2018 Third Quarter Financial Statements

To: Business Editor 7th November 2018

For immediate release

Jardine Cycle & Carriage Limited

2018 Third Quarter Financial Statements and Dividend Announcement

The following announcement was issued today by the Company's 75%-owned subsidiary, Jardine Cycle & Carriage Limited.

For further information, please contact:

Jardine Matheson Limited

Jonathan Lloyd (852) 2843 8223

Brunswick Group Limited

Karin Wong (852) 3512 5077

7th November 2018

JARDINE CYCLE & CARRIAGE LIMITED

2018 THIRD QUARTER FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

· Underlying earnings per share 14% higher

· Strong growth in Astra

· Improved performances by Direct Motor Interests and Other Strategic Interests

"We expect the Group to achieve satisfactory full year results, notwithstanding concerns over competitive pressure in the car market and weak crude palm oil prices in Indonesia. The Group's Direct Motor Interests and Other Strategic Interests are expected to continue to perform well."

Ben Keswick, Chairman

7th November 2018

The exchange rate of US$1=S$1.37 (31st December 2017: US$1=S$1.34) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.34 (30th September 2017: US$1=S$1.38) was used for translating the results for the period. The financial results for the nine months ended 30th September 2018 and 30th September 2017 have been prepared in accordance with International Financial Reporting Standards and have not been audited or reviewed by the auditors.

† The accounts have been restated due to changes in accounting policies upon adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers', as set out in Note 1 to the condensed financial statements.

# The Group uses 'underlying profit attributable to shareholders' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in Note 4 to the condensed financial statements. Management considers this to be a key performance measurement which enhances the understanding of the Group's underlying business performances.

^ Included in 'non-trading items' are unrealised losses arising from the revaluation of the Group's equity investments.

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CHAIRMAN'S STATEMENT

Overview

The Group performed well in the first nine months of the year, supported by strong growth in Astra and improved performances by the Group's Direct Motor Interests and Other Strategic Interests.

Performance

The Group's revenue for the nine months ended 30th September 2018 grew by 10% to US$14.0 billion, with revenue growth in most of Astra's businesses. Group underlying profit attributable to shareholders was 14% higher at US$675 million and underlying profit per share was 14% higher at US¢171. Profit attributable to shareholders fell by 38% from US$605 million to US$375 million, after accounting for net non-trading losses of US$300 million, principally unrealised fair value losses related to non-current investments. These resulted from the adoption of a new accounting standard that requires the unrealised gains and losses arising from equity investments at the end of each financial period to be included in the profit and loss account.

Astra contributed US$582 million to the Group's underlying profit, an increase of 17%, modestly dampened by the weakening of the Rupiah. The underlying profit from the Group's Direct Motor Interests was 20% higher year-on-year at US$107 million, while the Group's Other Strategic Interests contributed an underlying profit of US$56 million, a significant increase on the previous year.

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$1.2 billion at the end of September 2018, compared to US$819 million at the end of December 2017. The increase was primarily due to Astra's toll road and GO-JEK investments and capital expenditure in Astra's mining contracting business, together with the Group's investments in Toyota Motor Corporation and in associates and joint ventures. Net debt within Astra's financial services subsidiaries was US$3.2 billion at the end of September 2018, compared to US$3.4 billion at the end of 2017.

The Board has not declared a dividend for the third quarter ended 30th September 2018 (September 2017: Nil).

Group Review

Astra

Astra reported a net profit equivalent to US$1,208 million, under Indonesian accounting standards, 21% higher in its local currency terms, due to increased contributions from its heavy equipment, mining, construction and energy, financial services and automotive segments, which more than offset a lower contribution from agribusiness.

Net income from the group's automotive division was 7% higher at US$496 million, primarily due to higher motorcycle sales.

The wholesale market for cars was 7% higher in the period at 857,000 units. Astra's car sales, however, were 4% lower at 424,000 units as a result of increased competition, which resulted in a decline in market share from 55% to 50%. The group launched 17 new models and six revamped models during the period.

The wholesale market for motorcycles increased by 9% to 4.7 million units. Astra Honda Motor's domestic sales increased by 9% to 3.5 million units, with its market share stable at 75%. The group launched five new models and 16 revamped models during the period.

Astra Otoparts, Astra's automotive components business, reported net income which was 12% higher at US$29 million, due to increased revenues from its original equipment manufacturing and replacement market sales.

Financial Services

Net income from Astra's financial services division increased by 17% to US$244 million, with an improved contribution from its consumer finance businesses.

