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OLDTOWN BERHAD(797771-M) Annual Report 2015
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II annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
In the midst of our busy and hectic lives, some long for the
good old days that we grew up in. When everything was
simple and life was peaceful.
At OLDTOWN White Coffee, we strive to recreate
charming memories of good old days.
So come and rekindle unique memories of atime worth remembering. Come and enjoy the Aroma Of
Good Times with OLDTOWN White Coffee.
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2 Our Legacy Vision, Mission Statement & Business Overview
4 Group Structure
5 Corporate Information
6 Board of Directors
8 Board of Directors Profile
12 Chairmans Statement
15 Group Managing Directors Review of Operations
22 Financial Highlights
23 Sustainability & Corporate Responsibility
27 Corporate Responsibility
29 Corporate Governance Statement
37 Audit Committee Report
40 Statement On Risk Management & Internal Control
42 Additional Compliance Information
49 Financial Statements
137 List of Properties Owned by Oldtown Group
142 Analysis of Shareholdings
146 Notice of Annual General Meeting
Proxy Form
Contents
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2 annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
OurLegacy
From the day our proprietary OLDTOWN White
Coffee blend was formulated, it has been steadfastly
carried down over the years to this day. Our white
coffee are roasted and prepared according to
the original method to ensure that every cup of
OLDTOWN White Coffee imparts the same full-
bodied taste, texture and aroma year after year. Our
commitment to maintain the true essence of our
heritage has helped us to create a one-of-its-kind
brand that is renowned the world over.
To date, our white coffee products are exported to
more than 14 countries worldwide. Our business also
includes the OLDTOWN White Coffee chain of caf
outlets. Carrying the charm of a traditional Ipoh coffee
shop, we serve a variety of Malaysian delicacies from
white coffee to toasts, rice and noodles. To date, we
have more than 200 caf outlets throughout Asia.
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annual report 2015 3
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
VisionTo be Asia Pacifics Leading White Coffee Brand
Mission StatementOUR PEOPLE :
We Believe That Our People Are Our Assets
We acknowledge and appreciate our people as those who grow
with us and for their full dedication. We value them for their
effort and what they are able to bring to the company, hence
we constantly provide a platform and opportunities for careergrowth and enrichment of knowledge. We cultivate the passion of
delighting our consumers into all our staffs to bring forth the best
experience possible.
Community :
We Nurture The Community
We are aware and committed to our community hence we operate
our business in a manner that does not compromise the wellness
of our future generations. We are passionate about our corporate
responsibilities and do our best to provide for the community
in different ways, from doing our part for the earth we live in to
providing underprivileged children with better homes. We will not looklightly upon our social responsibilities as we believe in giving back to
the community as part of the effort towards a better future.
Our Consumers :
We Delight Our Consumers with Our Products
We are consumer centric and are always focused on consumer
needs. Hence we are dedicated to delighting our consumers with
all our product offerings, by committing ourselves in sourcing the
finest ingredients through ethical ways to provide them with the best
quality products. We hold strongly to our origins in order to bring to
consumers the authentic experience that they expect to enjoy.
MOTHER EARTH :We Do Our Part in Saving Mother Earth
We are attuned with the growing needs to nurture our mother earth
and to do our part in caring for the environment. With this, we share
and grow the passion and knowledge of caring for the environment
with our partners and consumers for them to live this together with
us as part of our corporate values.
INVESTORS :
We Focus on Prospering Our Investors
We are dedicated to growing and maximising the financial rewards of
our investors as we see it as a platform for our company to continueto provide to our consumers and the community.
Business OverviewThe business activities of Oldtown Group can be divided into three
broad categories as follows:
Operation of Cafe Chain
Own Cafe Outlets*
Franchised Outlets
Food Processing
Manufacturing of coffee and other beverages
Instant Coffee Mix Roasted Coffee Powder
Instant Milk Tea Mix
Instant Chocolate
Marketing and sales of coffee and other beverages
Instant Coffee Mix
Roasted Coffee Powder
Instant Milk Tea Mix
Instant Chocolate
Ready-to-drink coffee
*Own cafe outlets include those that are fully and partially owned.
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4 annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
OldTown Berhad
100% Old Town Kopitiam Sdn Bhd
100% OTK (HK) Investment Limited
50% OTK Singapore Pte Ltd
100% Dynasty Kitchen Sdn Bhd
100% Shenzhen Oldtown White
Coffee Trading Co., Ltd
100% White Cafe Sdn Bhd
100% Gongga Food Sdn Bhd
100% White Cafe Marketing Sdn Bhd
100%
Emperors Kitchen Sdn Bhd
100% Dynasty Confectionery Sdn Bhd
100% Esquire Chef Sdn Bhd
100% Kopitiam Asia Pacific Sdn Bhd
100% Oldtown Singapore Pte Ltd
100%
Old Town Kopitiam
Butterworth Sdn Bhd
100% Old Town Kopitiam
Kuala Lumpur Sdn Bhd
100% Old Town Kopitiam
Cheras Sdn Bhd
100% Old Town (M) Sdn Bhd
100% Oldtown Logistics Sdn Bhd
100% Oldtown APP Sdn Bhd
80% Conneczone Sdn Bhd
70% Advance City Limited
50% Plus One Solution Sdn Bhd
40% OTK Eatery Sdn Bhd
as at 31 March 2015
GroupStructure
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annual report 2015 5
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
Board of Directors
Board Committees
Audit Committee Remuneration Committee Nomination Committee
Dato Wong Guang SengIndependent Non-Executive
Director
Tan Chon Ing @
Tan Chong LingIndependent Non-Executive
Director
Datuk Dr. Ahmed Tasir
Bin Lope PihiePJN, PMP, JSM, FASc
Independent Non-Executive
Chairman
Lee Siew HengGroup Managing Director
Chuah Seong MengExecutive Director
Clarence DSilva A/L Leon DSilvaExecutive Director
Goh Ching MunExecutive Director
Tan Say Yap
Executive Director
Tan Chon Ing @ Tan Chong LingChairman
Datuk Dr. Ahmed Tasir
Bin Lope Pihie
Lee Siew Heng
Dato Wong Guang Seng
Goh Ching Mun
Dato Wong Guang SengChairman
Datuk Dr. Ahmed Tasir
Bin Lope Pihie
Tan Chon Ing @
Tan Chong Ling
Company Secretaries
Wong Wai Foong
(MAICSA 7001358)
Ng Bee Lian
(MAICSA 7041392)
Tan Hsiao Yuen
(MAICSA 7056952)Website
www.oldtown.com.my
Head Office
No. 2, Jalan Portland,
Kawasan Perindustrian Tasek,31400 Ipoh, Perak.
Tel : (605) 541 5511
Fax: (605) 541 2860
Stock Exchange Listing
Main Market of
Bursa Malaysia Securities Berhad
(Listed since 13 July 2011)Stock Name: OLDTOWN
Stock Code: 5201
Registrars
Tricor Investor Services Sdn Bhd (118401-V)
Level 17, The Gardens North Tower,
Mid Valley City, Lingkaran Syed Putra,
59200 Kuala Lumpur.
Tel: (603) 2264 3883Fax: (603) 2282 1886
Principal Bankers
CIMB Bank Berhad (13491-P)
HSBC Bank Malaysia Berhad(127776-V)
Registered Office
Level 18, The Gardens North Tower,
Mid Valley City, Lingkaran Syed Putra,
59200 Kuala Lumpur.
Tel : (603) 2264 8888
Fax: (603) 2282 2733
Statutory Auditors
Messrs. Deloitte (AF0080)
Chartered Accountants
Level 2, Weil Hotel
292, Jalan Sultan Idris Shah,
30000 Ipoh, Perak Darul Ridzuan
Tel: (605) 254 0288
Fax: (605) 254 7288
Datuk Dr. Ahmed Tasir
Bin Lope PihieChairman
Dato Wong Guang Seng
Tan Chon Ing @ Tan Chong Ling
CorporateInformation
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Notes:-
1. Family Relationship with Director and/or Major Shareholder
(i) Mr Lee Siew Heng is a deemed substantial shareholder of
Oldtown Berhad.
(ii) Mr Lee Siew Heng is the brother of Mr Lee Siew Ming, a
deemed substantial shareholder of Oldtown Berhad.
Save as disclosed herein, none of the Directors has any family
relationship with any Director and/or major shareholder of
Oldtown Group.
