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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Jardine Strategic Holdings Ld | LSE:JDSB | London | Ordinary Share | BMG507641022 | ORD US$0.05(BERMUDA REG) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 27.9722 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMJDS TIDMJAR
RNS Number : 9832V
Jardine Strategic Hldgs Ltd
27 July 2018
To: Business Editor 27th July 2018
For immediate release
The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.
Jardine Strategic Holdings Limited
Half-Yearly Results for the Six Months ended 30th June 2018
Highlights
-- Underlying profit up 9% -- Good performances from Astra and Jardine Cycle & Carriage -- Strong financial position maintained
"After a good performance in the first half of 2018 driven primarily by Astra and Jardine Cycle & Carriage, we are optimistic for a stronger second half of the year, with these companies continuing to perform well and the contributions of other businesses expected to improve."
Sir Henry Keswick, Chairman
Results
Hot Features
Premium
(unaudited)
Six months ended 30th June
2018 2017 Change
US$m US$m %
-------------------------------------------- ------- ------- -------
Gross revenue including 100% of
Jardine Matheson, associates and
joint ventures 44,348 37,417 +19
Revenue 16,939 14,959 +13
Underlying profit* attributable
to shareholders 828 762 +9
Profit attributable to shareholders 984 2,342 -58
US$ US$ %
------- -------
Underlying earnings per share* 1.45 1.31 +11
Earnings per share 1.72 4.03 -57
Net asset value per share(#) 64.62 59.08 +9
-------------------------------------------- ------- ------- -------
USc USc %
-------------------------------------------- ------- ------- -------
Interim dividend per share 10.00 9.50 5
-------------------------------------------- ------- ------- -------
* The Group uses 'underlying profit' in its internal financial
reporting to distinguish between ongoing business performance
and non-trading items, as more fully described in note 9
to the condensed financial statements. Management considers
this to be a key measure which provides additional information
to enhance understanding of the Group's underlying business
performance.
(#) At 30th June 2018 and 31st December 2017, respectively.
Net asset value per share is calculated on a market value
basis, details of which are set out in note 15 to the condensed
financial statements.
The accounts have been restated due to changes in accounting
policies upon adoption of IFRS 9 'Financial Instruments'
and IFRS 15 'Revenue from Contracts with Customers', as
set out in note 1 to the condensed financial statements.
The interim dividend of USc10.00 per share will be payable on 10th October 2018 to shareholders on the register of members at the close of business on 17th August 2018 and will be available in cash with a scrip alternative.
Jardine Strategic Holdings Limited
Half-Yearly Results for the Six Months ended 30th June 2018
Overview
Jardine Strategic benefited from strong performances in the first half of 2018 from Astra and Jardine Cycle & Carriage in particular, although these were partially offset by Jardine Pacific. Dairy Farm saw a slight increase in profit, while Hongkong Land was slightly down against the prior year.
Results
Underlying profit for the period rose 9% to US$828 million, and underlying earnings per share were up 11% at US$1.45. The revenue of the Group for the period was 13% higher at US$16,939 billion, while revenue, including 100% of Jardine Matheson, associates and joint ventures, was up 19% at US$44,348 billion.
Within the Group's businesses, Jardine Pacific saw lower results from Restaurants and Transport Services and steady performances by Gammon, Jardine Schindler and JEC. Jardine Motors made a good start to the year in Hong Kong, but its margins in mainland China and the United Kingdom came under pressure. Its increased underlying profit included a contribution from Zhongsheng, which became an associate in the second half of 2017. Jardine Lloyd Thompson delivered a solid performance in the context of continuing inconsistency in global insurance markets.
Results from Hongkong Land were slightly down. While the contribution from its investment properties was higher, due to positive rental reversions in Hong Kong, profits from its development properties were lower due to the timing of sales completions in mainland China, partially offset by a higher contribution from Singapore.
Dairy Farm saw an increase in sales with profit slightly higher than the prior year. There were strong results from North Asia, driven by the Health and Beauty business in Hong Kong and Macau, but the Southeast Asian Food businesses continued to face significant challenges.
At Mandarin Oriental, underlying profits were higher due to generally improved performances across the Group's portfolio, notably in Hong Kong, Singapore, Bangkok and Tokyo. The impact of the fire at its London hotel is being assessed by insurers with the estimate of a write-off of tangible assets offset by insurance claims recoverable. Given the coverage under the group's insurance arrangements, the impact on profitability is expected to be modest.
In Southeast Asia, Jardine Cycle & Carriage saw stronger performances by its Direct Motor Interests and Other Strategic Interests. Astra also performed well, with strong performances from its heavy equipment and mining businesses and an improved contribution from its financial services division, which more than offset lower contributions from its agribusiness and infrastructure operations. Net income from the automotive business was flat.
Non-trading gains in the first half totalled US$156 million, primarily consisting of a net gain of US$337 million from revaluations of investment properties and a net loss of US$187 million due to unrealised fair value losses related to non-current investments. This compares with a net non-trading gain of US$1,580 million in the first half of 2017. Accordingly, the Group's profit attributable to shareholders for the period was US$984 million compared with US$2,342 million in 2017.
The Board has declared an increased interim dividend of USc10.00 per share.
Business Developments
Hongkong Land has continued to benefit from tight supply in the Hong Kong office leasing market and vacancy in the Singapore office portfolio also remains low. WF CENTRAL in Beijing is performing in line with expectations and its hotel, Mandarin Oriental Wangfujing, is expected to open towards the end of the year. Planning of the prime commercial joint venture project in the central business district of Bangkok, which was secured in late 2017, continues in line with schedule. Good progress was made in the period in securing new sites for development, including a prime commercial site in Nanjing's central business district and a residential site in Singapore, as well as projects in Bangkok, Jakarta and Manila. Hongkong Land's joint venture projects in the rest of Southeast Asia are progressing on schedule.
Dairy Farm continues to face challenges on several fronts, including increasing competitive pressures and a number of underperforming businesses within its portfolio. In order to address these, it has consolidated its trading operations into a more centralised structure with two main trading divisions, North Asia and Southeast Asia, in addition to Home Furnishings and Maxim's, which remain as standalone divisions. Newly constituted shared functions will provide specialist support to all divisions and a strengthened and broadened leadership team has been created to meet the requirements of the business. These structural and management changes will enable the group to address the issues it faces, but time will be needed to deliver sustainable improvement. A series of programmes is underway to address its strategic priorities of building capability, protecting the Hong Kong business, revitalising the Southeast Asia operations, growing presence in China, and driving digital innovation. A partnership has been announced with Robinsons Retail Holdings Inc. to build a leading food retail business in the Philippines.
Five new management contracts were signed by Mandarin Oriental in the first half of the year, while new hotels in Beijing, Doha and Dubai, as well as The Residences at Mandarin Oriental in Bangkok, are expected to open over the next 12 months. Management of the Las Vegas hotel will cease at the end of August 2018 following a change of ownership. Strategic options for The Excelsior, Hong Kong, including the possible redevelopment of the site into a commercial building, remain under consideration.
People
Julian Hui and Dr George Koo stepped down as Directors on 10th May 2018. We would like to thank them for their significant contribution to the Company over many years. We are pleased to welcome Lord Powell of Bayswater to the Board.
Outlook
After a good performance in the first half of 2018 driven primarily by Astra and Jardine Cycle & Carriage, we are optimistic for a stronger second half of the year, with these companies continuing to perform well and the contributions of other businesses expected to improve.
Sir Henry Keswick
Chairman
Operating Review
Jardine Matheson
Jardine Matheson produced an underlying profit for the first six months of 2018 of US$792 million, an increase of 6% over the same period in 2017. Non-trading items in the first half represented a net gain of US$136 million, giving a profit attributable to shareholders of US$928 million for the six months under review, compared with US$2,174 million in 2017. Shareholders' funds rose to US$25.8 billion during the first six months of the year.
-- Jardine Pacific
Jardine Pacific's underlying profit for the first half was down 6% at US$63 million, as lower results from Restaurants and Transport Services, and steady performances by Gammon, Jardine Schindler and JEC, were mitigated by the contribution from the interest in Greatview, acquired in June 2017. Jardine Restaurants reported a lower result due to difficult trading conditions in Taiwan and Vietnam. The results of the Transport Services business were impacted by the loss of a significant customer at Hactl but, generally, cargo throughput was in line with the market. Jardine Schindler saw flat profits, but further growth in its maintenance portfolio, while Gammon's profits were broadly in line with last year due to project timing, but its order book remains strong. JEC produced a stable contribution, with its Hong Kong operations performing well. Greatview's business saw revenue growth, with good performances in both China and international business.
