7th Mar 2007 09:05
Jardine Matheson Hldgs Ld07 March 2007 To: Business Editor 7th March 2007 For immediate release The following announcement was today issued to a Regulatory Information Serviceapproved by the Financial Services Authority in the United Kingdom. Jardine Matheson Holdings Limited2006 Preliminary Announcement of Results Highlights • Underlying earnings per share* up 14%• Full-year dividend up 11%• Good profit growth from most Group businesses• Astra impacted by weak Indonesian markets• Hongkong Land property portfolio value increases 21% "The outlook for the majority of our markets remains promising. Following theexcellent result in 2006, it may, however, be demanding to match the level ofgrowth in 2007 that has been seen in recent years." Henry Keswick, Chairman7th March 2007 __________________________________________________________________________ Year ended 31st December 2006 2005 Change US$m US$m %__________________________________________________________________________Underlying profit attributable toshareholders* 533 463 +15Profit attributable to shareholders 1,348 1,244 +8Shareholders' funds 6,594 4,998 +32__________________________________________________________________________ US$ US$ %__________________________________________________________________________Underlying earnings per share* 1.52 1.33 +14Earnings per share 3.83 3.58 +7Dividends per share 0.50 0.45 +11Net asset value per share 18.65 14.27 +31__________________________________________________________________________* The Group uses 'underlying business performance' in its internalfinancial reporting to distinguish between the underlying profits andnon-trading items, as more fully described in note 7 to the financialstatements. Management considers this to be a key measure and hasprovided this analysis as additional information in order to providegreater understanding of the Group's underlying business performance.__________________________________________________________________________ The final dividend of USc40.00 per share will be payable on 16th May 2007,subject to approval at the Annual General Meeting to be held on 10th March 2007,to shareholders on the register of members at the close of business on 23rdMarch 2007 and will be available in cash with a scrip alternative. The ex-dividend date will be on 21st March 2007, and the share registers will be closedfrom 26th to 30th March 2007, inclusive. Jardine Matheson Holdings Limited Preliminary Announcement of ResultsFor The Year Ended 31st December 2006 Performance A generally favourable economic environment and good performances from a numberof Group companies in 2006 enabled Jardine Matheson to achieve a recordunderlying profit of US$533 million, an increase of 15%. The turnover of theGroup including 100% of the turnover of associates and joint ventures wasUS$27.1 billion, compared to US$24.1 billion in 2005. Among the Group's associates and subsidiaries, Hongkong Land, Jardine Pacific,Jardine Motors and Dairy Farm all produced good profit increases, but JardineCycle & Carriage's earnings were lower. The investment in RothschildsContinuation made a valuable first contribution, and a first dividend wasreceived from Tata Industries. The Group's financial position has continued to improve. Despite activeinvestment programmes, consolidated net debt excluding finance companies fell by31% to US$1.2 billion, due to proceeds from disposals and careful cash flowmanagement. Property values again rose strongly in 2006, although not quitematching the increases of the previous year, and together with the gains ondisposals led to a higher net profit of US$1,348 million. Shareholders' fundsincreased 32% to US$6.6 billion. The Board is recommending a final dividend of USc40.00 per share, representingan overall increase of 11% for the full year. Business Activity Business confidence in Asia remained strong in 2006, driven in large part by thecontinued growth in the Chinese economy. Moreover, the increasing sophisticationof China's markets is expanding the opportunities in sectors that are attractiveto the Group's service businesses, such as commercial and residential property,hotel management, retail stores, motor dealerships and insurance broking. The stability of the Group's earnings benefits from its broad business mix, notonly by commercial sector but also by geographic spread. Southeast Asia, forexample, accounted for some 40% of underlying profit in 2006, having more thandoubled its share over five years. The removal of fuel subsidies in Indonesia in late 2005 led to a sharp increasein inflation, higher interest rates and a fall in consumer confidence, whichaffected Astra's motor related activities. Sentiment began to improve towardsthe end of 2006, and the medium-term outlook remains positive. The steadiness ofthe currency throughout the year was an encouraging feature. In 2007 Jardine Matheson will mark the 175th anniversary of its founding as apartnership in Canton in 1832. The Firm has experienced many business cycles andpolitical changes as it has survived and prospered in the region's volatilemarkets, and the past twenty-five years have been no exception. The globalization of commerce has led to Asia's markets maturing, making redundant the agency role that was once the mainstay of many of the Group's operations. Jardine Matheson has responded by investing in businesses where it could control its own destiny, and has today established a portfolio of focused companies that are at the forefront of their chosen markets; each well financed and possessing sound growth prospects. These companies have continued to build their businesses over the past year.Among the more notable examples, Hongkong Land expanded its property activitieson a substantial scale both regionally and into the residential sector; DairyFarm extended its banners across its Asian markets and has promising opportunities in India and Vietnam; and the development of Mandarin Oriental's hotel portfolio gathered pace with a record number of new developments and the reopening of the refurbished Mandarin Oriental, Hong Kong. Outlook In conclusion, the Chairman, Henry Keswick said, "The outlook for the majorityof our markets remains promising. Following the excellent result in 2006, itmay, however, be demanding to match the level of growth in 2007 that has beenseen in recent years." "Looking further ahead, Hongkong Land will recognize profits in the three yearsfrom 2008 upon completion of residential properties already sold, and most ofour other businesses are also expected to perform well as they grow theiroperations." Managing Director's Review Jardine Matheson's underlying profit in 2006 was US$533 million, an increase