REG - Jardine Matheson Hdg - 2021 Preliminary Announcement of Results
03/03/2022 10:30
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RNS Number : 5280D Jardine Matheson Hldgs Ltd 03 March 2022
To: Business
Editor
3rd March 2022
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 Matheson Holdings Limited
2021 Preliminary Announcement of Results
Encouraging recovery despite continuing challenging conditions
Headlines
· Underlying net profit up 39% against 2020, 5% below 2019
· Increased earnings per share and enhanced corporate governance through
simplification of Group's parent company structure
· Underlying earnings per share US$4.83, up 64% against prior year and 14%
higher than 2019
· Good recovery in Southeast Asia, led by Astra
· Motors business performs strongly, led by Zhongsheng and UK Motors
· Mandarin Oriental sees strong recovery with underlying loss significantly
reduced
· DFI Retail transformation offsets continued operating challenges, but results
impacted by associate Yonghui's substantial loss
· Full year dividend at US$2.00, up 16%
"Jardines faced major challenges in 2021 as a result of the ongoing pandemic,
but the dedication and hard work of our colleagues across the Group enabled us
to continue to adapt to the changing trading environment and deliver
significant improvements in the underlying performance of our businesses.
The Company also deployed substantial levels of capital to acquire 100% of
Jardine Strategic, which both enhanced corporate governance and created
significant value for our shareholders, while also increasing the Group's
operational and financial flexibility. I want to thank everyone across the
Group for their commitment to our customers and our businesses in the face of
considerable challenges.
High levels of uncertainty remain this year, given the continuing impact of
the pandemic. We remain confident, however, in our long-term strategy,
rooted in Hong Kong and the growth markets of Asia."
Ben Keswick, Executive Chairman
Results summary
Year ended 31st December
2021 2020 Change
US$m US$m %
Gross revenue including 100% of associates and joint ventures 109,370 90,906
+20
Revenue 35,862 32,647 +10
Underlying profit before tax* 4,117 2,786 +48
Underlying profit attributable to shareholders * (♦) 1,513 1,085 +39
Profit/(loss) attributable to shareholders 1,881 (394) n/a
Shareholders' funds 29,781 29,387 +1
US$
Underlying earnings per share* (♦) 4.83 2.95 +64
Earnings/(loss) per share 6.01 (1.07) n/a
Dividends per share 2.00 1.72 +16
* 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 40 to the financial statements.
Management considers this to be a key measure which provides additional
information to enhance understanding of the Group's underlying business
performance.
(♦) Improvements to underlying profit attributable to shareholders and
underlying earnings per share benefitted from the impact of the Company's
acquisition of the remaining 15% minority interest in Jardine Strategic.
Excluding the impact of this Group simplification, increases in underlying net
profit and underlying earnings per share in 2021 were 29% and 32%,
respectively.
The final dividend of US$1.56 per share will be payable on 11th May 2022,
subject to approval at the Annual General Meeting to be held on 5th May 2022,
to shareholders on the register of members at the close of business on 18th
March 2022 and will be available in cash with a scrip alternative.
Jardine Matheson Holdings Limited (the 'Company')
2021 Preliminary Announcement of Results
Chairman's Statement
2021 in Review
2021 was a further year of exceptional challenge for colleagues across the
Group, who have continued to be impacted both personally and professionally by
the pandemic. The Group's ability to continue to thrive in the difficult
environment created by COVID-19 can only be achieved with the commitment of
the huge number of people who work for Jardines, as well as the Group's many
partners across all its markets. I want to start by thanking each and every
one of them.
I also want to recognise the adaptability our colleagues have shown to a fast
pace of change and new ways of working. I am especially proud of our
frontline staff, who have put the needs of customers first despite everything.
The resilience the Group demonstrated in 2021 reflects our long track record
of successfully navigating change and challenge throughout the past 190
years. We are confident that we will be able to continue to take advantage
of the best long-term opportunities in Asia, while adapting to the changing
external environment and evolving expectations of our stakeholders.
Performance
The Group's underlying net profit for the year rose by US$428 million (39%) to
US$1,513 million. The increase was primarily driven by a stronger
contribution from Astra, a recovery in the performance of Mandarin Oriental
and improved contributions by the Group's Motors business (including its stake
in Zhongsheng) and its Southeast Asian businesses held by Jardine Cycle &
Carriage. There were also resilient performances by Hongkong Land and the
Group's unlisted Jardine Pacific businesses. The profits of DFI Retail Group
('DFI Retail') were reduced by the impact of the significant loss made by its
associate Yonghui.
While a large part of the increase in the Group's profit was due to
improvements in the underlying performances of most of our businesses, results
also benefitted from the impact of the Group simplification which was
completed in April 2021. This overall improvement in performance is
encouraging, although the Group's results were 5% behind those of 2019, before
the pandemic began.
The financial and operational strength of the Group's businesses continues to
be supported by its investment strategy and approach to capital allocation.
The Board keeps its portfolio of businesses under review and regularly
assesses whether action is necessary to ensure that the Group's activities
remain aligned with its strategic priorities. Despite the short-term
challenges of the pandemic, the Board sees it as essential to continue to
invest for the long-term in business opportunities which will drive future
growth.
The Board is recommending an increased final dividend of US$1.56 per share,
which produces a full-year dividend of US$2.00 per share, up 16% from the
prior year.
Significant Developments
In April 2021 we completed the simplification of the Group's parent company
structure by acquiring the 15% of the issued share capital of Jardine
Strategic Holdings Limited ('Jardine Strategic') that the Company did not
already own. We emphasised at the time that the transaction was a natural
step in the evolution of the Group and would create value for shareholders.
We also said that it was consistent with our policy of investing further in
the growth prospects of our existing businesses. As we highlighted at the
time, the transaction has delivered a range of benefits to the Group,
including a material enhancement to earnings attributable to shareholders, the
creation of a conventional ownership structure for the Group and increased
financial and operational flexibility.
The Group has a long history of building partnerships and developing
businesses across Asia, which has seen great success with some of the largest
brand owners over many years. The Group's regional network and connections
create a real advantage as we work with our Group companies to evolve their
businesses and position them well for future growth. We place great
importance on building and maintaining strong relationships with governments
and other key stakeholders in the markets where we operate.
We have seen it as essential to continue to focus on these relationships even
when the pandemic has made the practicalities of doing so more difficult. In
this context, last autumn I travelled to the Chinese mainland and spent nearly
two months visiting our businesses there and meeting with a wide range of
business partners and senior government representatives.
We have also successfully strengthened our strategic partnership with the
founders of Zhongsheng, a leading China motor dealership group, which we have
focussed on developing since first acquiring an interest in the business in
2014. In late 2021, we sold our Zung Fu China business to Zhongsheng, as a
result of which we have further increased the Group's interest in Zhongsheng,
a highly resilient, cash-generative business.
Sustainability
We believe that real value can be realised from integrating sustainability in
the strategy and business models of our Group companies, and that it is
increasingly important for each of our businesses to consider sustainability
issues in all aspects of their decision-making.
We are aiming to create real scale in our sustainability efforts, and believe
that we can add more value as a group of businesses working together than by
each business pursuing their own agendas without alignment.
Jardines has made significant progress over the past year in building a strong
level of engagement between our businesses on sustainability issues. Our
Sustainability Leadership Council, whose members are the leaders of each of
our businesses, has helped create alignment among them on the Group's
sustainability strategy and agenda. Each of our Group companies is pursuing
their own sustainability strategy, tailored to their business and sector, as
well as the interests of their stakeholders, while following an approach which
is aligned with that of the Group.
The Group works closely with each of its businesses to help them as they
implement their sustainability strategies, providing support, guidance and
resource as appropriate. We have also put in place cross-Group working
groups to support each of the pillars of the Group's sustainability strategy,
facilitating collaboration between Group companies and providing a governance
framework to support the execution of our sustainability strategy.
We have over the past year developed a set of 10 key metrics against which
each of our businesses is measuring itself, and which we are collating in
order to form a Group-wide picture of our sustainability performance, which
will be disclosed in our first Group Sustainability Report, to be published
later in the first half of the year.
Governance
We have continued our focus in the last year on enhancing our approach to
corporate governance. The completion in April 2021 of the acquisition of the
minority stake in Jardine Strategic led to a simplification of the Group's
holding company structure.
We have also led a series of enhancements to the governance of our listed
subsidiaries. This has included a series of changes to strengthen our
boards, with new independent non-executive directors with sector expertise and
experience appointed to the boards of Dairy Farm International Limited,
Mandarin Oriental International Limited and Hongkong Land Holdings Limited,
generally reducing their size and increasing their diversity. At the same
time as making these board changes, we have established formal audit,
remuneration and nominations committees at the listed company level.
People
Alex Newbigging stepped down from the Board of the Company on 31st December
2021. As announced on 3rd March 2022, Jeremy Parr will be retiring from the
Board on 31st March 2022. On behalf of the Company, I would like to thank
both of them for their contribution to the Board and the wider Group.
Conclusion
2021 was another year of exceptional challenge for colleagues across the
Group, who have continued to be impacted both personally and professionally
over the past year. I want to thank all our colleagues across the Group for
their commitment to our customers and our businesses in the face of
considerable challenges, as well as their flexibility and willingness to
embrace change, to enable the business to achieve a significant improvement in
its underlying performance.
The resilience the Group demonstrated in 2021 reflects our long track record
of successfully navigating change and challenge. We are confident that this
resilience will enable us to continue to take advantage of the best long-term
opportunities in Asia, while adapting to the changing external environment and
evolving expectations of our stakeholders.
Ben Keswick
Executive Chairman
Group Managing Director's Review
Introduction
2021 has been another challenging year for Jardines, and our people have had
to continue to deal with the obstacles presented by the global pandemic. I
would like to thank each of them for their dedication and hard work, often in
very challenging circumstances.
COVID-19 and its economic consequences have had a devastating effect in all
our markets, and we have intensified our focus on ensuring the health and
wellbeing of our communities, customers and colleagues.
Protecting and ensuring the wellbeing of our colleagues has been a top
priority throughout the year, with a particular focus on encouraging colleague
vaccination. We have also continued to encourage flexible working
practices and made health and safety a top priority. Colleagues across our
businesses continue to be hit by COVID-19, and a major focus of our efforts
has been to support them and keep them safe. We have given colleagues access
to support and resources to address mental health issues.
Our businesses have also been taking action to support their partners and the
communities in which they operate, to help them meet the challenges of the
pandemic. In our communities, this has included extensive corporate social
responsibility support.
The COVID-19 pandemic has led to a tightened talent market and growing salary
inflation, which makes retaining great Jardines people both a challenge and a
high priority. We are working with our businesses to address this challenge
as effectively as possible.
