JC&C 2017 Financial Statements

To: Business Editor 1st March 2018

For immediate release

Jardine Cycle & Carriage Limited

2017 Financial Statements and Dividend Announcement

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

For further information, please contact:

Jardine Matheson Limited

Neil M McNamara (852) 2843 8227

Brunswick Group Limited

Karin Wong (852) 3512 5077

1st March 2018

JARDINE CYCLE & CARRIAGE LIMITED

2017 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

· Underlying earnings per share up 16%

· Improvements in most of Astra's businesses

· Weaker overall performances from Direct Motor Interests and Other Strategic Interests

· Acquisition of a strategic stake in Vinamilk

"After a satisfactory overall result in 2017, Astra should continue to benefit in 2018 from improving economic conditions and stable commodity prices, although the competition seen in the car market is expected to intensify. The Group's Direct Motor Interests will continue to face challenges, while its Other Strategic Interests are expected to produce growth."

Ben Keswick, Chairman

1st March 2018

The exchange rate of US$1=S$1.34 (31st December 2016: US$1=S$1.44) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.38 (2016: US$1=S$1.38) was used for translating the results for the year. The financial results for the year ended 31st December 2017 have been prepared in accordance with the International Financial Reporting Standards. These results have not been audited or reviewed by the auditors.

\* The Group uses 'underlying profit' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in Note 5 to the financial statements. Management considers this to be a key measure which provides additional information to enhance understanding of the Group's underlying business performance.

# The S$ equivalent is an estimate as the actual amount will be determined on Books Closure Date referred to in Note 15.

CHAIRMAN'S STATEMENT

Overview

The Group achieved a satisfactory result in 2017 as an improved performance from Astra offset lower overall contributions from the Group's Direct Motor Interests and Other Strategic Interests.

Performance

The Group's revenue for the year was 12% up at US$17.7 billion. Underlying profit attributable to shareholders was 16% up at US$788 million, and underlying profit per share also increased by 16% to US¢199 per share. Profit attributable to shareholders was US$811 million compared to US$702 million in 2016, after accounting for a net non-trading gain of US$23 million due largely to investment property revaluations and net gains on disposal of interests in certain companies and investments, partly offset by impairment charges.

Astra's contribution to the Group's underlying profit of US$641 million was up 28%. Underlying profit in the Group's Direct Motor Interests was 25% lower at US$125 million, while the Group's Other Strategic Interests made a contribution of US$34 million, 3% up.

The Board is recommending a final one-tier tax dividend of US¢68 per share (2016: US¢56 per share) which, together with the interim dividend, will produce a total dividend of US¢86 per share (2016: US¢74 per share).

Business Development

The Group is pursuing expansion in Southeast Asia through supporting the growth of Astra in Indonesia, strengthening its Direct Motor Interests, and developing its Other Strategic Interests by investing in market-leading companies that provide exposure to new business sectors in the region.

Astra

Astra continues to seek opportunities in Indonesia to expand its existing activities and move into new sectors.

Astra extended its toll road interests with the acquisition of a 45% interest in the fully operational Cikopo-Palimanan toll road early in 2017.

Construction of two 1,000 MW power plants is continuing in Central Java at Bhumi Jati Power, a 25%-owned associate of United Tractors, which is scheduled to start commercial operations in 2021.

50%-owned Astra Land Indonesia increased its shareholding from 50% to 67% in Astra Modern Land, which is developing a 67-hectare site in East Jakarta.

In February 2018, Astra invested US$150 million for a minority stake in GO-JEK, Indonesia's leading multi-platform technology group, providing access to a wide range of services from transportation and payments to food delivery, logistics and other on-demand services. The investment is intended to create value and accelerate digital initiatives within the group's businesses.

Direct Motor Interests

To drive growth, the Group's Direct Motor Interests are focused on building innovative, customer-centric and digital-first organisations across Singapore, Malaysia and Indonesia to strengthen their competitive positions in these challenging markets.

In Vietnam, Truong Hai Auto Corporation was appointed the general distributor for FUSO commercial vehicle products in December 2017. It also expanded its passenger car product range to cover the high-end segment with its appointment as an importer and distributor of BMW and MINI vehicles, which commenced in January 2018.

Other Strategic Interests

In May 2017, the Company supported Siam City Cement's rights issue, which raised approximately US$500 million, and subsequently increased its interest to 25.5%.

The Company also increased its shareholding in Refrigeration Electrical Engineering Corporation from 22.9% to 23.9% during the year.

In November 2017, the Group acquired a 10% strategic stake in Vietnam Dairy Products Joint Stock Company, known as Vinamilk, for a cost of US$1.2 billion. Vinamilk is the leading dairy producer in Vietnam with a market share of some 58%. It operates 13 dairy factories, owns ten farms and has one of the strongest distribution networks in Vietnam with more than 240,000 retailers as exclusive distributors.

