| To: Business Editor | 19th March 1998 For immediate release |
The following announcement was today issued to the London Stock Exchange.
JARDINE STRATEGIC HOLDINGS LIMITED
1997 PRELIMINARY ANNOUNCEMENT OF RESULTS
Results
"The Group businesses will be affected in 1998 by the present economic problems in Asia. Nevertheless, the businesses remain financially strong and continue to improve their operations, which will provide scope for recovery when the Region's fortunes improve."
Henry Keswick, Chairman
19th March 1998
The final dividend of US?.90 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. The share registers will be closed from 13th to 17th April 1998, inclusive.
JARDINE STRATEGIC HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31ST DECEMBER 1997
PERFORMANCE
Jardine Strategic Holdings Limited today announced that the Group 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 the diminution in the value of the Company's investment in EON.
Earnings per ordinary share were US?4.23, compared with US?7.92 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 Board is recommending a final dividend of US?.90 per ordinary share which, together with the interim dividend of US?.60, gives an unchanged dividend for the full year of US?4.50 per ordinary share.
GROUP REVIEW
Turning to the operations, the Chairman, Henry Keswick, said that for most of the Group businesses the significant economic deterioration which was experienced in the latter part of the year in the Asia-Pacific Region has had a wide ranging effect on their operations.
Jardine Matheson reported a net profit for 1997 of US$325 million, up 8% on 1996. Excluding the effect of non-recurring items in both years, profit was US$292 million, a decline of 21%.
Jardine Pacific's profit from underlying businesses was US$94 million, down 4%, primarily due to the impact on its Engineering & Construction operations of a depressed Thai property market. The overall result was higher due to the exceptional gain of US$130 million from the sale of its life insurance interests. Further progress was made in restructuring its business activities, with a number of non-core or loss-making units being disposed of in 1997.
Jardine International Motors saw its trading profit decrease by 9% in 1997 to US$80 million, primarily due to reduced margins as a result of a change in Mercedes-Benz model mix in its major Hong Kong market. The group made significant acquisitions in the United Kingdom, where it is now one of the leading motor retail businesses.
Jardine Fleming faced an unusually difficult market in 1997 producing a net profit of US$14 million, compared to US$82 million in 1996 after exceptional charges. Its investment management arm produced a good relative performance across its portfolios, although funds under management declined from US$21 billion in 1996 to some US$17 billion as market values fell across the Region. Overall, Jardine Fleming is aligning its cost base to the expected level of revenues, while consolidating its position in the front rank of Asia's investment houses.
Jardine Lloyd Thompson, which was formed in February 1997 from the merger of JIB Group and Lloyd Thompson Group, recorded pro-forma results for the year showing a profit before merger costs, exceptional items and tax equivalent to US$83 million, an increase of 5% over 1996. While the insurance industry continues to be affected by soft markets and adverse currency movements, Jardine Lloyd Thompson made good progress in integrating the two businesses and creating a strong platform for growth.
Dairy Farm produced a profit before interest from continuing activities of US$209 million, an increase of 3%. The result reflected the significant improvement in Australia, partly offset by continuing start-up losses in Asia, higher corporate overheads and investment in systems. During the year, the group strengthened its operational management and continued to build on its strategy of improving the quality of its outlets and product ranges. Decisions were made to withdraw from a number of underperforming businesses so as to concentrate on its core retail activities.
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. Occupancy in its Hong Kong property portfolio remained high, but capital values declined as the depth of Asia's economic crisis became apparent. The group remained active, announcing a redevelopment of one of its core Central Hong Kong properties, progressing a number of other property projects and expanding its infrastructure activity in Mainland China. The company also implemented a share repurchase programme during the year, buying back some 4% of its capital, enhancing both earnings and net asset value per share.
Mandarin Oriental saw a strong first half in 1997 followed by a steep decline in the second half as Asia's crisis began to bite. Net profit for the year was US$45 million, a decrease of 25% from 1996. Excluding a provision against its investment in its hotel in Surabaya, Indonesia, its profit fell by 10%. The group continues the renovation of its London property and is to open its new hotel in Kuala Lumpur in mid year. It has also announced a new project in Miami.
Cycle & Carriage reported a net profit equivalent to US$106 million for the year, down 25%. Motor earnings declined 45% to US$62 million, while profit from property activities increased by 44% to US$40 million. The group's motor business performed well in Singapore despite the contracting market, but margins came under pressure in Australia. There was a good performance from its property interests in 1997, although the level of contribution will not be maintained in the current poor climate.
EON, the Malaysian group in which the Company holds a 17.4% interest, was affected by the worsening economic situation in the Region, but the scale of the decline in the share price at the year end does not match our 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.
During the year, the Company repurchased some 2.3% of its ordinary share capital and subsequently converted its outstanding 7?% preference shares into fully paid ordinary shares.
OUTLOOK
In conclusion, Henry Keswick said, "The Group businesses will be affected in 1998 by the present economic problems in Asia. Nevertheless, the businesses remain financially strong and continue to improve their operations, which will provide scope for recovery when the Region's fortunes improve."
Jardine Strategic 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 ITEM
This represents provision for diminution in value of the Group's investment in Edaran Otomobil Nasional.
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$17.7 million (1996: US$15.0 million).
4 DIVIDENDS
A wholly-owned subsidiary undertaking has waived the interim dividend and agreed to waive the recommended final dividend on the ordinary shares held by it.
5 PROFIT AFTER TAXATION, OUTSIDE INTERESTS AND PREFERENCE DIVIDENDS
6 EARNINGS PER SHARE
Earnings per share are calculated on the profit after taxation, outside interests and preference dividends of US$193.9 million (1996: US$301.9 million) and on the weighted average number of 800.1 million (1996: 796.1 million) ordinary shares in issue during the year. The weighted average number excludes shares held by a wholly-owned subsidiary undertaking and the Company's share of the shares held by an associate.
Earnings per share excluding non-recurring items are calculated on the profit after taxation, outside interests and preference dividends after adjusting for non-recurring losses of US$62.6 million (1996: US$15.0 million).
Full exercise of call warrants would not result in a material dilution of earnings per share.
7 TERM LOANS
8 CORPORATE CASH FLOW AND NET DEBT
Corporate cash flow and net debt comprises the cash flows and net cash or debt of the Company and of its investment holding and financing subsidiary undertakings.
9 ACQUISITIONS
Purchase of associates and other investments includes the Company's increased holding in Edaran Otomobil Nasional and Hap Seng Consolidated of US$100.8 million and US$20.4 million respectively.
10 MARKET VALUE BASIS NET ASSETS
Net assets based on the market price of the Company's holdings:
* The figures reflect the full conversion of convertible preference shares, which took place during 1997, but do not assume the exercise of the outstanding call warrants.
11 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 US?.90 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 ordinary Shareholders on the register of members at the close of business on 9th April 1998. The ordinary share registers will be closed from 13th to 17th April 1998, inclusive. Ordinary Shareholders will receive their dividends in United States Dollars. Ordinary 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. Ordinary 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.
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/jsh1". This announcement is also available through "First Call".
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