JDS.L Regulatory News (JDS)

15 Aug 2007 10:05

Jardine Strategic Hldgs Ld15 August 2007 To: Business Editor 15th August 2007 For immediate release The following announcement was issued today to a Regulatory Information Serviceapproved by the Financial Services Authority in the United Kingdom. Jardine Strategic Holdings LimitedInterim Results for the Six Months ended 30th June 2007 Highlights • Strong increase in underlying earnings per share* • Good profit growth across the Group • Hongkong Land property portfolio value up 10% • Net asset value per share+ up 27% to US$24.69 "The exceptional rate of increase in profits for the first half of 2007 waspartly due to comparison with a relatively weak first half in 2006. While thepace of growth over the full year will inevitably slow, the Group's businessesshould continue to perform well if the current benign environment persists." Henry Keswick, Chairman15th August 2007 Results _________________________________________________________________________ (unaudited) Six months ended 30th June 2007 US$m 2006 US$m Change %_________________________________________________________________________Underlying profit attributable to shareholders* 315 220 +43 Profit attributable to shareholders 883 615 +44Shareholders' funds+ 8,566 7,627 +12_________________________________________________________________________ US$ US$ %_________________________________________________________________________Underlying earnings per share* 0.51 0.36 +42Earnings per share 1.43 1.00 +43Net asset value per share+ 24.69 19.38 +27_________________________________________________________________________ USc USc %_________________________________________________________________________Interim dividend per share 5.60 5.30 +6_________________________________________________________________________ * The Group uses 'underlying business performance' in its internal financial reporting to distinguish between the underlying profits and non-trading items, as more fully described in note 9 to the condensed financial statements. Management considers this to be a key measure and has provided this analysis as additional information in order to providegreater understanding of the Group's underlying business performance. + At 30th June 2007 and 31st December 2006, respectively. Net asset value per share is calculated on a market value basis, details of which are set out in note 15 to the condensed financial statements. _________________________________________________________________________ The interim dividend of USc5.60 per share will be payable on 24th October 2007to shareholders on the register of members at the close of business on 31stAugust 2007 and will be available in cash with a scrip alternative. Theex-dividend date will be on 29th August 2007, and the share registers will beclosed from 3rd to 7th September 2007, inclusive. Jardine Strategic Holdings LimitedInterim Results for the Six Months ended 30th June 2007 Overview The Company's businesses produced good results in the first half of 2007 as apositive economic environment persisted in most of their major markets. Results The Company's underlying profit attributable to shareholders for the first halfof 2007 was US$315 million, an increase of 43% compared with the previous year'sfirst half. Underlying earnings per share for the first six months rose by 42%to US$0.51. Non-trading items include a net gain of US$495 million arising from a furtherincrease in Hongkong Land's investment property values during the period,compared with a US$360 million gain in 2006. This has been taken through theprofit and loss account. Non-trading items also include profits arising on thesale of part of the Company's shareholding in Butterfield Bank, the disposal byMandarin Oriental of half of its 50% interest in its New York property, and therestructuring of Jardine Lloyd Thompson's interest in its French associate.After non-trading items, the Company's profit attributable to shareholders wasUS$883 million. Net asset value per share at 30th June 2007, calculated on a market value basis,was US$24.69, an increase of 27% from 31st December 2006. An increased interim dividend of USc5.60 per share has been declared. Business Performance Robust commercial property markets in Hong Kong and Singapore enabled HongkongLand to achieve a significant increase in both earnings and capital values.Construction is under way at the group's latest joint venture development inSingapore, Marina Bay Financial Centre, which is scheduled for phased completionfrom 2010. Hongkong Land's residential developments in Hong Kong, Macau,mainland China and Singapore are progressing on target, while its Singaporesubsidiary, MCL Land, experienced strong demand on the launch of three newresidential projects. Jardine Cycle & Carriage's earnings were sharply higher as the recovery inIndonesia boosted Astra's results. Astra's motor vehicle sales rosesignificantly, although motorcycle sales showed only marginal growth in the