TIDMDFI TIDMJDS TIDMJAR
RNS Number : 4902U
Dairy Farm International Hldgs Ltd
29 July 2020
29th July 2020
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 2020
Highlights
-- Sales from subsidiaries down 9%
-- Underlying profit 40% lower due to reduced contributions from
Health and Beauty, Maxim's and Convenience Stores
-- Strong performances in Grocery Retail and Home Furnishings
-- Ongoing execution of multi-year transformation plan
"Overall profits were significantly lower in the first half due
to reduced contributions from Health and Beauty, Maxim's and
Convenience Stores as a result of COVID-19 and its impact on
customer behaviours. There were, however, strong performances from
the Grocery Retail and Home Furnishings businesses. Trading
conditions in the second half are expected to continue to be
challenging, but we are confident in the strength of Dairy Farm's
businesses and remain committed to its multi-year transformation
plan."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended 30th
June
2020 2019 Change
US$m US$m %
Combined total sales including 100%
of associates and joint ventures 14,547 13,781 +6
Sales 5,240 5,761 - 9
Underlying profit attributable to
shareholders* 105 177 - 40
Profit attributable to shareholders 115 178 - 35
USc USc %
Underlying earnings per share* 7.77 13.05 - 40
Basic earnings per share 8.53 13.16 - 35
Interim dividend per share 5.00 6.50 - 23
* 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 USc5.00 per share will be payable on
14th October 2020 to shareholders on the register of members at the
close of business on 21st August 2020.
DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2020
OVERVIEW
The Group's overall profits were significantly lower in the
period due to reduced contributions from Health and Beauty, Maxim's
and Convenience Stores as a result of COVID-19 and restrictions
imposed by governments to contain it, as well as the impact of the
pandemic on customer behaviours. There were, however, strong
performances from the Grocery Retail and Home Furnishings
businesses.
RESULTS
Combined sales, including 100% of associates and joint ventures,
rose by 6% to US$14.5 billion, due to higher contributions from
Robinsons Retail and Yonghui.
Sales by the Group's subsidiaries in the first half reduced by
9%, primarily due to the annualised impact of the stores closures
in 2019 under the Group's space optimisation plan in Southeast
Asia, as well as reduced revenues from Convenience Stores and
Health and Beauty as a result of pandemic-related restrictions.
Within the Group's subsidiaries, the Grocery Retail and Home
Furnishings businesses saw improved profits, which were offset by
reduced profitability for the Health and Beauty and Convenience
Stores businesses. Underlying profit for subsidiaries in the period
was US$101 million, compared to US$105 million in the same period
last year.
The contribution to underlying profit by the Group's associates
and joint ventures fell significantly primarily due to the
underperformance of Maxim's in the period. Consequently, the total
underlying profit for the Group was US$105 million, a 40% reduction
from the US$177 million recorded in the same period last year.
The benefits of the Group's transformation plan, including cost
improvement programmes, stronger retail execution and improved ways
of working, together with the diversity of the Group's business
portfolio, supported the performance of the Group's subsidiaries,
despite the significant challenges faced as a result of the
pandemic.
Operating cash flow, after lease payments, for the period was a
net inflow of US$76 million, compared with US$273 million in the
first half of 2019. As at 30th June 2020, the Group's net debt was
US$1,091 million, compared with US$821 million at 31st December
2019. The Group's financial position remains robust and at 30th
June 2020 it had access to US$756 million of liquidity, consisting
of US$275 million of cash reserves and US$481 million of unused,
committed debt facilities. An interim dividend of USc5.00 per share
has been declared, 23% lower than the 2019 interim dividend.
OPERATING PERFORMANCE
The Group's Grocery Retail business reported strong
like-for-like sales and strong profit growth during the period. The
strong performance was underpinned by the ongoing execution of the
Group's transformation plan and improvement programmes, as well as
changing customer behaviours as a result of the pandemic.
Grocery Retail in Singapore and Malaysia maintained its strong
turnaround momentum as the execution of improvement programmes and
the Group's space optimisation plan both made a positive
contribution. The performance of new upscale formats and refreshed
stores in Southeast Asia was also encouraging. Market conditions in
Indonesia remain challenging.
The Group's Convenience Stores business was impacted in the
first half by movement restrictions and physical distancing
requirements, as well as temporary store closures on the Chinese
mainland and reduced customer numbers in Hong Kong and Singapore.
Performance, however, improved over the course of the first half in
Hong Kong and the Chinese mainland in particular, as various
lockdown restrictions eased. Recovery in Singapore has lagged
behind North Asia.
The Health and Beauty business was impacted significantly by the
pandemic and the various restrictions to contain it. Within North
Asia, the performance of Mannings was materially affected by a
continuing lack of overseas tourist custom in Hong Kong, despite
the business seeing an initial surge in demand for personal
protection equipment. In Southeast Asia, the business performed
well in the first quarter but was then impacted as social
distancing requirements began to take effect towards the end of the
first quarter.
