the way 2013forwardcorpdocs.msci.com/annual/ar_2013_316275.pdfpenang. additionally, overseas...

THE WAY FORWARD

2013AnnuAl REpORT

(4205-V)

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Founded in 1883 by John Fraser and David Chalmers Neave, from whom the instantly recognisable initials ‘F&N’ are derived, F&N has evolved into an iconic household brand and the F&N Group today is among the oldest, most recognised and most successful businesses in Singapore and Malaysia with core expertise and leadership in the Food & Beverage, Property and Publishing & Printing sectors.

Listed on Bursa Malaysia, Fraser & Neave Holdings Bhd is a subsidiary of Fraser and Neave, Limited and one of Malaysia’s diversified blue chip companies with leadership in the nation’s

beverages and dairy products sectors. Fraser & Neave Holdings Bhd operates in Malaysia, Brunei, Thailand and Indochina and employs over 3,000 employees.

As a brand that has been closely integrated into the nation’s fabric for over a century, F&N enjoys a special place in the hearts of Malaysians, one that is trusted by generations while fulfilling its promise of ‘Pure Enjoyment, Pure Goodness’ through its wide portfolio of brands and products.

The core strengths of its 130-year enterprise, as reflected in its vision, brands and products, strong distribution network, resources, and experience, distinguish F&N and set it apart in the market. These core strengths, moreover, enable it to deliver sustainable performance and growth, in harmony with the well-being of local communities and the environment, to meet consumers’ present and future expectations.

OurPrOFILE

contents097 Statements of Comprehensive Income098 Statements of Financial Position101 Statements of Changes in Equity 105 Statements of Cash Flows107 Notes to the Financial Statements 181 Supplementary Information

OTHER InFORmATIOn183 List of Properties186 Shareholdings Statistics 188 Share Price Charts189 Recurrent Related Party Transactions

• nOTIcE OF AnnuAl GEnERAl mEETInG

• pROxY FORm

002 Vision003 Mission004 Our Exports006 Five Years’ Statistics Group Financials007 Five Years’ Statistics Group Financial Charts

cORpORATE REvIEW010 Chairman’s Statement014 Profile of Board of Directors026 Corporate Information027 Corporate Structure

BusInEss REvIEW030 CEO’s Message034 Soft Drinks040 Dairies Malaysia 046 Dairies Thailand 052 Property

cORpORATE susTAInABIlITY056 Workplace Principles059 Community Principles063 Environmental Principles068 Marketplace Principles

cORpORATE GOvERnAncE072 Statement on Corporate Governance 077 Report on Audit Committee079 Statement on Risk Management & Internal Control082 Statement on Directors’ Responsibility

FInAncIAl sTATEmEnTs086 Directors’ Report093 Statement by Directors and Statutory Declaration094 Independent Auditors’ Report096 Income Statements

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1883-20131999 - F&N started the Thailand Ice Cream business with the setting up of F&N United Ltd.

2000 - F&N took control of Times Publishing after acquiring a 20 per cent stake in 1999.

2004 - F&N’s property division started construction on Fraser Business Park in Sungai Besi, Kuala Lumpur.

2006 - F&N acquired the Borneo brand of Mineral Water business in East Malaysia.

2007 - Fraser & Neave Holdings Bhd acquired Nestle’s Tea Pot and secured the licence to manufacture and distribute Nestle’s Ideal, Carnation and Milkmaid brands in Malaysia, Thailand and Singapore. F&N Dairies (Thailand) Limited was also established this year.

2009 - Operations at F&N Dairies (Thailand) Limited’s new plant in Rojana, Thailand, commenced.

2010 - Red Bull joined the F&N product line-up. Construction of F&N Dairies manufacturing plant in Pulau Indah began. End of licensing arrangement with The Coca-Cola Company in Malaysia, Singapore and Brunei.

2011 - Official opening of the F&N Dairies manufacturing plant in Rojana, Thailand.

2012 - F&N Dairies manufacturing plant in Petaling Jaya ceased operations after 52 years, making way for the Section 13, Petaling Jaya property development project.

2013 - The 130th anniversary of the Fraser & Neave Group and official opening of the F&N Dairies manufacturing plant in Pulau Indah.

1989 - F&N acquired the interests of Beatrice Foods and restructured its dairy operations under F&N Dairies (Malaysia) Sdn Bhd.

1990 - F&N acquired the dairies and property interests of Cold Storage Holdings Ltd.

1992 - Joint venture agreement was signed between Fraser and Neave, Limited and The Coca-Cola Company (TCCC), which saw the birth of F&N Coca-Cola Pte. Ltd.

1995 - Magnolia was acquired.

1996 - F&N Coca-Cola Malaysia moved to a new plant costing RM160 million in Shah Alam on 23 March 1996. The Group’s glass, dairies and soft drinks operation in Malaysia were incorporated under the umbrella of Fraser & Neave Holdings Bhd.

1998 - F&N Dairies commenced its Pasteurised Milk and Juice business.

This is a snapshot of F&N’s long and storied history, one which is 130 years old and remains woven into the fabric of Malaysian and Singaporean society. The F&N story begins in 1883, in a registered office in the British colony of Singapore, when two partners in a printing business, John Fraser and David Chalmers Neave, signed their names on a document that brought the Singapore and Straits Aerated Water Company into existence.

OurmILEstOnEs

1883 - The Singapore and Straits Aerated Water Company was founded.

1898 - The Singapore and Straits Aerated Water Company went public under its present name, Fraser and Neave, Limited on 27 January 1898.

1913 - By this year, F&N had branches across the peninsula, including Kuala Lumpur, Malacca, Seremban, Ipoh and Penang. Additionally, overseas expansion had begun and F&N had set up branches in Bangkok and Saigon.

1931 - Fraser and Neave, Limited formed Malayan Breweries Limited in a joint venture with Heineken of Holland. The result of this joint venture was the much-loved and iconic Tiger Beer.

1936 - Fraser and Neave, Limited acquired the franchise rights to Coca-Cola drinks. In later years, the company acquired the rights to 7-Up, Fanta and Sunkist as well.

1968 - Dairy production commenced in Singapore and F&N Powdered Milk was introduced the following year.

1971 - Several new products were launched: Fanta, Daisy long-life milk in Tetrapak, Zapple drinks and Sunkist Orange.

1973 - Sweetened Condensed Filled Milk was launched, followed by the launch of Meadow Gold range of ice cream products the following year.

1977 - F&N commenced its Ice Cream business.

1983 - F&N celebrated its 100th anniversary and introduced the iconic 100PLUS brand to the market, which soon became the No.1 Isotonic Drink in Malaysia and Singapore.

1985 - F&N introduced SEASONS’s range of beverages.

1941 - Archipelago Brewery was acquired, which produced Anchor beer, another well-known brew in the region.

1948 - Lion Ltd was incorporated to manage Coca-Cola.

1959 - The Group entered into a joint venture with Beatrice Foods of Chicago, USA, to manufacture Sweetened Condensed Milk, setting the foundation for the company eventually known as F&N Dairies (Malaysia) Sdn Bhd.

1962 - The Kuala Lumpur plant was completed and commenced its operations.

1965 - Carnation International of Los Angeles joined Beatrice Food and F&N to form a manufacturing company, Premier Milk (Malaya) Sdn Bhd in Kuala Lumpur. The first F&N soft drinks factory in East Malaysia was also opened in Kuching.

Our

VisiOn & MissiOnTo be a world-class multinational enterprise providing superior returns to our shareholders, excellent value for our customers and a rewarding career for our employees

To become the leading total beverage company in Malaysia and the region

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004 005Our ExportsOur

expOrts

south east asia

Oceania

east asia

Indochina

central asia

middle east

south asia

europe

central americaafrica

45COuntrieswOrldwide

F&n prOduCts are expOrted tO OVer

year ended 30 september 2013 2012 2011 2010 2009

Results (RM million)*

Revenue 3,508.2 3,171.9# 3,824.6# 3,918.4# 3,663.2# Profit before taxation (PBT) 308.7 230.2 463.7 777.9^ 299.8 Attributable profits 260.6 274.0 383.1 695.3^ 224.4

Dividend

Per share- Earnings - basic (sen) 71.7 75.9 106.9 195.1 63.0- Earnings - diluted (sen) 71.4 75.4 106.0 194.2 62.9- Dividend - net (sen) 60.0** 58.0 97.0 164.5 41.8- Dividend - cover (times) 1.2 1.3 1.1 1.2 1.5

Statement of Financial Position (RM million)

Share capital 364.7 363.0 360.4 357.3 356.5Shareholders’ equity 1,650.2 1,554.3 1,558.8 1,796.5 1,293.1Total assets 2,763.6 2,654.9 2,487.8 2,968.9 2,759.9Long term borrowings 150.0 - 150.0 150.0 360.4Net assets per share (RM) 4.53 4.28 4.33 5.03 3.63

Ratio

PBT on revenue (%) 8.8 7.3 12.1 19.9 8.0Return on shareholders’ equity (%) 15.8 17.6 24.6 38.7 17.4Net debt to equity ratio (%) 1.7 12.6 - - 26.7

FiVe Years’ statistiCs GrOup FinanCials

FiVe Years’ statistiCs GrOup FinanCial Charts

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* Results for financial years ended 30 September 2009 and 2010 were on a total group basis, which included continuing and discontinued operations.

** Included proposed dividend of 40 sen, which will only be recognised in the financial statements upon shareholders’ approval. ^ Included exceptional gain on divestment of glass container business of RM382 million.# Restated to reclassify sales tax incurred on intercompany transactions which was previously included in cost of sales but reclassified

to revenue in financial year ended 30 September 2013.

1009 11 12 13

net assets Per share

(rm)

09 1110 12 13

PBt On revenue(%)

09

return On sharehOlders’ equIty

(%)

1110 12 13

3.63

5.03

4.33

4.28

19.9

12.1

7.3

8.8

24.6

17.4

38.7

17.6

15.8

8.0

4.53

1009 11 12

3,91

8.4

3,66

3.2

3,82

4.6

3,50

8.2

3,17

1.9

13

revenue(rm million)

224.

4

299.

8

777.

9

695.

346

3.7

383.

123

0.2 27

4.0

1,79

6.5

1,55

8.8

1,29

3.1

2,75

9.9 2,

968.

9

2,48

7.8

1,55

4.3

2,65

4.9

1,65

0.2

2,76

3.6

63.0

41.8

308.

7

195.

1

164.

510

6.9

97.0

75.9

58.0

71.7

60.0

260.

6

09 1110 12 13

PBt / attrIButaBle PrOfIts

(rm million)

09 1110 12 13

earnInGs Per share / net dIvIdend

(sen)

09

sharehOlders’ equIty / tOtal assets

(rm million)

1110 12 13

PBtattrIButaBle PrOfIts

earnInGs Per share (BasIc)net dIvIdend

sharehOlders’ equItytOtal assets

GaIn On dIvestment Of Glass cOntaIner BusIness

COrpOrate reView010 Chairman’s Statement014 Profile of Board of Directors026 Corporate Information027 Corporate Structure

InnovatIon out of tradItIonF&N beverages continue to invigorate the market with its innovative flavours and inspiring

Malaysians to push their limits on or off the playing field. Already the market leader in many of the ready-to-drink segments in Malaysia, our mission is to keep our consumers delighted with an ever-increasing range of beverages that leave them thirsting for more!

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010 011Chairman’s Statement

We also saw several other significant changes beginning with a change in the ultimate ownership of the Group as F&N became part of the TCC Group which is one of Thailand’s leading conglomerates and established international players.

In addition, we witnessed the official launch of our state-of-the-art manufacturing plant in Pulau Indah, the biggest dairy condensary in the region, while the Group recorded double-digit growth in revenue, operating profit and pre-tax profit.

Performance review Buoyed by resilient domestic demand, the Asia Pacific region showed signs of improvement despite the subdued growth of advanced economies.

As a highly open economy, Malaysia was not immune to the uncertainties and lower global economic growth. Nevertheless, the country’s strong fundamentals and accommodative monetary policy, aided by improvement in exports and firm domestic demand, is projected to fuel economic growth of 4.5 to 5 per cent in 2013.

In Thailand, exports and domestic demand remained weak, coupled with delays in infrastructure spending plan, resulting in a lower 2013 economic growth forecast of 3 per cent.

ChairMan’sstateMent

2013 is a momentous year for fraser & neave Holdings BHd as tHe group celeBrates a landmark in tHe malaysian and regional corporate arena – its 130tH year of operations since its HumBle Beginnings.

Against this economic backdrop, Fraser & Neave Holdings Bhd recorded an impressive performance, for the year ended 30 September 2013, chalking up double-digit growth in revenue, operating profit and pre-tax profits. For the year in review, Group revenue rose 10.6 per cent to RM3.51 billion thanks to a stronger performance at the soft drinks unit coupled with a notable post-flood recovery and full year contribution from Dairies Thailand which grew almost 40 per cent, while reinforcing their respective market leadership positions.

Group operating profit rose 35.1 per cent to RM312.7 million while Group profit before tax went up 34.1 per cent to RM308.7 million. Group profit after tax, however, eased 4.9 per cent to RM260.6 million due to a lower deferred tax assets recognition compared with last financial year.

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012 013Chairman’s StatementChairman’s Statement

of customers and consumers for whom F&N has become a part of their daily lives.

delIverInG value tO sharehOldersIn line with maintaining a dividend policy that is commensurate with the Group’s performance, the Directors are recommending a final single tier dividend of 30 sen per share together with a special single tier dividend of 10 sen per share. If approved by shareholders at the forthcoming Annual General Meeting, the total dividend for the year would be 60 sen, as compared with 58 sen in the previous financial year.

cOrPOrate GOvernance The Board of Directors and management continue to drive the Group’s vision and mission to imbue a culture of professionalism, responsibility, accountability, transparency, excellence and trust in people.

In tandem with this, the Board established a Risk Management Committee in July 2013, aimed at reinforcing its risk management governance and enabling greater and deeper focus on the risk management of the Group.

Additionally, in accordance with the new guidelines of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, both the Chief Executive Officer and the Chief Financial Officer have to provide assurance to the Board yearly on the adequacy of, and compliance with, to its risk management framework.

cOrPOrate sustaInaBIlItyHigh ethical standards and good governance are paramount to the sustainability of any business and in this respect the F&N Group has continued to expand the implementation of corporate sustainability programmes throughout the year.

Our efforts have started to bear fruit and in this context, I congratulate and commend Dairies Thailand for winning the Thailand Energy Awards 2013 for Best Energy Conservation in the Energy-controlled Factory category and also the prestigious ASEAN Energy Award 2013 for Best Practice on Energy Management for Buildings and Industries, Special Submission Category. The award is a first for the F&N Group and Dairies Thailand was one of the only two food and beverage companies to be accorded the honour. This recognition is testament that our best-in-class journey is on the right track towards achieving our vision of becoming the leading food and beverage company in the region.

In addition, this year, we have joined other leading food and beverage companies in the “Responsible Advertising to Children Pledge”, the first of its kind in Malaysia. This initiative demonstrates our commitment to responsible marketing of food and beverage to children. The pledge was done in collaboration with the Ministry of Health, Malaysian Advertisers Association and FMM Malaysian Food Manufacturing Group.

OutlOOk and PrOsPectsGoing forward, the Group will continue to focus on strengthening market activation and the pervasiveness of its soft drinks and dairy products, whilst ramping up export initiatives to deepen and widen our export market footprint.

The grand opening of our F&N Dairies Malaysia manufacturing plant, graced by HRH Sultan of Selangor at the Selangor Halal Hub, Pulau Indah, Klang will provide greater impetus towards realising our export aspirations especially to the relatively untapped halal markets and its two billion Muslim consumers globally.

Work is in progress to launch Phase 1 of our Section 13 integrated property development project scheduled for the last quarter of our 2013/2014 financial year.

The operating environment will remain challenging in the new financial year especially with high global commodity prices continuing to put pressure on our margins and the expected volatilities in the US Dollar and other foreign currencies. However, emerging signs of a recovery in the major advanced economies are expected to support overall global growth indications and our continuing internal cost savings initiatives will help us mitigate some of the cost pressures.

While global policy spillovers may have some impact on Asia, growth will continue to be underpinned by domestic demand. The Group is in a strong position to benefit from domestic demand with its sound balance sheet, an even stronger and diversified brand portfolio and unparalleled marketing and distribution networks.

The on-going integration and synergising between the F&N Group and TCC Group will only serve to strengthen our core. Benefits and synergies which the Group can draw from include Group product introduction, market knowledge and other operational synergies such as raw material procurement, cost optimisation and adoption of best practices from the various business units within the enlarged Group.

acknOwledGementsThe Board welcomes the appointment of Mr. Somsak Chayapong as Chief Executive Officer of Fraser & Neave Holdings Bhd, succeeding Dato’ Ng Jui Sia, who returns to Fraser and Neave, Limited (F&NL). The Board is confident that Mr. Somsak will leverage on his wealth of experience in the food and beverage industry to lead and grow our business.

we will continue to forge ahead leveraging on our long established heritage to deliver excellence in the market place and to our loyal legion of customers and consumers for whom f&n has become a part of their daily lives.

The Board also wishes to record its appreciation to Dato’ Ng Jui Sia for his invaluable contribution to the Group over the years. Notwithstanding this, we will still benefit from Dato’ Ng’s counsel as he remains a member of our Board and in his new role at the helm of F&NL’s Non-Alcoholic Beverages Division, overseeing operations and investments across Singapore, Malaysia, Thailand and Indochina.

We welcome three new directors, namely, Mr. Chin Kwai Yoong, Dato’ Johan Tazrin bin Hamid Ngo and Dato’ Jorgen Bornhoft, who joined the Board during the year. We would also like to record our appreciation for the invaluable contributions of Mr. Pascal De Petrini to the Group.

I would like to take this opportunity to express my heartfelt thanks to my colleagues on the Board for their invaluable support and guidance to the management of the Group during this year of transitions. My appreciation also extends to our shareholders, business partners, customers and other stakeholders for their confidence, trust and continued support of the Group. Last but not least, I would like to pay tribute to all staff and management for their professionalism, dedication, loyalty and industry that have enabled the Group to record yet another impressive performance.

tenGku syarIf Bendahara PerlIs syed BadarudIn JamalullaIl IBnI almarhum tuanku syed Putra JamalullaIlChairman30 November 2013

trusted By GeneratIOnsIt is with great pride that F&N Group celebrates its 130th anniversary this year. Very few companies in the world can boast of such a long and enduring heritage of service to consumers who have remained loyal to its brands throughout. Thus the theme “Trusted by Generations” for our commemoration aimed at sharing this landmark with our stakeholders and thanking them for their patronage of the F&N brands for the last 130 years.

At this point, I must thank our consumers for their support and trust over the years, who, through their loyalty, have made the F&N brand a household name that is trusted by generations in Malaysia and the region.

We will continue to forge ahead leveraging on our long established heritage as well as building on the strength of our brand portfolio and unparalleled marketing and distribution network to deliver excellence in the market place and to our loyal legion

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014 015Profile ofBoard of Directors

malaysian, age 68chairman of Board, Independent non-executive director chairman of Group executive, nominating, remuneration & share Buy-Back committeesmember of audit committee

y.BhG. datO’ anwarrudIn BIn ahamad Osman

malaysian, age 70Independent non-executive directormember of Group executive, audit, remuneration & share Buy-Back committees

Dato’ Anwarrudin bin Ahamad Osman graduated from the University of Malaya in 1966 with a Bachelor of Arts degree.

Upon graduation, he joined the Malaysian Civil Service in 1966 and served in the Ministry of Defence. In May 1975, he joined Petronas and served in various capacities until his retirement on 1 September 1998 as Managing Director/Chief Executive Officer of Petronas Dagangan Berhad.

During the 23 years in Petronas, Dato’ Anwarrudin held various senior positions. He was the General Manager of Corporate Planning Division in 1984, General Manager, Human Resources Management Division in 1985 before heading the International Marketing Division of Petronas responsible for sales of crude and products and processing of crude. He was a member of the Asean Council On Petroleum (“ASCOPE”) technical committee for several years and spoke at the ASCOPE oil marketing management seminars and local seminars on prospects of

Bumiputera in the marketing and distribution industry; represented Malaysia in the OPEC/NON-OPEC dialogues from 1989 to 1991.

Currently, Dato’ Anwarrudin holds directorship positions in KKB Engineering Bhd and Perisai Petroleum Teknologi Bhd and in several non-listed companies. He is also Executive Vice-Chairman of Yasmin Engineering (M) Sdn Bhd.

Dato’ Anwarrudin was appointed to the Board on 20 January 2005. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company.

Tengku Syed Badarudin Jamalullail graduated from Cambridge University in 1968 with a Master of Arts degree in Law & History. From 1968 to 1978, he was employed and held various executive positions in Fraser & Neave (Malaya) Sdn Bhd. Currently, Tengku Syed is involved in his family business and he is a Director of Hwang-DBS (Malaysia) Berhad, Hwang-DBS Investment Bank Berhad and Hwang Investment Management Berhad. Tengku Syed is also a board member of Yayasan Tuanku Syed Putra, a charitable foundation and the President of Tuanku Syed Putra Dialysis Centre, Perlis.

Tengku Syed was appointed to the Board on 24 February 1987 and on 27 February 2001 was appointed its Chairman. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company.

prOFile OFBOard OF direCtOrs y.a.m. tenGku syarIf Bendahara PerlIs syed BadarudIn JamalullaIl IBnI almarhum tuanku syed Putra JamalullaIl

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chIn kwaI yOOnG

malaysian, age 65Independent non-executive directorchairman of audit committeemember of Group executive, nominating & risk management committees

Mr. Chin Kwai Yoong is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants.

He started his career with Price Waterhouse (currently known as PricewaterhouseCoopers) as an Audit Senior in 1974 and was promoted to Audit Manager in 1978. He was an Audit Partner in the firm from 1982 until his retirement in 2003. During his tenure as Partner, he was the Executive Director in charge of the Consumer and Industrial Products and Services Group and was the Director-in-charge of the Audit and Business Advisory Services and Management Consulting Services division.

Mr. Chin has extensive experience in the audits of major companies in banking, oil and gas, automobile, heavy equipment, manufacturing, construction and property development industries. He was also involved in the corporate advisory services covering investigations, mergers and acquisitions and share valuations.

He was appointed as a director of Bank Negara Malaysia with effect from 1 March 2010 and has been a director of Genting Berhad since August 2007. He sits on the Board of Astro Malaysia Holdings Berhad and has been a director of Astro All Asia Networks plc since March 2006. He also sits on the Board of Deleum Berhad.

Mr. Chin was appointed to the Board on 23 January 2013. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company.

anthOny cheOnG fOOk senG

malaysian, age 59 non-Independent non-executive directormember of Group executive, audit & risk management committees

Mr. Anthony Cheong Fook Seng is a member of the Institute of Chartered Accountants in England and Wales and the Institute of Singapore Chartered Accountants.

He has worked in the Audit & Corporate Advisory Services Division of Ernst & Young till 1989 when he joined CarnaudMetalbox Asia Ltd as Internal Audit Manager, later on assuming the position of Company Secretary. He joined the F&N Group in Times Publishing Ltd as Corporate General Manager (Group Finance) and Company Secretary in 2001. He was appointed the Group Company Secretary of the Fraser and Neave, Limited Group on 1 October 2002 and was a director from 1 February 2005 to 31 January 2008. He represents the F&N Group on the Boards of a number of listed and unlisted subsidiaries.

Mr. Anthony Cheong was appointed to the Board on 1 October 2002. Except for his position as the Group Company Secretary of Fraser and Neave, Limited, a major shareholder of the Company, he does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company.

Profile ofBoard of Directors


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y.BhG. datO’ JOrGen BOrnhOft

danish, age 71non-Independent non-executive directormember of Group executive committee

Dato’ Jorgen Bornhoft holds a degree in Accountancy and Finance (Bachelor of Commerce) from Copenhagen Business School.

He joined Carlsberg Brewery Malaysia Berhad (“Carlsberg Malaysia”) in 1991 as its Chief Executive Officer, and assumed the position of Managing Director from 1995 to 2002, after which he was the Chairman from 2002 to 2005. Dato’ Bornhoft re-joined the Board of Carlsberg Malaysia as a Non-Executive Director from 2006 to 2007. He also assumed the position as the Chief Executive Officer of Carlsberg Malaysia Asia Pte Ltd in Singapore from January 2003 to June 2004. Prior to joining Carlsberg Malaysia, he was the Vice-President of Carlsberg International A/S, Denmark responsible for foreign subsidiaries and new projects.

Dato’ Bornhoft was appointed as an Independent Non-Executive Director of Hap Seng Consolidated Berhad on 24 January 2005 and later became its Chairman on 1 February 2007. He also sits on the Board of Hap Seng Plantations Holdings Berhad as an Independent Non-Executive Director. He is also a director of The Royal Bank of Scotland Berhad and the Vice-Chairman of International Beverage Holdings Limited.

Dato’ Bornhoft was appointed to the Board on 7 May 2013. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company except that he is a nominee director of Fraser and Neave, Limited, a major shareholder of the Company.

y.BhG. datO’ JOhan tazrIn BIn hamId nGO

malaysian, age 41Independent non-executive directormember of audit committee

Dato’ Johan Tazrin bin Hamid Ngo has a Bachelor of Arts (Honours) in Business Economics from Reading University, UK. He is also an Associate Member of the Society of Investment Professionals (“ASIP”), UK (CFA Institute) and European Association of Financial Analysts (“EFFAS”).

Currently, Dato’ Johan is the Managing Director and the Chief Investment Officer of Amara Investment Management Sdn Bhd (“AMARA”), a fund management company incorporated in Malaysia and licensed by the Securities Commission. Dato’ Johan established the company in 1997 as a joint venture between K&N Kenanga Berhad and Rothschild Asset Management Intl B.V before taking the company private in 2007 in a management buy-out exercise. Prior to this, he was a Portfolio Manager with Coutts & Co. (London) Ltd managing Asian Equities and Japan. Dato’ Johan has 20 years of experience in investment management overseeing Asian equities & fixed income.

Dato’ Johan was appointed to the Board on 23 January 2013. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company.



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y.BhG. datO’ dr. mOhd shahar BIn sIdek

malaysian, age 66 non-Independent non-executive director

Dato’ Dr. Mohd Shahar bin Sidek graduated from the University of Malaya with a Bachelor of Economics (Accounting) Hons in 1971. Upon graduation, he joined the Federal Treasury of Malaysia as Assistant Secretary. In 1980, he was transferred to INTAN as a lecturer where he completed his Masters in Economics (Public Administration) at the University of Malaya in the same year. He pursued his Ph.D. in Public Finance at the Temple University, USA and completed it in 1989.

Upon completion of his doctorate in Finance, Dato’ Dr. Mohd Shahar joined the Penang State as its State Financial Officer in 1991 and held the position until 1994. He was promoted as the Director General of Biro Tata Negara in 1994. In 1997, he was posted to the Federal Treasury of Malaysia as Secretary for Supply and Procurement Division and was transferred to MAMPU as Deputy Director General in 1999. He was promoted as Director General of the Road Transport Department in the Ministry of Transport in 2000 until his retirement in April 2003.

Dato’ Dr. Mohd Shahar was appointed to the Board on 30 September 2003. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company except that he is a nominee director of Permodalan Nasional Berhad, a major shareholder of the Company.

lee kOnG yIP

malaysian, age 69non-Independent non-executive directorchairman of risk management committeemember of Group executive, remuneration & share Buy-Back committees

Mr. Lee Kong Yip graduated from the University of Malaya with a Bachelor in Economics (Hons) majoring in statistics in 1969. He completed the Executive Programme in the Graduate School of Business Administration in the University of California Berkeley, USA in 1988.

From 1969 to 1994, he has held various executive positions in the Oversea-Chinese Banking Corporation Limited and its finance subsidiary, the Oversea-Chinese Finance Company Berhad. In 1995, he was appointed the Executive Vice President and director of the OCBC Bank (Malaysia) Berhad, a post he held until his retirement in April 2000. He is a director of Overseas Assurance Corporation (Malaysia) Berhad, Overseas Assurance Corporation (Holdings) Berhad, Great Eastern Life Assurance (Malaysia) Berhad, Great Eastern Capital (Malaysia) Sdn Bhd and The Great Eastern General Insurance Company Sdn Bhd.

Mr. Lee was appointed to the Board on 10 May 2000. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company except that he is a nominee director of Fraser and Neave, Limited, a major shareholder of the Company.



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022 023

y.BhG. datO’ nG JuI sIa

singaporean, age 61non-Independent non-executive directormember of Group executive, nominating & remuneration committees

Dato’ Ng Jui Sia holds a Bachelor degree in Business Administration from the University of Singapore and is an Associate of the Institute of Chartered Accountants in England and Wales.

Dato’ Ng began his career in accounting and auditing in London and Singapore with Price Waterhouse and has extensive general management experience operating in Hong Kong, China, South Asia, Malaysia and Singapore. He was with CarnaudMetalbox Asia Ltd before he joined the F&N Group in 1995. He was appointed the General Manager of F&N Coca-Cola Singapore in 1996 and the Managing Director of F&N Coca-Cola Malaysia in 2000, a position he held till his secondment to F&N’s Times Publishing Ltd as Chief Executive Officer with an international portfolio of printing, publishing, distribution and book retailing. Dato’ Ng was also a nominee director in Fung Choi Media Group Ltd., a China based company listed on the Singapore Stock Exchange and PMP Ltd, a company listed on the Australia Stock Exchange

from November 2007 to July 2010. In October 2010, Dato’ Ng was appointed the Chief Executive Officer of the Company and appointed to the Board on 19 January 2011.

On 1 September 2012, Dato’ Ng was appointed to the Board of Cocoaland Holdings Berhad. He was also appointed Independent Non-Executive Director of Malaysia Smelting Corporation Berhad on 19 September 2012, an integrated producer of tin metal and tin-based products listed on Malaysia Stock Exchange and Singapore Stock Exchange. Dato’ Ng was appointed the Chief Executive Officer, F&B (Non Alcoholic) of Fraser and Neave, Limited on 1 July 2013.

Dato’ Ng does not have any family relationship with any director and/or major shareholder of the Company, or any personal interest in any business arrangement involving the Company except that he is a nominee director of Fraser and Neave, Limited, a major shareholder of the Company.

y.BhG. datO’ dr. nIk nOrzrul thanI BIn nIk hassan thanI

malaysian, age 53non-Independent non-executive director

Dato’ Dr. Nik Norzrul Thani bin Nik Hassan Thani holds a Ph.D. in Law from the School of Oriental and African Studies, University of London and a Masters in Law from Queen Mary College, University of London. He read law at the University of Buckingham, United Kingdom.

Dato’ Dr. Nik also holds a Post-Graduate Diploma in Syariah Law and Practice (with Distinction) from the International Islamic University of Malaysia. He is a Barrister of Lincoln’s Inn and an Advocate & Solicitor of the High Court of Malaya. He was called to the Bar of England and Wales in 1985 and to the Malaysian Bar in 1986. He was a Visiting Fulbright Scholar, Harvard Law School from 1996 to 1997, and was formerly the Acting Dean/Deputy Dean of the Faculty of Laws, International Islamic University Malaysia.

Dato’ Dr. Nik is a director of UMW Holdings Berhad, Manulife Holdings Berhad, Konsortium Logistik Berhad and several non-listed companies. Currently, Dato’ Dr. Nik is a practising lawyer with Zaid Ibrahim & Co. Prior to joining Zaid Ibrahim & Co., Dato’ Dr. Nik was with Baker & McKenzie (International Lawyers), Singapore.

Dato’ Dr. Nik was appointed to the Board on 7 November 2006. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company except that he is a nominee director of Permodalan Nasional Berhad, a major shareholder of the Company.



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huI chOOn kIt

singaporean, age 49 (alternate director to y.Bhg. dato’ ng Jui sia)non-Independent non-executive director

Mr. Hui Choon Kit holds a Bachelor of Business degree from Curtin University, Australia and a Master of Business Administration degree from Nanyang Technological University, and is a member of the Institute of Singapore Chartered Accountants.

He is currently the Chief Financial Officer of the Fraser and Neave, Limited Group and is responsible for the Group’s corporate finance, treasury, accounting, taxation, information technology and investor relations functions.

Mr. Hui joined the F&N Group in February 2000 as Senior Manager, Business Development and has held a number of other positions. Prior to joining the F&N Group, he worked as a corporate finance banker based in Singapore and Thailand, covering the Asia-Pacific region. He commenced his career as an accountant and financial consultant with Ernst & Young.

Mr. Hui was appointed as an Alternate Director to Dato’ Ng Jui Sia on 29 August 2013. He does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company except that he is a nominee director of Fraser and Neave, Limited, a major shareholder of the Company.

tOnG sInG enG

singaporean, age 56non-Independent non-executive directormember of Group executive committee

Ms. Tong Sing Eng graduated with a Bachelor of Arts Degree (Honours) from the National University of Singapore.

She has worked extensively in the food and beverage industries, covering both alcoholic and non-alcoholic as well as retail and manufacturing aspects of the category. Having worked in well-established multinational corporations including Pepsi, Bacardi Martini and A.S.Watson’s Industries, between 1989 and 2011, focusing on growth markets in North Asia, South East Asia and Australia over the past decades, Ms. Tong has in-depth understanding of both the consumer and customer dimensions of the business, specifically in marketing and commercial development across Asia Pacific.

Currently, Ms. Tong serves as Business Development & Strategic Planning Director, Non-Alcoholic, Food & Beverage Division of Fraser and Neave, Limited, focusing on licensee management and new business development.

Ms. Tong was appointed to the Board on 7 May 2012. She does not have any family relationship with any director and/or major shareholder of the Company, nor any personal interest in any business arrangement involving the Company except that she is a nominee director of Fraser and Neave, Limited, a major shareholder of the Company.

Note: None of the above Directors have committed any offences which require disclosure pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.