2. Conflict of Interest
Save for related party disclosures as disclosed under Note 25
to the Audited Financial Statements of this Annual Report and
the Circular to Shareholders dated 19 August 2015 which is
despatched together with this Annual Report, the Directors haveno conflict of interest in any business arrangement with the
Company and its subsidiaries.
3. Conviction of Offences
None of the Directors has been convicted of any offence within
the past 10 years other than possible traffic offences.
4. Directors Shareholdings
The details of Directors interest in securities of the Company
are set out in the Analysis of Shareholdings on page 143 of this
Annual Report.
5. Attendance of Board Meetings
The details of attendance of Directors at the Board Meetings are
set out in the Corporate Governance Statement on page 34.
OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
01.Datuk Dr. Ahmed Tasir Bin Lope Pihie
02.Lee Siew Heng
03.Tan Chon Ing @ Tan Chong Ling
04.Dato Wong Guang Seng
05.Chuah Seong Meng
06.Clarence DSilva A/L Leon DSilva
07.Goh Ching Mun
08.Tan Say Yap
6 annual report 2015
BoardofDirectors
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annual report 2015 7
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
01 0207 0405 06 0803
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OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
8 annual report 2015
OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
Datuk Dr. Ahmed Tasir Bin Lope Pihie, a Malaysian, aged 64,
is the Independent Non-Executive Chairman of Oldtown Berhad
and was appointed to the Board on 10 November 2009. He is the
Chairman of the Nomination Committee and a member of the Audit
Committee and Remuneration Committee respectively. He holds a
Doctor of Philosophy (PhD) in Science and Technology Policy from
the University of Manchester, Master of Science in Seed Technology
from the University of Edinburgh, Scotland and a Bachelor in
Agriculture Science from the University of Malaya. He was with the
Malaysian Agricultural Research and Development Institute (MARDI)
from 1972 to 1992 and last held the post as a Director before he
left the Institute. He was the Chief Executive Officer of the Malaysia
Industry-Government Group for High Technology (MIGHT) from
1993 to 2008. He is presently the Chairman of Strand Aerospace
Malaysia Sdn Bhd; President and Director of Inno Bio Ventures Sdn
Bhd, Inno Biologics Sdn Bhd, Inno Bio Diagnostics Sdn Bhd, Director
for Universiti Kebangsaan Malaysia (UKM), MARA Aerospace &
Technologies Sdn Bhd and several private companies including A7N
Sdn Bhd and R7 Sdn Bhd.
Lee Siew Heng, a Malaysian, aged 49, is the Group Managing
Director of Oldtown Berhad and was appointed to the Board on
30 November 2007. He is also a member of the Remuneration
Committee. He brings with him invaluable industry experience,
having accumulated more than 23 years of experience in the
manufacturing and retailing industries, of which more than 13 years
is in the coffee beverage industry. He has been instrumental in
the growth and development of the Oldtown Group of Companies
and has been a key driving force in the expansion of the Groups
beverage manufacturing and cafe chain operation businesses. Upon
completion of his secondary education in 1986, he started his career
as a Production Manager of Chong Ngai Knitting Factory Sdn Bhd, a
garment manufacturer and was later promoted to the position of a
General Manager. He left the company in 1997 to become a Director
of CN Supplies Sdn Bhd which was trading in hotel supplies. In 2001,
he joined White Cafe Marketing Sdn Bhd, a company in the Oldtown
Group as a Managing Director and was subsequently re-designated
as the Group Managing Director of Oldtown Group in 2009. He
holds directorships in several private companies and is currently the
Chairman of Old Town International Sdn Bhd, the holding company of
Oldtown Berhad.
BoardofDirectors'Profile
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annual report 2015 9
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
Dato Wong Guang Seng, a Malaysian, aged 63 is an Independent Non-
Executive Director of Oldtown Berhad and was appointed to the Board
on 1 April 2014. He was appointed Chairman of the Audit Committee on
3 November 2014. He is also a member of the Nomination Committee
and Remuneration Committee. Dato Wong is a Fellow of the Institute
of Chartered Accountants (England & Wales) as well as a Chartered
Management Accountant (UK). He is also a member of Malaysian
Institute of Accountants (MIA), Malaysian Institute of Certied Public
Accountants (MICPA) and an Associate of Chartered Tax Institute of
Malaysia (ACTIM).He holds a Master Degree in Business Administration
(MBA) from the Cranfield Institute of Technology (UK). Dato Wong has
served Deloitte for over 41 years, holding various positions including,
Head of Clients and Markets as well as Exco Member of Deloitte
Malaysia. He is currently an Executive Director of AG Legal Tax Services
Sdn. Bhd. Dato Wong also sits on the board of Unisem (M) Berhad as an
Independent Non-Executive Director.
Tan Chon Ing @ Tan Chong Ling, a Malaysian, aged 54, is an
Independent Non-Executive Director of Oldtown Berhad and was
appointed to the Board on 7 November 2012. He is the Chairman of the
Remuneration Committee and is a member of the Audit Committee and
Nomination Committee of Oldtown Berhad. He graduated with a honours
degree in Bachelor of Civil Engineering from the National University of
Singapore in 1985. He joined WTS Konsultant in Kuching from 1985
to 1990 as a Civil Engineer. He was the Managing Director of Uomo
Donna Sarawak Sdn Bhd from 1991 to 1993 and was appointed Chief
Executive Ofcer of PT Indoscala, Indonesia, a wholesaler and retailer
of ladies apparel, from 1993 to 1996. He is a business entrepreneur
with more than 18 years of experience in construction and property
development which include a golf course township development. Mr
Tan is the founder and Vice Chairman of Eduland China with 13 years
of experience in the setting up, operation and franchise of a chain of
Bilingual Early Childhood Education centres in Shanghai City, Suzhou
and Zhejiang Provinces to provide quality early childhood care and
education at purpose built kindergarten buildings located at premium
township and residential area.
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10 annual report 2015
OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
Clarence DSilva A/L Leon DSilva, a Malaysian, aged 54, is an Executive
Director of Oldtown Berhad and was appointed to the Board on 10
November 2009. He has over a span of 32 years in the Food Service
industry where he managed several International Brands and has done
start up for new food business in Indonesia, Thailand, Philippines, Hong
Kong and Malaysia and served in several senior positions with several
Multi-National Companies.He graduated with a Bachelor of Business
Administration from the California Technical College, United States in 1982.
His career started in 1983 when he joined Kentucky Fried Chicken as a
Management Trainee. In 1989, he took up employment with Carls Jr. Asia
Development Corporation, part of the MBF Group of Companies and was
eventually promoted to General Manager of the brand in Thailand. In 1998,
he joined Sushi Kin Sdn Bhd as the General Manager/Chief Operating
Officer and was appointed to the Board of Directors of the company in
2000. In 2003, he joined Yoshinoya Food Systems, part of the Wing Tai
Asia Limited in Singapore as the Chief Operating Officer. In 2006, he took
up the position of Chief Operating Officer with FB Food System (HK) Ltd, a
subsidiary of Far East Consortium, Hong Kong. He joined Oldtown Group of
Companies in 2009 and is currently the Chief Operating Officer of the Food
and Beverage (F&B) Sector of the Oldtown Group. His main responsibilities
include overseeing the domestic and international F&B operations,
distribution and logistics as well as the development of the F&B franchise
business of the Group.
Chuah Seong Meng, a Malaysian, aged 40, is an Executive Director
of Oldtown Berhad and was appointed to the Board on 10 November
2009. He graduated with a Bachelor of Business, majoring in Marketing
from the University of Tasmania, Australia in 1997. He is also a certified
marketer of the Chartered Institute of Marketing, United Kingdom. He has
more than 17 years of extensive experience in Sales and Marketing. His
career started in 1997 as a Sales Executive with Besta Computerized
Dictionary Sdn Bhd, a distributor of computer dictionary products. He
joined White Cafe Sdn Bhd in 1999 as Marketing Manager and was
promoted to Senior Marketing Manager in 2003 and subsequently the
Group Marketing General Manager in 2007. He currently assumes the
role of Chief Operating Officer of the Fast Moving Consumer Group
(FMCG) sector of the Group. He is responsible for the overall business
strategy formulation, objectives setting and strategy implementation
for all FMCG activities and businesses including sales and marketing,
manufacturing and research and development functions. He is also
heading the Group Marketing Communication Division.
