REG - DFI Retail Group Jardine Matheson Hdg - Half Year Results
28/07/2022 10:30
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RNS Number : 0661U DFI Retail Group Holdings Ltd 28 July 2022
Announcement
28th July 2022
The following announcement was issued today to a Regulatory Information
Service approved by the Financial Conduct Authority in the United Kingdom.
DFI RETAIL GROUP HOLDINGS LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2022
Highlights
· Underlying loss of US$52 million, including US$60 million loss
from associates
· Subsidiaries delivered underlying operating profit of US$76
million, 51% lower than prior year
· Strong profit growth for Health and Beauty
· Grocery Retail and Convenience profits impacted by pandemic and
inflation
· Increased investments in digital to drive long-term sustainable
growth
· Interim dividend of US¢1.00 per share declared
"The pandemic has continued to have a significant adverse effect on all of the
Group's businesses, with the first quarter particularly difficult on the
Chinese mainland and in Hong Kong. Profits are also being impacted by supply
chain and inflationary pressures. As a result, the Group's profits for the
full year are expected to be materially lower than those of 2021. The Group
remains confident, however, in the strengths of the Group's banners and
believes that the additional investment being made to advance digital
capabilities, and improve stores and the Group's operating standards, will
deliver sustainable growth for the Group, as the impact of the pandemic
recedes."
Ben Keswick
Chairman
Results
(unaudited)
Six months ended 30th June
2022 2021 Change
US$m US$m %
Combined total sales including 100% of associates and joint ventures 14,028 13,950 +1
Sales 4,483 4,537 -1
Underlying (loss)/profit attributable to shareholders* (52) 32 n/a
(Loss)/profit attributable to shareholders (58) 17 n/a
US¢ US¢ %
Underlying (loss)/earnings per share* (3.81) 2.38 n/a
(Loss)/earnings per share (4.25) 1.24 n/a
Interim dividend per share 1.00 3.00 -67
* the Group uses 'underlying (loss)/profit' in its internal financial
reporting to distinguish between ongoing business performance and non-trading
items, as more fully described in note 8 to the condensed financial
statements. Management considers this to be a key measure which provides
additional information to enhance understanding of the Group's underlying
business performance.
The interim dividend of US¢1.00 per share will be payable on 12th October
2022 to shareholders on the register of members at
the close of business on 19th August 2022.
DFI RETAIL GROUP HOLDINGS LIMITED
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2022
The Group's performance in the first half of 2022 was impacted by a number of
challenges. Within the Group's subsidiaries, strong Health and Beauty profit
growth and an increased contribution from IKEA were offset by reduced profit
contributions from Grocery Retail and Convenience, which faced a combination
of inflation and continuing customer behaviour shifts driven by the pandemic,
with the latter leading to reduced levels of eating-at-home. The Group
increased investments in digital capacity and capability during the period.
While these reduced profit in the period, they are necessary to meet
customers' evolving needs for on- and off-line service and are made with a
view to driving long-term sustainable growth and value.
The Group's overall financial performance was impacted materially by the
performance of key associates in the period. Results were particularly
impacted by the substantial loss incurred by Yonghui for the fourth quarter of
2021. Maxim's performance was also significantly adversely impacted by the
surge in COVID-19 cases within Hong Kong and resulting Government-imposed
restrictions on dining.
RESULTS
Total first half sales for the Group, including 100% of associates and joint
ventures, increased by 1% to US$14 billion. Reported subsidiary sales
reduced by 1% to US$4.5 billion. However, underlying subsidiary sales,
excluding the impact of the Giant Indonesia restructuring in the second half
of 2021, increased by 2%. Strong revenue growth in Health and Beauty and the
contribution from new IKEA store openings were partially offset by lower sales
within the Grocery Retail division, primarily driven by the easing of movement
restrictions in Southeast Asia, which led to a reduction in eating-at-home by
customers, and store renovation disruptions in Singapore.
The Group reported an underlying loss of US$52 million for the first half,
with US$60 million loss attributable to associates. The Group's share of
Yonghui's underlying results included US$64 million of loss arising from
Yonghui's performance in the fourth quarter of 2021. In addition, key
associate Maxim's contributed an underlying loss of US$26 million to the
Group's results in the first half, due to the impact of movement restrictions
imposed in Hong Kong.
Within the Group's subsidiaries, the profitability of the Health and Beauty
division increased significantly as a result of a strong recovery in revenue
across both North Asia and Southeast Asia. Overall subsidiary underlying
operating profit was, however, US$76 million for the period, a reduction of
US$78 million over the prior comparable period, as strong profit growth within
Health and Beauty and an increased contribution from IKEA were offset by
reduced profit contributions from Grocery Retail and Convenience, as well as
operating expense investments to enhance digital capacity and marketing.
Operating cash flow, after lease payments, for the period was a net inflow of
US$76 million, compared with US$97 million in the first half of 2021. As at
30th June 2022, the Group's net debt was US$995 million, compared with US$844
million at 31st December 2021.
Given the loss incurred in the first half of the year and the Group's
commitment to maintaining a strong balance sheet position while supporting
ongoing investments in business and digital transformation, the Board has
reduced the interim dividend for 2022 to US¢1.00 per share.
OPERATING PERFORMANCE
Like-for-like sales for the Group's Grocery Retail division in the first half
were slightly behind the prior year. Good like-for-like growth in North Asia
was driven by pantry-stocking behaviour and strong in-store execution in the
face of challenging external conditions and supply chain constraints,
particularly in the first quarter. Sales performance in Southeast Asia was
impacted by the easing of movement restrictions, which led to a reduction in
eating-at-home, store renovation disruptions in Singapore and stock
availability issues in Malaysia. Overall profitability, however, was behind
the comparable period last year, due to a combination of inflation impacting
cost of goods sold, operating cost pressures (particularly electricity and
labour costs) and e-commerce investment costs.
The Group's Convenience business saw varying operating performance across
regions in the first half. In Singapore, a relaxation of movement
restrictions led to strong sales and profit recovery. Within North Asia,
disruption caused by rising COVID-19 cases significantly impacted both
like-for-like sales and profitability. In Hong Kong, the fifth COVID wave in
the first quarter significantly impacted customer traffic. On the Chinese
mainland, ongoing COVID-19 disruptions continued to have a significant impact
on like-for-like sales.
