Jardine Math.sr Regulatory News (JAR)

To: Business Editor 26th April 2018

For immediate release

Jardine Cycle & Carriage Limited

2018 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

26th April 2018

JARDINE CYCLE & CARRIAGE LIMITED

2018 FIRST QUARTER FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

· Underlying earnings per share up 8%

· Astra's contribution slightly down year-on-year

· Higher results from Direct Motor Interests and Other Strategic Interests

"Astra is continuing to benefit from stable coal prices, although the car market is increasingly competitive. While the Group's Direct Motor Interests are also likely to continue to face challenges, its Other Strategic Interests are expected to produce growth. Overall, the current outlook for the full year is for a satisfactory performance."

Ben Keswick, Chairman

26th April 2018

The exchange rate of US$1=S$1.31 (31st December 2017: US$1=S$1.34) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.32 (31st March 2017: US$1=S$1.41) was used for translating the results for the period.

The financial results for the three months ended 31st March 2018 and 31st March 2017 have been prepared in accordance with International Financial Reporting Standards. These results have not been audited or reviewed by the auditors.

(1) The accounts have been restated due to the adoption of IFRS 9 "Financial Instruments" and IFRS 15 "Revenue Contracts with Customers", as set out in note 1 to the financial statements.

(2) Includes changes in fair value of the Group's investments in equity instruments under IFRS 9.

CHAIRMAN'S STATEMENT

Overview

The Group reported improved results in the first quarter of 2018 as a lower contribution from Astra was offset by higher contributions from the Group's Direct Motor Interests and Other Strategic Interests.

Performance

The Group's revenue for the three months ended 31st March was 12% higher at US$4.6 billion. Underlying profit attributable to shareholders grew 8% to US$219 million, and underlying profit per share was 8% higher at US¢55 per share. Profit attributable to shareholders was US$135 million, compared to US$212 million in the equivalent period last year, following the recognition of fair value losses on the adoption of new accounting standards.

Astra's contribution of US$177 million to the Group's underlying profit was 4% down. Underlying profit from the Group's Direct Motor Interests was 23% higher at US$28 million, while the Group's Other Strategic Interests made a contribution of US$10 million.

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$1.4 billion at the end of March 2018, compared to US$819 million at the prior year end. The increase was primarily due to Astra's toll road and GO-JEK investments and capital expenditure in its mining contracting business, together with the investments by the Group in Toyota Motor Corporation and other associates and joint ventures. The net debt of the Company increased to US$1.3 billion, from US$1.2 billion at the end of 2017. Net debt within Astra's financial services subsidiaries of US$3.3 billion was slightly down from the prior year end.

The Board has not declared a dividend for the three months ended 31st March 2018 (31st March 2017: Nil).

Astra

Astra reported a net profit equivalent to US$365 million, under Indonesian accounting standards, 2% lower in its local currency terms, as lower results were experienced in some of its business segments, particularly in automotive and agribusiness, which more than offset the improved performance from its heavy equipment, mining, construction and energy business.

Net income from the group's automotive division was down by 8% at US$155 million, mainly due to increased competition in the car segment.

The wholesale market for cars grew by 3% to 292,000 units. Astra's car sales were, however, 12% lower at 142,000 units due to the impact of intense competition which resulted in a decline in market share from 57% to 49%. The group launched seven new models and two revamped models during the period.

The wholesale market for motorcycles increased by 4% to 1.5 million units. Astra Honda Motor's domestic sales were flat at 1.1 million units, mainly due to inventory management ahead of several key model launches, which resulted in its market share decreasing from 77% to 73%. The group launched one new model and five revamped models during the period.

Astra Otoparts, the group's components business, reported net income which was 1% lower at US$11 million, despite an 11% increase in revenue. The decline in net income was mainly due to reduced contributions from its joint venture and associate companies, which were impacted by forex translation losses.

Financial Services

Net income from the group's financial services division decreased by 6% to US$78 million, due to a lower contribution from Permata Bank.

The group's consumer finance businesses saw a 5% decrease in the amount financed. The contribution from the group's car-focused finance companies decreased by 17% to US$17 million mainly due to increased loan loss provisions in the low cost car segment. Motorcycle-focused Federal International Finance's net income was up 22% at US$40 million, mainly due to a larger loan portfolio.

The amount financed through the group's heavy equipment-focused finance operations decreased by 35% to US$62 million, mainly due to reduced lending to small and medium-sized borrowers.

Permata Bank, in which Astra holds a 44.6% interest, reported net income of US$12 million, compared to US$34 million recorded in the first quarter of last year. The results benefited from a one-off gain on the sale of non-performing loans. Excluding this one-off gain, the bank's net income would have increased mainly driven by lower loan impairment costs which fell from US$50 million in the first quarter last year to US$34 million in this first quarter. The bank's gross and net non-performing loan ratios at the end of March 2018 were relatively stable at 4.6% and 1.7%, respectively.