Another area where Jardines plays an important role in creating alignment
across the Group is the promotion of diversity and inclusion. We are working
with our businesses to increase the diversity of the boards and senior
management of our Group companies. A key element of this is the successful
nurturing of colleagues at all levels, in order to development diverse pools
of talent from which our future senior leaders can be selected.
The past year has demonstrated how important it is for Jardines to apply
innovation and adaptability in its approach to business. We have made good
progress in modernising the core of our businesses and changing how we do
business to reflect the evolving environment in which we find ourselves. The
pace of change is continuing to accelerate, however, so we need to drive
forward our strategic priorities with real pace in the coming year. These
priorities and how we are progressing them are set out below.
Evolving the Group Portfolio
Ensuring that our business is sustainable and grows earnings over the
long-term is of the utmost importance for the Group, and we therefore need to
continue to evolve the portfolio to achieve this. This includes deploying
capital towards strategic higher growth initiatives, while prudently divesting
lower-yielding non-strategic assets. This approach is being taken both at a
Group level and within our individual Group companies.
We have continued to actively manage our portfolio to build our presence in
the more attractive markets of Asia and in businesses where we can achieve
market leading positions, in order to maintain growth and create long-term
sustainable value. The healthy geographic diversification we have with
presence in China and Southeast Asia, as well as our balance of businesses
across sectors, continues to underpin our resilient performance in challenging
market conditions.
We continue to focus on expanding the Group's businesses in those areas which
we see as offering the most opportunities for future growth. These include
the Chinese mainland and a number of ASEAN markets. We have made significant
capital investments in these markets. In the Chinese mainland we are
focussed on developing our automotive interests, retail and property
development. We also foresee strong future growth in a number of developing
ASEAN markets, in particular Indonesia and Vietnam. We aim to align with
key trends in these markets, including the developing middle class and
increasing urbanisation, in developing our businesses there. We also
continue to see growth opportunities in developed markets including Hong Kong
and Singapore, which provide a stable core and a strong asset and cashflow
base.
The Group's capital allocation framework prioritises organic investment in its
portfolio to drive long-term growth and returns, underpinned by the continued
payment of dividends, which it aims to grow over time. The Group then
focusses on investing in new business opportunities as well as carrying out
share buybacks in its Group companies where appropriate. The framework is
grounded in a strong balance sheet which provides resilience through the
business cycle. We are also increasingly seeking to ensure that our
investments align with the objectives of our sustainability strategy.
This prudent capital allocation approach underpinned the acquisition by the
Company in April 2021 of the 15% minority stake in Jardine Strategic that it
did not already own. This resulted in Jardine Matheson increasing its
interest in Hongkong Land, DFI Retail, Mandarin Oriental, Jardine Cycle &
Carriage and Astra, as well as simplifying the Group's ownership structure and
governance framework. The acquisition was funded in part by debt facilities.
In the balance of the year after the completion of the acquisition, we
prioritised debt reduction ahead of further, material new investments. The
second half of the year saw two significant strategic disposals - the sale of
the Zung Fu China business to our long-term partner in China, Zhongsheng, and
the sale and leaseback of the Zung Fu Hong Kong properties. These
transactions, which together realised net cash proceeds of US$1.5 billion,
enabled the Company to reduce its net debt to US$1.3 billion by the end of
2021. The Company's remaining debt is funded by US$1.2 billion of 10 and 15
year long-term fixed rate debt, ensuring that its balance sheet remains robust
and flexible.
The Company continued in 2021 to seek mutually beneficial and enduring
partnerships with leading businesses in our markets, to support our growth
plans. Last year, we announced the Group's strategic co-operation with
Hillhouse Capital, a leading Asian private equity firm, that deploys
technology to drive innovation in its portfolio companies, with sustainable,
long-term growth as its primary goal. The strategic co-operation enables
both of our companies to partner on mutually beneficial investment and
business development opportunities predominantly in China, as well as
Southeast Asia. The partnership is progressing well and is already resulting
in discussion of a number of co-investment opportunities.
The Group is focussed on developing and implementing its portfolio strategy
and on increasing its decision-making agility, so we can act with speed to
seize opportunities when they arise and maximise our portfolio value.
Driving Innovation and Operational Excellence
We are focussed on driving operational excellence in our businesses and in new
ventures we undertake, and the past year has seen real progress achieved by
our businesses in driving greater efficiency and productivity, despite the
challenging market environment. DFI Retail's multi-year transformation plan
is delivering real improvements in underlying performance across its banners,
and we have seen strong growth in Mandarin Oriental's hotel and residences
management business. Business improvement initiatives were completed in the
year in JEC, Gammon, HACTL, Jardine Restaurants and a number of other
companies, with a positive impact on results. The increased efficiencies
which these initiatives create help our businesses navigate the challenges
posed by the pandemic and prepare for future growth.
Our businesses have also accelerated the pace at which they embrace digital
ways of working to improve operations. Leveraging increased robotics at
HACTL's cargo terminal and embracing digital twins in Gammon's construction
business, as well as building modern warehouse and delivery capabilities for
DFI Retail have helped our businesses navigate the challenges posed by the
pandemic and prepare for future growth.
As the Asian consumer appetite for digital continues to increase, our B2C
businesses are heavily focussed on embedding digital as a core component of
how we anticipate and serve their needs - developing omnichannel experiences,
building data capabilities and embracing start-ups to augment our capabilities
to react with speed and agility to the changing marketplace.
A good example of this is DFI Retail's yuu rewards platform, with almost 4
million members, which has gone from strength to strength this year and is
helping us move beyond a transactional focus to drive new ways of meeting and
anticipating individual customer needs and preferences, by embedding
e-commerce into the loyalty platform, embracing new partnerships such as those
with insurance and fuel companies. DFI Retail has also expanded its
e-commerce offering in Southeast Asia with the launch of the CART app in
Singapore. Mandarin Oriental has also made good progress in developing new
ways of using digital and data to enhance the guest experience on property
through wide adoption of a guest messaging service, Hello MO, and by
accelerating its Fans of MO recognition programme, which has now passed the
milestone of one million members. Our restaurant business saw peaks of 90%
of sales coming through digital channels in some locations in 2021.
Our B2B businesses have enthusiastically embraced digital as a mechanism to
anticipate, verify and exceed customer expectations. Gammon (an early
embracer of building information modelling) now has one of the largest Virtual
Design & Construction (VDC) teams in Hong Kong and Shenzhen. By
undertaking digital prototyping, Gammon can validate and optimise the design
and construction sequence, ensuring the project is delivered to the highest
standard.
We continue to seek new inorganic growth opportunities which complement our
current businesses or enable our wider participation in the digital economy.
We look for partnership and investment opportunities to increase exposure to
the digital economy, emerging industries and new geographies. In 2021, JEC
acquired the Hong Kong and Macau business of MGI Group Holdings Limited, a
leading specialty healthcare engineering solutions provider. We also
invested in PickUpp, a leading smart logistics and delivery business, and
Halodoc, a telehealth provider in Indonesia. We need to build on the
progress we have made so far to develop more new partnerships in this space.
Enhancing Leadership and Entrepreneurialism
We place a high importance on attracting, developing and retaining leadership
talent, and we also support our Group companies as they do the same. The
past year has seen the making of a series of key senior appointments by our
Group companies to strengthen their leadership and help drive future growth.
These included the external appointment of a new Chief Commercial Officer by
Mandarin Oriental and a new Chief Executive, Digital by DFI Retail. These
leaders have in turn been hiring top quality talent into their areas. We
also continued to demonstrate our commitment to developing our leaders and
providing them with opportunities to progress their careers within a range of
different businesses across the Group, with over a dozen executive level
senior management moves taking place in the period across our businesses.
We are focussed on providing our colleagues with appropriate training and
other support to equip them with the right skills to navigate the challenges
and opportunities they face, both in the short term in the context of COVID-19
and for the longer-term. The comprehensive programme of online learning and
academies across the Group has seen high levels of participation in the year.
As we grow, it is essential that we maintain a high pace of change and foster
a culture of entrepreneurialism across our businesses. Some good examples of
this in action have been the expansion of DFI Retail's own brand offering, the
rollout by JEC of its JEDI sustainable building management solution; and
Astra-IKEA's development of its digital analytics 'next product to buy'
capability.
Progressing Sustainability
In 2021 we drove a more aligned, focussed approach to sustainability across
all our Group companies, leveraging and building on the work many of them were
already doing in this area to maximise the impact we have in our communities
and on the environment.
Great progress was made in the year in putting in place the key frameworks for
delivering the Group's sustainability agenda. This included setting metrics
to be measured by each of our businesses and communicated for the Group as a
whole, as well as establishing working groups to support each of the three
pillars of our strategy and drive collaboration and action across our Group
businesses.
We also strengthened the capability of the Group in relation to sustainability
by the appointment of a Head of Sustainability, and we are well placed to
provide guidance and support to our Group businesses as they take forward
their sustainability agendas. Most of our businesses also strengthened their
sustainability resources during the year, and we will be creating a community
of expertise in this area across the Group in the coming months.
We are focussed on actively sharing the positive actions our diverse
businesses are taking in this area, by reporting more effectively on ESG
(environmental, social and governance) issues, and we will be publishing our
first Group sustainability report later in the first half of this year.
Creating emotional engagement among our colleagues and other stakeholders is a
key aspect of implementing an impactful and effective sustainability approach,
and this was a focus of our sustainability efforts during the year, as we
developed a Group-wide volunteering programme, which we launched in
December. We will be working across our Group businesses in the coming year
to encourage colleague engagement across our sustainability agenda, including
high levels of take-up for volunteering opportunities.
Summary of Performance
Jardine Matheson delivered encouraging performance in 2021, with most of its
businesses achieving better results than last year, although COVID-19
restrictions continue to impact trading conditions in a number of markets.
The Group's underlying net profit for the year increased by 39% to US$1,513
million, with underlying earnings per share up 64% to US$4.83. This was 10%
above the Group's record earnings per share of US$4.40 in 2018, following the
completion of the Group simplification in April 2021.
There were strong contributions from Astra, which saw improved performances in
most of its divisions; Jardine Cycle & Carriage, whose Motor and other
interests across Southeast Asia delivered better results; and the Group's
Motors interests, which saw a higher contribution from the interest in
Zhongsheng (more than 10% of the Group's total earnings) as well as stronger
performance in our UK and Hong Kong operations.
Mandarin Oriental continued to be materially impacted by the pandemic and the
resulting reduction in travel, but saw a significantly reduced annual loss,
due to a modest recovery outside Asia and the benefits of careful costs
management.
Jardine Pacific delivered improvements in the underlying performance of most
its businesses, but reported results were slightly lower than last year due to
a focus on operational improvements.