-- Jardine Motors
Jardine Motors saw its underlying net profit for the first half increase by 6% to US$87 million, including the contribution from Zhongsheng. Hong Kong reported steady profit growth and there were increased sales of new cars. In mainland China, however, profits were lower as a result of reduced margins on new car sales. UK vehicle sales were higher but margins were compressed resulting in a lower profit.
-- Jardine Lloyd Thompson
JLT delivered a solid performance against a backdrop of continuing inconsistency and unpredictability in global economic and insurance market environments. In April, the group restructured into three global business segments: Specialty, Reinsurance and Employee Benefits. Total revenue was US$978 million, an increase of 3% in its reporting currency, representing 4% organic revenue growth. Underlying profit before tax increased by 10%, compared to the first half of 2017. In the period, the group incurred costs relating to its global transformation programme, which is already beginning to contribute to an improvement in operating performance. After adjusting for the costs of the programme and on conversion into US dollars, JLT's contribution to the Group's underlying profit was 2% lower than in the prior year.
Hongkong Land
Hongkong Land's underlying profit attributable to shareholders for the first six months was US$455 million, down 3%, largely due to the timing of sales completions of development properties in mainland China. There was a strong performance from investment properties due to positive rental reversions in Hong Kong, in both the office and retail portfolios. Profit attributable to shareholders was US$1,124 million after accounting for a net gain of US$661 million arising on the revaluation of investment properties. This compares with a profit of US$3,114 million in the first half of 2017, including a net revaluation gain of US$2,608 million.
Hongkong Land's investment properties benefited from the tight supply in the Hong Kong Central office leasing market. Vacancy in the group's Central office portfolio at 30th June 2018 was 1.9%, compared with 1.4% at the end of 2017. The retail portfolio remained effectively fully occupied. In Singapore, mildly negative rental reversions continued, although there are signs of a market recovery with reversions expected to become positive later in the year. Vacancy in the group's office portfolio was 0.1% at the end of June 2018, compared with 0.3% at the end of 2017.
The profit contribution from development properties was lower as a result of fewer sales completions in mainland China than in the first half of 2017, due to phasing. The number of sales completions will increase in the second half, particularly in relation to projects in Chongqing. At 30th June, the group had US$1,507 million in sold but unrecognised contracted sales, compared with US$1,032 million at the end of 2017. Results from Singapore were driven by the completion of the Sol Acres executive condominium project and the percentage of completion of sold units at the Lake Grande project, which is on schedule for completion in 2019. The group's joint venture projects in the rest of Southeast Asia are progressing on schedule.
Dairy Farm
Dairy Farm saw sales of US$5.9 billion for the period by the group's subsidiaries, 8% ahead of the prior year or 6% higher at constant rates of exchange. Total sales, including 100% of associates and joint ventures, increased by 17% to US$12.2 billion. Underlying profit of US$215 million was 2% higher than the same period last year, as strong results from North Asia and Maxim's were offset by lower profits in Southeast Asia and Yonghui. Home Furnishings was broadly in line with the same period last year.
In North Asia, overall sales within the Food businesses were ahead of prior year, but profits declined, mainly due to higher rental and labour costs in Hong Kong. The Health and Beauty business in Hong Kong and Macau delivered very strong sales and profits growth, driven by a significant increase in business from higher numbers of mainland Chinese tourists. Yonghui reported strong sales growth and underlying profits from the core food business remained strong, but total profits were behind the prior year due to the investment in new technology formats and the introduction of a new employee incentive scheme.
In Southeast Asia, challenging trading conditions continued for the Food businesses, with lower sales and profits in Singapore, Malaysia and Indonesia. In the Philippines, sales were higher but profits lower. The improving performance of the majority of the group's Health and Beauty businesses in Southeast Asia was encouraging, with Malaysia, Indonesia and Vietnam reporting better underlying results.
The group's convenience store operations performed well, with Hong Kong and Macau trading in line with last year, lower sales but higher profits in Singapore and continued growth in mainland China.
In Home Furnishings, IKEA delivered sales and profits growth in Taiwan and Indonesia, while Hong Kong reported higher sales but lower profits due to increased operating costs. Maxim's delivered another good performance and is continuing to expand its presence across mainland China and Southeast Asia.
Mandarin Oriental
Mandarin Oriental delivered a good result for the period due to generally improved performances across most of the portfolio, notably in Hong Kong, Singapore, Bangkok and Tokyo. There were also signs of recovery in Paris after several years of weak demand. In The Americas, results from Washington D.C. and Boston were lower. The group's underlying profit for the first half was US$22 million, compared with US$15 million in the same period of 2017.
Following the fire at the London hotel, the process of repairs is underway and it is anticipated that the hotel will be able partially to reopen in the fourth quarter of this year. The impact of the fire is being assessed by insurers with the estimate of a write off of tangible assets offset by insurance claims recoverable. Given the coverage under the group's insurance arrangements, the impact on the Group's profitability is expected to be modest.
An early termination fee was received in respect of the cessation of the management of the Las Vegas hotel from the end of August 2018 following a change in the hotel's ownership.
Jardine Cycle & Carriage
Jardine Cycle & Carriage reported an underlying profit for the period of US$414 million, up 10%. Profit attributable to shareholders was down 56% to US$174 million, after accounting for net non-trading losses of US$240 million, principally unrealised fair value losses related to non-current investments. These result from the adoption of a new accounting standard that requires the unrealised gains or losses arising from the revaluation of equity investments at the end of each financial period to be included in the profit and loss account.
Astra's contribution to underlying profit rose 12% to US$354 million. Jardine Cycle & Carriage's Direct Motor Interests contributed an underlying profit of US$74 million, 18% above the previous year. There were improved margins on passenger cars and increased contributions from used cars in Singapore, as well as higher contributions from Tunas Ridean in Indonesia and Truong Hai Auto Corporation in Vietnam. Other Strategic Interests also made a stronger contribution of US$41 million, up from US$8 million in the first half of 2017, benefiting in particular from Vinamilk dividends received in the period. In addition, there was profit growth at Siam City Cement in Thailand and at Refrigeration Electrical Engineering Corporation in Vietnam.
Astra
Astra reported net profit equivalent to US$750 million, under Indonesian accounting standards, up 11% in its reporting currency. There were higher profits from the group's heavy equipment and mining businesses and an improved contribution from its financial services division, which more than offset lower contributions from its agribusiness and infrastructure operations.
Net income from Astra's automotive business was flat at US$304 million, with increased earnings in the motorcycle operations and automotive components business offset by lower results in the car operations. The wholesale market for cars in Indonesia was 4% higher in the period but the group's car sales fell by 10% as a result of increased competition, resulting in its market share falling from 56% to 48%. The wholesale market for motorcycles increased by 11%, while Astra Honda Motor's domestic sales also rose by 11%, with its market share maintained at 74%.
Net income from Astra's financial services division increased to US$155 million with an improved contribution from the group's consumer finance businesses. Permata Bank reported a net income of US$20 million for the period, compared to US$47 million in the first half of 2017. Its results in the first half of 2017 benefited from a one-off gain on the sale of non-performing loans. In May 2018, Permata Bank sold its 25% shareholding in Astra Sedaya Finance to Astra in order to strengthen the bank's capital position and maximise its capital allocation for lending. Astra Sedaya Finance is now 100%-owned by the group. Asuransi Astra Buana, the group's general insurance company, reported net income of US$36 million, 2% lower than 2017 due to a reduction in investment income, while Astra Aviva Life continued to grow its customer base.
Net income from the group's heavy equipment, mining, construction and energy businesses increased by 60% to US$237 million, mainly due to improved performances in its construction machinery and mining contracting operations as a result of increased coal prices. Within United Tractors' construction machinery business, Komatsu heavy equipment sales were up 37% at 2,400 units, while parts and service revenues were also higher. The mining contracting operations of wholly-owned Pamapersada Nusantara recorded an 8% higher coal production at 56 million tonnes and a 23% higher overburden removal volume at 445 million bank cubic metres. United Tractors' mining subsidiaries reported 22% higher coal sales at 4.4 million tonnes.