BoardofDirectors'Profile
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annual report 2015 11
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
Goh Ching Mun, a Malaysian, aged 44, is an Executive Director of
Oldtown Berhad and was appointed to the Board on 30 November 2007.
He is also a member of the Remuneration Committee. He completed his
secondary education in 1988. As the co-founder of Oldtown Group of
Companies, he has accumulated more than 22 years of experience in
the coffee manufacturing industry. His career started in 1983 when he
was involved in the family business of operating the Nam Heong Coffee
Shop in Ipoh. Subsequently in 1999, he co-founded and established
White Cafe Sdn Bhd where he was appointed Product Research and
Development Director and was then responsible for the formulation of
the blend of white coffee that is currently produced by the Group and the
product research and development activities of the Group from 1999 to
2013. Mr Goh & Mr Tan Say Yap are currently assuming a co-advisory
role to the Group Managing Director in matters relating to the FMCG
segment in relation to the production of coffee mixtures.He is also the
Chairman of the Corporate Social Responsibility (CSR) Committee that
carries out the social responsibility functions of the Group via Oldtown
Children Care Fund (OCAF) and Oldtown Earthcare activities. He is a
director of several private companies which are involved in property
investments and cafe and restaurant business.
Tan Say Yap, a Malaysian, aged 40, is an Executive Director of Oldtown
Berhad and was appointed to the Board on 10 November 2009. He
has more than 15 years of experience in the coffee manufacturing
industry. As the co-founder of the Oldtown Group of Companies, he
is instrumental in the formulation of the blend of white coffee, which
started the beverage manufacturing business of the Group. He obtained
a Diploma in Hotel Business Management from Syuen Hotel and Catering
Management Institute, Ipoh in 1996. His career started in 1997 as
Commis One at the Pangkor Laut Resort Hotel where he was mainly
involved in the preparation of food for the hotels food and beverage
outlets. In 1999, he co-founded and established White Cafe Sdn Bhd
and was appointed Director of White Cafe Sdn Bhd. He was appointed
Business Development Director of Kopitiam Asia Pacic Sdn Bhd and
was responsible for the cafe outlet operations from 2005 to 2009
and held the position of Corporate Relations Director where he was
responsible for fostering corporate relations with franchisees, landlords,
business associates and business partners from 2009 to 2013. Mr Tan
and Mr Goh are currently assuming a co-advisory role to the Group
Managing Director in matters relating to the FMCG segment in relation to
the production of coffee mixtures.
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12 annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
Datuk Dr. Ahmed Tasir
Bin Lope PihiePJN, PMP, JSM, FASc
Independent
Non-Executive Chairman
Chairman'sStatement
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annual report 2015 13
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
We are managing our business to deliver positive contributions to
our shareholders despite the challenging business environment.
The Group generated a net cash inow of RM62.215 million from
operations (compared to RM68.670 million in FY2014) on the back
of the strong EBITDA of RM83.975 million for FY2015.
The fixed deposits, cash and bank balances as at 31 March 2015
amounted to RM134.981 million against a total debt of RM19.501
million. As a result, the Group was in a net cash position of
RM115.480 million as at 31 March 2015.
The Groups financial position remains strong.
Rewarding our Shareholders Dividend
We are always grateful for the support of our shareholders,
and remain committed to pay out at least 50% of our net profit
as dividends. We seek to distribute a reasonable portion of the
Companys profit each year, taking into account numerous factors,
including the prevailing economic conditions and prospects in
the markets in which we operate, anticipated capital expenditure,
prospective acquisition opportunities, the availability and cost of
borrowings and the need to reward shareholders for their investment
in the Company.
A first interim single-tier dividend of 3.0 sen per share amounting to
RM13.264 million was paid on 16 April 2015 in FY 2015.
The Board of Directors further recommended a final single-tier
dividend of 3.0 sen per share, based on the share capital of 442.135
million ordinary shares, net of treasury shares held by the Company
as at 31 March 2015. The recommended final single-tier dividend is
subject to the approval of the shareholders at the forthcoming Annual
General Meeting.
Should the proposed nal single-tier dividend of RM13.264 million
be approved by the shareholders at the forthcoming Annual General
Meeting, the cumulative total dividends will amount to RM26.528
million. This will translate to 55.9% of the profits attributable to the
owners of the Company.
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial
Statements of Oldtown Berhad and its Group for the financial year ended 31 March 2015.
This has been another year of success despite the challenging business environment.
Strong Overall Financial Performance
The Groups strong fundamentals had enabled us to deliver a
net prot of RM49.080 million on the back of the revenue of
RM397.740 million amidst a challenging and volatile business
environment during the financial year.
Our Dual Engines of Growth Caf Chain Operations
and Manufacturing of Beverages Operations
The caf chain operations segment continued to be the largest
revenue contributor to the Group, bringing in 55% of the FY2015
revenue whilst the remaining 45% was contributed by the
manufacturing of beverages segment.
The caf chain operations registered a total revenue and profit before
tax of RM217.059 million and RM26.216 million respectively, whilst
the Groups manufacturing of beverages segment reported revenue of
RM180.636 million and prot before tax of RM38.087 million in FY2015.
The Groups FY2015 profit before tax included an impairment
on goodwill of RM3.50 million. The impairment on goodwill was
primarily attributable to the unanticipated change in the business
environment of one of our subsidiaries which has caf outlets in an
area where construction projects are in progress. This, coupled with
increased competition, caused lower customers patronage.
Sustainable Earnings
The Group registered a net profit attributable to owners of the
Company of RM47.494 million in FY2015 against the net prot
attributable to owners of the Company of RM48.938 million in
FY2014, which translated into earnings per share of 10.61 sen for
FY2015 against FY2014 earnings per share of 10.93 sen, based
on the issued and paid-up share capital base of 447.758 million
ordinary shares at RM1.00 each.
Strong Financial Position
Shareholders funds increased by RM3.779 million to RM333.069
million for FY2015. Gearing ratio improved from 0.07x in FY2014 to
0.06x in FY2015. The reduction in the gearing ratio was mainly due
to the repayment of term loans.
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14 annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
Business Prospects
Despite a challenging external environment, the Malaysian economy
is expected to register steady growth of 4.5% - 5.5% in 2015,
supported mainly by sustained expansion in domestic demand amid
strong domestic fundamentals and a resilient export sector. Domestic
demand will continue to anchor growth in 2015, driven by private
sector spending. After registering five consecutive years of above-
average growth rates, private consumption is expected to grow by
6.0% in 2015. While the implementation of the GST in April 2015
and lower earnings in the commodity-related sectors are expected
to affect spending, this will, however, be partially mitigated by higher
household disposable income, lower fuel prices and the continuous
measures by the Government to assist low-and middle-income
households.
In Asia, growth is expected to be sustained in 2015, supported
by the continued expansion in domestic activity and improving
external demand. Of significance, capital spending, particularly on
infrastructure development, will continue to support the expansion
in domestic demand. In the external sector, the improving growth
prospects of several advanced economies, particularly the US,
will continue to benefit Asias export performance. Nevertheless,
the degree of improvement will vary across economies based on
their trade exposure, especially to the US and China. For the major
commodity exporters in the region, the lift from improving external
demand could also be partly mitigated by the lower commodity
prices. Overall, the Asian region is projected to remain an important
driver of global economy activity, contributing to over 50% of global
growth in 2015.
Although the Group is well-positioned for growth, the year ahead will
continue to be a challenging one in the midst of operating under a
competitive business environment.
We will focus on growing both our caf chain outlets and
manufacturing of beverages products in existing core markets and
new markets. We will continue to develop and protect our brand,
and build on the strength of our business model by improving on the
distribution network, expanding the manufacturing capabilities and
increasing product and service innovation.
We have already built a strong brand equity position, and this will
allow us to boost our market share. I am confident that we have the
business strategies as described in detail in the Group Managing
Directors Review of Operations of the Company in this Annual
Report, a strong management team, dedicated staff and resources
to achieve sustainable growth and to deliver greater value to our
consumers, customers and shareholders.
Acknowledgement
On behalf of the Board, I would like to take this opportunity to
express my gratitude to all shareholders, bankers, customers,
business partners and regulatory authorities for their continued
support, guidance and assistance extended to the Group. The Board
would like to express its appreciation to the management and
employees of the Group for their hard work, dedication and loyalty.
The Board also would like to express its highest appreciation to Mr
Mark Wing Kong who resigned as director on 3 November 2014, for
his invaluable contribution to the Group..
