Cycle & Carriage Limited
2000 Profit and Dividend Announcement

The following press release was issued today by the Company's 26%-owned associate, Cycle & Carriage.

For further information please contact:

Golin/Harris Forrest Sue Gourlay

(852) 2501 7936

RESULTS

The Board of Directors announced today an unaudited consolidated profit attributable to shareholders of S$100.3 million for the year ended 31 December 2000 compared to S$113.2 million in 1999. This was supported by a strong performance from the Mercedes-Benz business in Singapore. Profits also improved in the major markets of Malaysia and Australia. The Group's property interests showed a decline as the highly profitable MeraWoods project was completed in early 1999. Astra had a strong trading performance in Indonesia. This was unfortunately more than offset by losses on exchange arising from Astra's foreign currency debt and a provision made for the diminution in the value of investment in PT Bank Universal Tbk. An extraordinary profit of S$27.2 million arose from the restructuring of Astra's Honda motorcycle activities and the sale of the Group's interest in Selangor Ice Company in Malaysia which was in line with the strategy of exiting non-core operations.

Primarily as a result of the Astra acquisition, the Group's net debt increased to S$677.7 million at 31 December 2000, from the level of S$91.3 million at the end of the previous year. The goodwill arising on the Astra acquisition (the difference between the purchase price and the share of the fair value of tangible net assets of Astra) was written off directly to reserves in line with the Group's accounting policy. This has reduced the Group's net tangible asset value from S$1,228.8 million at 31 December 1999 to S$685.6 million at 31 December 2000.

The earnings per share were 73.9 cents, excluding the exceptional and extraordinary items, compared with 41.9 cents for the previous year.

DIVIDEND

The Directors recommend a final dividend of 12 cents or 12% (1999: 15 cents or 15%) per share, less income tax at 25.5% (1999: 26%), which, together with the interim dividend of 5 cents or 5% per share, will make a total dividend in respect of 2000 of 17 cents or 17% per share.

The final dividend, if approved by shareholders at the Annual General Meeting of the Company to be held on 3 May 2001, will be paid on a date to be announced. The Books Closure Date to determine the entitlement of the proposed dividend will also be announced at a later date.

The Directors are proposing to recommend a scrip dividend scheme which will allow shareholders to elect to receive dividend in scrips. The scrip dividend scheme is subject to the approval of the Singapore Stock Exchange Securities Trading Limited and the shareholders of the Company at an extraordinary general meeting to be convened.

CORPORATE EVENTS

January

Cycle & Carriage was appointed the sole distributor of Kia passenger and commercial vehicles in Singapore by Kia Motors Corporation of Korea.

March

Cycle & Carriage acquired an initial 24.9% stake in PT Astra for US$309.4 million through a successful tender as part of a consortium which acquired a 41.1% interest in the company offered for sale by the Indonesian Bank Restructuring Agency. A further 6.4% was later acquired for US$70.9 million.

Cycle & Carriage acquired a 100% interest in Truck Investments in New Zealand for NZ$39.1 million. Truck Investments distributes a variety of trucks which includes Hino, Renault, ERF, Mack, Western Star and MAN and operates a chain of truck service facilities throughout New Zealand.

April

To spearhead its expansion in Malaysia, Cycle & Carriage's subsidiary, MCL Land, entered into a joint venture agreement with PGK Sdn Bhd, a member of Landmarks Berhad Group to acquire land for residential cum commercial developments in the township of Wangsa Maju, Kuala Lumpur.

October

MCL Land together with a joint venture partner, Ho Bee Developments Pte Ltd acquired two adjoining 99-year lease land parcels with an area of 331,700 sq ft for S$220.0 million at Serangoon View and Hougang Avenue 7 on which a 725-unit high rise condominium will be developed.

November

Jardine Strategic announced a mandatory takeover offer for Cycle & Carriage Limited at a price of S$3.30 per share. The independent directors supported by independent adviser, Vickers Ballas recommended that shareholders with a long-term view of their investment in the Group and who are confident of the long-term prospects of the Group do not accept the offer.

