12th Sep 2006 10:05
Jardine Matheson Hldgs Ld12 September 2006 To: Business Editor 12th September 2006 For immediate release The following announcement was today issued to the London Stock Exchange. Jardine Matheson Holdings LimitedInterim Results for the Six Months ended 30th June 2006 Highlights • Good performances from most Group businesses• Astra's result affected by weak Indonesian motor markets• Hongkong Land property portfolio value increases 10%• Interim dividend up 7% to USc10.00 per share "The majority of Jardine Matheson's businesses are expected to perform wellduring the remainder of the year, though the extent of an improvement in Astra'smotor and consumer finance operations in Indonesia remains unclear." Henry Keswick, Chairman12th September 2006 Results ________________________________________________________________________________ (unaudited) Six months ended 30th June 2006 2005 Change US$m US$m %________________________________________________________________________________Underlying profit attributable to shareholders* 228 232 -2Profit attributable to shareholders 550 672 -18Shareholders' funds+ 5,710 4,999 +14________________________________________________________________________________ US$ US$ %________________________________________________________________________________Underlying earnings per share* 0.65 0.67 -3Earnings per share 1.57 1.95 -19Net asset value per share+ 16.18 14.27 +13________________________________________________________________________________ USc USc %________________________________________________________________________________Interim dividend per share 10.00 9.35 +7________________________________________________________________________________ * The basis of calculation is set out in note 6 to the condensed financial statements. + At 30th June 2006 and 31st December 2005, respectively. Net asset value per share is based on the book value of shareholders' funds. The interim dividend of USc10.00 per share will be payable on 22nd November 2006 to shareholders on the register of members at the close of business on 29th September 2006 and will be available in cash with a scrip alternative. The ex-dividend date will be on 27th September 2006, and the share registers will be closed from 2nd to 6th October 2006, inclusive. - more - Jardine Matheson Holdings LimitedInterim Results for the Six Months ended 30th June 2006 OverviewThe first half of 2006 saw most of the Group's businesses produce good resultsdespite rising interest rates and a high oil price creating challenges in thebusiness environment. The overall result was, however, affected by a reducedcontribution from Astra. ResultsThe Group's revenue for the first six months of 2006 was 71% higher at US$7.9billion, primarily due to the consolidation of Astra, which became a subsidiaryin the second half of 2005. The Company's underlying net profit was US$228million, a decline of 2% over the same period in 2005. Underlying earnings pershare were 3% lower at US$0.65. The 2005 figures were, however, flattered bygains on mark to market foreign exchange hedging contracts, excluding whichunderlying net profit in the first half of 2006 grew 8%. In accordance with International Financial Reporting Standards, the Company'sshare of any revaluations in Hongkong Land's investment property portfolio istaken through the profit and loss account. A 10% upward revaluation of theportfolio was recorded at the half year, compared with a 19% increase in thesame period in 2005. Of the Group's wholly-owned subsidiaries, Jardine Pacific achieved strongearnings growth as profitability improved in its construction business. JardineMotors also produced an excellent result. Among the Group's major quotedsubsidiaries, Dairy Farm posted another good result with all its majoroperations performing well; Mandarin Oriental benefited from healthy markets andcontributions from new hotels, although its profit was lower due to the closurefor renovation of its major Hong Kong property; while Jardine Cycle & Carriage'searnings performance suffered from the reduced contribution from Astra. Of theGroup's principal equity-accounted affiliates, Hongkong Land's increasedcontribution was due mainly to its rising net rental income and the acquisitionof MCL Land. Jardine Lloyd Thompson turned in a little changed performance indifficult conditions. The Group's results were also enhanced by an encouragingfirst contribution from its 20% investment in Rothschilds Continuation and bylower financing charges. An increased interim dividend of USc10.00 per share has been declared. Business PerformanceThe marked improvement in profitability at Gammon was the main reason forJardine Pacific's profit growth. The longer-term future of HACTL is stilluncertain due to the continuing discussions on the future cargo handlingcapacity requirements at Hong Kong's international airport. Jardine Pacificstreamlined its portfolio further with the sale of its minority interests in BALtrans and River Trade Terminal during the period and its joint-venture interestin a mid-stream cargo handling operation in August 2006. In Southern China, Jardine Motors has continued its development of Mercedes-Benzdealerships, which has led to a significant improvement in profitability, whilein Hong Kong it is benefiting from good demand for the new Mercedes-BenzS-Class. In July, it sold its joint-venture vehicle contracts business in theUnited Kingdom. There was a further expansion of Dairy Farm's South Asian operations where it ismaximizing the growth potential of the 'Giant' hypermarket format. Progress isalso being made with