Tenders will be invited in the range of US$0.66 to US$0.75 per Share. The price range represents a premium of between 3.9 per cent. and 18.1 per cent. over the closing price of the Shares on the Singapore Stock Exchange on 25th February 2002 and a premium of between 5.6 per cent. and 20.0 per cent. over the average closing price of the Shares on the Singapore Stock Exchange for the 30 market days immediately prior to this announcement. The Tender Offer will be for up to 170 million Shares (representing approximately 10 per cent. of the Company's issued share capital). If fully subscribed, this will result in the Company returning between US$112.2 million and US$127.5 million to shareholders.
Background
Dairy Farm today announced its preliminary results for the year ended 31st December 2001. The Company reported a year of significant progress in terms of profit performance and strategic positioning against a backdrop of poor economic conditions in most of its markets.
Record profits were achieved in Singapore, Malaysia and Taiwan and also by Mannings and 7-Eleven in Hong Kong. All other retail businesses were on plan including Wellcome Hong Kong which produced a significantly improved performance. Maxim's profits declined but it performed well against its peers in a sluggish catering market.
The Wellcome Taiwan result represented the fruition of a two-year turnaround effort from losses in 1999 to earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$15 million in 2001. South Asia has also improved rapidly over the past two years with sales and profit up more than 75 per cent.
The managed sell-down of Franklins in Australia was substantially completed in the second half of 2001. Dairy Farm's balance sheet moved into a net cash position at the year end, due mainly to the disposal of Franklins' assets and the sale of Sims Trading.
The Directors stated that, in view of Dairy Farm's forthcoming investment commitments and a cautious view of prospects for 2002, they believed it to be too early for a resumption of dividend payments.
Considering the significant balance sheet strengthening over the past year but bearing in mind the contribution to this improvement of non-recurring asset disposals, the Company believes it appropriate to offer shareholders a return of capital.
Benefits of the Tender Offer
Dairy Farm believes that the Tender Offer strikes the right balance between offering shareholders a return of capital and leaving the business prudently financed. The reduction in capital will also have the effect of increasing earnings per Share. The benefits to shareholders, therefore, are that:
· it will offer shareholders a return of value whilst still leaving the Company able to support an increased capital expenditure programme;
· it will enhance earnings per Share, and thereby accelerate a return to dividend payments; and
· it will give shareholders the choice either to sell Shares at a premium to the recent market price or to increase their proportionate stake in the Company by retaining their holdings.
Dairy Farm has no intention of making any further premium tender offer to shareholders in the year ahead.
Further Terms
The Tender Offer will close on 5th April 2002.
Full details of the Tender Offer, including the terms and conditions on which it is being made, are set out in a circular which will be posted to shareholders on 28th February 2002.
The Tender Offer is available to all Registered Shareholders with registered addresses outside Canada, Japan, Malaysia and South Africa. In addition, the Tender Offer will also be available to depositors holding Shares through the CDP scripless system in Singapore. Holders of American Depositary Shares will be required to withdraw the relevant Shares from the US Depositary in order to participate in the Tender Offer.
Jardine Strategic Group
The Directors have been informed that the Jardine Strategic Group has no present intention of tendering its Shares under the Tender Offer in respect of its holding of approximately 1,029 million Shares representing approximately 60.3 per cent. of the currently issued share capital of Dairy Farm.
If 170 million Shares are repurchased, the Jardine Strategic Group's shareholding in Dairy Farm would increase to approximately 66.9 per cent. of the issued share capital of the Company.
Preliminary Results
The announcement of Dairy Farm's preliminary results for the year ended 31st December 2001, which contains an operational review of the Dairy Farm Group businesses for the year 2001 and discusses the outlook for the year 2002, is set out in the circular which will be posted to shareholders on 28th February 2002.
The Dairy Farm Group
Dairy Farm is a leading food and drugstore retailer in the Asia-Pacific Region. As at 31st December 2001, the Dairy Farm Group and its associates operated some 2,200 outlets -
principally supermarkets, hypermarkets, convenience stores, drugstores and restaurants -employed some 58,800 people in the Region and in 2001 had total sales from ongoing operations of some US$4.4 billion. Dairy Farm is a member of the Jardine Matheson Group.