| To : Business Editor | 12th March 1997 For immediate release |
CYCLE & CARRIAGE LIMITED 1996 PROFIT AND DIVIDEND
ANNOUNCEMENT
The attached press announcement was released
today by the Company's 23%-owned associate, Cycle & Carriage.
For further information, please contact:
| Ludgate Asia Limited Martin Spurrier |
Tel: (852) 2543 5413 (office) |
Full text of the Preliminary Announcement of Results for the year ended 31st December 1996 can be accessed through the Internet at "http://www.irasia.com/listco/sg/jsh", and is also available through "First Call".
RESULTS
The Board of Directors announced today an unaudited consolidated net profit after taxation and minority interests for the year ended 31 December 1996 of S$200 million, an increase of 10% over the previous year.
Earnings per share for the year were 85.7¢ compared with 77.8¢ for the previous year, an increase of 10%.
DIVIDEND
The Directors recommend a final dividend of 27¢ or 27% (1995: 24¢ or 24%) per share, less income tax at 26% (1995: 26%), which, together with the interim dividend of 9¢ or 9% per share, less income tax at 26%, will make a total annual dividend in respect of 1996 of 36¢ or 36% per share. This is an increase of 13% over the previous year.
The final dividend, if approved, will be payable in cash on Wednesday, 28 May 1997 to shareholders whose registrable transfers are received by the share registrar, Coopers & Lybrand, 9 Penang Road, #10-20 Park Mall, Singapore 238459 by 5 p.m. on Thursday, 15 May 1997.
OPERATIONAL REVIEW
Motor
Motor earnings for the year rose to S$156.1 million, a 15% increase over 1995.
1996 has been a difficult year for the motor operations in Singapore with the size of the new car market falling by 12% to 28,750 units compared to 1995 and demand weakening. Whilst Cycle & Carriage was able to maintain its share of the passenger car market at over 25%, its unit sales fell by 14% to 7,100 units and earnings consequently fell by 15% to S$100.2 million.
The highlight of the year was the launch of the new E-class in February 1996. More than 2,000 units of this model were sold, making it the top selling car model for the year. Other Mercedes models also continued to sell well and the launch of the new SLK sports car in November 1996 was a notable success, although limited supply is likely to restrict the number of units that can be delivered each month. Margins remained steady during the year with the impact of increased competition and pressure from parallel importers being offset by benefits arising from the weak Deutschmark and the strong demand for the new E-class.
Mitsubishi sales increased by 89% to 2,500 units with the launch of the new Lancer in January 1996 being a notable success. The Lancer was the third top selling model in Singapore in 1996 and demand continues to be good. Mitsubishi margins improved slightly on 1995, but the sectors in which many of its models compete remain very competitive. The Proton marque did less well with unit sales falling to 1,200 units and margins being eroded by the higher COE subsidies offered.
Cycle & Carriage Bintang ("CCB") had another good year, announcing a profit after tax and minority interests of RM110.7 million, 43% up on 1995. Demand for Mercedes cars remained strong, especially for the new E-class, which was well received. Both Mercedes and Mazda commercial vehicles made an increased contribution. The Kia franchise has made little contribution to CCB's earnings to date, but this should improve with the launch of the Ceres, which CCB is assembling in Malaysia. CCB, together with our Malaysian dealership operation, Cycle & Carriage (Malaysia), contributed S$31.7 million to the Group's motor earnings.
In Australia, our motor operations under 49% owned Astre Investments, have continued their strong performance with Hyundai sales exceeding 49,000 units, 40% up on 1995. This makes Hyundai the fourth highest selling car marque and much the largest importer. Market share in the passenger car market was just over 10%. Chrysler has also been selling well, with sales of 8,700 units, 77% up on 1995. The Chrysler range has been greatly expanded with the Grand Cherokee, Wrangler and Neon all being launched. The performance also benefited from the write-back of a S$8.9 million provision for withholding tax which had been created in the previous year, but is no longer considered necessary following a ruling from the Australian Tax Office. The earnings contribution from Astre Investments, excluding the impact of this write-back, was S$19.0 million, an increase of 45% on 1995.
Since the end of the year, Astre has announced its acquisition of the Audi franchise for Australia and the formation of a joint venture vehicle finance company. In New Zealand the earnings from the Group's motor dealerships fell 19% to S$1.3 million reflecting the weakening in consumer demand that occurred in the middle of the year. Australia and New Zealand together contributed 19% of the Group's motor earnings.
Cycle & Carriage Thailand's sales declined by 42% and margins came under further pressure as the transition from Ford distributor to dealer was completed. The costs associated with this change in status, together with the costs incurred in establishing the Group's presence in Vietnam and Myanmar, caused a loss of S$5.0 million to be incurred in these territories.
Property
Property earnings for the year were S$39.1 million, a fall of 14% against 1995.
Malayan Credit has announced earnings of S$50.7 million, an increase of 14% over 1995. Investment property earnings rose 5% to S$11.8 million, but earnings from development properties rose substantially as profit was recognised from the Mera Terrace (100% completed), Seven Oaks (28% completed) and Scotts 28 (26% completed) developments.
CCL Group Properties contributed S$7.2 million to the Group's earnings, 59% down on 1995. Only 20% of the expected profit from MeraLodge was recognised during the year, compared to 31% in 1995, as construction stopped in December 1995, when the contractor was placed under judicial management, and did not recommence until September 1996. This delay is not expected to impact the overall profitability of the project which should be completed in time for hand-over in September 1997. No profit was recognised on the MeraWoods development during the year as it had not reached 10% completion.
In Malaysia, The Weld tower has now been completed and a temporary certificate of fitness was obtained on 7 January 1997. To date, tenants have been signed up for more than 50% of the 283,000 sq. ft of newly constructed office space. The revenue generated by Wisma Cyclecarri and The Weld podium increased slightly during the year, but was largely offset by interest costs associated with the developments. Cold Storage (Malaysia)'s property interests contributed S$1.6 million to the Group's earnings, up 3%.
Other interests
Net earnings from the Group's other interests were S$4.9 million, an increase of S$4.8 million over 1995. The contribution from the Group's other associated companies, including Cold Storage's non-property interests, was S$7.3 million compared to S$3.9 million in 1995. The Group's central overhead and financing costs were S$2.4 million, S$1.3 million down on 1995.
Cold Storage's Guardian pharmacy business in Malaysia performed in line with 1995 but is expected to benefit in future from the recent tie up with the Guardian business in Singapore. The Group's share of Cold Storage's RM28.3 million extraordinary gain on the sale of a 30% stake in the Guardian Malaysia business has been taken directly to reserves. UMF (Singapore) has continued to perform well despite increasing competition in the motor finance market. Its earnings contribution increased by 69% to S$2.2 million.
Prospects
1997 is expected to continue to be a difficult year for the Group's Singapore motor operations, with the size of the passenger car market likely to decline by about 5% against 1996, and increasing pressure being felt on margins. In overseas markets further progress is expected, but there is likely to be some slow down in the rates of growth seen in recent years.
Assuming progress on our development projects, particularly MeraLodge and MeraWoods, is in line with expectations, C&C's property earnings in 1997 will show significant improvement.
Barring unforeseen circumstances, the results for the Group for 1997 are expected to be satisfactory.
By Order of the Board
Ho Yeng Tat
Secretary
Singapore
12 March 1997
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