Sales in the Home Furnishings business were higher than the
equivalent period last year, as strong e-commerce growth and the
annualised impact of new stores opened in the prior year more than
compensated for the impact on customer visits of pandemic-related
restrictions, including temporary store closures. Profitability
grew strongly due to the contribution from new stores, enhancements
in margin mix and lower cost of goods.
Maxim's, the Group's 50%-owned associate, was significantly
affected by a substantial reduction in restaurant customers and
some temporary closures of its outlets. The business reported a
loss for the period. Performance has progressively improved over
the course of the second quarter, in line with the easing of social
distancing restrictions, but any return of restrictions which
reduce customer levels or require further closures of its outlets
will impact future performance.
Yonghui reported strong sales and underlying profit growth in
the first quarter of 2020, but has not yet released its half year
results. Robinsons Retail reported strong growth in profitability
in the first quarter. Second quarter results will be included in
the Group's results for the second half.
BUSINESS DEVELOPMENTS
The Group announced in June that it had entered into an
agreement to sell Wellcome Taiwan to Carrefour. Completion of this
transaction is expected to take place later in 2020, after the
appropriate regulatory approvals have been granted.
The launch of Yuu, expected to become Hong Kong's largest
loyalty programme, at the end of July 2020 represents a critical
milestone in driving Dairy Farm's modernisation and digital
transformation. Yuu will support a more customer-centric approach
across all the Dairy Farm banners and drive an enhanced level of
customer engagement.
During the period, Dairy Farm also launched Meadows, its new
own-brand offering. Over 300 items have already been launched
across banners and markets at lower prices. The future growth of
own-brand will allow the Group to leverage scale and gain
competitive advantage.
IKEA opened its first store in Macau during the period and
opened a larger replacement store in Taoyuan, Taiwan in July.
PEOPLE
Given the extraordinary operating circumstances, we would like
to express our deep gratitude for the continuing dedication and
resolve of our team members in putting our customers first during
these difficult times.
Support from governments in a number of our key markets has
helped maintain employment.
We were pleased to welcome Clive Schlee as a Non-executive
Director of the Company with effect from 6th May 2020. I stepped
down as Managing Director on 15th June 2020 and was succeeded by
John Witt. I will continue as Chairman.
OUTLOOK
The pandemic and measures to contain it continue to create
uncertainty and volatility. Trading conditions in the second half
are expected to continue to be challenging. With a strong balance
sheet and funding position, we are confident in the strength of
Dairy Farm's businesses and remain committed to its multi-year
transformation plan, which is delivering sustainable improvements
to the business over time, and its continuing pursuit of the
strategic initiatives which will drive medium- to long-term
growth.
Ben Keswick
Chairman
Dairy Farm International Holdings Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2020 2019 2019
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Underlying Underlying Underlying
business Non-trading business Non-trading business Non-trading
performance items Total performance items Total performance items Total
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Sales (note 2) 5,239.9 - 5,239.9 5,760.8 - 5,760.8 11,192.3 - 11,192.3
Cost of sales (3,640.9) - (3,640.9) (3,988.8) - (3,988.8) (7,658.5) - (7,658.5)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Gross margin 1,599.0 - 1,599.0 1,772.0 - 1,772.0 3,533.8 - 3,533.8
Other operating
income 136.6 - 136.6 98.2 - 98.2 189.8 19.3 209.1
Selling and
distribution
costs (1,269.6) - (1,269.6) (1,358.1) - (1,358.1) (2,700.7) - (2,700.7)
Administration
and
other operating
expenses (255.0) (1.2) (256.2) (277.7) (0.5) (278.2) (586.4) (30.2) (616.6)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating profit
(note 3) 211.0 (1.2) 209.8 234.4 (0.5) 233.9 436.5 (10.9) 425.6
Financing charges (76.2) - (76.2) (88.0) - (88.0) (164.9) - (164.9)
Financing income 1.8 - 1.8 3.7 - 3.7 6.7 - 6.7
Net financing
charges
(note 4) (74.4) - (74.4) (84.3) - (84.3) (158.2) - (158.2)
Share of results
of associates
and
joint ventures
