Half Yearly Report

To: Business Editor 30th July 2010

For immediate release

The following announcement was issued today to a Regulatory Information Service approved by the Financial Services Authority in the United Kingdom.

Half-Yearly Results for the Six Months ended 30th June 2010

Highlights

·; Underlying earnings for the half year up 66%

·; Significantly improved contributions from all Group companies

"The excellent first-half result included a particularly strong contribution from residential sales in Hongkong Land and compared favourably with the relatively weak start to the previous year. While the Group's overall performance in the second half is unlikely to exceed that of 2009, a satisfactory result is expected for the full year."

Sir Henry Keswick,Chairman

30th July 2010

Results

The interim dividend of US¢6.00 per share will be payable on 13th October 2010 to shareholders on the register of members at the close of business on 20th August 2010 and will be available in cash with a scrip alternative. The ex-dividend date will be on 18th August 2010, and the share registers will be closed from 23rd to 27th August 2010, inclusive.

Jardine Strategic Holdings Limited

Half-Yearly Results for the Six Months ended 30th June 2010

Overview

The Group performed strongly throughout the first half of 2010 compared to the more challenging first six months of 2009. Significantly increased contributions were received from all major operating units, most notably Hongkong Land, which recorded substantial gains from residential developments, and the Group's Indonesian subsidiary, Astra.

Performance

Jardine Strategic's underlying profit for the first six months of 2010 was US$698 million, an increase of 66% over the same period in 2009. Underlying earnings per share were 65% higher at US$1.12. The turnover of the Group, including 100% of the turnover of associates and joint ventures, was US$22.8 billion, compared to US$15.7 billion in the first half of 2009.

The Group's share of investment property valuations in Hongkong Land at the end of June gave rise to a net gain of US$462 million, which has been taken through the profit and loss account. This compares with a US$339 million deficit in the first half of 2009. After non-trading items, the Company's profit attributable to shareholders was US$1,168 million for the six months, compared with US$295 million in 2009. 

Net asset value per share at 30th June 2010 calculated on a market value basis was US$35.98, an increase of 10% from 31st December 2009 reflecting a strengthening of the share prices on the Company's underlying investments.

The Board has declared an interim dividend of US¢6.00 per share.

Business Developments

Within Jardine Matheson's directly held interests, operating conditions improved for Jardine Pacific's businesses leading to a good result for the period. In May 2010, Jardine Pacific completed the acquisition of an additional 17% of HACTL, Hong Kong's leading air cargo terminal operator, to take its interest to 42%. Jardine Motors' profits rose strongly in the six months compared with the first half of 2009. Its markets in Southern China, while highly competitive, continue to show attractive growth prospects. Jardine Lloyd Thompson produced a satisfactory profit increase, despite low interest rates and a subdued rating environment, reflecting improved efficiencies and new business wins.

Hongkong Land enjoyed an excellent first half with an impressive profit contribution from its residential development activities. Construction of the group's Singapore joint venture office development, Marina Bay Financial Centre, continued on schedule, and the two towers which are being completed in 2010 are already almost fully let. The commercial property markets of Hong Kong and Singapore are expected to remain stable as the year progresses, but conditions in residential markets are mixed.

Dairy Farm maintained its expansion programme during the first half of the year. It added 127 outlets to reach a total of some 5,200 stores, including a new IKEA store which opened in Hong Kong in June. In addition to the group's continuing organic growth, recent acquisitions in Malaysia and Singapore will add a further seven hypermarkets and 17 supermarkets in the second half of the year. Restaurant associate, Maxim's, has also been active in Southern China where it opened a new bakery to support the expansion of its cake shop chain and launched its first Genki Sushi outlet in Shenzhen.

Occupancy in Mandarin Oriental's hotels benefited from increased demand in the first half of 2010 with the strongest performances being seen in Asia, particularly Hong Kong. Occupancy levels, however, have not yet reached those achieved in 2008, limiting the group's capacity to raise average room rates. Mandarin Oriental has maintained its development strategy and has recently announced management contracts for hotel developments in Abu Dhabi and Doha.

Jardine Cycle & Carriage produced a good set of results as trading conditions remained positive for most of its business interests. Astra's activities, in particular its automotive, financial services and heavy equipment operations, were supported by growth in the Indonesian economy as consumer demand was buoyed by low interest rates, modest inflation and relatively stable exchange rates. Jardine Cycle & Carriage's directly held motor interests in Singapore suffered from government measures to restrict demand, but profit growth was recorded in Malaysia, Indonesia and Vietnam.

