Consolidated Profit and Loss Account

Transcription

1 Consolidated Profit and Loss Account for the year ended 31st December 2000 Note Revenue 1 10, ,674.8 Cost of sales (7,819.0) (8,039.7) Gross profit 2, ,635.1 Other operating income Selling and distribution costs (1,829.3) (1,847.6) Administration expenses (611.3) (652.2) Other operating expenses (129.3) (61.2) Profit on sale of Robert Fleming Impairment of assets in Dairy Farm 3 (129.4) Operating profit Net financing charges 5 (106.4) (68.3) Share of results of associates and joint ventures Profit before tax 1, Tax 8 (111.3) (92.2) Profit after tax Outside interests (10.0) (87.2) Net profit US US Earnings per share 9 basic diluted Earnings per share excluding non-recurring items 9 basic diluted

2 Consolidated Balance Sheet at 31st December 2000 Note Net operating assets Goodwill Tangible assets 11 2, ,742.4 Associates and joint ventures 12 3, ,975.4 Other investments Deferred tax assets Pension assets Non-current assets 7, ,337.9 Stocks and work in progress ,111.5 Debtors and prepayments Bank balances and other liquid funds 18 1, ,601.4 Current assets 3, ,591.6 Creditors and accruals 19 (2,129.2) (2,320.6) Borrowings 20 (383.7) (555.6) Current tax liabilities (33.1) (30.9) Provisions 21 (41.8) (43.9) Current liabilities (2,587.8) (2,951.0) Net current assets Long-term borrowings 20 (2,742.4) (1,553.7) Deferred tax liabilities 14 (76.8) (77.1) Pension liabilities 15 (12.6) (14.2) Other non-current liabilities 22 (80.6) (9.5) 23 4, ,324.0 Capital employed Share capital Share premium and contributed surplus Revenue and other reserves 27 3, ,051.2 Own shares held 29 (629.8) (489.6) Shareholders funds 3, ,106.0 Outside interests 30 1, , , ,324.0 Percy Weatherall Norman Lyle Directors 27th February

3 Consolidated Statement of Changes in Shareholders Funds for the year ended 31st December 2000 Note At 1st January 3, ,931.6 Property revaluation Deferred tax on property revaluation 27 (1.0) (2.8) Net exchange translation differences amount arising in year 27 (85.9) (13.5) disposal of subsidiary undertakings, associates and joint ventures Other Net gains not recognised in consolidated profit and loss account Net profit Dividends 28 (137.3) (130.6) Exercise of share options Scrip issued in lieu of dividends Repurchase of shares 24 (1,065.2) Change in attributable interests Increase in own shares held (140.2) (57.2) At 31st December 3, ,106.0

4 Consolidated Cash Flow Statement for the year ended 31st December 2000 Note Operating activities Operating profit Depreciation and amortisation 31(a) Other non-cash items 31(b) (700.3) (22.9) Decrease in working capital 31(c) Interest received Interest and other financing charges paid (160.5) (142.5) Tax paid (41.5) (46.7) Dividends from associates and joint ventures Cash flows from operating activities Investing activities Purchase of subsidiary undertakings 31(d) (1,010.3) (218.6) Purchase of associates and joint ventures 31(e) (91.9) (115.0) Purchase of other investments (18.0) (35.6) Purchase of tangible assets (318.8) (382.4) Sale of subsidiary undertakings 31(f) Sale of associates and joint ventures 31(g) Sale of other investments Sale of tangible assets Cash flows from investing activities (622.5) (497.3) Financing activities Issue of shares Repurchase of shares (992.0) Capital contribution from outside shareholders Drawdown of borrowings 4, ,114.1 Repayment of borrowings (2,922.1) (6,046.9) Dividends paid by the Company (78.5) (76.7) Dividends paid to outside shareholders (103.9) (208.3) Cash flows from financing activities (4.2) (213.4) Effect of exchange rate changes (34.6) 2.2 Net decrease in cash and cash equivalents (230.8) (132.8) Cash and cash equivalents at 1st January 1, ,681.1 Cash and cash equivalents at 31st December 31(h) 1, ,

