The following announcement was today issued to the London Stock Exchange.

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
INTERIM REPORT 1999 HIGHLIGHTS

• Competitive pressures intensified in Australasia and Hong Kong
• US$178 million Special Dividend to be paid to enhance the capital structure
• Hong Kong Shared Services initiative delivers benefits ahead of schedule
• Expansion in Malaysia with the acquisition of a 90% stake in Giant

Results

"We expect that it will take at least another year before Franklins adds economic value and the recent surge in competitive activity in Hong Kong's supermarket sector will also impact this year's results. The Group's focus will remain on improving fresh food sales, developing new formats and improving the efficiency of our businesses.

"We remain confident that Dairy Farm's strategy and its people will deliver our vision of becoming the leading food and drugstore retailer in the Asia-Pacific Region and will generate added value for our shareholders."

Simon Keswick, Chairman
13th September 1999

The interim dividend of US¢1.65 per share will be payable on 23rd November 1999 to shareholders on the register of members at the close of business on 8th October 1999. The ex-dividend date will be on 4th October 1999, and the share registers will be closed from 11th to 15th October 1999, inclusive.

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
INTERIM REPORT 1999

PERFORMANCE

Dairy Farm International Holdings Limited today announced that as indicated at the Annual General Meeting in June, trading conditions for Dairy Farm's businesses have become more difficult in 1999 and this is reflected in the disappointing performance in the first half. Recurring trading profit of US$46 million is 28% down on the first half of 1998. The recovery at Franklins in Australia has been set back by intensified competition in that market and the Group's Hong Kong supermarket business has suffered from significant expansion in rival retail space and reduced consumer spending resulting from the economic recession.

Sales from continuing activities for the six months ended 30th June 1999 were US$2,846 million, a 1% decline from the same period last year. The Group's retail sales in Hong Kong were 8% below last year and sales increases in underlying currencies in Australia, New Zealand and Singapore have been partly offset by exchange rate movements.

Net profit, excluding non-recurring items, of US$42 million was 16% behind last year. Poor sales performances combined with intense competition in Hong Kong, Australia and New Zealand have reduced net profit. The Group's Singapore businesses have all performed well and Hero has increased its profit and market share in the difficult Indonesian market. With two stores now open, start up losses in the Géant hypermarket joint venture in Taiwan have been greater than expected.

Without the exceptional profit on the 1998 disposal of the Group's European operations reported last year, and with non-recurring Year 2000 remediation costs of US$12 million this year, the consolidated net profit of US$33 million was 63% behind last year.

Earnings per share were US¢1.77 compared with US¢4.80 in the first half of 1998. Excluding non-recurring items, earnings per share of US¢2.29 were 16% behind last year.

The Directors have declared an unchanged interim dividend of US¢1.65 per share, payable in cash.

SPECIAL DIVIDEND AND SHARE CONSOLIDATION

Following a review of the Group's balance sheet and expected cash flow, the Directors have recommended a return of US$178 million to shareholders by way of a special dividend and a share consolidation. The Directors consider this to be the most equitable and efficient method of returning cash to shareholders, thereby realising value for shareholders and enhancing the efficiency of the balance sheet.

The special dividend will be US¢9.65 per share and will be payable to shareholders on the register of members at the close of business on 8th October 1999. The share consolidation, on the basis of 9 new shares for 10 old shares currently held, ensures comparability of the Company's earnings per share and continuity of the share price before and after the special dividend. This will be applied to all shares and therefore all shareholders' effective interest in the Company will be substantially unchanged. A circular is being sent to shareholders providing full details of the proposals.

OPERATIONS

Turning to the operations, the Chairman, Simon Keswick, said that the implementation of shared services in Hong Kong is ahead of schedule and within budget. This will deliver benefits sooner than expected and will contribute positively to the results for the year. This concept is now under review in the Group's Australian operations.

Despite the increasingly competitive Hong Kong market, the Group expects to improve its market share by opening 16 new supermarkets and refurbishing 20 stores during the second half of the year. At Franklins in Australia the Group will build profitability by acquiring new stores, by refining the format of the Fresh stores and by reducing the expenses of the business.