The Health and Beauty division reported strong sales recovery in the first
half. Mannings Hong Kong's like-for-like sales were supported by effective
in-store execution and a surge in demand for COVID-19 related products and
over-the-counter medicines. Guardian reported double-digit like-for-like
growth across key geographies, driven by a combination of recovery in mall and
tourist locations, strong demand for COVID-19 related products and effective
store-level execution. Profitability also grew strongly in the first half,
driven by a combination of strong sales recovery, effective promotion
management and cost control.
Revenue for the Home Furnishings division increased relative to the
corresponding period in 2021 due to the annualisation impact of newly-opened
stores in the prior year and strong e-commerce sales. Like-for-like sales
were adversely impacted in the first quarter as the pandemic continued to
disrupt store operating capacity and there was significantly reduced stock
availability. Despite the ongoing challenges faced by IKEA during the first
half, profitability was ahead of the same period last year, with like-for-like
sales improving in the second quarter.
The performance of Maxim's, the Group's 50%-owned associate, was severely
impacted by Government-imposed dining restrictions in Hong Kong, as well as
temporary lockdowns on the Chinese mainland. Like-for-like sales, however,
recovered in Hong Kong over the course of the second quarter as restrictions
eased.
The Group's share of Yonghui's underlying loss for the six months ended March
2022 was US$38 million. Encouragingly, Yonghui reported improvements in
like-for-like sales and a return to profitability in the first quarter of
2022. In addition, Robinsons Retail reported solid sales and profit growth
contribution for the first half. Robinsons Retail reported in the first
quarter of 2022 that its drugstores, department stores and specialty segments
delivered strong sales recovery reflecting increased economic activity as
restrictions in the Philippines started to ease in February 2022.
BUSINESS DEVELOPMENTS
Driving digital innovation remains a key strategic priority for DFI Retail
Group. In July 2020, DFI launched its yuu coalition loyalty programme, a
critical milestone in driving DFI's modernisation and digital
transformation. Since its launch, yuu has exceeded expectations and has now
welcomed over four million members. The yuu-niverse has grown to include
Maxim's restaurants, insurance partners and, most recently, a fuel partner.
In May 2022, yuu-to-me was officially launched, offering customers an
integrated one-stop online shopping experience and home delivery to customers
across leading Hong Kong brands on one yuu mobile app. Initial performance
has been encouraging. Digital remains a key priority for the Group, and the
Group expects to continue investing to drive long-term value for shareholders.
PEOPLE
The first quarter was a particularly challenging period in our core market of
Hong Kong, with a significant surge in COVID-19 cases and consequent
constraints on the supply chain and labour shortages. We express deep
gratitude to our team members across the Group for their continuing dedication
and resolve to putting our customers first during these challenging times.
OUTLOOK
The pandemic has continued to have a significant adverse effect on all of the
Group's businesses, with the first quarter particularly difficult on the
Chinese mainland and in Hong Kong. Profits are also being impacted by supply
chain and inflationary pressures. As a result, the Group's profits for the
full year are expected to be materially lower than those of 2021. The Group
remains confident, however, in the strengths of the Group's banners and
believes that the additional investment being made to advance digital
capabilities, and improve stores and the Group's operating standards, will
deliver sustainable growth for the Group, as the impact of the pandemic
recedes.
Ben Keswick
Chairman
DFI Retail Group Holdings Limited
Consolidated Profit and Loss Account
for the six months ended 30th June 2022
(unaudited) Year ended 31st December
Six months ended 30th June
2022 2021 2021
Underlying business performance US$m Non-trading items Total Underlying business performance Non-trading items Total Underlying business performance Non-trading items Total
US$m US$m US$m US$m US$m US$m US$m US$m
Sales (note 2) 4,483.1 - 4,483.1 4,536.8 - 4,536.8 9,015.4 - 9,015.4
Cost of sales (3,080.4) - (3,080.4) (3,123.9) - (3,123.9) (6,145.7) - (6,145.7)
Gross margin 1,402.7 - 1,402.7 1,412.9 - 1,412.9 2,869.7 - 2,869.7
Other operating income 94.6 6.6 101.2 105.2 1.3 106.5 207.1 28.4 235.5
Selling and distribution costs (1,175.5) - (1,175.5) (1,114.8) - (1,114.8) (2,310.1) - (2,310.1)
Administration and other operating expenses (245.6) (7.2) (252.8) (248.7) (35.9) (284.6) (452.9) (31.4) (484.3)
Operating profit (note 3) 76.2 (0.6) 75.6 154.6 (34.6) 120.0 313.8 (3.0) 310.8
Financing charges (58.2) - (58.2) (60.5) - (60.5) (119.5) - (119.5)
Financing income 1.6 - 1.6 0.5 - 0.5 0.7 - 0.7
Net financing charges (note 4) (56.6) - (56.6) (60.0) - (60.0) (118.8) - (118.8)
Share of results of associates and joint ventures (note 5) (59.6) (5.6) (65.2) (43.6) 15.5 (28.1) (40.4) (1.4) (41.8)
(Loss)/profit before tax (40.0) (6.2) (46.2) 51.0 (19.1) 31.9 154.6 (4.4) 150.2
Tax (note 6) (18.3) - (18.3) (19.0) 0.2 (18.8) (60.0) 1.1 (58.9)
(Loss)/profit after tax (58.3) (6.2) (64.5) 32.0 (18.9) 13.1 94.6 (3.3) 91.3
Attributable to:
Shareholders of the Company (51.6) (6.0) (57.6) 32.1 (15.4) 16.7 104.6 (1.7) 102.9