of15%, which was helped by property and pension gains in Jardine Motors and afirst dividend from Tata Industries. Underlying earnings per share rose 14% toUS$1.52. Jardine Pacific produced a creditable improvement in earnings following goodperformances from a number of its operations, most notably its constructionbusiness. Jardine Motors also achieved an excellent result, benefiting fromproperty disposals and changes in pension liabilities in the United Kingdom,while Jardine Lloyd Thompson's result was little changed in a year ofrestructuring. Among the Group's listed affiliates, Dairy Farm posted another good result withall its major operations performing well, and Hongkong Land increased itscontribution as it benefited from rising net rental income and the acquisitionof MCL Land. At Mandarin Oriental, healthy markets and income from new hotelsoffset the impact of the closure for renovation of its major Hong Kong property.Jardine Cycle & Carriage's contribution, however, fell due to a reduction inAstra's earnings. The Group's results also reflect a US$21 million contributionfrom its 20% investment in Rothschilds Continuation and a dividend received byJardine Strategic from Tata Industries. The Company's share of a 21% upward revaluation of Hongkong Land's portfolio in2006 amounted to US$599 million, compared with US$647 million in 2005, and aUS$70 million increase was also recorded by Jardine Pacific. In accordance withInternational Financial Reporting Standards, such revaluations of investmentproperties are taken through the profit and loss account. The net profit ofUS$1,348 million includes these revaluations together with non-trading itemssuch as gains on disposals in Jardine Motors, Jardine Pacific and MandarinOriental as well as the advance disposal of shares in JPMorgan Chase underlyingthe Company's exchangeable bond. This disposal produced a non-trading profit ofUS$69 million, after allowing for the cost of ensuring availability of stock tomeet any conversions prior to bond redemption in September 2007. In December, Hongkong Land raised US$269 million through the sale by itswholly-owned subsidiary of some 3% of Hongkong Land's existing share capital toJardine Strategic at the prevailing market price. Jardine Strategic now has adirect interest of 46% in Hongkong Land. Jardine Pacific Jardine Pacific's underlying profit from continuing businesses in 2006 increased27% to US$103 million as the majority of its operations performed well,particularly Gammon. In addition, an upward revaluation of the group'sresidential property investment portfolio produced a gain of US$70 million. Thecompany's net profit was US$191 million. Shareholders' funds rose 10% to US$363million at the year end, producing an underlying return of 30%. During 2006,Jardine Pacific sold its interest in a Hong Kong mid-stream cargo handling jointventure and minority shareholdings in both BALtrans and the River TradeTerminal. Financial information of Jardine Pacific's larger businesses is summarizedbelow: Underlying profit Shareholders' funds 2006 2005 2006 2005 US$m US$m US$m US$m____________________________________________________________________Gammon 14 1 49 43HACTL 33 33 100 109Jardine Aviation Services 9 9 22 16JEC 12 10 26 27JOS 11 6 19 18Jardine Property Investment 3 3 187 116Jardine Restaurants 14 13 8 5Jardine Schindler 12 13 29 29Jardine Shipping Services 4 7 15 13Other 3 - 15 11Corporate (12) (14) (105) (91)____________________________________________________________________Continuing Businesses 103 81 365 296Discontinued Businesses - 9 (2) 34____________________________________________________________________ 103 90 363 330____________________________________________________________________ HONG KONG AIR CARGO TERMINALS ('HACTL') enjoyed record cargo volumes, but itsprofit contribution was little changed at US$33 million due to higher operatingcosts. HACTL has expressed its interest in developing a new cargo terminal atHong Kong International Airport and believes it is well qualified to deliver theAirport Authority's requirements. JARDINE AVIATION SERVICES also benefited fromthe increased activity at Hong Kong's airport producing a 7% increase in profit.Weaker shipping freight rates led to a lower contribution of US$4 million fromJARDINE SHIPPING SERVICES. Claims income from contracts completed in prior years and good progress inprojects in Macau enabled GAMMON to achieve a significantly improved result,Jardine Pacific's share of which was US$14 million. The profit contribution fromJARDINE SCHINDLER of US$12 million was slightly down on 2005 due mainly toincreased losses in its subsidiary in Korea. JEC's earnings rose 13% to nearlyUS$12 million as its operations in Hong Kong and Thailand performed well,although it continued to face challenging markets in mainland China. In 2006 itsold its 30% interest in Thorn Lighting to its joint venture partner. JARDINE RESTAURANTS continued to achieve good earnings growth, up 12% at someUS$14 million, with a strong performance from its Pizza Hut operation in HongKong. In Taiwan, it opened its first Long John Silver's restaurant. JOS recordeda higher profit of US$11 million with an 8% increase in sales. RoomPlus, a selfstorage business in Hong Kong, completed its first full year of operation andrecorded a small loss. COLLIERS HALIFAX produced an improved contribution fromits property activities in Japan. Jardine Pacific will incur higher financing charges in 2007 and a number of itsbusinesses are facing more challenging conditions. Despite this, the group isexpected to maintain an excellent return on shareholders' funds. Jardine Motors Jardine Motors' continuing operations produced commendable performancesachieving an underlying net profit of US$63 million, up 62%. The result wasenhanced by gains from property sales and a change in pension and tax law in theUnited Kingdom. The group's net profit for the year of US$104 million included anon-trading gain of US$38 million arising from the sale of its 50% interest inAppleyard Vehicle Contracts in the United Kingdom. Deliveries by Zung Fu of the new S-Class, following its well received launch inlate 2005, increased the Mercedes-Benz share of the new car market in Hong Kong,which reached 15% in 2006. The market for commercial vehicles in Hong Kong,however, was softer, while competitive pressures led to a small loss fromHyundai. The contributions from Zung Fu's service centres remained healthy andits car parks business was steady. The Mercedes-Benz dealership in Macaurecorded increased deliveries. Zung Fu continued to expand its dealershipnetwork in Southern China and achieved good growth in profitability with highersales volumes and service income. A new