TIDMDFI TIDMJAR TIDMJDS
RNS Number : 2769F
Dairy Farm International Hldgs Ltd
28 July 2016
To: Business Editor 28th July 2016
For immediate release
The following announcement was issued today to a Regulatory
Information Service approved by the Financial Conduct Authority in
the United Kingdom.
DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2016
Highlights
-- Modest sales growth in constant currency
-- Underlying profit 3% ahead of prior year, 5% in constant currency
-- Cost challenges remain although some signs that margin pressures are easing
-- Good progress on key business priorities
"While sales and profit performance in the first half have been
encouraging in a challenging trading environment, the outlook
remains uncertain with consumer confidence fragile in most markets.
Our businesses are continuing to invest in their customer offerings
and infrastructure, and are fully committed to enhancing their
competitive positions."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended 30th
June
2016 2015 Change
US$m US$m %
Combined total sales including associates
and joint ventures(+) 10,110 8,011 +26
Sales 5,562 5,593 -1
Underlying profit attributable to
shareholders* 199 193 +3
Profit attributable to shareholders 199 192 +4
USc USc %
Underlying earnings per share* 14.74 14.25 +3
Basic earnings per share 14.74 14.16 +4
Interim dividend per share 6.50 6.50 -
+ on a 100% basis.
* 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 7 to the
condensed 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 interim dividend of USc6.50 per share will be payable on
12th October 2016 to shareholders on the register of members at the
close of business on 19th August 2016.
DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2016
OVERVIEW
Dairy Farm performed satisfactorily in the first half in the
face of difficult trading conditions. A stronger second quarter
produced improved like-for-like sales in most major businesses and
enabled all Divisions to achieve modest sales growth at constant
exchange rates. Underlying profit was slightly ahead as higher
contributions from Food, Home Furnishings, Restaurants and Yonghui
offset a lower contribution from the Health and Beauty Division.
Operating margin pressure is gradually easing, and the Group is
seeing the benefits from investments made in 2015.
RESULTS
Sales for the period, excluding associates and joint ventures,
were 1% lower, although up 2% at constant exchange rates. Sales
were impacted by the closure of a number of underperforming stores
in Singapore and Indonesia. Underlying net profit at US$199 million
was up 3%, and up 5% at constant exchange rates, as it benefited
from a half year's results of Yonghui, compared to three months in
2015 following the acquisition of the shareholding interest in
April of that year. Underlying earnings per share were also 3%
higher at USc14.74.
Operating cash flow for the period was a net inflow of US$181
million, compared with US$315 million in the first half of 2015.
The reduction was mainly due to negative working capital movements
driven by the timing of supplier payments. As at 30th June 2016,
the Group's net debt was US$602 million, compared to US$482 million
at 31st December 2015. The increased borrowings were principally
due to higher supplier payments and continued investment in the
business partly offset by stable operating profit at US$197
million, compared with US$201 million in the first half of
2015.
An unchanged interim dividend of USc6.50 per share has been
declared.
PERFORMANCE
In the Food Division, sales within supermarkets and hypermarkets
were up 2% at constant exchange rates despite deflationary
pressures. In Hong Kong, sales increased modestly but profits were
impacted by higher rental and labour costs. In Singapore and
Indonesia, profitability improved despite reduced sales following
the closure of certain underperforming stores. Sales were flat but
profits were lower in Malaysia. The Philippines enjoyed good sales
growth and improved profitability.
The convenience store operations in Hong Kong and Macau
performed satisfactorily in a difficult trading environment. While
overall sales in Singapore were flat due to a reduced store base,
like-for-like sales were positive and profits were higher. In
mainland China, store expansion continued and there was good sales
and profits growth.
In the Health and Beauty Division, sales improved in Hong Kong
but Malaysia and Macau were behind the prior year. All three
territories had lower profitability. In mainland China,
like-for-like sales were positive. In Indonesia, encouraging
improvements were made in sales and profits following the last
year's store rationalization programme. In the Philippines, good
progress continues to be made on the integration of Rose
Pharmacy.
In Home Furnishings, IKEA performed well and produced growth in
both sales and profits in all three of its markets. The group is
pursuing store expansion opportunities in all its territories.
In the Restaurant Division, Maxim's maintained its impressive
track record with increased sales and profits in Hong Kong and
mainland China. The group is growing its presence in mainland
China, and continues to expand its Starbucks network in Vietnam and
Cambodia.
Yonghui reported a strong 18% revenue growth in the first
half.
BUSINESS DEVELOPMENTS
In February, PT Hero agreed the sale of its remaining Starmart
stores in Indonesia. The transfer of the stores is in progress and
is expected to be completed in the fourth quarter.
In March, the Group refinanced its short-term borrowings through
new bank loan facilities totalling US$900 million in a range of
maturities up to five years. The new facilities will be used in
part to finance the investment of a further US$191 million in
Yonghui, which is expected to complete in the third quarter. The
investment will maintain the Group's 19.99% interest following the
placement by Yonghui of a 10% shareholding to JD.com.
