ANNUAL REPORT 2023
ANNUAL REPORT 2023
To give our customers across Asia
a store they trust, delivering quality,
service and value.
Front cover: (Top left) Guardian Indonesia’s team member, Annisa Zahwa at Lippo Mall Puri, Jakarta (Top right) 7-Eleven Hong Kong’s 1,000th store
on Des Voeux Road, Central (Bottom left) Our team member, Yeung Yuen Wai, serving a customer at Wellcome Fresh, The Westwood, Kennedy Town
(Bottom right) IKEA Taiwan team members Kevin Yu and Denise Lin at IKEA Kaohsiung store
Interior of the largest Wellcome Fresh in Hong Kong at The Westwood, Kennedy Town
2
Corporate Information
3
DFI Retail Group At-a-Glance
4
Highlights
6
Chairman’s Statement
8
Group Chief Executive’s Review
12
Business Review
12 Food
16 Convenience
18 Health and Beauty
22 Home Furnishings
26 Restaurants
28 Other Associates
30
Financial Review
34
Sustainability Overview
36 TCFD
47 ESG Report
81
Directors’ Profiles
83
Our Management Committee
86
Financial Statements
166 Independent Auditor’s Report
174 Five Year Summary
175 Responsibility Statements
176 Corporate Governance
211
Shareholder Information
212 Retail Outlet Summary
213 Management and Offices
Contents
Our Market Place team member, Iris Tam
at the Tai Wai, Hong Kong store
DFI Retail Group’s parent company, DFI Retail
Group Holdings Limited, is incorporated in
Bermuda and has a primary listing in the
standard segment of 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.
A member of the Jardine Matheson Group
Corporate Information
Directors
Ben Keswick
Chairman
John Witt
Managing Director
Ian McLeod
Former Group Chief Executive
(stepped down on 1st August 2023)
Scott Price
Group Chief Executive
(joined the Board on 1st August 2023)
Clem Constantine
Group Chief Financial Officer
Dave Cheesewright
Weiwei Chen
Adam Keswick
Anthony Nightingale
(stepped down on 31st January 2024)
Christian Nothhaft
Company Secretary
Jonathan Lloyd
Registered Office
Jardine House
33-35 Reid Street
Hamilton
Bermuda
DFI Retail Group Management Services Limited
Directors
John Witt
Chairman
Ian McLeod
Former Group Chief Executive
(stepped down on 1st August 2023)
Scott Price
Group Chief Executive
(joined the Board on 1st August 2023)
Clem Constantine
Group Chief Financial Officer and Property Director
Chris Bush
Chief Executive Officer – DFI Retail Southeast Asia
(retired on 31st October 2023)
Erica Chan
Group Chief Legal, Governance and Corporate Affairs Officer
(joined the Board on 1st December 2023)
Choo Peng Chee
Chief Executive Officer, Food
Shen Li
Group Corporate Strategy and yuu Rewards Director
(joined the Board on 1st December 2023)
Martin Lindström
Chief Executive Officer, DFI IKEA
Wee Lee Loh
Group Chief Digital Officer
(joined the Board on 1st December 2023)
Danni Peirce
Chief Executive Officer, 7-Eleven
(joined the Board on 1st December 2023)
Andrew Wong
Chief Executive Officer, Health & Beauty
(joined the Board on 1st December 2023)
Johnny Wong
Chief Executive Officer – DFI Digital
(joined the Board on 3rd April 2023 and stepped down on 18th September 2023)
Michael Wu
Chairman and Managing Director, Maxim’s
Joy Jinghui Xu
Group Chief People & Culture Officer
(joined the Board on 1st December 2023)
Graham Baker
Matthew Bland
Anne O’Riordan
Y.K. Pang
(stepped down on 31st March 2024)
Steve Sun
Corporate Secretary
Jonathan Lloyd
DFI Retail Group Holdings Limited Annual Report 2023
2
13
Asian Markets
Some
11,000
Outlets
(including associates and joint ventures)
Geographical
Locations
Food
Convenience
Health and Beauty
Home Furnishings
Restaurants
Other Associates
Hong Kong
Market Place
Wellcome
7-Eleven
Mannings
IKEA
Maxim’s
Taiwan
IKEA
The Philippines
Robinsons
Laos
Maxim’s
Vietnam
Guardian
Maxim’s
Cambodia
Lucky
Guardian
Maxim’s
Thailand
Maxim’s
Malaysia
Guardian
Maxim’s
Singapore
Cold Storage
CS Fresh
Giant
Jason’s Deli
7-Eleven
Guardian
Maxim’s
Brunei
Guardian
Macau
San Miu
7-Eleven
Mannings
IKEA
Maxim’s
Chinese Mainland
Yonghui
7-Eleven
Mannings
Maxim’s
Indonesia
Hero
Guardian
IKEA
DFI Retail Group At-a-Glance
3
Highlights
2023
2022
Change
Results
US$m
US$m
%
Revenue
– subsidiaries
9,170
9,174
–
– including associates and joint ventures*
26,471
27,597
(4)
Underlying EBITDA†
1,121
1,070
5
Underlying profit attributable to shareholders‡
155
29
437
Net non-trading items attributable to shareholders
(123)
(143)
n/a
Profit/(loss) attributable to shareholders
32
(115)
n/a
Net debt
618
866
(29)
US¢
US¢
%
Underlying earnings per share‡
11.49
2.14
437
Earnings/(loss) per share
2.39
(8.51)
n/a
Dividends per share
8.00
3.00
167
Net asset value per share^
72.41
69.98
3
Store Network #
2023
2022
Net change
Food
1,907
1,933
-26
Convenience
3,791
3,596
+195
Health and Beauty
2,694
2,552
+142
Home Furnishings
26
23
+3
Restaurants
1,998
1,908
+90
Other Retailing
578
560
+18
10,994
10,572
+422
* Including 100% of associates and joint ventures.
† Underlying EBITDA represents underlying operating profit before depreciation and amortisation.
‡ The Group uses ‘underlying profit’ in its internal financial reporting to distinguish between ongoing business performance and non-trading items, as more
fully described in note 37 to the financial statements. Management considers this to be a key measure which provides additional information to enhance
understanding of the Group’s underlying business performance.
^ Net asset value per share is based on the book value of shareholders’ funds.
# Including 5,501 associates and joint ventures stores in 2023 (2022: 5,355) and on a continuing basis.
• Substantial improvement in underlying profit
• Subsidiaries’ performance driven by recovery in Health and Beauty and
Convenience
• Associates’ performance supported by Maxim’s recovery
• Final dividend of US¢5.00 per share
DFI Retail Group Holdings Limited Annual Report 2023
4
Gross Revenue*
-4 %
Underlying Profit
+
437 %
Number of Stores
#
10,994
Gross Revenue* (US$b)
20
15
10
5
25
30
0
2019
2020
2023
2022
2021
US$
26.5b
Food
Convenience
Health and Beauty
Home Furnishings
Restaurants
Others
Interim dividend
Final dividend
Ordinary Dividends per Share (US¢)
21
15
12
9
3
6
18
0
2019
2020
2023
2022
2021
US¢
8.00
Subsidiaries
Associates and
joint ventures
Number of Employees
250,000
150,000
100,000
50,000
200,000
0
2019
2020
2023
2022
2021
Underlying Profit Attributable
to Shareholders (US$m)
300
200
100
400
0
2019
2020
2023
2022
2021
US$
155m
Underlying Earnings per Share (US¢)
15
10
5
20
25
0
2019
2020
2023
2022
2021
US¢
11.49
Revenue – Subsidiaries (US$b)
6
3
9
12
0
2019
2020
2023
2022
2021
US$
9.2b
Food
Convenience
Health and Beauty
Home Furnishings
Others
Some
213,000
people
5
Chairman’s Statement
The Group has been
encouraged by the significant
improvement in performance in
2023. The recovery in economic
activity following the pandemic
has, however, brought about
changes in customer behaviours
to which the Group is still
adapting. In addition, higher
interest rates, inflationary
pressures and a broader
economic slowdown on the
Chinese mainland are likely
to lead to slower growth in
2024. Nonetheless, with the
appointment of Scott Price
as Group Chief Executive,
we are confident in the Group’s
long-term strategy to deliver
the medium- and long-term
growth prospects of the Group.
Overview
Following a number of challenging years for the
business in a disrupted environment, DFI Retail
Group (the ‘Group’) reported substantially improved
performance in 2023. The Group reported total
underlying profit attributable to shareholders
of US$155 million for the year, an increase of
US$126 million compared to the prior year.
This profit improvement was driven both by
subsidiaries and associates.
Operating performance
Total 2023 revenue for the Group, including 100%
of associates and joint ventures, was US$26.5 billion,
slightly behind 2022 levels. Strong revenue growth
in Health and Beauty and Convenience was offset
by lower sales within Food and Home Furnishings.
Total subsidiary revenue was US$9.2 billion, broadly
in line with the prior year, or 5% higher for ongoing
businesses (excluding the impact of the Malaysia
Grocery Retail divestment).
The Group’s underlying profit attributable to
shareholders was US$155 million, a substantial
improvement from the US$29 million reported
in the prior year. Within subsidiaries, profitability
was supported by strong recovery in the Health
and Beauty and Convenience divisions. The
increased contribution by associates was driven
by improvement at Maxim’s and reduced losses
from Yonghui. There was a non-trading loss
attributable to shareholders of US$123 million,
predominantly due to a goodwill impairment in
respect of the Macau business and Giant Singapore,
and foreign exchange losses associated with the
divestment of the Malaysia Grocery Retail business.
These losses were partially offset by gains from
property divestments, resulting in total reported
profits attributable to shareholders of US$32 million.
Operating cash flow for the period, after lease
payments, was a net inflow of US$419 million,
compared with US$279 million in 2022. As at
31st December 2023, the Group’s net debt was
US$618 million, compared with US$866 million
at 31st December 2022.
DFI Retail Group Holdings Limited Annual Report 2023
6
2023
Profit Mix
†
* Sales of goods.
† Based on operating profit before effect of adopting
IFRS 16, excluding selling, general and administrative
expenses and non-trading items.
2023
Sales Mix*
9%
27%
27%
5%
58%
37%
24%
13%
Food
Convenience
Health and Beauty
Home Furnishings
The Board recommends a final dividend for 2023 of
US¢5.00 per share (2022 final dividend: US¢2.00).
People
Scott Price succeeded Ian McLeod as Group
Chief Executive with effect from 1st August 2023.
We wish to thank Ian for his contribution during
his six years as Group Chief Executive, when he
led a comprehensive business transformation of DFI
Retail Group to strengthen its customer propositions.
Anthony Nightingale retired from the Board and
Audit Committee on 31st January 2024 and we would
like to thank him for his contribution to the Company
over many years. We are pleased to welcome
Weiwei Chen, an Independent Non-Executive Director
of the Company, as Chair of the Audit Committee
in place of Anthony Nightingale with effect from
31st January 2024. As a result of this appointment,
the Audit Committee now has a majority of
independent Non-Executive Directors as members.
Prospects
The Group has been encouraged by the significant
improvement in performance in 2023. The recovery
in economic activity following the pandemic has,
however, brought about changes in customer
behaviours to which the Group is still adapting.
In addition, high interest rates, inflationary pressures
and a broader economic slowdown on the Chinese
mainland are likely to lead to the rate of growth
in the Group’s performance reducing substantially
in 2024 compared to that of 2023. Nonetheless,
we remain confident in the medium- and long-term
growth prospects of the Group.
Ben Keswick
Chairman
7th March 2024
7
Group Chief Executive’s Review
Overall financial performance
in 2023 has been encouraging.
Total underlying profit
attributable to shareholders
was US$155 million for the year,
an increase of US$126 million
compared to the prior year.
There remains a significant
opportunity, however, to
continue to build on this
profit recovery.
Introduction
It is both a pleasure and a privilege to join DFI Retail
Group as Group Chief Executive. I am excited to be
part of an organisation with such a long history and
which plays such an important role in serving all of
the communities where it operates.
The past few years have been very challenging
for the Group, our customers, team members and
shareholders. Post the pandemic, there is a need
to reset DFI and align the business to a strategic
framework focussed on capital allocation priorities
and growth plans that will improve performance
over the coming years. I believe this realignment
of the organisation will generate enhanced returns
for shareholders.
Overall financial performance in 2023 has been
encouraging. Total underlying profit attributable
to shareholders was US$155 million for the year,
an increase of US$126 million compared to the
prior year. There remains a significant opportunity,
however, to continue to build on this profit recovery.
I am confident that, with the right focus on our
customers, team members and shareholders, as
well as the right balance of local autonomy and
centralised scale, we will gain share from our
competitors and sustainably grow returns for
our shareholders.
Strategic framework
Since joining the Group in August, I have visited all
our markets and formats, meeting team members
and learning about our business and customers.
This has been a great opportunity to receive input
and I have been impressed by the energy our team
members bring to serving our customers. Over the
course of this period, a new strategic framework
has been introduced: Customer First, People Led,
DFI Retail Group Holdings Limited Annual Report 2023
8
Shareholder Driven. An aligned strategic framework
is crucial to supporting the Group’s capital allocation
priorities and growth plans over the coming three
to five years.
Customer First
As a leading retailer across multiple formats in the
markets where we operate, we must evolve at the
same pace as our customers’ changing shopping
behaviours. While significant progress has been
made over the past few years in enhancing retail
fundamentals within the Group, there remain
opportunities to improve local relevance across
our assortment, Own Brand mix, store execution
and design. Additionally, we are resetting our
approach to creating a digital proposition across
the businesses that is significantly less margin
dilutive yet protects our future market share.
People Led
As a People Led organisation, we are focussed on
deeply embedding our values throughout the Group,
speeding up decision making and improving Inclusion,
Equity and Diversity to ensure local relevancy of
decision-making to customers. Our team members
are closest to the views of our customers and their
voices must be heard.
Shareholder Driven
We have committed to driving improved shareholder
returns. We must win with customers, but do this
through a disciplined capital and resource allocation
model that creates sustainable returns as well
achievement of our Environmental, Social and
Governance (‘ESG’) commitments.
Organisation structure
An important milestone achieved over the course
of the second half of 2023 was the alignment
of our organisation structure to the new strategic
framework. Our customers, competitors and the
markets in which we operate are changing. We
must ensure our organisation is prepared to meet
the challenge. Decisions that impact our customers
must be made close to the customer. Centralised
services must add value to the banners through
scale and expertise, all delivered through a lean
overheads model. We will invest only where our
business leaders commit to delivering attractive
returns. Based upon these principles, we have
moved accountability to a format structure across
Food, Health and Beauty, Convenience and Home
Furnishings, removing the regional layer. By moving
to a format structure, each of our formats will
optimise the assortment, digital proposition and
store design principles to deliver service, quality
and value to our customers in a more consistent
manner that can also be tailored to the format’s
individual strategies.
Aligned to the format structure is a new go-to-
market digital strategy. Driving Digital has been a
key strategic focus for DFI Retail Group during the
past several planning periods and will continue and
intensify. We need, however, to revise our strategy
based on the post-COVID needs of our customers.
The end goal is to provide them with great choice
and service at an affordable price, capturing
potential opportunities and creating greater
synergies between our stores and online businesses.
Consequently, accountability for the technology
function, the yuu Rewards business and the Digital
function has been split. This will enable us to create
greater focus on these three important strategic
areas and support the creation of a Customer First
digital proposition.
9
2023 performance
The Group reported total revenue from subsidiaries
in 2023 of US$9.2 billion, broadly in line with the
prior year. Total revenue for the Group, including
100% of associates and joint ventures, was
US$26.5 billion, slightly behind 2022 levels.
The Group reported a subsidiaries underlying profit
attributable to shareholders of US$112 million
for the full year, over 70% higher than the prior
year. Profit from associates was US$43 million,
US$78 million higher than the prior year. Total
underlying profit attributable to shareholders
was US$155 million for the year, an increase of
US$126 million compared to the prior year.
Our Health and Beauty business reported over
20% sales growth and nearly 130% profit growth
for the full year, driven by traffic recovery from
markets reopening and gross margin improvement.
Recovery of customer foot traffic also supported
strong profit growth for our Convenience division,
which grew 74% compared to the prior year.
Food profit reduced relative to the prior year.
Within North Asia, first half performance was
impacted by the absence of pantry-stocking seen
during the fifth wave of COVID in Hong Kong in
the equivalent period last year. However, North Asia
Food performance improved in the second half and
profit during that period also increased compared
to the prior year. South East Asia Food financial
performance was adversely affected by intense
competition and weakening consumer sentiment
caused by rising cost of living pressures.
IKEA saw like-for-like (‘LFL’) sales decline due to
reduced home renovation and furniture demand, as
a result of a softening in property market sentiment
caused by higher interest rates. Profit also fell,
primarily as a result of the revenue shortfall.
The Group’s share of underlying profits from
associates was US$43 million, representing
a US$78 million increase from the prior year.
Maxim’s reported strong recovery with its share
of underlying profit more than doubling relative
to the prior year, as customers returned to dining
out. The Group’s share of Yonghui’s underlying
losses was US$36 million, an improvement relative
to the prior year. Robinsons Retail reported good
underlying business performance but its contribution
to the Group’s profits reduced due to foreign
exchange losses and higher net financing charges.
The Group reported strong operating cash flow
after lease payments of US$419 million, 50% higher
than the US$279 million reported in the prior year.
Operating cash flow after lease payments and
normal capital expenditure was US$222 million,
over six times higher than the US$35 million
reported in 2022.
Environmental, social, governance
(‘ESG’)
The growing awareness of the impact from
climate change has sparked a global movement
towards sustainable practices and environmental
responsibility. As a leading pan-Asian retailer,
we have the unique opportunity to contribute to
and be part of the solution. Indeed, being part
of the solution is an important component of our
Customer First, People Led and Shareholder Driven
strategic framework.
DFI Retail Group Holdings Limited Annual Report 2023
10
The Group’s strong commitment to ESG is reflected
in our three strategic pillars: serving communities,
sustaining the planet, and sourcing responsibly across
the markets in which we operate. In November,
the Group’s greenhouse gas emissions targets were
validated by the Science Based Targets initiative
(‘SBTi’). We became one of the first Asian retailers
to receive validation from the SBTi for its near-term
emissions reduction targets, aligned with its criteria
and recommendations. The validated targets cover
Scope 1, Scope 2, and Scope 3 greenhouse gas (‘GHG’)
emissions. For Scope 1 and 2, the committed target
is to reduce half emissions by 2030. DFI has also
pledged separately to achieve net-zero emissions
by 2050, with an annual investment plan to achieve
this long-term goal. SBTi has also validated DFI’s
Scope 3 emissions reduction target, focussing on
purchased goods and services (category 1) as well
other significant categories.
DFI has also achieved a significant improvement in
its independent ESG Risk Rating from Morningstar
Sustainalytics, a leading global ESG rating provider,
with our score improving from 25.3 in 2022 to 22.9
in 2023. This represents a ranking improvement
from top 50% to top 29% in the Global Food Retail
sub-industry. DFI’s overall management score
from Sustainalytics, which assesses the robustness
of a company’s ESG programmes, practices, and
policies, is also rated as ‘Strong’. This improvement
represents external validation of the strong ESG
management efforts that have been made by the
Group, despite above-average risk exposure for the
sub-industry. These efforts have included proactive
climate risk management in line with Task Force
on Climate related Financial Disclosures (‘TCFD’)
recommendations and auditing of supply chains
against ethical standards.
Group Chief Executive’s Review
I am personally passionate about this topic and the
achievement of our ESG objectives, particularly our
emissions reduction targets, is a core focus of the
leadership team. Whilst the journey will not be easy,
we believe it is necessary and we will continue to
drive the organisation to be a change agent in the
markets that we serve.
Outlook
The reopening of economies following the
pandemic has had a positive overall impact
on the Group’s financial performance in 2023.
Customer behaviours are, however, rapidly evolving
and the Group is dynamically adapting to changing
market conditions. In our home market of Hong
Kong, for example, we have seen increased levels
of outbound travel, particularly into the Chinese
Mainland over weekends and public holidays.
There remain additional market challenges such as
high interest rates, inflationary and wage pressures
and uncertainty as to the impact these factors will
have on consumer sentiment. Nevertheless, I am
confident in the short-, medium- and longer-term
prospects of the Group and believe we have put in
place strong foundations to drive sustainable growth
and shareholder returns over the coming years.
Scott Price
Group Chief Executive
7th March 2024
11
Business Review
Sales of Goods
US$
3.3 billion
Operating Profit
US$ 45 million
Store Network *
1,907 stores
Indonesia
Chinese Mainland
Hong Kong
Macau
The Philippines
Singapore
FOOD
Cambodia
CS Fresh Gold Paragon, Singapore provides a premium supermarket experience
Reported sales revenue for the Food division in 2023
was US$3.3 billion. Excluding the impact of the
Malaysia Grocery Retail divestment, revenue for the
division reduced by 5%. Underlying operating profit
for the division was US$45 million for the year,
compared to US$91 million in the prior year.
12
12
DFI Retail Group Holdings Limited Annual Report 2023
Reported sales revenue for the Food division in 2023
was US$3.3 billion. Excluding the impact of the
Malaysia Grocery Retail divestment, revenue for the
division reduced by 5%. Underlying operating profit
for the division was US$45 million for the year,
compared to US$91 million in the prior year.
Wellcome’s LFL sales growth in the first half of 2023
was adversely affected by the absence this year of
the pantry stocking behaviour that occurred during
the fifth wave of COVID in Hong Kong in the
equivalent period last year. LFL sales momentum
improved in the second half. Nevertheless, the rising
frequency of travel from Hong Kong residents into
the Chinese mainland is now impacting shopping
behaviour, particularly during weekends. Despite
the challenges, the Wellcome team continued
to execute well in stores, which has supported
continued market share gains. While Wellcome
profitability reduced in the first half of the year,
strong margin and cost control contributed to profit
growth in the second half relative to the prior year.
Digital growth remains a priority for the Wellcome
team and the wellcome.com.hk website launched
in October 2023, in addition to the existing app.
The yuu Rewards programme in Hong Kong also
continues to grow, and now has 4.9 million members.
37%
Group Sales
†
13%
Group Profit
‡
* Including 1,353 associates and joint ventures stores.
† Sales of goods.
‡ Based on operating profit before effect of adopting IFRS 16, excluding
selling, general and administrative expenses and non-trading items.
Meadows Own Brand product selection
13
Giant Own Brand product selection
Hero Supermarket team member Muhamad Firdaus from Hero Kota Wisata
M. Cellars is Meadows’ exclusive selection of fine wines
The newly transformed Cold Storage store at Joo Chiat, Singapore
DFI Retail Group Holdings Limited Annual Report 2023
14
South East Asia Food sales performance was
adversely affected by intense competition and
weakening consumer sentiment caused by
cost-of-living pressures. Profitability was impacted
by soft sales as well as rising cost pressures,
particularly labour costs. Growing the contribution
from digital sales has remained a key focus area
for the management team. The yuu Rewards
programme in Singapore, which was launched in
October 2022, has now reached 1.5 million members,
with the Food banners leading the programme in
terms of transaction penetration. In September
2023, the Singapore Food business also launched
one hour delivery in partnership with Foodpanda,
with initial encouraging results.
In March 2023, the Group completed the divestment
of its Malaysia Grocery Retail business. The sale of
all six associated properties in Malaysia completed in
the second half of 2023.
Business Review FOOD
The largest Market Place at The Wai, Hong Kong opened its doors in July 2023
15
Chinese Mainland
Hong Kong
Macau
The Philippines
Singapore
Business Review
CONVENIENCE
Total Convenience sales were US$2.4 billion,
an increase of 8% compared to the prior year.
LFL sales grew 5% compared to the prior year.
Convenience underlying operating profit was
US$88 million for the year, an increase of 74%
compared to the prior year.
DFI’s Caring Passionately Award Grand Champions from 7-Eleven China – Zhimei Liang (L) and Chunling Liang (R)
Sales of Goods
US$
2.4 billion
Operating Profit
US$ 88 million
Store Network *
3,791 stores
16
16
DFI Retail Group Holdings Limited Annual Report 2023
Total Convenience sales were US$2.4 billion, an
increase of 8% compared to the prior year. LFL sales
grew 5% compared to the prior year. Convenience
underlying operating profit was US$88 million for the
year, an increase of 74% compared to the prior year.
Within Hong Kong, LFL sales were strong in the first
half, as revenues were adversely impacted by the
fifth COVID wave in the first half of 2022. LFL sales
in the second half were broadly in line with the prior
year, as sales were impacted by the rising frequency
of outbound travel from Hong Kong residents,
particularly during weekends. Operating profit
improved strongly due to a favourable shift in mix
away from cigarette sales, as well as ongoing
strong cost control.
7-Eleven South China reported double-digit LFL
sales growth, as the business benefitted from
the economy reopening. Strong execution of
promotional campaigns and ongoing strong
digital sales also supported revenue growth. Profit
increased significantly as a result of strong LFL sales
growth, favourable margin impact from product
mix shift and ongoing strong cost control.
7-Eleven Singapore also reported strong LFL sales
growth, as the business continued to benefit
from the economy reopening and strong in-store
execution. Profit almost doubled, despite labour
and utility cost pressures.
27%
Group Sales†
24%
Group Profit‡
7-SELECT ready-to-eat products from 7-Eleven Hong Kong
* Including 416 associates and joint ventures stores.
† Sales of goods.
‡ Based on operating profit before effect of adopting IFRS 16, excluding
selling, general and administrative expenses and non-trading items.
17
Malaysia
Indonesia
Chinese Mainland
Hong Kong
Macau
The Philippines
Singapore
Brunei
Business Review
HEALTH AND BEAUTY
Health and Beauty division revenue increased by
21% to US$2.4 billion, with LFL sales growing by
over 20%. Underlying operating profit increased
by 127%, to US$213 million for the year.
Cambodia
Vietnam
Mannings newly opened store in Tai Wai, Hong Kong
Sales of Goods
US$
2.4 billion
Operating Profit
US$ 213 million
Store Network *
2,694 stores
18
18
DFI Retail Group Holdings Limited Annual Report 2023
Health and Beauty division revenue increased by
21% to US$2.4 billion, with LFL sales growing by
over 20%. Underlying operating profit increased
by 127%, to US$213 million for the year.
In Hong Kong, the Mannings business benefitted
from the recovery in the economy and increased
tourism traffic. LFL sales were consistently strong
over the course of the year and the team continues
to execute well in stores, which supported positive
market share momentum. Healthcare as a category
performed strongly, representing over 50% of
Mannings’ revenue. Mannings’ profit increased
significantly due to strong sales growth, gross
margin expansion, operating leverage and ongoing
strong cost control. In Macau, Mannings also
reported double-digit LFL growth, which supported
strong profit growth.
* Including 1,156 associates and joint ventures stores.
† Sales of goods.
‡ Based on operating profit before effect of adopting IFRS 16,
excluding selling, general and administrative expenses and
non-trading items.
Caring Passionately Award – Crystal Award winner, Steven Fok from
Mannings Hong Kong, serving a customer at our Mongkok store
27%
Group Sales
†
58%
Group Profit
‡
19
Mannings Own Brand Vitamins selection
Guardian’s sales performance in South East Asia
was driven by LFL sales growth in Indonesia and
Malaysia, although growth did slow in the second
half. Guardian’s profit also increased significantly
in the year. Strong profit growth was reported
across all key markets, supported by gross margin
expansion and operating leverage. Performance
in Indonesia was driven by a recovery in mall traffic,
increased demand for beauty products and strong
execution of marketing and promotion campaigns
in stores. Malaysia performance was supported by
strong marketing campaign execution, competitive
healthcare pricing and range innovation. Strong
commercial execution and changes in product mix
supported gross margin expansion in Singapore.
During the year, Guardian continued to grow its
store network and opened 138 stores. Driving
digital growth was also a focus, with e-commerce
orders growing over 70% compared to the prior
year and fulfillment capability upgraded in both
Singapore and Malaysia.
The brand-new Guardian flagship store at Mid Valley Megamall in Kuala Lumpur, Malaysia
DFI Retail Group Holdings Limited Annual Report 2023
20
Business Review HEALTH AND BEAUTY
Mannings’ Pharmacist, Nathan Lam, helping a customer with the recently
launched AI Wellness Scan service in Hong Kong
Mannings Pharmacy at Airside, Kai Tak, Hong Kong
Guardian Indonesia’s team member Annisa Zahwa with a customer at Lippo Mall Puri, Jakarta
21
Indonesia
Hong Kong
Taiwan
Macau
Business Review
HOME FURNISHINGS
IKEA reported sales revenue of US$794 million,
5% behind the prior year. Overall, LFL sales
reduced by 7% in 2023. Operating profit was
US$19 million, US$27 million behind the prior year.
Solar panels at IKEA Hsin Chuang store, Taiwan
Sales of Goods
US$
794 million
Operating Profit
US$ 19 million
Store Network
26 stores
22
22
DFI Retail Group Holdings Limited Annual Report 2023
IKEA reported sales revenue of US$794 million,
5% behind the prior year. Overall, LFL sales reduced
by 7% in 2023. Operating profit was US$19 million,
US$27 million behind the prior year.
IKEA’s business performance in its markets has
been hampered by a combination of changing
customer behaviours post COVID and weak
property market activity across our markets.
LFL sales performance has been driven by reduced
customer traffic, which impacted the business
more as the year progressed. Despite strong cost
control measures in place, the challenging sales
environment materially affected IKEA’s level of profit.
IKEA team members Rena Satya (L) and Arina Rahmatul (R)
hosting IKEA’s 9th Anniversary Celebration in Indonesia at
the Alam Sutera store
* Sales of goods.
† Based on operating profit before effect of adopting IFRS 16, excluding
selling, general and administrative expenses and non-trading items.
9%
Group Sales*
5%
Group Profit
†
23
Despite the challenging external environment in
the short term, the IKEA team continues to invest
judiciously for the long-term. In May 2023, the
new IKEA Taiwan fulfillment centre became fully
operational, providing a key foundation for future
e-commerce growth in Taiwan. Supported by
enhanced fulfillment capabilities, e-commerce
penetration in Taiwan has now increased to over
9%. In 2023, three small store concepts were
opened in Hong Kong, with encouraging initial
performance to date. The formats will provide IKEA
with an opportunity to test and experiment new
growth drivers over the coming years.
Self-ordering kiosks at IKEA Bistro, Taipei City Shop – Arena
IKEA Pop Up store at K11 Art Mall, Hong Kong
DFI Retail Group Holdings Limited Annual Report 2023
24
Business Review HOME FURNISHINGS
IKEA’s Djungelskog soft toy collection
Customers shopping at IKEA Taipei City Shop – Arena
25
Business Review
RESTAURANTS
The Group’s overall share of Maxim’s underlying
profits was US$79 million for the full year, more
than double the US$38 million contribution in
the prior year.
Cambodia
Thailand
Vietnam
Malaysia
Chinese Mainland
Hong Kong
Macau
Singapore
Laos
Maxim’s latest Chiuchow cuisine restaurant – Be My Goose in Yuen Long, Hong Kong
Share of Underlying Results
US$ 79 million
Store Network
1,998 stores
26
26
DFI Retail Group Holdings Limited Annual Report 2023
Maxim’s continued to expand in the year and reached
the milestone of its 2,000th store in December.
In March 2023, Maxim’s opened its first Shake Shack
store in Thailand and has subsequently opened its
first The Cheesecake Factory store in the country in
early December.
The Group’s overall share of Maxim’s underlying
profits was US$79 million for the full year, more
than double the US$38 million contribution in
the prior year. The growth in profit reflects the
substantial business recovery in Hong Kong and
the Chinese Mainland following the full reopening
of their economies, as well as a favourable
performance in South East Asia. Maxim’s reported
strong restaurant growth, as well as solid mooncake
sales in the year.
Maxim’s opened its 2,000th store in Hong Kong – simplylife in the apm mall
27
Business Review
OTHER ASSOCIATES
The Group’s share of Yonghui’s underlying losses was
US$36 million for the year, compared to a US$80 million
share of underlying losses in the prior year. Robinsons Retail’s
underlying profit contribution reduced from US$24 million
to US$15 million.
Chinese Mainland
The Philippines
Yonghui supermarket in Taihe Plaza, Fuzhou City, China
DFI Retail Group Holdings Limited Annual Report 2023
28
The Group’s share of Yonghui’s underlying losses
was US$36 million for the year, compared to a
US$80 million share of underlying losses in the
prior year. The reduction in losses was underpinned
by an improvement in gross margin as well as
cost optimisation. Nevertheless, Yonghui’s sales
performance in the year has been impacted by
a combination of challenging macroeconomic
conditions and intense competition.
Robinsons Retail’s underlying profit contribution
reduced from US$24 million to US$15 million.
Robinsons Retail continued to report strong sales
and core net earnings growth. For reporting
purposes, however, DFI’s share of underlying profits
was adversely impacted by foreign exchange losses
and higher net financing charges reported by
Robinsons Retail.
Robinsons Department Store at Robinsons Magnolia in Quezon City, Metro Manila
GoCart – Robinsons Retail’s online retail platform
29
Financial Review
Accounting policies
The accounting policies are consistent with those of
the previous year. The Directors continue to review
the appropriateness of the accounting policies
adopted by the Group, regarding developments
in International Financial Reporting Standards
(‘IFRS Accounting Standards’). In 2023, a number
of amendments to the IFRS Accounting Standards
become effective and the Group has applied these
amendments with no material impacts to the
financial statements.
Results
2023 was an encouraging year for DFI Retail Group,
with the Group’s reported underlying profit
attributable to shareholders substantially
increased by US$126 million from US$29 million
to US$155 million. The increase was supported by
strong growth in profitability across subsidiaries
and improved performance of associates.
Revenue, excluding those of associates and joint
ventures, totalled US$9.2 billion, broadly in line
with last year. Total revenue including 100% of
associates and joint ventures, was 4% down at
US$26.5 billion.
27%
73%
3%
2023
Sales Mix*
2023
Operating
Profit Mix
North Asia
South East Asia
* Sales of goods.
2023 was an encouraging year
for DFI Retail Group, with the
Group’s reported underlying
profit attributable to
shareholders substantially
increased by US$126 million
from US$29 million to
US$155 million. The increase
was supported by strong
growth in profitability across
subsidiaries and improved
performance of associates.
97%
DFI Retail Group Holdings Limited Annual Report 2023
30
Health and Beauty reported a strong sales and
profit growth for the full year. The growth was
driven by traffic recovery from markets reopening,
gross margin improvement and good cost control.
Sales growth in Convenience was driven by the LFL
sales growth as a result of border reopening and
post lifting of COVID-related restrictions. Recovery
of foot traffic and favourable margin mix shift
supported the significant profit growth.
Food reported a reduction in operating profit.
In North Asia, profitability was adversely impacted
by the annualisation of pantry stocking behaviour
during the fifth COVID wave in Hong Kong which
occurred in the first half of 2022. In South East
Asia, lower profitability was resulted from intensive
competition and weakening consumer sentiment.
Home Furnishings reported a reduction in sales as
a result from softening property market sentiment
due to higher interest rates and slow recovery in home
furnishings sector after the COVID-related restrictions.
The shortfall in revenue resulted in lower profitability.
Net financing charges increased by US$22 million
compared to 2022, reflecting the higher interest
rates on external borrowings and higher interest
expenses charged on leases.
The Group’s share of underlying results of associates
and joint ventures was US$43 million, comparing to
a loss of US$35 million last year.
Contribution from Maxim’s underlying results was
US$79 million, more than doubled comparing to
US$38 million in 2022. Strong improvement in
profitability was benefitted from good recovery
across all markets post lifting of COVID-related
restrictions and resumption of economic activity.
The Group’s share of Yonghui’s underlying loss was
US$36 million, compared to US$80 million in the
prior year. The Group’s interest in Yonghui, increased
from 21.13% to 21.44%, following the share
buyback by Yonghui during the year.
The Group’s share of underlying results in Robinsons
Retail decreased by 36% to US$15 million. During
the year, the Group’s interest in Robinsons Retail
also increased from 21.30% to 21.47% following
the share buyback by Robinsons Retail.
The tax charge for 2023 was US$41 million, 31%
higher than 2022, mainly due to the increase in
underlying operating profit during the year.
Net non-trading expenses attributable to
shareholders of US$123 million were reported in
2023, principally from the impairment charge on
goodwill, loss from the divestment of the Malaysia
Grocery Retail business and the fair value loss on
other investments, partly offset by the profit on
sale of certain properties in Singapore and Indonesia,
together with net gains on the share of non-trading
items of associates and joint ventures.
Underlying EBITDA (US$m)
Net Asset Value per Share (US¢)
0
400
800
1,200
1,600
2019
2020
2021
2022
2023
0
30
60
90
120
2019
2020
2021
2022
2023
31
Underlying profit attributable to shareholders
was US$155 million, significantly increased from
US$29 million in 2022. Underlying earnings per
share of US¢11.49 were also improved substantially.
Cash flow
2023
2022
Summarised Cash Flow
US$m
US$m
Underlying operating
profit
294
209
Depreciation and
amortisation
827
861
Decrease/(increase) in
working capital
45
(7)
Net interest and
other financing
charges paid
(145)
(121)
Tax paid
(41)
(43)
Dividends received
from associates
46
45
Other
18
(4)
Cash flows from
operating activities
1,044
940
Principal elements of
lease payments
(625)
(661)
Cash flows from
operating activities
after lease payments
419
279
Normal capital
expenditure
(197)
(244)
Investments
(17)
(28)
Disposals
119
71
Cash flows from
investing activities
(95)
(201)
Cash flows before
financing but after
lease payments
324
78
The Group maintained solid cash flows from
operating activities after lease payments of
US$419 million, compared with US$279 million in
2022. The increase was mainly due to increased
underlying operating profit and the favourable
movement in working capital results from better
working capital management.
Normal capital expenditure for the store network
operation and existing estates, was lower at
US$197 million versus US$244 million in 2022
principally due to tighter control on refurbishment
of the existing store estate, and there was substantial
investment for new IKEA stores in Indonesia and
Taiwan in 2022.
During the year, the Group realised proceeds on
the disposal of a number of properties in Singapore
and Indonesia, together with the proceeds from
the disposal of associated properties relating
to the divestment of Malaysia Grocery Retail
business, a total cash amounting to US$142 million
was received.
44%
4%
17%
16%
19%
US$197 m
2023 Normal Capital
Expenditure
Food
Convenience
Health and Beauty
Home Furnishings
IT / Distribution
Centres
DFI Retail Group Holdings Limited Annual Report 2023
32
At 31st December 2023, the Group’s businesses,
including associates and joint ventures, operated
a total of 10,994 stores across all formats in 13
markets, compared with 10,572 stores at the end
of 2022. Within which, there were 1,012 Yonghui
stores, 1,998 Maxim’s stores and 2,368 Robinsons
Retail stores.
Balance sheet
Total assets, excluding cash and bank balances,
were US$6.8 billion, down US$291 million compared
to 2022. The decrease was mainly due to the
impairment charge on goodwill, the divestment of
the Malaysia Grocery Retail business, and the fair
value loss on other investments, partly offset by
the revaluation surplus for properties reclassified to
investment properties. Net operating assets were
US$988 million at the end of 2023, a 5% increase
from previous year.
The Group ended the year with reduced net debt
level at US$618 million, US$248 million lower as
compared to US$866 million at 31st December
2022. The improvement reflects the efforts
resulting from the ongoing optimisation of
capital structure through disciplined capital
and resource allocation to drive the improved
shareholder returns.
Dividend
The Board is recommending a final dividend of
US¢5.00 per share, giving a total dividend of
US¢8.00 per share for the year.
Financing
As of 31st December 2023, the Group had a
gross debt of US$924 million, a decrease of
US$172 million from 2022. The gross debt is
funded by total committed and uncommitted
lines of US$2,483 million, with US$1,066 million
committed and US$493 million uncommitted
facilities being unused and available. The Group
had cash balances of US$306 million. The available
undrawn committed facilities and the cash pooling
Financial Review
scheme continued to provide good support and
flexibility to the Group for cash and liquidity needed
for the operation.
Where required, and typically for working capital
purposes, borrowings are normally taken out in
local currencies by the Group’s operating subsidiaries
to fund daily operations. Borrowings to fund any
strategic expansion of the Group are managed
centrally and typically funded in United States
dollars and Hong Kong dollars, with hedging of
foreign exchange and interest rate risk as may be
appropriate depending on the investment.
Despite the ongoing market challenges, with
the strong foundation, the Group remains
confident in the short-, medium- and long-term
growth perspective.
Financial risk management
A comprehensive discussion of the Group’s financial
risk management policies is included in note 39
to the financial statements. The Group manages
its exposure to financial risk using a variety of
techniques and instruments. The main objectives
are to limit exchange and interest rate risks and
to provide a degree of certainty about costs. It is
our policy not to engage in speculative derivative
transactions. The investment of the Group’s cash
resources is managed to minimise risk while seeking
to enhance yield. Overall, the Group’s funding
arrangements are designed to keep an appropriate
balance between equity and debt (short- and
long-term), to maximise flexibility for the future
development of the business.
Principal risks and uncertainties
A review of the principal risks and uncertainties
facing the Group is set out on pages 203 to 210
of the Annual Report.
Clem Constantine
Group Chief Financial Officer
7th March 2024
33
34
DFI Retail Group Holdings Limited Annual Report 2023
Sustainability Overview
DFI’s mission includes serving communities
by reducing hunger, lowering the cost of
living, and promoting self-esteem through
various initiatives. To sustain the planet,
we focus on reducing plastic usage,
minimising food waste, conserving energy,
and eliminating harmful refrigerants.
We also prioritise responsible sourcing
by focussing on fair labour, and promoting
sustainable supply chain practices.
Through these efforts, we aim to foster
thriving communities and contribute to
a sustainable future.
SBTi Validated Targets
DFI became one of the first Asian retailers to receive
validation from the Science Based Targets initiative
for our near-term greenhouse gas emissions reduction
targets.
Strong ESG Management
Improved Morningstar Sustainalytics ESG Risk Rating
from 25.3 (2022) to 22.9 (2023), a rank upswing
in the global food retail sub-industry to rank 35th out
of 120 (Top 29%).
ESG Awards
DFI received ESG awards that recognised our
outstanding efforts in making positive impacts,
including:
• Hong Kong Awards for Environmental Excellence –
Super Gold Award (DFI is the sole recipient)
• CLP Smart Energy Award 2023
• TVB ESG Award
Sustainability Membership
and Associations
• Consumer Goods Forum
• Amfori BSCI
• Foodlink Foundation
• Hong Kong General Chamber of Commerce –
Environment & Sustainability Committee
• Hong Kong Retail Management Association –
Sustainability Task Force
• World Business Council for Sustainable Development
• Drink-without-waste
Solar panel installation at Wellcome Fresh Food Centre, Hong Kong
35
-19% Carbon
19% reduction in Scope 1 and 2 GHG
emissions vs 2021 baseline.
54% Diversion
54% waste diversion rate in 2023,
up from 51% in 2022.
-38% Plastic
Plastic bags and plastic wrap usage
down 38% (compared with 2022).
57% Recyclability
57% of own brand products with
plastic packaging are recyclable.
Environmental
>1,129 Hours
More than 1,129 volunteering hours
were contributed in Hong Kong.
Social
0.95 Gender
Median gender pay equity in Hong
Kong, representing a 5% gap (<0.5%
median gender pay gap in Singapore).
3.7 m (US$)
Donated US$3.7m to communities
across the markets in which
we operate.
Good
Moody’s assessed our sustainability
quality score as ‘Good’ in relation to
the Sustainability Linked Financing
that we secured in 2023.
94% Ethics
94% of factories in high-risk countries
supplying own brand products have been
audited against Amfori or equivalent
standards.
Governance
24% Products
24% of Own Brand products in
selected categories now have
sustainability certifications, more
than doubling the number from 2022.
36
DFI Retail Group Holdings Limited Annual Report 2023
This report sets out our climate related financial disclosures which are consistent with the Task Force on Climate-Related
Financial Disclosures (‘TCFD’) recommendations and the 2021 TCFD annex guidance for all sectors.
Governance
Board oversight of climate-related risks and opportunities
The DFI Board is ultimately responsible for ensuring DFI is managing its climate risks, Greenhouse Gas (‘GHG’) emissions,
and sustainability objectives. DFI’s Board oversees this through receiving updates on climate and sustainability risks and
mitigation measures. Furthermore, DFI’s Board considers and approves key initiatives, for example they have endorsed the
Scope 1 and 2 GHG emissions net zero plan, and they have been updated on progress against this plan.
The Jardine Matheson (‘JM’) Sustainability Leadership Council (‘SLC’) comprises the Chief Executives of all JM Business
Units (‘BU’) which includes DFI. Meeting twice a year, the JM SLC serves as a collaboration platform for the senior
management from across the JM group to exchange insights and perspectives on sustainability strategy, planning and
direction for the JM group, including DFI.
The JM SLC receives updates on global and regional climate and sustainability trends, policies, initiatives, and activities
undertaken by JM group businesses including DFI. Progress on climate risk assessments and identified climate risks
and opportunities are also provided to the JM SLC to inform their discussion of sustainability strategy and priorities.
All sustainability-related policies are periodically reviewed by executive management and updated as required.
Sustainability
Working Group 1
Climate
Sustainability
Working Group 2
Waste
Sustainability
Working Group 3
Social & Ethical
Sustainability
Working Group 4
Tracking and
Reporting
DFI Board
DFI Leadership Team
DFI Sustainability Management Committee
JM Sustainability Leadership Council
JM Climate Action Working Group
Oversight, Advice
Implementation
Task Force on Climate-Related
Financial Disclosures
37
Management’s role in assessing and managing climate-related risks and opportunities
DFI’s Sustainability Management Committee reviews progress against DFI’s net zero targets twice a year. Actual results
were reviewed and plans to deliver the short-, medium-, and long-term targets were discussed. The time horizons
to analyse climate-related risks and opportunities are defined as short-term (between now and 2025), medium-term
(2025-2030), and long-term (2030-2050, and onwards).
The JM Climate Action Working Group (‘CAWG’) fosters collaboration between the various BUs of JM and creates a
community of expertise. Comprising representatives from each JM BU, the CAWG meets on a quarterly basis to collaborate
on the Climate strategy and to drive a shared agenda forward. DFI’s Sustainability Working Group (‘SWG’) for Climate
regularly contributes to the CAWG, including sharing initiatives to reduce Scope 1 and 2 emissions, and learning from
other BUs that have already taken action.
The SWG for Climate is responsible for the implementation of the plans needed to deliver DFI’s climate targets. It is
sponsored by the DFI CFO and chaired by senior leaders: the procurement director leads the Eliminating Harmful
Refrigerants initiative within the SWG for Climate, the supply chain director leads the Reducing Fuel Usage initiative,
the facilities management director leads the Reducing Energy Usage initiative, and the head of ESG Reporting leads the
Tracking and Reporting SWG. The SWGs meet bi-weekly and are supported by our Head of Sustainability, Head of ESG
Reporting, and Senior Finance Director.
Strategy
Scenario selection
Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario
DFI has chosen two of the Representative Concentration Pathways (’RCPs’) adopted by the Intergovernmental Panel on
Climate Change (’IPCC’) – RCP 2.6 and RCP 8.5 – for scenario analysis. Whilst in 2022 we conducted scenario analysis
across three RCPs, we have targeted two RCPs in 2023 to help simplify communications. The IPCC RCPs provide a widely
accepted and standardised framework for assessing and analysing future climate scenarios. Each RCP represents a
different GHG concentration trajectory and provides a range of potential future climate scenarios. The objective is for
DFI to assess our strategies and operations against a range of possible climate futures, seeking to ensure preparedness
and resilience in the face of climate change.
Scenario
Commentary and assumptions
Changes in temperature by
2100 (degree Celsius)*
Risks
RCP 2.6
A pathway with lower GHG emissions,
indicating a future where stringent mitigation
measures are implemented, and global
warming is limited to below 2 degrees Celsius.
1.6 °C
High Transition Risk
Low Physical Risk
RCP 8.5
A higher GHG emissions pathway, indicating a
future where no substantial mitigation actions
are taken, resulting in significant global
warming and climate impacts.
4.3 °C
Low Transition Risk
High Physical Risk
* Source: The Meteorological Office UK
38
DFI Retail Group Holdings Limited Annual Report 2023
Qualitative analysis
Conducting qualitative climate scenario analysis based on two different RCPs supports DFI to gain a comprehensive
understanding of the potential impacts of physical and transition risks under various climate futures on the business.
This analysis helps DFI to prioritise mitigation and adaptation strategies, allocate resources effectively, and make informed
decisions that align with our long-term sustainability goals. It helps DFI to proactively manage climate-related risks and
capitalise on emerging opportunities, seeking to ensure resilience and competitiveness in an evolving business landscape.
For physical risks, the analysis assesses the potential impacts of each RCP on DFI’s operations. RCP 2.6, representing a
low-emission scenario, may indicate a lower likelihood of extreme weather events and sea-level rise, resulting in a relatively
lower impact on store locations and supply chains. Conversely, RCP 8.5, representing a high-emission scenario, may
indicate a higher likelihood of severe weather events and increased flood risks, requiring DFI to prioritise adaptation
measures in vulnerable areas.