In support of the strategy of taking strategic stakes in high quality companies that have existing or potential links with the Group, the Company recently invested US$200 million in shares of Toyota Motor Corporation, which is an important business partner of Astra.

People

The Group achieved a good result in 2017 due largely to the effort and commitment of our over 250,000 employees across the region. On behalf of the Board, I would like to thank them for their hard work and dedication.

Outlook

After a satisfactory overall result in 2017, Astra should continue to benefit in 2018 from improving economic conditions and stable commodity prices, although the competition seen in the car market is expected to intensify. The Group's Direct Motor Interests will continue to face challenges, while its Other Strategic Interests are expected to produce growth.

Ben Keswick

Chairman

1st March 2018

GROUP MANAGING DIRECTOR'S REVIEW

Overview

The Group's underlying profit increased 16% in 2017. Astra's results benefited significantly from the return to profitability at Permata Bank, while higher commodity prices benefited the trading performances of the heavy equipment and mining businesses as well as agribusiness. The contribution from the automotive businesses, however, was modestly lower due to the impact of increasing competition in the car market, which showed no overall growth. The performance of the motorcycle operations was stable against the backdrop of a relatively soft market. The Group's Direct Motor Interests and Other Strategic Interests, however, saw lower contributions overall.

Performance

The Group reported an underlying profit attributable to shareholders of US$788 million for 2017, 16% up on the previous year, while underlying profit per share grew by 16% to US¢199 per share. Profit attributable to shareholders was up 16% at US$811 million, after accounting for a net non-trading gain of US$23 million due mainly to investment property revaluations and the net gains on disposal of interests in certain companies and investments, partly offset by impairment charges. This compares to a profit attributable to shareholders in 2016 of US$702 million, after accounting for a net non-trading gain of US$23 million primarily from the sales of land and revaluations on investment properties.

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$819 million at the end of 2017, representing a gearing of 6%, compared to net cash of US$709 million at the of 2016. The Group's parent company's net debt was US$1.2 billion compared to net cash of US$154 million at the end of 2016. The change from net cash to net debt in the Group and its parent company was largely due to the purchase of a 10% interest in Vinamilk, for US$1.2 billion, and the subscription for Siam City Cement's rights issue and additional share purchases for US$138 million. Net debt within Astra's financial services subsidiaries of US$3.4 billion at the end of 2017 was slightly down from the end of 2016.

Group Review

Astra

Astra reported a net profit equivalent to US$1,409 million under Indonesian accounting standards, 25% higher in its local currency.  

Automotive

Net income from the group's automotive division was down by 3% to US$661 million. Improved earnings in the components business were more than offset by a decline in the car business following lower sales and discounting pressures arising from increased competition. Results from the motorcycle business were relatively flat.

The wholesale market for cars was little changed at 1.1 million units. Astra's car sales were 2% lower at 579,000 units, with its market share decreasing from 55% to 54%. The group launched 11 new models and 11 revamped models during the year.

The wholesale market for motorcycles decreased by 1% to 5.9 million units. Astra Honda Motor's domestic sales were maintained at 4.4 million units, resulting in its market share improving from 74% to 75%. The group launched eight new models and 18 revamped models during the year.

Astra Otoparts, the group's components business, saw net income increase by 32% to US$41 million due mainly to an increase in revenues arising from higher replacement market sales and improved contributions from its joint ventures and associated companies.

Financial Services

Net income from the group's financial services division increased to US$280 million from US$59 million in the prior year, due to a return to profitability at Permata Bank and improved earnings contributions from Astra Sedaya Finance, Federal International Finance and Asuransi Astra Buana.

The group's consumer finance businesses saw a 3% increase in the amount financed, including amounts financed through joint bank financing without recourse to US$6.1 billion. Car-focused Astra Sedaya Finance reported a 2% increase in net income at US$71 million. Toyota Astra Financial Services, however, recorded a 95% decrease in net income to US$1 million as a result of increased loan loss provisions, mainly in the low cost car segment. Motorcycle-focused Federal International Finance's net income was up 11% at US$157 million, as it benefited from Honda's improved market share as well as loan product diversification.

The amount financed through the group's heavy equipment-focused finance operations increased by 25% to US$437 million. There was, however, a significant increase in loan loss provisions relating to small and medium sized borrowers.

