TIDMDFI TIDMJAR
RNS Number : 8821G
Dairy Farm International Hldgs Ltd
29 July 2021
Announcement
29th July 2021
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 2021
Highlights
-- Total sales down 4% at US$14 billion
-- Subsidiaries' underlying profit reduced due to return to more
normal customer buying patterns
-- Contribution from Associates adversely impacted by Yonghui performance
-- Significant improvement in underlying operating cash flow
" Ongoing pandemic-related restrictions have significantly
affected trading in all markets, impacting the Group's overall
performance in the period. There remains significant uncertainty as
to the future impact of the pandemic on Dairy Farm's businesses and
trading conditions in the second half are likely to remain
challenging. The Group continued to make progress in the first half
in implementing its multi-year transformation programme."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended 30th
June
2021 2020 Change
US$m US$m %
Combined total sales including 100%
of associates and joint ventures 13,950 14,547 - 4
Sales 4,537 5,240 - 13
Underlying profit attributable to
shareholders* 32 105 - 69
Profit attributable to shareholders 17 115 - 85
USc USc %
Underlying earnings per share* 2.38 7.77 - 69
Earnings per share 1.24 8.53 - 85
Interim dividend per share 3.00 5.00 - 40
* 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 8 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 USc3.00 per share will be payable on
13th October 2021 to shareholders on the register of members at the
close of business on 20th August 2021.
DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
HALF-YEARLY RESULTS FOR THE SIX MONTHSED 30TH JUNE 2021
OVERVIEW
Ongoing restrictions related to the COVID-19 pandemic imposed by
Governments across our markets have significantly affected trading
in all markets, impacting the Group's overall performance in the
period. The Group continued to implement its multi-year
transformation programme in the first half, however, with a number
of key initiatives demonstrating further progress. The sales surges
experienced by key businesses in the first half of last year,
caused by the panic buying behaviour at the start of the pandemic,
have ceased as consumers have adjusted to a different way of life.
This return to more normal buying patterns as well as the
annualisation of Government support from the prior year have been
key drivers of the change in underlying profitability for the
Group's subsidiaries. Similar behavioural volatility on the Chinese
mainland was also responsible in part for Yonghui's weaker
performance in the first quarter of this year than the same period
last year, when there were very high sales, and this, together with
reduced margins due to increasing online competition, significantly
impacted the Group's share of profits from this key associate in
the first half of 2021.
RESULTS
Combined sales for the Group, including 100% of associates and
joint ventures, reduced by 4% to US$14 billion.
Last year's overall sales benefitted from the Group's ownership
of Wellcome Taiwan and Rose Pharmacy in the Philippines, both of
which have now been divested. The loss of the contributions from
these businesses, combined with reduced Grocery Retail sales
compared with the prior year, have been the primary contributors to
the 13% reduction in sales in the first half from the Group's
subsidiaries. Underlying profit for the Group's subsidiaries in the
period was US$76 million, a reduction of US$25 million on the same
period last year, primarily due to more normal levels of customer
shopping behaviour, the absence of panic buying compared to the
prior year as well as the annualisation of Government support
received in the prior year. Convenience Stores, which experienced
adverse trading conditions in 2020, saw a significant improvement
in profitability in the first half of 2021. This was not, however,
sufficient to offset lower profitability reported by the Group's
other subsidiaries.
There was an improvement in performance from Maxim's, which
recorded a lower loss than the same period last year despite
reduced level of Government support compared to the prior year. The
Group's associates and joint ventures made a loss overall, due to
the Group's share of losses from Yonghui. Consequently, the total
underlying profit for the Group was US$32 million, a 69% reduction
from the US$105 million recorded in the same period last year.
Operating cash flow, after lease payments, for the period was a
net inflow of US$97 million, compared with US$76 million in the
first half of 2020. As at 30th June 2021, the Group's net debt was
US$935 million, compared with US$817 million at 31st December 2020.
An interim dividend of USc3.00 per share has been declared, 40%
lower than the 2020 interim dividend.
OPERATING PERFORMANCE
Grocery Retail profitability in the first half was primarily
impacted by lower sales driven by the normalisation of customer
buying behaviours. There were, however, significant underlying
improvements to business fundamentals as a result of the
implementation of the Group's multi-year transformation plan. The
introduction of cost improvement programmes, stronger retail
execution, enhanced Own Brand penetration, and a groupwide approach
to customer loyalty in Hong Kong have led to significant
improvements in profits for the Grocery Retail business compared to
2019 levels.
The Group's Convenience Stores business reported strong growth
in profitability compared with the same period last year, when
movement restrictions and physical distancing requirements,
together with temporary store closures on the Chinese mainland,
impacted performance. Like-for-like sales growth was encouraging,
particularly on the Chinese mainland despite new COVID-19 cases
arising in Guangdong province in May.