(note
5) 4.4 11.3 15.7 71.9 1.9 73.8 114.9 11.4 126.3
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit before tax 141.0 10.1 151.1 222.0 1.4 223.4 393.2 0.5 393.7
Tax (note 6) (37.5) 0.1 (37.4) (43.7) - (43.7) (69.5) 0.8 (68.7)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit after tax 103.5 10.2 113.7 178.3 1.4 179.7 323.7 1.3 325.0
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Attributable to:
Shareholders of
the
Company 105.1 10.2 115.3 176.6 1.4 178.0 320.9 2.9 323.8
Non-controlling
interests (1.6) - (1.6) 1.7 - 1.7 2.8 (1.6) 1.2
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
103.5 10.2 113.7 178.3 1.4 179.7 323.7 1.3 325.0
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
US c US c US c US c US c US c
Earnings per
share
(note 7)
- basic 7.77 8.53 13.05 13.16 23.72 23.93
- diluted 7.77 8.52 13.05 13.15 23.71 23.92
----------- --------- ----------- --------- ----------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Comprehensive Income
(unaudited)
Six months ended Year ended
30th June 31st December
2020 2019 2019
US$m US$m US$m
Profit for the period 113.7 179.7 325.0
Other comprehensive (expense)/income
---------- ------- --------------
Items that will not be reclassified
to profit or loss:
---------- ------- --------------
Remeasurements of defined benefit
plans - (0.7) 15.9
Tax relating to items that will
not be reclassified (0.1) 0.2 (2.4)
(0.1) (0.5) 13.5
Share of other comprehensive (expense)/
income of associates and joint
ventures (1.0) - 0.7
---------- ------- --------------
(1.1) (0.5) 14.2
---------- ------- --------------
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences
---------- ------- --------------
* net (loss)/gain arising during the period (8.4) 24.9 25.5
* transfer to profit and loss - - 3.4
(8.4) 24.9 28.9
Cash flow hedges
---------- ------- --------------
* net (loss)/gain arising during the period (5.2) 2.9 (2.6)
* transfer to profit and loss 1.5 (3.8) (5.5)
(3.7) (0.9) (8.1)
Tax relating to items that may
be reclassified 0.7 0.1 1.6
Share of other comprehensive (expense)/
income of associates and joint
ventures (0.9) - 2.8
---------- ------- --------------
(12.3) 24.1 25.2
---------- ------- --------------
Other comprehensive (expense)/income
for the period, net of tax (13.4) 23.6 39.4
---------- ------- --------------
Total comprehensive income for
the period 100.3 203.3 364.4
---------- ------- --------------
Attributable to:
Shareholders of the Company 102.4 201.0 362.1
Non-controlling interests (2.1) 2.3 2.3
---------- ------- --------------
100.3 203.3 364.4
---------- ------- --------------
Dairy Farm International Holdings Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2020 US$m 2019 US$m 2019 US$m
Net operating assets
Intangible assets 579.9 587.1 589.2
Tangible assets 800.9 749.0 820.2
Right-of-use assets 3,140.1 3,331.2 3,186.3
Associates and joint ventures 2,080.3 2,078.3 2,101.9
Other investments 6.0 6.9 6.8
Non-current debtors 135.9 156.1 142.4
Deferred tax assets 18.0 7.7 18.2
Non-current assets 6,761.1 6,916.3 6,865.0
Stocks 841.8 848.3 896.1
Current debtors 294.1 320.3 281.3
Current tax assets 25.9 24.0 26.1
Cash and bank balances 274.9 313.3 301.4
--------- --------- ---------
Current assets 1,436.7 1,505.9 1,504.9
--------- --------- ---------
Current creditors (2,022.9) (2,274.0) (2,315.4)
Current borrowings (1,218.1) (834.3) (938.2)
Current lease liabilities (748.2) (782.7) (728.3)
Current tax liabilities (82.8) (113.4) (126.5)
Current provisions (57.6) (86.2) (56.0)
--------- --------- ---------
Current liabilities (4,129.6) (4,090.6) (4,164.4)
--------- --------- ---------
Net current liabilities (2,692.9) (2,584.7) (2,659.5)
Long-term borrowings (147.7) (299.1) (184.0)
Non-current lease liabilities (2,520.9) (2,672.4) (2,577.5)
Deferred tax liabilities (30.6) (15.6) (34.9)
Pension liabilities (33.9) (47.7) (31.3)
Non-current creditors (87.8) (39.2) (13.2)
Non-current provisions (114.6) (108.3) (125.1)
Non-current liabilities (2,935.5) (3,182.3) (2,966.0)
---------
1,132.7 1,149.3 1,239.5
--------- --------- ---------
Dairy Farm International Holdings Limited
Consolidated Balance Sheet (continued)
(unaudited) At 31st
At 30th June December
2020 US$m 2019 US$m 2019 US$m
Total equity
Share capital 75.1 75.1 75.1
Share premium and capital reserves 59.4 59.5 59.2
Revenue and other reserves 970.0 976.9 1,074.9
--------- --------- ---------
Shareholders' funds 1,104.5 1,111.5 1,209.2
Non-controlling interests 28.2 37.8 30.3
--------- ---------
1,132.7 1,149.3 1,239.5
