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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Jardine Strategic Holdings Ld | LSE:88EI | London | Ordinary Share | BMG507641022 | ORD US$0.05(JERSEY REG) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMDFI TIDMJAR TIDMJDS
RNS Number : 7125V
Dairy Farm International Hldgs Ltd
26 July 2018
To: Business Editor 26th July 2018
For immediate release
The following announcement was issued today to a Regulatory Information Service approved by the Financial Conduct Authority in the United Kingdom.
DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018
Highlights
-- Consolidated sales up 6% at constant rates of exchange -- Underlying profit 2% higher -- Strong results from North Asia Health and Beauty -- Continuing decline in Southeast Asia Food -- New leadership team in place
"The first half of the year saw strong results from North Asia, driven by the Health and Beauty business in Hong Kong and Macau, but the Southeast Asian Food businesses continued to face challenges producing a weaker overall performance. While the outlook for the remainder of the year is expected to remain challenging for the Food businesses, particularly in Southeast Asia, the Group's other businesses should continue to make steady progress. Significant management and structural changes have been made to address the issues the Group faces in a number of areas, but time will be needed to deliver sustainable improvement."
Ben Keswick
Chairman
Results
Hot Features
Premium
(unaudited)
Six months ended 30th
June
2017 Change
2018 US$m %
US$m restated
Combined total sales including 100%
of associates and joint ventures 12,215 10,448 +17
Sales 5,929 5,505 +8
Underlying profit attributable to
shareholders* 215 211 +2
Profit attributable to shareholders 225 212 +6
USc USc %
Underlying earnings per share* 15.88 15.63 +2
Basic earnings per share 16.63 15.68 +6
Interim dividend per share 6.50 6.50 -
* 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 accounts have been restated due to changes in accounting
policies upon adoption of IFRS 9 'Financial Instruments' and
IFRS 15 'Revenue from Contracts with Customers', as set out in
note 1 to the condensed financial statements.
----------------------------------------------------------------------------------
The interim dividend of USc6.50 per share will be payable on 10th October 2018 to shareholders on the register of members at the close of business on 17th August 2018.
DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2018
OVERVIEW
The Group continues to face challenges on several fronts, including increasing competitive pressures and a number of underperforming businesses within the portfolio. In order to address these, Dairy Farm has consolidated its trading operations into a more centralised structure with two main trading divisions, North Asia and Southeast Asia, in addition to Home Furnishings and Maxim's, which remain as standalone divisions. Newly constituted shared functions will provide specialist support to all divisions and a strengthened and broadened leadership team has been created to meet the requirements of the business.
Performance in the first half saw higher sales achieved in all divisions, with the Group's underlying profit increasing slightly compared with the prior year.
RESULTS
Sales of US$5.9 billion for the period by the Group's subsidiaries were 8% higher than last year, or 6% higher at constant rates of exchange. Total sales, including 100% of associates and joint ventures, rose 17% to US$12.2 billion, primarily as a result of strong growth in Yonghui and Maxim's. Underlying net profit was US$215 million, 2% higher than the same period last year as were underlying earnings per share at USc15.88.
Operating cash flow for the period was a net inflow of US$312 million, compared with US$306 million in the first half of 2017 reflecting continued improvements in working capital management. As at 30th June 2018, the Group's net debt was higher at US$670 million compared to US$599 million at 31st December 2017, principally due to continued investment in the businesses.
An unchanged interim dividend of USc6.50 per share has been declared.
PERFORMANCE
In North Asia, overall sales within the Food businesses were ahead of prior year, but profits declined, mainly due to higher rental and labour costs in Hong Kong. The Health and Beauty business in Hong Kong and Macau delivered very strong sales and profit growth, driven by a significant increase in business from higher numbers of mainland Chinese tourists.
In Southeast Asia, challenging trading conditions continued for the Food businesses. The Group saw lower sales and profits in Singapore, Malaysia and Indonesia, while in the Philippines, sales were higher but profits lower, due to increased operating costs resulting from more store openings. Generally, these businesses have suffered from a lack of investment in infrastructure, range and competitive pricing for some time, while competition in each market has been increasing. Turning these Food businesses around and becoming more relevant to the changing demands of customers will take significant effort. Appropriate plans are now being put in place following the strategic review, but will require time to take effect.
The improving performance of the majority of the Group's Health and Beauty businesses in Southeast Asia is encouraging, with Malaysia, Indonesia and Vietnam reporting better underlying results.
The Group's convenience store operations performed well, with Hong Kong and Macau trading in line with last year. In Singapore, overall convenience store sales were slightly lower than last year due to the termination of a multi-site agreement, but profitability improved following the closure of some underperforming stores. Like-for-like sales increases and store expansion in mainland China continued to underpin growth in this sector.
In Home Furnishings, IKEA performed ahead of last year in Taiwan and Indonesia, with sales and profits growth. Hong Kong reported higher sales, helped by a contribution from the new store which opened in October last year, but associated higher operating costs resulted in a reduction in profits. Progress continues to be made on new store development in both Taiwan and Indonesia, with several sites under development. Meanwhile, e-commerce activities are showing increased results in all markets but from a small base.