Hongkong Land delivered a resilient performance in 2021 despite the continued
impact of the pandemic, with the results from Investment Properties in line
with last year, while Development Properties delivered an improved
contribution due to higher residential sales completions, against the backdrop
of an increasingly challenging environment.
DFI Retail's contribution was considerably lower than the previous year, with
profit impacted by a material loss in its 21.08%-owned associate, Yonghui.
The group also continued to face challenging trading conditions due to a lack
of tourists in Hong Kong and pandemic restrictions, which impacted store
operations, customer numbers and consumer behaviours. Results also reflected
a lower level of government support than last year. Excluding the Yonghui
impact, however, performance was relatively resilient compared with the
previous year.
Net non-trading items were positive, versus a negative position last year. A
large proportion of the non-trading gain resulted from transactions -
including a US$791 million gain on the disposal of the Zung Fu China business
and a US$337 million gain on the sale and leaseback of Zung Fu Hong Kong's
principal operating properties. These gains were offset by an unrealised
US$664 million loss in respect of the revaluation of the value of the Hongkong
Land's Investment Properties portfolio.
Jardine Matheson's diversified portfolio of market-leading businesses is
focussed principally on two of the regions that are most driving global
growth: China and Southeast Asia. In 2021, the split between China and
Southeast Asia reverted to more historic norms, with 55% of the Group's
underlying profit coming from China (compared with 73% in 2020), and 42%
coming from Southeast Asia (compared with 34% in 2020).
The Group's balance sheet remains strong with gearing of 11%, up from 6% at
the end of 2020, reflecting the acquisition of Jardine Strategic and
subsequent strategic disposals.
The Group's capital investment, including expenditure on properties for sale,
was US$10.3 billion in 2021, and capital investment at its associates and
joint ventures exceeded US$4.7 billion. The Group continues to invest for
the long-term and ensure that its businesses have the resources to drive
future growth.
Individual Business Performance
Jardine Pacific
Jardine Pacific produced an underlying net profit of US$175 million, 4% lower
than 2020. Most businesses, however, saw an improvement in their underlying
performance in 2021. Net profit after net non-trading gains of US$389
million was US$564 million.
Jardine Pacific businesses received total government subsidies of US$9 million
in 2021, compared with US$88 million in 2020.
There was significant focus in the year across Jardine Pacific's businesses in
driving operational improvements. The benefits are now starting to be seen
in improved business performance and the group is well set for future growth.
Group Group Share of Underlying profit
Interest
% 2021 2020
US$m US$m
Analysis of Jardine Pacific's contribution:
Jardine Schindler 50 32 32
JEC 50-100 49 51
Gammon 50 39 38
Jardine Restaurants 100 27 32
Transport Services 42-50 31 24
Zung Fu Hong Kong* 100 4 -
Corporate and other interests (7) 5
175 182
* Zung Fu Hong Kong was reported as part of the Jardine Pacific group of
businesses with effect from October 2021.
Jardine Restaurants saw profits fall by US$5 million. Solid delivery sales
in Taiwan and the benefits realised from ongoing process re-engineering
projects were offset by the impact of the resurgence of the pandemic in some
markets, as well as increasing supply chain costs. The business received
lower government subsidies than in 2020. JEC delivered a slightly lower
contribution than in 2020, mainly due to the absence of government subsidies
compared with 2020. There was a good performance from the Hong Kong
engineering units, but the businesses in Thailand and Singapore were impacted
by the pandemic. JEC recently completed the acquisition of a healthcare
engineering solutions provider, strengthening its position in the sector.
Gammon's profit contribution was slightly higher than the previous year, due
to improved margins and project timing, and the business also benefitted from
the lower impact from COVID-19 in Hong Kong. Jardine Schindler reported
profits in line with the previous year, with better performance in its new and
existing installation businesses, while markets remained very competitive.
In Transport Services, HACTL's performance was slightly higher than 2020.
The business saw high levels of cargo throughput as it benefitted from the
continuing strong demand in the global air cargo industry. Jardine Aviation
Services saw a US$7 million improvement in results, recording a small loss,
mainly due to lower staff costs and depreciation from the 2020 restructuring,
plus the release of a customer bad debt provision. The results of the
business were also partly offset by the absence of government support compared
with 2020.
Jardine Pacific saw net non-trading gains of US$389 million in the year,
comprising a gain on disposal of properties of US$345 million and fair value
gains related to investment properties of US$43 million.
Jardines Motor Interests
The Group's Motors business produced 49% higher underlying net profit of
US$318 million in 2021. The business benefitted from a higher contribution
from its 21% investment in Zhongsheng in respect of the second half of 2020
and the first half of 2021. Zhongsheng saw strong performance from its used
car business, while it begins to develop its EV-related business. Its
acquisition of the Zung Fu China business significantly strengthened its
market position in its Mercedes Benz business.
There was also a higher contribution from our United Kingdom business, which
saw increased volumes and margins in all operations and achieved cost savings,
delivering US$38 million profit compared with a loss of US$12 million in 2020,
when the business faced extensive temporary closures of its dealerships in the
first half of the year.
The Hong Kong business saw better performance in 2021. Delivery of cars,
however, remains impacted by a shortage of microchips and supply chain issues.
The business was reported as part of the Jardine Pacific group of businesses
with effect from October 2021.
Hongkong Land
Hongkong Land delivered a resilient performance in 2021, despite the continued
impact of the pandemic and related restrictions. The group delivered
underlying profit of US$966 million, in line with the prior year. Profits
from the group's Investment Properties business were flat against the prior
year. Retail rental income increased during the year, although this was offset
by lower office rents in Hong Kong. A greater number of residential sales
completions on the Chinese mainland resulted in a higher contribution from the
Development Properties business. Good progress was made during the year on
the replenishing of the group's land bank, with nine new projects secured on
the Chinese mainland and three in Singapore.
There was a loss attributable to shareholders of US$349 million, reflecting
net losses of US$1,315 million due to lower valuations of Investment
Properties. This compares to a loss attributable to shareholders of US$2,647
million in 2020, which included a US$3,610 million reduction in property
valuations.
Investment Properties
The group's Central office portfolio in Hong Kong continued to perform well
overall and Central rents declined to a lesser extent than the broader
market. Vacancy and average office rents were both lower at the end of 2021
than at the end of the prior year.
The Central LANDMARK retail portfolio remained effectively fully occupied and
saw improved tenant sales due to a modest recovery in consumer sentiment and
an increase in average retail rents due to a reduction in temporary rent
relief provided to tenants.
The value of the group's Hong Kong Investment Properties portfolio decreased
by 5% compared with the prior year, due to lower rents, with no change in
capitalisation rates.
In Singapore, positive rental reversions continued, with average office rents
increasing and vacancy remaining low. The value of the group's Singapore
Investment Properties portfolio increased by 1% compared with the prior year.
In Beijing, trading performance at WF CENTRAL continued to benefit from the
strength of luxury retail sentiment on the Chinese mainland.
In Shanghai, construction is proceeding on schedule at the group's 43%-owned
prime 1.1 million sq. m. mixed-use development on the West Bund, which is
expected to complete in multiple phases between 2023 and 2027.
Development Properties
On the Chinese mainland, the profit contribution from Development Properties
increased compared with the prior year, due to more residential sales
completions. Market sentiment weakened in the second half of the year amidst
tightened credit conditions for the sector, but contracted sales performance
at the group's projects remained satisfactory, reflecting the superior
locations of its developments in Tier 1 and 2 cities.
In April 2021, the group launched a seven-level shopping mall in Chongqing
under a new lifestyle retail brand - The Ring, the first in a series of malls
under development using this new brand. In addition, the group has three
luxury retail properties under development, in Shanghai, Chongqing and
Nanjing. It also has six premium lifestyle retail properties under
development on the Chinese mainland. Singapore profits were in line with the
prior year. Despite ongoing impact from the pandemic, residential market
sentiment remained robust during the year, resulting in the introduction of
cooling measures in late 2021 to moderate demand. In the rest of Southeast
Asia, there were moderate improvements in market sentiment and a gradual
recovery in construction activities as borders across the region reopened.
Good progress continued to be made by Hongkong Land in replenishing its land
bank, with nine new projects secured on the Chinese mainland and three in
Singapore.
DFI Retail Group
2021 was another challenging year for DFI Retail, as the pandemic continued to
constrain normal store operations, reduce store traffic and impact the
customer experience and customer behaviours. These external factors,
combined with a significant loss incurred by its key associate Yonghui and a
reduced level of government support compared with the prior year, materially
affected the reported financial results of the group.
The underlying financial performance of the group's subsidiaries, excluding
government support, however, improved year-on-year as the group continued to
focus on its multi-year transformation plan, driving improvements in its
businesses. These included enhancements to operating efficiency,
improvements to customer service standards and the delivery of greater value
for customers.
Underlying net profit for DFI Retail's subsidiaries in 2021 was down 27% at
US$145 million. Underlying net profit attributable to shareholders fell to
US$105 million in 2021 from US$276 million in the prior year. Around 70% of
this reduction was due to a US$119 million adverse swing in the group's share
of Yonghui's profits compared with 2020. The impact of the loss incurred by
Yonghui was partially offset by an encouraging recovery by Maxim's, where DFI
Retail's share of the profits increased by US$15 million.
Food - Grocery Retail
Given the significant volatility in 2020 performance, a comparison of
performance in 2021 to 2019 provides a better understanding of the progress
made in the group's transformation plan. Operating profit for the Grocery
Retail division in 2021 was US$143 million, significantly higher than the
US$63 million reported in 2019. This reflected a strong improvement in
underlying profitability achieved through the execution of business
improvement programmes, business portfolio management initiatives, store
revitalisation programmes leading to improved store-level execution, enhanced
own brand penetration and progress in driving customer loyalty in Hong Kong.
The weaker performance in Grocery Retail in 2021 compared with 2020 was due to
reduced sales as customer buying behaviours normalised compared with last
year, together with lower levels of government support.
Food - Convenience
The performance of the group's Convenience business was broadly flat compared
with the prior year. It received lower levels of government support than the
prior year, but saw better performance in Hong Kong and Macau, where 7-Eleven
sales recovered in the third quarter as market conditions stabilised. There
was strong new store growth and reinvigorated customer traffic into stores,
particularly in Hong Kong. Operating profit was 5% lower than the prior
year, however, primarily due to lower profits in Singapore and the Chinese
mainland, where COVID-19 restrictions impeded sales momentum.
Health and Beauty
Total underlying sales (excluding the impact of divestments)
for the Health and Beauty Division were slightly lower than the prior
year. The absence of tourist traffic due to the ongoing closure of the border
with the Chinese mainland continued to significantly impact Mannings'
performance in Hong Kong, which was also impacted by lower levels of
government support than the prior year, while Guardian performance in
Singapore and rest of Southeast Asia was impacted by fewer customer visits due
to pandemic restrictions. Operating profit for 2021 was lower than the prior
year, but profitability increased by over 50% in the second half as a result
of improved sales and strong cost control.
