JDS.L Regulatory News (JDS)

7 Mar 2007 09:05

Jardine Strategic Hldgs Ld07 March 2007 To: Business Editor 7th March 2007 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 Limited 2006 Preliminary Announcement of Results Highlights • Underlying earnings per share* up 10% • Net assets per share+ up 25% • Good profit growth from most Group businesses • Astra impacted by weak Indonesian markets • Hongkong Land property portfolio value increases 21% "The outlook is promising for most of the markets in which the Group'sbusinesses operate. It may, however, be demanding to match the level of growthin 2007 that has been seen in recent years." Henry Keswick, Chairman 7th March 2007----------------------------------------------------------------------- Year ended 31st December 2006 2005 Change US $m US $m %-----------------------------------------------------------------------Underlying profit attributable toshareholders* 526 475 +11Profit attributable to shareholders 1,412 1,398 +1Shareholders' funds 7,627 5,859 +30----------------------------------------------------------------------- US$ US$ %-----------------------------------------------------------------------Underlying earnings per share* 0.86 0.78 +10Earnings per share 2.30 2.29 -Dividends per share 0.17 0.16 +6Net asset value per share+ 19.38 15.50 +25-----------------------------------------------------------------------* The Group uses 'underlying business performance' in its internalfinancial reporting to distinguish between the underlying profits andnon-trading items as more fully described in note 9 to the financialstatements. Management considers this to be a key measure and hasprovided this analysis as additional information in order to providegreater understanding of the Group's underlying business performance. + Net asset value per share is on a market value basis, details of whichare set out in note 18 to the financial statements.----------------------------------------------------------------------- The final dividend of USc11.70 per share will be payable on 16th May 2007,subject to approval at the Annual General Meeting to be held on 10th May 2007,to shareholders on the register of members at the close of business on 23rdMarch 2007 and will be available in cash with a scrip alternative. Theex-dividend date will be on 21st March 2007, and the share registers will beclosed from 26th to 30th March 2007, inclusive. Jardine Strategic Holdings Limited Preliminary Announcement of ResultsFor The Year Ended 31st December 2006 Performance In 2006 Jardine Strategic benefited from a generally favourable economicenvironment and good performances from the majority of the Group's companies.Underlying profit for the year increased by 11% to US$526 million. Underlyingearnings per share rose 10% to US$0.86. Within Jardine Matheson, Jardine Pacific produced a creditable improvement inearnings, and Jardine Motors achieved an excellent result enhanced by gains fromproperty disposals and changes in pension liabilities in the United Kingdom.Jardine Lloyd Thompson's profit was little changed in a year of restructuring.Dairy Farm posted another good year of earnings growth, with all its majoroperations performing well, and Hongkong Land increased its contribution,benefiting from rising net rental income and the acquisition of MCL Land. AtMandarin Oriental, healthy markets and income from new hotels offset the impactof the closure for renovation of its major Hong Kong property. Jardine Cycle &Carriage's contribution, however, fell due to a reduction in Astra's earnings.The Company's results also reflect a US$27 million contribution from its 20%investment in Rothschilds Continuation and a first dividend from TataIndustries. In accordance with International Financial Reporting Standards, revaluations ininvestment properties are taken through the profit and loss account. TheCompany's share of a 21% upward revaluation of Hongkong Land's portfolio in 2006amounted to US$751 million, compared with US$813 million in 2005, and a US$37million increase in property values was also contributed by Jardine Matheson.The Company's net profit of US$1,412 million includes these revaluations as wellas non-trading items such as gains on disposals within Jardine Matheson andMandarin Oriental. The Group's financial position has continued to improve. Despite activeinvestment programmes, consolidated net debt excluding finance companies ofUS$1.6 billion showed a marginal decline due to the proceeds from disposals andcareful cash flow management. Shareholders' funds had increased by 30% fromUS$5.9 billion to US$7.6 billion. The Board is recommending a final dividend of USc11.70 per share, representingan overall increase of 6% for the full year. Business Activity The overall stability of the Group's earnings benefits from its broad businessmix, not only by commercial sector but also by geographic spread. Southeast Asia,for example, accounted for some 45% of underlying profit in 2006, having morethan doubled its share over five years. Business confidence in Asia remained strong during the year, driven in largepart by the continued growth in the Chinese economy. The increasingsophistication of China's markets is expanding the opportunities in sectors thatare attractive to the Group's service businesses, such as commercial andresidential property, hotel management, retail stores, motor dealerships andinsurance broking. One country that did not follow the regional trend was Indonesia. The removal offuel subsidies in late 2005 led to a sharp increase in inflation, higherinterest rates and a fall in consumer confidence, which affected Astra's motorrelated activities. Sentiment, however, began to improve towards the end of2006, and the medium-term outlook remains positive. The steadiness of thecurrency during this period was an encouraging feature. Group companies have continued to build their businesses over the past year.Among the more notable examples, Hongkong Land expanded its property activitieson a substantial scale both regionally and into the residential sector; DairyFarm extended its banners across its Asian markets and has promisingopportunities in India and Vietnam; and the development of Mandarin Oriental'shotel portfolio gathered pace with a record number of new developments and thereopening of the refurbished