Mercedes-Benz centre was opened inFoshan in January 2007, bringing the total to 11, and three additional siteshave been secured for further expansion in 2007. Operating profits improved in the United Kingdom, despite a weaker car market,due to a resilient sales performance, higher earnings from services and furtherreductions in central overheads. In January 2007, a group of four Audidealerships was acquired, which is expected to be earnings enhancing. Jardine Motors continues to build its market position in the United Kingdom,Hong Kong and mainland China, but in 2007 its underlying profit will not benefitfrom the same level of property gains. Jardine Lloyd Thompson Jardine Lloyd Thompson ("JLT") achieved a creditable performance in 2006 againstthe background of challenging trading conditions and further weakening of the USdollar. The turnover of its continuing operations, following disposals in theUnited States, rose modestly to US$851 million. Underlying profit was maintainedat US$91 million, although net profit was lower at US$86 million. Non-tradingitems included a curtailment gain following the closure of a defined benefitscheme to reduce the group's pension exposure in the United Kingdom, offset by aloss on the sale of the group's discontinued US operations. The Risk & Insurance group, which accounts for more than 80% of JLT's revenue,faced insurance rates under pressure and intense competition for market share.Good performances from most of its retail operations, however, produced a 2%growth in turnover despite the adverse dollar movement. In May, approval wasreceived to start operations in a 51%-owned subsidiary as an insurance andre-insurance broker across mainland China. After the year end, the group'sassociate SIACI announced a merger which should significantly strengthen itsposition in France. The Employee Benefits business in the United Kingdom performed well. Turnoverwas 8% higher at US$141 million and the trading profit rose 15% to US$24million. The business is developing product categories in response to marketchanges as companies seek alternatives to defined benefit pension schemes. In 2006, progress was made in the repositioning of JLT with the strengthening ofits senior management, the sale of underperforming operations in the UnitedStates and the reorganization of its London market activities. Steps were alsotaken to reduce costs. The benefits from these actions should begin to be seenin 2007 and more fully in 2008. Hongkong Land Hongkong Land's net rental income from commercial property increased by 25% in2006 as broad-based demand and reduced supply in Hong Kong's Central districtproduced higher rents and capital values. Vacancy in its commercial portfoliowas maintained at 4.5% despite having added 2.8% with the completion of YorkHouse. Earnings from residential property were higher, largely due to a firstcontribution from the company's 77%-held affiliate in Singapore, MCL Land.Overall, underlying profit for 2006 rose 31% to US$245 million. The value of Hongkong Land's investment assets again rose in 2006 ending theyear 21% higher at US$11.7 billion, resulting in an adjusted net asset value pershare of US$4.76, up 23%. The group's net profit for 2006, including therevaluation, was US$1,901 million. Hongkong Land's strategy of broadening its commercial business regionally gainedmomentum as it significantly increased its portfolio in Singapore. Its jointventure development at One Raffles Quay in Singapore was fully let on completionin October 2006, while at the adjacent Marina Bay Financial Centre joint venturedevelopment, construction has begun on the first phase that includes 180,000 sq.m of office space and 428 residential units. A 194,000 sq. m second phase isalso to be developed by the consortium. Hongkong Land's reputation for quality in the commercial sector is also beingrecognized in the residential market, as was demonstrated in the excellentresponse to its new joint venture developments in Macau and Singapore. Thedevelopments of MCL Land have also attracted strong interest. Response to thelaunch of the final phase of Hongkong Land's joint venture development atCentral Park in Beijing was more subdued following measures announced by theGovernment designed to dampen certain market sectors, while elsewhere inmainland China construction began on the 650-unit Phase I of Bamboo Grove, ajoint venture in Chongqing. The prospects for Hongkong Land are encouraging as the office leasing reversioncycle in its Hong Kong portfolio will continue to enhance earnings, while theretail element is expected to remain strong. This will be complemented in thecoming years by the recognition of profits on residential sales. Dairy Farm Dairy Farm's strategy has been to build leading retail businesses in Asia'sgrowing consumer markets, and it now has 27 operations in nine countries. Thegroup had another good year in 2006 with increases in both sales and earnings asits operations benefited from its investment progamme and favourable economicconditions in its major markets. Sales, including 100% of those of associates,were up 9% to US$6.0 billion, and its underlying profit for the year rose by 11%to US$211 million. In North Asia, sales were 4% higher in 2006, and operating profit rose by 6%.All major retail formats in Hong Kong produced improved operating results. InSouthern China, the group's 7-Eleven operation increased sales and reducedlosses. It ended the year with 284 stores, including the first franchisedoutlets, and acquired a further 110 in March 2007. In Taiwan, IKEA incurredsignificant pre-opening costs for two new large stores, but has laid thefoundation for future growth. Most divisions of Hong Kong restaurant associate,Maxim's, achieved good results, with excellent progress being made by the GenkiSushi chain. In South Asia, Dairy Farm's businesses generally performed well. Sales rose 15%,but profits were only 3% higher due to costs associated with the repositioningof the Giant hypermarkets in Singapore. Active expansion programmes are beingpursued in Malaysia by Giant and the Guardian health and beauty stores, both ofwhich enjoyed substantial increases in sales and operating profit. The group'soperations in Indonesia have yet to produce the required returns, but areshowing some improvement and the medium-term prospects remain attractive. Therewas an encouraging growth in sales in India in what is becoming an increasinglycompetitive market. Dairy Farm acquired a small supermarket chain in Vietnamfollowing the receipt of a license to operate a number of stores on awholly-owned basis. Dairy Farm's financial position remains sound and it has ample cash flow to fundits ongoing investment requirements in its Asian