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Director’s review
Graham Baker
Group Finance Director
The Group’s underlying net profit and underlying earnings per share (EPS) decreased by 11% and 12%, respectively in 2024 as strong performances by DFI Retail and Astra were offset by lower profit contributions from Hongkong Land and Zhongsheng.
Hongkong Land’s contribution was impacted by US$168 million non-cash impairment in its Build-to-sell business. Excluding these, the Group’s underlying net profit and EPS fell by 1% and 2%, respectively (but grew by 3% and 2% respectively at CER).
As outlined in the Group Managing Director’s review, during 2024 the Group re-focused its strategy on driving long-term value creation for shareholders, as an engaged investor in a portfolio of high-quality businesses in Asia. Although we have seen solid progression on earnings and dividends over the last five years, 3.7% 5Y EPS CAGR and 5.5% 5Y DPS CAGR, Total Shareholder Returns (TSR) have disappointed. While we saw a stabilisation and marginal recovery in TSR over the last year, we aim to drive significantly improved performance in the coming years.
Revenue
The Group’s revenue of US$35.8 billion in 2024 was slightly less than last year, principally due to disposals and the translation impact of a weaker Indonesian rupiah. Revenue in the Group’s ongoing businesses at CER grew by 3% in the year.
Hongkong Land’s revenue increased by 9% from 2023, primarily due to the Build-to-sell business, with higher residential properties sales on the Chinese mainland, partially offset by lower rental income from the Central Portfolio in Hong Kong.
Jardine Cycle & Carriage’s motor operations recorded a 1% increase in sales from 2023, driven by its motor vehicle operations in Singapore.
Astra’s revenue was flat year on year or 5% higher at CER driven by its Financial Services business, which achieved a 9% increase in new amounts financed.
DFI Retail reported lower revenue in the current year. In the Food business, this was due to the divestments of the Hero Supermarket business in Indonesia in 2024 and the Giant business in Malaysia in 2023. Convenience sales were down year-on-year, impacted by a decline in cigarette volumes following tax increases in Hong Kong. Home Furnishing revenue decreased as the market remained challenging.
Mandarin Oriental’s subsidiary hotels recorded a 6% decrease in revenue as a result of the disposal of the Paris hotel and retail properties, mitigated by higher revenue in Hong Kong, Munich and Tokyo benefitting from robust demand.
Operating profit
Operating profit from the Group’s subsidiaries, excluding non-trading items, was US$3,814 million, a decrease of US$475 million or 11%.
Hongkong Land’s underlying operating profit decreased by US$210 million to US$583 million, principally due to non-cash impairments in the Chinese mainland Build-to-sell business and lower occupancy and average office rents in Hong Kong.
Astra’s underlying operating profit decreased by 9% to US$2,724 million, reflecting fewer equipment sales Heavy Equipment business, and a weaker Indonesian rupiah.
Mandarin Oriental recorded an underlying operating profit of US$85 million, US$17 million less than 2023, reflecting the impact of disposal of the Paris hotel and retail properties in 2024, together with lower residences branding fees. Recurring hotel management fees grew 15% in the year.
Jardine Cycle & Carriage’s motor operations reported an underlying operating profit of US$71 million in 2024, US$13 million lower than 2023 due to the unfavourable exchange translation of foreign currency loans, while its motor operations continued to produce stable contributions.
Jardine Pacific reported an operating profit of US$57 million, which was US$6 million down from 2023, principally a result of weaker performance at Zung Fu Hong Kong which was impacted by changes to government tax concessions on electric vehicles. This was mitigated by improved performance in Jardine Restaurants.
DFI Retail’s underlying operating profit was US$49 million or 17% higher than 2023. Higher operating profits were achieved in Convenience due to favourable shift in product mix, and in Singapore Food due to improved margins and disciplined cost control, while Health and Beauty continued to produce a stable contribution. These increases were partially offset by lower contributions from Home Furnishings due to challenging market conditions.
