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2012ANNUAL REPORTANNUAL REPORT
THE NEXT LEAP FORWARD
BREADTALK GROUP LIMITEDBREADTALK GROUP LIMITED
The Next Leap Forward
With 10 successful years under its belt, BreadTalk® is well poised to take on its next stage of growth. Moving forward with the times means to first take stock of the present and build on past achievements before we can look ahead to a brighter, greater future.
As we look back on the momentum that we have built steadily and carefully over the years, we are certain that we have amassed the critical force we need to steer confidently ahead. Through consolidating our present means and strategically planning for the future, we move forward more prepared than ever before.
With our stable of seven brands well-loved by many consumers, we look forward to the next 10 years as the next great leap for us to surmount. Here’s to growing and advancing together in The Next Leap Forward, towards the future and beyond.
CR
EA
TIV
ER
AT
ION
ALE
CO
RP
OR
AT
EP
RO
FIL
E
Founded in 2000, and listed on the SGX since 2003, BreadTalk® transformed the face of the humble bun with innovative fl avours and a distinctive identity. Our endeavours to surprise and delight customers have earned us numerous awards and growing popularity among consumers. Focused on our vision of becoming an international, trend-setting lifestyle company, BreadTalk Group Limited has become a distinctive F&B brand with acclaimed bakery, restaurant and food atrium footprints. Our proprietary brands are BreadTalk®, Toast Box, Food Republic, RamenPlay and The Icing Room. We also manage franchises from Taiwan’s Michelin Star recipient Din Tai Fung and USA’s Carl’s Jr.
In just a decade, the Group has expanded into a network of 16 countries, including Singapore, Mainland China, Hong Kong and Indonesia. Supported by our global staff of 6000, we manage over 500 F&B outlets.
CONTENT
Corporate Profi leFinancial HighlightsChairman’s StatementBoard of DirectorsSenior ManagementBrand AccoladesGroup StructureGeographical ReachBusiness ReviewBakeryRestaurantFood AtriumCorporate GovernanceFinancial StatementStatistics of Shareholdings Notice of Annual General Meeting
0102 04070910 121416 1620242945
145 146
Our signature Flosss
bun has sold more than
50 million globally.
11
FIN
AN
CIA
LH
IGH
LIG
HT
SRevenue ($ Million) Profi t Before Tax ($ Million)
156.6 11.2
212.2 12.0
246.5 15.6
302.9 16.7
365.9 17.1
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Food Atrium25.8%
Restaurant21.0%
Bakery53.2%
Revenue Mix By Business Segment FY2011
Hong Kong9.6%
Singapore 52.3%
Rest of World
6%
Mainland China32.1%
Revenue Mix By Geographical Segment FY2011
2
BreadTalk Group Limited & Its Subsidiaries - Group Financial Highlights
FY2007 FY2008 FY2009 FY2010 FY2011
FY2007 FY2008 FY2009 FY2010 FY2011
Financial Results ($’000)
Financial Positions ($’000)
Ratios
REVENUE
OPERATING PROFIT
PROFIT BEFORE TAX
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
156,610
12,150
11,228
7,319
212,249
13,227
12,001
7,770
246,493
16,253
15,615
11,092
365,904
16,995
17,127
11,592
302,888
16,564
16,688
11,266
PROPERTY, PLANT AND EQUIPMENT
INVESTMENT IN ASSOCIATE /JOINT VENTURES
INTANGIBLE ASSETS
OTHER NON-CURRENT ASSETS
CURRENT ASSETS
CURRENT LIABILITIES
NON-CURRENT LIABILITIES
MINORITY INTERESTS
SHAREHOLDERS’ EQUITY
EARNINGS PER SHARE (CENTS) - BASIC(1)
EARNINGS PER SHARE (CENTS) - DILUTED(1)
NET ASSET PER SHARE (CENTS)(2)
NET TANGIBLE ASSET PER SHARE (CENTS)(2)
GEARING (TIMES)(3)
RETURN ON SHAREHOLDERS’ FUND (%)(4)
44,893
1,333
9,665
710
59,089
(62,996)
(5,428)
(3,170)
44,096
2.69
2.69
15.64
12.21
0.25
20.9
58,156
422
9,205
2, 026
77,348
(82,866)
(8,158)
(3,623)
52,510
2.76
2.76
18.63
15.36
0.30
16.1
64,352
284
9,097
3,890
94,462
(97,197)
(8,722)
(5,504)
60,662
3.95
3.94
21.61
18.37
0.24
19.6
4.12
4.10
27.78
24.50
0.47
15.82
4.01
3.99
24.37
21.12
0.26
18.0
(1) The basic and diluted earnings per ordinary share for FY2011 are computed based on the weighted average number of ordinary shares (excluding treasury shares) in issue during the year 281,197,676 and 282,392,002 respectively. The comparative fi gures for FY2007 to FY2009 have been restated taking into account the Company’s bonus share issue on 30 March 2010.
(2) Net assets per share and net tangible assets per share as at end of fi nancial year 2011 are computed based on the share capital of 280,655,548 ordinary shares, representing shares issued and fully paid (excluding treasury shares) as at end of the year. The comparative fi gures for FY2007 to FY2009 have been restated taking into account the Company’s bonus share issued on 30 March 2010.
(3) Gearing is computed based on total borrowings divided by total equity.
(4) Return on shareholders’ funds is the profi t after taxation and minority interests expressed as a percentage of the average shareholders’ funds.
FY2007 FY2008 FY2009 FY2010 FY2011
88,898
422
9,214
15,178
148,593
(151,484)
(25,353)
(7,498)
77,970
73,306
446
9,142
14,424
106,879
(118,254)
(10,860)
(6,521)
68,562
FIN
AN
CIA
LH
IGH
LIG
HT
S
3
Our FoundationWe had a modest but auspicious beginning. Our maiden BreadTalk® outlet in Bugis Junction in 2000 attracted long queues with its signature Flosss bun. Two years later, BreadTalk® had expanded to 20 outlets in Singapore. It became a listed company in 2003 and its fi rst overseas outlet was opened in Jakarta, Indonesia the same year. Since then, thebrand has grown steadily, overcoming serious challenges posed by SARS in 2003 and the 2008 global fi nancial crisis.
The Group’s ability to keep up the pounding pace of growth can be attributed to our passion for creating and delivering exciting, innovative experiences. This stems from our intent to always instill creative differentiation in the concepts that are built. More than a place to refuel for food, our outlets have become social destinations much talked about by consumers and at friendly prices.
In Mainland China, our Bakery outlets are found in 43 cities – an increase of fi ve over the previous year. Capitalising on the excellent prospects for Mainland China, we have invested in a centralised frozen dough factory which was opened in Shanghai in January 2012. This is a joint venture with Japanese Ajinomoto Bakery Co., Ltd, a leading player in the fi eld of bakery dough products.
Our Restaurant Division further added three Din Tai Fung restaurants, and notable Din Tai Fung openings included the long-awaited 7,200 sq ft outlet at Central World Mall (Bangkok), a duplex restaurant at 112 Katong shopping mall and at the iconic Marina Bay Sands.
The Food Atrium Division added fi ve outlets, including two in Taiwan. We are the fi rst foreign food atrium brand to enter the highly competitive Taiwan market.
Despite the global uncertainty in 2011, the Group turned in a credible performance. By focusing on delivering innovative and exciting culinary experiences to our customers, we managed to deliver another year of record results to our shareholders.
We fi nished the year with a total of 534 outlets and restaurants, an increase of 86 over the previous year, while delivering a credible double-digit growth of 20.8% in sales turnover to S$365.9 million. Excluding gain from disposal of property in FY2010, the Group’s net profi t attributable to shareholders for FY2011 improved by 63.1% over the previous year to S$11.6 million.
2011: Promising Start to a New Decade
CH
AIR
MA
N’S
STA
TE
ME
NT
“Right from the start, “Right from the start,
we set out to infuse a creative we set out to infuse a creative
difference in our products difference in our products
and embraced this as our and embraced this as our
business philosophy.”business philosophy.”
George QuekGeorge Quek
4
Going Forward: The Next Decade Begins
We started our second decade with 448 outlets and restaurants spanning 13 diverse countries in Asia and the Middle East. Our target consumers are fast growing with rising purchasing power and an appetite for new food experiences. This augurs well for the Group as our team strives continuously to lead the way for exciting dining concepts.
Our continued growth will come from sustained development of our proprietary brands, franchises and our nascent property investments to diversify our revenue streams. We will continue to nurture established relationships and build new ones. More than half of our bakery outlets are franchisee-operated, underscoring the importance of having the right downstream business partners to help us achieve our global expansion goals.
By executing our multi-pronged strategy, I am confi dent that we can be a 1,000-outlet Group in two to three years, with revenue in excess of S$1 billion in fi ve years.
With confi dence in the future, we commenced construction of our lnternational Headquarters (IHQ) in Singapore. The 10-storey building, scheduled for completion in 2013, will cost approximately S$64.1 million. Befi tting the Group’s emphasis on fl air and creativity, the building will stand out in the Paya Lebar iPark with its innovative design. The architectural concept takes its cue from the many delicate layers of a Danish pastry and alludes to the dynamic and multi-faceted BreadTalk Group.
Our IHQ will house the Group‘s main offi ce cum retail, Research & Development, training, logistics and central kitchen facilities, all under one roof. Bringing these diverse departments together will accelerate our ability to create fresh culinary delights, fast-track them through production and to the outlets.
New International Headquarters
The BreadTalk Group Training Academy will standardise preparation and delivery, and will also train overseas franchise staff to support our expansion plans. The Central Kitchen will cater to the Group’s operations in Southeast Asia. An enhanced R&D facility will continue to focus on creating trendsetting and alluring concepts and products to ensure the Group’s international competitiveness.
BreadTalk Group’s IHQ will forge
an exciting creative community. With
retail concepts on Levels 1 and 2, it will be a
destination hub for Paya Lebar’s
offi ce professionals.
5
Our pioneering property investment via a stake in the new 112 Katong Shopping Mall has begun to yield results. With its strategic location in the heart of Katong, the mall has quickly gained a solid following from residents of District 15. Besides looking forward to a good return on our investment, we have secured vantage locations for our brands at the mall, strategically fronting the mall with strong presence of our concepts.
In recognition of our track record in conceptualisation and design development, as well as our extensive experience in F&B operations, we have been invited to participate in the revamping of the heritage CHIJMES site into a vibrant F&B destination for locals and tourists in the heart of downtown Singapore. Going forward, the Group will carefully evaluate investment opportunities that are strategic to upstream integration along the retail supply chain.
Property Investments
The Board of Directors has proposed an ordinary dividend of 1.0 cents per share and a special dividend of 0.5 cents per share, subject to shareholders’ approval at the AGM.
We have grown from a company with just a handful of staff to a Group with a global staff strength of 6000 running over 500 outlets in 11 years. This enormous achievement calls for the dedication of many. I am grateful to our directors, management, staff, business partners, and shareholders for sharing in our vision. Their unstinting support is the key ingredient in our success and with their continued partnership, we will continue to make our mark.
Managing for Rapid Growth
Dividend
In Appreciation
The Group has further strengthened our management bench with the hiring of our new CFO, Mr Lawrence Yeo. He comes with more than 20 years of experience, including 10 years in Group CFO capacities in SGX-listed companies in the retail and F&B sectors.
Our ambitious growth plans require us to open a dozen new outlets every month. But unlike making more buns, adding more territories, outlets and restaurants, the formula for growth requires more complex recipes. We have to evolve a multi-dimensional approach customised to the nature of the brand and product, the ownership structure, the country and even province concerned; the peculiarities of each site and the ability to exploit economies of scale among others. We are fortunate to have dedicated and experienced professionals within our team; and partners such as franchisees and property developers who work with us to see to the sustainable expansion of our network.
The biggest challenge facing us in the immediate future continues to be infl ation and rising costs. Over the years, BreadTalk® has successfully controlled our operational costs with a robust procurement system, and by paying close attention to raising productivity and cutting wastage. It is only possible if we take a conscientious approach towards how we operate our business. Our operating models will need to evolve to be complementary to the business climates that we face.
George QuekChairman
6
George Quek Meng Tong
BO
AR
D O
F D
IRE
CT
OR
S
George, founder of the Group, was appointed to the Board on 6 March 2003 and last re-elected on 27 April 2010. Having led and grown the Company to its current empire, George continues to drive our strategic direction and development into the future.
George started his food and beverage business in Taiwan in 1982, successfully growing it into a chain of 21 Southeast Asian food outlets within a mere decade. Returning to Singapore in 1992, he then founded Topwin Singapore and subsequently Megabite China in 1996, establishing the food court businesses.
In 2000, he started the bakery business with BreadTalk® Pte Ltd and eventually brought it to list on the SGX in 2003 while creating a household name. George is a Brand Champion who has positioned the company’s brand portfolio into innovative concepts now widely accepted in Asia and throughout the world. His keen interest in the arts, creative talent and acute sense of anticipating consumer demands have led the BreadTalk Group to always position itself as an inspiring company that delights consumers time and again.
George holds a Doctorate in Business Administration (Honorary) from Wisconsin International University, USA. Amongst other awards, he won the Ernst & Young “Entrepreneur of the Year 2006” (Emerging Entrepreneur Category) and the “Entrepreneur of the Year Award 2002” organised by the Assocation of Small and Medium Entreprises and The Rotary Club of Singapore.
Chairman
LEFT TO RIGHT: ● Tan Khee Giap ● Katherine Lee Lih Leng ● George Quek Meng Tong ● Ong Kian Min ● Chan Soo Sen
7
Soo Sen was appointed to the Board on 14 August 2006 and last re-elected 26 April 2011. He is the Chairman of the Remuneration Committee, as well as member of the Audit Committee and Nominating Committee of the Company.
Soo Sen was a Member of Parliament for Joo Chiat Constituency from 1997 to 2011. He was a Minister of State and had served in several ministries including the Ministry of Community Development, Youth and Sports, Ministry of Education, and Ministry of Trade and Industry. Before entering politics, he was involved in the starting up of the China-Singapore Suzhou Industrial Park as its founding Chief Executive Offi cer in 1994, laying the foundation and framework for infrastructure and utilities development for the industrial park. He holds a Master in Management Science from the University of Stanford, USA.
After leaving public service in 2006, Mr Chan joined Keppel Corporation Ltd as Director, Chairman’s Offi ce. In 2009, he joined Singbridge International Singapore Pte Ltd, a company fully owned by Temasek Holdings to undertake major international projects, as Executive Vice President. Mr Chan is now advising a few investment companies on their China Projects. He is also an Independent Director in a fewlisted companies.
Kian Min was appointed to the Board on 30 April 2003 and last re-elected on 27 April 2010. He is the Lead Independent Director, Chairman of the Audit Committee and Nominating Committee, and member of the Remuneration Committee of the Company.
He was called to the Bar of England and Wales in 1988 and to the Singapore Bar the following year. In his 22 years of legal practice, he focused on corporate and commercial law, such as, mergers and acquisitions, joint ventures, and restructuring and corporate fi nance. In addition to practising as a consultant with Drew & Napier LLC, a leading Singapore law fi rm, he is a senior adviser of Alpha Advisory Pte. Ltd. (a corporate advisory fi rm) and CEO of Kanesaka Sushi Private Limited, which owns and operates Japanese fi ne-dining restaurants in the region. He is also non-executive chairman of Hupsteel Ltd and serves as non-executive director of several other Singapore-listed companies.
Kian Min was awarded the President’s Scholarship and Police Force Scholarship in 1979. He holds a Bachelor of Laws (Honours) external degree from the University of London and a Bachelor of Science (Honours) Degree from the Imperial College of Science and Technology in England. He was a Member of Parliament of Singapore from January 1997 to April 2011.
Khee Giap was appointed to the Board on 26 April 2011. He is a member of the Audit Committee. Khee Giap is currently Co-Director of Asia Competitiveness Institute and an Associate Professor of Public Policy at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is also the Chair of Singapore National Committee for Pacifi c Economic Cooperation. He holds directorships in a few listed companies in Singapore. Khee Giap graduated with a Ph.D from the University of East Anglia in 1987. He has consulted extensively with various government ministries, statutory boards and government-linked companies of the Singapore government. Khee Giap has served as a member of the Resource Panel of the Government Parliamentary Committee for Transport and Government Parliamentary Committee for Finance and Trade since 2007.
Katherine was appointed to the Board on 6 March 2003 and last re-elected on 26 April 2011. She oversees the Group’s research and development, as well as pioneers new ideas and concepts.
Responsible for concept creation, product development and enhancement of our various brands both locally and globally, Katherine also formulates product training and technical skill upgrade programmes to ensure proper transfer of knowledge and skills to our franchisees in line with our local operations so as to sustain product quality. In addition, Katherine spearheads product costing, which is an integral part of our product strategy.
Katherine has more than 15 years of experience in the industry. She was previously the Finance Director of Topwin Singapore prior to which she was in charge of the human resource and operations of more than 20 food and beverage outlets in Taiwan.
Katherine Lee Lih Leng
Ong Kian Min
Independent Director
Chan Soo Sen
Dr Tan Khee Giap
Independent Director
Independent Director
Deputy Chairman
8
SE
NIO
RM
AN
AG
EM
EN
T
Eng Lock was appointed Group CEO on1 January 2011. As Group CEO, he oversees the Group’s global operations, focusing on strategic planning and business development. Eng Lock has a keen grasp on the Group’s business operations, since joining the company on 1 June 2010 as Group Managing Director. Prior to his appointment as CEO, Eng Lock was Regional Managing Director with Merrill Lynch Asia Pacifi c Ltd. in Hong Kong, overseeing their North Asia businesses. He has also garnered vast senior executive and management experience at DBS Bank and United Overseas Bank growing their regional franchises in Taiwan, China and the USA. Eng Lock holds a Bachelor of Arts degree from the University of Singapore.
Lawrence assumed duties as Group Chief Financial Offi cer on 10 October 2011. He has more than 20 years of fi nancial management experience in various roles and capacities including more than 10 years as Group CFO of SGX-listed companies.
With his extensive fi nancial expertise and hands-on experience in retail operations, he will add depth to BreadTalk®’s management bench.
Mr Yeo holds an MBA from the University of Strathclyde and a Bachelor of Accountancy degree from the National University of Singapore. He is also a FCPA of the Institute of Certifi ed Public Accountants of Singapore and a member of Singapore Institute of Directors.
Oh Eng Lock
Group Chief Executive Offi cer
Goh Tong PakPresident - Chairman’s Offi ceSpecial Projects
Lawrence Yeo
Group Chief Financial Offi cer
Henry Chu Heng HweeCEO - Bakery Division
● BreadTalk®
● Toast Box● Carl’s Jr.● The Icing Room● Bread Society
Jenson Ong Chin HockCEO - Food Atrium Division
● Food Republic
Cheng WilliamCEO - Restaurant Division
● Din Tai Fung● RamenPlay
Frankie Quek Swee HengCEO - China Region
James Quek Seng HwaCEO - Asean Region
9
BreadTalk Group LimitedSales/Turnover Growth Excellence
(Hospitality/Food & Beverage)Award 2009/2010
BreadTalk® & Food RepublicListed by Brand Finance as one of Top 100 Brands
in Singapore, 2010
BreadTalk® Most Promising Brand
2002 To 2005Most Popular Brand 2002/2005
Most Distinctive Brand 2003 to 2005Silver Award 2004Gold Award 2005
Singapore Promising Brand Award - ASME and Lianhe Zaobao
BreadTalk® Finalist, World Retail Awards 2009Emerging Market Retailer of the
Year Category
BreadTalk®
Overall Winner,Regional Brands Category
Winner, Most Popular Brand, Singapore Prestige Brand Award 2011
BreadTalk®
Five Star Diamond Brand Award 2006Five Star Diamond Brand
Shanghai, PRC
BreadTalk®
Regional Brand Award 2006Singapore Promising Brand AwardAssociation of Small and Medium
Enterprises (ASME) and Lianhe Zaobao
BreadTalk® Design for Asia Award 2004
Hong Kong Design Centre
BR
AN
DA
CC
OLA
DE
S
Our consistent and dedicated efforts to brand management have placed our brands on both local and international platforms.
10
BreadTalk® Finalist
Franchisor Of The Year Award 2005Franchising and Licensing
Association of Singapore (FLA)
BreadTalk Group LimitedMost TransparentCompany Award (SIAS)
2004 and 2005 - Sesdaq Category Runner-Up2007 - Sesdaq Category Winner
2008 - Catalist Category Runner-Up2011 - Mainboard award, Runner up
Toast BoxOverall Winner,
Promising Brands CategorySingapore Prestige Brand Award 2009
Food RepublicOverall Winner,
Promising Brands CategorySingapore Prestige Brand Award 2008
BreadTalk®
Superbrand StatusSingapore version 2002/2003
Singapore Superbrands Council
George QuekEntrepreneur of the Year 2006
Emerging Entrepreneur CategoryErnst & Young
BreadTalk®
Ranked Number 1Enterprise 50 Start Up Award 2002Accenture and The Business Times
George QuekEntrepreneur of the Year 2002
ASME and The Rotary Club
11
BR
EA
DTA
LK G
RO
UP
LIM
ITE
D S
UB
SID
IAR
IES
100% 100% 100% 100%
30%
BreadTalk Group LtdBreadTalk Group Ltd
BreadTalk® International Pte Ltd
Together Inc. Pte LtdBreadTalk® Pte Ltd
Shanghai BreadTalk®
Co. LtdRamen Play Pte Ltd
Hong Kong BreadTalk® Ltd
Shanghai BreadTalk®
Gourmet Co. Ltd
Beijing BreadTalk®
RestaurantManagement Co. Ltd
Beijing BreadTalk®
Co. Ltd
BreadTalk® (Thailand)Company Limited
ML BreadWorksSdn Bhd
100%70%
75%
60%
100%100%
90%
49%
100%
100%
90%
49%
25%
Taster Food Pte Ltd
Taster Food International Pte Ltd
Taster Food (Thailand) Co. Limited
Charcoal Pte Ltd
Gro
up S
truc
ture
As
At
31 D
ecem
ber
201
1
Imagine Properties Pte Ltd
12
100%100%
100%100%
100%
100%
100%
100%
100%
100%
90%
49%
50%
30%
85%
50%
100%
100%
100%
100%
60%Shanghai Star FoodF&B Management
Co., Ltd
Beijing Star Food F&B Management
Co., Ltd
Food Republic Shenzhen F&B Management Co.,Ltd
MWA Pte Ltd
Star Food Pte LtdTopwin InvestmentHolding Pte Ltd
Food Republic (Shanghai)Co., Ltd
Shanghai Ramen PlayCo., Ltd
Beijing Da Shi Dai Food & Beverage
Co., Ltd
BreadTalk® ConceptHong Kong Limited
Food Art Pte Ltd
Megabite (S) Pte Ltd
Food Republic Guangzhou F&B
Management Co. Ltd
Chongqing Food Republic Food & Beverage
Co., Ltd
Shanghai Hong Bu Rang Food & Beverage
Management Co., Ltd
Food Republic Hangzhou F&B Co., Ltd
Megabite Hong Kong Limited
75%
30%
50%
Megabite Eatery (M)Sdn Bhd
Food Republic TaiwanCo., Ltd
FR (Thailand) Co., Ltd
Apex ExcellentSdn Bhd
Out Of The Box Pte Ltd
Street Food Pte Ltd
Food Republic Pte Ltd
13
People’s Republic of China
Oman
Kuwait
BahrainJordan
43 Cities in PRC (excluding Hong Kong)
JinhuaKunmingNanjingNantongNingboQuanzhouShanghaiShaoxingShenyangShenzhenShijiazhuangSuzhouTaiYuanTaizhou ( )Taizhou (
BeijingChangshaChangzhouChengduChongqingDalianFuzhouGuangzhouGuiyangHangzhouHarbinHefeiHuzhouJiaxinJinan
TianjinUrumuqiWenzhouWuhanWuxiXiamenXianXuzhouYanchengYangzhouZhengzhouZhenjiangZhuzhou
Bakery Food Atrium Restaurant
Bakery
Number of Outlets Worldwide
Food Atrium
Restaurant
PRC 230 ● Indonesia 79 ● Singapore 81 Philippines 21 ● Malaysia 9 ● Hong Kong 12
India 8 ● Jordan 1 ● Kuwait 5 ● Thailand 14
Korea 2 ● Bahrain 3 ● Oman 1 ● Vietnam 5
PRC 21 ● Singapore 7 ● Taiwan 2Malaysia 2 ● Hong Kong 5
Singapore 17 ● PRC 8 ● Thailand 1
GE
OG
RA
PH
ICA
LR
EA
CH
Spread across 16 countries in Asia and the Middle East, the BreadTalk Group’s creative concepts engage and excite consumers.
14
People’s Republic of China
Korea
Taiwan
Philippines
Hong KongThailand
India
Malaysia
Vietnam
Singapore
Indonesia
15
BU
SIN
ES
S R
EV
IEW
BA
KE
RY
In 2011, the Bakery Division opened 76 new outlets bringing the total number of outlets to 471: 24 outlets are owned and 52 are franchised. This contributed 53.2% to overall Group revenue, recording 23.0% growth to S$194.4 million. Excluding gain from disposal of property in 2010, operating profi t rose by 73.0 % to S$8.6 million. The profi t growth was mainly attributed to higher profi t contribution from Singapore and Mainland China bakery units on the back of higher revenue as well as smaller losses from the Malaysia bakery unit.
Financial Performance
Our Bakery Division continued to grow from strength to strength, especially in our key markets of Singapore, Mainland China and Hong Kong. As of end 2011, we have a total of 471 bakery outlets, an increase of 76 over the previous year. We expanded into Jordan in 2011, bringing the total number of countries with our presence to 16.
To grow more rapidly, we have aggressively pushed the BreadTalk® Transit concept which was fi rst introduced in Singapore in 2010. With smaller footprints than the regular outlets, we are able to access new locations like educational institutions, transit access points and other non-mall areas with high traffi c count. Implementation lead times are much shorter and fewer skilled workers are needed per outlet. Results have been encouraging and we have already rolled this concept out to Mainland China and Hong Kong.
