JDS.L Regulatory News (JDS)

To: Business Editor 6th March 2014

For immediate release

The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.

Jardine Strategic Holdings Limited

2013 Preliminary Announcement of Results

Highlights

· Underlying earnings* up 3%

· Full-year dividend up 6%

· Hongkong Land, Mandarin Oriental and Jardine Motors perform well

· Solid rupiah result from Astra

· 20% interest acquired in leading China motor dealership group

"While the Group's businesses have generally started 2014 trading well, it is expected that the overall performance for the year will be affected by the continuation of last year's uneven market conditions, a reduced contribution from Hongkong Land's residential completions and a weaker average exchange rate for the Indonesian rupiah."

Sir Henry Keswick, Chairman

6th March 2014

Results

The final dividend of US¢18.00 per share will be payable on 14th May 2014, subject to approval at the Annual General Meeting to be held on 8th May 2014, to shareholders on the register of members at the close of business on 21st March 2014 and will be available in cash with a scrip alternative. The ex-dividend date will be on 19th March 2014, and the share registers will be closed from 24th to 28th March 2014, inclusive.

Jardine Strategic Holdings Limited

Preliminary Announcement of Results

For The Year Ended 31st December 2013

Overview

Good trading performances were achieved by a number of the Group's businesses during 2013. Overall earnings growth, however, was held back by a softer rupiah exchange rate and certain operations suffering in the face of difficult markets. In January of this year, the Company agreed to acquire a minority interest in Zhongsheng Group, which is one of mainland China's leading motor dealership groups, increasing significantly its investment in the country in a business sector that the Group knows well.

Performance

The Group's revenue for 2013, including 100% of revenue from Jardine Matheson, associates and joint ventures, was US$61.4 billion, compared with US$60.5 billion in 2012. The underlying profit before tax was US$4,431 million in 2013, a 3% decline from the prior year. Underlying profit attributable to shareholders was 3% higher at US$1,616 million, while underlying earnings per share were also up 3% at US$2.65.

Within Jardine Matheson's interests, Jardine Pacific's operations produced mixed results in more difficult trading conditions. Jardine Motors achieved a promising turnaround in its mainland China operation and improved results in the United Kingdom and Hong Kong. Jardine Lloyd Thompson's good profit growth benefited from organic growth, cost control and acquisitions.

Hongkong Land reported an excellent profit with strong contributions from both its commercial and its residential interests. Dairy Farm's sales were higher and its Hong Kong operations recorded good results, but it faced more challenging markets elsewhere. Most of Mandarin Oriental's hotels maintained their trading performances, while its reported result also benefited from gains arising from the acquisition of the freehold of its Paris property. The results from Jardine Cycle & Carriage's motor activities were mixed as most markets remained difficult. Astra achieved good rupiah results in its financial services, motorcycle and mining contracting operations, although this was countered by weaker results elsewhere.

The Group's profit attributable to shareholders of US$1,700 million included its US$135 million share of the increase in the valuation of investment properties, and compares with US$1,827 million in 2012 which included an increase of US$341 million in investment property values.

The Group continues to enjoy strong operating cash flows, ample committed facilities and access to the capital markets. This provides a sound financial base on which to support investment in developing its leading market positions. Total capital investment across the Group, including 100% of Jardine Matheson, associates and joint ventures, exceeded US$5.2 billion in 2013. The consolidated net debt at the end of 2013, excluding financial services companies, was US$2.3 billion, representing gearing of 5%, which compares to US$3.1 billion at the end of 2012 and gearing of 7%.

In the light of the Group's strong liquidity, the Board is recommending a final dividend of US¢18.00 per share, which represents an increase of 6% for the full year.

Business Developments

Within Jardine Matheson's directly held interests, Jardine Pacific's businesses produced a lower contribution reflecting some mixed underlying performances. Earnings from Hong Kong Air Cargo Terminals were reduced following the planned move of a major customer to its own dedicated facility. There were disappointing performances by the group's KFC business in Taiwan and by Jardine OneSolution, although good results were achieved by its engineering and construction operations. Jardine Motors produced an increased profit as its Mercedes-Benz sales activities in mainland China reversed their earnings decline, and its dealerships in the United Kingdom and Hong Kong traded well. JLT had another year of good organic growth, with encouraging results from Reinsurance, Asia, Latin America and Employee Benefits, culminating in the acquisition of Towers Watson's reinsurance broking business for US$250 million.

Hongkong Land reported an excellent result in 2013 with improved performances from both its commercial property interests and its residential developments. In Hong Kong, rent reversions remained positive for both its office and retail portfolios, while in Singapore it benefited from a full-year's contribution from Marina Bay Financial Centre and higher average rents. Hongkong Land's residential earnings reflected the completion of three projects in Singapore.  The group currently has commercial developments underway in Beijing, Jakarta and Phnom Penh, and is expanding its residential activities in the region with new ventures in mainland China, Indonesia and the Philippines.

