JDS.L Regulatory News (JDS)

To: Business Editor 26th February 2015

For immediate release

Jardine Cycle & Carriage Limited

2014 Financial Statements and Dividend Announcement

The following announcement was issued today by the Company's 74%-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 February 2015

JARDINE CYCLE & CARRIAGE LIMITED

2014 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

· Underlying earnings per share 11% down

· Astra's contribution reduced by weaker rupiah

· Improved earnings from the Group's other interests

"The Group's markets are expected to remain uncertain in the year ahead. Astra is anticipating continued competition in the car market in Indonesia and relatively low coal prices, while the weaker rupiah exchange rate will continue to impact its contribution to the Group."

Ben Keswick, Chairman

26th February 2015

Group Results

The exchange rate of US$1=S$1.32 (31st December 2013: US$1=S$1.27) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.27 (2013: US$1=S$1.25) was used for translating the results for the year.

The financial results for the year ended 31st December 2014 have been prepared in accordance with the International Financial Reporting Standards. These results have not been audited or reviewed by the auditors.

.

* The basis for calculating underlying earnings is set out in Note 5 of this report.

# The S$ equivalent is an estimate as the actual amount of the final dividend will be determined on Books Closure Date

referred to in Note 14.

CHAIRMAN'S STATEMENT

Overview

The Group's full year results declined as Astra's trading performance was affected by heightened competition in the car market and weak coal prices, while a weaker rupiah reduced its US dollar contribution further. This more than outweighed the improved results from the Group's other interests.

Performance 

The Group's revenue for the year was 6% lower at US$18.7 billion. Underlying profit attributable to shareholders was down 11% at US$793 million, while underlying earnings per share also declined by 11% to US¢222.88. Profit attributable to shareholders at US$820 million was 10% lower, after accounting for a net gain in non-trading items of US$27 million, attributable largely to the recognition of negative goodwill arising on the acquisition of a 50% interest in Astra Aviva Life and a fair value gain on the revaluation of investment properties, partly offset by a fair value loss on plantations.

Astra contributed US$724 million to the Group's underlying profit, as a 3% decrease in Astra's rupiah result was translated into a 15% decline in US dollars due to the rupiah which was on average 11% weaker than in 2013. The contribution to underlying profit from the Group's other interests of US$82 million was up 40%.

The Board is recommending a final one-tier tax-exempt dividend of US¢67 per share (2013: US¢90 per share), which together with the interim dividend will give a total dividend of US¢85 per share (2013: US¢108 per share) for the year. The decline in dividend per share reflects the reduced level of underlying profit for the year and the desire to lower the level of debt within the Company so as to leave it better placed to take advantage of investment opportunities. The final dividend is payable in US dollars or Singapore dollars.

Business Activity

Jardine Cycle & Carriage's activities are focused principally on Southeast Asia. Through its 50.1% interest in Astra, the Group is involved in six business segments in Indonesia, comprising automotive, financial services, heavy equipment and mining, agribusiness, infrastructure, logistics and others, and information technology. The Group's strategy is to support the growth of Astra, which is seeking to complement the continued development of its existing operations with expansion into new areas where it believes that it can, over time, develop market-leading businesses that can benefit from Astra's reach and expertise. The Group's other predominantly motor interests are active in Singapore, Malaysia, Indonesia, Vietnam and Myanmar.

Astra's underlying profit in rupiah was 3% lower than in 2013. Improved results were seen from its agribusiness and contract mining operations, but these were offset by lower earnings from the automotive businesses, where margins in the car sector declined, and an impairment charge was recorded in relation to its coal mining properties.

Astra sold a 25% interest in Astra Sedaya Finance to Permata Bank in the second quarter of 2014. In November 2014, the Astra Aviva life insurance joint venture was formally launched. In December 2014, United Tractors announced that it had entered into an agreement to acquire a majority interest in Indonesian-listed construction company, PT Acset Indonusa Tbk.