On the Ground
4.4%
53.2%
471
Operation Margin for FY11
Contribution to FY11 revenue
Outlets as of 31 Dec 2011
This BreadTalk® Transit Store in
Shanghai promotes easy access to
products for busy city slick
ers, offering
a variety of bakery favourites for
customers on the go.
BreadTalk®’s innovative product team launched an exciting Mid-Autumn collection to suit the premium Mainland Chinese market.
16
BAKERY
Toast Box, now in seven countries, continues to
develop and grow and can be found in Singapore’s
most prestigious locations like Resorts World Sentosa
and Marina Bay Sands.
In Mainland China, our Bakery outlets are found in 43 cities, an increase of eleven. We added fi ve more cities to our network in 2011, namely Zheng Zhou, Tai Yuan, Ji Nan, Yan Cheng and Tian Jin. To meet demands of our increasing outlets, together with Ajinomoto Bakery Co., Ltd of Japan, a joint venture Frozen Dough Factory - AB Pan was set up in Shanghai to supply frozen dough to fulfi ll the capacity of 200 outlets in Mainland China. This move has created many operational advantages such as improved consistency and quality of products, and reduced equipment needs per store, improving the outlets’ productivity.
Toast Box, now in seven countries, continues to develop and grow and can be found in Singapore’s most prestigious locations like Resorts World Sentosa and Marina Bay Sands. The Toast Box concept is that of a comfortable, modern rustic environment, offering simple but appealing Asian dishes with Nanyang Kopi and thick toasts as our signatures. In 2011, we successfully introduced this Southeast Asian concept to Taiwan via our Food Republic atrium in Taipei.
AB Pan Frozen Dough Factory supplies top quality
dough products to 200 stores in Mainland China.
Our signature Nanyang Kopi is a hot favourite among the offi ce crowd.
17
BU
SIN
ES
S R
EV
IEW
B
AK
ER
Y The Icing Room is a highly participative and engaging concept offering aspiring “chefs” Design-It-Yourself (DIY) cake personalisation services and a beautiful selection of pastry delights. With décor accessories and colourful icing provided, customers enjoy expressing their creativity for a one-of-a-kind creation that unequivocally conveys their love to someone special.
To engage the young and foster family bonding, we also conduct weekly “TIR Junior Chef Workshops”, inculcating design and creative fun in our young customers. The Icing Room has grown to six outlets in Singapore and has a strong fan base among its target audience. We plan to bring this concept to Shanghai in 2012, together with our niche bakery brand, Bread Society.
Bread Society is designed to offer artisanal European-inspired breads, mixed and baked on site, to ensure the freshest and best premium taste experience possible. Recipes are grounded on back-to-basics goodness. This is ensured by having the whole process of bread making done on site and helmed by our highly experienced Japanese head chef. Our fi rst outlet is in Singapore’s iconic ION Orchard. As this is a niche brand concept, we will be selective about expanding this brand only to major cities.
The Icing Room provides the perfect
platform for exercising one’s culina
ry
creativity through its uni
que DIY
cake personalisation servi
ce.
Bread Society is an artisanal brea
d
concept that emphasizes the
back-to-basics goodness of premium
ingredients.
18
Through relentless innovation and incisive strategic initiatives, the Group has built world-class brands that are acclaimed as trendsetters in the local and international F&B industry.
While we wish to aggressively add sites and expand to more countries, we are mindful that we must do so purposefully, with the right discipline and preparation. To support the guiding vision of our Chairman, our management team must be inspired to think out of the box, to challenge the status quo and be empowered to act. Teamwork, good morale and sharing of best practices are essential. To achieve these, we practise close and constant communications all round. Two examples are our Bakery CEO Forum and our Franchisee Forum whereby leaders and owners gather to share the best practices developed for each market as well as to strengthen the team spirit.
We are always mindful of rising costs, be they rental, raw materials or manpower, and will spare no effort to improve effi ciency and productivity. Productivity improvement must come from working smarter. Thus, strategic initiatives like our frozen dough factory joint venture in Shanghai is expected to provide greater effi ciency throughout for Mainland China outlets, with better staff productivity.
The Next Leap Forward
Our Annual Franchisee Forum provides the platform for the sharing
of ideas between partners operating the BreadTalk® brand.
Spread across 43 cities in
Mainland China, BreadTalk® delights
upwardly mobile Chinese consumers with
its creative concept stores in strategic
mall locations.
19
Revenue from the restaurant segment rose strongly by 36.8% to S$77.0 million. Due to a strong performance in the 4th quarter, operating profi t for the year also grew by 38.0% to S$3.9 million. Contributing to this creditable performance was the fi rst Din Tai Fung restaurant in Bangkok, higher profi t contribution from Din Tai Fung operations in Singapore and smaller losses from RamenPlay outlets in Mainland China and Singapore and Carl’s Jr. in Mainland China.
Financial Performance
BU
SIN
ES
S R
EV
IEW
R
ES
TAU
RA
NT
5%
21%
26
Operation Margin for FY11
Contribution to FY11 revenue
Outlets as of 31 Dec 2011
Din Tai Fung’s fi rst duplex inSouth East Asia at 112 Katong, Singapore.
T F fi
Our signature Xiao Long Bao
is a classic favourite among
discerning connoisseurs.
20
Din Tai Fung, awarded one Michelin Star and ranked as one of the world’s Top Ten Best Restaurants by The New York Times, has its roots dating back to Taiwan close to 40 years ago. We have the franchise rights for this celebrated brand for Singapore and Thailand.
Our fi rst Din Tai Fung restaurant in Thailand opened in May with a lot of fanfare. This is a 7,200 sq ft outlet at Central World Mall. The opening party was prominently featured across all main media as Bangkok’s Who’s Who turned up in droves. The response has been so overwhelming that the outlet is already profi table. This has encouraged us to step up our expansion plans for Thailand.
We also opened our fi rst duplex level Din Tai Fung at the newly opened 112 Katong Mall, fronting the mall façade with strong street level visibility. Its world-renowned reputation is further cemented with its presence at the iconic Marina Bay Sands property, serving an international clientele. The team’s dedication to deliver an exciting culinary experience sees close collaboration with our Taiwanese principal, serving up new dishes frequently, to the delight of its loyal customers.
On the Ground
Mr George Quek & Mr Yang Ji-Hua, owner of Din Tai Fung Taiwan at the restaurant’s Grand Opening
celebrations in Thailand.
Entering the iconic
Marina Bay Sands location
cements Din Tai Fung as a world
class brand name with its enduring
appeal to discerning diners.
Din Tai Fung’s fi rst outlet in Bangkok.
21
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RamenPlay is a collaboration with Japan’s Sanpou Co., Ltd which has had decades of experience in the Japanese F&B industry. At RamenPlay, we offer authentic Japanese ramen delights, with premium ingredients in an upbeat and lively setting at our eight outlets in Singapore and Shanghai. Our Japanese chefs push the creative envelope to create new fl avours and concepts to enhance customers’ dining experience. With this innovative culture, we introduced 40 new menu items to draw in a younger clientele with a wider range of Japanese dishes while retaining our focus on ramen and rice dishes.
An extensive new menu featuring
authentic
hand massaged ramen, premium Nigata rice
dishes and delectable side dishes for those
who love Japanese cuisine!
22
Having secured the rights to selected cities in Mainland China, the positioning of Carl’s Jr. as a premium fast food brand has been well received by young working adults who relish the sumptuous taste of charbroiled burgers. Its positioning as a lifestyle brand has been one of exciting product and promotional initiatives that drive young consumers to our stores.
Carl’s Jr. at Metro City, Xujiahui, Shanghai
We will stay focused on creating and delivering fresh, innovative experiences and great taste in food. We will continually refresh our restaurants to keep pace with today’s affl uent consumers and their demanding lifestyles while offering meals that remain friendly to the pockets.
The Next Leap Forward
23
Financial Performance
BU
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S R
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F
OO
D A
TR
IUM
4.9%
25.8%
37
Operation Margin for FY11
Contribution to FY11 revenue
Outlets as of 31 Dec 2011
Two outlets were opened consecutively in Taiwan in December 2011. The nostalgic 1950s style old Taiwanese food streets have redefi ned the arena of the competitive food court scene.
The Food Atrium Division continued to grow, adding fi ve new outlets. Revenue from our food atrium rose S$6.0 million or 6.8% to S$94.5 million. Operating profi t rose 6.5% to S$4.7 million mainly contributed by higher profi t from Mainland China and Singapore, offset by the start-up costs incurred in new outlets in Guangzhou, Taiwan and Thailand.
24
The unique positioning of Food Republic with its thematic concepts and strong network of Asian and local food partners give us the exceptional advantage to win over property owners. Food Republic brings its exciting concepts to property developers, establishing the mall as a strong destination point.
We opened two outlets in Taiwan in December 2011 in Taipei and Taizhong. As the fi rst international food atrium player invited to enter Taiwan, we redefi ned the concept of a food court. The two food atriums have been set up beautifully, taking customers back to the 1940s and 50s of Taiwan’s food streets with original memorabilia and heritage local street eats (famous Taiwanese Xiao Chi), creating a unique mood and ambience which has never been seen previously in Taiwanese food courts. Results have been excellent.
In Mainland China, DaShiDai ( ) is a forerunner since 1997. As the country is geographically vast and diverse, it portends great opportunities for us to hone unique concepts that complement the different cities which have fast improving purchasing power. We set up in the fi rst outlet in Guangzhou at KK Mall at Taikoo Hui.
On the Ground
Food Republic 112 Katong presents the theme of a “Professional Chef’s Kitchen”. This outlet draws its inspiration from the rich Peranakan culture of Katong and reinforces the culinary heritageof the location with its strong lineup of well-known hawkers.
25
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In Hong Kong, the renovation at City Plaza - Taikoo Sing, themed “A Touch of Luxury”, has been very well received by our target customers. Incorporating art sculptures juxtaposed with elegant furniture classics, this revamp to Hong Kong’s very fi rst outlet lends a refreshing feel to the upmarket mall.
We will stay focused on targeting discerning consumers and meeting their lifestyle aspirations. Our strategy of developing unique and creative themes for our food atrium, in addition to distinctive, affordable quality and heartwarming food, are key differentiators for the Food Republic brand.
The Food Republic KK Mall
GuangZhou hosts delectable
local delights from all over China.Th F d R bli KK M ll
The newly-refurbished Food Republic City Plaza at Hong Kong’s Taikoo Sing brings a “Touch of Luxury” to working
professionals who enjoy local delights set in a restaurant ambience.
26
As a Group, BreadTalk® has forged strong relationships with landlords. Food Republic is a major tenant that enjoys signifi cant pull and negotiating muscle when sourcing for premier space in strategic locations. It is also a lead brand that allows for the other brands to be discussed in tandem during real estate negotiations. This is highly advantageous to our Group as we continuously look out for premier locations which present strong opportunities for our family of brands.
Asia will continue to be a strong region for Food Republic’s expansion. New markets such as Taiwan and Thailand will be key considerations in 2012. In Mainland China, Hong Kong, Malaysia and Singapore, we will continuously forge our base for stronger market penetration, to bolster our brand presence.
The Next Leap Forward
Dine under the stars at St. James Beer Garden. Enjoy great local food and down a refreshing beer!
Food Republic’s strong network of Asia’s top hawker brands is our competitive advantage as we bring great street eats ( ) to excite consumers’ tastebuds across different countries.
27
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Board of Directors Principal Bankers
Investor Relations
George Quek Meng TongChairman
Katherine Lee Lih LengDeputy Chairman
Ong Kian MinIndependent Director
Tan Khee GiapIndependent Director
Chan Soo SenIndependent Director
171 Kampong Ampat#05-05 KA FoodLinkSingapore 368330Tel: (65) 6285 6116Fax: (65) 6285 1661
Company Secretary
Registered Offi ce
Share Registrar
Auditors
Tan Cher Liang
Boardroom Corporate & AdvisoryServices Private Limited50 Raffl es Place#32-01 Singapore Land TowerSingapore 048623
Ernst & Young LLPPublic Accountants and Certifi ed Public AccountantsOne Raffl es QuayNorth Tower Level 18Singapore 048583Partner-in-Charge:Ang Chuen Beng(appointed since fi nancial year ended 31 December 2011)
● DBS Bank Limited● HSBC Bank● Malayan Banking Berhad● Overseas-Chinese Banking Corporation Limited● Standard Chartered Bank● United Overseas Bank Limited
Spin Capital Asia22 Malacca Street#11-03 Royal Brothers Building Singapore 048980Tel: [65] 6 227 7790
Michael TanEmail: [email protected]
28
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E This report sets out BreadTalk Group Limited’s corporate governance processes and structures that were in place throughout the fi nancial year ended 31 December 2011, with specifi c reference made to the principles and guidelines of the Code and the Best Practice Guide issued by the Singapore Exchange Securities Trading Limited (the “SGX-ST”).
The Board of Directors (the “Board”) is pleased to confi rm that for the fi nancial year ended 31 December 2011, the Company has generally adhered to the framework as outlined in the Singapore Code of Corporate Governance 2005 (the “Code”) and the amendments to the listing manual which came into effect on 29 September 2011 as announced by SGX-ST to strengthen corporate governance practices and foster greater corporate governance disclosure, where it is applicable and practical to the Company. Where there are deviations from the Code, the reasons for which deviation are explained accordingly.
Board’s Conduct of its Affairs
Principle 1: Every company should be headed by an effective board to lead 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 the board.
The primary function of the Board is to protect and enhance long-term value and returns for its Shareholders. Besides carrying out its statutory responsibilities, the Board’s roles include:-
A. BOARD MATTERS
Guideline 1.1 of the Code: The Board’s role
1.
2.
3.
4.
5.
6.
7.
Providing entrepreneurial leadership, set strategic directions and overall corporate policies of the Group;
Supervising and monitoring the performance of the management team;
Ensuring the adequacy of internal controls, risk management and periodic reviews of the Group’s fi nancial performance and compliance;
Setting the Company’s values and standards, ensuring that the necessary human resources are in place;
Approving annual budget, major investments and divestment proposals;
Assuming responsibility for good corporate governance practices; and
Approving corporate or fi nancial restructuring, share issuance, dividends and other returns to Shareholders, Interested Person Transactions of a material nature and release of the Group’s results for the fi rst 3 quarters and full year results.
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ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS
Name of Director
To assist in the execution of its responsibilities, the Board has established three (3) Board committees, namely the Audit Committee (“AC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”), to which the Board has delegated decisions on certain Board matters to the specialised Board committees.
The Board met four (4) times during the fi nancial year to discuss the key activities and business strategies of the Group. All Directors were furnished with relevant information beforehand in order to enable them to obtain further explanation where necessary, and be adequately briefed prior to the respective meetings. Minutes of the meetings are also available to the respective Board members. Ad-hoc and non-scheduled meetings are convened by Board members to deliberate on urgent and substantive matters.
The Company’s Articles of Association provides for telephone, videoconferencing, audio-visual or other electronic means of communication to facilitate meetings of the Board.
Details of Directors’ attendance at Board and Board Committee meetings held during the fi nancial year ended 31 December 2011 is summarised as follows:
Number of Meetings
Attendance
George Quek Meng Tong
Ong Kian Min
4
4
4
4
3
3
4
NA
NA
4
3
3
1
NA
NA
1
-
1
1
NA
NA
1
1
1
Katherine Lee Lih Leng
Chan Soo Sen
Tan Khee Giap
BoardAudit
CommitteeNominatingCommittee
RemunerationCommittee
Guideline 1.3 of the Code: Disclosure on delegation of authority by Board to Board Committees
Guideline 1.4 of the Code: Board to meet regularly
Guideline 1.5 of the Code: Matters requiring Board approval
Matters that are specifi cally reserved to the Board for approval are:
matters involving a confl ict of interest for a substantial Shareholder or Director;
material acquisitions and disposal of assets;
corporate or fi nancial restructuring;
share issuances, dividends and other returns to Shareholders;
matters which require Board approval as specifi ed in the Company’s Interested Person Transactions policy; and substantial expenditures exceeding a prescribed limit.
(a)
(b)
(c)
(d)
(e)
(f)
30
All Directors are appointed to the Board by way of a formal letter of appointment indicating the amount of time commitment required and scope of duties.
The Company provides a comprehensive orientation programme to familiarise new Directors with the Company’s businesses and governance practices, as well as the Group’s history, core values, strategic direction and industry-specifi c knowledge so as to assimilate them into their new roles.
Directors also have the opportunity of visiting the Group’s operational facilities and meet with the management team to gain a better understanding of the Group’s business operations. Each Director is provided with an annually updated manual containing Board and Company policies relating to the disclosure of interests in securities and confl icts of interests in transactions involving the Company, prohibition on dealings in the Company’s securities, as well as restrictions on the disclosure of price sensitive information.
Board members are encouraged to attend seminars and receive training to improve themselves in the discharge of their duties as Directors. In addition, the Company works closely with professionals to provide Directors with updates on risk management and key changes to relevant regulatory requirements and accounting standards.
Guideline 1.7 of the Code: Formal appointment letter
Guidelines 1.6 and 1.8 of the Code: Directors to receive appropriate training
Guideline 2.1 of the Code:Independence of Board
Guideline 2.2 of the Code:Independent Directors
Principle 2: There should be a strong and independent element on the board, which is able to exercise objective Judgement on corporate affairs independently, in particular, from management. No individual or small group of individuals should be allowed to dominate the board’s decision-making.
The Board comprises fi ve (5) members with majority of independent Directors: three (3) Independent non-executive Directors and two (2) Executive Directors. They are as follows:
Dr George Quek Meng Tong (Chairman)Ms Katherine Lee Lih Leng (Deputy Chairman)Mr Ong Kian Min (Lead Independent Non-Executive Director)Mr Chan Soo Sen (Independent Non-Executive Director)Dr Tan Khee Giap (Independent Non-Executive Director)
The Board has three (3) Independent Directors whose independence is reviewed by the NC annually. The NC considers an “independent” Director as one who has no relationship with the Company, its related companies or its offi cers that could interfere or be reasonably perceived to interfere, with the exercise of the Director’s independent judgement of the conduct of the Group’s affairs, and is not a substantial Shareholder, or a partner (with 5% or more stake) or an executive offi cer, or a director of any for profi t business organisation to which the Company or any of its subsidiaries has made or received signifi cant payments (aggregated in excess of S$200,000 per year) in the current or immediate past fi nancial year. Moreover, the Chairman of the NC is not associated, directly or indirectly, with a substantial Shareholder to enhance an independent view to the best interests of the Company.
As a result of the NC’s review for fi nancial year ended 31 December 2011, the NC is of the view that the Independent Directors are independent of the Company’s management as contemplated by the Code.
Board Composition and Guidance
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E The Board, in view of the nature and scope of business operations, considers that though small, the present Board size and composition facilitate effi cient and effective decision-making with a strong independent element.
Each Director has been appointed on the strength of his calibre, experience, grasp of corporate strategy and potential to contribute to the Company and its businesses. As each of the Directors brings valuable insights from different perspectives vital to the strategic interests of the Company, the Board considers that the Directors possess the necessary competencies to provide Management with a diverse and objective perspective on issues so as to lead and govern the Company effectively.
Guideline 2.3 of the Code: Appropriate Board size
Guideline 2.4 of the Code: Board to comprise Directors with core competencies
32
The Company adopts a dual leadership structure whereby the positions of chairman and chief executive offi cer are separated. There is a clear division of responsibilities between the Company’s executive Chairman and Group Chief Executive Offi cer, which provides a balance of power and authority. As Chairman, Dr George Quek Meng Tong is responsible for ensuring Board effectiveness and conduct, as well as strategic development of the Group in addition to which, he shall assume duties and responsibilities as may be required from time to time. The Group Chief Executive Offi cer, Mr Oh Eng Lock has overall responsibility of the Group’s operations, organisational effectiveness and implementation of Board policies and decisions.
Notwithstanding the above, the Non-Executive and Independent Directors fulfi ll a pivotal role in corporate accountability. Their presence is particularly important as they provide unbiased and independent views, advice and judgement to take care of the interests, not only of the Company but also of Shareholders, employees, customers, suppliers and the many communities in which the Company conducts business with. The Board had on 14 August 2006 appointed Mr Ong Kian Min as the Lead Independent Non-Executive Director to act as an additional channel available to Shareholders.
Principle 4: There should be a formal and transparent process for the appointment of new directors to the board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals.
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.
The NC comprises the three (3) Independent non-executive Directors who have been tasked with the authority and responsibility to devise an appropriate process to review and evaluate the performance of the Board as a whole as well as each individual Director on the Board. The chairman of the NC is an Independent non-executive Director, and is not a substantial Shareholder or directly associated with a substantial Shareholder.
The composition of the NC is as follows:
Mr Ong Kian Min – ChairmanMr Chan Soo Sen – MemberDr Tan Khee Giap – Member
At least one-third (1/3) of the Board shall retire from offi ce by rotation and be subject to re-election at every Company annual general meeting, and the primary responsibilities of the NC are:
Chairman and Chief Executive Offi cer
Board Membership and Board Performance
Guidelines 2.5 and 2.6 of the Code: Role of NEDs and regular meetings of NEDs
Guideline 3.1 of the Code: Chairman and chief executive offi cer should be separate persons
Guideline 3.2 of the Code: Chairman’s role
Guideline 3.3 of the Code: Appointment of Lead Independent Director
Guideline 4.1 of the Code: NC composition
Guidelines 4.2 to 4.6 of the Code: Duties of the NC
Once a year, a formal session is arranged for the Non-Executive Directors (“NEDs”) to meet without the presence of Management or executive Directors to discuss any matters that must be raised privately. The session is chaired by Mr Ong Kian Min, the Lead Independent Non-Executive Director, who is also the chairman of the AC and NC.
Principle 3: There should be a clear division of responsibilities at the top of the company – the working of the board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.
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Access to Information
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For the year under review, with the Board’s approval, the NC has decided on how the Board’s performance is to be evaluated as a whole and proposed objective performance criteria including Board composition, size and expertise, Board information and timeliness, as well as Board commitment and accountability. In assessing each individual Director’s contribution and performance to the effectiveness of the Board, the NC takes into consideration factors such as attendance, preparedness, participation and candour.
The NC has met once during the fi nancial year under review on 24 February 2011. Each member of the NC shall abstain from voting on any resolution in respect of the assessment of his performance or re-nomination as a Director. Details of Board members’ qualifi cations and experience including the year of initial appointment are presented in this Annual Report under the heading “Board of Directors”.
Principle 6: In order to fulfi ll their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.
Guidelines 5.1 to5.4 of the Code: Assessing theBoard’s effectiveness
To make recommendations to the Board on the appointment of new Executive and Non-Executive Directors, including making recommendations on the composition of the Board generally and the balance between Executive and Non-Executive Directors appointed to the Board, as well as ensuring there are procedures in place for the selection and appointment of NEDs.
To regularly review the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary.
To be responsible for assessing nominees or candidates for appointment or election to the Board, determining whether or not such nominees have the requisite qualifi cations and whether or not they are independent.
To make plans for succession, in particular for the Chairman, Group Chief Executive Offi cer and other key executives.
To determine, on an annual basis, if a Director is independent. If the NC determines that a Director, who has one or more of the relationships mentioned under the Code is in fact independent, the NC would disclose in full, the nature of the Director’s relationship and bear responsibility for explaining why he should be considered independent.
To recommend Directors who are retiring by rotation to be put forward for re-election.
To decide whether or not a Director is able to and has been adequately carrying out his duties as a Director of the Company, particularly when he has multiple board representations.
To be responsible for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual Director to the effectiveness of the Board and disclosing annually, this assessment process.
1.
2.
3.
4.
5.
6.
7.
8.
34
The Board receives complete and adequate information on an on-going basis. The Management provides the Chairman and Deputy Chairman with monthly management accounts and the rest of the Board members with quarterly management accounts. The agenda for Board meetings is prepared in consultation with the Chairman and it will be circulated at least one (1) week in advance to Board members of each meeting.
Furthermore, the Board has separate and independent access to the Company Secretary and senior executives, and there is no restriction of access to the senior Management team of the Company or Group at all times in carrying out its duties.
The Company Secretary or his agent attends all formal Board meetings to respond to the queries of any Director and ensures that Board procedures are followed and that all applicable rules and regulations are complied with.
Where decisions to be taken by the Board require specialised knowledge or expert opinion, the Board takes independent professional advice as and when necessary to enable it or the Independent Directors to discharge the responsibilities effectively.
Procedures for Developing Remuneration Policies
Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fi xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.
The RC, established for the purpose of ensuring that there is a formal and transparent procedure for fi xing the remuneration packages of individual Directors, comprises three (3) Independent Non-Executive Directors. The chairman of the RC is an Independent Non-Executive Director.
The RC comprises the following:
Mr Chan Soo Sen – ChairmanDr Tan Khee Giap – MemberMr Ong Kian Min – Member
The overriding principle is that no Director should be involved in deciding his own remuneration. The RC has adopted a written term of reference that defi nes its membership, roles, functions and administration.
During the fi nancial year under review, the RC had held one (1) meeting on 8 February 2011. The primary responsibilities of the RC are as follows:
B. REMUNERATION MATTERS
Guidelines 6.1 and 6.2 of the Code: Information to the Board
Guideline 6.3 of the Code: Access to and role of the Company Secretary
Guideline 6.5 of the Code: Access to independent professional advice
Guideline 7.1 of the Code: RC to consist entirely of NEDs and majority, includingRC chairman, must be independent
Guideline 7.2 of the Code: RC’s responsibilities
1.
2.
3.
4.
To review and recommend to the Board in consultation with the Chairman of the Board, a framework of remuneration and to determine the specifi c remuneration packages and terms of employment for each of the executive Directors and senior executives or divisional Directors (those reporting directly to the Chairman or Group Chief Executive Offi cer) and those employees related to the Executive Directors and controlling Shareholders of the Group.