5 Principal Accounting Policies Basis of preparation The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain noncurrent assets, and comply with International Accounting Standards. In view of the international nature of the Group s operations, the amounts shown in the financial statements are presented in United States Dollars. The Group s reportable segments are set out in note 1 and are described on pages 8 to 39. Basis of consolidation (a) The consolidated financial statements include the financial statements of the Company, its subsidiary undertakings and, on the basis set out in (b) below, its associates and joint ventures. Subsidiary undertakings are companies over which the Company has control. Control is the power to govern the financial and operating policies of the company so as to obtain benefits from its activities. The results of subsidiary undertakings, associates and joint ventures are included or excluded from their effective dates of acquisition or disposal respectively. All material intercompany transactions, balances and unrealised surpluses and deficits on transactions between Group companies have been eliminated. The cost of and related income arising from shares held in the Company by subsidiary undertakings are eliminated from shareholders funds and outside interests, and profit respectively. (b) Associates are companies, not being subsidiary undertakings, over which the Group exercises significant influence. Joint ventures are entities which the Group jointly controls with one or more other venturers. Associates and joint ventures are included on the equity basis of accounting. The profit or loss on disposal of investment properties held by associates and joint ventures is recognised by reference to their carrying value. (c) Outside interests represent the proportion of the results and net assets of subsidiary undertakings and their associates and joint ventures not attributable to the Group. (d) The results of companies other than subsidiary undertakings, associates and joint ventures are included only to the extent of dividends received. Foreign currencies Transactions in foreign currencies are accounted for at the exchange rates ruling at the transaction dates. Assets and liabilities of subsidiary undertakings, associates and joint ventures, together with all other monetary assets and liabilities expressed in foreign currencies are translated into United States Dollars at the rates of exchange ruling at the year end. Results expressed in foreign currencies are translated into United States Dollars at the average rates of exchange ruling during the year. Net exchange differences arising from the translation of the financial statements of subsidiary undertakings, associates and joint ventures expressed in foreign currencies, and exchange differences on transactions which hedge these investments are taken directly to exchange reserves. On the disposal of these investments, such exchange differences are recognised in the consolidated profit and loss account as part of the profit or loss on disposal. All other exchange differences are dealt with in the consolidated profit and loss account.

6 Goodwill Goodwill represents the difference between the cost of an acquisition and the fair value of the Group s share of the net assets of the acquired subsidiary undertaking, associate or joint venture at the effective date of acquisition. Goodwill on acquisitions occurring on or after 1st January 1995 is reported in the balance sheet as a separate asset or included within associates and joint ventures, and is amortised using the straight line method over its estimated useful life which is generally between 5 and 20 years. Goodwill on acquisitions which occurred prior to 1st January 1995 was taken directly to reserves. The carrying amount of goodwill is reviewed annually and written down for permanent impairment where it is considered necessary. The profit or loss on disposal of subsidiary undertakings, associates and joint ventures is calculated by reference to the net assets at the date of disposal including the attributable amount of goodwill which remains unamortised but does not include any attributable goodwill previously eliminated against reserves. Tangible fixed assets and depreciation Land and buildings are stated at valuation. Independent valuations are performed every three years on an open market basis. In the intervening years the Directors review the carrying value of land and buildings and adjustment is made where there has been a material change. Revaluation surpluses and deficits are dealt with in property revaluation reserves except for movements on individual properties below depreciated cost which are dealt with in the consolidated profit and loss account. Other tangible fixed assets are stated at cost less amounts provided for depreciation. Depreciation is calculated on the straight line basis at annual rates estimated to write off the cost or valuation of each asset over its estimated life. The principal rates in use are as follows: Leasehold land and buildings up to 3 1 / 3 % Leasehold improvements over period of the lease Plant and machinery / 3 % Furniture, equipment and motor vehicles / 3 % No depreciation is provided on freehold land as it is deemed to have an indefinite life. In respect of hotel properties held on leases with more than 20 years to run, it is the Group s practice to maintain the properties in a continual state of sound repair, such that their value is not diminished by the passage of time. Accordingly, the Directors consider that the lives of these properties are sufficiently long and their residual values, based on prices prevailing at the time of valuation, are sufficiently high that their depreciation is insignificant. The cost of maintenance and repairs of the hotel properties is charged to the consolidated profit and loss account as incurred and the cost of significant improvements is capitalised. Where the carrying amount of a tangible fixed asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. The profit or loss on disposal of tangible fixed assets is recognised by reference to their carrying amount. Investments (a) Other non-current investments are shown at cost less amounts provided. As the investments are held for the long term, provision is only made where, in the opinion of the Directors, there is a long-term impairment in value. (b) Liquid investments which are readily convertible to known amounts of cash are included in bank balances and other liquid funds and are stated at market value. Increases or decreases in market value are dealt with in the consolidated profit and loss account

7 Principal Accounting Policies (continued) Stocks and work in progress Stocks which principally comprise goods held for resale are stated at the lower of cost and net realisable value. Cost is determined by the first-in, first-out method. Contract work in progress is valued at cost plus an appropriate proportion of profit, established by reference to the percentage of completion, and after deducting progress payments and provisions for foreseeable losses. Debtors Trade debtors are carried at anticipated realisable value. An estimate is made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks and financial institutions, bank and cash balances, and liquid investments, net of bank overdrafts. In the balance sheet, bank overdrafts are included in borrowings in current liabilities. Provisions Provisions are recognised when the Group has present legal or constructive obligations as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate of the amount of the obligations can be made. Borrowings and borrowing costs Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective yield method. On issue of convertible bonds, the fair value of the liability portion is determined using a market interest rate for an equivalent non-convertible bond; this amount is included in long-term borrowings on the amortised cost basis until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option which is recognised and included in shareholders funds or non-current liabilities, as appropriate. Borrowing costs relating to major development projects are capitalised until the asset is ready for use. Capitalised borrowing costs are included as part of the cost of the asset. All other borrowing costs are expensed as incurred. Deferred tax Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values. Provision for deferred tax is made on the revaluation of certain non-current assets and, in relation to acquisitions, on the difference between the fair values of the net assets acquired and their tax base. Provision for withholding tax which could arise on the remittance of retained earnings relating to subsidiary undertakings is only made where there is a current intention to remit such earnings. Deferred tax assets relating to carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

