| To: Business Editor | 19th March 1998 For immediate release |
The following announcement was today issued to the London Stock Exchange.
JARDINE MATHESON HOLDINGS LIMITED
1997 PRELIMINARY ANNOUNCEMENT OF RESULTS
Results
"Although we expect greater pressure on profits in the current year from Asia's depressed markets, our businesses remain solidly underpinned by the strength of our balance sheets and we are well placed to recover once Asia regains its momentum."
Henry Keswick, Chairman
19th March 1998
The final dividend of USą17.20 per share will be payable on 17th June 1998, subject to approval at the Annual General Meeting to be held on 11th June 1998, to Shareholders on the register of members at the close of business on 9th April 1998 and will be available in cash with a scrip alternative. The share registers will be closed from 13th to 17th April 1998, inclusive.
JARDINE MATHESON HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 1997
PERFORMANCE
Jardine Matheson Holdings Limited today announced that the Group's net profit for 1997 was US$325 million, an increase of 8% over the previous year. Both years' results, however, were affected by non-recurring items, excluding which the underlying profit declined by 21% to US$292 million. The reduced trading result was principally due to the impact of depressed regional markets on the Group's investment banking operations and its Engineering & Construction businesses, and by the absence of investment gains.
Within the non-recurring items, a profit of US$130 million from the sale of Jardine Pacific's life assurance business was offset to a large extent by provisions for discontinued activities, restructuring costs and a diminution in the value of certain investments in Southeast Asia. In particular, the Group's share of Jardine Strategic's provision against the decline in value of its investment in EON amounts to US$47 million.
Earnings per share were USą55.95, compared with USą51.63 in 1996. Earnings per share excluding non-recurring items declined by some 21% to USą50.28.
The Board is recommending a final dividend of USą17.20 per share, which, together with the interim dividend of USą7.80 per share, will produce an unchanged dividend for the full year of USą25.00 per share.
The net asset value per share declined by some 10% during 1997 to US$6.40, primarily due to the effect of reduced property values in Hong Kong.
BUSINESS DEVELOPMENTS
Turning to the operations, the Chairman, Henry Keswick, said that 1997 saw unprecedented stock market and currency turmoil in Asia which led to a drastic downturn in the latter part of the year in many of the economies in which the Group operates. The Group's financial services, hotels and Engineering & Construction businesses were particularly affected. Given the severity of this economic downturn, it would be unrealistic to expect an early recovery. However, the factors which have fueled Asia's economic growth in recent years, an industrious workforce, entrepreneurial drive, high levels of personal savings and a commitment to education, remain intact. The Group therefore retains its confidence in the long-term prosperity of the Region.
A notable event in 1997 was the resumption of the exercise by China of sovereignty over Hong Kong, where the Group retains its substantial business presence. The smooth handover and the successful response of the new Special Administrative Region Government to the recent pressures on the Hong Kong currency are encouraging indicators for Hong Kong's future prosperity.
During the year the Group continued its strategy of increased operational focus and withdrew from a number of non-core or poorly performing businesses. Jardine Pacific disposed of its life insurance joint venture, realising a substantial gain, and is in the process of disposing of its remaining Australian restaurant interests. Dairy Farm is closing its supermarket joint venture in Japan as well as its drugstore chain in Taiwan, as neither business was expected to achieve acceptable levels of profitability. Since the year end the group has also sold its Spanish supermarket chain.
A number of senior appointments have been made to strengthen operating management. Considerable effort has also been put into upgrading systems to ensure cost competitiveness and to meet the increasingly sophisticated requirements of the Group's customers across the Region.
There have been a number of initiatives to develop the Group's core businesses. Hongkong Land announced plans to invest some US$300 million to redevelop one of its Central Hong Kong properties and increased its property and infrastructure investments in Mainland China. Mandarin Oriental is to open a hotel in Kuala Lumpur later this year and is to develop a hotel in Miami, taking its global deluxe brand into an important new market.
The revitalisation of Dairy Farm's Australian supermarket operations is gathering pace, and the group is expanding its core retail activities in Asia. It has recently acquired a 31% stake in Hero, Indonesia's leading supermarket group, and plans to open its first hypermarket in Taiwan in a joint venture with Casino S.A. by the end of 1998. In Hong Kong, its new fresh food distribution facility will strengthen its position in this key market when it comes on line later this year. The group is also supporting Kwik Save's proposed merger with Somerfield in the United Kingdom, which would give Dairy Farm an 11% stake in the enlarged business.
