Fraser and Neave : profit increases 43 per cent in the first nine months (Press Release)

Company Registration No. 189800001R Incorporated in the Republic of Singapore

• Profit after taxation1 up 43 per cent to $127.2 million
  • Including Discontinued Operations2, profit after taxation fell 29 per cent
• PBIT3 improved 26 per cent to $140.8 million
  • Dairies led earnings growth; PBIT up 66 per cent
  • Food & Beverage earnings up 31 per cent to $128.5 million
  • Food & Beverage PBIT margin rose to 10 per cent, from 7 per cent

1 Continuing operations

2 In August 2015, the Group completed the sale of its brewery in Myanmar. To reflect the sale of this brewery, its FY2015 operating results have been restated as Discontinued Operations

3 PBIT denotes profit before interest, taxation and exceptional items; continuing operations only

4 Before exceptional items

SINGAPORE, 4 AUGUST 2016 - Fraser and Neave, Limited ("F&N" or the "Group") achieved revenue of $524.0 million in the third quarter ended 30 June 2016 ("3Q2016"), a fall of 4 per cent over the same period last year. The decrease in revenue was largely due to a decline in soft drinks sales in Malaysia where increasing pricing pressures and weaker Ringgit eroded growth. Despite lower revenue, Group 3Q2016 profit before interest and taxation ("PBIT") soared 25 per cent to $58.7

million. The strong performance was attributed to robust performance in Dairies, where profit increased 64 per cent to $33.9 million in 3Q2016, despite higher operating costs incurred for expansion into new markets, brand building activities, and translation losses from unfavourable exchange rates.

Dairies Thailand, in particular, continued to excel as the Group's best performing operation. Its 3Q2016 profit jumped 43 per cent on revenue increase of 1 per cent, mainly due to lower input costs and more cost-effective trade distribution, and despite unfavourable translation effect (49 per cent increase in constant currency terms).

Dairies Malaysia 3Q2016 revenue, although benefitting from higher volume, was flat against the year-earlier period due to unfavourable translation effects. On a constant currency basis, revenue would have grown 8 per cent. Aided by lower input costs and ongoing productivity improvements, Dairies Malaysia 3Q2016 PBIT nearly doubled (111 per cent in constant currency), despite unfavourable translation effect.

Beverages division recorded weaker performance in 3Q2016. Despite successful execution of festive consumer and trade promotions, intensifying pricing pressures, higher marketing spend on new products and in new markets, as well as weaker Ringgit adversely impacted earnings. This quarter, Beverages revenue and PBIT declined 9 per cent and 41 per cent, respectively.

For the nine months ended 30 June 2016 ("9M2016"), Group revenue was down 7 per cent to $1,486.9 million. Despite lower revenue, Group PBIT improved 26 per cent, from a restated $111.8 million to $140.8 million, aided by favourable input costs and higher operational efficiencies, despite adverse foreign currency translation impact and a rise in brand investment costs and operating expenses to support regional expansion in new markets of Indonesia, Myanmar, Thailand and Vietnam.

Boosted mainly by higher interest income, Group 9M2016 profit after taxation leapt 43 per cent*, to $127.2 million.

Corporate Development

On 1 July 2016, Fraser and Neave, Limited ("F&N" and together with its subsidiaries, the "Group") acquired the entire issued share capital of Warburg Vending Pte Ltd, Warburg Engineering Pte. Ltd. and Warburg Vending Services Pte. Ltd. (collectively, "Warburg") for approximately $29 million in cash. Warburg is a leading player in the Singapore vending market with over 18 years of operational experience, and has been a partner of F&N since 2011.

The acquisition of Warburg is a strategic fit with F&N's food and beverage business. Together with Warburg, the Group's total number of active vending machines increased by almost threefold, thereby expanding its vending network and increasing its brand visibility in both public and private segments, across educational, industrial and commercial sectors in Singapore.

The acquisition was funded fully from internal sources.

- END -

For clarification and further enquiries, please contact:

Mr Hui Choon Kit Ms Jennifer Yu

Chief Financial Officer Head, Investor Relations

DID: 6318 9272 DID: 6318 9231

Email: huick@fngroup.com.sg Email: jenniferyu@fngroup.com.sg

* From continuing operations

Operations Review (9 months ended 30 June 2016)

DAIRIES

The Group's Dairies division continued to deliver strong performances across its core markets of Thailand and Malaysia, benefitting from higher canned milk volumes across key brands. Despite translation losses, Dairies 9M2016 PBIT jumped 66 per cent (+84 per cent in constant currency) to $99.5 million, as a result of lower input costs and improved operational efficiencies.

(A) Dairies Thailand

Dairies Thailand continued to shine as the Group's largest profit contributor. Despite lost sales from Bear Brand and Milo UHT products, Dairies Thailand 9M2016 revenue grew 3 per cent, on a constant currency basis, on the back of strong demand for its brands, contribution from the newly launched F&N MAGNOLIA UHT milk products, increased distribution coverage and effective promotional and trade marketing activities. Taking into account negative foreign exchange translation effects due to the weakening of Thai Baht, Dairies Thailand revenue fell 1 per cent.

Despite the decline in revenue and translation losses, in Singapore Dollar terms, Dairies Thailand 9M2016 PBIT jumped 60 per cent (+67 per cent in constant currency), to $53.9 million against the same period last year. The improvement was due to lower input costs, as well as realised cost savings from manufacturing efficiencies and a one-off cost recovery.

(B) Dairies Malaysia

Dairies Malaysia revenue fell 10 per cent against the same period last year due to higher tactical discounts offered for its canned milk products, impacted