1、Dairy Farm International Holdings Limited Annual Report 2010Dairy Farm International Holdings LimitedAnnual Report PMS 280U PMS 186UDESIGN:FORMAT LIMITEDC O N T E N T SInternet website: 1 Corporate Information 2 Corporate Overview 3 Highlights 4 Chairmans Statement 6 Group Chief Executives Review 10
2、 Financial Review 12 Directors Profiles 13 Financial Statements 54 Independent Auditors Report 55 Five Year Summary 56 Responsibility Statement 57 Corporate Governance62 Principal Risks and Uncertainties 63 Shareholder Information 64 Retail Outlets Summary 65 Management and OfficesDairy Farm Interna
3、tional Holdings Limited Annual Report 20101CORPORATE INFORMATIONDIRECTORSSimon KeSwicKChairmanA J L nightingALeManaging DirectormichAeL KoKGroup Chief ExecutiveRonALd J FLotomARK gReenbeRggeoRge J hoSiR henRy KeSwicKdR geoRge c g KooR c KwoKLoRd LeAch oF FAiRFoRdJAmeS RiLeyALec tongPeRcy weAtheRALLg
4、iLeS whiteCOMPAnY SECRETARY AnD REGISTERED OFFICEJohn c LAngJardine House33-35 Reid StreetHamiltonBermudaDAIRY FARM MAnAGEMEnT SERVICES LIMITEDDIRECTORSA J L nightingALeChairmanmichAeL KoKGroup Chief ExecutiveALec tongGroup Finance DirectordAto John coyLeRegional Director,East AsiacARoLine mAKRegion
5、al Director,North Asia/Chief Executive Officer,ChinaPoh Seng PoLGroup Business Development DirectorALex tAyRegional Director,South AsiamichAeL wuChairman and Managing Director,MaximsmARK gReenbeRgJAmeS RiLeygiLeS whiteCORPORATE SECRETARYn m mcnAmARADairy Farm International Holdings LimitedDairy Farm
6、 is a leading pan-Asian retailer.At 31st December 2010,the Group and its associates operated over 5,300 outlets;employed over 80,000 people in the region;and had total annual sales exceeding US$9 billion.The Group operates supermarkets,hypermarkets,health and beauty stores,convenience stores and hom
7、e furnishings stores under well-known local brands,including:SupermarketsWellcomeinHongKong,TaiwanandVietnam,ThreeSixtyandOliversTheDelicatesseninHongKong,JasonsMarketPlaceinSingapore,HongKongandTaiwan,ColdStorage in Singapore and Malaysia,Giant in Malaysia,Indonesia and Brunei,Shop n Save in Singap
8、ore,Hero in Indonesia,and Foodworld in India;HypermarketsGiantinMalaysia,Indonesia,SingaporeandBrunei;HealthandbeautystoresManningsinHongKong,mainlandChinaand Macau,Guardian in Malaysia,Singapore,Indonesia and Brunei,and Health and Glow in India;Conveniencestores7-EleveninHongKong,Singapore,Southern
9、China and Macau,and Starmart in Indonesia;andHomefurnishingsstoresIKEAinHongKongandTaiwan.TheGrouphasa50%interestinMaxims,HongKongsleading restaurant chain.Dairy Farm International Holdings Limited is incorporated in Bermuda and has a Premium Listing on the London Stock Exchange,with secondary listi
10、ngs in Bermuda and Singapore.The Groups businessesaremanagedfromHongKongbyDairyFarmManagementServices Limited through its regional offices.Dairy Farm is a member of the Jardine Matheson Group.Dairy Farm International Holdings Limited Annual Report 20102HigH-Quality,low-Cost RetailingDairy Farm aims
11、to be a leader in all its market sectors.Our focus is retailing and we strive to offer consumers value-for-money through efficient,low-cost distribution of high-quality fresh foods,and consumer and durable goods in our supermarkets,hypermarkets,health and beauty stores,convenience stores and home fu
12、rnishings stores.asia FoCusWearegeographicallycommittedtoAsia.Inadditiontodevelopingourexistingoperations,we aim to achieve growth by exploring new investment opportunities within the region.Multiple FoRMats,sHaRed seRviCesWeoperatemultipleformatsinmostmarketsandachieveeconomiesofscaleby supporting
13、these with shared infrastructure for logistics,human resources,finance,procurement,and information technology systems.long-teRM sHaReHoldeR value CReationWeaimtomaintainfinancialstrengththroughprudentbalancesheetmanagement.Wetakealong-termviewofbusinessdevelopmentandbelievein striking a balance betw
14、een investment in mature cash-flow activities and investment in new businesses.Shareholder value creation is the performance yardstick for the long-term incentive programme of the Companys management.Corporate Overview“Our goal is to satisfy the appetites of Asian shoppers for wholesome food and qua
15、lity consumer and durable goods at competitive prices.”Dairy Farm International Holdings Limited Annual Report 20103Highlights Underlyingearningsup13%Profitgrowthinallregions Maximsachievedexcellentresults ContinuedbusinessexpansionResults2010US$m2009US$m(restated*)Change%Sales subsidiaries7,9717,02
16、913includingassociates9,1138,05313Underlying profit attributable to shareholders41036413non-trading items1n/aProfit attributable to shareholders41136413USUS%Underlying earnings per share 30.3827.0212Basic earnings per share 30.5027.0213Dividends per share18.0016.0013*Restated due to changes in accou
17、nting policies as set out in note 1 to the financial statements.Dairy Farm International Holdings Limited Annual Report 20104Chairmans Statement264North AsiaSouth AsiaEast AsiaUS$bTotal Sales01082008 2009 201020072006MaximsoveRviewDairy Farm experienced another good year in 2010 as generally favoura
18、ble trading conditions persisted in its Asian markets.The Groups core business of selling everyday basic products at competitive prices enjoyed strong recognition and support from consumers.peRFoRManCeSales,including 100%of associates,increased by 13%to US$9.1 billion in 2010,while underlying profit
19、 at US$410 million was up 13%.Favourable exchange movements enhanced both sales and profit by some 5%.Underlying earnings per share were US30.38,up 12%.The profit attributable to shareholders at US$411 million included US$1 million of net non-trading gain.The Group continued to generate positive cas
20、h flows and ended the year with net cash of US$223 million,compared with US$34 million at the end of 2009.Capital expenditure,including two acquisitions,amounted to US$276million,whileanassetdisposalproducedaninflowofUS$37million.The Board is recommending a final dividend of US13.00 per share,bringi
21、ng the total ordinary dividend for 2010 to US18.00 per share,up 13%on 2009.opeRationsDairy Farm continued to expand organically and through acquisitions in 2010,increasing its total number of outlets by 315 to 5,386.In the larger format segment,the Group operated 113 Giant hypermarkets at the year e
22、nd,comprising 67inMalaysia,38inIndonesia,seven in Singapore and one in Brunei.There were mixed performances from the Groups operations in north Asia,with overall sales increasing by 9%and operatingprofitby4%.InHongKong,Mannings achieved excellent results,as didIKEAwhichenjoyedagoodresponseto its rel
23、ocated 13,900 sq.m.store that openedinJune.Wellcometradedreasonably,while7-Elevenhadamorechallengingyear.InTaiwan,Wellcomesearnings declined in a difficult market segment,but IKEA improved itsprofitability further.In Southern China,7-Eleven wasadversely affected by the restrictions on sale of tobacc
24、o products,although the business stabilized in the second half.Mannings continued to expand its health and beauty business on the Mainland and added 43 outlets to bring its network to 163.Restaurant associate,Maxims,produced another excellent result with good performances from all its operations in
25、HongKong.ExpansioninmainlandChinacontinued as,in addition to its cake shop Dairy Farm International Holdings Limited Annual Report 20105Chairmans Statement510152008 2009 201020072006USUnderlying EarningsPer Share030352520chain,Maxims opened its first Genki Sushi and SimplyLife outlets in Shenzhen.Ma
26、xims also operated a food hall at the WorldExpo2010inShanghai.In South Asia,sales increased by 12%whileoperatingprofitroseby7%.Thebuoyant economy in Singapore enabled the Groups operations to achieve further growth in sales and trading profit despite some demand moving from supermarkets to dining-ou
27、t.The overall contribution benefited from the strong Singaporean dollar,but this was offset by employment incentives offered by the government being lower than in 2009.In the Indian joint ventures,the 73-outlethealthandbeautybusinessisnow trading profitably,while the operating losses have been reduc
28、ed in the supermarket operation.Sales in East Asia increased by 22%and operatingprofitby27%.InMalaysia,the health and beauty stores produced an excellent result and there was a satisfactory performance from hypermarkets and supermarkets,while the country network grew to over 500 stores by the year e
29、nd.All formats performed well in Indonesia,with particularly strong results from hypermarkets,and the total number of stores increased to 489 with further expansion planned in 2011.The first two supermarkets were opened in Brunei to complement the existing hypermarket and health and beauty formats.p
30、eopleDairy Farms good results achieved in 2010 reflect the dedication and hard work of all employees.On behalf of the Board,I would like to thank them for their efforts and wish them well in the year ahead.Alec Tong was appointed as the Group Finance Director in September upon the retirementofHoward
31、Mowlem.Wewouldlike to thank Howard for his significant contribution over the past ten years with the Group.pRospeCtsDairy Farms major businesses enjoy leading positions in their respective market segments.The Groups prospects for 2011 are positive as the economic environments in most of the countrie
32、s where it operates are expected to remain favourable.Simon KeSwicKChairman3rd March 2011Dairy Farm International Holdings Limited Annual Report 20106Group Chief Executives Review2008 2009 201020072006US$mUnderlying Net Profit050100150200250300350400450Dairy Farm achieved further growth in sales and
33、 earnings in each of its three operating regions in 2010.The Groups prime strategy is to grow its retailing businesses in Asia,while at the same time introducing new concepts and implementing initiatives to improve operational efficiencies and enhance the attractiveness of stores.A number of importa
34、nt developments took place in 2010:Weaddedanet315stores,toreachatotal of 5,386 by the year end.Wecompletedtheacquisitionsof16hypermarkets and supermarkets in Malaysia and eight supermarkets in Singapore.InHongKong,IKEAsuccessfullyrelocateditsKowloonBaystoreto the Megabox complex producing enhanced r
35、esults.InmainlandChina,weexpandedourMannings health and beauty business to 163 stores.InMalaysia,weopenedsevenGianthypermarkets and completed the sale and leaseback of a major hypermarket development.Wehavecrossedthe500store milestone in the country.InBrunei,weopenedourfirsttwosupermarkets to comple
36、ment our existing hypermarket and health and beauty stores.Ourrestaurantassociate,Maxims,operated a 1,850 sq.m.food hall at theWorldExpo2010inShanghaiwhere it promoted its brand equity and HongKongsuniqueculinaryculture.Afterthesuccessfulimplementationof the SAP merchandising systems in Malaysia,the
37、 IT modernization programme continued in Indonesia.Weincreasedfurthertheinvestmentin private label development and supply chain management to deliver additional value from these important areas.Regional ReviewNORTH ASIAHong KongThebusinessesinHongKongfaced cost increases as rental levels escalated i
38、n a buoyant property market.Wellcome supermarkets experienced very competitive trading conditions,although tight controls over operating costs enabled an acceptable result to be achieved.In a challenging year,7-Eleven convenience stores focused on driving their ready-to-eat business.Dairy Farm Inter
39、national Holdings Limited Annual Report 20107Group Chief Executives ReviewMannings health and beauty stores produced another good performance with the addition of 29 stores and the benefit of growth in Mainland tourist numbers.The first two health stores under the Mannings Plus banner were opened,of
40、fering services ranging from free professional consultations to health tests.Mannings also launched a loyalty card programme which received good responses from customers.IKEA had an excellent year with encouraging trading results from its newlyrelocatedstoreatKowloonBay.Our associate,Maxims,continue
