JDS.L Regulatory News (JDS)

7 Mar 2008 09:05

Jardine Strategic Hldgs Ld07 March 2008 To: Business Editor 7th March 2008 For immediate release The following announcement was today issued to a Regulatory Information Serviceapproved by the Financial Services Authority in the United Kingdom. Jardine Strategic Holdings Limited2007 Preliminary Announcement of Results Highlights• Underlying earnings per share+ up 38%• Net assets per share# up 46% to US$28.22• Excellent performances from most businesses• Hongkong Land property portfolio up 25% "Following a good set of results from Group companies in 2007, the current yearis showing signs of being more challenging. Nevertheless, our businesses remainsoundly financed and are positioned well to take advantage of the market place." Henry Keswick, Chairman7th March 2008 Results-------------------------------------------------------------------------------- Year ended 31st December 2007 2006 Change US$m US$m %--------------------------------------------------------------------------------Revenue together with revenue of associates and joint ventures* 31,616 27,136 +17Underlying profit attributable to shareholders+ 723 522 +39Profit attributable to shareholders 2,024 1,412 +43Shareholders' funds 9,787 7,627 +28-------------------------------------------------------------------------------- US$ US$ %--------------------------------------------------------------------------------Underlying earnings per share+ 1.17 0.85 +38Earnings per share 3.28 2.30 +43Dividends per share 0.18 0.17 +6--------------------------------------------------------------------------------Net asset value per share# 28.22 19.38 +46--------------------------------------------------------------------------------* Includes 100% of revenue from associates and joint ventures. + The Group uses 'underlying business performance' in its internal financialreporting to distinguish between the underlying profits and non-trading items,as more fully described in note 10. Management considers this to be a keymeasure and has provided this analysis as additional information in order toprovide greater understanding of the Group's underlying business performance. # Net asset value per share is on a market value basis, details of which areset out on page 27.--------------------------------------------------------------------------------The final dividend of USc12.40 per share will be payable on 14th May 2008,subject to approval at the Annual General Meeting to be held on 8th May 2008, toshareholders on the register of members at the close of business on 20th March2008 and will be available in cash with a scrip alternative. The ex-dividenddate will be on 18th March 2008, and the share registers will be closed from24th to 28th March 2008, inclusive. Jardine Strategic Holdings Limited Preliminary Announcement of ResultsFor The Year Ended 31st December 2007 Performance The Group's businesses produced some excellent performances in 2007 as healthymarket conditions prevailed. There were particularly good profit contributionsfrom Astra and Hongkong Land. Accordingly, Jardine Strategic achieved a recordunderlying profit of US$723 million, an increase of 39%. Underlying earnings pershare rose 38% to US$1.17. The turnover of the Group in 2007, including 100% ofassociates and joint ventures, was US$31.6 billion, compared with US$27.1billion in the prior year. Within Jardine Matheson, Jardine Pacific produced an improved contribution withincreased earnings in a number of its businesses. Jardine Motors just fell shortof its 2006 profit, which had been helped by greater one-off trading gains inthe United Kingdom, while Jardine Lloyd Thompson did well to produce earningsgrowth in a difficult trading environment. Dairy Farm achieved another fineresult with all its major operations performing well, and Hongkong Land reporteda significant increase in earnings from both its commercial and residentialbusinesses. At Mandarin Oriental, favourable markets, new hotels and a fullyear's contribution from its major Hong Kong property after renovation led to asignificant increase in profit. Jardine Cycle & Carriage benefited from a strongperformance by Astra. The Group's result was also enhanced by lower financingcharges. In accordance with International Financial Reporting Standards, revaluations ininvestment properties are taken through the profit and loss account. TheCompany's share of a 25% upward revaluation of Hongkong Land's portfolio in 2007amounted to US$1,173 million, compared with US$751 million in 2006, and afurther US$38 million increase was contributed by Jardine Matheson. The profitattributable to shareholders of US$2,024 million includes these propertyrevaluations together with other non-trading items, including gains on disposalsof shares in The Bank of N.T. Butterfield & Son and Edaran Otomobil Nasional,and compares with US$1,412 million in 2006. The Group continued to strengthen its financial position in 2007 whilemaintaining active development programmes. Consolidated net debt excludingfinancial services companies was reduced by 52% to US$851 million, and this,together with further significant rises in property values, led to the Group'sgearing falling from 16% to 6%. Shareholders' funds increased 28% to US$9.8billion. The net asset value per share, based on the market price of theCompany's holdings, rose 46% from US$19.38 to US$28.22 at the year end. The Board is recommending a final dividend of USc12.40 per share, representingan overall increase of 6% for the full year. Business Activity Business confidence in Asia remained robust during 2007 notwithstanding theincreasing uncertainties in the financial markets in the United States andEurope in the second half of the year. In particular, mainland China's economycontinued its strong rate of growth, while in Southeast Asia the recovery inIndonesia gathered pace. Overall, the contributions to the Group's underlyingprofit from Greater China and Southeast Asia were well matched in 2007,providing the Group with a good geographic mix as well as complementing itsbroad spread of