To review and recommend to the Board in consultation with the Chairman of the Board, any long term incentive schemes which may be set up from time to time and to do all acts necessary in connection therewith.
To administer the BreadTalk Group Limited Employees’ Share Option Scheme (the “Scheme”) and shall have all the powers as set out in the Rules of the Scheme.
To administer the BreadTalk Group Limited Restricted Share Grant Plan (the “RSG Plan”) and shall have all the powers as set out in the Rules of the RSG Plan.
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E To carry out its duties in the manner that it deems expedient, subject always to any regulations or restrictions that may be imposed upon the RC by the Board from time to time.
As part of its review, the RC shall ensure that:
(i)
(ii)
(iii)
5.
6.
Guidelines 8.1 to 8.5of the Code: RC to recommend remuneration of Directors and review remuneration of key executives
all aspects of remuneration including but not limited to Directors’ fees, salaries, allowances, bonuses, options and benefi ts-in-kind should be covered.
the remuneration packages should be comparable within the industry and comparable companies and shall include a performance-related element coupled with appropriate and meaningful measures of assessing individual executive Directors’ and senior executives’ or divisional Directors’ performance.
the remuneration package of employees related to Executive Directors and controlling Shareholders are in line with the Group’s staff remuneration guidelines and commensurate with their respective job scopes and levels of responsibility.
Level and Mix of Remuneration
Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signifi cant proportion of remuneration, especially that of executive directors, should be structured so as to link rewards to corporate and individual performance.
The Company advocates a performance based remuneration system for executive Directors and key executives that is fl exible and responsive to the market, comprising a base salary and other fi xed allowances, as well as variable performance bonus and participation in an employee share award or scheme based on the Company’s performance and linking it to the individual’s performance.
In determining such remuneration packages, the RC will ensure that they are adequate by considering, in consultation with the Chairman or Group Chief Executive Offi cer amongst other things, the respective individuals’ responsibilities, skills, expertise and contribution to the Company’s performance, and whether they are competitive and suffi cient to ensure that the Company is able to attract and retain the best available executive talent, meanwhile keeping tabs that they are not excessive.
At an Extraordinary General Meeting held on 28 April 2008, the shareholders of the Company had approved the adoption of the RSG Plan. Under the RSG Plan and any other share based schemes of the Company, the aggregate number of shares to be issued shall not exceed fi fteen per cent. (15%) of the total issued share capital excluding treasury shares of the Company and will be in force for a maximum period of 10 years commencing from 28 April 2008.
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The award of shares under RSG Plan can be either performance based awards or time based awards. For performance based awards, entitled participant will be allotted fully paid shares upon satisfactory achievement of pre-determined performance targets. As for time-based awards, entitled participant will be allotted fully paid shares upon satisfactory completion of time based service conditions that is, after the participant has served the Company or as the case may be, the relevant associated company, for a specifi ed duration, as may be determined by the RC.
The adoption of RSG Plan is consistent with the continuing efforts of the existing Scheme in rewarding, retaining and motivating employees to achieve superior performance standards and afford the Company greater fl exibility to align the interests of employees with those of the shareholders. To date, the Company has issued 1,516,310 shares under its RSG Plan.
The RC has adopted a framework which consists of a base fee to remunerate Non-Executive Directors based on their appointments and roles in the respective Committees, as well as the fees paid in comparable companies. Fees for the Non-Executive Directors will be tabled at the forthcoming Annual General Meeting to be held on 25 April 2012 (the “AGM”) for Shareholders’ approval. The notice periods in the service agreements of the Executive Directors and key executives of the Group are set at a period of not more than 6 months. The Company confi rms that there is no onerous removal clause in any of the service agreements.
Guideline 8.6 of the Code: Notice periods in service contracts to be six (6) months orless
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Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedures for setting remuneration in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.
A breakdown showing the level and mix of each Director’s and key Executives remuneration for the year ended 31 December 2011 is set out below:
Disclosure on Remuneration
REMUNERATION OF DIRECTORS AND KEY EXECUTIVES
Name of Director
S$700,000 to below S$800,000
S$500,000 to below S$600,000
Below S$100,000
George Quek Meng Tong
Ong Kian Min
Katherine Lee Lih Leng
Chan Soo Sen
Tan Khee Giap
%
55
63
-
-
-
Salary(1)
%
39
32
-
-
-
Bonus /Profi t
Sharing
%
3
5
-
-
-
Shared-basedCompensation
%
2
-
-
-
-
Benefi ts-In-Kind
100
%
-
-
100
100
Directors’Fee2
%
100
100
100
100
100
Total
Guidelines 9.1 to 9.3 of the Code: Directors’, key executives’ and related employees’remuneration
38
Notes:
(1) Salary is inclusive of fi xed allowance and CPF contribution.
(2) Directors’ fees will be paid after approval is obtained from Shareholders at the forthcoming AGM to be held on 25 April 2012.
(3) Mr Frankie Quek is the brother of Dr George Quek.
(4) Mr James Quek Seng Hwa has been appointed as CEO Asean with effect from 1 March 2011.
(5) Mr Cheng William has been appointed as CEO Restaurant Division with effect from 1 January 2011.
(6) Mr Lawrence Yeo Kia Yeow has been appointed as Group CFO with effect from 10 October 2011.
Save as disclosed, no other employee whose remuneration exceeded S$150,000 during the year is an immediate family member of any of the members of the Board.
Name of Key Executives(who are not Directors)
S$500,000 to S$750,000
S$250,000 to S$500,000
Below S$250,000
Oh Eng Lock
Goh Tong Pak
James Quek Seng Hwa(4)
Henry Chu Heng Hwee
Frankie Quek Swee Heng(3)
Jenson Ong Chin Hock
Cheng William(5)
Lawrence Yeo Kia Yeow (6)
%
60
85
52
66
85
63
54
32
Salary(1)
%
33
12
39
28
13
31
37
68
Bonus /Profi t-
Sharing
%
7
3
9
6
2
6
9
-
Shared-based
Compensation
Group Chief Executive Offi cer
President (Chairman’s
Offi ce)
CEO, ASEAN
Chief Executive Offi cer
(Bakery Division)
CEO, China
CEO, Food Atrium Division
CEO, Restaurant Division
Group Chief Financial Offi cer
Designation
%
-
-
-
-
-
-
-
-
Benefi ts-In-
Kind
%
100
100
100
100
100
100
100
100
Total
39
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For all announcements (including fi nancial performance reporting) made to the public via SGXNET and the annual report to Shareholders, as required by the SGX-ST, the Board has a responsibility to present a fair assessment of the Group’s position, including the prospects of the Group.
To enable effective monitoring and decision-making by the Board, Management provides the Board with a continual fl ow of relevant information on a timely basis as well as quarterly management accounts of the Group. Particularly, prior to the release of quarterly and full year results to the public, Management will present the Group’s fi nancial performance together with explanatory details of its operations to the AC, which will review and recommend the same to the Board for approval and authorisation for the release of the results.
Principle 11: The board should establish an audit committee with written terms of reference, which clearly set out its authority and duties.
The role of the AC is to assist the Board in the execution of its corporate governance responsibilities within the established Board’s references and requirements. The fi nancial statements, accounting policies and system of internal accounting controls are responsibilities that fall under the ambit of the AC. The AC has its set of written terms of reference defi ning its scope of authority and further details of its major functions are set out below and also in the Report of the Directors.
The AC comprises three (3) members who are all Independent non-executive Directors. The chairman of the AC is an Independent non-executive Director.
The members of the AC are:
Mr Ong Kian Min – ChairmanMr Chan Soo Sen – MemberDr Tan Khee Giap – Member
The members of the AC collectively have expertise or experience in fi nancial management, and are qualifi ed to discharge the AC’s responsibilities.
In performing its functions, the AC confi rms that it has explicit authority to investigate any matter within its terms of reference, full access to and co-operation from the Management, and has been given full discretion to invite any Director or executive offi cer to attend its meetings, as well as reasonable resources to enable it to discharge its functions properly.
C. ACCOUNTABILITY AND AUDIT
Audit Committee
Accountability
Guideline 10.1 of the Code: Board’s responsibility to the public
Guideline 10.2 of the Code: Management’s responsibility to the Board
Guidelines 11.1, 11.2 and 11.8 of the Code: Board to establish AC and composition of AC
Guideline 11.3 of the Code: AC’s authority
40
The AC held four (4) meetings during the fi nancial year under review. It has reviewed the fi nancial statements of the Group for the purpose of the fi rst 3 quarters and annual results release before they were submitted to the Board for approval. It has also met with the Company’s internal and external auditors to review their audit plans and results, and has separate and independent access to the auditors. The AC had reviewed the non-audit services provided by the external auditors, Messrs Ernst & Young LLP and is of the opinion that the provision of such services does not affect their independence. The fees payable to auditors is set out on page 94 of this Annual Report.
The Group has complied with Rule 712 and Rules 715 or 716 of the Listing Manual issued by Singapore Exchange Securities Trading Limited in relation to its auditors. As required by Rule 716 of the Listing Manual, the Audit Committee and the Board of Directors of the Company has satisfi ed themselves that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Group.
Where there is any suspected fraud or irregularity, or failure of internal controls, or infringement of any Singapore law, rule or regulation which has a material impact on the Company’s operating results, the AC will commission and review the fi ndings of internal investigations into the matters. Endorsed by the AC, the Company has in place a whistle-blowing framework which provides an avenue for staff of the Company to access the AC chairman to raise concerns about improprieties and independent investigation of such matters by the AC. Contact details of AC have been made available to all staff.
1.
2
3.
4.
5.
6.
7.
The main functions of the AC are as follows: Guideline 11.4 of the Code: Duties of AC
Guidelines 11.5 and 11.6 of the Code: Meeting with auditors and review of their independence
Guideline 11.7 of the Code: Whistle-blowing arrangements
Guideline 12.2 of the Code: AC to comment on the adequacy of internal controls
Guideline 12.1 of the Code: AC to review adequacy of the fi nancial, operational and compliance controls and risk management policies.
Review the audit plan of the Company’s external auditors and adequacy of the system of internal accounting control;
Discuss and review external auditors’ reports;
Review signifi cant fi nancial reporting issues and judgements so as to ensure the integrity of the fi nancial statements and any formal announcements relating to the Company’s or Group’s fi nancial performance;
Review and recommend the nomination of the external auditors for appointment or re-appointment;
Review the Interested Person Transactions;
Review the scope and result of the internal audit procedures; and
Review the remuneration packages of the employees who are related to the Directors or substantial Shareholders.
Principle 12: The board should ensure that the management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.
The Internal Auditors carried out internal audit on the system of internal controls and report the fi ndings to the AC. The Group’s External Auditors, Ernst & Young LLP have also carried out, in the course of their statutory audit, a review of the Group’s material internal controls. Material non-compliance and internal control weaknesses and recommendations for improvements noted during their audit are reported to the AC. The AC has reviewed the effectiveness of the actions taken by the management on the recommendations made by the Internal and External Auditors in this respect.
For the fi nancial year ended 31 December 2011, the Board believes that in the absence of any evidence to the contrary, the system of internal controls maintained by the Group’s management that was in place throughout the fi nancial period up to the date of this report, provides reasonable, but not absolute assurance against material fi nancial misstatements or loss. The Board notes that no system of internal control could provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human errors, losses, fraud or other irregularities. Based on the aforesaid, the AC and the Board are satisfi ed that there are adequate internal controls in the Group in addressing the Group’s fi nancial, operational and compliance risks.
Internal Control
41
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Since 2006, the Group had outsourced its internal audit function to RSM Ethos Pte Ltd, a merged entity of Stone Forest Consulting Pte Ltd and Ethos Advisory Pte Ltd (formerly known as Stone Forest Consulting Pte Ltd). The Internal Auditor is guided by the Standards for Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The Internal Auditors report directly to the Chairman of the AC. The AC reviews the scope of internal audit function, internal audit fi ndings and the internal audit plan.
Principle 14: A company should engage in regular, effective and fair communication with its shareholders.
Principle 15: A company should encourage greater shareholder participation at annual general meetings and allow its shareholders the opportunity to communicate their views on various matters affecting the company.
The Board has adopted a policy of openness and transparency in the conduct of the Company’s affairs while preserving the commercial interests of the Company. Financial results and other price sensitive information are disseminated to Shareholders via SGXNET, press releases, the Company’s website, and through media and analyst briefi ngs.
The Board strives to ensure that all material information is disclosed to the shareholders on an adequate and timely basis. The Board informs and communicates with shareholders through annual reports, announcement released through SGXNET, press releases, advertisements of notice of general meetings in local newspapers.
Notices of general meetings are despatched to shareholders, together with the annual report or circulars within the time notice period as prescribed by the regulations. At general meetings, shareholders are given opportunities to voice their views and direct their questions to directors or management regarding the Company. The chairman of the AC, NC and/or RC are present and available to address questions at general meetings. The External Auditors are also present to assist the Board.
In preparation for the annual general meeting, shareholders are encouraged to refer to SGX’s investor guides, namely ‘An Investor’s Guide To Reading Annual Reports’ and ‘An Investor’s Guide To Preparing For Annual General Meetings’. The guides, in both English and Chinese versions are available at the SGX website via this link : http://www.sgx.com/wps/portal/marketplace/mp-en/investor_centre/investor_guide
The Company has in place an investor relations programme to keep investors informed of material developments in the Company’s business and affairs beyond that which is prescribed, but without prejudicing the business interests of the Company.
The Company’s Articles of Association do not restrict the number of proxy a shareholder can appoint to attend and vote on his/her behalf at all general meetings. There are separate resolutions at the general meetings for each distinct issue. The Board and Management are on hand at general meetings to address questions by shareholders.
Internal Audit
Communication with Shareholders
Guidelines 13.1 to 13.4 of the Code: IA to report to AC chairman
Guidelines 14.1 to 14.2 of the Code: Regular, effective and fair communications with shareholders
Guideline 15.3 of the Code: Chairman and external auditors present at general meetings
Guideline 15.1-15.2 and 15.4 of the Code: Shareholders should be allowed to vote in absentia, avoid bundling of resolutions and limit on proxy.
42
The Company has adopted and implemented an Insider Trading (Prevention) Policy (the “Policy”). The Policy is to ensure that the Company’s Directors, offi cers, employees of the Group as well as consultants or contractors to the Group (collectively the “Covered Persons”) and immediate family members of Covered Persons are aware of their legal obligations in relation to the dealing of securities in the Company. Covered Persons who are in possession of unpublished material price sensitive information and use such information for their own material gain in relation to those securities is an offence. The Company, while having provided the window periods for dealing in the Company’s securities, has its own internal compliance code in providing guidance to its offi cers with regards to dealing in the Company’s securities including reminders that the law on insider trading is applicable at all the times.
On 28 May 2009, a Disciplinary Committee (“DC”) was formed to conduct inquiry on a possible breach of the Policy. The role of the DC is to report its fi nding to the Board and make recommendation as to the penalty if applicable. The Board will decide based on the DC’s recommendation.
The DC comprises three (3) members, a majority of whom are Independent Non-Executive Directors. The chairman of the DC is an Independent Non-Executive Director.
The DC consists of:
Mr Ong Kian Min – ChairmanDr George Quek Meng Tong – MemberMr Chan Soo Sen – Member
Dealing in Securities
Guideline 15.5 of the Code: Minutes of general meetings
Minutes of general meetings are prepared and made available to shareholders upon their requests by the Company Secretary.
When a potential confl ict arises, the Directors concerned do not participate in discussions and refrains from exercising any infl uence over other members of the Board.
The AC has reviewed the Interested Person Transactions (“IPT”) entered into during the fi nancial year by the Group and the aggregate value of IPT entered during the fi nancial year ended 31 December 2011 is as follows:
Interested Person Transactions
Name of Interested Person
(1) Monewell Enterprise - Purchase of Chinese New Year Cookies
(2) Kung Fu Kitchen - Food court rental income/ miscellaneous charges
Aggregate value of all IPTs conducted during the fi nancial year under review
under shareholders’ mandate pursuant to Rule 920 (excluding
transactions less than S$100,000)
Not applicable - the Company does not have a shareholders’
mandate under Rule 920
(3) Sky One Art Investment Pte Ltd - Purchase of furniture and fi ttings
Aggregate value (S$’000) of all IPTs during the
fi nancial year under review (excluding transactions
less than S$100,000 and transactions conducted
under shareholders’ mandate pursuant to Rule 920)
75.3
221.4
194.3
43
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Except as disclosed in Interested Person Transactions, there is no material contract or loan entered into by the Company or any of its subsidiaries involving interests of any Director or controlling shareholder during the fi nancial year ended 31 December 2011.
The Group regularly reviews and improves its business and operational activities to identify areas of signifi cant business risks as well as taking appropriate measures to control and mitigate these risks. The Group reviews all signifi cant control policies and procedures and highlights all signifi cant matters to the AC and the Board.
During the last quarter of the fi nancial year ended 31 December 2011, the AC and the Board had commissioned Management to seek quotations from several professional fi rms specialising in enterprise risk management in order to further enhance the robustness of overall risk management within the Group. The evaluation exercise is still ongoing and no candidate has been shortlisted yet. The existing fi nancial risk management objectives and policies are outlined in the fi nancial statements.
Material Contracts
Risk Management
44
IndexPage
GE
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Directors’ Report 46
Statement by Directors 53
Independent Auditors’ Report 54
Consolidated Statement of Comprehensive Income 56
Balance Sheets 57
Statements of Changes in Equity 59
Consolidated Cash Flow Statement 62
Notes to the Financial Statements 65
45
DIR
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T The directors are pleased to present their report to the members together with the audited fi nancial statements of BreadTalk Group Limited (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the fi nancial year ended 31 December 2011.
Directors
The directors of the Company in offi ce at the date of this report are:
George Quek Meng Tong Katherine Lee Lih Leng Ong Kian Min Chan Soo Sen Tan Khee Giap
Except as disclosed in this report, neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement whose objects are, or one of whose object is, to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares or debentures of the Company or any other body corporate.
Directors’ interests in shares and debentures
The following directors, who held offi ce at the end of the fi nancial year, had, according to the register of directors’ shareholdings required to be kept under section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company as stated below:
Arrangements to enable directors to acquire shares and debentures
Name of director
The Company(Ordinary shares)
George Quek Meng TongKatherine Lee Lih LengOng Kian MinTan Khee Giap
George Quek Meng TongKatherine Lee Lih Leng
As at 1January
2011
95,538,55652,282,800
120,000–
111,10494,220
Direct interestAs at 31
December2011
95,583,95252,319,880
120,000–
125,708117,140
As at 21January
2012
95,583,95252,319,880
120,000–
125,708117,140
52,282,80095,538,556
–20,000
94,220111,104
52,319,88095,583,952
–20,000
117,140125,708
52,319,88095,583,952
–20,000
117,140125,708
(Conditional award of restricted shares)
(Chairman)(Deputy Chairman)
As at 1January
2011
Deemed interestAs at 31
December2011
As at 21January 2012
46
Directors’ interests in shares and debentures (cont’d)
By virtue of Section 7 of the Companies Act, Cap. 50, George Quek Meng Tong and Katherine Lee Lih Leng are deemed to be interested in the shares held by the Company in its subsidiaries.
Except as disclosed in this report, no other director who held offi ce at the end of the fi nancial year had interest in shares or debentures of the Company, or of related corporations, either at the beginning of the fi nancial year, date of appointment or the end of the fi nancial year or on 21 January 2012.
Directors’ contractual benefi ts
Except as disclosed in the fi nancial statements, since the end of previous fi nancial year, no director of the Company has received or become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation with the director, or with a fi rm of which the director is a member, or with a company in which the director has a substantial fi nancial interest.
Share Option and Share Plans
The Company has a Share Option Scheme and a Restricted Share Grant Plan which are administered by the Remuneration Committee comprising three Directors namely Messrs Chan Soo Sen (Chairman), Ong Kian Min (Member) and Tan Khee Giap (Member). Details of the Share Option Scheme and the Restricted Share Grant Plan are as follows:
The BreadTalk Group Limited Employees’ Share Option Scheme
The BreadTalk Group Limited Employees’ Share Option Scheme (“ESOS”) was approved at an Extraordinary General Meeting held on 30 April 2003. The following persons are eligible to participate in the ESOS at the absolute discretion of the Remuneration Committee:
(i) Employees and Directors
Employees, Executive directors and Non-Executive directors of the Group who are not on probation and have attained the age of 21 years on or before the Offering Date.
(ii) Controlling Shareholders and their Associates
Controlling Shareholders or their Associates whose participation and actual number of shares issued to them must be approved by independent shareholders in general meeting.
(a)
47
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(a) The BreadTalk Group Limited Employees’ Share Option Scheme (cont’d)
Size of ESOS
(b) The BreadTalk Restricted Share Grant Plan
The total number of new shares over which options may be granted pursuant to the ESOS shall not exceed fi fteen per cent (15%) of the issued share capital of the Company on the date preceding the grant of an option.
The aggregate number of Shares available to eligible Controlling Shareholders and their Associates under the ESOS shall not exceed twenty fi ve per cent (25%) of the Shares available under the ESOS. In addition, the number of Shares available to each Controlling Shareholder or his Associate shall not exceed ten per cent (10%) of the Shares available under the ESOS.
Grant of ESOS
Options may be granted from time to time during the year when the ESOS is in force, except that options shall be granted on or after the second market day on which an announcement of any matter involving unpublished price sensitive information is released.
Acceptance of ESOS
The grant of an option shall be accepted not more than 30 days from the offering date of that option and accompanied by payment to the Company of a nominal consideration of $1 or such other amount as required by the Remuneration Committee.
Since the commencement of the ESOS up to the end of the fi nancial year, there were no options granted to any person. Any options granted under the ESOS do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any share issue of any other company.
The BreadTalk Restricted Share Grant Plan (“RSG Plan”) was approved at an Extraordinary General Meeting held on 28 April 2008.
The RSG Plan is centred on the accomplishment of specifi c pre-determined performance objectives and service conditions, which is the prerequisite for the contingent award of fully paid Shares (“Award”). The reward structure allows the Company to target specifi c performance objectives and incentivise the Participants to put in their best efforts to achieve these targets.
48
Eligibility
The following persons shall be eligible to participate in the RSG Plan subject to the absolute discretion of the Remuneration Committee:
(i) Employees
(ii) Directors
Controlling Shareholders and their Associates within the above categories are eligible to participate in the RSG Plan. Participation in the RSG Plan by Controlling Shareholders or their Associates must be approved by the independent shareholders. A separate resolution shall be passed for each such Participant and to approve the number of Shares to be awarded to the Participant and the terms of such Award.
There shall be no restriction on the eligibility of any Participant to participate in any other share option or share incentive schemes implemented or to be implemented by the Company or another company within the Group.
Size of RSG Plan
The aggregate number of Shares available to eligible Controlling Shareholders and their Associates under the RSG Plan shall not exceed twenty fi ve per cent (25%) of the Shares available under the RSG Plan. In addition, the number of Shares available to each Controlling Shareholder or his Associate shall not exceed ten per cent (10%) of the Shares available under the RSG Plan.
The aggregate number of Shares to be awarded pursuant to the RSG Plan when added to the number of Shares issued and issuable in respect of such other Shares issued and/or issuable under such other share-based incentive schemes of the Company, including but not limited to the ESOS, shall not exceed fi fteen per cent (15%) of the total issued share capital excluding treasury shares of the Company on the day preceding the relevant Award Date.
Share Option and Share Plans (cont’d)
(b) The BreadTalk Restricted Share Grant Plan (cont’d)
Employees who are confi rmed in their employment with the Company or any subsidiary, or employees of associated companies who hold such rank as may be designated by the Committee from time to time and who, in the opinion of the Committee, have contributed or will contribute to the success of the Group; and
Executive and non-executive directors of the Company and its subsidiaries, provided always that any of the aforesaid persons:
- have attained the age of twenty-one (21) years on or before the Award Date; and - not undischarged bankrupts.
49
Grant of RSG Plan
The grant of Awards under the RSG Plan may be made from time to time during the year when the RSG Plan is in force.
While Awards may be granted at any time in the year, it is anticipated that Awards under the RSG Plan would be made once a year, after the Company’s annual general meeting. It will be administered by the Remuneration Committee.
Share Awards and Vesting
The fi nal number of restricted shares awarded will depend on the achievement of pre-determined targets over a one year period. On meeting the performance conditions for the performance period, one-third of the restricted shares will vest. The balance will vest equally over the subsequent two years with fulfi lment of service requirements.
The details of the restricted shares awarded under the RSG Plan since its commencement up to 31 December 2011 are as follows:
Share Option and Share Plans (cont’d)
(b) The BreadTalk Restricted Share Grant Plan (cont’d)
Name of Participant
Directors of the Company
Associate of a Controlling Shareholder
George Quek Meng Tong (1)
Frankie Quek Swee Heng (2)
201,200 - 45,396 75,492 125,70865,000
176,000
106,000
-
-
37,080
26,880
58,860
48,660
117,140
57,340
65,000
25,000
Katherine Lee Lih Leng (1)
Conditional restricted
shares granted
during the year
Aggregate conditional
restricted shares awarded since
commencement of the Plan
Aggregate conditional
restricted shares lapsed since
commencement of the Plan
Aggregate conditional restricted
shares vested and released
during the year
Aggregate conditional
restricted shares vested and
released since commencement
of the Plan
Aggregate conditional
restricted shares outstanding at end of the year
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50
Share Option and Share Plans (cont’d)
(1) Also a controlling shareholder of the Company.(2) Associate of George Quek Meng Tong, a controlling shareholder of the Company.(3) This includes a total of 781,666 shares that were released via the issuance of treasury shares in relation to a sign-on bonus granted to Mr. Oh Eng Lock.(4) Ms Catherine Lee resigned as Group CFO with effect from 7 September 2011.
With the Remuneration Committee’s approval on the achievement of the performance targets for the performance period FY2009 and FY2010, a total of 432,892 restricted shares were released via the issuance of treasury shares.