41、d its strong progress and made significant gains in sales and profitability in 2010.Several new concept restaurants and productswereintroducedinHongKong,while the important mid-Autumn mooncake sales achieved another record volume with good growth on the Mainland.MacauBoth 7-Eleven and Mannings in Ma
42、cau produced satisfactory earnings growth during the year.Mainland ChinaIn a competitive market,7-Eleven in Southern China is concentrating on growing its share in the ready-to-eat food business.Mannings achieved good growth in sales as it made progress in its development plan with the addition of 4
43、3 stores.In Southern China,Maxims launched three Genki Sushi outlets and its first SimplyLife bakery caf.Overall,it increased its market penetration by doubling the number of its cake shops and bakeries to 89 stores.TaiwanWellcome supermarkets continued to face keen competition,although steps taken
44、to consolidate the existing business produced positive results and provide a sound platform on which to develop going forward.Building on the progress made in 2009,IKEA achieved good growth in sales and profitability in 2010.SOUTH ASIASingaporeThe strong economic recovery that began in 2009 augured
45、well for the retail industry.Businesses had benefited from temporary government subsidies in 2009 and while the subsidy for employment costs was extended to June 2010,it was scaled back significantly.Cold Storage and Shop N Save supermarkets performed satisfactorily in 2010,achieving higher sales an
46、d profit despite a return to more restaurant dining as the Singapore economy improved.Ten supermarkets were added during the year,including eight acquired by Shop n Save.The Giant hypermarkets sustained their strong recovery with increased sales and profit in 2010.Dairy Farm International Holdings L
47、imited Annual Report 20108Group Chief Executives Review7-Eleven produced improved earnings as it continued its growth momentum,ending the year with 549 stores after a net addition of 65 stores.Guardian maintained a stable profit in a very competitive segment.IndiaFoodworld supermarkets made further
48、progress as higher turnover and reduced operating costs led to lower losses,but the trading environment remains challenging.Health and Glow achieved increases in both sales and profit from its health and beauty stores.The growth momentum is expected to continue as the store network is expanded furth
49、er.EAST ASIAMalaysiaThe Giant and Cold Storage hypermarket and supermarket businesses in Malaysia produced satisfactory growth despite customers remaining cautious in discretionary spending,especially in general merchandise.Stores acquired in 2010 were integrated successfully into the network,and ei
50、ght Giant stores were opened,comprising seven hypermarkets and one supermarket.A dedicated fresh distribution centre was also established in Selangor,which should improve the fresh offer in terms of quality,purchasing and distribution costs.Guardian,the countrys leading health and beauty chain,had a
51、nother strong year with new stores enhancing the good comparable store sales growth.A net 30 stores were added in 2010.BruneiIn addition to the first two Giant supermarkets and one hypermarket in Brunei,the Group is well represented with the 21 Guardian outlets in key locations.IndonesiaThe Giant an
52、d Hero hypermarket and supermarket operations in Indonesia showed further improvements in their performances.Whilegeneralmerchandisesales slowed,cost controls at both the store and head office levels led to a good increase in earnings.There was a net increase of 22 stores during 2010,and the expansi
53、on programme is expected to accelerate in 2011.The upgrading of several Hero stores to provide an enhanced offering was well received,producing improvements in both sales and margins.The Guardian health and beauty stores recorded a satisfactory result and 11 stores were added.VietnamWellcome achieve
54、d good comparable sales growth,but its small supermarket operation suffered from lack of scale.Wecontinuetoexploreopportunitiestodevelop our multi-format stores.Dairy Farm International Holdings Limited Annual Report 20109tHe yeaR aHeadWhilefoodinflationandlabourcostpressures are being seen in Asia,
55、the Groups view for the economic outlook in the Region remains positive as consumer confidence is growing.This year,Dairy Farm will continue to expand its retailing formats in existing markets and to identify new opportunities,supported by enhanced supply chain and IT systems to deliver added value.
56、Substantial capital expenditure has been allocated to the development of hypermarkets and supermarkets in Indonesia and Malaysia,as well as to the refurbishment of existing store networks.Our progress to-date has been due to the hard work and commitment of our workforce.I thank them for their effort
57、s and for the success they have achieved for the Group.michAeL KoKGroup Chief Executive 3rd March 2011Group Chief Executives ReviewOrdinary DividendsPer ShareInterim dividendFinal dividendUS2008 2009 201020072006024681012141618Dairy Farm International Holdings Limited Annual Report 201010Financial R
58、eviewEast Asia(61%)South Asia(13%)North Asia(26%)Total by region:US$276mStore capex by format2010 Capital ExpenditureSupermarkets(32%)Convenience stores(8%)Health andbeauty stores(8%)Hypermarkets(41%)Property(7%)IKEA(4%)Dairy Farm recorded another good result in 2010 with strong profit growth in Eas
59、t Asia and Maxims,together with steady performances in north Asia and South Asia.The Group continued to generate positive cash flows to fund capital expenditure and annual dividends,while still increasing the net cash position at the year end.peRFoRManCeSales,excluding those of associates,were US$7,
60、971million,a13%increaseover2009.Operating profit before interest and tax(PBIT)was US$469 million,an increase of US$46 million over the previous year,and the PBIT to sales ratio was 5.9%(2009:6.0%).After including the Groups share of results of associates,underlying net profit was US$410 million.This
61、 represents a 13%increase over 2009.There was a net non-trading gain of US$1 million in 2010.The tax charge for 2010 was US$84 million,comparedtoUS$75millionin2009,reflecting the Groups improved profitability in all major markets.Underlying earnings per share were US30.38,an increase of 12%over the
62、previous year.CasH FlowOperating cash flow was strong with a netinflowofUS$677million,comparedto the previous years US$481 million.The increase was mainly due to higher profit from operations and good working capital management.Two acquisitions in Malaysia and Singapore accounted for US$52 million,w
63、hile the sale and leaseback of a retail complex in Malaysia generatedaninflowofUS$37million.As a result,the Group ended the year with net cash of US$223 million,an increase of US$189 million from the 2009 year end.Capital expenditure,including the two acquisitions,wasUS$276million,compared to US$292
64、 million in 2009.The Group,including associates,added 315 outlets in 2010.BalanCe sHeetTotal assets,excluding cash and bank balances,ofUS$2,576millionwereUS$303 million higher than 2009,mainly reflecting the investment in new and refurbished stores,the acquisitions and the associated increase in the
65、 level of operating assets excluding net cash were US$511 million at the end of 2010,a 3%increase over the previous year.Dairy Farm International Holdings Limited Annual Report 201011Financial ReviewdividendThe Board is recommending a final dividend of US13.00 per share.This will bring the total div
66、idend in respect of 2010 to US18.00 per share,an increase of 13%over 2009 and a payout of approximately 60%of the years profit.FinanCingBorrowings are normally taken out in local currencies by the Groups operating subsidiaries to fund and partially hedge their local asset investments.The Group,exclu
67、ding associates,had gross debt of US$459 million at the year end,a decrease of US$40 million.Committed banking facilities at the year end totalled US$793million,andhadanaverage life to maturity of 2.3 years.Financing income remained unchanged at US$3 million,while financing charges increased slightl
68、y from US$24 million in 2009 to US$26 million in 2010.pRinCipal RisKs and unCeRtaintiesA review of the principal risks and uncertainties facing the Group is set out on page 62.FinanCial RisK ManageMentA comprehensive discussion of the Groups financial risk management policies is included in note 2 t
69、o 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 Group does not enter into speculative
70、 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,both short and long term,to give flexibility for the d
71、evelopment of the business.At the year end,US$232 million of gross debt was subject to fixed interest rates,with a remaining average tenor of 1.3 years.aCCounting poliCiesThe Groups financial statements have been prepared in accordance with International Financial Reporting Standards.During 2010,the
72、 Group adopted certain new accounting standards,but these did not have a material impact on the Groups results.Details are disclosed in note 1 to the financial statements.ALec tongGroup Finance Director 3rd March 20112008 2009 201020072006USOperating Cash Flow Per Share0102030405060Dairy Farm Intern
73、ational Holdings Limited Annual Report 201012Directors ProfilesSimon KeswickChairmanMrSimonKeswickjoinedtheBoardandbecame Chairman in 1986.He joined the Jardine Matheson group in 1962 and is also chairman of Hongkong Land and Mandarin Oriental,and a director of Jardine Lloyd Thompson,Jardine Matheso
74、n and Jardine Strategic.A J L Nightingale*Managing DirectorMr nightingale joined the Board and was appointed as Managing Director in 2006.He has served in a number of executive positions since joining the Jardine Matheson group in 1969.He is chairman of Jardine Cycle&Carriage,Jardine Matheson Limite
75、d,Jardine Motors and Jardine Pacific,and a commissioner of Astra.He is also managing director of Hongkong Land,Jardine Matheson,Jardine Strategic and Mandarin Oriental.Mr nightingale is chairman of the Business Facilitation Advisory Committee established by the Financial Secretary in HongKong,amembe
76、roftheCommissionon Strategic Development,a member of the Committee on Strategic Enhancement ofHongKongasanInternationalFinancial Centre,a vice president of The Real Estate Developers Association of HongKong,acouncilmemberoftheEmployersFederationofHongKong,aHongKongrepresentativetotheAPECBusiness Adv
77、isory Council and a member of Chongqing Mayors International Economic Advisory Council.He is also chairman of The Sailors Home and MissionstoSeameninHongKong.Michael Kok*Group Chief ExecutiveMrKokjoinedtheBoardandwasappointedGroupChiefExecutivein2007.HejoinedDairyFarmin1987andhasextensive experience
78、 in the retail industry in Asia.As a director of Dairy Farm ManagementServicessince1997,hehadprime responsibility for the Groups retail businesses in South and East Asia.Alec Tong*Group Finance DirectorMr Tong joined the Board as Group Finance Director in September 2010.He has been with the Jardine
79、Matheson group since 1993 during which time he has held a number of senior finance positions,most recently group treasurer of the Jardine Matheson group.Mr Tong is a Chartered Accountant.Ronald J FlotoMrFlotojoinedtheBoardin1997andwas Group Chief Executive until he retiredfromexecutiveofficein2007.H
80、is extensive experience in the retail industry included senior positions in KmartCorporationandSuperKmartinthe United States.Mark GreenbergMr Greenberg joined the Board in 2006.He is group strategy director of Jardine Matheson.He had previously spent 16 years in investment banking with DresdnerKlein
81、wortWassersteininLondon.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.George J HoMr Ho joined the Board in 1998.He was previously engaged in private law practice in San Francisco and is curren