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BOard Of dIrectOrsIndependent non-executive chairman y.a.m. tengku syarif Bendahara Perlissyed Badarudin Jamalullail Ibni almarhum tuanku syed Putra Jamalullail

Independent non-executive directors y.Bhg. dato’ anwarrudin bin ahamad Osman

chin kwai yoong (appointed on 23 January 2013)

y.Bhg. dato’ Johan tazrin bin hamid ngo (appointed on 23 January 2013)

non-Independent non-executive directors anthony cheong fook seng

y.Bhg. dato’ Jorgen Bornhoft (appointed on 7 May 2013)

lee kong yip

y.Bhg. dato’ dr. mohd shahar bin sidek

y.Bhg. dato’ ng Jui sia

y.Bhg. dato’ dr. nik norzrul thani bin nik hassan thani

tong sing eng

hui choon kit(Alternate Director to Y.Bhg. Dato’ Ng Jui Sia) (appointed on 29 August 2013)

cOmPany secretarysoon wing chongMICPA 3508

GrOuP executIve cOmmItteechairmany.a.m. tengku syarif Bendahara Perlis syed Badarudin Jamalullail Ibni almarhum tuanku syed Putra Jamalullail

vice chairmany.Bhg. dato’ ng Jui sia (appointed on 6 August 2013)

membersy.Bhg. dato’ anwarrudin bin ahamad Osman

anthony cheong fook seng

lee kong yip

tong sing eng

chin kwai yoong (appointed on 23 January 2013)

y.Bhg. dato’ Jorgen Bornhoft (appointed on 10 June 2013)

audIt cOmmItteechairmanchin kwai yoong (appointed on 23 January 2013)

membersy.a.m. tengku syarif Bendahara Perlissyed Badarudin Jamalullail Ibni almarhum tuanku syed Putra Jamalullail

y.Bhg. dato’ anwarrudin bin ahamad Osman

anthony cheong fook seng

y.Bhg. dato’ Johan tazrin bin hamid ngo (appointed on 23 January 2013)

nOmInatInG cOmmIttee chairmany.a.m. tengku syarif Bendahara Perlissyed Badarudin Jamalullail Ibni almarhum tuanku syed Putra Jamalullail

memberschin kwai yoong (appointed on 23 January 2013)

y.Bhg. dato’ ng Jui sia (appointed on 6 August 2013)

remuneratIOn cOmmIttee

chairmany.a.m. tengku syarif Bendahara Perlissyed Badarudin Jamalullail Ibni almarhum tuanku syed Putra Jamalullail

memberslee kong yip

y.Bhg. dato’ anwarrudin bin ahamad Osman(appointed on 23 January 2013)

y.Bhg. dato’ ng Jui sia (appointed on 6 August 2013)

share Buy-Back cOmmItteechairmany.a.m. tengku syarif Bendahara Perlissyed Badarudin Jamalullail Ibni almarhum tuanku syed Putra Jamalullail

memberslee kong yip

y.Bhg. dato’ anwarrudin bin ahamad Osman(appointed on 23 January 2013)

rIsk manaGement cOmmItteechairmanlee kong yip*

memberschin kwai yoong*

anthony cheong fook seng*

*appointed on 19 June 2013

GrOuP manaGement somsak chayapongChief Executive Officer

soon wing chongChief Financial Officer

david hoong cheong waiHead, Group Human Capital

mayeen wong may funGroup Company Secretary

timothy Ooi aik tuanHead, Group Legal

soh swee hockHead, Group Corporate Services

suhailah mohamed abdullaHead, Group Internal Audit

BusIness unIt senIOr manaGementsoft drinks: khalid alviManaging Director

dairies: tan hock BengManaging Director, Dairies Malaysia

karn chitaravimol Managing Director, Dairies Thailand

Property:Ir. cheah hong chongGeneral Manager

reGIstered OffIceLevel 8, F&N PointNo. 3, Jalan Metro Pudu 1Fraser Business Park, Off Jalan Yew55100 Kuala LumpurT: 603-9235 2288F: 603-9222 7878

audItOrsernst & youngLevel 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala Lumpur

share reGIstrartricor Investor services sdn BhdLevel 17, The GardensNorth Tower, Mid Valley CityLingkaran Syed Putra59200 Kuala Lumpur, MalaysiaT: 603-2264 3883 F: 603-2282 1886

PrIncIPal BankersOCBC Bank (Malaysia) BerhadDeutsche Bank (Malaysia) BerhadCitibank Berhad

stOck exchanGeBursa Malaysia Securities Berhad : Main MarketStock Name & Code : F&N 3689Stock Sector : Consumer Products

daIrIes thaIland

PrOPerty OtherssOft drInks

daIrIesmalaysIa

COrpOrateinFOrMatiOn

COrpOrate struCture

100%F&N Beverages Manufacturing Sdn Bhd

100%Borneo SpringsSdn Bhd

100%F&N BeveragesMarketing Sdn Bhd

100% F&N Beverages (Thailand) Limited

100% F&N Dairies (Thailand) Limited

100% Fraser & Neave (Malaya) Sdn Bhd

100% F&N Capital Sdn Bhd

100% Four Eights Sdn Bhd

100% F&N Dairies(Malaysia) Sdn Bhd

100% F&N Dairies Manufacturing Sdn Bhd (formerly known as PML Dairies Sdn Bhd)

100% F&N Dairies Distribution (Singapore) Pte Ltd. (formerly known as Arolys Singapore Pte Limited)

100% Lion Share Management Limited

100% F&N Foods Sdn Bhd

100% Premier Milk (Malaya) Sdn Bhd

100% F&N Properties Sdn Bhd

100%Wimanis Sdn Bhd

100% Elsinburg Holdings Sdn Bhd

100% Greenclipper Corporation Sdn Bhd

100% Nuvak Company Sdn Bhd

100% Utas Mutiara Sdn Bhd

100% Tropical League Sdn Bhd

100% Kuala Lumpur Glass Manufacturers Company Sdn Bhd

70% Lettricia Corporation Sdn Bhd

50% Vacaron Company Sdn Bhd

as at 30 sePtemBer 2013

Business reView030 CEO’s Message034 Soft Drinks040 Dairies Malaysia 046 Dairies Thailand 052 Property

Creating treasured moments everyday

F&N has been creating treasured moments in the daily lives of Malaysians over the last 130 years by building on our commitment to quality and innovative products to create meaningful and enduring partnerships with our consumers. A key ingredient in many

favourite Malaysian dishes, desserts and refreshments, F&N’s dairy products and juices are enjoyed at every hour of the day.

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030CEO’s MessageCeO’s

MessaGe

delivering crediBle and sustainaBle Business groWtH to stakeHoldersIt is a privilege and honour to present my maiden CEO’s message to shareholders of Fraser & Neave Holdings Bhd for our financial year ended 30 September 2013 which significantly marks the beginning of our 130th anniversary commemoration.

The endurance, longevity and pervasiveness of the F&N brand are reflective of the confidence, trust and loyalty of our legions of consumers, customers and our people. In addition, this has led to its unique position as one of a handful of brands in the world that has been through various evolutions while retaining its peerless affinity and brand equity in the face of competition from leading global brands.

Our performance in the year under review is testament to our robustness to evolve and transform in the face of ever growing cost and market pressures. We are proud to deliver another set of impressive results in keeping with our commitment to deliver credible, positive and more importantly, sustainable business growth to our stakeholders.

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032CEO’s MessageCEO’s Message

41% Soft Drinks

18% Dairies Malaysia

41% Dairies Thailand*

Group Operating Profit

41% Soft Drinks

28% Dairies Malaysia

31% Dairies Thailand

Group Revenue

RM3.51 +10.6% RM308.7from FY2011/12billion

Group Revenue

million

Group Profit before Tax

+34.1% from FY2011/12

Performance OverviewBuilding on the transformational journey which began in 2011/2012, we are pleased to record solid double digit growth of 10.6 per cent and 35.1 per cent respectively in group operating revenue and operating profit while profit before tax registered an impressive 34.1 per cent improvement.

Thanks mainly to the strong performance from the soft drinks unit and the significant post-flood full year contribution from Dairies Thailand, revenue grew to RM3.51 billion from RM3.17 billion while operating profit and profit before taxation rose from RM231.4 million to RM312.7 million and RM230.2 million to RM308.7 million respectively.

It should be noted that profit after tax, however, eased 4.9 per cent to RM260.6 million due to the absence of deferred tax assets recognition.

The performance in the year in review can be attributed to the sustained efforts of the Group’s dedicated work-force and its trade partners in strengthening and deepening our market presence and penetration throughout the soft drinks and dairies businesses.

The Group’s top-line performer was the soft drinks division whose contribution was buoyed by higher volume sales, delivering RM1.46 billion up from RM1.36 billion previously followed by a strong comeback by Dairies Thailand from the calamitous floods to record RM1.08 billion in revenue from RM770.6 million in the preceding year.

Intense trade competition within the canned milk arena in Malaysia saw Dairies Malaysia’s revenue dip 6.3 per cent from RM1.04 billion to RM974.4 million. Dairies Malaysia turned in a higher operating profit due to the absence of accelerated depreciation incurred in the shift to our state-of-the-art Pulau Indah plant, which was recognised in the corresponding period last year.

Our brands, many of which are household names trusted by generations, continue to be an integral part in the lives of our consumers as evidenced by our market leadership positions, thanks to the consistent support from our consumers, customers and trade partners.

The soft drinks division, Malaysia’s largest soft drinks manufacturer and distributor, secured higher volume from all product lines while its new product offerings, namely myCola, 100PLUS EDGE and OISHI performed within expectations. The strong performance bolstered F&N’s 27 per cent market leadership of the overall ready-to-drink (RTD) market with increasing trade distribution and presence.

100PLUS, winner of the Putra Brand award 2013, maintained its leadership as the number one brand in the carbonated soft drinks (CSD) market in the country while edging ahead with a lion’s share of over 80 per cent in the isotonic segment.The successful reformulation and rebranding of F&N SEASONS Soya as F&N NutriSoy, saw F&N NutriSoy taking the No.1 position in the soya category.

Dairies Malaysia maintained its overall volume sales despite intensive market competition but revenue decreased on sales of lower margin products. In view of the extremely competitive market, the division focused on building its core market leadership in the Sweetened Condensed Milk (SCM) and Evaporated Milk segments while driving export growth and improving operational efficiency, capitalising on the new state-of-the art manufacturing plant in Pulau Indah.

market leadershIP

synerGIstIc BenefIts

nurturInG talents

With a sharp focus on revitalising its brands through brand repositioning and product innovation, which include the launch of F&N High Calcium Sweetened Creamer, the division maintained its undisputed No.1 position in the canned milk segment with more than half of total market share in both SCM and Evaporated milk segments. Dairies Malaysia also recorded strong volume growth in the RTD milk segment.

The new Dairies Malaysia manufacturing plant’s strategic location within the Selangor Halal Hub will be leveraged for the Group’s dairy products to penetrate the halal markets in Asia, the Middle East and Europe.

Meanwhile, Dairies Thailand made an impressive comeback with strong yearly domestic sales, which is reflective of its aggressive post flood recovery initiatives. All brands have attained pre-flood market position and distribution channels have also reached the pre-flood level. Dairies Thailand also benefitted from the final flood insurance claims amounting to RM49.3 million, which contributed to its operating profit this financial year.

Besides strengthening its market position for its Evaporated Milk and Sweetened Beverage Creamer segments, Dairies Thailand increased its network of distributors while increasing the number of new distribution points. The business unit also focused on accelerating growth in Indochina.

The change in the ultimate ownership of the Group with the emergence of the TCC Group as a major shareholder avails and enhances synergistic benefits arising from the Group being part of one of Thailand’s leading conglomerates and established international players.

As in every organisation, the employees are one of the most critical assets of the Group and I appreciate, applaud and commend the continued commitment, hard work, dedication and professionalism of the management and staff of the F&N Group that has enabled us to record credible year-on-year performance despite the various challenges we had to endure.

Our workforce has become more diverse and the environment in which we work has become faster-paced, more demanding and complex. Employees are continuously challenged to innovate, adapt and change. Emphasis on building competencies through cross-fertilisation and placement of employees within the various business units will be implemented, as we journey to achieve our vision and mission.

Developing our human capital at all levels continues to be emphasised in our organisation, and this year, the Group invested some 4,000 man hours in soft skills development.

We are pleased to note that the F&N Management Associate Programme has been chosen as the finalist for the

Best Management Trainee/Graduate Programme in the Graduate Recruitment Awards 2013. Furthermore, for the second consecutive year, we have been recognised as one of Malaysia’s 100 Leading Graduate Employees.

Another feather in the cap for us is being one of the winners at the 2013 ITC Excellence Awards, which is one of Asia’s leading recognition programmes by analyst firm IDC Asia/Pacific and Fairfax Business Media Asia for the most progressive and effective enterprise IT deployments. This year, there were seven categories with 197 entries from various industries all over Asia. Our winning entry was Project GOLD, which was our Google Apps deployment project under the Change Management category.

sustainable performance and at the same time, ensuring the wellbeing of the communities and the environment we are operating in.

In addition, as we forge ahead we will strive towards being the best-in-class in all of our operations, be it being the lowest cost producer or having the most effective and efficient distribution network and supply chain in the business. In this best-in-class journey, there must be commitment, not only from the leadership, but also from the entire team in the Group.

The divisions under the F&N Group are committed to working together towards making F&N a world-class food and beverage player in the region. The many accolades we received this year which among others include the Thai Energy Awards 2013, ASEAN Energy Awards 2013 and the 2013 Frost & Sullivan Malaysia Excellence Awards have further fueled our mission and shows that we are most certainly on track.

Our unrivalled heritage of 130 years of trust by generations, our widely recognised and valued brands, unparalleled marketing and distribution network, a sound balance sheet and a dedicated workforce all augur well for the future of the Group to become the leading food and beverage player in the region.

In the near term, the operating environment will remain challenging especially with increasing global commodity prices, the expected volatility in the US Dollar and other foreign currencies. However, with the Malaysian and Thai economies expected to perform better in 2014, thanks to improving exports and domestic demand, we look forward to an even stronger performance in the new financial year.

Yours sincerely,

sOmsak chayaPOnGChief Executive Officer30 November 2013

GOInG fOrwardThe Master Plan for the Section 13 integrated property development project has been approved. The Property Division is now proceeding with the land conversion and lease extension. The RM1.8 billion development project is a joint venture with our Singapore-based sister company, FCL Centrepoint Pte Ltd. The residential portion of the project is expected to be launched in the fourth quarter of the next financial year.

Our aspiration going forward is to drive the evolution of the F&N Group as a high performance organisation and among the most admired companies in the country by people both within and outside the Group.

Strong distribution, though essential is not all encompassing, as there is need for the right product, right distribution network, right marketing activation and the right communication in the market place. Enhancing our competitiveness is key to remaining relevant amongst our consumers and to be ahead of our competitors.

Our continued success in the years ahead will, as always, hinge on our enduring partnership with our customers, suppliers, distributors and investors in generating

Synergies and opportunities with the Thai Beverage Group include leveraging on regional distribution networks, product development capabilities, portfolio of leading beverage brands and best practices sharing. Some of these initiatives are already bearing fruit including the introduction of OISHI ready-to-drink green tea into Malaysia and cost savings through joint procurement of packaging material by F&N Group and OISHI.

In line with our aspiration to be a regional world class food and beverage player, we will relentlessly pursue the sharing of best practices and benchmarking within the enlarged group with the objective of optimising our strengths towards greater operational and cost efficiency.

* Inclusive of flood insurance claims

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1,361

1,457

113130

761

731

Revenue(RM million)

Operating Profit(RM million)

Assets Employed(RM million) Business Review

Soft Drinks

sOft drInks

100PlusThe brand’s ability to empower consumers across a wide cross-section has propelled 100PLUS to become Malaysia’s number one isotonic drink, as well as the top-selling brand within the ready-to-drink beverage market. Over one million people rehydrate, refresh and re-energise with 100PLUS every 24 hours in Malaysia, and the number continues to grow steadily.

100PLUS continued to garner more awards, adding the Putra Brand Award 2013 - Gold in the Non-Alcoholic Beverage category during the year to edge ahead with a lion’s share of over 80 per cent in the isotonic segment. 100PLUS was also ranked No.2 in Malaysia’s Top Ten Brands in the Superbrands 2013 survey conducted by BDRC Asia as well as being named the Best Isotonic Drink at the Malaysia Women’s Weekly Domestic Diva Awards 2013. To further entrench 100PLUS’ position as Malaysians’ favourite soft drink, the division launched 100PLUS EDGE in November 2012 and the Malaysia on the Move campaign from May to August 2013 while continuing to support numerous sporting competitions.

cOnsumer favOurItes

Business reView

FY13’FY12’ FY12’ FY13’ FY12’ FY13’

Soft drinks division pulled in an exceptionally strong performance for the financial year 2013, overcoming a generally sluggish economy domestically as well as intense competition to increase sales significantly by 7.1 per cent. Its growth outpaced the market and further widened the gap with competitors, entrenching F&N soft drinks division’s position as Malaysia’s premier soft drinks manufacturer and distributor.

OvervIew

The year was marked by the launch of three new products namely myCola, 100PLUS EDGE and OISHI, and strengthened business fundamentals across the entire value chain from production to distribution, marketing and sales. Continued focus on building partnerships and expanding the distribution network contributed to increased product penetration and brand presence throughout the country. In addition, the launch of myCola in Sabah and Sarawak positively accelerated the division’s plans to enhance its business in East Malaysia.

Total sales from the soft drinks division increased from RM1.36 billion to RM1.46 billion, making it once again the top-line performer in FNHB’s stable. Over and above its financial achievements, the year was made especially memorable when F&N Beverages Marketing Sdn Bhd won the 2013 Frost & Sullivan Malaysia Excellence Award in the non-alcoholic beverage company category, in recognition of best practices and outstanding performance.

100PLUS is consumed by

more than

1,000consumers every minute, every day

f&n seasOns

No.1rtd tea Brand

f&n seasOns nutrisoy

No.1 soya Brand

1.8million homescarry F&N soft drinks in their pantry/home

100Plus

No.1Isotonic drink in malaysia

100PLUS EDGE is a non-carbonated option of the isotonic drink, catering specifically to those who prefer non-gaseous beverages. The Malaysia on the Move campaign, meanwhile, adopted various approaches to inspire a more active lifestyle including a fun and effective app highlighting moves that take only a few minutes and which can be done anytime, anywhere. The campaign was taken on a nationwide roadshow that featured celebrities such as Scha Alyahya and Bunkface.

In the sporting arena, 100PLUS continued to be a strategic partner in national competitions such as the Education Minister’s under-14 League Cup for football, the 51st Tun Abdul Razak Cup 2013 for hockey, and the 100PLUS Badminton Asia Youth Under-19 Championships. It also recognised outstanding Malaysian footballers at the annual 100PLUS-Astro Arena-FAM National Football Awards 2012. Among the winners was Selangor’s Safiq Rahim who was named Best Midfielder.

Meanwhile, world No.1 badminton star Datuk Lee Chong Wei, world-class diving ace and Olympic bronze medallist Pandelela Rinong, and national football players Safee Sali and Khairul Fahmi Che Mat continued as 100PLUS brand ambassadors.

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Business ReviewSoft Drinks

f&n fun flavoursAmid increased competition from global players, F&N Fun Flavours reinforced its leadership as the No.1 Flavoured Carbonated Soft Drinks brand with innovative and fun competitions that created a buzz. F&N Gempakz contest lets anyone with an F&N Fun Flavours drink share a shoutout via a mobile app and their message got to be featured on a giant billboard for public viewing. Participants stood to win handphones, tablets, cameras and other prizes on a

mycolaEast Malaysians with a penchant for cola drinks received the perfect year-end bonanza when F&N launched its very own myCola brand in Sabah and Sarawak. F&N chose to launch myCola first in Sabah and Sarawak, in a show of appreciation for the continuing support and brand loyalty of East Malaysia consumers.

Designed with market tastes in mind, pre-launch surveys showed that over 70 per cent of the respondents liked it compared to current cola leaders. With its competitive pricing, coupled with refreshing taste, the drink garnered six per cent of the cola market in East Malaysia within nine months. myCola complements the existing F&N Fun Flavours range and consumers can be assured of the great taste and superior quality of F&N that they have been accustomed to for over four generations.

f&n fun flavours

No.1flavoured carbonated soft drinks brand

f&n seasOns Strong festive presence in the markets with great consumer offerings drove significant growth in the F&N SEASONS range of products. Sales were further enhanced by the introduction of F&N SEASONS NutriSoy in June 2013, which is made with more soya beans hence contains more protein and a richer soya taste. With a heart as part of its logo, the rebranding emphasises on the goodness of soy protein which lowers cholesterol, is lactose-free and low in fat.

The new brand proposition coupled with effective marketing led to F&N SEASONS NutriSoy quickly becoming the No.1 soya drink in the country. An added feather in the cap of F&N SEASONS NutriSoy less sweet was being named the Best Soya Milk at the Malaysia Women’s Weekly Domestic Diva Awards 2013.

Meanwhile, F&N SEASONS range of teas continued to dominate the market and create excitement with fun and innovative contests for food-loving Malaysians. The Ice Passionfruit Green Tea launch was accompanied by the Inspire the Passion in You online contest with

hitz.fm. Winners had a cookout session, baking passion fruit cupcakes with Jin from the hitz.fm Breakfast crew. In the Jom Nom Nom with F&N SEASONS online contest, consumers were invited to share photos of their favourite food haunts across the four regions in Malaysia. The winning photo in each region won its photographer a free ‘makan’ session with friends hosted by F&N SEASONS and deejays from hitz.fm, MY FM and Sinar FM.

In the Asian Soft Drinks segment, which includes F&N SEASONS Chrysanthemum, Grass Jelly, Winter Melon and Water Chestnut, sales grew over 20 per cent contributed by strong festive activation. The year was also marked by the ever-popular F&N SEASONS Grass Jelly being named the Best Non-Carbonated Drink by the Malaysia Women’s Weekly Domestic Diva Awards 2013.

weekly basis for eight weeks and a main prize for the highest number of entries sent.

This innovative and interactive campaign won the:• 2013MarkiesAward forBestUserof

Apps• 2013MalaysianMediaAward-Goldfor

Best Use of Digital “Online/Interactive/Mobile”

• 2013MalaysianMediaAward -Silverfor Best Use of TV

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OIshIThe F&N range of teas was enhanced with the launch of OISHI Green Tea in August 2013, which stands apart from other brands by being 100 per cent brewed from natural tea leaves grown on certified organic plantations, once again catering to health-conscious Malaysians. OISHI, which means ‘delicious’ in Japanese, has been available in Thailand since 2003 where it has established itself as the leader in the competitive ready-to-drink green tea market. The division expects the same market response in Malaysia, where OISHI Green Tea is fast gaining ground.

f&n Ice mOuntaInF&N Ice Mountain continued its steady ascent in terms of popularity, with sales over 20 per cent during the year supported by enhanced distribution and accessibility as well as strategic advertising on billboards, LRTs and buses. The bottled water’s increasing market presence was reflected in it winning Gold in the Water Category at the Reader’s Digest Trusted Brand Awards 2013.



strateGIc PlannInG & marketInG Operationally, a key highlight of the year was better demand forecasting and production planning, which created significant trade efficiencies. More efficient demand forecasting also supported the division’s strong festive presence in the markets.

Efforts in strengthening the depth and width of our distribution network have increased soft drinks’ coverage by almost 5,000 additional outlets nationwide, further reinforcing F&N’s position as the most pervasive of fast moving consumer goods products in the country.

At the same time, the division continued to build its partner relationship with third-party logistics providers, distributors and key customers to further enhance its go-to-market capabilities with a stronger and more extensive delivery network.

PeOPle develOPmentAs competition in the industry heightens, soft drinks division has been focusing more intensely on building the capabilities of its human resources. Various institutionalised processes have been put in place to develop the strengths of the leadership team and to align these with the unique dynamics of the soft drinks market in order to transition from being good to great.

The division’s investment in training and development has helped to nurture a stronger team able to design and execute programmes that lend the soft drinks division a competitive advantage in the midst of an expanding sea of beverage choices.

OutlOOkThe division expects competition to continue to intensify in FY2014 along with an increasing cost of business as the price of ingredients, materials, transport and other operating essentials escalate. Consequently, there will be greater pressure on effective consumer engagement and service, areas in which the division is already focusing on. To step up its game, the division will enhance all efforts to build its partner relationships in order to create greater synergies, while enhancing internal efforts to increase capacities.

Despite the challenges, soft drinks division is confident of capitalising on its operational strengths and business fundamentals to continue to outpace the fast growing ready-to-drink market. It further aims to invest in new products and brand innovations to cater to changing lifestyles thus deliver greater value to its customers.

FY2014 began with a 100PLUS Win the Day campaign to create greater awareness of how 100PLUS contributes not only to agile bodies but also to agile minds that are able to overcome daily challenges. Focusing on more strategic campaigns and leveraging on its regional positioning to enter new markets, FY2014 promises to be as invigorating and exciting as soft drinks’ brand propositions and flavours.

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daIrIes malaysIa

At the same time, favourable raw material and packaging prices added to increased cost efficiencies across the entire value chain – from enhanced operations at the new manufacturing plant in Pulau Indah to a more streamlined and market sensitive distribution system. This led to RM20 million in cost savings which contributed to the higher operating profit from RM33 million to RM55 million in FY2013. Revenue, however, eased by 6.3 per cent from RM1.04 billion to RM974.4 million due to continuing intense trade price competition, both in the domestic and international markets.

Some of the cost savings achieved during the year was ploughed back into trade spend in order to further build the value of the different brands. This saw numerous innovative campaigns, promotions and consumer activation workshops that caught the imagination of Malaysians and reinforced their affinity with Dairies Malaysia’s products.

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It was, in many ways, a year of transition for Dairies Malaysia; the relocation of its office from Petaling Jaya to Fraser Business Park in February 2013; first full year of operations at its new and state-of-the-art manufacturing plant in Pulau Indah; first full year of managing the distribution of its entire product range, having re-claimed the distribution of products that were previously handled by Nestle; and a year in which it further expanded its export market. Despite having to invest in these structural changes, it was a successful year with several notable achievements which positioned Dairies Malaysia well to pursue The Way Forward.

Despite continued competition which created a downward pressure on prices, Dairies Malaysia chalked up a very commendable performance in FY2013. With a sharp focus on revitalising its brands, the division maintained its undisputed leadership in the canned milk segment, while also increasing sales of its pasteurised and sterilised milk brands.

F&N Dairies Malaysia business indirectly provides a source of livelihood at

60,000tOuchPOInts,which in turn service 7 million households out of a population of 29 million Malaysians

almOst

2/3 Of hOusehOldsconsume Sweetened Condensed Milk largely produced by F&N Dairies Malaysia

200 muGsof beverages brewed with F&N Dairies Sweetened Creamers consumed in Malaysia per annum

f&n dairies sweetened condensed milk and evaporated milk is the undisputed

no.1 market leader in malaysia in terms of sales and revenue

Business ReviewDairies Malaysia

cOnsumer favOurItes

For Gold Coin, which has traditionally been the Sweetened Creamer of choice at coffee shops and restaurants, Dairies Malaysia increased its value-add services to loyal outlets by offering functional items such as aprons and glasses.

While F&N is the undisputed market leader in the Evaporated Milk segment, the current penetration in Malaysia is half that of Sweetened Condensed Milk, hence there exists much potential to further grow this segment. Towards this end, Dairies Malaysia focused on increasing consumers’ awareness of the many applications of evaporated milk as a healthier, sugar and cholesterol-free option in food and beverage preparation. From December 2012 to September 2013, the Carnation team was on a mission to introduce the use of Carnation Evaporated Creamer in preparing simple, tasty and healthy breakfasts.

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canned mIlkDairies Malaysia reinforced its leadership in the canned milk segment by launching a new value-add product while actively engaging consumers in various promotions to heighten the image and credibility of its already well-loved brands.

In November 2012, the F&N Hi-Calcium Sweetened Creamer was launched to meet consumers’ evolving needs for functional benefits, forming part of the division’s continuing efforts to differentiate the F&N brand and enhance the value proposition of F&N Sweetened Creamer. Not only is the creamer fortified with calcium but it also contains vitamin D3 to aid in the absorption of the bone-strengthening mineral.

This was followed by a two-month nationwide consumer promotion in which consumers who submitted two labels of any F&N Sweetened Creamer product stood to win various prizes, including the grand prize of a Mazda CX-5. The contest attracted a lot of attention and led to a higher than targeted increase in sales.

Another highly successful campaign, held from March to April 2013, offered purchasers of Tea Pot products, the chance of winning a RM30,000 home makeover by celebrity interior designer, Eric Leong. The contest continued to draw attention even after the winner was announced as the whole town watched the home being transformed in time for Hari Raya. The contest and high visibility through point-of-sales at retail outlets helped to increase Tea Pot’s market share.

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ready-tO-drInk JuIces and mIlkTo promote its ready-to-drink (RTD) Milk and Juices brands, Dairies Malaysia held numerous in-store campaigns.

Farmhouse, the 100 per cent imported Australian premium fresh milk, is renowned for its high quality and pure natural taste of milk. Farmhouse saw double digit growth due to the growing acceptance by consumers and customers alike. Farmhouse tied up with Secret Recipe for a free cake promo during Christmas period.

Farmhouse also built affinity with the barista community by supporting the Malaysia Barista Championship 2013. Loyal Farmhouse consumers were rewarded with various limited edition gifts in the brand’s Drink and Redeem loyalty programme, which ran from May to July 2013.

F&N Magnolia’s wide range of milk, from nourishing SMOO cow milk for children to delicious fresh milk treats for adults, brings satisfaction to all generations in the family. As F&N Magnolia Sterilised Milk is the milk of choice among the local Indian community for Thaipusam festivities, the division prepared exclusive merchandising and point-of-sale at various retail outlets to ensure high visibility and availability during this period. Among other special promotions organised, consumers who purchased F&N Magnolia Milk were entitled to up-size their Chatime drinks and redeem free King’s Confectionery donuts.

For Juices, one of the strategic focuses was to highlight the nutritional value of the products. For example, for the high-end fresh Sunkist juice, consumers’ attention was drawn to the fact that each liter contains freshly squeezed juice of 16 oranges.

Meanwhile, within the F&N Fruit Tree Fresh range, the focus was on the no-sugar added products that are also high in anti-oxidants. Consumers love this healthier and great-tasting range and a double digit volume growth was achieved this year. A key differentiator for F&N Fruit Tree Fresh is the selection of tropical fruits loved by Malaysians. The Ramadan promotion that offered free tickets to Istanbul and Dubai was exceptionally popular.

each lIter Of fresh sunkIst JuIce cOntaIns

freshly squeezed OranGes

Carnation Quick Kitchen mobile kiosks were set up at high traffic locations such as LRT stations, shopping malls and office buildings offering passers-by a combination of a hot drink and an omelette sandwich (both prepared using Carnation Evaporated Creamer) for only RM2. The offer proved so irresistible that long queues were seen at the kiosks and the value meals were sold out within an hour.

Further reinforcing the application of Carnation in food, Dairies Malaysia collaborated once again with celebrity chef, Amy Beh to demonstrate how evaporated milk can be used to enhance the flavour of favourite Malaysian dishes. A series of 20 Carnation Cooking Workshops with Amy Beh was held across Peninsular Malaysia from May to September 2013 at which, for the first time, participants were invited to join the renowned chef in preparing the dishes. At the end of the workshops, participants went home with Carnation recipe books and goodie bags. In conjunction with these workshops, a home recipe competition was also held.

Dairies Malaysia made the most of the Food and Beverage Expo (FoodBEX) held from 23 to 25 August 2013 at the Mid Valley Exhibition Centre which attracted over 30,000 visitors a day. Its booth at Malaysia’s largest food and beverage expo was one of the most popular thanks to the food tasting and cooking demos, product sampling and special offers. F&N’s range of Evaporated Milk products took centre stage with the introduction of the F&N Kahwin concept, a less sweet yet creamier choice by combining F&N Evaporated Creamer with F&N Hi-Calcium Sweetened Creamer. Local celebrity chefs Marina Mustafa and Amy Beh showcased the versatility of the products, preparing dishes such as ayam kapitan, Thai laksa, mee rebus and pengat labu bersago. Other brands showcased were Tea Pot, Sunkist, F&N Fruit Tree Fresh and F&N Magnolia.

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Increased effIcIency and caPacIty

Dairies Malaysia celebrated its first full year of operations at the new manufacturing plant in Pulau Indah, which was officially launched on 2 October 2013 by H.R.H. Sultan of Selangor.

The cutting edge capabilities at the plant include automated production quality control systems that provide tracking and traceability of raw materials, intermediate products and finished goods; a hole-in-the-wall can manufacturing capability that ensures a just-in-time system to reduce inventory; integrated energy management system to promote real-time energy management and conservation; heat recovery technology to reclaim and recycle heat generated during manufacturing; and sustainable packaging innovations such as nitrogen filling which keeps products fresher longer.

OutlOOkDairies Malaysia is confident that with the right mix of sales and marketing strategies, it will be able to continue to expand both domestically and overseas. This is in spite of the market environment in FY2014 expected to be as challenging as it was in FY2013, with increased competition within the industry, continued volatility of

These capabilities, coupled with an initial capacity to produce 500 million cans per annum, lend Dairies Malaysia the twin benefits of production efficiencies and economies of scale to support its aspiration to expand further in the global market. During the financial year itself, Dairies Malaysia increased its export reach from 36 countries to 45. There are plans to double the export volume by year 2018, from 20 per cent of the plant’s total output currently.

In the longer term, the plant supports Dairies Malaysia’s vision to enhance and broaden its product offering to become a total dairy player within the next decade.

In recognition of Dairies Malaysia’s continuous commitment towards meeting safety practices in accordance with international standards, the OHSAS 18001:2007 Occupational Health and Safety Management Systems Certification has been duly renewed for another three years at the new dairies manufacturing plant in Pulau Indah.

This year, Dairies Malaysia also added the FSSC 22000:2010, an International Standard developed for the certification of Food Safety Management Systems to its list of accreditations.


F&N Kahwin Concepta less sweet yet creamier choice by combining f&n sweetened creamer and f&n evaporated creamer

raw materials and packaging prices, and a more sophisticated, price-discerning and health-conscious consumer base.

Increased customer and consumer engagement with heightened awareness of product applications are expected to contribute to further growth of Sweetened Condensed Milk and Evaporated Milk within Malaysia, at a rate surpassing that of the single digit growth rate of the industry. Given the halal certification of its products, the division also expects to be able to push its brands further into the international space, and particularly in halal markets such as in Africa, the Middle East and Indonesia. Within the value-for-money Sweetened Condensed Milk segment, Dairies Malaysia will continue to build brand loyalty with customers thus growing the market share of Gold Coin and Tea Pot. Targeted efforts will be made to educate consumers on requesting for the F&N Kahwin concept when having a beverage.

Similarly, initiatives to offer healthier value-for-money choices to consumers are expected to drive growth within the RTD business encompassing ambient milk, chilled milk and chilled juices.

Having come through a year of transition with a stronger profit profile, Dairies Malaysia is confident of building on its strengths as it continues along The Way Forward, charting even better progress in FY2014 and beyond.

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cOnsumer favOurItes

canned mIlkCarnation Evaporated Milk is the market leader in the evaporated milk category topping the premium segment, while Tea Pot is an established favourite among local beverage operators in the standard segment.

Revenue(RM million)



Financially, Dairies Thailand achieved its best ever profit on the back of Baht 10.8 billion (RM1.08 billion) in revenue, the first time it exceeded the Baht 10 billion mark. This also represented a 40 per cent increase from its revenue of Baht 7.71 billion (RM770.6 million) in the previous financial year.

Dairies Thailand’s performance was supported by its export business to Indochina, which grew 28 per cent and recorded another financial milestone by exceeding Baht 1 billion in sales. Cambodia remained its key foreign market, accounting for more than 60 per cent of total exports, however growth was also seen in Myanmar, Laos and Vietnam.

The year also marked the close of the Group’s flood insurance claim of over Baht 1.6 billion for property damage and business interruption, inclusive of Baht 493 million received in this financial year, which also contributed to Dairies Thailand’s operating profit.

OvervIew

It was an exceptionally busy 12 months for Dairies Thailand, where the team went all out to rebuild its brands in the first full year after severe floods had stalled production at the Rojana Industrial Park plant for about 200 days from October 2011. The results speak for themselves: not only did its brands re-capture their market share, but in the canned milk and liquid milk categories, the products gained even more ground.

dairies thailand achieved

Baht 10 billionrevenue mark

yOy revenue

+40%After the recovery of the F&N Rojana plant, production of Carnation and Tea Pot swung into top gear to meet distribution demands. Marketing activities were implemented to help support and drive sales, including a special promotion featuring premium paper cups with unique designs which proved popular among beverage operators. Carnation and Tea Pot also supported operators by renewing over 15,000 sets of merchandising materials to further promote the brands among consumers.

