| To: Business Editor | 1st August 2000 For immediate release |
CYCLE & CARRIAGE LIMITED
Interim Report 2000 Highlights
The following press release was issued today by the Company's 25%-owned associate, Cycle & Carriage.
For further information please contact:
| Forrest International Limited David Dodwell / Leslie Fung |
Tel: (852) 2522 6475 |
RESULTS
The Board of Directors announced today a trading profit of S$139.0 million, 74% up on the previous year due to the excellent performance of the Singapore motor operations, supported by improved performances in the other motor activities and the inclusion of PT Astra International Tbk's ("Astra") results, partly offset by reduced earnings from properties due to a lower number of development projects and the completion in 1999 of the MeraWoods project.
The weakness of the Rupiah has however, resulted in major foreign exchange losses in Astra on its uncovered US$ debt of which Cycle & Carriage's share at the half year was S$92.4 million before taxation which is shown as an exceptional item together with the writeback in MCL Land's provision for foreseeable losses for development properties of S$1.6 million. As a consequence, the profit attributable to shareholders was S$19.3 million, 66% below the previous year.
Earnings per share excluding exceptional and extraordinary items at 35.5 cts were 58% above the previous year and 8.3 cts including exceptional and extraordinary items, 66% below the previous year.
The Group's net asset value per share declined by 48% to S$2.71 during the first half, due primarily to the write-off of goodwill of S$580.8 million against reserves arising from the acquisition of Astra, in accordance with the Group's policy.
DIVIDEND
An interim dividend of 5 cts or 5% (1999: 5 cts or 5% per share and a special dividend of 10 cts or 10% per share), less income tax at 25.5% (1999: 26%) has been declared for the six months to 30 June 2000. The dividend will be payable in cash on Friday, 1 September 2000 to shareholders whose registrable transfers are received by the share registrar, Barbinder & Co Pte Ltd, 8 Cross Street, #11-00 PWC Building, Singapore 048424 by 5.00 p.m. on Monday, 21 August 2000.
CORPORATE EVENTS
January
Cycle & Carriage Kia was appointed the sole distributor of Kia passenger and commercial vehicles in Singapore by Kia Motors Corporation of Korea.
February
Cycle & Carriage (Australia) Pte Ltd (previously Astre Investments Pte Ltd) entered into a joint venture to subscribe for a 10% stake in Autobytel Australia for A$1.4 million. Autobytel Australia will allow Australian car buyers to buy, lease, finance and insure new and used vehicles over the internet.
March
Cycle & Carriage acquired an initial 24.9% stake in Astra for US$309.4 million (S$531.7 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 (S$123.1 million). The Group's interest was diluted to 31.1% due to the exercise of rights. Astra will enable Cycle & Carriage to focus on its core competency in the automotive sector and also diversify its earning base through Astra's non-automotive businesses.
Cycle & Carriage acquired a 100% interest in Truck Investments of New Zealand for NZ$39.1 million. Truck Investments distributes a variety of trucks which include Hino, Renault, ERF, Mack, Western Star and MAN and operates a chain of truck service facilities throughout New Zealand.
April
To spearhead its expansion in Malaysia, MCL Land has entered into an agreement with PGK Sdn Bhd, a member of Landmarks Berhad Group. The joint venture company has acquired 2 plots of land with a total area of 11 acres for residential cum commercial development at Wangsa Maju, Kuala Lumpur.
MCL Land has also entered into a joint venture agreement with pFission Investments Pte Ltd, a subsidiary of Pidemco Land Limited, City Developments Limited, CB Richard Ellis (Pte) Ltd and Jones Lang LaSalle Property Consultants Pte Ltd to take up a 16.7% interest in a property portal, PropBuzz.com. PropBuzz.com will offer a comprehensive range of information and services to consumers and property agents.
