JDS.L Regulatory News (JDS)

To: Business Editor 5th March 2015

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

2014 Preliminary Announcement of Results (Unaudited)

Highlights

· Underlying profit* maintained

· Full-year dividend up 6%

· Good performances from most of the Group's businesses

· Astra's contribution reduced by weaker rupiah

· New strategic investments in mainland China

"While a number of our businesses continue to face difficult markets as regional economies remain under pressure, most are trading well. With our Group companies well financed and possessing significant opportunities for growth, we continue to view the future with confidence."

Sir Henry Keswick

Chairman

Results

The final dividend of US¢19.00 per share will be payable on 13th May 2015, subject to approval at the Annual General Meeting to be held

on 7th May 2015, to shareholders on the register of members at the close of business on 20th March 2015 and will be available in cash

with a scrip alternative.

Jardine Strategic Holdings Limited

Preliminary Announcement of Results

For The Year Ended 31st December 2014

(Unaudited)

Overview

Most of the Group's businesses produced improved performances in 2014 despite more challenging trading conditions as key Asian economies came under pressure. Hongkong Land did well to maintain its profitability after a record year in 2013. Astra's underlying earnings were modestly lower in its reporting currency, but a weaker rupiah reduced materially its contribution in US dollars.

Performance

The Group's revenue for 2014, including 100% of revenue from Jardine Matheson, associates and joint ventures, was US$62.8 billion, compared with US$61.4 billion in 2013. The Company's underlying profit before tax for the year was US$4,231 million, a decrease of 5% from the prior year. The underlying profit attributable to shareholders was US$1,613 million and underlying earnings per share were US$2.66, both in line with 2013.

Within the businesses held through Jardine Matheson, Jardine Pacific recorded steady trading in most of its activities, and good improvement in profits in its Restaurant business and JOS. Jardine Motors enjoyed an excellent year, while Jardine Lloyd Thompson benefited from good organic growth.

Hongkong Land maintained a high level of profitability with strong contributions from both its commercial and its residential interests. Dairy Farm's sales and earnings increased in most of its operations, although its Food businesses in Southeast Asia faced more challenging conditions. Most of Mandarin Oriental's hotels performed well and there was a further contribution from branding fees on the sale of Residences. The overall results from Jardine Cycle & Carriage's motor businesses were higher. Astra did well to maintain its rupiah net profit as it experienced mixed performances within its portfolio.

The profit attributable to shareholders for the year was US$1,832 million, with the main non-trading item being an increase in the value of Hongkong Land's investment property portfolio. This compares with US$1,700 million in 2013, which also benefited from higher property valuations. Shareholders' funds were up 5% at US$23.2 billion.

The Group's continued profit generation, cash flows and retained earnings have enabled high levels of capital expenditure to be combined with low levels of debt. Total capital investment across the Group in 2014 exceeded US$5.6 billion. The consolidated net debt at the end of 2014 excluding financial services companies was US$2.2 billion, representing gearing of 5%, which was modestly lower than at the end of 2013. 

The Board is recommending a final dividend of US¢19.00 per share, which represents an increase of 6% for the full year.

Business Developments

The Group announced two strategic initiatives in mainland China in 2014. In January, the Company agreed to invest US$731 million in shares and convertible bonds representing up to a 20% interest in Hong Kong-listed Zhongsheng Group, a leading mainland China motor dealership group. In August, Dairy Farm reached agreement with Yonghui Superstores, one of mainland China's fastest growing food retailers, to establish a strategic partnership, and upon receipt of regulatory approvals will acquire a shareholding of just below 20% in the company for an investment of some US$925 million. These initiatives, together with Hongkong Land's ongoing investment in the residential and commercial property sectors, reflect the Group's increasing commitment to mainland China's economy.

Within Jardine Matheson, Jardine Pacific produced good profit growth, supported by strong sales in its recently acquired KFC franchise in Hong Kong and a sustained turnaround at JOS. Jardine Motors enjoyed a much better year with profits increasing 66% as it benefited from further recovery in mainland China, where it now has 33 outlets and a further two under development, and good performances elsewhere. JLT continued to produce strong organic growth, and in August it established a specialty insurance broking business in the United States.

Hongkong Land performed well in 2014 as its results were broadly in line with the prior record year. Its commercial portfolio had another good year, although in the residential sector fewer completions in Singapore offset a strong contribution from the remaining Serenade units in Hong Kong and increased completions in mainland China. The group has commercial developments in Beijing, Jakarta and Phnom Penh, and ongoing residential developments in mainland China, Singapore, Indonesia and the Philippines.

