Company Profile Reference Code: 12215 Publication Date: 15 Aug 2002 www.datamonitor.com Datamonitor USA 245 5th Avenue 4th Floor New York, NY 10016 USA t: +1 212 686 7400 f: +1 212 686 2626 e: usinfo@datamonitor.com Datamonitor Europe Charles House 108-110 Finchley Road London NW3 5JJ United Kingdom t: +44 20 7675 7000 f: +44 20 7675 7500 e: eurinfo@datamonitor.com Datamonitor Germany Messe TurmBox 2360308 Frankfurt Deutschland t: +49 69 9754 4517 f: +49 69 9754 4900 e: deinfo@datamonitor.com Datamonitor Hong Kong Rm 2413-18, 24/F Shui On Center 6-8 Harbour Road Wanchai Hong Kong t: +852 2520 1177 f: +852 2520 1165 e: hkinfo@datamonitor.com
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TABLE OF CONTENTS TABLE OF CONTENTS Company Overview... 4 Key Facts... 4 Business Description... 5 History... 6 Key Employees... 7 Major Products And Services... 10 Top Competitors... 11 Company View... 12 Locations and Subsidiaries... 14 Datamonitor Page 3
Company Overview COMPANY OVERVIEW Holdings operates approximately 2,200 stores in the Asia- Pacific region. Dairy Farm is a leading food and drug retailer. It owns grocery chains, drugstore chains and convenience stores. For the year ended December 2001, Dairy Farm had a turnover of $4.9 billion. The company also has stakes in restaurants and supermarkets in India and the Far East. It is headquartered in Hong Kong. KEY FACTS Head Office 7/F Devon House, Taikoo Place 979 King s Road Quarry Bay Hong Kong Phone +852 22991888 Fax +852 22994888 Web Address Revenues/turnover (US$ Mn) Financial Year End Employees 58800 LSE Ticker www.dairyfarmgroup.com 4924.5 December DFI Datamonitor Page 4
Business Description BUSINESS DESCRIPTION Dairy Farm is 60% owned by the Jardine Matheson Group. The company operates several well-known retail outlets. The most established supermarket chains are Wellcome in Hong Kong and Taiwan, Woolworths in New Zealand, Cold Storage in Singapore, Hero in Indonesia and Foodworld in India. It also runs the Giant hypermarket chain in Malaysia and Singapore. As well as these, Dairy Farm operates 7-eleven stores in Hong Kong, Southern China and Singapore. Dairy Farm s drugstores include Mannings in Hong Kong, Guardian in Singapore, Malaysia and Indonesia and Health and Glow in India. The group also owns 50% of Maxim s, a restaurant chain in Hong Kong. Datamonitor Page 5
History HISTORY Dairy Farm was incorporated by Sir Patrick Manson and five prominent Hong Kong businessmen in 1886. A farm was established at Pokfulam, stocked with 80 head of cattle. Dairy Farm began importing frozen meat and opened its first retail store at the Central District depot in 1904. Datamonitor Page 6
Key Employees KEY EMPLOYEES Name Job Title Board Compensation Simon Keswick Chairman Executive Board Ronald J. Floto Managing Director Executive Board Percy Weatherall Managing Director Executive Board Howard Mowlem Group Finance Director Executive Board George Joseph Ho Director Non Executive Board Brian Keelan Director Non Executive Board Henry Keswick Director Non Executive Board R C Kwok Director Non Executive Board Dr. George C. G. Koo Director Non Executive Board C G R Leach Director Non Executive Board Norman Lyle Director Non Executive Board Howard Mowlem Director Non Executive Board Owen Price Director Non Executive Board James Watkins Director Non Executive Board Datamonitor Page 7
