| To : Business Editor | 4th September 1997 For immediate release |
CYCLE & CARRIAGE: 1997 ANNOUNCEMENT OF HALF-YEAR RESULTS
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 announcement can be accessed through the Internet at
"http://www.irasia.com/listco/sg/jsh", and is also available through "First Call".
CYCLE & CARRIAGE LIMITED
(Incorporated in Singapore)
INTERIM REPORT 1997
RESULTS
The Board of Directors announced today an unaudited consolidated net profit after taxation and minority interests for the six months ended 30 June 1997 of S$98.8 million, an increase of 3% over the results for the six months to 30 June 1996.
Earnings per share for the half year were 42.2¢ compared with 41.1¢ for the six months to 30 June 1996, an increase of 3%.
DIVIDEND
An interim dividend of 9% or 9¢ per share less income tax at 26% has been declared (1996: 9% or 9¢ for the six months to 30 June 1997. The dividend will be payable in cash on 1 October 1997 to shareholders whose registrable transfers are received by the share registrars, Coopers & Lybrand, 9 Penang Road, #10-20 Park Mall, Singapore 238459 by 5.00 p.m. on 18 September 1997.
OPERATIONAL REVIEW
Motor
Earnings from the motor vehicle operations were S$59.9 million, 19% lower than in the first half of 1996.
Trading conditions in the Singapore car market have worsened significantly during the first half. The size of the new car market has fallen by 15% to 12,807 units compared to the previous year. At the same time competition between distributors for COEs has been increasingly intense, resulting in a steady increase in prices since the beginning of the year.
Against this background, whilst Cycle & Carriage has been able to increase its share of the Singapore passenger car market to over 28%, earnings have fallen by 43% to S$29.2 million. Margins have been principally affected by COE price rises, which have generally not been passed on to the customer, although, in the case of Mercedes-Benz, this has been offset by the weakness of the Deutschemark against the Singapore dollar. Mercedes-Benz car sales fell by 20% to 1,532 units, but its share of the passenger car market was sustained at 12%. Mitsubishi sales, which were exceptionally buoyant due to a series of new launches, rose to 1,625 units, making it the top selling marque in Singapore, with a market share of 13%. Proton sales have been weak in a difficult market.
Cycle & Carriage Bintang ("CCB") had another excellent half year, announcing a profit after minority interests of RM75.0 million, 90% up on 1996. Demand for Mercedes-Benz cars was healthy and unit sales increased by 22%. Profitability also benefitted from currency movements during the period. The Mercedes-Benz and Mazda commercial vehicle operations continued to perform well. CCB, together with our Malaysian dealership operation, Cycle & Carriage (Malaysia), contributed S$20.3 million to the Group's motor earnings, up 72% on 1996.
Our Australian motor group continued to trade strongly. Hyundai car sales increased to 33,875 units, 23% up on 1996, but margins were down slightly. Chrysler vehicle sales increased to 6,029 units, 60% up on 1996. Astre acquired the Audi franchise for Australia in February 1997 and, whilst progress is being made in developing this, a loss was made in the first half due to increased marketing spend. A new finance company, supporting the Astre motor operations, was also formed in the period. The initial response of dealers to this initiative has been encouraging.
In New Zealand, the profitability of our dealership has been adversely affected by weak demand and the oversupply of used cars in the market. Provision has also been made for the closure of our operations in Christchurch. Australia and New Zealand together contributed S$11.0 million to Group motor earnings, 5% down on 1996.
Property
Property earnings for the first six months were S$33.0 million, 60% up on the same period in 1996.
MCL Land has announced earnings of S$16.0 million for the half year, a fall of 49% on 1996. Investment property earnings were slightly up on 1996, but earnings from development properties fell following the cessation of contributions from the Mera Terrace project which was completed in 1996. The Seven Oaks, Mera Gardens and Scotts 28 developments all made contributions, although progress on the Scotts 28 development has been less rapid than had been hoped earlier in the year.
CCL Group Properties contributed S$22.7 million to the Group's earnings compared to the S$1.2 million contributed in the first half of 1996. The MeraLodge development, which is fully sold was 89% completed by the end of June and TOP was obtained in August. The first profit from the MeraWoods development, which is also fully sold, was recognised in the first half when the project reached 11% completion. In Malaysia, the tenanting of the Weld tower has progressed steadily and tenancies have now been secured for 72% of the available space.
Other interests
Net earnings from the Group's other interests increased by S$4.3 million to S$5.9 million. This included a S$4.9 million non-recurring profit on the sale of the Group's 30% stake in Robert Bosch (SEA) Pte Ltd.
PROSPECTS
The volume of passenger car sales in Singapore in the second half of 1997 is expected to be roughly the same as in the first half, but the total size of the market will nevertheless be approximately 9% down on 1996. The current intensity of competition and consequent pressure on margins show no signs of slackening. In consequence, the earnings from the Singapore motor business are unlikely to improve in the second half. The Group's Malaysian motor interests are expected to see a slow down in demand, and in Australia, Astre's competitors are intensifying their efforts to regain market share with the launch of new models.
The outlook for the Singapore residential property market in the short term continues to be weak. However, underpinned by sustained economic growth, management believe that the prospects for the property market in the long-term remain favourable. MCL Land has been successful in a number of recent tenders for land and is building up a landbank for future development. Further development profits will be recognised in the second half from projects which have already been sold, the main ones being MeraLodge, MeraWoods and Scotts 28. Earnings from the Group's investment properties are expected to remain stable in the second half.
In the light of prevailing market conditions, the Board of Directors believes that the Group's 1997 earnings will be slightly lower than its earnings for the previous year.
Cycle & Carriage Limited
Notes
1 Basis of preparation
The unaudited half year results have been prepared in accordance with the Statement of Accounting Standards. There have been no changes to the accounting policies as described in the 1996 audited accounts.
2 Company profit and loss account
3 Turnover and profit
4 Taxation
The effective tax rate for the Group is higher than the current Singapore tax rate of 26% because of higher corporate tax rates in Malaysia and Australia, losses in certain subsidiaries and costs disallowed for income tax purposes.
5 Segment information
6 Group borrowings
7 Issue of shares
The number of shares that may be issued on conversion of all outstanding options amounted to 1,211,500 (31.12.96: 900,500).
Between 31 December 1996 and 30 June 1997, there have been no rights, bonus or equity issues except that 97,500, 19,000 and 58,500 ordinary shares were issued for cash to senior executives who exercised the options granted on 31 December 1992, 17 March 1994 and 24 March 1995 pursuant to the Senior Executives' Share Option Scheme, to subscribe for shares of S$1.00 each at S$6.82, S$9.035 and S$11.55 respectively, per share.
8 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. No other significant transaction or event has occurred between 30 June 1997 and the date of this report.
9 Closure of books
NOTICE IS HEREBY GIVEN that the Transfer Books and the Register of Members will be closed from Friday, 19 September 1997 to Monday, 22 September 1997 for the preparation of dividend warrants.
By Order of the Board
Ho Yeng Tat
Secretary
Singapore
4 September 1997
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