6th Mar 2008 09:05
Dairy Farm International Hldgs Ld06 March 2008 To: Business Editor 6 March 2008 For immediate release The following announcement was issued today to a Regulatory Information Serviceapproved by the Financial Services Authority in the United Kingdom. DAIRY FARM INTERNATIONAL HOLDINGS LIMITED2007 PRELIMINARY ANNOUNCEMENT OF RESULTS Highlights•Earnings per share up 22%•Good results in major markets•Maxim's performing well•Strong cash flow "Dairy Farm's retail businesses continue to enjoy leading positions in theirmarket sectors, and prospects remain positive despite the more uncertaineconomic outlook. The Group will build on its good results in 2007 bycontinuing to expand its operations to meet the growing demands from Asianconsumers." Simon Keswick, Chairman6th March 2008 Results-------------------------------------------------------------------------------- Year ended 31st December 2007 2006 Change US$m US$m %-------------------------------------------------------------------------------- Sales- subsidiaries 5,887 5,175 +14- including associates 6,810 6,010 +13 Profit attributable to shareholders 258 211 +22 PBIT to sales 4.7% 4.5% +0.2%-------------------------------------------------------------------------------- USc USc %--------------------------------------------------------------------------------Earnings per share 19.19 15.70 +22 Dividends per share 11.50 9.40 +22 Special dividend per share 16.00 - n/a-------------------------------------------------------------------------------- The final dividend of USc8.50 per share will be payable on 14th May 2008,subject to approval at the Annual General Meeting to be held on 7th May 2008,to shareholders on the register of members at the close of business on 20thMarch 2008. The ex-dividend date will be on 18th March 2008, and the shareregisters will be closed from 24th to 28th March 2008, inclusive. DAIRY FARM INTERNATIONAL HOLDINGS LIMITED PRELIMINARY ANNOUNCEMENT OF RESULTSFOR THE YEAR ENDED 31ST DECEMBER 2007 OVERVIEWDairy Farm achieved excellent sales and profit in 2007 as it benefited fromfavourable trading environments in its major markets. The Group continued itsstrategy of expanding the reach of its retail formats within selectedterritories in Asia. PERFORMANCESales, including 100% of associate companies, increased by 13% to US$6.8 billionin 2007. Net profit for the year increased by 22% to US$258 million, whileearnings per share also rose 22% to USc19.19. Following the payment of a special dividend of US$215 million, or USc16.00 pershare, in October 2007, the Group returned to a net debt position by the yearend with net borrowings of US$83 million. The Group's financial position remainssound, with strong cash generation that ensures ample funds are available forits trading, expansion and debt servicing requirements. The Board is recommending a final dividend of USc8.50 per share, bringing thetotal ordinary dividend for 2007 to USc11.50 per share, an increase of 22% over2006. OPERATIONSThe expansion of Dairy Farm's operations across the Region continued with storeopenings in most formats producing a total of 4,191 outlets at the year end. Inparticular, Dairy Farm now operates 64 Giant hypermarkets, with 41 in Malaysia,17 in Indonesia and six in Singapore. The Group's retail businesses in Hong Kong produced improved results in 2007,and those in Macau made a profit for the first time since commencing operationin 2005. In Taiwan, its supermarkets' earnings remained stable in a highlycompetitive market, but the operating results in IKEA were below expectationsdespite the opening of two large stores in 2006. In Southern China, new storeopenings and the acquisition of a competitor chain increased the number of7-Eleven outlets to 440, of which 41 are franchised, while the refinement of theoffering in the Mannings health and beauty stores led to improved results in theexisting 30 outlets. Hong Kong restaurant associate, Maxim's, achieved good growth in sales andprofit as innovative products and marketing in its fast food operations producedimprovements, and increased contributions were also received from its cakeshops, Starbucks and Genki Sushi. Good progress was made in developing the business in Malaysia, particularly inEast Malaysia where focused expansion in recent years has proven successful.During the year, 13 hypermarkets, four supermarkets and 61 Guardian health andbeauty stores were opened in the country. While a satisfactory level of earnings has yet to be achieved in Indonesia,despite some recent improvement, the prospects for the market remain attractiveand the Group will continue to build its business. Three supermarkets