Cycle & Carriage announced the completion of the sale of its 50% owned associated company, Selangor Ice Company for RM26.0 million.

December

The takeover offer was unsuccessful at the close of the offer as insufficient acceptances were received to reach the conditional acceptance level of more than 50% including the shares Jardine Strategic and its concert parties already held before the offer.

OPERATIONS REVIEW

Motor

Earnings from the motor operations at S$119.3 million, were almost double the profits of 1999 due to improved performances in all the Group's major markets, particularly in Singapore.

The Singapore passenger car market had strong growth of 51% to 58,117 units due to an increase in the number of Certificates of Entitlement ("COE") that were made available. Earnings for the Singapore motor operations increased by 98% on 1999 to S$99.8 million, despite a decline in market share of the passenger car market to 17% for the year.

Mercedes-Benz passenger car sales of 3,256 units were supported by continuing strong demand for the S-Class and the recently launched new C-Class although only limited C-Class deliveries were possible in 2000. Mitsubishi and Proton both reflected increases in sales, albeit at a slower rate than the overall market, with sales of 4,298 units and 1,498 units respectively. The new Mitsubishi Lancer was only launched in September 2000 and had limited deliveries in 2000. The recently acquired Kia franchise got off to a satisfactory start with sales of 1,022 units for the eight months since the commencement of the operations.

Commercial vehicle sales grew strongly in line with the market which increased by 100%. Mercedes-Benz commercial vehicle sales increased by 116% while Mitsubishi commercial vehicle sales increased by 113%. Despite very keen competition between motor distributors, margins for the Group were satisfactory for both passenger and commercial vehicle sales with Mercedes-Benz margins being enhanced by the weak Euro.

The Singapore Mercedes-Benz operations have been restructured to be a retail and after-sales function only. Staff dedicated to the import function were transferred to DaimlerChrysler which assumed responsibility for managing the import activities. The cost base of the retail operation was reviewed to ensure that it was consistent with the lower level of margins which will be earned in the future.

In Malaysia, Cycle & Carriage Bintang benefited from the continued recovery in the passenger car market. The passenger car market increased by 18% while sales of Mercedes-Benz passenger cars grew by 21%. Local assembly has now commenced for the S-Class and the new C-Class will also be assembled in Malaysia in 2001.

Cycle & Carriage Bintang profits excluding its interest in its associates, CCL Group Properties and Cycle & Carriage (Malaysia), were RM55.1 million, a 47% increase over the previous year due to improved margins. Tax became payable again following the tax holiday of 1999. Cycle & Carriage (Malaysia), the Group's dealership business in Malaysia, also had a satisfactory year, although suffering from insufficient supply of certain popular models.

Cycle & Carriage Australia (previously Astre), the Group's distribution business in Australia continued its recovery. The Australian passenger car market declined by 1% to 553,673 units partly due to disruption caused by the introduction of GST on 1 July 2000. Sales of Hyundai fell by 3% to 45,584 units while Audi sales increased to 3,252 units. The expanded Hyundai product range has resulted in a better model mix and improved margins, enabling the company to compete more effectively in the market.

The Group's contribution from New Zealand reflected an improvement due to the acquisition of Truck Investments in March 2000 and an improved trading performance from the Group's dealership activities.

Property

The Singapore property market was soft after a strong recovery in the previous year. The contribution from the Group's property interest declined to S$16.7 million for the year due to a weaker trading performance by MCL Land and no further contribution from CCL Group Properties' MeraWoods project which was completed in March 1999. The Sims Residences and Forest Hills projects were launched with satisfactory take-ups considering the prevailing market conditions.

MCL Land's other development projects, Balmoral Residences, Grange Garden and the freehold Devonshire Road site will be launched when the luxury sector shows signs of recovery. The landbank was strengthened through the acquisition of residential sites at Serangoon View and Hougang Avenue 7 at reasonable prices in joint venture with Ho Bee Developments Pte Ltd. The land parcels total 331,700 sq ft and could accommodate about 700 residential units.