the remodelling of its formats in India, and opportunitiesare being pursued in Thailand, Vietnam and Brunei. In North Asia, its 7-Elevenchain in Guangdong Province continues to expand and has reached 250 outlets. TheIKEA business in Taiwan is incurring costs in its expansion programme as itopens further large stores. Dairy Farm's Hong Kong restaurant associate,Maxim's, did well to produce a good profit recovery. Jardine Cycle & Carriage saw its results impacted by the economic slowdown inIndonesia, which had a severe effect on Astra's motor sales and related consumerfinance operations. The recent lowering of interest rates in Indonesia was apositive move, but it is too early to predict the extent of a recovery inconsumer confidence. Nevertheless, the medium-term outlook for Astra remainspromising. Jardine Cycle & Carriage's motor operations in Singapore areperforming well, but its dealership interests in Malaysia and Indonesia arefacing challenging markets. The earnings of Mandarin Oriental were impacted by the temporary closure ofMandarin Oriental, Hong Kong for renovation during the first half of 2006,although the effect was mitigated in part by good performances elsewhere. Itsbalance sheet was strengthened following the completion of the sale of The Markhotel in New York. Mandarin Oriental's development strategy remains on coursewith three new hotel management contracts announced in the period, and the groupnow has 21 hotels in operation and another ten under development. Hongkong Land benefited from further rises in Hong Kong office rents and valuesin the first half of the year, and its rental reversions are set to remainpositive. Its latest office building in Hong Kong's Central district, YorkHouse, will be ready for occupancy in the fourth quarter, and its joint-venturecommercial developments in Singapore are progressing well. The acquisition of a77% interest in Singapore-listed residential property developer, MCL Land, wascompleted in February and income from its development projects will start tobenefit Hongkong Land's earnings fully in 2007. Elsewhere, the group is activewith residential development projects in mainland China, Hong Kong and Macau. The new management team at Jardine Lloyd Thompson has made progress with thereview of operations and strategic positioning of its businesses instigated inresponse to regulatory and structural changes in the industry. Some changes arealready being made, including the agreed sale of most of its businesses in the United States, and the benefits should begin to be seen in 2007 and 2008.The group received approval in May to commence activities as an insurance and reinsurance broker across mainland China in a 51%-owned joint venture. Rothschilds Continuation's investment banking operations took full advantage ofactive demand for their advice on mergers and acquisitions, enabling the groupto produce a satisfactory overall performance. OutlookIn conclusion, the Chairman, Henry Keswick said, "The majority of JardineMatheson's businesses are expected to perform well during the remainder of theyear, though the extent of an improvement in Astra's motor and consumer financeoperations in Indonesia remains unclear." Operating Review Jardine PacificJardine Pacific's underlying profit for the first half increased by 24% to US$46million, due largely to a marked improvement at Gammon. Excluding businessessold in 2005 the increase would have been 38%. Overall, the operatingenvironment for Jardine Pacific's businesses remains positive and its outlookfor the second half is encouraging. HACTL performed in line with last year as cargo throughput remained steady atHong Kong's international airport, although the longer-term prospects for thebusiness remain uncertain due to the continuing discussions over proposedincreases in cargo handling capacity at the airport. JARDINE AVIATION SERVICEShad a good first half as flight frequencies increased by over 10%, but JARDINESHIPPING SERVICES continued to suffer from the downward trend in freight rates.The group sold its minority shareholdings in BALtrans and River Trade Terminalduring the period and its interest in a mid-stream cargo handling joint venturein August 2006. GAMMON benefited from the receipt of claims income from contracts completed inprior periods as well as from good progress in its projects in Macau. JARDINESCHINDLER's earnings were at a similar level to last year, although a strongorder book means that the outlook for the remainder of the year is positive.JARDINE ENGINEERING CORPORATION's earnings were slightly down due to slowersales in mainland China. JARDINE ONESOLUTION recorded an improved profit, and JARDINE RESTAURANTScontinued to achieve good earnings growth from its Pizza Hut operations in HongKong and Taiwan. A good performance from its leasing division led to a higherresult for Colliers Halifax in Japan. Central finance costs rose slightly due tohigher interest rates. Jardine Motors GroupJardine Motors' underlying net profit from continuing businesses for the sixmonths rose 27% to US$28 million. In Hong Kong, Zung Fu benefited from the deliveries of new Mercedes-Benz modelslaunched towards the end of 2005 and increased its market share. Its servicecentres also continued to do well. The performance of its Hyundai passenger carfranchise was steady despite tough competition in the product segment. Asignificant improvement in profitability was achieved in its Mercedes-Benzoperations in Southern China where a strong growth in volumes was a reflectionof the buoyant market. Despite a weaker new car market in the United Kingdom, the group's