Non-controlling interests (6.7) (0.2) (6.9) (0.1) (3.5) (3.6) (10.0) (1.6) (11.6)
(58.3) (6.2) (64.5) 32.0 (18.9) 13.1 94.6 (3.3) 91.3
US¢ US¢ US¢ US¢ US¢ US¢
(Loss)/earnings per share (note 7)
- basic (3.81) (4.25) 2.38 1.24 7.73 7.61
- diluted (3.81) (4.25) 2.37 1.24 7.73 7.61
DFI Retail Group Holdings Limited
Consolidated Statement of Comprehensive Income
for the six months ended 30th June 2022
(unaudited) Year ended
Six months ended 31st December
30th June
2022 US$m 2021 2021
US$m US$m
(Loss)/profit for the period (64.5) 13.1 91.3
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans 0.4 - 22.1
Tax relating to items that will not be reclassified (0.1) - (3.5)
0.3 - 18.6
Share of other comprehensive income/ (expense) of associates and joint 1.0 (0.5) 1.0
ventures
1.3 (0.5) 19.6
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
- net loss arising during the period (108.1) (5.4) (19.8)
Cash flow hedges
- net gain arising during the period 29.2 7.2 10.1
- transfer to profit and loss (2.1) 5.5 11.6
27.1 12.7 21.7
Tax relating to items that may be reclassified (1.7) (2.5) (3.3)
Share of other comprehensive expense of associates and joint ventures (4.3) (0.5) (1.1)
(87.0) 4.3 (2.5)
Other comprehensive (expense)/income for the period, net of tax (85.7) 3.8 17.1
Total comprehensive income for the period (150.2) 16.9 108.4
Attributable to:
Shareholders of the Company (144.1) 20.6 120.1
Non-controlling interests (6.1) (3.7) (11.7)
(150.2) 16.9 108.4
DFI Retail Group Holdings Limited
Consolidated Balance Sheet
at 30th June 2022
(unaudited) At 31st December
At 30th June
2022 US$m 2021 US$m 2021 US$m
Net operating assets
Intangible assets 404.8 406.6 411.9
Tangible assets 760.7 754.5 803.3
Right-of-use assets 2,614.8 2,795.6 2,747.6
Associates and joint ventures 1,968.9 2,134.5 2,164.3
Other investments 21.7 6.2 11.5
Non-current debtors 125.4 112.3 113.2
Deferred tax assets 17.8 13.6 14.7
Pension assets 9.3 - 13.3
Non-current assets 5,923.4 6,223.3 6,279.8
Stocks 793.1 745.8 781.9
Current debtors 211.2 219.5 232.0
Current tax assets 17.5 21.1 15.6
Cash and bank balances 219.1 262.7 210.4
1,240.9 1,249.1 1,239.9
Non-current assets held for sale (note 9) 81.8 19.9 85.1
Current assets 1,322.7 1,269.0 1,325.0
Current creditors (1,976.7) (1,892.4) (2,081.3)
Current borrowings (799.8) (692.5) (743.5)
Current lease liabilities (602.0) (633.0) (640.3)
Current tax liabilities (32.2) (52.6) (26.6)
Current provisions (38.0) (67.8) (49.2)
Current liabilities (3,448.7) (3,338.3) (3,540.9)
Net current liabilities (2,126.0) (2,069.3) (2,215.9)
Long-term borrowings (414.0) (505.5) (310.8)
Non-current lease liabilities (2,212.4) (2,324.7) (2,320.0)
Deferred tax liabilities (42.9) (37.5) (44.0)
Pension liabilities (5.7) (16.1) (7.5)
Non-current creditors (10.0) (32.6) (11.4)
Non-current provisions (105.9) (105.1) (103.0)
Non-current liabilities (2,790.9) (3,021.5) (2,796.7)
1,006.5 1,132.5 1,267.2
Total equity
Share capital 75.2 75.2 75.2
Share premium and capital reserves 65.0 60.2 60.2
Revenue and other reserves 872.6 987.2 1,131.8
Shareholders' funds 1,012.8 1,122.6 1,267.2
Non-controlling interests (6.3) 9.9 -
1,006.5 1,132.5 1,267.2
DFI Retail Group Holdings Limited
Consolidated Statement of Changes in Equity
for the six months ended 30th June 2022
Share Share Capital Revenue Attributable to shareholders of the Company US$m Attributable to non-controlling Total
capital premium reserves and other reserves interests equity
US$m
US$m
US$m
US$m
US$m
US$m
Six months ended 30th June 2022 (unaudited)
At 1st January 2022 75.2 35.6 24.6 1,131.8 1,267.2 - 1,267.2
Total comprehensive income - - - (144.1) (144.1) (6.1) (150.2)
Dividends paid by the Company (note 10) - - - (87.4) (87.4) - (87.4)
Dividends paid to non-controlling interests - - - - - (0.2) (0.2)
Share-based long-term incentive plans - - 4.8 - 4.8 - 4.8
Shares purchased for a share-based long-term incentive plan - - - (20.0) (20.0) - (20.0)
Change in interests in associates and joint ventures - - - (7.7) (7.7) - (7.7)
Transfer - 2.0 (2.0) - - - -
At 30th June 2022 75.2 37.6 27.4 872.6 1,012.8 (6.3) 1,006.5
Six months ended 30th June 2021 (unaudited)
At 1st January 2021 75.1 34.1 25.5 1,187.6 1,322.3 13.6 1,335.9
Total comprehensive income - - - 20.6 20.6 (3.7) 16.9
Dividends paid by the Company (note 10) - - - (155.6) (155.6) - (155.6)
Exercise of options 0.1 - - - 0.1 - 0.1
Share-based long-term incentive plans - - 0.6 - 0.6 - 0.6
Change in interests in associates and joint ventures - - - (65.4) (65.4) - (65.4)
Transfer - 1.5 (1.5) - - - -
At 30th June 2021 75.2 35.6 24.6 987.2 1,122.6 9.9 1,132.5
Share Share Capital Revenue Attributable to shareholders of the Company US$m Attributable to non-controlling Total
capital premium reserves and other reserves interests equity
US$m
US$m
US$m
US$m
US$m
US$m
Year ended 31st December 2021
At 1st January 2021 75.1 34.1 25.5 1,187.6 1,322.3 13.6 1,335.9
Total comprehensive income - - - 120.1 120.1 (11.7) 108.4
Dividends paid by the Company - - - (196.2) (196.2) - (196.2)
Dividends paid to non-controlling interests - - - - - (1.9) (1.9)
Exercise of options 0.1 (0.1) - - - - -
Share-based long-term incentive plans - - 0.7 - 0.7 - 0.7
Change in interests in associates and joint ventures - - - 20.3 20.3 - 20.3
Transfer - 1.6 (1.6) - - - -
At 31st December 2021 75.2 35.6 24.6 1,131.8 1,267.2 - 1,267.2
Revenue and other reserves at 30th June 2022 comprised revenue reserves of
US$1,187.4 million (2021: US$1,212.2 million), hedging reserves of US$34.4
million gain (2021: US$0.8 million gain) and exchange reserves of US$349.2
million loss (2021: US$225.8 million loss).