The Health and Beauty Division continued to be significantly
impacted by the ongoing pandemic and the prolonged closure of the
border between Hong Kong and the Chinese mainland. The performance
of Mannings in North Asia continued to be significantly affected by
the lack of custom from tourists in Hong Kong. In Southeast Asia,
heavy restrictions on movement resulted in a significant reduction
in footfall in malls, which continued to materially impact sales
and profitability. Nevertheless, like-for-like sales performance
improved in the second quarter relative to the first quarter. Faced
with such challenging external conditions and the desire by
consumers to reduce spending, the Group continued to reinvest in
prices to enhance the customer value proposition. The short-term
impact on profit margins as a result of these price investments has
been largely offset by volume growth, and operating cash flow has
improved significantly. The Group firmly believes this will enhance
brand value and scale over the medium term.
The pandemic also negatively impacted customer traffic for IKEA
due to the requirement to close stores periodically or restrict
customer numbers to comply with Government policy, particularly in
both Indonesia and Taiwan. However, the strong performance of
e-commerce, combined with a stronger store opening programme,
supported revenue to be broadly in line with the equivalent period
last year. During the first six months of 2021, a third IKEA store
was opened in Bandung Indonesia, marking another milestone for the
growth of IKEA in the country. IKEA remains on track to open its
fourth Indonesian store in the second half of the year. In May,
IKEA opened a larger replacement store in Neihu, Taipei City, which
is almost double the size of the store that it replaced.
Higher pre-opening expenses from strong investment in new
spaces, together with the disruptions caused by COVID-19 as well as
supply chain constraints which impacted availability, were the
primary drivers of the reduction in IKEA profitability compared to
the same period last year.
The performance of Maxim's, the Group's 50%-owned associate,
improved in the first half relative to the same period last year.
Maxim's reported a smaller loss for the period, with encouraging
Hong Kong and Chinese mainland like-for-like sales performance,
partially offset by challenging trading conditions in Thailand and
Singapore resulting from the surge of
COVID-19 cases there in the second quarter.
Dairy Farm's share of Yonghui's underlying losses for the six
months ended 31st March 2021 was US$31 million. Yonghui's operating
performance over the period was impacted by normalisation of sales
performance in the first quarter compared with a high base from the
prior year, as well as reduced gross margins resulting from rising
online competition. Robinsons Retail's performance over the same
period was affected by ongoing Government-imposed restrictions on
movement, which particularly impacted discretionary retail banners.
Revenue growth for Robinsons Retail's supermarket business in the
first quarter was also impacted by a high base in 2020.
BUSINESS DEVELOPMENTS
Despite the challenges posed by COVID-19, the Group made good
progress in executing its key transformation initiatives. The Group
continues to effectively execute its four key improvement
programmes. These programmes have generated significant cost
savings for the Group, which have supported the Group's ability to
reinvest into its key businesses. The Group's Own Brand initiatives
continue to gather momentum, with over 1,200 SKUs now launched.
Following the successful launch of the Meadows Own Brand range, our
Chinese Own Brand range Yu Pin King was also successfully
relaunched in the first half. Own Brand penetration has grown
approximately 40% since launch. In addition, yuu Rewards in Hong
Kong continues to grow and has now attracted over 3.5 million
members, with approximately 80 billion points issued.
The Group continues to innovate and upgrade its store formats,
taking advantage of changes in supply and demand dynamics for real
estate. With the relaunch of the Giant brand in Malaysia, over 100
Giant stores have now been recalibrated across Southeast Asia, with
encouraging performance so far. Upscale supermarket refreshes have
been piloted and are now being rolled out across a number of key
markets, with approximately 40 stores expected to be refreshed in
2021. 7-Eleven reached its 1,000th store milestone in Hong Kong and
opened over 90 stores in Guangdong in the first half, bringing
total number of 7-Eleven stores in Guangdong to over 1,450.
In May, the Group's 89.3%-owned subsidiary in Indonesia, PT
Hero, announced that, following a strategic review, it will be
pivoting its trading operations by increasing investment in its
strong brands of IKEA, Guardian and Hero Supermarkets and away from
the Giant banner. This change in strategy is a decisive and
necessary response to changing market dynamics, particularly given
the Indonesian consumer's move away from the hypermarket format in
recent years, reflecting a similar trend evidenced in other
international markets. As part of this pivot, the company intends
to convert a number of stores into both the IKEA and Hero
supermarket brands. The company is also in active negotiations with
a number of third parties with respect to the divestment of some
existing Giant stores.
PEOPLE
Given the ongoing challenges associated with the pandemic across
the geographies where the Group operates, 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.
OUTLOOK
There remains significant uncertainty as to the future impact of
the COVID-19 pandemic on Dairy Farm's businesses and trading
conditions in the second half are likely to remain challenging.
Nevertheless, Dairy Farm remains committed to its multi-year
transformation and we are confident in the Group's ability to
continue to adapt and achieve long-term sustainable growth.