July
MCL Land took a 10% stake in a joint venture company known as eNabled Homes Pte Ltd. The other partners in the second portal are pFission Investments Pte Ltd (45%), eNable Technology Pte Ltd (25%), CB Richard Ellis (Pte) Ltd (10%) and Premas International Limited (10%). eNabled Homes aims to provide a suite of tailored content and secured on-line services to create an e-lifestyle within private residential developments.
OPERATIONAL REVIEW
The continued improvement in the economies in which Cycle & Carriage operates gave rise to strong growth in the trading performance in the various motor operations. This good performance was, however, largely offset by foreign exchange losses in Astra on its US$ debt.
Motor
Earnings from the motor vehicle operations were S$64.9 million, 164% higher than for the first half of 1999, with improved performances in all major markets.
The Singapore passenger car market grew by 56% to 26,187 units in the first half, due to the increased number of Certificates of Entitlement ("COE") that were made available, relative to the first half of 1999. The increased number of COEs released resulted in volatility in COE prices, but with an overall decline in prices. Due to continuing competition, Cycle & Carriage saw its market share reduced to 19% for the marques that it represents. Sales from the newly acquired Kia franchise are still at an embryonic stage.
Earnings for the Singapore motor operations at S$48.5 million were significantly ahead due to a favourable Euro exchange rate, lower COE prices and strong demand.
Mercedes-Benz market share was maintained at 7% with sales of 1,901 units due to continued strong demand for the new S-class. Mitsubishi and Proton grew at a slower rate than the overall market, with sales increasing to 2,189 and 600 units respectively. Mercedes-Benz commercial vehicles grew by 83% to 555 units, due to the continuing success of the Vito van. Mitsubishi commercial vehicle sales increased to 437 units.
The Malaysian car market continued its recovery with the non-national car sector growing by 30%. Earnings from Cycle & Carriage Bintang Berhad (CCB) grew to RM40.5 million. Excluding its interest in associates, CCL Group Properties (40%) and Cycle & Carriage (Malaysia) (30%), CCB made a profit of RM35.3 million.
The continued recovery in Malaysia resulted in an overall increase in sales by CCB and improved margins. The improved demand for commercial vehicles helped to reduce the excess commercial vehicle stocks. Cycle & Carriage (Malaysia) also benefited from the improved demand. Together, the Group's Malaysian motor interests contributed S$8.9 million to the Group's earnings.
As anticipated, the Australian passenger car market declined by 14% to 239,454 units, ahead of the introduction of a General Sales Tax ("GST") on 1 July 2000. The Australian motor activity, which has been renamed Cycle & Carriage (Australia) achieved sales of 24,748 units Hyundai and 1,568 units Audi, giving it an 11% market share. Profit contribution from Australia was increased to S$4.5 million. The Group's New Zealand operations made a positive contribution of S$0.8 million due to inclusion of Truck Investments with effect from 1 April 2000.
Property
Property earnings for the first six months were S$8.9 million, a significant decrease on the prior year which included the profitable MeraWoods project.
The office and industrial markets performed marginally better due to improved economic conditions. However, the residential market slowed down in the first half of this year.
The Group's investment properties continued to experience healthy occupancy and stable rental rates during the first half of 2000. The Directors have reviewed the values of the Group's investment properties as at 30 June 2000 and have noted no significant changes in the values of the Group's investment properties.
The Group's development properties performed modestly. Net profits from development properties declined for the six months ended 30 June 2000 due to fewer projects under construction.
Sims Residences was relaunched in June 2000 with improved layout and better finishes. To-date, 46% of the 112 apartments have been sold. Together with Pidemco Land Limited, our joint venture partner, we continue to make progress in the sales of Ubi Tech Park. To-date, a total of 156 units were sold out of a total of 323 units launched.
Depending on market conditions, the 65-unit condominium development at Balmoral Crescent is likely to be launched in the later part of 2000. The condominium development at Grange Garden is currently being redesigned for joint development with the adjacent site owned by Wing Tai Holdings Limited. Planning and design works on the development of the Group's other development properties at Robertson Quay, Devonshire Road and Transit Road are in progress.
