Dairy Farm International Holdings (DFI) 2019年年度報告「LSE」.pdf

1、Annual Report 2019Dairy Farm International Holdings Limited is incorporated in Bermuda and has a standard listing on the London Stock Exchange,with secondary listings in Bermuda and Singapore.The Groups businesses are managed from Hong Kong by Dairy Farm Management Services Limited through its regio

2、nal offices.Dairy Farm is a member of the Jardine Matheson Group.A member of the Jardine Matheson Group Our Goal:“To give our customers across Asia a store they TRUST,delivering QUALITY,SERVICE and VALUE.”Contents2 Corporate Information3 Dairy Farm At-a-Glance4 Highlights6Chairmans Statement 10Group

3、 Chief Executives Review14Sustainable Transformation at Dairy Farm18Business Review18 Food22 Health and Beauty26 Home Furnishings30 Restaurants34 Other Associates36Financial Review39Directors Profiles41Our Leadership44Financial Statements116Independent Auditors Report124Five Year Summary125Responsib

4、ility Statement126Corporate Governance133Principal Risks and Uncertainties135Shareholder Information136Retail Outlets Summary137Management and OfficesAnnual Report 20191Corporate InformationDirectorsBen KeswickChairman and Managing DirectorIan McLeodGroup Chief ExecutiveClem Constantine(joined the B

5、oard on 11th November 2019)Neil Galloway(stepped down on 31st March 2019)Mark GreenbergGeorge J.HoAdam KeswickSimon Keswick(stepped down on 1st January 2020)Michael Kok(stepped down on 8th May 2019)Dr Delman LeeAnthony NightingaleY.K.PangJeremy ParrLord Sassoon,KtPercy WeatherallJohn WittCompany Sec

6、retaryJonathan LloydRegistered OfficeJardine House33-35 Reid StreetHamiltonBermudaDairy Farm Management Services LimitedDirectorsBen KeswickChairmanIan McLeodGroup Chief ExecutiveClem ConstantineChief Financial Officer(joined the board on 19th November 2019)Neil GallowayGroup Finance&IKEA Director(s

7、tepped down on 31st March 2019)Choo Peng CheeChief Executive Officer North Asia&Group ConvenienceSam Kim Chief Executive Officer Health&Beauty and Chief Marketing&Business Development OfficerMartin LindstrmGroup Director IKEASimon McDowellGroup Chief Customer Officer and Chief Executive Officer Nort

8、h Asia Health and Beauty(stepped down on 31st July 2019)Michael WuChairman and Managing Director,MaximsMark GreenbergDavid HsuAnne ORiordan(joined the board on 1st June 2019)Y.K.PangJeremy ParrJohn WittCorporate SecretaryJonathan LloydDairy Farm International Holdings Limited2Dairy Farm At-a-Glance

9、Mainland China Yonghui 7-Eleven Mannings MaximsTaiwan Jasons Wellcome IKEAMacau San Miu 7-Eleven Mannings IKEA MaximsHong Kong MarketPlace Wellcome 7-Eleven GNC Mannings IKEA MaximsThe Philippines Rose Pharmacy Robinsons Cambodia Giant Lucky Guardian MaximsThailand MaximsMalaysia Cold Storage Giant

10、Jasons Shopsmart Guardian MaximsVietnam Guardian MaximsSingapore Cold Storage Giant Jasons MarketPlace 7-Eleven Guardian MaximsIndonesia Giant Hero Guardian IKEAStore NetworkGeographical Locations Restaurants Other Retailing Home Furnishings Health and Beauty Convenience Stores Grocery Retail(Includ

11、ing associates and joint ventures.)Network Span12Asian markets and territories10,533outletsBrunei GuardianAnnual Report 20193Highlights Multi-year transformation making progress Underlying profit impacted by social unrest in Hong Kong Improvement in Southeast Asia Grocery Retail and Health and Beaut

12、y20192018ChangeResults US$mUS$m%restated#Sales subsidiaries11,19211,749(5)including associates and joint ventures*27,66521,95726Underlying EBITDA1,4391,607(10)Underlying profit attributable to shareholders321358(10)Net non-trading items3(273)n/aProfit attributable to shareholders32485282Net debt8217

13、4410USUS%Underlying earnings per share23.7226.48(10)Basic earnings per share23.936.27282Dividends per share21.0021.00Net asset value per share 89.3983.277Store Network*20192018Net changeFood5,7325,474+258 Grocery Retail2,5182,501+17 Convenience Stores3,2142,973+241Health and Beauty2,4022,322+80Home

14、Furnishings1210+2Restaurants1,7531,298+455Other Retailing634643910,5339,747+786*On a 100%basis.Underlying EBITDA represents underlying operating profit before depreciation and amortisation.The Group uses underlying profit in its internal financial reporting to distinguish between ongoing business pe

15、rformance and non-trading items,as more fully described in note 35 to the financial statements.Management considers this to be a key measure which provides additional information to enhance understanding of the Groups underlying business performance.Net asset value per share is based on the book val

16、ue of shareholders funds.#The accounts have been restated due to the change in accounting policy upon adoption of IFRS 16 Leases,as set out in note 1 to the financial statements.Dairy Farm International Holdings Limited4Total Sales*Underlying Profit 26%10%Profit Attributable to Shareholders 282%Numb

17、er of Stores*Number of Employees*10,533some 230,000 people0520251015US303520152016201720182019US0369121518242120152016201720182019Interim dividendFinal dividendOn an IFRS 16 basisBefore effect of adopting IFRS 16On an IFRS 16 basisBefore effect of adopting IFRS 16Total Sales*Underlying Earnings per

18、ShareOrdinary Dividends per ShareUnderlying Profit Attributable to Shareholders0US$m10020030040050020152016201720182019US$27.7 billionUS23.72US21.00US$321 millionUS$b048121620242820152016201720182019Grocery RetailConvenience StoresRestaurantsHealth and BeautyHome Furnishings Other RetailingAnnual Re

19、port 20195Chairmans StatementOverviewThe Dairy Farm Groups multi-year transformation programme to reshape and reorganise the business adapting to the changing needs of customers,continued to gain momentum during 2019.Opportunities are being unlocked across the Group as the business seeks to leverage

20、 its scale effectively and develop a more coherent approach to improving its customer proposition,both by banner and at a country level.While the Group began to see some early benefits from its transformation programme,profitability was impacted by market conditions in Hong Kong in the second half o

21、f the year caused by social unrest.The ongoing COVID-19 outbreak has added extra complexity to Groups businesses and the Groups results are being significantly impacted by it.Performance for the remainder of the year will depend on the duration,geographic extent and impact of the outbreak and the me

22、asures taken to control it.The Groups diverse retail portfolio does,however,provide some insulation against market uncertainties and Dairy Farm remains firmly focused on the successful delivery of its transformation.Operating performanceSales of US$11.2 billion for the year by the Groups subsidiarie

23、s were 5%behind those of 2018.Total sales of US$27.7 billion,including 100%of associates and joint ventures,were 26%higher,reflecting the investment in Robinsons Retail in the prior year.The underlying operating profit of the Groups subsidiaries was US$437 million,14%lower than 2018,primarily due to

24、 social unrest in Hong Kong which disrupted trading at some of the Groups banners in the second half of the year.Among the Groups subsidiaries,the impact was greatest for Mannings,because of the significant reduction in the number of visitors from the Chinese mainland to Hong Kong.Ongoing investment

25、s in the IKEA store network in the year also reduced Group“While difficult market conditions in Hong Kong impacted the Groups financial performance during the year,the multi-year transformation of the Dairy Farm Group continued to gain momentum during 2019,with signs of progress across our businesse

26、s.The Groups space optimisation plan,new store formats and improvement programmes together generated greater efficiencies and started to deliver tangible results.We expect this progress to continue in 2020,although the Groups results are being materially impacted by the ongoing COVID-19 outbreak.Per

27、formance for the remainder of the year will depend on the duration,geographic extent and impact of the outbreak and the measures taken to control it.”Dairy Farm International Holdings Limited6profitability.Offsetting these impacts was a significant improvement in profitability in our Southeast Asia

28、Grocery Retail business,as the space optimisation plan took effect.The businesses also benefitted from transformation and improvement programmes.Underlying profit attributable to shareholders was US$321 million,down 10%from US$358 million last year.Underlying earnings per share of US23.72 were also

29、down 10%.The Group maintained solid net cash flows from operating activities of US$1,288 million.Net debt at the end of 2019 was US$821 million,an increase from US$744 million last year.The Board is recommending an unchanged final dividend of US14.50 per share,giving a total dividend of US21.00 per

30、share for the year,which is in line with 2018.Food Grocery RetailThe divestment of the Rustan Supercenters business,as well as the execution of the Groups space optimisation plan in Southeast Asia,led to overall sales for the Grocery Retail business reducing by 12%to US$5.2 billion.Sales in Hong Kon

31、g and Macau Grocery Retail rose in 2019.There was a significant improvement in operating profit in the Groups Grocery Retail business,from US$22 million in 2018 to US$63 million in 2019.The improvement was driven by Southeast Asia,as the space optimisation plan took effect.The foundation for future

32、growth by the business were also strengthened by the ongoing transformation and improvement programmes.Profits in Hong Kong and Macau Grocery Retail were impacted by cost pressures and ongoing investments in people and capabilities,but the Group has started to see improving trends in underlying prof

33、it performance.ConvenienceSales in the Convenience business increased by 4%to US$2.2 billion,driven by new store growth and strong like-for-like sales in Chinese mainland in particular.Enhancements to range and services are proving popular with customers and the business continues to focus on brand

34、differentiation to support sales growth.Profits for the year declined by US$6 million,however,as a result of pre-opening costs in respect of the expansion of the 7-Eleven store network in Guangdong,as a net total of over 200 new stores were opened in 2019.Profits in 2018 were also positively impacte

35、d by a number of one-off items.*Including share of associates and joint ventures.Based on operating profit before effect of adopting IFRS 16 and share of results of associates and joint ventures,excluding selling,general and administrative expenses and non-trading items.2019Profit Mix7%14%15%14%1%49

36、%2019Sales Mix*14%21%5%1%50%9%Grocery RetailConvenience StoresRestaurantsOther RetailingHealth and BeautyHome Furnishings Annual Report 20197Chairmans StatementHealth and BeautyTotal sales for the Health and Beauty Division increased by 1%to US$3.1 billion,supported by the consolidation of Rose Phar

37、macy as well as strong growth in other Southeast Asian markets.Operating profit,however,declined by 11%to US$296 million,as the business was impacted by the social unrest in Hong Kong.The Group has been addressing these challenging conditions by appropriate management of costs.Weakness in North Asia

38、 Health and Beauty was partially offset by strong revenue and like-for-like sales growth in Southeast Asia,particularly in Indonesia and Malaysia.Guardian in Southeast Asia delivered a strong performance during the year,with improvements in operating standards,service and product availability,and it

39、 benefitted from a growing middle-class customer base in Indonesia,Malaysia,and Vietnam.Home FurnishingsIn Home Furnishings,sales for IKEA were up by 6%in the year.Operating margins were,however,adversely affected through a combination of currency movements,cost of goods changes and pre-opening cost