dealershipsproduced increased earnings helped by a good used car performance, furtheroverhead reductions and lower financing charges. The net profit, however, waslower than the first half of 2005, which had benefited from the release ofproperty provisions. The vehicle leasing joint venture, Appleyard VehicleContracts, performed in line with the prior year, and in July 2006 the businesswas sold at a profit of some US$35 million, which will be recognized in theresults for the full year. Jardine Lloyd ThompsonJardine Lloyd Thompson's turnover for the first six months was up 4% at £260million (US$467 million). Underlying profit before tax was largely unchanged at£47 million (US$84 million) as higher investment income compensated for theeffect of lower trading profits. Underlying diluted earnings per share were 8%lower. Management has made progress in a review of the operations and strategicpositioning of the group's businesses, of which the full benefits should beachieved progressively over the next two years. Agreement has already been reached for the sale of most of the group's businesses in the United States, which is expected to complete by 31st October. The group is also addressing its pension deficit and is proposing to replace its defined benefit pension schemein the United Kingdom with a defined contribution scheme. Risk & Insurance increased its turnover by 5%, but the trading margin fell dueto declining premium rates and intense competition for market share. Turnoverwas stable in Risk Solutions, where margins are also under pressure and a newmanagement team is now in place. Most of the group's other operations producedsatisfactory performances, with strong showings from the specialist wholesaleand Asian operations. In May, approval was received to commence business as aninsurance and reinsurance broker across mainland China in a 51%-owned jointventure. Employee Benefits in the United Kingdom performed well. Client retentionremained strong and turnover increased 9%, while the trading margin againimproved. Dairy FarmDairy Farm achieved good results in most of its major markets in the first sixmonths in a trading environment that was generally favourable. Sales, includingassociates, increased by 8% to US$2.9 billion, while net profit rose 13% toUS$86 million. Most of Dairy Farm's businesses are continuing to trade well andthe prospects are positive for the remainder of the year. The South Asian businesses achieved good growth in sales and profit, up 16% and12% respectively, as Malaysia and Singapore performed well and Indonesiacontinued to improve. Dairy Farm now operates 44 Giant hypermarkets in theregion, and a further 16 are planned for the second half. In Malaysia,regulatory approvals received for additional hypermarket and health and beautyoutlets allow for further growth in that market, while 7-Eleven in Singapore isto operate convenience stores located at Shell petrol stations. The group ismaking progress in India with the remodelling and expansion of its operations,while its fledgling health and beauty venture in Thailand opened seven newstores to finish the period with ten outlets. Opportunities are also beingpursued in Vietnam and Brunei. Sales in North Asia increased by 5%. There were good performances from itsoperations in Hong Kong, and its supermarkets in Taiwan produced an improvedresult. In Guangdong Province, 7-Eleven continued to expand and reached 250stores at the end of June. The group's South Korean associate, Olive Young,achieved satisfactory gains in like-for-like sales. IKEA increased its profit inHong Kong, but the result from Taiwan was held back by significant pre-openingexpenses for a new large store in Taipei. Dairy Farm's Hong Kong-basedrestaurant associate, Maxim's, enjoyed a strong profit increase as a recovery inits Chinese restaurants was complemented by good contributions from Starbucksand the newly-acquired Genki Sushi business. Hongkong LandHongkong Land's underlying profit rose 11% to US$117 million in the first halfof 2006 as net rental income rose strongly on positive reversions. Residentialprofits from existing projects were lower on fewer completions, although thiswas more than compensated for by the first contribution from MCL Land. Theoverall result also reflected higher interest rates and increased debt levelsfollowing the investment in MCL Land. The value of the group's portfolioincreased by a further 10% during the period to US$10.8 billion, although thepace of growth is slowing. High levels of occupancy continued to underpin the commercial property market inHong Kong's Central district and although the rate of rental increase ismoderating Hongkong Land's rent reversions are set to remain strongly positive.At the end of June the vacancy in its office portfolio was below 5% and itsretail portfolio was fully let. The prospects are good for the letting of YorkHouse, due to complete in the fourth quarter. In Singapore, the group'sone-third owned development, One Raffles Quay, is now almost entirely committedprior to full completion in the fourth quarter. The neighbouring Business andFinancial Centre site, acquired by the same consortium, has received approval ofits masterplan and construction should begin later in the year. MCL Land made a useful profit contribution and has reported good progress inboth sales and site acquisitions. Construction of the third phase of the group's joint-venture residentialdevelopment in Beijing is nearing completion, the profits from which will berecognized when the units are handed over next year; work has also begun on thefourth phase. In Macau, Hongkong Land's