Revenue and other reserves at 31st December 2021 comprised revenue reserves of
US$1,363.1 million, hedging reserves of US$9.0 million gain and exchange
reserves of US$240.3 million loss.
DFI Retail Group Holdings Limited
Consolidated Cash Flow Statement
for the six months ended 30th June 2022
(unaudited) Year ended 31st December
Six months ended
30th June
2022 US$m 2021 US$m 2021 US$m
Operating activities
Operating profit (note 3) 75.6 120.0 310.8
Depreciation and amortisation 437.7 439.3 885.7
Other non-cash items (7.9) (26.0) (63.7)
Increase in working capital (32.0) (18.5) (10.4)
Interest received 1.5 0.5 0.8
Interest and other financing charges paid (57.8) (59.5) (117.2)
Tax paid (21.0) (51.3) (110.1)
396.1 404.5 895.9
Dividends from associates and joint ventures 11.5 23.7 46.4
Cash flows from operating activities 407.6 428.2 942.3
Investing activities
Purchase of subsidiaries (note 12(a)) (8.8) - -
Purchase of associates and joint ventures - - (1.6)
Purchase of other investments (note 12(b)) (10.0) - (5.0)
Purchase of intangible assets (2.9) (4.7) (26.9)
Purchase of tangible assets (121.1) (100.1) (185.1)
Sale of associates and joint ventures (note 12(c)) 6.9 - -
Sale of properties (note 12(d)) - 35.0 86.3
Sale of tangible assets 0.8 0.5 7.6
Cash flows from investing activities (135.1) (69.3) (124.7)
Financing activities
Purchase of shares for a share-based long-term incentive plan (note 12(e)) (20.0) - -
Drawdown of borrowings 710.5 759.3 1,248.3
Repayment of borrowings (619.5) (760.6) (1,308.2)
Net increase in other short-term borrowings 83.0 100.8 88.7
Principal elements of lease payments (331.7) (330.9) (672.0)
Dividends paid by the Company (note 10) (87.4) (155.6) (196.2)
Dividends paid to non-controlling interests (0.2) - (1.9)
Cash flows from financing activities (265.3) (387.0) (841.3)
Net increase/(decrease) in cash and cash equivalents 7.2 (28.1) (23.7)
Cash and cash equivalents at beginning of period 210.0 234.2 234.2
Effect of exchange rate changes (5.8) (0.1) (0.5)
Cash and cash equivalents at end of period (note 12(f)) 211.4 206.0 210.0
DFI Retail Group Holdings Limited
Notes to Condensed Financial Statements
1. Accounting Policies and Basis of Preparation
The condensed financial statements have been prepared in accordance with IAS
34 'Interim Financial Reporting' and on a going concern basis. The condensed
financial statements have not been audited or reviewed by the Group's auditors
pursuant to the UK Auditing Practices Board guidance on the review of interim
financial information.
There are no changes to the accounting policies as described in the 2021
annual financial statements and the Group has not early adopted any standards
or amendments that have been issued but not yet effective. A number of
amendments were effective from 1st January 2022. The more important
amendments applicable to the Group is as follows:
Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract
(effective from 1st January 2022)
The amendments clarify that for the purpose of assessing whether a contract is
onerous, the cost of fulfilling the contract includes both the incremental
costs of fulfilling that contract and an allocation of other costs that relate
directly to fulfilling contracts. The Group applied the amendments from 1st
January 2022 and there is no significant impact on the Group's consolidated
financial statements.
2. Sales
Including associates and joint ventures Subsidiaries
Six months ended 30th June
2022 US$m 2021 US$m 2022 US$m 2021 US$m
Analysis by operating segment:
Food 10,958.1 11,031.5 3,089.0 3,264.9
- Grocery retail 9,824.0 9,903.2 2,004.8 2,190.6
- Convenience stores 1,134.1 1,128.3 1,084.2 1,074.3
Health and Beauty 1,276.0 1,146.5 984.5 887.1
Home Furnishings 409.6 384.8 409.6 384.8
Restaurants 1,000.1 1,005.4 - -
Other Retailing 384.5 381.7 - -
14,028.3 13,949.9 4,483.1 4,536.8
Sales including associates and joint ventures comprise 100% of sales from
associates and joint ventures.
Operating segments 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. DFI Retail Group
operates in five segments: Food, Health and Beauty, Home Furnishings,
Restaurants and Other Retailing. Food comprises grocery retail and
convenience store businesses (including the Group's associate, Yonghui, a
leading grocery retailer in the Chinese mainland). Health and Beauty
comprises the health and beauty businesses. Home Furnishings is the Group's
IKEA businesses. Restaurants is the Group's food and beverage associate,
Maxim's, a leading Hong Kong restaurant chain. Other Retailing represents
the department stores, specialty and Do-It-Yourself ('DIY') stores of the
Group's Philippines associate, Robinsons Retail.
Sales and share of results of Yonghui and Robinsons Retail represent six
months from October 2021 to March 2022 (2021: October 2020 to March 2021),
based on their latest published announcements (note 5).