82、tly engaged in the broadcasting and multi-media industries.Mr Ho isalsochairmanofHongKong Commercial Broadcasting Company and a non-executive director of Enoteca Company in Japan.Sir Henry KeswickSir Henry joined the Board in 1988.He is chairman of Jardine Matheson,having first joined the Jardine Ma
83、theson group in 1961,and is also chairman of Jardine Strategic.He is a director of Hongkong Land,Mandarin Oriental and Rothschilds Continuation.He is alsovicechairmanoftheHongKongAssociation.Dr George C G KooDrKoo,aFellowoftheRoyalCollegeof Surgeons,was appointed as a Director in 1990.He is the foun
84、der and managingdirectoroftheHongKongLithotripter Centre and a member of the Political Consultative Committee of Chekiang Province of the Peoples Republic of China.He is also a director of Jardine Strategic.R C KwokMrKwokisaCharteredAccountantandhas been a Director since 1986.He joined the Jardine M
85、atheson group in 1964 and is a director of Jardine Matheson Limited,Hongkong Land,Jardine Matheson,Jardine Strategic and Mandarin Oriental.Lord Leach of FairfordLordLeachjoinedtheBoardin1987.He is deputy chairman of Jardine Lloyd Thompson,and a director of Hongkong Land,Jardine Matheson,Jardine Stra
86、tegic,Mandarin Oriental and Rothschilds Continuation.He joined the Jardine Matheson group in 1983 after a career in banking and merchant banking.James RileyMr Riley joined the Board in 2005.He is group finance director of Jardine Matheson.A Chartered Accountant,he joined the Jardine Matheson group f
87、romKleinwortBensonin1993.Hewasappointed chief financial officer of Jardine Cycle&Carriage in 1994,and from 1999 to 2005 he was responsible for the businesses grouped under Jardine Pacific.He is also a director of Jardine Matheson Limited.Percy WeatherallMrWeatheralljoinedtheBoardin2000and was Managi
88、ng Director from 2000 to 2006.He held a number of senior positions since first joining the Jardine Mathesongroupin1976untilhisretirement 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 and Barrow.G
89、iles WhiteMrWhitejoinedtheBoardin2009.Heis the Jardine Matheson group general counsel.He was previously Asia managing partner of Linklaters based inHongKong,priortowhichhewasthe firms head of global finance andprojectsinLondon.MrWhiteis also a director of Jardine Matheson Limited,Jardine Matheson an
90、d Mandarin Oriental.*Executive DirectorDairy Farm International Holdings Limited Annual Report 201013note2010US$m 2009US$m(restated)Sales 47,970.57,028.5Cost of sales(5,595.5)(4,910.9)Gross margin 2,375.02,117.6Other operating income 120.7117.0Selling and distribution costs(1,755.2)(1,564.8)Administ
91、ration and other operating expenses(271.2)(246.1)Operating profit 5469.3423.7Financing charges(25.5)(24.3)Financing income 2.93.2 net financing charges 6(22.6)(21.1)Share of results of associates and joint ventures 747.135.2 Profit before tax 493.8437.8Tax 8(83.5)(75.0)Profit after tax 410.3362.8 At
92、tributable to:Shareholders of the Company 411.4 364.0 Minority interests(1.1)(1.2)410.3 362.8 USUSEarnings per share 9basic30.5027.02diluted30.46 26.99 Consolidated Profit and Loss Account for the year ended 31st December 2010 Dairy Farm International Holdings Limited Annual Report 2010142010US$m 20
93、09US$m(restated)Profit for the year 410.3362.8Revaluation of other investments gainsarisingduringtheyear0.20.8net actuarial(loss)/gain on employee benefit plans (5.2)16.5net exchange translation differences gainsarisingduringtheyear13.621.7Cash flow hedges netgain/(loss)arisingduringtheyear2.6(2.5)S
94、hare of other comprehensive income of associates and joint ventures(2.7)3.8Tax relating to components of other comprehensive income 0.2(2.7)Other comprehensive income for the year 8.737.6Total comprehensive income for the year 419.0400.4Attributable to:Shareholders of the Company 420.1400.8Minority
95、interests(1.1)(0.4)419.0400.4Consolidated Statement of Comprehensive Income for the year ended 31st December 2010 Dairy Farm International Holdings Limited Annual Report 201015Consolidated Balance Sheetat 31st December 2010At 31st DecemberAt 1st Januarynote2010US$m 2009US$m(restated)2009US$m(restate
96、d)Net operating assetsIntangible assets11343.9278.1 242.9 Tangible assets12920.8732.7 680.1 Associates and joint ventures13160.6145.8128.7Other investments143.33.1 2.3 non-current debtors15123.5113.3 105.3 Deferred tax assets1619.219.1 18.0 Pension assets1727.124.8 8.8 non-current assets1,598.41,316
97、.9 1,186.1 Stocks816.3709.9 649.0 Current debtors15160.4139.9 120.6 Current tax assets0.91.2 4.9 Bank balances and other liquid funds 18681.8532.8 462.9 1,659.41,383.81,237.4non-current assets classified as held for sale19105.2 65.2 Current assets1,659.41,489.0 1,302.6 Current creditors20(1,869.9)(1
98、,605.5)(1,537.9)Current borrowings21(120.5)(133.8)(62.6)Current tax liabilities(69.0)(63.0)(65.0)Current provisions22(5.8)(3.2)(2.0)Current liabilities(2,065.2)(1,805.5)(1,667.5)net current liabilities(405.8)(316.5)(364.9)Long-term borrowings21(337.9)(365.4)(404.5)Deferred tax liabilities16(48.8)(40
99、.6)(33.4)Pension liabilities17(33.9)(31.1)(27.0)non-current creditors20(16.4)(16.9)(20.7)non-current provisions22(21.4)(18.6)(17.0)non-current liabilities(458.4)(472.6)(502.6)734.2527.8 318.6 Total equityShare capital2375.074.974.8Share premium and capital reserves2546.436.6 32.6 Revenue and other r
100、eserves611.7414.1 208.6 Shareholders funds733.1525.6 316.0 Minority interests271.12.2 2.6 734.2527.8 318.6 Approved by the Board of DirectorsA J L nightingALemichAeL KoKDirectors3rd March 2011Dairy Farm International Holdings Limited Annual Report 201016Attributable to shareholders of the CompanySha
101、recapitalUS$m SharepremiumUS$m CapitalreservesUS$m RevenuereservesUS$m AssetrevaluationreservesUS$m HedgingreservesUS$m ExchangereservesUS$mTotalUS$m Attributableto minorityinterestsUS$m TotalequityUS$m 2010At 1st January 2010aspreviouslyreported74.99.926.7436.315.8(5.5)(17.3)540.82.2543.0changeinac
102、countingpolicy for owner-occupied properties(0.2)(15.8)0.8(15.2)(15.2)asrestated74.99.926.7436.1(5.5)(16.5)525.62.2527.8Total comprehensive income404.11.914.1420.1(1.1)419.0Dividends paid by the Company(222.5)(222.5)(222.5)Issue of shares0.18.18.28.2Employee share option schemes1.71.71.7At 31st Dece
103、mber 201075.018.028.4617.7(3.6)(2.4)733.11.1734.22009At 1st January 2009aspreviouslyreported 74.87.425.2248.816.8(3.6)(38.5)330.92.6333.5changeinaccountingpolicy for owner-occupied properties0.8(16.8)1.1(14.9)(14.9)asrestated74.87.425.2249.6(3.6)(37.4)316.02.6318.6Total comprehensive income381.8(1.9
104、)20.9400.8(0.4)400.4Dividends paid by the Company (195.3)(195.3)(195.3)Issue of shares0.12.52.62.6Employee share option schemes1.51.51.5At 31st December 200974.99.926.7436.1(5.5)(16.5)525.62.2527.8Total comprehensive income included in revenue reserves comprises profit attributable to shareholders o
105、f the Company of US$411.4 million(2009:US$364.0 million),net fair value gain on revaluation of other investments of US$0.2million(2009:US$0.7million)andnetactuariallossonemployeebenefitplansofUS$7.5million(2009:netgainofUS$17.1million).Consolidated Statement of Changes in Equityfor the year ended 31
106、st December 2010 Dairy Farm International Holdings Limited Annual Report 201017Consolidated Cash Flow Statementfor the year ended 31st December 2010note2010US$m 2009US$m(restated)Operating activitiesOperating profit 5 469.3423.7Depreciation and amortization 29(a)167.3143.4Other non-cash items 29(b)6
107、.09.2Decrease/(increase)in working capital 29(c)100.5(28.2)Interest received2.93.6Interest and other financing charges paid(25.5)(24.0)Tax paid(73.6)(70.9)646.9456.8Dividends from associates and joint ventures29.624.5Cash flows from operating activities676.5481.3 Investing activitiesPurchase of tang
108、ible assets(210.8)(262.2)Purchase of subsidiaries 29(d)(52.2)Purchase of associates and joint ventures(2.6)Purchase of intangible assets(13.0)(27.0)Sale of properties 29(e)37.347.0Sale of other tangible assets0.80.6Cash flows from investing activities(237.9)(244.2)Financing activitiesIssue of shares
109、8.22.6Drawdown of borrowings1,480.41,202.4Repayment of borrowings(1,555.5)(1,181.9)Dividends paid by the Company 26(222.5)(195.3)Cash flows from financing activities(289.4)(172.2)Effect of exchange rate changes9.92.7net increase in cash and cash equivalents159.167.6Cash and cash equivalents at 1st J
110、anuary520.8453.2 Cash and cash equivalents at 31st December 29(f)679.9520.8Dairy Farm International Holdings Limited Annual Report 201018Notes to the Financial Statements1.PRINCIPAL ACCOUNTING POLICIES(a)Basis of preparationThe financial statements have been prepared in accordance with International
111、 Financial Reporting Standards,including International Accounting Standards and Interpretations adopted by the International Accounting Standards Board.The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.Previously,the
112、 Groups freehold land and buildings,and the building component of owner-occupied leasehold properties were stated at valuation.Independent valuations were performed every three years on an open market basis,and in the case of the building component of leasehold properties,on the basis of depreciated
113、 replacement cost.In the intervening years,the Directors reviewed the carrying values and adjustments were made where there were material changes.Revaluation surpluses and deficits were recognized in other comprehensive income and accumulated in equity under asset revaluation reserves,except for mov
114、ements on individual properties below depreciated cost which were recognized in profit and loss.Leasehold land was carried at amortized cost.Witheffectfrom1stJanuary2010,theGroupreviseditsaccountingpolicyinrespectofitsfreeholdlandandbuildingsand the building component of owner-occupied leasehold pro
115、perties to the cost model,under which these assets are carried at cost less any accumulated depreciation and impairment.This change harmonizes the treatment of land and buildings,both freehold and leasehold,and aligns the Groups accounting policy with industry practice,enhancing the comparability of
116、 the Groups financial statements with those of its international peers.The Directors believe that the new policy provides reliable and more relevant financial information to the users of the financial statements.This change in accounting policy has been accounted for retrospectively,and the comparat
117、ive financial statements have been restated.Standards,amendments and interpretations effective in 2010 which are relevant to the Groups operationsAmendments to IFRS 2Group Cash-settled Share-based Payment TransactionsAmendment to IAS 39Eligible Hedged ItemsIFRIC17Distributions of non-cash Assets to
118、OwnersIFRIC 18Transfers of Assets from CustomersImprovements to IFRSs(2009)IAS17(amendment)Leasesispartofthe2009improvementproject.Itspecifiesthatalandleasemaybeclassifiedas a finance lease when significant risks and rewards associated with the land are transferred to the lessee despite there being
119、no transfer of title at the end of the lease term.Previously,all of the Groups leasehold land was included under land use rights in intangible assets and stated at cost less accumulated amortization.In accordance with the amendment,certain long-term interests in leasehold land have been classified a
120、s finance leases and grouped under tangible assets if substantially all risks and rewards relating to the land have been transferred to the Group.The amendment has been applied retrospectively to unexpired leases at the date of adoption of the amendment on the basis of information existing at the in
121、ception of the leases.Dairy Farm International Holdings Limited Annual Report 201019notes to the Financial Statements(a)Basis of preparation(continued)The adoption of the following standards,amendments and interpretations does not have a material impact on the Groups accounting policies.The amendmen
