JDS.L Regulatory News (JDS)

12 Sep 2006 10:05

Jardine Strategic Hldgs Ld12 September 2006 To: Business Editor 12th September 2006 For immediate release The following announcement was today issued to the London Stock Exchange. Jardine Strategic Holdings LimitedInterim Results for the Six Months ended 30th June 2006 Highlights • Good contributions from Dairy Farm, Hongkong Land and Jardine Matheson • Astra affected by weak Indonesian motor markets • Renovation of Hong Kong hotel reduces Mandarin Oriental's result • Hongkong Land property portfolio value increases 10% • Net asset value per share+ up 6% to US$16.44 "Most of the Group's businesses are expected to continue to perform well in theremainder of the year. The recent easing of interest rates in Indonesia shouldprovide some stimulus to consumer markets, but it is still too early to predictthe extent of an improvement in Astra's motor and related finance operations." Henry Keswick, Chairman12th September 2006 Results (unaudited) Six months ended 30th June 2006 2005 US$m US$m Change %--------------------------------------------------------------------------------Underlying profit attributable to shareholders* 220 245 -10Profit attributable to shareholders 615 784 -22Shareholders' funds+ 6,723 5,860 +15-------------------------------------------------------------------------------- US$ US$ %--------------------------------------------------------------------------------Underlying earnings per share* 0.36 0.40 -10Earnings per share 1.00 1.29 -22Net asset value per share+ 16.44 15.50 +6-------------------------------------------------------------------------------- USc USc %--------------------------------------------------------------------------------Interim dividend per share 5.30 5.00 +6-------------------------------------------------------------------------------- * The basis of calculation is set out in note 7 to the condensed financial statements. + At 30th June 2006 and 31st December 2005, respectively. Net asset value per share is based on a market value basis, details of which are set out in note 14 to the condensed financial statements. The interim dividend of USc5.30 per share will be payable on 22nd November 2006to shareholders on the register of members at the close of business on 29thSeptember 2006 and will be available in cash with a scrip alternative. Theex-dividend date will be on 27th September 2006, and the share registers will beclosed from 2nd to 6th October 2006, inclusive. Jardine Strategic Holdings LimitedInterim Results for the Six Months ended 30th June 2006 Overview The majority of the Group's businesses performed well in the first half of theyear despite the more challenging business environment, but the Company'sresults were impacted by a reduced contribution from Astra. Results Consolidated revenue for the first six months of 2006 more than doubled to someUS$6.2 billion, primarily due to the consolidation of Astra, which became asubsidiary in the second half of 2005. The Company's underlying net profit forthe first half of 2006 was US$220 million, a decrease of 10% compared with theprevious year's first half. Underlying earnings per share for the first sixmonths also fell by 10% to US$0.36. The 2005 figures were, however, flattered bygains on mark to market foreign exchange hedging contracts, excluding whichunderlying earnings in the first half of 2006 were modestly higher. In accordance with International Financial Reporting Standards, the Company'sshare of any revaluations in Hongkong Land's investment property portfolio istaken through the profit and loss account. A 10% upward revaluation of theportfolio was recorded at the half year, compared with a 19% increase in the same period in 2005. Net asset value per share at 30th June 2006, calculated on a market value basis,was US$16.44, compared with US$15.50 at 31st December 2005. An increased interim dividend of USc5.30 per share has been declared. Business Performance Jardine Cycle & Carriage saw its results impacted by the economic slowdown inIndonesia, which had a severe effect on Astra's motor sales and related consumerfinance operations. The recent lowering of interest rates in Indonesia was apositive move, but it is too early to predict the extent of a recovery in consumerconfidence. Nevertheless, the medium-term outlook for Astra remainspromising. Jardine Cycle & Carriage's motor operations in Singapore areperforming well, but its dealership interests in Malaysia and Indonesia arefacing challenging markets. Hongkong Land produced an improved contribution due to rising net rental incomeand the acquisition of MCL Land. It is benefiting from rises in Hong Kong officerents and values, and its rental reversions are set to remain positive. Itslatest office building in Hong Kong's Central district, York House, will beready for occupancy in the fourth quarter, and its joint-venture commercialdevelopments in Singapore are progressing well. The acquisition of a 77%interest in MCL Land, a Singapore-listed residential property developer, wascompleted in February and income from its development projects will start tobenefit Hongkong