Half Yearly Report

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 2011 

Highlights

·; First-half underlying earnings per share up 10%

·; Excellent performances from Astra and Dairy Farm

·; Lower contribution from residential property developments

·; Significant rise in investment property values

"There are concerns over the uncertain global economic environment and the contribution from residential developments in Hongkong Land will be lower. Nevertheless, conditions for the Group's businesses in Asia remain relatively resilient and a satisfactory performance is expected in the second half of the year."

Sir Henry Keswick, Chairman

29th July 2011

Results

The interim dividend of US¢6.50 per share will be payable on 12th October 2011 to shareholders on the register of members at the close of business on 19th August 2011 and will be available in cash with a scrip alternative. The ex-dividend date will be on 17th August 2011, and the share registers will be closed from 22nd to 26th August 2011, inclusive.

Jardine Strategic Holdings Limited

Half-Yearly Results for the Six Months ended 30th June 2011

Overview

The Group recorded good results in the first half of the year as strong performances from Astra and Dairy Farm more than offset the effect of fewer residential development completions by Hongkong Land and a lower profit contribution from Jardine Motors.

Results

Jardine Strategic's underlying profit for the first six months of 2011 was US$766 million, an increase of 10% over the same period in 2010. Underlying earnings per share were also 10% higher at US$1.23. The gross revenue of the Group, including 100% of the revenue of Jardine Matheson, associates and joint ventures, was US$27.4 billion, compared to US$22.8 billion in the first half of 2010.

Increases in investment property values in Hongkong Land and Jardine Matheson at the end of June 2011 gave rise to a net gain of US$1,747 million, which has been taken through the profit and loss account and compares with a US$559 million gain in the first half of 2010. Including this and other non-trading items, the Company's profit attributable to shareholders was US$2,539 million for the six months, up from US$1,261 million in 2010. 

Net asset value per share at 30th June 2011 calculated on market value basis was US$54.58, an increase of 15% from 31st December 2010. The improvement reflected the good performance of the Group shareholdings notwithstanding declines in stock markets over the period.

The Board has declared an increased interim dividend of US¢6.50 per share, up 8%.

Business Performances

Within Jardine Matheson's directly held interests, Jardine Pacific recorded mixed results from its businesses in the first half of 2011. Its recently enlarged IT group, JOS, and its restaurant operations had a strong six months, but its shipping activities suffered from rate erosion and Gammon's earnings were affected by two difficult projects. While the group is performing ahead of 2010, a less positive trading environment in some sectors must temper the outlook for the year.

Jardine Motors faced a poor market in the United Kingdom and margin pressure in mainland China. Nevertheless, its second-half performance should benefit from good levels of demand in Hong Kong and on the Mainland, where the group is expanding its Mercedes-Benz dealership network, as well as the recent acquisition of a group of 22 dealerships in the United Kingdom.

Jardine Lloyd Thompson is trading well and the outlook for the full year is encouraging despite a subdued insurance rating environment and low interest rates. The group continues to invest in the recruitment of leading industry professionals while seeking further cost efficiencies, the benefit of which will be seen increasingly over the medium term.

Hongkong Land's commercial property activities enjoyed positive market conditions. In April 2011, the group expanded its regional footprint with the announcement of the conditional acquisition of sites in Phnom Penh, Cambodia. Hongkong Land remains active in the residential sector, particularly in mainland China and Singapore, although the timing of completions means that the profit contribution will be lower in 2011. Government measures designed to dampen residential sales activity in key sectors in the region have the potential to affect Hongkong Land's future results.

Dairy Farm continued to explore acquisition opportunities in existing and new markets in Asia while maintaining its investment in organic growth. At the end of May, its restaurant associate, Maxim's, restructured its Starbucks interests with the franchisor by selling back its 30% share of the mainland China operations and acquiring the remaining interests in its Hong Kong and Macau Starbucks businesses. Looking forward, despite inflationary cost pressures, Dairy Farm's major businesses are expected to continue to trade well.

More favourable conditions enabled Mandarin Oriental to achieve higher occupancy and increased room rates. This led to improved profitability despite a significant fall in demand in its Tokyo hotel following the March earthquake. Its first-half results also reflected gains arising in its London property following the completion of the adjacent branded residences. In June, the group opened its hotel in Paris, increasing its portfolio to 27.

Jardine Cycle & Carriage produced a strong set of results as Astra's businesses benefited from continued economic growth in Indonesia. Supply constraints in Astra's automotive operations resulting from the events in Japan had a less material impact than initially expected and sales remained strong. Increased earnings were also achieved in its financial services, agribusiness, heavy equipment, mining and infrastructure activities. In May, United Tractors raised some US$700 million through a rights issue to finance the expansion of its coal mining and coal contracting businesses as well as related infrastructure opportunities. While the prospects for Jardine Cycle & Carriage's non-Astra motor interests are mixed, the outlook for Astra remains promising.