--------- --------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Changes in Equity
Attributable Attributable
Revenue to shareholders to
Share Share Capital and other of the non-controlling Total
capital premium reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2020
(unaudited)
At 1st January
2020 75.1 34.1 25.1 1,074.9 1,209.2 30.3 1,239.5
Total
comprehensive
income - - - 102.4 102.4 (2.1) 100.3
Dividends paid by
the Company
(note 9) - - - (196.1) (196.1) - (196.1)
Share-based
long-term
incentive plans - - 0.7 - 0.7 - 0.7
Change in
interest in a
subsidiary - - - (0.2) (0.2) - (0.2)
Change in
interests in
associates and
joint ventures - - - (11.5) (11.5) (11.5)
Transfer - - (0.5) 0.5 - - -
At 30th June 2020 75.1 34.1 25.3 970.0 1,104.5 28.2 1,132.7
Six months ended
30th June 2019
(unaudited)
At 1st January
2019 75.1 33.9 24.4 993.0 1,126.4 35.5 1,161.9
Total
comprehensive
income - - - 201.0 201.0 2.3 203.3
Dividends paid by
the Company
(note 9) - - - (196.1) (196.1) - (196.1)
Share-based
long-term
incentive plans - - 1.2 - 1.2 - 1.2
Change in
interests in
associates and
joint ventures - - - (21.0) (21.0) - (21.0)
Transfer - 0.2 (0.2) - - - -
At 30th June 2019 75.1 34.1 25.4 976.9 1,111.5 37.8 1,149.3
-------- -------- --------- ---------- ---------------- ----------------- -------
Dairy Farm International Holdings Limited
Consolidated Statement of Changes in Equity (continued)
Attributable Attributable
Revenue to shareholders to
Share Share Capital and other of the non-controlling Total
capital premium reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m
Year ended 31st
December 2019
At 1st January
2019 75.1 33.9 24.4 993.0 1,126.4 35.5 1,161.9
Total
comprehensive
income - - - 362.1 362.1 2.3 364.4
Dividends paid by
the Company - - - (284.0) (284.0) - (284.0)
Unclaimed
dividends
forfeited - - - 0.1 0.1 - 0.1
Share-based
long-term
incentive plans - - 0.9 - 0.9 - 0.9
Change in
interests in
subsidiaries - - - 0.8 0.8 (7.5) (6.7)
Change in
interests in
associates and
joint ventures - - - 2.9 2.9 - 2.9
Transfer - 0.2 (0.2) - - - -
At 31st December
2019 75.1 34.1 25.1 1,074.9 1,209.2 30.3 1,239.5
Revenue and other reserves at 30th June 2020 comprised revenue reserves of US$1,297.1 million (2019:
US$1,291.0
million), hedging reserves of US$5.1 million loss (2019: US$3.7 million gain) and exchange reserves of
US$322.0 million loss (2019: US$317.8 million loss).
Revenue and other reserves at 31st December 2019 comprised revenue reserves of US$1,388.5 million, hedging
reserves of US$0.7 million gain and exchange reserves of US$314.3 million loss.
Dairy Farm International Holdings Limited
Consolidated Cash Flow Statement
(unaudited)
Six months ended Year ended
30th June 31st December
2020 US$m 2019 US$m 2019 US$m
Operating activities
--------- --------- --------------
Operating profit (note 3) 209.8 233.9 425.6
Depreciation and amortisation 496.7 522.7 1,002.2
Other non-cash items 15.1 6.7 33.2
Increase in working capital (115.3) (26.6) (76.7)
Interest received 2.8 3.8 7.1
Interest and other financing charges
paid (76.7) (88.3) (166.7)
Tax paid (84.9) (4.0) (25.1)
--------- --------- --------------
447.5 648.2 1,199.6
Dividends from associates and joint
ventures 15.4 24.2 88.5
Cash flows from operating activities 462.9 672.4 1,288.1
Investing activities
--------- --------- --------------
Purchase of subsidiaries (note
11(a)) (21.4) - (2.6)
Purchase of associates and joint
ventures - - (3.8)
Purchase of intangible assets (8.0) (23.6) (53.2)
Purchase of tangible assets (126.0) (114.2) (233.3)
Additions to right-of-use assets - (18.3) (18.4)
Sale of properties - - 22.6
Sale of tangible assets 3.9 1.1 5.7
Cash flows from investing activities (151.5) (155.0) (283.0)
Financing activities
--------- --------- --------------
Change in interests in subsidiaries (0.2) - (6.7)
Drawdown of borrowings 728.6 874.4 1,778.4
Repayment of borrowings (501.6) (801.9) (1,662.6)
Net increase/(decrease) in other
short-term borrowings 5.1 22.7 (42.4)
Principal elements of lease payments (386.9) (399.2) (790.3)
Dividends paid by the Company (note
9) (196.1) (196.1) (284.0)
Cash flows from financing activities (351.1) (500.1) (1,007.6)
---------
Net (decrease)/increase in cash
and cash equivalents (39.7) 17.3 (2.5)
Cash and cash equivalents at beginning
of period 288.3 284.5 284.5
Effect of exchange rate changes (2.1) 2.6 6.3
--------- --------- --------------
Cash and cash equivalents at end
of period (note 11(b)) 246.5 304.4 288.3
--------- --------- --------------
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.