Key Employee Biographies KEY EMPLOYEE BIOGRAPHIES Simon Keswick Board: Executive Board Job Title: Chairman Since: 1986 Mr. Simon Keswick joined the Jardine Matheson group in 1962 and is also chairman of Hongkong Land Holdings, Mandarin Oriental, and a director of Jardine Lloyd Thompson, Jardine Matheson and Jardine Strategic. He is also a director of Hanson and chairman of The Fleming Mercantile Investment Trust. Ronald J. Floto Board: Executive Board Job Title: Managing Director Since: 1997 Mr. Floto joined the Board in 1997. He has extensive experience in the supermarket industry and was formerly executive vice president of Kmart Corporation and president of Super Kmart in the United States. Percy Weatherall Board: Executive Board Job Title: Managing Director Since: 2000 Mr. Weatherall has been with the Jardine Matheson Group since 1976 during which time he has held several senior executive positions, most recently chief executive officer of Hongkong Land Holdings. He is also chairman of Jardine Matheson Limited, managing director of Hongkong Land Holdings, Jardine Matheson, Jardine Strategic and Mandarin Oriental. Howard Mowlem Board: Executive Board Job Title: Group Finance Director Since: 2001 Datamonitor Page 8
Key Employee Biographies Mr. Mowlem first joined the Group in 2000 as finance director, North Asia, and was also appointed chief executive of OneResource Group. He previously held a number of senior financial positions in the Australian retail sector. Mr. Mowlem is a Fellow of the Australia Society of CPAs, an Associate of the Securities Institute of Australia and a member of the Finanace and Treasury Association of Australia. George Joseph Ho Board: Non Executive Board Job Title: Director Since: 1998 Mr. Ho joined the Board in 1998. He was previously engaged in private law practice in San Francisco and is currently engaged in the broadcasting, multi-media and telecommunications industries. Mr. Ho is also chairman of Hong Kong Commercial Broadcasting Company, executive director of ABC Communications (Holdings) and a director of PCC Skyhorse and United Chinese Bank. Henry Keswick Board: Non Executive Board Job Title: Director Since: 1988 Mr. Henry Keswick joined the Board in 1988. He is chairman of Jardine Matheson, having first joined the Jardine Matheson group in 1961, and is also chairman of Jardine Strategic and the Hong Kong Association. He is a director of Hongkong Land Holdings, Mandarin Oriental and Telegraph Group. Dr. George C. G. Koo Board: Non Executive Board Job Title: Director Since: 1990 Dr Koo, a Fellow of the Royal College of Surgeons, was appointed as a Director in 1990. He is the founder and managing director of the Hong Kong Lithotripter Centre and a member of the Political Consultative Committee of Chekiang Province of the People s Republic of China. Datamonitor Page 9
Major Products And Services MAJOR PRODUCTS AND SERVICES Supermarket brands include: Cold Storage Wellcome Woolworths Foodworld Foodworld (partially owned) PT Hero (partially owned) Pharmacy chains include: Mannings Guardian Health & Glow (partially owned) Restaurants: Maxim s (partially owned) Datamonitor Page 10
Top Competitors TOP COMPETITORS The following companies are the major competitors of : Carrefour S.A. Datamonitor Page 11
Company View COMPANY VIEW A statement by Simon Keswick, Chairman of follows. The statement has been taken from the company s 2001 annual report. Overview Dairy Farm made significant progress in 2001, against a backdrop of poor economic conditions in most of our markets. We resolved a major problem through the disposal of Franklins, our Australian business, and we began sustained developments in areas we see as profit drivers for the future. Results Sales from continuing activities of US$3,470 million were 7% ahead of last year, with growth in all regions. Each of our regional businesses has shown improved performance, and our underlying profit of US$48 million in 2001 compares to a profit of US$1 million in 2000. Underlying earnings per share were US 2.87, compared to US 0.03 in 2000. The Group moved into a net cash position, due mainly to the disposal of Franklins and Sims Trading. In the circumstances the Directors consider it appropriate to offer to return value to shareholders and therefore propose to repurchase up to 170 million shares representing 10% of issued share capital. This is to be carried out by way of a tender offer at a price