40、s in support of strong store expansion.AssociatesThe contribution from key associate Maxims declined to US$82 million from US$105 million in the prior year,as the business was impacted by the ongoing social unrest in Hong Kong.Despite the challenging market conditions in the second half,however,Maxi

41、ms reported a 4%growth in sales overall for the year,as it saw the benefit of its acquisition of the Starbucks Thailand business.Yonghui in the Chinese mainland reported strong sales growth and positive like-for-like sales.Our share of results in Yonghui grew from US$15 million in 2018 to US$23 mill

42、ion in 2019 and benefitted from the partial sell-down by Yonghui of their investment in the Yunchuang Technology business,which was announced in December 2018.The Group also benefitted from the contribution from its interest in Robinsons Retail,which it acquired in late 2018.TransformationThe Groups

43、 multi-year transformation programme to reshape and reorganise the business,adapting to the changing needs of customers,continued to gain momentum during 2019.Opportunities are being unlocked across the group as the business seeks to leverage its scale effectively and develop a more coherent Dairy F

44、arm International Holdings Limited8approach to improving its customer proposition,both by banner and at a country level.The Groups space optimisation plan,new store formats and improvement programmes generated greater efficiencies and started to deliver tangible results in the year.Corporate develop

45、mentsIn May,Maxims acquired the Starbucks franchise in Thailand,with some 370 stores in operation,through a 64%-owned joint venture.As at 31st December 2019,Dairy Farm,including associates and joint ventures,operated over 10,000 outlets across all formats,compared with some 9,700 at 31st December 20

46、18.PeopleUndoubtedly 2019 was a challenging year for many of our businesses,however the hard work,resilience and determination of colleagues and their commitment to serve our customers every day has been outstanding.I would like to thank all the Groups employees for their efforts in moving the Group

47、 towards becoming a truly modern-day retailer that puts our customers first.Neil Galloway stepped down as Group Finance Director at the end of March 2019.The Board would like to express its gratitude for the significant contribution Neil made to the Group over a number of years.Clem Constantine show

48、ed strong leadership during his time as interim Chief Financial Officer following Neils departure,and the Board confirmed his appointment to the role permanently in November 2019.Michael Kok stepped down from the Board on 8th May 2019 and Simon Keswick retired as a Director with effect from 1st Janu

49、ary 2020.It was announced on 20th January 2020 that Lord Sassoon will retire from the Board on 9th April 2020.The Board would like to express its gratitude for the significant contribution all three Directors have made to the Group over many years.Clive Schlee will join the Board with effect from 6t

50、h May 2020.As announced on 5th March 2020,with effect from 15th June 2020 the roles of Chairman and Managing Director,which are currently held on a combined basis by Ben Keswick,will be separated.Ben Keswick will remain as Chairman and John Witt will take on the role of Managing Director of the Comp

51、any.ProspectsDairy Farm is undergoing transformation across all areas of its business and this scale of change will take time to execute successfully.However,good progress is being made in implementing the Groups customer-focused and market-driven strategy and Dairy Farm is well-placed to achieve lo

52、ng-term sustainable growth.Performance for the remainder of the year will depend on the duration,geographic extent and impact of the COVID-19 outbreak and the measure taken to control it.Ben KeswickChairman5th March 2020Annual Report 20199Group Chief Executives ReviewIntroductionOverall,the Group co

53、ntinued to make progress in 2019 in improving the fundamentals underpinning our businesses as part of our multi-year transformation.While we still have work to do to complete phase one of our transformation plan which entails building a strong retail foundation,we are pleased with the progress so fa

54、r and are turning attention to some areas of phase two with the objective of delivering well consistently across all facets of our business.The Groups Grocery Retail profits increased significantly in the year,driven by an improvement in Southeast Asia Grocery Retail as the space optimisation plan d

55、elivered enhanced quality and operating standards.While the turnaround of the Southeast Asian businesses remains at an early stage,there are encouraging signs of improvement.Underlying performance for our Convenience format was pleasing.We continued to invest in mainland China,with the network havin

56、g now grown to almost 1,300 stores.We also continued to invest in IKEA,with two additional stores opened in 2019.E-commerce growth was also strong for IKEA as improvements were made to website functionality across the region.The Groups investments in Yonghui and Robinsons Retail delivered good retur

57、ns.Underlying profit growth in Yonghui was strong as it benefitted from the partial sell-down of their investment in the Yunchuang Technology business,which was announced in December 2018.Robinsons Retail successfully integrated the Rustan acquisition in 2019.The diversity of the Groups business mix

58、 from the perspective of both direct and indirectly managed businesses,formats and geography did provide some insulation from unprecedented market challenges.In particular,the social unrest in Hong Kong materially impacted the performance of the Groups Health and Beauty division,as well as Maxims.Fi

59、ve strategic imperatives1)Grow in China7-Eleven delivered strong growth,with almost 1,300 stores now opened,and we are pleased with the underlying performance of the business with strong like-for-like sales growth throughout the year.Strong focus has been put on the development of the ready-to-eat o

60、ffering,which has resulted in higher day time traffic and converted consumer behaviour to encourage eating at 7-Eleven.On-top of this,digital and other services such as facial recognition payment continue to be one of the key drivers in China.There remains significant opportunity for growth in the l

61、onger-term with Guangdong province home to over 100 million people.In the short-term,however,competition for site rentals has intensified and we will remain disciplined in our property growth strategy.Mannings China reported good like-for-like sales growth in the second half due to strong O2O e-comm

62、erce growth as well as encouraging results from new format designs.We have also developed a revised cross-border e-commerce platform for Mannings,with an upgraded and integrated supply chain to support fulfilment and accessibility.Our scale of growth in Mannings China has not fulfilled its potential

63、 historically,but we see“The Group continued to make progress in 2019 in improving the fundamentals underpinning our businesses as part of our multi-year transformation.While we still have work to do to complete phase one of our transformation plan,we are pleased with the progress so far and are tur

64、ning attention to some areas of phase two with the objective of delivering well consistently The diversity of the Groups business mix from the perspective of both direct and indirectly managed businesses,formats and geography did provide some insulation from unprecedented market challenges.”Dairy Fa

65、rm International Holdings Limited10opportunities for further space development through a realignment programme which aims to identify the optimal store format and size.There will be a stronger focus on the Greater Bay Area where Mannings has strong brand awareness and where the business can leverage

66、 the existing scale of 7-Eleven in the region.We continue to develop a strong and growing relationship with Yonghui.Projects to leverage the scale of both companies are beginning to bear fruit with partnerships in procurement enhancing efficiency and reducing costs.In addition,Mannings branded produ

67、cts have been introduced into almost 450 Yonghui stores.We anticipate further shared learning and idea generation between the two businesses going forward.We also continue to develop relationships with Chinas technology companies,with a series of trials taking place to better understand the changes

68、in customer expectations as regards the use of technology in this market and beyond.2)Maintain strength in Hong KongThe social unrest in Hong Kong negatively impacted our operations in our home market last year.Reduction in tourist traffic has had the greatest impact on Mannings within our portfolio

69、.Disruptions to stores have also impacted our key associate Maxims.IKEAs Hong Kong operations were also disrupted by the social unrest.However,even within Hong Kong,we benefitted to some extent from the diversified mix of our businesses.While there was disruption to stores,a clear trend towards more

70、 eating at home supported solid like-for-like sales growth for Wellcome Hong Kong.A combination of improvement programmes and a more disciplined approach to store space saw an improving trend in underlying profit performance.We remain confident about the future growth potential of our Grocery Retail

71、 business in Hong Kong.Performance for our Convenience format was pleasing with sales and profit ahead of last year.This is despite challenging conditions in the second half.In order to continue to build store traffic and brand differentiation,aggressive development of ready-to-eat and the Own Brand

72、 range was a key focus.This will continue in 2020.Faced with the current challenges,the Group is adopting a prudent approach to cost control.The challenges in Hong Kong were also difficult for our team members but their commitment towards putting customers first was nevertheless unwavering and I wou

73、ld like to thank all of them for their hard work and dedication.3)Revitalise Southeast AsiaProfitability in our Southeast Asian Grocery Retail business improved significantly in 2019 as we execute our multi-year transformation plan.Greater efficiencies generated from improvement programmes as well a

74、s our space optimisation plan supported the strong growth in profits.While the turnaround remains at an early stage,there are encouraging signs.Our upscale stores continue to show signs of recovery as we raise operating standards of quality,freshness,availability and range.Remodelled pilot stores ha

75、ve been developed and initial performance has been encouraging.We continue to re-engineer our food offering within Giant to focus on improving the customer proposition and optimising space.A detailed plan is being executed and we are expecting to see continued progress in 2020.We are taking a holist

76、ic view towards space optimisation,of which the conversion of a Giant hypermarket to an IKEA store in Sentul,Indonesia is a good example.The store was opened in November,only five months after handover and was the fastest IKEA store opening in history.*Including 100%of associates and joint ventures.

77、Grocery RetailConvenience StoresRestaurantsStore Support Centre and Shared ServicesOther RetailingHealth and BeautyHome Furnishings Total Gross Trading Area*110 millionsq.ft2%3%4%2%6%83%Total Employees*some 230,000people6%8%2%1%17%57%9%Annual Report 201911Group Chief Executives ReviewOur Guardian He

78、alth and Beauty business remains a significant opportunity for us in Southeast Asia.Over 1,000 stores have now been opened across the region,with the business achieving strong like-for-like sales growth overall in the region.Profits in Singapore,Malaysia and Indonesia each achieved double-digit perc

79、entage growth.Indonesia grew particularly strongly,driven by strong retail execution as we introduced better,more relevant range into stores and invested in store fitout in a cost-effective manner.Guardian is leveraging its strong brand name in the region both from the perspective of Own Brand,as we

80、ll as innovative partnerships.Guardian Own Brand performance for products introduced into Rose Pharmacy has been strong.Guardian Singapore also entered into an exclusive partnership in 2019 with leading Korean Health and Beauty retailer Olive Young to enhance its range in the K-beauty segment.We are

81、 continuing to invest in growth of the IKEA network across the Group,but in particular in Indonesia.While this will have some short-term impact on profits due to new store startup costs and pre-opening expenses,we remain confident about our underlying profitability for IKEA and its growth potential

82、in the markets where we operate the franchise.Robinsons Retail made a positive contribution in 2019.The adoption of the new lease accounting standard,IFRS 16,led to Robinsons Retail reporting a decline in profits.4)Build capabilitySince the start of 2018,we have significantly changed the leadership

83、team to assemble a group of people who have strong track records in the Retail and Consumer industries.In addition to the senior leadership team,we have also built management depth within the business.There have been close to 200 middle-management new hires since 2018.In addition,over 80%of senior m

84、anagers have taken new or expanded responsibilities.The result of the strengthening of our capabilities has driven a significantly different way of working and seen a significant improvement in our ability to collaborate across functions,banners and regions,which has led to successful execution of a

85、 number of improvement programmes.We plan to change our Store Support Centre to an open plan environment to facilitate better collaboration.We are taking a proactive approach towards nurturing younger talent within the organisation and collaborating more closely with the Jardine Matheson Group.Gradu

86、ates of the Jardine Executive Trainee programme have taken opportunities in key areas of the business including commercial operations,merchandising,digital and finance management.We are also working more closely with Jardines in developing a pipeline of junior talent and graduate trainees.We now hav

