| To: Business Editor | 11th March 1999 For immediate release |
The following announcement was today issued to the London Stock Exchange.
JARDINE STRATEGIC HOLDINGS LIMITED
1998 PRELIMINARY ANNOUNCEMENT OF RESULTS
HIGHLIGHTS
"We do not expect the recessionary trading environment in Asia to improve materially in the near future. However, these unfavourable conditions mask considerable progress in each of our underlying businesses which, with sound finance and a commitment to the efficient use of capital, are well equipped to benefit when the Region finally recovers momentum."
Henry Keswick, Chairman
11th March 1999
The final dividend of US?.90 per share will be payable on 9th June 1999, subject to approval at the Annual General Meeting to be held on 3rd June 1999, to Shareholders on the register of members at the close of business on 1st April 1999. The ex-dividend date will be on 26th March 1999, and the share registers will be closed from 5th to 9th April 1999, inclusive.
JARDINE STRATEGIC HOLDINGS LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 1998
PERFORMANCE
Jardine Strategic Holdings Limited today announced that its underlying businesses had to contend with depressed Asian markets during 1998, which affected both earnings and asset values. The Company recorded a net profit for 1998, excluding non-recurring items, of US$223 million, a decrease of 17% from 1997. The overall result was impacted by significant non-recurring items, including the reduction in value of properties below cost and provisions against certain investments in Southeast Asia. In particular, a further provision has been made against the value of the Company’s investment in Edaran Otomobil Nasional. These charges were offset, to some extent, by gains arising on the disposal of non-core businesses. After non-recurring items, a loss of US$33 million was recorded, compared with a profit after preference dividends of US$189 million in 1997.
Excluding non-recurring items in both years and assuming full conversion of the preference shares in 1997, earnings per share declined 15% to US?4.48. Including non-recurring items, a loss per share of US?.65 was recorded, compared with earnings of US?3.67 in 1997.
The net asset value per share, based on the market price of the Company's holdings, recorded a decline of 25% to US$3.11 in 1998.
In light of the challenging economic conditions, the Company's businesses have carefully reviewed their level of dividend, and some are recommending a reduction in the final dividend. The Board has therefore considered it prudent to recommend a final dividend of US?.90 per share which, together with the interim dividend of US?.60, gives a dividend for the full year of US?2.50 per share, down 14%.
GROUP REVIEW
Turning to the operations, the Chairman, Henry Keswick, said that Jardine Matheson's underlying profit declined by 32% to US$190 million, but after non-recurring items, net profit fell 84% to US$51 million.
Jardine Pacific's profit from ongoing operations in 1998 was US$47 million, a reduction of 48%, reflecting weak consumer demand in most Asian markets and the cost to its aviation businesses of the move to the new Hong Kong International Airport. The net profit including non-recurring items of US$72 million benefited from gains arising from the disposal of Republic Cement in the Philippines, Reliance Environmental Services and Pizza Hut Australia. Following the latest disposals, the restructuring of Jardine Pacific's portfolio of businesses is well advanced, and the emphasis is moving towards growing its core operations.
Jardine International Motors reported a net profit for 1998 of US$38 million, down 40%. Excluding the exceptional gain in 1997, the decline was 33%. It was a challenging environment for the group's Asian operations, although Zung Fu performed well, with only a small fall in profit. In the United Kingdom, however, some of the recently acquired Appleyard operations suffered from greater problems than anticipated, and, while progress has been made in resolving these, results were well below expectations.
Jardine Lloyd Thompson continued its good progress in 1998 with profit before tax and exceptional items increasing 15% to ?8 million. The result was achieved against a background of difficult and competitive market conditions. Growth was recorded in both revenues and operating profit, which clearly reflected the success of the merger in 1997. The insurance industry continues to go through considerable structural change, but JLT's competitive position has been improved.
Jardine Fleming achieved a pretax profit of US$18 million in 1998 in the face of difficult markets. This result was due, in part, to a material reduction in costs which was achieved without reducing the scope or quality of its services. In December, agreement was reached for Jardine Matheson to exchange its 50% stake in Jardine Fleming for a direct interest in Robert Fleming. This transaction recognises that Jardine Fleming's development in the face of the globalisation of the financial services industry can best be achieved as an integral part of the Robert Fleming group. Jardine Matheson's interest in Robert Fleming, coupled with the Company's existing 4% stake, will give the Group a combined holding of 18%.
Dairy Farm reported a profit of US$155 million for 1998, 38% ahead of 1997. Some US$10 million of this was attributable to the profit on the disposal of its European operations, partially offset by a write-down of its investment in Indonesia, year 2000 software costs and property devaluations. There were good underlying performances from its key retail businesses in Australia, Hong Kong and New Zealand. Dairy Farm's repositioning over the past two years has turned it from a retail holding company to a decentralised operating company. The resultant business simplification, clarity of focus and sharing of upgraded group resources have been important elements in its ability to achieve earnings improvements.
Hongkong Land's net profit, excluding exceptional items, declined by 9% to US$370 million. After making provisions for the reduction in the value of its development properties and other property and infrastructure investments in Southeast Asia, the net profit was US$126 million, compared with US$392 million in 1997. Shareholders' funds declined 44% to US$4,925 million, reflecting the reduction in investment property values. The group maintained high levels of occupancy in its Hong Kong portfolio, but oversupply in a weak market has caused sustained downward pressure on rents.
