Notes To The Financial Statements
October 30, 2017 | Author: Anonymous | Category: N/A
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, Lucien Wong Yuen Kuai, Akinobu of Singapore Airlines Limited, Director of Hap Seng Plantations Holdings ......
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CONTENTS 02
Chairman’s Message
62
Product Listings
04
President & CEO’s Message
70
Performance Analyses
06
Group Financial Highlights
75
Investor Relations
09
Corporate Information
76
Frequently Asked Questions
28
Corporate Governance Report
80
Financial Statements
39
Calendar of Financial Events
155 Analysis of Shareholdings
41
Operations Review
157 Notice of AGM
51
Strategic Investments
161 Proxy Form
Trailblazing Success. Victory in the fast lanes of business takes undivided focus, superlative finesse and a tenacious spirit to emerge ahead. These qualities have accompanied Cerebos’ unique journey to being the best in the food and healthcare supplement arena. Constantly reinventing itself, the organisation has blazed a trail for yet another successful year At the core of this dynamic energy are our people whose grit and dedication have propelled us into the winning league. And central to this strive are our customers whose continual support is the spark that ignite our engine and the sustaining power for us to go the distance. From good to excellent, a whole new year of growth beckons as we rev our engine for the lap ahead.
Vision Statement To be the leading food and health supplements enterprise in the Asia Pacific region by creating value for our employees, our customers and our shareholders.
Chairman’s Message The Group's results reinforce its strategy of continuing with investments that lead to long-term sustainable growth. Despite adverse economic conditions, the Group has pulled through the very challenging year with confidence. Cerebos went ahead with major investments in brand building, R&D and capacity expansion despite the weak consumer environment. These investments continue to support the current business but more importantly ensure that the Group’s core infrastructures are equipped to achieve sustainable accelerated growth in the future. Against the backdrop of a global recession, the Group turned in a reasonable performance by maintaining and enhancing our competitiveness through the year. Cerebos Pacific Limited achieved a net profit of S$82.8 million on a turnover of S$775.2 million which is comparable to the previous year. (S$81.0 million and S$774.1 million respectively in FY2007/08). Basic earnings per share improved to 26.29 cents and Return on Shareholders’ Fund was a respectable 22.8%. Group operating profit before interest and tax was S$115.6 million. (FY2007/08 S$119.9 million) primarily attributable to increased investments in our Health Supplements business in Asia and our Australasia Coffee and Sauces business. For Asia, full year top line growth was driven by investments in brand building with Operating Profit level with last year. For Australasia, full year top line growth was experienced in most categories including the recently acquired Toby’s Estate® with Operating Profit negatively impacted by commitment on foreign currency purchases and heavier marketing investments. Our Health Supplements liquid category, led by our flagship BRAND’S® Essence of Chicken, saw strong sales improvement especially in our key markets of Thailand, Taiwan, Malaysia and Singapore. We had continued success with integrated marketing campaigns and initiatives targeted at our consumers’ specific needs and preferences. We were able to effectively communicate relevant product benefits to consumers leveraging on our quality assurance and scientifically proven efficacy. Turnover for our flagship, together with BRAND’S® Herbal Range, BRAND’S ® Bird’s Nest, BRAND’S ® InnerShine Prune and Berry Essence products, grew by 7%. Our Health Supplement tablets category sales grew 4% and continues to perform in accordance with expectations. Sales were slightly affected by some supplier issues which have since been overcome. We will continue with necessary investments to develop and support new products and look forward to gaining a stronger share of this important market segment. The People’s Republic of China (PRC) business continues to receive strong management focus and commitment to making this our principal market in the long-term. We had made inroads into Guangzhou, Shanghai and Beijing, targeting the students and festive segments. However the global economic slump coupled with food safety concerns resulting from the local melamine scare severely affected consumer sentiment. The situation was worsened by unfavourable media coverage of the import ban of BRAND’S® products to the US due to trade regulatory issues. Additionally the switch to a new distributor affected product availability. These problems in PRC will take time and effort to fully resolve but we continue to strive to bring the business back on stable footing.
Our Australasia Coffee and Sauces business grew by double digits in local currency terms supported by strong investments in advertising and promotion, assisted by changes in consumer behaviour with more people eating at home. Australia experienced higher sales from most product categories in line with our previously identified roadmap to accelerate growth. In addition, the acquisition of Toby’s Estate® and the transfer of Asian Home Gourmet® business in Australia to our subsidiary, Cerebos Australia Limited, accounted for the non-organic turnover growth. In the Sauces category, Gravox®, Fountain® and Saxa® grew strongly supported by significant marketing campaigns. New Zealand also experienced higher sales from most product categories, in particular the instant coffee category where Gregg’s® had a major new product launch. We further extended our leadership in the Herbs and Spices category leveraging on highly successful advertising campaigns. As the Group has been able to maintain profits for this financial year, the Board of Directors is recommending no change to the dividend payout as compared to last year – a first and final dividend of 6 cents per share, tax exempt one-tier; (First & final 6 cents per share, tax exempt one-tier in FY2007/08) and to maintain the bonus dividend at 19 cents per share, tax exempt one-tier. (FY2007/08: 19 cents; tax exempt one-tier). For the coming year, despite the emergence of ‘green shoots’ in the global economy, the Group remains cautious but optimistic. Having made key strategic investments in the past years, the Group is currently in a strong position to exploit market opportunities to expand sales of our products in the expected recovery of the global economies projected by some economists. BRAND’S® will celebrate its 175th Anniversary in 2010, with significant milestones underlined by the opening of new state-of-the-art manufacturing facilities in Thailand and Malaysia scheduled for April next year. The increased capacities in BRAND’S® Essence of Chicken, Bird’s Nest and InnerShine range production as well as for cap manufacturing will enable the Group to keep up with growing demand in the Asia markets and completes our major capex investments for the medium term. The Group remains dedicated to good corporate governance and transparency as the primary basis for managing the business. We are pleased that this discipline was recognised in April 2009, where Cerebos was ranked a creditable 26th best, out of all Singapore public listed companies in the inaugural Governance and Transparency Index published by the Business Times. The Board is also assured that the Management Team is well placed to continue our stated strategy to deliver long-term shareholder value. I take this opportunity to thank my fellow Board Members for their astute counsel and guidance. On their behalf I wish to thank the Management and Staff for performing so diligently but more importantly, thanks to our shareholders and business associates for your firm partnership. We look forward to the continued support from all stakeholders to enable the Group to achieve its vision of sustainable accelerated growth. Teo Chiang Long Chairman January 2010
Teo Chiang Long Chairman
Chairman
The Group's results reinforce its strategy of continuing with investments that lead to long-term sustainable growth. Despite adverse economic conditions, the Group has pulled through the very challenging year with confidence. Cerebos went ahead with major investments in brand building, R&D and capacity expansion despite the weak consumer environment. These investments continue to support the current business but more importantly ensure that the Group’s core infrastructures are equipped to achieve sustainable accelerated growth in the future.
President & CEO’s Message Cerebos’ infrastructure has again demonstrated resilience in a difficult year. Despite the challenging environment, we continued with our strategy, making significant investments to ensure our future source of growth. Our ultimate goal is unchanged – we intend to make Cerebos immune to economic downturns and uncertainties. Overall our FY 2008/09 performance is satisfactory given the tough challenges thrown at us. The global financial crisis did have some impact but was less severe than expected. It is fortunate that we had prepared well to manage the business even in a recessionary environment, otherwise we would have been very negatively affected. So while the financial crisis has set back our progress timeline slightly, we are set to resume speedy growth soon. It is important to note that management and staff were never pessimistic – indeed through every difficulty encountered, our Cerebos team showed very positive confidence that was never shaken. We also remained steadfast in our decision to invest heavily in brand building, Research & Development and capacity building. In particular our new factories in Thailand and Malaysia are on schedule to be officially open in April 2010, paving the way for us to cater to the growing consumer demand. The Health Supplements business has continued to perform as our growth engine and BRAND’S® has been reaching out strongly to a targeted range of key consumer segments. Our customer relationship insights revealed that consumers want to lead healthy and happy lives. Hence our direction will be to position BRAND’S® as the answer to harnessing untapped opportunities, overcoming challenges and enabling consumers to live life to its fullest. Evidence of this successful approach can be seen in our BRAND’S® Essence of Chicken flagship which has performed exceedingly well. Other more recently launched products such as BRAND’S® InnerShine Berry, Prune and Quince essences also performed very well in the key markets of Thailand, Taiwan, Malaysia and Singapore. Sales growth momentum was also sustained through targeted brand building initiatives and well integrated marketing campaigns featuring celebrity ambassadors. Strategically our BRAND’S® Health Supplements business is well placed. Health is a fundamental need and our sales growth shows that the consumer need for health is not affected by economic conditions. We are also aiming to ride on the fast growing trend for health supplements in Asia. During the year, construction of new manufacturing facilities in Thailand and Malaysia got underway. At full utilisation, our combined capacity would be sufficient to cater for the BRAND’S® liquid range demand for the next 10 years. Most significantly, these investments will improve our manufacturing standards to the point where we will be vastly superior to the competition in terms of quality assurance. Simply put, we are installing the latest technology – making the manufacturing process highly automated which equates to higher efficiency, superb quality and minimal waste. In other words, we will have overcome any bottlenecks in capacity and improved our profitability. For our Food business, we have managed to revitalize the Coffee and Sauces segments with very strong sales growth in local currency terms. Strategically, food is a basic necessity and our established
04
brands remain as familiar staples poised to take advantage of the growing trend for newer and more authentic flavours. In the Sauces segment, Gravox® has done particularly well achieving its highest ever market share. All our brands continued to deliver reliable and tasty meal solutions for modern day families. Along with recently acquired Essential Cuisine®, good progress was made in terms of new formats and genuine flavours combined with more convenient packaging. The global financial crisis has resulted in some changes in consumer behaviour with more people eating at home which helped drive growth for our Sauces as well as our Herbs & Spices categories. In the Coffee segment, we have made further inroads into the instant and fresh coffee categories. RIVA® performed steadily and Mocopan® won 2 prestigious coffee awards in Australia. We leveraged on our strengths in boutique coffees introducing Toby’s Estate ® to new geographies in Australia and Asia with a commitment to sustainable coffee sourcing. In New Zealand we continue to provide consumers with award winning coffee as our gourmet coffee credentials were reinforced with more awards. Caffe L’affare® successfully launched several new products including Gusto Fairtrade Organic Coffee while the launch of Gregg’s® Café Gold Flavoured Instant Coffee was a major hit capturing a 10% market share in under 6 months. The People’s Republic of China (PRC) market continues to be of keen interest to our stakeholders and to our management. Last year, despite adopting a more aggressive approach, the business was impacted by the financial crisis and also by a series of unfortunate events. While these setbacks were temporary and have since been resolved, it will still require us to make further investments to drive towards our goal of dynamic and profitable growth. Overall our chosen businesses of health supplements, coffee and sauces are providing momentum in their sectors and coming together to propel growth for Cerebos. BRAND’S® continues to unlock its potential in the health supplements market. Our coffee and sauces brands are also growing from strength to strength and are experiencing a great deal of marketing success. I must emphasise that our existing markets still have very good growth potential. Nevertheless we are also making more significant investments in the emerging markets of Vietnam and Indonesia so as not to miss the opportunities there. This annual report continues the theme “Accelerating Growth: From Good to Excellent”. As I have reiterated, in order for Cerebos to become truly sustainable, we must focus on quickly accelerating growth. I am confident that we can reach this goal because we have managed to increase sales even in less than ideal economic conditions. We remain confident of a promising future for Cerebos and our strategy to get there is unchanged – making significant investments to ensure our future source of growth. Backed by our experienced and dedicated management and staff, I aim to share the positive results of our passion for the business with all stakeholders in the next annual report. I look forward to the coming year with eagerness and high anticipation. Eiji Koike President & CEO January 2010
Eiji Koike President & CEO Cerebos’ infrastructure has again demonstrated resilience in a difficult year. Despite the challenging environment, we continued with our strategy, making significant investments to ensure our future source of growth. Our ultimate goal is unchanged – we intend to make Cerebos immune to economic downturns and uncertainties.
Group Financial Highlights 5-Year Summary 2006 $'000
2007 $'000 Restated
2008 $'000
2009 $'000
L
L
2005 $'000
OPERATING PROFILE Turnover – Asia
321,602
340,894
387,115
442,888
469,351
Turnover – Australasia
283,825
269,563
310,397
331,162
305,853
Turnover
605,427
610,457
697,512
774,050
775,204
Operating profit before interest and tax – Asia
70,008
76,758
100,005
101,921
104,718
Operating profit before interest and tax – Australasia
21,003
16,984
16,771
17,954
10,839
Operating profit before interest and tax
91,011
93,742
116,776
119,875
115,557
Operating profit margin (%)
15.0%
15.4%
16.7%
15.5%
14.9%
Operating profit margin – Asia (%)
21.8%
22.5%
25.8%
23.0%
22.3%
7.4%
6.3%
5.4%
5.4%
3.5%
100,698
104,887
127,410
128,749
121,003
Operating profit margin – Australasia (%) Profit before tax Income tax expense
(31,716)
(31,644)
(36,926)
(40,890)
(30,068)
Profit after tax
68,982
73,243
90,484
87,859
90,935
Attributable to: Equity holders of the Company Minority interest
64,238 4,744
69,581 3,662
84,422 6,062
80,960 6,899
82,768 8,167
Net profit margin (%)
10.6%
11.4%
12.1%
10.5%
10.7%
2005
2006
2007
2008
2009
QUALITY OF PERFORMANCE Current ratio
2.2
2.2
2.1
1.6
1.7
120.0
104.9
109.8
104.6
107.1
Earnings per share (in cents)
20.5
22.2
26.9
25.7
26.3
Dividend per share (in cents)
25.0
25.0
25.0
25.0
25.0
Return on shareholders' equity (%)
17.0
19.6
22.7
23.0
22.8
9.0
10.5
12.6
12.8
12.5
Total assets
715,041
660,348
671,907
631,263
659,823
Total liabilities
328,837
298,767
291,199
269,150
279,439
Net tangible assets
376,566
329,512
345,375
329,437
337,140
Shareholders' equity
378,767
354,314
371,972
351,836
362,646
Net tangible assets per share (in cents)
Return on total assets (%)
06
Group Profit Attributable To Equity Holders Of The Company (in $ million) 120
2007
2008
2009
120.0
107.1
104.9
82.8
81.0
2009
2008
2007
2006
2005
2009
2008
8 6
26
4
24
2
22
0
20
22.8
2006
Return On Shareholders’ Equity And Total Assets (in cents) Shareholders’ Equity Total Assets
23.0
2005
6.4
0
22.7
8.7 8.2
2007
0
2006
10
2005
10.8
2009
2008
2007
20
20
10 8.7
40
30 20
18.0
16.8
17.0
2006
2005
2009
2008
2007
2006
60
Dividend Yield (in %)
7.0
80
50
40
50 0
60
40
21.0
100
100
60
150
2005
84.4 64.2
76.8
70.0
305.9
331.2
250
70
69.6
101.9
387.1
80
300 310.4
340.9
104.7
400 350
269.6
321.6 283.8
80
100 100.0
442.9
469.4
450
200
120
90
104.6
500
Net Asset Value Per Share Data (in cents)
109.8
Group Operating Profit Before Interest and Tax (in $ million) Asia Australasia
Group Turnover (in $ million) Asia Australasia
19.6
18
14
28 27
9.0
25 25.0
25.0
25.0
10 8
10.5
26
12.5
25.7
12 12.8
26.3
12.6
26.9
25.0
16
17.0
Per Share Data (in cents) Earnings Dividend
6
25.0
4 24 2 23 2009
2008
2007
2006
2005
22
22.2
0
20.5
21 2005
2006
2007
2008
2009
20
07
0
Cerebos Share Price vs Straits Times Index (STI) Share Price
STI
4.0
3.75 3.36
3.5
3.23
3.15
3.05
3.01
2.82
3.0
2.96
2.80 2.57
2.52 1,746.47
1,732.57 1,794.20
2.0 OCT 08
1,594.87
1,761.56
NOV 08
DEC 08
3000
3.31
2,732.12 2,672.57 2,659.20 2500 2,651.13 2,592.90
2,333.14
2.44
2.5
3.22
3500
2,329.08
1,699.99
2000
1,920.28
1500 JAN 09
FEB 09
MAR 09
APR 09
MAY 09
JUN 09
JUL 09
AUG 09
SEP 09
OCT 09
NOV 09
Monthly Share Volume (’000)
1200
1,170
1000
573
521
JAN 09
FEB 09
MAR 09
APR MAY 09 09
JUN 09
400 200
425
429
DEC 08
685
701
714
685
OCT NOV 08 08
596
600 774
854
891
988
800
JUL 09
AUG 09
SEP 09
OCT 09
NOV 09
0
Business Segmentation Based on 12-Month Group Turnover
2008 $774.1m
BRAND’S® Liquid $403.7 m (52%)
BRAND’S® Liquid $431.0 m (56%)
Sauces $159.3 m (21%)
Sauces $138.3 m (18%)
Coffee $107.8 m (14%) Others $57.8 m (7%) BRAND’S® Tablets $23.6 m (3%)
2009 $775.2m
Others $53.4 m (6%) BRAND’S® Tablets $24.6 m (3%)
Desserts $16.7 m (2%)
Desserts $15.0 m (2%)
Salts $5.2 m (1%)
Salts $4.6m (1%)
* Others are primarily herbs & spices, beverages and tea
08
Coffee $108.3 m (14%)
Organisation Structure Board Of Directors And Committee Structure Board of Directors Chairman Teo Chiang Long Members Eiji Koike Raja Tan Sri Muhammad Alias Bin Raja Muhammad Ali Lucien Wong Yuen Kuai Akinobu Kodaira (Alternate: Hiroaki Kojima) Takayuki Hirashima (Alternate: Keiichi Abe) Hong Sik Park Ramlee Bin Buang Lackana Leelayouthayotin
Audit Committee Chairman Lucien Wong Yuen Kuai
Group Internal Audit Vice President Wong Swee Chin
Members Teo Chiang Long Raja Tan Sri Muhammad Alias Bin Raja Muhammad Ali Hong Sik Park
Nominating Committee Chairman Teo Chiang Long Members Lucien Wong Yuen Kuai Hong Sik Park
Remuneration Committee Chairman Teo Chiang Long Members Lucien Wong Yuen Kuai Hong Sik Park
Board Risk Management Committee
Share Option Scheme Committee Chairman Teo Chiang Long Members Lucien Wong Yuen Kuai Hong Sik Park
Chief Risk Officer Chief Executive Officer Eiji Koike
Note: The Audit Committee undertakes the responsibilities of Board Risk Management Committee.
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Board of Directors
Front Row: Teo Chiang Long (Left), Eiji Koike (Right) Back Row From Left : Lackana Leelayouthayotin, Ramlee Bin Buang, Lucien Wong Yuen Kuai, Akinobu Kodaira, Takayuki Hirashima, Hong Sik Park, Raja Tan Sri Muhammad Alias Bin Raja Muhammad Ali
Board of Directors TEO CHIANG LONG Chairman Mr. Teo joined Cerebos Pacific Limited (CPL) as a Non-Executive and Independent Director on 3 February 1982 and was appointed as Chairman of the Board of Directors of CPL on 17 November 2003. He also serves as Chairman of the Nominating Committee (NC), the Remuneration Committee (RC), the Share Options Scheme Committee (SOSC) as well as a Member of the Audit Committee (AC). Mr. Teo holds a Bachelor of Economics degree from the University of Adelaide, Australia. He is a Fellow Member, Certified Public Accountants (“CPA”) Australia and a non-practicing CPA of the Institute of Certified Public Accountants of Singapore. He is also a fellow member of the Singapore Institute of Directors. Mr. Teo is the Executive Chairman of Singapura Finance Ltd. His other directorships include Non-Executive Chairman of AXA Insurance Singapore Pte Ltd, Director of Chinese Development Assistance Council, a Senior Honorary Council member of the Singapore Chinese Chamber of Commerce & Industry and Vice President of Ngee Ann Kongsi. Mr. Teo does not hold any shares or share options in CPL as at 30 September 2009. Mr. Teo was last re-elected as a Director at the Annual General Meeting (AGM) of the Company held on 28 January 2008 and will be seeking re-election as a Director of the Company at the forthcoming AGM to be held on 28 January 2010.
EIJI KOIKE Director, President and Group Chief Executive Officer Mr. Koike joined CPL as Director on 6 March 1997 and was appointed the President and Chief Executive Officer (CEO) of CPL Group on 1 November 1997. As CPL Group CEO, he also serves on the Board of Directors of various subsidiaries of CPL Group. Mr. Koike holds a Bachelor of Arts in Economics degree from Hitotsubashi University, Japan. Prior to joining CPL, Mr. Koike was General Manager of International Division, Suntory Limited and was in charge of the overall overseas operations of Suntory Limited. He had also served as President of Suntory International Corporation, New York and was responsible for all of Suntory’s businesses in North and South America from 1992 to 1995. He was Chief Financial Officer of Suntory International Corporation, New York from 1987 to 1992. Mr. Koike holds 70,000 shares and 1,014,000 share options in CPL as at 30 September 2009. He was last re-elected as a Director of the Company at the last AGM held on 23 January 2009.
RAJA TAN SRI MUHAMMAD ALIAS BIN RAJA MUHAMMAD ALI Director Raja Tan Sri Muhammad Alias Bin Raja Muhammad Ali (Raja M Alias) joined the CPL Board as a Non-Executive and Independent Director on 20 January 1988. He is currently a Member of the AC and the Chairman of Cerebos (Malaysia) Sdn Bhd. Raja M Alias graduated with a Bachelor of Arts (Honours) degree, from The University of Malaya in 1958. He obtained the Certificate in Public Administration from the Royal Institute of Public Administration, London in 1963 and attended the Advanced Management programme 70 at Harvard Business School in Boston, USA in 1975. He was conferred an Honorary Doctorate Degree in Science by University Putra Malaysia in 1992 and an Honorary Doctorate Degree in Economics by University Malaya in 1998. He brings with him a wealth of experience from the plantation, shipping, industrial and financial sectors. He holds directorships in Kuala Lumpur Kepong Berhad and Batu Kawan Berhad. Raja M Alias does not hold any shares or share options in CPL as at 30 September 2009. As Raja M Alias is over 70 years of age, he will be seeking re-appointment at the forthcoming AGM to be held on 28 January 2010 pursuant to Section 153(6) of the Companies Act, Cap. 50.
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LUCIEN WONG YUEN KUAI Director Mr. Wong joined CPL as a Non-Executive and Independent Director on 28 January 2004 and was appointed as Chairman of the AC, Member of the NC, RC and SOSC on the same date. Mr. Wong holds a Bachelor of Law (Honours) degree from the former University of Singapore and has over 30 years of experience in the practice of law, specialising in banking, corporate and financial services work. Mr. Wong is the Managing Partner of Allen and Gledhill LLP, Singapore. His other directorships include Director of Singapore Airlines Limited, Director of Hap Seng Plantations Holdings Berhad, Director of Linklaters Allen & Gledhill Pte Ltd and Director of Singapore Press Holdings Limited. Mr. Wong is also the Chairman of Maritime and Port Authority of Singapore as well as a Board member of Monetary Authority of Singapore, a Trustee of SingHealth Foundation and a Member of Board of Trustee of National University of Singapore. Mr. Wong has a deemed interest in 40,000 shares in CPL held by his spouse as at 30 September 2009. He was last re-elected as a Director at the AGM of the Company held on 28 January 2008.
AKINOBU KODAIRA Director Mr. Akinobu Kodaira was appointed a Non-Executive and Non-Independent Director of CPL on 10 May 2006. Mr. Kodaira holds a Bachelor of Arts Degree (Majoring in Business & Commerce) from Keio University. He is a Director and Executive Vice-President of Suntory Holdings Limited. He joined Suntory Limited since 1966 and headed many divisions in Suntory Limited including the Business Development Division, Advertising Division, Marketing Service & Development Division, Public Relations Division, Consumer Healthcare Products Division, Flower Business Division, the Restaurant & Food Service Business Division, Liquor and Beer Division and overseas businesses. Mr. Kodaira holds 200,000 shares in Suntory Holdings Limited as at 30 September 2009. He does not hold any shares or share options in CPL. He was last re-elected as a Director of the Company at the last AGM held on 23 January 2009.
TAKAYUKI HIRASHIMA Director Takayuki Hirashima was appointed a Non-Executive and Non-Independent Director of CPL on 14 August 2008. Mr. Hirashima holds a Masters Degree in Engineering from Osaka University, Japan. He has over 26 years’ experience in production and research & development in food and beverage business. Mr. Hirashima joined Suntory Limited in 1982 and was elected as Head of Health Care Science Center since 2007. He is currently the Managing Director and Chief Operating Officer of the Health Care Science Center of Suntory Wellness Limited. Mr. Hirashima holds 16,593 shares in Suntory Holdings Limited through nominees as at 30 September 2009. He does not hold any shares or share options in CPL. Mr. Hirashima was last re-elected as a Director of the Company at the AGM held on 23 January 2009.
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HONG SIK PARK Director Mr. Park was appointed a Non-Executive and Non-Independent Director of CPL on 18 November 2003. He is a Member of the AC, NC, RC and SOSC. He is also a Director of some of the key subsidiaries of CPL Group. Mr. Park holds a Bachelor of Arts degree from Tokyo University of Foreign Studies. Mr. Park is the Chief Executive of the Corporate Planning & Administration Division of Suntory Holdings Limited. He joined Suntory Limited in 1982 and was based in London with Sanwa International Ltd from 1987 to 1988, and in the United States of America with Suntory International Corporation and Suntory Water Group from 2000 to 2002. He had also served as Chief Executive of the International Corporate Planning Division and Overseas Corporate Management Division in the Global Business Company, Suntory Limited between 2003 to 2006. Mr. Park does not hold any shares in Suntory Holdings Limited and CPL as at 30 September 2009. Mr. Park was last re-elected as a Director of the Company at the AGM of the Company held on 23 January 2009.
RAMLEE BIN BUANG Director Mr. Ramlee joined CPL on 11 November 1998 as Chief Financial Officer (CFO) of CPL Group and was appointed to the Board of Directors of CPL as an Executive Director on 1 March 2002. As the Group CFO, Mr. Ramlee also serves on the Board of Directors of various subsidiaries of CPL. In addition to the finance function, he oversees the Group information technology division and corporate affairs division of CPL. Mr. Ramlee holds a Professional Qualification from the Chartered Association of Certified Accountants, United Kingdom and is a non-practicing member of the Institute of Certified Public Accountants, Singapore as well as an Associate Member of the Institute of Data Processing Management, United Kingdom. He has a Diploma in Marketing from the Chartered Institute of Marketing, United Kingdom and a Graduate Diploma in Marketing from the Marketing Institute of Singapore. He is an Associate Member of Chartered Institute of Marketing, UK and a member of the Marketing Institute of Singapore. Mr. Ramlee brings with him over 32 years of experience in corporate and international business and finance, having had extensive experience in leading multinational corporations from various industries ranging from petroleum, power tools and houseware to household and personal care products and food. His other directorships include Director of Khoo Teck Puat Hospital and Director of the Centre for Fathering Limited. Mr. Ramlee holds 150,000 shares in CPL, has a deemed interest in 10,000 shares in CPL held by his spouse and 574,000 share options in CPL as at 30 September 2009. Mr. Ramlee was last re-elected as a Director at the AGM of the Company held on 26 January 2007 and will be seeking re-election as a Director of the Company at the forthcoming AGM to be held on 28 January 2010.
LACKANA LEELAYOUTHAYOTIN Director Dr. Lackana joined Cerebos (Thailand) Limited (CTL) in 1988 and was promoted to the position of Chief Executive Officer of CTL since 1997. She was appointed as an Executive Director on the Board of CPL on 10 May 2005. She is currently the Executive Vice President and Chief Executive Officer of South East Asia and also serves as Director of various subsidiaries of CPL Group. Dr. Lackana has over 25 years of experience in the food business. She holds a Bachelor of Science degree, majoring in Chemistry from Chulalongkorn University in Thailand, an MBA in Marketing from the Catholic University of Leuven in Belgium and a DBA in Marketing from the University of Southern Queensland in Australia. Dr. Lackana’s other directorship includes Director of Tipco F&B Co., Ltd, Thailand. She is a Member of the Committee of the Thai Red Cross Society, an advisor in Master of Science in Marketing, Retail Marketing branch, Chulalongkorn University, and a Member of the Committee of the National Innovation Awards, The National Innovation Agency, Thailand. Dr. Lackana holds 173,000 shares in CPL and 293,000 share options in CPL as at 30 September 2009. Dr. Lackana was last re-elected as a Director at the AGM of the Company held on 26 January 2007 and will be seeking re-election as a Director of the Company at the forthcoming AGM to be held on 28 January 2010.
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Management Structure President & Chief Executive Officer (CEO), Eiji Koike Executive Committee Members Eiji Koike Ramlee Bin Buang Lackana Leelayouthayotin Senior Vice President – Group Financial Controller Executive Vice President & Chief Financial Officer (CFO)
Vice President – Group Information Systems Vice President – Corporate Affairs & Investor Relations
Vice President
–
Group Internal Audit
Senior Vice President
–
Operations (Asia)
Vice President
–
Research & Development Division
Vice President
–
Regional Marketing
Senior Vice President
–
Legal & Corporate Secretariat
Vice President
–
Group Corporate Planning & Risk Management
Vice President
–
Regional Human Resource
CEO Australia & New Zealand
CEO Thailand & S.E. Asia
CEO Group Health Supplements Division
CEO International Business Development / Woh Hup
CEO Hong Kong
CEO Japan
GM Hong Kong
GM Japan
GM Indonesia Country Manager Vietnam Operations Manager Woh Hup GM GM GM GM
CEO People’s Republic of China (PRC)
CEO Taiwan
Chief Operating Officer (COO) PRC
Malaysia Operations Thailand Marketing & Business Thailand Singapore, Brunei, Philippines
SVP Finance & Commercial ANZ GM Human Resources ANZ GM Sales & Marketing CAL GM Commercial NZ GM Retail Sales & Marketing NZ Dy GM Asian Home Gourmet * * Took over Asian Home Gourmet portfolio from International Business Development on 1 Jan 2010.
15
Management Team
From left to right: Keiichi Abe, Christine Wong Myrn Hung, Michael Yeong Choon Hang, Eiji Koike, Ramlee Bin Buang, Liew Chee Yin
EIJI KOIKE
DICK LEE CHEAH TSEH
President & Group Chief Executive Officer Chief Executive Officer of China, Taiwan, Japan and Group Health Supplements Division Director of Cerebos Pacific Limited and various subsidiaries of Cerebos Mr. Koike was formerly from Suntory International Corp, New York. He joined Cerebos Pacific Ltd in March 1997 with many years’ experience in finance, corporate planning and international business operations including mergers and acquisitions. Besides his responsibility as President and Chief Executive Officer of the Group, Mr. Koike also oversees the business operations in The People’s Republic of China, Taiwan and the Group Health Supplements Division. Mr. Koike holds a Bachelor of Arts degree in Economics from Hitotsubashi University, Japan.
Senior Vice President, Operations (Asia) Director of Cerebos (Guangzhou) Ltd China, CPL Packaging, Inc, Philippines and BRAND’S (1835) Limited, Thailand
RAMLEE BIN BUANG Executive Vice President & Chief Financial Officer, Information Systems and Corporate Affairs Director of Cerebos Pacific Limited and various subsidiaries of Cerebos Mr. Ramlee joined Cerebos Pacific Limited in 1998. He has over 32 years’ experience in corporate and international business and finance in wide ranging industries, from petroleum and power tools to houseware, personal care products and food. Mr. Ramlee oversees Finance, Information Systems and Corporate Affairs of the Group. Mr. Ramlee has a professional qualification from Chartered Association of Certified Accountants, UK and a Diploma in Marketing from the Chartered Institute of Marketing, UK, and a Graduate Diploma in Marketing from the Marketing Institute of Singapore. He is also a non-practicing member of the Institute of Certified Public Accountants, Singapore, Associate Member of Chartered Institute of Marketing, UK and member of Marketing Institute of Singapore.
KOO NGUANG SIAH Senior Vice President & Group Financial Controller Mr. Koo joined Cerebos Pacific Limited in 1996. He has more than 22 years’ experience in auditing, accounting and finance. Mr. Koo is responsible for all financial matters of the Group, including Treasury, Tax and Insurance. He graduated from the National University of Singapore with a Bachelor of Accounting degree. He is also a non-practicing member of the Institute of Certified Public Accountants.
16
Mr. Lee joined Cerebos Pacific Limited in August 2003. He has over 23 years’ experience in the food, flavour and fragrances manufacturing industries in leading multinational companies. He oversees the manufacturing and factory operations of the Group’s Health Supplement business including the operation matters relating to new product development. Mr. Lee graduated with a Bachelor degree in Food Science & Technology from the Agricultural University of Malaysia.
CHRISTINE WONG MYRN HUNG Senior Vice President, Legal & Company Secretary Ms. Wong joined Cerebos Pacific Limited as Legal Manager in 1997. She was promoted to Senior Vice President, Legal & Company Secretary in January 2009. Ms. Wong holds a Bachelor of Law degree from the National University of Singapore and has more than 19 years’ experience in corporate legal work and corporate secretarial work with various companies in the businesses of food and beverage, petroleum and property development. She is responsible for all legal, corporate secretarial and intellectual property matters in the Group.
WONG SWEE CHIN Vice President, Group Internal Audit Ms. Wong joined Cerebos Pacific Limited in March 2001, with significant number of years of experience in audit and accounting. Ms. Wong is responsible for the internal audit matters of the Group. She holds a Master of Science degree in Accounting & Finance from the University of Stirling, Scotland, UK. She is a Fellow Chartered Association of Certified Accountant, UK and a member of The Institute of Internal Auditors, Singapore. She is a member of the Board of Governors of The Institute of Internal Auditors, Singapore for the term FY2006/2007 to FY2009/2010, and holds the office of Treasurer from FY2008/2009 to FY2009/2010. She is also a certified member of the Association of Certified Fraud Examiners.
From left to right: Wong Swee Chin, Koo Nguang Siah, Isabella Tan Lai Yuen, Dick Lee Cheah Tseh, Indra Budidharma Laban, Daniel Quek
KEIICHI ABE
INDRA BUDIDHARMA LABAN
Vice President, Scientific Research Division Alternate Director on the Board of Cerebos Pacific Limited
Vice President, Group Corporate Planning, General Manager, PT Cerebos Indonesia (PTCI) Mr. Laban joined Cerebos Pacific Limited in September 2004. He has over 12 years' regional experience in business consulting and operations, mainly with consumer product companies. Mr. Laban is responsible for the development of the Group’s Mid-Term Plan, business development matters and activities related to risk management. Mr. Laban holds a Master of Science degree in Mechanical Engineering from Delft University of Technology (the Netherlands) and an MBA from the Rotterdam School of Management, Erasmus University (the Netherlands).
Dr. Abe was seconded from Suntory Limited in August 2008. He has 26 years’ experience in research and development of drug and functional food products. Dr. Abe is responsible for the scientific research of BRAND’S® products including compliance with product regulations and health science studies for the Group. He holds a Bachelor of Science Degree from University of Tokyo, Master of Science and Ph.D in Biochemistry from Graduate School of University of Tokyo, Japan.
ISABELLA TAN LAI YUEN Vice President, Regional Marketing Ms. Tan joined Cerebos Pacific Limited in 1996 as Marketing Manager and was promoted to Vice President, Regional Marketing in April 2004. She has more than 22 years’ experience in marketing and business development in wide ranging industries from fast moving consumer goods (“FMCG”) to Swiss timepieces and paper packaging. She is responsible for shaping the Strategic Marketing Plan and spearheads the implementation of CRM strategy for the Group’s Health Supplement Business. Ms. Tan was awarded a Gold Medal for her Diploma in Sales & Marketing by the Marketing Institute of Singapore.
MICHAEL YEONG CHOON HANG Vice President, Regional Human Resource Mr. Yeong joined Cerebos Pacific Limited in December 2000 as Manager of Human Resource and was promoted to Vice President, Regional Human Resource in January 2006. Mr. Yeong is responsible for the human resource and people development policies and practices across Singapore, Malaysia, Thailand, Taiwan, Hong Kong, Philippines and The People’s Republic of China. Having graduated from La Trobe University with a Bachelor in Business Administration degree (Major in Human Resource Management), he has more than 21 years’ experience in Human Resource Management and Development. He also holds a Graduate Diploma in Personnel Management and a Diploma in Training and Development Management from Singapore Institute of Management.
LIEW CHEE YIN
Vice President, Group Information Systems Mr. Liew joined Cerebos Pacific Limited in 1999 as Manager of Information Systems (Applications) and was promoted to Vice President, Group Information Systems in January 2006. Mr. Liew is responsible for the strategy, management and development of the Group information systems. Mr. Liew has over 19 years’ experience in consulting, planning, development and implementation of enterprise-wide information systems and technologies in a wide range of industries covering electronics, semiconductor, technology, and food and beverage. He holds a Diploma in Electrical & Electronic Engineering and a Bachelor of Science (Hons) Business and Management Studies degree from University of Bradford (UK).
