Long-term borrowings (1,229.6) (1,615.2) (1,271.1) Other non-current liabilities (122.4) (136.0) (127.9) -------- -------- -------- 5,150.9 7,171.6 5,265.8 ======== ======== ======== Capital employed Share capital 197.3 191.6 194.1 Share premium and contributed surplus 346.7 351.8 349.2 Revenue and other reserves 2,858.3 3,782.6 2,820.7 Own shares held (474.9) (419.9) (432.4) -------- -------- -------- Shareholders' funds 2,927.4 3,906.1 2,931.6 Outside interests 2,223.5 3,265.5 2,334.2 -------- -------- -------- 5,150.9 7,171.6 5,265.8 ======== ======== ======== ------------------------------------------------------------------- Jardine Matheson Holdings Limited Condensed Consolidated Statement of Changes in Equity ------------------------------------------------------------------- (unaudited) Year ended Six months ended 31st December 30th June 1999 1998 1998 US$m US$m US$m ------------------------------------------------------------------- At beginning of period - as previously reported 2,799.0 3,728.6 3,728.6 - change in accounting policies (note 1) 132.6 149.7 149.7 -------- -------- -------- - as restated 2,931.6 3,878.3 3,878.3 Property revaluation - (7.6) (936.3) Deferred tax on property revaluation 0.2 0.2 9.6 Net exchange translation differences - amount arising in period (28.5) (33.4) (7.5) - disposal of subsidiary undertakings, associates and joint ventures (0.4) 23.9 26.2 Net losses not recognised in consolidated profit and loss account (28.7) (16.9) (908.0) Net profit 93.1 107.3 50.5 Dividends (note 8) (83.7) (100.7) (147.5) Exercise of share options 0.7 0.5 0.4 Scrip issued in lieu of dividends 55.4 63.8 95.9 Change in attributable interests 1.5 0.1 0.8 Increase in own shares held (42.5) (26.3) (38.8) -------- -------- -------- At end of period 2,927.4 3,906.1 2,931.6 ======== ======== ======== ------------------------------------------------------------------- Jardine Matheson Holdings Limited Condensed Consolidated Cash Flow Statement ------------------------------------------------------------------- (unaudited) Year ended Six months ended 31st December 30th June 1999 1998 1998 US$m US$m US$m ------------------------------------------------------------------- Operating activities Operating cash flow of subsidiary undertakings (note 9(a)) 197.3 (19.6) 170.6 Dividends from associates and joint ventures 90.7 128.8 204.1 Cash flows from operating activities 288.0 109.2 374.7 Investing activities Purchase of subsidiary undertakings (note 9(b)) (98.8) (10.3) (42.1) Purchase of associates and joint ventures (note 9(c)) (88.6) (89.2) (120.7) Purchase of other investments (19.4) (12.1) (71.6) Purchase of tangible assets (131.5) (116.7) (331.3) Sale of subsidiary undertakings 5.6 112.7 177.8 Sale of associates and joint ventures (note 9(d)) 83.9 304.1 345.4 Sale of other investments 11.5 2.7 41.6 Sale of tangible assets 10.9 27.6 82.1 Cash flows from investing activities (226.4) 218.8 81.2 Financing activities Issue of shares 0.7 0.5 0.4 Capital contribution from outside shareholders 2.3 14.2 14.3 Repurchase and redemption of preference shares - (10.3) (113.6) Drawdown of long-term borrowings 771.4 94.4 1,227.5 Repayment of long-term borrowings (730.7) (181.4) (1,326.2) Dividends paid by the Company (49.7) (61.9) (88.4) Dividends paid to outside shareholders (85.1) (100.1) (143.2) Cash flows from financing activities (91.1) (244.6) (429.2) Effect of exchange rate changes (3.4) (1.3) (8.6) -------- -------- -------- Net (decrease)/increase in cash and cash equivalents (32.9) 82.1 18.1 Cash and cash equivalents at beginning of period 1,483.3 1,465.2 1,465.2 -------- -------- -------- Cash and cash equivalents at end of period 1,450.4 1,547.3 1,483.3 ======== ======== ======== ------------------------------------------------------------------- Jardine Matheson Holdings Limited Notes ------------------------------------------------------------------- 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION The unaudited interim condensed financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting. In 1999 the Group implemented IAS 14 (revised) - Segment Reporting, IAS 17 (revised) - Leases, IAS 19 (revised) - Employee Benefits and IAS 35 - Discontinuing Operations. The provisions of IAS 10 (revised) - Events After the Balance Sheet Date, IAS 16 (revised) - Property, Plant and Equipment, IAS 22 (revised) - Business Combinations, IAS 28 (revised) - Accounting for Investments in Associates, IAS 31 (revised) - Financial Reporting of Interests in Joint Ventures, IAS 36 - Impairment of Assets, IAS 37 - Provisions, Contingent Liabilities and Contingent Assets and IAS 38 - Intangible Assets are applied in advance of their effective dates. In accordance with IAS 10 (revised), dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date. In previous years dividends proposed or declared after the balance sheet date were recognised as a liability at the balance sheet date. The effect of this change has been to increase the Shareholders' funds at 31st December 1997 and 1998 by US$100.7 million and US$83.7 million respectively. In accordance with IAS 19 (revised), pension costs for defined benefit plans are assessed using the projected unit credit method. Under