Dairy Farm International Holdings (DFI) 2016年年度報告「LSE」.pdf

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1、Annual Report 2016Dairy Farm International Holdings LAnnual Report 2016Pioneers in Asian Retail00_DF006_AR16_Back&Cover_AW.indd 117年3月20日 下午10:23Dairy Farm International Holdings Limited is incorporated in Bermuda and has a standard listing on the London Stock Exchange,with secondary listings in Ber

2、muda and Singapore.The Groups businesses are managed from Hong Kong by Dairy Farm Management Services Limited through its regional offices.Dairy Farm is a member of the Jardine Matheson Group.A member of the Jardine Matheson GroupCorporate InformationDirectorsBen KeswickChairman and Managing Directo

3、rGraham AllanGroup Chief ExecutiveNeil GallowayMark GreenbergGeorge J.HoAdam KeswickSir Henry KeswickSimon KeswickMichael KokDr George C.G.KooAnthony NightingaleY.K.PangJeremy ParrLord Sassoon,KtPercy WeatherallJohn WittCompany SecretaryNeil M.McNamaraRegistered OfficeJardine House 33-35 Reid Street

4、HamiltonBermudaDairy Farm Management Services LimitedDirectorsBen KeswickChairmanGraham AllanGroup Chief ExecutiveNeil GallowayGroup Finance DirectorChoo Peng CheeRegional Director,North Asia(Food)Pierre-Olivier DeplanckChief Executive Officer,Malaysia and Brunei (Food)Stphane DeutschPresident Direc

5、tor,PT HeroGordon FarquharGroup Director,Health and BeautyMark HerbertChief Executive Officer,Singapore and Cambodia(Food)Martin LindstrmGroup Director,IKEAMichael WuChairman and Managing Director,MaximsMark GreenbergY.K.PangJeremy ParrJohn WittCorporate SecretaryNeil M.McNamaraCONCEPT&DESIGN:YELLOW

6、 CREATIVE(HK)LIMITED00_DF006_AR16_Back&Cover_AW.indd 217年3月20日 下午10:23Annual Report 201612Dairy Farm At-a-Glance4Vision,Mission and Guiding Principles6Highlights8Our Business Divisions12Chairmans Statement14Group Chief Executives Review18Feature Stories30Business Review 40Financial Review43Directors

7、 ProfilesContentsThis year marks the 130th anniversary of Dairy Farm,tracing our roots back to a dairy farm incorporated in Hong Kong by a Scottish surgeon,Sir Patrick Manson,and five prominent local businessmen in 1886.Over the past 13 decades,Dairy Farm has grown to become a pioneer in Asian retai

8、l operating supermarkets,hypermarkets,convenience stores,health and beauty stores and home furnishings stores under well-known brands.The Group also has a 50%interest in Maxims,Hong Kongs leading restaurant chain.Today,Dairy Farm is one of the leading pan-Asian retail groups,with over 6,500 outlets

9、and over 180,000 staff across the region.45Our Leadership48Financial Statements105Independent Auditors Report107Five Year Summary108Responsibility Statement109Corporate Governance116Principal Risks and Uncertainties118Shareholder Information119Retail Outlets Summary120Management and Offices130 Years

10、 of Pioneering Asian RetailMainland ChinaTaiwanHong KongCambodiaMalaysiaIndonesiaSingaporeBruneiThe PhilippinesMacauVietnamSupermarkets and HypermarketsConvenience StoresHealth and BeautyHome FurnishingsRestaurants11Asian countries and territoriesNetwork spans acrossDairy Farm International Holdings

11、 Limited2Dairy Farm At-a-GlanceStore Network 114storesNumber of Net New Stores*6,548outletspeople180,000Number of Employees Total Corporate Brands 10,000SKUs*including associates and joint ventures.*on a continuing operations basis.*stock keeping units.OverOverAnnual Report 20163The Way We Work:Our

12、Guiding PrinciplesPioneers in Asian RetailVisionConsumers are Our Reason for BeingOur first priority is to delight our customers.We listen to consumers,understand their changing needs and aspirations and build our retail offer around insights that enrich their lives every single day.Teamwork Gives U

13、s Our Competitive EdgeOur working culture is based around teamwork,engagement,openness and trust.We celebrate diversity across our teams and the unique contribution of each individual.Sustainable Results Reinforce Everything We DoWe work with passion and urgency to deliver superior results.We value

14、durable business performance and we invest to build the strongest possible foundations.By doing this,we create lasting value for shareholders and enhance the lives of our customers,colleagues,business partners and communities.Innovation Drives Our GrowthRetail is a business of constant innovation.In

15、novation involves risk and we embrace that with relish.We view disruptive change as a great opportunity.With equal enthusiasm for different channels,we constantly search for new ways to excite consumers and deliver greater value to our customers.Dairy Farm International Holdings Limited4Vision,Missi

16、on and Guiding PrinciplesThe Way We Grow:Our Strategic PrioritiesMissionBringing to Asian Consumers the Benefits of Modern RetailOperate a consumer pull retail model across all formatsProvide convenient consumer access whether in stores or onlineUnderpinned by a modern,efficient supply chain which l

17、everages central distributionSustain core markets and build presence in mainland China,Indonesia and the Philippines to deliver portfolio balanceProvide talented and empowered people with fun jobs that stimulate personal developmentOur People Make Us DifferentWhen it comes to retail skills,our peopl

18、e are the envy of the industry.We cultivate an organization where people learn and grow by creating a workplace that attracts great people,builds capability,promotes talent and inspires excellence.Integrity is at the Heart of the Way We Do BusinessWe accept responsibility for our actions and outcome

19、s individually,as teams,and as an organization.We aspire to be trusted and respected in everything we do and by everyone with whom we engage.1.Consumer-Centric2.Market Leading Access3.Exceptional Availability and Value4.Pan-Asian Strength5.High Performing Teams12345Core StrategiesAnnual Report 20165

20、Modest sales growth achieved in challenging markets7%at US$460 millionUnderlying profit up14%Total sales upResults20162015ChangeUS$mUS$m%Sales subsidiaries11,20111,1371 including associates and joint ventures20,42417,90714EBITDA6726435Underlying profit attributable to shareholders*4604287Profit attr

21、ibutable to shareholders46942411Net debt64148233USUS%Underlying earnings per share*34.0331.667Basic earnings per share34.6931.3911Dividends per share21.0020.005Net asset value per share111.32101.759Store Network#20162015Net changeFood3,8393,696+143 Supermarkets1,1371,073+64 Hypermarkets471438+33 Con

22、venience Stores2,2312,185+46Health and Beauty1,7151,815-100Home Furnishings99Restaurants985914+716,5486,434+114 on a 100%basis.EBITDA represents operating profit before depreciation and amortization.*the Group uses underlying profit in its internal financial reporting to distinguish between ongoing

23、business performance and non-trading items,as more fully described in note 1 to the financial statements.Management considers this to be a key measure which provides additional information to enhance understanding of the Groups underlying business asset value per share is based on the book value of

24、shareholders funds.#on a 100%and continuing basis.Dairy Farm International Holdings Limited6Highlights114Net store increase Food,Home Furnishings and Restaurants deliver higher profitsfrom Yonghui SuperstoresAdditional contribution Total SalesOrdinary Dividends per Share036912151821RestaurantsHome F

25、urnishingsHealth and BeautyConvenience StoresSupermarkets/Hypermarkets201220132014201520160481216202420122013201420152016Underlying Earnings per Share051015202530354020122013201420152016010020030040050020122013201420152016Underlying Profit Attributable to ShareholdersUS$bUS$mUSUSFinal dividendInteri

26、m dividendAnnual Report 20167FoodDairy Farm is a leading operator of supermarkets,hypermarkets and convenience stores catering to all consumer segments across the region,recognized for our fresh produce offerings and wide variety of local and international brands.With multiple formats and our broad

27、presence in 11 markets across Asia,the quality of service,convenience,and accessibility that we offer our consumers is unmatched in the region.Supermarkets and Hypermarkets Convenience Stores15.2Total Sales(US$)267millionOperating Profit(US$)Total sales and store network in Our Business Divisions in

28、clude 100%of associates and joint ventures.billionStore Network3,839 storesOur Business DivisionsDairy Farm International Holdings Limited8Health and BeautyWe continue to roll out our Health and Beauty business concept across the region through well-established brands Mannings,Guardian and Rose Phar

29、macy.Serving the needs of Asias increasingly health-conscious population,Dairy Farms Health and Beauty business now spans ten countries and territories.2.6Total Sales(US$)Store Network1,715stores175millionOperating Profit(US$)billionAnnual Report 20169Home Furnishings597Total Sales(US$)71millionOper

30、ating Profit(US$)9storesStore NetworkWell-established in Hong Kong and Taiwan,and now with a presence in Indonesia,IKEA provides a comprehensive range of affordable and attractive home furnishing products.millionOur Business DivisionsDairy Farm International Holdings Limited10RestaurantsDairy Farms

31、restaurant associate,Maxims,is known for its passion for excellence,innovative approach to cuisine,and superior service.With operations in Hong Kong,Macau,mainland China,Vietnam,Cambodia and Thailand,Maxims offers a diverse mix of Chinese,Asian and Western restaurants in addition to fast food and co

32、ffee outlets and cake shops.2.0Total Sales(US$)storesStore Network98588millionShare of Results(US$)billionAnnual Report 201611OverviewDairy Farm achieved sound profit growth in 2016,its 130th anniversary year,despite soft consumer spending and intense pressure on pricing in most markets.Underlying n

33、et profit rose by 7%for the full year and by 11%in the second half compared with 2015.Improved operating margins in the Food Division and at IKEA,as well as strong contributions from Maxims and Yonghui,underpinned the profit performance.The Group continued to make progress against its key strategic

34、objectives and invested a further US$190 million in Yonghui Superstores to maintain its shareholding.Operating performanceSales for the year by the Groups subsidiaries of US$11.2 billion were 1%ahead of last year.Total sales,including 100%of associates and joint ventures,of US$20.4 billion were 14%h

35、igher than 2015,buoyed by stronger growth at Yonghui as well as an additional three months of contribution from Yonghui.In the Food Division,sales were flat with the modest growth achieved in Hong Kong being offset by weaker sales in Southeast Asia,in part reflecting the Groups store rationalization

36、 programme.Operating profit in the Division improved,however,as the Group continued its initiatives to enhance gross margins and control costs.In Health and Beauty,sales growth was achieved in difficult markets,but operating profit showed a modest decline principally due to lower gross margins and h

37、igher rents.In Home Furnishings,both sales and operating profit showed growth.“The Group is transforming itself to compete aggressively in a changing retail landscape.Central to this are a strong focus on understanding changing consumer behaviour,growing market share,building digital engagement with

38、 customers and sharing know-how across the Group.”based on operating profit and share of results of associates and joint ventures,excluding support office costs and non-trading items.including share of associates and joint ventures.7%14%4%56%19%14%36%11%12%27%Supermarkets/HypermarketsHome Furnishing

39、sRestaurantsConvenience StoresHealth and Beauty2016 Sales Mix2016 Profit MixDairy Farm International Holdings Limited12Chairmans StatementThe operating margin gains together with increased contributions from Yonghui and Maxims,partly offset by higher net financing charges,produced underlying profit

40、attributable to shareholders up 7%at US$460 million and underlying earnings per share up 7%at US34.03.The Group generated a net cash flow from operating activities of US$543 million,versus US$700 million in 2015.The reduction was due mainly to negative working capital movements from the timing of su

41、pplier payments and inventory accumulation for an earlier Chinese New Year in 2017.Net debt at the end of 2016 was US$641 million compared to US$482 million at the prior year end.The Board recommends a final dividend of US14.50 per share,(up US1)for a total 2016 dividend of US21.00 per share,a 5%inc

42、rease on the prior year.Business developmentsThe Group is transforming itself to compete aggressively in a changing retail landscape.Central to this are a strong focus on understanding changing consumer behaviour,growing market share,building digital engagement with customers and sharing know-how ac