The Group had early adopted the 'Interest Rate Benchmark Reform:
Amendments to IFRS 9, IAS 39 and IFRS 7' (effective 1st January
2020) for the Group's annual reporting period commencing 1st
January 2019.
There are no changes to the accounting policies as described in
the 2019 annual financial statements other than the following
changes in relation to rent concessions and government grants.
Other amendments, which are effective in 2020 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 other
standard or amendments that have been issued but not yet
effective.
COVID-19 Related Rent Concessions: Amendment to IFRS 16
'Leases'
The Group has early adopted the Amendment, which is effective
for annual reporting periods beginning on or after 1st June 2020,
for the Group's annual reporting period commencing 1st January
2020. Where the Group is a lessee, the practical expedient is
applied to account for the change in lease payments resulting from
rent concessions granted as a direct consequence of the COVID-19
pandemic and elects not to assess these concessions as lease
modifications when all of the following conditions are met:
(i) the revised lease payments are substantially the same as, or
less than, the consideration for the lease immediately preceding
the change;
(ii) reduction in lease payments relates to payment due on or before 30th June 2021; and
(iii) there is no substantive change to the other terms and
conditions of the lease.
Rent concessions fulfilling the above conditions are recognised
in the profit and loss over the period in which they cover.
Government grants
Grants from government are recognised at their fair values where
there is reasonable assurance that the grants will be received, and
the Group will comply with the conditions associated with the
grants.
Grants that compensate the Group for expenses incurred are
recognised in the profit and loss as other operating income on a
systematic basis in the period in which the expenses are
recognised. Unconditional grants are recognised in the profit and
loss as other operating income when they become receivable.
Grants related to assets are deducted in arriving at the
carrying value of the related assets.
2. Sales
Including associates
and joint ventures Subsidiaries
Six months ended 30th June
2020 US$m 2019 US$m 2020 US$m 2019 US$m
Analysis by operating
segment:
Food 11,550.4 9,955.1 3,812.1 3,758.1
* Grocery retail 10,480.8 8,820.9 2,809.2 2,676.8
* Convenience stores 1,069.6 1,134.2 1,002.9 1,081.3
Health and Beauty 1,248.8 1,793.1 1,038.4 1,632.0
Home Furnishings 389.4 370.7 389.4 370.7
Restaurants 873.3 1,230.3 - -
Other Retailing 485.3 432.3 - -
---------- ---------- --------- ---------
14,547.2 13,781.5 5,239.9 5,760.8
---------- ---------- --------- ---------
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 five segments: Food, Health and
Beauty, Home Furnishings, Restaurants and Other Retailing. Food
comprises grocery retail and convenience store businesses
(including the Group's associate, Yonghui, a leading grocery
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 food and beverage associate,
Maxim's, a leading Hong Kong restaurant chain. Other Retailing
represents the department stores, specialty and Do-It-Yourself
('DIY') stores of the Group's Philippines associate, Robinsons
Retail.
Sales and share of results of Yonghui represent six months from
October 2019 to March 2020 (2019: October 2018 to March 2019) and
that of Robinsons Retail represent six months from October 2019 to
March 2020 (2019: five months from date of acquisition, November
2018 to March 2019). The results are based on their latest
published announcements (note 5).
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
2020 US$m 2019 US$m 2020 US$m 2019 US$m
Analysis by geographical
area:
North Asia 10,769.8 10,324.4 3,369.6 3,743.0
Southeast Asia 3,777.4 3,457.1 1,870.3 2,017.8
14,547.2 13,781.5 5,239.9 5,760.8
---------- ---------- --------- ---------
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,
Thailand, Malaysia, Indonesia, Vietnam and Brunei.
3. Operating Profit
Six months ended 30th
June
2020 US$m 2019 US$m
Analysis by operating segment:
Food 148.6 59.1
- Grocery retail 147.9 25.9
- Convenience stores 0.7 33.2
1
----------- ----------
Health and Beauty 42.4 170.8
Home Furnishings 25.1 19.2
----------- ----------
216.1 249.1
Selling, general and administrative expenses (47.4) (67.6)
----------- ----------
Underlying operating profit before IFRS
16 (*) 168.7 181.5
IFRS 16 adjustment (^) 42.3 52.9
----------- ----------
Underlying operating profit 211.0 234.4
Non-trading items:
- business restructuring costs (0.4) -
- fair value loss on equity investments (0.8) (0.5)
209.8 233.9
----------- ----------
Set out below is an analysis of the Group's underlying operating
profit by geographical locations:
Six months ended 30th
June
2020 US$m 2019 US$m
Analysis by geographical area:
North Asia 155.3 234.6
Southeast Asia 60.8 14.5
----------- ----------
216.1 249.1
Selling, general and administrative expenses (47.4) (67.6)
----------- ----------
Underlying operating profit before IFRS
16 (*) 168.7 181.5
IFRS 16 adjustment (^) 42.3 52.9
----------- ----------
Underlying operating profit 211.0 234.4
----------- ----------
Included in other operating income were government grants, the
majority of which were in support of employee retention, and rent
concessions of US$32.4 million and US$32.4 million, respectively,
in relation to the COVID-19 pandemic for the six months ended 30th
June 2020.
