Jardine Math.sr Regulatory News (JAR)

To: Business Editor 3rd March 2016

For immediate release

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

Jardine Strategic Holdings Limited

2015 Preliminary Announcement of Results

Highlights

· Underlying profit* down 11%

· Full-year dividend up 6%

· Sound business performances in unsettled markets

· Astra profit lower and contribution further reduced by rupiah weakness

"The difficult trading conditions which affected many of our businesses in 2015 are expected to continue in the current year. Nevertheless, with sound finances and clear strategic objectives, the Group remains well positioned to benefit from the increasing spread of affluence in the region."

Sir Henry Keswick, Chairman

Results

The final dividend of US¢20.00 per share will be payable on 11th May 2016, subject to approval at the Annual General Meeting to be held on 5th May 2016, to shareholders on the register of members at the close of business on 18th March 2016 and will be available in cash with a scrip alternative.

Jardine Strategic Holdings Limited

Preliminary Announcement of Results

For The Year Ended 31st December 2015

Overview

The majority of the Group's businesses are focused on Greater China and on Southeast Asia, in particular Indonesia. A slowing in the Chinese economy in 2015 as the country continued to rebalance its economy affected both China itself and a number of other countries in the region. In Indonesia, the Group's businesses were hit by lower commodity prices and reduced consumption, while their profit contribution was further eroded by the weakening of the rupiah. Despite softening demand and intensifying cost pressures in many of the areas where the Group operates, a number of the Group's businesses performed strongly enough to limit the earnings decline to 11%, or 6% at constant rates of exchange.

Performance

The Group's revenue for 2015, including 100% of revenue from associates and joint ventures, was US$65.3 billion, compared with US$62.8 billion in 2014. Jardine Strategic achieved an underlying profit before tax for the year of US$3,342 million, a decrease of 21%. The underlying profit attributable to shareholders was down 11% at US$1,428 million, while underlying earnings per share were 11% lower at US$2.38.

The profit attributable to shareholders of US$1,953 million included a US$565 million increase in the valuation of investment properties, a profit on the sale of the Group's investment in Acleda Bank and a reversal of an impairment of investment by Jardine Cycle & Carriage. Partially offsetting these was the decline in the market value of the investment in Zhongsheng, which was taken through profit and loss account in line with accounting requirements, although the Group remains confident in the medium to long-term prospects for this business. Shareholders' funds were 3% higher at US$24.0 billion.

Total capital investment across the Group, including 100% of associates and joint ventures, exceeded US$6.5 billion in 2015. Both Mandarin Oriental and Jardine Cycle & Carriage raised funds through fully-subscribed rights issues during the year. The consolidated net debt at the end of the year, excluding financial services companies, was US$2.4 billion, which compares to US$2.2 billion at the end of 2014, representing gearing unchanged at 5%.

The Board is recommending a final dividend of US¢20.00 per share, which increases the dividend for the full year to US¢28.50 per share.

Business Developments

Within Jardine Matheson, Jardine Pacific produced an improved profit in 2015, with good performances from its engineering and construction businesses, as well as the acceleration of profit recognition on the termination of a shipping joint venture. Jardine Motors' results declined as profits from Hong Kong and Macau did not benefit to the same extent in 2015 from new model launches. The group is purchasing a flagship property for US$220 million for its Mercedes-Benz operations in Hong Kong. Jardine Lloyd Thompson delivered a resilient performance in difficult trading conditions, with a modest reduction in trading profit reflecting lower revenues in its Employee Benefits business in the United Kingdom and the planned development cost of its Specialty business in the United States.

Hongkong Land continued to see sound performances from its commercial and residential property activities. It embarked upon two new joint venture developments in mainland China in 2015. In July, it consolidated its market position in Chongqing when it acquired with its existing partner a new residential project adjacent to their Bamboo Grove development. In September, it took a 50% interest in a 227,000 sq. m. residential and commercial development located in an established area of Pudong, within Shanghai's inner-ring road. In the meantime, construction of the group's prestigious retail complex in Beijing, WF CENTRAL, is progressing satisfactorily.

Dairy Farm faced a challenging retail environment in many of its markets, although it saw strong performances from its Hong Kong operations. The group continued to pursue its long-term growth plans with a number of strategic moves completed. These included the investment in a 20% stake in Yonghui Superstores in mainland China, the acquisition of the San Miu supermarket chain in Macau, and the required divestment of 30% of the ordinary shares in its food retail business in Malaysia. The group is also continuing its significant investment in its IT infrastructure and systems, as well as supply chain, to improve efficiency and to increase productivity.