Mandarin Oriental, Hong Kong. The Company is also seeing encouraging performances from a number of its smallershareholdings. The value of the Company's 7% interest in The Bank of N. T.Butterfield & Son in Bermuda has increased significantly, as has the value ofits 7% shareholding in Asia Commercial Bank, a Vietnamese bank floated inNovember 2006. The Company's 20% stake in Tata Industries has also enjoyedconsiderable growth. In December, Jardine Strategic raised its direct interest in Hongkong Land to46% with the US$269 million purchase of some 3% of Hongkong Land's share capitalat the prevailing market price. The shares had previously been held by awholly-owned subsidiary of Hongkong Land. Outlook In conclusion, the Chairman, Henry Keswick said, "The outlook is promising formost of the markets in which the Group's businesses operate. It may, however, bedemanding to match the level of growth in 2007 that has been seen in recentyears." "Looking further ahead, Hongkong Land will recognize profits upon completion ofresidential properties already sold, and most of the Group's other businessesshould perform well as they grow their operations." Operating Review Jardine Matheson Jardine Matheson reported good increases in earnings and asset values in 2006.Its underlying profit was US$533 million, an increase of 15% helped in part byproperty and pension gains in Jardine Motors. Underlying earnings per share rose14% to US$1.52. Jardine Matheson's net profit of US$1,348 million benefited frominvestment property revaluations in Hongkong Land and Jardine Pacific togetherwith gains from disposals, including a non-trading profit of US$69 million onthe advance sale of shares in JPMorgan Chase that underlie Jardine Matheson'sexchangeable bond. Net asset value per share, which does not include the marketvalue of the company's listed subsidiaries and affiliates, increased by 31% toUS$18.65. • Jardine Pacific's underlying profit from continuing businesses increased 27% to US$103 million in 2006 as the majority of its operations performed well, particularly Gammon. In addition, an upward revaluation of the group's residential property investment portfolio produced a gain of US$70 million. The company's net profit was US$191 million. Shareholders' funds rose 10% to US$363 million, producing an underlying return of 30%. During 2006, Jardine Pacific sold its interest in a Hong Kong mid-stream cargo handling joint venture and minority shareholdings in both BALtrans and the River Trade Terminal. Claims income from contracts completed in prior years and good progress in projects in Macau enabled Gammon to achieve a significantly improved result. HACTL enjoyed record cargo volumes, but its profit contribution was little changed due to higher operating costs. Jardine Aviation Services benefited from the increased activity at Hong Kong's airport, but Jardine Shipping Services was affected by weaker freight rates. The profit contribution from Jardine Schindler was slightly down due mainly to increased losses in its subsidiary in Korea. JEC's earnings rose as its operations in Hong Kong and Thailand performed well. Jardine Restaurants and JOS each recorded a higher profit. Colliers Halifax produced an improved contribution from its property activities in Japan. Looking ahead, Jardine Pacific will incur higher financing charges in 2007 and a number of its businesses are facing more challenging conditions. • Jardine Motors' continuing operations achieved an underlying net profit of US$63 million, up 62%. The result was enhanced by gains from property sales and a change in pension and tax law in the United Kingdom. The group's net profit for the year of US$104 million included a non-trading gain of US$38 million arising from the sale of its interest in a vehicle contract hire business in the United Kingdom. Zung Fu performed well in 2006 as deliveries of the new S-Class helped Mercedes-Benz achieve a 15% share of the new car market in Hong Kong. Increased sales were also recorded in Macau. Its commercial vehicles operation was quieter, while competitive pressures led to a small loss from Hyundai. Zung Fu continued to expand its dealership network in Southern China and achieved good growth in profitability with higher sales volumes and service income. Operating profits improved in the United Kingdom, despite a weaker car market, and the business is selectively acquiring additional dealerships. Jardine Motors continues to build its market position in the United Kingdom, Hong Kong and mainland China, but in 2007 its underlying profit will not benefit from the same level of property gains. •Jardine Lloyd Thompson achieved a creditable performance in 2006 against the background of challenging trading conditions and further weakening of the US dollar. The turnover of its continuing operations, following disposals in the United States, rose modestly to US$851 million, while underlying profit was maintained at US$91 million. Net profit was lower at US$86 million. Non-trading items included a curtailment gain following the closure of a defined benefit scheme to reduce the group's pension exposure in the United Kingdom, offset by a loss on the sale of the group's discontinued US operations. Its Risk & Insurance group, which accounts for more than 80% of revenue, faced pressure on rates and intense competition for market share. Good performances from most of its retail operations, however, produced a 2% growth in turnover despite the adverse dollar movement. Its Employee Benefits business in the United Kingdom made further progress increasing turnover by 8% and trading profit by 15%. In May, approval was received to start insurance and re-insurance broking operations in mainland China. After the year end, the group's associate SIACI announced a merger which should significantly strengthen its position in France. In 2006, progress was made in the repositioning of Jardine Lloyd Thompson with the strengthening of its senior management, the sale of underperforming operations in the United States and the reorganization of its London market activities. Steps were also taken to reduce costs. The benefits from these actions should begin to be seen this year and more fully in 2008. Hongkong Land Hongkong Land's net rental income from commercial property increased by 25% in2006 