Jardine Matheson Holdings Limited

Welcome to the Jardine Matheson half-year results presentation. I am Suzanne Chirk, Head of Treasury and Investor Relations. Joining us today are our CEO, Lincoln Pan, and CFO, Graham Baker, who will give an update of our strategic progress and financial performance in the first half of 2026. The presentation deck is now available on the Jardine corporate website. Just a reminder, all numbers are in U.S. dollars unless otherwise stated. We will address questions at the end of the presentation. You may start inputting your questions by scanning the QR code at the bottom of the screen. Thank you. I'll now pass the time to Lincoln.

Thank you, Suzanne. And a good morning to everyone from here in Singapore. We've had an exciting first half of 2026, highlighted by our first ever Investor Day, our acquisition of IMEDD, continued efforts on portfolio simplification, all in the efforts to drive total shareholder returns. At our investor day in June, we provided clarity on our strategic and financial objectives, and we set a clear mission that Jardines will be an outstanding investor and owner dedicated to building diverse, high-quality-scaled businesses in Asia Pacific, offering stable and sustainable top quartile shareholder returns. This has been developed in full partnership with our principal shareholders, the Kethix, and our board of directors. To remind our shareholders in June, we made a number of commitments which we target to deliver by 2030. First, delivering at least 9% per annum five-year total shareholder return. Second, growing the Jardine Matheson dividend by at least 5% annually, which we're well-placed to do at least in 2026. Recycling at least $4 billion of capital from the portfolio, excluding additional capital recycling commitments made by Hong Kong Land and Astra, and importantly, building at least $200 million earnings from new, high-quality growth pillars through acquisitions such as IMED. In addition to these commitments, we also announced a new follow-on $500 million share buyback program for Jardine Matheson Holdings. Now, we are ready delivering against these objectives. Corporate simplification remains a priority. In January, we completed the privatization of Mandarin Oriental, and Jardine Cycle & Carriage has announced simplification actions specifically the distribution and specie of shares in Toyota Motor Corporation together with a special cash dividend for proceeds from our sale of TMC shares. The distribution and specie would enable JC&C to further simplify its portfolio allowing it to focus on stewardship of Astra and our Vietnam assets. We are focused to further simplify the JC&C portfolio going forward. In the first half, Jardine Matheson and its portfolio companies recycled 1.5 billion in capital and reinvested her main commitments to invest $3.2 billion of capital. Excluding Astra and Hong Kong Land, we recycled just under $500 million in the first half of 2026, representing 12% of our 2030 target of $4 billion. We remain active in the second half to push toward realizing at least 20% of this target in 2026 and are planning ahead for more realizations in 2027. We have made further progress exiting non-control holdings. We have divested the majority of our holdings in Vinamilk and reduced our holdings in Toyota and Zhongsheng. Investors should expect us to continue to divest and recycle positions in line with our strategic direction, while we will continue to invest via buybacks, bolt-on acquisitions, and new pillars of long-term growth. In May, we announced the acquisition of IMED, and at Investor Day in June, we detailed Jardine Engineering and Infrastructure's ambitious growth agenda. and we have made substantial progress restructuring Jardine Matheson as a lean and focused investment company. Jardine headcount has been reduced by around 47% since 2024 while building a high caliber investment and portfolio support team with Irene Liu and Chris Gannis joining the team in the last several months. Additional senior hires will be announced before year end. On IMED, the 2.4 billion acquisition of IMED represents a significant step for Jardine in its strategic evolution as a control owner of high-quality businesses in the APAC region. With a long history of high-quality earnings growth, IMED will provide an additional source of positive momentum and diversification into the Jardine's portfolio. IMED's performance for the fiscal year ending June 2026 is in line with our expectations and our transaction underwriting. We are working at this time to put in place an independent board of directors and to upgrade the CEO position. With the Jardine Matheson balance sheet in a strong position, we continue to look for other new control investment opportunities and strengthening our existing platforms via bull-con acquisitions, namely through IMED, Jardine Engineering and Infrastructure, and Mandarin Oriental. Where we see value in our