Further equity stakes were taken by Mandarin Oriental in key hotel properties. It acquired a 50% interest in the Hotel Ritz, Madrid in May for some US$73 million. In January 2016, it exercised its right to acquire the property housing Mandarin Oriental, Boston in a US$140 million transaction, which is expected to close in April 2016. The group's balance sheet was further strengthened following a US$316 million rights issue in April 2015, which has provided the capacity to fund the investments in Madrid and Boston and pay down debt in advance of its London property's US$126 million renovation.

Jardine Cycle & Carriage developed further its strategic investment portfolio in April 2015 with a US$615 million acquisition of a 24.9% stake in listed Siam City Cement, the second largest cement manufacturer in Thailand. This was refinanced in July following a US$752 million rights issue.

Astra faced weaker commodity prices and reduced domestic consumption, as well as increased competition in the car sector and a deterioration in corporate credit quality. These factors, together with a further impairment charge recorded in relation to its coal mining properties, resulted in reduced profit contributions from all its major segments. Nevertheless, Astra's operations remain market leaders in Indonesia, with a 50% market share of the car market and a 69% share of the motorcycle market, and the group maintained strong cash inflows. Its new life insurance joint venture with Aviva is trading well and has acquired 28,500 individual life customers and more than 180,000 participants in its corporate employee benefits programmes. Anandamaya Residences, the group's luxury residential development in Jakarta, continued to attract strong buyer interest. 

People

We were pleased to welcome Julian Hui to the Board in March 2015. Y.K. Pang will join the Board on 1st August 2016.

Outlook

The difficult trading conditions which affected many of our businesses in 2015 are expected to continue in the current year. Nevertheless, with sound finances and clear strategic objectives, the Group remains well positioned to benefit from the increasing spread of affluence in the region.

Sir Henry Keswick

Chairman

Operating Review

Jardine Matheson

Jardine Matheson achieved an underlying profit before tax for the year of US$3,526 million, a decrease of 21%. The underlying profit attributable to shareholders was down 11% at US$1,363 million, while underlying earnings per share were 12% lower at US$3.65. The profit attributable to shareholders for the year was US$1,797 million, mainly due to an increase in the value of Hongkong Land's investment property portfolio. This compares with US$1,710 million in 2014, which also benefited from a small increase in property valuations.

· Jardine Pacific

Jardine Pacific performed well in 2015 producing an underlying profit of US$142 million, 9% ahead of 2014. Profit attributable to shareholders was US$145 million after including US$3 million net of non-trading items, compared to US$137 million in the prior year. Within the group's engineering and construction activities, which together accounted for 68% of earnings, Jardine Schindler achieved further good results with a growing portfolio of installed units and stable margins. JEC's Hong Kong businesses performed well leading to improved earnings, and Gammon produced a higher profit, with its order book remaining strong at US$3.5 billion. The group's transport services businesses recorded an increased profit due to the accelerated earnings recognized on the early termination of its joint venture shipping business with UASAC, although there was a decline in earnings at Hactl following reduced cargo throughput. Jardine Restaurants maintained a stable contribution. The business turnaround within JTH's technology support businesses is continuing, although the profit was slightly lower than in 2014.

· Jardine Motors

Jardine Motors produced an underlying profit of US$77 million for 2015, compared to US$97 million in the prior year. Zung Fu in Hong Kong and Macau saw sales and margins fall following a record year in 2014, which had benefited from new product launches. The results were steady in mainland China, with the benefit of higher new car sales being offset by lower margins. The United Kingdom produced an improved contribution, despite unfavourable exchange rate movements, due to steady trading and profits arising from property and dealership disposals. 

Zhongsheng Group is one of mainland China's leading motor dealership groups, in which Jardine Strategic holds a minority interest. The motor market in 2015 saw increased levels of activity, but this was tempered by softer margins. 

· Jardine Lloyd Thompson

JLT's total revenue for 2015 was US$1,763 million, an increase of 5% in its reporting currency. The underlying trading profit decreased by 5%, in its reported currency, to US$286 million. Excluding the planned US development costs, underlying profit before tax would have increased by 3%. JLT's contribution to the Group's underlying profit was 17% lower on conversion into US dollars. The Risk & Insurance businesses produced a 6% increase in revenues. Good performances were seen in its Specialty and Reinsurance businesses as well its Asian and Latin American operations, with progress continued to be made in its new US Specialty business. The Employee Benefits operations increased their revenues by 2% overall, but these were reduced by 6% on an organic revenue basis due to the challenges faced by the UK business. The International Employee Benefits operations delivered 21% revenue growth, or 7% on an organic basis.

