JC&C 2019 Third Quarter Financial Statements

 

To:   Business Editor                                                                                           6th November 2019

                                                                                                                            For immediate release

       

 

 

 

 

 

Jardine Cycle & Carriage Limited

2019 Third 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

 

 

6th November 2019                                     

 

JARDINE CYCLE & CARRIAGE LIMITED

2019 THIRD QUARTER FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

 

Highlights

·    Underlying profit of US$614 million

·    Lower contribution from Astra primarily due to a weaker automotive market and lower commodity prices

·    Direct Motor Interests impacted by increased competition in Vietnam

·    Stable contribution from Other Strategic Interests

 

"Jardine Cycle & Carriage reported underlying profit of US$614 million for the first nine months of 2019, 9% lower than last year. This was due primarily to lower contributions from Astra in Indonesia and Truong Hai Auto Corporation in Vietnam. Astra is expected to continue to be affected by relatively weak domestic consumption and low commodity prices for the remainder of the year, while benefiting from an improved contribution from financial services and its gold mine operations. JC&C's Direct Motor Interests are expected to continue to face challenging market conditions, while the contribution from Other Strategic Interests is expected to be stable."

 

Ben Keswick, Chairman

 

Group Results

	Nine months ended 30th September
			2019 US$m	Restated† 2018 US$m	Change %			2019 S$m
Revenue			13,909	13,984	-1			18,991
Underlying profit attributable to
shareholders #			614	674	-9			838
Non-trading items^			115	(300)	nm			157
Profit attributable to shareholders			729	374	95			995
			US¢	US¢				S¢
Underlying earnings per share #			155	170	-9			212
Earnings per share			184	95	95			252
Interim dividend per share			18	18	-			25
			At 30.9.2019	At 31.12.2018				At 30.9.2019
			US$m	US$m				S$m
Shareholders' funds			6,626	6,144	8			9,156
			US$	US$				S$
Net asset value per share			16.77	15.55	8			23

 

The exchange rate of US$1 =S$1.38 (31st December 2018: US$1=S$1.37) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.37 (30th September 2018: US$1=S$1.34) was used for translating the results for the period. The financial results for the nine months ended 30th September 2019 and 30th September 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.

 

CHAIRMAN'S STATEMENT

 

Overview

 

The performance of Jardine Cycle & Carriage ("JC&C" or "the Group") in the first nine months of 2019 reflected the challenging conditions faced by Astra and Truong Hai Auto Corporation ("Thaco").

 

The Group's revenue was 1% lower than the comparable period in 2018 at US$13.9 billion and its underlying profit attributable to shareholders was 9% lower at US$614 million. Underlying earnings per share were also down 9% at US¢155. Profit attributable to shareholders increased significantly to US$729 million, due to net non-trading gains of US$115 million from unrealised fair value gains related to non-current investments. For the same period in 2018, there were net non-trading losses of US$300 million from unrealised fair value losses on these investments. Earnings per share were US¢184, compared with US¢95 last year.

 

The Group's consolidated net debt, excluding Astra's financial services subsidiaries, was US$2.8 billion at the end of September 2019, compared to US$2.2 billion at the end of 2018. The increase was largely due to Astra's additional investments in the Surabaya-Mojokerto toll road and Gojek, as well as capital expenditure in its mining contracting business, and additional investment by JC&C in Thaco. Net debt of US$3.3 billion within Astra's financial services subsidiaries was unchanged from December 2018. JC&C parent company's net debt was US$1.5 billion, compared with US$1.3 billion at the previous year end.

 

The Board has not declared a dividend for the third quarter ended 30th September 2019 (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

 

The contribution to JC&C's underlying profit attributable to shareholders by business segments was as follows:  

 

		Contribution to JC&C's underlying profit
		Nine months ended 30th September
Business segments		2019 US$m	Restated† 2018 US$m	Change %
Astra		536	582	-8
Direct Motor Interests		79	103	-24
Other Strategic Interests		59	56	6
Corporate Costs		(60)	(67)	-11
Underlying profit attributable to    shareholders		614	674	-9

 

†        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

 

Astra

 

Astra contributed US$536 million to JC&C's underlying profit, 8% lower than the same period last year with the Rupiah exchange rate being stable. Astra reported a net profit equivalent to US$1.1 billion under Indonesian accounting standards. This was mainly due to lower contributions from its automotive and agribusiness divisions, which more than offset higher contributions from the financial services division.

 

Automotive

 

Net income from Astra's automotive division was down 14% at US$428 million, mainly due to lower car sales volumes, increased manufacturing costs and foreign exchange translation losses. Highlights were as follows:

 

·    Car sales were 7% lower at 396,000 units. The overall Indonesian wholesale market declined by 12% to 754,000. Astra's market share increased from 50% to 53%, and it launched 14 new models and 7 revamped models during the period.

·    Motorcycle sales increased by 5% to 3.7 million units. The Indonesian wholesale market increased by 4% to 4.9 million units and Astra increased its market share slightly to 75%, launching 6 new models and 19 revamped models during the period.

·    Astra Otoparts reported a 24% increase in net income at US$36 million, largely due to higher revenue from the replacement market and lower production costs.

 

Financial Services

 

Net income from Astra's financial services division increased by 25% to US$304 million mainly due to a larger loan portfolio and an improvement in non-performing loans. Highlights were as follows:

 

·    Consumer finance businesses saw a 7% increase in the amount financed to US$4.5 billion. The net income contribution from the car-focused finance companies increased by 31% to US$78 million, mainly due to lower non-performing loan losses. The net income contribution from the motorcycle-focused finance business increased by 8% to US$132 million, mainly due to a larger loan portfolio.

·    Heavy equipment-focused finance operations saw a 17% decrease in the amounts financed to US$220 million. However, the net income contribution grew 27% to US$5 million, with lower loan provisions.

·    Permata Bank reported a significant increase in net income to US$77 million due to higher revenue and lower loan impairment levels, attributable to improved loan quality and recoveries from non-performing loans. The bank's gross and net non-performing loan ratios improved to 3.3% and 1.2%, respectively, compared to 4.4% and 1.7% at the end of 2018.

·    General insurance company, Asuransi Astra Buana, reported a 6% growth in net income at US$57 million, driven by increased investment income.

 

Heavy Equipment, Mining, Construction & Energy

 

Net income from Astra's heavy equipment, mining, construction and energy division decreased by 5% to US$363 million, principally due to foreign exchange translation, where a significant foreign exchange gain was recorded in the prior year. Excluding foreign exchange translation, net income would have been slightly higher. The contributions from the new gold mining operation and improved mining contracting volumes were partly offset by lower heavy equipment sales due to lower coal prices and lower earnings from general contracting business. Highlights were as follows:

 

·    United Tractors reported a 5% decrease in net income to US$610 million.

·    Komatsu heavy equipment sales fell 30% to 2,568 units, while parts and service revenues were stable.

·    Mining contracting operations recorded a 5% higher overburden removal volume at 750 million bank cubic metres, and a 7% higher coal production at 96 million tonnes.

·    Coal mining subsidiaries achieved 11% higher coal sales at 6.4 million tonnes including 0.8 million tonnes of coking coal, but were affected by the lower coal prices.

·    Agincourt Resources achieved gold sales of 306,000 oz.

·    General contractor Acset Indonusa reported a net loss of US$53 million compared to a net income of US$6 million in the same period of 2018, mainly due to increased project and funding costs for several ongoing contracts.

 

Infrastructure & Logistics

 

Net income from Astra's infrastructure and logistics division increased by 38% to US$11 million, mainly due to improved toll road revenue. Highlights were as follows:

 

·    Toll revenue increased due to a 22% higher traffic volume in Astra's 339km of operational toll roads along the Trans-Java network. 

·    Serasi Autoraya's net income decreased by 23% to US$10 million due to a fall in vehicles under lease and lower used car sales.

 

Agribusiness

 

Net income from Astra's agribusiness was down 90% at US$6 million, primarily due to a 16% fall in average crude palm oil prices, despite an increase in crude palm oil and derivatives sales by 10% to 1.7 million tonnes.

 

Direct Motor Interests

 

JC&C's Direct Motor Interests contributed US$79 million to the Group's underlying profit, 24% lower than the prior year largely due to a smaller contribution from Thaco.  Highlights were as follows: 

 

·    In Vietnam, Thaco's US$33 million contribution to the Group's underlying profit was 38% lower than the same period last year. This was due to an 11% decline in Thaco's vehicle sales in the face of the intense competition in the completely-built-up import segment, as tariffs were eliminated following the full implementation of the ASEAN Trade in Goods Agreement in 2018.

·    In Singapore, Cycle & Carriage Singapore ("CCS") contributed US$42 million to the Group's underlying profit, slightly higher than the previous year. Its passenger car sales grew by 8% to 11,100 units, despite a 4% decrease in the overall passenger car market. This was, however, partly offset by lower margins due to higher certificate of entitlement costs. CCS' market share increased from 17% to 19%, with the launch of new models and competitive pricing. 

·    In Indonesia, Tunas Ridean contributed US$14 million to the Group's underlying profit, 8% higher than the previous year. This was due to a stronger contribution from its automotive operations, which was partially offset by a lower contribution from its rental business. Its consumer finance operations were in line with the prior year.

·    In Malaysia, Cycle & Carriage Bintang contributed a loss of US$2 million compared to a profit of US$1 million in 2018, when the business benefited from the one-off zero rate of GST from June to August 2018.

 

Other Strategic Interests

 

Other Strategic Interests contributed US$59 million to the Group's underlying profit, 6% up on the previous year.  Highlights were as follows:

 

·    Siam City Cement's underlying profit contribution of US$19 million was in line with the previous year. Its improved domestic performance was offset by a lower contribution from its regional operations, mainly from South Vietnam.

·    The contribution from Refrigeration Electrical Engineering Corporation ("REE") of US$13 million was 3% down on the previous year due to weaker performances from its hydropower investments and its M&E business, which were partially offset by a stronger contribution from real estate.

·    The Group's investment in Vinamilk delivered dividend income of US$28 million, compared to US$24 million in the previous year. Vinamilk's profit for the first nine months of the year was up 6% up in local currency terms, due to the rebound of the fast-moving consumer goods sector as well as an increase in Vinamilk's market share.

 

Corporate Costs

 

Corporate costs were US$60 million for the period, compared to US$67 million in the previous year. This was primarily due to a lower foreign exchange loss from the translation of foreign currency loans, partly offset by higher net financing charges and overheads.

 

People

 

YC Boon, Deputy Chairman, will be retiring from the Board with effect from 31st December 2019. I would like to thank YC for his significant contribution to the Group over many years. 

 

Outlook 

 

Astra is expected to continue to be affected by relatively weak domestic consumption and low commodity prices for the remainder of the year, while benefiting from an improved contribution from financial services and its gold mine operations. JC&C's Direct Motor Interests are expected to continue to face challenging market conditions, while the contribution from Other Strategic Interests is expected to be stable.

 

Ben Keswick

Chairman

 

CORPORATE PROFILE

 

Jardine Cycle & Carriage ("JC&C" or "the Group") is the investment holding company of the Jardine Matheson Group in Southeast Asia. With an investment strategy focused on urbanisation and the growing middle class in the region, JC&C holds long-term, strategic interests in diversified market-leading businesses across Southeast Asia.

 

The Group has a 50.1% interest in Astra, a diversified group in Indonesia, which is also the largest independent automotive group in Southeast Asia.

 

JC&C also has significant interests in Vietnam, including 26.6% in Truong Hai Auto Corporation, 24.9% in Refrigeration Electrical Engineering Corporation and 10.6% in Vinamilk. Its 25.5%-owned Siam City Cement also has a presence in South Vietnam, in addition to operating in Thailand, Sri Lanka, Cambodia and Bangladesh.

 

The other investments in JC&C's portfolio are the Cycle & Carriage businesses in Singapore, Malaysia and Myanmar, and 46.2%-owned Tunas Ridean in Indonesia. These motor businesses are managed by Jardine International Motors.

 

JC&C is a leading Singapore-listed company, 75%-owned by the Jardine Matheson Group. Together with its subsidiaries and associates, JC&C employs more than 250,000 people across Southeast Asia.

 

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 nine months ended 30th September 2019 to be false or misleading in any material respect.

 

On behalf of the Directors

 

Ben Keswick

Director

 

Vimala Menon

Director

 

6th November 2019

 

Jardine Cycle & Carriage Limited Consolidated Profit and Loss Account for the nine months ended 30th September 2019

 

			Three months ended					Nine months ended
					Restated					Restated
			30.9.2019		30.9.2018	Change		30.9.2019		30.9.2018	Change
Note			US$m		US$m	%		US$m		US$m	%
Revenue			4,751.9		4,794.7	-1		13,909.0		13,983.5	-1
Net operating costs	2		(4,129.3)		(4,230.1)	-2		(12,206.6)		(12,619.7)	-3
Operating profit	2		622.6		564.6	10		1,702.4		1,363.8	25
Financing income			21.8		23.2	-6		66.2		67.8	-2
Financing charges			(92.3)		(70.3)	31		(270.3)		(180.8)	50
Net financing charges			(70.5)		(47.1)	50		(204.1)		(113.0)	81
Share of associates' and joint
ventures' results after tax			187.5		183.3	2		435.9		456.4	-4
Profit before tax			739.6		700.8	6		1,934.2		1,707.2	13
Tax	3		(142.9)		(158.9)	-10		(398.9)		(424.8)	-6
Profit after tax			596.7		541.9	10		1,535.3		1,282.4	20
Profit attributable to:
Shareholders of the Company			301.4		200.5	50		728.9		373.5	95
Non-controlling interests			295.3		341.4	-14		806.4		908.9	-11
			596.7		541.9	10		1,535.3		1,282.4	20
			US¢		US¢			US¢		US¢
Earnings per share	4		76		51	50		184		95	95

 

 

 

Jardine Cycle & Carriage Limited Consolidated Statement of Comprehensive Income for the nine months ended 30th September 2019

 

	Three months ended				Nine months ended
			Restated				Restated
	30.9.2019		30.9.2018		30.9.2019		30.9.2018
	US$m		US$m		US$m		US$m
Profit for the period	596.7		541.9		1,535.3		1,282.4
Items that will not be reclassified to profit or loss:
Asset revaluation surplus	-		-		-		3.0
Remeasurements of defined benefit pension plans	(0.1)		0.3		0.2		(0.7)
Tax on items that will not be reclassified	-		(0.1)		-		0.1
Share of other comprehensive income of associates and
joint ventures, net of tax	0.1		(0.1)		-		0.8
	-		0.1		0.2		3.2
Items that may be reclassified subsequently to profit
or loss:
Translation difference
- gain/(loss) arising during the period	(16.5)		(411.4)		268.2		(1,109.0)
Financial assets at FVOCI (1)
- gain/(loss) arising during the period	3.7		(3.4)		18.1		(24.1)
- transfer to profit and loss	(0.2)		0.7		(0.6)		(3.1)
Cash flow hedges
- gain/(loss) arising during the period	(23.7)		19.3		(99.7)		71.0
- transfer to profit and loss	-		-		1.6		0.4
Tax relating to items that may be reclassified	4.5		(4.7)		23.8		(16.5)
Share of other comprehensive income of associates and
joint ventures, net of tax	(21.6)		15.5		(57.7)		28.8
	(53.8)		(384.0)		153.7		(1,052.5)
Other comprehensive income for the period	(53.8)		(383.9)		153.9		(1,049.3)
Total comprehensive income for the period	542.9		158.0		1,689.2		233.1
Attributable to:
Shareholders of the Company	288.3		37.5		829.5		(76.3)
Non-controlling interests	254.6		120.5		859.7		309.4
	542.9		158.0		1,689.2		233.1

 

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

 

 

 

Jardine Cycle & Carriage Limited Consolidated Balance Sheet at 30th September 2019

 

				Restated		Restated
		At		At		At
	Note	30.9.2019		31.12.2018		1.1.2018
		US$m		US$m		US$m
Non-current assets
Intangible assets		1,781.4		1,630.6		1,079.5
Property, plant and equipment		4,641.9		4,457.5		3,404.5
Investment properties		518.5		587.2		618.6
Bearer plants		500.6		486.8		498.0
Interests in associates and joint ventures		4,825.7		4,250.6		4,280.3
Right-of-use assets		843.0		753.0		762.1
Non-current investments		2,190.0		1,911.2		2,031.8
Non-current debtors		2,875.4		2,867.1		2,824.5
Deferred tax assets		365.7		300.7		322.4
		18,542.2		17,244.7		15,821.7
Current assets
Current investments		42.7		50.4		22.7
Properties for sale		362.7		355.8		254.0
Stocks		2,000.3		2,039.7		1,723.8
Current debtors		6,014.6		5,595.5		5,044.9
Current tax assets		182.0		134.9		120.5
Bank balances and other liquid funds
- non-financial services companies		1,696.9		1,711.4		2,398.7
- financial services companies		197.9		187.5		241.1
		1,894.8		1,898.9		2,639.8
		10,497.1		10,075.2		9,805.7
Total assets		29,039.3		27,319.9		25,627.4
Non-current liabilities
Non-current creditors		294.8		271.4		241.6
Provisions		163.3		146.7		113.7
Non-current lease liabilities		85.1		93.3		89.0
Long-term borrowings	5
- non-financial services companies		2,017.5		1,125.4		845.0
- financial services companies		1,766.5		1,655.2		1,486.4
		3,784.0		2,780.6		2,331.4
Deferred tax liabilities		406.2		428.0		212.9
Pension liabilities		278.8		253.0		262.2
		5,012.2		3,973.0		3,250.8
Current liabilities
Current creditors		5,154.6		4,951.5		4,152.7
Provisions		98.5		92.8		87.2
Current lease liabilities		41.5		40.5		20.0
Current borrowings	5
- non-financial services companies		2,433.6		2,737.9		2,368.5
- financial services companies		1,757.5		1,824.5		2,153.9
		4,191.1		4,562.4		4,522.4
Current tax liabilities		102.7		213.8		135.4
		9,588.4		9,861.0		8,917.7
Total liabilities		14,600.6		13,834.0		12,168.5
Net assets		14,438.7		13,485.9		13,458.9
Equity
Share capital	6	1,381.0		1,381.0		1,381.0
Revenue reserve	7	6,584.3		6,202.4		6,171.9
Other reserves	8	(1,339.3)		(1,439.6)		(1,120.1)
Shareholders' funds		6,626.0		6,143.8		6,432.8
Non-controlling interests	9	7,812.7		7,342.1		7,026.1
Total equity		14,438.7		13,485.9		13,458.9