Transition risks are also evaluated across the different RCPs. Under RCP 2.6, which reflects a more sustainable trajectory,
DFI may anticipate regulatory frameworks, including carbon taxes, and market incentives for low-carbon technologies
and sustainable products. This may present opportunities for DFI to proactively invest in decarbonising supply chain and
operations, adopt environmentally friendly practices, and meet evolving consumer demands.
Throughout the scenario analysis, DFI considers its level of preparedness across the different RCPs. For example, since DFI
has already embarked on the journey of phasing out high carbon equipment and transitioning to a low carbon economy,
DFI believes it is aligned and furthermore working on managing the transition risks under RCP 2.6.
Quantitative analysis
To better support a representative quantitative analysis, DFI selects a sample of the most relevant operating locations,
considering factors such as property type (store or distribution centre), ownership (owned or leased), area, floor number,
asset value, construction cost, and operational revenue. DFI then calculates the exposure of each location to extreme
weather events by considering the likelihood of relevant extreme weather events (e.g. drought, sea level rise) in the two
climate scenarios considered (RCP 2.6 and RCP 8.5) over the short-, medium-, and long-term. This likelihood is then
multiplied by the potential financial impact of each event, including damage to owned assets and disruptions to the
business and the supply chain.
Based on the outcomes of this quantitative analysis, DFI has concluded that the residual financial impact of climate risk
in each of the scenarios considered is not expected to be significant, with an assessed impact of less than US$250,000 of
profitability per year. As a result, these impacts are not separately disclosed. However, the assessment will be updated
annually, and if future impacts are re-evaluated to be significant, they will be included in the annual TCFD report, seeking
to ensure transparency and accountability in disclosing climate-related risks.
This quantitative analysis helps DFI to prioritise our risk management efforts, allocate resources effectively, and make
informed decisions to protect our assets and ensure business continuity. DFI’s commitment to regularly updating the
assessment and disclosing significant impacts underscores our dedication to transparent reporting and our proactive
stance in managing climate-related risks.
This forward looking scenario analysis made by DFI is founded on our current knowledge and assumptions. DFI does not
provide any assurance regarding the accuracy of these assumptions. These forward-looking statements involve inherent
risks, uncertainties, and assumptions that could lead to material differences between the actual results, performance,
or achievements of DFI. Additionally, scenario analysis has limitations, and it is challenging to predict which scenarios,
if any, will occur.
39
TCFD
Climate-related risks and opportunities the organisation has identified over the short-, medium-,
and long-term
Considering the scenario analysis performed, DFI has undertaken the task of identifying climate risks and opportunities,
and their potential to significantly affect the organisation. This approach takes into account various factors, including
the geographical impact of climate events, evolving regulatory frameworks, and emerging social trends. By focussing
on areas that have the highest impact on our core business activities, DFI seeks to effectively assess and address the
associated risks while leveraging opportunities that align with our operational and supply chain objectives. For instance,
the occurrence of rainfall flooding twice in Hong Kong in 2023 demonstrated the vulnerability of the region to extreme
weather events. While DFI did not experience any uninsured losses as a result, we recognise the increasing frequency and
severity of such events.
By acknowledging these risks, DFI seeks to be prepared to manage and mitigate potential consequences, to ensure the
resilience of our operations and the protection of our stakeholders. This proactive stance helps DFI to adapt and respond
effectively, not only to climate-related challenges but also to capitalise on potential opportunities that arise from
sustainable and climate-resilient practices.
Risks type
Risks description
Risk mitigation and
opportunities
Time horizon
Physical risk – acute
Typhoon
Severity (measured by
wind speed) is increasing,
with more frequent and
destructive typhoons in
expected in North Asia.
• Disruption of services and
business operations caused by
the severe weather conditions.
• Store closures, power outages,
and transportation disruptions.
• Damage to equipment,
facilities, and properties
due to floodwaters.
• Decrease in business demand
as customers in flood-affected
areas are affected.
• Supply chain disruptions due
to damage to transportation
networks, delayed deliveries,
and disrupted production.
• Developing business continuity
plans for all locations to ensure
operational resilience.
• Review of overflow and
draining systems in areas
prone to flooding.
• Careful assessments of
geographical flood plains to
avoid vulnerable areas when
establishing new locations.
• Standard operating procedures
and evacuation plans to
prioritise the safety of team
members and protect assets
during flood events.
• Implementing security of supply
initiatives and resilient sourcing
practices to minimise disruptions
to the availability of products
and raw materials.
Short-,
medium-,
and long-term.
Rainfall flooding
Severity (measured by
flood depth) is expected
to increase across Asia,
with implications for
low-lying and flood
vulnerable locations.
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DFI Retail Group Holdings Limited Annual Report 2023
Risks type
Risks description
Risk mitigation and
opportunities
Time horizon
Physical risk – chronic
Extreme heat
Measured by the
combined impact
of temperature and
humidity on the human
body, and is forecasted
to increase across Asia.
• Higher energy costs and
consumption for cooling to
maintain comfortable
temperatures for customers
and team members.
• Faster spoilage of perishable
items such as food and
pharmaceuticals due to
hotter climate.
• Adverse effects on team
members’ health and safety
because of heat-related illnesses.
• Supply chain disruptions impeding
the availability of goods.
• Energy and refrigeration
efficiency initiatives to reduce
energy consumption and
optimise cooling systems.
• Maintaining and enforcing
safety-at-work procedures
for heat related illness.
• Supply security and resilient
initiatives through
diversification.
Short-,
medium-,
and long-term.
Transition risk – policy and legal
Regulatory compliance
DFI Retail Group may
encounter several
policies and legal risks
due to the nature of
our operations.
• Non-compliance with evolving
regulations related to climate
change and sustainability.
• Failure to Accurately disclose
climate-related information.
• Failure to adhere to consumer
protection laws regarding
environmental impact disclosures.
• Compliance programme to
ensure adherence to evolving
regulations, including regular
monitoring, and updating
of policies and procedures.
Short- and
medium-term.
Transition risk – technology
Low carbon
technologies
Delaying the adoption of
low-carbon technology
in the retail industry
includes missed
opportunities for
cost savings, reduced
competitiveness.
• Failure to adopt and integrate
sustainable practices and
technologies within operations.
• Increased operational costs and
inefficiencies associated with
outdated and carbon-intensive
technologies.
• Use of low global warming
potential (‘GWP‘) refrigerants
in our cooling systems.
• Adopting the water loop
refrigeration systems that
significantly reduce the amount
of refrigerant gas needed
and minimises associated
GHG emissions.
• Investment in energy efficiency
equipment across relevant
locations.
Short- and
medium-term.
41
TCFD
Risks type
Risks description
Risk mitigation and
opportunities
Time horizon
Transition risk – market
Carbon price
Direct (e.g. Carbon tax) or
indirect costs associated
with emissions reduction
regulatory or fiscal policies.
• Higher operational expenses
due to carbon pricing and rising
energy price.
• Challenges in managing energy
consumption and efficiency.
• Implement measures to reduce
Scope 1 and 2 GHG emissions
through energy efficiency
improvements and sustainable
commodities initiatives to lower
carbon sources.
• Planning of Scope 3 GHG
emission plan to address high
carbon emitting commodities.
Medium- and
long-term.
Energy price
The rising prices of
primary and secondary
energy (fossil fuels
and electricity).
Consumer preference
change
As awareness of climate
change increases,
individuals seek to make
more environmentally
conscious choices.
• Failure to adapt our
product offerings to
meet climate-conscious
customers’ demands.
• Adjust our product offerings to
align with sustainability and
climate-friendly demands.
Long-term.
Transition risk – reputation
Investor and consumer
expectation
Investors and consumers
increasingly expect
businesses to address
and mitigate climate
risks, incorporating
sustainable practices
and demonstrating
a commitment to
environmental
stewardship.
• Being perceived as a laggard
in climate change efforts
could affect both sales and
investment prospects.
• Engaging in open and
transparent dialogue, and
seeking feedback and input
from stakeholders to shape
our sustainability strategies
and initiatives.
• Actively involving customers in
product development through
market research.
• Stakeholder engagement
such as responding to investor
ESG surveys.
Short-,
medium-,
and long-term.
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DFI Retail Group Holdings Limited Annual Report 2023
Transition plan
With a long-term target of achieving net zero GHG emissions by 2050 compared with 2021 levels, DFI is taking proactive
steps to address climate-related risks and seize opportunities by allocating investment towards climate initiatives. With
an annual investment allocation ranging from US$10-20 million, equivalent to approximately 5-10% of our total capital
commitments each year, DFI is actively engaged in initiatives that promote energy efficiency, refrigerant gas management,
and the electrification of our fleet.
SHORT-TERM
Accelerate
decarbonisation
across operations
• Retrofit stores with Water Loop technology fridges,
that reduce the requirement for base gas charge
• Behavioural change education to store team members
• Install leak detectors and monitor their output to address
refrigerant leakage
• Transition from high to low GWP refrigerant gas
• With the aim of electrifying our fleet of delivery vehicles
in the medium-term where commercially viable, we have
purchased an electric truck in 2023 as part of a pilot scheme
• Increase waste diversion rate
2025
43
TCFD
LONG-TERM
Extend
decarbonisation
across value chain
Address
decarbonisation
in remaining gaps
MEDIUM-TERM
• Purchase REC or carbon offset as a last resort
to meet net zero target
• Anticipate technological advancement for net
zero solutions
• Fully electrify fleet in own operation
• Source low carbon OB products from suppliers,
ideally with sustainable certifications
• Increase OB plastic packaging that is recyclable
25%
Scope 3 emission reduction
across targeted categories
50%
absolute Scope 1 and 2
emission reduction
2030
Net zero
emissions
by 2050
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DFI Retail Group Holdings Limited Annual Report 2023
Impact of climate-related risks and opportunities on the organisation’s businesses, strategy,
and financial planning
Area
Impacts
Strategy
GHG emissions
By setting a Science-Based Target (‘SBT’) for GHG emissions reduction, DFI aims to mitigate
climate risks by aligning our emissions reduction efforts with the goals of the Paris Agreement
and the latest climate science. By establishing a clear and measurable pathway for GHG
emissions reduction, DFI seeks to proactively manage our carbon footprint, minimise
emissions-related risks, and contribute to a more sustainable future.
Business
Products
Climate change has led to a growing demand for products made from sustainable materials.
Consumers are actively seeking alternatives to products that contribute to deforestation,
habitat destruction, or excessive resource consumption. They may prefer products made
from renewable resources, recycled materials, or those that incorporate sustainable
production practices. Expanding the range of sustainable products involves various initiatives
within DFI, including seeking out suppliers and manufacturers that prioritise sustainable
sourcing, production processes, and packaging.
Operations
Energy efficiency in retail stores plays an important role in mitigating climate risks by
reducing GHG emissions and minimising energy consumption. Energy efficiency measures,
such as installing energy-efficient lighting, and fridges with a reduced base charge of
refrigerant gas (e.g. water-loop fridges), help our retail stores to reduce their carbon footprint.
Supply Chain
EV trucks produce zero tailpipe emissions, as they run on electricity rather than fossil fuels like
diesel or gasoline. By transitioning to EV trucks for transportation and delivery operations,
DFI can reduce our GHG emissions. This reduction in emissions helps mitigate climate risks
by reducing the industry’s carbon footprint and contributing to the overall decarbonisation
of the transportation sector. DFI has begun the trial of adopting EV trucks in our fleets.
Financial planning
Capital expenditure
Allocating CAPEX towards energy-efficient technologies and equipment upgrades can
optimise resource consumption and reduce operational carbon footprint. Investing in
sustainable supply chain initiatives, such as responsible sourcing and supplier engagement
programmes, helps mitigate risks associated with resource scarcity and disruptions.
Furthermore, CAPEX directed towards infrastructure resilience, such as implementing
climate-adaptive measures, seeks to ensure business continuity in the face of extreme
weather events. DFI is investing US$10 to US$20 million annually into climate-related initiatives.
Financing
In 2023, DFI successfully closed a $2 million Sustainability-linked Loan conversion link to
performance in 3 key sustainability areas: emissions reductions, waste diversion, and plastic
packaging. DFI believes that Sustainable Finance opportunities will become more prominent
in the future. Consequently, the company is actively exploring additional avenues to build
upon this achievement and further strengthen our commitment to sustainability.
45
TCFD
Risk Management
Processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s
overall risk management
DFI’s existing risk management approach adopts the ISO 31000 and COSO principles. The DFI Risk Management team
manage this approach, which consists of a bi-annual exercise, where DFI BUs are required to revisit their respective risk
registers. This process entails the identification of new risks, the review of existing risks, and risk mitigation strategies.
These risk registers then form the basis of our consolidated view of DFI Group’s risk profile and are reported for consolidation
at JM group. Both physical and transition risk will be integrated into this existing DFI risk management approach.
Organisation’s processes for identifying and assessing climate-related risks
In 2023 both transition and physical risk workshops were held with senior business leaders, with the objective of identifying
risks, and then also aligning on both DFI’s climate strategy and the planned mitigations to each risk. The results of these
workshops have been incorporated into the risk management approach. Further work is underway to enhance the
assessment and the mapping of climate risks over the short-, medium-, and long-term.
Organisation’s processes for managing climate-related risks
After identifying and assessing climate-related risks, DFI has implemented a transition plan to manage these risks.
For example carbon pricing, reducing carbon emissions can mitigate potential carbon pricing costs associated with
transition risk. Through energy-efficient technologies and operational optimisation, DFI is working towards a lower-carbon
business model.
Metrics used by the organisation to assess climate-related risks and opportunities aligning with
our strategy and risk management process
In order to help quantify and prioritise climate risks, a risk assessment model has been established across 2 different
climate scenarios by 2100 (RCP 2.6 and RCP 8.5), with financial impact of each of these scenarios over the short-,
medium-, and long-term calculated and assessed. Each of these scenarios is considered possible depending on the
volume of GHG emitted in the years to come.
Transitioning to a net-zero economy will bring about regulatory, technological, legal, market, and reputational changes
that we believe will likely impact DFI in the medium- to long-term. These risks are higher in the RCP 2.6 scenario.
However, physical risks will likely be greater in the RCP 8.5 scenario due to the increased likelihood of extreme weather
events. Refer to previous sections of this TCFD report for further details of the analysis performed.
46
DFI Retail Group Holdings Limited Annual Report 2023
Metrics and Targets
For DFI’s TCFD disclosure on metrics and targets, please refer to the ‘Climate Change’ section in the ESG Report on page
49 of this Annual Report.
TCFD recommendation
Recommended disclosures
Location
Governance
Disclose the organisation’s
governance around climate-related
risks and opportunities.
a. Describe the board’s oversight of climate-related risks
and opportunities.
TCFD Report,
Page 36
b. Describe management’s role in assessing and managing
climate-related risks and opportunities.
TCFD Report,
Page 37
Strategy
Disclose the actual and potential
impacts of climate-related risks and
opportunities on the organisation’s
businesses, strategy, and financial
planning where such information
is material.
a. Describe the climate-related risks and opportunities
the organisation has identified over the short-, medium-,
and long-term.
TCFD Report,
Page 39
b. Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy,
and financial planning.
TCFD Report,
Page 44
c. Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
TCFD Report,
Page 37
Risk Management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.
a. Describe the organisation’s processes for identifying
and assessing climate-related risks.
TCFD Report,
Page 45
b. Describe the organisation’s processes for managing
climate-related risks.
TCFD Report,
Page 45
c. Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management.
TCFD Report,
Page 45
Metrics and Targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where such
information is material.
a. Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with our
strategy and risk management process.
ESG Report,
Page 53-57
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
GHG emissions and the related risks.
ESG Report,
Page 53-57
c. Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
ESG Report,
Page 53-57
47
Environmental, Social, and
Governance(‘ESG’) Report 2023
Introduction
The purpose of this ESG report is to highlight DFI’s efforts in quantifying our impact on the economy, environment, and
society, along with our targets and progress made to date. We disclose all relevant performance indicators for material
ESG issues (refer page 50 for ESG materiality assessment) with the aim of improving the transparency of our activities.
This report has been prepared in accordance with the Global Reporting Initiative (‘GRI’), with references to the index also
published online on our website www.DFIretailgroup.com. This report has also considered information from sustainability
reporting standards (including, but not limited to, SASB, TCFD, CDP), sustainable development principles (including, but
not limited to, UNSDGs, UNGC), ESG rating agencies (such as Morningstar Sustainalytics), and industry initiatives.
Reporting scope
This ESG Report covers ESG data for the year ending 31st December 2023. Unless stated otherwise, the year ending
31st December 2022 is used for comparison (and the year ending 31st December 2021 if available). Operations divested
in 2023 have been excluded from metrics, with prior year comparisons restated. To the extent possible, the prior year
comparative figures have been restated to align with any updated ESG reporting perspectives. This is stated in this ESG
report where relevant, and in addition the metrics impacted by any restatement are disclosed in the GRI Index available
online at www.DFIretailgroup.com.
For the scope of coverage, we included all subsidiaries of DFI. Associates and Franchisees of DFI are out of scope unless
stated otherwise.
Reporting limitation and assumption
In preparing the ESG-related information contained in this document, DFI has made a number of key judgements,
estimations, and assumptions, and the processes and issues involved are complex. The ESG data, models, and
methodologies used are often relatively new, are rapidly evolving, and are not of the same standard as those available in
the context of other financial information, nor are they subject to the same or equivalent disclosure standards, historical
reference points, benchmarks, or globally accepted accounting principles. In particular, it is not possible to rely on
historical data as a strong indicator of future trajectories, in the case of climate change and its evolution. Outputs of
models, processed data, and methodologies are also likely to be affected by underlying data quality, which can be hard
to assess and we expect industry guidance, market practice, and regulations in this field to continue to change. There are
also challenges faced in relation to the ability to access data on a timely basis and the lack of consistency and comparability
between data that is available. This means the ESG metrics discussed in this document carry an additional degree of
inherent risk and uncertainty.
In light of uncertainty as to the nature of future policy, market response to climate change, and the effectiveness of any
such response, DFI may have to re-evaluate its progress towards its ESG ambitions, commitments and targets in the
future, update the methodologies it uses, or alter its approach to ESG analysis, and may be required to amend, update,
and recalculate its ESG disclosures and assessments in the future, as market practice and data quality, accuracy, and
availability develops rapidly.
ESG data limited assurance
Selected ESG data have been subject to limited assurance by PricewaterhouseCoopers. Their limited assurance report
outlines the specific scope of the assurance provided and the conclusion. The appointment of PricewaterhouseCoopers
was made by the Audit Committee. For further details, please refer to the Limited Assurance Report on page 79.
48
DFI Retail Group Holdings Limited Annual Report 2023
47
Cover Page
49
Managing our ESG Performance
49
ESG Governance
49
ESG Policies
50
ESG Materiality Assessment
53
Environmental
53
Climate Change
53 Scope 1 and 2 Greenhouse Gas Emissions
56 Scope 3 Greenhouse Gas Emissions
59
Waste
61
Water
62
Plastic
64
Sustainable Products
64
Social
64
Community Engagement and Support
64 Community Investment
65 Team Member Volunteering
65
Human Capital
65 Talent Development and Training
66 Team Member Benefits and Retention
67 Diversity
69 Gender Pay Equity
70
Health, Safety, and Well-being
70 Health and Safety
71 Mental Health
72
Social Compliance
73
Governance
73
Product Safety and Quality
73 Product Safety and Quality Management
74 Responsible Marketing Communication
74
Ethics and Anti-corruption
74 Anti-corruption and Anti-bribery
75 Speak Up Programme (Whistleblower Programme)
76
Data Privacy and Cybersecurity
76 Data Privacy
77 Cybersecurity
77
Tax Governance
78
Appendices
78 GRI Index
78 Feedback
79
Limited Assurance Report
ESG Report Contents
49
ESG Report
Managing our ESG performance
ESG governance
In line with our commitment to ESG practices, we have established working groups for various ESG topics to drive our
organisation’s ESG agenda and strategy.
Each working group focusses on a specific ESG aspect, such as governance, social impact, or environmental stewardship.
These working groups comprise cross-functional teams consisting of experts from relevant departments across our
organisation, and report progress directly to the Sustainability Management Committee on a monthly basis during
dedicated working group meetings.
By adopting working groups for different ESG topics, we demonstrate our holistic approach to ESG management.
These working groups enable us to focus on each aspect of ESG governance, social impact, and environmental stewardship
specifically, while supporting alignment with our overarching ESG agenda. Through their collaborative efforts, we believe
these working groups play an important role in embedding ESG principles into our business strategy, driving positive
change, and creating long-term value for our stakeholders. Please refer to the TCFD report (page 36 of this annual
report) for the graphical illustration of DFI ESG governance structure.
ESG policies
DFI business ethics policies
DFI places a strong emphasis on business ethics and integrity, recognising our role in building trust, maintaining credibility,
and fostering sustainable relationships. To ensure ethical conduct, DFI has established the following policies and guidelines
that govern the actions and behaviours of all team members:
•
Code of Conduct
•
Data Privacy Policy
•
Speak Up Policy
•
Supplier Code of Conduct
•
Information Security Policy
•
No Gift Policy
•
Personal Data Protection Policy
These policies encompass areas such as anti-corruption, conflicts of interest, fair competition, data protection, and
confidentiality. By upholding these policies, DFI aims to conduct business with integrity, transparency, and accountability,
thereby aiming to safeguard the interests of our stakeholders and upholding our reputation as a responsible corporate
entity.
Jardine Matheson sustainability policies
As the parent company of DFI, Jardines has also established a comprehensive range of sustainability policies that outlines
their commitment to responsible and sustainable business practices (www.jardines.com/en/sustainability/our-
commitment):
•
Climate Change
•
Resources and Circularity
•
Sustainability
•
Diversity and Inclusion
•
Human Rights
•
Health and Safety
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DFI Retail Group Holdings Limited Annual Report 2023
ESG materiality assessment
Stakeholder engagement
Stakeholders are defined as individuals, groups, or organisations that can influence or be influenced by DFI. By engaging
with these stakeholders, DFI aims to mitigate any negative impact on society and the environment where possible.
Among the many stakeholders, DFI identifies the following groups as the most impactful:
Stakeholder
Engagement method
Material ESG issues
DFI team members
Team member surveys, town hall
meetings, focus groups, and regular
communication channels
Community Engagement and Support,
Human Capital, Health and Safety,
Well-being, and Product Safety and
Quality
Customers
Customer surveys and feedback
mechanisms
Sustainable Packaging, Sustainable
Products, Product Safety and Quality,
Cyber Security and Data Protection
Suppliers
Supplier assessments, supplier code of
conduct, and regular communication
channels
Social Compliance, Ethics, and
Anti-corruption
Investors and shareholders
Annual general meetings, result
announcement investor relations
communications, and sustainability reports
ESG Governance, Tax Governance
Community and
non-governmental
organisations (NGOs)
Partnerships, community outreach
programmes, stakeholder consultations,
and collaboration on initiatives
Community Engagement and Support
Regulators and
government authorities
Compliance with regulations,
participation in industry consultations,
and regular reporting
Health and Safety, Well-being, Social
Compliance, Product Safety and Quality,
Ethics and Anti-corruption, Cyber Security,
Data Protection, and Tax Governance
Industry associations
and trade unions
Participation in industry forums,
collaboration on industry-wide initiatives,
and dialogue with trade unions
Climate Change, Waste, Water, Sustainable
Packaging, Sustainable Products, Social
Compliance, and Product Safety and
Quality
Academia and
research institutions
Collaborative research projects and
knowledge sharing
Climate Change, Waste, Water,
Sustainable Packaging, Sustainable
Products, and Social Compliance
Media and public
Press releases, media interviews, social
media engagement, and public events
ESG Governance
Board of directors and
executive leadership
Board meetings, executive briefings,
and regular reporting
ESG Governance and all material ESG
issues listed above
51
ESG Report
Materiality assessment process
DFI conducted a materiality assessment in 2023 to prioritise issues for our sustainable development strategy and ESG
reporting. This assessment played a crucial role in effectively allocating internal resources to address risks and
opportunities, while meeting the evolving expectations of our stakeholders.
1. Identification
We identified relevant ESG issues based on a review of industry trends, international sustainability initiatives (including
the United Nations Sustainable Development Goals), sustainability reporting frameworks like GRI and SASB, and material
issues identified by ESG rating agencies and retail industry peers.
2. Evaluation
We invited both internal and external stakeholders to participate in an online survey. The purpose of this survey was
to rank each sustainability issue based on the significance of its impact on the economy, environment, and society.
By gathering input from stakeholders, we aim to gain an understanding of their perspectives and priorities regarding
these sustainability issues.
Furthermore, our internal ESG team has considered sustainability trends, risks, opportunities, and impacts related
to our business. Based on the analysis, the ESG team prioritised sustainability issues according to the significance of
their impact. This process supported us to focus our efforts on addressing the most critical sustainability issues that
have the greatest impact on our business and stakeholders.
3. Validation
Once ESG issues were identified and evaluated, their significance was assessed and prioritised. This analysis involved
assessing the impact of the identified ESG issues on DFI and our stakeholders. Through our process of identification,
evaluation, and validation, we have concluded on the below material ESG issues.
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DFI Retail Group Holdings Limited Annual Report 2023
Material ESG issues
Material ESG issues
Description of risk and impact
Climate change
The physical effects of climate change, such as increased occurrences of severe flooding,
stronger typhoons, and heatwaves, pose a significant threat to both our productivity and
the resilience of our supply chains. Transition risks such as the introduction of carbon tax
will also impact our economic baseline.
Waste
Excessive waste can lead to increased costs for waste management and disposal, damage
to reputation and stakeholder perception, and potential legal compliance issues.
Water
Excessive water consumption has negative impacts on retail businesses, including
increased costs, strained resources, and environmental harm.
Plastic
There is a growing concern regarding plastic waste, particularly single-use plastic, and the
negative environmental impact it can have if not properly managed at the end of its life
cycle. Regulations in markets in which DFI operates are also phasing out the sales of
single-use plastic (e.g. Hong Kong in 2023).
Sustainable products
Non-sustainable products can lead to reputational damage, as consumers are increasingly
concerned about the environmental and social impact of the products they purchase.
Moreover, the lack of sustainable products on offer could impact long-term business
growth and profitability.
Community engagement
and support
Poor community engagement can lead to strained relationships with local communities,
resulting in potential boycotts or protests. Additionally, lack of community engagement
can hinder access to local resources and license to operate.
Human capital
Poor human capital management can result in decreased team members’ morale,
productivity, and engagement, leading to higher turnover rates and increased recruitment
and training costs. Additionally, ineffective management of human capital can hinder
innovation, collaboration, and overall organisational performance, ultimately affecting
DFI’s profitability.
Health, safety and
wellbeing
In our operations across Asia, it is crucial for us to effectively manage health, safety, and
overall well-being. Failing to uphold a safe working environment can hinder our ability to
attract and retain team members.
Social compliance
Human rights issues in our supply chain can lead to reputational damage, as consumers
increasingly demand transparency and ethical practices throughout the supply chain.
Additionally, unethical sourcing can result in legal and regulatory issues, including fines
and penalties.
Product safety
and quality
Product quality and safety incidents can lead to reputational damage, loss of customer
trust, and decreased sales. Additionally, such incidents can result in legal liabilities,
lawsuits, and financial penalties, potentially impacting DFI’s profitability.
Ethics and
anti-corruption
Corruption incidents can erode trust from stakeholders, including customers, investors,
and partners, and potentially lead to legal consequences, fines, and penalties.
Data privacy and
cybersecurity
Data privacy and cybersecurity incidents can result in compromised customer data,
financial losses, and potential legal liabilities, undermining trust and confidence in DFI.
Additionally, these incidents can disrupt business operations, lead to regulatory scrutiny,
and require significant resources to mitigate and recover from.
Tax governance
Poor tax governance could result in legal and regulatory issues, and potential financial
penalties. Additionally, it may lead to strained relationships with tax authorities, impacting
DFI’s overall financial stability and long-term profitability.
53
ESG Report
Environmental
1. Climate change GRI 302,305
Humans are responsible for causing climate change by releasing carbon dioxide and other greenhouse gases (‘GHGs’)
into the atmosphere. The increased concentration of carbon dioxide in the atmosphere today is unprecedented in at
least the past two million years.
In the context of DFI’s operations, GHG emissions can be categorised into Scope 1, Scope 2, and Scope 3 GHG emissions.
Scope 1 GHG emissions refer to direct emissions that occur from sources owned or controlled by DFI. In DFI’s case, the
burning of fossil fuels, such as gasoline or diesel, and the leaking of cooling refrigerant contributes to Scope 1 emissions.
This can include emissions from vehicles, generators, or other equipment that directly burn fossil fuels. Cooling refrigerants,
such as hydro-fluorocarbons (‘HFCs’), are potent GHGs that are commonly used in cooling systems and can contribute to
climate change.
Scope 2 GHG emissions are indirect emissions associated with the generation of electricity purchased by DFI. Purchased
electricity from CLP or Hong Kong Electric are examples of activities in Hong Kong that can contribute to Scope 2 GHG
emissions.
The majority of our Scope 1 and 2 GHG emissions come from energy consumption and refrigerant gas leakages. To
mitigate climate risk, we allocate an annual investment of US$10-20 million, which accounts for approximately 5-10%
of our total capital commitments each year. These funds are directed towards climate initiatives focussed on enhancing
energy efficiency, reducing refrigerant emissions, and transitioning our fleet to electric vehicles where commercially viable.
With all these initiatives, we believe we have a sufficient plan to achieve our targets for Scope 1 and 2 GHG emissions
reduction.
The majority of our total GHG emissions fall under Scope 3, which refers to indirect emissions occurring throughout our
entire value chain. This is not unusual for a retailer, given that these Scope 3 emissions are generated through various
activities such as the production, manufacturing, and use of the products we sell. Our value chain encompasses a vast
network of suppliers, producers, and farmers who provide products to millions of customers in Asia on a daily basis.
Scope 1 and 2 GHG emissions
DFI has set a target to reduce absolute Scope 1 and 2 GHG emission by 50% by 2030 compared to 2021 levels. This
target has been validated by the Science Based Targets initiative (‘SBTi‘) in 2023. Furthermore, by 2050, DFI aims to
achieve net zero emissions compared to 2021 levels. To accomplish these objectives, DFI is implementing the following:
Refrigerants
DFI is actively working to reduce refrigerant gas emissions (Scope 1) through various initiatives. These include:
•
Installation of Leak Detectors: DFI is installing leak detectors in our refrigeration systems to timely identify and address
any leaks. This helps to minimise the release of refrigerant gas into the atmosphere.
•
Dedicated Leak Fix Teams: DFI has deployed dedicated teams to promptly fix any detected leaks. By having
specialised personnel focussed on leak repairs, DFI can ensure timely and effective resolution of any issues.
•
Replacement of High Global Warming Gases: DFI is replacing refrigerants with high global warming potential (‘GWP‘)
with more environmentally friendly alternatives. This transition helps to reduce the overall impact of refrigerant
emissions on climate change.
•
Installation of New Systems with Lower Refrigeration Gas Charge: DFI is installing Water Loop refrigeration systems
that have a lower refrigeration gas charge. This innovative system is designed to minimise the amount of refrigerant
required (reduction of approximately 80% compared to traditional centralised systems), thereby reducing the
potential for leaks.
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DFI Retail Group Holdings Limited Annual Report 2023
Energy
DFI is investing in energy-efficient technologies and practices to reduce energy consumption in our stores, and the
resulting Scope 2 GHG emissions. This includes the LED lighting roll-out across our stores, upgrading HVAC (heating,
ventilation, and air conditioning) systems, implementing energy management systems, and installing energy efficient
building technologies. Furthermore, there have been a number of upgrades to store refrigeration in Hong Kong and
Singapore food stores which have increased energy efficiency, including but not limited to:
•
Aerofoils: Aerofoil is a shelf edge technology to retain cool air within the fridge case on open front chillers. By reducing
air leakage and minimising the loss of cold air, Aerofoils help the refrigeration system work more efficiently, thereby
reducing energy consumption.
•
Refrigeration LEDs: Traditional lighting systems in refrigerated display cases often use bulbs which generate heat.
By replacing these conventional bulbs with energy-efficient LEDs (light-emitting diodes), the heat generation is
minimised. This, in turn, reduces the load on the refrigeration system, leading to energy savings.
•
Electronically Commutated (‘EC‘) Fans: Compared to traditional alternating current fans, EC fans consume less
energy while providing the same or higher airflow. By upgrading to EC fans, the refrigeration system can operate
more efficiently and consume less electricity.
•
Defrost on Demand: Defrosting is a necessary process in refrigeration systems to remove ice build up on evaporator
coils. However, traditional systems often rely on fixed time intervals for defrosting, regardless of the actual need.
Defrost on Demand systems utilise sensors to detect when defrosting is necessary and perform it only when required.
This reduces the frequency of defrost cycles, saving energy in the process.
•
Compressor Manager: The Compressor Manager is a control system that optimises the operation of the refrigeration
compressors. It ensures that the compressors run at the most efficient capacity, adjusting their speed and load to
match the refrigeration demands. By optimising compressor operation, energy wastage is minimised, resulting in
energy savings.
•
Gas Leak Detectors: Refrigeration systems rely on refrigerant gases to cool and maintain the desired temperature.
However, leaks in the system can lead to refrigerant loss, compromising cooling efficiency and increasing energy
consumption. Gas leak detectors continuously monitor the system for any leaks and alert maintenance personnel,
enabling timely repairs and preventing energy waste.
•
Central Remote Monitoring: This initiative involves implementing a centralised monitoring system for the refrigeration
systems in all DFI’s Food stores. It allows real-time monitoring and control of various parameters such as
temperature, energy usage, and system performance. By closely monitoring the refrigeration systems, any
anomalies or inefficiencies can be quickly identified and addressed, leading to improved energy management.
•
Lead Compressor VSD: This technology adjusts the speed of the lead compressor in a refrigeration system based on
the cooling load requirements. By modulating the compressor speed, energy consumption is optimised, as the
system operates at the most efficient capacity to meet the demand.
DFI is also increasing the use of renewable energy sources in our operations. In 2022, Wellcome installed one of the
largest solar panel systems in Hong Kong on the rooftop of its Fresh Food Centre and is continuing to harness solar energy
in 2023. There are also a total of 5 IKEA Taiwan stores with solar panels, the most recent of which was installed in 2023.
This growth in solar panel installation in DFI’s retail network demonstrates DFI’s commitment to renewable energy and
sustainability.
Furthermore, DFI continues to engage our team members and raise awareness about the importance of sustainability
and energy conservation. This includes providing training, promoting eco-friendly behaviours, and encouraging team
members’ participation in sustainability initiatives. DFI intends to continue these efforts through 2024, aiming to further
embed sustainability and energy conservation practices within the organisation.
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ESG Report
Fuel for own trucks
DFI outsources most of its logistics to third party providers, therefore fuel usage is a relatively small part of our Scope 1
GHG emissions. However, DFI still recognises the importance of improving fuel usage efficiency to minimise our
environmental impact. To achieve this, DFI is focussing on two key strategies:
•
Optimising Truck Loads and Routing: DFI aims to enhance fuel usage efficiency by optimising truck loads and routes.
By maximising the capacity of each truck and planning efficient routes, DFI can reduce fuel consumption and
associated emissions.
•
Transitioning to Electric Trucks: In 2023, DFI purchased our first electric truck from Scania. This step marks the
beginning of DFI’s journey towards electrifying our fleet. The goal is to gradually replace conventional trucks with
electric ones; however, this transition will be dependent on the commercial viability of such vehicles. This transition
would significantly reduce emissions associated with fuel usage and contribute to a cleaner transportation system.
By prioritising fuel usage efficiency and pursuing the adoption of electric trucks, DFI is taking proactive measures to
reduce our carbon footprint and promote sustainable transportation practices.
From 2021 to 2023, DFI reduced our Scope 1 and 2 GHG emissions by 19%. This reduction reflects DFI’s efforts to reduce
refrigerant gas emissions and increase energy consumption efficiency. However, it is important to note that Scope 2
GHG emissions increased from 2022 to 2023 due to the net store growth, hotter summer temperatures (2023 was the
hottest June to August on record in Hong Kong), and increased store trading hours (2022 still impacted by COVID-19
related restrictions).
Scope 1 and 2 GHG emissions
2023
kt CO2e
2022
kt CO2e
2021
kt CO2e
% Change
from 2021
to 2023
Refrigerants
228
228
341
(33)
Fuel for own trucks
8
8
9
(9)
Total Scope 1
236
236
350
(33)
Electricity
341
335
361
(6)
Total Scope 2
341
335
361
(6)
Total Scope 1 and Scope 2
577
571
711
(19)
Scope 1 and Scope 2 intensity
Tonnes CO2e per US$m net sales
63
62
77
(19)
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
Energy consumption
Million gigajoules
% Change
from 2021
to 2023
2023
2022
2021
Energy consumption – fuel
0.11
0.11
0.12
(8.4)
Energy consumption – electricity
2.48
2.39
2.48
(0.2)
Total energy consumption
2.59
2.50
2.60
(0.6)
Energy intensity
Gigajoules consumption per US$m net sales
282
273
283
(0.3)
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
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DFI Retail Group Holdings Limited Annual Report 2023
In 2023, DFI transitioned a loan facility (term 2023 to 2026) to a sustainability linked loan, for which a syndicate of banks
have offered an interest rate discount if DFI achieve three Sustainability Performance Targets, one of which relates to GHG
Emissions Scope 1 and 2 reduction targets in line with our net zero plan. Moody’s assigned a sustainability quality score of
‘Good’ to this sustainability linked loan, and specifically commented ‘the magnitude of the ambition of the Sustainability
Performance Targets related to (GHG emission Scope 1 and 2) reduction is ‘high’ because (DFI’s) performance targets are
in line with the most ambitious Paris Agreement goal and validated by SBTi’. The Paris Agreement’s aim is to strengthen
the global response to the threat of climate change by keeping global temperature rise this century to well below 2
degrees Celsius above pre-industrial levels (the most ambitious goal is to pursue efforts to limit the temperature increase
even further to 1.5 degrees Celsius).
Scope 3 GHG emissions
DFI have had our near-term target reduction of 25% of targeted Scope 3 categories (by 2030 from 2021 levels) validated
by SBTi, indicating DFI’s commitment to aligning with a trajectory below 2°C of global warming. Achievement of this
target is dependent on the pace of the transition in the jurisdictions in which we operate (which includes developing
economies) including the development and evolution of policy and regulatory frameworks which support the
decarbonisation of the wider economy. To achieve a substantial reduction in emissions throughout our value chain,
it is crucial to have the involvement of governments, collaboration with suppliers, and effective communication with
customers. This means that our capacity to influence carbon reduction presents both risks and opportunities. The
success of our efforts will depend on the strength of our relationships, both upstream and downstream, within our
value chain.
DFI continues to work to improve the completeness of our Scope 3 GHG emission data. In 2023, DFI has transitioned from
a spend-based approach to an activity-based method, focussing on the weight of the products procured (Category 1). DFI
has also split the Scope 3 Category 1 inventory into Forest, Land, Agriculture (‘FLAG’) emissions and non-FLAG emissions.
This shift allows DFI to gain a more accurate understanding of the environmental impact associated with our supply
chain activities, supporting us to identify areas for improvement and implement targeted sustainability measures.
DFI has identified Category 1 Purchased Goods and Services products as the main driver of our Scope 3 emissions,
which accounts for 65% of our 2023 Scope 3 GHG emissions, and structured our net zero plan around them. Among
Category 1 Purchased Goods and Services, rice purchased accounts for a significant portion of DFI’s Scope 3 emissions.
DFI is working on a pilot to grow sustainable rice using the Alternate Wetting and Drying (‘AWD’) method. AWD is a water
management technique that involves periodically drying and re-flooding rice fields. This practice could help consume
water in a more efficient way while reducing methane emissions by up to 50%. We are also working on plans to reduce
Scope 3 GHG emissions from other products purchased and categories.
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ESG Report
For information on the limitations of our Scope 3 GHG emissions disclosures, please see the Methodology section below.
Scope 3 GHG Emissions
Scope 3 category
2023
kt CO2e
2022
kt CO2e
2021
kt CO2e
% of
Scope 3
Category 1 Purchased goods and services – Products (FLAG)
1,360
1,472
1,536
41
Category 1 Purchased goods and services – Products (non-FLAG)
818
852
866
24
Category 2 Capital goods
63
75
77
2
Category 3 Fuel- and energy-related activities
121
117
133
3
Category 4 Upstream transportation
95
91
68
3
Category 5 Waste generation
23
27
28
1
Category 6 Business travel
6
6
7
–
Category 7 Team member commuting
30
33
34
1
Category 9 Downstream transportation and distribution
3
5
6
–
Category 11 Use of sold products
54
59
57
2
Category 12 End-of-life treatment of sold products
157
152
134
5
Category 14 Franchises
78
79
75
2
Category 15 Investments
540
610
680
16
Total
3,348
3,578
3,701
100
% of Scope 3 in total emission
85%
86%
84%
Note: Excluded Scope 3 categories 8. Upstream leased assets (covered in Scope 1 and 2), 10. Processing of sold products (no intermediate products sold to
customers), 13. Downstream leased assets (only few assets leased to others).
The main reason for the decrease in Scope 3 from 3.7mt CO2e in base year 2021 to 3.3mt CO2e in 2023 is due to store
closure in Indonesia. Note that store openings across the group are also included.
Methodology
Scope 1 and 2 Methodology
DFI follows a comprehensive methodology to calculate Scope 1 and Scope 2 GHG emissions, the key elements of which are:
Energy Consumption Calculation: Actual electricity bills are collected from the majority of markets, accounting for 84% of
total energy consumption in 2023. For the remaining markets, an analytic based on electricity spend is used to estimate
energy consumption.
GHG Emission Conversion Factors: To convert energy consumption from kilowatt-hours (kWh) into carbon dioxide
equivalent (CO2e), GHG emission conversion factors are applied. The latest 2023 emissions factors provided by the
International Energy Agency (‘IEA’) are used. Location-based electricity emission factors are adopted, sourced from
Energy Providers and Government websites for Hong Kong, Macau, Chinese mainland, and Taiwan (based on 2022 data).
Refrigerant Gas Calculation: Invoices for all purchased refrigerant gas are collected and the weight in kilograms is totalled
by store, market, and business. Global Warming Potential emissions factors from the Intergovernmental Panel on Climate
Change’s Sixth Assessment Report are used to calculate the impact of each gas purchased relative to one unit of CO2.
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DFI Retail Group Holdings Limited Annual Report 2023
Reporting and Tracking: GHG emissions are measured at the store level and reported monthly. Progress against annual
targets is tracked, with these targets forming the pathway to achieving net zero GHG emissions. Divested businesses are
excluded from the baseline, while emissions from store expansion are included in the total emissions calculation (in line
with SBTi guidance calculation methodology). Therefore, we have excluded Malaysia Food as we divested this business in
2023. Furthermore, franchisee stores are excluded from Scope 1 and 2 figures (but included in Scope 3).
DFI’s methodology supports a comprehensive and transparent approach to measuring and tracking GHG emissions,
enabling DFI to monitor progress and work towards our net zero goals.
Scope 3 Methodology
DFI acknowledges the challenges associated with tracking and precisely calculating Scope 3 carbon emissions, especially
when working with a large number of vendors who source materials and ingredients from various suppliers worldwide.
To address this complexity, DFI strives to follow the guidelines provided by organisations such as the World Business
Council for Sustainable Development (‘WBCSD’), World Resources Institute (‘WRI’), GHG Protocol, and SBTi reporting
requirements. Our reporting methodology is summarised below:
•
The scope for Scope 3 carbon emissions has been revised to remove businesses divested during 2023.
•
The 2022 full year inventory is calculated using a spend-based analytic of the 2021 inventory. 2023 full year
inventory is calculated based on the actual spend and weight data.
•
Majority of the categories’ emissions are calculated using the latest spend based Environmentally-Extended
Input-Output (‘EEIO’) emission factors.
•
Category 1 Purchased Goods and Services: DFI has split the FLAG and non-FLAG emissions, and changed the
methodology from spend-based to activity-based (weight) for the most significant portion of product emissions.
FLAG (Forest, Land, and Agriculture) emissions encompass land use change and land-related activities that impact
the climate. The methodology for FLAG is to multiply the weight of food products with agricultural emission factors
and non-FLAG emission factors (processing, packaging, and transportation) respectively.
•
95% of the FLAG products use emission factors from the Agribalyse database, and the remaining are from other
databases and scientific research papers. Agribalyse is the most comprehensive food related emission database
accessible and provides emission factors by stages. It is recognised by GHG Protocol as one of the ‘Land Sector
Calculation Resources’. Remaining non-FLAG emissions are calculated using EEIO emission factors where available.
•
Categories 2 to 4: Calculated using spend based emissions factors (EEIO where available).
•
Category 5 Waste Generation: Multiply the amount of waste by type and disposal method with corresponding UK
Government Department for Environmental Food & Rural Affairs emission factors.
•
Category 6 Business travel: Travel record (origin and destination for travel, hotel expense for rental) from travel
system multiplied by EEIO emissions factors.
•
Category 7 Employee commuting: Apply a weighted average commute emission by region, based on average
commute distance and travel mode.
•
Category 9: Downstream transportation and distribution: Sales in external delivery platforms multiplied by EEIO
emissions factors.
•
Category 11 and 12: Disposal method by country considered to apply specific emission factors.
•
Category 14 Franchises: Convenience franchises in Hong Kong, China, Singapore are included (previously in Scope 1
and 2).
•
Category 15 Investments: Taken from most recently available information disclosed for Yonghui, Robinsons,
Maxims and Guardian Vietnam (where information is not disclosed, a proxy based on sales has been used).
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ESG Report
2. Waste GRI 306
Product and non-product waste
DFI is fostering a transition towards a circular economy by minimising and effectively managing our waste streams.
Alongside our efforts to reduce food waste, we also prioritise recycling other materials such as paper, plastic, and
aluminium whenever feasible. DFI is focussed on the transition towards a circular economy and has set a waste diversion
target of 80% by 2030. Across our markets, we have rolled out recycling and donation initiatives to reduce waste sent to
landfills and work towards meeting this target.
Since 2022, the Wellcome Fresh Food Centre (‘WFFC’) team has taken sustainable measures to divert waste by
collaborating with NGOs to pick up our polystyrene boxes, reuse pallets, and look for recovery channels for temperature
data loggers (which are traditionally single-use). We have joined the pilot scheme on food waste collection from the
Environmental Protection Department and Hong Kong Organic Waste Recycling Logistics in Hong Kong, diverting about
850 tonnes of food waste generated in the WFFC this year.
DFI implements paper and cardboard recycling programmes and provides appropriate recycling infrastructure through
informal waste collector and third-party contractors to ensure that paper and cardboard waste generated in our
distribution centres, stores, and offices are diverted from landfills and recycled into new products. Furthermore, any
hazardous waste from used batteries are all targeted for recycling.
These initiatives collectively demonstrate DFI’s efforts to minimise waste, promote recycling, and raise awareness among
our team members. By integrating these practices into our operations, DFI is working towards a more sustainable
approach to waste management.
Waste disposed and diverted
2023
tonnes
2022
tonnes
2021
tonnes
Disposed waste
Product waste (Food)
15,060
16,829
21,873
Product waste (Non-Food)
773
822
1,168
General
Paper
9,691
5,582
9,167
5,696
8,943
6,067
Plastic
185
232
221
Polyfoam
257
272
221
Total disposed waste
31,548
33,018
38,493
Diverted waste
Product waste (Food)
2,146
699
336
Product waste (Non-Food)
–
–
–
General
2,922
3,361
3,533
Paper
30,662
30,246
29,340
Plastic
473
493
371
Polyfoam
197
178
224
Hazardous
32
36
56
Total diverted waste
36,432
35,013
33,860
All waste
67,980
68,031
72,353
Diverted waste %
54%
51%
47%
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DFI Retail Group Holdings Limited Annual Report 2023
Diverted waste by method
2023
tonnes
2022
tonnes
2021
tonnes
Recycled
33,786
33,379
33,498
Reused
1,234
989
26
Donated
1,412
645
336
Total
36,432
35,013
33,860
Methodology
DFI has implemented a comprehensive approach to account for product waste and non-product waste in our operations:
Product Waste
DFI tracks product waste (both food products and non-food products) by accounting for the net weight, which is based
on store shrinkage records and the article master list. This allows DFI to quantify the amount of product waste generated
accurately. Diversion weight is calculated based on NGO (e.g., Foodlink) or government (EPD for OPark donations)
recordings of donated or recycled waste.
DFI estimates the weight of primary packaging using proxy data provided by an external waste consultant (‘ERM’). This
proxy has been updated in 2023 based on site visits in Hong Kong, Singapore, and China (both stores and distribution
centres) and over one thousand surveys with store managers. The conclusions drawn form this collated data is then
extrapolated to estimate primary packaging weight in other markets.