Land's earnings fully in 2007. Elsewhere, the group is activewith residential development projects in mainland China, Hong Kong and Macau. Dairy Farm posted another good result with all its major operations performingwell. There was a further expansion of its South Asian operations where it ismaximizing the growth potential of the 'Giant' hypermarket format. Progress isalso being made with the remodelling of its formats in India, and opportunitiesare being pursued in Thailand, Vietnam and Brunei. In North Asia, its 7-Elevenchain in Guangdong Province continues to expand and has reached 250 outlets. TheIKEA business in Taiwan is incurring costs in its expansion programme as itopens further large stores. Dairy Farm's Hong Kong restaurant associate,Maxim's, did well to produce a good profit recovery. Mandarin Oriental benefited from healthy markets and contributions from newhotels, although its profit was lower due to the closure for renovation of itsmajor Hong Kong property. Its balance sheet was strengthened following thecompletion of the sale of The Mark hotel in New York. Mandarin Oriental'sdevelopment strategy remains on course with three new hotel management contractsannounced in the period, and the group now has 21 hotels in operation andanother ten under development. Within Jardine Matheson's directly held businesses, Jardine Pacific achievedstrong earnings growth with a marked improvement in profitability at Gammon. Thelonger-term future of HACTL, however, remains uncertain due to the continuingdiscussions on the future cargo handling capacity requirements at Hong Kong'sinternational airport. Jardine Motors also produced an excellent result in thefirst half as its Hong Kong operation benefited from good demand for the newMercedes-Benz S-Class, while the development of its dealerships in SouthernChina led to a significant improvement in profitability. In July, it sold itsjoint-venture vehicle contracts business in the United Kingdom. Jardine LloydThompson turned in a little changed performance in difficult conditions.Progress was made with the review of its operations and the strategicpositioning of its businesses. Some changes are already being made, includingthe agreed sale of most of its businesses in the United States, which should begin toproduce benefits in 2007 and 2008. The group has received approvalto commence activities as an insurance and reinsurance broker across mainlandChina in a 51%-owned joint venture. Rothschilds Continuation's investment banking operations took full advantage ofactive demand for their advice on mergers and acquisitions, enabling the groupto produce a satisfactory overall performance. Outlook In conclusion, the Chairman, Henry Keswick said, "Most of the Group's businessesare expected to continue to perform well in the remainder of the year. Therecent easing of interest rates in Indonesia should provide some stimulus toconsumer markets, but it is still too early to predict the extent of an improvement in Astra's motor and related finance operations." Operating Review Jardine Matheson Jardine Matheson's revenue for the first six months of 2006 was 71% higher atUS$7.9 billion, primarily due to the consolidation of Astra, which became asubsidiary in the second half of 2005. Underlying net profit was 2% lower atUS$228 million, while underlying earnings per share were 3% lower at US$0.65.The 2005 figures were, however, flattered by gains on mark to market foreignexchange hedging contracts, excluding which underlying net profit grew8%. Of the company's directly held interests: • Jardine Pacific Jardine Pacific's underlying profit for the first half increased by 24% to US$46 million, due largely to a marked improvement at Gammon. Excluding businesses sold in 2005, the increase would have been 38%. Gammon benefited from the receipt of claims income from contracts completed in prior periods as well as from good progress in its projects in Macau. Jardine OneSolution recorded an improved profit and there were good performances from Jardine Restaurants and Jardine Aviation Services. HACTL performed in line with last year as cargo throughput remained steady at Hong Kong's international airport, although its longer-term prospects remain uncertain due to the continuing discussions over proposed increases in cargo handling capacity at the airport. Jardine Pacific sold its minority shareholdings in BALtrans and River Trade Terminal during the period and its interest in a mid-stream cargo handling joint venture in August 2006. • Jardine Motors Group Jardine Motors' underlying net profit from continuing businesses for the six months rose 27% to US$28 million. In Hong Kong, Zung Fu benefited from the deliveries of new Mercedes-Benz models launched in 2005, and the performance of its Hyundai passenger car franchise was steady. A significant improvement in profitability was achieved in its Mercedes-Benz operations in Southern China. In the United Kingdom its dealerships produced increased earnings, although the net profit was lower as the prior year comparative had benefited from the release of property provisions. In July its vehicle leasing