1996 PRELIMINARY ANNOUNCEMENT OF RESULTS

To:   Business Editor	18th March 1997
	For immediate release

Dairy Farm International Holdings Limited today announced that the Group’s sales in 1996 were US$6,968 million, an increase of 12%. Established operations achieved an increase of 8% to US$6,920 million with the balance coming from new businesses and exchange gains. Combined sales, including associates, were US$12,767 million, an increase of 9%.

Profit before interest for the year ended 31st December 1996 was US$91 million, a decrease of 52%. Australia and the United Kingdom produced poor performances while start-up costs were incurred in new markets, particularly in Japan and China. The overall result was further affected by repositioning provisions in Australia and the United Kingdom of US$78 million. The consolidated net profit for the year, after taxation and minority interests, was US$28 million, a decrease of 79%.

Earnings per ordinary share were US¢1.60, a decline of 80%. If the non-recurring items in both 1995 and 1996 are excluded, the earnings per share would have declined by 40% to US¢6.19.

After considering the strong cash flow last year and the outlook for future years, the Directors believe it appropriate to maintain the dividend in 1996 at the same level as 1995. A final dividend of US¢4.35 per ordinary share is therefore recommended, 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.

A dividend at the rate of 6.5% per annum will be payable on the Company's outstanding convertible preference shares on 9th May 1997 to preference Shareholders registered at the close of business on 30th April 1997.

Turning to the operations of the Group, the Chairman, Mr Simon Keswick, said, in 1996 Dairy Farm increased its investment in its established businesses and continued to develop new operations in the Asia-Pacific Region. A number of key management appointments have been made to support this commitment.

Capital expenditure in 1996 was US$247 million. During the year the Group opened 143 stores giving a total at year end of 1,518 with a gross retail area in excess of 14 million sq. ft, an increase of 5%. If associates are included, the number of outlets increased to 2,822.

In Australia, Franklins increased sales by 8%, but an improvement in margins was more than offset by higher infrastructure costs relating to the introduction of Fresh formats. The new Fresh stores, which now account for over 40% of total sales, have been well accepted. The decision has therefore been taken to accelerate the conversion of the 'No Frills' stores into the 'Fresh' format over the next four years, which has required a write down of fixed assets of US$38 million. The investment in the overall process is substantial and Franklins' profit recovery will be held back for the next two years. In New Zealand, Woolworths continued to perform strongly.

In Hong Kong, Wellcome and Mannings continued to achieve steady sales and profit growth, although the cost of new systems in 7-Eleven reduced its contribution. Wellcome's focus on fresh food will be underpinned by a US$50 million investment in a Fresh Food Processing Centre due for completion in 1998. Sims Trading reported good results and further expansion of its network in China. The Group’s 7-Eleven and supermarket joint ventures in Southern China continued to build their market presence and now have a sound base for future expansion.

Maxim’s Caterers, the Group’s 50% restaurant associate had another excellent year, with sales and profit growth well ahead of the industry trend in Hong Kong. The company now has over 300 outlets in Asia and its prospects remain outstanding. The Nestlé Dairy Farm joint venture, however, had a poor year, with a decline in trading profit due to high start-up costs associated with its new factory in Hong Kong and the two factories in China.

In Taiwan, where hypermarkets have taken a significant share of the market, the Company’s operations faced strong competition. Wellcome reported a decline in profit and Mannings traded at a loss. Steps have been taken to consolidate Wellcome's position as a neighbourhood supermarket chain, while the Group’s joint venture with Casino S. A. is expected to open its first hypermarket in Taipei in 1998. The Company’s Singapore businesses had another good year.

In Japan, the Group has now opened 14 Wellsave stores, but it will be some time before this operation achieves sufficient critical mass to contribute profit. In Malaysia, the Company’s supermarket joint venture further consolidated its position, and in Indonesia, where the Company provides technical assistance to the 12-store Mitra supermarket chain, a refurbishment programme has been completed. The Group’s plans to develop a regional drugstore business made good progress, with joint ventures being established in Malaysia and India, and agreement to provide technical assistance in Indonesia.

In the United Kingdom, Kwik Save has embarked upon a programme to rationalise and reposition its stores following a comprehensive review of the company's business. This is expected to take three years and is designed to enable Kwik Save to respond to changes in Britain's food retail sector. The Company is pleased to report that the Spanish business, Simago, has achieved a modest trading profit following an 11% increase in sales in 1996 and further progress is expected.

In conclusion, Mr Simon Keswick said, "Dairy Farm is investing for the future, both by adapting its mature businesses to meet changing retail environments and by entering new markets in Asia. This has inevitably been impacting our results, but we are creating a sound base for renewed profit growth, and in 1997 we will benefit from the absence of non-recurring repositioning costs."

---

---

---