DANIEL QUEK
Vice President, Corporate Affairs & Investor Relations Mr. Quek joined Cerebos Pacific Limited in 1999 as Corporate Affairs Manager. He was appointed Head of Corporate Affairs in 2005 and promoted to his current position in 2008. He is responsible for the Group’s corporate reputation, covering corporate communications, investor relations and crisis management matters. Mr. Quek has over 19 years of experience in multinational companies working in corporate and public affairs including regulatory affairs and marketing communications. Mr. Quek graduated with a Bachelor of Arts Honours degree from the National University of Singapore. He holds a Post-Graduate Diploma in Business Administration from the National University of Singapore as well as a Post-Graduate Diploma in Education (with Credit) from the Singapore Institute of Education. He also holds a Master in Business Administration degree from James Cook University (Australia). Mr. Quek is currently the elected President of the Health Supplements Industry Association of Singapore and also Chairman of the ASEAN Alliance of Heath Supplement Associations. He is also a member of the Singapore Polytechnic Food & Nutrition Advisory Panel as well as the Agri-food & Veterinary Authority’s Advisory Committee on Evaluation of Health Claims.
17
Divisional Heads
From left to right: T ul Wongsuphasawat, Mana Tiengtrakulthong, Lackana Leelayouthayotin, Kazumi Narahara,Geetha K Balakrishna
LACKANA LEELAYOUTHAYOTIN
HOONG CHEONG HON
Executive Vice President & Chief Executive Officer, Thailand and South East Asia Director of Cerebos Pacific Limited and various subsidiaries of Cerebos
Director & Chief Operating Officer, Cerebos (Guangzhou) Ltd
Dr. Lackana joined Cerebos (Thailand) Ltd in 1988. She has over 24 years’ experience in the food business. She was promoted to Chief Executive Officer of Cerebos (Thailand) Ltd in 1997 and promoted to Executive Vice President and Chief Executive Officer of Thailand & South East Asia in May 2005. Dr. Lackana is responsible for the businesses in Thailand and South East Asia. She holds a Bachelor of Science degree, majoring in Chemistry from Chulalongkorn University in Thailand, a Masters degree in Marketing from the Catholic University of Leuven in Belgium and a doctorate in Marketing from the University of Southern Queensland, Australia.
Mr. Hoong joined Cerebos Pacific Limited in July 1996 as Finance Manager and was appointed as Chief Operating Officer of Cerebos (Guangzhou) Ltd (“CGZ”) on 1 October 2005. He oversees the factory operations, sales, marketing, finance and human resources functions of CGZ. Mr. Hoong graduated from Monash University Australia with a Bachelor of Science (Hons) degree and has over 13 years’ experience in accounting and finance prior to his appointment as Chief Operating Officer of CGZ. He also holds a Master of Business Administration degree awarded by The Graduate School of International Corporate Strategy, Hitotsubashi University, under the Monbukagakusho: MEXT Scholarship for Young Leaders programme, which is fully sponsored by the Japanese Government.
LAWRENCE LIM KIN NAM
KAZUMI NARAHARA
Senior Vice President & Chief Executive Officer, International Business Development/ Woh Hup Director of various subsidiaries of Cerebos
General Manager, Japan
Mr. Lim joined Cerebos Pacific Limited in February 1969. He has over 40 years’ international experience in the pharmaceutical, food and beverage business. He is responsible for the international export business of BRAND’S® products and the global businesses of Woh Hup. He is also responsible for the emerging markets of Vietnam and Indonesia. Prior to 2010, he was also responsible for the turnaround and growth of the Asian Home Gourmet business. Mr. Lim graduated with a Bachelor of Pharmacy degree as well as a Diploma in Business Administration from the former University of Singapore.
18
Mr. Narahara joined Cerebos Pacific Limited as General Manager in December 1997. He is responsible for the businesses in BRAND’S® Japan. Prior to joining the Company, he worked in Suntory Limited and was responsible for marketing, procurement and logistics matters. Mr. Narahara graduated with a Bachelor of Law degree from Kwansei Gakuin University, Japan and he has over 40 years’ experience in international marketing, logistics and procurement in the food and beverage industry.
From left to right: Lawrence Lim Kin Nam, Timothy Chow, Hoong Cheong Hon, Koh Joo Siang
GEETHA K BALAKRISHNA
MANA TIENGTRAKULTHONG
General Manager – Singapore/Brunei/ Philippines
General Manager, Operations, Cerebos (Thailand) Ltd
Ms. Balakrishna joined Cerebos Pacific Limited on March 17, 2008, as General Manager of Singapore, Indonesia, Brunei and Philippines and is responsible for BRAND’S® businesses in these countries. Ms. Balakrishna brings with her over 18 years' experience in sales, marketing and general management in consumer goods, both food and non food businesses. She holds a Bachelor of Management Science degree from Universiti Sains Malaysia.
Mr. Tiengtrakulthong joined Cerebos (Thailand) Ltd on 1 October 1992 as Production Manager and was promoted to General Manager, Operations in July 2005. He has over 22 years' experience in food manufacturing industry. He oversees the manufacturing operations and finance and accounting function of Cerebos (Thailand) Ltd. Mr. Tiengtrakulthong holds a Bachelor of Science degree, majoring Agro-Industrial Product Development from Kasetsart University in Thailand as well as an MBA from the Graduate School of Commerce, Burapha University,Thailand.
KOH JOO SIANG General Manager, Cerebos (Malaysia) Sdn Bhd
TUL WONGSUPHASAWAT
Mr. Koh joined Cerebos (Malaysia) Sdn Bhd as General Manager on 22 August 2006. He is responsible for the BRAND’S® business in Malaysia. Mr. Koh has over 23 years’ experience in the FMCG industry. Mr. Koh holds a Master of Business Administration degree from IMC (United Kingdom).
General Manager, Marketing & Business Management, Cerebos (Thailand) Ltd
TIMOTHY CHOW General Manager and Director of Cerebos (Hong Kong) Limited Mr. Chow was appointed General Manager of Cerebos (Hong Kong) Limited on 6 August 2007. Mr. Chow is responsible for managing the business operations of the Company in Hong Kong. He has more than 18 years’ experience in the FMCG and apparel industries. Mr. Chow holds a Bachelor of Arts degree from the Hong Kong Polytechnic University and a MBA degree from the Chinese University of Hong Kong.
Mr. Wongsuphasawat joined Cerebos (Thailand) Ltd in January 1996 as Marketing Manager and was promoted to General Manager, Marketing & Business Management in July 2005. He has over 22 years’ marketing experience in the FMCG business. He oversees the marketing, procurement, human resources and legal functions of Cerebos (Thailand) Ltd. Mr. Wongsuphasawat holds a Bachelor in Marketing (Magna Cum Laude honors) degree and a MBA degree from Assumption University.
19
Divisional Heads ANZ
From left to right: Peter Cawley, T errence Joseph Svenson, George Crocker, Ian Airey, Robert Vincent Tanna, Brendan Downey-Parish
GEORGE CROCKER
IAN AIREY
Chief Executive Officer, Australia & New Zealand Director of various subsidiaries of Cerebos in Australia & New Zealand
General Manager, Commercial, New Zealand Director of various subsidiaries and associate companies of Cerebos in New Zealand
Mr. Crocker is a Senior Vice President of Cerebos Pacific Limited and has served as the Chief Executive Officer of Cerebos Australia and New Zealand since joining the company in 2005. Prior to joining Cerebos, Mr. Crocker spent 9 years in Asia as a management consultant at Monitor Group, a strategy consulting firm. Prior to that, Mr. Crocker worked for international banks in Asia and the US. He holds a Bachelor of Arts degree in Economics from Amherst College (USA) and an MBA in Finance from U.C. Berkeley (USA).
Mr. Airey joined Cerebos in 2002 and was promoted to General Manager Commercial in November 2007. Mr. Airey is responsible for finance & administration, the franchise and foodservice divisions and the commercial development of the Group’s business in New Zealand. Prior to joining Cerebos, he worked as Financial Controller for a number of food companies. He holds a Bachelor of Commerce degree from the University of Auckland and is a member of the Institute of Chartered Accountants in New Zealand.
ROBERT VINCENT TANNA
TERRENCE JOSEPH SVENSON
Senior Vice President, Finance and Commercial ANZ Director of various subsidiaries of Cerebos in Australia & New Zealand
General Manager, Sales & Marketing, Cerebos (Australia) Limited Director of Salpak Pty Limited
Mr. Tanna joined Cerebos in 1997 and was appointed General Manager, Finance and Commercial of Australia & New Zealand in 2001. He was promoted to Senior Vice President, Finance and Commercial ANZ on 1 January 2010. Mr. Tanna is responsible for all the finance and commercial matters of the Cerebos ANZ Group. Mr. Tanna has more than 21 years of experience in accounting and finance and was with Coopers & Lybrand (now known as PricewaterhouseCoopers LLP) prior to joining Cerebos. He holds a Bachelor of Economics degree from Macquarie University in Sydney and is a member of the Institute of Chartered Accountants in Australia.
Mr. Svenson joined Cerebos in 2006 as General Manager of Sales. He is responsible for leading the Australian Retail and Foodservice sales team. In 2009, Mr. Svenson also assumed responsibility for the Australian Marketing Team. Prior to joining Cerebos, he spent 8 years with Unilever Australasia. He holds a Bachelor of Arts degree from University of Central Queensland and Graduate Diploma of Business Administration from University of New South Wales.
PETER CAWLEY
Mr. Downey-Parish joined Cerebos in 2006 and has held several marketing and sales roles in the ANZ business. He was appointed General Manager, Retail Sales & Marketing New Zealand on 1 January 2010. Mr. Downey-Parish is responsible for Sales & Marketing for the Retail Division of the Group's New Zealand business. Prior to joining Cerebos, he held a number of Marketing & Sales roles in the Beverage and Dairy industries both in New Zealand and internationally. He holds a Bachelor of Management Studies (Hons.) degree from the Waikato University, New Zealand.
General Manager, Human Resources Australia & New Zealand Mr. Cawley was appointed General Manager of Human Resources Australia and New Zealand in 1996. Mr. Cawley is responsible for the Human Resources, industrial relations and employee development policies and practices of the ANZ Group. Prior to joining Cerebos, Mr. Cawley held senior HR roles in Britain, New Zealand and Australia. He holds a Diploma in Business Studies from Massey University, New Zealand.
20
BRENDAN DOWNEY-PARISH General Manager, Retail Sales & Marketing, New Zealand
Revving Up the Engine of Growth
Corporate Structure Cerebos Pacific Limited SINGAPORE
MALAYSIA
JAPAN
CPL Exports Pte Ltd •100% PEOPLE’S REPUBLIC OF CHINA Cerebos (Guangzhou) Ltd •100%
Cerebos (Malaysia) Sdn Bhd •60% Brand & Co (Malaysia) Sdn Bhd •100%
Brand’s Japan Limited •100%
Cerebos International Health Ltd •100% TAIWAN Cerebos International Health Limited Taiwan Branch •100%
AUSTRALIA
PHILIPPINES CPL Packaging Inc. •100% Woh Hup Food Industries Pte Ltd •100% Asian Home Gourmet (CPL) Pte Ltd •100%
INDONESIA PT Cerebos Indonesia •100%
THAILAND
HONG KONG
Asia Pacific Value Plus Limited •100% Cerebos Pacific Services Limited •100% Cerebos (Thailand) Limited •90% Cerebos Foods (Thailand) Limited •100% Cerebos (Hong Kong) Limited •100% Soberec (Thailand) Ltd •100% UNITED KINGDOM Brand’s® (1835) Ltd •100% Home Gourmet (Europe) Limited •100%
Cerebos (Australia) Limited •100% Salpak Proprietary Limited •44.1% Cerebos Processing Proprietary Limited •100% Riva Coffee Company Proprietary Limited •100% Menu-Master Proprietary Limited •100% Toby’s Estate Coffee Pty Limited •60%
NEW ZEALAND Cerebos Gregg’s Limited •100% Dominion Salt Limited •50% Dominion Salt (NI) Limited •50% Cerebos-Skellerup Limited •51% Atomic Coffee Roasters Ltd •100% Caffe L’affare Limited •100%
Note: The percentage in shareholdings indicated above is based on the audited financial statement in respect of subsidiaries set out on page 150 and 151 of this AR.
22
Cerebos Group Of Companies SINGAPORE Cerebos Pacific Limited 18 Cross Street #12-01/08 China Square Central Singapore 048423 Tel : (65) 6212 0100 Fax : (65) 6226 3925 (Level 12) Fax : (65) 6226 2126 (Level 13) Head Office Asian Food Division International Business Development Division Group Health Supplements Division South Asia Division (Singapore, Indonesia, Philippines, Brunei) Asian Home Gourmet (CPL) Pte Ltd Cerebos Pacific Limited Operations Department 10 Science Park Road #03-23 & 24 The Alpha Science Park II Singapore 117684 Tel : (65) 6872 3250 Fax : (65) 6872 3259 Cerebos Pacific Limited R&D Laboratory 10 Science Park Road #01-08 The Alpha Science Park II Singapore 117684 Tel : (65) 6778 9722 Fax : (65) 6778 0787 Woh Hup Food Industries Pte Ltd Office 247 Pandan Loop Singapore 128429 Tel : (65) 6779 1922 Fax : (65) 6776 0004 THAILAND Cerebos (Thailand) Limited Office – Bangkok 15th Floor, Kian Gwan Building II 140/1 Wireless Road Kwaeng Lumpinee Khet Patumwan Bangkok 10330 Thailand Tel : (66-2) 651 4211 Fax : (66-2) 253 7398 Factory – Laem Chabang Laem Chabang Industrial Estate 38/6 Moo 5 Tambol Tungsukla Amphur Sriracha Chonburi 20230 Thailand Tel : (66-38) 490 400 Fax : (66-38) 490 407 PHILIPPINES CPL Packaging Inc. Office & Factory – Calamba City CPL Packaging Inc. Lot B1-2, Carmelray Industrial Park 2 Barangay Tulo Calamba City, 4027 Laguna The Philippines Tel : (63-49) 545 7756 Fax : (63-49) 545 7044
TAIWAN Cerebos International Health Limited Taiwan Branch Office – Taipei 6F, No. 6, Sec. 3 MinChuan E. Rd ChungShan District Taipei Taiwan 104, R.O.C. Tel : (886-2) 2503 9000 Fax : (886-2) 2505 6186 Factory – Taichung No. 18 Lu Kong Road Chang Bin Industrial Park Lu Kang Town, Chang Hwa Hsien Taiwan R.O.C. Tel : (886-4) 781 0088 Fax : (886-4) 781 0022 HONG KONG Cerebos (Hong Kong) Limited Office 15F, Cambridge House Taikoo Place 979 King’s Road Quarry Bay, Hong Kong Tel : (852) 2506 1262 Fax : (852) 2506 2311 PEOPLE’S REPUBLIC OF CHINA Cerebos (Guangzhou) Ltd Office & Factory – Guangzhou No 19 Jin Xiu Road Guangzhou Economic & Technology Development District Ming Hua Er Jie Guangzhou 510730 People’s Republic of China Tel : (86-20) 8221 3021 Fax : (86-20) 8221 3836 Office – Shanghai Rooms 20E, 20F Zhao Feng World Trade Building No. 369 Jiang Su Road Shanghai 200050 People’s Republic of China Tel : (86-21) 5240 0926 Fax : (86-21) 5240 0148 MALAYSIA Cerebos (Malaysia) Sdn Bhd Office & Factory – Petaling Jaya Lot 13 Jalan 219 Federal Highway 46100 Petaling Jaya Selangor Darul Ehsan Malaysia Tel : (603) 7958 6222 Fax : (603) 7957 7610 (Mktg/Fty) (603) 7955 4114 (Finance) Cerebos International Health Ltd Office Level 15(A2) Main Office Tower Financial Park 87000, Labuan FT Malaysia Tel : (60-87) 433 118 (60-87) 433 188 Fax : (60-87) 441 288
INDONESIA PT Cerebos Indonesia Office – Jakarta Jl. Raya Kelapa Gading Permai Blok De No. 20, Kelapa Gading Timur, Kelapa Gading Jakarta Utara 14240 Indonesia Tel : (62-21) 4585 4542/36 Fax : (62-21) 4585 4443 JAPAN Brand’s Japan Limited Office – Tokyo Bureau Ginza, #605 12-1-4 Chome, Tukiji, Chuo-ku, Tokyo 104-0045 Japan Tel : (81-3) 3541 5916 Fax : (81-3) 3541 5917 AUSTRALIA Cerebos (Australia) Limited Office – Sydney Unit 2, 2 Costello Place Seven Hills NSW 2147 Australia Tel : (61-2) 9624 5200 Fax : (61-2) 9624 4397 Factory – Sydney 92 - 96 Station Road Seven Hills NSW 2147 Australia NEW ZEALAND Cerebos Gregg’s Limited Office & Factory – Auckland 291 East Tamaki Road PO Box 58095, Greenmount Auckland New Zealand Tel : (64-9) 274 2777 Fax : (64-9) 274 2775 Factory – Dunedin 51 Forth Street, Dunedin New Zealand Tel : (64-3) 477 9191 Fax : (64-3) 474 0851 Food Service Office – Auckland 12 Newark Place PO Box 58095, Greenmount East Tamaki Auckland New Zealand Tel : (64-9) 274 2777 Fax : (64-9) 274 2490 Atomic Coffee Roasters Ltd 420C New North Road Kingsland, Auckland New Zealand Tel : (64-9) 846 5883 Fax : (64-9) 815 9031
Dominion Salt Limited Office & Factory – Mount Maunganui Totara Street, Mount Maunganui PO Box 4249 Mount Maunganui South New Zealand Tel : (64-7) 575 6193 Fax : (64-7) 575 3017 Factory – Lake Grassmere Lake Grassmere, Marlborough, PO Box 81, Seddon New Zealand Tel : (64-3) 575 7021 Fax : (64-3) 575 7002 ASSOCIATE COMPANY Salpak Proprietary Limited Office & Factory – Sydney 2 Costello Place Seven Hills NSW 2147 Australia Tel : (61-2) 9624 5200 Fax : (61-2) 9624 2887 REGISTERED OFFICE 18 Cross Street #12-01/08 China Square Central Singapore 048423 Tel : (65) 6212 0100 Fax : (65) 6226 2126 http://www.cerebos.com SHARE REGISTRAR M & C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906 BANKERS Hongkong and Shanghai Banking Corporation Limited Oversea-Chinese Banking Corporation Ltd Australia and New Zealand Banking Group Limited United Overseas Bank Limited Standard Chartered Bank AUDITORS PricewaterhouseCoopers Certified Public Accountants 8 Cross Street #17-00 PwC Building Singapore 048424 Partner-in-charge: Ms Quek Bin Hwee (Appointed 11 February 2008)
Caffe L’affare Limited 27 College St Wellington New Zealand Tel : (64-4) 385 9748 Fax : (64-4) 385 9261
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Significant Events 2008 OCTOBER Cerebos Malaysia attained the prestigious Malaysia (Silver) Effie Award 2008 for significant and breakthrough marketing campaign.
Cerebos was recognised as supporter of ChildAid Concerts and conferred the Associate of the Arts Award by the National Arts Council. BRAND’S® Alpha, a rebranding of BRAND’S® children health supplement range, was launched. Cerebos New Zealand was awarded McDonald’s “Supplier of the Year in Restaurant Quality”. Barista@Home triumphed at the 2008 Summit International Marketing Effectiveness Awards (Consumer Products category), for its well-executed integrated marketing communications campaign.
NOVEMBER Cerebos Pacific Limited held the inaugural Charity Futsal Invitational to raise funds for Cerebos’ adopted charity, The Straits Times School Pocket Money Fund.
24
Cerebos received the Singapore HEALTH Award (Platinum) by the Health Promotion Board for commendable workplace health promotion programmes.
Singer-songwriter and actor, Wang Lee-Hom, was appointed as new brand ambassador for BRAND’S® Essence of Chicken in Taiwan. Cerebos was ranked 45th in Singapore International 100 Ranking 2008. Mocopan Pasquale clinched the Gold Medal at Golden Bean Roasters Competition for Australia’s Best Coffee with Milk.
DECEMBER 136 runners from Cerebos participated in The Standard Chartered Singapore Marathon to raise funds for The Straits Times School Pocket Money Fund. First ever Singapore-Malaysia BRAND’S® Blogger Challenge saw the Singapore team emerge as champions. BRAND’S® was ranked 1st in “Best Brand of 2008” survey by Taiwan’s Business Today magazine.
2009 JANUARY Cerebos moved up 34 ranks to 63rd position in market capitalisation ranking by The Business Times. Bruno Rossi launched the Primavera FairTrade Coffee.
FEBRUARY Cerebos Australia announced its joint venture with Toby’s Estate, a leading boutique specialty coffee roaster in New South Wales. Ground breaking ceremony for new BRAND’S® factory in Shah Alam, Malaysia, was held. Slated for completion in March 2010, the factory would double the current output of the existing factory.
Cerebos Thailand organised its 20th BRAND’S® Summer Camp, helping more than 40,000 students prepare for the Thai university entrance examinations. Cerebos Australia donated food products to victims of the Victoria bushfires.
MARCH Cerebos supported Earth Hour by turning off lights at all Cerebos Singapore office locations for an hour at 8.30pm on 28 March 2009, as part of our CSR to gradually reduce our ecological footprint on the environment. Cerebos ANZ entered into a strategic partnership with OTTO Espresso, a premium stovetop espresso machine manufacturer. Gravox’s Liquid Gravies commenced in-house manufacturing, giving Cerebos total control of quality, supply and future product development.
Cerebos Malaysia clinched the Malaysia HR Awards 2009 (Silver) in the “HR Achievement” category. BRAND’S® Malaysia bagged “The Best Brands in Consumer – Health Tonic” Asia Pacific Brand Laureate Award for the second year.
APRIL In the inaugural Governance & Transparency Index by Business Times, Cerebos ranked a commendable 26th best out of the 676 companies ranked for good corporate governance. Robert Harris’ “Every Break Should Be Inspirational” campaign earned 6 awards at the prestigious Communication Agencies Association of New Zealand (CAANZ) AXIS Awards.
25
Cerebos Taiwan donated NST$2 million and 50,000 bottles of essence of chicken to relief efforts for Taiwan Typhoon Morakot. BRAND’S® South Asia organised the 3rd BRAND’S® Sudoku Challenge to overwhelming response.
MAY
SEPTEMBER
Robert Harris won the gold trophy for Best Integrated Media Campaign in the CAANZ Media Awards for their “Every Break Should Be Inspirational” campaign.
Cerebos BRAND’S® Charity Sales held in Singapore raised a record $24,202 for The Straits Times School Pocket Money Fund.
Cerebos South Asia won the prestigious “Best of the Best Brands (Health)” Award for BRAND’S® at Guardian’s Health & Beauty Awards 2009. BRAND’S® captured the Asian Gold Award in the Reader’s Digest Most Trusted Brands Award, for the fifth time. Thailand bagged the Gold award at country level.
JUNE Cerebos Thailand hosted the 24th BRAND’S® Crossword King’s Cup Competition with record number of entries.
26
Cerebos acquired 2 Gold, 6 Silver and 2 Bronze awards at the 2009 New Zealand Coffee Awards.
JULY Cerebos supported The Straits Times School Pocket Money Fund with purchase of special edition tissues.
AUGUST Cerebos organised the 2nd Charity Futsal tournament, raising S$11,680 for its adopted charity.
BRAND’S® InnerShine Prune Essence launched in Singapore.
Blazing Trails of Glory
Corporate Governance Report Cerebos Pacific Limited (“CPL” or the “Company”) and its subsidiaries (together, the “Group”) firmly believes that establishing good corporate governance is important to provide the foundation for a wellm a n a g e d a n d e ff i c i e n t organisation.
BOARD’S CONDUCT OF ITS AFFAIRS
4. r e v i e w
the
performance
of
Management, approve the nominations to the Board of Directors and appointment of key executives, as
Principle 1 : Every company should be headed by an effective Board to lead
may be recommended by the Nominating Committee;
and control the company. The board is collectively responsible for the success of the company. The Board works with management to achieve this and the Management remains accountable to
5. approve the annual budget, major funding proposals, investment and divestment proposals of the Company;
the Board. 6. review and endorse the framework of
At CPL, the Directors are committed to developing and upholding the standards of corporate governance, guided by the principles and guidelines of the Singapore Code of Corporate Governance 2005 (the “Code”) issued by the Singapore Council on Corporate Disclosure and Governance.
CPL’s Board is responsible for the success of the Company and is accountable to the shareholders while the Management is
executives as may be recommended by the Remuneration Committee; and
accountable to the Board. 7. assume responsibility for corporate The Board will provide the shareholders with a balanced and understandable assessment
of
the
gover nance framework of the Company.
C o m p a n y ’s
performance, position and prospects on a quarterly basis. This responsibility extends to interim and other price sensitive public reports, and reports to regulators (if required).
Matters which are specifically reserved for the Board’s decisions are those involving interested person transactions (including, inter alia, conflict of interest issues relating to substantial shareholders of CPL and/or Directors), material
The principal functions of the Board are to:
In this Report, we describe the corporate governance processes and activities of CPL, with specific reference to the principles of the Code.
remuneration for the Board and key
acquisitions and disposals of assets, corporate or financial restructuring, issues of shares, dividends and other
1. set values and standards of the
distributions to shareholders.
Company and ensure that obligations to shareholders are understood;
Interested person transactions between the Group and CPL’s holding company of
2. provide entrepreneurial leadership,
a recurring nature and which relate to:
approve the strategic and financial
This Report should be read as a whole, instead of being read separately under the d i ff e re n t p r i n c i p l e s o f the Code.
28
objectives of the Company;
(1) provision of services such as research and development services, marketing
3. oversee the processes for risk management, financial reporting and compliance and evaluate the adequacy of internal controls;
services, management and advisory services, consultancy services, technical assistance and support and other related services;
(2) sale and purchase and/or supply of
To enhance the Directors’ knowledge of
Board committees are set out in the CPL
the business operations of the Company,
Corporate Governance Policies Manual
visits to the various business locations
(“CPL CGM”), which was first approved
(3) agreements in relation to use and/or
including Thailand, Australia, New Zealand,
on 28 February 2002 and subsequently
ownership of trade and other marks,
China and Taiwan are arranged from time
revised on 24 November 2006, with
copyright, patents, trade and business
to time.
approval of the Board.
how, processes and other intellectual
The Company also provides facilities for
The terms of reference of these Board
property rights,
Directors to meet their relevant training
Committees are disclosed according to
products or materials; and
names, technology, technical know-
needs. Each Director is provided with the
the relevant principle of the Code as set
are covered under a shareholder’s general
CPL CGM and other procedural and control
out in this report.
mandate which is subject to renewal
manuals containing all relevant Board and
annually at the General Meeting of CPL.
company policies, which are updated as
Specific Board approval is required for any
a training budget that Directors and
BOARD COMPOSITION AND GUIDANCE
investments and divestments with a gross
employees can tap on to fund participation
Principle 2 : There should be a strong
value greater than S$5 million in total.
at any course appropriate to the discharge
and independent element on the
of their duties.
Board, which is able to exercise
and when necessary. The Company has
There are no material contracts
objective judgment on corporate
entered into by the Company and its
The Company has adopted an internal
affairs independently, in particular,
subsidiaries for the benefit of the
policy, which welcomes Directors to seek
from Management. No individual or
Chief Executive Officer (“CEO”), or any
explanations or clarifications from and/or
small group of individuals should be
director or controlling shareholder,
convene briefings or informal discussions
allowed to dominate the Board’s
either still subsisting at the end of the
with the Management on any aspect of
decision making.
financial year or if not then subsisting,
the Company’s operations or business.
entered into since the end of the
Necessary arrangements will be made
In line with the Code, the policy of the
previous financial year.
for the briefings, informal discussions
Group is to have an appropriate mix of
or explanations as and when required
executive and independent Directors to
by any Director.
maintain the independence of the Board.
procedures, investments and divestments
To assist the Board in the oversight of the
Presently, the Board comprises nine
and the performance of the business,
Company’s business operations, certain
Directors, with six (6) Non-Executive
consider corporate governance matters,
functions have been delegated to Board
Directors (of which three are independent)
approve the release of the quarterly and
committees namely, Audit Committee (AC),
and three (3) Executive Directors, thereby
full year results and deliberate on other
Nominating Committee (NC), Remuneration
transactions and matters. The Board also
Committee (RC) and Share Option Scheme
holds meetings when warranted by
Committee (SOSC). Further information
particular circumstances, as deemed
regarding the Board’s functions and details
appropriate by Board members.
of the terms of reference of the respective
The Board meets on a regular basis to review the Group’s internal policies and
fulfilling the Code’s recommendations that independent Directors make up at least one-third of the Board. The names of the directors and their respective positions and status are:
29
Name of Director
Status
Board
AC
NC
RC
SOSC
Teo Chiang Long (Chairman)
Non-Executive & Independent
Chairman
Member
Chairman
Chairman
Chairman
Raja Tan Sri Muhammad Alias Bin Raja Muhammad Ali (Raja M Alias)
Non-Executive & Independent
Member
Member
–
–
–
Lucien Wong Yuen Kuai
Non-Executive & Independent
Member
Chairman
Member
Member
Member
Akinobu Kodaira
Non Executive & Non-Independent
Member
–
–
–
–
Takayuki Hirashima
Non Executive & Non-Independent
Member
–
–
–
–
Hong Sik Park
Non Executive & Non-Independent
Member
Member
Member
Member
Member
Eiji Koike
Executive & Non-Independent
Member
–
–
–
–
Ramlee Bin Buang
Executive & Non-Independent
Member
–
–
–
–
Lackana Leelayouthayotin
Executive & Non-Independent
Member
–
–
–
–
The NC reviews annually, whether or not a director is independent and adopts the
and knowledge necessary to meet the Company’s objectives.
Code’s definition of what constitutes an Independent Director in its review. As a result of the NC’s review for FY2009, the NC is of the view that the three Non-
the meaning of the Code, that there is a strong and independent element on the Board which is able to exercise objective judgment on corporate matters independently, in particular, from Management, and that no individual or small group of individuals dominate the Board’s decision-making process. The NC is also of the view that the current Board comprises persons who as a group, provides core competencies in areas such as legal, accounting and finance, research and development expertise, business and management experience, industry knowledge, strategic planning experience
30
company’s business – which will ensure a balance of power and authority, such
Key information regarding the Directors is provided under the “Board of Directors” section in the annual report.
that no one individual represents a considerable concentration of power. The Board applies the principle of clear
Executive and Independent Directors of CPL are independent directors within
and the executive responsibility of the
While the Company’s Articles of Association allow for the appointment of a maximum of 15 Directors, the NC is of the view that the current Board size of 9 Directors out of which 3 are Independent Directors (that is, one third of the Board size) is appropriate and will facilitate effective decision-making, taking into account the nature and scope of CPL’s operations.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER Principle 3 : There should be a clear division of responsibilities at the top of the company – the working of the Board
division of responsibilities at the top of the Company – the working of the Board and the responsibility of the management of Company’s business are separated to ensure a balance of power and authority. The roles of the Chairman and CEO in the Company are separate. The Chairman is a Non-Executive and Independent Director whilst the CEO is an Executive Director. The Chairman, being a Non-Executive Director, leaves the daily running of the business to the CEO although he bears responsibility for the workings of the Board, ensuring its effectiveness in all aspects of its role. The Chairman and the CEO are not related.
The Chairman is responsible for the management of the Board and leads the Board in its oversight of Management. He ensures that relevant policies and procedures are introduced from time to time in accordance with the Code and the CPL CGM. He plays an important role in encouraging constructive relations between the Board and Management and between the Executive Directors and NonExecutive Directors. He also assumes the formal role of an independent leader that chairs all Board meetings and ensures effective communication by the Board and Management with Shareholders at Shareholders’ meetings. He ensures that Board meetings are held as and when necessary and ensures that Board members are provided with complete, adequate and timely information from the Management. As a general rule, Board papers are sent to Directors at least 7 days in advance in order for Directors to be adequately prepared for the meeting. Management staff who have prepared the papers, or who can provide additional insight into the matters to be discussed, are invited to carry out presentations or attend the Board meeting at the relevant time.
BOARD MEMBERSHIP Principle 4 : There should be a formal and transparent process for the appointment of new directors to the Board. The NC comprises three Directors, namely, Teo Chiang Long (Chairman), Lucien Wong Yuen Kuai and Hong Sik Park, all of whom are Non-Executive Directors. A majority of them, including the Chairman of the NC, are independent of Management, not
associated with substantial shareholder and free from any business or other relationships, which may interfere with the exercise of their independent judgment.
During the year, the NC met and determined the independence of the Directors in line with the definition in the Code.
The rules and regulations governing the NC’s establishment are set out in the CPL CGM.
New Directors are presently appointed by way of Board resolutions, after the NC has reviewed and nominated them for appointment. The NC considers each candidate for directorship carefully, taking into consideration the qualification and experience of the candidate, his/her ability to increase the effectiveness of the Board and to add value to the Group’s business in line with its strategic objectives.
The principal functions of the NC are to: 1. make recommendations to the Board on appointments or re-appointments of all Board and Board committee members, including to recommend the Chairman for the Board and for each Board committee; 2. evaluate the effectiveness of the Board as a whole and assess the contribution by each individual Director, to the effectiveness of the Board. (This assessment will also take into consideration whether a Director who has multiple board appointments is able to, and has been adequately carrying out his duties as a Director. Internal guidelines have been adopted that address the competing time commitments that are faced when Directors serve on multiple boards); 3. determine annually whether or not a Director is independent; 4. make recommendations to the Board on the appointment of representatives from CPL to directorships on the Boards of subsidiaries and associated companies of CPL; and 5. review and recommend to the Board on the appointment of key executives, including but not limited to Group and Divisional CEOs.
New Directors who are appointed by Board resolution will submit themselves for re-election at the following AGM of the Company. Article 100 of the Articles requires one third of the Board to retire by rotation at every AGM. This means that no Director stays in office for more than three years, before being subject to re-election by shareholders.
BOARD PERFORMANCE Principle 5 : There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. Annually, all Directors will assess the effectiveness of the Board as a whole and the results of each assessment will be considered by the NC, which has the responsibility of assisting the Board in the evaluation of the Board’s effectiveness. Factors such as the structure and size of the Board, the manner in which Board meetings are conducted, the Board’s access to information, the Company’s internal procedure and controls, the
31
performance of Management and shareholders communication are applied in the evaluation of the Board performance as a whole.
the contribution of such Director to t h e e ff e c t i v e n e s s o f t h e B o a rd , his/her participation and involvement in the Board meetings and Board committees meetings, qualification and experience as well as his/her directorships and major appointments in other companies.
The NC, in recommending the reelection/re-appointment of Directors, who are subject to retirement at the Annual General Meeting in accordance with the Articles or the Companies Act, Cap. 50, had taken into consideration
Name
Each member of the NC abstains from making any recommendations and/or
CPL Board
Audit Committee
Nominating Committee
participating in any deliberation of the NC and from voting on any resolution, in respect of the assessment of his own performance or re-nomination as a Director. The attendance of the Directors at meetings of the Board and Board committees held in FY 2008/2009, as well as the frequency of such meetings, are as follows:
Remuneration Committee
Share Option Scheme Committee
No of Mtgs Held
No of Mtgs Attended
No of Mtgs Held
No of Mtgs Attended
No of Mtgs Held
No of Mtgs Attended
No of Mtgs Held
No of Mtgs Attended
No of Mtgs Held
No of Mtgs Attended
Teo Chiang Long
5
5
5
5
2
2
1
1
0
0
Eiji Koike
5
5
–
–
–
–
–
–
–
–
Raja M Alias
5
5
5
5
–
–
–
–
–
–
Lucien Wong Yuen Kuai
5
5
5
5
2
2
1
1
0
0
Akinobu Kodaira
5
3
–
–
–
–
–
–
–
–
Takayuki Hirashima
5
5
–
–
–
–
–
–
–
–
Hong Sik Park
5
5
5
5
2
2
1
1
0
0
Ramlee Bin Buang
5
5
–
–
–
–
–
–
–
–
Lackana Leelayouthayotin
5
5
–
–
–
–
–
–
–
–
Hiroaki Kojima (Alternate Director to Akinobu Kodaira)
5
4
–
–
–
–
–
–
–
–
Keichi Abe (Alternate Director to Takayuki Hirashima)
5
5
–
–
–
–
–
–
–
–
ACCESS TO INFORMATION Principle 6 : In order to fulfill their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis.
32
In order to ensure that the Board is able to fulfill its responsibilities, Management provides the Board members with balanced and understandable management accounts and other financial statements of the Company’s performance, position and prospects within 25 days after the end of each calendar month.
Board meetings are also convened to review and approve the Company’s quarterly financial statements, the Annual Budget and Mid-Term Plan. Background or explanatory information relating to matters which require the Board’s approval and/or review, copies of disclosure documents, budget, forecasts and
quarterly reports of the Company’s
to ensure that the Company complies
1. recommend to the Board base salary
activities are also provided to the Board.
with the requirements of the Companies
levels, benefits and incentive
In respect of the budget, any material
Act, Cap. 50. Together with the other
programmes, and identify components
variance between the budget, the latest
Management staff of CPL, the Company
of salary which can best be used to
forecast and the actual results are
Secretary is also responsible for com-
focus management staff on achieving
disclosed and explained. The Board has
pliance with the SGX-ST Listing Manual
corporate objectives;
separate and independent access to the
and all other rules and regulations,
Company’s senior management and the
which are applicable to the Company.
