JC&C 2017 First Quarter Financial Statements

To: Business Editor 28th April 2017

For immediate release

Jardine Cycle & Carriage Limited

2017 First Quarter 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

28th April 2017

JARDINE CYCLE & CARRIAGE LIMITED

2017 FIRST QUARTER FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

· Underlying earnings per share up 44%

· Stronger performance from Astra

· Lower contribution from Direct Motor Interests

"The outlook for the rest of the year is positive with Astra expected to benefit from the continued growth in the Indonesian economy, supported by higher commodity prices, although for its automotive activities there is a risk of increasing price competition. The Group's Direct Motor Interests and the Other Interests are likely to face increased competition."  

Ben Keswick, Chairman

28th April 2017

The exchange rate of US$1=S$1.40 (31st December 2016: US$1=S$1.44) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.41 (31st March 2016: US$1=S$1.40) was used for translating the results for the period.

The financial results for the three months ended 31st March 2017 and 31st March 2016 have been prepared in accordance with International Financial Reporting Standards. These results have not been audited or reviewed by the auditors.

CHAIRMAN'S STATEMENT

Overview

Jardine Cycle & Carriage performed well in the first quarter of the year with Astra showing improvements in almost all of its businesses as they benefited from the general growth in the Indonesian economy and a recovery in commodity prices.

Performance

The Group's revenue in the first quarter was US$4.2 billion, 16% up on the previous year, with increases from most of Astra's businesses. The Group's underlying profit rose by 44% to US$202 million. Profit attributable to shareholders was US$210 million, an increase of 50% on the previous year, after accounting for a non-trading gain of US$8 million arising from the valuation at fair value of an investment held by an associate. Earnings per share rose 50% to US¢53.

Astra contributed US$185 million to the Group's underlying profit, 67% higher than the comparable period last year. The Group's Direct Motor Interests contributed an underlying profit of US$23 million, a decline of 36%, while no contribution was recognised from the Group's Other Interests.

The Group's net cash, excluding net borrowings within Astra's financial services subsidiaries, was US$263 million at the end of March compared to US$709 million at the end of 2016, mainly due to toll road and power plant investments made by Astra. Net debt within Astra's financial services subsidiaries was US$3.5 billion, similar to the end of 2016. JC&C's net cash was US$153 million, compared to US$154 million at the end of 2016.

The Board has not declared a dividend for the first quarter ended 31st March 2017 (31st March 2016: Nil)

Group Review

Astra

Astra reported a net profit equivalent to US$381 million, under Indonesian accounting standards, 63% higher in its local currency with increases in all businesses, except for infrastructure and logistics and information technology. The group's automotive businesses achieved strong improved market shares for both cars and motorcycles. The overall wholesale market for cars grew while that for motorcycles declined. The financial services businesses improved, with a return to profit for Permata Bank, while higher commodity prices led to better trading performances from the heavy equipment and agribusiness operations.

Automotive

Net income from the group's automotive businesses increased by 45% to US$171 million, largely due to the sales momentum from successful new model introductions in 2016 which has continued into 2017.

The wholesale market for cars grew by 6% to 283,000 units. Astra's car sales were 27% higher at 161,000 units, resulting in an increase in market share from 48% to 57%. The group launched one new model and two revamped models during the first quarter of 2017.

The wholesale market for motorcycles decreased by 7% to 1.4 million units. While Astra Honda Motor's domestic sales fell 2% to 1.1 million units, its market share rose from 72% to 77%, supported by the launch of four new models and six revamped models during the period.

Net income of Astra Otoparts, the group's component business, increased 83% to US$11 million, supported by higher revenue from its OEM and aftermarket segments and a higher earnings contribution from its joint venture and associates.

Financial Services

Net income from the group's financial services business increased 75% to US$84 million, with improved contributions from most financial services businesses, including Permata Bank.

The group's consumer finance businesses saw a 17% increase in the amount financed, including amounts financed through joint bank financing without recourse, to US$1.4 billion. Car-focused Astra Sedaya Finance reported net income 11% higher at US$18 million, while Toyota Astra Financial Services recorded a 25% increase in net income at US$7 million, both benefiting from growth in the car market and Astra's increased market share. Motorcycle-focused Federal International Finance's net income was up 13% at US$33 million, benefiting from Honda's improved market share and loan product diversification.