Maxim's delivered another good performance and is continuing to expand its presence across mainland China and Southeast Asia.
Yonghui reported strong sales growth and underlying profits from the core food business remained strong, but total profits were behind prior year due to the investment in new technology formats and the introduction of an employee incentive scheme announced earlier this year.
BUSINESS DEVELOPMENTS
Given the mixed performance of businesses within the Group, plans are now being developed to build on Dairy Farm's strengths and address the challenges it faces. Five strategic priorities have been identified: building capability, growing presence in mainland China, protecting the Group's Hong Kong business, revitalising the Southeast Asia operations and driving digital innovation. A series of programmes are underway to support these priorities across all of the Group's businesses.
In March, the Group announced that it had agreed to partner with Robinsons Retail Holdings Inc. ('RRHI'), the third largest retailer in the Philippines, to build a leading food retail business in that market. Dairy Farm will combine its Rustan Supercenters, Inc. operations with RRHI to build on the combined strengths of both businesses, creating a new platform for growth. Following completion of the transaction, Dairy Farm would own 18.25% of RRHI. The transaction, which is subject to certain regulatory approvals, is expected to be completed in the fourth quarter.
In May, Maxim's opened its first Shake Shack restaurant, an American fast casual burger-and-shake format, in Hong Kong, with encouraging initial results.
At 30th June, Dairy Farm, including associates and joint ventures, operated over 7,400 outlets across all formats, compared with 7,181 at 31st December 2017.
PEOPLE
Dr George Koo stepped down as a Director on 9th May 2018. We would like to thank him for his significant contribution to the Company over many years. We would also like to welcome Dr Delman Lee, who has joined the Board.
Several new senior executives with a wealth of retail experience from around the world have joined the Dairy Farm leadership team.
OUTLOOK
The first half of the year saw strong results from North Asia, driven by the Health and Beauty business in Hong Kong and Macau, but the Southeast Asian Food businesses continued to face challenges producing a weaker overall performance. While the outlook for the remainder of the year is expected to remain challenging for the Food businesses, particularly in Southeast Asia, the Group's other businesses should continue to make steady progress. Significant management and structural changes have been made to address the issues the Group faces in a number of areas, but time will be needed to deliver sustainable improvement.
Ben Keswick
Chairman
Dairy Farm International Holdings Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2018 2017 2017
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Underlying Underlying Non-trading Underlying Non-trading
business Non-trading business items Total business items Total
performance items Total performance US$m US$m performance US$m US$m
US$m US$m US$m US$m restated restated US$m restated restated
Sales (note 2) 5,928.7 - 5,928.7 5,505.3 - 5,505.3 11,288.7 - 11,288.7
Cost of sales (4,126.1) - (4,126.1) (3,849.5) - (3,849.5) (7,856.1) - (7,856.1)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Gross margin 1,802.6 - 1,802.6 1,655.8 - 1,655.8 3,432.6 - 3,432.6
Other operating
income 94.5 9.1 103.6 87.6 1.1 88.7 182.4 1.5 183.9
Selling and
distribution
costs (1,433.6) - (1,433.6) (1,315.9) - (1,315.9) (2,714.1) - (2,714.1)
Administration
and
other operating
expenses (245.9) - (245.9) (227.4) - (227.4) (533.5) - (533.5)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating profit
(note 3) 217.6 9.1 226.7 200.1 1.1 201.2 367.4 1.5 368.9
Financing charges (16.8) - (16.8) (13.2) - (13.2) (28.0) - (28.0)
Financing income 1.6 - 1.6 0.8 - 0.8 1.7 - 1.7
Net financing
charges (15.2) - (15.2) (12.4) - (12.4) (26.3) - (26.3)
Share of results
of associates
and
joint ventures
(note
4) 61.4 1.0 62.4 61.3 (0.3) 61.0 143.4 (1.2) 142.2
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit before tax 263.8 10.1 273.9 249.0 0.8 249.8 484.5 0.3 484.8
Tax (note 5) (52.6) - (52.6) (40.0) (0.1) (40.1) (92.5) (0.5) (93.0)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit after tax 211.2 10.1 221.3 209.0 0.7 209.7 392.0 (0.2) 391.8
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Attributable to:
Shareholders of
the
Company 214.8 10.1 224.9 211.4 0.7 212.1 402.6 (0.2) 402.4
Non-controlling