8 Pension obligations The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in trustee administered funds. Pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under this method, the costs of providing pensions are charged to the consolidated profit and loss account so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of major plans every year. The pension obligations are measured as the present value of the estimated future cash outflows by reference to market yields on high quality corporate bonds which have terms to maturity approximating the terms of the related liability. Plan assets are measured at fair value. All actuarial gains and losses are spread forward over the average remaining service lives of employees. The Group s total contributions relating to the defined contribution plans are charged to the consolidated profit and loss account in the year to which they relate. Dividends Dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date. Scrip dividends are accounted for as a bonus issue. The nominal amount of the ordinary shares issued as a result of election for scrip is capitalised out of the share premium account or other reserves, as appropriate. Revenue Revenue consists of gross inflow of economic benefits associated with a transaction and is recognised when the amount can be measured reliably. Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods have been transferred to outside customers, and revenue from the rendering of services is recognised when services are performed. Operating leases Payments made under operating leases are charged to the consolidated profit and loss account on a straight line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the year in which termination takes place. Pre-operating costs Pre-operating costs are expensed as they are incurred. Derivative financial instruments The Group only enters into derivative financial instruments in order to hedge underlying exposures. Where these relate to interest rate movements, interest payable and receivable under such instruments is accrued and recorded as an adjustment to the interest income or expense related to the underlying exposure. Premiums paid or received on options are included in debtors or creditors and amortised to the consolidated profit and loss account over the life of the agreements. Where derivative financial instruments are used to hedge future commitments or transactions in foreign currencies, the unrealised exchange differences are deferred against the matching losses and gains on the specific transactions

9 Notes to the Financial Statements 1 Revenue By business: Jardine Pacific 1, ,705.6 Jardine Motors Group 2, ,806.6 Dairy Farm 5, ,917.9 Mandarin Oriental Other activities , ,674.8 By geographical location of customers: Australasia 2, ,584.0 United Kingdom 1, ,753.8 Continental Europe Hong Kong and Mainland China 3, ,185.2 North America Northeast Asia Southeast Asia 1, , ,674.8 The Group is grouped into seven core companies as described on page 4 and accordingly its primary segment reporting format is business segments with secondary segment information reported geographically. Jardine Pacific includes a number of business segments. Each business segment contributes less than 10% of the Group s revenue, segment results or assets. Continental Europe is principally France. Northeast Asia includes Japan and Taiwan. Southeast Asia includes all other countries in Asia. Revenue consists primarily of sale of goods. 2 Profit on Sale of Robert Fleming In August 2000, the Group disposed of its interests in Robert Fleming for a total consideration of US$1,215.0 million of which US$648.7 million was settled in cash and US$566.3 million in shares of common stock of the Chase Manhattan Corporation (subsequently renamed J.P. Morgan Chase & Co.). The profit attributable to the Group, after tax and outside interests, amounted to US$766.7 million of which US$631.1 million arises in the Company and US$135.6 million relates to the interests held by Jardine Strategic (refer note 7). 3 Impairment of Assets in Dairy Farm At the year end, the Directors have reviewed the carrying value of Dairy Farm s assets and have concluded that it is appropriate to make impairment write down against certain assets. As a result, impairment losses were recorded against goodwill in Australia of US$14.5 million, and against tangible assets in Australia and Hong Kong of US$114.9 million. The loss attributable to the Group, after tax and outside interests, amounted to US$50.5 million (refer note 7).

10 4 Operating Profit By business: Jardine Pacific Jardine Motors Group Dairy Farm (54.1) 30.1 Mandarin Oriental Corporate and other interests (3.6) (15.9) Non-recurring items (refer note 7) The following items have been charged/(credited) in arriving at operating profit: Depreciation of tangible assets Amortisation of goodwill on acquisition of subsidiary undertakings Directors remuneration (refer Directors emoluments on page 91) Staff costs salaries and benefits in kind 1, ,325.8 defined benefit pension plans (refer note 15) defined contribution pension plans , ,386.2 Operating leases minimum lease payments contingent rents subleases (13.6) (11.4) Year 2000 remediation costs 26.1 Income from other investments (18.5) (16.1) Rental income (14.6) (13.6) 54 55

11 Notes to the Financial Statements (continued) 5 Net Financing Charges Interest expense bank loans and advances (152.2) (140.0) other loans (19.5) (1.8) (171.7) (141.8) Interest income Unwinding of discount on provisions for onerous leases (0.2) (0.2) Commitment and other fees (4.4) (2.7) (106.4) (68.3) 6 Share of Results of Associates and Joint Ventures By business: Jardine Pacific Jardine Motors Group (9.9) (0.1) Jardine Lloyd Thompson Robert Fleming Dairy Farm Hongkong Land Mandarin Oriental Cycle & Carriage Corporate and other interests Non-recurring items (refer note 7) 22.6 (4.6) Results are shown after amortisation and impairment of goodwill.