joint-venture residential and commercialdevelopment has also begun construction, with completion projected for 2008/2009. Mandarin OrientalMarket conditions remained favourable for Mandarin Oriental as room ratesbenefited from growing demand and limited new supply. Profit attributable toshareholders, excluding gains from disposals, was US$14 million in the firsthalf of 2006 compared with US$19 million in the same period in 2005. Thetemporary closure for renovation of Mandarin Oriental, Hong Kong, has affectedresults, although the impact was partly offset by growing contributions fromother properties. The completion of the sale of The Mark hotel in New York at aprofit of US$35 million enhanced the group's financial position. Revenues willcontinue to be affected by the Hong Kong renovation for the remainder of 2006,but overall market conditions are expected to remain good. The Excelsior, Hong Kong and the group's European properties benefited fromrising average rates and strong demand. The contribution from its associates andjoint ventures also increased with stronger performances in Macau, Bangkok andNew York, while its Singapore hotel also produced significantly improved resultsfollowing extensive renovations that were completed in the first half of 2005. Mandarin Oriental, Hong Kong is scheduled to reopen partially in late Septemberwith most of the public areas complete and the full complement of rooms becomingavailable in stages by the year end. A 99-room hotel in Prague will also beopened in September. A further three new management projects were announced byMandarin Oriental in the first half. A luxury resort on Hainan Island in Chinais scheduled to open in 2007, followed by properties in Barcelona and Dallas.Further opportunities are under consideration as Mandarin Oriental continues todevelop as one of the world's leading luxury hotel groups. Jardine Cycle & CarriageJardine Cycle & Carriage's underlying profit after tax and minority interestsfor the period declined by 38% to US$96 million. Astra's results were impactedby weak consumer demand for motors and its contribution was 32% lower at US$99million. Earnings from the group's other motor operations at US$13 million were23% down due to a reduced profit in PT Tunas Ridean, its 37%-owned Indonesianassociate, and the absence of a contribution from Australia. The contributionfrom property also ceased following the distribution in specie in January 2006of the group's interest in MCL Land. Weak demand in Indonesia saw the market for motor cars decline by 49% and formotorcycles by 26%. Astra's market share for motor cars rose from 46% to 56%,supported by Toyota's strong range and the introduction of new models, but itsmarket share for motorcycles was slightly lower at 50%. Astra's related consumerfinance activities experienced a similar decline and have increased theirprovisions for doubtful debts. Within Astra's non-automotive activities, United Tractors' contract coal miningoperations performed well, increasing overburden removal by 32% and coalextraction by 23%, but sales of Komatsu heavy equipment fell 25% on lower demandfrom the mining sector. Net income from agribusiness grew 8% as Astra AgroLestari raised its crude palm oil sales by 23% and benefited from firmer prices.In infrastructure, the result from Astra's small investment in a toll road wassatisfactory. On 7th September 2006, Astra announced that in partnership withStandard Chartered Bank, each is investing a further US$97 million to acquireadditional shares in PT Bank Permata Tbk, thereby increasing their respectiveshareholdings from 31.6% to 44.5%. Jardine Cycle & Carriage's Malaysian motor operation, Cycle & Carriage Bintang,saw its sales impacted by the introduction of a new national automotive policythat caused considerable disruption to the market. PT Tunas Ridean also sufferedfrom weak demand and additional doubtful debt provisions. The Singapore motoroperations, however, performed well with good growth from Mitsubishi aspassenger car sales increased by 41%. Sales of Mercedes-Benz benefited from thelaunch of the new S-Class and rose 6%. Sales of Kia also rose 6%. The group hasbeen appointed as the distributor for Citroen in Singapore with effect from 1stOctober 2006. _____________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Profit and Loss Account _____________________________________________________________________________________ Year (unaudited) ended Six months ended 31st 30th June December 2006 2005 2005 US$m US$m US$m ___________________________________________________ Revenue (note 2) 7,878 4,608 11,929Cost of sales (6,046) (3,555) (9,131) ________ ________ ________ Gross profit 1,832 1,053 2,798Other operating income 228 148 356Selling and distribution costs (978) (682) (1,593)Administration expenses Other (436) (227) (695)operating expenses (64) (11) (56) ________ ________ ________Operating profit (note 3) 582 281 810Financing charges (110) (53) (154) ________ ________ ________Share of results of associates and joint ventures excluding change in fair value of investment properties 208 276 523Increase in fair value of investment properties 360 471 814 ________ ________ ________ Share of results of associates and joint ventures (note 4) 568 747 1,337 ________ ________ ________ Profit before tax 1,040 975 1,993Tax (note 5) (157) (56) (173) ________ ________ ________ Profit for the period 883 919 1,820 ________ ________ ________ Attributable to:Shareholders of the Company 550 672 1,245Minority interests 333 247 575 ________ ________ ________ 883 919 1,820 ________ ________ ________ ___________________________________________________ US$ US$ US$ ___________________________________________________Earnings per share (note 6)- basic 1.57 1.95 3.59- diluted 1.53 1.93 3.55 Underlying earnings pershare (note 6)- basic 0.65 0.67 1.33- diluted 0.65 0.67 1.32 ____________________________________________________ _____________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Balance Sheet _____________________________________________________________________________________ (restated) (unaudited) At 31st At 30th June December 2006 2005 2005 US$m US$m US$m ___________________________________________________AssetsIntangible assets 1,743 885 1,690Tangible assets 2,610 1,428 2,404Investment properties 179 157 179Plantations 413 - 383Associates and joint ventures 5,498 4,614 5,062Other investments 877 615 686Financing and other debtors 1,141 57 1,347Deferred tax assets 116 57 103Pension assets 150 135 152 ________ ________ ________ Non-current assets 12,727 7,948 12,006 ________ ________ ________ Properties for sale - 391 -Stocks and work in progress 1,447 812 1,491Trade, financing and other debtors 2,441 672 2,384Current tax assets 83 14 56Bank balances and other liquid funds ________ ________ ________ - non-finance companies 1,693 1,542 1,503- finance companies 189 - 187 ________ ________ ________ 1,882 1,542 1,690 ________ ________ ________ 5,853 3,431 5,621Non-current assetsclassified as held for sale (note 7) 39 149 690 ________ ________ ________ Current assets 5,892 3,580 6,311 ________ ________ ________ Total assets 18,619 11,528 18,317 ________ ________ ________ (Consolidated Balance Sheet continued on page 12) _____________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Balance Sheet (continued) _____________________________________________________________________________________ (restated) (unaudited) At 31st At 30th June December 2006 2005 2005 US$m US$m US$m ___________________________________________________ EquityShare capital 153 150 151Share premium and capital reserves 25 11 21Revenue and other reserves 6,405 4,781 5,608Own shares held (873) (756) (781) ________ ________ ________ Shareholders' funds (note 8) 5,710 4,186 4,999Minority interests 4,070 1,836 3,876 ________ ________ ________ Total equity 9,780 6,022 8,875 ________ ________ ________ LiabilitiesLong-term borrowings ________ ________ ________- non-finance companies 2,375 2,667 2,631- finance companies 825 - 1,005 ________ ________ ________ 3,200 2,667 3,636Deferred tax liabilities 466 182 459Pension liabilities 191 138 176Non-current provisions 17 5 16Other non-current liabilities 154 19 151 ________ ________ ________ Non-current liabilities 4,028 3,011 4,438 ________ ________ ________ Creditors and accruals 2,779 1,850 2,838Current borrowings ________ ________ ________ - non-finance companies 806 522 619- finance companies 1,027 - 1,169 ________ ________ ________ 1,833 522 1,788Current tax liabilities 145 74 128Current provisions 53 48 54 ________ ________ ________ 4,810 2,494 4,808Liabilities directly associated with non-current assets classified as held for sale (note 7) 1 1 196 ________ ________ ________ Current liabilities 4,811 2,495 5,004 ________ ________ ________ Total liabilities 8,839 5,506 9,442 ________ ________ ________ Total equity and liabilities 18,619 11,528 18,317 ________ ________ ________ _____________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Statement of Recognized Income and Expense_____________________________________________________________________________________ (restated) (unaudited) Year Six months ended ended 31st 30th June December 2006 2005 2005 US$m US$m US$m _____________________________________________ Surpluses on revaluation of intangible assets - 2 458Surpluses on revaluation of properties - 2 77Gains/(losses)on revaluation of other investments 208 (27) 48Actuarial (losses)/gains on defined benefit pension plans (10) - 14Net exchange translation differences 225 (100) (84)Gains on cash flow hedges 2 19 24Tax on items taken directly to equity 3 (1) (170) ________ ________ ________ Net income/(expense) recognized directly in equity 428 (105) 367Transfer to profit and loss on disposal of other investments (8) (20) (20)Transfer to profit and loss on disposal of subsidiary undertakings, associates and joint ventures 1 (1) (1)Transfer to profit and loss in respect of cash flow hedges 2 3 -Profit for the period 883 919 1,820 ________ ________ ________ Total recognized income and expense for the period 1,306 796 2,166 ________ ________ ________ Attributable to:Shareholders of the Company 777 597 1,401Minority interests 529 199 765 ________ ________ ________ 1,306 796 2,166 ________ ________ ________ Surpluses on revaluation of intangible assets represent the increase in fairvalue attributable to the Group's previously held interests in Astra and PT HeroSupermarket on the date they became subsidiary undertakings. _____________________________________________________________________________________Jardine Matheson Holdings LimitedConsolidated Cash Flow Statement _____________________________________________________________________________________ (unaudited) Year Six months ended ended 31st 30th June December 2006 2005 2005 US$m US$m US$m _____________________________________________Operating activities Operating profit 582 281 810Interest income (46) (18) (56)Depreciation and amortization 194 83 249Other non-cash items 7 (74) (38)Decrease/(increase)in working capital 185 (119) (361)Interest received 45 21 55Interest and other financing charges paid (105) (67) (165)Tax paid (185) (37) (179) ________ ________ ________ 677 70 315Dividends