Dairy Farm achieved sales growth across all its divisions, but its profit was held back by mixed performances within its Food businesses in Southeast Asia. The group made several operational changes during the year which are designed to lay the foundations for further growth. It has been reorganized by format into four divisions so as to allow greater focus on its offer to consumers, enable scale to be built more quickly, and improve its financial performance over the longer term. In parallel, Dairy Farm is investing significantly in its people, infrastructure and systems.

Most of Mandarin Oriental's hotels were able to maintain or enhance their competitive positions in 2013. The group's growth strategy was progressed during the year with the opening of hotels in Guangzhou and Shanghai, and the announcement of management contracts for hotels under development in Bali, Chongqing, Istanbul and Shenzhen. Meanwhile, five new hotels are scheduled to open over the next 18 months in Taipei, Bodrum, Marrakech, Beijing and Milan.

Jardine Cycle & Carriage's non-Astra motor operations continued to face difficult trading conditions in a number of markets in Southeast Asia, although there was a pleasing improvement in Truong Hai Auto Corporation in Vietnam. The group has expanded its motor operations with a new joint venture in Myanmar.

Astra maintained its profit performance in its reporting currency, with strong earnings in its financial services, motorcycle and coal mining contracting businesses more than compensating for declines elsewhere. Its contribution to the Group's results, however, was lower due to an 11% decline in the average rupiah exchange rate against the US dollar. Astra is pursuing a strategy of expansion into new areas where it believes that it can develop market-leading businesses by building on its existing expertise, customer base and reputation for quality. Initiatives included the launch of Low Cost Green Cars, the acquisition of a stake in a wheel rim manufacturer, the launch of a commercial and residential property development project in central Jakarta alongside Hongkong Land, and in January 2014 the announcement of a new life insurance joint venture with Aviva plc. 

In January 2014, the Company agreed to invest US$731 million for an interest in Hong Kong-listed Zhongsheng Group, which is one of mainland China's leading motor dealership groups. The investment represents an initial 11% equity interest together with convertible bonds, which entitles the Group's interest to increase to 20%. Zhongsheng represents a range of major international marques and operates over 170 outlets in some 60 cities across 15 provinces and regions.

Corporate Developments

The Company has announced its intention, subject to shareholder approval, to transfer the listing of its shares on the Main Market of the London Stock Exchange to the Standard listing category from the current Premium listing category. The Standard listing category represents the common listing standards across all European Union member states and complies fully with the relevant European Directives. A circular containing full details of the proposals, including the notice of a Special General Meeting, is being dispatched to shareholders.

People

David Hsu joined the Board on 6th January 2014.

Outlook

While the Group's businesses have generally started 2014 trading well, it is expected that the overall performance for the year will be affected by the continuation of last year's uneven market conditions, a reduced contribution from Hongkong Land's residential completions and a weaker average exchange rate for the Indonesian rupiah.

Sir Henry Keswick

Chairman

6th March 2014

Operating Review

Business Model

Jardine Strategic is a holding company within the Jardine Matheson Group which takes long-term strategic investments in multinational businesses and other high quality companies with existing or potential links to the Group. The Company's investments are focused principally on Greater China and Southeast Asia, although some of its operations have a more global reach. The Group companies are leaders in the fields of motor vehicles and related activities, property investment and development, retailing and restaurants, engineering and construction, transport services, luxury hotels, financial services, heavy equipment, mining and agribusiness.

The Group's representation in this broad mix of business sectors and the spread between cash generating activities and long-term property assets enables it to focus its investment in high growth markets while spreading the risk that might otherwise be associated with its geographic concentration. This strategy, combined with a strong balance sheet, is designed to achieve long-term growth in both earnings and net asset value.

Jardine Matheson

Jardine Matheson achieved an underlying profit before tax for the year of US$4,600 million, a decrease of 3%. Underlying profit attributable to shareholders was up 3% at US$1,502 million, while underlying earnings per share were 2% higher at US$4.09. Its profit attributable to shareholders was US$1,566 million, compared with US$1,671 million in 2012, reflecting a modest increase in investment property portfolio values.