Value creation
- Robust 5Y EPS CAGR 3.7% and 7.6% at CER, excluding HKL non-cash impairments
- Progressive 5Y DPS CAGR of 5.5%
- Resilient 1Y TSR but 5Y and 10Y disappointing. Strong focus on evolving the portfolio and disciplined capital allocation to ensure future delivery of superior 5Y TSR
Underlying EPS (US$)
DPS (US$)
Total shareholder return (%)
Net financing charges
Net financing charges of US$527 million were US$11 million higher compared to 2023, principally due to higher average interest rates and higher average net borrowings during the year. Interest cover^, excluding financial services companies, decreased slightly from 12 times to 11 times in 2024, though remained ample, reflecting the Group’s cautious approach to financial leverage.
^Interest cover is calculated as the sum of underlying operating profit (before the deduction of the amortisation of right-of-use assets, net of actual lease payment), and the share of results of associates and joint ventures, divided by net financing charges excluding interest on lease liabilities.
Share of results of associates and joint ventures
The Group’s US$1,125 million share of underlying results of associates and joint ventures was US$136 million, or 11% lower than 2023.
Hongkong Land’s share of associates and joint ventures contribution decreased by US$120 million in 2024 to US$115 million, as a result of non-cash impairments in the Chinese mainland Build-to-sell business, partly offset by higher residential sales completions on the Chinese mainland.
The Group’s underlying contribution from Zhongsheng of US$83 million was US$56 million lower than last year, reflecting lower new car profit, partially mitigated by growth in the after-sales business.
The contribution from Jardine Cycle & Carriage’s associates and joint ventures decreased by US$8 million to US$114 million. REE reported a lower contribution from its power generation business due to unfavourable hydrology and lower hydropower demand, and there was a lower contribution from Siam City Cement (SCCC), reflecting its disposal in August 2024.
In Mandarin Oriental, the improved result came mainly from the reopening of the Singapore hotel which was closed for renovation during 2023.
The contribution from Astra’s associates and joint ventures increased by US$27 million in 2024 to US$636 million, resulting from the solid performance of its motorcycle business, with increased car sales volumes.
Tax
The underlying effective tax rate for the year was 26%, which was broadly in line with 2023.
Non-trading Items
In 2024, the Group had net non-trading losses attributable to shareholders of US$1,939 million, which included a net decrease of US$1,209 million in the fair value of investment properties, impairment of associates and goodwill of US$456 million and US$112 million, respectively, sale and closure of businesses and a loss relating to divestment of an associate of US$174 million, offset by net gains on the sale of properties of US$39 million.
In 2023, the Group had net non-trading losses attributable to shareholders of US$975 million, which included a net decrease of US$1,066 million in the fair value of investment properties and impairment of goodwill of US$172 million, offset by gains on the sale of properties of US$105 million, and the US$101 million share of Zhongsheng’s 2022 second half profit.
Dividends
The Board is recommending a final dividend of US$1.65 per share for 2024, providing a total annual dividend for 2024 of US$2.25 per share, stable year-on-year. The final dividend will be payable on 14 May 2025, subject to approval at the Annual General Meeting to be held on 2 May 2025, to shareholders on the register of members at the close of business on 21 March 2025. The dividend will be available in cash, with a scrip alternative.
Cash Flow
Summarised cash flow
2024 US$m |
2023
US$m |
|
|---|---|---|
Cash generated from operations |
5,637 |
5,549 |
Net interest and other financing charges paid |
(551) |
(541) |
Tax paid |
(1,066) |
(1,307) |
Dividends from associates and joint ventures |
979 |
883 |
Operating activities |
4,999 |
4,584 |
Capital expenditure and investments |
(2,397) |
(4,612) |
Disposals and repayments from associates and joint ventures |
1,426 |
2,149 |
Cash flow before financing |
4,028 |
2,121 |
Acquisition of the remaining interest in Jardine Strategic |
(23) |
(5) |
Principal elements of lease payments |
(877) |
(856) |
Other financing activities |
(2,938) |
(2,402) |
Net increase/(decrease) in cash and cash equivalents |
190 |
(1,142) |
Cash inflow from operating activities for the year was US$4,999 million, compared with US$4,584 million in 2023. The increase of US$415 million from the prior year was due to decreased working capital, principally in Astra, reduction in tax paid by Hongkong Land and Astra; together with increased dividends from Astra’s associates and joint ventures.