(*) Property lease payments and depreciation of reinstatement
costs under the lease contracts were included in the Group's
analysis of operating and geographical segments' results.
(^) Represented the reversal of lease payments which are
accounted for on a straight-line basis, adjusted by the lease
contracts recognised under IFRS 16 'Leases', primarily for the
charge of depreciation on right-of-use assets.
4. Net Financing Charges
Six months ended 30th
June
2020 US$m 2019 US$m
Interest expense on bank loans and advances (17.7) (21.6)
Interest expense on lease liabilities (56.6) (64.4)
Commitment and other fees (1.9) (2.0)
----------- ----------
Financing charges (76.2) (88.0)
Financing income 1.8 3.7
----------- ----------
(74.4) (84.3)
----------- ----------
5. Share of Results of Associates and Joint Ventures
Six months ended 30th
June
2020 US$m 2019 US$m
Analysis by operating segment:
Food 38.9 36.0
- Grocery retail 39.3 36.0
- Convenience stores (0.4) -
Health and Beauty 0.1 (0.6)
Restaurants (25.0) 36.5
Other Retailing 1.7 1.9
----------- ----------
15.7 73.8
----------- ----------
Share of results of associates and joint ventures included the
following gains/(losses) from non-trading items (note 8):
Six months ended 30th
June
2020 US$m 2019 US$m
Share of Yonghui's fair value gain/(loss)
on equity investments 4.4 (6.3)
Share of Robinsons Retail's fair value
gain on equity investments 0.1 -
Share of net gains from divestments of
an investment/
a subsidiary by Yonghui 6.8 8.2
----------- ----------
11.3 1.9
----------- ----------
Results are shown after tax and non-controlling interests in the
associates and joint ventures.
Included in share of results of associates and joint ventures
were the Group's share of the government grants, the majority of
which were in support of employee retention, and rent concessions
of US$20.7 million and US$16.1 million, respectively, in relation
to the COVID-19 pandemic for the six months ended 30th June
2020.
Included Yonghui's six months results from October 2019 to March
2020 (2019: October 2018 to March 2019) and Robinsons Retail's six
months results from October 2019 to March 2020 (2019: five months
results from November 2018 to March 2019) (note 2).
6. Tax
Six months ended 30th
June
2020 US$m 2019 US$m
Tax charged to profit and loss is analysed
as follows:
Current tax (40.1) (44.7)
Deferred tax 2.7 1.0
----------- ----------
(37.4) (43.7)
----------- ----------
Tax relating to components of other comprehensive
income is analysed as follows:
Remeasurements of defined benefit plans (0.1) 0.2
Cash flow hedges 0.7 0.1
----------- ----------
0.6 0.3
----------- ----------
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$3.1 million
(2019: US$17.7 million) is included in share of results of
associates and joint ventures.
7. Earnings per Share
Basic earnings per share are calculated on profit attributable
to shareholders of US$115.3 million (2019: US$178.0 million), and
on the weighted average number of 1,352.7 million (2019: 1,352.7
million) shares in issue during the period.
Diluted earnings per share are calculated on profit attributable
to shareholders of US$115.3 million (2019: US$178.0 million), and
on the weighted average number of 1,353.3 million (2019: 1,353.5
million) shares in issue after adjusting for 0.6 million (2019: 0.8
million) shares which are deemed to be issued for no consideration
under the share-based long-term incentive plans based on the
average share price during the period.
Additional basic and diluted earnings per share are also
calculated based on underlying profit attributable to shareholders.
A reconciliation of earnings is set out below:
Six months ended 30th June
2020 2019
Basic Diluted Basic Diluted
earnings earnings earnings earnings
p er share per share per share per share
US$m USc USc US$m USc USc
Profit attributable
to shareholders 115.3 8.53 8.52 178.0 13.16 13.15
Non-trading
items (note
8) (10.2) (1.4)
------ -----
Underlying
profit attributable
to shareholders 105.1 7.77 7.77 176.6 13.05 13.05
------ -----
8. Non-trading Items
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains and losses
on equity investments which are measured at fair value through
profit and loss; gains and losses arising from the sale of
businesses, investments and properties; impairment of
non-depreciable intangible assets and other investments; provisions
for the closure of businesses; acquisition-related costs in
business combinations; and other credits and charges of a
non-recurring nature that require inclusion in order to provide
additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
Six months ended 30th June
2020 US$m 2019 US$m
Business restructuring costs (0.3) -
Fair value loss on equity investments (0.8) (0.5)
Share of Yonghui's fair value gain/(loss) on
equity investments 4.4 (6.3)
Share of Robinsons Retail's fair value gain
on
equity investments 0.1 -
Share of net gains from divestments of an investment/
a subsidiary by Yonghui 6.8 8.2
10.2 1.4
--------- ---------
9 . Dividends
Six months ended 30th June
2020 US$m 2019 US$m
Final dividend in respect of 2019 of USc14.50
(2018: USc14.50) per share 196.1 196.1
--------- ---------
An interim dividend in respect of 2020 of USc5.00 (2019:
USc6.50) per share amounting to a total of US$67.6 million (2019:
US$87.9 million) is declared by the Board, and will be accounted
for as an appropriation of revenue reserves in the year ending 31st
December 2020 .