faceof keen competition. Its financial services businesses and palm oil operationsare performing well, and United Tractors achieved profit growth despite its coalmining activities experiencing a poor start to the year. Jardine Cycle &Carriage's directly held motor dealership interests also reported an increasedcontribution. Dairy Farm posted another good result with all its major retail formatsperforming well. The group has continued to build scale in its major marketsacross Asia with further store openings; the group now operates 57 hypermarketsin Southeast Asia. The expansion of its 7-Eleven chain in Southern Chinagathered pace in June with the acquisition and re-branding of a conveniencestore chain in Guangdong. Dairy Farm is now established in Vietnam, with itsfirst four stores laying the foundation for a more substantial business, whilein India its supermarket and health & beauty joint ventures continue to makeprogress. The company has announced plans for a special dividend, which itsstrong cash position will enable it to pay without impairing its developmentprogramme. Within Jardine Matheson's directly held interests, most of Jardine Pacific'sbusinesses produced improved profit performances in the first half. HACTL's medium-term prospects, however, remain uncertain due to the additional capacitythat will be coming available at Hong Kong's airport in 2011. Jardine Motorsachieved increased earnings from its Asian operations and UK dealerships, butits results for the full year are unlikely to reach those achieved in 2006 asthey will not enjoy favourable pension adjustments or the same level of propertygains. Jardine Lloyd Thompson reported improved earnings from continuingoperations primarily due to firm cost control despite facing continued downwardpressure on insurance rates and further weakness in the US dollar. Mandarin Oriental's excellent results were due to higher average room rates inits key markets together with a full contribution from its freshly-renovatedflagship hotel in Hong Kong. The strength of its brand continues to attractinterest from owners and developers, and the group now has 16 hotels underdevelopment following the announcement of five new projects during the firsthalf of the year. These include a 241-room hotel in the headquarters of ChinaCentral Television in Beijing and a 150-room property in central Paris. There was an enhanced contribution from the Company's stake in RothschildsContinuation Holdings as its investment banking business produced recordrevenues in a positive business environment. The group has recently announced areorganization of its shareholding interests to consolidate its French bankingactivities within the same holding structure as N.M. Rothschild & Sons underRothschilds Continuation Holdings. Outlook In conclusion, the Chairman, Henry Keswick said, "The exceptional rate ofincrease in profits for the first half of 2007 was partly due to comparison witha relatively weak first half in 2006. While the pace of growth over the fullyear will inevitably slow, the Group's businesses should continue to performwell if the current benign environment persists." Operating Review Jardine Matheson Jardine Matheson's underlying profit for the first six months of 2007 was US$320million, up 41% over the same period in 2006. Underlying earnings per share were38% higher at US$0.90. Of the company's directly held interests: • Jardine Pacific Jardine Pacific's underlying profit from continuing businesses for the period was 16% higher at US$53 million with further strong performances from Jardine Restaurants and Gammon. There was a lower contribution from its aviation and shipping operations, with HACTL's result little changed following only a modest increase in cargo throughput. Gammon continued to perform well in Hong Kong and Macau, while Jardine Schindler and JEC increased their contributions. Jardine Restaurants achieved significant earnings growth from its Pizza Hut operation in Hong Kong, and Jardine OneSolution achieved higher profits following a 12% increase in sales. The group's interest in Colliers Halifax, a property services joint venture in Japan, was sold to Hongkong Land in early June. Jardine Pacific's businesses should produce steady performances in the second half of the year. • Jardine Motors Group Jardine Motors' underlying profit from continuing businesses for the first half of 2007 was US$34 million, up 21%. Zung Fu's new Mercedes-Benz car deliveries remained strong in Hong Kong, although below the level achieved in the same period last year following the successful launch of the new S-Class. The performance of the Mercedes-Benz dealership in Macau improved, while the dealerships in Southern China continued their profitable growth. The United Kingdom businesses benefited from a satisfactory new car market, the acquisition of a dealership group and gains arising from disposals. Jardine Motors is not expected to achieve the same level of earnings in 2007 as in 2006, when the group