In April, Maxim's completed the acquisition of the COVA
patisserie and restaurant franchise in Hong Kong, which has ten
commercial locations. Maxim's also opened its first The Cheesecake
Factory in Shanghai Disney Town in June.
Dairy Farm is continuing to invest in the development of its
businesses. Improvements are being made to existing stores to
enhance the shopping experience of customers, and its private label
range is being expanded to offer consumers a choice of high quality
products at lower prices. Greater efficiencies and productivity is
being achieved through investment in information systems and supply
chain infrastructure.
At 30th June, Dairy Farm, including Yonghui, operated some 6,500
outlets across all formats and employed in excess of 180,000
people.
PEOPLE
James Riley stepped down as a Director on 31st March 2016, and
we would like to thank him for his contribution. He was succeeded
by John Witt on 1st April 2016. Y. K. Pang will join the Board on
1st August 2016. We were saddened by the death of Lord Leach in
June 2016. He made a significant contribution to the Group and his
wise counsel will be greatly missed.
PROSPECTS
While sales and profit performance in the first half have been
encouraging in a challenging trading environment, the outlook
remains uncertain with consumer confidence fragile in most markets.
Our businesses are continuing to invest in their customer offerings
and infrastructure, and are fully committed to enhancing their
competitive positions.
Ben Keswick
Chairman
Dairy Farm International Holdings Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2016 2015 2015
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Underlying Underlying Underlying
business Non-trading business Non-trading business Non-trading
performance items Total performance items Total performance items Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Sales (note 2) 5,561.9 - 5,561.9 5,593.4 - 5,593.4 11,137.3 - 11,137.3
Cost of sales (3,913.8) - (3,913.8) (3,961.5) - (3,961.5) (7,852.1) - (7,852.1)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Gross margin 1,648.1 - 1,648.1 1,631.9 - 1,631.9 3,285.2 - 3,285.2
Other operating
income 86.4 - 86.4 79.6 - 79.6 170.5 0.5 171.0
Selling and
distribution
costs (1,322.2) - (1,322.2) (1,302.0) - (1,302.0) (2,602.5) - (2,602.5)
Administration
and
other operating
expenses (215.4) - (215.4) (207.7) (1.2) (208.9) (417.9) (4.7) (422.6)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating profit
(note 3) 196.9 - 196.9 201.8 (1.2) 200.6 435.3 (4.2) 431.1
Financing charges (9.6) - (9.6) (6.7) - (6.7) (15.3) - (15.3)
Financing income 0.6 - 0.6 1.1 - 1.1 1.7 - 1.7
Net financing
charges (9.0) - (9.0) (5.6) - (5.6) (13.6) - (13.6)
Share of results
of associates
and
joint ventures
(note
4) 46.5 - 46.5 31.7 - 31.7 85.0 - 85.0
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit before tax 234.4 - 234.4 227.9 (1.2) 226.7 506.7 (4.2) 502.5
Tax (note 5) (37.4) - (37.4) (39.5) - (39.5) (84.4) (0.1) (84.5)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit after tax 197.0 - 197.0 188.4 (1.2) 187.2 422.3 (4.3) 418.0
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Attributable to:
Shareholders of
the
Company 199.3 - 199.3 192.7 (1.2) 191.5 428.1 (3.7) 424.4
Non-controlling
interests (2.3) - (2.3) (4.3) - (4.3) (5.8) (0.6) (6.4)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
197.0 - 197.0 188.4 (1.2) 187.2 422.3 (4.3) 418.0
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
USc USc USc USc USc USc
Earnings per
share
(note 6)
- basic 14.74 14.74 14.25 14.16 31.66 31.39
- diluted 14.73 14.73 14.25 14.16 31.66 31.38
----------- --------- ----------- --------- ----------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Comprehensive Income
(unaudited)
Six months ended Year ended
30th June 31st December
2016 2015 2015
US$m US$m US$m
Profit for the period 197.0 187.2 418.0
Other comprehensive income/(expense)
--------- -------- --------------
Items that will not be reclassified
to profit or loss:
--------- -------- --------------
Remeasurements of defined benefit
plans (5.7) - (31.9)
Tax relating to items that will
not be reclassified 1.4 - 6.1
(4.3) - (25.8)
Share of other comprehensive expense
of associates and joint ventures - - (3.7)
--------- -------- --------------
(4.3) - (29.5)
--------- -------- --------------
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences
* net gain/(loss) arising during the period 40.0 (56.1) (118.9)
Revaluation of other investments
* (loss)/gain arising during the period (0.9) 0.5 1.6
Cash flow hedges
--------- -------- --------------
* net (loss)/gain arising during the period (2.4) (0.7) 0.4
* transfer to profit and loss (0.4) (1.1) (1.9)
(2.8) (1.8) (1.5)
Tax relating to items that may
be reclassified 0.6 0.2 -