from associates and joint ventures 236 110 303 ________ ________ ________ Cash flows from operating activities 913 180 618 Investing activities ________ ________ ________ Purchase of subsidiary undertakings (note 10(a)) (31) (25) 219Purchase of associates and joint ventures (note 10(b)) (45) (133) (302)Purchase of other investments (5) (4) (12)Purchase of land use rights (4) (1) (12)Purchase of tangible assets (363) (90) (458)Purchase of investment properties (2) (8) (18)Purchase of plantations (8) - (6)Loans to associates, joint ventures and other - (13) (13)Sale of subsidiary undertakings (note 10(c)) 272 (6) 80Sale of associates and joint ventures (note 10(d)) 10 118 181Sale of other investments (note 10(e)) 46 37 40Sale of land use rights 8 - 33Sale of tangible assets 28 8 63Sale of investment properties - 45 49 ________ ________ ________ Cash flows from investing activities (94) (72) (156) Financing activities ________ ________ ________ Issue of shares 2 7 13Capital contribution from minority shareholders 10 4 4Drawdown of borrowings 4,629 4,801 9,735Repayment of borrowings (5,171) (4,435) (9,516)Dividends paid by the Company (71) (59) (76)Dividends paid to minority shareholders (77) (152) (199) ________ ________ ________ Cash flows from financing activities (678) 166 (39)Effect of exchange rate changes 20 (4) (2) ________ ________ ________ Net increase in cash and cash equivalents 161 270 421Cash and cash equivalents at beginning of period 1,684 1,263 1,263 ________ ________ ________ Cash and cash equivalents at end of period 1,845 1,533 1,684 ________ ________ ________ _________________________________________________________________________________________Jardine Matheson Holdings LimitedAnalysis of Profit Contribution _________________________________________________________________________________________ (unaudited) Year Six months ended ended 31st 30th June December 2006 2005 2005 US$m US$m US$m _______________________________________________Group contribution Jardine Pacific 46 38 90Jardine Motors Group 31 26 47Jardine Lloyd Thompson 18 19 29Hongkong Land 39 36 65Dairy Farm 53 48 118Mandarin Oriental 8 11 21Jardine Cycle & Carriage 6 8 23Astra 46 70 127Corporate and other interests (19) (24) (57) _______ _______ _______ Underlying profit 228 232 463Increase in fair value of investment properties 287 375 664Other net gains 35 65 118 _______ _______ _______ Profit attributable to shareholders 550 672 1,245 _______ _______ _______ Analysis of Jardine Pacific's contribution Gammon Construction 6 (5) 1HACTL 14 14 33Jardine Aviation Services 4 4 9Jardine Engineering Corporation 3 4 10Jardine OneSolution 5 3 6Jardine Property Investment 1 1 3Jardine Restaurants 8 6 13Jardine Schindler 8 8 13Jardine Shipping Services 2 4 7Other interests 1 1 2Corporate (6) (6) (14) _______ _______ _______ 46 34 83Discontinued businesses - 4 7 _______ _______ _______ 46 38 90 _______ _______ _______ Analysis of Jardine Motors Group's contribution Hong Kong and Mainland China 21 13 24United Kingdom 8 10 16Corporate (1) (1) (1) _______ _______ _______ 28 22 39Discontinued businesses 3 4 8 _______ _______ _______ 31 26 47 _______ _______ _______ Jardine Matheson Holdings LimitedNotes 1. Accounting Policies and Basis of Preparation The financial information contained in this announcement has been based on the unaudited interim condensed financial statements, which have been prepared in accordance with IAS 34, Interim Financial Reporting. In 2006, the Group adopted the following amendments and interpretation to existing standards which are relevant to its operations. IAS 39 (amended 2005) Cash Flow Hedge Accounting of Forecast Intragroup Transactions IAS 39 (amended 2005) The Fair Value Option IAS 39 and IFRS 4 (amended 2005) Financial Guarantee Contracts IFRIC 4 Determining whether an Arrangement contains a Lease There have been no changes to the accounting policies described in the 2005 annual financial statements as a result of adoption of the above amendments and interpretation. Following revision of the initial accounting in respect of the acquisition of Astra in 2005, the consolidated balance sheet at 31st December 2005 and the consolidated statement of recognized income and expense for the year ended 31st December 2005 have been restated to reflect adjustments to the provisional fair values of identifiable assets and liabilities determined at the date of acquisition, and the consequential change in the surplus on revaluation of intangible assets attributable to the Group's previously held interest in that company. These adjustments have no impact on the consolidated profit and loss account. The Group's reportable segments are set out in note 2 and are described on pages 5 to 9. 2. Revenue Six months ended 30th June 2006 2005 US$m US$m _____________________________ By business: Jardine Pacific 472 471 Jardine Motors Group 1,185 1,118 Dairy Farm 2,496 2,282 Mandarin Oriental 183 193 Jardine Cycle & Carriage 558 543 Atra 2,980 - Other activities 4 1 ________ ________ 7,878 4,608 ________ ________ 3. Operating Profit Six months ended 30th June 2006 2005 US$m US$m _____________________________ By business: Jardine Pacific 29 20 Jardine Motors Group 44 39 Dairy Farm 104 97 Mandarin Oriental 97 82 Jardine Cycle & Carriage 19 25 Astra 286 - ________ ________ 579 263 Corporate and other interests 3 18 ________ ________ 582 281 ________ ________ 4. Share of Results of Associates and Joint Ventures Six months ended 30th June 2006 2005 US$m US$m _____________________________ By business: Jardine Pacific 39 26 Jardine Motors Group 3 4 Jardine Lloyd Thompson 18 37 Hongkong Land 46 46 Dairy Farm 10 8 Mandarin Oriental 6 2 Jardine Cycle & Carriage 2 7 Astra 70 146 Corporate and other interests 14 - ________ ________ 208 276 Increase in fair value of investment properties 360 471 ________ ________ 568 747 ________ ________ Results are shown after tax and minority interests. Results of Astra for the six months ended 30th June 2006 represents Astra'sshare of the results of its joint ventures. The comparative figure for 2005represents Jardine Cycle & Carriage's share of the results of Astra when it wasan associate. 