are now inoperation in Vietnam which will form the foundation of a more substantialbusiness, and the Group is also expanding its interests in Brunei where theconstruction of its first hypermarket is almost complete. In Singapore, the repositioning of the Giant hypermarkets and good performancesfrom other formats, especially supermarkets and 7-Eleven, led to a recovery inearnings in 2007. In India, both the Group's supermarket and health and beautyjoint ventures continued their expansion, although changes in the implementationof government regulations led to some store closures. In Thailand, the Group's health and beauty operation was closed during the year.Also, since the year end, the Group has sold its 50% shareholding in the OliveYoung health and beauty operation in Korea to its partner. Neither business hadmet the Group's expectations. PROSPECTSIn conclusion, the Chairman, Simon Keswick said, "Dairy Farm's retail businessescontinue to enjoy leading positions in their market sectors, and prospectsremain positive despite the more uncertain economic outlook. The Group willbuild on its good results in 2007 by continuing to expand its operations to meetthe growing demands from Asian consumers." GROUP CHIEF EXECUTIVE'S REVIEW Dairy Farm achieved further growth in sales and earnings in 2007. We increasedsales and earnings in our operations in North Asia, East Asia and South Asia. Atthe year end, Dairy Farm operated 25 separate businesses in seven countriesacross these three regions. A number of important steps were taken in 2007: • We added 618 stores to reach a total of 4,191 stores at the year end. • In Malaysia, we opened 13 Giant hypermarkets, bringing our total of these stores to 41. These included two hypermarkets in East Malaysia, where Giant is becoming established as the leading retailer. • Also in Malaysia, our Guardian business was able to expand dramatically, opening 61 stores to bring its total to 288 at the year end, and establishing itself as the country's leading pharmacy and health and beauty chain. • In Singapore, we relocated both our head office and distribution centre to a new combined location and opened a new Giant hypermarket as part of the same complex. • We concluded negotiations to establish our presence in Brunei through Guardian health and beauty stores, and will also open our first Giant hypermarket there in early 2008. • In China, we expanded the 7-Eleven business through the acquisition of the Quik convenience store chain; we also expanded the number of franchisees in China, with 41 franchised stores in operation at the year end and many more planned. • We introduced the MarketPlace supermarket format in Hong Kong, and will add or convert more of these stores in 2008 to extend our reach into the upper segment. • In Taiwan, we trialed the new Express Fresh concept mini-market stores, and these will be rolled out more aggressively in 2008. • After careful consideration, we decided to end our participation in the Thai market and ceased operations at the year end.Without the ability to achieve rapid scale, and confronted with regulatory issues, we determined that our efforts would be better directed at expansion of our health and beauty business in mainland China. A minor loss was incurred in closing the 11 Guardian stores that had been in operation. Subsequent to the year end, we withdrew from the Olive Young joint venture inKorea, in order to concentrate our resources on other markets. A gain ofapproximately US$14 million was realized on disposal of our interest. REGIONAL REVIEW NORTH ASIAHong Kong Wellcome supermarkets again performed well,recording another year of sales andprofit improvement. The expansion of the MarketPlace format is providing a newarea of growth, with three stores now operating. A second ThreeSixty store wasalso added in late 2007. 7-Eleven convenience stores also performed well, adding 81 stores to bring itstotal portfolio to 828 stores at the year end, of which 317 were operated byfranchisees. Mannings health and beauty stores had another year of growth, and was able toexpand by seven stores, despite continuing adverse effects from the increasing level of rentals in Hong Kong. IKEA achieved excellent growth in sales and earnings, but will be affected in2008 by the partial closure and re-location of its Shatin store. Maxim's continued to improve its results, with all major formats achieving gainsand overall profit contribution increasing by 12%. MacauBoth 7-Eleven and Mannings reached profitability in Macau in 2007, despite eachhaving a relatively small scale of operations with 30 and five stores,respectively. There is scope for moderate further