122、ts to IFRS 2 Group Cash-settled Share-based Payment Transactions incorporate the guidance provided inIFRIC8ScopeofIFRS2andIFRIC11IFRS2GroupandTreasuryShareTransactionsandexpandontheguidancein IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation.Th
123、e amendment to IAS 39 Eligible Hedged Items gives additional guidance on the designation of a hedged item and how hedged accounting should be applied in particular situations.IFRIC17DistributionofNon-cashAssetstoOwnersrequiresthatanon-cashdividendpayableshouldberecognizedwhen the dividend is appropr
124、iately authorized and is no longer at the discretion of the entity.The dividend should be measured at the fair values of the net assets to be distributed.Any difference between the dividend paid and the carrying amount of the net assets distributed should be included in profit and loss.IFRIC 18 Tran
125、sfers of Assets from Customers addresses the accounting by recipients for transfers of property,plant and equipment from customers and concludes that when an item of property,plant and equipment transferred meets the definition of an asset from the perspective of the recipient,the recipient should r
126、ecognize the asset at its fair value on the date of transfer,with the credit being recognized as revenue in accordance with IAS 18 Revenue.IFRS 5(amendment)non-current Assets Held for Sale and Discontinued Operations is part of the 2009 improvement project.It clarifies that the disclosure requiremen
127、ts in IFRSs other than IFRS 5 do not apply to non-current assets(or disposal groups)classified as held for sale of discontinued operations unless those IFRSs require(i)specific disclosures in respect of non-current assets(or disposal groups)classified as held for sale or discontinued operations,or(i
128、i)disclosures about measurement of assets and liabilities within a disposal group that are not within the scope of the measurement requirement of IFRS 5 and the disclosures are not already provided in the consolidated financial statements.IAS 1(amendment)Presentation of Financial Statements is part
129、of the 2009 improvement project.It clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current.IAS 36(amendment)Impairment of Assets is part of the 2009 improvement project.It clarifies that the largest cash-generating
130、 unit(or group of units)to which goodwill should be allocated for the purposes of impairment testing is an operating segment,as defined by paragraph 5 of IFRS 8.IFRIC 16(amendment)Hedges of a net Investment in a Foreign Operation is part of the 2009 improvement project.It states that in a hedge of a
131、 net investment in a foreign operation,qualifying hedging instruments may be held by any entity or entities within the group,including the foreign operation itself,as long as the designation,documentation and effectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied.Da
132、iry Farm International Holdings Limited Annual Report 201020notes to the Financial Statements(a)Basis of preparation(continued)Effects of change in accounting policies:(i)On the consolidated profit and loss account for the year ended 31st DecemberThere is no material impact on the consolidated profi
133、t and loss account arising from the change to the cost model for owner-occupiedpropertiesortheamendmenttoIAS17fortheyearended31stDecember2010and2009.(ii)On the consolidated balance sheet at 31st December Increase/(decrease)in assetsDecrease in equity/liabilitiesIntangible assetsUS$mTangible assetsUS
134、$mRevenue andotherreservesUS$mDeferred tax liabilitiesUS$m2010Effect of:Change to cost model for owner-occupied properties(19.0)15.93.1AdoptingIAS17(amendment)(84.7)84.7Total(84.7)65.715.93.12009Effect of:Change to cost model for owner-occupied properties(18.2)15.23.0AdoptingIAS17(amendment)(41.2)41
135、.2Total(41.2)23.015.23.02008Effect of:Change to cost model for owner-occupied properties(18.1)14.93.2AdoptingIAS17(amendment)(61.3)61.3Total(61.3)43.214.93.2Standards,amendments and interpretations effective after 2010 which are relevant to the Groups operations and yet to be adoptedIFRS 9Financial
136、InstrumentsRevised IAS 24Related Party DisclosuresAmendment to IAS 32Classification of Rights IssuesAmendments to IFRIC 14Prepayments of a Minimum Funding RequirementIFRIC 19Extinguishing Financial Liabilities with Equity InstrumentsImprovements to IFRSs(2010)IFRS 9 Financial Instruments(effective f
137、rom 1st January 2013)is the first part of a project to replace IAS 39.It addresses the classification and measurement of financial assets.IFRS 9 is likely to affect the Groups accounting for its financial assets.The Group will apply IFRS 9 from 1st January 2013 and is yet to assess IFRS 9s full impa
138、ct.Dairy Farm International Holdings Limited Annual Report 201021notes to the Financial Statements(a)Basis of preparation(continued)Revised IAS 24 Related Party Disclosures(effective from 1st January 2011)supersedes IAS 24(as revised in 2003).It simplifies the disclosure requirements for government-
139、related entities and clarifies the definition of a related party.The Group will apply IAS 24 and provide the required disclosure from 1st January 2011.Amendment to IAS 32 Classification of Rights Issues(effective from 1st February 2010)clarifies that rights issues are equity instruments when they ar
140、e denominated in a currency other than the issuers functional currency and are issued pro-rata to an entitys existing shareholders for a fixed amount of currency.The Group will apply amendment to IAS 32 from 1st January 2011.To date,the Group has not entered into any arrangements that would fall wit
141、hin the scope of the amendments.Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement(effective from 1st January 2011)require an entity to recognize an asset for a prepayment that will reduce future minimum funding contributions required by the entity.The Group will apply amendments to
142、 IFRIC 14 from 1st January 2011,but it is not expected to have any significant impact on the results of the Group.IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments(effective from 1st July 2010)provides guidance on the application of IAS 39 and IAS 32 when an entity issues its own
143、equity instruments to extinguish all or part of a financial liability.The Group will apply IFRIC 19 from 1st January 2011 and is in the process of making an assessment of the impact of this interpretation.The Improvements to IFRSs(2010)comprise a number of non-urgent but necessary amendments to IFRS
144、s.The amendments which are relevant to the Groups operations include IFRS 3(amendments)Business Combinations,IFRS7(amendments)FinancialInstruments:Disclosures,IAS1(amendments)PresentationofFinancialStatements,IAS 34(amendments)Interim Financial Reporting and IFRIC 13(amendment)Customer Loyalty Progr
145、ammes.The adoption of these amendments is not expected to have any significant impact on the results of the Group.IFRS 3(amendments)Business Combinations(effective from 1st July 2010)clarify the transition requirements for contingent consideration from business combination that occurred before the e
146、ffective date of the revised IFRS,the measurement of non-controlling interests and un-replaced and voluntarily replaced share-based payment awards.The Group will apply the amendments from 1st January 2011.IFRS7(amendments)FinancialInstruments:Disclosures(effectivefrom1stJanuary2011)emphasizetheinter
147、actionbetween qualitative and quantitative disclosures and the nature and extent of risks associated with financial instruments.The Group will apply the amendments from 1st January 2011.IAS 1(amendments)Presentation of Financial Statements(effective from 1st January 2011)clarify that entities may pr
148、esent the required reconciliations for each component of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements.The Group will apply the amendments from 1st January 2011.IAS 34(amendments)Interim Financial Reporting(effective from 1st Janu
149、ary 2011)provide guidance to illustrate how to apply disclosure principles in IAS 34 and add disclosure requirements around the circumstances likely to affect fair values of financial instruments and their classification,transfers of financial instruments between different levels of fair value hiera
150、rchy,changes in classification of financial assets and changes in contingent liabilities and assets.The Group will apply the amendments from 1st January 2011.IFRIC 13(amendment)Customer Loyalty Programmes(effective from 1st January 2011)clarifies that when the fair value of award credits is measured
151、 on the basis of the value of the awards for which they could be redeemed,the fair value of the award credits should take account of expected forfeitures as well as the discounts or incentives that would otherwise be offered to customers who have not earned award credits from an initial sale.The Gro
152、up will apply the amendment from 1st January 2011.The principal operating subsidiaries,associates and joint ventures have different functional currencies in line with the economic environments of the locations in which they operate.The functional currency of the Company is United States dollars.The
153、consolidated financial statements are presented in United States dollars.TheGroupsreportablesegmentsaresetoutinnotes4,5and7andaredescribedonpage31.Dairy Farm International Holdings Limited Annual Report 201022notes to the Financial Statements(b)Basis of consolidation(i)The consolidated financial sta
154、tements include the financial statements of the Company,its subsidiaries,and its associates and joint ventures.(ii)Subsidiaries are entities over which the Group has the power to govern the financial and operating policies.The purchase method of accounting is used to account for the acquisition of s
155、ubsidiaries by the Group.The cost of an acquisition includes the fair value at the acquisition date of any contingent consideration.In a business combination achieved in stages,the Group remeasures its previously held interest in the acquiree at its acquisition-date fair value and recognizes the res
156、ulting gain or loss in profit and loss.Changes in a parents ownership interest in a subsidiary thatdonotresultinthelossofcontrolareaccountedforasequitytransactions.Whencontroloveraprevioussubsidiaryis lost,any remaining interest in the entity is remeasured at fair value and the resulting gain or los
157、s is recognized in profit and loss.All material intercompany transactions,balances and unrealized surpluses and deficits on transactions between Group companies have been eliminated.(iii)Associates are entities,not being subsidiaries or joint ventures,over which the Group exercises significant influ
158、ence.Joint ventures are entities which the Group jointly controls with one or more other venturers.Associates and joint ventures are included on the equity basis of accounting.(iv)Minority interests represent the proportion of the results and net assets of subsidiaries and their associates and joint
159、 ventures not attributable to the Group.(v)The results of subsidiaries,associates and joint ventures are included or excluded from their effective dates of acquisition or disposal respectively.The results of entities other than subsidiaries,associates and joint ventures are included to the extent of
160、 dividends received when the right to receive such dividend is established.(c)Foreign currenciesTransactions in foreign currencies are accounted for at the exchange rates ruling at the transaction dates.Assets and liabilities of subsidiaries,associates and joint ventures,together with all other mone
161、tary assets and liabilities expressed in foreign currencies,are translated into United States dollars at the rates of exchange ruling at the year end.Results expressed in foreign currencies are translated into United States dollars at the average rates of exchange ruling during the year,which approx
162、imate the exchange rates at the dates of the transactions.Exchange differences arising from the retranslation of the net investment in foreign subsidiaries,associates and joint ventures,and of financial instruments which are designated as hedges of such investments,are recognized in other comprehens