12 7 Non-recurring Items Gross Net Gross Net By nature: Discontinued activities Robert Fleming Chubb China Central Registration Matheson Investment financial services businesses other (3.6) (3.6) Impairment of assets Jardine Motors Group (40.2) (34.1) (1.6) (0.8) Dairy Farm (129.4) (50.5) (5.6) (1.9) other (41.8) (40.0) (9.4) (9.0) (211.4) (124.6) (16.6) (11.7) Sale and revaluation of properties Hongkong Land other (9.8) (9.6) (3.1) (2.3) 0.5 Onerous leases and lease exit costs (12.6) (9.8) (3.6) (2.0) Other (0.6) (2.7) By business: Jardine Pacific Jardine Motors Group (63.5) (53.2) (8.5) (5.3) Jardine Lloyd Thompson Dairy Farm (129.4) (50.5) (7.9) (2.6) Hongkong Land Mandarin Oriental Cycle & Carriage Corporate and other interests Included in: Operating profit Share of results of associates and joint ventures 22.6 (4.6) Gross non-recurring items are shown before net financing charges and tax. Net non-recurring items are shown after net financing charges, tax and outside interests

13 Notes to the Financial Statements (continued) 8 Tax Company and subsidiary undertakings: Current tax charge for the year over provision in prior years and tax rebate (2.0) (11.0) Deferred tax (3.5) (13.9) Associates and joint ventures: Current tax charge for the year under/(over) provision in prior years and tax rebate 0.4 (3.4) Deferred tax 1.9 (1.6) By geographical area: Australasia United Kingdom Continental Europe Hong Kong and Mainland China North America Northeast Asia Southeast Asia Reconciliation between tax expense and tax at the applicable tax rate: Tax at applicable tax rate Tax relating to non-recurring items 34.8 (3.9) Income not subject to tax (22.9) (15.3) Expenses not deductible for tax purposes Tax losses not recognised Utilisation of previously unrecognised tax losses (5.3) (2.2) Deferred tax assets written off Recognition of previously unrecognised deferred tax assets (1.7) (5.4) Changes in tax rates Over provision in prior years (1.6) (8.1) Tax rebate (6.3) Withholding tax Effect of exchange rate changes 0.6 Other The applicable tax rate represents the weighted average of the rates of taxation prevailing in the territories in which the Group operates.

14 9 Earnings Per Share Basic earnings per share are calculated on net profit of US$930.8 million (1999: US$207.4 million) and on the weighted average number of million (1999: million) shares in issue during the year. The weighted average number excludes the Company s share of the shares held by subsidiary undertakings and the shares held by the Trustee under the Senior Executive Share Incentive Schemes (refer note 25). Diluted earnings per share are calculated on the weighted average number of shares after adjusting for the number of shares which are deemed to be issued for no consideration under the Senior Executive Share Incentive Schemes based on the average share price during the year as follows: Ordinary shares in millions Weighted average number of shares in issue Adjustment for shares deemed to be issued for no consideration Weighted average number of shares for diluted earnings per share Earnings per share excluding non-recurring items are calculated on the net profit after adjusting for non-recurring items as follows: Net profit Non-recurring items (refer note 7) (735.8) (31.4) Net profit excluding non-recurring items

15 Notes to the Financial Statements (continued) 10 Goodwill Positive Negative goodwill goodwill Net 2000 Net book value at 1st January (39.8) Exchange rate adjustments (4.1) 0.1 (4.0) Additions 65.2 (95.3) (30.1) Disposals (0.1) (0.1) Amortisation (17.2) 5.2 (12.0) Impairment charge (17.4) (17.4) Net book value at 31st December (129.8) 50.5 Cost (140.7) Accumulated amortisation (60.8) 10.9 (49.9) (129.8) Net book value at 1st January 56.1 (28.7) 27.4 Exchange rate adjustments 0.4 (0.1) 0.3 Additions (13.4) 94.9 Disposals (1.1) (1.1) Amortisation (9.8) 2.4 (7.4) Net book value at 31st December (39.8) Cost (45.5) Accumulated amortisation (25.6) 5.7 (19.9) (39.8) 114.1