existing portfolio, we have and will continue to support share buybacks and share purchases at the Jardine Matheson and the portfolio company levels. They've been substantial over the last five and a half years with JMH investing $8.5 billion. In the first half of 2026, Jardine Matheson completed the $250 million US share buyback program announced in November, which was immediately followed with a new $500 million share buyback program we announced at our investor day in June. At the half year, we also have open buyback programs across Hong Kong land, Astra, and United Tractors. And just as a reminder, looking forward to 2030, you should expect our dividend to grow at least 5% per annum, which we will deliver in 2026, buybacks to continue where and when we see value, and investments approximately the same amount as dividends and buybacks combined in a small number of scaled control investments in high quality businesses to drive earnings growth by and well beyond 2030. Sustainability remains an important enabler of long-term value across Drydeen's and our portfolio. Our ESG ratings have continued improvement for one rate of key rating, we've moved from triple C to triple B over the last five years. In particular, on decarbonization, we want to approach decarbonization commitments in the same way we manage our financial budgets, meaning commitments to improve year-on-year performance. I will now hand over to Graham, who will take us through the first half financial performance.

Thanks, Lincoln. Janine Matheson's portfolio delivered a positive performance in the first half of 2026. Parent cash flows grew robustly, and adjusted underlying net profit was up 9% to $735 million. This figure adjusts for prior year disposals and the impact of the change in Zhongsheng accounting. The proposed interim dividend is 8% higher at $0.65 per share. I'd note here that while we've upgraded our full year dividend guidance, to at least $2.47 per share, consistent with our guidance given at the investor day for dividend growth of at least 5% per annum until 2030. However, you should assume that 8% growth in the interim dividend is also a rebalancing to increase the interim as a share of the full year payout. We'll look now more closely at underlying earnings. I've mentioned first half underlying net profit adjusted for disposals and the Zhongsheng reclassification increased by 9% to $735 million. The key components of this, as shown on the slide, were higher shareholdings in JC&C, MO and Hong Kong Land, which drove 2% growth, 10% organic growth at constant FX across the portfolio. Within that, 4% reflected one-off lease remeasurement gains in Jardine Pacific's motor business and a larger-than-normal FX headwind of 3% principally from depreciation of the Indonesian rupiah. Overall, 5% underlying growth excluding the effect of disposals, reclassifications and a non-recurring lease gain is an encouraging performance amid ongoing economic challenges in our largest market. Looking in more detail at underlying net profit by business, Astra remained our largest contributor, despite the challenges, which were primarily felt as a slowdown in the mining solutions segment. Astra's automotive, consumer finance businesses in Indonesia remained resilient, growing in the first half. Hong Kong lands, Jardine Pacific and DFI also grew strongly, once again demonstrating the value of our diversified portfolio. Corporate costs were lower as net financing costs in the prior year reversed to net financing income as proceeds from capital recycling moved the parent balance sheet to a net cash position at the beginning of the year. I'll cover the core portfolio companies in more detail in a moment. Outside underlying earnings, the group recorded a net non-trading loss of $196 million. 17% smaller than the loss recorded in the prior year. Following the change of accounting for Zhongsheng, the investment is now marked to market, and Zhongsheng's share price weakness was the largest contributor to the fair value loss recorded on other investments. Our interest in Zhongsheng dropped from 21% to 14% in the first half. Following Hong Kong Land, we also recorded our share of the profits from build to sell through non-trading as they steadily wind down the business over a number of years. As usual, Hong Kong Land also drove the largest part of the fair value adjustment on investment properties. We recorded an increase in the first half of 2026 as the central market in Hong Kong continued its recovery bringing higher open market rents for office and marginally lower cap rates in the retail portfolio as the tomorrow's central renovations progressed and luxury retail demand grew. On the Group's balance sheet, net borrowings, excluding Astra's financial services companies, increased by $906 million, although gearing remained very modest at 7%. The increase was principally driven by payment of Mandarin Oriental special dividends following the