Hongkong Land

Hongkong Land produced a sound performance in 2015 with an underlying profit attributable to shareholders of US$905 million, down 3%. Results from its commercial portfolio remained strong, although earnings from the residential sector declined despite an improvement in mainland China and the benefit of a gain recognized on a redeveloped property in Hong Kong. The profit attributable to shareholders was US$2,012 million, after taking into account gains of US$1,107 million recorded principally on property valuations. This compares to US$1,327 million in 2014, which included net valuation gains of US$397 million. Hongkong Land remains well-financed with net debt of US$2.3 billion at the year end and gearing of 8%.

In commercial property, conditions in the Hong Kong office leasing market were moderately positive. Vacancy in the group's Central portfolio improved to 3.4% at the end of 2015, and rental reversions were marginally positive. The retail portfolio remained fully occupied with positive rent reversions. In Singapore, vacancy in its office portfolio at the year end had reduced to 1%, including committed space under new leases. In mainland China, construction of the prestigious retail complex in Beijing, WF CENTRAL, is making progress.

As anticipated, the contribution from Hongkong Land's residential interests was lower. There was a good performance from mainland China despite the challenging markets, and in Singapore, its wholly-owned subsidiary, MCL Land, completed three projects. Satisfactory progress continues to be made in its residential projects in Indonesia and the Philippines. In Hong Kong, while there was a US$63 million gain from the redevelopment of a residential property owned by the group, the overall contribution declined due to the absence of the Serenade sales seen in 2014.

Dairy Farm

Dairy Farm's Food Division and the Health and Beauty Division reported lower profits in a challenging retail environment, despite most key businesses achieving positive like-for-like sales growth. The Home Furnishings and Restaurants divisions reported good increases in both sales and profits. The group's sales, including 100% of associates and joint ventures, rose 37% to US$17.9 billion, including contributions from acquisitions. Sales for continuing businesses were little changed at US$13.1 billion. Underlying profit at US$428 million was down 14%. The profit attributable to shareholders of US$424 million, after provisions for store closure costs, was down 17%. The operating cash flow remained strong, while net debt at the year end was US$482 million, compared with net cash of US$475 million in 2014, due primarily to a US$912 million investment in Yonghui Superstores.

Dairy Farm purchased a 20% interest in the leading Mainland chain, Yonghui Superstores, and will invest a further US$200 million to maintain its interest when Chinese internet retailer, JD.com, takes a 10% shareholding. It also acquired the 15 store Macau supermarket chain, San Miu. To meet the local regulatory requirements in Malaysia, 30% of the ordinary shares in its food retail business, GCH Malaysia, were divested.

Dairy Farm is strengthening its market share in each format and building consistent operating practices across the different countries in which it is active. Expansion of the store network is also continuing in all formats, together with the renovation of existing stores to offer an improved shopping experience. The group has established an on-line presence in Guardian Singapore, which is the first of several planned moves into e-commerce.

Mandarin Oriental

Reduced demand in Hong Kong and Paris, together with disruption from renovations at a number of properties, led to an underlying profit for Mandarin Oriental of US$90 million. This represented an 7% decrease on the prior year's record result, which had benefited from branding fees from residences. Profit attributable to shareholders was US$89 million, compared to US$97 million in 2014. The company raised US$316 million by way of a rights issue in April, with the proceeds reducing debt and funding its 50% share of the acquisition of the Hotel Ritz, Madrid.

Its Asian hotels produced a lower contribution, despite an improved performance in Tokyo, due to softer demand in Hong Kong and Singapore as well as disruption from a renovation in Kuala Lumpur. The group's performance in Europe was negatively impacted by challenging conditions in Paris following the terrorist attacks and a renovation in Munich, which was partially offset by an improved result from London. All of the group's hotels in North America reported higher revenue-per-available-room, other than New York which undertook a refurbishment of suites during the first half of the year.

Mandarin Oriental, Milan was opened in July, followed by the partial opening of Mandarin Oriental, Marrakech in October. Management contracts were announced for new hotels under development in Beijing, Beirut and Boca Raton. The group is to undertake a US$126 million refurbishment of Mandarin Oriental Hyde Park, London, which is scheduled to commence in the third quarter of 2016. Within the next 18 months, hotels are scheduled to open in Doha and Beijing.