5. Tax Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates and includes United Kingdom tax of US$5 million (2005: US$4 million). 6. Earnings Per Share Basic earnings per share are calculated on profit attributable to shareholders of US$550 million (2005: US$672 million) and on the weighted average number of 350 million (2005: 346 million) shares in issue during the period. The weighted average number excludes the Company's share of the shares held by subsidiary undertakings and the shares held by the Trustee under the Senior Executive Share Incentive Schemes. Diluted earnings per share are calculated on profit attributable to shareholders of US$537 million (2005: US$671 million), which is after adjusting for the effects of the conversion of dilutive potential ordinary shares of subsidiary undertakings, associates or joint ventures, and on the weighted average number of 352 million (2005: 348 million) shares after adjusting for the number of shares which are deemed to be issued for no consideration under the Senior Executive Share Incentive Schemes based on the average share price during the period. Additional basic and diluted earnings per share are also calculated based on underlying earnings attributable to shareholders. A reconciliation of earnings is set out below: Six months ended 30th June 2006 2005 Basic Diluted Basic Diluted earnings earnings earnings earnings per share per share per share per share US$m US$ US$ US$m US$ US$ _________________________________________________________________ Underlying profit 228 0.65 0.65 232 0.67 0.67 ______ ______ Increase in fair value of investment properties 287 375 Other net gains 35 65 ______ ______ 322 440 ______ ______ Profit attributable to shareholders 550 1.57 1.53 672 1.95 1.93 ______ ______ A fuller analysis of the adjustments made to the profit attributable to shareholders in arriving at the underlying profit is set out below: Six months ended 30th June 2006 2005 US$m US$m _____________________________ Increase in fair value of investment properties in Hongkong Land 287 375 Sale and closure of businesses __________ _________ - The Mark 21 - - Kahala Mandarin Oriental - 21 - other 1 7 __________ _________ 22 28 Buyout of minority interests in Jardine Lloyd Thompson - 17 Value added tax recovery in Jardine Motors Group - 3 Fair value gain on conversion option component of 4.75% Guaranteed Bonds due 2007 - 1 Sale of investments 15 16 Asset impairment (2) - __________ __________ 322 440 __________ __________ 7. Non-current Assets Classified as Held for Sale The major classes of assets and liabilities classified as held for sale are set out below: At 31st At 30th June December 2006 2005 2005 US$m US$m US$m ______________________________________________________ Intangible assets - - 7 Tangible assets 11 112 72 Investment properties - - 24 Associates and joint ventures 28 37 34 Other investments - - 28 Deferred tax assets - - 1 Current assets - - 524 _______ _________ _________ Total assets 39 149 690 _______ _________ _________ Long-term borrowings - - 81 Deferred tax liabilities 1 1 1 Other non-current liabilities - - 2 Current liabilities - - 112 ________ __________ _________ Total liabilities 1 1 196 _________ __________ _________ The non-current assets classified as held for sale at 30th June 2006 included certain of Jardine Motors Group's properties in the United Kingdom and its interest in Appleyard Vehicle Contracts with carrying amounts of US$9 million and US$28 million respectively. The non-current assets classified as held for sale at 31st December 2005 principally comprised Jardine Pacific's investment in BALtrans, Mandarin Oriental's interest in The Mark and Jardine Cycle & Carriage's interest in MCL Land. The Group's interests in BALtrans and The Mark were disposed of during the period, resulting in gains of US$11 million and US$77 million respectively, which were included in other operating income. Jardine Cycle & Carriage's interest in MCL Land was distributed to its shareholders by way of a dividend in specie. Jardine Strategic subsequently disposed of its 40.9% interest in MCL Land that it received through the distribution to Hongkong Land for US$163 million, which approximates its carrying amount. 8. Shareholders' Funds Six months ended 30th June 2006 2005 US$m US$m _____________________________ At 1st January - as previously reported 5,020 3,639 - consequential change arising from adjustments to provisional fair values on acquisition of Astra (21) - ________ _______ - as restated 4,999 3,639 Recognized income and expense attributable to shareholders 777 597 Dividends (note 9) (125) (108) Employee share option schemes - value of employee services 4 2 - exercise of share options 2 7 Scrip issued in lieu of dividends 144 128 Change in attributable interests 1 - Increase in own shares held (92) (79) ________ _______ At 30th June 5,710 4,186 ________ _______ 9. Dividends Six months ended 30th June 2006 2005 US$m US$m ______________________________ Final dividend in respect of 2005 of USc35.65 (2004: USc31.50) per share 216 187 Less Company's share of dividends paid on the shares held by subsidiary undertakings (91) (79) ________ _______ 125 108 ________ _______ An interim dividend in respect of 2006 of USc10.00 (2005: USc9.35) per share amounting to a total of US$61 million (2005: US$56 million) is declared by the Board. The net amount after deducting the Company's share of the dividends payable on the shares held by subsidiary undertakings of US$26 million (2005: US$24 million) will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2006. 