Capital expenditure and investments for the year, before disposals, amounted to US$2,397 million (2023: US$4,612 million). This included the following:
- US$1,191 million for the purchase of tangible assets, which included US$966 million in Astra (of which US$629 million was for the acquisition of heavy equipment and machinery by Pamapersada), and US$153 million in DFI Retail for refurbishment of existing stores;
- US$417 million for the purchase of other investments, including US$292 million in Astra of which US$288 million represented acquisition of securities in relation to its financial services businesses; and US$75 million in Corporate for the capital calls by Hillhouse Fund V Feeder, L.P.; and
- US$369 million for investments in various associates and joint ventures, primarily JC&C’s additional investment in REE of US$98 million, Hongkong Land’s investments of US$115 million mainly in its Build-to-sell business, most of which were joint venture projects in the Chinese mainland (in Chongqing and Nanjing), and in Singapore; and Astra’s investment in PT Supreme Energy Rantau Dedap of US$87 million.
In 2023, the Group’s principal capital expenditure and investments included:
- US$1,667 million for the purchase of tangible assets, which included US$1,377 million in Astra (of which US$1,208 million was for the acquisition of heavy equipment and machinery to accommodate increased business activity, predominantly by Pamapersada), and US$173 million in DFI Retail for refurbishment of existing stores;
- US$1,565 million for investments in various associates and joint ventures, primarily Hongkong Land’s investments of US$665 million in the Build-to-sell business, most of which were joint venture projects in the Chinese mainland (in Chongqing and Beijing), and in Singapore; and Astra’s investment in Nickel Industries of US$616 million;
- US$671 million for the purchase of other investments, which included US$288 million in Astra (of which US$285 million represented acquisition of securities in relation to its financial services businesses); and Jardine Cycle & Carriage further invested in THACO through subscription of US$357 million five-year convertible bond; and
- US$378 million for the acquisition of subsidiaries, which included US$285 million for Astra’s acquisition of PT Anugerah Surya Resources, PT Stargate Pasific Resources and PT Stargate Mineral Asia.
The Group also continued to progress the simplification of its portfolio by divesting non-core investments.
Capital allocation framework
1
- Organic investment in portfolio to drive long-term growth and returns
2
- Sustainable, stable dividends growing over time
3
- New business M&A
- Investment in portfolio companies, including through buy-backs
The contribution to the Group’s cash flow from disposals and repayments from associates and joint ventures for the year amounted to US$1,426 million (2023: US$2,149 million), which principally include:
- US$388 million from the sale of associates and joint ventures, primarily Jardine Cycle & Carriage’s investment in SCCC of US$344 million;
- US$317 million being proceeds received, net of transaction costs, relating to the sale of the Paris hotel in Mandarin Oriental and the property holding companies in DFI Retail; and
- US$253 million from sale of other investments, primarily US$171 million from the sale of investments by Astra’s financial services businesses; and sale of a listed investment by Corporate for US$82 million.
The Group’s cash flow from disposals and repayments from associates and joint ventures in 2023 included principally:
- US$364 million from sale of tangible assets, primarily DFI Retail’s sale and sale and leaseback of properties in Singapore, Malaysia and Indonesia, and Jardine Cycle & Carriage’s sale of its properties in Singapore under a sale and leaseback arrangement;
- US$359 million being proceeds received, net of transaction costs, relating to sale of the automotive dealership business in the United Kingdom;
- US$161 million, primarily from the sale of Astra’s investment in relation to its financial services businesses; and
- US$134 million from the sale of associates and joint ventures, primarily Jardine Pacific’s investment in Greatview Aseptic Packaging Company.
During the year, the Company also repurchased its own shares (for cancellation) at a total cost of US$101 million (2023: US$209 million). Additional shares in Group companies were also purchased in 2024. Shares in Jardine Cycle & Carriage were acquired at a total cost of US$527 million (2023: US$136 million) and Mandarin Oriental shares at a total cost of US$172 million (2023: US$18 million). These purchases are recognised as part of financing activities in the Consolidated Cash Flow Statement.