market leading businesses. Jardine Matheson's two wholly-owned subsidiaries, Jardine Pacific and JardineMotors, had good results, while maintaining strong cash flows. Jardine LloydThompson's recovery continued, with profit growth in sterling terms, and itscontribution rose further on translation into US dollars. Dairy Farm sustained the expansion of its successful banners in Asia, adding 618outlets in 2007 to reach a total of 4,191. Mandarin Oriental is beginning tobenefit from its enlarged portfolio of 21 hotels, with a further 18 propertiesunder development in city and leisure destinations, including Beijing and Paris. The commercial property cycle in Hong Kong attained a new peak in 2007,producing rental renewals in Hongkong Land's portfolio that will provide goodlevels of income over the next three years. In addition, the recognition ofprofits from residential projects will enhance earnings as these developmentsachieve completion. Astra's excellent performance reflected impressive growth across nearly all itsmajor businesses. Strong demand in the automotive sector in Indonesia, due tolow interest rates and increased consumer confidence, benefited Astra's motorvehicle sales and financial services activities, while record prices have alsoled to an improved performance from Astra's oil palm plantations. The currentyear has started encouragingly, and the recently announced expansion of thegroup's coal mining activities also bodes well for future profitability. In August 2007, the Company accepted an offer for its 20% shareholding in EdaranOtomobil Nasional, the listed Malaysian motor vehicle distributor. The Companyalso sold a 3% shareholding in The Bank of N.T. Butterfield & Son inBermuda, leaving a remaining interest of 3.8%. Outlook In conclusion, the Chairman, Henry Keswick said, "Following a good set ofresults from Group companies in 2007, the current year is showing signs of beingmore challenging. Nevertheless, our businesses remain soundly financed and arepositioned well to take advantage of the market place." Operating Review Jardine Matheson Jardine Matheson achieved a record underlying profit of US$719 million in 2007,an increase of 36%. Underlying earnings per share rose 34% to US$2.03. JardineMatheson's profit attributable to shareholders of US$1,828 million benefitedfrom investment property revaluations in Hongkong Land and Jardine Pacific, andother non-trading gains. Shareholders' funds increased 29% to US$8.5 billion. During the year Jardine Matheson increased its shareholding in the Company to81% by a combination of a tender offer, market purchases and scrip dividendsinvolving the acquisition of some 20 million shares. Jardine Matheson alsorepurchased and cancelled its own shares through a tender offer and marketpurchases. • Jardine Pacific Jardine Pacific produced an underlying profit from continuing businesses ofUS$115 million in 2007, up 15%, with good performances from most of itsoperations. The revaluation of the group's residential property investmentportfolio produced a non-trading gain of US$70 million which together with gainson disposals led to a profit attributable to shareholders of US$213 million, an increase of 12%. Shareholders' funds were US$475 million at the end of 2007, giving an underlying return of 28% on average shareholders' funds. Gammon continued to perform well and its contribution rose on completion of anumber of major contracts. Jardine Schindler also performed strongly on newinstallations and produced further growth from its existing maintenanceportfolio. JEC's contribution was steady with good performances in Thailand andthe Philippines. Hong Kong Air Cargo Terminals enjoyed higher cargo volumes,although increased costs held back profit growth. Jardine Shipping Servicesbenefited from better freight rates and increased volume, but Jardine AviationServices was affected by lower fees. Jardine Restaurants achieved excellentearnings growth, however, it faced significant cost increases towards the yearend. JOS produced higher underlying profits following an increase in sales. InJune 2007, Jardine Pacific sold its 50% interest in Colliers Halifax in Japan toHongkong Land. • Jardine Motors Jardine Motors did well to achieve an underlying profit from continuingbusinesses in 2007 of US$63 million, equaling that of 2006 which had benefitedfrom one-off gains. The profit attributable to shareholders was US$79 million,and included a VAT recovery of US$10 million in the United Kingdom. Zung Fu produced a good performance in Hong Kong with increased deliveries ofMercedes-Benz cars and maintained its leading position in the luxury car market.Its Mercedes-Benz operation in Macau also had another good year. Zung Fu'sMercedes-Benz dealerships in Southern China continued their profitable growthwith new car deliveries increasing significantly to over 4,000 units in 2007,and the planned expansion of this dealership network will bring the number ofoutlets to 17 in 2008. In the United Kingdom, Jardine Motors' operationsachieved good growth in new and used car sales, helped in part by theacquisition of an Audi dealership group. • Jardine Lloyd Thompson Jardine Lloyd Thompson achieved an overall improvement in its underlyingperformance in 2007 as the business repositioning and cost streamliningundertaken over the past two years began to bring benefits. This progress wasset against challenging insurance markets and a weak US dollar. Turnover rose by3% to US$949 million with the benefit of modest organic growth and acquisitions.The underlying trading margin improved to 13.1% from 12.8% in 2006. Theunderlying trading profit which excludes exceptional items and impairments rose6% to US$125 million reflecting the higher turnover and improved operationalefficiencies. The profit attributable to shareholders was US$145 million. The Risk & Insurance group, which comprises Jardine Lloyd Thompson's worldwideretail operations and specialist risk and insurance businesses largely based inLondon, did well to record a modest increase in turnover and trading profit. TheEmployee Benefits business in the