43、ross the Group.Investment is being sustained in supply chain,IT infrastructure and systems,and the skills and expertise of our people to support this transformation.Each business is committed to optimizing the shopping experience of its customers and to serving their evolving needs as efficiently as

44、 possible.Increasing convenience through expansion and enhancement of the store network remains a high priority,although when necessary,underperforming stores will be closed.The Groups continuing operations,including associates and joint ventures,added a net 114 stores in 2016.At 31st December 2016,

45、the Group had 6,548 stores in operation in 11 countries and territories,including its interest in 487 Yonghui stores in mainland China.The Group accelerated its e-commerce presence in 2016 with a number of initiatives in its Home Furnishings,Food and Health and Beauty operations.Strategic initiative

46、s on range enhancement also progressed in all formats,such as with increased fresh food penetration,higher Ready-to-Eat participation and a broader corporate brand range.The Group is increasingly leveraging its scale to provide a more extensive international range at more attractive prices,while the

47、 consumer offer is advancing through better in-store experiences and further investment in quality assurance.Corporate developmentsIn March,the Group refinanced its short-term borrowings through new bank loan facilities totalling US$900 million.The new facilities were used in part to finance the US$

48、190 million additional investment in Yonghui in August,which maintained the Groups 19.99%interest following a private placement by Yonghui of a 10%shareholding to JD.com.In April,Maxims completed the acquisition of the COVA patisserie and restaurant franchise in Hong Kong.Maxims also opened its firs

49、t The Cheesecake Factory restaurant in Shanghai Disney Town in June,and has launched a cakes and bakery joint venture in Thailand.PT Hero completed the sale of its Starmart stores in Indonesia in September.PeopleDairy Farms encouraging performance in 2016,in the face of challenging market conditions

50、,reflects the resilience and resourcefulness of its people.On behalf of the Board,I would like to thank them for their efforts and wish them well for the year ahead.James Riley stepped down as a Director on 31st March 2016,and was succeeded by John Witt on 1st April 2016.Y.K.Pang also joined the Boa

51、rd on 1st August 2016.We were saddened by the death of Lord Leach in June 2016.He made a significant contribution to the Group and his wise counsel will be greatly missed.ProspectsDespite the uncertain economic outlook for 2017,the Group continues to strengthen its businesses.Investments are being m

52、ade to enhance its competitive position,increase customer convenience and adapt to emerging consumer trends.These investments,coupled with the exposure of its market-leading retail brands to Asias growth markets,will support Dairy Farms long-term success.Ben KeswickChairman2nd March 2017Annual Repor

53、t 201613“With our proud,130-year history of doing business in Asia,the depth of our Asian know-how and the breadth of our retail formats,we are uniquely placed to benefit from the growth prospects in the region.”In 2016,Dairy Farm celebrated its 130th anniversary.From its modest beginnings as a dair

54、y farm in Pok Fu Lam,Hong Kong,in 1886,the Company has evolved into an expansive Asian retailer with 6,548 stores across 11 markets,five major formats,20 retail brands and more than 180,000 employees.While Hong Kong remains a key market for Dairy Farm,accounting for the largest proportion of revenue

55、 and operating profit,we now have a broad retail portfolio with exposure to many of the most exciting growth markets in Asia.Well established market positions have been built in Singapore,Malaysia and Indonesia,and more recently,investments have been made in China,the Philippines,Vietnam and Cambodi

56、a.In 2016,Dairy Farms businesses delivered encouraging results,while further investments were made to enhance our long-term competitive position in all our markets.These investments are helping us to adapt to current changes taking place in retail,where it is increasingly important to complement bri

57、cks and mortar stores with a digital presence.Shifts are also occurring in the balance between more local smaller stores and the more remote larger format offers.Interest in international product ranges is also higher than ever before.Dairy Farm is embracing these consumer trends and is making inves

58、tments to strengthen our retail offer,to improve efficiency and to enrich the shopping experience of our customers.2%2%15%10%64%7%3%5%4%85%3%including 100%of associates and joint ventures.Supermarkets/HypermarketsHome FurnishingsRestaurantsConvenience StoresHealth and BeautyHead Office and Shared Se

59、rvicesTotal Employees:over 180,000Total Gross Trading Area:over 60 million sq.ftDairy Farm International Holdings Limited14Group Chief Executives Review2016 performanceSales,excluding associates and joint ventures,of US$11.2 billion,were 1%ahead of the prior year in US dollar terms and 2%ahead in co

60、nstant currency terms.Total sales,including 100%of associates and joint ventures,were US$20.4 billion,an increase of 14%in US dollar terms and 17%in constant currency terms.Underlying net profit rose by 7%to US$460 million,partly due to a 13 basis point net improvement in operating margins as well a

61、s increased contributions from Yonghui and Maxims.Operating profit rose 6%and the Company generated net cash flow of US$543 million from its operating activities.In our Food Division,sales were flat in US dollar terms,although up 1%in constant currency.In an environment of severe pressure on pricing

62、,sales growth in Hong Kong supermarkets and in the convenience store businesses in Hong Kong,mainland China and Singapore helped to offset declines in the Groups supermarkets and hypermarkets in Singapore and Indonesia and largely flat sales elsewhere.The closure of a number of unprofitable stores i

63、n Singapore and Indonesia also weighed on sales performance.However,specific actions,including strategic store closures,prudent management of costs and more targeted promotional activity,delivered improved operating margins.Consequently,operating profit from the Division was up 13%to US$267 million,

64、with the largest gains coming from Singapore and Indonesia.Sales in our Health and Beauty Division were up by 3%,and 4%in constant currency.Gains in Hong Kong,mainland China,Singapore,Indonesia and the Philippines,offset disappointing sales in Malaysia.Operating profit,however,declined by 5%to US$17

65、5 million due mainly to lower gross margins and higher rents in Hong Kong,softer sales in Macau attributable to weakness in mainland visitor spending,and the combination of declining sales and rising costs in Malaysia.Encouraging progress in Mannings China and significant margin gains in Rose Pharma

66、cy in the Philippines were very promising developments for the Division.In our Home Furnishings Division,sales and operating profit were up by 5%and 11%,respectively.Sales and profit gains were strong in Taiwan and the performance in our single IKEA store in Indonesia was also very pleasing in its s

67、econd full year of operation.Dairy Farms Restaurants Division,Maxims,delivered another year of good results.A very successful mooncake programme during the Chinese Mid-Autumn Festival bolstered its sales and profit performance.Regional expansion continued with Starbucks in Vietnam and Cambodia,and M

68、axims established a cakes and bakery joint venture in Thailand.Our 19.99%owned associate,Yonghui Superstores,opened a net 105 new stores in China underpinning a 17%growth in revenue.Improvements in margins led to higher year-on-year profits.Strategic progressIn 2016,significant progress was made in

69、pursuit of the Groups strategic priorities,which are important to the long-term growth prospects of our businesses.Further investments will be made in the coming year to build on the progress to date.Annual Report 201615Create a consumer-centric business modelUnderstanding our customers needs,and de

70、livering an in-store experience that meets them,is at the heart of our consumer-centric retail model.We are implementing a new SAP merchandising system across the Group that will greatly enhance our processes and our business analytics.In 2016,the implementation of the new system was completed in Ma

71、nnings China and Guardian Singapore,and has begun in both Giant and Guardian in Malaysia.Additional merchandising training has been added to strengthen our category management capability across the Group.The corporate brand programme in both Food and Health and Beauty continues to provide value and

72、differentiation to customers.In 2016,we launched over 1,500 new SKUs.Further product range innovation is focused on improving local relevance and creating a differentiated assortment through our international supplier network.To embed enhanced quality into our assortment and operating practices,we h

73、ave strengthened our quality assurance and food safety teams across the Group.Investment in existing store refurbishments and additional service counters are also being undertaken to enhance the customer experience.Leverage our regional presence and scaleThere is increased focus on direct sourcing f

74、rom international and domestic suppliers.The reduced reliance on third party distributors should deliver a more differentiated range and reduce costs.We are looking to consolidate common ranges across business units and simplify the supply chain to lower cost and improve replenishment frequency.Comm

75、on sourcing opportunities are also being pursued in fresh food,including the use of mainland Chinese suppliers developed through our Yonghui relationship.A new buying office established in Hong Kong manages common sourcing in general merchandise to maximize Group-wide cooperation on regular range an

76、d seasonal promotions.Deliver greater convenience for customersDuring 2016 we continued to expand our store network to increase convenience across our formats.The Groups continuing operations,including associates and joint ventures,opened 114 net new stores,including 97 net new supermarkets and hype

77、rmarkets,46 net new convenience stores and 71 net new restaurant outlets,although it was necessary to have a net reduction of 100 Health and Beauty stores due to rationalization,particularly in Indonesia.IKEA will open its fourth Hong Kong store in Tsuen Wan in the second half of 2017,and has identi

78、fied a site for its second Indonesian store in Jakarta.During 2016,IKEA also created three new pick-up points in Hong Kong,Macau and Taiwan to provide more convenient options for its customers closer to home.In parallel,e-commerce initiatives are being pursued by most of our formats to deliver a mul

79、ti-channel shopping experience for our customers.In 2016,IKEA launched its online offering in Hong Kong,Macau and Indonesia,and this was expanded to Taiwan in February 2017.Separately,Wellcome in Hong Kong has enhanced its MarketPlace online offer with improved fulfilment options.Strengthening our d

80、igital presence and putting consumers in charge of the way they access our brands,is a key priority for all our businesses.Invest in a modern,efficient supply chainOur modern retail formats rely on a centralized distribution centre approach to drive efficiencies and stock availability levels.In 2016

81、,centralization rates,which capture the percentage of products delivered to our stores via our own distribution centres,improved in most businesses,leading to enhanced in-store product availability.Further investments have also been made in our fresh supply chain.A new fresh food distribution centre

82、 was opened in Singapore during the year,which has enhanced product quality.This is important for the future growth of both Cold Storage and Giant,providing better quality control,cost savings and the potential for higher value food production.A new fresh food distribution centre Dairy Farm Internat

83、ional Holdings Limited16Group Chief Executives Reviewis being built in Malaysia,and will open in the second half of 2017,while in the Philippines,a new fresh food distribution centre will open in the first half of the year.Build people capability across AsiaRetail is a people intensive business.Over

84、 180,000 people are employed across Dairy Farms own operations and those of its associates and joint ventures.We rely on the dedication and resourcefulness of our people to welcome more than 6.6 million consumers every day.We are developing a culture which rewards people who champion innovation and

85、demonstrate a bias for collaboration,while delivering results.To support our ambitious growth plans,we are also building capability in the key retail functions of merchandising,operations,supply chain,IT and quality assurance.These priorities have broad application across each of our formats.They ha

86、ve been important contributors to our 2016 performance and will sharpen the competitive edge of our businesses for the longer term.Accordingly,further steps are planned in 2017 to accelerate progress on all of these fronts.The year aheadRetailers across the globe face unprecedented disruption from n

87、ew business models as well as the changing lifestyles and increased expectations of consumers.In response,we will continue to focus on profitable business approaches in both our bricks and mortar stores and our digital presence as we innovate to improve our consumer offer and modernize our infrastru

88、cture.Dairy Farms market-leading brands,strong cash generation,solid balance sheet and deep people capability place us in a good position to meet these challenges.There remains a significant degree of economic uncertainty in a number of key markets in Asia and consumer confidence is mixed.In such ti

89、mes,delivering real value to customers and maximizing efficiencies are especially important.All of our businesses are focused on driving these efficiencies and improving our offerings to customers.This has reinforced our performance in 2016 and is the basis for continued confidence in the outlook fo

90、r the Company.With our proud,130-year history of doing business in Asia,the depth of our Asian know-how and the breadth of our retail formats,we are uniquely placed to benefit from the growth prospects in the region.The passion and commitment of our people underpin our performance and future growth

