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2012.03.01 Dah Chong Hong Announces 2011 Annual Results
Dah Chong Hong Holdings Limited

Dah Chong Hong Announces 2011 Annual Results

Turnover Surges 43%

Profit from Operations Rises 27% to HK$1,861 Million

China Business Sustains Growth Momentum

- Turnover increased 43.1% to a record of HK$46,109 million.
- Profit from operations rose 27.1% to a record of HK$1,861 million.
- Profit attributable to shareholders was HK$1,323 million.
- Full year dividend of 27.04 HK cents per share, up 15.3%.

Motor and Motor Related Business
- A total of 85,448 vehicles were sold in mainland China, up 45.2%.
- Sales volume of Bentley jumped 104.2% to a record of 1,664 units in mainland China.
- Total number of 4S shops increased to 65 by the end of 2011. Same store unit sales and unit service grew by 12.7% and 18.9% respectively.
- Audi unit sales in Taiwan surged by 57.4%.

Food and Consumer Products Business
Strong sales from the FMCG business with a 42.0% growth, while sales of electrical appliances surged by 58.3% in mainland China.
- Formed a joint venture (“JV”) with Brasil Foods S.A.(“BRF”), a leading global food company.
- Sales in Hong Kong and Macao grew at a remarkable rate of 18.1%.

Logistics Business 
- Revenue of Xinhui’s logistics business doubled in 2011, thanks to the increased cross border importation business and higher occupancy rate of warehouses.
- Acquired a 25,000-tonne capacity multi-temperature cold storage facility in Shanghai during 2011.
- Additional multi-temperature logistics facilities operated in Xiamen, Guangzhou and Shenzhen.

(Hong Kong, 1 March 2012) — Dah Chong Hong Holdings Limited (“DCH” or the “Group”; stock code: 01828) announced today that it has achieved a record total turnover of HK$46,109 million for the year ended 31 December 2011, a solid growth of 43.1% compared to the previous year (2010 : HK$32,211 million). Profit attributable to shareholders was HK$1,323 million compared to HK$1,422 million in 2010 which included an exceptional gain on disposal of a jointly controlled entity (“JCE”) of HK$331 million. Excluding this exceptional gain, the year-on-year growth was 21.3%. The Group’s adjusted net profit for the year, excluding the above disposal gain and other non-operating items, amounted to HK$1,231 million, up 16.0% from HK$1,061 million recorded in 2010.

The Board of Directors proposed payment of a final dividend of 12.74 HK cents per share for the year ended 31 December 2011 (2010 : 12.77 HK cents). Together with the interim dividend of 14.30 HK cents per share already paid during the year, total dividend for the year ended 31 December 2011 amounted to 27.04 HK cents (2010 : 23.45 HK cents) per share.

Mr. Clement Hui, Chairman of DCH, said, "I am delighted to report that DCH has achieved an outstanding performance with a record turnover and profit from operations in 2011. Thanks to our diversified business portfolio and prudent expansion strategy, we have kept the promise to our shareholders to continue our growth momentum in 2011.”

Business Review & Prospects

Motor and Motor Related Business
This business segment continued to achieve excellent results with a robust growth of 50.9% in turnover to HK$37,183 million despite a market slowdown in mainland China. Segment result from operations rose by 28.5% to HK$1,672 million, while segment profit after taxation grew by 24.3% to reach HK$1,263 million. This growth was driven by encouraging development of the luxury vehicle business as well as continued expansion of the Group’s dealership network.