as broad-based demand and reduced supply in Hong Kong's Central districtproduced higher rents and capital values. Vacancy in its commercial portfoliowas maintained at 4.5% despite having added 2.8% with the completion of YorkHouse. Earnings from residential property were higher, largely due to a firstcontribution from the company's 77%-held affiliate in Singapore, MCL Land.Overall, underlying profit for 2006 rose 31% to US$245 million. The value of Hongkong Land's investment assets again rose in 2006 ending theyear 21% higher at US$11.7 billion, resulting in an adjusted net asset value pershare of US$4.76, up 23%. The group's net profit for 2006, including therevaluation, was US$1,901 million. Hongkong Land's strategy of broadening its commercial business regionally gainedmomentum as it significantly increased its portfolio in Singapore. Its jointventure development at One Raffles Quay in Singapore was fully let on completionin October 2006, while at the adjacent Marina Bay Financial Centre joint venturedevelopment, construction has begun on the first phase that includes 180,000 sq.m of office space and 428 residential units. A 194,000 sq. m second phase isalso to be developed by the consortium. Hongkong Land's reputation for quality in the commercial sector is also beingrecognized in the residential market, as was demonstrated in the excellentresponse to its new joint venture developments in Macau and Singapore. Thedevelopments of MCL Land have also attracted strong interest. Response to thelaunch of the final phase of Hongkong Land's joint venture development atCentral Park in Beijing was more subdued following measures announced by theGovernment designed to dampen certain market sectors, while elsewhere inmainland China construction began on the 650-unit Phase I of Bamboo Grove, ajoint venture in Chongqing. The prospects for Hongkong Land are encouraging as the office leasing reversioncycle in its Hong Kong portfolio will continue to enhance earnings, while theretail element is expected to remain strong. This will be complemented in thecoming years by the recognition of profits on residential sales. Dairy Farm Dairy Farm's strategy has been to build leading retail businesses in Asia'sgrowing consumer markets, and it now has 27 operations in nine countries. Thegroup had another good year in 2006 with increases in both sales and earnings asits operations benefited from its investment progamme and favourable economicconditions in its major markets. Sales, including 100% of those of associates,were up 9% to US$6.0 billion, and its underlying profit for the year rose by 11%to US$211 million. In North Asia, sales were 4% higher in 2006, and operating profit rose by 6%.All major retail formats in Hong Kong produced improved operating results. InSouthern China, the group's 7-Eleven operation increased sales and reducedlosses. It ended the year with 284 stores, including the first franchisedoutlets, and acquired a further 110 in March 2007. In Taiwan, IKEA incurredsignificant pre-opening costs for two new large stores, but has laid thefoundation for future growth. Most divisions of Hong Kong restaurant associate,Maxim's, achieved good results, with excellent progress being made by the GenkiSushi chain. In South Asia, Dairy Farm's businesses generally performed well. Sales rose 15%,but profits were only 3% higher due to costs associated with the repositioningof the Giant hypermarkets in Singapore. Active expansion programmes are beingpursued in Malaysia by Giant and the Guardian health and beauty stores, both ofwhich enjoyed substantial increases in sales and operating profit. The group'soperations in Indonesia have yet to produce the required returns, but areshowing some improvement and the medium-term prospects remain attractive. Therewas an encouraging growth in sales in India in what is becoming an increasinglycompetitive market. Dairy Farm acquired a small supermarket chain in Vietnamfollowing the receipt of a license to operate a number of stores on awholly-owned basis. Dairy Farm's financial position remains sound and it has ample cash flow to fundits ongoing investment requirements in its Asian markets. Mandarin Oriental Continued improvement in Mandarin Oriental's key markets and the contributionfrom new hotels offset the impact on earnings arising from the nine monthclosure for renovation of its Hong Kong flagship property. Underlying earningswere US$45 million, compared with US$41 million in 2005 when Mandarin Oriental,Hong Kong was open throughout the year. Net profit in 2006 was US$80 million, including a gain of US$35 million on thesale of The Mark hotel in New York. This compares with US$77 million in 2005,which included a US$36 million gain on the disposal of a property interest inHawaii. A further gain of some US$16 million was realized in March 2007following completion of the sale of half of the group's 50% equity interest inMandarin Oriental, New York. There were strong results from the group's owned hotels as The Excelsior, HongKong and its European properties benefited from higher room rates and increasesin occupancy. Its Tokyo hotel also improved significantly as its 2005 result hadincluded pre-opening costs. Mandarin Oriental, Hong Kong has been well receivedsince its reopening in September 2006, achieving a 50% increase in its averageroom rate. The contribution from associates and joint ventures also rose,largely due to impressive performances in Singapore and New York. Mandarin Oriental's international expansion accelerated in 2006 with theannouncement of five new management contracts and the opening of its latesthotel in Prague. In the first two months of 2007, luxury hotel developments wereannounced in Guangzhou, Paris and Taipei. The group's portfolio now comprises 20hotels with a further 14 under development, giving a total of 9,500 rooms in 20countries. Market demand is expected to remain strong in 2007, and Mandarin Oriental'sresults will benefit from its renovated Hong Kong property. Over the longerterm, the group will see increasing contributions from its many hotels currentlyunder development. Jardine Cycle & Carriage Jardine Cycle & Carriage's underlying profit for 2006 fell by 29% to US$211million. The prior year comparative included 13 months' contribution from Astrarequired to align its accounting