Dairy Farm International : Half-Yearly Results for the six months ended 30th June 2017

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To: Business Editor 3rd August 2017

For immediate release

The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.

• Consolidated sales flat in constant currency

• Underlying profit up 6%

• Strong performances from Yonghui and Maxim's

• Operating margins improve

• Continued progress on key strategic initiatives

"Solid profit growth was achieved in the first half despite lower sales seen in the Group's supermarkets and hypermarkets operations. While the outlook for the remainder of the year is expected to remain challenging for the supermarket and hypermarket activities in Southeast Asia, the Group's other businesses continue to make steady progress."‌

Ben Keswick

Chairman

The interim dividend of US¢6.50 per share will be payable on 19th October 2017 to shareholders on the register of members at the close of business on 25th August 2017.

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Dairy Farm's sales were maintained in the first half as declines within supermarkets and hypermarkets in the Food Division were offset by good sales growth in all other Divisions. Overall profits increased with strong results from Yonghui and Maxim's in addition to good performances from the Health and Beauty and Home Furnishings Divisions more than compensating for the lower earnings in the Food Division.

Sales for the period by the Group's subsidiaries of US$5.5 billion were marginally behind last year, but flat at constant exchange rates. Total sales, including 100% of associates and joint ventures, were 3% higher at US$10.4 billion. Underlying net profit was US$211 million, up 6%, while underlying earnings per share were also 6% higher at US¢15.63.

Operating cash flow for the period was a net inflow of US$306 million, compared with US$181 million in the first half of 2016. The improvement was mainly due to changes in working capital management. As at 30th June 2017, the Group's net debt was

US$685 million, as compared to US$641 million at 31st December 2016 principally due to continued investment in the business.

An unchanged interim dividend of US¢6.50 per share has been declared.

In the Food Division, sales within supermarkets and hypermarkets were 3% lower at constant exchange rates and profits declined due to continuing softness in certain key markets. The Hong Kong operations continued to trade steadily in line with last year, but difficult trading conditions in Singapore, Malaysia and Taiwan led to reduced sales and profits. In Indonesia, better margin management enabled profits to be maintained despite lower sales, while profitability improved in the Philippines, even though sales were flat following the closure of a large hypermarket.

Yonghui reported a strong 15% growth in revenue and a 57% increase in profit due to both higher store numbers and margin improvement from more effective merchandising.

The Group's convenience store operations performed well. Hong Kong and Macau were ahead of last year, supported in part by a modest increase in tourist numbers. In Singapore, sales were lower as a number of stores were closed, although earnings benefited as several had been unprofitable. Store expansion in mainland China continued to underpin sales growth.

In the Health and Beauty Division, good sales and profit growth were achieved in Hong Kong, Macau and Indonesia. In Singapore and Malaysia, sales and profits were reduced as consumer confidence remained low. In mainland China, sales were enhanced with successful promotions. In the Philippines, operational improvements put into place following the integration of Rose Pharmacy are beginning to yield positive results.

In Home Furnishings, IKEA performed well driven by strong sales in Taiwan and Indonesia, although the performance in Hong Kong was soft. Store expansion continues with a fourth IKEA store in Hong Kong opening later this year and a site for a second store in Jakarta having been secured. Meanwhile, e-commerce activities are showing encouraging results in all three markets.

In the Restaurants Division, Maxim's delivered a strong performance as it continues to expand its presence. Maxim's now has over one thousand outlets across Greater China and Southeast Asia.

Dairy Farm is continuing its programme of investment in its technology backbone, supply chain infrastructure, stores and people. These initiatives are supporting the expansion of the range of fresh produce and own brand products on offer, together with the introduction of enhanced e-commerce offers in many of its businesses and the innovation of new store formats in most markets. By improving the shopping experience of its customers and meeting their changing requirements, the Group is underpinning its future growth.

In July, the Group agreed to increase its ownership in Rustan's in the Philippines to 100% with the acquisition of the remaining 34% interest from its joint venture partner.

In May, Maxim's opened its first The Cheesecake Factory in Hong Kong and in July, they announced the franchise to operate Shake Shack, an American burger-and-fries restaurant format, in Hong Kong and Macau with the first store opening in 2018.

At 30th June, Dairy Farm, including associates and joint ventures, operated over 6,600 outlets across all formats, compared with 6,548 at 31st December 2016.

Graham Allan will step down as Group Chief Executive at the end of August after five years of introducing change initiatives that have laid the foundation for growth. We would like to thank him for his contribution. Graham will be succeeded by Ian McLeod, who brings over 30 years of experience in the retail sector.

Solid profit growth was achieved in the first half despite lower sales seen in the Group's supermarkets and hypermarkets operations. While the outlook for the remainder of the year is expected to remain challenging for the supermarket and hypermarket activities in Southeast Asia, the Group's other businesses continue to make steady progress.

Ben Keswick

Chairman