Ben Keswick
Chair m an
s
Dairy Farm International Holdings Limited
Consolidated Profit and Loss Account
(unaudited)
Six months ended 30th June Year ended 31st December
2021 2020 2020
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
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) 4,536.8 - 4,536.8 5,239.9 - 5,239.9 10,268.5 - 10,268.5
Cost of sales (3,123.9) - (3,123.9) (3,640.9) - (3,640.9) (7,077.7) - (7,077.7)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Gross margin 1,412.9 - 1,412.9 1,599.0 - 1,599.0 3,190.8 3 - 3,190.8
Other operating
income 105.2 1.3 106.5 136.6 - 136.6 355.4 75.2 430.6
Selling and
distribution
costs (1,114.8) - (1,114.8) (1,269.6) - (1,269.6) (2,575.8) - (2,575.8)
Administration and
other operating
expenses (248.7) (35.9) (284.6) (255.0) (1.2) (256.2) (558.8) (98.7) (657.5)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating profit
(note 3) 154.6 (34.6) 120.0 211.0 (1.2) 209.8 411.6 (23.5) 388.1
Financing charges (60.5) - (60.5) (76.2) - (76.2) (145.1) - (145.1)
Financing income 0.5 - 0.5 1.8 - 1.8 2.4 - 2.4
Net financing
charges
(note 4) (60.0) - (60.0) (74.4) - (74.4) (142.7) - (142.7)
Share of results
of associates and
joint ventures
(note
5) (43.6) 15.5 (28.1) 4.4 11.3 15.7 76.0 8.9 84.9
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit before tax 51.0 (19.1) 31.9 141.0 10.1 151.1 344.9 (14.6) 330.3
Tax (note 6) (19.0) 0.2 (18.8) (37.5) 0.1 (37.4) (74.2) 0.4 (73.8)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Profit after tax 32.0 (18.9) 13.1 103.5 10.2 113.7 270.7 (14.2) 256.5
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Attributable to:
Shareholders of the
Company 32.1 (15.4) 16.7 105.1 10.2 115.3 275.7 (4.7) 271.0
Non-controlling
interests (0.1) (3.5) (3.6) (1.6) - (1.6) (5.0) (9.5) (14.5)
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
32.0 (18.9) 13.1 103.5 10.2 113.7 270.7 (14.2) 256.5
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
US c US c US c US c US c US c
Earnings per share
(note 7)
- basic 2.38 1.24 7.77 8.53 20.38 20.03
- diluted 2.37 1.24 7.77 8.52 20.37 20.03
----------- --------- ----------- --------- ----------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Comprehensive Income
(unaudited)
Six months ended Year ended
30th June 31st December
2021 2020 2020
US$m US$m US$m
Profit for the period 13.1 113.7 256.5
Other comprehensive income/(expense)
-------- --------- --------------
Items that will not be reclassified
to profit or loss:
-------- --------- --------------
Remeasurements of defined benefit
plans - - 16.3
Tax relating to items that will
not be reclassified - (0.1) (2.7)
- (0.1) 13.6
Share of other comprehensive (expense)/
income of associates and joint
ventures (0.5) (1.0) 2.2
-------- --------- --------------
(0.5) (1.1) 15.8
-------- --------- --------------
Items that may be reclassified
subsequently to profit or loss:
Net exchange translation differences
-------- --------- --------------
* net (loss)/gain arising during the period (5.4) (8.4) 109.4
* transfer to profit and loss - - (16.9)
(5.4) (8.4) 92.5
Cash flow hedges
-------- --------- --------------
* net gain/(loss) arising during the period 7.2 (5.2) (11.6)
* transfer to profit and loss 5.5 1.5 2.8
12.7 (3.7) (8.8)
Tax relating to items that may
be reclassified (2.5) 0.7 1.8
Share of other comprehensive (expense)/
income of associates and joint
ventures (0.5) (0.9) 0.5
-------- --------- --------------
4.3 (12.3) 86.0
-------- --------- --------------
Other comprehensive income/(expense)
for the period, net of tax 3.8 (13.4) 101.8
-------- --------- --------------
Total comprehensive income for
the period 16.9 100.3 358.3
-------- --------- --------------
Attributable to:
Shareholders of the Company 20.6 102.4 373.9
Non-controlling interests (3.7) (2.1) (15.6)
-------- --------- --------------
-
16.9 100.3 358.3
-------- --------- --------------
Dairy Farm International Holdings Limited
Consolidated Balance Sheet