Share of other comprehensive (expense)/
income of associates and joint
ventures (22.1) 6.3 (43.9)
--------- -------- --------------
14.8 (50.9) (162.7)
--------- -------- --------------
Other comprehensive income/(expense)
for the period, net of tax 10.5 (50.9) (192.2)
--------- -------- --------------
Total comprehensive income for
the period 207.5 136.3 225.8
--------- -------- --------------
Attributable to:
Shareholders of the Company 207.2 146.8 242.8
Non-controlling interests 0.3 (10.5) (17.0)
--------- -------- --------------
207.5 136.3 225.8
--------- -------- --------------
Dairy Farm International Holdings Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2016 US$m 2015 US$m 2015 US$m
Net operating assets
Intangible assets 760.7 742.6 744.4
Tangible assets 1,142.4 1,159.8 1,140.8
Associates and joint ventures 1,279.2 1,322.7 1,292.1
Other investments 5.9 5.6 6.8
Non-current debtors 169.8 174.3 161.5
Deferred tax assets 34.8 22.6 35.0
Non-current assets 3,392.8 3,427.6 3,380.6
Stocks 982.4 984.1 936.8
Current debtors 229.2 241.1 233.8
Current tax assets 14.2 7.5 10.8
Bank balances and other liquid
funds 259.7 368.9 258.5
--------- --------- ---------
1,485.5 1,601.6 1,439.9
Non-current assets held for sale
(note 8) 0.5 1.8 0.4
--------- --------- ---------
Current assets 1,486.0 1,603.4 1,440.3
--------- --------- ---------
Current creditors (2,251.4) (2,389.4) (2,354.5)
Current borrowings (344.7) (859.8) (729.6)
Current tax liabilities (70.2) (63.2) (56.0)
Current provisions (10.5) (6.3) (10.6)
--------- --------- ---------
Current liabilities (2,676.8) (3,318.7) (3,150.7)
--------- --------- ---------
Net current liabilities (1,190.8) (1,715.3) (1,710.4)
Long-term borrowings (517.4) (98.3) (10.6)
Deferred tax liabilities (52.0) (41.0) (55.3)
Pension liabilities (76.9) (37.7) (71.4)
Non-current creditors (45.9) (50.4) (43.6)
Non-current provisions (35.6) (30.7) (34.1)
Non-current liabilities (727.8) (258.1) (215.0)
---------
1,474.2 1,454.2 1,455.2
--------- --------- ---------
Total equity
Share capital 75.1 75.1 75.1
Share premium and capital reserves 61.7 60.6 61.3
Revenue and other reserves 1,264.1 1,231.1 1,239.4
--------- --------- ---------
Shareholders' funds 1,400.9 1,366.8 1,375.8
Non-controlling interests 73.3 87.4 79.4
--------- ---------
1,474.2 1,454.2 1,455.2
--------- --------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Changes in Equity
Attributable
Attributable to shareholders of the Company to non-
Share Share Capital Revenue Hedging Exchange controlling Total
capital premium reserves reserves reserves reserves Total interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2016
(unaudited)
At 1st January
2016 75.1 31.1 30.2 1,561.3 0.3 (322.2) 1,375.8 79.4 1,455.2
Total
comprehensive
income - - - 194.5 (2.2) 14.9 207.2 0.3 207.5
Dividends paid
by the Company
(note
9) - - - (182.5) - - (182.5) - (182.5)
Dividends paid
to
non-controlling
interests - - - - - - - (2.0) (2.0)
Employee share
option schemes - - 0.4 - - - 0.4 - 0.4
Capital
repayment to
non-controlling
interests - - - - - - - (4.4) (4.4)
At 30th June
2016 75.1 31.1 30.6 1,573.3 (1.9) (307.3) 1,400.9 73.3 1,474.2
Six months ended
30th June 2015
(unaudited)
At 1st January
2015 75.1 30.5 28.6 1,461.6 1.7 (168.8) 1,428.7 93.8 1,522.5
Total
comprehensive
income - - - 191.9 (1.6) (43.5) 146.8 (10.5) 136.3
Dividends paid
by the Company
(note
9) - - - (223.1) - - (223.1) - (223.1)
Employee share
option schemes - - 1.5 - - - 1.5 - 1.5
Change in
interests in
subsidiaries - - - 12.9 - - 12.9 4.1 17.0
Transfer - 0.6 (0.6) - - - - - -
At 30th June
2015 75.1 31.1 29.5 1,443.3 0.1 (212.3) 1,366.8 87.4 1,454.2
------- ------- -------- -------- -------- -------- ------- ------------ -------
Attributable
Attributable to shareholders of the Company to non-
Share Share Capital Revenue Hedging Exchange controlling Total
capital premium reserves reserves reserves reserves Total interests equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Year ended
31st December
2015
At 1st January
2015 75.1 30.5 28.6 1,461.6 1.7 (168.8) 1,428.7 93.8 1,522.5
Total
comprehensive
income - - - 397.6 (1.4) (153.4) 242.8 (17.0) 225.8
Dividends paid
by the
Company - - - (311.0) - - (311.0) - (311.0)
Employee share
option
schemes - - 2.2 - - - 2.2 - 2.2
Change in
interests in
subsidiaries - - - 13.1 - - 13.1 2.6 15.7
Transfer - 0.6 (0.6) - - - - - -
At 31st
December 2015 75.1 31.1 30.2 1,561.3 0.3 (322.2) 1,375.8 79.4 1,455.2
Total comprehensive income for the six months ended 30th June 2016 included in revenue reserves
comprises
profit attributable to shareholders of the Company of US$199.3 million (2015: US$191.5 million) and net
fair value loss on other investments of US$1.2 million (2015: net fair value gain of US$0.4 million).