Carnation Evaporated Milk’s market share quickly grew to 61 per cent by end FY2013 as the production line resumed, coupled with strategic advertising including the ‘Hunting Deliciousness Hunting Carnation’ campaign.

Tea Pot, meanwhile, embarked on a new nationwide ‘Happiness Thailand’ campaign which included a TV commercial and below the line activities. It also continued to support new small and medium-sized businesses with Roti and Cha-chak Training free of charge, which helped to enhance Tea Pot’s brand image as well as increase its usage.

Meanwhile, BEAR BRAND GOLD highlighted its seven health benefits for consumers’ everyday needs – namely Vitamins B12, C, A, D and E, high calcium and low fat via a TV commercial that featured popular artiste, Ms. Ann Thongprasom.

Each brand in Dairies Thailand’s portfolio was similarly treated to targeted marketing programmes that are catered to the specific demographic of consumers’ tastes and general lifestyles. The sales teams were given ambitious targets to meet and attractive incentives. A combination of ‘push’ and ‘pull’ strategies to communicate the brand values as well as aggressive trade marketing efforts resulted in the positive results accrued during the year.

lIquId mIlkBEAR BRAND has been a familiar and trusted name in Thailand for over 70 years. Its distinctive flavour that is packed with high calcium and healthy goodness are suitable for the whole family. BEAR BRAND Sterilised Milk comes in three delicious recipes. The original recipe is made from 100 per cent pure cow milk; while the Low Fat Milk (skimmed) and zero per cent Fat Milk are produced from 100 per cent pure skimmed milk.

BEAR BRAND Sterilised Milk (BBSTM) and BEAR BRAND GOLD are market leaders in their respective categories. The ‘Health Giving is the Best Giving’ campaign, helped to drive a 68 per cent increase in sales of BBSTM during the year accompanied by market share growth. The campaign emphasised on the nourishment qualities of BEAR BRAND sterilised milk for children, high school students, working adults, pregnant women and even senior adults. BEAR BRAND also encouraged consumers to put their health first by offering a 60 per cent discount coupon for a health check-up at the Bangkok Hospital with every pack of BEAR BRAND products.

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key strateGIesAs business in Indochina has gained considerable momentum, Dairies Thailand will focus on strengthening its sales force and operations to accelerate distribution coverage in all regions. Apart from distribution network, Dairies Thailand will also be implementing strategic sales and marketing plans to drive greater sales and brand presence.

Another new initiative to drive further growth of its export segment was the introduction of tri-lingual labels. Beginning in FY2013, all products exported to Indochina will carry labels in Thai, English and Vietnamese.



manufacturInG effIcIencIes Further cost savings are obtained from the manufacturing plant in Rojana, which has always been equipped with best-in-class facilities and systems. The plant’s quick recovery from the floods is testament not only to the extremely strong commitment and teamwork of the employees, but also to the effective disaster recovery and business continuity plans that have been put in place.

Adding to this is a strong culture of continuous improvement and innovation. Over the last six years, Dairies Thailand has been able to progressively drive higher cost efficiencies in its manufacturing processes, saving an estimated Baht 100 million annually, thanks to the excellent performance and productivity of its employees. The ideas of some 30 employee think-tank teams are regularly pitched against each other in a healthy competition which creates a highly motivated and energised environment. Improvements and achievements from these ideas are then presented in Dairies Thailand’s annual ‘Winning as One’ convention. Because the members of individual teams come from different departments, they are able to contribute different viewpoints and create amazing synergies which have kept Dairies Thailand’s business lean and efficient over the years.

Dairies Thailand is also enhancing the cost-efficiency of its distribution operations to minimise waste in terms of time and resources. During the financial year, Dairies Thailand implemented a direct full-truck load shipment policy entailing direct shipments from the factory to customers, thus cutting down on time and warehousing costs while greatly reducing its carbon footprint.

F&N Group and TCC Group have also started implementing synergies and integrating best practices in manufacturing, market knowledge and cost optimisation. There is much potential for collaboration in the areas of distribution network between the two Groups which Dairies Thailand will be focusing on in the new financial year.

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awards Dairies Thailand’s continuous efforts to maintain the highest standards in every aspect of its operations have led to a string of awards. This year, Dairies Thailand added the following awards to its stable of recognition:

• asean energy awards 2013 for Best Practices on Energy Management for Building and Industry, Special Submission, from the Department of Alternative Energy Development and Efficiency, Ministry of Energy

• thailand energy awards 2013 for Best Energy Conservation in Energy-controlled Factory category from the Department of Alternative Energy Development and Efficiency, Ministry of Energy

• thailand’s national Occupational safety and health award 2013 from the Ministry of Labour

• zero accident award 2013 silver star for 4 million man hours without accident, from the Ministry of Labour

• Thefda quality awards 2013 from the Thai Food and Drug Administration

• A silver thailand kaizen award 2013 for its 2kg Check Weight Pouch from the Technology Promotion Association (Thailand-Japan)

• csr awards 2013 and the csr-dIw advance award level 4 from the Department of Industrial Works (DIW)

• labour relations and welfare award (national level) of 2013 from the Department of Labour Protection and Welfare

OutlOOkWhile Dairies Thailand’s competitors took longer to recover from the floods, most have been able to get their plants up and running during this financial year and are now seeking aggressively to regain their foothold in the markets. Competition which began to grow in FY2013 will therefore intensify in FY2014. At the same time, Dairies Thailand expects the cost of raw materials to increase significantly while the Thai Baht depreciates in value against major currencies, adding to the cost of procurement from the international market.

To counter these challenges, Dairies Thailand plans to increase its cost efficiencies by further streamlining its manufacturing and supply chain processes, increasing its sales volumes and deriving the benefits of economies of scale, while also ensuring the most cost effective trade and marketing spend. At the same time, Dairies Thailand will leverage on potential synergies with Thai Beverage Group to increase its distribution channels and network and intensify its efforts to make further inroads in Indochina.

This, combined with focused efforts to increase the market share of its products, will ensure that Dairies Thailand continues to make excellent progress in The Way Forward, satisfying the beverage needs of millions of consumers in Thailand and the Indochina region.

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Property

PrOPerty

OvervIew

The property market continued to perform well in the year under

review despite a general increase in the price of building materials

as well as that for petrol, and efforts by the government to curb

speculation by increasing the real property gain tax (RPGT) from

10 per cent to 15 per cent.

Although property prices across the nation remained bullish,

demand was higher in suburban areas where new launches

were met with very positive response from the market. Foreign

investors, too, continued to show interest in local property,

partly because of a favourable foreign exchange environment

that strengthened their currency against the ringgit.

PJ sectIOn 13 The 12.72-acre site that housed the Group’s previous dairy manufacturing plant in Section 13, Petaling Jaya, has been earmarked for an integrated residential and commercial development encompassing apartment blocks, a hotel, retail outlets and office lots with a total gross development value of RM1.6 billion. The project, based on a total lifestyle concept, is being undertaken by a joint venture (JV) company between FCL Centrepoint Pte Ltd (FCL), a wholly-owned subsidiary of Fraser and Neave Ltd (Singapore), and Fraser & Neave Holdings Bhd. The FCL Group is a prominent property developer with an established international track record in Singapore, China, Australia, New Zealand, Thailand and United Kingdom.

During the financial year, the JV company obtained approval for the Master Development Plan and went on to enhance the design of various components of the project by drawing upon the design expertise of FCL. At the same time, the company proceeded with the land conversion and lease extension process, which is expected to be completed by the first quarter of 2014. Although changes in the regulatory environment have lengthened the approval process, the residential portion of the development is anticipated to be launched in the fourth quarter of the next financial year.

JOhOr Bahru Property prices in Johor Bahru have escalated in recent years along with the influx of foreign developers and progress in the ambitious Iskandar Malaysia project, the largest single development ever to be undertaken in the region. Leveraging on the property boom, the Group is planning to revise the development mix of its three-acre land bank off Jalan Tebrau, a major road linking Singapore with the North South Highway within the Iskandar Flagship Zone A, comprising residential

OutlOOkIn October 2013, the Government announced its Budget 2014, which serves to further stem speculation in the property market. Among other provisions, the Budget increases the RPGT from the current 15 per cent to 30 per cent, and removes the developer interest bearing scheme (DIBS) as of 1 January 2014. The latter would require investors to pay interest on their property loans from the time they drawdown the loan for construction progress claims, whereas in the past developers absorbed this payment, easing the financial commitment of investors until projects were completed. Foreigners, meanwhile, will only be entitled to buy properties worth more than RM1 million, up from half a million ringgit now.

In addition, the Strata Management Act 2013 which was gazetted in February 2013, is expected to come into force in January 2014, compelling developers to

During the financial year, Property Division worked steadily and

made progress on the PJ Section 13 project while embarking on

re-planning its land bank in Johor Bahru and continuing to

enhance the value of its industrial land in Kota Kinabalu, Sabah.

Much activity was carried out behind the scenes to pave The

Way Forward for the Group’s properties to add significantly to its

revenue in the years to come.

and commercial components. This project is still at the drawing board and more details will be revealed once they are finalised.

establish and file share units and parcel plans of all components of their projects before being able to launch any phase of their development in the market. Compliance to these requirements is most challenging to developers of integrated property development projects and is likely to cause further delays to the already long approval process. Along with a general increase in the cost of construction, these regulatory changes are likely to raise the selling price of new property launches and slow down the property market.

The Group, however, remains confident of its ability to forge ahead with its PJ Section 13 project which has been carefully designed to offer outstanding value propositions to discerning buyers. In addition, its partnership with the internationally renowned FCL Group lends the Group a definite edge in the more challenging property landscape. Further boosted by liquidity in the market, the property division will continue to enhance the value of its existing land banks to fulfil its vision of growth as it pursues The Way Forward.

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COrpOrate sustainaBilitY056 Workplace Principles059 Community Principles063 Environmental Principles068 Marketplace Principles

Building a Better

tomorrowAs a major producer, we are mindful that our actions today influence many lives tomorrow.

Hence in F&N, we are committed to embodying our philosophy of ‘Pure Goodness, Pure Enjoyment’ in our engagement with all stakeholders. We translate our business

vision and core values into action by enhancing social integrity, practicing environmental stewardship and generating economic value in the community where we operate,

to build a better tomorrow.

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wOrkPlace PrIncIPles – enGaGe and develOP

emPlOyee enGaGementThe Group encourages free and open communication between management and employees as well as among employees from the different business units. This financial year, a group-wide CEO Executive briefing session was held during which our CEO shared his vision for the Group while providing an update on corporate developments.

To promote cross-border interaction, the F&N Group has an enterprise social network that enables employees to communicate and collaborate freely with colleagues from across the organisation, exchange information and ideas, as well as to connect on a more social level.

Employee engagement begins from the time new recruits join the Group and are placed on our orientation programme. To ensure the programme remains relevant, it was restructured during the year into a three-day intensive programme to offer a more dynamic and holistic introduction to the F&N Group.

Social activities are also organised to create a greater sense of belonging. Annual events include our Family Day and long-service awards.

Employees of the soft drinks division get together for a good cause in July 2013 with a blood donation drive. Over 70 pints were collected in this activity which was jointly organised with Pusat Perubatan Universiti Malaya and Hospital Tengku Ampuan Rahimah. During Ramadhan month, soft drinks division also shared the festive spirit by distributing bubur lambok and kurma to all employees. During Dairies Malaysia manufacturing plant’s move from Petaling Jaya to Pulau Indah, various formal employee events as well as ad hoc get-togethers were organised to ease the transition and help our employees adjust to their new work environment. Transport allowance and relocation assistance were also offered, as the new factory is located in an entirely new location.

Meanwhile, the new Dairies Malaysia office at the Fraser Business Park boasts an open office design which encourages greater communication and active collaboration.

COrpOratesustainaBilitY

We believe that the commitment and efforts of our employees are fundamental to continued growth and hence, the economic sustainability of our business via increased productivity and innovation. To attract and retain the best talents, we aim to be a preferred employer, offering a challenging and exciting environment along with avenues for personal development. We also wish to lead in providing a safe workplace which encourages a healthier and active lifestyle.

To achieve this, we are committed to:

• Continuouslyengagingouremployees• Providingpersonaldevelopmentandstructuredcareer

support• Advocatingactivelifestylestonurtureahealthyworkforce• Promotingafairandsafeworkenvironment

PersOnal develOPment and talent manaGementThe Group invests in the professional and personal development of our employees in order to enhance our human capital and thus the capabilities of the F&N family. During the year under review, employees attended about 4,000 man-hours of soft skills training. In addition, as part of our talent development programme, key senior managers were assigned cross-divisional postings.

Continuing its effort in developing leaders at all levels, the F&N Group organised the Mark of A Leader development programme for senior managers across the business units. Participants worked through a series of workshops, group discussions and assessments focusing on innovation leadership, strategic leadership and business acumen. The participants also had the opportunity to engage the Group CEO in a lively chat forum on the CEO’s leadership philosophy and vision.

This year, Dairies Malaysia also launched the Mission Directed Work Team (MDWT), a technical skills development programme that engages all employees in continuous improvement and innovation activities with emphasis on enhancing the quality, speed and cost-effectiveness of operations.

To position the Group as an employer of choice, once again eight young graduates were selected to join the 15-month Management Associate Programme, during which they underwent

Employee engagement extends to supporting our staff’s aspirations for their children. In 2003, in conjunction with F&N’s 120th anniversary, the Group set up the Chairman’s Award to reward employees’ children who attain outstanding academic results in public examinations and who gain admission to institutions of higher learning. The Award serves both as an employee appreciation initiative as well as a motivation for their children to strive for excellence.

To date, the Group has disbursed more than RM2 million under the Award benefitting 1,800 children. In commemoration of F&N’s 130th anniversary, a further RM1.3 million was committed to the Award this year. In terms of disbursement, a total of RM309,000 was presented to 183 children this year at a prize-giving ceremony witnessed by over 250 employees comprising the recipients’ proud parents and the Group management team.

nurturInG a healthy wOrkfOrce Various activities such as badminton, futsal and bowling tournaments were organised to motivate our employees to be physically active and enjoy better health.

In addition, two boot camps were held this year. The first was organised from November 2012 to January 2013 and attracted the participation of 26 employees who attended hour-long workouts once a week, while the second instalment in April 2013 attracted more participants.

The Group also organised the inaugural F&N Aqtiv Green Run which brought together more than 270 employees from all F&N business units and their family members at Taman Bukit Jalil on 9 March 2013. Each runner received a voucher for a free health check-up at Pantai Hospital, a free pass from Fitness First, and nutritious breakfast cereal from Kellogg’s. In line with the F&N Go Green cause, about 124kg of waste from the event was collected and sent for recycling.

As part of its Occupational Health & Safety (OHS) Campaign from 1 to19 April 2013, Dairies Malaysia ran a Quit Smoking programme at its manufacturing plant in Pulau Indah. Employees who wanted to quit smoking were given personalised counselling and treatment at Klinik Kesihatan Pulau Indah, while those who managed to quit smoking successfully were rewarded with F&N staff shoppe vouchers worth RM200. On a sustained basis, the new manufacturing plant houses a gymnasium, where employees can exercise regularly for maximum fitness.

comprehensive on-the-job training and were mentored by senior managers. The F&N Management Associate Programme, which was launched in October 2008, was one of the three finalists for the Best Management Trainee/Graduate Programme in the Graduate Recruitment Awards 2013.

We were also named one of Malaysia’s 100 Leading Graduate Employers for the second year running. This was based on the votes of final-year university students and fresh graduates in the Trendence Graduate Barometer – Malaysian Edition, Malaysia’s largest graduate careers survey.

F&N Group Badminton Tournament 2013

Kirosha Rani a/p Rajandran receiving the Chairman’s Award from FNHB Chairman and Dato’ Ng Jui Sia

MDWT training in progress

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faIr and safe wOrk envIrOnmentSafety is of paramount importance to the Group, and all business units are tasked with reinforcing a safe work culture. Their combined efforts led to the Group maintaining zero lost time due to accidents (LTA) in all manufacturing plants.

As part of its OHS Campaign, Dairies Malaysia invited experts to speak on road and fire safety. Given its strong safety culture, Dairies Malaysia Manufacturing plant achieved two million accident-free man-hours as of 31 August 2013. The division also renewed its OHSAS 18001:2007 certification for another three years, which now applies to processes and systems in the new plant in Pulau Indah. The soft drinks division also organised talks on crime prevention and sexual harassment.

Dairies Thailand organised a Safety Occupational Health & Environment Exhibition Week themed Green Industry and Health Wellness from 21 to 24 December 2012 that included numerous activities and competitions that promote safety and health awareness, environmental protection and energy-saving in the workplace. Dairies Thailand’s unrelenting focus on safety was rewarded when it was presented the Zero Accident Awards 2013 (Silver Level) and Thailand’s National Occupational Safety and Health Award 2013 by the Ministry of Labour. In addition, it won the Labour Relations and Welfare Award (National Level) 2013 by Department of Labour Protection and Welfare.

salary and BenefItsF&N Group benchmarks our salary and benefits against the fast moving consumer goods (FMCG) industry to ensure internal and external equity and to maintain our competitiveness as an employer of choice.

Corporate SustainabilityCommunity

Corporate SustainabilityWorkplace

We believe that establishing the F&N Group as a responsible corporate organisation that is sensitive to the needs of our local communities will strengthen our brand value and reinforce the sustainability of our business.

educatIOn and natIOn-BuIldInGThe Group has been promoting IT literacy among underprivileged children since setting up the first F&N IT Corner at the Montfort Boys Town in 2010, followed by the Montfort Youth Centre in Malacca in 2012. This financial year, a third centre was established at the Montfort Girls Centre in Shah Alam in October 2012.

The newly furbished RM25,000 F&N IT Corner comes fully equipped with 14 new computers, a printer and internet access. Similar with other F&N IT Corners, the girls at Montfort Girls Centre will train for the International Computer Driving License (ICDL), an internationally recognised computer literacy certification which entails understanding basic ICT concepts, word processing and the ability to use spreadsheets and databases to make presentations. In addition, the girls are encouraged to use the computers to pursue graphic design and multimedia courses at Montfort.

In January 2013, the Group celebrated the graduation of 45 students from both Montfort Boys Town and Montfort Girls Centre who had recently completed the ICDL course, joining the ranks of 30 others who had done so earlier.

In aid of children with special needs, F&N Beverages Marketing has been setting up Sensory Integration Rooms in public schools with classes and equipment that caters to children with special needs. On 4 October 2012, the third F&N Sensory Integration Room was established at SK Taman Bukit Subang to cater for 50 students, including 25 students with special needs from SK U3. We have to date invested close to RM300,000 in all three centres, while also conducting training for teachers and parents and engaging occupational therapists to monitor the progress of the children.

Dairies Malaysia continued to support the work of the Kassim Chin Humanity Foundation (KCHF) which provides educational assistance to children from lower-income families via its Empowering Lives Through Education (ELITE) programme. Since 2011, Dairies Malaysia has been contributing RM5,000 per month and F&N Dairies milk products to the PPR Pangsapuri Enggang centre, one of several centres within the KCHF network.

cOmmunIty PrIncIPles – delIver In harmOny

We are committed to supporting the communities in which we have a presence in ways that are meaningful and have sustainable impact. We are a major economic driver in the markets we operate in, and seek to extend our contribution by supporting educational, sporting and environmental initiatives as well as offering a helping hand to the underprivileged.

Our focus within the wider community is to:

• Supportdevelopmentbyleveragingourskillsandcapacity• Developengagementprojectsthatareinlinewithoursustainabilityobjectives• Encourageemployeevolunteerism

Dairies Thailand sponsored various environmental-related activities at two schools it has adopted. The division created a green zone from a previously empty and unused space at the Wattanod-tia school, and donated recycling bins made from used vitamin tanks. To create greater environmental awareness among the students, the division provided Good Manufacturing Practice (GMP) training to the students and taught them to separate their waste for disposal. In addition, it provided Baht 1,000 each to 20 underprivileged students at the school. Dairies Thailand also improved the drinking water unit it had installed at the Watmitthapapwanaram School in FY11/12 and trained more students to be Junior GMPs and Junior Engineers.

Employees ready for flag off during the F&N Aqtiv Green Run

A student trying out the equipment in Sensory Integration Room while FNHB Chairman looks on

Students of Wattanod-tia school with the recycling bins donated by F&N

Dairies Thailand receiving the Zero Accident Award 2013 Silver star (top) and the Labour Relations and Welfare Award 2013 (bottom)

All smiles after completing the F&N Aqtiv Green Run

PG.

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PG.

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envIrOnmental awarenessIn September 2012, the F&N Group kicked off a three-year F&N S.O.S (Save Our Seas) programme in collaboration with Reef Check Malaysia and Marine Park Terengganu to increase awareness of marine conservation and to inculcate responsible behaviour including proper waste disposal and recycling.

A key highlight of the programme is its reef rehabilitation process which involves tying coral fragments on a nursery frame that is planted on the seabed. The objective is to help return the marine ecosystem as closely as possible to its former condition prior to disturbance. As part of the activity requires diving, employees across the Group who are certified divers were roped into the project as volunteers.

In conjunction with F&N’s 130th anniversary celebration this year, F&N pledged to plant a total of 130 reef rehabilitation frames. During the first phase of the programme last year, 40 frames were planted off Redang Island. So far in 2013, another 70 frames have been placed in the sea, hence the team has 20 more frames to go to meet its target. The reef rehabilitation frames are maintained and coral growth are monitored monthly during the non-monsoon season. From reports to date, the nubbins are in good shape and the rehabilitated corals are growing well.

Aside from reef rehabilitation, in May 2013 the F&N S.O.S team donated 60 recycle bins to several Redang Island resort operators and conducted a one-day educational session with 50 students of Sekolah Kebangsaan Pulau Redang; and in September 2013, a three-day Coral Reef Camp was conducted at the Pulau Redang Marine Park for 30 school children.

Dairies Thailand embarked on its own Save Our Sea (SOS) activities on 2 June 2012, by building five reef rehabilitation frames which were given to the Marine and Coastal Conservation Center. Further enhancing the marine ecosystem, Dairies Thailand planted 200 mangroves seedlings at the Rayong Mangrove Forest Station and deployed 10 reef rehabilitation frames off Samet Island in November 2012.

300 Dairies Thailand employees took part in planting a total of 3,600 trees around the Rojana factory and in the Klang Dong forest, Saraburi province, in conjunction with World Environment Day on 5 June 2013 and a factory outing on 7 September 2013. Dairies Thailand also encouraged its employees to create greener homes by giving them young plants to be grown in their own gardens. A ‘My Tree’ photo contest was also organised, inviting employees to submit photos of themselves with their newly planted trees.

recyclInG PrOGrammesThe soft drinks division has been working with the Shah Alam City Council and the Municipal Council of Penang Island to conduct extensive Kempen Kitar Semula programmes which include school recycling competitions to inculcate the 4-R (Reduce, Reuse, Recycle and Rethink) mentality among the younger generation. The programme in Shah Alam entered its seventh year in FY12/13, which saw 21 schools compete to collect the most recyclable materials from 10 April to 10 July 2013. A total of 67,655kg of recyclable items was collected.



nurturInG chamPIOns100PLUS continued to champion the elevation of sports in the country by supporting various events in collaboration with the Ministry of Education including the 100PLUS Super Cup U17 and U14 Football Leagues. It is also the official isotonic drink for all events organised by the Badminton Association of Malaysia including the Malaysian Open Super Series, National Junior Circuit and Inter-state Junior Championships; the National Track Cycling Team under the Malaysian National Cycling Federation and the Football Association of Malaysia. Through the 100PLUS FAM Astro Football Awards, it recognises the sporting excellence of national footballers.

More than150,000kgof recyclable items collected in F&N’s Kempen Kitar Semula programmes in Shah Alam and Penang this year

3,600 treesplanted by Dairies Thailand employees this year

110 reef rehabilitation frames deployed at Pulau Redang underF&N S.O.S Programme

In Penang, the programme returned for its second year and, with the support of the Penang State Education Department, a total of 82,421.35kg of waste was collected by 78 participating schools, marking an increase of 268 per cent from last year’s collection of 22,372.8kg. A new feature in this year’s campaign was the inclusion of electronic waste (e-waste), namely old computers and other electronic gadgets.

Dairies Thailand continued to encourage all its employees to separate their waste at home and in the workplace through its recycling programme. As a result, a total of 440kg of plastic bottles, 510kg of glass bottles and 1,220kg of paper were collected. The waste paper was donated to the Media Center for Development for recycling. Since the project was initiated in 2009, Dairies Thailand has saved an equivalent of 80 trees from the volume of paper recycled.

Students and teachers proudly showing the recyclable items collected during the Kempen Kitar Semula programmes

Participants of F&N SOS Coral Reef Camp

Six months later, the nubbins are growing over the reef rehabilitation framesF&N volunteers tying coral fragments to the reef rehabilitation frame at Redang Island

Players from the Kedah and Kelantan teams battle it out in the Minister of Education Under-14 League Cup 2012

Tree planting exercise in conjuction with World Environment Day

Dairies Thailand presenting reef rehabilitation frames to the Marine and Coastal Conservation Center

PG.

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PG.

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cOmmunIty Outreach PrOGrammesF&N Beverages Marketing continued its tradition of spreading festive joy by celebrating the major festivals with the less fortunate. On Deepavali, children from Rumah Kanak-kanak Impian enjoyed a shopping spree where each child was given RM200 to spend. In addition, the children enjoyed face-painting and games with prizes, followed by a hearty lunch.

Chinese New Year was spent with old folks from two homes. In Ipoh, a sumptuous feast was prepared for 48 residents of the Home for the Aged (CWS) Simee, followed by a lion dance performance. The residents were also treated to complimentary haircuts. In Kuching, 29 senior citizens at the Sarawak Hun Nam Siang Tng were given ang pows. In addition, soft drinks division presented the administration of both homes with household supplies and basic necessities worth RM5,000. When the month of Ramadhan came round, children from Rumah Al-Munirah in Klang were treated to a ‘Buka Puasa’ feast and gifts. F&N Beverages Marketing also donated RM40,000 worth of books to the home.

Christmas was spent fulfilling the wishes of 35 children from the Siddharthan Care Centre in Petaling Jaya. Each child gets to choose a present worth RM200. At the same time, employees of F&N Beverages Marketing also pooled their own resources to contribute five double-decker beds and other household items for the home, bringing our employees’ total contribution close to RM10,000.

Dairies Thailand conducted a drive to collect pull tabs from aluminum cans to be donated to the Prostheses Foundation of HRH the Princess Mother. These tabs are used to make artificial legs for disadvantaged amputees in the country and abroad. Since the programme was launched in FY09/10, a total of 136kg of aluminium tabs have been collected including 40kg this year.


The financial year of 2011/2012 (FY11/12) was a turning point for the soft drinks division, as this was when it started in-house Tetrapak production and ended the production of Coca-Cola products. As such, a new baseline for its environmental assessment was set in FY11/12. In-house production of Tetra products – which consume more resources than carbonated soft drinks – increased by 58 per cent in FY12/13 compared with the previous year. Efforts are therefore in place to optimise the consumption of utilities in this area.

Dairies Thailand’s overall environmental performance in FY11/12 declined due to the additional resources required during its flood recovery. However, process improvements from the rebuilding exercise meant its performance in FY12/13 was not only better than the year preceding the flood, the division also met all its environmental impact reduction targets and won numerous awards including the coveted Thailand Energy Awards for Best Energy Conservation in the Energy-controlled Factory category; and the ASEAN Energy Awards 2013 for Best Practices in Energy Management in the Building and Industry category.

Corporate SustainabilityEnvironmental

envIrOnmental PrIncIPles – GettInG mOre Out Of less

The Thailand Energy Awards is held annually to honour personnel and organisations both in the government and private sectors which have contributed to energy conservation and national alternative energy development plans. The ASEAN Energy Awards was a first for the F&N Group, and Dairies Thailand was one of only two companies in the food and beverage sector to win the honour. It was awarded in recognition of Dairies Thailand’s reduction in consumption of natural gas and electricity by 47 per cent and 5 per cent respectively for the unsweetened condensed milk and evaporated milk production lines at its manufacturing plant in Rojana.

Following Dairies Malaysia’s shift of its manufacturing operations to the new state-of-the-art plant in Pulau Indah in FY11/12, a new baseline for its environmental assessment was set in FY12/13. The new plant was designed with energy efficiency in mind and boasts an Integrated Energy Management System in which heat generated is recycled thus, reducing the load on the plant’s primary energy source. A cannery located adjacent to the manufacturing block provides a steady stream of cans, reducing transport needs.

This is further enhanced by the plant’s proximity to Pulau Indah’s port facilities, which also greatly reduces road transport.

As for waste water management, all effluent is treated to remove suspended solids and organic matter before being discharged, conforming to DOE Quality Regulations (Standard B). This system of active and passive energy management has reduced the plant’s water and carbon footprints by 30 per cent and 17 per cent respectively for every metric tonne of produce.

As a major player in the food and beverage sector, our activities have an impact on the environment throughout the life cycle of our operations. From the time ingredients and materials are sourced to the production and manufacturing of the base product; from the bottling/canning, packaging, distribution and logistics to the final saleable item as well as all processes dealing with the end of product life, we have some control on our environment footprint. Our business relies on the long-term availability of basic raw materials. By reducing our resource use and producing more for less, we can combine sustainability of supply with cost savings and at the same time protect the environment.

As a responsible producer and manufacturer, we will do our best within business constraints to minimise our environmental footprint through continuous improvement in the following areas:

• Reducingwasteandrawmaterialuse• Conservingwater• Minimisingenergyconsumptionandcarbonemissions

Tossing yee sang with residents of Home for the Aged (CWS) Simee

F&N staff making a child’s Christmas wish come true

A fun-filled day of shopping, face painting and games for children of Rumah Kanak-kanak Impian on Deepavali

Mr. Khalid Alvi, Managing Director of F&N Beverages Marketing presenting the gift to Mr. Manimaran, caretaker of the Siddhartan Care Center

PG.

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PG.

064Corporate SustainabilityEnvironmental


sustaInaBle PackaGInGF&N is committed to seeking packaging solutions that will lower our environment footprint while maintaining the integrity of our products. Various ongoing initiatives to optimise packaging materials through innovation and technical feasibility have resulted in a significant reduction in the packaging index of polyethylene terephthalate (PET) since 2009.

Efforts to achieve sustainable packaging have resulted in the reduction of our packaging index for total PET beverages by eight per cent over the last five years as well as decreasing its aluminium usage by 137 tonnes this year.

Thanks to improved yield control, Dairies Thailand was able to reduce its raw material wastage in the production line. At the same time, the division decreased the volume of solid waste by 58 per cent from the FY11/12 level; and following a segregating campaign, lowered the amount of sludge produced from its waste water treatment plant by 23 per cent compared to FY11/12.

dairies thailand manufacturing Plant

dairies malaysia manufacturing Plant

Packaging ratio for dairies thailand (tonne of packaging material/tonne of product)

In 2009, Dairies Thailand initiated a continuous review and assessment of packaging optimisation opportunities, which has reduced its use of packaging materials by 6,500 tonnes since FY09/10. Ongoing initiatives to pursue innovative designs and recycled materials usage led to a decrease of 2,310 tonnes in total packaging material weight in FY12/13.

0.160

0.155

0.150

0.145

0.140

0.135

0.130

FY09/10 FY10/11 FY11/12 FY12/13

FY12/13

FY12/13

FY12/13

0.1520.148

0.155

solid waste ratio (kg per tonne of product)

solid waste ratio (kg per tonne of product)

solid waste recycled (%)

30.00

25.00

20.00

15.00

10.00

5.00

-FY09/10 FY10/11 FY11/12 FY12/13

24.00

10.00 11.27

4.77


0.143

waste manaGementThe nature of our business is such that a large quantity of waste is generated during manufacturing. Our top priority therefore is to reduce the amount of waste generated and, secondly, to recycle as much waste as we can.

Towards this end, this year the Group launched an online claims (e-claims) and employee performance management system (e-TPMS) that greatly reduced manual and administrative work as well as paper wastage.

Both soft drinks and Dairies Thailand operations recorded an improved waste ratio this year due to concerted efforts by all departments to minimise waste and maximise recycling. F&N Beverages Manufacturing, for example, is collaborating with their raw material and packaging suppliers to switch to re-usable or recycled packaging such as cartons, pallets and boxes.

soft drinks manufacturing Plant

Packaging ratio for dairies malaysia (tonne of packaging material/tonne of product)

FY09/10 FY10/11 FY11/12 FY12/13


60%

50%

40%

30%

20%

10%

0%

14.4

48.7

32.3

47.1

Note: FY11/12 is the new baseline without Coca-Cola production

100%

80%

60%

40%

20%

0%

FY08/09 FY09/10 FY10/11 FY11/12 FY12/13

9490

93

7882

Packaging Index for total Pet Beverages

Packaging index = Pet material usage per liter product

39

38

37

36

35

34

FY03/04 FY04/05 FY05/06 FY06/07 FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13

37.6 37.7

38.1

37.4

PET

Mat

eria

l Usa

ge (g

/L)

37.6

38.1

37.436.7

35.4

35.1

Total PET Usage

Total PET Product

FY12/13 is Dairies Malaysia’s first full year of operations in its new manufacturing plant. As such, the data of FY12/13 will form its baseline for future assessments.

7.28 20

0.121

PG.

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PG.

066

OPtImIsInG water usaGeAs a manufacturer of beverages, the Group is among the largest water consuming companies in Malaysia today, and our business is very dependent on the availability of clean water sources.

Note: Data from FY11/12 onwards include in-house Tetrapak production and excludes Coca-Cola products

soft drinks manufacturing water ratio(liter/liter)

The water ratio (consumption of water per liter of product) in the soft drinks division had increased in FY11/12 due to in-house Tetrapak production and discontinuation of the Coca-Cola line which affected some economies of scale in manufacturing. However, concerted efforts to improve operational efficiencies at the Tetrapak plant led to improvement of its water ratio in FY12/13.

dairies thailand water ratio(m3/tonne)

The water ratio in Dairies Thailand has improved significantly by 50 per cent since its manufacturing plant commenced operations in FY09/10. This, and a reduction in waste water discharge, has been due in part to the channeling of recovered cooling water and treated waste water to the F&N Green Park.

The new manufacturing facility in Pulau Indah (PI) enabled Dairies Malaysia to achieve over 30 per cent savings in water consumption as compared to FY10/11 when operating from its old plant at Petaling Jaya (PJ).

dairies malaysia water ratio(m3/tonne)

mInImIsInG enerGy cOnsumPtIOn and carBOn emIssIOns

dairies thailand - energy consumption and carbon emissions

The soft drinks division experienced a slight increase in its energy utilisation ratio (energy consumed per liter of product) due to an increase in production of UHT products which utilise more energy than canned products. However, the division’s efforts to minimise energy consumption and reduce its carbon footprint meant it was able to maintain the same CO2 emissions level as in FY11/12. Its green initiatives which included replacing hi-bay lighting with energy-efficient T5 lighting contributed to 66,000 kWh savings in energy usage in FY12/13.

