23rd Feb 2006 09:05
Dairy Farm International Hldgs Ld23 February 2006 To: Business Editor 23rd February 2006 For immediate release The following announcement was today issued to the London Stock Exchange. DAIRY FARM INTERNATIONAL HOLDINGS LIMITED2005 PRELIMINARY ANNOUNCEMENT OF RESULTS Highlights • Strong performance in all major markets • Asset disposals raise US$135 million • Special dividend of USc25 per share paid • Underlying profit increases 16% "The prospects for Dairy Farm's businesses in 2006 remain encouraging. DairyFarm will continue to develop its operations across Asia and look foracquisitions and new ventures as opportunities arise." Simon Keswick, Chairman23rd February 2006 Results________________________________________________________________________________ Year ended 31st December 2005 2004 Change US$m US$m %________________________________________________________________________________Sales- subsidiaries 4,749 3,957 +20- including associates 5,539 5,116 +8 Underlying profit attributable to shareholders 190 165 +16Exceptional gains 15 86 n/aProfit attributable to shareholders 205 251 -18 Underlying PBIT to sales 4.7% 4.6% +0.1%________________________________________________________________________________ USc USc %________________________________________________________________________________Underlying earnings per share 14.23 12.38 +15Earnings per share 15.34 18.87 -19Cash flow per share from operating activities 26.33 22.90 +15Dividends per share 8.50 7.40 +15Special dividend per share - 25.00 n/a________________________________________________________________________________ The final dividend of USc6.20 per share will be payable on 21st June 2006,subject to approval at the Annual General Meeting to be held on 14th June 2006,to shareholders on the register of members at the close of business on 17thMarch 2006. The ex-dividend date will be on 15th March 2006, and the shareregisters will be closed from 20th to 24th March 2006, inclusive. DAIRY FARM INTERNATIONAL HOLDINGS LIMITED PRELIMINARY ANNOUNCEMENT OF RESULTSFOR THE YEAR ENDED 31ST DECEMBER 2005 OVERVIEW Dairy Farm achieved further growth in sales and underlying earnings in 2005,supported by recent acquisitions and generally favourable economic conditions inmost of its major markets. Management remains focused on developing retail operations in Asia, bothorganically and through acquisitions. PERFORMANCE Sales, including associate companies, increased by 8% to US$5.5 billion in 2005.There was good profit growth in both the North and South Asian regions, andunderlying profit increased by 16% to US$190 million. Underlying earnings pershare in 2005 were USc14.23, up from USc12.38 in the previous year. The net profit of US$205 million was enhanced by exceptional gains of US$15million, predominantly from asset disposals, as compared to a US$86 million gainin 2004. Basic earnings per share were USc15.34. Despite the payments of theordinary and special dividends that have reduced shareholders' fundssignificantly, the Group had no net debt at the year end. The Board has recommended an increased final dividend of USc6.20 per share, upfrom USc5.30 in 2004, bringing the total ordinary dividend in respect of 2005 toUSc8.50, an increase of 15% over the USc7.40 paid in the previous year. Aspecial dividend of USc25.00 per share was paid in May 2005 CORPORATE DEVELOPMENTS The Group increased its direct shareholding in PT Hero Supermarket in Indonesiafrom 12.2% to 44.5% following two tender offers and the purchase of a minorityshareholding. Dairy Farm also holds exchangeable bonds which can be exchangedfor a further 24.6% of Hero's shares at any time. ASSET DISPOSALS The restructuring of the Group's property portfolio in Malaysia, through a saleand leaseback transaction, was completed in December 2005. The Group alsodisposed of certain properties in Indonesia and a shopping centre in Singapore,mostly under sale and leaseback agreements. OPERATIONS The Group's operations in North Asia enjoyed further growth in 2005, with salesincreasing by 12% and profit by 18%. The Hong Kong businesses enjoyed thebenefits of an improving economy. Wellcome Hong Kong continued to improve, whilean acquisition in late 2004 underpinned a strong performance