MCL Land entered into a joint venture agreement with PGK Sdn Bhd, a member of the Malaysian Landmarks Berhad Group to acquire a 50% interest in two proposed residential cum industrial developments in the township of Wangsa Maju in Kuala Lumpur.
Astra
Cycle & Carriage owns a 31.1% interest in Astra in Indonesia, as part of a consortium which acquired a 41.1% interest. Due to the size and complexities of Astra, its results are reported later, as such, Astra's trading results are only equity accounted for the two months since acquisition until end May.
During the first five months of 2000, the Indonesian automotive market reflected strong growth from the weak sales caused by political uncertainty in the previous year. Vehicle sales grew by five times to nearly 50,000 units, giving a 50% market share. Motorcycle sales grew to a level of 159,000 units. The non-automotive activities also benefited from the improvement in the overall economic and political environment. These factors resulted in a strong improvement in trading profit.
Astra has a significant level of unhedged US$ debt. The recent declines in the Rupiah against the US$ has resulted in large foreign exchange losses in Astra. Cycle & Carriage has reflected its share of the foreign exchange losses as an exceptional item.
Other Interests
Other interests showed a decline due to the interest charge on the funds borrowed for the Astra acquisition, partly offset by improved earnings from the Group's other associated companies.
Prospects
The good trading performance of the Group is expected to be sustained in the second half, albeit at a slower rate for certain of the activities.
In Singapore, the passenger car market is expected to grow due to the increased number of COEs released but competition is expected to remain tough. The improvement in the Malaysian market is expected to be sustained while Australia should show an increase due to satisfying the demand pent-up ahead of the GST introduction.
The Singapore residential property sector is expected to benefit from the improved economy. However, the combined effects of the current oversupply of existing unsold units and future supply from private and government land sales are expected to dampen any substantial gains in selling prices in the coming months.
The Group is experiencing improved occupancy rates in its investment properties in Singapore and Kuala Lumpur and renewal rates continue to remain stable. A firm recovery is only expected in Singapore after the present supply has been absorbed by the increased demand resulting from the better economic situation.
MCL Land is constantly reviewing its activities to find better and more efficient ways to generate more value to shareholders. In line with this strategy, MCL Land is considering disposing its low yielding investment assets to reallocate its resources to higher yielding development properties in Singapore and the region.
Astra should continue to perform satisfactorily at the trading level. It is hoped that political stability will restrict any further decline in the Rupiah and limit the consequent foreign exchange losses.
Overall, the directors are confident that the Group will show an improved trading performance for the full year, but the overall results will depend on the Rupiah exchange rate.
1 Basis of preparation
The financial information contained in this announcement has been based on the unaudited results for the six months ended 30 June 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 accounts.
2 Company profit and loss account
3 Turnover and profit
4 Exceptional items
The exceptional items consist of the Group's share of exchange losses on Astra's uncovered US$ debt of S$92.4 million and the writeback of S$1.6 million in the provision made by MCL Land for foreseeable losses on certain development properties in Singapore. The exceptional items included in the profit of the Group, after taxation and minority interests, amounted to a net loss of S$63.7 million (1999: writeback of S$3.3 million).
5 Taxation
The Group's effective taxation rate is higher than the standard rate as certain costs are non-deductible for income tax purposes. The share of associates' tax assets 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 item
8 Group borrowings
9 Issue of shares
The number of shares that may be issued on conversion of all outstanding options amounted to 2,385,000 (31.12.99: 1,696,000).
Between 31 December 1999 and 30 June 2000, there have been no rights, bonus or equity issues.
10 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 items set out in note 4 of this report. No other significant transaction or event has occurred between 30 June 2000 and the date of the report.
11 Closure of books
NOTICE IS HEREBY GIVEN that the Transfer Books and the Register of Members will be closed from Tuesday, 22 August 2000 to Wednesday, 23 August 2000 for the preparation of dividend warrants.
By Order of the Board
HO YENG TAT
Group Company Secretary
Singapore
1 August 2000
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