Mainland China
- Segment turnover grew by 59.7% to HK$30,901 million. Unit sales increased by 45.2% to 85,448 units, outperforming the 2.5% overall growth of the market.
- Bentley achieved a 104.2% unit sales increase to 1,664 units. Bentley dealerships in Shanghai and Hangzhou ranked 2nd and 3rd in global sales ranking.
- Five additional Bentley dealerships in Ningbo, Dalian, Hefei and other two cities were secured in exchange for the early return of the PRC distributorship in 2013.
- Isuzu sales volume increased by 3.3%, despite a supply interruption after the 311 earthquake in Japan.
- Brand portfolio was expanded to 22 with acquisition of Ferrari and Maserati dealerships in Guangzhou and Shenzhen. - Secured 17 new 4S shops, most of which are for super luxury or luxury brands including Bentley, FAW Audi, Ferrari, Lexus and Maserati.
- Targets to add 15 4S shops annually, with more focus on super luxury and luxury brands.
- Five MotorMech independent service outlets were established in Dongguan in 2011. Five more outlets in Guangdong province will be set up in 2012.
- The lubrication oil blending plant in Xinhui has commenced operation in 2011. Production volume will increase to 18 million liters in 2012.

Hong Kong and Macao
- European brands recorded strong unit sales growth in 2011, with Audi, Bentley and MAN reporting growth of 28.5%, 31.4% and 69.2% respectively.
- Isuzu and Nissan reported 9.7% and 8.3% growth in unit sales despite strong appreciation of Japanese Yen in 2011.
- A new luxury brand INFINITI will be launched in 2012.
- The first batch of electric buses will be delivered to customers in 2012.

Other Markets
- In Taiwan, the Group was appointed to establish the third Audi dealership in New Taipei City following the good performance of the first two Audi dealerships in Taipei and Hsinchu.
- The Group was appointed by Isuzu as the Taiwan distributor from 2012 onwards.

Food and Consumer Products Business
The Group had made substantial progress in developing a Total Food Supply Chain platform with addition of new brands and the extension of the distribution network to more second- and third-tier cities. The segment turnover recorded a 17.2% rise to HK$8,443 million. Segment result from operations increased by 12.7% to HK$160 million in Hong Kong and Macao, and surged by 47.9% to HK$105 million in the PRC.

Mainland China
- Segment turnover surged 21.7% to HK$3,483 million, thanks to strong FMCG business as key brands such as Ferrero, Fonterra and Wyeth continued to perform well.
- Secured new brands including Welch's (grape juice) and Pringles (potato chips).
- The JV company with BRF will handle all import, processing and distribution of meat products in mainland China, commencing business in the first half of 2012. The JV will distribute 140,000 tonnes of meat products in the first year. 
- Pocari Sweat Phase-2 bottling plant and a JV factory with CJ CheilJedang Corp., one of the largest food manufacturers in Korea, will commence operation in 2012, with production of Korean frozen dumplings in the initial phase.
- 10 retail outlets of DCH AV shop were established in Shanghai, Chengdu, Suzhou and Nanjing. We target to expand to 80 outlets by the end of 2012 through franchise and direct operation.

Hong Kong and Macao
- Segment turnover rose 18.1% to HK$4,061 million.
- Acquisitions of Tai Luen Coffee Company Limited and Bayern Gourmet Food Company Limited were completed in 2011, enriching the product portfolio and strengthening the distribution network.
- DCH Food Mart recorded same store sales growth of 6.4%. A total of six new outlets were opened in 2011, taking the total number of shops to 83. We target to open 10 new DCH Food Mart/Food Mart Deluxe stores in 2012.

Logistics Business
Segment turnover rose by 23.8% to HK$452 million, of which HK$109 million was from internal customers. To support the Group’s Food Business and attract more third party customers, DCH has extended the logistics set-up in southern (Guangzhou and Shenzhen) and eastern (Shanghai and Xiamen) China during 2011 and these efforts will continue in the coming years.

Mr Hui concluded, “Looking ahead, we are committed to enhancing the quality of services and product offerings while expanding our business network in the Greater China region. We will strive to achieve a double digit growth each year in the next three years, generating rewarding returns to our shareholders.”

- End -

Appendix: Consolidated Income Statement for the Year ended 31 December 2011 [Download]

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