Net income from the group's agribusiness division was US$45 million, a decrease of 23% from the prior year primarily due to a fall in crude palm oil prices, which were 8% lower compared to the first half of 2017.
The group's infrastructure and logistics division reported a net income of US$0.3 million, compared with a net profit of US$8 million in the first half of 2017, as initial losses on two new toll roads outweighed improved earnings from more established assets. The group continues to develop its portfolio of toll road interests, which now total 353km, of which 269km is operational.
Net income from Astra's information technology business was 24% higher at US$5 million, with improved revenue across document and information technology solutions and office services businesses.
The group's property division reported a net profit of US$3 million in the first half of 2018, compared to US$5 million in the prior year, reflecting lower development earnings recognised from its Anandamaya Residences project.
Jardine Strategic Holdings Limited
Consolidated Profit and Loss
Account
(unaudited)
Six months ended 30th June Year ended 31st December
2018 2017 2017
Underlying Underlying
Underlying business Non-trading business Non-trading
business Non-trading performance items Total performance items Total
performance items Total US$m US$m US$m US$m US$m US$m
US$m US$m US$m restated restated restated restated restated restated
Revenue (note 2) 16,939 - 16,939 14,959 - 14,959 30,848 - 30,848
Net operating costs (note
3) (15,169) (234) (15,403) (13,554) 163 (13,391) (27,931) 340 (27,591)
Change in fair value
of investment
properties - 665 665 - 2,694 2,694 - 4,701 4,701
-------- ----------- -------- ----------- ------------ --------- ----------- ------------ ---------
Operating profit 1,770 431 2,201 1,405 2,857 4,262 2,917 5,041 7,958
Net financing charges
-------- ----------- -------- ----------- ------------ --------- ----------- ------------ ---------
- financing charges (209) - (209) (156) - (156) (321) - (321)
- financing income 79 - 79 83 - 83 168 - 168
(130) - (130) (73) - (73) (153) - (153)
Share of results of Jardine
Matheson
(note 4) 109 4 113 116 119 235 251 120 371
Share of results of associates
and joint
ventures (note 5)
* before change in fair value of
investment properties 446 1 447 499 15 514 1,025 (4) 1,021
* change in fair value of investment
properties - (1) (1) - (56) (56) - (32) (32)
446 - 446 499 (41) 458 1,025 (36) 989
Profit before tax 2,195 435 2,630 1,947 2,935 4,882 4,040 5,125 9,165
Tax (note 6) (414) (2) (416) (333) (3) (336) (748) (1) (749)
-------- ----------- -------- ----------- ------------ --------- ----------- ------------ ---------
Profit after tax 1,781 433 2,214 1,614 2,932 4,546 3,292 5,124 8,416
-------- ----------- -------- ----------- ------------ --------- ----------- ------------ ---------
Attributable to:
Shareholders of the Company
(notes 7 & 9) 828 156 984 762 1,580 2,342 1,570 2,735 4,305
Non-controlling interests 953 277 1,230 852 1,352 2,204 1,722 2,389 4,111
-------- ----------- -------- ----------- ------------ --------- ----------- ------------ ---------
1,781 433 2,214 1,614 2,932 4,546 3,292 5,124 8,416
-------- ----------- -------- ----------- ------------ --------- ----------- ------------ ---------
US$ US$ US$ US$ US$ US$
Earnings per share (note
8)
- basic 1.45 1.72 1.31 4.03 2.71 7.44
- diluted 1.45 1.72 1.31 4.03 2.71 7.44
-------- -------- ----------- --------- ----------- ---------
Jardine Strategic Holdings Limited
Consolidated Statement of Comprehensive
Income
(unaudited) Year ended
Six months ended 31st
30th June December
2018 2017 2017
US$m US$m restated US$m restated
Profit for the period 2,214 4,546 8,416
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss:
--------------
Remeasurements of defined benefit
plans (1) (2) 8
Net revaluation surplus before transfer
to
investment properties
- intangible assets 2 - 6
- tangible assets 1 - -
Reversal of fair value gain upon
reclassification
of equity investments to associates - (67) (67)
Tax on items that will not be reclassified - 1 1
2 (68) (52)
Share of other comprehensive (expense)
/income
of Jardine Matheson (2) 6 49
Share of other comprehensive
income/(expense)
of associates and joint ventures 1 (1) (9)
---------- -------------- --------------
1 (63) (12)
Items that may be reclassified subsequently
to profit or loss:
Net exchange translation differences
---------- -------------- --------------
- net (loss)/gain arising during
the period (720) 133 129
- transfer to profit and loss 1 - 9
(719) 133 138
Revaluation of other investments
at fair value
through other comprehensive income
---------- -------------- --------------
- net (loss)/gain arising during
the period (20) 13 22
- transfer to profit and loss (4) (5) (3)
(24) 8 19
Cash flow hedges
---------- -------------- --------------
- net gain/(loss) arising during
the period 38 (55) (39)
- transfer to profit and loss - 7 10
38 (48) (29)
Tax relating to items that may be
reclassified (14) 9 8
Share of other comprehensive
(expense)/income
of Jardine Matheson (25) 30 56
Share of other comprehensive
(expense)/income
of associates and joint ventures (333) 220 345
---------- -------------- --------------
(1,077) 352 537
Other comprehensive (expense)/income
for the
period, net of tax (1,076) 289 525
---------- -------------- --------------
Total comprehensive income for the
period 1,138 4,835 8,941
---------- -------------- --------------
Attributable to:
Shareholders of the Company 506 2,496 4,701
Non-controlling interests 632 2,339 4,240
---------- -------------- --------------
1,138 4,835 8,941
---------- -------------- --------------
Jardine Strategic Holdings Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2018 2017 2017
US$m US$m restated US$m restated
Assets
Intangible assets 2,698 3,070 2,832
Tangible assets 6,233 5,977 6,291
Investment properties 33,671 30,889 33,100
Bearer plants 475 512 498
Investment in Jardine Matheson 3,335 2,818 3,103
Associates and joint ventures 12,309 11,180 12,189
Other investments 2,826 1,243 2,629
Non-current debtors 3,034 3,210 3,019
Deferred tax assets 372 367 375
Pension assets 5 - 5
Non-current assets 64,958 59,266 64,041
------ -------------- --------------
Properties for sale 3,006 1,990 2,811
Stocks and work in progress 2,555 2,639 2,681
Current debtors 6,398 5,891 6,043
Current investments 22 50 23
Current tax assets 180 163 162
Bank balances and other liquid
funds
------ -------------- --------------
- non-financial services companies 4,667 5,064 5,061
- financial services companies 173 234 241
4,840 5,298 5,302
------ -------------- --------------
17,001 16,031 17,022
Assets classified as held for sale 5 3 11
------ -------------- --------------
Current assets 17,006 16,034 17,033
------ -------------- --------------
Total assets 81,964 75,300 81,074
------ -------------- --------------
Equity
Share capital 56 56 56
Share premium and capital reserves 1,015 1,009 1,011
Revenue and other reserves 31,898 29,386 31,486
Own shares held (2,080) (1,928) (2,000)
------- ------- -------
Shareholders' funds 30,889 28,523 30,553
Non-controlling interests 27,474 25,937 27,677
------- ------- -------
Total equity 58,363 54,460 58,230
------- ------- -------
Liabilities
Long-term borrowings
------- ------- -------
- non-financial services companies 6,484 4,962 5,856
- financial services companies 1,652 1,510 1,487
8,136 6,472 7,343
Deferred tax liabilities 520 549 515
Pension liabilities 296 293 297
Non-current creditors 233 501 251
Non-current provisions 159 139 151
------- ------- -------
Non-current liabilities 9,344 7,954 8,557
------- ------- -------
Current creditors 8,400 7,792 8,671
Current borrowings
------- ------- -------
- non-financial services companies 3,474 2,274 2,978
- financial services companies 1,845 2,410 2,154
5,319 4,684 5,132
Current tax liabilities 413 316 338
Current provisions 125 94 140
------- ------- -------