from 7-Eleven.Mannings health and beauty stores again produced a fine result. Wellcome Taiwan faced a competitive supermarket sector, but had a very strongsecond half to record a good result for the year. In Guangdong Province,7-Eleven continued its expansion, while Mannings has reached 11 stores after itsfirst full year of operation. South Korean associate, Olive Young, alsocontinued its expansion, opening seven health and beauty stores to finish theyear with 25 outlets. IKEA in Hong Kong and Taiwan recorded a decline in underlying profit in achallenging environment. In Taiwan, two new IKEA stores are scheduled to open in2006. The Group's Hong Kong-based restaurant associate, Maxim's, produced a slightincrease in underlying profit despite being affected by strong competition andclosure costs. In early 2006, Maxim's completed the acquisition of a majorityinterest in the 18-outlet Genki Sushi chain. In South Asia, the Group achieved excellent growth, increasing sales by 33% andprofits by 26%. Both Singapore and Malaysia performed well, and Indonesiacontinued to produce significantly improved results. Following 12 new openings,Group companies now operate 41 Giant hypermarkets in the region. In India, new local joint venture partners have replaced the previous partner.The supermarket and the health and beauty businesses are now headquartered inBangalore under a fresh management team, and there are aggressive expansionplans for 2006. The Group entered new markets in 2005 with Mannings and 7-Eleven opening inMacau and Guardian starting up in Bangkok. All three ventures recorded promisingresults and will continue to grow in 2006. PROSPECTS In conclusion, the Chairman, Simon Keswick said, "The prospects for Dairy Farm'sbusinesses in 2006 remain encouraging. Dairy Farm will continue to develop itsoperations across Asia and look for acquisitions and new ventures asopportunities arise." GROUP CHIEF EXECUTIVE'S REVIEW Our performance was solid across all major markets as sales and earningsincreased in both North Asia and South Asia for the fifth consecutive year. Weare committed to maintaining our strategy which is to: •Focus on retail in Asia; •Operate multiple retail formats tailored to local customers; •Build leading local market positions; and •Deliver efficient shared support services. We continued our policy of owning only the most strategic properties. Sale andleaseback transactions in Malaysia, Singapore and Indonesia produced US$135million in cash. We also strengthened our portfolio of businesses with anincreased interest in PT Hero Supermarket in Indonesia, new joint venturepartners in India and, through Maxim's, acquisition of the Genki Sushi chain inHong Kong. We started three businesses in two new markets during the year:7-Eleven and Mannings in Macau and Guardian in Thailand. In line with the Company's policy to return value to shareholders, a specialdividend totalling US$334 million was paid in May 2005. The Group reached several other important milestones in 2005: •The Group opened 413 stores, acquired six and closed or sold 156 to finish the year with 3,165 stores, a net increase of 263. •Maxim's extended its Starbucks franchise in Hong Kong by ten years to 2037, and simultaneously reduced its majority interest in South China to 49%. •We now have 41 Giant hypermarkets in South Asia with nine additions in Malaysia, two in Indonesia and one in Singapore. Over the past 24 months, Dairy Farm has launched five new businesses, three innew territories. Collectively, these businesses lost US$5.0 million in 2005: thecost of future growth. The Group incurred another US$9.0 million of storepre-opening expenses. These commitments were more than offset by improvements inour more established businesses, particularly our 41 Giant hypermarkets inMalaysia, Indonesia and Singapore. Hypermarkets have become an important elementof our 'multiple retail format' strategy. REGIONAL REVIEW NORTH ASIA Hong Kong Wellcome's results improved significantly on the back of timely promotions andtight cost controls. Our ongoing upgrade of the store network saw ten openings,five closings and the completion of 26 major refurbishments. 