The contribution from the Group's other interests rose 40% to US$82 million, due largely to an improved performance by Truong Hai Auto Corporation in Vietnam, which benefited from strong vehicle sales, good margins and lower financing costs. Earnings from the Singapore motor operations were 8% higher following an increase in the number of vehicles sold. In Malaysia, Cycle & Carriage Bintang's contribution was up 138%, from a low base, due to good demand for new models, although margins on older models remained under pressure. In Indonesia, Tunas Ridean's contribution was 28% lower in the face of competitive pressure in the car market.

In February 2015, the Group increased further its commitment to Vietnam when it raised its shareholding in publicly-listed Refrigeration Electrical Engineering Corporation Group ("REE") from 19% to 22% for a cost of US$12 million. REE is now an associated company.

People

Together with its subsidiaries and associates, the Group employs around 245,000 people across Indonesia, Malaysia, Singapore, Vietnam and Myanmar. On behalf of the Board, I would like to take this opportunity to thank them for their commitment and hard work and wish them well in 2015.

I am delighted to welcome Dr Marty Natalegawa to the Board. Dr Natalegawa has extensive knowledge and experience of International relations, particularly of ASEAN, and his insights and experience will be of great value to the Board.

Outlook

The Group's markets are expected to remain uncertain in the year ahead. Astra is anticipating continued competition in the car market in Indonesia and relatively low coal prices, while the weaker rupiah exchange rate will continue to impact its contribution to the Group.

Ben Keswick

Chairman

26th February 2015

GROUP MANAGING DIRECTOR'S REVIEW

Overview

The Group's profit declined in 2014 in the face of challenging trading conditions. Astra's results were mixed, with strong performances from agribusiness and contract mining being offset by a decline in contribution from automotive and an impairment charge recorded in relation to its coal mining properties. The Group's other interests recorded improved results.

Performance

The Group reported an underlying profit of US$793 million for 2014, 11% down on the previous year. Profit attributable to shareholders was US$820 million, 10% lower with the inclusion of a net gain from non-trading items of US$27 million, attributable largely to the recognition of negative goodwill arising on the acquisition of a 50% interest in Astra Aviva Life and a fair value gain from the revaluation of investment properties, partly offset by a fair value loss on plantations.

The Group continues to have a strong balance sheet and cash flow. Shareholders' funds at the end of 2014 were 8% higher at US$4.6 billion, while net asset value per share at US$13.00 was 8% up on the previous year end. The Group's consolidated net debt at the end of 2014 was US$239 million, excluding borrowings within Astra's financial services subsidiaries, or 2% of consolidated total equity. This was down from US$303 million at the end of 2013, which represented 3% of consolidated total equity. Net debt within Astra's financial services subsidiaries at the end of the year was US$3.7 billion, slightly higher than the previous year end as the weaker rupiah largely offset the increase in the volumes financed.

Group Review

Astra

Astra reported a net profit equivalent to US$1,614 million under Indonesian accounting standards, 1% down in its reporting currency. Improved results mainly from its agribusiness and contract mining operations were offset by lower earnings from its automotive businesses, as margins declined in the car sector, and from the mining business which recorded an impairment charge in relation to its coal mining properties. Astra also benefited from a non-trading gain on the acquisition of 50% of Astra Aviva Life and a fair value gain on the revaluation of its investment properties. Excluding the non-trading gains, Astra's underlying profit was 3% down in its reporting currency.

Automotive

Discounting in the car market continues to have a negative impact on margins in the sales operations. The wholesale market for cars decreased by 2% to 1.2 million units. Astra's car sales fell by 6% to 614,000 unites, with its market share decreasing from 53% to 51%. The group launched 19 new models and 9 revamped models during the year.

The wholesale market for motorcycles increased by 2% to 7.9 million units. Astra Honda Motor's sales increased by 8% to 5.1 million units, with its market share increasing from 61% to 64%. Astra Honda Motor launched 2 new models and 15 revamped models during the year.