Datuk Dr. Ahmed Tasir bin Lope PihieChairman
Chairman'sStatement
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annual report 2015 15
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
Despite the solid growth in the Groups revenue, the Prot Before Tax
(PBT) decreased by RM2.203 million or approximately 3.3%, from
RM66.368 million for FY2014 to RM64.165 million for FY2015.
The reduction was primarily attributable to the RM3.50 million
impairment on goodwill. The impairment on goodwill was primarily
attributable to the unanticipated change in the business environment
of one of our subsidiaries which has caf outlets in an area where
construction projects are in progress. This, coupled with increased
competition, caused lower customers patronage.
The Group generated a prot after tax (PAT) of RM49.080 million
on the back of the revenue of RM397.740 million in FY2015.
Excluding the impairment on goodwill, PAT was marginally higher.
The Groups caf chain operations recorded PBT of RM26.216
million for FY2015 on the back of the revenue of RM217.059 million.
This represents a 16.4% drop in PBT as compared to RM31.341
million achieved in FY2014 (mainly due to impairment on goodwill of
RM3.50 million). Generally, the protability of cafe chain operations
was negatively impacted by the twin effects of the tight labour
market and increasingly competitive market conditions.
The manufacturing of beverages segment recorded revenue of
RM180.636 million and PBT of RM38.087 million for FY2015.
The revenue and PBT were RM175.112 million and RM35.929
million respectively for FY2014. The increase in PBT of 6.0% was
attributable to the reorganization and realignment of distributors
coverage in the domestic market as well as the positive impact from
the weak Ringgit Malaysia (RM) against foreign currencies.
Overall Financial Review - Commendable
Performance with Resilient Balance Sheet
A strong operating and financial performance has been achieved
for FY2015. The revenue of the Group increased by approximately
1.9% from RM390.194 million for the year ended 31 March 2014
(FY2014) to RM397.740 million for FY2015. This was mainly
attributable to the growth in revenue of both caf chain operations
and manufacturing of beverage segments.
In FY2015, the Groups total revenue rose to RM397.740 million, an
increase of RM7.546 million or 1.9% compared to the previous year.
The manufacturing of beverages segment reported the strongest
growth, increasing by 3.2% to RM180.636 million. The Cafoperations segment posted marginal growth, increasing by 0.9% to
RM217.059 million in revenue. Both business segments continued
to grow, owing to rising consumption demand in our domestic
and regional markets, which are well supported by their strong
economies and fast-growing middle class consumers.
The business environment for the food and beverages sector has
become more challenging due to rising operating costs. However,
the Group has implemented effective cost management measures to
mitigate increase in such costs.
Oldtown Berhad is forging ahead with a strong and successful brand as a trusted food and beverage
entity with a sound integrated business model. We are continuously working to ensure our products
evolve with the changes in consumer lifestyles and preferences. The solid financial performance
achieved during the financial year ended 31 March 2015 (FY2015) is a good testimony of our effective
business strategies and a sound integrated business model.
GroupManagingDirector's
ReviewofOperations
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OLDTOWN BERHAD (797771-M)Incorporated in Malaysia
Lee Siew Heng
Group Managing Director
GroupManagingDirector's
ReviewofOperations
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annual report 2015 17
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
OPERATIONS REVIEW
Cafe Chain Segment
The caf chain operations segment continued to be the main
revenue contributor to the Group, attributing 55% of the consolidated
revenue for FY2015 (54% of the consolidated revenue for FY2014).
The Oldtown Group spearheaded the development of the Asian-
styled caf chain in 2005 with our first outlet in Ipoh, and this year
2015 marks our 10th anniversary for our caf operations. Since
2005, the Group has transformed from a small domestic caf chain
to a significant international player. Our sustainable development
strategy remained on track and we made good progress with steady
growth in our business performance.
As at 31 March 2015, the Group has a total of 245 caf outlets in
Malaysia, Singapore, Indonesia and China. Amongst the 245 caf
outlets, 93 are fully owned caf outlets, 17 partially owned outlets,
119 franchised and 16 licensed outlets. In the countries where we
operate our caf chain, we strive to provide to each customer a
unique dining experience to enjoy food and beverages which are
customized to local requirements and expectations with their friends
and family members.
Domestic Market Challenging and competitive
Our domestic caf operations continued to be the key driver of the
Groups results. Having contributed to approximately 91% of the
Groups total caf operations revenue, our business operations
in Malaysia provide a solid foundation for accomplishing an even
greater market penetration and expansion of our business. We are
positioning ourselves to penetrate into new market segments and
strengthen our leading market position as the largest Asian-styled
caf chain operator in Malaysia.
Since the introduction of our first Generic Outlet back in 2005,
we have progressed upscale to create Signature Outlets in 2008
and Basic Kiosk Outlets in 2012. The evolution and innovation has
continued, with the roll-out of our first Grand Outlet in 2013, and
during the year under review, we have successfully opened another
two (2) Grand Outlets, one (1) each in Johor Bahru and Melaka. As
our society becomes more affluent, customer profiles have become
increasingly segmented into niche markets. By broadening our caf
chain portfolio, we have been able to satisfy dif ferent customer
segments in the market place.
Our Groups main objective is to continuously and consistently
provide our customers with superior quality service and in-store
experience. Our constant focus and commitment are on serving the
vast majority of the citys population with affordable, quality meals
whenever and wherever they need them near their homes and
next to their offices.
The Group places the greatest importance to customer satisfaction
and thus, it has from time to time introduced new products to bring
customers fresh dining experiences. In addition, the Groups wide
variety and quality food offerings under the OLDTOWN brand have
always maintained its competitiveness in terms of price. In this
connection, we launched a new menu in March 2015 to deliver even
more delights in taste to our customers.
International Markets Expanding
As at 31 March 2015, a total of 31 OLDTOWN caf outlets were
operating in Singapore, Indonesia and China as compared to 30 outlets
as at 31 March 2014. The expansion of our caf chain beyond Asias
border became a reality when the first licensed outlet opened its doors
for business in Melbourne, Australia on 16th June 2015.
As our operations continue to expand overseas, we face challenges
in new markets and cultures, each with different types of customers
demanding for unique and appealing products. We continuously
strive to offer our customers superior value and satisfaction, focusing
not only on product range, but also on the services we provide.
During the year, OLDTOWN cafe outlets in Singapore had to face
the effects of an increasingly t ight labour market and high rentals.
In order to manage property rentals and related expenses, Oldtown
will focus on promoting the Basic concept model with smaller
sized outlets to lower operating costs for future caf outlets in the
Singapore market.
For the Indonesian market, thus far, the sub-licensing model has
proven to be successful, as we managed to increase another two (2)
new caf outlets in FY2015. We were operating a total of twenty (20)
caf outlets in Indonesia as at 31 March 2015.
To facilitate our expansion of cafe outlets in Southern China, Oldtown
Logistics Sdn Bhd, a wholly-owned subsidiary company of Oldtown,
entered into a conditional agreement on 27 January 2015 to
acquire 51% stake in April Eight (China) Limited (AEC), which has a
subsidiary company that is involved in the central kitchen business
in Guangzhou. The expansion of cafe outlets in Southern China will
be dependent on the support of a central kitchen whose primary
role would be to ensure that the products supplied to the caf
outlets meet the specifications and food safety standards of the local
authorities in Southern China and OLDTOWN. The central kitchen
would also allow for a more consistent delivery of quality products to
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18 annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
the outlets whilst ensuring price efficiency as a result of consolidated
procurement procedures.
The Group appointed OTK (Australia) Sdn Bhd as Master Licensee to
spearhead the Groups expansion of OLDTOWN caf operations in
Australia through the execution of a Master License Agreement on
19 May 2014. Our venture into the Australian market forms part of
the Groups overall international expansion plans and is consistent
with the Groups aspirations to become Asia Pacics Leading White
Coffee Brand.
Manufacturing of Beverages Segment Another Record Year with Solid Performance
The Groups manufacturing of beverages segment continued to grow
from strength to strength in FY2015 with a revenue of RM180.636
million, up from RM175.112 million in FY2014. This business
segment accounted for 45% of the Groups total revenue.
The positive FY2015 results reaffirm our business strategies, which
are to focus on our core markets in Asia, build on our key capabilities
to compete, invest in the development of our brand, drive innovation
for expansion into attractive growth categories and improve our
market presence.