The Group's investment properties provided a steady return with improved occupancy levels and rental rates. In order to improve shareholder returns, MCL Land has decided to exit the Singapore residential and commercial investment property markets and to focus on its development portfolio. Consistent with this approach, the Robertson Quay property which is still to be developed has been re-designated from an investment project to a development project.

Astra

The 31% interest in Astra, acquired for S$664.3 million by Cycle & Carriage as part of a consortium, is expected to be a major contributor to Cycle & Carriage in the future. This acquisition completes Cycle & Carriage's search for a major new investment as reflected in the report of last year. Due to the size and complexities of Astra, its results take longer to complete, as such Astra's trading results were only equity accounted for the eight months since acquisition until end November but adjusted for significant transactions occurring in December 2000.

The Group's share of Astra's earnings before exceptional items for the eight months which was equity accounted was S$50.9 million. Unfortunately, this was more than offset by exchange losses of S$83.7 million, arising on Astra's foreign currency denominated debt and a provision of S$20.8 million made for the diminution in value of investment in PT Bank Universal Tbk. An extraordinary gain of which the Group's share was S$24.3 million arose from the restructuring of the Honda motorcycle activities into an equal joint venture with the Honda Motorcycle Company of Japan.

In Indonesia, the economy continued its modest recovery. This factor, together with the satisfaction of pent-up demand from previous years, led to a rebound in the vehicle market. The market for passenger cars grew by 250% to 275,257 units for the 11 months to November, while the recovery for motorcycles was less dramatic and reflected an increase of 120% to 959,377 units. In the passenger car market, Astra was able to improve its market share and its sales grew by 258% to 139,114 units, a 51% market share. Astra's motorcycle sales were, however, impacted by the import of cheap motorcycles, primarily from China, and so its market share declined. Its sale of Honda motorcycles increased by 75% to 433,054 units. The improved vehicle market benefited all of Astra's auto related activities such as component manufacture, vehicle manufacturing, distribution, retail, finance and insurance.

The Toyota Kijang remained the best selling car in Indonesia. This, together with the Toyota Soluna which was launched in April gave Toyota a 30% market share. Isuzu saw good growth too with the launch of the new Panther in September. Daihatsu, BMW, Peugeot and Nissan Diesel also benefited from the improved market conditions.

Astra also saw an operational improvement in its heavy equipment, palm oil, information technology and telecommunications businesses.

The major concern remains Astra's high level of foreign currency debt. The strong operating flows for the year and the proceeds from the Honda restructuring will enable the early repayment of the Series I debt. The next major debt repayment is only due in December 2002. The weakness of the Rupiah during the year gave rise to significant unrealised exchange losses on the foreign currency denominated debt.

Other Interests

The Group has exited its interest in Selangor Ice Company Sdn Bhd and has remaining interests in Maritime Holdings Ltd (20%), MTU Asia Pte Ltd (25%) and Ampang Investments Pte Ltd (40%) which owns the Concorde Hotel in Kuala Lumpur. These businesses which are not regarded as core investments contributed a profit of S$3.0 million to the Group. The central overheads which are also included here were high due to the cost of financing the acquisition of Astra.

Prospects

The economic recovery in the Southeast Asian region appears to be slowing after the strong recovery of last year. There is also the risk of an economic slowdown in the United States of America, the extent of which will have a differing impact on world economies.

The Singapore motor operations will be impacted by the loss of the Mercedes-Benz import activities as well as a reduction in the COE quota for 2001. On the positive side, the Group has a significant number of Mercedes-Benz vehicles in stock for which the distribution margin will be accounted for in 2001 together with a strong order book, particularly for the new Mercedes-Benz C-Class. Good growth is expected from the Kia franchise which will contribute for the full year.

Malaysia is expected to benefit from the local assembly of the Mercedes-Benz S-Class and C-Class. In Australia, the expanded Hyundai range and the strengthened Audi dealership chain should improve performance. In New Zealand, results for Truck Investments will be included for the full year.