7-Eleven had an outstanding year with strong sales and profit growth generatedby well-received promotions and successful integration of the Daily Stopacquisition. We expanded our network by 55 stores finishing the year with 665stores of which 303 are franchised. Mannings results improved in a challenging market as it further consolidated itsleading position in the health and beauty sector. The total number of storesincreased to 230. IKEA, our home furnishings business, increased sales but lower margins impactedthe underlying profit. IKEA now has four stores in Hong Kong. Maxim's underlying profit was slightly ahead of last year despite closure costsand strong competitive activity. The modernization of our Chinese restaurantsand fast food shops, the acquisition of Genki Sushi and development of severalnew concepts to debut in 2006 are expected to deliver improved results. Duringthe year, Maxim's extended its Starbucks franchise in Hong Kong by ten years to2037, while reducing its interests in China to a minority position. Mainland China 7-Eleven opened 59 convenience stores in Guangdong and Shenzhen reaching a totalof 241 by year end. We are confident of our future as the network expands and weachieve economies of scale. 7-Eleven opened 16 stores in the new Macau market. Mannings completed its first year of operation in China opening eight new storesto bring the total to 11. Mannings also opened its first two stores in Macauwith encouraging results. Maxim's opened its first cake shop in Guangdong in April 2005, and now has sixstores in operation. During 2005, Starbucks opened eight outlets to finish theyear with 20, including its first two stores in Chengdu. Taiwan Wellcome recorded slightly higher sales but greatly improved profit due tohigher margins, tight cost controls and good performance from the Jasons gourmetstores, with the third one opened in December. We consolidated our position inthis competitive market by opening six and closing six stores, maintaining thetotal at 167. IKEA's two stores operated for the full year resulting in a significant salesincrease. However, lower margins and the costs incurred in developing an optimalinfrastructure reduced profitability. Two new stores, one in Hsin Chuang andanother in Kaohsiung, will open in 2006. Korea Olive Young, the Group's 50%-owned associate, expanded its health and beautychain in a competitive market. We opened seven stores and closed one to end theyear with 25. We will continue to expand in this promising market. SOUTH ASIA Singapore Both Cold Storage and Shop N Save supermarkets recorded strong profit growth. Weopened four new stores to end the year with 80 outlets. Giant opened its seventh store, reinforcing its position as the leadinghypermarket chain in Singapore. Guardian finished the year with 127 stores, an increase of 15, and once moresignificantly improved its results. 7-Eleven recorded strong sales and profits supported by innovative products andservices. Fifty-eight stores were opened and four closed bringing the network to315 outlets of which 87 are franchised. Malaysia Giant continued its growth of sales and profit further establishing itself asthe leading retailer in Malaysia. We added nine hypermarkets and threesupermarkets bringing the total to 22 hypermarkets and 49 supermarkets at yearend. Guardian, the leading health and beauty chain in the country, enjoyed anotherstrong performance. Fourteen new stores were opened. The network now stands at171. Indonesia Hero supermarkets continued to improve sales and profit. Eight underperformingsupermarkets were closed and four openings brought the total to 95 outlets. Giant hypermarkets continued to improve their results and opened two new storesto bring the total to 12. Guardian and Starmart expanded further with 38 openings, finishing the year with101 and 54 stores respectively. India Foodworld, the Group's 49%-owned supermarket joint venture, divested 51 storesas part of a change in shareholders that was completed in September. Thebusiness incurred a loss for the year but with the introduction of new jointventure partners and installation of a new management team, we remain confidentof our prospects in the Indian market. The joint venture had 46 stores operatingat year end. Health and Glow, the Group's health and beauty joint venture had a similarchange