Asuransi Astra Buana, the group's general insurance company, reported net income 15% higher at US$18 million, due to increased investment income. During the period, the group's life insurance joint venture, Astra Aviva Life, acquired more than 78,000 new individual life customers and 411,000 new participants for its corporate employee benefits programmes.

Heavy Equipment, Mining, Construction and Energy

Net income from the group's heavy equipment, mining, construction and energy division increased by 68% to US$111 million.

United Tractors, which is 59.5%-owned, reported net income 69% higher at US$186 million. The increase was mainly due to improved performances in its construction machinery and mining contracting businesses, as well as its mining operations, as a result of increased coal prices.

In its construction machinery business, Komatsu heavy equipment sales were up 38% at 1,171 units, while parts and service revenues were also higher. The mining contracting operations of Pamapersada Nusantara recorded a 6% higher coal production at 26.5 million tonnes and 22% higher overburden removal at 207 million bank cubic metres. United Tractors' mining subsidiaries reported 36% higher coal sales at 2.6 million tonnes.

In the first quarter of 2018, Suprabari Mapanindo Mineral, United Tractors' 80.1%-owned coking coal company which became operational in late 2017, achieved coal sales at 111,000 tonnes.

General contractor Acset Indonusa, a 50.1% subsidiary of United Tractors, reported net income up 27% at US$3 million due to higher revenue mainly from its infrastructure construction projects.

Agribusiness

Net income from the group's agribusiness division was down by 55% at US$21 million.

Astra Agro Lestari, which is 79.7%-owned, reported net income 55% lower at US$26 million, primarily due to lower crude palm oil prices. Achieved average crude palm oil prices were 12% lower at Rp7,855/kg, while sales of crude palm oil and its derivatives were 17% higher at 480,000 tonnes.

Infrastructure and Logistics

The group's infrastructure and logistics division reported a net loss of US$2 million, compared with a net profit of US$5 million in the first quarter of 2017, as results were affected by initial losses on the Cikopo-Palimanan toll road acquired in the first half of 2017.

The group's portfolio of toll road interests totals 353km, of which 269km is operational. At the mature 72.5km Tangerang-Merak toll road, operated by 79.3%-owned Marga Mandalasakti, toll revenue increased by 14% to US$19 million. At the wholly-owned 40.5km Jombang-Mojokerto toll road, 39.6km became fully operational in September 2017 and recorded US$3 million of toll revenue during the first quarter of 2018. Toll revenue at the 45%-owned 116.8km Cikopo-Palimanan increased by 4% to US$22 million. At the 40%-owned 72.6km Semarang-Solo toll road, of which 40.1km is now in operation, toll revenue was US$4 million, 36% higher than the comparable period last year.

The group also has a 40% stake in the 11.2km Kunciran-Serpong toll road and a 25% stake in the 39.8km Serpong-Balaraja toll road, both of which are under development.

Serasi Autoraya's net income increased by 47% to US$4 million, due to higher net margins in its car leasing and rental businesses, despite a 4% decline in vehicles under contract.

Information Technology

Net income from the group's information technology division was 4% higher at US$2 million.

Astra Graphia, which is 76.9%-owned, reported net income higher at US$3 million due to higher revenues across all its business segments.  

Property

The group's property division reported a marginal net income compared to a net income of US$3 million in the prior year, primarily due to lower development earnings recognised from its Anandamaya Residences project.

Arumaya, the group's 60%-held residential development project located in South Jakarta, commenced marketing in March 2018 and is scheduled for completion in 2022.

50%-owned Astra Land which owns 67% of Astra Modern Land, is in the process of developing a 67-hectare site in East Jakarta and started marketing activities for its first two clusters of landed houses during the first quarter of 2018.

Direct Motor Interests

The Group's Direct Motor Interests contributed an underlying profit of US$28 million, 23% above the previous year.

Cycle & Carriage Singapore's profit rose as margins improved on passenger cars as well as increased contributions from used cars and parts trading. In Malaysia, Cycle & Carriage Bintang recorded a loss despite higher unit sales, mainly due to higher operating expenses and financing costs. In Indonesia, Tunas Ridean's contribution was higher following stronger performances from its motor vehicle and motorcycle sales operations and from Mandiri Tunas Finance, partly offset by a lower profit from its rental business. In Vietnam, Truong Hai Auto Corporation's ("Thaco") contribution increased year-on-year, as the comparable results were negatively affected by stock provisions. Thaco's sales were higher in the first three months of 2018, as the full impact of the removal of CBU import tariffs in January 2018 has yet to be felt, and margins remained stable. In March 2018, the Group increased its shareholding in Tunas Ridean from 44.37% to 45.12%.