interests (3.6) - (3.6) (2.4) - (2.4) (10.6) - (10.6)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
211.2 10.1 221.3 209.0 0.7 209.7 392.0 (0.2) 391.8
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
USc USc USc USc USc USc
Earnings per
share
(note 6)
- basic 15.88 16.63 15.63 15.68 29.77 29.75
- diluted 15.87 16.62 15.62 15.67 29.76 29.74
----------- --------- ----------- --------- ----------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Comprehensive Income
(unaudited)
Six months ended Year ended
30th June 31st December
2017 2017
2018 US$m US$m
US$m restated restated
Profit for the period 221.3 209.7 391.8
Other comprehensive (expense)/income
---------- --------- --------------
Items that will not be reclassified
to profit or loss:
---------- --------- --------------
Remeasurements of defined benefit
plans (0.1) (2.5) 19.2
Tax relating to items that will
not be reclassified 0.1 0.6 (2.6)
- (1.9) 16.6
Share of other comprehensive (expense)/
income of associates and joint
ventures - (0.1) 5.4
---------- --------- --------------
- (2.0) 22.0
---------- --------- --------------
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences
---------- --------- --------------
* net (loss)/gain arising during the period (41.3) 26.5 38.0
* transfer to profit and loss 1.0 - -
(40.3) 26.5 38.0
Cash flow hedges
---------- --------- --------------
* net gain/(loss) arising during the period 5.6 (2.3) (1.8)
* transfer to profit and loss 0.8 0.3 0.2
6.4 (2.0) (1.6)
Tax relating to items that may
be reclassified (1.2) 0.4 0.3
Share of other comprehensive (expense)/
income of associates and joint
ventures (28.8) 26.1 70.5
---------- --------- --------------
(63.9) 51.0 107.2
---------- --------- --------------
Other comprehensive (expense)/income
for the period, net of tax (63.9) 49.0 129.2
---------- --------- --------------
Total comprehensive income for
the period 157.4 258.7 521.0
---------- --------- --------------
Attributable to:
Shareholders of the Company 164.5 260.6 532.8
Non-controlling interests (7.1) (1.9) (11.8)
---------- --------- --------------
157.4 258.7 521.0
---------- --------- --------------
Dairy Farm International Holdings Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2018 US$m 2017 US$m 2017 US$m
Net operating assets
Intangible assets 788.3 793.2 814.7
Tangible assets 1,119.5 1,115.1 1,184.2
Associates and joint ventures 1,611.8 1,496.9 1,601.0
Other investments 54.8 6.4 6.9
Non-current debtors 168.3 159.6 162.6
Deferred tax assets 28.2 27.5 26.4
Non-current assets 3,770.9 3,598.7 3,795.8
Stocks 920.6 967.5 950.0
Current debtors 342.2 267.3 350.7
Current tax assets 27.4 22.9 27.1
Bank balances and other liquid
funds 330.2 299.1 332.4
--------- --------- ---------
1,620.4 1,556.8 1,660.2
Assets classified as held for sale 4.8 2.7 11.2
--------- --------- ---------
Current assets 1,625.2 1,559.5 1,671.4
--------- --------- ---------
Current creditors (2,355.5) (2,253.8) (2,469.5)
Current borrowings (829.7) (471.8) (412.7)
Current tax liabilities (104.7) (74.1) (71.6)
Current provisions (41.3) (14.5) (52.5)
--------- --------- ---------
(3,331.2) (2,814.2) (3,006.3)
Liabilities directly associated
with assets classified as held
for sale - - (6.2)
--------- --------- ---------
Current liabilities (3,331.2) (2,814.2) (3,012.5)
--------- --------- ---------
Net current liabilities (1,706.0) (1,254.7) (1,341.1)
Long-term borrowings (170.8) (512.2) (522.0)
Deferred tax liabilities (61.7) (56.2) (62.7)
Pension liabilities (34.7) (54.8) (34.2)
Non-current creditors (42.4) (43.6) (42.7)
Non-current provisions (36.6) (33.3) (37.4)
Non-current liabilities (346.2) (700.1) (699.0)
---------
1,718.7 1,643.9 1,755.7
--------- --------- ---------
Dairy Farm International Holdings Limited
Consolidated Balance Sheet (continued)
(unaudited) At 31st
At 30th June December
2018 US$m 2017 US$m 2017 US$m
Total equity
Share capital 75.1 75.1 75.1
Share premium and capital reserves 59.6 61.3 57.9
Revenue and other reserves 1,525.4 1,435.8 1,557.0
--------- --------- ---------
Shareholders' funds 1,660.1 1,572.2 1,690.0
Non-controlling interests 58.6 71.7 65.7
--------- ---------
1,718.7 1,643.9 1,755.7
--------- --------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Changes in Equity
Attributable to shareholders of the Company Attributable
---------------------------------------------------
Revenue
Share Share Capital and other to non-controlling Total
capital premium reserves reserves Total interests equity
US$m US$m US$m US$m US$m US$m US$m
Six months ended 30th
June 2018 (unaudited)