Jardine International Motors is now one of the largest motor dealership groups in the United Kingdom following the acquisition of Appleyard, while in India the company has formed a joint venture dealership network with the Tata Group. Jardine Lloyd Thompson has made a number of acquisitions to strengthen its core businesses, building on the benefits of the merger earlier in the year.
Jardine Fleming's performance reflected the difficult trading conditions in Asia. The company maintained its position as one of the Region's leading securities brokers, and has recently successfully bid for a seat on the Singapore Stock Exchange. While funds under management declined, mainly in line with falling markets, 1997 saw improved relative performance in most of its funds.
To enhance earnings and net asset value per share, both Jardine Strategic and Hongkong Land undertook share repurchase programmes during the year.
LOOKING AHEAD
In conclusion, Henry Keswick said, "Although we expect greater pressure on profits in the current year from Asia's depressed markets, our businesses remain solidly underpinned by the strength of our balance sheets and we are well placed to recover once Asia regains its momentum."
OPERATING REVIEW
Jardine Pacific
Jardine Pacific's profit from ongoing operations for 1997 was down 4% at US$94 million. The decline was primarily due to provisions in the Engineering & Construction businesses in Thailand brought about by the sudden downturn in the Thai property market.
Net profit was US$210 million, compared with US$37 million in 1996. This significant increase was due to an exceptional gain of US$130 million from the sale of Jardine Pacific's life assurance business and the non-recurrence of the provision taken in 1996 against the Sizzler restaurant business in Australia, which was successfully disposed of in 1997.
Further progress was made in restructuring Jardine Pacific's portfolio of businesses, with the disposal of a number of non-core or loss-making units and a reduction in overhead costs as a result of a simplified management structure.
1998 is expected to be a difficult year for Jardine Pacific as the effects of the economic turbulence in Asia, particularly in Southeast Asia, continue to dampen consumer demand. The move to the new Hong Kong International Airport will also reduce the profit of the company's airport-related activities during the year.
Marketing & Distribution
JOS Technology Group showed profit growth in 1997 despite the difficult market conditions. IKEA, Jardine Pacific's home furnishing business, also had a good year in Hong Kong, expanding its Causeway Bay store and opening a new 130,000 sq. ft flagship store in Shatin. Following the success of its first Taipei outlet, a 160,000 sq. ft store will be opened there in mid 1998.
Restaurants achieved outstanding results from Pizza Hut in Hong Kong and recorded improvements in Hawaii and Taiwan. Australian Pizza Hut activities, however, continued to underperform and a decision was taken to dispose of the business. Wines & Spirits had another disappointing year in the Japanese and Southeast Asian markets.
In the Philippines Jardine Davies experienced a difficult operating environment, and a number of its businesses have been closed as they proved unlikely to show satisfactory returns in the medium term. Nevertheless, the expansion of its existing cement milling activity was successfully completed, resulting in a more than doubling of capacity. Further investments were also made in modernising the sugar milling operation and in developing middle-income housing.
Engineering & Construction
Jardine Pacific's Engineering & Construction activities were severely affected by the decline in the Thai property market. However, Gammon produced a satisfactory performance in Hong Kong and had an order book at year end of US$1.3 billion. Jardine Schindler had a good year with strong sales and profit, although it is expected to face a more difficult operating environment in 1998. The new manufacturing plant in Malaysia should commence production by the end of this year.
In Jardine Engineering Services, the Chubb business produced a satisfactory performance. Significant losses were, however, incurred on Mechanical & Electrical Contracting in Thailand due to the difficulty in obtaining payment for work completed.
Aviation and Shipping
Aviation Services achieved a good result, with Hong Kong Air Cargo Terminals once again handling a record tonnage. The air cargo and ramp and passenger handling activities will all face increased costs and competition following the move to the new Hong Kong International Airport in July 1998. Nevertheless, the longer-term prospects for these businesses have been enhanced by their success in renewing their franchises at the new airport. As security at the new airport will no longer be handled by the private sector, Securair will cease to be a contributor to the group's earnings from 1998.