163、ive income and accumulated in equity under exchange reserves.On the disposal of these investments which results in the loss of control,such exchange differences are recognized in profit and loss.Exchange differences on available-for-sale investments are recognized in other comprehensive income as pa
164、rt of the gains and losses arising from changes in their fair value.All other exchange differences are recognized in profit and loss.Goodwill and fair value adjustments arising on acquisition of a foreign entity after 1st January 2003 are treated as assets and liabilities of the foreign entity and t
165、ranslated into United States dollars at the rate of exchange ruling at the year end.(d)ImpairmentAssets that have indefinite useful lives are not subject to amortization and are tested for impairment annually and whenever there is an indication that the assets may be impaired.Assets that are subject
166、 to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.For the purpose of assessing impairment,assets are grouped at the lowest level for which there is a separately identifiable cash flow.Cash-generating unit
167、s or groups of cash-generating units to which goodwill has been allocated are tested for impairment annually and whenever there is an indication that the units may be impaired.An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount,whi
168、ch is the higher of an assets fair value less costs to sell and value in use.Dairy Farm International Holdings Limited Annual Report 201023notes to the Financial Statements(e)Intangible assets(i)Goodwill represents the excess of the cost of an acquisition over the fair value of the Groups share of t
169、he net identifiable assets of the acquired subsidiary,associate or joint venture at the effective date of acquisition.Minority interests are measured at their proportionate share of the net identifiable assets at the acquisition dates.If the cost of acquisition is less than the fair value of the net
170、 assets acquired,the difference is recognized directly in profit and loss.Goodwill on acquisitions of subsidiaries is included in intangible assets.Goodwill on acquisitions of associates and joint ventures is included in investment in associates and joint ventures.Goodwill is allocated to cash-gener
171、ating units or groups of cash-generating units for the purpose of impairment testing and is carried at cost less accumulated impairment loss.The profit or loss on disposal of subsidiaries,associates and joint ventures includes the carrying amount of goodwill relating to the entity sold.(ii)Leasehold
172、 land represents payments to third parties to acquire short-term interests in owner-occupied property.These payments are stated at cost and are amortized over the useful life of the lease which includes the renewal period if the lease can be renewed by the Group without significant cost.(iii)Other i
173、ntangible assets are stated at cost less accumulated amortization.Amortization is calculated on the straight line basis to allocate the cost of intangible assets over their estimated useful lives.(f)Tangible fixed assets and depreciationFreehold land and buildings,and the building component of owner
174、-occupied leasehold properties are stated at cost less any accumulated depreciation and impairment.Long-term interests in leasehold land are classified as finance leases and grouped under tangible assets if substantially all risks and rewards relating to the land have been transferred to the Group,a
175、nd are amortized over the useful life of the lease.Grants related to tangible assets are deducted in arriving at the carrying amount of the assets.Other tangible fixed assets are stated at cost less amounts provided for depreciation.Depreciation of tangible fixed assets is calculated on the straight
176、 line basis to allocate the cost of each asset to its residual value over its estimated useful life.The residual values and useful lives are reviewed at each balance sheet date.The estimated useful lives are as follows:Buildings30-50 yearsLeasehold improvementsperiod of the leaseLeasehold landperiod
177、 of the leasePlant and machinery3-20 yearsFurniture,equipment and motor vehicles3-15 yearsno depreciation is provided on freehold land as it is deemed to have an indefinite life.Wherethecarryingamountofatangiblefixedassetisgreaterthanitsestimatedrecoverableamount,itiswrittendown immediately to its r
178、ecoverable amount.The profit or loss on disposal of tangible fixed assets is recognized by reference to their carrying amount.(g)Investments Investments are classified by management as available for sale on initial recognition.Available-for-sale investments are shown at fair value.Gains or losses ar
179、ising from changes in the fair value are recognized in other comprehensive income.On the disposal of an investment or when an investment is determined to be impaired,the cumulative gain or loss previously deferred in equity is recognized in profit and loss.Investments are classified under non-curren
180、t assets unless they are expected to be realized within twelve months after the balance sheet date.At each balance sheet date,the Group assesses whether there is objective evidence that an investment is impaired.All purchases and sales of investments are recognized on the trade date,which is the dat
181、e that the Group commits to purchase or sell the investment.Dairy Farm International Holdings Limited Annual Report 201024notes to the Financial Statements(h)StocksStocks,which principally comprise goods held for resale,are stated at the lower of cost and net realizable value.Cost is determined by t
182、he first-in,first-out method.(i)Debtors Trade debtors are measured at amortized cost except where the effect of discounting would be immaterial.Provision for impairment is established when there is objective evidence that the outstanding amounts will not be collected.Significant financial difficulti
183、es of the debtor,probability that the debtor will enter bankruptcy or financial reorganization,and default or delinquency in payments are considered indicators that the debt is impaired.The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is
184、recognized in arrivingatoperatingprofit.Whenadebtisuncollectible,itiswrittenoffagainsttheallowanceaccount.Subsequentrecoveries of amount previously written off are credited to profit and loss.Debtors with maturities greater than twelve months after the balance sheet date are classified under non-cur
185、rent assets.(j)Cash and cash equivalentsFor the purposes of the cash flow statement,cash and cash equivalents comprise deposits with banks,bank and cash balances,net of bank overdrafts.In the balance sheet,bank overdrafts are included in current borrowings.(k)ProvisionsProvisions are recognized when
186、 the Group has present legal or constructive obligations as a result of past events,it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations,and a reliable estimate of the amount of the obligations can be made.(l)Deferred taxDeferred tax is p
187、rovided,using the liability method,for all temporary differences arising between the tax bases of assets and liabilities and their carrying values.Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply w
188、hen the related deferred tax asset is realized or the deferred tax liability is settled.Provision for deferred tax is made on the revaluation of certain non-current assets and,in relation to acquisitions,on the difference between the fair value of the net assets acquired and their tax base.Deferred
189、tax is provided on temporary differences associated with investments in subsidiaries,associates and joint ventures,except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.Deferred t
190、ax assets relating to the carry forward of unused tax losses are recognized to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized.(m)Employee benefits(i)Pension obligationsThe Group operates a number of defined benefit and
191、defined contribution plans,the assets of which are held in trustee administered funds.Pension accounting costs for defined benefit plans are assessed using the projected unit credit method.Under this method,the costs of providing pensions are charged to profit and loss spreading the regular cost ove
192、r the service lives of employees in accordance with the advice of qualified actuaries,who carry out a full valuation of major plans every year.The pension obligations are measured as the present value of the estimated future cash outflows by reference to market yields on high quality corporate bonds
193、 which have terms to maturity approximating the terms of the related liability.Plan assets are measured at fair value.Actuarial gains and losses are recognized in other comprehensive income in the year in which they occur.The Groups total contributions relating to the defined contribution plans are
194、charged to profit and loss in the year to which they relate.Dairy Farm International Holdings Limited Annual Report 201025notes to the Financial Statements(m)Employee benefits(continued)(ii)Share-based compensationThe Company operates a number of equity settled employee share option schemes.The fair
195、 value of the employee servicesreceivedinexchangeforthegrantoftheoptionsinrespectofoptionsgrantedafter7thNovember2002isrecognized as an expense.The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted as determined on the grant date.
196、At each balance sheet date,the entity revises its estimates of the number of options that are expected to become exercisable.The impact of the revision of original estimates,if any,is recognized in profit and loss.(n)DividendsDividends proposed or declared after the balance sheet date are not recogn
197、ized as a liability at the balance sheet date.(o)SalesSales consist of the net value of goods sold to customers,excluding sales taxes.This does not include sales generated by associates and joint ventures.Sale of goods is recognized when the significant risks and rewards of ownership of the goods ha
198、ve been transferred to customers.Sales are recognized at the point of sale and are recorded at the net amount received from customers.(p)LeasesLeases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.All other lea
199、ses are classified as operating leases.Payments made under operating leases(net of any incentives received from the lessor)are charged to profit and loss onastraightlinebasisovertheperiodofthelease.Whenaleaseisterminatedbeforetheleaseperiodhasexpired,any payment required to be made to the lessor by
200、way of penalty is recognized as an expense in the year in which termination takes place.(q)Pre-operating costsPre-operating costs are expensed as they are incurred.(r)Borrowings and borrowing costsBorrowings are initially recognized at fair value,net of transaction costs incurred.In subsequent perio
201、ds,borrowings are stated at amortized cost using the effective interest method.Borrowing costs relating to major development projects are capitalized during the construction period until the asset is substantially completed.Capitalized borrowing costs are included as part of the cost of the asset.Al
202、l other borrowing costs are expensed as incurred.Borrowings are classified under non-current liabilities unless these are due to be settled within twelve months after the balance sheet date.(s)Non-current assets held for salenon-current assets are classified as assets held for sale and stated at the
203、 lower of carrying amount and fair value less costs to sell if their carrying amount is expected to be recovered principally through a sale transaction rather than through continuing use.(t)Derivative financial instrumentsThe Group enters into derivative financial instruments only in order to hedge
204、underlying exposures.Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value.The method of recognizing the resulting gain or loss is dependent on the nature of the item being hedged.
