Jardine Math.sr Regulatory News (JAR)

To: Business Editor

Jardine Cycle & Carriage Limited

2021 Half Year 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

Joey Ho (65) 9765 0717 

Brunswick Group Limited

Ben Fry (65) 9017 9886

29th July 2021

JARDINE CYCLE & CARRIAGE LIMITED

2021 HALF YEAR FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

· Underlying profit more than doubled to US$346 million

· Higher earnings from Astra, principally in its automotive businesses

· Improved profits from Direct Motor Interests in Singapore

· Other Strategic Interests stronger, led by a continued THACO recovery

· Interim dividend of US¢18 per share, up from US¢9 in 2020

"The Group's underlying profit improved in the first half of 2021, compared with the same period in 2020, when the second quarter of 2020 was particularly affected by significant pandemic-related business restrictions. Although business conditions have since improved, the Group remains cautious about performance in the second half of 2021, given the worsening COVID-19 situation in a number of countries across the region."

Ben Keswick, Chairman

The exchange rate of US$1=S$1.34 (31st December 2020: US$1=S$1.32) was used for translating assets and liabilities at the balance sheet date, and US$1=S$1.33 (30th June 2020: US$1=S$1.40) was used for translating the results for the period. The financial results for the six months ended 30th June 2021 and 30th June 2020 have been prepared in accordance with International Financial Reporting Standards and have not been audited or reviewed by the auditors.

* The Group uses 'underlying profit attributable to shareholders' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in Note 6 to the condensed financial statements. Management considers this to be a key performance measurement that enhances the understanding of the Group's underlying business performances.

^ Included in 'non-trading items' are unrealised gains/losses arising from the revaluation of the Group's equity investments.

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CHAIRMAN'S STATEMENT

Overview

Jardine Cycle & Carriage ("JC&C" or "the Group") produced an increase in underlying profit in the first half of 2021, compared to the same period in 2020, which saw the emergence of the pandemic and the implementation of major lockdown restrictions in the second quarter. Most of the Group's businesses have also seen some performance improvements compared to previous quarters.

Astra contributed US$293 million to the Group's underlying profit in the first half of 2021, 71% higher than the same period last year, with the improvement in its performance largely driven by its automotive businesses.

Direct Motor Interests contributed US$24 million, compared to a loss of US$0.3 million in the same period last year, with performance benefiting mainly from higher profits in the Singapore operations.

Other Strategic Interests contributed a profit of US$66 million compared to US$28 million in the same period last year, mainly due to the continued recovery of THACO's automotive and real estate operations.

Exchange losses of US$21 million from the translation of foreign currency loans at JC&C parent company were substantially lower than in the same period last year.

The Group's underlying profit attributable to shareholders more than doubled from US$138 million to US$346 million. After accounting for non-trading items which included unrealised losses arising from the revaluation of the Group's equity investments and a gain on disposal of Astra's investment in Permata Bank in 2020, the Group's profit attributable to shareholders was 25% lower at US$226 million.

The Group's consolidated net cash position, excluding the net borrowings from Astra's financial services subsidiaries, was US$40 million at the end of June 2021, compared to a net debt of US$854 million at the end of 2020. The change from net debt to net cash was mainly due to strong trading cashflows, together with low capital expenditure and improved working capital management. Net debt within Astra's financial services subsidiaries increased slightly to US$2.9 billion. JC&C parent company's net debt was US$1.6 billion at the end of June 2021.

JC&C parent company increased its interest in Cycle & Carriage Bintang from 59.1% to 88.0% through market purchases and acceptances under its Voluntary General Offer which closed on 4th June 2021. JC&C parent company increased its interest in REE from 29.8% to 30.8%. It also entered into an agreement to acquire the remaining 30% stake that it did not own in Republic Auto, a used car business in Singapore.

Group Review

The contributions to JC&C's underlying profit attributable to shareholders by business segment were as follows:  

Astra

Astra contributed US$293 million to JC&C's underlying profit, 71% higher than the same period last year. Under Indonesian accounting standards, Astra reported a net profit equivalent to US$615 million.

Automotive

Net income increased significantly to US$231 million, mainly due to the negative impact on performance in the second quarter of 2020 from the pandemic and related containment measures, and an increase in sales volumes in the first half of 2021, especially in the car segment, which benefited from temporary luxury sales tax incentives. Key points were as follows:

· The wholesale car market increased by 51% in the first half to 393,000 units. Astra's car sales were 50% higher at 210,000 units, with its market share maintained at 53%. Eight new models and six revamped models were launched.

· The wholesale market for motorcycles increased by 30% in the first half to 2.5 million units. Astra's Honda motorcycle sales grew by 29% to 1.9 million units, maintaining its market share. Four new models and seven revamped models were launched.

· Components business, Astra Otoparts, reported a net profit of US$19 million compared to a net loss of US$20 million in the same period last year, mainly due to higher revenues from the original equipment manufacturer and replacement market segments.