completion of the sale of One Causeway Bay and at Astra, which completed acquisition of the ASA gold mine and progressed buyback programs at parent level and United Tractors. JC&C reduced its net debt using proceeds from the sale of shares in Vinamilk and half of its position in Toyota Motor Corp. and JM Parent further built its net cash position despite completing the privatisation of Mandarin Oriental in the first half. Group cash flows from operating activities for the period were down $600 million primarily due to more challenging conditions in Astra's mining solutions business. Cash flows from investing activities recorded a net outflow of $392 million compared to an inflow of $416 million in the prior year. This principally reflected higher outflows for other capital expenditure, which rose to $1.7 billion, as in addition to ongoing organic CapEx, Hong Kong Land completed its investment in Suntec REIT and Astra its goldmine investment. the sale of associates and JVs mainly comprised the transfer of MBFC and One Raffles Quay to Hong Kong Lands Private Reef in Singapore the sale of investment properties included the handover of four floors of one exchange square to the Hong Kong Stock Exchange and other disposals mainly reflected JC&C's sales of shares in Vinamilk and TMC and our own sale of shares in Junction cash outflows from financing activities were broadly in line with the prior year. The group has $12.7 billion in liquidity headroom to finance future growth. Overall, the group's portfolio companies continue to be highly cash generative, supported by strong balance sheets and access to considerable liquidity. Now, turning to Jardine Matheson's corporate balance sheet and cash flows at the parent company level, Parent free cash flow rose strongly by 21% to $709 million in the first half, primarily reflecting strong performance by the portfolio companies in 2025 and newly enhanced recurring payout policies from some of them. Cash cover for the Jardine Matheson dividend remained very comfortable at 1.9 times. The parent company's net cash position of $379 million at period end comprised 10 and 15 year bonds totaling $1.2 billion issued in 2021 at an effective interest rate of 2.6% and $1.6 billion of corporate cash held at leading high quality regional and global banks. We have of course committed to the acquisition of IMED which we expect to complete in the second half and are progressing our new follow on $500 million buyback program However, with further capital recycling ongoing, including JM's share of the special dividend announced yesterday by JC&C, we expect the corporate balance sheet to remain in a strong position at year end. And with further substantial committed facilities, the group has ample flexibility for new capital deployments should they arise. I'll now go through the performance of our core portfolio companies for details do refer directly to our company's respective results briefings looking first at Astra and less otherwise stated the numbers on this slide are shown in local currency and like all the other portfolio company slides are on a 100% basis net profit in local currency was 14.9 trillion rupiah a 7% decline compared to the first half of 2025. This was primarily driven by a lower contribution from the mining solutions segment, as some customers' coal quotas were restricted and the Matabe gold mine was out of production. Importantly though, and evidence of the resilience of the Indonesian economy, earnings were up in the automotive, financial services and other segments, Astra's contribution to Jardine's underlying net profit, excluding non-trading items, fell by 8%. The effects of the weak Rupiah were partly offset by an increase in Jardine's effective shareholding. Astra's five-year TSR was at 6.6% per annum, despite challenging macroeconomic and investor sentiment. As Lincoln mentioned, Astra and United Tractors both have active share buyback programs aligned to their new shareholder-led shareholder return-led strategy. The operating environment in Indonesia may remain uncertain in the short term, although we are encouraged that the Mataibe gold miners return to operation. However, we remain confident in Indonesia and Astra's long-term fundamentals and are committed to both. Hong Kong land continues to see strong five-year TSR as it makes meaningful progress against its Vision 2035 strategy. Capital recycled by Hong Kong Land rose a further $100 million to $3.7 billion, 93% of their announced target for delivery by 2027. Net debt has fallen a further 5% to $3.4 billion, providing capacity to fund future investment and growth. Underlying net profit was 11% higher at $259 million, benefiting from lower net financing costs. underlying earnings per share rose 14% as their buybacks progressed. The interim dividend which Jardines will receive increased by 33% to $94 million, reflecting a rebalancing of Hong Kong Land's annual dividend payout towards the interim, as well as upgraded earnings guidance for the year. Total equity increased by 2% to $31.4 billion, reflecting progress at West Bund, and the upward valuation adjustments already mentioned in central. DFI's contribution to Jardine's underlying net profit in the first half increased by 49% to $90 million, excluding the impact of disposals. Execution of its customer-first strategy saw positive sales and profit momentum across all banners in its key markets, which together with lower financing costs drove continued strong growth DFI have also revised their full year earnings guidance upwards to between $285 million and $305 million. 