JC&C 2018 First Quarter Financial Statements

 

To: Business Editor                                                                    26th April 2018

                                                                                                   For immediate release

 

 

 

Jardine Cycle & Carriage Limited

2018 First Quarter Financial Statements and Dividend Announcement

 

The following announcement was issued today by the Company's 75%-owned subsidiary, Jardine Cycle & Carriage Limited.

 

For further information, please contact:

 

Jardine Matheson Limited

Neil M McNamara                                                                         (852) 2843 8227

 

Brunswick Group Limited

Karin Wong                                                                                   (852) 3512 5077

 

26th April 2018                           

 

JARDINE CYCLE & CARRIAGE LIMITED

2018 FIRST QUARTER FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

 

Highlights

·     Underlying earnings per share up 8%

·     Astra's contribution slightly down year-on-year

·     Higher results from Direct Motor Interests and Other Strategic Interests

 

"Astra is continuing to benefit from stable coal prices, although the car market is increasingly competitive. While the Group's Direct Motor Interests are also likely to continue to face challenges, its Other Strategic Interests are expected to produce growth. Overall, the current outlook for the full year is for a satisfactory performance."

 

Ben Keswick, Chairman

26th April 2018

 

 

Group Results
	Three months ended 31st March
			2018 US$m	Restated(1) 2017 US$m	Change %			2018 S$m
Revenue			4,643	4,149	12			6,112
Profit after tax(2)			412	472	-13			542
Underlying profit attributable to
shareholders			219	202	8			288
Profit attributable to shareholders(2)			135	212	-36			178
			US¢	US¢				S¢
Underlying earnings per share			55	51	8			73
Earnings per share			34	54	-36			45
			At 31.3.2018	At 31.12.2017				At 31.3.2018
			US$m	US$m				S$m
Shareholders' funds			6,545	6,408	2			8,588
			US$	US$				S$
Net asset value per share			16.56	16.21	2			21.7

 

 

The exchange rate of US$1=S$1.31 (31st December 2017: US$1=S$1.34) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.32 (31st March 2017: US$1=S$1.41) was used for translating the results for the period.

 

The financial results for the three months ended 31st March 2018 and 31st March 2017 have been prepared in accordance with International Financial Reporting Standards. These results have not been audited or reviewed by the auditors.

 

(1) The accounts have been restated due to the adoption of IFRS 9 "Financial Instruments" and IFRS 15 "Revenue Contracts with Customers", as set out in note 1 to the financial statements.

(2) Includes changes in fair value of the Group's investments in equity instruments under IFRS 9.

 

 

 

CHAIRMAN'S STATEMENT

 

Overview

 

The Group reported improved results in the first quarter of 2018 as a lower contribution from Astra was offset by higher contributions from the Group's Direct Motor Interests and Other Strategic Interests. 

 

Performance

 

The Group's revenue for the three months ended 31st March was 12% higher at US$4.6 billion. Underlying profit attributable to shareholders grew 8% to US$219 million, and underlying profit per share was 8% higher at US¢55 per share. Profit attributable to shareholders was US$135 million, compared to US$212 million in the equivalent period last year, following the recognition of fair value losses on the adoption of new accounting standards.

 

Astra's contribution of US$177 million to the Group's underlying profit was 4% down. Underlying profit from the Group's Direct Motor Interests was 23% higher at US$28 million, while the Group's Other Strategic Interests made a contribution of US$10 million.

 

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$1.4 billion at the end of March 2018, compared to US$819 million at the prior year end. The increase was primarily due to Astra's toll road and GO-JEK investments and capital expenditure in its mining contracting business, together with the investments by the Group in Toyota Motor Corporation and other associates and joint ventures. The net debt of the Company increased to US$1.3 billion, from US$1.2 billion at the end of 2017. Net debt within Astra's financial services subsidiaries of US$3.3 billion was slightly down from the prior year end.

 

The Board has not declared a dividend for the three months ended 31st March 2018 (31st March 2017:  Nil).

 

Astra

 

Astra reported a net profit equivalent to US$365 million, under Indonesian accounting standards, 2% lower in its local currency terms, as lower results were experienced in some of its business segments, particularly in automotive and agribusiness, which more than offset the improved performance from its heavy equipment, mining, construction and energy business.

 

Automotive

 

Net income from the group's automotive division was down by 8% at US$155 million, mainly due to increased competition in the car segment.

 

The wholesale market for cars grew by 3% to 292,000 units. Astra's car sales were, however, 12% lower at 142,000 units due to the impact of intense competition which resulted in a decline in market share from 57% to 49%. The group launched seven new models and two revamped models during the period.

 

The wholesale market for motorcycles increased by 4% to 1.5 million units. Astra Honda Motor's domestic sales were flat at 1.1 million units, mainly due to inventory management ahead of several key model launches, which resulted in its market share decreasing from 77% to 73%. The group launched one new model and five revamped models during the period.

 

Astra Otoparts, the group's components business, reported net income which was 1% lower at US$11 million, despite an 11% increase in revenue. The decline in net income was mainly due to reduced contributions from its joint venture and associate companies, which were impacted by forex translation losses.

 

Financial Services

Net income from the group's financial services division decreased by 6% to US$78 million, due to a lower contribution from Permata Bank.

The group's consumer finance businesses saw a 5% decrease in the amount financed. The contribution from the group's car-focused finance companies decreased by 17% to US$17 million mainly due to increased loan loss provisions in the low cost car segment.  Motorcycle-focused Federal International Finance's net income was up 22% at US$40 million, mainly due to a larger loan portfolio.

The amount financed through the group's heavy equipment-focused finance operations decreased by 35% to US$62 million, mainly due to reduced lending to small and medium-sized borrowers.

Permata Bank, in which Astra holds a 44.6% interest, reported net income of US$12 million, compared to US$34 million recorded in the first quarter of last year. The results benefited from a one-off gain on the sale of non-performing loans. Excluding this one-off gain, the bank's net income would have increased mainly driven by lower loan impairment costs which fell from US$50 million in the first quarter last year to US$34 million in this first quarter. The bank's gross and net non-performing loan ratios at the end of March 2018 were relatively stable at 4.6% and 1.7%, respectively.

Asuransi Astra Buana, the group's general insurance company, reported net income 15% higher at US$18 million, due to increased investment income. During the period, the group's life insurance joint venture, Astra Aviva Life, acquired more than 78,000 new individual life customers and 411,000 new participants for its corporate employee benefits programmes.

Heavy Equipment, Mining, Construction and Energy

Net income from the group's heavy equipment, mining, construction and energy division increased by 68% to US$111 million.

United Tractors, which is 59.5%-owned, reported net income 69% higher at US$186 million. The increase was mainly due to improved performances in its construction machinery and mining contracting businesses, as well as its mining operations, as a result of increased coal prices.

In its construction machinery business, Komatsu heavy equipment sales were up 38% at 1,171 units, while parts and service revenues were also higher. The mining contracting operations of Pamapersada Nusantara recorded a 6% higher coal production at 26.5 million tonnes and 22% higher overburden removal at 207 million bank cubic metres. United Tractors' mining subsidiaries reported 36% higher coal sales at 2.6 million tonnes.

In the first quarter of 2018, Suprabari Mapanindo Mineral, United Tractors' 80.1%-owned coking coal company which became operational in late 2017, achieved coal sales at 111,000 tonnes. 

 

General contractor Acset Indonusa, a 50.1% subsidiary of United Tractors, reported net income up 27% at US$3 million due to higher revenue mainly from its infrastructure construction projects. 

Agribusiness

 

Net income from the group's agribusiness division was down by 55% at US$21 million.

 

Astra Agro Lestari, which is 79.7%-owned, reported net income 55% lower at US$26 million, primarily due to lower crude palm oil prices. Achieved average crude palm oil prices were 12% lower at Rp7,855/kg, while sales of crude palm oil and its derivatives were 17% higher at 480,000 tonnes.

 

Infrastructure and Logistics

 

The group's infrastructure and logistics division reported a net loss of US$2 million, compared with a net profit of US$5 million in the first quarter of 2017, as results were affected by initial losses on the Cikopo-Palimanan toll road acquired in the first half of 2017.

 

The group's portfolio of toll road interests totals 353km, of which 269km is operational. At the mature 72.5km Tangerang-Merak toll road, operated by 79.3%-owned Marga Mandalasakti, toll revenue increased by 14% to US$19 million. At the wholly-owned 40.5km Jombang-Mojokerto toll road, 39.6km became fully operational in September 2017 and recorded US$3 million of toll revenue during the first quarter of 2018. Toll revenue at the 45%-owned 116.8km Cikopo-Palimanan increased by 4% to US$22 million. At the 40%-owned 72.6km Semarang-Solo toll road, of which 40.1km is now in operation, toll revenue was US$4 million, 36% higher than the comparable period last year.

 

The group also has a 40% stake in the 11.2km Kunciran-Serpong toll road and a 25% stake in the 39.8km Serpong-Balaraja toll road, both of which are under development. 

 

Serasi Autoraya's net income increased by 47% to US$4 million, due to higher net margins in its car leasing and rental businesses, despite a 4% decline in vehicles under contract.

 

Information Technology

 

Net income from the group's information technology division was 4% higher at US$2 million.

 

Astra Graphia, which is 76.9%-owned, reported net income higher at US$3 million due to higher revenues across all its business segments.  

 

Property

 

The group's property division reported a marginal net income compared to a net income of US$3 million in the prior year, primarily due to lower development earnings recognised from its Anandamaya Residences project.

 

Arumaya, the group's 60%-held residential development project located in South Jakarta, commenced marketing in March 2018 and is scheduled for completion in 2022.

 

50%-owned Astra Land which owns 67% of Astra Modern Land, is in the process of developing a 67-hectare site in East Jakarta and started marketing activities for its first two clusters of landed houses during the first quarter of 2018. 

 

Direct Motor Interests

 

The Group's Direct Motor Interests contributed an underlying profit of US$28 million, 23% above the previous year.  

 

Cycle & Carriage Singapore's profit rose as margins improved on passenger cars as well as increased contributions from used cars and parts trading. In Malaysia, Cycle & Carriage Bintang recorded a loss despite higher unit sales, mainly due to higher operating expenses and financing costs. In Indonesia, Tunas Ridean's contribution was higher following stronger performances from its motor vehicle and motorcycle sales operations and from Mandiri Tunas Finance, partly offset by a lower profit from its rental business. In Vietnam, Truong Hai Auto Corporation's ("Thaco") contribution increased year-on-year, as the comparable results were negatively affected by stock provisions. Thaco's sales were higher in the first three months of 2018, as the full impact of the removal of CBU import tariffs in January 2018 has yet to be felt, and margins remained stable.  In March 2018, the Group increased its shareholding in Tunas Ridean from 44.37% to 45.12%.

 

Other Strategic Interests

 

As in the previous year, the Group did not recognise any contribution in the first quarter from its 25.54% holding in Siam City Cement Public Company in Thailand and its 24.65% holding in Refrigeration Electrical Engineering Corporation ("REE Corp") in Vietnam, as both companies have yet to announce their first quarter results.  Together these results are not expected to have a material impact on the Group, and will be accounted for in the second quarter. The Group recognised dividend income of US$9 million in the first quarter from its 10% interest in Vinamilk, which was acquired in November 2017. 

 

Since the beginning of the year, the Group has increased its shareholding in REE Corp from 23.91% to 24.65%. The Group also invested US$200 million in shares of Toyota Motor Corporation, which is an important long-standing business partner of Astra.

 

Outlook

 

Astra is continuing to benefit from stable coal prices, although the car market is increasingly competitive. The Group's Direct Motor Interests are likely to continue to face challenges, while its Other Strategic Interests are expected to produce growth. Overall, the current outlook for the full year is for a satisfactory performance.

 

 

Ben Keswick, Chairman

26th April 2018

 

 

Statement pursuant to Rule 705(5) of the Listing Manual

 

The directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the accompanying unaudited interim financial results for the three months ended 31st March 2018 to be false or misleading in any material respect.

 

 

On behalf of the Directors

 

 

Ben Keswick

Director

 

 

Hassan Abas

Director

 

 

26th April 2018

 

 

Jardine Cycle & Carriage Limited Consolidated Profit and Loss Account for the three months ended 31st March 2018

 

					Restated
			2018		2017	Change
	Note		US$m		US$m	%
Revenue			4,643.2		4,148.7	12
Net operating costs	2		(4,211.6)		(3,723.2)	13
Operating profit	2		431.6		425.5	1
Financing income			22.4		27.9	-20
Financing charges			(47.6)		(38.4)	24
Net financing charges			(25.2)		(10.5)	140
Share of associates' and joint
ventures' results after tax			126.2		155.8	-19
Profit before tax			532.6		570.8	-7
Tax	3		(120.8)		(99.0)	22
Profit after tax			411.8		471.8	-13
Profit attributable to:
Shareholders of the Company			135.4		211.7	-36
Non-controlling interests			276.4		260.1	6
			411.8		471.8	-13
			US¢		US¢
Earnings per share	4		34		54	-36

 

 

  

Jardine Cycle & Carriage Limited Consolidated Statement of Comprehensive Income for the three months ended 31st March 2018

 

			Restated
	2018		2017
	US$m		US$m
Profit for the period	411.8		471.8
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension plans	(1.0)		0.9
Tax on items that will not be reclassified	0.2		(0.2)
Share of other comprehensive income/(expense) of associates
and joint ventures, net of tax	0.6		(0.7)
	(0.2)		-
Items that may be reclassified subsequently to profit or loss:
Translation difference
- gain/(loss) arising during the period	(134.7)		123.6
Financial assets at FVOCI1
- gain/(loss) arising during the period	(3.3)		6.7
- transfer to profit and loss	(1.4)		-
Cash flow hedges
- loss arising during the period	(0.1)		(21.3)
- transfer to profit and loss	0.3		4.3
Tax relating to items that may be reclassified	0.1		4.1
Share of other comprehensive income/(expense) of associates
and joint ventures, net of tax	27.8		(1.2)
	(111.3)		116.2
Other comprehensive income/(expense) for the period	(111.5)		116.2
Total comprehensive income for the period	300.3		588.0
Attributable to:
Shareholders of the Company	107.4		278.8
Non-controlling interests	192.9		309.2
	300.3		588.0

 

 

⁽¹⁾      Fair value through other comprehensive income ("FVOCI")

 

 

Jardine Cycle & Carriage Limited Consolidated Balance Sheet at 31st March 2018

 

				Restated		Restated
		At		At		At
	Note	31.3.2018		31.12.2017		1.1.2017
		US$m		US$m		US$m
Non-current assets
Intangible assets		1,068.7		1,079.5		972.3
Leasehold land use rights		608.0		625.0		620.4
Property, plant and equipment		3,484.4		3,410.2		2,978.5
Investment properties		619.4		618.6		460.2
Bearer plants		493.6		498.0		496.8
Interests in associates and joint ventures		4,286.5		4,274.3		3,738.5
Non-current investments		2,342.9		1,973.3		487.8
Non-current debtors		2,759.0		2,827.1		2,691.6
Deferred tax assets		327.7		322.2		291.7
		15,990.2		15,628.2		12,737.8
Current assets
Current investments		18.6		22.7		65.2
Properties for sale		251.7		254.0		-
Stocks		1,619.6		1,723.8		1,578.6
Current debtors		5,491.4		5,072.8		4,604.1
Current tax assets		129.6		120.5		136.9
Bank balances and other liquid funds
- non-financial services companies		2,321.7		2,398.7		2,237.2
- financial services companies		231.5		241.1		228.5
		2,553.2		2,639.8		2,465.7
		10,064.1		9,833.6		8,850.5
Total assets		26,054.3		25,461.8		21,588.3
Non-current liabilities
Non-current creditors		167.9		170.8		156.7
Provisions		117.3		113.7		97.6
Long-term borrowings	5
- non-financial services companies		1,249.3		845.8		349.9
- financial services companies		1,600.7		1,486.7		1,517.5
		2,850.0		2,332.5		1,867.4
Deferred tax liabilities		211.9		212.9		188.0
Pension liabilities		265.9		262.2		215.9
		3,613.0		3,092.1		2,525.6
Current liabilities
Current creditors		4,077.8		4,223.5		3,363.6
Provisions		90.9		87.2		85.7
Current borrowings	5
- non-financial services companies		2,445.0		2,371.7		1,178.6
- financial services companies		1,885.7		2,154.1		2,264.6
		4,330.7		4,525.8		3,443.2
Current tax liabilities		180.7		135.4		95.7
		8,680.1		8,971.9		6,988.2
Total liabilities		12,293.1		12,064.0		9,513.8
Net assets		13,761.2		13,397.8		12,074.5
Equity
Share capital	6	1,381.0		1,381.0		1,381.0
Revenue reserve	7	6,312.4		6,147.2		5,515.6
Other reserves	8	(1,148.4)		(1,120.1)		(1,142.5)
Shareholders' funds		6,545.0		6,408.1		5,754.1
Non-controlling interests	9	7,216.2		6,989.7		6,320.4
Total equity		13,761.2		13,397.8		12,074.5