10. Notes to Consolidated Cash Flow Statement Six months ended 30th June 2006 2005 (a) Purchase of subsidiary undertakings US$m US$m ___________________________ Intangible assets - 8 Tangible assets 4 71 Current assets 15 84 Long-term borrowings (1) (9) Deferred tax liabilities - (15) Pension liabilities (1) - Other non-current liabilities - (9) Current liabilities (9) (70) Minority interests (2) - ________ ________ Fair value of net assets 6 60 Adjustment for minority interests 4 (25) ________ ________ Fair value of net assets acquired 10 35 Goodwill 3 10 ________ ________ Total consideration 13 45 Adjustment for carrying value of (2) (26) associates and joint ventures Cash and cash equivalents of subsidiary undertakings acquired - 1 ________ ________ Net cash outflow 11 20 Purchase of shares in Jardine Cycle & Carriage 20 5 ________ ________ 31 25 ________ ________ Net cash outflow in 2006 of US$11 million included US$6 million for Jardine Motors Group's acquisition of dealerships in the United Kingdom. Net cash outflow in 2005 of US$20 million included US$13 million for Dairy Farm's acquisition of an additional 20.4% interest in PT Hero Supermarket. (b) Purchase of associates and joint ventures for the six months ended 30th June 2006 included US$26 million for Astra's interest in Toyota Astra Financial Services and Jardine Strategic's increased interest in Hongkong Land of US$13 million. Purchase of associates and joint ventures for the six months ended 30th June 2005 included Jardine Cycle & Carriage's increased interest in Astra of US$124 million and Jardine Strategic's increased interest in Hongkong Land of US$9 million. Six months ended 30th June 2006 2005 (c) Sale of subsidiary undertakings US$m US$m ___________________________ Intangible assets 12 - Tangible assets 92 - Investment properties 24 - Associates and joint ventures 35 - Deferred tax assets 1 - Current assets 615 1 Long-term borrowings (100) - Deferred tax liabilities (1) - Current liabilities (163) (1) _______ ______ Net assets 515 - Adjustment for minority interests (261) - _______ ______ Net assets disposed of 254 - Cumulative exchange translation differences (3) - Profit on disposal 83 - Adjustment for deferred consideration - 1 Adjustment for carrying value of associates and joint ventures (13) - _______ ______ Sale proceeds 321 1 Closure and related costs (1) - Tax paid on disposals - (7) Cash and cash equivalents of subsidiary undertakings disposed of (48) - _______ ______ Net cash inflow/(outflow) 272 (6) _______ ______ Sale proceeds in 2006 of US$321 million included US$143 million from Mandarin Oriental's sale of its interest in The Mark, New York, US$13 million from Astra's partial sale of its interest in Aisin and US$163 million from the sale of the Group's interest in MCL Land. (d) Sale of associates and joint ventures for the six months ended 30th June 2006 included a repayment of shareholder's loan from HACTL of US$9 million in Jardine Pacific. Sale of associates and joint ventures for the six months ended 30th June 2005 included US$97 million from Mandarin Oriental's sale of its interest in Kahala Mandarin Oriental. (e) Sale of other investments for the six months ended 30th June 2006 included US$31 million from Jardine Pacific's sale of its interest in BALtrans. Sale of other investments for the six months ended 30th June 2005 included US$36 million from Jardine Strategic's sale of its interest in EON Capital. 11. Capital Commitments and Contingent Liabilities At 31st At 30th June December 2006 2005 2005 US$m US$m US$m ______________________________________________ Capital commitments 315 232 310 _____ _____ _____ Contingent liabilities Guarantees in respect of facilities made available to associates and joint ventures 71 78 78 _____ _____ _____ Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have been made in the financial statements. The interim dividend of USc10.00 per share will be payable on 22nd November 2006to shareholders on the register of members at the close of business on 29thSeptember 2006, and will be available in cash with a scrip alternative. The ex-dividend date will be on 27th September 2006, and the share registers will beclosed from 2nd to 6th October 2006, 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 3rd November 2006. The Sterling equivalentof dividends declared in United States Dollars will be calculated by referenceto a rate prevailing on 8th November 2006. Shareholders holding their sharesthrough The Central Depository (Pte) Limited ('CDP') in Singapore will receiveUnited States Dollars unless they elect, through CDP, to receive SingaporeDollars or the scrip alternative. - end - For further information, please contact: Jardine Matheson LimitedJames Riley (852) 2843 8229 Matheson & CoMartin Henderson (44) 207 816 8135 GolinHarrisKennes Young (852) 2501 7987 Weber Shandwick Square MileRichard Hews / Helen Thomas (44) 207 067 0700 This and other Group announcements can be accessed through the Internet at'www.jardines.com'. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Jardine Math.sr