1995 Preliminary Announcement of Results

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED

PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31ST DECEMBER 1995

RESULTS

Dairy Farm International Holdings Limited today announced that the Group's combined turnover, including associates, was US$11,695 million, an increase of 12%. Existing operations achieved an increase of 8% and the balance came from new businesses and exchange gains.

Trading profit for the year ended 31st December 1995 was US$244 million, a decrease of 9% over the comparable figure for 1994. The overall result was affected by an exceptional charge of US$36 million after tax in respect of an inventory shortfall in the Australian business. The consolidated net profit for the year, after taxation and minority interests, was US$149 million, compared with US$227 million in 1994, a decrease of 35%

Earnings per ordinary share were US¢7.86, a fall of 37%. If the exceptional profit in 1994 and the exceptional charge in 1995 are excluded, earnings per share would have declined 6%.

DIVIDENDS

The Directors recommend a final dividend of US¢4.35 per ordinary share, payable in cash with a scrip alternative, which, together with the interim dividend of US¢1.65 per ordinary share, will make a total annual dividend of US¢6.00 per ordinary share, unchanged from 1994.

A dividend at the rate of 6.5% per annum will be payable on the Company's outstanding convertible preference shares on 10th May 1996 to preference Shareholders on that date.

GROUP REVIEW

Turning to the operations of the Group, the Chairman, Mr Simon Keswick, said, during the year the Group opened more than 180 stores giving a total at the year end of some 1,460 with a gross retail area in excess of 13 million sq.ft, an increase of 7%. If associates are included, the number of outlets reached 2,760.

The Group continues to invest in the development of its existing businesses and in entering new markets. In 1995 total capital expenditure rose to US$247 million, and a further US$300 million is expected to be invested in 1996. To meet the current challenges facing the industry, the Group is upgrading its information technology and its distribution and logistics systems. Store formats, operations and product ranges are also being improved to attract customers and to meet their shopping requirements.

In Hong Kong, Wellcome achieved further growth with an increasing focus on fresh produce. There was an excellent performance from Mannings drugstores, and a steady result from the 7- Eleven convenience store chain. Sims Trading made good progress in China with the establishment of a warehousing and distribution business.

In the Group's China-based operations, the 7-Eleven and supermarket joint ventures in the Shenzhen region developed satisfactorily and, in early 1996, a further 7-Eleven joint venture was established in Guangdong.

In Taiwan, sales of the Wellcome chain continued to grow although profit showed a decline, while Mannings had a good year achieving profitability in the last quarter. In addition, the Company has recently established a joint venture with Casino S.A. of France to develop hypermarkets alongside the Group's other retail formats in Taiwan. In Japan, the first four Wellsave stores were opened and a further 12 stores are planned for 1996.

The Group's retail operations in Singapore had a good year, although opportunities for expansion are limited. The new supermarket joint venture in Malaysia showed improved sales as the business was repositioned, and store developments are being accelerated.

In Australia, Franklins' trading result was affected by start up costs, pressure on margins and an inventory shortfall. Good progress was made with refocusing the grocery business which, combined with the strong consumer acceptance of new Big Fresh and Franklins Fresh formats, should lead to improving margins. Woolworths in New Zealand improved its profit and market share following the successful repositioning of its three retail formats.

Sales increased at Simago in Spain, but trading results were affected by the cost of store refurbishments and by a US$8 million provision against properties. The Company expects trading results to improve in 1996. In the United Kingdom, Kwik Save's sales also rose but profit declined 10% as a result of aggressive pricing on staple items, combined with general competitive pressure on margins and the costs of upgrading stores and systems.

The Nestlé Dairy Farm joint venture completed the construction of its new ice cream and dairy products manufacturing plant in Hong Kong. Two further plants in China are nearing completion and are expected to start up in the first half of 1996. While the Group is optimistic about the long-term prospects for this business, it will take time before the China operations make their contribution to profit.

Maxim's restaurants had an outstanding year, with strong profit growth in Hong Kong at a time when most of its competitors were reporting substantial reductions in profitability.

The Company signed agreements with supermarket groups in India and Indonesia which provide opportunities to enter these growing markets.

PROSPECTS

In conclusion, Mr Simon Keswick, said, "Dairy Farm International is facing intense competition in its more mature markets. Investment in new markets and development costs incurred in response to a changing retail environment will also hold back the current year's trading profit. Nevertheless, as personal income levels rise throughout Asia and shopping patterns change, the Company's range of retail formats should provide a firm basis for sustained long-term growth."