People

R.C. Kwok retired from the Board in May 2011. We would like to thank him for his significant contribution to the Company.

Outlook

There are concerns over the uncertain global economic environment and the contribution from residential developments in Hongkong Land will be lower. Nevertheless, conditions for the Group's businesses in Asia remain relatively resilient and a satisfactory performance is expected in the second half of the year.

Sir Henry Keswick

Chairman

29th July 2011

Operating Review

Jardine Matheson

Jardine Matheson reported an underlying profit for the first six months of 2011 of US$725 million, an increase of 9%. After investment property revaluations and other non-trading items, the company's profit attributable to shareholders was US$2,202 million for the period, compared with US$1,129 million in 2010. Shareholders' funds increased by 15% to US$15,747 million during the first six months of 2011.

·; Jardine Pacific

Jardine Pacific's underlying profit was 13% higher at US$74million. The revaluation of the group's investment property portfolio gave rise to a non-trading gain of US$31million and property disposals produced profits of US$14 million, resulting in a profit attributable to shareholders of US$119 million. Hong Kong Air Cargo Terminals recorded a decline in earnings due to reduced cargo throughput, although an increased shareholding led to a larger profit contribution. Jardine Aviation Services achieved a better performance, but Jardine Shipping Services' results were lower. While Gammon's first-half earnings were affected by two difficult projects, its performance is expected to improve in the second half. Jardine Schindler generated higher profits from new installations and continues to grow its maintenance portfolio. JEC's earnings were flat as the 2010 comparative benefited from one-off items. Jardine Restaurants' Pizza Hut operations experienced sales and profit growth, while the KFC franchise in Taiwan acquired in 2010 produced a stable year on year result. JOS recorded improved revenue and earnings following its recent acquisition.

·; Jardine Motors

Jardine Motors recorded an underlying profit of US$39 million for the period, a decrease of 31% from 2010, which had benefited from a gain of US$6 million from property disposals and the timing of variable margin receipts in respect of mainland China. Zung Fu produced a satisfactory performance in Hong Kong and Macau with higher deliveries of Mercedes-Benz passenger cars. Despite good volume growth on the Mainland, Zung Fu is facing keen competition in the luxury car market and its results were impacted by lower margins. It now has 18 outlets operating in Southern China with a further six under development. The group's dealerships in the United Kingdom faced very challenging conditions with declining new vehicles sales and reduced margins, although a recent acquisition will benefit the full-year result.

·; Jardine Lloyd Thompson

Jardine Lloyd Thompson produced a satisfactory performance for the first half of 2011 despite strong competition and very low interest earnings. Revenue benefited from further organic growth and rose to US$667 million, an increase of 9% in the company's reporting currency. Underlying profit before tax was US$129 million, an increase of 8% in its reporting currency. The contribution to the Group's first-half underlying profit was lower as 2010 included a significant tax credit. The retail and specialist risk and insurance activities had a good first half with strong results from emerging markets. Underlying trading profit was little changed, however, as investment continued to be made in growing the business. The trading margin was 23%, compared to 25% for the same period in 2010. The Employee Benefits business achieved a 19% increase in trading profit, and the trading margin improved from 14% to 15%.

Hongkong Land

Hongkong Land's commercial property portfolio continued to benefit from favourable markets, but reduced residential completions led to the underlying profit for the period declining by 23% to US$365 million. A US$3.4 billion gain on revaluation of investment properties was recorded producing a profit attributable to shareholders of US$3.8 billion.

Rental reversions were generally positive in Hongkong Land's office portfolio as broad-based demand continued. At the end of June 2011, office vacancy was 2.5%, while its retail portfolio was fully occupied. In Singapore, there is no significant vacancy in the group's existing portfolio, and it is now benefiting from the addition of the first two towers of Marina Bay Financial Centre that were completed in 2010. The third tower, which is some 60% pre-let, will complete next year.

In the residential sector, there were further sales of units at The Serenade in Hong Kong and The Residences and Apartments at Mandarin Oriental, Macau. In Singapore, MCL Land has handed over to buyers Peak@Balmeg, the only project that it will complete during 2011. In May, it successfully launched Terrasse, a new development that will complete in 2014, and an additional residential development site was acquired in Singapore on which some 600 high-rise apartments will be built. In mainland China, sales continued at Maple Place, Beijing, while development activities are ongoing in residential projects in Chongqing, Chengdu and Shenyang.

Dairy Farm

Dairy Farm enjoyed stable trading conditions in its principal markets across Asia in the first half of 2011. Sales, including 100% of associates, increased by 16% to US$5.0 billion, while underlying net profit rose 18% to US$216 million. The results were enhanced by favourable currency movements. The profit attributable to shareholders of US$226 million included a non-trading gain arising from a disposal by Maxim's of its 30% interest in the Starbucks operations on the Mainland.  Dairy Farm's number of outlets stood at some 5,250 at 30th June 2011, a slight reduction during the period primarily due to the Starbucks China sale.

