1973: Growth In Asia
pp. 6-7 · Read in the full issue
And The Pacific
Extracts from the Statement to Stockholders by Mr Henry Keswick, Chairman, Jar dine, Matheson & Co. Ltd.
Dividends and earnings per stock unit up 40%. 1973 was one of the most challenging years in Jardines recent history, in which our profit reached a record level and our net worth was more than doubled. Net operating profit after tax for the year ended 31st December, 1973 was HK$ 136.7 million compared with HKS92.3 million in 1972, an increase of 48%. In addition a capital profit of HK$96 million arising from real estate and investment transactions, has been credited direct to reserves. Earnings per stock unit, based on net operating profit, increased to HKS1.13 from the 1972 adjusted figure of HKS0.81, a rise of 40%. The compound growth rate in adjusted earnings per stock unit over the past ten years is 27% per annum.
Total dividends were HK$0.50 per stock unit, up 40% on the 1972 adjusted figure of HKS0.36. By the end of 1973 stockholders’ funds had risen by 154% from HK$573 million in 1972 to HK$1,458 million, mainly as a result of
incorporating the net assets of two acquisitions, Theo. H. Davies & Co. Ltd and Reunion Properties Co. Ltd, and transfers to reserves. The net asset value per stock unit was HK$11.21 at 31st December, 1973, an increase of 120% over the 1972 adjusted figure of
Hks5.09.
The 1973 profit of HK$16.7 million from Theo. H. Davies & Co. Ltd, has not been consolidated in the 1973 accounts; Reunion Properties Co. Ltd’s nine month’s figures have been included.
Following free scrip issues of two for five in May and one for one in November, the issue of 15.7 million new stock units
in the two acquisitions (including free scrip issued), and the issue of 1.8 million stock units to converting Warrant holders, issued capital at year-end reached HK$781 million.
The group has ready access to international sources of finance and during the year raised medium and long term funds of HK$165 million in Europe through guaranteed notes.
Hong Kong. Jardines activities in Hong Kong continued to grow and show profit improvement during 1973. We have reorganised and re-grouped various activities and several changes in names
Earnings after tax 1973 FS 21.2 m. 1972 F$ 14.4 m.
Earnings per stock unit 0.18 0.13 Dividends per stock unit 0.08 0.06 Stockholders’ funds 226 m. 90 m.
Note Currencies converted at rates ruling at mid-April 1974 (F$l = HKS6.45) and 1973 (F$l = HK$6.40)
of subsidiary and associated companies occurred during the year, to reflect our interests more accurately.
In April 1973 we injected HK$95 million of our assets in certain smaller trading, industrial and real estate companies into Jardine Industries Ltd, now a listed subsidiary. In October Jardines principal ship-owning subsidiary, The Indo-China Steam Navigation Co.
Ltd was reorganised as a Hong Kong company (having been registered in the United Kingdom since 1881).
Jardine Fleming & Co. Ltd, our merchant banking joint venture, have played a leading part in the local and regional financial scenes. Other financial services offered through associates include hire purchase finance and consumer credit, share registration, money broking, computer bureau services, factoring and stockbroking.
Jardine Securities Ltd, the investment holding company in which our interest is over 40%, increased their dividend distribution in 1973 by 18%.
Our traditional businesses have done well. Imports of leading internationally known consumer goods and raw materials continue to maintain a healthy share of the Hong Kong market. Our engineering subsidiary, The Jardine Engineering Corporation Ltd continued to secure major contracts and will be closely connected with the forthcoming Mass Transit Scheme in Hong Kong. We were well represented at the British Trade Fair in Peking in March 1973 and at the bi-annual fairs in Kwangchow; our business with China continues to prosper.
The Airways Division had an excellent year. Our insurance interests, including Lombard Insurance Co. Ltd and Chinese International Underwriters Ltd, have shown good growth. Hong Kong Security Ltd, our subsidiary in the security field, have a major share of the Hong Kong market.
Real estate developments and investments progressed satisfactorily during the year.
Japan, Our Japanese subsidiary, Jardine, Matheson & Co. (Japan) Ltd, had a record year. Our joint venture company, MacMillan Jardine (Japan) Ltd, had a successful year with improved demand for wood products, and our joint venture with Alfred Dunhill continued to do well.
Singapore, Malaysia, Thailand. Jardines interests in these three countries have been operated for many years through our subsidiary, Jardine Waugh Ltd. In May 1973 this company was re-structured and changed its name to Jardine Matheson & Co. (South East
Asia) Ltd which is quoted on the Singapore and Kuala Lumpur Stock Exchanges. At the same time a rights issue raised HK$l2B million for the company’s expansion programme. This company has strengthened its management and substantially increased its investments in Singapore and Malaysia.
In Thailand our traditional importing business was sold and our activities consolidated in the manufacture and supply of air conditioning and in developing specific new ventures.
Indonesia. Our representative office in Jakarta has helped to find investments in Indonesia, and with associates we have commitments in two projects - a first-class hotel and a 20-storey office development.
Australia and the South Pacific. Jardine Matheson & Co. (Australia) Pty Ltd were affected by the weakness in the property market, but our property assets are well situated to benefit from future improvements in the real estate market.
Our associated company Fleetways (Holdings) Ltd showed improved earnings in the second half of 1973.
Flinders Shipping Co. Ltd had a satisfactory year and a second container vessel has been ordered.
We are continuing to expand our interests in the South Pacific, centred on Fiji.
U.S.A. and the Philippines. In the last quarter of 1973 we acquired the Hawaiian-based Theo. H. Davies & Co.
Ltd, a leading publicly quoted trading company which also has a varied portfolio of interests in the Philippines.
Davies are well placed to make a significant contribution to the earnings of the group and this acquisition is our first major investment in the Philippines.
United Kingdom. In the Spring of 1973 Matheson & Co. Ltd acquired Reunion Properties Co. Ltd. The net assets of the company have been brought into the accounts on the basis of an independent valuation by Jones, Lang, Wootton.
Reunion, which was a listed company on the London Stock Exchange, have a portfolio of first-class commercial buildings and sites mainly in the City and central areas of London. Matheson’s other activities produced satisfactory profits and their diversification programme has continued.
Future Prospects. Despite the unsettled worldwide situation, Jardines are in a healthy position to trade profitably, and we are now well involved in natural resources - particularly in the production of wood products, rubber, palm oil and sugar. We also intend to participate in the rapidly expanding oil industry in South East Asia, through exploration and the supply of related services.
With our wide spread of investments around the Pacific, and a diversified yet balanced business, Jardines have the management and financial resources to continue expanding and to take advantage of the many opportunities which will present themselves in this fast growing area. The recent oil crisis and worldwide inflation make forecasting difficult, but nevertheless we anticipate further earnings growth in 1974.
Henry Keswick Chairman Jardine, Matheson & Co. Ltd Connaught Centre, Hong Kong
Jardines
10 year Earnings per stock unit in Hong Kong Dollars