The division also continued to identify opportunities with suppliers to create greater energy efficiencies. For example, it collaborated with their can supplier to remove ink-coating on some of the product packaging which helped to reduce its carbon footprint. Further energy reduction activities have been planned for FY13/14 including the installation of boiler economiser, improving steam condensate recovery and enhancing the use of energy-efficient lighting.

Following its flood recovery efforts in the last financial year, Dairies Thailand managed to normalise its energy consumption with an emphasis on heat recovery and other energy optimisation initiatives including the replacement of lights with high-efficiency luminairs. As a result, its energy consumption was 11.6 per cent lower than in FY10/11, the year before the flood. CO2 emissions, meanwhile, decreased by more than 30 per cent since its start-up in FY09/10.

Dairies Thailand’s spectacular energy efficiency recovery and enhancement led to a number of awards and certifications during the year, including the prestigious ASEAN Energy Award 2013 in the Special Project Submission category and the Thailand Energy Award 2013. Meanwhile, the Department of Industrial works presented Dairies Thailand’s manufacturing plant with a Green industry level 3 certificate for having in place sound environmental protection practices and systems, and for a keen focus on nurturing a green culture.

In terms of products, BEAR BRAND, Carnation and F&N Tea Pot have been granted Carbon Reduction Labels by the Thailand Greenhouse Gas Management Organisation (TGO). This certifies that the products have lowered their carbon emissions during the production process by at least 10 per cent. Carnation Extra has also passed the Thailand Carbon Footprint evaluation by the Industrial Ministry and National Food Institute (NFI). Carnation Extra’s total product lifecycle carbon emission has been estimated to be 295 grammes per unit.

soft drinks - energy consumption and carbon emissions

carbon emissions ratio (mt cO2/tonne)


energy utilisation ratio (mJ/liter)

energy utilisation ratio (GJ/tonne) energy utilisation ratio (GJ/tonne)


dairies malaysia - energy consumption and carbon emissions

The production efficiency and environmental protection features in Dairies Malaysia’s new manufacturing plant in Pulau Indah led to a 24 per cent reduction in energy consumption per tonne compared to FY10/11, when operating from the Petaling Jaya plant. The integration of other energy-saving initiatives into its facilities and systems, such as the use of electric forklifts and timer control in the production process enabled the division with a total of RM300,000 in energy cost savings in FY12/13.



2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

-

2.50

2.00

1.50

1.00

0.50

-

0.20

0.16

0.12

0.08

0.04

0.000.70

0.60

0.50

0.40

0.30

0.20

0.20

0.00

0.080

0.060

0.040

0.020

0.000

FY09/10 FY10/11 FY11/12 FY12/13

FY09/10 FY10/11 FY11/12 FY12/13

FY10/11 FY11/12 FY12/13 (PJ) (PJ & PI) (PI)

FY10/11 FY11/12 FY12/13 (PJ) (PJ & PI) (PI)

FY10/11 FY11/12 FY12/13 (PJ) (PJ & PI) (PI)

FY08/09 FY09/10 FY10/11 FY11/12 FY12/13


3.63

3.12

0.53

0.051

2.38 4.95

0.163

2.73

0.52

0.049

2.38

5.18

0.160

2.64

0.500.050

3.10

0.66

0.064

1.89 3.25

0.137

2.96

0.670.064

NGElectricity

NGElectricity

0.49

1.32

0.38

1.00

0.42

1.07

0.32

0.90

0.30

1.78

0.39

1.76 0.43

1.15

0.16

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0 FY09/10 FY10/11 FY11/12 FY12/13

0.138

0.107 0.112

0.092

PG.

069

PG.

068

healthIer and delIcIOus PrOductsIn keeping with the Group’s ‘Pure Goodness, Pure Enjoyment’ promise, the F&N Nutrition Charter outlines our principles and commitment to health and nutrition encompassing guidelines for new product development, the provision of clear and accurate nutritional information to consumers, and advocating a healthy lifestyle among consumers and employees.

F&N has over the years introduced healthier options for consumers including product variants with reduced or no added

Corporate SustainabilityMarketplace

Corporate SustainabilityMarketplace

reducInG Our suGar fOOtPrIntIn line with the latest health research and evolving consumer tastes, F&N has been gradually decreasing the sugar level of all our products over the past few years. We employ a Sugar Index to track the sugar content in our beverages, and to guide further product development to ensure we have a balanced product portfolio.

Our efforts have led to a 28 per cent reduction in our overall sugar index since FY03/04, but we believe we can do more. Thus we continue to innovate on ways to keep lowering the sugar content of our beverages without compromising on taste and consumer acceptance.

suPPlIer enGaGement The Group forms strategic alliances to establish long-term and sustainable contracts with reputable suppliers with whom we work closely to ensure standards and practices related to food safety and the environment are maintained throughout the value chain. To enhance our ethical standards and processes within the supply chain, F&N is also a member of the Supplier Ethical Data Exchange (SEDEX).

During the year under review, Dairies Malaysia engaged in supplier audits under the McDonald’s Supplier Quality Management System (SQMS) and the WQA Manufactured Food Standard. Dairies Malaysia also continued to review its packaging specifications to meet competitive business needs while satisfying the need for robustness. Dairies Thailand collaborated with the Thai-Denmark Patthananikom Fresh Milk Cooperative to improve the quality of fresh milk under the ‘Develop valuable raw milk’ project. The initiative led to a lower quantity of microorganisms in the raw milk and considerable energy savings.

resPOnsIBle cOmmunIcatIOnThe Group is mindful of our responsibility to communicate accurate information to our consumers in all our marketing and advertising material. Underlining this commitment, we joined other leading food and beverage companies in Malaysia in the Pledge on Responsible Advertising to Children. This entails advertising only products that meet specific nutrition criteria based on accepted scientific evidence and/or applicable national and international dietary guidelines to children under 12 years. The pledge is the first of its kind in Malaysia, and was carried out in collaboration with the Ministry of Health, Malaysian Advertisers Association and FMM Malaysian Food Manufacturing Group.

9.0

8.5

8.0

7.5

7.0

6.5

6.0


sugar Index for total Beverage

marketPlace PrIncIPles – resPOnsIve and transParent

Within an increasingly competitive marketplace, it is imperative for fast moving consumer goods (FCMG) companies to operate with the highest level of transparency and stakeholder integrity. At the F&N Group, this entails responsible behaviour towards our millions of customers as well as our suppliers and business partners. Amid a constantly shifting market, our success relies on the ability to comprehend our consumers’ evolving preferences, lifestyles and concerns; and in maintaining robust relationships with our partners.

We are therefore committed to:

• Providingdeliciousandenjoyableproducts compatible with a healthier lifestyle

• Listeningandrespondingtotheneeds and preferences of our consumers

• Activelyself-regulatingandpromoting responsible practices throughout our supply chain

• Communicatingaccuratelyand responsibly with all our stakeholders

sugar, that are low-fat, or that have added nutrients. In FY12/13, for example, we launched the F&N Hi-Calcium Sweetened Creamer which has extra calcium for healthy bones; F&N SEASONS Ice Passion Fruit Green Tea with lower sugar content; and OISHI Green Tea, providing the health benefits of organic green tea which is a proven antioxidant.

All our new products follow stringent and regulated processes throughout their entire lifecycle, from conceptualisation to commercialisation.

This year, in recognition of its excellence in quality standards, Dairies Thailand received the Thai Food and Drug Administration Quality Award 2013. The award also recognizes organisations that has in place, a robust quality improvement system and manufacturing operations that emphasize on corporate social responsibility.

To promote a healthy lifestyle, the Group will continue to support and participate in community health and nutrition activities in partnership with health and regulatory authorities.

We ensure that the information displayed on our packaging – such as energy per serving, nutritional contents and highlights – is accurate. We also include other nutritional information such as Recommended Daily Allowances (RDA) and the functions of various nutrients to educate our consumers on healthy eating. Where applicable, our packaging includes product endorsements from the authorities.

All information displayed on our packaging is reviewed in detail and approved by an internal cross-functional team comprising Research & Development, Scientific and Regulatory Affairs and a Dietician. The product information is then sent to relevant authorities for their verification and endorsement. All new products are required to undergo stringent review before they are launched.Sugar Index (g/100ml)

Total Beverage (mL)

8.7

8.2

8.07.8 7.7

7.3 7.2

6.6 6.6

6.3

Leading food and beverage companies joined hands in the Malaysia Pledge on Responsible Advertising to Children

F&N provides briefing and training under the ‘Develop valuable milk’ project

COrpOrate GOVernanCe072 Statement on Corporate Governance 077 Report on Audit Committee079 Statement on Risk Management & Internal Control082 Statement on Directors’ Responsibility

Winning asOne

F&N’s strong culture of continuous improvement and innovation was rooted from our entrepreneurial beginning. As such, our people are always prepared to rise above the challenges by ‘Winning as One’ in the quest for consistent growth and sustainability.

Dairies Thailand embodies the winning spirit by maintaining the highest standards in every aspect of its operations; from their commitment in producing high quality products

that are full of natural goodness, to bringing smiles to millions of consumers in Thailand and the Indochina region.

PG.

073

PG.

072

IntrOductIOnBursa malaysia Bhd has recently launched the 2nd edition of corporate Governance Guide (“cG Guide”) which is intended to support the board of directors and management in their efforts to raise the bar of corporate governance.

the company is committed to good corporate governance practices and fair and equitable conduct in its interaction with all stakeholders and subscribes to the principles and recommendations set out in the malaysian code on corporate Governance 2012 (“code”). In addition, the cG Guide provides a comprehensive list of suggestions and practical examples on how the principles and recommendations can be implemented. to the extent these practices are relevant and appropriate, they have been adopted.

this statement describes the practices that the company had taken with respect to the principles and the extent of its compliance with the code during the financial year.

BOard Of dIrectOrsThe Board of Directors is nominated by the shareholders and holds the ultimate decision making authority, except for matters reserved by law or by the Company’s Articles of Association to the shareholders. Formal processes and structures are in place to assist the Board in carrying out its responsibilities and its decisions are normally taken as a whole.

The Board oversees the business affairs of the Group. It approves strategic plans, key business initiatives as well as major investment and funding decisions. It also reviews financial performance, determines compensation and succession plans for senior management and ensures adequate internal controls. These actions are carried out either directly by the Board or through the Board Committees.

The role, composition and responsibilities of the Board embodying the principles of the Code are set out in the Board Charter, which is available for reference at the Company’s website at http://www.fn.com.my.

Assisting the Board are six Board Committees, namely the Group Executive, Audit, Nominating, Remuneration, Risk Management and Share Buy-Back (details of which are provided below). On a day-to-day basis, the Board delegates the conduct of operating matters to its Chief Executive Officer (“CEO”).

1) composition and Board Balance The Company’s Articles of

Association currently provides for the Board to compose of a maximum of 11 Directors. The present Board comprises 11 Directors whose varied skills and vast experience are relevant to the Group’s business operations.

The mix of Directors on the Board is broadly balanced to reflect the interests of major shareholders, management and minority shareholders. Of the 11 Directors, seven are nominees of the two largest shareholders and four are independent and they are all Non-Executive Directors.

stateMent On COrpOrate GOVernanCe

An Independent Non-Executive Chairman heads the Board and also performs the role as the Senior Independent Director to whom concerns relating to the Company may be conveyed by shareholders and stakeholders.

The Board acknowledges the importance of Board diversity, including gender diversity, to the effective functioning of the Board. Female representation will be considered when vacancies arise and suitable candidates are identified.

Statement on Corporate Governance

2) Board Processes and Board committees’ activities During the financial year, the Board held eight meetings, while the relevant Board Committees had also met frequently to discharge

their duties and responsibilities. Record of Directors’ attendances at meetings (taking into account the date of their respective appointments) is contained in the table below:

director BoardGroupexcO

auditcommittee

nominatingcommittee

risk management

committeeremuneration

committee

Y.A.M. Tengku Syed Badarudin Jamalullail

8/8 5/5 5/5 2/2 4/4

Y.Bhg. Dato’ Anwarrudin bin Ahamad Osman

8/8 4/5 5/5 2/2

Anthony Cheong Fook Seng 8/8 5/5 5/5 2/2

Chin Kwai Yoong(appointed on 23 Jan 2013)

4/5 3/4 4/4 2/2

Y.Bhg. Dato’ Johan Tazrin bin Hamid Ngo(appointed on 23 Jan 2013)

5/5 4/4

Y.Bhg. Dato’ Jorgen Bornhoft(appointed on 7 May 2013)

4/4 1/2

Lee Kong Yip 8/8 5/5 2/2 4/4

Y.Bhg. Dato’ Dr. Mohd Shahar bin Sidek 6/8

Y.Bhg. Dato’ Dr. Nik Norzrul Thani bin Nik Hassan Thani

8/8

Y.Bhg. Dato’ Ng Jui Sia 8/8 1/1

Tong Sing Eng 8/8 5/5

Y.Bhg. Tan Sri Dato’ Dr. Lin See Yan(retired on 23 Jan 2013)

3/3 0/1 1/1 2/2

Leslie Oswin Struys(retired on 23 Jan 2013)

3/3 1/1 1/2 2/2

Pascal De Petrini(resigned on 18 Apr 2013)

4/4 2/3 2/2 2/2

The Board delegates certain responsibilities to the Board Committees, all of which operate within defined terms of reference.

The Group executive committee (“Group excO”) is tasked with formulating strategic direction and initiatives to deliver long term shareholder value creation, oversee management performance and provide direction and guidance to management. To achieve its objectives, the Group EXCO, among others, reviews the long term objectives of the Company and the Group in addition to reviewing and recommending annual budgets and long term business plans for adoption by the Board.

The Group EXCO comprises eight Non-Executive Directors. There were five meetings held during the financial year and the attendance at the meetings is shown in the above table.

The nominating committee is tasked with reviewing recommendations for appointments to the Board and Board Committees. It comprises three Non-Executive Directors, two of whom are independent.

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074Statement on Corporate Governance

Statement on Corporate Governance

Two meetings of the Nominating Committee were held during the financial year and the attendance at the meetings is set out in the above table. Proposed appointment of two Independent Non-Executive Directors to the Board was discussed and recommendation was made to the Board for the appointment of Mr. Chin Kwai Yoong and Y.Bhg. Dato’ Johan Tazrin bin Hamid Ngo to the Board, which was approved by the shareholders’ at the 51st annual general meeting.

The Directors also reviewed and kept abreast of developments in the area of Board performance assessment. A formal evaluation process is in place to assess the effectiveness of the Board as a whole. In this regard, performance evaluation of the Board, Board Committees, individual Director and Independent Directors were conducted. The Nominating Committee was satisfied that the overall rating of the respective evaluations was high.

In line with the Code, the Nominating Committee has assessed the independence of Y.A.M. Tengku Syed Badarudin Jamalullail and recommended to the Board the retention of Tengku as the Independent Non-Executive Chairman of the Company in view that Tengku continues to be able to exercise independent and objective judgement, has detailed knowledge of the Company’s business and has proven commitment, experience and competency to effectively advise and oversee the management of the Company. Tengku has also met the independence guidelines set out in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The remuneration committee comprises four Non-Executive Directors. Responsible for reviewing succession planning as well as remuneration policies and practices of the Group, the Remuneration Committee also supervises the allocation of share options and award of shares to employees under the Group’s ESOS Scheme and Share Grant Plan. Four meetings of the Remuneration Committee were held during the financial year and the attendance at the meetings is set out in the above table.

The share Buy-Back committee comprises three Non-Executive Directors, is entrusted with recommending to and implementing the decision of the Board on share buy-back within certain perimeters. No meeting was held during the financial year.

The audit committee assists the Board in reviewing and monitoring the integrity of the Group’s reporting process, the system of internal controls, audit process and compliance with legal and regulatory matters. A separate report of the Audit Committee is contained on pages 77 to 78 of this Annual Report.

A risk management committee was formed in June 2013 to assist the Board in carrying out its responsibilities of overseeing the Company’s risk management framework and policies, and ensuring that management maintains a sound system of risk management and internal controls. The Committee comprises three Non-Executive Directors. Two meetings of the Committee were held during the financial year and the attendance at the meetings is set out in the above table. More details on risk management are set out in the Statement on Risk Management and Internal Control on pages 79 to 81 of this Annual Report.

3) access to information A formal agenda issued by the

Company Secretary in consultation with the Chairman and the CEO precedes all scheduled meetings during the financial year. The agenda for each meeting is also accompanied by the minutes of preceding meetings of the Board and Board Committees, reports on group financial performance, presentations by subsidiaries on their performance, industry trends, business plans including major capital expenditure and proposals, quarterly result announcements and other relevant information.

Additionally, Directors are encouraged to approach management to seek clarification or obtain further information through the CEO in furtherance of their duties, including appropriate external professional consultation. All Directors have direct access to the advice and services of the Company Secretary in discharging their duties.

4) appointments and re-elections Procedures relating to the appointment

and re-election of Directors are contained in the Company’s Articles of Association. When assessing the suitability of Directors for appointment to the Board, the Nominating Committee will take into consideration the competencies, commitment, contribution and performance of the candidates.

New Directors are subject to re-election at the Annual General Meeting (“AGM”) following their first appointment. In addition, one-third of the Directors are required by rotation to submit themselves for re-election by shareholders at every AGM of the Company.

Directors over 70 years of age are required to submit themselves for re-appointment annually at AGM of the Company in accordance with Section 129(6) of the Companies Act, 1965.

The Board take cognisance of the recommendations of the Code regarding tenure of Independent Directors and will seek approval of the shareholders for retention of Independent Directors who have served for a cumulative term of more than nine years.

remuneratIOnThe Remuneration Committee is entrusted with the role of determining and recommending suitable policies in respect of salary packages for Executive Directors and the Group’s senior executives. The current salary packages comprise a combination of basic salary and a variable performance incentive to attract and retain talent in a competitive environment. There was no change in the remuneration policies and practices during the financial year.

The remuneration for Non-Executive Directors is based on a standard fixed fee, with the Chairman receiving a double amount in recognition of his additional responsibilities. An additional fee is also paid to Non-Executive Directors sitting on Board Committees, and where applicable, the boards of subsidiaries that are not wholly owned.

Fees payable to the Company’s Directors are subject to yearly approval by shareholders at the Company’s AGM. The aggregate Directors’ remuneration paid or payable to the Directors of the Company and its subsidiaries for the financial year ended 30 September 2013 is disclosed in the financial statements.

dIrectOrs’ traInInGIn compliance with the Main Market Listing Requirements, all members of the Board have attended the required training programmes prescribed by Bursa Malaysia Securities Berhad.

From time to time, the Directors attend training to keep abreast with current developments as well as the new statutory and regulatory requirements. In addition to this, the Group, in collaboration with external training providers, also organises internal training programmes for the Directors.

Training programmes and seminars attended by the Directors of the Company during the financial year ended 30 September 2013 are as follows:

directors training/seminar attended

Y.A.M. Tengku Syed Badarudin Jamalullail

•Directors’ContinuingEducationProgramme(“CEP”) held at The Datai, Langkawi

Y.Bhg. Dato’ Anwarrudin bin Ahamad Osman

•Directors’CEPheldatTheDatai,Langkawi

Anthony Cheong Fook Seng •WadingthroughMuddyWaters•SectorConnectSeries–RealEstate,Consumer

Services and Utilities

Chin Kwai Yoong •LaunchofStatementonRiskManagement& Internal Control – Guidelines for Directors of Listed Issuer

•PersonalDataProtectionAct•5th Annual Corporate Governance Summit•GoodsandServicesTax•Directors’CEPheldatTheDatai,Langkawi

Y.Bhg. Dato’ Johan Tazrin bin Hamid Ngo


Y.Bhg. Dato’ Jorgen Bornhoft •Directors’CEPheldatTheDatai,Langkawi•ValuesDrivenMarketing

Lee Kong Yip •Directors’CEPheldatTheDatai,Langkawi•GovernanceinGroupsProgramme

Y.Bhg. Dato’ Dr. Mohd Shahar bin Sidek


Y.Bhg. Dato’ Dr. Nik Norzrul Thani bin Nik Hassan Thani

• InternationalCommercialArbitration•AsianInstituteofFinanceInternational

Symposium 2013

Y.Bhg. Dato’ Ng Jui Sia •Directors’CEPheldatTheDatai,Langkawi

Tong Sing Eng •Directors’CEPheldatTheDatai,Langkawi

Hui Choon Kit (Alternate Director to Y.Bhg. Dato’ Ng Jui Sia)

•F&NGroupAccountingSeminar

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076Statement on Corporate Governance

sharehOlder and InvestOr relatIOns The Board recognises the need for and the importance of effective communication with shareholders and the investment community. Annual General Meeting (“AGM”) is especially important for individual shareholders as it provides the main forum for direct dialogue with the Board. The 51st AGM of the Company was held on 23 January 2013 at Sime Darby Convention Centre. The Notice of Meeting attached to the Annual Report was distributed to the shareholders. The AGM in 2013 was attended by shareholders comprising registered individuals, proxies and corporate representatives, whose total shareholdings representing 85.30 per cent of the issued and paid-up share capital of the Company (excluding treasury shares). There was a forum for the shareholders to raise questions or issues at the AGM regarding the Group’s performance for the financial year 2012, which the Directors appropriately addressed.

During the financial year 2013, results briefings were conducted for investment analysts and the media. Two briefings were held during the financial year. Apart from publishing the results in the print media, Bursa Malaysia Securities Berhad also provides for the Company to electronically publish all its announcements, including the full version of its quarterly results and Annual Reports. These can be accessed online through Bursa Malaysia’s website at http://announcements.bursamalaysia.com.my and the Company’s website at http://www.fn.com.my.

accOuntaBIlIty and audIt

1) financial reports In reviewing all the published annual

and quarterly financial statements during the financial year, the Directors took due care and reasonable steps

The Group paid Ernst & Young approximately RM825,000 for professional services rendered in connection with audits and related services for the financial year ended 30 September 2013.

4) compliance with the code The Company has complied with the

Code and observed its principles and recommendations throughout the financial year.

This statement is made in accordance with the Board’s approval on 7 November 2013.

repOrt Onaudit COMMittee

the Board is pleased to present the following report on the audit committee and its activities for the financial year ended 30 september 2013.

audIt cOmmIttee cOmPOsItIOn and meetInGs The Audit Committee consists of five members, all of whom are Non-Executive Directors and a majority of them are independent. The Audit Committee is chaired by Mr. Chin Kwai Yoong who was appointed on 23 January 2013.

The names of the members of the Audit Committee and the record of their attendance during the year (or since the date of their appointment) are as follows:

namesattendance at

meetings

Independent Non-Executive Directors

Chin Kwai Yoong (Chairman) 4 of 4 meetings

Y.Bhg. Tan Sri Dato’ Dr. Lin See Yan1 1 of 1 meeting

Y.A.M. Tengku Syed Badarudin Jamalullail 5 of 5 meetings

Y.Bhg. Dato’ Anwarrudin bin Ahamad Osman 5 of 5 meetings

Y.Bhg. Dato’ Johan Tazrin bin Hamid Ngo (appointed on 23 Jan 2013)

4 of 4 meetings

Leslie Oswin Struys1 1 of 1 meeting

Non-Independent Non-Executive Director

Anthony Cheong Fook Seng 5 of 5 meetings

At the invitation of the Audit Committee, the Chief Executive Officer, relevant Senior Management personnel, external and internal auditors attend the Audit Committee meetings and are required to present their reports on financial results, audit and other matters for the information and/or approval of the Audit Committee. The Chairman of the Audit Committee would thereafter present the recommendations of the Audit Committee to the Board and apprise the Board of relevant issues. During the financial year, the Audit Committee met with the external auditors independently on two occasions without the presence of executive Management.

terms Of reference The Audit Committee is responsible among others, to review and monitor the integrity of the Group’s reporting process, system of internal control, audit process as well as compliance with legal, regulatory and taxation matters for the Group. The terms of reference of the Audit Committee, is made available on our corporate website at www.fn.com.my.

summary Of actIvItIesDuring the financial year, the Audit Committee discharged its functions and carried out its duties as set out in its terms of reference. The summary of key activities undertaken by the Audit Committee is provided below:

financial reporting and complianceThe Audit Committee reviewed the quarterly and annual consolidated financial statements and announcements of the Group before submission to the Board. In doing so, there was focus on changes in major accounting policies and practices as well as adjustments/issues affecting the audit to ascertain compliance with applicable financial reporting standards, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and other statutory requirements. The external auditors’ annual and interim audit reports as well as the accompanying management reports and responses by Management were also reviewed by the Audit Committee as part of their oversight over the accounting, auditing and financial reporting practices and procedures of the Group.

risk management and Internal controlBased on reports presented by the Management, external and internal auditors during the Audit Committee meetings, the Audit Committee assessed the adequacy of the risk management and internal control system of the Group. The Audit Committee was also updated on investigations conducted on whistle blowing allegations to ensure that independent investigations of such allegations had been conducted and appropriate follow-up action was taken.

1 Both Y.Bhg. Tan Sri Dato’ Dr. Lin See Yan and Mr. Leslie Oswin Struys retired as Independent Non-Executive Directors at the Annual General Meeting held on 23 January 2013.

to ensure that the requirements of accounting standards and relevant regulations were fully met. Their presentation reflects a balanced assessment of the Group’s performance and prospects.

2) Internal controls and risk management

The Directors acknowledge their responsibility for the Group’s system of internal controls, which is designed to protect shareholders’ investments and the assets entrusted under its custody.

The system was intended to provide reasonable (but not absolute) assurance against material financial mis-statement or loss. It includes formal policies and operating procedures in relation to the safeguarding of assets, maintenance of proper accounting records, reliability of financial information and compliance with applicable legislation, regulation and best practice. It also includes the identification and containment of business risks.

The Group has well-established internal audit and compliance functions. Formal procedures are in place for both internal and external auditors to report independently on their findings and make the appropriate recommendations to the management and the Audit Committee.

3) relationship with external auditors

The external auditors attended all the scheduled meetings of the Audit Committee during the financial year. These meetings enabled the exchange of views on issues requiring attention. The role of the auditors and their participation during the financial year are stated in the Report on Audit Committee on pages 77 to 78 of this Annual Report.

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Internal auditThe Audit Committee continually evaluated the Group Internal Audit function to ensure its activities are performed independently and with impartiality and due professional care. This included the assessment of the Head of Group Internal Audit by the Chairman of the Audit Committee against established key results areas and competencies.

The annual internal audit plan was approved by the Audit Committee to ascertain the extent of its scope and coverage of the Group’s activities, including the adequacy of Group Internal Audit’s staffing strategies in supporting the plan’s completion. Following the completion of audit reviews conducted, the audit reports and the corresponding key findings, recommendations and corrective actions taken by Management were deliberated upon by the Audit Committee.

external auditDuring the financial year, the Audit Committee assessed the suitability and independence of external auditors and obtained a written assurance from the external auditors confirming their independence throughout the conduct of the audit engagement, including ascertaining that the independence of the external auditors were not impaired by the provision of non-audit services. The Audit Committee also reviewed the external audit plan and scope of work for the statutory audit for the financial year ending 30 September 2013 and performed an independent evaluation of the external auditors which was coordinated by Group Internal Audit. Other mattersThe related party transactions entered into by the Group were looked into by the Audit Committee to ensure that they were conducted on the Group’s normal

commercial terms and adequate internal procedures had been deployed in the Group in relation to such transactions to monitor compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

As at the date of this report, the Audit Committee had also reviewed the verification work performed by the external auditors on the allocation of share options/share grants under the Executives’ Share Option Scheme/ Share Grant Plan at the end of the financial year to ensure compliance with the established criteria.

The Statement on Corporate Governance, Statement on Risk Management and Internal Control and Report on Audit Committee for inclusion in this Annual Report were reviewed by the Audit Committee prior to Board approval.

GrOuP Internal audItThe internal audit function of the Group is performed in-house by Group Internal Audit. The Head of Group Internal Audit is independent and reports directly to the Chairman of the Audit Committee and administratively to the Chief Executive Officer.

In accordance with the annual internal audit plan which had been approved by the Audit Committee, Group Internal Audit conducts regular reviews of the governance, risk management and internal control processes within the Group. The audits are performed using a risk based approach and is consistent with the Group’s established framework in designing, implementing and monitoring of its control systems.

The ambit of the Group Internal Audit function is defined in the Group Internal Audit Charter which is periodically reviewed and had been approved

by the Audit Committee. During the financial year, the key activities carried out by Group Internal Audit, included the following:

• Performed periodic audits of keysubsidiaries within the Group to test on the appropriateness of control design and implementation as well as compliance with existing policies and procedures. This included the conduct of audits on financial management, procurement and tender, manufacturing, logistics, regulatory, safety, health and environment as well as regional operations.

• Followed up on the status ofimplementation of recommendations made for reporting to the Audit Committee and Management on a quarterly basis.

• Performed ad-hoc reviews andinvestigations as requested by the Audit Committee and Management.

The operational costs incurred by Group Internal Audit for the financial year amounted to RM1.04 million.

This Statement is made in accordance with the Board’s approval on 7 November 2013.

Report onAudit Committee

stateMent OnrisK ManaGeMent& internal COntrOl

the following ‘statement on risk management and Internal control: Guidelines for directors of listed Issuers’ outlines the nature and scope of risk management and internal controls of the Group during the financial year under review and is included pursuant to the requirements of Paragraph 15.26(b) of the main market listing requirements of Bursa malaysia securities Berhad.

BOard’s resPOnsIBIlIty and accOuntaBIlItyThe Board acknowledges that it has a responsibility to maintain a sound risk management and internal control system to address all key risks which the Group considers relevant and material to its operations. The Chief Executive Officer and Management play an integral role in assisting the design and implementation of the Board’s policies on risk and control.

In view of the inherent limitations in any such system, the system of risk management and internal controls are designed to manage rather than eliminate the risk of failure to achieve the Group’s corporate objectives and would therefore provide only reasonable and not absolute assurances against material misstatements or losses.

For the purposes of this statement, associated companies have been excluded from the Group.

rIsk manaGementThe Group has in place a Group Risk Management Framework (“GRMF”) which is designed to provide consistency in the management of risks across the Group. The GRMF defines the standard conditions and minimum requirements for risk management in the Group and addresses the following key areas:

on-going monitoring and review of risks and related controls and action plans are developed and implemented to manage risks.

risk Identification and assessmentAs part of the GRMF, a risk management methodology and approach is applied across the Group to facilitate risk identification, assessment, reporting, review and mitigation, as described below:

• A consistent risk likelihood and riskimpact criteria is applied across the Group, reflecting the acceptable risk appetite as approved by the Board.

• Risks are identified based on thefollowing risk categories to ensure a uniform and comprehensive risk identification approach:

rIsk cateGOrIes

Corporate GovernanCe

financial

operations

customers

human capital

products & services

external

legal

regulatory

suppliers

risk management roles and responsibilitiesIn providing oversight of risk management framework and policies in the Group, the Board is assisted by the Risk Management Committee (“RMC”) to ascertain that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interest and the Group’s assets; and determines the nature and extent of significant risks which the Group is willing to take in achieving its strategic objectives. The terms of reference of the RMC is made available on our corporate website at www.fn.com.my. Since its establishment on 19 June 20131, the RMC had convened 2 meetings to review the implementation of the risk management framework as well as to discuss on business risks and the actions to be taken to mitigate the risks identified. Further details on the activities of the RMC are included in the Statement on Corporate Governance on pages 72 to 76.

A Management Risk Committee, chaired by the Chief Executive Officer meets on a quarterly basis to deliberate on risks identified, controls and risk mitigation strategies arising from the risk assessment process conducted. The responsibility for day-to-day risk management resides with the Management of each subsidiary and they are accountable for the risks identified and assessed. In managing the risks of the Group, Management works closely with its risk coordinators to ascertain that there is

1 Prior to the formation of the RMC on 19 June 2013, the Audit Committee assisted the Board in providing appropriate advice and recommendations on material risk issues, and a risk management system for the timely identification, mitigation and management of such key risks that may have a material impact on the Group

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080Statement onRisk Management& Internal Control

Statement onRisk Management& Internal Control

• Risks identified are assessed todetermine their impact on the relevant business strategies/objectives and their likelihood of occurrence. The outcome of the risk assessment process is captured in a Corporate Risk Scorecard which enables subsidiaries within the Group to report risks and risk status using a common platform.

risk reporting and review On a quarterly basis, the risk profiles of the key subsidiaries are tabled to the Management Risk Committee and the Audit Committee1/RMC in a heat map, which sets out the priority and focus for risk mitigation based on risk rating at gross and net levels. Key Risk Indicators (“KRIs”) are also established to monitor risks and for risks that are material, the mitigating measures and KRIs are to be presented in the form of a Key Risk Dashboard. The risk reporting process is supported by an assurance letter from the Management of key subsidiaries on the adequacy and effectiveness of the system of risk management and internal controls.

During the financial year, a comfort matrix depicting the key risks of the Group and their corresponding controls, encompassing key responsibilities, organisation structure, processes, systems, assurance processes as well as information or reports received and reviewed by Board and Management was compiled and validated by Group Internal Audit. The comfort matrix was signed off by the Chief Executive Officer and Chief Financial Officer and thereafter presented to the Audit Committee and the Board for approval.

The risk management activities in the Group are reviewed on a periodic basis by Group Internal Audit. As part of the Group’s efforts to improve its risk management capabilities, a risk refresh exercise had been initiated during the financial year to enhance the risk content

and risk awareness in the Group. As at the date of this statement, this exercise is on-going and is expected to complete by December 2013.

Internal cOntrOl The following internal control components have been embedded to assist the Board to maintain a sound system of internal control in the Group.

code of Business conductA Code of Business Conduct (“the Code”) defines acceptable behaviour for staff in dealing with key stakeholders. The Code is made available to all staff in the Group’s intranet and staff are required to acknowledge that they have read and understood the Code.

human capital Industry tools and benchmarks assist Group Human Capital to analyse skills and knowledge related to specific job functions. These include job descriptions to define tasks assigned to respective jobs and functions as well as a Performance Management System which provides rating criteria for the assessment of performance based on agreed Key Result Areas and competencies defined for each staff.

Board and Board committeesBoard and Board Committees provide important oversight function and ascertain the adequacy of the internal control framework in the Group. Further details on the workings of the Board and its committees are provided under Corporate Information on page 26 as well as the Statement on Corporate Governance and Report on Audit Committee on pages 72 and 78.

limits of authorityThe authority limits for the Group’s organisational requirements for areas such as procurement, contracting, human resources and financial management are encapsulated in the Chart of Authority. The Chart of Authority provides guidance on the division of responsibilities between the Board and Management and is periodically reviewed and updated to reflect changes in the business, operational and organisational environment.

annual Business Plans and PerformanceThe Annual Business Plan (“ABP”) sets the targets and objectives of the Group and is supplemented by strategic initiatives and activities as well as key performance indicators to support and track the achievement of the Group’s targets and objectives. Frequent engagements between the Board and the Chief Executive Officer/Management via Group Exco meetings and management reports provide an avenue for performance to be periodically monitored and followed up upon.