In August the Group agreed, subject to the necessary regulatory approvals, to acquire 90% of Giant TMC Bhd which operates seven supermarkets and hypermarkets in Malaysia. This acquisition, combined with an increased ownership of Guardian pharmacies, establishes Dairy Farm's position as the leading food and drug retailer in the market and provides the general merchandise expertise for the Group to operate hypermarkets in other Asian markets. The Group has also exercised an option to purchase a 49% interest in the 29-store Foodworld supermarket chain in India. These acquisitions and last year's investment in Hero in Indonesia have substantially broadened its scope in South Asia.

During the first half the Group continued to invest in its core businesses, opening 65 new stores and converting or refurbishing a further 185. Capital investment in the first half amounted to US$107 million and is expected to total US$400 million for the year.

YEAR 2000

The Year 2000 remediation process has been substantially completed and tested in all of the Group's businesses. The Group is confident that all business critical activities will be millennium ready and has been working with its key suppliers of products and services to ensure continuity of service but there is a risk that some suppliers may experience Year 2000 failures. The Group has developed business contingency plans, which will be in place before the end of the year, to mitigate these risks. Costs of US$12 million were expensed in the first half and the total cost of this programme is expected to be within the estimate of US$40 million.

OUTLOOK

In conclusion, Simon Keswick said, "We expect that it will take at least another year before Franklins adds economic value and the recent surge in competitive activity in Hong Kong's supermarket sector will also impact this year's results. The Group's focus will remain on improving fresh food sales, developing new formats and improving the efficiency of our businesses.

"We remain confident that Dairy Farm's strategy and its people will deliver our vision of becoming the leading food and drugstore retailer in the Asia-Pacific Region and will generate added value for our shareholders."

1. ACCOUNTING POLICIES AND BASIS OF PREPARATION

The unaudited interim condensed financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting.

In 1999 the Group implemented IAS 14 (revised) - Segment Reporting, IAS 17 (revised) - Leases, IAS 19 (revised) - Employee Benefits and IAS 35 - Discontinuing Operations. The provisions of IAS 10 (revised) - Events After the Balance Sheet Date, IAS 16 (revised) - Property, Plant and Equipment, IAS 22 (revised) - Business Combinations, IAS 28 (revised) - Accounting for Investments in Associates, IAS 31 (revised) - Financial Reporting of Interests in Joint Ventures, IAS 36 - Impairment of Assets, IAS 37 - Provisions, Contingent Liabilities and Contingent Assets and IAS 38 - Intangible Assets are applied in advance of their effective dates.

In accordance with IAS 10 (revised), dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date. In previous years dividends proposed or declared after the balance sheet date were recognised as a liability at the balance sheet date. The effect of this change has been to increase the Shareholders' funds at 31st December 1997 and 1998 by US$79.6 million and US$79.9 million respectively.

In accordance with IAS 19 (revised), pension costs for defined benefit plans are assessed using the projected unit credit method. Under this method, pension obligations are measured as the present value of the estimated future cash flows by reference to market yields on high quality corporate bonds which have terms to maturity approximating the terms of the related liability. Plan assets are measured at fair value. This is a change in accounting policy as in previous years pension costs were assessed using the attained age normal method and pension obligations were discounted at the expected rate of return on plan assets. The comparative figures for 1998 have been restated to reflect the change in policy. The effect of this change has been to increase the profit after taxation and minority interests for the six months ended 30th June 1998 and for the year ended 31st December 1998 by US$1.1 million and US$2.3 million respectively, and the Shareholders' funds at 31st December 1997 and 1998 by US$23.1 million and US$25.4 million respectively.

With the exception of IAS 10 (revised) and IAS 19 (revised), there are no changes in accounting policy that affect profit or Shareholders' funds resulting from the adoption of the above standards in these condensed financial statements, as the Group has already followed other relevant recognition and measurement principles in those standards.

Other than described above, there have been no other changes to the accounting policies described in the 1998 financial statements.