14,257 12,886 14,281
Liabilities classified as held
for sale - - 6
------- ------- -------
Current liabilities 14,257 12,886 14,287
------- ------- -------
Total liabilities 23,601 20,840 22,844
------- ------- -------
Total equity and liabilities 81,964 75,300 81,074
------- ------- -------
Jardine Strategic Holdings Limited
Consolidated Statement of Changes in Equity
Attributable
to Attributable
Revenue Contributed Asset Own shareholders to
Share Share Capital reserves surplus revaluation Hedging Exchange shares of the non-controlling Total
capital premium reserves US$m US$m reserves reserves reserves held Company interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2018
(unaudited)
At 1st January
2018
- as previously
reported 56 816 195 32,604 304 264 (7) (1,683) (2,000) 30,549 27,672 58,221
- change in
accounting
policies
(note 1) - - - 31 - - - (7) - 24 50 74
- as restated 56 816 195 32,635 304 264 (7) (1,690) (2,000) 30,573 27,722 58,295
Total
comprehensive
income - - - 971 - 1 5 (471) - 506 632 1,138
Dividends paid
by the Company
(note 10) - - - (128) - - - - - (128) - (128)
Dividends paid
to
non-controlling
interests - - - - - - - - - - (607) (607)
Employee share
option schemes - - 8 - - - - - - 8 - 8
Scrip issued in
lieu of
dividends - - - 5 - - - - - 5 - 5
Increase in own
shares held - - - - - - - - (80) (80) - (80)
Subsidiaries
acquired - - - - - - - - - - 2 2
Capital
contribution
from
non-controlling
interests - - - - - - - - - - 21 21
Change in
interests in
subsidiaries - - - 3 - - - - - 3 (311) (308)
Change in
interests in
associates
and joint
ventures - - - 2 - - - - - 2 15 17
Transfer - - (4) 4 - - - - - - - -
At 30th June
2018 56 816 199 33,492 304 265 (2) (2,161) (2,080) 30,889 27,474 58,363
------- ------- -------- --------- ------------ ----------- -------- -------- ------- ------------ --------------- ------
Six months ended
30th June 2017
(unaudited)
At 1st January
2017
- as previously
reported 56 816 204 28,498 304 262 (16) (2,064) (1,918) 26,142 24,064 50,206
- change in
accounting
policies
(note 1) - - - 40 - - - (8) - 32 42 74
- as restated 56 816 204 28,538 304 262 (16) (2,072) (1,918) 26,174 24,106 50,280
Total
comprehensive
income - - - 2,283 - - (9) 222 - 2,496 2,339 4,835
Dividends paid
by the Company
(note 10) - - - (122) - - - - - (122) - (122)
Dividends paid
to
non-controlling
interests - - - - - - - - - - (515) (515)
Employee share
option schemes - - 7 - - - - - - 7 - 7
Scrip issued in
lieu of
dividends - - - 5 - - - - - 5 - 5
Increase in own
shares held - - - - - - - - (10) (10) - (10)
Subsidiaries
acquired - - - - - - - - - - 7 7
Change in
interests in
associates
and joint
ventures - - - (27) - - - - - (27) - (27)
Transfer - - (18) 18 - - - - - - - -
At 30th June
2017 56 816 193 30,695 304 262 (25) (1,850) (1,928) 28,523 25,937 54,460
------- ------- -------- --------- ------------ ----------- -------- -------- ------- ------------ --------------- ------
Year ended 31st
December 2017
At 1st January
2017
- as previously
reported 56 816 204 28,498 304 262 (16) (2,064) (1,918) 26,142 24,064 50,206
- change in
accounting
policies
(note 1) - - - 40 - - - (8) - 32 42 74
- as restated 56 816 204 28,538 304 262 (16) (2,072) (1,918) 26,174 24,106 50,280
Total
comprehensive
income - - - 4,308 - 2 9 382 - 4,701 4,240 8,941
Dividends paid
by the Company - - - (177) - - - - - (177) - (177)
Dividends paid
to
non-controlling
interests - - - - - - - - - - (766) (766)
Unclaimed
dividends
forfeited - - - 1 - - - - - 1 - 1
Employee share
option schemes - - 12 - - - - - - 12 - 12
Scrip issued in
lieu of
dividends - - - 7 - - - - - 7 - 7
Increase in own
shares held - - - - - - - - (82) (82) - (82)
Subsidiaries
acquired - - - - - - - - - - 107 107
Subsidiaries
disposed of - - - - - - - - - - (1) (1)
Capital
repayment to
non-controlling
interests - - - - - - - - - - (3) (3)
Change in
interests in
subsidiaries - - - (48) - - - - - (48) (16) (64)
Change in
interests in
associates
and joint
ventures - - - (35) - - - - - (35) 10 (25)
Transfer - - (21) 21 - - - - - - - -
--- ---- ------ --- --- ---- ------- ------- ------ ------ ------
At 31st December
2017 56 816 195 32,615 304 264 (7) (1,690) (2,000) 30,553 27,677 58,230
--- ---- ------ --- --- ---- ------- ------- ------ ------ ------
Contributed surplus represents the excess in value of shares acquired in consideration for the issue of the Company's shares, over the nominal value of those shares issued. Under the Bye-Laws of the Company, the contributed surplus is distributable.
Jardine Strategic Holdings Limited
Consolidated Cash Flow Statement
(unaudited)
Six months ended Year ended
30th June 31st December
2018 2017 2017
US$m US$m restated US$m restated
Operating activities
------- -------------- --------------
Operating profit 2,201 4,262 7,958
Change in fair value of investment properties (665) (2,694) (4,701)
Depreciation and amortisation 497 445 917
Other non-cash items 384 (26) 15
(Increase)/decrease in working capital (889) 30 (381)
Interest received 74 77 167
Interest and other financing charges
paid (207) (165) (310)
Tax paid (374) (291) (694)
------- -------------- --------------
1,021 1,638 2,971
Dividends from associates and joint
ventures 342 458 779
Cash flows from operating activities 1,363 2,096 3,750
Investing activities
------- -------------- --------------
Purchase of subsidiaries (note 12(a)) (84) (10) (56)
Purchase of shares in Jardine Matheson (99) - (95)
Purchase of associates and joint ventures
(note 12(b)) (514) (1,079) (1,525)
Purchase of other investments (note
12(c)) (617) (147) (1,609)
Purchase of intangible assets (51) (94) (170)
Purchase of tangible assets (601) (517) (1,055)
Additions to investment properties (99) (216) (370)
Additions to bearer plants (20) (19) (50)
Advance to associates and joint ventures
(note 12(d)) (395) (304) (853)
Advance and repayment from associates
and joint ventures
(note 12(e)) 534 232 658
Sale of subsidiaries 4 - 86
Sale of associates and joint ventures - 13 66
Redemption of convertible bonds by Zhongsheng - 398 398
Sale of other investments (note 12(f)) 136 117 369
Sale of intangible assets 12 1 2
Sale of tangible assets 10 9 20
Sale of investment properties - 42 42
Cash flows from investing activities (1,784) (1,574) (4,142)
Financing activities
------- -------------- --------------
Capital contribution from/(repayment
to) non-controlling interests 21 - (3)
Change in interests in subsidiaries
(note 12(g)) (308) 15 (49)
Drawdown of borrowings 3,762 2,271 6,178
Repayment of borrowings (2,555) (1,971) (4,500)
Dividends paid by the Company (244) (228) (331)
Dividends paid to non-controlling interests (607) (520) (774)
Cash flows from financing activities 69 (433) 521
------- -------------- --------------
Net (decrease)/increase in cash and
cash equivalents (352) 89 129
Cash and cash equivalents at beginning
of period 5,298 5,091 5,091
Effect of exchange rate changes (144) 64 78
------- -------------- --------------
Cash and cash equivalents at end of
period 4,802 5,244 5,298
------- -------------- --------------
Jardine Strategic Holdings Limited
Notes to Condensed Financial Statements
1. Accounting Policies and Basis of Preparation
The condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and on a going concern basis. The condensed financial statements have not been audited or reviewed by the Group's auditors pursuant to the UK Auditing Practices Board guidance on the review of interim financial information.
There are no changes to the accounting policies as described in the 2017 annual financial statements except for the adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' from 1st January 2018 as set out below.
The other amendments, which are effective in 2018 and relevant to the Group's operations, do not have a significant effect on the Group's accounting policies.
The Group has not early adopted any standard, interpretation or amendment that have been issued but not yet effective.