United Kingdom achieved a modest increase intrading profit and maintained its trading margin following an active year in2006 that had been driven by regulatory and tax changes. Hongkong Land Hongkong Land's underlying profit rose 41% to US$345 million in 2007 as itbenefited from a strong market in Hong Kong and a higher contribution fromresidential developments. The valuation of the group's commercial investmentproperties, including the share of investment properties in joint ventures andassociates, rose to US$15.1 billion at the year end, an increase of 25%. Theprofit attributable to shareholders, which incorporates the revaluation, was 49%higher at US$2,840 million. There was demand for prime commercial office space in Hong Kong's Centraldistrict across all business sectors in 2007, and rents rose for the fourthconsecutive year. The luxury retail market also remained strong, underpinningthe contribution from Hongkong Land's premium retail space in Central. Thegroup's results include the first full-year contribution from One Raffles Quayin Singapore, where the office market also performed well. Strong demand in thecity-state led to a number of pre-commitments for space in the Marina BayFinancial Centre, the group's joint-venture development which is due to completein two phases in 2010 and 2011. Residential development projects were completed in Beijing and Singapore in 2007leading to the recognition of US$73 million in profit, an increase of 90% overthe prior year. There were also successful sales launches of a number of newdevelopments, including the first phase of Bamboo Grove in Chongqing and fourMCL Land projects in Singapore. Dairy Farm Dairy Farm achieved an excellent result in 2007 as favourable trading conditionspersisted in its major markets. Sales, including 100% of associated companies,were 13% higher at US$6.8 billion, and the profit attributable to shareholdersfor the year rose 22% to US$258 million. Following the payment of a specialdividend of US$215 million in October 2007, the group ended the year with netdebt of just US$83 million. Dairy Farm continued to expand its retail formats within selected territories inAsia, ending the year with 4,191 outlets. The group, however, decided towithdraw from its small health and beauty ventures in Korea and Thailand thathad not met expectations. The group's operations in both Hong Kong and Macau performed well in 2007. InSouthern China, an acquisition helped increase the number of 7-Eleven outlets to440, while the repositioning of 30 Mannings health and beauty stores producedpromising results. In Taiwan, its supermarkets remained stable in a competitivemarket, but the results from IKEA were below expectations despite two largestore openings in 2006. Hong Kong restaurant associate, Maxim's, made furtherprogress in sales and profit with the introduction of innovative products in itsfast food operations and good performances from its restaurants and cakesactivities. A good result was achieved in Malaysia where the business is growing well, andin Singapore improved performances led to a recovery in earnings. The resultsfrom Indonesia remained unsatisfactory, although progress is being made and themarket's medium-term prospects continue to be attractive. The group's firstthree supermarkets in Vietnam are now operational, while the expansion of itssupermarket and health and beauty joint venture operations in India continueddespite regulatory challenges. Mandarin Oriental Favourable conditions in most markets and a limited new supply of hotel rooms inkey city centre locations enabled Mandarin Oriental to achieve higher averagerates and record earnings in 2007. In particular, the group's two wholly-ownedHong Kong hotels performed well. Earnings before interest, tax, depreciation andamortization for 2007 were US$190 million, compared with US$116 million in 2006when Mandarin Oriental, Hong Kong was closed for renovation for nine months. The group's profit attributable to shareholders, which increased to US$108million, also benefited from a US$16 million gain on the sale of half of its 50%equity interest in its New York hotel. Mandarin Oriental's development programme gathered pace in 2007 with theannouncement of eight new projects, comprising hotels in Beijing, Guangzhou,Taipei, Milan and Paris and three in resort destinations. Mandarin Oriental nowhas 10,000 rooms in operation or under development in 39 hotels. Of its 18hotels under development, all will be managed on behalf of third-party ownerswith the exception of Paris, which is on a long-term lease. Ten of the projectsalso incorporate a 'Residences at Mandarin Oriental' component, in addition tothe residences being built next to the group's existing hotel in London. Jardine Cycle & Carriage Jardine Cycle & Carriage performed well in 2007 as underlying profit rose 82% toUS$374 million and underlying earnings per share were up 79% at USc108. Profitattributable to shareholders rose 52% to US$340 million. A low interest rateenvironment, strong recovery in the motor car market in Indonesia and high palmoil prices led to an excellent increase in the group's earnings. Astra's contribution to Jardine Cycle & Carriage's underlying profit was 76%higher at US$356 million. Its non-automotive activities performed particularlywell with their share of the profits exceeding that of the automotivebusinesses. The contribution to underlying profit from Jardine Cycle &Carriage's other motor activities increased by 34% to US$43 million as itsoperations in Singapore and Indonesia enjoyed a good year, although Cycle &Carriage Bintang in Malaysia continued to face a difficult market. Jardine Cycle & Carriage took further steps to focus its investments with thesale of its 40% interest in the Concorde Hotel in Malaysia to Hongkong Land, anda reduction to 15% of its shareholding in a Singapore consumer finance company.These disposals raised US$36 million and helped to strengthen its parent company balance sheet, which at the end of the year showed net debt of just US$31 million. Astra Astra benefited from the strong growth in