this method, pension obligations are measured as the present value of the estimated future cash flows by reference to market yields on high quality corporate bonds which have terms to maturity approximating the terms of the related liability. Plan assets are measured at fair value. This is a change in accounting policy as in previous years pension costs were assessed using the attained age normal method and pension obligations were discounted at the expected rate of return on plan assets. The comparative figures for 1998 have been restated to reflect the change in policy. The effect of this change has been to increase net profit for the six months ended 30th June 1998 and for the year ended 31st December 1998 by US$4.9 million and US$7.1 million respectively, and the Shareholders' funds at 31st December 1997 and 1998 by US$49.8 million and US$56.9 million respectively. In accordance with IAS 38, pre-operating costs are expensed as they are incurred. This is a change in accounting policy as in previous years pre-operating costs were capitalized and amortised over a period of three to five years from the date of commencement of operation. The comparative figures for 1998 have been restated to reflect the change in policy. The effect of this change has been to decrease net profit for the six months ended 30th June 1998 and for the year ended 31st December 1998 by US$0.4 million and US$2.9 million respectively, and the Shareholders' funds at 31st December 1997 and 1998 by US$5.1 million and US$8.0 million respectively. Following the implementation of IAS 37 on provisions by an associate, the Shareholders' funds at 31st December 1997 have increased by US$4.3 million and the net profit for the year ended 31st December 1998 has decreased by US$4.3 million. With the exception of IAS 10 (revised), IAS 19 (revised), IAS 37 and IAS 38, there are no changes in accounting policy that affect profit or Shareholders' funds resulting from the adoption of the above standards in these condensed financial statements, as the Group was already following other relevant recognition and measurement principles in those standards. Robert Fleming has a financial year end of 31st March and publishes its results half yearly. The results of Robert Fleming have been included on the equity basis of accounting. Other than described above, there have been no other changes to the accounting policies described in the 1998 annual financial statements. The disclosure requirements of IAS 1 (revised) - Presentation of Financial Statements will be complied with in the Group's 1999 annual financial statements. The Group's reportable segments are set out in note 2. 2. REVENUE Six months ended 30th June 1999 1998 US$m US$m ------------------------- By business: Jardine Pacific - Marketing & Distribution 431.8 403.4 - Engineering & Construction 196.0 200.4 - Aviation & Shipping Services 157.6 131.5 - Property & Financial Services 8.2 4.3 793.6 739.6 Jardine International Motors 1,457.2 1,860.1 Dairy Farm 2,845.7 2,876.9 Mandarin Oriental 86.9 100.3 Other activities 37.5 57.0 -------- -------- 5,220.9 5,633.9 Discontinued activities - 68.8 -------- -------- 5,220.9 5,702.7 ======== ======== 3. OPERATING PROFIT Six months ended 30th June 1999 1998 US$m US$m ------------------------- By business: Jardine Pacific - Marketing & Distribution 5.1 10.1 - Engineering & Construction 6.8 0.3 - Aviation & Shipping Services 5.2 1.5 - Property & Financial Services 5.7 5.5 - Corporate and other interests (5.8) (7.1) 17.0 10.3 Jardine International Motors 38.0 48.1 Dairy Farm 25.2 53.0 Mandarin Oriental 15.9 20.7 -------- -------- 96.1 132.1 Corporate and other interests (11.4) (9.9) Non-recurring items 3.0 42.9 -------- -------- 87.7 165.1 ======== ======== 4. TAX Six months ended 30th June 1999 1998 US$m US$m ------------------------- Company and subsidiary undertakings 9.0 24.1 Associates and joint ventures 30.3 37.7 -------- -------- 39.3 61.8 ======== ======== 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$8.7 million (1998: US$7.8 million). 5. NET PROFIT Six months ended 30th June 1999 1998 US$m US$m ------------------------- By business: Jardine Pacific - Marketing & Distribution 4.0 4.8 - Engineering & Construction 14.2 12.3 - Aviation & Shipping Services 3.5 13.6 - Property & Financial Services 7.5 5.8 - Corporate and other interests (8.5) (7.9) 20.7 28.6 Jardine International Motors 18.8 21.5 Jardine Lloyd Thompson 9.5 9.3 Robert Fleming/Jardine Fleming 5.6 - Dairy Farm 10.3 16.9 Hongkong Land 31.7 40.4 Mandarin Oriental 3.1 3.1 Cycle & Carriage 4.0 3.3 -------- -------- 103.7 123.1 Corporate and other interests (15.2) (18.3) -------- -------- Net profit excluding non-recurring items 88.5 104.8 Non-recurring items (note 6) 4.6 2.5 -------- -------- 93.1 107.3 ======== ======== 6. NON-RECURRING ITEMS Six months ended 30th June 1999 1998 Gross Net Gross Net US$m US$m US$m US$m --------------------------------------- By nature: Discontinued activities (including operating results) - - 46.7 17.2 Diminution in value of investments - - (9.9) (5.8) Sale and revaluation of properties 0.8 0.3 (21.1) (9.5) Property provisions 4.1 4.1 - - Other non-recurring items 0.4 0.2 1.0 0.6 ------ ------ ------ ------ 5.3 4.6 16.7 2.5 ====== ====== ====== ====== By business: Jardine Pacific - - 3.2 1.8 Jardine Lloyd Thompson 1.3 1.2 - - Dairy Farm - - 40.2 12.1 Hongkong Land - - (9.9) (5.8) Cycle & Carriage 1.0 0.4 (16.8) (5.6) Corporate and other interests 3.0 3.0 - - ------ ------ ------ ------ 5.3 4.6 16.7 2.5 ====== ====== ====== ====== Gross non-recurring items are shown before net financing charges and tax. Net non-recurring items are shown after tax and outside interests. 