Non-Product Waste
Store Secondary Packaging (paper carton boxes, polyfoam boxes) and General Refuse (from customers and staff, mostly
consisting of food containers and packaging) waste is calculated by weighing selected sample products in Hong Kong,
Singapore, and China stores, and extrapolating the collated data to other markets based on sales activity. This method,
again updated in 2023 through consultation with ERM, provides an estimation of the store non-product waste generated
across DFI’s operations. The exception is plastic wrap/film, which is calculated using actual purchase records.
The proxy for non-product waste diversion rates is then also based on site visits across our store network and survey
responses from hundreds of store managers who deal with the waste on a day-to-day basis. DFI updated this proxy for
non-product packaging data based on 2023 site visits and surveys, and therefore 2021 and 2022 waste amounts and
diversion rates have been updated to reflect this updated proxy and ensure comparability.
For distribution centre non-product waste, DFI calculated the disposal and diversion of non-product waste based on
invoice data directly obtained from the collector of the waste. Hazardous waste includes used batteries from the
distribution centres, the weight of which are traced directly to recycling records.
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ESG Report
3. Water GRI 303
DFI conducted baseline analysis on water consumption and conducted a thorough mapping of our operational areas.
This approach supports DFI to understand our exposure to water risks and develop appropriate mitigation strategies.
By measuring water consumption, DFI can assess our current usage patterns and identify areas where water conservation
measures can be implemented. This enables DFI to make informed decisions and implement targeted initiatives to reduce
water consumption.
In addition to measuring water consumption, DFI has engaged third party engineering and sustainability consultant –
ARUP to conduct a water risk mapping exercise to identify operational areas with high water scarcity. This mapping
process involved assessing the availability, quality, and reliability of water sources in different regions where DFI operates.
By understanding the specific water risks associated with each operational location, DFI can prioritise our efforts and seek
to allocate resources effectively to address these challenges.
The mapping exercise also helps DFI identify potential vulnerabilities in our supply chain and operations. By having a
clear picture of the areas with high water scarcity, DFI can work collaboratively with suppliers, local communities, and
stakeholders to implement strategies that promote responsible water management and reduce risks.
DFI measured water consumption for the first time in 2023 and is considering plans to target reduced water consumption
in the future.
Water consumption 2023 (million litres)
Source
Non-
stressed
area
Stressed
area
Total
Water withdrawal and discharge
Third-party water
2,162
28
2,190
Water Stress Assessment: Majority of our operating locations (5,599) are in non-stressed areas. For Indonesia however,
34 of our stores in Java are classified as being in a stressed area, which is 0.6% of the total number of locations.
Methodology
The water consumption figures presented in this report have been obtained through a process involving the conversion of
water costs from billing using specific conversion factors. In order to support accuracy and reliability, DFI collaborated with
ARUP who provided their expertise in determining the appropriate spend based conversion factors for water consumption
calculations. Where spend was deemed an inappropriate estimation due to utility billing consolidation (e.g. Hong Kong
where water is billed from the landlord and not directly related to consumption), water bills were obtained for each store
type, and the consumption per bill extrapolated based on the number of store types in that location.
Additionally, the on-site visits conducted by ARUP allowed for a detailed understanding of DFI’s operational activities
and water usage patterns. By examining water infrastructure, monitoring systems, and water management practices
at DFI’s facilities, ARUP was able to provide insights and data to support the determination of reliable conversion factors.
Furthermore, samples were taken from DFI store water discharge, and subsequent lab testing concluded that the water
was ‘fresh’ (below 1,000mg/l dissolved solids).
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DFI Retail Group Holdings Limited Annual Report 2023
4. Plastic GRI 306
Plastic waste has various impacts on biodiversity, such as ingestion by marine life, and pollution from its toxic components
if not recycled or treated properly. DFI recognise the importance of managing plastic and is working toward reducing
plastic in our operations.
Plastic packaging
We are exploring alternative packaging materials to reduce our environmental impact. DFI is also setting targets for own
brand plastic packaging to be 100% Designed for Recycling by SKU count by 2030 (see methodology for definition) wherever
appropriate packaging technology is available to ensure product safety and quality. These targets reflect DFI’s goal to
reduce plastic waste and promote sustainable packaging solutions. DFI is a member of the Plastic Waste Coalition and
has implemented the following Consumer Goods Forum Golden Design Rules to ensure the packaging is optimised for
recyclability: Increase Recycling Value in PET Bottles, Remove Problematic Elements, Increase Recycling Value in PET Trays,
Increase Recycling Value in Rigid HDPE and PP, Reduce Virgin Plastic in B2B Packaging, and Use On-Pack Recycling
Instructions.
DFI recognises the importance of addressing the issue of plastic waste at its source. To support this, DFI is involved in
policy advocacy efforts. For instance, DFI is working closely with Drink Without Waste, a coalition in Hong Kong that
aims to reduce plastic waste from bottled beverages.
Own brand products with plastic packaging that is Designed for Recycling (SKUs)
2023
Own brand products with plastic packaging (SKUs)
1,290 (100%)
Own brand products with plastic packaging that is technically Designed for Recycling (SKUs)*
733 (57%)
* To meet these criteria every component of the plastic packaging must be recyclable.
Methodology
Our reporting on plastic packaging is conducted at a component level for almost all of our brands. This means that we
track and report the use of plastic in various packaging components. However, some brands may have less detailed data,
and in these cases we will classify the product packaging as plastic if the main structural element of the packaging is plastic.
For a packaging or packaging component to be reported as Designed for Recycling, two conditions must be met. Firstly,
its successful post-consumer collection, sorting, and recycling must be proven to work practically and at scale. Secondly,
no materials or components should disrupt the recycling system.
The definition of Designed for Recycling in this section of the report means that the products meet these two conditions,
however the local logistics of where we operate mean that there is not necessarily capacity to recycle all of these
products. Whilst we hope that these logistics will improve in the future, we are not directly responsible for them.
The current data excludes all 7-Eleven and IKEA operations, and we aim to address the gap in 2024. We are committed
to continuously improving our reporting and working towards a more sustainable approach to plastic packaging. This is
shown through the expansion of our ESG reporting from the top 100 own brand products per category to all own brand
products that are on sale.
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ESG Report
Plastic bags
Hong Kong and Singapore banners started charging for plastic bags due to government enforced levies (Hong Kong levy
was increased from 1st January 2023, Singapore had a newly introduced levy since January 2023). This data represents the
purchased number of bags for Hong Kong and Singapore business multiplied by the average weight of that bag category.
Plastic bags consumption
2023
2022
Plastic bags (tonnes sold in Hong Kong and Singapore)
1,524
2,721
Plastic Wrap
Plastic wrap is used to provide an additional layer of protection and stability during transit. The plastic wrap helps to
secure items together, preventing shifting or damage during handling and transportation. We understand the concerns
regarding plastic waste and are actively exploring options to reduce our reliance on plastic wrap or find eco-friendly
alternatives that still meet our transportation needs, such as:
•
Recyclable Plastic Wrap: DFI utilises recyclable plastic wrap, which reduces the environmental impact of plastic
waste. By choosing recyclable materials, DFI supports the circular economy and encourages the recycling of plastic
packaging. For example, DFI’s distribution centres are switching from black plastic wrap to transparent plastic wrap,
which is more easily recycled.
•
Reducing Plastic Wrap Usage: DFI works to reduce the overall use of plastic wrap. By implementing efficient
packaging practices and exploring alternative packaging solutions, DFI aims to reduce the amount of plastic wrap
used in our operations.
Plastic wrap consumption
2023
2022
Plastic Wrap used in Operations (tonnes)
486
518
Methodology
The weight of plastic bags and plastic wrap used by DFI is calculated based on procurement data. Plastic bags are
specifically considered for Hong Kong and Singapore only, while plastic wrap encompasses the entire group.
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DFI Retail Group Holdings Limited Annual Report 2023
5. Sustainable products
DFI recognises the importance of sustainable food production and sourcing and acknowledges that through our role
as a major food retailer in Asia it must work to support change in these areas. This is reflected in various initiatives and
sustainable sourcing practices across our own brand product lines:
•
Sustainable Seafood: DFI ensures that all our own brand canned tuna products are sourced from Marine Stewardship
Council certified fisheries. This certification ensures that the seafood comes from sustainable and well-managed
fisheries.
•
Sustainable Cocoa: DFI’s Meadows Gold Chocolate products are certified by the Rainforest Alliance. This certification
ensures that the cocoa used in these products is sourced sustainably, promoting biodiversity conservation and fair
treatment of farmers.
•
Sustainable Coffee Beans: Coffee beans being used in 7-Eleven Café in Singapore, Hong Kong, and Macau are
certified by the Rainforest Alliance. This certification guarantees that the coffee beans are produced using
sustainable farming practices, protecting the environment and supporting the livelihoods of coffee farmers.
•
Paper: DFI aims to ensure that 100% of our grocery paper products are FSCTM-certified by 2028, demonstrating
DFI’s commitment to reducing waste and promoting responsible sourcing throughout our operations.
Own brand products with
sustainability certifications
2023
2022
2021
Scope
Total number of own brand products (SKUs,
and percentage of range)
87 (24%)
48 (11%)
27 (6%)
Own brand pre-packaged
products within
selected categories
Methodology
We take into account the number of own brand products (by SKU) that have received globally recognised sustainability
certifications. The scope of these certifications covers a range of aspects such as protecting the environment,
communities, human welfare and wildlife, and safeguarding animal welfare. The percentage is calculated as the total
per own brand category, it is not the total percentage of all DFI own brand product sold. The categories included are
seafood, palm oil, eggs, coffee, cocoa, and paper. Note that this metric excludes DFI IKEA, however we will endeavour
to include in future years’ disclosure.
Social
6. Community engagement and support
Community investment
At DFI, we aim to create value for our communities, with the priorities being reducing hunger and raising self-esteem.
We have chosen to partner with NGOs or charity partners to address the needs of the communities in which we operate.
Local organisations are prioritised given their proximity with the local stakeholders. We also actively seek feedback from
local communities to improve the planning and execution of our charity programmes.
For example, one of DFI’s brands 7-Eleven, launched the ‘Sik Tak Fan La’ Charity Programme in collaboration with Pei Ho
Counterparts, a charitable organisation, which aims to provide food and assistance to individuals facing financial difficulties.
For details information on the programme, please refer to DFI’s website (www.DFIretailgroup.com).
There was a higher level of community investment in 2021, mainly driven by donation of physical assets and other
resources for COVID-19 relief.
Community investment
2023
2022
2021
Community investment (US$000)
3,670
3,558
10,158
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ESG Report
Methodology
Community investment includes all the donations we have made to charitable organisations from both DFI subsidiaries
and associates, which includes direct monetary donation, product donation and sponsorships. For product donation,
monetary value is derived based on the cost of products.
Team member volunteering
By actively encouraging and supporting team members’ volunteering, we showcase our commitment to making a
positive impact beyond our business operations. These activities can range from supporting education programmes for
underprivileged children to environmental conservation efforts or assisting local charities. By engaging in these initiatives,
DFI team members can give back to the community, contribute to social causes, and make a tangible difference in the
lives of others. Further details of volunteering work DFI and team members participated can be found on DFI website,
social media, and Sustainability Report.
Team member volunteering hours
2023
2022
2021
Team member total volunteering hours (Hong Kong only)
1,129
922
944
Methodology
Volunteering hours refer to the amount of time team members contributes to a charitable or non-profit organisation
without receiving financial compensation. Only Hong Kong is disclosed as this is the only market for which data is
readily available.
7. Human capital GRI 401, 404, 405
Talent development and training
Team members’ training plays a key role in enhancing skills, knowledge, and capabilities of team members, ultimately
leading to improved performance and productivity. Training programmes provide team members with the opportunity
to acquire new skills, refine existing ones, and stay updated with the latest industry trends and technologies.
DFI invests in training programmes to prepare its team members for the evolving landscape of the retail industry. To that
end, DFI offers more than 130 training programmes for team members, which cover a wide range of business skills such
as data analytics, design thinking, functional skills, professional skills such as problem-solving, collaboration, influence,
strategic planning, among others, to help our individual contributors enhance their capabilities at work. These programmes
are delivered in various formats, including eLearning, virtual sessions, and face-to-face interactions, to accommodate the
diverse preferences of our team members. Trainings are provided on cybersecurity, anti-discrimination, health and safety,
diversity, and other related topics ensuring DFI team members operate in a safe, secure, and equal environment.
To support career advancement and preparing team members for managerial and leadership positions, we also provide
leadership training programmes aimed at developing the necessary skills and competencies for future leaders, the DFI
Commercial Graduate Trainee Programme (a DFI led functional-specific programme to cultivate a pool of Commercial
talent and nurture future leaders) and Jardines Executive Trainee Programme (a rotation programme of executive
trainees across the group of companies). We also offer leadership skill and development training, such as Building Better
Leaders, Inclusive Leadership, and Jardines Leadership Development Programmes.
DFI aims to upskill its team members and build a capable workforce in delivering our objectives. We have targeted to
achieve 14.2 average training hours per team member for all team members in 2024.
Average training hours per team member
2023
2022
2021
All team members
13.6
14.1
16.1
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
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DFI Retail Group Holdings Limited Annual Report 2023
It is noted that in 2022, we introduced a knowledge check before proceeding to mandatory training. Therefore, if team
members achieve the required proficiency level in the knowledge check, they can pass the training as their knowledge and
understanding of the training subject are deemed sufficient. Whilst training hours per team member has decreased, the
completion rate of mandatory training in 2023 remains high.
Methodology
Training is defined as any type of knowledge-based and skills-based session, attended by team members on a compulsory
or voluntary basis. The number of training hours include in-person sessions, and virtual sessions delivered on internal
e-learning platforms. It excludes ’on the job’ training. For fundamental topics, all team members are required to attend
at the start of their employment contract, followed by periodic compulsory refresher training.
In calculating average training hours per team member, one part time team member is counted as equal to 0.5 of a full
time team member. The total number of employees used in the calculation is based on the year end number.
Team member benefits and retention
Experienced team members possess valuable knowledge and expertise that they have acquired through their tenure with
DFI. Retaining such talent ensures that this knowledge remains within the organisation, benefiting overall performance
and productivity. High turnover rate also has implications on cost structure. DFI strives to retain team members with the
below strategies:
Team Members Benefits and Recognition:
DFI offer a range of market competitive benefits to our team members, including but not limited to medical benefits, life
insurance, purchase discounts at DFI’s outlets, retirement benefits and flexible work arrangement for office team members.
To mitigate retention risk, DFI seeks to ensure that our benefits and remuneration offers are in line with market standards.
Therefore, DFI conducts regular reviews of our employment policies, remuneration, and benefits packages. These reviews
allow DFI to make necessary adjustments and enhancements to our compensation and benefits packages, so that team
members are rewarded appropriately for their contributions with the aim that they feel valued and motivated within the
organisation.
Furthermore, DFI actively seeks the sentiments and views of our colleagues through the annual ‘Your Voice Counts’ survey
which is sent to all team members. These surveys provide an avenue for team members to voice their opinions, concerns,
and suggestions, enabling DFI to better understand their needs and expectations. By analysing the survey results, DFI
identifies areas for improvement and implements targeted initiatives that prioritise team members satisfaction and
engagement, and enhances our talent retention strategy.
To recognise the dedication and contribution of team members, DFI offers long service awards at different service
milestones as celebratory gift.
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Performance Evaluations and Reward Principle
We conduct regular performance evaluations to assess individual and team performance. These evaluations serve as
a platform for constructive feedback on performance and discussions on career development and growth opportunities.
They are conducted through a transparent and objective process that evaluates team members’ achievement of their
individual and team goals. It ensures fairness and provides a basis for recognising and rewarding strong performance.
At DFI, we believe in recognising and rewarding team members based on their contributions, performance, and
alignment with company values. Our reward framework is designed to foster a culture of meritocracy and incentivise
high performance. We believe we offer a fair and transparent system that ensures team members are recognised and
rewarded accordingly. We regularly conduct salary benchmarking to ensure that our team members’ compensation
remain competitive. Performance evaluations play a crucial role in determining the extent of pay increases, with
high-performing team members receiving greater consideration.
Team member turnover
2023
2022
2021
Team member turnover (full-time voluntary)
27%
27%
27%
We note that the above turnover rates do not compare unfavourably to other equivalent retailers that have disclosed
this information, and is reflective of the dynamic nature of the retail industry.
Methodology
Turnover includes only full-time team members that have chosen to leave DFI voluntarily. Turnover percentage refers to
the number of leavers as a percentage of the average number of team members within the calendar year.
Diversity
DFI strives to create an inclusive work environment where every individual has an equal opportunity to grow and thrive.
DFI recognises the value of diverse perspectives and experiences in driving innovation and fostering a positive workplace
culture. DFI has the below initiatives to bolster organisational diversity culture and practices:
•
Conscious Inclusion Training for Executives and Leaders: All top 400 leaders have been through a half day conscious
inclusion training to promote cultural awareness, minimise bias in the work environment and hiring practices. These
programmes aim to drive diversity awareness from top, fostering a more inclusive and diverse workplace.
•
Team Members Diversity Training: Diversity and inclusion trainings are provided to team members which aims to
reduce biases and prejudices, creating a more inclusive workplace where everyone feels valued and respected.
•
AI Technology for Diversity: Utilise AI-powered software to track and suggest gender-neutral wording in
communication materials, including job descriptions. This technology can help eliminate unconscious bias in
language and promote a more inclusive hiring process. Additionally, DFI leverages software to track diversity metrics
for job applicants, enabling DFI to refine our diversity strategy and ensure equal opportunities for all.
•
Targeted Recruitment for Diverse Talent: To help ethnic minorities achieve equity within the community, in 2022,
we joined the Emerging Talent Internship Programme in collaboration with The Zubin Foundation, a Hong Kong
based charity that aims to improve the lives of ethnic minorities in the city, to offer internship opportunities for those
who may be marginalised.
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DFI Retail Group Holdings Limited Annual Report 2023
We are monitoring the diversity of DFI with the below metrics:
Team members diversity
2023
2022
Gender
Male
16,525 (35%)
15,810 (35%)
Female
30,940 (65%)
29,809 (65%)
Age group
Under 30 years old
15,737 (33%)
15,280 (33%)
30-50 years old
22,071 (47%)
21,351 (47%)
Over 50 years old
9,657 (20%)
8,988 (20%)
Work region
Hong Kong
20,167 (43%)
18,687 (41%)
Macau
1,880 (4%)
1,953 (4%)
Chinese mainland
6,631 (14%)
6,469 (14%)
Singapore
6,148 (13%)
5,966 (13%)
Indonesia
4,891 (10%)
4,816 (11%)
Others
7,748 (16%)
7,728 (17%)
Job type (permanent and temporary)
Permanent*
40,755 (86%)
n/a
Temporary†
6,710 (14%)
n/a
Job type (full time and part time)
Full time
29,547 (62%)
29,384 (64%)
Part time
17,918 (38%)
16,235 (36%)
Total
Total team members
47,465 (100%)
45,619 (100%)
* Permanent team members are contracted for full time or part time work for an indeterminate period.
† Temporary team members are contracted for a defined duration.
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
Gender diversity in senior leadership in %
2023
2022
Male
62%
65%
Female
38%
35%
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
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DFI is targeting 40% female gender diversity in senior leadership by 2025.
New hires
2023
2022
Age
Under 30 years old
16,083 (60%)
14,982 (60%)
30-50 years old
7,911 (30%)
7,617 (31%)
Over 50 years old
2,628 (10%)
2,153 (9%)
Total
Total new hires
26,622 (100%)
24,752 (100%)
Methodology
A thorough process is put in place to extract data from our Human Resources system, which automatically calculates
the metrics shown above. All data above is as of 31st December 2023. Senior leadership is defined as Grade 17 or above
according to the Willis Towers Watson Global Grading System, which we have matched to the DFI grading system for
direct comparison.
Gender pay equity
DFI recognises the significance of gender equity and has taken a proactive approach to review and monitor gender pay
ratio per job level in two of our most significant markets, Hong Kong and Singapore. DFI will regularly monitor gender pay
equity, and attempt to bridge any observed pay gaps.
Gender pay ratio per job level
Hong Kong
Singapore
Median
Mean
Median
Mean
Senior leadership
0.95
0.87
1.06
1.09
Middle manager and senior professional
0.98
0.98
0.99
1.00
Supervisory and professional
0.95
0.95
1.01
1.02
General support staff
0.94
0.95
0.95
0.98
All team members (simple average of all 4 levels)
0.95
0.94
1.00
1.02
Data as of 1st January 2024. Ratio based on rate of basic salary for full time team members.
Methodology
The Gender Pay Ratio is a metric used to assess the disparity in basic salary between men and women. It measures the
difference in salary across genders with female being the nominator. The Gender Pay Ratio is reported by 4 levels: Senior
Leadership, Middle Manager and Senior Professional, Supervisory and Professional, and General Support Staff. For each
of the locations, both the median and the average are provided for full transparency. The Gender Pay Ratio for All Team
Members is the simple average of the Gender Pay Ratio for each of the 4 levels. The mean is the average value obtained
by summing all data points and dividing by the total number of team members, while the median is the middle value in a
dataset when arranged in ascending or descending order.
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DFI Retail Group Holdings Limited Annual Report 2023
8. Health, safety, and well-being GRI 403
Health and safety
Team members health and safety is important to DFI. It is crucial for several reasons, including the well-being of team
members, customers, legal compliance, and overall business success. Prioritising team members health and safety
creates a positive work environment, fosters team members morale, and contributes to increased productivity.
We endeavour to create a safe working environment that promotes the well-being and success of our team members and
to comply with all Health and Safety (‘H&S’) regulations across all operating countries and businesses. Managed and
implemented by DFI’s Health and Safety team, DFI has implemented a Health and Safety Management System to ensure
safety across our stores, store support centres, and distribution centres. The system consists of below key activities:
•
Occupational Health and Safety (‘OHS’) Risk Assessment: DFI prioritises risk assessment and prevention to reduce
workplace accidents and protect the health and safety of our team members. DFI focusses on the health and safety
risks faced by team members working in stores and warehouses. For example, the distribution centres’ risks are
associated with access to loading docks and operating machinery.
•
Awareness and Training: To promote workplace accident prevention, DFI starts awareness training during the team
members’ orientation process. Our objective is that new hires receive training upon arrival where possible to
familiarise themselves with the professional risks associated with their work environment. This training helps
them to learn how to protect themselves against these risks and whom to notify in case of hazardous situations.
•
Promote Safe Practices and Culture: DFI has established and promotes good practices throughout our operations.
This includes fostering a safety culture that encourages team members to prioritise their own safety and the safety
of others. By promoting awareness, communication, and adherence to safety guidelines, DFI aims to create a
culture of safety and accountability.
•
Safe Working Practices: DFI has integrated safe working practices into our operations. This includes implementing
standardised procedures and protocols that prioritise the safety of team members. By following these practices,
DFI aims to minimise workplace hazards and create a secure environment for our team members.
•
Modern and Well-Maintained Equipment: DFI provides our team members with modern and well-maintained
equipment. By regularly inspecting and maintaining equipment, DFI ensures that it operates safely and efficiently.
This proactive approach helps prevent accidents and injuries caused by faulty or outdated equipment.
•
Monitoring and Reporting: DFI actively encourages our team members to report any injuries or near-miss incidents
to OHS responsible officers. By promptly reporting such incidents, team members contribute to creating a safer
working environment. Additionally, DFI advises team members to follow the guidelines provided and remove
themselves from the area if necessary. This proactive approach ensures that potential hazards are addressed
promptly and that team members are protected from further harm.
•
Monitoring and Review: DFI actively reviews and monitors data related to injury rates and injury hotspots to enhance
our OHS system and practices. By analysing this data, DFI identifies areas for improvement and implements
measures to achieve continuous enhancement in our OHS system.
DFI’s focus on providing a safe working environment demonstrates our dedication to the well-being and success
of our team members. By integrating safe working practices, maintaining modern equipment, and establishing good
practices, DFI strives to create an environment where team members can thrive while minimising the risk of workplace
accidents and injuries.
DFI are continuing to ensure we have oversight of the work-related injury reporting framework, ensuring that all markets
are tracked. Several initiatives were undertaken in 2023 to raise awareness on H&S, including reporting on incidents
through reporting near misses and dangerous occurrences, ‘raising awareness campaigns’ monthly newsletter, and new
QR code reporting system launch. This has inevitably had an impact on the number of injuries reported in 2023, which is
potentially reflective of an improvement in reporting culture.
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ESG Report
Whilst we have strived to create a safe working environment across all of our businesses, there was unfortunately a
fatality recorded during the year. We believe that this fatality was not work related, however the cause is pending
confirmation as at the date of this report publication.
Fatalities and injuries
2023
2022
2021
Number of fatalities
1
0
0
Number of high-consequence work related injuries
7
0
0
Number of recordable work-related injuries
593
614
696
Number of hours worked (million hours)
83.7
80.7
91.3
Fatalities rate
0.002
0
0
High-consequence work-related injury rate
0.02
0
0
Recordable work-related injury rate
1.42
1.51
1.53
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
Mental Health
DFI has taken steps to support our team members by launching a Mental Health Awareness programme. This programme
includes various initiatives such as webinars, self-evaluation tools, and expanded benefits. These resources aim to raise
awareness about mental health and provide support to team members.
The webinars provide valuable information and insights on mental health topics, helping team members better understand
and manage their mental well-being. The self-evaluation tools enable individuals to assess their own mental health and
identify areas where they may need additional support or resources.
DFI has also expanded our benefits to include provisions specifically related to mental health. These benefits may include
access to counselling services, mental health resources, or other forms of support.
To ensure the success of these initiatives, DFI has a responsible team in place that advocates for mental health and raises
awareness within the organisation. This team plays a crucial role in promoting a supportive and inclusive environment
where team members feel comfortable seeking help and discussing mental health concerns.
Methodology
We take into account the number and rate of injuries because of work-related injury, both high-consequence work-related
injuries (excluding fatalities), and recordable work-related injuries (including fatalities) of our team members. Work
related injuries are defined as negative impacts on health arising from exposure to hazards at work. High consequence
work-related injuries are defined as work-related injuries that result in an injury from which the worker cannot, does not,
or is not expected to recover fully to pre-injury health status within six months. Recordable work-related injuries result
in any of the following: days away from work, restricted work, medical treatment beyond first aid, loss of consciousness,
or significant injury diagnosed by a physician or other licensed healthcare professional. Fatalities include team member
deaths that occurred whilst they were working, however not necessarily as a result of or caused by their work.
Recordable work-related injury rate and fatalities rate are calculated based on 200,000 hours worked, which indicates the
number of work-related injuries and fatalities per 100 full-time team members over a one-year timeframe, assuming that
one full-time worker works 2,000 hours per year. To calculate hours worked, most store and distribution centre team
members are based on actual clock in clock out records. For office-based team members, the methodology is based on
standard hours less leave using average headcount by month by banner.
Note for 2021 we are unable to split out Malaysia Food hours worked, and therefore this metric still includes the data for
Malaysia Food for 2021 (excluded from 2022 and 2023).
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DFI Retail Group Holdings Limited Annual Report 2023
9. Social compliance GRI 414
DFI has taken steps to establish goals, monitor key indicators, and share best practices with our teams and suppliers,
which supports us to identify areas for improvement and rectify any practices that may be detrimental to human rights
in our business operations and value chain. We believe we are working towards creating a positive impact and ensuring
that our operations align with ethical standards.
In addition to our internal practices, we are dedicated to continuing to drive ethical labour practices across our supply
chain. As a member of the Amfori Business Social Compliance Initiative (‘BSCI’) since September 2022, we actively
communicate to our suppliers that we will not tolerate forced labour or any other exploitative practices.
All our own brand suppliers are required to respond to key ethical questions as part of the supplier pre-qualification
onboarding process. Should any red flags be identified from the responses, regarding for example child labour or forced
labour, we will not enter into business relations until we have conducted a full investigation and we are satisfied that all
the potential issues have been remediated before supply may commence. DFI’s Supplier Code of Conduct outlines the
expectations we have of ourselves and our supplier partners concerning business ethics, human rights and fair labour
practices, and respect for environment. We recognise our suppliers operate in diverse legal and cultural environments
where they are based across the globe, therefore the Supplier Code of Conduct sets the guidelines for consistent
evaluation across our diverse and complex supply chains.
94% of DFI’s own brand production facilities located in high-risk locations have been audited against Amfori or
other equivalent ethical standards. By the end of 2024, we target all own brand supplying factories to meet DFI
ethical requirements.
Since rolling out our Ethical Sourcing Programme in 2021, DFI has increased our insights into ethical compliance in our
existing factories. This has provided opportunities where we can actively support our supplying factories through
coaching and sharing of industry best practices to drive effective corrective actions. We are on a continuous journey to
engage with factories to progress towards full ethical compliance. However, if a factory continues failing to implement
the necessary measures in timely manner, DFI may consider ending the business partnership with the factory.
By upholding these principles and expectations, we strive to create a responsible and inclusive ecosystem that respects
human rights, promotes equality, and ensures the well-being of all individuals involved in our operations and supply chains.
Suppliers’ factories social audit
2023
2022
2021
% of factories in high-risk countries supplying own brand products
audited against Amfori or equivalent standards (Cumulative)
94%
44%
24%
Methodology
To ensure ethical and responsible sourcing practices, all own brand products’ factories located in high-risk countries are
subjected to comprehensive audits. Factories in countries which are categorised as ‘high-risk’ according to the Amfori
BSCI Countries Risk Classification and other published country risk indexes on labour rights protection, are required to
undergo full on-site audits based on Amfori or other equivalent ethical standards. These ethical audits aim to identify
any instances of child labour, forced labour, or slavery, ensuring that the factories meet the required ethical standards
and have not been associated with such practices in the past.
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ESG Report
Governance
10. Product safety and quality GRI 416
Product safety and quality management
Product safety incidents erode consumer confidence and trust in consumer products and the companies that produce
them. When consumers lose faith in the safety of products, they may change their purchasing habits, leading to financial
losses for businesses. Restoring consumer trust can be a challenging and time-consuming process. Product safety issues
can also cause significant reputational damage to businesses. News of recalls, or contamination incidents can spread
quickly through media and social networks, tarnishing the reputation of the company involved. Rebuilding a damaged
reputation can be costly and may take years to achieve.
DFI has implemented several programmes and processes to ensure the quality, safety, and legal compliance of our own
brand products. DFI’s Sustainability Management Committee has accountability to ensure the quality and safety of the
products we offer.
Quality and Safety Programme:
DFI Supplier Technical Standards are the core standards, and Suppliers are required to comply with all applicable aspects
to protect DFI product and brand integrity by ensuring compliance and consistency. In developing and manufacturing
DFI own brand products, as a minimum, we expect Suppliers to adhere to:
•
Local regulations and relevant legislation in DFI operating markets
•
Other technical policies and guidelines as outlined in DFI Product Quality and Safety Programmes
•
Product specifications
•
Additional brand standards agreed and specified by DFI
DFI’s Qualify and Safety Programme is designed to facilitate risk management and effective communication between
cross-functional departments and Suppliers. This seeks to ensure that our products meet both local standards and DFI’s
own stringent quality, safety, and legality standards.
As a Consumer Goods Forum (‘CGF’) signatory, we have embedded the Global Food Safety Initiative (‘GFSI’) into our own
brand requirements which encourages continuous improvement of food safety management standards across the supply
chain. This certification seeks to ensure suppliers meet internationally recognised food safety standards. For non-food
categories we leverage other global certifications or the DFI audit standard.
Prior to launch of any own brand product, each product is assessed internally and validated by a third-party accredited
laboratory for quality, safety and legal compliance. While the launch phase is critical for introducing a product to the
market, post-surveillance becomes crucial for ongoing success. Our post-surveillance programme includes manufacturing
and product compliance, supporting continuous monitoring and evaluation, helping DFI to identify and address any
emerging issues or opportunities for improvement. In the event of a product recall or withdrawal, our procedures outline
the necessary steps to be taken to minimise any potential risks associated with the product and to swiftly remove it from
the market. In 2023, 81% of own brand product factories were third-party audited for a globally recognised food safety
certification, while 19% of factories who do not have a GFSI certification were audited against our DFI second party audit
scheme by one of our nominated third-parties.
Food safety certification
2023
2022
2021
% of production factories of DFI own brand products that
have a globally recognised food safety audit certification
81%
67%
61%
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DFI Retail Group Holdings Limited Annual Report 2023
Methodology
Metric includes production facilities of own brand food and non-food products that have been certified by one of
the GFSI approved schemes. GFSI is a CGF Coalition of Action that promotes continuous improvement of food safety
management across the supply chain. Production facilities that are not certified by one of the GFSI schemes, must be
audited by a DFI appointed third-party auditing partner. All suppliers must also comply with DFI’s Supplier Technical
Standards, which are protocols set by a team of Supplier and Product Technical subject matter experts. We have taken
into account the percentage of production facilities with GFSI or other globally recognised audit certifications.
Responsible marketing communication
At DFI, we endeavour to conduct responsible marketing activities to support the safety and reliability of our products and
services. Our Responsible Marketing Policy guides our approach, emphasising the importance of truthful, accurate, and
ethical communication with our customers.
When transmitting information to our customers, we strive to adhere to the following principles:
•
Appropriate Expressions: In our commercials and advertisements, we use appropriate expressions that resonate with
our target audience. We ensure that any images or recordings used are suitable and align with the intended message.
•
Legal Compliance: We provide information that meets or exceeds the legally mandated requirements concerning
health, environment, and other sustainability aspects. We are committed to upholding the highest standards in
these areas and strive to exceed the minimum legal requirements whenever possible.
By adhering to these principles, we aim to build trust with our customers and ensure that they have access to accurate
and reliable information about our products and services. We regularly review and update our marketing practices
to align with evolving industry standards and customer expectations. Our goal is to provide our customers with the
information they need to make informed decisions while maintaining integrity and responsibility.
11. Ethics and anti-corruption GRI 205
Anti-corruption and anti-bribery
DFI is dedicated to conducting our business with a strong commitment to ethical responsibility and adherence to laws
and regulations in all the regions where it operates. This commitment extends to compliance with anti-corruption and
bribery laws. DFI’s Code of Conduct and Supplier Code of Conduct (available on our website www.DFIretailgroup.com)
explicitly prohibits any form of corruption or bribery such as illicit payments The Code of Conduct is a mandatory policy
applicable to all team members and is included as part of the onboarding process when team members join DFI. Team
Members are also required to comply with DFI’s No Gift Policy which provides for a general prohibition against receipt of
gifts in order to avoid the risk of team members being placed in a position where actions or offers might be misconstrued
as being offered for personal gain. DFI also has a Speak-Up Policy to encourage team members to raise serious and
genuine concerns about malpractice that may affect DFI’s business and reputation. DFI is committed to investigating
such matters and will take appropriate and timely action to address such concerns.
DFI regularly conducts code of conduct training sessions to strengthen ethics and compliance awareness and training
among our stakeholders. These training initiatives aim to enhance understanding and knowledge of ethical standards,
ensuring that employees and relevant parties are well-informed about the organisation’s expectations and requirements.
In 2023, the code of conduct training courses were completed by over 92% of the total team members.
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ESG Report
These training and awareness initiatives demonstrate the commitment of DFI to equip team members with the necessary
knowledge and tools to uphold ethical standards and mitigate corruption risks. By reaching a significant portion of the
workforce, DFI aims to foster a culture of compliance and integrity throughout the organisation.
To mitigate corruption risks, DFI has also implemented a range of control procedures. These procedures include reviews
and audits conducted by the Internal Audit team. These reviews and audits assess the effectiveness of the Group’s
compliance programme across all countries. Based on their findings, the Internal Auditor teams formulate recommendations
to enhance DFI’s ethics, compliance, and anti-corruption programme. These recommendations aim to improve the
overall integrity and effectiveness of the programme, ensuring that it remains effective.
By regularly reviewing and auditing the policies and procedures of the compliance programme, DFI demonstrates our
commitment to continuous improvement and the proactive management of corruption risks. These control procedures
help to identify areas for enhancement and strengthen the organisation’s ability to prevent, detect, and address any
potential instances of corruption.
Speak Up programme (whistleblower programme)
A Speak Up programme is important in a corporate setting. It provides a mechanism for team members to report any
wrongdoing, misconduct, or unethical behaviour they witness within the organisation. This aims to empower team
members, suppliers, and applicable stakeholders to speak up without fear of retaliation, helping potential issues to be
brought to light and addressed promptly.
It also helps to maintain transparency and accountability within the organisation. By encouraging mentioned stakeholders
to report concerns, it creates a culture of integrity and ethical behaviour. This can deter unethical practices and promote
a positive work environment where everyone is held accountable for their actions.
DFI’s Speak Up Policy reinforces our mandate to all of our business units and departments to comply with all applicable
laws and regulations and maintain proper standards of business conduct. In line with this, DFI actively encourages all
team members to voice their concerns and report any issues that are of serious and genuine concern, as these matters
may impact the operation of DFI’s business and our reputation. By fostering a culture of open communication and
accountability, DFI aims to address and resolve any potential issues promptly and maintain the integrity of our operations.
DFI has established a reporting system which includes an outsourced whistleblowing system that operates 24/7 and
is accessible through the internet, by email or by telephone. This system serves as a channel for all team members to
report any suspicions of unethical practices. The scope of reports includes various serious concerns such as discrimination,
harassment, health and safety issues, theft, fraud, corruption, misappropriation of funds, conflicts of interest, and
unethical behaviour.
DFI’s reporting system allow cases of misconduct reported by team members to trigger an alert within the DFI team,
prompting a thorough investigation for cases that are confirmed to be valid. Once a reported case is validated, DFI takes
appropriate measures to address such misconduct.
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DFI Retail Group Holdings Limited Annual Report 2023
12. Data Privacy and Cybersecurity GRI 418
Organisations that experience data and cybersecurity breaches may face legal, regulatory, financial, and reputational
consequences. Many jurisdictions have enacted data protection and privacy laws that require organisations to
implement appropriate security measures and notify affected individuals in the event of a breach. Cybersecurity is a
critical component of data protection, as it encompasses the practices and technologies used to safeguard sensitive
information from unauthorised access, theft, or damage.
Data privacy
DFI understands that safeguarding personal data is crucial in maintaining a strong relationship of trust. By complying
with data protection regulations, DFI can demonstrate our commitment to protecting the privacy and confidentiality of
personal information. To securely guard customer privacy and data, DFI has established a comprehensive Group Privacy
Policy. This policy outlines our commitment to:
•
Requiring Third-Party Compliance: We ensure that any third parties with whom we share data are obligated to
comply with our privacy policy and data protection standards.
•
Transparency and Clear Terms: We maintain transparency by providing clear and easily understandable terms
regarding the collection, use, sharing, and retention of user data, including data transferred to third parties.
•
Lawful and Transparent Data Collection: We obtain user data through lawful and transparent means, ensuring
explicit consent from the data subject when required by applicable regulations.
•
Limited Data Collection and Processing: We collect and process user data only for the stated purpose, ensuring
that it is limited to what is necessary and relevant.
•
Timely Notification: In the event of policy changes or data breaches, we notify data subjects promptly and in
accordance with local laws and regulations.
•
Implementation of Data Protection Standards: We adhere to data protection standards as outlined in local
regulations, ensuring that our practices align with the requirements set forth by the relevant authorities.
To ensure the commitment outlined in the Group Privacy Policy, DFI has implemented the Data Privacy Programme.
It is designed to protect customer data from mishandling.
Data Privacy Programme
•
Data Subject Access: DFI provides mechanisms for data subjects to access their accounts and exercise their rights
to erase, rectify, complete, or amend their personal information as required by applicable regulations.
•
Concerns and Complaints: DFI has implemented mechanisms for data subjects to raise concerns or lodge
complaints regarding data privacy. These channels ensure that any issues related to data privacy are addressed
promptly and appropriately.
•
Team members Training: DFI conducts regular training sessions for team members on data management and data
privacy. These training programmes aim to enhance team members awareness and understanding of data privacy
best practices.
•
Data Privacy Risk Assessment: DFI performs regular assessments to identify and mitigate data privacy risks associated
with technologies and practices. These assessments help ensure that data privacy measures are up to date and
aligned with evolving threats and regulatory requirements. Detail of the risk assessment that are conducted and
reported regularly can be found in the Risk Management section of the annual report.
77
ESG Report
Cybersecurity
Cybersecurity is the practice of protecting computer systems, networks, and data from unauthorised access, attacks,
and disruptions. DFI has a cyber security programme to implement measures and protocols to safeguard our digital assets.
Cybersecurity Programme
•
Endpoint and Mobile Data Protection: DFI has implemented preventive measures such as endpoint protection, including
ransomware protection and anti-virus software, to safeguard our endpoints from malicious attacks, as well as
mobile data protection practices such as two-step verification to enhance security and protect sensitive information
on mobile devices.
•
Data Breach Monitoring and Response: DFI has implemented measures to monitor and respond to data breaches
and cyber attacks promptly. These measures include incident response plans and protocols to minimise the impact
of any potential breaches.
•
Team members Training: DFI conducts regular training sessions for team members on cybersecurity and internet
threats. These training programmes aim to enhance team members awareness and knowledge of cybersecurity
best practices, reducing the risk of cyber incidents.
•
Audits: DFI conducts regular external and internal audits of the company’s systems that handle user data. These audits
help identify vulnerabilities and ensure that appropriate security measures are in place to protect customer data.
•
Penetration Testing: DFI conducts penetration testing regularly, which simulate cyber attacks on the organisation’s
infrastructure to identify vulnerabilities and weaknesses, allowing DFI to proactively identify and address potential
security gaps.
By implementing privacy and cybersecurity programme, DFI demonstrates our commitment to safeguarding customer
data, maintaining data privacy, and protecting against cyber threats. These initiatives contribute to building trust and
confidence among customers, team members, and partners.
13. Tax governance GRI 207
Activities across the Group generate a variety of direct and indirect taxes, such as corporate income taxes, property taxes,
sales taxes, employer payroll, and social security taxes, among others. We view our compliance with relevant tax laws and
regulations as consistent with sustainable business practices and aligned with our responsibilities and societal obligations
as a good corporate citizen. We submit all appropriate tax returns covering all areas of taxes and ensure the correct
amounts of taxes are paid by the due dates.
78
DFI Retail Group Holdings Limited Annual Report 2023
Given the complex nature of taxation in an environment with rising tax obligations associated with global minimum
taxation initiatives, increased transparency may result in greater scrutiny and increased reputational risk. The Group
operates a risk-based system of controls, processes, and training to manage tax risks and minimise instances of error.
The Group has a low tolerance for tax uncertainty. We engage with tax authorities in a timely and transparent manner.
The Group manages a team of experienced tax professionals overseeing the Group Tax function and providing support to
the Finance and Human Resources teams of our group companies, who have collective responsibility for ensuring that the
Group adopts appropriate tax accounting treatment and reporting standards.
Tax contribution
2023
2022
2021
Tax contribution (US$m)
118
127
158
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
Tax contribution (by country)
Region
2023 Tax contribution (US$m)
Hong Kong
47
Macau
3
Chinese mainland
15
Taiwan
19
Singapore
12
Malaysia
7
Indonesia
11
Cambodia, Brunei, and Philippines
1
Non-Asian based
3
Total
118
Note: The data underlined have been independently assured by PricewaterhouseCoopers.
Methodology
We have taken into account DFI’s total tax contribution on an accrual basis, which includes corporate income taxes,
property taxes for real property holdings or transactions, non-creditable VAT (‘GST’) and other sales or similar taxes,
employer’s portion of payroll taxes, social securities and other taxes paid that constitute costs to the company (such
as stamp duty, consumption tax, royalties, dividend, interest withholding tax).
Appendices
GRI index
Please refer to our website www.DFIretailgroup.com for a full listing of GRI index and related responses.
Feedback
We appreciate your interest in providing feedback on this ESG report. For further information, to share your comments,
or to utilise the information presented in this ESG Report and draw conclusions from the data, please email us at:
DFIcontactus@DFIretailgroup.com
79
ESG Report
Independent practitioner’s limited assurance report
To the Board of Directors of DFI Retail Group Holdings Limited
We have undertaken a limited assurance engagement in respect of the selected sustainability information of DFI Retail
Group Holdings Limited (the ‘Company’) listed below and identified as the numbers underlined in the Company’s
Environmental, Social and Governance Report for the year ended 31st December 2023 (the '2023 ESG Report’) (the ‘Identified
Sustainability Information’), which is included in the Company’s Annual Report 2023.
Identified Sustainability Information
The Identified Sustainability Information for the year ended 31st December 2023 is summarised below:
Climate Change
•
Total Scope 1 and Scope 2 GHG emissions
•
Total energy consumption
Human Capital
•
% of male team members / % of female team members
•
Gender diversity in senior leadership
•
Average hours of training
Health, Safety, and Well-being
•
Fatalities
•
High-consequence work-related injury rate
•
Recordable work-related injury rate
Tax Governance
•
Tax contribution
Our assurance was with respect to the year ended 31st December 2023 information only and we have not performed any
procedures with respect to earlier periods or any other elements included in the 2023 ESG Report and, therefore, do not
express any conclusion thereon.
Criteria
The criteria used by the Company to prepare the Identified Sustainability Information is set out in the ‘Climate Change’,
‘Human Capital’, ‘Health, Safety, and Well-being’ and ‘Tax Governance’ sections of the 2023 ESG Report (the ‘Criteria’).
The Company’s responsibility for the Identified Sustainability Information
The Company is responsible for the preparation of the Identified Sustainability Information in accordance with the Criteria.
This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of
Identified Sustainability Information that is free from material misstatement, whether due to fraud or error.
Inherent Limitations
The absence of a significant body of established practice on which to draw to evaluate and measure non-financial information
allows for different, but acceptable, measures and measurement techniques and can affect comparability between entities.
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the International Code of Ethics for
Professional Accountants (including International Independence Standards) issued by the International Ethics Standards
Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and
due care, confidentiality and professional behaviour.
80
DFI Retail Group Holdings Limited Annual Report 2023
Our firm applies International Standards on Quality Management, which require the firm to design, implement and
operate a system of quality management including policies or procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Identified Sustainability Information based on the
procedures we have performed and the evidence we have obtained. We conducted our limited assurance engagement in
accordance with International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements other than
Audits or Reviews of Historical Financial Information issued by the International Auditing and Assurance Standards Board.
That standard requires that we plan and perform this engagement to obtain limited assurance about whether the
Identified Sustainability Information is free from material misstatement.
A limited assurance engagement involves assessing the suitability in the circumstances of the Company’s use of the Criteria
as the basis for the preparation of the Identified Sustainability Information, assessing the risks of material misstatement
of the Identified Sustainability Information whether due to fraud or error, responding to the assessed risks as necessary in
the circumstances, and evaluating the overall presentation of the Identified Sustainability Information. A limited assurance
engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment
procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.
The procedures we performed were based on our professional judgement and included enquiries, observation of processes
performed, inspection of documents, analytical procedures, evaluating the appropriateness of quantification methods
and reporting policies, and agreeing or reconciling with underlying records.
Given the circumstances of the engagement, in performing the procedures listed above we:
•
made enquiries of the persons responsible for the Identified Sustainability Information;
•
understood the process for collecting and reporting the Identified Sustainability Information;
•
performed limited substantive testing on a selective basis of the Identified Sustainability Information at the
Company’s corporate head office to check that data had been appropriately measured, recorded, collated and
reported; and
•
considered the disclosure and presentation of the Identified Sustainability Information.
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent
than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable
assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether the Company’s
Identified Sustainability Information has been prepared, in all material respects, in accordance with the Criteria.
Limited Assurance Conclusion
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that
causes us to believe that the Company’s Identified Sustainability Information for the year ended 31st December 2023 is
not prepared, in all material respects, in accordance with the Criteria.
Restriction on Use
Our report has been prepared solely for the Board of Directors of the Company and is not to be used for any other
purpose. We do not assume responsibility towards or accept liability to any other parties for the content of this report.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
7th March 2024
Directors’ Profiles
Ben Keswick
Chairman
Ben Keswick joined the Board as Managing Director in April 2012 and held the
position until June 2020. He has been Chairman since 2013. He was also
managing director of Jardine Matheson from 2012 to 2020. He has held a number
of executive positions since joining the Jardine Matheson group in 1998, including
finance director and then chief executive officer of Jardine Pacific between 2003
and 2007, and group managing director of Jardine Cycle & Carriage until March
2012. He is executive chairman of Jardine Matheson and chairman of Hongkong
Land and Mandarin Oriental. He is also chairman of Jardine Cycle & Carriage and
a commissioner of Astra. He has an MBA from INSEAD.
John Witt*
Managing Director
John Witt joined the Board in 2016 and was appointed Managing Director in June
2020. He has been with the Jardine Matheson group since 1993 and has held a
number of senior positions, including group finance director of Jardine Matheson
from 2016 to 2020 and the chief financial officer of Hongkong Land and Mandarin
Oriental Hotel Group. John is chairman of Jardine Matheson Limited, group
managing director of Jardine Matheson and managing director of Hongkong Land
and Mandarin Oriental. He is also a director of Jardine Pacific, as well as a
commissioner and chairman of the executive committee of Astra. John is a
Chartered Accountant and has an MBA from INSEAD.
