Final Results

The following announcement was issued today to a Regulatory Information Service approved by the Financial Services Authority in the United Kingdom.

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED

2011 PRELIMINARY ANNOUNCEMENT OF RESULTS

Highlights

·; Underlying earnings up 16%

·; Profit growth in all regions

·; Maxim's performing well

·; Continued investment in business expansion

"While the global economic outlook remains uncertain, Dairy Farm's market leading businesses are generally trading well. With its strong financial position, the Group is well placed to secure further development opportunities."

Simon Keswick, Chairman

1st March 2012

Results

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 31ST DECEMBER 2011

OVERVIEW

Stable trading environments in Dairy Farm's major markets across Asia led to strong sales and profits growth in 2011.

PERFORMANCE

Sales, including 100% of associates, increased by 15% to US$10.4 billion in 2011, while underlying profit at US$474 million was up 16%. Foreign currency movements enhanced both sales and profit by 4% during the year. Underlying earnings per share were US¢35.09, an increase of 16%. The profit attributable to shareholders of US$484 million included a non-trading gain of US$10 million, being the Group's share of profit arising from the disposal by Maxim's of its remaining interest in Starbucks in mainland China.

There was an excellent performance from the Group's operations in North Asia with profit growth exceeding that of sales. Mannings health and beauty stores produced another strong result in Hong Kong, while IKEA traded well in both Hong Kong and Taiwan. In East Asia, most businesses performed well with fine results from the Guardian health and beauty chain in Malaysia and from hypermarkets and supermarkets in Indonesia. A steady trading performance was seen in South Asia. Our restaurant associate, Maxim's, also made an increased contribution despite facing higher food and wage costs.

The Group's financial position remains healthy with good cash generation. Net cash at the end of 2011 was US$466 million, representing an increase of US$243 million during the year. Capital expenditure incurred in growing the store network and in refurbishing existing outlets amounted to US$232 million.

The Board is recommending a final dividend of US¢15.00 per share, bringing the total ordinary dividend for 2011 to US¢21.00 per share, up 17%.

BUSINESS DEVELOPMENTS

Dairy Farm continued to generate profitable growth during 2011 as good increases in comparable store sales were complemented by further organic expansion from new store openings. There was some impact from food inflation and higher staff costs, particularly in Hong Kong following the introduction of a minimum wage.

In the more mature markets of Hong Kong, Singapore and Taiwan, the Group is concentrating on improving operational efficiencies and enhancing store attractiveness, while in Indonesia and Malaysia significant funds are being invested in enlarging the store network of existing formats.

New areas of activity include the first Giant hypermarket and the first five Guardian health and beauty stores in Vietnam, which were opened towards the end of the year. Expansion of the Mannings health and beauty store network in mainland China also continues. In February 2012, the Group agreed to acquire a 70% equity interest in a supermarket chain in Cambodia, with the local joint venture partner retaining 30%. This venture creates a good platform for growth in this developing economy, and increases to 11 the number of territories in Asia in which the Group is active.

Maxim's introduced further new restaurant concepts in Hong Kong in 2011, while maintaining the growth of its Starbucks and Japanese restaurant chains. It has also increased its activities in mainland China. In May, Maxim's restructured its Starbucks business interests in conjunction with the franchisor, selling its 30% interest in the Starbucks operations in mainland China and acquiring full ownership of the Hong Kong and Macau operations.

Dairy Farm is continuing to invest in the modernization and standardization of its retail business processes and systems across its operations. During the year the Group successfully implemented SAP merchandising systems in Indonesia, following a similar introduction in Malaysia in 2010. Improvements are also being made in supply chain management, while the expansion is ongoing of its private label products offering value-for-money alternatives to customers.

PEOPLE

The achievement of another year of good results is a reflection of the hard work and dedication of all our employees. On behalf of the Board, I would like to thank them for their efforts and wish them well in the year ahead.

R.C. Kwok retired from the Board on 12th May 2011. Anthony Nightingale will step down as Managing Director at the end of March 2012, and will remain as a non-executive Director. On behalf of the Board, I would like to thank them for their significant contributions to the Group. Joining the Board on 1st April 2012 will be Ben Keswick as Managing Director and Adam Keswick as a Director. 

PROSPECTS

While the global economic outlook remains uncertain, Dairy Farm's market leading businesses are generally trading well. With its strong financial position, the Group is well placed to secure further development opportunities.

Simon Keswick

Chairman

1st March 2012

GROUP CHIEF EXECUTIVE'S REVIEW

BUSINESS MODEL

Dairy Farm is a leading retailer in Asia operating supermarkets, hypermarkets, health and beauty stores, convenience stores and home furnishings stores under well-known local brands. We operate multi-formats in most markets to cater for different market segments and customer needs. The Group also has a 50% interest in Maxim's, a leading restaurant group in Hong Kong.

In addition to developing our existing operations, the Group's strategy is to expand by seeking investment opportunities in current and new markets in Asia. The Group has holdings in mature cash generating operations in developed markets which it complements with investments in new ventures and markets, thereby spreading the risk that might otherwise be associated with its geographical concentration. This strategy combined with a strong balance sheet is designed to achieve long-term earnings growth.

2011 PERFORMANCE

Dairy Farm delivered another year of strong results in 2011 with increased sales and earnings in each of our operating regions. We continue to introduce new concepts and implement initiatives to enhance our operating efficiencies and make our stores more attractive.

A number of important developments occurred during the year:

·; In continuing operations, we added a net 141 stores to reach a total of 5,406.