87、e the ability to drive considerable changes necessary to not only improve Dairy Farms performance but to transform the business to a modern-day retailer focused on delivering what customers want,where and how they want it.5)Driving digital innovationRetail is rapidly changing and Dairy Farm has hist

88、orically been slow to respond to the pace of digital change.Since the appointment of our Chief Digital Officer and Chief Technology Officer in the fourth quarter of 2018,a significant review of the previous ad-hoc programmes has been undertaken.Focus and discipline in our IT investments has been enh

89、anced and we are confident that returns on our IT investments will improve over the coming years.We have now successfully consolidated our IT systems in Singapore by introducing SAP and removing a significant number of legacy systems.We have invested in e-commerce across both our Home Furnishings an

90、d Health and Beauty businesses.Enhanced website functionality supported growth for IKEA.In addition,we have invested in e-commerce infrastructure to support the growth of online sales for our Health and Beauty businesses.E-commerce for Guardian Singapore was relaunched in early 2020 with significant

91、 improvement in the customer experience.We expect these investments to support online sales growth for Mannings Hong Kong later in 2020.Significant investments have also been made to enhance the Groups own digital data analytics capabilities,which will support the future growth of our businesses.In

92、addition,progress is also being made in our partnerships with technology companies,which will support our digital transformation.Leveraging scaleThe key objective of our transformation is to leverage our expertise and scale more effectively across our countries and banners.This will be achieved by o

93、perating more effectively as one company.While we fully recognise that there needs to be localisation of the offer and customer proposition at both a banner and a country level,we also believe there are significant opportunities for us to drive efficiency and lower costs Dairy Farm International Hol

94、dings Limited12through a more cohesive approach towards leveraging synergy and scale.Improvement programmes have been a key area of focus to date and will continue to be in 2020 and beyond.We are continuing to make progress in improving consistency and lowering costs in areas such as Procurement,Cat

95、egory Management,People Development,Store Productivity,Supply Chain Optimisation and Business Process Re-engineering.At the store level,we have been working on a number of projects to improve the workflow for team members and remove unnecessary duplication of work.For example,auto-replenishment syst

96、ems have been introduced into Mannings Hong Kong,which reduces the amount of manual labour required for store team members when re-ordering inventory.In addition,programmes to introduce new systems and processes to improve fresh food quality and lower waste are being implemented and have been introd

97、uced to over 300 stores across the company,which are also yielding significant cost savings.At the Store Support Centre level,we have also taken a more centralised approach across functions to leverage the scale of the organisation.As an example,we have taken a centralised approach to marketing by m

98、oving away from having different media agencies across each banner and country.This has yielded a 90%reduction in the number of agencies we use and considerable cost savings.The Group is now adopting a more consistent approach to Own Brand.One example is with the launch of the Meadows brand in our F

99、ood businesses.The brand is common across markets and we are able to leverage its scale in common sourcing,as well as marketing.The number of SKUs brought to market has progressively increased with focus on increasing range over time.The value proposition is exceptional with high quality products in

100、troduced that are significantly cheaper than branded equivalent products,helping to support value-for-money in our store offer.In addition,customers can find Meadows branded products across multiple banners including our supermarkets and convenience stores.We are piloting other Own Brand development

101、 options across our Health and Beauty businesses and leveraging scale when opportunities arise.Impactful growthAs the business transforms there is a great opportunity to improve the Groups impact on the communities it serves,by demonstrating that Dairy Farms business and commercial objectives are cl

102、osely correlated with addressing societal challenges and by creating a consistent approach across our businesses to how they address those challenges.The Group is developing an enduring sustainable business architecture that is aligned with its corporate strategy and commercial ambitions.There is mu

103、ch work to do but the journey is underway to become a truly purpose-led business.Year aheadThe Dairy Farm transformation remains on track.Our efforts over the past two years to enhance capability,change the way in which we operate,to address underlying business challenges previously neglected and to

104、 focus on consistently improving retail basics across our business are all combining to enhance Dairy Farms prospects for the future.This cultural change to drive Standardisation,Synergy and Scale is now integrated into our way of working.We also benefit from the diversity of our portfolio,not only

105、in terms of retail sector,format and geographical spread,but also in the balance between Dairy Farm managed businesses and Dairy Farm invested businesses.While we have seen some businesses with a Hong Kong bias adversely impacted in their 2019 performance,others have seen performance improve,most no

106、tably in Southeast Asia where our turnaround plans are beginning to bear fruit.In addition,the integration of our Rustan business into Robinsons Retail has proved to be a successful financial investment decision in its first year.We are not ignoring the current short-term challenges and have been pr

107、o-active in adapting to a changing operating environment,seeking to optimise our current trading position in difficult circumstances.However,the diversity of our portfolio does provide the Group with greater resilience when facing external market uncertainties such as the events of 2019 and the curr

108、ent COVID-19 challenges of 2020.All sustainable business transformations take time to execute and we are still in the early stages of that transformation.Nonetheless,we are encouraged by our underlying progress to date,remain resolute in our confidence in our turnaround plan and are grateful for the

109、 determination and effort of all our team members across Dairy Farm in their personal hard work to make a sustainable performance difference over time,both for our shareholders and most importantly,our customers.Ian McLeodGroup Chief Executive5th March 2020Annual Report 201913Dairy Farm Group is goi

110、ng through a significant transformation.We are transforming every level of our business and bringing together all our banners under one Dairy Farm.This business change is all about putting our customers at heart of everything we do,whilst building a sustainable long-term business which serves the co

111、mmunities around us.It is also a demonstration of how we live our values;to care passionately,do the right thing,respect each other and put our customers first.The Dairy Farm Group is going through a significant multi-year transformation,bringing together all our banners under one Dairy Farm.While i

112、t is essential that the business transforms,at the operating level this move towards best practice in Asian retail also gives rise to an opportunity to improve our impact on our communities,allowing us to take greater steps to becoming a more sustainable business.With the business change,the Group c

113、an leverage its scale and resources to take a collective stance on key issues such as the environment,responsible consumption and social inclusion.This transformation and alignment of our businesses is also a demonstration of how we live our values:to care passionately,do the right thing,respect eac

114、h other and put our customers first.By putting our customers at the heart of everything we do,we are building a sustainable long-term business which serves the communities around us.Sustainable Transformation at Dairy Farm2019 ProgressWe firmly believe in giving back to the communities in which we l

115、ive and work,supporting the community initiatives of NGOs and other charitable organisations who share our goals and values.During 2019,we strengthened our efforts to support the communities around us.We collaborated more closely with industry and government authorities in the regions we operate to

116、help find solutions to tackle large societal problems.A good example of this is our involvement in“Drink without Waste”(“DWW”)in Hong Kong which is an industry and NGO-led body aiming to align industry and government on the path towards a statutory producer responsibility scheme,increasing the recov

117、ery of plastic beverage waste in Hong Kong and creating a circular economy.As part of our commitment to DWW,Dairy Farm has embarked on a pilot scheme of Reverse Vending Machines located at some of our Dairy Farm International Holdings Limited14retail locations to support DWWs long term goal of diver

118、ting plastic that would otherwise go to landfill.We are also working smarter within our own businesses,with food waste being a key focus.In our new and refitted stores where improvements in our supply chain and better product sourcing are already in place,we have seen food waste in our Fresh categor

119、y reduced by 50%.Plastic waste is also being addressed as a priority and in our reformatted Giant and Upscale stores,we have visibly reduced our plastic packaging and wrapping.In April 2019 we introduced new internal guidelines in Hong Kong to use less plastics in stores and have,so far,achieved a 2

120、5%decrease in plastic waste.Internal training has also been stepped up,with frontline team members,to ensure the effectiveness of these initiatives is maximised.We are working with our suppliers too requesting them to use much less plastic;light-weighting plastic,removing unnecessary foam,as well as

121、 removing single-use plastics in our in-store cafes and Store Support Centres.Incorporating new and innovative materials going forward will help ensure that our customers get their products in perfect and fresh condition,while reducing the impact of single use plastics through design of products wit

122、h greater environmental focus.Our customers trust us to be a responsible retailer and to provide them with the best products sourced from around the globe.We are improving guidelines to our suppliers on quality with a greater emphasis on responsible sourcing.A good example of this is our commitment

123、to have Own Brand eggs cage-free in Taiwan supermarkets by 2025 and for all our upscale food businesses to follow suit by 2028.Dairy Farm is taking a more holistic approach to tackling animal welfare issues with respect to food safety,food quality and sustainable environmental management.Over time,w

124、e aim to influence positive environmental,ethical practices and behaviour across the agricultural supply chain,addressing and solving issues in a sustainable way.All of these initiatives focus on doing the right thing for those customers who want more transparency on where their food comes from and

125、how it was produced.We aim to provide them with the choices they want,respecting their preferences,and creating greater awareness within our communities.Health plays a major role in our business with our health and beauty banners supporting the communities they serve with our trusted brands.Our busi

126、nesses support vulnerable groups in their respective communities,running activities promoting health and wellbeing.For example,Guardian in Indonesia recently ran a#StrongerTogether campaign for the LovePink Foundation in the fight against breast cancer and how early detection saves lives.As we refit

127、 and reformat our existing store network,significant consideration has been given to the environmental impact of these programmes.Trials are currently underway to utilise recycled pallet material in some of our upscale stores in Malaysia and Hong Kong.The fixtures and cladding have been produced fro

128、m pallets taken from our local Distribution Centres that were destined for disposal.New initiatives around materials used,improvement programmes,education and behavioural change are being rolled out across the portfolio with physical improvements being made to insulation,more energy efficient refrig

129、eration and installation of LED lighting where possible.Energy Annual Report 201915Sustainable Transformation at Dairy Farm*Data from City FM Monthly Energy Report Dated 25th February 2020.efficiency targets and monitoring systems are now in place with a view to actively reduce energy use across our

130、 stores and warehouses.With these programmes,and through subtle changes to behaviour,as well as the ongoing education of our team members in stores and support Centres,we have seen a significant combined reduction of 6 Million kWh across our Hong Kong,Singapore and Malaysian Markets*.PT Hero,was awa

131、rded one of the Most Valued Business in Indonesia in 2019 in recognition of Heros momentum in sustainability initiatives.Hero also won SINDO INOVASI 2019 for CSR Innovation and received the Human Initiative Award,and Best Partner in Humanity in recognition of Heros service to the communities across

132、Indonesia including;Hero and Giant supermarkets ongoing childrens education development programmes;IKEAs Bunk Beds for Lombok,and their support to help build a“Children Playing Center”in Lombok as communities there are still suffering the aftereffects of the 2018 earthquakes.Hero was given the Gold

133、Award in the Womens Empowerment Category and Industrial Relations Award 2019,and Best Social Dialogue Awards Category for the strong commitment shown in labour relations.IKEA launched its“People and Plant Positive plan in 2019 and the“Three Roads Forward”programme to drive continual improvement.The

134、IKEA sustainability strategy has 4 areas of focus.Waste management,to reduce operational waste in stores and prolong IKEA product life.Energy Efficiency and Independency,using 100%renewable energy and increasing energy efficiency by 2030.Circular IKEA,rental and leasing of furniture,waste material r

135、emade and circular packing.People and Planet,incorporating much greater coworker community involvement activity.Without the hard work and dedication of our 230,000 team members we would not be able to support and serve our customers and contribute to the communities around us.The wellbeing and safet

136、y of our team members,and other working parties is paramount to Dairy Farm.We are committed to providing a safe working environment and creating a culture that values health,safety and wellbeing of our team members,as well as our customers.Looking forward to a more Sustainable FutureWhile acknowledg

137、ing these achievements,as a Group of businesses,we are only at the start of our sustainability journey.We have some work ahead but we will not duck hard challenges in favour of tokenism.Our focus is on making real,sustainable and long-term progress.Our aim is to embed impactful growth into our busin

138、esses and not treat sustainability as a bolt-on function but to integrate it into the fabric of our business progress and growth.Sustainable Development at Dairy Farm 2020-2025 Dairy Farm is now in the process of building an enduring sustainable business that is aligned with our corporate strategy a

139、nd commercial ambitions.This sustainable transformation wont happen overnight,it will be a multi-year programme and takes place in tandem with the broader business transformation.We have a five-year sustainability development timeline 2020-2025 and in the coming year we will establish Group wide pol

140、icies and set the Group agenda whilst supporting the transformation.There is undoubtedly much work to do,but Dairy Farms sustainable transformation sits across all our values as a businessDairy Farm International Holdings Limited16“We care passionately.We do the right thing.We respect each other and

141、 we put our customers first.”Annual Report 201917FoodBusiness ReviewDairy Farm International Holdings Limited18Dairy Farm International Holdings Limited18of Group Sales*64%of Group Profit29%ConvenienceStoresGrocery Retail50%15%IndonesiaSingaporeCambodiaMalaysiaThe PhilippinesTaiwanHong KongMainland

142、ChinaMacau Including 100%of associates and joint ventures.Total Sales(US$)19.9 billionOperating Profit(US$)145 millionStore Network5,732 stores*Including share of associates and joint ventures.Based on operating profit before effect of adopting IFRS 16 and share of results of associates and joint ve

143、ntures,excluding selling,general and administrative expenses and non-trading items.Grocery RetailConvenience Stores14%14%Operating profit for Grocery Retail increased significantly,driven by Southeast Asia as we execute towards our multi-year transformation plan.Convenience sales increased 4%to US$2

144、.2 billion,driven by new store growth and strong like-for-like sales in China.Annual Report 20191919Annual Report 2019Business Review FoodConsistent with the Groups strategy of proactively managing our business portfolio,the Rustan Supercenters business was successfully integrated into Robinsons Ret

145、ail in 2019.The Rustan deal as well as the execution of our store optimisation plan in Southeast Asia led to sales for the Grocery Retail unit reducing by 12%to US$5.2 billion.Operating profit,however,increased close to three-fold to US$63 million,compared to US$22 million reported in 2018.The impro

146、vement in performance was driven by Southeast Asia,as we continue to execute towards our multi-year transformation plan,with the space optimisation plan also yielding benefits.Sales in Hong Kong and Macau were ahead of the prior year.While the social unrest in Hong Kong did disrupt trading,Wellcomes

147、 like-for-like sales grew as customers shifted towards eating at home.Underlying profitability improvements have been encouraging as we start to enhance efficiency across the business despite some cost pressures.Reported profitability was impacted by ongoing investments in people and capabilities.Ou

148、r price reinvestment campaign in Taiwan led to improved performance in the second half,despite the market backdrop of weak sentiment and fierce competition.The divestment of the Rustan Supercenters business as well as the Southeast Asian space optimisation plan impacted our reported sales for Southe

149、ast Asia Grocery Retail.However,the space optimisation initiatives as well as improvements in format and range are delivering some encouraging results,particularly in our upscale and smaller format stores.Ongoing success in executing against our transformation plan supported profit growth for the So

150、utheast Asian grocery businesses in 2019.Grocery RetailDairy Farms Grocery Retail business has been serving our customers for over 70 years.Today we lead the industry in Asia,offering the freshest produce,excellent service and great value through a range of iconic brands.Dairy Farm International Hol

151、dings Limited20Convenience sales increased 4%to US$2.2 billion,driven by new store growth and strong like-for-like sales in China.Underlying profit performance for the Division was pleasing.Investments into the growth of our China business,however,as well as the non-recurrence of some one-off factor

152、s which positively impacted profit in 2018 led to reported profits for the Division reducing by US$6 million to US$82 million.Convenience StoreWith 30 years of delivering the convenience shopping experience,7-Eleven,the leading global chain of one-stop stores,continues to run and operate in Hong Kon

153、g,Macau,Southern China and Singapore and offers innovative products and services to customers.Annual Report 201921Health and BeautyBusiness ReviewDairy Farm International Holdings Limited22Dairy Farm International Holdings Limited22of Group Sales*21%of Group Profit49%Sales for our Health and Beauty

154、Division benefitted from strong revenue and like-for-like sales growth in our Guardian business in Southeast Asia.Like-for-like sales for both China and Macau also improved over the course of the year as we continued to improve the customer offer.However,these positives were offset by the impact tha

155、t the social unrest in Hong Kong has had on Mannings.Health and Beauty21%49%SingaporeCambodiaVietnamMalaysiaHong KongMainland ChinaIndonesiaThe PhilippinesBruneiMacauHealth and Beauty Including 100%of associates and joint ventures.Total Sales(US$)3.4 billionOperating Profit(US$)296 millionStore Netw

156、ork2,402 stores*Including share of associates and joint ventures.Based on operating profit before effect of adopting IFRS 16 and share of results of associates and joint ventures,excluding selling,general and administrative expenses and non-trading items.Annual Report 20192323Annual Report 2019Busin

157、ess Review Health and BeautySales for our Health and Beauty Division benefitted from strong revenue and like-for-like sales growth in our Guardian business in Southeast Asia.Improvements in the customer range,particularly in the Beauty category,as well as investments in store fitout supported sales

158、growth.Like-for-like sales for both China and Macau also improved over the course of the year as we continued to improve the customer offer.However,these positives were offset by the impact that the social unrest in Hong Kong has had on Mannings,with the business seeing decline in foot traffic both

159、from visitors to Hong Kong and local customers.Reported sales for our Health and Beauty Division were US$3.1 billion in 2019,ahead of 2018,supported by the consolidation of Rose Pharmacy.Diversity in our business geography mix saw robust profit growth by Guardian Indonesia,Malaysia and Singapore par

160、tially offset challenging trading conditions which impacted Mannings Hong Kong.The good performance of our Southeast Asia business was driven by strong sales growth as well as better mark-down management.Overall,operating profit for the Division reduced 11%to US$296 million.Health and BeautyDairy Fa

161、rms Health and Beauty business operates across Asia through well-established and trusted brands such as Mannings and GNC in North Asia,Guardian in Southeast Asia and Rose Pharmacy in the Philippines,serving our customers with a wide range of health,beauty,personal care and baby care products.Dairy F

162、arm International Holdings Limited24In the Philippines,Rose Pharmacys profitability also improved materially.The acquisition of the remaining 51%interest in the business in late 2018 allowed the Group to accelerate growth in new stores as well as investment into Own Brands,with financial performance

163、 improving as a result.We continued to improve the customer offer throughout the Health and Beauty Division.Some examples include the relaunched Mannings cross-border e-commerce offering through a WeChat mini programme,with a significant increase in range and Guardian Singapores exclusive partnershi

164、p with leading Korean health and beauty retailer Olive Young.We are also beginning to leverage the strong brands that we have within our Health and Beauty portfolio,with the introduction of Mannings Own Brand into almost 450 Yonghui stores across China,as well as Wellcome Taiwan stores.Annual Report

165、 201925Home FurnishingsBusiness ReviewDairy Farm International Holdings Limited26Dairy Farm International Holdings Limited26of Group Profit7%of Group Sales*5%Home Furnishings5%7%We continued to invest in the future growth of our Home Furnishings business in 2019.Sales grew 6%to a record US$766 milli

166、on.Taiwan and Indonesia both reported strong sales growth,with two new store openings.In addition,e-commerce growth was also strong across all markets with investments made to support website functionality.IndonesiaTaiwanHong KongMacauHome Furnishings Including 100%of associates and joint ventures.T

167、otal Sales(US$)766 millionOperating Profit(US$)43 millionStore Network12 stores*Including share of associates and joint ventures.Based on operating profit before effect of adopting IFRS 16 and share of results of associates and joint ventures,excluding selling,general and administrative expenses and

168、 non-trading items.Annual Report 20192727Annual Report 2019Business Review Home FurnishingsWe continued to invest in the future growth of our Home Furnishings business in 2019.Sales grew 6%to a record US$766 million.Taiwan and Indonesia both reported strong sales growth,with two new store openings.I

169、n addition,e-commerce growth was also strong across all markets with investments made to support website functionality.Like-for-like sales in Hong Kong,however,were impacted in the second half by the social unrest.The IKEA team continues to innovate from the perspective of store format with the conv

170、ersion of the Giant hypermarket in Sentul,Indonesia to an IKEA store,a good example of taking a holistic view to space optimisation.The store was opened in November,only five months after handover and was the fastest ever IKEA store opening in history and the first ever hypermarket conversion.Perfor

171、mance for the store since opening has been pleasing.IKEA also introduced a pick-up point format in Bandung,Indonesia in September 2019,a year ahead of the official store opening in 2020.Our investments into new stores,higher cost of goods as well as currency fluctuations impacted operating profits i

172、n the short-term.However,we remain confident in the future prospects of IKEA across the region.Our first store in Macau will open in the first half of 2020.In addition to a new store opened in Southern Taipei in 2019,good progress has been made with new store projects in Taiwan as well as in Indones

173、ia,which are anticipated to open in 2020.Our strategic plans to meet the demands of the growing middle-income consumer involve opening traditional and new IKEA formats.Home FurnishingsThe worlds largest furniture retailer,IKEA,is operated by Dairy Farm in Hong Kong,Macau,Taiwan and Indonesia.Renowne

174、d for design,functionality and quality at affordable prices,IKEA offers a comprehensive range of attractive home furnishing products,underpinned by a solid commitment to sustainability.Dairy Farm International Holdings Limited28Annual Report 201929RestaurantsBusiness ReviewDairy Farm International H

175、oldings Limited30Dairy Farm International Holdings Limited30of Group Sales*9%of Group Profit14%Restaurants9%14%*Including share of associates and joint ventures.Based on operating profit before effect of adopting IFRS 16 and share of results of associates and joint ventures,excluding selling,general

176、 and administrative expenses and non-trading items.Maxims reported 4%growth in sales to US$2.7 billion.The acquisition of the Starbucks franchise in Thailand through a 64%-owned joint venture was another milestone in the year.A portfolio of some 370 retail outlets was acquired as part of the deal.Af

177、ter this acquisition,Maxims has now secured the Starbucks franchise in six markets.SingaporeCambodiaVietnamThailandMalaysiaHong KongMainland ChinaMacau Including 100%of associates and joint ventures.Total Sales(US$)2.7 billionShare of Results(US$)82 millionStore Network1,753 storesRestaurantsAnnual