Scott Price*
Group Chief Executive
Scott Price joined the Board as Group Chief Executive effective on 1st August 2023.
Scott has over 30 years of retail, logistics and consumer packaged goods sectors
experience from around the world. Scott was previously the President, International
at UPS, before which he was the executive vice president of global leverage at
Walmart and was also the President & CEO of DHL Express in Europe. He started
his career with the Coca Cola Company and held country business positions in
various locations across Asia. He is also a director of Yonghui Superstores.
Clem Constantine*
Group Chief Financial Officer
and Property Director
Clem Constantine joined the Board as Group Chief Financial Officer in 2019, having
joined the DFI leadership team as Property Director in 2018. He is a Chartered
Accountant with extensive experience in senior finance and property roles in the
retail sector. He has previously held finance, international and property directorships
with Marks and Spencer, the Arcadia group, Debenhams and the Burton Group in
the United Kingdom.
* Executive Director
81
Dave Cheesewright
Dave Cheesewright joined the Board in 2021. He is a member of the Audit
Committee of the Company. He is currently a non-executive director of
Rapha Racing Ltd. He was the former president and chief executive officer
of Walmart International.
Weiwei Chen
Weiwei Chen joined the Board in 2021. She is the Chair of the Audit Committee
of the Company. She is currently an independent non-executive director and a
member of the audit committee and the compensation committee of LianBio
and board senior adviser to Pharmplus. She was the former vice president and
chief financial officer, China of Starbucks and chief financial officer, China Division
of Yum! Brands.
Adam Keswick
Adam Keswick joined the Board in 2012. Having joined Jardine Matheson in
2001, he was appointed to the Jardine Matheson board in 2007 and was deputy
managing director from 2012 to 2016. Adam is a director of Hongkong Land
and Mandarin Oriental. He is also a director of Ferrari NV, Schindler and Yabuli
China Entrepreneurs Forum and vice chairman of the supervisory board of
Rothschild & Co.
Christian Nothhaft
Christian Nothhaft joined the Board in 2021. He is currently the chair of Active
Capital Partners Limited. He was the former CEO of Watsons Personal Care Stores,
China and managing director of Fortress.
82
DFI Retail Group Holdings Limited Annual Report 2023
Directors’ Profiles
Our Management Committee
Scott Price
Group Chief Executive
Scott Price is currently Group Chief Executive for the DFI Retail Group; a multi-sector
retailer, based in Hong Kong operating in 13 different Asian markets, with some
11,000 retail outlets across the group and its associated companies.
Scott has over 30 years of retail, logistics and consumer packaged goods sectors
experience from around the world. He started his career with the Coca-Cola Company
and held country business positions in various locations across Asia. He joined
DHL Express as the President in Japan in 2002 and was appointed as Chief Executive
Officer – Asia Pacific in 2005 and Chief Executive Officer – Europe in 2007. From 2009
to 2017, Scott led Walmart’s Asia store business before moving to the United States
to lead global sourcing, international technology, real estate and strategy.
In 2017, Scott joined UPS as Chief Strategy and Transformation Officer, responsible
for strategic planning, Global Business Services and the company’s Advanced
Technology Group. He was appointed Executive Vice-President, UPS International
in 2020 responsible for all 220 markets outside the U.S.
Following UPS, Scott joined as an Independent Board Director of Coles Group in
Australia before joining the DFI Retail Group in August 2023.
Scott earned a bachelor’s degree in business administration from the University
of North Carolina in Charlotte. He also holds a master of business administration
degree and a master’s degree in Asian studies from the University of Virginia.
Clem Constantine
Group Chief Financial Officer
and Property Director
Clem was appointed CFO and Property Director in August 2019, having joined
the Group’s leadership team in September 2018. He is a Chartered Accountant
with extensive experience of senior finance and property roles in the retail sector.
He has previously held finance, international and property directorships with
Marks and Spencer, the Arcadia Group, Debenhams and the Burton Group in
the United Kingdom.
Choo Peng Chee
Chief Executive Officer,
Food
Choo was appointed CEO, Food in November 2023, responsible for all DFI Food
banners across Hong Kong, Macau, Singapore, Indonesia and Cambodia. He is
a director of the DFI Retail Group Management Services Board since 2013, and
a Board Member of Robinsons Retail Holdings, Inc. – an associate company of
DFI Retail Group. In 2022, he was nominated to represent Jardine Matheson Group
on the Board of Livi Bank.
He joined the Group in 2000 and was the CEO of Cold Storage in Singapore from 2005
to 2009. He subsequently served as the CEO for Wellcome Hong Kong from 2010, and
was appointed as the Regional Director, North Asia (Food) in 2013, and CEO – North
Asia & Group Convenience in 2018. In August 2021, he was appointed as CEO DFI
Retail North Asia covering all food retail operations (grocery retail and convenience
stores) in Hong Kong, Macau, China as well as the convenience format in Singapore.
Choo brings with him more than 35 years of retail experience to this role and has an
MBA in Retailing from the University of Stirling, Scotland.
Martin Lindström
Chief Executive Officer,
DFI IKEA
Martin was appointed CEO, DFI IKEA in August 2021 responsible for the Group’s IKEA
operations in Taiwan, Hong Kong, Macau and Indonesia. He joined the Group in 2007
as General Manager of IKEA Taiwan and subsequently CEO of the Group’s IKEA
business in 2010 and Group Director, IKEA in 2013.
Martin has more than 20 years’ experience in a variety of senior positions with the IKEA
business in Europe, Eastern Europe and more than a decade in the Asia Pacific region.
83
Danni Peirce
Chief Executive Officer,
7-Eleven
Danni Peirce was appointed Chief Executive Officer for 7-Eleven in November 2023,
responsible for a network of 3,300 stores across Hong Kong, South China, Singapore
and Macau. She also holds several board positions. Danni joined DFI in 2018 and has
held a number of roles, including Managing Director of Guardian Singapore, CEO of
yuu Rewards and Commercial Director for North Asia Food & Group Convenience.
Danni started her career with Deloitte before moving into retail, joining Tesco in
the UK in 2006. She subsequently joined Coles, the supermarket chain in Australia,
where she held a number of commercial leadership positions. In 2015, she moved to
work for Southeastern Grocers in the United States.
Danni holds a Management Studies degree from the University of Nottingham.
Andrew Wong
Chief Executive Officer,
Health & Beauty
Andrew was appointed CEO, Health & Beauty in November 2023, responsible for
Guardian and Mannings’ businesses across all DFI markets.
Andrew’s career spun from start-ups to the public sector and subsequently, to the
business sector. He found his passion for business and entrepreneurship when he first
ventured into the business world, and has been ever since working to propel businesses
towards excellence, innovation, and sustainability. Previously, Andrew had been CEO,
Health & Beauty North Asia since 2021, responsible for Mannings’ businesses in
Hong Kong, Macau and the Chinese mainland. Prior to that, he was Group Chief
Executive of Jardine Restaurant Group, overseeing the group’s businesses across Asia
from 2018. He joined SSP Group in 2013, and was subsequently appointed Regional
Managing Director responsible for developing the group’s multi-brand portfolio in Asia
Pacific. Andrew also held various leadership roles at DFI and Pacific Coffee in the past.
Andrew is also Chairman of MINDSET, a registered charity in Hong Kong founded
by the Jardine Matheson Group devoted to making a positive and sustainable
difference in mental health.
Erica Chan
Group Chief Legal,
Governance and Corporate
Affairs Officer
Erica was appointed Group Chief Legal, Governance and Corporate Affairs Officer in
December 2023. She is also a director of the DFI Retail Group Management Services
Board. In her role, she is responsible for the Legal, Communication and Corporate
Affairs, Sustainability, Group Technical, Risk management and Loss Prevention
functions for the DFI Group.
She brings over 25 years of experience with retail, e-commerce, media, governance
and regulatory compliance in the Asia Pacific region. Prior to joining DFI, she spent
12 years at Walmart, most recently as SVP, General Counsel and Chief Administrative
Officer, Asia, oversaw all legal matters in Asia in addition to human resources and
administrative functions for the Asia office. She was also part of Walmart’s Global
President’s Diversity and Inclusion Council.
Erica also spent 13 years at Star TV Group where she was General Counsel for
Greater China and General Manager for Hong Kong.
Erica is a Hong Kong qualified solicitor. She received her Postgraduate Certificate in
Laws from University of Hong Kong, Common Professional in Laws from University of
Sussex and Bachelor of Social Science in Government and Public Administration degree
from the Chinese University of Hong Kong.
84
DFI Retail Group Holdings Limited Annual Report 2023
Shen Li
Group Corporate Strategy
and yuu Rewards Director
Shen was appointed Group Strategy and yuu Rewards Director in September 2023.
Shen joined the Group in September 2019 as Group Corporate Finance Director,
responsible for Group strategy, M&A and investor relations. His responsibilities
were expanded in September 2023 to include accountability for yuu Rewards, the
Group’s coalition customer loyalty programme. Prior to joining DFI, Shen spent
over a decade as an equities research analyst covering the consumer sector across
both Australia and Asia. Shen began his career in M&A advisory in Australia.
Shen holds Bachelor of Commerce and Bachelor of Laws (Hons) degrees from
the University of Melbourne and is a CFA Charterholder.
Wee Lee Loh
Group Chief Digital Officer
Wee Lee was appointed the Group Chief Digital Officer in September 2023. He is
responsible for the Group’s efforts in driving the growth of Digital businesses.
Prior to joining DFI, Wee Lee held various senior management roles with Lazada Group,
serving in both regional and country business roles across corporate development,
innovation and general business management. As the CEO of Lazada Singapore,
he led both the Lazada marketplace and Singapore’s leading online grocery Redmart,
transforming the business towards growth and sustainability.
Wee Lee also held other leadership roles in two Singapore-listed Engineering and
Technology companies, leading strategy, corporate development and business
operation roles spanning multiple geographies. He led and incubated the growth
of emerging new businesses across energy, infrastructure, robotics, automotives and
AI-linked domains. Wee Lee started his private sector career as a management
consultant with McKinsey and Company across Asia Pacific.
Wee Lee has lived and worked in more than 10 countries. He received his Bachelor’s
in Economics (Summa Cum Laude), and graduated as a Merrill Presidential Scholar.
He also completed his Masters in Statistics at Harvard University.
Joy Jinghui Xu
Group Chief People &
Culture Officer
Joy was appointed Group Chief People & Culture Officer in August 2023. She is a
member of the DFI Group Management Committee and the Jardine Group Senior
People & Culture Leadership Team. She is responsible for leading the DFI Retail Group
People & Culture organisation and driving our ambitious agenda while operationalising
DFI People & Culture Strategy across all functional areas and all formats and banners
in all markets.
Joy brings with her extensive international expertise in HR leadership roles which
spans the US, China, UAE, Germany and Hong Kong. She has previously held
leadership roles at Procter & Gamble, PepsiCo, Novartis/Sandoz and Manulife.
Joy was named one of the Global Rising Stars by Global Women Forum in 2007
and 2008. In 2010, she was recognised for HR excellence by World HRD Congress.
In 2020, she was recognised as one of the 501 Most Fabulous Global HR Leaders
by the World HRD Congress. She was named an Imergey Luminary 2022.
Joy served as a board member of LumiVoce Foundation Limited, based in Hong Kong
that focuses on protecting biodiversity.
Joy earned a bachelor’s degree in Applied English from the South China University
of Technology.
85
Our Management Committee
86
DFI Retail Group Holdings Limited Annual Report 2023
Consolidated Profit and Loss Account
2023
2022
Underlying
business
performance
Non-
trading
items
Total
Underlying
business
performance
Non-
trading
items
Total
Note
US$m
US$m
US$m
US$m
US$m
US$m
Revenue
2
9,169.9
–
9,169.9
9,174.2
–
9,174.2
Net operating costs
3
(8,876.1)
(131.2)
(9,007.3)
(8,965.0)
35.1
(8,929.9)
Operating profit
4
293.8
(131.2)
162.6
209.2
35.1
244.3
Financing charges
(151.8)
–
(151.8)
(126.4)
–
(126.4)
Financing income
7.9
–
7.9
4.8
–
4.8
Net financing charges
5
(143.9)
–
(143.9)
(121.6)
–
(121.6)
Share of results of
associates and
joint ventures
6
43.4
9.2
52.6
(34.9)
(177.1)
(212.0)
Profit/(loss) before tax
193.3
(122.0)
71.3
52.7
(142.0)
(89.3)
Tax
7
(41.9)
1.0
(40.9)
(31.4)
0.1
(31.3)
Profit/(loss) after tax
151.4
(121.0)
30.4
21.3
(141.9)
(120.6)
Attributable to:
Shareholders of
the Company
154.7
(122.5)
32.2
28.8
(143.4)
(114.6)
Non-controlling interests
(3.3)
1.5
(1.8)
(7.5)
1.5
(6.0)
151.4
(121.0)
30.4
21.3
(141.9)
(120.6)
US¢
US¢
US¢
US¢
Earnings/(loss) per share
8
– basic
11.49
2.39
2.14
(8.51)
– diluted
11.43
2.38
2.14
(8.48)
for the year ended 31st December 2023
87
Consolidated Statement of
Comprehensive Income
2023
2022
Note
US$m
US$m
Profit/(loss) for the year
30.4
(120.6)
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans
(1.7)
1.3
Net revaluation surplus before transfer to investment properties
– tangible assets
11
1.5
–
– right-of-use assets
12
63.2
38.2
Tax relating to items that will not be reclassified
7
0.3
(0.2)
63.3
39.3
Share of other comprehensive income of associates and joint ventures
2.4
1.8
65.7
41.1
Items that may be reclassified subsequently to profit or loss:
Net exchange translation differences
– net loss arising during the year
(15.2)
(163.0)
– transfer to profit and loss
48.7
4.2
33.5
(158.8)
Cash flow hedges
– net gain arising during the year
6.7
35.4
– transfer to profit and loss
(34.3)
(4.4)
(27.6)
31.0
Tax relating to items that may be reclassified
7
1.2
(1.4)
Share of other comprehensive expense of associates and joint ventures
(3.0)
(1.9)
4.1
(131.1)
Other comprehensive income/(expense) for the year, net of tax
69.8
(90.0)
Total comprehensive income for the year
100.2
(210.6)
Attributable to:
Shareholders of the Company
96.8
(205.1)
Non-controlling interests
3.4
(5.5)
100.2
(210.6)
for the year ended 31st December 2023
88
DFI Retail Group Holdings Limited Annual Report 2023
at 31st December 2023
Consolidated Balance Sheet
2023
2022
Note
US$m
US$m
Net operating assets
Intangible assets
10
289.6
411.9
Tangible assets
11
708.1
802.9
Right-of-use assets
12
2,662.3
2,670.1
Investment properties
13
122.2
39.8
Associates and joint ventures
14
1,793.7
1,781.4
Other investments
15
6.7
21.7
Non-current debtors
16
102.2
124.3
Deferred tax assets
17
35.8
27.3
Pension assets
18
4.4
6.7
Non-current assets
5,725.0
5,886.1
Stocks
763.5
871.4
Current debtors
16
256.3
252.9
Current tax assets
15.1
19.5
Cash and bank balances
19
303.4
230.7
1,338.3
1,374.5
Assets held for sale
20
47.8
65.7
Current assets
1,386.1
1,440.2
Current creditors
21
(2,095.9)
(2,169.7)
Current borrowings
22
(771.1)
(837.5)
Current lease liabilities
23
(562.0)
(586.3)
Current tax liabilities
(39.7)
(39.9)
Current provisions
24
(38.9)
(40.2)
(3,507.6)
(3,673.6)
Liabilities associated with assets held for sale
20
(19.8)
–
Current liabilities
(3,527.4)
(3,673.6)
Net current liabilities
(2,141.3)
(2,233.4)
Long-term borrowings
22
(153.0)
(258.7)
Non-current lease liabilities
23
(2,285.8)
(2,289.4)
Deferred tax liabilities
17
(41.2)
(40.0)
Pension liabilities
18
(6.2)
(5.8)
Non-current creditors
21
(3.7)
(8.7)
Non-current provisions
24
(105.7)
(108.7)
Non-current liabilities
(2,595.6)
(2,711.3)
988.1
941.4
89
2023
2022
Note
US$m
US$m
Total equity
Share capital
25
75.2
75.2
Share premium and capital reserves
27
72.8
67.6
Revenue and other reserves
832.2
804.3
Shareholders’ funds
980.2
947.1
Non-controlling interests
7.9
(5.7)
988.1
941.4
Approved by the Board of Directors
Scott Price
Clem Constantine
Directors
7th March 2024
90
DFI Retail Group Holdings Limited Annual Report 2023
Consolidated Statement of
Changes in Equity
for the year ended 31st December 2023
Share
capital
Share
premium
Capital
reserves
Revenue
and other
reserves
Attributable
to
shareholders
of the
Company
Attributable
to non-
controlling
interests
Total
equity
US$m
US$m
US$m
US$m
US$m
US$m
US$m
2023
At 1st January
75.2
37.6
30.0
804.3
947.1
(5.7)
941.4
Total comprehensive
income
–
–
–
96.8
96.8
3.4
100.2
Dividends paid by the
Company (note 28)
–
–
–
(67.3)
(67.3)
–
(67.3)
Share-based long-term
incentive plans
–
–
12.4
–
12.4
–
12.4
Shares purchased for
a share-based long-
term incentive plan
–
–
–
(9.7)
(9.7)
–
(9.7)
Subsidiaries disposed of
(note 30(g))
–
–
–
–
–
10.2
10.2
Change in interests
in associates and
joint ventures
–
–
–
0.9
0.9
–
0.9
Transfer
–
2.0
(9.2)
7.2
–
–
–
At 31st December
75.2
39.6
33.2
832.2
980.2
7.9
988.1
2022
At 1st January
75.2
35.6
24.6
1,131.8
1,267.2
–
1,267.2
Total comprehensive
income
–
–
–
(205.1)
(205.1)
(5.5)
(210.6)
Dividends paid by the
Company (note 28)
–
–
–
(100.9)
(100.9)
–
(100.9)
Dividends paid to
non-controlling
interests
–
–
–
–
–
(0.2)
(0.2)
Unclaimed dividends
forfeited
–
–
–
0.1
0.1
–
0.1
Share-based long-term
incentive plans
–
–
7.4
–
7.4
–
7.4
Shares purchased for
a share-based long-
term incentive plan
–
–
–
(20.0)
(20.0)
–
(20.0)
Change in interests
in associates and
joint ventures
–
–
–
(1.6)
(1.6)
–
(1.6)
Transfer
–
2.0
(2.0)
–
–
–
–
At 31st December
75.2
37.6
30.0
804.3
947.1
(5.7)
941.4
Revenue and other reserves at 31st December 2023 comprised revenue reserves of US$1,088.3 million (2022:
US$1,127.2 million), hedging reserves of US$12.2 million (2022: US$38.6 million), revaluation reserves of US$98.5 million
(2022: US$38.2 million) and exchange reserves of US$366.8 million loss (2022: US$399.7 million loss).
91
for the year ended 31st December 2023
Consolidated Cash Flow Statement
2023
2022
Note
US$m
US$m
Operating activities
Operating profit
4
162.6
244.3
Depreciation and amortisation
30(a)
827.2
861.0
Other non-cash items
30(b)
148.1
(40.4)
Decrease/(increase) in working capital
30(c)
45.4
(6.7)
Interest received
8.7
2.6
Interest and other financing charges paid
(153.2)
(123.3)
Tax paid
(40.8)
(42.5)
998.0
895.0
Dividends from associates and joint ventures
45.6
44.8
Cash flows from operating activities
1,043.6
939.8
Investing activities
Purchase of subsidiaries
30(d)
–
(8.8)
Purchase of associates and joint ventures
30(e)
(18.4)
(8.3)
Purchase of other investments
30(f)
–
(10.0)
Purchase of intangible assets
(22.9)
(19.8)
Purchase of tangible assets
(173.4)
(223.9)
Repayment from/(advances to) associates and joint ventures
1.2
(1.2)
Sale of subsidiaries
30(g)
(23.8)
–
Sale of associates and joint ventures
30(h)
–
6.9
Sale of properties
30(i)
142.0
63.6
Sale of other tangible assets
0.7
0.5
Cash flows from investing activities
(94.6)
(201.0)
Financing activities
Purchase of shares for a share-based long-term incentive plan
30(j)
(9.7)
(20.0)
Drawdown of borrowings
22
1,268.9
1,429.4
Repayment of borrowings
22
(1,486.1)
(1,468.7)
Net increase in other short-term borrowings
22
51.3
92.7
Principal elements of lease payments
30(k)
(624.7)
(660.6)
Dividends paid by the Company
28
(67.3)
(100.9)
Dividends paid to non-controlling interests
–
(0.2)
Cash flows from financing activities
(867.6)
(728.3)
Net increase in cash and cash equivalents
81.4
10.5
Cash and cash equivalents at 1st January
213.7
210.0
Effect of exchange rate changes
3.1
(6.8)
Cash and cash equivalents at 31st December
30(l)
298.2
213.7
92
DFI Retail Group Holdings Limited Annual Report 2023
General Information
DFI Retail Group Holdings Limited (the ‘Company’) is incorporated in Bermuda and has a primary listing in the standard
segment of the London Stock Exchange, with secondary listings in Bermuda and Singapore.
1. Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards
(’IFRS Accounting Standards’), including International Accounting Standards (‘IAS’) and Interpretations as issued
by the International Accounting Standards Board (‘IASB’). The financial statements have been prepared on a going
concern basis and under the historical cost convention except as disclosed in the accounting policies.
Details of the Group’s material accounting policies are included in note 37.
The Group has adopted the following amendments for the annual reporting period commencing 1st January 2023.
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 (effective from
1st January 2023)
The amendments require entities to disclose material rather than significant accounting policies. The amendments
define what is ‘material accounting policy information’ and explain how to identify when accounting policy information
is material. Material accounting policy information is information that, when considered together with other information
included in an entity’s financial statements, can reasonably be expected to influence decisions that the primary users
of general purpose financial statements make on the basis of those financial statements. IASB further clarifies that
immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material
accounting information. To support this amendment, the IASB also amended IFRS Practice Statement 2 Making
Materiality Judgements to provide guidance on how to apply the concept of materiality to accounting policy disclosures.
The material accounting policies following the adoption of IAS 1 are included in note 37.
Amendment to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(effective from 1st January 2023)
The amendment requires deferred tax to be recognised on transactions that, on initial recognition, give rise to equal
amounts of taxable and deductible temporary differences. They typically apply to transactions such as leases of
lessees and decommissioning obligations and require the recognition of additional deferred tax assets and liabilities.
On adoption of the amendment, the deferred tax assets and liabilities had been restated in the notes to the financial
statements (note 17) with no impact on the balance sheet.
Amendment to IAS 12 – International Tax Reform – Pillar Two Model Rules (effective for annual reporting
period commencing on or after 1st January 2023)
The amendment provides a temporary mandatory exception from deferred tax accounting in respect of Pillar Two income
taxes and certain additional disclosure requirements. The Group is within the scope of the OECD Pillar Two model rules,
and has applied the amendment from 1st January 2023.
Pillar Two legislation has been enacted or substantially enacted in certain jurisdictions in which the Group operates.
The legislation will be effective for the Group’s annual reporting period commencing 1st January 2024. Since the
Pillar Two legislation was not effective at 31st December 2023, the Group has no related current tax exposure.
The Group is in scope of the enacted or substantively enacted legislation and has performed an assessment of the
Group’s potential exposure to Pillar Two income taxes when the legislation comes into effect. The assessment of
the potential exposure to Pillar Two income taxes is based on the latest financial information for the year ended
31st December 2023 of the constituent entities in the Group. Based on the assessment, the effective tax rates
in most of the jurisdictions in which the Group operates are above 15%. However, there are a limited number of
jurisdictions where the effective tax rate is slightly below or close to 15%. The Group does not expect a material
exposure to Pillar Two income taxes in those jurisdictions.
Notes to the Financial Statements
93
1.
Basis of Preparation continued
Apart from the above, there are no other amendments which are effective in 2023 and relevant to the Group’s operations,
that have a significant impact on the Group’s results, financial position and accounting policies.
The Group has not early adopted any other standards, interpretations or amendments that have been issued but not yet
effective (note 38).
The principal operating subsidiaries, associates and joint ventures have different functional currencies in line with the
economic environments of the locations in which they operate. The functional currency of the Company is United States
dollars. The consolidated financial statements are presented in United States dollars.
The Group’s reportable segments are set out in notes 2, 4 and 6 and are described below.
2.
Revenue
2023
2022
US$m
US$m
Sales of goods
Analysis by reportable segment:
Food
3,285.4
3,872.4
Convenience
2,441.4
2,266.0
Health and Beauty
2,444.8
2,024.6
Home Furnishings
793.7
839.2
8,965.3
9,002.2
Revenue from other sources
204.6
172.0
9,169.9
9,174.2
Reportable segments are identified on the basis of internal reports about components of the Group that are regularly
reviewed by the Executive Directors of the Company for the purpose of resource allocation and performance assessment.
DFI Retail Group operates various divisions: Food, Convenience, Health and Beauty, Home Furnishings, Restaurants and
Other Retailing. Food represents the grocery retail businesses (including the Group’s associate, Yonghui, a leading grocery
retailer in the Chinese mainland). Convenience is the Group’s 7-Eleven businesses. Health and Beauty comprises the
health and beauty businesses. Home Furnishings is the Group’s IKEA businesses. Restaurants is the Group’s associate,
Maxim’s, one of Asia’s leading food and beverage companies. Other Retailing represents the department stores, specialty
and Do-It-Yourself (‘DIY’) stores of the Group’s Philippines associate, Robinsons Retail.
94
DFI Retail Group Holdings Limited Annual Report 2023
2. Revenue continued
Set out below is an analysis of the Group’s revenue by geographical locations:
2023
2022
US$m
US$m
North Asia
6,675.4
6,332.2
South East Asia
2,494.5
2,842.0
9,169.9
9,174.2
The geographical areas covering North Asia and South East Asia, are determined by the geographical location of
customers. North Asia comprises Hong Kong, the Chinese mainland, Macau and Taiwan. South East Asia comprises
Singapore, Cambodia, Malaysia, Indonesia and Brunei.
3. Net Operating Costs
2023
2022
Underlying
business
performance
Non-
trading
items
Total
Underlying
business
performance
Non-
trading
items
Total
US$m
US$m
US$m
US$m
US$m
US$m
Cost of sales
(5,957.2)
–
(5,957.2)
(6,108.4)
–
(6,108.4)
Other operating income
10.5
61.0
71.5
31.2
50.5
81.7
Selling and
distribution costs
(2,412.1)
–
(2,412.1)
(2,402.6)
–
(2,402.6)
Administration and other
operating expenses
(517.3)
(192.2)
(709.5)
(485.2)
(15.4)
(500.6)
(8,876.1)
(131.2)
(9,007.3)
(8,965.0)
35.1
(8,929.9)
95
Notes to the Financial Statements
3. Net Operating Costs continued
The following (charges)/credits are included in net operating costs:
2023
2022
US$m
US$m
Cost of stocks recognised as expense
(5,893.0)
(6,048.1)
Amortisation of intangible assets (note 10)
(30.9)
(31.5)
Depreciation of tangible assets (note 11)
(149.1)
(150.8)
Amortisation/depreciation of right-of-use assets (note 12)
(647.2)
(678.7)
Impairment of intangible assets (note 10)
(111.8)
(6.3)
(Impairment)/reversal of impairment of tangible assets (note 11)
(7.0)
0.3
Impairment of right-of-use assets (note 12)
(0.6)
(0.9)
Impairment of trade and other debtors
(3.7)
(1.8)
Write down of stocks
(6.1)
(7.4)
Reversal of write down of stocks
4.7
2.4
Employee benefit expense
– salaries and benefits in kind
(995.2)
(963.4)
– share options and share awards (note 27)
(12.4)
(7.4)
– defined benefit pension plans (note 18)
(12.6)
(14.4)
– defined contribution pension plans
(46.2)
(47.3)
(1,066.4)
(1,032.5)
Expenses relating to short-term leases
(82.7)
(58.0)
Expenses relating to variable lease payments not included in lease liabilities
(36.4)
(23.1)
Gain on lease modification and termination
0.3
5.0
Sublease income
6.5
21.4
Rental income from properties
7.9
10.6
Interest income from debt investments
0.6
0.6
Auditors’ remuneration
– audit
(5.0)
(4.7)
– non-audit services
(1.0)
(1.0)
(6.0)
(5.7)
Net foreign exchange gains/(losses)
0.5
(0.5)
Profit on sale of properties (note 9)
64.3
31.1
Loss on disposals of other tangible and intangible assets
(6.8)
(3.0)
96
DFI Retail Group Holdings Limited Annual Report 2023
4. Operating Profit
2023
2022
US$m
US$m
Analysis by reportable segment:
Food
45.3
90.9
Convenience
87.7
50.5
Health and Beauty
212.5
93.6
Home Furnishings
18.5
45.5
364.0
280.5
Selling, general and administrative expenses*
(151.9)
(147.3)
Underlying operating profit before IFRS 16†
212.1
133.2
IFRS 16 adjustment‡
81.7
76.0
Underlying operating profit
293.8
209.2
Non-trading items (note 9):
– divestment of Malaysia Grocery Retail business
(54.4)
–
– business restructuring costs
(12.4)
(5.8)
– impairment of intangible assets
(109.8)
(6.3)
– impairment of right-of-use assets
–
(2.2)
– gain on partial disposal of a joint venture
–
6.9
– gain on acquisition of an associate
–
11.2
– profit on sale of properties
61.0
31.1
– change in fair value of an investment property
(0.6)
–
– change in fair value of equity and debt investments
(15.0)
0.2
162.6
244.3
* Included costs incurred for e-commerce development and digital innovation.
† This measure of profit and loss is regularly provided to the management. Property lease payments and depreciation of reinstatement costs under the
lease contracts were included in the Group’s analysis of reportable and geographical segments’ results.
‡ Represented the reversal of lease payments which were accounted for on a straight-line basis, adjusted by the lease contracts recognised under IFRS 16
‘Leases’, primarily for the depreciation charge on right-of-use assets.
97
Notes to the Financial Statements
4. Operating Profit continued
Set out below is an analysis of the Group’s underlying operating profit by geographical locations:
2023
2022
US$m
US$m
North Asia
351.5
259.7
South East Asia
12.5
20.8
364.0
280.5
Selling, general and administrative expenses*
(151.9)
(147.3)
Underlying operating profit before IFRS 16†
212.1
133.2
IFRS 16 adjustment‡
81.7
76.0
Underlying operating profit
293.8
209.2
5. Net Financing Charges
2023
2022
US$m
US$m
Interest expense
– bank loans and advances
(49.5)
(33.4)
– lease liabilities
(95.9)
(86.3)
– other loans
–
(0.5)
(145.4)
(120.2)
Commitment and other fees
(6.4)
(6.2)
Financing charges
(151.8)
(126.4)
Financing income
7.9
4.8
(143.9)
(121.6)
98
DFI Retail Group Holdings Limited Annual Report 2023
6. Share of Results of Associates and Joint Ventures
2023*
2022*
US$m
US$m
Analysis by reportable segment:
Food
(39.4)
(269.0)
Convenience
0.3
–
Health and Beauty
8.5
1.4
Restaurants
77.6
52.2
Other Retailing
5.6
3.4
52.6
(212.0)
Share of results in Food segment included an impairment charge on the Group’s interest in Robinsons Retail which
amounted to US$170.8 million in 2022 (note 14).
Share of results of associates and joint ventures included the following gains/(losses) from non-trading items (note 9):
2023*
2022*
US$m
US$m
Impairment charge on interest in Robinsons Retail
–
(170.8)
Impairment charge of Yonghui’s investments
(9.8)
(17.2)
Change in fair value of Maxim’s investment property
(0.9)
14.3
Change in fair value of Yonghui’s investment property
(0.2)
5.7
Change in fair value of Yonghui’s equity investments
(0.9)
(11.9)
Change in fair value of Robinsons Retail’s equity investments
20.8
(1.4)
Net gain from divestment of an investment by Yonghui
–
4.1
Net gains from sale of debt investments by Robinsons Retail
0.2
0.1
9.2
(177.1)
Results are shown after tax and non-controlling interests in the associates and joint ventures.
* Included 12 months results from 1st October 2022 to 30th September 2023 (2022: 1st October 2021 to 30th September 2022) for Yonghui and
Robinsons Retail, based on their latest published announcements.
99
Notes to the Financial Statements
7. Tax
2023
2022
US$m
US$m
Tax charged to profit and loss is analysed as follows:
Current tax
(45.8)
(50.9)
Deferred tax
4.9
19.6
(40.9)
(31.3)
Reconciliation between tax expense and tax at the applicable tax rate †:
Tax at applicable tax rate
(11.4)
8.8
Income not subject to tax
27.4
14.1
Expenses not deductible for tax purposes
(54.1)
(42.4)
Tax losses and temporary differences not recognised
(12.0)
(15.5)
Utilisation of previously unrecognised tax losses and temporary differences
10.5
6.3
Recognition of previously unrecognised temporary differences
(1.4)
5.5
Over/(under) provision in prior years
3.3
(8.4)
Withholding tax
(4.9)
(3.7)
Other
1.7
4.0
(40.9)
(31.3)
Tax relating to components of other comprehensive income/expense is
analysed as follows:
Remeasurements of defined benefit plans
0.3
(0.2)
Cash flow hedges
1.2
(1.4)
1.5
(1.6)
Share of tax charge of associates and joint ventures of US$23.4 million (2022: US$7.1 million) is included in share of results
of associates and joint ventures.
† The applicable tax rate for the year was 18.2% (2022: 14.9%) and represented the weighted average of the rates of taxation prevailing in the territories in
which the Group operates.
100
DFI Retail Group Holdings Limited Annual Report 2023
8. Earnings/(Loss) per Share
Basic earnings/(loss) per share are calculated on profit attributable to shareholders of US$32.2 million (2022: loss of
US$114.6 million), and on the weighted average number of 1,346.1 million (2022: 1,346.8 million) shares in issue during
the year.
Diluted earnings/(loss) per share are calculated on profit attributable to shareholders of US$32.2 million (2022: loss
of US$114.6 million), and on the weighted average number of 1,353.6 million (2022: 1,350.8 million) shares in issue
after adjusting for 7.5 million (2022: 4.0 million) shares which are deemed to be issued for no consideration under the
share-based long-term incentive plans based on the average share price during the year.
The weighted average number of shares is arrived at as follows:
Ordinary shares in millions
2023
2022
Weighted average number of shares in issue
1,353.6
1,353.3
Shares held by a subsidiary of the Group under a share-based long-term incentive plan
(7.5)
(6.5)
Weighted average number of shares for basic earnings per share calculation
1,346.1
1,346.8
Adjustment for shares deemed to be issued for no consideration under
the share-based long-term incentive plans
7.5
4.0
Weighted average number of shares for diluted earnings per share calculation
1,353.6
1,350.8
Additional basic and diluted earnings/(loss) per share are also calculated based on underlying profit attributable to
shareholders. A reconciliation of earnings is set out below:
2023
2022
Basic
earnings
per share
Diluted
earnings
per share
Basic
(loss)/
earnings
per share
Diluted
(loss)/
earnings
per share
US$m
US¢
US¢
US$m
US¢
US¢
Profit/(loss) attributable
to shareholders
32.2
2.39
2.38
(114.6)
(8.51)
(8.48)
Non-trading items (note 9)
122.5
143.4
Underlying profit
attributable to
shareholders
154.7
11.49
11.43
28.8
2.14
2.14
101
Notes to the Financial Statements
9. Non-trading Items
An analysis of non-trading items in operating profit and profit/(loss) attributable to shareholders is set out below:
Operating profit
Profit/(loss) attributable
to shareholders
2023
2022
2023
2022
US$m
US$m
US$m
US$m
Divestment of Malaysia Grocery Retail business
– loss on disposal of subsidiaries (note 30(g))
(49.1)
–
(48.8)
–
– impairment of tangible assets
(3.0)
–
(3.0)
–
– loss on lease modifications
(3.2)
–
(3.2)
–
– gain on sale of associated properties (note 30(i))
3.3
–
3.3
–
– other
(2.4)
–
(2.4)
–
(54.4)
–
(54.1)
–
Business restructuring costs
(12.4)
(5.8)
(11.4)
(5.4)
Impairment of intangible assets
(109.8)
(6.3)
(109.8)
(6.3)
Impairment of right-of-use assets
–
(2.2)
–
(2.1)
Gain on partial disposal of a joint venture
–
6.9
–
6.9
Gain on acquisition of an associate
–
11.2
–
11.2
Profit on sale of properties (note 30(i))
61.0
31.1
59.2
29.2
Change in fair value of an investment property
(0.6)
–
(0.6)
–
Change in fair value of equity and debt
investments (note 15)
(15.0)
0.2
(15.0)
0.2
Impairment charge on interest in Robinsons Retail (note 6)
–
–
–
(170.8)
Share of impairment charge of Yonghui’s investments
–
–
(9.8)
(17.2)
Share of change in fair value of Maxim’s
investment property
–
–
(0.9)
14.3
Share of change in fair value of Yonghui’s
investment property
–
–
(0.2)
5.7
Share of change in fair value of Yonghui’s
equity investments
–
–
(0.9)
(11.9)
Share of change in fair value of Robinsons Retail’s
equity investments
–
–
20.8
(1.4)
Share of net gain from divestment of an investment
by Yonghui
–
–
–
4.1
Share of net gains from sale of debt investments
by Robinsons Retail
–
–
0.2
0.1
(131.2)
35.1
(122.5)
(143.4)
102
DFI Retail Group Holdings Limited Annual Report 2023
9. Non-trading Items continued
In March 2023, the Group exited the Grocery Retail business in Malaysia through disposals of certain of its subsidiaries
and associated properties to a third party. The disposal consisted of two phases. In March, shareholdings in GCH Retail
(Malaysia) Sdn. Bhd. (‘GCH’), and Jutaria Gemilang Sdn Bhd. (‘Jutaria’), which operated a supermarket and hypermarket
chain, and mini-marts respectively, were disposed. In November, the shareholding in Jupiter Lagoon Sdn. Bhd. (‘Jupiter
Lagoon’), holding the distribution centres, was disposed. A loss on disposal of subsidiaries amounting to US$49.1 million,
including a cumulative exchange translation losses of US$48.7 million, was recorded. Certain tangible assets in the
business were impaired upon reclassification to assets held for sale during the year (note 20). The cash received from
the divestment of the Malaysia Grocery Retail business was US$19.3 million, representing the cash outflows related to
disposals of subsidiaries of US$23.8 million (note 30(g)) and proceeds from the disposal of associated properties of
US$43.1 million (note 30(i)).
The Group is in the process of reviewing and restructuring its operation formats. In view of this, a restructuring cost
primarily relating to employee related costs of US$12.5 million was charged to profit and loss. In 2022, the restructuring
costs were mainly incurred for the Group’s 2018 restructuring of its South East Asia Food business.
In 2022, the Group acquired 100% interests 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 acquisition, 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$6.3 million on the related goodwill
was recorded.
Impairment of intangible assets in 2023 related to the impairment of goodwill associated with San Miu business in
Macau, Giant business in Singapore and the remaining goodwill in Digital Hong Kong and Digital Singapore after the
impairment review (note 10).
Gain on partial disposal of a joint venture in 2022 represented the gain arising from the Group’s disposal of 8.5% of
its interest in RTA. The Group’s interest in RTA is reduced from 50% to 41.5% upon the completion of the transaction.
Gain on acquisition of an associate in 2022 related to the Group’s acquisition of 40% interest in Minden International
Pte. Ltd. (‘Minden’) from a third party. Minden supports the Group’s customer loyalty programme in Singapore.
103
Notes to the Financial Statements
10. Intangible Assets
Goodwill
Computer
software
Other
Total
US$m
US$m
US$m
US$m
2023
Cost
456.3
274.8
12.9
744.0
Amortisation and impairment
(144.6)
(176.4)
(11.1)
(332.1)
Net book value at 1st January
311.7
98.4
1.8
411.9
Exchange differences
(0.2)
–
–
(0.2)
Additions
–
22.9
–
22.9
Disposal of subsidiaries
–
(1.9)
–
(1.9)
Disposals
–
(0.4)
–
(0.4)
Amortisation
–
(30.6)
(0.3)
(30.9)
Impairment charge
(109.8)
(2.0)
–
(111.8)
Net book value at 31st December
201.7
86.4
1.5
289.6
Cost
376.0
265.4
12.4
653.8
Amortisation and impairment
(174.3)
(179.0)
(10.9)
(364.2)
201.7
86.4
1.5
289.6
2022
Cost
448.8
252.7
13.6
715.1
Amortisation and impairment
(143.9)
(147.9)
(11.4)
(303.2)
Net book value at 1st January
304.9
104.8
2.2
411.9
Exchange differences
(0.1)
(1.4)
(0.1)
(1.6)
New subsidiaries
13.2
–
–
13.2
Additions
–
26.2
–
26.2
Amortisation
–
(31.2)
(0.3)
(31.5)
Impairment charge
(6.3)
–
–
(6.3)
Net book value at 31st December
311.7
98.4
1.8
411.9
Cost
456.3
274.8
12.9
744.0
Amortisation and impairment
(144.6)
(176.4)
(11.1)
(332.1)
311.7
98.4
1.8
411.9
Goodwill is allocated to groups of cash-generating units (‘CGU’) identified by banners or groups of stores acquired in
each territory.
Addition of goodwill in 2022 related to the acquisition of the 100% interests in Digital Hong Kong and Digital Singapore.
Management has assessed the recoverable amount of each CGU based on value-in-use calculations using cash flow
projections in the approved budgets which have forecasts covering a period of three years and projections for a further
two years. Cash flows beyond the projection periods were extrapolated using the assumptions on average sales growth
rates, average annual profit growth rates, pre-tax discount rates and long-term growth rates. The pre-tax discount rates
reflected business specific risks relating to the relevant industries, business life-cycle and the risk related to the places
of operation.
104
DFI Retail Group Holdings Limited Annual Report 2023
10. Intangible Assets continued
Following the impairment review, the Group has recognised impairment charges against goodwill relating to its San Miu
business in Macau amounting to US$60.0 million, its Giant business in Singapore amounting to US$42.9 million and
Digital Hong Kong and Digital Singapore amounting to US$6.9 million during the year. Goodwill relating to Giant
business in Singapore and Digital Hong Kong and Digital Singapore was fully impaired and goodwill relating to San Miu in
Macau was reduced to US$120.3 million.
The recoverable amount based on the value-in-use calculation in the impairment review for San Miu in Macau in 2023
was inherently sensitive to changes in assumptions. Summary of the significant assumptions used and sensitivities on
how the recoverable amount would change if the assumptions changed by a reasonably possible amount for San Miu are
listed below:
Assumptions used:
Cash flow projection period
5 years
Average sales growth rate
5.1%
Average gross profit growth rate
6.3%
Pre-tax discount rate
10.9%
Long-term growth rate
2.5%
US$m
Sensitivities on recoverable amount:
– average sales growth rate conforms to long-term growth rate of 2.5%
(33.7)
– average gross profit growth rate 1.5% lower
(36.3)
– pre-tax discount rate 1.0% higher
(16.2)
– long-term growth rate 1.0% lower
(11.9)
The sensitivities on recoverable amount represented the amount of further impairment charge that would have been
required if there were changes in management assumptions.
For Giant in Singapore, key assumptions used for value-in-use calculation included average sales growth rate of 1.0%
and average gross profit growth rate of 0.3%. Cash flows beyond the five-year period are extrapolated using long-term
growth rate of 1.0% and pre-tax discount rate of 9.6%.
In 2022, goodwill relating to Digital Hong Kong and Digital Singapore amounting to US$6.3 million was impaired and
charged to the profit and loss following the impairment review.
Key assumptions used for value-in-use calculations for the remaining significant balances of goodwill in 2023 include
budgeted gross margins between 27% and 36% (2022: 21% and 29%) and long-term sales growth rates between 1.0%
and 4.5% (2022: 2.0% and 5.0%) to project cash flows, which vary across the Group’s business segments and geographical
locations, over a five-year period, and are based on management expectations for the market development; and pre-tax
discount rates between 12% and 13% (2022: 8% and 16%) applied to the cash flow projections. The discount rates used
reflect specific risks relating to the relevant industry, business life-cycle and geographical location. On the basis of this
review, management concluded that no further impairment charge is required.
105
Notes to the Financial Statements
10. Intangible Assets continued
Other intangible assets comprise mainly trademarks.
The amortisation charges are recognised in arriving at operating profit and are included in selling and distribution costs,
and administration expenses.
The remaining amortisation periods for intangible assets are as follows:
Computer software
up to 7 years
Trademarks
up to 8 years
11. Tangible Assets
Freehold
properties
Buildings
on
leasehold
land
Leasehold
improvements
Plant &
machinery
Furniture,
equipment
& motor
vehicles
Total
US$m
US$m
US$m
US$m
US$m
US$m
2023
Cost
56.8
315.9
859.4
799.0
324.5
2,355.6
Depreciation and impairment
(14.7)
(103.8)
(615.2)
(566.9)
(252.1)
(1,552.7)
Net book value at 1st January
42.1
212.1
244.2
232.1
72.4
802.9
Exchange differences
(0.1)
1.4
–
0.4
0.1
1.8
Additions
–
–
51.7
81.6
25.9
159.2
Disposal of subsidiaries
–
(2.8)
(4.7)
(13.1)
(1.0)
(21.6)
Disposals
–
(3.1)
(1.9)
(1.6)
(2.0)
(8.6)
Revaluation surplus
before transfer to
investment properties
–
1.5
–
–
–
1.5
Transfer to investment
properties (note 13)
–
(9.5)
–
–
–
(9.5)
Depreciation charge
(0.4)
(8.7)
(55.0)
(61.9)
(23.1)
(149.1)
Impairment charge
(1.3)
(2.1)
(1.3)
(1.6)
(0.7)
(7.0)
Reclassified from assets
held for sale (note 20)
–
16.6
–
–
–
16.6
Reclassified to assets
held for sale (note 20)
(27.4)
(50.7)
–
–
–
(78.1)
Net book value at 31st December
12.9
154.7
233.0
235.9
71.6
708.1
Cost
16.6
217.1
828.7
760.2
290.0
2,112.6
Depreciation and impairment
(3.7)
(62.4)
(595.7)
(524.3)
(218.4)
(1,404.5)
12.9
154.7
233.0
235.9
71.6
708.1
106
DFI Retail Group Holdings Limited Annual Report 2023
11. Tangible Assets continued
Freehold
properties
Buildings
on
leasehold
land*
Leasehold
improvements*
Plant &
machinery
Furniture,
equipment
& motor
vehicles
Total
US$m
US$m
US$m
US$m
US$m
US$m
2022
Cost
59.0
385.1
822.9
765.5
353.2
2,385.7
Depreciation and impairment
(12.1)
(128.5)
(610.3)
(546.6)
(284.9)
(1,582.4)
Net book value at 1st January
46.9
256.6
212.6
218.9
68.3
803.3
Exchange differences
(1.8)
(20.0)
(7.4)
(8.2)
(2.8)
(40.2)
New subsidiaries
–
–
–
–
0.1
0.1
Additions
–
0.2
96.3
81.6
30.7
208.8
Disposals
–
(10.6)
(1.8)
(1.5)
(0.3)
(14.2)
Transfer to investment
properties (note 13)
–
(0.3)
–
–
–
(0.3)
Depreciation charge
(1.1)
(10.4)
(56.6)
(60.1)
(22.6)
(150.8)
(Impairment)/reversal
of impairment charge
(1.9)
0.7
1.1
0.3
0.1
0.3
Reclassified from assets
held for sale (note 20)
–
0.2
–
–
–
0.2
Reclassified to assets
held for sale (note 20)
–
(1.4)
–
–
–
(1.4)
Reclassified to right-of-use
assets (note 12)
–
(2.9)
–
–
–
(2.9)
Transfer
–
–
–
1.1
(1.1)
–
Net book value at 31st December
42.1
212.1
244.2
232.1
72.4
802.9
Cost
56.8
315.9
859.4
799.0
324.5
2,355.6
Depreciation and impairment
(14.7)
(103.8)
(615.2)
(566.9)
(252.1)
(1,552.7)
42.1
212.1
244.2
232.1
72.4
802.9
* During the year, management reviewed the composition of assets reported in different categories of tangible assets. As a result, certain assets
previously reported under leasehold improvements have been reclassified to buildings on leasehold land. Accordingly, the 2022 comparative figures
have been restated to reflect the impact of this change, resulting in previously reported figures decreasing/increasing between the tangible asset
categories, respectively: cost at 1st January 2022 by US$81.1 million; depreciation and impairment at 1st January 2022 by US$7.5 million; net
book value at 1st January 2022 by US$73.6 million; exchange differences in 2022 by US$7.3 million; depreciation charge in 2022 by US$4.8 million;
cost at 31st December 2022 by US$73.0 million; depreciation and impairment at 31st December 2022 by US$11.5 million; and net book value at
31st December 2022 by US$61.5 million. Restatement is not required for the total tangible assets balance.