IFRS 9 'Financial Instruments'
Under IFRS 9, the gains and losses arising from changes in fair value of the Group's investments in equity securities, previously classified as available-for-sale, will be recognised in profit and loss, instead of through other comprehensive income. Such fair value gains or losses on revaluation of these investments are classified as non-trading items, and do not have any impact on the Group's underlying profit attributable to shareholders and shareholders' funds. The new forward-looking expected credit loss model, which replaces the incurred loss impairment model, mainly affects the loan impairment provisions of the Group's financial services companies in Indonesia. The new hedge accounting rules, which align the accounting for hedging instruments closely with the Group's risk management practices, has no significant impact to the Group.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 establishes a comprehensive framework for the recognition of revenue. It replaces IAS 11 'Construction Contracts' and IAS 18 'Revenue' which covers contracts for goods and services. The core principle in the framework is that revenue is recognised when control of a good or service transfers to a customer. The new standard mainly changes the Group's revenue recognition on certain property sales, from completion method to percentage of completion method. This will lead to earlier recognition of revenue when compared to the current completion method.
Changes to accounting policies on adoption of IFRS 9 and 15 have been applied retrospectively and the comparative financial statements have been restated.
The effects of adopting IFRS 9 and IFRS 15
(a) On the consolidated profit and loss account for the six months ended 30th June 2017:
Increase/(decrease)
in
profit upon
adopting
IFRS IFRS
9 15
US$m US$m
------------ -------
Revenue - (647)
Net operating costs 150 589
Share of results of Jardine
Matheson 1 (1)
Share of results of associates
and joint ventures 6 -
Tax - 10
------------ -------
Profit after tax 157 (49)
------------ -------
Attributable to:
Shareholders of the Company* 140 (25)
Non-controlling interests 17 (24)
------------ -------
157 (49)
------------ -------
* Further analysed as:
Underlying profit attributable
to shareholders - (25)
Non-trading items 140 -
------------ -------
Profit attributable to shareholders 140 (25)
------------ -------
Basic underlying earnings
per share (US$) - (0.04)
------------ -------
Diluted underlying earnings
per share (US$) - (0.04)
------------ -------
Basic earnings per share
(US$) 0.24 (0.04)
------------ -------
Diluted earnings per share
(US$) 0.24 (0.04)
------------ -------
(b) On the consolidated statement of comprehensive income for the six months ended 30th June 2017:
Increase/(decrease)
in
total comprehensive
income upon
adopting
IFRS IFRS
9 15
US$m US$m
Profit for the period
Other comprehensive income 157 (49)
Items that may be reclassified
subsequently to
profit or loss:
Net exchange translation differences
- net gain arising during
the period - 2
Revaluation of other investments
at fair value through other
comprehensive income
- net gain arising during
the period (150) -
Share of other comprehensive
income of Jardine Matheson (1) -
Share of other comprehensive
income of associates and joint
ventures (6) -
Other comprehensive income
for the period, net of tax (157) 2
---------- ----------
Total comprehensive income
for the period - (47)
---------- ----------
Attributable to:
Shareholders of the Company - (24)
Non-controlling interests - (23)
---------- ----------
- (47)
---------- ----------
(c) On the consolidated balance sheet at 1st January
Increase/(decrease) upon adopting
IFRS 9 IFRS 15 Total
208 2017 2018 2017 2018 2017
US$m US$m US$m US$m US$m US$m
Assets
Investment in
Jardine Matheson - - (15) (12) (15) (12)
Associates and
joint ventures (22) - 28 25 6 25
Other investments 58 - - - 58 -
Deferred tax assets - - 2 1 2 1
Properties for
sale - - (136) (328) (136) (328)
Stocks and work
in progress - - 66 30 66 30
Current debtors (7) - (79) (54) (86) (54)
Equity and liabilities
Revenue and other
reserves 7 - 17 32 24 32
Non-controlling
interests 22 - 28 42 50 42
Deferred tax liabilities - - 8 13 8 13
Current creditors - - (187) (425) (187) (425)
------ ------ ------ ----- ----- -----
Increase in revenue and other reserves at 1st January 2018 included a fair value gain of US$20 million on revaluation of unlisted equity investments previously stated at cost but measured at fair value at the date of initial application of IFRS 9.
(d) Changes in principal accounting policies on adoption of IFRS 9 and 15
Investments
The Group classifies its investments into the following measurement categories:
(i) those to be measured subsequently at fair value, either through other comprehensive income or through profit and loss; and
(ii) those to be measured at amortised cost.
The classification is based on the management's business model and their contractual cash flows characteristics.
Equity investments are measured at fair value with fair value gains and losses recognised in profit and loss, unless management has elected to recognise the fair value gains and losses through other comprehensive income. For equity investments measured at fair value through other comprehensive income, gains or losses realised upon disposal are not reclassified to profit and loss.
Debt investments that are held for collection of contractual cash flows and for sale, where the cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. On disposal, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit and loss.
Debt investments that are held for collection of contractual cash flows till maturity, where the cash flows represent solely payments of principal and interest, are measured at amortised cost. Any gain or loss arising on derecognition is recognised in profit and loss.
The Group assesses on a forward-looking basis the expected credit losses associated with both types of debt investments. They are considered 'credit impaired' when one or more events that have a detrimental impact on the estimated future cash flows have occurred. Any impairment is recognised in profit and loss.
All purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments.
Debtors
Consumer financing debtors and financing lease receivables are measured at amortised cost using the effective interest method. The gross amount due from customers for contract work is stated at cost plus an appropriate proportion of profit, established by reference to the percentage of completion, and after deducting progress payments and provisions for foreseeable losses. Repossessed assets of finance companies are measured at the lower of the carrying amount of the debtors in default and fair value less costs to sell. All other debtors, excluding derivative financial instruments, are measured at amortised cost except where the effect of discounting would be immaterial. The Group assesses on a forward-looking basis the expected credit losses associated with its consumer financing debtors. The impairment measurement is subject to whether there has been a significant increase in credit risk. For trade debtors, the Group applied the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the debtors. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in arriving at operating profit. When a debtor is uncollectible, it is written off against the allowance account. Subsequent recoveries of amount previously written off are credited to profit and loss.
Debtors with maturities greater than 12 months after the balance sheet date are classified under non-current assets.
Non-trading items
Non-trading items are separately identified to provide greater understanding of the Group's underlying business performance. Items classified as non-trading items include fair value gains or losses on revaluation of investment properties and on equity investments which are fair value through profit and loss; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for the closure of businesses; acquisition-related costs in business combinations; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance.
Revenue recognition
Revenue is measured at the fair value of the consideration received and receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes.
(i) Revenue from the sale of goods is recognised when or as the control of the asset is transferred to the customer, which generally coincides with the time when the goods are delivered to customers.
(ii) Revenue from properties for sale and engineering and construction services are recognised when or as the control of the asset is transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may transfer over time or at a point in time. Control of the asset is transferred over time if the Group's performance:
-- provides all of the benefits received and consumed simultaneously by the customer; or -- creates and enhances an asset that the customer controls as the Group performs; or
-- do not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset.
The progress towards complete satisfaction of the performance obligation is measured based on the Group's efforts or inputs to the satisfaction of the performance obligation, by reference to the contract costs incurred up to the end of reporting period as a percentage of total estimated costs for each contract.
For properties for sale under development and sales contract for which the control of the property is transferred at a point in time, revenue is recognised when the customer obtains the physical possession or the legal title of the completed property and the Group has present right to payment and the collection of the consideration is probable.
In determining the transaction price, the Group adjusts the promised amount of consideration for the effect of a financing component if it is significant.
For engineering and construction services, the Group's performance creates or enhances an asset or work in progress that the customer controls as the asset is created or enhanced, thus the Group satisfies a performance obligation and recognises revenue over time, by reference to completion of the specific transaction assessed on the basis of the actual costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract.
(iii) Receipts under operating leases are accounted for on an accrual basis over the lease terms.
(iv) Revenue from consumer financing and financing leases is recognised over the term of the respective contracts based on a constant rate of return on the net investment.
(v) Interest income from a financial asset is recognised on a time-proportion basis using the effective interest method.
(vi) Dividend income is recognised when the right to receive payment is established.