At 1st January 2018 75.1 33.1 24.8 1,557.0 1,690.0 65.7 1,755.7
Total comprehensive
income - - - 164.5 164.5 (7.1) 157.4
Dividends paid by the
Company (note 8) - - - (196.1) (196.1) - (196.1)
Employee share option
schemes - - 1.7 - 1.7 - 1.7
Transfer - 0.6 (0.6) - - - -
At 30th June 2018 75.1 33.7 25.9 1,525.4 1,660.1 58.6 1,718.7
Six months ended 30th
June 2017 (unaudited)
At 1st January 2017 75.1 31.1 28.3 1,370.8 1,505.3 74.1 1,579.4
Total comprehensive
income - - - 260.6 260.6 (1.9) 258.7
Dividends paid by the
Company (note 8) - - - (196.1) (196.1) - (196.1)
Dividends paid to
non-controlling
interests - - - - - (0.5) (0.5)
Unclaimed dividends
forfeited - - - 0.5 0.5 - 0.5
Employee share option
schemes - - 1.9 - 1.9 - 1.9
Transfer - 1.4 (1.4) - - - -
At 30th June 2017 75.1 32.5 28.8 1,435.8 1,572.2 71.7 1,643.9
--------- -------- --------- ---------- ------- ------------------ -------
Dairy Farm International Holdings Limited
Consolidated Statement of Changes in Equity (continued)
Attributable to shareholders of the Company Attributable
---------------------------------------------------
Revenue
Share Share Capital and other to non-controlling Total
capital premium reserves reserves Total interests equity
US$m US$m US$m US$m US$m US$m US$m
Year ended 31st December
2017
At 1st January 2017 75.1 31.1 28.3 1,370.8 1,505.3 74.1 1,579.4
Total comprehensive
income - - - 532.8 532.8 (11.8) 521.0
Dividends paid by the
Company - - - (284.0) (284.0) - (284.0)
Dividends paid to
non-controlling
interests - - - - - (0.5) (0.5)
Unclaimed dividends
forfeited - - - 0.6 0.6 - 0.6
Employee share option
schemes - - 1.6 - 1.6 - 1.6
Change in interests in
subsidiaries - - - (66.4) (66.4) 6.3 (60.1)
Change in interests in
associates and joint
ventures - - - 0.1 0.1 - 0.1
Capital repayment to
non-controlling
interests - - - - - (2.4) (2.4)
Transfer - 2.0 (5.1) 3.1 - - -
At 31st December 2017 75.1 33.1 24.8 1,557.0 1,690.0 65.7 1,755.7
Total comprehensive income for the six months ended 30th June 2018 included in revenue reserves comprises
profit attributable to shareholders of the Company of US$224.9 million (2017: US$212.1 million).
Total comprehensive income for the year ended 31st December 2017 included in revenue reserves comprises
profit attributable to shareholders of the Company of US$402.4 million.
Dairy Farm International Holdings Limited
Consolidated Cash Flow Statement
(unaudited)
Six months ended Year ended
30th June 31st December
2018 US$m 2017 US$m 2017 US$m
restated restated
Operating activities
--------- --------- --------------
Operating profit (note 3) 226.7 201.2 368.9
Depreciation and amortisation 116.5 107.1 221.0
Other non-cash items 0.6 6.2 15.1
(Increase)/decrease in working
capital (18.4) (24.5) 92.1
Interest received 1.2 0.8 1.6
Interest and other financing charges
paid (14.4) (13.1) (28.0)
Tax paid (23.1) (28.9) (84.3)
--------- --------- --------------
289.1 248.8 586.4
Dividends from associates and joint
ventures 23.0 56.8 84.9
Cash flows from operating activities 312.1 305.6 671.3
Investing activities
--------- --------- --------------
Purchase of associates and joint
ventures (0.1) (4.9) (5.8)
Purchase of intangible assets (8.8) (32.0) (60.9)
Purchase of tangible assets (128.7) (118.3) (218.4)
Purchase of other investments (47.2) - -
Sale of a subsidiary (note 10(a)) 4.2 - -
Sale of properties (note 10(b)) - 1.5 3.2
Sale of tangible assets 1.0 0.4 1.3
Cash flows from investing activities (179.6) (153.3) (280.6)
Financing activities
--------- --------- --------------
Change in interests in subsidiaries - - (60.1)
Capital repayment to non-controlling
interests - - (2.4)
Drawdown of borrowings 416.9 325.6 851.0
Repayment of borrowings (389.1) (430.4) (1,014.2)
Net increase in other short-term
borrowings 36.6 113.6 122.3
Dividends paid by the Company (note
8) (196.1) (196.1) (284.0)
Dividends paid to non-controlling
interests - (0.5) (0.5)
Cash flows from financing activities (131.7) (187.8) (387.9)
---------
Net increase/(decrease) in cash
and cash equivalents 0.8 (35.5) 2.8
Cash and cash equivalents at beginning
of period 334.5 322.6 322.6
Effect of exchange rate changes (7.6) 3.1 9.1
--------- --------- --------------
Cash and cash equivalents at end
of period (note 10(c)) 327.7 290.2 334.5
--------- --------- --------------
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' and 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.
There are no changes to the accounting policies as described in the 2017 annual financial statements except for the adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' from 1st January 2018 as set out below.