107
Notes to the Financial Statements
11. Tangible Assets continued
Rental income from properties amounted to US$7.9 million (2022: US$10.6 million) with no contingent rents for both
2023 and 2022.
The maturity analysis of the undiscounted lease payments to be received after the balance sheet date is as follows:
2023
2022
US$m
US$m
Within one year
1.2
9.9
Between one and two years
1.0
4.4
Between two and five years
0.7
4.5
Beyond five years
–
1.3
2.9
20.1
There were no tangible assets pledged as security for borrowings at 31st December 2023 and 2022.
108
DFI Retail Group Holdings Limited Annual Report 2023
12. Right-of-use Assets
Leasehold
land
Properties
Furniture,
equipment
& other
Total
US$m
US$m
US$m
US$m
2023
Net book value at 1st January
106.5
2,563.0
0.6
2,670.1
Exchange differences
0.8
3.1
–
3.9
Additions
–
155.1
–
155.1
Disposal of subsidiaries
(1.3)
(73.2)
–
(74.5)
Disposals
(12.6)
–
–
(12.6)
Revaluation surplus before transfer to investment properties
63.2
–
–
63.2
Transfer to investment properties (note 13)
(73.7)
–
–
(73.7)
Modifications to lease terms
–
601.7
–
601.7
Amortisation/depreciation charge
(2.0)
(644.9)
(0.3)
(647.2)
Impairment charge
–
(0.6)
–
(0.6)
Reclassified from assets held for sale (note 20)
28.6
–
–
28.6
Reclassified to assets held for sale (note 20)
(34.0)
(17.7)
–
(51.7)
Net book value at 31st December
75.5
2,586.5
0.3
2,662.3
2022
Net book value at 1st January
120.3
2,626.5
0.8
2,747.6
Exchange differences
(7.5)
(66.0)
(0.1)
(73.6)
Additions
–
175.2
0.2
175.4
Revaluation surplus before transfer to investment properties
38.2
–
–
38.2
Transfer to investment properties (note 13)
(39.5)
–
–
(39.5)
Modifications to lease terms
–
503.0
0.1
503.1
Amortisation/depreciation charge
(2.6)
(675.7)
(0.4)
(678.7)
Impairment charge
(0.9)
–
–
(0.9)
Reclassified from assets held for sale (note 20)
1.8
–
–
1.8
Reclassified to assets held for sale (note 20)
(6.2)
–
–
(6.2)
Reclassified from tangible assets (note 11)
2.9
–
–
2.9
Net book value at 31st December
106.5
2,563.0
0.6
2,670.1
Furniture, equipment and other comprise furniture, equipment, plant and machinery, motor vehicles and other.
The typical lease terms associated with the right-of-use assets are as follows:
Leasehold land
25 to 999 years
Properties
1 to 40 years
Furniture, equipment & other
1 to 6 years
There was no leasehold land pledged as security for borrowings at 31st December 2023 and 2022.
109
Notes to the Financial Statements
13. Investment Properties
2023
2022
US$m
US$m
At 1st January
39.8
–
Exchange differences
(0.2)
–
Transfer from tangible assets (note 11)
9.5
0.3
Transfer from right-of-use assets (note 12)
73.7
39.5
Change in fair value
(0.6)
–
At 31st December
122.2
39.8
Following a change of the future use determined by the Directors, several properties in Hong Kong and Indonesia were
transferred to investment properties at 31st December 2023. On the date of transfer, the properties were accounted
for at their respective fair values and US$64.7 million was credited to the revaluation reserves (note 11 and note 12).
At 31st December 2022, an owner-occupied property in Hong Kong was transferred to investment property in view
of the change in intention to hold the property for long-term rental yield. On the date of transfer, the property was
accounted for at its fair value and US$38.2 million was credited to the revaluation reserves (note 12).
The Group’s investment properties are further summarised as follows:
2023
2022
Category
Location
US$m
US$m
Residential property
Hong Kong
39.0
39.8
Commercial properties
Hong Kong
23.4
–
Commercial properties
Indonesia
59.8
–
122.2
39.8
All investment properties are leasehold properties.
The Group measures its investment properties at fair value. The fair values of the Group’s investment properties at
31st December 2023 and 2022 have been determined on the basis of valuations carried out by independent valuers
who hold a recognised relevant professional qualification and have recent experience in the locations and segments
of the investment properties being valued.
The Group engaged Jones Lang LaSalle and KJPP Susan Widjojo & Rekan to value its investment properties in Hong Kong
and Indonesia, respectively. The valuations in Hong Kong conform to the International Valuation Standards issued by
the International Valuation Standards Council and the HKIS Valuation Standards issued by the Hong Kong Institute of
Surveyors, while the valuations in Indonesia conform to the local valuation standards. The valuations are comprehensively
reviewed by the Group.
110
DFI Retail Group Holdings Limited Annual Report 2023
13. Investment Properties continued
Fair value of the residential property in Hong Kong is derived using the direct comparison method. This valuation method
is based on comparing the property to be valued directly with other comparable properties, which were recently transacted.
Comparable premises are generally located in the surrounding areas or in other sub-markets which are comparable to
the property. However, given the heterogeneous nature of real estate properties, appropriate adjustments are usually
required to allow for any qualitative differences that may affect the price likely to be achieved by the property under
consideration.
Fair values of commercial properties in Hong Kong are generally derived using the income capitalisation method. This
valuation method is based on the capitalisation of the net income and reversionary income potential by adopting
appropriate capitalisation rates, which are derived from analysis of sale transactions and valuers’ interpretation of
prevailing investor requirements or expectations. The prevailing market rents adopted in the valuation have referenced
to valuers’ views of recent lettings, within the subject properties and other comparable properties.
In Hong Kong, fair value of the residential property is also cross-referenced to income capitalisation method and the fair
values of commercial properties are also cross-referenced to direct comparison method as supplementary measurements.
In Indonesia, fair values of the leasehold land portion of commercial properties are measured using direct comparison
method and the fair values of the relevant building portion are measured through depreciated replacement cost method.
The depreciated replacement cost method refers to the current cost of replacing an asset with its modern equivalent
asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation.
Prevailing market rents are estimated based on independent valuers’ view of recent lettings, within the subject properties
and other comparable properties. Capitalisation rates are estimated by independent valuers based on the risk profile of
the properties being valued.
During the year, the rental income from investment properties amounted to US$0.8 million (2022: US$nil).
The maturity analysis of lease payments, showing the undiscounted lease payments to be received after the balance
sheet date are as follows:
2023
2022
US$m
US$m
Within one year
2.6
0.8
Between one and two years
2.0
0.8
Between two and five years
1.4
0.4
Beyond five years
1.2
–
7.2
2.0
There were no investment properties pledged as security for borrowings at 31st December 2023 and 2022.
111
Notes to the Financial Statements
14. Associates and Joint Ventures
2023
2022
US$m
US$m
Associates
Listed associates
623.1
662.8
Unlisted associates
567.1
519.4
Share of attributable net assets
1,190.2
1,182.2
Goodwill on acquisition
601.7
600.1
1,791.9
1,782.3
Joint ventures
Unlisted joint ventures
1.8
(2.1)
Amount due from a joint venture
–
1.2
1.8
(0.9)
1,793.7
1,781.4
At 31st December 2022, the amount due from a joint venture was unsecured and interest-bearing at a fixed rate of
3.13% per annum. The balance was settled during the year.
Associates
Joint ventures
2023
2022
2023
2022
US$m
US$m
US$m
US$m
Movements of associates and joint ventures during the year:
At 1st January
1,782.3
2,157.8
(0.9)
6.5
Exchange differences
(14.9)
(145.2)
(0.1)
0.1
Share of results after tax and non-controlling interests
61.9
(197.9)
(9.3)
(14.1)
Share of other comprehensive expense after tax
and non-controlling interests
(0.6)
(0.1)
–
–
Dividends received
(45.6)
(44.8)
–
–
Additions, capital injections and advances
7.9
11.2
12.1
9.5
Other movements in attributable interests
0.9
1.3
–
(2.9)
At 31st December
1,791.9
1,782.3
1.8
(0.9)
Fair values of listed associates*
986.4
1,308.7
* Fair values of the listed associates were based on quoted prices in active markets at 31st December 2023 and 2022.
The Group acquired 40% interest in Minden from a third party in 2022. A gain on acquisition of an associate amounted
to US$11.2 million was recognised in the profit and loss.
112
DFI Retail Group Holdings Limited Annual Report 2023
14. Associates and Joint Ventures continued
At 31st December 2023, the fair values of Yonghui and Robinsons Retail were US$760.6 million and US$225.8 million.
Comparing to their respective carrying amounts of US$792.2 million and US$432.6 million, which indicated deficits of
US$31.6 million for Yonghui and US$206.8 million for Robinsons Retail. Management has performed impairment reviews
on their carrying values and concluded that the value-in-use calculations supported no impairment charges were
required.
In 2022, following the impairment review performed by the management, an impairment charge of US$170.8 million was
charged to profit and loss on the interest in Robinsons Retail.
Summary of the significant assumptions used and sensitivities on recoverable amounts for the impairment reviews in
2023 and 2022 are listed below:
Yonghui
Robinsons Retail
2023
2023
2022
US$m
US$m
US$m
Goodwill allocated
476.8
124.9
123.8
Assumptions used:
Cash flow projection period
5 years
5 years
5 years
Average revenue growth rate
3.6%
4.0%
4.0%
Average annual profit before interest and tax growth rate
1.6%
10.7%
11.0%
Pre-tax discount rate
8.4%
13.7%
15.2%
Long-term growth rate
2.0%
3.0%
3.0%
Sensitivities on recoverable amounts:
– average revenue growth rate 1.0% lower
(322.2)
(29.0)
(61.7)
– profit before interest and tax margin 0.4% lower for Yonghui
(120.5)
n/a
n/a
– average annual profit before interest and tax growth rate 1.0% lower
for Robinsons Retail
n/a
–
(15.2)
– pre-tax discount rate 1.0% higher
(113.3)
–
(30.7)
– long-term growth rate
– 0.5% lower for Yonghui
(21.4)
n/a
n/a
– 1.0% lower for Robinsons Retail
n/a
–
(30.2)
The sensitivities on recoverable amounts represented the amount of impairment charge in 2023 and further impairment
charge in 2022 that would have been required if there were changes in management assumptions.
113
Notes to the Financial Statements
14. Associates and Joint Ventures continued
(a) Investment in associates
The material associates of the Group are listed below. These associates have share capital consisting solely of ordinary
shares, which are held directly by the Group. The place of incorporation is also their principal place of business, and the
proportion of ownership interest is the same as the proportion of voting rights held.
Nature of investments in material associates in 2023 and 2022:
% of ownership interest
Name of entity
Nature of business
Place of
incorporation/listing
2023
2022
Maxim’s Caterers Limited
(‘Maxim’s’)
Restaurants
Hong Kong/Unlisted
50
50
Yonghui Superstores Co., Ltd
(‘Yonghui’)
Grocery retail
Chinese mainland/Shanghai
21.44
21.13
Robinsons Retail Holdings, Inc.
(‘Robinsons Retail’)
Food, convenience,
health and beauty,
department stores,
specialty and
DIY stores
The Philippines/
The Philippines
21.47
21.30
Following the continuous share buybacks in Yonghui and Robinsons Retail, the Group’s interests in Yonghui increased from
21.13% to 21.44% and Robinsons Retail increased from 21.30% to 21.47% at 30th September 2023.
114
DFI Retail Group Holdings Limited Annual Report 2023
14. Associates and Joint Ventures continued
(a) Investment in associates continued
Summarised financial information for material associates
Summarised balance sheets at 31st December (unless otherwise indicated):
Maxim’s
Yonghui
Robinsons Retail
2023
2022
2023*
2022†
2023*
2022†
US$m
US$m
US$m
US$m
US$m
US$m
Non-current assets
2,663.0
2,505.6
5,321.0
6,130.7
2,024.0
1,598.1
Current assets
Cash and cash equivalents
201.2
219.1
931.1
1,136.7
164.1
226.5
Other current assets
291.1
286.0
1,724.4
1,954.5
591.0
553.5
Total current assets
492.3
505.1
2,655.5
3,091.2
755.1
780.0
Non-current liabilities
Financial liabilities‡
(932.7)
(992.2)
(2,980.0)
(3,638.1)
(631.6)
(384.9)
Other non-current liabilities
(169.2)
(163.5)
(32.1)
(34.9)
(104.0)
(101.6)
Total non-current liabilities
(1,101.9)
(1,155.7)
(3,012.1)
(3,673.0)
(735.6)
(486.5)
Current liabilities
Financial liabilities‡
(708.2)
(600.2)
(999.0)
(1,243.2)
(178.9)
(179.6)
Other current liabilities
(107.4)
(112.7)
(2,627.7)
(2,617.4)
(382.0)
(368.2)
Total current liabilities
(815.6)
(712.9)
(3,626.7)
(3,860.6)
(560.9)
(547.8)
Non-controlling interests
(130.6)
(123.2)
(7.1)
(39.2)
(82.4)
(81.0)
Net assets
1,107.2
1,018.9
1,330.6
1,649.1
1,400.2
1,262.8
* Based on unaudited summarised balance sheet at 30th September 2023.
† Based on unaudited summarised balance sheet at 30th September 2022.
‡ Excluded trade and other payables and provisions, which are presented under other current and non-current liabilities.
115
Notes to the Financial Statements
14. Associates and Joint Ventures continued
(a) Investment in associates continued
Summarised financial information for material associates continued
Summarised statements of comprehensive income for the year ended 31st December (unless otherwise indicated):
Maxim’s
Yonghui
Robinsons Retail
2023
2022
2023^
2022#
2023^
2022#
US$m
US$m
US$m
US$m
US$m
US$m
Revenue
3,109.2
2,524.0
10,719.1
13,053.5
3,410.7
3,237.3
Depreciation and amortisation
(441.1)
(405.8)
(484.8)
(654.9)
(131.3)
(137.7)
Interest income
3.1
1.6
19.4
36.4
5.9
6.8
Interest expense
(45.7)
(34.9)
(191.7)
(342.9)
(51.1)
(36.4)
Profit/(loss) from underlying
business performance
204.0
86.7
(193.5)
(457.1)
109.8
148.7
Income tax (expense)/credit
(41.0)
(9.6)
(1.1)
11.9
(28.1)
(21.4)
Profit/(loss) after tax from
underlying business performance
163.0
77.1
(194.6)
(445.2)
81.7
127.3
(Loss)/profit after tax from
non-trading items
(1.8)
28.7
(51.7)
(92.7)
98.2
(7.1)
Profit/(loss) after tax
161.2
105.8
(246.3)
(537.9)
179.9
120.2
Non-controlling interests
(6.0)
(1.3)
23.9
53.6
(10.8)
(10.1)
Profit/(loss) after tax and
non-controlling interests
155.2
104.5
(222.4)
(484.3)
169.1
110.1
Other comprehensive
income/ (expense)
3.5
(23.3)
–
(0.1)
(11.7)
(5.9)
Total comprehensive income
158.7
81.2
(222.4)
(484.4)
157.4
104.2
Dividends received from associates
34.5
28.1
–
5.7
11.1
11.0
^ Based on unaudited summarised statement of comprehensive income for the 12 months ended 30th September 2023.
# Based on unaudited summarised statement of comprehensive income for the 12 months ended 30th September 2022.
The information contained in the summarised balance sheets and statements of comprehensive income reflect the
amounts presented in the financial statements of the associates adjusted for differences in accounting policies between
the Group and the associates, and fair value of the associates at the time of acquisitions.
116
DFI Retail Group Holdings Limited Annual Report 2023
14. Associates and Joint Ventures continued
(a) Investment in associates continued
Reconciliation of the summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interests in its
material associates for the year ended 31st December:
Maxim’s
Yonghui
Robinsons Retail
2023
2022
2023
2022
2023
2022
US$m
US$m
US$m
US$m
US$m
US$m
Net assets
1,107.2
1,018.9
1,330.6†
1,649.1‡
1,400.2†
1,262.8‡
Interests in associates (%)
50
50
21.44
21.13
21.47
21.30
Group’s share of net assets
in associates
553.6
509.5
285.3
348.5
300.6
269.0
Goodwill
–
–
476.8
476.3
124.9
123.8
Other reconciling items
–
–
30.1
30.7
7.1
14.6
Carrying value
553.6
509.5
792.2
855.5
432.6
407.4
Fair values*
n/a
n/a
760.6
1,004.0
225.8
304.7
* Fair values of the listed associates were based on quoted prices in active markets at 31st December 2023 and 2022.
† Based on unaudited summarised balance sheet at 30th September 2023.
‡ Based on unaudited summarised balance sheet at 30th September 2022.
Contingent liabilities in respect of associates
There were no contingent liabilities relating to the Group’s interests in associates at 31st December 2023 and 2022.
117
Notes to the Financial Statements
14. Associates and Joint Ventures continued
(b) Investment in joint ventures
In the opinion of the Directors, none of the Group’s interests in unlisted joint ventures are considered material.
Commitments and contingent liabilities in respect of joint ventures
The Group has the following commitments relating to its joint ventures at 31st December:
2023
2022
US$m
US$m
Commitment to provide funding if called
–
2.8
There were no contingent liabilities relating to the Group’s interests in the joint ventures at 31st December 2023 and 2022.
15. Other Investments
2023
2022
US$m
US$m
Equity investments measured at fair value through profit and loss
– unlisted equity investments
6.7
11.7
Debt investments measured at fair value through profit and loss
– unlisted debt investments
–
10.0
6.7
21.7
Debt investments comprise unlisted convertible bonds. All equity and debt investments are non-current assets.
2023
2022
US$m
US$m
Movements during the year:
At 1st January
21.7
11.5
Additions
–
10.0
Change in fair value recognised in profit and loss (note 9)
(15.0)
0.2
At 31st December
6.7
21.7
The Group had equity and debt investments in Pickupp Limited (‘Pickupp’), a delivery platform founded in Hong Kong,
amounted to US$15.0 million. The fair values of the investments were valued based on unobservable inputs (note 39).
Following the management’s review in 2023, the Group determined the fair value of the investments to be US$nil.
118
DFI Retail Group Holdings Limited Annual Report 2023
16. Debtors
2023
2022
US$m
US$m
Trade debtors
Third parties
114.2
93.5
Associates
–
1.0
114.2
94.5
Less: provision for impairment
(0.5)
(1.1)
113.7
93.4
Other debtors
Third parties
249.3
287.0
Less: provision for impairment
(4.5)
(3.2)
244.8
283.8
358.5
377.2
Non-current
– trade debtors
–
–
– other debtors
102.2
124.3
102.2
124.3
Current
– trade debtors
113.7
93.4
– other debtors
142.6
159.5
256.3
252.9
358.5
377.2
Trade and other debtors, other than derivative financial instruments, are stated at amortised cost. The fair values of
these debtors approximate their carrying amounts. Derivative financial instruments are stated at fair value.
Other debtors are further analysed as follows:
2023
2022
US$m
US$m
Derivative financial instruments
14.2
40.9
Rental and other deposits
140.6
148.0
Other receivables
25.9
21.5
Financial assets
180.7
210.4
Prepayments
47.7
51.5
Other
16.4
21.9
244.8
283.8
119
Notes to the Financial Statements
16. Debtors continued
Trade and other debtors
Sales of goods to customers are mainly made in cash or by major credit cards and other electronic payments. The
average credit period on sales of goods and services varies among Group businesses and is normally not more than
30 days. The maximum exposure to credit risk is represented by the carrying amount of trade debtors after deducting
the impairment allowance.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payment are considered indicators that the debtor is impaired. An allowance for impairment
of trade and other debtors is made based on the estimated irrecoverable amount.
Impairment of trade and other debtors
At 31st December 2023, trade debtors of US$0.5 million (2022: US$1.1 million) were impaired, which have been fully
provided for in both years. The ageing analysis of these debtors is as follows:
Trade debtors
2023
2022
US$m
US$m
Below 30 days
–
–
Between 31 and 60 days
–
–
Between 61 and 90 days
–
–
Over 90 days
0.5
1.1
0.5
1.1
The Group has assessed the expected impairment of other debtors, including rental and other deposits, based on the
likelihood of collection of the balances at the time at which they are due. At 31st December 2023 and 2022, total
amounts deemed uncollectible were immaterial.
Movements in the provisions for impairment are as follows:
Trade debtors
Other debtors
2023
2022
2023
2022
US$m
US$m
US$m
US$m
At 1st January
(1.1)
(2.7)
(3.2)
(4.5)
Exchange differences
–
0.1
(0.1)
0.3
Additional provisions
–
–
(3.8)
(1.5)
Disposal of subsidiaries
–
–
0.3
–
Unused amounts reversed
0.1
0.5
0.1
1.5
Amounts written off
0.5
1.0
2.2
1.0
At 31st December
(0.5)
(1.1)
(4.5)
(3.2)
There were no debtors pledged as security for borrowings at 31st December 2023 and 2022.
120
DFI Retail Group Holdings Limited Annual Report 2023
17. Deferred Tax Assets/(Liabilities)
Accelerated
tax
depreciation
Fair value
gains/
losses
Employee
benefits
Lease
liabilities
and other
temporary
differences
Total
US$m
US$m
US$m
US$m
US$m
2023
At 1st January
– as previously reported
(25.0)
(2.3)
0.2
14.4
(12.7)
– change in accounting policy (note 1)
(252.4)
–
–
252.4
–
– as restated
(277.4)
(2.3)
0.2
266.8
(12.7)
Exchange differences
(1.1)
–
–
1.4
0.3
(Charged)/credited to profit and loss
(2.1)
–
0.2
6.8
4.9
Credited to other comprehensive income
–
1.2
0.3
–
1.5
Disposal of subsidiaries
1.6
–
–
–
1.6
Reclassified to assets held for sale (note 20)
11.5
–
–
(12.5)
(1.0)
At 31st December
(267.5)
(1.1)
0.7
262.5
(5.4)
Deferred tax assets
(239.4)
(0.1)
1.3
274.0
35.8
Deferred tax liabilities
(28.1)
(1.0)
(0.6)
(11.5)
(41.2)
(267.5)
(1.1)
0.7
262.5
(5.4)
2022
At 1st January
– as previously reported
(21.6)
(2.9)
1.1
(5.9)
(29.3)
– change in accounting policy (note 1)
(239.6)
–
–
239.6
–
– as restated
(261.2)
(2.9)
1.1
233.7
(29.3)
Exchange differences
11.3
0.2
(0.2)
(12.7)
(1.4)
(Charged)/credited to profit and loss
(27.5)
1.8
(0.5)
45.8
19.6
Charged to other comprehensive expense
–
(1.4)
(0.2)
–
(1.6)
At 31st December
(277.4)
(2.3)
0.2
266.8
(12.7)
Deferred tax assets
(252.3)
(2.3)
1.2
280.7
27.3
Deferred tax liabilities
(25.1)
–
(1.0)
(13.9)
(40.0)
(277.4)
(2.3)
0.2
266.8
(12.7)
121
Notes to the Financial Statements
17. Deferred Tax Assets/(Liabilities) continued
Deferred tax balances predominantly comprise non-current items. Deferred tax assets and liabilities are netted when
the taxes relate to the same taxation authority and where offsetting is allowed.
Deferred tax assets of US$63.2 million (2022: US$99.7 million) arising from unused tax losses of US$291.8 million
(2022: US$442.6 million) have not been recognised in the financial statements. Included in the unused tax losses,
US$61.7 million have no expiry date and the balance will expire at various dates up to and including 2028.
At 31st December 2023 and 2022, no deferred tax liabilities arising on temporary differences associated with investment
in subsidiaries had been recognised as there were no undistributed earnings of these subsidiaries. With respect to the
investment in associates, deferred tax liabilities of US$15.0 million (2022: US$15.0 million) were recognised for the
temporary differences of the unremitted earnings.
18. Pension Plans
The Group operates defined benefit pension plans in Hong Kong, Indonesia, Taiwan and the Philippines, with the major
plan in Hong Kong. These plans are final salary defined benefits, calculated based on members’ lengths of service
and their salaries in the final years leading up to retirement. All pension benefits are paid in one lump sum. With the
exception of certain plans in Hong Kong, other defined benefit plans are open to new members. In addition, all plans are
impacted by discount rate while liabilities are driven by salary growth.
The Group’s defined benefit plans are both funded and unfunded, with the assets of the funded plans held independently
of the Group’s assets in separate trustee administered funds. Plan assets held in trusts are governed by local regulations
and practices in each country. Responsibility for governance of the plans, including investment decisions and contribution
schedules, lies jointly with the company and the boards of trustees. The Group’s major plans are valued by independent
actuaries annually using the projected unit credit method.
The amounts recognised in the consolidated balance sheet are as follows:
2023
2022
US$m
US$m
Fair value of plan assets
187.7
173.9
Present value of funded obligations
(185.6)
(169.7)
2.1
4.2
Present value of unfunded obligations
(3.9)
(3.3)
Net pension (liabilities)/assets
(1.8)
0.9
Analysis of net pension (liabilities)/assets:
Pension assets
4.4
6.7
Pension liabilities
(6.2)
(5.8)
(1.8)
0.9
122
DFI Retail Group Holdings Limited Annual Report 2023
18. Pension Plans continued
The movements in the net pension (liabilities)/assets are as follows:
Fair value
of plan
assets
Present
value of
obligations
Total
US$m
US$m
US$m
2023
At 1st January
173.9
(173.0)
0.9
Current service cost
–
(12.5)
(12.5)
Interest income/(expense)
8.6
(8.2)
0.4
Past service cost
–
(0.2)
(0.2)
Administration expenses
(0.3)
–
(0.3)
8.3
(20.9)
(12.6)
182.2
(193.9)
(11.7)
Exchange differences
(0.3)
0.2
(0.1)
Remeasurements
– return on plan assets, excluding amounts included in interest income
8.0
–
8.0
– change in financial assumptions
–
(8.0)
(8.0)
– experience losses
–
(3.1)
(3.1)
8.0
(11.1)
(3.1)
Contributions from employers
12.5
–
12.5
Contributions from plan participants
0.1
(0.1)
–
Benefit payments
(14.6)
14.7
0.1
Settlements
–
0.5
0.5
Transfer (to)/from other plans
(0.2)
0.2
–
At 31st December
187.7
(189.5)
(1.8)
2022
At 1st January
197.5
(191.7)
5.8
Current service cost
–
(13.3)
(13.3)
Interest income/(expense)
4.6
(4.4)
0.2
Past service cost
–
(0.1)
(0.1)
Administration expenses
(1.2)
–
(1.2)
3.4
(17.8)
(14.4)
200.9
(209.5)
(8.6)
Exchange differences
(0.2)
0.9
0.7
Remeasurements
– return on plan assets, excluding amounts included in interest income
(22.7)
–
(22.7)
– change in financial assumptions
–
27.1
27.1
– experience losses
–
(3.1)
(3.1)
(22.7)
24.0
1.3
Contributions from employers
7.2
–
7.2
Contributions from plan participants
0.1
(0.1)
–
Benefit payments
(11.8)
11.9
0.1
Settlements
–
0.2
0.2
Transfer from/(to) other plans
0.4
(0.4)
–
At 31st December
173.9
(173.0)
0.9
123
Notes to the Financial Statements
18. Pension Plans continued
The weighted average duration of the defined benefit obligations at 31st December 2023 was 5.8 years (2022: 5.7 years).
Expected maturity analysis of undiscounted pension benefits at 31st December is as follows:
2023
2022
US$m
US$m
Within one year
33.6
26.7
Between one and two years
21.6
21.5
Between two and five years
66.5
65.7
Between five and ten years
103.5
99.0
Between ten and fifteen years
93.7
94.7
Between fifteen and twenty years
61.4
65.9
Beyond twenty years
56.4
51.5
436.7
425.0
The principal actuarial assumptions used for accounting purposes at 31st December are as follows:
Hong Kong
Indonesia
Taiwan
The Philippines
2023
2022
2023
2022
2023
2022
2023
2022
%
%
%
%
%
%
%
%
Discount rate
4.3
5.2
6.8
7.1
1.5
1.6
6.1
7.3
Salary growth rate
4.0
4.0
6.1
5.9
3.5
3.0
4.5
5.0
The sensitivity of the defined benefit obligations to changes in the weighted principal assumptions is as follows:
(Increase)/decrease on
defined benefit
obligations
Change in
assumption
Increase in
assumption
Decrease in
assumption
%
US$m
US$m
Discount rate
1
10.0
(10.6)
Salary growth rate
1
(11.4)
9.9
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the
sensitivity of the defined benefit obligations to significant actuarial assumptions, the same method (present value of the
defined benefit obligations calculated with the projected unit credit method at the end of the reporting period) has been
applied as when calculating the pension liabilities recognised within the balance sheet.
124
DFI Retail Group Holdings Limited Annual Report 2023
18. Pension Plans continued
The analysis of the fair value of plan assets at 31st December is as follows:
2023
2022
US$m
US$m
Investment funds
Asia Pacific
42.0
38.1
Europe
36.4
35.2
North America
95.1
88.8
Global
20.2
17.5
Total investments
193.7
179.6
Cash and cash equivalents
10.0
8.1
Benefits payable and other
(16.0)
(13.8)
187.7
173.9
At 31st December 2023, 79% (2022: 83%) of investment funds were quoted on active markets.
The strategic asset allocation is derived from an asset-liability modelling (‘ALM’) review, done triennially to ensure
the plans can meet future funding and solvency requirements. The last ALM review was completed in 2021, with the
modified strategic asset allocation adopted in 2021. The next ALM review is scheduled for 2024.
At 31st December 2023, the Hong Kong plans had assets of US$183.6 million (2022: US$170.7 million).
The Group maintains an active and regular contribution schedule in major plans. The contributions to all its plans
in 2023 were US$12.5 million and the estimated amounts of contributions expected to be paid to all its plans in 2024
are US$13.6 million.
125
Notes to the Financial Statements
19. Cash and Bank Balances
2023
2022
US$m
US$m
Deposits with banks
32.8
33.9
Bank balances
84.2
47.3
Cash balances
186.4
149.5
303.4
230.7
Analysis by currency:
Chinese renminbi
14.4
10.4
Hong Kong dollar
158.9
122.0
Indonesian rupiah
5.5
5.6
Macau pataca
20.7
17.2
Malaysian ringgit
11.7
8.9
New Taiwan dollar
31.1
30.8
Singapore dollar
28.9
20.2
United States dollar
29.1
11.5
Other
3.1
4.1
303.4
230.7
The weighted average interest rate on deposits with banks at 31st December 2023 was 0.3% (2022: 1.3%) per annum.
20. Assets Held for Sale/(Liabilities Associated with Assets Held for Sale)
2023
2022
US$m
US$m
Non-current assets held for sale
6.5
65.7
Assets included in disposal group held for sale
41.3
–
Assets held for sale
47.8
65.7
Liabilities associated with assets held for sale
(19.8)
–
28.0
65.7
Non-current assets held for sale
At 31st December 2023, the non-current assets held for sale represented two properties in Indonesia brought forward
from 31st December 2022. The sale of these properties was completed in early 2024.
At 31st December 2022, the non-current assets held for sale represented 17 properties in Indonesia, and a piece of
vacant land in Malaysia. Three properties in Indonesia were sold during the year at a profit of US$16.6 million while the
vacant land in Malaysia was disposed of via the divestment of the Malaysia Grocery Retail business. Twelve properties
in Indonesia remained unsold. As a result of weaker property market sentiment in Indonesia, the sale of these properties
is no longer considered highly probable within 12 months after the year end. Therefore, these properties have been
reclassified to tangible assets or right-of-use assets, respectively.
126
DFI Retail Group Holdings Limited Annual Report 2023
20. Assets Held for Sale/(Liabilities Associated with Assets Held for Sale) continued
Non-current assets held for sale continued
The movements of non-current assets held for sale are as follows:
2023
2022
US$m
US$m
At 1st January
65.7
85.1
Exchange differences
(2.3)
(8.0)
Reclassified from tangible assets (note 11)
58.6
1.4
Reclassified from right-of-use assets (note 12)
34.0
6.2
Reclassified to tangible assets (note 11)
(16.6)
(0.2)
Reclassified to right-of-use assets (note 12)
(28.6)
(1.8)
Disposal of subsidiaries
(50.0)
–
Disposals
(54.3)
(17.0)
At 31st December
6.5
65.7
Tangible assets
–
22.4
Right-of-use assets
6.5
43.3
6.5
65.7
Disposal of subsidiaries mainly represented the distribution centres, previously held by Jupiter Lagoon, which were
disposed of as part of the divestment of Malaysia Grocery Retail business during the year (note 9 and note 30(g)).
Disposal group held for sale
2023
US$m
Tangible assets (note 11)
19.5
Right-of-use assets (note 12)
17.7
Deferred tax assets (note 17)
1.0
Debtors
0.2
Cash and bank balances (note 30(l))
2.9
Assets held for sale
41.3
Creditors
(0.1)
Lease liabilities (note 23)
(19.5)
Tax liabilities
(0.2)
Liabilities associated with assets held for sale
(19.8)
21.5
127
Notes to the Financial Statements
20. Assets Held for Sale/(Liabilities Associated with Assets Held for Sale) continued
Disposal group held for sale continued
In December 2023, the Group entered into a sale and purchase agreement with a third party to dispose of its subsidiary,
DFI Properties Taiwan Limited (‘DFI Properties’), a property holding company in Taiwan. Upon completion of the
transaction, the Group will leaseback a portion of the tangible and right-of-use assets from DFI Properties.
At 31st December 2023, the disposal group held for sale represented the portion of the tangible and right-of-use assets
that will not be leased back, and other assets and liabilities, with a total carrying value of US$21.5 million attributable to
DFI Properties. The consideration of the disposal exceeds the carrying amounts of the relevant assets and liabilities and
accordingly, no impairment loss has been recognised. The transactions are expected to complete in the first half of 2024.
21. Creditors
2023
2022
US$m
US$m
Trade creditors
– third parties
1,155.0
1,209.8
– associates
7.5
4.1
– joint ventures
–
0.6
1,162.5
1,214.5
Accruals*
546.9
576.7
Rental and other refundable deposits
19.1
25.6
Derivative financial instruments
1.0
1.0
Other creditors*
162.6
128.0
Financial liabilities
1,892.1
1,945.8
Contract liabilities
200.6
231.4
Rental income received in advance
0.9
1.0
Other
6.0
0.2
2,099.6
2,178.4
Non-current
3.7
8.7
Current
2,095.9
2,169.7
2,099.6
2,178.4
* During the year, management reviewed the composition of balances reported in different categories of creditors. As a result, certain balances previously
reported under accruals have been reclassified to other creditors. Accordingly, the 2022 comparative figures have been restated to reflect the impact of
this change, resulting in previously reported accruals decreasing by US$112.1 million and other creditors increasing by US$112.1 million. Restatement is
not required for the total creditors balance.
Derivative financial instruments are stated at fair value. Other creditors are stated at amortised cost. The fair values of
these creditors approximate their carrying amounts.
Contract liabilities principally include payments received in advance from customers for sale of the unredeemed gift
vouchers and loyalty points.
During the year, revenue related to the contract liabilities at the beginning of the year amounted to US$208.0 million
(2022: US$169.5 million) was recognised.
128
DFI Retail Group Holdings Limited Annual Report 2023
22. Borrowings
2023
2022
US$m
US$m
Current
– bank overdrafts
8.1
17.0
– other bank advances
552.4
714.9
560.5
731.9
Current portion of long-term borrowings
210.6
105.6
771.1
837.5
Long-term bank borrowings
153.0
258.7
924.1
1,096.2
All borrowings are unsecured. The fair values of borrowings are not materially different from their carrying amounts.
The Group’s borrowings are further summarised as follows:
Fixed rate borrowings
Weighted
average
interest
rates
Weighted
average
period
outstanding
Floating
rate
borrowings
Total
By currency
%
Year
US$m
US$m
US$m
2023
Chinese renminbi
4.0
–
–
27.8
27.8
Hong Kong dollar
3.0
0.1
189.4
128.0
317.4
Indonesian rupiah
8.3
–
–
112.1
112.1
Malaysian ringgit
4.3
–
–
15.9
15.9
Singapore dollar
3.4
–
–
246.5
246.5
United States dollar
0.8
0.1
199.8
4.6
204.4
389.2
534.9
924.1
2022
Chinese renminbi
4.0
–
–
40.8
40.8
Hong Kong dollar
2.2
0.1
189.8
190.3
380.1
Indonesian rupiah
7.3
–
–
141.1
141.1
Malaysian ringgit
4.5
–
–
230.2
230.2
United States dollar
0.7
0.2
299.8
4.2
304.0
489.6
606.6
1,096.2
The weighted average interest rates and period of fixed rate borrowings were stated after taking into account
hedging transactions.
129
Notes to the Financial Statements
22. Borrowings continued
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at 31st December
after taking into account hedging transactions is as follows:
2023
2022
US$m
US$m
Floating rate borrowings
534.9
606.6
Fixed rate borrowings
– within one year
389.2
100.0
– between one and two years
–
389.6
924.1
1,096.2
The movements in borrowings are as follows:
Bank
overdrafts
Short-term
borrowings
Long-term
borrowings
Total
US$m
US$m
US$m
US$m
2023
At 1st January
17.0
820.5
258.7
1,096.2
Exchange differences
(0.3)
1.9
0.8
2.4
Change in bank overdrafts
(8.6)
–
–
(8.6)
Drawdown of borrowings
–
728.4
540.5
1,268.9
Repayment of borrowings
–
(1,177.2)
(308.9)
(1,486.1)
Net increase in other short-term borrowings
–
51.3
–
51.3
Transfer
–
338.1
(338.1)
–
At 31st December
8.1
763.0
153.0
924.1
2022
At 1st January
0.4
743.1
310.8
1,054.3
Exchange differences
(0.4)
(26.5)
(2.1)
(29.0)
Change in fair value
–
0.5
–
0.5
Change in bank overdrafts
17.0
–
–
17.0
Drawdown of borrowings
–
1,269.4
160.0
1,429.4
Repayment of borrowings
–
(1,273.8)
(194.9)
(1,468.7)
Net increase in other short-term borrowings
–
92.7
–
92.7
Transfer
–
15.1
(15.1)
–
At 31st December
17.0
820.5
258.7
1,096.2
Net change in other short-term borrowings represents the aggregated net drawdown and repayment movement under
the Group’s global liquidity cash pooling scheme, which is implemented for enhancing the daily cash flow management.
130
DFI Retail Group Holdings Limited Annual Report 2023
23. Lease Liabilities
2023
2022
US$m
US$m
At 1st January
2,875.7
2,960.3
Exchange differences
2.4
(77.9)
Additions
151.0
171.9
Disposal of subsidiaries
(146.6)
–
Reclassified to liabilities associated with assets held for sale (note 20)
(19.5)
–
Modifications to lease terms
609.5
482.0
Lease payments
(720.6)
(746.9)
Interest expense
95.9
86.3
At 31st December
2,847.8
2,875.7
Non-current
2,285.8
2,289.4
Current
562.0
586.3
2,847.8
2,875.7
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
The Group was not exposed to any residual guarantees in respect of the leases entered into at 31st December 2023
and 2022.
The Group has not entered into any material lease contracts which have not commenced at 31st December 2023
and 2022.
131
Notes to the Financial Statements
24. Provisions
Closure
cost
provisions
Reinstatement
and
restoration
costs
Statutory
employee
entitlements
Total
US$m
US$m
US$m
US$m
2023
At 1st January
6.3
138.4
4.2
148.9
Exchange differences
0.1
0.1
–
0.2
Additional provisions
6.1
12.7
–
18.8
Disposal of subsidiaries
–
(12.0)
–
(12.0)
Unused amounts reversed
(2.7)
(6.3)
–
(9.0)
Utilised
(1.4)
(0.9)
–
(2.3)
At 31st December
8.4
132.0
4.2
144.6
Non-current
–
101.5
4.2
105.7
Current
8.4
30.5
–
38.9
8.4
132.0
4.2
144.6
2022
At 1st January
14.0
138.2
–
152.2
Exchange differences
(0.8)
(1.1)
–
(1.9)
Additional provisions
4.4
5.9
4.2
14.5
Unused amounts reversed
(5.1)
(1.6)
–
(6.7)
Utilised
(6.2)
(3.0)
–
(9.2)
At 31st December
6.3
138.4
4.2
148.9
Non-current
0.1
104.4
4.2
108.7
Current
6.2
34.0
–
40.2
6.3
138.4
4.2
148.9
Closure cost provisions are established when legal or constructive obligations, and obligations from restructuring plans,
arise from store closure or disposal of businesses.
Provisions for reinstatement and restoration costs comprise the estimated costs, to be incurred by the Group as lessees,
in dismantling and removing the underlying assets, restoring the sites on which they are located or restoring the underlying
assets to the condition required by the terms and conditions of the leases.
Statutory employee entitlements are the long service payments for the employees.
132
DFI Retail Group Holdings Limited Annual Report 2023
25. Share Capital
2023
2022
US$m
US$m
Authorised:
2,250,000,000 shares of US¢5 5/9 each
125.0
125.0
500,000 shares of US$800 each
400.0
400.0
525.0
525.0
Ordinary shares in millions
2023
2022
2023
2022
US$m
US$m
Issued and fully paid:
Ordinary shares of US¢5 5/9 each
At 1st January
1,353.3
1,352.9
75.2
75.2
Issue under share-based long-term incentive plans
0.4
0.4
–
–
At 31st December
1,353.7
1,353.3
75.2
75.2
26. Share-based Long-term Incentive Plans
Share-based long-term incentive plans (‘LTIP’) have been put in place to provide incentives for selected executives.
Awards take the form of share options to purchase ordinary shares in the Company with exercise prices based on the
then prevailing market prices, however, share awards which will vest free of payment may also be made. Awards normally
vest on or after the first, second and third anniversary of the date of grant and may be subject to the achievement of
performance conditions.
An LTIP was adopted by the Company on 5th March 2015. During 2023, conditional awards of 5,661,613 shares
(2022: 5,182,398 shares) were awarded under the LTIP. The fair value of the share awards granted during the year
was US$16.3 million (2022: US$16.9 million). The inputs into the discounted cash flow valuation model were share
prices which ranged from US$2.32 to US$2.97 (2022: US$2.96) per share at the grant date, dividend yield which
ranged from 0.98% to 2.05% (2022: 3.25%) and annual risk-free interest rates which ranged from 3.95% to 5.49%
(2022: 1.66% to 2.46%).
In 2022, there were also conditional awards amounted to US$2.5 million awarded.
Under these awards, shares are granted to selected executives to align their long-term rewards with shareholders’
interest. Conditions, if any, are at the discretion of the Directors.
Prior to the adoption of the LTIP, The Dairy Farm International Share Option Plan 2005 provided selected executives
with options to purchase ordinary shares in the Company. The exercise prices of the granted options were, in general,
based on the average market prices for the five trading days immediately preceding the dates of grant of the options.
Options are normally vested over a period of up to three years and are exercisable for up to ten years following the date
of grant. No options were granted in 2023 and 2022.
Share options and share awards amounting to US$12.4 million (2022: US$7.4 million) were charged to profit and loss
during the year.
133
Notes to the Financial Statements
26. Share-based Long-term Incentive Plans continued
Movements of the outstanding conditional awards during the year:
Conditional awards
in millions
2023
2022
At 1st January
5.1
0.4
Granted
5.7
5.4
Lapsed
(0.7)
(0.3)
Released
(2.5)
(0.4)
At 31st December
7.6
5.1
Outstanding conditional awards at 31st December:
Conditional awards
in millions
Awards vesting date
2023
2022
2023
–
1.8
2024
2.9
1.6
2025
3.0
1.7
2026
1.7
–
Total outstanding
7.6
5.1
Movements of the outstanding conditional awards in dollars during the year:
Conditional awards
in dollars
2023
2022
US$m
US$m
At 1st January
2.0
–
Granted
–
2.5
Released
(0.5)
(0.5)
At 31st December
1.5
2.0
Outstanding conditional awards in dollars at 31st December:
Conditional awards
in dollars
2023
2022
Awards vesting date
US$m
US$m
2023
–
0.5
2024
0.5
0.5
2025
0.5
0.5
2026
0.5
0.5
Total outstanding
1.5
2.0
134
DFI Retail Group Holdings Limited Annual Report 2023
26. Share-based Long-term Incentive Plans continued
Movements of the outstanding options during the year:
2023
2022
Weighted
average
exercise
price
Options
Weighted
average
exercise
price
Options
US$
in millions
US$
in millions
At 1st January
8.3925
1.1
8.4746
1.3
Lapsed
12.1580
(0.2)
8.9060
(0.2)
At 31st December
7.5065
0.9
8.3925
1.1
The average share price during the year was US$2.73 (2022: US$2.70) per share.
Outstanding options at 31st December:
Exercise price
Options in millions
Expiry date
US$
2023
2022
2023
12.1580
–
0.2
2026
5.9320
0.4
0.4
2027
8.9060
0.5
0.5
Total outstanding
0.9
1.1
of which exercisable
0.9
1.1
135
Notes to the Financial Statements
27. Share Premium and Capital Reserves
Share
premium
Capital
reserves
Total
US$m
US$m
US$m
2023
At 1st January
37.6
30.0
67.6
Share-based long-term incentive plans
– value of employee services
–
12.4
12.4
Transfer
2.0
(9.2)
(7.2)
At 31st December
39.6
33.2
72.8
2022
At 1st January
35.6
24.6
60.2
Share-based long-term incentive plans
– value of employee services
–
8.1
8.1
– share awards lapsed
–
(0.7)
(0.7)
Transfer
2.0
(2.0)
–
At 31st December
37.6
30.0
67.6
Capital reserves comprise contributed surplus of US$20.1 million (2022: US$20.1 million) and other reserves of
US$13.1 million (2022: US$9.9 million), which represent the value of employee services under the Company’s
share-based long-term incentive plans. The contributed surplus principally arose from the conversion of convertible
preference shares in 1989 and, under the Bye-laws of the Company, is distributable.
136
DFI Retail Group Holdings Limited Annual Report 2023
28. Dividends
2023
2022
US$m
US$m
Final dividend in respect of 2022 of US¢2.00 (2021: US¢6.50) per share
27.1
87.9
Interim dividend in respect of 2023 of US¢3.00 (2022: US¢1.00) per share
40.6
13.5
67.7
101.4
Dividends on shares held by a subsidiary of the Group under a share-based
long-term incentive plan
(0.4)
(0.5)
67.3
100.9
A final dividend in respect of 2023 of US¢5.00 (2022: US¢2.00) per share amounting to a total of US$67.7 million
(2022: US$27.1 million) is proposed by the Board. The dividend proposed will not be accounted for until it has been
approved at the 2024 Annual General Meeting. This amount will be accounted for as an appropriation of revenue
reserves in the year ending 31st December 2024.
29. Geographical Analysis of Non-current Assets
Set out below is an analysis of the Group’s non-current assets, excluding financial instruments, non-current debtors,
deferred tax assets and pension assets, by geographical area at 31st December:
2023
2022
US$m
US$m
North Asia
3,501.4
3,543.2
South East Asia
2,074.5
2,162.9
5,575.9
5,706.1
The geographical areas consist of North Asia and South East Asia. North Asia comprises Hong Kong, the Chinese
mainland, Macau and Taiwan. South East Asia comprises Singapore, Cambodia, the Philippines, Thailand, Malaysia,
Indonesia, Vietnam, Brunei and Laos.
137
Notes to the Financial Statements
30. Notes to Consolidated Cash Flow Statement
2023
2022
US$m
US$m
(a) Depreciation and amortisation
Analysis by reportable segment:
Food
320.3
345.4
Convenience
247.0
249.3
Health and Beauty
150.5
152.8
Home Furnishings
89.7
92.8
Selling, general and administrative expenses
19.7
20.7
827.2
861.0
(b) Other non-cash items
By nature:
Loss on disposal of subsidiaries
49.1
–
Profit on sale of properties
(64.3)
(31.1)
Loss on disposals of other tangible and intangible assets
6.8
3.0
Change in fair value of an investment property
0.6
–
Change in fair value of equity and debt investments
15.0
(0.2)
Impairment of tangible and intangible assets
118.8
6.0
Impairment of right-of-use assets
0.6
0.9
Write down of stocks
6.1
7.4
Reversal of write down of stocks
(4.7)
(2.4)
Change in provisions
4.2
0.7
Gain on lease modification and termination
(0.3)
(5.0)
Gain on partial disposal of a joint venture
–
(6.9)
Gain on acquisition of an associate
–
(11.2)
Share-based payment
12.4
7.4
Impairment of trade and other debtors
3.7
1.8
Fair value loss on fair value hedges
0.1
0.4
Rent concessions received
–
(15.4)
Notional interest expense on other loans
–
0.5
Amortisation of government grant on other loans
–
(0.5)
Realisation of exchange translation difference
–
4.2
148.1
(40.4)
138
DFI Retail Group Holdings Limited Annual Report 2023
30. Notes to Consolidated Cash Flow Statement continued
2023
2022
US$m
US$m
(c) Decrease/(increase) in working capital
Decrease/(increase) in stocks
47.5
(115.8)
Increase in debtors
(24.8)
(7.4)
Increase in creditors
22.7
116.5
45.4
(6.7)
(d) Purchase of subsidiaries
2022
US$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 acquisition
(5.6)
Net cash outflows
8.8
In 2022, the Group acquired 100% interests 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 were provisional at the acquisition date and finalised during the
year with no change to the provisional values.