10. Financial Instruments
Financial instruments by category
The carrying amounts of financial assets and financial
liabilities at 30th June 2020 and 31st December 2019 are as
follows:
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying
instruments and loss cost liabilities amounts
US$m US$m US$m US$m US$m
At 30th June 2020
Financial assets measured
at fair value
Other investments
- equity investments - 6.0 - - 6.0
Derivative financial
instruments - 0.1 - - 0.1
------------ ---------- ------------- ------------ ---------
- 6.1 - - 6.1
------------ ---------- ------------- ------------ ---------
Financial assets not
measured at fair value
Debtors - - 263.3 - 263.3
Cash and bank balances - - 274.9 - 274.9
- - 538.2 - 538.2
------------ ---------- ------------- ------------ ---------
Financial liabilities
measured at fair value
Derivative financial
instruments (6.3) (0.7) - - (7.0)
(6.3) (0.7) - - (7.0)
------------ ---------- ------------- ------------ ---------
Financial liabilities
not measured at fair
value
Borrowings - - - (1,365.8) (1,365.8)
Lease liabilities - - - (3,269.1) (3,269.1)
Trade and other payables
excluding non-financial
liabilities - - - (1,982.7) (1,982.7)
- - - (6,617.6) (6,617.6)
------------ ---------- ------------- ------------ ---------
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 2019
Financial assets measured
at fair value
Other investments
- equity investments - 6.8 - - 6.8
Derivative financial
instruments 0.3 - - - 0.3
------------ ---------- ------------- ------------ ---------
0.3 6.8 - - 7.1
------------ ---------- ------------- ------------ ---------
Financial assets not
measured at fair value
Debtors - - 280.3 - 280.3
Cash and bank balances - - 301.4 - 301.4
- - 581.7 - 581.7
------------ ---------- ------------- ------------ ---------
Financial liabilities
measured at fair value
Derivative financial
instruments (3.3) (0.7) - - (4.0)
(3.3) (0.7) - - (4.0)
------------ ---------- ------------- ------------ ---------
Financial liabilities
not measured at fair
value
Borrowings - - - (1,122.2) (1,122.2)
Lease liabilities - - - (3,305.8) (3,305.8)
Trade and other payables
excluding non-financial
liabilities - - - (2,187.7) (2,187.7)
- - - (6,615.7) (6,615.7)
------------ ---------- ------------- ------------ ---------
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 securities are based on quoted prices
in active markets at the balance sheet date.
(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 equity 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 equity 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
discounted cash flow by projecting the cash inflow from these
investments.
There were no changes in valuation techniques during the six
months ended 30th June 2020 and the year ended 31st December
2019.
The table below analyses financial instruments carried at fair
value at 30th June 2020 and 31st December 2019, measured by
observable current market transactions.
At 30th At 31st
June December
2020 2019
US$m US$m
Assets
Other investments
- equity investments 6.0 6.8
Derivative financial instruments
at fair value
- through other comprehensive
income - 0.3
- through profit and loss 0.1 -
6.1 7.1
------- ---------
Liabilities
Derivative financial instruments
at fair value
- through other comprehensive
income (6.3) (3.3)
- through profit and loss (0.7) (0.7)
(7.0) (4.0)
------- ---------
(ii) Financial instruments that are not measured at fair value
The fair values of current debtors, cash and bank balances,
current creditors, current borrowings and current lease liabilities
are assumed to approximate their carrying amounts due to the
short-term maturities of these assets and liabilities.
The fair values of long-term borrowings and non-current lease
liabilities are based on market prices or are estimated using the
expected future payments discounted at market interest rates.
11. Notes to Consolidated Cash Flow Statement
(a) Purchase of subsidiaries
Net cashflow for purchase of a subsidiary in 2020 represented
the settlement of deferred consideration for the Group's
acquisition of the 100% interest in San Miu Supermarket Limited,
which operates a supermarket chain in Macau, in 2015.