205、The Group designates certain derivatives as either a hedge of the fair value of a recognized asset or liability(fair value hedge),or a hedge of a forecasted transaction or of the foreign currency risk on a firm commitment(cash flow hedge),or a hedge of a net investment in a foreign entity.Dairy Farm
206、 International Holdings Limited Annual Report 201026notes to the Financial Statements(t)Derivative financial instruments(continued)Changes in the fair value of derivatives that are designated and qualify as fair value hedges and that are highly effective,are recognized in profit and loss,along with
207、any changes in the fair value of the hedged asset or liability thatisattributabletothehedgedrisk.Whenahedginginstrumentexpiresorissold,orwhenahedgenolongermeetsthe criteria for hedge accounting,the cumulative adjustment to the carrying amount of a hedged item for which the effective interest method
208、is used is amortized to profit and loss over the residual period to maturity.Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective,arerecognizedinothercomprehensiveincomeandaccumulatedinequityunderhedgingreserves.Wherethe forecaste
209、d transaction or firm commitment results in the recognition of a non-financial asset or of a non-financial liability,the gains and losses previously deferred in hedging reserves are transferred from hedging reserves and included in the initial measurement of the cost of the asset or liability.Otherw
210、ise,amounts deferred in hedging reserves are transferred to profit and loss in the same periods during which the hedged firm commitment or forecasted transaction affectsprofitandloss.Whenahedginginstrumentexpiresorissold,orwhenahedgenolongermeetsthecriteriafor hedge accounting,any cumulative gain or
211、 loss existing in hedging reserves at that time remains in the hedging reserves and is recognized when the committed or forecasted transaction ultimately is recognized in profit and loss.Whenacommittedorforecastedtransactionisnolongerexpectedtooccur,thecumulativegainorlossthatwasreported in hedging
212、reserves is immediately transferred to profit and loss.Certain derivative transactions,while providing effective economic hedges under the Groups risk management policies,do not qualify for hedge accounting under the specific rules in IAS 39.Changes in the fair value of any derivative instruments th
213、at do not qualify for hedge accounting under IAS 39 are recognized immediately in profit and loss.Hedges of net investments in foreign entities are accounted for on a similar basis to that used for cash flow hedges.Any gain or loss on the hedging instrument relating to the effective portion of the h
214、edge is recognized in exchange reserves;the gain or loss relating to the ineffective portion is recognized immediately in profit and loss.The fair value of derivatives which are designated and qualify as effective hedges are classified as non-current assets or liabilities if the remaining maturities
215、 of the hedged assets or liabilities are greater than twelve months after the balance sheet date.(u)Financial guarantee contractsFinancial guarantee contracts under which the Group accepts significant risk from a third party by agreeing to compensate that party on the occurrence of a specified uncer
216、tain future event are accounted for in a manner similar to insurance contracts.Provisions are recognized when it is probable that the Group has obligations under such guarantees and an outflow of resources embodying economic benefits will be required to settle the obligations.(v)Non-trading itemsnon
217、-trading items are separately identified to provide greater understanding of the Groups underlying business performance.Items classified as non-trading items include gains and losses arising from the sale of businesses,investments and properties;impairment of non-depreciable intangible assets and ot
218、her investments;provisions for the closure of businesses;acquisition-related costs in business combinations;and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance.(w)Earnings per shareBasic earnings p
219、er share are calculated on profit attributable to shareholders and on the weighted average number of shares in issue during the year.The weighted average number excludes the Companys share of the shares held by the Trustee under the Senior Executive Share Incentive Schemes.For the purpose of calcula
220、ting diluted earnings per share,profit attributable to shareholders is adjusted for the effects of the conversion of dilutive potential ordinary shares,and the weighted average number of shares is adjusted for the number of shares which are deemed to be issued for no consideration under the Senior E
221、xecutive Share Incentive Schemes based on the average share price during the year.(x)Comparative figuresCertain comparative figures have been reclassified to conform with the current year presentation.Dairy Farm International Holdings Limited Annual Report 201027notes to the Financial Statements2.FI
222、NANCIAL RISK MANAGEMENT(a)Financial risk factorsThe Groups activities expose it to a variety of financial risks:market risk(including foreign exchange risk and interest rate risk),credit risk and liquidity risk.The Groups treasury function co-ordinates financial risk management policies and their im
223、plementation on a group-wide basis.The Groups treasury policies are designed to manage the financial impact of fluctuations in interest rates and foreign exchange rates and to minimize the Groups financial risks.The Group uses derivative financial instruments,principally interest rate swaps,caps,for
224、ward foreign exchange contracts and foreign currency options as appropriate for hedging transactions and managing the Groups assets and liabilities in accordance with the Groups financial risk management policies.Financial derivative contracts are executed between third party banks and the Group ent
225、ity that is directly exposed to the risk being hedged.Certain derivative transactions,while providing effective economic hedges under the Groups risk management policies,do not qualify for hedge accounting under the specific rules in IAS 39.Changes in the fair value of any derivative instruments tha
226、t do not qualify for hedge accounting under IAS 39 are recognized immediately in profit and loss.It is the Groups policy not to enter into derivative transactions for speculative purposes.The notional amounts and fair values of derivative financial instruments at 31st December 2010 are disclosed in
227、note 30.(i)Market riskForeign exchange riskEntities within the Group are exposed to foreign exchange risk from future commercial transactions,net investments in foreign operations and net monetary assets and liabilities that are denominated in a currency that is not the entitys functional currency.E
228、ntities in the Group use forward foreign exchange contracts and foreign currency options in a consistent manner to hedge firm and anticipated foreign exchange commitments and manage their foreign exchange risk arising from future commercial transactions.Group companies are required to manage their f
229、oreign exchange risk against their functional currency.The purpose of these hedges is to mitigate the impact of movements in foreign exchange rates on assets and liabilities and the profit and loss account of the Group.CurrencyrisksasdefinedbyIFRS7ariseonaccountofmonetaryassetsandliabilitiesbeingden
230、ominatedinacurrencythat is not the functional currency.There are no significant monetary balances held by Group companies at 31st December 2010 that are denominated in a non-functional currency.Interest rate riskThe Group is exposed to interest rate risk through the impact of rate changes on interes
231、t bearing liabilities and assets.These exposures are managed partly by using natural hedges that arise from offsetting interest rate sensitive assets and liabilities,and partly through the use of derivative financial instruments such as interest rate swaps and caps.The Group monitors interest rate e
232、xposure on a monthly basis by currency and business unit,taking into consideration proposed financing and hedging arrangements.The Groups guideline is to maintain 40%to 60%of its gross borrowings in fixed rate instruments with an average tenor of one to three years.At 31st December 2010 the Groups i
233、nterest rate hedge was 52%(2009:60%),with an average tenor of 1.3 years(2009:1.4 years).The interest rate profile of the Groups borrowings after taking into account hedging transactions is set out in note 21.Cash flow interest rate risk is the risk that changes in market interest rates will impact c
234、ash flows arising from variable rate financial instruments.Borrowings at floating rates therefore expose the Group to cash flow interest rate risk.The Group manages this risk by entering into interest rate swaps and caps for a maturity of up to five years.Interest rate swaps have the economic effect
235、 of converting borrowings from floating rate to fixed rate,whilst caps provide protection against a rise in floating rates above a pre-determined rate.Dairy Farm International Holdings Limited Annual Report 201028notes to the Financial Statements(a)Financial risk factors(continued)At 31st December 2
236、010,if interest rates had been 100 basis points higher/lower with all other variables held constant,the Groups profit after tax would have been US$3.9 million(2009:US$2.8 million)higher/lower,and hedging reserves would have been US$3.2 million(2009:US$4.1 million)higher/lower,as a result of fair val
237、ue changes to cash flow hedges.The sensitivity analysis has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that d
238、ate.The 100 basis point increase or decrease represents managements assessment of a reasonably possible change in those interest rates which have the most impact on the Group,specifically theUnitedStatesandHongKongratesovertheperioduntilthenextannualbalancesheetdate.Changesinmarketinterest rates aff
239、ect the interest income or expense of non-derivative variable-interest financial instruments,the interest payments of which are not designated as hedged items of cash flow hedges against interest rate risks.As a consequence,they are included in the calculation of profit after tax sensitivities.Chang
240、es in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow hedge to hedge payment fluctuations resulting from interest rate movements affect the hedging reserves and are therefore taken into consideration in the equity-related sensitivity calcu
241、lations.(ii)Credit riskThe Groups credit risk is primarily attributable to deposits with banks and credit exposures to derivative financial instruments with a positive fair value.The Group has credit policies in place and the exposures to these credit risks are monitored on an ongoing basis.The Grou
242、p manages its deposits with banks and transactions involving derivative financial instruments by monitoring credit ratings,capital adequacy ratios,and limiting the aggregate risk to any individual counterparty.The utilization of credit limits is regularly monitored.At 31st December 2010,99%(2009:99%
243、)of deposits and balances with banks were made to institutions with credit ratings of no less than A-(Fitch).Similarly,transactions involving derivative financial instruments are with banks with sound credit ratings and capital adequacy ratios.In developing countries it may be necessary to deposit m
244、oney with banks that have a lower credit rating,however,the Group only enters into derivative transactions with counterparties which have credit ratings of at least investment grade.Management does not expect any counterparty to fail to meet its obligations.Sales to customers are made in cash or by
245、major credit cards.The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after deducting any impairment allowance.The Groups exposure to credit risk arising from debtors is set out in note 15 and totals US$283.9 million(2009:US$253.2 m
246、illion).The Groups exposure to credit risk arising from exposure to derivative financial instruments with a positive fair value is disclosed in note 15 as a component of other debtors and totals US$0.2 million (2009:nil).The Groups exposure to credit risk arising from deposits and balances with bank
247、s is set out in note 18 and totals US$598.8 million(2009:US$468.8 million).(iii)Liquidity riskPrudent liquidity risk management includes managing the profile of debt maturities and funding sources,maintaining sufficient cash,and ensuring the availability of funding from an adequate amount of committ
248、ed credit facilities and the ability to close out market positions.The Groups ability to fund its existing and prospective debt requirements is managed by maintaining diversified funding sources with adequate committed funding lines from high quality lenders,and by monitoring rolling short-term fore
249、casts of the Groups cash and gross debt on the basis of expected cash flows.In addition long-term cash flows are projected to assist with the Groups long-term debt financing plans.At31stDecember2010,totalavailableborrowingfacilitiesamountedtoUS$1,179.6million(2009:US$1,185.8million),of which US$458.
