REG - Jardine Matheson Hdg - 2023 Preliminary Results
07/03/2024 12:30
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RNS Number : 0263G Jardine Matheson Hldgs Ltd 07 March 2024
7th March 2024
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
2023 Preliminary Announcement of Results
Solid Performance In Challenging Market Conditions
Highlights
· Underlying profit up 5% to US$1.66 billion (+7% at CER°)
· Record performance in South East Asia, driven by Astra
· Strong recoveries at DFI Retail and Mandarin Oriental
· Significant capital investments at Astra to drive future growth
· Full year dividend up 5% to US$2.25
"Jardines delivered a very solid performance in 2023, benefitting from its
diversified portfolio, with results above pre-pandemic levels. Challenging
conditions on the Chinese mainland and in Vietnam adversely impacted
Zhongsheng, Hongkong Land and THACO. Astra, however, delivered a record
performance in South East Asia and both DFI Retail and Mandarin Oriental drove
strong recoveries.
I want to thank our colleagues across the Group for their unwavering
commitment to their customers and businesses.
The Group anticipates a challenging year ahead, as a result of ongoing
economic headwinds in key markets, but with new leadership in place across
several Group companies, and an effective long-term strategy, we are
optimistic about the future and believe that we are well-positioned to take
advantage of opportunities for mid- and long-term growth."
Ben Keswick, Executive Chairman
Results summary
Year ended 31st December
2023 2022 Change Change at CER°
US$m US$m % %
restated (Ω)
Revenue 36,049 37,496 -4
Underlying profit* before tax 5,034 4,930 +2
Underlying profit* attributable to shareholders 1,661 1,584 +5 +7
Profit attributable to shareholders 686 354 +94
Shareholders' funds 29,010 28,850 +1
US$ US$
Underlying earnings* per share 5.74 5.49 +5 +6
Earnings per share 2.37 1.22 +94
Dividends per share 2.25 2.15 +5
* The Group uses 'underlying profit' in its internal financial reporting to
distinguish between ongoing business performance and non-trading items, as
more fully described in note 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.
(Ω) The 2022 financials have been restated due to changes in accounting
policies upon adoption of IFRS 17 'Insurance Contracts', as set out in note 1
to the financial statements.
° CER means Constant Exchange Rates
The final dividend of US$1.65 per share will be payable on 15th May 2024,
subject to approval at the Annual General Meeting to be held on 8th May 2024,
to shareholders on the register of members at the close of business on 22nd
March 2024 and will be available in cash with a scrip alternative.
Jardine Matheson Holdings Limited (the 'Company')
2023 Preliminary Announcement of Results
Chairman's Statement
2023 Overview
2023 saw the Group's underlying profit rise to a new high, as many of our
businesses benefitted from the post-pandemic reopening of markets,
particularly in the first half of the year. The Group's diversified
portfolio continued to generate strong cash flows, supporting a strong balance
sheet and creating a solid foundation for future growth. Full details of the
business's performance, and significant developments during the year, are
provided in the Group Managing Director's Review.
The Board is recommending an increased final dividend of US$1.65 per share,
which produces a full-year dividend of US$2.25 per share, up 5% from the prior
year.
Governance
Our approach to governance reflects what the Board believes is most
appropriate for the Group's unique shareholding structure, size and its
operations in Asia. However, as our environment and the Group evolves, we
continue to review its effectiveness on an ongoing basis. In the last year,
we have brought greater diversity and sectoral expertise to the Boards of both
Jardine Matheson and our listed subsidiaries, with multiple new executive and
independent non-executive appointments.
At JMH, Janine Feng and Keyu Jin joined the Company's Board on 5th May 2023
and 31st January 2024 respectively, as independent non-executive directors.
From 1st April 2024, the Board will comprise 50% independent non-executive
directors.
Anthony Nightingale retired from the Board on 31st January 2024, and Y.K. Pang
and David Hsu will step down from the Board on 31st March 2024. Y.K. will
remain as a Senior Adviser of the Company. I would like to thank Anthony,
Y.K. and David for their contributions to the Board and the wider Group over
many years.
Janine Feng also joined the Audit Committee on 5th May 2023 and, following
Michael Wu's appointment to the Committee in March 2023, in place of Adam
Keswick, who stood down with effect from the same date, the Board considers
that the Audit Committee now comprises only independent non-executive
directors.
Following recent changes, the audit committees of each of our listed
subsidiary Boards now have a majority of independent members and are chaired
by an independent non-executive director.
Sustainability
As a long-term business, sustainability is at the forefront of our business
practices and I am pleased to say we have made significant strides in
progressing our agenda. The culture within the Group is fast becoming one
where sustainability is seen as a business opportunity and an integral part of
our day-to-day business lives.
We are increasingly focussed on the three main pillars of our sustainability
strategy: Leading Climate Action, Driving Responsible Consumption and Shaping
Social Inclusion, and I am really pleased that the progress we have made in
these areas has been reflected in our improved ESG ratings.
Good business is sustainable business, and with our focussed approach we
believe the future growth of the Company will also benefit the communities in
which we invest. I am proud to say that sustainability is now something that
is embedded as a core element of our strategy, and all future investments will
take account of it as a key part of the decision-making process.
I continue to chair our Sustainability Leadership Council, which includes all
Group CEOs, and together we will continue to ensure that Jardines maximises
the long-term business opportunities that a consistent and integrated
sustainability programme should produce.
Conclusion
Jardines delivered a very solid performance in 2023 as the Group benefitted
from its diversified portfolio, with results above pre-pandemic levels. Our
two large auto associates, Zhongsheng and THACO, were significantly impacted
by tough market conditions in the Chinese mainland and Vietnam respectively.
Hongkong Land was also impacted by the downturn in the Chinese property
sector. Astra, however, delivered a record performance and both DFI Retail
and Mandarin Oriental drove strong recoveries.
The Group enters 2024 facing continued challenging market conditions in key
segments in China and Vietnam, as well as lower market prices for a number of
Astra's key commodity outputs in Indonesia. However, we remain confident in
our long-term strategy and will continue to create opportunities to deliver
growth and long-term value, benefitting from our diversified portfolio.
Ben Keswick
Executive Chairman
Group Managing Director's Review
The Group performed well in 2023 and, despite facing increasing headwinds in
the second half of the year, achieved a new record level of profit.
We remain focussed on addressing the short-term challenges our businesses face
from local and global economic pressures. As the pace of change increases,
we are focussed on advancing our strategic priorities with urgency, as
outlined below.
Enhancing Leadership and Entrepreneurialism
In the last year, the Group has made several significant senior appointments
to enhance leadership and drive future growth, including the appointment of
new chief executives at DFI Retail, Mandarin Oriental and Hongkong Land.
Scott Price succeeded Ian McLeod as Group Chief Executive of DFI Retail with
effect from 1st August 2023. Scott is an experienced senior business
executive with 25 years' international experience, mostly in Asia, spanning
the retail, logistics and consumer packaged goods sectors.
Since joining DFI Retail, Scott has visited all its formats and markets to
meet colleagues and learn about the group's business and customers. He has
introduced a new strategic framework, which will support the group's capital
allocation priorities and growth plans over the coming three to five years.
The new framework is centred on putting the customer first - evolving the
business at the same pace as customers' changing shopping behaviours;
focussing on the group's people - embedding core values throughout the group,
speeding up decision making and improving diversity, equity and inclusion to
ensure local relevancy of decision-making to customers; and driving improved
shareholder returns - through a disciplined capital and resource allocation
approach.
Laurent Kleitman succeeded James Riley as Group Chief Executive of Mandarin
Oriental with effect from 1st September 2023. Laurent joined the group from
LVMH, where he was President and CEO of Parfums Christian Dior, and brings
many years' experience in building iconic consumer brands across the beauty
and broader FMCG sectors.
In his first few months at Mandarin Oriental, Laurent has visited the group's
properties around the world, met with owners and partners and spent time
listening to and learning from the group's many colleagues. Going forward,
he aims to scale up the management business, further elevate the brand to
become the reference point in luxury hospitality and enrich the group's
service proposition to guests and owners.
In November 2023, we announced that Michael Smith will succeed Robert Wong as
the new Chief Executive of Hongkong Land, effective 1st April 2024. Michael
brings 30 years of real estate, capital markets and investment banking
experience. He was most recently Regional Chief Executive Officer of Europe
and the US at Mapletree Investments, a global real estate development,
investment, capital and property management company. Michael grew Mapletree
Investment's Europe and US businesses through his successful build-out of an
entrepreneurial and high-performance organisation.
Elton Chan, currently the Chief Executive of Jardine Schindler Group and a
non-Executive Director of Zhongsheng, will succeed Y.K. Pang as Chief
Executive of the Jardine Pacific group of companies, with effect from 1st
April 2024. Prior to his current role at Jardine Schindler Group, Elton was
Managing Director of Zung Fu China. He joined Jardines in 2004 and has
worked in a range of senior management roles across the Group.
I would like to thank Ian, James, Robert and Y.K. for their significant
contributions to the Group.
A crucial part of building an entrepreneurial culture is finding, developing
and keeping the right leadership talent, and this is a high priority for the
Group and its companies. We also recognise the importance of having the
right management structure to support the future development of our portfolio
and identify new growth areas.
During the year, we have continued to invest in developing our leaders and
giving them opportunities to advance their careers within different businesses
across the Group, with multiple senior management progressions happening
during the period.
We are also focussed on assessing and developing the next generation of
leaders across our businesses. We offer colleagues the training and support
they need to deal with the challenges and opportunities they face, both in the
near- and the long-term. We supplement our talent planning with Group-wide
leadership development programmes, co-designed with world-class institutions
including IMD and INSEAD.
Jardines also continues to build a diverse and inclusive culture where anyone
can succeed. Our strategy includes a five-year Inclusion, Equity and
Diversity target, with an initial focus on gender representation. In
addition, each Group business has set its own targets for improving Inclusion,
Equity and Diversity in the workplace.
Evolving the Group Portfolio
We see the evolution of the Group's portfolio as crucial to ensuring the
long-term growth and sustainability of our business. We allocate capital
towards strategic growth initiatives, both at the Group level and within our
Group companies, while divesting non-strategic and lower-yielding assets.
Our diversified presence in China and South East Asia, as well as our balanced
portfolio across sectors, has enabled us to perform well even in challenging
market conditions. We continue to focus on further strengthening our
position in the high-potential markets of Asia and in those industries where
we can establish a leading position, to create long-term value and ensure
sustainable growth.
Our primary goal is to expand our operations in areas with the greatest
potential for future growth, including a number of emerging ASEAN markets.
We aim to align ourselves with key trends in these markets, such as
continuing urbanisation and the expanding middle class. We are actively
seeking growth opportunities in markets like Indonesia and Vietnam, while also
developing our business interests in China.
We also recognise the continuing growth opportunities in our established
markets, such as Hong Kong and Singapore, which provide a stable foundation
and strong cash flow.