The other amendments, which are effective in 2018 and relevant to the Group's operations, do not have a significant effect on the Group's accounting policies.
The Group has not early adopted any standard, interpretation or amendment that have been issued but not yet effective.
IFRS 9 'Financial Instruments'
Under IFRS 9, the gains and losses arising from changes in fair value of the Group's investments in equity securities, previously classified as available-for-sale, will be recognised in profit and loss, instead of through other comprehensive income. Such fair value gains or losses on revaluation of these investments are classified as non-trading items, and do not have any impact on the Group's underlying profit attributable to shareholders and shareholders' funds. The new hedge accounting rules, which align the accounting for hedging instruments closely with the Group's risk management practices, and the new forward-looking expected credit loss model replacing the incurred loss impairment model, have no significant impact to the Group.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 establishes a comprehensive framework for the recognition of revenue. It replaces IAS 11 'Construction Contracts', and IAS 18 'Revenue' which covers contracts for goods and services. The core principle in the framework is that revenue is recognised when control of a good or service transfers to a customer. There is no significant impact on the new standard to the Group.
Changes to accounting policies on adoption of IFRS 9 and IFRS 15 have been applied retrospectively and the comparative financial statements have been restated.
The effects of adopting IFRS 9 and IFRS 15
(a) On the consolidated profit and loss account for the six
months ended 30th June 2017
Increase/(decrease)
US$m
Other operating income 0.5
Share of results of associates and joint
ventures (1.0)
Tax (0.1)
-------------------
Profit after tax (0.6)
-------------------
Attributable to:
Shareholders of the Company* (0.6)
Non-controlling interests -
(0.6)
-------------------
* Further analysed as:
Underlying profit attributable to shareholders -
Non-trading items (0.6)
Profit attributable to shareholders (0.6)
-------------------
USc
Basic underlying earnings per share -
-------------------
Diluted underlying earnings per share -
-------------------
Basic earnings per share (0.05)
-------------------
Diluted earnings per share (0.05)
-------------------
(b) On the consolidated statement of comprehensive income for
the six months ended 30th June 2017
Increase/(decrease)
US$m
Profit for the period (0.6)
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss:
Revaluation of other investments at fair value
through other comprehensive income
- net gain arising during the period (0.5)
1
Tax relating to items that may be reclassified 0.1
Share of other comprehensive income of associates
and joint ventures 1.0
Other comprehensive income for the period, net
of tax 0.6
-----
Total comprehensive income for the period -
-----
Attributable to:
Shareholders of the Company -
Non-controlling interests -
-
-----
(c) On the consolidated balance sheet
There is no impact on the consolidated balance sheet.
(d) Changes in principal accounting policies on adoption of IFRS 9 and IFRS 15
Investments
The Group's investments are measured at fair value through profit and loss. The classification is based on the management's business model and their contractual cash flows characteristics.
Equity investments are measured at fair value with fair value gains and losses recognised in profit and loss, unless management has elected to recognise the fair value gains and losses through other comprehensive income.
All purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments.
Debtors
All debtors, excluding derivative financial instruments, are measured at amortised cost except where the effect of discounting would be material. The impairment measurement is subject to whether there has been a significant increase in credit risk. For trade debtors, the Group applied the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the debtors. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in arriving at operating profit. When a debtor is uncollectible, it is written off against the allowance account. Subsequent recoveries of amount previously written off are credited to profit and loss.
Debtors with maturities greater than 12 months after the balance sheet date are classified under non-current assets.
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 fair value gains or losses on equity investments which are fair value through profit and loss; 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.
Sales recognition
Sales consist of the fair value of goods sold to customers, net of returns, discounts and sales related taxes. This does not include sales generated by associates and joint ventures. Sale of goods is recognised at the point of sale, when the control of the asset is transferred to the customers, and is recorded at the net amount received from customers.
2. SALES
Including associates
and joint ventures Subsidiaries
Six months ended 30th June
2018 US$m 2017 US$m 2018 US$m 2017 US$m
Analysis by operating
segment:
Food 9,140.0 7,849.4 4,101.4 3,972.7
* Supermarkets/hypermarkets 8,110.6 6,878.1 3,072.0 3,001.4
* Convenience stores 1,029.4 971.3 1,029.4 971.3
Health and Beauty 1,574.3 1,320.8 1,480.8 1,229.0
Home Furnishings 346.5 303.6 346.5 303.6
Restaurants 1,153.9 974.1 - -
---------- ---------- --------- ---------
12,214.7 10,447.9 5,928.7 5,505.3
---------- ---------- --------- ---------
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 (including the Group's associate, Yonghui, a leading supermarket/hypermarket retailer in mainland China). 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.
