Results

"The profitability of our continuing operations for the year, with the exception of the United Kingdom, should be satisfactory. The overall result will, however, be impacted by the substantial non-recurring costs being incurred in exiting problem franchises and resolving property problems in the United Kingdom."

A J L Nightingale, Executive Chairman
2nd August 2000

Jardine International Motor Holdings Limited
Interim Report 2000

Performance

Jardine International Motor Holdings Limited today announced that the Group, including its associates and joint ventures, sold some 88,500 new and used motor vehicles in the first half of 2000, representing an increase of 14% over the same period in 1999.

Revenue, excluding associates and joint ventures, was US$1.4 billion, a reduction of 4%.

The unaudited consolidated net profit for the six months ended 30th June 2000 was US$19 million, a decrease of 25% over the comparable figure for 1999. Excluding non-recurring items earnings declined by 6%.

Earnings per share for the first half year, at US¢3.93, also decreased by 25%. Excluding non-recurring items earnings per share declined by 6% to US¢4.94.

Corporate Developments

Turning to the significant developments, the Executive Chairman, Anthony Nightingale, said that the Company and its parent, Jardine Matheson Holdings Limited, jointly announced on 27th June 2000 the proposed privatisation of Jardine International Motors by way of a scheme of arrangement. The offer price will be approximately HK$4.295 in cash for each share, to be paid as to HK$4.10 per share by Jardine Matheson and as to US¢2.50 per share by the Company in the form of a special dividend. The detailed terms of the proposals are included in a circular to shareholders, which will be posted shortly.

The Group has reached agreement with DaimlerChrysler AG on the future arrangements for the distribution of Mercedes-Benz motor vehicles in the Hong Kong and Macau markets. With effect from 1st July 2002, DaimlerChrysler will assume the role of distributor and Zung Fu will continue as exclusive dealer in Hong Kong and Macau. While the new arrangements allow a key relationship to continue, they will have a significant adverse impact on the future profitability of Jardine International Motors.

As part of the ongoing restructuring of the Group's loss-making operations in the United Kingdom, substantial non-recurring costs have been, and will continue to be, incurred in exiting onerous leases and closure of dealerships. It is anticipated that much of this restructuring will be completed by the end of 2000, with further costs to be incurred in 2001.

In France, Cica has consolidated a number of its Internet-compatible business ventures in the fields of car procurement, marketing and sales into one subsidiary, Exlinea. The Group holds 50% of the equity of the new company, the balance being held by a venture capitalist and the company's executives. The Group will also continue to seek other e-commerce development opportunities to support its business in its principal market sectors.

Group Review

• Hong Kong SAR, Macau SAR and Mainland China

  In Hong Kong, Zung Fu continued to perform well and has maintained its market share for Mercedes-Benz in a passenger car market that has grown by 28%. The environment, however, is becoming increasingly competitive. After-sales activities produced a reduced contribution on lower margins despite improved revenues.

  Good profit growth was achieved in Macau with increased car sales revenues.

  In Mainland China, a stringent programme of cost control and some margin improvement in Southern Star led to an improvement in earnings. The workshop operations in Mainland China saw a higher level of activity but an increase in losses due to reorganisation costs.

• Southeast Asia

  PT Tunas Ridean, the Group's 30%-held associate in Indonesia, has benefited from a significant uplift in demand for motor vehicles and associated consumer finance. Increased vehicle supply to meet this demand and internally funded expansion of consumer lending, together with a continued regime of tight cost and financial controls, has enabled the company to increase earnings significantly. The economic environment, however, remains fragile.

  Cycle & Carriage Bintang, the Group's 13%-owned affiliate in Malaysia, has continued to benefit from improved market conditions.

• India

  Concorde Motors, the Group's 50%-owned joint venture with the Tata Group, has incurred start-up losses at a higher rate than planned. This is a result of a slower than expected production rate of the Telco Indica, following its launch in early 1999, and higher property costs in certain major cities. Indica production is now running at improved rates, the property portfolio is being realigned to bring down costs and the increased on-road population of Indica is producing a growing demand for after-sales service. The Mercedes-Benz operation in Mumbai continued to operate satisfactorily.