Our capital allocation strategy prioritises organic investment in our
portfolio to drive long-term growth and returns, while also aiming to increase
dividends over time. We then focus on investing in new business
opportunities and carrying out share buybacks in our companies as appropriate.
Our strategy is supported by a strong balance sheet, and we are increasingly
focussed on ensuring that our investment opportunities align with our
sustainability goals.
During 2023 and, as we enter 2024, we have continued to progress the
simplification of the Group's portfolio and lay the foundations for the next
stage of its growth. In March 2023, we completed the sale of our Motors
business in the United Kingdom for US$402 million. In September 2023, the
Group completed the sale of its 28.22% stake in Hong Kong-listed Greatview
Aseptic Packaging Company for US$128 million. In March 2024, the Group
completed the sale of its 50% stake in Jardine Aviation Services Group.
In March 2023, DFI Retail sold its Malaysian Grocery Retail business and it
completed the sale of several associated properties over the course of the
second half of the year.
In line with Mandarin Oriental's strategy for driving future growth, primarily
through developing its management business and realising capital, in 2023 the
group sold its Jakarta hotel to Astra and signed an option to sell its Paris
hotel, in each case retaining the management contract.
Against the backdrop of challenging market conditions in China, the Group
continued to make strategic investments in South East Asia.
Astra continued its diversification into non-coal assets, as part of its
commitment to a just transition, with United Tractors' acquisition of
interests in two nickel mining and processing businesses: the acquisition of a
90% effective share ownership of PT Stargate Pasific Resources and PT Stargate
Mineral Asia, for total consideration of US$319 million; and the acquisition
of a 19.99% interest in Nickel Industries, for US$616 million.
Astra took further steps to deliver its commitment to transition away from
coal and into renewables through the acquisition by its subsidiary United
Tractors, in December 2023, of a 49.6% interest for US$52 million in Supreme
Energy Sriwijaya, which owns an operating geothermal project in South Sumatera
with a total existing capacity of 98 MW.
Astra progressed its healthcare strategy by investing an additional US$100
million in Halodoc, a leading digital health ecosystem platform in Indonesia,
bringing its ownership to 21%.
The Group's commitment to South East Asia was reinforced with Jardine Cycle
& Carriage's ('JC&C') investment of a further US$350 million in Truong
Hai Group Corporation ('THACO') in Vietnam, through subscription for a
five-year convertible bond. JC&C also increased its interest in
Refrigeration Engineering Electrical ('REE') from 33.6% to 34.9% through a
series of on-market purchases, for around US$14 million. In Singapore,
JC&C completed a sale and leaseback arrangement of its properties for
US$225 million.
The Company repurchased 4.4 million of its own shares for cancellation in 2023
for US$209 million, primarily in order to cancel the impact of scrip issues
during the year on overall share count and EPS. The Group also acquired 5.8
million shares in JC&C for US$136 million during the year.
These examples illustrate the focus of the Group on implementing its capital
allocation and portfolio strategy and on seizing opportunities when they arise
to optimise our portfolio and prepare the Group for future growth.
Driving Innovation and Operational Excellence
The Group continues to focus on delivering operational excellence in both its
existing and new businesses, and 2023 saw strong progress in driving greater
efficiency and productivity. Many of the Group's businesses progressed
improvement initiatives in the year, with HACTL increasing its capacity to
handle pallets by 30% by enhancing its use of robotics, as well as introducing
automation more generally to increase efficiency. DFI's transformation
programme also continued to deliver real improvements in operating metrics
across its banners. The Group is progressing its implementation of an
in-house Global Business Services function to support the Group's businesses,
while Mandarin Oriental has made encouraging progress in driving operational
efficiency through modernising its systems and processes required to support
evolving business needs.
The increased efficiencies which are being delivered across our businesses
help them demonstrate adaptability and agility in addressing the challenges
they face in delivering future growth.
The Group has continued to focus on driving innovation as a key strategic
priority. In November 2023, Astra launched Bank Saqu, a digital banking
service with a focus on small business owners and small entrepreneurs in
Indonesia. In the automotive space, Astra acquired the leading online used
car platform in Indonesia. This has been integrated with Astra's existing
used car business to create a preeminent position in both online/offline used
car sales as the market grows. In June 2023, JC&C announced a used car
and aftersales partnership with Carro, a leading online auto platform.
Mandarin Oriental is implementing its Guest Experience Programme, which will
greatly improve the group's ability to recognise, understand and engage
guests. A redesign of Fans of M.O. will enhance Mandarin Oriental's ability
to attract and retain guests. Mandarin Oriental is also establishing a
bespoke relationship management service, to build brand-level loyalty with
ultra-high net worth guests.
We continue to seek new inorganic growth opportunities in the digital economy,
emerging industries and new geographies. This is well illustrated by Astra's
partnership with Equinix, one of the world's largest digital infrastructure
companies, to develop data centres in Indonesia, as well as United Tractors'
acquisition of interests in Supreme Energy Sriwijaya, Nickel Industries and
Stargate.
Progressing Sustainability
Sustainability remains a key strategic priority for the Group. In 2023, we
continued to leverage and build on the work our Group companies are doing on
sustainability, to create an aligned, focussed approach which maximises the
impact Jardines has in its communities and on the environment, and enables us
to create real scale in what we do.
In Leading Climate Action, we continue to build momentum on our net-zero
strategy and our businesses have set decarbonisation targets to align with the
trajectory needed to limit global warming to 1.5(o)C. All our businesses
have also developed decarbonisation pathways to achieve their targets for
reducing Scope 1 and 2 emissions. We are working towards understanding and
reducing our Scope 3 emissions over time.
In Driving Responsible Consumption, most businesses have identified their
material waste streams and set individual waste reduction/diversion targets,
and we are looking for synergies and cooperation opportunities between our
businesses on circular solutions. We are also building up expertise to
understand our dependencies and impacts on biodiversity, so we can adopt
industry-leading practices for biodiversity management.
The Group continues to operate some businesses in Indonesia which are the
focus of stakeholders on environmental and biodiversity-related issues, but we
believe that our businesses are taking appropriate and extensive steps to
protect biodiversity and the environment, while at the same time supporting
the communities where they operate.
In relation to Shaping Social Inclusion, we are prioritising the promotion of
access to quality education and efforts to create greater awareness of mental
health.
Summary of Performance
The Group delivered a good performance in 2023, with a 5% increase (+7% at
Constant Exchange Rates ('CER')) in underlying profit to US$1,661 million, and
5% growth (+6% at CER) in underlying earnings per share to US$5.74.
Growth was primarily driven by strong results from Astra and significantly
improved contributions from DFI Retail and Mandarin Oriental. Growth continued
in the second half in all three businesses, but saw a marked slowdown as
market conditions weakened (and prior year comparables became tougher).
There was a significantly lower contribution in 2023 from Zhongsheng and
contributions from JC&C's other businesses (ex-Astra), Hongkong Land and
Jardine Pacific were also lower. Further details of the individual
businesses are provided below.
Net non-trading items were negative. The net non-trading losses in 2023
consisted primarily of the Group's fair value losses arising from the
revaluation of the Group's investment properties portfolio of US$1,066 million
and impairment of goodwill of US$172 million, offset by gain on sale of
property interests of US$105 million and the US$101 million share of
Zhongsheng's 2022 second half profit (resulting from a change in accounting
policy as explained under the Zhongsheng section below).
Cashflow remained strong both at Group and parent company level. The Group's
cash flows from operating activities for the year was US$4.6 billion and free
cashflow at parent company 1 (#_ftn1) was US$778 million, amply covering
the Company's external dividend payments by 1.7x. The Group's balance sheet
remains strong with gearing of 15%, slightly up from 13% at the end of 2022,
despite significant capex and enhanced external dividend payments at Astra
during the year.
The Group continued to focus during 2023 on making organic and strategic
investments to sustain the business and drive future growth. The Group's
organic capital expenditure in 2023, including expenditure on properties for
sale, was US$3.4 billion (2022: US$3.8 billion), and strategic investments
added a further US$1.8 billion (2022: US$1.5 billion) to capital expenditure
in 2023. Additional capital investment within the Group's associates and
joint ventures was over US$5.2 billion (2022: US$4.3 billion). The Group
continues to invest for the long-term and ensure that its businesses have the
resources to drive future growth.
These results demonstrate, once again, the value of our diversified portfolio,
enabling Jardines to produce a resilient profit and cash performance, despite
challenging conditions in a number of our sectors and markets.
The strong performance of the Group's businesses in Indonesia, together with
the challenges faced by our businesses in Hong Kong and on the Chinese
mainland, led to 56% of the Group's profit for the period coming from South
East Asia and 37% from China.
Individual Business Performance
Certain financial information of the Group's listed subsidiaries presented and
referred to below represents the financial information of each respective
business of the Group as reported within their own Annual Report ('100%
basis'). References to profit attributable to shareholders is therefore the
performance attributable to the shareholders of the respective business, which
we believe provides the reader a better understanding of the relevant listed
Group subsidiaries. The Jardine Matheson Group's attributable interest in each
business is disclosed, where relevant, within the segmental information in
Note 2 of the financial statements.
Jardine Pacific
The Jardine Pacific group of companies reported underlying net profit of
US$164 million, 10% lower than 2022. There were good performances by most
businesses, although the group's consumer businesses continued to be impacted
by weaker consumer sentiment in Hong Kong. The lower underlying net profit
was primarily due to the absence of government support and subsidies received
last year (US$28 million), as well as the net loss incurred by Jardine
Restaurants.
There was significant focus in the year across the group's businesses on
driving operational improvements, and the benefits are now starting to be seen
in better business performance.
Group Group Share of Underlying profit Change
Interest
% 2023 2022 %
US$m US$m
Analysis of Jardine Pacific's contribution:
Jardine Schindler 50 42 36 +16
JEC 100 57 53 +6
Gammon 50 45 39 +15
Transport Services 42-50 30 23 +32
Jardine Restaurants 100 (15) 19 n/a
Zung Fu Hong Kong 100 10 12 -18
Corporate and other interests (5) -
TOTAL 164 182 -10
Within Jardine Pacific's B2B businesses, Jardine Schindler produced a good
performance with higher sales, although gross margins were impacted by mix.
A stable contribution from the Existing Installation business helped offset
the challenging New Installation market. JEC performed satisfactorily and its
Hong Kong businesses reported solid performances. There were improvements
from its regional businesses in Thailand and Singapore, and its order book
remained strong.
Gammon reported higher profits, reflecting higher sales. Margins remained
under pressure due to the timing of projects, but good cost control and higher
financing income helped drive a better performance. Gammon's ongoing
operational improvement projects continue to generate encouraging results.
In Transport Services, there was a satisfactory performance from HACTL,
despite lower cargo volume being handled and higher financing costs. Jardine
Aviation reported a net profit for the year, benefitting from higher flight
volumes as the recovery in air travel continued, as well as improved pricing
from contract renewals. In March 2024, the group completed the sale of its 50%
stake in Jardine Aviation. HACTL continues to face labour shortages.
The group's consumer-facing businesses faced challenges. Jardine Restaurants
incurred a net loss, with macro challenges seen across all markets and the
absence of government support received in Hong Kong last year. In Hong Kong,
weekend traffic has been impacted by the trend of Hong Kong locals
increasingly visiting Shenzhen, and both Pizza Hut and KFC Hong Kong reported
losses. The Taiwan operations performed well despite intensified competition,
while the Vietnam businesses were impacted by the slow recovery in the
Vietnamese economy.
Zung Fu Hong Kong reported a lower profit year on year. Despite higher
Mercedes passenger cars deliveries and better After Sales performance, the
overall contribution from Mercedes fell, driven by lower margins and
commercial vehicles sales. Hyundai experienced supply constraints which
impacted the number of car deliveries and margin. The business also incurred
start-up costs from its newly acquired smart and Denza car distributorships.
Jardine Pacific reported a net non-trading gain of US$23 million in the year,
compared to a net non-trading loss of US$305 million in 2022. The 2022
non-trading loss included a decrease in the fair value of the group's
investment properties and impairment of the group's investments.
Zhongsheng
The Group received a substantially lower underlying contribution of US$139
million from its 21% interest in Zhongsheng in 2023 (2022 reported
contribution from Zhongsheng was US$263 million), as its new car business
faced a challenging market environment for new luxury vehicle sales volumes
and margins during the year, due to China's EV transition and intense auto
market competition.
As noted last year, we have changed our accounting for Zhongsheng's results in
2023 to reflect an estimate of their results for the second half of the year,
based on recent external analysts' forecasts. We believe this is a better
way to ensure the Group's financial statements reflect current progress and
developments at Zhongsheng, amid the fast-moving automotive market on the
Chinese mainland. This change has been adopted prospectively from 1st
January 2023 and, as such, the Group's share of Zhongsheng's estimated 2023
results is presented as underlying profit. Whereas, for the 2022
contribution from Zhongsheng, the Group reported its results with six months
in arrears. Had the current year accounting policy also applied in 2022, the
drop in underlying contribution from Zhengsheng recognised in 2023 would have
been approximately 40% smaller. The Group's share of its 2022 second half
results is included as a non-trading item, so as not to distort the current
year's underlying performance.
Despite the significant reduction in Zhongsheng's 2023 contribution and
continuing challenging market conditions, we believe that Zhongsheng has
strong market insight, deep relationships in the Chinese mainland premium
vehicle segment, and superb capabilities to execute its well-developed
strategy focussing on aftermarket auto services and used car business, which
will deliver long-term value for the Group.
Hongkong Land
Hongkong Land's underlying performance during the year was impacted by lower
profits from Development Properties, which offset improved results from
Investment Properties. Challenging market conditions impacted total
contributions from Development Properties business on the Chinese mainland.
Profits from the group's Investment Properties increased, mainly due to an
improved performance from its luxury retail and Singapore office portfolios,
offsetting reduced contributions from the Hong Kong office portfolio.
Underlying profit attributable to shareholders fell by 5% to US$734 million.
The loss attributable to shareholders was US$582 million after including net
non-cash losses of US$1,317 million arising primarily from the revaluation of
the group's Investment Properties portfolio. This compares to a profit
attributable to shareholders of US$203 million in 2022, which included net
non-cash losses of US$573 million from lower property revaluations. In both
years, the net negative revaluation movements principally arose in Hong Kong,
where there was a gradual decrease in valuations of the group's prime office
portfolio, primarily due to a decline in market rents and a mild expansion of
capitalisation rates.
Investment Properties
In Hong Kong, the Central office market remained weak, reflecting subdued
capital market sentiment, although the group's Central office portfolio
remained resilient and continued to outperform the overall market. At the
end of 2023, physical vacancy was 7.4%, while on a committed basis it was
6.8%, compared with 4.7% at the end of 2022. Vacancy was, however, well
below the 9.9% vacancy for the Central Grade A office market overall.
Average office rents were HK$106 per sq. ft. in 2023, decreasing from HK$111
per sq. ft. in the prior year due to negative rental reversions.
The group's LANDMARK retail portfolio saw a steady recovery in tenant sales
and footfall in 2023, following the relaxation of pandemic restrictions and
the reopening of Hong Kong's borders. Average retail rents increased from
HK$177 per sq. ft. in 2022 to HK$203 per sq. ft. in 2023, mainly due to mildly
positive rental reversions and the removal of temporary rent relief.
Vacancy, on both a physical and committed basis, remained low at 1.5%.
In Singapore, the group's office portfolio continued to perform well.
Average office rents increased to S$10.9 per sq. ft. in 2023, from S$10.6 per
sq. ft. in 2022. On a committed basis, vacancy in the group's office
portfolio remained low at 0.9%, compared with 2.2% at the end of 2022.
Contributions from our luxury retail portfolio in Beijing and Macau were
higher than the prior year, as footfall and retail sales improved following
the lifting of pandemic restrictions.
In Shanghai, work continued to progress well on the West Bund development, the
group's 43%-owned prime 1.1 million sq. m. mixed-use development. The
project's first phase, consisting of a luxury residential tower and serviced
apartments, completed construction at the end of 2023, with residential sales
to be launched in 2024. The rest of the West Bund development is targeted to
be completed in phases from 2024 to 2027.
The combined value of the group's prime Investment Properties portfolio
reduced by 5% in 2023.
Development Properties
As anticipated, the profit contribution from the group's Development
Properties business on the Chinese mainland was lower than the prior year, due
to a combination of lower sales, reduced profit margins and the impairment of
some residential for sale assets, in particular two residential projects in
Wuhan.
The group's attributable interest in contracted sales in 2023 increased to
US$1,530 million, from US$1,300 million in 2022. At 31st December 2023, the
group had an attributable interest of US$2,031 million in sold but
unrecognised contracted sales, compared with US$2,087 million at the end of
2022.
In Singapore, Development Properties profits recognised were largely in line
with the prior year. The group's attributable interest in contracted sales
was US$587 million, compared with US$615 million in the prior year. During
the year, the group launched sales for 638-unit Tembusu Grand - in which 59%
was sold or reserved as at the end of the year. There was solid sales
performance at the 638-unit Leedon Green and 407-unit Piccadilly Grand and
Galleria developments, which are both effectively sold out.
The group's joint venture projects in the rest of South East Asia performed
within expectations, producing a combined profit contribution in line with the
prior year.
DFI Retail Group
The past few years have been very challenging for DFI Retail, its customers,
colleagues and shareholders. Following the pandemic, DFI Retail is resetting
and aligning its business to a new 'Customer First, People Led, Shareholder
Driven' strategic framework, which is crucial to supporting its capital
allocation priorities and growth plans to improve performance over the coming
years.
The group reported underlying profit after tax of US$155 million for the full
year, a substantial improvement from the US$29 million reported in the prior
year, supported by strong growth in profitability across subsidiaries and
improved performance by associates. The group reported a non-trading loss of
US$123 million, predominantly due to the goodwill impairment in respect of the
Macau Food business and Giant Singapore, and foreign exchange losses
associated with the divestment of the Malaysian Grocery Retail business.
These losses were partially offset by gains from property divestments,
resulting in total reported profits of US$32 million.
Food
Sales revenue for the Food division in 2023 was US$3.3 billion. Excluding
the impact of the Malaysian Grocery Retail divestment, revenue for the
division was 5% lower. Underlying operating profit for the division was
US$45 million for the year, compared to US$91 million in the prior year.
Within North Asia, first half performance was impacted by the absence this
year of the pantry-stocking seen during the fifth wave of COVID in Hong Kong
in the equivalent period last year. North Asia's performance, however,
improved in the second half and profit during that period also increased
compared to the prior year. South East Asia Food sales performance was
adversely affected by intense competition and weakening consumer sentiment
caused by rising cost of living pressures.
Convenience
Total Convenience sales were US$2.4 billion, an increase of 8% compared to the
prior year. Like-for-like ('LFL') sales grew by 5% compared to the prior
year. Convenience underlying operating profit was US$88 million for the
year, an increase of 74% compared to the prior year.
Within Hong Kong, there were strong sales in the first half, with sales in the
second half broadly in line with the prior year, as results were impacted by
the rising frequency of outbound travel from Hong Kong residents, particularly
during weekends. Operating profit improved strongly due to a favourable
shift in mix away from cigarette sales, as well as ongoing strong cost
control.
7-Eleven South China benefitted from the Chinese economy reopening. Profit
increased significantly as a result of strong LFL sales growth, favourable
margin impact from product mix shift and ongoing strong cost control.
7-Eleven Singapore also reported strong sales growth, as the business
continued to benefit from the economy reopening and strong in-store execution,
with profit almost doubling, despite labour and utility cost pressures.
Health and Beauty
Health and Beauty division revenue increased by 21% to US$2.4 billion, with
LFL sales growing by over 20%. Underlying operating profit increased by 127%
to US$213 million for the year.
The Mannings business, particularly in Hong Kong, benefitted from the recovery
in the economy and increased tourism traffic. LFL sales were consistently
strong over the course of the year, which supported positive market share
momentum. Healthcare as a category performed strongly, representing over 50%
of Mannings' revenue. Mannings' profit increased significantly due to strong
sales growth, gross margin expansion, operating leverage and ongoing strong
cost control.
Home Furnishings
IKEA reported sales revenue of US$794 million, 5% behind the prior year.
Overall, LFL sales reduced by 7% in 2023, due to reduced home renovation and
furniture demand, as a result of a softening in property market sentiment.
Operating profit was US$19 million, US$27 million behind the prior year,
primarily as a result of the revenue shortfall.
Associates
Maxim's reported a strong recovery, as customers returned to dining out. Its
contribution to the group's underlying profit more than doubled relative to
the prior year, to US$79 million.
The group's share of Yonghui's underlying losses was US$36 million for the
year, compared to a US$80 million share of underlying losses in the prior
year. The reduction in losses was underpinned by an improvement in gross
margin and cost optimisation. Yonghui's sales performance in the year
continued to be impacted by challenging macroeconomic conditions and intense
competition.
Robinsons Retail's underlying profit contribution reduced from US$24 million
to US$15 million. Robinsons Retail continued to report strong sales and core
net earnings growth. For reporting purposes, however, DFI Retail's share of
Robinsons Retail's underlying profits was adversely impacted by foreign
exchange losses and higher net financing charges reported by Robinsons Retail.
Mandarin Oriental
In 2023, Mandarin Oriental's performance benefitted from consumers' robust
appetite for luxury leisure travel. The group continued to provide the
exceptional levels of service for which the brand is legendary and secured
record room rates. The business also continued to build occupancy, which
translated into substantial improvements in Revenue Per Available Room
('RevPAR') across almost all hotels.
Underlying profit increased to US$81 million, from US$8 million in 2022, with
underlying earnings per share at US¢6.41, compared with US¢0.60 in 2022.
Non-trading losses of US$446 million primarily comprised a non-cash decrease
in the valuation of the Causeway Bay site under development, resulting in a
loss attributable to shareholders of US$365 million.
Net debt fell to US$225 million at the end of 2023, from US$376 million at the
end of 2022. This reflected significantly higher operating cashflow from the
business, net of ongoing capital investment, as well as proceeds from
disposals. Gearing as a percentage of adjusted shareholders' funds was 5%,
compared to 8% at the end of 2022.
In 2023, the management business delivered strong operating performance, with
a 30% increase in hotel management fees and a 55% improvement in EBITDA.
Combined Total Revenue for hotels under management was US$1.9 billion in
2023, 21% above 2022. This increase was driven primarily by a 29% increase
in RevPAR, primarily due to a gradual recovery of occupancy across all
geographies, a continuation of high rates in Europe, Middle East and Africa,
and a solid rebound in rates in Asia. Food & Beverage ('F&B')
revenue increased by 18% year-on-year.
Mandarin Oriental's 13 owned properties reported a combined EBITDA 63% higher
than 2022, and most properties maintained or improved their earnings. There
were materially improved contributions by Hong Kong and Tokyo, both of which
were severely impacted by stringent travel restrictions in 2022. London and
Geneva also delivered considerably improved results, driven by better RevPAR
and F&B performance. There were lower earnings in 2023 from Singapore,
due to its closure for renovation and repositioning, and Miami.
In 2023, the group opened two new hotels and completed one rebranding,
expanding its portfolio to a total of 38 hotels and nine residences. Eight
new hotel and residences projects were announced during the year. These
projects will strengthen Mandarin Oriental's brand presence in a broader range
of destinations and enrich its customer proposition in existing locations.
At the end of 2023, the group's development pipeline had a total of 28
hotels and two standalone residences expected to open over the next five
years, with four of these expected in 2024.
As part of Mandarin Oriental's regular review of its asset portfolio, the
property in Jakarta was sold to Astra in June 2023, while retaining the
management contract. The group has also announced the sale of the Paris
hotel, while retaining a long-term hotel agreement. The Causeway Bay site in
Hong Kong, which is being redeveloped as a mixed-use office and retail
complex, remains on track to complete in the first half of 2025.
Jardine Cycle & Carriage
JC&C's underlying profit attributable to shareholders increased by 6% to
US$1,160 million, mainly supported by record results from Astra. After
accounting for non-trading items, the group's profit attributable to
shareholders was US$1,215 million, 64% higher than the previous year. The
non-trading items recorded in the year mainly comprised a US$81 million gain
from the sale and leaseback of properties under Cycle & Carriage
Singapore, partly offset by unrealised fair value losses of US$20 million
related to non-current investments.
Astra contributed US$1,019 million to the group's underlying profit, 12%
higher than the previous year, reflecting improved performances from most of
its businesses.
Direct Motor Interests contributed US$68 million, an increase of 8%, with
higher profits from Tunas Ridean in Indonesia and Cycle & Carriage Bintang
in Malaysia.
The contribution from the group's Other Strategic Interests was 2% down at
US$84 million, due to lower earnings reported by REE, offset by higher profits
in Siam City Cement.
THACO
THACO contributed US$36 million, 57% down from the previous year. This was
mainly due to a significantly lower automotive profit, reflecting the slowdown
of Vietnam's economy, weakened consumer sentiment and greater competitive
pressure. Unit sales were 28% down, with a market share decline from 23% to
21%. Losses from its agricultural operations were, however, lower than the
previous year.
The group's continued commitment to Vietnam and THACO was demonstrated by
JC&C's investment of a further US$350 million in THACO through its
subscription for a five-year convertible bond.
Astra
Astra's consolidated revenue of US$20.6 billion and underlying net profit of
US$2,175 million under IFRS, were 3% and 9% higher than the previous year,
respectively. This earnings growth reflected improved performances from most
of the group's businesses, especially the automotive and financial services
divisions.
The following performance review on Astra's businesses is based on results
prepared under Indonesian accounting standards.
Under Indonesian accounting standards, Astra reported a record net income of
Rp33.8 trillion, equivalent to US$2.2 billion, 17% higher than 2022 in its
reporting currency. Excluding the fair value loss on the group's investments
in GoTo and Hermina, Astra's net profit of Rp34.0 trillion, or US$2.2 billion,
was 12% higher than the same period last year in its reporting currency.
Automotive
Net income increased by 18% to US$750 million, reflecting higher sales in the
motorcycle and components businesses.
The wholesale car market decreased by 4% to 1.0 million units in 2023.
Astra's car sales in 2023 were 2% lower, but market share increased from 55%
to 56%. The wholesale motorcycle market grew by 19% in 2023. Astra Honda
Motor's sales increased by 22% compared with the prior year and its market
share increased from 77% to 78%.
The group's 80%-owned components business, Astra Otoparts, reported a 39%
increase in net income to US$121 million in 2023, mainly due to improved
operating margin and higher contributions from its associates.
Financial Services
Net income increased by 30% to US$516 million in 2023, primarily due to higher
contributions from its consumer finance businesses.
The group's consumer finance and heavy equipment-focussed finance businesses
saw a 15% and 8% increase, respectively, in new amounts financed to US$7.7
billion and US$0.7 billion, respectively. The net income contribution from the
heavy equipment-focussed finance businesses increased significantly by 75% to
US$12 million, mainly due to a larger loan portfolio.
General insurance company Asuransi Astra Buana reported a 14% increase in net
income to US$92 million, mainly due to higher insurance revenue. The group's
life insurance company, Asuransi Jiwa Astra, recorded a 2% increase in gross
written premiums to US$401 million.
Heavy Equipment, Mining, Construction and Energy
Net income was stable at US$832 million, with improved performances from
construction machinery and mining contracting offsetting lower contributions
from the group's coal and gold mining businesses.
United Tractors reported a 2% decrease in net income to US$1,354 million.
Komatsu heavy equipment sales decreased by 8%, while revenues from the parts
and service businesses were higher.
General contractor Acset Indonusa, 87.7%-owned by United Tractors, reported a
lower net loss of US$18 million, compared with a net loss of US$30 million in
the previous year.
Agribusiness
Net income decreased by 39% to US$55 million, largely due to lower selling
prices of crude palm oil.
Infrastructure and Logistics
Net income increased by 85% to US$64 million, due to improved performance in
its toll road, transportation solutions and logistics businesses.
The group has interests in 396km of operational toll roads along the
Trans-Java network and in the Jakarta Outer Ring Road. The group's toll road
concessions saw 7% higher daily toll revenue during the year.
Serasi Autoraya's net income increased by 26% to US$14 million, mainly due to
higher contributions from transportation solutions and logistics services,
with vehicles under contract relatively stable at 25,800 units, which more
than offset a lower contribution from used car earnings.
Information Technology
The group's information technology division, represented by 76.9%-owned Astra
Graphia, reported a 45% increase in net income to US$7 million, primarily due
to improved operating margin.
Property
The group's property division saw a 10% increase in net income to US$9
million, mainly due to an improvement in occupancy at Menara Astra.
Outlook
There was a very solid performance overall by the Group in 2023, exceeding
pre-pandemic profit levels despite increasingly challenging conditions as the
year progressed.
The Group enters 2024 facing continued market challenges in key segments in
China and Vietnam, as well as lower market prices for a number of Astra's key
commodity outputs in Indonesia.
We remain confident, however, in our long-term strategy across our core
markets in Asia and will continue to focus on our strategic priorities in
order to deliver growth and long-term value, benefitting from our diversified
portfolio.
John Witt
Group Managing Director
Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2023
2023 2022
Underlying Non- Underlying Non-
business trading Total business trading
performance items US$m performance items Total
US$m US$m US$m US$m US$m
restated restated
Revenue (note 2) 36,049 - 36,049 37,496 - 37,496
Net operating costs (note 3) (31,760) (75) (31,835) (33,370) (363) (33,733)
Change in fair value of investment properties - (1,779) (1,779) - (930) (930)
Operating profit 4,289 (1,854) 2,435 4,126 (1,293) 2,833
Net financing charges
- financing charges (769) - (769) (625) - (625)
- financing income 253 - 253 197 - 197
(516) - (516) (428) - (428)
Share of results of associates and joint ventures (note 4)
- before change in fair value of investment properties 1,261 107 1,368 1,232 (411) 821
- change in fair value of investment properties - 18 18 - (3) (3)
1,261 125 1,386 1,232 (414) 818
Profit before tax 5,034 (1,729) 3,305 4,930 (1,707) 3,223
Tax (note 5) (932) (11) (943) (964) 4 (960)
Profit after tax 4,102 (1,740) 2,362 3,966 (1,703) 2,263
Attributable to:
Shareholders of the Company (notes 6 & 7) 1,661 (975) 686 1,584 (1,230) 354
Non-controlling interests 2,441 (765) 1,676 2,382 (473) 1,909
4,102 (1,740) 2,362 3,966 (1,703) 2,263
US$ US$ US$ US$
Earnings per share (note 6)
- basic 5.74 2.37 5.49 1.22
- diluted 5.73 2.37 5.49 1.22
Jardine Matheson Holdings Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2023
2023 2022
US$m US$m
Profit for the year 2,362 2,263
Other comprehensive income/(expense)
Items that will not be reclassified to profit and loss:
Net exchange translation gain/(loss) arising during 88 (761)
the year
Remeasurements of defined benefit plans (18) 37
Net revaluation surplus before transfer to
investment properties
- tangible assets 1 -
- right-of-use assets 63 39
Tax on items that will not be reclassified 4 (7)
138 (692)
Share of other comprehensive income/(expense) of 24 (467)
associates and joint ventures
162 (1,159)
Items that may be reclassified subsequently to profit
and loss:
Net exchange translation differences
- net gain/(loss) arising during the year 29 (526)
- transfer to profit and loss 111 4
140 (522)
Revaluation of other investments at fair value through
other comprehensive income
- net loss arising during the year (12) (20)
- transfer to profit and loss - (2)
(12) (22)
Cash flow hedges
- net (loss)/gain arising during the year (40) 92
- transfer to profit and loss (36) (7)
(76) 85
Tax relating to items that may be reclassified 9 (11)
Share of other comprehensive expense of (78) (487)
associates and joint ventures
(17) (957)
Other comprehensive income/(expense) for the year, 145 (2,116)
net of tax
Total comprehensive income for the year 2,507 147
Attributable to:
Shareholders of the Company 729 (660)
Non-controlling interests 1,778 807
2,507 147
Jardine Matheson Holdings Limited
Consolidated Balance Sheet
at 31st December 2023
At 31st December
2023 US$m 2022 US$m
restated
Assets
Intangible assets 2,274 2,485
Tangible assets 6,585 5,853
Right-of-use assets 4,080 4,184
Investment properties 30,166 31,813
Bearer plants 481 465
Associates and joint ventures 18,473 17,856
Other investments 3,329 2,801
Non-current debtors 3,833 3,269
Deferred tax assets 644 575
Pension assets 8 17
Non-current assets 69,873 69,318
Properties for sale 3,480 3,311
Stocks and work in progress 3,664 3,513
Current debtors 6,691 6,799
Current investments 55 18
Current tax assets 159 156
Cash and bank balances
- non-financial services companies 4,519 5,526
- financial services companies 361 372
4,880 5,898
18,929 19,695
Asset classified as held for sale 380 65
Current assets 19,309 19,760
Total assets 89,182 89,078
At 31st December
2023 US$m 2022 US$m
restated
Equity
Share capital 72 73
Share premium and capital reserves 22 26
Revenue and other reserves 28,916 28,751
Shareholders' funds 29,010 28,850
Non-controlling interests 26,921 27,410
Total equity 55,931 56,260
Liabilities
Long-term borrowings
- non-financial services companies 9,486 10,541
- financial services companies 1,647 1,532
11,133 12,073
Non-current lease liabilities 2,966 2,951
Deferred tax liabilities 862 791
Pension liabilities 370 368
Non-current creditors 268 200
Non-current provisions 359 336
Non-current liabilities 15,958 16,719
Current borrowings
- non-financial services companies 3,419 2,500
- financial services companies 2,094 1,663
5,513 4,163
Current lease liabilities 754 772
Current tax liabilities 471 671
Current creditors 10,308 10,318
Current provisions 203 175
17,249 16,099
Liabilities directly associated with assets 44 -
classified as held for sale
Current liabilities 17,293 16,099
Total liabilities 33,251 32,818
Total equity and liabilities 89,182 89,078
Jardine Matheson Holdings Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2023
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
2023
At 1st January
- as previously reported 73 - 26 28,887 2,272 55 (2,487) - 28,826 27,371 56,197
- change in accounting policies (note 1) - - - 24 - - - - 24 39 63
- as restated 73 - 26 28,911 2,272 55 (2,487) - 28,850 27,410 56,260
Total comprehensive income - - - 662 51 (44) 60 - 729 1,778 2,507
Dividends paid by the Company (note 8) - - - (637) - - - - (637) - (637)
Dividends paid to non-controlling interests - - - - - - - - - (2,037) (2,037)
Unclaimed dividends forfeited - - - 2 - - - - 2 1 3
Employee share option schemes - - 10 - - - - - 10 3 13
Scrip issued in lieu of dividends - (1) - 183 - - - - 182 - 182
Repurchase of shares (1) - - (208) - - - - (209) - (209)
Capital contribution from non-controlling interests - - - - - - - - - 41 41
Share purchased for a share-based incentive plan in a subsidiary - - - (7) - - - - (7) (2) (9)
Subsidiaries acquired - - - - - - - - - 37 37
Subsidiaries disposed of - - - - - - - - - 5 5
Change in interests in subsidiaries - - - 75 - - - - 75 (315) (240)
Change in interests in associates and joint ventures - - - 15 - - - - 15 - 15
Transfer - 1 (14) 13 - - - - - - -
At 31st December 72 - 22 29,009 2,323 11 (2,427) - 29,010 26,921 55,931
2022
At 1st January
- as previously reported 179 - 25 34,926 2,242 (18) (1,350) (6,223) 29,781 28,587 58,368
- change in accounting policies (note 1) - - - 24 - - - - 24 39 63
- as restated 179 - 25 34,950 2,242 (18) (1,350) (6,223) 29,805 28,626 58,431
Total comprehensive income - - - 374 30 73 (1,137) - (660) 807 147
Dividends paid by the Company (note 8) - - - (607) - - - - (607) - (607)
Dividends paid to non-controlling interests - - - - - - - - - (994) (994)
Unclaimed dividends forfeited - - - 2 - - - - 2 - 2
Issue of shares - 1 - - - - - - 1 - 1
Employee share option schemes - - 4 - - - - - 4 2 6
Scrip issued in lieu of dividends 1 (1) - 184 - - - - 184 - 184
Repurchase of shares (1) (2) - (168) - - - - (171) - (171)
Reduction of capital (106) (1) - (6,116) - - - 6,223 - - -
Capital contribution from non-controlling interests - - - - - - - - - 4 4
Share purchased for a share-based incentive plan in a subsidiary - - - (15) - - - - (15) (5) (20)
Change in interests in subsidiaries - - - 322 - - - - 322 (1,030) (708)
Change in interests in associates and joint ventures - - - (15) - - - - (15) - (15)
Transfer - 3 (3) - - - - - - - -
At 31st December 73 - 26 28,911 2,272 55 (2,487) - 28,850 27,410 56,260
At the Company's annual general meeting on 5th May 2022, shareholders approved
the cancellation of the 59% shareholding in the Company held by its
subsidiaries by way of a reduction of capital in the Company. The capital
reduction, which was effective on 18th May 2022, constituted the final stage
in the Group's simplification of its parent company structure that commenced
in 2021.
Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2023
2023 2022
US$m US$m
Operating activities
Cash generated from operations 5,549 5,287
Interest received 217 177
Interest and other financing charges paid (758) (564)
Tax paid (1,307) (1,006)
3,701 3,894
Dividends from associates and joint ventures 883 931
Cash flows from operating activities 4,584 4,825
Investing activities
Purchase of subsidiaries (note 9(a)) (378) (19)
Purchase of associates and joint ventures (note 9(b)) (1,166) (658)
Purchase of other investments (note 9(c)) (671) (645)
Purchase of intangible assets (114) (154)
Purchase of tangible assets (1,667) (1,014)
Additions to leasehold land under right-of-use assets (31) (53)
Additions to investment properties (151) (123)
Additions to bearer plants (35) (39)
Advances to associates and joint ventures (note 9(d)) (455) (802)
Repayments from associates and joint ventures (note 9(e)) 1,252 416
Sale of subsidiaries (note 9(f)) 365 -
Sale of associates and joint ventures (note 9(g)) 134 30
Sale of other investments (note 9(h)) 161 228
Sale of intangible assets - 3
Sale of tangible assets (note 9 (i)) 364 230
Sale of right-of-use assets 38 7
Cash flows from investing activities (2,354) (2,593)
Financing activities
Issue of shares - 1
Capital contribution from non-controlling interests 41 4
Acquisition of the remaining interest in Jardine Strategic (5) (21)
Change in interests in other subsidiaries (note 9(j)) (240) (708)
Purchase of own shares (209) (173)
Purchase of shares for a share-based incentive plan in (9) (20)
a subsidiary
Drawdown of borrowings 9,873 9,047
Repayment of borrowings (9,475) (9,113)
Principal elements of lease payments (856) (875)
Dividends paid by the Company (455) (423)
Dividends paid to non-controlling interests (2,037) (994)
Cash flows from financing activities (3,372) (3,275)
Net decrease in cash and cash equivalents (1,142) (1,043)
Cash and cash equivalents at 1st January 5,879 7,278
Effect of exchange rate changes 59 (356)
Cash and cash equivalents at 31st December 4,796 5,879
Jardine Matheson Holdings Limited
Analysis of Profit Contribution
for the year ended 31st December 2023
2023 2022
US$m US$m
Reportable segments
Jardine Pacific 164 182
Jardine Motor Interests 139 299
Hongkong Land 389 405
DFI Retail 120 22
Mandarin Oriental 65 6
Jardine Cycle & Carriage 102 135
Astra 786 691
1,765 1,740
Corporate and other interests (104) (156)
Underlying profit attributable to shareholders* 1,661 1,584
Decrease in fair value of investment properties (1,066) (604)
Other non-trading items 91 (626)
Profit attributable to shareholders 686 354
Analysis of Jardine Pacific's contribution
Jardine Schindler 42 36
JEC 57 53
Gammon 45 39
Transport Services 30 23
Jardine Restaurants (15) 19
Zung Fu Hong Kong 10 12
Corporate and other interests (5) -
164 182
Analysis of Jardine Motor Interests' contribution
Zhongsheng 139 263
Jardine Motors Group United Kingdom 1 35
Corporate (1) 1
139 299
* Underlying profit attributable to shareholders is the measure of profit
adopted by the Group in accordance with IFRS 8 'Operating Segments'.
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 2023 which have been prepared
in conformity with International Financial Reporting Standards ('IFRS
Accounting Standards'), including International Accounting Standards ('IAS')
and Interpretations as issued by the International Accounting Standards Board
('IASB').
The Group has adopted the following standard and amendments for the annual
reporting period commencing 1st January 2023.
IFRS 17 'Insurance Contracts'
(effective from 1st January 2023)
The standard covers recognition, measurement, presentation and disclosure for
insurance contracts and is applicable to the Group's insurance businesses in
Indonesia. Prior to the adoption of IFRS 17, profits were recognised in the
profit and loss on initial recognition of certain insurance contracts. Under
IFRS 17, all profits are recognised in the profit and loss over the life of
the contracts as insurance services are provided. The adoption of IFRS 17
resulted in certain restatements to the Group's financial statements.
The effect of adopting IFRS 17 on the consolidated profit and loss account for
the year ended 31st December 2022 was as follows:
(a) On the consolidated profit and loss account
Adjustment upon adoption of IFRS 17 Increase/ (decrease)
As previously reported Restated
For the year ended 31st December 2022 US$m US$m US$m
Revenue 37,724 (228) 37,496
Net operating costs (33,961) 228 (33,733)
Change in fair value of investment
properties
(930) - (930)
Operating profit 2,833 - 2,833
(b) On the consolidated balance sheet
Adjustment upon adoption of IFRS 17 Increase/ (decrease)
As previously reported Restated
At 31st December 2022 US$m US$m US$m
Assets
Intangible assets 2,528 (43) 2,485
Non-current debtors 3,222 47 3,269
Debtors 6,873 (74) 6,799
Total assets 89,148 (70) 89,078
Equity
Revenue and other reserves 28,727 24 28,751
Non-controlling interests 27,371 39 27,410
Total equity 56,197 63 56,260
Liabilities
Non-current creditors 191 9 200
Current tax liabilities 672 (1) 671
Current creditors 10,459 (141) 10,318
Total liabilities 32,951 (133) 32,818
Total equity and liabilities 89,148 (70) 89,078
The consolidated balance sheet on 1st January 2022 has not been presented, as
the impact of adoption of IFRS 17 is not significant.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
(effective from 1st January 2023)
The amendments require entities to disclose material rather than significant
accounting policies. The amendments define what is 'material accounting
policy information' and explain how to identify when accounting policy
information is material. Material accounting policy information is
information that, when considered together with other information included in
an entity's financial statements, can reasonably be expected to influence
decisions that the primary users of general purpose financial statements make
on the basis of those financial statements. IASB further clarifies that
immaterial accounting policy information does not need to be disclosed. If
it is disclosed, it should not obscure material accounting information. To
support this amendment, the IASB also amended IFRS Practice Statement 2 Making
Materiality Judgements to provide guidance on how to apply the concept of
materiality to accounting policy disclosures.
The material accounting policies following the adoption of IAS 1 are included
in note 40 to the financial statements.
Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
(effective from 1st January 2023)
The amendment requires deferred tax to be recognised on transactions that, on
initial recognition, give rise to equal amounts of taxable and deductible
temporary differences. They typically apply to transactions such as leases of
lessees and decommissioning obligations and require the recognition of
additional deferred tax assets and liabilities. On adoption of the
amendment, the deferred tax assets and liabilities had been restated in the
notes to the financial statements with no impact on the balance sheet.
Amendment to IAS 12 - International Tax Reform - Pillar Two Model Rules
(effective for annual reporting period commencing on or after 1st January
2023)
The amendment provides a temporary mandatory exception from deferred tax
accounting in respect of Pillar Two income taxes and certain additional
disclosure requirements. The Group is within the scope of the OECD Pillar
Two model rules, and has applied the amendment from 1st January 2023.
Pillar Two legislation has been enacted or substantially enacted in certain
jurisdictions in which the Group operates. The legislation will be effective
for the Group's annual reporting period commencing 1st January 2024. Since
the Pillar Two legislation was not effective at 31st December 2023, the Group
has no related current tax exposure.
The Group is in scope of the enacted or substantively enacted legislation and
has performed an assessment of the Group's potential exposure to Pillar Two
income taxes when the legislation comes into effect. The assessment of the
potential exposure to Pillar Two income taxes is based on the latest financial
information for the year ended 31st December 2023 of the constituent entities
in the Group. Based on the assessment, the effective tax rates in most of
the jurisdictions in which the Group operates are above 15%. However, there
are a limited number of jurisdictions where the effective tax rate is slightly
below or close to 15%. The Group does not expect a material exposure to
Pillar Two income taxes in those jurisdictions.
There are no other amendments which are effective in 2023 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
2023 2022
US$m US$m
By business:
Jardine Pacific 2,135 2,079
Jardine Motor Interests 165 2,044
Hongkong Land 1,844 2,244
DFI Retail 9,170 9,174
Mandarin Oriental 558 454
Jardine Cycle & Carriage 1,629 1,589
Astra 20,606 19,977
Intersegment transactions and other (58) (65)
36,049 37,496
3. Net Operating Costs
2023 2022
US$m US$m
Cost of sales (25,775) (27,310)
Other operating income 634 493
Selling and distribution costs (3,918) (4,017)
Administration expenses (2,385) (2,296)
Other operating expenses (391) (603)
(31,835) (33,733)
Net operating costs included the following gains/(losses) from non-trading
items:
Change in fair value of other investments 11 (395)
Impairment of goodwill (226) (6)
Impairment of other assets - (3)
Sale and closure of businesses 36 (15)
Sale of a hotel property - 41
Sale of property interests 123 31
Restructuring of businesses (13) (7)
Other (6) (9)
(75) (363)
4. Share of Results of Associates and Joint Ventures
2023 2022
US$m US$m
By business:
Jardine Pacific 130 12
Jardine Motor Interests 238 263
Hongkong Land 253 193
DFI Retail 53 (212)
Mandarin Oriental (1) 10
Jardine Cycle & Carriage 122 45
Astra 611 531
Corporate and other interests (20) (24)
1,386 818
Share of results of associates and joint ventures included the following
gains/(losses) from non-trading items:
Change in fair value of investment properties 18 (3)
Change in fair value of other investments 11 (26)
Impairment
- investment in Robinsons Retail - (171)
- investment in Siam Cement - (114)
- other - (100)
- (385)
Share of Zhongsheng's results from 1st July 2022 to 101 -
31st December 2022 (note 7)
Other (5) -
125 (414)
Results are shown after tax and non-controlling interests in the associates
and joint ventures.
5. Tax
2023 2022
US$m US$m
Tax charged to profit and loss is analysed as follows:
Current tax (1,043) (1,022)
Deferred tax 100 62
(943) (960)
China (160) (139)
South East Asia (761) (793)
United Kingdom (2) (6)
Rest of the world (20) (22)
(943) (960)
Tax relating to components of other comprehensive income is analysed as
follows:
Remeasurements of defined benefit plans 4 (7)
Cash flow hedges 9 (11)
13 (18)
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$282 million
(2022: US$490 million) is included in share of results of associates and
joint ventures. Share of tax credit of US$1 million (2022: tax charge of
US$30 million) is included in other comprehensive income of associates and
joint ventures.
6. Earnings per Share
Basic earnings per share are calculated on profit attributable to shareholders
of US$686 million (2022: US$354 million) and on the weighted average number
of 290 million (2022: 289 million) shares in issue during the year.
Diluted earnings per share are calculated on profit attributable to
shareholders of US$686 million (2022: US$354 million), which is after
adjusting for the effects of the conversion of dilutive potential ordinary
shares of subsidiaries, associates or joint ventures, and on the weighted
average number of 290 million (2022: 289 million) shares in issue during the
year.
The weighted average number of shares is arrived at as follows:
Ordinary shares
in millions
2023 2022
Weighted average number of shares in issue 290 467
Company's share of shares held by subsidiaries - (178)
Weighted average number of shares for basis and diluted earnings per share 290 289
calculation
There was no shares deemed to be issued for no consideration for the
calculation of diluted earnings per share under the Senior Share Executive
Incentive Schemes for the year ended 31st December 2023 (2022: 721 shares).
Additional basic and diluted earnings per share are also calculated based on
underlying profit attributable to shareholders. A reconciliation of earnings
is set out below:
2023 2022
US$m Basic Diluted earnings US$m Basic Diluted
earnings per share earnings per share earnings per share US$
per share US$ US$
US$
Profit attributable to shareholders 686 2.37 2.37 354 1.22 1.22
Non-trading items (note 7) 975 1,230
Underlying profit attributable to shareholders 1,661 5.74 5.73 1,584 5.49 5.49
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 and debt 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.
2023 2022
Profit before tax Attributable to shareholders Profit before tax Attributable to shareholders
US$m US$m US$m US$m
By business:
Jardine Pacific 25 23 (305) (305)
Jardine Motor Interests 165 165 (22) (30)
Hongkong Land (1,290) (701) (646) (335)
DFI Retail (201) (156) (143) (112)
Mandarin Oriental (489) (394) (64) (46)
Jardine Cycle & Carriage 55 54 (308) (234)
Astra (40) (12) (88) (37)
Corporate and other interests 46 46 (131) (131)
(1,729) (975) (1,707) (1,230)
An analysis of non-trading items is set out below:
Change in fair value of investment properties
- Hongkong Land (1,307) (710) (646) (335)
- other (454) (356) (287) (269)
(1,761) (1,066) (933) (604)
Change in fair value of other investments 22 35 (421) (327)
Impairment of goodwill (226) (172) (6) (5)
Impairment of associates - - (385) (320)
Impairment of other assets - - (3) (2)
Share of Zhongsheng's results from 1st July 2022 to 31st December 2022 101 101 - -
Sale and closure of businesses 35 44 (15) (24)
Sale of hotel properties - (2) 41 37
Sale of property interests 123 105 31 23
Restructuring of businesses (15) (11) (7) (5)
Other (8) (9) (9) (3)
(1,729) (975) (1,707) (1,230)
Zhongsheng's annual results have historically been reported after the Group's
results announcement. In previous years, the Group recognised its 21% share
of Zhongsheng's results based on publicly available reported results as at the
Group's reporting date. Hence, Zhongsheng's contribution to the Group's 2022
results represented its share of Zhongsheng's results for the period from 1st
July 2021 to 30th June 2022. From 2023, however, the Group has determined
that a better representation of Zhongsheng's current performance would be
given using management's estimate of its share of Zhongsheng's results on a
calendar year basis, based on an average of recent external analyst estimates.
This change has been adopted prospectively from 1st January 2023 as a change
in estimate such that the Group's 2023 results included its share of
Zhongsheng's results for an eighteen-month period from 1st July 2022 to 31st
December 2023. The Group's share of Zhongsheng's results for the year ended
31st December 2023 are presented as underlying profit, and the results for 1st
July 2022 to 31st December 2022 have been presented as a non-trading item so
as not to distort the current year's underlying performance.
8. Dividends
2023 2022
US$m US$m
Final dividend in respect of 2022 of US$1.60 463 1,114
(2021: US$1.56) per share
Interim dividend in respect of 2023 of US$0.60 174 159
(2022: US$0.55) per share
637 1,273
Company's share of dividends paid on the shares held by subsidiaries - (666)
637 607
A final dividend in respect of 2023 of US$1.65 (2022: US$1.60) per share
amounting to a total of US$477 million (2022: US$463 million) is proposed by
the Board. The dividend proposed will not be accounted for until it has been
approved at the 2024 Annual General Meeting and will be accounted for as an
appropriation of revenue reserves in the year ending 31st December 2024.
Final dividend in respect of 2022 of US$463 million was charged to reserves in
the year ended 31st December 2023.
9. Notes to Consolidated Cash Flow Statement
(a) Purchase of subsidiaries
2023
Fair value
US$m
Non-current assets (526)
Current assets (371)
Non-current liabilities 137
Current liabilities 164
Non-controlling interests 38
Fair value of identifiable net assets acquired (558)
Goodwill (45)
Gain on bargain purchase 32
Total consideration (571)
Carrying value of associates and joint ventures 102
Cash and cash equivalents of subsidiaries acquired 91
Net cash outflow (378)
For the subsidiaries acquired during 2023, the fair values of the identifiable
assets and liabilities at the acquisition dates are provisional and will be
finalised within one year after the acquisition dates.
Net cash outflow for purchase of subsidiaries in 2023 included a total of
US$285 million for Astra's acquisition of 67% of PT Anugerah Surya Pasific
Resources ('ASPR'), 70% of PT Stargate Pasific Resources ('SPR') and 70% of PT
Stargate Mineral Asia ('SMA'), which engage in nickel mining and processing in
Indonesia. ASPR has 30% interest in each of SPR and SMA, thus the Group has
direct and indirect attributable interest totalling 90% in each of SPR and
SMA. In addition, Astra acquired a 100% interest in PT Tokobagus, a company
operating a leading classifieds platform in Indonesia under the OLX brand, for
US$63 million.
Goodwill in 2023 mainly arose from the acquisition of PT Tokobagus, which
provides synergy with the Group's existing automotive business creating a
leading used car omnichannel platform and further expand the automotive value
chain. The goodwill is not expected to be deductible for tax purposes.
Revenue and profit after tax since acquisition in respect of subsidiaries
acquired during the year amounted to US$43 million and US$7 million,
respectively. Had the acquisitions occurred on 1st January 2023,
consolidated revenue and profit after tax for the year ended 31st December
2023 would have been US$36,091 million and US$2,345 million, respectively.
(b) Purchase of associates and joint ventures in 2023 mainly included
US$287 million for Hongkong Land's investment in the Chinese mainland; US$14
million for Jardine Cycle & Carriage's additional interest in
Refrigeration Electrical Engineering Corporation; US$616 million, US$53
million, US$25 million and US$99 million for Astra's acquisition of a 20%
interest in Nickel Industries, a 49.6% interest in PT Supreme Energy
Sriwijaya, a 25% interest in PT Equinix Indonesia JKT and an additional 14%
interest in Halodoc (after which became a 21%-held associate), respectively.
Purchase in 2022 mainly included US$213 million for Hongkong Land's
investments in the Chinese mainland; US$34 million for Jardine Cycle &
Carriage's additional interest in Refrigeration Electrical Engineering
Corporation; US$260 million, US$44 million and US$41 million for Astra's
investments in PT Bank Jasa Jakarta, toll road concession business and PT
Mobilitas Digital Indonesia, respectively.
(c) Purchase of other investments in 2023 mainly included US$357 million
for Jardine Cycle & Carriage's subscription to THACO's convertible bonds
and US$285 million for Astra acquisition of securities in relation to its
financial services businesses.
Purchase in 2022 mainly included Astra's acquisition of securities in relation
to its financial services businesses of US$327 million, investments in
healthcare services of US$99 million, an online consumer credit platform of
US$31 million and a technology-based logistics startup of US$14 million; and
Corporate's investment in limited partnership investments funds for
US$151 million.
(d) Advances to associates and joint ventures in 2023 included Hongkong
Land's advances to its property joint ventures of US$434 million and Mandarin
Oriental's advance to its associate hotel of US$20 million.
Advances to associates and joint ventures in 2022 mainly included Hongkong
Land's advances to its property joint ventures.
(e) Repayments from associates and joint ventures in 2023 mainly included
Hongkong Land's repayments from its property joint ventures of US$1,184
million and Mandarin Oriental's repayments from its associate and joint
venture hotels of US$67 million.
Repayments from associates and joint ventures in 2022 mainly included
repayments from Hongkong Land's property joint ventures.
(f) Sale of subsidiaries
2023
US$m
Non-current assets 441
Current assets 467
Non-current assets held for sale 50
Non-current liabilities (232)
Current liabilities (466)
Non-controlling interests (3)
Net assets 257
Cumulative exchange translation losses 118
Profit on disposal 7
Transaction costs and other payable 47
Sales proceeds 429
Cash and cash equivalents of subsidiaries disposed of (64)
Net cash inflow 365
Net cash inflow for sale of subsidiaries in 2023 comprised US$359 million
inflow from the Group's sale of its automotive dealership business in the
United Kingdom and US$29 million inflow from Hongkong Land's sale of a
property interest in Vietnam; offset by US$23 million cash outflow from DFI
Retail's divestment of its Malaysia grocery retail business.
(g) Sale of associates and joint ventures included US$126 million for
Jardine Pacific's sale of Greatview Aseptic Packaging.
(h) Sale of other investments in 2023 and 2022 mainly included Astra's
sale of securities in relation to its financial services businesses.
(i) Sale of tangible assets in 2023 included US$106 million for DFI
Retail's sale and sale and leaseback of properties in Singapore, Malaysia and
Indonesia; and US$225 million for Jardine Cycle & Carriage's sale of its
properties in Singapore under a sale and leaseback arrangement.
Sale in 2022 included US$131 million for Mandarin Oriental's sale of a hotel
property.
(j) Change in interests in subsidiaries
2023 2022
US$m US$m
Increase in attributable interests
- Hongkong Land (83) (352)
- Jardine Cycle & Carriage (136) (130)
- Mandarin Oriental (18) (1)
- other (3) (225)
(240) (708)
Increase in 2022 included US$214 million for repurchase of shares in Astra's
subsidiary, United Tractors, which consequentially increased Astra's interest
from 59.5% to 61.1%.
10. Capital Commitments and Contingent Liabilities
Total capital commitments at 31st December 2023 amounted to US$2,283 million
(2022: US$2,500 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 ongoing. It is anticipated that
the court appraisal process will not be concluded for at least a further 12
months and will likely extend further. The Board believes that the US$33 per
share that was paid represented fair value to Jardine Strategic minority
shareholders and is of the opinion that no provision is required in relation
to these claims.
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed outstanding claims
and taking into account legal advice received, the Directors are of the
opinion that adequate provisions have been made in the financial statements.
11. Related Party Transactions
In the normal course of business the Group undertakes a variety of
transactions with certain of its associates and joint ventures.
2023 2022
US$m US$m
Sales to associates and joint ventures
- motor vehicles and spare parts 810 763
- coal 977 640
- crude palm oil 440 416
2,227 1,819
Purchase from associates and joint ventures
- motor vehicles and spare parts 6,484 6,142
- ready-to-eat products 47 42
6,531 6,184
Services received from associates and joint ventures
- point-of-sale system implementation and consultancy services 17 13
The Group manages six (2022: six) associate and joint venture hotels.
Management fees received by the Group in 2023 from these managed hotels
amounted to US$14 million (2022: US$15 million).
The Group has engaged one of its joint ventures in the construction business
for the redevelopment of a Group's commercial property in Hong Kong. The
value of works completed amounted to US$60 million as of 31st December 2023
(2022: US$14 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 the Group's systems of 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 2023 Annual Report (the 'Report'). Set out below are
the principal risks and uncertainties facing the Company as required to be
disclosed pursuant to the Disclosure Guidance and Transparency Rules, 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.
Political and economic risk
Description
Changes and uncertainties in the political landscape pose risks for business
activity and sentiment in the territories where the Group operates and,
consequently, for the current investments and future growth of the Group's
businesses.
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.
Mitigation
· Maintaining the Group's financial strength and funding sources
under scenarios of economic downturn and other stresses.
· Monitoring the volatile macroeconomic environment and
considering economic factors in strategic and financial planning processes.
· Making agile adjustments to existing business plans and
exploring new business streams and new markets.
· Reviewing pricing strategies and keeping conservative
assumptions on global commodity prices.
· Insurance programme covering business interruption due to civil
unrest.
Customers' changing behaviours and market competition
Description
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, product, distribution, service or application of new
technologies, can hurt margins, earnings or market share.
Sustainability considerations has increasingly resulted in customers switching
to other companies, brands or providers that provide sustainable products or
services.
Mitigation
· Utilising market intelligence and deploying digital strategies
for business-to-consumer businesses.
· Establishing customer relationship management and digital
commerce capabilities.
· Diversifying the customer base and reducing dependency on any
key customers.
· Re-engineering existing business processes to take advantage of
new technological capabilities.
· Investing in and partnering with companies that can provide the
Group access to different capabilities and technologies.
Investment, partnerships and franchise rights
Description
Conflicts with joint venture partners or other strategic partners may arise
due to (i) different corporate cultures, management styles and risk appetite;
(ii) disagreement over business priorities, strategy, and allocation of
capital/resources; and (iii) conflicts of interests.
The Group's retail and motor businesses rely on their franchises on
relationships with principals, whereby non-compliance with the agreement or a
strained relationship with principals might result in principals terminating,
not renewing or renegotiating the franchise agreement.
Mitigation
· Conducting sufficient research, due diligence and evaluation of
investment opportunities and potential business partners.
· In-house Legal reviewing shareholder agreements to ensure
adequate rights and protections are in place.
· Developing clear frameworks and levels of authority for
investment or partnership decisions.
· Established Group Investment and Business Development Committee
to review significant investments.
· Maintaining close relationships with senior management of
business partners.
· Requesting and influencing joint ventures and associates to
operate in a proper manner and in compliance with policies and procedures.
· Strengthening existing relationships with principals through
sustaining strong market shares, achieving high customer retention and
complying with dealer standards and principal's policies.
IT, facilities and cybersecurity
The Group's businesses are ever more reliant on technology in their operations
and face increasing cyber-attacks 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 IT
systems or the unauthorised or inadvertent release of information, resulting
in brand damage, impaired customer trust, loss of competitiveness or
regulatory action.
Cyber-attacks stemming from inadequate cybersecurity or lack of employee
cybersecurity awareness may also adversely affect the function of important
equipment and facilities and our ability to manage daily business operations,
resulting in business interruption, reputational damage, regulatory penalties,
lost revenues, repair or other costs.
Mitigation
· Engaging external consultants to perform assessments on the
business units with industry benchmarks.
· Defining cybersecurity programme and centralised function to
provide oversight, promote cybersecurity hygiene, strengthen cybersecurity
defences and manage cybersecurity incidents.
· Performing regular vulnerability assessment and penetration
testing to identify weaknesses.
· Maintaining and testing disaster recovery plans and backup for
data restoration.
· Arranging regular security awareness training at least annually
and phishing testing to raise users' cybersecurity awareness.
· Conducting regular internal audits of IT general controls and
cybersecurity.
Geographic concentration risk
Description
Certain locations in Asia contribute a significant portion of the Group's
underlying profit and are where many of its key functions and senior
management are based. Adverse conditions such as social upheaval, erosion of
the rule of law or travel restrictions could reduce a location's
competitiveness and impact the Group's businesses concentrated operations in
that jurisdiction.
Mitigation
The diverse nature of the Group's businesses mitigates concentration risk at a
portfolio level. Ongoing strategic initiatives include:
· Exploring diversification of businesses through organic growth,
selective acquisitions and establishing support services beyond locations
where the Group typically operates.
· Maintaining financial strength under challenging scenarios.
· Further strengthening the Group's brands to sustain
competitiveness and resilience.
· Supporting governments with constructive input and activities.
Talent and labour
Description
The competitiveness of the Group's businesses depends on the quality of the
people that it attracts and retains. The unavailability of needed human
resources may impact the ability of the Group's businesses to operate at
capacity, implement initiatives and pursue opportunities.
Recent and future workforce rationalisation in some businesses may raise the
potential for organisational gaps in capabilities, succession and controls.
Mitigation
· Supporting workforce practices that promote well-being and
flexible work arrangements that are competitive with the market.
· Ensuring proactive manpower planning and succession planning
are in place.
· Enhancing modern employer branding, training for staff members,
compensation and benefits, including retention incentives.
· Establishing employee assistance and counselling programmes.
· Enhancing talent development plans to increase employees'
visibility on future career paths, including identifying strategic talent
pools.
· Delivering new learning academy programmes to equip staff with
finance, procurement, human resources, digital, IT and innovation technical
capabilities for business transformation.
Climate physical and transition risk
Description
Environmental disasters such as earthquakes, floods and typhoons can damage
the Group's assets and disrupt operations. The Group is also facing higher
insurance premiums or reduced coverage for such natural disasters.
Some of the Group's businesses operate in areas which are sensitive from a
biodiversity point of view have the potential to impact the local environment
and to be negatively perceived by stakeholders.
Mitigation
· Sustainability Leadership Council established to mobilise and
coordinate sustainability efforts across the Group.
· A Climate Action Working Group, with representatives from all
business units, drives Group-wide initiatives which strengthen collaboration
and share knowledge.
· Each business is building a net-zero carbon pathway and climate
change plan to build climate resilience.
· Conducting climate risk assessments and adaptation action plans
based on recommendations of TCFD, including implementing measures to address
physical risks posed by climate change and identifying opportunities in global
transition to a low carbon economy.
· Company has issued Just Energy Transition commitments to scale
up investment in renewable energy and related innovations, diversify into
non-coal mineral mining, and make no investments in new thermal or
metallurgical coal mines or new thermal coal-fired power plants.
Change management, cultural agility and strategic initiatives
Description
Challenges include managing change, fostering an agile and entrepreneurial
culture that supports innovation and exploring, and ensuring skilful project
management of strategic initiatives.
Dependence on legacy systems and processes may also undermine change
initiatives due to inability to support new tools and efficiency improvements.
Inadequate change management, cultural agility or strategic initiatives could
lead to erosion of competitive position and reputation, loss of valued
employees, project delays, failure to deliver results on invested resources,
and lost opportunities for cross-business synergies.
Mitigation
· Senior management maintain support and regular communication
across the organisation on strategic direction and cultural values.
· Oversight of material strategic initiatives by Steering
Committees or Board.
· Encouraging innovation, including cross-organisation sharing of
ideas, incentives and championing of change initiatives.
· Encouraging cross-departmental input and involvement on
projects.
· Appointing experienced personnel to manage projects and change,
including external consultants where needed.
· Exploring potentially disruptive business models by partnering
with start-ups or allowing business units autonomy to create new ventures.
Third-party service provider and supply chain management
Description
Supply chain disruption caused by key suppliers or service providers, or
failure to deliver by contractors/subcontractors could cause significant
operational disruption, lack of inventory supply, financial loss and
reputational damage to the businesses.
The Group's operations may be materially affected if third parties on which we
depend are compromised by cyber-attacks. With increased reliance on
third-party ecosystems, the Group has greater exposure to third-party risk if
there is insufficient vetting, oversight or visibility over third parties and
their subcontractors, particularly on information security, resilience,
regulatory compliance, and their ongoing capability.
Mitigation
· Ensuring protective terms and conditions in third-party service
agreements, including vendors being contractually required to bear higher
liability for failures to deliver or if they are responsible for a cyber
incident at a Group business.
· Having robust evaluation and selection procedures for vendors
and third-party service providers, including an information security
assessment where appropriate.
· Engaging suppliers only if they agree to comply with a supplier
code of conduct where businesses require.
· Maintaining a minimum safety stock for key/high risk
ingredients at all times.
· Sourcing back-up suppliers, warehouses or other alternative
plans.
· Maintaining strong relationships with suppliers that are
designated by principals.
· Maintaining supplier insurance to cover logistics interruption.
· Ensuring early negotiation of new contracts for key service
providers.
· Diversifying the product range to reduce the impact of
disruptions to single products.
· Including third-party disruption scenarios as part of business
continuity planning.
Health, safety and product quality
Description
Several of the Group's businesses engage in construction, production or other
physical activities that may lead to serious injury or fatal incidents if work
conditions are unsafe or workers do not take due care to observe safety
procedures.
The safety and quality of food products, elevators, vehicles and other items
delivered by the Group's businesses are fundamental to their reputation with
customers. Any actual or perceived deficiency in product safety or quality
may damage consumer confidence and the brand's reputation, leading to
financial loss.
Mitigation
· Establishing and maintaining safe working environments and
regular safety training for all employees and subcontractors.
· Establishing contractual requirements for contractors to comply
with high expected levels of safety standards.
· Incorporating site safety plans in tenders and contracts.
· Conducting occupational health and safety awareness campaigns.
· Disseminating safety materials such as signage, guard rails and
pictorial representations of safe work procedures accessed via mobile phones.
· Purchasing sufficient insurance coverage including employee
compensation and motorbike insurance for delivery riders.
· Establishing product quality and safety standards, guidelines.
· Reporting and including quality and food safety as KPIs.
· Establishing and maintaining proper supplier selection
processes.
· Implementing comprehensive quality control measures in all
retail stores.
· Ensuring suppliers follow the Group's guidelines, principals'
requirements and local regulations.
· Conducting regular audits on suppliers, manufacturers,
warehouse services providers and own facilities.
· Conducting periodic drills and crisis management procedures for
safety incidents, including media handling.
· Obtaining adequate product liability insurance.
Compliance with and changes to laws and regulations
Description
The Group's businesses are subject to several regulatory regimes in the
territories they operate in. New or changing laws and regulations in a wide
range of areas such as foreign ownership of assets and businesses, exchange
controls, building and environmental standards, competition, tax, employment
and data privacy could potentially impact the operations and profitability of
the Group's businesses.
Non-compliance may lead to reputational damage from media exposure and
financial loss due to litigation or penalties by government authorities.
Mitigation
· Engaging legal experts at early stage to assess implications of
new rules.
· Staying connected and informed of relevant new and draft
regulations.
· Annual update on new regulations.
· Lobbying of relevant bodies.
· Undertaking early scenario planning assessing the implications
of new rules and preparing contingencies.
Customer exposures and claims on customers
Description
If not carefully managed, receivables from customers could be impaired and
lead to financial loss. Customers may also present financial exposures for
businesses that provide product warranties or insurance as part of their
offering.
For construction projects, claims on customers are substantial parts of the
contract sum. Failure to agree claims with customers due to disputes on
terms such as delivery of contractual scope or cost estimates may impair
profitability and cash flow of the projects.
Mitigation
· Setting credit limits based on comprehensive and regular
evaluation of customers' creditworthiness.
· Monitoring the ageing of accounts receivable.
· Implementing receivables collection to maximise recoverability.
· Reviewing and ensuring terms and conditions of contracts are
acceptable, including payment terms, during tender stage.
· Maintaining sufficient provision for doubtful debts, based on
prudent assessment of recoverability of receivables.
· Allocating sufficient allowances for contingencies for each
project.
· Considering sanctions lists when assessing potential customers.
Financial strength and funding
Description
The Group's activities expose it to a variety of risks to its financial
strength and funding, 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.
Several of the Group's businesses and projects may have concessions,
franchises or other contracts which contain financial requirements as part of
their obligations which, if breached, may lead to termination or
renegotiation.
Mitigation
· Setting clear policies and limits on market, credit and
liquidity risks, including in relation to foreign exchange exposure, interest
rate risks, cash management and prohibition on derivatives not used in
hedging.
· Regular internal audits of compliance with treasury policies.
· Adopting appropriate credit guidelines to manage counterparty
risk.
· When economically feasible, taking borrowings in local currency
to hedge foreign exchange exposures on investments.
· Fixing a portion of borrowings in fixed rates.
· Maintaining adequate headroom in committed facilities to
facilitate the Group's capacity to pursue new investment opportunities and to
provide some protection against market uncertainties.
· Keeping an appropriate funding balance between equity and debt
from banks and capital markets, both short- and long-term in tenor, to give
flexibility to develop the business.
· Maintaining sufficient cash and marketable securities, and
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.
Governance and misconduct
Description
Ethical breaches, management override of controls, employee fraud and
misconduct, or other deficiencies in governance and three lines of internal
controls may result in financial loss and reputational damage for the Group.
Inadequate capability and diversity in management or the Board may also lead
to sub-optimal deliberations and decisions.
The Group holds minority stakes in various companies. Lack of control or
significant influence over these companies may lead to losses on the Group's
investment if the companies are mismanaged.
Mitigation
· Established Groupwide mandatory Code of Conduct and training
that applies to all Group businesses and new joiners.
· Maintaining a robust Corporate Governance Framework which
includes whistle-blowing channels.
· Compliance departments of individual businesses reviewing
internal controls.
· Maintaining functionally independent internal audit function
that reports to the Group Audit Committee on risk management, the control
environment and significant non-compliance matters.
· Maintaining Professional Indemnity, Crime and General Liability
insurance policies with adequate coverage.
Responsibility Statements
The Directors of the Company confirm to the best of their knowledge that:
(a) the consolidated financial statements prepared in accordance with
International Financial Reporting Standards, including International
Accounting Standards and Interpretations as issued by the International
Accounting Standards Board, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group; and
(b) the Chairman's Statement, Group Managing Director's Review, Financial
Review and the description of Principal Risks and Uncertainties facing the
Group as set out in the Company's 2023 Annual Report, which constitute the
management report required by the Disclosure Guidance and Transparency Rule
4.1.8, include a fair review of all information required to be disclosed under
Rules 4.1.8 to 4.1.11 of the Disclosure Guidance and Transparency Rules 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$1.65 per share will be payable on 15th May 2024,
subject to approval at the Annual General Meeting to be held on 8th May 2024,
to shareholders on the register of members at the close of business on 22nd
March 2024. The shares will be quoted ex-dividend on 21st March 2024 and the
share registers will be closed from 25th to 29th March 2024, 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 2023 final dividend by notifying the United
Kingdom transfer agent in writing by 26th April 2024. The Sterling equivalent
of dividends declared in United States Dollars will be calculated by reference
to a rate prevailing on 2nd May 2024.
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 22nd March 2024, must
submit the relevant documents to Boardroom Corporate & Advisory Services
Pte. Ltd., the Singapore branch registrar, by no later than 5.00 p.m. (local
time) on 21st March 2024.
The Jardine Matheson Group
Jardine Matheson is a diversified Asian-based group founded in China in 1832,
with unsurpassed experience in the region. Our broad portfolio of
market-leading businesses are well-positioned to capture the themes of
urbanisation and the rising middle-income population in Asia. The Group's
businesses aim to produce sustainable returns by providing their customers
with high quality products and services. The Group is committed to driving
long-term sustainable success in our businesses and our communities.
Jardine Matheson operates principally in China and South East 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%), Hongkong Land
(53.3%), DFI Retail Group (77.5%), Mandarin Oriental (80.2%), Zhongsheng Group
(21.2%) and Jardine Cycle & Carriage (78.1%) ('JC&C'). JC&C in
turn has a 50.1% 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 / Suzanne Cheuk (852) 2843 8218 / 8262
Brunswick Group Limited
William Brocklehurst (852) 5685 9881
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31st December 2023 can be accessed via
the Jardines corporate website www.jardines.com.
1 (#_ftnref1) Free Cash Flow at parent company is defined as recurring
dividends received from subsidiaries, associates, joint ventures and other
investments, less corporate costs and net interest expenses.
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