The overall performance of the Shipping Services' activities was disappointing. However, the River Trade Terminal project, in which Jardine Pacific has a 14% interest, will commence operations at its first berth in late 1998. The small interest in Asia Container Terminals, which has been awarded two berths at Hong Kong's Container Port, has been sold to Hongkong Land.
Property Services
Property Services had a difficult year, with poorer performances from Colliers Jardine, Jardine Securicor and Reliance due to more difficult and competitive markets. Jakarta Land, 25% owned, produced a satisfactory performance but is now facing pressure on rentals as a result of the devaluation of the Indonesian Rupiah.
Financial Services
Pacific Finance increased its profit despite the effect of high interest rates in Hong Kong in late 1997. The company's instalment finance activities in Singapore recorded a decline in earnings due to pressure on margins. Central Registration performed well due to increased stock market activity in the first half.
Jardine International Motors
Jardine International Motors reported a trading profit of US$80 million in 1997, a decrease of 9%. Net profit was US$65 million, a decline of 5%. Excluding exceptional items, profit declined by 14%. Turnover reached US$2,345 million, an increase of 17%, with total new and used vehicle sales rising by 25% to 80,800 units.
During the year, sizeable acquisitions in the United Kingdom furthered the group's strategy of building on its well established retail businesses there to complement its activities in Asia. The group also continues to look for opportunities in Asia where its experience can be successfully exploited, most recently joining with the Tata Group in India to retail a new range of domestically produced passenger cars.
In Hong Kong, Zung Fu increased its sales of Mercedes-Benz passenger cars by 15%, although a change in the model mix led to lower turnover and reduced margins. In Southern China, market conditions were markedly better in 1997, with Southern Star performing well and the group's joint venture service operation reporting higher business volumes.
In Malaysia, Cycle & Carriage Bintang, in which the group has a 13% shareholding, performed well, although it was affected towards the end of the year by the economic downturn. P.T. Tunas, the group's Indonesian associate, was also adversely affected in the second half of the year and showed a profit decline. Elsewhere in Asia, pressure on margins in Japan resulted in the Stern Zushi dealership reporting a small loss.
In the United Kingdom, Lancaster achieved an excellent result. The acquisition of BPW enlarged the company's exposure to the Ford franchise and to the volume sector of the market. In November, Appleyard was acquired, making Jardine International Motors one of the United Kingdom's leading motor retail businesses. In France, Cica faced a difficult year with the overall market for new cars down 20% in terms of unit sales, but this was mitigated by a significant increase in the volume of used cars sold.
In the United States, Beverly Hills made a strong contribution aided by increased sales of new Mercedes-Benz models. In Hawaii, the group continued to expand its business through the acquisition of new franchises and a body shop, but overall results were held back by the cost of investment in new facilities.
Jardine International Motors expects that the downturn in Asia's economy will inevitably have an effect upon its results in 1998, although the company remains confident about the longer term. The group should begin to benefit from the recent acquisitions in the United Kingdom once the businesses are fully integrated.
Jardine Fleming
Jardine Fleming's consolidated profit for 1997 after taxation and minority interests was
US$14 million, compared with US$82 million in 1996.
1997 saw the greatest stockmarket and currency turmoil ever encountered in Asia. While these upheavals inevitably had a material effect on the profitability of Jardine Fleming's securities, capital markets and fund management businesses, steps were taken to hedge regional assets against local currency movements. At the year end the net assets of the group, after currency translation differences, were US$469 million compared with US$481 million in 1996.
Against a backdrop of very weak markets, Jardine Fleming Investment Management produced good investment performances across its range of portfolios. The falls in market valuations across the Region, however, resulted in funds under management declining to some US$17 billion at year end, down from approximately US$21 billion in 1996. In the United States, Rowe Price-Fleming International, the company's 25%-owned affiliate, had an outstanding year in which its funds under management increased to US$30 billion.
Jardine Fleming Securities consolidated its position as Asia's leading stockbroker, successfully bidding for an international seat on the Singapore Stock Exchange at the year end, while the capital markets operation lead-managed 29 equity and equity-linked issues. In corporate finance, the group acted for a significant number of multinational companies on a range of cross-border transactions. Ord Minnett, the group's Australasian joint venture, had a successful year, with all the business areas delivering improved results. Jardine Fleming Bank also continued to perform well, showing an increase in profits over the previous year.