benefited from one-off pension and property gains. • Jardine Lloyd Thompson Jardine Lloyd Thompson's turnover for its continuing operations, following disposals in the United States, was marginally ahead for the period at US$484 million. The results of the actions to raise efficiency taken by management are beginning to be seen. Underlying trading margin improved to 17% from 15%, and underlying trading profit from continuing operations was up 10% at US$80 million. The Risk & Insurance group produced a modest growth in turnover, notwithstanding continued pressure on rates, intense competition and further weakness in the US dollar, while the Employee Benefits business in the United Kingdom made steady progress. The continuing deterioration in insurance markets and the dollar-sterling exchange rate will, however, restrict profit growth for the full year. Hongkong Land Continued strength in the commercial property markets in Hong Kong and Singaporeand lower financing charges enabled Hongkong Land to increase underlying profitby 32% to US$155 million. A 10% improvement in capital values was recorded overthe period. Competition for prime Central district office space in Hong Kong continues,driven primarily by the financial services sector and underpinned by tightsupply. Vacancy in Hongkong Land's office portfolio at the end of June was 3%.The group's retail portfolio is also benefiting from high demand and is fullyleased. The strength of the financial services sector in Singapore is also behind thedemand for high quality office space. The recently completed One Raffles Quay,developed by a consortium in which Hongkong Land holds a one-third interest, hasestablished itself as the leading office building in Singapore's prime businessdistrict. The same consortium has now begun construction of the larger MarinaBay Financial Centre. Hongkong Land has a number of residential projects under development in HongKong, Macau, mainland China and Singapore, which will contribute to its resultsupon their completion over the next few years. Singapore subsidiary, MCL Land,had an active first half in which it successfully launched three residentialprojects and secured three additional development sites. The level of its profitrecognition on developments in 2007 will depend on whether a 421-unit projectcompletes before the year end or in early 2008. The outlook for Hongkong Land for the remainder of the year is encouraging as itwill continue to benefit from positive rental reversions in its key markets. Dairy Farm Dairy Farm performed well in the first half of 2007 as it benefited fromfavourable trading environments in its major markets. Sales, including those ofassociates, increased by 11% to US$3.2 billion, and underlying profit for theperiod was 17% higher at US$101 million. Dairy Farm's North Asian businesses performed well with improved results fromretail banners in Hong Kong and Macau. In Taiwan, its supermarket operationtraded in line with last year in a highly competitive market, but IKEA's resultsremain below expectations. The group now operates over 400 7-Eleven outlets inSouthern China following the acquisition and re-branding of a convenience storechain in Guangdong. Hong Kong restaurant associate, Maxim's, enjoyed good growthas its fast food operations continued to recover. Sales and profit in East Asia grew following another good performance from Malaysia, where there was further expansion in all formats, particularly in East Malaysia. Earnings in Indonesia, however, remained unsatisfactory and management changes were made to address the issues. The group has entered the Vietnamese market with the acquisition of four supermarkets. In South Asia sales rose 16%, but operating profit was only marginally higher asthe contribution from Singapore was affected by expenses incurred in therelocation of its head office and distribution centre, and costs in establishingtwo new Giant hypermarkets. The group's supermarket and health and beauty jointventures in India added 14 outlets, while the remodelling of older stores isprogressing. In Thailand, 13 health and beauty stores are now being operated inGreater Bangkok. Dairy Farm's retail businesses continue to enjoy leading positions in theirmarket sectors, and the prospects for the remainder of the year are positive. Mandarin Oriental Conditions in Mandarin Oriental's key markets remained strong in the first halfof 2007. Increases in average room rates together with a full contribution fromthe newly-renovated Mandarin Oriental, Hong Kong enabled the group to achieve asignificant improvement in earnings. Underlying profit rose 150% to US$34million. The net result benefited from a US$16 million gain arising on the saleof half of its 50% equity interest in Mandarin Oriental, New York. Mandarin Oriental, Hong Kong achieved a higher average room rate following itsrefurbishment, and The Excelsior, Hong Kong also produced good growth in roomrate. The contribution from hotels in London and Geneva was higher