Outlook

The excellent first-half result included a particularly strong contribution from residential sales in Hongkong Land and compared favourably with the relatively weak start to the previous year. While the Group's overall performance in the second half is unlikely to exceed that of 2009, a satisfactory result is expected for the full year.

Sir Henry Keswick

Chairman

30th July 2010

Operating Review

Jardine Matheson

Jardine Matheson reported an underlying profit for the first six months of 2010 of US$664 million, an increase of 70%. After investment property revaluations, the company's profit attributable to shareholders was US$1,052 million for the six months, compared with US$252 million in 2009. Shareholders' funds increased by 9% to US$10.6 billion.

·; Jardine Pacific

Jardine Pacific's underlying profit for the first half of 2010 was 52% higher at US$65 million. The revaluation of the group's residential property investment portfolio gave rise to a non-trading gain of US$9 million, producing a profit attributable to shareholders of US$77 million. The group's aviation and shipping activities generated an improved overall contribution, with Hong Kong Air Cargo Terminals benefiting from a 38% growth in cargo throughput. Gammon's earnings were little changed, although its strong order book should lead to a better result in the second half of the year. Jardine Schindler and JEC both produced increased earnings. Jardine Restaurants' Pizza Hut operations in Hong Kong and Taiwan showed some profit growth, while a new KFC franchise in Taiwan had an encouraging start. JOS recorded higher turnover and earnings despite the sector remaining subdued. The group continues to trade well and the full-year results will benefit from its increased shareholding in HACTL.

·; Jardine Motors

Jardine Motors achieved an underlying profit of US$57 million, a significant improvement over the US$18 million recorded in the first half of 2009, as its businesses benefited from more positive trading conditions. Zung Fu's performance in Hong Kong and Macau reflected higher deliveries of Mercedes-Benz passenger cars at improved margins. Its Mercedes-Benz sales in Southern China continued to grow strongly, achieving a 74% increase in new car deliveries, while the number of outlets reached 18. The United Kingdom operations also made progress as new car sales rose, and the first-half results included a gain of US$6 million arising on the disposal of two properties. While the full-year prospects for Jardine Motors remain promising, its second-half earnings will face costs associated with its expansion in mainland China.

·; Jardine Lloyd Thompson

Jardine Lloyd Thompson produced a good performance in the first half of 2010, despite competitive insurance markets and low interest rates. A 21% increase in total revenue reflected good organic growth and the successful integration of recent acquisitions, and underlying profit before tax was US$112 million, an increase of 23% in the company's reporting currency. After a significant non-recurring tax credit, the company's contribution to the Group's first-half underlying profit rose by 55%. The retail and specialist risk and insurance business again achieved good growth in both revenue and trading profit and produced an improved trading margin of 25%. The employee benefits business saw revenue grow by 50%, due mainly to acquisitions and good improvement in organic growth; trading margin, however, reduced from 15% to 14% reflecting the cost of business integration. The outlook for the full year is encouraging.

Hongkong Land

Hongkong Land's underlying profit for the period was up 70% at US$477 million. While rental income from its commercial portfolio was stable, there was a significant increase in earnings from the residential sector. The group's results also benefited from its US$39 million share of a reversal of an impairment provision. Profit attributable to shareholders was US$1,391 million after accounting for a US$914 million gain arising from an increase in investment property values.

Demand for office and retail space in Hong Kong's Central district remained relatively robust during the first half. Vacancy in Hongkong Land's office portfolio at the end of June was 4.2%, while its retail portfolio was fully leased. In the Marina Bay development area of Singapore, where Hongkong Land will complete two commercial towers this year, rents remained reasonably firm. In Jakarta, the group has begun construction of a 61,000 sq. m. joint venture commercial tower.

In the residential sector, two pre-sold projects in Singapore were completed in the first half, Marina Bay Residences, in which the group has a 33% interest, and MCL Land's Waterfall Gardens project. In the second half of 2010, profits will be primarily recognized from developments in Hong Kong, Macau and mainland China. The group continues with its programme of residential developments across the region.

Hongkong Land should produce a good result for the full year, although the contribution from residential sales will be lower in the second half.

Dairy Farm

Dairy Farm made good progress in the first half of 2010. Sales, including 100% of associates, increased by 13% to US$4.3 billion, while its profit attributable to shareholders was 17% higher at US$182 million. The results benefited from favourable currency movements. There were no non-trading items.