178、Report 20193131Annual Report 2019Business Review RestaurantsMaxims reported 4%growth in sales to US$2.7 billion.The acquisition of Starbucks franchise in Thailand through a 64%-owned joint venture in May supported sales growth for the year.A portfolio of some 370 retail outlets was acquired as part

179、of the deal.After this acquisition,Maxims has now secured the Starbucks franchise in six markets.Profitability,however,was impacted significantly by the social unrest in Hong Kong,with disruptions caused to restaurants and shops,as well as reduction in foot traffic.Mooncake sales performance did con

180、tinue to grow in 2019.It was another successful year for the introduction of new concepts,with expansion of the Shake Shack franchise into China.Shake Shack is expected to expand into Macau in 2020.Maxims also launched The Cheesecake Factory in Macau in 2019,with one opening in the heart of the Cota

181、i area.In addition to the Starbucks Thailand acquisition,Maxims continues to diversify its business in Southeast Asia,as well as growing its Starbucks business in the region.The Genki Sushi franchise is also being expanded in Thailand,Singapore and Malaysia.RestaurantFounded in 1956,Maxims is a hous

182、ehold name in Hong Kong,famous for its mooncakes and successful restaurants,bakeries,cafes and catering.The Maxims network has expanded across Asia Pacific,with over 1,700 outlets in Hong Kong,Macau,mainland China,Vietnam,Cambodia,Thailand,Singapore and Malaysia.Dairy Farm International Holdings Lim

183、ited32Annual Report 201933Other AssociatesBusiness Review34Dairy Farm International Holdings LimitedOther AssociatesYonghui delivered strong sales growth in the year,driven largely by store openings,while also achieving positive like-for-like sales.Underlying profit growth was strong due to the part

184、ial sell-down of the investment in the Yunchuang digital business as well as lower cost from employee share incentive expenses.Reported profitability for Robinsons Retail in 2019 was impacted by the adoption of IFRS 16 as its profits in 2018 were not adjusted for the new lease accounting standard.Un

185、derlying profit before interest,tax,depreciation and amortisation increased by double-digit percentage.The Groups investments in Yonghui and Robinsons Retail delivered good returns with Dairy Farms share of results from both companies growing in 2019.Other AssociatesDairy Farm owns a 19.99%stake in

186、Yonghui Superstores,a leading grocery retailer in China with over 1,300 stores.In November 2018,Dairy Farm also acquired a 20%stake in Robinsons Retail,one of the largest multi-format retailers in the Philippines.Mainland ChinaThe Philippines35Annual Report 2019Dairy Farm International Holdings Limi

187、ted36Financial Review*Including share of associates and joint ventures.On a 100%basis.North AsiaSoutheast Asia44%56%2019 Retail Outlet Mix70%2019Sales Mix*30%ResultsThe ongoing execution of the Groups space optimisation plan as well as the divestment of the Rustan Supercenters business saw sales,exc

188、luding those of associates and joint ventures,reduced 5%to US$11.2 billion.Strong profit growth in the Food segment was driven by Southeast Asia Grocery Retail as the Groups multi-year transformation plan started to deliver enhanced quality and operating standards.Performance for the Health and Beau

189、ty Division was impacted by difficult trading conditions caused by the social unrest in Hong Kong,while increased investments in the growth of the store network impacted Home Furnishings profits.Overall,underlying operating profit at US$437 million,reduced 14%relative to the prior year.Net financing

190、 charges decreased by US$8 million compared to 2018 mainly due to lower interest expense on lease liabilities partly offset by higher interest charge on bank borrowings as a result of higher debt to fund investments in the Philippines last year.The Groups share of the results of associates and joint

191、 ventures increased 11%to US$126 million compared with 2018 principally due to higher contribution from Yonghui and the new contribution from Robinsons Retail since the Group invested 20%interest in November 2018,partly offset by the lower contribution from Maxims.The tax charge for 2019 was US$69 m

192、illion,29%lower than 2018,mainly due to reduced profit contribution from Hong Kong businesses.Accounting policiesThe accounting policies are consistent with those of the previous year.The Directors continue to review the appropriateness of the accounting policies adopted by the Group with regard to

193、developments in International Financial Reporting Standards(IFRS).In 2019,the Group adopted IFRS 16 Leases.The standard requires the Group to recognise almost all of its leases onto the balance sheet by capitalising future lease payments into a lease liability and a corresponding right-of-use asset.

194、The Group has applied IFRS 16 based on a full retrospective approach.The adoption of this standard has a material effect on the financial statements,and the comparative financial statements have been restated in accordance with the requirements under IFRS.The impact on the Groups results for 2018 ca

195、n be found in note 1 to the financial statements.“Strong profit growth in the Food segment was driven by Southeast Asia Grocery Retail as the Groups multi-year transformation plan started to deliver enhanced quality and operating standards.”Annual Report 201937Underlying EBITDA3001,2001,5009006001,8

196、00US$m020152016201720182019Net Asset Value per Share903060120US150020152016201720182019On an IFRS 16 basisBefore effect of adopting IFRS 16On an IFRS 16 basisBefore effect of adopting IFRS 162019 Normal Capital Expenditure:US$305million29%11%13%10%37%Grocery RetailHome Furnishings Health and BeautyC

197、onvenience StoresIT and Distribution CentresUnderlying net profit was US$321 million,10%behind 2018 levels.Underlying earnings per share were US23.72,as compared to US26.48 in 2018 on a restated basis.Cash flow20192018Summarised Cash FlowUS$mUS$mrestatedUnderlying operating profit437506Depreciation

198、and amortisation1,0021,101Increase in working capital(77)(21)Net interest and other financing charges paid(160)(164)Dividends received from associates8994Others(3)(58)Cash flows from operating activities1,2881,458Principal elements of lease payments(790)(815)Cash flows from operating activities afte

199、r lease payments498643Normal capital expenditure(305)(256)Investments(6)(278)Disposals2833Cash flow from investing activities(283)(501)Cash flow before financing but after lease payments215142The Group maintained good operating cash flow and generated a net inflow from operating activities after lea

200、se payments of US$498 million in the year,compared to US$643 million in 2018.The unfavourable movement in working capital this year was partly due to a negative impact on payments to suppliers as a result of the earlier Chinese New Year holidays in 2020.Normal capital expenditure was higher at US$30

201、5 million versus US$256 million in 2018 principally due to increased investment for new IKEA stores in Taiwan and Indonesia.Dairy Farm International Holdings Limited38Financial ReviewThe Groups businesses,including associates and joint ventures,added a net 786 outlets in 2019,and now consists of 10,

202、533 stores across all formats in 12 markets.Included in this total are 1,351 Yonghui stores,1,753 Maxims stores and 1,918 Robinsons Retail stores.Number of Stores20192018At 1st January9,7477,180Net additions786689Additions related to Robinsons Retailinvestment in 20181,878At 31st December10,5339,747

203、Balance sheetTotal assets,excluding cash and bank balances,of US$8.1 billion were broadly in line with 2018.Inventory was down by 2%to US$896 million reflecting the continuous effort to manage inventory.Net operating assets were US$1.2 billion at the end of 2019,a 7%increase versus the previous year

204、.The Group ended the year with net debt of US$821 million,US$77 million higher as compared to US$744 million at 31st December 2018,reflecting the continuous investments in our stores.DividendThe Board is recommending an unchanged final dividend of US14.50 per share,bringing the total dividend in res

205、pect of 2019 to US21.00 per share,the same as the prior year.FinancingWhere required,and typically for working capital purposes,borrowings are normally taken out in local currencies by the Groups operating subsidiaries to fund daily operations.Borrowings to fund any strategic expansion of the Group

206、are managed centrally and typically funded in United States dollars and Hong Kong dollars,with hedging of foreign exchange and interest rate risk as may be appropriate depending on the particular investment.The Group,excluding associates and joint ventures,had gross debt of US$1,122 million at the y

207、ear end,an increase of US$82 million from 2018.The gross debt is funded by total committed and uncommitted lines of US$2,344 million.At the end of 2019,US$462 million of committed and US$760 million of uncommitted facilities were unused and available.The Group had cash balances of US$301 million as

208、at 31st December 2019.The Group has implemented a global liquidity cash pooling scheme which enables the Group to manage and optimise its working capital funding requirements on a daily basis.Net financing charges excluding those on lease liabilities increased from US$33 million in 2018 to US$39 mil

209、lion in 2019,reflecting the drawdown of facilities to fund the purchase of the additional investments in the Philippines and higher interest rates.Financial risk managementA comprehensive discussion of the Groups financial risk management policies is included in note 37 to the financial statements.T

210、he 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 transactions in derivatives

211、.The investment of the Groups cash resources is managed so as to minimise risk while seeking to enhance yield.Overall,the Groups funding arrangements are designed to keep an appropriate balance between equity and debt(short and long term),to maximise flexibility for the future development of the bus

212、iness.Principal risks and uncertaintiesA review of the principal risks and uncertainties facing the Group is set out on pages 133 to 134.Clem ConstantineChief Financial Officer5th March 2020Annual Report 201939Directors ProfilesBen Keswick*Chairman and Managing DirectorMr Keswick joined the Board as

213、 Managing Director in 2012 and became Chairman in 2013.He has held a number of executive positions since joining the Jardine Matheson group in 1998,including finance director and then chief executive officer of Jardine Pacific between 2003 and 2007 and,thereafter,group managing director of Jardine C

214、ycle&Carriage until 2012.He has an MBA from INSEAD.Mr Keswick is chairman of Jardine Matheson Limited,Jardine Cycle&Carriage and Yonghui Superstores and a commissioner of Astra.He is also executive chairman and managing director of Jardine Matheson and Jardine Strategic,chairman and managing directo

215、r of Hongkong Land and Mandarin Oriental,and a director of Jardine Pacific and Jardine Motors.Ian McLeod*Group Chief ExecutiveMr McLeod joined the Board as Group Chief Executive in 2017.He has extensive experience in the retail sector and was previously chief executive of Southeastern Grocers in the

216、 United States,before which he was managing director of Coles in Australia.He is also a director of Yonghui Superstores and a commissioner of Hero.Clem Constantine*Chief Financial OfficerMr Constantine joined the Board as Chief Financial Officer in November 2019,having joined the Dairy Farm leadersh

217、ip team as Group Property Director in September 2018.He is a Chartered Accountant with extensive experience in senior finance and property roles in the retail sector.He has previously held finance,international and property directorships with Marks and Spencer,the Arcadia group,Debenhams and the Bur

218、ton Group in the United Kingdom.Mark GreenbergMr Greenberg joined the Board in 2006.He is group strategy director of Jardine Matheson.He previously spent 16 years in investment banking with Dresdner Kleinwort Wasserstein in London.He is also a director of Jardine Matheson Limited,Hongkong Land,Jardi

219、ne Cycle&Carriage and Mandarin Oriental,and a commissioner of Astra and Permata Bank.George J.HoMr Ho joined the Board in 1998.He was previously engaged in private law practice in San Francisco and is currently engaged in the broadcasting and multi-media industries.Mr Ho is also chairman of Hong Kon

220、g Commercial Broadcasting Company and president of Hong Kong Red Cross.Adam KeswickMr Keswick joined the Board in 2012.Having joined Jardine Matheson in 2001,he was appointed to the board in 2007 and was deputy managing director from 2012 to 2016.Mr Keswick is a director of Hongkong Land,Jardine Str

221、ategic and Mandarin Oriental.He is also a director of Ferrari NV and Yabuli China Entrepreneurs Forum and vice-chairman of the supervisory board of Rothschild&Co.Dr Delman LeeDr Lee joined the Board in May 2018.He is currently the president and chief technology officer of TAL Apparel,an independent

222、non-executive director of The Bank of East Asia and a director of Tradelink Electronic Commerce.He is also a council member of The Hong Kong Management Association.*Executive DirectorDairy Farm International Holdings Limited40Directors ProfilesAnthony NightingaleMr Nightingale joined the Board in 20

223、06 and was Managing Director of the Company from 2006 to 2012.He is also a director of Hongkong Land,Jardine Cycle&Carriage,Jardine Matheson,Jardine Strategic,Mandarin Oriental,Prudential,Schindler,Shui On Land and Vitasoy,and a commissioner of Astra.He is chairperson of The Sailors Home and Mission

224、s to Seafarers in Hong Kong.Y.K.PangMr Pang joined the Board in 2016.He is deputy managing director and chairman of Hong Kong of Jardine Matheson,and chairman of Jardine Pacific and Gammon.He previously held a number of senior executive positions in the Jardine Matheson group,which he joined in 1984

225、,including chief executive of Hongkong Land between 2007 and 2016.Mr Pang is also deputy chairman of Jardine Matheson Limited,and a director of Hongkong Land,Jardine Matheson(China),Jardine Strategic and Mandarin Oriental.He is chairman of the Hong Kong Tourism Board,deputy chairman of the Hong Kong

226、 Management Association,a member of the Council and General Committee of the Hong Kong General Chamber of Commerce and the Employers Federation of Hong Kong.Jeremy ParrMr Parr joined the Board in 2015.He is general counsel of the Jardine Matheson group.He was previously a senior corporate partner wi

227、th Linklaters,where he was the global head of the firms corporate division,based in London.Mr Parr is also a director of Jardine Matheson Limited,Jardine Matheson and Mandarin Oriental.Lord Sassoon,KtLord Sassoon joined the Board in 2013.He began his career at KPMG,before joining SG Warburg(later UB

228、S Warburg)in 1985.From 2002 to 2006 he served as a civil servant in the United Kingdom Treasury,where he had responsibility for financial services and enterprise policy.He subsequently chaired the Financial Action Task Force and conducted a review of the UKs system of financial regulation.From 2010

229、to 2013 Lord Sassoon was the first Commercial Secretary to the Treasury and acted as the Governments Front Bench Treasury spokesman in the House of Lords.He is a director of Hongkong Land,Jardine Matheson and Mandarin Oriental.He is also President of the China-Britain Business Council.As announced o

230、n 20th January 2020,Lord Sassoon will be retiring as a Director on 9th April 2020.Percy WeatherallMr Weatherall joined the Board in 2000 and was Managing Director from 2000 to 2006.He first joined the Jardine Matheson group in 1976 and retired from executive office in 2006.He is also a director of H

231、ongkong Land,Jardine Matheson,Jardine Strategic and Mandarin Oriental.He is chairman of Corney&Barrow and the Nith District Salmon Fishery Board.John WittMr Witt joined the Board in 2016,following his appointment as group finance director of Jardine Matheson.He is a Chartered Accountant and has an M

232、BA from INSEAD.He has been with the Jardine Matheson group since 1993 and has held a number of senior finance positions.Most recently,he was the chief financial officer of Hongkong Land.He is also a director of Jardine Matheson Limited and a commissioner and chairman of the executive committee of As

233、tra.Annual Report 201941Our LeadershipIan McLeodGroup Chief ExecutiveIan was named Group Chief Executive of Dairy Farm in September 2017,having spent the previous two years as CEO of Southeastern Grocers,the fifth largest supermarket chain in the United States.With over 30 years retail experience,Ia

234、n began his career with Asda(subsequently Wal-Mart)in 1981,where he spent 20 years working in the United Kingdom and Germany.Following this,he moved to Halfords where he became CEO in 2005.In 2008,he moved to Australia as Managing Director of Coles,overseeing 2,200 outlets and 100,000 employees.Whil

235、st there he oversaw fundamental improvements in product quality and value as well as customer service.This resulted in Coles producing substantial increases in both turnover and profits,as well as significant market outperformance.Ian attended the Harvard Business School Advanced Management Program

236、in 1999 and was awarded an Honorary Doctorate in his native Scotland in 2010 for services to Business and Retail.Chris BushChief Executive Officer South East Asia FoodChris Bush was appointed CEO South East Asia Food in August 2019.Chris is a highly experienced senior food retailer with an impressiv

237、e track record in leadership roles in Tesco for over 30 years,including CEO roles in Malaysia,Thailand,Korea and the U.K.After a period of time in a consultancy role for a major retailer in the United States,Chris joined Dairy Farm in 2018 to lead the transformation of the food business in Indonesia

238、.Chris has Business background and executive training from Manchester Business school in United Kingdom.Choo Peng CheeChief Executive Officer North Asia&Group ConvenienceChoo was appointed Chief Executive Officer North Asia&Group Convenience in May 2018,covering all food retail operations(supermarke

239、ts,hypermarkets and convenience stores)in Hong Kong,Macau,China and Taiwan,also the convenience format in Singapore.He joined Dairy Farm in 2000 and was the Chief Executive Officer of Cold Storage,Market Place and Shop N Save in Singapore from 2005 to 2009.He subsequently served as the Chief Executi

240、ve Officer for Wellcome Hong Kong from 2010,and was appointed as the Regional Director,North Asia(Food)in 2013.Choo brings with him more than 35 years of retail experience to this role and has an MBA in Retailing from the University of Stirling,Scotland.Clem ConstantineChief Financial OfficerMr Cons

241、tantine took up the position of Chief Financial Officer in November 2019,having joined the Dairy Farm leadership team as Group Property Director in September 2018.He is a Chartered Accountant with extensive experience of senior finance and property roles in the retail sector.He has previously held f

242、inance,international and property directorships with Marks and Spencer,the Arcadia Group,Debenhams and the Burton Group in the United Kingdom.Dairy Farm International Holdings Limited42Our LeadershipEdward HunterGroup Supply Chain DirectorEdward joined Dairy Farm as the Group Supply Chain Director i

243、n September 2018.Prior to this,Edward has held several leadership roles within P&G around the world including most recently as Vice President for Product Supply Chain for Asia responsible for supply chain delivery of all P&G categories across Asian markets including China,Hong Kong,Taiwan,Japan,Indi

244、a,Vietnam,Indonesia,Thailand,Australia,Korea,the Philippines and Myanmar.Edward graduated in Chemical Engineering.Sam KimChief Executive Officer Health&Beauty and Chief Marketing&Business Development OfficerSam was appointed Chief Executive Officer Health&Beauty and Chief Marketing&Business Developm

245、ent Officer in August 2019.Sam joined Dairy Farm as Chief Executive Officer Southeast Asia Division in April 2018.Prior to joining Dairy Farm,he was the Chief Executive Officer at Home plus(formerly Tesco)in South Korea where he launched the“Minus is Plus”campaign leading to a transformation of the

246、corporate culture,improving organisational capabilities and eventually,performance of the business.Before that,Sam spent 30 years at P&G,where he was one of the top Asian executives having assumed many senior leadership positions including Regional Head for P&G ASEAN and Asia Development Markets fro

247、m 2008 to 2015.He personally helped start up P&G Korea in 1989,and later also served as the President of P&G Korea from 2003 to 2008.Sam has dual degrees in Political Science and Management from Wharton School,University of Pennsylvania,where he also serves currently on the Board of Advisors for Pen

248、ns Huntsman Program.He is also an advisor to the Asian Alumni Council of Phillips Academy,Andover,and a member of the Andover Development Board.Martin LindstrmGroup Director IKEAMartin was appointed Group Director IKEA in January 2013 with responsibilities for the Groups IKEA operations in Taiwan,Ho

249、ng Kong and Indonesia.Prior to that,he was General Manager of IKEA Taiwan in 2007 and subsequently CEO of the Dairy Farm IKEA business in 2010.Martin has more than 20 years experience in a variety of senior positions with the IKEA business in Europe,Eastern Europe and more than a decade in the Asia

250、Pacific region.Annual Report 201943Judith NelsonGroup Human Resources DirectorJudith joined Dairy Farm as the Group Human Resources Director in July 2018.Judith is an experienced HR leader who has led significant transformation and change across the UK and various international markets.More recently

251、 she has been a director and consultant to a number of businesses,including the e-commerce delivery enterprise,Deliveroo.Prior to this,Judith built a remarkable career with Tesco where she started as a trainee and ultimately led the people function for their international business comprising 12 mark

252、ets across Asia and Europe,before her appointment as HR Director for Tesco UK where she transformed the function,built HR capabilities across Tesco,and created a people strategy and people operating model that delivered on the business long-term plan.Marcus SpurrellChief Digital OfficerMarcus joined

253、 Dairy Farm as the Chief Digital Officer in October 2018.Marcus has over 25 years direct management experience in this field,having held a number of positions working in a digital environment from website development,e-commerce data analytics to personalised customer communication.Prior to joining D

254、airy Farm,he was the Senior Vice President for Digital,Loyalty and e-commerce at Ahold Delhaize Group where he led a transformation of its loyalty programmes that delivered strong business results.Marcus previously held several Digital and e-commerce leadership roles for Adidas Group across Asia Pac

255、ific,USA,and Europe.Marcus has a joint honours degree in Japanese and Economics from SOAS London University,and have lived in Asia for 13 years.Charlie WoodGroup CounselCharlie was appointed Group Counsel in January 2007.He was initially recruited in September 1999 to set up a legal department for D

256、airy Farm in Hong Kong,and subsequently became responsible for the legal affairs of Dairy Farm in North Asia before assuming his current role.Charlie qualified as a solicitor in England and worked in private practice in London for three years before moving to Vietnam in 1995 to work for an internati

257、onal law firm.Dairy Farm International Holdings Limited44for the year ended 31st December 2019Consolidated Profit and Loss Account20192018Underlying business performanceNon-trading itemsTotalUnderlying business performanceNon-trading itemsTotalNoteUS$mUS$mUS$mUS$mUS$mUS$mrestatedrestatedrestatedSale

258、s211,192.311,192.311,749.311,749.3Cost of sales(7,658.5)(7,658.5)(8,100.5)(8,100.5)Gross margin3,533.83,533.83,648.83,648.8Other operating income189.819.3209.1194.9207.0401.9Selling and distribution costs(2,700.7)(2,700.7)(2,806.4)(2,806.4)Administration and other operating expenses(586.4)(30.2)(616

259、.6)(531.7)(495.9)(1,027.6)Operating profit3436.5(10.9)425.6505.6(288.9)216.7Financing charges(164.9)(164.9)(171.7)(171.7)Financing income6.76.75.15.1Net financing charges4(158.2)(158.2)(166.6)(166.6)Share of results of associates and joint ventures5114.911.4126.3112.81.2114.0Profit before tax393.20.