the Indonesian economy in 2007 andreported a net profit for the year, under Indonesian accounting standards,equivalent to US$711 million, an increase of 76%. Earnings in Astra's automotive operations improved as the Indonesian wholesalemotor vehicle market grew by 36% in 2007. Astra's motor sales increased by 28 %to 223,000 units, leading to a slightly lower market share of 52% which is morein line with past levels. The wholesale motorcycle market in Indonesia grew by6% in the same period, but in the face of intense competition sales at AstraHonda Motor were 9% lower at 2.1 million units representing a reduced marketshare of 46%. New model launches and a repositioned strategy helped to underpinthe market position, while improvements in margins and a more stable retailshare enabled Astra to achieve overall earnings growth from the sector. Thecontribution from Astra Otoparts was well ahead of 2006 as its automotivecomponent activities benefited from the market recovery. The performance of Astra's consumer finance operations also reflected the growthin vehicle sales. The volume financed was 11% higher at US$2.3 billion, althoughthe loan book ended the year 12% lower at US$1.7 billion as a greater proportionwas joint-funded without recourse. The earnings at 44.5%-held Bank Permata alsoimproved. An excellent result was reported by Astra Agro Lestari, Astra's 80%-owned palmoil producer. While production was relatively flat due to poor weatherconditions at the start of the year, a 69% increase achieved in crude palm oilprices boosted revenues and profits. United Tractors, which is 58%-held,benefited from strong demand for Komatsu equipment and recorded a 54%improvement in sales. The company's contract coal mining interests overcameadverse weather and operational interruptions to achieve a 28% increase in coalextracted and a 4% increase in overburden removed. A coal mining concession inSouth Kalimantan was acquired in January 2007, and an effective 70% stake in afurther mine in Central Kalimantan was purchased in February 2008. Astra's information technology activities and infrastructure investmentsperformed satisfactorily in 2007, and the group is continuing to review furtherinfrastructure investments. Further Interests Rothschilds Continuation The French and English branches of the Rothschild family took steps to unifytheir shareholdings through the listed French company Paris Orleans. In thereorganization, Rothschilds Continuation Holdings, in which the Company holds a20% interest, increased its stake in the French bank, Rothschild et Cie Banque. Tata Industries Tata Industries is an unlisted Indian investment company in which the Companyholds a 20% shareholding. Following the sale of a strategic stake in a cellulartelephone operator in 2006, part of the proceeds was used to reduce debt and paya dividend. In 2007, Tata Industries made commitments to new projects in anumber of existing investee companies and identified further new investmentopportunities. Tata Industries continues to review a range of new projectsacross a broad band of industry sectors. Others Edaran Otomobil Nasional, in which the Company held a 20% interest, continued tostruggle in 2007 as the Malaysian motor vehicle sector remained difficult forthe third consecutive year. It faced weak demand for Proton cars and, while someprogress was made in reducing overheads, the National Automotive Policyintroduced in 2006 made it hard to reposition the business. In August 2007, theCompany accepted an offer for its entire shareholding made by another majorinvestor, DRB-HICOM, which gave rise to a gain of US$19 million on completion ofthe sale in November 2007. Asia Commercial Bank in Vietnam continued to trade well in 2007 with excellentbalance sheet and profit growth as the local economy strengthened. The Companymaintained its 7% shareholding through the conversion of convertible bonds andthe full participation in a rights issue as the bank raised additional funds togrow its business. The Company also took advantage of the strong share price of The Bank of N.T.Butterfield & Son in Bermuda to sell part of its interest. Some 3% was soldduring the year, producing a gain of US$46 million, and leaving a remainingshareholding of 3.8%. Anthony NightingaleManaging Director7th March 2008 -----------------------------------------------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Profit and Loss Accountfor the year ended 31st December 2007----------------------------------------------------------------------------------------------------------------------- 2007 2006 ----------------------------------- ----------------------------------- Underlying Non- Underlying Non- business trading business trading performance items Total performance items Total US$m US$m US$m US$m US$m US$m ----------------------------------- ----------------------------------- ----------- -----------Revenue (note 2) 15,328 - 15,328 12,845 - 12,845 Net operating costs (note 3) (13,977) 133 (13,844) (12,012) 120 (11,892) ----------- ----------- ----------- ----------- ----------- -----------Operating profit (note 4) 1,351 133 1,484 833 120 953 ----------- ----------- ----------- ----------- ----------- -----------Financing charges (177) - (177) (176) - (176)Financing income 82 - 82 72 - 72 ----------- ----------- ----------- ----------- ----------- -----------Net financing charges (95) - (95) (104) - (104)Share of results of Jardine Matheson (note 5) 130 59 189 105 105 210 Share of results of associates and joint ventures (note 6) 425 1,101 1,526 330 747 1,077 ----------- ----------- ----------- ----------- ----------- -----------Profit before tax 1,811 1,293 3,104 1,164 972 2,136Tax (note 7) (372) (20) (392) (216) (50) (266) ----------- ----------- ----------- ----------- ----------- -----------Profit after tax 1,439 1,273 2,712 948 922 1,870 ----------------------------------- -----------------------------------Attributable to:Shareholders of the Company (notes 8 & 10) 723 1,301 2,024 522 890 1,412Minority interests 716 (28) 688 426 32 458 ----------- ----------- ----------- ----------- ----------- ----------- 