Dairy Farm International Holdings Limited 2005 Preliminary Announcement Of Results

"The prospects for Dairy Farm's businesses in 2006 remain encouraging. Dairy Farm will continue to develop its operations across Asia and look for acquisitions and new ventures as opportunities arise."

23rd February 2006

The final dividend of US¢6.20 per share will be payable on 21st June 2006, subject to approval at the Annual General Meeting to be held on 14th June 2006, to shareholders on the register of members at the close of business on 17th March 2006. The ex-dividend date will be on 15th March 2006, and the share registers will be closed from 20th to 24th March 2006, inclusive.

Dairy Farm achieved further growth in sales and underlying earnings in 2005, supported by recent acquisitions and generally favourable economic conditions in most of its major markets.

Management remains focused on developing retail operations in Asia, both organically and through acquisitions.

Sales, including associate companies, increased by 8% to US$5.5 billion in 2005. There was good profit growth in both the North and South Asian regions, and underlying profit increased by 16% to US$190 million. Underlying earnings per share in 2005 were US¢14.23, up from US¢12.38 in the previous year.

The net profit of US$205 million was enhanced by exceptional gains of US$15 million, predominantly from asset disposals, as compared to a US$86 million gain in 2004. Basic earnings per share were US¢15.34. Despite the payments of the ordinary and special dividends that have reduced shareholders' funds significantly, the Group had no net debt at the year end.

The Board has recommended an increased final dividend of US¢6.20 per share, up from US¢5.30 in 2004, bringing the total ordinary dividend in respect of 2005 to US¢8.50, an increase of 15% over the US¢7.40 paid in the previous year. A special dividend of US¢25.00 per share was paid in May 2005.

The Group increased its direct shareholding in PT Hero Supermarket in Indonesia from 12.2% to 44.5% following two tender offers and the purchase of a minority shareholding. Dairy Farm also holds exchangeable bonds which can be exchanged for a further 24.6% of Hero's shares at any time.

The restructuring of the Group's property portfolio in Malaysia, through a sale and leaseback transaction, was completed in December 2005. The Group also disposed of certain properties in Indonesia and a shopping centre in Singapore, mostly under sale and leaseback agreements.

The Group's operations in North Asia enjoyed further growth in 2005, with sales increasing by 12% and profit by 18%. The Hong Kong businesses enjoyed the benefits of an improving economy. Wellcome Hong Kong continued to improve, while an acquisition in late 2004 underpinned a strong performance from 7-Eleven. Mannings health and beauty stores again produced a fine result.

Wellcome Taiwan faced a competitive supermarket sector, but had a very strong second half to record a good result for the year. In Guangdong Province, 7-Eleven continued its expansion, while Mannings has reached 11 stores after its first full year of operation. South Korean associate, Olive Young, also continued its expansion, opening seven health and beauty stores to finish the year with 25 outlets.

IKEA in Hong Kong and Taiwan recorded a decline in underlying profit in a challenging environment. In Taiwan, two new IKEA stores are scheduled to open in 2006.

The Group's Hong Kong-based restaurant associate, Maxim's, produced a slight increase in underlying profit despite being affected by strong competition and closure costs. In early 2006, Maxim's completed the acquisition of a majority interest in the 18-outlet Genki Sushi chain.

In South Asia, the Group achieved excellent growth, increasing sales by 33% and profits by 26%. Both Singapore and Malaysia performed well, and Indonesia continued to produce significantly improved results. Following 12 new openings, Group companies now operate 41 Giant hypermarkets in the region.

In India, new local joint venture partners have replaced the previous partner. The supermarket and the health and beauty businesses are now headquartered in Bangalore under a fresh management team, and there are aggressive expansion plans for 2006.

The Group entered new markets in 2005 with Mannings and 7-Eleven opening in Macau and Guardian starting up in Bangkok. All three ventures recorded promising results and will continue to grow in 2006.

In conclusion, the Chairman, Simon Keswick said, "The prospects for Dairy Farm's businesses in 2006 remain encouraging. Dairy Farm will continue to develop its operations across Asia and look for acquisitions and new ventures as opportunities arise."

Our performance was solid across all major markets as sales and earnings increased in both North Asia and South Asia for the fifth consecutive year. We are committed to maintaining our strategy which is to:

We continued our policy of owning only the most strategic properties. Sale and leaseback transactions in Malaysia, Singapore and Indonesia produced US$135 million in cash. We also strengthened our portfolio of businesses with an increased interest in PT Hero Supermarket in Indonesia, new joint venture partners in India and, through Maxim's, acquisition of the Genki Sushi chain in Hong Kong. We started three businesses in two new markets during the year: 7-Eleven and Mannings in Macau and Guardian in Thailand.

In line with the Company's policy to return value to shareholders, a special dividend totalling US$334 million was paid in May 2005.