2. Revenue
Six months ended 30th June
Gross revenue Revenue
2018 2017 2018 2017
US$m US$m US$m US$m
By business:
Jardine Matheson 10,313 6,655 - -
Hongkong Land 2,126 1,852 1,516 816
Dairy Farm 12,215 10,448 5,929 5,505
Mandarin Oriental 492 462 308 287
Jardine Cycle &
Carriage 3,545 3,280 1,041 984
Astra 15,797 14,850 8,148 7,369
Intersegment transactions (140) (130) (3) (2)
----------------- ---------------- ----------- -----------
44,348 37,417 16,939 14,959
----------------- ---------------- ----------- -----------
Gross revenue comprises revenue together with 100% of revenue from Jardine Matheson, associates and joint ventures.
3. Net Operating Costs
Six months ended 30th June
2018 2017
US$m US$m
Cost of sales (12,617) (11,097)
Other operating income 303 414
Selling and distribution costs (1,865) (1,758)
Administration expenses (952) (889)
Other operating expenses (272) (61)
-------- --------
(15,403) (13,391)
-------- --------
Net operating costs included
the following gains/(losses)
from non-trading items:
Change in fair value of other
investments (242) 150
Sale of businesses 9 -
Change in interests in associates
and joint ventures - 13
Other (1) -
(234) 163
-------- --------
4. Share of Results of Jardine Matheson
Six months ended 30th June
2018 2017
US$m US$m
By business:
Jardine Pacific 39 41
Jardine Motors 35 154
Jardine Lloyd Thompson 20 21
Corporate and other interests 19 19
----- -----
113 235
----- -----
Share of results of Jardine
Matheson included the
following gains/(losses) from
non-trading items:
Change in fair value of investment
properties 5 -
Change in fair value of other
investments - 1
Sale of property interests - 111
Sale of businesses - 2
Value added tax recovery in
Jardine Motors - 5
Other (1) -
4 119
----- -----
Results are shown after tax and non-controlling interests in Jardine Matheson.
5. Share of Results of Associates and Joint Ventures.
Six months ended 30th June
2018 2017
US$m US$m
By business:
Jardine Matheson 38 -
Hongkong Land 72 58
Dairy Farm 62 61
Mandarin Oriental 1 3
Jardine Cycle & Carriage 64 57
Astra 209 271
Corporate and other interests - 8
----- -----
446 458
----- -----
Share of results of associates
and joint ventures included
the following gains/(losses)
from non-trading items:
Change in fair value of investment
properties (1) (56)
Change in fair value of other
investments 1 6
Change in interest in an associate - 8
Sale of businesses - 1
- (41)
----- -----
Results are shown after tax and non-controlling interests in the associates and joint ventures.
6. Tax
Six months ended 30th June
2018 2017
US$m US$m
Tax charged to profit and loss
is analysed as follows:
Current tax (432) (369)
Deferred tax 16 33
----- -----
(416) (336)
----- -----
Greater China (114) (113)
Southeast Asia (299) (221)
Rest of the world (3) (2)
----- -----
(416) (336)
----- -----
Tax relating to components of
other comprehensive income or
expense is analysed as follows:
Remeasurements of defined benefit
plans - 1
Cash flow hedges (14) 9
(14) 10
----- -----
Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates.
Share of tax charge of Jardine Matheson of US$17 million and credit of US$1 million (2017: charge of US$21 million and US$4 million) are included in share of results of Jardine Matheson and share of other comprehensive income of Jardine Matheson, respectively.
Share of tax charge of associates and joint ventures of US$158 million and US$5 million (2017: charge of US$202 million and credit of US$1 million) are included in share of results of associates and joint ventures and share of other comprehensive income of associates and joint ventures, respectively.
7. Profit Attributable to Shareholders
Six months ended 30th June
2018 2017
US$m US$m
Operating segments:
Jardine Matheson 146 134
Hongkong Land 228 235
Dairy Farm 167 164
Mandarin Oriental 17 12
Jardine Cycle & Carriage 63 46
Astra 266 236
------ -----
887 827
Corporate and other interests (59) (65)
------ -----
Underlying profit attributable
to shareholders* 828 762
Increase in fair value of investment
properties 337 1,311
Other non-trading items (181) 269
Profit attributable to shareholders 984 2,342
------ -----
* Underlying profit attributable to shareholders is the measure of profit adopted by the Group in accordance with IFRS 8 'Operating Segments'.
8. Earnings per Share
Basic earnings per share are calculated on profit attributable to shareholders of US$984 million (2017: US$2,342 million) and on the weighted average number of 571 million (2017: 581 million) shares in issue during the period.
Diluted earnings per share are calculated on profit attributable to shareholders of US$983 million (2017: US$2,342 million), which is after adjusting for the effects of the conversion of dilutive potential ordinary shares of Jardine Matheson, subsidiaries, associates or joint ventures, and on the weighted average number of 571 million (2017: 581 million) shares in issue during the period.
The weighted average number of shares is arrived at as follows:
Ordinary shares
in millions
2018 2017
Weighted average number of shares
in issue 1,108 1,108
Company's share of shares held
by Jardine Matheson (537) (527)
------------ ------------
Weighted average number of shares
for earnings per
share calculation 571 581
------------ ------------
Additional basic and diluted earnings per share are also calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below:
Six months ended 30th June
2018 2017
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per share per share per share per share
US$m US$ US$ US$m US$ US$
Profit attributable
to shareholders 984 1.72 1.72 2,342 4.03 4.03
Non-trading items (note
9) (156) (1,580)
----- -------
Underlying profit
attributable
to shareholders 828 1.45 1.45 762 1.31 1.31
----- -------
9. Non-trading items
Non-trading items are separately identified to provide greater understanding of the Group's underlying business performance. Items classified as non-trading items include fair value gains or losses on revaluation of investment properties and on equity investments which are fair value through profit and loss; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for the closure of businesses; acquisition-related costs in business combinations; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance.
Six months ended 30th June
2018 2017
US$m US$m
By business:
Jardine Matheson 4 119
Hongkong Land 337 1,322
Dairy Farm 8 -
Jardine Cycle & Carriage (180) 6
Astra - 11
Corporate and other interests (13) 122
156 1,580
----- -----
An analysis of non-trading items after
interest, tax and non-controlling interests
is set out below:
Change in fair value of investment properties
----- -----
- Hongkong Land 332 1,304
- other 5 7
----- -----
337 1,311
Change in fair value of other investments (187) 140
Sale of property interests - 111
Sale of businesses 7 3
Change in interests in associates and
joint ventures - 10
Value added tax recovery in Jardine Motors - 5
Other (1) -
156 1,580
----- -----
10. Dividends
Six months ended 30th June
2018 2017
US$m US$m
Final dividend in respect of 2017 of USc22.50
(2016: USc21.00) per share 249 233
Company's share of dividends paid on the
shares
held by Jardine Matheson (121) (111)
----- -----
128 122
----- -----
An interim dividend in respect of 2018 of USc10.00 (2017: USc9.50) per share amounting to a total of US$111 million (2017: US$105 million) is declared by the Board. The net amount after deducting the Company's share of the dividends payable on the shares held by Jardine Matheson of US$54 million (2017: US$50 million) will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2018.