expansion. Mainland China7-Eleven expanded with the acquisition of the Quik chain of convenience storesin Guangdong Province, Southern China. All of the acquired stores have been re-badged as 7-Eleven, bringing total stores in operation to 440 at the year end.Mannings showed very encouraging growth in same-store sales and, havingestablished a viable model, we will accelerate the expansion of this business. Maxim's is planning an expansion of factory space to support growth of itsbakery and cake shop business, which is receiving excellent customer acceptance.In addition, Maxim's remains a minority shareholder in the Starbucks chains inSouthern and Western China, which are also continuing to expand. TaiwanWellcome supermarkets again achieved a satisfactory result, in a difficultmarket in which overall consumer demand continued to be constrained. The newExpress Fresh concept has shown promise, and these smaller format storestogether with Jasons MarketPlace superstores will in future supplement Wellcomesupermarkets and allow us to continue to expand in Taiwan, despite the strongcompetition from hypermarkets. IKEA had a year of consolidation in 2007, after a period of rapid expansionwhich saw two large new stores added in 2006. Management focus on improvingoperating efficiency, developing consumer awareness of the new stores, andincreasing sales has seen a broad-based improvement in the business, although itis expected to take some time to reach satisfactory profitability. EAST ASIAMalaysiaGiant hypermarkets and supermarkets, as well as Cold Storage supermarkets, againrecorded very pleasing growth, with expansion in both peninsular Malaysia andEast Malaysia. At the year end, we operated 101 stores across the country,having opened 13 hypermarkets and four supermarkets during the year. Guardian pharmacies also had an excellent year, opening 61 stores and furtherestablishing itself as the leading pharmacy chain in Malaysia. We will continueto expand this successful business in 2008. IndonesiaGiant hypermarkets' results improved slightly, but store expansion was not rapidenough and we plan to accelerate this in the coming years. Profits for the yearwere lower than anticipated, but improved results were achieved towards the yearend and we plan to build on these in 2008 and beyond. Hero supermarketsconverted 16 stores to the new format of Giant supermarkets, with a view toaligning the offers of both these businesses to serve their target customersbetter. Guardian pharmacies added 21 stores and Starmart added 28 convenience storesduring the year. Both businesses continued to trade profitably, but offer thepotential for improved returns. Vietnam Wellcome supermarkets is still a small business, but it consolidated itsposition in the local market during 2007 and gained valuable operatingexperience. We are evaluating expansion options to take advantage of theexpected opening of Vietnam 's retail sector to wider foreign participation inthe next few years. SOUTH ASIASingaporeCold Storage and Shop N Save supermarkets achieved excellent results in 2007,with strong growth in sales and profit. The store refurbishment and upgradingprogramme continued to receive very positive customer response. Five stores wereadded during the year, to reach 85 stores at the year end. Giant hypermarkets improved its performance after a poor year in 2006, althoughresults are still not up to required levels. One new store was added in March atTampines, and is trading well. 7-Eleven benefited from the addition of the former Shell stores to increase bothsales and profits for the year. Guardian faced a more challenging market, butstill achieved a high level of profitability. IndiaFoodworld supermarkets were adversely affected by regulatory changes and thevery rapid expansion of local retailer chains in India, which is placing upwardpressure on all operating costs. Despite this, the market is maintaining itsgrowth and we plan to continue our measured expansion. Health and Glow has beenrelatively less affected by competitive pressures in the health and beautysector, and has continued to show good growth in same-store sales. THE YEAR AHEADOur strategy of operating multi-format, Asian-focused retail businesses hasdelivered steady profit growth over the last seven years. We are fortunate tohave established leading positions in some of the fastest-developing markets inthe world, and will continue to base our expansion plans around this. In theyear ahead we will allocate increased capital expenditure to development of theGiant hypermarket business in Indonesia, continue our expansion in Malaysia, anddirect greater efforts toward the growth of our