DAIRY FARM SELLS REMAINING INTEREST IN FOOD MANUFACTURING JOINT VENTURE

15th September 1997 -- Dairy Farm International Holdings Limited today announced that Nestlé will acquire Dairy Farm's remaining 49% interest in the dairy products manufacturing business, Nestlé Dairy Farm, for a cash consideration of some US$40 million.

Nestlé purchased its original 51% of the dairy products manufacturing business operations in Hong Kong and China in November 1992 as Dairy Farm increasingly focused on its international retail chains.

The sale of the remaining 49%, due to be completed on 19th September, will produce an exceptional gain for Dairy Farm of US$24 million, which will be taken into the Company's 1997 full year results. In 1996, Dairy Farm's share of the losses of the Nestlé Dairy Farm joint venture was some US$8 million as the joint venture continued its investment programme.

Announcing the agreement, Dairy Farm's Managing Director, Ronald J. Floto, said, "Dairy Farm is concentrating on international food retailing and drugstore operations, especially in the fast-developing Asian Region, and today's agreement with Nestlé is in line with that strategy." He added, "Our Hong Kong operations remain at the heart of our Group, and China is an important part of our growth strategy with continuing investment in our retail businesses in Shenzhen, Guangzhou and Chengdu."

Mr. Floto said that Dairy Farm and Nestlé will continue to work together in the future, combining Nestlé's manufacturing and marketing expertise with Dairy Farm's retail networks.

Mr. Floto also confirmed that the Company will continue to operate under the Dairy Farm name. Nestlé S.A. Group acquired the 'Dairy Farm' brand, and its trade and service marks when the ice cream and dairy products joint venture was established in 1992. Dairy Farm retains the use of the corporate name for the remainder of the 50-year term.

Dairy Farm is an international food retailer with supermarket and other interests in 12 territories across Asia, in Australasia and in Europe. In 1996, Dairy Farm reported turnover of some US$7,000 million which, when associates are included, totalled some US$12,800 million. The Group employs 49,900 people and its associates employ a further 41,500 people. In total, the wider Dairy Farm Group has interests in over 2,800 retail outlets. Dairy Farm is listed in London, Singapore, Australia and Bermuda and has a sponsored American Depositary Receipt Programme.