250、4 million(2009:US$499.2 million)was drawn down.Undrawn committed facilities,in the form of revolvingcreditandtermloanfacilities,totalledUS$404.7million(2009:US$381.3million).An ageing analysis of the Groups financial liabilities based on the remaining period at the balance sheet to the contractual m
251、aturity dates is included in notes 20,21 and 30.Dairy Farm International Holdings Limited Annual Report 201029notes to the Financial Statements(b)Capital managementThe Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern whilst seeking to maximiz
252、e benefits to shareholders and other stakeholders.Capital is equity as shown in the consolidated balance sheet plus net debt.The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder returns,taking into consideration the future cap
253、ital requirements of the Group and capital efficiency,prevailing and projected profitability,projected operating cash flows,projected capital expenditures and projected strategic investment opportunities.In order to maintain or adjust the capital structure,the Group may adjust the amount of dividend
254、s paid to shareholders,repurchase Company shares,return capital to shareholders,issue new shares or sell assets to reduce debt.The Group monitors capital on the basis of the Groups consolidated gearing ratio and consolidated interest cover.The gearing ratio is calculated as net debt divided by total
255、 debt is calculated as total borrowings less bank balances and other liquid funds.Interest cover is calculated as underlying business performance divided by net financing charges.The Group does not have a defined gearing or interest cover benchmark or range.The ratios at 31st December 2010 and 2009
256、are as follows:20102009Gearing ratio(%)n/an/aInterest cover(times)2322The net cash position at 31st December 2010 is primarily due to better operating results and working capital position.The slight increase in interest cover is mainly due to better operating results.(c)Fair value estimationThe fair
257、 value of interest rate swaps and caps is calculated by reference to the present value of the estimated future cash flows,taking into account current interest rates as observed from the market.The fair value of forward foreign exchange contracts is determined using forward exchange market rates of t
258、he same remaining tenor at the balance sheet date.The fair values of current debtors,bank balances and other liquid funds,current creditors and current borrowings are assumed to approximate their carrying amounts due to the short-term maturities of these assets and liabilities.The fair values of lon
259、g-term borrowings are based on market prices or are estimated using the expected future payments discounted at market interest rates.3.CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSEstimates and judgements used in preparing the financial statements are continually evaluated and are based on historical
260、 experience and other factors,including expectations of future events that are believed to be reasonable.The resulting accounting estimates will,by definition,seldom equal the related actual results.The estimates and assumptions that have a significant effect on the carrying amounts of assets and li
261、abilities are discussed below.(a)Acquisition of subsidiaries,associates and joint venturesThe initial accounting on the acquisition of subsidiaries,associates and joint ventures involves identifying and determining the fair values to be assigned to the identifiable assets,liabilities and contingent
262、liabilities of the acquired entities.The fair values of leasehold land and tangible assets are determined by independent valuers by reference to market prices or present value of expected net cash flows from the assets.Any changes in the assumptions used and estimates made in determining the fair va
263、lues,and managements ability to measure reliably the contingent liabilities of the acquired entity will impact the carrying amount of these assets and liabilities.Dairy Farm International Holdings Limited Annual Report 201030notes to the Financial Statements(b)Tangible fixed assets and depreciationM
264、anagement determines the estimated useful lives and related depreciation charges for the Groups tangible fixed assets.Management will revise the depreciation charge where useful lives are different to those previously estimated,or it will write-off or write-down technically obsolete or non-strategic
265、 assets that have been abandoned or sold.(c)Impairment of assetsThe Group tests annually whether goodwill and other assets that have indefinite useful lives suffered any impairment.Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
266、of the asset exceeds its recoverable amount.The recoverable amount of an asset or a cash generating unit is determined based on the higher of its fair value less costs to sell and its value in use,calculated on the basis of managements assumptions and estimates.Changing the key assumptions,including
267、 the discount rates or the growth rate assumptions in the cash flow projections,could materially affect the value-in-use calculations.(d)Income taxesThe Group is subject to income taxes in numerous jurisdictions.Significant judgement is required in determining the worldwide provision for income taxe
268、s.There are many transactions and calculations for which the ultimate tax determinationisuncertainduringtheordinarycourseofbusiness.Wherethefinaltaxoutcomeofthesemattersisdifferent from the amounts that were initially recorded,such differences will impact the income tax and deferred tax provisions i
269、n the period in which such determination is made.Provision of deferred tax follows the way management expects to recover or settle the carrying amount of the related assets or liabilities,which the management may expect to recover through use,sale or combination of both.Accordingly,deferred tax will
270、 be calculated at income tax rate,capital gains tax rate or combination of both.Recognition of deferred tax assets,which principally relate to tax losses,depends on the managements expectation of future taxable profit that will be available against which the tax losses can be utilized.The outcome of
271、 their actual utilization may be different.(e)Pension obligationsThe present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions.The assumptions used in determining the net cost/income for pensions include the expect
272、ed long-term rate of return on the relevant plan assets and the discount rate.Any changes in these assumptions will impact the carrying amount of pension obligations.The expected return on plan assets assumption is determined on a uniform basis,taking into consideration long-term historical returns,
273、asset allocation and future estimates of long-term investment returns.The Group determines the appropriate discount rate at the end of each year.This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pensio
274、n obligations.In determining the appropriate discount rate,the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid,and that have terms to maturity approximating the terms of the related pension liability.Other key
275、 assumptions for pension obligations are based in part on current market conditions.(f)Non-trading itemsThe Group uses underlying business performance in its internal financial reporting to distinguish between the underlying profits and non-trading items.The identification of non-trading items requi
276、res judgement by management.Dairy Farm International Holdings Limited Annual Report 201031notes to the Financial Statements Including associates and joint ventures Subsidiaries4.SALES2010US$m2009US$m2010US$m2009US$mAnalysis by operating segment:north Asia4,009.83,666.74,009.83,666.7East Asia2,395.81
277、,957.82,395.81,957.8South Asia1,629.91,459.81,564.91,404.0 8,035.57,084.37,970.57,028.5Maxims1,077.6968.39,113.18,052.67,970.57,028.5Analysis by format:Supermarkets/hypermarkets4,848.64,311.94,807.64,275.1Health and beauty stores1,454.61,232.81,430.61,213.8Convenience stores1,426.21,282.21,426.21,28
278、2.2Home furnishings stores 306.1257.4306.1257.48,035.57,084.37,970.57,028.5Restaurants1,077.6968.3 9,113.18,052.67,970.57,028.5Sales including associates and joint ventures include 100%of sales from associates and joint ventures.Operating segments are identified on the basis of internal reports abou
279、t components of the Group that are regularly reviewed by the Board for the purpose of resource allocation and performance assessment.Dairy Farm operates in four operating segments:North Asia,East Asia,South Asia and Maxims.North Asia comprises Hong Kong,mainland China,Macau and Taiwan.East Asia comp
280、rises Malaysia,Indonesia,Vietnam and Brunei.South Asia comprises Singapore and India.Maxims is the Groups major associate,a leading Hong Kong restaurant chain.No operating segments have been aggregated to form the reportable segments.5.OPERATING PROFIT2010US$m2009US$mAnalysis by operating segment:no
281、rth Asia215.9208.2East Asia178.0140.4South Asia107.0101.0500.9449.6Support office(31.2)(25.9)469.7423.7non-trading items in East Asia:Acquisition-relatedcostsinbusinesscombinations(0.7)Profitonsaleofaproperty0.3469.3423.7Analysis by format:Supermarkets/hypermarkets266.9251.7Health and beauty stores1
282、31.2108.9Convenience stores55.360.8Home furnishings stores32.212.3Other15.315.9500.9449.6Dairy Farm International Holdings Limited Annual Report 201032notes to the Financial Statements5.OPERATING PROFIT(continued)The following items have been charged/(credited)in arriving at operating profit:2010US$
283、m2009US$mCost of stocks recognized as expense5,584.04,901.8Amortization of intangible assets(note 11)5.93.4Depreciation of tangible assets(note 12)161.4140.0Employee benefit expensesalariesandbenefitsinkind657.7584.8shareoptionsgranted(note25)1.71.5definedbenefitpensionplans(note17)10.310.9definedco
284、ntributionpensionplans30.630.3700.3627.5Operating leasesminimumleasepayments617.9542.1contingentrents6.04.7subleases(41.6)(31.6)582.3515.2Concession and service income(94.2)(81.0)Rental income(15.3)(15.9)net foreign exchange gains(1.1)(0.6)Loss on sale of tangible assets4.73.46.NET FINANCING CHARGES
285、2010US$m2009US$mInterestexpensebankloansandadvances23.823.4Commitment and other fees1.70.9Financing charges25.524.3Interest income on bank deposits(2.9)(3.2)22.621.17.SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES2010US$m2009US$mAnalysis by operating segment:Maxims49.138.2South Asia(2.0)(3.0)47.1
286、35.2Analysis by format:Restaurants49.138.2Supermarkets(2.4)(2.9)Health and beauty stores0.4(0.1)47.135.2Results are shown after tax and minority interests in the associates and joint ventures.Dairy Farm International Holdings Limited Annual Report 201033notes to the Financial Statements8.TAX2010US$m
287、2009US$mTax charged to profit and loss is analyzed as follows:Current tax76.271.5Deferred tax 7.33.583.575.0Geographical analysis:north Asia31.932.8East Asia35.425.7South Asia16.216.583.575.0Reconciliation between tax expense and tax at the applicable tax rate*:Tax at applicable tax rate72.865.7Inco
288、me not subject to tax(0.4)(1.3)Expenses not deductible for tax purposes7.04.4Tax losses not recognized5.04.6Utilization of previously unrecognized tax losses(1.4)(0.4)Recognition of previously unrecognized tax losses and temporary differences(0.5)(0.5)(Over)/under provision in prior years(3.2)0.3Cha
289、nge in tax rates0.2(0.4)Withholdingtax2.42.1Other1.60.583.575.0Tax relating to components of other comprehensive income is analyzed as follows:Employee benefit plans0.9(3.2)Cash flow hedges(0.7)0.6Revaluation of other investments(0.1)0.2(2.7)Share of tax charge of associates and joint ventures of US
290、$11.6 million(2009:US$9.3 million)related to Maxims is included in share of results of associates and joint ventures.*The applicable tax rate for the year was 16.3%(2009:16.3%)and represents the weighted average of the rates of taxation prevailing in the territories in which the Group operates.The G
291、roup has no tax payable in the United Kingdom(2009:nil).Dairy Farm International Holdings Limited Annual Report 201034notes to the Financial Statements9.EARNINGS PER SHAREBasic earnings per share are calculated on profit attributable to shareholders of US$411.4 million(2009:US$364.0 million),and on
292、theweightedaveragenumberof1,349.0million(2009:1,347.0million)sharesinissueduringtheyear.Diluted earnings per share are calculated on profit attributable to shareholders of US$411.4 million(2009:US$364.0 million),and on the weighted average number of shares in issue after adjusting for the number of
293、shares which are deemed to be issued for no consideration under the Senior Executive Share Incentive Schemes based on the average share price during the year.The weighted average number of shares is arrived at as follows:Ordinary shares in millions20102009Weightedaveragenumberofsharesforbasicearning
294、spersharecalculation1,349.01,347.0Adjustment for shares deemed to be issued for no consideration under the Senior Executive Share Incentive Schemes1.81.8Weightedaveragenumberofsharesfordilutedearningspersharecalculation1,350.81,348.8Additional basic and diluted earnings per share are also calculated
295、 for the year ended 31st December 2010 based on underlying profit attributable to shareholders.A reconciliation of earnings is set out below:US$mBasic earnings per shareUSDiluted earnings per shareUSProfit attributable to shareholders411.430.5030.46non-trading items(note 10)(1.6)Underlying profit at
296、tributable to shareholders409.830.3830.34There were no non-trading items in 2009.10.NON-TRADING ITEMSAn analysis of non-trading items after interest,tax and minority interests(2009:nil)is set out below:2010US$mRelease of over-provision for a business disposal in prior years2.0Profit on sale of a pro
297、perty0.3Acquisition-related costs in business combinations(0.7)1.6Dairy Farm International Holdings Limited Annual Report 201035notes to the Financial Statements11.INTANGIBLE ASSETSGoodwillUS$mLeasehold landUS$mOtherUS$mTotalUS$m2010Costaspreviouslyreported234.173.528.9336.5changeinaccountingpolicie
298、sforlong-term interests in leasehold land(44.6)(44.6)asrestated234.128.928.9291.9Amortization and impairmentaspreviouslyreported(0.4)(4.5)(12.3)(17.2)changeinaccountingpoliciesforlong-term interests in leasehold land3.43.4asrestated(0.4)(1.1)(12.3)(13.8)net book value at 1st January233.727.816.6278.
299、1Exchange differences12.41.31.615.3new subsidiaries acquired0.20.2Additions 43.72.79.856.2Amortization(0.8)(5.1)(5.9)net book value at 31st December289.831.023.1343.9Cost290.232.941.4364.5Amortization and impairment(0.4)(1.9)(18.3)(20.6)289.831.023.1343.92009Costaspreviouslyreported224.571.521.0317.