11. Financial Instruments
Financial instruments by category
The fair values of financial assets and financial liabilities, together with carrying amounts at
30th June 2018 and 31st December 2017 are as follows:
Fair
value Fair value Financial
through through assets
Fair value profit other at Other Total
of hedging and comprehensive amortised financial carrying Fair
instruments loss income costs liabilities amount value
US$m US$m US$m US$m US$m US$m US$m
30th June 2018
Financial assets
measured at
fair value
Other investments
* equity investments - 2,326 - - - 2,326 2,326
* debt investments - - 522 - - 522 522
Derivative financial
instruments 183 - - - - 183 183
----------- -------
183 2,326 522 - - 3,031 3,031
----------- ------- ------------- ----------- ----------- -------- --------
Financial assets
not measured at
fair value
Debtors - - - 7,714 - 7,714 7,753
Bank balances - - - 4,840 - 4,840 4,840
----------- ------- ------------- ----------- ----------- -------- --------
- - - 12,554 - 12,554 12,593
----------- ------- ------------- ----------- ----------- -------- --------
Financial liabilities
measured at
fair value
Derivative financial
instruments (24) - - - - (24) (24)
Contingent consideration
payable - (9) - - - (9) (9)
----------- ------- ------------- ----------- ----------- -------- --------
(24) (9) - - - (33) (33)
----------- ------- ------------- ----------- ----------- -------- --------
Financial liabilities
not measured at
fair value
Borrowings
(excluding finance
lease liabilities) - - - - (13,417) (13,417) (13,458)
Finance lease
liabilities - - - - (38) (38) (38)
Trade and other
payable excluding
non-financial
liabilities - - - - (6,802) (6,802) (6,802)
----------- ------- ------------- ----------- ----------- -------- --------
- - - - (20,257) (20,257) (20,298)
----------- ------- ------------- ----------- ----------- -------- --------
Financial instruments by category
Fair
value Fair value Financial
through through assets
Fair value profit other at Other Total
of hedging and comprehensive amortised financial carrying Fair
instruments loss income costs liabilities amount value
US$m US$m US$m US$m US$m US$m US$m
31st December
2017
Financial assets
measured at
fair value
Other investments
* equity investments - 2,036 - - - 2,036 2,036
* debt investments - - 613 - - 613 613
Derivative financial
instruments 47 - - - - 47 47
----------- -------
47 2,036 613 - - 2,696 2,696
----------- ------- ------------- ----------- ----------- -------- --------
Financial assets
not measured at
fair value
Other investments
- debt investments - - - 3 - 3 3
Debtors - - - 7,644 - 7,644 7,696
Bank balances - - - 5,302 - 5,302 5,302
----------- ------- ------------- ----------- ----------- -------- --------
- - - 12,949 - 12,949 13,001
----------- ------- ------------- ----------- ----------- -------- --------
Financial liabilities
measured at
fair value
Derivative financial
instruments (43) - - - - (43) (43)
Contingent consideration
payable - (9) - - - (9) (9)
----------- ------- ------------- ----------- ----------- -------- --------
(43) (9) - - - (52) (52)
----------- ------- ------------- ----------- ----------- -------- --------
Financial liabilities
not measured at
fair value
Borrowings
(excluding finance
lease liabilities) - - - - (12,471) (12,471) (12,605)
Finance lease
liabilities - - - - (4) (4) (4)
Trade and other
payable excluding
non-financial
liabilities - - - - (7,034) (7,034) (7,034)
----------- ------- ------------- ----------- ----------- -------- --------
- - - - (19,509) (19,509) (19,643)
----------- ------- ------------- ----------- ----------- -------- --------
Fair value estimation
(i) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the balance sheet, the corresponding fair value measurements are disclosed by level of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities ('quoted prices in active markets')
The fair values of listed investments are based on quoted prices in active markets at the balance sheet date. The quoted market price used for listed investments held by the Group is the current bid price.
(b) Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly ('observable current market transactions')
The fair values of derivative financial instruments are determined using rates quoted by the Group's bankers at the balance sheet date. The rates for interest rate swaps and caps, cross-currency swaps, forward foreign exchange contracts and credit default swaps are calculated by reference to market interest rates and foreign exchange rates.
The fair values of unlisted investments mainly include club and school debentures, are determined using prices quoted by brokers at the balance sheet date.
(c) Inputs for assets or liabilities that are not based on observable market data ('unobservable inputs')
The fair values of other unlisted investments are determined using valuation techniques by reference to observable current market transactions (including price-to earnings and price-to book ratios of listed securities of entities engaged in similar industries), or the market prices of the underlying investments with certain degree of entity specific estimates, or determined with reference to the underlying cash flow from the investments, discounted using a risk-adjusted discount rate.
There were no changes in valuation techniques during the six months ended 30th June 2018 and the year ended 31st December 2017.
The table below analyses financial instruments carried at fair value at 30th June 2018 and 31st December 2017, by the levels in the fair value measurement hierarchy:
Quoted Observable
prices current
in active market Unobservable
markets transactions inputs Total
US$m US$m US$m US$m
30th June 2018
Assets
Other investments
---------- ------------- ------------ -----
- equity investments 2,075 9 242 2,326
- debt investments 522 - - 522
2,597 9 242 2,848
Derivative financial instruments
at
fair value
- through other comprehensive
income - 181 - 181
- through profit and loss - 2 - 2
---------- ------------- ------------ -----
2,597 192 242 3,031
---------- ------------- ------------ -----
Liabilities
Contingent consideration
payable - - (9) (9)
Derivative financial instruments
at
fair value
* through other comprehensive income - (10) - (10)
- through profit and loss - (14) - (14)
- (24) (9) (33)
---------- ------------- ------------ -----
31st December 2017
Assets
Other investments
---------- ------------- ------------ -----
- equity investments 1,983 9 44 2,036
- debt investments 616 - - 616
2,599 9 44 2,652
Derivative financial instruments
at
fair value
- through other comprehensive
income - 37 - 37
- through profit and loss - 10 - 10
---------- ------------- ------------ -----
2,599 56 44 2,699
---------- ------------- ------------ -----
Liabilities
Contingent consideration
payable - - (9) (9)
Derivative financial instruments
at
fair value
- through other comprehensive
income - (34) - (34)
- through profit and loss - (9) - (9)
---------- ------------- ------------ -----
- (43) (9) (52)
---------- ------------- ------------ -----
There were no transfers among the three categories during the six months ended 30th June 2018 and the year ended 31st December 2017.
Movement of financial instruments which are valued based on unobservable inputs during the six months ended 30th June 2018 and year ended 31st December 2017 are as follows:
Unlisted Contingent
equity consideration
investments payable
US$m US$m
At 1st January 2018
- as previously reported 44 (9)
- transition provision on adoption
of IFRS 9 58 -
- as restated 102 (9)
Exchange differences (10) -
Additions 150 -
At 30th June 2018 242 (9)
------------ --------------
At 1st January 2017 51 (9)
Exchange differences 2 -
Additions 2 -
Disposal (11) -
At 31st December 2017 44 (9)
------------ --------------
The contingent consideration payable mainly arose from Astra's acquisition of a 60% interest in PT Duta Nurcahya in 2012 and represents the fair value of service fee payable for mining services to be provided by the vendor.
(ii) Financial instruments that are not measured at fair value
The fair values of current debtors, bank balances and other liquid funds, current creditors and current borrowings are assumed to approximate their carrying amounts due to the short-term maturities of these assets and liabilities.
The fair values of long-term borrowings are based on market prices or are estimated using the expected future payments discounted at market interest rates.
12. Notes to Consolidated Cash Flow Statement
(a) Purchase of subsidiaries
Six months ended 30th June
2018 2017
Fair Fair
value value
US$m US$m
Intangible assets - 307
Tangible assets 4 149
Associates and joint ventures - 70
Deferred tax assets - 12
Current assets 1 4
Deferred tax liabilities - (86)
Current liabilities - (117)
Long-term borrowings - (35)
Other non-current liabilities - (1)
Fair value of identifiable
net assets acquired 5 303
Adjustment for non-controlling
interests (2) (7)
Goodwill 1 -
------ ------
Total consideration 4 296
Adjustment for deposit paid
in previous year - (12)
Adjustment for deferred consideration (1) (79)
Carrying value of an associate (2) (194)
Payment for deferred consideration 84 -
Cash and cash equivalents
of subsidiaries acquired (1) (1)
------ ------
Net cash outflow 84 10
------ ------
For the subsidiaries acquired during 2018, the fair values of identifiable assets and liabilities at the acquisition dates are provisional and will be finalised within one year after the acquisition dates.
Net cash outflow for purchase of subsidiaries for the six months ended 30th June 2018 included US$71 million and US$13 million for Astra's payment for deferred consideration for investments in toll road concessions and acquisition of an 80% interest in PT Suprabari Mapanindo Mineral ('Suprabari'), a coal mining company, respectively, in 2017.
Net cash outflow for purchase for the six months ended 30th June 2017 included an additional consideration of US$9 million for Astra's acquisition of the above-mentioned 80% interest in Suprabari.
Revenue and profit after tax since acquisition in respect of subsidiaries acquired during the six months ended 30th June 2018 are insignificant. Had the acquisitions occurred on 1st January 2018, the impact to the consolidated revenue and consolidated profit after tax was also insignificant.
(b) Purchase of associates and joint ventures for the six months ended 30th June 2018 mainly included Hongkong Land's investments in mainland China, Thailand and Vietnam.
Purchase for the six months ended 30th June 2017 included Jardine Cycle & Carriage's subscription to rights issue and purchase of additional shares in Siam City Cement Public Company Limited in Thailand of US$138 million, increasing its interest from 24.9% to 25.5%; Astra's investments in toll road concessions of US$264 million and a 25% interest in power plants of US$206 million in Indonesia, and subscription to PT Bank Permata's rights issue of US$44 million; and the Company's acquisition of a 28% interest in Greatview Aseptic Packaging Company Limited, an aseptic carton packaging supplier, of US$246 million and additional investment in Zhongsheng of US$172 million, increasing its interest from 15.5% to 20.0%.