period and US$19 million from the group'sshareholding in MCL Land, which was distributed in specie in early 2006. Withoutthese elements, the decline would have been 18%. Jardine Cycle & Carriage's consolidated net debt, excluding borrowing withinAstra's financial services operations, was slightly lower at US$600 million withthe proceeds from disposal of properties in Malaysia and the removal of MCLLand's net debt being substantially offset by capital expenditure in Astra. Poor market conditions in Indonesia, particularly in the automotive sector, ledto a material reduction in earnings at Astra, although the effect of the declineon Jardine Cycle & Carriage's results was lessened by the strengthening of theRupiah against the US dollar. Astra's contribution, on a comparable 12 monthbasis, was 18% lower at US$208 million. The contribution from the Jardine Cycle & Carriage's directly-held motorinterests increased marginally to US$32 million. Profits from its operations inSingapore improved strongly with Mitsubishi and Mercedes-Benz performing well,offsetting declines in Cycle & Carriage Bintang in Malaysia and PT Tunas Rideanin Indonesia and the cessation of contribution from Australia. The new NationalAutomotive Policy in Malaysia impacted Cycle & Carriage Bintang, although theefficiency of its balance sheet was enhanced following the payment of a specialdividend in October. Tunas Ridean suffered from the difficult conditions inIndonesia. Astra International The Indonesian economy was affected by a sharp increase in inflation and highinterest rates following the removal of fuel subsidies in late 2005. Towards theend of 2006 interest rates were lowered, leading to improvements in consumerconfidence. Within Astra's automotive operations, motor vehicle sales in 2006were down 32%, although market share rose from 49% to 55% with a number of newmodel launches. The decline in Astra's motorcycle sales was less severe at 12%as volumes increased in the second half, albeit at lower margins, and its marketshare was stable at some 53%. Astra's financial services businesses, which primarily support its automotiveoperations, declined in line with the market and recorded increases in doubtfuldebt provisions. Its automotive component manufacturing and trading operationswere similarly affected. Earnings from Astra's agribusiness improved in USdollar terms, but in Rupiah were flat as higher costs offset a 12% increase incrude palm oil sales volumes and firmer prices. Nevertheless, the prospectsremain promising, and Astra is continuing to source land for new oil palm andrubber plantations. Its heavy equipment business, United Tractors, produced satisfactory growth incontract mining with 20% increases achieved in both overburden removal and coalextraction, although additional provisions for doubtful debts were required formining contracts. The company's overall profit was also affected by lower salesof Komatsu equipment despite its market share remaining at 48%. In January 2007,its mining subsidiary acquired for US$34 million the rights to mine and marketthe coal from concessions located in South Kalimantan. In September, Astra increased its shareholding in Bank Permata from 31.6% to44.5% in tandem with its partner, Standard Chartered Bank. Bank Permata produceda marginal increase in profit, but further steps are being taken to improveproductivity and profitability to an acceptable level. In infrastructure,Astra's investment in a toll road project performed satisfactorily. In July, itacquired a 30% interest in the franchise for the Western Jakarta water utilityand is considering further infrastructure investments. Astra's performance is expected to show improvement as Indonesian marketscontinue to recover, although competitive pressures remain significant. In themedium term, Astra's leadership in the automotive sector, its established marketpositions in financial services, agribusiness and heavy equipment, and itsinfrastructure investments, provide excellent opportunities for growth. Further Interests Rothschilds Continuation In late 2005 the Company acquired a 20% interest in RothschildsContinuation, an unlisted financial services holding company within theRothschild group whose interests include the investment bank N M Rothschild &Sons. It contributed US$27 million to the Company's earnings in 2006 as itsinvestment banking operations benefited from the high level of M&A activity inthe London market. The group's other activities also showed improvement under anew management team. Tata Industries Tata Industries is an unlisted Indian investment company in which the Company has a 20% shareholding. In June 2006, Tata Industries sold its largeststrategic investment, a 48% holding in IDEA Cellular Ltd., realizing asubstantial gain. The net proceeds were applied in part to debt reduction and tothe payment of a first dividend, of which the Company's share was US$16million, with the balance being retained for future investment. Others Edaran Otomobil Nasional, the Malaysian motor dealership group in which the Company holds a 20% interest, experienced a difficult year in 2006 reportingonly a modest net profit after tax of US$2.5 million. With the new NationalAutomotive Policy leading to increased competition, the group's operations wereimpacted by the fall in market share of the Proton. The company is reviewing anumber of options to reposition the business, but in the short term itsprospects remain challenging. Of the Company's smaller investments its 7% interest in The Bank of N. T.Butterfield & Son in Bermuda has performed well and the valuation of the stakehas increased significantly. The value of the Company's 7% shareholding inVietnamese bank, Asia Commercial Bank, has also enjoyed strong growth. The bank,which was floated on the Hanoi Securities Trading Center in November 2006,focuses on consumers and SMEs and has a network of 80 branches. Anthony NightingaleManaging Director7th March 2007----------------------------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Profit and Loss Accountfor the year ended 31st December 2006---------------------------------------------------------------------------------------------------- Restated 2006 2005 ----------------------------------- ----------------------------------------- Underlying Non- Underlying