Policies and ProceduresThe Group has set in place standard operating procedures covering critical and significant facets of the Group’s business processes and are primarily geared towards the prevention of asset and data loss and other major aspects of the Group’s business operations. These areas include financial management, occupational safety procedures, information technology, social media, human capital management, productivity benchmarks, product quality assurance, compliance with regulatory standards and disciplines, among other matters. The procedures are also subject to review as processes change or when new business requirements need to be met. Compliance with these procedures is an essential element of the internal control framework.

Information systemsThe Group operates on a comprehensive information system platform which enables transactions to be captured, compiled and reported in a timely and accurate manner. The information system is automated and provides management with data, analysis, variations, exceptions and other inputs relevant to the Group’s performance.

whistle BlowingA Whistle Blowing Policy had been formulated to encourage, and provide a channel to employees to report in good faith and in confidence, without fear of reprisals, of concerns about possible improprieties. Allegations of improprieties which had been reported via the whistle blowing channel are appropriately followed up upon and the outcome(s) reported at the Audit Committee meetings.

audit committee and Group Internal auditGroup Internal Audit performs periodic audits of subsidiaries within the Group based on a risk based internal audit plan approved by the Audit Committee. The audits are designed to test on the appropriateness of control design and implementation as well as compliance with existing policies and procedures. Based on the audits performed, areas of improvement on control design and implementation are highlighted, on a quarterly basis, to the Audit Committee and Management for corrective actions to be taken. Status of implementation of corrective actions is tracked until completion and quarterly updates are provided to the Audit Committee and Management. Further details on the activities of the Audit Committee and Group Internal Audit are set out in the Report on Audit Committee on pages 77 to 78.

cOnclusIOnThe Board is of the view that the Group’s overall risk management and internal control system is sound and adequate, in all material aspects, and have received the same assurance from both the Chief Executive Officer and Chief Financial Officer of the Group. The Board confirms that the risk management process in identifying, evaluating and managing significant risks faced by the Group had been in place throughout the financial year up to the date of approval of this statement. It is in the Board’s opinion that the Group’s system of internal control is adequate and is able to safeguard the interest of shareholders, stakeholders and the Group’s assets.

As required by Paragraph 15.23 of Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reviewed this Statement of Risk Management and Internal Control. Their review was performed in accordance with Recommended Practice Guide 5 (“RPG5”) issued by the Malaysian Institute of Accountants. RPG5 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

This Statement is made in accordance with the Board’s approval on 7 November 2013.

stateMent On direCtOrs’ respOnsiBilitYfOr PreParatIOn Of fInancIal statements

As required under the Companies Act 1965 (“Act”), the Directors on page 93 of this Annual Report have made a statement expressing an opinion on the financial statements. The Board is of the opinion that the financial statements have been drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Malaysian Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and the Company as at 30 September 2013 and of their financial performance and cash flows for the financial year then ended.

In the process of preparing these financial statements, and other than as disclosed in the notes to the financial statements, the Directors have reviewed the accounting policies and practices to ensure that they were consistently applied throughout the financial year. In cases where judgment and estimates were made, they were based on reasonableness and prudence.

Additionally, the Directors have relied on the system of internal controls to ensure that the information generated for the preparation of the financial statements from the underlying accounting records is accurate and reliable.

This statement is made in accordance with the Board’s approval on 7 November 2013.

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FinanCial stateMents086 Directors’ Report093 Statement by Directors and Statutory Declaration094 Independent Auditors’ Report096 Income Statements097 Statements of Comprehensive Income098 Statements of Financial Position101 Statements of Changes in Equity 105 Statements of Cash Flows107 Notes to the Financial Statements 181 Supplementary Information

F&N, as a company with 130 years of history, has been delivering products of consistently high quality and trusted brands that have grown with many families through different generations.

We are continuing to make great strides in leveraging our long heritage, the strength of our brand portfolio and unparalleled marketing and distribution network to deliver excellence in the market place

as well as to our customers and consumers for whom F&N is inseparable in their daily lives.

Our products have satisfied the tastes and appetites of generations and we will continue to deepen the connection with our consumers and offer excitement and enjoyment in tandem with our brand

promise of ‘Pure Enjoyment, Pure Goodness’.

1883-2013

trusted by GeneratIons

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Directors’ report

Directors' report

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 September 2013.

principal activities

The principal activity of the Company is investment holding and its subsidiaries are primarily engaged in the manufacture and sale of soft drinks, dairy products, property development activities and the provision of management services.

There have been no significant changes in the nature of the principal activities during the financial year.

results Group company rM'000 rM'000 Profit for the year 260,626 177,505 Equity holders of the Company 260,653 177,505 Non-controlling interests (27) -

260,626 177,505 There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements. In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature, other than the following:

(i) recognition of final insurance claims in respect of flood related damages to the Group's dairies product manufacturing facilities in Rojana, Thailand (as disclosed in Note 5(a) to the financial statements); and

(ii) provision for litigation claims as disclosed in Note 7(a) to the financial statements.

Directors’ Report

DiviDenDs

The amounts of dividends paid by the Company since 30 September 2012 were as follows:

rM'000 In respect of the financial year ended 30 September 2012 as reported in the Directors' report of that year:

- Final single tier dividend of 23% per share on 363,560,201 ordinary shares,declared on 23 January 2013 and paid on 27 February 2013 83,619

- Special single tier dividend of 15% per share on 363,560,201 ordinary shares,declared on 23 January 2013 and paid on 27 February 2013 54,534

In respect of the financial year ended 30 September 2013:

- Interim single tier dividend of 20% per share on 363,669,800 ordinary shares, declared on 7 May 2013 and paid on 1 August 2013 72,734

210,887

At the forthcoming Annual General Meeting, the Directors are recommending for shareholders' approval, a final single tier dividend of 30 sen per share together with a special single tier dividend of 10 sen per share in respect of the current financial year on 364,420,601 ordinary shares as at 30 September 2013 (excluding treasury shares). The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 30 September 2014.

Directors

The Directors of the Company in office since the date of the last report and at the date of this report are:

Tengku Syed Badarudin Jamalullail (Chairman)Dato' Anwarrudin bin Ahamad OsmanDato' Dr Mohd Shahar bin SidekDato' Ng Jui SiaDato' Dr Nik Norzrul Thani bin Nik Hassan ThaniAnthony Cheong Fook SengLee Kong YipTong Sing EngDato' Johan Tazrin bin Hamid Ngo (Appointed on 23 January 2013)Chin Kwai Yoong (Appointed on 23 January 2013)Dato' Jorgen Bornhoft (Appointed on 7 May 2013)Hui Choon Kit (Ceased as Alternate Director to Pascal De Petrini on 18 April 2013 but reappointed as Alternate Director to Dato' Ng Jui Sia on 29 August 2013)Leslie Oswin Struys (Retired on 23 January 2013)Tan Sri Dato' Dr Lin See Yan (Retired on 23 January 2013)Pascal De Petrini (Resigned on 18 April 2013)

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Directors (cont'D.)

At the forthcoming Annual General Meeting, the following Directors retire and, being eligible, offer themselves for re-election:

(i) Dato’ Ng Jui Sia, Anthony Cheong Fook Seng and Lee Kong Yip pursuant to Article 97 of the Company’s Articles of Association; and

(ii) Dato’ Anwarrudin bin Ahamad Osman and Dato’ Jorgen Bornhoft pursuant to Section 129 of the Companies Act, 1965.

Directors' benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted pursuant to the immediate holding company and the Company's Executives' Share Option Scheme ("ESOS") and Share Grant Plan.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary of a full-time employee of the Company as shown in Note 7(c) to the financial statements) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Directors' interests

According to the register of Directors' shareholdings, the interests of Directors in office at the end of the financial year in shares, options over shares and Share Grant Plan in the Company and its related corporations during the financial year were as follows:

number of ordinary shares/ordinary unitscompanies in which Directors as at as at held interest 1.10.2012 acquired sold 30.9.2013

fraser & neave Holdings bhdTengku Syed Badarudin Jamalullail - direct interest 2,062,000 - - 2,062,000

fraser and neave, limitedDato’ Ng Jui Sia - direct interest 85,960 695,300 (769,260) 12,000 Anthony Cheong Fook Seng - direct interest 676,150 a 2,641,350 b (3,317,500) - - indirect interest 60,250 - c (60,250) - Hui Choon Kit - direct interest 145,240 d 897,715 g (1,042,955) -

frasers centrepoint trustDato’ Jorgen Bornhoft - direct interest - 60,000 - 60,000 Dato’ Ng Jui Sia - direct interest 10,000 - - 10,000 Anthony Cheong Fook Seng - direct interest 50,000 - - 50,000

Directors’ Report Directors’ Report

Directors' interests (cont'D.)

number of ordinary shares/ordinary unitscompanies in which Directors as at as at held interest (cont'd.) 1.10.2012 acquired sold 30.9.2013

frasers centrepoint trust (cont'd.)Hui Choon Kit - direct interest 140,000 - - 140,000

frasers commercial trust Dato’ Ng Jui Sia - direct interest 10,000 - - 10,000 Anthony Cheong Fook Seng - indirect interest 24,000 - - 24,000 Hui Choon Kit - direct interest 131,000 - - 131,000

fung choi Media Group ltd Dato’ Ng Jui Sia - direct interest 80,000 - - 80,000 - indirect interest e 10,000 - - 10,000

thai beverage public company limitedDato’ Ng Jui Sia - direct interest - 120,000 - 120,000

number of share optionscompanies in which Directors as at as at held interest 1.10.2012 Granted exercised 30.9.2013

fraser and neave, limitedDato’ Ng Jui Sia 795,580 - f (795,580) - Anthony Cheong Fook Seng 2,572,400 - (2,572,400) - Hui Choon Kit 839,790 - (839,790) -

number of share grantscompanies in which Directors as at as at held interest 1.10.2012 Granted vested 30.9.2013

fraser and neave, limitedDato’ Ng Jui Sia - RSP 143,022 f 135,339 (50,700) 227,661 - PSP 50,430 f 58,217 f (37,700) 70,947 Anthony Cheong Fook Seng - RSP 109,600 f 100,801 (36,950) 173,451 - PSP 36,000 f 46,307 (32,000) 50,307 Hui Choon Kit - RSP 115,982 f 95,838 (40,325) 171,495 - PSP 29,847 f 37,123 (17,600) 49,370

a including 68,950 share awards vested on 18 October 2012b sold in open market at own discretion, transferred to “indirect interest” and acceptance of TCC Assets Limited's offer for Fraser and Neave, Limitedc acceptance of TCC Assets Limited’s offer for Fraser and Neave, Limitedd including 57,925 share awards vested on 18 October 2012e shares held by spousef including adjustments pursuant to Fraser and Neave, Limited’s Capital Reductiong sold in open market at own discretion and acceptance of TCC Assets Limited's offer for Fraser and Neave, Limited

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Directors’ interests (cont'D.)

None of the other Directors in office at the end of the financial year had an interest in shares in the Company or its related corporations during the financial year.

issue of sHares

During the financial year, the Company has issued 1,660,800 new ordinary shares of RM1 each pursuant to the exercise of the Executives' Share Option Scheme ("ESOS") at the following issue price for cash:

(i) 60,400 ordinary shares were issued at an issue price of RM7.81 per share;(ii) 927,600 ordinary shares were issued at an issue price of RM10.47 per share; and (iii) 672,800 ordinary shares were issued at an issue price of RM14.52 per share.

The share premium of RM21.5 million arising from the exercise of ESOS has been included in the share premium account. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company. Shares issued pursuant to the exercise of ESOS subsequent to the end of the financial year and to the date of this report are disclosed in Note 23 to the financial statements.

treasury sHares

There were no repurchase of treasury shares during the financial year. As at 30 September 2013, the Company held 237,100 treasury shares under Section 67A of the Companies Act, 1965.

executives’ sHare option scHeMe (“esos”) anD sHare Grant plan

(a) esos

The ESOS which is governed by its by-laws was approved by the shareholders at the Extraordinary General Meeting held on 5 April 2007. The ESOS is effective 1 October 2007.

Details of all the options to subscribe for ordinary shares of RM1.00 each in the share capital of the Company granted to executives pursuant to the ESOS are as follows:

exercise price/adjusted balance balance exercise price as at options options as at w.e.f. vesting

offer date 1.10.2012 exercised lapsed 30.9.2013 13.12.2010 period no. of options rM

options 2009 19.8.2011 -19.11.2008 60,400 (60,400) - - 8.46/7.81 18.10.2013 options 2010 20.8.2012 -20.11.2009 1,124,000 (927,600) - 196,400 11.34/10.47 19.10.2014 options 2011 22.8.2013 -22.11.2010 2,752,400 (672,800) (204,900) 1,874,700 14.52 21.10.2015

Directors’ Report

executives’ sHare option scHeMe (''esos'') anD sHare Grant plan (cont'D.)

(a) esos (cont'd.)

The main features of the Company’s ESOS are disclosed in Note 25(b) to the financial statements. There were no options granted during the year.

(b) restricted share plan ("rsp") and performance share plan ("psp") (the "share Grant plan")

The Company had undertaken a review of the ESOS and introduced an additional long term incentive plan, i.e. the Share Grant Plan. The plan which is governed by its by-laws, was approved by Bursa Malaysia Securities Berhad on 20 December 2011 and subsequently approved by shareholders at the Extraordinary General Meeting held on 13 January 2012.

The first grant of RSP was made in March 2012 whilst the second grant of RSP was made in February 2013. There were no grant made under the PSP. The details of the shares awarded under the RSP are as follows:

balance as at balance 1.10.2012/ shares shares as at vesting

offer date grant date exercised lapsed 30.9.2013 period no. of options

year 1 31.12.2013 -15.03.2012 402,300 - (45,900) 356,400 31.12.2015

year 2 31.12.2014 -07.02.2013 396,000 - (46,500) 349,500 31.12.2016

The main features of the Company's RSP and PSP are disclosed in Note 25(c) to the financial statements.

The Directors do not participate in both the ESOS and Share Grant Plan.

otHer statutory inforMation

(a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for impairment of receivables and satisfied themselves that all known bad debts had been written off and that adequate allowance for impairment had been made for receivables; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the allowance for impairment of receivables in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

Directors’ Report

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otHer statutory inforMation (cont'D.)

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) At the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the Directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due, other than as disclosed in Note 41 to the financial statements; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

HolDinG coMpanies

The immediate holding company is Fraser and Neave, Limited, a corporation incorporated in the Republic of Singapore whilst the ultimate holding company is TCC Assets Limited, a corporation incorporated in British Virgin Islands.

siGnificant event

Significant event is disclosed in Note 41 to the financial statements.

auDitors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 7 November 2013.

Tengku Syed Badarudin Jamalullail Dato' Ng Jui Sia

Directors’ Report statement by Directors

statutory Declaration

We, Tengku Syed Badarudin Jamalullail and Dato' Ng Jui Sia, being two of the Directors of Fraser & Neave Holdings Bhd, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 96 to 180 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and the Company as at 30 September 2013 and of their financial performance and cash flows for the financial year then ended.

The supplementary information set out in Note 42 to the financial statements on page 181 have been prepared, in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directives of Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 7 November 2013.

Tengku Syed Badarudin Jamalullail Dato' Ng Jui Sia

I, Soon Wing Chong, being the officer primarily responsible for the financial management of Fraser & Neave Holdings Bhd, do solemnly and sincerely declare that the financial statements set out on pages 96 to 181 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovementioned Soon Wing Chong at Kuala Lumpur in the Federal Territory on 7 November 2013. Soon Wing Chong

Before me,

Commissioner for OathsArshad Abdullah (W 550)

pursuant to section 169(15) of tHe coMpanies act, 1965

pursuant to section 169(16) of tHe coMpanies act, 1965

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inDepenDentauDitors’ report

report on tHe financial stateMents We have audited the financial statements of Fraser & Neave Holdings Bhd, which comprise the statements of financial position as at 30 September 2013 of the Group and of the Company, and income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended and a summary of significant accounting policies and other explanatory information, as set out on pages 96 to 180.

Directors’ responsibility for the financial statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial 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 the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 September 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia.

report on otHer leGal anD reGulatory requireMents In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(c) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

to tHe MeMbers of fraser & neave HolDinGs bHD (incorporateD in Malaysia)

otHer reportinG responsibilities The supplementary information set out in Note 42 on page 181 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

otHer Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Low Khung Leong AF: 0039 No. 2697/01/15(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia7 November 2013

Independent Auditors’ Reportto the members of fraser & neave Holdings bhd (cont'd.) (incorporated in Malaysia)

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Group company note 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 (restated) revenue 4 3,508,225 3,171,923 183,917 272,589 Cost of sales (2,472,460) (2,285,112) - -

Gross profit 1,035,765 886,811 183,917 272,589 other income 5(a) 63,771 176,629 7,610 4,788 operating expenses Distribution expenses (361,465) (324,500) - - Marketing expenses (278,002) (255,894) - - Administrative expenses (130,612) (142,248) (10,631) (3,192)Other expenses 5(b) (16,772) (109,417) (11,934) (4,764)

(786,851) (832,059) (22,565) (7,956) operating profit 312,685 231,381 168,962 269,421 Interest expense 6 (13,918) (11,558) - - Interest income 6 5,252 4,266 9,404 7,573

304,019 224,089 178,366 276,994 Share of results of an associate 4,691 6,119 - -

profit before tax 7 308,710 230,208 178,366 276,994 Income tax (expense)/credit 8 (48,084) 43,782 (861) (366)

profit for the year 260,626 273,990 177,505 276,628 Profit attributable to: Equity holders of the Company 260,653 274,030 177,505 276,628 Non-controlling interests (27) (40) - -

260,626 273,990 177,505 276,628 Basic earnings per share attributable to equity holders of the Company (sen) 9(a) 71.7 75.9 Diluted earnings per share attributable to equity holders of the Company (sen) 9(b) 71.4 75.4

income statementsfor tHe financial year enDeD 30 septeMber 2013

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

statements oFcompreHensiVe incomefor tHe financial year enDeD 30 septeMber 2013

Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000

Profit for the year 260,626 273,990 177,505 276,628 other comprehensive income Exchange differences on translation of foreign operations 19,351 (13,138) - -

total comprehensive income for the year 279,977 260,852 177,505 276,628 Attributable to: Equity holders of the Company 280,004 260,892 177,505 276,628 Non-controlling interests (27) (40) - -

279,977 260,852 177,505 276,628


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statements oFFinancial positionas at 30 septeMber 2013

Group 30 september 30 september 1 october note 2013 2012 2011 rM'000 rM'000 rM'000 (restated) (restated)

assets non-current assets Property, plant and equipment 11 1,065,776 1,074,386 1,008,840 Investment properties 12 57,084 - - Properties held for development 13 54,518 62,276 5,504 Investment in an associate 15 75,511 73,737 55,929 Intangible assets 17 136,476 134,970 127,262 Deferred tax assets 28 71,404 79,050 4,705

1,460,769 1,424,419 1,202,240 current assets Property development costs 18 26,834 9,047 74,569 Inventories 19 350,134 370,775 314,668 Receivables 20(a) 559,722 562,117 547,454 Tax recoverable 3,948 4,745 2,672 Cash and cash equivalents 21 362,172 227,873 290,290

1,302,810 1,174,557 1,229,653 Non-current assets held for sale 22 - 55,897 55,897

1,302,810 1,230,454 1,285,550

total assets 2,763,579 2,654,873 2,487,790 equity and liabilities

equity attributable to equity holders of the companyShare capital 23 364,658 362,997 360,379 Treasury shares 24 (1,716) (1,716) (1,716)Reserves 25 1,287,231 1,193,002 1,200,155

1,650,173 1,554,283 1,558,818 Non-controlling interests 227 254 294

total equity 1,650,400 1,554,537 1,559,112 non-current liabilities Borrowings 26 150,000 - 150,000 Provision for retirement benefits 27 35,042 35,227 35,822 Deferred tax liabilities 28 26,833 15,047 13,604

211,875 50,274 199,426

Statements of Financial Positionas at 30 september 2013 (cont'd.)

Group 30 september 30 september 1 october note 2013 2012 2011 rM'000 rM'000 rM'000 (restated) (restated)

current liabilities Payables 29(a) 636,354 618,001 697,188 Provisions 29(b) 17,934 6,000 22,468 Borrowings 26 240,000 423,711 - Tax payable 7,016 2,350 9,596

901,304 1,050,062 729,252

total liabilities 1,113,179 1,100,336 928,678

total equity and liabilities 2,763,579 2,654,873 2,487,790

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company 30 september 30 september 1 october note 2013 2012 2011 rM'000 rM'000 rM'000

assets non-current assets Investments in subsidiaries 14 955,010 962,180 978,298 Investment in an associate 15 68,727 68,727 54,648 Investment in a joint venture 16 500 500 - Receivables 20(b) 160,046 148,243 148,649

1,184,283 1,179,650 1,181,595 current assets Receivables 20(a) 94,961 131,555 134,566 Tax recoverable 117 - 23 Cash and cash equivalents 21 53,539 17,960 18,247

148,617 149,515 152,836

total assets 1,332,900 1,329,165 1,334,431 equity and liabilities equity attributable to equity holders of the company Share capital 23 364,658 362,997 360,379 Treasury shares 24 (1,716) (1,716) (1,716)Reserves 25 951,544 959,814 951,231

total equity 1,314,486 1,321,095 1,309,894 current liabilities Payables 29(a) 480 2,010 2,069 Provisions 29(b) 17,934 6,000 22,468 Tax payable - 60 -

18,414 8,070 24,537

total equity and liabilities 1,332,900 1,329,165 1,334,431


as at 30 september 2013 (cont'd.)

for tHe financial year enDeD 30 septeMber 2013

statements oFcHanges in equity

attributable to equity holders of the company non-distributable Distributable share- foreign based share share treasury exchange payment legal retained non- capital premium shares reserve reserve reserve earnings controlling total note (note 23) (note 25) (note 24) (note 25) (note 25) (note 25) (note 25) total interests equity rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000

Group at 1 october 2012 362,997 395,810 (1,716) (9,268) 8,552 9,934 787,974 1,554,283 254 1,554,537 total comprehensive income - - - 19,351 - - 260,653 280,004 (27) 279,977 transaction with owners Share options granted under ESOS - - - - 2,069 - - 2,069 - 2,069 Shares awarded under Share - - - - 4,750 - - 4,750 - 4,750 Grant PlanShares exercised under ESOS 1,661 21,499 - - (3,206) - - 19,954 - 19,954 Dividends 10 - - - - - - (210,887) (210,887) - (210,887)total transactions with owners 1,661 21,499 - - 3,613 - (210,887) (184,114) - (184,114)

at 30 september 2013 364,658 417,309 (1,716) 10,083 12,165 9,934 837,740 1,650,173 227 1,650,400

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attributable to equity holders of the company non-distributable Distributable share- foreign based share share treasury exchange payment legal capital retained non- capital premium shares reserve reserve reserve reserve earnings controlling total note (note 23) (note 25) (note 24) (note 25) (note 25) (note 25) (note 25) (note 25) total interests equity rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000

Group

at 1 october 2011 360,379 369,782 (1,716) 3,870 6,626 - 15,897 803,980 1,558,818 294 1,559,112total comprehensive income - - - (13,138) - - - 274,030 260,892 (40) 260,852

transaction with owners Share options granted under ESOS - - - - 3,646 - - - 3,646 - 3,646 Shares awarded under Share Grant Plan - - - - 2,082 - - - 2,082 - 2,082 Shares exercised under ESOS 2,618 26,028 - - (3,802) - - - 24,844 - 24,844 Dividends 10 - - - - - - - (295,999) (295,999) - (295,999)Transfer to retained earnings - - - - - - (15,897) 15,897 - - - Transfer to legal reserve 25(a) - - - - - 9,934 - (9,934) - - - total transactions with owners 2,618 26,028 - - 1,926 9,934 (15,897) (290,036) (265,427) - (265,427)

at 30 september 2012 362,997 395,810 (1,716) (9,268) 8,552 9,934 - 787,974 1,554,283 254 1,554,537

Statements of Changes in Equityfor the financial year ended 30 september 2013 (cont'd.)

Statements of Changes in Equity

attributable to equity holders of the company non-distributable Distributable share- based share share treasury payment retained capital premium shares reserve earnings total note (note 23) (note 25) (note 24) (note 25) (note 25) equity rM'000 rM'000 rM'000 rM'000 rM'000 rM'000

company at 1 october 2012 362,997 395,810 (1,716) 8,552 555,452 1,321,095 total comprehensive income - - - - 177,505 177,505 transaction with owners Share options granted under ESOS - - - 2,069 - 2,069 Shares awarded under Share Grant Plan - - - 4,750 - 4,750 Shares exercised under ESOS 1,661 21,499 - (3,206) - 19,954 Dividends 10 - - - - (210,887) (210,887)total transactions with owners 1,661 21,499 - 3,613 (210,887) (184,114) at 30 september 2013 364,658 417,309 (1,716) 12,165 522,070 1,314,486

for the financial year ended 30 september 2013 (cont'd.)

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104

attributable to equity holders of the company non-distributable Distributable share- based share share treasury payment capital retained capital premium shares reserve reserve earnings total note (note 23) (note 25) (note 24) (note 25) (note 25) (note 25) equity rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000

company at 1 october 2011 360,379 369,782 (1,716) 6,626 15,897 558,926 1,309,894 total comprehensive income - - - - - 276,628 276,628 transaction with owners Share options granted under ESOS - - - 3,646 - - 3,646 Shares awarded under Share Grant Plan - - - 2,082 - - 2,082 Shares exercised under ESOS 2,618 26,028 - (3,802) - - 24,844 Transfer to retained earnings - - - - (15,897) 15,897 - Dividends 10 - - - - - (295,999) (295,999)total transactions with owners 2,618 26,028 - 1,926 (15,897) (280,102) (265,427)

at 30 september 2012 362,997 395,810 (1,716) 8,552 - 555,452 1,321,095

Statements of Changes in Equityfor the financial year ended 30 september 2013 (cont'd.)


for tHe financial year enDeD 30 septeMber 2013

statements oFcasH Flows

Group company note 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 cash flows from operating activities Profit before tax 308,710 230,208 178,366 276,994 Adjustments for: Depreciation of property, plant and equipment 11 82,165 90,472 - - Impairment loss on property, plant and equipment 11 2,397 678 - - Property, plant and equipment written-off 11 1,817 34,788 - - (Gain)/loss on disposal of property, plant and equipment (541) 993 - - Net gain from fair value adjustment of investment properties 12 (9,416) - - - Amortisation of intangible assets 17 6,203 3,981 - - Impairment of intangible assets 17 5,392 - - - Intangible assets written-off 17 - 56 - - Inventories written-down 2,484 3,184 - - Inventories written-off 13,210 47,780 - - Property damage insurance claim 5(a) (30,921) (80,699) - - Business interruption insurance claim 5(a) (18,395) (29,892) - - Fair value (gain)/loss on derivatives (360) 274 - - Impairment of investment in a subsidiary - - 7,170 - Gain arising from the loss of control in a former subsidiary 14(a) - (55,301) - - Share of results of an associate (4,691) (6,119) - - Dividend income 4 - - (183,917) (272,589) Interest income 6 (5,252) (4,266) (9,404) (7,573) Interest expense 6 13,918 11,558 - - Retirement benefits expense 27 3,265 3,481 - - Allowance for impairment on trade receivables 20 720 2,149 - - Share-based payment transactions expense 6,819 5,728 - - Write-back of impairment loss on property,

plant and equipment 11 (1,658) (529) - - Reversal of allowance for impairment on trade receivables 20 (683) (1,930) - - Bad debts recovered (3,527) - - - Reversal of inventories written-down (1,614) (2,262) - - Unrealised foreign exchange loss 735 1,664 - 4,764 Unrealised foreign exchange gain - - (7,610) - Provision for litigation claim 5(b) 11,934 - 11,934 - Write-back of provision relating to glass container business 29(b) - (4,788) - (4,788)

Operating profit/(loss) before changes in working capital 382,711 251,208 (3,461) (3,192)Changes in working capital: Decrease/(increase) in inventories 6,561 (104,809) - - (Increase)/decrease in trade and other receivables (31,898) 48,183 39,049 10,200 Increase/(decrease) in trade and other payables 71,870 (120,344) (1,358) (59) Decrease in property development costs (10,029) (5,437) - -

Cash generated from operations 419,215 68,801 34,230 6,949

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Group company note 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 cash flows from operating activities (cont'd.) Income tax paid (40,322) (39,408) (1,039) (620) Income tax refunded 17,272 841 - 337 Insurance claims received 38,986 84,155 - - Payment of indemnity cost relating to glass container business 29(b) - (11,680) - (11,680) Benefits paid for retirement benefits 27 (3,708) (3,952) - -

Net cash generated from/(used in) operating activities 431,443 98,757 33,191 (5,014)

cash flows from investing activities Proceeds from disposal of property, plant and equipment 2,502 1,222 - - Net cash inflow from the loss of control in a former subsidiary 14(a) - 69,602 - - Investment in an associate 15 - (14,079) - (14,079)Investment in a joint venture - - - (500)Subscription of RNCCPS* in subsidiaries 14(c) - - - (147,700)Purchase of property, plant and equipment 11 (69,507) (209,687) - - Purchase of intangible assets 17 (3,225) (3,684) - - Dividends received 2,917 2,390 183,917 266,589 Proceeds from capital repayment scheme in a subsidiary 14(b) - - - 24,999 Proceeds from redemption of RNCCPS* in a subsidiary 14(d) - - - 139,000 Interest received 4,806 4,014 9,404 7,573

Net cash (used in)/generated from investing activities (62,507) (150,222) 193,321 275,882 cash flows from financing activitiesInterest paid (15,465) (10,988) - - Proceeds from exercise of ESOS 19,954 24,844 19,954 24,844 (Repayment)/drawdown of borrowings (33,711) 273,711 - - Payment of dividends 10 (210,887) (295,999) (210,887) (295,999)

Net cash used in financing activities (240,109) (8,432) (190,933) (271,155) net increase/(decrease) in cash and cash equivalents 128,827 (59,897) 35,579 (287)effects of foreign exchange rate changes 5,472 (2,520) - -cash and cash equivalents at beginning of financial year 227,873 290,290 17,960 18,247

cash and cash equivalents at end of financial year 21 362,172 227,873 53,539 17,960

Statements of Cash Flows

* RNCCPS - Redeemable Non-Cumulative Convertible Preference Shares

for the financial year ended 30 september 2013 (cont'd.)


1. corporate inforMation

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 8, F&N Point, No. 3, Jalan Metro Pudu 1, Fraser Business Park, Off Jalan Yew, 55100 Kuala Lumpur.

The immediate holding company is Fraser and Neave, Limited which is incorporated in Singapore. The ultimate holding company is TCC Assets Limited, which is incorporated in the British Virgin Islands.

The principal activity of the Company is investment holding and its subsidiaries are primarily engaged in the manufacture and sale of soft drinks, dairy products and property development activities and the provision of management services. There have been no significant changes in the nature of the principal activities during the financial year.

The financial statements were authorised for issue in accordance with a resolution of the Directors on 7 November 2013.

2. suMMary of siGnificant accountinG policies

2.1 basis of preparation

The financial statements of the Group and of the Company for the financial year ended 30 September 2013 have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and of the Company for periods up to and including the financial year ended 30 September 2012 were prepared under Financial Reporting Standards ("FRS") and are available upon request from the Company's registered office.

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia ("RM"), and all values are recorded to the nearest thousand ("RM'000") except when otherwise indicated.

2.2 first-time adoption of Malaysian financial reporting standards ("Mfrs")

These are the first financial statements of the Group and of the Company prepared in accordance with MFRS. The accounting policies set out below have been applied in preparing the financial statements of the Group and the Company for the financial year ended 30 September 2013, the comparative information presented in these financial statements for the financial year ended 30 September 2012 and the opening MFRS statement of financial position at 1 October 2011 (the Group’s and the Company's date of transition to MFRS).

The significant accounting policies adopted in preparing these financial statements are consistent with those of the audited financial statements for the financial year ended 30 September 2012 except as disclosed in Note 12. There are no material adjustments arising from the transition to MFRS. Accordingly, no notes relating to the statement of financial position as at the date of transition to MFRS are presented.

notes to tHeFinancial statementsfor tHe financial year enDeD 30 septeMber 2013

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108Notes to the Financial Statements Notes to the Financial Statements

For the financial year ended 30 September 2013For the financial year ended 30 September 2013

2. suMMary of siGnificant accountinG policies (cont'D.)

2.3 Mfrs and amendments to Mfrs issued but not yet effective

As at the date of authorisation of these financial statements, the following Standards, Amendments and IC Interpretations have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective and have not been adopted by the Group and the Company:

effective for financial periods beginning on or after 1 January 2013 • MFRS3Business Combinations • MFRS10Consolidated Financial Statements • MFRS11Joint Arrangements • MFRS12Disclosure of Interests in Other Entities • MFRS13Fair Value Measurement • MFRS119Employee Benefits (IAS 19 as amended by IASB in June 2011) • MFRS127Consolidated and Separate Financial Statements (IAS 27 revised by IASB in December 2003) • MFRS127Separate Financial Statements (IAS 27 as amended by IASB in May 2011) • MFRS128Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May 2011) • AmendmentstoMFRS1First-time Adoption of MFRS - Government Loans • AmendmentstoMFRS7Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities • AmendmentstoMFRS10Consolidated Financial Statements: Transition Guidance • AmendmentstoMFRS11Joint Arrangements: Transition Guidance • AmendmentstoMFRS12Disclosure of Interests in Other Entities: Transition Guidance • AnnualImprovementstoICInterpretationsandMFRSs2009-2011Cycle

effective for financial periods beginning on or after 1 January 2014 • AmendmentstoMFRS10Investment Entities • AmendmentstoMFRS12Investment Entities • AmendmentstoMFRS127Investment Entities • AmendmentstoMFRS132Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities • AmendmentstoMFRS136Recoverable Amount Disclosures for Non-Financial Assets • AmendmentstoMFRS139Novation of Derivatives and Continuance of Hedge Accounting • ICInterpretation21Levies

effective for financial periods beginning on or after 1 January 2015 • MFRS9Financial Instruments (IFRS 9 issued by IASB in November 2009 and October 2010)

The Group and the Company will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any effect to the financial statements of the Group and of the Company upon their initial application, except as described below:


2.3 Mfrs and amendments to Mfrs issued but not yet effective (cont'd.)

(a) Mfrs 11 Joint Arrangements

MFRS 11 replaces MFRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly Controlled Entities – Non-monetary Contributions by Venturers.

The classification of joint arrangements under MFRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under MFRS 11, joint arrangements are classified as either joint operations or joint ventures.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

MFRS 11 removes the option to account for jointly controlled entity (“JCE”) using proportionate consolidation. Instead, JCE that meets the definition of a joint venture must be accounted for using the equity method.

The application of this new standard will affect the financial position of the Group due to the cessation of proportionate consolidation of Vacaron Company Sdn Bhd. Under MFRS 11, Vacaron Company Sdn Bhd is treated as a joint venture and will be accounted for using the equity method.

MFRS 11 will be applied in accordance with the relevant transitional provisions set out in MFRS 11. The initial investment as at 1 October 2013 for the purposes of applying the equity method will be measured as the aggregate of the carrying amounts of the assets and liabilities that the Group had previously proportionately consolidated.

(b) Mfrs 12 Disclosures of Interests in Other Entities

MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.