Cumulative net fair value gain on other investments amounted to US$4.2 million.
Total comprehensive income for the year ended 31st December 2015 included in revenue reserves comprises
profit attributable to shareholders of the Company of US$424.4 million and net fair value gain on other
investments of US$1.3 million. Cumulative net fair value gain on other investments amounted to US$5.4
million.
Dairy Farm International Holdings Limited
Consolidated Cash Flow Statement
(unaudited)
Six months ended Year ended
30th June 31st December
2016 US$m 2015 US$m 2015 US$m
Operating activities
--------- --------- --------------
Operating profit (note 3) 196.9 200.6 431.1
Depreciation and amortization 107.2 105.9 212.0
Other non-cash items 5.5 7.8 25.2
(Increase)/decrease in working
capital (130.6) 21.7 73.0
Interest received 0.5 1.1 1.8
Interest and other financing charges
paid (8.9) (6.5) (15.0)
Tax paid (28.2) (35.2) (90.2)
--------- --------- --------------
142.4 295.4 637.9
Dividends from associates and joint
ventures 38.9 19.3 61.9
Cash flows from operating activities 181.3 314.7 699.8
Investing activities
--------- --------- --------------
Purchase of subsidiaries (note
11(a)) - (114.2) (146.6)
Purchase of associates and
joint ventures (note 11(b)) (3.7) (913.9) (918.4)
Purchase of intangible assets (13.2) (14.0) (41.9)
Purchase of tangible assets (97.2) (133.0) (261.9)
Sale of a property - - 1.7
Sale of tangible assets 1.6 0.3 1.7
Cash flows from investing activities (112.5) (1,174.8) (1,365.4)
Financing activities
--------- --------- --------------
Change in interests in subsidiaries
(note 11(c)) - 16.9 15.7
Capital repayment to non-controlling
interests (4.4) - -
Drawdown of borrowings (note 11(d)) 2,339.6 1,836.7 2,782.4
Repayment of borrowings (2,247.6) (1,061.3) (2,209.3)
Dividends paid by the Company (note
9) (182.5) (223.1) (311.0)
Dividends paid to non-controlling
interests (2.0) - -
Cash flows from financing activities (96.9) 569.2 277.8
---------
Net decrease in cash and cash equivalents (28.1) (290.9) (387.8)
Cash and cash equivalents at
beginning of period 256.7 656.6 656.6
Effect of exchange rate changes 3.6 (3.5) (12.1)
--------- --------- --------------
Cash and cash equivalents at end
of period (note 11(e)) 232.2 362.2 256.7
--------- --------- --------------
Dairy Farm International Holdings Limited
Notes to Condensed Financial Statements
1. ACCOUNTING POLICIES AND BASIS OF PREPARATION
The condensed financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting'. The condensed
financial statements have been prepared on a going concern basis.
The condensed financial statements have not been audited or
reviewed by the Group's auditors pursuant to the UK Auditing
Practices Board guidance on the review of interim financial
information.
The following amendments which are effective in the current
accounting period and relevant to the Group's operations are
adopted in 2016:
Amendments to IFRS 11 Accounting for Acquisitions of
Interests in
Joint Operations
Amendments to IAS 1 Disclosure Initiative: Presentation
of
Financial Statements
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods
of
Depreciation and Amortization
Annual Improvements to IFRSs 2012 - 2014 Cycle
There have been no changes to the accounting policies described
in the 2015 annual financial statements upon the adoption of the
above amendments to existing standards. The adoption of these
amendments does not have any significant impact on the results or
financial position of the Group.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
2. SALES
Including associates
and joint ventures Subsidiaries
Six months ended 30th June
2016 US$m 2015 US$m 2016 US$m 2015 US$m
Analysis by operating
segment:
Food 7,634.3 5,602.9 4,086.1 4,131.2
* Supermarkets/hypermarkets 6,694.2 4,684.0 3,146.0 3,212.3
* Convenience stores 940.1 918.9 940.1 918.9
Health and Beauty 1,289.5 1,284.1 1,193.6 1,191.1
Home Furnishings 282.2 271.1 282.2 271.1
Restaurants 904.4 853.1 - -
---------- ---------- --------- ---------
10,110.4 8,011.2 5,561.9 5,593.4
---------- ---------- --------- ---------
Sales including associates and joint ventures comprise 100% of
sales from associates and joint ventures.