(unaudited) At 31st
At 30th June December
2021 US$m 2020 US$m 2020 US$m
Net operating assets
Intangible assets 406.6 579.9 420.6
Tangible assets 754.5 800.9 771.9
Right-of-use assets 2,795.6 3,140.1 2,872.1
Associates and joint ventures 2,134.5 2,080.3 2,256.5
Other investments 6.2 6.0 6.0
Non-current debtors 112.3 135.9 114.8
Deferred tax assets 13.6 18.0 15.5
Non-current assets 6,223.3 6,761.1 6,457.4
Stocks 745.8 841.8 778.7
Current debtors 219.5 294.1 303.6
Current tax assets 21.1 25.9 28.0
Cash and bank balances 262.7 274.9 277.6
--------- --------- ---------
1,249.1 1,436.7 1,387.9
Non-current assets held for sale
(note 9) 19.9 - 55.2
Current assets 1,269.0 1,436.7 1,443.1
--------- --------- ---------
Current creditors (1,892.4) (2,022.9) (2,060.5)
Current borrowings (692.5) (1,218.1) (852.0)
Current lease liabilities (633.0) (748.2) (684.1)
Current tax liabilities (52.6) (82.8) (84.7)
Current provisions (67.8) (57.6) (43.8)
--------- --------- ---------
Current liabilities (3,338.3) (4,129.6) (3,725.1)
--------- --------- ---------
Net current liabilities (2,069.3) (2,692.9) (2,282.0)
Long-term borrowings (505.5) (147.7) (242.3)
Non-current lease liabilities (2,324.7) (2,520.9) (2,386.3)
Deferred tax liabilities (37.5) (30.6) (44.3)
Pension liabilities (16.1) (33.9) (13.4)
Non-current creditors (32.6) (87.8) (43.2)
Non-current provisions (105.1) (114.6) (110.0)
Non-current liabilities (3,021.5) (2,935.5) (2,839.5)
---------
1,132.5 1,132.7 1,335.9
--------- --------- ---------
(unaudited) At 31st
At 30th June December
2021 US$m 2020 US$m 2020 US$m
Total equity
Share capital 75.2 75.1 75.1
Share premium and capital reserves 60.2 59.4 59.6
Revenue and other reserves 987.2 970.0 1,187.6
--------- --------- ---------
Shareholders' funds 1,122.6 1,104.5 1,322.3
Non-controlling interests 9.9 28.2 13.6
--------- ---------
1,132.5 1,132.7 1,335.9
--------- --------- ---------
Dairy Farm International Holdings Limited
Consolidated Statement of Changes in Equity
Attributable Attributable
Revenue to shareholders to
Share Share Capital and other of the non-controlling Total
capital premium reserves reserves Company interests equity
US$m US$m US$m US$m US$m US$m US$m
Six months ended
30th June 2021
(unaudited)
At 1st January
2021 75.1 34.1 25.5 1,187.6 1,322.3 13.6 1,335.9
Total
comprehensive
income - - - 20.6 20.6 (3.7) 16.9
Dividends paid by
the Company
(note 10) - - - (155.6) (155.6) - (155.6)
Exercise of
options 0.1 - - - 0.1 - 0.1
Share-based
long-term
incentive plans - - 0.6 - 0.6 - 0.6
Change in
interests in
associates and
joint ventures - - - (65.4) (65.4) - (65.4)
Transfer - 1.5 (1.5) - - - -
At 30th June 2021 75.2 35.6 24.6 987.2 1,122.6 9.9 1,132.5
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 10) - - - (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
-------- -------- --------- ---------- ---------------- ----------------- -------
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 2020
At 1st January
2020 75.1 34.1 25.1 1,074.9 1,209.2 30.3 1,239.5
Total
comprehensive
income - - - 373.9 373.9 (15.6) 358.3
Dividends paid by
the Company - - - (263.8) (263.8) - (263.8)
Unclaimed
dividends
forfeited - - - 0.5 0.5 - 0.5
Share-based
long-term
incentive plans - - 1.2 - 1.2 - 1.2
Change in
interest in a
subsidiary - - - (0.8) (0.8) (1.1) (1.9)
Change in
interests in
associates and
joint ventures - - - 2.1 2.1 - 2.1
Transfer - - (0.8) 0.8 - - -
At 31st December
2020 75.1 34.1 25.5 1,187.6 1,322.3 13.6 1,335.9
Revenue and other reserves at 30th June 2021 comprised revenue reserves of US$1,212.2 million (2020:
US$1,297.1
million), hedging reserves of US$0.8 million gain (2020: US$5.1 million loss) and exchange reserves of
US$225.8 million loss (2020: US$322.0 million loss).
Revenue and other reserves at 31st December 2020 comprised revenue reserves of US$1,417.5 million, hedging
reserves of US$9.4 million loss and exchange reserves of US$220.5 million loss.