No significant recovery is expected in the Singapore property market. MCL Land will earn development profits from The Sunnydale, Sims Residences and Forest Hills projects which are under construction. Further projects will be launched during the year but, other than Balmoral Residences, these are not expected to contribute until later. Occupancy levels of the investment properties are expected to remain satisfactory, with an improving rental market. MCL Land wishes to exit its two investment properties in Singapore in order to focus on the development property market, but will only do so if the prices are attractive.

In Indonesia, no growth is expected from the car market as the pent-up demand has been largely satisfied in 2000 and inflated the market, and a decline is even possible. The motorcycle market is expected to show reasonable growth. The Group will benefit from accounting for a full year of Astra's results whereas 2000 only included results for eight months.

The directors expect that the Group's trading performance for 2001 will be satisfactory, but the Group will remain exposed to exchange losses in Astra should the Indonesian Rupiah depreciate further.

1 Basis of preparation

The financial information contained in this announcement has been based on the unaudited results for the year ended 31 December 2000 which have been prepared in accordance with the Statements of Accounting Standard on the basis of the accounting policies set out in the financial statements. There have been no changes to the accounting policies as described in the 1999 audited financial statements except for the change in the policy adopted for the recognition of deferred tax assets as described in note 9.

2 Company profit and loss account and balance sheet

Profit and loss account for the year ended 31 December

3 Turnover and profit

4 Exceptional items

The exceptional items included in the profit after taxation and minority interests are as follows:

5 Taxation

The effective tax rate for the Group is higher than the current Singapore tax rate of 25.5% due to certain costs not being deductible for income tax purposes, higher tax rates and restricted recognition of deferred tax asset in certain foreign subsidiaries. The share of associates' tax credits is due mainly to the recognition of the Group's share of Astra's deferred income tax benefits on timing differences and tax losses.

6 Segment information

7 Extraordinary items

8 Group borrowings

9 Change in accounting policy

From 1 January 2000, the accounting policy relating to the recognition of deferred tax assets was changed. Under the new policy, deferred tax assets are recognised where such benefits are expected to be realisable in the near future compared to the previous policy, where deferred tax assets are recognised only to the extent of any deferred tax liability and where such benefits are expected to be realisable in the near future.

The credit to income arising on 1 January 2000 from the change in accounting policy amounting to S$11.8 million has been dealt with as follows:

The effect of the change is to decrease taxation by a net amount of S$22.8 million in 2000 as the increase in the Group's taxation (excluding associates) of S$0.6 million is offset by the decrease in the Group's share of associates' taxation of S$23.4 million.

10 Issue of shares

The number of shares that may be issued on conversion of all outstanding options granted pursuant to the Senior Executives' Share Option Schemes amounted to 1,936,000 as at 31 December 2000 (30.6.2000: 2,385,000).

Between 1 July 2000 and 31 December 2000, there have been no rights, bonus or equity issues.

11 Other

The results do not include any pre-acquisition profits and have not been affected by any item, transaction or event of a material or unusual nature other than the exceptional and extraordinary items set out in notes 4 and 7 of this report. Other than disclosed above, no other significant transaction or event has occurred between 31 December 2000 and the date of this report, except for a sale and purchase agreement entered into by the Company on 31 January 2001 to increase its stake in Cycle & Carriage Motor Dealer Pte Ltd ("CCMD") by 23% to 50%, to broaden its investment in the retail network. The consideration is based on 23% of the audited net tangible asset value of CCMD for the financial year ended 31 December 2000.

12 Closure of books

The notice of Books Closure for determining shareholders' entitlement of the proposed dividend will be announced at a later date.

13 Annual General Meeting

The Annual General Meeting of the Company will be held on Thursday, 3 May 2001 in the Oriental Ballroom, Level One, The Oriental, Singapore, 5 Raffles Avenue, Singapore 039797 at 11.00 a.m.

By Order of the Board

Ho Yeng Tat
Group Company Secretary

Singapore
21 February 2001