Dairy Farm produced sales improvement in all of its divisions, but weaker performances in its Food division in Southeast Asia held back profits. The group has embarked upon a number of strategic initiatives that will see it positioned better for sustained growth. It has expanded its activities in mainland China and the Philippines, and is continuing to invest in its existing store networks, supply chain infrastructure, IT systems and people development.

Mandarin Oriental added two hotels in 2014, and now operates 27 hotels. It has a further 17 under development, of which Marrakech, Milan, Beijing and Doha are due to open within the next 18 months. In addition, it operates eight Residences connected to its properties, and is developing a further seven. The group has announced a US$300 million rights issue that will provide the capacity to finance the renovation of its London property and reduce debt, while placing it in a strong position to make further investments. Jardine Strategic has agreed to support and underwrite the offer.

Jardine Cycle & Carriage's non-Astra operations produced an overall increase in earnings, with a particularly good result from Truong Hai Auto Corporation in Vietnam. In February 2015, the group increased further its commitment to Vietnam when it raised its shareholding in publicly-listed Refrigeration Electrical Engineering Corporation Group from 19% to 22%.

Astra's underlying profit contribution of US$533 million was 14% lower, principally due to the weakening of the rupiah. Its underlying profit in rupiah was 3% lower as improved results from its agribusiness, contract mining operations and financial services businesses were offset by lower earnings from its automotive business and an impairment charge in relation to its coal mining properties. Astra is seeking to complement the development of its existing activities with investments in new sectors, where it believes that over the longer term it can build market-leading businesses. Its new life insurance joint venture, Astra Aviva Life, began operating in November 2014, while in the fourth quarter of 2014, United Tractors agreed to acquire a majority stake in listed construction company, PT Acset Indonusa Tbk. It is believed that both new ventures will benefit from Astra's reach and expertise.

Corporate Developments

Following shareholder approval at a Special General Meeting held in April, the transfer of the Company's listing on the Main Market of the London Stock Exchange to the standard listing category was completed on 27th May 2014.

People

Jenkin Hui passed away on 4th September 2014 and, on behalf of the Board, I would like to express our appreciation for the significant support that he gave to the Group over many years of service as a non-executive Director. His wise counsel will be missed. 

We were pleased to welcome Julian Hui to the Board on 5th March 2015.

Outlook

While a number of our businesses continue to face difficult markets as regional economies remain under pressure, most are trading well. With our Group companies well financed and possessing significant opportunities for growth, we continue to view the future with confidence.

Sir Henry Keswick

Chairman

Operating Review 

Jardine Matheson

Jardine Matheson achieved an underlying profit before tax for the year of US$4,451 million, a decrease of 3%. Its underlying profit attributable to shareholders was 2% higher at US$1,534 million, while underlying earnings per share were 1% higher at US$4.14. Its profit attributable to shareholders was US$1,710 million, compared with US$1,566 million in 2013, with both results benefiting from increases in the value of Hongkong Land's investment property portfolio.

· Jardine Pacific

Jardine Pacific's underlying profit of US$131 million was 19% higher, reflecting good all-round performances and particularly improved results in two of its businesses. Its profit attributable to shareholders was US$137 million, compared with US$112 million in 2013. Shareholders' funds were US$703 million at the end of 2014, and the underlying return on average shareholders' funds was 19%. Jardine Schindler, JEC and Gammon all produced steady performances. Jardine Restaurants achieved good profit growth with its recently acquired KFC franchise in Hong Kong making a pleasing full-year contribution. Hactl recorded lower results following the move of a major customer to its own facility in the second half of 2013. Jardine Shipping Services achieved a good increase in profit, while Jardine Aviation Services showed a slight improvement. The positive steps taken by JOS to address operational weaknesses have led to the start of a recovery with improvements in both revenues and earnings.

· Jardine Motors

Jardine Motors achieved a much improved underlying profit of US$97 million in 2014, up 66% from the US$59 million recorded in 2013. Zung Fu performed well in mainland China, despite a challenging trading environment, with higher deliveries of Mercedes-Benz passenger cars at enhanced margins. The group remains confident in the potential of the automotive sector in mainland China where the group now has 33 outlets and a further two under development. Zung Fu continued to trade well in Hong Kong and Macau where it achieved higher sales of Mercedes-Benz passenger cars. Jardine Motors' dealerships in the United Kingdom also had a good year.