due to thestrengthening of occupancy and room rates, while in the United States, itsWashington D.C. property continued to improve. Despite the reduced investment inits New York property, contribution from associates and joint ventures alsoincreased. Excellent progress was made in Mandarin Oriental's expansion programme with theannouncement of five projects during the first half of 2007. The group now has16 hotels under development and, with the exception of Paris, these will bemanagement contracts requiring little or no investment from the group. Eightwill also incorporate a 'residences' component. Mandarin Oriental has some 9,800rooms in operation or planned, and its geographic spread has increasedsignificantly with more than half of its portfolio outside of Asia. Mandarin Oriental is expected to continue to experience favourable conditionsduring the remainder of the year. Jardine Cycle & Carriage Jardine Cycle & Carriage achieved a good level of profit growth in the firsthalf of 2007 as the businesses of its 50.1%-held subsidiary, Astra, benefitedfrom the continued strengthening of the Indonesian economy. Underlying profitfor the six months increased by 56% to US$152 million. Astra's contribution was 46% higher at US$147 million, enhanced in part by astronger Rupiah. Improved earnings were achieved in its automotive, financialservices, palm oil and heavy equipment activities. The contribution to Jardine Cycle & Carriage from its directly held motoroperations rose 43% to US$19 million. In Singapore, its operations produced agood result, supported by strong demand for Mercedes-Benz passenger cars.Indonesian associate, Tunas Ridean, performed well in line with the strongmarket, but Cycle & Carriage Bintang continued to struggle as trading conditionsin the Malaysian automotive sector remained difficult. The encouraging performances in most of Jardine Cycle & Carriage's keybusinesses are expected to continue for the remainder of the year, although themotorcycle sector in Indonesia will remain challenging for Astra. Astra International Astra performed well as the Indonesian automotive market continued to recover,particularly in the motor vehicle sector which has seen a greater decline in2006 than motorcycles. The wholesale motor vehicle market grew by 32% to 197,300units in the first six months of the year. Astra's motor vehicle sales alsoincreased, but at the lower rate of 25% to 104,300 units. This led to its marketshare reducing from 56% to 53%. Sales in the wholesale motorcycle market inIndonesia rose 17% during the same period, reaching 2.1 million units. In theface of keen competition, however, Astra's wholesale motorcycle sales were onlymarginally higher at 923,400 units and its market share fell from 50% to 44%. Astra's financial services activities benefited from the growth in theautomotive market, while Bank Permata performed well due to the higher netinterest margins achieved. Astra Agro Lestari's earnings were strongly aheadfollowing a 56% increase in crude palm oil prices, which more than offset theeffects of a 12% decline in production. United Tractors produced a modest growthin earnings as a 57% increase in unit sales of Komatsu equipment compensated fora lower contribution from its coal mining subsidiary, Pamapersada Nusantara,resulting from adverse weather conditions and operational interruptions. __________________________________________________________________________________ Jardine Strategic Holdings Limited Consolidated Profit and Loss Account __________________________________________________________________________________ (unaudited) Six months ended 30th June Year ended 31st December 2007 2006 2006 Underlying Non- Underlying Non- Underlying Non- business trading business trading business trading performance items Total performance items Total performance items Total US$m US$m US$m US$m US$m US$m US$m US$m US$m_______________________________________________________________________________________________________________________ Revenue (note 2) 7,174 - 7,174 6,220 - 6,220 12,845 - 12,845Net operating costs (note 3) (6,612) 77 (6,535) (5,850) 87 (5,763) (11,996) 98 (11,898) _____ _____ _____ _____ _____ _____ _____ _____ _____ Operating profit (note 4) 562 77 639 370 87 457 849 98 947 _____ _____ _____ _____ _____ _____ _____ _____ _____ Financing charges (95) - (95) (81) - (81) (176) - (176)Financing income 38 - 38 33 - 33 70 - 70 _____ _____ _____ _____ _____ _____ _____ _____ _____ Net financing charges (57) - (57) (48) - (48) (106) - (106)Share of results of Jardine Matheson (note 5) 63 16 79 48 7 55 105 105 210Share of results of associates and joint ventures (note 6) 198 492 690 148 360 508 330 747 1,077 _____ _____ _____ _____ _____ _____ _____ _____ _____ Profit before tax 766 585 1,351 518 454 972 1,178 950 2,128Tax (note 7) (155) (9) (164) (94) (46) (140) (214) (44) (258) _____ _____ _____ _____ _____ _____ _____ _____ _____ Profit after tax 611 576 1,187 424 408 832 964 906 1,870 _____ _____ _____ _____ _____ _____ _____ _____ _____ Attributable to:Shareholders of the Company 315 568 883 220 395 615 526 886 1,412Minority interests 296 8 304 204 13 217 438 20 458 _____ _____ _____ _____ _____ _____ _____ _____ _____ 611 576 1,187 424 408 832 964 906 1,870 _____ _____ _____ _____ _____ _____ _____ _____ _____ US$ US$ US$ US$ US$ US$_______________________________________________________________________________________________________________________ Earnings per share (note 8) - basic 0.51 1.43 0.36 1.00 0.86 2.30- diluted 0.51 1.40 0.36 0.98 0.85 2.25 _____ _____ _____ _____ _____ _____ ____________________________________________________________________________________Jardine Strategic Holdings Limited Consolidated Balance Sheet ____________________________________________________________________________________ (unaudited) At 31st At 30th June December Restated 2007 2006 2006 US$m US$m US$m ____________________________________________ Assets Intangible assets 1,775 1,666 1,741 Tangible assets 2,743 2,387 2,697 Investment properties 29 27 33 Plantations 474 413 460 Investment in Jardine Matheson 951 792 946 Associates and joint ventures 6,792 5,156 6,135 Other investments 642 492 577 Non-current debtors 878 1,140 1,051 Deferred tax assets 93 80 95 Pension assets 87 74 89 _______ _______ _______ Non-current assets 14,464 12,227 13,824 _______ _______ _______ Stocks and work in progress 1,122 1,146 1,138 Current debtors 2,106 2,067 1,910 Current investments 13 - 3 Current tax assets 138 83 140 Bank balances and other liquid funds _______ _______ _______ - non-financial services companies 1,358 1,069 1,145 - financial services companies 233 189 173 _______ _______ _______ 1,591 1,258 1,318 _______ _______ _______ 4,970 4,554 4,509 Non-current assets classified as held for sale (note 10) 7 2 56 _______ _______ _______ Current assets 4,977 4,556 4,565 _______ _______ _______ _______ _______ _______ Total assets 19,441 16,783 18,389 _______ _______ _______ __________________________________________________________________________________________ Jardine Strategic Holdings Limited Consolidated Balance Sheet (continued) __________________________________________________________________________________________ (unaudited) At 31st At 30th June December Restated 2007 2006 2006 US$m US$m US$m ________________________________________Equity Share capital 54 53 54 Share premium and capital reserves 1,327 1,323 1,325 Revenue and other reserves 8,292 6,376 7,302 Own shares held (1,107) (1,030) (1,054) _______ _______ _______ Shareholders' funds (note 11) 8,566 6,722 7,627 Minority interests 3,336 2,894 3,183 _______ _______ _______ Total equity 11,902 9,616 10,810 _______ _______ _______ Liabilities Long-term borrowings _______ _______ _______- non-financial services companies 1,697 1,634 1,841- financial services companies 680 825 723 _______ _______ _______ 2,377 2,459 2,564 Deferred tax liabilities 498 411 485 Pension liabilities 74 56 64 Non-current creditors 128 148 185 Non-current provisions 17 12 15 _______ _______ _______ Non-current liabilities 3,094 3,086 3,313 _______ _______ _______ Current creditors 2,852 2,133 2,269 Current borrowings _______ _______ _______ - non-financial services companies 566 772 937 - financial services companies 854 1,027 954 _______ _______ _______ 1,420 1,799 1,891 Current tax liabilities 145 123 80 Current provisions 28 25 26 _______ _______ _______ 4,445 4,080 4,266 Liabilities directly associated with non-current assets classified as held for sale (note 10) - 1 - _______ _______ _______ Current liabilities 4,445 4,081 4,266 _______ _______ _______ Total liabilities 7,539 7,167 7,579 _______ _______ _______ _______ _______ _______ Total equity and liabilities 19,441 16,783 18,389 _______ _______ _______ ________________________________________ __________________________________________________________________________________________ Jardine Strategic Holdings Limited Consolidated Statement of Recognized Income and Expense __________________________________________________________________________________________ Year (unaudited) ended Six months ended 31st 30th June December 2007 2006 2006 US$m US$m US$m _____________________________________________ Surpluses on revaluation of properties 1 - 120 Gains on revaluation of other investments 124 198 264 Actuarial gains/(losses) on defined benefit pension plans 7 (10) 22 Net exchange translation differences (6) 221 381 Gains/(losses) on cash flow hedges 3 - (15) Tax on items taken directly to equity (21) 4 (67) ____________ ___________ __________ Net income recognized directly in equity 108 413 705 Transfer to profit and loss on disposal of other investments (44) (4) (45) Transfer to profit and loss on realization of exchange reserves (3) 1 (3) Transfer to profit and loss in respect of cash flow hedges 1 2 3 Profit after tax 1,187 832 1,870 ____________ ___________ __________ Total recognized income and expense for the period 1,249 1,244 2,530 ____________ ___________ __________ Attributable to: Shareholders of the Company 958 884 1,794 Minority interests 291 360 736 ____________ ___________ __________ 1,249 1,244 2,530 ____________ ___________ __________ _____________________________________________ __________________________________________________________________________________________ Jardine Strategic Holdings Limited Consolidated Cash Flow Statement __________________________________________________________________________________________ Year (unaudited) ended Six months ended 31st 30th June December 2007 2006 2006 US$m US$m US$m ____________________________________________ Operating activities ___________ ___________ __________ Operating profit 639 457 947 Depreciation and amortization 218 181 377 Other non-cash items 1 14 65 Decrease in working capital 370 241 588 Interest received 36 32 67 Interest and other financing charges paid (89) (83) (169) Tax paid (107) (174) (337) ___________ ___________ __________ 1,068 668 1,538 Dividends from Jardine Matheson 87 - 11 Dividends from associates and joint ventures 109 188 272 ___________ ___________ __________ Cash flows from operating activities 1,264 856 1,821 Investing activities ___________ ___________ __________ Purchase of subsidiary undertakings (note 13(a)) - (23) (47) Purchase of associates and joint ventures (note 13(b)) (104) (45) (465) Purchase of other investments (27) (5) (94) Purchase of land use rights (3) (4) (17) Purchase of other intangible assets (48) - (4) Purchase of tangible assets (239) (349) (686) Purchase of plantations (16) (8) (22) Advance of mezzanine loans (3) - - Repayment of mezzanine loans 12 - - Capital distribution from associates 12 1 1 Sale of subsidiary undertakings (note 13(c)) - 272 227 Sale of associates and joint ventures (note 13(d)) 80 - 1 Sale of other investments (note 13 (e)) 72 - 27 Sale of land use rights 12 8 26 Sale of tangible assets 24 26 50 ___________ ___________ __________ Cash flows from investing activities (228) (127) (1,003) Financing activities ___________ ___________ __________ Capital contribution from minority shareholders - 11 14 Drawdown of borrowings 1,611 1,662 3,481 Repayment of borrowings (2,281) (2,161) (3,870) Dividends paid by the Company (22) (18) (26) Dividends paid to minority shareholders (74) (57) (216) ___________ ___________ __________ Cash flows from financing activities (766) (563) (617) Effect of exchange rate changes - 18 42 ___________ ___________ __________ Net increase in cash and cash equivalents 270 184 243 Cash and cash equivalents at beginning of period 1,287 1,044 1,044 ___________ ___________ __________ Cash and cash equivalents at end of period 1,557 1,228 1,287 ___________ ___________ __________ ____________________________________________ __________________________________________________________________________________________ Jardine Strategic Holdings Limited Notes __________________________________________________________________________________________ 1. Accounting Policies and Basis of Preparation The financial information contained in this announcement has been based on the unaudited interim condensed financial statements, which have been prepared in accordance with IAS 34, Interim Financial Reporting. In 2007, the Group adopted the following standards and interpretations to existing standards which are relevant to its operations: ___________________________________________________________________________________________ IFRS 7 Financial Instruments: Disclosures IAS 1 (amended 2005) Presentation of Financial Statements - Capital Disclosures IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment ___________________________________________________________________________________________ There have been no changes to the accounting policies described in the 2006 annual financial statements as a result of adoption of the above standards and interpretations. The comparative figures for the six months ended 30th June 2006 have been restated to reflect revisions to the provisional fair value of certain liabilities in Rothschilds determined at the date of acquisition, which were reflected in the 2006 annual financial statements. Certain comparative figures have been reclassified to conform with the current period presentation. The Group's reportable segments are set out in note 2 and are described above in the Operating Review. 