(c) Purchase of other investments for the six months ended 30th June 2018 included Jardine Cycle & Carriage's investment in Toyota Motor Corporation of US$200 million; and Astra's investment in GO-JEK and other securities of US$150 million and US$158 million, respectively.
Purchase for the six months ended 2017 mainly included acquisition of securities by Astra.
(d) Advance to associates and joint ventures for the six months ended 30th June 2018 and 2017 mainly included Hongkong Land's advance to its property joint ventures.
(e) Advance and repayment from associates and joint ventures for the six months ended 30th June 2018 and 2017 mainly included advance and repayment from Hongkong Land's property joint ventures.
(f) Sale of other investments for the six months ended 30th June 2018 and 2017 comprised Astra's sale of securities.
(g) Change in interests in subsidiaries
Six months ended 30th June
2018 2017
US$m US$m
Increase in attributable interests
- Hongkong Land (87) -
- Mandarin Oriental (22) -
- other (202) -
Decrease in attributable interests 3 15
----- -----
(308) 15
----- -----
Increase in attributable interests in other subsidiaries for the six months ended 30th June 2018 comprised Astra's acquisition of an additional 25% interest in PT Astra Sedaya Finance, a consumer financing company from PT Bank Permata, increasing its controlling interest to 100%.
13. Capital Commitments and Contingent Liabilities
Total capital commitments at 30th June 2018 and 31st December 2017 amounted to US$2,268 million and US$2,318 million, respectively.
Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have been made in the condensed financial statements.
14. Related Party Transactions
In accordance with the Bye-laws of the Company, Jardine Matheson Limited, a wholly-owned subsidiary of Jardine Matheson Holdings Limited ('Jardine Matheson'), has been appointed General Manager of the Company under a General Manager Agreement. With effect from 1st January 2008, Jardine Matheson Limited has sub-delegated certain of its responsibilities under the agreement to a fellow subsidiary. Total fees payable for services provided to the Company for the six months ended 30th June 2018 amounted to US$70 million (2017: US$71 million).
In the normal course of business the Group undertakes a variety of transactions with Jardine Matheson, and with certain of its associates and joint ventures.
The most significant of such transactions relate to the purchases of motor vehicles and spare parts from the Group's associates and joint ventures in Indonesia including PT Toyota-Astra Motor, PT Astra Honda Motor and PT Astra Daihatsu Motor. Total cost of motor vehicles and spare parts purchased for the six months ended 30th June 2018 amounted to US$2,578 million (2017: US$2,547 million). The Group also sells motor vehicles and spare parts to its associates and joint ventures in Indonesia including PT Astra Honda Motor, PT Astra Daihatsu Motor and PT Tunas Ridean. Total revenue from sales of motor vehicles and spare parts for the six months ended 30th June 2018 amounted to US$307 million (2017: US$289 million).
PT Bank Permata provides banking services to the Group. The Group's deposits with PT Bank Permata at 30th June 2018 amounted to US$396 million (2017: US$352 million).
There were no other related party transactions that might be considered to have a material effect on the financial position or performance of the Group that were entered into or changed during the first six months of the current financial year.
Amounts of outstanding balances with Jardine Matheson, associates and joint ventures are included in debtors and creditors, as appropriate.
15. Market Value Basis Net Assets
At 30th
June At 31st
2018 December2017
US$m US$m
Jardine Matheson 8,821 5,520
Hongkong Land 8,412 8,283
Dairy Farm 9,226 8,250
Mandarin Oriental 2,287 1,964
Jardine Cycle & Carriage 6,895 9,017
Other holdings 522 535
------- -------------
36,163 33,569
Jardine Strategic Corporate 516 379
------- -------------
36,679 33,948
------- -------------
US$ US$
Net asset value per share 64.62 59.08
------- -------------
'Market value basis net assets' are calculated based on the market price of the Company's holdings for listed companies, with the exception of the holding in Jardine Matheson which has been calculated by reference to the market value of US$26,940 million (2017: US$25,341 million) less the Company's share of the market value of Jardine Matheson's interest in the Company. For unlisted companies a Directors' valuation has been used.
Net asset value per share is calculated on 'market value basis net assets' of US$36,679 million (2017: US$33,948 million) and on 568 million (2017: 575 million) shares outstanding at the period end which excludes the Company's share of the shares held by Jardine Matheson of 540 million (2017: 533 million) shares.
Jardine Strategic Holdings Limited Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal control. The following have been identified previously as the areas of principal risk and uncertainty facing the Company, and they remain relevant in the second half of the year.
-- Economic Risk -- Commercial Risk and Financial Risk -- Concessions, Franchises and Key Contracts -- Regulatory and Political Risk -- Terrorism, Pandemic and Natural Disasters
For greater detail, please refer to page 122 of the Company's 2017 Annual Report, a copy of which is available on the Company's website www.jardines.com.
Responsibility Statement
The Directors of the Company confirm to the best of their knowledge that:
(a) the condensed financial statements have been prepared in accordance with IAS 34; and
(b) the interim management report includes a fair review of all information required to be disclosed by the Disclosure Guidance and Transparency Rules 4.2.7 and 4.2.8 issued by the Financial Conduct Authority of the United Kingdom.
For and on behalf of the Board
Ben Keswick
Y.K. Pang
Directors
The interim dividend of USc10.00 per share will be payable on 10th October 2018 to shareholders
on the register of members at the close of business on 17th August 2018. The shares will be
quoted ex-dividend on the Singapore Exchange and the London Stock Exchange on 15th and 16th
August 2018, respectively. The share registers will be closed from 20th August to 24th August
2018, inclusive. The dividend will be available in cash with a scrip alternative.
Shareholders will receive their cash dividends in United States Dollars, unless they are registered
on the Jersey branch register, in which case they will have the option to elect for their
dividends to be paid in Sterling. These shareholders may make new currency elections for the
2018 interim dividend by notifying the United Kingdom transfer agent in writing by 21st September
2018. The Sterling equivalent of dividends declared in United States Dollars will be calculated
by reference to a rate prevailing on 26th September 2018.
Shareholders holding their shares through CREST in the United Kingdom will receive their cash
dividends in Sterling only as calculated above. Shareholders holding their shares through
The Central Depository (Pte) Limited ('CDP') in Singapore will receive their cash dividends
in United States Dollars unless they elect, through CDP, to receive Singapore Dollars.
Shareholders on the Singapore branch register who wish to deposit their shares into the CDP
system by the dividend record date, being 17th August 2018, must submit the relevant documents
to M & C Services Private Limited, the Singapore branch registrar, by no later than 5.00 p.m.
(local time) on 16th August 2018.
Jardine Strategic
Jardine Strategic is a holding company which makes long-term strategic investments in multinational businesses, particularly those with an Asian focus, and in other high quality companies with existing or potential links with the Group. Its principal attributable interests are in Jardine Matheson (58%), Hongkong Land (50%), Dairy Farm (78%), Mandarin Oriental (78%) and Jardine Cycle & Carriage (75%), which in turn has a 50% interest in Astra. It also has minority interests in Greatview Aseptic Packaging and Zhongsheng. Jardine Strategic is 84% held by Jardine Matheson.
The Group companies operate in the fields of motor vehicles and related operations, property investment and development, food retailing, home furnishings, engineering and construction, transport services, insurance broking, restaurants, luxury hotels, financial services, heavy equipment, mining and agribusiness.
Jardine Strategic Holdings Limited is incorporated in Bermuda and has a standard listing on the London Stock Exchange, with secondary listings in Bermuda and Singapore. The Company's interests are managed from Hong Kong by Jardine Matheson Limited.
- end -
For further information, please contact: Jardine Matheson Limited John Witt (852) 2843 8278 Brunswick Group Limited Karin Wong (852) 3512 5077
As permitted by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in the United Kingdom, the Company will not be posting a printed version of the Half-Yearly Results announcement to shareholders. The Half-Yearly Results announcement will remain available on the Company's website, www.jardines.com, together with other Group announcements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR SESSMWFASELW
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July 27, 2018 05:47 ET (09:47 GMT)
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