(b) Analysis of balances of cash and cash equivalents
At 30th June
2020 US$m 2019 US$m
Cash and bank balances 274.9 313.3
Bank overdrafts (28.4) (8.9)
246.5 304.4
--------- ---------
12. Capital Commitments and Contingent Liabilities
Total capital commitments at 30th June 2020 and 31st December
2019 amounted to US$213.2 million and US$338.8 million,
respectively.
Various Group companies are involved in litigation arising in
the ordinary course of their respective businesses.
The Group has tax litigation with the Hong Kong Inland Revenue
Department relating to the tax treatment of intra-group royalties
for the tax years from 2012/13 to 2014/15 and a dispute for the
same subject matter from 2015 to June 2020. The amount in dispute
for the period from 2012 to June 2020 is approximately US$101
million. The exposure, net of amounts provided, is estimated to be
US $69 million. Having taken legal advice, the Directors are of the
opinion that the Group has strong grounds to support its
position.
Apart from the above, the Directors are of the opinion that
adequate provisions have been made in the condensed financial
statements.
13. 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 certain of its subsidiaries,
associates and joint ventures. The more significant of such
transactions are described below.
Under the terms of a Management Services Agreement, the
management fee payable by the Group was US$0.6 million (2019:
US$0.9 million) for the first six months of 2020 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
(2019: US$0.4 million) to JML for the same period in 2020.
The Group rents properties from Hongkong Land Holdings Limited
('HKL'), a subsidiary of JMH. The lease payments paid by the Group
to HKL for the first six months of 2020 were US$1.6 million (2019:
US$1.7 million). The Group's 50%-owned associate, Maxim's Caterers
Limited ('Maxim's'), also paid lease payments of US$5.2 million
(2019: US$7.0 million) to HKL for the first six months of 2020.
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
2020 amounted to US$0.7 million (2019: US$1.8 million).
Maxim's supplies ready-to-eat products at arm's length to
certain subsidiaries of the Group. For the first six months of
2020, these amounted to US$11.3 million (2019: US$13.3
million).
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 133 and 134 of the
Company's 2019 Annual Report, a copy of which is available on the
Company's website www.dairyfarmgroup.com.
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
Clem Constantine
Directors
Dairy Farm International Holdings Limited
Dividend Information for Shareholders
The interim dividend of USc5.00 per share will be payable on
14th October 2020 to shareholders on the register of members at the
close of business on 21st August 2020. The shares will be quoted
ex-dividend on 20th August 2020, and the share registers will be
closed from 24th to 28th August 2020, inclusive.
Shareholders will receive their cash dividends in United States
Dollars, except when elections are made for alternate currencies in
the following circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register will have
the option to elect for their dividends to be paid in Sterling.
These shareholders may make new currency elections for the 2020
interim dividend by notifying the United Kingdom transfer agent in
writing by 25th September 2020 . The Sterling equivalent of
dividends declared in United States Dollars will be calculated by
reference to a rate prevailing on 30th September 2020.
Shareholders holding their shares through CREST in the United
Kingdom will receive their cash dividends in Sterling only as
calculated above.
Shareholders on the Singapore branch register who hold their
shares through The Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service
('DCS')
For those shareholders who are on CDP's DCS, they will receive
their cash dividends in Singapore Dollars unless they opt out of
CDP Currency Conversion Service, through CDP, to receive United
States Dollars.
Shareholders who are not on CDP's DCS
For those shareholders who are not on CDP's DCS, they 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 21st August 2020, 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 20th August 2020.
About Dairy Farm
Dairy Farm is a leading pan-Asian retailer. At 30th June 2020,
the Group and its associates and joint ventures operated over
10,000 outlets and employed some 240,000 people. The Group had
total annual sales in 2019 exceeding US$ 27 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
five divisions. The principal brands are:
Food
-- Grocery retail - Wellcome in Hong Kong S.A.R. and Taiwan;
Yonghui in Chinese mainland; Cold Storage in Malaysia and
Singapore; Giant in Indonesia, Malaysia and Singapore; Hero in
Indonesia; and Robinsons in the Philippines.
-- Convenience stores - 7-Eleven in Hong Kong and Macau S.A.R., 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 and Macau S.A.R., Indonesia, and Taiwan.
Restaurants
-- Maxim's in Cambodia, Chinese mainland, Hong Kong and Macau
S.A.R., Malaysia, Singapore, Thailand and Vietnam (directly and via
various joint ventures or franchises).
Other Retailing
-- Robinsons in the Philippines operating department stores, specialty and DIY stores.
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
Kirsten Molyneux (852) 2299 1884
Marjorie Law (852) 2299 1788
Brunswick Group Limited
David Ashton (852) 3512 5063
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 KKCBDKBKDQOB
(END) Dow Jones Newswires
July 29, 2020 06:31 ET (10:31 GMT)
Dfi Retail (LSE:DFIB)
Historical Stock Chart
From Feb 2024 to Mar 2024
Dfi Retail (LSE:DFIB)
Historical Stock Chart
From Mar 2023 to Mar 2024