in shareholders with Dairy Farm remaining at 50%. There was no divestmentof stores. The business showed improvement during the year. We added five storesand closed one to bring the total to 34, and will continue to expand in 2006. Thailand Guardian opened its first three stores in Bangkok and plans several additions in2006. THE YEAR AHEAD We have improved our underlying performance for five consecutive years sinceadopting our strategy of being an Asian focused, multi-format retailer. Thisfocus has resulted in strong and often leading positions in markets thatcontinue to be very attractive. Almost half the world's population lives in themarkets we presently serve, and much of the economic expansion over the next tenyears is predicted to occur in the region. We plan to stick to our strategy andexpand through a combination of organic growth and acquisitions. We are fortunate to have a fine, dedicated and highly diverse work force ofalmost 60,000 people. We thank them for their outstanding performance in 2005and ask their support in the continued development of Dairy Farm in 2006 as wecelebrate our 120th anniversary. Ronald J FlotoGroup Chief Executive23rd February 2006 ________________________________________________________________________________Dairy Farm International Holdings LimitedConsolidated Profit and Loss Accountfor the year ended 31st December 2005________________________________________________________________________________ 2005 2004 US$m US$m________________________________________________________________________________ Sales (note 2) 4,749.4 3,956.5Cost of sales (3,334.9) (2,754.2) ________ ________ Gross margin 1,414.5 1,202.3Other operating income (note 3) 44.3 103.2Selling and distribution costs (1,034.8) (871.1)Administration and other operating expenses (175.2) (161.6) ________ ________ Operating profit (note 2) 248.8 272.8Financing charges (25.7) (9.0)Share of results of associates and joint ventures (note 4) 28.5 21.2 ________ ________ Profit before tax 251.6 285.0Tax (note 5) (45.0) (34.2) ________ ________Profit for the year 206.6 250.8 Attributable to:Shareholders of the Company 205.3 251.3Minority interests 1.3 (0.5) ________ ________ 206.6 250.8 ________ ________________________________________________________________________________________ USc USc________________________________________________________________________________ Earnings per share (note 6)- basic 15.34 18.87- diluted 15.25 18.74 Underlying earnings per share (note 6)- basic 14.23 12.38- diluted 14.15 12.29________________________________________________________________________________ ________________________________________________________________________________Dairy Farm International Holdings LimitedConsolidated Balance Sheetat 31st December 2005________________________________________________________________________________ 2005 2004 US$m US$m________________________________________________________________________________ Net operating assetsIntangible assets 226.8 183.6Tangible assets 463.4 398.4Associates and joint ventures 106.6 127.0Deferred tax assets 7.0 8.6Other non-current assets 54.3 47.5 ________ ________ Non-current assets 858.1 765.1 ________ ________Stocks 423.8 341.6Debtors and prepayments 157.3 100.5Current tax assets 2.1 1.8Bank balances 389.1 454.6 ________ ________ 972.3 898.5Non-current assets classified as held for sale (note 7) 2.2 106.7 ________ ________ Current assets 974.5 1,005.2 ________ ________ Creditors and accruals (1,116.9) (921.6)Current borrowings (35.9) (84.9)Current tax (31.8) (22.0)liabilities ________ ________ (1,184.6) (1,028.5)Liabilities directly associated with non-current assets classified as held for sale (note 7) (0.5) - ________ ________ Current liabilities (1,185.1) (1,028.5) ________ ________ ________ ________Net current liabilities (210.6) (23.3)Long-term borrowings (352.1) (261.5)Deferred tax liabilities (34.9) (27.8)Other non-current liabilities (17.4) (7.8) ________ ________ 243.1 444.7 ________ ________ Total equityShare capital 74.5 74.1Share premium and capital reserves 26.1 24.7Revenue and other reserves 123.5 345.8 ________ ________Shareholders' funds (note 8) 224.1 444.6Minority interests 19.0 0.1 ________ ________ 243.1 444.7 ________ ________________________________________________________________________________________ ________________________________________________________________________________Dairy Farm International Holdings LimitedConsolidated Statement of Recognized Income and Expensefor the year ended 31st December 2005________________________________________________________________________________ 2005 2004 US$m US$m________________________________________________________________________________ Net surplus on revaluation of properties 7.6 -Surplus on revaluation of intangible assets 3.0 -Actuarial gains on defined benefit pension plans 3.0 13.0Net exchange translation differences (7.0) (0.3)Gains / (losses) on cash flow hedges 5.0 (0.7)Tax on items taken directly to equity (3.9) (0.5) ________ ________Net income recognized directly in equity 7.7 11.5Profit for the year 206.6 250.8 ________ ________Total recognized income and expense for the year 214.3 262.3 ________ ________Attributable to:Shareholders of the Company 213.0 262.8Minority interests 1.3 (0.5) ________ ________ 214.3 262.3 ________ ________________________________________________________________________________________ ________________________________________________________________________________Dairy Farm International Holdings LimitedConsolidated Cash Flow Statementfor the year ended 31st December 2005________________________________________________________________________________ 2005 2004 US$m US$m________________________________________________________________________________ Operating activities ________ ________Operating profit (note 2) 248.8 272.8Interest income (note 2) (16.3) (2.6)Depreciation and amortization 103.2 89.3Other non-cash items (note 11(a)) (5.9) (78.9)Decrease in working capital 40.3 28.3Interest received 15.8 2.6Interest and other financing charges paid (25.6) (8.9)Tax paid (31.8) (21.4) ________ ________ 328.5 281.2Dividends from associates and joint ventures 23.8 23.7 ________ ________Cash flows from operating activities 352.3 304.9 Investing activities ________ ________Purchase of tangible assets (112.2) (93.1)Purchase of subsidiaries (note 11(b)) (38.4) -Store acquisitions (note 11(c)) (0.9) (15.8)Purchase of associates and joint ventures (3.0) (0.2)Sale of subsidiaries (note 11(d)) 95.9 20.0Sale of properties (note 11(e)) 37.0 86.9Sale of other tangible assets 1.3 0.4Sale of other investments 2.3 - ________ ________Cash flows from investing activities (18.0) (1.8) Financing activities ________ ________Issue of shares 1.4 3.1Drawdown of borrowings 1,386.4 705.7Repayment of borrowings (1,362.7) (650.6)Dividends paid by the Company (note 10) (435.3) (70.6) ________ ________Cash flows from financing activities (410.2) (12.4)Effect of exchange rate changes (0.4) 0.8 ________ ________ Net (decrease) / increase in cash and cash equivalents (76.3) 291.5Cash and cash equivalents at 1st January 454.6 163.1 ________ ________ Cash and cash equivalents at 31st December 378.3 454.6 ________ ________________________________________________________________________________________ ________________________________________________________________________________Dairy Farm International Holdings LimitedNotes________________________________________________________________________________ 1. ACCOUNTING POLICIES AND BASIS OF PREPARATION The financial information contained in this announcement has been based on theaudited results for the year ended 31st December 2005 which have been preparedin conformity with International Financial Reporting Standards, includingInternational Accounting Standards and Interpretations adopted by theInternational Accounting Standards Board. There have been no changes to the accounting policies described in the 2004annual financial statements. The Group's reportable segments are set out in note 2. 