91、and I am grateful to them for their contribution to another successful year at Dairy Farm.Graham AllanGroup Chief Executive2nd March 2017Annual Report 201617Building Profitable BrandsOne Click to a Better HomeFocusing on the Finer Things in LifeDairy Farm International Holdings Limited18Setting the

92、Benchmark for Retail in AsiaFeature Stories:Over the past 130 years,Dairy Farm has grown from a small Hong Kong dairy farm to one of the leading retail organizations in Asia with operations in Food,Health and Beauty,Restaurants and Home Furnishings throughout the region.As a leader in Asian retail,t

93、he Group has been at the forefront of the industry in developing upscale supermarket experiences and private label corporate brands while expanding its online offerings and community engagement programmes.Live,Work and SupportAnnual Report 2016191886The Dairy Farm Company Limited incorporated in Hon

94、g Kong by Sir Patrick Manson1986Became a public company again,taking a 50%interest in Maxims from Hongkong Land1989Hong Kong 7-Eleven convenience store chain acquired1993Singapore Cold Storage acquired19801990188019601916Dairy Farms Central Depot reorganized to form Hong Kongs first supermarket1964W

95、ellcome grocery chain acquired1972Acquired by Hongkong Land,joining the Jardine Matheson groupPioneering 130 Years of InnovationIncorporated in 1886 in Hong Kong as a dairy farm,the Company started with a capital of HK$30,000 and 80 head of cattle.Over the years it has transformed into a leading pan

96、-Asian retailer with operations spanning across 11 markets,serving the needs of Asian consumers and bringing them world-class products and services.1976Invested in Manning Dispensary Ltd.Dairy Farm International Holdings Limited202013First Starbucks opens in Vietnam20057-Eleven and Mannings enter Ma

97、cau and China2000201020152014First IKEA store in Indonesia opensInvests in Rose Pharmacy in the Philippines 1998Invested in PT Hero,an Indonesian supermarket chain,and Guardian,a Malaysian pharmacy chain2002IKEA Hong Kong and Taiwan join the Group1999Acquires Giant MalaysiaInvests in Sanmiu Supermar

98、kets in Macau2012Enters the Philippines market with investment in Rustan Supercenters Acquires interest in Lucky Supermarkets to enter Cambodia2015Investment in Yonghui Superstores in ChinaAnnual Report 201621Focusing on the Finer Things in LifeOver the course of Dairy Farms 130-year heritage,upmark

99、et delicatessens have played a major role in defining the business and reputation of the Group.Today,our focus on fresh produce and exciting imported goods is a hallmark of our upscale supermarket business around the region,and that distinction allows us to provide a rewarding shopping experience fo

100、r discerning shoppers across Asia.Purveyors of International GroceriesIn 1904,Dairy Farms Hong Kong Central Depot established a small retail section effectively Hong Kongs first supermarket treating sophisticated palates to a selection of fine imported goods.The Hong Kong Telegraph praised the“hams

101、in nice white cloths bacon of undisputed excellence,(and)German sausages of all kinds”,as well as imported Australian butter and cheese,of which“the quality of these commodities is so well known that further mention of them would be superfluous”.Today,Olivers Delicatessen and many of our upscale sup

102、ermarket chains thrive as kindred descendents of Dairy Farms first steps into food retailing over a century ago.Catering to Asias Sophisticated TastesAcross the region,the Group has created a comprehensive upscale supermarket experience from high-end boutique offerings,to all-natural organics and pr

103、emium everyday groceries.Dairy Farms supermarkets share a commitment Dairy Farm International Holdings Limited22to quality fresh food and a diverse selection of global brands.In Hong Kong,Olivers Delicatessen provides a boutique grocery experience with bespoke shopping services such as an in-store w

104、ine specialist.Catering to the citys health conscious consumers,ThreeSixty focuses on healthy,natural and organic offerings,while our MarketPlace offers consumers an international and customized assortment of foods,produce and merchandise in a comfortable and contemporary shopping environment.Known

105、for its focus on freshness,quality and choices from around the world,Cold Storage is a household name in Singapore and has moved the consumer offering further upscale with the introduction of the MarketPlace concept into the country.In Malaysia,Cold Storage brings its same high-end focus to shoppers

106、 through a network of 17 stores building on the strong branding and reputation of excellence in Singapore.Our Hero supermarket chain in Indonesia traces its history back to its first store in north Jakarta.Today,Hero continues to bring new offerings to Indonesia and now operates 33 supermarkets thro

107、ughout the country.Rustans has pioneered modern grocery retailing in the Philippines,and this has been reinforced with the introduction of our MarketPlace concept to pioneer a luxury-themed lifestyle experience.In Taiwan,Jasons treats our local consumers to a top-end selection of quality goods from

108、around the world.Throughout our history,Dairy Farm has stayed true to its founding principles of bringing the best quality products to our customers.As consumers lifestyles and preferences evolve,our ability to offer quality products will continue to exceed their expectations.Annual Report 201623med

109、als in international wine competitionsWinning50Dairy Farms corporate brands in Food delivered strong growth during 2016,building on the strength of its private label food and wine.Our SnapMax brand was introduced offering a wide range of snack products including dried nuts and hand-cooked chips,whil

110、e our new Sun Harvest brand showcases a variety of wholesome choices such as dried fruits and nuts,cereals,jams and spreads.Our Red Peak wine label follows the success of our French Cellars label,which has won over 50 medals in numerous international competitions.Red Peak focuses on Australian wine

111、and has already won a bronze medal at the most recent Cowra wine show.In creating more diverse product ranges,Dairy Farm has developed its own exciting brands in food and health and beauty providing superior value and additional choice for consumers throughout the region while enhancing profitabilit

112、y.Building Profitable BrandsDairy Farm International Holdings Limited24Corporate brands in the Health and Beauty Division achieved record sales in 2016,with double-digit growth and increased market penetration.Innovation marked this years efforts,with over 900 new products introduced during 2016.Ans

113、wering the growing consumer demand for natural hair and body care products,Botaneco Garden has become a truly pan-Asian brand with successful launches in ten markets around the region.Crystal Moist,our skin care brand formulated with deep ocean water and minerals,continues to grow expanding from Chi

114、na and Hong Kong into Singapore and Malaysia.Lip Hop(known as Kiss Hop in China)is our fun,Korean-inspired skin care brand targeting young consumers with innovative formulations at an affordable price.Addressing the specific needs of the 15-20 year-olds in China,Beaut Blizz offers a fresh and blosso

115、ming beauty approach to skin care with natural ingredients.Dairy Farm introduced more than 450 of its health and beauty corporate brand products into the developing markets of Vietnam,Cambodia,Indonesia and the Philippines,achieving an impressive 117%sales growth in 2016.Annual Report 201625One Clic

116、k to a Better HomeDairy Farm is committed to making shopping more convenient for our customers whether in-store or online.Over the past year,this commitment has been particularly exemplified by IKEA.Dairy Farm International Holdings Limited26Living up to its goal of increasing accessibility for cons

117、umers,IKEA rolled out its online shopping service in Hong Kong and Indonesia in 2016,and launched its online shopping service for Taiwan in February 2017.The site provides an extensive shopping catalogue and product information,as well as seasonal promotions and decoration suggestions,raising conven

118、ience and quality of service to a higher level.Online buyers can choose home delivery,full assembly and installation services,and have the option of picking up their orders at newly opened IKEA pick-up points.The first pickup point was opened in Macau in May 2016,and we followed up with the openings

119、 of a combined pick-up and order point in Hsinchu,Taiwan in September,and a pick-up point in Hong Kong in November.In bringing the IKEA shopping experience beyond our stores and into our customers living rooms and smartphones,our online service is becoming a great complement to our physical retail s

120、tores and helps us to connect closer to our customers.Annual Report 201627Live,Work and SupportMINDSETDairy Farm actively participates in MINDSET,the Jardine Matheson groups philanthropic initiatives supporting people suffering or recovering from mental illnesses,as well as the promotion of mental h

121、ealth in Hong Kong and Singapore.In Hong Kong,Dairy Farm staff formed teams to run up the 49 floors of Jardine House at the Walk Up Jardine House event to raise funds for MINDSET.Through participation in the CENTRAL Rat Race,Dairy Farm executives overcame the obstacles of a challenging course to rac

122、e around the Central Business District to raise awareness about mental health.Our employees also acted as Jardine Ambassadors to volunteer in the in-school Health in Mind programme providing volunteer services,interactive workshops and seminars to raise awareness of mental health issues among young

123、students,teachers and parents.In Singapore,Dairy Farm actively participated in the MINDSET Learning Hub.Established in October 2016,the Hub is a facility that recruits,trains and equips clients with skillsets,and sources placements for clients upon completion of the programme.Dairy Farm Singapore su

124、pports the initiative by providing on-the-job training and hiring of clients who take part in the retail training programme.We also generously sponsored the MINDSET Vertical Challenge through monetary support,goodie bags and supplier engagement with proceeds going towards the MINDSET Learning Hub.Ma

125、nnings Supports Speech Therapy for Youth in Hong KongAs the title sponsor of Benjis Centre Walkie Talkie Walkathon for the past four years,Mannings has provided valuable support to the only charitable organization in Hong Kong providing professional speech therapy to children and teenagers with lang

126、uage development delays and hearing disabilities.In November,over 50 supporters and friends from Mannings joined this meaningful event to raise funds for children in need,with proceeds going towards over 1,000 one-on-one speech therapy sessions.Wellcome Feeds the Needy in Hong KongCollaborating with

127、 three local food banks(Feeding Hong Kong,Food for Good,and Food Angel),Wellcome runs a programme to donate food to people in need.Initiated in 2012 with ten cooperating stores,the programme now involves nearly 100 stores as of November 2016.Food items donated since the programme launch have been eq

128、uivalent to nearly 150,000 meals reducing food waste while benefitting the less fortunate members of our society.The Dairy Farm Group believes it is our responsibility to give back to the communities where we live and work and to support the less fortunate members of our society.These are just some

129、examples of our many community outreach efforts across the region.Dairy Farm International Holdings Limited281,000Dairy Farm Singapore donated essential groceries to needy families under the care of CCSSDairy Farm Singapore Works Hand in Hand with the CommunityIn Singapore,staff volunteers and their

130、 families invited 800 young and elderly beneficiaries under the auspices of the Care Community Services Society(CCSS)to a fun-filled day of carnival games and activities at Bay East Park.As part of the event,Dairy Farm Singapore donated essential groceries to 1,000 needy families under the care of C

131、CSS.CCSS is a voluntary welfare organization that provides assistance,education,training,therapy and counselling to individuals and families in need of assistance.CCSS has been Dairy Farms adopted charity in Singapore for the past ten years,and this years activities were organized under the theme of

132、“Hand in Hand”.This event is one of many initiatives and efforts by Dairy Farm Singapore such as placing donation boxes across its chain of Cold Storage,Giant,7-Eleven and Guardian stores island-wide to help raise awareness and over SG$400,000 in funds for CCSS.Young Indonesian Artist Wins Global IK

133、EA Soft Toy Drawing CompetitionChildren from around the world have created a new toy collection to support IKEA Good Cause Campaign focusing on childrens right to play.For the second year in a row,IKEA invited children to design their dream soft toys and gave the opportunity for children aged four t

134、o 12 to express their creativity.The drawing competition attracted 52,000 unique and wonderful designs from around the world.Judges from the IKEA Global Team selected ten global winners,and one of them is from Indonesia.Naurazka Salsabilla(aged nine)impressed judges with her pink punk horse,which ju

135、dges praised for its“creativity,winking eyes and unique features”.Salsabillas entry was turned into a real-life soft toy as part of the IKEA SAGOSKATT limited soft toy collection and launched for sale around the world as part of the IKEA Good Cause Campaign.For every toy sold from November to Decemb