Following the paths of our record performance in FY2014, this
year, we have maintained the growth momentum and generated
RM180.636 million of revenue or an increase of 3.2%. The
prot before tax (PBT) grew by 6.0% to RM38.086 million, up
from RM35.929 million in FY2014. We believe that this record
performance further underlines the growing demand for our unique
white coffee beverages.
A successful innovative business model complemented by our
strong brands, distribution and marketing expertise has enabled us
to respond to changing consumer preferences and played a vital
role in driving growth and demand. To grow this segment, we have
developed and launched a new product known as OLDTOWN 3
in 1 Less Sugar White Coffee to suit consumer with dif ferent taste
preferences in FY 2015.
Domestic Market Stiff Competition
In recent years, more competitors are striving to grow their
market share and increase their brand equity value to attract
more customers. Backed by the scale of our business and the
diversity of our product range, we have been able to stay aheadof the competition. In this difficult business environment, we have
maintained our competitiveness and marketed our position through
the disciplined implementation of our business initiatives, process
enhancement and sustainability during the past few years.
In FY2015, the domestic market remained as our single largest
market for our white coffee products and we maintained our
dominant position in the white coffee segment in Malaysia. Our
differentiated brand marketing, leveraging on the origins of white
coffee is reaping rewards as our marketing research data revealed
success in reaching the targeted market segment.
In order to reiterate our OLDTOWN brand association with white
coffee, Oldtown has teamed up with Ernest Zacharevic, a renowned
Lithuanian artist to create the Art of OLDTOWN as a celebrationof the heritage and history shared between Ipoh, Old Town and
OLDTOWN White Coffee. In conjunction with this collaboration,
Zacharevic demonstrated his unique artistic creativity through
the painting of seven (7) murals to celebrate Ipoh, Old Town, the
birthplace of white coffee.
We will consistently invest in advertising, promotional and marketing
campaigns to promote OLDTOWNs branding and to enhance
its brand equity value and customer loyalty in the marketplace.
We appreciate that a successful brand strategy is important to
the growth of our business, especially in influencing consumerspurchasing decisions.
To deliver sustainable and profitable growth, we expanded our
domestic distribution network to increase our footholds in the local
market through the reorganisation of the market coverage of local
distributors. New distributors have been appointed in East and West
Malaysia in mid-2014. As a result of the successful outcome of the
reorganisation, our domestic market recorded positive growth in
revenue in FY2015.
Our marketing and promotional campaigns are comprehensive
to ensure in-depth coverage of every customer group in the
demographics. These include print media, such as major stream
newspapers and magazines; the digital media world such as radio
and TV commercials; online media and social networks. These
advertisements have complemented well with the Companys
continuous promotional activities throughout the year. During the
year, we organised various on-the-ground events such as consumer
contests, product testing and sampling, road shows and participated
in expos and exhibitions.
Since the introduction of OLDTOWN white coffee products in 1999,
we have grown our brand over the years to become a trusted brand
recognised for its quality. We believe, by continuing to invest in our
brand, OLDTOWN will be able to maintain its dominant presence in
the domestic market.
GroupManagingDirector's
ReviewofOperations
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annual report 2015 19
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
International Market Vast opportunities
Currently, our OLDTOWN white coffee products are widely
distributed in the Asia Pacic region, and through an extensive
distribution network, our products can be found in fourteen (14)
countries. For the FY2015, the export market contributed about
57% of the Groups manufacturing of beverages division revenue.
The on-going branding and marketing campaigns coupled with the
continued customisation of products have contributed to the robust
business momentum in overseas markets.
This international business segment grew strongly in FY2015with higher sales in the Asia region, particularly in Taiwan and
Singapore. The growth in Asia was mainly attributed to the
comprehensive distribution networks.
As Hong Kong is also one of the largest export markets for the
Group and an important link to China, we have intensified our
advertising campaign by displaying OLDTOWN advertisements at
various MTR stations (underground train system) in Hong Kong in
November-December 2014 to create greater awareness of our
beverage products. Amongst the busiest MTR stations that have
displayed OLDTOWN advertisement during the year-end holidayseason were Mong Kok Station, Admiralty Station, Kowloon Tong
Station and Shatin Station. We wish to raise brand awareness
through Hong Kongs MTR stations and to enhance brand value by
advocating True White Coffee pioneered by Oldtown.
The Group can widen its market reach through multi-layered
distribution network comprising third-party distributors, wholesalers
and retailers where they will carry and distribute our beverage
products in various distribution points. This gives us access to
a wider spectrum of traditional and modern trade channels
from small retailers, through to wholesalers, supermarkets andhypermarkets. In addition, our Group also leverages on the online
platform and business-to-consumer e-commerce portal in China to
reach its consumers.
In China, Tmall flagship store was launched in April 2014 with a
primary objective to expand our market penetration in China. Tmall
was selected in view of its business model, which only accepts
trusted brand names, and hence, there is an assurance that
products sold online are genuine. The Group has also developed
its own unique marketing and communication proposition in Weibo
China since October 2013. Weibo would act as a diverse and
dynamic platform for us to communicate and interact with our target
audiences through one of the most popular social media websites in
China today. This form of advertisement costs significantly less than
the traditional advertising methods.
Pursuing Growth
Caf Chain Operations and Manufacturing of Beverages
Building a brand that is acceptable by our consumers is central to
our strategy for sustainable growth. By ensuring the quality and value
of our products and services, we are able to consistently deliver our
promises to our consumers and provide them with fuss free dining
that they can enjoy.
Caf Chain
We are delighted to report that our caf chain operations, which
is celebrating its 10th anniversary, experienced a successful and
productive year in FY2015. Our sustainable development strategy
remained on track and we made good progress with steady growth
in our business performance. We shall continue to expand the caf
network via our franchise and licensing programmes locally and
internationally, in addition to the establishment of our fully or partially
owned outlets to fuel further growth in our business.
The Group has evolved from an initial domestic operated caf
chain to become a regional player where we have undergone a
tremendous change by expanding into the other Asian regions over
the years since 2005. We marketed our products to Singapore in2008, a proximate market that has an almost similar consumer taste
profile to Malaysia, followed by Indonesia and China in 2011.
Going forward, the caf operations intends to promote the lower
cost model (known as OLDTOWN White Coffee Basic) in Malaysia
with an estimated ten (10) new outlets for the financial year ending
31 March 2016 (FY2016). The caf operations will also penetrating
into the kids and family segment with the launch of its Kids and
Family marketing programs in FY2016, which is expected to improve
the frequency of consumer visits to its caf outlets.
In addition, the cafe operations have also signed an exclusive
agreement with Select Service Partners, an International Food
and Beverage specialist for airports and transportation hubs to
develop the OLDTOWN White Coffee Caf outlets at such locations
throughout Asia Pacic.
With a strong and solid foundation in the domestic market, we are
gearing up for expansion and reinforcing our market leadership
position through a multi-branding strategy based on organic and
inorganic growth. We may explore possible opportunities through
mergers and acquisitions or strategic alliances to enter new markets,
which will broaden our income streams and add further value to our
shareholders.
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OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
For the China market, the Group is expected to proceed with a
re-launch of its operations in the third quarter of FY2016. In view of
the countrys large population base and growing disposable income,
the Group is optimistic about the growth potential of the caf chain
business in China. It is anticipated that, after the completion of the
April Eight (China) Limited (AEC) acquisition in FY2016 and setting
up of its central kitchen operations, we will be able to strengthen
the Groups quality and hygiene standards, boost its operational
efficiency and standardise its quality control to support the expansion
of caf chain business in China.
Besides China, we will also relentlessly focus on innovation and
improvement of our existing caf chain operations in Singapore and
Indonesia. Development plans for Singapore will follow suit with the
introduction of the Basic concept with an estimated three (3) new
outlets in FY2016. For the Indonesian market, the Group granted the
right to the Master Licensee in Indonesia to establish and operate
outlets in the territory of Jawa and Bali, Indonesia in the year 2011.
A second Master License Agreement was executed in June 2014
to cover the rest of Indonesia. The Group will continue to adopt the
sub-licensing model to accelerate the expansion plans in Indonesia
and targets to open seven (7) new outlets by FY2016.
The Master Licensee in Australia is actively evaluating other viable
locations after the successful commencement of business of the
first outlet in Melbourne, Australia in June 2015. The Australian
market presents a vast opportunity for future growth owing to the
overwhelming demand and acceptance of Asian cuisine, particularly
Malaysian.