During the period, Astra's consumer finance businesses saw a 4% decrease in the amount financed to US$4.3 billion, mainly due to a reduction in amounts financed in the low cost car segment. The net income contribution from the group's car-focused finance companies increased by 12% to US$59 million, as a result of lower provisioning. The net income contribution from motorcycle-focused Federal International Finance was 18% higher at US$127 million, reflecting a larger loan portfolio.

The amount financed through Astra's heavy equipment-focused finance operations decreased by 28% to US$266 million, mainly due to reduced lending to small and medium-sized operations.

In September 2018, Astra and WeLab, a leading technology enabler for consumer lending in China including Hong Kong, announced the establishment of Astra WeLab Digital Arta, 60%-owned by Astra to offer mobile lending products to retail consumers and provide financial technology solutions to enterprise customers.

Permata Bank, in which Astra holds a 44.6% interest, reported net income of US$35 million, compared to US$53 million in the equivalent period last year. Permata Bank's 2017 results benefited from a one-off gain on the sale of non-performing loans. The bank's gross and net non-performing loan ratios at the end of September 2018 were 4.8% and 1.7%, respectively.

Asuransi Astra Buana, the group's general insurance company, reported net income 2% higher at US$54 million, due to higher investment and underwriting income. During the period, the group's life insurance joint venture, Astra Aviva Life, acquired more than 232,000 new individual life customers and 663,000 new participants for its corporate employee benefits programmes.

Heavy Equipment, Mining, Construction and Energy

Net income from Astra's heavy equipment, mining, construction and energy division increased by 60% to US$384 million.

United Tractors, which is 59.5%-owned, reported a 61% higher net income at US$642 million mainly due to improved performances in its construction machinery, mining contracting and mining operations, all of which benefited from higher coal prices.

Within United Tractors' construction machinery business, Komatsu heavy equipment sales rose 34% to 3,681 units, while parts and service revenues were also higher. The mining contracting operations of wholly-owned Pamapersada Nusantara recorded a 22% increase in overburden removal volume at 717 million bank cubic metres and 10% higher coal production at 90 million tonnes. United Tractors' mining subsidiaries reported 15% growth in coal sales at 5.8 million tonnes, including sales of 526,000 tonnes of coking coal by Suprabari Mapanindo Mineral, United Tractors' 80.1%-owned coking coal company which became operational in late 2017.

General contractor Acset Indonusa, a 50.1% subsidiary of United Tractors, reported an 18% decrease in net income at US$6 million. US$59 million of new construction projects were secured during the period.

Bhumi Jati Power, 25%-owned by United Tractors, is in the process of constructing two 1,000MW power plants in Central Java, which are scheduled to start commercial operations in 2021.

In August 2018, United Tractors' subsidiary, Danusa Tambang Nusantara, signed a Conditional Share Sale Agreement to acquire a 95% stake in Agincourt Resources, which operates a gold mine in North Sumatra, for approximately US$1.0 billion.

Agribusiness

Net income from Astra's agribusiness division was down 18% at U$63 million.

Astra Agro Lestari, which is 79.7%-owned, reported an 18% decline in net income at US$80 million, primarily due to a fall in crude palm oil prices which were 8% lower at Rp7,639/kg. This more than offset a 23% increase in crude palm oil and derivative sales to 1.6 million tonnes. 

Infrastructure and Logistics

Astra's infrastructure and logistics division reported net income of US$8 million compared to a US$5 million net loss in the first nine months of 2017. This was mainly due to improved earnings from the Tangerak-Merak toll road and Serasi Autoraya, as well as the inclusion in the prior year's results of a one-off loss on the disposal of Astra's 49% interest in PAM Lyonnaise Jaya.

The group's portfolio of toll road interests totals 353km, of which 269km is operational. Toll revenue from the mature 72.5km Tangerang-Merak toll road, operated by 79.3%-owned Marga Mandalasakti, increased by 11% to US$56 million, while the wholly-owned 40.5km Jombang-Mojokerto toll road, of which 39.6km became fully operational in September 2017, recorded US$11 million of toll revenue during the first nine months of 2018. Toll revenue from the 45%-owned 116.8km Cikopo-Palimanan toll road increased by 12% to US$74 million. The 40%-owned 72.6km Semarang-Solo toll road recorded toll revenue of US$13 million, a 44% rise from the comparable period last year, with 40.1km now in operation, following the opening of the third section in September 2017. Astra also has a 40% stake in the 11.2km Kunciran-Serpong toll road and a 25% stake in the 39.8km Serpong-Balaraja toll road, both of which are under development. 