Set out below is an analysis of the Group's sales by geographical locations:
Including associates and joint ventures Subsidiaries
Six months ended 30th June
2022 US$m 2021 US$m 2022 US$m 2021 US$m
Analysis by geographical area:
North Asia 10,745.5 10,606.6 3,054.0 2,993.9
Southeast Asia 3,282.8 3,343.3 1,429.1 1,542.9
14,028.3 13,949.9 4,483.1 4,536.8
The geographical areas covering North Asia and Southeast Asia, are determined
by the geographical location of customers. North Asia comprises Hong Kong,
the Chinese mainland, Macau and Taiwan. Southeast Asia comprises Singapore,
Cambodia, the Philippines, Thailand, Malaysia, Indonesia, Vietnam and Brunei.
3. Operating Profit
Six months ended 30th June
2022 US$m 2021 US$m
Analysis by operating segment:
Food 47.3 103.5
- Grocery retail 47.4 84.9
- Convenience stores (0.1) 18.6
Health and Beauty 39.3 20.6
Home Furnishings 15.2 11.5
101.8 135.6
Selling, general and administrative expenses(+) (64.8) (31.2)
Underlying operating profit before IFRS 16(*) 37.0 104.4
IFRS 16 adjustment(^) 39.2 50.2
Underlying operating profit 76.2 154.6
Non-trading items:
- impairment of intangible assets (6.3) -
- gain on partial disposal of a joint venture 6.3 -
- business restructuring costs (0.9) (35.8)
- profit on sale of properties - 1.0
- change in fair value of equity investments 0.3 0.2
75.6 120.0
Set out below is an analysis of the Group's underlying operating profit by
geographical locations:
Six months ended 30th June
2022 US$m 2021 US$m
Analysis by geographical area:
North Asia 100.6 122.0
Southeast Asia 1.2 13.6
101.8 135.6
Selling, general and administrative expenses(+) (64.8) (31.2)
Underlying operating profit before IFRS 16(*) 37.0 104.4
IFRS 16 adjustment(^) 39.2 50.2
Underlying operating profit 76.2 154.6
In relation to the COVID-19 pandemic, the Group had received government grants
and rent concessions of US$1.1 million (2021: US$6.6 million) and US$14.2
million (2021: US$23.2 million), respectively, for the six months ended 30th
June 2022. These subsidies were accounted for as other operating income.
(+) Included costs incurred for e-commerce development and digital
innovation.
(*) Property lease payments and depreciation of reinstatement costs under
the lease contracts were included in the Group's analysis of operating and
geographical segments' results.
(^) Represented the reversal of lease payments which were accounted for on a
straight-line basis, adjusted by the lease contracts recognised under IFRS 16
'Leases', primarily for the depreciation charge on right-of-use assets.
4. Net Financing Charges
Six months ended 30th June
2022 US$m 2021 US$m
Interest expense (55.2) (57.4)
- bank loans and advances (13.0) (9.9)
- lease liabilities (41.9) (46.8)
- other loans (0.3) (0.7)
Commitment and other fees (3.0) (3.1)
Financing charges (58.2) (60.5)
Financing income 1.6 0.5
(56.6) (60.0)
5. Share of Results of Associates and Joint Ventures
Six months ended 30th June
2022 US$m (†) 2021 US$m (†)
Analysis by operating segment:
Food (43.2) (14.2)
- Grocery retail (43.0) (13.1)
- Convenience stores (0.2) (1.1)
Health and Beauty 1.7 0.6
Restaurants (25.5) (13.2)
Other Retailing 1.8 (1.3)
(65.2) (28.1)
Share of results of associates and joint ventures included the following
(losses)/gains from non-trading items (note 8):
Six months ended 30th June
2022 US$m (†) 2021 US$m (†)
Change in fair value of Yonghui's equity investments 5.4 29.2
Change in fair value of Robinsons Retail's equity investments 1.4 0.1
Impairment charge of Yonghui's investments (12.5) (13.9)
Net gains from sale of debt investments by Robinsons Retail 0.1 0.1
(5.6) 15.5
Results are shown after tax and non-controlling interests in the associates
and joint ventures.
In relation to the COVID-19 pandemic, included in share of results of
associates and joint ventures were the Group's share of the government grants
and rent concessions of US$14.6 million (2021: US$10.8 million) and US$8.8
million (2021: US$9.9 million), respectively, for the six months ended 30th
June 2022.
(†) Included six months results from October 2021 to March 2022 (2021:
October 2020 to March 2021) for Yonghui and Robinsons Retail (note 2).
6. Tax
Six months ended 30th June
2022 US$m 2021 US$m
Tax charged to profit and loss is analysed as follows:
Current tax (24.9) (26.1)
Deferred tax 6.6 7.3
(18.3) (18.8)
Tax relating to components of other comprehensive income is analysed as
follows:
Remeasurements of defined benefit plans (0.1) -
Cash flow hedges (1.7) (2.5)
(1.8) (2.5)
Tax on profits has been calculated at rates of taxation prevailing in the
territories in which the Group operates. Share of tax credit of associates
and joint ventures of US$0.2 million (2021: US$3.3 million) is included in
share of results of associates and joint ventures.
7. (Loss)/Earnings per Share
Basic (loss)/earnings per share are calculated on loss attributable to
shareholders of US$57.6 million (2021: profit of US$16.7 million), and on the
weighted average number of 1,353.3 million (2021: 1,352.9 million) shares in
issue during the period.
Diluted (loss)/earnings per share are calculated on loss attributable to
shareholders of US$57.6 million (2021: profit of US$16.7 million), and on the
weighted average number of 1,353.5 million (2021: 1,353.1 million) shares in
issue after adjusting for 0.2 million (2021: 0.2 million) shares which are
deemed to be issued for no consideration under the share-based long-term
incentive plans based on the average share price during the period.
Additional basic and diluted (loss)/earnings per share are also calculated
based on underlying (loss)/profit attributable to shareholders. A
reconciliation of earnings is set out below:
Six months ended 30th June
2022 2021
US$m Basic Diluted loss US$m Basic earnings per share US¢ Diluted earnings per share US¢
loss per share
per share US¢ US¢
(Loss)/profit attributable to shareholders (57.6) (4.25) (4.25) 16.7 1.24 1.24
Non-trading items (note 8) 6.0 15.4
Underlying (loss)/profit attributable to shareholders (51.6) (3.81) (3.81) 32.1 2.38 2.37
8. Non-trading Items
Non-trading items are separately identified to provide greater understanding
of the Group's underlying business performance. Items classified as
non-trading items include fair value gains and losses on equity and debt
investments which are measured at fair value through profit and loss; gains
and losses arising from the sale of businesses, investments and properties;
impairment of non-depreciable intangible assets, properties, associates and
joint ventures, and other investments; provisions for the closure of
businesses; acquisition-related costs in business combinations; and other
credits and charges of a non-recurring nature that require inclusion in order
to provide additional insight into underlying business performance.