260、5393.7451.8(287.7)164.1Tax6(69.5)0.8(68.7)(93.8)(2.8)(96.6)Profit after tax323.71.3325.0358.0(290.5)67.5Attributable to:Shareholders of the Company320.92.9323.8358.2(273.4)84.8Non-controlling interests2.8(1.6)1.2(0.2)(17.1)(17.3)323.71.3325.0358.0(290.5)67.5USUSUSUSEarnings per share7 basic23.7223.9

261、326.486.27 diluted23.7123.9226.476.27Annual Report 20194520192018NoteUS$mUS$mrestatedProfit for the year325.067.5Other comprehensive incomeItems that will not be reclassified to profit or loss:Remeasurements of defined benefit plans2115.9(12.0)Tax relating to items that will not be reclassified(2.4)

262、2.213.5(9.8)Share of other comprehensive income of associates and joint ventures0.70.914.2(8.9)Items that may be reclassified subsequently to profit or loss:Net exchange translation differences net gain/(loss)arising during the year25.5(91.1)transfer to profit and loss3.445.228.9(45.9)Cash flow hedg

263、es net(loss)/gain arising during the year(2.6)3.1 transfer to profit and loss(5.5)1.8(8.1)4.9Tax relating to items that may be reclassified1.6(1.0)Share of other comprehensive income of associates and joint ventures2.825.2(42.0)Other comprehensive income/(expense)for the year,net of tax39.4(50.9)Tot

264、al comprehensive income for the year364.416.6Attributable to:Shareholders of the Company362.137.1Non-controlling interests2.3(20.5)364.416.6Consolidated Statement of Comprehensive Incomefor the year ended 31st December 2019Dairy Farm International Holdings Limited46At 31st DecemberAt 1st January2019

265、20182018NoteUS$mUS$mUS$mrestatedrestatedNet operating assetsIntangible assets9589.2571.0707.9Tangible assets10820.2756.61,086.7Right-of-use assets113,186.33,430.93,646.1Associates and joint ventures122,101.92,030.91,582.2Other investments136.87.46.9Non-current debtors14142.4151.3113.8Deferred tax as

266、sets1518.214.426.4Non-current assets6,865.06,962.57,170.0Stocks896.1913.1950.0Current debtors14281.3326.0345.2Current tax assets26.135.227.1Cash and bank balances16301.4296.2332.41,504.91,570.51,654.7Assets classified as held for sale11.2Current assets1,504.91,570.51,665.9Current creditors17(2,315.4

267、)(2,364.4)(2,429.6)Current borrowings18(938.2)(1,025.7)(412.7)Current lease liabilities19(728.3)(736.1)(710.6)Current tax liabilities(126.5)(84.3)(71.6)Current provisions20(56.0)(84.2)(61.2)(4,164.4)(4,294.7)(3,685.7)Liabilities directly associated with assets classified as held for sale(6.2)Current

268、 liabilities(4,164.4)(4,294.7)(3,691.9)Net current liabilities(2,659.5)(2,724.2)(2,026.0)Long-term borrowings18(184.0)(14.5)(522.0)Non-current lease liabilities19(2,577.5)(2,816.5)(2,944.0)Deferred tax liabilities15(34.9)(23.4)(41.3)Pension liabilities21(31.3)(47.6)(34.2)Non-current creditors17(13.2

269、)(39.7)(42.7)Non-current provisions20(125.1)(134.7)(129.4)Non-current liabilities(2,966.0)(3,076.4)(3,713.6)1,239.51,161.91,430.4at 31st December 2019Consolidated Balance SheetAnnual Report 201947At 31st DecemberAt 1st January201920182018NoteUS$mUS$mUS$mrestatedrestatedTotal equityShare capital2275.

270、175.175.1Share premium and capital reserves2459.258.357.9Revenue and other reserves1,074.9993.01,238.1Shareholders funds1,209.21,126.41,371.1Non-controlling interests30.335.559.31,239.51,161.91,430.4Approved by the Board of DirectorsIan McLeodClem ConstantineDirectors5th March 2020Dairy Farm Interna

271、tional Holdings Limited48Consolidated Statement of Changes in Equityfor the year ended 31st December 2019Share capitalShare premiumCapital reservesRevenue and other reservesAttributable to shareholders of the CompanyAttributable to non-controlling interestsTotal equityUS$mUS$mUS$mUS$mUS$mUS$mUS$m201

272、9At 1st January as previously reported75.133.924.41,313.61,447.043.91,490.9 change in accounting policy(note 1)(320.6)(320.6)(8.4)(329.0)as restated75.133.924.4993.01,126.435.51,161.9Total comprehensive income362.1362.12.3364.4Dividends paid by the Company(284.0)(284.0)(284.0)Unclaimed dividends for

273、feited0.10.10.1Share-based long-term incentive plans0.90.90.9Change in interests in subsidiaries0.80.8(7.5)(6.7)Change in interests in associates and joint ventures2.92.92.9Transfer0.2(0.2)At 31st December75.134.125.11,074.91,209.230.31,239.52018At 1st January as previously reported75.133.124.81,557

274、.01,690.065.71,755.7 change in accounting policy(note 1)(318.9)(318.9)(6.4)(325.3)as restated75.133.124.81,238.11,371.159.31,430.4Total comprehensive income37.137.1(20.5)16.6Dividends paid by the Company(284.0)(284.0)(284.0)Dividends paid to non-controlling interests(0.2)(0.2)Unclaimed dividends for

275、feited0.40.40.4Share-based long-term incentive plans0.40.40.4Change in interests in subsidiaries(0.4)(0.4)(3.1)(3.5)Change in interests in associates and joint ventures1.81.81.8Transfer0.8(0.8)At 31st December75.133.924.4993.01,126.435.51,161.9Revenue and other reserves at 31st December 2019 compris

276、ed revenue reserves of US$1,388.5 million(2018:US$1,330.6 million),hedging reserves of US$0.7 million(2018:US$4.3 million)and exchange reserves of US$314.3 million loss(2018:US$341.9 million loss).Annual Report 20194920192018NoteUS$mUS$mrestatedOperating activitiesOperating profit3425.6216.7Deprecia

277、tion and amortisation28(a)1,002.21,101.3Other non-cash items28(b)33.2326.7Increase in working capital28(c)(76.7)(20.5)Interest received7.13.9Interest and other financing charges paid(166.7)(168.2)Tax paid(25.1)(96.0)1,199.61,363.9Dividends from associates and joint ventures88.594.2Cash flows from op

278、erating activities1,288.11,458.1Investing activitiesPurchase of subsidiaries28(d)(2.6)(54.6)Purchase of associates and joint ventures28(e)(3.8)(223.1)Purchase of intangible assets(53.2)(33.2)Purchase of tangible assets(233.3)(222.6)Additions to right-of-use assets(18.4)(0.3)Sale of subsidiaries28(f)

279、(1.6)Sale of properties28(g)22.632.6Sale of tangible assets5.71.9Cash flows from investing activities(283.0)(500.9)Financing activitiesChange in interests in subsidiaries28(h)(6.7)(3.5)Drawdown of borrowings181,778.4998.2Repayment of borrowings18(1,662.6)(963.6)Net(decrease)/increase in other short-

280、term borrowings18(42.4)67.1Principal elements of lease payments(790.3)(814.7)Dividends paid by the Company25(284.0)(284.0)Dividends paid to non-controlling interests(0.2)Cash flows from financing activities(1,007.6)(1,000.7)Net decrease in cash and cash equivalents(2.5)(43.5)Cash and cash equivalent

281、s at 1st January284.5334.5Effect of exchange rate changes6.3(6.5)Cash and cash equivalents at 31st December28(j)288.3284.5for the year ended 31st December 2019Consolidated Cash Flow StatementDairy Farm International Holdings Limited501.Basis of PreparationThe financial statements have been prepared

282、in accordance with International Financial Reporting Standards(IFRS),including International Accounting Standards(IAS)and Interpretations adopted by the International Accounting Standards Board(IASB).The financial statements have been prepared on a going concern basis and under the historical cost c

283、onvention except as disclosed in the accounting policies.Details of the Groups principal accounting policies are included in note 35.The Group has applied IFRS 16 Leases for the first time for the Groups annual reporting period commencing 1st January 2019.Changes to principal accounting policies are

284、 described below.There are no other amendments or interpretations,which are effective in 2019 and relevant to the Groups operations,that have a significant effect on the Groups accounting policies.The Group has elected to early adopt the Interest Rate Benchmark Reform:Amendments to IFRS 9,IAS 39 and

285、 IFRS 7(effective 1st January 2020)in relation to hedge accounting for the Groups annual reporting period commencing 1st January 2019.In accordance with the transition provisions,the amendments have been adopted retrospectively with respect to hedging relationships that existed at the start of the r

286、eporting period or were designated thereafter.The amendments provide temporary relief from applying specific hedge accounting requirements to hedging relationships which are directly affected by the uncertainty arising from the reforms and replacement of existing benchmark interest rates such as LIB

287、OR and other inter-bank offered rates(IBOR reform).The forthcoming IBOR reform may take effect at different times and may have a different impact on the hedged items(the fixed and floating rate borrowings)and the hedging instruments(the interest rate swaps and cross currency swaps used to hedge the

288、borrowings).The reliefs have the effect that the IBOR reform should not generally cause hedge accounting to terminate.The reliefs under the amendments will end when the uncertainty arising from the IBOR reform are no longer present;or the hedging relationship is discontinued.Early adoption of these

289、amendments has no impact on the Groups consolidated financial statements for 2019.Apart from the above,the Group has not early adopted any other standard,interpretation or amendments that have been issued but not yet effective(note 36).The principal operating subsidiaries,associates and joint ventur

290、es 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 consolidated financial statements are presented in United States dollars.The Groups reportable segments are set ou

291、t in notes 2,3 and 5 and are described on page 55.Changes in principal accounting policiesIFRS 16 LeasesThe standard replaces IAS 17 Leases and related interpretations,and introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and les

292、sees.The distinction between operating and finance leases is removed for lessee accounting,and is replaced by a model where a lease liability and a corresponding right-of-use asset have to be recognised on the balance sheet for almost all leases by the lessees,except for leases with a term ending wi

293、thin 12 months or low-value assets.The Groups recognised right-of-use assets primarily relate to property leases,which are entered into for use as retail stores,distribution centres and offices.IFRS 16 affects primarily the Groups accounting for lessees while the accounting for lessors does not chan

294、ge significantly.Prior to 2019,payments made under operating leases were charged to profit and loss on a straight-line basis over the period of the lease.Upon the adoption of IFRS 16,each lease payment is allocated between settlement of the lease liability and finance cost.The finance cost is charge

295、d to profit and loss over the lease period using the effective interest rate method.The right-of-use asset is depreciated over the shorter of the assets useful life and the lease term on a straight-line basis.Notes to the Financial StatementsAnnual Report 2019511.Basis of Preparation continuedChange

296、s in principal accounting policies continuedIFRS 16 Leases continuedIn addition,leasehold land which represents payments to third parties to acquire interests in property,previously included inintangible assets and tangible assets,is now presented under right-of-use assets.Leasehold land is amortise

297、d over the useful lifeof the lease,which includes the renewal period if the lease is likely to be renewed by the Group without significant cost.Changes to accounting policies on adoption of IFRS 16 have been applied retrospectively,and the comparative financial statements have been restated.The effe