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.
(e) Purchase of associates and joint ventures in 2023 related to the Group’s capital injections of US$8.3 million in its
digital joint venture, US$5.1 million in its associate in Singapore, US$2.2 million in its health and beauty joint venture in
Thailand and US$2.8 million in the business in Vietnam.
Purchase in 2022 related to the capital injection of US$8.3 million in the Group’s digital joint venture.
(f) Purchase of other investments in 2022 related to the Group’s subscription of a five-year convertible bond of Pickupp
for a principal of US$10.0 million (note 15).
139
Notes to the Financial Statements
30. Notes to Consolidated Cash Flow Statement continued
(g) Sale of subsidiaries
2023
US$m
Non-current assets
102.2
Current assets
174.2
Current liabilities
(177.9)
Non-current liabilities
(120.8)
Non-controlling interests
10.2
Net liabilities disposed of
(12.1)
Cumulative exchange translation losses
48.7
Loss on disposals
(49.1)
Total consideration
(12.5)
Non-cash items:
– consideration settled
41.8
– consideration receivable
(1.1)
– transaction costs settled
2.2
– transaction costs payable
4.4
47.3
Cash and cash equivalents of the subsidiaries disposed of
(58.6)
Net cash outflows
(23.8)
Total consideration of the transaction is further analysed as follows:
Net sale proceeds
59.6
Consideration paid and settled
(49.2)
Consideration receivable
1.1
Transaction costs paid and settled
(19.6)
Transaction costs payable
(4.4)
(12.5)
In February 2023, the Group entered into agreements to dispose of interests in subsidiaries operating the Malaysia
Grocery Retail business, and the associated properties, to a third party. The disposals of the Group’s interests
in the related subsidiaries, GCH, Jutaria and Jupiter Lagoon were completed during the year. Included within the
consideration, an amount of US$41.8 million was due to be paid to the third party after completion to cover certain
liabilities incurred by GCH. The amount was subsequently settled via an offset against a loan receivable from GCH.
The revenue and loss after tax in respect of subsidiaries disposed of during the year amounted to US$83.3 million and
US$8.8 million, respectively.
The cash received from the divestment of the Malaysia Grocery Retail business was US$19.3 million, representing the cash
outflows related to disposals of subsidiaries of US$23.8 million and proceeds from the disposal of associated properties of
US$43.1 million (note 30(i)).
140
DFI Retail Group Holdings Limited Annual Report 2023
30. Notes to Consolidated Cash Flow Statement continued
(h) Sale of associates and joint ventures in 2022 related to the proceeds from the Group’s disposal of 8.5% of its interest
in RTA amounted to US$6.9 million.
(i) Sale of properties in 2023 related to disposal of properties in Singapore, Indonesia and Malaysia amounted to
US$142.0 million. A property in Singapore and three properties in Indonesia were sold with proceeds of US$98.9 million,
and a gain on disposal amounted to US$61.0 million (note 9) was recognised. Four properties in Malaysia were sold
through the divestment of Malaysia Grocery Retail business with proceeds of US$43.1 million (note 30(g)), and a gain of
US$3.3 million (note 9) was recognised.
Sale of properties in 2022 related to disposal of three properties in Indonesia and one property in Hong Kong, Singapore
and Malaysia, respectively, for a total cash consideration of US$63.6 million, and a gain on disposal of properties
amounted to US$31.1 million (note 9) was recognised.
(j) Purchase of shares for a share-based long-term incentive plan in 2023 related to the purchase of 3,976,300 ordinary
shares from the stock market by a subsidiary of the Group for a total consideration of US$9.7 million.
Purchase of shares in 2022 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$20.0 million.
(k) Cash outflows for leases
2023
2022
US$m
US$m
Cash outflows for lease rentals paid are included in
– operating activities
(215.0)
(167.4)
– investing activities
–
–
– financing activities
(624.7)
(660.6)
(839.7)
(828.0)
(l) Analysis of balances of cash and cash equivalents
2023
2022
US$m
US$m
Cash and bank balances (note 19)
303.4
230.7
Bank overdrafts (note 22)
(8.1)
(17.0)
Cash and bank balances included in assets held for sale (note 20)
2.9
–
Cash and cash equivalents
298.2
213.7
141
Notes to the Financial Statements
31. Derivative Financial Instruments
The fair values of derivative financial instruments at 31st December are as follows:
2023
2022
Positive
fair value
Negative
fair value
Positive
fair value
Negative
fair value
US$m
US$m
US$m
US$m
Designated as cash flow hedges
– forward foreign exchange contracts
1.8
0.9
11.8
0.3
– interest rate swaps
12.4
–
28.8
–
14.2
0.9
40.6
0.3
Designated as fair value hedges
– forward foreign exchange contracts
–
0.1
0.3
0.7
–
0.1
0.3
0.7
Forward foreign exchange contracts
The contract amounts of the outstanding forward foreign exchange contracts at 31st December 2023 were
US$493.6 million (2022: US$588.8 million).
Interest rate swaps
The notional principal amounts of the outstanding interest rate swap contracts at 31st December 2023 were
US$389.2 million (2022: US$489.6 million) and the fixed interest rates relating to interest rate swaps varied from
0.66% to 0.67% (2022: 0.39% to 0.67%) per annum.
The fair values of interest rate swaps at 31st December 2023 were based on the estimated cash flows discounted at
market rates of 5.4% (2022: 4.7% to 5.1%) per annum.
142
DFI Retail Group Holdings Limited Annual Report 2023
32. Commitments
2023
2022
US$m
US$m
Capital commitments
Authorised not contracted
67.0
116.9
Contracted not provided
– joint venture
–
2.8
– other
5.3
11.4
72.3
131.1
Operating lease commitments for short-term and low-value asset leases which were due within one year amounted to
US$2.1 million at 31st December 2023 (2022: US$5.6 million).
Total future sublease payments receivable amounted to US$3.0 million at 31st December 2023 (2022: US$19.5 million).
33. Contingent Liabilities
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 financial statements.
34. Related Party Transactions
The parent company of the Group is Jardine Strategic Limited 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 in 2023 were US$0.2 million (2022: US$0.3 million). The Group also paid
directors’ fees of US$0.3 million (2022: US$0.3 million) in 2023 to JML.
The Group rents properties from Hongkong Land (‘HKL’) and Mandarin Oriental Hotel Group (‘MOHG’), subsidiaries
of JMH. The lease payments paid by the Group to HKL and MOHG in 2023 were US$3.4 million (2022: US$2.8 million)
and US$0.6 million (2022: US$0.7 million), respectively. The Group’s 50%-owned associate, Maxim’s, also paid lease
payments of US$10.6 million (2022: US$8.3 million) to HKL in 2023.
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 in 2023 amounted to US$2.4 million (2022: US$3.5 million).
143
Notes to the Financial Statements
34. Related Party Transactions continued
Maxim’s supplies ready-to-eat products at arm’s length to certain subsidiaries of the Group. In 2023, these amounted to
US$47.3 million (2022: US$41.9 million).
The Group’s digital joint venture, RTA group, implements point-of-sale system and provides consultancy services to the
Group. The total fees paid by the Group to RTA group in 2023 amounted to US$16.9 million (2022: US$13.1 million).
The Group’s associate, Minden, supports the Group’s customer loyalty programme in Singapore. The total fees paid by
the Group to Minden in 2023 amounted to US$4.7 million (2022: $0.6 million).
Amounts of outstanding balances with associates and joint ventures are included in debtors and creditors, as appropriate.
Balances with group companies of JMH at 31st December 2023 and 2022 are immaterial, unsecured, and have no fixed
terms of repayment.
Details of Directors’ remuneration (being key management personnel compensation) are shown on page 197 under the
heading of ‘Remuneration Outcomes in 2023’.
35. Summarised Balance Sheet of the Company
Included below is certain summarised balance sheet information of the Company at 31st December disclosed in
accordance with Bermuda law.
2023
2022
US$m
US$m
Subsidiaries, at cost
92.4
92.4
Current assets*
503.0
527.0
Current liabilities*
(54.2)
(13.8)
Net operating assets
541.2
605.6
Share capital (note 25)
75.2
75.2
Share premium and capital reserves (note 27)
72.8
67.6
Revenue and other reserves
393.2
462.8
Shareholders’ funds
541.2
605.6
* Included intercompany balances due from/(to) subsidiaries.
144
DFI Retail Group Holdings Limited Annual Report 2023
36. Principal Subsidiaries
The Group’s principal subsidiaries at 31st December 2023 are set out below:
Attributable
interests
Proportion of ordinary
shares and voting powers
at 31st December 2023
held by
Company name
Place of
incorporation
Nature of business
2023
%
2022
%
the Group
%
non-
controlling
interests
%
DFI Retail Group Management Limited* Bermuda
Holding
100
100
100
–
DFI Retail Group Management
Services Limited*
Bermuda
Group management
100
100
100
–
DFI (China) Commercial Investment
Holding Company Limited
Chinese mainland
Investment holding
100
100
100
–
Guangdong Sai Yi Convenience
Stores Limited
Chinese mainland
Convenience
65
65
65
35
Mannings Guangdong Retail
Company Limited
Chinese mainland
Health and beauty
100
100
100
–
DFI Retail Group Treasury Limited
Hong Kong
Group treasury
100
100
100
–
The Dairy Farm Company, Limited
Hong Kong
Investment holding,
food, convenience,
health and beauty
and home furnishings
100
100
100
–
Wellcome Company Limited
Hong Kong
Property and
food processing
100
100
100
–
DFI Development (HK) Limited
Hong Kong
Customer loyalty
programme
100
100
100
–
San Miu Supermarket Limited
Macau
Food
100
100
100
–
DFI Home Furnishings Taiwan Limited
Taiwan
Home furnishings
100
100
100
–
Guardian Health And Beauty Sdn. Bhd.
Malaysia
Health and beauty
100
100
100
–
PT Hero Supermarket Tbk
Indonesia
Investment holding,
food and health
and beauty
89
89
89
11
PT Rumah Mebel Nusantara
Indonesia
Home furnishings
89
89
89
11
Guardian Health And Beauty (B) Sdn. Bhd. Brunei
Health and beauty
100
100
100
–
Cold Storage Singapore (1983)
Pte Limited
Singapore
Food, convenience
and health and beauty
100
100
100
–
DFI Lucky Private Limited
Cambodia
Food and health
and beauty
70
70
70
30
All subsidiaries are included in the consolidation.
Attributable interests represent the proportional holdings of the Company, held directly or through its subsidiaries, in the
issued share capital of the respective companies, after the deduction of any shares held by the trustees of the employee
share option schemes of any such company and any shares in any such company owned by its wholly-owned subsidiaries.
* Directly held by the Company.
145
Notes to the Financial Statements
37. Material Accounting Policies
Basis of consolidation
(i)
The consolidated financial statements include the financial statements of the Company, its subsidiaries, and the
Group’s interests in associates and joint ventures.
(ii) A subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of
an acquisition includes the fair value at the acquisition date of any contingent consideration. The Group recognises
the non-controlling interest’s proportionate share of the recognised identifiable net assets of the acquired subsidiary.
In a business combination achieved in stages, the Group remeasures its previously held interest in the acquiree
at its acquisition-date fair value and recognises the resulting gain or loss in profit and loss. Changes in a parent’s
ownership interest in a subsidiary that do not result in the loss of control are accounted for as equity transactions.
When control over a previous subsidiary is lost, any remaining interest in the entity is remeasured at fair value and
the resulting gain or loss is recognised in profit and loss.
All material intercompany transactions, balances and unrealised surpluses and deficits on transactions between
Group companies have been eliminated.
(iii) An associate is an entity, not being a subsidiary or a joint venture, over which the Group exercises significant
influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing
of control of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
Associates and joint ventures are included on the equity basis of accounting.
Profits and losses resulting from upstream and downstream transactions between the Group and its associates
and joint ventures are recognised in the consolidated financial statements only to the extent of unrelated investor’s
interests in the associates and joint ventures.
(iv) Non-controlling interests represent the proportion of the results and net assets of subsidiaries and their associates
and joint ventures not attributable to the Group.
(v) The results of subsidiaries, associates and joint ventures are included or excluded from their effective dates of
acquisition or disposal, respectively. The results of entities other than subsidiaries, associates and joint ventures
are included to the extent of dividends received when the right to receive such dividend is established.
146
DFI Retail Group Holdings Limited Annual Report 2023
37. Material Accounting Policies continued
Foreign currencies
Transactions in foreign currencies are accounted for at the exchange rates ruling at the transaction dates.
Assets and liabilities of subsidiaries, associates and joint ventures, together with all other monetary assets and liabilities
expressed in foreign currencies, are translated into United States dollars at the rates of exchange ruling at the year end.
Results expressed in foreign currencies are translated into United States dollars at the average rates of exchange ruling
during the year, which approximate the exchange rates at the dates of the transactions.
Exchange differences arising from the retranslation of the net investment in foreign subsidiaries, associates and joint
ventures, and of financial instruments which are designated as hedges of such investments, are recognised in other
comprehensive income and accumulated in equity under exchange reserves. On the disposal of these investments, such
exchange differences are recognised in profit and loss. Exchange differences on other investments measured at fair value
through profit and loss are recognised in profit and loss as part of the gains and losses arising from changes in their fair
values. All other exchange differences are recognised in profit and loss.
Goodwill and fair value adjustments arising on acquisition of a foreign entity after 1st January 2003 are treated as assets
and liabilities of the foreign entity and translated into United States dollars at the rates of exchange ruling at the year end.
Impairment of non-financial assets
Assets that have indefinite useful lives are not subject to amortisation and are tested for impairment annually and
whenever there is an indication that the assets may be impaired. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
For the purpose of assessing impairment, assets are grouped at the lowest level for which there is a separately identifiable
cash flow. Cash-generating units or groups of cash-generating units to which goodwill has been allocated are tested
for impairment annually and whenever there is an indication that the units may be impaired. An impairment loss is
recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher
of an asset’s fair value less costs to sell and value-in-use. Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment annually.
Intangible assets
(i)
Goodwill represents the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the acquisition-date fair value of any previously held equity interest in the acquiree
over the acquisition-date fair value of the Group’s share of the net identifiable assets acquired. Non-controlling
interests are measured at their proportionate share of the net identifiable assets at the acquisition date. If the cost
of acquisition is less than the fair value of the net assets acquired, the difference is recognised directly in profit and
loss. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates
and joint ventures is included in investment in associates and joint ventures. Goodwill is allocated to cash-generating
units or groups of cash-generating units for the purpose of impairment testing and is carried at cost less
accumulated impairment loss.
The profit or loss on disposal of subsidiaries, associates and joint ventures is stated after deducting the carrying
amount of goodwill relating to the entity sold.
(ii) Other intangible assets, consisting of trademarks and computer software, are stated at cost less accumulated
amortisation and impairment. Amortisation is calculated on the straight-line basis to allocate the cost of intangible
assets over their estimated useful lives.
147
Notes to the Financial Statements
37. Material Accounting Policies continued
Tangible assets and depreciation
Freehold properties comprised land and buildings. Freehold land is stated at cost less any impairment. No depreciation is
provided on freehold land as it is deemed to have an indefinite life. Buildings on freehold and leasehold land are stated at
cost less any accumulated depreciation and impairment. Other tangible assets are stated at cost less amounts provided
for depreciation and impairment.
Depreciation of tangible assets is calculated on the straight-line basis to allocate the cost of each asset to its residual
value over its estimated useful life. The residual values and useful lives are reviewed at each balance sheet date.
The estimated useful lives are as follows:
Freehold buildings
25 to 40 years
Buildings on leasehold land
Shorter of the lease term or useful life
Leasehold improvements
Shorter of unexpired lease term or useful life
Plant and machinery
5 to 10 years
Furniture, equipment and motor vehicles
3 to 10 years
Where the carrying amount of a tangible asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
The profit or loss on disposal of tangible assets is recognised by reference to their carrying amounts.
Owner-occupied properties are remeasured at fair value at the date of change in use before transferring to investment
properties. The differences between the fair value and net book value of the properties are recognised in other
comprehensive income and accumulated in equity under revaluation reserves. On the disposal of the properties,
such revaluation reserves are transferred to revenue reserves.
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration.
Lease contracts may contain lease and non-lease components. The Group allocates the consideration in the contract
to lease and non-lease component based on their relative stand-alone prices. For property leases where the Group is
a lessee, it has elected not to separate lease and immaterial non-lease components and accounts for these items as
a single lease component.
148
DFI Retail Group Holdings Limited Annual Report 2023
37. Material Accounting Policies continued
Leases continued
(i) As a lessee
The Group enters into property leases for use as retail stores, distribution centres and offices. The Group recognises
right-of-use assets and lease liabilities at the lease commencement dates, that is the dates the underlying assets are
available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment, and
adjusted for any remeasurement of lease liabilities. The cost of the right-of-use assets includes amounts of the initial
measurement of lease liabilities recognised, lease payments made at or before the commencement dates less any lease
incentives received, initial direct costs incurred and restoration costs. In the case where right-of-use assets arise from
a sale and leaseback transaction, the Group measures the related right-of-use assets at the proportion of the previous
carrying amount of the assets that relate to the right of use retained by the Group and recognises the amount of gain
or loss that relates to the right transferred to the buyer-lessor in the profit and loss. Right-of-use assets are depreciated
using the straight-line method over the shorter of their estimated useful lives and the lease terms.
The Group also has interests in leasehold land for use in its operations. Lump sum payments are made upfront to acquire
these land interests from their previous registered owners or governments in the jurisdictions where the land is located.
There are no ongoing payments to be made under the term of the land leases, other than insignificant lease renewal
costs or payments based on rateable value set by the relevant government authorities. These payments are stated at
cost and are amortised over the term of the lease which includes the renewal period if the lease can be renewed without
significant cost.
Leasehold land related to owner-occupied properties is remeasured at fair value at the date of change in use before
transferring to investment properties. The differences between the fair value and net book value of the land lease are
recognised in other comprehensive income and accumulated in equity under revaluation reserves. On the disposal of
the properties, such revaluation reserves are transferred to revenue reserves.
Lease liabilities are measured at the present value of lease payments to be made over the lease terms. Lease payments
include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option which is reasonably certain to be exercised and payments
of penalties for terminating a lease, if the lease term reflects the Group exercising that option. The variable lease
payments that do not depend on an index or a rate are recognised as expenses in the period on which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. Lease liabilities are measured
at amortised cost using the effective interest rate method. After the commencement date, the amount of lease liabilities
is increased by the interest costs on the lease liabilities and decreased by lease payments made.
The carrying amount of lease liabilities is remeasured when there is a change in the lease term, or there is a change in
future lease payments arising from a change in an index or a rate, or there is a change in the Group’s estimate of the
amount expected to be payable under a residual guarantee, or there is a change arising from the reassessment of
whether the Group will be reasonably certain to exercise an extension or a termination option. When the lease liability
is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in
profit and loss if the carrying amount of right-of-use asset has been reduced to zero.
149
Notes to the Financial Statements
37. Material Accounting Policies continued
Leases continued
(i) As a lessee continued
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets (i.e. US$5,000
or less) and short-term leases. Low-value assets comprise IT equipment and small items of office furniture. Short-term
leases are leases with a lease term of 12 months or less. Lease payments associated with these leases are recognised
on a straight-line basis as an expense in profit and loss over the lease term.
Lease liabilities are classified as non-current liabilities unless payments are due within 12 months from the balance
sheet date.
(ii) As a lessor
The Group enters into contracts with lease components as a lessor primarily on its investment properties. These leases
are operating leases as they do not transfer the risk and rewards incidental to the underlying investment properties.
The Group recognises the lease payments received under these operating leases on a straight-line basis over the lease
term as part of revenue from other sources in the profit and loss.
Investment properties
Properties, including those under operating leases, which are held for long-term rental yields or capital gains are classified
and accounted for as investment properties. Investment properties are carried at fair value, representing estimated
open market value determined annually by independent qualified valuers who have recent experience in the location
and category of the investment properties being valued. Changes in fair value are recognised in profit and loss.
Investments
The Group’s investments are measured at fair value through profit and loss. The classification is based on the
management’s business model and their contractual cash flow characteristics.
Equity and debt investments are measured at fair value with fair value gains and losses recognised in profit and loss.
Transaction costs of investments carried at fair value through profit and loss are expensed in profit and loss.
All purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to
purchase or sell the investments. Investments are classified as non-current assets.
Stocks
Stocks, which principally comprise goods held for resale, are stated at the lower of cost and net realisable value. Cost is
determined on a weighted average cost basis and comprises purchase price less rebates. A stock provision is recognised
when the net realisable value from sale of the stock is estimated to be lower than the carrying value.
Debtors
Trade and other debtors, excluding derivative financial instruments, are measured at amortised cost except where the
effect of discounting would be immaterial. Provision for impairment is established by considering potential financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or
delinquency in payments. The carrying amount of the asset is reduced through the use of an allowance account and
the amount of the loss is recognised in arriving at operating profit. When a debtor is uncollectible, it is written off
against the allowance account. Subsequent recoveries of amount previously written off are credited to profit and loss.
Debtors with maturities greater than 12 months after the balance sheet date are classified under non-current assets.
150
DFI Retail Group Holdings Limited Annual Report 2023
37. Material Accounting Policies continued
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise deposits with banks, and cash and
bank balances, net of bank overdrafts. In the balance sheet, bank overdrafts are included in current borrowings.
Provisions
Provisions are recognised when the Group has present legal or constructive obligations as a result of past events, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable
estimate of the amount of the obligations can be made. Obligations arising from restructuring plans are recognised
when detailed formal plans have been established and when there is a valid expectation that such plans will be carried
out by either starting to implement them or announcing their main features to those affected by it.
Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of transaction costs incurred. In subsequent periods, borrowings are
stated at amortised cost using the effective interest rate method. All borrowing costs are expensed as incurred.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit and loss, except to the extent
that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance
sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets
and liabilities and their carrying values. Deferred tax is determined using tax rates and laws that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised
or the deferred tax liability is settled.
Provision for deferred tax is made on the revaluation of certain non-current assets and, in relation to acquisitions, on the
difference between the fair value of the net assets acquired and their tax bases. Deferred tax is provided on temporary
differences associated with investments in subsidiaries, associates and joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent
that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.
Employee benefits
(i) Pension obligations
The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in trustee
administered funds.
Pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under this
method, the costs of providing pensions are charged to profit and loss spreading the regular cost over the service lives of
employees in accordance with the advice of qualified actuaries, who carry out a full valuation of major plans every year.
The pension obligations are measured as the present value of the estimated future cash outflows by reference to market
yields on high quality corporate bonds which have terms to maturity approximating the terms of the related liability.
Plan assets are measured at fair value.
151
Notes to the Financial Statements
37. Material Accounting Policies continued
Employee benefits continued
(i) Pension obligations continued
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in
other comprehensive income in the year in which they occur.
Past service costs are recognised immediately in profit and loss.
The Group’s total contributions relating to the defined contribution plans are charged to profit and loss in the year to
which they relate.
(ii) Share-based compensation
The Company operates a number of equity-settled employee share option schemes. The fair value of the employee
services received in exchange for the grant of the share options or the share awards in respect of options or awards
granted after 7th November 2002 is recognised as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the share options or share awards granted as determined on the
grant date. At each balance sheet date, the Company revises its estimates of the number of share options that are
expected to become exercisable and the number of share awards which will be vested free of payment. The impact
of the revision of original estimates, if any, is recognised in profit and loss.
Assets held for sale
Assets are classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell if their
carrying amounts are expected to be recovered principally through a sale transaction rather than through continuing use.
Once classified as held for sale, assets are no longer amortised or depreciated.
Derivative financial instruments
The Group only enters into derivative financial instruments in order to hedge underlying exposures and not as speculative
investments. Derivative financial instruments are initially recognised at fair value on the date a derivative contract is
entered into and are subsequently remeasured at their fair values. The method of recognising the resulting gain or loss is
dependent on the nature of the item being hedged. The Group designates certain derivatives as a hedge of the fair value
of a recognised asset or liability (‘fair value hedge’), or a hedge of a forecasted transaction or of the foreign currency risk
on a firm commitment (‘cash flow hedge’).
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments
and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset
changes in the cash flows of hedged items. The Group documents its risk management objective and strategy for
undertaking its hedge transactions.
Changes in the fair value of derivatives that are designated and qualified as fair value hedges and that are highly
effective, are recognised in profit and loss, along with any changes in the fair value of the hedged asset or liability that
is attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate swaps hedging fixed
rate borrowings is recognised in profit and loss within finance costs, together with changes in the fair value of the hedged
fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognised
in profit and loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, the cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate
method is used is amortised to profit and loss over the residual period to maturity.
152
DFI Retail Group Holdings Limited Annual Report 2023
37. Material Accounting Policies continued
Derivative financial instruments continued
Changes in the fair value of derivatives that are designated and qualified as cash flow hedges and that are highly
effective, are recognised in other comprehensive income and accumulated in equity under hedging reserves. Changes
in the fair value relating to the ineffective portion are recognised immediately in profit and loss. Where the hedged item
results in the recognition of a non-financial asset or a non-financial liability, the deferred gains and losses are included in
the initial measurement of the cost of the asset or liability. The deferred amounts are ultimately recognised in profit and
loss as the hedged item affects profit and loss. Otherwise, amounts deferred in hedging reserves are transferred to profit
and loss in the same periods during which the hedged firm commitment or forecasted transaction affects profit and loss.
The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised
in profit and loss within finance costs at the same time as the interest expense on the hedged borrowings. When a
hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative
gain or loss existing in hedging reserves at that time remains in the hedging reserves and is recognised in profit and
loss when the committed or forecasted transaction occurs. When a committed or forecasted transaction is no longer
expected to occur, the cumulative gain or loss that was reported in hedging reserves is immediately transferred to profit
and loss.
Certain derivative transactions, while providing effective economic hedges under the Group’s risk management policies,
do not qualify for hedge accounting under the specific rules in IFRS 9. Changes in the fair value of any derivative
instruments that do not qualify for hedge accounting under IFRS 9 are recognised immediately in profit and loss.
The fair value of derivatives which are designated and qualified as effective hedges are classified as non-current assets
or liabilities if the remaining maturities of the hedged assets or liabilities are greater than 12 months after the balance
sheet date.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset
and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must
be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or
the counterparty.
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; fair value gains and losses on revaluations of investment
properties; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable
intangible assets, properties, and associates and joint ventures; 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.
Earnings per share
Basic earnings per share is calculated on profit attributable to shareholders and on the weighted average number
of shares in issue during the year. The weighted average number excludes the shares held by the Trustee under the
Share-based Long-term Incentive Plans. For the purpose of calculating diluted earnings per share, profit attributable
to shareholders is adjusted for the effects of the conversion of dilutive potential ordinary shares, and the weighted
average number of shares is adjusted for the number of 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 year.
153
Notes to the Financial Statements
37. Material Accounting Policies continued
Dividends
Dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date.
Revenue recognition
(i) Sales of goods
Sales consist of the fair value of goods sold to customers, net of returns, discounts and sales related taxes. Sales of goods
is recognised when the control of the asset is transferred to customers which is at the point of sale or when the delivery of
the goods is made to the customers, and is recorded at the net amount received from customers.
(ii) Revenue from other sources
Revenue from other sources comprises primarily delivery and assembly income, income from concessions, service
income, income from the Group’s customer loyalty programme, rental income from the investment properties and plastic
bags income.
Delivery and assembly income and service income are recognised when the services are rendered to the customers.
Concessions and service income are based on the Group’s contractual commission.
Programme contribution mainly revenue share and subscription income, associated with the on-going provision of
marketing service or loyalty point management service to participating merchants, is recognised over time when the
service is being performed. Where separately identifiable performance obligation is associated with the programme
contribution, revenue is recognised at a point in time when the performance obligation is deemed to have been met.
Loyalty point margin is recognised when loyalty points are redeemed by the customers of participating merchants.
Breakage, refers to the proportion of loyalty points that are expected to expire, which is recognised as revenue in
proportion to the pattern of loyalty points redemption.
Rental income from investment properties is accounted for as earned.
Plastic bags income represents a levy charged on plastic bags is recognised at the point of sale.
Buying income
Supplier incentives, rebates and discounts are collectively referred to as buying income. Buying income is recognised
when earned by the Group, which occurs when all obligations conditional for earning income have been discharged, and
the income can be measured reliably based on the terms of the contract.
The income is recognised as a credit within cost of sales. Where the income earned relates to stocks which are held by the
Group at period ends, the income is included within the cost of those stocks, and recognised in cost of sales upon sale of
those stocks. The accrued value at the reporting date is included in trade debtors or trade creditors, depending on the
right of offset.
The key types of buying income which the Group receives include:
•
Discounts and incentives relate to individual unit sales.
•
Sales volume-based incentives based on achieving certain purchases on promotion for an event or a period.
•
Conditional incentives subject to satisfaction of certain conditions by the Group.
•
Fixed amounts agreed with suppliers for supporting in-store activity.
154
DFI Retail Group Holdings Limited Annual Report 2023
38. Standards and Amendments Issued But Not Yet Effective
A number of amendments effective for accounting periods beginning after 2023 have been published and will be
adopted by the Group from their respective effective dates. The Group is currently assessing the potential impact of
these amendments but expects the adoption will not have a significant impact on the Group’s consolidated financial
statements.
39. Financial Risk Management
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate
risk), credit risk and liquidity risk.
The Group’s treasury function co-ordinates financial risk management policies and their implementation on a group-wide
basis. The Group’s treasury policies are designed to manage the financial impact of fluctuations in interest rates and
foreign exchange rates and to minimise the Group’s financial risks. The Group uses derivative financial instruments,
principally interest rate swaps and forward foreign exchange contracts as appropriate for hedging transactions and
managing the Group’s assets and liabilities in accordance with the Group’s financial risk management policies. Financial
derivative contracts are executed between third party banks and the Group’s entity that is directly exposed to the risk
being hedged. Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and
the hedged item. The effective portion of the change in the fair value of the hedging instrument is deferred into the cash
flow hedge reserve through other comprehensive income and will be recognised in profit and loss when the hedged item
affects profit and loss. In general, the volatility in profit or loss can be reduced by applying hedge accounting.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
effectiveness assessments to ensure that an economic relationship exists between the hedged item and
hedging instrument.
For hedges of foreign currency purchases, the Group enters into hedge relationships where the critical terms of the
hedging instrument match exactly with the terms of the hedged item. The Group assesses whether the derivative
designated in each hedging relationship has been and expected to be effective in offsetting changes in cash flow of
the hedged item using the hypothetical derivative method.
Ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated for hedges
of foreign currency purchases, or if there are changes in the credit risk of the Group or the derivative counterparty.
The Group enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate,
reset dates, payment dates, maturities and notional amount. The Group does not hedge 100% of its loans, therefore the
hedged item is identified as a proportion of the outstanding loans up to the notional amount of the swaps. As all critical
terms matched during the year, effective economic relationship existed between the swaps and the loans.
155
Notes to the Financial Statements
39. Financial Risk Management continued
Financial risk factors continued
Hedge ineffectiveness for interest rate swaps is assessed using the same principles as for hedges of foreign currency
purchases. It may occur due to:
(i)
The credit/debit value adjustment on the interest rate swaps which is not matched by the loan; and
(ii) Differences in critical terms between the interest rate swaps and loans.
The ineffectiveness during 2023 and 2022 in relation to interest rate swaps were not material.
(i) Market risk
Foreign exchange risk
Entities within the Group are exposed to foreign exchange risk arising from future commercial transactions, net
investments in foreign operations and net monetary assets and liabilities that are denominated in a currency that
is not the entity’s functional currency.
The Group uses forward foreign exchange contracts in a consistent manner to hedge firm and anticipated foreign
exchange commitments and manage foreign exchange risk arising from future commercial transactions. The purpose
of these hedges is to mitigate the impact of movements in foreign exchange rates on assets and liabilities and the profit
and loss account of the Group.
Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in
a currency that is not the functional currency. There are no significant monetary balances held by Group
companies at 31st December 2023 that are denominated in a non-functional currency. Differences resulting
from the translation of financial statements into the Group’s presentation currency are not taken into consideration.
Interest rate risk
The Group is exposed to interest rate risk through the impact of rate changes on interest-bearing assets and liabilities.
These exposures are managed partly by using natural hedges that arise from offsetting interest rate sensitive assets
and liabilities, and partly through fixed rate borrowings and the use of derivative financial instruments including interest
rate swaps. The Group monitors interest rate exposure on a regular basis by currency and business unit, taking into
consideration proposed financing and hedging arrangements. The Group’s guideline is to maintain 40% to 60% of its
long-term non-working capital gross borrowings in fixed rate instruments. At 31st December 2023, the Group’s fixed rate
borrowings were 42% (2022: 45%) on the total borrowings, with an average tenor of 0.1 year (2022: 0.2 year). The
interest rate profile of the Group’s borrowings after taking into account hedging transactions is set out in note 22.
Cash flow interest rate risk is the risk that changes in market interest rates will impact cash flows arising from variable
rate financial instruments. Borrowings at floating rates therefore expose the Group to cash flow interest rate risk. The
Group manages this risk by entering into interest rate swaps for a maturity of up to three years. Interest rate swaps have
the economic effect of converting borrowings from floating rate to fixed rate. Details of interest rate swaps are set out in
note 31.
Fair value interest rate risk is the risk that the value of a financial asset or liability and derivative financial instruments will
fluctuate because of changes in market interest rates. The Group manages its fair value interest rate risk by entering into
interest rate swaps which have the economic effect of converting borrowings from fixed rate to floating rate, to maintain
the fixed rate instruments within the Group’s guideline.
156
DFI Retail Group Holdings Limited Annual Report 2023
39. Financial Risk Management continued
Financial risk factors continued
(i) Market risk continued
Interest rate risk continued
At 31st December 2023, if interest rates had been 100 basis points higher/lower with all other variables held constant,
the Group’s profit after tax would have been US$3.9 million lower/higher (2022: loss after tax would have been
US$4.4 million higher/lower), and hedging reserves would have been US$2.6 million (2022: US$6.0 million) higher/lower,
as a result of fair value changes to cash flow hedges. The sensitivity analysis has been determined assuming that the
change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate
risk for both derivative and non-derivative financial instruments in existence at that date. The 100 basis point increase
or decrease represents management’s assessment of a reasonably possible change in those interest rates which have
the most impact on the Group, specifically the Singaporean, Hong Kong and Indonesian rates, over the period until
the next annual balance sheet date. In the case of effective fair value hedges, changes in the fair value of the hedged
items caused by interest rate movements balance out in the profit and loss account against changes in the fair value
of the hedging instruments. Changes in market interest rates affect the interest income or expense of non-derivative
variable-interest financial instruments, the interest payments of which are not designated as hedged items of cash flow
hedges against interest rate risks. As a consequence, they are included in the calculation of profit after tax sensitivities.
Changes in the market interest rate of financial instruments that were designated as hedging instruments in a cash flow
hedge to hedge payment fluctuations resulting from interest rate movements affect the hedging reserves and are
therefore taken into consideration in the equity-related sensitivity calculations.
(ii) Credit risk
The Group’s credit risk is primarily attributable to deposits with banks and derivative financial instruments with a positive
fair value. The Group has credit policies in place and the exposures to these credit risks are monitored on an ongoing basis.
The Group manages its deposits with banks and transactions involving derivative financial instruments by monitoring
credit ratings and capital adequacy ratios of counterparties, and limiting the aggregate risk to any individual counterparty.
The utilisation of credit limits is regularly monitored. Similarly, transactions involving derivative financial instruments are
with banks with sound credit ratings and capital adequacy ratios. In developing countries it may be necessary to deposit
money with banks that have a lower credit rating, however, the Group only enters into derivative transactions with
counterparties which have credit ratings of at least investment grade. Management does not expect any counterparty
to fail to meet its obligations.
Sales of goods to customers are made in cash or by major credit cards and other electronic payments. The maximum
exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after deducting
any impairment allowance.
The Group’s debt investments are monitored for credit deterioration. The maximum exposure to credit risk is represented
by the carrying amount of the Group’s debt investments in the balance sheet after deducting any fair value loss.
(iii) Liquidity risk
Prudent liquidity risk management includes managing the profile of debt maturities and funding sources, maintaining
sufficient cash and ensuring the availability of funding from an adequate amount of committed credit facilities and
the ability to close out market positions. The Group’s ability to fund its existing and prospective debt requirements is
managed by maintaining diversified funding sources with adequate committed funding lines from high quality lenders,
and by monitoring rolling short-term forecasts of the Group’s cash and gross debt on the basis of expected cash flows.
Long-term cash flows are projected to assist with the Group’s long-term debt financing plans. In addition, the Group
has implemented a global liquidity cash pooling scheme, which enables the Group to manage and optimise its working
capital funding requirement on a daily basis.
157
Notes to the Financial Statements
39. Financial Risk Management continued
Financial risk factors continued
(iii) Liquidity risk continued
At 31st December 2023, total available borrowing facilities amounted to US$2,483.4 million (2022: US$3,051.2 million),
of which US$1,487.0 million (2022: US$1,927.0 million) were committed facilities. A total of US$924.1 million
(2022: US$1,096.2 million) from both committed and uncommitted facilities was drawn down. Undrawn committed
facilities, in the form of revolving credit facilities, totalled US$1,066.5 million (2022: US$1,403.1 million).
The following table analyses the Group’s non-derivative financial liabilities, net-settled derivative financial liabilities and
gross-settled derivative financial instruments into relevant maturity groupings based on the remaining period at the
balance sheet date to the contractual maturity date. Derivative financial liabilities are included in the analysis if their
contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the
table below are the contractual undiscounted cash flows.
Within
one year
Between
one and
two years
Between
two and
three
years
Between
three and
four years
Between
four and
five years
Beyond
five years
Total
undiscounted
cash flows
US$m
US$m
US$m
US$m
US$m
US$m
US$m
At 31st December 2023
Creditors
1,887.8
1.4
0.6
0.7
0.4
0.2
1,891.1
Borrowings
785.9
34.6
129.4
0.3
–
–
950.2
Lease liabilities
667.7
537.5
416.1
328.5
286.8
1,051.3
3,287.9
Net-settled derivative
financial instruments
–
–
–
–
–
–
–
Gross-settled derivative
financial instruments
– inflow
351.2
–
–
–
–
–
351.2
– outflow
350.0
–
–
–
–
–
350.0
At 31st December 2022
Creditors
1,937.1
1.4
1.2
0.7
0.1
4.3
1,944.8
Borrowings
854.1
261.6
0.9
0.7
0.3
–
1,117.6
Lease liabilities
667.5
522.2
401.5
311.1
240.0
1,160.5
3,302.8
Net-settled derivative
financial instruments
–
–
–
–
–
–
–
Gross-settled derivative
financial instruments
– inflow
421.7
–
–
–
–
–
421.7
– outflow
421.9
–
–
–
–
–
421.9
158
DFI Retail Group Holdings Limited Annual Report 2023
39. Financial Risk Management continued
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst
seeking to maximise benefits to shareholders and other stakeholders. Capital is equity as shown in the consolidated
balance sheet plus net debt.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and
shareholder returns, by taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, repurchase Company shares, return capital to shareholders, issue new shares
or sell assets to reduce debt.
The Group monitors capital on the basis of the Group’s consolidated gearing ratio and consolidated interest cover.
The gearing ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings less cash
and bank balances. Interest cover is calculated as the sum of underlying operating profit, before the deduction of
amortisation/depreciation and impairment charges of right-of-use assets, net of actual lease payments, and share of
results of associates and joint ventures, divided by net financing charges excluding interest on lease liabilities. The Group
does not have a defined gearing ratio or interest cover benchmark or range.
The ratios at 31st December 2023 and 2022 are as follows:
2023
2022
Gearing ratio (%)
63
92
Interest cover (times)
6
3
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.
159
Notes to the Financial Statements
39. Financial Risk Management continued
Fair value estimation continued
(i) Financial instruments that are measured at fair value continued
(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 year.
The table below analyses financial instruments carried at fair value, by the levels in the fair value measurement hierarchy
at 31st December 2023 and 2022:
Observable
current
market
transactions
Unobservable
inputs
Total
US$m
US$m
US$m
2023
Assets
Other investments (note 15)
– equity investments
6.7
–
6.7
– debt investments
–
–
–
Derivative financial instruments at fair value (note 31)
– through other comprehensive income
13.7
–
13.7
– through profit and loss
0.5
–
0.5
20.9
–
20.9
Liabilities
Derivative financial instruments at fair value (note 31)
– through other comprehensive income
(0.8)
–
(0.8)
– through profit and loss
(0.2)
–
(0.2)
(1.0)
–
(1.0)
160
DFI Retail Group Holdings Limited Annual Report 2023
39. Financial Risk Management continued
Fair value estimation continued
(i) Financial instruments that are measured at fair value continued
Observable
current
market
transactions
Unobservable
inputs
Total
US$m
US$m
US$m
2022
Assets
Other investments (note 15)
– equity investments
6.7
5.0
11.7
– debt investments
–
10.0
10.0
Derivative financial instruments at fair value (note 31)
– through other comprehensive income
40.4
–
40.4
– through profit and loss
0.5
–
0.5
47.6
15.0
62.6
Liabilities
Derivative financial instruments at fair value (note 31)
– through profit and loss
(1.0)
–
(1.0)
(1.0)
–
(1.0)
There were no transfers between the categories during the year ended 31st December 2023 and 2022.
Movements of unlisted equity and debt investments which are valued based on unobservable inputs are as follows:
2023
2022
US$m
US$m
At 1st January
15.0
5.0
Additions
–
10.0
Change in fair value during the year recognised in profit and loss (note 15)
(15.0)
–
At 31st December
–
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.
161
Notes to the Financial Statements
39. Financial Risk Management continued
Fair value estimation continued
Financial instruments by category
The carrying amounts of financial assets and financial liabilities at 31st December 2023 and 2022 are as follows:
Fair value
of hedging
instruments
Fair value
through
profit and
loss
Financial
assets at
amortised
cost
Other
financial
liabilities
Total
carrying
amounts
US$m
US$m
US$m
US$m
US$m
2023
Financial assets measured at fair value
Other investments
– equity investments
–
6.7
–
–
6.7
– debt investments
–
–
–
–
–
Derivative financial instruments
14.2
–
–
–
14.2
14.2
6.7
–
–
20.9
Financial assets not measured at fair value
Debtors
–
–
280.2
–
280.2
Cash and bank balances
–
–
306.3
–
306.3
–
–
586.5
–
586.5
Financial liabilities measured at fair value
Derivative financial instruments
(1.0)
–
–
–
(1.0)
(1.0)
–
–
–
(1.0)
Financial liabilities not measured at fair value
Borrowings
–
–
–
(924.1)
(924.1)
Lease liabilities
–
–
–
(2,847.8)
(2,847.8)
Trade and other payables excluding
non-financial liabilities
–
–
–
(1,891.1)
(1,891.1)
–
–
–
(5,663.0)
(5,663.0)
162
DFI Retail Group Holdings Limited Annual Report 2023
39. Financial Risk Management continued
Fair value estimation continued
Financial instruments by category continued
Fair value of
hedging
instruments
Fair value
through
profit
and loss
Financial
assets at
amortised
cost
Other
financial
liabilities
Total
carrying
amounts
US$m
US$m
US$m
US$m
US$m
2022
Financial assets measured at fair value
Other investments
– equity investments
–
11.7
–
–
11.7
– debt investments
–
10.0
–
–
10.0
Derivative financial instruments
40.9
–
–
–
40.9
40.9
21.7
–
–
62.6
Financial assets not measured at fair value
Debtors
–
–
262.9
–
262.9
Cash and bank balances
–
–
230.7
–
230.7
–
–
493.6
–
493.6
Financial liabilities measured at fair value
Derivative financial instruments
(1.0)
–
–
–
(1.0)
(1.0)
–
–
–
(1.0)
Financial liabilities not measured at fair value
Borrowings
–
–
–
(1,096.2)
(1,096.2)
Lease liabilities
–
–
–
(2,875.7)
(2,875.7)
Trade and other payables excluding
non-financial liabilities
–
–
–
(1,944.8)
(1,944.8)
–
–
–
(5,916.7)
(5,916.7)
The fair values of financial assets and financial liabilities approximate their carrying amounts.
163
Notes to the Financial Statements
40. Critical Accounting Estimates and Judgements
Estimates and judgements used in preparing the financial statements are continually evaluated and are based on
historical experience and other factors, including expectations of future events that are believed to be reasonable
according to circumstances and conditions available. The existing and potential impacts arising from climate change
have been considered when applying estimates and assumptions in the preparation of the financial statements, including
the Group’s assessment of impairment of assets.
The estimates and assumptions that have a significant effect on the reported amounts of assets and liabilities, and
income and expenses are discussed below.
Significant areas of estimation uncertainty
Acquisition of subsidiaries, associates and joint ventures
The initial accounting on the acquisition of subsidiaries, associates and joint ventures involves identifying and determining
the fair values to be assigned to the identifiable assets, liabilities and contingent liabilities of the acquired entities. The
fair values of tangible assets, right-of-use assets and investment properties are determined by independent valuers by
reference to market prices or present value of expected net cash flows from the assets. Any changes in the assumptions
used and estimates made in determining the fair values, and management’s ability to measure reliably the contingent
liabilities of the acquired entity will impact the carrying amount of these assets and liabilities.
On initial acquisition or acquisition of further interests in an entity, an assessment of the level of control or influence
exercised by the Group is required. For entities where the Group has a shareholding of less than 50%, an assessment of
the Group’s level of voting rights, board representation and other indicators of influence is performed to consider whether
the Group has de facto control, requiring consolidation of that entity, or significant influence, requiring classification as
an associate, or joint control, requiring classification as a joint venture.
Investment properties
The fair values of investment properties are determined by independent valuers using direct comparison and income
capitalisation method. The direct comparison method is made by reference to comparable market transactions and
adjusted by property-specific qualitative factors. Capitalisation rates are being used under the income capitalisation
method in the fair value determination.
In forming the valuations, the independent valuers have considered relevant external factors. Consideration has been
given to assumptions that are mainly based on market conditions existing at the balance sheet date and appropriate
capitalisation rates. These estimates are regularly compared to actual market data and transactions.
Impairment of assets
The Group tests annually whether goodwill and other assets that have indefinite useful lives suffered any impairment.
Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of the asset exceeds its recoverable amount. The recoverable amount of an asset or a cash-generating unit
is determined based on the higher of its fair value less costs to sell and its value-in-use, calculated on the basis of
management’s assumptions and estimates. Changing the key assumptions, including the discount rates or the growth
rate assumptions in the cash flow projections, could materially affect the value-in-use calculations.
164
DFI Retail Group Holdings Limited Annual Report 2023
40. Critical Accounting Estimates and Judgements continued
Significant areas of estimation uncertainty continued
Pension obligations
The present value of the pension obligations depends on a number of factors that are determined on an actuarial
basis using a number of assumptions. The assumptions used in determining the net cost/income for pension assets
and obligations include the discount rate. Any changes in these assumptions will impact the carrying amount of
pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used
to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations.
In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that
are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the
terms of the related pension obligations.
Other key assumptions for pension obligations are based in part on current market conditions.
Buying income
The Group receives buying income, including supplier incentives, rebates and discounts, which are deducted from cost
of sales on an accrual basis. Management is required to make estimates in determining the expected entitlement which
has been earned up to the balance sheet date for each relevant supplier contract and the timing of recognition.
There is limited estimation involved in recognising income for fixed amounts agreed with suppliers.
Significant areas of judgement
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining
the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is made.
Provision for deferred tax follows the way management expects to recover or settle the carrying amount of the related
assets or liabilities, which the management may expect to recover through use, sale or combination of both. Accordingly,
deferred tax will be calculated at income tax rate, capital gains tax rate or combination of both.
Recognition of deferred tax assets, which principally relate to tax losses, depends on the management’s expectation
of future taxable profit that will be available against which the tax losses can be utilised. The outcome of their actual
utilisation may be different.
165
Notes to the Financial Statements
40. Critical Accounting Estimates and Judgements continued
Significant areas of judgement continued
Leases
Liabilities and the corresponding right-of-use assets arising from leases are initially measured at the present value of
the lease payments at the lease commencement date, discounted using the interest rates implicit in the leases, or if
that rate cannot be readily determinable, the Group uses the incremental borrowing rate. The Group generally uses
the incremental borrowing rate as the discount rate.
The Group applies the incremental borrowing rate with reference to the rate of interest that the Group’s leasing entity
would have to pay to borrow, over a similar term as that of the lease, the funds necessary to obtain an asset of a similar
value to the right-of-use asset in the place where it is located.