· Jardine Pacific

Jardine Pacific's underlying profit of US$110 million was 24% lower than 2012 reflecting the mixed results within its businesses. The profit attributable to shareholders was US$112 million, compared with US$155 million in 2012. Shareholders' funds were US$703 million at the end of 2013, and the underlying return on average shareholders' funds was 17%. The group's engineering and construction businesses all performed well generating higher earnings, and Gammon's order book increased to US$4.5 billion. Hong Kong Air Cargo Terminals saw its earnings decline as a major customer undertook a planned move to its own dedicated facility, while the results of Jardine Shipping Services and Jardine Aviation Services improved slightly. Jardine Restaurants' Pizza Hut operations in Hong Kong and Taiwan produced higher sales and profits, but its KFC franchise in Taiwan reported a loss as a result of difficult trading conditions and an increased franchise fee. The group acquired the KFC franchise in Hong Kong during the year. Jardine OneSolution saw a decline in revenue and recorded a trading loss following an underperformance in all its markets.

· Jardine Motors

Jardine Motors recorded a much improved underlying profit result of US$59 million, compared with US$15 million in 2012. A breakeven result was achieved in mainland China, following a loss recorded in 2012, as its service operations produced higher income and losses arising on new car sales were reduced as margins improved slightly. Zung Fu produced a modest increase in profit in Hong Kong and Macau, with higher deliveries of Mercedes-Benz passenger cars and an increased contribution from Hyundai. The group's dealerships in the United Kingdom performed better with vehicle sales up and margins enhanced slightly, and the result included a US$3.6 million gain from the sale of dealerships.

· Jardine Lloyd Thompson

JLT's total revenue for the year was US$1,533 million, up 11% in its reporting currency. Underlying profit after tax and non-controlling interests was US$188 million, a reported increase of 13%. This result was achieved through continued investment, cost control and organic growth across the business with good performances from its Reinsurance, Asia, Latin America and Employee Benefits operations. JLT's contribution to Jardine Matheson's underlying profit was up 7% after adjusting for foreign exchange movements and costs associated with the relocation of its London head office. The Risk & Insurance group, comprising specialist insurance, wholesale and reinsurance broking businesses, achieved revenue growth of 7% all of which was organic and underlying trading profit also grew by 7%. In November, JLT acquired Towers Watson's reinsurance broking business, which significantly increased its reinsurance operation, particularly in North America. The Employee Benefits group delivered strong results with revenue growth of 25%, including organic growth of 14%, while underlying trading profit grew by 29%. 

Hongkong Land

Hongkong Land reported a record underlying profit attributable to shareholders of US$935 million, up 20%, with improved performances from both its commercial and residential activities. The profit attributable to shareholders of US$1,190 million included US$255 million of property valuation gains, and compares with US$1,438 million in 2012 which included valuation gains of US$662 million. The net asset value per share at 31st December 2013 was US$11.41, compared with US$11.11 at the end of 2012. The group remained financially robust with year-end net debt of US$3.0 billion and gearing of 11%.

In its commercial properties rental reversions remained largely positive in Hong Kong, despite demand for office space remaining subdued, while its retail portfolio was fully occupied. The contribution from Singapore rose due to the inclusion of a full year of results from the now complete Marina Bay Financial Centre and higher average rents. In mainland China, the development of a luxury retail complex on a prime site at Wangfujing in Beijing, which will incorporate a Mandarin Oriental hotel, is progressing.

Earnings from residential developments rose strongly following the completion in Singapore of two fully-sold projects by MCL Land and the one-third owned Marina Bay Suites which was some 90% pre-sold. In mainland China, sales completions continued in projects in Beijing and Chongqing, and sales of further units were also completed in Hong Kong and Macau. In Indonesia, construction began at a residential joint venture near central Jakarta, and planning is underway for a second project in the city in conjunction with Astra. In the Philippines, the final phase of a development of luxury apartments in central Manila is being progressed.

Dairy Farm

Dairy Farm's sales, including 100% of associates and joint ventures, rose 8% to US$12.4 billion in 2013. Underlying profit was up 8% at US$480 million. The profit attributable to shareholders was US$501 million, an increase of 12%, including a net non-trading gain of US$21 million arising mainly from a property disposal in Indonesia.

If the write-off of prior years' Malaysian supplier income is excluded from Dairy Farm's 2012 results, underlying earnings in 2013 were 4% lower. This was largely a reflection of the mixed performances within Dairy Farm's Food businesses. There was increased profitability in Hong Kong and mainland China, but lower earnings in Indonesia, Singapore and Malaysia due to increased competition, higher operating costs, a weaker economic environment and adverse currency movements. In Malaysia, steps are being taken to rebuild the fundamentals of the hypermarket and supermarket operations, which has shown some stabilization. In contrast to the Food division, there were record sales and profits from the group's Health & Beauty, Home Furnishings and Restaurants divisions.

A fifth IKEA store in Taiwan was opened in early September with encouraging initial results, and the construction of the first IKEA store in Indonesia is currently on track for opening by the end of the year. Across both the Food and Health & Beauty divisions significant work is underway to develop a stronger own-label offering. The group is also investing in the renovation of existing stores to enhance the shopping experience for its customers, while improvements are being made in its supply chain to obtain greater efficiencies and higher productivity.