Astra Otoparts, which is 80%-owned, saw 15% higher sales, although net income decreased to US$73 million on lower manufacturing margins, due to the weakening of the rupiah and higher labour costs.

Financial Services

Net income from Astra's financial services businesses increased by 11% to US$398 million. Excluding the US$37 million non-trading gain from the recognition of negative goodwill arising on the acquisition of a 50% interest in Astra Aviva Life, net income from the financial services businesses increased by 1%. Strong growth across most of the consumer financial services portfolio was largely offset by a decline in contribution from Astra Sedaya Finance, following the reduced shareholding, and Permata Bank.

The amount financed through Astra's automotive-focused consumer finance operations, including balances financed through joint bank financing without recourse, grew by 13% to US$5.4 billion. The amount financed through the heavy equipment-focused finance operations declined by 30% to US$295 million, due to a reduction in equipment sales.

Astra's 45%-held joint venture, Permata Bank, reported net income of US$134 million, a decrease of 8%, due to an increase in funding costs and non-performing loans.

Group insurance company, Asuransi Astra Buana, recorded 16% higher net income of US$85 million, due to growth in gross written premiums and an increased contribution from investment earnings.

Heavy Equipment and Mining

United Tractors, which is 60%-owned, reported a 4% increase in net revenue and an 11% improvement in net income to US$449 million. Excluding the impact of the US$130 million impairment charge in respect of its coal mining properties, United Tractors would have recorded a 43% increase in net income.

In the construction machinery business, net revenue decreased by 4%, reflecting a 16% decline in Komatsu heavy equipment sales to 3,513 units, partly offset by higher parts and service revenue.

The contract mining operations of subsidiary, Pamapersada Nusantara, benefited from improved coal volumes on lower stripping ratios. It reported a 6% increase in net revenue, as contract coal production increased 14% to 119 million tonnes, while contract overburden removal decreased by 5% to 806 million bank cubic metres.

United Tractors' mining subsidiaries reported an increase in net revenue of 22%, with coal sales 42% higher at 6 million tonnes, although average coal sale prices declined by 10%. United Tractors and its subsidiaries own interests in 9 coal mines with combined reserves estimated at 405 million tonnes.

In the light of weak coal prices, United Tractors conducted a review of the carrying value of its coal mining properties and recorded an impairment charge of US$130 million at year end. While United Tractors still sees coal mining as an attractive business longer-term, this impairment reflects the combination of current weak market conditions and uncertainty over the timing and extent of any meaningful recovery.

Agribusiness

Astra Agro Lestari, which is 80%-held, reported net income of US$210 million, up 39%. Average crude palm oil prices achieved were 14% higher at Rp8,282 per kg. Crude palm oil sales decreased by 13% to 1.4 million tonnes. In addition, 255,000 tonnes of olein were sold during the year by Astra Agro Lestari's new refinery in Sulawesi, which opened in the first quarter of 2014.

Infrastructure, Logistics and Others

Net income from infrastructure, logistics and others fell by 34% to US$41 million.

The 72.5 km Tangerang-Merak toll road, operated by 79%-owned Marga Mandalasakti, reported a 6% increase in traffic volume to 43 million vehicles and a 9% increase in average tariffs.

Construction continues at the wholly-owned greenfield 40.5 km Kertosono-Mojokerto toll road near Surabaya. Section 1, which is 14.7 km long, began operations in October 2014, and further stages are expected to be operational during 2015, subject to the timely completion of land acquisitions. Taken together with Astratel's 40% interest in the greenfield 11.2 km Kunciran-Serpong toll road on Jakarta's outer ring-road, the group has an interest in 124.2 km of toll road.

Serasi Autoraya's revenue improved despite the number of vehicles under contract at its TRAC car rental business falling 7% to 29,000 units owing to higher used car sales. The benefit was, however, offset by lower margins on rental contracts in the mining sector. Net income decreased by 22% to US$13 million.