2. SALES AND OPERATING PROFIT Sales Operating Profit _____________________ _____________________ 2005 2004 2005 2004 US$m US$m US$m US$m _____________________ _____________________ Analysis by geographical area: North Asia 2,709.7 2,425.9 132.5 112.0 South Asia 2,039.7 1,530.6 109.7 87.4 _________ _________ _________ _________ 4,749.4 3,956.5 242.2 199.4 _________ _________ Support office (18.8) (15.7) Interest income 16.3 2.6 _________ _________ 239.7 186.3 Profit on sale of other investments 2.0 - Profit on sale of properties (note 3) 11.1 72.6 (Loss) / profit on sale of subsidiaries (note 3) (4.0) 13.9 _________ _________ 248.8 272.8 _________ _________ Summary: North Asia 132.5 198.2 South Asia 116.8 87.7 Support office (16.8) (15.7) Interest income 16.3 2.6 _________ _________ 248.8 272.8 _________ _________ Analysis by business: Supermarkets / hypermarkets 2,993.4 2,483.2 124.3 98.8 Health and beauty stores 728.3 643.2 56.6 50.9 Convenience stores 855.4 679.5 45.4 32.6 Home furnishings stores / other 172.3 150.6 15.9 17.1 _________ _________ _________ _________ 4,749.4 3,956.5 242.2 199.4 _________ _________ _________ _________ Dairy Farm operates in two regions: North Asia and South Asia, and accordingly, its primary segment reporting is geographical areas with secondary segment information reported by business. North Asia comprises Hong Kong, Mainland China, Macau, Taiwan and South Korea. South Asia comprises Singapore, Malaysia, Indonesia, India and Thailand. Included under Support office was a cost of US$3.3 million (2004: nil) in respect of restructuring of the joint ventures in India. In the summary, Support office was shown net of profit on sale of other investments of US$2.0 million (2004: nil). 3. OTHER OPERATING INCOME 2005 2004 US$m US$m _____________________ Interest income 16.3 2.6 Rental income 16.0 14.2 Profit on sale of properties in: - Singapore 9.0 0.3 - Indonesia 2.1 - - Hong Kong - 72.3 (Loss) / profit on sale of subsidiaries (4.0) 13.9 Profit on sale of other investments 2.0 - Exchange gain and others 2.9 (0.1) _________ _________ 44.3 103.2 _________ _________ 4. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES 2005 2004 US$m US$m _____________________ Analysis by geographical area: North Asia 30.0 24.3 South Asia (1.5) (3.1) _________ _________ 28.5 21.2 _________ _________ Analysis by business: Restaurants 31.1 24.9 Retailing (2.6) (3.7) _________ _________ 28.5 21.2 _________ _________ Results are shown after tax and minority interests. A reversal of impairment on land use rights of US$3.9 million (2004: nil) has been included under North Asia and Restaurants. In 2004, an impairment charge of US$3.0 million against the Foodworld supermarket joint venture in India has been included under South Asia and Retailing. Retailing is predominantly supermarkets and health and beauty stores. 5. TAX 2005 2004 US$m US$m _____________________ Current 42.1 26.4 Deferred 2.9 7.8 _________ _________ 45.0 34.2 _________ _________ Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates. The Group has no tax payable in the United Kingdom (2004: nil). 6. EARNINGS PER SHARE Basic earnings per share are calculated on profit attributable to shareholders of US$205.3 million (2004: US$251.3 million) and on the weighted average number of 1,338.2 million (2004: 1,331.6 million) shares in issue during the year. Diluted earnings per share are calculated on profit attributable to shareholders of US$205.3 million (2004: US$251.3 million) and on the weighted average number of 1,345.8 million (2004: 1,341.2 million) shares in issue during the year. The number of shares for basic and diluted earnings per share is reconciled as follows: Ordinary shares in millions 2005 2004 _____________________ Weighted average number of shares in issue 1,338.2 1,331.6 Adjustment for shares deemed to be issued for no consideration under the Senior Executive Share Incentive Schemes 7.6 9.6 _________ _________ Weighted average number of shares for diluted earnings per share 1,345.8 1,341.2 _________ _________ Additional basic and diluted earnings per share are also calculated based on underlying earnings attributable to shareholders of US$190.4 million (2004: US$164.8 million). A reconciliation of earnings is set out below: 2005 2004 ________________________ _________________________ Basic Diluted Basic Diluted earnings earnings earnings earnings per per per per share share share share US$m USc USc US$m USc USc ________________________ _________________________ Underlying profit 190.4 14.23 14.15 164.8 12.38 12.29 Reversal of impairment on properties 4.4 - Profit on sale of investments 4.2 - Profit on sale of properties 10.3 72.6 (Loss) / profit on sale of subsidiaries (4.0) 13.9 _______ _______ Profit attributable to shareholders 205.3 15.34 15.25 251.3 18.87 18.74 _______ _______ 7. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE The major classes of assets and liabilities classified as held for sale are set out below: 2005 2004 US$m US$m _____________________ Intangible assets 0.5 - Tangible assets 1.7 106.7 _________ _________ Total assets 2.2 106.7 _________ _________ Total liabilities - deferred tax liabilities 0.5 - _________ _________ At 31st December 2004, the non-current assets classified as held for sale represented the Group's property portfolio in Malaysia. With the exception of two properties with a carrying value of US$6.5 million which were reclassified to tangible assets, all other properties were sold during the year resulting in a post-tax loss of US$4.0 million. During the year, a staff quarter in Hong Kong was classified as held for sale. As part of the increased shareholding in PT Hero Supermarket, the Group acquired certain properties in Indonesia classified as held for sale. With the exception of the staff quarter in Hong Kong and one retail property in Indonesia with carrying values of US$1.5 million and US$0.7 million respectively, all other properties were sold during the year generating a post-tax profit of US$0.6 million. 8. SHAREHOLDERS' FUNDS 2005 2004 US$m US$m _________ _________ At 1st January 444.6 249.1 Recognized income and expense attributable to shareholders 213.0 262.8 Dividends (note 10) (435.3) (70.6) Employee share option schemes - value of employee services 0.4 0.2 - exercise of share options 1.4 3.1 _________ _________ At 31st December 224.1 444.6 _________ _________ 9. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES 2005 2004 US$m US$m _____________________ Capital commitments as at 31st December 98.0 24.8 _________ _________ Various Group companies are involved in litigation arising in the ordinary course of their respective businesses. Having reviewed outstanding claims and taking into account legal advice received, the Directors are of the opinion that adequate provisions have been made in the financial statements. 10. DIVIDENDS 2005 2004 US$m US$m _____________________ Final dividend in respect of 2004 of USc5.30 (2003: USc3.20) per share 70.8 42.5 Interim dividend in respect of 2005 of USc2.30 (2004: USc2.10) per share 30.8 28.1 _________ _________ 101.6 70.6 Special dividend of USc25.00 per share 333.7 - _________ _________ 435.3 70.6 _________ _________ A final dividend in respect of 2005 of USc6.20 (2004: USc5.30) per share amounting to a total of US$83.2 million (2004: US$70.8 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the Annual General Meeting. This amount will be accounted for as an appropriation of revenue reserves in the year ending 31st December 2006. 11. NOTES TO CONSOLIDATED CASHFLOW STATEMENT 2005 2004 US$m US$m _____________________ (a) Other non-cash items Profit on sale of properties (11.1) (72.6) Profit on sale of other investments (2.0) - Loss / (profit) on sale of subsidiaries 4.0 (13.9) Loss on sale of tangible assets 2.7 7.0 Other 0.5 0.6 _________ _________ (5.9) (78.9) _________ _________ 2005 ______________________________________ Book Fair value Fair amount adjustments value US$m US$m US$m ______________________________________ (b) Purchase of subsidiaries Intangible assets 13.5 13.8 27.3 Tangible assets 46.4 (0.3) 46.1 Deferred tax assets 5.3 - 5.3 Current assets 80.8 0.5 81.3 Current liabilities (76.5) (0.2) (76.7) Long-term borrowings (8.7) - (8.7) Deferred tax liabilities (4.1) (4.1) (8.2) Other non-current liabilities (9.1) - (9.1) Minority interests 7.1 - 7.1 _________ _________ _________ Net assets 54.7 9.7 64.4 _________ _________ Adjustment for minority interests (26.5) _________ Net assets acquired 37.9 Goodwill 31.4 _________ Total consideration 69.3 Adjustment for carrying value of an associate and deferred consideration (22.1) Adjustment to fair values relating to previously held interests (3.8) Cash and cash equivalents acquired (5.0) _________ 38.4 _________ During the year, the Group increased its effective shareholding in PT Hero Supermarket to 69.1% for a total cash consideration of US$43.3 million. Sales and operating profit since acquisition amounted to US$392.9 million and US$6.3 million respectively. If the acquisitions had occurred on 1st January 2005, Group sales and operating profit would have been US$4,802.0 million and US$247.1 million respectively. 