Financial Services

Net income increased by 2% to US$149 million, due to higher contributions from the consumer finance and general insurance businesses. Key points were as follows:

· Consumer finance businesses saw a 13% increase in the amounts financed to US$2.8 billion. The net income contribution from the car-focused finance companies increased by 3% to US$39 million, and the contribution from the motorcycle-focused financing business also increased by 3% to US$66 million. Both increases were mainly due to lower loan loss provisioning.

· Heavy equipment-focused finance operations saw a 46% increase in the amounts financed to US$188 million, but the net income contribution from this business fell 20% to US$2 million.

· General insurance company, Asuransi Astra Buana, reported a 15% increase in net income to US$42 million due to higher investment income.

Heavy Equipment, Mining, Construction and Energy

Net income increased by 13% to US$187 million, mainly due to higher Komatsu heavy equipment sales and improved coal prices. Key points were as follows:

· United Tractors reported a 11% increase in net income to US$313 million.

· Komatsu heavy equipment sales increased by 60% to 1,361 units.

· Mining contracting operations reported 3% lower overburden removal volume at 409 million bank cubic metres, while coal production was 3% higher at 58 million tonnes.

· Coal mining subsidiaries achieved 12% higher coal sales at 6.3 million tonnes, including 1.4 million tonnes of metallurgical coal.

· Agincourt Resources saw 5% lower gold sales at 176,000 oz.

· General contractor, Acset Indonusa, reported a net loss of US$11 million, mainly due to the slowdown of several ongoing projects and reduced construction project opportunities during the pandemic.

Agribusiness

Net income increased by 66% to US$36 million, mainly due to improved crude palm oil prices. 

Infrastructure and Logistics

Astra's infrastructure and logistics division reported a net profit of US$6 million, compared to a net loss of US$6 million for the same period last year, mainly due to improved performances in its toll road and Serasi Autoraya operations. Key points were as follows:

· Toll road revenues were 41% higher. Astra has 358km of operational toll roads along the Trans-Java network and in the Jakarta Outer Ring Road.

· Serasi Autoraya's net income increased significantly to US$6 million mainly due to increased used car sales, improved operating margins and an increase in the numbers of vehicles under contract to 23,000 units.

· In June, Astra acquired an additional 14% stake in Marga Lingkar Jakarta, the operator of the 7.7km Kebon Jeruk-Ulujami toll road, part of the Jakarta Outer Ring Road I, which brought Astra's ownership to 49%.

Direct Motor Interests

The Group's Direct Motor Interests contributed a profit of US$24 million, compared to a loss of US$0.3 million in the same period last year. Key points were as follows:

· Cycle & Carriage Singapore made a significantly higher contribution of US$19 million, compared to US$1 million in the previous year. Passenger car sales grew 33% to 4,188 units, with market share at 16%. There was also an improved trading performance in used car operations.

· In Indonesia, Tunas Ridean contributed US$7 million, compared to US$3 million last year, supported by improved profits from its automotive and financial services businesses.

· Cycle & Carriage Bintang in Malaysia contributed a profit of US$0.2 million, compared to a loss of US$3 million in the previous year. Despite challenging trading conditions, the financial performance of the business benefited from improved sales due to a sales tax reduction, as well as cost savings initiatives.

Other Strategic Interests

The Group's Other Strategic Interests contributed a profit of US$66 million, compared to US$28 million in the previous year. Key points were as follows:

· THACO contributed a profit of US$37 million. THACO's automotive unit sales were up 40%, and margins also increased due to an improved sales mix. The real estate business continued to benefit from a gradual recovery of the market.

· The contribution from Siam City Cement was US$14 million, 19% higher than the same period last year. This was mainly due to higher cement volumes mainly in the regional operations, although overall prices remained under pressure. Margins were also down due to an increase in coal prices, despite continued cost-saving initiatives.

· REE's contribution of US$6 million, based on its first-quarter results, was 72% higher than the same period last year. There were improved performances from its power and water investments as a result of favourable hydrography and an increase in REE's solar projects. Profits from REE's real estate leasing business were relatively stable.

· The Group's investment in Vinamilk produced a dividend income of US$11 million, consistent with the same period last year. Vinamilk reported a net profit of US$235 million in the first half, 7% down in local currency terms, due to a weaker domestic market.

Corporate Costs

There were lower foreign exchange losses from the translation of foreign currency loans and lower net financing charges than in the first half of last year. Corporate costs totalled US$37 million in the first half, compared to US$61 million in the same period last year.

Dividend

The Board has declared an interim one-tier tax-exempt dividend of US¢18 per share (2020: US¢9 per share) for the half-year ended 30th June 2021.

Outlook

Although business conditions have improved in the first half of 2021, the Group remains cautious about performance in the second half of 2021, given the worsening COVID-19 situation in a number of countries across the region.