1,439 1,273 2,712 948 922 1,870 ----------------------------------- ----------------------------------- US$ US$ US$ US$ ----------- ----------- ----------- -----------Earnings per share (note 9)- basic 1.17 3.28 0.85 2.30- diluted 1.17 3.19 0.85 2.25 ----------- ----------- ----------- ----------- ----------- ----------- -------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Balance Sheetat 31st December 2007------------------------------------------------------------------------------- 2007 2006 US$m US$m -------------------------Assets Intangible assets 1,759 1,741Tangible assets 2,912 2,697Investment properties 28 33Plantations 515 460Investment in Jardine Matheson 962 946Associates and joint ventures 7,514 6,135Other investments 704 572Non-current debtors 998 1,146Deferred tax assets 102 95Pension assets 107 89 -------- --------Non-current assets 15,601 13,914 -------- --------Stocks and work in progress 1,225 1,138Current debtors 1,957 1,821Current investments 21 2Current tax assets 149 140Bank balances and other liquid funds -------- --------- non-financial services companies 1,423 1,145- financial services companies 167 173 -------- -------- 1,590 1,318 -------- -------- 4,942 4,419Non-current assets classified as held for sale (note 11) 43 56 -------- --------Current assets 4,985 4,475 -------- -------- -------- --------Total assets 20,586 18,389 -------- -------- 2007 2006 US$m US$m ------------------------Equity Share capital 54 54Share premium and capital reserves 1,331 1,325Revenue and other reserves 9,611 7,302Own shares held (1,209) (1,054) -------- --------Shareholders' funds (note 12) 9,787 7,627Minority interests 3,531 3,183 -------- --------Total equity 13,318 10,810 -------- -------- Liabilities Long-term borrowings -------- --------- non-financial services companies 1,775 1,926- financial services companies 616 723 -------- -------- 2,391 2,649Deferred tax liabilities 508 485Pension liabilities 66 64Non-current creditors 63 100Non-current provisions 34 25 -------- --------Non-current liabilities 3,062 3,323 -------- -------- Current creditors 2,670 2,202Current borrowings -------- --------- non-financial services companies 499 988- financial services companies 806 954 -------- -------- 1,305 1,942Current tax liabilities 198 80Current provisions 33 32 -------- --------Current liabilities 4,206 4,256 -------- --------Total liabilities 7,268 7,579 -------- -------- -------- --------Total equity and liabilities 20,586 18,389 -------- -------- ------------------------ -----------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Statement of Recognized Income and Expensefor the year ended 31st December 2007----------------------------------------------------------------------------------- 2007 2006 US$m US$m ------------------------Surpluses on revaluation of properties 114 120Gains on revaluation of other investments 165 264Actuarial gains on defined benefit pension plans 59 22Net exchange translation differences (95) 381Losses on cash flow hedges (7) (15)Tax on items taken directly to equity (20) (67) -------- --------Net income recognized directly in equity 216 705Transfer to profit and loss on disposal of other investments (59) (45)Transfer to profit and loss on realization of exchange reserves (4) (3)Transfer to profit and loss in respect of cash flow hedges 2 3Profit after tax 2,712 1,870 -------- --------Total recognized income and expense for the year 2,867 2,530 -------- -------- Attributable to:Shareholders of the Company 2,263 1,794Minority interests 604 736 -------- -------- 2,867 2,530 -------- -------- -----------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Cash Flow Statementfor the year ended 31st December 2007 ----------------------------------------------------------------------------------- 2007 2006 US$m US$m ------------------------Operating activities -------- --------Operating profit 1,484 953Depreciation and amortization 450 377Other non-cash items 50 63Decrease in working capital 93 582Interest received 75 69Interest and other financing charges paid (175) (169)Tax paid (267) (345) -------- -------- 1,710 1,530Dividends from Jardine Matheson 131 11Dividends from associates and joint ventures 203 272 -------- --------Cash flows from operating activities 2,044 1,813Investing activities -------- --------Purchase of subsidiary undertakings (note 14(a)) (26) (47)Purchase of associates and joint ventures (note 14(b)) (113) (465)Purchase of other investments (note 14(c)) (83) (94)Purchase of land use rights (30) (17)Purchase of other intangible assets (25) (4)Purchase of tangible assets (568) (603)Purchase of plantations (41) (22)Advance of mezzanine loans (3) -Repayment of mezzanine loans 12 -Capital distribution from associates 14 1Sale of subsidiary undertakings (note 14(d)) - 227Sale of associates and joint ventures (note 14(e)) 104 1Sale of other investments (note 14(f)) 127 27Sale of land use rights 14 26Sale of tangible assets 43 50Sale of investment properties 6 - -------- --------Cash flows from investing activities (569) (920)Financing activities -------- --------Capital contribution from minority shareholders 5 14Drawdown of borrowings 3,664 3,469Repayment of borrowings (4,572) (3,933)Dividends paid by the Company (33) (26)Dividends paid to minority shareholders (256) (216) -------- --------Cash flows from financing activities (1,192) (692)Effect of exchange rate changes (16) 42 -------- --------Net increase in cash and cash equivalents 267 243Cash and cash equivalents at 1st January 1,287 1,044 -------- --------Cash and cash equivalents at 31st December 1,554 1,287 -------- -------- -----------------------------------------------------------------------------------Jardine Strategic Holdings LimitedNotes----------------------------------------------------------------------------------- 1. Accounting Policies and Basis of Preparation The financial information contained in this announcement has been based on theaudited results for the year ended 31st December 2007 which have been preparedin conformity with International Financial Reporting Standards, includingInternational Accounting Standards and Interpretations adopted by theInternational Accounting Standards Board. In 2007, the Group adopted the following standards and interpretations toexisting standards which are relevant to its operations: -----------------------------------------------------------------------------------IFRS 7 Financial Instruments:DisclosuresAmendment to IAS 1 Capital DisclosuresIFRIC 8 Scope of IFRS 2IFRIC 9 Reassessment of Embedded DerivativesIFRIC 10 Interim Financial Reporting and Impairment----------------------------------------------------------------------------------- There have been no changes to the accounting policies as a result of adoption ofthe above standards and interpretations. The Group's reportable segments are set out in note 2. Certain comparative figures have been reclassified to conform with the currentyear presentation. 