Jardine Cycle & Carriage

Jardine Cycle & Carriage's underlying profit declined by 20% to US$638 million in 2015. Its profit attributable to shareholders was US$688 million after accounting for a net non-trading gain of US$50 million, which included the reversal of an impairment charge of US$43 million in respect of a Vietnamese associate, and compares with US$820 million in 2014 after a net non-trading gain of US$27 million. Astra's contribution to underlying profit at US$477 million was 34% lower than in 2014, due in part to a 12% decline in the average rupiah exchange rate. The contribution from Direct Motor Interests was up 71% at US$141 million, and there was a US$30 million contribution from new businesses in its Other Interests. 

Within the Direct Motor Interests, 27%-owned Truong Hai Auto Corporation in Vietnam enjoyed an excellent year producing a contribution of US$85 million, up from US$39 million in 2014, following strong sales and good margins. Earnings from the wholly-owned Singapore motor operations rose 17% to US$39 million as the passenger car market grew. In Malaysia, 59%-owned Cycle & Carriage Bintang benefited from a good trading environment and the recognition of dividend income from Mercedes-Benz. In Indonesia, 44%-owned Tunas Ridean increased its contribution as higher income from financing offset weaker automotive profits.

The group's Other Interests comprises two investments. In April 2015, a 25% stake was acquired in Thai-listed Siam City Cement, which is the second largest cement manufacturer in Thailand. This US$615 million acquisition was refinanced following a US$752 million rights issue in July. In February 2015, Vietnam-listed Refrigeration Electrical Engineering Corporation Group, which has interests in mechanical and electrical engineering, real estate and infrastructure investments, became an associated company when the shareholding was increased from 19% to 22%.

Astra

Astra's underlying profit for 2015 under Indonesian accounting standards was down 24% at Rp14.0 trillion, equivalent to US$1,038 million. Its net profit was 25% lower at Rp14.5 trillion, some US$1,075 million. Excluding the impairments of coal mining properties recognized in both years, its net profit would have declined 20%. Strong working capital inflows were maintained with net cash, excluding its financial services subsidiaries, of Rp1.0 trillion or US$75 million at the year end, compared to net debt of Rp3.3 trillion or US$266 million at the end of 2014.

The wholesale market for cars in Indonesia fell 16% in 2015, while Astra's car sales were 17% lower at 510,000 units, leading to a modest decline in market share from 51% to 50%. Astra Honda Motor's motorcycle sales declined by only 12% to 4.5 million units as the market contracted 18%, increasing its market share from 64% to 69%. Net income at Astra Otoparts, the component business, fell 63% to US$24 million due to a lower contribution from its manufacturing activities.

Net income from financial services was 25% lower at US$264 million, while excluding a prior year acquisition gain the decline would have been 18%. The consumer finance businesses saw financings fall 6% to US$4.5 billion, although there was an improved performance from motorcycle financing. Heavy equipment financings increased 7%. Increases in loan loss provisions at 45%-held joint venture, Permata Bank, offset higher interest income leading to net income being 84% lower at US$18 million. Insurance company, Asuransi Astra Buana, saw net income decline 10% due to lower investment earnings.

United Tractors' net income declined 28% to US$286 million. Komatsu heavy equipment unit sales fell by 40%, although parts revenue was up. The contract coal mining interests saw a 9% fall in revenue, with declines of 4% in coal production and 5% in overburden removal. United Tractors' own coal sales were 18% lower. The lower coal prices and uncertainty as to recovery has led United Tractors to take an US$192 million impairment charge against the carrying value of its coal mining properties, compared to a US$130 million impairment in 2014. Acset Indonusa, the newly acquired general contractor which is 50% held, increased its new contracts during the year to US$228 million from US$52 million in 2014.

Astra Agro Lestari reported net income 75% lower at US$46 million. Average crude palm oil prices achieved were down 16% and crude palm oil sales were down 24%, while olein sales rose 62%.

Net income from infrastructure, logistics and others fell by 17%, primarily due to initial losses arising on a new toll road. Progress continues in the development of the toll road interests, which now extend to 197 km of road. PAM Lyonnaise Jaya, which operates the western Jakarta water utility system, saw sales volumes little changed. Astra's contract car hire business experienced declines in both revenues and income. Astra's information technology interests produced a modest increase in net income, while the net income on continuing operations was up 20%.

Ben Keswick

Managing Director