Going forward, the Group aims to elevate its operating standards and
enhance profitability. The Group is expanding its cafe chain network
across different regions from existing markets, and is continuing to
execute its well-planned store-opening strategy in a flexible way by
adapting to changing market conditions from time to time.
In addition to caf chain development, we are making some
modifications to our food and beverage items, as well as in the set-
up of our outlets to suit the local taste profile and lifestyle.
The Group shall continue its efforts to maintain its margins and
improve its top-line growth for caf chain operations through various
initiatives, namely streamlining the menu offerings and focusing
on building brand loyalty among customers via consistent product
quality and customer service.
Manufacturing of Beverages
Since the commencement of the manufacturing of beverages
business, the Company has established defined and clear business
principles and practices with focus on quality management for our
white coffee beverages. Therefore, our OLDTOWN brand has
been widely recognised amongst white coffee consumers in the
market place. In addition, the Company has also focused on brand
strengthening to create awareness of the OLDTOWN brand
amongst the consumers with new innovative creations to meet
the consumers lifestyle, including innovations related to products,
activities and campaigns.
As a brand owner, branding and innovations are the focus of our
business model. Our white coffee products are well placed to meet
the needs of our consumers across a variety of categories, price
points and channels, allowing us to compete effectively in our key
markets, especially in overseas.
Competition in the manufacturing of beverages business is quite
intense. There are potential new entrants to the market. In order
to stay ahead of our competitors, we have to be sensit ive to the
changing needs of todays consumers and continuously beingable to delight our consumers with fresh tastes, formats and even
packaging. In this regard, we are well supported by a group of
experienced workforce and an in-house R&D team. Our continued
investment in R&D has positioned us to be able to compete with
other international companies.
In addition, distribution and marketing expertise is just as vital to
our successful business model. The regional distribution reach is
complemented by the specialised expertise we have developed in
both the modern and traditional retail formats, extending from the
supermarkets and hypermarkets to the convenience stores andeven to the corner mom-and-pop stores. This provides us with a
wider reach compared to many of our competitors and gives us
a tremendous competitive edge in distributing our white coffee
products, and when introducing new products into the marketplace.
Seizing growth opportunities in Asia
The Group foresees that there are ample opportunities to grow its
revenue in Asia in view of the regions enormous market potential
and growing affluence amongst the urban population. As a leading
regional player, Oldtown can capitalise on the potential growth in
appetite for white coffee products in the emerging markets withinthe Asia region. In several of these markets, Oldtown is in fact the
market leader.
GroupManagingDirector's
ReviewofOperations
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annual report 2015 21
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
The Group will always strive to find ways and means to strengthen its
marketing initiatives and place greater efforts in key Asias countries
in which the Group has already established i tself as one of the early
players, and its products are well recognized among consumers.
Various marketing campaigns, advertising and promotional activities
have been conducted recently to entrench the OLDTOWN White
Coffee (OTWC) brand equity in the marketplace. A concerted
effort was also implemented to create greater awareness of the
uniqueness of OTWC amongst the target consumer groups on a
regular basis.
Comprehensive coverage in existing markets
The Group will step up its efforts to work with the existing appointed
distributors in various emerging markets to achieve a thorough and
comprehensive coverage of its distribution network. Constant review
of the performance of appointed distributors in overseas markets
will enable us to respond swiftly to the needs of diverse customers.
Initiatives to capitalise on our core strengths brand and products,
distribution network and facilities to sustain the Groups top and
bottom-line growth, will be executed through product innovation that
caters to the consumers discerning lifestyles whilst enhancing theoverall operational efficiency of our supply chain in the business.
The need to adapt to constantly changing consumer habits,
market trends and macro factors requires our Group to be flexible
and attentive. While maintaining a global outlook in business
management, the Group pays close attention to the consumer tastes
and sentiments in each of its diverse local markets.
Outlook and Prospects
Overall, the Group expects the local market conditions to remain
competitive while greater upside risks to inflation and currency
fluctuations will impact the Groups operating results. The coming
financial year promises to be challenging as rationalization of
several governments policies may also have a short-term impact on
consumer spending.
In response to these imminent challenges, we shall continue our
near-term business development initiatives and long-term growth
plans in order to maintain a healthy and steady growth. Our team
will continue to drive efficiencies and effectiveness to reinforce our
leading position in segments in which we have a strong foundation,
continuing with our steady and cautious expansion strategy for our
Group.
The economic outlook and consumption trend in our key overseas
markets remain positive, supported by the growth of affluent, middle
class consumers. We have already built a solid brand equity position,
and this will allow us to lift our market share. I am confident that
we have the right business strategies, a strong management team,
dedicated staff and resources to achieve sustainable growth and to
deliver greater value to our consumers, customers and shareholders.
I believe our carefully formulated strategies to achieve sustainable
business models for growth will be executed by the management
team as planned to deliver another record year for the Group.
Acknowledgement
I would like to thank all our customers, government authorities,
vendors and bankers for their assistance and patronage.
To all our employees, our deepest appreciation for their efforts,
dedication and loyalty.
Last but not least, I would like to thank my management team and
the Board for their counsel and support throughout the year.
Lee Siew Heng
Group Managing Director
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22 annual report 2015
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
Profit Before Tax (RM000)
#Earnings Per Share (Sen)
Note B
261,706
Revenue (RM000)
Note A
Revenue (RM000)
Note A
RM397,7402015
Profit Before Tax (RM000)
RM64,165Profit Attributable to
Owners of the Company (RM000)
RM47,494#Earnings Per Share
Note B
10.47SEN
2010p* 2011 2013a 2014 2015
292,779
432,085390,194 397,740
31,700
2010p* 2011 2013a 2014 2015
40,177
55,527
48,938 47,494
6.99
2010p* 2011 2013a 2014 2015
8.86
12.24
10.79 10.47
43,379
2010p* 2011 2013a 2014 2015
51,594
74,947
66,368 64,165
Profit Attributable to Owners of the Company (RM000)
p* : based on the proforma consolidated nancial information as disclosed in the Prospectus dated 22 June 2011.
a^ : based on the audited financial statements for 15-month financial period ended 31 March 2013.
The Company has on 27 August 2012 changed the financial year end of the Company from 31 December to 31 March. The financial period ended
31 March 2013 made up of 15 months results covering period from 1 January 2012 to 31 March 2013.
Note A : Previous years revenue has been restated to conform to current years presentation for fair comparison purpose.
Note B : The EPS are calculated based on the enlarged share capital of 453.597 million ordinary shares after adjusted for 1-for-4 bonus issue for year-on-year
comparison purpose.
They are different from the EPS disclosed in the Prospectus for nancial year 2010 (computed based on the enlarged share capital prior to the
public listing) and EPS disclosed in the audited nancial statements for year 2011, 2013, 2014 and 2015 respectively (computed based on weighted
average number of shares)
FinancialHighlights
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annual report 2015 23
OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
Oldtown Berhad (Oldtown or the Group) recognises that acting
responsibly and sustainably creates value for the group, employees,
customers, shareholders and society as a whole. Sustainability is an
integral part of our business and corporate responsibility serves as
key to sustainability.
The Groups corporate responsibility practices focus on four areas -
Environment, Workplace, Community and Marketplace which aim to
deliver sustainable value to society at large.
The Group will continue to build sustainable practices in every aspect
of the Groups business and remain steadfast in achieving excellence
in its corporate responsibility activities.
(A) Environment
Environmental Sustainability is of utmost importance due to the
increasing depletion of the earths natural resources and global
climate change issues. As a dynamic business entity, we rely on the
earths natural resources every day and climate change issues will
affect the supply chain and the source of many products. Therefore,
it is essential to embed environmental sustainability principles into
our business operations and practices.
We aim for business growth that is in harmony with environment and
are committed to protecting the earths natural resources, conserving
and preserving the environment.
Among the approaches seek to heighten the positive impact
and minimise negative impacts of the Groups operations on the
environment are:
The efcient use of energy, water and raw materials in all our
operations.
The establishment of Oldtown EARTHCARE which inculcate
environmentally intelligent practices with a variety of green
initiatives, activities and awareness programs.
The implementation of ongoing product wastage elimination
program and packaging design optimisation.
The proper utilisation of reusable resources and recyclablematerials.
The practice of 3Rs (Reduce, Reuse and Recycle) at the
workplace.
The participation in Earth Hour Campaign.