current formats in mainlandChina. We are confident that the strength of our businesses will allow us to continueto perform well in the coming year and beyond. Our achievements in 2007 are theresult of the abilities and commitment of our work force. I thank themsincerely for their efforts in achieving another rewarding year for the Groupand its shareholders. Michael KokGroup Chief Executive6th March 2008 Dairy Farm International Holdings LimitedConsolidated Profit and Loss Accountfor the year ended 31st December 2007---------------------------------------------------------------------------------- 2007 2006 US$m US$m---------------------------------------------------------------------------------- Sales (note 2) 5,887.2 5,175.0Cost of sales (4,095.7) (3,604.0) -------- -------- Gross margin 1,791.5 1,571.0Other operating income (note 4) 13.5 13.7Selling and distribution costs (1,315.7) (1,155.2)Administration and other operating expenses (213.2) (195.7) -------- -------- Operating profit (note 3) 276.1 233.8 -------- -------- Financing charges (25.6) (23.0)Financing income 22.8 17.0 -------- -------- Net financing charges (2.8) (6.0)Share of results of associates and joint ventures (note 5) 29.4 27.7 -------- --------Profit before tax 302.7 255.5Tax (note 6) (45.6) (44.5) -------- -------- Profit for the year 257.1 211.0 -------- -------- Attributable to:Shareholders of the Company 258.2 210.8Minority interests (1.1) 0.2 -------- -------- 257.1 211.0 -------- -------- ----------------------------------------------------------------------------------- USc USc-----------------------------------------------------------------------------------Earnings per share (note 7) - basic 19.19 15.70- diluted 19.17 15.66----------------------------------------------------------------------------------- Dairy Farm International Holdings LimitedConsolidated Balance Sheetat 31st December 2007-------------------------------------------------------------------------------------- 2007 2006 US$m US$m--------------------------------------------------------------------------------------Net operating assetsIntangible assets 292.5 266.1Tangible assets 603.8 540.0Associates and joint ventures 120.3 113.9Other investments 0.4 0.4Non-current debtors 101.3 90.0Deferred tax assets 14.4 9.4Pension assets 72.5 61.6 ------- -------Non-current assets 1,205.2 1,081.4 ------- ------- Stocks 545.6 472.1Current debtors 106.2 111.1Current tax assets 10.0 5.0Bank balances 395.9 456.5 ------- ------- 1,057.7 1,044.7Non-current assets classified as held for sale (note 8) 39.8 0.5 ------- -------Current assets 1,097.5 1,045.2 ------- -------Current creditors (1,445.8) (1,204.1)Current borrowings (40.0) (47.0)Current tax liabilities (48.7) (33.7)Current provisions (3.0) (5.8) -------- -------- (1,537.5) (1,290.6) Liabilities directly associated with non-current assets classified as held for sale (note 8) - (0.1) -------- -------- Current liabilities (1,537.5) (1,290.7) -------- -------- -------- --------Net current liabilities (440.0) (245.5) -------- --------Long-term borrowings (439.1) (389.5)Deferred tax liabilities (43.7) (41.3)Pension liabilities (24.1) (20.3)Non-current creditors (1.1) (46.8)Non-current provisions (16.1) (9.7) -------- --------Non-current liabilities (524.1) (507.6) -------- -------- 241.1 328.3 -------- --------Total equityShare capital 74.8 74.7Share premium and capital reserves 30.3 27.8Revenue and other reserves 133.0 221.5 -------- --------Shareholders' funds (note 9) 238.1 324.0Minority interests 3.0 4.3 -------- -------- 241.1 328.3 -------- -------- Dairy Farm International Holdings LimitedConsolidated Statement of Recognized Income and Expensefor the year ended 31st December 2007-------------------------------------------------------------------------------- 2007 2006 US$m US$m-------------------------------------------------------------------------------- Net deficit on revaluation of properties - (2.6)Net actuarial gains on defined benefit pension plans 12.1 11.7Net exchange translation differences (11.4) 2.8Gains/(losses) on cash flow hedges 0.3 (2.8)Tax on items taken directly to equity (0.8) (1.9) -------- -------- Net income recognized directly in equity 0.2 7.2Profit after tax 257.1 211.0 -------- --------Total recognized income and expense for the year 257.3 218.2 -------- --------Attributable to:Shareholders of the Company 258.6 216.1Minority interests (1.3) 2.1 -------- -------- 257.3 218.2 -------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------Dairy Farm International Holdings LimitedConsolidated Cash Flow Statementfor the year ended 31st December 