2025 strong growth as well as an increased dividend payout ratio saw Jardine's share of the interim dividend increased by 77% to $65 million. DFI finished the half year with minimal net debt providing capacity to fund strategic priorities ahead Mandarin Oriental reported lower underlying net profit due to a lower contribution from owned hotels with disposals in Miami and Munich impacting as well as closure of the Hong Kong property for renovation the management business remained stable despite the impact of conflict in the Middle East Expanding the management business, of course, remains the focus for future growth, and another five new management contracts were announced in the first half of 2026. As noted earlier, Mandarin paid a special dividend of $668 million to Jardines in January, following the disposal of the top floors of One Causeway Bay. Part of this was used to fund the privatisations. Juddine Pacific reported higher underlying net profit of $102 million, up $35 million, or 51%. Of that, $24 million was attributable to lease remeasurement gains reported as part of others, which will not recur in the second half. The remainder came from recovery in the consumer businesses. Jardine Engineering and Infrastructure was marginally down in the first half of the year, but is trading in line with expectations and typically sees the larger part of annual profits delivered in the second half of the year. As shared at the investor day in June, GEI has a target to double earnings by 2030. JC&C's contribution to underlying net profit, that is excluding the impact of the Vinamote disposal, remained flat at $45 million. Improved contributions came from the Vietnam businesses and lower financing costs. Foreign exchange gains recognised in the prior year did not recur as the underlying loans were either repaid or re-denominated in Singapore dollars. JC&C made further progress on portfolio action initiatives, specifically the sale of shares in their listed investments in Vinamilk and half their holding in Toyota. Following the TMC divestment, JC&C has proposed a special dividend of approximately 73 cents per share, comprising a cash distribution funded from the proceeds of the parts sale and a distribution in specie of the remaining TMC shares. The distribution in specie enables shareholders to choose between holding Toyota shares directly or realising the value in cash. overall corporate costs at Jardine's parent more than halved in the first half of 2026 due to net financing income generated following the significant recent capital recycling activity while within this overall reduction net overheads grew this was predominantly as a result of lower management fees charged to the portfolio companies as the benefits of head office restructuring come through in the second half we expect to see significant cost reductions net of building our new investment team and therefore expect overheads for the full year to be broadly in line with 2025 finally looking ahead to the full year our guidance given in March recognised that Jardine's 2026 underlying earnings will exclude a number of items that contributed meaningfully in 2025 specifically businesses disposed by DFI primarily Singapore Food and Robinsons Retail Vinamilk shares disposed by JC&C and finally the equity share of earnings from Zhongchun which with our reclassification of Zhongchun could be an investment rather than associate are no longer reported After adjusting for these changes our pro forma 2025 underlying EPS base for 2026 estimates was $5.33. We've seen encouraging first half results, even putting aside the non-recurring lease gain in Jardine Pacific. These have led to guidance upgrades at DFI and Hong Kong Land. However, uncertainty remains over the short-term trajectory for earnings in Indonesia, our largest contributor. Accordingly, we believe it's prudent for now to hold our earnings guidance unchanged for 2026 underlying earnings to be broadly in line with 2025 adjusted for business disposals we will of course provide a further update once we've seen results in the third quarter with the IMS release in November as outlined at the investor day though we can say already that Jardine's full year dividend will rise at least 5% to $2.47 per share with that I'll hand back to Lincoln thank you Grant