The amount financed through the group's heavy equipment-focused finance operations increased by 28% to US$98 million. Net income at Surya Artha Nusantara Finance, which specialises in small and medium heavy equipment financing, was slightly lower at US$1 million.

Astra's 44.6%-held joint venture, Permata Bank, reported net income of US$34 million compared with a net loss of US$28 million in the same period in 2016. The bank's gross non-performing loan ratio declined from 8.8% at the end of 2016 to 6.4% at the end of March 2017, while its net non-performing loan ratio remained stable at 2.2%. The improved performance of Permata Bank was the result of good underlying income and the liquidation of non-performing loans as planned. In order to further strengthen its capital base, a US$220 million rights issue is expected to be completed in the first half of 2017, of which US$110 million had already been injected as a capital advance in December 2016 by its two major shareholders, Astra International and Standard Chartered Bank.

Asuransi Astra Buana, the group's general insurance company, reported net income 4% higher at US$16 million, primarily due to increased automotive underwriting income. 

During the period, the group's life insurance joint venture, Astra Aviva Life, acquired close to 67,000 individual life customers and 145,000 participants for its corporate employee benefits programmes, bringing the respective totals to 267,000 and 637,000 at the end of the first quarter of 2017.

Heavy Equipment and Mining

The net income contribution to the group from its heavy equipment and mining business increased by 104% to US$68 million.

United Tractors, which is 59.5%-owned, reported net income 105% higher at US$113 million due to higher business volumes in construction machinery, mining contracting and mining operations, all of which benefited from improved coal prices.

In its construction machinery business, Komatsu heavy equipment sales were up 70% to 847 units, while parts and service revenues were also higher. The mining contracting operations of Pamapersada Nusantara recorded a 2% increase in coal production at 25 million tonnes while overburden removal was 3% higher at 171 million bank cubic metres. United Tractors' mining subsidiaries reported 9% higher coal sales at 1.9 million tonnes.

General contractor Acset Indonusa, a 50.1% subsidiary of United Tractors, reported net income up 63% at US$2 million with new contracts of US$518 million secured in the period, compared with US$176 million secured in the first quarter of 2016.

In March 2017, 25%-owned Bhumi Jati Power, which will develop and operate two 1,000 MW thermal power plants in Central Java, completed its project financing agreement with lenders. This build, operate and transfer project is expected to cost approximately US$4.2 billion and is scheduled to start commercial operation in 2021. Bhumi Jati Power is a joint venture amongst wholly-owned subsidiaries of United Tractors, Sumitomo Corporation and Kansai Electric Power Co Inc.

In March 2017, United Tractors through its subsidiary, Tuah Turangga Agung, completed the acquisition of an 80.1% stake in PT Suprabari Mapanindo Mineral, a coking coal company in Central Kalimantan.

Agribusiness

Net income from the group's agribusiness business increased by 92% to US$48 million in the first quarter of 2017.

Astra Agro Lestari, which is 79.7%-owned, reported net income of US$60 million, up from US$31 million in the first quarter of 2016, due to improved revenue from higher crude palm oil prices and increased crude palm oil production and sales. Average crude palm oil prices achieved were 36% higher at Rp8,953/kg, while sales of crude palm oil and its derivatives were 1% higher at 410,000 tonnes, compared to the same period last year.

Infrastructure and Logistics

Net income of the group's infrastructure and logistics business decreased by 3% to US$5 million, mainly due to initial losses arising from the commencement of the Cikopo-Palimanan toll road and lower earnings from its water utility business.

The 72km Tangerang-Merak toll road, operated by 79.3%-owned Marga Mandalasakti, saw traffic volumes increase by 5% to 12 million vehicles. Construction continues at the wholly-owned 41km Jombang-Mojokerto toll road, where 20km is already operational. At the 73km Semarang-Solo toll road, in which the group has a 25% interest, 23km is now in operation.

In January 2017, the group completed the acquisition of an initial 40% interest in PT Baskhara Utama Sedaya, which owns 45% of the operator of the fully operational 116km Cikopo-Palimanan toll road, and has subsequently conditionally agreed to acquire the remaining 60% interest. Along with its 40% stake in the 11km Kunciran-Serpong toll road and a 25% stake in the 40km Serpong-Balaraja toll road, both of which are greenfield, the group's total interest in toll roads amounts to 353km.

PAM Lyonnaise Jaya, which operates the western Jakarta water utility system, experienced a 2% decrease in sales volume to 38 million cubic metres.