markets. Mandarin Oriental Continued improvement in Mandarin Oriental's key markets and the contributionfrom new hotels offset the impact on earnings arising from the nine monthclosure for renovation of its Hong Kong flagship property. Underlying earningswere US$45 million, compared with US$41 million in 2005 when Mandarin Oriental,Hong Kong was open throughout the year. Net profit in 2006 was US$80 million, including a gain of US$35 million on thesale of The Mark hotel in New York. This compares with US$77 million in 2005,which included a US$36 million gain on the disposal of a property interest inHawaii. A further gain of some US$16 million was realized in March 2007following completion of the sale of half of the group's 50% equity interest inMandarin Oriental, New York. There were strong results from the group's owned hotels as The Excelsior, HongKong and its European properties benefited from higher room rates and increasesin occupancy. Its Tokyo hotel also improved significantly as its 2005 result hadincluded pre-opening costs. Mandarin Oriental, Hong Kong has been well receivedsince its reopening in September 2006, achieving a 50% increase in its averageroom rate. The contribution from associates and joint ventures also rose,largely due to impressive performances in Singapore and New York. Mandarin Oriental's international expansion accelerated in 2006 with theannouncement of five new management contracts and the opening of its latesthotel in Prague. In the first two months of 2007, luxury hotel developments wereannounced in Guangzhou, Paris and Taipei. The group's portfolio now comprises 20hotels with a further 14 under development, giving a total of 9,500 rooms in 20countries. Market demand is expected to remain strong in 2007, and Mandarin Oriental'sresults will benefit from its renovated Hong Kong property. Over the longerterm, the group will see increasing contributions from its many hotels currentlyunder development. Jardine Cycle & Carriage Jardine Cycle & Carriage's underlying profit for 2006 fell by 29% to US$211million. The prior year comparative included 13 months' contribution from Astrarequired to align its accounting period and US$19 million from the group'sshareholding in MCL Land, which was distributed in specie in early 2006. Withoutthese elements, the decline would have been 18%. Jardine Cycle & Carriage's consolidated net debt, excluding borrowing withinAstra's financial services operations, was slightly lower at US$600 million withthe proceeds from disposal of properties in Malaysia and the removal of MCLLand's net debt being substantially offset by capital expenditure in Astra. Poor market conditions in Indonesia, particularly in the automotive sector, ledto a material reduction in earnings at Astra, although the effect of the declineon Jardine Cycle & Carriage's results was lessened by the strengthening of theRupiah against the US dollar. Astra's contribution, on a comparable 12 monthbasis, was 18% lower at US$208 million. The contribution from Jardine Cycle & Carriage's directly-held motor interestsincreased marginally to US$32 million. Profits from its operations in Singaporeimproved strongly with Mitsubishi and Mercedes-Benz performing well, offsettingdeclines in Cycle & Carriage Bintang in Malaysia and PT Tunas Ridean inIndonesia and the cessation of contribution from Australia. The new NationalAutomotive Policy in Malaysia impacted Cycle & Carriage Bintang, although theefficiency of its balance sheet was enhanced following the payment of a specialdividend in October. Tunas Ridean suffered from the difficult conditions inIndonesia. Astra International The Indonesian economy was affected by a sharp increase in inflation and highinterest rates following the removal of fuel subsidies in late 2005. Towards theend of 2006 interest rates were lowered, leading to improvements in consumerconfidence. Within Astra's automotive operations, motor vehicle sales in 2006were down 32%, although market share rose from 49% to 55% with a number of newmodel launches. The decline in Astra's motorcycle sales was less severe at 12%as volumes increased in the second half, albeit at lower margins, and its marketshare was stable at some 53%. Astra's financial services businesses, which primarily support its automotiveoperations, declined in line with the market and recorded increases in doubtfuldebt provisions. Its automotive component manufacturing and trading operationswere similarly affected. Earnings from Astra's agribusiness improved in USdollar terms, but in Rupiah were flat as higher costs offset a 11% increase incrude palm oil sales volumes and firmer prices. Nevertheless, the prospectsremain promising, and Astra is continuing to source land for new oil palm andrubber plantations. Its heavy equipment business, United Tractors, produced satisfactory growth incontract mining with 20% increases achieved in both overburden removal and coalextraction, although additional provisions for doubtful debts were required formining contracts. The company's overall profit was also affected by lower salesof Komatsu equipment despite its market share remaining at 48%. In January2007, its mining subsidiary acquired for US$34 million the rights to mine andmarket the coal from concessions located in South Kalimantan. In September, Astra increased its shareholding in Bank Permata from 31.6% to44.5% in tandem with its partner, Standard Chartered Bank. Bank Permata produceda marginal increase in profit, but further steps are being taken to improveproductivity and profitability to an acceptable level. In infrastructure,Astra's investment in a toll road project performed satisfactorily. In July, itacquired a 30% interest in the franchise for the Western Jakarta water utilityand is considering further infrastructure investments. Astra's performance is expected to show improvement as Indonesian marketscontinue to recover, although competitive pressures remain significant. In themedium term, Astra's leadership in the automotive sector, its established marketpositions in financial services, agribusiness and heavy equipment, and itsinfrastructure investments, provide excellent opportunities for growth. Further Interests Rothschilds Continuation In late 2005 Jardine Strategic acquired a 20% interest in RothschildsContinuation, an unlisted financial services holding company within theRothschild group whose interests include the investment bank N M Rothschild &Sons. It contributed US$21 million to the Group's earnings in 2006 as itsinvestment banking operations benefited from the high level of M&A activity inthe London market. The group's other activities also showed improvement under anew management team. Tata Industries Tata Industries is an unlisted Indian investment company in which JardineStrategic has a 20% shareholding. In June 2006, Tata Industries sold its largeststrategic investment, a 48% holding in IDEA Cellular Ltd., realizing asubstantial gain. The net proceeds were applied in part to debt reduction and tothe payment of a first dividend, of which Jardine Strategic's share was US$16million, with the balance being retained for future investment. Others Edaran Otomobil Nasional, the Malaysian motor dealership group in which JardineStrategic holds a 20% interest, experienced a difficult year in 2006 reportingonly a modest net profit after tax of US$2.5 million. With the new NationalAutomotive Policy leading to increased competition, the group's operations wereimpacted by the fall in market share of the Proton. The company is reviewing anumber of options to reposition the business, but in the short term itsprospects remain challenging. Of Jardine Strategic's smaller investments, its 7% interest in The Bank of N. T.Butterfield & Son in Bermuda has performed well and the valuation of the stakehas increased significantly. The value of the company's 7% shareholding inVietnamese bank, Asia Commercial Bank, has also enjoyed strong growth. The bank,which was floated on the Hanoi Securities Trading Center in November 2006,focuses on consumers and SMEs and has a network of 80 branches. Anthony NightingaleManaging Director7th March 2007 ______________________________________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Profit and Loss Accountfor the year ended 31st December 2006______________________________________________________________________________________________________________ Restated 2006 2005 _______________________________________ _______________________________________ Underlying Non- Underlying Non- business trading business trading performance items Total performance items Total US$m US$m US$m US$m US$m US$m _______________________________________ _______________________________________Revenue (note 2) 16,281 - 16,281 11,929 - 11,929Net operating costs (note 3) (15,274) 302 (14,972) (11,331) 155 (11,176) _________ _________ _________ _________ _________ _________Operating profit 1,007 302 1,309 598 155 753 Financing charges (234) - (234) (176) - (176)Financing income 102 - 102 79 - 79 Net financing charges (132) - (132) (97) - (97)Share of results of associatesand joint ventures (note 4) 439 748 1,187 499 837 1,336 _________ _________ _________ _________ _________ _________ Profit before tax 1,314 1,050 2,364 1,000 992 1,992Tax (note 5) (252) (58) (310) (160) (13) (173) _________ _________ _________ _________ _________ _________ Profit after tax 1,062 992 2,054 840 979 1,819 _________ _________ _________ _________ _________ _________Attributable to:Shareholders ofthe Company 533 815 1,348 463 781 1,244Minority interests 529 177 706 377 198 575 _________ _________ _________ _________ _________ _________ 1,062 992 2,054 840 979 1,819 _________ _________ _________ _________ _________ _________ US$ US$ US$ US$ _________ _________ _________ _________ _________ _________Earnings per share (note 6)- basic 1.52 3.83 1.33 3.58- diluted 1.51 3.75 1.32 3.55 _________ _________ _________ _________ _________ _______________________________________________________________________________________________________________________ ________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Balance Sheetat 31st December 2006________________________________________________________________________________ Restated 2006 2005 US$m US$m ________________________________________AssetsIntangible assets 1,825 1,689Tangible assets 2,931 2,404Investment properties 271 179Plantations 460 383Associates and joint ventures 6,476 5,062Other investments 597 686Financing and other debtors 1,052 1,349Deferred tax assets 119 103Pension assets 174 152 _________ _________Non-current assets 13,905 12,007 _________ _________ Stocks and work in progress 1,478 1,491Trade, financing and other debtors 2,262 2,382Current investments 3 -Current tax assets 142 56Bank balances and other liquid funds - non-finance companies 2,355 1,503- finance companies 173 187 2,528 1,690 _________ _________ 6,413 5,619Non-current assets classified as held for sale (note 8) 60 690 _________ _________Current assets 6,473 6,309 _________ _________ Total assets 20,378 18,316 _________ _________ EquityShare capital 154 151Share premium and capital reserves 29 21Revenue and other reserves 7,303 5,607Own shares held (892) (781) _________ _________Shareholders' funds (note 9) 6,594 4,998Minority interests 4,509 3,876 _________ _________Total equity 11,103 8,874 _________ _________LiabilitiesLong-term borrowings- non-finance companies 2,074 2,631- finance companies 723 1,005 2,797 3,636Deferred tax liabilities 557 459Pension liabilities 151 176Non-current provisions 20 16Other non-current liabilities 190 151 _________ _________Non-current liabilities 3,715 4,438 _________ _________Creditors and accruals 2,920 2,838 Current borrowings- non-finance companies 1,522 619- finance companies 954 1,169 2,476 1,788Current tax liabilities 101 128Current provisions 63 54 _________ _________ 5,560 4,808Liabilities directly associated with non-currentassets classified as held for sale (note 8) - 196 _________ _________Current liabilities 5,560 5,004 _________ _________Total liabilities 9,275 9,442 _________ _________ Total equity and liabilities 20,378 18,316 _________ _________________________________________________________________________________________ ________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Statement of Recognized Income and Expensefor the year ended 31st December 2006________________________________________________________________________________ Restated 2006 2005 US$m US$m _______________________________Surpluses on revaluation of intangible assets - 458Surpluses on revaluation of properties 120 77Gains on revaluation of other investments 306 48Actuarial gains on defined benefit pension plans 40 14Net exchange translation differences 393 (84)(Losses)/gains on cash flow hedges (13) 24Tax on items taken directly to equity (71) (170) ________ _________Net income recognized directly in equity 775 367Transfer to profit and loss on disposal of otherinvestments (91) (20)Transfer to profit and loss on disposal of subsidiary undertakings, associates and joint ventures (3) (1)Transfer to profit and loss in respect ofcash flow hedges 4 -Profit after tax 2,054 1,819 ________ _________Total recognized income and expense for the year 2,739 2,165 ________ _________Attributable to:Shareholders of the Company 1,681 1,399Minority interests 1,058 766 ________ _________ 2,739 2,165 ________ _________ Surpluses on revaluation of intangible assets represent the increase in fairvalue attributable to the Group's previously held interests in Astra and PT HeroSupermarket on the date they became subsidiary undertakings. ____________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Cash Flow Statementfor the year ended 31st December 2006____________________________________________________________________________ Restated 2006 2005 US$m US$m _______________________________Operating activitiesOperating profit 1,309 753Depreciation and amortization 403 249Other non-cash items (138) (21)Decrease/(increase) in working capital 478 (377)Interest received 95 55Interest and other financing charges paid (212) (165)Tax paid (362) (179) _________ _________ 1,573 315Dividends from associates and joint ventures 377 303 Cash flows from operating activities 1,950 618 Investing activitiesPurchase of Astra - 320Purchase of other subsidiary undertakings (note 11(a)) (55) (101)Purchase of associates and joint ventures (note 11(b)) (465) (302)Purchase of other investments (note 11(c)) (94) (12)Purchase of land use rights (17) (12)Purchase of other intangible assets (6) -Purchase of tangible assets (725) (458)Purchase of investment properties (2) (18)Purchase of plantations (22) (6)Loans to associates, joint ventures and other - (13)Sale of subsidiary undertakings (note 11(d)) 231 80Sale of associates and joint ventures (note 11(e)) 101 181Sale of other investments (note 11(f)) 480 40Sale of land use rights 26 33Sale of tangible assets 75 63Sale of investment properties - 49 Cash flows from investing activities (473) (156) Financing activitiesIssue of shares 3 13Capital contribution from minority shareholders 13 4Drawdown of borrowings 7,611 9,735Repayment of borrowings (8,008) (9,516) Dividends paid by the Company (91) (76)Dividends paid to minority shareholders (243) (199) Cash flows from financing activities (715) (39)Effect of exchange rate changes 45 (2) _________ _________Net increase in cash and cash equivalents 807 421Cash and cash equivalents at 1st January 1,684 1,263 _________ _________Cash and cash equivalents at 31st December 2,491 1,684 _________ _____________________________________________________________________________________ ____________________________________________________________________________Jardine Matheson Holdings LimitedAnalysis of Profit Contributionfor the year ended 31st December 2006____________________________________________________________________________ 2006 2005 US$m US$m _______________________________Group contributionJardine Pacific 103 90Jardine Motors Group 67 47Jardine Lloyd Thompson 28 29Hongkong Land 85 65Dairy Farm 131 118Mandarin Oriental 27 21Jardine Cycle & Carriage 16 23Astra 101 127Corporate and other interests (25) (57) _________ _________Underlying profit 533 463Increase in fair value of investment properties 671 664Other non-trading items 144 117 _________ _________Profit attributable to shareholders 1,348 1,244 _________ _________ Analysis of Jardine Pacific's contributionGammon 14 1HACTL 33 33Jardine Aviation Services 9 9JEC 12 10JOS 11 6Jardine Property Investment 3 3Jardine Restaurants 14 13Jardine Schindler 12 13Jardine Shipping Services 4 7Other interests 3 -Corporate (12) (14) _________ _________ 103 81Discontinued businesses - 9 _________ _________ 103 90 _________ _________ Analysis of Jardine Motors Group's contributionHong Kong and Mainland China 36 24United Kingdom 29 16Corporate (2) (1) _________ _________ 63 39Discontinued businesses 4 8 _________ _________ 67 47 _________ _____________________________________________________________________________________ ____________________________________________________________________________Jardine Matheson Holdings LimitedNotes____________________________________________________________________________ 1. Accounting Policies and Basis of Preparation The financial information contained in this announcement has been based on theaudited results for the year ended 31st December 2006 which have been preparedin conformity with International Financial Reporting Standards, includingInternational Accounting Standards and Interpretations adopted by theInternational Accounting Standards Board. In 2006, the Group adopted the following amendments and interpretation toexisting standards which are relevant to its operations: ____________________________________________________________________________ IAS 21 (amended 2005), Net Investment in a Foreign OperationIAS 39 (amended 2005), Cash Flow Hedge Accounting of Forecast Intragroup TransactionsIAS 39 (amended 2005), The Fair Value OptionIAS 39 and IFRS 4 (amended 2005), Financial Guarantee ContractsIFRIC 4, Determining whether an Arrangement contains a Lease ____________________________________________________________________________ There have been no changes to the accounting policies as a result of adoption ofthe above amendments and interpretation. Following completion of the initial accounting in respect of the acquisition ofAstra and Rothschilds, the comparative figures for 2005 have been restatedprincipally to reflect revisions to the provisional fair value of franchiserights in Astra determined at the date of acquisition, and the consequentialchange in the surplus on revaluation attributable to the Group's previously heldinterest. The Group's reportable segments are set out in note 2. Certain comparative figures have been reclassified to conform with the currentyear presentation. 2. Revenue 2006 2005 US$m US$m ________________________ By business: Jardine Pacific 1,082 1,024 Jardine Motors Group 2,352 2,078 Dairy Farm 5,175 4,749 Mandarin Oriental 405 399 Jardine Cycle & Carriage 1,119 1,087 Astra 6,143 2,590 Other activities 5 2 _________ _________ 16,281 11,929 _________ _________ 3. Net Operating Costs 2006 2005 US$m US$m ________________________ Cost of sales (12,507) (9,131) Other operating income 537 299 Selling and distribution costs (1,995) (1,593) Administration expenses (854) (695) Other operating expenses (153) (56) _________ _________ (14,972) (11,176) _________ _________ Net operating costs included the following gains/ (losses) from non-trading items: Increase in fair value of investment properties 91 19 Sale and closure of businesses 127 96 Sale of investments 80 20 Revaluation of properties - 3 Sale of property interests 10 1 Restructuring of businesses (5) - Other (1) 16 _________ _________ 302 155 _________ _________ 4. Share of Results of Associates and Joint Ventures 2006 2005 US$m US$m ________________________ By business: Jardine Pacific 80 64 Jardine Motors Group 3 8 Jardine Lloyd Thompson 27 47 Hongkong Land 856 900 Dairy Farm 28 29 Mandarin Oriental 13 12 Jardine Cycle & Carriage 3 193 Astra 151 82 Corporate and other interests 26 1 _________ _________ 1,187 1,336 _________ _________ Share of results of associates and joint ventures included the following gains/(losses) from non-trading items: Increase in fair value of investment properties 752 814 Sale and closure of businesses (13) 6 Sale of investments 4 - Pension curtailment 13 1 Buyout of minority interests in Jardine Lloyd - 18 Thompson Revaluation of properties - 4 Restructuring of businesses (5) (2) Other (3) (4) _________ _________ 748 837 _________ _________ Results are shown after tax and minority interests. 