joint venture was sold at a profit of some US$35 million, which will be recognized in its full-year results. • Jardine Lloyd Thompson Jardine Lloyd Thompson's underlying profit before tax was largely unchanged at £47 million (US$84 million) as higher investment income compensated for the effect of lower trading profits. Risk & Insurance increased its turnover by 5%, but the trading margin fell due to declining premium rates and intense competition for market share. Most of the group's operations produced satisfactory performances, with strong showings from the specialist wholesale and Asian operations. In May, approval was received to commence business as an insurance and reinsurance broker across mainland China in a 51%-owned joint venture. Employee Benefits in the United Kingdom performed well with client retention remaining strong. Progress has also been made by management in a review of the operations and strategic positioning of the group's businesses, of which the full benefits should be achieved progressively over the next two years. Agreement has already been reached for the sale of most of the group's businesses in the United States, which is expected to complete by 31st October. Dairy Farm Dairy Farm achieved good results in most of its major markets in the first sixmonths in a trading environment that was generally favourable. Sales, includingassociates, increased by 8% to US$2.9 billion, while net profit rose 13% toUS$86 million. Most of Dairy Farm's businesses are continuing to trade well andthe prospects are positive for the remainder of the year. The South Asian businesses achieved good growth in sales and profit, up 16% and12% respectively, as Malaysia and Singapore performed well and Indonesiacontinued to improve. Dairy Farm now operates 44 Giant hypermarkets in theregion, and a further 14 are planned for the second half. In Malaysia,regulatory approvals received for additional hypermarket and health andbeauty outlets allow for further growth in that market, while 7-Eleven inSingapore is to operate convenience stores located at Shell petrol stations. Thegroup is making progress in India with the remodelling and expansion of itsoperations, while its fledgling health and beauty venture in Thailand openedseven new stores to finish the period with ten outlets. Opportunities are alsobeing pursued in Vietnam and Brunei. Sales in North Asia increased by 5%. There were good performances from itsoperations in Hong Kong, and its supermarkets in Taiwan produced an improvedresult. In Guangdong Province, 7-Eleven continued to expand and reached 250stores at the end of June. The group's South Korean associate, Olive Young,achieved satisfactory gains in like-for-like sales. IKEA increased its profit inHong Kong, but the result from Taiwan was held back by significant pre-openingexpenses for a new large store in Taipei. Dairy Farm's Hong Kong-basedrestaurant associate, Maxim's, enjoyed a strong profit increase as a recovery inits Chinese restaurants was complemented by good contributions from Starbucksand the newly-acquired Genki Sushi business. Hongkong Land Hongkong Land's underlying profit rose 11% to US$117 million in the first halfof 2006 as net rental income rose strongly on positive reversions. Residentialprofits from existing projects were lower on fewer completions, although thiswas more than compensated for by the first contribution from MCL Land. Theoverall result also reflected higher interest rates and increased debt levelsfollowing the investment in MCL Land. The value of the group's portfolioincreased by a further 10% during the period to US$10.8 billion, although thepace of growth is slowing. High levels of occupancy continued to underpin the commercial property market inHong Kong's Central district and although the rate of rental increase ismoderating Hongkong Land's rent reversions are set to remain strongly positive.At the end of June the vacancy in its office portfolio was below 5% and itsretail portfolio was fully let. The prospects are good for the letting of YorkHouse, due to complete in the fourth quarter. In Singapore, the group'sone-third owned development, One Raffles Quay, is now almost entirely committedprior to full completion in the fourth quarter. The neighbouring Business andFinancial Centre site, acquired by the same consortium, has received approval ofits masterplan and construction should begin later in the year. MCL Land made a useful profit contribution and has reported good progress inboth sales and site acquisitions. Construction of the third phase of the group's joint-venture residential development in Beijing is nearing completion, the profits from which will be recognizedwhen the units are handed over next year; work has also begun on the fourthphase. In Macau, Hongkong Land's joint-venture residential and commercialdevelopment has also begun construction, with completion projected for 2008/2009. Mandarin Oriental Market conditions remained favourable for Mandarin Oriental as room ratesbenefited from growing demand and limited new supply. Profit attributable toshareholders, excluding gains from disposals, was US$14 