Dairy Farm International Holdings Limited
Consolidated Cash Flow Statement
(unaudited)
Six months ended Year ended
30th June 31st December
2021 US$m 2020 US$m 2020 US$m
Operating activities
--------- --------- --------------
Operating profit (note 3) 120.0 209.8 388.1
Depreciation and amortisation 439.3 496.7 983.4
Other non-cash items (26.0) 15.1 (16.6)
Increase in working capital (18.5) (115.3) (102.1)
Interest received 0.5 2.8 3.5
Interest and other financing charges
paid (59.5) (76.7) (146.3)
Tax paid (51.3) (84.9) (110.4)
--------- --------- --------------
404.5 447.5 999.6
Dividends from associates and joint
ventures 23.7 15.4 67.6
Cash flows from operating activities 428.2 462.9 1,067.2
Investing activities
--------- --------- --------------
Purchase of a subsidiary (note
12(a)) - ( 21 .4) (21.4)
Purchase of associates and joint
ventures - - (18.3)
Purchase of intangible assets (4.7) (8.0) (20.7)
Purchase of tangible assets (100.1) (126.0) (227.2)
Sales of subsidiaries - - 193.1
Sale of properties (note 12(b)) 35.0 - 2.8
Sale of tangible assets 0.5 3.9 5.3
Cash flows from investing activities (69.3) (151.5) (86.4)
Financing activities
--------- --------- --------------
Change in interest in a subsidiary - (0.2) (1.9)
Drawdown of borrowings 759.3 728.6 1,115.9
Repayment of borrowings (760.6) (501.6) (918.5)
Net increase/(decrease) in other
short-term borrowings 100.8 5.1 (268.1)
Principal elements of lease payments (330.9) (386.9) (706.5)
Dividends paid by the Company (note
10) (155.6) (196.1) (263.8)
Cash flows from financing activities (387.0) (351.1) (1,042.9)
---------
Net decrease in cash and cash equivalents (28.1) (39.7) (62.1)
Cash and cash equivalents at beginning
of period 234.2 288.3 288.3
Effect of exchange rate changes (0.1) (2.1) 8.0
--------- --------- --------------
Cash and cash equivalents at end
of period (note 12(c)) 206.0 246.5 234.2
--------- --------- --------------
Dairy Farm International Holdings Limited
Notes to Condensed Financial Statements
1. Accounting Policies and Basis of Preparation
The condensed financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' and on a going
concern basis. The condensed financial statements have not been
audited or reviewed by the Group's auditors pursuant to the UK
Auditing Practices Board guidance on the review of interim
financial information.
There are no changes to the accounting policies as described in
the 2020 annual financial statements and the Group has not early
adopted any other standards or amendments that have been issued but
not yet effective, except as mentioned below:
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16 (effective 1st January 2021)
The amendments provide practical expedient from certain
requirements under the IFRSs as a result of the reform which affect
the measurement of financial assets, financial liabilities and
lease liabilities, and a number of reliefs for hedging
relationships. The Group applied the amendments from 1st January
2021 and there is no significant impact on the Group's consolidated
financial statements.
COVID-19 Related Rent Concessions beyond 30th June 2021:
Amendment to IFRS 16 Leases (effective 1st April 2021)
The Group adopted and applied the practical expedient of the
COVID-19 Related Rent Concessions: Amendment to IFRS 16 Leases,
published in June 2020 ('2020 amendment'), in the 2020 annual
financial statements. The 2021 amendment extends the practical
expedient in the 2020 amendment to eligible lease payments due on
or before 30th June 2022. By using the 2021 amendment, the Group
continues to apply the practical expedient consistently to all
lease contracts with similar characteristics and in similar
circumstances, and does not assess these concessions as lease
modifications.
2. Sales
Including associates
and joint ventures Subsidiaries
Six months ended 30th June
2021 US$m 2020 US$m 2021 US$m 2020 US$m
Analysis by operating
segment:
v Food 11,031.5 11,550.4 3,264.9 3,812.1
* Grocery retail 9,903.2 10,480.8 2,190.6 2,809.2
* Convenience stores 1,128.3 1,069.6 1,074.3 1,002.9
Health and Beauty 1,146.5 1,248.8 887.1 1,038.4
Home Furnishings 384.8 389.4 384.8 389.4
Restaurants 1,005.4 873.3 - -
Other Retailing 381.7 485.3 - -
---------- ---------- --------- ---------
13,949.9 14,547.2 4,536.8 5,239.9
---------- ---------- --------- ---------
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 the Chinese mainland). 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 and Robinsons Retail
represent six months from October 2020 to March 2021 (2020: October
2019 to March 2020), 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
2021 US$m 2020 US$m 2021 US$m 2020 US$m
Analysis by geographical
area:
North Asia 10,606.6 10,769.8 2,993.9 3,369.6
Southeast Asia 3,343.3 3,777.4 1,542.9 1,870.3
13,949.9 14,547.2 4,536.8 5,239.9
---------- ---------- --------- ---------
The geographical areas covering North Asia and Southeast Asia,
are determined by the geographical location of customers. North
Asia comprises Hong Kong, the Chinese mainland, Macau and Taiwan.
Southeast Asia comprises Singapore, Cambodia, the Philippines,
Thailand, Malaysia, Indonesia, Vietnam and Brunei.