2005 2004 US$m US$m _________ _________ (c) Store acquisitions Tangible assets 0.6 1.8 Current assets 0.3 1.0 _________ _________ Fair value of net assets acquired 0.9 2.8 Goodwill - 12.8 _________ _________ Total consideration 0.9 15.6 Adjustment for deferred consideration - 0.2 _________ _________ 0.9 15.8 _________ _________ During the year, GCH Retail (Malaysia), a wholly-owned subsidiary, acquired the store operating assets of two supermarkets at fair values from a third party for a cash consideration of US$0.9 million. During 2004, Wellcome Taiwan, a wholly-owned subsidiary, acquired the store operating assets of seven supermarkets from a third party for a cash consideration of US$2.2 million; and The Dairy Farm Company, a wholly-owned subsidiary, acquired the store operating assets of 84 convenience stores from a third party for a cash consideration of US$13.1 million. Sales and operating profit since acquisition amounted to US$2.1 million and US$0.3 million respectively. If the acquisition had occurred on 1st January 2005, Group sales and operating profit would have been US$4,750.4 million and US$248.4 million respectively, and US$4,803.0 million and US$246.7 million respectively including purchase of subsidiaries. 2005 2004 US$m US$m _____________________ (d) Sale of subsidiaries Current assets 100.7 7.1 Current liabilities - (0.6) Non-current liabilities - (0.4) _________ _________ Net assets disposed of 100.7 6.1 (Loss) / profit on disposal (4.0) 13.9 _________ _________ Sale proceeds (net of expenses) 96.7 20.0 Adjustment for deferred consideration (0.8) - _________ _________ 95.9 20.0 _________ _________ During 2005, the Group completed the sale of its 100% interest in Hartanah Progresif, a property-owning subsidiary, to a third party for cash. During 2004, the Group completed the sale of its 100% interest in Hong Kong Ice to a third party for cash. (e) Sale of properties During 2005, the Group disposed of 13 properties in Indonesia for US$9.6 million, and a shopping centre in Singapore for US$27.4 million. The profit attributable to the Group, after tax and minority interests, is US$10.3 million. During 2004, the Group disposed of the Fotan warehouse in Hong Kong for US$70.4 million, and four retail properties, predominately in Hong Kong, for US$16.5 million. The final dividend of USc6.20 per share will be payable on 21st June 2006,subject to approval at the Annual General Meeting to be held on 14th June 2006,to shareholders on the register of members at the close of business on 17thMarch 2006. The ex-dividend date will be on 15th March 2006, and the shareregisters will be closed from 20th to 24th March 2006, inclusive. Shareholderswill receive their dividends in United States Dollars, unless they areregistered on the Jersey branch register where they will have the option toelect for Sterling. These shareholders may make new currency elections bynotifying the United Kingdom transfer agent in writing by 2nd June 2006. TheSterling equivalent of dividends declared in United States Dollars will becalculated by reference to a rate prevailing on 7th June 2006. Shareholdersholding their shares through The Central Depository (Pte) Limited ('CDP') inSingapore will receive United States Dollars unless they elect, through CDP, toreceive Singapore Dollars. - end - For further information, please contact: Dairy Farm Management Services LimitedRonald J Floto (852) 2299 1881Howard Mowlem (852) 2299 1896 email: [email protected] Matheson & Co LimitedMartin Henderson (44) 207 816 8135 GolinHarrisJohn Morgan (852) 2501 7939 email: [email protected] Weber Shandwick Square MileRichard Hews / Helen Thomas (44) 207 067 0700 Full text of the Preliminary Announcement of Results and the PreliminaryFinancial Statements for the year ended 31st December 2005 can be accessedthrough the Internet at 'www.dairyfarmgroup.com'. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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