Lease payments to be made during the lease term will be included in the measurement of a lease liability. The Group
determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any period covered by an option to terminate the lease, if it
is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms. The Group applies judgement
in evaluating whether it is reasonably certain to exercise the option to renew. That is, the Group considers all relevant
factors that create an economic incentive for it to exercise the renewal. After the lease commencement date, the Group
reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects
its ability to exercise or not to exercise the option to renew. The assessment of whether the Group is reasonably certain
to exercise the options impacts the lease terms, which significantly affects the amount of lease liabilities and right-of-use
assets recognised, and the profit or loss on disposal under a sale and leaseback transaction.
Assets held for sale
Assets are classified as held for sale if their carrying amounts are expected to be recovered principally through a sale
transaction rather than through continuing use and measured at its lower of carrying amount and fair value less costs
to sale. The Group considers all relevant factors in determining how the carrying amounts of assets will be recovered
and only reclassifies the assets to held for sale when the sale is highly probable. The assessment of whether an asset is
classified to held for sale impacts the classification and the measurement of that asset.
Non-trading items
The Group uses underlying business performance in its internal financial reporting to distinguish between the underlying
profit and non-trading items. The identification of non-trading items requires judgement by management, but follows
the consistent methodology as set out in the Group’s accounting policies.
166
DFI Retail Group Holdings Limited Annual Report 2023
Independent Auditor’s Report
To the Members of DFI Retail Group Holdings Limited
(incorporated in Bermuda with limited liability)
Report on the Audit of the Consolidated Financial Statements
Opinion
What we have audited
The consolidated financial statements of DFI Retail Group Holdings Limited (the ‘Company’) and its subsidiaries (the ‘Group’),
included within the Annual Report, which comprise:
•
the Consolidated Balance Sheet at 31st December 2023;
•
the Consolidated Profit and Loss Account for the year then ended;
•
the Consolidated Statement of Comprehensive Income for the year then ended;
•
the Consolidated Statement of Changes in Equity for the year then ended;
•
the Consolidated Cash Flow Statement for the year then ended; and
•
the Notes to the Financial Statements, comprising material accounting policy information and other
explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the
consolidated financial statements. These disclosures are cross-referenced from the consolidated financial statements
and are identified as audited.
Our opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31st December 2023, and of its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board (‘IASB’).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (‘ISAs’). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants
(including International Independence Standards) issued by the International Ethics Standards Board for Accountants
(‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
167
Our Audit Approach
Overview
Materiality
•
Overall Group materiality: US$22.9 million, based on 0.25% of total revenue of the Group.
Audit scope
•
A full scope audit was performed on six entities including four subsidiaries and two associates, Maxim’s Caterers
Limited (‘Maxim’s’) and Yonghui Superstores Co., Ltd (‘Yonghui’).
•
These entities, together with the audit of specific balances and transactions performed on six other subsidiaries,
and procedures performed on central functions and at the Group level, accounted for 89% of the Group’s revenue,
80% of the Group’s profit before tax and 76% of the Group’s underlying profit before tax.
Key audit matters identified in our audit are summarised as follows:
•
Recoverability of goodwill for San Miu Macau and Giant Singapore; and
•
Buying income
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated financial statements. In particular, we considered where the Directors made subjective judgements; for
example, in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal
controls, including among other matters, consideration of whether there was evidence of bias by the Directors that
represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable
assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise
due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial
statements as a whole.
Overall group materiality
US$22.9 million
How we determined it
0.25% of total revenue of the Group
Rationale for the materiality
benchmark applied
Total revenue is a primary measure used by the shareholders in assessing the
performance of the Group when underlying profit before tax is close to breakeven
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
US$1.1 million, other than classifications within the Consolidated Profit and Loss Account or Consolidated Balance Sheet,
which were only reported above US$4.9 million. We would also report misstatements below these amounts that in our
view, warranted reporting for qualitative reasons.
168
DFI Retail Group Holdings Limited Annual Report 2023
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter
Recoverability of goodwill for San Miu Macau and
Giant Singapore
Refer to note 40 (Critical Accounting Estimates and
Judgements), note 10 (Intangible Assets) and note 9
(Non-trading Items) to the financial statements.
As at 31st December 2023 the Group had goodwill of
US$202 million, included within 11 cash generating units
(‘CGUs’).
Management undertook annual impairment assessments
for all CGUs containing goodwill, as required by accounting
standards. Based on management’s assessments, the
recoverable amounts for the San Miu Macau and Giant
Singapore CGUs were lower than the respective carrying
values. Impairment charges in respect of the goodwill
balances of these CGUs of approximately US$103 million
were recognised as non-trading items in the Consolidated
Profit and Loss Account for the year ended 31st December
2023.
In addition, the San Miu Macau goodwill remains sensitive
to changes in key assumptions used in the valuation
assessment, as not all of the goodwill has been impaired,
and therefore any further deterioration in the future cash
flows and/or financial assumptions would result in an
additional impairment charge.
How our audit addressed the key audit matter
We assessed the inherent risk of material misstatement
by considering the degree of estimation uncertainty and
the judgement involved in determining the recoverable
amounts of CGUs containing goodwill, including the
assumptions applied. We performed the following
procedures in relation to management’s impairment
assessments, focussing on the CGUs containing the
San Miu Macau and Giant Singapore goodwill.
With the support of our valuation experts, we assessed
key assumptions used in management’s valuation
assessments against relevant supporting evidence.
This included whether the assumptions of projected
cash flows of the respective businesses, the discount
rates, and the long-term growth rates were appropriate.
We agreed the future cash flows used in the assessments
with management approved budgets, where relevant.
We also tested management’s historical estimation
accuracy by comparing historical budgeted performances
with actual results.
We compared the discount rates used with the range of
discount rates used in similar businesses and considered
whether management had incorporated all relevant
macro-economic and country-specific factors, as well as
those specific to San Miu Macau and Giant Singapore.
169
Independent Auditor’s Report
Key Audit Matter
Recoverability of goodwill for San Miu Macau and
Giant Singapore continued
There is inherent estimation uncertainty and judgement in
determining the recoverable amount of CGUs containing
goodwill. Assumptions are made by management in
preparing the valuation assessments, particularly
management’s judgement on key internal inputs and
external market conditions which impact future cash
flows, the discount rates and the long-term growth rates.
We focussed on the San Miu Macau and Giant Singapore
CGUs, as these contained the most significant goodwill
balances held by the Group and had a higher risk
of impairment.
How our audit addressed the key audit matter
For the long-term growth rates we compared these with
the long-term inflation rates, and considered whether
management had incorporated macro-economic and
country-specific factors related to the respective businesses.
We evaluated the sensitivity analysis performed by
management and performed our own independent
sensitivity analysis on the key assumptions and considered
a range of alternative outcomes to determine the
sensitivity of the valuation assessments to changes in
these assumptions.
As the recoverable amounts determined by management
were lower than the carrying amounts of the CGUs
containing the San Miu Macau and Giant Singapore
goodwill, we checked the calculations of the impairment
charges recognised.
Based on the procedures performed, we found that
the assumptions made by management, including the
discount rates, long-term growth rates and the cash flows
used in the valuation assessments, were reasonable.
We assessed the adequacy of the disclosures related to
the carrying values of goodwill balances in the context
of IFRS Accounting Standards, including those relating
to sensitivities, and agreed disclosures in the financial
statements to the assessments tested and the assumptions
applied in those assessments. We considered the
disclosures to be appropriate.
170
DFI Retail Group Holdings Limited Annual Report 2023
Key Audit Matter
Buying income
Refer to note 37 (Material Accounting Policies) and
note 40 (Critical Accounting Estimates and Judgements)
to the financial statements.
The Group has arrangements with suppliers whereby
volume-based, promotional, and various other incentives,
rebates and discounts are earned in connection with
the purchase of goods for resale from those suppliers
(collectively referred to as ‘buying income’). As such,
the Group recognises the buying income as deductions
from cost of sales.
The individual supplier arrangements in place across the
Group vary in nature. The majority of buying income is
driven by volume-based measures, with the remainder
related to ad-hoc and promotional activities.
Buying income is material to the financial statements and
given the types of buying income arrangements, as well as
various performance criteria which differ by supplier, we
identified buying income as a key audit matter.
The level of judgement in each category of buying income
is detailed below:
Volume-based income
Volume-based income is generally driven by achieving
purchase volume targets set with individual suppliers
for specific products over a pre-set period of time.
In instances where the agreement does not fully coincide
with the period-end, the key judgement that we focussed
on was the estimate of expected purchase volumes in
the period covered by the agreement.
Ad hoc and promotional income
The nature of this income and the manner in which
it is recognised varies depending on the nature of the
agreement with the individual supplier. The income is
earned as the relevant performance criteria are met.
How our audit addressed the key audit matter
We assessed the inherent risk of material misstatement by
considering the degree of estimation uncertainty and the
judgement involved in determining the amounts of buying
income recognised.
We gained an understanding of, and evaluated, the key
manual and IT controls over buying income and tested
key controls on a sample basis. We performed a detailed
analytical review of buying income by type and location
to identify unusual trends.
In addition, on a sample basis:
•
we checked supplier buying income recognised
to supporting documents e.g. cash receipts or
supplier contracts;
•
where buying income amounts were estimated based
on volume or other criteria, we checked that there
was appropriate supporting evidence to determine
those estimates;
•
for ad-hoc and promotional income, we assessed
whether the performance criteria of the items
selected had been met;
•
we selected amounts recognised in debtors and
creditors and agreed the amounts to supporting
documentation. Where buying income amounts
were offset against outstanding amounts payable
to suppliers we assessed whether there was a right to
offset, based on the contractual terms with suppliers;
•
we assessed the appropriateness of journal entries
and adjustments associated with buying income by
tracing them to supporting documentation; and
•
we assessed supplier dispute logs to determine whether
material disputes or disagreements with suppliers
existed. Where significant disputes or disagreements
existed, we understood the nature of these disputes
through discussions with management and obtained
evidence to assess whether the corresponding buying
income recognised was reasonable.
Based on the procedures performed, we found the buying
income recognised in the financial statements to be
supportable, based on available evidence.
We assessed the adequacy of the disclosures related to
buying income in the context of IFRS Accounting Standards
and considered the disclosures to be appropriate.
171
Independent Auditor’s Report
How We Tailored Our Group Audit Scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes
and controls, and the industries in which the Group operates.
The Group’s accounting processes are structured around finance functions, which are responsible for their own accounting
records and controls, which in turn, report financial information to the Group’s finance function in Hong Kong to enable
them to prepare consolidated financial statements.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by
members of the Group engagement team or by component auditors from member firms within the PwC Network and
other auditors operating under our instruction. Where the work was performed by component auditors, we determined
the level of involvement necessary for us to have in the audit work at those components to be able to conclude whether
sufficient, appropriate audit evidence had been obtained as a basis for our opinion on the financial statements as a
whole. The Group engagement team was involved in the significant reporting entities in scope for Group reporting
during the audit cycle through a combination of meetings, visits and conference calls. Senior members of the Group
engagement team undertook visits to the Chinese mainland, Indonesia and Singapore during the year to direct and
oversee the audit, along with regular communication through conference calls and either remote or on site review of
the work of component teams in those locations.
A full scope audit was performed on six entities including four subsidiaries and two associates, Maxim’s and Yonghui.
These entities, together with the audit of specific balances and transactions performed on six other subsidiaries, and
procedures performed on central functions and at the Group level (on the consolidation and other areas involving
significant judgement), accounted for 89% of the Group’s revenue, 80% of the Group’s profit before tax and 76% of
the Group’s underlying profit before tax.
This gave us the evidence we needed for our opinion on the consolidated financial statements as a whole.
Other Information
The Directors of the Company are responsible for the other information. The other information comprises all of the
information included in the annual report other than the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
172
DFI Retail Group Holdings Limited Annual Report 2023
Responsibilities of Directors and the Audit Committee for the Consolidated Financial Statements
As explained more fully in the Responsibility Statements and the Corporate Governance section in the Annual Report, the
Directors of the Company are responsible for the preparation of the consolidated financial statements that give a true
and fair view in accordance with IFRS Accounting Standards as issued by the IASB, and for such internal control as the
Directors determine is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
The Audit Committee assists the Directors in discharging their responsibilities for overseeing the Group’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Directors.
•
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
173
Independent Auditor’s Report
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit Committee, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Use of this report
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance
with Section 90 of the Companies Act 1981 (Bermuda) and for no other purpose. We do not, in giving these opinions,
accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose
hands it may come, including without limitation under any contractual obligations of the Company, save where expressly
agreed by our prior consent in writing.
The engagement partner on the audit resulting in this independent auditor’s report is Sean William Tuckfield.
Other Matter
In due course, as required by the United Kingdom Financial Conduct Authority Disclosure Guidance and Transparency
Rule 4.1.14R, these consolidated financial statements will form part of the ESEF-prepared annual financial report filed
on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical
Standard (‘ESEF RTS’). This auditor’s report provides no assurance over whether the annual financial report will be
prepared using the single electronic format specified in the ESEF RTS.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
7th March 2024
174
DFI Retail Group Holdings Limited Annual Report 2023
Five Year Summary
2023
2022
2021
2020
2019
US$m
US$m
US$m
US$m
US$m
Profit and Loss
Revenue *
9,169.9
9,174.2
9,188.2
10,443.4
11,385.1
Profit/(loss) attributable to shareholders
32.2
(114.6)
102.9
271.0
323.8
Underlying profit attributable to shareholders
154.7
28.8
104.6
275.7
320.9
Underlying earnings per share (US¢)
11.49
2.14
7.73
20.38
23.72
Earnings/(loss) per share (US¢)
2.39
(8.51)
7.61
20.03
23.93
Dividends per share (US¢)
8.00
3.00
9.50
16.50
21.00
Balance Sheet
Total assets
7,111.1
7,326.3
7,604.8
7,900.5
8,369.9
Total liabilities
(6,123.0)
(6,384.9)
(6,337.6)
(6,564.6)
(7,130.4)
Net operating assets
988.1
941.4
1,267.2
1,335.9
1,239.5
Shareholders’ funds
980.2
947.1
1,267.2
1,322.3
1,209.2
Non-controlling interests
7.9
(5.7)
–
13.6
30.3
Total equity
988.1
941.4
1,267.2
1,335.9
1,239.5
Net debt
(617.8)
(865.5)
(843.9)
(816.7)
(820.8)
Net asset value per share (US¢)
72.41
69.98
93.67
97.75
89.39
Cash Flow
Cash flows from operating activities
1,043.6
939.8
942.3
1,067.2
1,288.1
Cash flows from investing activities
(94.6)
(201.0)
(124.7)
(86.4)
(283.0)
Cash flows before financing activities
949.0
738.8
817.6
980.8
1,005.1
Cash flow per share from operating activities(US¢)
77.10
69.45
69.65
78.89
95.22
* Figures in 2019 to 2021 have been restated to include revenue from other sources.
175
Responsibility Statements
The Directors of the Company confirm to the best of their knowledge that:
a.
the consolidated financial statements prepared in accordance with International Financial Reporting Standards,
including International Accounting Standards and Interpretations as issued by the International Accounting
Standards Board, give a true and fair view of the assets, liabilities, financial position and profit or loss of
the Group; and
b.
the Chairman’s Statement, Group Chief Executive’s Review, Business Review, Financial Review and the description
of Principal Risks and Uncertainties facing the Group as set out in this Annual Report, which constitute the
management report required by the Disclosure Guidance and Transparency Rule 4.1.8, include a fair review of
all information required to be disclosed under Rules 4.1.8 to 4.1.11 of the Disclosure Guidance and Transparency
Rules issued by the Financial Conduct Authority in the United Kingdom.
For and on behalf of the Board
Scott Price
Clem Constantine
Directors
7th March 2024
176
DFI Retail Group Holdings Limited Annual Report 2023
Overview of the Group’s Governance Approach
DFI Retail Group (DFI Retail Group Holdings Limited (the ‘Company’) and its subsidiaries together known as ‘DFI Retail
Group’ or the ‘Group’) understands the value of good corporate governance in driving the long-term sustainable success
of business and attaches importance to the corporate stability that strong governance brings, as well as the opportunities
that result from it being part of the Jardine Matheson Holdings Limited (‘Jardine Matheson’) group.
The Group is committed to high standards of governance. The system of governance it has adopted has been developed,
over many years, by the members of the Jardine Matheson group, and both the Group and its stakeholders regard
as appropriate to the nature of its business and the long-term strategy it pursues in its markets, primarily China and
South East Asia. The Group’s governance framework is tailored to its size, ownership structure, complexity and breadth
of businesses. It enables the Company to benefit from Jardine Matheson’s strategic guidance and professional expertise
while at the same time ensuring that the independence of the Board is respected and clear operational accountability
rests with the Company’s executive management teams.
The Company also ensures that the Group retains and promotes those characteristics and values of a family-owned
business that have enabled the Group to prosper over the long-term:
•
A long-term perspective – the Group takes a long-term view in its decision-making and investments and draws
on the many years’ experience of our Directors, as opposed to focussing on short-term profitability. This leads to
long-term, sustainable growth for our shareholders and benefits the communities where we operate.
•
Credibility, stability and trust – the credibility, stability and trust that family ownership brings to the business are
highly valued by our partners and other stakeholders, especially in developing markets.
•
Deep knowledge of the business and our markets – the involvement of many generations of the family in the
running of the Group has led to a deep understanding of how to drive successful growth by the business across its
markets, giving the Group a competitive advantage.
The Group believes that its stakeholders gain significant value from the long-standing governance approach the Group
has taken as a family-owned business and that it is therefore important to retain the key elements of this approach. It is
also important, without losing these benefits, to adapt to changing circumstances in our markets and, where appropriate,
to the developing expectations of stakeholders and changes in best practice.
Accordingly, the Company continues to focus on enhancing the Group’s approach to corporate governance more
generally, focussing on changes that benefit the Group.
Independent Non-Executive Directors with a broad and diverse range of backgrounds are a valuable source of external
perspectives and are a key element of good governance and decision-making. The Company has taken steps to increase
the independence and diversity of its Board and the Company and the Group benefit from the expertise and experience
they bring.
During the year the Company underwent several changes in its governance. Scott Price was appointed as the new Group
Chief Executive, succeeding Ian McLeod effective from 1st August 2023. Anthony Nightingale retired from the Board and
the Audit Committee on 31st January 2024. Accordingly, from 1st February 2024, the Board comprised eight Directors
of whom 38% are considered Independent Non-Executive Directors, taking into account the independence considerations
under the UK Corporate Governance Code (the ‘Code’), and 13% are female.
Corporate Governance
177
Overview of the Group’s Governance Approach continued
Dave Cheesewright was appointed to the Audit Committee on 8th September 2023 and Weiwei Chen was appointed as
Chair of the Audit Committee on 31st January 2024, respectively. The Company’s Audit Committee now comprises a
majority of Independent Non-Executive Directors.
Having an effective corporate governance framework supports the Board in delivering the Group’s strategy and supports
long-term sustainable growth, and ensuring it operates transparently and in accordance with the best practice.
Group Structure
Jardine Matheson is the ultimate holding company of the Group. The structural relationship between the Jardine Matheson
group and the Group is considered a key element of the Group’s success. By coordinating objectives, establishing common
values and standards, and sharing experience, contacts and business relationships, the Jardine Matheson group companies,
including the Group, aim to optimise their opportunities across the Asian countries in which they operate.
Governance and Legal Framework
The Company is incorporated in Bermuda. The retailing business interests of DFI Retail Group are entirely in Asia. The
primary listing of the Company’s equity shares is a standard listing on the Main Market of the London Stock Exchange
(the ‘LSE’). The Company also has secondary listings in Singapore and Bermuda. As the Company has only secondary
listings on these exchanges, many of the listing rules of such exchanges are not applicable. Instead, the Company must
release the same information in Singapore and Bermuda as it is required to release under the rules which apply to it as a
standard-listed company on the LSE.
As a company incorporated in Bermuda, the Company is governed by:
•
The Bermuda Companies Act 1981 (the ‘Bermuda Companies Act’);
•
The Bermuda Dairy Farm International Holdings Limited Consolidation and Amendment Act 1988 (as amended),
pursuant to which the Company was incorporated and the Bermuda Dairy Farm International Holdings Limited
Regulations 1993 (as amended) were implemented; and
•
The Company’s Memorandum of Association and Bye-laws.
The shareholders can amend the Company’s Bye-laws by way of a special resolution at a general meeting of the Company.
The Company’s standard listing on the LSE means that it is bound by many, but not all, of the same rules as premium-listed
companies under the UK Listing Rules, the Disclosure Guidance and Transparency Rules (the ‘DTRs’) issued by the Financial
Conduct Authority in the United Kingdom (the ‘FCA’), the UK Market Abuse Regulation (the ‘MAR’) and the Prospectus
Regulation Rules, including in relation to continuous disclosure, periodic financial reporting, disclosure of interests in
shares, market abuse and the publication and content of prospectuses in connection with admission to trading or the
offering of securities to the public. In addition, the Company is subject to regulatory oversight from the FCA, as the
Company’s principal securities regulator, and is required to comply with the Admission and Disclosure Standards of the
Main Market of the LSE. The Company and its Directors are also subject to legislation and regulations in Singapore
relating, among other things, to insider dealing.
Although some of the rules applicable to premium-listed companies do not apply to the Company, when the shareholders
approved the Company’s move to a standard listing from a premium listing in 2014, the Company stated that it intended
to maintain certain governance principles which were then applicable to the Company’s premium listing. As a result,
the Company adopted several governance principles (the ‘Governance Principles’) then-applicable requirements for
a premium listing, which go further than the standard listing requirements.
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DFI Retail Group Holdings Limited Annual Report 2023
Governance and Legal Framework continued
The key elements of the Governance Principles are as follows:
•
When assessing a significant transaction (a larger transaction which would be classified as a class 1 transaction
under the provisions of the UK Listing Rules), the Company will engage an independent financial adviser to provide
a fairness opinion on the terms of the transaction.
•
If the Company carries out a related party transaction which would require a sponsor to provide a fair and
reasonable opinion under the provisions of the UK Listing Rules, it will engage an independent financial adviser to
confirm that the terms of the transaction are fair and reasonable as far as the shareholders of the Company are
concerned. In addition, the Company shall observe the mandatory related party transaction rules under the DTRs,
including assessment, approval and disclosure requirements for material related party transactions, that apply to
UK standard-listed companies.
•
Further, as soon as the terms of a significant transaction or a related party transaction are agreed, the Company
will issue an announcement, providing such details of the transaction as are necessary for investors to evaluate the
effect of the transaction on the Company.
•
At each annual general meeting (‘AGM‘), the Company will seek shareholders’ approval to issue new shares on
a non-pre-emptive basis for up to 33% of the Company’s issued share capital, of which up to 5% can be issued
for cash consideration.
•
The Company adheres to a set of Securities Dealing Rules which follow the provisions of MAR with respect to market
abuse and disclosure of interests in shares.
The Company is not required to comply with the Code, which applies to all premium-listed companies and sets out the
governance principles and provisions expected to be followed by companies subject to the Code. However, the Company
does have regard to the Code in developing and implementing its approach to corporate governance and disclosure.
The Management of the Group
The Board
The Board is responsible for ensuring that the Group is appropriately managed and achieves its strategic objectives in a
way that is supported by the right culture, values and behaviours throughout the Group. The Group’s culture provides the
foundation for the delivery of our strategy and our long-term, sustainable success while generating value for shareholders.
Our workforce policies and practices are consistent with our values and support the long-term, sustainable success of
the Group.
The Board is also responsible for ensuring that appropriate systems and controls are in place throughout the Group to
enable efficient management and well-grounded decision-making. Our business processes incorporate efficient internal
reporting, robust internal controls, and supervision of current and emerging risk themes, all of which form a vital part
of our governance framework. As a key part of this, the Group Company Secretary has set up processes and systems
to ensure that all Directors receive information in a timely, accurate and clear manner. The Group uses a board paper
distribution portal to disseminate Board and Committee papers instantly and securely.
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Corporate Governance
The Board continued
The Chairman facilitates discussions at Board meetings by ensuring all Directors have an opportunity to make comments
and ask questions. In addition, the Chairman, from time to time, discusses Group matters with Directors individually and
collectively outside of Board meetings. The Chairman also uses other gatherings of the Directors, such as Board dinners,
to facilitate discussions in a less formal environment.
The Board has full power to manage the Company’s business affairs, except matters reserved to be exercised by the
Company in a general meeting under Bermuda legislation or the Company’s Bye-laws. Key matters for which the Board
is responsible include:
•
The overall strategic aims and objectives of the Group;
•
Establishing the Company’s purpose and values;
•
Approval of the Group’s strategy and risk appetite to align with the Group’s purpose and values;
•
Approval and oversight of the Group policy framework and approval of appropriate Group policies;
•
Approval of the Annual Budget and monitoring of performance against it;
•
Oversight of the Group’s operations;
•
Approval of significant changes to Group’s corporate or capital structure;
•
Approval of major capital expenditure and significant transactions in terms of size or reputational impact;
•
Approval of interim and annual financial statements upon recommendation from the Audit Committee, as well as
interim management statements;
•
Approval of the Annual Report and Accounts;
•
Approval of dividend policy and the amount and form of interim and final dividend payments for approval by
shareholders as required;
•
Ensuring relevant sustainability and ESG matters are incorporated into purpose, governance, strategy, decision-making
and risk management;
•
Overseeing the management of risk within the Group;
•
Any significant changes to the Company’s accounting policies or practices upon recommendation from the
Audit Committee;
•
Appointment, re-appointment or removal of the external auditor, subject to shareholders’ approval, upon
recommendation from the Audit Committee;
•
Approval of matters relating to AGM resolutions and shareholder documentation;
•
Approval of all shareholder circulars, prospectuses and listing particulars issued by the Company; and
•
Approval of material public announcements concerning matters decided by the Board.
Responsibility for certain matters, including the approval of borrowing facilities and of capital expenditure (other than
major capital expenditure which is required to be approved by the Board), has been delegated to the finance committee
established within the Hong Kong-based Group management company, DFI Retail Group Management Services Limited
(‘DFIRGMS’), with specific written terms of reference outlining its role and authorities.
The Company sees the value of regularly reviewing the effectiveness of its processes and making improvements
where appropriate.
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DFI Retail Group Holdings Limited Annual Report 2023
The Board continued
Board activities
1. Strategy
We have always focussed on evolving our businesses to reflect changes in the environment in which we operate and
the needs of our customers, and we have invested in our digital capabilities, divested non-core businesses and exited
regions, whenever it has been appropriate.
Our application of these principles over many years has led to the portfolio of businesses we have today, which has
delivered steady growth in returns, through economic cycles.
To facilitate oversight and provide opportunities for the Board to challenge and measure progress against the Group’s
strategic priorities, at each Board meeting, the Group Chief Executive and Group Chief Financial Officer provide updates
on the operational and financial performance of the Group.
In 2023, the Board meetings discussed strategy on various topics relevant to the Group. The Board meetings provides
Directors with the opportunity to review progress against strategic priorities, inform Directors about the latest trends
relevant to our business, assist the Directors in identifying opportunities and risks and give the Directors the opportunity
to contribute views and ask questions of management and share experiences for the benefit of the Group.
2. Operational performance
We operate in highly dynamic markets and need to constantly innovate and pivot our businesses to remain relevant
and achieve long-term, sustainable success. In the past years, Asia has seen a large influx of new capital, the rapid rise
of digital companies and an increasing desire among consumers for convenient digital services. In response, we aim to
put innovation, operational excellence and an entrepreneurial spirit at the heart of everything we do.
At each Board meeting, an update is provided on each business segment which offers important insights into the
opportunities and challenges faced by these areas. In addition, a deeper understanding of how our varied markets
function and perform and the implications for stakeholder-related issues equip the Board with the necessary perspective
to enhance strategic decision-making.
The Group attaches great importance to attracting, developing and retaining leadership talent. We strive to develop
leaders with an owner mindset and who are entrepreneurial in how they develop their businesses. This has helped the
Group to capitalise on new business opportunities to achieve long-term sustainable growth. We continue to enhance our
performance management structures to recognise, reward and retain such talents. As the Group increasingly embraces
digital ways of working and invests in new economy businesses, we are focussed on recruiting and developing digital
talent across our Group. To provide the Board with oversight of talent attraction, development and retention, progress
of Inclusion, Equity and Diversity (‘IE&D’), and colleague engagement and movements, information on the Group’s
employees is provided at every Board meeting.
Building leadership capability to develop and grow diverse talent and strengthen future pipelines through tailored
development programmes is a key focus for the Board. The Board is committed to creating an inclusive workplace and
reflecting the diversity of the communities we serve. The Group has a clear IE&D strategy in place to ensure that
colleagues treat each other in a way they would expect others to treat them.
181
Corporate Governance
Board activities continued
3. Financial performance and risk
We take a disciplined, long-term approach to capital allocation, to maximise financial performance, maintain our
financial strength and manage risk. Over time, and in addition to be being part of the Jardine Matheson group of
businesses, we have developed deep relationships with a diverse portfolio of well-capitalised, leading banks and corporate
partners, which have supported and continue to support our financial strength.
The Group Chief Financial Officer presents a detailed overview of the financial performance of the business at each meeting
to ensure the Board is provided with sufficient information to enable it to exercise the appropriate financial oversight and
has the opportunity to challenge the management as appropriate. This includes details of the performance of each
business unit and an overview of the sales, profit, cash flow, debt levels and capital expenditure.
The Board also reviews the Group’s dividend policy and shareholder returns as well as the management of the Group
debt levels, interest cover and capital markets activities.
The Board has overall responsibility for risk management and is actively engaged in risk discussions. The Audit Committee,
on behalf of the Board, undertakes an annual assessment of the effectiveness of the management of the principal risks
facing the Group and actions taken to mitigate them, validating the key risks and approving any necessary actions arising
from the risk assessments. Maintaining and enhancing the risk and internal control environment is fundamental to the
Group’s governance framework and stewardship of the Company.
4. Governance and stakeholder engagement
The Group Chief Financial Officer provides Directors with regular updates on stakeholder engagements, including
engagement with shareholders, governments and other relevant third parties, and relevant regulatory developments.
Increasing the Directors’ understanding of our stakeholders’ views supports the Board’s decision-making.
Updates from the Group Chief Financial Officer provide the Board with feedback on investor views and expectations,
visibility of market conditions, share price performance, shareholder returns and the future outlook.
Governance matters are discussed at Board meetings, including directors’ and officers’ insurance, litigation, regulatory
changes, review and approval of statutory reporting and shareholder documentation and governance-related matters.
The Group Chief Executive provides the Board with Sustainability updates twice a year, which include the progress of the
Group’s Net Zero project, updates on the Group’s key initiatives supporting three CSR priorities, namely Serving
Communities, Sustaining the Planet and Sourcing Responsibly.
In addition, the Audit Committee Chair provides an update on the activities of the Audit Committee to the Board after
each Audit Committee meeting.
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DFI Retail Group Holdings Limited Annual Report 2023
Board Composition and Operational Management
The Board’s composition and the way it operates provide stability, allowing the Company to take a long-term view as it
seeks to grow its businesses and pursue investment opportunities.
The Chairman has been appointed in accordance with the provisions of the Bye-laws of the Company, which provide that
the chairman of Jardine Matheson, or any Director nominated by him, shall be the Chairman of the Company.
The Company has a dedicated executive management team led by the Group Chief Executive. The Memorandum of
Association of the Company, however, provides for the chairman of Jardine Matheson to be, or to appoint, the Managing
Director of the Company. Reflecting this, and the Jardine Matheson group’s 78% interest in the Company’s share capital,
the Group Chief Executive and the Managing Director meet regularly. Similarly, the board of DFIRGMS and its finance
committee are chaired by the Managing Director and include DFI Retail Group executives as well as Jardine Matheson’s
group finance director and group general counsel.
The presence of Jardine Matheson representatives on the Board and Audit Committee of the Company, as well as on the
board and finance committee of DFIRGMS, provides an added element of stability to the Company’s financial planning
and supervision, enhancing its ability to raise finance and take a long-term view of business development. In addition,
the presence of Jardine Matheson representatives on the Company’s Board, Audit, Nominations and Remuneration
Committees, as well as DFIRGMS’ finance committee, also strengthens the ability of management to work effectively
together in exploiting the full range of the Jardine Matheson group’s commercial strengths.
As at 7th March 2024, the Company comprises eight Directors, three of whom (38%) – Dave Cheesewright, Weiwei Chen
and Christian Nothhaft – are considered Independent Non-Executive Directors, taking into account the independence
considerations under the Code. There are detailed succession plans in place to ensure that plans are in place for orderly
succession to the Board. The names of all the Directors and brief biographies appear on pages 81 and 82 of this Annual
Report.
Ben Keswick has been Chairman of the Board since 16th May 2013. John Witt has held the role of Managing Director
from 15th June 2020. Scott Price has been Group Chief Executive since 1st August 2023, to succeed Ian McLeod.
183
Corporate Governance
Board Composition and Operational Management continued
The Board considers that there is a clear division of responsibilities among the Chairman, the Managing Director and the
Group Chief Executive in order to ensure an appropriate balance of power and authority is maintained at all times.
Directors’ Experience
Age of Directors
Capacity of Directors
60-69
50-59
Retail Sector-Related Operational Knowledge/Experience
International Business
Executive Leadership
Strategy & Business Acumen
Financial Acumen
Corporate Governance, Risk Management and/or Sustainability
Supply-Chain, Procurement and Customer-Relation Management
E-commerce Experience
Food and Beverage
Logistics/Trucking Freight/Courier Services
Non-Executive Directors
Executive Directors
Independent Non-Executive Directors
British
Canadian
American
German
0
6
2
4
1
7
3
5
8
0
6
2
4
1
7
3
5
8
0
6
2
4
1
7
3
5
8
5 years or below
6-10 years
Over 10 years
3
2
2
1
5
1
2
4
4
0
1
2
3
Tenure of Directors
Nationality of Directors
Number of Directors
184
DFI Retail Group Holdings Limited Annual Report 2023
Board Composition and Operational Management continued
The Board also considered the diversity of the Group’s Board and senior executives in the context of the new Listing Rules’
requirements that listed companies should publish information on the gender and ethnic representation of the Board and
executive management. As at 31st December 2023, being the reference date for the purposes of 14.3.33R(1)(a) of the
UK Listing Rules, which requires the disclosure of certain diversity statistics, and as shown below:
•
The Board met its target of having one Director from a minority ethnic background;
•
The Company does not currently meet the target of the Board comprising at least 40% female directors but will
continue to take IE&D considerations into account for future Board appointments; and
•
The Board does not currently meet the target to have a female director occupying one of the senior Board positions
(chairman, chief executive or chief financial officer). The Directors who hold these roles were appointed following
formal, rigorous and transparent nomination procedures and are the most suitable and experienced individuals
for their roles and the Group’s needs. The Board will continue to take IE&D considerations into account for future
appointments for these roles.
The Company did not meet the targets of the Board comprising at least 40% female directors and having one of the
senior Board positions occupied by a female director due to the significant change to the composition of the Board and
senior management which would be required to meet these requirements. The Company will continue to take IE&D
considerations into account with respect to future appointments of directors and senior Board positions.
185
Corporate Governance
Board Composition and Operational Management continued
The table below illustrates the ethnic background and gender diversity of the Group’s Board and executive management
– which includes the Company Secretary – but excludes administrative or support staff pursuant to 14.3.33R(2) of the UK
Listing Rules, as at 31st December 2023 which is our chosen reference date in accordance with the UK Listing Rules.
As at 31st December 2023†
Number of
Board
members
Percentage
of the Board
Number of
senior
positions on
the Board
(Group Chief
Executive,
Group Chief
Financial
Officer,
Senior
Independent
Director and
Chairman)
Number in
executive
management
(DFIRGMS
Board and
Company
Secretary)
Percentage
of executive
management
(DFIRGMS
Board and
Company
Secretary)
Gender diversity
Men
8
89%
3
12
75%
Women
1
11%
–
4
25%
Not specified/prefer not to say
–
–
–
–
–
Ethnic diversity
White British or other White
(including minority-white groups)
8
89%
3
7
44%
Mixed/Multiple Ethnic Groups
–
–
–
–
–
Asian/Asian British
1
11%
–
9
56%
Black/African/Caribbean/Black British
–
–
–
–
–
Other ethnic group, including Arab
–
–
–
–
–
Not specified/ prefer not to say
–
–
–
–
–
† The numbers had been changed after the chosen reference date owing to the stepping down of Anthony Nightingale from the Board of the Company on
31st January 2024 and Y.K. Pang from the board of DFIRGMS on 31st March 2024.
Data relating to the gender and ethnic diversity of the Board and executive management was gathered by the Company
Secretary via the collection of each individual’s identification documents, which are held within the Company’s secure
filing system. Apart from the retirement of Anthony Nightingale from the Board of the Company on 31st January 2024
and Y.K. Pang from the board of DFIRGMS on 31st March 2024, there have been no changes in board composition since
the reference date.
The Company has a Board Diversity Policy but does not have a separate Diversity Policy for the Audit Committee in place.
IE&D issues are and will be taken into account where relevant to Board and Audit Committee decisions.
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DFI Retail Group Holdings Limited Annual Report 2023
Chairman
The Chairman’s role is to lead the Board, ensuring its effectiveness while taking account of the interests of the Group’s
various stakeholders and promoting high standards of corporate governance. The Chairman’s principal responsibilities
are in the areas of strategy, external relationships, governance and people. In addition, he leads the Board in overseeing
the long-term strategic direction of the Group and approving its key business priorities. His key responsibilities also include:
•
Leading, with the Managing Director and the Group Chief Executive, the development of the culture and values of
the Group;
•
Supporting the development and maintenance of relationships with existing and new key business partners,
governments and shareholders;
•
Ensuring (together with the Managing Director and the Group Chief Executive) an appropriate focus on attracting
and retaining the right people and carrying out succession planning for senior management positions;
•
Creating a culture of openness and transparency at Board meetings;
•
Leading, with the Managing Director, the succession planning for the Group Chief Executive;
•
Building an effective Board supported by a strong governance framework;
•
Ensuring all Directors effectively contribute to discussions and feel comfortable in engaging in healthy debate and
constructive challenge;
•
Ensuring all Directors receive accurate, timely and clear information; and
•
Promoting effective communication between Executive and Non-Executive Directors (including the Independent
Non-Executive Directors).
Managing Director
The Managing Director acts as chairman of DFIRGMS and of its finance committee and is a member of the Company’s
Nominations and Remuneration Committees. In addition, he has responsibility for representing Jardine Matheson, as the
major shareholder of the Company, including:
•
Providing oversight of the day to-day management by the Group Chief Executive and his leadership team of
the business;
•
Carrying out ongoing reviews of the business, financial and operational performance of each business against
agreed objectives;
•
Providing regular feedback to the Group Chief Executive on his /her performance and conducting an annual
performance review;
•
Leading the Group Chief Executive succession planning;
•
Ensuring that there is appropriate discussion of future competencies required of the management team to
execute the strategy;
•
Ensuring that the information submitted to the Board is of high quality and provided on a timely basis;
•
Ensuring the Board conducts reviews on past significant capex decisions; and
•
Communicating with shareholders as appropriate.
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Corporate Governance
Group Chief Executive
The responsibility for running the Group’s business and all the executive matters affecting the Group rests with the Group
Chief Executive. The implementation of the Group’s strategy is delegated to the Company’s executive management,
with decision-making authority within designated financial parameters delegated to the DFIRGMS finance committee.
The Group Chief Executive has day-to-day operational responsibility for:
•
Effective management of the Group’s businesses;
•
Leading the development of the Company’s strategic direction and implementing the agreed strategy;
•
Identifying and executing new business opportunities;
•
Managing the Group’s risk profile and implementing and maintaining an effective framework of internal controls;
•
Developing targets and goals for his executive team;
•
Ensuring effective communication with shareholders and key stakeholders and regularly updating institutional
investors on the business strategy and performance;
•
Providing regular operational updates to the Board on all matters of significance relating to the Group’s business
or reputation;
•
Overseeing the Group’s capital allocation, business planning and performance;
•
Ensuring (together with the Chairman and the Managing Director) an appropriate focus on attracting and retaining
the right people and carrying out succession planning for senior management positions; and
•
Fostering innovation and entrepreneurialism to drive the Group’s businesses forward.
Non-Executive Directors
The Non-Executive Directors bring insight and relevant experience to the Board. They have responsibility for constructively
challenging the strategies proposed by the Executive Directors, scrutinising the performance of management in achieving
agreed goals and objectives. In addition, Non-Executive Directors work on individual initiatives as appropriate.
Board Meetings
The Board usually holds four scheduled meetings each year, and ad hoc procedures are adopted to deal with urgent
matters between scheduled meetings. Board meetings are usually held in different locations around the Group’s markets.
In March 2023, an in-person Board meeting was held in Singapore. The May 2023 Board meeting was held virtually.
In-person Board meetings were held in Shenzhen, China in July 2023 and in Shanghai, China in December 2023. The
Board receives high quality, up to date information for each of its meetings, which is provided to Directors via a secure
online board information portal. The Company reviews the information provided to the Board regularly, to ensure that it
remains relevant to the needs of the Board in carrying out its duties.
The Company’s Directors who do not serve on the board of DFIRGMS and who are based outside Asia will usually visit the
region to discuss the Group’s business and inspect the Group’s assets and various banners.
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DFI Retail Group Holdings Limited Annual Report 2023
Board Attendance
Directors are expected to attend all Board meetings. The table below shows the attendance at the scheduled
2023 Board meetings:
Meetings eligible
to attend
Attendance
Current Directors
Non-Executive Directors
Ben Keswick
4/4
100%
Dave Cheesewright
4/4
100%
Weiwei Chen
4/4
100%
Adam Keswick
4/4
100%
Christian Nothhaft
4/4
100%
Executive Directors
John Witt
4/4
100%
Scott Price*
1/1
100%
Clem Constantine
4/4
100%
Former Directors
Anthony Nightingale†
4/4
100%
Ian McLeod‡
3/3
100%
* Scott Price joined the Board as Director and was appointed as Group Chief Executive on 1st August 2023. In 2023, only one Board meeting was
held after 1st August 2023.
† Anthony Nightingale retired from the Board as Director on 31st January 2024.
‡ Ian McLeod retired from the Board as Director and Group Chief Executive on 1st August 2023. In 2023, three Board meetings were held before
1st August 2023.
189
Corporate Governance
Appointment and Retirement of Directors
There are detailed succession plans in place to ensure that plans are in place for orderly succession to the Board. The Board
is focussed on development and succession plans at both Board and executive level to strengthen the diverse management
pipeline. The Chairman, in conjunction with other Directors, reviews the size, composition, tenure and skills of the Board.
The Chairman leads the process for new appointments, monitors Board succession planning, and considers independence,
diversity, inclusion and Group governance matters when recommending appointments to the Board. Non-Executive
Directors are appointed on merit, against objective criteria and are initially appointed for a three-year term.
Upon appointment, all new Directors receive a comprehensive induction programme over several months. This is designed
to facilitate their understanding of the business and is tailored to their individual needs. The Group Chief Financial Officer
and the Company Secretary are responsible for delivering the programme covering the Company’s core purpose and
values, strategy, key areas of the business and corporate governance.
The Chairman regularly assesses the time commitments of Directors to ensure that they each continue to have sufficient
time for their role. He also considers the potential additional time required in the event of corporate stress. Prior to
appointment, the Chairman assesses the commitments of a proposed candidate, including other directorships, to ensure
they have sufficient time to devote to the role. Any Director’s external appointments, which may affect existing time
commitments relevant to the Board, must be agreed with the Chairman in advance.
The Board appoints each new Director, and the Nominations Committee has been established to assist the Board in such
matters. In accordance with the Company’s Bye-laws, each new Director is subject to retirement and re-election at
the first AGM after the appointment. After that, Directors are subject to retirement by rotation requirements under the
Bye-laws, whereby one-third of the Directors retire at the AGM each year. These provisions apply to both Executive and
Non-Executive Directors, but the requirement to retire by rotation does not extend to the Chairman or Managing Director
of the Company. The Company has determined that it is appropriate for the Chairman and the Managing Director to
be exempted from the retirement by rotation requirements because an important part of the Group’s strong governance
is corporate stability, and this is provided by the long-term stewardship of the business by family as well as related and
like-minded shareholders, who hold a significant proportion of the shares of the Company. John Witt, being the
Managing Director, has a service contract with the Company that has a notice period of six months.
On 1st August 2023, Ian McLeod stepped down as a Director and Group Chief Executive of the Company, and Scott Price
joined the Board in his place. On 31st January 2024, Anthony Nightingale stepped down from the Board.
In accordance with Bye-law 85, Dave Cheesewright will retire by rotation at the forthcoming AGM and, being eligible,
offer himself for re-election. In accordance with Bye-law 92, Scott Price will also retire and, being eligible, offer himself
for re-election. Scott Price has a service contract with a subsidiary of the Company with a notice period of six months.
Dave Cheesewright does not have a service contract with the Company or its subsidiaries.
Directors need to obtain the Chairman’s approval before accepting additional appointments that might affect their time
to devote to the role as a Director of the Company.
Board and Audit Committee Training
During the year, certain Board members and the Audit Committee members received trainings in Gen AI and
cybersecurity, respectively.
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DFI Retail Group Holdings Limited Annual Report 2023
Company Secretary
All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all
governance matters.
Committees
The Board is supported by the activities of its Committees (the Nominations, Remuneration and Audit Committees),
which ensure the right level of attention and consideration are given to specific matters. Matters considered by each of
the Committees are set out in their respective terms of reference. Copies of these documents can be obtained from the
Company’s website at www.DFIretailgroup.com.
Nominations Committee
The Board established a Nominations Committee (the ‘Nominations Committee’) in March 2021. The key responsibilities
of the Nominations Committee are to:
•
Review the structure, size and composition of the Board and its committees and make recommendations to the
Board on any appointments to maintain a right balance of skills, knowledge and experience and independence, as
well as a diversity of perspectives;
•
Support the Chairman to lead the process for Board appointments and nominate suitable candidates to the Board;
•
Assess suitable candidates based on merit and objective criteria (giving consideration to the promotion of the
diversity of social and ethnic backgrounds, knowledge, experience and skills), taking into account their ability to
meet the required time commitments;
•
Oversee the development of succession pipelines for both the Board and senior management positions to ensure
talent is identified and nurtured to meet the challenges and opportunities facing the Group; and
•
Satisfy itself that any skill gaps are addressed in the reviews of Board composition and that appropriate
development opportunities are in place for Directors to keep abreast of market knowledge and industry trends to
perform their role effectively.
The Nominations Committee consists of a minimum of three members, selected by the Chairman of the Board. The
Chairman of the Board is the chairman of the Nominations Committee. The current members of the Nominations
Committee are Ben Keswick, Adam Keswick and John Witt. The Nominations Committee meets as circumstances require,
or by the circulation of Committee circulars and recommendations to the Board for approval as it deems appropriate.
It plays a key role in the process of recruiting senior executives. Candidates for appointment as Executive Directors of the
Company or other senior management positions may be sourced internally or externally, including by using the services
of specialist executive search or recruitment firms. The aim is to appoint individuals who combine international business
knowledge and experience, industry knowledge and experience, if possible, and familiarity with, or adaptability to, Asian
markets. When appointing Non-Executive Directors, the Nominations Committee pays particular attention to the Asian
business experience and relationships that they can bring.
Insurance and Indemnification
The Company purchases insurance to cover its Directors against their costs in defending themselves in civil proceedings
taken against them in that capacity and in respect of damages resulting from the unsuccessful defence of any
proceedings. To the extent permitted by applicable law, every Director shall be indemnified and secured harmless
out of the assets of the Company against all liability and loss suffered and expenses reasonably incurred. However,
neither insurance nor indemnity arrangements provide cover where the Director has acted fraudulently or dishonestly.
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Corporate Governance
Delegations of Authority
The Group has an organisational structure with defined lines of responsibility and delegation of authority in place.
There are established policies and procedures for financial planning and budgeting, information and reporting systems,
assessment of risk, and monitoring of the Group’s operations and performance. The information systems in place are
designed to ensure that the financial information reported is reliable and up to date.
The Group’s 50% associate, Maxim’s Caterers Limited (‘MCL’), has a separate board, audit committee, risk management
and internal audit structure. The Group is represented on the board of MCL, at which reviews of strategy, operations,
budgets and significant investments are undertaken. The MCL board has delegated to the MCL group’s audit and risk
management committees and its audit department responsible for reviewing major risk areas and the effectiveness of
the internal control procedures.
The Group’s delegation of authority establishes a clear pathway for decision-making. This ensures that judgements are
made at the correct business level by the team members most equipped to do so. Every decision made aligns with our
culture and values, taking into account the advantages, risks, financial consequences, and effects on all stakeholders.
The Board, bolstered by the Audit Committee, places significant emphasis on maintaining high governance standards
throughout the Group. This reinforcement assists the Board in accomplishing its strategic goals and fulfilling key
performance objectives.