(c) Mfrs 127 Separate Financial Statements

As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

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2.3 Mfrs and amendments to Mfrs issued but not yet effective (cont'd.)

(d) Mfrs 128 Investments in Associates and Joint Ventures

As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.

(e) Mfrs 13 Fair Value Measurement

MFRS 13 establishes a single source of guidance under MFRS for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted.

Upon adoption of MFRS 13, the Group will take into consideration the highest and best use of certain properties in measuring the fair value of such properties. The adoption of MFRS 13 is expected to result in higher fair value of certain properties of the Group.

(f) Mfrs 119 Employee Benefits

The amendments to MFRS 119 Employee Benefits change the accounting for defined benefit plans and termination benefits. The significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the ‘corridor method’ permitted under the existing version of MFRS 119 Employee Benefits and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the statements of financial position to reflect the full value of the plan deficit or surplus.

As at the current financial year end, the Group has unrecognised actuarial gain of RM1.3 million as disclosed in Note 27. The Group and the Company expect to recognise the actuarial gain and the corresponding deferred tax assets in accordance with MFRS 119 Employee Benefits upon adoption of this amendment and a retrospective application is required. These amounts would be adjusted in the opening financial statements in the next financial year.

(g) Mfrs 3 Business Combinations (IFRS 3 issued by IASB in March 2004) and Mfrs 127 Consolidated and Separate Financial Statements (IAS 27 revised by IASB in December 2003)

An entity shall apply these earlier versions of MFRS 3 and MFRS 127 only if the entity has elected to do so as allowed in MFRS 10 Consolidated Financial Statements. The adoption of these standards are not expected to have a significant impact to the Group and the Company.

(h) Mfrs 9 Financial Instruments: Classification and Measurement

MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.


2.4 basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the 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 are eliminated in full. Unrealised losses with indication of impairment may require recognition in the consolidated financial statements.

Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable 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.

In business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in the profit or loss.

The Group elects for each individual business combination, whether non-controlling interests 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 net identifiable assets.

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:

• Derecognisestheassets(includinggoodwill)andliabilitiesofthesubsidiary • Derecognisesthecarryingamountofanynon-controllinginterest • Derecognisesthecumulativetranslationdifferencesrecordedinequity • Recognisesthefairvalueoftheconsiderationreceived • Recognisesthefairvalueoftheinvestmentretained • Recognisesanysurplusordeficitinprofitorloss • Reclassifiestheparent'sshareofcomponentspreviouslyrecognisedinothercomprehensiveincometoprofitor

loss or retained earnings, as appropriate

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2.4 basis of consolidation (cont'd.)

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interests 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 identifiable assets and liabilities is recorded as goodwill in the statement of financial position. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in the profit or loss on the acquisition date.

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.

Business combinations prior to 1 October 2010

Business combinations were accounted for using the purchase method. Any costs directly attributable to the business combination formed part of the cost of a business combination.

Business combinations achieved in stages were accounted for separately for each transaction, using the cost of the transaction and fair value information at the date of each transaction, to determine the amount of any goodwill associated with that transaction. Adjustments to those fair values relating to previously held interests were treated as a revaluation and recognised in equity. Any additional acquired interest did not affect previously recognised goodwill.

Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent measurements of the contingent consideration affected goodwill.

2.5 transactions with non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated income statement, consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, 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 reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.


2.6 subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the profit or loss.

2.7 associate

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investment in an associate is accounted for using the equity method. Under the equity method, the investment in an associate is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

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 an associate. The Group determines at each reporting date 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 the profit or loss.

The Group's share of the operating results of an associate is shown separately in the profit or loss. The Group’s share of other comprehensive income of the associate is recognised in other comprehensive income. The financial statements of the associate are prepared as of a different reporting date from that of the Group. The share of results of an associate refers to Cocoaland Holdings Berhad and is derived from the sum total of its unaudited quarterly results recognised by the Group for the four quarters ended 30 June 2013. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

In the Company’s separate financial statements, investment in an associate is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in the profit or loss.

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2.8 Joint venture

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 financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The Group recognises its interest in joint venture using proportionate consolidation. The Group combines its share of each of the assets, liabilities, income and expenses of the joint venture with the similar items, line by line, in its consolidated financial statements. The joint venture is proportionately consolidated from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.

Upon loss of joint control, the Group measures and recognises its remaining investment at its fair value. The difference between the carrying amount of the investment upon loss of joint control and the fair value of the remaining investment and proceeds from disposal is recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as an investment in an associate.

Adjustments are made in the Group's consolidated financial statements to eliminate the Group's share of intragroup balances, income and expenses and unrealised gains and losses on transactions between the Group and its jointly controlled entity.

The financial 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.

In the Company’s separate financial statements, its investment in joint venture is stated at cost less impairment losses. On disposal of such investment, the difference between net disposal proceeds and the carrying amount is included in the profit or loss.

2.9 investment properties

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the reporting date. Fair value is arrived at by reference to market evidence to transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected form its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment up to the date of change in use.


2.10 intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

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, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. 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 cash-generating 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 2006 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 2.19(c).

Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.

(b) brand

Brand is stated at cost less any impairment loss. The useful life of the brand is estimated to be indefinite because based on the current market share of the brand, management believes there is no foreseeable limit to the period over which the brand is expected to generate net cash flows to the Group.

Brands 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 brands are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of a brand are measured as the difference between the net disposal

proceeds and the carrying amount of the asset and are recognised in the profit or loss when the brand is derecognised.

(c) computer software

Acquired computer software licences are capitalised on the basis of the cost incurred to acquire and bring to use the specific software. These costs are amortised on a straight line basis over their expected useful lives at rates between 12.5 to 33.3%.

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2.11 property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. 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 benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated depreciation and accumulated impairment losses.

The cost of property, plant and equipment comprises its purchase price and any directly attributable costs in bringing the property, plant and equipment to working condition for its intended use. Dismantlement, removal or restoration costs are included as part of the cost of fixed assets if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit or loss.

Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress are not depreciated as these assets are not yet available for use.

Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Leasehold land Lease term (ranging from 18 to 91 years) Buildings 2% to 6.67% Plant and machinery 6.7% to 50% Motor vehicles 10% to 33.33% Postmix, coolers and vending machines 10% to 25% Furniture, fittings and computer equipment 10% to 50% 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 lives and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.


2.12 properties held for development and property development costs

(a) properties held for development

Properties held for development consist of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Properties held for development are classified within non-current assets and are stated at cost less any accumulated impairment losses.

Properties held for development are reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(b) property development costs

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is being held as inventory property and is measured at the lower of cost and net realisable value.

Cost includes: - Freehold land and leasehold rights for land - Amounts paid to contractors for construction - Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services,

property transfer taxes, construction overheads and other related costs

Non refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when paid.

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale.

Property development costs recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.

2.13 inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

- Cost of raw materials and packaging materials comprises cost of purchase and is stated on a weighted average cost or standard cost basis (which approximates average actual cost).

- Cost of finished goods includes raw materials, labour and an appropriate proportion of production overheads.

- Engineering inventories comprise cost of purchase and are stated on a weighted average cost basis.

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.

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2.14 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 outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources 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 reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.15 leases

(a) as lessee

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 finance 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 the profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

A lease where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item is classified as an operating lease. Operating lease payments are recognised as an expense in the profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) as lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the assets are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.18(e).


2.16 income taxes

(a) current tax

Current tax assets and liabilities 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 reporting date.

Current taxes are recognised in the profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred 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 the accounting profit nor taxable profit or loss; and

- 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 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 profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred 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 transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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2.16 income taxes (cont'd.)

(b) Deferred tax (cont'd.)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

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 reporting date.

Deferred tax relating to items recognised outside the profit or loss is recognised outside the profit 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 tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(c) sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except:

- where the sales tax incurred in 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 statements of financial position.

2.17 employee benefits

(a) short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group.

(b) Defined contribution plan

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.


2.17 employee benefits (cont'd.)

(c) Defined benefit plan

Certain subsidiaries of the Group operate unfunded defined benefit retirement benefit plan for its employees. The plan pays a lump sum amount (instead of a pension) at retirement.

The costs of providing benefits under defined benefit plans are determined separately for each plan using the projected unit credit actuarial valuation method. Actuarial gains and losses are recognised as income or expense when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous reporting year exceeded 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plans.

The past service cost is recognised as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognised immediately.

The defined benefit liability is the aggregate of the present value of the defined benefit obligation and actuarial gains and losses not recognised, reduced by past service cost not yet recognised and the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognised net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

(d) employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to the employees. The estimated liability for leave is recognised for services rendered by employees up to the reporting date.

(e) share-based compensation plans

Certain executive employees of the Group receive remuneration in the form of share options and share awards as consideration for services rendered.

(i) Equity-settled transactions The fair value of the employee services received in exchange for the grant of the options or awards is recognised

as an expense in the profit or loss with a corresponding increase in the share-based payment reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the options or awards on the date of grant. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on the vesting date. It recognises the impact of the revision of original estimates, if any in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period.

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2.17 employee benefits (cont'd.)

(e) share-based compensation plans (cont'd.)

(i) Equity-settled transactions (cont'd.) When the options are exercised and new ordinary shares issued, the proceeds received (net of any directly

attributable transaction costs) and the corresponding share-based payment reserve are credited to share capital. The proceeds received (net of any directly attributable transaction costs) and the corresponding share option reserve are credited to the 'treasury share' account when treasury shares purchased are re-issued to the employees.

(ii) Cash-settled transactions The cost of cash-settled share-based payment transactions is measured initially at fair value at the grant

date taking into account the terms and conditions upon which the options were granted. Until the liability is settled, it is remeasured at each reporting date and the fair value is expensed over the period till vesting with recognition of a corresponding liability.

2.18 revenue and income recognition

Revenue and income are recognised to the extent that they are probable that the economic benefits will flow to the Group and the revenue and income can be reliably measured. The following specific recognition criteria must also be met before revenue and income are recognised:

(a) sale of goods

Revenue from the sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, which generally coincides with delivery and acceptance of the goods sold.

Revenue from sale of goods represents the invoiced value of net sales (including excise duties, net of sales tax and trade discounts).

(b) sale of properties

Revenue from sale of completed properties and sale of properties under development are recognised when the risks and rewards of ownership have been transferred to the purchaser either through the transfer of legal title or equitable interest in the properties, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.

(c) interest income

Interest income is recognised on an accrual basis using the effective interest method.

(d) Dividend income

Dividend income is recognised when the Group's right to receive payment is established.


2.18 revenue and income recognition (cont'd.)

(e) rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

2.19 foreign currency

(a) functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia ("RM"), which is also the Company’s functional currency.

(b) foreign currency transactions

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 rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value 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 reporting date are recognised in the profit 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 foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to the profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in the profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(c) foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

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2.20 impairment of non-financial 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 assessment 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 fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in the profit or loss.

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. 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 the profit or loss.

2.21 financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition and, where allowed and appropriate, re-evaluate this designation at each financial year end.

(a) financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in the profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in the profit or loss as part of other losses or other income.


2.21 financial assets (cont'd.)

(a) financial assets at fair value through profit or loss (cont'd.)

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in the profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified 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. Gains and losses are recognised in the profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) available-for-sale financial assets

Available-for-sale are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset 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 the profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in the profit or loss. Dividends on an available-for-sale equity instrument are recognised in the profit or loss when the Group and the Company's right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

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2.21 financial assets (cont'd.)

(d) available-for-sale financial assets (cont'd.)

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial 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 profit or loss.

2.22 impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

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 to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.


2.22 impairment of financial assets (cont'd.)

(b) available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in the profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss.

2.23 financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

(b) other financial liabilities

The Group’s and the Company's other financial liabilities include trade payables, other payables, loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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2.23 financial liabilities (cont'd.)

(b) other financial liabilities (cont'd.)

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification 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 profit or loss.

2.24 financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in the profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Company for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.

2.25 interest-bearing borrowings

Interest-bearing bank loans, Medium Term Notes ("MTN") and Commercial Papers ("CP") are recorded at the amount of proceeds received.

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.

The amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the Group's borrowings that are outstanding during the year, other than borrowings made specifically for the purpose of obtaining another qualifying asset. For borrowings made specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of that borrowing.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.


2.26 cash and cash equivalents

Cash and short-term deposits in the statements of financial position comprise cash at banks and on hand, short-term deposits and short-term highly liquid investments with a maturity of three months or less that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

2.27 contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

2.28 share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared or when they are approved by shareholders in the annual general meeting.

2.29 treasury shares

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares and are presented in the reserve for own shares.

When treasury shares are distributed as share dividends, the cost of treasury shares is applied in the reduction of the share premium account or distributable reserves, or both.

When treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity, and the resulting surplus or deficit on the transaction is presented in share premium.

Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them.

2.30 non-current assets held for sale

A non-current asset is deemed to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Upon classification as held for sale, non-current assets are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in the profit or loss.

2.31 segment reporting

For management purposes, the Group's operating businesses are organised according to products and services, namely soft drinks, dairies Malaysia, dairies Thailand, property, and others which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge.

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3. siGnificant accountinG estiMates anD JuDGeMents

Estimate and assumptions concerning the future are made in the preparation of the financial 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 ongoing basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

3.1 Judgements made in applying accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements:

operating lease commitments - Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on the evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a substantial portion of the economic life of the commercial property, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) impairment of goodwill and brand

The Group determines whether goodwill and brand are 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 and brand are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of the goodwill and brand at financial reporting date are disclosed in Note 17.

(b) income taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the Group companies.

Deferred tax assets are recognised for unused tax losses and tax allowances to the extent that it is probable that taxable profit will be available against which they can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits.

3. siGnificant accountinG estiMates anD JuDGeMents (cont'D.)

3.2 Key sources of estimation uncertainty (cont'd.)

(b) income taxes (cont'd.)

The Group has RM10.5 million (2012: RM5.7 million) of tax losses carried forward. These losses relate to subsidiaries that have a history of losses, do not expire and may not be used to offset taxable income elsewhere in the Group. The subsidiaries have no taxable temporary differences nor any tax planning opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, the Group has determined that it cannot recognise deferred tax assets on the tax losses carried forward.

If the Group was able to recognise all unrecognised deferred tax assets, profit and equity would have increased by RM33.6 million (2012: RM27.2 million). Further details on taxes are disclosed in Note 8 and Note 28.

(c) impairment of property, plant and equipment

During the current financial year, the Group has recognised impairment losses in respect of a subsidiary's property, plant and equipment. The Group carried out the impairment test based on a variety of estimates including the value-in-use of the CGU to which the property, plant and equipment are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the impairment losses recognised are disclosed in Note 11.

(d) Depreciation of plant and machinery

Plant and machinery are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these plant and machinery to be within 2 to 15 years. 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.

(e) pension benefits

The cost of the defined benefit pension plan and other post employment medical benefits and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

(f) litigation

The Group determines whether a present obligation from potential claims arising from the material litigation that exists at the reporting date by taking into account all available evidences. Management and external legal counsel had studied the claims and believed that the adequate provision has been made to cover all material exposures arising from the claims as disclosed in Note 41.

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4. revenue Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 (restated) Sale of goods 3,507,513 3,171,437(i) - - Dividend income - from subsidiaries - - 181,000 270,199 - from associate - - 2,917 2,390 Others 712 486 - -

3,508,225 3,171,923 183,917 272,589

(i) The comparatives for the financial year ended 30 September 2012 have been restated as follows: as previously reclassi- as stated fication restated Group rM'000 rM'000 rM'000 impact on the profit or loss: for the financial year ended 30 september 2012 Revenue 3,238,786 (66,863) 3,171,923 Cost of sales (2,351,975) 66,863 (2,285,112)

The reclassification arises from sales tax incurred on intercompany transactions which was previously included in cost of sales but now reclassified to revenue. The reclassification has no impact on the results and cash flows for the financial year ended 30 September 2012 or the financial position of the Group as at that date.

5. otHer incoMe anD otHer expenses Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000

(a) other income Property damage insurance claim 30,921 80,699 - - Business interruption insurance claim 18,395 29,892 - - Net gain from fair value adjustment of investment properties 9,416 - - - Gain arising from the loss of control in a former subsidiary (Note 14(a)) - 55,301 - - Write-back of provision relating to glass container business - 4,788 - 4,788 Others 5,039 5,949 7,610 -

63,771 176,629 7,610 4,788

5. otHer incoMe anD otHer expenses (cont'D.) Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000

(b) other expenses Property, plant and equipment written-off (i) 1,817 34,788 - - Inventories written-off (i) - 36,571 - - Accelerated depreciation for buildings - 16,954 - - Other flood related expenses (i) - 15,997 - - Provision for litigation claim 11,934 - 11,934 - Loss on disposal of property, plant and equipment 116 993 - - Others 2,905 4,114 - 4,764

16,772 109,417 11,934 4,764

(i) Included in the expenses above were mainly flood related expenses incurred during previous financial year as further disclosed in Note 37.

6. interest expense anD interest incoMe Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 interest expense: Bank borrowings and CP/MTN (13,626) (11,230) - - Security deposits by customers (292) (328) - -

(13,918) (11,558) - -

interest income: Bank deposits 5,252 4,248 661 323 Subsidiaries - - 8,743 7,250 Others - 18 - - 5,252 4,266 9,404 7,573

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7. profit before tax Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000

(a) this is arrived at after charging: Auditors' remuneration

- Statutory audits 618 593 36 35 - Other services 207 109 91 -

Depreciation of property, plant and equipment 82,165 90,472 - - Impairment loss on property, plant and equipment 2,397 678 - - Impairment of intangible assets 5,392 - - - Impairment of investment in a subsidiary - - 7,170 - Property, plant and equipment written-off (i) 1,817 34,788 - - Loss on disposal of property, plant and equipment 116 993 - - Amortisation of intangible assets 6,203 3,981 - - Intangible assets written-off - 56 - - Inventories written-down 2,484 3,184 - - Inventories written-off (i) 13,210 47,780 - - Retirement benefits expense 3,265 3,481 - - Allowance for impairment on trade receivables 720 2,149 - - Provision for litigation claim 11,934 - 11,934 - Rental expense:

- Premises 17,242 16,522 - - - Equipment 5,818 6,121 - -

Royalties: - Holding company 1,456 1,364 - - - Related companies 48,890 47,960 - - - Third parties 60,748 45,010 - -

Staff costs (excluding key management personnel) - Salary, allowances and bonus 222,751 228,435 - - - Contributions to defined contribution plan 22,532 19,352 - - - Share-based payment transactions expense 6,794 5,198 - -

Fair value loss on derivatives - 274 - - Foreign exchange loss

- Unrealised 735 1,664 - 4,764 - Realised 2,036 3,311 1,320 87

(i) Included above were flood related expenses incurred during previous financial year as further disclosed in Note 37.

7. profit before tax (cont'D.)


(b) this is arrived at after crediting: Property damage insurance claim 30,921 80,699 - - Business interruption insurance claim 18,395 29,892 - - Bad debts recovered 3,527 - - - Gain arising from the loss of control in a former subsidiary (Note 14(a)) - 55,301 - - Gain on disposal of property, plant and equipment 657 - - - Write-back of impairment loss on property, plant and equipment 1,658 529 - - Reversal of allowance for impairment on trade receivables 683 1,930 - - Reversal of inventories written-down 1,614 2,262 - - Write-back of provision relating to glass container business - 4,788 - 4,788 Rental income:

- Premises 924 620 - - Net gain from fair value adjustment of investment properties 9,416 - - - Fair value gain on derivatives 360 - - - Foreign exchange gain

- Unrealised - - 7,610 - - Realised 3,225 2,036 - -

(c) Directors remuneration

The details of remuneration receivable by Directors of the Company during the year are as follows:

Group company 2013 2012 2013 2012 rM’000 rM'000 rM'000 rM'000

Executive Director - Salary and bonus - 2,223 - - - Contributions to defined contribution plan - 16 - - - Benefits-in-kind - 220 - - Non-Executive Directors - Fees 803 827 793 821 - Others emoluments 1,720 - - - - Benefits-in-kind 170 35 - -

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7. profit before tax (cont'D.) (c) Directors remuneration (cont'd.)

The number of Directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

2013 2012

non- non- remuneration (rM) executive executive executive executive Director Directors Director Directors

0 - 50,000 - 6 - 3 50,001 - 100,000 - 7 - 8 100,001 - 150,000 - - - 1 150,001 - 200,000 - 1 - - 1,850,000 - 1,900,000 - 1 - - 2,450,000 - 2,500,000 - - 1 -

8. incoMe tax expense/(creDit)


current income tax: - Malaysian income tax 28,347 27,645 861 379 - Foreign tax 3,161 1,641 - -

Overprovision in prior years - Malaysian income tax (3,012) (40) - (13)

28,496 29,246 861 366 Deferred tax (note 28):

- Origination and reversal of temporary differences 15,494 (74,670) - - - Underprovision in prior years 4,034 114 - -

Effect of reduction in tax rate 60 1,528 - - 19,588 (73,028) - - 48,084 (43,782) 861 366

8. incoMe tax expense/(creDit) (cont'D.) Reconciliations of income tax expense/(credit) applicable to profit before tax at the statutory income tax rate to income tax

expense at the effective income tax rate of the Group and of the Company are as follows: Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 Profit before tax 308,710 230,208 178,366 276,994 Tax at Malaysian statutory tax rate of 25% (2012: 25%) 77,178 57,552 44,592 69,249 Different tax rates in other countries (4,227) (808) - - Effect of changes in foreign income tax rate on deferred tax 60 1,528 - - Income not subject to tax (tax incentives/exemption) (26,083) (29,836) (48,973) (70,389) Expenses not deductible for tax purposes 5,487 8,952 5,242 1,519 Utilisation of previously unrecognised tax losses (1,005) (97) - - Deferred tax assets recognised (5,473) (80,990) - - (Over)/underprovision in prior years

- Income tax (3,012) (40) - (13) - Deferred tax 4,034 114 - -

Share of results of an associate (1,173) (1,530) - - Others 2,298 1,373 - -

Total income tax expense/(credit) 48,084 (43,782) 861 366 Effective income tax rate 16% -19% 0% 0% Domestic current income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable

profit for the year. Tax for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Corporate tax rate applicable to the Thailand subsidiary of the Group was reduced from 30% to 23% in 2012 (subsidiary's fiscal year 2012/2013) and then to 20% from 2013 onwards (subsidiary's fiscal year 2013/2014). The computation of deferred tax as at 30 September 2013 has reflected these changes.

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off and levied by the same tax authority.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

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9. earninGs per sHare

(a) basic earnings per share Basic earnings per share amounts are calculated by dividing the profit for the year, net of tax, attributable to equity holders

of the Company by the weighted average number of ordinary shares outstanding during the financial year.

Group 2013 2012 rM'000 rM'000

Profit net of tax, attributable to equity holders of the Company 260,653 274,030 no of shares 2013 2012

'000 '000

Weighted average number of ordinary shares net of treasury shares 363,593 361,039 Earnings per share (sen) 71.7 75.9

(b) Diluted earnings per share Diluted earnings per share amounts are calculated by dividing the profit for the year, net of tax, attributable to equity

holders of the Company by the weighted average number of ordinary shares outstanding during the financial year, adjusted for the dilutive effects of potential ordinary shares, i.e. share options granted pursuant to the ESOS and RSP pursuant to the Share Grant Plan.

Group 2013 2012 rM'000 rM'000

Profit net of tax, attributable to equity holders of the Company 260,653 274,030

There were no changes to the Group's profit, net of tax, arising from the dilutive effect of the share options granted pursuant to the ESOS and RSP pursuant to the Share Grant Plan.

no of shares 2013 2012 '000 '000

Weighted average number of ordinary shares net of treasury shares 363,593 361,039 Adjustment for share options granted pursuant to the ESOS and RSP pursuant to the Share Grant Plan 1,541 2,335

Adjusted weighted average number of ordinary shares net of treasury shares 365,134 363,374 Diluted earnings per share (sen) 71.4 75.4

9. earninGs per sHare (cont'D.) There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and

the date of authorisation of these financial statements except for those transactions disclosed in Note 23.

10. DiviDenDs

Group/company 2013 2012 rM'000 rM'000

recognised during the financial year: Dividends on ordinary shares: - Final single tier dividend for 2012: 23 sen (2011: 47 sen) per share 83,619 169,649 - Special interim single tier dividend for 2012: 15 sen (2011: 15 sen) per share 54,534 54,143 - Interim single tier dividend for 2013: 20 sen (2012: 20 sen) per share 72,734 72,207

210,887 295,999 proposed but not recognised as a liability as at 30 september: Dividends on ordinary shares, subject to shareholders' approval at the AGM: - Final single tier dividend for 2013: 30 sen (2012: 23 sen) per share 109,326 83,435 - Special single tier dividend for 2013:10 sen (2012: 15 sen) per share 36,442 54,414

145,768 137,849 At the forthcoming Annual General Meeting, the Directors are recommending for shareholders' approval, a final single tier

dividend of 30 sen per share together with a special single tier dividend of 10 sen per share in respect of the current financial year on 364,420,601 ordinary shares as at 30 September 2013 (excluding treasury shares). The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 30 September 2014.

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11. property, plant anD equipMent

freehold leasehold plant and Work-in- land land buildings machinery progress others total Group rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 cost at 1 october 2011 93,428 53,313 316,245 600,459 235,783 329,419 1,628,647 Additions - 158 1,020 12,731 107,969 87,809 209,687 Transfer to intangible assets (Note 17) - - - - (8,061) - (8,061) Disposals - - - - - (16,218) (16,218) Write-offs* - - (21,953) (47,598) - (23,292) (92,843) Reclassification - - 169,617 198,071 (331,408) (36,280) - Exchange differences (534) - (3,878) (5,090) (310) (560) (10,372) at 30 september 2012 and 1 october 2012 92,894 53,471 461,051 758,573 3,973 340,878 1,710,840 Additions - - 290 369 34,596 34,252 69,507 Transfer from non-current assets held for sale (Note 22) - - 11,831 - - - 11,831 Transfer to intangible assets (Note 17) - - - - (10,015) - (10,015) Transfer to investment properties (Note 12) - - (1,697) - (2,907) - (4,604) Disposals - - - (5,553) - (18,204) (23,757) Write-offs - - (6,200) (61,117) - (14,213) (81,530) Reclassification - - 14,543 29,806 (16,348) (28,001) - Exchange differences 832 - 6,339 8,570 - 1,162 16,903 Adjustment** - - - - (3,063) - (3,063) at 30 september 2013 93,726 53,471 486,157 730,648 6,236 315,874 1,686,112

* In the previous financial year, flood related damages to property, plant and equipment amounted to RM32.8 million was recognised in the consolidated income statement.

** Being adjustment to costs of property, plant and equipment capitalised in previous year upon finalisation of statements of account from suppliers and contractors.

11. property, plant anD equipMent (cont'D.)

freehold leasehold plant and Work-in- land land buildings machinery progress others total Group rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000

accumulated depreciation and impairment loss at 1 october 2011 (2,216) (8,304) (51,568) (349,517) (780) (207,422) (619,807)Depreciation for the year - (814) (25,196) (34,504) - (29,958) (90,472)Disposals - - - - - 14,003 14,003 Write-offs - - 21,953 17,335 - 18,767 58,055 Impairment loss recognised in profit or loss (Note 7(a)) - - - (408) - (270) (678)Impairment loss reversed in profit or loss (Note 7(b)) - - - 419 - 110 529 Reclassification - - (624) 1,002 780 (1,158) - Exchange differences - - 148 1,516 - 252 1,916 at 30 september 2012 and 1 october 2012 (2,216) (9,118) (55,287) (364,157) - (205,676) (636,454)Depreciation for the year - (808) (10,028) (41,643) - (29,686) (82,165)Transfer to intangible asset (Note 17) - - - - - 139 139 Transfer to investment properties (Note 12) - - 1,002 - - - 1,002 Disposals - - - 5,515 - 16,281 21,796 Write-offs - - 6,200 61,097 - 12,416 79,713 Impairment loss recognised in profit or loss (Note 7(a)) - - (301) (387) - (1,709) (2,397)Impairment loss reversed in profit or loss (Note 7(b)) - - - - - 1,658 1,658 Reclassification - - - (17,297) - 17,297 - Exchange differences - - (571) (2,626) - (431) (3,628) at 30 september 2013 (2,216) (9,926) (58,985) (359,498) - (189,711) (620,336) net carrying amount:

at 30 september 2012 90,678 44,353 405,764 394,416 3,973 135,202 1,074,386

at 30 september 2013 91,510 43,545 427,172 371,150 6,236 126,163 1,065,776

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12. investMent properties Group 2013 2012 rM'000 rM'000

at 1 october 2012/2011 - - Transfer from property, plant and equipment (Note 11) 3,602 - Transfer from non-current assets held for sale (Note 22) 44,066 - Net gain from fair value adjustment recognised in profit or loss (Note 7(b)) 9,416 -

at 30 september 57,084 -

Rental income derived from investment properties 357 - Direct operating expenses (including repairs and maintenance) generating rental income (816) - Direct operating expenses (including repairs and maintenance) that did not generate rental income (560) -

net loss arising from investment properties carried at fair value (1,019) -

The Group has no restrictions on the realisability of its investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

Valuation of investment properties Investment properties are stated at fair value, which has been determined based on valuations at the reporting date. Valuations

are performed by accredited independent valuers with recent experience in the location and category of properties being valued. The valuations are based on the income method that makes reference to estimated market rental values and equivalent yields. The fair value of investment properties is determined primarily using the Investment and Comparison Approach methods of valuation. In relying on the valuation reports, management has exercised its judgement and is satisfied that the valuation methods and estimates are reflective of current market conditions. The following primary inputs have been used:

2013

All risk yields - 1st to 5th year 7% - 6th year onwards 7.25% Occupancy rate - 1st to 5th year 90% - 6th year onwards 95% Capital expenditure reserve 3% Discount factor 7.25%

Transfer to property, plant and equipment During the financial year, the Group transferred the properties that was classified as non-current asset held for sale to investment

properties and property, plant and equipment, as the conditions pre-requisite for these assets to be held as assets for sale no longer can be applied.

13. properties HelD for DevelopMent

Group 2013 2012 rM'000 rM'000 at 1 october 2012/2011 62,276 5,504 Cost incurred during the year 6 - Transfer (to)/from property development costs (Note 18) (7,635) 56,772 Recognised in profit or loss (129) -

at 30 september 54,518 62,276 Properties held for development comprise: Freehold land 49,689 49,689 Leasehold land - 7,350 Development costs 4,829 5,237

54,518 62,276

14. investMents in subsiDiaries

company 2013 2012 note rM'000 rM'000

Unquoted shares at cost: - Ordinary shares (a), (b) 396,776 396,776 - Redeemable non-cumulative convertible preference shares ("RNCCPS") (c), (d) 565,404 565,404

962,180 962,180 Less: Impairment loss (7,170) -

955,010 962,180 The details of the subsidiaries are set out in Note 39. During the previous financial year, the following events took place:

(a) On 11 November 2011, the Company had entered into a conditional subscription cum shareholders' agreement ("SSA") with FCL Centrepoint Pte Ltd ("FCLC") to form a joint venture, via its wholly owned subsidiary, Vacaron Company Sdn Bhd ("VCSB"), for the purpose of carrying out a proposed mixed development on the land held under PN 3679 for Lot No. 35 and PN 3681 for Lot No. 37, Seksyen 13, Bandar Petaling Jaya ("PJ"), Daerah Petaling, Selangor ("Land").

On 18 January 2012, VCSB issued 499,998 and 500,000 new VCSB shares to the Company and FCLC respectively. Consequent thereupon, the Company and FCLC each holds 50% equity interest in VCSB. With the announcement of the completion of the transaction in previous financial year, the Company had effectively divested 50% of its interest in the development land in PJ Section 13 and recognised a gain of RM55 million. Pursuant to the SSA, the Company and FCLC have both granted a shareholders' loan of RM69.5 million each to VCSB in previous financial year.

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14. investMents in subsiDiaries (cont'D.)

(a) (cont'd.)

The disposal of 50% equity interest in VCSB had the following effects on the financial position of the Group as at 30 September 2012:

Group rM'000 assets Property development costs 14,307 Cash and cash equivalents 398 Borrowings (69,506)

carrying value of net liabilities disposed (54,801) Proceeds from disposal of 50% equity investment in VCSB (500)

Gain arising from the loss of control in a former subsidiary (i) (55,301) cash inflow arising from loss of control in a former subsidiary: Proceeds from disposal of 50% equity investment in VCSB 500 Less: Cash and cash equivalents of subsidiary disposed (398) Shareholders' loan granted to VCSB 69,500

net cash inflow from the loss of control in a former subsidiary 69,602

With the announcement of the completion of the transactions on 18 January 2012, the Group had effectively divested 50% of its interest in the development land in PJ Section 13. The gain arising from the loss of control in a former subsidiary includes the realisation of asset valuation reserve of RM55 million, shown below:

rM'000 Land at market value 138,566 Land cost, net carrying amount (27,982) Unrealised asset valuation reserve 110,584 Joint venture portion 50% Realisation of asset valuation reserve upon loss of control in a former subsidiary, VCSB 55,292

(b) During the previous financial year, a wholly owned subsidiary of the Company, F&N Foods Sdn Bhd had reduced its issued and paid up capital of RM25,000,000 comprising 25,000,000 ordinary shares of RM1 each to RM2 comprising 2 ordinary shares of RM1 each by cancelling 24,999,998 ordinary shares of RM1 each, and that the credit of RM24,999,998 arising therefrom was distributed to the Company as capital repayment.

(c) During the previous financial year, the Company subscribed for the entire Redeemable Non-Cumulative Convertible

Preference Shares ("RNCCPS") in the following subsidiaries:

(i) 9,700 RNCCPS in Nuvak Company Sdn Bhd at an issue price of RM1,000 per RNCCPS totalling to RM9,700,000. (ii) 138,000 RNCCPS in F&N Dairies Manufacturing Sdn Bhd (formerly known as PML Dairies Sdn Bhd) at an issue price

of RM1,000 per RNCCPS totalling to RM138,000,000.

(d) During the previous financial year, Vacaron Company Sdn Bhd redeemed its entire 139,000 RNCCPS at its previous issue price of RM1,000 per RNCCPS totalling to RM139,000,000.