136、er 2016,IKEA Foundation donated one euro to support childrens right to play,grow and have fun in vulnerable communities in the world.Annual Report 201629FoodSupermarkets and HypermarketsFood(excluding Yonghui)reported US$8.2 billion in sales,in line with last year and 1%ahead in constant currency.Op

137、erating profit increased significantly to US$267 million,14%ahead of prior year in constant currency,driven by margin recovery across the Division.Our continued drive to improve our fresh,corporate brand and Ready-to-Eat(RTE)offerings helped bolster sales in most markets.However,difficult trading co

138、nditions in Malaysia and Indonesia led to lower sales,with increasing competition from smaller format retailers being a key factor.Food Supermarkets and HypermarketsSales of US$6.2 billion from our supermarkets and hypermarkets(excluding Yonghui)were in line with last year in constant currency while

139、 operating profit increased by 13%to US$194 million.HONG KONG MACAUWellcome in Hong Kong drove higher sales through further efforts to strengthen its fresh offer and enhanced its merchandise assortment leading to better appeal to local consumers despite uncertainties in the local economy.Operating p

140、rofit was lower,principally due to a continued rise in rental costs and competitor promotional activities.In Macau,San Miu achieved sales and operating profit growth in its first full year in the Group with range enhancement and increased fresh participation.TAIWANIn Taiwan,sales and operating profi

141、t were ahead of last year.A new superstore concept was introduced for Wellcome with two net new stores opening during the year,while Jasons continued its store expansion and upscale leadership.INDONESIAThe retail landscape in Indonesia was challenging with limited recovery in consumer confidence and

142、 significant competition from the continued rollout of mini-market stores across the country,which impacted sales growth at supermarkets and hypermarkets.Nevertheless,improved margins,from pricing and promotional activities,the closure of a number of underperforming stores and tighter cost control b

143、oosted profitability.Improving the fresh assortment and revitalizing the upscale Hero brand remain key focus areas for the business.Convenience Stores based on operating profit and share of results of associates and joint ventures,excluding support office costs and non-trading items.including share

144、of associates and joint ventures.%of Group Sales14%56%36%12%of Group ProfitSupermarkets/HypermarketsConvenience StoresDairy Farm International Holdings Limited30Business ReviewUnderstanding changes in our customers expectations,needs and preferences is the foundation of our key strategic priority to

145、 enhance our offering in the fresh category.This has been reinforced by the fact that growth in sales of fresh produce outpaced the rest of the food business,with fresh sales increasing 0.6%year-on-year as a percentage of our total sales.Dairy Farms investment in new fresh distribution centres in Si

146、ngapore(May 2016),and additional centres launching in Malaysia and the Philippines(2017)aims to improve quality control and cost,while creating higher value food production and bringing a wider range of products to our consumers.The Group is also committed to expanding its direct sourcing and is con

147、tinually looking for opportunities to partner and work with local businesses.By building longterm relationships with local farmers and producers,we are able to shorten the time from field to shelf of the produce,improve the quality and freshness of our products,and contribute to the development of l

148、ocal economies while passing on cost benefits to consumers.We believe its a winning formula.Continuous Improvement in Fresh Food and Direct SourcingAnnual Report 201631 MALAYSIAIn Malaysia,sales and operating profit were behind 2015.Persistent low consumer confidence together with ongoing price cont

149、rols following the introduction of GST continues to weigh on performance.Despite this,improvements to our fresh offer yielded positive results,and sales participation of private label increased.THE PHILIPPINESThe Philippines recorded a strong year with all banners reporting like-for-like sales growt

150、h and improved profitability.A more appealing fresh assortment coupled with tactical pricing and successful marketing activities underpinned an encouraging increase in footfall.Rustans benefited from increased sales of its imported and exclusive brands,while measures to improve cost efficiency were

151、also implemented.SINGAPOREIn Singapore,sales were down year-on-year due to continued poor consumer sentiment and the impact of store rationalization.Cold Storage achieved an encouraging operating profit increase,despite reduced sales following the closure of underperforming stores.Giant saw steady s

152、ales and positive profit growth,driven by increased margins and lower operating costs.A new fresh distribution centre opened in May 2016.In the coming year,we aim to invest in the renewal of customer facing and back office technologies to improve our customer experience and internal efficiency whils

153、t optimizing ranges and supply chain productivity.VIETNAM In Vietnam,Giant again posted sound sales growth,from our single store,with increased customer traffic being the main driver.CAMBODIAIn Cambodia,the Group saw encouraging increases in like-for-like sales and operating profit.The business redu

154、ced costs through labour efficiency improvements.Dairy Farm International Holdings Limited32Business ReviewReady-to-Eat(RTE)food offerings continued to improve with over 10%year-on-year sales growth across the Group,which was double the rate of overall growth in the convenience store business.Penetr

155、ation of this popular product category increased across all markets.Focusing on innovation,quality improvement and development of local ranges including Hainan chicken rice in Singapore,soup rice noodles and steamed sweet potatoes in China and dim sum and fish balls in Hong Kong,we believe the oppor

156、tunities to expand this category are wide-ranging.Dairy Farm also expanded a successful collaboration with 7-Eleven Japan to source exclusive and unique Japanese products for its Singapore and Hong Kong markets with the goal of extending this offering to other markets in the future.Increasing Conven

157、ience with Ready-to-EatFood Convenience StoresConvenience stores reported US$2.0 billion in sales,an increase of 5%over the previous year in constant currency terms.Operating profit increased by 15%to US$73 million.HONG KONG MACAUIn Hong Kong,7-Eleven outpaced the competition and grew sales and oper

158、ating profit despite soft consumer sentiment and difficult market conditions.Like-for-like sales strengthened during the year supported by promotions,range improvements(including RTE)and new products.A slight gross margin improvement led to a higher operating profit despite cost increases from labou

159、r and rent.In Macau,sales were flat and operating profit was lower due to slowing tourist numbers and a substantial cigarette tax increase in 2015.MAINLAND CHINAIn mainland China,7-Eleven continued its solid growth and passed its 800th store milestone.During the year,sales and operating profit incre

160、ased,with store network expansion and like-for-like sales growth.RTE sales growth combined with attractive consumer promotions supported this achievement.In 2017,7-Eleven will further expand its store network and develop its RTE consumer offer,driven by range,quality and innovation.SINGAPOREIn Singa

161、pore,7-Eleven achieved positive like-for-like sales growth arising from a store re-ranging project with a strong focus on RTE,including the successful introduction of new private label products sourced from 7-Eleven Japan.Operating profit was significantly ahead of 2015 due to these initiatives and

162、the rationalization of loss making stores.The RTE range will be further expanded in 2017 and there will be increased focus on acquiring new profitable sites.INDONESIAIn Indonesia,the Group completed its disposal of the Starmart chain.Annual Report 201633Health and BeautyHealth and Beauty achieved US

163、$2.6 billion in total sales,an increase of 4%in constant currency,although operating profit declined 5%to US$175 million due to margin pressure and higher rents.HONG KONG MACAUIn Hong Kong,Mannings sales increased in 2016 despite having fewer stores than the previous year.As mainland Chinese tourist

164、 arrivals continued to decline,promotional campaigns and loyalty programmes were launched throughout the year targeting local consumers.Sales were flat in Macau as mainland Chinese tourist arrivals remained soft.Operating profit in both Hong Kong and Macau declined due to lower gross margin and high

165、er costs driven by rental increases.MAINLAND CHINAIn mainland China,Mannings showed gradual improvement with solid sales growth,particularly in baby care,beauty care and personal care,while the contribution from corporate brands increased.SINGAPOREIn Singapore,Guardian reported growth in sales,while

166、 operating profit also increased with higher gross margins and greater focus on cost and shrinkage management,partially offset by higher rental costs.A new SAP merchandising system went live smoothly in September.MALAYSIAIn Malaysia,Guardian experienced a challenging year with lower sales and operat

167、ing profit due to subdued consumer sentiment,increased competition and weakness in the ringgit.The year-on-year impact on sales of the introduction of GST in 2015 was felt in the first quarter however momentum improved in the second half.INDONESIAIn Indonesia,Guardian had a strong year,delivering sa

168、les growth despite the net closure of 73 stores.Double-digit like-for-like sales growth was achieved for the fifth year in a row.Operating profit was ahead of 2015 with higher gross margins and the benefits of the store rationalization programme undertaken during the year.VIETNAMIn Vietnam,Guardian

169、recorded another strong year of double-digit sales based on operating profit and share of results of associates and joint ventures,excluding support office costs and non-trading items.including share of associates and joint ventures.%of Group Sales%of Group Profit19%27%Dairy Farm International Holdi

170、ngs Limited34Business Reviewgrowth and improvement in gross margin.Corporate brand penetration increased significantly as brands such as Botaneco Garden proved popular with local consumers.CAMBODIAIn Cambodia,good progress was made in developing this new market,with range expansion and increased cor

171、porate brand penetration supporting strong like-for-like sales.THE PHILIPPINESIn its second year in the Group,Rose Pharmacy in the Philippines delivered performance improvement through sales growth,gross margin enhancement,better cost efficiency and the closure of a number of underperforming stores.

172、Guardian brand products were launched with encouraging early signs of customer acceptance.The Health and Beauty business delivered a number of successes in electronic loyalty programmes,e-commerce and increased online presence during the year.In Vietnam,Guardian leveraged social media,Facebook in pa

173、rticular,to update its customers on current promotions and special offers.This led to increased customer traffic and sharing of health and beauty tips with consumers.In the Philippines,Rose Pharmacy introduced a new e-commerce platform,allowing customers to order non-pharmaceutical products online.I

174、t also allows customers to order selected medicines online with payment-on-delivery and in-store pick up options.Mannings introduced its Wechat member card in China in April,and also saw 150%growth in its e-commerce sales in 2016.Expanding Health and Beauty OnlineAnnual Report 201635HomeFurnishingsH

175、ome Furnishings again achieved record sales and operating profit during 2016.In constant currency terms,operating profit rose by 12%to US$71 million driven by increased sales of US$597 million,6%ahead of 2015.Sales and operating profit were higher than last year in all three markets.Like-for-like sa

176、les growth was particularly strong in Taiwan and Indonesia.Hong Kong led the Group in introducing new concepts to increase consumer access,launching online shopping in April 2016 and opening two pick-up points in Macau and on Hong Kong Island.Indonesia introduced online shopping in July.Taiwan opene

177、d a pick-up point in Hsinchu and launched online shopping in February 2017.We continued to strengthen our low price image through ongoing price investment,and increased our focus on market specific products to enhance our local consumer appeal.based on operating profit and share of results of associ

178、ates and joint ventures,excluding support office costs and non-trading items.including share of associates and joint ventures.4%of Group Sales11%of Group ProfitDairy Farm International Holdings Limited36Business ReviewCombining the inspirational experience of IKEAs showrooms with the unique atmosphe

179、re of Taipeis popular coffee shops,IKEA House in Taiwan attracts consumers with unique food and beverage offerings,while inspiring visitors to upgrade their own home furnishings by showcasing a wide variety of IKEA products.Featuring an IKEA caf on the ground floor,IKEA House cultivates a welcoming

180、experience by encouraging visitors to take their food and wander throughout the house exploring IKEA designs and products in real-life environments.These special showcases include a seating area on the first floor,a model apartment,bedroom and living room on the second floor,and a fully functional m

181、odel kitchen on the third floor,giving consumers a refreshing,holistic view of model living.Functional Inspiration IKEA HouseIn the coming year,Home Furnishings plans both to continue its push in consumer accessibility and to drive forward its expansion plans,having identified a second Indonesia sto

182、re location and opening a fourth store in Hong Kong in the second half of 2017.Annual Report 201637RestaurantsRestaurants reported US$2.0 billion in total sales,an increase of 7%over the prior year,while profit contribution increased by 4%.The business delivered another year of record earnings in a

183、difficult market environment while continuing to expand outside Hong Kong.In 2016,Maxims celebrated its 60th anniversary and continued its success in developing new concepts,business models and products.In Hong Kong,the group realized steady sales growth,while continuing to update its consumer propo