The disclosure requirements of IAS 1 (revised) - Presentation of Financial Statements will be complied with in the Group's 1999 annual financial statements.

The Group's reportable segments are set out in note 2 and are described on page 10.

2. SEGMENT INFORMATION

Results are shown after amortisation of goodwill of US$1.8 million (1998: US$1.9 million).

3. DISCONTINUED ACTIVITIES AND EXCEPTIONAL ITEMS

4. TAXATION

Tax on profits has been calculated at rates of taxation prevailing in the territories in which the Group operates and has no tax in the United Kingdom (1998: US$1.2 million).

5. EARNINGS PER SHARE

Basic earnings per share are calculated on the net profit of US$32.6 million (1998: US$87.9 million) and on the weighted average number of 1,837.5 million (1998: 1,830.0 million) shares in issue during the period. The weighted average number excludes the Company's shares held by the Trustee under the Senior Executive Share Incentive Schemes.

Diluted earnings per share are calculated on the weighted average number of 1,839.3 million (1998: 1,831.2 million) shares after adjusting for the number of 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 period.

Earnings per share excluding discontinued activities and exceptional items are calculated on the adjusted profit of US$42.1 million (1998: US$50.0 million) and on the weighted average number of 1,837.5 million (1998: 1,830.0 million) shares in issue during the period.

6. ORDINARY DIVIDENDS

An interim dividend in respect of 1999 of US¢1.65 (1998: US¢1.65) per share amounting to a total of US$30.4 million (1998: US$30.3 million) is declared and will be accounted for as an appropriation of revenue reserves in the year ending 31st December 1999.

7. CAPITAL EXPENDITURE AND COMMITMENTS

8. BORROWINGS

The movements in the borrowings can be analysed as follows:

9. SHARE CAPITAL AND SHARE PREMIUM

10. POST BALANCE SHEET EVENTS

a. In July 1999, the Group acquired a 50% shareholding in Selangor Ice Company Limited for US$6 million from a third party. This acquisition increased the Group's effective shareholdings in DFI Supermarkets (M) Sdn Bhd from 50% to 75% and in Cold Storage Retail (Malaysia) Sdn Bhd from 30% to 65%.

b. In August 1999, the Group reached agreement with a third party to purchase, subject to necessary regulatory approvals, a 90% shareholding in Giant TMC Bhd ("Giant"). In addition, the Group will assume the existing bank borrowings in Giant. Giant operates 7 supermarkets and hypermarkets in Malaysia.

11. INTERIM REPORT

The Interim Report will be posted to shareholders on or about 5th October 1999. Copies may be obtained from Jardine Matheson International Services Limited, P.O. Box HM 1068, Hamilton HM EX, Bermuda; IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent BR3 4TU, England and M & C Services Private Limited, 16 Raffles Quay #23-01, Hong Leong Building, Singapore 048581.

The interim dividend of US¢1.65 per share will be payable on 23rd November 1999 to shareholders on the register of members at the close of business on 8th October 1999. The ex-dividend date will be on 4th October 1999, and the share registers will be closed from 11th to 15th October 1999, inclusive. Shareholders will receive their dividends in United States Dollars, unless they are registered on the Jersey branch register where they will have the option to elect for Sterling. These shareholders may make new currency elections by notifying the United Kingdom transfer agent in writing by 4th November 1999. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to a rate prevailing ten business days prior to the payment date. Shareholders holding their shares through The Central Depository (Pte) Limited ("CDP") in Singapore will receive United States Dollars unless they elect, through CDP, to receive Singapore Dollars.

For further information, please contact:

Dairy Farm Management Services Limited Ronald J Floto Ian Durant	(852) 2299 1881 (office) (852) 2299 1896 (office) email: idurant@dairy-farm.com.hk
Forrest International Limited Bob Fienberg Sue Gourlay	(852) 9408 6599 (mobile) (852) 2501 7936 (office) email: fienberg@forrestintl.com.hk

Full text of this and other Group announcements can be accessed through the Internet at
"http://www.irasia.com/listco/sg/dfi".