15. investMent in an associate

Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 Quoted shares at cost 68,727 68,727 68,727 68,727 Share of post-acquisition reserves 12,655 7,964 - - Dividend received (5,871) (2,954) - - 75,511 73,737 68,727 68,727 Fair value of investment in an associate for which there is published price quotation 102,649 119,446 102,649 119,446

The associate is incorporated in Malaysia and the details are as follows: proportion of name of associate principal activities ownership interest 2013 2012 % % Cocoaland Holdings Investment holding Berhad company, manufacturing, (Financial year trading, marketing of processed end: 31 December) and preserved foods and fruits of all kinds 27.19 27.19

The share of results of an associate is derived from the sum total of its unaudited quarterly results recognised by the Group for the four quarters ended 30 June 2013. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group,

is as follows: Group 2013 2012 rM'000 rM'000

assets and liabilities: Current assets 108,296 126,482 Non-current assets 133,547 104,458 Current liabilities (35,613) (33,508) Non-current liabilities (3,915) (1,642)

Total assets and liabilities 202,315 195,790 income and expenses: Revenue 240,022 202,067 Profit for the year 17,251 23,871

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16. investMent in a Joint venture company 2013 2012 rM'000 rM'000 At cost: Investment in a joint venture 500 500 The joint venture is incorporated in Malaysia and the details are as follows: proportion of name of joint venture principal activities ownership interest 2013 2012 % % Vacaron Company Property development 50.00 50.00 Sdn Bhd The aggregate amounts of each of the current assets, non-current assets, current liabilities, income and expenses related to the

Group's interests in the jointly-controlled entity are as follows: Group 2013 2012 rM'000 rM'000

assets and liabilities: Current assets 83,648 64,528 Non-current assets 294 7,703 Current liabilities (84,330) (71,988) Total assets and liabilities (388) 243 income and expenses: Income 32 2 Expenses (663) (250)

17. intanGible assets computer Goodwill brand software total rM'000 rM'000 rM'000 rM'000

Group cost: at 1 october 2011 45,929 75,370 15,009 136,308 Additions - - 3,684 3,684 Transfer from property, plant and equipment (Note 11) - - 8,061 8,061 Write-offs - - (495) (495) at 30 september 2012 and 1 october 2012 45,929 75,370 26,259 147,558 Additions - - 3,225 3,225 Transfer from property, plant and equipment (Note 11) - - 10,015 10,015 Disposals - - (1) (1) Write-offs - - (2) (2) at 30 september 2013 45,929 75,370 39,496 160,795

accumulated depreciation and impairment loss: at 1 october 2011 - - (9,046) (9,046) Amortisation for the year - - (3,981) (3,981) Write-offs - - 439 439

at 30 september 2012 and 1 october 2012 - - (12,588) (12,588) Amortisation for the year - - (6,203) (6,203) Transfer from property, plant and equipment (Note 11) - - (139) (139) Disposals - - 1 1 Write-offs - - 2 2 Impairment loss recognised in profit or loss (Note 7(a)) (5,392) - - (5,392) at 30 september 2013 (5,392) - (18,927) (24,319)

net carrying amount: at 30 september 2012 45,929 75,370 13,671 134,970

at 30 september 2013 40,537 75,370 20,569 136,476

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17. intanGible assets (cont'D.)

(a) allocation of goodwill, brand and computer software Goodwill, brand and computer software have been allocated to the Group's cash generating units identified according to

country of operation and business segment as follows: computer Goodwill brand software total rM'000 rM'000 rM'000 rM'000 at 30 september 2013 Dairy products 999 75,370 6,045 82,414 Soft drinks 39,538 - 4,056 43,594 Property/Others - - 10,468 10,468 40,537 75,370 20,569 136,476 at 30 september 2012 Dairy products 6,391 75,370 1,146 82,907 Soft drinks 39,538 - 3,190 42,728 Property/Others - - 9,335 9,335

45,929 75,370 13,671 134,970

(b) Key assumptions used in value in use calculations

(i) Goodwill No impairment loss is required for the goodwill assessed as their recoverable values are in excess of their carrying

values.

The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk premium at the date of assessment of the respective cash generating units.

The forecasted growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the cash generating units.

Goodwill is allocated for impairment testing purposes to the individual entity which is also the cash generating unit. The value in use calculations apply a discounted cash flow model using cash flow projections based on financial budgets approved by management covering 5 years period. Cash flows beyond these periods are extrapolated using the estimated growth rate stated in the table below.

17. intanGible assets (cont'D.)

(b) Key assumptions used in value in use calculations (cont'd.)

(i) Goodwill (cont'd.)

Significant assumptions

pre-tax discount Growth rate rate

at 30 september 2013 Dairy products 3.0% 9.0% Soft drinks 5.0% 9.0% at 30 september 2012 Dairy products 3.0% 10.3% Soft drinks 5.0% 10.3%

(ii) brand The recoverable amount of brand have been determined based on value in use. No impairment loss is required for the

brand as its recoverable value is in excess of its carrying value.

Value in use is determined by discounting the future cash flows generated from the continuing use of the brand and is based on the following key assumptions:

- Cash flows are projected based on actual operating results and the five years business plan; and

- The discount rates applied to the cash flow projections are derived from the weighted average cost of capital of the Group plus a reasonable risk premium.

Significant assumptions pre-tax terminal discount growth rate rate at 30 september 2013 0.0% 9.0% at 30 september 2012 1.5% 10.3% The key assumptions represent management’s assessment of future trends in sweetened condensed milk industry

and are based on both external sources and internal sources (historical data).

(c) sensitivity to changes in assumptions With regard to the assessment of value in use of these cash generating units, management believes that no reasonably

possible changes in any of the key assumptions would cause the carrying values of these CGUs to differ materially from their recoverable amounts except for the changes in the prevailing operating environment, the impact of which is not ascertainable.

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18. property DevelopMent costs Group leasehold Development land cost total rM'000 rM'000 rM'000 2013 cumulative property development costs: at 1 october 2012 6,644 2,403 9,047 Costs incurred during the year - 10,152 10,152 Transfer from properties held for development (Note 13) 7,350 285 7,635

at 30 september 2013 13,994 12,840 26,834 cumulative property development costs recognised in profit or loss: at 1 october 2012/at 30 september 2013 - - -

property development costs at 30 september 2013 13,994 12,840 26,834

Group freehold leasehold Development land land cost total rM'000 rM'000 rM'000 rM'000 2012 cumulative property development costs: at 1 october 2011 41,271 27,982 5,316 74,569 Costs incurred during the year 2,914 3 2,640 5,557 Transfer to properties held for development (Note 13) (44,185) (7,350) (5,237) (56,772) Disposal of a subsidiary - (13,991) (316) (14,307)

at 30 september 2012 - 6,644 2,403 9,047 cumulative property development costs recognised in

profit or loss: at 1 october 2011/at 30 september 2012 - - - -

property development costs at 30 september 2012 - 6,644 2,403 9,047

Interest capitalised during the financial year amounted to RM3.4 million (2012: RM2.2 million).

19. inventories Group 2013 2012 rM'000 rM'000 at cost: Manufactured inventories 156,658 166,003 Raw materials 142,816 139,449 Packaging materials 36,319 52,359 Engineering and other inventories 14,341 12,798 350,134 370,609 at net realisable value: Engineering and other inventories - 166 Total inventories 350,134 370,775 The cost of inventories recognised as an expense during the financial year in the Group amounted to RM2,196 million (2012:

RM2,119 million). The reversal of write-down of inventories made during the year of RM1.6 million (2012: RM2.3 million) when the related inventories were sold above their carrying amounts (Note 7(b)).

20. receivables


(a) short term Trade receivables iii 413,939 412,802 - - Allowance for impairment (862) (2,186) - - 413,077 410,616 - - Other receivables i - Prepayments 1,928 1,699 - - - Deposits 11,171 12,820 - - - Insurance claims receivable (Note 37) 36,766 26,436 - - - Others 28,545 35,888 204 25 78,410 76,843 204 25 Amounts due from related parties: Subsidiaries ii - - 10,526 59,763 Related companies iv 26,035 38,416 2 30 Associate iv - 123 - - Joint venture v 42,200 36,119 84,229 71,737 68,235 74,658 94,757 131,530

559,722 562,117 94,961 131,555

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20. receivables (cont'D.)


(b) long term Amount due from a subsidiary ii : Principal - - 146,263 139,378 Accreted interest - - 13,783 8,865 As at 30 September - - 160,046 148,243 Total receivables 559,722 562,117 255,007 279,798 The currency profile is as follows: - Ringgit Malaysia 371,702 376,574 94,961 131,159 - US Dollar 24,056 33,420 - - - Singapore Dollar 5,467 5,993 - - - Thai Baht 154,833 144,348 160,046 148,639 - Others 3,664 1,782 - -

559,722 562,117 255,007 279,798

(i) Included in other receivables in the financial year is derivative asset amounting to RM306,000 (2012: RM Nil). (ii) The short term amounts due from subsidiaries are unsecured, receivable on demand and interest free. The long term

amount due from a subsidiary is on a zero coupon bond arrangement. The tenure of the bond is 7 years commencing 1 October 2009 and is repayable by way of a bullet repayment at the end of the tenure of the bond. The redemption value is RM170.7 million (Thai Baht 1,671.6 million) and the effective interest rate of the bond is 2.88% (2012: 2.88%).

(iii) Trade receivables include amounts due from Permodalan Nasional Berhad group of companies amounting to RM9.3 million (2012: RM10.0 million).

(iv) The amounts due from related companies and an associate are trade in nature, non-interest bearing and receivable

on demand. Related companies are subsidiaries and associates of TCC Assets Limited and its subsidiaries, excluding entities within the Group.

(v) The non-trade amounts due from joint venture are unsecured, non-interest bearing and receivable on demand. Loans

due from joint venture are unsecured, bears interest at KLIBOR + 1.25% (2012: KLIBOR + 1.5%) per annum. Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000

Non-trade 85 250 - - Loan 42,115 35,869 84,229 71,737

42,200 36,119 84,229 71,737

(vi) The Group has no significant concentration of credit risk that may arise from exposures to a single receivable or to groups of receivables except for the debts due from related companies. The Group’s normal trade credit terms for trade receivables are 30 to 90 days (2012: 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis.

20. receivables (cont'D.)

Ageing analysis of trade receivables The ageing analysis of the Group's trade receivables is as follows: Group 2013 2012 rM'000 rM'000 Neither past due nor impaired 348,719 340,641 Ageing of trade receivables that are past due but not impaired: 1 to 30 days 59,368 52,825 31 to 60 days 4,960 7,981 61 to 90 days 12 2,182 91 to 120 days 3 2,477 More than 120 days 15 4,510 64,358 69,975 Impaired 862 2,186

413,939 412,802

Receivables that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the

Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired The Group has trade receivables amounting to RM64.4 million (2012: RM69.9 million) that are past due at the reporting date

but not impaired. Certain receivables that are past due but not impaired are secured by bank guarantees and properties. The management is confident that these receivables are recoverable as these accounts are still active.

Receivables that are impaired The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to

record the impairment are as follows:

Group 2013 2012 rM'000 rM'000 at 1 october 2012/2011 2,186 3,425

Charge for the year 720 2,149 Written off (1,395) (1,435) Reversal of impairment loss (683) (1,930) Exchange differences 34 (23)

at 30 september 862 2,186

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments.

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21. casH anD casH equivalents

Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 Short term deposits with local licensed banks 177,778 41,487 51,199 17,100 Cash and bank balances 184,394 186,386 2,340 860

362,172 227,873 53,539 17,960 The currency profile is as follows: - Ringgit Malaysia 298,016 141,520 53,539 17,960 - US Dollar 12,980 57,066 - - - Singapore Dollar 1,706 3,766 - - - Thai Baht 47,795 23,054 - - - Others 1,675 2,467 - -

362,172 227,873 53,539 17,960

The weighted average effective interest rates and the average maturities of deposits as at 30 September 2013 were as follows:

Weighted average average maturities 2013 2012 2013 2012 % % Days Days

Group Local licensed banks 2.9 2.7 2 1 company Local licensed banks 2.9 2.8 1 1

22. non-current assets HelD for sale Group 2013 2012 rM'000 rM'000

at carrying value: building:

at 1 october 2012/2011 55,897 55,897 Transfer to investment properties (Note 12) (44,066) - Transfer to property, plant and equipment (Note 11) (11,831) -

- 55,897

The non-current assets held for sale comprises car park and Techno Centre which have been reclassified to property, plant and equipment and investment properties during the financial year as the criteria under MFRS 5: Non-current Assets Held for Sale and Discontinued Operations are no longer met.

23. sHare capital Group and company 2013 2012 number of number of shares shares '000 rM'000 '000 rM'000

authorised: Ordinary shares of RM1 each 500,000 500,000 500,000 500,000 issued and fully paid: Ordinary shares of RM1 each at 1 october 2012/2011 362,997 362,997 360,379 360,379 Shares exercised under ESOS 1,661 1,661 2,618 2,618

at 30 september 364,658 364,658 362,997 362,997 As at 30 September 2013, the issued and paid up capital comprises 364,657,701 (2012: 362,996,901) ordinary shares of

RM1.00 each, of which 237,100 (2012: 237,100) ordinary shares are held as treasury shares.

During the financial year, the Company has issued 1,660,800 new ordinary shares of RM1 each pursuant to the exercise of the Executives' Share Option Scheme ("ESOS") at the following issue price for cash:

(i) 60,400 ordinary shares were issued at an issue price of RM7.81 per share; (ii) 927,600 ordinary shares were issued at an issue price of RM10.47 per share; and (iii) 672,800 ordinary shares were issued at an issue price of RM14.52 per share. The share premium of RM21.5 million arising from the exercise of ESOS has been included in the share premium account. The

new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

Subsequent to the end of the financial year and up to the date of this report, 190,500 ESOS were exercised which resulted in 190,500 ordinary shares of RM1.00 each being allotted and issued and thereafter listed on the Main Market of Bursa Securities. Consequently, the issued and paid-up share capital of the Company increased by RM190,500 to RM364,848,201 comprising 364,848,201 ordinary shares of RM1.00 each. The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

The above shares were issued at the issue prices of RM10.47 and RM14.52 per share respectively and the share premium of RM2.6 million has been included in the share premium account.

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24. treasury sHares Movement of shares repurchased Group and company Group and company 2013 2012 number of number of shares shares ‘000 rM'000 ‘000 rM'000 at 1 october 2012/2011 237 1,716 237 1,716 30 september The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. There

were no shares repurchased during the financial year and in the previous financial year.

25. reserves Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 non-distributable: Share premium 417,309 395,810 417,309 395,810 Legal reserve (Note a) 9,934 9,934 - - Foreign exchange reserve 10,083 (9,268) - - Share-based payment reserve (Note b and c) 12,165 8,552 12,165 8,552

449,491 405,028 429,474 404,362 Distributable: Retained earnings (Note d) 837,740 787,974 522,070 555,452

837,740 787,974 522,070 555,452 Total reserves 1,287,231 1,193,002 951,544 959,814

(a) Non-distributable legal reserve amounting to RM9.9 million relates to one of the subsidiaries in Thailand. Under the Section 116 of Public Companies Act B.E. 2535, the subsidiary is required to set aside at least 5% of its net income after accumulated deficit (if any) as a legal reserve until the reserve is not less than 10% of the registered share capital. This reserve is non-distributable as dividends.

(b) Details of the options granted to executives pursuant to the Executives' Share Option Scheme ("ESOS") are as

follows: The main features of the Company's ESOS are outlined below:

- The maximum number of new ordinary shares of RM1.00 each in the Company which may be issued upon the exercise of the ESOS shall not exceed 10% of the issued and paid-up share capital of the Company at any point of time throughout the duration of the ESOS.

- Eligible full-time executives of the Group and Executive Directors of the Company with at least one year service shall be eligible to participate in the ESOS.

25. reserves (cont'D.)

(b) Details of the options granted to executives pursuant to the Executives’ Share Option Scheme (‘‘ESOS’’) are as follows (cont’d.):

- The allotment to an Eligible Executive shall not exceed the maximum limits for any specific job grade in any one financial year and 1,000,000 new shares of the Company during the tenure of the ESOS, subject to the limits below:

(i) not more than 50% of the new shares of the Company available under the ESOS shall be allocated, in aggregate, to the Directors and senior management of the Group; and

(ii) not more than 10% of the new shares of the Company available under the ESOS shall be allocated to any individual Eligible Executive who, either singly or collectively through persons connected to that Eligible Executive, holds 20% or more of the issued and paid-up share capital of the Company.

The option price shall be the five days weighted average market price of the Company's shares as quoted on Bursa Securities immediately preceding the date of the offer, or the par value of the shares of the Company, whichever is the higher.

The ESOS shall be in force for a period of 10 years from the effective date (14 March 2007) for the implementation of the ESOS.

In respect of the ESOS By-Law 13.1(c), the special interim single tier dividend of RM1.10 per share which represent the entire gain from the divestment of the glass container business, amount to a capital distribution and require adjustments to be made to the option price of ESOS. Accordingly, the ESOS option prices were adjusted effective 13 December 2010.

The fair value of share options granted as at the date of grant, is determined using the Binomial valuation model, taking into account the terms and conditions upon which the options were granted. The input to the model used are as follows:

2011 2010 2009 Dividend yield (%) 3.76 3.89 4.12 Expected volatility (%) 22.70 21.80 17.15 Risk-free interest rate (%) 3.53 3.61 3.66 Expected life of option (years) 4.90 4.50 4.50 Share price at date of grant (RM) 14.62 11.20 8.50 Exercise share price (RM) 14.52 11.34 8.46 The expected life of the option is based on historical date and is not necessarily indicative of exercise pattern that may

occur. The expected volatility reflects the assumptions that the historical volatility is indicative of future trends which may also not necessarily be the actual outcome.

(c) Share grants under Restricted Share Plan (‘‘RSP’’) and Performance Share Plan (“PSP”) Under the RSP and PSP, the Company grants shares to eligible participants annually, referred to herein as “RSP Shares”

and “PSP Shares”, respectively. The grant (“Base Award”) represents the right to receive fully paid shares, their equivalent cash value or combinations thereof, free of charge, provided that certain prescribed performance conditions are met. The Remuneration Committee that administers this scheme has absolute discretion in the granting of shares under the RSP and PSP. The RSP Base Award is conditional on the achievement of pre-determined targets set for a two-year performance period and the PSP Base Award is conditional on the achievement of pre-determined targets set for a three-year performance period. The final number of RSP Shares and PSP Shares to be awarded will be determined at the end of the relevant performance period (“Final Award”).

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(c) Share grants under Restricted Share Plan (“RSP’’) and Performance Share Plan (“PSP”) (cont’d.)

The Final Award varies depending on the level of achievement of the pre-determined targets. An achievement factor will be applied to the relevant Base Award to determine the final number of RSP Shares and PSP Shares (as the case may be) to be awarded. The achievement factor ranges from 0% to 150% for RSP and from 0% to 200% for PSP.

At the end of the performance period, 50% of the RSP Shares will be released upon vesting and the balance will be released equally over the subsequent two years with fulfilment of service requirements.

All PSP Shares will be released to the participants at the end of the three-year performance period upon vesting.

Pre-determined targets are set by the Remuneration and Staff Establishment Committee at their absolute discretion for the performance conditions to be met over the performance period. For the RSP, the targets set are the achievement of Attributable Profit Before Exceptional items (APBE) and Return On Capital Employed (ROCE). For the PSP, the pre-set targets are based on Return on Invested Capital (ROIC), Total Shareholders’ Return Relative to Straits Times Index and Absolute Shareholders’ Return as a multiple of Cost of Equity.

Senior management participants are required to hold a minimum number of the shares released to them under the RSP and PSP to maintain a beneficial ownership stake in the Company for the duration of their employment or tenure with the Company.

No awards have been granted to controlling shareholders or their associates under the RSP and PSP.

No awards have been granted to Directors of the Company. No employee has received 5% or more of the total number of shares available/delivered pursuant to grants under RSP.

There were no shares granted under PSP during the year.

The estimated fair value of shares granted during the year ranges from RM15.36 to RM16.67. The fair value of equity-settled contingent award of shares are determined using Monte Carlo Valuation Model, which involves projection of future outcomes using statistical distributions of key random variables including share price and volatility of returns. The inputs to the model used are as follows:

2013 2012 Dividend yield (%) 3.66 4.02 Expected volatility (%) 20.94 19.23 Risk-free interest rate (%) 3.03 - 3.20 2.94 - 3.26 Expected life of option (years) 1.90 - 3.90 1.80 - 3.80 Share price at date of grant (RM) 18.00 18.06


(d) Retained earnings Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with

the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ("single tier system"). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

As at 30 September 2013, the Section 108 tax credit has been fully utilised (2012: RM Nil) and the Company pays dividend under the single tier system.

26. borroWinGs Group 2013 2012 rM'000 rM'000 current secured: Commercial Papers ("CP") (Note a) 240,000 130,000 Medium Term Notes ("MTN") (Note a) - 250,000 Short terms borrowings (Note b) - 43,711

240,000 423,711 non-current Medium Term Notes ("MTN") (Note a) 150,000 - total borrowings 390,000 423,711 Within one year 240,000 423,711 More than 1 year 150,000 -

390,000 423,711

(a) cp and Mtn programme CP/MTN - RM1 billion The MTN and CP programmes of up to RM500 million each was issued in 2008 and will expire in 2015 and bear interest ranging

from 3.3% to 5.4% (2012: 3.43% to 5.4%) per annum. The programmes are secured by an unconditional and irrevocable guarantee from the Company. All outstanding borrowings under the MTN programme were repaid in the current financial year. At 30 September 2013, the outstanding amount under the CP programme is repayable within the next twelve months.

CP/MTN - RM1.5 billion A wholly owned subsidiary of the Company, F&N Capital Sdn Bhd (“the Issuer”), had submitted an application to seek the

authorisation of the Securities Commission (“SC”) for the proposed issuance of Commercial Papers (“CP”) and Medium Term Notes (“MTN”) (collectively, the “Notes”) pursuant to a CP Programme and a MTN Programme respectively with a nominal value of RM750 million for each Programme. The SC has provided its authorisation via letter dated 2 September 2013 for the Programmes.

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26. borroWinGs (cont'D.)

(a) cp and Mtn programme (cont'd.)

CP/MTN - RM1.5 billion (cont’d.) Under the Programmes, the Issuer is able to issue up to RM750 million in nominal value of each of the CP and the MTN,

which are unconditionally and irrevocably guaranteed by the Company. The CP Programme shall have tenure of seven (7) years from the first issue date of the CP under the CP Programme whilst the MTN Programme shall have tenure of fifteen (15) years from the first issue date of the MTN under the MTN Programme.

The Issuer has on 26 September 2013, successfully issued RM150 million in nominal value of MTN pursuant to the MTN Programme for the purposes of refinancing the Group’s existing private debt securities.

The MTN has tenure of five (5) years and will mature on 26 September 2018. The MTN will bear interest rate of 4.38% per annum, payable semi-annually in arrears.

(b) short term borrowings In the previous financial year, F&N Dairies (Thailand) Limited, a wholly owned subsidiary of the Company, had obtained

an unsecured loan of RM43.7 million for working capital purpose. The loan was repayable within a year and an average of 3.4% per annum of interest was imposed.

27. provision for retireMent benefits Certain companies within the Group provide retirement benefits in accordance with agreements for their eligible employees.

The provisions are assessed in accordance with the advice of independent qualified actuaries using the Projected Unit Credit Method. The schemes do not hold any physical assets but instead the Group makes provision to cover the estimated retirement benefits liabilities.

Group 2013 2012 rM'000 rM'000 Present value of unfunded defined benefit obligations 36,305 36,441 Unrecognised actuarial gains (1,263) (1,214)

Net benefit liability 35,042 35,227 The amounts recognised in the profit or loss are as follows: Current service cost 2,371 2,402 Interest cost 1,626 1,943 Curtailment loss - 140 Amortisation of unrecognised actuarial loss/(gain) 51 (305) Write-back of provision (1,160) (847) Transition obligation recognised 377 148

Total 3,265 3,481

27. provision for retireMent benefits (cont'D.)

Movements in the net benefit liability in the current year were as follows: Group 2013 2012 rM'000 rM'000

at 1 october 2012/2011 35,227 35,822 Recognised in profit or loss (Note 7(a)) 3,265 3,481 Benefits paid (3,708) (3,952) Exchange differences 258 (124) at 30 september 35,042 35,227 Group 2013 2012 % %

Principal actuarial assumptions used: Discount rate (%) 4.40 - 5.25 3.80 - 5.50 Rate of increase in salaries (%) 4.00 - 6.00 4.00 - 6.00 Mortality rate (%) 0.03 - 1.48 0.00 - 1.48 Disability rate (%) 0.00 - 0.07 0.00 - 0.04 Retirement age (years)

- Malaysia 60 55 - Thailand 60 60

Based on the latest available actuarial valuation carried out in 2013, the provision for retirement and service benefits is considered

sufficient to meet the actuarially determined value of vested benefits.

28. DeferreD tax assets anD liabilities

Group 2013 2012 rM'000 rM'000 at 1 october 2012/2011 (64,003) 8,899 Recognised in profit or loss: - property, plant and equipment 6,028 19,391 - investment properties 2,395 - - tax losses and unabsorbed capital allowances 16,204 (16,092) - tax incentive (4,365) (80,155) - provisions and others (830) 3,954 19,432 (72,902)

at 30 september (44,571) (64,003)

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28. DeferreD tax assets anD liabilities (cont'D.) Deferred tax is provided on temporary differences between the tax bases and carrying amounts of assets and liabilities at the

reporting date. The movements of deferred tax assets and liabilities during the financial year are as follows:

Group 2013 2012 rM'000 rM'000

Deferred tax assets at 1 october 2012/2011 (79,050) (4,705) Currency realignment (156) 126 Recognised in profit or loss 7,802 (74,471)

at 30 september (71,404) (79,050) Deferred tax liabilities at 1 october 2012/2011 15,047 13,604 Recognised in profit or loss 11,786 1,443

at 30 september 26,833 15,047

The components of deferred tax assets and liabilities prior to offsetting are as follows: Group 2013 2012 rM'000 rM'000 Deferred tax assets - Provisions and others (9,428) (8,598) - Tax incentives (84,520) (80,155) - Tax losses and unabsorbed capital allowances (7,954) (24,158)

(101,902) (112,911) Deferred tax liabilities Subject to income tax: - Property, plant and equipment 54,936 48,908 - Investment properties 2,395 -

57,331 48,908 net deferred tax assets (44,571) (64,003)

The following deferred tax assets have not been recognised as they may not be used to offset taxable profits elsewhere in the

Group: Group 2013 2012 rM'000 rM'000

Unutilised tax losses 6,828 3,234 Unabsorbed capital allowances 11,406 7,601 Unabsorbed reinvestment allowances 15,400 16,362

33,634 27,197

There are no income tax consequences attached to the payment of dividends by the Group to its shareholders in financial years ended 30 September 2013 or 30 September 2012.

29. payables anD provisions

(a) payables Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 current Trade payables iii 208,073 195,299 - - Other payables ii & iii - Accrued expenses 211,817 227,753 457 1,935 - Deposits 5,393 6,225 - - - Sales tax 12,517 9,165 - - - Staff costs 32,509 31,879 - - - Others 87,368 90,767 - -

349,604 365,789 457 1,935 Subsidiaries - - 23 75 Related companies i 78,064 56,561 - - Associate i 613 352 - -

Total trade and other payables 636,354 618,001 480 2,010

The currency profile is as follows: - Ringgit Malaysia 499,689 455,081 480 2,010 - US Dollar 8,139 9,985 - - - Thai Baht 122,355 147,726 - - - Singapore Dollar 3,612 4,759 - - - Others 2,559 450 - -

636,354 618,001 480 2,010

(i) The amounts due to related companies and an associate are trade in nature, repayable on demand and non-interest bearing. The normal trade credit terms granted to the Group for trade payables are 30 to 90 days (2012: 30 to 90 days). Related companies are subsidiaries and associates of TCC Assets Limited and Thai Beverage Public Company Limited, excluding entities within the Group.

(ii) Included in other payables as at 30 September 2012 was a derivative liability amounting to RM53,921.

(iii) Trade and other payables include amounts due to Permodalan Nasional Berhad group of companies amounting to RM2.4 million (2012: RM4.1 million).

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29. payables anD provisions (cont'D.)

(b) provision for litigation claims

Group/company 2013 2012 rM'000 rM'000 at 1 october 2012/2011 6,000 22,468 Provision 11,934 - Write-back of provision - (4,788) Payment - (11,680)

at 30 september 17,934 6,000 The provision is in respect of the estimated indemnity costs arising from the divestment of the glass container business in

financial year ended 30 September 2010 under the conditional share sale agreement with Berli Jucker and ACI International (Note 41).

30. capital coMMitMents Group 2013 2012 rM'000 rM'000 property, plant and equipment: Amounts approved and contracted for 9,674 12,183 Amounts approved but not contracted for 29,814 32,789

39,488 44,972 31. lease coMMitMents The balance of the non-cancellable operating lease rentals payable under rental agreements are as follows:

Non-cancellable operating lease commitments - Group as lessee Group 2013 2012 rM'000 rM'000 future minimum rentals payable: Not later than 1 year 25,124 23,129 Later than 1 year and not later than 5 years 10,764 27,665 Later than 5 years 1,109 1,114

36,997 51,908

32. siGnificant relateD party transactions In addition to the related party information disclosed elsewhere in the financial statements, the significant related party

transactions of the Group other than key management personnel compensation are as follows:

Group 2013 2012 rM'000 rM'000

fraser and neave, limited Group: Sales 128,578 134,322 Receipt of corporate service fees and staff costs 12 - Rental income 301 301 Purchases 190,891 169,770 Royalties paid 50,346 49,324 Corporate charges paid 2,276 2,690

vacaron company sdn bhd: Receipt of corporate service fees and staff costs 598 212 Rental income 54 27 Interest income 1,689 1,118 thai beverage public company limited Group: Sales 337 - Purchases 1,144 - berli Jucker public company limited Group: Sales 1,902 - Purchases 30,238 - Logistic cost 7 - permodalan nasional berhad Group: Sales 68,730 80,326 Purchases 34,116 44,128 Repair and maintenance of motor vehicle paid 37 22 Rental of equipment paid 511 192 Other expenses paid 41 12

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32. siGnificant relateD party transactions (cont'D.)

company 2013 2012 rM'000 rM'000 subsidiaries: Dividend income received 181,000 270,199 Interest income received 5,365 5,015 Management fees paid 300 300 cocoaland Holdings berhad: Dividend income received 2,916 2,390 vacaron company sdn bhd: Shareholder's loan granted to joint venture 9,120 69,500 Interest income received 3,378 2,235 The sales to and purchases from related parties are made at normal market price. Outstanding balances at the financial

year-end are interest-free and settlement occurs in cash. Permodalan Nasional Berhad (“PNB”) is deemed a related party to Fraser & Neave Holdings Bhd (“FNHB”) by virtue of PNB

holding 68,898,300 shares through Amanahraya Trustees Berhad, representing 18.91% equity interest in FNHB and having two nominee Directors on the Board of FNHB.

compensation of key management personnel of the Group Key management personnel is defined as those persons having authority and responsibility for planning, directing and controlling

the activities of the Group, directly or indirectly including any Directors.

The following table summarises remuneration paid to key management personnel:

Group 2013 2012 rM'000 rM'000

Key executives officers - Salaries and allowances 4,353 4,763 - Contributions to defined contribution plan 347 502 - Bonus 1,677 2,835 - Benefits-in-kind 472 464 - Share-based payment transactions 223 530

7,072 9,094 The compensation of key management personnel of the Group also includes remuneration paid and payable to Executive

Director as disclosed in Note 7(c).

33. financial risK ManaGeMent obJectives anD policies Information about the extent and nature of the financial instruments, including significant terms and conditions and their

exposure to foreign currency, credit, liquidity and interest rate risks are presented in their respective notes.

The Group and the Company are exposed to market risk, including primarily changes in currency exchange rates and other instruments in connection with its risk management activities. The Group does not hold nor issue derivative financial instruments for trading purposes. The Group has established processes to monitor and control hedging transactions in a timely and accurate manner.

The Group's Finance Risk Management Framework and Guidelines set the foundation for the establishment of effective risk management practices across the Group.

The Board of Directors reviews and agrees policies for managing each of these risks as summarised below. It is and has been throughout the year under review, the Group's policy that no speculative trading in derivative financial instruments shall be undertaken.

(a) foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in foreign exchange rates.

The Group has exposure to foreign exchange risk as a result of transactions denominated in foreign currencies arising from normal trading and investment activities. Where exposures are certain, it is the Group's policy to hedge these risks as they arise. For those exposures less certain in the timing and extent, it is the Group's policy to cover 50% to 90% of anticipated exposure for a maximum period of 12 months forward. At 30 September 2013 and 2012, the outstanding foreign currency forward contracts of the Group are as follows:

notional value fair value rM'000 rM'000

currency 2013 USD (less than 2 months) 23,347 23,653 2012 USD (less than 2 months) 7,688 7,634 The above instruments are executed with credit worthy financial institutions in Malaysia and as such credit and counterparties

risks are minimal. There is no cash requirement for these contracts. Policies to mitigate or control the risk associated with foreign exchange forward contracts are consistent with those of last financial year.

The difference between the notional value and fair value of the foreign currency forward contracts amounting to RM360,331 (2012: RM274,000) was recognised in the profit or loss as disclosed in Note 7.

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33. financial risK ManaGeMent obJectives anD policies (cont'D.)

(a) foreign currency risk (cont'd.) Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group's and the Company's profit after tax to a reasonably possible

change in the US Dollar ("USD"), Thai Baht ("THB") and Singapore Dollar ("SGD") exchange rates against the functional currency of the Company, with all other variables held constant.


USD/RM - strengthened 10% 2,167 6,038 - - - weakened 10% (2,167) (6,038) - - THB/RM - strengthened 10% 6,020 1,476 12,003 11,148 - weakened 10% (6,020) (1,476) (12,003) (11,148) SGD/RM - strengthened 10% 267 375 - - - weakened 10% (267) (375) - -

(b) credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group's and the Company's exposure to credit risk arise primarily from trade and other receivables. The receivables are monitored on an ongoing basis through the Group's management reporting procedures.

Exposure to credit risk The Group's and the Company's exposure to credit risk arises in the event that the counterparties fail to perform their

obligations. The maximum exposure to credit risk is represented by the carrying amount of each class of recognised financial assets, other than derivatives, as indicated in the statements of financial position.

It is the Group’s policy to enter into financial instruments with a diversity of creditworthy counterparties. The Group does

not expect to incur material credit losses on its financial assets or other financial instruments. The Company is also exposed to credit risk in respect of its financial guarantees provided to credit facilities granted to a

subsidiary. The maximum credit risk exposure of these financial guarantees is RM2.5 billion (2012: RM1 billion) of which RM390 million (2012: RM380 million) was utilised in respect of the issuance of the CP/MTN of its subsidiary (Note 26).

Concentration of credit risk exists when changes in economic, industry and geographical factors similarly affect the group

of counterparties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure. The Group’s portfolio of financial instruments is broadly diversified along industry, product and geographical lines, and transactions are entered into with diverse creditworthy counterparties, thereby mitigating any significant concentration of credit risk. As at the reporting date, there was no indication that any subsidiary would default on repayment.

Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired are disclosed in Note 20. Deposit

with banks and other financial institutions that are neither past due nor impaired, as disclosed in Note 21, are placed with reputable financial institutions or companies with high credit rating and no history of default.

33. financial risK ManaGeMent obJectives anD policies (cont'D.)

(c) interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments

will fluctuate because of changes in market interest rates.

The Group and the Company have no exposure to significant interest rate risk as the fixed rate debts were entered into by the Group and the Company in order to minimise fluctuations in interest rates.

(d) liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to

shortage of funds. The Group's and the Company's exposure to liquidity risk arises in the general funding of the Group's and the Company's business activities. It includes the risk of being able to fund business activities in a timely manner.