16 11 Tangible Assets Furniture, Leasehold equipment Land & improve- Plant & & motor buildings ments machinery vehicles Total 2000 Net book value at 1st January 1, ,742.4 Exchange rate adjustments (60.8) (16.4) (39.5) (16.8) (133.5) New subsidiary undertakings Additions Disposals (35.5) (16.0) (20.6) (20.7) (92.8) Depreciation charge (10.0) (54.4) (76.2) (90.0) (230.6) Impairment charge (12.3) (17.8) (61.4) (46.4) (137.9) Net revaluation surplus Net book value at 31st December 1, ,611.2 Cost or valuation 1, ,917.4 Accumulated depreciation (22.3) (316.3) (529.7) (437.9) (1,306.2) 1, , Net book value at 1st January 1, ,424.4 Exchange rate adjustments (6.6) New subsidiary undertakings Additions Disposals (28.2) (6.5) (12.0) (22.1) (68.8) Depreciation charge (10.2) (49.7) (77.7) (91.8) (229.4) Impairment charge (2.6) (6.2) (2.2) (11.0) Net revaluation surplus Net book value at 31st December 1, ,742.4 Cost or valuation 1, ,809.0 Accumulated depreciation (3.8) (230.0) (466.7) (366.1) (1,066.6) 1, ,

17 Notes to the Financial Statements (continued) 11 Tangible Assets (continued) Analysis of additions by business: Jardine Pacific Jardine Motors Group Dairy Farm Mandarin Oriental Corporate and other interests Analysis of additions by geographical area: Australasia United Kingdom Continental Europe Hong Kong and Mainland China North America Northeast Asia Southeast Asia Corporate and other interests Analysis of net book value of land and buildings: Freehold Long leases (50 years and over unexpired) Other leases , ,787.3 The Group s land and buildings were revalued at 31st December 1999 by independent valuers. The Directors have reviewed the carrying values at 31st December 2000 and as a result, deficits on individual properties below depreciated cost of US$9.9 million (1999: US$1.7 million) and impairment loss of US$12.3 million (1999: nil) have been charged to the consolidated profit and loss account, and a net surplus of US$70.7 million (1999: US$146.8 million) has been taken directly to property revaluation reserves. The amounts attributable to the Group, after tax and outside interests, are US$8.3 million, US$12.0 million and US$27.6 million respectively. Certain of the land and buildings are pledged as security for borrowings (refer note 20). If the land and buildings had been included in the financial statements at cost less depreciation, the carrying value would have been US$1,060.4 million (1999: US$1,012.7 million).

18 12 Associates and Joint Ventures Listed associates Cycle & Carriage Hongkong Land 2, ,787.1 Jardine Lloyd Thompson The Oriental Hotel (Thailand) other , ,098.7 Unlisted associates Robert Fleming other , ,583.0 Joint ventures Share of attributable net assets 3, ,041.4 Goodwill on acquisition positive negative (144.9) (128.4) (120.3) (84.7) Amounts due from associates and joint ventures Amounts due to associates and joint ventures (51.2) (0.8) 3, ,975.4 Market value of listed associates 2, ,787.7 The Group s share of assets and liabilities and results of joint ventures are summarised below: Non-current assets Current assets ,105.8 Current liabilities (904.0) (1,009.9) Non-current liabilities (292.6) (335.0) Net assets Revenue 1, ,922.4 Profit before tax Profit after tax Net profit Capital commitments Contingent liabilities

19 Notes to the Financial Statements (continued) 12 Associates and Joint Ventures (continued) Movements of share of attributable net assets for the year: At 1st January 3, ,845.6 Net exchange translation differences amount arising in year (72.9) 43.1 disposal of foreign entities by associates and joint ventures 0.4 (72.9) 43.5 Share of results before tax and amortisation and impairment of goodwill Share of tax (69.8) (65.4) Share of outside interests (3.4) (5.1) Dividends received (210.2) (183.6) Share of property revaluation Share of deferred tax on property revaluation (2.7) (1.1) Additions and change in holding Disposals (338.7) (99.8) Other movements 0.6 (1.4) At 31st December 3, ,041.4 Movements of goodwill on acquisition for the year: Net book value at 1st January (84.7) (38.5) Exchange rate adjustments (1.3) (0.6) Additions (31.1) (44.7) Disposals 11.6 (1.6) Amortisation Impairment charge (17.8) Net book value at 31st December (120.3) (84.7) The Directors believe it appropriate to continue to state the value of the Group s investment in listed associates at its share of attributable net assets notwithstanding the lower stock market valuation at the year end. Amounts due to associates and joint ventures include a loan, denominated in Euro, payable to Hongkong Land of US$50.4 million, of which US$45.9 million is interest bearing at market rate. If the listed investments had been realised at their market values no taxation would have been payable.