million in the firsthalf of 2006 compared with US$19 million in the same period in 2005. Thetemporary closure for renovation of Mandarin Oriental, Hong Kong, has affectedresults, although the impact was partly offset by growing contributions fromother properties. The completion of the sale of The Mark hotel in New York at aprofit of US$35 million enhanced the group's financial position. Revenues willcontinue to be affected by the Hong Kong renovation for the remainder of 2006,but overall market conditions are expected to remain good. The Excelsior, Hong Kong and the group's European properties benefited fromrising average rates and strong demand. The contribution from its associates andjoint ventures also increased with stronger performances in Macau, Bangkok andNew York, while its Singapore hotel also produced significantly improved resultsfollowing extensive renovations that were completed in the first half of 2005. Mandarin Oriental, Hong Kong is scheduled to reopen partially in late Septemberwith most of the public areas complete and the full complement of rooms becomingavailable in stages by the year end. A 99-room hotel in Prague will also beopened in September. A further three new management projects were announced byMandarin Oriental in the first half. A luxury resort on Hainan Island in Chinais scheduled to open in 2007, followed by properties in Barcelona and Dallas.Further opportunities are under consideration as Mandarin Oriental continues todevelop as one of the world's leading luxury hotel groups. Jardine Cycle & Carriage Jardine Cycle & Carriage's underlying profit after tax and minority interestsfor the period declined by 38% to US$96 million. Astra's results were impactedby weak consumer demand for motors and its contribution was 32% lower at US$99million. Earnings from the group's other motor operations at US$13 million were23% down due to a reduced profit in PT Tunas Ridean, its 37%-owned Indonesianassociate, and the absence of a contribution from Australia. The contributionfrom property also ceased following the distribution in specie in January 2006of the group's interest in MCL Land. Weak demand in Indonesia saw the market for motor cars decline by 49% and formotorcycles by 26%. Astra's market share for motor cars rose from 46% to 56%,supported by Toyota's strong range and the introduction of new models, but itsmarket share for motorcycles was slightly lower at 50%. Astra's related consumerfinance activities experienced a similar decline and have increased theirprovisions for doubtful debts. Within Astra's non-automotive activities, United Tractors' contract coal miningoperations performed well, increasing overburden removal by 32% and coalextraction by 23%, but sales of Komatsu heavy equipment fell 25% on lower demandfrom the mining sector. Net income from agribusiness grew 8% as Astra AgroLestari raised its crude palm oil sales by 23% and benefited from firmer prices.In infrastructure, the result from Astra's small investment in a toll road wassatisfactory. On 7th September 2006, Astra announced that in partnership withStandard Chartered Bank, each is investing a further US$97 million to acquireadditional shares in PT Bank Permata Tbk, thereby increasing their respectiveshareholdings from 31.6% to 44.5%. Jardine Cycle & Carriage's Malaysian motor operation, Cycle & Carriage Bintang,saw its sales impacted by the introduction of a new national automotive policythat caused considerable disruption to the market. PT Tunas Ridean also sufferedfrom weak demand and additional doubtful debt provisions. The Singapore motoroperations, however, performed well with good growth from Mitsubishi aspassenger car sales increased by 41%. Sales of Mercedes-Benz benefited from thelaunch of the new S-Class and rose 6%. Sales of Kia also rose 6%. The group hasbeen appointed as the distributor for Citroen in Singapore with effect from 1stOctober 2006. --------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Profit and Loss Account-------------------------------------------------------------------------------- Year (unaudited) ended Six months ended 31st 30th June December 2006 2005 2005 US$m US$m US$m ---------------------------------------Revenue (note 2) 6,220 3,018 8,825Cost of sales (4,669) (2,233) (6,577) ---------- ---------- ----------Gross profit 1,551 785 2,248Other operating income 188 120 239Selling and distribution costs (821) (540) (1,288)Administration expenses (364) (138) (529)Other operating expenses (64) (11) (57) ---------- ---------- ----------Operating profit (note 3) 490 216 613Financing charges (81) (24) (96)Share of results of Jardine Matheson (note 4) 55 52 130 Share of results of associates and joint ventures excluding change in fair value of investment properties 148 209 403Increase in fair value of investment properties 360 471 813 Share of results of associates and joint ventures (note 5) 508 680 1,216 ---------- ---------- ----------Profit before tax 972 924 1,863Tax (note 6) (140) (44) (154) ---------- ---------- ----------Profit for the period 832 880 1,709 ---------- ---------- ----------Attributable to:Shareholders of the Company 