2. a p p ro v e t h e s t r u c t u re o f t h e compensation programme (including
Company Secretary at all times. From time
PROCEDURES FOR DEVELOPING REMUNERATION POLICIES
but not limited to Directors’ fees,
Principle 7 : There should be a
executives of the required quality to
Since 2003, all analysts’ reports on the
formal and transparent procedure
run the Company successfully;
Company have been forwarded to the
for developing policy on executive
Directors on an on-going basis, as and
remuneration and for fixing the
3. review, on an annual basis, the
when received by the Company. The
remuneration packages of individual
compensation packages of the
Directors have also been provided with
directors. No director should be involved
Company’s Directors, CEO and key
the name and contact particulars of the
in deciding his own remuneration.
executives and determine appropriate
to time, the Management will brief the Directors at Board meetings when there are changes in regulations and/or accounting standards, which would have an impact on the disclosure obligations or the financial position of the Company.
salaries, allowances, bonuses, options and benefits in kind) for Directors and key executives to ensure that the programme is competitive and sufficient to attract, retain and motivate key
adjustments; and
Company’s senior management and Company Secretary to facilitate separate
The RC comprises three Directors, namely
and independent access.
Teo Chiang Long (Chairman), Lucien Wong
4. administer the Company’s Executive
Yuen Kuai and Hong Sik Park. All the
Share Option Scheme (ESOS) by
Should the Directors, whether as a group
members of the RC are Non-Executive
way of delegation to the Share
or individually, require independent
Directors and a majority of them, including
Option Scheme Committee which
professional advice in the furtherance of
the Chairman, are independent of
is responsible for approving and
their duties, the Company Secretary or
Management and free from any business
administering the ESOS according
relevant member of the Company’s
or other relationships, which may interfere
to its Rules.
Management Team will, upon direction by
with the exercise of their independent
the Board, appoint a professional advisor
judgment. All three members of the RC
The RC reviews, for recommendation to
selected by the Directors or the individual,
are experienced and knowledgeable in
the Board, the specific remuneration
to render the necessary professional
executive compensation. RC has access
packages of Executive Directors or key
advice. The cost of such professional
to the Company’s Human Resources
executives and also reviews subsequent
advice will be borne by the Company.
Department and, if so required, external
increments, awards of share options under
consultant for expert advice on executive
the ESOS and variable bonuses where
compensation.
these payments are discretionary. There
The Company Secretary attends all Board
are appropriate and meaningful measures
and Board committee meetings and is responsible for ensuring that Board and
The RC covers all aspects of remuneration,
in place for the purpose of assessing the
Board committee procedures are followed.
including but not limited to the following
performances of Executive Directors and
It is the Company Secretary’s responsibility
principal responsibilities:
key executives.
33
LEVEL AND MIX OF REMUNERATION
Executive Directors do not receive
any remuneration to the immediate family
directors’ fees but they are eligible to
members of any Directors or the CEO.
Principle 8 : The level of remuneration
and approve the quantity of share options
The compensation benefits for the staff
should be appropriate to attract, retain
to be granted based on pre-determined
of the Company comprises a fixed
and motivate the directors needed to
performance criteria. The options are
component and a variable component.
run the company successfully but
exercisable over a ten-year period including
The fixed component is in the form of a
companies should avoid paying more
a vesting period of two years. Executive
base salary. The variable component is in
than is necessary for this purpose.
Directors are encouraged to hold their
the form of a variable bonus that is linked
A significant proportion of directors’
shares beyond the vesting period, subject
to the Company’s and the individual’s
remuneration should be structured so
to the individual’s need to finance the costs
performances. The total amount of bonus
as to link rewards to corporate and
of acquisition and associated tax liability.
(“bonus pool”) is determined by the
participate in the ESOS. The RC will review
achievement of corporate key performance
individual performance. The Chairman, who is Non-Executive,
indicators that have been approved by the
In setting remuneration packages, the
and all Non-Executive Directors, are
RC at the beginning of each financial year.
RC takes into account the respective
paid directors’ fees, subject to share-
In most cases, individual performance on
performances of the Group and the
holders’ approval at the AGM. The RC
objectives and competencies will also be
individual, and what is appropriate to
recommends to the Board, fees payable
taken into consideration in determining
attract, retain and motivate the Directors
to Non-Executive Directors that are
the bonus amount. The RC will evaluate
to run the Company successfully, the
appropriate to the level of contribution,
the extent to which the key performance
performance of the Group, as well as
taking into account the effort and time
indicators and individual performance have
individual Directors and key executives,
spent and the responsibilities of the
been achieved based on the Company’s
aligning their interest with those of
Directors. The fees paid to the Company’s
performance and approve the bonus pool
Shareholders and linking rewards to
Non-Executive Directors are also
for distribution to staff based on the
corporate and individual performance. In
benchmarked against non-executive
individual performance. Another element
its deliberations, the RC takes into
directors’ fees paid by companies in the
of the variable component is the grant of
consideration, remuneration packages and
same industry and with similar scale of
share options to staff under the ESOS.
employment conditions within the industry
operation. The RC is of the view that the
and benchmarked against comparable
Company’s Non-Executive Directors are
The ESOS was first adopted on 28 May
companies.
not over-compensated to the extent that
1998 and was extended for a further period
their independence may be compromised.
of 10 years pursuant to approval granted by the shareholders at the Extraordinary
The CEO has a fixed-term service contract with the Company. The CEO’s
The Board has adopted the policy that the
remuneration package includes a variable
Board’s annual remuneration report shall
bonus element and share options, both of
be made in consultation with the Chairman
Information on ESOS such as size of
which are performance-related and which
of the Board and endorsed at Board level,
grants, exercise price of options that were
have been designed to align his interests
as specified in the CPL CGM.
granted as well as outstanding and vesting
General Meeting held on 28 January 2008.
period of options are found on pages 82
with those of shareholders, and to link rewards to his individual performance
The Company does not employ any
to 84 and 130 to 131 of the annual report.
together with that of the Group.
immediate family member of any Director
Subject to such adjustment as may be
or the CEO and there is no payment of
made pursuant to the ESOS, the total
34
number of shares in respect of which the
took place on the SGX-ST immediately
Company may grant options shall at no
preceding the date of grant. The
time exceed five per cent. of the total
Company’s policy is to account for the
DISCLOSURE ON REMUNERATION
issued share capital of the Company for
fair value of share options for financial
Principle 9 : Each company should
the time being. The amount of share
reporting purposes.
provide clear disclosure of its
options, which may be granted to each
remuneration policy, level mix of
employee depends on the grade of the
During the financial year 2008/2009, the
remuneration, and the procedure for
employee, subject to the approval of
Company had granted a total of 916,000
setting the remuneration in the
the SOSC.
share options at the exercisable price of
company’s annual report. It should
S$2.52 each to executives who had made
provide disclosure in relation to its
In line with the Company’s focus on
significant contributions based on the
remuneration policies to enable
aligning individual staff rewards with the
predetermined performance criteria
investors to understand the link
interest of its shareholders, the method
approved by the RC.
between remuneration paid to directors
of determining the subscription price
and key executives, and performance.
was revised on 23 January 2009. The
There is no participation of the share option
subscription price payable upon the
scheme by the Company’s controlling
The following table shows the breakdown
exercise of a share option shall be the
shareholders and their associates. Neither
of remuneration of Executive Directors,
average of the last transacted prices of
is a discount offered in respect of the
Alternate Directors (who are executives
the shares for the three consecutive market
Company’s present share option scheme
in the Company) and Non-Executive
days on which dealings in the shares
to Executives of the Company.
Directors in percentage terms:-
Fees
Salary
Bonus
Other Benefits(1)
Total
Eiji Koike
0%
55%
26%
19%
100%
Ramlee Bin Buang
0%
57%
30%
13%
100%
Lackana Leelayouthayotin
0%
61%
30%
9%
100%
0%
54%
16%
30%
100%
Teo Chiang Long
100%
0%
0%
0%
100%
Raja M Alias
100%
0%
0%
0%
100%
Lucien Wong Yuen Kuai
100%
0%
0%
0%
100%
Akinobu Kodaira
100%
0%
0%
0%
100%
Hong Sik Park
100%
0%
0%
0%
100%
Takayuki Hirashima
100%
0%
0%
0%
100%
Executive Directors
Alternate Director Keiichi Abe Non-Executive Directors
(1) excluding share options details of which are disclosed in Directors’ Report
35
The names of the Directors and the top five Executives (who are not also Directors) earning remuneration which falls within bands of S$250,000 for the financial year ended 30 September 2009 are as follows: Remuneration bands (S$)
Name of Directors/Executives
Designation
1,500,000 to 1,750,000
Eiji Koike
Executive Director President & Group CEO
1,250,000 to 1,500,000
Nil
N.A
1,000,000 to 1,250,000
Nil
N.A
750,000 to 1,000,000
Lackana Leelayouthayotin
Executive Director CEO & EVP South East Asia CEO Australia and New Zealand
George Crocker 500,000 to 750,000
Ramlee Bin Buang
Executive Director Group CFO & EVP
250,000 to 500,000
Keiichi Abe
Alternate Director to Takayuki H. VP Scientific Research Division SVP Operations Asia SVP & Chief Financial Controller GM Finance & Commercial ANZ SVP & CEO Asian Food Division/ International Business Development Division
Dick Lee Koo Nguang Siah Rob Tanna Lawrence Lim 250,000 and below
Teo Chiang Long Lucien Wong Yuen Kuai Raja M Alias Akinobu Kodaira Takayuiki Hirashima Hong Sik Park
Chairman & Independent Director Independent Director Independent Director Non-Independent Director Non-Independent Director Non-Independent Director
ACCOUNTABILITY
statements of the Company’s performance,
Principle 10 : The Board should
after the end of each calendar month.
period as stipulated in the relevant SGX Listing Rule and the Singapore Companies Act, Cap 50.
standable assessment of the
Board meetings are convened to review
AUDIT COMMITTEE
company’s performance, position
and assess the Company’s performance,
and prospects.
position and prospects on quarterly
position and prospects within 25 days
present a balanced and under-
basis to ensure that a balance and Both the Management and the Board
understandable assessment of the
recognize the importance of providing the
Company’s performance and position is
Board with all relevant information on an
presented to the shareholders through
accurate and timely basis in order that
SGXNet on quarterly basis. The relevant
the Board may effectively discharge its
notices, report and addendum for the
duties. The Board members are provided
annual general meeting or extraordinary
with balanced and understandable
general meeting are distributed to
management accounts and other financial
shareholders according to the notice
36
Principle 11 : The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. The AC comprises four members, namely Lucien Wong Yuen Kuai (Chairman), Teo Chiang Long, Raja M Alias and Hong Sik Park. All the members of the AC are NonExecutive Directors and a majority of them, including the Chairman, are independent
Directors. All the members of the AC have experience in managerial positions in the legal, banking and finance industries. The NC is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the AC’s functions. The AC performs the following functions in accordance with section 201B(5) of the Companies Act, Cap. 50 and CPL CGM: 1. reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss; 2. reviews with the internal auditors at least annually, the adequacy of the internal audit procedures and their evaluation of the effectiveness of the overall internal control systems, including financial, operational and compliance controls and risk management; 3. reviews the quarterly and annual financial statements, including announcements to shareholders and the SGX-ST prior to the submission to the Board so as to ensure the integrity of the Company’s financial statements; 4. reviews any significant findings of internal investigations; 5. makes recommendations to the Board on the appointment of external auditors, the audit fee and any questions of their resignation or dismissal; 6. reviews and approves the appointment, replacement, reassignment or the dismissal of the Head of the Group Internal Audit (GIA) department;
7. reviews the assistance given by the Company’s officers to the external and internal auditors;
INTERNAL CONTROLS Principle 12 : The Board should ensure that the management maintains a
8. reviews interested person transactions to ensure that internal control p ro c e d u re s a p p ro v e d b y t h e shareholders are adhered to; 9. reports actions and minutes of the AC meetings to the Board of Directors with such recommendations as the AC considers appropriate; and 10. conducts an annual review of the independence and objectivity of the Company’s external auditors, including the volume of non-audit services supplied by the external auditors, to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination.
sound system of internal controls to safeguard the shareholders’ investments and the company assets. The Company’s external auditors, PricewaterhouseCoopers LLP (“PwC”), carry out in the course of their statutory audit, a review of the effectiveness of the Company’s material internal controls focusing primarily on financial controls, to the extent set out in their audit plan. Material non-compliance and internal control weaknesses noted during their audit, and the external auditors’ recommendations to address such noncompliance and weaknesses, are reported to the AC. The Management, with the assistance of GIA, follows up on PwC’s recommendations as part of its role in the review of the Company’s internal control
The AC has the express power to conduct or authorise investigations into any matters within its terms of reference, has full access to and co-operation of Management. It has full discretion to invite any Director or member of management to attend its meetings, and to ensure that adequate resources are available to enable it to discharge its function properly.
systems. The Board is satisfied that the
Each member of the AC shall abstain from voting on any resolution and making any recommendations and/or participating in any deliberations in respect of matters in which he is interested.
has reviewed the non-audit services
Company’s internal controls are adequate. The fees paid by the Company to its auditors, PwC, for non-audit work for the financial year ended 30 September 2009, including tax services provided to the Company, exceed 50% of the total amount of the fees paid to PwC. The AC performed by PwC and is satisfied with PwC's position as an independent external auditor as the non-audit work primarily relates to standard and routine tax work such as filing tax returns,
The AC meets with the external auditors, and with the internal auditors, without the presence of Management, at least once a year. Ad-hoc meetings may be carried out from time to time, as circumstances require.
responding to Comptroller's queries and on-going work to resolve outstanding tax assessments and has no material impact on the financial statements.
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Some of the main policies on internal controls adopted by the Company are described below: Whistle Blowing Policy The Company has a whistle blowing policy, which together with the Company’s Code of Ethics, provide well-defined and accessible channels in the Group through
The Directors have identified that the recognition and increased awareness of risk management in the operational and business units would be key factors in implementing a successful ERM programme in the Group. During the year, the Group’s key subsidiaries have included risk management as part of their local board meetings, which are attended by certain members of the Board.
on the date of the announcement of the relevant results. Directors are required to report to the Company Secretary whenever they deal in the Company’s shares and the latter will make the necessary announcements in accordance with the requirements of the SGX-ST.
which employees may raise concerns about improper conduct within the Group. Enterprise Risk Management
Please refer to the Enterprise Risk Management Report on Page 51 of the annual report for further information.
The Company has institutionalized the Company’s overall risk management processes under a formal Enterprise Risk Management (“ERM”) Framework. The area of risks covered under the ERM Framework include corporate and brand image and reputation, business development, regulatory environment, manufacturing, health and safety, supply chain management, management of corporate information and compliance and Code of Ethics as well as Financial Risk Management. The AC undertakes the responsibilities of the Board Risk Management Committee (“RMC”) and receives updates from the Company’s chief risk officer on the progress of the implementation of ERM. Name of interested person
SUNTORY GROUP
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Dealings in Securities of the Company The Company has issued an Internal Compliance Code on Securities Transaction to all Directors and employees of the Company, setting out a code of conduct on dealings in the Company’s shares by these persons. The code of conduct relates to, inter alia, insider trading prohibitions under the Securities and Futures Act, Cap. 289, the disclosure requirements of the SGX-ST and prohibitions on Directors and employees from dealing in the Company’s shares during the period commencing two weeks before the announcement of the Company’s quarterly results or one month before the announcement of the Company’s full year results, and ending
Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)
With the above in place, the Company has complied, and is committed to comply, with the Best Practices Guide issued by the SGX-ST. Interested Person Transactions The Company has adopted an internal policy in respect of any transaction with interested persons and has set out the procedures for review and approval of the Company’s interested person transactions, including transactions with Suntory Holdings Limited, Kotobuki Realty Company and its associates, which are covered by a Shareholders’ Mandate approved at each General Meeting. CPL’s disclosure according to Rule 907 of the SGX-ST Listing Manual in respect of interested person transactions for the financial year ended 30 September 2009 is stated in the following table:-
Aggregate value of all interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than $100,000)
2009 $’000
2008 $’000
2009 $’000
2008 $’000
–
–
1,767
853
INTERNAL AUDIT Principle 13 : The company should establish an internal audit function that is independent of the activities it audits. There are seven (7) staff in GIA department including the Vice President, Group Internal Audit. The GIA department reports directly to the chairman of the AC on audit matters, and to the CEO on administrative matters. The AC reviews GIA’s reports and its activities on a quarterly basis. The AC also approves the annual GIA plans and reviews its resources to ensure that GIA has the capabilities to adequately perform its functions. The AC is of the view that GIA is adequately resourced and has appropriate standing within the Group.
COMMUNICATION WITH SHAREHOLDERS Principle 14 : Companies should engage in regular, effective and fair communication with shareholders. The Company had adopted quarterly reporting since 2003. The Company currently holds a media and analysts briefing upon release of its half-year and full-year results. This briefing is simultaneously webcast to the public and all shareholders via the Company’s website. Quarterly results will be published through the SGXNET, news releases and the Company’s website. All information
on the Company’s new initiatives will be first disseminated via SGXNET followed by a news release, which will also be available on the website.
PROMOTING GREATER PARTICIPATION BY SHAREHOLDERS
The Company does not practice selective disclosure. Price sensitive information is first publicly released, either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Results and annual reports are announced or issued within the period prescribed by the SGX-ST and are available on the Company’s website.
Principle 15 : Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company.
The Company has a Corporate Affairs Department, which communicates with its investors on a regular basis and attends to their queries. All shareholders of the Company receive a copy of the annual report and notice of AGM. The notice of AGM is also advertised in newspapers and made available on the website. At AGMs, shareholders are given the opportunity to air their views and ask questions in connection with information stated in the annual report of the Company. The Chairman of each of the Board committees will be present and available to address questions at general meetings. The external auditors and legal advisors of the Company will also be present to assist the Directors in addressing any relevant queries by shareholders. Separate resolutions are proposed for each distinct issue at general meetings. All minutes of general meetings are available to Shareholders for inspection upon requests.
The Articles of the Company allow a shareholder of the Company to appoint one or two proxies to attend and vote at all general meetings on his/her behalf. The Company has not amended its Articles to provide for absentia voting methods, which requires elaborate and costly implementation of a fool-proof-system, because the need for such voting methods does not presently arise. Voting in absentia and by electronic mail may only be possible following careful study to ensure that integrity of the information and authentication of the identity of Shareholders through the web will not be compromised.
Christine Wong Company Secretary
CALENDAR OF FINANCIAL EVENTS Announcement of first quarter results Announcement of second quarter results Announcement of third quarter results End of financial year Preliminary announcement of full year results Despatch of Annual Report Annual General Meeting Books closure dates
13 February 2009 12 May 2009 14 August 2009 30 September 2009 25 November 2009 12 January 2010 28 January 2010 9 February 2010
Dividend Payment date Announcement of first quarter 2010 results Announcement of second quarter 2010 results Announcement of third quarter 2010 results End of financial year Preliminary announcement of full year results Annual General Meeting Proposed final dividend payout date
23 February 2010 February 2010 May 2010 August 2010 September 2010 November 2010 January 2011 February 2011
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Geared Up To Lead
Operations Review Health Supplements THAILAND Cerebos Thailand managed to achieve double digit growth despite being affected by the global recession. Breakthrough marketing initiatives and strong execution at all consumer touch points gave consumers more compelling reasons to continue taking BRAND’S®, and helped spur sales despite the tough economic situation. In particular, the ‘Science of Essence of Chicken’ campaign propelled the further growth of BRAND’S® Essence of Chicken and the BRAND’S® Gen Season II campaign received over 1,000 projects of science innovation and creative art from university students nationwide. There were more than 400,000 clicks to BRAND’S® website to view this campaign and five million votes via SMS and web from the general public. The campaign received recognition from the Marketing Association of Thailand and won the Gold Award for the Best Marketing Campaign of the Year. Our special campaign for the Mother’s Day Limited Edition BRAND’S® Golden
Bird’s Nest in August received overwhelming demand. In September, BRAND’S® Bird’s Nest launched a new improved formula with even more premium bird’s nest content and this was extremely well received. Another new product, the Veta 7 Berries Concentrate – with the addition of acai berry, strawberry and elderberry to the current blueberry, blackcurrant, cranberry, and chokeberry – was launched with very favourable market response. Veta Prune Concentrate “Girl Gang” campaign and the accompanying
marketing activation “Shine for Blythe” also generated a lot of excitement and sales growth. BRAND’S® tablets renewed its marketing activities and a new variant, Gingko Biloba with added Panax Ginseng was launched.
The Laem Chabang factory expansion was completed, enabling us to double production capacity for Essence of Chicken to cope with strong business growth. Subsequently the building of a second factory in Pinthong Industrial Estate was begun. Only 15 km from Laem Chabang, the second site is scheduled to be officially opened in 2010, and will house the production of BRAND’S® Bird’s Nest and Veta. Both factories are equipped with state ofthe-art manufacturing facilities and will boost the production capacity of Veta by 300% and Bird’s Nest by 200%. The factories have been designed to accommodate a BRAND’S® museum and visitor zone to accommodate consumer visits.
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campaign for BRAND’S® InnerShine Berry Essence with Grape Seed Extract made it the market leader in the oral beauty drink category.
TAIWAN ROC Despite the global economic downturn, we achieved strong growth and successfully sustained Cerebos Taiwan’s leadership position with dominant market share. Key business growth drivers included various highly effective initiatives in new marketing campaigns for both liquid and tablet health supplements. A new thematic BRAND’S® Essence of Chicken “Vitality” Campaign, featuring new brand ambassador Wang Lee-Hom, rejuvenated the brand among youths to drive overall category growth and boost total sales. We successfully leveraged on Wang Lee-Hom, a multi-talented and popular artiste who was voted “The person I most admire” and who also happens to be a loyal BRAND’S® consumer.
In another growth area, our BRAND’S® Sesamin with Schisandra Extract grew rapidly in the liver health protection tablet category through new Direct Response Advertising. The biggest gains came from BRAND’S® InnerShine Pre + Probiotic, a unique product in the gut health category. After acquiring the Health Food Certificate in January 2009, a unique marketing campaign boosted annual sales growth to a point where this product is now another flagship for Taiwan.
Targeting teenage consumers, the BRAND’S® Study Smart Essence of Chicken (EOC) was successfully launched to parents and students via events on-campus and trial programmes in high schools and intermediate schools island-wide. Cerebos Taiwan not only rebounded successfully in the children’s category, but also edged ahead as the dominant player in the Essence of Chicken segment. The powerful BRAND’S® Alpha campaign repositioned both liquid and tablet supplements in a new TV Commercial with sampling and premium programmes that helped to greatly increase total sales. In the nutritive drinks arena, the new campaign for BRAND’S® Xu Pei Clam Essence propelled it to category leadership while the new celebrity “Little S”
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MALAYSIA Notwithstanding the external circumstances, the year’s performance achieved a strong double digit growth representing a 26% increase over the previous financial year. To tap on the potential of the Malay market, we embarked on Malay-focused campaigns to expand BRAND’S® Essence of Chicken’s user base. With strong, integrated executions in both above
and below-the-line marketing, we were able to strengthen our engagement not only with the Malays, but with our loyal Chinese consumers as well. One of the major campaigns for the year was the nationwide BRAND’S® High Achievers’ Awards, where students who achieved outstanding results in their examinations were recognised by BRAND’S®. This annual campaign has been gaining popularity over the years and is much anticipated by both parents and students.
The launch of InnerShine Balance Quince Essence further affirmed our product innovation in this category. This exciting new launch has been supported with intergrated marketing and extensive sampling activities. The initial consumer response is encouraging. BRAND’S® Bird’s Nest continued to grow well in spite of stiff competition during the year. Sales during the Chinese New Year festivities were
encouraging as we continued to leverage on the ‘Elixir of Natural Beauty’ platform. For the second year running, BRAND’S® bagged “The Best Brands in Consumers Health Tonic” at the Asia Pacific Brand Laureate Awards 2008-2009. Dubbed as “The Grammy Awards for Branding”, the winners of the Awards were selected based on the criteria of brand strategy, brand culture, integrated brand communication, brand equity and brand performance.
One of the worthy achievements during the year was the market expansion of the Nutritive Drink range, which continued to make impressive inroads into the Malay consumer market. InnerShine is slowly emerging to become one of the mandatory beauty regimes of the beauty conscious Malay female. Strong engagement programmes building on InnerShine’s brand values were implemented.
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SINGAPORE It was a good year for Singapore. While retail dynamics continue to be challenging, trending has been positive with improved sales offtake and market share for the flagship BRAND’S® Essence of Chicken range and InnerShine Berry Essence. ‘Be Your Best’ was the overarching communication platform for the year and drew the brand closer to consumers through a series of interactive campaigns featuring television commercials aimed at engaging consumers with BRAND’S® Essence of Chicken and driving the benefits message through a series of mental performance-related questions. The ever popular annual event, BRAND’S® Sudoku Challenge, a battle among the region’s best players for the highly coveted BRAND’S® Sudoku Champion title was expanded to include a BRAND’S® Sudoku School Challenge to reach out to primary and secondary schools. The BRAND’S® Asia Pacific Sudoku Challenge 2009 drew close to 100,000 responses with participants from 7 Asian countries. A record number of entries were received, generated by our marketing initiatives to drive continued excitement and encourage regular consumption.
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In line with the “enviable natural beauty” platform and its premium quality positioning, BRAND’S® Bird’s Nest launched the nationwide “Gem In A Bottle” campaign in July. Demand for BRAND’S® InnerShine Berry Essence continues to grow. To keep this momentum and to gain a strong foothold in the Fruit Essence category, the BRAND’S® InnerShine Prune Essence was launched in September 2009 through an integrated thematic that included a TV commercial featuring the New Paper New Face 2008 winner and in-store chilled sampling. A new thematic campaign for BRAND’S® Essence of Chicken Tablets helped communicate its efficacy in assisting consumers with their daily mental and work challenges.
BRAND’S® once again made headlines for the following major awards this year: U Reader’s Digest – Asia’s Most Trusted Brand 2008 (Gold Award) U Guardian Best of Best Brands (BRAND’S®) U Guardian Health & Beauty Award in Health Category (BRAND’S® Essence of Chicken) U Watson’s Health and Beauty Award – Best Selling Mental Nourisher (BRAND’S® Essence of Chicken Tablet) U Watson’s Health and Beauty Award – Best Selling Liver Care Supplement (BRAND’S® Sesamin with Schisandra)
HONG KONG FY08/09 was a difficult year worsened by a negative GDP growth in the first half. However, our business performance has since recovered, while maintaining leadership in BRAND’S® Essence of Chicken and BRAND’S® Bird’s Nest. The “Essence of Chicken Study SmartTop Students Trial Programme” rolled out in the famous tutorial college, Ever Learning Educational Center, attracted many college students to consume BRAND’S® Essence of Chicken Study Smart daily and to compete for several Cerebos scholarship prizes. The best performer in the programme attained ten distinctions in his HKCEE public examination 2009. Together with others who attained many distinctions as well,
it was the ideal platform to communicate BRAND’S® product efficacy for achieving excellent results in examinations. Distribution of Premium Golden Bird’s Nest was extended to all Watson’s outlets, attracting many young female consumers. For the second time, Cerebos participated in the Hong Kong Trade Fair event which attracted over 2.3 million people, or onethird of Hong Kong’s population. The HK$1 trial bottle of Essence of Chicken generated very positive publicity. BRAND’S® received the outstanding marketing award from Yahoo – “Yahoo! Emotive Brand Award 2008-2009 in Health Care Category” for the third consecutive year.
PEOPLE’S REPUBLIC OF CHINA (PRC) FY08/09 proved to be a tumultuous year for the food and health supplement industry, especially in the wake of the Melamine issue and worldwide negative economic conditions at the beginning of the financial year. Economic challenges posed in the distribution level also affected sales performance. As a result the year ended with a decline in sales versus last year. Despite the difficulties on the macro environment, we succeeded in shifting reliance from modern trade by developing new channels. Through consumer education, brand building and marketing established a more sustainable foundation. In spite of budget constraints, we were able to enlarge the consumer base and deepen penetration in key cities. To balance out its reliance on modern
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INDONESIA Indonesia’s business continued its double-digit growth, mainly driven by the flagship BRAND’S® Essence of Chicken while the BRAND’S® Herbal range continued to strengthen. Indonesia re-commenced media investment via two major campaigns for BRAND’S® Essence of Chicken – “Lebih Cerdas, Lebih Cemerlang” (Smarter, Brighter) and “Jadi Juara” (Become A Winner). Above-the-line support (print, radio and TV built-ins) and in-store visibility saw improved consumer offtake for the range in total.
trade, Cerebos refocused by leveraging on new channels, an initiative that began two years ago. The new channels not only gave us the opportunity to conduct consumer education but also laid the foundation for more self consumption opportunities in the future. We will be scouting for more such opportunities – where consumer education can be an integral part of the marketing operation.
The website remains the most important marketing tool and efforts will focus on improving it further and increasing consumer education on product efficacy.
BRAND’S® EXPORTS BRAND’S® faced an extremely challenging year in FY08/09 when the Essence of Chicken range was affected by the USA regulatory compliance issues. BRAND’S® Essence of Chicken is expected to return to USA in the next fiscal year after all regulatory issues are resolved.
During the year we worked with the relevant authorities within the Ministry of Education in Shanghai to promote major public events. We were commended by the authorities for good effort in one of these events which engaged students and teachers in creative drama.
JAPAN Our strategy to build up BRAND’S® image and leverage on research findings is set to become the cornerstone for Cerebos China’s overall strategy.
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BRAND’S® Bird’s Nest registered high product satisfaction among its consumers for quality and performance, and the strategic target is to further increase sales by acquisition of customers through a monthly replenishment system. Sales for BRAND’S® Essence of Chicken continues to grow, led by sales in Thai food stores.
In spite of high unemployment and reduced spending due to the global recession, turnover for Liquid Health Supplements in BRAND’S® Japan improved strongly.
The global financial crisis dampened consumer sentiments throughout our key markets. Sales declined in these affected areas, with advertising investment at a moderate level. But new products are being planned for launch to revive the business and offset the sales shortfall.
Operations Review Coffee contemporary feel and this has been well received by all customers. Mocopan also won two medals at the Golden Bean Roasters Competition including a gold medal in the milk based coffees category. The competition gives recognition to Australia’s best coffee roasters from an independent forum of expert industry and consumer judges.
The Coffee business continued its strong growth momentum in FY08/09. We are making strong progress in achieving our strategic goals in building a significant coffee presence in Australasia. This has been supported by a number of initiatives including new product launches, continued investment in our brands and an acquisition.
AUSTRALIA Riva Coffee faced strong competition within the Australian retail channel in FY08/09 and its performance remains steady. Premium freeze dried and flavoured coffee are the fastest growing segments within supermarkets. Riva launched three SKU’s into the flavoured coffee segment in September 2009 and early signs are very positive. The launch of these products and continued investment throughout 2009/2010 should result in share growth. In the Foodservice channel, Mocopan Fresh Coffee continued the strong trend of sales growth achieved last year. This growth came from its major corporate partners including McDonald’s and BP together with new business won over the past 12 months. The profit contribution has also improved significantly, driven by both sales growth and operational efficiencies.
The business also entered into a commercial arrangement to become the exclusive distributor (with an equity option) of OTTO – an innovative designer stovetop espresso unit.
NEW ZEALAND The Instant Coffee business had a robust year delivering strong growth. The major product launch for the New Zealand business in 2009 was Gregg’s Café Gold Flavoured Instant Coffee. After only six months in the market the brand has captured 10% share of the segment and Gregg’s Café Gold is now a NZ$3 million brand in its own right. Cerebos continues to produce award winning coffee taking out 2 golds, 6 silvers and 1 bronze medal at the 2009 New Zealand Coffee Awards.
Cerebos also launched an independent business – Espresso Mechanics – to sell and service coffee machines to the Foodservice channel on a national basis. This new venture was launched in the market in July 2009 and Espresso Mechanics has won many new customers within a short period of time.
Caffe L’affare launched a number of new products including Gusto Fairtrade Organic Coffee and a range of three Fairtrade Hot Chocolate Products. The Foodservice business enjoyed steady sales growth despite a general slowdown in economic activity in the hospitality sector.
In February 2009, we formed an exciting partnership with Toby Smith, the founder of Toby’s Estate Coffees, the leading specialty coffee roaster in New South Wales, Australia. Toby’s Estate was one of the first roasters in Australia to become registered Fair Trade and Organic and is known for its focus on sustainability. Cerebos acquired a 60% interest in the business and the partnership is based on a joint vision of bringing boutique coffees and teas to new geographies in Australia and Asia with a commitment to sustainable coffee sourcing.
Coffee margins have been under significant pressure largely due to sharp and unfavourable exchange rate movements. Price recovery action was taken to assist in mitigating against the impact of input cost increases.
The Mocopan brand was relaunched throughout 2009 with a more
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Operations Review Sauces However, the Singapore market continued to grow through the twin strategies of new product launches of concentrated soups range and new user recruitment through sustained advertising to the Muslim community. Business revival plans for Malaysia and entry plans into Indonesia were executed successfully to lay the foundation for future growth. Coupled with more marketing investment in the key market of Singapore, more new products are being developed to improve profitability and to drive growth in the next fiscal year.
ASIAN SAUCES ASIAN HOME GOURMET Despite the global financial crisis and significant forex loss due to currency volatility, Asian Home Gourmet managed to improve profits against last fiscal year primarily through business expansion in USA and more innovative product launches in selected markets. A breakthrough into the US mainstream market was achieved by the entry of Asian Home Gourmet products into a high end chain of 300 supermarkets. Continuous marketing investment in Europe, Asia and Australasia led to growing brand awareness internationally. Twenty-one new products were launched worldwide, including a new range of quick meal kits which received excellent response in New Zealand and which will be rolled out to other selected markets in the near future.
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In the coming fiscal year, Asian Home Gourmet has identified key markets in Asia to grow the current business significantly in line with Group direction to have a stronger presence in Asia.
WOH HUP FY08/09 saw profit margins improve with sales maintained at last year’s level. The worldwide economic slowdown and escalating costs adversely impacted our export business to Europe.
Operations Review Sauces & Others
WESTERN SAUCES Cerebos’ brands achieved steady growth despite trading conditions remaining challenging within Australian and New Zealand supermarkets. The global financial crisis has resulted in some changes in consumer behaviour with more people eating at home and a growth in value offerings, including private labels.
AUSTRALIA In Australia, Gravox has performed very strongly with the brand achieving its highest ever share in Gravies after a new advertising campaign in May-August 2009. We expect this solid growth to continue throughout 2010 with some strong plans already in place. Fountain sauces faced growing competition and with higher investment levels the brand finished the year in growth. FY2010 is shaping up to be a very strong year for the brand after the appointment of Julie Goodwin, winner of Australian Masterchef, as the new brand ambassador. Masterchef was the highest rating television programme on Australian TV since 2000. A significant advertising campaign and new product launches throughout 2010 should deliver a strong performance.
by Gravox, Saxa, and Fountain within this channel. Sales growth and ongoing profit improvement will again be the focus in 2010. Strong customer partnerships have been forged within this channel.
NEW ZEALAND In New Zealand Gregg’s Herbs & Spices had another good year delivering double digit growth, strengthening the leadership position in the category. The “Cook Freestyle” advertising campaign has performed very strongly. The Whitlock’s brand grew significantly on the back of strong sauce sales and the launch of the Whitlock’s condiments range. The Essential Cuisine brand (acquired in 2008) was our platform to enter the chilled market. The brand enjoyed a year of strong growth with distribution gains, new packaging for the entire range and the launch of six new products. A new manufacturing plant in Auckland was successfully commissioned and the plant has now received export certification. An independent survey of New Zealand retail customers ranked our sales force
third for overall customer satisfaction. This is the seventh consecutive year of improved performance.
Dominion Salt Dominion Salt again set a record profit result eclipsing the record set last year. Sales of pharmaceutical salt continued to grow as the company kept winning new customers. The agricultural sector generally performed well with some softening apparent towards the end of the year. Profits were assisted by a favourable exchange rate with a weakening New Zealand dollar improving the margins on exported salt.
Salpak Salpak maintained its strong market leadership position with a focus on gourmet salt products such as flaky salt, rock salt and salt grinders. Marketing activity continued to communicate the benefits of iodised salt and this segment also enjoyed strong growth.
Foodservice has also enjoyed strong top line growth in 2009 and this has been led
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Satisfied Customers – Our Ultimate Goal
Strategic Investments Enterprise Risk Management Corporate-Wide Implementation Since the corporate-wide implementation of the Enterprise Risk Management (ERM) strategic initiative in 2004, Cerebos has continued to strengthen its risk management practice. ERM remains one of the key agenda items in all Local Board and Senior Management meetings. Cerebos Management continues to act proactively to manage potential issues emerging from the ever-changing business environment.
Regulatory Environment On the Regulatory Environment front, we continue to ensure good governance and compliance of our products to the regulatory requirements. Additionally we keep abreast of regulatory developments and trends globally to remain at the forefront of our industry.
Management of Corporate Information and Compliance to Code of Ethics We continue to review and improve our corporate policies and procedures – to avoid misuse or poor handling of confidential information and to prevent fraud. Besides an independent “whistle blowing” programme to help improve corporate transparency, continuous efforts are taken by the Company’s senior management and human resource department to inculcate in our employees an understanding and compliance with Cerebos’ Code of Ethics.
Corporate and Brand Image and Reputation To uphold Corporate and Brand Image and Reputation we continue to ensure improvement of overall control and established measures on product safety, quality assurance and efficacy. Key initiatives, such as regular updating and testing of crisis management processes, have been implemented to further safeguard our image, brand and reputation, and enable the Company to address any potential issues.