20 13 Other Investments Listed investments Edaran Otomobil Nasional J.P. Morgan Chase & Co other Unlisted investments Market value of listed investments Of the 11 million shares of common stock of J.P. Morgan Chase & Co. held by the Group at the year end, 8.7 million shares have been set aside under a trust deed in relation to the issue of the US$550 million 4.75% guaranteed bonds to cover the Group s obligations to deliver the shares on exercise of the exchange rights in relation to the bonds (refer note 20). 14 Deferred Tax Provisions Accelerated and other tax Property temporary depreciation revaluation Losses differences Total 2000 At 1st January (13.4) (50.0) (50.8) Exchange rate adjustments (1.7) 6.8 (0.3) (3.5) 1.3 Credited/(charged) to consolidated profit and loss account (1.6) Credited to reserves Subsidiary undertakings disposed of 1.4 (1.4) (0.3) (0.3) At 31st December (13.4) (41.9) (45.5) 1999 At 1st January (27.9) (48.7) (61.9) Exchange rate adjustments (0.1) Credited/(charged) to consolidated profit and loss account (5.1) Charged to reserves (2.2) (2.2) New subsidiary undertakings (0.2) 0.1 (0.7) (0.8) At 31st December (13.4) (50.0) (50.8) 64 65

21 Notes to the Financial Statements (continued) 14 Deferred Tax (continued) Analysis of net book value: Deferred tax assets Deferred tax liabilities (76.8) (77.1) (45.5) (50.8) Deferred tax balances predominantly comprise non-current items. Deferred tax assets and liabilities are netted when the taxes relate to the same taxation authority and where offsetting is allowed. Deferred tax assets of US$130.5 million (1999: US$78.2 million) arising from unused tax losses of US$556.2 million (1999: US$290.5 million) have not been recognised in the financial statements. Included in the unused tax losses, US$466.7 million (1999: US$196.4 million) has no expiry date and the balance will expire at various dates up to and including Deferred tax liabilities of US$3.2 million (1999: US$8.8 million) on temporary differences associated with investment in subsidiary undertakings of US$21.2 million (1999: US$55.7 million) have not been recognised as there is no current intention of remitting the retained earnings to the holding companies. 15 Pension Plans The Group has a large number of defined benefit pension plans, covering all the main territories in which it operates with the major plans relating to employees in Hong Kong, the United Kingdom and the United States. Most of the pension plans are final salary defined benefit plans and are either funded or unfunded. The assets of the funded plans are held independently of the Group s assets in separate trustee administered funds. The Group s major plans are valued by independent actuaries annually using the projected unit credit method. The amounts recognised in the consolidated balance sheet are as follows: Fair value of plan assets Present value of funded obligations (484.7) (550.3) Present value of unfunded obligations (10.3) (11.2) Unrecognised actuarial gains (29.7) (97.2) Unrecognised past service cost Net pension assets Analysis of net pension assets: Pension assets Pension liabilities (12.6) (14.2)

22 15 Pension Plans (continued) Movements for the year: At 1st January Exchange rate adjustments (0.8) 0.2 Expense recognised in the consolidated profit and loss account (11.4) (36.5) Subsidiary undertakings disposed of (0.8) Transfer from other plans (2.6) Contributions paid At 31st December The principal actuarial assumptions used for accounting purposes at 31st December are as follows: % % Discount rate applied to pension obligations Expected return on plan assets Future salary increases The amounts recognised in the consolidated profit and loss account are as follows: Current service cost Interest cost Expected return on plan assets (54.8) (47.3) Net actuarial (gains)/losses recognised (4.3) 5.1 Past service cost Actual return on plan assets (54.9) Stocks and Work in Progress Stocks ,102.6 Contract work in progress ,

23 Notes to the Financial Statements (continued) 17 Debtors and Prepayments Trade debtors Agency debtors Other debtors Prepayments Amounts due from associates and joint ventures Rental and other deposits Tax recoverable Bank Balances and Other Liquid Funds Deposits with banks and financial institutions 1, ,343.1 Bank and cash balances Liquid investments , ,601.4 Of bank balances and other liquid funds, US$193.0 million (1999: US$234.4 million) is held on behalf of third parties. The weighted average interest rate on deposits with banks and financial institutions is 6.1 % (1999: 5.7%). 19 Creditors and Accruals Trade creditors 1, ,246.5 Accruals Agency creditors Amounts due to associates and joint ventures Deposits accepted Deferred warranty income Other , ,320.6

24 20 Borrowings Current bank overdrafts other bank advances other borrowings Current portion of long-term borrowings bank other Long-term borrowings bank 2, ,538.6 guaranteed bonds convertible bonds 20.4 other , , , ,109.3 Secured Unsecured 2, , , ,109.3 Due dates of repayment: Within one year Between one and two years 1, Between two and five years 1, Beyond five years , ,