The extreme volatility in Asian markets has continued into 1998 and this will create a difficult operating environment for financial services businesses. Steps have accordingly been taken to align the group's cost base to the expected level of revenues. Nevertheless, the conditions Jardine Fleming faces have enabled it to consolidate its position in the front rank of Asia's investment houses. With a strong regional presence and a leading position in both fund management and investment banking services, the group is fully committed to Asia and is well positioned to benefit from the eventual upturn in Asian financial markets.
Jardine Lloyd Thompson
In February 1997, JIB Group and Lloyd Thompson Group merged to create Jardine Lloyd Thompson Group plc.
1997 witnessed continued merger and acquisition activity in the insurance industry amongst both insurers and brokers. As a result JLT is now the 6th largest broker in the world with operating revenues of Ł246 million, employs 3,500 staff and operates in 35 countries.
Due to a change of accounting dates the enlarged group announced pro-forma results for calendar year 1997. These disclosed a profit, before merger costs and other exceptional items and tax, of Ł51 million, reflecting a 5% increase at constant rates of exchange over the result for 1996.
Revenue and profit growth have been affected by soft insurance markets and adverse currency movements, the combined effect of which offset significant new business obtained in many parts of the group's operations.
In the United Kingdom there was considerable activity in merging the London operations of JIB and Lloyd Thompson, and the London market insurance and reinsurance businesses entered 1998 with a reduced cost base and a strong focus on client service. In other United Kingdom businesses, market share was maintained and operating margins improved. The specialist businesses in North America had a good year, all improving their margins and increasing their contribution to the group's earnings. JLT's businesses in the Asia-Pacific Region continued to grow despite the economic difficulties, with good results from Indonesia, Singapore and the Philippines. Its Australian operations also did well, expanding turnover in difficult markets.
JLT's French associate, SIACI, once again produced increased profits.
Throughout the insurance industry there has been much change and considerable debate about its future. JLT's objective is to sustain a position as a world-class broker, operating internationally in selected areas where it is or can become a market leader.
Jardine Strategic
Jardine Strategic recorded a net profit for 1997, excluding non-recurring items, of
US$257 million, a decrease of 19% from 1996. In both periods, there were significant non-recurring items, including which profit declined by 36% to US$194 million. The non-recurring items in 1997 relate principally to closure cost provisions in Dairy Farm, a profit on the sale of Jardine Matheson's life assurance business and a provision for diminution in the value of the company's investment in Edaran Otomobil Nasional.
Earnings per ordinary share were USą24.23, compared with USą37.92 in 1996. Excluding non-recurring items, earnings per ordinary share showed a 19% decline.
The net asset value per ordinary share, based on the market price of the company's holdings, recorded a decline of 30% to US$4.14 in 1997.
The company made a bonus issue of put warrants as an extension of its share repurchase programme, and some 2.3% of its ordinary shares were acquired in July as the warrants matured. Jardine Strategic also converted its outstanding 7œ% convertible preference shares into fully paid ordinary shares.
The results of Jardine Strategic's principal investments, Jardine Matheson, Dairy Farm, Hongkong Land, Mandarin Oriental and Cycle & Carriage are dealt with elsewhere in this review.
Of its other investments, Jardine Strategic increased its stake in the Malaysian group, Edaran Otomobil Nasional, to 17.4% during the year. EON performed well in 1997 against a background of deteriorating market conditions in the second half of the year. However, although EON is affected by the poor economic situation, the scale of the decline in its share price at the year end did not match Jardine Strategic's view of the long-term value of the business. While a provision against the investment has been made in the company's results, it was not considered appropriate to write it down to the depressed market value. Jardine Strategic's published net asset value per share does, however, reflect the current market value of this as well as the company's other investments.
The company has a 20% stake in Tata Industries, the principal investment vehicle of the Tata Group for new ventures in India. During the year it continued to develop its projects particularly in the fields of telecommunications and auto-components.
Connaught Investors, an investment company which is held 45% by Jardine Strategic, 45% by Hongkong Land and 10% by the Company, saw its net assets decline 11% to US$545 million, based on the market value of its holdings, as a consequence of the poor regional markets.