2. Revenue 2007 2006 US$m US$m ------------------------By business:Dairy Farm 5,887 5,175Mandarin Oriental 529 405Jardine Cycle & Carriage 1,239 1,119Astra 7,673 6,143Other activities - 3 -------- -------- 15,328 12,845 -------- -------- 3. Net Operating Costs 2007 2006 US$m US$m ------------------------Cost of sales (11,411) (9,672)Other operating income 289 285Selling and distribution costs (1,835) (1,751)Administration expenses (843) (715)Other operating expenses (44) (39) -------- -------- (13,844) (11,892) -------- -------- 4. Operating Profit 2007 2006 US$m US$m ------------------------By business:Dairy Farm 276 233Mandarin Oriental 133 122Jardine Cycle & Carriage 38 54Astra 1,034 570 -------- -------- 1,481 979Corporate and other interests 4 (26)Intersegment transactions (1) - -------- -------- 1,484 953 -------- --------Operating profit included the following gains/(losses) from non-trading items: Increase in fair value of investment properties 1 7Increase in fair value of plantations 35 22Sale and closure of businesses 17 81Sale of investments 70 -Sale of property interests - 10Restructuring of businesses (7) -Realization of exchange gains* 8 -Discount on acquisition of businesses 5 -Other 4 - -------- -------- 133 120 -------- -------- * Arising on repatriation of capital from a foreign subsidiary undertaking. 5. Share of Results of Jardine Matheson 2007 2006 US$m US$m ------------------------Share of results of Jardine Matheson included the following gains/(losses) from non-trading items: Increase in fair value of investment properties 38 37Sale and closure of businesses 5 20Sale of investments - 46Sale of property interests 1 -Pension curtailment - 7Restructuring of businesses 7 (5)Realization of exchange gains* 4 -Value added tax recovery in Jardine Motors Group 5 -Other (1) - -------- -------- 59 105 -------- -------- * Arising on repatriation of capital from a foreign subsidiary undertaking. Results are shown after tax and minority interests in Jardine Matheson 6. Share of Results of Associates and Joint Ventures 2007 2006 US$m US$m ------------------------By business:Hongkong Land 1,342 856Dairy Farm 30 28Mandarin Oriental 23 13Jardine Cycle & Carriage 9 3Astra 116 151Corporate and other interests 6 26 -------- -------- 1,526 1,077 -------- --------Share of results of associates and joint ventures included the following gains/(losses) from non-trading items:Increase in fair value of investment properties 1,173 751Asset impairment (70) -Sale and closure of businesses (10) (4)Sale of investments 2 2Sale of property interests 4 -Discount on increased interest in an associate 2 -Other - (2) -------- -------- 1,101 747 -------- -------- Results are shown after tax and minority interests in the associates and joint ventures. 7. Tax 2007 2006 US$m US$m ------------------------Current tax (382) (276)Deferred tax (10) 10 -------- -------- (392) (266) -------- -------- Greater China (29) (26)Southeast Asia (339) (201)United Kingdom (5) (4)Rest of the world (19) (35) -------- -------- (392) (266) -------- -------- Tax on profits has been calculated at rates of taxation prevailing in theterritories in which the Group operates. Share of tax of Jardine Matheson of US$34 million (2006: US$27 million) and ofassociates and joint ventures of US$307 million (2006: US$248 million) areincluded in share of results of Jardine Matheson and share of results ofassociates and joint ventures respectively. 8. Profit attributable to shareholders 2007 2006 US$m US$m ------------------------By business:Jardine Matheson 130 105Hongkong Land 163 107Dairy Farm 201 165Mandarin Oriental 59 33Jardine Cycle & Carriage 27 20Astra 222 122Corporate and other interests (79) (30) -------- --------Underlying profit attributable to shareholders 723 522Increase in fair value of investment properties (note 10) 1,211 790Other non-trading items (note 10) 90 100 -------- --------Profit attributable to shareholders 2,024 1,412 -------- -------- 9. Earnings per Share Basic earnings per share are calculated on profit attributable to shareholdersof US$2,024 million (2006: US$1,412 million) and on the weighted average numberof 618 million (2006: 614 million) shares in issue during the year. Diluted earnings per share are calculated on profit attributable to shareholdersof US$1,973 million (2006: US$1,381 million), which is after adjusting for theeffects of the conversion of dilutive potential ordinary shares of JardineMatheson, subsidiary undertakings, associates or joint ventures. The weighted average number of shares is arrived at as follows: Ordinary shares in millions 2007 2006 ----------------------------Weighted average number of shares in issue 1,077 1,063Company's share of shares held by Jardine Matheson (459) (449) ------- -------Weighted average number of shares for earnings per share calculation 618 614 ------- ------- Additional basic and diluted earnings per share are also calculated based onunderlying profit attributable to shareholders. A reconciliation of earningsis set out below: 2007 2006 Basic Diluted Basic Diluted earnings earnings earnings earnings per share per share per share per share US$m US$ US$ US$m US$ US$ -----------------------------------------------------------------------------------Profit attributable to shareholders 2,024 3.28 3.19 1,412 2.30 2.25Non-trading items (note 10) (1,301) (890) ------- -------Underlying profit attributable to shareholders 723 1.17 1.17 522 0.85 0.85 ------- -------10. Non-trading Items Non-trading items are separately identified to provide greater understanding ofthe Group's underlying business performance. Items classified as non-tradingitems include fair value gains or losses on revaluation of investment propertiesand plantations; gains and losses arising from the sale of businesses,investments and properties; impairment of non-depreciable intangible assets andother investments; provisions for the closure of businesses; and other creditsand charges of a non-recurring nature that require inclusion in order to provideadditional insight into underlying business performance. An analysis of non-trading items after interest, tax and minority interests isset out below: 2007 2006 US$m US$m ------------------------Increase in fair value of investment properties -------- --------- Hongkong Land 1,173 751- Jardine Matheson 38 37- other - 2 -------- -------- 1,211 790Increase in fair value of plantations 6 4Asset impairment -------- --------- Mandarin Oriental, Kuala Lumpur 4 -- motorcycle franchise rights (24) - -------- -------- (20) -Sale and closure of businesses -------- --------- Appleyard Vehicle Contracts - 21- 25% interest in Mandarin Oriental, New York 12 -- The Mark - 26- motor operations - 2- insurance broking - (5)- other (7) 2 -------- -------- 5 46Sale of investments 71 48Sale of property interests 5 3Pension curtailment - 7Restructuring of businesses -------- --------- SIACI in Jardine Lloyd Thompson 10 -- other (5) (5) -------- -------- 5 (5)Realization of exchange gains* 10 -Discount on acquisitions 4 -Value added tax recovery in Jardine Motors Group 5 -Other (1) (3) -------- -------- 1,301 890 -------- -------- * Arising on repatriation of capital from a foreign subsidiary undertaking and from a foreign subsidiary undertaking in Jardine Matheson. 11. Non-current Assets Classified as Held for Sale The major classes of assets classified as held for sale are set out below: 2007 2006 US$m US$m ------------------------Tangible assets 34 -Investment properties 2 2Associates and joint ventures 7 14Non-current debtors - 31Current assets - 9 -------- --------Total assets 43 56 -------- -------- At 31st December 2007, the non-current assets classified as held for saleinclude Dairy Farm's interest in a retail property in Malaysia with a carryingvalue of US$33 million and its 50% interest in a joint venture in Korea with acarrying value of US$7 million. The sale of the property is expected to becompleted in 2008 at an amount not materially different from the carrying value.The sale of the joint venture interest was completed in February 2008 andresulted in a profit before tax of approximately US$14 million. At 31st December 2006, the non-current assets classified as held for saleprincipally related to Mandarin Oriental's 25% interest in Mandarin Oriental,New York of US$14 million and its mezzanine loan to the hotel of US$40 million.The sale was completed in March 2007 resulting in a profit before tax of US$25million, which was included in other operating income. 12. Shareholders' Funds 2007 2006 US$m US$m ------------------------At 1st January 7,627 5,859Recognized income and expense attributable to shareholders 2,263 1,794Dividends (note 13) (107) (100)Employee share option schemes- value of employee services 6 6Scrip issued in lieu of dividends 153 147Increase in own shares held (155) (79) -------- --------At 31st December 9,787 7,627 -------- -------- 13. Dividends 2007 2006 US$m US$m ------------------------Final dividend in respect of 2006 of USc11.70 (2005: USc11.00) per share 125 116Interim dividend in respect of 2007 of USc5.60 (2006: USc5.30) per share 61 57 -------- -------- 186 173Company's share of dividends paid on the shares held by Jardine Matheson (79) (73) -------- -------- 107 100 -------- -------- A final dividend in respect of 2007 of USc12.40 (2006: USc11.70) per shareamounting to a total of US$134 million (2006: US$125 million) is proposed by theBoard. The dividend proposed will not be accounted for until it has beenapproved at the Annual General Meeting. The net amount after deducting theCompany's share of the dividends payable on the shares held by Jardine Mathesonof US$58 million (2006: US$53 million) will be accounted for as an appropriationof revenue reserves in the year ending 31st December 2008. 14. Notes to Consolidated Cash Flow Statement 2007 2006(a) Purchase of subsidiary undertakings US$m US$m --------------------Intangible assets 1 6Tangible assets 1 14Non-current debtors 2 -Current assets 9 15Long-term borrowings - (1)Deferred tax liabilities - (1)Pension liabilities (1) (1)Current liabilities (6) (9) ------- -------Net assets acquired 6 23Goodwill 2 9 ------- -------Total consideration 8 32Adjustment for deferred consideration and carrying value of associates and joint ventures (4) (7)Cash and cash equivalents of subsidiary undertakings acquired (2) - ------- -------Net cash outflow 2 25Purchase of shares in Jardine Cycle & Carriage 24 22 ------- ------- 26 47 ------- ------- Net cash outflow in 2006 of US$25 million included US$17 million for DairyFarm's store acquisitions in Malaysia and Vietnam. (b) Purchase of associates and joint ventures in 2007 included the Company'sincreased interest in Hongkong Land of US$104 million. Purchase of associatesand joint ventures in 2006 included US$26 million, US$26 million, US$19 millionand US$98 million for Astra's interest in Toyota Astra Financial Services, PTPAM Lyonnaise Jaya, Astra Daihatsu Motor and an additional 12.95% interest inBank Permata respectively, and the Company's increased interest in Hongkong Landof US$289 million. (c) Purchase of other investments included US$61 million (2006: US$80 million)for Astra's purchase of securities. (d) Sale of subsidiary undertakings in 2006 included US$99 million from MandarinOriental's sale of its interest in The Mark, New York, US$28 million fromAstra's partial sale of its interest in Aisin and US$163 million from theCompany's sale of its interest in MCL Land. (e) Sale of associates and joint ventures in 2007 included US$71 million fromMandarin Oriental's sale of its 25% interest in Mandarin Oriental, New York, andUS$12 million and US$15 million from Jardine Cycle & Carriage's sale of itsinterests in Ampang Investments and UMF respectively. (f) Sale of other investments in 2007 included US$54 million from the Company'spartial disposal of its interest in The Bank of N.T. Butterfield & Son, US$11million from disposal of shares in CNAC and US$46 million from a capitaldistribution from Edaran Otomobil Nasional followed by sale of that investment.Sale of other investments in 2006 included US$27 million from Astra's sale ofsecurities. 