5. Tax 2006 2005 US$m US$m _______________________ Current tax - charge for the year (298) (147) - over/(under) provision in prior years 3 (15) Deferred tax (15) (11) _________ _________ (310) (173) _________ _________ Tax on profits has been calculated at rates of taxation prevailing in theterritories in which the Group operates and includes United Kingdom tax of US$15million (2005: US$2 million). 6. Earnings Per Share Basic earnings per share are calculated on profit attributable to shareholdersof US$1,348 million (2005: US$1,244 million) and on the weighted average numberof 352 million (2005: 347 million) shares in issue during the year. The weightedaverage number excludes the Company's share of the shares held by subsidiaryundertakings and the shares held by the Trustee under the Senior Executive ShareIncentive Schemes. Diluted earnings per share are calculated on profit attributable to shareholdersof US$1,324 million (2005: US$1,242 million), which is after adjusting for theeffects of the conversion of dilutive potential ordinary shares of subsidiaryundertakings, associates or joint ventures, and on the weighted average numberof 353 million (2005: 350 million) shares after adjusting for the number ofshares which are deemed to be issued for no consideration under the SeniorExecutive Share Incentive Schemes based on the average share price during theyear. Additional basic and diluted earnings per share are also calculated based onunderlying profit attributable to shareholders. A reconciliation of earnings isset out below: 2006 2005 Basic Diluted Basic Diluted earnings earnings earnings earnings per per per per share share share share US$m US$ US$ US$m US$ US$ ___________________________________________________________________________Profit attributableto shareholders 1,348 3.83 3.75 1,244 3.58 3.55Non-trading items (note 7) (815) (781) ________ _________Underlying profit attributable toshareholders 533 1.52 1.51 463 1.33 1.32 ________ _________ 7. Non-trading Items Non-trading items are separately identified to provide greater understanding ofthe Group's underlying business performance. Items classified as non-tradingitems include fair value gains or losses on revaluation of investment properties; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for the closure of businesses; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance. An analysis of non-trading items after interest, tax and minority interests isset out below: 2006 2005 US$m US$m ________________________Increase in fair value of investmentproperties - Hongkong Land 599 647- other 72 17 671 664Sale and closure of businesses - Appleyard Vehicle Contracts 38 -- EastPoint - 23- Pacific Finance - 22- The Mark 21 -- Kahala Mandarin Oriental - 22- motor operations 2 5- insurance broking (8) 1- other 6 6 59 79Sale of investments 83 16Pension curtailment 13 1Buyout of minority interests in Jardine Lloyd Thompson - 18Revaluation of properties - 5Sale of property interests 2 (1)Restructuring of businesses (10) (2)Other (3) 1 _________ _________ 815 781 _________ _________ 8. Non-current Assets Classified as Held for Sale The major classes of assets and liabilities classified as held for sale are setout below: 2006 2005 US$m US$m ______________________________ Intangible assets - 7Tangible assets 4 72Investment properties 2 24Associates and joint ventures 14 34Other investments - 28Financing and other debtors 31 -Deferred tax assets - 1Current assets* 9 524 _________ _________Total assets 60 690 _________ _________ Long-term borrowings - 81Deferred tax liabilities - 1Other non-current liabilities - 2Current liabilities - 112 _________ _________Total liabilities - 196 _________ _________ Non-current assets held for sale at 31st December 2006 principally related toMandarin Oriental's 25% interest in Mandarin Oriental, New York of US$14 millionand its mezzanine loan to the hotel of US$40 million. Non-current assets heldfor sale at 31st December 2005 principally related to Mandarin Oriental'sinterest in The Mark, New York, and Jardine Cycle & Carriage's interest in MCLLand. * Carrying amount in 2005 included bank balances and other liquid funds of US$26million. 9. Shareholders' Funds 2006 2005 US$m US$m ________________________At 1st January- as previously reported 5,020 3,639- revision of fair value adjustments (22) - _________ _________- as restated 4,998 3,639Recognized income and expense attributable toshareholders 1,681 1,399Dividends (note 10) (160) (141)Employee share option schemes- value of employee services 8 7- exercise of share options 3 13Scrip issued in lieu of dividends 175 167Equity component of convertible bondsissued by an associate - 22Change in attributable interests - (4)Increase in own shares held (111) (104) _________ _________At 31st December 6,594 4,998 _________ _________ 10. Dividends 2006 2005 US$m US$m ______________________Final dividend in respect of 2005 of USc35.65(2004: USc31.50) per share 216 187Interim dividend in respect of 2006 of USc10.00(2005: USc9.35) per share 61 56 _________ _________ 277 243Less Company's share of dividends paid on theshares held by subsidiary undertakings (117) (102) _________ _________ 160 141 _________ _________ A final dividend in respect of 2006 of USc40.00 (2005: USc35.65) per shareamounting to a total of US$246 million (2005: US$216 million) is proposed by theBoard. The dividend proposed will not be accounted for until it has beenapproved at the Annual General Meeting. The net amount after deducting theCompany's share of the dividends payable on the shares held by subsidiaryundertakings of US$104 million (2005: US$91 million) will be accounted for as anappropriation of revenue reserves in the year ending 31st December 2007. 