Operating segments are identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the Board for the purpose of resource allocation and performance
assessment. Dairy Farm operates in four segments: Food, Health and
Beauty, Home Furnishings and Restaurants. Food comprises
supermarket, hypermarket and convenience store businesses. Health
and Beauty comprises the health and beauty businesses. Home
Furnishings is the Group's IKEA businesses. Restaurants is the
Group's catering associate, Maxim's, a leading Hong Kong restaurant
chain.
3. OPERATING PROFIT
Six months ended 30th
June
2016 US$m 2015 US$m
Analysis by operating segment:
Food 115.8 111.5
- Supermarkets/hypermarkets 88.6 85.1
- Convenience stores 27.2 26.4
1
----------- ----------
Health and Beauty 79.7 89.4
Home Furnishings 31.2 26.0
----------- ----------
226.7 226.9
Support office (29.8) (25.1)
----------- ----------
196.9 201.8
Non-trading item:
- acquisition-related costs in business
combination - (1.2)
196.9 200.6
----------- ----------
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Six months ended 30th
June
2016 US$m 2015 US$m
Analysis by operating segment:
Food - Supermarkets/hypermarkets 20.0 4.3
Health and Beauty (3.7) (2.1)
Restaurants 30.2 29.5
----------- ----------
1
46.5 31.7
----------- ----------
Results are shown after tax and non-controlling interests in the
associates and joint ventures.
5. TAX
Six months ended 30th June
2016 US$m 2015 US$m
Tax charged to profit and loss is analyzed
as follows:
Current tax (38.8) (39.2)
Deferred tax 1.4 (0.3)
--------- ---------
(37.4) (39.5)
--------- ---------
Tax relating to components of other comprehensive
income/(expense) is analyzed as follows:
Remeasurements of defined benefit plans 1.4 -
Revaluation of other investments 0.1 (0.1)
Cash flow hedges 0.5 0.3
2.0 0.2
--------- ---------
Tax on profit 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$11.9 million
(2015: US$8.6 million) is included in share of results of
associates and joint ventures.
6. EARNINGS PER SHARE
Basic earnings per share are calculated on profit attributable
to shareholders of US$199.3 million (2015: US$191.5 million), and
on the weighted average number of 1,352.2 million (2015: 1,352.1
million) shares in issue during the period.
Diluted earnings per share are calculated on profit attributable
to shareholders of US$199.3 million (2015: US$191.5 million), and
on the weighted average number of 1,352.3 million (2015: 1,352.6
million) shares in issue after adjusting for 0.1 million (2015: 0.5
million) shares which are deemed to be issued for no consideration
under the share-based long-term incentive plans based on the
average share price during the period.
Additional basic and diluted earnings per share are also
calculated based on underlying profit attributable to shareholders.
A reconciliation of earnings is set out below:
Six months ended 30th June
2016 2015
Basic Diluted Basic Diluted
earnings earnings earnings earnings
per share per share per share per share
US$m USc USc US$m USc USc
Profit attributable
to shareholders 199.3 14.74 14.73 191.5 14.16 14.16
Non-trading item - 1.2
----- -----
Underlying profit
attributable
to shareholders 199.3 14.74 14.73 192.7 14.25 14.25
----- -----
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 gains and losses arising
from the sale of businesses, investments and properties; impairment
of non-depreciable intangible assets 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.
8. NON-CURRENT ASSETS HELD FOR SALE
At 30th June 2016, the non-current assets held for sale
represented two apartments in Indonesia brought forward from 31st
December 2015.
At 30th June 2015, the non-current assets held for sale
represented a retail property in Taiwan and two apartments in
Indonesia. The retail property in Taiwan was sold during 2015 at a
profit of US$0.4 million while the apartments in Indonesia remained
unsold.
9. DIVIDS
Six months ended 30th June
2016 US$m 2015 US$m
Final dividend in respect of 2015 of USc13.50
(2014: USc16.50) per share 182.5 223.1
--------- ---------
An interim dividend in respect of 2016 of USc6.50 (2015:
USc6.50) per share amounting to a total of US$87.9 million (2015:
US$87.9 million) is declared by the Board, and will be accounted
for as an appropriation of revenue reserves in the year ending 31st
December 2016.