25 Notes to the Financial Statements (continued) 20 Borrowings (continued) Fixed rate borrowings Weighted Weighted Floating average average period rate interest rates outstanding borrowings Total Currency: % Years 2000 Australian Dollar Hong Kong Dollar Malaysian Ringgit New Taiwan Dollar New Zealand Dollar Singapore Dollar United Kingdom Sterling United States Dollar ,436.5 Other , , , Australian Dollar Hong Kong Dollar Malaysian Ringgit New Taiwan Dollar New Zealand Dollar Singapore Dollar United Kingdom Sterling United States Dollar Other , ,109.3 All borrowings were within subsidiary undertakings. In September 2000, JMH Finance Limited, a wholly-owned subsidiary undertaking, issued US$550 million 4.75% guaranteed bonds due The bonds are guaranteed by the Company. Proceeds of the bonds were used to finance the repurchase of the Company s shares. The bonds are exchangeable, at the option of the holders, into shares of common stock of J.P. Morgan Chase & Co. on the basis of shares for each US$1,000 principal amount of the bonds from 6th September 2001 until 30th August The bonds will mature on 6th September The fair values of the liability component and option component are determined on issue of the bond. The fair value of the liability component, included in long-term borrowings, is calculated using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of the conversion option component, is included in other non-current liabilities (refer note 22). In March 2000, Mandarin Oriental issued US$75.8 million 6.75% convertible bonds due Proceeds of the bonds were used to finance the acquisition of The Rafael Group. The bonds are convertible up to and including 23rd February 2005 into fully paid ordinary shares of Mandarin Oriental at a conversion price of US$0.671 per ordinary share. At 31st December 2000, US$60.7 million of the bonds were held by Jardine Strategic and were netted off the carrying amount of the bonds. Secured borrowings at 31st December 2000 included US$354.0 million (1999: US$309.4 million) which were secured against Mandarin Oriental s tangible fixed assets. The net book value of these assets at 31st December 2000 was US$951.2 million (1999: US$837.5 million). The weighted average interest rates and period of fixed rate borrowings are stated after taking account of hedging transactions.

26 21 Provisions Obligations Closure under cost onerous provisions leases Others Total At 1st January Exchange rate adjustments (0.9) (1.0) (0.5) (2.4) Additional provisions Unused amounts reversed (1.4) (3.1) (4.5) Utilised (6.9) (1.9) (16.0) (24.8) At 31st December Closure cost provisions are established when legal or constructive obligations arise on closure of businesses. Provisions are made for obligations under onerous operating leases when the properties are not used by the Group and the net costs of exiting from the leases exceed the economic benefits expected to be received. Other provisions comprise provisions in respect of indemnities on disposal of businesses, lease dilapidations and legal claims. 22 Other Non-current Liabilities Motor vehicle repurchase commitments Conversion option component of guaranteed bonds (refer note 20) 67.6 Other creditors due after more than one year

27 Notes to the Financial Statements (continued) 23 Net Operating Assets Associates Other Segment Segment and joint assets and assets liabilities ventures liabilities Total 2000 By business: Jardine Pacific (537.5) (180.0) Jardine Motors Group (326.3) 84.2 (163.7) Jardine Lloyd Thompson Dairy Farm 1,661.7 (930.3) (263.1) Hongkong Land 2, ,442.8 Mandarin Oriental 1,086.0 (54.2) (279.1) Cycle & Carriage ,464.1 (1,848.3) 3,451.6 (885.9) 5,181.5 Corporate and other interests 55.1 (348.3) (47.7) (21.7) (362.6) 4,519.2 (2,196.6) 3,403.9 (907.6) 4,818.9 By geographical area: Australasia (307.9) 30.0 (262.0) (29.5) United Kingdom (176.8) 94.4 (273.4) Continental Europe (93.4) 51.8 (25.6) Hong Kong and Mainland China 2,169.9 (805.4) 2,521.6 (708.7) 3,177.4 North America (97.0) ,025.4 Northeast Asia (88.6) (0.3) (77.0) 59.9 Southeast Asia (279.2) ,464.1 (1,848.3) 3,451.6 (885.9) 5,181.5 Corporate and other interests 55.1 (348.3) (47.7) (21.7) (362.6) 4,519.2 (2,196.6) 3,403.9 (907.6) 4, By business: Jardine Pacific (516.0) (150.5) Jardine Motors Group (391.1) (162.6) Jardine Lloyd Thompson Robert Fleming Dairy Farm 2,022.1 (1,031.4) (239.4) Hongkong Land 1, ,676.6 Mandarin Oriental (40.0) (229.0) Cycle & Carriage ,778.9 (1,978.5) 2,972.7 (781.5) 4,991.6 Corporate and other interests (409.7) ,917.6 (2,388.2) 2,975.4 (180.8) 5,324.0

28 23 Net Operating Assets (continued) Associates Other Segment Segment and joint assets and assets liabilities ventures liabilities Total By geographical area: Australasia (447.4) 27.7 (267.6) United Kingdom (229.8) (318.5) Continental Europe (93.9) 55.0 (14.3) Hong Kong and Mainland China 2,157.9 (792.2) 1,742.1 (643.7) 2,464.1 North America (89.5) ,107.5 Northeast Asia (86.5) 17.9 (93.7) 82.2 Southeast Asia (239.2) (13.2) ,778.9 (1,978.5) 2,972.7 (781.5) 4,991.6 Corporate and other interests (409.7) ,917.6 (2,388.2) 2,975.4 (180.8) 5,324.0 Associates and joint ventures include share of attributable net assets and unamortised goodwill on acquisition. Other assets and liabilities include other investments, tax assets and liabilities, cash and cash equivalents, and borrowings. 24 Share Capital Authorised: 1,000,000,000 shares of US 25 each Ordinary shares in millions Issued and fully paid: At 1st January Scrip issued in lieu of dividends Issued under share incentive schemes Repurchased and cancelled (196.2) (49.1) At 31st December Outstanding under share incentive schemes (13.1) (10.7) (3.3) (2.7) During the year the Company repurchased million ordinary shares through a tender offer and from the stock market at a total cost of US$992.0 million. In addition, the Company also repurchased 15.1 million ordinary shares from a subsidiary undertaking at a cost of US$88.9 million. After elimination of intercompany profit of US$15.7 million, the net cost of US$1,065.2 million had been dealt with by charging US$49.1 million to share capital, US$342.4 million to share premium and contributed surplus, and US$673.7 million to revenue and other reserves