Mandarin Oriental

Mandarin Oriental performed well with underlying profit up 35% to a record US$93 million. The underlying earnings benefited from a profit of US$7 million arising upon the acquisition in February of the freehold rights of the group's Paris hotel together with an increased contribution from the hotel itself. Profit attributable to shareholders was US$96 million in 2013, compared to US$71 million in the prior year.

The occupancy and average rates were maintained at the group's two wholly-owned hotels in Hong Kong, while the performance in Tokyo improved significantly. The trading performances of its other Asian hotels were resilient. In Europe, a continued strong performance in Munich more than offset subdued results in Geneva. London was marginally down following a record year in 2012, while in Paris the hotel stabilized further with improvements in occupancy and average rate. In America, increased demand led to an overall improved performance.

Mandarin Oriental opened luxury hotels in Guangzhou and Shanghai during the year, while it ceased to manage the Chiang Mai resort and the Grand Lapa in Macau. The group has announced management contracts for hotels under development in Bali, Chongqing, Istanbul and Shenzhen, and within the next 18 months, expects to open five new hotels in Taipei, Bodrum, Marrakech, Beijing and Milan. Mandarin Oriental now operates 26 hotels with a further 18 under development, and has six Residences at Mandarin Oriental connected to its properties with a further seven under development.

Jardine Cycle & Carriage

Jardine Cycle & Carriage's underlying profit declined by 12% to US$894 million in 2013. Profit attributable to shareholders was 7% lower at US$915 million after accounting for non-trading items. Astra's contribution to underlying profit at US$849 million was 13% lower than 2012, largely due to an 11% decline in the average rupiah exchange rate. The contribution from the group's other motor interests was little changed. 

Among the group's non-Astra motor businesses, its Singapore operations did well with only a marginal decline in earnings despite government measures to curb demand for vehicles. Intense competition led to a lower profit for Cycle & Carriage Bintang in Malaysia, although investment continued with the opening of a tenth Mercedes-Benz outlet. In Indonesia, Tunas Ridean's profits suffered lower margins and increased labour costs, although its finance operation did well. In Vietnam, the contribution from Truong Hai Auto Corporation increased significantly due to improved sales and margins, and lower interest costs. Jardine Cycle & Carriage has recently entered into a 60%-owned joint venture in Myanmar and has secured rights for the distribution and after-sales service of Mercedes-Benz, Mazda and Fuso vehicles.

Astra

Astra produced a net profit under Indonesian accounting standards that was little changed at Rp19.4 trillion, equivalent to US$1,838 million. Strong results from its financial services and mining contracting businesses were offset by a decline in earnings from its heavy equipment and palm oil subsidiaries. Its automotive activities delivered slightly improved results, as a decline in the contribution from its components business was countered by an improved result from its motorcycle operations.

While automotive demand remained favourable during 2013, increased competition from additional domestic capacity coupled with higher labour costs led to the earnings contribution from the car sector being little changed. Astra's automotive component businesses achieved higher sales volumes, but earnings fell 4% following rises in both material and labour costs. There was, however, an improved contribution from the motorcycle businesses, which saw its market share increasing from 58% to 61%.

Net income from the group's financial services businesses grew by 15% in 2013. Strong growth in Permata Bank and the automotive-focused Astra Credit Companies, Toyota Astra Financial Services and Federal International Finance, was partly offset by a decline in the group's heavy equipment-focused finance companies, Surya Artha Nusantara Finance and Komatsu Astra Finance.  Insurance company, Asuransi Astra Buana, recorded higher earnings.

United Tractors reported net income 16% lower as sales of Komatsu heavy equipment fell 32% following a decline in demand from the mining sector due to weaker coal prices. The coal mine contracting operations of subsidiary, Pamapersada Nusantara, benefited from increased mine site capacity and reported a 13% improvement in revenue. United Tractors' mining subsidiaries reported a decline in revenue of 34%, with coal sales 26% lower and average coal prices down 14%.

Astra Agro Lestari saw net income fall 25% despite an increase in sales. Average crude palm oil prices achieved were down 1%, and income also suffered from lower crop yield, higher labour costs and foreign exchange translation loss on US dollar borrowings.

Net income from infrastructure, logistics and other businesses increased by 10%, however, if items classified as non-trading are excluded, net income was down 19%. Its toll road saw increased traffic volume, while its TRAC car rental business experienced a 33% decline in net income due to higher depreciation and operating costs. Astra Graphia, which is active in the area of document information and communication technology solutions, reported net income up 22%.

Ben Keswick

Managing Director

6th March 2014