10. FINANCIAL INSTRUMENTS
Financial instruments by category
The carrying amounts of financial assets and financial
liabilities at 30th June 2016 and 31st December 2015 are as
follows:
Other financial
instruments
Loans and Derivatives Available- at amortized
receivables used for for-sale cost Total carrying
US$m hedging US$m US$m US$m amounts US$m
30th June 2016
Assets
Other investments - - 5.9 - 5.9
Debtors 96.7 - - - 96.7
Bank balances and
other liquid funds 259.7 - - - 259.7
------------ ------------- ---------- --------------- --------------
356.4 - 5.9 - 362.3
------------ ------------- ---------- --------------- --------------
Liabilities
Borrowings - - - (862.1) (862.1)
Trade and other
payables excluding
non-financial liabilities - (2.5) - (2,291.9) (2,294.4)
- (2.5) - (3,154.0) (3,156.5)
------------ ------------- ---------- --------------- --------------
31st December 2015
Assets
Other investments - - 6.8 - 6.8
Debtors 116.0 0.5 - - 116.5
Bank balances and
other liquid funds 258.5 - - - 258.5
------------ ------------- ---------- --------------- --------------
374.5 0.5 6.8 - 381.8
------------ ------------- ---------- --------------- --------------
Liabilities
Borrowings - - - (740.2) (740.2)
Trade and other
payables excluding
non-financial liabilities - (0.1) - (2,394.8) (2,394.9)
- (0.1) - (3,135.0) (3,135.1)
------------ ------------- ---------- --------------- --------------
The fair values of financial assets and financial liabilities
approximate their carrying amounts.
Fair value estimation
(i) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the
balance sheet, the corresponding fair value measurements are
disclosed by level of the following fair value measurement
hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical
assets or liabilities ('quoted prices in active markets')
The fair value of listed securities, which are classified as
available-for-sale, is based on quoted prices in active markets at
the balance sheet date. The quoted market price used for listed
investments held by the Group is the current bid price.
(b) Inputs other than quoted prices in active markets that are
observable for the asset or liability, either directly or
indirectly ('observable current market transactions')
The fair values of all interest rate swaps and caps, and forward
foreign exchange contracts have been determined using rates quoted
by the Group's bankers at the balance sheet date which are
calculated by reference to market interest rates and foreign
exchange rates.
The fair values of unlisted investments, which are classified as
available-for-sale and mainly include club debentures, are
determined by market prices at the balance sheet date.
(c) Inputs for assets or liabilities that are not based on
observable market data ('unobservable inputs')
The fair value of other unlisted securities, which are
classified as available-for-sale, is determined using valuation
techniques by reference to observable current market transactions
or the market prices of the underlying investments with certain
degree of entity specific estimates.
There were no changes in valuation techniques during the six
months ended 30th June 2016 and the year ended 31st December
2015.
The table below analyzes financial instruments carried at fair
value at 30th June 2016 and 31st December 2015, measured by
observable current market transactions.
At 30th
June At 31st
2016 December
US$m 2015 US$m
Assets
Available-for-sale financial assets
- unlisted investments 5.9 6.8
Derivatives designated at fair value
- through other comprehensive income/(expense) - 0.5
5.9 7.3
------- ----------
Liabilities
Derivatives designated at fair value
- through other comprehensive income/(expense) (2.5) (0.1)
(2.5) (0.1)
------- ----------
(ii) Financial instruments that are not measured at fair
value
The fair values of current debtors, bank balances and other
liquid funds, current creditors and current borrowings are assumed
to approximate their carrying amounts due to the short-term
maturities of these assets and liabilities.
The fair values of long-term borrowings are based on market
prices or are estimated using the expected future payments
discounted at market interest rates.
11. NOTES TO CONSOLIDATED CASH FLOW STATEMENT
(a) Purchase of subsidiaries
In March 2015, the Group acquired 100% interest in San Miu
Supermarket Limited ('San Miu'), which operates a supermarket chain
in Macau, for a total net cash consideration of US$114.2
million.
The provisional fair values of the identifiable assets and
liabilities at the acquisition date were as follows:
Six months
ended
30th June
2015 Provisional
fair values
US$m
Tangible assets 4.6
Non-current debtors 0.7
Current assets 25.4
Current liabilities (28.7)
Fair value of identifiable net assets acquired 2.0
Goodwill 185.4
-----------------
Total consideration 187.4
Adjustment for deferred consideration (56.8)
Cash and cash equivalents at the date of acquisition (16.4)
Net cash outflow 114.2
-----------------
At 31st December 2015, the Group had finalized its assessment of
the fair values of the identifiable assets and liabilities of San
Miu. The finalized goodwill was concluded at US$181.8 million as
compared to the provisional goodwill of US$185.4 million, with an
adjustment to decrease the goodwill by US$3.6 million.
The goodwill was attributable to its leading market position and
retail network in Macau.
None of the goodwill is expected to be deductible for tax
purposes.