PAM Lyonnaise Jaya, which operates the western Jakarta water utility system, experienced marginally higher sales volume of 159 million cubic metres.

Anandamaya Residences, the group's 60%-held luxury residential development project located in Jakarta's Central Business District, successfully commenced sales during the third quarter, achieving market leading prices and strong buyer interest. In addition, the group commenced construction of a grade-A office tower adjacent to the residential development. Completion of both developments is expected in 2018.

Information Technology

Astra Graphia, 77%-owned, is active in the area of document information and communication technology solutions and is the sole distributor of Fuji Xerox office equipment in Indonesia. It reported net income up 24% to US$22 million, benefiting from a gain of US$4 million recorded on the disposal of its 51% interest in AGIT Monitise Indonesia.

Group's Other Interests

The Group's other interests contributed a profit of US$82 million, 40% up on the previous year.

Singapore

Earnings from the wholly-owned Singapore motor operations at US$34 million were 8% higher due to an increase in the number of vehicles sold. The Singapore passenger car market grew 29% to 28,900 units following an increase in the quota due to higher de-registrations. The Singapore motor operations sold a total of 5,300 passenger cars, 31% up on the previous year with a stable market share of 18%.

Vietnam

30%-owned Truong Hai Auto Corporation ("Thaco") had an excellent year with a contribution of US$39 million, 2.5 times the previous year, following strong vehicle sales, good margins and lower financing costs. The Vietnam motor vehicle market grew by 38% to 178,000 units, while Thaco's overall sales rose by 49% to 42,000 units, leading to an increase in its market share from 22% to 24%. Thaco's passenger car sales grew by 59% to 20,600 units, and its commercial vehicle sales grew by 40% to 21,400 units.

Malaysia

59%-owned Cycle & Carriage Bintang's contribution of US$2 million was significantly higher, albeit from a low base. Mercedes-Benz passenger car unit sales were up 28% with good demand for new models, although supply remained constrained. Margin pressure continued to be experienced, particularly on older models. The after-sales division performed satisfactorily.

Indonesia

44%-owned Tunas Ridean contributed a profit of US$9 million, 28% lower due to margin pressure on motor cars and lower gains from the disposal of ex-rental vehicles. Motor car sales were 2% down at 53,700 units, while motorcycle sales were 18% higher at 209,200 units. The contribution from 49%-owned associate, Mandiri Tunas Finance, was up 27% mainly due to a larger loan portfolio.

Alex Newbigging

Group Managing Director

26th February 2015

1 Basis of preparation

The financial statements are consistent with those set out in the 2013 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 2013 audited accounts except for the adoption of the following amendments and interpretation:

The adoption of these amendments and interpretation did not have any impact on the results of the Group.

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$1.3205 (2013: US$1=S$1.2656), US$1=RM3.4928 (2013: US$1=RM3.2815), US$1=IDR12,440 (2013: US$1=IDR12,189) and US$1=VND21,388 (2013: US$1=VND21,110).

The exchange rates used for translating the results for the year are US$1=S$1.2695 (2013: US$1 =S$1.2539), US$1=RM3.2792 (2013: US$1=RM3.1726), US$1=IDR11,885 (2013: US$1=IDR10,563) and US$1=VND21,217 (2013: US$1=VND21,046).

2 Net operating costs and operating profit

(1) Higher due mainly to impairment of coal mining properties

(1) Increase due to lower projected crude palm oil price growth

(2) Increase due mainly to disposal of machinery and equipment

(3) Increase due to impairment of coal mining properties

3 Revenue and Profit after tax

4 Dividends

The Board is recommending a final dividend of US¢67.00 per share which, together with the interim dividend of US¢18.00 per share, will give a total dividend for the year of US¢85.00 per share.

5 Earnings per share

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

 The underlying profit attributable to shareholders by business is shown below: