JC&C 2019 First Quarter Financial Statements

To:  Business Editor                                                                         26th April 2019

                                                                                                         For immediate release

       

 

 

Jardine Cycle & Carriage Limited

2019 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

Jonathan Lloyd                                                                                     (852) 2843 8223

 

Brunswick Group Limited

Ben Fry                                                                                                  (65) 6426 8103

 

 

 

 

 

26th April 2019                             

 

JARDINE CYCLE & CARRIAGE LIMITED

2019 FIRST QUARTER FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

 

HIGHLIGHTS

·      Underlying earnings per share down 8%

·      Astra earnings increase by 5% in local currency terms

·      Lower contribution from non-Astra interests

 

"While Astra's earnings increased by 5% in local currency terms, the increase in its contribution to the Group was lower due to a weaker local currency this year compared with the first quarter of 2018.  Earnings from the Group's non-Astra interests fell by 22% due to the timing of dividends from Vinamilk. Setting aside this impact of dividends from Vinamilk, the non-Astra interests would have shown 6% growth. For the rest of the year, Astra is expected to continue to benefit from higher contributions from its financial services and mining contracting businesses as well as its newly acquired gold mining business, but concerns remain over lacklustre demand and intense competition in the car market and weaker commodity prices.  The Group's non-Astra interests are expected to show slower growth."

 

Ben Keswick, Chairman

26th April 2019

 

Group Results
	Three months ended 31st March
			2019 US$m	Restated† 2018 US$m	Change %		2019 S$m
Revenue			4,716	4,643	2		6,369
Underlying profit attributable to
shareholders #			201	219	-8		272
Non-trading items^			111	(84)	nm		150
Profit attributable to shareholders			312	135	131		422
			US¢	US¢			S¢
Underlying earnings per share #			51	55	-8		69
Earnings per share			79	34	131		107
			At 31.3.2019	At 31.12.2018			At 31.3.2019
			US$m	US$m			S$m
Shareholders' funds			6,539	6,144	6		8,864
			US$	US$			S$
Net asset value per share			16.55	15.54	6		22.43

 

The exchange rate of US$1=S$1.36 (31st December 2018: US$1=S$1.37) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.35 (31st March 2018: US$1=S$1.32) was used for translating the results for the year. The financial results for the three months ended 31st March 2019 and 31st March 2018 have been prepared in accordance with International Financial Reporting Standards and have not been audited or reviewed by the auditors.

 

†       The accounts have been restated due to changes in accounting policies upon adoption of IFRS 16 Leases, as set out in Note 1 to the condensed financial statements.

 #       The Group uses 'underlying profit attributable to shareholders' in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more fully described in Note 4 to the condensed financial statements.  Management considers this to be a key performance measurement which enhances the understanding of the Group's underlying business performances.

 ^         Included in 'non-trading items' are unrealised gain/losses arising from the revaluation of the Group's equity investments.

 nm      not meaningful

 

 

CHAIRMAN'S STATEMENT

 

Overview

 

Jardine Cycle & Carriage ("JC&C") saw an 8% reduction in underlying profit in the first quarter of the year, with increased earnings from Astra offset by a lower contribution from the Group's non-Astra interests, principally due to the timing of dividends from Vinamilk.   

 

Performance

 

The Group's revenue for the three months ended 31st March 2019 increased by 2% to US$4.7 billion, primarily due to higher revenue in most of Astra's businesses, in particular financial services and heavy equipment, mining, construction and energy. The Group's underlying profit attributable to shareholders of US$201 million was 8% lower than the comparable period last year, with the underlying profit per share of US¢51 also 8% down. Profit attributable to shareholders increased significantly to US$312 million from US$135 million, after accounting for net non-trading gains of US$111 million, principally unrealised fair value gains related to non-current investments. 

 

Astra contributed US$179 million to the Group's total underlying profit, an increase of 1%. The underlying profit from the Group's Direct Motor Interests was 6% higher at US$28 million, but no contribution was recorded from its Other Strategic Interests in the period, compared to dividends of US$10 million received from Vinamilk in the comparable period last year.  Vinamilk's 2018 final dividend was approved by its shareholders in April 2019 and will be included in the results for the second quarter. Corporate costs were US$6 million compared to an income of US$5 million in the previous year primarily due to higher net financing charges and lower foreign exchange gain from the translation of foreign currency loans.

 

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$2.3 billion at the end of March 2019, compared to US$2.2 billion at the end of 2018. This increase was largely due to Astra's additional investment in GOJEK during the period. Net debt within Astra's financial services subsidiaries remained stable at US$3.3 billion compared to the end of 2018. JC&C parent's net debt was US$1.3 billion at the end of March 2019, in line with the previous year end.

 

The Board has not declared a dividend for the three months ended 31st March 2019 (31st March 2018: Nil). Dividends are usually declared on a semi-annual basis for every six-month period ending 30th June (in respect of an interim dividend) and 31st December (in respect of a final dividend).

 

GROUP REVIEW

 

ASTRA

 

Astra reported a net profit equivalent to US$369 million, under Indonesian accounting standards, 5% higher in its local currency terms. This was mainly due to increased contributions from its financial services and heavy equipment, mining, construction and energy businesses, which more than offset lower contributions from its automotive business and agribusiness.

 

In February 2019, as part of the collaboration between Astra and GOJEK, a joint venture company was formed to provide fleet management support for the ride-hailing online transportation system of GO-CAR in Indonesia. This strategic collaboration was launched following an additional US$100 million of equity investment by Astra in GOJEK in January 2019, which brings the total investment in GOJEK to US$250 million.

 

Automotive

 

Net income from the group's automotive division fell by 10% to US$135 million, mainly due to lower car sales volumes and increased material costs which affected the manufacturing operations.

 

The wholesale market for cars declined by 13% to 254,000 units. Astra's car sales, however, were only 5% lower at 134,000 units which resulted in an increase in market share from 49% to 53% in the first quarter of 2019. The group launched 6 new models and 2 revamped models during the period.

 

The wholesale market for motorcycles increased by 19% in the first two months of this year, compared with the equivalent period in 2018. Wholesale market size information is not yet available for March 2019. The group launched 2 new models and 12 revamped models during the period.

 

Astra Otoparts, the group's components business, reported a 9% increase in net income at US$11 million. The increase in net income was mainly due to higher revenue generated from its original equipment manufacturing, replacement market and export segments.

 

Financial Services

 

Net income from the group's financial services division increased by 32% to US$99 million, due to higher contributions from most business segments.

 

The group's consumer finance businesses saw a 5% increase in the amount financed to US$1.5 billion. The net income contribution from the group's car-focused finance companies increased by 51% to US$24 million, mainly due to lower non-performing loan losses. Motorcycle-focused Federal International Finance's net income was up 11% at US$43 million, primarily due to a larger loan portfolio.

 

The amount financed through the group's heavy equipment-focused finance operations increased by 15% to US$69 million. The net income contribution from the group's heavy equipment-focused finance operations increased by 69% to US$2 million, reflecting higher levels of lending to corporate customers.

 

Permata Bank, in which Astra holds a 44.6% interest, reported net income of US$27 million compared with US$12 million in the first quarter of 2018, mainly due to higher levels of recoveries from non-performing loans. The bank's gross and net non-performing loan ratios were 3.8% and 1.6%, respectively, at the end of March 2019 compared to 4.4% and 1.7% at the end of 2018.

 

Asuransi Astra Buana, the group's general insurance company, reported a 9% increase in net income at US$19 million, due to higher investment income. During the period, the group's life insurance joint venture, Astra Aviva Life, acquired more than 170,000 new individual life customers and 50,000 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 20% to US$129 million.

 

United Tractors, which is 59.5%-owned, reported net income of US$216 million, 21% higher than the comparable period in 2018. The increase was mainly due to the improved performance in its mining contracting business and the contribution from the gold mining operation acquired in December 2018.

 

Within United Tractors' construction machinery business, Komatsu heavy equipment sales increased by 1% to 1,181 units, while parts and service revenues were also higher. The mining contracting operations of wholly-owned Pamapersada Nusantara recorded a 14% increase in overburden removal volume at 235 million bank cubic metres and 15% higher coal production at 31 million tonnes. United Tractors' coal mining subsidiaries reported 4% lower coal sales at 3 million tonnes, including 325,000 tonnes of coking coal sales by 80.1%-owned Suprabari Mapanindo Mineral. Agincourt Resources, a 95%-owned subsidiary of United Tractors, reported gold sales of 97,000 oz in the first quarter of 2019.

 

General contractor Acset Indonusa, a 50.1%-owned subsidiary of United Tractors, reported a net loss of US$6 million, compared to net income of US$3 million recorded in the first quarter last year, mainly due to increased construction and funding costs of several ongoing projects.

 

25%-owned Bhumi Jati Power is in the process of constructing two 1,000MW power plants in Central Java, which are scheduled to start commercial operations in 2021.

 

Agribusiness

 

Net income from the group's agribusiness division was down 89% at US$2 million.

 

Astra Agro Lestari, which is 79.7%-owned, reported a 89% decline in net income to US$3 million primarily due to a fall in crude palm oil prices, which were 20% lower at Rp6,252/kg compared with the average in the first quarter of 2018. This more than offset a 25% increase in crude palm oil and derivatives sales to 599,000 tonnes.

 

Infrastructure and Logistics

 

The group's infrastructure and logistics division reported a net income of US$1 million, compared with a net loss of US$2 million in the first quarter of 2018. This was mainly due to improved earnings from operational toll roads. Astra has interests in 302km of operational toll roads along the Trans-Java network, with a further 11km in Greater Jakarta under construction.

 

Serasi Autoraya's net income decreased by 19% to US$3 million, due to a 2% fall in vehicles under contract at 22,000 and 2% lower used car sales at 8,000 units.

 

Information Technology

 

Net income from the group's information technology division was 26% lower at US$1 million.  

 

Astra Graphia, which is 76.9%-owned, reported net income of US$2 million, 26% lower than the first quarter of last year. While revenues in the document solutions and office services businesses rose, they were offset by higher operating costs.

 

Property

 

The group's property division reported a net profit of US$1 million, compared to a marginal net profit in the first quarter of last year, mainly due to increased earnings from Menara Astra, with no project completions in either period. 

 

The group's other projects include interests in Arumaya in South Jakarta and Asya in East Jakarta, both residential projects, and a 3-hectare residential and commercial development in Jakarta's Central Business District.

 

 

 

DIRECT MOTOR INTERESTS

 

The Group's Direct Motor interests contributed a profit of US$28 million, 6% up on the equivalent period in the prior year. 

 

Singapore

 

Profit from the Group's wholly-owned business, Cycle & Carriage Singapore, rose by 6% to US$14 million due to an increase in the number of vehicles sold. The Singapore passenger car market rose by 15% to 20,500 units, as registrations in the first quarter of 2018 were negatively affected by the implementation of the Vehicle Emission Scheme in January 2018, which saw tax increases on most car models. The Group sold a total of 4,300 passenger cars, an increase of 21% compared with the first quarter of 2018, maintaining its 21% market share.

 

Malaysia

 

In Malaysia, 59.1%-owned Cycle & Carriage Bintang contributed a loss of US$1 million, due to a decline in unit sales, as well as higher operating expenses and financing costs, compared to a loss of US$2 million in the prior year, which included adjustments for stock losses.

 

Myanmar

 

Cycle & Carriage Myanmar, in which the Group owns a 60% interest, contributed a loss of US$2 million, compared to a loss of US$1 million in the prior year, mainly due to higher depreciation charges on new facilities in Yangon and increased stock provisions. 

 

Indonesia

 

In Indonesia, 46.2%-owned Tunas Ridean's profit contribution of US$6 million was 12% higher than the previous year, due to stronger contributions from its automotive and consumer finance operations, which were partly offset by a lower contribution from its rental business. Motor car sales of 12,800 units were 7% lower, while motorcycle sales rose 10% to 56,800 units.

 

Vietnam

 

In Vietnam, the profit contribution from 25.3%-owned Truong Hai Auto Corporation ("Thaco") was US$12 million, 2% higher than the first quarter of the previous year, despite a 13% fall in unit sales caused by increased CBU competition. The increase was due to improved margins and lower stock provisions. In April 2019, the Company acquired a further 1.3% interest in Thaco for US$168 million, increasing its shareholding to 26.6%. 

 

OTHER STRATEGIC INTERESTS

 

The Group's Other Strategic Interests did not recognise any profits in the first quarter of 2019, compared to US$10 million in the comparable period last year, when dividends were recognised from its 10% interest in Vinamilk.  Instead, the final dividend from the previous year will be received in June of this year.  As in the prior year, the Group did not report any contribution from its 25.5% holding in Siam City Cement Public Company in Thailand and its 24.9% holding in Refrigeration Electrical Engineering Corporation in Vietnam, since both companies have yet to announce their first quarter results.  Together, these results are not expected to have a material impact on the Group. They will be included in the Group's second quarter earnings.

 

 

Outlook

 

While Astra's earnings increased by 5% in local currency terms the increase in the contribution to the Group was lower due to a weaker local currency this year compared with the first quarter of 2018.  Earnings from the Group's non-Astra interests fell by 22% due to the timing of dividends from Vinamilk. Setting aside this impact of dividends from Vinamilk, the non-Astra interests would have shown 6% growth. For the rest of the year, Astra is expected to continue to benefit from higher contributions from its financial services and mining contracting businesses as well as its newly acquired gold mining business, but concerns remain over lacklustre demand and intense competition in the car market and weaker commodity prices.  The Group's non-Astra interests are expected to show slower growth.

 

 

Ben Keswick, Chairman

26th April 2019

 

 

 

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 2019 to be false or misleading in any material respect.

 

 

On behalf of the Directors

 

 

 

 

 

 

Ben Keswick

Director

 

 

 

 

 

Vimala Menon

Director

 

 

 

 

 

26th April 2019

 

 

 

Jardine Cycle & Carriage Limited Consolidated Profit and Loss Account for the three months ended 31st March 2019

 

					Restated
			2019		2018	Change
	Note		US$m		US$m	%
Revenue			4,716.2		4,643.2	2
Net operating costs	2		(4,060.9)		(4,209.1)	-4
Operating profit	2		655.3		434.1	51
Financing income			22.5		22.4	0
Financing charges			(87.2)		(49.4)	77
Net financing charges			(64.7)		(27.0)	140
Share of associates' and joint
ventures' results after tax			124.0		126.1	-2
Profit before tax			714.6		533.2	34
Tax	3		(119.4)		(120.8)	-1
Profit after tax			595.2		412.4	44
Profit attributable to:
Shareholders of the Company			312.4		135.3	131
Non-controlling interests			282.8		277.1	2
			595.2		412.4	44
			US¢		US¢
Earnings per share	4		79		34	132

 

 

 

Jardine Cycle & Carriage Limited Consolidated Statement of Comprehensive Income for the three months ended 31st March 2019

 

			Restated
	2019		2018
	US$m		US$m
Profit for the period	595.2		412.4
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension plans	0.2		(1.0)
Tax on items that will not be reclassified	-		0.2
Share of other comprehensive (expense)/income of associates
and joint ventures, net of tax	(0.2)		0.6
	-		(0.2)
Items that may be reclassified subsequently to profit or loss:
Translation difference
- gain/(loss) arising during the period	187.5		(134.7)
Financial assets at FVOCI1
- gain/(loss) arising during the period	9.6		(3.3)
- transfer to profit and loss	-		(1.4)
Cash flow hedges
- loss arising during the period	(19.2)		(0.1)
- transfer to profit and loss	0.8		0.3
Tax relating to items that may be reclassified	4.5		0.1
Share of other comprehensive (expense)/ income of associates
and joint ventures, net of tax	(12.1)		27.8
	171.1		(111.3)
Other comprehensive income/(expense) for the period	171.1		(111.5)
Total comprehensive income for the period	766.3		300.9
Attributable to:
Shareholders of the Company	396.0		107.3
Non-controlling interests	370.3		193.6
	766.3		300.9

 

 

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

 

 

Jardine Cycle & Carriage Limited Consolidated Balance Sheet at 31st March 2019

 

				Restated		Restated
		At		At		At
	Note	31.3.2019		31.12.2018		1.1.2018
		US$m		US$m		US$m
Non-current assets
Intangible assets		1,702.5		1,630.6		1,079.5
Property, plant and equipment		4,613.6		4,457.5		3,404.5
Investment properties		600.4		587.2		618.6
Bearer plants		499.2		486.8		498.0
Interests in associates and joint ventures		4,347.2		4,250.6		4,280.3
Right-of-use assets		765.4		753.0		762.1
Non-current investments		2,172.9		1,911.2		2,031.8
Non-current debtors		2,901.0		2,867.1		2,824.5
Deferred tax assets		317.4		300.7		322.4
		17,919.6		17,244.7		15,821.7
Current assets
Current investments		52.7		50.4		22.7
Properties for sale		355.8		355.8		254.0
Stocks		2,041.1		2,039.7		1,723.8
Current debtors		5,939.5		5,602.1		5,044.9
Current tax assets		163.5		134.9		120.5
Bank balances and other liquid funds
- non-financial services companies		1,931.5		1,711.4		2,398.7
- financial services companies		326.6		187.5		241.1
		2,258.1		1,898.9		2,639.8
		10,810.7		10,081.8		9,805.7
Total assets		28,730.3		27,326.5		25,627.4
Non-current liabilities
Non-current creditors		279.8		271.4		241.6
Provisions		153.8		146.7		113.7
Non-current lease liabilities		103.3		93.3		89.0
Long-term borrowings	5
- non-financial services companies		1,529.1		1,125.3		844.9
- financial services companies		1,745.1		1,655.3		1,486.5
		3,274.2		2,780.6		2,331.4
Deferred tax liabilities		421.4		428.0		212.9
Pension liabilities		263.8		253.0		262.2
		4,496.3		3,973.0		3,250.8
Current liabilities
Current creditors		5,023.1		4,951.5		4,152.7
Provisions		96.7		92.8		87.2
Current lease liabilities		18.4		40.5		20.0
Current borrowings	5
- non-financial services companies		2,740.9		2,744.5		2,368.5
- financial services companies		1,857.5		1,824.5		2,153.9
		4,598.4		4,569.0		4,522.4
Current tax liabilities		233.8		213.8		135.4
		9,970.4		9,867.6		8,917.7
Total liabilities		14,466.7		13,840.6		12,168.5
Net assets		14,263.6		13,485.9		13,458.9
Equity
Share capital	6	1,381.0		1,381.0		1,381.0
Revenue reserve	7	6,514.5		6,202.4		6,171.9
Other reserves	8	(1,356.2)		(1,439.6)		(1,120.1)
Shareholders' funds		6,539.3		6,143.8		6,432.8
Non-controlling interests	9	7,724.3		7,342.1		7,026.1
Total equity		14,263.6		13,485.9		13,458.9

 

 

 

 

 

 

	Attributable to shareholders of the Company
														Attributable
						Asset				Fair value				to non-
		Share		Revenue		revaluation		Translation		and other				controlling		Total
		capital		reserve		reserve		reserve		reserves		Total		interests		equity
		US$m		US$m		US$m		US$m		US$m		US$m		US$m		US$m
2019
Balance at 1st January		1,381.0		6,206.2		403.3		(1,852.6)		9.6		6,147.5		7,345.4		13,492.9
Effect of adoption of IFRS 16		-		(3.8)		-		0.1		-		(3.7)		(3.3)		(7.0)
Balance as at 1st January as restated		1,381.0		6,202.4		403.3		(1,852.5)		9.6		6,143.8		7,342.1		13,485.9
Total comprehensive income		-		312.6		-		87.9		(4.5)		396.0		370.3		766.3
Dividends declared to non-controlling    Interest		-		-		-		-		-		-		(0.6)		(0.6)
Issue of shares to non- controlling interests		-		-		-		-		-		-		15.0		15.0
Change in shareholding		-		(0.5)		-		-		-		(0.5)		(2.5)		(3.0)
Balance at 31st March		1,381.0		6,514.5		403.3		(1,764.6)		5.1		6,539.3		7,724.3		14,263.6
2018
Balance at 1st January		1,381.0		6,173.7		402.4		(1,521.5)		(1.0)		6,434.6		7,028.4		13,463.0
Effect of adoption of IFRS 16		-		(1.8)		-		-		-		(1.8)		(2.3)		(4.1)
Balance as at 1st January as restated		1,381.0		6,171.9		402.4		(1,521.5)		(1.0)		6,432.8		7,026.1		13,458.9
Total comprehensive income		-		135.4		-		(33.7)		5.6		107.3		193.6		300.9
Dividends paid to non-controlling interests		-		-		-		-		-		-		(25.3)		(25.3)
Issue of shares to non-controlling interests		-		-		-		-		-		-		17.3		17.3
Change in shareholding		-		-		-		-		-		-		2.9		2.9
Other		-		3.2		-		-		-		3.2		-		3.2
Balance at 31st March		1,381.0		6,310.5		402.4		(1,555.2)		4.6		6,543.3		7,214.6		13,757.9