7. EARNINGS PER SHARE Basic earnings per share are calculated on the net profit of US$93.1 million (1998: US$107.3 million) and on the weighted average number of 603.7 million (1998: 588.0 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 the weighted average number of 604.1 million (1998: 588.4 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. Earnings per share excluding non-recurring items are calculated on the net profit after adjusting for non- recurring profits of US$4.6 million (1998: US$2.5 million). 8. DIVIDENDS Six months ended 30th June 1999 1998 US$m US$m ------------------------- Final dividend in respect of 1998 of USc13.80 (1997: USc17.20) per share 107.1 128.3 Less: Company's share of dividends paid on the shares held by subsidiary undertakings (23.4) (27.6) -------- -------- 83.7 100.7 ======== ======== An interim dividend in respect of 1999 of USc7.80 (1998: USc7.80) per share amounting to a total of US$61.6 million (1998: US$59.8 million) is declared and the net amount after deducting the Company's share of the dividends payable on the shares held by subsidiary undertakings of US$14.3 million (1998: US$13.0 million) will be accounted for as an appropriation of revenue reserves in the year ending 31st December 1999. 9. NOTES TO CONDENSED CONSOLIDATED CASH FLOW STATEMENT Six months ended 30th June 1999 1998 US$m US$m ------------------------- (a) Operating cash flow of subsidiary undertakings Operating profit 87.7 165.1 Depreciation and amortisation 114.0 101.6 Other non-cash items (3.3) (44.7) Decrease/(increase) in working capital 65.3 (176.9) Interest received 69.2 95.9 Interest and other financing charges paid (117.4) (132.4) Tax paid (18.2) (28.2) -------- -------- 197.3 (19.6) ======== ======== (b) Purchase of subsidiary undertakings Purchase of subsidiary undertakings includes the Company's increased interest in Jardine Strategic of US$61.1 million and Jardine Strategic's increased interests in Dairy Farm and Mandarin Oriental of US$18.8 million. (c) Purchase of associates and joint ventures Purchase of associates and joint ventures includes the Company's acquisition of shares in Robert Fleming of US$11.4 million, Jardine Strategic's increased interest in Hongkong Land of US$34.1 million and Jardine International Motors' additional investment in Polar Motor Group in the United Kingdom of US$21.3 million. (d) Sale of associates and joint ventures Sale of associates and joint ventures includes US$61.8 million received as part of the transaction for the exchange of the Group's 50% interest in Jardine Fleming for shares in Robert Fleming. 10. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES At At 30th June 31st December ---------------------------------- 1999 1998 1998 US$m US$m US$m ---------------------------------- (a) Capital commitments 163.7 140.7 104.1 ======== ======== ======== (b) Contingent liabilities - guarantees in respect of facilities made available to associates and joint ventures 205.7 166.7 169.8 - other guarantees 50.6 5.2 50.1 - acceptances outstanding in the ordinary course of a banking business 15.8 13.3 16.6 ======== ======== ======== Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have been made in the financial statements. 11. INTERIM REPORT The Interim Report will be posted to Shareholders on or about 5th October 1999. Copies may be obtained from Jardine Matheson International Services Limited, P.O. Box HM 1068, Hamilton HM EX, Bermuda; IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, England and M & C Services Private Limited, 16 Raffles Quay £23-01, Hong Leong Building, Singapore 048581. The interim dividend of USc7.80 per share will be payable on 23rd November 1999 to Shareholders on the register of members at the close of business on 1st October 1999 and will be available in cash with a scrip alternative. The ex-dividend date will be on 27th September 1999, and the share registers will be closed from 4th to 8th October 1999, 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 4th November 1999. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing ten business days prior to the payment date. 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. For further information, please contact: Jardine Matheson Limited Norman Lyle (852) 2843 8216 (office) Matheson & Co. Limited Martin Henderson (44) 171 816 8135 (Office) Forrest International Limited (852) 2522 6475 (office) David Dodwell (852) 2501 7902 (direct) Sue Gourlay (852) 2501 7936 (direct) Ludgate Communications Richard Hews (44) 171 253 2252 (office) Victoria Martin Full text of this and other Group announcements can be accessed through the Internet at 'http://www.irasia.com/listco/sg/jml'.

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