Business Development In line with Cerebos’ vision to enhance shareholder value, the Group recognises that any new business initiative, eg. new products, mergers and acquisitions etc. will have both opportunities and risks. In order to minimise the risk in any new venture, a process to evaluate and assess new business opportunities has been put in place together with close monitoring to measure and ensure that both financial and operating milestones and targets are achieved. Any new business opportunities will need to be in line with the Group’s core businesses.
made significant progress in expanding the capacity of its factories in Thailand, Malaysia and its closure factory in the Philippines. This investment demonstrates Cerebos’ commitment to secure the supply of Cerebos’s BRAND’S® products and to improve Cerebos’ efficiency in supply chain management for its BRAND’S® business in Asia.
Manufacturing Health and Safety We continue to improve control measures to enhance our manufacturing environment for the benefit of employees and consumers in line with health and safety requirements. We continuously streamline our manufacturing processes and take measures to minimise business interruption and manufacturing down time.
Supply Chain Management We are closely monitoring the implementation of our sourcing strategies to secure the continuous supplies of raw materials which meet our requirements. In 2009, Cerebos management has
Moving ahead we will continue to monitor and assess both the implementation of the ERM plans as well as possible new business risks on a regular basis. This process allows us to arrive at periodic checkpoints to ensure that we are effectively addressing the identified potential risks. Overall, the Board’s Risk Management Committee (whose role is currently performed by the Audit Committee) provides the guidance and general supervision of the ERM activities recommended by the Risk Management Working Committee headed by the Chief Risk Officer (currently performed by the President & CEO). The Group Internal Audit Department reviews the effectiveness of the risk management process and ensures internal controls are in place.
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Strategic Investments Mid-Term Plan Strategic initiatives with Atomic Coffee Roasters and Caffe L’Affare, a specialty brand in New Zealand, have strengthened our foothold in the premium gourmet coffee market. Robert Harris café chain has gone through reformation for new brand image which shows our commitment as the market leader.
Clearly Defined Direction and Roadmap to Double-Digit Growth Cerebos commenced the first year of its three-year strategic plan in 2007 with clear objectives to focus on strengthening consumer loyalty in our core brands and products and to achieve more aggressive growth than previous MTP. In FY08/09 significant investments have been continued for branding, product innovation and in creating the right consumer experience with our brands and products. A number of our core brands continued to score impressive achievements, which reaffirm the strategies and demonstrate the strong foundations. Entering the third year of our MTP, we are confident that the achievement of previous years together with the future direction, strategies and planned roadmap will help us achieve our goals. We concurrently continue to focus on building our leadership and core competencies and on making Cerebos’ organisation faster, more responsive and focused on creating value for all stakeholders.
BRAND’S® Health Supplements BRAND’S® is continuously voted as Asia’s Most Trusted Brand by Reader’s Digest in the vitamins and health supplements category. This demonstrates consistent engagement with our consumers and the result of company-wide efforts to enhance our product and service quality. Cerebos continues to sustain its CRM initiatives to consolidate our understanding of consumers’ needs and build customer loyalty.
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We continue to focus on our strategic initiatives which leverages on strong brand awareness and differentiated consumer proposition to increase penetration and relevancy of our products. Our consumer campaigns in Thailand and Malaysia have been awarded by the respective authorities for its authenticity and communication creation. Cerebos will continue to make investments in R&D to develop based health supplements, better and new products to the demanding lifestyles of consumers.
strategic scienceoffering support today’s
Coffee The encouraging performance and promising developments in our coffee business in the first year of our MTP is gained through our continued investment in brand building and product innovation in line with consumer trends. Riva continues to emerge as a stronger category player with its refreshing marketing initiatives, creating the necessary excitement and brand experience among the young and trendy coffee drinkers.
In food service, Cerebos continue to invest in Mocopan and its expresso related services to ensure stronger relationships with its trade partners and higher consumer confidence.
Sauces In western style sauces, Cerebos continue to strengthen its major brands Fountain and Gravox. We have continued our focus on innovative packaging and line extensions, as part of our continuous efforts to increase the relevancy of our products to the target consumers. Further expansion into new formats and flavors are planned for catering specific opportunities in the market. For our Asian sauces, Cerebos continued with its strategies of geographical expansion into new territories and continued brand building in selected markets. Woh Hup products aim to get to the top shelves in Singapore, Malaysia and Indonesia. Asian Home Gourmet continues to be distributed in high-end supermarket chains in various markets worldwide. With expanded exposure in the North America, Europe and Australasia, and traditional markets in Asia, Asian Home Gourmet is now a truly international brand.
Strategic Investments Research & Development Publication of Clinical Findings on Product Efficacy for BRAND’S® Blackcurrant and BRAND’S® Sesamin with Schisandra Our collaborative research work with Dr Akihiro Yagi from Kwansei Gakuin University, to study the effectiveness of a supplement containing lutein, zeaxanthin and blackcurrant extract in relieving eye fatigue, has resulted in a joint publication this
year.
The
clinical
findings
on
BRAND’S® Blackcurrant with Lutein and Zeaxanthin is a testimonial of product At Cerebos, Research and Development (R&D) is a key driver for sustainable growth. Here, winning the assurance and confidence of consumers goes beyond banking on traditional beliefs to actually building a strong scientific basis for product efficacy, quality and safety. Our dedication to product innovation and improvement is matched by our continuous investment in R&D, to deliver safe and efficacious health products which are scientifically proven to work. To this end, we have actively sought and collaborated with renowned scientists at various universities and institutions around the world, in addition to harnessing in-house expertise in brain research to lead in R&D.
basic research to test and substantiate the development of BRAND’S® health supplements. Two such technologies already in place include the use of non-invasive EEG measurement in evaluating a health food or supplement’s effect on brain function, and the use of sensory science and senso-metrics technology to assess consumers’ sensory or taste preferences for health foods and supplements.
efficacy for consumers. A second publication on the research findings by Dr Chen Jiun-Rong from Taipei Medical University, Taiwan, showed the beneficial effects on liver function for the combination of BRAND’S® Sesamin with Schisandra.
With a focus and investment in R&D that is unmatched in the industry, we remain totally committed to developing products using a science-based approach to satisfy consumers’ needs.
Expansion of R&D Technologies to Enhance Brain Research Plans are underway to expand and enhance Cerebos’ in-house research capabilities, especially in employing state-of-the-art technologies for engaging in further brain research, and in further applied and
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Health Food Certification in Taiwan – Official Approval of Claim for Physiological Effects on Human Health In Taiwan, the issuance of health food certificates for products by the authority requires very comprehensive scientific and technical research and documentation. These health food certificates then bear the official approval of claim for their physiological effects on the human health. To date, through concerted efforts with Cerebos Taiwan, we have received Health Food Certificates for the various benefits of four of our products. The beneficial effects of a combination of sesamin and schisandra on liver function based on Dr Chen Jiun-Rong’s research findings were instrumental in Cerebos Taiwan’s successful application
for certification of BRAND’S® Sesamin with Schisandrin Extract as a health food in 2006. Most recently, BRAND’S® InnerShine Pre + Probiotic also obtained certification and approval for its beneficial effect to gut health. More than a three-fold increase in sales was observed with BRAND’S® InnerShine Pre + Probiotic upon its acquisition of a Health Food Certificate in Taiwan. This significant and sustainable growth in sales is notably a direct evidence of consumers’ confidence in products well backed by scientific proof. Our continuous drive for research innovation and excellence has recently seen some breakthrough findings that may potentially be patentable. Further investigations and tests are still underway to confirm its potential.
ASEAN Economic Community Regulatory Harmonisation for Health Supplements Cerebos continues its active contribution towards the vision and development of the ASEAN Economic Community, even as the ASEAN Consultative Committee for Standards and Quality Traditional Medicines and Health Supplements Product Working Group (TMHS PWG) continued to deliberate and draft the ASEAN harmonisation regulations at its 12th meeting. Taking a leading role in the ASEAN Alliance of Health Supplement Associations, Cerebos provides the Scientific and Regulatory expertise and input to both the ASEAN TMHS PWG Scientific Committee (ATSC) and to the ASEAN Common Technical Requirements (ACTR). Cerebos remains poised at the forefront of developments that will shape and influence the future of the industry in ASEAN.
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Strategic Investments Corporate Social Responsibility Good Corporate Social Responsibility (CSR) is a fundamental business principle for Cerebos. It reflects our efforts to achieve sustainable outcomes by committing to good business practices and standards, and our belief that branding and reputation are enhanced by good CSR practices. Value creation for all stakeholders, with an eye on the communities where we operate, is now an integral part of our business strategy. We continue to leverage our CSR contributions through the CSR concept of the “triple bottom line”. This encompasses economic value (bottom line), social value (charity and community involvement including worker welfare and volunteerism), and environmental value (best practices and investments in enviro-friendly practices). We have rolled out our CSR policy and all subsidiaries now understand and strongly support our CSR direction. The year saw a good range of CSR initiatives and good staff participation as we focused on Healthcare, Education, Community Support and Sports, while continuing to encourage Work-Life balance among employees. Acknowledgements for our excellent span of charitable endeavours – from product sponsorship and cash donations to charity fund-raising events – strongly enhanced Cerebos’ good reputation and stature.
Education Here is a brief cross-section of the Group’s CSR initiatives carried out during the year:
Healthcare Cerebos continues its strong support for community healthcare activities, especially in spreading the message of proactive health maintenance through regular exercise, a balanced diet and health supplements where appropriate. We also continue to encourage healthy lifestyles amongst our staff via the regional ACTIVE (All Companies Together in Various Exercises) Day activities and year-long work-life balance initiatives, in line with the Singapore Ministry of Health’s National Healthy Lifestyle Campaign. In Singapore Cerebos won the prestigious Platinum Award at the Singapore HEALTH Awards which recognises workplaces with excellent workplace health programmes. The Platinum Award is only awarded to companies with three consecutive years of Gold award status. Cerebos Awards Foundation was officially set up to hand out research funds to Thai scientists in the area of health and nutrition. Cerebos Thailand has committed to sponsor three research projects every year.
In Singapore, Cerebos was acknowledged by the Singapore Compact for CSR in its inaugural publication launched by Minister for Manpower Mr Gan Kim Yong, entitled: “CSR for Sustainability and Success”. This publication chronicles the experiences of 10 companies with exemplary CSR practices and features Cerebos as the first case-study. Cerebos continues to support and provide advice on the curriculum for the Singapore Polytechnic Diploma in Nutrition, Health & Wellness which was approved by the Ministry of Education.
The BRAND’S® Asia Pacific Sudoku Challenge was again held in Singapore and a charity segment helped raise $10,000 for the Childrens’ Cancer Foundation. Other longstanding programmes in Thailand include the Volunteer Doctor Foundation, the BRAND’S® Summer
55
recess time. This includes funds raised by staff running in the Singapore Marathon. Our fourth consecutive year as Gold sponsor for the ChildAid concert in Singapore helped raise much needed funds for the STSPMF and the Budding Artists Fund. We were recognized by the The National Arts Council with the Associate of the Arts Award. Cerebos ANZ has continued to support Habitat for Humanity in both Australia and New Zealand in their unchanging mission of Building Homes, Building Community, Building Hope and helped families to achieve the happiness of home ownership and security in their lives. Camp (in its 20th year) which helped over 40,000 students prepare for university entrance examinations as well as BRAND’S® International Crossword Competition (in its 24th year) which continues to promote better English. In the PRC, we continue to sponsor programmes to stimulate young minds, focused on helping stressed-out students prepare for their university entrance examinations.
Community Support During the year, we continued the BRAND’S® Young Blood programme in Thailand, encouraging youths to donate blood. This community programme drew strong public support. In Taiwan we donated BRAND’S® Essence of Chicken products regularly to help the homeless elderly treated in city hospitals. In Malaysia, we marked the third year of support for the welfare of the less fortunate through our “A Gift of Love”
56
community project, working with the Beautiful Gates Foundation – a home for people with disabilities – to provide training to young adults with disabilities to equip them with basic skills that can help them gain meaningful employment and be independent. In Singapore we raised over $177,000 for The Straits Times School Pocket Money Fund (STSPMF) to help needy school children so that they won’t go hungry at
In Australia we are also committed to reducing packaging waste that impacts the environment. We continue to support the principles of the National Packaging Covenant and have been a signatory since mid-2000. In New Zealand, our East Tamaki Factory continues its goal of achieving health, safety, and environmental legal compliance, reducing environmental risk, increasing resource use efficiency (i.e. water, waste, energy, and raw materials), improving status with stakeholders by demonstrating environmental commitment.
In addition to the financial support for Habitat for Humanity in New Zealand and in Australia, two other activities occurred this year. Cerebos ANZ sent two employees to assist in a house-building project in Jimma, Ethiopia. Jimma is one of the main coffee growing regions in Ethiopia from which we source much of our Fair Trade coffee. Another highlight was being part of the special Woman’s Build in Auckland where Cerebos sent nine women for a day to help build a whole house in just 5 days. In ANZ, the Equal Opportunity for Women in the Workplace Agency (EOWA) recognised that our business is in line with the Equal Opportunity for Women in the Workplace Act 1999. Cerebos ANZ also placed strategic value on workplace Equal Opportunity as it enhances the sustainability of our business in the long term. Cerebos ANZ continued to address hunger through donations of 61,922 kg
of food and beverages to Foodbank. Working in partnership with Foodbank, we helped support the 60,000 people in Australia who would otherwise have gone hungry without access to food. This was particularly the case this year with the bush fires disaster in Victoria.
Environmental Management Cerebos continues to do its part by ensuring its manufacturing operations conform to ISO 14001 standards. In Australia we are committed to saving water. As one of the top 300 water users in New South Wales, the Cerebos Seven Hills factory site has worked very closely with the Department of Utilities, Energy and Sustainability (DUES) to reduce our usage and increase recycling of this limited resource. Ongoing initiatives include a staff awareness programme, improved liquid waste handling processes, reduced-flow toilet systems, and trial of waterless bottle conveyor lubrication.
In Asia, we are on track for all our operations to be certified OHSAS 18001 (Occupational Health and Safety Assessment System). While we remain committed to good environmental management, we recognise that much more can be done and we will persevere. Overall and across all our subsidiaries, Cerebos continues to receive commendations and encouragement from government ministries and welfare organisations acknowledging our good efforts in CSR. We intend to invest further in a sustainable future for all our stakeholders and aim to grow with the communities where we operate.
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Strategic Investments Human Resource Management Cerebos Employer Value Proposition
E3 = Engaged x Effective x Efficient
Our employees are our Ambassadors! They stand for a contemporary, innovative and trusted company that grows with the community. They project our brands and reach out to people so that they can enjoy their lifestyles. Their passion and drive for excellence will excite our customers. They deliver results. Employees are undoubtedly one of Cerebos’ key forces and Critical Success Factors. We will continue to attract, develop, motivate and retain quality employees, and build an engaged, efficient and effective workforce.
Financial
What do our Customer expect and value?
U Competency-Based Recruitment & Selection U Valued Added Learning & Growth U Retain & Manage Talent U Performance Driven Remuneration
Effective leadership
HR Process/ Operations To satisfy our Customers, what Processes must we excel at?
HR Strategies
The HR team developed these key HR strategies towards achieving our Vision and Employer Value Proposition, and business objectives:
E3 workforce
How does HR Contribute to business success?
Customer
Leadership development
Competency based recruitment & selection
Enhanced staff capabilities
Competitive compensation & benefits
Effective performance management
Alignment & communication of HR practices
Value Added learning & growth opportunities
We have conducted our first Employee Engagement Survey three years ago and a 3-year HR blueprint was drawn to respond to our findings, working in tandem with our regional markets to spearhead various HR initiatives.
U Quality Work-Life 1. I am motivated to do more than normally required to deliver results.
51 60 66 73 38 55 71 38 60 71 72 64 73 44 58 0 72
Overall region 2006
58
2. I am clear about my organisation’s business direction and objectives. 3. My organisation executes our strategies in an aligned and systematic manner.
53
Overall region 2009
Achieve Accelerated & Sustainable business growth through our people
4. My organisation is passionate delivering high performance.
about
5. My immediate supervisor gives me the support I need to succeed. 6. I know what is expected of me at work. 7. I have developed positive relationships with my customers within the organisation. 8. There are practices and programmes at work to enable me to achieve a quality work-life. 9. I think my organisation is doing enough to be socially responsible.
Retain & manage talent
Conducive work environment
Foster teamwork & support Quality Work-life
Performance driven remuneration
Quality Work-life
Some FY08/09 Highlights U Our FY08/09 Employee Engagement Survey shows an improvement trend in all our employee engagement dimensions in the region. U Our senior management staff completed the Leadership Development Programme through the rigorous process of action learning. This programme will be cascaded to the next levels of leaders commencing their development journey in the new financial year. U We implemented the Competency Based Interview approach in our recruitment and selection process. All hiring supervisors and managers are consistently being trained to use this method effectively.
U For the 8th consecutive year, our Cerebos Ambassadors, driven by team spirit and compassion, gave their all in the Annual 2-day Cerebos Charity Sales, held every September to raise funds for our adopted charity – The Straits Times School Pocket Money Fund. This year the steadfast spirit of Cerebos paid off, with a 64% increase in funds raised over last year’s Charity Sales.
Excellent Work-life and Meaningful Community Involvement, CSR Cerebos style It has been Cerebos’ unwavering commitment to build CSR through employees’ community involvement. For the past 7 years, Cerebos has been successful in implementing the “Charity
Points” programme, where employee attendance and participation in sports, fitness and work-life activities are credited as “Charity Points”. Cerebos converts each “Charity Points” into a $5 donation to STSPMF. For participation in Marathons, Cerebos donated $100 for every kilometer completed.
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Strategic Investments Customer Relationship Management Connecting with Consumers in a Downturn The extremely challenging economic environment in fiscal 2009 was unprecedented but offered many opportunities for BRAND’S® business to tap more into our Customer Relationship Management (CRM) investment which started in 2002. Consumers had concerns about job security, monetary value of their assets and investments and were very cautious on many aspects of their expenditure. Regular and loyal customers of BRAND’S® products expected a lot more from us and their loyalty to BRAND’S® were constantly attacked by other companies offering deep price cuts and other freebies. In spite of all these, we increased market shares for flagship BRAND’S® Essence of Chicken range in all markets and grew our regional customer database to 1.54 million, versus 1.2 million in the prior
The web self-serve site in Taiwan enables customer to engage with BRAND’S® when and where they want
year. We made closer connections with about 280,000 brand advocates who, over the years have demonstrated their active interest in what BRAND’S® do and say. They are also the first to tell us
if we did not get something right. Their unwavering support in all seasons is testament to the relationship that we have established with them through greater affinity with BRAND’S®.
Reaching out to Singapore and Malaysia bloggers at the first ever BRAND’S® Blogger Challenge
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Building Superior Consumer Understanding Through our CRM initiatives, BRAND’S® continue to engage our loyal consumers in the six key markets namely Thailand, Taiwan, Hong Kong, China, Malaysia and Singapore, retaining them and growing their annual expenditure on health and beauty supplements with us. Besides gaining fresh insights through the use of advanced data analytics, a CRM capability which BRAND’S® is proud to possess, we also conducted more than 50 consumer and market research studies and invested more than $2.5 million to sharpen our understanding of the consumers. This has helped BRAND’S® business to identify market opportunities and weather the turbulent economic climate.
BRAND’S® Club Fresh and Fun Day in HuaHin – strengthens and builds strong relationship with key customers
Relevance and Differentiation BRAND’S® celebrates its 175th anniversary in 2010, a milestone which few companies have achieved. From a modest beginning of a single product – BRAND’S® Essence of Chicken – to a portfolio of scientific, evidence-based offerings designed to help consumers look, feel and perform at their best everyday requires BRAND’S® to stay relevant to consumers changing lifestyles and be different from the countless me-too offerings in the marketplace. Our brand heritage of trust and constant investment in scientific research set us apart from competition. Our CRM and branding focus ensure we maintain relevance in a fast changing world.
With the uncovering of fresh consumer insight, the sales of BRAND’S® Innershine Berry Essence with Grapeseed Extract in Taiwan was further accelerated
This is the foundation to sustaining accelerated business growth for BRAND’S® and creating value for our
The success of BRAND’S® Golden Bird’s Nest in Thailand despite tough market conditions is another benefit of superior consumer understanding translated into compelling customer proposition
customers and shareholders.
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Product Listings – Health Supplements LIQUID HEALTH SUPPLEMENTS
TABLET HEALTH SUPPLEMENTS
Plain Essence Of Chicken
Wellness Range
BRAND’S® Essence of Chicken BRAND’S® Essence of Chicken Fine Taste
For Brain BRAND’S® Essence of Chicken with Ginkgo Biloba BRAND’S® Essence of Chicken with Ginkgo Biloba + Panax Ginseng BRAND’S® Essence of Chicken with Vitamin B Complex + Iron
Herbal Essence Of Chicken BRAND’S® Essence of Chicken with Cordyceps BRAND’S® Essence of Chicken with American Ginseng BRAND’S® Essence of Chicken with Tangkwei BRAND’S® Essence of Chicken with 4 Herbs BRAND’S® Essence of Chicken with Lingzhi BRAND’S® Essence of Chicken with Agaricus Blazei Muril and Lingzhi BRAND’S® Essence of Chicken with Lingzhi Spores BRAND’S® Essence of Chicken Study Smart with Lycium
Essence Of Chicken For Children BRAND’S® AlphaMynd with Vitamin B Complex BRAND’S® AlphaMynd with Vitamin B Complex (Chocolate Flavour) BRAND’S® AlphaMynd with Lycium BRAND’S® AlphaMynd with Honey BRAND’S® AlphaMynd with DHA (Banana Flavour)
Bird’s Nest Range BRAND’S® Bird’s Nest with Rock Sugar BRAND’S® Bird’s Nest with American Ginseng and Rock Sugar BRAND’S® Bird’s Nest with Collagen BRAND’S® Bird’s Nest with Manuka Honey BRAND’S® Bird’s Nest Sugar Free BRAND’S® Bird’s Nest with American Ginseng Sugar Free BRAND’S® Bird’s Nest with Collagen Sugar Free BRAND’S® Bird’s Nest with Collagen with Nano CoQ10 Sugar Free BRAND’S® Premium Golden Bird’s Nest BRAND’S® Royal Superior Bird’s Nest with Rock Sugar BRAND’S® Royal Superior Bird’s Nest Sugar Free
XU PEI (
®)
BRAND’S®
Xu Pei Clam Essence BRAND’S® VETA Berry Essence BRAND’S® VETA Prune Essence BRAND’S® VETA Balance
HUA TUO (
®)
HUA TUO® Essence of Chicken with 4 Herbs HUA TUO® Essence of Chicken with 10 Herbs HUA TUO® Essence of Chicken with Cordyceps HUA TUO® Essence of Chicken with Ginseng & Ganoderma Extract
InnerShine BRAND’S® InnerShine Prune Essence BRAND’S® InnerShine Berry Essence BRAND’S® InnerShine Berry Essence with Grape Seed Extract
For Bones And Joints BRAND’S® Calcium + Isoflavone with Essence of Chicken BRAND’S® Calcium 600 + Isoflavone with Essence of Chicken BRAND’S® Calcium Plus BRAND’S® Glucosamine with Essence of Chicken For Cardio BRAND’S® Lecithin with Essence of Chicken BRAND’S® Omega 3 with Essence of Chicken For Liver BRAND’S® Sesamin with Schisandra Extract For Well-being BRAND’S® Evening Primose Oil with Essence of Chicken BRAND’S® Vitamin C Plus For Eye BRAND’S® Blackcurrant Anthocyanins with Lutein
InnerShine Range For Weight Management BRAND’S® InnerShine Capsaicin + Green Tea Extract with Essence of Chicken (added with HCA) For Skin Beauty BRAND’S® InnerShine Grape Seed Extract with Essence of Chicken BRAND’S® InnerShine Grape Seed Extract with Selenium BRAND’S® InnerShine Sesamin with Royal Jelly BRAND’S® InnerShine Collagen with Lycopene BRAND’S® InnerShine Pre + Probiotics
Alpha® Range For Children - Growth & Development BRAND’S® AlphaVision Bilberry with Vitamin A and Zinc (Blueberry Flavour) BRAND’S® AlphaVision Bilberry with Vitamin A and Zinc (Apple Flavour) BRAND’S® AlphaMynd DHA + Taurine (Orange Flavour) BRAND’S® AlphaShield Chewable C Double Action (Fruity Flavour) BRAND’S® AlphaTank Calcium Grow (Strawberry Flavour) BRAND’S® AlphaTank Multi-Vitamins & Minerals (Peach Flavour)
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Product Listings – Coffee & Sauces COFFEE
SAUCES
Fresh Coffee
Western Sauces
Salt
Atomic Coffee Roasters Barista@Home Fresh Coffee Bruno Rossi Roast & Ground Coffee Caffe L’affare Civo Roast & Ground Coffee Robert Harris Roast & Ground Coffee Mocopan Roast & Ground Coffee ORB Roast & Ground Coffee
Sauces & Gravies
Cerebos Salt Crown Salt Gregg’s Salt Kooka Salt Mermaid Salt Pacific Salt Saxa Low (Sodium) Salt Saxa Table Salt Saxa Cooking Salt Saxa Iodized Salt Saxa Sea Salt Rock Crystals Saxa Gourmet Salt Saxa Seasoned Salt
Instant Coffee Gregg’s In Room Instant Coffee Sachets Gregg’s Instant Coffee Gregg’s Cafe Gold Freeze Dried Gregg’s Granulated Gregg’s Powdered Gregg’s In Room Freeze Dried Coffee Sachets Robert Harris Freeze Dried Coffee Robert Harris In Room Instant Coffee Sachets Riva Gold Freeze Dried Coffee Riva Granulated Coffee Riva Arôme Premium Freeze Dried Riva Espresso Premium Freeze Dried Riva Decaffeinated Premium Freeze Dried Special Blend Instant Coffee
Fountain Barbecue Sauces Fountain Squeezie Sauces Fountain Tomato Sauces Fountain Variety Sauces Fountain Marinades Fountain Asia Style Sauces, Hoi Sin, Sweet Chilli Sauces White Crow Tomato Sauces Gregg’s Tomato, Smoked Hickory BBQ, BBQ, Steak, Sweet Chilli, Lite Tomato, Mint Sauces Gravox Instant Gravy & Sauces Gravox Stocks Gravox Gravy Gravox Gravy Powder Gravox Gravy & Sauces Liquid UHT Gravox Gravy & Sauces Sachets Gravox Gravy Instant Gravy & Sauces Canisters Bisto Gravy Powder Bisto Gravy Boxes Bisto Gravy Bistoy Liquid Gravy Whitlocks Mint Sauce Whitlocks Worcester Sauce Whitlocks Tomato Chutney Sauce Herbs & Spices Gregg’s Curries Gregg’s Dried Herbs Gregg’s Grinders Gregg’s Pastes Gregg’s Rubs Gregg’s Seasoning Blend Gregg’s Ground Spice Gregg’s Whole Spice Saxa Grinders Pickles Cerebos Chutneys & Relishes Cerebos Whole Pickles Fountain Chutney Whitlocks Tomato Chutney Whitlocks Pickles Gregg’s Chutney
Pepper Gregg’s Pepper Saxa Pepper Food Mixes Gregg’s Seasoned Stuffing Mixes Gregg’s Tomato & Pizza Paste Gregg’s Meal Based Paste Sachets Fountain Tomato Paste Tandaco Coating Mixes Tandaco Dry Yeast Tandaco Rapid Rise Yeast Tandaco Stuffing Mixes Tandaco Suet Mix Tandaco One Pan Dinners Shreddo Suet Wild’s Ezy Sauce Alison Holst Baking Mix Salad Dressings Chinese Dressing Sesame Mustard Thai Dressing Lemongrass Chilli Vietnamese Dressing Chilli Garlic
65
Product Listings – Sauces & Others ASIAN SAUCES
Woh Hup Premium Dark Soya Sauce Woh Hup Premium Light Soya Sauce Woh Hup Star Anise Soy Sauce Woh Hup Tangkwei Soy Sauce Woh Hup XO Soy Sauce Woh Hup Superior Light Soy Sauce Woh Hup Superior Dark Soy Sauce
Woh Hup Plum Paste Woh Hup Singapore Laksa Paste Woh Hup Singapore Mee Siam Paste Woh Hup Black Bean Paste (Mild) Woh Hup Sesame Paste Woh Hup Thai Green Curry Paste Woh Hup Thai Red Curry Paste Woh Hup Indonesian Rendang Curry Paste Woh Hup Singapore Hainanese Chicken Rice Paste Woh Hup Singapore Mee Goreng Paste Woh Hup Singapore Noodle Paste Woh Hup Sesame Sauce Woh Hup Kung Po Sauce Woh Hup Assam Sauce Woh Hup Tom Yum Paste Woh Hup Teriyaki Marinade
Woh Hup Chilli Sauces
Asian Home Gourmet Spice Pastes
Woh Hup Hot Chilli Sauce Woh Hup Sweet Chilli Sauce Woh Hup Garlic Chilli Sauce Woh Hup Ginger Chilli Sauce Woh Hup Thai Sweet Chilli Sauce Woh Hup Sambal Shrimp Woh Hup Ikan Bilis
Asian Home Gourmet Spice Paste for Curry Asian Home Gourmet Spice Paste for Rice Asian Home Gourmet Spice Paste for Stir Fry Asian Home Gourmet Spice Paste for Noodles Asian Home Gourmet Spice Paste for Soup Asian Home Gourmet Spice Paste for Poultry Asian Home Gourmet Marinade for Meat Asian Home Gourmet Dessert Mix Asian Home Gourmet Mixer
Woh Hup Oyster Sauces Woh Hup Oyster Flavoured Sauce Woh Hup Oyster Sauce Extra Flavour Woh Hup Shiitake Mushroom Vegetarian Oyster Flavoured Sauce Woh Hup Vegetarian Sauce Shiitake Mushroom – Lower Salt Woh Hup Abalone Sauce
Woh Hup Soya Sauces
Woh Hup Specialty Sauces/Pastes Woh Hup Black Bean Sauce Woh Hup Char Siu Sauce Woh Hup Hoisin Sauce Woh Hup Lemon Sauce Woh Hup Plum Sauce Woh Hup Peking Duck Sauce Woh Hup Spare Rib Sauce Woh Hup Sweet & Sour Sauce Woh Hup Satay BBQ Sauce Woh Hup Fish Sauce Woh Hup Spicy Black Bean Sauce Woh Hup Yellow Bean Sauce Woh Hup Garlic Honey BBQ Sauce Woh Hup Black Pepper Sauce Woh Hup Pineapple Sweet & Sour Sauce Woh Hup Sambal Oelek Woh Hup Hot Szechuan Paste
Asian Home Gourmet Soy Sauces Asian Home Gourmet Sweet Soy Sauce Asian Home Gourmet Light Soy Sauce Asian Home Gourmet Dark Soy Sauce Asian Home Gourmet Mushroom Soy Sauce
Asian Home Gourmet Chilli Sauces Asian Home Gourmet Thai Hot Chilli Sauce Asian Home Gourmet Garlic Chilli Sauce Asian Home Gourmet Sweet Chilli Sauce Asian Home Gourmet Green Chilli Sauce Asian Home Gourmet Vietnamese Spring Rolls Sauce
Asian Home Gourmet Salad Dressings Asian Home Gourmet Thai Lemongrass Chilli Dressing Asian Home Gourmet Vietnamese Chilli Garlic Dressing Asian Home Gourmet Chinese Sesame Mustard Dressing Asian Home Gourmet Thai Tamarind Coriander Dressing Asian Home Gourmet Indonesian Gado Gado Dressing
Asian Home Gourmet Fruity Chilli Sauces Asian Home Gourmet Pineapple Chilli Sauce Asian Home Gourmet Watermelon Chilli Sauce Asian Home Gourmet Ginger Chilli Sauce
Asian Home Gourmet Microwaveable Quick Meals Asian Home Gourmet Thai Sweet Chilli Rice Asian Home Gourmet Indian Briyani Rice Asian Home Gourmet Indian Masala Rice Asian Home Gourmet Japanese Curry Rice Asian Home Gourmet Japanese Shoyu Noodle
Asian Home Gourmet Gourmet Sauces Asian Home Gourmet Indonesian Mee Goreng Asian Home Gourmet Indonesian Peanut Sauce Asian Home Gourmet Thai Red Curry Sauce Asian Home Gourmet Malaysian Sambal Udang Sauce Asian Home Gourmet Indonesian Rendang Sauce Asian Home Gourmet Thai Pad Thai Sauce
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OTHERS Asian Home Gourmet Noodle Kits Asian Home Gourmet Tom Yum Stir-Fry Noodles Asian Home Gourmet Szechuan Stir-Fry Noodles Asian Home Gourmet Singapore Stir-Fry Noodles Asian Home Gourmet Pad Thai Noodles Asian Home Gourmet Cantonese Stir-Fry Noodles Asian Home Gourmet Singapore Laksa
Asian Home Gourmet Stir-Thru Sauces and Marinades Asian Home Gourmet Lemon Chicken Sauce Asian Home Gourmet Honey Soy Sauce Asian Home Gourmet Lettuce Cup Sauce Asian Home Gourmet Singapore Noodle Sauce Asian Home Gourmet Hokkien Noodle Sauce Asian Home Gourmet Peking Duck Sauce Asian Home Gourmet Teriyaki Sauce
Asian Home Gourmet Simmer Sauces Asian Home Gourmet Indian Butter Chicken Simmer Sauce Asian Home Gourmet Indian Tikka Masala Simmer Sauce Asian Home Gourmet Indian Korma Simmer Sauce Asian Home Gourmet Indian Vindaloo Simmer Sauce Asian Home Gourmet Thai Green Curry Simmer Sauce Asian Home Gourmet Thai Red Curry Simmer Sauce
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Asian Home Gourmet Ready-to-use Canned Coconut Milk Asian Home Gourmet Light Coconut Milk (60% Fat reduction based on Asian Home Gourmet original recipe) Asian Home Gourmet Coconut Milk (Fat content 16-18%)
Noodles/Vermicelli Woh Hup Egg Noodle Woh Hup Good Luck Noodle Woh Hup Longevity Noodle Woh Hup Rice Vermicelli
Pickles
Woh Hup Premium Range
Woh Hup Salted Plum Woh Hup Young Ginger Stem (Sliced)
Woh Hup XO Sauce Woh Hup Vegetarian XO Sauce
Drinks
Woh Hup Vinegar/Oil Woh Hup Chinese Cooking Rice Vinegar Woh Hup Red Vinegar Woh Hup Rice Vinegar Woh Hup Plain Wine Vinegar Woh Hup Hot Chilli Oil Woh Hup Pure Sesame Oil Woh Hup Sesame Seed Oil Woh Hup Blended Sesame Oil
Woh Hup Sachets Woh Hup Easy Cook Sauce Chicken Curry Woh Hup Easy Cook Sauce Nonya Chicken Curry Woh Hup Easy Cook Sauce Fish Curry Woh Hup Easy Cook Sauce Spicy Seafood Stir Fry Woh Hup Easy Cook Sauce Steamed Fish With Soybean Woh Hup Easy Cook Sauce Ginger Chicken Woh Hup Easy Cook Sauce Nonya Steamed Fish Woh Hup Easy Cook Sauce Nonya Ayam Pongtay Woh Hup Easy Cook Sauce Stir Fried Chicken with Curry Leaves
Woh Hup Stock Woh Hup Concentrated Stock Chicken Woh Hup Concentrated Stock Mushroom Woh Hup Concentrated Stock Scallop Woh Hup Concentrated Stock Ikan Bilis Woh Hup Concentrated Stock Kimchi
Diet Refresh Powdered Drinks Raro Powdered Beverages Refresh Powdered Beverages
Desserts & Toppings Foster Clark’s Custard Powder Foster Clark’s UHT Vanilla Foster Clark’s Egg Custard Mix Foster Clark’s Quick Custard Mix Foster Clark’s Snack Pack Foster Clark’s Custard Cups Gregg’s Maple Syrup Gregg’s Crumble Mixes Gregg’s Jelly Crystals Gregg’s Mousses Gregg’s Seameal Custard Gregg’s Jelly Time Quick Set Jelly Gregg’s Instant Desserts & Mousse
Chilled Food Essential Cuisine Pesto Essential Cuisine Stock Essential Cuisine Jus
Staying The Course
Performance Analyses Financial Review QUARTERLY RESULTS For the financial year ended 30 September 2009 1st Quarter 2009 2008 $'000 $'000 Turnover %
2nd Quarter 2009 2008 $'000 $'000
209,104 216,186 170,057 176,339 27% 28% 22% 23%
3rd Quarter 2009 2008 $'000 $'000
4th Quarter 2009 2008 $'000 $'000
186,454 180,348 209,589 201,177 24% 23% 27% 26%
Full Year 2009 2008 $'000 $'000 775,204 774,050 100% 100%
Operating Profit before interest and tax %
43,336 38%
43,190 36%
16,470 14%
23,101 19%
21,889 19%
22,693 19%
33,862 29%
30,891 26%
115,557 119,875 100% 100%
Profit before tax %
44,716 37%
45,873 36%
18,032 15%
25,783 20%
23,351 19%
24,642 19%
34,904 29%
32,451 25%
121,003 128,749 100% 100%
Profit after tax %
32,591 36%
32,085 36%
14,069 15%
17,012 19%
17,414 19%
17,218 20%
26,861 30%
21,544 25%
90,935 100%
87,859 100%
Profit attributable to equity holders of Cerebos Pacific Limited %
30,134 37%
29,663 37%
12,422 15%
15,701 19%
15,152 18%
15,749 19%
25,060 30%
19,847 25%
82,768 100%
80,960 100%
140,361 131,570 105,648 103,852 68,743 84,616 64,409 72,487
100,017 86,437
93,353 123,325 114,113 86,995 86,264 87,064
469,351 442,888 305,853 331,162
209,104 216,186 170,057 176,339
186,454 180,348 209,589 201,177
775,204 774,050
Breakdown of quarterly results: Turnover – Asia – Australasia
Operating profit before interest and tax – Asia – Australasia
70
40,235 3,101
38,489 4,701
17,271 (801)
21,980 1,121
20,968 921
18,446 4,247
26,244 7,618
23,006 7,885
104,718 101,921 10,839 17,954
43,336
43,190
16,470
23,101
21,889
22,693
33,862
30,891
115,557 119,875
FULL YEAR RESULTS For the financial year ended 30 September 2009 2009 $'000
2008 $'000
PROFIT AND LOSS Turnover Operating profit before interest and tax Profit before tax Profit after tax Profit attributable to equity holders of Cerebos Pacific Limited
775,204 115,557 121,003 90,935 82,768
774,050 119,875 128,749 87,859 80,960
– (4) (6) 4 2
BALANCE SHEET Working capital Net tangible assets Shareholders' equity Minority interest
162,209 337,140 362,646 17,738
142,478 329,437 351,836 10,277
14 2 3 73
50% 15% 11%
50% 15% 10%
– – 10
26.29 26.29 25.0
25.72 25.69 25.0
2 2 –
1.7 50.2 3.7 107.1 22.8%
1.6 47.9 4.4 104.6 23.0%
6 5 (16) 2 (1)
% change
FINANCIAL RATIOS PROFIT AND LOSS Gross margin (%) Operating profit margin (%) Net profit margin (%) Earning per share (in cents) – Basic – Diluted Dividend per share (in cents) BALANCE SHEET Current ratio Day sales outstanding (days) Inventory turnover ratio (times) Net tangible assets per share (cents) Return on shareholders' equity (%)
71
72
Malaysia
0
Malaysia
60
120
100
60 20
0 (42.6) (39.1)
2009
Short term borrowings
50
2.0
160
0
180
Held-to-maturity financial assets with maturity less than 3 months
240
165.5
260
135.5
114.1 112.0
2008
Cash and bank deposits
4.6 3.0
80 25.6 21.7
265.0
2009
Taiwan
11.6
11.1
40
Thailand
7.6
143.5
244.0
2008
New Zealand
4.0 2.9
20
Singapore
26.1 21.4
105.1 96.6
127.8
178.1 187.7
2009
Taiwan
New Zealand
Thailand
Australia
Top 5 Turnover By Region Top 5 Operating Profit By Region Cash and Cash Equivalents
(in $ million) (in $ million) (in $ million)
2008
110
100
90
220
200 80
70
150
140
100
40
30 50
0
10
-50
OVERVIEW Despite the financial and economic crisis in FY08/09, the Group achieved a net profit of $82.8 million, a growth of 2% against last year's net profit of $81.0 million. Excluding translation loss of $4.8 million, net profit would have recorded a growth of 8% against last year. Basic and diluted earnings per share for the financial year ended 2009 were both 26.29 cents, up against last year's basic and diluted earnings per share of 25.72 cents and 25.69 cents respectively. The proposed dividend per share was 25.0 cents, tax exempt one-tier, represents a yield of 8.7%, based on the average share price for the financial year then ended. The shareholders' equity as at 30 September 2009 was $362.6 million, which was 3% above last year's shareholders' equity of $351.8 million. This was largely attributed to the favorable net currency translation differences on translation of net assets of foreign subsidiaries, particularly for Australian dollar ("AUD") and New Zealand dollar ("NZD") denominated subsidiaries, and the retained profit of $4.1 million for the financial year. Return on shareholders' equity was 22.8%, a slight dip from last year's return of 23.0%.
