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 MONTHS ENDED 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

10,110

8,011

+26

joint ventures+

Sales

5,562

5,593

1

Underlying profit attributable to shareholders*

199

193

+3

Profit attributable to shareholders

199

192

+4

US¢

US¢ %

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 US¢6.50 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.

- more -

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 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 US¢14.74.

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 US¢6.50 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 Ltd. published this content on 28 July 2016 and is solely responsible for the information contained herein.
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