·; In Taiwan, we secured a site in Tai Chung for a fifth IKEA store, and the project is progressing well for completion in 2013.

·; In mainland China, we continued to expand our Mannings health and beauty business, which now has 195 outlets.

·; In Malaysia, we opened seven new Giant hypermarkets, bringing the total to 71 stores.

·; In Indonesia, we have passed the 500-store milestone in the country.

·; In Vietnam, our first hypermarket and the first five Guardian health and beauty stores were opened.

·; Our restaurant associate, Maxim's, restructured its Starbucks business in conjunction with the franchisor by selling its 30% interests in mainland China and acquiring the outstanding interests in the Hong Kong and Macau franchise.

·; SAP merchandising systems have been successfully implemented in Indonesia, following their implementation in Malaysia in 2010.

·; We increased further the investment in private label development and supply chain management and are delivering additional value from these important areas.

REGIONAL REVIEW

NORTH ASIA

Hong Kong

The businesses in Hong Kong performed well with profit growth in all banners. Wellcome supermarkets achieved a good result, especially in the second half of the year, and the 7-Eleven convenience stores recorded higher sales and profit in a challenging market segment.

Mannings health and beauty stores had another excellent year. The first pharmacist App available on the iPhone was launched, providing video calling real-time professional advice to customers. We now have six 'Mannings Plus' stores offering free health consultation services.

IKEA had another fine year as the MegaBox store at Kowloon Bay continued the good trading results achieved since its opening in June 2010.

Maxim's performed well in 2011 as the negative effects of increases in food costs and the introduction of a statutory minimum wage in Hong Kong were mitigated by strong sales growth. Its Chinese restaurants delivered a good performance, while Starbucks and the Japanese restaurant chains produced excellent results. Maxim's also achieved another year of record sales of Mooncakes, assisted by increased demand in the Mainland market.

Macau

Despite their relatively small size, both 7-Eleven and Mannings in Macau achieved good improvements in sales and earnings.

Mainland China

7-Eleven Southern China's focus on growing its ready-to-eat food business has led to improved sales and margins. Mannings achieved a further increase in sales as it continues to pursue its development plan.

Maxim's opened its first Chinese restaurants in Shanghai and Guangzhou, and added three Genki Sushi outlets in Shenzhen and Guangzhou. It increased its market penetration in Southern China with the number of its cake shops now standing at 100 stores.

Taiwan

Wellcome supermarkets made steady progress in a competitive market. It operated 280 outlets at the end of 2011, and further investment is being made in store refurbishment to enhance their attractiveness. IKEA achieved another year of good sales and profit growth, and secured a site in Tai Chung for a fifth store which is expected to open in late 2013.

SOUTH ASIA

Singapore

Cold Storage supermarkets performed well in 2011 and achieved higher sales and profit. Shop N Save faced challenges with keen competition, although sales improved in the latter part of the year following the remodelling of its stores. The Giant hypermarkets made further progress with increased sales and profit.

7-Eleven performed satisfactorily and ended the year with 561 stores, while Guardian achieved good growth in both sales and profit in a competitive segment.

India

Foodworld supermarkets continued to make progress as higher turnover and reduced operating costs led to lower losses. New stores were opened in 2011 with encouraging results.

Health and Glow achieved increases in both sales and profit from its health and beauty stores, and its growth momentum bodes well for the future.

EAST ASIA

Malaysia

In Malaysia, the Giant and Cold Storage hypermarket and supermarket operations produced satisfactory results despite increasing levels of competition and customers remaining cautious with their discretionary spending. Seven Giant hypermarkets were opened during the year with another six sites secured for 2012.

Guardian, the country's leading health and beauty chain, had another excellent year with new stores enhancing the good comparable store sales growth.

Brunei

Giant hypermarket and supermarket operations in Brunei suffered a decline in sales in a difficult market, while the Guardian chain performed satisfactorily.

Indonesia

The Giant and Hero hypermarket and supermarket operations in Indonesia showed further improvements in performance. Sales growth and tight cost controls at the store level led to good increases in earnings. Guardian and Starmart also recorded satisfactory sales and profit growth. The expansionprogramme will continue in 2012 with seven sites already secured for the opening of new hypermarkets.

Vietnam

The first hypermarket was opened in December 2011, and the first five Guardian health and beauty stores were opened during the year. We continue to pursue suitable sites for the expansion of our multi-format operations.

THE YEAR AHEAD

With the European debt issues and a sluggish US economy, the global economic environment remains uncertain. This will inevitably have some effect on the Asian region. We are also seeing food inflation as well as rising rental, wage and utilities costs in many countries in which we operate. Despite these increasingly challenging conditions, our established market leading positions should allow us to perform well in the year ahead.

In early 2012, we entered a new Asian market with the acquisition of a 70% interest in a supermarket chain in Cambodia. This joint venture with the local partner offers good opportunities for growth.

Dairy Farm will continue to grow its retailing formats in existing markets and seek acquisition opportunities. These developments will be supported by enhanced supply chain and IT systems that will deliver added value. Substantial capital has also been earmarked for the expansion of our hypermarkets and supermarkets in Indonesia and Malaysia, as well as for the refurbishment of existing stores. Overall, our net growth in the number of stores for this year is expected to be higher than in 2011.

Our achievements in 2011 were the result of the hard work and commitment of our people. I wish to thank them sincerely for their great efforts that are fundamental to the Group's success.

Michael Kok

Group Chief Executive

1st March 2012