1. TURNOVER In Singapore dollars, the Group's turnover was on par with last year. Excluding translation loss of $59.9 million, primarily due to the depreciation of AUD and NZD against Singapore dollar ("SGD"), turnover would have posted a growth of 8% against last year, mainly contributed from the Australasia and Health Supplement businesses. For Australasia, excluding translation loss of $60.5 million, turnover would have achieved a growth of 11% compared to last year. The higher sales were derived primarily from growth in most product categories. The acquisition of Toby's Estate Coffee Pty Limited contributed to 2% of
the growth. For the Health Supplement business, excluding translation gain of $0.6 million, turnover would have increased by 6% against last year, with higher contributions from Thailand, Taiwan, Malaysia and Singapore.
2. EARNINGS The Group's operating profit for the full year was 4% below last year. Excluding translation loss of $4.0 million, operating profit would have been on par with last year. Despite the increased investment in advertising and promotion, operating profit margin remained consistent at 15% compared to last year. For Australasia, excluding translation loss of $2.2M, operating profit for the full year would have been 28% below last year, primarily due to the impact from the weakening AUD and NZD on foreign currency purchases, heavier spending on advertising and promotion on sauces and gravies and higher operating expenses. Operating profit for the Health Supplement business would have increased marginally by 1% against last year if translation loss of $1.8M was excluded. The marginal increase was largely due to higher sales but offset by heavier investment in brand building and higher operating expenses. The Group's profit before tax at $121.0 million was 6% lower than last year's profit before tax of $128.7 million, largely due to the lower operating profit and lower net finance income as a result of lower interest rates and lower cash and bank balances. The Group's full year effective tax rate was 25%, which was 7% lower than last year's effective tax rate of 32%. The difference in effective tax rates was mainly due to changes in the composition of profit or loss positions of the subsidiaries within the Group with different local tax rates and also the impact of tax incentives granted to an overseas subsidiary.
3. FINANCIAL POSITION The net asset value per share at 107.1 cents was 2% higher than last year's net asset value per share of 104.6 cents, mainly contributed by the favorable currency translation on overseas net assets and the higher profit attributable to the shareholders of the Company after deducting the dividend for 2008. As at 30 September 2009, the net tangible assets for the Group were $337.1 million (2008: $329.4 million).
4. CASH FLOW As at 30 September 2009, the Group's cash and cash equivalents stood at $92.9 million (equivalent to 30 cents per ordinary share) against $128.4 million (equivalent to 41 cents per ordinary share) for last year. Net cash outflow at $36.1 million for the financial year was lower than last year's net cash outflow of $67.2 million, largely contributed by the lower tax payment, favorable adjustments for non-cash items like exchange differences, favorable changes in working capital items like payables and provisions and lower repayment of borrowings. This was partially offset by the cash outflow from the acquisition of Toby's Estate Coffee Pty Limited.
5. DIVIDEND The Directors have proposed a first and final dividend for the financial year ended 30 September 2009 of 6 cents per ordinary share, tax exempt one-tier, based on the number of shares in issue at the balance sheet date, amounting to $18.9 million and a bonus dividend of 19 cents per ordinary share, tax exempt one-tier, based on the number of shares in issue at the balance sheet date, amounting to $59.8 million. The total dividend is maintained at 25 cents per ordinary share ($78.7 million). Apart from the above, no interim dividend was paid during the year. Payment of the final dividend is subject to the approval of the shareholders of the Company at the forthcoming Annual General Meeting.
73
VALUE ADDED STATEMENT 2009 S$'000
2008 S$'000
Turnover Less : Purchase of goods and services
775,204 (505,120)
774,050 (491,904)
Value added from operations Other operating expenses Interest income Exchange (loss)/gain Share of results of: – associated company – joint ventures
270,084 (1,931) 2,745 (3,214)
282,146 (1,931) 8,057 1,166
2,262 4,194
2,457 4,442
Total value added available for distribution
274,140
296,337
Distribution To employees in salaries, wages and benefits To government in income and other taxes
129,196 30,733
133,627 41,548
To providers of capital – Interest paid on borrowings – Dividends paid to shareholders
3,755 78,706
6,082 78,702
Retained in business – Depreciation and amortisation – Retained profit – Minority interests
20,312 4,062 8,167
18,104 2,258 6,899
Other non-operating income/(expenses) – Interest income – Exchange (loss) /gain – Provision for doubtful debts – Bad debts written off
2,745 (3,214) (267) (55)
8,057 1,166 (40) (66)
274,140
296,337
2009
2008
Number of employees
2,635
2,478
Productivity Analysis Value added per employee ($'000) Value added per dollar of employment cost Value added per dollar sales
104.0 2.1 0.4
119.6 2.2 0.4
Total distribution
74
Investor Relations Stakeholder information and communications aim to give an appreciation of and garner support for the Group’s business directions. They help management to illustrate how the Group’s strategy is working. Cerebos is a component in the FTSE ST Mid Cap Index.
CORPORATE TRANSPARENCY Cerebos is dedicated to high standards of corporate governance which forms an integral part of our investor relations. We have been regularly sharing information to make our business more transparent to shareholders and potential investors. The Group has a Corporate Affairs Department tasked with communicating with investors, the investment community and the mass media on a regular basis, and attending to their queries. Our efforts ensure that material information on Cerebos is appropriately communicated to investment analysts, stock-broking houses, the major business and news media and the public via SGXnet, our website, news releases, briefings and announcements. In April 2009, Cerebos was ranked 26th most transparent Singapore public listed company in the inaugural Governance and Transparency Index published by the Business Times. We abide by the SGX-ST’s Code of Corporate Gover nance and have adopted quarterly reporting since the first quarter of FY02/03. The Group is committed to releasing its quarterly results within the mandatory time-frame.
GOOD CORPORATE GOVERNANCE In accordance with the Code of Corporate Governance, Cerebos has nine directors on its Board, three of whom are independent directors. The composition of independent and non-independent directors have served the Group well. Their participation in the Remuneration, Nominating and Audit Committees is an assurance to shareholders’ interests. As a further measure, all committees are headed by independent directors.
COMMUNICATIONS WITH SHAREHOLDERS Corporate Announcements/ News Releases Information on the Group’s significant initiatives is disseminated through SGXnet and via news releases, as well as made available on the Group’s corporate website http://www.cerebos.com. During the year, quarterly financial results were issued within the mandatory reporting period.
Analysts/Media Briefings/Dialogues During the year Cerebos held combined media and analysts briefings upon release of its half-year and full-year results. Media interviews with our President & CEO and with our EVP & CFO have been conducted to give the public more opportunities to understand the Group’s business and performance. These briefings and interviews are subsequently made available to the public via SGXnet and webcast accessible from the group’s corporate website. To further clarify the business directions and growth strategy of the Group, Cerebos participated in a range of analyst dialogues. Cerebos’ investor relations executives, namely the President & CEO, the EVP & CFO and the VP Corporate Affairs & Investor Relations, met up with 85 research analysts, fund managers and institutional investors during the year. As Cerebos continues to receive interest from the global investment community, we participated in a investor relations conference organised by Daiwa Securities in Singapore which showcased Cerebos to a wide range of investors. In addition we also went on a non-deal roadshow to Tokyo. The meetings with both buyside and sell-side analysts from major Japanese firms saw a keen interest in Cerebos long-term strategic plans.
continue to regularly communicate Group developments through our current activities of announcements, briefings, dialogues, roadshows and news releases. Our investor relations programme will be reviewed regularly to ensure that it keeps pace with the growing attention.
Annual Report Our annual report is designed to give a comprehensive picture of the Cerebos Group. We continually review and improve the content and format to include more in-depth information as well as a clearer presentation to allow shareholders easy access to key information such as performance analyses, business policies, organisation structure and MTP growth strategies. Cerebos’ annual report is issued well within the mandatory period and is also made available on the Group’s corporate website. All shareholders and staff receive a printed copy of the annual report.
Shareholders’ Meetings At Annual General Meetings (AGM) and Extraordinary General Meetings (EGM), shareholders are encouraged to share their views and to raise issues that need clarification on any aspect of the Group. No time constraints are placed so that all questions are taken and answered to shareholders’ satisfaction. Ample time is allowed after the formal AGM or EGM to enable shareholders to engage Board members and senior management in informal discussions on the Group’s performance and on the Group’s strategy for value creation. Cerebos’ Articles of Association allow for shareholders to appoint one or two proxies to attend and vote at all general meetings on their behalf.
Overall, the Group’s growth strategies, performance and reliability are well acknowledged and investors showed good understanding of Cerebos. We will
75
Investor Relations – Frequently Asked Questions independent as recommended by the Code of Corporate Governance. In addition to this, the President & Chief Executive Officer is not an employee of Suntory Limited. As indicated by Chart 2, Cerebos has consistently created value for shareholders over the past five years. Chart 2: Return on Shareholders’ Equity and Total Assets (%) Shareholders’ Equity Total Assets
23.0 22.7
Chart 1: Dividend payout ratio (%) – in excess of 90% for the past five years 140% 122% 120%
113%
100%
93%
97%
95%
80% 60% 40% 20%
2009
2008
2007
2006
2005
0%
Q2 How much influence does Suntory Limited exert in the running of Cerebos’ business? A2 Cerebos Pacific Limited is a public listed company on the SGX-ST and hence is responsible to its shareholders. While Suntory remains the largest shareholder, and is the parent company of Cerebos Pacific Limited, the management of the business is based on the principles of Good Corporate Governance. The Board of Directors consists of nine members, three of whom are
76
22.8 20
19.6 17.0
15 12.6
12.8
12.5
10.5
10
2008
2007
2006
9.0
2005
The Board believes that although total dividend should be taken into consideration when looking at the attractiveness of dividend payout, the Board appreciates that investors may differentiate between normal and bonus dividend. At this moment, based on past payout, the Board believes that the differentiation should not affect investors’ perception of Cerebos.
2009
Q1 What is Cerebos Pacific Limited’s dividend policy? A1 The amount of dividend to be paid will depend on a number of factors such as performance for the year, economic situation, business requirements and prevailing interest rates. Over the last five years, Cerebos has paid out more than 90% of the Group’s yearly earnings as dividend. If there is no change in circumstances we hope to maintain this level of dividend payout. In fact over the past five years, Cerebos has exceeded this guideline. (See Chart 1)
5
Q3 What are you doing to improve the liquidity of your shares? A3 We have been gathering feedback from shareholders, investors, fund managers and investment analysts to determine if a real issue exists. In this respect, the general consensus seems to be that the current free float of 16.63% may not be ideal. However a high shareholding of institutional investors, who tend to be long term investors, may also limit the daily retail trade volumes. Management is sensitive to the feedback and also to the many requests for the improvement of our stock liquidity and will continue to review the situation carefully, including consulting our parent company, before considering any action. Ultimately the decision is the prerogative of the parent company and the Management is more focused on improving performance and ensuring continued growth. Q4 When will the PRC business break even? A4 Following our first foray into PRC in 1996, we were caught up in a
distribution and collection tangle and had to take tough action. We took a hit on the bottom-line in 1998 and 1999 from the write-off and destruction of expired stocks. The write-off of stocks primarily arose from our overenthusiastic view of the huge potential in China. Our sales to distributors were not followed by similar level of sales to the trade and ultimately the consumer, due to a number of reasons such as distributors’ inability to collect payments, ineffective use of advertising and promotion funds, etc. Having learned well from our earlier mistakes, we now understand the market dynamics better and know what we need to do to grow the business. We have adopted a cash-on-delivery policy for sales to wholesalers with exceptions made for selected key accounts and wholesalers with a good credit history. With a stronger emphasis on marketing, we shifted from relying heavily on mass communication such as television advertising, to a more targeted, consumer focused communication. Our strategy to build upon the heritage of BRAND’S® and leverage on the scientifically proven benefits of BRAND’S® Essence of Chicken is beginning to pay off. Coupled with an aggressive focus on the students segment, the consumer base was enlarged and penetration deepened in the key cities of Guangzhou, Shanghai, and Beijing. Cerebos continues to invest in brand building and marketing communications in the student and self-consumption segments. We started looking beyond the traditional channels of distribution and began focusing on improving convenience to consumers instead of just standard offerings in the retail outlets. As potentially the largest growth market in the medium term, PRC continues to command our attention. While the loss in this financial year is greater than last year, sales growth has grown by double-digits and the management remains confident that the PRC business will continue to grow and increase the ability to break even.
Q5 Why are you not expanding quickly to other countries in the Asia Pacific? A5 We know from market research that there is still a large, untapped consumer segment in our current markets. The year-on-year sales growth also testifies to this large potential. What we need to do is to increase penetration and frequency of consumption in these markets. We will continue our focus on our Health Partner for Life platform, upgrading our consumer experience touchpoints and educating consumers about the proven scientific benefits of BRAND’S® with more frequent and regular consumption to derive the maximum benefits. Growing in current markets would be faster and will require less investment. Nevertheless we are aware of the abundant opportunities and have already commissioned a team to map out our entry strategies for potential new territories. We have already started marketing to the lucrative Japan and India markets. Closer to home, we are laying the foundations. In line with our objective to develop the markets, we have employed local-based marketing personnel in Myanmar, Vietnam and Indonesia to drive our growth strategy. As we expand our presence, we continue to be mindful that initial investment will be required before returns can be reaped. Q6 W h y a re y o u f o c u s i n g o n developing Health Supplements, in particular the tablets business, instead of just focusing on the BRAND’S® Essence of Chicken business? A6 The Health Supplements category is estimated to grow at double-digit rates in the Asia Pacific. We see this as an excellent opportunity to capitalise on BRAND’S® strong brand name as the market is fragmented and there is no clear leader. From a business strategy perspective, we can very quickly make BRAND’S® the industry leader in the Health
Supplements tablets segment by delivering high quality, innovative products. Our results show continually increasing sales and we achieved an operating profit this year – proof that our strategy is working. We expect continued healthy turnover growth. Health Supplements will give us a new ‘wing’ to expand the overall BRAND’S® business. More importantly, it will give our consumers a wider range of products to meet their growing health needs and make BRAND’S® their “Health Partner for Life”. Q7 How has Avian Influenza (AVI), or Bird Flu, affected your business? A7 The AVI outbreak in January 2004 dampened sales initially. However sales recovered strongly and overall for FY03/04, AVI had an impact of less than 1% on turnover. When the AVI outbreak began, it affected consumer confidence in poultry related products in Thailand, Malaysia and our export markets. Cerebos responded with increased communications to assure consumers of our product safety and reliability. We also emphasised the bio-security of our poultry supplies which come from closed farms not affected by AVI. These efforts worked in tandem with information from WHO and local governments to help educate people on the facts regarding AVI. Hence despite the recent sporadic AVI outbreaks, we are confident that our ongoing quality assurance measures and communications to consumers coupled with the experience and knowledge gained by the populations in our key markets, will enable our business to remain stable. For the long term, our Essence of Chicken business remains unaffected as we are a trusted brand and our consumers are familiar with our proprietary manufacturing processes which conform to internationally recognised standards of quality and safety. Additionally our manufacturing process temperatures at >100 degrees celsius, are sufficiently high
enough to destroy harmful viruses – much higher than the WHO recommended temperature of 70 degrees celsius. Q8 Why are you so dependent on Thailand and Taiwan in the Health Supplements business? A8 While it is true that Thailand and Taiwan are our leading markets for BRAND’S® Health Supplements, we must highlight that the other Asian markets continue to hold much promise. Thailand and Taiwan have been able to make better headway as a result of their relative larger consumer base built on BRAND’S® long history and recent impactful marketing and CRM initiatives. This large consumer base has allowed us to make faster inroads for our Health Supplement tablets business. These two markets remain good models in terms of leadership, initiative and consistency in marketing and key message delivery. With stronger management focus, our other Asian markets are performing better and will eventually match up to the bigger markets in terms of achieving full market potential. In particular strong performances from Malaysia and Hong Kong support this contention. Q9 Why not focus on your Health Supplements business exclusively? A9 Our current core business areas of Health Supplements, Coffee and Sauces have been the Group’s strategic direction since 1997. We have divested a plethora of non-core businesses such as soft drinks, tomato processing, body building supplements, yogurt, etc, to focus on these three areas because we own strong brand names and products with excellent potential for sustained growth. The rationale for our strategic direction can be viewed in terms of business risk management and also in terms of the essential nature of these core business areas. What could be more basic to human needs than Food and Health?
77
Our Health Supplements business remains the primary growth engine for the Group. By capitalising on the increasing health consciousness of consumers and the fact that health care costs are rapidly rising, BRAND’S® will continue its strong growth momentum. Our Coffee and Sauces businesses take advantage of these basic needs by establishing our brands and products as a staple requisite in every home. By offering food products that add flavour to life’s ordinary routines, we can remain relevant to the community and grow as steadily as the population does. In addition our coffee expertise will allow us to remain at the forefront of the fast spreading coffee culture and provide a second engine for growth. In combination therefore, our core businesses form the three pillars which support the sustainability and success of the Cerebos Group.
positive difference in people’s lives. Included in our CSR is the donations and sponsorships policy as well as our encouragement of Work-Life balance for employees. While the investments may be significant, they are necessary for the Group to maintain its competitive advantage and to enable the business to keep growing at a faster pace. This is also in line with our objective of trying to make Cerebos revenue streams more stable and less influenced by economic vagaries. By taking care of all stakeholders needs and by cultivating loyal consumers, we can help to ensure a continuous demand for our products. These investments are thus the necessary building blocks upon which the Group can secure our future by transforming Cerebos into a sturdy and sustainable enterprise with a clear vision of its future and an enduring ability to create value for all its stakeholders.
Q10 How will the heavy strategic investments benefit Stakeholders? A10 Our strategic investments in Customer Relationship Management, Research & Development and Human Resources are all part of the Group’s strategy to build and enhance our infrastructure and core competencies. During the year we also continued our investments in Enterprise Risk Management (ERM), which regularly assesses all our business risks and helps to minimise the Group’s overall risk profile.
Q11 What are your controls in place in respect of foreign currency exposure? A11 Cerebos practises financial risk management which focuses on the unpredictability of financial markets and seeks to minimise adverse impact on the financial performance of the Group. Day-to-day financial risk management is the responsibility of a central Group treasury department which identifies, evaluates and hedges financial risk in close co-operation with our operating units.
In addition, we have rolled out our Corporate Social Responsibility (CSR) direction. Cerebos’ CSR policy is founded on our belief that CSR is a necessary principle of business strategy and that business thrives where society thrives. In our MTP, we have instructed our local territories to keep in mind that our operations and activities should reflect our CSR outlook, to make a
Subsidiaries in the Group use forward contracts, transacted with Group treasury, to hedge their foreign currency exposures and transactions. Group treasury is responsible for hedging the net position after taking into consideration any natural hedges and forecasted foreign currency requirements. At the Group level, external foreign exchange contracts
78
are designated as hedges of foreign exchange risk on specific assets, liabilities or future transactions. Whenever exposures are certain, it is the Group’s policy to hedge these risks. For those exposures with less certainty in their timing and extent, it is the Group’s policy to cover 50% to 90% of anticipated exposure for a maximum period of 12 months forward. The Group uses foreign c u r re n c y f o r w a rd e x c h a n g e contracts to manage these exposures. Where possible, the Group funds overseas operations with borrowings denominated in their measurement currency as a natural hedge for overseas assets. Q12 What do you plan to do with the cash reserve? A12 The cash reserve at the end of the financial year stands at S$128.4 million and is equivalent to 41 cents per share. As indicated previously, Cerebos is a cash generating business and the cash built-up has been earmarked for the following purposes: (i) to pay out dividends to shareholders (ii) as a war-chest for acquisitions (iii) for re-investment in the business, primarily for brand building. Q13 Why do you still offer executive share options instead of performance shares? A13 We are aware that the trend is to reward management with performance shares in place of share options. However based on the phase of development in Cerebos and its objectives for the next MTP, it was decided that a share option scheme was more appropriate. Adopting the share option scheme illustrates management commitment to share price growth as employees can only benefit on share price increases. Furthermore there is no cash outlay for the company as the share options are only granted on achievement of a predetermined target.
Financial Statements For The Financial Year Ended 30 September 2009
80 86 87 88 89 90 91 92
Directors’ Report Statement by Directors Independent Auditors’ Report Consolidated Income Statement Balance Sheets Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements
Directors’ Report For The Financial Year Ended 30 September 2009 The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 30 September 2009 and the balance sheet of the Company as at 30 September 2009. Directors The directors of the Company in office at the date of this report are: Teo Chiang Long Eiji Koike Raja Tan Sri Muhammad Alias bin Raja Muhammad Ali Lucien Wong Yuen Kuai Akinobu Kodaira Takayuki Hirashima Hong Sik Park Ramlee Bin Buang Lackana Leelayouthayotin Hiroaki Kojima (alternate director to Akinobu Kodaira) Keiichi Abe (alternate director to Takayuki Hirashima) Arrangements to enable directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate, other than as disclosed under "Share Options" in this report. Directors’ interest in shares or debentures (a)
According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the share capital or debentures of the Company and related corporations, except as follows: Holdings registered in the name of director At 1.10.2008 or date of appointment if later
At 30.9.2009
70,000
Holdings in which a director is deemed to have an interest
At 21.10.2009
At 1.10.2008 or date of appointment if later
At 30.9.2009
At 21.10.2009
70,000
70,000
–
–
–
–
–
–
40,000
40,000
40,000
Ramlee Bin Buang
150,000
150,000
150,000
10,000
10,000
10,000
Lackana Leelayouthayotin
170,000
173,000
173,000
–
–
–
Name of directors and companies in which interests are held Cerebos Pacific Limited (incorporated in Singapore) Ordinary shares Eiji Koike Lucien Wong Yuen Kuai
80
Directors’ Report For The Financial Year Ended 30 September 2009 Directors’ interest in shares or debentures (continued) Holdings registered in the name of director At 1.10.2008 or date of appointment if later
At 30.9.2009
–
Holdings in which a director is deemed to have an interest
At 21.10.2009
At 1.10.2008 or date of appointment if later
At 30.9.2009
At 21.10.2009
–
–
10,510
–
–
180,000
–
–
–
–
–
Name of directors and companies in which interests are held Suntory Limited (incorporated in Japan) Ordinary shares Hong Sik Park Akinobu Kodaira Takayuki Hirashima
–
–
–
13,833
–
–
2,300
–
–
–
–
–
–
–
–
–
–
–
Akinobu Kodaira
–
200,000
200,000
–
–
–
Takayuki Hirashima
–
–
–
–
16,593
16,593
Hiroaki Kojima
–
–
–
–
2,300
2,300
Hiroaki Kojima Suntory Holdings Limited (incorporated in Japan) Ordinary shares Hong Sik Park
(b)
According to the register of directors’ shareholdings, certain directors holding office at the end of the financial year had interests in options to subscribe for ordinary shares of the Company granted pursuant to Cerebos Pacific Limited 1998 Executives’ Share Option Scheme as set out below and in the paragraph on “Share Options”. No. of unissued ordinary shares under options held by directors At 1.10.2008
At 30.9.2009
At 21.10.2009
Eiji Koike
842,000
1,014,000
1,014,000
Ramlee Bin Buang
476,000
574,000
574,000
Lackana Leelayouthayotin
198,000
293,000
293,000
Directors’ contractual benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or by a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the financial statements and in this report, and except that some of the directors have received remuneration from related corporations for their services rendered and, all the executive directors participate in the Cerebos Pacific Limited 1998 Executives’ Share Option Scheme.
81
Directors’ Report For The Financial Year Ended 30 September 2009 Share options On 28 May 1998, the shareholders of the Company approved the adoption of the Cerebos Pacific Limited 1998 Executives’ Share Option Scheme (“the Scheme”). On 3 March 2000, the shareholders of the Company approved the amendments relating to the exercise period, offering date, specific grant of options to Executive Directors, individual limitations and the basis of calculation of the subscription price, to the Scheme. On 7 February 2005, in line with the Company’s focus to align its executives’ rewards with the interest of its shareholders, the directors of the Company approved changes to the basis of calculation of the subscription price under the Scheme. The subscription price shall be equal to the greater of $3.20 and the average of the last transacted prices of the shares for the three consecutive market days on which the shares were transacted immediately preceding the date of the grant of share options. On 14 August 2006, the Scheme was amended to be in line with the Companies (Amendment) Act 2005. On 28 January 2008, the shareholders of the Company approved the extension of the Scheme to further 10 years from 28 January 2008. On 23 January 2009, the shareholders of the Company approved the amendment to the basis of calculation of the subscription price under the Scheme. The subscription price shall be the average of the last transacted prices of the shares (as determined by reference to the daily official list published by Stock Exchange) for the three consecutive market days on which dealings in the shares took place on the Stock Exchange immediately preceding the relevant offering date. The members of the Share Option Scheme Committee administering the Scheme are as follows: Teo Chiang Long (Chairman) Lucien Wong Yuen Kuai Hong Sik Park Particulars of options granted in the financial years ended 30 September 1999 to 30 September 2002, 30 September 2004 and 30 September 2006 to 30 September 2009 under the Scheme were set out in the Directors’ Report for those relevant financial years. No options were granted during the financial years ended 30 September 2003 and 30 September 2005. On 17 March 2009, options were offered pursuant to the Scheme to 25 executives of the Company and its subsidiaries to subscribe for 938,000 ordinary shares in the Company (hereinafter called the “2009” options) at the subscription price of $2.52 per share. However, only 24 executives had taken up the offer, which comprised of 916,000 ordinary share and the details of which are as follows: Number of employees
Options for ordinary shares
Eiji Koike
1
172,000
Ramlee Bin Buang
1
98,000
Lackana Leelayouthayotin
1
98,000
21
548,000
24
916,000
Other executive officers
The total fair value of the 2009 options granted has been estimated to be $224,000 using the Black-Scholes model.
82
Directors’ Report For The Financial Year Ended 30 September 2009 Share options (continued) Options forfeited During the financial year, the following options were forfeited upon the cessation of employment of certain executives: Options for ordinary shares 2000 Options
4,000
2005 Options
35,000
2006 Options
84,000
2008 Options
88,000
2009 Options
22,000
Total Options forfeited
233,000
Options exercised 3,000 options were exercised during the financial year. Please refer to note 30(b) to the financial statements for more details. Options offered but not taken up 22,000 of 2009 options offered to one particular executive was not taken up eventually due to resignation. Options outstanding At the end of the financial year, unissued shares of the Company pursuant to the Scheme were as follows: Number of ordinary shares in Cerebos Pacific Limited
Subscription price per share
Exercisable Periods
2000 Options
174,000
$2.54*
23 March 2002 to 22 March 2010
2001 Options
310,000
$2.54*
19 March 2003 to 18 March 2011
2002 Options
52,000
$1.72*
28 March 2004 to 27 March 2012
2004 Options
308,000
$3.04
18 March 2006 to 17 March 2014
2005 Options
334,000
$3.20
16 December 2007 to 15 December 2015
2006 Options
542,000
$3.45
22 December 2008 to 21 December 2016
2008 Options
664,000
$3.83
17 March 2010 to 16 March 2018
2009 Options
894,000
$2.52
17 March 2011 to 16 March 2019
Total Options outstanding
3,278,000
* The subscription price per share was revised after the Capital Reduction Exercise on 7.12.2002.
The persons to whom the options have been granted do not have the right to participate, by virtue of the options, in any share issue of any other company in the Group.
83
Directors’ Report For The Financial Year Ended 30 September 2009 Share options (continued) Additional information on share options required under The Singapore Exchange Securities Trading Ltd’s listing rules The information of directors participating in the Scheme and employees who received 5 per cent or more of the total number of options available under this Scheme are as follows:
Name of Participants Executive Directors Eiji Koike Ramlee Bin Buang Lackana Leelayouthayotin
Options granted during the financial year under review
Aggregate options granted since commencement of the Scheme to end of the financial year under review
Aggregate options exercised since commencement of the Scheme to end of the financial year under review
Aggregate options outstanding as at end of the financial year under review
172,000 98,000 98,000
1,194,000 724,000 697,000
180,000 150,000 404,000
1,014,000 574,000 293,000
Audit Committee The Audit Committee comprises the following four members, all of whom are non-executive: Lucien Wong Yuen Kuai (Chairman) Teo Chiang Long Raja Tan Sri Muhammad Alias bin Raja Muhammad Ali Hong Sik Park Except for Hong Sik Park who is a non-independent director, the other members of the Audit Committee are independent directors. The Audit Committee carries out its functions in accordance with Section 201B(5) of the Companies Act, Cap. 50 and the Company’s corporate governance policies manual and performs the following: (a)
reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss;
(b)
reviews with the internal auditors at least annually, the adequacy of the internal audit procedures and their evaluation of the overall internal control systems; including financial, operational and compliance controls and risk management;
(c)
reviews the quarterly and annual financial statements, including announcements to shareholders and the Singapore Exchange Securities Trading Ltd prior to submission to the Board so as to ensure the integrity of the Company’s financial statements;
(d)
reviews any significant findings of internal investigations;
(e)
makes recommendations to the Board on the appointment of external auditors, the audit fee and any questions on their resignation or dismissal;
(f)
reviews and approves the appointment, replacement, reassignment or the dismissal of the Head of the Group Internal Audit department;
(g)
reviews the assistance given by the Company’s officers to the external and internal auditors;
(h)
reviews interested person transactions to ensure that the internal control procedures approved by the shareholders are adhered to;
(i)
reports actions and minutes of the Audit Committee meetings to the Board with such recommendations as the Audit Committee considers appropriate; and
84
Directors’ Report For The Financial Year Ended 30 September 2009 Audit Committee (continued) (j)
conducts an annual review of the independence and objectivity of the Company’s external auditors, including the volume of non-audit services supplied by the external auditors, to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination.
It held 5 meetings during the financial year. The Audit Committee has nominated PricewaterhouseCoopers LLP for re-appointment as the auditors of the Company at the forthcoming Annual General Meeting.
Auditors The auditors, PricewaterhouseCoopers LLP have expressed their willingness to accept re-appointment.
On behalf of the directors
TEO CHIANG LONG Director
EIJI KOIKE Director
7 December 2009
85
Statement By Directors For The Financial Year Ended 30 September 2009 In the opinion of the directors, (a)
the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 88 to 154 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group at 30 September 2009 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the directors
TEO CHIANG LONG Director 7 December 2009
86
EIJI KOIKE Director
Independent Auditors’ Report To The Members Of Cerebos Pacific Limited We have audited the accompanying financial statements of Cerebos Pacific Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 88 to 154, which comprise the balance sheets of the Company and of the Group as at 30 September 2009, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (Cap. 50) (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: (a)
Devising and maintaining a system of internal accounting control sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets;
(b)
selecting and applying appropriate accounting policies; and
(c)
making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, (a)
the balance sheet of the Company and the consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 30 September 2009, and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and
(b)
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor, have been properly kept in accordance with the provisions of the Act.
PricewaterhouseCoopers LLP Public Accountants and Certified Public Accountants Singapore, 7 December 2009
87
Consolidated Income Statement For The Financial Year Ended 30 September 2009
Notes
Turnover
775,204)
774,050)
Cost of sales
(389,782)
(385,136)
Gross profit
385,422)
388,914)
Distribution cost, advertising and promotion expenses
(130,727)
(127,014)
Administrative expenses
(133,993)
(141,260)
(5,145)
(765)
115,557)
119,875)
Other operating expenses
4
The Group 2009) 2008) $’000) $’000) (Restated)
5
Operating profit Finance income
7
2,745)
8,057)
Finance cost
8
(3,755)
(6,082)
2,262) 4,194)
2,457) 4,442)
121,003)
128,749)
(30,068)
(40,890)
Profit after tax
90,935)
87,859)
Attributable to: Equity holders of the Company Minority interests
82,768) 8,167)
80,960) 6,899)
90,935)
87,859)
26.29 cents) 26.29 cents)
25.72 cents) 25.69 cents)
Share of results of: – associated company – joint ventures Profit before tax Income tax expense
Earnings per ordinary share attributable to the equity holders of the Company (cents per share) – Basic – Diluted
The accompanying notes form an integral part of these financial statements.
88
10(a)
11
Balance Sheets As At 30 September 2009 The Group 2009) 2008) $’000) $’000)
Notes ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Held-to-maturity financial assets Financial assets, at fair value through profit or loss Derivative financial instruments Tax recoverable Other current assets Sub-participation loan
135,455 116,337 104,298 6,000 3,000 952 2,252 7,080 17,812
165,523 111,171 87,210 3,250 – 474 5,477 4,552 18,490
42,530 33,122 500 6,000 3,000 3,477 1,277 1,114 –
92,634 34,915 374 3,250 – 179 3,726 907 –
393,186
396,147
91,020
135,985
1,117 11,070 – – – – 24,597 199,603 25,506 4,744
373 8,543 – 6,000 6,000 – 34,135 152,686 22,399 4,980
– – 99,845 – – 67,037 – 2,866 201 –
– – 99,763 6,000 6,000 80,874 – 3,804 201 –
266,637
235,116
169,949
196,642
659,823
631,263
260,969
332,627
156,816 12,062 2,749 59,350
141,014 15,680 247 96,728
31,593 – 2,831 –
43,338 – 136 –
230,977
253,669
34,424
43,474
31,605 15,407 1,450
2,222 11,024 2,235
– 3,157 –
– 1,525 –
48,462
15,481
3,157
1,525
Total liabilities
279,439
269,150
37,581
44,999
NET ASSETS
380,384
362,113
223,388
287,628
67,560 – (47,688) 342,774
67,550 – (54,426) 338,712
67,560 73,756 377 81,695
67,550 73,756 178 146,144
Minority interests
362,646 17,738
351,836 10,277
223,388 –
287,628 –
Total equity
380,384
362,113
223,388
287,628
Non-current assets Investment in associated company Investments in joint ventures Investments in subsidiaries Held-to-maturity financial assets Financial assets, at fair value through profit or loss Loans to subsidiaries Sub-participation loan Property, plant and equipment Intangible assets Deferred tax assets
12 13 14 15 21 16 10(c) 17 22(b)
The Company 2009 2008 $’000 $’000
18 19 20 15 21 22(a) 22(b) 23 24 29
Total assets LIABILITIES Current liabilities Trade and other payables Current tax liabilities Derivative financial instruments Borrowings Non-current liabilities Borrowings Provisions Deferred tax liabilities
EQUITY Capital and reserves attributable to the Company’s equity holders Share capital Special reserve Revaluation and other reserves Retained earnings
25 10(b) 16 27(a)
27(a) 26 29
30 31 32 33
The accompanying notes form an integral part of these financial statements.