During the year Connaught Investors increased its stake in Malaysian-listed Hap Seng Consolidated to 4% at a cost of US$20 million and also took a 1% stake in the China National Aviation Company.
At 31st December 1997 22% of Connaught Investors' portfolio related to interests in Group companies, 45% was invested in other companies and 33% was held in cash.
Dairy Farm
In 1997, Dairy Farm's profit before interest from continuing activities of US$209 million was 3% ahead of the prior year. This result reflected an improvement in Australia, partly offset by start-up losses in Asia, higher corporate overheads and investment in systems. Sales in 1997 were US$6,888 million, marginally below the prior year as a result of exchange rate movements.
Dairy Farm's strategy is to focus on retail in the Asia-Pacific Region and the company is positioning itself to compete more effectively in an increasingly challenging environment. The new management team is addressing two main objectives - to ensure that the group has the right blend of organisational structure and core competencies; and to improve the quality of the shopping experience in its stores.
In 1997 Dairy Farm redeployed certain of its assets. It sold its interest in the manufacturing joint venture with Nestlé and announced the sale of its Spanish supermarket subsidiary, Simago, which was completed in February 1998. The drugstore operation in Taiwan and the Japanese supermarket joint venture are being closed. Dairy Farm recently acquired an effective interest of 31% in PT Hero Supermarket, the leading supermarket chain in Indonesia.
In Australia, the repositioning of Franklins' business led to a profit before interest of US$15 million, compared with the US$8 million loss in 1996. This improvement reflects the higher margins and productivity gains generated by the continuing conversion to Fresh formats, which now account for over 52% of total sales. In New Zealand, Woolworths had another good year of steady growth in sales and profit.
In Hong Kong, the principal retail businesses achieved a 5% increase in total sales, with a steady profit performance from Wellcome and an improvement from 7-Eleven. The group will further enhance its fresh food offer this year with the completion of its US$50 million Fresh Food Processing Centre. Maxim's Caterers, Dairy Farm's 50% restaurant associate, produced another good result despite the difficult conditions which prevailed in the second half.
In Taiwan, Wellcome supermarkets suffered a decline in sales but improved its profit performance. The group's hypermarket joint venture with Casino S.A. plans to open its first store towards the end of 1998. Dairy Farm's operations in Singapore performed well, and its supermarket joint venture in Malaysia continued to seek expansion opportunities.
Kwik Save, the group's 29%-owned associate in the United Kingdom, made progress with the implementation of its repositioning programme. Its proposed merger with Somerfield, if approved by the shareholders, will result in Dairy Farm owning an interest of some 11% in the enlarged group.
The difficult economic conditions in Asian markets will inevitably affect Dairy Farm's performance in 1998, though they will also create opportunities for new investment. The results being achieved from its new formats in Australia and the investments being made throughout the group in systems and infrastructure should provide a sound base for future profit growth.
Hongkong Land
Hongkong Land's profit for 1997 was US$395 million compared with US$432 million in 1996 excluding the write-back from a discontinued activity.
The annual valuation of the group's investment properties produced a net valuation deficit for the year of US$845 million, which has been charged to reserves. Shareholders' funds at the year end were US$8,833 million, down 11% and net asset value per share was US$3.48, a decline of 7%.
The group purchased and cancelled some 4% of its own shares during 1997 at a cost of US$253 million. This action enhanced both earnings and assets per share.
Sentiment in the Hong Kong property market was positive in the first half of 1997. Rents were steady and, continuing the trend established in 1996, property values continued to rise. In the second half, however, as problems developed in several Asian economies, confidence was eroded. The more challenging market conditions led to a 10% fall in the value of the group's properties. Average rents, however, were steady during 1997, and occupancy of the group's office and retail portfolio, which totals some 5 million sq. ft, was maintained at 98%.
The group faces both increased competition from the new buildings being erected in Hong Kong's Central business district and a leasing market that has yet to reflect fully the economic difficulties being experienced in the Region.
Several new initiatives were launched during 1997 to enhance the group's competitive position. The most important of these was the decision to proceed with the redevelopment of the group's property at 11 Chater Road (currently known as Swire House), where demolition of the existing 35 year old building will commence later in 1998.