184、sition.Maxims mooncakes enjoyed very strong sales and operating profit growth driven by the popularity of the Lava Custard Mooncake.The group expanded organically and via acquisition;opening their first food hall,TREATS,and acquiring COVA,a premium line of cake shops and restaurants.Maxims continued

185、 its expansion in mainland China,adding a net 16 new outlets across all brands.This brought new and exciting brands to the market,opening the first The Cheesecake Factory outlet in Asia at the Shanghai Disney Town adjacent to the new Disneyland theme park which opened in June.Maxims is also managing

186、 several staff canteens at the theme park.In Southeast Asia,the group is now operating over 20 Starbucks stores across Vietnam and Cambodia and performance is encouraging.In September 2016,the group entered Thailand and launched its first franchise,mx cakes and bakery,through a joint venture with Th

187、aiBev,which has opened three outlets in Bangkok.Looking ahead,the group continues to see various exciting opportunities,including entry into the Beijing market with the opening of Jade Garden,Caf Landmark and The Cheesecake Factory planned in 2017.Maxims will also continue to explore franchise and a

188、cquisition opportunities across the region.based on operating profit and share of results of associates and joint ventures,excluding support office costs and non-trading items.including share of associates and joint ventures.7%of Group Sales14%of Group ProfitDairy Farm International Holdings Limited

189、38Business ReviewIn April 2016,Maxims acquired the COVA franchise of high-end Italian patisseries and restaurants in Hong Kong.COVA opened its first Pasticceria-Confetteria in Hong Kong in 1993,followed by the citys first Caff Restaurante in 1994,and today has ten outlets throughout the territory.In

190、 June 2016,Maxims introduced Chinas first The Cheesecake Factory at Shanghai Disney Resort,located just outside the new Shanghai Disneyland.Delivering American-sized portions of comfort food classics and generous desserts,the restaurants family-friendly atmosphere provides a fitting complement to th

191、e bright lights of Disneyland.Acquisitions and Openings COVA and The Cheesecake FactoryAnnual Report 201639Total Capital Expenditure 20122013201420152016InvestmentNormal Capital Expenditure03006009001,2001,500US$m6%12%14%55%13%Supermarkets/HypermarketsHome FurnishingsIT/Distribution CentresConvenien

192、ce StoresHealth and Beauty2016 Normal Capital ExpenditureAccounting policiesThe accounting policies are consistent with those of the previous year.The Directors continue to review the appropriateness of the accounting policies adopted by the Group with regard to developments in International Financi

193、al Reporting Standards.ResultsSales,excluding those of associates and joint ventures,were US$11.2 billion,a 1%increase over prior year.On a constant currency basis sales have increased by 2%on prior year,mainly impacted by the depreciation of the Chinese renminbi,Malaysian ringgit and Philippine pes

194、o to the US dollar of approximately 5%each.With the inclusion of 100%of associates and joint ventures,total sales were US$20.4 billion,an increase of 14%over 2015,or 17%on a constant currency basis,principally driven by growth in Yonghui and the additional three months contribution from Yonghui and

195、San Miu compared with 2015.Underlying operating profit increased from US$435 million in 2015 to US$453 million in 2016 mainly due to higher contributions from the Food and Home Furnishings divisions,partly offset by lower profits from the Health and Beauty Division.“Underlying operating profit incre

196、ased from US$435 million in 2015 to US$453 million in 2016 mainly due to higher contributions from the Food and Home Furnishings divisions”Normal Capex:US$245mDairy Farm International Holdings Limited40Financial ReviewEBITDA 010020030040050060070080020122013201420152016US$mNet Asset Value per Share2

197、0122013201420152016020406080100120USThe Groups share of results of associates and joint ventures increased 39%to US$118 million from 2015 which principally reflected the better performance and additional three months contribution from Yonghui and consistent good performance from Maxims.The tax charg

198、e for 2016 was US$85 million,1%higher than 2015,mainly due to the change of profit contribution mix from different territories.Underlying net profit was US$460 million,an increase of 7%versus 2015.There was a net non-trading gain of US$9 million in 2016,principally from the profit on disposal of cer

199、tain properties,lower than expected costs associated with the closure of the Starmart business in Indonesia and share of profit on disposal of an associate by Yonghui.Consequently the reported net profit was US$469 million,11%above prior year.Underlying earnings per share were US34.03,also 7%ahead o

200、f 2015.Cash flowThe Group generated a net inflow of US$543 million operating cash flow,compared to the previous years US$700 million,mainly impacted by negative working capital from the timing of supplier payments and inventory stocking up in December for an early Chinese New Year in 2017.EBITDA was

201、 US$672 million for the year(2015:US$643 million).Normal capital expenditure was lower at US$245 million(2015:US$304 million),principally due to a reduction in new store expansion and refurbishment.The Groups continuing businesses,including associates and joint ventures,added a net 114 outlets in 20

202、16.This included its interest in 487 Yonghui stores,ending the year with 6,548 stores across all formats in 11 markets.An additional investment of US$190 million was made in Yonghui Superstores during the year to maintain the Groups 19.99%shareholding.Annual Report 201641Balance sheetTotal assets,ex

203、cluding cash and bank balances,of US$4.81 billion were 5%higher than 2015,mainly reflecting the additional investment in Yonghui and capital expenditure for new and refurbished stores.Inventory was up 5%to US$983 million while trade creditors were broadly flat.Net operating assets were US$1.58 billi

204、on at the end of 2016,a 9%increase versus the previous year.The Group ended the year with net debt of US$641 million as compared to US$482 million at 31st December 2015.The increase in the net debt position was principally driven by increased borrowings to fund the additional investment in Yonghui.D

205、ividendThe Board is recommending an increased final dividend of US14.50 per share,bringing the total dividend in respect of 2016 to US21.00 per share,up 5%.Financing Borrowings are normally taken out in local currencies by the Groups operating subsidiaries to fund and partially hedge their local ass

206、et investments.The Group,excluding associates and joint ventures,had gross debt of US$965 million at the year end,an increase of US$224 million from 2015,reflecting the loan drawn to finance the additional investment in Yonghui.Total committed banking facilities at the year end totalled US$1.25 bill

207、ion with US$861 million drawn at year end,and had an average life to maturity of 2.4 years.Net financing charges increased from US$14 million in 2015 to US$22 million in 2016 reflecting the additional borrowings.Financial risk managementA comprehensive discussion of the Groups financial risk managem

208、ent policies is included in note 2 to the financial statements.The Group manages its exposure to financial risk using a variety of techniques and instruments.The main objectives are to limit exchange and interest rate risks and to provide a degree of certainty about costs.As a matter of policy,the G

209、roup does not enter into speculative transactions in derivatives.The investment of the Groups cash resources is managed so as to minimize risk while seeking to enhance yield.Overall,the Groups funding arrangements are designed to keep an appropriate balance between equity and debt(short and long ter

210、m),to maximize flexibility for the future development of the business.Principal risks and uncertaintiesA review of the principal risks and uncertainties facing the Group is set out on pages 116 and 117.Neil GallowayGroup Finance Director2nd March 2017Dairy Farm International Holdings Limited42Financ

211、ial ReviewMr Ben Keswick joined the Board as Managing Director in 2012 and became Chairman in 2013.He has held a number of executive positions since joining the Jardine Matheson group in 1998,including finance director and then chief executive officer of Jardine Pacific between 2003 and 2007 and,the

212、reafter,group managing director of Jardine Cycle&Carriage until 2012.He has an MBA from INSEAD.Mr Keswick is chairman of Jardine Matheson Limited and Jardine Cycle&Carriage and a commissioner of Astra.He is also chairman and managing director of Hongkong Land and Mandarin Oriental,managing director

213、of Jardine Matheson and Jardine Strategic,and a director of Jardine Pacific and Jardine Motors.Mr Allan joined the Board in 2013 as Group Chief Executive,having been Chief Operating Officer since 2012.He has extensive experience in the food service industry and was previously President and CEO of Yu

214、m!Restaurants International based in the United States.He is also a director of Yonghui Superstores and a commissioner of Hero.Mr Galloway joined the Board as Group Finance Director in 2013.He was previously finance director and chief financial officer of The Hongkong and Shanghai Hotels from 2008.M

215、r Galloway began his career in investment banking and he held a range of senior positions in Hong Kong and the United Kingdom.He is also a commissioner of Hero.Mr Greenberg joined the Board in 2006.He is group strategy director of Jardine Matheson.He had previously spent 16 years in investment banki

216、ng with Dresdner Kleinwort Wasserstein in London.He is also a director of Jardine Matheson Limited,Hongkong Land,Jardine Cycle&Carriage and Mandarin Oriental,and a commissioner of Astra and Bank Permata.Mr Ho joined the Board in 1998.He was previously engaged in private law practice in San Francisco

217、 and is currently engaged in the broadcasting and multi-media industries.Mr Ho is also chairman of Hong Kong Commercial Broadcasting Company.Mr Adam Keswick joined the Board in 2012.Having joined Jardine Matheson in 2001,he was appointed to the board in 2007 and was deputy managing director from 201

218、2 to 2016.Mr Keswick is also deputy chairman of Jardine Lloyd Thompson and a director of Hongkong Land,Jardine Matheson,Jardine Strategic and Mandarin Oriental.He is also a director of Ferrari,and a supervisory board member of Rothschild&Co.Sir Henry joined the Board in 1988.He is chairman of Jardin

219、e Matheson,having first joined the group in 1961,and is also chairman of Jardine Strategic.He is a director of Hongkong Land and Mandarin Oriental.He is also vice chairman of the Hong Kong Association.Mr Simon Keswick joined the Board in 1986 and was Chairman of the Company from 1986 to 2013.He join

220、ed the Jardine Matheson group in 1962 and is a director of Hongkong Land,Jardine Matheson,Jardine Strategic and Mandarin Oriental.Mr Kok was Group Chief Executive from 2007,when he first joined the Board,until he retired from executive office in 2012.He began his career in Dairy Farm in 1987 and has

221、 extensive experience in the retail industry in Asia.He is also a director of Jardine Cycle&Carriage,Mapletree Greater China Commercial Trust Management and SATS.*Executive DirectorBen Keswick*Chairman and Managing DirectorGraham Allan*Group Chief ExecutiveNeil Galloway*Group Finance DirectorMark Gr

222、eenbergGeorge J.HoAdam KeswickSir Henry KeswickSimon KeswickMichael KokAnnual Report 201643Directors ProfilesDr Koo,a Fellow of the Royal College of Surgeons,was appointed as a Director in 1990.He is also a director of Jardine Strategic.Mr Nightingale joined the Board in 2006 and was Managing Direct

223、or of the Company from 2006 to 2012.He is also a director of Hongkong Land,Jardine Cycle&Carriage,Jardine Matheson,Jardine Strategic,Mandarin Oriental,Prudential,Schindler,Shui On Land and Vitasoy,and a commissioner of Astra.Mr Nightingale also holds a number of senior public appointments,including

224、acting as a non-official member of the Commission on Strategic Development,a Hong Kong representative to the Asia Pacific Economic Cooperation(APEC)Business Advisory Council and a director of the UK-ASEAN Business Council.He is chairman of The Sailors Home and Missions to Seamen in Hong Kong.Mr Pang

225、 joined the Board in August 2016.He is deputy managing director of Jardine Matheson,chairman of Jardine Pacific,and chairman and chief executive of Jardine Motors.He previously held a number of senior executive positions in the Jardine Matheson group,which he joined in 1984,including chief executive

226、 of Hongkong Land between 2007 and 2016.Mr Pang is also deputy chairman of Jardine Matheson Limited,and a director of Hongkong Land,Jardine Matheson(China),Jardine Strategic,Mandarin Oriental,Yonghui Superstores and Zhongsheng Group Holdings.He is chairman of the Employers Federation of Hong Kong an