Permata Bank, in which Astra holds a 44.6% interest, reported a net income of US$56 million for the year, compared with a net loss of US$486 million in 2016. The bank's gross non-performing loan ratio improved to 4.6% at the end of 2017 compared with 8.8% at the end of 2016, while its net non-performing loan ratio improved to 1.7% from 2.2%. Permata Bank's return to profitability was mainly driven by an improvement in its asset quality and good underlying credit growth in the second half of the year and recoveries from non-performing loans. To strengthen its capital base, Permata Bank completed a further US$220 million rights issue in June 2017, which was fully subscribed. 

Net income at Asuransi Astra Buana, the group's general insurance company, was 9% higher at US$75 million, primarily due to increased investment income. During the year, the group's life insurance joint venture, Astra Aviva Life, acquired more than 259,000 new individual life customers and 373,000 new participants for its corporate employee benefits programmes, bringing the respective totals of people insured at the end of December 2017 to 390,000 and 896,000.

Heavy Equipment, Mining, Construction and Energy

Net income from the group's heavy equipment, mining, construction and energy division increased by 47% to US$333 million.

United Tractors, which is 59.5%-owned, reported net income 48% higher at US$553 million. The increase was mainly due to significantly stronger coal prices that led to improved performances in its construction machinery and mining contracting businesses, as well as its mining operations.

In its construction machinery business, Komatsu heavy equipment sales were up 74% at 3,788 units, while parts and service revenues were also higher. The mining contracting operations of Pamapersada Nusantara recorded a 3% increase in coal production at 113 million tonnes, while overburden removal was up 14% at 801 million bank cubic metres. United Tractors' mining subsidiaries, however, reported coal sales down 8% at 6.3 million tonnes due to lower volumes in its coal trading business.

Suprabari Mapanindo Mineral, the coking coal company in Central Kalimantan which is 80.1% owned by United Tractors, started production at the end of 2017.

General contractor Acset Indonusa, a 50.1% subsidiary of United Tractors, reported net income up 126% at US$ 11 million. New contracts worth US$627 million were secured during 2017, compared with US$283 million secured in the previous year.

Agribusiness

Net income from the group's agribusiness division was flat at US$120 million.

Astra Agro Lestari, which is 79.7%-owned, reported net income of US$150 million. Despite improved revenue from higher crude palm oil prices and sales volumes, the result was little changed from 2016, which had benefited from significant foreign exchange translation gains. Excluding the impact of foreign exchange in both years, net income would have been 8% higher. Average crude palm oil prices achieved were 6% higher at Rp8,271/kg, while sales of crude palm oil and its derivatives were 12% higher at 1.7 million tonnes compared with 2016.

Infrastructure and Logistics

The group's infrastructure and logistics division reported a net loss of US$17 million, compared with a net profit of US$20 million in 2016. This was mainly due to initial losses on the newly opened Cikopo-Palimanan toll road, in which the group acquired a 45% interest earlier in the year, and the loss on the disposal of the group's 49% interest in PAM Lyonnaise Jaya, a water concession with five years left to run.

The group's portfolio of toll road interests expanded during the year from 236km to 353km, of which 269km is operational. At the mature 72.5km Tangerang-Merak toll road, operated by 79.3%-owned Marga Mandalasakti, traffic volumes increased by 4% to 50 million vehicles. The wholly-owned 40.5km Jombang-Mojokerto toll road is now fully constructed with the final two sections completed in the fourth quarter of the year. At the 116.8km Cikopo-Palimanan toll road, traffic volumes increased by 13% to 17 million vehicles, while at the 40% owned 72.6km Semarang-Solo toll road, 40.1km is now in operation with traffic volumes increased by 3% to 12 million vehicles.

Serasi Autoraya's net income increased by 101% to US$15 million, due to higher net margins in its car leasing and rental, as well as logistics businesses, despite a 2% decline in its vehicles under contract and 18% lower used car sales.

Information Technology

Net income from the group's information technology division was 1% higher at US$15 million.

Astra Graphia, which is 76.9%-owned, reported net income modestly higher at US$19 million, mainly due to increased revenues from its office services business.

Property

Net income from the group's property division was up 101% at US$17 million, primarily due to higher property development earnings recognised on its Anandamaya Residences project. Both Anandamaya Residences and Menara Astra are scheduled for completion in 2018.

Direct Motor Interests

The Group's Direct Motor Interests contributed a profit of US$125 million in 2017, 25% down on the previous year due mainly to the increasingly competitive environment in Vietnam.

Singapore

The Singapore passenger car market grew by 5% to 91,900 units, following an increase in the number of certificates of entitlement. The Group's wholly-owned Cycle & Carriage Singapore, which achieved record results in 2017, saw its earnings grow by 15% to US$57 million, due to a 14% increase in passenger car sales to 14,300 units and improved contribution from parts and used car sales.