Set out below is an analysis of the Group's sales by geographical locations:
Including associates
and joint ventures Subsidiaries
Six months ended 30th June
2018 US$m 2017 US$m 2018 US$m 2017 US$m
Analysis by geographical
area:
North Asia 9,747.7 8,146.4 3,645.2 3,308.1
Southeast Asia 2,467.0 2,301.5 2,283.5 2,197.2
12,214.7 10,447.9 5,928.7 5,505.3
---------- ---------- --------- ---------
The geographical areas covering North Asia and Southeast Asia, are determined by the geographical location of customers. North Asia comprises Hong Kong, mainland China, Macau and Taiwan. Southeast Asia comprises Singapore, Cambodia, the Philippines, Malaysia, Indonesia, Vietnam and Brunei.
3. OPERATING PROFIT
Six months ended 30th
June
2017 US$m
2018 US$m restated
Analysis by operating segment:
Food 69.6 105.7
- Supermarkets/hypermarkets 33.2 71.3
- Convenience stores 36.4 34.4
1
----------- ----------
Health and Beauty 154.0 88.6
Home Furnishings 33.9 33.4
----------- ----------
257.5 227.7
Store support centre (39.9) (27.6)
----------- ----------
217.6 200.1
Non-trading items:
- fair value gain on equity investments 0.6 0.5
- profit on sale of a subsidiary 8.5 -
- profit on sale of a property - 0.6
226.7 201.2
----------- ----------
Set out below is an analysis of the Group's operating profit by geographical locations:
Six months ended 30th
June
2017 US$m
2018 US$m restated
Analysis by geographical area:
North Asia 248.3 198.7
Southeast Asia 9.2 29.0
257.5 227.7
Store support centre (39.9) (27.6)
----------- ----------
217.6 200.1
----------- ----------
4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES
Six months ended 30th June
2017 US$m
2018 US$m restated
Analysis by operating segment:
Food - Supermarkets/hypermarkets 27.1 30.1
Health and Beauty (2.0) (3.2)
Restaurants 37.3 34.1
--------- ---------
1
62.4 61.0
--------- ---------
Share of results of associates and joint ventures included the share of fair value gain of US$1.0 million (2017: loss of US$0.9 million) on the equity investments of Yonghui Superstores Co., Ltd ('Yonghui') in 2018 and the share of a net gain of US$0.6 million on the disposal of an investment by Yonghui in 2017 (note 7).
Results are shown after tax and non-controlling interests in the associates and joint ventures.
5. TAX
Six months ended 30th June
2017 US$m
2018 US$m restated
Tax charged to profit and loss is analysed
as follows:
Current tax (56.4) (38.1)
Deferred tax 3.8 (2.0)
--------- ---------
(52.6) (40.1)
--------- ---------
Tax relating to components of other comprehensive
(expense)/income is analysed as follows:
Remeasurements of defined benefit plans 0.1 0.6
Cash flow hedges (1.2) 0.4
(1.1) 1.0
--------- ---------
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$17.2 million (2017: US$15.8 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$224.9 million (2017: US$212.1 million), and on the weighted average number of 1,352.6 million (2017: 1,352.4 million) shares in issue during the period.
Diluted earnings per share are calculated on profit attributable to shareholders of US$224.9 million (2017: US$212.1 million), and on the weighted average number of 1,353.3 million (2017: 1,353.1 million) shares in issue after adjusting for 0.7 million (2017: 0.7 million) shares which are deemed to be issued for no consideration under the share-based long-term incentive plans based on the average share price during the period.
Additional basic and diluted earnings per share are also calculated based on underlying profit attributable to shareholders. A reconciliation of earnings is set out below:
Six months ended 30th June
2018 2017
Diluted
Basic Diluted Basic earnings
earnings earnings earnings per share
per share per share US$m per share USc
US$m USc USc restated USc restated
Profit attributable
to shareholders 224.9 16.63 16.62 212.1 15.68 15.67
Non-trading items
(note 7) (10.1) (0.7)
------ ---------
Underlying profit
attributable
to shareholders 214.8 15.88 15.87 211.4 15.63 15.62
------ ---------
7. NON-TRADING ITEMS
Non-trading items are separately identified to provide greater understanding of the Group's underlying business performance. Items classified as non-trading items include fair value gains or losses on equity investments which are fair value through profit and loss; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for the closure of businesses; acquisition-related costs in business combinations; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and non-controlling interests is set out below:
Six months ended 30th June
2017 US$m
2018 US$m restated
Fair value gain on equity investments 0.6 0.4
Profit on sale of a subsidiary 8.5 -
Profit on sale of a property - 0.6
Share of Yonghui's fair value gain/(loss) on
equity investments 1.0 (0.9)
Share of net gain from disposal of an investment
by Yonghui - 0.6
10.1 0.7
--------- ---------
8. DIVIDS
Six months ended 30th June
2018 US$m 2017 US$m
Final dividend in respect of 2017 of USc14.50
(2016: USc14.50) per share 196.1 196.1
--------- ---------
An interim dividend in respect of 2018 of USc6.50 (2017: USc6.50) per share amounting to a total of US$87.9 million (2017: US$87.9 million) is declared by the Board, and will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2018.