Decline in hotel demand in almost all parts of Asia Pacific throughout 1998 led to a reduced trading profit for Mandarin Oriental of US$46 million, down 44% on 1997. A provision for property devaluations, combined with higher interest expense, has resulted in the group for the first time suffering a net loss of US$4 million, compared with a profit of US$46 million in 1997. Mandarin Oriental Hyde Park is in the course of renovation, which is having a negative immediate impact on earnings, but on completion will confirm its position as one of London's premier luxury hotels. The group's Kuala Lumpur hotel has opened, and construction has begun on its new hotel in Miami.
Cycle & Carriage reported a net profit of S$4 million, which included an exceptional charge relating to development properties in its 60% associate MCL Land. Excluding exceptional items, the group's reported profit declined 37% to S$107 million. Earnings from its motor operations were 77% lower due to difficult markets in both Singapore and Malaysia and reduced margins in Australia. Property operations achieved an 18% increase in earnings for the year, although a loss was recorded following the exceptional charge.
EON's performance in 1998 was impacted by the extremely difficult operating environment in its two main businesses, motor car distribution and finance. Although a recovery is expected in due course, the Group has decided to take a cautious view of the value of its investment in EON and accordingly has made an additional provision of US$129 million against it. Nevertheless, in light of the depressed share price the Group has taken the opportunity to increase its holding to 19%.
OUTLOOK
In conclusion, Henry Keswick said, "We do not expect the recessionary trading environment in Asia to improve materially in the near future. However, these unfavourable conditions mask considerable progress in each of our underlying businesses which, with sound finance and a commitment to the efficient use of capital, are well equipped to benefit when the Region finally recovers momentum."
1 BASIS OF PREPARATION
The financial information contained in this announcement has been based on the audited results for the year ended 31st December 1998 which have been prepared in conformity with International Accounting Standards.
In accordance with the revised International Accounting Standard 12, deferred taxation is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values. This is a change in accounting policy as in previous years deferred taxation was provided in respect of timing differences between profit as computed for taxation purposes and profit as stated in the financial statements to the extent that a liability or an asset was expected to be payable or receivable in the foreseeable future. The comparative figures for 1997 have been restated to reflect the change in policy. The effect of this change has been to decrease the profit after taxation and outside interests for the year ended 31st December 1997 by US$4.5 million and the Shareholders funds as at that date by US$29.4 million. There have been no other changes to the accounting policies described in the 1997 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$7.3 million (1997: US$16.9 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 NON-RECURRING ITEMS
7 EARNINGS PER SHARE
Basic earnings per share are calculated on the loss after taxation, outside interests and preference dividends of US$33.2 million (1997: profit of US$189.4 million) and on the weighted average number of 910.1 million (1997: 800.1 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.
Diluted earnings per share are calculated on the weighted average number of 910.1 million (1997: 930.7 million) ordinary shares on the assumption that all outstanding convertible preference shares which were compulsorily converted into ordinary shares on 10th October 1997 and those converted before that date had been converted into ordinary shares on 1st January 1997.
The call warrants which expired in May 1998 were anti-dilutive and therefore ignored in the calculation of diluted earnings per share.
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$256.0 million (1997: US$51.7 million).
8 TERM LOANS
9 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.
10 ACQUISITIONS AND DISPOSALS
Purchase of associates and other investments includes Dairy Farm’s acquisition of a 32% effective interest in P.T. Hero Supermarket of US$39.1 million.
Sale of subsidiary undertakings represents the disposal of Simago by Dairy Farm of US$119.9 million.
Sale of associates and other investments includes US$292.8 million arising on the disposal by Dairy Farm of its interest in Somerfield which it acquired in consideration for its interest in Kwik Save.
11 MARKET VALUE BASIS NET ASSETS
Net assets based on the market price of the Company's holdings:
12 ANNUAL REPORT
The Annual Report will be posted to Shareholders on or about 4th May 1999. 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 9th June 1999, subject to approval at the Annual General Meeting to be held on 3rd June 1999, to Shareholders on the register of members at the close of business on 1st April 1999. The ex-dividend date will be on 26th March 1999, and the share registers will be closed from 5th to 9th April 1999, inclusive. Shareholders will receive their 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 21st May 1999. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing ten business days prior to the payment date. 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.
- end -
For further information, please contact:
| Jardine Matheson Limited Norman Lyle |
(852) 2843 8216 (office) |
| Forrest International Limited David Dodwell Sue Gourlay |
(852) 2522 6475 (office) (852) 2501 7902 (direct) (852) 2501 7936 (direct) |
Full text of the Preliminary Announcement of Results and the Preliminary Financial Statements for the year ended 31st December 1998 can be accessed through the Internet at "http://www.irasia.com/listco/sg/jsh1". This announcement is also available through "First Call".
| © Copyright 1996-2008 irasia.com Ltd. All rights reserved. Tel: (852) 2831-9792. |
|
DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any
information provided on this website. Under no circumstances shall irasia.com Ltd be liable
for damages resulting from the use of the information provided on this website.
TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website. |