An analysis of non-trading items after interest, tax and non-controlling
interests is set out below:
Six months ended 30th June
2022 US$m 2021 US$m
Impairment of intangible assets (6.3) -
Gain on partial disposal of a joint venture 6.3 -
Business restructuring costs (0.7) (32.0)
Profit on sale of properties - 0.9
Change in fair value of equity investments 0.3 0.2
Share of change in fair value of Yonghui's equity investments 5.4 29.2
Share of change in fair value of Robinsons Retail's equity investments 1.4 0.1
Share of impairment charge of Yonghui's investments (12.5) (13.9)
Share of net gains from sale of debt investments by Robinsons Retail 0.1 0.1
(6.0) (15.4)
In April 2022, the Group acquired 100% interest in DFI Digital (Hong Kong)
Limited ('Digital Hong Kong') and DFI Digital (Singapore) Pte. Limited
('Digital Singapore') from its joint venture, Retail Technology Asia Limited
('RTA'). Following the acquisitions, Digital Hong Kong and Digital Singapore
became wholly-owned subsidiaries of the Group. Goodwill amounting to US$13.2
million was recognised and an impairment charge of US$6.3 million on the
related goodwill was recorded during the period.
Gain on partial disposal of a joint venture represented the gain arising from
the Group's disposal of its 8.5% interest in RTA, a 50% owned joint venture in
May 2022. The Group's interest in RTA is reduced to 41.5% upon the
completion of the transaction.
In 2021, the management decided to withdraw its Giant brand investment in
Indonesia following a strategic review recommendation. Exit costs of US$30.5
million mainly relating to impairment charge against tangible assets, landlord
compensation and the expected payments to employees were charged in the profit
and loss.
9. Non-current Assets Held for Sale
At 30th June 2022, the non-current assets held for sale represented 18
properties in Indonesia, three properties in Hong Kong and one retail property
in Malaysia brought forward from 31st December 2021 remained unsold. The
sale of these properties is highly probable in the remainder of the year.
10. Dividends
Six months ended 30th June
2022 US$m 2021 US$m
Final dividend in respect of 2021 of US¢6.50 87.9 155.6
(2020: US¢11.50) per share
Dividends on shares held by a subsidiary of the Group (0.5) -
under a share-based long-term incentive plan
87.4 155.6
An interim dividend in respect of 2022 of US¢1.00 (2021: US¢3.00) per share
amounting to a total of US$13.5 million (2021: US$40.6 million) is declared by
the Board, and will be accounted for as an appropriation of revenue reserves
in the year ending 31st December 2022.
11. Financial Instruments
Financial instruments by category
The carrying amounts of financial assets and financial liabilities at 30th
June 2022 and 31st December 2021 are as follows:
Fair value of hedging instruments US$m Fair value through profit Financial assets at amortised cost Other financial liabilities Total carrying amounts US$m
and loss US$m US$m
US$m
At 30th June 2022
Financial assets measured at fair value
Other investments
- equity investments - 11.7 - - 11.7
- debt investments - 10.0 - - 10.0
Derivative financial instruments 37.4 - - - 37.4
37.4 21.7 - - 59.1
Financial assets not measured at fair value
Debtors - - 226.0 - 226.0
Cash and bank balances - - 219.1 - 219.1
- - 445.1 - 445.1
Financial liabilities measured at fair value
Derivative financial instruments (0.1) - - - (0.1)
(0.1) - - - (0.1)
Financial liabilities not measured at fair value
Borrowings - - - (1,213.8) (1,213.8)
Lease liabilities - - - (2,814.4) (2,814.4)
Trade and other payables excluding non-financial liabilities - - - (1,769.8) (1,769.8)
- - - (5,798.0) (5,798.0)
Fair value of hedging instruments US$m Fair value through profit Financial assets at amortised cost Other financial liabilities Total carrying amounts US$m
and loss US$m US$m
US$m
At 31st December 2021
Financial assets measured at fair value
Other investments
- equity investments - 11.5 - - 11.5
Derivative financial instruments 10.5 - - - 10.5
10.5 11.5 - - 22.0
Financial assets not measured at fair value
Debtors - - 253.1 - 253.1
Cash and bank balances - - 210.4 - 210.4
- - 463.5 - 463.5
Financial liabilities measured at fair value
Derivative financial instruments (0.4) - - - (0.4)
(0.4) - - - (0.4)
Financial liabilities not measured at fair value
Borrowings - - - (1,054.3) (1,054.3)
Lease liabilities - - - (2,960.3) (2,960.3)
Trade and other payables excluding non-financial liabilities - - - (1,888.1) (1,888.1)
- - - (5,902.7) (5,902.7)
The fair values of financial assets and financial liabilities approximate
their carrying amounts.
Fair value estimation
(i) Financial instruments that are measured at fair value
For financial instruments that are measured at fair value in the balance
sheet, the corresponding fair value measurements are disclosed by level of the
following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or
liabilities ('quoted prices in active markets')
The fair values of listed securities are based on quoted prices in active
markets at the balance sheet date.
(b) Inputs other than quoted prices in active markets that are observable
for the asset or liability, either directly or indirectly ('observable current
market transactions')
The fair values of derivative financial instruments are determined using rates
quoted by the Group's bankers at the balance sheet date. The rates for
interest rate swaps and forward foreign exchange contracts are calculated by
reference to market interest rates and foreign exchange rates.
The fair values of unlisted equity investments, club debentures, are
determined using prices quoted by brokers at the balance sheet date.