Audit Committee
The Audit Committee performed the functions specifi ed in the Companies Act. The functions performed are detailed in the Report on Corporate Governance.
Name of Participant
Participants who received 5% or more of the total grants available
Oh Eng Lock (3)
Goh Tong Pak
Catherine Lee Khia Yee (4)
Cheng William
James Quek
Other participants
Conditional restricted
shares granted
during the year
Aggregate conditional
restricted shares awarded since
commencement of the Plan
Aggregate conditional
restricted shares lapsed since
commencement of the Plan
Aggregate conditional restricted
shares vested and released
during the year
Aggregate conditional
restricted shares vested and
released since commencement
of the Plan
Aggregate conditional
restricted shares outstanding at end of the year
103,000
25,00051,000
34,000
107,000
206,000
681,000
933,666
298,200
187,600204,200
166,800
611,400
2,885,066
–
–51,000
–
–
84,420
135,420
16,660
91,016
45,50856,776
20,044
93,532
432,892
798,326
152,792
76,396
92,812
29,548
183,424
1,516,310
135,340
145,408
60,204
111,388
137,252
343,556
1,233,336
51
Auditors
Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.
On behalf of the board of directors:
George Quek Meng TongDirector
Katherine Lee Lih LengDirector
Singapore23 March 2012
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52
STA
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BY
DIR
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RS We, George Quek Meng Tong and Katherine Lee Lih Leng, being two of the directors of
BreadTalk Group Limited, do hereby state that, in the opinion of the directors,
On behalf of the board of directors:
George Quek Meng TongDirector
Katherine Lee Lih LengDirector
Singapore23 March 2012
the accompanying balance sheets, consolidated statement of comprehensive income, statements of changes in equity, and consolidated cash fl ow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results of the business, changes in equity and cash fl ows of the Group and the changes in equity of the Company for the year ended on that date, and
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.
(i)
(ii)
53
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RT To the members of BreadTalk Group Limited
We have audited the accompanying consolidated fi nancial statements of BreadTalk Group Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 56 to 144, which comprise the balance sheets of the Group and the Company as at 31 December 2011, the statements of changes in equity of the Group and the Company, the statement of comprehensive income and cash fl ow statement of the Group for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.
Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls suffi cient 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 profi t and loss accounts and balance sheets and to maintain accountability of assets.
Our responsibility is to express an opinion on these fi nancial 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 about whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the fi nancial statements that give a true and fair view 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 fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Report on the fi nancial statements
Management’s responsibility for the fi nancial statements
Auditors’ responsibility
54
In our opinion, the consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity of the Company 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 Group and of the Company as at 31 December 2011 and the results, changes in equity and cash fl ows of the Group and the changes in equity of the Company for the year ended on that date.
In our opinion, 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 auditors have been properly kept in accordance with the provisions of the Act.
Ernst & Young LLPPublic Accountants and Certifi ed Public Accountants Singapore23 March 2012
Opinion
Report on other legal and regulatory requirements
55
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E For the year ended 31 December 2011
Revenue
Gross profi t
Profi t before taxation
Profi t attributable to:
Other comprehensive income:
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Earnings per share (cents)
Profi t for the year
Profi t before taxation and share of results of joint ventures
$’000
3
5
5
4
86
9
9
365,904
200,058
824
(5,370)
4.12
4.10
7,495
17,127
11,757
11,757
12,668
12,668
17,034
(165,846)
(145,520)(45,038)
93
11,592
–
12,503
165
911
911
165
(785)
(137,646)
(120,994)(41,872)
158
11,266
(574)
9,833
(98)
(859)
(1,433)
(98)
(635)
302,888
165,242
601
(5,520)
4.01
3.99
14,188
16,688
11,168
11,168
9,735
9,735
16,530
$’000
Cost of sales
Interest income
Share of results of joint ventures
Equity holders of the Company
Net loss on available-for-sale fi nancial assets
Equity holders of the Company
Non-controlling interests
Foreign currency translation gain/(loss)
Non-controlling interests
Distribution and selling expensesAdministrative expenses
Other operating income
Taxation
Basic
Diluted
Notes 2011 2010
Interest expense
The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.
56
BA
LAN
CE
SH
EE
TS As at 31 December 2011
Non-current assetsProperty, plant and equipmentIntangible assetsInvestment securitiesInvestment in subsidiariesInvestment in associatesInvestment in joint venturesOther receivablesDeferred tax assets
Current assetsInventoriesTrade and other receivables PrepaymentsTax recoverableAmounts due from subsidiaries (non-trade)Amounts due from joint ventures(non-trade)Amounts due from minority shareholders of subsidiaries (non-trade)Cash and cash equivalents
Current liabilitiesTrade and other payablesOther liabilitiesProvisionAmounts due to subsidiaries (non-trade)Amounts due to joint ventures (non-trade)Finance lease obligations, securedLoan from a minority shareholder of a subsidiaryShort-term loansCurrent portion of long-term loansTax payable
Group Company
$’000 $’000
101112131415178
1617
1818
18
19
20212118182322
2425
88,8989,214
11,669--
4221,3892,120
113,712
7,39746,8005,389
230-
1,297
420
87,060
148,593
74,07441,1245,871
-39537
200
15,7648,3965,623
151,484
73,3069,142
11,669--
446857
1,898
97,318
6,11425,3453,306
9-
506
455
71,144
106,879
60,84632,3873,536
-14054
200
4,6986,2324,402
112,495
7,222--
40,476---
30
47,728
--
36-
15,335-
-
2,698
18,069
2502,115
-7,394
---
12,000--
21,759
5,766--
39,166---
12
44,944
-2683
-5,748
-
-
2,947
8,804
4891,845
-8,762
---
--
80
11,176
$’000 $’000
Notes 2011 20112010 2010
57
Group Company
Notes 2011 20112010 2010
As at 31 December 2011 (cont’d)
Net current liabilities
Non-current liabilities
Long-term loansFinance lease obligations, securedLoans from minority shareholdersof subsidiariesOther payablesOther liabilitiesDeferred tax liabilities
Net assets
Equity attributable to equity holders of the CompanyShare capitalTreasury sharesAccumulated profi tsOther reserves
Non-controlling interests
Total Equity
$’000 $’000
2523
2220218
26262727
(2,891)
15,156-
882-
7,0392,276
25,353
85,468
33,303(609)
41,5583,178
77,9707,498
85,468
(5,616)
8,11737
595,7592,647
16,619
75,083
33,303(199)
33,0902,368
68,5626,521
75,083
(3,690)
3,989--
---
3,989
40,049
33,303(609)
6,812543
40,049-
40,049
(2,372)
3,989--
---
3,989
38,583
33,303(199)5,064
415
38,583-
38,583
$’000 $’000
BA
LAN
CE
SH
EE
TS
The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.
- - -
58
Stat
emen
ts o
f C
hang
es in
Eq
uity
fo
r th
e ye
ar e
nded
31
Dec
emb
er 2
011
Att
rib
utab
le t
o eq
uity
hol
der
s of
the
Com
pan
y
2010
Gro
up
At 1
Jan
uary
201
0
Profi
t fo
r the
yea
r
Net
loss
on
fair
valu
e ch
ang
es
of a
vaila
ble-
for-s
ale
fi nan
cial
as
sets
Fore
ign
curr
ency
tran
slat
ion
Oth
er c
omp
rehe
nsiv
e in
com
e fo
r the
yea
r, ne
t of
tax
Tota
l com
preh
ensi
ve in
com
e
for t
he y
ear
Tran
sact
ions
with
equ
ity
hol
der
s
Shar
e-ba
sed
paym
ents
Div
iden
ds
paid
(Not
e 34
)D
ivid
end
pay
able
(Not
e 20
)Tr
ansf
er to
sta
tuto
ry re
serv
eTr
easu
ry s
hare
s tr
ansf
erre
don
ves
ting
of re
stric
ted
shar
eg
rant
Purc
hase
of t
reas
ury
shar
esIs
suan
ce o
f new
sha
res
to
m
inor
ity s
hare
hold
ers
At 3
1 D
ecem
ber 2
010
Shar
e ca
pit
al
––
$’00
0
(Not
e 26
)
33,3
03
– – – – – – ––––
33,3
03
–
$’00
0
(Not
e 26
)
(283
)
Trea
sury
sh
ares
– – – – – – – –
(259
)34
3–
(199
)
$’00
0
(Not
e 27
)
24,7
82
11,2
66
Acc
umul
ated
p
rofi t
s
– – – –(2
,342
)–
(616
)
–––
11,2
66
33,0
90
$’00
0
(Not
e 27
)
1,45
5
–
Stat
utor
y re
serv
e fu
nd
– – – – – – 616 ––––
2,07
1
$’00
0
(Not
e 27
)
137 –
Tran
slat
ion
rese
rve
–
(859
)
(859
)
– – – – ––--
(859
)
(722
)
Fair
val
ue
adju
stm
ent
rese
rve
$’00
0
(Not
e 27
)
1,17
8
–
(574
)
–
(574
)
– – – – –––
(574
)
604
Shar
e b
ased
co
mp
ensa
tion
re
serv
e
$’00
0
(Not
e 27
)
90 – – – – 668 – – – ––
(511
)
– 247
Cap
ital
rese
rve
$’00
0
(Not
e 27
)
– – – – – – – – – ––168– 168
(574
)
(859
)
(1,4
33)
668
(2,3
42)
– – –
(259
)–
9,83
3
Tota
l
$’00
0
60,6
62
11,2
66
68,5
62
– – – – –(8
20)
–
1,93
5
––(98)
Non
-con
-tr
ollin
gin
tere
sts
$’00
0
5,50
4
(98)
6,52
1
(574
)
(859
)
(1,4
33)
668
(2,3
42)
(820
)
–
1,93
5
(259
)–
9,73
5
Tota
l eq
uity
$’00
0
66,1
66
11,1
68
75,0
83
Oth
er c
ompr
ehen
sive
inco
me
59
Stat
emen
ts o
f C
hang
es in
Eq
uity
fo
r th
e ye
ar e
nded
31
Dec
emb
er 2
011
(co
nt’d
)
Att
rib
utab
le t
o eq
uity
hol
der
s of
the
Com
pan
y
2011
Gro
up
At 1
Jan
uary
201
1
Profi
t fo
r the
yea
r
Oth
er c
ompr
ehen
sive
inco
me
Fore
ign
curr
ency
tran
slat
ion
Oth
er c
ompr
ehen
sive
inco
me
f
or th
e ye
ar, n
et o
f tax
Tota
l com
preh
ensi
ve in
com
e
for
the
year
Tran
sact
ions
with
equ
ity
h
olde
rs
Shar
e-ba
sed
pay
men
tsD
ivid
ends
pai
d (N
ote
34)
Tran
sfer
to s
tatu
tory
rese
rve
Trea
sury
sha
res
tran
sfer
red
on
ves
ting
of r
estr
icte
d
shar
e gr
ant
Purc
hase
of t
reas
ury
shar
esIs
suan
ce o
f new
sha
res
to
min
ority
sha
reho
lder
s
At 3
1 D
ecem
ber 2
011
Shar
e ca
pit
al
––
$’00
0
(Not
e 26
)
33,3
03
– – – ––
33,3
03
–
$’00
0
(Not
e 26
)
(199
)
Trea
sury
sh
ares
– – – 148
(558
)
–
(609
)
$’00
0
(Not
e 27
)
33,0
90
11,5
92
Acc
umul
ated
p
rofi t
s
– – – –
(311
)
41,5
58
– –– –
–(2
,813
)
––
–
$’00
0
(Not
e 27
)
2,07
1
–
Stat
utor
y re
serv
e fu
nd
– – – – –311
2,38
2
– – –
$’00
0
(Not
e 27
)
(722
)
–
Tran
slat
ion
rese
rve
911
911
911 – –– 189– – –
Fair
val
ue
adju
stm
ent
rese
rve
$’00
0
(Not
e 27
)
604 – – – – – –– 604– – –
Shar
e b
ased
co
mp
ensa
tion
re
serv
e
$’00
0
(Not
e 27
)
247 – – – –
(166
)
–– 357
276 – –
Cap
ital
rese
rve
$’00
0
(Not
e 27
)
168 – – – – 18 –– 186– – –
911
911
12,5
03
–
(588
)
–
Tota
l
$’00
0
68,5
62
11,5
92
77,9
70
276
(2,8
13)
–
– – 165 – ––
Non
-con
-tr
ollin
gin
tere
sts
$’00
0
6,52
1
165
7,49
8
– – 812
911
911
12,6
68
–
(558
)
–Tota
l eq
uity
$’00
0
75,0
83
11,7
57
85,4
68
276
(2,8
13)
812
11,5
92
60
(283)–
–
–
(199)
(199)–
–
–
(609)
–
–
343
148
(259)
(558)
33,303–
–
–
33,303
33,303–
–
–
33,303
–
–
–
–
–
–
90–
–
157
247
247–
–
276
357
–
–
–
(166)
–
–
4,2533,153
3,153
–
5,064
5,0644,561
4,561
–
6,812
(2,342)
(2,813)
–
–
–
–
––
–
–
168
168–
–
–
186
–
–
168
18
–
–
37,3633,153
3,153
157
38,583
38,5834,561
4,561
276
40,049
(2,342)
(2,813)
511
–
(259)
(558)
Statements of Changes in Equity for the year ended 31 December 2011 (cont’d)
2010
Company
1 January 2010Profi t for the year
Total comprehensive income for the year
Transactions with equity holders
Share-based paymentsTreasury shares transferred on vesting of restricted share grantPurchase of treasury sharesDividends paid (Note 34)
At 31 December 2010
2011
Company
1 January 2011Profi t for the year
Total comprehensive income for the year
Transactions with equity holders
Share-based paymentsTreasury shares transferred on vesting of restricted share grantPurchase of treasury sharesDividends paid (Note 34)
At 31 December 2011
Share capital$’000
(Note 26)
Treasury shares$’000
(Note 26)
Accumulated profi ts$’000
(Note 27)
Share based compensation
reserve$’000
(Note 27)
Capital reserve$’000
(Note 27)
Total equity$’000
The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.
61
11
1110
10
442
785
125
1,219
(93)
23,920
(824)
277
289
(20)
31
25364
25
(358)
–
17,127
$’000
4,782
(1,416)
43,262 37,941
(6,616)(2,842)
(2,083)
18,712
53,799(4,933)
48,866
408
635
19
2,285
(158)
21,190
(601)
668
761
(4,568)
23
(5)3
–
563
30
16,688
$’000
4,070
(1,299)
(179)(1,330)
(983)
11,404
49,594(4,152)
45,472
Consolidated Cash Flow Statement for the year ended 31 December 2011
Notes 2011 2010
Cash fl ows from operating activitiesProfi t before taxationAdjustments for: Amortisation of intangible assets Depreciation of property, plant and equipment Impairment loss on intangible assets Impairment loss on property, plant and equipment Interest expense Interest income Property, plant and equipment written off Gain on disposal of property, plant and equipment Share based payment expenses Share of results of joint ventures Translation difference Write-off of inventories Write-down of inventories Impairment/(write back of impairment) of trade receivables Impairment of other receivables Impairment of an amount due from an associate (non-trade)
Operating cash fl ows before working capital changes(Increase)/decrease in: Inventories Trade receivables Other receivables and deposits PrepaymentsIncrease / (decrease) in: Trade payables Other payables and other liabilities
Cash fl ows generated from operationsTax paid
Net cash fl ows from operating activities
62
A
17
19
(616)
(12,000)
(126)
255
(100)
-
(291)
(500)
225
-
(49,725)
200
305(37,077)
$’000
21,227
(2,813)(761) (611)
(558)(820)
15,764(6,625)
(10,196)812(54)
15,916
882(83)
71,144
16,775
87,060
(499)
-
(61)
35
-
(5,750)
(37)
-
9,082
(30)
(33,602)
-
143(36,485)
$’000
(8,695)
(1,312)(2,342)
8,828(259)
(4,837)8,780
1,480(298)200
12,718
(86)
58,426
848
71,144
Notes 2011 2010
Cash fl ows from investing activitiesInterest income receivedPurchase of property, plant and equipment Additions to intangible assets Subscription of junior bondsCash paid for reinstatement expensesProceeds from disposal of property, plant and equipmentDeposit for subscription of junior bondsAmount due from joint ventures(non-trade)Amount due to joint ventures (non-trade)Amount due from an associate (non-trade)Loan to a joint ventureInvestment in a joint ventureDividends received from a joint venture
Net cash fl ows used in investing activities
Cash fl ows from fi nancing activitiesInterest paid Dividends paid to shareholders of the CompanyDividends paid to minority shareholders of a subsidiaryPurchase of treasury sharesProceeds from long-term loansRepayment of long-term loansProceeds from short-term loansRepayment of short-term loansCapital injection from minority shareholders of subsidiaries Repayment of fi nance lease obligationsLoans from minority shareholders of subsidiariesRepayment of amount due to landlord
Net cash fl ows from fi nancing activities
Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Consolidated Cash Flow Statement for the year ended 31 December 2011
The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.
63
Note A. Purchase of property, plant and equipment
During the year, the Group acquired property, plant and equipment with an aggregate cost of approximately $40,033,000 (2010: $39,168,000). The additions were by way of cash payments of $27,214,000 (2010: $28,769,000), increase in provision for reinstatement costs of $2,461,000 (2010: $536,000) and amount payable to other creditors of $10,358,000 (2010: $9,863,000).
Cash outfl ow for the year also include payments in respect of property, plant and equipment acquired in the previous years of $9,863,000 (2010: $7,716,000).
The accompanying accounting policies and explanatory notes form an integral part of the fi nancial statements.
Consolidated Cash Flow Statement for the year ended 31 December 2011
64
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS General
Corporate information
BreadTalk Group Limited (the “Company”) is a limited liability company, which is incorporated and domiciled in the Republic of Singapore and listed on the Singapore Exchange Securities Trading Ltd.
The registered offi ce and principal place of business of the Company is located at 171 Kampong Ampat, #05-05 KA FoodLink, Singapore 368330.
The principal activity of the Company is that of investment holding and provision of management services. The principal activities of the subsidiaries are shown in Note 13 to the fi nancial statements.
Fundamental accounting assumption
The fi nancial statements of the Group have been prepared on a going concern basis. The Group’s net current liabilities position as at 31 December 2011 was $2,891,000 (2010: $5,616,000).
Included in current liabilities are deposits from food court tenants and franchisees and stored value card deposits of $12,866,000 (2010: $12,516,000), provision for reinstatement costs of $5,871,000 (2010: $3,536,000) and deferred revenue of $14,496,000 (2010: $9,916,000) respectively. Deferred revenue relates to the unutilised value on the food court stored value cards, unredeemed cash vouchers sold and unearned franchise fees received. These current liabilities, because of their nature, are not expected to result in signifi cant cash outfl ow from the Group within the next 12 months.
In addition, the Group has unutilised banking facilities available for future use. The directors are confi dent that the Group will be able to pay its debts as and when they fall due.
Summary of signifi cant accounting policies
Basis of preparation
The consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).
The fi nancial statements have been prepared on the historical cost basis, except as disclosed in the accounting policies below.
The fi nancial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand ($’000) except when otherwise indicated.
1.
1.1
1.2
2.
2.1
65
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous fi nancial year except in the current fi nancial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 January 2011. The adoption of these standards and interpretations did not have any effect on the fi nancial performance or position of the Group and the Company.
Standards issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Amendments to FRS 107 Disclosures – Transfers of Financial Assets 1 July 2011Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012Amendments to FRS 1: Presentations of Items of Other Comprehensive Income 1 July 2012Amendments to FRS 19 Employee Benefi ts FRS 27 Separate Financial Statements FRS 28 Investments in Associates and Joint Ventures FRS 110 Consolidated Financial Statements FRS 111 Joint Arrangements FRS 112 Disclosure of Interest in Other Entities FRS 113 Fair Value Measurements
Except for FRS 27 and FRS 110, the directors expect that the adoption of the standards and interpretations above will have no material impact on the fi nancial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 27 and FRS 110 is described below.
2.2
2.3
Effective for annual periods beginning on
or afterDescription
FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements.
FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12 Consolidation – Special Purpose Entities.
FRS 110 defi nes the principle of control and establishes control as the basis for determining which entities are consolidated in the consolidated fi nancial statements. It also provides more extensive application guidance on assessing control based on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate fi nancial statements.
FRS 110 will take effect from fi nancial years beginning on or after 1 January 2013, with full retrospective application. When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it currently does not consolidate may qualify for consolidation. The Group is currently estimating the effects of FRS 110 on its investments in the period of initial adoption.
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
1 January 20131 January 20131 January 20131 January 20131 January 20131 January 20131 January 2013
66
Impairment of available-for-sale investments and held-to-maturity investments
The Group records impairment charges on available-for-sale equity investments when there has been a signifi cant or prolonged decline in the fair value below their cost. The determination of what is “signifi cant” or “prolonged” requires judgment. In making this judgment, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost.
The Group assesses whether there is an indication that held-to-maturity investments may be impaired. In the assessment, the Group evaluates, among other factors, the cash fl ow projections and value of the related secured property.
Signifi cant accounting estimates and judgements
Estimates, assumptions concerning the future and judgements are made in the preparation of the fi nancial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.
Judgments made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most signifi cant effect on the amounts recognised in the consolidated fi nancial statements:
2.4
(i)
67
Signifi cant accounting estimates and judgements (cont’d)
(ii) Income taxes
The Group has exposure to income taxes in numerous jurisdictions. Signifi cant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the fi nal tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payable and deferred tax liabilities at 31 December 2011 were approximately $5,623,000 (2010: $4,402,000) and $2,276,000 (2010: $2,647,000) respectively. The carrying amount of the Group’s tax recoverable and deferred tax assets at 31 December 2011 was $230,000 (2010: $9,000) and $2,120,000 (2010: $1,898,000) respectively.
A subsidiary, BreadTalk Pte Ltd obtained the Development and Expansion Incentive (“DEI”) which entitles the qualifying income of the company earned up to the fi nancial year ended 31 December 2012 to be subject to the concessionary tax rate of 10%. Judgment is involved when determining the amount of qualifying income for the year.
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash fl ows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash fl ows. The carrying amount of the Group’s goodwill at 31 December 2011 was $6,048,000 (2010: $6,173,000). More details are given in Note 11.
2.4
(i)
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.
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2.4
(ii)
(iii)
(iv)
Signifi cant accounting estimates and judgements (cont’d)
Valuation and estimated useful life of brand value arising from acquisition of a subsidiary, Topwin Investment Holding Pte Ltd (“Topwin”)
Brand value arising from the acquisition of Topwin was separately identifi ed and recognised by management using the “relief from royalty method”. The premise of this valuation method is the assumption that the Group would be compelled to pay the rightful owner of the brand name if the Group did not have the legal right to utilise the brand name. The ownership of the brand therefore relieves the Group from making such royalty payments. This requires an estimation of the royalty payments including initial fees and continuing royalty payments based on a percentage of projected revenue. The basis used to determine the revenue projections is the revenue for each food court of Topwin achieved in the fi nancial year ended 31 December 2004 projected into the future. The useful life of the brand value is estimated by the directors to be 15 years as this is the length of time that they expect the benefi ts of the brand to fl ow to the Group. Amortisation of the brand amounted to $213,000 (2010: $213,000) for the fi nancial year ended 31 December 2011 and the carrying amount of the brand value at 31 December 2011 was $1,706,000 (2010: $1,919,000). More details are given in Note 11.
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 2 to 20 years. The carrying amount of the Group’s property, plant and equipment as at 31 December 2011 was $88,898,000 (2010: $73,306,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. In particular, renovation costs incurred and capitalised for bakery outlets, food courts and restaurants may be subject to immediate impairment upon their unforeseen closure due to unfavourable operations.
Impairment of loans and receivables
The Group assesses at the end of each reporting period whether there is any objective evidence that a fi nancial asset is impaired. To determine whether there is objective evidence of impairment, the Company considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash fl ows are estimated based on historical loss experience of assets with similar credit risk characteristics. The carrying amount of the Company’s loans and receivables at balance sheet date is disclosed in Note 31 to the fi nancial statements.
69
Functional currency
The Group’s consolidated fi nancial statements are presented in Singapore Dollars, which is also the parent company’s functional currency. Each entity in the Group determines its own functional currency and items included in the fi nancial statements of each entity are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet are recognised in profi t or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under translation reserve in equity. The translation reserve is reclassifi ed from equity to profi t or loss of the Group on disposal of the foreign operation.
Consolidated fi nancial statements
For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profi t or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profi t or loss.
In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profi t or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassifi ed to profi t or loss.
2.5
(a)
(b)
(c)
Foreign currency
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A person or a close member of that person’s family is related to the Group and Company if that person:
(i) Has control or joint control over the Company;
(ii) Has signifi cant infl uence over the Company; or
(iii) Is a member of the key management personnel of the Group or Company or of a parent of the Company.
An entity is related to the Group and the Company if any of the following conditions applies:
(i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third party.
(v) The entity is a post-employment benefi t plan for the benefi t of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;
(vi) The entity is controlled or jointly controlled by a person identifi ed in (a);
(vii) A person identifi ed in (a) (i) has signifi cant infl uence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
2.6
(a)
(b)
Related parties
A related party is defi ned as follows:
71
2.7
(a)
(b)
Subsidiaries, basis of consolidation and non-controlling interests
Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the fi nancial and operating policies so as to obtain benefi ts from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors.
In the Company’s separate fi nancial statements, investments in subsidiaries are accounted for at cost less any impairment losses.