15. Jardine Strategic Corporate Cash Flow and Net Debt 2007 2006 US$m US$m -------------------------Dividends receivable -------- --------Subsidiary undertakings 350 134Jardine Matheson 197 147Associates 118 95Other holdings 12 23 -------- -------- 677 399Less taken in scrip (117) (170) -------- -------- 560 229Other operating cash flows (83) (68) -------- --------Cash flows from operating activities 477 161 Investing activities -------- --------Purchase of subsidiary undertakings (24) (22)Purchase of associates (104) (289)Purchase of other investments (18) (13)Sale of subsidiary undertakings - 163Sale of other investments 111 - -------- --------Cash flows from investing activities (35) (161)Financing activities -------- --------Dividends paid by the Company (33) (26) -------- --------Cash flows from financing activities (33) (26)Fair value adjustment on 6.375% Guaranteed Bonds (15) -Effect of exchange rate changes (2) (11) -------- --------Net decrease/(increase) in net debt 392 (37)Net debt at 1st January (735) (698) -------- --------Net debt at 31st December (343) (735) -------- --------Represented by:Bank balances and other liquid funds 6 66.375% Guaranteed Bonds due 2011 (313) (297)Other long-term borrowings (36) (444) -------- -------- (343) (735) -------- -------- Corporate cash flow and net debt comprises the cash flows and net cash or debtof the Company and of its investment holding and financing subsidiaryundertakings 16. Capital Commitments and Contingent Liabilities 2007 2006 US$m US$m -------------------------Capital commitments 226 191 -------- -------- Various Group companies are involved in litigation arising in the ordinarycourse of their respective businesses. Having reviewed outstanding claims andtaking into account legal advice received, the Directors are of the opinion thatadequate provisions have been made in the financial statements. 17. Post Balance Sheet Events In February 2008, Dairy Farm disposed of its 50% interest in a joint venture inKorea which resulted in a profit before tax of approximately US$14 million. In February 2008, United Tractors, a 58%-held subsidiary undertaking of Astra,acquired a 70% interest in a company which holds coal mining rights in CentralKalimantan, Indonesia for US$116 million. 18. Market Value Basis Net Assets 2007 2006 US$m US$m ------------------------Jardine Matheson 1,821 949Hongkong Land 5,342 4,212Dairy Farm 4,576 3,568Mandarin Oriental 1,698 1,201Jardine Cycle & Carriage 3,406 2,102Other holdings 890 693Jardine Strategic Corporate (343) (770) -------- -------- 17,390 11,955 -------- -------- US$ US$ -------- --------Net assets per share 28.22 19.38 -------- -------- 'Market value basis net assets' are calculated based on the market price of theCompany's holding for listed companies, with the exception of the holding inJardine Matheson which has been calculated by reference to the market value ofUS$9,139 million (2006: US$7,004 million) less the Company's share of the marketvalue of Jardine Matheson's interest in the Company. For unlisted companies aDirectors' valuation has been used. Net asset value per share is calculated on 'market value basis net assets' ofUS$17,390 million (2006: US$11,955 million) and on 616 million (2006: 617million) shares outstanding at the year end which excludes the Company's shareof the shares held by Jardine Matheson of 466 million (2006: 455 million)shares. ---------------------------------------------------------------------------------The final dividend of USc12.40 per share will be payable on 14th May 2008,subject to approval at the Annual General Meeting to be held on 8th May 2008, toshareholders on the register of members at the close of business on 20th March2008, and will be available in cash with a scrip alternative. The ex-dividenddate will be on 18th March 2008, and the share registers will be closed from24th to 28th March 2008, inclusive. Shareholders will receive their cashdividends in United States Dollars, unless they are registered on the Jerseybranch register where they will have the option to elect for sterling. Theseshareholders may make new currency elections for the 2007 final dividend bynotifying the United Kingdom transfer agent in writing by 25th April 2008. Thesterling equivalent of dividends declared in United States Dollars will becalculated by reference to a rate prevailing on 30th April 2008. Shareholdersholding their shares through The Central Depository (Pte) Limited ('CDP') inSingapore will receive United States Dollars unless they elect, through CDP, toreceive Singapore Dollars or the scrip alternative.--------------------------------------------------------------------------------- For further information, please contact: Jardine Matheson LimitedJames Riley (852) 2843 8229 Matheson & Co., Limited Philip Hawkins (020) 7816 8136 GolinHarrisKennes Young (852) 2501 7987 Weber Shandwick FinancialRichard Hews / Hannah Marwood (020) 7067 0700 Full text of the Preliminary Announcement of Results and the PreliminaryFinancial Statements for the year ended 31st December 2007 can be accessedthrough the Internet at 'www.jardines.com'. This information is provided by RNS The company news service from the London Stock Exchange