Fraser and Neave : reports 44-per cent jump in earnings in the first half (Press Release)

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

Fraser and Neave reports 44-per cent jump in earnings in the first half

• Profit after taxation1 up 44 per cent to $73.7 million
  • Including Discontinued Operations2, profit after taxation fell 34 per cent
• PBIT3 improved 27 per cent to $82.1 million
  • Dairies continued to lead earnings growth, PBIT increased 66 per cent
  • Food & Beverage earnings up 38 per cent to $85.5 million
  • Food & Beverage PBIT margin improved to 11 per cent
• Interim dividend of 1.5 cents per share declared

Financial Highlights (S$ 'million)	3 months to 31 March 2016	3 months to 31 March 2015 (Restated)	6 months to 31 March 2016	6 months to 31 March 2015 (Restated)
Revenue	474.3	498.7	962.8	1,048.7
PBIT3	28.4	25.5	82.1	64.9
Profit After Taxation Continuing Operations Discontinued Operations	26.0 26.0 -	51.3 20.7 30.6	73.7 73.7 -	112.0 51.0 61.0
Attributable Profit1,4	11.6	8.8	37.2	27.9
Earnings Per Share (basic)(cents)1,4	0.8	0.65	2.6	1.95
Net Asset Value Per Share			$1.73	$1.57 (30 Sep 2015)

1 Continuing Operations

2 In August 2015, the Group completed the sale of its brewery in Myanmar. Upon the divestment, the operating results of this brewery have been reclassified as Discontinued Operations

3 PBIT denotes profit before interest, taxation and exceptional items

4 Before exceptional items

5 Including Discontinued Operations, 2Q2015 and 1H2015 earnings per share (basic) were 1.8 cents and 4.2 cents, respectively

SINGAPORE, 10 May 2016 - Fraser and Neave, Limited ("F&N" or the "Group") achieved second-quarter FY2016 ended 31 March 2016 ("2Q2016") earnings after tax

of $26.0 million, a 26-per cent improvement i compared with the corresponding period last year.

Buoyed by solid growth in both Beverages and Dairies, Food & Beverage ("F&B") 2Q2016 profit before interest and tax ("PBIT") rose 29 per cent to $37.2 million. The strong performance was a result of margin expansion, from 6.9 per cent to 9.2 per cent, due to favourable product mix, lower input costs and improved manufacturing and operational efficiencies, despite negative foreign exchange translation effects. Consequently, Group PBIT for 2Q2016 increased 11 per cent, to $28.4 million.

This quarter, the Group's Soft Drinks and Dairies businesses in all its core markets of Singapore, Malaysia and Thailand recorded revenue and volume gains, as a result of well-executed consumer and trade promotions centred around the Lunar New Year demand, favourable product mix and the strengthening of its distribution channels. However, impacted by translation losses from the weaker Malaysian Ringgit and Thai Baht, F&B revenue for 2Q2016 slipped 3 per cent to $405.0 million. Coupled with a drop in Publishing & Printing revenue, Group 2Q2016 revenue fell 5 per cent, to

$474.3 million, compared to the corresponding period last year.

For the half-year ended 31 March 2016 ("1H2016"), Group revenue was down 8 per cent to $962.8 million. However, Group PBIT improved 27 per cent, from $64.9 million to $82.1 million. The increase was a result of the 49-per cent and 70-per cent PBIT growth in Dairies Malaysia and Dairies Thailand, respectively, both aided by favourable input costs and higher operational efficiencies, and despite 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.

i From Continuing Operations

Boosted mainly by higher interest income and the absence of one-off items related to the floods in Malaysia recorded in the corresponding period last year, Group 1H2016 profit after taxation leapt 44 per centii, to $73.7 million.

Mr Koh Poh Tiong, Chairman of the F&N Board Executive Committee said, "We have made a strong start to FY2016. Our performance over the first six months, notably the Food & Beverage division, was attributed to robust volume growth of our core brands in markets of Thailand, Malaysia and Singapore, driven by good festive demand."

"Our emphasis on brand building and channel penetration has enabled us to maintain our leading positions in core markets. However, we remain cautious amidst a soft global economy and subdued consumer sentiments, and we will continually review our marketing spend and investment plans, taking into account the economic environment. Despite this, the Group continues to have its sights fixed firmly on regional expansion, particularly Indonesia, Myanmar and Vietnam. We are confident that we will strike the right balance between seeding and growing new markets for long-term sustainable growth and delivering financial performance this year," added Mr Koh.

Directors have declared an interim dividend of 1.5 cents per share, down from 2.0 cents last year, to reflect the Group's underlying operational results following the sale of its brewery in Myanmar. The dividend will be paid on 9 June 2016.

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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

ii From Continuing Operations

Operations Review (Half-year ended 31 March 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 negative currency effects, Dairies 1H2016 PBIT jumped 66 per cent (+87 per cent in constant currency) to $65.6 million, as a result of lower raw material 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 1H2016 revenue grew 2 per cent, in constant currency, 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 management activities. Taking into account negative foreign exchange translation impact due to the weakening of Thai Baht, Dairies Thailand revenue fell 3 per cent.

Despite the weaker revenue, in Singapore Dollar terms, Dairies Thailand 1H2016 PBIT jumped 70 per cent (+78 per cent in constant currency), to $36.1 million against the same period last year. The improvement was due to lower input cost and trade discounts, as well as realised cost savings from manufacturing efficiencies and a one-off cost recovery.

(B) Dairies Malaysia

Dairies Malaysia revenue fell 3 per cent, in constant currency, against the same period last year due to higher tactical discounts offered for its canned milk