Non- business trading business trading performance items Total performance items Total US$m US$m US$m US$m US$m US$m ----------------------------------- ----------------------------------------- Revenue (note 2) 12,845 - 12,845 8,825 - 8,825Net operating costs (note 3) (11,996) 98 (11,898) (8,341) 88 (8,253) -------- -------- -------- -------- -------- --------Operating profit 849 98 947 484 88 572 Financing charges (176) - (176) (118) - (118)Financing income 70 - 70 63 - 63 Net financing charges (106) - (106) (55) - (55) Share of results of Jardine Matheson (note 4) 105 105 210 77 53 130Share of results of associates and joint ventures (note 5) 330 747 1,077 398 818 1,216 -------- -------- -------- -------- -------- --------Profit before tax 1,178 950 2,128 904 959 1,863Tax (note 6) (214) (44) (258) (137) (17) (154) -------- -------- -------- -------- -------- --------Profit after tax 964 906 1,870 767 942 1,709 ---------------------------------- -------------------------------- Attributable to:Shareholders of the Company (notes 7 & 9) 526 886 1,412 475 923 1,398 Minority interests 438 20 458 292 19 311 -------- -------- -------- -------- -------- -------- 964 906 1,870 767 942 1,709 --------------------------------- -------------------------------- US$ US$ US$ US$ --------------------------------- --------------------------------Earnings per share (note 8)- basic 0.86 2.30 0.78 2.29- diluted 0.85 2.25 0.77 2.28 -------- -------- -------- -------- -------- -------- ----------------------------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Balance Sheetat 31st December 2006---------------------------------------------------------------------------------------------------- Restated 2006 2005 US$m US$mAssets ----------------------- Intangible assets 1,741 1,627Tangible assets 2,697 2,183Investment properties 33 27Plantations 460 383Investment in Jardine Matheson 946 728Associates and joint ventures 6,135 4,698Other investments 577 307Financing and other debtors 1,051 1,343Deferred tax assets 95 69Pension assets 89 75 ------ ------ Non-current assets 13,824 11,440 ------ ------Stocks and work in progress 1,138 1,212Trade, financing and other debtors 1,910 2,077Current investments 3 -Current tax assets 140 55Bank balances and other liquid funds - non-finance companies 1,145 855- finance companies 173 187 ------ ------ 1,318 1,042 ------ ------ 4,509 4,386Non-current assets classified as held for sale (note 10) 56 662 ------ ------Current assets 4,565 5,048 ------ ------ ------ ------Total assets 18,389 16,488 ------ ------ Equity Share capital 54 53Share premium and capital reserves 1,325 1,320Revenue and other reserves 7,302 5,461Own shares held (1,054) (975) ------- -------Shareholders' funds (note 11) 7,627 5,859Minority interests 3,183 2,858 ------- -------Total equity 10,810 8,717 ------- ------- Liabilities Long-term borrowings (note 13)- non-finance companies 1,841 1,853- finance companies 723 1,005 2,564 2,858Deferred tax liabilities 485 405Pension liabilities 64 41Non-current provisions 15 11Other non-current liabilities 185 144 ------- ------- Non-current liabilities 3,313 3,459 ------- -------Creditors and accruals 2,269 2,224Current borrowings - non-finance companies 937 586- finance companies 954 1,169 1,891 1,755Current tax liabilities 80 111Current provisions 26 26 ------- ------- 4,266 4,116Liabilities directly associated with non-current assets classified as held for sale (note 10) - 196 ------- -------Current liabilities 4,266 4,312 ------- -------Total liabilities 7,579 7,771 ------- ------- Total equity and liabilities 18,389 16,488 ------- ------- ------------------------ ----------------------------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Statement of Recognized Income and Expensefor the year ended 31st December 2006---------------------------------------------------------------------------------------------------- Restated 2006 2005 US$m US$m ---------------------- Surpluses on revaluation of intangible assets - 458Surpluses on revaluation of properties 120 69Gains on revaluation of other investments 270 38Actuarial gains on defined benefit pension plans 22 27Net exchange translation differences 381 (79)(Losses)/gains on cash flow hedges (15) 25Tax on items taken directly to equity (67) (171) ------- -------Net income recognized directly in equity 711 367Transfer to profit and loss on disposal of other investments (51) (20)Transfer to profit and loss on disposal of subsidiary undertakings, associates and joint ventures (3) (6)Transfer to profit and loss in respect of cash flow hedges 3 -Profit after tax 1,870 1,709 ------- ------- Total recognized income and expense for the year 2,530 2,050 ------- -------Attributable to:Shareholders of the Company 1,794 1,587Minority interests 736 463 ------- ------- 2,530 2,050 Surpluses on revaluation of intangible assets represent the increase in fairvalue attributable to the Group's previously held interests in Astra and PT HeroSupermarket on the date they became subsidiary undertakings. ----------------------------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Cash Flow Statementfor the year ended 31st December 2006---------------------------------------------------------------------------------------------------- Restated 2006 2005 US$m US$mOperating activities ------- ------- Operating profit 947 572Depreciation and amortization 377 223Other non-cash items 65 35Decrease/(increase) in working capital 588 (370)Interest received 67 40Interest and other financing charges paid (169) (120)Tax paid (337) (161) ------- ------- 1,538 219Dividends from Jardine Matheson 11 -Dividends from associates and joint ventures 272 226 Cash flows from operating activities 1,821 445 Investing activities Purchase of Astra - 320Purchase of other subsidiary undertakings (note 14(a)) (47) (101)Purchase of associates and joint ventures (note 14(b)) (465) (297)Purchase of other investments (note 14(c)) (94) (7)Purchase of land use rights (17) (12)Purchase of other intangible assets (4) -Purchase of tangible assets (686) (419)Purchase of investment properties - (8)Purchase of plantations (22) (6)Loans to associates, joint ventures and other - (13)Sale of subsidiary undertakings (note 14(d)) 227 103Sale of associates and joint ventures (note 14(e)) 2 109Sale of other investments (note 14(f)) 27 39Sale of land use rights 26 33Sale of tangible assets 50 59Sale of investment properties - 50 ------- -------Cash flows from investing activities (1,003) (150) Financing activities Capital contribution from minority shareholders 14 3Drawdown of borrowings 3,481 3,287Repayment of borrowings (3,870) (3,043)Dividends paid by the Company (26) (26)Dividends paid to minority shareholders (216) (172) Cash flows from financing activities (617) 49Effect of exchange rate changes 42 (2) ------- ------- Net increase in cash and cash equivalents 243 342Cash and cash equivalents at 1st January 1,044 702 ------- -------Cash and cash equivalents at 31st December 1,287 1,044 ----------------------------------------------------------------------------------------------------Jardine Strategic Holdings LimitedNotes----------------------------------------------------------------------------------------------------1. Accounting Policies and Basis ofPreparation The financial information contained in this announcement has been based on theaudited results for the year ended 31st December 2006 which have been preparedin conformity with International Financial Reporting Standards, includingInternational Accounting Standards and Interpretations adopted by theInternational Accounting Standards Board. In 2006, the Group adopted the following amendments and interpretation toexisting standards which are relevant to its operations: ---------------------------------------------------------------------------------------------------- IAS 21 (amended 2005), Net Investment in a Foreign OperationIAS 39 (amended 2005), Cash Flow Hedge Accounting of Forecast Intragroup TransactionsIAS 39 (amended 2005), The Fair Value OptionIAS 39 and IFRS 4 (amended 2005), Financial Guarantee ContractsIFRIC 4, Determining whether an Arrangement contains a Lease ---------------------------------------------------------------------------------------------------- There have been no changes to the accounting policies as a result of adoption ofthe above amendments and interpretation. Following completion of the initial accounting in respect of the acquisition ofAstra and Rothschilds, the comparative figures for 2005 have been restatedprincipally to reflect revisions to the provisional fair value of franchiserights in Astra determined at the date of acquisition, and the consequentialchange in the surplus on revaluation attributable to the Group's previously heldinterest. 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 2006 2005 US$m US$m -------------------------- By business: Dairy Farm 5,175 4,749 Mandarin Oriental 405 399 Jardine Cycle & Carriage 1,119 1,087 Astra 6,143 2,590 Corporate and other interests 3 - ------- ------- 12,845 8,825 ------- ------- 3. Net Operating Costs 2006 2005 US$m US$m -------------------------- Cost of sales (9,672) (6,577) Other operating income 279 198 Selling and distribution costs (1,647) (1,288) Administration expenses (715) (529) Other operating expenses (143) (57) ------- ------- (11,898) (8,253) ------- ------- Net operating costs include the following gains from non-trading items: Increase in fair value of investment properties 7 - Sale and closure of businesses 81 49 Sale of investments - 21 Revaluation of properties - 1 Sale of property interests 10 2 Other - 15 ------- ------- 98 88 ------- ------- 4. Share of Results of Jardine Matheson 2006 2005 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 37 9 Sale and closure of businesses 20 32 Sale of investments 46 - Pension curtailment 7 - Buyout of minority interests in Jardine Lloyd Thompson - 10 Sale of property interests - 2 Restructuring of businesses (5) (1) Revaluation of properties and other - 1 ------- ------- 105 53 ------- ------- Results are shown after tax and minority interests. 5. Share of Results of Associates and Joint Ventures 2006 2005 US$m US$m -------------------------- By business: Hongkong Land 856 900 Dairy Farm 28 29 Mandarin Oriental 13 11 Jardine Cycle & Carriage 3 193 Astra 151 82 Corporate and other interests 26 1 ------- ------- 1,077 1,216 ------- ------- Share of results of associates and joint ventures included the following gains/(losses) from non-trading items: Increase in fair value of investment properties 751 813 Sale and closure of businesses (4) 5 Sale of investments 2 - Revaluation of properties - 4 Other (2) (4) ------- ------- 747 818 ------- ------- Results are shown after tax and minority interests. 6. Tax 2006 2005 US$m US$m -------------------------- Current tax - charge for the year (268) (126) - under provision in prior years - (19) Deferred tax 10 (9) ------- ------- (258) (154) ------- ------- Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates and includes United Kingdom tax of US$4 million (2005: US$1 million) 7. Profit attributable to shareholders 2006 2005 US$m US$m -------------------------- By business: Jardine Matheson 105 77 Hongkong Land 107 82 Dairy Farm 165 149 Mandarin Oriental 33 26 Jardine Cycle & Carriage 20 30 Astra 126 159 Corporate and other interests (30) (48) ------- ------- Underlying profit attributable to shareholders 526 475 Increase in fair value of investment properties 790 822 (note 9) Other non-trading items (note 9) 96 101 ------- ------- Profit attributable to shareholders 1,412 1,398 ------- ------- 8. Earnings Per Share Basic earnings per share are calculated on profit attributable to shareholders of US$1,412 million (2005: US$1,398 million) and on the weighted average number of 614 million (2005: 610 million) shares in issue during the year. Diluted earnings per share are calculated on profit attributable to shareholders of US$1,381 million (2005: US$1,394 million), which is after adjusting for the effects of the conversion of dilutive potential ordinary shares of Jardine Matheson, subsidiary undertakings, associates or joint ventures. Additional basic and diluted earnings per share are also calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below: 2006 2005 Basic Diluted Basic Diluted earnings earnings earnings earnings per per per per share share share share US$m US$ US$ US$m US$ US$ --------------------------------------------------------- Profit attributable to shareholders 1,412 2.30 2.25 1,398 2.29 2.28Non-trading items (note 9) (886) (923) ------ ------ Underlying profit