89
Consolidated Statement Of Changes In Equity For The Financial Year Ended 30 September 2009
L Notes 2009 Beginning of financial year – As previously reported Cash flow hedge – Fair value loss – Transfers Currency translation differences
L
Attributable to equity holders of the Company Revaluation Share and other Retained capital reserves earnings $’000 $’000 $’000
Total $’000
Minority interests $’000
Total Equity $’000
67,550
(54,426)
338,712
351,836
10,277
362,113
32(b) 32(b) 32(b)
– – –
(1,542) (170) 8,251
– – –
(1,542) (170) 8,251
– – 50
(1,542) (170) 8,301
Net income recognised directly in equity Net profit Total recognised income for the financial year Employee share option scheme: – Value of employee services 32(b) – Proceeds from shares issued 30(a) – Transfer from share option reserve 30(a), 32(b) Dividends paid/payable to minority shareholders Dividend for 2008 35 Acquisition of subsidiary 12
– –
6,539 –
– 82,768
6,539 82,768
50 8,167
6,589 90,935
–
6,539
82,768
89,307
8,217
97,524
– 9 1
200 – (1)
– – –
200 9 –
– – –
200 9 –
End of financial year
– – –
– – –
– (78,706) –
– (78,706) –
(1,261) – 505
(1,261) (78,706) 505
67,560
(47,688)
342,774
362,646
17,738
380,384
66,611
(31,093)
336,454
371,972
8,736
380,708
32(b) 32(b)
– –
16 (23,412)
– –
16 (23,412)
– (704)
16 (24,116)
Net expenses recognised directly in equity Net profit Total recognised (expenses)/income for the financial year Employee share option scheme: – Value of employee services 32(b) – Proceeds from shares issued 30(a) – Transfer from share option reserve 30(a), 32(b) Dividends paid/payable to minority shareholders Dividend for 2007 35
– –
(23,396) –
– 80,960
(23,396) 80,960
(704) 6,899
(24,100) 87,859
–
(23,396)
80,960
57,564
6,195
63,759
– 915 24
87 – (24)
– – –
87 915 –
– – –
87 915 –
2008 Beginning of financial year – As previously reported Cash flow hedge – Fair value gain Currency translation differences
End of financial year
– – 67,550
– – (54,426)
– (78,702) 338,712
– (78,702) 351,836
(4,654) – 10,277
An analysis of the movement in each category within “Revaluation and other reserves” is presented in note 32.
The accompanying notes form an integral part of these financial statements.
90
(4,654) (78,702) 362,113
Consolidated Cash Flow Statement For The Financial Year Ended 30 September 2009 2009 $’000)
2008) $’000)
90,935
87,859
30,068 200 6 18,302 2,010 (6,456) (95) 63 – – 4,689 3,755 (2,745)
40,890 87 – 16,013 2,091 (6,899) (228) 43 765 (552) (8,906) 6,082 (8,057)
Operating cash flow before working capital changes
140,732
129,188
Changes in working capital: Inventories Receivables and other current assets Payables and provisions
(16,581) (5,812) 19,658
(6,618) (5,597) 4,827
137,997 (31,500)
121,800 (41,463)
106,497
80,337
(3,487) 460 (63,137) 5,746 3,257
(625) 563 (64,528) 7,676 9,018
Net cash outflow from investing activities
(57,161)
(47,896)
Cash flow from financing activities Repayment of long term bank loan Repayment of short term bank loan Repayment of lease liabilities Interest paid Proceeds from repayment of sub-participation loan Proceeds from issue of shares under share option scheme Dividends paid to minority shareholders of subsidiaries Dividends paid
(11,561) – (29) (4,084) 10,216 9 (1,261) (78,706)
(25,391) (5,263) – (6,594) 20,074 915 (4,654) (78,702)
Net cash outflow from financing activities
(85,416)
(99,615)
Net decrease in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents
(36,080) 128,434 533
(67,174) 202,933 (7,325)
92,887
128,434
Notes Cash flow from operating activities Profit after tax Adjustments for: Income tax expense Cost of share-based payments Impairment loss for property, plant and equipment Depreciation Amortisation of intangible assets Share of results of associated company and joint ventures Gain on disposal of property, plant and equipment Property, plant and equipment written off Loss on liquidation of a branch Gain on liquidation of a subsidiary Exchange differences Finance cost Finance income
Cash generated from operations Income tax paid
10(a) 32(b) 5 6 5 5 5 5 5 8 7
10(b)
Net cash inflow from operating activities Cash flow from investing activities Acquisition of subsidiary/business, net of cash acquired Proceeds from disposal of property, plant and equipment Purchase of property, plant and equipment Dividend received from associated company and joint ventures Interest received
Cash and cash equivalents at the end of the financial year
12 23
30(a) 35
12
The accompanying notes form an integral part of these financial statements.
91
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1.
General The Company is incorporated and domiciled in Singapore. The address of its registered office is 18 Cross Street #12-01/08, China Square Central, Singapore 048423. The Company is listed on the Singapore Exchange. The principal activities of the Company comprise providing management services to its subsidiaries and associated companies and the marketing and sale of health supplements including essence of chicken and related products. The subsidiaries and associated companies are engaged principally in the manufacture, marketing, sales and distribution of health supplements including essence of chicken and related products in Asia and food products (primarily sauces, gravies, coffee, salt and other food products) in Australasia and the manufacture of composite caps used for BRAND’S® products.
2.
Significant accounting policies
2.1
Basis of preparation These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Interpretations and amendments to published standards effective in 2008 On 1 October 2008, the Group adopted the new Interpretation to FRS (“INT FRS”) that is mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective INT FRS. The following is the new INT FRS that is relevant to the Group: INT FRS 113
Customer Loyalty Programmes
The adoption of the above INT FRS did not result in any substantial changes to the Group’s accounting policies nor any significant impact on these financial statements. 2.2
Revenue recognition Sales comprise the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group’s activities. Sales are presented, net of goods and service tax, returns and discounts, and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, when it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group’s activities are met as follows:
92
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.2
Revenue recognition (continued) (a)
Sale of goods Revenue from sales of goods is recognised when a Group entity has delivered the products to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured.
(b)
Interest income Interest income is recognised using the effective interest method.
(c)
Management fees Management fees are recognised by the Company as revenue when the services are performed and in accordance with the substance of the relevant agreements.
(d)
Royalty income Royalty income is recognised by the Company as revenue when sales of goods is recognised and in accordance with the substance of the relevant agreements.
(e)
Dividend income Dividend income is recognised when the right to receive payment is established.
2.3
Group accounting (a)
Subsidiaries Subsidiaries are entities over which the Group has power to govern the financial and operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the date of acquisition, irrespective of the extent of minority interest. Please refer to the paragraph “Intangible assets – Goodwill” for the accounting policy on goodwill on acquisition of subsidiaries. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. In preparing the consolidated financial statements, transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the assets transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
93
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.3
Group accounting (continued) (a)
Subsidiaries (continued) Minority interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are not owned directly or indirectly by the Group. They are measured at the minorities’ share of fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition by the Group and the minorities’ share of changes in equity since the date of acquisition, except when the minorities’ share of losses in a subsidiary exceeds its interests in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minorities are attributed to the equity holders of the Company, unless the minorities have a binding obligation to, and are able to, make good the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority interests are attributed to the equity holders of the Company until the minorities’ share of losses previously absorbed by the equity holders of the Company are fully recovered. Please refer to the paragraph “Investments in subsidiaries, joint ventures and associated companies” for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.
(b)
Transactions with minority interests The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group that are recognised in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the Group’s incremental share of the carrying value of identifiable net assets of the subsidiary.
(c)
Associated companies and joint ventures Associated companies are entities over which the Group has significant influence, but not control, and generally accompanied by a shareholding giving rise to between and including 20% and 50% of the voting rights. Joint ventures are entities over which the Group has contractual arrangements to jointly share the control with one or more parties. Investments in associated companies and joint ventures are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses. Investments in associated companies and joint ventures are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. In applying the equity method of accounting, the Group’s share of its associated companies’ and joint ventures’ postacquisition profits or losses are recognised in the income statement and its share of post-acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company and joint venture equals or exceeds its interest in the associated company and joint venture, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associated company and joint venture.
94
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.3
Group accounting (continued) (c)
Associated companies and joint ventures (continued) Unrealised gains on transactions between the Group and its associated companies and joint ventures are eliminated to the extent of the Group's interest in the associated companies and joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies and joint ventures have been changed, where necessary, to ensure consistency with the accounting policies adopted by the Group. Dilution gains and losses arising from investments in associated companies and joint ventures are recognised in the income statement. Please refer to the paragraph “Investment in subsidiaries, joint ventures and associated companies” for the accounting policy on investments in associated companies and joint ventures in the separate financial statements of the Company.
(d)
Transaction costs Costs directly attributable to an acquisition are included as part of the cost of acquisition.
2.4
Property, plant and equipment (a)
Measurement (i)
Land and buildings Land and buildings are initially recognised at cost. Freehold land is subsequently stated at cost less accumulated impairment losses (note 2.8(b)). Buildings and leasehold land are subsequently stated at cost less accumulated depreciation and accumulated impairment losses (note 2.8(b)).
(ii)
Other property, plant and equipment All other items of property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.
(iii)
Component of costs The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The projected cost of dismantlement, removal or restoration is also included as part of the cost of property, plant and equipment if the obligation for the dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset. Cost may also include any fair value gains or losses on qualifying cash flow hedges of property, plant and equipment that are transferred from the hedging reserve.
(b)
Depreciable amount Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value.
95
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.4
Property, plant and equipment (continued) (c)
Depreciation Freehold land is not depreciated. Depreciation on other property, plant and equipment is calculated using the straightline method to allocate their depreciable amounts over their estimated useful lives. The estimated useful lives are as follows: Useful lives Freehold buildings and leasehold land and buildings Motor vehicles Plant and machinery
17 – 76 years 3 – 10 years 3 – 15 years
The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are included in the income statement when the changes arise. (d)
Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in the income statement when incurred.
(e)
Disposal On disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in the income statement. Any amount in revaluation reserve relating to that asset is transferred to retained earnings directly.
2.5
Intangible assets (a)
Goodwill on acquisitions Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities of the acquired subsidiaries, joint ventures and associated companies at the date of acquisition. Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses. Goodwill on joint ventures and associated companies is included in the carrying amount of the investments. Gains and losses on the disposal of subsidiaries, joint ventures and associated companies include the carrying amount of goodwill relating to the entity sold, except for goodwill arising from acquisitions prior to 1 October 2000. Such goodwill was adjusted against retained earnings in the year of acquisition and not recognised in the income statement on disposal.
96
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.5
Intangible assets (continued) (b)
Brands, trademarks and licences Acquired brands, trademarks and licences acquired are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to the income statement using the straight-line method over the useful lives of the brands, trademarks and licences. These intangibles are not revalued. The estimated useful lives are as follows: Useful lives Brands Trademarks and licences
5 – 10 years 3 – 15 years
The amortisation period and amortisation method of intangible assets other than goodwill are reviewed at each balance sheet date. The effects of any revision are recognised in the income statement when the changes arise. 2.6
Borrowing costs Borrowing costs are recognised on a time-proportion basis in the income statement using the effective interest method.
2.7
Investments in subsidiaries, joint ventures and associated companies Investments in subsidiaries, joint ventures and associated companies are carried at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries, joint ventures and associated companies, the difference between disposal proceeds and the carrying amounts of the investments are recognised in the income statement.
2.8
Impairment of non-financial assets (a)
Goodwill Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired. Goodwill included in the carrying amount of an investment in joint ventures and associated company is tested for impairment as part of the investment, rather than separately. For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”) expected to benefit from synergies arising from the business combination. An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. Recoverable amount of the CGU is the higher of the CGU’s fair value less cost to sell and value-in-use. The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognised in the income statement and is not reversed in a subsequent period.
97
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.8
Impairment of assets (continued) (b)
Intangible assets Property, plant and equipment Investments in subsidiaries, associated companies and joint ventures Intangible assets, property, plant and equipment and investments in subsidiaries, associated companies and joint ventures are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the income statement, unless the asset is carried at revalued amount, in which case, such impairment loss is treated as a revaluation decrease. Please refer to the paragraph “Property, plant and equipment” for the treatment of revaluation decrease. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the income statement, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase. However, to the extent that an impairment loss on the same revalued asset was previously recognised in the income statement, a reversal of that impairment is also recognised in the income statement.
2.9
Investments in financial assets (a)
Classification The Group classifies its investments in financial assets in the following categories: at fair value through profit or loss, loans and receivables and held-to-maturity financial assets. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition. The designation of financial assets through profit or loss is irrevocable. (i)
Financial assets, at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated as at fair value through profit or loss at inception are those that are managed and their performances are evaluated on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date.
98
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.9
Investments in financial assets (continued) (a)
Classification (continued) (ii)
Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents” on the balance sheet.
(iii)
Held-to-maturity financial assets Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. They are presented as non-current assets, except for those maturing within 12 months after the balance sheet date which are presented as current assets.
(b)
Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognized in the income statement.
(c)
Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognized at fair value. Transaction costs for financial assets at fair value through profit and loss are recognized immediately in the income statement.
(d)
Subsequent measurement Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity financial assets are subsequently carried at amortised cost using the effective interest method. Changes in the fair value through profit or loss including the effects of currency translation, interest and dividends, are recognised in the income statement when the changes arise.
99
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.9
Investments in financial assets (continued) (e)
Impairment The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognizes an allowance for impairment when such evidence exists. Loans and receivables/Financial assets, held to maturity Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the income statement. The allowance for impairment loss account is reduced through the income statement in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost, had no impairment been recognised in prior periods.
2.10
Financial guarantees The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings. Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s balance sheet. Financial guarantees are subsequently amortised to the income statement over the period of the subsidiaries’ borrowings, unless it is probable that the Company will reimburse the bank for an amount higher than the unamortised amount. In this case, the financial guarantees shall be carried at the expected amount payable to the bank in the Company’s balance sheet. Intragroup transactions are eliminated on consolidation.
2.11
Trade and other payables Trade and other payables are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest method.
2.12
Borrowings Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date. Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
100
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.13
Fair value estimation of financial assets and liabilities The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices for financial liabilities are the current asking prices. The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash flow analyses, are also used to determine the fair values of the financial instruments. The fair values of currency forwards are determined using actively quoted forward exchange rates. The fair values of interest rate swaps are calculated as the present value of the estimated future cash flows discounted at actively quoted interest rates. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.
2.14
Leases (a)
Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the lease assets and the present value of the minimum lease payments. Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in the income statement on a basis that reflects a constant periodic rate of interest on the finance lease liability.
(b)
Operating leases Leases of factories and warehouses where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in the income statement on a straight-line basis over the period of the lease. Contingent rents are recognised as an expense in the income statement when incurred.
2.15
Inventories Inventories are carried at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
101
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.16
Income taxes Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associated companies and joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred income tax is measured: (i)
at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and
(ii)
based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
Current and deferred income taxes are recognised as income or expense in the income statement, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. 2.17
Provisions for other liabilities and charges Provisions are recognised when; the Group has a legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
2.18
Currency translation (a)
Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Singapore Dollars.
102
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.18
Currency translation (continued) (b)
Transactions and balances Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in the income statement unless they arise from borrowings in foreign currencies, other currency instruments designated and qualifying as net investment hedges and net investment in foreign operations. Those currency translation differences are recognised in the currency translation reserve in the consolidated financial statements and transferred to the income statement as part of the gain or loss on disposal of the foreign operation. Non-monetary items measured at fair values in foreign currencies are translated using the exchange rates at the date when the fair values are determined.
(c)
Translation of Group entities’ financial statements The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i)
Assets and liabilities are translated at the closing exchange rates at the date of the balance sheet;
(ii)
Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and
(iii)
All resulting currency translation differences are recognised in the currency translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after 1 October 2005 are treated as assets and liabilities of the foreign operations and translated at the closing rates at the date of the balance sheet. For acquisitions prior to 1 October 2005, the exchange rates at the dates of acquisition were used. 2.19
Segment reporting A business segment is a distinguishable component of the Group engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.
2.20
Cash and cash equivalents For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents comprise cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, other short term, highly liquid investments that are readily convertible to cash less short term borrowings. Short term borrowings are included within borrowings categorised under current liabilities on the balance sheet.
2.21
Employee benefits The Group’s contributions are recognised as employee compensation expense when they are due, unless they are capitalised as an asset. (a)
Post-employment benefits The Group operates both defined benefit and defined contribution post-employment benefit plans.
103
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.21
Employee benefits (continued) (a)
Post-employment benefits (continued) Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The Group’s contributions are recognised as employee compensation expense when they are due. Defined benefit plans are post-employment benefit pension plans other than defined contribution plans. Defined benefit plans typically define the amount of benefit that an employee will receive on or after retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of a defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yields of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and have tenures approximating to that of the related post-employment benefit obligations. Actuarial gains and losses are recognised directly in the income statement in the period when they arise. Past service costs are recognised immediately in the income statement, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.
(b)
Share-based compensation The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of options is recognised as an expense in the income statement with a corresponding increase in the share option reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted at the grant date. Non-market vesting conditions are included in the estimation of the number of shares under options that are expected to become exercisable on the vesting date. At each balance sheet date, the Group revises its estimates of the number of shares under options that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimates in the income statement, with a corresponding adjustment to the share option reserve over the remaining vesting period. When the options are exercised, the proceeds received (net of transaction costs) and the related balance previously recognised in the share option reserve are credited to share capital account, when new ordinary shares are issued.
(c)
Termination benefits Termination benefits are those benefits which are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.
(d)
Other long term employee benefit Eligible employees of the Group, including executive directors, are eligible for compensation benefits in the form of management incentive plan. The benefit is recorded at the present value of the expected future cash outflows.
104
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 2.
Significant accounting policies (continued)
2.21
Employee benefits (continued) (e)
Employee long service leave The liability for long service leave is recognised in non-current provisions and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
2.22
Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against the share capital account.
2.23
Dividends Dividends to Company’s shareholders are recognised when the dividends are approved for payments.
2.24
Derivative financial instruments and hedging activities A derivative financial instrument is initially recognised at its fair value on the date the contract is entered into and is subsequently carried at its fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objective and strategies for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives designated as hedging instruments are highly effective in offsetting changes in fair value or cash flows of the hedged items. The Group designates each hedge as cash flow hedge. Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised in the income statement when the changes arise. (a)
Cash flow hedge (i)
Currency forwards The Group has entered into currency forwards that qualify as cash flow hedges against highly probable forecasted transactions in foreign currencies. The fair value changes on the effective portion of the currency forwards designated as cash flow hedges are recognised in the hedging reserve and transferred to either the cost of a hedged non-monetary asset upon acquisition or the income statement when the hedged forecast transactions are recognised. When a forecasted transaction is no longer expected to occur, the gains and losses that were previously recognised in the hedging reserve are transferred to the income statement immediately.
The fair value changes on the ineffective portion of hedging instruments are recognised separately in the income statement. The carrying amount of a derivative designated as a hedge is presented as a non-current asset or liability if the remaining expected life of the hedged item is more than 12 months, and as a current asset or liability if the remaining expected life of the hedged item is less than 12 months. The fair value of a trading derivative is presented as a current asset or liability. 2.25
Government grants Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants relating to expenses are offset against the related expenses. Government grants are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to assets are deducted against the carrying amount of the assets.
105
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 3.
Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (a)
Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i)
Estimated impairment of goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.8. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (note 24(a)). Management does not reasonably foresee any possible changes in the key assumptions used for the value-in-use calculations that will cause the carrying amount of the cash-generating unit to be in excess of the recoverable amount.
(ii)
Income taxes The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. 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 income tax provisions in the period in which such determination is made. The estimates and judgements are reviewed on an ongoing basis. However, they are not expected to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
4.
Turnover The Group 2009 2008 $’000 $’000 (Restated) Sales of health supplement products Sales of food and grocery products Franchise fee income
106
455,614 318,493 1,097
427,289 345,439 1,322
775,204
774,050
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 5.
Other operating expenses The Group 2009) 2008) $’000) $’000) Exchange (loss)/gain Amortisation of intangible assets Gain on disposal of property, plant and equipment Property, plant and equipment written off Impairment loss for property, plant and equipment Loss on liquidation of a branch Gain on liquidation of a subsidiary Miscellaneous income
6.
(3,214) (2,010) 95 (63) (6) – – 53
1,166 (2,091) 228 (43) – (765) 552 188
(5,145)
(765)
Expenses by nature The following items have been included in arriving at profit from operations: The Group 2009) 2008) $’000) $’000) Charging/(crediting): Other fees paid/payable to: – Auditor of the Company – Other auditors
200 176
147 132
Employee benefits expense (note 9)
129,196
133,627
Advertising and promotion expense (note 47(a))
113,693
127,014
Depreciation of property, plant and equipment – Freehold buildings – Leasehold land and buildings – Plant and machinery – Motor vehicles
760 1,488 15,751 303
871 1,022 13,827 293
Total depreciation (note 23)
18,302
16,013
321
224
Fair value gains on derivatives that are not designated or do not qualify for hedge accounting Inventories (note 14): – Purchases of inventories – Changes in inventories – Write-down of inventory provision – (Write-back) of inventory provision Rental expense – operating leases
403,458 (17,088) 3,448 (1,567) 6,579
381,082 (6,672) 1,136 (1,964) 6,408
107
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 7.
Finance income The Group 2009) 2008) $’000) $’000) Interest income on: – held-to-maturity financial assets – fixed deposits – sub-participation loan
8.
300 1,477 968
490 4,570 2,997
2,745
8,057
Finance cost The Group 2009) 2008) $’000) $’000) Interest expense on: – bank loans – finance lease liabilities
9.
3,749 6
6,082 –
3,755
6,082
Staff costs The Group 2009) 2008) $’000) $’000) Wages and salaries Employer’s contribution to defined contribution plans including Central Provident Fund Other employment related costs * Share options granted to executive directors and employees (notes 30 and 32) Less: Government grant – Jobs Credit Scheme
96,431 5,946 27,094 200 (475)
98,107 6,290 29,143 87 –
129,196
133,627
* Other employment related costs mainly comprise provision for annual leave, salesman incentive, staff welfare and fringe benefits.
108
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 10.
Tax (a)
Income tax expense The Group 2009) 2008) $’000) $’000) (Restated) Income tax expense attributable to profit is made up of: Current income tax – Singapore – Foreign Deferred income tax (note 29)
6,167 23,322 (675)
7,388 33,707 (347)
Underprovision in prior financial years
28,814 1,254
40,748 142
30,068
40,890
The tax expense on profit differs from the amount that would arise using the Singapore standard rate of income tax due to the following: The Group 2009) 2008) $’000) $’000) (Restated) Profit before tax
(b)
121,003
128,749
Tax calculated at a tax rate of 17% (2008: 18%) Effects of: – Different tax rates in other countries – Withholding tax paid – Income not subject to tax/subject to double tax relief – Expenses not deductible for tax purposes – Deferred tax assets not recognized – Others
20,571
23,175
15,728 7,469 (21,056) 2,283 4,279 (460)
18,195 7,411 (16,702) 5,529 2,611 529
Tax charge
28,814
40,748
Movements in current tax liabilities The Group 2009) 2008) $’000) $’000) Beginning of financial year Acquisition of subsidiary Income tax paid Current financial year’s tax expense on profit Underprovision in preceding financial years Currency translation differences End of financial year
(c)
10,203 63 (31,500) 29,489 1,254 301
12,769 – (41,463) 41,095 142 (2,340)
9,810
10,203
The tax recoverable at the Company level comprised largely tax deducted at source for dividends received.
109
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 11.
Earnings per ordinary share (i)
The calculation of basic earnings per share is based on the following: 2009 Profit attributable to members ($’000)
82,768
80,960
314,823
314,746
26.29 cents
25.72 cents
Weighted average number of ordinary shares used in calculation of basic earnings per share (’000) Adjustments for share options (’000)
314,823 35
314,746 436
Weighted average number of ordinary shares in issue during the year (’000)
314,858
315,182
26.29 cents
25.69 cents
Weighted average number of shares (’000) Basic earnings per share (ii)
The Group 2008
The calculation of diluted earnings per share is based on the following:
Diluted earnings per share
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. A calculation is done to determine the number of shares that would have been issued at market price (determined as the average annual share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding options to determine the “bonus” element; the “bonus” shares are added to the ordinary shares outstanding but no adjustment is made to net profit. 12.
Cash and cash equivalents The Group 2009 2008 $’000 $’000 Cash at bank and on hand Bank deposits
The Company 2009) 2008 $’000) $’000
44,420 91,035
23,941 141,582
6,352 36,178
5,749 86,885
135,455
165,523
42,530
92,634
For the purposes of presenting the consolidated cash flow statement, the consolidated cash and cash equivalents at the end of the financial year comprise the following: The Group 2009) 2008) $’000) $’000) Cash and bank deposits (as above) Other investments – Held-to-maturity financial assets with maturity less than 3 months (note 15) Less: – Short term borrowings forming an integral part of the Group’s cash management process (note 27(a)) Cash and cash equivalents per consolidated cash flow statement
110
135,455
165,523
–
2,000
(42,568) 92,887
(39,089) 128,434
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 Cash and cash equivalents (continued) Held-to-maturity financial assets with maturity less than 3 months were included in cash and cash equivalents as the Directors believe that they are readily convertible to known amount of cash, which are subject to an insignificant risk of changes in value. Short term borrowings are considered as cash and cash equivalents as they form an integral part of the Group’s cash management process. Acquisition of subsidiary/business On 16 February 2009, the Group’s subsidiary, Cerebos (Australia) Limited, acquired 60% of the issued share capital of Toby’s Estate Coffee Pty Limited for a cash consideration of $3,548,000. On 30 May 2008, the Group’s subsidiary, Cerebos Gregg’s Limited, acquired the business of Essential Cuisine Limited for a cash consideration of $625,000. The aggregate effects of the acquisition of the businesses were as follows:
L
L
12.
The Group Carrying amounts in acquiree’s At books fair values
At fair values 2009
Carrying amounts in acquiree’s books 2008
$’000
$’000
$’000
$’000
Cash and cash equivalents Trade and other receivables Other current assets Inventories Intangibles (notes 24(b)&(c)) Property, plant and equipment (note 23)
61 321 87 507 2,790 1,305
61 321 87 507 – 1,305
– 130 15 54 557 137
– 130 15 54 – 137
Total assets
5,071
2,281
893
336
(857) (116) (48) (63) (771)
(857) (116) (48) (63) 66
(101) – – – (167)
(101) – – – –
Total liabilities
(1,855)
(1,018)
(268)
(101)
Identifiable net assets Less: Minority interests
3,216 (505)
1,263 (505)
625 –
235 –
Identifiable net assets acquired Goodwill (note 24(a))
2,711 837
758
625 –
235
Total cash consideration
3,548
625
(61)
–
3,487
625
Trade and other payables Borrowings Provisions Current tax liabilities (note 10) Deferred taxation (liabilities)/assets (note 29)
Less: Cash and cash equivalents in the acquired business Net cash outflow from acquisition of the business
The fair value of the acquired identifiable net assets and liabilities above, including intangible assets of $2,790,000 (including brand and trademarks and license) is provisional as the underlying audit of the acquired subsidiary in 2009 is still ongoing.
111
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 13.
Trade and other receivables The Group 2009) 2008) $’000) $’000) Trade receivables from: – non-related parties Less: Allowance for impairment of receivables
Non-trade receivables from: – subsidiaries Less: Allowance for impairment of receivables
Non-trade receivable from: – related company Dividend receivable from joint ventures Other receivables
The Company 2009) 2008) $’000) $’000)
107,837) (377)
103,164) (116)
4,152) (2)
2,676) –)
107,460)
103,048)
4,150)
2,676)
–) –)
–) –)
49,846) (21,661)
52,811) (20,622)
–)
–)
28,185)
32,189)
15) –) 8,862)
10) 1,987) 6,126)
15) –) 772)
10) –) 40)
116,337)
111,171)
33,122)
34,915)
The non-trade receivables from subsidiaries are unsecured, interest-free and have no fixed terms of repayment. 14.
Inventories The Group 2009) 2008) $’000) $’000) Raw materials Work-in-progress Finished goods
The Company 2009) 2008) $’000) $’000)
33,072) 10,388) 60,838)
32,481) 5,049) 49,680)
–) –) 500)
–) –) 374)
104,298)
87,210)
500)
374)
The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to $386,370,000 (2008: $374,410,000). The Group has recognised a reversal of $1,567,000 (2008: $1,964,000) from an inventory write-down made in 2008, as the inventories were sold above the carrying amounts in 2009.
112
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 15.
Held-to-maturity financial assets The Group and the Company 2009 2008 $’000 $’000 Current Bonds with fixed interest ranging from 3.22% to 3.24% (2008: 2.82% to 2.90%) and maturity dates ranging from 8 July 2010 to 28 July 2010 (2008: 6 October 2008 to 18 June 2009) Non-current Bonds with fixed interest ranging from 3.22% to 3.24% and maturity dates ranging from 8 July 2010 to 28 July 2010
6,000
3,250
–
6,000
6,000
9,250
The fair value of the held-to-maturity financial assets approximated its carrying value.
Fair values Asset Liability $’000 $’000
The Company
Contract/ Notional Amount $’000
L
L
The Group
Contract/ Notional Amount $’000
L
Derivative financial instruments
L
16.
Fair values Asset Liability $’000 $’000
2009 Cash-flow hedges – Currency forwards
29,038
199
(2,567)
–
–
Non-hedging instruments – Currency forwards
45,106
753
(182)
82,349
3,477
(2,831)
952
(2,749)
3,477
(2,831)
Total 2008 Cash-flow hedges – Currency forwards Non-hedging instruments – Currency forwards Total
297
13
–
35,653
461
(247)
474
(247)
–
297
13
–
13,353
166
(136)
179
(136)
Period when the cash flows on cash flow hedges are expected to occur or affect the income statement Currency forwards Currency forwards are entered to hedge highly probable forecast transactions denominated in foreign currency expected to occur at various dates within three months from the balance sheet date. The currency forwards have maturity dates that coincide within the expected occurrence of these transactions. Gains and losses recognised in the hedging reserve prior to the occurrence of these transactions are transferred to the income statement within three months from the balance sheet date except for those used to hedge highly probable forecast foreign currency purchases of property, plant and equipment, whose gains and losses are included in the cost of the assets and recognised to the income statement over their estimated useful lives as part of depreciation expense.
113
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 17.
Other current assets The Group 2009 2008 $’000 $’000 Deposits Prepayments
18.
The Company 2009 2008 $’000 $’000
1,726 5,354
1,439 3,113
656 458
556 351
7,080
4,552
1,114
907
2009 $’000
The Group 2008 $’000
Investment in associated company (unquoted)
Beginning of financial year Currency translation differences Share of profits, net of tax Dividends received from an associated company
373 106 2,262 (1,624)
End of financial year
1,117
373
5,091 2,574 21,281 5,130
1,921 1,090 22,170 5,569
The summarised financial information of associated company is as follows: – Assets – Liabilities – Revenues – Net profit
1,110 (50) 2,457 (3,144)
Details of the associated company are included in note 44. 19.
Investment in joint ventures One of the subsidiary companies has a 50% interest in Dominion Salt Limited (“DS”) and Dominion Salt (NI) Limited (“DSNI”), which carry out salt mining and processing activities and salt processing activities respectively. The following amounts represent the Group’s 50% share of the assets and liabilities and income and expenses of the joint ventures. The Group’s interests in the joint ventures are accounted for in the consolidated financial statements using the equity method of accounting.
114
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 19.
Investment in joint ventures (continued) 2009 $’000
The Group 2008 $’000
8,380 9,360
7,691 8,726
17,740
16,417
5,152 1,518
6,445 1,429
6,670
7,874
Net assets
11,070
8,543
Sales Expenses
20,187 (14,292)
24,441 (17,633)
Profit before tax Income tax
5,895 (1,701)
6,808 (2,366)
Profit after tax
4,194
4,442
–
–
Assets: Current assets Non-current assets Liabilities: Current liabilities Non-current liabilities
Capital commitments in relation to interest in joint ventures Details of the joint ventures are included in note 45. 20.
Investments in subsidiaries (unquoted) The Company 2009 2008 $’000 $’000 Equity investments at cost Beginning of financial year Addition during financial year Addition subsequent to acquisition
113,962 4 –
113,953 – 9
End of financial year Less: Impairment
113,966 (14,293)
113,962 (14,293)
Carrying amount after impairment allowance Capital contribution in form of share options issued to employees of subsidiaries
99,673 172
99,669 94
Net book value of equity investments
99,845
99,763
Details of all subsidiaries are included in note 43.
115
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 20.
Investments in subsidiaries (unquoted) (continued) Acquisition of subsidiary On 16 February 2009, the Group’s subsidiary, Cerebos (Australia) Limited (“CAL”), acquired 60% of the issued share capital of Toby’s Estate Coffee Pty Limited for a cash consideration of $3,548,000. The acquisition was funded through internal cash resources. The fair value of identifiable net assets of the acquiree at the date of acquisition amounted to $3,216,000, resulting in a provisional goodwill on acquisition of $837,000. Details of the identifiable net assets acquired are disclosed in note 12. The acquired subsidiary’s contribution to revenue and net profit of the Group from date of acquisition to 30 September 2009 amounted to $2,742,000 and $39,000 respectively. The subsidiary’s asset and liabilities at 30 September 2009 were $3,587,000 and $1,836,000 respectively. If the acquisition had occurred on 1 October 2008, Group revenue would have been $784,812,000 and net profit attributable to equity holders of the Group would have been $82,894,000.
21.
Financial assets, at fair value through profit or loss The Group and the Company 2009 2008 $’000 $’000
22.
Current At fair value on initial recognition Structured notes – Singapore
3,000
–
Non-current At fair value on initial recognition Structured notes – Singapore
–
6,000
3,000
6,000
2009 $’000
The Company 2008 $’000
Amounts with interest charged at: 1.16% (2008: 2.20%) per annum Interest free amounts
97,562 63,164
100,298 63,335
Less: Allowance for doubtful loans
160,726 (93,689)
163,633 (82,759)
67,037
80,874
Loans to subsidiaries/Sub-participation loan (a)
Loans to subsidiaries are as follows:
The loans to subsidiaries are unsecured and have no fixed terms of repayment. It is the company’s intention not to call for repayment within the next twelve months from September 2009. The fair value of the loans to subsidiaries approximated their carrying value. Included in loans to subsidiaries at Company level, is a loan of $67,448,000 (2008: $77,057,000) provided to a subsidiary to sub-participate in a loan arrangement, which in turn has enabled a subsidiary in Thailand to consolidate all the operations of the Group in Thailand by acquiring the shares of all subsidiaries in Thailand from the Company and a subsidiary. This receivable is subject to the fulfilment of certain conditions imposed by the Group.
116
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 22.
Loans to subsidiaries/Sub-participation loan (continued) (b)
Sub-participation loan The Group 2009 2008 $’000 $’000 Current Non-current
17,812 24,597
18,490 34,135
42,409
52,625
The non-current sub-participation loan has the following maturity: The Group 2009 2008 $’000 $’000 Maturity of non-current sub-participation loan is as follows: Between two and five years
24,597
34,135
The sub-participation loan, which is denominated in USD, is unsecured and bears an interest rate of 1.17% (2008: 4.72%) per annum at balance sheet date. The bank borrowings of a subsidiary are secured by this sub-participation loan (note 27(b)). The fair value of the sub-participation loan approximates its carrying value. 23.
Property, plant and equipment
(a)
Freehold land and buildings $’000
Leasehold land and buildings $’000
Plant and machinery $’000
Motor vehicles $’000
The Group 2009 Cost Beginning of financial year Currency translation differences Additions Acquisition of subsidiary (note 12) Reclassification Disposals
60,031 924 5,678 – – –
30,162 (32) 614 300 1,383 (5)
210,279 4,704 24,568 1,494 20,441 (5,279)
2,213 69 167 213 (12) (314)
21,661 150 32,110 – (21,812) –
324,346 5,815 63,137 2,007 – (5,598)
End of financial year
66,633
32,422
256,207
2,336
32,109
389,707
Accumulated depreciation and impairment losses Beginning of financial year Currency translation differences Acquisition of subsidiary (note 12) Depreciation Impairment loss Reclassification Disposals
12,145 340 – 760 – – –
13,951 (35) 114 1,488 – 30 (1)
144,369 4,268 515 15,751 6 (30) (4,915)
1,195 31 73 303 – – (254)
– – – – – – –
171,660 4,604 702 18,302 6 – (5,170)
End of financial year
13,245
15,547
159,964
1,348
–
190,104
Net book value End of financial year
53,388
16,875
96,243
988
32,109
199,603
Construction In-progress $’000
Total $’000
117
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 23.