227、d a past chairman of the Hong Kong General Chamber of Commerce.Mr Parr joined the Board in 2015.He is general counsel of the Jardine Matheson group.He was previously a senior corporate partner with Linklaters,where he was the global head of the firms corporate division,based in London.Mr Parr is als

228、o a director of Jardine Matheson Limited,Jardine Matheson and Mandarin Oriental.Lord Sassoon joined the Board in 2013.He began his career at KPMG,before joining SG Warburg(later UBS Warburg)in 1985.From 2002 to 2006 he was in the United Kingdom Treasury as a civil servant,where he had responsibility

229、 for financial services and enterprise policy.Following this,he chaired the Financial Action Task Force;and conducted a review of the UKs system of financial regulation.From 2010 to 2013 Lord Sassoon was the first Commercial Secretary to the Treasury and acted as the Governments Front Bench Treasury

230、 spokesman in the House of Lords.He is a director of Hongkong Land,Jardine Lloyd Thompson,Jardine Matheson and Mandarin Oriental.He is also chairman of the China-Britain Business Council.Mr Weatherall joined the Board in 2000 and was Managing Director from 2000 to 2006.He first joined the Jardine Ma

231、theson group in 1976 and retired from executive office in 2006.He is also a director of Hongkong Land,Jardine Matheson,Jardine Strategic and Mandarin Oriental.He is chairman of Corney&Barrow and the Nith District Salmon Fishery Board.Mr Witt joined the Board in April 2016,following his appointment a

232、s group finance director of Jardine Matheson.He is a Chartered Accountant and has an MBA from INSEAD.He has been with the Jardine Matheson group since 1993 during which time he has held a number of senior finance positions,most recently chief financial officer of Hongkong Land.He is also a director

233、of Jardine Matheson Limited.Dr George C.G.KooAnthony NightingaleY.K.PangJeremy ParrLord Sassoon,KtPercy WeatherallJohn WittDairy Farm International Holdings Limited44Directors ProfilesMr Allan was named Group Chief Executive of Dairy Farm in January 2013,having served as Chief Operating Officer from

234、 June 2012.Prior to joining Dairy Farm,Mr Allan was President and CEO at Yum!Restaurant International and was responsible for global brands KFC,Pizza Hut and Taco Bell in all markets except the US and China.Since 1989,he has held various senior positions in multinational food and beverage companies

235、with operations across the globe and has lived and worked in Australia,the US and Europe.Mr Allan began his career in law before moving to leading management consultancy,McKinsey&Co.Inc.,where he spent five years as a consultant working extensively in consumer goods.Mr Allan holds Bachelor of Econom

236、ics and Bachelor of Laws degrees from Monash University in Melbourne and an MBA from the University of Melbourne.He is also a director of Yonghui Superstores and a commissioner of Hero.Mr Galloway joined the Board as Group Finance Director in 2013.He was previously Finance Director and Chief Financi

237、al Officer of The Hongkong and Shanghai Hotels from 2008.Mr Galloway began his career in investment banking and he has held a range of senior positions in Hong Kong and the United Kingdom.He is also a commissioner of Hero.Ms Zhao was appointed Group Human Resources Director of the Dairy Farm Group i

238、n July 2013.Prior to her appointment,she lived and worked in Singapore as Regional HR Director,Asia Pacific for Rentokil Initial.Ms Zhao began her career with Unilever in 1992 where she worked within Research&Development and Supply Chain functions.Following her career transition to Human Resources w

239、ithin Unilever,she had held several leadership roles in China,Thailand as well as Singapore.Ms Zhao holds a Bachelor degree in Polymer Engineering from Tongji University in Shanghai,and an MBA from China Europe International Business School.She is also a supervisor of Yonghui Superstores.Ms Wong was

240、 named the Group Commercial Director in May 2016 responsible for the Groups Corporate Brand,Quality Assurance,Fresh,General Merchandise and Non-trade Procurement functions.Ms Wong previously served as Group Corporate Brand Director responsible for the Groups Own Brand strategy,including product and

241、brand development,marketing,group sourcing,quality assurance for Own Brand products across the Group from May 2009.Prior to joining Dairy Farm,Ms Wong lived and worked in Shanghai as the Vice President,Asia for the US sales and marketing consulting firm Daymon Worldwide covering mainland China,Asia,

242、Korea and Japan;working with retail customers like Lotte,Mandai,the CP Group,Lianhua and Dairy Farm.Ms Wong began her career in Mars in the United Kingdom and has worked and lived in Asia with the company where she held senior roles in Regional Brand Management,Marketing,Sales and Business Developme

243、nt.Ms Wong brings more than 20 years of brand marketing,product development and sourcing experience to her role.Born and educated in Singapore,Ms Wong holds a Bachelors degree in Science in Economics from the University of Singapore.Graham AllanGroup Chief ExecutiveNeil GallowayGroup Finance Directo

244、rTongwen ZhaoGroup Human Resources DirectorSuzanne WongGroup Commercial DirectorAnnual Report 201645Our LeadershipChoo Peng CheeRegional Director,North Asia(Food)Gordon FarquharGroup Director,Health and BeautyPierre-Olivier DeplanckCEO,Malaysia and Brunei(Food)Mr Oh joined Dairy Farm as the Group Ch

245、ief Information Officer in 2015.Mr Oh has over 25 years of IT management experience in the retail industry.Mr Oh has led and built a number of global,sustainable,and transformational IT capabilities for multi-national organizations including Tesco,Fujitsu,and Lotus.Mr Oh has lived and worked in Shan

246、ghai,Hong Kong,Bangkok and the US.Mr Oh also founded and led a number of non-profit organizations to serve communities around the globe.Mr Oh holds a Bachelors degree in Mathematics and Computer Science from University of California,San Diego and completed the Executive Management Academy from Unive

247、rsity of California,Los Angeles.Mr Wood was appointed Group Counsel in January 2007.He was initially recruited in September 1999 to set up a legal department for Dairy Farm in Hong Kong,and subsequently became responsible for the legal affairs of Dairy Farm in North Asia before assuming his current

248、role.Mr Wood qualified as a solicitor in England and worked in private practice in London for three years before moving to Vietnam in 1995 to work for an international law firm.Mr Farquhar was appointed Group Director,Health and Beauty in November 2016.Prior to joining Dairy Farm,Mr Farquhar was Reg

249、ional Managing Director for Europe and the Middle East of Walgreens Boots Alliance.He was previously based in New York as Managing Director of Boots Retail USA where he led Boots retail programmes following the integration of Walgreens and Alliance Boots.His career at Boots(over two separate periods

250、)has spanned 25 years having begun as a store manager and newly qualified pharmacist 30 years ago.Mr Farquhar holds a Bachelor degree in Pharmacy with honours from the University of Strathclyde and an MBA from the University of Nottingham.Mr Deplanck was appointed Chief Executive Officer of Malaysia

251、 and Brunei(Food)in August 2016,responsible for the Groups food retail operations in Malaysia and Brunei.Prior to the appointment,Mr Deplanck was Chief Executive Officer of Rustan Supercenters,Inc.,leading the Groups food retail operations in the Philippines.He was initially recruited as Merchandise

252、 Director for Giant Singapore in 2007 and became Chief Executive Officer of Guardian Singapore in 2011.Mr Deplanck has more than 25 years of retail experience in food and non-food retail,starting in France and developed most of his career over the last 20 years in Asia.Mr Choo was appointed Regional

253、 Director,North Asia(Food)in January 2013,covering all food related business units in Hong Kong,Macau,China and Taiwan.Mr Choo previously served as Chief Executive Officer for Wellcome Hong Kong from May 2010.Prior to that,he was Chief Executive Officer of Cold Storage,MarketPlace and Shop N Save in

254、 Singapore.Mr Choo joined the Dairy Farm Group in 2000.Mr Choo brings more than 30 years of retail experience to his role and holds an MBA in Retailing from the University of Stirling,Scotland.Sam OhGroup CIOCharlie WoodGroup CounselDairy Farm International Holdings Limited46Our LeadershipMr Lee joi

255、ned in September 2016 as Chief Executive Officer of Rustan Supercenters,Inc.(RSCI).Prior to this,he served as a board director at Wm Morrison Supermarkets Plc and a senior advisor at McKinsey&Co.Mr Lee started his career at Procter&Gamble(P&G)in the Philippines and rose to become Chief Financial Off

256、icer in Indonesia,Japan/Korea and Greater China.He then held General Manager and Managing Director roles in China and UK/Ireland,culminating as Regional CEO for P&G Northern Europe.Mr Lee graduated Summa Cum Laude with an Accountancy degree from De La Salle University,and completed Executive Educati

257、on program at IESE Business School,University of Navarra.Mr Deutsch was appointed President Director of PT Hero in July 2014.Mr Deutsch moves into the role from his prior position as Chief Executive Officer of Dairy Farms operations in Vietnam,which he has held since August 2013.Prior to joining Dai

258、ry Farm,Mr Deutsch worked for Carrefour for 23 years in various Chief Financial Officer roles and as Chief Operating Officer for Carrefour South China.In 2010,Mr Deutsch became Chief Executive Officer of Carrefour Malaysia and Singapore.He is a French citizen with more than 25 years of experience in

259、 retail operations and finance roles across China,Malaysia,Singapore,Korea,Vietnam,Portugal and France.Mr Deutsch has executive training from ESCP Paris.Mr Herbert was appointed Chief Executive Officer,Singapore(Food)in September 2015.He oversees the Dairy Farm Groups food related retail operations

260、in Singapore and Cambodia,covering the Cold Storage,MarketPlace,Jasons,Giant,7-Eleven and Lucky supermarket and convenience banners.Prior to joining Dairy Farm,Mr Herbert was Chief Executive of Jardine Motors Groups UK business where he successfully grew the business both via acquisition and organic

261、ally through the implementation of a new operating strategy.With an extensive experience in business transformation and integration,Mr Herbert joined the Jardine Matheson Group in 1997.Since then,he has held various senior management positions in different operations,including Cycle&Carriage in New

262、Zealand,Jardine Pacific,Jardine Aviation and Gammon Construction in Hong Kong and PT United Tractors Tbk in Jakarta,Indonesia.Mr Herbert began his professional career in Corporate Recovery in New Zealand followed by the UK.Mr Lindstrm was appointed Group Director,IKEA in January 2013 with responsibi

263、lities for the Groups IKEA operations in Taiwan,Hong Kong and Indonesia.Prior to that,he was General Manager of IKEA Taiwan in 2007 and subsequently CEO of the Dairy Farm IKEA business in 2010.Mr Lindstrm has more than 20 years experience in a variety of senior positions with the IKEA business in Eu

264、rope,Eastern Europe and more than nine years in the Asia Pacific region.Irwin LeeCEO,RSCIStphane DeutschPresident Director,PT HeroMark HerbertCEO,Singapore and Cambodia(Food)Martin LindstrmGroup Director,IKEAAnnual Report 20164720162015Underlying business performanceNon-trading itemsTotalUnderlyingb

265、usinessperformanceNon-trading itemsTotalNoteUS$mUS$mUS$m US$mUS$mUS$mSales411,200.711,200.711,137.311,137.3Costofsales(7,815.2)(7,815.2)(7,852.1)(7,852.1)Grossmargin3,385.53,385.53,285.23,285.2Otheroperatingincome171.86.2178.0170.50.5171.0Sellinganddistributioncosts(2,634.9)(2,634.9)(2,602.5)(2,602.

266、5)Administrationandotheroperatingexpenses(469.8)(469.8)(417.9)(4.7)(422.6)Operatingprofit5452.66.2458.8435.3(4.2)431.1Financingcharges(23.3)(23.3)(15.3)(15.3)Financingincome1.51.51.71.7Netfinancingcharges6(21.8)(21.8)(13.6)(13.6)Shareofresultsofassociatesand jointventures7114.53.7118.285.085.0Profit

267、beforetax545.39.9555.2506.7(4.2)502.5Tax8(85.1)(85.1)(84.4)(0.1)(84.5)Profitaftertax460.29.9470.1422.3(4.3)418.0Attributableto:ShareholdersoftheCompany460.28.8469.0428.1(3.7)424.4Non-controllinginterests1.11.1(5.8)(0.6)(6.4)460.29.9470.1422.3(4.3)418.0USUSUSUSEarningspershare9basic34.0334.6931.6631.