615 784 1,398Minority interests 217 96 311 ---------- ---------- ---------- 832 880 1,709 ---------- ---------- ---------- US$ US$ US$ ---------- ---------- ----------Earnings per share (note 7) - basic 1.00 1.29 2.29 - diluted 0.98 1.29 2.28 Underlying earnings per share (note 7) - basic 0.36 0.40 0.78 - diluted 0.36 0.40 0.77 ---------- ---------- ---------- -------------------------------------------------------------------------------- Jardine Strategic Holdings LimitedConsolidated Balance Sheet-------------------------------------------------------------------------------- (restated) (unaudited) At 31st At 30th June December 2006 2005 2005 US$m US$m US$m ------------------------------------AssetsIntangible assets 1,666 806 1,627Tangible assets 2,387 1,229 2,183Investment properties 27 36 27Plantations 413 - 383Investment in Jardine Matheson 792 627 728Associates and joint ventures 5,157 4,270 4,699Other investments 492 253 307Financing and other debtors 1,140 48 1,342Deferred tax assets 80 21 69Pension assets 74 69 75 ---------- ---------- ----------Non-current assets 12,228 7,359 11,440 ---------- ---------- ----------Properties for sale - 391 -Stocks and work in progress 1,146 529 1,212Trade, financing and other debtors 2,067 375 2,078Current tax assets 83 11 55 Bank balances and other liquid funds - non-finance companies 1,069 1,000 855 - finance companies 189 - 187 1,258 1,000 1,042 ---------- ---------- ---------- 4,554 2,306 4,387Non-current assets classified as held for sale (note 8) 2 110 662 ---------- ---------- ----------Current assets 4,556 2,416 5,049 ---------- ---------- ---------- Total assets 16,784 9,775 16,489 ---------- ---------- ---------- EquityShare capital 53 52 53Share premium and capital reserves 1,323 1,318 1,320Revenue and other reserves 6,377 4,542 5,462Own shares held (1,030) (953) (975) ---------- ---------- ----------Shareholders' funds (note 9) 6,723 4,959 5,860Minority interests 2,894 983 2,858 ---------- ---------- ----------Total equity 9,617 5,942 8,718 ---------- ---------- ----------LiabilitiesLong-term borrowings - non-finance companies 1,634 1,886 1,853 - finance companies 825 - 1,005 2,459 1,886 2,858Deferred tax liabilities 411 132 405Pension liabilities 56 8 41Non-current provisions 12 - 11Other non-current liabilities 148 14 144 ---------- ---------- ----------Non-current liabilities 3,086 2,040 3,459 ---------- ---------- ---------- Creditors and accruals 2,133 1,233 2,224 Current borrowings - non-finance companies 772 487 586 - finance companies 1,027 - 1,169 1,799 487 1,755Current tax liabilities 123 53 111Current provisions 25 19 26 ---------- ---------- ---------- 4,080 1,792 4,116Liabilities directly associated with non-current assets classified as held for sale (note 8) 1 1 196 ---------- ---------- ----------Current liabilities 4,081 1,793 4,312 ---------- ---------- ----------Total liabilities 7,167 3,833 7,771 ---------- ---------- ----------Total equity and liabilities 16,784 9,775 16,489 ---------- ---------- ---------- --------------------------------------------------------------------------------Jardine Strategic Holdings LimitedConsolidated Statement of Recognized Income and Expense-------------------------------------------------------------------------------- (restated) Year (unaudited) ended Six months ended 31st 30th June December 2006 2005 2005 US$m US$m US$m ---------------------------------Surpluses on revaluation of intangible assets - 2 458Surpluses on revaluation of properties - 2 69Gains/(losses) on revaluation of other investments 198 (13) 38Actuarial (losses)/gains on defined benefit pension plans (10) - 27Net exchange translation differences 221 (96) (79)Gains on cash flow hedges - 18 25Tax on items taken directly to equity 4 (1) (171) ---------- ---------- --------Net income/(expense) recognized directly in equity 413 (88) 367Transfer to profit and loss on disposal of other investments (4) (20) (20)Transfer to profit and loss on disposal of subsidiary undertakings, associates and joint ventures 1 (6) (6)Transfer to profit and loss in respect of cash flow hedges 2 3 -Profit for the period 832 880 1,709 ---------- ---------- --------Total recognized income and expense for the period 1,244 769 2,050 ---------- ---------- --------Attributable to:Shareholders of the Company 884 710 1,587Minority interests 360 59 463 ---------- ---------- -------- 1,244 769 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 Statement-------------------------------------------------------------------------------- Year (unaudited) ended Six months ended 31st 30th June December 2006 2005 2005 US$m US$m US$m -----------------------------------Operating activities Operating profit 490 216 613Interest income (33) (11) (41)Depreciation and amortization 181 69 223Other non-cash items 14 (68) 18Decrease/(increase) in working capital 241 (93) (353)Interest received 32 12 40Interest and other financing charges paid (83) (46) (120)Tax paid (174) (26) (161) ---------- ---------- -------- 668 53 219Dividends from associates and joint ventures 188 71 226 Cash flows from operating activities 856 124 445 Investing