The Group reached several other important milestones in 2005:

Over the past 24 months, Dairy Farm has launched five new businesses, three in new territories. Collectively, these businesses lost US$5.0 million in 2005: the cost of future growth. The Group incurred another US$9.0 million of store pre-opening expenses. These commitments were more than offset by improvements in our more established businesses, particularly our 41 Giant hypermarkets in Malaysia, Indonesia and Singapore. Hypermarkets have become an important element of our €˜multiple retail format' strategy.

Wellcome's results improved significantly on the back of timely promotions and tight cost controls. Our ongoing upgrade of the store network saw ten openings, five closings and the completion of 26 major refurbishments.

7-Eleven had an outstanding year with strong sales and profit growth generated by well-received promotions and successful integration of the Daily Stop acquisition. We expanded our network by 55 stores finishing the year with 665 stores of which 303 are franchised.

Mannings results improved in a challenging market as it further consolidated its leading position in the health and beauty sector. The total number of stores increased to 230.

IKEA, our home furnishings business, increased sales but lower margins impacted the underlying profit. IKEA now has four stores in Hong Kong.

Maxim's underlying profit was slightly ahead of last year despite closure costs and strong competitive activity. The modernization of our Chinese restaurants and fast food shops, the acquisition of Genki Sushi and development of several new concepts to debut in 2006 are expected to deliver improved results. During the year, Maxim's extended its Starbucks franchise in Hong Kong by ten years to 2037, while reducing its interests in China to a minority position.

7-Eleven opened 59 convenience stores in Guangdong and Shenzhen reaching a total of 241 by year end. We are confident of our future as the network expands and we achieve economies of scale. 7-Eleven opened 16 stores in the new Macau market.

Mannings completed its first year of operation in China opening eight new stores to bring the total to 11. Mannings also opened its first two stores in Macau with encouraging results.

Maxim's opened its first cake shop in Guangdong in April 2005, and now has six stores in operation. During 2005, Starbucks opened eight outlets to finish the year with 20, including its first two stores in Chengdu.

Wellcome recorded slightly higher sales but greatly improved profit due to higher margins,  tight cost controls and good performance from the Jasons gourmet stores, with the third one opened in December. We consolidated our position in this competitive market by opening six and closing six stores, maintaining the total at 167.

IKEA's two stores operated for the full year resulting in a significant sales increase. However, lower margins and the costs incurred in developing an optimal infrastructure reduced profitability. Two new stores, one in Hsin Chuang and another in Kaohsiung, will open in 2006.

Olive Young, the Group's 50%-owned associate, expanded its health and beauty chain in a competitive market. We opened seven stores and closed one to end the year with 25. We will continue to expand in this promising market.

Both Cold Storage and Shop N Save supermarkets recorded strong profit growth. We opened four new stores to end the year with 80 outlets.

Giant opened its seventh store, reinforcing its position as the leading hypermarket chain in Singapore.

Guardian finished the year with 127 stores, an increase of 15, and once more significantly improved its results.

7-Eleven recorded strong sales and profits supported by innovative products and services. Fifty-eight stores were opened and four closed bringing the network to 315 outlets of which 87 are franchised.

Giant continued its growth of sales and profit further establishing itself as the leading retailer in Malaysia. We added nine hypermarkets and three supermarkets bringing the total to 22 hypermarkets and 49 supermarkets at year end.

Guardian, the leading health and beauty chain in the country, enjoyed another strong performance. Fourteen new stores were opened. The network now stands at 171.

Hero supermarkets continued to improve sales and profit. Eight underperforming supermarkets were closed and four openings brought the total to 95 outlets.

Giant hypermarkets continued to improve their results and opened two new stores to bring the total to 12.

Guardian and Starmart expanded further with 38 openings, finishing the year with 101 and 54 stores respectively.

Foodworld, the Group's 49%-owned supermarket joint venture, divested 51 stores as part of a change in shareholders that was completed in September. The business incurred a loss for the year but with the introduction of new joint venture partners and installation of a new management team, we remain confident of our prospects in the Indian market. The joint venture had 46 stores operating at year end.

Health and Glow, the Group's health and beauty joint venture had a similar change in shareholders with Dairy Farm remaining at 50%. There was no divestment of stores. The business showed improvement during the year. We added five stores and closed one to bring the total to 34, and will continue to expand in 2006.

Guardian opened its first three stores in Bangkok and plans several additions in 2006.

We have improved our underlying performance for five consecutive years since adopting our strategy of being an Asian focused, multi-format retailer. This focus has resulted in strong and often leading positions in markets that continue to be very attractive. Almost half the world's population lives in the markets we presently serve, and much of the economic expansion over the next ten years is predicted to occur in the region. We plan to stick to our strategy and expand through a combination of organic growth and acquisitions.

We are fortunate to have a fine, dedicated and highly diverse work force of almost 60,000 people. We thank them for their outstanding performance in 2005 and ask their support in the continued development of Dairy Farm in 2006 as we celebrate our 120th anniversary.

Ronald J Floto

23rd February 2006