During the first half of the year, Jardine Strategic invested US$731 million for a minority interest in Hong Kong-listed Zhongsheng Group, which is one of mainland China's leading motor dealership groups. The investment represents an initial 11% equity stake together with convertible bonds. On conversion, the Group would hold 20% of Zhongsheng. This investment, which is not yet being equity accounted, is included as part of Corporate and contributed US$15 million to the Group's results for 2014. 

· Jardine Lloyd Thompson

Jardine Lloyd Thompson's total revenue for the year was US$1,817 million, an increase of 13% in its reporting currency. In a year which saw a marked decline in the insurance and reinsurance rating environment, the company did well to achieve organic growth of 6%. In August, the company announced the expansion of its specialty insurance broking activities with the establishment of a new business in the United States. This is expected to result in a net investment by way of cumulative losses of US$80 million over the period 2014 to 2017, of which US$8 million were incurred in 2014. Despite tight cost controls and strong revenue growth across most of the company's operations, the increase to US$203 million in the company's reported underlying profit after tax and non-controlling interests was 3% in sterling terms, due to unfavourable exchange movements and the initial investment in the US specialty business. JLT's contribution to the Group's underlying profit, however, was up 12% on conversion into US dollars.

Hongkong Land

Hongkong Land reported an underlying profit attributable to shareholders of US$930 million in 2014, only modestly below its record result in 2013. The group's commercial portfolio had another strong year, while its residential activities performed well despite fewer completions in Singapore. There was a net gain of US$397 million on the valuation of investment properties, producing a profit attributable to shareholders of US$1,327 million. This compares to US$1,190 million in 2013, which included net valuation gains of US$255 million. The net asset value per share at the end of 2014 was up 3% at US$11.71. Hongkong Land remains well-financed with net debt of US$2.7 billion at the year end and gearing of 10%.

The contribution from the group's Hong Kong commercial property portfolio benefited from the positive rent reversions seen in 2013, although reversions became negative in 2014. Vacancy in the portfolio was 5.4% at the year end. The retail portfolio remained fully occupied and saw strong positive rent reversions. The market was stable in Singapore, where the group's office portfolio ended the year with vacancy of 1.7%. Higher rents were achieved at Jakarta Land in Indonesia. In Beijing, good progress was made in the development of the luxury retail complex at Wangfujing.

Hongkong Land's residential development activities benefited from the sale of remaining units at projects in Hong Kong and Macau. Momentum is building in mainland China with the first significant contribution from two wholly-owned projects in Chongqing. In Singapore, group subsidiary MCL Land completed two fully-sold projects during 2014. Two joint-venture developments in Indonesia are making good progress, while in the Philippines a 40%-owned luxury development in Manila is also proceeding well. 

Dairy Farm

Dairy Farm's sales, including 100% of associates and joint ventures, increased by 5% to US$13.1 billion in 2014 with growth achieved in all divisions. Its underlying profit was up 4% at US$500 million. The group delivered good like-for-like sales growth in its major businesses in Health and Beauty, Home Furnishings and Restaurants. While like-for-like sales growth in its Food retailing business in Greater China was good, it was much weaker in Southeast Asia. The profit attributable to shareholders was US$509 million, which included a net non-trading gain of US$9 million arising mainly from the disposal of properties. The group's financial position remains strong with net cash of US$475 million at the end of 2014.

In 2014, Dairy Farm made a number of strategic moves, notably in mainland China and the Philippines. Agreement was reached in August to establish a partnership with Yonghui Superstores Co., Ltd and to acquire a shareholding of just below 20% in the company, subject to regulatory approvals, for an investment of approximately US$925 million. Yonghui is one of mainland China's fastest growing food retailers, and both companies have started to work closely together on joint procurement initiatives and to drive operating synergies. In the Philippines, Dairy Farm increased its interest in Rustan Supercenters to 66%, and entered the Health and Beauty market with the acquisition of a 49% interest in Rose Pharmacy. In parallel, Dairy Farm continued its investment in existing store networks, supply chain infrastructure, IT systems and people, which are designed to deliver a superior offer to its customers.