3. Operating Profit
Six months ended 30th
June
2021 US$m 2020 US$m
Analysis by operating segment:
Food 101.3 148.6
- Grocery retail 82.7 147.9
- Convenience stores 18.6 0.7
1
----------- ----------
Health and Beauty 20.6 42.4
Home Furnishings 11.5 25.1
----------- ----------
133.4 216.1
Selling, general and administrative expenses (29.0) (47.4)
----------- ----------
Underlying operating profit before IFRS
16 (*) 104.4 168.7
IFRS 16 adjustment (^) 50.2 42.3
----------- ----------
Underlying operating profit 154.6 211.0
Non-trading items:
- business restructuring costs (35.8) (0.4)
- profit on sale of properties 1.0 -
- change in fair value of equity investments 0.2 (0.8)
120.0 209.8
----------- ----------
Set out below is an analysis of the Group's underlying operating
profit by geographical locations:
Six months ended 30th
June
2021 US$m 2020 US$m
Analysis by geographical area:
v North Asia 119.8 155.3
Southeast Asia 13.6 60.8
----------- ----------
133.4 216.1
Selling, general and administrative expenses (29.0) (47.4)
----------- ----------
Underlying operating profit before IFRS
16 (*) 104.4 168.7
IFRS 16 adjustment (^) 50.2 42.3
----------- ----------
Underlying operating profit 154.6 211.0
----------- ----------
In relation to the COVID-19 pandemic, the Group had received
government grants of US$6.6 million (2020: US$32.4 million) and
rent concessions of US$23.2 million (2020: US$32.4 million), for
the six months ended 30th June 2021. These subsidies were accounted
for as other operating income.
(*) Property lease payments and depreciation of reinstatement
costs under the lease contracts were included in the Group's
analysis of operating and geographical segments' results.
(^) Represented the reversal of lease payments which were
accounted for on a straight-line basis, adjusted by the lease
contracts recognised under IFRS 16 'Leases', primarily for the
depreciation charge on right-of-use assets.
4. Net Financing Charges
Six months ended 30th
June
2021 US$m 2020 US$m
Interest expense (57.4) (74.3)
- bank loans and advances (9.9) (17.7)
- lease liabilities (46.8) (56.6)
- other loans (0.7) -
1
----------- ----------
Commitment and other fees (3.1) (1.9)
----------- ----------
Financing charges (60.5) (76.2)
Financing income 0.5 1.8
----------- ----------
(60.0) (74.4)
----------- ----------
5. Share of Results of Associates and Joint Ventures
Six months ended 30th
June
2021 US$m 2020 US$m
Analysis by operating segment:
Food (14.2) 38.9
- Grocery retail (13.1) 39.3
- Convenience stores (1.1) (0.4)
Health and Beauty 0.6 0.1
Restaurants (13.2) (25.0)
Other Retailing (1.3) 1.7
----------- ----------
(28.1) 15.7
----------- ----------
Share of results of associates and joint ventures included the
following gains/(losses) from non-trading items (note 8):
Six months ended 30th
June
2021 US$m 2020 US$m
Change in fair value of Yonghui's equity
investments 29.2 4.4
Change in fair value of Robinsons Retail's
equity investments 0.1 0.1
Impairment charge of Yonghui's investments (13.9) -
Net gain from divestment of an investment
by Yonghui - 6.8
Net gains from sale of debt instruments
by Robinsons Retail 0.1 -
15.5 11.3
----------- ----------
Results are shown after tax and non-controlling interests in the
associates and joint ventures.
In relation to the COVID-19 pandemic, included in share of
results of associates and joint ventures were the Group's share of
the government grants of US$10.8 million (2020: US$20.7 million)
and rent concessions of US$9.9 million (2020: US$16.1 million), for
the six months ended 30th June 2021.
Included six months results from October 2020 to March 2021
(2020: October 2019 to March 2020) for Yonghui and Robinsons Retail
(note 2).
6. Tax
Six months ended 30th
June
2021 US$m 2020 US$m
Tax charged to profit and loss is analysed
as follows:
Current tax (26.1) (40.1)
Deferred tax 7.3 2.7
----------- ----------
(18.8) (37.4)
----------- ----------
Tax relating to components of other comprehensive
income is analysed as follows:
Remeasurements of defined benefit plans - (0.1)
Cash flow hedges (2.5) 0.7
----------- ----------
(2.5) 0.6
----------- ----------
Tax on profits has been calculated at rates of taxation
prevailing in the territories in which the Group operates. Share of
tax credit of associates and joint ventures of US$3.3 million
(2020: share of tax charge of US$3.1 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$16.7 million (2020: US$115.3 million), and on
the weighted average number of 1,352.9 million (2020: 1,352.7
million) shares in issue during the period.
Diluted earnings per share are calculated on profit attributable
to shareholders of US$16.7 million (2020: US$115.3 million), and on
the weighted average number of 1,353.1 million (2020: 1,353.3
million) shares in issue after adjusting for 0.2 million (2020: 0.6
million) shares which are deemed to be issued for no consideration
under the share-based long-term incentive plans based on the
average share price during the period.
Additional basic and diluted earnings per share are also
calculated based on underlying profit attributable to shareholders.