attributable to shareholders 26 0.86 0.85 475 0.78 0.77 ------ ------ 9. Non-trading Items Non-trading items are separately identified to provide greater understanding of the Group's underlying business performance. Items classified as non-trading items include fair value gains or losses on revaluation of investment properties; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for the closure of businesses; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance. An analysis of non-trading items after interest, tax and minority interests is set out below: 2006 2005 US$m US$m ---------------------------- Increase in fair value of investment properties - Hongkong Land 751 813- Jardine Matheson 37 9- other 2 - 790 822Sale and closure of businesses - Appleyard Vehicle Contracts 21 -- EastPoint - 12- Pacific Finance - 12- The Mark 26 -- Kahala Mandarin Oriental - 27- motor operations 2 2- insurance broking (5) 1- other 2 9 46 63Sale of investments 48 21Pension curtailment 7 -Buyout of minority interests in Jardine Lloyd Thompson - 10Revaluation of properties - 4Sale of property interests 3 3Restructuring of businesses (5) (1)Other (3) 1 ------- ------- 886 923 ------- ------- 10. Non-current Assets Classified as Held for Sale The major classes of assets and liabilities classified as held for sale are set out below: 2006 2005 US$m US$m ----------------------------- Intangible assets - 7 Tangible assets - 71 Investment properties 2 24 Associates and joint ventures 14 34 Financing and other debtors 31 - Deferred tax assets - 1 Current assets* 9 525 ------- ------- Total assets 56 662 ------- ------- Long-term borrowings - 81 Deferred tax liabilities - 1 Other non-current liabilities - 2 Current liabilities - 112 ------- ------- Total liabilities - 196 ------- ------- Non-current assets held for sale at 31st December 2006 principally 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. Non-current assets held for sale at 31st December 2005 principally related to Mandarin Oriental's interest in The Mark, New York, and Jardine Cycle & Carriage's interest in MCL Land. *Carrying amount in 2005 included bank balances and other liquid funds of US$26 million. 11. Shareholders' Funds 2006 2005 US$m US$m -------------------------- At 1st January - as previously reported 5,886 4,269 - revision of fair value adjustments (27) - ------- ------- - as restated 5,859 4,269 Recognized income and expense attributable to shareholders 1,794 1,587 Dividends (note 12) (100) (93) Employee share option schemes - value of employee services 6 4 Scrip issued in lieu of dividends 147 135 Equity component of convertible bonds issued by an associate - 27 Change in attributable interests - 1 Increase in own shares held (79) (71) ------- ------- At 31st December 7,627 5,859 ------- ------- 12. Dividends 2006 2005 US$m US$m -------------------------- Final dividend in respect of 2005 of USc11.00 (2004: USc10.40) per share 116 109 Interim dividend in respect of 2006 of USc5.30 (2005: USc5.00) per share 57 52 ------- ------- 173 161 Less Company's share of dividends paid on the shares held by Jardine Matheson (73) (68) ------- ------- 100 93 ------- ------- A final dividend in respect of 2006 of USc11.70 (2005: USc11.00) per share amounting to a total of US$125 million (2005: US$116 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the Annual General Meeting. The net amount after deducting the Company's share of the dividends payable on the shares held by Jardine Matheson of US$53 million (2005: US$49 million) will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2007. 13. Long-Term Borrowings 2006 2005 US$m US$m -------------------------- Dairy Farm 436 388 Mandarin Oriental 601 480 Jardine Cycle & Carriage 242 329 Astra ---------- ---------- - non-finance companies 758 538 - finance companies 1,677 2,174 2,435 2,712 Corporate 741 704 ---------- ---------- Total borrowings 4,455 4,613 Less: Amount included in current liabilities (1,891) (1,755) ---------- ---------- 2,564 2,858 ---------- ---------- 14. Notes to Consolidated Cash Flow Statement 2006 2005(a) Purchase of other subsidiary undertakings US$m US$m ---------------------------- Intangible assets 6 27 Tangible assets 14 47 Deferred tax assets - 5 Current assets 15 99 Long-term borrowings (1) (9) Deferred tax liabilities (1) (8) Pension liabilities (1) (9) Current liabilities (9) (85) Minority interests - 13 ------ ------ Net assets 23 80 Adjustment for minority interests - (27) ------ ------ Net assets acquired 23 53 Goodwill 9 39 ------ ------ Total consideration 32 92 Adjustment for deferred consideration and carrying value of associates and joint ventures (7) (23) Adjustment to fair values relating to previously held interests - (4) Cash and cash equivalents of subsidiary undertakings acquired - (5) ------ ------ Net cash outflow 25 60 Purchase of shares in Jardine Cycle & Carriage 22 41 ------ ------ 47 101 ------ ------ Net cash outflow in 2006 of US$25 million included US$17 million for Dairy Farm's store acquisitions in Malaysia and Vietnam. Net cash outflow in 2005 of US$60 million included US$39 million for acquisition of an additional 32.3% interest in PT Hero Supermarket in Dairy Farm, and US$7 million for an additional 30% interest in Republic Auto and US$8 million for an additional 30% interest in Century Gardens in Jardine Cycle & Carriage. (b) Purchase of associates and joint ventures in 2006 included US$26 million, US$26 million, US$19 million and US$98 million for Astra's interest in Toyota Astra Financial Services, PT PAM Lyonnaise Jaya, Astra Daihatsu Motor and an additional 12.95% interest in Bank Permata respectively, and the Company's increased interest in Hongkong Land of US$289 million. Purchase of associates and joint ventures in 2005 included US$21 million for increased interest in Landmarks Land and Properties in Jardine Cycle & Carriage, US$15 million for Astra's interest in PT Marga, US$71 million for increased interest in Hongkong Land and US$187 million for a 20% interest in Rothschilds. (c) Purchase of other investments in 2006 included US$80 million for Astra's purchase of securities. 