activities Purchase of subsidiary undertakings (note 11(a)) (23) (25) 219Purchase of associates and joint ventures (note 11(b)) (45) (133) (297)Purchase of other investments (5) (2) (7)Purchase of land use rights (4) - (12)Purchase of tangible assets (349) (72) (419)Purchase of investment properties - (8) (8)Purchase of plantations (8) - (6)Loans to associates, joint ventures and other - (13) (13)Sale of subsidiary undertakings (note 11 (c)) 272 - 103Sale of associates and joint ventures (note 11(d)) 1 108 109Sale of other investments (note 11(e)) - 36 39Sale of land use rights 8 - 33Sale of tangible assets 26 7 59Sale of investment properties - 45 50 Cash flows from investing activities (127) (57) (150) Financing activitiesCapital contribution from minority shareholders 11 4 3Drawdown of borrowings 1,662 1,471 3,287Repayment of borrowings (2,161) (1,092) (3,043)Dividends paid by the Company (18) (18) (26)Dividends paid to minority shareholders (57) (134) (172) Cash flows from financing activities (563) 231 49Effect of exchange rate changes 18 (4) (2) ---------- ---------- --------Net increase in cash and cash equivalents 184 294 342Cash and cash equivalents at beginning of period 1,044 702 702 ---------- ---------- --------Cash and cash equivalents at end of period 1,228 996 1,044 ---------- ---------- -------- --------------------------------------------------------------------------------Jardine Strategic Holdings LimitedNotes-------------------------------------------------------------------------------- 1. Accounting Policies and Basis of Preparation The financial information contained in this annoucement has been based on theunaudited interim condensed financial statements, which have been prepared inaccordance with IAS 34, Interim Financial Reporting. In 2006, the Group adopted the following amendments and interpretation toexisting standards which are relevant to its operations. IAS 39 (amended 2005) Cash Flow Hedge Accounting of Forecast Intragroup Transactions IAS 39 (amended 2005) The Fair Value Option IAS 39 and IFRS 4 (amended 2005) Financial Guarantee Contracts IFRIC 4 Determining whether an Arrangement contains a Lease There have been no changes to the accounting policies described in the 2005annual financial statements as a result of adoption of the above amendments andinterpretation. Following revision of the initial accounting in respect of the acquisition ofAstra in 2005, the consolidated balance sheet at 31st December 2005 and theconsolidated statement of recognized income and expense for the year ended 31stDecember 2005 have been restated to reflect adjustments to the provisional fairvalues of identifiable assets and liabilities determined at the date ofacquisition, and the consequential change in the surplus on revaluation ofintangible assets attributable to the Group's previously held interest in thatcompany. These adjustments have no impact on the consolidated profit and lossaccount. The Group's reportable segments are set out in note 2 and are described on pages5 to 8. 2. Revenue Six months ended 30th June 2006 2005 US$m US$m --------------------------By business:Dairy Farm 2,496 2,282Mandarin Oriental 183 193Jardine Cycle & Carriage 558 543Astra 2,980 -Other activities 3 - ------------- ---------- 6,220 3,018 ------------- ---------- 3. Operating Profit Six months ended 30th June 2006 2005 US$m US$m --------------------------By business:Dairy Farm 104 97Mandarin Oriental 97 82Jardine Cycle & Carriage 19 26Astra 286 - ------------- ---------- 506 205Corporate and other interests (16) 11 ------------- ---------- 490 216 ------------- ---------- 4. Share of Results of Jardine Matheson Six months ended 30th June 2006 2005 US$m US$m ---------------------------Share of results excluding change in fair value of investment properties 55 52 Increase in fair value of investment properties - - ---------- ---------- 55 52 ---------- ----------Results are shown after tax and minority interests. 5. Share of Results of Associates and Joint Ventures Six months ended 30th June 2006 2005 US$m US$m ---------------------------By business:Hongkong Land 46 46Dairy Farm 10 8Mandarin Oriental 6 2Jardine Cycle & Carriage 2 7Astra 70 146Corporate and other interests 14 - -------------- ---------- 148 209Increase in fair value of investment properties 360 471 -------------- ---------- 508 680 -------------- ----------Results are shown after tax and minority interests. Results of Astra for the six months ended 30th June 2006 represents Astra'sshare of the results of its joint ventures. The comparative figure for 2005represents Jardine Cycle & Carriage's share of the results of Astra when it wasan associate. 6. Tax Tax on profits has been calculated at rates of taxation prevailing in theterritories in which the Group operates and includes United Kingdom tax of US$1million (2005: nil). 7. Earnings Per Share Basic earnings per share are calculated on profit attributable to shareholdersof US$615 million (2005: US$784 million) and on the weighted average number of613 million (2005: 609 million) shares in issue during the period. The weightedaverage number excludes the Company's share of the shares held by JardineMatheson. Diluted earnings per share are calculated on profit attributable to shareholdersof US$598 million (2005: US$783 million), which is after adjusting for theeffects of the conversion of dilutive potential ordinary shares of JardineMatheson, subsidiary undertakings, associates or joint ventures. Additional basic and diluted earnings per share are also calculated based onunderlying earnings attributable to shareholders. A reconciliation of earningsis set out below: Six months ended 30th June 2006 2005 Basic Diluted Basic Diluted earnings earnings earnings earnings per per per per share share share share US$m US$ US$ US$m US$ US$-------------------------------------------------------------------------------------Underlying profit 220 0.36 0.36 245 0.40 0.40 Increase in fair value of investment properties 360 471 Other net gains 35 68 395 539 --- ---Profit attributable to shareholders 615 1.00 0.98 784 1.29 1.29 --- --- A fuller analysis of the adjustments made to the profit attributable toshareholders in arriving at the underlying profit is set out below: Six months ended 30th June 2006 2005 US$m US$m --------------------------Increase in fair value of investment properties in Hongkong Land 360 471Sale and closure of businesses - The Mark 26 -- Kahala Mandarin Oriental - 27- other 2 9 28 36Buyout of minority interests in Jardine Lloyd Thompson - 9Value added tax recovery in Jardine Motors Group - 1Fair value gain on options embedded in Jardine Matheson Guaranteed Bonds - 1Sale of investments 10 21Asset impairment (3) - --------- --------- 395 539 --------- --------- 8. Non-current Assets Classified as Held for Sale The major classes of assets and liabilities classified as held for sale are setout below: At 31st At 30th June December 2006 2005 2005 US$m US$m US$m -----------------------------Intangible assets - - 7Tangible assets 2 110 71Investment properties - - 24Associates and joint ventures - - 34Deferred tax assets - - 1Current assets - - 525 ---- ------ ------Total assets 2 110 662 ---- ------ ------Long-term borrowings - - 81Deferred tax liabilities 1 1 1Other non-current liabilities - - 2Current liabilities - - 112 ---- ------ ------Total liabilities 1 1 196 ---- ------ ------ The non-current assets classified as held for sale at 31st December 2005principally comprised Mandarin Oriental's interest in The Mark and Jardine Cycle& Carriage's interest in MCL Land. The Group's interest in The Mark was disposedof during the period, resulting in a gain of US$77 million, which was includedin other operating income. Jardine Cycle & Carriage's interest in MCL Land wasdistributed to its shareholders by way of a dividend in specie. The Companysubsequently disposed of its 40.9% interest in MCL Land that it received throughthe distribution to Hongkong Land for US$163 million, which approximates itscarrying amount. 9. Shareholders' Funds Six months ended 30th June 2006 2005 US$m US$m --------------------------At 1st January - as previously reported 5,886 4,269 - consequential change arising from adjustments to provisional fair values on acquisition of Astra (26) - ------ ------- - as restated 5,860 4,269Recognized income and expense attributable to shareholders 884 710Dividends (note 10) (67) (63)Employee share option schemes - value of employee services 2 1Scrip issued in lieu of dividends 98 91Change in attributable interests 1 -Increase in own shares held (55) (49) ------ -------At 30th June 6,723 4,959 ------ ------- 10. Dividends Six months ended 30th June 2006 2005 US$m US$m --------------------------Final dividend in respect of 2005 of USc11.00 (2004: USc10.40) per share 116 109Less Company's share of dividends paid on the shares held by Jardine Matheson (49) (46) ------ ------ 67 63 ------ ------ An interim dividend in respect of 2006 of USc5.30 (2005: USc5.00) per shareamounting to a total of US$57 million (2005: US$52 million) is declared by theBoard. The net amount after deducting the Company's share of the dividendspayable on the shares held by Jardine Matheson of US$24 million (2005: US$22million) will be accounted for as an appropriation of revenue reserves in theyear ending 31st December 2006. 11. Notes to Consolidated Cash Flow Statement Six months ended 30th June 2006 2005(a) Purchase of subsidiary undertakings US$m US$m -------------------------- Intangible assets - 8 Tangible assets 3 71 Current assets 11 84 Long-term borrowings (1) (9) Deferred tax liabilities - (15) Pension liabilities (1) - Other non-current liabilities - (9) Current liabilities (9) (70) Minority interests (2) - ------ ------ Fair value of net assets 1 60 Adjustment for minority interests 3 (25) ------ ------ Fair value of net assets acquired 4 35 Goodwill 1 10 ------ ------ Total consideration 5 45 Adjustment for carrying value of associates and joint ventures (2) (26) Cash and cash equivalents of subsidiary undertakings acquired - 1 ------ ------ Net cash outflow 3 20 Purchase of shares in Jardine Cycle & Carriage 20 5 ------ ------ 23 25 ------ ------ Net cash outflow in 2005 of US$20 million included US$13 million for DairyFarm's