Packaging materials wastage is sold as recyclable content to
be processed as alternative burning fuel with environmental
conservation objective of reducing dumping into landfill areas
and also reducing the consumption of fossil fuel.
Implementation of Environmental Tobacco Smoke Control to
establish a non-smoking policy in and around the building andallocation of a smoking zone exclusively for a non-smoking
premise.
Promote other initiatives to maintain Indoor Environmental Quality
through landscaping, gardening and reserving area for grass
turfing and plants.
The Group through Oldtown EARTHCARE takes a proactive approach
to promote an environmentally-conscious culture in the workplace.
Oldtown EARTHCARE sends out Oldtown Green Alert to all
employees periodically to introduce various green initiatives and
measures on the responsible use of resources to reduce, reuse and
recycle materials wherever possible. It provides tips for resource-
saving and promotes environmental friendly practices and awareness
among employees to help make a difference to the environment.
Oldtown EARTHCARE carried out various activities during thefinancial year under review, such as:
Allocation of Green Signage at nationwide Oldtown White Coffee
outlets.
Conducted Oldtown Carnival of the Green 2014 at SJK(C) Pasir
Pinji 2 Ipoh on 22nd November 2014.
Maintained Oldtown Mother Earth website which was established
in January 2014 A charity fundraising platform for buying and
selling recycled creations and used items.
Participated the Earth Hour Campaign 2015 at nationwide
Oldtown White Coffee outlets on 28th March 2015.
Implemented different practices of 3Rs (Reduce, Reuse and
Recycle) such as established a Recycling Corner and arranged
recycling pickup services to collect the recyclable materials and
sent out monthly Green Alert with various go green practices
and messages to all staff.
Sponsored UTAR Perak Environmental Tree Run Event conducted
on 7th March 2015 with the objective to educate the citizens in
Kampar about GREEN environment.
Green Building
To support the Groups commitment to GREEN, the Groups
integrated industrial complex located at Ipoh, Perak which comprisea 2 storey factory building, 1 storey warehouse, 2 storey canteen
cum Recreation Centre and 3 storey administration building was
constructed based on GREEN BUILDING concept by adopting green
building design and requirements.
The design and layout of the building includes green features which
can reduce electricity and water usage to minimise environmental
impact.
The project is registered under the name of OLDTOWN
MANUFACTURING PLANT (GBI Reg No GSB/INC/2012/01). It has
been awarded Green Building Index SILVER on 16 December 2014
(Green Building Index Certificate No. GBI-INC-0004). The plant is the
rst food manufacturing plant in Malaysia being awarded the SILVERclassification under the category of Industrial New Construction.
Sustainbility&
CorporateResponsibility
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OLDTOWN BERHAD (797771-M)
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(B) Workplace
Employees are the backbone of the business. Essentially, employees
are central to the smooth functioning of business operations and play
a vital role in the success and sustainability of the Group.
The Group believes that human capital is the most valuable asset.
In line with this belief, the Group strives to provide a dynamic and
challenging workplace that gives emphasis on the opportunity to
develop employee skills, talent and capability.
The Group, in fulfilling its corporate responsibility as a caring
employer, places emphasis to build long lasting relationships with its
employees.
The efforts towards achieving the above objectives are carried out in
various aspects:
(i) Employee Welfare & Well-being Program
The Group aims to enhance the employee benefits schemes to build
an engaged workforce that stay loyal and grow with the Group. In
pursuing the objective, we provide the following:
Medical benets, hospitalisation and personal accident insurance
coverage.
Financial assistance in the form of education subsidy and
employee emergency assistance fund.
Organises annual dinner and recognises long service staff with
the Long Service Award in recognition of their loyalty, dedication
and commitment.
Review the Human Resource policies and staff benets on
regular basis.
(ii) Safe, Healthy and Conducive Work Environment
The Group strives to provide a safe, healthy, comfortable and
conducive work environment for its employees through the following
initiatives:
Setting up of Occupational Safety and Health Committee to
initiate various health and safety programs such as fire drills, fire
safety briefings and safety system checks on the equipment.
Ensuring safe practices in all aspects.
Promoting the awareness of safety precautions and health.
(iii) Training and Development Program
The Group seeks to promote and develop its human assets to be
competent, multi-skilled and well-motivated to increase their career
advancement opportunities. The Group continues to carry out the
following efforts:
Employees are provided with the necessary job related training,
seminars and workshops on an ongoing basis to further enhance
their skills, knowledge, core competencies and proficiency level.
Participation in various in-house and external training programs
from technical-related skills to soft management skills.
Participation in international trade fairs/exhibitions locally and
overseas, to broaden the knowledge base and exposure of
the employees to keep abreast of new developments in their
respective field of expertise.
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(iv) Recreational, Sports and Leisure Activities
The Group acknowledges a good work-life balance will lead to a
more productive workforce.
In order to cultivate balanced work life and create a caring,
harmonious and cohesive working environment, employees are
encouraged to participate in social, sports, recreational and leisure
activities organised by the Group. Besides, communication and
camaraderie among staff is fostered through social gatherings and
festive celebration.
To maintain a healthy lifestyle, the Group also organised fitness
programmes after working hours for staff participation to help
employees stay fit and healthy.
(v)Retention, Talent Management and Succession Planning
Retaining key employees is crucial to ensure business success.
The Group shall continue to ensure the rewards package remain
competitive to attract, retain and motivate the right talents.
A proper succession plan is put in place for critical positions to
ensure sustainability in terms of continuous effective and efficient
operations within the Group and a healthy leadership pipeline.
(vi) Diversity and Equal Opportunities
Oldtown embraces diversity at the workplace as we believe diversityenriches our work environment and workforce diversity is of great
importance for growing our business.
The Group is an equal opportunity employer and does not practice
discrimination of any form, whether based on age, gender, race or
religion, throughout the organisation. The Group insists on a working
environment that is free of prejudice.
The Group encourages differences on age, gender, ethnicity, religious
beliefs, nationality, language, abilities, physical appearance, cultural
and socio-economic background. All employees are treated with
respect and fair manner.
As at the end of the financial year, the gender, ethnicity and age mixof the Groups employees (excluding foreign workers and part time
workers) are as follows:
(C) Community
The Group recognises the interdependent relationship between
business growth and social well-being and welfare. Therefore, in
fulfilling its corporate responsibilities to the community it serves, the
Group is obligated to nourish and improve the quality of the society
at large while doing business.
To be socially responsible, the Group focuses its corporateresponsibilities on enhancing community sustainability through
various activities and actions aim to promote community engagement
and address the needs of less fortunate and underprivileged families.
The philanthropic activities and approaches include:
The setting up of Oldtown Children Care Fund to provide aid
funds in the form of medical, educational, medical and other
short term emergency funds to orphaned, abandoned, vulnerable
and deprived children.
Monetary and in kind donations to schools, charity, welfare and
voluntary associations.
Distribution of gifts, goodie bags, basic supplies and necessities
to the poor and impoverished communities during festivals.
Annual Orphanage Project - Building funds donations to
orphanage or purchase of building as shelter for orphans.Ethnicity %
Bumiputera 53
Chinese 33
Indian 5
Others 9
Grand Total 100
Age Group %
< 30 39
30 to < 40 36
40 to < 50 18
50 & Above 7
Grand Total 100
Gender %
Male 45
Female 55
Grand Total 100
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During the financial year ended 31 March 2015, the Group through
Oldtown Children Care Fund has carried out the following initiatives:
Extended monetary donations to charity, welfare and voluntary
association and needy families.
Organised various festive celebrations for orphans.
Donated school necessities to 611 deprived primary school
students from Puchong, Sg Pelek, Ampang, Menglembu, Batu
Gajah, Kampung Tawas, Bidor and Tronoh Mines in the month of
November 2014.
Organized Educational Charity Day Trip for 61 Orphans to KajangOstrich Farm and Kajang Teddy Town on 6 June 2014.
Established Student Excellence Learning Foundations aid
fund for students who demonstrate financial needs and achieve
outstanding academic excellence.
(D) Marketplace
To achieve the sustainable development of the marketplace, the
Group endeavors to carry out activities in a sustainable manner and
promote responsible practices among our investors, suppliers and
customers.
(i)InvestorsWe strive to enhance corporate value and maintain stable and long
term growth for the benefit of shareholders. It is through engagement
with its shareholders that the Group may learn of new and better
ways to enable a successful and sustainable business model. The
Group continues its efforts to engage with its shareholders through
the following initiatives:
Disclose and disseminate all material information in a timely,
open, fair and transparent manner.