A reconciliation of earnings is set out below:
Six months ended 30th June
2021 2020
Basic Diluted Basic Diluted
earnings earnings earnings earnings
p er share per share per share per share
US$m USc USc US$m USc USc
Profit attributable
to shareholders 16.7 1.24 1.24 115.3 8.53 8.52
Non-trading items
(note 8) 15.4 (10.2)
---- ------
Underlying profit
attributable
to shareholders 32.1 2.38 2.37 105.1 7.77 7.77
---- ------
8. Non-trading Items
Non-trading items are separately identified to provide greater
understanding of the Group's underlying business performance. Items
classified as non-trading items include fair value gains and losses
on equity investments which are measured at fair value through
profit and loss; gains and losses arising from the sale of
businesses, investments and properties; impairment of
non-depreciable intangible assets, associates and joint ventures,
and other investments; provisions for the closure of businesses;
acquisition-related costs in business combinations; and other
credits and charges of a non-recurring nature that require
inclusion in order to provide additional insight into underlying
business performance.
An analysis of non-trading items after interest, tax and
non-controlling interests is set out below:
Six months ended 30th June
2021 US$m 2020 US$m
Business restructuring costs (32.0) (0.3)
Profit on sale of properties 0.9 -
Change in fair value of equity investments 0.2 (0.8)
Share of change in fair value of Yonghui's
equity investments 29.2 4.4
Share of change in fair value of Robinsons
Retail's equity investments 0.1 0.1
Share of impairment charge of Yonghui's investments (13.9) -
Share of net gain from divestment of an investment
by Yonghui - 6.8
Share of net gains from sale of debt investments
by Robinsons Retail 0.1 -
(15.4) 10.2
--------- ---------
Following a strategic review recommendation, the management
decided to withdraw its Giant brand investment in Indonesia.
Restructuring costs of US$30.5 million relating to impairment
charge against tangible assets, rent compensation and the expected
payments to employees were charged in the profit and loss.
9. Non-current Assets Held for Sale
At 30th June 2021, the non-current assets held for sale
represented three retail properties in Malaysia and three retail
properties in Taiwan brought forward from 31st December 2020. The
sale of these properties is expected to complete in 2021 at amounts
not materially different from their carrying values.
At 31st December 2020, the non-current assets held for sale
represented six retail properties in Malaysia and three retail
properties in Taiwan. Three retail properties in Malaysia were sold
during the period.
10. Dividends
Six months ended 30th June
2021 US$m 2020 US$m
Final dividend in respect of 2020 of USc11.50
(2019: USc14.50) per share 155.6 196.1
--------- ---------
An interim dividend in respect of 2021 of USc3.00 (2020:
USc5.00) per share amounting to a total of US$40.6 million (2020:
US$67.7 million) is declared by the Board, and will be accounted
for as an appropriation of revenue reserves in the year ending 31st
December 2021 .
11. Financial Instruments
Financial instruments by category
The carrying amounts of financial assets and financial
liabilities at 30th June 2021 and 31st December 2020 are as
follows:
Fair value Financial
Fair value through assets Other Total
of hedging profit at amortised financial carrying
instruments and loss cost liabilities amounts
US$m US$m US$m US$m US$m
At 30th June 2021
Financial assets measured
at fair value
Other investments
- equity investments - 6.2 - - 6.2
Derivative financial
instruments 4.4 - - - 4.4
------------ ---------- ------------- ------------ ---------
4.4 6.2 - - 10.6
------------ ---------- ------------- ------------ ---------
Financial assets not
measured at fair value
Debtors - - 239.8 - 239.8
Cash and bank balances - - 262.7 - 262.7
- - 502.5 - 502.5
------------ ---------- ------------- ------------ ---------
Financial liabilities
measured at fair value
Derivative financial
instruments (3.4) - - - (3.4)
(3.4) - - - (3.4)
------------ ---------- ------------- ------------ ---------
Financial liabilities
not measured at fair
value
Borrowings - - - (1,198.0) (1,198.0)
Lease liabilities - - - (2,957.7) (2,957.7)
Trade and other payables
excluding non-financial
liabilities - - - (1,744.9) (1,744.9)
- - - (5,900.6) (5,900.6)
------------ ---------- ------------- ------------ ---------
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 2020
Financial assets measured
at fair value
Other investments
- equity investments - 6.0 - - 6.0
Derivative financial
instruments 1.2 - - - 1.2
------------ ---------- ------------- ------------ ---------
1.2 6.0 - - 7.2
------------ ---------- ------------- ------------ ---------
Financial assets not
measured at fair value
Debtors - - 263.2 - 263.2
Cash and bank balances - - 277.6 - 277.6
- - 540.8 - 540.8
------------ ---------- ------------- ------------ ---------
Financial liabilities
measured at fair value
Derivative financial
instruments (13.0) - - - (13.0)
(13.0) - - - (13.0)
------------ ---------- ------------- ------------ ---------
Financial liabilities
not measured at fair
value
Borrowings - - - (1,094.3) (1,094.3)
Lease liabilities - - - (3,070.4) (3,070.4)
Trade and other payables
excluding non-financial
liabilities - - - (1,925.7) (1,925.7)
- - - (6,090.4) (6,090.4)
------------ ---------- ------------- ------------ ---------
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 inflows from these
investments.