298、cts of adopting IFRS 16 were as follows:(i)On the consolidated profit and loss account for the year ended 31st December 2018:Increase/(decrease)in profitUS$mOther operating income25.8Selling and distribution costs70.3Administration and other operating expenses41.7Net financing charges(133.9)Share of

299、 results of associates and joint ventures(18.8)Profit before tax(14.9)Tax4.8Profit after tax(10.1)Attributable to:Shareholders of the Company*(7.2)Non-controlling interests(2.9)(10.1)*Further analysed as:Underlying profit attributable to shareholders(66.1)Non-trading items58.9Profit attributable to

300、shareholders(7.2)USBasic underlying earnings per share(4.89)Diluted underlying earnings per share(4.89)Basic earnings per share(0.53)Diluted earnings per share(0.53)Dairy Farm International Holdings Limited521.Basis of Preparation continuedChanges in principal accounting policies continuedIFRS 16 Le

301、ases continued(ii)On the consolidated statement of comprehensive income for the year ended 31st December 2018:Increase/(decrease)in total comprehensive incomeUS$mProfit for the year(10.1)Other comprehensive incomeItems that may be reclassified subsequently to profit or loss:Net exchange translation

302、differences net loss arising during the year7.9 transfer to profit and loss(1.5)Other comprehensive expense for the year,net of tax6.4Total comprehensive income for the year(3.7)Attributable to:Shareholders of the Company(1.3)Non-controlling interests(2.4)(3.7)Annual Report 2019531.Basis of Preparat

303、ion continuedChanges in principal accounting policies continuedIFRS 16 Leases continued(iii)On the consolidated balance sheet at 1st January:Increase/(decrease)20192018US$mUS$mNet operating assetsIntangible assets(95.7)(106.8)Tangible assets(91.4)(97.5)Right-of-use assets3,430.93,646.1Associates and

304、 joint ventures(36.0)(18.8)Non-current debtors(9.0)(48.8)Deferred tax assets(9.4)Non-current assets3,189.43,374.2Current debtors(46.0)(5.5)Current assets(46.0)(5.5)Current creditors34.239.9Current lease liabilities(736.1)(710.6)Current provisions19.9(8.7)Current liabilities(682.0)(679.4)Net current

305、liabilities(728.0)(684.9)Non-current lease liabilities(2,816.5)(2,944.0)Deferred tax liabilities35.221.4Non-current provisions(9.1)(92.0)Non-current liabilities(2,790.4)(3,014.6)(329.0)(325.3)Total equityRevenue and other reserves(320.6)(318.9)Shareholders funds(320.6)(318.9)Non-controlling interest

306、s(8.4)(6.4)(329.0)(325.3)Dairy Farm International Holdings Limited541.Basis of Preparation continuedChanges in principal accounting policies continuedIFRS 16 Leases continued(iv)On the consolidated cash flow statement for the year ended 31st December 2018:Inflows/(outflows)US$mOperating activitiesOp

307、erating profit137.8Depreciation and amortisation872.2Other non-cash items(60.0)Increase in working capital(1.4)Interest and other financing charges paid(133.9)814.7Investing activitiesPurchase of tangible assets0.3Additions to right-of-use assets(0.3)Financing activitiesPrincipal elements of lease p

308、ayments(814.7)(814.7)Net change in cash and cash equivalentsAnnual Report 2019552.SalesIncluding associates and joint venturesSubsidiaries2019201820192018US$mUS$mUS$mUS$mAnalysis by operating segment:Food19,907.315,424.77,375.67,992.2 Grocery retail17,603.413,320.65,190.25,888.1 Convenience stores2,

309、303.92,104.12,185.42,104.1Health and Beauty3,400.83,225.73,051.03,035.8Home Furnishings765.7721.3765.7721.3Restaurants2,701.22,585.5Other Retailing890.027,665.021,957.211,192.311,749.3Sales including associates and joint ventures comprise 100%of sales from associates and joint ventures.Operating seg

310、ments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board for the purpose of resource allocation and performance assessment.Dairy Farm operates in five segments:Food,Health and Beauty,Home Furnishings,Restaurants and Other Retailing.

311、Food comprises grocery retail and convenience store businesses(including the Groups associate,Yonghui,a leading grocery retailer in mainland China).Health and Beauty comprises the health and beauty businesses.Home Furnishings is the Groups IKEA businesses.Restaurants is the Groups catering associate

312、,Maxims,a leading Hong Kong restaurant chain.Other Retailing represents the department stores,specialty and Do-It-Yourself(DIY)stores of the Groups newly acquired Philippines associate,Robinsons Retail.Sales and share of results of Yonghui represent 12 months from October 2018 to September 2019 base

313、d on their latest published announcement(2018:nine months from January to September 2018)and that of Robinsons Retail represent 11 months from the date of acquisition,November 2018 to September 2019 based on their latest published announcement(note 5).Set out below is an analysis of the Groups sales

314、 by geographical locations:Including associates and joint venturesSubsidiaries2019201820192018US$mUS$mUS$mUS$mAnalysis by geographical area:North Asia20,560.317,254.17,339.57,422.4Southeast Asia7,104.74,703.13,852.84,326.927,665.021,957.211,192.311,749.3The geographical areas covering North Asia and

315、 Southeast Asia,are determined by the geographical location of customers.North Asia comprises Hong Kong,mainland China,Macau and Taiwan.Southeast Asia comprises Singapore,Cambodia,the Philippines,Thailand,Malaysia,Indonesia,Vietnam and Brunei.Dairy Farm International Holdings Limited563.Operating Pr

316、ofit20192018US$mUS$mAnalysis by operating segment:Food145.1110.2 Grocery retail63.122.3 Convenience stores82.087.9Health and Beauty295.5330.2Home Furnishings42.768.4483.3508.8Selling,general and administrative expenses(143.4)(103.0)Underlying operating profit before adopting IFRS 16*339.9405.8Effect

317、 of adopting IFRS 1696.699.8Underlying operating profit436.5505.6Non-trading items:business restructuring costs(15.6)(435.4)profit on sale of businesses and properties15.7206.5 loss on reclassification of joint ventures as subsidiaries(13.9)(60.5)adjustment to deferred consideration for acquisition

318、of a subsidiary3.6 fair value(loss)/gain on equity investments(0.7)0.5425.6216.7Set out below is an analysis of the Groups underlying operating profit by geographical locations:20192018US$mUS$mAnalysis by geographical area:North Asia443.4513.7Southeast Asia39.9(4.9)483.3508.8Selling,general and admi

319、nistrative expenses(143.4)(103.0)Underlying operating profit before adopting IFRS 16*339.9405.8Effect of adopting IFRS 1696.699.8Underlying operating profit436.5505.6*Property lease payments and depreciation of reinstatement costs under the lease contracts were included in the Groups analysis of ope

320、rating and geographical segments results.Annual Report 2019573.Operating Profit continuedThe following items have been(charged)/credited in arriving at operating profit:20192018US$mUS$mCost of stocks recognised as expense(7,617.6)(8,060.5)Amortisation of intangible assets(note 9)(27.1)(21.1)Deprecia

321、tion of tangible assets(note 10)(160.2)(203.5)Depreciation of right-of-use assets(note 11)(814.9)(876.7)Impairment of intangible assets(note 9)(20.7)(117.2)Reversal of impairment/(impairment)of tangible assets(note 10)4.4(207.9)Impairment of right-of-use assets(note 11)(1.9)(93.9)Write down of stock

322、s(5.7)(19.1)Reversal of write down of stocks6.34.2Employee benefit expense salaries and benefits in kind(1,131.9)(1,129.1)share options and share awards granted(note 24)(2.0)(0.4)defined benefit pension plans(note 21)(37.7)(22.9)defined contribution pension plans(49.8)(54.0)(1,221.4)(1,206.4)Lease e

323、xpenses short-term leases(47.3)(22.1)variable lease payments(51.3)(54.6)sublease income43.743.1(54.9)(33.6)Auditors remuneration audit(4.9)(3.3)non-audit services(1.9)(0.7)(6.8)(4.0)Concession and service income159.3159.9Rental income from properties23.327.7Net foreign exchange gains2.62.7(Loss)/pro

324、fit on sale of tangible and intangible assets(3.4)11.7Gain on lease modification and termination4.16.2Dairy Farm International Holdings Limited584.Net Financing Charges20192018US$mUS$mInterest expense on bank loans and advances(41.8)(33.3)Interest expense on lease liabilities(119.2)(133.9)Commitment

325、 and other fees(3.9)(4.5)Financing charges(164.9)(171.7)Financing income6.75.1(158.2)(166.6)5.Share of Results of Associates and Joint Ventures2019*2018*US$mUS$mAnalysis by operating segment:Food40.914.8 Grocery retail40.714.8 Convenience stores0.2Health and Beauty(1.4)(5.3)Restaurants82.1104.5Other

326、 Retailing4.7126.3114.0Share of results of associates and joint ventures included the following gains/(losses)from non-trading items(note 8):20192018US$mUS$mShare of Yonghuis fair value(loss)/gain on equity investments(0.4)1.2Share of net gains from partial divestment of subsidiaries by Yonghui11.81

327、1.41.2Results are shown after tax and non-controlling interests in the associates and joint ventures.*Included Yonghuis 12 months results from October 2018 to September 2019(2018:nine months from January to September 2018)and Robinsons Retails 11 months results from November 2018 to September 2019(n

328、ote 2).Annual Report 2019596.Tax20192018US$mUS$mTax charged to profit and loss is analysed as follows:Current tax(76.7)(102.1)Deferred tax8.05.5(68.7)(96.6)Reconciliation between tax expense and tax at the applicable tax rate:Tax at applicable tax rate(42.5)20.9Income not subject to tax14.018.0Expen

329、ses not deductible for tax purposes(26.8)(82.4)Tax losses and temporary differences not recognised(7.4)(39.4)Utilisation of previously unrecognised tax losses0.1Deferred tax assets written off(6.5)Deferred tax liabilities written back3.0Over provision in prior years1.60.1Withholding tax(10.2)(12.9)C

330、hange in tax rate0.7Other2.51.9(68.7)(96.6)Tax relating to components of other comprehensive income is analysed as follows:Remeasurements of defined benefit plans(2.4)2.2Cash flow hedges1.6(1.0)(0.8)1.2Share of tax charge of associates and joint ventures of US$30.7 million(2018:US$29.0 million)is in

331、cluded in share of results of associates and joint ventures.The applicable tax rate for the year was 16.3%(2018:17.1%)and represents the weighted average of the rates of taxation prevailing in the territories in which the Group operates.Dairy Farm International Holdings Limited607.Earnings per Share

332、Basic earnings per share are calculated on profit attributable to shareholders of US$323.8 million(2018:US$84.8 million),and on the weighted average number of 1,352.7 million(2018:1,352.6 million)shares in issue during the year.Diluted earnings per share are calculated on profit attributable to shar

333、eholders of US$323.8 million(2018:US$84.8 million),and on the weighted average number of shares in issue after adjusting for the number of shares which are deemed to be issued for no consideration under the share-based long-term incentive plans based on the average share price during the year.The weighted average number of shares is arrived at as follows:Ordinary shares in millions20192018Weighted