29 Notes to the Financial Statements (continued) 25 Senior Executive Share Incentive Schemes The Senior Executive Share Incentive Schemes were set up in order to provide selected executives with options to purchase ordinary shares in the Company. Under the Schemes ordinary shares are issued to the Trustee of the Schemes, Clare Investment and Trustee Company Limited, a wholly-owned subsidiary undertaking, which holds the ordinary shares until the options are exercised. Ordinary shares are issued at prices based on the average market price for the five trading days immediately preceding the date of grant of the options, which are exercisable for up to ten years following the date of grant. As the shares issued under the Schemes are held on trust by a wholly-owned subsidiary undertaking, for presentation purposes they are netted off the Company s share capital in the consolidated balance sheets (refer note 24) and the premium attached to them is netted off the share premium account (refer note 26). Movements for the year: Ordinary shares in millions At 1st January Granted Exercised (0.4) (0.4) (1.3) (1.1) At 31st December The exercise price of share options exercised during the year were in the range of US$3.2 to US$4.3 (1999: US$2.3 to US$3.2) per share. Outstanding at 31st December: Exercise Ordinary shares price in millions Expiry date US$ Unallocated

30 26 Share Premium and Contributed Surplus At 1st January Capitalisation arising on scrip issued in lieu of dividends (3.9) (5.1) Arising from shares issued under share incentive schemes Repurchase of shares (refer note 24) (342.4) At 31st December Outstanding under share incentive schemes (66.9) (58.3) The contributed surplus was set up on the formation of the Company in 1984 and, under the Bye-Laws of the Company, is not distributable. 27 Revenue and Other Reserves Property Revenue Capital revaluation Exchange reserves reserves reserves reserves Total 2000 At 1st January 2, (195.8) 3,051.2 Property revaluation Deferred tax on property revaluation (1.0) (1.0) Net exchange translation differences amount arising in year (85.9) (85.9) disposal of subsidiary undertakings, associates and joint ventures Net profit Dividends (refer note 28) (137.3) (137.3) Scrip issued in lieu of dividends (refer note 28) Capitalisation arising on scrip issued in lieu of dividends (1.5) (1.5) Repurchase of shares (refer note 24) (613.6) (60.1) (673.7) Change in attributable interests Other Transfer 11.6 (11.3) (0.3) At 31st December 2, ,197.6 (226.4) 3,802.2 of which: Company Associates and joint ventures (77.5) 1,

31 Notes to the Financial Statements (continued) 27 Revenue and Other Reserves (continued) Property Revenue Capital revaluation Exchange reserves reserves reserves reserves Total 1999 At 1st January 2, (187.9) 2,820.7 Property revaluation Deferred tax on property revaluation (2.8) (2.8) Net exchange translation differences amount arising in year (13.5) (13.5) disposal of subsidiary undertakings, associates and joint ventures Net profit Dividends (refer note 28) (130.6) (130.6) Scrip issued in lieu of dividends (refer note 28) Change in attributable interests Other Transfer 2.6 (7.6) 5.0 At 31st December 2, (195.8) 3,051.2 of which: Company 1, ,515.8 Associates and joint ventures (84.8) The capital reserves represent the balance of the share premium account of Jardine Matheson & Co., Limited, the holding company of the Group prior to the reorganisation in 1984 when Jardine Matheson Holdings Limited became the new holding company, and are non-distributable. The property revaluation arising during the year includes surpluses of US$517.8 million and US$46.2 million (1999: US$27.1 million and US$43.2 million) relating to Hongkong Land and Mandarin Oriental respectively.

32 28 Dividends Final dividend in respect of 1999 of US (1998: US 13.80) per share Interim dividend in respect of 2000 of US 7.80 (1999: US 7.80) per share Less Company s share of dividends paid on the shares held by subsidiary undertakings (49.1) (38.1) Shareholders elected to receive scrip in respect of the following: Final dividend in respect of previous year Interim dividend in respect of current year A final dividend in respect of 2000 of US (1999: US 17.20) per share amounting to a total of US$116.5 million (1999: US$137.1 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the Annual General Meeting. The net amount after deducting the Company s share of the dividends payable on the shares held by subsidiary undertakings of US$43.2 million (1999: US$32.1 million) will be accounted for as an appropriation of revenue reserves in the year ending 31st December