Other Strategic Interests

As in the previous year, the Group did not recognise any contribution in the first quarter from its 25.54% holding in Siam City Cement Public Company in Thailand and its 24.65% holding in Refrigeration Electrical Engineering Corporation ("REE Corp") in Vietnam, as both companies have yet to announce their first quarter results. Together these results are not expected to have a material impact on the Group, and will be accounted for in the second quarter. The Group recognised dividend income of US$9 million in the first quarter from its 10% interest in Vinamilk, which was acquired in November 2017.

Since the beginning of the year, the Group has increased its shareholding in REE Corp from 23.91% to 24.65%. The Group also invested US$200 million in shares of Toyota Motor Corporation, which is an important long-standing business partner of Astra.

Outlook

Astra is continuing to benefit from stable coal prices, although the car market is increasingly competitive. The Group's Direct Motor Interests are likely to continue to face challenges, while its Other Strategic Interests are expected to produce growth. Overall, the current outlook for the full year is for a satisfactory performance.

Ben Keswick, Chairman

26th April 2018

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 2018 to be false or misleading in any material respect.

On behalf of the Directors

Ben Keswick

Director

Hassan Abas

Director

26th April 2018

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

1 Basis of preparation

The financial statements are consistent with those set out in the 2017 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 2017 audited accounts except for the adoption of the following new standards, which are effective from 1st January 2018.

Under IFRS 9, the gains and losses arising from changes in fair value of the Group's investments in equity instruments, previously classified as available-for-sale, will be recognised in profit and loss, instead of through other comprehensive income. Such fair value gains or losses on revaluation of these investments will be classified as non-trading items, and hence will not have any impact on the Group's underlying profit attributable to shareholders. The forward-looking expected credit loss model will affect mainly the loan impairment provisions of the Group's financial services companies in Indonesia. The new hedge accounting rules will align the accounting for hedging instruments closely with the Group's risk management practices, but have no significant impact on the Group's results.

The adoption of IFRS 9 has been accounted for retrospectively and the comparative financial statements have been restated. The adoption has resulted in an increase in the profit attributable to shareholders for the financial period 3 months ended 31st March 2017 by US$1.3 million and a decrease in shareholders' funds as at 31st December 2017 by US$16.4 million.

IFRS 15 establishes a comprehensive 5-step framework for the recognition of revenue which replaces IAS 11 "Construction Contracts" and IAS 18 "Revenue" which covers contracts for goods and services. The core principle in the framework is that revenue is recognised when control of a good or service transfers to a customer. It provides clarification on recognition criteria for certain revenue elements, resulting in restatements to revenue and net operating costs, respectively.

The adoption of IFRS 15 has been accounted for retrospectively and the comparative financial statements have been restated. The adoption has no significant impact on the Group's profit or underlying profit attributable to shareholders, but resulted in a decrease in shareholders' funds as at 31st December 2017 by US$2.4 million.

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$1.3122 (2017: US$1=S$1.337), US$1= RM3.8663 (2017: US$1= RM4.065), US$1= IDR13,756 (2017: US$1=IDR13,548), US$1= VND22,808 (2017: US$1= VND22,704) and US$1= THB31.2640 (2017: US$1=THB32.6890).

The exchange rates used for translating the results for the period are US$1= S$1.3164 (2017: US$1=S$1.4098), US$1= RM3.8968 (2017: US$1= RM4.4334), US$1= IDR13,625 (2017: US$1= IDR13,342), US$1=VND22,758 (2017: US$1= VND22,705) and US$1= THB31.3743 (2017: US$1= THB34.8873).

2 Net operating costs and operating profit

nm - not meaningful

(1) Fair value loss in 2018 relates mainly to equity investment in Vinamilk and Toyota Motor Corporation

(2) Increase due to dividend from the Vinamilk which was only acquired in 4Q 2017

(3) Net exchange gain in 2018 relates mainly to the impact of stronger Singapore dollars on monetary liabilities denominated in USD

 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 2017 and 2018, 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$1,798.8 million (31st December 2017: US$1,783.8 million).

6 Share capital

There were no rights, bonus or equity issues during the period between 1st January 2018 and 31st March 2018. The Company did not hold any treasury shares as at 31st March 2018 (31st March 2017: Nil) and did not have any unissued shares under convertibles as at 31st March 2018 (31st March 2017: Nil).

There were no subsidiary holdings (as defined in the Listing Manual of the SGX-ST) as at 31st March 2018 (31st March 2017: Nil).

7 Revenue reserve

8 Other reserves