Serasi Autoraya's net income increased by 82% to US$3 million, due to higher net margins in its car leasing and rental and logistics businesses, despite a 2% decline in contracted vehicles in its car leasing and rental business.

Information Technology

Net income from the group's information technology business decreased by 23% to US$2 million. Astra Graphia, which is 76.9%-owned, reported a 23% decline in net income to US$3 million following a decline in revenue from its IT solutions business.

Property

Net income from the group's property business at US$3 million was significantly higher than the US$1 million achieved in the first quarter of 2016, mainly due to higher development earnings recognised on Anandamaya Residences.

Direct Motor Interests

The Group's Direct Motor Interests contributed an underlying profit of US$23 million, 36% down on the previous year. The reduction was due largely to a lower contribution from Truong Hai Auto Corporation in Vietnam as a result of increased competition. In Singapore, Cycle & Carriage recorded increased profits from higher vehicle unit sales and a larger contribution from its used car business. In Malaysia, Cycle & Carriage Bintang's modest profit reflected intense price competition in the premium car market which impacted margins. In Indonesia, Tunas Ridean's contribution was stable as stronger profits from the automotive and rental businesses were offset by a lower contribution from Mandiri Tunas Finance.

Other Interests

Similar to the previous year, the Group did not recognise any contribution from its Other Interests in the first quarter of 2017. The Group's 24.9%-held Siam City Cement Public Company Limited in Thailand has yet to announce its first quarter results while 22.9%-held Refrigeration Electrical Engineering Corporation in Vietnam, just reported a profit of US$15 million, significantly higher than the previous year. Together, these results are not expected to have a material impact to the Group and will be accounted for in the second quarter.

Outlook

The outlook for the rest of the year is positive with Astra expected to benefit from the continued growth in the Indonesian economy, supported by higher commodity prices, although for its automotive activities there is a risk of increasing price competition. The Group's Direct Motor Interests and the Other Interests are likely to face increased competition.  

Ben Keswick

Chairman

28th April 2017

Statement pursuant to Rule 705(5) of the Listing Manual

The directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the accompanying unaudited interim financial results for the three months ended 31st March 2017 to be false or misleading in any material respect.

On behalf of the Directors

Ben Keswick

Director

Hassan Abas

Director

28th April 2017

(1) Increase in cash from financing activities largely to finance toll road and power plant investments made by Astra

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$1.3982 (2016: US$1=S$1.4449), US$1=RM4.4257 (2016: US$1=RM4.4852), US$1= IDR13,321 (2016: US$1=IDR13,436), US$1=VND22,760 (2016: US$1=VND22,765) and US$1=THB34.4630 (2016: US$1=THB35.8090).

The exchange rates used for translating the results for the period are US$1=S$1.4098 (2016: US$1 =S$1.3961), US$1=RM4.4334 (2016: US$1=RM4.1001), US$1=IDR13,342 (2016: US$1=IDR13,506), US$1=VND22,705 (2016: US$1=VND22,272) and US$1=THB34.8873 (2016: US$1=THB35.5893).

2 Net operating costs and operating profit

 nm - not meaningful

(1) Increase due mainly to impairment of financing debtors

(2) Decrease due mainly to lower net impact of stronger rupiah on monetary assets and liabilities denominated in US dollars

 3 Tax

The provision for income tax is based on the statutory tax rates of the respective countries in which the companies operate after taking into account non-deductible expenses and group tax relief.

4 Earnings per share

As at 31st March 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:

5 Borrowings

Certain subsidiaries of the Group have pledged their assets in order to obtain bank facilities from financial institutions. The value of assets pledged was US$1,940.7 million (31st December 2016: US$1,884.7 million).

6 Share capital

There were no rights, bonus or equity issues during the period between 1st January 2017 and 31st March 2017. The Company did not hold any treasury shares as at 31st March 2017 (31st March 2016: Nil) and did not have any unissued shares under convertibles as at 31st March 2017 (31st March 2016: Nil).

As at 31st March 2017, the Company had utilised S$930 million of the S$1,028 million rights issue proceeds raised from the 2015 rights issue exercise. The utilisation of the rights issue proceeds is in accordance with the intended use of proceeds as stated in the Offer Information Statement dated 29th June 2015, registered by the Company with the Monetary Authority of Singapore.

7 Revenue reserve

8 Other reserves

9 Non-controlling interests

10 Cash flows from operating activities