9. FINANCIAL INSTRUMENTS
Financial instruments by category
The carrying amounts of financial assets and financial liabilities at 30th June 2018 and 31st December 2017 are as follows:
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying
instruments and loss cost liabilities amounts
US$m US$m US$m US$m US$m
At 30th June 2018
Financial assets measured
at fair value
Other investments
- equity investments - 54.8 - - 54.8
Derivative financial
instruments 6.9 - - - 6.9
------------ ---------- ------------- ------------ ---------
6.9 54.8 - - 61.7
------------ ---------- ------------- ------------ ---------
Financial assets not
measured at fair value
Debtors - - 116.3 - 116.3
Bank balances - - 330.2 - 330.2
- - 446.5 - 446.5
------------ ---------- ------------- ------------ ---------
Financial liabilities
measured at fair value
Derivative financial
instruments - - - - -
- - - - -
------------ ---------- ------------- ------------ ---------
Financial liabilities
not measured at fair
value
Borrowings - - - (1,000.5) (1,000.5)
Trade and other payables
excluding non-financial
liabilities - - - (2,396.1) (2,396.1)
- - - (3,396.6) (3,396.6)
------------ ---------- ------------- ------------ ---------
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying
instruments and loss cost liabilities amounts
US$m US$m US$m US$m US$m
At 31st December 2017
Financial assets measured
at fair value
Other investments
- equity investments - 6.9 - - 6.9
Derivative financial
instruments 2.7 0.7 - - 3.4
------------ ---------- ------------- ------------ ---------
2.7 7.6 - - 10.3
------------ ---------- ------------- ------------ ---------
Financial assets not
measured at fair value
Debtors - - 161.3 - 161.3
Bank balances - - 332.4 - 332.4
- - 493.7 - 493.7
------------ ---------- ------------- ------------ ---------
Financial liabilities
measured at fair value
Derivative financial
instruments (2.3) - - - (2.3)
(2.3) - - - (2.3)
------------ ---------- ------------- ------------ ---------
Financial liabilities
not measured at fair
value
Borrowings - - - (934.7) (934.7)
Trade and other payables
excluding non-financial
liabilities - - - (2,508.0) (2,508.0)
- - - (3,442.7) (3,442.7)
------------ ---------- ------------- ------------ ---------
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 values of listed investments are 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 derivative financial instruments are determined using rates quoted by the Group's bankers at the balance sheet date. The rates for interest rate swaps and forward foreign exchange contracts are calculated by reference to market interest rates and foreign exchange rates.
The fair values of unlisted investments mainly include club debentures, are determined using prices quoted by brokers at the balance sheet date.
(c) Inputs for assets or liabilities that are not based on observable market data ('unobservable inputs')
The fair values of other unlisted investments are 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, or determined with reference to the underlying cash flow from the investments, discounted using a risk-adjusted discount rate.
There were no changes in valuation techniques during the six months ended 30th June 2018 and the year ended 31st December 2017.
The tables below analyse financial instruments carried at fair value at 30th June 2018 and 31st December 2017, by the levels in the fair value measurement hierarchy.
Quoted Observable
prices current
in active market
markets transactions
US$m US$m Total US$m
At 30th June 2018
Assets
Other investments
- equity investments 47.2 7.6 54.8
Derivative financial instruments
at fair value
- through other comprehensive
expense - 6.9 6.9
47.2 14.5 61.7
---------- ------------- ----------
Liabilities
Derivative financial instruments
at fair value
- through other comprehensive
expense - - -
- - -
---------- ------------- ----------
Observable
current
market
transactions
US$m
At 31st December 2017
Assets
Other investments
- equity investments 6.9
Derivative financial instruments
at fair value
- through other comprehensive
income 2.7
- through profit and loss 0.7
10.3
-------------
Liabilities
Derivative financial instruments
at fair value
- through other comprehensive
income (2.3)
(2.3)
-------------
There were no transfers between the two categories during the six months ended 30th June 2018 and year ended 31st December 2017.
(ii) Financial instruments that are not measured at fair value
The fair values of current debtors, bank balances and other liquid funds, current creditors and current borrowings are assumed to approximate their carrying amounts due to the short-term maturities of these assets and liabilities.
The fair values of long-term borrowings are based on market prices or are estimated using the expected future payments discounted at market interest rates.
10. NOTES TO CONSOLIDATED CASH FLOW STATEMENT
(a) Sale of a subsidiary
Six months ended
30th June
2018 US$m
Intangible assets 1.7
Tangible assets 0.1
Current assets 3.3
Current liabilities (5.8)
Net liabilities disposed of (0.7)
Release of exchange reserve 1.0
( Profit on disposal 8.5
---------
Net sale proceeds 8.8
Deferred consideration (2.0)
Cash and cash equivalents of the subsidiary
disposed of (2.6)
Net cash inflow 4.2
---------
Sale of a subsidiary for the six months ended 30th June 2018 represented the Group's disposal of its 100% interest in Asia Investment and Supermarket Trading Company Limited, operating a hypermarket in Vietnam, to a third party in February 2018.