(b) Purchase of associates and joint ventures for the six months
ended 30th June 2016 mainly related to the Group's capital
injection of US$2.4 million to Rose Pharmacy, Inc., the health and
beauty business in the Philippines and US$1.3 million to the
business in Vietnam.
Purchase of associates and joint ventures in 2015 mainly related
to the Group's acquisition of a 19.99% interest in Yonghui
Superstores Company Limited ('Yonghui'), a Shanghai-listed
hypermarket and supermarket operator in mainland China, by way of
subscription of new shares.
(c) Change in interests in subsidiaries
In February 2015, the Group completed the sale of 30% of the
ordinary share capital in GCH Retail (Malaysia) Sdn. Bhd. ('GCH
Malaysia'), the Group's hypermarket and supermarket operator in
Malaysia, to Circular Assets Sdn. Bhd., a wholly-owned subsidiary
of Syarikat Pesaka Antah Sdn. Bhd., for net proceeds of US$33.8
million, to maintain compliance with the 'Guidelines on Foreign
Participation in the Distributive Trade Services' issued by the
Ministry of Domestic Trade, Co-operatives and Consumerism of
Malaysia. The sale represented a 15% economic interest in GCH
Malaysia.
During the first six months of 2015, the Group acquired an
additional 2.49% interest in PT Hero Supermarket Tbk for a total
consideration of US$16.9 million.
(d) Drawdown of borrowings
In March 2016, the Group completed the refinancing of its
short-term facility through new term and revolving loan facilities
totalling US$900 million with longer tenor facilities of up to five
years. US$500 million of these facilities were drawn in 2016 to
repay the previous short-term loan.
Drawdown of borrowings in 2015 included a US$800 million bank
loan drawn to finance the acquisition of the 19.99% interest in
Yonghui.
(e) Analysis of balances of cash and cash equivalents
At 30th June
2016 US$m 2015 US$m
Bank balances and other liquid funds 259.7 368.9
Bank overdrafts (27.5) (6.7)
232.2 362.2
--------- ---------
12. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments at 30th June 2016 and 31st December
2015 amounted to US$203.3 million and US$178.3 million,
respectively.
In addition, the Group entered into an agreement in August 2015
to further invest in Yonghui, by way of subscription of new shares,
for a consideration of RMB1.29 billion (approximately US$194.4
million) as part of capital injection involving two other
investors. Following the adjustment for the one for one bonus issue
of shares by Yonghui on its ex-dividend date in June 2016, the
adjusted consideration was RMB1.27 billion (approximately US$191.2
million). Upon completion of the capital injection, the Group's
interest in Yonghui will remain at 19.99%. The investment requires
certain regulatory approvals in mainland China, and completion is
expected in the third quarter of 2016.
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 condensed financial statements.
13. RELATED PARTY TRANSACTIONS
The parent company of the Group is Jardine Strategic Holdings
Limited and the ultimate parent company is Jardine Matheson
Holdings Limited ('JMH'). Both companies are incorporated in
Bermuda.
In the normal course of business the Group undertakes a variety
of transactions with JMH and its subsidiaries, associates and joint
ventures. The more significant of such transactions are described
below.
Under the terms of a Management Services Agreement, the Group
paid a management fee of US$1.0 million (2015: US$1.0 million) for
the first six months of 2016 to Jardine Matheson Limited ('JML'), a
wholly-owned subsidiary of JMH, based on 0.5% of the Group's profit
attributable to shareholders in consideration for certain
management consultancy services provided by JML. The Group also
paid directors' fees of US$0.2 million (2015: US$0.2 million) for
the same period in 2016 to JML.
The Group rents properties from Hongkong Land Holdings Limited
('HKL'), a subsidiary of JMH. The gross rentals paid by the Group
to HKL for the first six months of 2016 were US$1.4 million (2015:
US$1.2 million). The Group's 50%-owned associate, Maxim's Caterers
Limited ('Maxim's'), also paid gross rentals of US$5.5 million
(2015: US$5.2 million) to HKL for the first six months of 2016.
The Group uses Jardine Lloyd Thompson Limited ('JLT'), an
associate of JMH, to place certain of its insurance. Brokerage fees
and commissions, net of rebates, paid by the Group to JLT for the
first six months of 2016 were US$1.2 million (2015: US$1.5
million).
The Group sources information technology infrastructure and
related services from Jardine OneSolution ('JOS'), a subsidiary of
JMH. The total fees paid by the Group to JOS for the first six
months of 2016 amounted to US$4.8 million (2015: US$4.9
million).
The Group also consumes repairs and maintenance services from
Jardine Engineering Corporation ('JEC'), a subsidiary of JMH. The
total fees paid by the Group to JEC for the first six months of
2016 amounted to US$1.9 million (2015: US$1.6 million).
Maxim's supplies ready-to-eat products at arm's length to
certain subsidiaries of the Group. For the first six months of
2016, these amounted to US$11.1 million (2015: US$11.0
million).