In Mainland China Hongkong Land made progress with initiatives in both property and infrastructure, creating a good operating platform from which further expansion can take place. A 40% interest in a US$130 million residential estate in Beijing was acquired, and leasing of the units has commenced. A 28% interest in Central China Power Corporation, which is developing mid-sized power stations in central China, was acquired for US$40 million. The group also increased its shareholding in the China Water Company to 40%.
In Singapore work commenced on the group's 395,000 sq. ft prime commercial and retail development at One Raffles Link, Marina Square. In the Philippines work is progressing on the group's joint venture residential property development with Ayala Land, although further new sales of the apartments were negligible due to the depressed market. In Vietnam the group's second office development in Hanoi was completed, and the first tenancy signed in February 1998, but demand for office space is currently weak.
Hongkong Land's income from properties will show the full effect of the negative rent reversion cycle in 1998. Capital values also remain under pressure and have fallen by some 10% so far this year. Notwithstanding these challenges, the group has entered the year with a clear strategy, a strong balance sheet and with its investment properties almost fully let.
Mandarin Oriental
Mandarin Oriental's profit in 1997 was US$45 million, a decrease of 25%. A non-recurring provision of US$9 million in respect of the group's investment in Hotel Majapahit in Surabaya, Indonesia contributed to this reduction. Excluding this non-recurring item, profit for 1997 declined by 10% to US$54 million.
A directors' review of the valuation of the hotel properties at the end of 1997 indicated that the significant increase in values shown in 1996 had been reversed, and net asset value per share decreased by 24%.
The overall picture for the group in 1997 was of a strong first half followed by a steep decline in the second half, as Asia's economic crisis began to bite. This was particularly apparent in the group's two Hong Kong hotels. Mandarin Oriental, Manila continued its profit growth into the second half of 1997, although the lower economic activity and a weakening exchange rate began to affect its performance adversely towards the end of the year.
Having acquired Mandarin Oriental Hyde Park, London in late 1996, the group has embarked on a renovation programme to establish its position as one of London's premier luxury hotels. The group's associate hotels in Southeast Asia were adversely affected by a combination of declining overseas visitors and the effects of falling exchange rates. In these circumstances only The Oriental, Singapore achieved an increased profit contribution in 1997. In view of an unprecedented deterioration in the Indonesian market, the group made full provision for its 25% interest in the Surabaya hotel. In Hawaii, the reduction in tourist traffic from Japan had an impact, although Kahala Mandarin Oriental achieved an improved performance over 1996.
Work is progressing towards a partial opening of the new Mandarin Oriental, Kuala Lumpur in the middle of 1998. When fully opened, the 645-room hotel will benefit from its premium location in this important Asian market, although its initial performance will inevitably be affected by the current economic climate.
In January 1998, the group announced plans to develop a 325-room Mandarin Oriental hotel in Miami, Florida. This 25%-owned hotel is expected to open in 2001 and will be managed by the group.
Against the background of difficult business conditions and declining travel and tourism in the Asia Pacific, the overall outlook for Mandarin Oriental in 1998 is not encouraging.
Cycle & Carriage
Cycle & Carriage reported a net profit for the year of S$159 million, a fall of 21%. Motor earnings were S$93 million, down 41%, while profit from property activities increased by 53% to S$60 million. Earnings per share fell 21%.
In Singapore the size of the new car market continued to contract, and earnings from the company's Singapore motor business fell by 52%. Nevertheless, Cycle & Carriage's share of the passenger car market increased slightly with strong Mitsubishi sales and Mercedes-Benz market share remaining at 12%.
In Malaysia, the 49%-owned Cycle & Carriage Bintang had another successful year, increasing its attributable profit by 29%, as demand for Mercedes-Benz remained strong for much of the year. In Australia, 49%-owned Astre Investments sold over 74,000 units of Hyundai, Chrysler and Audi vehicles, up from 58,000 units in 1996. However, margins came under intense pressure during the second half and as a result profits were down.
CCL Group Properties contributed S$47 million to the group's earnings in 1997. Considerable progress was made on both of the major residential development projects in Singapore, one being finished in August and the other being 28% completed at the year end. In Malaysia, tenancies have been secured for 73% of the Weld Tower. MCL Land announced a 62% fall in earnings following the completion of a major project in 1996.