range of US$0.66 to US$0.75 per share. The proposal gives shareholders a choice to sell shares at a premium to the market price or to increase their proportionate stake by retaining their shares. A circular containing full details of the offer is being sent to shareholders. In view of our forthcoming investment commitments, and a cautious view of prospects for 2002, the Directors believe it to be too early for a resumption of dividend payments. Disposal of Franklins Having decided in April to exit from Australia, a managed sell-down of Franklins was undertaken as the most effective means, among the limited options available to us, of realising value. An assessment of Franklins assets in 2000 led to an impairment charge of US$129 million. During the course of the disposal programme, however, a premium was achieved on the sale of the assets, yielding a net gain in 2001 of US$38 million. We are grateful for the dedication and professionalism shown by Franklins management during the complex sell-down process. "We resolved a major problem through the disposal of Franklins..." Datamonitor Page 12
Company View In South Asia our focus is on developing the successful Giant hypermarket format in Malaysia and Singapore, as well as expanding into Indonesia and, subject to government approvals, India. Our other businesses in the region continue to perform well. During the year we were approached to sell Woolworths, our New Zealand supermarket operation. This prompted enquiries from other potential purchasers, but after careful review, we decided that it was preferable to retain and grow this valuable business. Despite a profit decline in 2001, Maxim s remains an excellent investment. Maxim s is expanding the Starbucks chain in Hong Kong, and will be extending it to Southern China. The Group s improved results in 2001 have been achieved through the commitment and professionalism of our people. On behalf of the Directors, I would like to thank all our employees for their valuable contribution and look forward to their continued support. Outlook The economic outlook for the regions in which Dairy Farm operates is uncertain. The Company, however, remains strong with experienced staff and sound retail businesses that are well positioned to succeed. Datamonitor Page 13
Locations and Subsidiaries LOCATIONS AND SUBSIDIARIES Head Office 7/F Devon House, Taikoo Place 979 King s Road Quarry Bay Hong Kong P: 852 22991888 F: 852 22994888 www.dairyfarmgroup.com Other Locations and Subsidiaries 7-Eleven convenience stores 5/F Devon House, Taikoo Place 979 King s Road Quarry Bay, Hong Kong Hong Kong P: (852) 2299 1711 F: (852) 2299 4711 Cold Storage Singapore 1 Sophia Road #06-38 Peace Centre, Singapore 228149 Singapore P: (65) 337 2766 F: (65) 339 0398 Franklins Holdings Ltd 62 Hume Highway, Chullora Sydney, NSW 2190 Australia P: (61 2) 9722 1400 F: (61 2) 9722 1500 Cold Storage Retail Sdn Bhd Unit 701, Level 7, Uptown 1 Jalan SS21/58 Damansara Uptown 47400 Petaling Jaya Selangor Malaysia P: (60 3) 7725 5966 F: (60 3) 7725 6068 7/F Devon House, Taikoo Place 979 King s Road Quarry Bay Hong Kong P: 852 22991888 F: 852 22994888 www.dairyfarmgroup.com Giant TMC Bhd 2nd Floor Giant Office Block 673, USJI, Subang Jaya 47500 Petaling Jaya Selangor D.E. Malaysia P: (60 3) 737 3319 F: (60 3) 736 7881 Datamonitor Page 14
Locations and Subsidiaries Mannings drugstores 5/F Devon House, Taikoo Place 979 King s Road Quarry Bay Hong Kong P: (852) 2299 3388 F: (852) 2299 2388 Wellcome Taiwan Company Ltd 2nd Floor, 175 Hua Ling Street Shih Lin, Taipei Taiwan P: (886 2) 2883 9489 F: (886 2) 2881 7050 Wellcome supermarkets 5/F Devon House, Taikoo Place 979 King s Road Quarry Bay, Hong Kong Hong Kong P: (852) 2299 3838 F: (852) 2299 2838 Woolworths (New Zealand) Ltd 74 Kerrs Road, Private Bag 76927 Manukau City, Auckland New Zealand P: (64 9) 262 0772 F: (64 9) 262 6670 Datamonitor Page 15