(b) Sale of properties
Sale of properties in 2017 included the sale of land in Malaysia for a total cash consideration of US$1.5 million.
(c) Analysis of balances of cash and cash equivalents
At 30th June
2018 US$m 2017 US$m
Bank balances and other liquid funds 330.2 299.1
Bank overdrafts (2.5) (8.9)
327.7 290.2
--------- ---------
11. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
Total capital commitments at 30th June 2018 and 31st December 2017 amounted to US$328.9 million and US$338.7 million, respectively.
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.
12. 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$1.1 million (2017: US$1.1 million) for the first six months of 2018 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$0.4 million (2017: US$0.3 million) to JML for the same period in 2018.
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 2018 were US$1.6 million (2017: US$1.4 million). The Group's 50%-owned associate, Maxim's Caterers Limited ('Maxim's'), also paid gross rentals of US$6.1 million (2017: US$5.9 million) to HKL for the first six months of 2018.
The Group uses Jardine Lloyd Thompson Limited ('JLT'), an associate of JMH, to place certain of its insurance policies. Brokerage fees and commissions, net of rebates, paid by the Group to JLT for the first six months of 2018 were US$1.0 million (2017: US$1.0 million).
The Group sources information technology infrastructure and related services from Jardine Technology Holdings Limited ('JTH'), a subsidiary of JMH. The total fees paid by the Group to JTH for the first six months of 2018 amounted to US$5.6 million (2017: US$4.6 million). Maxim's also paid total fees of US$2.0 million (2017: US$1.8 million) to JTH for the same period in 2018.
The Group also obtains 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 2018 amounted to US$3.1 million (2017: US$3.7 million).
Maxim's supplies ready-to-eat products at arm's length to certain subsidiaries of the Group. For the first six months of 2018, these amounted to US$13.8 million (2017: US$11.4 million).
In addition, Gammon Construction, a joint venture of JMH, was engaged by Maxim's to provide construction and renovation works amounting to US$0.4 million (2017: US$4.8 million) for the first six months of 2018.
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 -- Technology Risk
For greater detail, please refer to pages 117 and 118 of the Company's Annual Report for 2017, 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 Guidance 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
Ian McLeod
Neil Galloway
Directors
The interim dividend of USc6.50 per share will be payable
on 10th October 2018 to shareholders on the register of members
at the close of business on 17th August 2018. The shares will
be quoted ex-dividend on the Singapore Exchange and the London
Stock Exchange on 15th and 16th August 2018, respectively.
The share registers will be closed from 20th to 24th August
2018, inclusive.
Shareholders will receive their cash dividends in United States
Dollars, unless they are registered on the Jersey branch register,
in which case they will have the option to elect for their
dividends to be paid in Sterling. These shareholders may make
new currency elections for the 2018 interim dividend by notifying
the United Kingdom transfer agent in writing by 21st September
2018. The Sterling equivalent of dividends declared in United
States Dollars will be calculated by reference to a rate prevailing
on 26th September 2018.
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 17th August 2018, must submit the relevant documents
to M & C Services Private Limited, the Singapore branch registrar,
by no later than 5.00 p.m. (local time) on 16th August 2018.
Dairy Farm
Dairy Farm is a leading pan-Asian retailer. At 30th June 2018, the Group and its associates and joint ventures operated over 7,400 outlets and employed over 200,000 people. The Group had total annual sales in 2017 exceeding US$21 billion.
The Group provides quality and value to Asian consumers by offering leading brands, a compelling retail experience and great service; all delivered through a strong store network supported by efficient supply chains.
The Group operates under a number of well-known brands across four divisions. The principal brands are:
Food
-- Supermarkets/Hypermarkets - Wellcome in Hong Kong, the Philippines and Taiwan; Yonghui in mainland China; Cold Storage in Malaysia and Singapore; Giant in Brunei, Indonesia, Malaysia and Singapore; Hero in Indonesia; and Rustan's and Shopwise in the Philippines.
-- Convenience stores - 7-Eleven in Hong Kong, Macau, Singapore and Southern China.
Health and Beauty
-- Mannings in Greater China; Guardian in Brunei, Cambodia, Indonesia, Malaysia, Singapore and Vietnam; and Rose Pharmacy in the Philippines.
Home Furnishings
-- IKEA in Hong Kong, Indonesia, Macau and Taiwan.
Restaurants
-- Maxim's in Cambodia, mainland China, Hong Kong, Macau, Singapore, Thailand and Vietnam (directly and via various joint ventures or franchises).
Dairy Farm International Holdings Limited is incorporated in Bermuda and has a standard listing on the London Stock Exchange, 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 Ian McLeod (852) 2299 1881 Neil Galloway (852) 2299 1896 Brunswick Group Limited Annabel Arthur (852) 3512 5075
As permitted by the Disclosure Guidance 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR FKPDBFBKKNOB
(END) Dow Jones Newswires
July 26, 2018 05:06 ET (09:06 GMT)
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