The group's Hong Kong operations produced a good result, and the contribution from Taiwan was satisfactory. In Southern China, 7-Eleven showed improvement, while Mannings continued to expand its network on the Mainland. Hong Kong restaurant associate, Maxim's, enjoyed a successful first half with increases in sales and profits.

Good performances were seen across the group's Malaysian operations, and there was further expansion in all formats in Indonesia. The Singapore businesses also achieved steady growth. In India, Dairy Farm's health and beauty joint venture traded profitably, while progress was made in the supermarket business. Developments also continued in Vietnam where the group's first hypermarket is targeted to open in early 2012.

Mandarin Oriental

Mandarin Oriental's underlying profit for the period rose from US$13 million to US$33 million, which includes US$16 million of branding fees received from the One Hyde Park complex adjacent to the group's London hotel, partially offset by pre-opening expenses of US$11 million incurred in its new Paris hotel. Profit attributable to shareholders was US$43 million, which includes a non-trading gain of US$10 million representing a long-term leasehold interest in part of the One Hyde Park complex granted at no cost to the group.

The performance of the group's wholly-owned Hong Kong hotels improved with increases in both occupancy and rates, but losses were recorded in its Tokyo hotel as occupancy fell. In Europe, the group benefited from strong demand in its traditional markets, and enhanced performances were also recorded in its properties in the United States.

The new Mandarin Oriental, Paris, located on the rue Saint-Honoré, opened at the end of June under a long-term lease. Mandarin Oriental currently operates 27 hotels and has a further 14 under development, a number of which are at an advanced stage of construction. The group continues to review further development opportunities in key destinations around the world.

Jardine Cycle & Carriage

Jardine Cycle & Carriage's revenue increased by 27% to US$9.4 billion, while underlying profit grew by 37% to US$485 million. With no non-trading items in the first half of 2011, profit attributable to shareholders was also US$485 million, up 35%. The group continued to benefit from strong operating cash flows. Astra's contribution to Jardine Cycle & Carriage's underlying profit rose 41% to US$491 million as the results from good trading performances were enhanced by the strength of the Indonesian rupiah.

Jardine Cycle & Carriage's other interests produced a modest decline in profit at US$28 million. The Singapore motor operations faced a fall in sales following a sharp reduction in the government quota for new vehicles, while in Vietnam, Truong Hai Auto Corporation made a lower contribution despite higher unit sales, due primarily to increased finance costs. In Indonesia, the earnings from Tunas Ridean were little changed as a higher profit from its automotive activities was offset by reduced returns from its finance and rental businesses. In Malaysia, Cycle & Carriage Bintang saw some improvement as sales rose. The full-year outlook is mixed as challenges remain in Singapore and Vietnam.

Astra

Astra's operations benefited from continued growth in the Indonesian economy, assisted by stable inflation, high commodity prices and the availability of consumer finance at affordable interest rates. It reported a 33% increase in net profit under Indonesian accounting standards for the first half of 2011, equivalent to US$985 million.

Astra's motor vehicle sales grew by 10% to some 230,000 units, representing a market share of 55%, down from 56%, as the Indonesian wholesale market for motor vehicles grew by 13% to 418,000 units. The wholesale market for motorcycles also grew by 13% to 4.1 million units. Astra Honda Motor maintained its leading position with sales improving by 26% to 2.1 million units, leading to a rise in market share from 46% to 51%. Astra Otoparts, the group's 96%-held component manufacturing business, reported a 16% decline in its net income due to higher costs.

An improved contribution from Astra's consumer finance operations reflected a 15% growth in the amount financed, reduced offshore funding costs and a stable customer credit experience. Group insurance company, Asuransi Astra Buana, generated an increase in earnings. Astra's 45%-held joint venture, Bank Permata, reported net income up 33% as its loan book grew by 36%.

United Tractors, which is 60%-owned, reported net income up 35% in the first half of 2011. Strong results were seen in its Komatsu heavy equipment business as sales rose 59% to 4,333 units. The contract coal mining operations of subsidiary, Pamapersada Nusantara, achieved an increase in contract coal production of 6% to 40 million tonnes and an increase in contract overburden removal of 16% to 365 million bcm, despite the continuing effects of unfavourable weather conditions and a weak US dollar. United Tractors sold two million tonnes of coal produced from its own mines.

Palm oil producer, 80%-held Astra Agro Lestari, reported a doubling in net income for the period as average crude palm oil prices achieved increased by 22% and palm oil production rose 26% to 594,000 tonnes. Astra's information technology business as well as its infrastructure and logistics activities all produced improved results.