• United Kingdom

  The United Kingdom passenger car market rose in the first half year by 2.1% over the same period in 1999, but this growth was achieved at the expense of margin. Overall, the Group's United Kingdom operations produced a disappointing performance. Revenues decreased and operating profits were poorer than those in the comparable period last year.

  All sectors of the Group's United Kingdom operations were adversely affected by the ongoing controversy over manufacturers' pricing levels compared to those prevailing in Continental Europe. This matter has been taken up by the United Kingdom government, through a market review by the Competition Commission, and by the European Commission. The outcome is uncertain and may influence the deliberations of the European authorities in connection with the expiry, at end 2002, of the block exemption granted to the motor industry from European competition law.

  Within the businesses, operating losses at Rover dealerships have been contained and Volkswagen Audi operations have returned to profit, however, other mid-market franchises have seen weaker results. The Polar Motor group joint venture produced a break-even result, having been profitable in the same period in 1999.

• France

  Cica produced an overall improved result but underlying dealership operations saw a reduction in earnings. The translated earnings have been adversely affected by weakness of the Euro in 2000.

• United States

  The Group's United States operations benefited from a continuing strong demand for premium imported product and saw revenues and operating results improve.

Year 2000

Year 2000 readiness was completed in 1999 and the change of year was handled without significant interruption of business systems.

Outlook

In conclusion, Mr Nightingale said, "The profitability of our continuing operations for the year, with the exception of the United Kingdom, should be satisfactory. The overall result will, however, be impacted by the substantial non-recurring costs being incurred in exiting problem franchises and resolving property problems in the United Kingdom."

1. Accounting Policies and Basis of Preparation

The unaudited interim condensed financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting. The accounting policies used in the preparation of the interim condensed financial statements are consistent with those used in the annual financial statements for the year ended 31st December 1999.

2. Revenue

3. Operating Profit

4. Tax

Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates and includes Hong Kong tax of US$4.1 million (1999: US$2.4 million).

5. Non-recurring Items

Non-recurring items relate to the restructuring costs in the United Kingdom.

6. Earnings Per Share

Basic earnings per share are calculated on the net profit of US$18.8 million (1999: US$25.1 million) and on the weighted average number of 477.8 million (1999: 477.8 million) shares in issue during the period.

Diluted earnings per share are calculated on the weighted average number of 477.8 million (1999: 477.9 million) shares after adjusting for the number of shares which are deemed to have been issued for no consideration under the Executive Share Option Schemes based on the average share price during the period.

Earnings per share excluding non-recurring items are calculated on the net profit after adjusting for non-recurring losses of US$4.8 million (1999: Nil).

7. Dividends

No interim dividend in respect of 2000 is declared by the Board (1999: US¢1.20 per share).

8. Capital Commitments and Contingent Liabilities

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 interim financial statements.

9. Post Balance Sheet Events

On 27th June 2000, Jardine Matheson Holdings Limited, the ultimate holding company, requested the Company to put forward a proposal to the minority shareholders regarding the proposed privatisation of the Company by way of a scheme of arrangement involving the cancellation of all issued shares held by the minority shareholders in exchange for cash to be paid by Jardine Matheson Holdings Limited and the Company. The cancellation price for each share of the Company comprises of HK$4.10 from Jardine Matheson Holdings Limited and US¢2.50 from the Company by way of a special dividend.

Upon the scheme becoming effective, the listing of the shares of the Company on the Hong Kong Stock Exchange will be withdrawn. The proposal is conditional on the fulfilment of various conditions. If all the conditions are fulfilled or waived, as applicable, it is expected that the scheme will become effective on or before 28th September 2000.

10. Purchase of Own Shares

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of its listed securities during the period under review.

11. Interim Report

The Interim Report will be posted to shareholders on or about 25th August 2000. Copies may be obtained from Central Registration Hong Kong Limited, 19th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong.

Issued by Forrest International Limited on behalf of Jardine International Motors Management Limited. For further information, please contact:

 

Jardine International Motors
A J L Nightingale	(852) 2843 8540
Sam Houston	(852) 2895 7343
Forrest International Leslie Fung	(852) 2501 7905

This and other Group announcements can be accessed through the Internet at "www.irasia.com/listco/hk/jim".

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