Basis of consolidation and business combinations
(A) Basis of consolidation
Basis of consolidation from 1 January 2010
The consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries as at the end of the reporting period. The fi nancial statements of the subsidiaries used in the preparation of the consolidated fi nancial statements are prepared for the same reporting date as the parent company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
Losses within a subsidiary are attributed to the non-controlling interest even if that results in a defi cit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
• De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost;• De-recognises the carrying amount of any non-controlling interest;• De-recognises the cumulative translation differences recorded in equity;• Recognises the fair value of the consideration received;• Recognises the fair value of any investment retained;• Recognises any surplus or defi cit in profi t or loss;• Re-classifi es the Group’s share of components previously recognised in other comprehensive income to profi t or loss or retained earnings, as appropriate.
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Acquisition of non-controlling interests, prior to 1 January 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill.
Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company.
Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 has not been restated.
Basis of consolidation (cont’d)
(b) Basis of consolidation and business combinations (cont’d)
Basis of consolidation prior to 1 January 2010
2.7
(A)
•
•
•
Subsidiaries, basis of consolidation and non-controlling interests (cont’d)
Business combinations
Business consolidation from 1 January 2010
(B)
Business combinations are accounted by applying the acquisition method. Identifi able assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.
When the Group acquires a business, it assesses the fi nancial assets and liabilities assumed for appropriate classifi cation and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation:
73
2.7
(B)
Subsidiaries, basis of consolidation and non-controlling interests (cont’d)
Business combinations (cont’d)
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profi t or loss or as change to other comprehensive income. If the contingent consideration is classifi ed as equity, it is not to be remeasured until it is fi nally settled within equity.
In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profi t or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree identifi able net assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifi able assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.11(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profi t or loss on the acquisition date.
Business combinations prior to 1 January 2010
In comparison to the above mentioned requirements, the following differences applied:
Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree’s identifi able net assets.
Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill.
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When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that signifi cantly modifi ed the cash fl ows that otherwise would have been required under the contract.
Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outfl ow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill.
(B) Business combinations (cont’d)
(c)
2.7
2.8
Subsidiaries, basis of consolidation and non-controlling interests (cont’d)
Transactions with non-controlling interests
Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to refl ect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributable to owners of the Company.
Associates
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has signifi cant infl uence. This generally coincides with the Group having 20% or more of the voting power, or has representation on the board of directors. An associate is equity accounted for from the date the Group obtains signifi cant infl uence until the date the Group ceases to have signifi cant infl uence over the associate.
The Group’s investment in associates is accounted for using the equity method. Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Group’s share of the net fair value of the associate’s identifi able assets, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s share of results of the associate in the period in which the investment is acquired.
75
Associates (cont’d)
The profi t or loss refl ects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates.
The Group’s share of the profi t or loss of its associates is shown on the face of profi t or loss after tax and non-controlling interests in the subsidiaries of associates.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profi t or loss.
The fi nancial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
Upon loss of signifi cant infl uence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of signifi cant infl uence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profi t or loss.
Joint ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic fi nancial and operating decisions relating to the activity require the unanimous consent of the parties sharing control and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest.
The Group’s investment in joint ventures is accounted for using the equity method. Under the equity method, the investment in joint ventures is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. The Group’s share of profi t or loss of the joint venture is recognised in profi t or loss. Where there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of such changes. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the joint venture. The joint venture is equity accounted for from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.
2.8
2.9
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Adjustments are made in the Group’s consolidated fi nancial statements to eliminate the Group’s share of intragroup balances, income and expenses and unrealised gains and losses on such transactions between the Group and its jointly controlled entity. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss.
The fi nancial statements of the joint venture are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
Upon loss of joint control, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the former jointly controlled entity upon loss of joint control and the aggregate of the fair value of the retained investment and proceeds from disposal is recognised in profi t or loss.
Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 2.18. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. When signifi cant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specifi c useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfi ed. All other repair and maintenance costs are recognised in profi t or loss as incurred.
Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful life of the asset as follows:
Leasehold property – 20 yearsMachinery and equipment – 5 - 6 yearsElectrical works – 5 - 6 yearsFurniture and fi ttings – 5 - 6 yearsOffi ce equipment – 3 - 6 yearsRenovation – 2 - 6 yearsMotor vehicles – 5 - 6 years
2.9
2.10
Joint ventures (cont’d)
77
Property, plant and equipment (cont’d)
Construction-in-progress is stated at cost. No depreciation is provided for construction-in-progress as these assets are not yet available for use.
Leasehold land represents the lease of land from Jurong Town Corporation and is intended for the construction of offi ce building and development of manufacturing facilities in Singapore.
Leasehold land will be depreciated over the remaining lease term upon completion of the construction of the building.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual values, useful life and depreciation method are reviewed at each fi nancial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profi t or loss in the year the asset is derecognised.
2.10
Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefi t from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profi t or loss.
Intangible assets2.11
(a)
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Goodwill (cont’d)
Impairment losses recognised for goodwill are not reversed in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.5.
Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the rates prevailing at the date of acquisition.
Other intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
The useful lives of intangible assets are assessed to be either fi nite or indefi nite.
Intangible assets with fi nite lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each fi nancial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefi ts embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with fi nite useful lives is recognised in profi t or loss in the expense category consistent with the function of the intangible asset.
Intangible assets with indefi nite useful lives or not yet available for use are tested for impairment annually or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefi nite life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefi nite to fi nite is made on a prospective basis.
2.11 Intangible assets (cont’d)
(a)
(b)
79
Other intangible assets (cont’d)
Gain or loss arising from derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profi t or loss when the asset is derecognised.
2.11 Intangible assets (cont’d)
(b)
(i)
(ii)
(iii)
(iv)
Trade mark
Costs relating to trade mark are capitalised and amortised on a straight-line basis over its estimated fi nite useful life of 5 years.
Franchise rights
Costs relating to master franchise fees paid are capitalised and amortised on a straight-line basis over the lease/franchise period ranging from 4 to 20 years.
Costs relating to territory reservation fees are capitalised. The costs were previously amortised by a fi xed amount as and when a new outlet starts operation. Based on a review performed for the year, the Group changed the amortisation method to straight line basis over the remaining useful life of 6 years. The change in estimate resulted in an annual amortisation expense of $102,000 and increased the amortisation expense for the year by $89,000.
Location premium
Consideration paid to previous tenants to vacate premises in order to secure the lease arrangement are amortised on a straight-line basis over the new lease agreement period of 4 years.
Brand value
Brand value was acquired through a business combination. The useful life of the brand is assessed to be fi nite and estimated to be 15 years because this is the length of time that the management expects the economic benefi ts of the brand to fl ow to the Group.
Brand value is amortised on a straight-line basis over its estimated economic useful life.
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Impairment of non-fi nancial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash infl ows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash fl ows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identifi ed, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of fi ve years. For longer periods, a long-term growth rate is calculated and applied to project future cash fl ows after the fi fth year.
Impairment losses of continuing operations are recognised in profi t or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed 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. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profi t or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase, in which case the reversal is treated as a revaluation increase.
2.12
81
Initial recognition and measurement
Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument. The Group determines the classifi cation of its fi nancial assets at initial recognition.
When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at fair value through profi t or loss, directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of fi nancial assets depends on their classifi cation as follows:
(a) Loans and receivables
(b) Held-to-maturity investments
2.13 Financial assets
Non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profi t or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
Non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturity are classifi ed as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profi t or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.
Available-for-sale fi nancial assets include equity and debt securities. Equity investments classifi ed as available-for-sale are those, which are neither classifi ed as held for trading nor designated at fair value through profi t or loss. Debt securities in this category are those which are intended to be held for an indefi nite period of time and which may be sold in response to needs for liquidity or in response to changes in market conditions.
After initial recognition, available-for-sale fi nancial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the fi nancial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profi t or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassifi ed from equity to profi t or loss as a reclassifi cation adjustment when the fi nancial asset is derecognised.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
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(c) Available-for-sale fi nancial assets
82
Financial assets (cont’d)
Derecognition
A fi nancial asset is derecognised where the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profi t or loss.
All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.
Impairment of fi nancial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset is impaired.
2.13
2.14
(a) Financial assets carried at amortised cost
For fi nancial assets carried at amortised cost, the Group fi rst assesses whether objective evidence of impairment exists individually for fi nancial assets that are individually signifi cant, or collectively for fi nancial assets that are not individually signifi cant. If the Group determines that no objective evidence of impairment exists for an individually assessed fi nancial asset, whether signifi cant or not, it includes the asset in a group of fi nancial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows (excluding future credit losses that have not been incurred) discounted at the fi nancial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in profi t or loss.
When the asset becomes uncollectible, the carrying amount of impaired fi nancial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the fi nancial asset.
To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments.
83
Impairment of fi nancial assets (cont’d)
Financial assets carried at amortised cost (cont’d)
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profi t or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
Financial assets carried at cost
If there is objective evidence (such as signifi cant adverse changes in the business environment where the issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer) that an impairment loss on a fi nancial asset carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the current market rate of return for a similar fi nancial asset. Such impairment losses are not reversed in subsequent periods.
Available-for-sale fi nancial assets
In the case of equity instruments classifi ed as available-for sale, objective evidence of impairment include (i) signifi cant fi nancial diffi culty of the issuer or obligor, (ii) information about signifi cant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a signifi cant or prolonged decline in the fair value of the investment below its costs. ‘Signifi cant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.
If an available-for-sale fi nancial asset is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profi t or loss, is transferred from other comprehensive income and recognised in profi t or loss.
Reversals of impairment losses in respect of equity instruments are not recognised in profi t or loss; increase in their fair value after impairment are recognised directly in other comprehensive income.
2.14
(a)
(b)
(c)
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
84
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and at bank, unpledged fi xed deposits and short-term highly liquid investments which are readily convertible to known amounts of cash and which are subject to insignifi cant risk of changes in value.
Inventories
Inventories comprise raw materials, consumables, semi-fi nished goods, fi nished goods and base inventory.
Inventories are valued at the lower of cost and net realisable value. Costs comprise purchase costs accounted for on a weighted average cost basis. In the case of semi-fi nished goods, costs also include an appropriate share of production overheads based on normal operating capacity.
Base inventory, comprising mainly cutlery and dining utensils, are written down to 50% of the original cost and all further replacement costs incurred in maintaining the base inventory is expensed.
Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the fi nancial instrument. The Group determines the classifi cation of its fi nancial liabilities at initial recognition.
All fi nancial liabilities are recognised initially at fair value plus in the case of fi nancial liabilities not at fair value through profi t or loss, directly attributable transaction costs.
Subsequent measurement
After initial recognition, fi nancial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profi t or loss when the liabilities are derecognised and through the amortisation process.
Derecognition
A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing fi nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profi t or loss.
2.15
2.16
2.17
85
Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset.
Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no longer probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that refl ects, where appropriate, the risks specifi c to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfi lment of the arrangement is dependent on the use of a specifi c asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specifi ed in an arrangement.
For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the fi nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profi t or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in profi t or loss on a straight-line basis over the lease term. The aggregate benefi t of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
2.18
2.19
2.20
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
86
Defi ned contribution plans
The Group participates in the national pension schemes as defi ned by the laws of the countries in which it has operations. Contributions to national pension schemes are recognised as an expense in the period in which the related services are performed.
Singapore
The Group makes contributions to the Central Provident Fund (“CPF”) scheme in Singapore, a defi ned contribution pension scheme. The Group makes monthly contributions based on stipulated contribution rates.
People’s Republic of China (“PRC”)
Subsidiaries incorporated and operating in the PRC are required to provide certain staff pension benefi ts to their employees under existing PRC regulations. Contributions are provided at rates stipulated by PRC regulations and are contributed to a pension fund managed by government agencies, which are responsible for administering these amounts for the subsidiaries’ PRC employees.
Hong Kong
Subsidiaries incorporated and operating in Hong Kong pay contributions to publicly or privately administered pension insurance plans on a mandatory basis. The subsidiaries have no further payment obligations once the contributions have been paid. The contributions are not reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to balance sheet date.
2.21 Employee benefi ts
(a)
(b)
87
2.21
2.22
The BreadTalk Restricted Share Grant Plan (“RSG Plan”)
Employees receive remuneration under the RSG Plan in the form of fully-paid shares (“Awards”) of the Company as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the Awards at the date on which the Awards are granted. The cumulative expense recognised at each reporting date until the vesting date refl ects the Company’s best estimate of the number of Awards that will ultimately vest. The charge or credit to profi t or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
In the Company’s separate fi nancial statements, the fair value of the Awards granted to employees of its subsidiaries is recognised as an increase in the cost of the Company’s investment in subsidiaries, with a corresponding increase in equity.
Employee benefi ts (cont’d)
(c)
Revenue
Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defi ned terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specifi c recognition criteria must also be met before revenue is recognised:
(a) Bakery sales, restaurant sales and sales to franchisee
Revenue from the sale of goods is recognised upon the transfer of signifi cant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are signifi cant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.
Initial franchise income is recognised upon the grant of rights, completion of the designated phases of the franchise setup and transfer of know-how to the franchisee in accordance with the terms stated in the franchise agreement. Recurring franchise income is recognised on a periodic basis as a percentage of the franchisees’ revenue in accordance with terms as stated in the franchise agreement.
(b) Franchise income
Fixed rental income from the sub-lease of food courts is recognised as income in profi t or loss on a straight line basis over the lease term. The variable portion of the rental income which is computed based on a percentage of the food court tenants’ gross sales is recognised when such sales are earned.
Revenue from the sale of food and beverage is recognised upon delivery and acceptance by customers, net of sale discounts.
(c) Food court revenue
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
88
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date, in the countries where the Group operates and generates taxable income.
Current taxes are recognised in profi t or loss except to the extent that the tax relates to items recognised outside profi t or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
2.22
2.23
2.24
Income recognition (cont’d)
Government grants
Income taxes
(d) Management fee
Interest income is recognised as interest accrued (using the effective interest method) unless collectibility is in doubt.
Dividend income is recognised when the Group’s right to receive payment is established.
(f) Dividend income
Management fee is recognised on an accrual basis.
(e) Interest income
Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised in profi t or loss over the period necessary to match them on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profi t or loss over the expected useful life of the relevant asset by equal annual instalments.
(a)
89
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for fi nancial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profi t nor taxable profi t or loss; and
Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profi t will be available against which the temporary differences can be utilised.
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profi t will be available against which the deductible temporary diffrences, and the carry forward of unused tax credits and unused tax losses can be utilised except:
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profi t will allow the deferred tax asset to be utilised.
2.24 Income taxes (cont’d)
(b) Deferred tax
•
•
•
•
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
90
2.24
2.25
Income taxes (cont’d)
Segment reporting
(b)
(c)
Deferred tax (cont’d)
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred income tax is recognised in profi t or loss. Deferred income tax relating to items recognised outside profi t or loss is recognised outside profi t or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax benefi ts acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about the facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurement period or in profi t or loss.
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 33, including the factors used to identify the reportable segments and the measurement basis of segment information.
Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
•
•
Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
91
Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.
A contingent liability is:
Bakery salesRestaurant salesSales to franchiseeFranchise income Food court income
A contingent asset is a possible asset that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.
The Group’s own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profi t or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullifi ed for the Group and no dividends are allocated to them respectively.
2.26
2.27
2.28
3
Share capital and share issue expenses
Treasury shares
Contingencies
Revenue
(a)
(b)
a possible obligation that arises from past events and whose existence will be confi rmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or
a present obligation that arises from past events but is not recognised because:
(i) It is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or
(ii) The amount of the obligation cannot be measured with suffi cient reliability.
Group 2011 2010 $’000 $’000
169,395 137,019 76,969 56,253 15,231 12,600 9,807 8,512 94,502 88,504 365,904 302,888
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
92
4 Other operating income
5 Interest income and interest expense
Management fee income Government grant (1)
Grant income from Jobs Credit Scheme (2)
Income from expired food court stored value cardsSponsorship incomeSundry salesCompensation from landlordRental incomeAgency commissionGain on disposal of property, plant and equipmentMiscellaneous income
Interest income from:- Loans and receivables- Held-to-maturity fi nancial assets
Interest expense on:- Term loans- Finance lease obligations- Others
2010$’000
4,6421,014
356111436221
1,721226
–4,568
893
14,188
2010$’000
143458
601
(603)(8)
(24)
(635)
2011$’000
4,332840
–13965167
339–
3920
1,068
7,495
2011$’000
304520
824
(754)(3)
(28)
(785)
Group
Group
Government grant in relation to business expansion activities undertaken by certain subsidiaries in the PRC.
During the fi nancial year ended 31 December 2009, the Singapore Finance Minister announced the introduction of a Jobs Credit Scheme (“Scheme”). Under this Scheme, the Group received a 12% cash grant on the fi rst $2,500 of each month’s wages for each employee on their Central Provident Fund payroll. The Government extended the Scheme with another two payments at stepped-down rates of 6% and 3% in March and June 2010 respectively. During the fi nancial year ended 31 December 2010, the Group received grant income of $356,000 under the Scheme.
(1)
(2)
93
Audit fees to:- Auditors of the Company- Other auditorsNon-audit fees to:- Auditors of the Company- Other auditorsAmortisation of intangible assets (Note 11)Impairment/(write back of impairment) of loans and receivables- Trade receivables (Note 17)- Other receivables (Note 17)- Amount due from an associate (non-trade) Directors’ feesDepreciation of property, plant and equipment (Note 10)Employee benefi ts (Note 7)Foreign exchange (gain)/loss, netLoss from misappropriation of funds (1)
Operating lease expenses- Fixed portion - Variable portionProperty, plant and equipment written offImpairment loss on intangible assets (Note 11)Impairment loss on property, plant and equipment (Note 10)Write-down of inventories (Note 16)Write-off of inventories (Note 16)
2010$’000
225235
11259
408
(5)3
30124
21,19084,338
368622
57,2536,7762,285
19761
–23
2011$’000
307269
12462
442
25364–
16823,920
102,284(58)
–
67,3407,3951,219
1252892531
Group
Staff costs (including directors)Salaries and bonusesCentral Provident Fund and other pension contributionsSales incentives and commissionShare-based payment (RSG Plan)Other personnel benefi ts
2010$’000
64,1226,9902,533
66510,028
84,338
2011$’000
76,0607,8112,357
27915,777
102,284
Group
6
7
Profi t before taxation
Employee benefi ts
This is determined after charging/(crediting) the following:
(1) This relates to loss as a result of misappropriation of funds by an employee of a subsidiary.
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
94
7 Employee benefi ts (cont’d)
RSG Plan
Under the RSG Plan, directors and employees receive remuneration in the form of fully-paid shares of the Company as consideration for services rendered. Restricted shares are granted conditionally and the fi nal number of restricted shares awarded will depend on the achievement of pre-determined targets over a one year period. On meeting the performance conditions for the performance period, one-third of the restricted shares will vest. The balance will vest equally over the subsequent two years with the fulfi lment of service requirements.
The fair value of the restricted shares granted is estimated based on the market price of the shares on grant date less the present value of expected future dividends during the vesting period.
During the year, 681,000 (2010: 1,356,539) restricted shares were granted. The number of restricted shares outstanding at year end is 1,233,336 (2010: 1,105,763) shares.
8 Taxation
Major components of income tax expense were:
Current tax- Current year - (Over)/under provision in prior year Deferred tax- Origination and reversal of temporary differences- Under/(over) provision in prior year Witholding tax Taxation expense
2010$’000
5,596(503)
(93)205
315
5,520
2011$’000
5,280(129)
(269)(156)
644
5,370
Group
95
8 Taxation (Cont’d)
A reconciliation between the tax expense and the product of accounting profi t multiplied by the applicable tax rate for the year ended 31 December is as follows:
Profi t before taxation Tax at the domestic rates applicable to profi ts in the countries where the Group operates (1)
Tax effect of:Expenses not deductible for tax purposesIncome not subject to taxationShare of associates’ and joint ventures’ taxTax savings arising from development and expansionincentive (2)
(Over)/under provision in prior years- Current tax- Deferred taxWithholding tax expense Effect of partial tax exemption and tax relief Deferred tax assets not recognised Benefi ts from previously unrecognised deferred tax assetsTax savings from enhanced deductions (3)
Others
Taxation expense
2010$’000
16,688
2,853
1,249(64)(70)
(189)
(503)205315(62)
1,967 (64)(78)(39)
5,520
2011$’000
17,127
2,821
1,592(37)68
(222)
(129)(156)644(93)
1,829(434)(483)(30)
5,370
Group
This is prepared by aggregating separate reconciliations for each national jurisdiction.
In February 2004, the Economic Development Board granted the Development and Expansion Incentive under the International Headquarters (IHQ-DEI) Award to a subsidiary. Subject to certain conditions, the subsidiary enjoys a concessionary tax rate of 10% on its qualifying income for a period of 5 years commencing 1 January 2003. On 24 January 2008, the subsidiary was granted an extension of the DEI for another 5 years commencing 1 January 2008.
In Budget 2010, the Minister for Finance of Singapore introduced a new broad-based tax scheme to encourage businesses to invest in productivity and innovation. The scheme enhances existing tax measures that encourage productivity and innovative activities and consolidates them into a single scheme, known as the Productivity and Innovation scheme (“PIC”). The PIC is available for Year of Assessment (“YA”) 2011 to YA 2015.
(1)
(2)
(3)NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
96
2010$’000
----
-
- --
12
12
As at 31 December 2011, the Group has tax losses of approximately $19,634,000 (2010: $12,721,000), unutilised capital allowances of approximately $198,000 (2010: $410,000) and other temporary differences of approximately $3,546,000 (2010: $2,714,000) that are available for offset against future taxable profi ts, for which no deferred tax assets are recognised on these amounts due to uncertainty of their utilisation. The utilisation of the tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. As at 31 December 2011, $13,872,000 (2010: $8,765,000) of the unrecognised tax losses will expire between 1 and 10 years.
There are no income tax consequences attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the fi nancial statements (Note 34).
Basic earnings per share is calculated by dividing the Group’s profi t for the year attributable to ordinary equity holders of the Company of $11,592,000 (2010: $11,266,000) by the weighted average number of ordinary shares, excluding treasury shares, of 281,197,676 (2010: 281,052,253) in issue during the year.
Diluted earnings per share is calculated by dividing the Group’s profi t for the year attributable to ordinary equity holders of the Company of $11,592,000 (2010: $11,266,000) by the weighted average number of ordinary shares, excluding treasury shares, in issue during the year plus the weighted average number of restricted shares granted conditionally under the “BreadTalk Restricted Share Grant Plan” of 282,392,002 (2010: 282,153,201).
Deferred tax liabilities: Differences in depreciation for tax purposesProvisionsDividend income Other items
Deferred tax assets: ProvisionsDifferences in depreciation for tax purposesUnutilised tax lossesOther items
Deferred income tax
2011$’000
(1,941)–
(168)(167)
(2,276)
1,426
640–
54
2,120
2010$’000
1,035 438178
(444)
(388)(273)(20)
112
2010$’000
(2,383) -
(186)(78)
(2,647)
920
69326520
1,898
2011$’000
(442)–
(17)89
(342)
57264(34)
(425)
2011$’000
----
-
-
(4)–
(14)
(18)
GroupBalance sheet Profi t or loss
CompanyBalance sheet
8
9
Taxation (cont’d)
Earnings per share
Deferred income tax as at 31 December relates to the following:
Unrecognised tax losses, capital allowances and other temporary differences
Tax consequences of proposed dividends
97
Leaseholdproperty
$’000
8,391–––
(4,925)(278)
3,188––––
140
3,328
1,613375––
(1,071)
–(61)
856145––––
45
1,046
2,332
2,282
–––––
––
––––––
–
–
5,147
5,147
Leaseholdland$’000
–4,462685(2)
–––
5,147–––––
5,147
Machinery and
equipment$’000
21,8696,1681,007(734)(287)(512)
27,5115,210(87)(830)(272)349
31,881
10,6263,685(49)(512)(174)
112(181)
13,5074,338
(4)(703)(190)109
129
17,186
14,004
14,695
Electricalworks$’000
16,0725,514
–(334)
–(499)
20,7534,960
63(1,437)
(73)67
24,333
7,1343,272
–(307)
–
42(241)
9,9004,008
3(1,307)
(9)105
37
12,737
10,853
11,596
Furniture and fi ttings
$’000
19,4965,412
–(383)(15)(981)
23,5294,732(63)
(2,334)(10)135
25,989
8,2113,955
–(255)(7)
196(461)
11,6394,346
(8)(2,130)
(1)7
64
13,917
11,890
12,072
Offi ceequipment
$’000
5,0401,120157(113)(8)
(140)
6,0561,431365(633)(26)110
7,303
2,75298253(99)(3)
–(81)
3,6041,139
3(573)(16)–
47
4,204
2,452
3,099
GroupCostAs at 1.1.2010AdditionsReclassifi cationsWrite offsDisposalsTranslation difference
As at 31.12.2010 and 1.1.2011
AdditionsReclassifi cationsWrite offsDisposalsTranslation difference
As at 31.12.2011
Accumulated depreciation and impairment losses
As at 1.1.2010Charge for the yearReclassifi cationsWrite offsDisposals
Impairment loss for the year
Translation difference
As at 31.12.2010 and 1.1.2011Charge for the yearReclassifi cationsWrite offsDisposals Impairment loss for the yearTranslation difference
As at 31.12.2011
10 Property, plant and equipment
Net carrying amountAs at 31.12.2010
As at 31.12.2011
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
98
Renovation (1)
$’000GroupCostAs at 1.1.2010Additions Reclassifi cationsWrite offsDisposalsTranslation difference
As at 31.12.2010 and 1.1.2011Additions Reclassifi cationsWrite offsDisposalsTranslation difference
As at 31.12.2011
Accumulated depreciation and impairment losses
As at 1.1.2010Charge for the yearReclassifi cationsWrite offsDisposals
Impairment loss for the year
Translation difference
As at 31.12.2010 and 1.1.2011Charge for the yearReclassifi cationsWrite offsDisposals Impairment loss for the yearTranslation difference
As at 31.12.2011
39,12715,941
124(5,322)(1,773)(1,198)
46,89913,431
134(5,038)
(79)1,192
56,539
19,3468,642
(4)(3,431)(1,475)
411(554)
22,9359,735
(3)(4,382)
(44)68
571
28,880
23,964
27,659
Motor vehicles$’000
1,656498–(1)
(836)(31)
1,286125––
(39)25
1,397
919279––
(605)
–(18)
575209––
(34)–
17
767
711
630
Construction-in-progress
$’000
3,30253
(1,288)(2)(5)
(107)
1,95310,144(497)(42)–
160
11,718
–––––
––
––––––
–
–
1,953
11,718
Total$’000
114,95339,168
685(6,889)(7,849)(3,746)
136,32240,033
(85)(10,314)
(499)2,178
167,635
50,60121,190
–(4,604)(3,335)
761(1,597)
63,01623,920
(9)(9,095)(294)289
910
78,737
73,306
88,898
(1) Additions in renovation for the year include provision for reinstatement costs of $2,461,000 (2010: $536,000).