Treasury policy
The Group manages its exposure to financial risk using a variety of techniques and instruments. The main objectives are to limit foreign exchange and interest rate risks to provide a degree of certainty about costs. Investment of the Group’s cash resources is managed so as to minimise risk, while seeking to enhance yield. Appropriate credit guidelines are in place to manage counterparty risk.
When economically sensible to do so, borrowings are taken in local currency to hedge foreign exchange exposures on investments. A portion of borrowings is denominated in fixed rates. Adequate headroom in committed facilities is maintained to facilitate the Group’s capacity to pursue new investment opportunities and to provide some protection against market uncertainties. Overall, the Group’s funding arrangements are designed to keep an appropriate balance between equity and debt from banks and capital markets, both short and long term in tenor, to give flexibility to develop the business.
The Group’s Treasury operations are managed as cost centres and are not permitted to undertake speculative transactions unrelated to underlying financial exposures. Note 43 of the financial statements summarises the Group’s financial risk factors.
Funding
The Group is well financed with strong liquidity. Net gearing, excluding net borrowings relating to Astra’s financial services companies, was 14% at 31 December 2024, down from 15% at the end of 2023. This reflected higher cash flow from operating activities and lower capital expenditure by the Group’s portfolio companies (both organic and for M&A). Investment for long-term growth by portfolio companies remains the Group’s top capital deployment priority. Net borrowings, on the same basis, were US$7.3 billion at 31 December 2024, compared with US$8.4 billion at the end of 2023. Astra’s financial services companies had net borrowings of US$3.7 billion at the end of the year, compared with US$3.4 billion at the end of 2023.
Net borrowings* and total equity (US$ billion)
*Excluding net borrowings of Astra’s financial services companies.
At the year end, undrawn committed facilities totalled US$7.3 billion. In addition, the Group had liquid funds of US$4.8 billion. During the year, the Group’s total equity decreased by US$2.6 billion to US$53.3 billion.
The average tenor of the Group’s borrowings at 31 December 2024 was 4.3 years, slightly down from 4.4 years at the end of 2023. 84% of borrowings were non-US dollar denominated, as shown below, and directly related to the Group’s businesses in the countries of the currencies concerned. At 31 December 2024, approximately 43% of the Group’s borrowings, exclusive of Astra’s financial services companies, were at floating rates and the remaining 57% were at fixed rates, including those hedged with derivative financial instruments with major creditworthy financial institutions. 87% of the borrowings for Astra’s financial services companies were at fixed rates.
Borrowings profile at 31 December 2024
Interest rate*
Fixed
Floating
*Excluding Astra’s financial services companies.
Currency
IDR
HKD
Others
USD
Maturity
< 1 year
1-2 years
2-5 years
> 5 years
Shareholders’ funds
Shareholders’ funds at 31 December 2024 are analysed below, by business and by geographical area. There were no significant changes in either from the prior year.
By business
Hongkong Land
Astra
Mandarin Oriental
Zhongsheng
JC&C (excl. Astra)
Jardine Pacific
DFI Retail
By geographical area
China
Southeast Asia
Rest of the World
Principal Risks and Uncertainties
A review of the principal risks and uncertainties facing the Group is set out on pages 97 to 104.
Accounting policies
The Directors continue to review the appropriateness of the accounting policies adopted by the Group, having regard to developments in International Financial Reporting Standards (IFRS). The accounting policies adopted in 2024 are consistent with those of previous year.
Certain financial information of the Group’s listed subsidiaries presented and referred to in the following individual business performance section represents the financial information of each respective business of the Group as reported within their own Annual Report (100% basis). References to profit attributable to shareholders is therefore the performance attributable to the shareholders of the respective business, which we believe provides the reader a better understanding of the relevant listed Group subsidiaries. The Jardine Matheson Group’s attributable interest in each business is disclosed, where relevant, within the segmental information in Note 2 of the financial statements.