2006 2005(d) Sale of subsidiary undertakings US$m US$m ---------------------------- Intangible assets 12 - Tangible assets 92 - Investment properties 24 - Associates and joint ventures 34 - Financing and other debtors 1 - Deferred tax assets 1 - Current assets 616 105 Long-term borrowings (100) - Deferred tax liabilities (2) - Current liabilities (206) - -------- -------- Net assets 472 105 Adjustment for minority interests (262) - -------- -------- Net assets disposed of 210 105 Cumulative exchange translation differences (7) - Profit/(loss) on disposal 87 (1) -------- -------- Sale proceeds 290 104 Adjustment for carrying value of associates and joint ventures (14) - Adjustment for deferred consideration 1 (1) Cash and cash equivalents of subsidiary undertakings disposed of (50) - -------- -------- Net cash inflow 227 103 -------- -------- Sale proceeds in 2006 of US$290 million included US$99 million from Mandarin Oriental's sale of its interest in The Mark, New York, US$28 million from Astra's partial sale of its interest in Aisin and US$163 million from the Company's sale of its interest in MCL Land. Sale proceeds in 2005 of US$104 million included US$96 million from Dairy Farm's sale of its interest in Hartanah Progresif, a property-owning subsidiary undertaking. (e) Sale of associates and joint ventures in 2005 included US$97 million from sale of Kahala Mandarin Oriental in Mandarin Oriental. (f) Sale of other investments in 2006 included US$27 million from Astra's sale of securities. Sale of other investments in 2005 included US$36 million from sale of the Company's interest in EON Capital. 15. Jardine Strategic Corporate Cash Flow and Net Debt 2006 2005 US$m US$m ------------------------- Dividends receivable Subsidiary undertakings 134 367 Jardine Matheson 147 128 Associates 95 67 Other holdings 23 16 399 578 Less: taken in scrip (170) (147) ------- ------- 229 431 Other operating cash flows (68) (67) ------- ------- Cash flows from operating activities 161 364 Investing activities Purchase of subsidiary undertakings (22) (41) Purchase of associates (289) (258) Purchase of other investments (13) (4) Sale of subsidiary undertakings 163 2 Sale of other investments - 36 Cash flows from investing activities (161) (265) Financing activities Dividends paid by the Company (26) (26) Cash flows from financing activities (26) (26) Effect of exchange rate changes (11) 4 ------- ------- Net (increase)/decrease in net debt (37) 77 Net debt at 1st January (698) (775) ------- ------- Net debt at 31st December (735) (698) ------- ------- Represented by: Bank balances and other liquid funds 6 6 6.375% Guaranteed Bonds due 2011 (297) (296) Other long-term borrowings (444) (408) ------- ------- (735) (698) ------- ------- Corporate cash flow and net debt comprises the cash flows and net cash or debt of the Company and of its investment holding and financing subsidiary undertakings. 16. Capital Commitments, Financial Guarantees and Contingent Liabilities 2006 2005 US$m US$m --------------------------Capital commitments 191 307 -------- -------Financial guarantees in respect of facilities made available to associates and joint ventures 70 71 -------- ------- Financial guarantees in respect of facilities made available to associates andjoint ventures are stated at their total respective contracted amounts. It isprobable that the Group has no obligations under such guarantees. 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 Event In December 2006, Mandarin Oriental announced that it had entered into anagreement to sell half of its investment in Mandarin Oriental, New York reducingits interest in the hotel from 50% to 25%. The sale was completed in March 2007resulting in a profit after tax of approximately US$16 million. 18. Market Value Basis Net Assets 2006 2005 US$m US$m -------------------------- Jardine Matheson 949 733 Hongkong Land 4,212 3,089 Dairy Farm 3,568 3,800 Mandarin Oriental 1,201 604 Jardine Cycle & Carriage 2,102 1,399 Other holdings 693 437 Corporate (770) (558) ------- ------- 11,955 9,504 ------- ------- US$ US$ ------- ------- Net assets per share 19.38 15.50 ------- ------- 'Market value basis net assets' are calculated based on the market price of the Company's holding for listed companies, with the exception of the holding in Jardine Matheson which has been calculated by reference to the market value of US$7,004 million (2005: US$5,505 million) less the Company's share of the market value of Jardine Matheson's interest in the Company. For unlisted companies a Directors' valuation has been used. Net asset value per share is calculated on 'market value basis net assets' of US$11,955 million (2005: US$9,504 million) and on 617 million (2005: 613 million) shares outstanding at the year end which excludes the Company's share of the shares held by Jardine Matheson of 455 million (2005: 446 million) shares. The final dividend of USc11.70 per share will be payable on 16th May 2007,subject to approval at the Annual General Meeting to be held on 10th May 2007,to shareholders on the register of members at the close of business on 23rdMarch 2007, and will be available in cash with a scrip alternative. Theex-dividend date will be on 21st March 2007, and the share registers will beclosed from 26th to 30th March 2007, inclusive. Shareholders will receive theircash dividends in United States Dollars, unless they are registered on theJersey branch register where they will have the option to elect for Sterling.These shareholders may make new currency elections by notifying the UnitedKingdom transfer agent in writing by 27th April 2007. The Sterling equivalent ofdividends declared in United States Dollars will be calculated by reference to arate prevailing on 2nd May 2007. Shareholders holding their shares through TheCentral Depository (Pte) Limited ('CDP') in Singapore will receive United StatesDollars unless they elect, through CDP, to receive Singapore Dollars or thescrip alternative. For further information, please contact: Jardine Matheson LimitedJames Riley (852) 2843 8229 Matheson & Co., LimitedPhilip Hawkins (020) 7816 8136 GolinHarrisKennes Young (852) 2501 7987 Weber Shandwick FinancialRichard Hews/ Helen Thomas (020) 7067 0700 Full text of the Preliminary Announcement of Results and the PreliminaryFinancial Statements for the year ended 31st December 2006 can be accessedthrough the Internet at 'www.jardines.com'. This information is provided by RNS The company news service from the London Stock Exchange