Mandarin Oriental

Despite some challenging markets, Mandarin Oriental recorded an underlying profit up US$4 million at US$97 million. The 2013 results had included a one-off profit of US$7 million arising on the acquisition of the freehold rights of its Paris hotel. Profit attributable to shareholders was US$97 million in 2014, compared to US$96 million in the prior year.

The group's two wholly-owned hotels in Hong Kong performed well despite being affected by demonstrations in the city during the final quarter. Tokyo benefited from improved visitor arrivals, but occupancy in the Bangkok property suffered from the country's ongoing political uncertainty. The performances of the group's other Asian hotels were broadly stable. In Europe, weaker demand in the London property was offset by the further stabilization of the Paris hotel and an improvement in Geneva. The contribution from The Americas was impacted by lower demand in Washington D.C.

During the year, Mandarin Oriental opened hotels in Taipei and Bodrum and also announced management contracts for new hotels under development in Bali, Manila and Dubai as well as Residences to be built opposite the group's Bangkok hotel. Mandarin Oriental also received US$15 million in branding fees on the sale of Residences in Bodrum. The group is to undertake a US$130 million renovation of its London hotel, scheduled to begin in 2016, and has agreed to invest some US$150 million to expand its Munich hotel on an adjacent site, with completion expected in 2021. Mandarin Oriental has announced that it is to raise US$300 million by way of a rights issue, which Jardine Strategic will underwrite.

Jardine Cycle & Carriage

Jardine Cycle & Carriage's underlying profit declined by 11% to US$793 million in 2014. The profit attributable to shareholders was 10% lower at US$820 million. Astra's contribution to underlying profit at US$724 million was 15% lower than 2013, largely due to an 11% decline in the average rupiah exchange rate. The group's other interests produced earnings up 40%.

There was a much improved performance at 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 up 8% due to higher sales. In Malaysia, Cycle & Carriage Bintang's contribution improved significantly from a low base due to good demand for new models, although margins on older models remained under pressure. In Indonesia, Tunas Ridean faced increased competitive pressure in the car market and its earnings contribution was down 28%. In February 2015, Jardine Cycle & Carriage increased its interest in Vietnam-listed Refrigeration Electrical Engineering Corporation Group from 19% to 22% at a cost of US$12 million. It will now be treated as an associate.

Astra

Under Indonesian accounting standards Astra's underlying profit was down 3% at Rp18.3 trillion, equivalent to US$1,538 million, and its net profit was 1% lower at Rp19.2 trillion, some US$1,614 million. Improvements in its agribusiness, contract mining operations and financial services businesses were offset by lower earnings from its automotive activities and an impairment charge in relation to its coal mining properties.

Discounting in the competitive car market in Indonesia led to lower margins in Astra's sales operations. The wholesale market for cars declined 2%, while Astra's sales were 6% lower giving it a reduced market share of 51%. Astra Honda Motor's sales rose in an expanding motorcycle market, giving it a market share of 64%. Astra Otoparts, in which the group interest was reduced to 80% in 2013, saw higher sales but a decline in net income.

Net income from Astra's financial services businesses rose 11%.  Excluding the gain arising from the acquisition of a 50% interest in Astra Aviva Life, however, the increase would have been 1%. There was strong growth in the consumer portfolio, but this was largely offset by a lower contribution from Astra Sedaya Finance, following the sale of a 25% interest to Permata Bank, and reduced earnings at Permata Bank due to an increase in funding costs and non-performing loans. Asuransi Astra Buana benefited from growth in gross written premiums and higher investment earnings.

United Tractors' net income rose 11% after accounting for an impairment charge on the valuation of its coal mining properties, excluding which net income would have risen 43%. There was a decline in Komatsu heavy equipment sales, but its contract mining interests benefited from improved coal volumes on lower stripping ratios and reported a 6% increase in net revenue. United Tractors' own mining subsidiaries saw net revenue rise 22%, but earnings were impacted by lower coal prices.

Astra Agro Lestari reported net income up 39% as average crude palm oil prices achieved were 14% higher. Crude palm oil sales decreased following the opening of the company's refinery in West Sulawesi, which sold 255,000 tonnes of olein during the year.

Net income from infrastructure, logistics and others fell by 34%. Progress continues in the development of its toll road interests. Its contract car hire business saw revenues benefit from higher used car sales, but income suffered from lower margins. Development continued at the group's luxury residential project in Jakarta's Central Business District, with completion expected in 2018. Astra's information technology interests produced a 24% increase in net income.

Ben Keswick

Managing Director