2. Revenue Six months ended 30th June 2007 2006 US$m US$m ______________________ By business: Dairy Farm 2,796 2,496 Mandarin Oriental 250 183 Jardine Cycle & Carriage 642 558 Astra 3,486 2,980 Other activities - 3 _________ ________ 7,174 6,220 _________ ________ 3. Net Operating Costs Six months ended 30th June 2007 2006 US$m US$m __________________ Cost of sales (5,377) (4,669) Other operating income 150 155 Selling and distribution costs (902) (873) Administration expenses (394) (364) Other operating expenses (12) (12) ________ _______ (6,535) (5,763) ________ _______ 4. Operating Profit Six months ended 30th June 2007 2006 US$m US$m _________________ By business: Dairy Farm 113 97 Mandarin Oriental 70 92 Jardine Cycle & Carriage 21 18 Astra 415 267 _________ _______ 619 474 Corporate and other interests 20 (17) _________ _______ 639 457 _________ _______ Operating profit included the following gains from non-trading items: Sale and closure of businesses 21 85 Sale of investments 47 - Discount on acquisition of businesses 9 - Other - 2 _________ _______ 77 87 _________ _______ 5. Share of Results of Jardine Matheson Six months ended 30th June 2007 2006 US$m US$m __________________ Share of results of Jardine Matheson included the following gains from non-trading items: Sale and closure of businesses 3 - Sale of investments - 7 Restructuring of SIACI in Jardine Lloyd Thompson 10 - Realization of exchange gains* 3 - __________ _______ 16 7 __________ _______ Results are shown after tax and minority interests in Jardine Matheson. *Arising on repatriation of capital from a foreign subsidiary undertaking. 6. Share of Results of Associates and Joint Ventures Six months ended 30th June 2007 2006 US$m US$m _________________ By business: Hongkong Land 568 406 Dairy Farm 12 10 Mandarin Oriental 8 6 Jardine Cycle & Carriage 4 2 Astra 86 70 Corporate and other interests 12 14 _______ _______ 690 508 _______ _______ Share of results of associates and joint ventures included the following gains/(losses) from non-trading items: Increase in fair value of investment properties 495 360 Sale and closure of businesses (3) - Sale of investments - 3 Other - (3) _______ _______ 492 360 _______ _______ Results are shown after tax and minority interests in the associates and joint ventures. 7. Tax Six months ended 30th June 2007 2006 US$m US$m _________________ United Kingdom 2 1 Other jurisdictions 162 139 _______ _______ 164 140 _______ _______ Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates. Share of tax of Jardine Matheson of US$11 million (2006: US$9 million) and of associates and joint ventures of US$150 million (2006: US$113 million) are included in share of results of Jardine Matheson and share of results of associates and joint ventures respectively. 8. Earnings Per Share Basic earnings per share are calculated on profit attributable to shareholders of US$883 million (2006: US$615 million) and on the weighted average number of 618 million (2006: 613 million) shares in issue during the period. Diluted earnings per share are calculated on profit attributable to shareholders of US$862 million (2006: US$598 million), which is after adjusting for the effects of the conversion of dilutive potential ordinary shares of Jardine Matheson, subsidiary undertakings, associates or joint ventures. The weighted average number of shares is arrived at as follows: Ordinary shares in millions 2007 2006 _____________________ Weighted average number of shares in issue 1,073 1,059 Company's share of shares held by Jardine Matheson (455) (446) ________ ________ Weighted average number of shares for earnings per share calculation 618 613 ________ ________ Additional basic and diluted earnings per share are also calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below: Six months ended 30th June 2007 2006 Basic Diluted Basic Diluted earnings earnings earnings earnings per share per share per share per share US$m US$ US$ US$m US$ US$ _____________________________________________________________ Profit attributable to shareholders 883 1.43 1.40 615 1.00 0.98 Non-trading items (note 9) (568) (395) _____ _____ Underlying profit attributable to shareholders 315 0.51 0.51 220 0.36 0.36 _____ _____ 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: Six months ended 30th June 2007 2006 US$m US$m __________________ Increase in fair value of investment properties in Hongkong Land 495 360 Sale and closure of businesses ______ ______ - 25% interest in Mandarin Oriental, New York 12 - - The Mark - 26 - other (1) 2 ______ ______ 11 28 Sale of investments 47 10 Restructuring of SIACI in Jardine Lloyd Thompson 10 - Realization of exchange gains* 3 - Discount on acquisition of businesses 2 - Other - (3) _______ _______ 568 395 _______ _______ * Arising on repatriation of capital from a foreign subsidiary undertaking of Jardine Matheson. 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: At 31st At 30th June December 2007 2006 2006 US$m US$m US$m _________________________ Tangible assets - 2 - Investment properties 7 - 2 Associates and joint ventures - - 14 Non-current debtors - - 31 Current assets - - 9 ______ ______ ______ Total assets 7 2 56 ______ ______ ______ Deferred tax liabilities - 1 - ______ ______ ______ Total liabilities - 1 - ______ ______ ______ At 30th June 2007, the non-current assets classified as held for sale comprised Jardine Cycle & Carriage's investment properties in Malaysia. Non-current assets classified as 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. The sale was completed in March 2007 resulting in a profit before tax of US$25 million, which was included in other operating income. 