11th Mar 2021 14:16
(Alliance News) - Jardine Matheson Holdings Ltd swung to a loss in 2020, hit a huge write-down in the value of its investment properties.
The almost 190-year-old Hong Kong-based conglomerate has interests in retailing, property, hotels and motor dealerships. It reported a pretax loss for 2020 of USD678 million, swung from a USD5.4 billion profit in 2019. Accounting for most of deterioration in results was a USD3.48 billion reduction in the fair value of investment properties in China and Singapore, compared to a USD832 million such hit taken in 2019.
However, revenue also fell, by 20% to USD32.65 billion from USD40.92 billion.
Jardine Matheson said its businesses in southeast Asia and its Mandarin Oriental hotels operation were "severely" damaged by the pandemic, but more resilience was shown by property firm Hongkong Land, grocer Dairy Farm, holding company Jardine Pacific, and automobile retailer Jardine Motors.
Underlying net profit attributable to shareholders fell by 32% to USD1.09 billion and underlying earnings per share fell by 30% to USD2.95.
Last week, in setting out plans to simplify its parent company structure into a single holding company with a "conventional ownership structure", Jardine Matheson had provided those two earnings figures, saying they were in line with market expectations.
Loss per share was USD1.07, swinging from USD7.56 in earnings in 2019. Net asset value per share slipped by 0.7% to USD81.32 on December 31 from USD81.90 a year before.
The company maintained its annual dividend at USD1.72 per share, saying this reflected the board's confidence in the long-term strength of its underlying businesses and balance sheet.
Looking head, Managing Director John Witt said: "The group's performance in the first part of 2021 is expected to be affected in particular by the continuing headwinds faced by our businesses in Southeast Asia and the ongoing low levels of Chinese mainland and other visitors to Hong Kong. There is continued robust economic activity on the Chinese mainland, but it is uncertain whether this will be maintained. It remains too soon to predict what the impact of the pandemic will be on the group's performance for the full year."
Last week, Jardine Matheson said it will spend USD5.5 billion to buy the 15% of Jardine Strategic Holdings Ltd that it doesn't already own. It then will cancel Jardine Strategic's 59% shareholding in Jardine Matheson. Jardine Strategic minority shareholders will receive USD33.00 in cash per share.
"The simplification of our ownership structure is a natural step in the evolution of the group and will create value for our shareholders," Executive Chair Ben Keswick said at the time. "Taking full ownership of Jardine Strategic is consistent with our policy of investing further in the growth prospects of our existing businesses and highlights the benefits of consistently maintaining the group's financial strength."
Jardine said the existing complex structure resulted from a series of restructurings in the 1980s, long after the group was founded in 1832. In addition to owning 59.3% of Jardine Matheson itself, Jardine Strategic owns majority stakes in the group's operating subsidiaries: 50.4% of Hongkong Land, 77.6% of Dairy Farm, 79.5% of Mandarin Oriental and 75% of Jardine Cycle & Carriage.
The restructuring will significantly increase EPS, as it will consolidate all of Jardine Strategic's profit as a wholly owned subsidiary.
Jardine Matheson's shares closed up 1.3% in Singapore on Thursday at SGD65.57.
By Tom Waite; [email protected]
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