The group's Hong Kong operations produced a satisfactory overall performance, while its supermarkets in Taiwan suffered in a very competitive market. IKEA produced increased profits in both Hong Kong and Taiwan. In Southern China, its convenience stores were adversely affected by restrictions on the sale of tobacco products. The health and beauty operation in mainland China produced good like-for-like sales growth and the number of stores increased to 139. Hong Kong restaurant associate, Maxim's, reported an excellent result as strong sales were maintained.

Dairy Farm's businesses in Singapore, Malaysia and Indonesia also achieved good growth in sales and profit, with all formats performing well. In the group's Indian joint ventures, the supermarket business produced lower operating losses, while the health and beauty chain operated profitably.

Dairy Farm is expected to continue to trade well overall in the second half of 2010 and deliver a satisfactory result for the full year.

Mandarin Oriental

Occupancy levels in Mandarin Oriental's hotels rose as demand increased in the first half of 2010. Strict cost control measures continued to be enforced across the portfolio, and the group's hotels have maintained or enhanced their relative market positions. Underlying profit was US$13 million, up from US$1 million in the same period in 2009. Profit attributable to shareholders was also US$13 million, as compared to US$74 million in the first half of 2009 which included a gain on a property disposal.

A new property in Macau located at the One Central complex opened at the end of June 2010, and the group will manage the 92 branded residences and apartments located above the hotel. Mandarin Oriental currently operates 26 hotels and has a further 16 hotels under development. It also operates, or has under development, 14 branded residences connected with its properties. While some of its current projects are continuing to face delays, the group is reviewing an increasing number of opportunities in key city centre and resort destinations.

While a full recovery is dependent on global economic conditions, Mandarin Oriental's performance is expected to improve as rates and occupancies continue to move towards pre-crisis levels.

Jardine Cycle & Carriage

Jardine Cycle & Carriage's revenue grew by 61% to US$7.4 billion, while underlying profit increased by 71% to US$353 million. Profit attributable to shareholders for the half year was up 70% at US$358 million.

Astra contributed US$349 million to Jardine Cycle & Carriage's underlying profit, an increase of 74%, reflecting improved performances in many of its major businesses and a stronger rupiah.

The underlying profit contribution from Jardine Cycle & Carriage's other motor interests was 33% higher at US$28 million. The Singapore motor operations faced difficult trading conditions following government measures to restrict demand resulting in a slightly lower contribution. Cycle & Carriage Bintang increased sales of the new Mercedes-Benz E-Class in a stronger market, and Tunas Ridean also traded well. In Vietnam, Truong Hai Auto Corporation produced a significantly higher profit contribution due to improved sales and the group's increased shareholding.

Following a strong first half in 2010, compared with a relatively weak start to the previous year, the overall performance of Jardine Cycle & Carriage in the second half is expected to be more in line with that of 2009. 

Astra

Astra recorded a 52% increase in net profit, under Indonesian accounting standards, for the six months of 2010 equivalent to US$701 million.

The Indonesian wholesale motor vehicle market grew by 76% to over 370,000 units compared to the same period of the previous year. While Astra's sales of motor vehicles were up 71% to some 208,000 units, its market share has declined from 58% to 56%. The wholesale motorcycle market grew by 41% to some 3.6 million units. Astra Honda Motor maintained its market leading position with sales up 43% to 1.7 million units, producing a market share of 46%. Astra Otoparts, the group's 96%-owned component manufacturing business, benefited from the expansion in the wholesale automotive market and reported an 81% increase in profit. The potential for significant increases in vehicle related taxes by provincial governments based on recently introduced legislation has now subsided and it is currently expected that there will be no major changes this year.

The contribution from Astra's consumer finance activities improved reflecting growth in their loan books and stable net interest margins. In June 2010, Astra agreed, subject to regulatory approvals, to purchase the 47% in Astra Sedaya Finance that it did not already own. Bank Permata produced an improved performance.

United Tractors, the group's heavy equipment and mining subsidiary, reported a 1% increase in profit for the period. Sales of Komatsu heavy equipment were 95% higher at 2,700 units following strong demand from the mining and plantation sectors, although a shift in the sales mix towards lower margin units led to a more modest rate of profit growth. Mining subsidiary, Pamapersada Nusantara, reported a 24% increase in coal extracted and a 15% increase in overburden removed, but its earnings fell due to lower gross profit margins caused by higher production costs and the impact of a stronger rupiah. Astra Agro Lestari reported a 17% decline in net income due to lower gross profit margins, increased operating expenditure and reduced sales despite some recovery in crude palm oil prices achieved. Astra's information technology, infrastructure and logistics activities all produced improved results.

Astra continues to benefit from economic growth in Indonesia and favourable trading conditions and the outlook for the remainder of the year is encouraging.