In addition, Gammon Construction ('GC'), a joint venture of JMH,
has engaged in a building contract with Maxim's for a commercial
building development in Cheung Sha Wan since 2014. The total
construction fees paid by Maxim's to GC for the first six months of
2016 amounted to US$18.5 million (2015: US$17.8 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 first six months of the current financial year.
Amounts of outstanding balances with associates and joint
ventures are included in debtors and creditors, as appropriate.
Dairy Farm International Holdings Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and
internal control. The following have been identified previously as
the areas of principal risk and uncertainty facing the Company, and
they remain relevant in the second half of the year.
-- Economic Risk
-- Commercial Risk and Financial Risk
-- Concessions, Franchises and Key Contracts
-- Regulatory and Political Risk
-- Terrorism, Pandemic and Natural Disasters
For greater detail, please refer to pages 120 and 121 of the
Company's Annual Report for 2015, a copy of which is available on
the Company's website www.dairyfarmgroup.com.
Dairy Farm International Holdings Limited
Responsibility Statement
The Directors of the Company confirm to the best of their
knowledge that:
a. the condensed financial statements have been prepared in accordance with IAS 34; and
b. the interim management report includes a fair review of all
information required to be disclosed by the Disclosure Rules and
Transparency Rules 4.2.7 and 4.2.8 issued by the Financial Conduct
Authority in the United Kingdom.
For and on behalf of the Board
Graham Allan
Neil Galloway
Directors
The interim dividend of USc6.50 per share will be payable
on 12th October 2016 to shareholders on the register of members
at the close of business on 19th August 2016. The shares will
be quoted ex-dividend on the Singapore Exchange and the London
Stock Exchange on 17th and 18th August 2016, respectively.
The share registers will be closed from 22nd to 26th August
2016, inclusive.
Shareholders will receive their cash dividends in United States
dollars, unless they are registered on the Jersey branch register
where they will have the option to elect for sterling. These
shareholders may make new currency elections for the 2016
interim dividend by notifying the United Kingdom transfer
agent in writing by 23rd September 2016. The sterling equivalent
of dividends declared in United States dollars will be calculated
by reference to a rate prevailing on 28th September 2016.
Shareholders holding their shares through CREST in the United
Kingdom will receive their cash dividends in sterling only
as calculated above. Shareholders holding their shares through
The Central Depository (Pte) Limited ('CDP') in Singapore
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 19th August 2016, must submit the relevant documents
to M & C Services Private Limited, the Singapore branch registrar,
no later than 5.00 p.m. (local time) on 18th August 2016.
Dairy Farm
Dairy Farm is a leading pan-Asian retailer. At 30th June 2016,
the Group and its associates and joint ventures operated some 6,500
outlets and employed over 180,000 people. It had total annual sales
in 2015 exceeding US$17 billion.
The Group aims to meet the changing needs of Asian consumers by
offering the leading brands, a pleasant retail experience and great
value, all provided through responsible operations supported by
reliable and trusted supply chains.
The Group operates under a number of well-known brands across
four divisions. The principal brands are:
Food
-- Supermarkets - Wellcome in Hong Kong, Taiwan and the
Philippines, Yonghui in mainland China, Cold Storage in Singapore
and Malaysia, Giant in Malaysia, Indonesia and Singapore, Hero in
Indonesia;
-- Hypermarkets - Giant in Malaysia, Indonesia, Singapore,
Brunei and Vietnam, Yonghui in mainland China;
-- Convenience stores - 7-Eleven in Hong Kong, Singapore, Southern China and Macau;
Health and Beauty
-- Mannings in Greater China, Guardian in the rest of Asia and
Rose Pharmacy in the Philippines;
Home Furnishings
-- IKEA in Hong Kong, Taiwan and Indonesia; and
Restaurants
-- Maxim's in Hong Kong, mainland China and Vietnam.
Dairy Farm International Holdings Limited is incorporated in
Bermuda and has a standard listing on the London Stock Exchange as
its primary listing, with secondary listings in Bermuda and
Singapore. The Group's businesses are managed from Hong Kong by
Dairy Farm Management Services Limited through its regional
offices. Dairy Farm is a member of the Jardine Matheson Group.
- end -
For further information, please contact:
Dairy Farm Management Services Limited
Graham Allan (852) 2299 1881
Neil Galloway (852) 2299 1896
Brunswick Group Limited
Siobhan Xiaohui Zheng (852) 3512 5044
As permitted by the Disclosure Rules and Transparency Rules of
the Financial Conduct Authority in the United Kingdom, the Company
will not be posting a printed version of the Half-Yearly Results
announcement to shareholders. The Half-Yearly Results announcement
will remain available on the Company's website,
www.dairyfarmgroup.com, together with other Group
announcements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LQLFLQDFFBBV
(END) Dow Jones Newswires
July 28, 2016 05:08 ET (09:08 GMT)
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