11. Shareholders' Funds Six months ended 30th June 2007 2006 US$m US$m ________________ At 1st January - as previously reported 7,627 5,860 - revision of fair value adjustments on acquisition of Rothschilds - (1) ________ ______ - as restated 7,627 5,859 Recognized income and expense attributable to shareholders 958 884 Dividends (note 12) (72) (67) Employee share option schemes - value of employee services 2 2 Scrip issued in lieu of dividends 103 98 Change in attributable interests 1 1 Increase in own shares held (53) (55) ________ ______ At 30th June 8,566 6,722 ________ ______ 12. Dividends Six months ended 30th June 2007 2006 US$m US$m _______________ Final dividend in respect of 2006 of USc11.70 (2005: USc11.00) per share 125 116 Company's share of dividends paid on the shares held by Jardine Matheson (53) (49) _______ _____ 72 67 _______ _____ An interim dividend in respect of 2007 of USc5.60 (2006: USc5.30) per share amounting to a total of US$60 million (2006: US$57 million) is declared by the Board. The net amount after deducting the Company's share of the dividends payable on the shares held by Jardine Matheson of US$26 million (2006: US$24 million) will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2007. 13. Notes to Consolidated Cash Flow Statement (a) Purchase of subsidiary undertakings for the six months ended 30th June 2006 included the Company's increased interest in Jardine Cycle & Carriage of US$20 million. (b) Purchase of associates and joint ventures for the six months ended 30th June 2007 included the Company's increased interest in Hongkong Land of US$96 million. 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. (c) Sale of subsidiary undertakings for the six months ended 30th June 2006 included US$143 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 sale of the Company's interest in MCL Land. (d) Sale of associates and joint ventures for the six months ended 30th June 2007 included US$75 million from Mandarin Oriental's sale of its 25% interest in Mandarin Oriental, New York. (e) Sale of other investments for the six months ended 30th June 2007 included US$50 million and US$12 million from the Company's sale of its interest in The Bank of N.T. Butterfield & Son and CNAC respectively. 14. Capital Commitments and Contingent Liabilities At 31st At 30th June December 2007 2006 2006 US$m US$m US$m ___________________________ Capital commitments 210 311 191 _____ _____ _____ Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have been made in the financial statements. 15. Market Value Basis Net Assets At 30th At 31st June December 2007 2006 US$m US$m ________________ Jardine Matheson 1,726 949 Hongkong Land 4,857 4,212 Dairy Farm 4,744 3,568 Mandarin Oriental 1,605 1,201 Jardine Cycle & Carriage 2,234 2,102 Other holdings 745 693 Jardine Strategic Corporate (588) (770) _______ _______ 15,323 11,955 _______ _______ Net asset value per share (US$) 24.69 19.38 _______ _______ 'Market value basis net assets' are calculated based on the market price of the Company's holdings for listed companies, with the exception of the holding in Jardine Matheson which has been calculated by reference to the market value of US$7,834 million (2006: US$7,004 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$15,323 million (2006: US$11,955 million) and on 621 million (2006: 617 million) shares outstanding at the period end which excludes the Company's share of the shares held by Jardine Matheson of 459 million (2006: 455 million) shares. _________________________________________________________________The interim dividend of USc5.60 per share will be payable on 24th October 2007 to shareholders on the register of members at the close of business on 31st August 2007, and will be available in cash with a scrip alternative. The ex-dividend date will be on 29th August 2007, and the share registers will be closed from 3rd to 7th September 2007, inclusive. Shareholders will receive their cash dividends in United States Dollars, unless they are registered on the Jersey branch register where they will have the option to elect for Sterling. These shareholders may make new currency elections by notifying the United Kingdom transfer agent in writing by 5th October 2007. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing on 10th October 2007. Shareholders holding their shares through The Central Depository (Pte) Limited ('CDP') in Singapore will receive United States Dollars unless they elect, through CDP, to receive Singapore Dollars or the scripalternative. __________________________________________________________________ - end - For further information, please contact: Jardine Matheson Limited James Riley (852) 2843 8229 Matheson & Co., Limited Philip Hawkins (020) 7816 8136 GolinHarris Kennes Young (852) 2501 7987 Weber Shandwick Financial Richard Hews / Georgia Dempsey / Hannah Marwood (020) 7067 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