118
Property, plant and equipment (continued) Freehold land and buildings $’000
Leasehold land and buildings $’000
Plant and machinery $’000
Motor vehicles $’000
Construction In-progress $’000
Total $’000
The Group 2008 Cost Beginning of financial year Currency translation differences Additions Acquisition of business Reclassification Disposals
54,991 (3,994) 9,021 – 13 –
25,591 (661) 5,403 – 5 (176)
202,310 (15,584) 27,673 137 (9) (4,248)
2,042 (107) 770 – (9) (483)
– – 21,661 – – –
284,934 (20,346) 64,528 137 – (4,907)
End of financial year
60,031
30,162
210,279
2,213
21,661
324,346
Accumulated depreciation and impairment losses Beginning of financial year Currency translation differences Depreciation Disposals
12,311 (1,037) 871 –
13,535 (463) 1,022 (143)
146,672 (12,133) 13,827 (3,997)
1,361 (70) 293 (389)
– – – –
173,879 (13,703) 16,013 (4,529)
End of financial year
12,145
13,951
144,369
1,195
–
171,660
Net book value End of financial year
47,886
16,211
65,910
1,018
21,661
152,686
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 23.
Property, plant and equipment (continued)
(b)
Freehold land and buildings $’000
Leasehold land and buildings $’000
Plant and machinery $’000
Motor vehicles $’000
Total $’000
The Company 2009 Cost Beginning of financial year Additions Disposals
290 – –
– – –
13,450 812 (741)
280 6 (6)
14,020 818 (747)
End of financial year
290
–
13,521
280
14,091
Accumulated depreciation Beginning of financial year Depreciation Disposals
20 5 –
– – –
10,137 1,693 (741)
59 58 (6)
10,216 1,756 (747)
End of financial year
25
–
11,089
111
11,225
Net book value End of financial year
265
–
2,432
169
2,866
2008 Cost Beginning of financial year Additions Disposals
290 – –
– – –
12,036 1,436 (22)
331 274 (325)
12,657 1,710 (347)
End of financial year
290
–
13,450
280
14,020
Accumulated depreciation Beginning of financial year Depreciation Disposals
14 6 –
– – –
8,110 2,048 (21)
End of financial year
20
–
10,137
59
10,216
270
–
3,313
221
3,804
Net book value End of financial year (c)
237 55 (233)
8,361 2,109 (254)
Included in additions in the consolidated financial statements are plant and equipment, and motor vehicles acquired under finance leases amounting to $17,000 (2008: nil) and $92,000 (2008: nil) respectively. The carrying amounts of plant and equipment, and motor vehicles held under finance leases are $19,000 and $98,000 respectively at the balance sheet date.
(d)
Valuation of certain land and buildings were carried out by independent professional valuers on an open market basis in February and March 1990. Accordingly, as the Group had performed a one-off revaluation on its property, plant and equipment between 1st January 1984 and 31st December 1996 (both dates inclusive), the Group is exempted from performing a regular revaluation.
119
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 23.
24.
Property, plant and equipment (continued) (e)
Details of the Group’s land and buildings are set out in note 42.
(f)
For the purpose of calculating depreciation of freehold and leasehold land and buildings for the Group, the amounts attributed to freehold land and leasehold land were $27,140,000 (2008: $26,822,000) and $4,501,000 (2008: $4,563,000) respectively.
Intangible assets The Group 2009 2008 $’000 $’000 Goodwill (note (a)) Trademarks and license (note (b)) Brands (note (c)) Club memberships (note (d))
(a)
The Company 2009 2008 $’000 $’000
13,723 4,243 7,237 303
12,149 5,296 4,654 300
– – – 201
– – – 201
25,506
22,399
201
201
Goodwill The Group 2009 2008 $’000 $’000 Balance at beginning of financial year Acquisition of subsidiary (note 12) Currency translation differences
12,149 837 737
13,761 – (1,612)
Balance at end of financial year
13,723
12,149
Goodwill in relation to the acquisition of Toby’s Estate Coffee Pty Limited has been determined provisionally as the underlying audit is still ongoing. The purchase price allocation to goodwill, intangibles (excluding goodwill) and other assets and liabilities is currently being assessed and is expected to be finalized within the 12 months from the date of acquisition and hence the goodwill has not been allocated to relevant cash-generating-units. The directors have performed an impairment review except for the goodwill arising from the acquisition of Toby’s Estate Coffee Pty Limited, of the carrying amount of goodwill at 30 September 2009 and have concluded that no impairment is required. The annual impairment review of the goodwill arising from the acquisition of Toby’s Estate Coffee Pty Limited will be done when the allocation of goodwill is completed. Impairment tests for goodwill Goodwill is allocated to the Group’s cash-generating-units (“CGUs”) identified according to country of operation and business segment. A segment-level summary of the goodwill allocation is presented below. 2009 New Zealand
120
2008
Coffee
Total
Coffee
Total
12,677
12,677
12,149
12,149
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 24.
Intangible assets (continued) (a)
Goodwill (continued) Impairment tests for goodwill (continued) The recoverable amount of a CGU is determined based on value-in-use. Cash flow projections used in the value-in-use calculations were based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the Coffee business in which the CGU operates. Key assumptions used for value-in-use calculations: New Zealand 2009 2008 Gross margin1 Growth rate 2 Discount rate 3
45.9% 2.5% 12.0%
46.5% 2.0% 13.1%
1
Budgeted gross margin Weighted average growth rate used to extrapolate cash flows beyond the budget period 3 Pre-tax discount rate applied to the cash flow projections 2
These assumptions have been used for the analysis of each CGU within the business segment. Management has determined budgeted gross margin based on past performance and its expectations for the market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the relevant segments. (b)
Trademarks and licences The Group 2009 2008 $’000 $’000
The Company 2009 2008 $’000 $’000
Cost Beginning of financial year Acquisition of subsidiary (note 12) Currency translation differences
22,516 186 300
23,281 – (765)
14,608 – –
14,608 – –
End of financial year
23,002
22,516
14,608
14,608
Accumulated amortisation Beginning of financial year Amortisation during the financial year Currency translation differences
17,220 1,254 285
16,028 1,466 (274)
14,608 – –
14,608 – –
End of financial year
18,759
17,220
14,608
14,608
4,243
5,296
–
–
Net book value
121
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 24.
Intangible assets (continued) (c)
(d)
Brands 2009 $’000
The Group 2008 $’000
Cost Beginning of financial year Acquisition of subsidiary/business (note 12) Currency translation differences
5,893 2,604 907
6,044 557 (708)
End of financial year
9,404
5,893
Accumulated amortisation Beginning of financial year Amortisation during the financial year Currency translation differences
1,239 756 172
757 625 (143)
End of financial year
2,167
1,239
Net book value
7,237
4,654
Club memberships 2009 $’000 Club memberships, at cost Currency translation differences Impairment of club memberships
(e)
25.
The Group 2008 $’000
The Company 2009 2008 $’000 $’000
404 2 (103)
404 (1) (103)
259 – (58)
259 – (58)
303
300
201
201
Amortisation of intangible assets amounting to $2,010,000 (2008: $2,091,000) is recognised in ‘other operating expenses’ of the income statement.
Trade and other payables 2009 $’000
The Group 2008 $’000
The Company 2009 2008 $’000 $’000
Trade payables to: – non-related parties – subsidiaries
74,624 –
63,692 –
1,436 492
305 486
Non-trade payables to: – non-related parties – subsidiaries – holding company (note 34) – associated company Accrued operating expenses
9,939 – 62 4,086 68,105
8,632 – 14 1,147 67,529
2,225 17,404 62 – 9,974
1,941 28,232 14 – 12,360
156,816
141,014
31,593
43,338
The non-trade payables to subsidiaries and associated companies are unsecured, interest-free and have no fixed terms of repayment.
122
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 26.
Provisions
(a)
2009 $’000
The Group 2008 $’000
4,330 7,130 3,947
4,070 3,617 3,337
– 3,157 –
– 1,525 –
15,407
11,024
3,157
1,525
Employee long service leave Beginning of financial year Provision made during the financial year Provision utilised during the financial year Currency translation differences
4,070 553 (517) 224
4,055 667 (248) (404)
– – – –
– – – –
End of financial year
4,330
4,070
–
–
Other long term employee benefit Beginning of financial year Provision made during the financial year Currency translation differences
3,617 3,376 137
– 3,702 (85)
1,525 1,632 –
– 1,525 –
End of financial year
7,130
3,617
3,157
1,525
Non-current – Provisions Employee long service leave Other long term employee benefit Retirement benefit obligations
(i)
(ii)
The Company 2009 2008 $’000 $’000
The liability for long service leave and other long term employee benefit expected to be settled more than 12 months from the balance sheet date is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance sheet date.
(iii)
2009 $’000
The Group 2008 $’000
Retirement benefit obligations Balance sheet obligations for: Pension benefits
3,947
3,337
–
–
Income statement charge for: Pension benefits
766
796
–
–
Pension benefits The amount recognised in the balance sheet is determined as follows: Present value of funded obligations Fair value of plan assets
The Company 2009 2008 $’000 $’000
5,225 (2,774)
5,653 (2,787)
– –
– –
2,451
2,866
–
–
Present value of unfunded obligations Unrecognised past service costs Unrecognised net actuarial gain/(loss)
1,417 52 27
1,236 – (765)
–
–
–
–
Liability recognised in the balance sheet
3,947
3,337
–
–
123
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 26.
Provisions (continued) (a)
Non-current – Provisions (continued) (iii)
Retirement benefit obligations (continued) The amounts recognised in the income statement were as follows:
2009 $’000
The Group 2008 $’000
The Company 2009 2008 $’000 $’000
Current service cost Interest cost Expected return on plan assets Past service cost Amortisation of unrecognised loss
595 223 (68) 14 2
577 203 (82) 94 4
– – – – –
– – – – –
Total, included in staff costs
766
796
–
–
Included in: Cost of goods sold Administrative expenses
242 524
180 616
– –
– –
766
796
–
–
54
113
–
–
2009 $’000
The Group 2008 $’000
Actual return on plan assets Movement in the defined obligation is as follows:
124
The Company 2009 2008 $’000 $’000
Beginning of financial year Current service cost Interest cost Past service cost Actuarial (gains)/losses Currency translation differences Benefits paid
6,889 595 223 – (825) (104) (136)
6,366 577 203 94 228 (258) (321)
– – – – – – –
– – – – – – –
End of financial year
6,642
6,889
–
–
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 26.
Provisions (continued) (a)
Non-current – Provisions (continued) (iii)
Retirement benefit obligations (continued) Movement in the fair value of plan assets is as follows: 2009 $’000
The Group 2008 $’000
The Company 2009 2008 $’000 $’000
Beginning of financial year Expected return on plan assets Actuarial (losses)/gains Currency translation differences Contributions by the employer Benefits paid
2,787 68 (13) (51) 90 (107)
2,873 82 74 (55) 104 (291)
– – – – – –
– – – – – –
End of financial year
2,774
2,787
–
–
The principal actuarial assumptions used were as follows:
Discount rate Expected return on plan assets Future salary increases
2009 %
The Group 2008 %
2.05 – 10.08 2.05 – 3.50 3.50 – 10.0
2.35 – 6.25 2.35 3.50 – 7.50
The Company 2009 2008 % % – – –
– – –
The average remaining life expectancy in years of a pensioner retiring at age 65 is as follows:
Male Female
2009
The Group 2008
30.13 29.58
27.65 26.59
The Company 2009 2008 – –
– –
Plan assets of pension benefits comprise the following: 2009 $’000 Equity securities Cash and cash equivalent
The Group 2008 % $’000
%
2009 $’000
The Company 2008 % $’000
%
35 2,739
1 99
– 2,787
– 100
– –
– –
– –
– –
2,774
100
2,787
100
–
–
–
–
The expected return on plan assets is determined by considering the expected returns available on the assets underlying current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected contribution to pension benefit plan for the financial year ending 31 September 2010 is $453,000.
125
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 27.
Borrowings The Group 2009 2008 $’000 $’000 (a)
Current Bank overdrafts Short term borrowings
744 41,824
– 39,089
Short term borrowings (unsecured) Bank loans – current portion Finance lease liabilities (note 28)
42,568 16,720 62
39,089 57,639 –
59,350
96,728
31,549 56
2,222 –
31,605
2,222
90,955
98,950
Non-current Bank loans Finance lease liabilities (note 28)
Total borrowings
The exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows: The Group 2009 2008 $’000 $’000 6 months or less 6 – 12 months 1 – 5 years
51,857 7,493 31,605
24,629 72,099 2,222
90,955
98,950
(b)
Total borrowings include secured liabilities of $42,526,000 (2008: nil) for the Group. Bank borrowings of the Group amounting to $42,408,000 are secured by a first floating charge over the sub-participation loan of a subsidiary. Finance lease liabilities are secured by the rights to the leased motor vehicles and equipment.
(c)
Carrying amounts and fair value The carrying amounts of current borrowings and long term bank loan approximated their fair values.
(d)
Unutilised borrowing facilities The Group and the Company had the following unutilised borrowing facilities: The Group 2009 2008 $’000 $’000 Not later than one year
76,919
53,972
The Company 2009 2008 $’000 $’000 21,309
5,000
The facilities expiring not later than one year from the balance sheet date are facilities subject to annual review at various dates during 2010.
126
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 28.
Finance lease liabilities The Group leases certain plant and equipment, and motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the Group with options to purchase the leased assets at nominal values at the end of the lease term. The Group 2009 2008 $’000 $’000 Minimum lease payments due – Not later than one year – Between one and five years
70 62
– –
Less: Future finance charges
132 (14)
– –
Present value of finance lease liabilities
118
–
2009 $’000
The Group 2008 $’000
Not later than one year (note 27)
62
–
Later than one year (note 27) – Between one and five years
56
–
56
–
118
–
The present values of finance lease liabilities are analysed as follows:
Total 29.
Deferred income taxes Movement in the deferred income tax account is as follows: 2009 $’000
The Group 2008 $’000
The Company 2009 2008 $’000 $’000
Beginning of financial year Currency translation differences Acquisition of business (note 12) Tax credit to: – income statement (note 10(a)) – equity (note 32(b)(iv))
(2,745) 97 771
(2,695) 130 167
– – –
– – –
(675) (742)
(347) –
– –
– –
End of financial year
(3,294)
(2,745)
–
–
Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. Subject to agreement with the tax authorities, the Group has unrecognised tax losses and capital allowances of $97,819,000 and nil (2008: $86,286,000 and $149,000) respectively and the Company has unrecognised tax losses of $20,157,000 (2008: $15,662,000). These unrecognized tax losses and capital allowances can be carried forward and used to offset against future taxable income subject to meeting certain regulatory requirements by those companies with unrecognised tax losses and capital allowances.
127
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 29.
Deferred income taxes (continued) In 2009, the tax losses have no expiry date except certain tax losses for a subsidiary amounting to $8,319,000, $6,440,000, $7,136,000, $5,857,000 and $13,252,000 which will expire on December 2010, December 2011, December 2012, December 2013 and December 2014 respectively. In 2008, the tax losses have no expiry date except certain tax losses for a subsidiary amounting to $10,361,000, $8,378,000, $6,486,000, $7,187,000 and $7,646,000 which will expire on December 2009, December 2010, December 2011, December 2012 and December 2013 respectively. Unutilised capital allowances do not have expiry dates. The movement in the deferred tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) is as follows: The Group Deferred tax liabilities Accelerated tax depreciation $’000
Unrealised exchange gain $’000
Others $’000
Total $’000
2,211
2,235
(414) (524) (6)
(281) (524) 20
2009 Beginning of financial year Charged/(credited) to – income statement – equity (note 32(b)(iv)) Currency translation differences
158 – 25
(25) – 1
End of financial year
183
–
1,267
1,450
2,552
2,552
–
24
2008 Beginning of financial year Charged/(credited) to – income statement Acquisition of business (note 12) Currency translation differences
–
–
– – –
23 – 1
End of financial year
–
24
(220) 167 (288)
(197) 167 (287)
2,211
2,235
Others $’000
Total $’000
Deferred tax assets Provisions $’000 2009 Beginning of financial year Credited to – income statement – equity (note 32(b)(iv)) Acquisition of subsidiary Currency translation differences End of financial year 2008 Beginning of financial year (Credited)/charged to – income statement Currency translation differences End of financial year
128
(4,980)
–
(4,980)
(394) – 771 77
– (218) – –
(394) (218) 771 77
(4,526)
(218)
(4,744)
(5,125)
(122)
(5,247)
(269) 414
119 3
(150) 417
(4,980)
–
(4,980)
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 29.
Deferred income taxes (continued) Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the income taxes relate to the same fiscal authority. The deferred income tax assets and liabilities are expected to be recovered/settled after more than 12 months. The following amounts, determined after appropriate offsetting, are shown in the balance sheets: 2009 $’000 Deferred tax assets Deferred tax liabilities
The Company 2009 2008 $’000 $’000
4,744 (1,450)
4,980 (2,235)
– –
– –
3,294
2,745
–
–
Share capital (a)
Share capital
2009 Beginning of financial year Issue of shares on exercise of employee share options Transfer from share option reserve (note 32(b)(i)) End of financial year 2008 Beginning of financial year Issue of shares on exercise of employee share options Transfer from share option reserve (note 32(b)(i)) End of financial year
Amount
L
No of ordinary shares
L
30.
The Group 2008 $’000
Issued share capital ’000
Issued share capital $’000
Total share capital $’000
314,820
67,550
67,550
3
9
9
–
1
1
314,823
67,560
67,560
314,497
66,611
66,611
323
915
915
–
24
24
314,820
67,550
67,550
All issued shares are fully paid. There is no par value for these ordinary shares. During the financial year, the Company issued for cash 3,000 (2008: 323,000) shares under the Cerebos Pacific Limited 1998 Executives’ Share Option Scheme to a certain full-time employee as indicated under note 30(b). The newly issued shares rank pari passu in all respects with the previously issued shares.
129
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 30.
Share capital (continued) (b)
Share options Share options are granted to key management and employees under the Cerebos Pacific Limited 1998 Executives’ Share Option Scheme, which came into effect on 28 May 1998. The subscription price of the options is determined based on an amount equal to the average of the last transacted prices of the shares for the three consecutive market days on which dealings in the shares took place on the Stock Exchange immediately preceding the relevant offering date. The vesting of the options is conditional on the key management or employee remaining in employment till the commencement of the exercise periods. Once the options are vested, they are exercisable for a period commencing on (and including) the second anniversary of the offering date and ending on (and including) the day immediately preceding the tenth anniversary of the offering date. The options may be exercised in full or in multiples of 1,000 shares subject to relevant notice being given to the Company accompanied by payment of the exercise price. The persons to whom the options have been granted shall not participate in any share ownership scheme implemented by any company in the Group. Any options remaining unexercised at the end of each exercise period shall forthwith lapse. At 30 September 2009, the following outstanding options were available to eligible participants to subscribe for ordinary shares exercisable at any time during the dates indicated below: Number of Ordinary Shares in Cerebos Pacific Limited Number Number Number Number of of of of Subscription At options options options options At price per 1.10.2008 granted expired forfeited exercised 30.9.2009 share Exercisable periods 2000 Options
178,000
–
–
(4,000)
–
174,000
$2.54*
2001 Options
310,000
–
–
–
–
310,000
$2.54*
2002 Options
52,000
–
–
–
–
52,000
$1.72*
2004 Options
308,000
–
–
–
–
308,000
$3.04
2005 Options
372,000
–
–
(35,000)
(3,000)
334,000
$3.20
2006 Options
626,000
–
–
(84,000)
–
542,000
$3.45
2008 Options
752,000
–
–
(88,000)
–
664,000
$3.83
2009 Options
– 916,000
–
(22,000)
–
894,000
$2.52
Total options outstanding
2,598,000 916,000
–
(233,000)
(3,000) 3,278,000
* The subscription price per share was revised after the Capital Reduction Exercise on 7.12.2002.
130
{23 March 2002 to 22 March 2010} {19 March 2003 to 18 March 2011} {28 March 2004 to 27 March 2012} {18 March 2006 to 17 March 2014} {16 December 2007 to 15 December 2015} {22 December 2008 to 21 December 2016} {17 March 2010 to 16 March 2018} {17 March 2011 to 16 March 2019}
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 30.
Share capital (continued) (b)
Share options (continued) Details of directors and executive officers who were granted options pursuant to the Cerebos Pacific Limited 1998 Executives’ Share Option Scheme are set out in the Directors’ Report under the caption “Share options”. Out of the outstanding options on 3,278,000 shares (2008: 2,598,000), options on 1,720,000 shares (2008: 1,220,000) were exercisable. Options exercised in 2009 resulted in 3,000 shares (2008: 323,000) being issued at an weighted average price of $3.20 (2008: $2.83) each. The fair value of the options granted in March 2004, December 2005, December 2006, March 2008 and 2009 is estimated using the Black-Scholes model, taking into account the terms and conditions upon which the options are granted. The inputs to the model used for the financial year ended 30 September 2009 are shown below:
Expected dividend yield Expected volatility Expected life Risk free rate Share price
2009
2008
6.06% – 8.15% 12.92% – 29.25% 8.0 – 10.0 2.257% – 3.413% $2.52 – $3.83
6.06% – 8.15% 12.92% – 19.95% 8.0 – 10.0 2.257% – 3.413% $3.04 – $3.83
The expected dividend yield is based on historical data and is not necessarily indicative of forecasted dividend payments to shareholders that may occur. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. The volatility measured is based on statistical analysis of daily share prices over the last 90 days. No other features of the option grant were incorporated into the measurement of fair value. 31.
Special reserve At an Extraordinary General Meeting of the Company on 30 September 1988, the shareholders approved a special resolution to cancel the sum standing to the credit of the Company’s share premium account by transferring it to a special reserve account. This was approved by the Court on 28 October 1988. The special reserve was previously used to write off purchased goodwill and goodwill arising on consolidation. This special reserve is non-distributable. The Company 2009 2008 $’000 $’000 At beginning and end of the financial year
73,756
73,756
131
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 32.
Revaluation and other reserves 2009 $’000 (a)
377 (59,770) 13,401 (1,696)
178 (68,021) 13,401 16
377 – – –
178 – – –
(47,688)
(54,426)
377
178
178
115
Movements: (i)
(ii)
(iii)
(iv)
Share option reserve Beginning of financial year Employee share option scheme: – Value of employee services (notes 9 and 30) – Transfer to share capital (note 30(a))
200 (1)
End of financial year
377
Currency translation reserve Beginning of financial year Net currency translation differences on: – translation of financial statements on a foreign branch – revaluation of loans that form part of net investment in foreign subsidiaries Net currency translation differences on translation of financial statements of foreign subsidiaries
178
(68,021)
–
115 87 (24) 178
(44,609)
646
200 (1) 377
87 (24) 178
–
(646)
–
646
436
(12,982)
–
–
7,815
(11,076)
–
–
End of financial year
(59,770)
(68,021)
–
–
Revaluation reserve Beginning and end of financial year
13,401
13,401
–
–
16
–
–
–
Hedging reserve Beginning of financial year Fair value (loss)/gain Tax on fair value loss (note 29)
(2,284) 742
16 –
– –
– –
Transfer to property, plant and equipment
(1,542) (170)
– –
– –
– –
End of financial year
(1,696)
16
–
–
The reserves are non-distributable.
132
The Company 2009 2008 $’000 $’000
Composition: Share option reserve Currency translation reserve Revaluation reserve (note 23(d)) Hedging reserve
(b)
The Group 2008 $’000
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 33.
Retained earnings (a)
Retained profits of the Group are distributable. Movement in retained earnings for the Group is shown in the Consolidated Statement of Changes in Equity.
(b)
Movement in the retained earnings for the Company is as follows: The Company 2009 2008 $’000 $’000 Beginning of financial year Net profit for the financial year Dividends paid (note 35) End of financial year
34.
146,144 14,257 (78,706)
214,910 9,936 (78,702)
81,695
146,144
Immediate and ultimate holding corporation During the financial year, Suntory Limited, incorporated in Japan, ceased to be the Company’s holding company and Suntory Holdings Limited, incorporated in Japan, became the Company’s holding company. The ultimate holding corporation is Kotobuki Realty Company Limited, also incorporated in Japan.
35.
Dividends The Group and the Company 2009 2008 $’000 $’000 Dividends paid: First and final dividend paid in respect of the previous financial year of 6 cents (2008: 6 cents, tax exempt) per ordinary share, tax exempt Bonus dividend paid in respect of the previous financial year of 19 cents (2008: 19 cents, tax exempt) per ordinary share, tax exempt
18,889
18,888
59,817
59,814
78,706
78,702
The Directors have proposed a first and final dividend for the financial year ended 30 September 2009 of 6 cents per ordinary share, tax exempt, based on the number of shares in issue at the balance sheet date, amounting to $18,889,000 and a bonus dividend of 19 cents per ordinary share, tax exempt based on the number of shares in issue at the balance sheet date, amounting to $59,817,000. These financial statements do not reflect these dividends, which will be accounted for in the shareholders’ equity as an appropriation of retained earnings for the financial year ending 30 September 2010.
133
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 36.
Related party transactions In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place during the financial year. (a)
Sales and purchases of goods and services The Group 2009 2008 $’000 $’000 Research and development charges paid/payable to – Suntory Holdings Limited (note 34)
1,204
–
In 2009, research and development charges paid/payable to Suntory Limited, the Company’s former holding company (note 34), amounted to $397,000 (2008: $724,000). The aggregate value of interested person transactions conducted with Suntory Group pursuant to the shareholders’ mandate during the financial year ended 30 September 2009 was $1,767,000 (2008: $853,000). The Group 2009 2008 $’000 $’000 Purchases from joint venture – Dominion Salt (b)
2,022
2,355
Payments made on behalf of subsidiaries by the Company Payments made on behalf of subsidiaries by the Company in their normal course of business, which are reimbursable from the subsidiaries, amounted to $152,064,000 (2008: $132,931,000).
(c)
Key management personnel compensation Key management personnel compensation is as follows: The Group 2009 2008 $’000 $’000 Salaries and other short-term employee benefits Post-employment benefits – contributions to CPF Termination benefits Other long-term benefits Share option expense
12,594 422 198 389 200
15,143 433 – 574 87
13,803
16,237
Included in the above was total compensation to directors of the Company amounting to $3,616,000 (2008: $4,465,000). The banding of directors’ remuneration and key management is disclosed in the Corporate Governance Report.
134
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 37.
Capital commitments The Group and the Company have the following capital commitments for property, plant and equipment at the balance sheet date: The Group The Company 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Commitments in respect of contracts placed
38.
14,320
10,612
810
685
Operating lease commitments The Group leases various factories and warehouses under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The Group also leases various plant and machinery under cancellable operating lease agreements. The lease expenditure charged to the income statement during the financial year is disclosed in note 6. The future aggregate minimum rental payments under non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities are as follows: The Group The Company 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Not later than one financial year Between two and five financial years Later than five financial years
39.
7,209 9,531 805
6,601 8,867 290
2,350 3,027 –
1,674 768 –
17,545
15,758
5,377
2,442
Contingent liability (unsecured) At the Company level, the Company has guaranteed borrowings of subsidiaries amounting to $44,079,000 (2008: $37,257,000).
40.
Financial risk management Financial risk factors The Group operates internationally and its activities expose it to a variety of financial risk, including the effect of foreign currency exchange rates. The Group’s overall risk management strategy seeks to minimize adverse effects from the unpredictability of financial markets on the Group’s performance. The Group uses financial instruments such as foreign exchange contracts to hedge certain financial risk exposures. The Board approves the key principles for overall risk management, as well as the written policies covering specific areas, such as currency risk, credit risk, use of derivative financial instruments and investing excess liquidity. Day to day financial risk management is the responsibility of a central treasury department (Group treasury), which identifies, evaluates and hedges financial risk in close co-operation with the operating units.
135
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (a)
Market risk (i)
Currency risk Forward foreign exchange contracts are used to hedge the Group’s exposure to currency risks. The fair values of the forward foreign exchange contracts are recognised in the financial statements. The Group’s foreign exchange exposure arises primarily from transactions in United States Dollars, Australian Dollars, New Zealand Dollars, Hong Kong Dollars, New Taiwan Dollars, Thai Baht, Malaysian Ringgit and Chinese Renminbi. Subsidiaries in the Group use forward contracts, transacted with Group treasury, to hedge their foreign currency exposures and transactions. Group treasury is responsible for hedging the net position after taking into consideration any natural hedges and forecasted foreign currency requirements. For financial reporting purposes, each subsidiary designates contracts with Group treasury as fair value hedges or cash flow hedges, as appropriate. At the Group level, external foreign exchange contracts are designated as hedges of foreign exchange risk on specific assets, liabilities or future transactions. Whenever exposures are certain, it is the Group’s policy to hedge these risks. For those exposures with less certainty in their timing and extent, it is the Group’s policy to cover 50% to 90% of anticipated exposure for a maximum period of 12 months forward. The Group uses foreign currency forward exchange contracts to manage these exposures. Where possible, the Group funds overseas operations with borrowings denominated in their functional currency as a natural hedge for overseas assets. In addition, the Group is exposed to currency translation risk on the net assets in foreign operations. The Group’s currency exposure based on the information provided to key management is as follows: SGD $’000
THB $’000
USD $’000
Other $’000
Total $’000
30,045 6,000
52,915 –
9,296 –
43,199 –
135,455 6,000
3,000 34,623 –
– 26,734 –
– 8,572 42,409
– 140,168 –
3,000 210,097 42,409
73,668
79,649
60,277
183,367
396,961
– (94,972)
– (45,177)
(42,408) (23,891)
(48,547) (147,628)
(90,955) (311,668)
(94,972)
(45,177)
(66,299)
(196,175)
(402,623)
Net financial assets /(liabilities)
(21,304)
34,472
(6,022)
(12,808)
(5,662)
Less: Net financial liabilities /(assets) denominated in the respective entities functional currencies
(38,382)
(31,857)
(2,548)
13,047
At 30 September 2009 Financial assets Cash and cash equivalents Held-to-maturity financial assets Financial assets, at fair value through profit or loss Trade and other receivables Sub-participation loan Financial liabilities Borrowings Other financial liabilities
Add: Firm commitments and highly probable forecast transactions in foreign currencies
136
(45)
(975)
(17,291)
(4,451)
Less: Currency forwards
22,520
(6,208)
24,675
2,172
Currency exposure
(37,211)
(4,568)
(1,186)
(2,040)
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (a)
Market risk (continued) (i)
Currency risk (continued) The Group’s currency exposure based on the information provided to key management is as follows: SGD $’000
THB $’000
USD $’000
Other $’000
Total $’000
79,352 9,250
39,596 –
9,948 –
36,627 –
165,523 9,250
6,000 40,432 –
– 22,351 –
– 14,682 52,625
– 134,189 –
6,000 211,654 52,625
135,034
61,947
77,255
170,816
445,052
– (81,108)
– (38,153)
(53,195) (44,404)
(45,755) (127,449)
(98,950) (291,114)
(81,108)
(38,153)
(97,599)
(173,204)
(390,064)
Net financial assets /(liabilities)
53,926
23,794
(20,344)
(2,388)
Less: Net financial liabilities /(assets) denominated in the respective entities functional currencies
(88,888)
(21,357)
2,040
At 30 September 2008 Financial assets Cash and cash equivalents Held-to-maturity financial assets Financial assets, at fair value through profit or loss Trade and other receivables Sub-participation loan
Financial liabilities Borrowings Other financial liabilities
Add: Firm commitments and highly probable forecast transactions in foreign currencies Less: Currency forwards Currency exposure
10,195
–
–
(10,069)
(3,485)
5,550
–
3,459
1,740
(24,914)
6,062
(29,412)
2,437
54,988
137
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (a)
Market risk (continued) (i)
Currency risk (continued) The Company’s currency exposure based on the information provided to key management is as follows: SGD $’000
THB $’000
USD $’000
Other $’000
Total $’000
29,719 6,000
– –
7,172 –
5,639 –
42,530 6,000
3,000 22,690
– 6,346
– 629
– 3,457
3,000 33,122
61,409
6,346
7,801
9,096
84,652
(22,174)
(1,356)
(3,180)
(4,883)
(31,593)
(22,174)
(1,356)
(3,180)
(4,883)
(31,593)
Net financial assets
39,235
4,990
4,621
4,213
53,059
Less: Net financial liabilities /(assets) denominated in the respective entities functional currencies
(39,235)
–
–
–
3,083
At 30 September 2009 Financial assets Cash and cash equivalents Held-to-maturity financial assets Financial assets, at fair value through profit or loss Trade and other receivables
Financial liabilities Other financial liabilities
138
Add: Firm commitments and highly probable forecast transactions in foreign currencies
–
–
–
Less: Currency forwards
–
581
7,321
(9,831)
Currency exposure
–
5,571
11,942
(2,535)
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (a)
Market risk (continued) (i)
Currency risk (continued) The Company’s currency exposure based on the information provided to key management is as follows: SGD $’000
THB $’000
USD $’000
Other $’000
Total $’000
79,085 9,250
– –
7,040 –
6,509 –
92,634 9,250
6,000 21,863
– 5,517
– 3,592
– 3,943
6,000 34,915
116,198
5,517
10,632
10,452
142,799
At 30 September 2008 Financial assets Cash and cash equivalents Held-to-maturity financial assets Financial assets, at fair value through profit or loss Trade and other receivables
Financial liabilities Other financial liabilities
(30,277)
(472)
(6,408)
(6,181)
(43,338)
(30,277)
(472)
(6,408)
(6,181)
(43,338)
5,045
4,224
4,271
99,461
–
–
–
Net financial assets
85,921
Less: Net financial liabilities /(assets) denominated in the respective entities functional currencies
(85,921)
Add: Firm commitments and highly probable forecast transactions in foreign currencies
–
–
–
–
Less: Currency forwards
–
–
–
88
Currency exposure
–
5,045
4,224
4,359
139
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (a)
Market risk (continued) (i)
Currency risk (continued)
L
L
With all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position will be as follows: 2009 2008 Increase/(Decrease) Profit Profit Change after tax Equity Change after tax Equity % $’000 $’000 % $’000 $’000 The Group USD against SGD – strengthened – weakened THB against SGD – strengthened – weakened RMB against SGD – strengthened – weakened USD against THB – strengthened – weakened SGD against HKD – strengthened – weakened USD against NZD – strengthened – weakened USD against RMB – strengthened – weakened
2% 2%
81 (81)
81 (81)
3% 3%
115 (115)
115 (115)
1% 1%
(151) 151
(151) 151
9% 9%
366 (366)
366 (366)
2% 2%
(169) 169
(169) 169
7% 7%
(570) 570
(570) 570
2% 2%
137 (137)
137 (137)
6% 6%
(73) 73
(73) 73
2% 2%
(396) 396
(396) 396
3% 3%
(370) 370
(370) 370
8% 8%
134 (134)
134 (134)
13% 13%
(484) 484
(484) 484
1% 1%
(144) 144
(144) 144
10% 10%
(2,817) 2,817
(2,817) 2,817
2% 2%
239 (239)
239 (239)
3% 3%
127 (127)
127 (127)
1% 1%
56 (56)
56 (56)
9% 9%
454 (454)
454 (454)
The Company USD against SGD – strengthened – weakened THB against SGD – strengthened – weakened
140
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (a)
Market risk (continued) (ii)
Price risk The Group is not materially exposed to price risk for the financial assets carried at fair value through profit or loss.
(iii)
Cash flow and fair value interest rate risk The Group’s exposure risk for changes in the market interest rates relate primarily to the investment portfolio in fixed deposits, bonds and debt obligation with financial institutions. The Group’s income and operating cash flows are not materially affected by changes in the market interest rates. As a policy, the Group does not hedge interest rate risks. The Group’s excess funds are invested in deposits and marketable securities with a minimum of Moody’s Grade A rating, and/or guaranteed by banks or government-linked corporations. The Group’s policy is to obtain the most favourable interest rates available without increasing its foreign currency exposures. The Group’s sub-participation loan, which is at variable rate, is denominated in USD. If the USD interest rates increase/decrease by 2.6% (2008: 2.3%) with all other variables including tax rate being constant, the profit after tax will be higher/lower by $1,082,000 (2008: $1,194,000) as a result of higher/lower interest income on this loan. The Group’s borrowings at variable rates are denominated in RMB, USD and MYR. If the RMB interest rates increase/decrease by 1.2% (2008: 0.4%) with all other variables including tax rate being constant, the profit after tax will be lower/higher by $489,000 (2008: $123,000) as a result of higher/lower interest expense on the RMB borrowing. If the USD interest rates increase/decrease by 2.6% (2008: 2.3%) with all other variables including tax rate being constant, the profit after tax will be lower/higher by $1,082,000 (2008: $1,207,000) as a result of higher/lower interest expense on the USD borrowing. If the MYR interest rates increase/decrease by 1.6% (2008: nil) with all other variables including tax rate being constant, the profit after tax will be lower/higher by $29,000 (2008: nil) as a result of higher/lower interest expense on the MYR borrowing. The Company’s loans to subsidiaries at variable rates are denominated in HKD, JPY, SGD and THB. If the HKD interest rates increase/decrease by 3.15% (2008: nil) with all other variables including tax rate being constant, the impact on profit after tax will be $207,000 (2008: nil) as a result of higher/lower interest income on the HKD inter-company loan. If the JPY interest rates increase/decrease by 0.35% (2008: 0.03%) with all other variables including tax rate being constant, the impact on profit after tax will be $4,000 (2008: negligible) as a result of higher/lower interest income on the JPY inter-company loan. If the SGD interest rates increase/decrease by 0.7% (2008: 1.4%) with all other variables including tax rate being constant, the profit after tax will be higher/lower by $158,000 (2008: $321,000) as a result of higher/lower interest income on the SGD inter-company loan. If the THB interest rates increase/decrease by 2.6% (2008: 0.6%) with all other variables including tax rate being constant, the profit after tax will be higher/lower by $1,781,000 (2008: $475,000) as a result of higher/lower interest income on the THB inter-company loan.