(2) The advance payment of land premium in 2009 was reclassifi ed from prepayment during 2010.
10 Property, plant and equipment (cont’d)
Net carrying amountAs at 31.12.2010
As at 31.12.2011
99
10 Property, plant and equipment (cont’d)
Assets held under fi nance leases
As at 31 December 2011, the net carrying amount of property, plant and equipment acquired under fi nance leases are as follows:
Leased assets are pledged as security for the related fi nance lease liabilities.
2011 2010$’000 $’000
Assets written off
Property, plant and equipment written off during the year arose mainly due to the refurbishment/closure of certain bakery outlets and food courts. The amount written off represents the total carrying value of the property, plant and equipment attributable to the bakery outlets and food courts at the date of refurbishment/closure.
The residual value of these assets has been assessed as nil.
Assets pledged as security
In addition to assets held under fi nance leases, the Group’s leasehold land with a carrying amount of $5,147,000 (2010: $5,147,000) is pledged to secure the Company’s bank loan (Note 25).
Impairment of assets
The impairment loss of $289,000 (2010:$761,000) recognised in “administrative expenses” in profi t or loss during the year comprised impairment loss on property, plant and equipment of certain food stalls which have been persistently incurring losses.
Group
106 152
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
Machinery and equipment
100
CostAs at 1.1.2010AdditionsReclassifi cation
As at 31.12.2010and 1.1.2011AdditionsWrite off
As at 31.12.2011
As at 31.12.2010 and 1.1.2011Charge for the year
As at 31.12.2011
Net carrying amountAs at 31.12.2010
As at 31.12.2011
1––
115–
16
–1
16
7
–
9
Electircalworks$’000
–––
–3–
3
––
–1
1
–
2
Offi ceequipment
$’000
12723–
15023–
173
6243
10531
136
45
37
Construction-in-progress
$’000
35539–
5741,488(35)
2,027
––
––
–
574
2,027
Total$’000
1635,024685
5,8721,529(35)
7,366
6244
10638
144
5,766
7,222
Leaseholdland$’000
–4,462685(2)
5,147––
5,147
––
––
–
5,147
5,147
Accumulated depreciation
10 Property, plant and equipment (cont’d)
Company
Furnitureand
fi ttings$’000
As at 1.1.2010Charge for the year
101
CostAs at 1.1.2010AdditionsTranslation difference
As at 31.12.2010 and 1.1.2011AdditionsWrite offTranslation difference
As at 31.12.2011
Accumulated amortisation and impairment lossesAs at 1.1.2010AmortisationImpairment lossTranslation difference
As at 31.12.2010 and 1.1.2011AmortisationImpairment lossWrite offTranslation difference
As at 31.12.2011
Net carrying amount As at 31.12.2010
As at 31.12.2011
Brand value$’000
3,209–
3,209––
–
3,209
1,077213–
–
1,290213––
–
1,503
1,919
1,706
Trademark$’000
79022
8122
–
814
62779–
–
70652–
–
758
106
56
6,173–
6,173––
–
6,173
–––
–
––
125–
–
125
6,173
6,048
Location premium
$’000
505–
505––
–
505
505––
–
505–––
–
505
–
–
Total$’000
11,859499
12,329616(71)
28
12,902
2,76240819
(2)
3,187442125(71)
5
3,688
9,142
9,214
Franchise rights$’000
1,182477
1,630614(71)
28
2,201
55311619
(2)
686177–
(71)
5
797
944
1,404
11 Intangible assets
Brand value, trade mark, franchise rights and location premium are determined to have fi nite useful lives and are amortised on a straight-line basis over their respective estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. Brand value, trade mark and franchise rights have remaining useful lives of 8 years (2010: 9 years), 1 to 5 years (2010: 1 to 5 years) and 1 to 5 years (2010: 1 to 5 years) as at 31 December 2011 respectively.
In the previous year, a subsidiary impaired its intangible assets of $19,000 as it had ceased operations.
Amortisation expense is included in “administrative expenses” in profi t of loss.
Goodwill $’000
Group
– – – –(29) (29)
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
102
11 Intangible assets (cont’d)
Impairment testing of goodwill
Goodwill arising from the acquisition of Topwin Investment Holding Pte Ltd and its subsidiaries in 2005 was allocated to 2 cash-generating units (“CGU”), which represent the 2 geographical segments (i.e. Shanghai and Beijing segments) in which the acquired food courts are located. The food courts located in the same geographical segment are managed by the same management team.
Goodwill arising from the acquisition of ML Breadworks Sdn Bhd in 2007 was allocated to the legal entity acquired which represents the CGU. Meanwhile, goodwill on the acquisition of MWA Pte Ltd in December 2007 was primarily attributable to the food court operations at Wisma Atria, Singapore.
The carrying amounts of goodwill allocated to each CGU are as follows:
The recoverable amount is determined based on a value in use calculation using the cash fl ow projections based on fi nancial budgets approved by management covering a three-year period. The discount rates applied to the cash fl ow projections are derived from cost of capital plus a reasonable risk premium at the date of assessment of the respective cash generating units.
The calculations of value in use for the CGUs are most sensitive to the following assumptions:
Budgeted gross margins – Gross margins are based on budget approved by management.
Shanghai segmentBeijing segmentML Breadworks Sdn BhdFood court operation at Wisma Atria, Singapore
Carryingamount as at 31
Dec 2011$’000
3,5691,009
202
1,268
6,048
Carryingamount as at 31
Dec 2010$’000
3,5691,009327
1,268
6,173
Pre-taxdiscount
rate2011
11.5%11.5%8.5%
8.5%
Pre-taxdiscount
rate 2010
10.6%10.6%10.6%
10.6%
103
11
12
Intangible assets (cont’d)
Investment securities
Pre-tax discount rates – Discount rates represent the current market assessment of the risks specifi c to each CGU, regarding the time value of money and individual risks of the underlying assets which have not been incorporated in the cash fl ow estimates. The discount rate calculation is based on the specifi c circumstances of the Group and its cash-generating units and derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interest bearing borrowings the Group is obliged to service. Segment–specifi c risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.
Impairment loss on goodwill of $125,000 (2010: $Nil) on ML Breadworks Sdn Bhd was recognised in “administrative expenses” in profi t or loss for the fi nancial year ended 31 December 2011 as the recoverable amount was less than the carrying value.
Junior bonds and redeemable preference shares
On 27 January 2010, the subsidiary, Imagine Properties Pte Ltd (“IPPL”) together with other investors, entered into a subscription agreement with PRE 1 Investments Pte Ltd (“PRE 1) for the subscription of junior bonds and attached redeemable preference shares in the capital of PRE 1. IPPL’s subscription was $10,750,000 in principal amount of junior bonds together with 43 preference shares at $0.10 per share, representing approximately 6.98% of the total aggregate value of the junior bonds and the preference shares issued by PRE 1. PRE 1 is the sole unitholder of the Perennial Katong Retail Trust which had acquired the Katong Mall (“property”).
Available-for-sale fi nancial assets- Equity instruments (quoted)- Redeemable preference shares (unquoted)
Held-to-maturity investments - 8% SGD junior bonds due on 29 January 2015
* less than $1,000
919*
10,750
11,669
919*
10,750
11,669
2011 2010$’000 $’000
Group
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
104
12
13
Investment securities (cont’d)
Investment in subsidiaries
The junior bonds are secured by a mortgage over the property, assignment of rental proceeds of the property and debentures. The payments of the principal and interest on the junior bonds are subordinated to the payments of principal and interest on the bank borrowings obtained for the purchase of the Katong Mall.
The junior bonds mature in 2015 and will bear interest, payable semi-annually in arrears, at 8% per annum from 29 January 2012 to but excluding the maturity date of the junior bonds, subject to the extinguishment of unpaid interest.
Loans to subsidiaries are quasi-capital in nature, non-interest bearing and have no fi xed terms of repayment.
Details of the subsidiaries are as follows:
Name
Held by the Company
BreadTalk Pte Ltd (1)
BreadTalk International Pte Ltd (1)
Topwin Investment Holding Pte Ltd (1)
Star Food Pte Ltd (1)
Imagine Properties Pte Ltd (1)
Together Inc. Pte Ltd (8)
Country of incorporation
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Principal activities
Bakers and manufacturers of and dealers in bread, fl our and biscuits
Investment holding
Investment holding
Investment holding
Investment holding
Investment holding
2011%
100
100
100
60
100
100
2010%
100
100
100
60
100
100
Unquoted equity shares at costLoans to subsidiariesShare based compensation reserve
28,28911,950
237
40,476
28,28910,750
127
39,166
2011 2010$’000 $’000
Company
Proportion of ownership
interest
105
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
Investment in subsidiaries (cont’d)
Name
Held through subsidiaries
Taster Food Pte Ltd (1)
Charcoal Pte Ltd (1)
Shanghai BreadTalk Co., Ltd (2)
Shanghai BreadTalk Gourmet Co., Ltd (2)
Beijing BreadTalk Restaurant Management Co., Ltd (2)
Beijing BreadTalk Co.,Ltd (2)
Food Republic (Shanghai) Co., Ltd (2)
Beijing Da Shi Dai Food and Beverage Co., Ltd (2)
Chongqing Food Republic Food & Beverage Co., Ltd (3)
Country of incorporation
Singapore
Singapore
People’s Republic of China
People’s Republic of China
People’s Republic of China
People’s Republic of China
People’s Republic of China
People’s Republic of China
People’s Republic of China
Principal activities
Operators of food and drinks outlets, eating houses and restaurants
Dormant
Bakers and manufacturers of and dealers in bread, fl our and biscuits
Management of food and beverage, manufacture and retail of bakery, confectionery products
Management of food and beverage, manufacture and retail of bakery, confectioneryproducts
Manufacture and sale of bakery and confectionery products
Food court operator
Food court operator
Food court operator
2011%
70
75
100
100
100
100
100
100
100
2010%
70
75
100
100
100
100
100
100
100
Proportion of ownership
interest
13
106
13 Investment in subsidiaries (cont’d)
Name
Held through subsidiaries (cont’d)
Megabite Hong Kong Limited (4)
Megabite (S) Pte Ltd (1)
Food Republic Pte Ltd (1)
BreadTalk (Thailand) Company Limited (5)(14)
Megabite Eatery (M) Sdn Bhd (6)
BreadTalk Concept Hong Kong Limited (4)
ML Breadworks Sdn Bhd (7)
MWA Pte Ltd (1)
Food Art Pte Ltd (1)
Shanghai Star Food F&B Management Co., Ltd (2) (Note (a))
Beijing Star Food F&B Management Co., Ltd (9)
Ramen Play Pte Ltd (8)
Shanghai Ramen Play Co., Ltd (3) (Note (a))
Country of incorporation
Hong Kong
Singapore
Singapore
Thailand
Malaysia
Hong Kong
Malaysia
Singapore
Singapore
People’s Republic of China
People’s Republic of China
Singapore
People’s Republic of China
Principal activities
Food court operator
Investment holding
Food court operator
Management of food and beverage, manufacture and retail of bakery, confectionery products
Operator of food and beverage outlets
Management of food and beverage, manufacture and retail of bakery, confectionery products
Bakers and manufacturers of and dealers in bread, fl our and biscuits
Dormant
Operators of food and beverage outlets
Operators of restaurants
Operators of restaurants
Operators of restaurants
Operators of restaurants
2011%
85
100
100
49
100
85
90
100
100
60
60
60
60
2010%
85
100
100
49
100
85
90
100
100
60
60
60
60
Proportion of ownership
interest
107
13 Investment in subsidiaries (cont’d)
Name
Held through subsidiaries (cont’d)
Taster Food International Pte Ltd (8)
Taster Food (Thailand) Co. Limited (11)(14)
Food Republic Hangzhou F&B Co.,Ltd (3)
Food Republic Shenzhen F&B Management Co.,Ltd (10)
Food Republic Guangzhou F&B Management Co., Ltd (13) (Note (a))
Food Republic Taiwan Co., Ltd (12) (Note (a))
FR (Thailand) Co., Ltd (11) (Note (a))
Country of incorporation
Singapore
Thailand
People’s Republic of China
People’s Republic of China
People’s Republic of China
Taiwan
Thailand
Principal activities
Investment holding
Operators of restaurants
Food court operator
Food court operator
Food court operator
Food court operator
Food court operator
2011%
63
31
100
85
64
90
49
(1). Audited by Ernst & Young LLP, Singapore(2) Audited by member fi rms of Ernst & Young Global in the respective countries(3) Audited by Shanghai Xin Gao Xin Certifi ed Public Accountants Co., Ltd, People’s Republic of China(4) Audited by S.F. Kwok & Co. Certifi ed Public Accountants, Hong Kong(5) Audited by CNN & S Co., Ltd, Thailand(6) Audited by RSM Robert Teo, Kuan & Co., Malaysia(7) Audited by C L Chong & Co., Malaysia(8) Audited by Trustnet Alliance, Singapore(9) Audited by Beijing Daxing Certifi ed Public Accountants Co., Ltd, People’s Republic of China(10) Audited by Shenzhen Zhigong Certifi ed Public Accountants, People’s Republic of China(11) Audited by Phattarakit Aupliting Offi ce Co.,Ltd, Thailand(12) Audited by KPMG, Taiwan(13) Audited by Guangzhou Dagong Certifi ed Public Accountants, People’s Republic of China(14) Considered a subsidiary of the Company as the Company has voting control at general meetings and Board meetings
2010%
63
31
100
85
–
–
–
Proportion of ownership
interest
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
108
(a)
13 Investment in subsidiaries (cont’d)
New subsidiaries and additional investments
Shanghai Star Food F&B Management Co., Ltd (“Shanghai Star Food”)
During the year, Star Food Pte Ltd, a 60% owned subsidiary of the Group, subscribed for the additional share capital of its wholly owned subsidiary, Shanghai Star Food, of 1,600,000 new ordinary shares for a cash consideration of US$1,600,000 ($1,937,000).
Food Republic Taiwan Co., Ltd (“Food Republic Taiwan”)
Food Republic Taiwan was incorporated as a 90% owned subsidiary of Topwin Investment Holding Pte Ltd (“Topwin”), a wholly-owned subsidiary of the Group in March 2011 with a registered capital and paid up capital of NT$5,000,000 ($215,000).
Shanghai Ramen Play Co., Ltd (“Shanghai Ramen Play”)
During the year, Shanghai BreadTalk Co., Ltd and Food Republic (Shanghai) Co., Ltd, subscribed for 30% each of the additional share capital issued by Shanghai Ramen Play for a total cash consideration of US$750,000 ($969,000). The Company retains an effective interest of 60% in Shanghai Ramen Play.
Food Republic Guangzhou F&B Management Co., Ltd (“Food Republic Guangzhou”)
Food Republic Guangzhou was incorporated as a 75% owned subsidiary of Megabite Hong Kong Limited, a 85% owned subsidiary of the Group, in June 2011 with a registered and paid up capital of HK$1,000,000 ($157,000).
FR (Thailand) Co, Ltd (“FR Thailand)
During the year, Topwin subscribed for a 49% interest in FR Thailand for a cash consideration of THB 2,450,000 ($104,000). FR Thailand was incorporated in July 2011 with a paid up capital of THB 5,000,000 ($210,000).
FR Thailand has not commenced operations as at 31 December 2011. FR Thailand is consolidated as a subsidiary as the Company has voting control at general meetings and Board meetings.
109
14 Investment in associates
Investment in shares, unquotedShares, at costImpairment lossLoan to an associateShare of post-acquisition results of associates
At end of year
Name
Held through subsidiaries
Hong Kong BreadTalk Ltd(“HKBT”) (1)
Out of The Box Pte Ltd (“OOTB”) (1)
Country of incorporation
Hong Kong
Singapore
Principal activities
Dormant
Dormant
1,252(385)614
(1,481)
–
1,252(385)614
(1,481)
–
2011 2010$’000 $’000
Group
Loan to an associate is quasi-capital in nature, non-interest bearing and has no fi xed terms of repayment.
Details of the associates are as follows:
(1) Not a signifi cant associate and unaudited fi nancial statements have been used for the preparation of the consolidated fi nancial statements of the Group.
The Group has not recognised losses relating to HKBT and OOTB where its share of losses exceeds the Group’s interest in these associates. The Group’s cumulative share of unrecognised losses as at 31 December 2011 was $375,000 (2010: $402,000). The Group has no obligation in respect of these losses.
2011%
25
30
2010%
25
30
Proportion of ownership
interest
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
110
14
15
Investment in associates (cont’d)
Investment in joint ventures
Assets and liabilities
Total assets
Total liabilities
Results
Net profi t/(loss) for the year
Investment in shares, unquoted
Shares, at costShare of post-acquisition results of joint venturesExchange difference
188
3,486
88
43418
(30)
422
105
3,435
(69)
334125(13)
446
2011 2010$’000 $’000
2011 2010$’000 $’000
Group
Group
The summarised fi nancial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:
111
15 Investment in joint ventures (cont’d)
Details of the joint ventures are as follows:
Name
Held through subsidiaries
Shanghai Hong Bu Rang Food & Beverage Management Co., Ltd (1)
Apex Excellent Sdn Bhd (2)
Street Food Pte Ltd (3)
Country of incorporation
People’s Republic of China
Malaysia
Singapore
Principal activities
Dormant
Food court operator
Food court operator
2011%
50
50
50
2010%
50
50
50
Proportion of ownership
interest
(1) Audited by Shanghai Xin Gao Xin Certifi ed Public Accountants Co., Ltd, People’s Republic of China(2) Audited by RSM Robert Teo, Kuan & Co., Malaysia(3) Audited by Ernst & Young LLP, Singapore
Additional investment
During the year, a wholly owned subsidiary, Food Republic Pte Ltd., increased its shareholding in Street Food Pte Ltd (“Street Food”) by subscribing for additional 99,999 new ordinary shares of $1.00 each. The consideration for the new ordinary shares was satisfi ed by capitalizing part of the existing shareholders’ loan owing by Street Food to the shareholders.
The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses, adjusted for the proportion of ownership interest held by the Group in the joint ventures, are as follows:
Assets and liabilities
Current assetsNon-current assets
Total assets
2,000827
2,827
1,751150
1,901
2011 2010$’000 $’000
Group
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
112
15
16
Investment in joint ventures (cont’d)
Inventories
Current liabilitiesNon-current liabilities
Total liabilities
Results
RevenueOther incomeExpenses
Profi t for the year
Balance sheet:
Raw materials and consumables, at costSemi-fi nished goodsFinished goodsBase inventories (1)
Total inventories at lower of cost and net realisable value
Profi t or loss:
Inventories recognised as an expense in cost of salesInclusive of the following charge:- Write-down of inventories- Write-off of inventories
2,4312
2,433
2,579459
(2,945)
93
6,252648300197
7,397
106,417
2531
1,481–
1,481
2,265324
(2,472)
117
5,392444137141
6,114
85,492
–23
2011 2010$’000 $’000
2011 2010$’000 $’000
2011 2010$’000 $’000
Group
Group
Group
The Group has not recognised losses relating to Shanghai Hong Bu Rang where its share of losses exceeds the Group’s interest in this joint venture. The Group’s cumulative share of unrecognised losses as at 31 December 2011 was $153,000 (2010: $153,000). The Group has no obligation in respect of these losses.
(1) This is stated after writing down 50% of the original cost of base inventories.
113
17 Trade and other receivables
Trade and other receivables(current):
Trade receivablesOther receivablesDeposits
United States DollarEuro
Other receivables(non-current):
Other receivables
Trade receivables
Trade receivables are non-interest bearing and are generally on 15 to 60 days terms (2010: 30 to 90 days). They are recognised at their original invoice amounts which represents their fair values on initial recognition.
Trade receivables denominated in foreign currencies at 31 December are as follows:-
CompanyGroup
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
7,7307,369
31,701
46,800
1,389
2011 $’000
5,2033,930
16,212
25,345
857
2010$’000
---
-
2011 $’000
-
-26
-
26
-
2010$’000
63817
655
33925
364
2010$’000
2011 $’000
Group
114
17 Trade and other receivables (cont’d)
Receivables that are past due but not impaired
Receivables that are impaired / partially impaired
Trade receivables past due:
Lesser than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days
Trade receivables – nominal amounts Less: Allowance for impairment
At 1 JanuaryCharge/(write back) during the yearWritten off during the yearTranslation difference
At 31 December
2,07645639079
660
3,661
361(361)
–
120253(13)
1
361
49525620589
340
1,385
167(120)
47
125(5)
––
120
2011 2010$’000 $’000
2011 2010$’000 $’000
Group
GroupIndividually impaired
The Group has trade receivables amounting to $3,661,000 (2010: $1,385,000) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows:
The Group’s trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows:
Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in fi nancial diffi culties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
Movement in allowance accounts:
115
17 Trade and other receivables (cont’d)
Other receivables that are past due but not impaired
The Group has other receivables amounting to $2,307,000 (2010: $1,169,000) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows:
Other receivables that are impaired / partially impaired
The Group’s other receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows:
Other receivables - nominal amountsLess: Allowance for impairment
Other receivables past due: Lesser than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days
Movement in allowance accounts:
At 1 JanuaryCharge during the yearWritten off during the yearTranslation difference
At 31 December
Other receivables
Deposits
Other receivables (current) are non-interest bearing and are generally on 0 to 60 days terms (2010: 30 to 180 days).
Deposits include an amount of $12,000,000 (2010: $Nil) for the subscription of junior bonds relating to the Group’s investment in a retail property trust in Singapore.
1,246581594
840
2,307
82(82)
–
27564
(259)2
82
36631330341146
1,169
277(275)
2
2723––
275
2011 2010$’000 $’000
2011 2010$’000 $’000
Group
Group
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
116
18. Amounts due from/to subsidiaries, joint ventures and minority shareholders of subsidiaries (non-trade)
Receivables that are past due but not impaired
Receivables that are past due but not impaired
Amount due from joint ventures (non-trade)
Amounts due from subsidiaries (non-trade)
Lesser than 30 days30 to 60 days61 to 90 days91 to 120 daysMore than 120 days
Total as at 31 December
Lesser than 30 days30 to 60 days61 to 90 days91 to 120 daysMore than 120 days
Total as at 31 December
125382426
975
1,188
84––
30
114
471515
–_
77
7–3–
27
37
2011 2010$’000 $’000
2011 2010$’000 $’000
Group
Company
Group
Group
The amounts due from/to subsidiaries and joint ventures are unsecured, non-interest bearing and generally on 30 to 60 days term except for:
(i) loans to subsidiaries of $20,000 (2010: $1,881,000) which are repayable on demand;
(ii) loans from subsidiaries of $7,378,000 (2010: $8,750,000). $7,000,000 and $378,000 are unsecured and repayable on demand.
(iii) loan to a subsidiary of $12,000,000 (2010: Nil) which bears an effective interest rate of 2.06% (2010: Nil) per annum and is repayable on demand
Amounts due from subsidiaries include dividend receivable of $2,200,000 (2010: $3,000,000).
The amounts due from minority shareholders of subsidiaries are unsecured, non-interest bearing and repayable on demand.
117
7,29579,765
87,060
2010$’000
2010$’000
2010$’000
2010$’000
2010$’000
2010$’000
2011 $’000
2011 $’000
2011 $’000
2011 $’000
2011 $’000
2011 $’000
19
20
Cash and cash equivalents
Trade and other payables
Fixed depositsCash on hand and at bank
Trade and other payables (current):
Trade payablesOther payablesSales collection on behalf of tenantsAmount due to landlord (non-trade)
Other payables (non-current):
Amount due to landlord (non-trade)
United States Dollar
Fixed deposits of the Group and the Company have varying maturity periods between 1 week to 1 month (2010: 12 months) with effective interest rates ranging from 0.11% to 0.88% (2010: 1.71% to 2.25%) per annum.
Cash and cash equivalents denominated in foreign currencies at 31 December are as follows:
2,000698
2,698
–250
–
–
250
–
34
22,89638,69912,392
87
74,074
–
1,193
–2,947
2,947
–489
–
–
489
–
35
78470,360
71,144
18,11432,54910,100
83
60,846
59
1,455
Company
Company
Company
Group
Group
Group
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
118
21
20
Other liabilities and provision
United States DollarOthers
24117
258
23235
267
2011 2010$’000 $’000
Group
Trade payable/other payables
These amounts are non-interest bearing. Trade payables are normally settled on 0 to 60 days terms (2010: 30 to 90 days terms) while other payables have an average term of 0 to 90 days term (2010: 30 to 90 days terms), except for retention sums which have repayment terms of up to 1 year. Other payables of the Group include food court tenant and stored value card deposits of $12,866,000 (2010: $12,516,000), amount payable for the purchase of property, plant and equipment of $10,358,000 (2010: $9,863,000) and dividend payable to minority shareholders of a subsidiary of $Nil (2010: $820,000).
Amount due to landlord (non-trade)
The balance is payable to a landlord, who paid renovation costs on behalf of a subsidiary. This amount is unsecured and non-interest bearing.