acquisition of an additional 20.4% interest in PT Hero Supermarket. (b) Purchase of associates and joint ventures for the six months ended 30th June 2006 included US$26 million for Astra's interest in Toyota Astra Financial Services and the Company's increased interest in Hongkong Land of US$13 million. Purchase of associates and joint ventures for the six months ended 30th June 2005 included Jardine Cycle & Carriage's increased interest in Astra of US$124 million and the Company's increased interest in Hongkong Land of US$9 million. Six months ended 30th June 2006 2005(c) Sale of subsidiary undertakings US$m US$m -------------------------- Intangible assets 12 - Tangible assets 92 - Investment properties 24 - Associates and joint ventures 35 - Deferred tax assets 1 - Current assets 615 - Long-term borrowings (100) - Deferred tax liabilities (1) - Current liabilities (163) - -------- ------- Net assets 515 - Adjustment for minority interests (261) - -------- ------- Net assets disposed of 254 - Cumulative exchange translation differences (3) - Profit on disposal 83 - Adjustment for carrying value of associates and joint ventures (13) - -------- ------- Sale proceeds 321 - Closure and related costs (1) - Cash and cash equivalents of subsidiary undertakings disposed of (48) - -------- ------- Net cash inflow 272 - -------- ------- Sale proceeds in 2006 of US$321 million included US$143 million from MandarinOriental's sale of its interest in The Mark, New York, US$13 million fromAstra's partial sale of its interest in Aisin and US$163 million from the saleof the Company's interest in MCL Land. (d) Sale of associates and joint ventures for the six months ended 30th June 2005 included US$97 million from Mandarin Oriental's sale of its interest in Kahala Mandarin Oriental. (e) Sale of other investments for the six months ended 30th June 2005 included US$36 million from the sale of the Company's interest in EON Capital. 12. Capital Commitments and Contingent Liabilities At 31st At 30th June December 2006 2005 2005 US$m US$m US$m -------------------------Capital commitments 311 209 307 ---- ---- ----Contingent liabilitiesGuarantees in respect of facilities made available to associates and joint ventures 71 78 71 ---- ---- ---- 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. 13. Jardine Strategic Corporate Cash Flow and Net Debt Six months ended 30th June 2006 2005 US$m US$m --------------------------Dividends receivable 255 485Less taken in scrip (116) (98) -------- ------- 139 387Other operating cash flows (37) (32) -------- -------Cash flows from operating activities 102 355Cash flows from investing activities 126 22Dividends paid by the Company (18) (18)Effect of exchange rate changes (8) 7 -------- -------Net decrease in net debt 202 366Net debt at beginning of period (699) (775) -------- -------Net debt at end of period (497) (409) -------- -------Represented by:Bank balances and other liquid funds 41 3046.375% Guaranteed Bonds due 2011 (297) (296)Other long-term borrowings (241) (417) -------- ------- (497) (409) -------- ------- 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. 14. Market Value Basis Net Assets At 30th At 31st June December 2006 2005 US$m US$m -----------------------Jardine Matheson 851 733Hongkong Land 3,612 3,089Dairy Farm 3,296 3,800Mandarin Oriental 828 604Jardine Cycle & Carriage 1,339 1,399Other holdings 663 437Jardine Strategic Corporate (481) (558) ------- ------- 10,108 9,504 ------- -------Net asset value per share (US$) 16.44 15.50 ------- ------- '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$5,740 million (2005: US$5,505 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$10,108 million (2005: US$9,504 million) and on 615 million (2005: 613million) shares outstanding at the period end which excludes the Company's shareof the shares held by Jardine Matheson of 453 million (2005: 446 million)shares. The interim dividend of USc5.30 per share will be payable on 22nd November 2006to shareholders on the register of members at the close of business on 29thSeptember 2006, and will be available in cash with a scrip alternative. Theex-dividend date will be on 27th September 2006, and the share registers will beclosed from 2nd to 6th October 2006, 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 3rd November 2006. The Sterling equivalentof dividends declared in United States Dollars will be calculated by referenceto a rate prevailing on 8th November 2006. Shareholders holding their sharesthrough The Central Depository (Pte) Limited ('CDP') in Singapore will receiveUnited States Dollars unless they elect, through CDP, to receive SingaporeDollars or the scrip alternative. - end - For further information, please contact: Jardine Matheson LimitedJames Riley (852) 2843 8229 Matheson & Co LimitedMartin Henderson (44) 20 7816 8135 GolinHarrisKennes Young (852) 2501 7987 Weber Shandwick Square MileRichard Hews/Helen Thomas (44) 20 7 067 0700 This and other Group announcements can be accessed through the Internet at'www.jardines.com'. This information is provided by RNS The company news service from the London Stock Exchange