Home Furnishings
Home Furnishings reported solid performance despite the negative impact of
government-imposed trading restrictions and global supply chain disruptions.
Sales benefitted from ongoing store network expansion and strong e-commerce
growth, but profits were 36% lower. This was principally due to ongoing
pandemic-related restrictions and compromised range availability caused by
global supply chain constraints, which impacted like-for-like sales
performance, as well as some additional pre-opening expenses.
Associates
The group's overall reported financial results in 2021 were materially
affected by its US$90 million share of the loss incurred by Yonghui.
Yonghui's performance was impacted by a combination of the normalisation of
sales performance; reduced margins resulting from rising competition and
investments in digital.
The contribution from 50%-owned Maxim's increased significantly in 2021
to US$52 million, as restaurant patronage recovered, particularly in Hong Kong
and on the Chinese mainland.
Other developments
Following a detailed strategic review PT Hero, DFI Retail's 89.3%-owned
subsidiary in Indonesia, was restructured in the year and pivoted focus
towards its strong brands of IKEA, Guardian and Hero Supermarkets, and away
from the Giant banner. The Giant banner in Indonesia ceased operations in
July, with six stores subsequently converted to the upscale Hero banner, the
conversion of one store in Bali into an IKEA store in the fourth quarter and a
number of other sites also scheduled to be transformed into IKEA stores.
'Own brand' has continued to be a key driver of value for customers and
Meadows is now the number one brand across the whole group. Own brand
development is also an ongoing focus within Health and Beauty, with plans to
launch over 1,000 products during 2022.
Digital innovation and e-commerce remain a key focus for DFI Retail. The yuu
rewards programme continues to exceed expectations and now has almost 4
million members, representing over 60% of Hong Kong's adult population. All
brands have benefited from stronger levels of customer engagement. The yuu
ecosystem has been expanded in 2021 to include Maxim's as a partner, the
introduction of yuu Insure and Shell as fuel partner, and the launch of
yuu-to-me e-commerce functionality.
Mandarin Oriental
Mandarin Oriental saw a significant improvement in its performance in 2021, as
restrictions on travel were gradually relaxed in most countries. Performance
varied by region, however, as demand remained heavily influenced by the extent
and pace with which these restrictions were lessened.
The group delivered a total underlying loss of US$68 million, US$138 million
lower than 2020. Results remain materially behind pre-COVID-19 levels.
Combined total revenue of hotels under management increased by 78% in 2021
compared with the prior year. In Europe and the United States, a relaxation
of travel restrictions in the second half of the year allowed business levels
to improve. In East Asia, by contrast, restraints on international travel
remained in place throughout the year, limiting most hotels to domestic
demand.
Results for most of the group's owned hotels improved, driven by both better
trading conditions and government support in some countries. In Europe,
results were notably better in Munich, London, Geneva and Paris, while Boston
and New York performed best of the properties in the Americas. There was also
a strong performance by the Hong Kong hotel.
The earnings before interest, tax, depreciation and amortization ('EBITDA')
from the group's property interests in 2021 were US$24 million, compared with
a loss of US$62 million in 2020. Due to associated depreciation costs, these
same properties in aggregate reported an underlying loss of US$71 million in
2021, compared with a loss of US$174 million in the prior year.
Performance of the management business improved substantially, producing
EBITDA of US$17 million compared with a loss of US$12 million in 2020.
Particularly strong management fees were earned in resort destinations such
as Bodrum and Dubai. There was an underlying profit of US$5 million in 2021,
compared with a loss of US$30 million in the prior year.
Results were boosted by COVID-19-related receipts that included government
support, primarily in Europe, rent concessions in Tokyo, and business
interruption insurance proceeds for hotels in the United States.
The group's total number of hotels under operation has increased to 36,
following the opening of its latest property in Shenzhen in January 2022. In
2021, the group took over the management of the Al Faisaliah Hotel in Riyadh
and opened a new hotel on the Bosphorus in Istanbul, both under management
contracts. The group also reopened the Mandarin Oriental Ritz, Madrid, in
which it owns a 50% interest, after an extensive programme of restoration and
refurbishment.
The group's development pipeline remains robust, with 24 projects expected to
open in the next five years. Three new management contracts were announced in
2021, and two new developments have been announced since the start of 2022.
Two hotels and three standalone residences projects are scheduled for
opening in 2022, while the group also expects to rebrand two properties in the
Middle East.
In Hong Kong, the Causeway Bay site under development remains on track to
complete in 2025.
Jardine Cycle & Carriage
JC&C's underlying profit attributable to shareholders was 83% higher than
last year at US$786 million. After accounting for non-trading items, profit
attributable to shareholders was US$661 million, 22% higher than the same
period last year. Non-trading items in 2021 comprised US$125 million of
unrealised fair value losses related to non-current investments.
Astra's contribution to the group's underlying profit increased significantly
to US$655 million from US$309 million last year, reflecting improved
performances from most of its businesses.
The underlying profit from Direct Motor Interests increased to US$39 million
from US$14 million last year, mainly due to improved contributions from Cycle
& Carriage Singapore and Tunas Ridean in Indonesia. Other Strategic
Interests contributed an underlying profit of US$151 million, up 26% from the
previous year.
Direct Motor Interests
Direct Motor Interests saw improved performance across its businesses, with a
58% increase in the contribution from Cycle & Carriage Singapore,
supported by higher profits from its premium and used car operations. In
Indonesia, Tunas Ridean's automotive business recovered well with a
contribution of US$16 million, compared with US$1 million last year, mainly
due to higher profits from its automotive and financial services businesses.
Other Strategic Interests
Under Other Strategic Interests, Thaco's contribution was 60% higher than last
year. Its automotive business continued to do well, as margins benefited
from an improved sales mix which offset a small decline in unit sales.
The contribution by Siam City Cement ('SCCC') was 18% higher than the previous
year, with results benefitting from a reduction in corporate tax rates in
respect of its Sri Lankan operations. Excluding the tax impact, SCCC's
contribution would have been flat, with the benefit of continued cost-saving
initiatives offset by continued lower cement volumes as market demand was
affected by the pandemic and reduced margins as a result of an increase in
coal prices. There was an 8% higher contribution from Refrigeration
Electrical Engineering Corporation ('REE'), mainly due to a stronger
performance by its power and water investments as a result of favourable
hydrography.
The group's investment in Vinamilk delivered slightly higher dividend income
of US$39 million. Vinamilk's net profit declined by 5% as a result of higher
input and transportation costs.
Astra
Astra delivered a strong performance, with net profit under Indonesian
accounting standards of Rp20.2 trillion, equivalent to US$1.4 billion, 25%
higher than 2020, when the group benefitted from the gain on the sale of its
investment in Permata Bank. Excluding this one-off gain, the group's net
income would have increased by 96%.
Key contributors to this strong performance included an overall improvement in
the Indonesian economy as the impact of the pandemic and related containment
measures abated; higher commodity prices - with historic high commodity
prices; and effective government fiscal measures, including the removal of
luxury sales tax on small engine cars for most of year.
These improved trading conditions drove stronger performances from all of
Astra's businesses, and in particular its automotive, financial services,
heavy equipment and mining and agribusiness divisions.
Automotive
Net income from Astra's automotive division increased by 170% to US$509
million, reflecting the recovery from the significant adverse impact of the
pandemic last year and an increase in sales volumes, especially in the car
segment, which benefitted from temporary luxury sales tax incentives.
The wholesale market for cars increased by 67% in 2021 and Astra's car sales
were 81% higher, with market share increasing to 55% from 51% last year. The
wholesale market for motorcycles increased by 38% and Astra Honda Motor's
sales rose by 36%, with a slightly reduced market share. Astra Otoparts saw
an increase in net income, mainly due to higher revenues from the original
equipment manufacturer, replacement market and export segments.
Financial Services
Net income from the group's financial services division increased by 49% to
US$345 million, primarily due to higher contributions from the
consumer finance and general insurance businesses. Consumer finance
businesses saw a 25% increase in new amounts financed. There was a 70% rise
in the contribution from the group's car-focussed finance companies and an
increase of 66% in the contribution from its motorcycle-focussed business.
These increases were mainly due to lower loan loss provisioning.
Astra's heavy equipment-focussed finance operations saw an 88% increase in new
amounts financed. The net income contribution from this segment increased by
85%.
General insurance company Asuransi Astra Buana reported a 21% increase in net
income, mainly caused by higher investment and underwriting income. The
group's life insurance company, Astra Life, recorded a 50% increase in gross
written premiums.
Heavy Equipment, Mining and Construction
Net income from Astra's heavy equipment, mining and construction
division increased by 79% to US$427 million, due to higher Komatsu heavy
equipment sales and improved coal prices.
Komatsu heavy equipment sales rose by 97%, while parts and service revenues
were also higher. Mining contractor Pamapersada Nusantara recorded 3%
higher overburden removal volume and 1% higher coal production. United
Tractors' coal mining subsidiaries achieved 3% lower coal sales, while
Agincourt Resources reported a 3% increase in gold sales.
General contractor Acset Indonusa reported a net loss of US$49 million, mainly
due to the slowdown of several ongoing projects and reduced construction
project opportunities during the pandemic.
Agribusiness
Net income from the group's agribusiness division was US$109 million, 137%
higher than 2020, mainly due to higher crude palm oil prices, which rose by
32%. Crude palm oil and derivatives sales fell slightly.
Infrastructure and Logistics
Astra's infrastructure and logistics division saw its net income increase by
53% to US$5 million in 2021. The group's toll road concessions saw 25%
higher toll revenue. Serasi Autoraya's net income increased by 26%, mainly
due to improved operating margins and more vehicles under contract, although
used car sales were lower.
During the year, the group acquired a 49% stake in PT Jasamarga Pandaan
Malang, the operator of the Pandaan-Malang toll road, one of the important
toll roads in East Java.
Information Technology
Net income from the group's information technology division was 86% higher at
US$5 million.
Property
Net income from the group's property division increased by 26% to US$8
million. During the year, Astra Land Indonesia ('ALI'), Astra's 50:50 joint
venture with Hongkong Land, acquired the remaining 33% stake in Astra Modern
Land, the developer of the Asya residential township in East Jakarta, which it
did not already own. In early 2022, ALI established a joint venture with
LOGOS to develop and manage modern logistics warehouses in Indonesia.
Outlook
The Group saw a recovery in a number of its businesses in 2021, demonstrating
their continuing resilience. In 2022, Astra is expected to see ongoing
benefits from positive commodity prices across its portfolio, while the normal
progression of projects in the Group's development properties business in the
Chinese mainland is expected to result in a reduction in the number of
completions. The performance of the Group's Hong Kong operations will depend
on the impact of the ongoing pandemic on our businesses there.
We remain confident in our long-term strategy, rooted in the growth markets of
China and Southeast Asia, and we will continue to focus on our core priorities
of driving operational excellence, evolving the Group's portfolio and finding
new growth opportunities, in order to deliver long-term value.
John Witt
Group Managing Director
Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2021
2021 2020
Underlying Non- Underlying Non-
business trading Total business trading
performance items US$m performance items Total
US$m US$m US$m US$m US$m
Revenue (note 2) 35,862 - 35,862 32,647 - 32,647
Net operating costs (note 3) (32,534) 1,114 (31,420) (30,310) 458 (29,852)
Change in fair value of investment properties - (1,410) (1,410) - (3,477) (3,477)
Operating profit/(loss) 3,328 (296) 3,032 2,337 (3,019) (682)
Net financing charges
- financing charges (595) - (595) (637) - (637)
- financing income 206 - 206 242 - 242
(389) - (389) (395) - (395)
Share of results of associates and joint ventures (note 4)
- before change in fair value of investment properties 1,178 10 1,188 844 (268) 576
- change in fair value of investment properties - 81 81 - (177) (177)
1,178 91 1,269 844 (445) 399
Profit/(loss) before tax 4,117 (205) 3,912 2,786 (3,464) (678)
Tax (note 5) (828) (123) (951) (483) (3) (486)
Profit/(loss) after tax 3,289 (328) 2,961 2,303 (3,467) (1,164)
Attributable to:
Shareholders of the Company (notes 6 & 7) 1,513 368 1,881 1,085 (1,479) (394)
Non-controlling interests 1,776 (696) 1,080 1,218 (1,988) (770)
3,289 (328) 2,961 2,303 (3,467) (1,164)
US$ US$ US$ US$
Earnings/(loss) per share
(note 6)
- basic 4.83 6.01 2.95 (1.07)
- diluted 4.83 6.01 2.95 (1.07)
Jardine Matheson Holdings Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2021
2021 2020
US$m US$m
Profit/(loss) for the year 2,961 (1,164)
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans 86 6
Net revaluation surplus before transfer to
investment properties
- tangible assets 75 -
- right-of-use assets 3 -
Tax on items that will not be reclassified (9) (1)
155 5
Share of other comprehensive income of 9 1
associates and joint ventures
164 6
Items that may be reclassified subsequently to profit
or loss:
Net exchange translation differences
- net (loss)/gain arising during the year (227) 712
- transfer to profit and loss (21) (227)
(248) 485
Revaluation of other investments at fair value through
other comprehensive income
- net (loss)/gain arising during the year (2) 19
- transfer to profit and loss (3) (4)
(5) 15
Cash flow hedges
- net gain/(loss) arising during the year 75 (70)
- transfer to profit and loss 12 5
87 (65)
Tax relating to items that may be reclassified (21) 12
Share of other comprehensive (expense)/income of (16) 268
associates and joint ventures
(203) 715
Other comprehensive (expense)/income for the year, (39) 721
net of tax
Total comprehensive income/(expense) for the year 2,922 (443)
Attributable to:
Shareholders of the Company 1,908 74
Non-controlling interests 1,014 (517)
2,922 (443)
Jardine Matheson Holdings Limited
Consolidated Balance Sheet
at 31st December 2021
At 31st December
2021 US$m 2020 US$m
Assets
Intangible assets 2,635 2,695
Tangible assets 6,184 6,862
Right-of-use assets 4,274 4,768
Investment properties 32,847 34,273
Bearer plants 499 497
Associates and joint ventures 17,980 16,545
Other investments 2,908 2,940
Non-current debtors 2,961 3,032
Deferred tax assets 518 485
Pension assets 32 11
Non-current assets 70,838 72,108
Properties for sale 3,345 2,339
Stocks and work in progress 2,793 2,849
Current debtors 6,928 6,753
Current investments 46 61
Current tax assets 172 158
Bank balances and other liquid funds
- non-financial services companies 6,904 8,801
- financial services companies 378 402
7,282 9,203
20,566 21,363
Asset classified as held for sale 85 55
Current assets 20,651 21,418
Total assets 91,489 93,526
Equity
Share capital 179 181
Share premium and capital reserves 25 31
Revenue and other reserves 35,800 34,457
Own shares held (6,223) (5,282)
Shareholders' funds 29,781 29,387
Non-controlling interests 28,587 33,456
Total equity 58,368 62,843
Liabilities
Long-term borrowings
- non-financial services companies 11,026 8,576
- financial services companies 1,273 1,246
12,299 9,822
Non-current lease liabilities 3,022 3,040
Deferred tax liabilities 743 699
Pension liabilities 451 507
Non-current creditors 250 366
Non-current provisions 309 322
Non-current liabilities 17,074 14,756
Current creditors 10,074 8,645
Current borrowings
- non-financial services companies 2,513 3,945
- financial services companies 1,846 1,930
4,359 5,875
Current lease liabilities 812 850
Current tax liabilities 609 368
Current provisions 193 189
Current liabilities 16,047 15,927
Total liabilities 33,121 30,683
Total equity and liabilities 91,489 93,526
Jardine Matheson Holdings Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2021
Share Share Capital Revenue Asset Hedging Exchange Own Attributable to shareholders of the Company Attributable Total
capital premium reserves reserves revaluation reserves reserves shares US$m to non-controlling interests equity
US$m US$m US$m US$m reserves US$m US$m held US$m US$m
US$m US$m
2021
At 1st January 181 - 31 33,497 2,167 (55) (1,152) (5,282) 29,387 33,456 62,843
Total comprehensive income - - - 1,966 76 37 (171) - 1,908 1,014 2,922
Dividends paid by the Company (note 8) - - - (505) - - - - (505) - (505)
Dividends paid to non-controlling interests - - - - - - - - - (669) (669)
Unclaimed dividends forfeited - - - 1 - - - - 1 1 2
Issue of shares - 3 - - - - - - 3 - 3
Employee share option schemes - - 1 - - - - - 1 - 1
Scrip issued in lieu of dividends 1 (1) - 152 - - - - 152 - 152
Repurchase of shares (3) (8) - (569) - - - - (580) - (580)
Acquisition of the remaining interest in Jardine Strategic - - - - - - - (941) (941) (4,627) (5,568)
Subsidiaries disposed of - - - - - - - - - (5) (5)
Change in interests in subsidiaries - - - 282 - - - - 282 (581) (299)
Change in interests in associates and joint ventures - - - 73 - - - - 73 (2) 71
Transfer - 6 (7) 29 (1) - (27) - - - -
At 31st December 179 - 25 34,926 2,242 (18) (1,350) (6,223) 29,781 28,587 58,368
2020
At 1st January 183 - 32 34,903 2,167 (22) (1,630) (5,282) 30,351 34,720 65,071
Total comprehensive expense - - - (371) - (33) 478 - 74 (517) (443)
Dividends paid by the Company (note 8) - - - (637) - - - - (637) 111 (526)
Dividends paid to non-controlling interests - - - - - - - - - (840) (840)
Unclaimed dividends forfeited - - - 1 - - - - 1 - 1
Issue of shares - 2 - - - - - - 2 - 2
Employee share option schemes - - 1 - - - - - 1 1 2
Scrip issued in lieu of dividends 1 (1) - 134 - - - - 134 - 134
Repurchase of shares (3) (2) - (549) - - - - (554) - (554)
Subsidiaries disposed of - - - - - - - - - (13) (13)
Capital contribution from non-controlling interests - - - - - - - - - 39 39
Change in interests in subsidiaries - - - 18 - - - - 18 (45) (27)
Change in interests in associates and joint ventures - - - (3) - - - - (3) - (3)
Transfer - 1 (2) 1 - - - - - - -
At 31st December 181 - 31 33,497 2,167 (55) (1,152) (5,282) 29,387 33,456 62,843
On 8th March 2021, the Company announced a plan to simplify the Group's parent
company structure, including the acquisition for cash of the 15% of Jardine
Strategic Holdings Limited's ('Jardine Strategic') issued share capital that
the Company and its wholly-owned subsidiaries did not already own (the
'Acquisition'). The Acquisition was implemented by way of an amalgamation of
Jardine Strategic and a wholly-owned subsidiary of the Company, under the
Companies Act 1981 of Bermuda. The total Acquisition value was approximately
US$5.6 billion, of which US$5.5 billion had been settled and reflected in the
consolidated cash flow statement for the year ended 31st December 2021. The
Acquisition was financed by the issuance of a total of US$1.2 billion bonds on
9th April 2021, new revolving credit facilities and existing cash resources.
The Acquisition was completed on 14th April 2021, following shareholders'
approval at Jardine Strategic's special general meeting on 12th April 2021.
The Acquisition value and the related transaction costs resulted in a
reduction of the Group's total equity.
Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2021
2021 2020
US$m US$m
Operating activities
Cash generated from operations 5,383 5,930
Interest received 194 209
Interest and other financing charges paid (573) (692)
Tax paid (728) (804)
4,276 4,643
Dividends from associates and joint ventures 800 632
Cash flows from operating activities 5,076 5,275
Investing activities
Purchase of subsidiaries (note 9(a)) (24) (87)
Purchase of associates and joint ventures (note 9(b)) (194) (206)
Purchase of other investments (note 9(c)) (467) (494)
Purchase of intangible assets (158) (131)
Purchase of tangible assets (620) (659)
Additions to right-of-use assets (25) (37)
Additions to investment properties (note 9(d)) (118) (4,660)
Additions to bearer plants (32) (35)
Advances to and repayments to associates and joint ventures (note 9(e)) (1,100) (725)
Advances from and repayments from associates and joint ventures (note 9(f)) 850 1,437
Sale of subsidiaries (note 9(g)) 1,510 2,821
Sale of associates and joint ventures (note 9(h)) 60 1,138
Sale of other investments (note 9(i)) 398 445
Sale of intangible assets - 1
Sale of tangible assets 135 47
Sale of right-of-use assets 13 -
Sale of investment properties 3 11
Cash flows from investing activities 231 (1,134)
Financing activities
Issue of shares 3 2
Capital contribution from non-controlling interests - 39
Acquisition of the remaining interest in Jardine Strategic (5,490) -
Change in interests in subsidiaries (note 9(j)) (299) (27)
Purchase of own shares (584) (549)
Drawdown of borrowings 12,572 7,967
Repayment of borrowings (11,467) (7,557)
Principal elements of lease payments (894) (962)
Dividends paid by the Company (353) (392)
Dividends paid to non-controlling interests (669) (840)
Cash flows from financing activities (7,181) (2,319)
Net (decrease)/increase in cash and cash equivalents (1,874) 1,822
Cash and cash equivalents at 1st January 9,153 7,157
Effect of exchange rate changes (1) 174
Cash and cash equivalents at 31st December 7,278 9,153
Jardine Matheson Holdings Limited
Analysis of Profit Contribution
for the year ended 31st December 2021
2021 2020
US$m US$m
Reportable segments
Jardine Pacific 175 182
Jardine Motors 318 214
Hongkong Land 474 412
DFI Retail 82 181
Mandarin Oriental (48) (138)
Jardine Cycle & Carriage 119 64
Astra 474 197
1,594 1,112
Corporate and other interests (81) (27)
Underlying profit attributable to shareholders* 1,513 1,085
Decrease in fair value of investment properties (681) (1,424)
Sale of Zung Fu China(#) 791 -
Sale of Zung Fu properties in Hong Kong 337 -
Other non-trading items (79) (55)
Profit/(loss) attributable to shareholders 1,881 (394)
Analysis of Jardine Pacific's contribution
Jardine Schindler 32 32
JEC 49 51
Gammon 39 38
Jardine Restaurants 27 32
Transport Services 31 24
Zung Fu Hong Kong(#) 4 -
Corporate and other interests (7) 5
175 182
Analysis of Jardine Motors' contribution
Hong Kong(#) and Chinese mainland 285 226
United Kingdom 38 (12)
Corporate (5) -
318 214
* Underlying profit attributable to shareholders is the measure of profit
adopted by the Group in accordance with IFRS 8 'Operating Segments'.
# During 2021, the operations under Jardine Motors had been restructured.
The motor trading business in the Chinese mainland ('Zung Fu China') was sold
to the Group's associate, Zhongsheng, in October 2021 (note 9(g)).
Subsequent to the sale, the motor trading business in Hong Kong and Macau are
managed by Jardine Pacific. Accordingly, the results of these operations are
presented under Jardine Pacific from October 2021. Operations in the United
Kingdom and Zhongsheng remain unchanged with results presented under Jardine
Motors.
Jardine Matheson Holdings Limited
Notes
1. Accounting Policies and Basis of Preparation
The financial information contained in this announcement has been based on the
audited results for the year ended 31st December 2021 which have been prepared
in conformity with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by the
International Accounting Standards Board.
The Group has adopted the following amendments for the annual reporting period
commencing 1st January 2021.
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16 (effective 1st January 2021)
The amendments provide practical expedient from certain requirements under the
IFRSs as a result of the reform which affect the measurement of financial
assets, financial liabilities and lease liabilities, and a number of reliefs
for hedging relationships. The Group applied the amendments from 1st January
2021 and there is no significant impact on the Group's consolidated financial
statements.
COVID-19 Related Rent Concessions beyond 30th June 2021: Amendment to IFRS 16
Leases (effective 1st April 2021)
The Group adopted and applied the practical expedient of the COVID-19 Related
Rent Concessions: Amendment to IFRS 16 Leases, published in June 2020 ('2020
amendment'), in the 2020 annual financial statements. The 2021 amendment
extends the practical expedient in the 2020 amendment to eligible lease
payments due on or before 30th June 2022. By using the 2021 amendment, the
Group continues to apply the practical expedient consistently to all lease
contracts with similar characteristics and in similar circumstances, and does
not assess these concessions as lease modifications.
Apart from the above, there are no other amendments which are effective in
2021 and relevant to the Group's operations, that have a significant impact on
the Group's results, financial position and accounting policies.
The Group has not early adopted any standard, interpretation or amendments
that have been issued but not yet effective.
2. Revenue
Gross revenue Revenue
2021 2020 2021 2020
US$m US$m US$m US$m
By business:
Jardine Pacific 5,665 6,178 1,533 1,906
Jardine Motors 31,568 22,931 4,988 5,031
Hongkong Land 6,845 4,948 2,384 2,094
DFI Retail 27,684 28,159 9,015 10,269
Mandarin Oriental 510 298 317 184
Jardine Cycle & Carriage 6,434 6,189 1,403 1,269
Astra 30,909 22,388 16,285 11,965
Intersegment transactions (245) (185) (63) (71)
109,370 90,906 35,862 32,647
Gross revenue comprises revenue together with 100% of revenue from associates
and joint ventures.
3. Net Operating Costs
2021 2020
US$m US$m
Cost of sales (26,755) (24,349)
Other operating income 1,940 1,422
Selling and distribution costs (4,024) (4,367)
Administration expenses (2,283) (2,213)
Other operating expenses (298) (345)
(31,420) (29,852)
In relation to the COVID-19 pandemic, the Group had received government grants
and rent concessions of US$58 million (2020: US$255 million) and US$49 million
(2020: US$76 million), respectively, for the year ended 31st December 2021.
These subsidies were accounted for as other operating income.
Net operating costs included the following gains/(losses) from non-trading
items:
Change in fair value of other investments (103) 142
Asset impairment (5) (65)
Sale of Zung Fu China (note 9(g)) 899 -
Sale and closure of other businesses - 422
Sale of Zung Fu properties in Hong Kong 336 -
Sale of other property interests 25 9
Restructuring of businesses (31) (62)
Reclassification of joint ventures as subsidiaries - 10
Other (7) 2
1,114 458
4. Share of Results of Associates and Joint Ventures
2021 2020
US$m US$m
By business:
Jardine Pacific 118 49
Jardine Motors 206 135
Hongkong Land 434 92
DFI Retail (41) 85
Mandarin Oriental (22) (27)
Jardine Cycle & Carriage 139 (99)
Astra 452 199
Corporate and other interests (17) (35)
1,269 399
Share of results of associates and joint ventures included the following
gains/(losses) from non-trading items:
Change in fair value of investment properties 81 (177)
Change in fair value of other investments 12 9
Asset impairment (14) (275)
Sale and closure of businesses 3 -
Bargain purchase on acquisition 8 (2)
Other 1 -
91 (445)
Results are shown after tax and non-controlling interests in the associates
and joint ventures.
In relation to the COVID-19 pandemic, included in share of results of
associates and joint ventures were the Group's share of the government grants
and rent concessions of US$18 million (2020: US$125 million) and US$19 million
(2020: US$30 million), respectively, for the year ended 31st December 2021.
5. Tax
2021 2020
US$m US$m
Tax charged to profit and loss is analysed as follows:
Current tax (974) (603)
Deferred tax 23 117
(951) (486)
China (355) (209)
Southeast Asia (560) (277)
United Kingdom (12) 4
Rest of the world (24) (4)
(951) (486)
Tax relating to components of other comprehensive income is analysed as
follows:
Remeasurements of defined benefit plans (9) (1)
Cash flow hedges (21) 12
(30) 11
Tax on profits has been calculated at rates of taxation prevailing in the
territories in which the Group operates.
Share of tax charge of associates and joint ventures of US$456 million
(2020: US$301 million) is included in share of results of associates and
joint ventures. Share of tax charge of US$11 million (2020: tax credit of
US$9 million) is included in other comprehensive income of associates and
joint ventures.
6. Earnings/(Loss) per Share
Basic earnings per share are calculated on profit attributable to shareholders
of US$1,881 million (2020: loss of US$394 million) and on the weighted average
number of 313 million (2020: 368 million) shares in issue during the year.
Diluted earnings per share are calculated on profit attributable to
shareholders of US$1,881 million (2020: loss of US$394 million), which is
after adjusting for the effects of the conversion of dilutive potential
ordinary shares of subsidiaries, associates or joint ventures, and on the
weighted average number of 313 million (2020: 368 million) shares in issue
during the year.
The weighted average number of shares is arrived at as follows:
Ordinary shares
in millions
2021 2020
Weighted average number of shares in issue 721 731
Company's share of shares held by subsidiaries (408) (363)
Weighted average number of shares for basic earnings per share calculation 313 368
Adjustment for shares deemed to be issued for no consideration under the - -
Senior Executive Share Incentive Schemes
Weighted average number of shares for diluted earnings per share calculation 313 368
Additional basic and diluted earnings/(loss) per share are also calculated
based on underlying profit attributable to shareholders. A reconciliation of
earnings is set out below:
2021 2020
US$m Basic Diluted earnings US$m Basic Diluted
earnings per share (loss)/ (loss)/
per share US$ earnings per share earnings per share US$
US$ US$
Profit/(loss) attributable to shareholders 1,881 6.01 6.01 (394) (1.07) (1.07)
Non-trading items (note 7) (368) 1,479
Underlying profit attributable to shareholders 1,513 4.83 4.83 1,085 2.95 2.95
7. 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 equity investments which are measured at fair value
through profit and loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable intangible assets,
associates and joint ventures 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.
2021 2020
US$m US$m
By business:
Jardine Pacific 382 332
Jardine Motors 789 (23)
Hongkong Land (663) (1,545)
DFI Retail (4) (3)
Mandarin Oriental (58) (316)
Jardine Cycle & Carriage (85) (49)
Astra (1) 120
Corporate and other interests 8 5
368 (1,479)
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 (664) (1,546)
- other (17) 122
(681) (1,424)
Change in fair value of other investments (62) 100
Asset impairment (12) (223)
Sale of Zung Fu China (note 9(g)) 791 -
Sale and closure of other businesses 2 93
Sale of Zung Fu properties in Hong Kong 337 -
Sale of other property interests 18 9
Restructuring of businesses (23) (37)
Reclassification of joint ventures as subsidiaries - 3
Bargain purchase on acquisition 6 -
Other (8) -
368 (1,479)
Asset impairment in 2020 included a partial impairment of Jardine Cycle &
Carriage's investment in Siam City Cement of US$116 million.
Profit on sale and closure of other businesses in 2020 included profit of
US$120 million from sale of Astra's 44.6% interest in Permata Bank with net
proceeds of US$1,136 million.
8. Dividends
2021 2020
US$m US$m
Final dividend in respect of 2020 of US¢128.00 921 938
(2019: US¢128.00) per share
Interim dividend in respect of 2021 of US¢44.00 318 322
(2020: US¢44.00) per share
1,239 1,260
Company's share of dividends paid on the shares held by subsidiaries (734) (623)
505 637
A final dividend in respect of 2021 of US¢156.00 (2020: US¢128.00) per share
amounting to a total of US$1,118 million (2020: US$921 million) is proposed by
the Board. The dividend proposed will not be accounted for until it has been
approved at the 2022 Annual General Meeting. The net amount after deducting
the dividends payable on the shares held by the Company's subsidiaries of
US$666 million (2020: US$546 million) will be accounted for as an
appropriation of revenue reserves in the year ending 31st December 2022.
9. Notes to Consolidated Cash Flow Statement
(a) Purchase of subsidiaries
Net cash outflow for purchase of subsidiaries in 2021 principally related to
Jardine Pacific's acquisition of a healthcare engineering solution provider in
Hong Kong and Macau.
Net cash outflow in 2020 included US$14 million for Jardine Motors'
acquisition of a dealership business in the Chinese mainland; US$21 million
for DFI Retail's payment for deferred consideration on acquisition of a 100%
interest in San Miu Supermarket Limited in Macau in 2015; and US$44 million
for Astra's acquisition of a 100% interest in PT Jakarta Marga Jaya, a toll
road business company, and US$7 million for Astra's increased interest in PT
Asuransi Jiwa Astra, a life insurance company, from 50% to 100%.
Goodwill in 2020 mainly arose from the acquisition of PT Asuransi Jiwa Astra
of US$56 million, attributable to synergy with Astra's existing insurance
business. None of the goodwill is expected to be deductible for tax
purposes.
(b) Purchase of associates and joint ventures in 2021 mainly included
US$115 million for Hongkong Land's investments in the Chinese mainland, US$9
million for Jardine Cycle & Carriage's additional interest in
Refrigeration Electrical Engineering Corporation, and US$66 million for
Astra's investments in toll road concession business.
Purchase in 2020 mainly included US$153 million for Hongkong Land's
investments primarily in the Chinese mainland; US$15 million for DFI Retail's
capital injection into an associate for the development of e-commerce platform
to support the group's digital business; and US$24 million for Astra's
settlement of deferred consideration on acquisition of toll road concessions
in 2019.
(c) Purchase of other investments in 2021 included US$375 million for
acquisition of securities in Astra and US$69 million for investment in limited
partnership investment funds in Corporate. Purchase in 2020 included US$478
million for Astra's acquisition of securities.
(d) Additions to investment properties in 2020 mainly included US$4,485
million for Hongkong Land's acquisition of a mixed-use site in the Xuhui
District in Shanghai, Chinese mainland.
(e) Advances to and repayments to associates and joint ventures in 2021
mainly included Hongkong Land's advances to its property joint ventures.
Advances to and repayments to associates and joint ventures in 2020 comprised
US$684 million for Hongkong Land's advances to its property joint ventures and
US$41 million for Mandarin Oriental's advances to its associate and joint
venture hotels.
(f) Advances from and repayments from associates and joint ventures in
2021 and 2020 mainly included advances from and repayments from Hongkong
Land's property joint ventures.
(g) Sale of subsidiaries
2021 2020
US$m US$m
Non-current assets 605 5,192
Current assets 423 398
Non-current liabilities (86) (101)
Current liabilities (250) (268)
Non-controlling interests (5) (13)
Net assets 687 5,208
Cumulative exchange translation difference (25) (248)
Profit on disposal 1,266 46
Deferred gain on sale and leaseback of properties 126 -
Sales proceeds 2,054 5,006
Adjustment for carrying value of an associate (428) -
Adjustment for carrying value of a joint venture - (2,119)
Adjustment for deferred payments - 14
Cash and cash equivalents of subsidiaries disposed of (116) (80)
Net cash inflow 1,510 2,821
Analysis of net cash inflow from sale of subsidiaries:
Proceeds received 1,510 4,827
Deposits refunded - (2,006)
1,510 2,821
Net cash inflow for sale of subsidiaries in 2021 included US$738 million from
Jardine Pacific's sale of property holding subsidiaries which hold the Zung Fu
Hong Kong properties in Hung Hom and Chai Wan with sale and leaseback
arrangements, and US$754 million (net of tax of US$115 million) from Jardine
Motors' sale of Zung Fu China to the Group's associate, Zhongsheng, for a
total consideration of US$1.3 billion, comprised US$886 million in cash and
US$428 million worth of new shares in Zhongsheng, increasing the Group's
shareholding in Zhongsheng to 20.9%.
Net cash inflow in 2020 included US$2,566 million, being proceeds received of
US$4,572 million net of deposits refunded of US$2,006 million, for Hongkong
Land's sale of a 57% interest in a wholly-owned company which became a
43%-owned joint venture. The company owns a mixed-use site in Xuhui District
in Shanghai, Chinese mainland.
The remaining net cash inflow in 2020 of US$255 million included US$47 million
for Hongkong Land's sale of its entire 80% interest in a development
properties subsidiary in Vietnam; and US$109 million for DFI Retail's sale of
its entire 100% interest in Wellcome Taiwan and US$84 million for DFI Retail's
sale of its entire 100% interest in Rose Pharmacy to its 20%-owned associate,
Robinsons Retail Holdings, Inc.
The revenue and profit after tax in respect of subsidiaries disposed of during
the year amounted to US$2,399 million and US$53 million, respectively.
(h) Sale of associates and joint ventures in 2021 mainly comprised
Hongkong Land's sale of its interest in a property joint venture in Chinese
mainland. Sale in 2020 mainly included US$1,136 million for Astra's sale of
its entire 44.6% interest in Permata Bank.
(i) Sale of other investments in 2021 comprised sale of securities of
US$246 million and US$152 million in Astra and Corporate, respectively. Sale
in 2020 comprised Astra's sale of securities.
(j) Change in interests in subsidiaries
2021 2020
US$m US$m
Increase in attributable interests
- Hongkong Land (192) -
- Mandarin Oriental - (25)
- other (107) (2)
(299) (27)
Increase in attributable interests in other subsidiaries in 2021 included
US$18 million and US$19 million for Jardine Cycle & Carriage's additional
30% and 25% interests in Cycle & Carriage Bintang and Republic Auto,
respectively, and US$70 million for Astra's acquisition of the remaining 33%
interest in PT Astra Modern Land.
10. Capital Commitments and Contingent Liabilities
Total capital commitments at 31st December 2021 amounted to US$2,864 million
(2020: US$2,698 million).
Following the acquisition of the 15 per cent of Jardine Strategic not
previously owned by the Company and its wholly-owned subsidiaries, which was
effected on 14th April 2021, a number of former Jardine Strategic
shareholders are seeking an appraisal of the fair value of their shares in
Jardine Strategic by the Bermuda court, relying upon the process referred to
in the shareholder circular issued in connection with the acquisition. These
shareholders claim the consideration of US$33 per share that Jardine Strategic
considered to be fair value for its shares, and that all shareholders have
already received, did not represent fair value. Although the proceedings
were commenced in April 2021, they are still at an early stage and it is
anticipated that the court appraisal process will not be concluded for at
least a further 12 months. The Board believes that the US$33 per share that
was paid represented fair value to Jardine Strategic minority shareholders and
is of the opinion that no provision is required in relation to these claims.
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 financial statements.
11. Related Party Transactions
In the normal course of business the Group undertakes a variety of
transactions 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 its 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 in 2021
amounted to US$4,970 million (2020: US$3,104 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 sale of motor vehicles and spare parts in 2021
amounted to US$604 million (2020: US$387 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 year.
Amounts of outstanding balances with associates and joint ventures are
included in debtors and creditors, as appropriate.
Jardine Matheson Holdings Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal control.
The process by which the Group identifies and manages risk will be set out in
more detail in the Corporate Governance section of the Company's 2021 Annual
Report (the 'Report'). Set out below are the principal risks and uncertainties
facing the Company as required to be disclosed pursuant to the DTRs, as well
as a summary of the steps taken to mitigate those risks.
These risks are in addition to matters referred to in the Chairman's
Statement, Group Managing Director's Review and other parts of the Report.
Economic Risk
Most of the Group's businesses are exposed to the risk of adverse developments
in global and regional economies and financial markets, either directly, or
through the impact such developments might have on the Group's joint venture
partners, associates, franchisors, bankers, suppliers or customers. These
developments could include recession, inflation, deflation, currency
fluctuations, restrictions in the availability of credit, business failures,
or increases in financing costs, oil prices or the cost of raw materials. Such
developments might increase operating costs, reduce revenues, lower asset
values or result in some or all of the Group's businesses being unable to meet
their strategic objectives.
Mitigation Measures
· Monitor the volatile macroeconomic environment and consider economic factors
in strategic and financial planning processes.
· Make agile adjustments to existing business plans and explore new business
streams and new markets.
· Review pricing strategies and keep conservative assumptions on global
commodity prices.
· Insurance programme covering property damage and business interruption.
Commercial Risk
Risks are an integral part of standard commercial activities, and where
practicable steps are taken to mitigate them. Risks can be more pronounced
when businesses are operating in volatile markets.
A number of the Group's businesses make significant investment decisions
regarding developments or projects, which are subject to market risks. This
is especially the case where projects are longer-term and take more time to
deliver returns.
The Group's businesses operate in sectors and regions which are highly
competitive and evolving rapidly. Failure to compete effectively, whether in
terms of price, tender terms, product specification, application of new
technologies or levels of service, and failure to manage change in a timely
manner, can hurt earnings or market share. Significant competitive pressure
may also lead to reduced margins.
It is essential for the products and services provided by the Group's
businesses to meet the appropriate quality and safety standards, and there is
an associated risk if they do not, including the risk of damage to brand
equity or reputation, which might adversely impact the ability to achieve
sufficient revenues and profit margins.
In addition, growing sustainability consciousness in customers' purchasing
preferences has resulted in customers being more willing to switch to other
companies, brands or providers that provide sustainable products or services.
Mitigation Measures
· Utilise market intelligence and deploy digital strategies for
business-to-consumer businesses.
· Establish customer relationship management programme and digital commerce
capabilities.
· Engage in longer-term contracts and proactively approach suppliers for
contract renewals.
· Re-engineer existing business processes.
Financial and Treasury Risk
The Group's activities expose it to a variety of financial risks, including
market risk, credit risk and liquidity risk.
The market risk the Group faces includes i) foreign exchange risk from future
commercial transactions, net investments in foreign operations and net
monetary assets and liabilities that are denominated in a currency that is not
the entity's functional currency; ii) interest rate risk through the impact of
rate changes on interest bearing liabilities and assets; and iii) securities
price risk as a result of its equity investments and limited partnership
investment funds which are measured at fair value through profit and loss, and
debt investments which are measured at fair value through other comprehensive
income.
The Group's credit risk is primarily attributable to deposits with banks,
contractual cash flows of debt investments carried at amortised cost and those
measured at fair value through other comprehensive income, credit exposures to
customers and derivative financial instruments with a positive fair value.
The Group may face liquidity risk if its credit rating deteriorates or if it
is unable to meet its financing commitments.
Mitigation Measures
· Limiting foreign exchange and interest rate risks to provide a degree
of certainty about costs.
· Management of the investment of the Group's cash resources so as to
minimise risk, while seeking to enhance yield.
· Adopting appropriate credit guidelines to manage counterparty risk.
· When economically sensible to do so, taking borrowings in local
currency to hedge foreign exchange exposures on investments.
· A portion of borrowings is denominated in fixed rates. Adequate
headroom in committed facilities is maintained to facilitate the Group's
capacity to pursue new investment opportunities and to provide some protection
against market uncertainties.
· The Group's funding arrangements are designed to keep an appropriate
balance between equity and debt from banks and capital markets, both short and
long term in tenor, to give flexibility to develop the business. The Company
also maintains sufficient cash and marketable securities, and ensures the
availability of funding from an adequate amount of committed credit facilities
and the ability to close out market positions.
· The Group's Treasury operations are managed as cost centres and are
not permitted to undertake speculative transactions unrelated to underlying
financial exposures.
The detailed steps taken by the Group to manage its exposure to financial risk
are set out in the Financial Review and in a note to the Financial Statements
in the Report.
Concessions, Franchises and Key Contracts Risk
Many of the Group's businesses and projects rely on concessions, franchises,
management, outsourcing or other vital contracts. Accordingly, cancellation,
expiry or termination, or the renegotiation of any such concession, franchise,
management, outsourcing or other third-party key contracts could adversely
affect the financial condition and results of operations of certain
subsidiaries, associates and joint ventures of the Group.
Mitigation Measures
· Strengthen existing relationships with the principals through
sustaining substantial market shares and complying with dealer standards and
principals' policies.
· Monitor sales performance and manufacturer scorecards.
· Regular communication with franchisees and strengthen quality
assurance programmes to maintain requirements by franchise principals.
Regulatory and Political Risk
The Group's businesses are subject to several regulatory regimes in the
territories they operate. Changes in such regimes in relation to foreign
ownership of assets and businesses, exchange controls, planning controls,
emission regulations, tax rules, and employment legislation could potentially
impact the operations and profitability of the Group's businesses.
Changes in the political environment, including political or social unrest, in
the Group's territories, could adversely affect the Group's businesses.
Mitigation Measures
· Stay connected and informed of relevant new and draft regulations.
· Engage external consultants and legal experts where necessary.
· Raise awareness via principals' brand conference with an annual
update on new regulations that may have been implemented in other markets.
Pandemic and Natural Disasters Risk
The Group businesses could be impacted by a global or regional pandemic which
seriously affects economic activity or the ability of businesses to operate
smoothly. The pandemic has also created heightened demand and competition
across industries for various skillsets. In addition, many of the territories
in which the Group operates can experience natural disasters such as
earthquakes and typhoons from time to time.
Mitigation Measures
· Flexible work arrangements and compliance with hygiene protocols.
· Supply chain stabilisation includes sourcing backup suppliers and
better coordination with logistics partners.
· Engage external consultants for climate risk analysis.
· Business Continuity Plans are tested and audited periodically.
· Insurance programmes that provide robust cover for natural disasters.
Cybersecurity Risk
The Group's businesses are ever more reliant on technology in their operations
and face increasing cyberattacks from groups targeting both individuals and
businesses. As a result, the privacy and security of customer and corporate
information are at risk of being compromised through a breach of our or our
suppliers' IT systems or the unauthorised or inadvertent release of
information, resulting in brand damage, impaired competitiveness or regulatory
action. Cyberattacks may also adversely affect our ability to manage our
business operations or operate information technology and business systems,
resulting in business interruption, lost revenues, repair or other costs.
The potential impact on many of our businesses of disruption to IT systems or
infrastructure, whether due to cyber-crime or other factors, could be
significant. There is also an increasing risk to our businesses from negative
social media commentary, which could influence customer and other stakeholder
behaviours, impact operations or profitability, or lead to reputational
damage.
Mitigation Measures
· Engage external consultants to perform assessments on the business units with
industry benchmarks.
· Define cybersecurity programme and centralised function to provide oversight,
manage cybersecurity matters, and strengthen cyber defences and security
measures.
· Perform regular vulnerability assessment and/or penetration testing to
identify weaknesses.
· Maintain disaster recovery plans and backup for data restoration.
· Arrange regular security awareness training at least annually and phishing
testing to raise users' cybersecurity awareness.
Investment, Strategic Transactions and Partnerships Risk
Competition for attractive investment opportunities has increased with the
rise of global investment funds and deep pools of low-cost capital, supporting
a greater appetite by investors across sectors for strategic transactions and
partnerships to optimise the business portfolio and enhance growth. As the
Group's businesses pursue projects and investments against keen competitors,
they face pressure on the terms they are willing to secure and accept prized
assets and relationships.
In addition, conflicts with strategic partners may arise due to various
reasons such as different corporate cultures and management styles.
Mitigation Measures
· Establish Group Investment and Business Development Committee.
· Conduct sufficient research, due diligence and evaluation of
investment opportunities and potential business partners.
· Develop clear frameworks and levels of authority for investment or
partnership decisions.
· Regular performance monitoring and strategic reviews of new
businesses and projects.
People Risk
The competitiveness of the Group's businesses depends on the quality of the
people that it attracts and retains. Unavailability of needed human resources
may impact the ability of the Group's businesses to operate at capacity,
implement initiatives and pursue opportunities.
The pandemic has accelerated corporate investments in digital projects and
stimulated global consumer demand for e-commerce. This has created heightened
demand and competition across industries for various skillsets, particularly
in IT and logistics. Pandemic-related travel restrictions and a more stringent
approach to issuing work visas to non-locals in some of the key markets have
also disrupted the availability of labour across borders, exacerbating labour
shortages as economies rebound.
Mitigation Measures
· Ensure proactive manpower planning and succession planning are in
place.
· Enhance modern employer branding, training for staff members,
compensation and benefits, talent development plan.
· Implement strategy to promote diversity and inclusion across the
Group.
· Provide employee retention programmes.
· Establish employee assistance programmes.
Environmental and climate risk
Global climate change has led to a trend of increased frequency and intensity
of potentially damaging natural events for the Group's assets and operations.
With interest in sustainability surging in recent years from investors,
governments and other interested parties, expectations by regulators and other
stakeholders for accurate corporate sustainability reporting and commitments
towards carbon neutrality and other sustainability related goals are also
growing. This brings increasing challenges to the Group and its businesses to
meet key stakeholders' expectations.
Mitigation Measures
· Sustainability Leadership Council established to mobilise and coordinate
sustainability efforts across the Group.
· A sustainability strategy framework, including a Climate Action pillar, drives
the Group's sustainability agenda.
· A Climate Action Working Group, with representatives from all business units,
drives Group-wide initiatives which strengthen collaboration and share
knowledge.
· A Group-wide climate change policy is being developed to build climate
resilience across Jardines.
· Developing a plan to make net zero commitments across Group businesses.
· Assessing emerging ESG reporting standards and requirements, to align Group
disclosures to best market practice.
· Conducting climate risk assessments and adaptation action plans based on
recommendations of Task Force on Climate-related Financial Disclosure (TCFD),
including implementing measures to address physical risks posed by climate
change and identifying opportunities in global transition to a low carbon
economy.
Monitoring of Risk Management and Internal Control Systems
The effectiveness of the Company's risk management and internal control
systems is monitored by the internal audit function, which reports
functionally to the Audit Committee of the Company, and by a series of audit
committees or risk management and compliance committees that operate in each
significant business unit across the Group. The internal audit function also
monitors the approach taken by the business units to managing risk. The
findings of the internal audit function and recommendations for any corrective
action required are reported to the relevant audit committee and, if
appropriate, to the Company's Audit Committee.
Responsibility Statement
The Directors of the Company confirm to the best of their knowledge that:
(a) the consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by the
International Accounting Standards Board; and
(b) the sections of the Company's 2021 Annual Report, including
the Chairman's Statement and Managing Director's Review and the Principal
Risks and Uncertainties, which constitute the management report, include a
fair review of all information required to be disclosed by the Disclosure
Guidance and Transparency Rules 4.1.8 to 4.1.11 issued by the Financial
Conduct Authority of the United Kingdom.
For and on behalf of the Board
John Witt
Graham Baker
Directors
Dividend Information for Shareholders
The final dividend of US$1.56 per share will be payable on 11th May 2022,
subject to approval at the Annual General Meeting to be held on 5th May 2022,
to shareholders on the register of members at the close of business on 18th
March 2022. The shares will be quoted ex-dividend on 17th March 2022 and the
share registers will be closed from 21st to 25th March 2022, inclusive. The
dividend will be available in cash with a scrip alternative.
Shareholders will receive their cash dividends in United States Dollars,
except when elections are made for alternate currencies in the following
circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register will have the option to
elect for their dividends to be paid in Sterling. These shareholders may make
new currency elections for the 2021 final dividend by notifying the United
Kingdom transfer agent in writing by 22nd April 2022. The Sterling equivalent
of dividends declared in United States Dollars will be calculated by reference
to a rate prevailing on 27th April 2022.
Shareholders holding their shares through CREST in the United Kingdom will
receive their cash dividends in Sterling only as calculated above.
Shareholders on the Singapore branch register who hold their shares through
The Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service ('DCS')
For those shareholders who are on CDP's DCS, they will receive their cash
dividends in Singapore Dollars unless they opt out of CDP Currency Conversion
Service, through CDP, to receive United States Dollars.
Shareholders who are not on CDP's DCS
For those shareholders who are not on CDP's DCS, they 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 18th March 2022, 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 17th
March 2022.
The Jardine Matheson Group
Jardine Matheson is a diversified Asian-based group with unsurpassed
experience in the region, having been founded in China in 1832. It has a
broad portfolio of market-leading businesses, which represent a combination of
cash generating activities and long-term property assets and are closely
aligned to the increasingly prosperous consumers of the region. The Group's
businesses aim to produce sustainable returns by providing their customers
with high quality products and services.
Jardine Matheson operates principally in China and Southeast Asia, where its
subsidiaries and affiliates benefit from the support of the Group's extensive
knowledge of the region and its long-standing relationships. These companies
are active in the fields of motor vehicles and related operations, property
investment and development, food retailing, health and beauty, home
furnishings, engineering and construction, transport services, restaurants,
luxury hotels, financial services, heavy equipment, mining and agribusiness.
Jardine Matheson holds interests in Jardine Pacific (100%), Jardine Motors
(100%), Hongkong Land (52%), Dairy Farm (78%), Mandarin Oriental (79%) and
Jardine Cycle & Carriage (75%) ('JC&C'). JC&C in turn has a 50%
shareholding in Astra.
Jardine Matheson Holdings Limited is incorporated in Bermuda and has a primary
listing on the London Stock Exchange, with secondary listings in Bermuda and
Singapore. Jardine Matheson Limited operates from Hong Kong and provides
management services to Group companies.
- end -
For further information, please contact:
Jardine Matheson Limited
Graham Baker / Max Sunarcia (852) 2843 8218 / 8266
Brunswick Group Limited
Sunitha Chalam (65) 6426 8188
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31st December 2021 can be accessed
through the internet at www.jardines.com.
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