Trade payables denominated in foreign currencies as at 31 December are as follows:
Other liabilities:
CurrentAccrued operating expensesDeferred revenueDeferred rent
Non-currentDeferred rent
2,115––
2,115
–
25,31814,4961,310
41,124
7,039
1,845––
1,845
–
21,5799,916892
32,387
5,759
2011 2010$’000 $’000
2011 2010$’000 $’000
CompanyGroup
Trade and other payables (cont’d)
119
21
22
23
Other liabilities and provision (cont’d)
Loans from minority shareholders of subsidiaries
Finance lease obligations, secured
At 1 January AdditionsUtilisation
Total as at 31 December
Provision:
Provision for reinstatement costs
Not later than one yearLater than one year but not later than fi ve years
Total minimum lease paymentsLess: amounts representing fi nance charges
Present value of minimum lease payments
The loans from minority shareholders of subsidiaries are unsecured, non-interest bearing and repayable on demand except for loans of $882,000 (2010: Nil) which are not expected to be repaid on the next twelve months.
The Group has fi nance leases for certain items of machinery and equipment (Note 10).
Future minimum lease payments under fi nance leases together with the present value of the net minimum lease payments are as follows:
The leases have options to purchase at the end of the lease term. The effective interest rates of the leases are 2.20% (2010: 2.20%) per annum. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing.
3,5362,461(126)
5,871
56
38
94
(3)
91
38–
38
(1)
37
3,061536(61)
3,536
54
37
91
–
91
37
–
37
–
37
2011 2010$’000 $’000
Totalminimum
leasepayments
2011
Totalminimum
leasepayments
2010
Present value of
payments 2011
Present value of
payments 2010
Group
Group
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
$’000 $’000 $’000 $’000
120
–3,989
–
––––––
3,989
–3,989
3,989
5,2613,989738
1,403
2,965
1,830182
3,5173,667
23,552
8,39615,156
23,552
–3,989
–
––––––
3,989
–3,989
3,989
4,2383,9891,3661,849
1,959
176286486
14,349
6,2328,117
14,349
24
25
Short-term loans
Long-term loans
Bank loans- SGD- USD- HKD- RMB- RM- NTD
SGD loansSGD loanHKD loansHKD loans
RMB loans
RM loanRM loanTHB loansNTD loan
CurrentNon-current
2012 - 2014Note 1
2012 - 2015 2012 – 2015
(Note 3)2012 – 2015
(Note 3)2012 - 2014
Note 22012 - 2016
2015
12,000–––––
12,000
12,000–
1,5051,409203647
15,764
––––––
–
–778
2,1571,763
––
4,698
2011 2010$’000 $’000
2011 2010$’000 $’000
2011 2010$’000 $’000
2011 2010$’000 $’000
Company
CompanyMaturity
Group
GroupTerm loans
The effective interests on these short-term loans range from 1.13% to 6.71% (2010: 1.86% to 7.72%) per annum. The interest rates of these fl oating rate loans are repriced from time to time at the discretion of the respective banks.
The bank loans are revolving term loans of 3 to 12 months (2010: 3 to 6 months).
Short term loans of $1,320,000 (2010: $1,945,000) are secured by continuing guarantees by the Company and certain subsidiaries of the Group. All other short term loans except for a loan of $12,000,000 (2010: Nil) are secured by continuing guarantees by the Company.
–
121
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
26. Share capital and treasury shares
(a) Share capital
Issued and fully paid ordinary shares
25. Long-term loans (cont’d)
Note 1 – The loan will be converted to a 15-year term loan within 3 months of the Temporary Occupation Permit (TOP) of the Group’s operations Headquarters or 30 April 2012, whichever is earlier.
Note 2 – The loan is repayable by 36 monthly instalments upon full drawdown of the loan to a specifi ed sum.
All the loans are fl oating rate loans with effective interest rates ranging from 1.25% to 7.29% (2010: 1.63% to 6.11%) per annum. The interest rates of these floating rate loans are repriced from time to time at the discretion of the respective banks.
Securities
Note 1 – Term loan of $3,989,000 (2010: $3,989,000) is secured by a charge over the Company’s leasehold land.
Note 3 – Term loans of $4,368,000 (2010: $3,808,000) are secured by continuing guarantees by the Company and certain subsidiaries of the Group.
All other term loans are secured by continuing guarantees by the Company.
At beginning of the year 281,893,238
281,893,238
234,911,034
46,982,204
33,303
33,303 281,893,238
33,303
33,303
Allotment of bonus sharesAt end of the year
Group and Company2011 2010
Number ofshares
Number ofshares$’000 $’000
The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value.
On 30 March 2010, the Company issued bonus shares on the basis of one bonus share for every fi ve existing ordinary shares.
122
26. Share capital and treasury shares (cont’d)
(b) Treasury shares
Treasury shares relate to ordinary shares of the Company that is held by the Company.
The Company acquired 1,090,000 (2010: 500,000) shares in the Company through purchases on the Singapore Exchange during the fi nancial year. The total amount paid to acquire the shares was $558,000 (2010: $259,000) and this was presented as a component within shareholders’ equity.
The Company reissued 432,892 (2010: 1,083,418) treasury shares pursuant to its restricted share grant at a weighted average share price of approximately $0.32 (2010: $0.32) each.
At beginning of the yearAcquired during the fi nancial yearAllotment of bonus sharesTreasury shares transferred on vesting of restricted share grant
At end of the year
580,582
1,090,000
- - -
1,237,690 580,582
432,892
(199)
(558)
(609) (199)
148
970,000
500,000
194,000
(1,083,418)
(283)
(259)
343
Group and Company2011 2010
Number ofshares
Number ofshares$’000 $’000
123
2,071(722)
604
247 168
2,382189
604
357 186
(a) (b)
(c) (d)
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
357 247 186 168
27. Accumulated profi ts and other reserves
Accumulated profi ts
Included in the Group’s accumulated profi ts is an amount of $1,432,000 (2010: $1,432,000) which is not distributable by way of dividends. The amount arose from the waiver of inter-company debt in the subsidiary, Beijing BreadTalk Restaurant Management Co., Ltd, which was recognised as capital reserve in accordance with local accounting convention.
Other reserves
2011 2011 Note 2010 2010
$’000 $’000$’000 $’000
(a) Statutory reserve fund
(b) Translation reserve
Group Company
Statutory reserve fundTranslation reserveFair value adjustment reserveShare-based compensation reserveCapital reserve
3,178 2,368 543 415
- -
- -
- -
In accordance with the Foreign Enterprise Law applicable to subsidiaries in the People’s Republic of China (“PRC”), the subsidiaries are required to make appropriation to a Statutory Reserve Fund (“SRF”). At least 10% of the statutory after tax profi ts as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiaries’ registered capital. Subject to the approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital of the subsidiaries. The SRF is not available for dividend distribution to shareholders.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.
124
27. Accumulated profi ts and other reserves (cont’d)
(c) Fair value adjustment reserve
Net loss on available-for-sale fi nancial assets:
- Net loss on fair value changes during the fi nancial year
2011 2010
$’000 $’000
28. Commitments and contingencies
(d) Capital reserve
(a)
Group
574
49,355
6,000
2,372
1,952
600
47,324 1,834
Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale fi nancial assets until they are disposed of or impaired.
Commitments
Capital reserve mainly arises from the gain or loss arising from purchase, sale, issue or cancellation of treasury shares. No dividend may be paid and no other distribution (whether in cash or otherwise) of the Company’s assets (including any distribution of assets to members on a winding up) may be made in respect of this reserve.
Expenditure contracted for as at the balance sheet date but not recognised in the fi nancial statements is as follows:
2011 2011 2010 2010
$’000 $’000$’000 $’000
Group Company
Commitment in respect of property, plant and equipment
Commitment in respect of investment securities
Commitment for capital contribution in a joint venture
Shareholder’s loan to a joint venture
-
-
-
-
-
-
-
-
-
-
125
28. Commitments and contingencies (cont’d)
(b) Contracted operating lease commitments
Not later than one year Later than one year but not later than fi ve years Later than fi ve years
Not later than one year Later than one year but not later than fi ve years
(c) Operating lease The Group has entered into non-cancellable operating leases to sublease its food court and retail outlet premises. Sublease rental receivable as at 31 December is as follows:
(d) Letters of guarantees, secured
The Group has various operating lease agreements for equipment, offi ce, central kitchen, food court and retail outlet premises. These non-cancellable leases have remaining non-cancellable lease terms of between less than 1 year and 9 years. Most leases contain renewable options. Some of the leases contain escalation clauses and provide for contingent rentals based on percentages of sales derived from assets held under operating leases. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing.
Future minimum lease payments payable under non-cancellable operating leases as at 31 December are as follows:
2011 2010
$’000
73,524170,789
17,231
261,544 211,772
61,052139,395
11,325
$’000
Group
2011 2010
$’000
30,889 21,189
52,078 48,324
29,458 18,866
$’000
Group
As at 31 December 2011, the banks issued letters of guarantees on behalf of the Group to lessors of premises amounting to approximately $9,352,000 (2010: $8,097,000).
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
126
28. Commitments and contingencies (cont’d)
(e) Corporate guarantees
(f) Undertakings
(g) Leasehold land
As at 31 December 2011, the Company has given corporate guarantees to fi nancial institutions in connection with banking facilities provided to its subsidiaries of which $44,716,000 (2010:$23,246,000) of the banking facilities have been utilised as at year end.
In conjunction with the investment in junior bonds by the subsidiary, Imagine Properties Pte Ltd (“IPPL”) (Note 12), the Company, together with the other investors of the junior bonds, had executed a Sponsors’ Undertaking on 29 January 2010 whereby the Company undertakes to pay IPPL’s proportion of all cost overruns in connection to the additions’ and alterations’ works to be undertaken on the Katong Mall. As at 31 December 2011, there were no contingent liabilities resulting from the aforesaid undertaking.
In November 2009, the Company accepted an offer from Jurong Town Corporation (“JTC”) to acquire a leasehold land located at Paya Lebar iPark, Tai Seng Street, Singapore. The Company also signed a Building Agreement with JTC in October 2010.
Under the lease arrangement, the Company will construct a multi-storey building on the land. The building will serve as the Group’s manufacturing facility and operations Headquarters. Upon completion of the building and fulfi lment of other terms and conditions in the Building Agreement, the land together with the building erected thereon will be leased to the Company for a term of 30 years from 1 February 2010.
127
29. Related party disclosures
(a) Sale and purchase of goods and services
In addition to those related party information disclosed elsewhere in the fi nancial statements, the following signifi cant transactions between the Group and related parties took place during the year on terms agreed between the parties:
Income Management fee income from a joint venture Rental and miscellaneous income from a party related to a director of the Company Dividend income from a joint venture
Income Management fee income from a subsidiary Dividend income from subsidiaries Training fee income from subsidiaries
Expenses Rental expense to a joint venture Royalty fees to minority shareholders Purchase of goods from a party related to a director of the Company
Expense Facilities fee to a subsidiary
Others Franchise fee to minority shareholders Purchase of furniture and fi tting from a company related to a director of the Company Design fee to a company related to a director of a subsidiary Purchase of lightings and fi ttings from a company related to a director of a subsidiary
155 -
2011
2011
2010
2010
$’000
$’000
327
73
52
221
1,654
7,247 4,672
22
194
97
228
38
200
142
273
79
58
1,282
6,399 4,680
22
25
59
84
80
$’000
$’000
Group
Company
-
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
128
29. Related party disclosures (cont’d)
(b) Compensation of key management personnel
30. Financial risk management objectives and policies
The Group and the Company is exposed to fi nancial risks arising from its operations and the use of fi nancial instruments. The key fi nancial risks include interest rate risk, foreign currency risk, credit risk, liquidity risk and market price risk. The Audit Committee provides independent oversight to the effectiveness of the risk management process.
The Group’s and Company’s principal fi nancial instruments comprise bank loans, fi nance leases and cash and short term deposits. The main purpose of these fi nancial instruments is to raise fi nance for the Group’s and Company’s operations. The Group and Company has various other fi nancial assets and liabilities such as trade and other receivables, trade and other payables and related company balances, which arise directly from its operations.
It is, and has been throughout the current and previous fi nancial year, the Group’s and Company’s policy that no trading in derivative fi nancial instruments shall be undertaken.
Salaries and bonusCentral Provident Fund contributions and other pension contributionsShare-based payment (RSG Plan)Directors’ feesOther personnel expenses
Total compensation paid to key management personnel
Comprise amounts paid to:
Directors of the CompanyDirectors of a subsidiaryOther key management personnel
2011 2010
$’000 $’000
Group
6,428
120
344
168
5,835
7,597
622
7,597
259
1,418 1,479
6,017
570
575
124
5,388
7,392
509
7,392
172
129
30. Financial risk management objective and policies (cont’d)
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned fi nancial risks and the objectives, policies and processes for the management of these risks.
(a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash fl ows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rates risk arises primarily from its investment portfolio in fi xed deposits and its debt obligations. The Group does not use derivative fi nancial instruments to hedge its investment portfolio. The Group obtains additional fi nancing through bank borrowings and leasing arrangements. The Group’s policy is to obtain the most favourable interest rates available without increasing its foreign exchange exposure.
Surplus funds are placed with reputable banks.
Sensitivity analysis for interest rate risk
2011
- Singapore dollar - Renminbi- Hong Kong dollar- New Taiwan dollar- Ringgit Malaysia- Thai Baht
Effect on profi t net of tax Group
100 basispoints
increase$’000
100 basispoints
decrease$’000
(128) (40) (33) (30) (22) (31)
128 40 33 30 22 31
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
130
30. Financial risk management objective and policies (cont’d)
The Group has transactional currency exposures arising from sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, Renminbi (RMB) and Hong Kong Dollar (HKD). The foreign currencies in which these transactions are denominated are mainly US dollars (USD), HKD, RMB and SGD.
Currently, the Chinese government imposes control over foreign currency. RMB, the offi cial currency in the People’s Republic of China (“PRC”), is not freely convertible. Enterprises operating in the PRC can enter into exchange transactions through the People’s Bank of China or other authorised fi nancial institutions. Payments for imported materials or services and remittance of earnings outside of the PRC are subject to the availability of foreign currency which depends on the foreign currency denominated earnings of the enterprises, or exchanges of RMB for foreign currency must be arranged through the People’s Bank of China or other authorised fi nancial institutions. Approval for exchanges at the People’s Bank of China or other authorised fi nancial institutions is granted to enterprises in the PRC for valid reasons such as purchase of imported materials and remittance of earnings. While conversion of RMB into Singapore dollars or other currencies can generally be effected at the People’s Bank of China or other authorised fi nancial institutions, there is no guarantee that it can be effected at all times.
The Group is also exposed to currency translation risk arising from its net investments in foreign operations, in Malaysia, the PRC, Hong Kong and Thailand. The Group’s net investments in these countries are not hedged as currency positions in Ringgit Malaysia, RMB, Hong Kong Dollar and Thai Baht are considered to be long-term in nature.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profi t net of tax to a reasonably possible change in the USD, HKD, RMB and SGD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.
(a) Interest rate risk (cont’d)
(b) Foreign currency risk
2010
- Singapore dollar - Renminbi- Hong Kong dollar- US dollar- Ringgit Malaysia- Thai Baht
Effect on profi t net of tax Group
100 basispoints
increase$’000
100 basispoints
decrease$’000
(68) (30) (45) (6) (5) (4)
68 30 45 6 5 4
131
52
(6)
30. Financial risk management objectives and policies (cont’d)
Against SGD:
USD - strengthened 6% (2010: 6%) - weakened 6% (2010: 6%)
RMB - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%)
Against RMB:
USD - strengthened 6% (2010: 6%) - weakened 6% (2010: 6%)
SGD - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%)
Against HKD:
SGD - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%)
USD - strengthened 6% (2010: 6%) - weakened 6% (2010: 6%)
RMB - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%)
Against Ringgit MalaysiaSGD - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%)
Effect on profi t net of tax Group
2011$’000
2010$’000
63
(3)
(56)
(63)
3
56
169
(3)
(5)
(169)
3
5
(1)
(8)
1
8
78
(43)
(52)
(78)
43
(2)
(2)
6
2
2
(34)
4
34
(c) Credit risk
Credit risk is the risk of loss that may arise on outstanding fi nancial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other fi nancial assets (including investment securities, cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verifi cation procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not signifi cant.
(4)
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
132
30. Financial risk management objectives and policies (cont’d)
(c) Credit risk (cont’d)
Exposure to credit risk
At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk is represented by:
–
–
Credit risk concentration profi le
The Group determines concentrations of credit risk by monitoring the country profi le of its trade receivables on an on-going basis. The credit risk concentration profi le of the Group’s trade receivables at the balance sheet date is as follows:
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents are placed with or entered into with reputable fi nancial institutions or companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding fi nancial assets that are either past due or impaired is disclosed in Notes 17 and 18 above.
By country:
SingaporePeople’s Republic of ChinaIndonesiaThe PhillippinesThailandTaiwanOthers
93
3,9491,1531,114342702377
7,730
1%
51%15%15%4%9%5%
100%
66
3,485471617145226193
5,203
1%
67%9%12%3%4%4%
100%
Group2011 2010
$’000% oftotal $’000
% oftotal
an amount of $32,716,000 (2010: $23,246,000) relating to corporate guarantees provided by the Company to fi nancial institutions on its subsidiaries’ borrowings and other banking facilities.
the carrying amount of each class of fi nancial assets recognised in the balance sheets; and
133
30. Financial risk management objectives and policies (cont’d)
(d) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter diffi culty in meeting fi nancial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of fi nancial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and fl exibility through the use of stand-by credit facilities.
The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to fi nance the operations of the Group.
Short-term funding may be obtained from short-term loans where necessary.
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
134
Gro
upFi
nanc
ial a
sset
s :
Inve
stm
ent s
ecur
ites
Trad
e an
d ot
her r
ecei
vabl
esA
mou
nts
due
from
join
t ven
ture
s (n
on-t
rade
)A
mou
nts
due
from
min
ority
sha
reho
lder
s of
sub
sidi
arie
s (n
on-t
rade
)C
ash
and
shor
t ter
m d
epos
its
Fina
ncia
l Lia
bili
ties
:Tr
ade
and
othe
r pay
able
sA
ccru
ed o
pera
ting
expe
nses
(Not
e 21
)A
mou
nts
due
to jo
int v
entu
res
Loan
s an
d bo
rrow
ings
Com
pan
yFi
nanc
ial a
sset
s :
Oth
er re
ceiv
able
sA
mou
nts
due
from
sub
sidi
arie
sC
ash
on h
and
and
at b
ank
Fina
ncia
l lia
bili
ties
: O
ther
pay
able
s A
ccru
ed o
pera
ting
expe
nses
(Not
e 21
)A
mou
nts
due
to s
ubsi
dia
ries
Loan
s an
d bo
rrow
ings
30.
Fin
anci
al r
isk
man
agem
ent
obje
ctiv
es a
nd p
olic
ies
(con
t’d
)
The
tabl
e be
low
sum
mar
ises
the
mat
urity
pro
fi le
of th
e G
roup
’s an
d th
e C
ompa
ny’s
fi nan
cial
ass
ets
and
fi nan
cial
liab
ilitie
s at
the
bala
nce
shee
t dat
e ba
sed
on
con
tract
ual u
ndis
coun
ted
paym
ents
:
1 ye
ar o
r le
ss
46,8
00
$’00
0
74,0
74
15,3
352,
698
250
395
–
–
$’00
0
14,2
49
2011
1
to 5
ye
ars –
––
– –
$’00
0
14,2
49
1,29
7
Tota
l
15,3
35 250
$’00
0
1 ye
ar o
r le
ss 26
5,74
8
489
$’00
0$’
000
2010
1
to 5
ye
ars – – –
Tota
l
87,0
60420
1,29
71,
389 – –
48,1
89 420
87,0
60
14,2
49
14,
249
857
26,2
02–
506
– 4
55–
71,1
44
–25
,345 506
455
71,1
44
25,3
18
25,0
22
135,
577
15,6
3815
1,21
597
,450
15,1
0611
2,55
6
– –– –
–16
,911
74,0
7425
,318
395
41,9
33
60,8
4621
,579 140
11,3
08
59
8,22
7
60,9
0521
,579 140
19,5
35
124,
809
16,9
1114
1,72
093
,873
8,28
610
2,15
9
–2,
698
2,94
7–
2,94
75,
74826
18,0
3318
,033
8,72
18,
721
––
2,11
57,
394
12,3
01
– –4,
042
2,11
57,
394
16,3
43
1,84
58,
762 56
– –4,
044
489
1,84
58,
762
4,10
0
22,0
604,
042
26,1
0211
,152
4,04
415
,196
135
Com
pan
y
Fina
ncia
l gua
rant
ees
30.
Fin
anci
al r
isk
man
agem
ent
obje
ctiv
es a
nd p
olic
ies
(con
t’d
)
The
tabl
e be
low
sho
ws
the
cont
ract
ual e
xpiry
by
mat
urity
of t
he C
ompa
ny’s
cont
inge
nt li
abili
ties.
The
max
imum
am
ount
of t
he fi
nanc
ial g
uara
ntee
con
trac
ts
are
allo
cate
d to
the
earli
est p
erio
d in
whi
ch th
e gu
aran
tee
coul
d be
cal
led.
1 ye
ar o
r le
ss
34,3
75
$’00
0$’
000
16,0
29
2011
1
to 5
ye
ars
$’00
0
50,4
04
Tota
l
$’00
0
1 ye
ar o
r le
ss
$’00
0$’
000
2010
1
to 5
ye
ars
Tota
l
8,1
34
27,
632
19,4
98
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
136
30. Financial risk management objectives and policies (cont’d)
31. Financial instruments
(e) Market price risk
(a) Financial assets and liabilities
Market price risk is that the fair value or future cash fl ows of the Group’s fi nancial instruments will fl uctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instrument. This instrument is quoted on the SGX-ST in Singapore and is classifi ed as available-for-sale fi nancial asset. The Group does not have exposure to commodity price risk.
Sensitivity analysis for equity price risk
At the balance sheet date, if the share price had been 15% (2010: 15%) higher/lower with all other variables held constant, the Group’s Fair Value Adjustment Reserve in equity would have been $138,000 (2010: $138,000) higher/lower, arising as a result of an increase/decrease in the fair value equity instruments classifi ed as available-for-sale.
The carrying amount by category of fi nancial assets and liabilities are as follows:
Loans and receivablesTrade and other receivablesAmounts due from joint-ventures (non-trade)Amounts due from minority shareholders of subsidiaries(non-trade)Cash and fi xed deposits
Total
Available-for-sale fi nancial assetsInvestment securities
Held-to-maturity investmentsInvestment sercurities
Financial liabilities carried at amortised costTrade and other payablesAccrued operating expenses (Note 21)Amounts due to joint-ventures (non-trade)Short term loans (Note 24)Long term loans (Note 25)Loans from minority shareholders of subsidiaries
Total
2011 2010
$’000 $’000
Group
46,800
74,07425,318
15,76423,552
87,060
140,185
135,577
420
1,297
919
395
1,082
10,750
919
140
200
10,750
25,345
60,48621,579
4,69814,349
71,144
101,452
97,450
455
506
137
31. Financial instruments (cont’d)
(b) Fair values
Financial instruments carried at fair value.
The fair value of quoted investment securities is determined by reference to the published market bid price at the balance sheet date.
Financial instruments whose carrying amount approximate fair value
Management has determined that the carrying amounts of unquoted investment securities, cash and bank balances, fi xed deposits, trade and other receivables, trade and other payables, related company balances and fl oating rate bank loans, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature or are repriced frequently.
Financial instruments carried at other than fair value.
Set out below is a comparison of the carrying amount and fair value of the fi nancial instrument that is carried in the fi nancial statements at other than fair value as at 31 December.
Fair value is estimated by discounting expected future cash fl ows at market incremental lending rate for similar types of borrowing or leasing arrangements at the balance sheet date.
No disclosure of fair values are made for the Group’s quasi-capital loan to an associate, loans from minority shareholders of subsidiaries and long-term amount due to landlord, and the Company’s quasi-capital loans to subsidiaries as it is not practical to determine their fair values with suffi cient reliability since the balances have no fi xed terms of repayment.
Financial assets:Other receivablesInvestment in junior bonds (Note 12)
Financial liabilities:Obligations under fi nance leases
2011 2011 2010 2010 Fair valueCarrying amount
1,389
37
10,750
1,019
37
11,315
857
91
10,750
839
89
11,362
$’000 $’000$’000 $’000
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
138
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year ended 31 December 2011 and 2010.
As disclosed in Note 27, subsidiaries of the Group operating in the PRC are required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the respective subsidiaries for the fi nancial year ended 31 December 2011 and 2010.
The Group monitors capital using gearing ratio (which is total borrowings divided by total equity) and net gearing ratio (which is total borrowings less cash and cash equivalents divided by total equity).
32.
Including bank loans, fi nance lease obligations and loans from minority shareholders of subsidiaries.
Total borrowingsLess: Cash and cash equivalents
Net cash
Total equity
Gearing ratio (times)
Net gearing
2011 2010
$’000 $’000
Group
40,435(87,060)
85,468
0.47
Net cash Net cash
19,338(71,144)
75,083
0.26
(46,625) (51,806)
(1)
(1)
139
For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows:
(a) The bakery segment is in the business of manufacturing and retailing of all kinds of food, bakery and confectionary products including franchising.
(b) The food court segment is involved in the management and operation of food courts and operation of food and drinks outlets within the food courts.
(c) The restaurant segment is in the business of operating food and drinks outlets, eating houses and restaurants.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profi t or loss.
Transactions between operating segments are generally based on terms determined on commercial basis.
33. Segment information
NO
TE
S T
O T
HE
FIN
AN
CIA
L S
TAT
EM
EN
TS
140
168,9385,6232,276
176,837
$’000 $’000 $’000 $’000 $’000 $’000
Segment information (cont’d)33.