Serasi Autoraya's net income increased by 41% to US$13 million, primarily due to improved operating margins in its car leasing and rental businesses. Its vehicles under contract rose 1% to 22,800 units.

Information Technology

Net income from Astra's information technology division was 1% higher at US$8 million.

Astra Graphia, which is 76.9%-owned, reported net income of US$10 million, in line with the previous year. 

PropertyAstra’s property division reported a 32% lower net profit of US$5 million, due mainly to reduced development earnings recognised from its Anandamaya Residences project as a result of lower percentage completion in its final stages of construction. Astra’s other property development projects comprise Arumaya in South Jakarta and Asya in East Jakarta.

Direct Motor Interests

The Group's Direct Motor Interests contributed an underlying profit of US$107 million, 20% higher than the previous year.

Singapore

In Singapore, the passenger car market declined by 10% to 60,000 units due to the decrease in the number of certificates of entitlement made available to the market. The Group's wholly-owned Cycle & Carriage Singapore ("CCS"), contributed a profit of US$42 million, 10% up on the prior year due to better margins on new cars, alongside improved used car sales. CCS sold a total of 10,300 passenger cars, 4% down on the previous year. Its market share rose from 16% to 17%. 

Malaysia

In Malaysia, 59.1%-owned Cycle & Carriage Bintang contributed a profit of US$2 million, mainly comprising dividends received from its investment in Mercedes-Benz Malaysia. At the trading level, a lower loss was incurred, compared to the previous year as the company benefited from the zero rate of GST from June to August. This was, however, partly offset by higher operating expenses and net financing charges as the group continues to invest in upgrading its customer service and network operations.

Indonesia

In Indonesia, 46.2%-owned Tunas Ridean's profit contribution of US$13 million was 23% higher, reflecting improved performances across all segments: automotive, consumer finance and rental operations. Motor car sales at 38,000 units were 3% down due to intense competition, while motorcycle sales which are mainly located in Sumatra, benefited from higher agricultural prices, leading to a 12% increase in sales to 181,000 units. There was an improved contribution from the rental business due to higher gains on disposal of rental vehicles, partly offset by higher depreciation and borrowing costs associated with fleet expansion. The contribution by Mandiri Tunas Finance, 49%-owned by Tunas Ridean, was 47% up on the prior year as higher income was earned on a larger portfolio.

Vietnam

In Vietnam, 25.3%-owned Truong Hai Auto Corporation ("Thaco") performed well, with a 27% increase in contribution to US$53 million from higher unit sales and margins. Thaco's overall vehicle sales rose 9% to 72,000 units with its passenger car sales increasing by 36%, partly offset by a 21% decline in its commercial vehicle sales, leading to an increase in market share from 27% to 31%. The contribution from Thaco's real estate subsidiary remained relatively unchanged from the previous year.

Other Strategic Interests

The Group's Other Strategic Interests, which comprise a 25.5% interest in Siam City Cement, a 24.7% interest in Refrigeration Electrical Engineering Corporation ("REE") and a 10.6% interest in Vinamilk, together contributed a profit of US$56 million, compared to US$19 million in 2017, benefiting in particular from Vinamilk dividends declared in the period and improved results from Siam City Cement.

Siam City Cement’s contribution of US$19 million was significantly higher than the prior year, due to improved domestic performance and lower one-off expenses, partially offset by lower contributions from its regional operations. REE’s contribution of US$13 million was 27% higher, due mainly to strong contributions from its real estate business, as well as its power and water investments. The Group’s investment in Vinamilk, acquired in the last quarter of 2017, produced dividend income of US$24 million.

Outlook

We expect the Group to achieve satisfactory full year results, notwithstanding concerns over competitive pressure in the car market and weak crude palm oil prices in Indonesia. The Group's Direct Motor Interests and Other Strategic Interests are expected to continue to perform well.

Ben Keswick

Chairman

7th November 2018

Statement pursuant to Rule 705(5) of the Listing Manual

The directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the accompanying unaudited interim financial results for the nine months ended 30th September 2018 to be false or misleading in any material respect.

On behalf of the Directors

Ben Keswick

Director

Vimala Menon

Director

7th November 2018

(1) Fair value through other comprehensive income ("FVOCI")

For the three months ended 30th September 2018

For the nine months ended 30th September 2018