11. Notes to Consolidated Cash Flow Statement 2006 2005(a) Purchase of other subsidiary undertakings US$m US$m _______________________ Intangible assets 6 27 Tangible assets 15 47 Deferred tax assets - 5 Current assets 18 99 Long-term borrowings - (9) Deferred tax liabilities (1) (8) Pension liabilities (1) (9) Current liabilities (9) (85) Minority interests - 13 ________ ________ Net assets 28 80 Adjustment for minority interests - (27) ________ ________ Net assets acquired 28 53 Goodwill 12 39 ________ ________ Total consideration 40 92 Adjustment for deferred consideration and carrying value of associates and joint ventures (7) (23) Adjustment to fair values relating to previously held interests - (4) Cash and cash equivalents of subsidiary undertakings acquired - (5) ________ ________ Net cash outflow 33 60 Purchase of shares in Jardine Cycle & Carriage 22 41 ________ ________ 55 101 ________ ________ Net cash outflow in 2006 of US$33 million included US$6 million for JardineMotors Group's acquisition of dealerships in the United Kingdom, and US$17million for Dairy Farm's store acquisitions in Malaysia and Vietnam. Net cash outflow in 2005 of US$60 million included US$39 million for acquisitionof an additional 32.3% interest in PT Hero Supermarket in Dairy Farm, and US$7million for an additional 30% interest in Republic Auto and US$8 million for anadditional 30% interest in Century Gardens in Jardine Cycle & Carriage. (b) Purchase of associates and joint ventures in 2006 included US$26 million, US$26 million, US$19 million and US$98 million for Astra's interest in Toyota Astra Financial Services, PT PAM Lyonnaise Jaya, Astra Daihatsu Motor and an additional 12.95% interest in Bank Permata respectively, and Jardine Strategic's increased interest in Hongkong Land of US$289 million. Purchase of associates and joint ventures in 2005 included US$21 million for increased interest in Landmarks Land and Properties in Jardine Cycle & Carriage, US$15 million for Astra's interest in PT Marga, US$71 million for increased interest in Hongkong Land and US$187 million for a 20% interest in Rothschilds in Jardine Strategic. (c) Purchase of other investments in 2006 included US$80 million for Astra's purchase of securities. 2006 2005(d) Sale of subsidiary undertakings US$m US$m _______________________ Intangible assets 12 4 Tangible assets 94 - Investment properties 24 - Associates and joint ventures 35 - Financing and other debtors 1 - Deferred tax assets 1 - Current assets 626 167 Long-term borrowings (100) - Deferred tax liabilities (2) - Current liabilities (207) (57) ________ ________ Net assets 484 114 Adjustment for minority interests (262) - ________ ________ Net assets disposed of 222 114 Cumulative exchange translation differences (8) - Profit on disposal 88 25 ________ ________ Sale proceeds 302 139 Adjustment for deferred consideration 1 - Adjustment for carrying value of associates and joint ventures (14) - Tax and other expenses paid on disposals - (7) Cash and cash equivalents of subsidiary undertakings disposed of (58) (52) ________ ________ Net cash inflow 231 80 ________ ________ Sale proceeds in 2006 of US$302 million included US$99 million from Mandarin Oriental's sale of its interest in The Mark, New York, US$28 million from Astra's partial sale of its interest in Aisin and US$163 million from Jardine Strategic's sale of its interest in MCL Land. Sale proceeds in 2005 of US$139 million included US$29 million from Jardine Pacific's sale of its interest in EastPoint and US$96 million from Dairy Farm's sale of its interest in Hartanah Progresif, a property-owning subsidiary undertaking. (e) Sale of associates and joint ventures in 2006 included US$72 million from Jardine Motors Group's sale of its interest in Appleyard Vehicle Contracts. Sale of associates and joint ventures in 2005 included US$59 million from sale of Pacific Finance in Jardine Pacific and US$97 million from sale of Kahala Mandarin Oriental in Mandarin Oriental. (f) Sale of other investments in 2006 included US$31 million from Jardine Pacific's sale of its interest in BALtrans, US$27 million from Astra's sale of securities and US$407 million from sale of the Group's interest in JPMorgan Chase. Sale of other investments in 2005 included US$36 million from Jardine Strategic's sale of its interest in EON Capital. 12. Capital Commitments, Financial Guarantees and Contingent Liabilities 2006 2005 US$m US$m _________________________Capital commitments 202 310 ________ ________Financial guarantees in respect of facilitiesmade available to associates and joint ventures 70 78 ________ ________ Financial guarantees in respect of facilities made available to associates andjoint ventures are stated at their total respective contracted amounts. It isprobable that the Group has no obligations under such guarantees. Various Group companies are involved in litigation arising in the ordinarycourse of their respective businesses. Having reviewed outstanding claims andtaking into account legal advice received, the Directors are of the opinion thatadequate provisions have been made in the financial statements. 13. Post Balance Sheet Event In December 2006, Mandarin Oriental announced that it had entered into anagreement to sell half of its investment in Mandarin Oriental, New York reducingits interest in the hotel from 50% to 25%. The sale was completed in March 2007resulting in a profit after tax of approximately US$16 million. The final dividend of USc40.00 per share will be payable on 16th May 2007,subject to approval at the Annual General Meeting to be held on 10th May 2007,to shareholders on the register of members at the close of business on 23rdMarch 2007, and will be available in cash with a scrip alternative. Theex-dividend date will be on 21st March 2007, and the share registers will beclosed from 26th to 30th March 2007, inclusive. Shareholders will receive theircash dividends in United States Dollars, unless they are registered on theJersey branch register where they will have the option to elect for Sterling.These shareholders may make new currency elections by notifying the UnitedKingdom transfer agent in writing by 27th April 2007. The Sterling equivalent ofdividends declared in United States Dollars will be calculated by reference to arate prevailing on 2nd May 2007. Shareholders holding their shares through TheCentral Depository (Pte) Limited ('CDP') in Singapore will receive United StatesDollars unless they elect, through CDP, to receive Singapore Dollars or thescrip alternative. - end - For further information, please contact: Jardine Matheson LimitedJames Riley (852) 2843 8229 Matheson & Co., Limited Philip Hawkins 020 7816 8136 GolinHarrisKennes Young (852) 2501 7987 Weber ShandwickRichard Hews/ Helen Thomas 020 7067 0700 Full text of the Preliminary Announcement of Results and the PreliminaryFinancial Statements for the year ended 31st December 2006 can be accessedthrough the Internet at 'www.jardines.com'. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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