(b)
Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The major classes of financial assets of the Group and of the Company are bank deposits and trade receivables. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining sufficient security where appropriate to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties. There are internal mechanisms and procedures to monitor the granting of credit and the active management of credit exposure.
141
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (b)
Credit risk (continued) As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. The trade receivables of the Group and of the Company comprise 5 debtors (2008: 6 debtors) and 1 debtor (2008: 1 debtor) respectively that individually represented 5% -13% of trade receivables. The credit risk for trade receivables based on the information provided to key management is as follows: The Group 2009 2008 $’000 $’000
The Company 2009 2008 $’000 $’000
By geographical areas Australia New Zealand Thailand Taiwan Hong Kong People’s Republic of China Malaysia Singapore Other countries
(i)
35,108 29,934 8,320 12,789 5,050 2,702 4,912 5,347 3,298
31,071 25,471 9,186 14,257 6,015 6,800 3,777 3,481 2,990
– – – – – – – 4,150 –
– – – – – – – 2,676 –
107,460
103,048
4,150
2,676
Financial assets that are neither past due nor impaired Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group. The Group’s and Company’s trade receivables not past due amount to $95,006,000 (2008: $97,308,000) and $4,150,000 (2008: $1,006,000) respectively.
(ii)
Financial assets that are past due and/or impaired There is no other class of financial assets that is past due and/or impaired except for trade receivables. The age analysis of trade receivables past due but not impaired is as follows: The Group 2009 2008 $’000 $’000 Past due < 3 months Past due 3 to 6 months
142
The Company 2009 2008 $’000 $’000
11,003 1,352
5,229 424
– –
1,659 11
12,355
5,653
–
1,670
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (b)
Credit risk (continued) (ii)
Financial assets that are past due and/or impaired (continued) The carrying amount of trade receivables individually determined to be impaired and the movement in the related allowance for impairment are as follows: The Group The Company 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Gross amount Less: Allowance for impairment
476 (377)
203 (116)
2 (2)
– –
99
87
–
–
Beginning of financial year Currency translation difference Allowance made Allowance utilised
116 17 267 (23)
270 (12) 40 (182)
– – 2 –
30 – – (30)
End of financial year
377
116
2
–
The impaired trade receivables arise mainly from sales to some customers who had defaulted on their repayment plans. (c)
Liquidity risk The Group and the Company manage the liquidity risk by maintaining sufficient cash to enable them to meet their normal operating commitments, having an adequate amount of committed credit facilities (note 27) and the ability to close market positions at a short notice. The table below analyses the maturity profile of the Group’s and Company’s financial liabilities (including derivative financial liabilities) based on contractual undiscounted cash flows. Less than 1 year $’000
Between 1 and 2 years $’000
Between 2 and 5 years $’000
73,645 (75,478) (156,816) (60,294)
– – – (14,478)
– – – (18,420)
(218,943)
(14,478)
(18,420)
13,671 (13,635) (141,014) (100,645)
– – – (2,282)
– – – –
(241,623)
(2,282)
–
The Group At 30 September 2009 Gross-settled currency forwards – Receipts – Payments Trade and other payables Borrowings
At 30 September 2008 Gross-settled currency forwards – Receipts – Payments Trade and other payables Borrowings
143
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 40.
Financial risk management (continued) (c)
Liquidity risk (continued) Less than 1 year $’000
Between 1 and 2 years $’000
Between 2 and 5 years $’000
The Company At 30 September 2009 Gross-settled currency forwards – Receipts – Payments Trade and other payables
At 30 September 2008 Gross-settled currency forwards – Receipts – Payments Trade and other payables
(d)
37,826 (37,344) (31,593)
– – –
– – –
(31,111)
–
–
88 (88) (43,338)
– – –
– – –
(43,338)
–
–
Capital risk The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings. Management monitors capital based on the return on shareholders’ fund. The return on shareholders’ fund was 22.8% for the current financial year ended 30 September 2009 (2008: 23.0%). The return on shareholders’ fund is calculated as net profit attributable to equity holders of the Company divided by shareholders’ equity. There are no externally imposed capital requirements for the financial years ended 30 September 2008 and 2009.
144
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 41.
Financial information by segment The Group’s business is that of a manufacturer and marketer of health supplements and food products. The operations of the Group are based predominantly in Asia and Australasia. (a)
Primary reporting format – geographical segments by location of assets Thailand $’000
Taiwan $’000
Australia $’000
New Zealand $’000
Others $’000
Eliminations $’000
Group $’000
Revenue from third parties Inter-segment revenue
264,982 37,912
105,100 1,802
178,054 1,229
127,799 5,245
99,269 21,369
– (67,557)
775,204 –
Turnover
302,894
106,902
179,283
133,044
120,638
(67,557)
775,204
Segment results Unallocated corporate expenses
114,136
25,627
3,243
7,596
(11,503)
Group 2009
Profits from operations Finance income Finance cost Share of results of associated company and joint ventures
–
(23,542) 115,557 2,745 (3,755) –
–
2,262
4,194
–
–
Profit before tax Income tax expense
6,456 121,003 (30,068)
Net profit
90,935
Segment assets 130,644 Investment in associated company – Investments in joint ventures – Sub-participation loan Unallocated corporate assets
34,809
104,023
101,789
77,849
–
449,114
– –
1,117 –
– 11,070
– –
– –
1,117 11,070 42,409 156,113
Consolidated total assets
659,823
Segment liabilities 42,475 Long term borrowings Unallocated corporate liabilities
25,864
43,655
23,299
29,175
–
Consolidated total liabilities Other segment items Capital expenditure: – Property, plant and equipment – Intangible assets Depreciation of property, plant and equipment Amortisation of intangible assets Impairment loss for property, plant and equipment
139,099
164,468 48,387 66,584 279,439
44,180 –
403 –
6,836 3,627
6,354 –
6,669 –
– –
64,442 3,627
4,386
1,147
4,419
2,989
5,361
–
18,302
–
–
201
1,670
139
–
2,010
–
–
–
–
6
–
6
145
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 41.
Financial information by segment (continued) (a)
Primary reporting format – geographical segments by location of assets (continued)
Thailand $’000
Taiwan $’000
Australia $’000
New Zealand $’000
Revenue from third parties Inter-segment revenue
243,981 36,000
96,592 1,055
187,711 1,086
143,451 530
Turnover
279,981
97,647
188,797
Segment results Unallocated corporate expenses
111,963
21,694
6,813
Others $’000
Eliminations $’000
Group $’000
102,315 21,029
– (59,700)
774,050 –
143,981
123,344
(59,700)
774,050
11,141
(6,057)
Group 2008
Profits from operations Finance income Finance cost Share of results of associated company and joint ventures
–
(25,679) 119,875 8,057 (6,082) –
–
2,457
4,442
–
–
Profit before tax Income tax expense
87,859 79,601
37,386
83,270
92,936
80,642
–
373,835
– –
– –
373 –
– 8,543
– –
– –
373 8,543 52,625 195,887
Consolidated total assets
631,263
Segment liabilities 33,475 Long term borrowings Unallocated corporate liabilities
23,767
35,516
20,201
28,033
–
Consolidated total liabilities Other segment items Capital expenditure: – Property, plant and equipment – Intangible assets Depreciation of property, plant and equipment Amortisation of intangible assets
146
6,899 128,749 (40,890)
Net profit Segment assets Investment in associated company Investments in joint ventures Sub-participation loan Unallocated corporate assets
145,554
140,992 59,861 68,297 269,150
35,641 –
1,978 –
8,355 –
3,136 557
15,555 –
– –
64,665 557
1,254
976
5,240
3,230
5,313
–
16,013
–
–
–
1,952
139
–
2,091
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 41.
Financial information by segment (continued) (a)
Primary reporting format – geographical segments by location of assets (continued) At 30 September 2009, the Group operates in 4 main geographical locations: •
Thailand – The operations in this area are principally the manufacture and sale of Cerebos products and investment holding.
•
Taiwan – The operations in this area are principally the manufacture and sale of Cerebos Products.
•
Australia – The operations in this area are the manufacture and distribution of a wide range of branded grocery food products for both retail and food services channel in Australia, packing and distribution of food products and investment holding.
•
New Zealand – The operations in this area are the manufacture and distribution of branded grocery food products for both retail and food services channel in New Zealand, manufacture and sales of roast & ground coffee.
Other operations of the Group mainly comprise investment holding and other manufacture and sale of Cerebos products, neither of which constitutes a separately reportable segment. Inter-segment transactions are recorded at their transacted price which is generally at fair value. Unallocated costs represent corporate expenses. Segment assets consist primarily of trade and other receivables, inventories, derivative financial instruments, other current assets, property, plant and equipment and intangible assets and exclude deferred tax assets, cash and cash equivalents, tax recoverable, financial investments, investment in associated company, investment in joint ventures and sub-participation loan. Segment liabilities comprise mainly of trade and other payables, derivative financial instruments and provisions and exclude deferred tax liabilities, current tax liabilities, short term borrowings and long term borrowings. Capital expenditures comprise additions to property, plant and equipment and intangible assets, including those acquired through business combinations. (b)
Secondary reporting format – product group segments The Group’s is organized into 3 main product group segments: •
Health supplements
•
Coffee
•
Sauces
With the exception of Health supplements, coffee and sauces, no other individual product groups contributed more than 10% of consolidated sales and assets. Sales are based on the country in which the customer is located. Total assets and capital expenditure are shown by the geographical area where the assets are located.
147
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 41.
Financial information by segment (continued) (b)
Secondary reporting format – product group segments (continued) Health Supplements $’000
Coffee $’000
Sauces $’000
Others $’000
Eliminations $’000
Group $’000
Revenue from third parties Inter-segment revenue
455,614 59,011
108,288 5,411
138,336 3,097
72,966 38
– (67,557)
775,204 –
Turnover
514,625
113,699
141,433
73,004
(67,557)
775,204
Segment assets
239,991
74,923
86,093
48,107
–
449,114
50,434 –
4,802 3,627
5,305 –
3,901 –
– –
64,442 3,627
Revenue from third parties Inter-segment revenue
427,289 57,612
107,759 642
159,308 1,446
79,694 –
– (59,700)
774,050 –
Turnover
484,901
108,401
160,754
79,694
(59,700)
774,050
Segment assets
193,990
58,671
80,036
41,138
–
373,835
51,412 –
3,826 –
5,034 –
4,393 557
– –
64,665 557
Group 2009
Capital expenditure – Property, plant and equipment – Intangible assets Group 2008
Capital expenditure – Property, plant and equipment – Intangible assets
Others relate to other foods, beverages and related services.
148
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 42.
Land and buildings The Group’s land and buildings are as follows: Address
Description
Tenure
Lot 13, Jalan 219 Federal Highway 46100 Petaling Jaya Selangor Darul Ehsan, Malaysia
Factory, laboratory, warehouse and office
Leasehold with lease expiring on 10 December 2066
Laem Chabang Industrial Estate 38/6 Moo 5, Tambol Tungsukla Amphur Sriracha, Chonburi 20230 Thailand
Factory, laboratory, warehouse and office
Leasehold with lease expiring on 29 January 2020
18 Lu Kong Road Chang Bin Industrial Park Lu Kang Town, Chang Hwa Hsien Taiwan, Republic of China
Factory, laboratory, warehouse and office
Freehold
19 Jin Xiu Road Guangzhou Economic and Technology Development District, Postal Code 510730 Guangzhou, The People’s Republic of China
Factory, warehouse and office
Leasehold with lease expiring on 23 August 2044
Lot No. B1-2 Carmelray Industrial Park II Brgy. Tulo, Calamba City 4027 Philippines
Factory, warehouse and office
Leasehold with lease expiring on 31 December 2012
Pinthong Industrial Estate Project II, 150 Moo 9, Nong-Kham Sub-District, Sriracha District, Chonburi Province 20230
Land
Freehold
Lot 64215, Jalan U8/88, Bkt Jelutung, Shah Alam, Selangor, Malaysia
Land
Freehold
400 Orchard Road #11-12 Orchard Towers Singapore 238875
Office
Freehold
92-96 Station Road, Seven Hills New South Wales, Australia
Factory, laboratory, warehouse and office
Freehold
291 East Tamaki Road, East Tamaki, Auckland, New Zealand
Factory, laboratory, warehouse and office
Freehold
51 Forth Street, Dunedin, New Zealand
Factory, laboratory, warehouse and office
Freehold
12 Newark Place, East Tamaki, Auckland, New Zealand
Warehouse and office
Freehold
Asia
Australasia
149
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 43.
Investment in subsidiaries (unquoted) The subsidiary companies in the Group are as follows: Place of incorporation and business/ name of company
Percentage of equity held 2009 2008
Principal activities
Direct interests Singapore CPL Exports Pte Ltd
100%
100%
Sale and distribution of Cerebos products in export markets and investment holding
Woh Hup Food Industries Pte Ltd
100%
100%
Sale of sauces and canned food products
Asian Home Gourmet (CPL) Pte Ltd
100%
100%
Sale and marketing of premium foodstuffs
60%
60%
Manufacture and sale of Cerebos products
Cerebos International Health Ltd (a)
100%
100%
Investment holding and carrying out of commercial activities including manufacturing, marketing and distribution
Taiwan Cerebos International Health Ltd Taiwan branch (b)
100%
100%
Manufacture and sale of Cerebos products
Thailand Asia Pacific Value Plus Limited (c)
100%
100%
Investment holding company
Australia Cerebos (Australia) Limited (d)
100%
100%
Manufacture and distribution of a wide range of branded grocery food products for both retail and food services channel in Australia
New Zealand Cerebos Gregg’s Limited (e)
100%
100%
Manufacture and distribution of a wide range of branded grocery food products for both retail and food services channel in New Zealand
Hong Kong Cerebos Pacific Services Limited (f)
100%
100%
Investment holding company
Cerebos (Hong Kong) Limited (f)
100%
100%
Sale and distribution of Cerebos products in domestic market and investment holding company
Indonesia PT Cerebos Indonesia (k)
100%
100%
Sale and distribution of Cerebos products
Japan Brand’s Japan Limited (l)
100%
100%
Sale and distribution of Cerebos products
Malaysia Cerebos (Malaysia) Sdn Bhd (a)
150
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 43.
Investment in subsidiaries (unquoted) (continued)
Place of incorporation and business/ name of company
Percentage of equity held 2009 2008
Principal activities
Indirect interests Australia Cerebos Processing Proprietary Limited (d)
100%
100%
Packing and distribution of food products
Riva Coffee Company Proprietary Limited (d)
100%
100%
Non-trading
100%
100%
Investment holding
60%
–
100%
100%
Non-trading
100%
100%
In voluntary liquidation
United Kingdom Home Gourmet (Europe) Limited (j)
100%
100%
Non-trading
The People’s Republic of China Cerebos (Guangzhou) Limited (g), (i)
100%
100%
Manufacture and sale of Cerebos products
Hong Kong Home Gourmet International Limited (m)
100%
100%
In voluntary liquidation
Thailand Cerebos Foods (Thailand) Limited (c)
100%
100%
Non-trading
90%
90%
Soberec (Thailand) Ltd (c)
100%
100%
Manufacture and sale of health supplement tablets
BRAND’S (1835) Ltd (c)
100%
100%
Manufacture and packaging
New Zealand Cerebos-Skellerup Limited (e)
51%
51%
Atomic Coffee Roasters Ltd (e)
100%
100%
Manufacture and sale of roast & ground coffee
100%
100%
Manufacture and sale of roast & ground coffee
100%
100%
Manufacture of composite caps
Menu-Master Proprietary Limited
(d)
Toby’s Estate Coffee Pty Limited (d) Malaysia Brand & Co (Malaysia) Sdn Bhd (h) Woh Hup Food Industries Sdn. Bhd
Cerebos (Thailand) Limited (c)
Caffe L’affare Limited Philippines CPL Packaging Inc (n)
(e)
(m)
Distribution of coffee, tea and chocolate products
Manufacture and sale of Cerebos products
Packing and distribution of table salt
151
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 43.
Investment in subsidiaries (unquoted) (continued) The above companies are audited by PricewaterhouseCoopers, Singapore except where indicated: (a)
Audited by PricewaterhouseCoopers, Malaysia
(b)
Audited by PricewaterhouseCoopers, Taiwan
(c)
Audited by PricewaterhouseCoopers, Thailand
(d)
Audited by PricewaterhouseCoopers, Australia
(e)
Audited by PricewaterhouseCoopers, New Zealand
(f)
Audited by PricewaterhouseCoopers, Hong Kong
(g)
Audited by PricewaterhouseCoopers, China
(h)
Audited by Chong & Associates
(i)
Audited by Nan Fang Certified Public Accountants
(j)
Audited by Chantrey Vellacott DFK
(k)
Audited by Kosasih & Nurdiyama
(l)
Not audited for FY08/09 as external audit for the entity is not compulsory under Japan Company Law when the paid-up capital is not more than JPY500m or total liability is not more than JPY20,000m
(m)
Not audited for FY08/09 as the entities are in voluntary liquidation
(n)
Audited by Isla Lipana & Co.
The above companies prepared their financial statements using the same closing date as the Company except for Cerebos (Guangzhou) Limited, which prepared its financial statements to 31 December each year. However, for the purpose of preparing the consolidated financial statements of the Group, the results for Cerebos (Guangzhou) Limited have been prepared to coincide with the same closing date as the Company. Waiver for not having a co-terminous year-end with the Group for the company has been obtained under Section 200(8) of the Companies Act, Cap. 50. 44.
Investment in associated company (unquoted)
Name of company Salpak Proprietary Limited *
Percentage of equity held 2009 2008 44.1%
44.1%
Country of incorporation and place of business Australia
Principal activities Packing and distribution of table and cooking salt to Australian domestic market
* Audited by PricewaterhouseCoopers, Australia
45.
Investment in joint ventures (unquoted)
Name of company
Percentage of equity held 2009 2008
Dominion Salt Limited *
50%
50%
New Zealand
Salt mining and processing
Dominion Salt (NI) Limited *
50%
50%
New Zealand
Salt processing
* Audited by PricewaterhouseCoopers, New Zealand
152
Country of incorporation and place of business
Principal activities
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 46.
New or revised accounting standards and FRS interpretations Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 October 2009 or later periods which the Group has not early adopted. The Group’s assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below: (a)
FRS 1(R) Presentation of Financial Statements (effective for annual period beginning on or after 1 October 2009) The revised standard required: • • •
•
All changes in equity arising from transactions with owners in their capacity as owners to be presented separately from components of comprehensive income; Components of comprehensive income not to be included in statement of changes in equity; Items of income and expenses and components of other comprehensive income to be presented either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate statement of profit and loss followed by a statement of comprehensive income); Presentation of restated balance sheet as at the beginning of the comparative period when entities make restatements or reclassifications of comparative information.
The revisions also include changes in the titles of some of the financial statements primary statements. The Group will apply the revised standard from 1 October 2009 and provide comparative information that conforms to the requirements of the revised standard. The key impact of the application of the revised standard is the presentation of an additional primary statement, that is, the statement of comprehensive income. (b)
FRS 108 Operating Segments (effective for annual period beginning on or after 1 October 2009) FRS 108 supersedes FRS 14 Segment Reporting and requires the Group to report the financial performance of its operating segments based on the information used internally by management for evaluating segment performance and deciding on allocation of resources. Such information may be different from the information included in the financial statements, and the basis of its preparation and reconciliation to the amounts recognised in the financial statements shall be disclosed. The Group will apply FRS 108 from 1 October 2009 and provide comparative information that conforms to the requirements of FRS 108. The Group is currently assessing the impact of adopting this standard.
(c)
Revised FRS 23 Borrowing Costs (effective for annual period beginning on or after 1 October 2009) The revised standard removes the option to recognise immediately as an expense borrowing costs that are attributable to qualifying assets, except for those borrowing costs on qualifying assets that are measured at fair value or inventories that are manufactured or produced in large quantities on a repetitive basis. The Group will apply the revised FRS 23 from 1 October 2009. The revised standard is not expected to have any significant impact to the Group.
Other new standards and amendments to existing standards and interpretations that are relevant to the Group but not expected to have any significant impact to the Group are as follows: (a)
Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items (effective for annual period beginning on or after 1 October 2009)
153
Notes To The Financial Statements For The Financial Year Ended 30 September 2009 46.
47.
New or revised accounting standards and FRS interpretations (continued) (b)
FRS 27 (revised) Consolidated and Separate Financial Statements (effective beginning on or after 1 October 2009)
(c)
FRS 103 (revised) Business Combinations (effective beginning on or after 1 October 2009)
(d)
Amendments to FRS 101 and FRS 27 (Cost of investment in a Subsidiary, Jointly Controlled Entity or Associate)
(e)
Amendment to FRS107: Improving disclosures about financial instruments
(f)
Amendment to FRS102: Vesting conditions and cancellations
Comparative (a)
Comparatives have been restated, after reassessment of the nature of certain advertising and promotion expenses, to better reflect the nature of these expenses. The effects on the financial statements of the Group for the financial year ended 30 September 2008 are as follows: The Group As reported in the financial statements for the financial year ended 30 September 2008 $’000 Income statement – Turnover – Cost of sales – Distribution cost, advertising and promotion expenses
(b)
Effect of the reclassification $’000
As restated $’000
824,599 (375,510)
(50,549) (9,626)
774,050 (385,136)
(187,189)
60,175
(127,014)
Comparatives of the following income statement items have been reclassified to conform with current year’s presentation. The effects on the financial statements of the Group for the financial year ended 30 September 2008 are as follows: The Group
Income statement – Share of results of: – associated company – joint ventures – Income tax expense 48.
As reported in the financial statements for the financial year ended 30 September 2008 $’000
Effect of the reclassification $’000
As restated $’000
3,511 6,808 (44,310)
(1,054) (2,366) 3,420
2,457 4,442 (40,890)
Authorisation of financial statements The Board of Directors of Cerebos Pacific Limited authorised these financial statements for issue on 7 December 2009.
154
Analysis Of Shareholdings Cerebos Pacific Limited (Incorporated in Singapore) As At 15 December 2009 By Range
Size Of Shareholdings 1 to 999 1,000 to 10,000 10,001 to 1,000,000 1,000,001 and above Total
Number of Shareholders
Percentage of Shareholders
Number of Shares
Percentage of Issued Share Capital
31
0.77
5,954
0.00
3,550
88.27
11,184,709
3.55
434
10.79
17,435,050
5.54
7
0.17
286,197,082
90.91
4,022
100
314,822,795
100
By Location
Countries
Pecentage of Shareholders
Singapore
3,864
96.07
51,504,500
16.36
Malaysia
81
2.01
563,020
0.18
Others
77
1.92
262,755,275
83.46
4,022
100
314,822,795
100
Total
Number of Shares
Pecentage of Issued Share Capital
Number Of Shareholders
155
Analysis Of Shareholdings Cerebos Pacific Limited (Incorporated in Singapore) As At 15 December 2009 Top Twenty Shareholders
Name of Shareholders
Number of Shares
Percentage of Issued Share Capital
1
SUNTORY HOLDINGS LIMITED
262,080,735
83.25
2
HSBC (SINGAPORE) NOMINEES PTE LTD
10,247,000
3.25
3
DBS NOMINEES PTE LTD
6,185,600
1.96
4
CITIBANK NOMINEES SINGAPORE PTE LTD
2,502,361
0.79
5
DBSN SERVICES PTE LTD
2,134,386
0.68
6
UNITED OVERSEAS BANK NOMINEES PTE LTD
1,975,000
0.63
7
OCBC NOMINEES SINGAPORE PTE LTD
1,072,000
0.34
8
PEH KWEE YONG
731,000
0.23
9
SING CHUNG HUI @ SING CHUNG SUI
714,000
0.23
10
DBS VICKERS SECURITIES (S) PTE LTD
607,000
0.19
11
TAN BOON KHAK HOLDINGS PTE LTD
336,000
0.11
12
NOMURA SINGAPORE LIMITED
318,000
0.10
13
LEAP INTERNATIONAL PTE LTD
300,000
0.10
14
ISHWAR DASS
255,000
0.08
15
CIMB-GK SECURITIES PTE. LTD.
243,000
0.08
16
UNIMARCO INVESTMENTS PTE LTD
238,000
0.08
17
SEAPAC INVESTMENT PTE LTD
212,000
0.07
18
TAN SECK CHUN CHRISTOPHER
205,000
0.07
19
SOO ENG HIONG
200,000
0.06
20
LIM HENG KOK
199,000
0.06
290,755,082
92.36
Number
TOTAL
The percentage of public shareholders is 16.63% which is more than 10% of the issued shares of the Company. Therefore, Rule 723 of the Listing Manual of The Singapore Exchange Securities Trading Limited has been complied with.
156
Notice Of Annual General Meeting Cerebos Pacific Limited (Incorporated in Singapore) (Registration No : 198104186H) NOTICE IS HEREBY GIVEN that the Twenty-Eighth Annual General Meeting of the Company will be held at Grand Copthorne Waterfront Hotel, Riverfront Ballroom, Level 2, 392 Havelock Road, Singapore 169663 on Thursday, 28 January 2010 at 2 p.m. to consider and if thought fit, to pass with or without any amendments, the following resolutions: Ordinary Business 1.
To receive and adopt the Directors’ Report and Audited Accounts for the year ended 30 September 2009.
2.
To declare in respect of the financial year ended 30 September 2009: (a) a first and final dividend of 6 cents per share (tax exempt one-tier) and (b) a bonus dividend of 19 cents per share (tax exempt one-tier).
3
To re-elect the following Directors, each of whom will retire by rotation: a) Teo Chiang Long b) Ramlee Bin Buang c) Lackana Leelayouthayotin
4.
To approve the re-appointment of Raja M Alias, as Director of the Company, to hold office until the next Annual General Meeting pursuant to Section 153(6) of the Companies Act, Cap. 50.
5.
To approve the payment of Directors’ fees of S$432,455 for the financial year ended 30 September 2009.
6.
To re-appoint PricewaterhouseCoopers LLP as Auditors of the Company and to authorise the Directors to fix their remuneration.
Special Business 7.
To consider and, if thought fit, to pass the following Ordinary Resolutions, with or without any modifications: a)
That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the Directors of the Company to issue shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise or in pursuance of any offer, agreement or option made or granted by the Directors during the continuance of this authority which would or might require shares or convertible securities to be issued during the continuance of this authority or thereafter) at any time to such persons and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit (notwithstanding that such issue of shares pursuant to the offer, agreement or option or the conversion of the convertible securities may occur after the expiration of the authority contained in this Resolution), provided that the aggregate number of shares and convertible securities to be issued pursuant to this Resolution shall not exceed fifty (50) percent of the issued shares of the Company, and provided further that where members of the Company with registered addresses in Singapore are not given an opportunity to participate in the same on a pro rata basis, then the number of shares and convertible securities to be issued under such circumstances shall not exceed twenty (20) percent of the issued shares of the Company, and for the purpose of this Resolution, the percentage of issued shares shall be based on the Company's issued share at the time this Resolution is passed (after adjusting for (a) new shares arising from the conversion or exercise of convertible securities, (b) new shares arising from the exercise of share options or the vesting of share awards outstanding or subsisting at the time this Resolution is passed, provided the options or awards were granted in compliance with the Listing Manual of the SGX-ST, and (c) any subsequent consolidation or subdivision of shares), and unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.
157
Notice Of Annual General Meeting Cerebos Pacific Limited (Incorporated in Singapore) (Registration No : 198104186H) b)
8.
9.
That authority be and is hereby given to the Directors of the Company to offer and grant options in accordance with the provisions of the Cerebos Pacific Limited 1998 Executives’ Share Option Scheme approved by shareholders in general meeting on 28 May 1998, amended by shareholders in general meeting on 3 March 2000 and amended by the Company on 7 February 2005, 14 August 2006 and was extended for a further period of 10 years by shareholders in general meeting held on 28 January 2008 and amended by the shareholders in general meeting on 23 January 2009, and as may be amended further from time to time (the “1998 Scheme”), and pursuant to Section 161 of the Companies Act, Cap. 50, to allot and issue from time to time such number of shares in the Company as may be required to be issued pursuant to the exercise of the options under the 1998 Scheme (notwithstanding that such allotment and issue may occur after the conclusion of the next or any ensuing Annual General Meeting of the Company), provided always that the aggregate number of shares to be issued pursuant to the 1998 Scheme shall not exceed five (5) percent of the issued shares of the Company for the time being.
To consider, and, if thought fit, to pass, the following Ordinary Resolutions, with or without any modifications: (a)
That approval be and is hereby given, for the purposes of Chapter 9 (“Chapter 9”) of the listing manual of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), for the Company, its subsidiaries and associated companies (the “Group” or “Cerebos Group”) that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the categories of interested person transactions, as described in the Company’s Addendum to Shareholders dated 12 January 2010 (being an addendum to the Annual Report of the Company for the financial year ended 30 September 2009) (the “Addendum”) with any party who is of the class of interested persons described in the Addendum, provided that such transactions are carried out in the normal course of business, at arm’s length and on normal commercial terms and in accordance with the guidelines of the Company for such interested person transactions as set out in the Addendum;
(b)
That the approval given in paragraph (a) above (the “Shareholders’ Mandate”) shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next annual general meeting of the Company; and
(c)
That the directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the Shareholders’ Mandate and/or this Resolution.
To transact any other business which may properly be brought forward.
By Order of the Board
Christine Wong Company Secretary Singapore 12 January 2010
158
Notice Of Annual General Meeting Cerebos Pacific Limited (Incorporated in Singapore) (Registration No : 198104186H) Explanatory notes: Resolution 3(a) – if re-elected, Teo Chiang Long will be considered as an independent director and will remain as Chairman of the Board of Directors, Chairman of the Nominating Committee, Remuneration Committee, Share Option Scheme Committee and a member of the Audit Committee. Resolution 4
– if re-appointed, Raja M Alias will be considered as an independent director and will remain as a member of the Audit Committee.
Resolution 7(a) – if passed, will empower the Directors, from the date of the above Annual General Meeting until the next Annual General Meeting, to allot and issue shares and convertible securities in the Company, without seeking any further approval from shareholders in general meeting but within the limitation imposed by the resolution, for such purposes as the Directors may consider would be in the best interests of the Company. The number of shares and convertible securities that the Directors may allot and issue under this Resolution will not exceed fifty (50) percent of the issued shares of the Company at the time of the passing of this Resolution. For issues of shares and convertible securities where members of the Company with registered addresses in Singapore are not given an opportunity to participate in the same on a pro rata basis, the aggregate number of shares and convertible securities to be issued shall not exceed twenty (20) percent of the issued shares of the Company at the time of the passing of this Resolution. Resolution 7(b) – if passed, gives authority to the Directors to offer and grant options and to issue shares in connection with the 1998 Scheme. This authority is in addition to the general authority to issue shares and convertible securities sought under Resolution 7(a). Resolution 8
– if passed, renews the Shareholders’ Mandate to allow the Group to enter into certain interested person transactions with persons who are considered “interested persons” (as defined in Chapter 9 of the SGX-ST Listing Manual). In accordance with the requirements of Chapter 9 of the SGX-ST Listing Manual, each of Suntory Holdings Limited and Kotobuki Realty Company Limited, being an “interested person” in relation to the Shareholders’ Mandate, will abstain from voting, and will ensure that their respective associates abstain from voting, on Ordinary Resolution 8 relating to the Shareholders’ Mandate. In addition, Akinobu Kodaira, who is a director of both the Company and Suntory Holdings Limited, Takayuki Hirashima and Hong Sik Park, who are directors of the Company and executive officers of Suntory Holdings Limited and Hiroaki Kojima, who is the Alternate Director to Akinobu Kodaira and an executive officer of Suntory Holdings Limited, are regarded as interested in the proposal relating to the renewal of the Shareholders' Mandate, and will also abstain from voting on Ordinary Resolution 8 relating to the renewal of the Shareholders’ Mandate. The Audit Committee of the Company has confirmed that the methods or procedures for determining the transaction prices of the Interested Person Transactions have not changed since the last renewal of the Shareholders’ Mandate on 23 January 2009 and that such methods or procedures are sufficient to ensure that the Interested Person Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders.
Note : A Member entitled to attend and vote at the meeting is also entitled to appoint one or two proxies to attend and vote instead of him. A proxy need not be a Member of the Company. The proxy form must be deposited at the registered office of the Company not less than 48 hours before the time appointed for the holding of the meeting.
159
Notice Of Annual General Meeting Cerebos Pacific Limited (Incorporated in Singapore) (Registration No : 198104186H) Notice of Books Closure and Dividend Payment Date NOTICE IS HEREBY GIVEN that the Register of Members and Share Transfer Books of the Company will be closed on 9 February 2010 to determine the shareholders’ entitlements to the proposed dividends. Duly completed registrable transfers of shares received by the Company’s Share Registrar, M & C Services Private Limited at 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, up to 5.00 pm on 8 February 2010 (the “Book Closure Date”) will be registered to determine shareholders’ entitlements to the proposed dividends. Subject as aforesaid, shareholders whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 pm on the Book Closure Date will be entitled to the dividends. The proposed dividends, if approved by the members at the Annual General Meeting, will be paid on 23 February 2010.
160
P R O X Y
F O R M
IMPORTANT 1.
For investors who have used their CPF monies to buy Cerebos Pacific Limited’s shares, this report is forwarded to them at the request of their CPF Approved Nominees solely FOR INFORMATION ONLY.
2.
This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
CEREBOS PACIFIC LIMITED (Incorporated in the Republic of Singapore) Registration no. 198104186H TWENTY-EIGHTH ANNUAL GENERAL MEETING
I/We
(Name)
(NRIC/Passport)
of
(Address)
being the registered holder(s) of (Note 6)
ordinary shares fully paid in the
capital of CEREBOS PACIFIC LIMITED (the “Company”), hereby appoint: Name
Address
NRIC/Passport No. Proportion of Shareholdings (%)
Address
NRIC/Passport No. Proportion of Shareholdings (%)
and/or (delete as appropriate) Name
as my/our proxy/proxies to attend and vote on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held at Grand Copthorne Waterfront Hotel, Riverfront Ballroom, Level 2, 392 Havelock Road, Singapore 169663, on Thursday, 28 January 2010 at 2.00 pm and at any adjournment thereof. I/We have indicated with an “X” in the appropriate box against such item how I/we wish my/our proxy/proxies to vote. If no specific direction as to voting is given, my/our proxy/proxies may vote or abstain as he/they may think fit on any other matter arising at the meeting. No.
Resolutions
Ordinary Business 11
To adopt the Directors’ Report and Audited Accounts
12
(a) To declare a First and Final dividend (b) To declare a bonus dividend
13
(a) To re-elect Teo Chiang Long as Director (b) To re-elect Ramlee Bin Buang as Director (c) To re-elect Lackana Leelayouthayotin as Director
14
To re-appoint Raja M Alias as Director
15
To approve payment of Directors’ Fees
16
To re-appoint PricewaterhouseCoopers LLP as Auditors and authorise Directors to fix their remuneration
For
Against
No.
Resolutions
For
Against
Special Business 17
To approve the authority to issue additional shares: (a) general power to issue shares and convertible securities (b) power to grant options and issue shares pursuant to the 1998 Scheme
18
To approve the proposed renewal of Shareholders’ Mandate for Interested Person Transaction
Total number of shares held
Dated this _____________ day of ______________ 2010
______________________________________ Signature(s) of Member(s)/Common Seal
Notes: 1.
A Member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company and where there is more than one proxy, the proportion of shares to be represented by each proxy must be stated.
2.
Where a Member appoints two proxies, he shall specify the percentage of shares to be represented by each proxy and if no percentage is specified, the first named proxy shall be deemed to represent 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the first.
3.
The instrument appointing a proxy or proxies must be under the hand of the appointer or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its seal or under the hand of any officer or attorney duly authorised.
4.
A corporation which is a Member may authorise by resolution of its Directors or other governing body, such person as it thinks fit, to act as its representative at the meeting, in accordance with Section 179 of the Companies Act, Cap. 50.
5.
The instrument appointing a proxy or proxies (together with the power of attorney (if any) under which it is signed or a certified copy thereof), must be deposited at the registered office of the Company at 18 Cross Street, #12-01/08, China Square Central, Singapore 048423 not less than 48 hours before the time set for holding the Annual General Meeting.
6.
Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50.), you should insert the number of shares. If you have shares registered in your name in the Register of Members of the Company, you should insert that number of shares. If you have shares entered against your name in the Depository Register and registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this instrument of proxy will be deemed to relate to all the shares held by you.
7.
The Company shall be entitled to reject this instrument of proxy if it is incomplete, improperly completed or illegible or where the true intentions of the appointer are not ascertainable from the instructions of the appointer specified in this instrument of proxy. In addition, in the case of Members whose shares are deposited with The Central Depository (Pte) Limited (“CDP”), the Company may reject any instrument of proxy lodged if such Member is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for the holding the Annual General Meeting as certified by CDP to the Company.
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Affix Stamp
Company Secretary
CEREBOS PACIFIC LIMITED (Registration No. 198104186H)
18 Cross Street, #12-01/08 China Square Central Singapore 048423
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