268、39diluted34.0234.6831.6631.38Dairy Farm International Holdings Limited48fortheyearended31stDecember2016ConsolidatedProfitandLossAccount20162015NoteUS$mUS$mProfitfortheyear470.1418.0OthercomprehensiveexpenseItemsthatwillnotbereclassifiedtoprofitorloss:Remeasurementsofdefinedbenefitplans2220.9(31.9)Ta

269、xrelatingtoitemsthatwillnotbereclassified(4.4)6.116.5(25.8)Shareofothercomprehensiveexpenseofassociatesandjointventures(1.1)(3.7)15.4(29.5)Itemsthatmaybereclassifiedsubsequentlytoprofitorloss:Netexchangetranslationdifferencesnetlossarisingduringtheyear(7.3)(118.9)Revaluationofotherinvestments(loss)/

270、gainarisingduringtheyear14(0.9)1.6Cashflowhedgesnetgainarisingduringtheyear2.00.4transfertoprofitandloss(0.4)(1.9)1.6(1.5)Taxrelatingtoitemsthatmaybereclassified(0.1)Shareofothercomprehensiveexpenseofassociatesandjointventures(76.4)(43.9)(83.1)(162.7)Othercomprehensiveexpensefortheyear,netoftax(67.7

271、)(192.2)Totalcomprehensiveincomefortheyear402.4225.8Attributableto:ShareholdersoftheCompany398.0242.8Non-controllinginterests4.4(17.0)402.4225.8Annual Report 201649fortheyearended31stDecember2016ConsolidatedStatementofComprehensiveIncome20162015NoteUS$mUS$mNet operating assetsIntangibleassets11765.1

272、744.4Tangibleassets121,099.51,140.8Associatesandjointventures131,461.81,292.1Otherinvestments145.96.8Non-currentdebtors15150.8161.5Deferredtaxassets1629.035.0Non-currentassets3,512.13,380.6Stocks983.1 936.8Currentdebtors15 290.5 233.8Currenttaxassets16.8 10.8Bankbalancesandotherliquidfunds17 323.8 2

273、58.51,614.2 1,439.9Non-currentassetsheldforsale18 2.6 0.4Currentassets1,616.8 1,440.3Currentcreditors19(2,327.9)(2,354.5)Currentborrowings20(369.6)(729.6)Currenttaxliabilities(58.6)(56.0)Currentprovisions21(14.8)(10.6)Currentliabilities(2,770.9)(3,150.7)Netcurrentliabilities(1,154.1)(1,710.4)Long-te

274、rmborrowings20(595.0)(10.6)Deferredtaxliabilities16(56.6)(55.3)Pensionliabilities22(52.4)(71.4)Non-currentcreditors19(42.9)(43.6)Non-currentprovisions21(31.7)(34.1)Non-currentliabilities(778.6)(215.0)1,579.41,455.2Total equitySharecapital2375.175.1Sharepremiumandcapitalreserves2559.461.3Revenueandot

275、herreserves1,370.81,239.4Shareholdersfunds1,505.31,375.8Non-controllinginterests74.179.41,579.41,455.2ApprovedbytheBoardofDirectorsBen KeswickGraham AllanDirectors2ndMarch2017Dairy Farm International Holdings Limited50at31stDecember2016ConsolidatedBalanceSheetAttributable to shareholders of the Comp

276、anyShare capitalShare premiumCapital reservesRevenue reservesHedging reservesExchange reservesTotalAttributable to non-controlling interestsTotal equity US$m US$m US$m US$m US$m US$m US$m US$m US$m 2016At1stJanuary75.131.130.21,561.30.3(322.2)1,375.879.4 1,455.2Totalcomprehensive income482.51.4(85.9

277、)398.04.4402.4Dividendspaidbythe Company(270.4)(270.4)(270.4)Dividendspaidto non-controlling interests(3.1)(3.1)Unclaimeddividends forfeited0.60.60.6Employeeshare optionschemes1.31.31.3Changeininterestin asubsidiary(2.2)(2.2)Capitalrepayment tonon-controlling interests(4.4)(4.4)Transfer(3.2)3.2At31s

278、tDecember75.131.128.31,777.21.7(408.1)1,505.374.1 1,579.42015At1stJanuary75.130.528.61,461.61.7(168.8)1,428.793.8 1,522.5Totalcomprehensive income397.6(1.4)(153.4)242.8(17.0)225.8Dividendspaidbythe Company(311.0)(311.0)(311.0)Employeeshare optionschemes2.22.22.2Changeininterests insubsidiaries13.113

279、.12.615.7Transfer0.6(0.6)At31stDecember75.131.130.21,561.30.3(322.2)1,375.879.4 1,455.2TotalcomprehensiveincomeincludedinrevenuereservescomprisesprofitattributabletoshareholdersoftheCompanyofUS$469.0million(2015:US$424.4million)andnetfairvaluelossonotherinvestmentsofUS$0.6million(2015:netfairvaluega

280、inofUS$1.3million).CumulativenetfairvaluegainonotherinvestmentsamountedtoUS$4.8million(2015:US$5.4million).Annual Report 201651fortheyearended31stDecember2016ConsolidatedStatementofChangesinEquity20162015NoteUS$mUS$mOperating activitiesOperatingprofit5458.8 431.1 Depreciationandamortization29(a)212.

281、8 212.0 Othernon-cashitems29(b)8.4 25.2(Increase)/decreaseinworkingcapital29(c)(97.1)73.0 Interestreceived1.3 1.8 Interestandotherfinancingchargespaid(22.0)(15.0)Taxpaid(85.3)(90.2)476.9 637.9 Dividendsfromassociatesandjointventures66.0 61.9 Cashflowsfromoperatingactivities542.9699.8Investing activi

282、tiesPurchaseofasubsidiary29(d)(146.6)Purchasesofassociatesandjointventures29(e)(197.0)(918.4)Purchaseofintangibleassets(32.1)(41.9)Purchaseoftangibleassets(212.5)(261.9)SaleofconveniencestoresinIndonesiaandrestaurantsinCambodia5.1 Saleofproperties29(f)7.21.7 Saleoftangibleassets1.31.7Cashflowsfromin

283、vestingactivities(428.0)(1,365.4)Financing activitiesChangeininterestsinsubsidiaries29(g)(2.2)15.7 Capitalrepaymenttonon-controllinginterests(4.4)Drawdownofborrowings1,769.7 2,782.4 Repaymentofborrowings(1,660.6)(2,209.3)Netincreaseinothershort-termborrowings29(h)128.5DividendspaidbytheCompany26(270

284、.4)(311.0)Dividendspaidtonon-controllinginterests(3.1)Cashflowsfromfinancingactivities(42.5)277.8Netincrease/(decrease)incashandcashequivalents72.4(387.8)Cashandcashequivalentsat1stJanuary256.7656.6Effectofexchangeratechanges(6.5)(12.1)Cashandcashequivalentsat31stDecember29(i)322.6256.7Dairy Farm In

285、ternational Holdings Limited52ConsolidatedCashFlowStatementfortheyearended31stDecember20161.Principal Accounting PoliciesBasis of preparationThefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS),includingInternationalAccountingStandards(IAS)andInterpret

286、ationsadoptedbytheInternationalAccountingStandardsBoard.Thefinancialstatementshavebeenpreparedonagoingconcernbasisandunderthehistoricalcostconventionexceptasdisclosedintheaccountingpoliciesbelow.Amendmentseffectivein2016whicharerelevanttotheGroupsoperations:AmendmentstoIFRS11AmendmentstoIAS1Amendmen

287、tstoIAS16andIAS38AnnualImprovementstoIFRSsAccountingforAcquisitionsofInterestsinJointOperationsDisclosureInitiative:PresentationofFinancialStatementsClarificationofAcceptableMethodsofDepreciationandAmortization20122014CycleTheadoptionoftheaboveamendmentsdoesnothaveasignificanteffectontheGroupsaccoun

288、tingpoliciesanddisclosures.Newstandardsandamendmentseffectiveafter2016whicharerelevanttotheGroupsoperationsandyettobeadopted:Certainnewstandardsandamendments,whichareeffectiveafter2016,havebeenpublishedandwillbeadoptedbytheGroupfromtheireffectivedates.TheGroupiscurrentlyassessingthepotentialimpactof

289、thesestandardsandamendmentsbutexpectstheiradoptionwillnothaveasignificanteffectontheGroupsconsolidatedfinancialstatementsexceptassetoutbelow.IFRS9FinancialInstruments(effectiveforaccountingperiodsbeginningonorafter1stJanuary2018),whichreplacesIAS39FinancialInstruments:RecognitionandMeasurement,addre

290、ssestheclassificationandmeasurementoffinancialassetsandliabilitiesandincludesanewexpectedcreditlossesmodelforfinancialassetsthatreplacestheincurredlossimpairmentmodelusedtoday.Asubstantially-reformedapproachtohedgingaccountingisintroduced.Italsocarriesforwardtheguidanceonrecognitionandderecognitiono

291、ffinancialinstrumentsfromIAS39.TheGroupdoesnotexpectthenewguidancetohaveasignificantimpactontheclassificationandmeasurementofitsfinancialassetsandfinancialliabilities.ThenewhedgeaccountingruleswillaligntheaccountingforhedginginstrumentscloselywiththeGroupsriskmanagementpractices.Nevertheless,theGrou

292、pdoesnotexpectasignificantimpactontheaccountingforitshedgingrelationships.IFRS15RevenuefromContractswithCustomers(effectiveforaccountingperiodsbeginningonorafter1stJanuary2018),establishes a comprehensive framework for determining when to recognize revenue and how much revenue torecognize.IFRS15repl

293、acesIAS11ConstructionContractsandIAS18Revenuewhichcoverscontractsforgoodsandservices.Thecoreprincipleinthatframeworkisthatrevenueisrecognizedwhencontrolofagoodorservicetransferstoacustomer.Thenewstandardwillalsoresultinnewdisclosurerequirementsonrevenue,provideguidancefortransactionsthat were not pr

294、eviously addressedcomprehensively(forexample,servicerevenueandcontract modifications)andimproveguidanceformultiple-elementarrangements.TheGrouphasdoneapreliminaryreviewanddoesnotexpectasignificantimpacttothefinancialstatements.Annual Report 201653Notes to the Financial Statements1.Principal Accounti

295、ng PoliciescontinuedBasis of preparationcontinuedIFRS16Leases(effectiveforaccountingperiodsbeginningonorafter1stJanuary2019)replacesIAS17Leasesandrelatedinterpretations.Itwillresultinlesseesbringingalmostalltheirleasesontothebalancesheetasthedistinctionbetweenoperatingleasesandfinanceleasesisremoved

296、.Themodelrequiresalesseetorecognizearight-of-useasset(therighttousetheunderlyingleasedasset)andaleaseliability(theobligationtomakeleasepayments)exceptforleaseswithatermoflessthan12monthsorwithlow-value.Theaccountingforlessorswillnotchangesignificantly.IFRS16willaffectprimarilytheaccountingfortheGrou

297、psoperatingleases.Withalargenumberofleases,IFRS16islikelytoexertsignificantfinancialimpactontheGroup.ApreliminaryreviewwascompletedandtheGroupisyettoundertakeadetailedassessmentonhowthenewleasemodelwillaffectitsprofit,classificationofcashflowsandbalancesheetposition.Theprincipaloperatingsubsidiaries