Ben Keswick

Chairman

CORPORATE PROFILE

Jardine Cycle & Carriage is the investment holding company of the Jardine Matheson Group in Southeast Asia. JC&C seeks to grow with Southeast Asia by investing in market-leading businesses based on the themes of urbanisation and the emerging consumer class. The Group works closely with its businesses to enable them to achieve their potential and to elevate their communities.

The Group has a 50.1% interest in Astra, a diversified group in Indonesia, which is also the largest independent automotive group in Southeast Asia.

JC&C also has significant interests in Vietnam, including 26.6% in THACO Corporation, 30.8% in Refrigeration Electrical Engineering Corporation and 10.6% in Vinamilk. Its 25.5%-owned Siam City Cement also has a presence in South Vietnam, in addition to operating in Thailand, Sri Lanka, Cambodia and Bangladesh.

The Direct Motor Interests in JC&C's portfolio are the Cycle & Carriage businesses in Singapore, Malaysia and Myanmar, and 46.2%-owned Tunas Ridean in Indonesia.

JC&C is a leading Singapore-listed company, 75%-owned by the Jardine Matheson group. Together with its subsidiaries and associates, JC&C employs around 240,000 people across Southeast Asia.

Statement pursuant to Rule 705(5) of the Listing Rules of the Singapore Exchange Securities Trading Limited ("SGX-ST")

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 six months ended 30th June 2021 to be false or misleading in any material aspect.

On behalf of the Board of Directors

Ben Keswick

Director

Vimala Menon

Director

29th July 2021

(1) Higher revenue was mainly due to higher sales in Astra's automotive, heavy equipment and mining operations and higher sales in Direct Motor Interests.

(2) Decrease in financing charges was mainly due to lower level of net debt.

(1) Fair value through other comprehensive income ("FVOCI")

(1) The increase in drawdown and repayment of loans includes the refinancing effect of the Company's borrowings from current liabilities to non-current liabilities.

(2) For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise deposits with bank and financial institutions, bank and cash balances, net of bank overdrafts. In the balance sheet, bank overdrafts are included under current borrowings.

1 Basis of preparation

The condensed interim financial statements for the six months ended 30th June 2021 have been prepared in accordance with IAS 34 Interim Financial Reporting. The condensed interim financial statements do not include all the information required for a complete set of financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance of the Group since the last annual financial statements for the year ended 31 December 2020. There have been no changes to the accounting policies described in the 2020 audited accounts which have been prepared in accordance with Singapore Financial Reporting Standards (International) ("SFRS(I)") and International Financial Reporting Standards ("IFRS"), except for the adoption of new and amended standards as set out below. The Group has not early adopted any other standard or amendments that have been issued but not yet effective.

The exchange rates used for translating assets and liabilities at the balance sheet date are US$1=S$1.3444 (2020: US$1=S$1.3216), US$1=RM4.1552 (2020: US$1=RM4.0245), US$1=IDR14,496 (2020: US$1=IDR14,105), US$1=VND23,013 (2020: US$1=VND23,086) and US$1=THB32.056 (2020: US$1= THB29.920).

The exchange rates used for translating the results for the period are US$1=S$1.3328 (2020: US$1=S$1.4011), US$1=RM4.1096 (2020: US$1=RM4.2694), US$1=IDR14,360 (2020: US$1=IDR14,786), US$1=VND23,042 (2020: US$1=VND23,335) and US$1=THB31.016 (2020: US$1=THB31.735).

Interpretations and amendments to published standard effective in 2021

On 1st January 2021, the Group has adopted the new or amended IFRS and Interpretations of IFRS that are mandatory for application for the financial year. Changes to the Group's accounting policies have been made as required, in accordance with the transitional provisions in the respective IFRS and Interpretations of IFRS.

The adoption of these new or amended IFRS and Interpretations of IFRS did not result in substantial changes to the Group's accounting policies and had no material effect on the amounts reported for the current or prior financial years.

Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (effective from 1st January 2021)

The amendments provide a number of practical expedients as a result of the reform which affect the measurement of financial assets, financial liabilities and lease liabilities, and a number of reliefs for hedging relationships. The adoption of these amendments does not have a significant impact on the Group's consolidated financial statements.

COVID-19 Related Rent Concessions beyond 30th June 2021: Amendment to IFRS 16 Leases (effective from 1st April 2021)

The Group adopted and applied the practical expedient of the Covid-19 Related Rent Concessions: Amendment to IFRS 16 Leases, published in June 2020 ("2020 amendment"), in the 2020 annual financial statements. The 2021 amendment extends the practical expedient in the 2020 amendment to eligible lease payments due on or before 30th June 2022. By using the 2021 amendment, the Group continues to apply the practical expedient consistently to all lease contracts with similar characteristics and in similar circumstances, and does not assess these concessions as lease modifications.

Critical accounting estimates and judgements

The preparation of the condensed interim financial statements require management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2020.

2 Revenue

3 Net operating costs and operating profit