DAIRY FARM AGREES TO SELL SIMAGO TO CONTINENTE OF SPAIN

17th October 1997 -- Dairy Farm International Holdings Limited announced today that preliminary agreement has been reached for the sale of its Spanish supermarket chain, Simago, S.A. to Centros Comerciales Continente, S.A. ("Continente").

The preliminary agreement allows for a period of due diligence, with a Sale Agreement to be entered into and expected to be effective at the year end.

The preliminary agreement provides a formula for determining the consideration, which will be finalized following the due diligence exercise and it will, in part, be subject to the results of Simago for the 1997 financial year. It is anticipated, however, that the net proceeds will give a gain on disposal, which will be included in Dairy Farm's 1997 results. The carrying value of the investment in Simago by Dairy Farm at 31st December 1996 was US$105 million.

Finalization of the sale consideration, which will be payable in cash, is expected by 28th February 1998 following the completion and audit of Simago's 1997 financial statements. The proceeds from the sale will be used by Dairy Farm for working capital purposes.

Group Chief Executive of Dairy Farm, Ron Floto, said "Dairy Farm's prime focus is upon the Asia-Pacific Region and while Simago's recent performance has been encouraging, to develop the business fully would require a significant further investment in Spain. This would not be in line with our strategy. Simago will, however, provide a good fit for Continente's Spanish retail portfolio and is complementary to their existing operations."

A further announcement will be made upon the signing of the Sale Agreement.

Dairy Farm acquired Simago in 1990. The company operated 61 Simago supermarkets and 56 Super Descuento limited-assortment discount stores at 30th June 1997. Simago is among the top 10 supermarket chains in Spain with a grocery market share of about 1%. In 1996, Simago recorded a profit before interest of US$0.5 million.

Continente is the Spanish listed subsidiary of the French retail group Promodes.