There were no changes in valuation techniques during the six
months ended 30th June 2021 and the year ended 31st December
2020.
The table below analyses financial instruments carried at fair
value at 30th June 2021 and 31st December 2020, measured by
observable current market transactions.
At 30th At 31st
June December
2021 2020
US$m US$m
Assets
Other investments
- equity investments 6.2 6.0
Derivative financial instruments at
fair value
- through other comprehensive income 4.2 1.1
- through profit and loss 0.2 0.1
10.6 7.2
------- ---------
Liabilities
Derivative financial instruments at
fair value
* through other comprehensive income (3.2) (12.7)
- through profit and loss (0.2) (0.3)
(3.4) (13.0)
------- ---------
(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 are based on market
prices or are estimated using the expected future payments
discounted at market interest rates. The fair values of non-current
lease liabilities are estimated using the expected future payments
discounted at market interest rates.
12. Notes to Consolidated Cash Flow Statement
(a) Purchase of a subsidiary
Purchase 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) Sale of properties
Sale of properties in 2021 included disposal of three properties
in Malaysia and two properties in Indonesia for a total net
consideration of US$35.0 million.
(c) Analysis of balances of cash and cash equivalents
At 30th At 31st
June December
2021 2020
US$m US$m
Cash and bank balances 262.7 277.6
Bank overdrafts (56.7) (43.4)
206.0 234.2
------- ---------
13. Capital Commitments and Contingent Liabilities
Total capital commitments at 30th June 2021 and 31st December
2020 amounted to US$157.8 million and US$137.5 million,
respectively.
Various Group companies are involved in litigation arising in
the ordinary course of their respective businesses. Having reviewed
outstanding claims and taking into account legal advice received,
the Directors are of the opinion that adequate provisions have been
made in the condensed financial statements.
14. Related Party Transactions
Jardine Strategic Limited ('JSL') became the parent company of
the Group following the completion of the simplification of the
Group's parent company structure in April 2021. Jardine Strategic
Holdings Limited and JMH Bermuda Limited, a wholly-owned subsidiary
of the Group's ultimate parent company, Jardine Matheson Holdings
Limited ('JMH'), amalgamated under the Bermuda Companies Act to
form JSL, a wholly-owned subsidiary of JMH. Both JMH and JSL 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$0.1 million (2020:
US$0.6 million) for the first six months of 2021 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$0.2 million
(2020: US$0.2 million) to JML for the same period in 2021.
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 2021 were US$1.5 million (2020:
US$1.6 million). The Group's 50%-owned associate, Maxim's, also
paid lease payments of US$4.5 million (2020: US$5.2 million) to HKL
for the first six months of 2021.
The Group 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 2021
amounted to US$0.8 million (2020: US$0.7 million).
Maxim's supplies ready-to-eat products at arm's length to
certain subsidiaries of the Group. For the first six months of
2021, these amounted to US$12.2 million (2020: US$11.3
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.
Balances with group companies of JMH at 30th June 2021 and 2020
are immaterial, unsecured, and have no fixed terms of
repayment.
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
-- Cybersecurity Risk
For greater detail, please refer to pages 149 and 150 of the
Company's 2020 Annual Report, a copy of which is available on the
Company's website at 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 USc3.00 per share will be payable on
13th October 2021 to shareholders on the register of members at the
close of business on 20th August 2021. The shares will be quoted
ex-dividend on 19th August 2021, and the share registers will be
closed from 23rd to 27th August 2021, 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 2021
interim dividend by notifying the United Kingdom transfer agent in
writing by 24th September 2021 . The Sterling equivalent of
dividends declared in United States Dollars will be calculated by
reference to a rate prevailing on 29th September 2021.
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')
Those shareholders who are on CDP's DCS 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
Those shareholders who are not on CDP's DCS 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 20th August 2021, 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 19th August 2021.
Dairy Farm International Holdings Limited
About Dairy Farm
Dairy Farm is a leading pan-Asian retailer. At 30th June 2021,
the Group and its associates and joint ventures operated over
10,000 outlets and employed some 230,000 people. The Group had
total annual sales in 2020 exceeding US$ 28 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 (including associates and joint ventures) 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.; Yonghui in
Chinese mainland; Cold Storage in Malaysia and Singapore; Giant in
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 Chinese mainland, Hong Kong and Macau S.A.R.;
Guardian in Brunei, Cambodia, Indonesia, Malaysia, Singapore and
Vietnam.
Home Furnishings
-- IKEA in Hong Kong and Macau S.A.R., Indonesia, and Taiwan.
Restaurants
-- Hong Kong Maxim's group in Cambodia, Chinese mainland, Hong
Kong and Macau S.A.R., Malaysia, Singapore, Thailand and
Vietnam.
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
Christine Chung (852) 2299 1056
Brunswick Group Limited
Sunitha Chalam (852) 3512 5050
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
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END
IR UKRVRAOUBURR
(END) Dow Jones Newswires
July 29, 2021 05:22 ET (09:22 GMT)
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