The group's motor interests are likely to have a difficult year in 1998. The Singapore business will be affected by weak sentiment and continuing intense competition. In Malaysia, the weakness of the Ringgit, poor consumer confidence and tight liquidity will impact Cycle & Carriage Bintang. Astre Investments is facing strong competition from other marques as well as being exposed to the fluctuations of the Australian Dollar against the United States Dollar. The group's property interests will inevitably be adversely impacted by weak property markets in both Singapore and Kuala Lumpur. Overall it is likely that earnings will be lower than in 1997.
Other Interests
The financial services group in the United Kingdom produced an improved operational performance in 1997 following the restructuring in 1996. The International Trust business had a steady year with an encouraging growth in business.
The United Kingdom 7-Eleven operations were sold in 1997.
Jardine Matheson Holdings Limited
Notes
1 BASIS OF PREPARATION
The financial information contained in this announcement has been based on the audited results for the year ended 31st December 1997 which have been prepared under the historical cost convention, as modified by the revaluation of certain fixed assets, and in conformity with International Accounting Standards on the basis of the accounting policies set out in the Financial Statements.
2 EXCEPTIONAL ITEMS
3 TAXATION
Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates. Taxation includes United Kingdom tax of US$21.8 million (1996: US$19.8 million).
4 SEGMENTAL INFORMATION
5 NON-RECURRING ITEMS
6 DIVIDENDS
7 EARNINGS PER SHARE
Earnings per share are calculated on the profit after taxation and outside interests of US$324.9 million (1996: US$300.2 million) and on the weighted average number of 580.7 million (1996: 581.5 million) shares in issue during the year. The weighted average number excludes the Company's share of the shares held by subsidiary undertakings and the shares held by the Trustee under the Company's Senior Executive Share Incentive Schemes.
Earnings per share excluding non-recurring items are calculated on the profit after taxation and outside interests after adjusting for non-recurring profits of US$32.9 million (1996: losses of US$70.2 million).
Full exercise of the options granted under the Senior Executive Share Incentive Schemes would not result in a material dilution of the earnings per share.
8 ACQUISITIONS
Purchase of subsidiary undertakings includes US$88.9 million relating to the acquisition of the Appleyard Group in the United Kingdom by Jardine International Motors, Jardine Strategic's increased holding in Dairy Farm and Mandarin Oriental of US$12.3 million, and the repurchase of own shares by Jardine Strategic of US$106.8 million.
Purchase of associates and other investments includes Jardine Pacific's increased funding of its air cargo terminal business in Hong Kong of US$34.7 million, and Jardine Strategic's increased interest in Cycle & Carriage, Edaran Otomobil Nasional and Hap Seng Consolidated of US$11.6 million, US$100.8 million and US$20.4 million respectively.
9 ANNUAL REPORT
The Annual Report will be posted to Shareholders on or about 7th May 1998. Copies may be obtained from Butterfield Corporate Services Limited, P.O. Box HM 1540, Hamilton HM FX, Bermuda; IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, England and M & C Services Private Limited, 16 Raffles Quay #23-01, Hong Leong Building, Singapore 048581.
The final dividend of USą17.20 per share will be payable on 17th June 1998, subject to approval at the Annual General Meeting to be held on 11th June 1998, to Shareholders on the register of members at the close of business on 9th April 1998, and will be available in cash with a scrip alternative. The share registers will be closed from 13th to 17th April 1998, inclusive. Shareholders will receive their cash dividends in United States Dollars. Shareholders registered on the United Kingdom branch register also have the option to elect for Sterling calculated by reference to a rate prevailing ten business days prior to the payment date. Such Shareholders may make new currency elections by notifying any one of the Company's registrars or the UK transfer agent in writing by 29th May 1998. 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 scrip alternative.
- end -
For further information, contact:
| Jardine Matheson Limited Norman Lyle |
(852) 2843 8216 (office) |
| Ludgate Asia Limited Martin Spurrier |
(852) 2543 5413 (office) |
Full text of the Preliminary Announcement of Results and the Preliminary Financial Statements for the year ended 31st December 1997 can be accessed through the Internet at "http://www.irasia.com/listco/sg/jm1". This announcement is also available through "First Call".
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