Directors’ Responsibilities in respect of the Financial Statements
Under the Bermuda Companies Act, the Directors are required to prepare financial statements for each financial year
and present them annually to the Company’s shareholders at the AGM. The financial statements are required to present
fairly, in accordance with the International Financial Reporting Standards (‘IFRS’), the financial position of the Group at
the end of the year, and the results of its operations and its cash flows for the year then ended. The Directors consider
that applicable accounting policies under IFRS, applied consistently and supported by prudent and reasonable judgements
and estimates, have been followed in preparing the financial statements. The financial statements have been prepared
on a going concern basis.
Substantial Shareholders
As classified as a non-UK issuer, the Company is subject to the provisions of the DTRs, which require that a person must,
in certain circumstances, notify the Company of the percentage of voting rights attaching to the share capital of the
Company that person holds. The obligation to notify arises if that person acquires or disposes of shares in the Company
and that results in the percentage of voting rights which the person holds reaching, exceeding, or falling below, 5%, 10%,
15%, 20%, 25%, 30%, 50% and 75%.
The Company has been informed of the holding of voting rights of 5% or more attaching to the Company’s issued
ordinary share capital by Jardine Strategic Limited (‘Jardine Strategic’), which is directly interested in 1,049,589,171
ordinary shares carrying 77.54% of the voting rights. By virtue of its interest in Jardine Strategic, Jardine Matheson is
also interested in the same ordinary shares. Apart from this shareholding, the Company is not aware of any holders of
voting rights of 5% or more attaching to the Company’s issued ordinary share capital as of 7th March 2024.
There were no contracts of significance with substantial corporate shareholders during the year under review.
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DFI Retail Group Holdings Limited Annual Report 2023
Related Party Transactions
Details of transactions with related parties entered into by the Company during the course of the year are included in
note 34 to the financial statements on pages 142 and 143.
Engagement with Shareholders, Other Stakeholders and Colleagues
Engaging with our stakeholders, including our employees, investors, creditors, partners and government, enables us to
understand their perspectives and ensure we address their expectations and improve accordingly.
The Group regularly engages with its shareholders. For the full year 2023, the Group have held two results briefings
and 22 analyst and institutional shareholder meetings to provide an opportunity for questions to be asked of senior
management, discuss concerns and hear feedback where improvements could be made.
The Group has also engaged with several Sustainability Non-Governmental Organisations and government agencies to
listen, learn and understand how we can improve. The engagements provide an opportunity for us to explore and discuss
key social, environmental and economic issues facing society and where our businesses operate. These engagements
occur across all stages of the project cycle, and provide an important touch point to sense-check the issues that matter
most to society and help us better understand evolving expectations. The meetings with shareholders and stakeholders
are attended by senior management, who are ultimately responsible.
Securities Purchase Arrangements
The Directors have the power under the Bermuda Companies Act and the Company’s Memorandum of Association
to purchase the Company’s shares. Any shares so purchased shall be treated as cancelled and, therefore, reduce the
Company’s issued share capital. When the Board considers the possibility of share repurchases, it will consider the
potential for enhancing earnings or asset values per share. When purchasing such shares, the Company is subject
to the provisions of MAR.
Workforce Engagement
The Group is working hard to support the growth of the next generation of leaders within our businesses, ensuring our
colleagues can develop the skills they need.
We also aim to create an owner mindset among our staff and support this by enhancing our incentive structures to focus
less on current profits and more on value creation over a longer time horizon. This longer-term view also incentivises
experimentation and innovation.
The Group also conducts an annual Your Voice Counts survey. In 2023, 93% of total number of colleagues took part in
the survey sharing feedback. Follow-up actions include listening sessions ensuring engagement strategies are focussed
and effective.
Annual General Meeting
The 2024 AGM will be held on 8th May 2024. The full text of the resolutions and explanatory notes in respect of the
meeting are contained in the Notice of AGM, despatched at the same time with this Annual Report and can be found
at www.DFIretailgroup.com/investor-relations/investors/regulatory.
Corporate Website
A corporate website is maintained containing a wide range of information of interest to investors at www.DFIretailgroup.com.
193
Corporate Governance
Group Policies
Code of Conduct
The Group conducts business in a professional, ethical and even-handed manner. Its ethical standards are set out in
its Code of Conduct, a set of guidelines to which every employee must adhere. It is reinforced and monitored by an
annual compliance certification process and modelled on the Jardine Matheson group’s code of conduct. The Code of
Conduct requires that all Group companies comply with all laws of general application, all rules and regulations that
are industry-specific and proper standards of business conduct. In addition, the Code of Conduct prohibits the giving
or receiving of illicit payments. It requires that all Directors and employees must be fully aware of their obligations under
the Code of Conduct and establish procedures to ensure compliance at all levels within their businesses.
The Company’s policy on commercial conduct underpins the Group’s internal control process, particularly in the area of
compliance. The policy is set out in the Group’s Code of Conduct.
Data Privacy
The Group is committed to being a responsible custodian of the data entrusted to it by customers, employees, business
partners and other stakeholders keeping the data secure and processing it in accordance with legal requirements
and stakeholder expectations as they continue to evolve. Appropriate protections are in place to prevent misuse and
unauthorised disclosure of personal data.
In addition, the Group’s Personal Data Protection Policy and Security Incident Response Plan underlines the Group’s
commitment to being a responsible data custodian.
Speak-Up Policy
The Group has a Speak-Up policy covering how individuals can report matters of serious concern on a named or
anonymous basis. The Audit Committee is responsible for overseeing the effectiveness of the formal procedures to
raise such matters and is required to review any reports made under those procedures referred to by the internal audit
function. In addition, the Group has a speak-up service managed by an independent third-party service provider to
supplement existing channels in the business units to assist in reporting of suspected illegal or unethical behaviour and
is intended to help foster an inclusive, safe and caring workplace. The service, which is available 24 hours in multiple local
languages, and is accessible through phone hotline or online. Reports may be lodged by one of three channels: email,
website and telephone hotline. Each report is allocated a unique case number which enables follow-up with the reporter,
if appropriate. Once a report is lodged, it is sent to certain authorised persons at the relevant business units. These
include senior representatives from legal, compliance and Human Resource teams who have experience in dealing with
such matters. The authorised persons will follow up on the report and investigate where necessary. The reporter will be
notified of the outcome. All reports are treated confidentially, and no retaliation against a person reporting a matter of
concern in good faith will be tolerated.
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DFI Retail Group Holdings Limited Annual Report 2023
Inclusion, Equity and Diversity
The Group will continue to foster a culture of inclusivity and empowerment, where colleagues with different backgrounds
feel comfortable in being themselves, in voicing their ideas and have equal opportunities to thrive. The Group applies
the principle that colleagues should always treat others in a way they would expect others to treat them. Bullying,
intimidation, discrimination, and harassment of others have no place in the Group and will not be tolerated.
As a multinational Group with a broad range of businesses operating across Asia, the Group believes in promoting equal
opportunities in recruiting, developing and all employees, regardless of ethnicity, gender, age, sexual orientation, disability,
background or religion, should be treated fairly and with dignity, and be valued for the contributions they make in their
role. The scale and breadth of the Group’s businesses necessitate that they seek the best people from the communities in
which they operate most suited to their needs.
All staff are encouraged and supported to develop their full potential and contribute to the sustainable growth of the
Group. Employees views and ideas are essential, and they are encouraged to express them respectfully with colleagues
at all levels within the organisation.
To build an inclusive workplace, we incorporate IE&D principles by modelling the Jardine Matheson group’s IE&D Policy.
This includes:
•
Ongoing collaboration with Jardine Matheson group to ensure a set of inclusive working arrangements and policies
to support IE&D.
•
Keeping our recruitment, promotion and retention systems fair and based on aptitude, merit and ability, including
ongoing reviews of remuneration to ensure appropriateness of pay levels.
•
Active talent management and career support for our talent pools to provide equitable opportunities that will
enable a diverse future pipeline of leaders.
•
Cultivating the right set of leadership behaviours through learning campaigns to ensure our people behave in a way
consistent with the principles we have put in place.
The Company keeps the composition of its Board and senior management positions under review, to ensure that it
adapts to the changing business landscape. The Company is actively focussed on increasing gender diversity at all levels
of the organisation.
195
Corporate Governance
Remuneration Report
Message from the Board/Remuneration Committee
The Board is pleased to present shareholders with the 2023 Remuneration Report. This report sets out the Group’s
approach to remuneration for its executives and Directors, particularly the link between the Group’s values, strategy and
its remuneration framework, and the link between performance and reward, in determining remuneration outcomes for
senior executives.
The Group’s Remuneration philosophy and framework for rewarding staff
The remuneration outcomes in 2023 reflect the intended operation of the remuneration framework.
At the heart of the Group’s remuneration framework is our commitment to deliver competitive remuneration for excellent
performance to attract the best and motivate and retain talented individuals, while aligning the interests of executives
and shareholders. The Company aims to ensure that its remuneration system is designed in a manner that is aligned with
the values and strategic priorities of the Company.
It does this through:
•
Incentives based on financial measures and strategic objectives that reflect key goals critical to long-term
sustainable organisational success;
•
Consideration of business and operational risk, as well as sustainability development goals through the design of
performance objectives;
•
Incentives and policies which align the interests of executives to those of shareholders;
•
Ensuring remuneration outcomes are reasonable, taking into account community and stakeholder expectations; and
•
Target remuneration levels and outcomes appropriately reflect the challenge and complexity of being a
multinational Asian-based retail group with diverse retail businesses.
The Company’s policy is to offer competitive remuneration packages to its senior executives. The Company relies
on a reward framework that provides varying levels of remuneration and benefits depending on employee level. It is
recognised that, given the nature of the Group and its diverse geographic base, a number of its senior executives are
required to be offered international terms, and the nature of the remuneration packages is designed to reflect this.
This structure of remuneration varies from senior executives to more junior level employees, but the link of remuneration
to strategic goals is consistent throughout all levels of the organisation. The nature of goals used for remuneration does
varies depending on employee level, but the Company ensures goals are relevant and measurable while aligned with
company values and strategic priorities. Executive Directors joining from outside the Group may be offered an initial
fixed-term service contract to reflect any requirement to relocate.
Accordingly, the remuneration mix for employees varies depending on level. At senior executive levels, more remuneration
is ‘at risk’, depending on performance levels against goals. At more junior levels, more remuneration is directed toward
fixed remuneration. The Company strives to provide an appropriate amount of remuneration ‘at risk’ for the achievement
of goals – whether those are short- or long-term in nature.
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DFI Retail Group Holdings Limited Annual Report 2023
The Group’s Remuneration philosophy and framework for rewarding staff continued
Directors’ Remuneration
Directors’ fees, which are payable to all Directors other than the Group Chief Executive and the Group Chief Financial
Officer, are decided upon by shareholders in general meetings as provided for by the Company’s Bye-laws.
The remuneration of the Company’s Non-Executive Directors is not linked to performance. This is consistent with
Non-Executive Directors being responsible for objective and independent oversight of the Group. The total amount
provided to all Directors (including the Managing Director but exclusive of salaried Executive Directors of the Company
who are not entitled to such fees) must not exceed the sum agreed by shareholders at a general meeting. The maximum
aggregate remuneration of US$1.0 million per annum was approved by shareholders at the 2022 AGM and would be
subject to review at the 2025 AGM. Executive Directors (excluding the Managing Director, who is also the Jardine Matheson
Managing Director) are paid a basic fixed salary as well as discretionary annual incentive bonuses and receive certain
employee benefits from the Group. Non-Executive Directors do not receive bonuses or any other incentive payments or
retirement benefits. The Non-Executive Directors are reimbursed for expenses properly incurred in performing their duties
as a Director of the Company. The schedule of fees paid to Directors in respect of 2023 is set out in the table below. Fees
are annual fees, unless otherwise stated:
US$ (per annum)
Chairman / Managing Director fee:
110,000
Base Director fee:
100,000
Audit Committee fee (Chair):
45,000
Audit Committee fee (member):
35,000
Nominations Committee fee:
15,000
Director
Director Fee
US$
Audit
Committee Fee
US$
Nominations
Committee Fee
US$
Total Fees
US$
1
Ben Keswick (Chairman)
110,000
–
15,000
125,000*
2
John Witt (Managing Director)
110,000
–
15,000
125,000*
3
Ian McLeod†
–
–
–
–
4
Scott Price‡
–
–
–
–
5
Clem Constantine
–
–
–
–
6
Dave Cheesewright
100,000
17,500
–
117,500
7
Weiwei Chen
100,000
35,000
–
135,000
8
Adam Keswick
100,000
–
15,000
115,000*
9
Anthony Nightingale^
100,000
45,000
–
145,000
10 Christian Nothhaft
100,000
–
–
100,000
TOTAL
720,000
97,500
45,000
862,500
* Fees surrendered to Jardine Matheson.
† Ian McLeod retired from the Board on 1st August 2023.
‡ Scott Price joined the Board on 1st August 2023.
^ Anthony Nightingale retired from the Board and Audit Committee on 31st January 2024.
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Corporate Governance
The Group’s Remuneration philosophy and framework for rewarding staff continued
Remuneration Committee
The Board has overall responsibility for setting remuneration across the Group, ensuring it is appropriate and supports the
Group’s strategy, creating value for stakeholders. The Remuneration Committee has been established to assist the Board
in these remuneration matters.
The Board had established a Remuneration Committee (the ‘Remuneration Committee’) at the Company level in
November 2021. The role of the Remuneration Committee is governed by its terms of reference. The key responsibilities
of the Remuneration Committee are to:
•
Oversee the formulation of a Group-wide reward strategy and ensure the business implements the reward strategy
in alignment with its industry-specific needs;
•
Review and approve the compensation of the Group Chief Executive and leadership team of the business;
•
Review the terms of and design of performance-related incentives (both short- and long-term), including the review
and approval of any changes to plan design, targets and metrics;
•
Review and approve the overall compensation costs, including salary and bonus budgets, of the business; and
•
Remain abreast of trends and developments in executive compensation and corporate governance related to the
Group’s industry and countries of operation.
The Remuneration Committee consists of a minimum of three members, selected by the Chairman of the Board.
The Chairman of the Board is the chairman of the Remuneration Committee. The current members of the Remuneration
Committee are Ben Keswick, John Witt and Graham Baker. In addition, the Group Chief Executive, the Group Chief
People & Culture Officer and Jardine Matheson group head of human resources will generally attend meetings of the
Remuneration Committee. The Remuneration Committee meets as circumstances require, or by the circulation of
Committee circulars and recommendations to the Board for approval as it deems appropriate.
How Remuneration framework is linked to the business strategy
The Group’s remuneration strategy is designed to support and reinforce its business and sustainability strategies, both
short- and long-term.
The ‘at risk‘ components of remuneration are tied to measures that reflect the successful execution of these strategies
in both the short- and long-term. Our strategic drivers of ‘Grow in China, Maintain Strength in Hong Kong, Revitalising
South East Asia, Building Capability, Driving Digital Innovation, and Own Brand Development’ are reflected in bonus
performance measures. So, the Group’s actual performance directly affects what executives are paid.
Remuneration Outcomes in 2023
For the year ended 31st December 2023, the Directors received from the Group US$19.3 million (2022: US$8.2 million) in
Directors’ fees and employee benefits, being:
•
US$0.9 million (2022: US$0.8 million) in Directors’ fees; and
•
US$17.3 million (2022: US$6.7 million) in short-term employee benefits, including salary, bonuses, accommodation
and deemed benefits in kind;
•
US$0.1 million (2022: US$0.1 million) in post-employment benefits; and
•
US$1.0 million (2022: US$0.6 million) in share-based payments.
These amounts in 2023 included partial and final payments relating to long-term incentive plans, including those paid to
the former Group Chief Executive.
The information set out in the section above headed ‘Remuneration Outcomes in 2023’ forms part of the audited
financial statements.
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DFI Retail Group Holdings Limited Annual Report 2023
Share Schemes
Share-based long-term incentive plans have also been established to provide incentives for Executive Directors and senior
managers. The scheme trustee grants share options after consultation between the Chairman and the Group Chief
Executive and other Directors as they consider appropriate. Share options are not granted to Non-Executive Directors.
Directors’ Share Interests
The Director of the Company in office on 7th March 2024 had interests* as set out below in the Company’s ordinary
share capital. These interests include those notified to the Company regarding the Directors’ closely associated persons*.
Clem Constantine
181,560
* Within the meaning of MAR
In addition, Scott Price and Clem Constantine held deferred share awards regarding 531,915 and 400,312 ordinary
shares, respectively, issued pursuant to the Company’s share-based long-term incentive plans.
Audit Committee Report
Audit Committee
The Board had established an Audit Committee (the ‘Audit Committee’) at the Company level in November 2021.
The Audit Committee consists of a minimum of three members, the current members of which are:
•
Weiwei Chen (Chair of the Audit Committee and Independent Non-Executive Director);
•
Graham Baker (Financial Expert); and
•
Dave Cheesewright (Independent Non-Executive Director).
None of them is directly involved in operational management. On 8th September 2023, Dave Cheesewright was
appointed as a member of the Audit Committee of the Company. On 31st January 2024, Weiwei Chen, a member of
the Audit Committee, was appointed as Chair of the Audit Committee, in place of Anthony Nightingale who resigned
as Chairman of the Audit Committee on the same date. Accordingly, from 31st January 2024, the Company considers
that the Audit Committee has a majority of independent members. Weiwei Chen and Graham Baker are the members
of the Audit Committee with recent financial experience and expertise. Graham Baker also has a deep understanding
of risk management.
The Group Chief Executive and Group Chief Financial Officer, together with representatives of the internal and external
auditors, also attend the Audit Committee meetings by invitation. In addition, other individuals may attend part of a
meeting for specific agenda items as appropriate. The Audit Committee meets twice a year and reports to the Board
after each meeting.
The role of the Audit Committee is governed by its terms of reference. The Audit Committee’s remit includes:
•
Independent oversight and assessment of financial reporting processes including related internal controls;
•
Independent oversight of risk management and compliance;
•
Independent oversight and responsibility for cybersecurity;
•
Monitoring and reviewing the effectiveness of the internal and external audit functions;
•
Considering the independence and objectivity of the external auditors; and
•
Reviewing and approving the level and nature of non-audit work performed by the external auditors.
Before completion and announcement of the half-year and year-end results, a review of the Company’s financial
information and any issues raised in connection with the preparation of the results, including the adoption of new
accounting policies, is undertaken by the Audit Committee with the executive management and a report is received
from the external auditors. The external auditors also have access to the entire Board when necessary, in addition to
the Group Chief Executive, Group Chief Financial Officer and other senior executives.
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Corporate Governance
The matters considered by the Audit Committee during 2023 included:
•
Reviewing the 2022 annual financial statements and 2023 half-year financial statements, with particular focus on
asset impairment assessments, including assumptions that underpinned key valuation models, buying income and
effectiveness of financial controls;
•
Reviewing the actions and judgements of management in relation to changes in accounting policies and practices
to ensure clarity of disclosures and compliance with new accounting standards;
•
Receiving reports from internal audit on the status of the control and compliance environment of the Group and
its business divisions, and progress made in resolving matters identified in the reports;
•
Reviewing the principal risks, evolving trends and emerging risks that affect the Group, and monitoring changes to
the risk profile, as well as the effectiveness of risk management measures and crisis management arrangements;
•
Receiving updates on the cybersecurity threat landscape and the Group’s cybersecurity environment, risk
management approach, training, priorities and control effectiveness;
•
Receiving reports from risk management and legal functions on key legal matters and compliance and code of
conduct issues, and the actions taken in addressing those issues and strengthening controls;
•
Reviewing the annual internal audit plan and status updates;
•
Reviewing the Group’s governance approach to cybersecurity management, data security and privacy management
across its businesses;
•
Reviewing the biennial assessment of the effectiveness of PwC;
•
Reviewing the independence, audit scope and fees of PwC, and recommending their re-appointment as the external
auditor at general meeting;
•
Conducting a review of the terms of reference of the Audit Committee;
•
Recommending the change of auditor from PwC LLP to PwC Hong Kong to the Board for approval; and
•
Approving the adoption of Non-Assurance Services Concurrence Policy, which establishes procedures and delegations
by which the Audit Committee intends to fulfil its responsibilities for the engagement of the independent auditor
to perform non-assurance services to comply with the revised Code of Ethics issued by the International Ethics
Standards Board for Accountants.
Audit Committee Attendance
The table below shows the attendance at the scheduled 2023 Audit Committee meetings:
Members of the Audit Committee
Meetings eligible
to attend
Attendance
Current Member of the Audit Committee
Weiwei Chen (Chair)†
2/2
100%
Dave Cheesewright‡
–/–
N/A
Director of DFIRGMS
Graham Baker
2/2
100%
Former Member of the Audit Committee
Anthony Nightingale (Former Chairman)^
2/2
100%
† Weiwei Chen was appointed as Chair of Audit Committee on 31st January 2024.
‡ Dave Cheesewright was appointed to the Audit Committee on 8th September 2023. In 2023, no Audit Committee meeting was held after
8th September 2023.
^ Anthony Nightingale resigned from the Audit Committee on 31st January 2024.
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DFI Retail Group Holdings Limited Annual Report 2023
Auditor Independence and effectiveness
The Group auditor’s independence and objectivity are safeguarded by control measures including:
•
Reviewing the nature of non-audit services (including the adoption by the Company of a non-audit services policy);
•
The external auditor’s own internal processes to approve requests for non-audit work to the external audit work;
•
Monitoring changes in legislation related to auditor independence and objectivity;
•
The rotation of the lead auditor partner after five years;
•
Independent reporting lines from the external auditor to the Audit Committee and providing an opportunity for
the external auditor to have in-camera sessions with the Audit Committee;
•
Restrictions on the employment by the Group of certain employees of the external auditor;
•
Providing a confidential helpline that employees can use to report any concerns; and
•
An annual review by the Audit Committee of the policy to ensure the objectivity and independence of the
external auditor.
The Board’s annual review in 2023 of the Auditor’s independence and effectiveness found that PwC performed their
duties effectively. The Board found the level of professional scepticism, the number and regularity of meetings with the
Audit Committee, feedback from Audit Committee members and internal stakeholders and the levels of technical skills
and experience to be effective.
At each AGM of the Company, the Company is required to appoint an Auditor to hold office until the conclusion of the
next AGM. The Company’s previous Auditor was PricewaterhouseCoopers LLP (‘PwC LLP’). In March 2023, the Audit
Committee recommended that the Company appoint PwC Hong Kong, also a PricewaterhouseCoopers network firm and
which had conducted much of the audit work on behalf of PwC LLP for many years, as its Auditor in place of PwC LLP for
future audit processes, to streamline audit procedures and align the location of the firm acting as Auditor more closely
with the location of the Company’s businesses. The Company’s shareholders approved the appointment of PwC HK as
the Company’s Auditor at the AGM on 4th May 2023.
Risk Management and Internal Control
The Board has overall responsibility for the Group’s risk management systems and internal control. The Board has
delegated to the Audit Committee responsibility for providing oversight in respect of risk management activities.
The Audit Committee considers the Group’s principal risks and uncertainties and potential changes to the risk profile.
It reviews the operation and effectiveness of the Group’s internal control systems (financial, operational and compliance)
and the procedures by which these risks are monitored and mitigated.
The Audit Committee considers the systems and procedures regularly and reports to the Board semi-annually. The
Jardine Matheson Group Audit and Risk Management (‘JM GARM’) is appointed to assist the Audit Committee in fulfilling
its assurance and reporting roles. JM GARM adheres to international standards for the professional practice of internal
audit. To safeguard its independence and objectivity, JM GARM reports functionally to the Audit Committee of the
Company and has full and unrestricted access to all business functions, records, properties and personnel.
The internal control systems are designed to manage, rather than eliminate, business risk; to help safeguard the Group’s
assets against fraud and other irregularities; and give reasonable, but not absolute, assurance against material financial
misstatement or loss.
Executive management is responsible for the implementation of the systems of internal control throughout the Group,
and a series of audit committees at an operational level and the internal audit function monitors the effectiveness of
the systems.
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Corporate Governance
Risk Management and Internal Control continued
The Group has an established risk management process reviewed regularly and covers all business units within the Group.
This includes the maintenance of risk registers that detail the emerging and existing risks to the future success of the
business and the relevant key controls and mitigating factors that address those risks. The Group’s risk management
process and risk registers are reviewed regularly.
The internal audit function also monitors the approach taken by the business units to risk. The internal audit function is
independent of the operating businesses and reports its findings and recommendations for any corrective action required
to the Audit Committee.
The Company’s principal risks and uncertainties are set out on pages 203 to 210.
Risk Governance Structure
Internal Audit
(‘JM GARM’)
DFI Board of Directors
DFI Audit Committee
DFI Management
Delegate/
Oversee
DFI Audit and Risk
Management
Monitor/
Review
External Audit (‘PwC’)
Report
The Group’s Management is responsible for:
•
Identifying and assessing principal risks and uncertainties to which it is exposed;
•
Implementing the most appropriate actions to mitigate and control those risks to an acceptable level;
•
Providing adequate resources to minimise, offset or transfer the effects of any loss that may occur while managing
acceptable risk/benefit relationships;
•
Monitoring the effectiveness of the systems of risk management and internal control;
•
Reporting periodically to DFI Board of Directors via Audit Committee on identifying principal risks and uncertainties
and measures taken to, mitigate such risks; and
•
Working with external and internal auditors to monitor and improve its control environment.
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DFI Retail Group Holdings Limited Annual Report 2023
Risk Management Framework
Risk management is integrated into each business unit’s strategic planning, budgeting, decision-making and operations.
Central to this is the continuous and systematic application of:
Risk
Identification
Risk
Treatment
Risk Reporting
& Monitoring
Risk
Assessment
A Risk Management Framework based on ISO 31000 and COSO principles is embedded in the Group to identify, assess
and define the strategies to monitor risks. The risk registers prepared by each business unit provide the basis for the
aggregation process, which summarises the principal risks and uncertainties facing the Group as a whole.
Risk Identification
•
Identify and document the Group’s exposure to uncertainty with existing
strategic objectives.
•
Adopt structured and methodical techniques to identify critical risks.
Risk Assessment
•
Evaluate risks by estimating likelihood, financial and reputational damage,
and the speed at which the risk materialises, based on its inherent and
residual level.
•
Determine risk rating using the risk heatmap, with four levels of residual
risk status.
Risk Treatment
•
Tolerate – accept if within the Group’s risk appetite.
•
Terminate – dispose or avoid risks were no appetite.
•
Risks may be accepted if mitigated to an appropriate level via:
•
Transfer – take out insurance or share risk through contractual
arrangements with business partners; and
•
Treat – redesign or monitor existing controls or introduce new controls.
Risk Reporting & Monitoring
•
Periodic review of principal risks and uncertainties.
•
Setting key risk indicators to enhance monitoring and mitigation of risks.
•
Regular reporting of principal risks and uncertainties from business units to
the Group’s Board of Directors via Audit Committee and JM GARM.
203
Corporate Governance
Principal Risks and Uncertainties
The following are the principal risks and uncertainties facing the Company as required to be disclosed pursuant to
the DTRs issued by the FCA and are in addition to the matters referred to in the Chairman’s Statement, Group Chief
Executive’s Review and other parts of this Annual Report.
Economic Risk
Description
Most of the Group’s businesses are exposed to the risk of negative developments
in global and regional economies and financial markets, either directly or through
the impact such developments might have on the Group’s joint venture partners,
associates, franchisors, bankers, suppliers or customers. These developments
could include recession, inflation, deflation, currency fluctuations, restrictions in
the availability of credit, business failures, or increases in financing costs, oil prices,
the cost of raw materials or finished products. Such developments might increase
operating costs, reduce revenues, lower asset values or result in some or all of the
Group’s businesses being unable to meet their strategic objectives.
Mitigation Measures
•
Monitor the volatile macroeconomic environment and consider economic
factors in strategic and financial planning processes.
•
Make agile adjustments to existing business plans and explore new business
streams and new markets.
•
Review pricing strategies and keep conservative assumptions.
•
Insurance programme covering property damage and business interruption.
204
DFI Retail Group Holdings Limited Annual Report 2023
Principal Risks and Uncertainties continued
Commercial Risk
Description
Risks are an integral part of normal commercial activities and where practicable
steps are taken to mitigate them. Risks can be more pronounced when businesses
are operating in volatile markets. While the Group’s regional diversification does
help to mitigate some risks, a significant portion of the Group revenues and profits
continue to be derived from our operations in Hong Kong.
A number of the Group’s businesses make significant investment decisions
regarding developments or projects, which are subject to market risks. This is
especially the case where projects are longer-term in nature and take more time
to deliver returns.
The Group’s businesses operate in areas that are highly competitive and failure to
compete effectively, whether in terms of price, product specification, technology,
property site or levels of service, failure to manage change in a timely manner or
to adapt to changing consumer behaviours, including new shopping channels and
formats, can have an adverse effect on earnings. Significant competitive pressure
may also lead to reduced margins.
While social media presents significant opportunities for the Group’s businesses
to connect with customers and the public, it also creates a whole new set of
potential risks for companies to monitor, including damage to brand equity or
reputation, affecting the Group’s profitability.
Mitigation Measures
•
Utilise market intelligence and deploy digital strategies for business-to-
consumer businesses.
•
Establish customer relationship management programme and digital
commerce capabilities.
•
Engage in longer-term contracts and proactively approach suppliers for
contract renewals.
•
Re-engineer existing business processes.
•
Continue accelerating the Group’s own brand strategy.
205
Corporate Governance
Principal Risks and Uncertainties continued
Financial and Treasury Risk
Description
The Group’s activities expose it to a variety of financial risks, including market risk,
credit risk and liquidity risk.
The market risk the Group faces includes i) foreign exchange risk from future
commercial transactions, net investments in foreign operations and net monetary
assets and liabilities that are denominated in a currency that is not the entity’s
functional currency; ii) interest rate risk through the impact of rate changes on
interest bearing liabilities and assets; and iii) securities price risk as a result of its
equity investments and limited partnership investment funds which are measured
at fair value through profit and loss, and debt investments which are measured at
fair value through other comprehensive income.
The Group’s credit risk is primarily attributable to deposits with banks, contractual
cash flows of debt investments carried at amortised cost and those measured at
fair value through other comprehensive income, credit exposures to customers and
derivative financial instruments with a positive fair value.
The Group may face liquidity risk if its credit rating deteriorates or if it is unable to
meet its financing commitments.
Mitigation Measures
•
Limiting foreign exchange and interest rate risks to provide a degree of
certainty about costs.
•
Management of the investment of the Group’s cash resources so as to
minimise risk, while seeking to enhance yield.
•
Adopting appropriate credit guidelines to manage counterparty risk.
•
When economically sensible to do so, taking borrowings in local currency to
hedge foreign exchange exposures on investments.
•
A portion of borrowings is denominated in fixed rates. Adequate headroom
in committed facilities is maintained to facilitate the Group’s capacity to
pursue new investment opportunities and to provide some protection against
market uncertainties.
•
The Group’s funding arrangements are designed to keep an appropriate
balance between equity and debt from banks and capital markets, both
short- and long-term in tenor, to give flexibility to develop the business.
The Company also maintains sufficient cash and marketable securities, and
ensures the availability of funding from an adequate amount of committed
credit facilities and the ability to close out market positions.
•
The Group’s treasury operations are managed as cost centres and are not
permitted to undertake speculative transactions unrelated to underlying
financial exposures.
The detailed steps taken by the Group to manage its exposure to financial risk are
set out in the Financial Review on page 33 and note 39 to the financial statements
on pages 154 to 162.
206
DFI Retail Group Holdings Limited Annual Report 2023
Principal Risks and Uncertainties continued
Concessions, Franchises and
Key Contracts Risk
Description
A number of the Group’s businesses and projects rely on concessions, franchises,
management, leasing of stores or other key contracts. Accordingly, cancellation,
expiry or termination, or the renegotiation of any such concessions, franchises,
management, leasing of stores or other key contracts could adversely affect the
financial condition and results of operations of certain subsidiaries, associates,
and joint ventures of the Group.
Mitigation Measures
•
Sustaining and strengthening relationships with franchisors.
•
Monitor sales performance and compliance with franchise terms.
•
Regular communication with franchisees and concessionaires, including
performance management.
Regulatory and Political Risk
Description
The Group’s businesses are subject to several regulatory regimes in the territories
they operate. Changes in such regimes, in relation to matters such as foreign
ownership of assets and businesses, exchange controls, licensing, imports, planning
controls, emission regulations, tax rules and employment legislation, could have
the potential to impact the operations and profitability of the Group’s businesses.
Changes in the political environment, including political or social unrest, in the
territories where the Group operates, could adversely affect the Group’s businesses.
Mitigation Measures
•
Stay connected and informed of relevant new and draft regulations.
•
Engage external consultants and legal experts where necessary.
•
Assessing impact on the business and taking appropriate measures.
•
Raise awareness with regular updates on new regulations that may have
been implemented in other markets.
207
Corporate Governance
Principal Risks and Uncertainties continued
Cybersecurity and
Technology Risk
Description
The Group faces increasing numbers of cyberattacks from groups targeting
individuals and businesses. As a result, the privacy and security of customer
and corporate information are at risk of being compromised through a breach
of our or our suppliers’ IT systems or the unauthorised or inadvertent release of
information, resulting in brand damage, impaired competitiveness or regulatory
action. Cyberattacks may also adversely affect our ability to manage our business
operations or operate information technology and business systems, resulting in
business interruption, lost revenues, repair or other costs.
The Group is heavily reliant on its IT infrastructure and systems for the daily
operation of its business. Any major disruption to the Group’s IT systems could
significantly impact operations. The ability to anticipate and adapt to technology
advancements or threats is an additional risk that may also impact the business.
Mitigation Measures
•
Continued investment in upgrading of technology and IT infrastructure.
•
Defined cybersecurity programme and centralised function to provide
oversight, manage cybersecurity matters, and strengthen cyber defences
and security measures.
•
Perform regular vulnerability assessment and/or penetration testing by third
parties to identify weaknesses.
•
Arrange regular security awareness training and phishing testing to raise
users’ cybersecurity awareness.
•
Maintain disaster recovery plans and backup for data restoration.
•
Regular external and internal audit reviews.
Talent Risk
Description
The competitiveness of an organisation depends on the quality and the availability
of the people that it attracts and retains. A shortage of store labour and
unavailability of needed human resources may impact the ability of the Group’s
businesses to operate at full capacity, implement initiatives and pursue
opportunities.
Mitigation Measures
•
Proactive manpower planning and proactive hiring are in place.
•
Enhanced employer branding, training for team members and talent
development plans.
•
Promote IE&D across the Group.
•
Total compensation in line with market benchmarking.
208
DFI Retail Group Holdings Limited Annual Report 2023
Principal Risks and Uncertainties continued
Environmental and Climate
Related Risks
Description
Environmental disasters such as earthquakes, floods and typhoons can damage
the Group’s assets and disrupt operations. Global warming-induced climate
change has increased the frequency and intensity of storms, leading to higher
insurance premiums or reduced coverage for such natural disasters.
With governments also taking a more proactive approach towards carbon taxes,
renewable energies and electric vehicles, additional investments and efforts
to address physical and transition risks of climate change are anticipated
from businesses.
With interest in sustainability surging in recent years from investors, governments
and the general public, expectations by regulators and other stakeholders for
accurate corporate sustainability reporting and commitments towards carbon
neutrality to address climate change are also growing. This brings increasing
challenges to the Group and its businesses to meet key stakeholders’ expectations.
There is potential for negative publicity and operational disruption arising from
conflict between activists and the Group’s businesses that are perceived to be
engaged in trade and activities that are environmentally unfriendly.
Mitigation Measures
•
Sustainability Leadership Council established to mobilise and coordinate
sustainability efforts across the Group.
•
A sustainability strategy framework, including a climate action pillar, drives
the Group’s sustainability agenda.
•
A Climate Action Working Group, with representatives from all business
units, drives Group-wide initiatives which strengthen collaboration and
share knowledge.
•
Each business is building a net zero carbon pathway and climate change plan
to build climate resilience.
•
Assess emerging Environmental, Social and Governance (‘ESG’) reporting
standards and requirements, to align Group disclosures to best market
practice.
•
Conduct climate risk assessments and adaptation action plans based on
recommendations of Task Force on Climate-Related Financial Disclosures,
including implementing measures to address physical risks posed by climate
change and identifying opportunities in global transition to a low carbon
economy.
•
Formulate the appropriate risk response strategy (particularly on the Group’s
key assets and supply chain), and integrate Physical and Transitional Climate
Risk into the Group’s existing risk management approach.
•
Foster ongoing dialogue with local communities, environmental groups, and
regulators to gain insights and build partnerships for sustainability. Proactive
engagement aids in preventing and resolving conflicts.
•
Continue the practice of rolling out regular sustainability training for
employees, aiming to enhance environmental awareness and instill a culture
of responsibility. Notably, this year, we have successfully integrated ESG
targets into each staff’s annual performance review, reinforcing our
commitment to sustainability across the Group.
209
Corporate Governance
Principal Risks and Uncertainties continued
Third-party Service Provider
and Supply Chain Management
Risk
Description
Supply chain disruption caused by key suppliers or service providers, or failure to
deliver by contractors/subcontractors could cause significant operational disruption,
lack of inventory supply, financial loss and reputational damage to the businesses.
The Group’s operations may be materially affected if third parties on which
we depend are compromised by cyber-attacks. With increased reliance on
third-party ecosystems, the Group has greater exposure to third-party risk
if there is insufficient vetting, oversight or visibility over third parties and their
subcontractors, particularly on information security, resilience, regulatory
compliance, and their ongoing capability.
Mitigation Measures
•
Ensuring protective terms and conditions in third-party service agreements,
including vendors being contractually required to bear higher liability
for failures to deliver or if they are responsible for a cyber incident at a
Group’s business.
•
Having robust evaluation and selection procedures for vendors and
third-party service providers, including an information security assessment
where appropriate.
•
Engaging suppliers only if they agree to comply with a supplier code of
conduct where businesses require.
•
Sourcing back-up suppliers, warehouses or other alternative plans.
•
Maintaining strong relationships with suppliers that are designated
by principals.
•
Maintaining supplier insurance to cover logistics interruption.
•
Ensuring early negotiation of new contracts for key service providers.
•
Diversifying the product range to reduce the impact of disruptions to
single products.
•
Including third-party disruption scenarios as part of business continuity planning.
210
DFI Retail Group Holdings Limited Annual Report 2023
Principal Risks and Uncertainties continued
Health, Safety and
Product Quality Risk
Description
Several of the Group’s businesses engage in production or other physical activities
that may lead to serious injury or fatal incidents if work conditions are unsafe or
workers do not take due care to observe safety procedures.
The safety and quality of food products and all items delivered by the Group’s
businesses are fundamental to their reputation with customers. Any actual or
perceived deficiency in product safety or quality may damage consumer confidence
and the Group’s reputation, leading to financial loss.
Mitigation Measures
Health & Safety ('H&S')
•
Risk management programme used to identify and manage the risk of the
Group’s business operations.
•
H&S inspection and incident management programme implemented to
identify unsafe acts and unsafe conditions in our workplaces so that we can
take corrective action.
•
H&S operational compliance is monitored via internal cross check programme.
•
Management of fire safety, statutory equipment and first aid certificates.
•
First aid policy is in place.
•
Established a contractor H&S management programme.
•
Contractors must have a contractual agreement in place to ensure they
comply with high expected levels of safety standards.
•
Incorporating site safety plans in tenders and contracts.
•
Routine safety training for all team members and sub-contractors.
•
Disseminating safety materials such as signage and pictorial representations
of safe work procedures.
Product Safety / Operational Food Safety
•
All Own Brand products have specifications, product quality and safety
standards in place and are monitored via routine product surveillance
assessments by a third party.
•
Established a strong supplier qualification and surveillance programme.
•
Suppliers must follow all DFI policies and adhere to all local regulations.
•
Operational compliance KPIs for food safety and health and safety.
•
Comprehensive quality control measures in place in the Group’s fresh
production centres, distribution centres and retail stores.
•
Effectiveness of Food safety standards validated by third-party audits in
retail stores, processing centres and distribution centres.
Other General
•
Purchasing sufficient insurance coverage including employee compensation.
•
Obtaining adequate product liability insurance.
Effectiveness Review of Risk Management and Internal Control Systems
The effectiveness of the Company’s risk management and internal control systems is monitored by the internal audit
function, which reports functionally to the Audit Committee. The internal audit function also monitors the approach
taken by the business units to manage risk. The findings of the internal audit function and recommendations for any
corrective actions required are reported to the Audit Committee and if appropriate, to Jardine Matheson’s Audit Committee.
Corporate Governance
211
Shareholder Information
Financial Calendar
2023 full-year results announced
7th March 2024
Shares quoted ex-dividend
21st March 2024
Share registers closed
25th to 29th March 2024
Annual General Meeting to be held
8th May 2024
2023 final dividend payable
15th May 2024
2024 half-year results to be announced
1st August 2024*
Shares quoted ex-dividend
22nd August 2024*
Share registers to be closed
26th to 30th August 2024*
2024 interim dividend payable
16th October 2024*
* Subject to change
Dividends
Shareholders will receive 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 can elect for their dividends to be paid in Sterling. These shareholders
may make new currency elections for the 2023 final dividend by notifying the United Kingdom transfer agent in writing by
26th April 2024. The Sterling equivalent of dividends declared in United States Dollars will be calculated by reference to
a rate prevailing on 2nd May 2024.
Shareholders holding their shares through CREST in the United Kingdom will receive 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 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 not on CDP’s DCS will receive their cash dividends in United States Dollars unless they elect, through
CDP, to receive Singapore Dollars.
Registrars and Transfer Agent
Shareholders should address all correspondence with regard to their shareholdings or dividends to the appropriate
registrar or transfer agent.
Principal Registrar
Jardine Matheson International Services Limited
P.O. Box HM 1068
Hamilton HM EX
Bermuda
Singapore Branch Registrar
(with effect from 1st March 2024)
Boardroom Corporate & Advisory Services Pte. Ltd.
1 Harbourfront Avenue, Keppel Bay Tower
#14-07, Singapore 098632
Jersey Branch Registrar
Link Market Services (Jersey) Limited
IFC 5
St Helier, Jersey JE1 1ST
Channel Islands
United Kingdom Transfer Agent
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL, United Kingdom
Press releases and other financial information can be accessed through the internet at www.DFIretailgroup.com.
212
DFI Retail Group Holdings Limited Annual Report 2023
Retail Outlet Summary
Note: Includes 5,501 associates and joint ventures stores (2022: 5,355) and excludes discontinued operations.
2023
Food Convenience
Health
and
Beauty
Home
Furnishings Restaurants
Other
Retailing
Total
Net
change
Hong Kong
325
1,095
305
10
827
–
2,562
56
Macau
22
50
21
1
26
–
120
1
Chinese mainland
1,012
1,730
108
–
291
–
3,141
58
Singapore
100
500
129
–
176
–
905
51
Indonesia
23
–
335
7
–
–
365
24
Malaysia
–
–
603
–
5
–
608
46
Brunei
–
–
28
–
–
–
28
(3)
Taiwan
–
–
–
8
–
–
8
–
The Philippines
341
416
1,033
–
–
578
2,368
107
Vietnam
–
–
123
–
103
–
226
27
Cambodia
84
–
9
–
44
–
137
9
Thailand
–
–
–
–
521
–
521
42
Laos
–
–
–
–
5
–
5
4
Total
1,907
3,791
2,694
26
1,998
578
10,994
422
Net change over 2022
(26)
195
142
3
90
18
422
2022
Food Convenience
Health
and
Beauty
Home
Furnishings
Restaurants
Other
Retailing
Total
Net
change
Hong Kong
324
1,066
303
7
806
–
2,506
38
Macau
22
49
21
1
26
–
119
3
Chinese mainland
1,074
1,591
125
–
293
–
3,083
49
Singapore
101
457
121
–
175
–
854
9
Indonesia
22
–
312
7
–
–
341
18
Malaysia
–
–
557
–
5
–
562
62
Brunei
–
–
31
–
–
–
31
5
Taiwan
–
–
–
8
–
–
8
1
The Philippines
311
433
957
–
–
560
2,261
82
Vietnam
–
–
112
–
87
–
199
31
Cambodia
79
–
13
–
36
–
128
32
Thailand
–
–
–
–
479
–
479
34
Laos
–
–
–
–
1
–
1
1
Total
1,933
3,596
2,552
23
1,908
560
10,572
365
Net change over 2021
56
46
172
4
107
(20)
365
Store Network
Food
Convenience
Health and Beauty
6,000
3,000
9,000
12,000
Stores
0
2019
2020
2023
2022
2021
10,994
10,572
9,928
9,929
10,207
Home Furnishings
Restaurants
Other Retailing
* Associates or joint ventures
Management Committee
Scott Price
Group Chief Executive
Choo Peng Chee
Chief Executive Officer, Food
Danni Peirce
Chief Executive Officer, 7-Eleven
Andrew Wong
Chief Executive Officer, Health & Beauty
Martin Lindström
Chief Executive Officer, DFI IKEA
Clem Constantine
Group Chief Financial Officer and Property Director
Erica Chan
Group Chief Legal, Governance and Corporate Affairs Officer
Joy Jinghui Xu
Group Chief People & Culture Officer
Wee Lee Loh
Group Chief Digital Officer
Shen Li
Group Corporate Strategy and yuu Rewards Director
Corporate Office
11/F Devon House, Taikoo Place
979 King’s Road, Quarry Bay
Hong Kong
P.O. Box 286, G.P.O.
Tel : (852) 2299 1888
Fax : (852) 2299 4888
Website : www.DFIretailgroup.com
Management and Offices
Brunei
Guardian Health And Beauty
(B) Sdn Bhd
Giant Hypermarket Tasik Rimba
Lot 58865 Kampong Rimba
Mukim Gadong
Bandar Seri Begawan
BE 3119
Negara Brunei Darussalam
Tel: (673) 246 0715
Cambodia
DFI Lucky Private Limited
No. 01, Street 55P
Phum Trong Moan
Sangkat Ou Baek K’am
Khan Sen Sok
Phnom Penh
Cambodia. 120802
Tel: (855 23) 885 722
Website: www.dfilucky.com
Hong Kong and Macau
The Dairy Farm Company, Ltd
5/F Devon House
Taikoo Place
979 King’s Road
Quarry Bay
Tel: (852) 2299 3888
Fax: (852) 2299 2888
Maxim’s Caterers Ltd *
18/F Maxim’s Centre
17 Cheung Shun Street
Cheung Sha Wan
Kowloon
Tel: (852) 2523 4107
Fax: (852) 2216 7883
Website: www.maxims.com.hk
Indonesia
PT Hero Supermarket Tbk
Graha Hero
CBD Bintaro Jaya
Sektor VII B.7/A.7, Pondok Jaya
Pondok Aren, Tangerang Selatan
Banten 15220
Tel: (62 21) 8378 8000
Website: www.hero.co.id
Chinese mainland
Guangdong Sai Yi Convenience
Stores Ltd
3/F Guangdong Mechanical
Sub-Building
185 Yue Hua Road
Yue Xiu District
Guangzhou 510030
Tel: (86 20) 8364 7118
Fax: (86 20) 8364 7436
Website: www.7-11.cn
Mannings Guangdong Retail
Company Ltd
2/F Guangdong Mechanical
Main-Building
185 Yue Hua Road
Yue Xiu District
Guangzhou 510030
Tel: (86 20) 8318 1388
Fax: (86 20) 8318 2388
Website: www.mannings.com.cn
Yonghui Superstores Co., Ltd *
120 Hutou Street
Fuzhou 350002
Tel: (86 591) 8376 2200
Fax: (86 591) 8378 7308
Website: www.yonghui.com.cn
Malaysia
Guardian Health And Beauty
Sdn Bhd
Mezzanine Floor
Giant Hypermarket Shah Alam
Stadium
Lot 2, Persiaran Sukan, Seksyen 13
40100 Shah Alam
Selangor Darul Ehsan
Tel: (603) 5544 8400
Website: www.guardian.com.my
The Philippines
Robinsons Retail Holdings, Inc.*
110 E. Rodriguez
Jr. Avenue, Bagumbayan,
Quezon City
Philippines 1110
Tel: (63 2) 8635 0751 to 64
Website: www.
robinsonsretailholdings.com.ph
Singapore
Cold Storage Singapore (1983)
Pte Ltd
21 Tampines North Drive 2
#03-01
Singapore 528765
Tel: (65) 6891 8000
Taiwan
DFI Home Furnishings Taiwan Ltd
4/F, No. 128 Section 1
Jiuzong Road
Neihu District, 114066
Taipei City
Taiwan
Tel: (886 2) 2791 8820
Website: www.IKEA.com.tw
Vietnam
Pan Asia Trading And Investment
One Member Company Limited *
L2-VP-01, 346 Ben Van Don
Ward 1, District 4
Ho Chi Minh City
Tel: (84 28) 3832 8272
Fax: (84 28) 3832 8448
Website: www.guardian.com.vn
213
www.DFIretailgroup.com