(c) Inputs for assets or liabilities that are not based on observable market
data ('unobservable inputs')
The fair values of other unlisted equity and debt investments are determined
using valuation techniques by reference to observable current market
transactions or the market prices of the underlying investments with certain
degree of entity specific estimates or discounted cash flow by projecting the
cash inflows from these investments.
There were no changes in valuation techniques during the six months ended 30th
June 2022 and the year ended 31st December 2021.
The table below analyses financial instruments carried at fair value at 30th
June 2022 and 31st December 2021, by the levels in the fair value measurement
hierarchy:
Observable current market transactions Unobservable inputs Total
US$m US$m US$m
At 30th June 2022
Assets
Other investments
- equity investments 6.7 5.0 11.7
- debt investments - 10.0 10.0
Derivative financial instruments at fair value
- through other comprehensive income 36.7 - 36.7
- through profit and loss 0.7 - 0.7
44.1 15.0 59.1
Liabilities
Derivative financial instruments at fair value
- through other comprehensive income - - -
- through profit and loss (0.1) - (0.1)
(0.1) - (0.1)
At 31st December 2021
Assets
Other investments
- equity investments 6.5 5.0 11.5
Derivative financial instruments at fair value
- through other comprehensive income 10.2 - 10.2
- through profit and loss 0.3 - 0.3
17.0 5.0 22.0
Liabilities
Derivative financial instruments at fair value
- through other comprehensive income (0.2) - (0.2)
- through profit and loss (0.2) - (0.2)
(0.4) - (0.4)
There were no transfers between the categories during the six months ended
30th June 2022 and the year ended 31st December 2021.
Movement of financial instruments which are valued based on unobservable
inputs during the year ended 31st December 2021 and six months ended 30th June
2022 are as follows:
Unlisted equity investments Unlisted debt investments Total
US$m US$m US$m
At 1st January 2021 - - -
Addition 5.0 - 5.0
At 31st December 2021 and 1st January 2022 5.0 - 5.0
Addition - 10.0 10.0
At 30th June 2022 5.0 10.0 15.0
(ii) Financial instruments that are not measured at fair value
The fair values of current debtors, cash and bank balances, current creditors,
current borrowings and current lease liabilities are assumed to approximate
their carrying amounts due to the short-term maturities of these assets and
liabilities.
The fair values of long-term borrowings are based on market prices or are
estimated using the expected future payments discounted at market interest
rates. The fair values of non-current lease liabilities are estimated using
the expected future payments discounted at market interest rates.
12. Notes to Consolidated Cash Flow Statement
(a) Purchase of subsidiaries
Six months ended 30th June
2022
US$m
Non-current assets 0.1
Current assets 8.1
Current liabilities (7.0)
Fair value of identifiable net assets acquired 1.2
Goodwill 13.2
Consideration paid 14.4
Cash and cash equivalents at the date of acquisitions (5.6)
Net cash outflow 8.8
In April 2022, the Group acquired 100% interest in Digital Hong Kong
and Digital Singapore, developing and driving digital innovation businesses,
from its joint venture, RTA, for a total net cash consideration of US$8.8
million.
The fair values of the identifiable assets and liabilities at the
acquisition date are provisional and will be finalised within one year after
the acquisition date.
The goodwill arising from the acquisition amounting to US$13.2 million
was attributable to its ownership interest in the intellectual property.
None of the goodwill is expected to be deductible for tax
purposes.
There were no sales recognised by these subsidiaries during the
period. Loss after tax since acquisitions in respect of these subsidiaries
during the period amounted to US$8.3 million. Had the acquisitions occurred
on 1st January 2022, consolidated loss after tax for the six months ended 30th
June 2022 would have been US$77.3 million.
(b) Purchase of other investments mainly related to the Group's subscription
of a five-year convertible bond of Pickupp Limited, a delivery platform
founded in Hong Kong, for a principal of US$10.0 million in January 2022.
(c) Sale of associates and joint ventures mainly related to the proceeds
from the Group's disposal of its 8.5% interest in RTA amounted to US$6.9
million in May 2022.
(d) Sale of properties in 2021 included disposal of three properties in
Malaysia and two properties in Indonesia for a total net consideration of
US$35.0 million.
(e) Purchase of shares for a share-based long-term incentive plan related
to the purchase of 7,912,100 ordinary shares from the stock market by a
subsidiary of the Group for a total consideration of US$20.0 million.
(f) Analysis of balances of cash and cash equivalents
At 30th June At 31st December 2021
2022 US$m
US$m
Cash and bank balances 219.1 210.4
Bank overdrafts (7.7) (0.4)
211.4 210.0
13. Capital Commitments and Contingent Liabilities
Total capital commitments at 30th June 2022 and 31st December 2021 amounted to
US$214.7 million and US$184.6 million, respectively.
Various Group companies are involved in litigation arising in the ordinary
course of their respective businesses. Having reviewed outstanding claims
and taking into account legal advice received, the Directors are of the
opinion that adequate provisions have been made in the condensed financial
statements.
14. Related Party Transactions
The parent company of the Group is Jardine Strategic Limited ('JSL') and the
ultimate parent company is Jardine Matheson Holdings Limited ('JMH'). Both
companies are incorporated in Bermuda.
In the normal course of business, the Group undertakes a variety of
transactions with JMH and certain of its subsidiaries, associates and joint
ventures. The more significant of such transactions are described below.
The Group pays management fees to Jardine Matheson Limited ('JML'), a
wholly-owned subsidiary of JMH, under the terms of a Management Services
Agreement, for certain management consultancy services provided by JML. The
management fees paid by the Group to JML were US$0.2 million (2021: US$0.1
million) for the first six months of 2022. The Group also paid directors'
fees of US$0.2 million (2021: US$0.2 million) to JML for the same period in
2022.
The Group rents properties from Hongkong Land Holdings Limited ('HKL'), a
subsidiary of JMH. The lease payments paid by the Group to HKL for the first
six months of 2022 were US$1.5 million (2021: US$1.5 million). The Group's
50%-owned associate, Maxim's, also paid lease payments of US$3.9 million
(2021: US$4.5 million) to HKL for the first six months of 2022.