298、,associatesandjointventureshavedifferentfunctionalcurrenciesinlinewiththeeconomicenvironmentsofthelocationsinwhichtheyoperate.ThefunctionalcurrencyoftheCompanyisUnitedStatesdollars.TheconsolidatedfinancialstatementsarepresentedinUnitedStatesdollars.TheGroupsreportablesegmentsaresetoutinnotes4,5and7a

299、ndaredescribedonpage69.Basis of consolidation(i)TheconsolidatedfinancialstatementsincludethefinancialstatementsoftheCompany,itssubsidiaries,andtheGroupsinterestsinassociatesandjointventures.(ii)AsubsidiaryisanentityoverwhichtheGrouphascontrol.TheGroupcontrolsanentitywhentheGroupisexposedto,orhasrigh

300、tsto,variablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthosereturnsthroughitspowerovertheentity.ThepurchasemethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheGroup.Thecostofanacquisitionincludesthefairvalueattheacquisitiondateofanycontingentconsideration.TheGrou

301、precognizesthenon-controllinginterestsproportionateshareoftherecognizedidentifiablenetassetsoftheacquiredsubsidiary.Inabusinesscombinationachievedinstages,theGroupremeasuresitspreviouslyheldinterestintheacquireeatitsacquisition-datefairvalueandrecognizestheresultinggainorlossinprofitandloss.Changesi

302、naparentsownershipinterestinasubsidiarythatdonotresultinthelossofcontrolareaccountedforasequitytransactions.Whencontroloveraprevioussubsidiaryislost,anyremaininginterestintheentityisremeasuredatfairvalueandtheresultinggainorlossisrecognizedinprofitandloss.Allmaterialintercompanytransactions,balances

303、andunrealizedsurplusesanddeficitsontransactionsbetweenGroupcompanieshavebeeneliminated.ThecostofandrelatedincomearisingfromsharesheldintheCompanybysubsidiariesareeliminatedfromshareholdersfundsandnon-controllinginterests,andprofit,respectively.Dairy Farm International Holdings Limited54Notes to the

304、Financial Statements1.Principal Accounting PoliciescontinuedBasis of consolidationcontinued(iii)Anassociateisanentity,notbeingasubsidiaryorjointventure,overwhichtheGroupexercisessignificantinfluence.Ajointventureisatypeofjointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverights

305、tothenetassetsofthejointventure.Jointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequireunanimousconsentofthepartiessharingcontrol.Associatesandjointventuresareincludedontheequitybasisofaccounting.Profitsandlossesresultingfromu

306、pstreamanddownstreamtransactionsbetweentheGroupanditsassociatesandjointventuresarerecognizedintheconsolidatedfinancialstatementsonlytotheextentofunrelatedinvestorsinterestsintheassociatesandjointventures.(iv)Non-controllinginterestsrepresenttheproportionoftheresultsandnetassetsofsubsidiariesandtheir

307、associatesandjointventuresnotattributabletotheGroup.(v)Theresultsofsubsidiaries,associatesandjointventuresareincludedorexcludedfromtheireffectivedatesofacquisitionordisposal,respectively.Theresultsofentitiesotherthansubsidiaries,associatesandjointventuresareincludedtotheextentofdividendsreceivedwhen

308、therighttoreceivesuchdividendisestablished.Foreign currenciesTransactionsinforeigncurrenciesareaccountedforattheexchangeratesrulingatthetransactiondates.Assetsandliabilitiesofsubsidiaries,associatesandjointventures,togetherwithallothermonetaryassetsandliabilitiesexpressedinforeigncurrencies,aretrans

309、latedintoUnitedStatesdollarsattheratesofexchangerulingattheyearend.ResultsexpressedinforeigncurrenciesaretranslatedintoUnitedStatesdollarsattheaverageratesofexchangerulingduringtheyear,whichapproximatetheexchangeratesatthedatesofthetransactions.Exchangedifferencesarisingfromtheretranslationoftheneti

310、nvestmentinforeignsubsidiaries,associatesandjointventures,andoffinancialinstrumentswhicharedesignatedashedgesofsuchinvestments,arerecognizedinothercomprehensiveincomeandaccumulatedinequityunderexchangereserves.Onthedisposaloftheseinvestments,suchexchangedifferencesarerecognizedinprofitandloss.Exchan

311、gedifferencesonavailable-for-saleinvestmentsarerecognizedinothercomprehensiveincomeaspartofthegainsandlossesarisingfromchangesintheirfairvalue.Exchangedifferencesrelatingtochangesintheamortizedcostofmonetarysecuritiesclassifiedasavailable-for-saleandallotherexchangedifferencesarerecognizedinprofitan

312、dloss.Goodwillandfairvalueadjustmentsarisingonacquisitionofaforeignentityafter1stJanuary2003aretreatedasassetsandliabilitiesoftheforeignentityandtranslatedintoUnitedStatesdollarsattherateofexchangerulingattheyearend.Annual Report 2016551.Principal Accounting PoliciescontinuedImpairment of non-financ

313、ial assetsAssetsthathaveindefiniteusefullivesarenotsubjecttoamortizationandaretestedforimpairmentannuallyandwheneverthereisanindicationthattheassetsmaybeimpaired.Assetsthataresubjecttoamortizationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecov

314、erable.Forthepurposeofassessingimpairment,assetsaregroupedatthelowestlevelforwhichthereisaseparatelyidentifiablecashflow.Cash-generatingunitsorgroupsofcash-generatingunitstowhichgoodwillhasbeenallocatedaretestedforimpairmentannuallyandwheneverthereisanindicationthattheunitsmaybeimpaired.Animpairment

315、lossisrecognizedfortheamountbywhichthecarryingamountoftheassetexceedsitsrecoverableamount,whichisthehigherofanassetsfairvaluelesscoststosellandvalueinuse.Non-financialassetsotherthangoodwillthatsufferedanimpairmentarereviewedforpossiblereversaloftheimpairmentannually.Intangible assets(i)Goodwillrepr

316、esentstheexcessofthesumoftheconsiderationtransferred,theamountofanynon-controllinginterestsintheacquiree,andtheacquisition-datefairvalueofanypreviouslyheldequityinterestintheacquireeovertheacquisition-datefairvalueoftheGroupsshareofthenetidentifiableassetsacquired.Non-controllinginterestsaremeasured

317、attheirproportionateshareofthenetidentifiableassetsattheacquisitiondate.Ifthecostofacquisitionislessthanthefairvalueofthenetassetsacquired,thedifferenceisrecognizeddirectlyinprofitandloss.Goodwillonacquisitionsofsubsidiariesisincludedinintangibleassets.Goodwillonacquisitionsofassociatesandjointventu

318、resisincludedininvestmentinassociatesandjointventures.Goodwillisallocatedtocash-generatingunitsorgroupsofcash-generatingunitsforthepurposeofimpairmenttestingandiscarriedatcostlessaccumulatedimpairmentloss.Theprofitorlossondisposalofsubsidiaries,associatesandjointventuresisstatedafterdeductingthecarr

319、yingamountofgoodwillrelatingtotheentitysold.(ii)Leaseholdlandrepresentspaymentstothirdpartiestoacquireshort-terminterestsinproperty.ThesepaymentsarestatedatcostandareamortizedovertheusefullifeoftheleasewhichincludestherenewalperiodiftheleasecanberenewedbytheGroupwithoutsignificantcost.(iii)Other int

320、angible assets,consist of trademarks and computer software,are stated at cost less accumulatedamortization.Amortizationiscalculatedonthestraightlinebasistoallocatethecostofintangibleassetsovertheirestimatedusefullives.Trademarkswithindefiniteusefullivesarenotsubjecttoamortization.Tangible fixed asse

321、ts and depreciationFreeholdlandandbuildings,andthebuildingcomponentofowner-occupiedleaseholdpropertiesarestatedatcostlessanyaccumulateddepreciationandimpairment.Long-terminterestsinleaseholdlandareclassifiedasfinanceleasesandgroupedundertangibleassetsifsubstantiallyallrisksandrewardsrelatingtothelan

322、dhavebeentransferredtotheGroup,andareamortizedovertheusefullifeofthelease.Grantsrelatedtotangibleassetsaredeductedinarrivingatthecarryingamountoftheassets.Othertangiblefixedassetsarestatedatcostlessamountsprovidedfordepreciation.Dairy Farm International Holdings Limited56Notes to the Financial State

323、ments1.Principal Accounting PoliciescontinuedTangible fixed assets and depreciationcontinuedDepreciationoftangiblefixedassetsiscalculatedonthestraightlinebasistoallocatethecostofeachassettoitsresidualvalueoveritsestimatedusefullife.Theresidualvaluesandusefullivesarereviewedateachbalancesheetdate.The

324、estimatedusefullivesareasfollows:FreeholdpropertiesLeaseholdpropertiesLeaseholdimprovementsLeaseholdlandPlantandmachineryFurniture,equipmentandmotorvehicles2540yearsShorteroftheleasetermorusefullifeShorterofunexpiredleasetermorusefullifeOverperiodofthelease315years37yearsNodepreciationisprovidedonfr

325、eeholdlandasitisdeemedtohaveanindefinitelife.Wherethecarryingamountofatangiblefixedassetisgreaterthanitsestimatedrecoverableamount,itiswrittendownimmediatelytoitsrecoverableamount.Theprofitorlossondisposaloftangiblefixedassetsisrecognizedbyreferencetotheircarryingamount.Investments(i)Available-for-s

326、aleinvestmentsareshownatfairvalue.Gainsandlossesarisingfromchangesinfairvaluearerecognizedinothercomprehensiveincomeandaccumulatedinequity.Onthedisposalofaninvestmentorwhenaninvestmentisdeterminedtobeimpaired,thecumulativegainorlosspreviouslydeferredinequityisrecognizedinprofitandloss.Investmentsare

327、classifiedundernon-currentassetsunlesstheyareexpectedtoberealizedwithin12monthsafterthebalancesheetdate.(ii)Ateachbalancesheetdate,theGroupassesseswhetherthereisobjectiveevidencethataninvestmentisimpaired.(iii)Allpurchasesandsalesofinvestmentsarerecognizedonthetradedate,whichisthedatethattheGroupcom

328、mitstopurchaseorselltheinvestment.LeasesLeasesareclassifiedasfinanceleaseswhenthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtoprofitand

329、lossonastraightlinebasisovertheperiodofthelease.Whenaleaseisterminatedbeforetheleaseperiodhasexpired,anypaymentrequiredtobemadetothelessorbywayofpenaltyisrecognizedasanexpenseintheyearinwhichterminationtakesplace.StocksStocks,whichprincipallycomprisegoodsheldforresale,arestatedatthelowerofcostandnet

330、realizablevalue.Costisdeterminedbythefirst-in,first-outmethodoronaweightedaveragebasisandcomprisespurchasepricelessrebates.Annual Report 2016571.Principal Accounting PoliciescontinuedDebtorsTradeandotherdebtors,excludingderivativefinancialinstruments,aremeasuredatamortizedcostexceptwheretheeffectofd

331、iscountingwouldbeimmaterial.Provisionforimpairmentisestablishedwhenthereisobjectiveevidencethattheoutstandingamountswillnotbecollected.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganization,anddefaultordelinquencyinpaymentsareconsideredindica

332、torsthatthedebtorisimpaired.Thecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccountandtheamountofthelossisrecognizedinarrivingatoperatingprofit.Whenadebtorisuncollectible,itiswrittenoffagainsttheallowanceaccount.Subsequentrecoveriesofamountpreviouslywrittenoffarecreditedtoprofitandloss

333、.Debtorswithmaturitiesgreaterthan12monthsafterthebalancesheetdateareclassifiedundernon-currentassets.Cash and cash equivalentsForthepurposesofthecashflowstatement,cashandcashequivalentscomprisedepositswithbanks,andbankandcashbalances,netofbankoverdrafts.Inthebalancesheet,bankoverdraftsareincludedincurrentborrowings.ProvisionsProvisionsarerecognizedwhentheGrouphaspresentlegalorconstructiveobligatio