2007--------------------------------------------------------------------------------------- 2007 2006 US$m US$m--------------------------------------------------------------------------------------- Operating activities -------- --------Operating profit (note 3) 276.1 233.8Depreciation and amortization 123.3 110.3Other non-cash items 10.2 10.3Decrease/(increase) in working capital 84.0 (11.4)Interest received 20.5 15.7Interest and other financing charges paid (25.4) (21.9)Tax paid (40.8) (45.8) -------- -------- 447.9 291.0Dividends from associates and joint ventures 25.6 21.2 -------- -------- Cash flows from operating activities 473.5 312.2 Investing activities -------- --------Purchase of tangible assets (186.0) (156.6)Purchase of subsidiaries (note 12(a)) (3.6) (0.3)Store acquisitions (note 12(b)) (0.9) (17.3)Purchase of associates and joint ventures (9.2) (0.5)Purchase of other intangible assets (23.1) (2.6)Sale of subsidiaries - 0.6Sale of properties (note 12(c)) 4.4 8.0Sale of other tangible assets 1.1 0.9 -------- -------- Cash flows from investing activities (217.3) (167.8) Financing activities -------- --------Issue of shares 1.0 1.1Capital contribution from minority shareholders - 1.1Drawdown of borrowings 934.6 682.8Repayment of borrowings (903.1) (651.4)Dividends paid by the Company (note 11) (347.1) (118.1) -------- -------- Cash flows from financing activities (314.6) (84.5)Effect of exchange rate changes 1.2 3.8 -------- --------Net (decrease)/increase in cash and cash equivalents (57.2) 63.7Cash and cash equivalents at 1st January 442.0 378.3 -------- --------Cash and cash equivalents at 31st December 384.8 442.0 -------- -------- ----------------------------------------------------------------------------------------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 2007 which have been preparedin conformity with International Financial Reporting Standards, includingInternational Accounting Standards and Interpretations adopted by theInternational Accounting Standards Board. In 2007, the Group adopted the following standards and interpretations toexisting standards which are relevant to its operations: -------------------------------------------------------------------------------- IFRS 7 Financial Instruments: DisclosuresAmendment to IAS 1 Capital DisclosuresIFRIC 8 Scope of IFRS 2IFRIC 9 Reassessment of Embedded DerivativesIFRIC 10 Interim Financial Reporting and Impairment-------------------------------------------------------------------------------- There have been no changes to the accounting policies as a result of adoption ofthe above standards and interpretations. Certain comparative figures have been reclassified to conform with the current year presentation. The Group's reportable segments are set out in notes 2, 3 and 5. 2. SALES Including associates and joint ventures Subsidiaries only -------------------- -------------------- 2007 2006 2007 2006 US$m US$m US$m US$m -------------------- -------------------- Analysis by geographical area of operation: North Asia 3,940.2 3,605.2 3,081.9 2,822.2East Asia 1,684.9 1,397.2 1,684.9 1,397.2South Asia 1,184.7 1,007.9 1,120.4 955.6 --------- ------- -------- -------- 6,809.8 6,010.3 5,887.2 5,175.0 --------- ------- -------- -------- Analysis by business:Supermarkets/hypermarkets 3,696.3 3,264.4 3,651.1 3,226.3Health and beauty stores 965.0 845.2 891.0 792.3Convenience stores 1,111.1 966.6 1,111.1 966.6Home furnishings stores 234.0 189.8 234.0 189.8Restaurants 803.4 744.3 - - ---------- ------- -------- -------- 6,809.8 6,010.3 5,887.2 5,175.0 ---------- ------- -------- -------- Dairy Farm operates in three regions: North Asia, East Asia and South Asia, andaccordingly, its primary segment reporting is by geographical areas withsecondary segment information reported by business. North Asia comprises HongKong, Mainland China, Macau, Taiwan and South Korea. East Asia comprisesMalaysia, Indonesia, Vietnam and Brunei. South Asia comprises Singapore, Indiaand Thailand. 3. OPERATING PROFIT 2007 2006 US$m US$m -------------------------- Analysis by geographical area of operation:North Asia 162.4 140.4East Asia 81.8 66.8South Asia 56.6 44.9 -------- -------- 300.8 252.1Support office (24.7) (18.3) -------- -------- 276.1 233.8 -------- -------- Analysis by business:Supermarkets/hypermarkets 155.7 132.8Health and beauty stores 73.5 65.1Convenience stores 59.5 52.2Home furnishings stores/property 12.1 2.0 -------- -------- 300.8 252.1 -------- -------- 4. OTHER OPERATING INCOME 2007 2006 US$m US$m ---------------------------- Rental income 8.7 8.1Compensation from landlord - 1.8Exchange gain and others 4.8 3.8 -------- -------- 13.5 13.7 -------- -------- 5. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES 2007 2006 US$m US$m ---------------------------- Analysis by geographical area of operation:North Asia 33.4 29.0South Asia (4.0) (1.3) -------- -------- 29.4 27.7 -------- -------- Analysis by business:Restaurants 34.4 30.8Supermarkets (3.5) (0.9)Health and beauty stores (1.5) (2.2) -------- -------- 29.4 27.7 -------- -------- Results are shown after tax and minority interests in the associates and joint ventures. 6. TAX 2007 2006 US$m US$m --------------------Current 49.6 43.6Deferred (4.0) 0.9 ------- ------- 45.6 44.5 ------- ------- Tax on profits has been calculated at rates of taxation prevailing in theterritories in which the Group operates. Share of tax of associates and jointventures of US$8.2 million (2006: US$7.2 million) are included in share ofresults of associates and joint ventures. The Group has no tax payable in theUnited Kingdom (2006:nil). 7. EARNINGS PER SHARE Basic earnings per share are calculated on profit attributable to shareholders of US$258.2 million (2006: US$210.8 million), and on the weighted average numberof 1,345.3 million (2006: 1,342.9 million) shares in issue during the year. The weighted average number excludes the shares held by the Trustee under the SeniorExecutive Share Incentive Schemes. Diluted earnings per share are calculated on profit attributable to shareholders of US$258.2 million (2006: US$210.8 million), and on the weighted average number of 1,347.0 million (2006: 1,346.3 million) shares in issue after adjusting for 1.7 million (2006: 3.4 million) shares which are deemed to be issued for no consideration under the Senior Executive Share Incentive Schemes based on the average share price during the year. 8. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE The major classes of assets and liabilities classified asheld for sale are set out below: 2007 2006 US$m US$m ---------------------Intangible assets - 0.4Tangible assets 32.5 0.1Associates and joint ventures 7.3 - ------- -------Total assets 39.8 0.5 ------- ------- Total liabilities - deferred tax liabilities - (0.1) ------- ------- In 2007, three properties in Indonesia and one property in Malaysia wereclassified as non-current assets held for sale. The Indonesia properties,together with the property held at the end of 2006, were sold during the yearand generated a net profit to the Group of US$0.4 million. The balance at 31stDecember 2007 represented one retail property in Malaysia. In February 2008, the Group has completed the sale of its 50% interest in CJ Olive Young to its partner, CJ Corp. The carrying value of US$7.3 million was classified as held for sale. The Group will realize a profit before tax of approximately US$14 million. The balance at 31st December 2006 represented a retail property in Indonesia. 9. SHAREHOLDERS' FUNDS 2007 2006 US$m US$m ---------------------------- At 1st January 324.0 224.1 Recognized income and expense attributable to shareholders 258.6 216.1Dividends (note 11) (347.1) (118.1)Employee share option schemes- value of employee services 1.6 0.8- exercise of share options 1.0 1.1 -------- --------At 31st December 238.1 324.0 -------- -------- 10. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES 2007 2006 US$m US$m ---------------------------- Capital commitments 134.5 91.7 -------- -------- Various Group companies are involved in litigation arising in the ordinarycourse of their respective businesses. Having reviewed outstanding claims andtaking into account legal advice received, the Directors are of the opinionthat adequate provisions have been made in the financial statements. 11. DIVIDENDS 2007 2006 US$m US$m ---------------------------- Final dividend in respect of 2006 of USc6.80 (2005: USc6.20) per share 91.4 83.2Interim dividend in respect of 2007 of USc3.00(2006: USc2.60) per share 40.4 34.9 -------- -------- 131.8 118.1Special dividend of USc16.00 per share (2006: nil) 215.3 - -------- -------- 347.1 118.1 -------- -------- A final dividend in respect of 2007 of USc8.50 (2006: USc6.80) per shareamounting to a total of US$114.4 million (2006: US$91.4 million) is proposed bythe Board. The dividend proposed will not be accounted for until it has beenapproved at the Annual General Meeting. This amount will be accounted for as anappropriation of revenue reserves in the year ending 31st December 2008. 