The Group obtains repairs and maintenance services from Jardine Engineering
Corporation ('JEC'), a subsidiary of JMH. The total fees paid by the Group
to JEC for the first six months of 2022 amounted to US$1.2 million (2021:
US$0.8 million).
Maxim's supplies ready-to-eat products at arm's length to certain subsidiaries
of the Group. For the first six months of 2022, these amounted to US$17.1
million (2021: US$12.2 million).
The Group's digital joint venture, RTA, implements point-of-sale system and
provides consultancy services to the Group. The total fees paid by the Group
to RTA for the first six months of 2022 were US$5.6 million (2021: nil).
There were no other related party transactions that might be considered to
have a material effect on the financial position or performance of the Group
that were entered into or changed during the first six months of the current
financial year.
Amounts of outstanding balances with associates and joint ventures are
included in debtors and creditors, as appropriate.
Balances with group companies of JMH at 30th June 2022 and 31st December 2021
are immaterial, unsecured, and have no fixed terms of repayment.
DFI Retail Group Holdings Limited
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal
control. The following have been identified previously as the areas of
principal risk and uncertainty facing the Company, and they remain relevant in
the second half of the year.
· Economic Risk
· Commercial Risk
· Financial and Treasury Risk
· Concessions, Franchises and Key Contracts Risk
· Regulatory and Political Risk
· Pandemic and Natural Disasters Risk
· Cybersecurity and Technology Risk
· Talent Risk
· Environmental and Climate Risk
For greater detail, please refer to pages 151 to 154 of the Company's 2021
Annual Report, a copy of which is available on the Company's website at
www.DFIretailgroup.com.
Responsibility Statement
The Directors of the Company confirm to the best of their knowledge that:
a. the condensed financial statements have been prepared in accordance
with IAS 34; and
b. the interim management report includes a fair review of all
information required to be disclosed by the Disclosure Guidance and
Transparency Rules 4.2.7 and 4.2.8 issued by the Financial Conduct Authority
in the United Kingdom.
For and on behalf of the Board
Ian McLeod
Clem Constantine
Directors
DFI Retail Group Holdings Limited
Dividend Information for Shareholders
The interim dividend of US¢1.00 per share will be payable on 12th October
2022 to shareholders on the register of members at the close of business on
19th August 2022. The shares will be quoted ex-dividend on 18th August 2022,
and the share registers will be closed from 22nd to 26th August 2022,
inclusive.
Shareholders will receive their cash dividends in United States Dollars,
except when elections are made for alternate currencies in the following
circumstances.
Shareholders on the Jersey branch register
Shareholders registered on the Jersey branch register will have the option to
elect for their dividends to be paid in Sterling. These shareholders may
make new currency elections for the 2022 interim dividend by notifying the
United Kingdom transfer agent in writing by 23rd September 2022. The
Sterling equivalent of dividends declared in United States Dollars will be
calculated by reference to a rate prevailing on 28th September 2022.
Shareholders holding their shares through CREST in the United Kingdom will
receive their cash dividends in Sterling only as calculated above.
Shareholders on the Singapore branch register who hold their shares through
The Central Depository (Pte) Limited ('CDP')
Shareholders who are on CDP's Direct Crediting Service ('DCS')
Those shareholders who are on CDP's DCS will receive their cash dividends in
Singapore Dollars unless they opt out of CDP Currency Conversion Service,
through CDP, to receive United States Dollars.
Shareholders who are not on CDP's DCS
Those shareholders who are not on CDP's DCS will receive their cash dividends
in United States Dollars unless they elect, through CDP, to receive Singapore
Dollars.
Shareholders on the Singapore branch register who wish to deposit their shares
into the CDP system by the dividend record date, being 19th August 2022, must
submit the relevant documents to M & C Services Private Limited, the
Singapore branch registrar, by no later than 5.00 p.m. (local time) on 18th
August 2022.
DFI Retail Group Holdings Limited
About DFI Retail Group
DFI Retail Group (the 'Group') is a leading pan-Asian retailer. At 30th June
2022, the Group and its associates and joint ventures operated over 10,300
outlets and employed over 220,000 people. The Group had total annual sales
in 2021 exceeding US$27 billion.
The Group provides quality and value to Asian consumers by offering leading
brands, a compelling retail experience and great service; all delivered
through a strong store network supported by efficient supply chains.
The Group (including associates and joint ventures) operates under a number of
well-known brands across five divisions. The principal brands are:
Food
· Grocery retail - Wellcome in Hong Kong S.A.R.; Yonghui in Chinese
mainland; Cold Storage in Malaysia and Singapore; Giant in Malaysia and
Singapore; Hero in Indonesia; and Robinsons in the Philippines.
· Convenience stores - 7-Eleven in Hong Kong and Macau S.A.R.,
Singapore and Southern China.
Health and Beauty
· Mannings in Chinese mainland, Hong Kong and Macau S.A.R.; Guardian
in Brunei, Cambodia, Indonesia, Malaysia, Singapore and Vietnam.
Home Furnishings
· IKEA in Hong Kong and Macau S.A.R., Indonesia and Taiwan.
Restaurants
· Hong Kong Maxim's group in Chinese mainland, Hong Kong and Macau
S.A.R., Cambodia, Malaysia, Singapore, Thailand and Vietnam.
Other Retailing
· Robinsons in the Philippines operating department stores, specialty
and DIY stores.
The Group's parent company, DFI Retail Group Holdings Limited, is incorporated
in Bermuda and has a primary listing on the London Stock Exchange, with
secondary listings in Bermuda and Singapore. The Group's businesses are
managed from Hong Kong by DFI Retail Group Management Services Limited through
its regional offices. DFI Retail Group is a member of the Jardine Matheson
Group.
- end -
For further information, please contact:
DFI Retail Group Management Services Limited
Christine Chung (852) 2299 1056
Brunswick Group Limited
William Brocklehurst (852) 5685 9881
As permitted by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority in the United Kingdom, the Company will not be
posting a printed version of the Half-Year Results announcement for the six
months ended 30th June 2022 to shareholders. This Half-Year Results
announcement will be made available on the Company's website,
www.DFIretailgroup.com, together with other Group announcements.
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