300、0changeinaccountingpoliciesforlong-term interests in leasehold land(64.7)(64.7)asrestated224.56.821.0252.3Amortization and impairmentaspreviouslyreported(0.4)(4.2)(8.2)(12.8)changeinaccountingpoliciesforlong-term interests in leasehold land3.43.4asrestated(0.4)(0.8)(8.2)(9.4)net book value at 1st Ja
301、nuary224.16.012.8242.9Exchange differences9.62.90.813.3Additions 19.16.225.3Amortization(0.2)(3.2)(3.4)net book value at 31st December233.727.816.6278.1Cost234.128.928.9291.9Amortization and impairment(0.4)(1.1)(12.3)(13.8)233.727.816.6278.1Dairy Farm International Holdings Limited Annual Report 201
302、036notes to the Financial Statements11.INTANGIBLE ASSETS(continued)2010US$m2009US$mAnalysis of goodwill by operating segment:north Asia42.241.0East Asia162.7119.4South Asia84.973.3289.8233.7Other intangible assets comprised trademarks and computer software.Additions of goodwill in 2010 mainly relate
303、d to the acquisition of Bintang stores in Malaysia and MCP stores in Singapore(note 29(d).Goodwill is allocated to cash-generating units identified as banners or group of stores acquired.Cash flow projections for impairment reviews are based on budgets prepared on the basis of assumptions reflective
304、 of the prevailing market conditions,and are discounted appropriately.Key assumptions used for value-in-use calculations include budgeted gross margins of between 23%and 51%and growth rates of up to 6%to extrapolate cash flows,which vary across the Groups business segments and geographical locations
305、,over a five year period,and are based on management expectations for the market development;and pre-tax discount rates of between 7%and 19%applied to the cash flow projections.The discount rates used reflect business specific risks relating to the relevant industry,business life-cycle and geographi
306、cal location.On the basis of these reviews,management concluded that no impairment is required.The amortization charges are all recognized in arriving at operating profit and are included in selling and distribution costs and administration expenses.12.TANGIBLE ASSETSFreeholdpropertiesUS$mLeasehold
307、propertiesUS$mLeasehold improvementsUS$mPlant&machineryUS$mFurniture,equipment&motor vehiclesUS$mTotalUS$m2010Costaspreviouslyreported47.2144.9465.2425.5579.71,662.5changeinaccountingpoliciesfor owner-occupiedproperties1.05.36.3 long-terminterestsin leasehold land44.644.6asrestated48.2194.8465.2425.
308、5579.71,713.4Depreciation and impairmentaspreviouslyreported(0.6)(18.2)(301.5)(265.2)(367.3)(952.8)changeinaccountingpoliciesfor owner-occupiedproperties(1.1)(23.4)(24.5)long-terminterestsin leasehold land(3.4)(3.4)asrestated(1.7)(45.0)(301.5)(265.2)(367.3)(980.7)net book value at 1st January46.5149
309、.8163.7160.3212.4732.7Exchange differences6.513.96.49.214.150.1new subsidiaries acquired15.31.92.01.120.3Additions32.430.033.143.771.3210.5Disposals(3.3)(1.0)(1.5)(5.8)Depreciation charge(0.1)(8.1)(41.8)(46.2)(65.2)(161.4)Reversal of impairment charge 0.40.4Reclassified from non-current assets held
310、for sale74.074.0net book value at 31st December85.3274.9160.4168.0232.2920.8Cost87.4331.3505.3482.8664.52,071.3Depreciation and impairment(2.1)(56.4)(344.9)(314.8)(432.3)(1,150.5)85.3274.9160.4168.0232.2920.8Dairy Farm International Holdings Limited Annual Report 201037notes to the Financial Stateme
311、nts12.TANGIBLE ASSETS (continued)FreeholdpropertiesUS$mLeasehold propertiesUS$mLeasehold improvementsUS$mPlant&machineryUS$mFurniture,equipment&motor vehiclesUS$mTotalUS$m2009Costaspreviouslyreported41.3119.2442.3390.4504.81,498.0changeinaccountingpoliciesfor owner-occupiedproperties1.15.36.4 long-t
312、erminterestsin leasehold land64.764.7asrestated42.4189.2442.3390.4504.81,569.1Depreciation and impairment aspreviouslyreported(0.5)(12.4)(288.2)(243.0)(317.0)(861.1)changeinaccountingpoliciesfor owner-occupiedproperties(1.2)(23.3)(24.5)long-terminterestsin leasehold land(3.4)(3.4)asrestated(1.7)(39.
313、1)(288.2)(243.0)(317.0)(889.0)net book value at 1st January40.7150.1154.1147.4187.8680.1Exchange differences0.95.61.01.812.922.2Additions21.766.951.052.670.7262.9Disposals(1.7)(1.4)(1.0)(4.1)Depreciation charge(0.2)(5.3)(40.7)(38.9)(54.9)(140.0)Impairment charge(1.2)(3.1)(4.3)Classified as non-curre
314、nt assets held for sale(16.6)(67.5)(84.1)net book value at 31st December46.5149.8163.7160.3212.4732.7Cost48.2194.8465.2425.5579.71,713.4Depreciation and impairment(1.7)(45.0)(301.5)(265.2)(367.3)(980.7)46.5149.8163.7160.3212.4732.7Net book value of leasehold properties acquired under finance leases
315、amounted to US$84.7 million(2009:US$41.2 million).Dairy Farm International Holdings Limited Annual Report 201038notes to the Financial Statements13.ASSOCIATES AND JOINT VENTURES2010US$m2009US$mUnlisted associates157.4143.1Joint ventures3.22.7Share of attributable net assets160.6145.8The Groups share
316、 of assets,liabilities,capital commitments,contingent liabilities and results of associates and joint ventures are summarized below:non-current assets163.7146.7Current assets140.0117.6non-current liabilities(29.8)(23.9)Current liabilities(109.5)(91.6)Total equity164.4148.8Attributable to minority in
317、terests(3.8)(3.0)Attributable net assets160.6145.8Sales570.9511.6Profit after tax 47.835.9Capital commitments34.425.5Contingent liabilitiesMovements of share of attributable net assets for the year:At 1st January145.8128.7Share of results after tax and minority interests47.135.2Share of other compre
318、hensive income after tax and minority interests(2.7)3.8Dividends received(29.6)(24.5)Capital injections2.6At 31st December160.6145.8Analysis by operating segment:Maxims161.8145.0South Asia(1.2)0.8At 31st December160.6145.814.OTHER INVESTMENTS2010US$m2009US$mMovements for the year:At 1st January3.12.
319、3Revaluation surplus0.20.8At 31st December3.33.1Other investments are unlisted non-current available-for-sale financial assets in north Asia.The fair value is determined on observable current market transactions.Dairy Farm International Holdings Limited Annual Report 201039notes to the Financial Sta
320、tements15.DEBTORS2010US$m2009US$mTrade debtorsthirdparties50.736.4provisionforimpairment(0.6)(0.6)50.135.8Other debtorsthirdparties234.2217.6provisionforimpairment(0.4)(0.2)233.8217.4283.9253.2non-current123.5113.3Current160.4139.9283.9253.2Geographical analysis:north Asia114.8107.0East Asia106.099.
321、5South Asia63.146.7283.9253.2Sales to customers are made in cash or by major credit cards.The average credit period on sale of goods and services varies among Group businesses and is normally not more than 30 days.The maximum exposure to credit risk is represented by the carrying amount of trade deb
322、tors after deducting the impairment allowance.An allowance for impairment of trade debtors is made based on the estimated irrecoverable amount.Significant financial difficulties of the debtor,probability that the debtor will enter bankruptcy or financial reorganization,and default or delinquency in
323、payment are considered indicators that the debtor is impaired.Dairy Farm International Holdings Limited Annual Report 201040notes to the Financial Statements15.DEBTORS(continued)At 31st December 2010,trade debtors of US$0.6 million(2009:US$0.6 million)were impaired,which have been fully provided for
324、 in both years.The ageing analysis of these trade debtors is as follows:2010US$m2009US$mOver 90 days0.6 0.6 At 31st December 2010,trade debtors of US$3.3 million(2009:US$2.9 million)were past due but not impaired.The ageing analysis of these trade debtors is as follows:Below 30 days2.92.5Between 31
325、and 60 days0.20.2Between 61 and 90 days0.10.2Over 90 days0.13.32.9The risk of trade debtors that are neither past due nor impaired at 31st December 2010 becoming impaired is low as most of the balances have been settled subsequent to the year end.Other debtors are further analyzed as follows:Prepaym
326、ents56.964.0Rental and other deposits121.5106.7Derivative financial instruments0.2Loans to employees0.20.2Other55.046.5233.8217.4Movements on the provision for impairment are as follows:Trade debtorsOther debtors2010US$m2009US$m2010US$m2009US$mAt 1st January(0.6)(0.6)(0.2)(0.2)Additional provisions(
327、0.3)(0.1)(0.2)(0.2)Unused amounts reversed0.20.10.2Amounts written off0.1At 31st December(0.6)(0.6)(0.4)(0.2)There were no debtors pledged as security for borrowings as at 31st December 2010 and 2009.Dairy Farm International Holdings Limited Annual Report 201041notes to the Financial Statements16.DE
328、FERRED TAX ASSETS/(LIABILITIES)AcceleratedtaxdepreciationUS$mFair valuegains/lossesUS$mEmployeebenefitsUS$m Provisions and other temporary differencesUS$mTotalUS$m2010At 1st Januaryaspreviouslyreported(27.9)(6.8)3.46.8(24.5)changeinaccountingpoliciesfor owner-occupied properties3.03.0asrestated(27.9
329、)(3.8)3.46.8(21.5)Exchange differences(1.6)(0.1)0.40.4(0.9)new subsidiary acquired(0.1)(0.1)Charged to profit and loss(6.2)(1.7)0.6(7.3)Credited to other comprehensive income(0.8)1.00.2At 31st December(35.8)(4.7)3.17.8(29.6)Deferred tax assets1.20.67.69.819.2Deferred tax liabilities(37.0)(5.3)(4.5)(
330、2.0)(48.8)(35.8)(4.7)3.17.8(29.6)2009At 1st Januaryaspreviouslyreported(23.1)(6.9)5.55.9(18.6)changeinaccountingpoliciesfor owner-occupied properties3.23.2asrestated(23.1)(3.7)5.55.9(15.4)Exchange differences(1.1)(0.6)0.81.00.1Charged to profit and loss(3.7)0.3(0.1)(3.5)Charged to other comprehensiv
331、e income0.5(3.2)(2.7)At 31st December(27.9)(3.8)3.46.8(21.5)Deferred tax assets0.71.38.19.019.1Deferred tax liabilities(28.6)(5.1)(4.7)(2.2)(40.6)(27.9)(3.8)3.46.8(21.5)Deferred tax balances predominantly comprise non-current items.Deferred tax assets and liabilities are netted when the taxes relate
332、 to the same taxation authority and where offsetting is allowed.Deferred tax assets of US$14.6 million(2009:US$14.2 million)arising from unused tax losses of US$60.6 million(2009:US$60.3 million)have not been recognized in the financial statements.Included in the unused tax losses,US$8.6 million hav
333、e no expiry date and the balance will expire at various dates up to and including 2018.Dairy Farm International Holdings Limited Annual Report 201042notes to the Financial Statements17.PENSION PLANSTheGrouphasdefinedbenefitpensionplansrelatingtoemployeesinHongKong,IndonesiaandTaiwan.Theseplansarefinalsalarydefined benefit plans and are either funded or unfunded.The assets of the funded plans are h
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