RevenueExternal salesInter-segment sales(Note A)
Total revenue
ResultsProfi t from operationsInterest incomeInterest expenseShare of jointventures’ results
Segment profi t Tax expense
Profi t for the year
Other informationInvestment in joint ventures
Additions to non-current assets (Note B)
Depreciation andamortisation
Other non-cash(income)/expenses(Note C)
Assets and liabilitiesSegment assets(Note A)
Deferred tax assets
Total assets Segment liabilities(Note A)
Tax payableDeferred tax liabilities
Total liabilities
Bakery operations(1)
Restaurant operations
Foodcourt
operations Others (2) Elimination Group2011
194,433
304
194,737
8,562239
(476)
–
8,325
–
11,683
9,487
1,231
–
9,895
4,297
186
422
17,754
10,540
536
–
1,529
38
311
–
–
–
–
422
40,843
24,362
2,264
90,899
63,006
3,87111
(94)
–
3,788
55,590
29,702
4,71255
(159)
93
4,701
104,673
80,833
(150)51956
–
313
35,715
25,405
–––
–
–
(26,692)
(30,008)
16,995824
(785)
93
17,127(5,370)
11,757
260,1852,120
262,305
76,969
–
76,969
94,502
1,394
95,896
–
–
–
–
(1,698)
(1,698)
365,904
–
365,904
141
122,0654,4022,647
129,114
$’000 $’000 $’000 $’000 $’000 $’000
Segment information (cont’d)33.
RevenueExternal salesInter-segment sales(Note A)
Total revenue
ResultsProfi t from operationsInterest incomeInterest expenseShare of joint ventures’ results
Segment profi t Tax expense
Profi t for the year
Other informationInvestment in joint ventures
Additions to non-current assets (Note B)
Depreciation andamortisation
Other non-cash(income)/expenses(Note C)
Assets and liabilitiesSegment assets
(Note A)Deferred tax assets
Total assets Segment liabilities(Note A)
Tax payable Deferred tax liabilities
Total liabilities
Bakery operations(1)
Restaurant operations
Foodcourt
operations Others 2) Elimination Group2010
158,131
448
158,579
9,108104
(214)
–
8,998
–
12,450
8,235
(3,844)
–
10,571
2,857
(65)
446
11,623
10,463
2,458
–
5,023
43
668
–
–
–
–
446
39,667
21,598
(783)
79,296
53,006
2,8052
(2)
–
2,805
41,519
20,727
4,42437
(375)
158
4,244
86,986
64,422
227458(44)
–
641
23,258
15,108
–––
–
–
(28,760)
(31,198)
16,564601
(635)
158
16,688(5,520)
11,168
202,2991,898
204,197
56,253
–
56,253
88,504
2,160
90,664
–
–
–
–
(2,608)
(2,608)
302,888
–
302,888
142
Segment information (cont’d)
Notes:
(A) Inter-segment sales, assets and liabilities are eliminated on consolidation.
(B) Additions to non-current assets consist of additions to property, plant and equipment and intangible assets.
(C) Other non-cash (income)/expenses consist of:
• impairment/(write-back) of property, plant and equipment, intangible assets, investment in associate, receivables, amount due from associates and inventories;
• write off of property, plant and equipment, bad debts and inventories;
• (gain)/loss on disposals of property, plant and equipment; • share based payment expenses; and
• unrealised foreign exchange (gain)/loss.
33.
Bakery operations comprise operation of bakery retail outlets as well as that operated through franchising.The business segment “Others” comprises the corporate services, treasury functions, investment holding activities and dormant associated company.Non-current assets information presented above consist of property, plant and equipment and intangible assets.
SingaporeMainland ChinaHong KongRest of the world
Total
2011 2011 2010 2010
$’000 $’000$’000 $’000
External sales Non-current assets (3)
Geographical information
191,237117,57335,20421,890
365,904
40,55238,1786,78512,597
98,112
157,50397,75533,45714,173
302,888
38,61933,4087,8792,542
82,448
(1)
(2)
(3)
143
Dividends paid during the year: • First and fi nal exempt (one-tier) dividend for 2010 of 1.0 cent per share (2009: 1.0 cent per share)
Proposed but not recognised as a liability as at 31 December: Dividends on ordinary shares, subject to shareholders’ approval at the Annual General Meeting: • First and fi nal exempt (one-tier) ordinary dividend for 2011 of 1.0 cent per share (2010: 1.0 cent per share) • First and fi nal exempt (one-tier) special dividend for 2011 of 0.5 cent per share (2010: Nil cent per share)
Events subsequent to the balance sheet date
Dividends34.
35.
36.
Group and Company
2,813 2,342
2,807 2,813
1,403 –4,210 2,813
(i) Investment in retail property trust in Singapore
(ii) Partial redemption of junior bonds
Authorisation of fi nancial statements
The fi nancial statements for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 23 March 2012.
On 10 February 2012, the Group announced that the subsidiary, Imagine Properties Pte Ltd (“IPPL”) had completed the subscription of $18,000,000 in principal amount of junior bonds and was issued 72 ordinary shares of $1.00 per ordinary share in the share capital of Perennial (Chijmes) Pte Ltd in relation to the company’s investment in a retail property trust in Singapore. The initial deposit of $12,000,000 (Note 17) was paid during the year and the balance subscription amount of $6,000,072 was paid in January 2012.
On 27 February 2012, IPPL received a partial redemption of $3,526,000 on the junior bonds of $10,750,000 at 31 December 2011.
2011$’000
2010$’000
144
52,319,880 18.6495,538,556 34.06
30,282,000 (2) 10.7930,282,000 (3) 10.79
Size of Shareholdings No. of Shareholders % No. of Shares %
1 - 999 55 3.39 20,528 0.01
1,000 - 10,000 970 59.88 4,732,609 1.69
10,001 - 1,000,000 570 35.19 32,362,179 11.53
1,000,001 and above 25 1.54 243,540,232 86.77
Total 1,620 100.00 280,655,548 100.00
Issued and fully Paid-up CapitalNumber of Ordinary Shares in Issue (excluding treasury shares)Number of Treasury Shares heldClass of SharesVoting Rights
: S$33,302,916: 280,655,548: 1,237,690: Ordinary Shares: One vote per share
Statistics of ShareholdingsAs at 20 March 2012
Distribution of Shareholdings
Twenty Largest Shareholders
%
11.56 10.8710.479.098.525.645.413.403.352.852.342.272.091.861.540.750.750.730.570.50
84.56
No. of Shares
32,447,105 30,500,000 29,379,000 25,522,80023,905,000 15,836,20415,180,000 9,549,9509,408,000 8,000,0006,562,7756,369,0005,872,775 5,231,1774,323,0002,118,6002,100,0002,055,000 1,591,0001,399,200
237,350,586
No.
1.2.3.4.5.6.7.8.9.
10.11.12.13.14.15.16.17.18.19.20.
(1)
(2)
(3)
Name
Katherine Lee Lih LengMayban Nominees (S) Pte LtdMorgan Stanley Asia (Singapore) Securities Pte LtdUnited Overseas Bank Nominees Pte LtdHong Leong Finance Nominees Pte LtdCitibank Nominees Singapore Pte LtdHL Bank Nominees (S) Pte LtdHSBC (Singapore) Nominees Pte LtdDBS Nominees Pte LtdSBS Nominees Pte LtdBank of Singapore Nominees Pte LtdCitibank Consumer Nominees Pte LtdOversea-Chinese Bank Nominees Private LimitedGeorge Quek Meng TongBNP Paribas Securities Services Singapore Pte LtdUOB Kay Hian Pte LtdTan Kim KoonBNP Paribas Nominees Singapore Pte LtdRoyal Bank of Canada (Asia) LtdLiow Siew Pieng
Total :
Based on information available to the Company as at 20 March 2012, approximately 35.95% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of SGX-ST.
SUBSTANTIAL SHAREHOLDERS(As recorded in the Register of Substantial Shareholders as at 20 March 2012)
Name of Substantial Shareholders
1. George Quek Meng Tong (1)
2. Katherine Lee Lih Leng (1)
3. Keywise Greater China Opportunities Master Fund4. Keywise Capital Management (HK) Ltd (2)
5. Fang Zheng (3)
95,538,556 34.0652,319,880 18.6430,282,000 10.79
Katherine Lee Lih Leng is the spouse of George Quek Meng Tong. Saved as disclosed above, there are no familyrelationship among our Directors and Substantial Shareholders.
Keywise Capital Management (HK) Ltd, as the fund manager, is deemed interested in these shares held by KeywiseGreater China Opportunities Master Fund.
Fang Zheng is deemed interested in these shares by virtue of him being the sole shareholder of Keywise CapitalManagement (HK) Ltd.
- -- -
- -
Direct InterestNumber of Shares
Direct InterestNumber of Shares % %
145
NO
TIC
E O
FA
NN
UA
L G
EN
ER
AL
ME
ET
ING
AS SPECIAL BUSINESS
To consider and if thought fi t, to pass the following resolutions as Ordinary Resolutions, with or without any modifi cations:
To receive and adopt the Directors’ Report and the Audited Financial Statements of the Company for the year ended 31 December 2011 together with the Auditors’ Report thereon. (Resolution 1) To declare a fi rst and fi nal dividend of 1.0 cent per share tax exempt (one-tier) anda special dividend of 0.5 cent per share tax exempt (one-tier) for the year ended31 December 2011 (2010: 1.0 cent). (Resolution 2)
To re-elect the following Directors retiring pursuant to Article 104 of the Company’s Articles of Association: Mr George Quek Meng Tong (Resolution 3)Mr Ong Kian Min (Resolution 4)
Mr Ong Kian Min will, upon re-election as a Director of the Company, remain as the Lead Independent non-executive Director, Chairman of the Audit and Nominating Committees and a member of the Remuneration Committee. Mr Ong will be considered independent for the purposes of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited.
To approve the payment of Directors’ fees of S$168,000 for the year ended 31 December 2011 (2010: S$124,000). (Resolution 5)
To re-appoint Messrs Ernst & Young LLP as the Auditors of the Company and to authorise the Directors of the Company to fi x their remuneration. (Resolution 6) To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS ORDINARY BUSINESS
NOTICE IS HEREBY GIVEN that the Annual General Meeting of BreadTalk Group Limited (“the Company”) will be held at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 on Wednesday, 25 April 2012 at 9.30 a.m. for the following purposes:
1.
2.
3.
4.
5.
6.
146
provided that:
[See Explanatory Note (i)] (Resolution 7)
Authority to issue shares
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”), the Directors of the Company be authorised and empowered to:
issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or
make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares,
new shares arising from the conversion or exercise of any convertible securities
new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this Resolution; and
any subsequent bonus issue, consolidation or subdivision of shares;
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fi t; and
(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force,
the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fi fty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and
unless revoked or varied by the Company in a 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 earlier.
(subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:
(2)
(4)
7.
(a)
(b)
(1)
(3)
(i)
(ii)
(a)
(b)
(c)
147
8. Authority to issue shares under the BreadTalk Group Limited Employees’ Share Option Scheme
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the prevailing BreadTalk Group Limited Employees’ Share Option Scheme (“the Scheme”) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Scheme shall not exceed fi fteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, 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 earlier.
[See Explanatory Note (ii)] (Resolution 8)
9. Authority to issue shares under the BreadTalk Group Limited Restricted Share Grant Plan That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant awards in accordance with the provisions of the BreadTalk Group Limited Restricted Share Grant Plan (“the Plan”) and to allot and/or issue from time to time such number of fully-paid shares as may be required to be allotted and/or issued pursuant to the vesting of the awards under the Plan, provided always that the aggregate number of new ordinary shares to be allotted and/or issued pursuant to the Plan, the Scheme and any other share based schemes (if applicable), which the Company may have in place, shall not exceed fi fteen per centum (15%) of the total issued shares excluding treasury shares in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, 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 earlier.
[See Explanatory Note (iii)] (Resolution 9)
NO
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FA
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UA
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148
Authority to grant awards to Participants pursuant to the Rules of, and issue shares under, the Plan
That, contingent upon the passing of Resolution 9, in order to reward, retain and motivate employees who had met specifi c performance objectives set by the Company, the Directors of the Company be authorised and empowered to grant awards in accordance with the provisions of the Plan to the following participants of the Plan (“the Participants”) and to issue shares in the Company to the Participants of awards granted by the Company under the Plan, provided always that the aggregate number of shares available to Controlling Shareholders and their associates under the Plan shall not exceed twenty fi ve per centum (25%) of all the shares available under the Plan and that the number of shares available to each Controlling Shareholder or his associate shall not exceed ten per centum (10%) of all the shares available under the Plan. Such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.
Name of Participants No. of shares to be awarded
Controlling ShareholdersMr George Quek Meng Tong 65,000 (Resolution 10)Ms Katherine Lee Lih Leng 65,000 (Resolution 11)
Associates of Controlling ShareholdersMr Frankie Quek Swee Heng 25,000 (Resolution 12)
Renewal of Share Purchase Mandate
That for the purposes of Sections 76C and 76E of the Companies Act, Cap. 50, the Directors of the Company be and are hereby authorised to make purchases or otherwise acquire issued shares in the capital of the Company from time to time (whether by way of market purchases or off-market purchases on an equal access scheme) of up to ten per centum (10%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as ascertained as at the date of Annual General Meeting of the Company) at the price of up to but not exceeding the Maximum Price as defi ned in paragraph 3.4 of the Appendix to the Annual Report to Shareholder dated 9 April 2012, in accordance with the terms of the Share Purchase Mandate set out in the Appendix, and this mandate shall, unless revoked or varied by the Company in a general meeting, 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 earlier.
[See Explanatory Note (v)] (Resolution 13)
[See Explanatory Note (iv)]
11.
10.
By Order of the Board
Tan Cher LiangCompany SecretarySingapore9 April 2012
149
Resolution 9 in item 9 above, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual General Meeting, to offer and grant awards under the BreadTalk Group Limited Restricted Share Grant Plan (“the Plan”) in accordance with the provisions of the Plan and to issue from time to time such number of fully-paid shares as may be required to be issued pursuant to the vesting of the awards under the Plan subject to the maximum number of shares prescribed under the terms and conditions of the Plan. The aggregate number of ordinary shares which may be issued pursuant to the Scheme, the Plan and any other share based schemes (if applicable) is limited to 15% of the total issued share capital of the Company excluding treasury shares from time to time. Resolution 9 is independent from Resolution 8 and the passing of Resolution 9 is not contingent on the passing of Resolution 8.
(iii)
The Ordinary Resolution 7 in item 7 above, if passed, will empower the Directors of the Company, effective 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 or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible into shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders.
For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.
The Ordinary Resolution 8 in item 8 above, if passed, will empower the Directors of the Company, from the date of this Meeting until 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 or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration of the Scheme) 15% of the total number of issued shares excluding treasury shares in the capital of the Company from time to time, and the aggregate number of ordinary shares which may be issued pursuant to the Scheme, the Plan and any other share based schemes (if applicable) is limited to 15% of the total issued share capital of the Company excluding treasury shares from time to time. Resolution 8 is independent from Resolution 9 and the passing of Resolution 8 is not contingent on the passing of Resolution 9.
(i)
(ii)
Explanatory Notes:
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Name
George Quek Meng Tong
Katherine Lee Lih Leng
Frankie Quek Swee Heng
Other Participants*
TOTAL
Aggregate Number of Restricted Shares Granted
201,200
176,000
106,000
2,401,866
2,885,066
Aggregate Number of Restricted Shares Vested
75,492
58,860
48,660
1,333,298
1,516,310
* None of the Other Participants is either a controlling shareholder of the Company or an associate of a controlling shareholder of the Company.
The Directors confi rm that, as at the Latest Practicable Date (i.e. 20 March 2012):
(a) the aggregate number of shares issued under the Plan do not exceed 15% of the total issued shares (excluding treasury shares) in the capital of the Company;
(b) the aggregate number of shares granted to Controlling Shareholders and their associates does not exceed 25% of the shares available under the Plan; and
(c) number of shares granted to each controlling shareholder or his or her associate respectively does not exceed 10% of the shares available under the Plan.
The rationale for Resolution 10 Mr. George Quek Meng Tong (George Quek), if re-elected, will remain as is the Chairman of the Group and he holds an aggregate of 52.70% of the shareholding (direct and deemed interests). He is one of the co-founders of the Group and has been instrumental in the Group’s development over the years. He is responsible for overseeing the overall management of the Group and is pivotal in charting the direction and growth of the Group.
George Quek has been with the Company since the start in 2000 and has played a pivotal role in steering the growth of the Group in their operations locally and in this region and building up a good track record and reputation for the Group.
His knowledge and contacts in the food and beverage industry, of which he has more than 3 decades of experience, are key factors to the success of the Group. His invaluable experience has not only been instrumental in establishing the “BreadTalk” brand name, but also in setting new F&B trends and redefi ning the Asian food scene. He also played a signifi cant role in the Company’s foray into the food court business in Shanghai and Beijing, Mainland China.
Resolutions 10, 11 and 12, in item 10 above, if passed, will empower the Directors of the Company to issue shares in the Company to the Controlling Shareholders and their associates, granted by the Company under the Plan. The resolutions in item 10 are independent from each other and the passing of each such resolution is not contingent on the passing of any of the other resolutions in item 10. Resolution 10 is contingent on the passing of Resolution 3. Shareholders who are eligible to participate in the Plan shall abstain from voting on Resolutions 10, 11 and 12.
As at the Latest Practicable Date prior to the printing of this Notice of Annual General Meeting (i.e. 20 March 2012), the number of shares granted in respect of the Plan since its commencement date are as follows:
(iv)
151
George Quek continues to play an instrumental role in charting our Group’s expansion and business development plans. As the Chairman of the Company, he has in-depth knowledge of the needs of the business as it evolved over the years. His ability to anticipate business trend and demand has enabled the Company to grow the business rapidly.
The Company believes that George Quek will continue to play a key role in the growth and future development of the Group and there are further potential contributions that he can make. The Company intends to have the fl exibility to structure his remuneration package to include such Awards in future if it is in the interest of the Company to do so. By extending the Plan to George Quek, the Company will have an additional tool to craft a more balanced and innovative remuneration package that will link his total remuneration to the performance of the Group.
The Directors are of the view that the remuneration package of George Quek is fair given his contributions to the Group. The extension of the Plan to George Quek is consistent with the Company’s objectives to motivate its employees to achieve and maintain a high level of performance and contribution which is vital to the success of the Company. Although George Quek already has a shareholding interest in the Company, the extension of the Plan to him will ensure that he is equally entitled, with the other employees who are not Controlling Shareholders, to take part in and benefi t from this system of remuneration, thereby enhancing his long term commitment to the Group.
The participation of and grant of the Awards to George Quek under the Plan has been approved in principle by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution 10 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 65,000 shares to George Quek in accordance with the Plan.
The rationale for Resolution 11
Ms. Katherine Lee Lih Leng (Katherine Lee) is the Deputy Chairman of the Company and holds an aggregate of 52.70% of the Company’s shareholding (direct and deemed interests). She is one of the co-founders of the Group and has been assisting the Chairman, George Quek in the Group’s development since its inception. She oversees the Research and Development Department where she is responsible for product development for local and overseas markets. She is also responsible for steering the Group’s new concept developments for the various brands, pioneering new ideas and concepts. She has therefore contributed greatly in the increase and development of the range and quality of the Group’s products, which is one of its unique strengths and factors for its success. In the areas of training, Katherine Lee has actively organized product training and technical skill upgrades to ensure systematic transfers of knowledge and skills to the franchisees and their operations teams to maintain their competitive edge.
The Company believes that Katherine Lee will continue to contribute to the success of the Group. The Company intends to have the fl exibility to structure her remuneration package to include such Awards in future if it is in the interests of the Company to do so. By allowing her to participate in the Plan, the Company will have an additional tool to craft a more balanced and innovative remuneration package that will link her total remuneration to the performance of the Group.
The extension of the Plan to Katherine Lee is consistent with the Company’s objectives to motivate its employees to achieve and maintain a high level of performance and contribution which is vital to the success of the Company. Although Katherine Lee already has a shareholding interest in the Company, the extension of the Plan to her will ensure that she is equally entitled, with the other employees who are not Controlling Shareholders, to take part in and benefi t from this system of remuneration, thereby enhancing her continued commitment to the Group.
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The Ordinary Resolution 13 proposed in item 11 above, if passed, will empower the Directors of the Company effective 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, to repurchase ordinary shares of the Company by way of market purchases or off-market purchases of up to 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company at the Maximum Price as defi ned in Paragraph 3.4 to the Appendix. The rationale for, the authority and limitation on, the sources of funds to be used for the purchase or acquisition including the amount of fi nancing and the fi nancial effects of the purchase or acquisition of ordinary shares by the Company pursuant to the Share Purchase Mandate on the audited consolidated fi nancial accounts of the Group for the fi nancial year ended 31 December 2011 are set out in greater detail in the Appendix.
The participation of and grant of Awards to Katherine Lee under the Plan has been approved in principle by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution 11 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 65,000 shares to Katherine Lee in accordance with the Plan.
The rationale for Resolution 12
Mr. Frankie Quek Swee Heng (Frankie Quek), Chief Executive Offi cer, Mainland China, holds an aggregate of 0.15% of the Company’s shareholding (direct and deemed interests). He is involved in the formulation and implementation of the expansion plans of the Group in the Mainland China. With his business acumen and extensive knowledge of the local food and beverage industry, he is assisting the Chairman, George Quek, in overseeing the growth and expansion as well as daily operations of the Group, focusing on the Group’s expansion into the Mainland China. Frankie Quek has been based in Shanghai since 2005 where he has been overseeing the growing bakery and food court operations in Shanghai and Beijing. His expertise has further led to the successful expansion of the BreadTalk brand name to many other Mainland China cities through a franchise model system managed by the in house franchise team. The Company therefore believes that he has the potential and ability to contribute to the further success of the Group.
By allowing him to participate in the Plan, the Company will have an additional tool to craft a more balanced and innovative remuneration package that will link his total remuneration to the performance of the Group. Frankie Quek will also be able to share in any future appreciation of the Company’s share price that is commensurate with the Company’s future growth through an increase in his shareholdings to a more signifi cant level.
The Directors are of the view that the remuneration package of Frankie Quek is fair given his contributions to the Group. The extension of the Plan to Frankie Quek is consistent with the Company’s objectives to motivate its employees to achieve and maintain a high level of performance and contribution which is vital to the success of the Company.
As the Plan serves as recognition of the past contributions of those eligible to participate in the Plan, as well as to secure future contributions for the Company and the Group from them, the Directors consider it important that Frankie Quek should be included in the Plan. The Directors consider it crucial for the Company to provide suffi cient incentives which will instill a sense of commitment to the Group.
The participation of and grant of Awards to Frankie Quek under the Plan has been approved in principle by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution 12 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 25,000 shares to Frankie Quek in accordance with the Plan.
(v)
1.
2.
A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company.
The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 not less than 48 hours before the time appointed for holding the Meeting.
Notes
153
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BREADTALK GROUP LIMITEDCompany Registration No. 200302045G(Incorporated In Singapore)
PROXY FORM(Please see notes overleaf before completing this Form)
Name NRIC/Passport No. Proportion of Shareholdings
Name NRIC/Passport No. Proportion of Shareholdings
or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held on Wednesday, 25 April 2012 at 9.30 a.m. at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specifi c direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.
(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)
No. Resolutions relating to: For Against
1 Directors’ Report and Audited Financial Statements for the year ended 31 December 2011. 2 Payment of proposed fi rst and fi nal dividend and special dividend.
3 Re-election of Mr George Quek Meng Tong as a Director. 4 Re-election of Mr Ong Kian Min as a Director.
5 Approval of Directors’ fees amounting to S$168,000 for the year ended 31 December 2011. 6 Re-appointment of Messrs Ernst & Young LLP as Auditors. 7 Authority to issue new shares.
8 Authority to issue shares under the BreadTalk Group Limited Employees’ Share Option Scheme. 9 Authority to issue shares under the BreadTalk Group Limited Restricted Share Grant Plan (the “Plan”). 10 Share award under the Plan to Mr George Quek Meng Tong. 11 Share award under the Plan to Ms Katherine Lee Lih Leng.
12 Share award under the Plan to Mr Frankie Quek Swee Heng. 13 Renewal of Share Purchase Mandate.
1.
2.
3.
For investors who have used their CPF monies to buy BreadTalk Group Limited’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.
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.
CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specifi ed. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specifi ed to enable them to vote on their behalf.
IMPORTANT:
I/We, of
being a member/members of BREADTALK GROUP LIMITED (the “Company”), hereby appoint:
and/or (delete as appropriate)
No. of Shares
No. of Shares
%
%
Address
Address
Signature of Shareholder(s)
or, Common Seal of Corporate Shareholder
Total number of Shares in: Dated this day of 2012
(a) CDP Register
(b) Register of Members
No. of Shares
155
Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defi ned in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.
A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.
Where a member appoints more than one proxy, the appointments shall be invalid unless he/she specifi es the proportion of his/her shareholding to be represented by each proxy. If no proportion or number of shares is specifi ed, the fi rst named proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternate to the fi rst named.
The instrument appointing a proxy or proxies must be deposited at the Registered Offi ce of the Company at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 not less than 48 hours before the time appointed for the holding of the Meeting.
The instrument appointing a proxy or proxies must be executed under the hand of the appointor 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 either under its seal or under the hand of an offi cer or attorney duly authorised or in such manner as appropriate under applicable laws. Where the original instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the original power of attorney or other authority, if any, under which the instrument of proxy is signed or a duly certifi ed copy of that power of attorney or other authority (failing previous registration with the Company) shall be attached to the original instrument of proxy and must be left at the Registered Offi ce, not less than 48 hours before the time appointed for the holding of the Meeting or the adjourned Meeting at which it is to be used failing which the instrument may be treated as invalid.
A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fi t to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore. The Company shall be entitled to treat an original certifi cate under the seal of the corporation as conclusive evidence of the appointment or revocation of appointment of a representative.
General:
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company shall reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding of the Meeting, as certifi ed by The Central Depository (Pte) Limited to the Company.
1.
2.
3.
4.
5.
6.
Notes :
156