Malaysia

In Malaysia, 59.1%-owned Cycle & Carriage Bintang had a particularly challenging year in 2017, contributing a loss of US$1 million due to poor retail performance and higher financing charges.

Myanmar

Cycle & Carriage Myanmar, in which the Group owns a 60% interest, contributed a loss of US$3 million due mainly to the write-off of project costs and weaker margins. Vehicles sales at 506 units were 1% up on the previous year.

Indonesia

In Indonesia, 44.4%-owned Tunas Ridean contributed a profit of US$15 million, 18% down on the previous year, mainly due to weaker margins in motor car sales, partly offset by stronger contributions from the rental, motorcycle and 49%-owned Mandiri Tunas Finance businesses. Motor car sales at 51,500 units were only 1% higher than 2016 sales, while motorcycle sales were 8% higher at 223,300 units.

Vietnam

In Vietnam, 25.1%-owned Truong Hai Auto Corporation ("Thaco") contributed a profit of US$57 million, a 40% decline on the previous year. Its automotive profit was down 45% due to market uncertainties, ahead of the removal of tariffs on imported cars under the ASEAN Free Trade Area which came into effect on 1st January 2018. The vehicle market in 2017 was down by 6% from the record in 2016 of 351,000 units as potential buyers anticipated reduced prices of imported cars with the removal of tariffs. Thaco's overall vehicle sales fell by 21% to 87,600 units, with its passenger car sales falling by 25% to 47,400 units and its commercial vehicle sales decreasing by 15% to 40,200 units. The decrease in automotive profit was, however, partly offset by higher profits recognised from its 85%-owned real estate subsidiary.

Other Strategic Interests

The Group's Other Strategic Interests comprising 25.5%-held Siam City Cement Public Company Limited ("Siam City Cement") in Thailand, and 23.9%-held Refrigeration Electrical Engineering Corporation ("REE") and 10%-held Vinamilk in Vietnam, contributed profits of US$34 million, compared to US$33 million in 2016.

Siam City Cement reported a profit equivalent to US$54 million for the year, a reduction of 54% in local currency terms. The decline was due mainly to one-off restructuring expenses and lower domestic volume and selling prices, coupled with higher energy costs. Siam City Cement contributed US$11 million to the Group's results in 2017, compared to US$22 million in the previous year.

REE announced a profit equivalent to US$61 million, 26% higher in local currency terms, due to higher contributions from all its businesses. REE contributed US$14 million to the Group's results in 2017, 26% up on the previous year.

Newly acquired strategic shareholding in Vinamilk, which is accounted for as an investment by the Group, produced its first contribution of US$9 million with the declaration of an interim dividend in December 2017.

Alex Newbigging

Group Managing Director

1st March 2018

1 Basis of preparation

The financial statements are consistent with those set out in the 2016 audited accounts which have been prepared in accordance with International Financial Reporting Standards ("IFRS"). There have been no changes to the accounting policies described in the 2016 audited accounts.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Estimates and judgments used in preparing the financial statements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.

The exchange rates used for translating assets and liabilities at the balance sheet date are US$1=S$1.3370 (2016: US$1=S$1.4449), US$1=RM4.0650 (2016: US$1= RM4.4852), US$1=IDR13,548 (2016: US$1= IDR13,436), US$1=VND22,704 (2016: US$1=VND22,765) and US$1=THB32.689 (2016: US$1=THB35.809).

The exchange rates used for translating the results for the year are US$1=S$1.3757 (2016: US$1 =S$1.3833), US$1=RM4.2820 (2016: US$1= RM4.1462), US$1=IDR13,400 (2016: US$1= IDR13,330), US$1=VND22,719 (2016: US$1= VND22,373) and US$1=THB33.8198 (2016: US$1= THB35.2710).

2 Net operating costs and operating profit

nm - not meaningful

(1) Increase in 2017 mainly due to higher impairment for financing debtors

(2) Net exchange gain in 2017 mainly relates to the impact of stronger Singapore dollars on monetary liabilities denominated in US dollars

3 Revenue and Profit after tax

4 Dividends

The Board is recommending a final dividend of US¢68 per share which, together with the interim dividend of US¢18 per share, will give a total dividend for the year of US¢86 per share.

5 Earnings per share

As at 31st December 2016 and 2017, there were no dilutive potential ordinary shares in issue.

A reconciliation of the profit attributable to shareholders and underlying profit attributable to shareholders is as follows:

Non-trading items are separately identified to provide greater understanding of the Group's underlying business performance. Items classified as non-trading items include fair value gains or losses on revaluation of investment properties and agricultural produce; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for closure of businesses; acquisition-related costs in business combinations; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into the Group's underlying business performance.

6 Segment information

Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board for the purpose of resource allocation and performance assessment. Set out below is an analysis of the segment information: