REG - Jardine Matheson Hdg - JMH - 2022 Preliminary Results
02/03/2023 12:30
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230302:nRSB6984Ra&default-theme=true
RNS Number : 6984R Jardine Matheson Hldgs Ltd 02 March 2023
2nd March 2023
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
2022 Preliminary Announcement of Results
Group well-positioned to take advantage of Asia reopening
Headlines
· Underlying profit and underlying EPS grow by 5% and 14%,
respectively
· Strong performance in Southeast Asia, led by Astra
· Continued pressure on China (including Hong Kong) in the second
half
· Full year dividend of US$2.15, up 8%
"Jardines delivered a good performance overall in 2022, with results
recovering to pre-pandemic levels seen in 2019. There were strong results
from Southeast Asia, in particular Astra and JC&C, but the performance of
our businesses in Hong Kong and on the Chinese mainland continued to be
materially impacted by the continuation of pandemic restrictions there, which
only began to be relaxed in December. The Group's resilience through the
pandemic, however, together with its diversified portfolio, have established a
solid foundation for future growth. I want to thank our colleagues across
the Group for their unwavering commitment to our customers and our businesses
during this challenging period.
The Group is well-positioned to take advantage of opportunities across Asia,
as Southeast Asia continues its return to growth and as Hong Kong and the
Chinese mainland recover. We also remain confident in our long-term
strategy, focussed on our core Asia markets."
Ben Keswick, Executive Chairman
Results summary
Year ended 31st December
2022 2021 Change
US$m US$m %
Gross revenue including 100% of associates and joint ventures 114,758 109,370
+5
Revenue 37,724 35,862 +5
Underlying profit* before tax 4,930 4,117 +20
Underlying profit* attributable to shareholders 1,584 1,513 +5
Profit attributable to shareholders 354 1,881 -81
Shareholders' funds 28,826 29,781 -3
US$ US$
Underlying earnings* per share 5.49 4.83 +14
Earnings per share 1.22 6.01 -80
Dividends per share 2.15 2.00 +8
* 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 41 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.
The final dividend of US$1.60 per share will be payable on 10th May 2023,
subject to approval at the Annual General Meeting to be held on 4th May 2023,
to shareholders on the register of members at the close of business on 17th
March 2023 and will be available in cash with a scrip alternative
Jardine Matheson Holdings Limited (the 'Company')
2022 Preliminary Announcement of Results
Chairman's Statement
2022 in Review
2022 was a further year of challenge for our businesses across the Group,
which continued to be impacted by the pandemic. I want to start by thanking
each of the many colleagues who work for Jardines, as well as the Group's
partners across our markets, for their unwavering commitment to our customers
and our businesses during this challenging period.
The last year has seen much of the world moving to live with COVID, and many
of our businesses were able to benefit from the reopening of markets and the
economic recovery which resulted. Hong Kong and the Chinese mainland,
however, continued to be significantly impacted by the pandemic and related
restrictions, with a relaxation only starting to be seen in these markets at
the very end of the year.
The Group's resilience through the pandemic, however, and its strong
performance in 2022, despite challenging conditions in a number of our sectors
and markets, together with its diversified portfolio, have established a solid
foundation for future growth. We are optimistic that the reopening of Hong
Kong and the Chinese mainland will enable our businesses there to recover
quickly and we are confident in the strong future growth opportunities in
Southeast Asia, and particularly in Indonesia and Vietnam. We are focussed
on continuing to capitalise on the best long-term opportunities across Asia,
while adapting to the changing external environment and evolving expectations
of our stakeholders.
Performance
The Group's underlying net profit of US$1,584 million for the year was US$71
million (5%) higher than the prior year. The increase was primarily driven
by strong performances by Astra and our other Southeast Asian businesses held
by Jardine Cycle & Carriage ('JC&C'). There was a return to
underlying profit by Mandarin Oriental and an improved contribution from the
Group's unlisted Jardine Pacific businesses. Hongkong Land, however,
delivered significantly reduced underlying profits in 2022 and the results of
DFI Retail Group ('DFI Retail') were also materially lower. There was a
slight decline in the performance of the Group's Motor interests.
The financial and operational strength of the Group's businesses continues to
be supported by our investment strategy and approach to capital allocation.
The Board is recommending an increased final dividend of US$1.60 per share,
which produces a full-year dividend of US$2.15 per share, up 8% from the prior
year.
Significant Developments
The Board regularly reviews our portfolio of businesses and assesses whether
actions are necessary to ensure that our activities align with our strategic
priorities. The Group believes it is essential to continue to invest for the
long term in business opportunities which will drive future growth for our
shareholders. This approach drove the substantial investment in 2021 in
simplifying the Group's parent company structure, by acquiring the 15% of the
issued share capital of Jardine Strategic Holdings Limited ('Jardine
Strategic') which the Company did not already own. The final stage in this
Group simplification was the approval by shareholders at the Company's AGM on
5th May 2022 of the cancellation of 427 million shares in the Company, as part
of a reduction in capital.
During 2022, and into 2023, we have continued to progress the simplification
of the Group's portfolio and lay the foundations for the next stage of its
growth. In January 2023, the Group entered into a conditional agreement to
sell its 28.2% stake in the Hong Kong-listed Greatview Aseptic Packaging
Company and, in March 2023, the Group expects to complete the sale of its
Motors business in the United Kingdom.
In September 2022, Mandarin Oriental completed the sale of its Washington D.C.
hotel, as it continued to pursue its strategy for driving future growth,
primarily through the development of its management business.
The Group also continued to make strategic investments. In September 2022,
Astra continued its focus on providing compelling financial services to its
customers by completing the acquisition of a 49.6% stake in Bank Jasa Jakarta,
which it jointly controls with WeLab and which it is planned to transform into
an innovative digital bank in Indonesia.
During the year, Astra also purchased a 7.4% stake in Medikaloka Hermina, one
of the largest hospital groups in Indonesia, operating as Hermina Hospitals,
increasing its focus on healthcare services and adding to its existing
investment in Halodoc, an online platform in Indonesia providing access to a
range of medical services.
Astra made an important further step in diversifying into other minerals, by
entering the nickel mining and processing businesses through an agreement to
acquire 90% interests in Stargate Pasific Resources and Stargate Mineral Asia,
which is expected to complete in 2023. It also made progress against its
commitment to invest in renewable energy, by acquiring a 31.5% interest in
Arkora Hydro, a hydro-based energy power generation business.
In July 2022, JC&C announced a general offer to acquire the remaining
shares in Cycle & Carriage Bintang which it did not already own. It also
increased its interest in Refrigeration Electrical Engineering Corporation
('REE') to 33.6% in the period, through on-market purchases.
In 2022, Hongkong Land acquired two new sites, in Suzhou and Shanghai. The
joint venture to develop a mixed-used commercial site in Suzhou, consisting of
a luxury mall and hotel, reflects the group's strategy of developing luxury
and premium lifestyle retail properties on the Chinese mainland. The
residential site in Shanghai is located in Xuhui District, adjacent to our
large mixed-used project in West Bund.
In May 2022, DFI Retail launched its yuu-to-me offering, providing customers
with an integrated one-stop online shopping experience and home delivery
service across leading Hong Kong brands. Following the success of the
rollout of the yuu Rewards loyalty programme in Hong Kong, the group launched
yuu Rewards in Singapore in October 2022. The programme in Singapore
benefits from partnerships with a number of leading local brands.
Sustainability
We believe that it is essential that our sustainability approach is good for
business, and that real value can be realised by integrating sustainability
into the strategy and business models of our Group companies. Each of our
businesses should also consider sustainability issues in all aspects of their
decision-making, and we are developing a framework for all our businesses to
use to integrate sustainability into the capital allocation decision-making
process.
There is a strong level of engagement between our businesses on sustainability
issues, and this will enable us to create real scale in what we do.
A significant milestone in the Group's sustainability journey was the
publication of our inaugural Sustainability Report at the end of June. The
report reflected extensive work over the previous year to set a range of
Group-wide metrics and gather data from our businesses, to enable the Group to
measure and report its progress. We also published Task Force on
Climate-Related Financial Disclosures ('TCFD')-aligned disclosures for the
first time. Eight other Group businesses also published sustainability
reports last year, three for the first time.
We published a statement in June 2022, clarifying the Group's support for a
Just Energy Transition to a low carbon economy in the geographies where we
operate. The statement contains commitments to scale up investments 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. Astra and JC&C published aligned
statements at the same time.
During 2022, good progress was made on climate action. Our businesses are
setting science-based 2030 targets for decarbonisation, and several of them
have submitted commitment letters to SBTi. In 2023, our businesses will be
developing decarbonisation pathways towards achieving those targets. There
is also a strong focus on climate risk, with the development of Group-wide
transition climate risk scenarios, and our businesses are starting to
incorporate physical climate risk into their risk management approach.
Our businesses are exploring opportunities in relation to responsible
consumption, especially in the areas of waste and circularity, including ways
in which they can collaborate to achieve shared objectives. A number of
initiatives are being progressed already. The Group is developing its social
inclusion strategy, with a particular focus on the areas of education and
mental health.
Governance
Our approach to governance is based on what is most appropriate for the
Group's unique shareholding structure, size and its operations in Asia, and we
continue to review its effectiveness on an ongoing basis. In 2022, we made a
series of changes to strengthen the boards of our listed subsidiaries,
appointing new independent non-executive directors with sector expertise and
experience. The audit committees of each of these boards now have a majority
of independent members. At the Company level, the membership of the audit
committee is now solely Independent Non-Executive Directors.
People
Jeremy Parr retired from the Board on 31st March 2022. David Hsu retired
from his role as Chairman of Jardine Matheson China on 1st August 2022. He
remains on the Board of the Company as a Non-Executive Director. On behalf
of the Company, I would like to thank them both for their contribution to the
Board and the wider Group.
Conclusion
The Group delivered a strong set of results in 2022, despite the fact that,
for much of the year, the performance of many of our businesses in Hong Kong
and on the Chinese mainland was materially impacted by pandemic restrictions
in those markets. This is testament to the value of the Group's diversified
portfolio, as well as the resilience which our businesses and our many
colleagues across the region have shown in the past year.
The Group is likely to continue to face challenges in the coming year from
global economic headwinds, but it is well-positioned to take advantage of
opportunities, as our key markets in Southeast Asia and China return to growth
following their emergence from the pandemic.
Ben Keswick
Executive Chairman
Group Managing Director's Review
Introduction
The pandemic continued to impact many of our businesses for much of 2022, but
the Group performed strongly and delivered near-record levels of underlying
profit.
The performance of the Group's businesses reflects the immense effort our many
colleagues across the Group have made to put customers first and to overcome
the extensive professional and personal challenges they have continued to face
as a result of the pandemic. This was especially the case in Hong Kong and
on the Chinese mainland, where the impact of the pandemic and related
restrictions continued for much longer than in other parts of the world. I
would like to thank each of our colleagues for their unwavering dedication and
hard work, often in very difficult circumstances.
We remain focussed on managing the short-term challenges our businesses are
likely to face from global economic headwinds. We are at the same time
building businesses and teams that will deliver sustainable strong growth over
the medium- to long-term, and over the past year we have continued to simplify
the Group's portfolio and set the Group up for its next stage of growth.
Innovation and adaptability have proven to be critical in the face of the
rapidly changing business environment, and we have made substantial progress
in modernising our core businesses and transforming the way we operate, to
reflect that evolving environment. The pace of change continues to
accelerate, however, and we are focussed on driving forward our strategic
priorities with urgency in the coming year. These priorities and how we are
progressing them are set out below.
Evolving the Group Portfolio
Evolving the Group's portfolio is a key element of ensuring that our business
is sustainable and grows earnings over the long-term. We are focussed on
deploying capital, both at a Group level and within our Group companies,
towards strategic higher growth initiatives, while taking a sensible approach
to divesting non-strategic and lower-yielding assets.
During the year, we continued to strengthen our position in the more promising
markets of Asia and in industries where we can establish market-leading
positions, to create long-term value and ensure sustainable growth. Our
diversified presence in China and Southeast Asia, as well as our balanced
portfolio across sectors, has helped us perform well even in difficult market
conditions.
Our primary focus is on expanding our operations in areas that offer the
greatest potential for future growth, such as the Chinese mainland and several
ASEAN markets. We are seeking strong growth opportunities in emerging ASEAN
markets like Indonesia and Vietnam, as well as developing our automotive,
retail and property development interests in China.
We want to align ourselves with key trends in these markets, such as growing
urbanisation and the developing middle class. We also recognise that there
are 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, as well as carrying out share buybacks in our companies as
appropriate. Our strategy is underpinned by a strong balance sheet. We are
also increasingly focussed on ensuring that the investment opportunities we
take align with our sustainability goals, and in this context we are
developing a framework, which will be adopted Group-wide, to integrate
sustainability into the capital allocation decision-making process.
The Group's prudent capital allocation approach underpinned the acquisition by
the Company in April 2021 of the 15% minority stake in Jardine Strategic that
it did not already own. This resulted in Jardine Matheson increasing its
interests in Hongkong Land, DFI Retail, Mandarin Oriental, Jardine Cycle &
Carriage and Astra, as well as simplifying the Group's ownership structure and
governance framework. The acquisition was funded in part by debt facilities.
Following the completion of the acquisition, for the remainder of 2021 we
prioritised debt reduction ahead of further, material new investments. In
order to achieve this, we made two significant strategic disposals in the
second half of 2021: the sale of the Zung Fu China business to our long-term
partner in China, Zhongsheng; and the sale and leaseback of the Zung Fu Hong
Kong properties. These transactions enabled the Company to reduce its net
debt to US$1.3 billion by the end of 2021.
During 2022 and, as we enter 2023, we have continued to progress the
simplification of the Group's portfolio and lay the foundations for the next
stage of its growth. In January 2023, the Group entered into a conditional
agreement to sell its 28.2% stake in the Hong Kong-listed Greatview Aseptic
Packaging Company and, in March 2023, the Group expects to complete the sale
of its Motors business in the United Kingdom.
The Group also continued to focus on making strategic investments, with Astra
acquiring a 49.6% stake in Bank Jasa Jakarta in 2022, continuing its focus on
providing compelling financial services to its customers, as well as a 7.4%
stake in Medikaloka Hermina, one of the largest hospital groups in Indonesia,
increasing its focus on healthcare services and adding to its existing
investment in Halodoc, an online platform in Indonesia providing access to a
range of medical services.
To support its strategy of diversifying into other minerals and renewable
energy, Astra, through United Tractors, is entering the nickel mining and
processing businesses through an agreement to acquire a 90% interest in
Stargate Pasific Resources and Stargate Mineral Asia for US$272 million, which
is expected to complete in 2023. It has also acquired a 31.5% interest in
Arkora Hydro, a hydro-based energy power generation business.
In February 2023, Cycle & Carriage Singapore completed a sale and
leaseback arrangement of its properties for around US$230 million.
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 also continues to focus on delivering operational excellence in our
existing and new businesses, and the past year has seen strong progress by our
businesses in driving greater efficiency and productivity, despite the
challenging market environment. Business improvement initiatives were
progressed in the year in many of the Group's businesses, including Gammon,
Jardine Restaurant Group, Zung Fu Hong Kong and HACTL, with a positive impact
on results. DFI Retail's multi-year transformation plan continues to deliver
real improvements in operating metrics across its banners. Mandarin Oriental
has successfully unified its property management system across hotels,
delivering standardisation and enabling efficiency benefits. The increased
efficiencies which are being delivered across our businesses are essential to
their ability to increase their agility and adaptability and address the
challenges they face in order to deliver future growth.
As well as driving operational excellence, a key strategic priority is a focus
on innovation. Our B2B businesses have continued enthusiastically to embrace
digital ways of working to improve operations. Gammon has been an early
embracer of building information modelling and has continued to grow its
Virtual Design & Construction ('VDC') teams in Hong Kong and Shenzhen,
which use digital prototyping to validate and optimise the design and
construction process. JEC have developed their JEDI AI-powered digital
platform, which utilises data-driven insights to provide building energy
services in areas such as energy analytics and optimisation, fault detection
and diagnostics and chiller optimisation, and deliver better experiences for
end-users. Gammon's Digital G subsidiary provides digital technology to make
the building process and management of the built environment safer, more
efficient and less labour intensive.
We continue to seek new inorganic growth opportunities which facilitate our
wider participation in the digital economy, emerging industries and new
geographies. JEC has acquired the Hong Kong and Macau business of MGI Group
Holdings Limited, a leading specialty healthcare engineering solutions
provider, as part of JEC's strategic aim of building its skills and
capabilities in the healthcare sector. Astra has continued to invest in
digital businesses in Indonesia during the period. It acquired an interest
in Paxel, a technology-based logistics startup, and also increased its
investments in Sayurbox, an e-commerce grocery farm-to-table platform and
Mapan, a digital community-based social financing platform.
As the Asian consumer appetite for digital continues to increase, our B2C
businesses are focussed on embedding digital as a core component of how we
anticipate and serve the needs of customers - developing omnichannel
experiences, building data capabilities and investing in start-ups to augment
our capabilities to react with speed and agility to the changing marketplace
and evolving consumer behaviours and connect effectively with our customers.
DFI Retail's yuu coalition loyalty programme continues to exceed expectations
and is the leading customer loyalty programme in Hong Kong, with more than
four million members. The group has this year launched yuu Rewards in
Singapore, with encouraging performance so far, and its yuu-to-me offering,
launched in May 2022, provides customers with an integrated one-stop online
shopping experience and home delivery service across leading Hong Kong
brands.
Hongkong Land has developed the digital services it provides to customers in
its Hong Kong retail portfolio by introducing a revamped LANDMARK app, which
provides shoppers and loyalty members with a more personalised and intuitive
user experience, while the group has also enhanced the functionality of its
'By The Bay' mobile app in Singapore with the addition of exclusive retail
offerings, health and wellness workshops and a series of community and
charitable events.
Mandarin Oriental launched its new website during the year, redesigned to
ensure a mobile-first, personalised user experience whilst improving site
performance and reliability. Since the new website went live in August, 60%
of visits have come from mobile devices, a considerable uplift from the
previous website, driving more direct digital bookings.
Our Southeast Asian businesses are also adopting innovative approaches to how
they run their businesses. Astra, for example, is using Formula 1 technology
in the mining industry to optimise fuel consumption. It is also using the
Internet of Things ('IoT') and control centres to optimise manufacturing.
Our businesses are looking for ways in which they can innovate (through
enhancements to existing businesses or new inorganic growth) which align with
our sustainability priorities. Astra's investment through United Tractors in
Arkora Hydro demonstrates its determination to take action to deliver on the
commitments in its Just Energy Transition Statement published last June, by
investing in renewable energy. This investment builds on Astra's existing
presence in the hydroelectric power sector, where it already operates a
mini-hydro power plant and is developing another.
Astra is also developing electricity generation facilities using innovative
solar photovoltaic ('PV') technology, through its subsidiary PT Energia Prima
Nusantara ('EPN'). In 2022, EPN secured commitments to install 16 MWp of
rooftop solar PV, of which 4 MWp has been installed in a number of Astra group
company facilities.
Vietnam's installed capacity for wind, solar and hydro power is forecast to
double by 2030 and REE, JC&C's associate there, continues to make
extensive investments in renewable energy. REE is Vietnam's largest investor
in roof-top solar power and also has interests in wind farms and hydroelectric
dams. As of December 2022, renewable energy sources (hydroelectric, solar
and wind) accounted for 72% of REE's energy portfolio.
JC&C's automotive businesses in Southeast Asia are also focussed on
innovative sustainable business solutions. As an example, Cycle &
Carriage Singapore ('CCS') is growing its new electric van logistics business
in Singapore, offering logistics solutions to retail giants such as IKEA,
Guardian and Uniqlo. CCS also sells and leases the vehicles to large
logistics businesses, including UPS and DHL.
Enhancing Leadership and Entrepreneurialism
We need to evolve and accelerate to stay ahead of the competition - and we
have identified the embedding of an entrepreneurial culture as a key success
factor in doing this. Entrepreneurship means being open to experimentation and
having the confidence to put ideas forward and, importantly, to promote and
defend them.
A key element of building an entrepreneurial culture is attracting, developing
and retaining the right leadership talent, and this is a top priority for the
Group and its companies. In the past year, the Group has made a number of
significant senior appointments to bolster its leadership and drive future
growth. We see it as essential to appoint the most competent,
highly-qualified and experienced senior executives to drive business growth,
and have appointed two new Jardine Matheson Limited Directors to lead our
business development efforts across China and Southeast Asia. We have also
strengthened the leadership of our core Group functions, by appointing a new
Group General Counsel and Group Head of Human Resources.
We have continued to invest in developing our leaders and providing them with
opportunities to advance their careers within different businesses across the
Group, with a number of executive-level senior management moves taking place
during the period.
We are focussed on providing our colleagues with the appropriate training and
support to equip them with the skills needed to navigate the challenges and
opportunities they face, both in the short- and the long-term. Our
comprehensive Group-wide programme of online learning and academies has seen
high levels of participation in the year.
We are also continuing our work to create a diverse and inclusive culture
where everyone can succeed. We are working with our businesses to increase
the diversity of the boards and senior management of our Group companies. A
key element of this is the successful nurturing of colleagues at all levels,
in order to develop diverse pools of talent from which our future senior
leaders can be selected. We recognise that there is a great deal more to
do in order to build greater diversity at all levels of the Group, but we made
good progress last year in implementing our diversity and inclusion
('D&I') strategy to help progress our ambitions across the Group. We
launched a series of initiatives, including a learning campaign on inclusive
leadership; a comprehensive review to enhance Human Resources policies; and
new processes which support D&I. We have also developed targets for
increasing female representation in our workforce and leadership.
We also aim to create an owner mindset among our staff and are supporting this
by enhancing our incentive structures over time to focus less on current
profits and more on value creation over a longer time horizon.
Progressing Sustainability
In 2022, we continued to drive a more aligned, focussed approach to
sustainability across all our Group companies, leveraging and building on the
work many of them are already doing in this area to maximise the impact we
have in our communities and on the environment. There is increasingly strong
engagement between our businesses on sustainability issues, which will enable
us to create real scale in what we do.
We continue to focus on actively sharing the positive actions our diverse
businesses are taking in relation to sustainability, by reporting more
effectively on Environmental, Social and Governance ('ESG') issues, and in
2022 we published our inaugural Sustainability Report. The report included
data on a range of Group-wide metrics gathered from our businesses. We also
published TCFD-aligned disclosures for the first time in the report.
We took a key step in progressing our climate action agenda in June 2022 with
the publication by the Company, JC&C and Astra of a Just Energy Transition
statement, which articulated our commitment to a low carbon economy in the
geographies where we operate. Effective steps are already being taken to
implement the key commitments in the statement: we saw investments in the year
in renewable energy-focussed businesses in Indonesia and Vietnam and a
diversification into non-coal mineral mining with the acquisition of interests
in a nickel mining and processing business.
Our focus on climate action also saw our businesses setting science-based 2030
targets for decarbonisation and starting to develop decarbonisation pathways
towards achieving those targets.
Our businesses are exploring opportunities to collaborate in relation to
responsible consumption, especially in the areas of waste and circularity, and
the Group is developing its social inclusion strategy, with a particular focus
on the areas of education and mental health.
Creating emotional engagement among our colleagues and other stakeholders
continues to be a key aspect of implementing an impactful and effective
sustainability approach, and this was a focus of our sustainability efforts
during the year, as we saw an acceleration in momentum across our businesses
in organising volunteering activity, with a significant increase in
volunteering hours and number of volunteers.
Summary of Performance
The Group saw improved performances from many of its businesses in 2022,
compared to 2021, with particularly strong growth in Southeast Asia, led by
Astra. The results delivered by the Group in 2022 once again demonstrate the
continuing value of our diversified portfolio, which has enabled Jardines to
produce a resilient performance, despite challenging conditions in a number of
our sectors and markets.
The strong performance of the Group's businesses in Southeast Asia in the
first half of 2022, together with the challenges faced by our businesses in
Hong Kong and on the Chinese mainland throughout the year, led to 55% of the
Group's profit for the period coming from Southeast Asia and 39% from China.
The Group's underlying net profit for the year increased by 5% to US$1,584
million and underlying earnings per share were US$5.49, an increase of 14%.
The Group's underlying earnings per share in 2022 represent an increase of 30%
over those of 2019, while its dividends per share of US$2.15 in 2022 represent
an increase of 25% over the same period.
The key drivers of the Group's performance were strong performances by Astra
and our other Southeast Asian businesses held by JC&C. Astra reported a
51% increase in underlying earnings, excluding the unrealised net fair value
loss on investments in GoTo and Hermina, with improvements across most of its
divisions, supported by Indonesia's economic recovery and higher commodity
prices. JC&C's underlying profits increased by 39%, with strong
performances by THACO and its Direct Motor Interests.
Mandarin Oriental saw a return to underlying profitability in the year, with a
strong performance from its resort hotels and a good recovery by its owned
hotels, although results were impacted by Hong Kong and Tokyo. There was
also an improved contribution from the Group's unlisted Jardine Pacific
businesses, driven by Jardine Schindler and JEC, although most of the
businesses focussed on Hong Kong were impacted by the continuation of pandemic
restrictions there.
Hongkong Land's full-year underlying profits were 20% lower than the prior
year, as a result of a significantly lower profit contribution from the
Development Properties business in the second half of the year. The lower
profit contribution was primarily due to a smaller number of planned sales
completions and the impact of pandemic-related restrictions on construction
activities on the Chinese mainland. DFI Retail Group saw a decline
year-on-year in underlying profit, with the pandemic continuing to impact the
financial performance of the group's subsidiaries and associates. There
were, however, encouraging signs of an improvement in performance in the
second half. There was a slight decline in the performance of the Group's
Motor interests.
Net non-trading items were negative, versus a positive position last year. The
majority of the non-trading losses in 2022 were the Group's share of fair
value losses of US$604 million arising from the revaluation of the Group's
investment properties portfolio and non-current investments of US$309 million,
together with the impairment of investment in associates of US$320 million.
The net non-trading gain in 2021 mainly included the US$791 million gain on
disposal of Zung Fu China business and the US$337 million gain on the sale and
leaseback of Zung Fu Hong Kong's principal operating properties, partly offset
by the Group's share of the unrealised loss of US$681 million in respect of
the Group's investment properties portfolio. After taking account of the net
non-trading losses, the Group recorded a net profit attributable to
shareholders of US$354 million in 2022.
The Group's balance sheet remains strong with gearing of 13%, up from 11% at
the end of 2021.
The Group's capital investment, including expenditure on properties for sale,
was US$5.3 billion in 2022, and capital investment at its associates and joint
ventures exceeded 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.
Individual Business Performance
Jardine Pacific
Jardine Pacific produced an underlying net profit of US$182 million, 4% higher
than 2021. There was a good performance by most of the B2B businesses, while
the group's consumer businesses continued to be impacted by continuing
pandemic restrictions in Hong Kong. The business reported a net loss of
US$123 million, after net non-trading losses of US$305 million.
Jardine Pacific businesses received total government subsidies of US$28
million in the current year, compared with US$9 million in 2021.
There was significant focus in the year across the group's businesses in
driving operational improvements. The benefits are now starting to be seen
in improved business performance and the group is well set for future growth.
Group Group Share of Underlying profit
Interest
% 2022 2021
US$m US$m
Analysis of Jardine Pacific's contribution:
Jardine Schindler 50 36 32
JEC 50-100 53 49
Gammon 50 39 39
Jardine Restaurants 100 19 27
Transport Services 42-50 23 31
Zung Fu Hong Kong* 100 12 4
Corporate and other interests - (7)
182 175
* Zung Fu Hong Kong was reported as part of the Jardine Pacific group of
businesses with effect from October 2021
Within Jardine Pacific's B2B businesses, Jardine Schindler's performance was
higher than in 2021, with a stable contribution from the Existing Installation
business. JEC delivered good profit growth. Its Hong Kong businesses
continued to report solid performances, although its regional businesses
continued to face challenging conditions. Strong levels of new work were
secured, leading to a record order book at year-end.
Gammon's performance was in line with last year due to the timing of projects,
and its order book remained strong.
In Transport Services, there was weaker performance in HACTL, mainly caused by
lower volumes as export demand softened. Jardine Aviation reported a higher
loss, due to lower flight volumes for much of the year. Volumes slowly
recovered, however, as pandemic restrictions in Hong Kong eased towards the
end of the year.
Looking at the group's consumer-facing businesses, Jardine Restaurants
delivered overall results which were 29% lower than last year, mainly due to
the impact of disruption from pandemic restrictions in Hong Kong, which
resulted in a weaker performance in both Pizza Hut and KFC Hong Kong.
Despite a lower contribution caused by increasing operating costs, Pizza Hut
Taiwan continued to perform well. The business continued to benefit from
ongoing 'process re-engineering' projects.
Zung Fu Hong Kong reported a lower profit year on year. After-sales
activities were affected by the pandemic, while supply constraints impacted
passenger car deliveries.
Jardine Pacific saw net non-trading losses of US$305 million in the year
compared to a net non-trading gain of US$389 million in 2021, as a result of
the decrease in the fair value of the investment properties and the impairment
of investments, and the absence of the gain on disposal of Hong Kong
properties by Zung Fu which was reported in 2021.
Jardines Motor
The Group's Motors business produced an underlying net profit of US$299
million in 2022, 6% lower than the prior year. The Group no longer had the
benefit of contributions from its Chinese mainland business following its
disposal to Zhongsheng in late 2021, although it benefitted from a higher
contribution from its 21% interest in Zhongsheng in respect of the second half
of 2021 and the first half of 2022, with a strong performance in its used car
business.
The Group's United Kingdom motor business delivered a slightly lower profit in
2022, with the business impacted by unfavourable exchange rates in the period.
Despite constrained supply, the new car business performed well due to
strong margins. Used cars also remained resilient, with lower volumes offset
by improved margins.
Hongkong Land
Hongkong Land's full-year underlying profits were 20% lower than the prior
year, primarily due to a significantly lower profit contribution from the
Development Properties business on the Chinese mainland in the second half of
the year. The contribution from Investment Properties was resilient, however,
with modest financial impacts in the retail portfolio from the pandemic
measures introduced across the Chinese mainland in 2022. The impact of lower
average office rents in Hong Kong was partially offset by a reduction in
operating costs.
Profit attributable to shareholders was US$203 million, after including net
non-cash losses of US$573 million resulting primarily from lower valuations of
the group's investment properties. This compares to a loss of US$349 million
in 2021, which included a US$1,315 million reduction in property valuations.
Investment Properties
In Hong Kong, office leasing demand remained subdued. Against this backdrop,
the group's Central office portfolio remained resilient, outperforming the
broader market due to its prime CBD location and premium offering. Physical
vacancy remained below average Central market vacancy levels. Modestly
negative rental reversions, however, resulted in a decrease in average office
rents.
Retail market sentiment in Hong Kong was severely affected by the fifth wave
of the pandemic in the first half of 2022. Retail trading benefitted in the
second half of the year, however, as social distancing and travel restrictions
were progressively relaxed. Total retail sales nevertheless remained well
below pre-pandemic levels, as travel restrictions continued to prevent the
return of tourists. Average retail rents in 2022 in the Central LANDMARK
retail portfolio decreased, but vacancy on both a physical and committed basis
was unchanged from the prior year.
In Singapore, contributions from the group's office portfolio increased, due
to positive rental reversions underpinned by a healthy level of occupier
demand, with average office rents increasing and vacancy in the Group's office
portfolio remaining low.
In Shanghai, development activity continued at the group's 43%-owned prime 1.1
million sq. m. development on the West Bund. The multi-phase project remains
on schedule, with modest impacts from the pandemic-related restrictions in
Shanghai during part of the year. The West Bund development is a complex,
predominantly commercial, mixed-use site of unprecedented scale. It is
located in a prime waterside location in Shanghai with unrivalled access to
the riverside. When completed, the project will comprise five neighbourhoods
and 28 land parcels. The West Bund has established itself as an
international creative industry cluster, supported by three pillars: culture
and creative industries, high-tech businesses and the innovative finance
sector. When completed, the development will comprise around 660,000 sq. m.
of offices, 210,000 sq. m. of retail space, 170,000 sq. m. of luxury
residences, 55,000 sq. m. of five-star hotels, 30,000 sq. m. of convention
facilities and 10,000 sq. m. of sports facilities. It will incorporate an
industry-leading approach to sustainability
Development Properties
As anticipated, the profit contribution from the group's Development
Properties business on the Chinese mainland decreased compared to the prior
year, as a result of a significantly lower profit contribution in the second
half of the year, due to fewer planned sales completions and the impact of
pandemic-related restrictions on construction activities. There was also a
decrease in the group's attributable interest in contracted sales in 2022,
mainly due to weak market sentiment for residential properties and
pandemic-related movement restrictions that hampered sales activities.
In Singapore, recognised profits in 2022 were lower than the prior year, which
benefitted from the construction of the wholly-owned 1,404 unit Parc Esta
project. The group's attributable interest in contracted sales rose,
however, driven by the healthy pre-sales performance of two new residential
projects launched during the year.
The group continues to be disciplined in evaluating and selecting Development
Properties opportunities on the Chinese mainland, with a focus on Tier 1 and
Tier 2 cities. During the year the group made two acquisitions - a primarily
residential site in Xuhui District, Shanghai, adjacent to our mixed-used
project in West Bund and an interest in a predominantly retail commercial site
in Suzhou. This development reflects the group's strategy of developing
luxury and premium lifestyle retail properties on the Chinese mainland. The
group currently has four such properties in operation, and the site in Suzhou
will be added to the pipeline of ten further such developments.
The group also increased its investments in two existing projects, acquiring
the remaining 50% interest in the mixed-use project in WE City, Chengdu from
KWG Property Holdings Limited and acquiring a 15% interest in Yue City, a
mixed-use project in Nanjing, from Country Garden in January 2023.
In Singapore, the group acquired a 49% interest in a residential site in the
Jalan Tembusu area.
DFI Retail Group
2022 was another very challenging year for DFI Retail. A combination of
inflationary pressures and customer behavioural shifts driven by the pandemic
significantly impacted first-half financial performance, reducing profit
contributions from the Grocery Retail and Convenience divisions. The group's
share of underlying losses from similarly affected associates also materially
affected results.
There was, however, a significant improvement in profitability in the second
half of the year. The group needs to continue to adapt to changes in
consumer preferences and, despite the external challenges, has increased
investments in digital capacity and capability in the year. While these
investments impacted profitability in the year, they are necessary to meet
customers' evolving needs and to drive long-term shareholder value.
The group reported an overall underlying profit of US$29 million for the full
year. The group's subsidiaries delivered underlying profit of US$64 million,
while associates contributed an underlying loss of US$35 million. There was
an encouraging improvement in second-half underlying profit to US$80 million,
representing a US$132 million increase in profitability relative to the first
half.
The group's net loss for the year was US$115 million, reflecting an impairment
charge of US$171 million in respect of its investment in Robinsons Retail.
Food - Grocery Retail
Underlying operating profit for the Grocery Retail division was US$91 million
for the year, lower than the prior year, primarily due to the absence of the
panic buying seen last year, further compounded by rising cost of goods sold
and increases in operating expenses. Despite the challenges faced throughout
2022, however, the group has been encouraged by stronger underlying
performance, with Grocery Retail underlying profitability significantly above
2019 levels, supported by the group's transformation initiatives.
Food - Convenience
Convenience underlying operating profit was US$51 million for the year,
broadly in line with the prior year. Encouragingly, profitability in the
second half improved significantly, with the group reporting US$51 million
profit compared to the breakeven result in the first half.
Health and Beauty
Underlying operating profit for the Health and Beauty division increased by
66% to US$94 million, driven by solid sales growth.
Home Furnishings
IKEA's sales for the year were impacted by COVID-related restrictions in the
first half and supply chain constraints, which impacted stock availability.
Operating profit was US$46 million, slightly ahead of the prior year,
primarily due to strong cost control.
Associates
The performance of Maxim's for the full year was severely hampered by a very
challenging first quarter as result of the fifth wave of COVID in Hong Kong,
which led to a large number of restrictions on movement and dining. The
group's share of Maxim's underlying losses was US$26 million in the first half
of the year. Encouragingly, Maxim's performance improved as the year
progressed, due to solid mooncake sales performance and the easing of dining
restrictions. The group's overall share of Maxim's underlying profits was
US$38 million for the full year.
The group's share of Yonghui's underlying losses was US$80 million for the
year, compared to a US$90 million share of underlying losses in the prior
year. While Yonghui's like-for-like sales improved in the first half of the
year, performance in the second half was impacted by government-imposed
restrictions on the Chinese mainland, as well as the slowdown in the overall
macroeconomic environment.
Robinsons Retail reported strong growth in 2022, as it benefitted from the
reopening of the Philippines economy, together with an improved product mix
and strong cost control. Robinsons Retail's underlying profit contribution
to the group was US$24 million in 2022, over 60% higher than in 2021.
Mandarin Oriental
Mandarin Oriental continued its recovery in 2022 as travel restrictions lifted
in most parts of the world and it ended the year strongly, with a return to
underlying profitability. Owned hotels achieved improved occupancy at strong
rates, and the management business continued to grow robustly, exceeding 2019
profitability. The group's management business recorded a strong
performance, with robust growth in management fees, particularly from resort
destinations such as Bodrum, Turkey, Lake Como, Italy and Dubai, UAE. The
group's management business reported an underlying profit of US$17 million in
2022, compared to US$5 million in 2021.
Most of the Group's owned or partially owned properties reported better
earnings in 2022. The overall performance from owned hotels, however,
continued to be adversely affected by lower contributions from the Hong Kong
and Tokyo hotels, whose performance was heavily impacted by COVID restrictions
throughout the year. Results were notably better in London, Paris,
Singapore, and Bangkok, driven by high rates and improved occupancy from the
previous year.
The group achieved an underlying profit of US$8 million for the full year, its
first profit since 2019. Although profitability remained below pre-pandemic
levels, this is a significant improvement compared with 2021, when the group
recorded an underlying loss of US$68 million.
The group opened two new hotels in the year, in Shenzhen, China and Lucerne,
Switzerland, and two standalone residences in Barcelona, Spain and Beverly
Hills, USA. Five projects are scheduled to open in 2023.
In 2022, the group announced seven new management contracts, in Greece, Italy,
Egypt, Kuwait, the Maldives, China and Vietnam. The group's robust development
pipeline includes 26 projects expected to be completed in the next five years.
The Causeway Bay site in Hong Kong, which is being redeveloped as a mixed-use
commercial building remains on track to complete in 2025.
Jardine Cycle & Carriage
JC&C's underlying profit was 39% higher than 2021 at US$1,096 million.
After accounting for non-trading items, profit attributable to shareholders
was US$740 million, 12% higher than the same period last year. Non-trading
items in 2022 of US$356 million comprised unrealised fair value losses of
US$238 million related to non-current investments, and an impairment loss of
US$114 million in respect of the investment in Siam City Cement ('SCCC'),
necessary due to a challenging operating environment.
Astra's contribution to the group's underlying profit increased to a record
US$913 million from US$655 million last year, with improved performances from
most of its businesses, reflecting the recovery in the Indonesian economy and
high commodity prices.
The underlying profit from JC&C's Direct Motor Interests increased to
US$63 million from US$39 million last year, mainly due to improved
contributions from Cycle & Carriage Singapore and Malaysia, and Tunas
Ridean in Indonesia. Other Strategic Interests contributed an underlying
profit of US$86 million, down 4% from the previous year.
THACO
THACO contributed a profit of US$83 million, 34% up from the previous year.
The profit from its automotive business continued to grow, supported by
strong production levels and a temporary reduction in registration fees for
locally-assembled vehicles that expired in May 2022. Its unit sales were
higher and its market share increased. Margins benefitted from strong demand
and an improved sales mix. The group continues to expand its investment in
agriculture and, as a result, saw an increase in losses from this business as
substantial pre-production losses were incurred.
Direct Motor Interests
Direct Motor Interests saw an increase of 62% in underlying profit, with
better results in Singapore, Malaysia and Indonesia. Cycle & Carriage
Singapore's contribution was 13% higher, mainly due to increased profits from
its premium and used car operations. New passenger car sales fell by 15% as
sales volume, particularly in respect of its mass-market models, was adversely
impacted by the tightened Certificate of Entitlement cycle. Market share,
however, increased from 15% to 19%.
In Indonesia, Tunas Ridean's contribution was 71% higher than the previous
year, with higher profits across its automotive, financial services and
leasing businesses.
Cycle & Carriage Bintang in Malaysia saw an increased profit, mainly due
to improved sales volumes and margins backed by a larger order book, arising
from a temporary reduction in government sales tax.
During the year, JC&C further increased its interest in Cycle &
Carriage Bintang from 89.0% to 96.9%, through on-market purchases, acceptances
under its Voluntary General Offer and direct purchases from the minority
shareholders. Cycle & Carriage Bintang was delisted from Bursa Malaysia
in September 2022.
Other Strategic Interests
The profit from JC&C's Other Strategic Interests decreased by 4% compared
with the previous year, with a significantly lower contribution from SCCC, as
the business was adversely impacted by higher energy costs and inflationary
pressure, as well as increased tax rates in Sri Lanka and the depreciation of
the rupee, which offset improved cement volumes and prices in most of its
markets.
REE's contribution was, however, 70% higher than the previous year, mainly due
to an improved performance from its renewable energy investments as a result
of favourable hydrology.
The group's investment in Vinamilk produced a slightly lower dividend income
of US$37 million compared to US$39 million last year. Vinamilk reported a
decrease in net profit, mainly due to higher raw material costs.
Astra
Astra delivered record earnings, with net profit under Indonesian accounting
standards of Rp28.9 trillion, equivalent to US$1.9 billion, 43% higher than
2021. Excluding the net fair value loss on the group's investments in GoTo
and Hermina, Astra's net profit of Rp30.5 trillion, or US$2.0 billion, was 51%
higher than 2021.
A strong recovery in the Indonesian economy and higher commodity prices drove
stronger performances from all of Astra's businesses and in particular its
infrastructure and logistics, heavy equipment and mining and automotive
divisions.
Automotive
Net income from Astra's automotive division increased by 33% to US$648
million, reflecting higher sales volume.
The wholesale car market increased by 18% in 2022. Astra's car sales for
that period were 17% higher, with market share relatively stable at 55%. The
wholesale motorcycle market increased by 3%, while Astra Honda Motor's sales
increased by 2%, with sales growth limited by semiconductor supply issues,
while market share remained relatively stable at 77%.
Astra Otoparts saw a 117% increase in profit compared to the previous year,
mainly due to higher revenues from the original equipment manufacturer and
replacement market segments.
Financial Services
Net income from the group's financial services division increased by 22% to
US$404 million, due to higher contributions from its consumer finance
businesses, which saw a 21% increase in new amounts financed. The net income
contribution from the group's car-focussed finance companies increased due to
larger loan portfolios, while the contribution from Astra's
motorcycle-focussed finance company, Federal International Finance, was higher
due to larger loan portfolios and lower loan loss provisions.
General insurance company Asuransi Astra Buana reported a 12% increase in net
income to US$80 million, mainly caused by higher investment and underwriting
income.
Heavy Equipment, Mining, Construction and Energy
Net income from the group's heavy equipment, mining, construction and energy
division increased by 107% to US$850 million, mainly due to higher
contributions from heavy equipment sales, mining contracting and coal mining,
all of which benefitted from unprecedented coal prices.
United Tractors reported a 104% increase in net income to US$1,408 million.
Komatsu heavy equipment sales rose significantly and revenue from its parts
and service businesses was higher. Mining services contractor Pamapersada
Nusantara recorded a higher overburden removal volume, while coal production
was relatively stable. Agincourt Resources, 95%-owned by United Tractors,
reported a decrease in gold sales.
General contractor Acset Indonusa, 82.2%-owned by United Tractors, reported a
lower net loss of US$30 million. Net losses continued to be incurred mainly as
a result of the continued slowdown of several ongoing projects.
Agribusiness
Net income from Astra's agribusiness division decreased by 12% to US$92
million, largely due to lower crude palm oil sales volumes and production,
which offset an increase in selling prices.
Infrastructure and Logistics
Astra's infrastructure and logistics division reported a significant increase
in net income to US$35 million, primarily due to improved performance in its
toll road businesses. The group's toll road concessions saw higher toll
revenue during the period. Astra has 396 km of operational toll roads along
the Trans-Java network and in the Jakarta Outer Ring Road. Serasi
Autoraya's net income increased by 19%, mainly due to an increase in vehicles
under contract, despite a lower used car earnings contribution.
Information Technology
Net income from the group's information technology division was 12% higher at
US$5 million.
Property
The group's property division saw a 10% increase in net income to US$9
million, primarily due to a higher occupancy rate in Menara Astra and the
handover of units in the Arumaya development starting at the end of 2022.
Outlook
The encouraging recovery in performance across many of our businesses
continued in 2022 and overall earnings returned to levels last seen in 2019.
This reflected the broad diversification of the Group, even while many of
our businesses in Hong Kong and the Chinese mainland were held back by the
continued impact of the pandemic.
We are optimistic that the reopening of borders, as well as opportunities in
Southeast Asia will drive the Group's cyclical recovery during 2023 despite
softening commodity prices, and we remain confidential in our strategy for
sustainable, long-term profit growth.
John Witt
Group Managing Director
Jardine Matheson Holdings Limited
Consolidated Profit and Loss Account
for the year ended 31st December 2022
2022 2021
Underlying Non- Underlying Non-
business trading Total business trading
performance items US$m performance items Total
US$m US$m US$m US$m US$m
Revenue (note 2) 37,724 - 37,724 35,862 - 35,862
Net operating costs (note 3) (33,598) (363) (33,961) (32,534) 1,114 (31,420)
Change in fair value of investment properties - (930) (930) - (1,410) (1,410)
Operating profit 4,126 (1,293) 2,833 3,328 (296) 3,032
Net financing charges
- financing charges (625) - (625) (595) - (595)
- financing income 197 - 197 206 - 206
(428) - (428) (389) - (389)
Share of results of associates and joint ventures (note 4)
- before change in fair value of investment properties 1,232 (411) 821 1,178 10 1,188
- change in fair value of investment properties - (3) (3) - 81 81
1,232 (414) 818 1,178 91 1,269
Profit before tax 4,930 (1,707) 3,223 4,117 (205) 3,912
Tax (note 5) (964) 4 (960) (828) (123) (951)
Profit after tax 3,966 (1,703) 2,263 3,289 (328) 2,961
Attributable to:
Shareholders of the Company (notes 6 & 7) 1,584 (1,230) 354 1,513 368 1,881
Non-controlling interests 2,382 (473) 1,909 1,776 (696) 1,080
3,966 (1,703) 2,263 3,289 (328) 2,961
US$ US$ US$ US$
Earnings per share (note 6)
- basic 5.49 1.22 4.83 6.01
- diluted 5.49 1.22 4.83 6.01
Jardine Matheson Holdings Limited
Consolidated Statement of Comprehensive Income
for the year ended 31st December 2022
2022 2021
US$m US$m
Profit for the year 2,263 2,961
Other comprehensive expense
Items that will not be reclassified to profit and loss:
Net exchange translation loss arising during the year (718) (62)
Remeasurements of defined benefit plans 37 86
Net revaluation surplus before transfer to
investment properties
- tangible assets - 75
- right-of-use assets 39 3
Tax on items that will not be reclassified (7) (9)
(649) 93
Share of other comprehensive income of 9 9
associates and joint ventures
(640) 102
Items that may be reclassified subsequently to profit
and loss:
Net exchange translation differences
- net loss arising during the year (569) (165)
- transfer to profit and loss 4 (21)
(565) (186)
Revaluation of other investments at fair value through
other comprehensive income
- net loss arising during the year (20) (2)
- transfer to profit and loss (2) (3)
(22) (5)
Cash flow hedges
- net gain arising during the year 92 75
- transfer to profit and loss (7) 12
85 87
Tax relating to items that may be reclassified (11) (21)
Share of other comprehensive expense of (963) (16)
associates and joint ventures
(1,476) (141)
Other comprehensive expense for the year, net of tax (2,116) (39)
Total comprehensive income for the year 147 2,922
Attributable to:
Shareholders of the Company (660) 1,908
Non-controlling interests 807 1,014
147 2,922
Jardine Matheson Holdings Limited
Consolidated Balance Sheet
at 31st December 2022
At 31st December
2022 US$m 2021 US$m
Assets
Intangible assets 2,528 2,635
Tangible assets 5,853 6,184
Right-of-use assets 4,184 4,274
Investment properties 31,813 32,847
Bearer plants 465 499
Associates and joint ventures 17,856 17,980
Other investments 2,801 2,908
Non-current debtors 3,222 2,961
Deferred tax assets 575 518
Pension assets 17 32
Non-current assets 69,314 70,838
Properties for sale 3,311 3,345
Stocks and work in progress 3,513 2,793
Current debtors 6,873 6,928
Current investments 18 46
Current tax assets 156 172
Bank balances and other liquid funds
- non-financial services companies 5,526 6,904
- financial services companies 372 378
5,898 7,282
19,769 20,566
Asset classified as held for sale 65 85
Current assets 19,834 20,651
Total assets 89,148 91,489
At 31st December
2022 US$m 2021 US$m
Equity
Share capital 73 179
Share premium and capital reserves 26 25
Revenue and other reserves 28,727 35,800
Own shares held - (6,223)
Shareholders' funds 28,826 29,781
Non-controlling interests 27,371 28,587
Total equity 56,197 58,368
Liabilities
Long-term borrowings
- non-financial services companies 10,541 11,026
- financial services companies 1,532 1,273
12,073 12,299
Non-current lease liabilities 2,951 3,022
Deferred tax liabilities 791 743
Pension liabilities 368 451
Non-current creditors 191 250
Non-current provisions 336 309
Non-current liabilities 16,710 17,074
Current creditors 10,459 10,074
Current borrowings
- non-financial services companies 2,500 2,513
- financial services companies 1,663 1,846
4,163 4,359
Current lease liabilities 772 812
Current tax liabilities 672 609
Current provisions 175 193
Current liabilities 16,241 16,047
Total liabilities 32,951 33,121
Total equity and liabilities 89,148 91,489
Jardine Matheson Holdings Limited
Consolidated Statement of Changes in Equity
for the year ended 31st December 2022
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
2022
At 1st January 179 - 25 34,926 2,242 (18) (1,350) (6,223) 29,781 28,587 58,368
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 28,887 2,272 55 (2,487) - 28,826 27,371 56,197
2021
At 1st January 181 - 31 33,497 2,167 (55) (1,152) (5,282) 29,387 33,456 62,843
Total comprehensive income - - - 1,966 76 37 (171) - 1,908 1,014 2,922
Dividends paid by the Company (note 8) - - - (505) - - - - (505) - (505)
Dividends paid to non-controlling interests - - - - - - - - - (669) (669)
Unclaimed dividends forfeited - - - 1 - - - - 1 1 2
Issue of shares - 3 - - - - - - 3 - 3
Employee share option schemes - - 1 - - - - - 1 - 1
Scrip issued in lieu of dividends 1 (1) - 152 - - - - 152 - 152
Repurchase of shares (3) (8) - (569) - - - - (580) - (580)
Acquisition of the remaining interest in Jardine Strategic - - - - - - - (941) (941) (4,627) (5,568)
Subsidiaries disposed of - - - - - - - - - (5) (5)
Change in interests in subsidiaries - - - 282 - - - - 282 (581) (299)
Change in interests in associates and joint ventures - - - 73 - - - - 73 (2) 71
Transfer - 6 (7) 29 (1) - (27) - - - -
At 31st December 179 - 25 34,926 2,242 (18) (1,350) (6,223) 29,781 28,587 58,368
On 8th March 2021, the Company announced a plan to simplify the Group's parent
company structure, including the acquisition for cash of the 15% of Jardine
Strategic Holdings Limited's ('Jardine Strategic') issued share capital that
the Company and its wholly-owned subsidiaries did not already own (the
'Acquisition'). The Acquisition was implemented by way of an amalgamation of
Jardine Strategic and a wholly-owned subsidiary of the Company, under the
Companies Act 1981 of Bermuda. The total Acquisition value was approximately
US$5.6 billion. The Acquisition was financed by the issuance of a total of
US$1.2 billion bonds on 9th April 2021, new revolving credit facilities and
existing cash resources.
The Acquisition was completed on 14th April 2021, following shareholders'
approval at Jardine Strategic's special general meeting on 12th April 2021.
The Acquisition value and the related transaction costs resulted in a
reduction of the Group's total equity in 2021.
At the Company's annual general meeting on 5th May 2022, shareholders approved
the cancellation of the 59% shareholding in the Company held directly and
indirectly by the above amalgamated subsidiary by way of a reduction of
capital in the Company. The capital reduction, which was effective on 18th
May 2022, constituted the final stage in the Group's simplification of its
parent company structure.
Jardine Matheson Holdings Limited
Consolidated Cash Flow Statement
for the year ended 31st December 2022
2022 2021
US$m US$m
Operating activities
Cash generated from operations 5,287 5,383
Interest received 177 194
Interest and other financing charges paid (564) (573)
Tax paid (1,006) (728)
3,894 4,276
Dividends from associates and joint ventures 931 800
Cash flows from operating activities 4,825 5,076
Investing activities
Purchase of subsidiaries (19) (24)
Purchase of associates and joint ventures (note 9(a)) (658) (194)
Purchase of other investments (note 9(b)) (645) (467)
Purchase of intangible assets (154) (158)
Purchase of tangible assets (1,014) (620)
Additions to right-of-use assets (53) (25)
Additions to investment properties (123) (118)
Additions to bearer plants (39) (32)
Advances to and repayments to associates and joint ventures (note 9(c)) (802) (1,100)
Advances from and repayments from associates and joint ventures (note 9(d)) 416 850
Sale of subsidiaries (note 9(e)) - 1,510
Sale of associates and joint ventures 30 60
Sale of other investments (note 9(f)) 228 398
Sale of intangible assets 3 -
Sale of tangible assets (note 9 (g)) 230 135
Sale of right-of-use assets 7 13
Sale of investment properties - 3
Cash flows from investing activities (2,593) 231
Financing activities
Issue of shares 1 3
Capital contribution from non-controlling interests 4 -
Acquisition of the remaining interest in Jardine Strategic (21) (5,490)
Change in interests in other subsidiaries (note 9(h)) (708) (299)
Purchase of own shares (173) (584)
Purchase of shares for a share-based incentive plan in (20) -
a subsidiary
Drawdown of borrowings 9,047 12,572
Repayment of borrowings (9,113) (11,467)
Principal elements of lease payments (875) (894)
Dividends paid by the Company (423) (353)
Dividends paid to non-controlling interests (994) (669)
Cash flows from financing activities (3,275) (7,181)
Net decrease in cash and cash equivalents (1,043) (1,874)
Cash and cash equivalents at 1st January 7,278 9,153
Effect of exchange rate changes (356) (1)
Cash and cash equivalents at 31st December 5,879 7,278
Jardine Matheson Holdings Limited
Analysis of Profit Contribution
for the year ended 31st December 2022
2022 2021
US$m US$m
Reportable segments
Jardine Pacific 182 175
Jardine Motors 299 318
Hongkong Land 405 474
DFI Retail 22 82
Mandarin Oriental 6 (48)
Jardine Cycle & Carriage 135 119
Astra 691 474
1,740 1,594
Corporate and other interests (156) (81)
Underlying profit attributable to shareholders* 1,584 1,513
Decrease in fair value of investment properties (604) (681)
Sale of Zung Fu China(#) (28) 791
Sale of Zung Fu properties in Hong Kong - 337
Other non-trading items (598) (79)
Profit attributable to shareholders 354 1,881
Analysis of Jardine Pacific's contribution
Jardine Schindler 36 32
JEC 53 49
Gammon 39 39
Jardine Restaurants 19 27
Transport Services 23 31
Zung Fu Hong Kong(#) 12 4
Corporate and other interests - (7)
182 175
Analysis of Jardine Motors' contribution
Hong Kong(#) and Chinese mainland 263 285
United Kingdom 35 38
Corporate 1 (5)
299 318
* Underlying profit attributable to shareholders is the measure of profit
adopted by the Group in accordance with IFRS 8 'Operating Segments'.
(#)( ) The operations under Jardine Motors were restructured in 2021.
The motor trading business in the Chinese mainland ('Zung Fu China') was sold
to the Group's associate, Zhongsheng, in October 2021 (note 9(e)).
Subsequent to the sale, the motor trading business in Hong Kong and Macau are
managed by Jardine Pacific. Accordingly, the results of these operations are
presented under Jardine Pacific from October 2021. Operations in the United
Kingdom and Zhongsheng remain unchanged with results presented under Jardine
Motors.
Jardine Matheson Holdings Limited
Notes
1. Accounting Policies and Basis of Preparation
The financial information contained in this announcement has been based on the
audited results for the year ended 31st December 2022 which have been prepared
in conformity with International Financial Reporting Standards, including
International Accounting Standards and Interpretations adopted by the
International Accounting Standards Board.
The Group has adopted the following amendments for the annual reporting period
commencing 1st January 2022.
Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract
(effective from 1st January 2022)
The amendments clarify that for the purpose of assessing whether a contract is
onerous, the cost of fulfilling the contract includes both the incremental
costs of fulfilling that contract and an allocation of other costs that relate
directly to fulfilling contracts. The Group applied the amendment from 1st
January 2022 and there was no material impact on the Group's consolidated
financial statements.
There are no other amendments which are effective in 2022 and relevant to the
Group's operations, that have a significant impact on the Group's results,
financial position and accounting policies.
The Group has not early adopted any standard, interpretation or amendments
that have been issued but not yet effective.
2. Revenue
Gross revenue Revenue
2022 2021 2022 2021
US$m US$m US$m US$m
By business:
Jardine Pacific 6,601 5,665 2,079 1,533
Jardine Motors 28,882 31,568 2,044 4,988
Hongkong Land 5,684 6,845 2,244 2,384
DFI Retail 27,597 27,684 9,174 9,015
Mandarin Oriental 834 510 454 317
Jardine Cycle & Carriage 8,243 6,434 1,589 1,403
Astra 37,173 30,909 20,205 16,285
Intersegment transactions (256) (245) (65) (63)
114,758 109,370 37,724 35,862
Gross revenue comprises revenue together with 100% of revenue from associates
and joint ventures.
3. Net Operating Costs
2022 2021
US$m US$m
Cost of sales (27,538) (26,755)
Other operating income 493 1,940
Selling and distribution costs (4,017) (4,024)
Administration expenses (2,296) (2,283)
Other operating expenses (603) (298)
(33,961) (31,420)
In relation to the COVID-19 pandemic, the Group received government grants and
rent concessions of US$31 million (2021: US$58 million) and US$17 million
(2021: US$49 million), respectively, for the year ended 31st December 2022.
These subsidies were accounted for as other operating income.
Net operating costs included the following gains/(losses) from non-trading
items:
Change in fair value of other investments (390) (103)
Impairment of assets (14) (5)
Sale of Zung Fu China (note 9(e)) (20) 899
Sale and closure of other businesses 5 -
Sale of a hotel property 41 -
Sale of Zung Fu properties in Hong Kong - 336
Sale of other property interests 31 25
Restructuring of businesses (7) (31)
Other (9) (7)
(363) 1,114
4. Share of Results of Associates and Joint Ventures
2022 2021
US$m US$m
By business:
Jardine Pacific 12 118
Jardine Motors 263 206
Hongkong Land 193 434
DFI Retail (212) (41)
Mandarin Oriental 10 (22)
Jardine Cycle & Carriage 45 139
Astra 531 452
Corporate and other interests (24) (17)
818 1,269
Share of results of associates and joint ventures included the following
gains/(losses) from non-trading items:
Change in fair value of investment properties (3) 81
Change in fair value of other investments (9) 12
Impairment of assets
- investment in Robinsons Retail (171) -
- investment in Siam City Cement (114) -
- other (117) (14)
(402) (14)
Sale and closure of businesses - 3
Other - 9
(414) 91
Results are shown after tax and non-controlling interests in the associates
and joint ventures.
In relation to the COVID-19 pandemic, included in share of results of
associates and joint ventures were the Group's share of the government grants
and rent concessions of US$24 million (2021: US$18 million) and US$14
million (2021: US$19 million), respectively, for the year ended 31st December
2022.
5. Tax
2022 2021
US$m US$m
Tax charged to profit and loss is analysed as follows:
Current tax (1,022) (974)
Deferred tax 62 23
(960) (951)
China (139) (355)
Southeast Asia (793) (560)
United Kingdom (6) (12)
Rest of the world (22) (24)
(960) (951)
Tax relating to components of other comprehensive income is analysed as
follows:
Remeasurements of defined benefit plans (7) (9)
Cash flow hedges (11) (21)
(18) (30)
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$490 million
(2021: US$456 million) is included in share of results of associates and
joint ventures. Share of tax charge of US$30 million (2021: US$11 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$354 million (2021: US$1,881 million) and on the weighted average number
of 289 million (2021: 313 million) shares in issue during the year.
Diluted earnings per share are calculated on profit attributable to
shareholders of US$354 million (2021: US$1,881 million), which is after
adjusting for the effects of the conversion of dilutive potential ordinary
shares of subsidiaries, associates or joint ventures, and on the weighted
average number of 289 million (2021: 313 million) shares in issue during the
year.
The weighted average number of shares is arrived at as follows:
Ordinary shares
in millions
2022 2021
Weighted average number of shares in issue 467 721
Company's share of shares held by subsidiaries (178) (408)
Weighted average number of shares for basic earnings per share calculation 289 313
Adjustment for shares deemed to be issued for no consideration under the - -
Senior Executive Share Incentive Schemes
Weighted average number of shares for diluted earnings per share calculation 289 313
Additional basic and diluted earnings per share are also calculated based on
underlying profit attributable to shareholders. A reconciliation of earnings
is set out below:
2022 2021
US$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 354 1.22 1.22 1,881 6.01 6.01
Non-trading items (note 7) 1,230 (368)
Underlying profit attributable to shareholders 1,584 5.49 5.49 1,513 4.83 4.83
7. Non-trading Items
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains or losses on revaluation of
investment properties and equity investments which are measured at fair value
through profit and loss; gains and losses arising from the sale of businesses,
investments and properties; impairment of non-depreciable intangible assets,
associates and joint ventures and other investments; provisions for the
closure of businesses; acquisition-related costs in business combinations; and
other credits and charges of a non-recurring nature that require inclusion in
order to provide additional insight into underlying business performance.
2022 2021
US$m US$m
By business:
Jardine Pacific (305) 382
Jardine Motors (30) 789
Hongkong Land (335) (663)
DFI Retail (112) (4)
Mandarin Oriental (46) (58)
Jardine Cycle & Carriage (234) (85)
Astra (37) (1)
Corporate and other interests (131) 8
(1,230) 368
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
Change in fair value of investment properties
- Hongkong Land (335) (664)
- other (269) (17)
(604) (681)
Change in fair value of other investments (309) (62)
Impairment of assets
- investment in Robinsons Retail (133) -
- investment in Siam City Cement (87) -
- other (125) (12)
(345) (12)
Sale of Zung Fu China (note 9(e)) (28) 791
Sale and closure of other businesses 4 2
Sale of a hotel property 37 -
Sale of Zung Fu properties in Hong Kong - 337
Sale of other property interests 23 18
Restructuring of businesses (5) (23)
Other (3) (2)
(1,230) 368
8. Dividends
2022 2021
US$m US$m
Final dividend in respect of 2021 of US¢156.00 1,114 921
(2020: US¢128.00) per share
Interim dividend in respect of 2022 of US¢55.00 159 318
(2021: US¢44.00) per share
1,273 1,239
Company's share of dividends paid on the shares held by subsidiaries (666) (734)
607 505
A final dividend in respect of 2022 of US¢160.00 (2021: US¢156.00) per share
amounting to a total of US$464 million (2021: US$1,114 million) is proposed by
the Board. The dividend proposed will not be accounted for until it has been
approved at the 2023 Annual General Meeting and will be accounted for as an
appropriation of revenue reserves in the year ending 31st December 2023.
Final dividend in respect of 2021 of US$448 million, after netting US$666
million paid to the shares held by the Company's subsidiaries, was charged to
reserves in the year ended 31st December 2022.
9. Notes to Consolidated Cash Flow Statement
(a) Purchase of associates and joint ventures 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.
Purchase in 2021 mainly included US$115 million for Hongkong Land's
investments in the Chinese mainland, US$9 million for Jardine Cycle &
Carriage's additional interest in Refrigeration Electrical Engineering
Corporation and US$66 million for Astra's investments in toll road concession
business.
(b) Purchase of other investments for 2022 mainly included acquisition of
securities 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 in Astra; and investment
in limited partnership investments funds for US$151 million in Corporate.
Purchase in 2021 included US$375 million for acquisition of securities in
Astra and US$69 million for investment in limited partnership investment funds
in Corporate.
(c) Advances to and repayments to associates and joint ventures in 2022 and 2021
mainly included Hongkong Land's advances to its property joint ventures.
(d) Advances from and repayments from associates and joint ventures in 2022 and
2021 mainly included advances from and repayments from Hongkong Land's
property joint ventures
(e) Sale of subsidiaries
2021
US$m
Non-current assets 605
Current assets 423
Non-current liabilities (86)
Current liabilities (250)
Non-controlling interests (5)
Net assets 687
Cumulative exchange translation difference (25)
Profit on disposal 1,266
Deferred gain on sale and leaseback of properties 126
Sales proceeds 2,054
Adjustment for carrying value of an associate (428)
Cash and cash equivalents of subsidiaries disposed of (116)
Net cash inflow 1,510
Net cash inflow for sale of subsidiaries in in 2021 included US$738 million
from Jardine Pacific's sale of property holding subsidiaries which hold the
Zung Fu Hong Kong properties in Hung Hom and Chai Wan with sale and leaseback
arrangements, and US$754 million (net of tax of US$115 million) from Jardine
Motors' sale of Zung Fu China to the Group's associate, Zhongsheng, for a
total consideration of US$1.3 billion, comprised US$886 million in cash and
US$428 million worth of new shares in Zhongsheng, increasing the Group's
shareholding in Zhongsheng to 20.9% at 31st December 2021.
(f) Sale of other investments in 2022 mainly included Astra's sale of
securities. Sale in 2021 comprised sale of securities of US$246 million and
US$152 million in Astra and Corporate, respectively.
(g) Sale of tangible assets in 2022 included US$131 million for Mandarin
Oriental's sale of a hotel property.
(h) Change in interests in subsidiaries
2022 2021
US$m US$m
Increase in attributable interests
- Hongkong Land (352) (192)
- Jardine Cycle & Carriage (130) -
- Mandarin Oriental (1) -
- other (225) (107)
(708) (299)
Increase in attributable interests in other subsidiaries 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%.
Increase in 2021 included US$18 million and US$19 million for Jardine Cycle
& Carriage's additional 30% and 25% interests in Cycle & Carriage
Bintang and Republic Auto, respectively, and US$70 million for Astra's
acquisition of the remaining 33% interest in PT Astra Modern Land.
10. Capital Commitments and Contingent Liabilities
Total capital commitments at 31st December 2022 amounted to US$2,500 million
(2021: US$2,864 million).
Following the acquisition of the 15 per cent of Jardine Strategic not
previously owned by the Company and its wholly-owned subsidiaries, which was
effected on 14th April 2021, a number of former Jardine Strategic
shareholders are seeking an appraisal of the fair value of their shares in
Jardine Strategic by the Bermuda court, relying upon the process referred to
in the shareholder circular issued in connection with the acquisition. These
shareholders claim the consideration of US$33 per share that Jardine Strategic
considered to be fair value for its shares, and that all shareholders have
already received, did not represent fair value. Although the proceedings
were commenced in April 2021, they are still at an early stage and it is
anticipated that the court appraisal process will not be concluded for at
least a further 12 months. The Board believes that the US$33 per share that
was paid represented fair value to Jardine Strategic minority shareholders and
is of the opinion that no provision is required in relation to these claims.
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed outstanding claims
and taking into account legal advice received, the Directors are of the
opinion that adequate provisions have been made in the financial statements.
11. Related Party Transactions
In the normal course of business the Group undertakes a variety of
transactions with certain of its associates and joint ventures.
The most significant of such transactions relate to the purchases of motor
vehicles and spare parts from its associates and joint ventures in Indonesia
including PT Toyota-Astra Motor, PT Astra Honda Motor and PT Astra Daihatsu
Motor. Total cost of motor vehicles and spare parts purchased in 2022
amounted to US$6,142 million (2021: US$4,970 million). The Group also
sells motor vehicles and spare parts to its associates and joint ventures in
Indonesia including PT Astra Honda Motor, PT Astra Daihatsu Motor and PT Tunas
Ridean. Total revenue from sale of motor vehicles and spare parts in 2022
amounted to US$763 million (2021: US$604 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.
12. Post Balance Sheet Event
The Group has entered into an agreement to sell its entire interest in the
automotive dealership business in the United Kingdom. Completion is expected
to take place in the first quarter of 2023. The gain on disposal will be
recognised as a non-trading item in the 2023 financial statements.
The Group, through a subsidiary of Astra, also entered into a conditional
agreement with third parties to acquire 90% of PT Stargate Pasific Resources,
a company engaged in the business of nickel mining, and 90% of PT Stargate
Mineral Asia, a company engaged in processing of nickel, for a total of
approximately US$272 million in December 2022. Completion of the acquisition
is subject to the fulfilment of the conditions set out in the agreement.
Jardine Matheson Holdings Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal control.
The process by which the Group identifies and manages risk will be set out in
more detail in the Corporate Governance section of the Company's 2022 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-engineer existing business processes to take advantage of new technological
capabilities.
· Invest in and partner 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.
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.
Environmental and climate 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.
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.
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.
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
· Engagement of 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.
· Undertake early scenario planning assessing the implications of new rules and
preparing contingencies.
Pandemic
Description
COVID-19 has demonstrated the wide-ranging and long-lasting impacts and
disruptions for businesses, communities and employees that may result from the
spread of a pandemic.
Significant disruptions and uncertainties would likely result from global or
regional pandemics if they raise the prospect of lockdowns, restrictions on
cross-border mobility, interruptions to supply chains, and dampened consumer
sentiment while vaccines are unavailable.
Mitigation
· Increasing flexibility and resilience of work arrangements, including tools
that enable all employees to work remotely.
· Testing business continuity plans periodically for various scenarios including
loss of premises, systems, people and extended periods of split teams.
· Increasing resilience of supply chain with sourcing alternative suppliers for
key inputs and close coordination with logistics partners.
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.
Monitoring of Risk Management and Internal Control Systems
The effectiveness of the Company's risk management and internal control
systems is monitored by the internal audit function, which reports
functionally to the Audit Committee of the Company, and by a series of audit
committees or risk management and compliance committees that operate in each
significant business unit across the Group. The internal audit function also
monitors the approach taken by the business units to managing risk. The
findings of the internal audit function and recommendations for any corrective
action required are reported to the relevant audit committee and, if
appropriate, to the Company's Audit Committee.
Responsibility Statement
The Directors of the Company confirm to the best of their knowledge that:
(a) the consolidated financial statements prepared in accordance with
International Financial Reporting Standards, including International
Accounting Standards and Interpretations adopted by the International
Accounting Standards Board, give a true and fair view of the assets,
liabilities, financial position and profit and losses of the Group; and
(b) the Chairman's Statement, Group Managing Director's Review, Financial Review
and the Principal Risks and Uncertainties of the Company's 2022 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$1.60 per share will be payable on 10th May 2023,
subject to approval at the Annual General Meeting to be held on 4th May 2023,
to shareholders on the register of members at the close of business on 17th
March 2023. The shares will be quoted ex-dividend on 16th March 2023 and the
share registers will be closed from 20th to 24th March 2023, 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 2022 final dividend by notifying the United
Kingdom transfer agent in writing by 21st April 2023. The Sterling equivalent
of dividends declared in United States Dollars will be calculated by reference
to a rate prevailing on 26th April 2023.
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 17th March 2023, must
submit the relevant documents to M & C Services Private Limited, the
Singapore branch registrar, by no later than 5.00 p.m. (local time) on 16th
March 2023.
The Jardine Matheson Group
Jardine Matheson is a diversified Asian-based group founded in China in 1832,
with unsurpassed experience in the region. It has a broad portfolio of
market-leading businesses, which represent a combination of cash generating
activities and long-term property assets which are closely aligned to the
increasingly prosperous consumers of the region. The Group's businesses aim
to produce sustainable returns by providing their customers with high quality
products and services. The Group is committed to driving long-term sustainable
success in our businesses and our communities.
Jardine Matheson operates principally in China and Southeast Asia, where its
subsidiaries and affiliates benefit from the support of the Group's extensive
knowledge of the region and its long-standing relationships. These companies
are active in the fields of motor vehicles and related operations, property
investment and development, food retailing, health and beauty, home
furnishings, engineering and construction, transport services, restaurants,
luxury hotels, financial services, heavy equipment, mining and agribusiness.
Jardine Matheson holds interests in Jardine Pacific (100%), Jardine Motors
(100%), Hongkong Land (52.9%), DFI Retail Group (77.5%), Mandarin Oriental
(79.5%) and Jardine Cycle & Carriage (76.6%) ('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 in the standard segment of the London Stock Exchange, with secondary
listings in Bermuda and Singapore. Jardine Matheson Limited operates from
Hong Kong and provides management services to Group companies.
- end-
For further information, please contact:
Jardine Matheson Limited
Graham Baker / Max Sunarcia (852) 2843 8218 / 8266
Brunswick Group Limited
William Brocklehurst (852) 5685 9881
Full text of the Preliminary Announcement of Results and the Preliminary
Financial Statements for the year ended 31st December 2022 can be accessed via
the Jardines corporate website, www.jardines.com.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UUUAROOUORARRecent news on Jardine Matheson Holdings
See all newsREG - Jardine Matheson Hdg - Transaction in Own Shares
AnnouncementREG - Jardine Matheson Hdg - Transaction in Own Shares
AnnouncementREG - Jardine Matheson Hdg - Dividend
AnnouncementREG - Jardine Matheson Hdg - Transaction in Own Shares
AnnouncementREG - Jardine Matheson Hdg - Total Voting Rights
Announcement