Ensuring a robust system of corporate governance.
Implementing policies that promote ethical behavior and
conducting business responsibly through high standards andbusiness ethnics.
Actively engages with its shareholders and investors through
various channels of communication such as investor relations
activities, general meetings of shareholders, financial results
briefings, dialogues and regular press releases.
Accessible in the public domain and regular investors updates on
our website.
The Group aims to develop a good relationship with investors and is
accountable for providing timely information about the Group to the
investment community.
During the financial year ended 31 March 2015, the Group has
conducted investor relations activities via various communication
channels such as one-to-one meeting, small group briefing, conference
calls, regular meetings and road shows.
(ii)Suppliers
We respect our suppliers and work with them through long-term
relationships to realise mutual growth based on mutual trust. In this
aspect, we engage with our suppliers in the following areas:
Fosters new partnerships and delivers new business opportunities
to expand the suppliers business coverage in the industry.
Engages in ethical procurement practices by adopting standard
procedures in vendors qualification.
Ensures the products supplied are in accordance with the Groups
materials requirements.
Conducts more in-depth suppliers audits to ensure improved
standards in the supply chain.
(iii)Customers
Based on our philosophy of Customer First, we develop and provide
innovative, safe and high quality products and services that meet a wide
variety of customers demands and earn the trusts of our customers.
Focuses on product innovation and development to meet the
customers requirements.
Ensures halal compliance covering materials, employees and
systems.
Enhances customers satisfaction and condence by providing safe,
reliable and affordable products.
Establishes customers complaint and feedback system through
dedicated email address, social media such as Facebook and
Twitter and suggestion boxes and ensures all customers complaints
are acknowledged and resolved promptly.
Sets quantitative benchmarks for its customer service delivery
standard such as Standard Waiting Time.
Continues to be covered by the internationally recognised ISO
9001:2008 (Quality Management System), ISO 22000:2005 (Food
Safety Management System), HACCP (Hazard Analysis Critical
Control Point) and GMP (Good Manufacturing Practice) certications
for its manufacturing operations to ensure uniform and high
standards of product.
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Corporate Responsibility
The Groups corporate responsibility practices focus on four areas
Environment, Workplace, Community and Marketplace which aim to
deliver sustainable value to society at large.
Oldtown Children Care Fund Initiatives
Donations and Sponsorships
Contribution of School Necessities
Festival Celebrations for the Unfortunates
Charity Day Trip
Student Excellence Learning Foundations Aid Fund
1. Contribution of a 3-door upright chiller worth RM4,200 to
Persatuan Kebajikan Kanak-Kanak Terencat Akal Malaysia.
2. Donation of RM50,000 Medical Aid Fund to 2-year-old Putra
Muhammad Ilyas from Klebang, Ipoh for his Liver Transplant
Surgery.
3. Bestowal of education essentials to 40 deprived students from
SJK(T) Menglembu.
4. Sponsorship of 3 in 1 Oldtown White Coffee to SMK SeafieldSubang Jaya in conjunction with a fund raising carnival.
5. Students from SJK(C) Pasir Pinji 2, Ipoh receiving SELF aid fund.
6. Chinese New Year Karaoke Outing at OTK Studio Greentown Ipoh
on 28 Feb 2015.
7. Christmas Laser Battle Outing for 88 Orphans at Ipoh Parade on
20 Dec 2014.
8. Deepavali Movie Outing at AEON Station 18 on 1 Nov 2014.
9. Hari Raya Celebration with 45 orphans at Oldtown White Coffee
Mahkota Square, Kuantan on 9 Aug 2014.
10. Educational Charity Day Trip for 61 Orphans to Kajang Ostrich
Farm on 6 June 2014.
11. Sponsorship of RM3,600 Living Expenses and Medical Aid Fund
to 6-year-old Lai Chen Hao from Ipoh.
1 2
5
8
6
10
119
4
7
3
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Earthcare Initiatives
Oldtown Carnival of the Green 2014.
Earth Hour Campaign 2015.
Oldtown Mother Earth website A charity fundraising platform
for buying and selling recycled creations and used items.
Practise of 3Rs - Reduce, Reuse & Recycle in Oldtown Berhad.
Allocations Green Signage at nationwide Oldtown White Coffee
outlets.
Donations & Sponsorships to Environmental Events & Activities.
Workplace Activities & Events
Learning, Training and Development Program.
Staffs Recreational, Sports and Leisure Activities.
Employee Welfare and Well-being Program.
Safe, Healthy and Conductive Work Environment.
Retention, Talent Management and Succession Planning.
1. The Launching Ceremony for Oldtown Carnival of the Green
conducted at SJK(C) Pasir Pinji 2 Ipoh on 22 November 2014.
2. Nationwide Oldtown White Coffee outlets celebrate Earth Hour
2015 on 28 March 2015.
3. Sponsorship to UTAR Environmental Tree Run Event conducted
on 7 March 2015.
4. Customer Service Training conducted at Oldtown White Coffee
outlets in Sept 2014.
5. Staffs Buka Puasa Celebration conducted at Oldtown Subang
office on 18 July 2014.
6. Staffs Chinese New Year Celebration held at Oldtown Subang
office on 13 Feb 2015.
7. Making A Difference Training organized in July 2014 at Oldtown
Berhad Headquarter.
2
4
6 7
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OLDTOWN BERHAD (797771-M)
Incorporated in Malaysia
The Board of Directors (the Board) of Oldtown Berhad (the Company)
recognises the value of good governance and believes that a high
standard of corporate governance will deliver long-term sustainable
shareholder value. The Board is committed to ensure good corporate
governance practices are applied throughout the Company and its
subsidiaries (the Group).
This Statement sets out the key aspects of how the Company has
applied the Principles and Recommendations of the Malaysian
Code on Corporate Governance 2012 (MCCG 2012) during the
financial year ended 31 March 2015 and any non-observation of the
Recommendations of MCCG 2012, including the reasons thereof, has
been included in this Statement.
Principle 1 Establish Clear Roles and Responsibilities
1.1 Clear Functions of the Board and Management
The Board leads the Group and plays a strategic role in overseeing
the Groups corporate objectives, directions and long term goals of
the business. The Board is responsible for the oversight of the overall
management of the Group.
The Board Committees are established to assist the Board in discharging
its responsibilities. The Board delegates specific responsibilities to three
(3) principal Committees, namely the Audit Committee, the Nomination
Committee and the Remuneration Committee. All Committees have
written terms of references and operating procedures and the Board
receives reports on their proceedings and deliberations. The Chairman
of the respective Committees shall report the outcome of their meetings
to the Board. Minutes of all Board Committee meetings are circulated
to the Board members so that they are kept abreast of proceedings and
matters discussed at Board Committee meetings.
Independent Non-Executive Directors provide unbiased and independent
views in ensuring that the strategies proposed by the Management
are fully deliberated and examined objectively, taking into perspective
of the long term interests of shareholders, other stakeholders and the
community at large.
The Board recognises the importance of the role of the Independent
Non-Executive Directors particularly in corporate accountability. They
are essential for protecting the interests of non-controlling interests and
can make significant contributions to a companys decision making bybringing in the quality of detached impartiality.
The Executive Directors take on primary responsibilities for implementing
the Groups business plans and managing the business activities.
1.2 Clear Roles and Responsibilities
In fulfilling its fiduciary and leadership functions, the Board meets
regularly to perform its functions, amongst others, as follows:
a. Reviewing and Adopting the Groups Strategic Plans
The Board provides strategic direction and guides the Group in
promoting its core values, policies and objectives. The Board reviews the
strategic plans presented by the Management.
b. Overseeing the Conduct of the Groups Business
To ensure the effective discharge of its functions and responsibilities, the
Board delegates the day-to-day management of the Groups business
to the Management. The Group Managing Director is responsible for the
implementation of the Boards decisions, overall responsibilities over the
day-to-day operations of the Groups business and operational efficiency.
c. Identifying Principal Risks and ensuring the
Implementation of appropriate Systems to manage them
The Risk Management Committee (RMC), headed by the Group
Managing Director advises the Audit Committee and the Board on areas
of high risk faced by the Group and the adequacy of compliance and
control throughout the Group. The findings relating thereto will be tabledto the Audit Committee on a regular basis.
Details on the RMC and the Companys Enterprise Risk Management are
set out in the Statement on Risk Management and Internal Control of this
Annual