12. NOTES TO CONSOLIDATED CASH FLOW STATEMENT 2007 ----------------------------------- Book Fair value Fair Value Adjustments Value US$m US$m US$m ----------------------------------- (a) Purchase of subsidiariesTangible assets 1.3 (0.4) 0.9Current assets 1.7 - 1.7Current liabilities (3.1) - (3.1) -------- -------- -------- Net assets acquired (0.1) (0.4) (0.5) -------- --------Goodwill 4.2 --------Total consideration 3.7Cash and cash equivalents acquired (0.1) -------- 3.6 -------- In March 2007, the Group's subsidiary, Guangdong Sai Yi Convenience Stores, acquired a 100% interest in Guangzhou Lianhua Quik Convenience Co from a third party for a total cash consideration of US$3.6 million. Sales and operating loss since acquisition in respect of subsidiary acquired during the year amounted to US$11.8 million and US$1.0 million respectively. If the acquisition had occurred on 1st January 2007, Group sales and operatingprofit would have been US$5,889.3 million and US$275.9 million respectively. 2007 2006 --------------------------- Book and Fair fair value Value US$m US$m --------------------------- (b) Store acquisitionsTangible assets (0.9) 6.3Current assets 1.4 2.7 ---------- --------Fair value of operating assets acquired 0.5 9.0Goodwill 0.4 8.3 ---------- --------Total consideration 0.9 17.3 ---------- -------- During the year, Giant South Asia (Vietnam), a wholly-owned subsidiary, acquired the store operating assets of two supermarkets in Vietnam at fair valuefrom a third party for a cash consideration of US$0.9 million. Areclassification between tangible assets and current assets of US$2.7 millionhas been taken into account in 2007. In 2006, GCH Retail (Malaysia), a wholly-owned subsidiary, acquired the store operating assets of three hypermarkets and seven supermarkets in Malaysia atfair value from third parties for atotal cash consideration of US$14.0 million.Also in 2006, Giant South Asia (Vietnam), a wholly-owned subsidiary, acquiredthe store operating assets of two supermarkets in Vietnam at fair value from athird party for a cash consideration of US$3.0 million. Sales and operating loss since acquisition in respect of stores acquired during the year amounted to US$5.7 million and US$0.3 million respectively.If the acquisition had occurred on 1st January 2007, Group sales and operating profit would have been US$5,888.3 million and US$276.1 million respectively. 2007 2006 US$m US$m -------------------- (c) Sale of propertiesIntangible assets - 1.4Tangible assets - 0.4Non-current assets classified as held for sale 4.1 7.8 -------- --------Net book value of assets disposed of 4.1 9.6Profit/(loss) on disposal 0.3 (1.6) -------- --------Sale proceeds (net of expenses) 4.4 8.0 -------- -------- During the year, the Group disposed of four properties in Indonesia for US$4.4million. The profit attributable to the Group, after tax and minorityinterests, is US$0.4 million. In 2006, the Group disposed of eight properties in Indonesia for US$7.8 million, and a property in Taiwan for US$0.2 million. The loss attributable to the Group, after tax and minority interests, was US$0.4 million. 13. POST-BALANCE SHEET EVENT In February 2008, the Group has completed the sale of its 50% interest in CJOlive Young to its partner, CJ Corp. The Group will realize a profit before taxof approximately US$14 million in 2008. --------------------------------------------------------------------------------The final dividend of USc8.50 per share will be payable on 14th May 2008,subject to approval at the Annual General Meeting to be held on 7th May 2008,to shareholders on the register of members at the close of business on 20thMarch 2008. The ex-dividend date will be on 18th March 2008, and the shareregisters will be closed from 24th to 28th March 2008, 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 for the2007 final dividend by notifying the United Kingdom transfer agent in writingby 25th April 2008. The Sterling equivalent of dividends declared in UnitedStates Dollars will be calculated by reference to a rate prevailing on 30thApril 2008. Shareholders holding their shares through The Central Depository(Pte) Limited ('CDP') in Singapore will receive United States Dollars unlessthey elect, through CDP, to receive Singapore Dollars.-------------------------------------------------------------------------------- - end - For further information, pleasecontact: Dairy Farm Management Services LimitedMichael Kok (852) 2299 1881Howard Mowlem (852) 2299 1896 email:[email protected] Matheson & Co., LimitedPhilip Hawkins (020) 7816 8136 Email:[email protected] Morgan (852) 2501 7939 email:[email protected] Weber Shandwick FinancialRichard Hews/Hannah Marwood (020) 7067 0700 email: [email protected] Full text of the Preliminary Announcement of Results and the PreliminaryFinancial Statements for the year ended 31st December 2007 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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