The Group adopts a prudent approach to managing its liquidity risk. The Group maintain sufficient cash and deposits, and have available funding through diverse sources of committed and uncommitted credit facilities from various banks.

analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based

on contractual undiscounted repayment obligations:

Within 1 year 2-3 years > 3 years total rM'000 rM'000 rM'000 rM'000 carrying amount: Group 2013 Interest-bearing borrowings 246,660 13,158 163,050 422,868 Payables 636,354 - - 636,354

883,014 13,158 163,050 1,059,222 2012 Interest-bearing borrowings 423,711 - - 423,711 Payables 618,001 - - 618,001

1,041,712 - - 1,041,712 company 2013 Payables 480 - - 480 2012 Payables 2,010 - - 2,010

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34. fair value of financial instruMents

(a) Determination of fair value Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair

value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

note Trade and other receivables (current) 20(a) Trade and other payables (current) 29(a) The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to

their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments, for which it is practicable to estimate that value:

Foreign currency forward contracts The fair value of a foreign currency forward contract is the amount that would be payable or receivable on termination of

the outstanding position arising and is determined by reference to the difference between the contracted rate and forward exchange rate as at the reporting date applied to a contract of similar quantum and maturity profile. The fair values of foreign currency forward contracts are disclosed in Note 33(a), foreign currency risk.

(b) fair value hierarchy As at 30 September 2013, the Group held the foreign currency forward contracts carried at fair value of RM306,410 (2012:

RM54,000) based on Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

35. capital ManaGeMent The primary objective of the Group when managing capital are to safeguard the Group's ability to continue as a going concern

in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group manages its capital structure and makes adjustments to it, in 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, issue new shares or acquire treasury shares from the market. No changes were made in the objective, policies or processes during the financial years ended 30 September 2013 and 2012.

The Group and the Company monitor and maintain a prudent level of total debt to total asset ratio to optimise shareholders value and to ensure compliance with covenants under debt agreements.

35. capital ManaGeMent (cont'D.)

The debt to equity ratio of the Group and of the Company are as follows: Group company note 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 Short term borrowings 26 240,000 423,711 - - Long term borrowings 26 150,000 - - -

Total debts 390,000 423,711 - - Total equity (exclude non-controlling interests) 1,650,173 1,554,283 1,314,486 1,321,095 Debt equity ratio 0.24 0.27 - - Under the requirement of Bursa Malaysia Practice Note No.17/2005, the Company is required to maintain consolidated

shareholders' equity equal to or not less than 25% of the issued and paid up capital (excluding treasury shares) and such shareholders' equity is not less than minimum issued and paid-up capital.

The Company has complied with this requirement.

36. cateGories of financial instruMents The table below provides an analysis of financial instruments categorised as follows:

(i) Fair value through profit or loss (“FVTPL”); (ii) Loans and receivables (“L&R”); (iii) Held-to-maturity (“HTM”); (iv) Available-for-sale financial assets (“AFS”); and (v) Other financial liabilities (“OFL”)

carrying amounts fvtpl l&r ofl note rM'000 rM'000 rM'000 rM'000

Group financial assets: 2013 Receivables (excluding prepayments) 20 557,794 306 557,488 - Cash and cash equivalents 21 362,172 - 362,172 -

919,966 306 919,660 -

2012 Receivables (excluding prepayments) 20 560,418 - 560,418 - Cash and cash equivalents 21 227,873 - 227,873 -

788,291 - 788,291 -

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36. cateGories of financial instruMents (cont'D.)

carrying amounts fvtpl l&r ofl note rM'000 rM'000 rM'000 rM'000

Group (cont'd.) financial liabilities: 2013 Payables 29 636,354 - - 636,354 Borrowings 26 390,000 - - 390,000

1,026,354 - - 1,026,354 2012 Payables 29 618,001 54 - 617,947 Borrowings 26 423,711 - - 423,711

1,041,712 54 - 1,041,658 company financial assets: 2013 Receivables (excluding prepayments) 20 255,007 - 255,007 - Cash and cash equivalents 21 53,539 - 53,539 -

308,546 - 308,546 - 2012 Receivables (excluding prepayments) 20 279,798 - 279,798 - Cash and cash equivalents 21 17,960 - 17,960 -

297,758 - 297,758 - financial liabilities: 2013 Payables 29 480 - - 480

480 - - 480 2012 Payables 29 2,010 - - 2,010

2,010 - - 2,010

37. insurance claiMs froM flooD Disaster

On 11 October 2011, the Group announced that its dairy products manufacturing facilities in Rojana Industrial Park, Ayutthaya, Thailand under F&N Dairies (Thailand) Limited, a wholly owned subsidiary, was inundated by massive floods and had ceased production.

As at 30 September 2013, the insurers had approved insurance claims in relation to property damage and business interruption amounting to RM165.8 million (THB 1.59 billion) (2012: RM110.6 million (THB 1.1 billion)) and RM128.9 million (2012: RM84.2 million) was received to date. As of the same date, all outstanding flood related claims are closed.

The agreed payment has been recognised as insurance claims receivable in other income. The net effect on Group’s profit for the financial year is shown below:

2013 2012 rM'000 rM'000

Property damage insurance claim 30,921 80,699Business interruption insurance claim 18,395 29,892Less: Damaged plant and equipment written-off - (32,774) Damaged inventories written-off - (36,571) Other flood related expenses - (15,997)

Net effect on Group's profit for the financial year 49,316 25,249

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38. seGMental inforMation

For management purposes, the Group’s operating businesses are organised according to products and services, namely soft drinks, dairies Malaysia, dairies Thailand, property, and others.

Segment performance is evaluated based on operating profit. The Group operates in three geographical areas namely, Malaysia, Thailand and Singapore. Geographical segment revenue is based on geographical location of the business segment customers. Geographical segment assets are based on geographical location of the Group’s assets. Inter-segment sales where applicable are based on terms determined on a commercial basis.

operating segments The following table provides an analysis at the Group's revenue, results, assets, liabilities and other information by operating

segments:

soft Dairies Dairies financial year ended drinks Malaysia thailand property others total 30 september 2013 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 revenue Total revenue 2,269,208 1,587,061 1,095,262 3,754 71,735 5,027,020 Inter-segment (811,773) (612,587) (19,658) (3,266) (71,511) (1,518,795)

External 1,457,435 974,474 1,075,604 488 224 3,508,225 results Operating profit 129,686 54,929 128,828 7,524 (8,282) 312,685 Share of results of an associate - - - - - 4,691 Interest expense (Note a) - - - - - (13,918) Interest income (Note a) - - - - - 5,252 Income tax expense (Note a) - - - - - (48,084)

Net profit for the year 260,626 other information Segment assets 731,048 658,355 551,744 257,259 56,086 2,254,492 Investment in an associate - - - - 75,511 75,511 Unallocated assets - - - - - 71,404 Cash and bank balances (Note a) - - - - - 362,172

Total assets 2,763,579 Segment liabilities 301,871 159,978 149,155 51,866 26,460 689,330 Unallocated liabilities - - - - - 26,833 Provision for taxation (Note a) - - - - - 7,016 Bank borrowings (Note a) - - - - - 390,000

Total liabilities 1,113,179 Capital expenditure 27,624 24,764 9,437 4,652 6,255 72,732 Depreciation and amortisation of intangible assets 42,468 19,460 19,810 690 5,940 88,368 Property, plant and equipment written-off 1,662 154 - - 1 1,817 Allowance for impairment on trade receivables 212 508 - - - 720 Inventories written-down 757 1,028 699 - - 2,484 Inventories written-off 5,079 5,744 2,387 - - 13,210

38. seGMental inforMation (cont'D.) operating segments (cont'd.) soft Dairies Dairies financial year ended drinks Malaysia thailand property others total 30 september 2012 rM'000 rM'000 rM'000 rM'000 rM'000 rM'000 revenue Total revenue 2,118,654 1,792,659 778,925 2,043 62,653 4,754,934 Inter-segment (757,596) (752,927) (8,278) (1,834) (62,376) (1,583,011) External 1,361,058 1,039,732 770,647 209 277 3,171,923 results Operating profit 112,513 33,198 26,002 850 58,818 231,381 Share of results of an associate - - - - - 6,119 Interest expense (Note a) - - - - - (11,558) Interest income (Note a) - - - - - 4,266 Income tax credit (Note a) - - - - - 43,782

Net profit for the year 273,990 other information Segment assets 760,673 724,599 546,396 171,838 14,810 2,218,316 Investment in an associate - - - - 73,737 73,737 Unallocated assets - - - - - 79,050 Cash and bank balances (Note a) - - - - - 227,873 Non-current assets held for sale - - - 55,897 - 55,897

Total assets 2,654,873 Segment liabilities 259,725 176,303 158,968 45,196 19,036 659,228 Unallocated liabilities - - - - - 15,047 Provision for taxation (Note a) - - - - - 2,350 Bank borrowings (Note a) - - - - - 423,711

Total liabilities 1,100,336 Capital expenditure 42,264 97,242 65,620 160 8,085 213,371 Depreciation and amortisation of intangible assets 42,972 28,487 16,509 288 6,197 94,453 Property, plant and equipment written-off 1,863 150 32,774 1 - 34,788 Allowance for impairment on trade receivables 316 1,833 - - - 2,149 Inventories written-down 369 1,657 1,158 - - 3,184 Inventories written-off 3,982 7,227 36,571 - - 47,780 note a: Group financing (including finance costs), cash and bank balances and provision for taxation are managed on a group basis

and are not allocated to operating segments.

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38. seGMental inforMation (cont'D.) Geographical segments The following table presents the financial information by geographical segments: revenue non-current assets 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 Malaysia 2,218,191 2,190,659 962,582 923,209 Vietnam 9,892 6,085 - - China 1,085 21,832 - - Singapore 166,435 173,248 - - Thailand 906,056 671,838 275,902 273,053 Others 206,566 108,261 75,370 75,370

3,508,225 3,171,923 1,313,854 1,271,632 Non-current assets information presented above consist of the following items as presented in the consolidated statement of

financial position:

2013 2012 rM'000 rM'000 Property, plant and equipment 1,065,776 1,074,386 Investment properties 57,084 - Properties held for development 54,518 62,276 Intangible assets 136,476 134,970

1,313,854 1,271,632 The Group has a large and diversified customer base which consists of individuals and corporations. There was no single

customer that contributed 10% or more of the Group's revenue for the financial years ended 30 September 2013 and 2012.

39. subsiDiaries anD activities place of proportion of name of company incorporation principal activities ownership interest (%) 2013 2012 subsidiaries of fraser & neave Holdings bhd Kuala Lumpur Glass Malaysia Inactive 100 100 Manufacturers Company Sdn Bhd (i) Fraser & Neave Malaysia Management 100 100 (Malaya) Sdn Bhd (i) services and property investment holdings Four Eights Sdn Bhd (i) Malaysia Inactive 100 100 F&N Beverages Malaysia Manufacture of 100 100 Manufacturing Sdn Bhd (i) soft drinks F&N Beverages Malaysia Distribution of 100 100 Marketing Sdn Bhd (i) soft drinks F&N Dairies Malaysia Distribution of 100 100 (Malaysia) Sdn Bhd (i) dairy products Premier Milk Malaysia Inactive 100 100 (Malaya) Sdn Bhd (i) F&N Foods Sdn Bhd (i) Malaysia Inactive 100 100 F&N Dairies (Thailand) Thailand Manufacture and 100 100 Limited (ii) distribution of dairy products F&N Dairies Distribution Singapore Distribution of 100 100 (S) Pte Ltd (ii) dairy products (formerly known as Arolys Singapore Pte Ltd) Lion Share Management British Virgin Brand owner 100 100 Limited (i) Island F&N Dairies Manufacturing Malaysia Manufacture and 100 100 Sdn Bhd (i) distribution of dairy (formerly known as products PML Dairies Sdn Bhd) Wimanis Sdn Bhd (i) Malaysia Property 100 100 development activities

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39. subsiDiaries anD activities (cont'D.) place of proportion of name of company incorporation principal activities ownership interest (%) 2013 2012

subsidiaries of fraser & neave Holdings bhd (cont'd.) Elsinburg Holdings Malaysia Property 100 100 Sdn Bhd (i) development activities Nuvak Company Malaysia Inactive 100 100 Sdn Bhd (i) Greenclipper Corporation Malaysia Property 100 100 Sdn Bhd (i) development activities Utas Mutiara Sdn Bhd (i) Malaysia Property 100 100 investment holding Lettricia Corporation Malaysia Property 70 70 Sdn Bhd (i) development activities F&N Properties Sdn Bhd (i) Malaysia Provision of 100 100 property management services Tropical League Sdn Bhd (i) Malaysia Inactive 100 100 F&N Capital Sdn Bhd (i) Malaysia Provision of financial 100 100 and treasury services subsidiary of f&n beverages Manufacturing sdn bhd Borneo Springs Malaysia Manufacture and 100 100 Sdn Bhd (i) sale of mineral water, carbonated drinks and bottles

subsidiary of f&n beverages Marketing sdn bhd F&N Beverages Thailand Inactive 100 100 (Thailand) Limited (ii)

(i) Audited by Ernst & Young, Malaysia (ii) Audited by member firms of Ernst & Young Global in the respective countries

40. cHanGe in coMparatives

(a) The comparatives for the financial year ended 30 September 2012 have been restated as follows: as previously adjustment as stated # restated Group rM'000 rM'000 rM'000 impact on the profit or loss: for the financial year ended 30 september 2012 Revenue 3,238,786 (66,863) 3,171,923 Cost of sales (2,351,975) 66,863 (2,285,112)

# Being adjustment for the elimination of sales tax. The adjustment has no impact on the results of the financial year ended 30 September 2012.

(b) The following comparatives have been reclassified to conform with current year's presentation: as previously as stated adjustment restated Group rM'000 rM'000 rM'000 impact on the statement of financial position: as at 30 september 2012 Receivables 518,315 43,802 562,117 Tax recoverable - 4,745 4,745 Payables (569,454) (48,547) (618,001) as at 1 october 2011 Receivables 538,175 9,279 547,454 Tax recoverable - 2,672 2,672 Payables (685,237) (11,951) (697,188) impact on the statement of cash flows: for the financial year ended 30 september 2012 Purchase of property, plant and equipment (201,626) 8,061 (209,687) Purchase of computer software (11,745) (8,061) (3,684)

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41. Material litiGation In August 2013, the Company was served with a Kuala Lumpur High Court Writ of Summons and Statement of Claim by BJC-

OI Glass Pte Ltd (“BJC-OI”). BJC-OI’s action against the Company is for damages for alleged breaches of a share purchase agreement dated 14 May 2010 (the “Share Purchase Agreement”) between Berli Jucker Public Company Ltd (“BJC”), ACI International Pty Ltd (“ACI”) and the Company for the sale by the Company to BJC and ACI as purchasers of the entire issued and paid-up share capital of Malaya Glass Products Sdn Bhd. BJC and ACI subsequently assigned their rights in the Share Purchase Agreement to BJC-OI.

BJC-OI is claiming special damages of RM43 million as well as general and consequential damages to be determined by the court.

BJC-OI is a 50-50 joint venture between Thailand-listed conglomerate BJC and Owens-Illinois Singapore Pte Ltd, which is a subsidiary of NYSE-listed Owens-Illinois Inc. BJC is a subsidiary of TCC Holding Company Limited (“TCCH”).

Adequate provision has been made in respect of this material litigation as disclosed in Note 29(b).

BJC-OI is deemed a related party to the Company in that, following acquisitions by Thai Beverage Public Company Limited (through its subsidiary) and TCC Assets Limited (both of which are members of the same group as TCCH) of shares in the Company’s Singapore-listed holding company Fraser and Neave, Limited (the “F&NL Share Acquisitions”), BJC and BJC-OI became persons connected with indirect major shareholders of the Company. The Share Purchase Agreement was entered into prior to the F&NL Share Acquisitions.

42. suppleMentary inforMation - breaKDoWn of retaineD earninGs into realiseD anD unrealiseD The breakdown of the retained profits of the Group and of the Company as at 30 September 2013 into realised and unrealised

profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:

Group company 2013 2012 2013 2012 rM'000 rM'000 rM'000 rM'000 Total retained earnings of the Group and its subsidiaries - Realised 782,422 704,864 520,438 561,258 - Unrealised 46,182 58,474 1,632 (5,806)

828,604 763,338 522,070 555,452 Total share of retained earnings from an associate - realised 6,784 5,010 - - Consolidation adjustments 2,352 19,626 - -

Retained earnings (Note 25) 837,740 787,974 522,070 555,452

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otHerinFormation183 List of Properties186 Shareholdings Statistics188 Share Price Charts189 Recurrent Related Party Transactions

net book value as at 30/9/13 Description/ approximate Date of land area existing age of last (sq. ft.) use of building land buildings revaluation/location building (tenure) rM'000 rM'000 acquisition

JoHor

Malay Grant 598, Jalan Tampoi, 59,895 Detached 46 years 1,050 3,279 FebruaryJohor Bahru house/ (Freehold) 1990 Warehouse

701, Jalan Tampoi, Johor Bahru 241,022 Industrial/ 46 years 7,662 161 February Factory (Freehold) 1990 premise Lot 15350, Lot 15351& 132,052 For the Freehold 19,599 - 2005Lot PTB 20048, Jalan Balau 1, development ofJalan Dato Sulaiman, commercial Jalan Tebrau, Mukim Bandar, propertyDistrict of Johor Bharu peraK

217 Jalan Lahat, Ipoh 287,738 Industrial/ 44 years 2,815 3,581 October Factory (Freehold) 1995 premise

79 & 81 Jalan Tun Perak, Ipoh 51,828 Industrial/ 107 years 363 - October Factory (Freehold/ 1995 premise Leasehold expiring 2013 & 2066)

pulau pinanG

3724 (Lot 834 and 842) 130,324 Industrial/ 59 years 2,600 1,793 OctoberSungei Nyior, Butterworth Factory (Freehold) 1995Pulau Pinang premise

3725 & 3726 (Lot 833) 97,387 Detached 58 years 2,120 180 OctoberButterworth house/ (Freehold) 1995Pulau Pinang Office premise

Kelantan

Pengkalan Chepa Industrial 203,861 Industrial/ 33 years 528 444 OctoberEstate, Kota Bahru Factory (Leasehold 1995 premise expiring 2043)

MelaKa

10 Jalan Bukit Gedong, 104,000 Industrial/ 88 years 763 467 OctoberMelaka Factory (Freehold/ 1995 premise Leasehold expiring 2023)

list oF propertiesyear enDeD 30 septeMber 2013

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paHanG

Mar Lodge, 90,931 Detached 46 years 586 168 OctoberCameron Highland house/ (Leasehold 1995 Holiday expiring Bungalow 2037)

Lot 7399, Jln Mempaga, 216,986 Industrial/ 6 years 3,699 7,463 2007Mukim Sabai, Karak Factory (Freehold) premise

Kuala luMpur

No. 3, Jalan Metro Pudu, 7,208 Office 6 years - 13,554 2007Fraser Business Park Premise (Freehold)

Kompleks Metro Pudu, 88,057 Office 4 years - 66,714 SeptemberNo. 1 Jalan Metro Pudu 2, Premise (Freehold) 2013Fraser Business Park

Lot 682 Seksyen 92, 40,763 Leased Freehold 5,504 3,438 SeptemberFraser Business Park, premise 2013Off Jalan Yew, 55100 Kuala Lumpur.

selanGor

Lot 3-1 Lion Industrial Park, 1,373,447 Industrial/ 16 years 36,899 62,671 OctoberShah Alam Factory (Freehold) 1995 premise and office Lot 3-2 Lion Industrial Park, 558,875 Industrial/ Freehold 11,679 - OctoberShah Alam Vacant 1995

Lot No 56, Section 4, Phase 2B, 1,629,042 Industrial/ 5 years 27,997 167,510 2008Mukim Klang, Selangor Factory (Leasehold premise expiring 2097)

Lot 609, Geran 24235, 2,640,251 For the Freehold 24,586 - 2006Mukim Hulu Semenyih, development ofDistrict of Hulu Langat, Selangor residential property 70, Jalan Universiti, 382,467 For mix (Leasehold 9,149 - OctoberPetaling Jaya development expiring 1995

2069)

16, Jalan Bersatu 13/4, 171,797 For mix (Leasehold 4,845 - OctoberPetaling Jaya development expiring 1995 2069)

List of Propertiesyear ended 30 september 2013


saraWaK

Lot 924 Block 4 118,776 Industrial/ 7 years 4,379 2,637 2006Matang Land District Factory (Freehold) premise

Lot 1581 Block 4 261,338 Commercial 7 years 4,260 3,028 2006Matang Land District (Leasehold expiring 2038)

3.5 Miles Penrissen Road, 194,539 Industrial/ 47 years 1,452 17,430 OctoberKuching Factory (Leasehold 1995 premise expiring 2038)

Lot 1557 Block 218 KNLD 124,797 Industrial 7 years 6,174 - 2006Kuching (Leasehold expiring 2038)

Lot 142 Block 63 47,413 Shop office 7 years 225 169 2006Kuching (Leasehold expiring 2784) sabaH

5.5 Miles Tuaran Road, 142,140 Vacant Land 3 years 1,172 - OctoberKota Kinabalu (Leasehold 1995 expiring 2062)

5.5 Miles Tuaran Road, 142,578 Industrial/ 42 years 958 4,599 OctoberKota Kinabalu Factory (Leasehold 1995 premise expiring 2062)

tHailanD

90 Moo 8 Mitapap Road, 125,857 Industrial 6 years - 6,001 2007Phayayen District, Amphur (Freehold)Pakchong, Nakonratchasima Province 30320

668 Moo 4 Rojana Industrial Park 990,280 Industrial 4 years 17,674 118,962 2010Zone 2, U-thai, Phra Nakhon Si (Freehold)Ayutthaya 13210 Thailand.

List of Propertiesyear ended 30 september 2013

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Authorised share capital : RM500,000,000Issued and paid-up share capital : RM364,936,401Voting issued and paid-up share capital : RM364,699,301Treasury shares : 237,100 ordinary shares of RM1.00 eachClass of share : Ordinary shares of RM1.00 eachVoting rights : One vote for each ordinary share held in the event of a poll

ordinary shares Distribution schedule

size of shareholdings no. of shareholders % no. of voting shares %

1 - 99 shares 360 7.449 4,681 0.001100 - 1,000 shares 2,215 45.831 1,490,404 0.4091,001 - 10,000 shares 1,832 37.906 6,956,228 1.90710,001 - 100,000 shares 361 7.469 10,410,798 2.855100,001 to less than 5% of issued shares 62 1.283 51,578,150 14.1435% and above of issued shares 3 0.062 294,259,040 80.685

4,833 100.000 364,699,301 100.000

Directors’ shareholdings(as per register of Directors’ shareholdings)

Direct shareholding indirect shareholding no. of voting no. of votingno. name of Director shares Held % shares Held %

1 Y.A.M. Tengku Syed Badarudin Jamalullail 2,062,000 0.565 - -

None of the Directors of the Company holds any share either directly or indirectly in its subsidiaries and associated companies save and except for the interest held through the Company.

substantial shareholders(as per register of substantial shareholders)

Direct shareholding indirect shareholding no. of voting no. of votingno. name of shareholders shares Held % shares Held %

1 Fraser and Neave, Limited 203,470,910 55.791 - - 2 InterBev Investment Limited - - 203,470,910 55.791*3 International Beverage Holdings Limited - - 203,470,910 55.791*4 Thai Beverage Public Company Limited - - 203,470,910 55.791*5 Maxtop Management Corp. - - 203,470,910 55.791*6 Siriwana Company Limited - - 203,470,910 55.791*7 MM Group Limited - - 203,470,910 55.791*8 Shiny Treasure Holdings Limited - - 203,470,910 55.791*9 Khun Charoen Sirivadhanabhakdi - - 203,470,910 55.791*10 Khunying Wanna Sirivadhanabhakdi - - 203,470,910 55.791*11 TCC Assets Limited - - 203,470,910 55.791*12 Amanahraya Trustees Berhad - Skim Amanah 68,488,700 18.779 - - Saham Bumiputera13 Employees Provident Fund Board 25,192,430 6.908 - -

297,152,040 81.478

*Indirect interest in the Company is held through Fraser and Neave, Limited pursuant to Section 6A of the Companies Act, 1965.

sHareHolDingsstatisticsas at 29 noveMber 2013

no. name of shareholdersvoting

shares Held %

1 Fraser and Neave, Limited 203,470,910 55.791

2 Amanahraya Trustees Berhad - Skim Amanah Saham Bumiputera 68,488,700 18.779

3 Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board 22,299,430 6.114

4 Malaysia Nominees (Tempatan) Sendirian Berhad - Great Eastern Life Assurance (Malaysia) Berhad (Par 1)

9,770,000 2.678

5 Amanahraya Trustees Berhad As 1Malaysia 8,032,700 2.202

6 HSBC Nominees (Asing) Sdn Bhd - BNP Paribas Secs Svs Lux for Aberdeen Global 4,792,100 1.313

7 Amanahraya Trustees Berhad - Amanah Saham Malaysia 4,594,300 1.259

8 Amanahraya Trustees Berhad - Amanah Saham Didik 1,656,100 0.454

9 DB (Malaysia) Nominee (Tempatan) Sendirian Berhad - icapital.biz Berhad 1,517,600 0.416

10 Employees Provident Fund Board 1,500,000 0.411

11 Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board (Aberdeen) 1,393,000 0.381

12 Amanahraya Trustees Berhad - Amanah Saham Wawasan 2020 1,270,200 0.348

13 CIMSEC Nominees (Tempatan) Sdn Bhd - CIMB Bank for Syed Badarudin Jamalullail (My1543) 1,200,500 0.329

14 Citigroup Nominees (Tempatan) Sdn Bhd - Kumpulan Wang Persaraan (Diperbadankan)(Aberdeen) 1,080,000 0.296

15 CIMSEC Nominees (Asing) Sdn Bhd - Bank of Singapore Limited for Kontinental International Limited 1,000,000 0.274

16 CIMSEC Nominees (Tempatan) Sdn Bhd - CIMB for Syed Badarudin Jamalullail (PB) 831,500 0.227

17 DB (Malaysia) Nominee (Asing) Sdn Bhd - SSBT Fund AM4N for Aberdeen Institutional Commingled Funds LLC

801,800 0.219

18 Key Development Sdn. Berhad 600,000 0.164

19 Soong Bee Yoke 575,000 0.157

20 Malaysia Nominees (Tempatan) Sendirian Berhad - Great Eastern Life Assurance (Malaysia) Berhad (Par 2)

559,500 0.153

21 Chinchoo Investment Sdn. Berhad 500,000 0.137

22 Gan Teng Siew Realty Sdn. Berhad 500,000 0.137

23 HSBC Nominees (Asing) Sdn Bhd - Exempt AN for Deutsche Wertpapierservice Bank AG (Dresdner BK AG)

495,300 0.135

24 Amanahraya Trustees Berhad - Public Index Fund 473,600 0.129

25 HSBC Nominees (Asing) Sdn Bhd - Exempt AN for BNP Paribas Securities Services (Singapore - SGD)

465,600 0.127

26 Cartaban Nominees (Asing) Sdn Bhd - RBC Investor Services Bank for Global Emerging Markets Smallcap (Danske Invest)

450,600 0.123

27 Lee Chin Hong 438,000 0.120

28 HSBC Nominees (Asing) Sdn Bhd - DZ Privatbank for DJE - Agrar & Ernaehrung 405,000 0.111

29 HSBC Nominees (Asing) Sdn Bhd - Exempt AN for JPMorgan Chase Bank, National Association (Guernsey)

380,700 0.104

30 CIMB Commerce Trustee Berhad - Public Focus Select Fund 378,300 0.103

339,920,440 93.191

30 largest shareholders

Shareholdings Statisticsas at 29 november 2013

PG.

189

PG.

188

f&n sHare price anD bursa Malaysia’s coMposite inDex

f&n sHare price anD voluMe traDeD

140%130%120%110%100%

90%80%70%60%50%40%30%20%10%0%

3,780

4,200

4,620

2,940

2,100

1,260

420

3,360

2,520

1,680

840

0

18

20

22

14

10

6

2

16

12

8

4

0

30 Sept 2009

30 Sept 2009

Volume Traded (‘000) Share Price (RM)

30 Sept 2010 30 Sept 2011 30 Sept 2012 30 Sept 2013

30 Sept 2010

Share Price (%) Composite Index (%)

Volume (Lots)Share Price (RM)

30 Sept 2011 30 Sept 2012 30 Sept 2013

sHare price cHarts

At the 51st Annual General Meeting of Fraser & Neave Holdings Bhd (“FNHB” or “Company”) held on 23 January 2013, the Company had obtained shareholders’ mandate to enter into recurrent related party transactions of a revenue or trading nature with the mandated related parties which are necessary for the day-to-day operation of the FNHB Group.

Pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the details of the recurrent related party transactions entered into during the financial year ended 30 September 2013 are as follows:-

Mandated related parties relationship type of transactionactual value transacted

rM'000

Fraser and Neave, Ltd (“F&N Ltd”) Group

F&N Ltd is the holding company of FNHB

Purchase of concentrates/raw materials from the F&N Ltd Group

190,449

Purchase of finished products from the F&N Ltd Group

442

Sale of finished products/raw materials to the F&N Ltd Group

128,579

Payment of royalties to the F&N Ltd Group for use of trademarks, trade names and brand names of the F&N Ltd Group

50,345

Payment of fees to the F&N Ltd Group for corporate services, corporate research and development services and technical services

2,276

Receipt of corporate services fees and staff costs from the F&N Ltd Group

1,196

Receipt of rental from the F&N Ltd Group 409

Thai Beverage Public Company Ltd (“ThaiBev”) Group

ThaiBev is deemed a major shareholder of the Company by virtue of its indirect substantial interest in F&N Ltd held through its wholly owned subsidiary, InterBev Investment Ltd

Sale of finished products to the ThaiBev Group

337

Berli Jucker Public Company Ltd (“BJC”) Group

BJC’s ultimate parent company is TCC Holding Company Ltd, which is under the control of Khun Charoen and Khunying Wanna, the ultimate major shareholders of ThaiBev and the Company. Hence, BJC Group is deemed as person connected to the said ultimate major shareholders

Purchase of raw materials (eg. cans, etc) from the BJC Group

30,238

Sale of finished products to the BJC Group

1,902

Total 406,173

recurrent relateDparty transactions

PG.

191

PG.

190

notice is Hereby Given that the 52nd Annual General Meeting of Fraser & Neave Holdings Bhd (“Company”) will be held at Banyan, Casuarina & Dillenia, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 23 January 2014 at 10:00 a.m. for the following purposes:

ordinary business

1. To receive the Audited Financial Statements for the financial year ended 30 September 2013 together with the Reports of the Directors and Auditors thereon.

refer to note (1)

2. To approve the payment of a final single tier dividend of 30 sen per share and a special single tier dividend of 10 sen per share for the financial year ended 30 September 2013.

resolution 1

3. To re-elect the following Directors retiring in accordance with Article 97 of the Company’s Articles of Association:a) Lee Kong Yipb) Anthony Cheong Fook Sengc) Y.Bhg. Dato’ Ng Jui Sia

resolution 2resolution 3resolution 4

4. To pass the following resolutions pursuant to Section 129(6) of the Companies Act, 1965:

“tHat Y.Bhg. Dato’ Anwarrudin bin Ahamad Osman who is retiring at the conclusion of the 52nd Annual General Meeting of the Company pursuant to Section 129(2) of the Companies Act, 1965, be and is hereby re-appointed as a Director of the Company to hold office until the conclusion of the next annual general meeting.”

“tHat Y.Bhg. Dato’ Jorgen Bornhoft who is retiring at the conclusion of the 52nd Annual General Meeting of the Company pursuant to Section 129(2) of the Companies Act, 1965, be and is hereby re-appointed as a Director of the Company to hold office until the conclusion of the next annual general meeting.”

resolution 5

resolution 6

5. To approve Directors’ fees of RM920,000 for the financial year ending 30 September 2014 payable monthly in arrears after each month of completed service of the Directors during the financial year.

resolution 7

6. To re-appoint Messrs Ernst & Young, the retiring auditors, as the auditors of the Company for the financial year ending 30 September 2014 and to authorise the Directors to fix their remuneration.

resolution 8

special business

7. orDinary resolution - proposeD reneWal of sHare buy-bacK

“tHat subject always to the Companies Act, 1965 (“Act”), the provisions of the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of the relevant authorities, the Board of Directors of the Company be and is hereby unconditionally and generally authorised, to the extent permitted by the law, to make purchases of ordinary shares of RM1.00 each (“F&N Shares”) in the Company’s issued and paid-up ordinary share capital from time to time through Bursa Securities, subject further to the following:

i) the maximum number of ordinary shares which may be purchased and held by the Company does not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company at any point in time (“Proposed Share Buy-Back”);

resolution 9

notice oF annual general meeting

special business (cont'd.)

7. ii) the maximum funds to be allocated by the Company for the Proposed Share Buy-Back shall not exceed the Company’s total retained profits and/or share premium account at the time of purchase of the Proposed Share Buy-Back;

iii) the approval conferred by this resolution will commence immediately upon the passing of this resolution and will expire at the conclusion of the next annual general meeting (“AGM”) of the Company, following the passing of this resolution or the expiration of the period within which the next AGM is required by law to be held unless earlier revoked or varied by ordinary resolution passed by shareholders of the Company at a general meeting but not as to prejudice the completion of purchase by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the Act, the rules and regulations made pursuant thereto and the guidelines issued by Bursa Securities and/or any other relevant authority; and

iv) upon completion of the purchase(s) of the F&N Shares or any part thereof by the Company, the Directors be and are hereby authorised to cancel all the F&N Shares so purchased, retain all the F&N Shares as treasury shares for future re-sale or retain part thereof as treasury shares and cancelling the balance or distribute all or part of the F&N Shares as dividends to shareholders, and in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of MMLR and any other relevant authority for the time being in force

anD tHat authority be and is hereby unconditionally and generally given to the Directors to take all such steps as are necessary or expedient (including without limitation, the opening and maintaining of central depository account(s) under the Securities Industry (Central Depositories) Act, 1991, and the entering into of all agreements, arrangements and guarantees with any party or parties) to implement, finalise and give full effect to the Proposed Share Buy-Back with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities and with full power to do all such acts and things thereafter (including without limitation, the cancellation or retention as treasury shares of all or any part of the shares bought back) in accordance with the Act, the provisions of the Memorandum and Articles of Association of the Company, the MMLR and all other relevant governmental and/or regulatory authorities.”

8. orDinary resolution - proposeD reneWal of existinG sHareHolDers’ ManDate for recurrent

relateD party transactions of a revenue or traDinG nature

“tHat approval be and is hereby given for the Company and/or its subsidiaries (“F&N Group”) to enter into any of the category of recurrent transactions of a revenue or trading nature falling within the types of transactions set out in Section 2.4.1, Part B of the Circular dated 30 December 2013 with the related parties mentioned therein, provided that such transactions are necessary for the day-to-day operations and they are carried out in the ordinary course of business on normal commercial terms which are consistent with the F&N Group’s normal business practices and policies, and on terms not more favourable to the related parties than those extended to the other customers of the F&N Group, and not to the detriment of the minority shareholders anD tHat such approval shall be in force until:

i) the conclusion of the next Annual General Meeting of the Company (“AGM”), at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

resolution 10

Notice of Annual General Meeting

PG.

193

PG.

192

special business (cont'd.)

8. ii) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

iii) revoked or varied by the Company in a general meeting,

whichever is the earlier anD tHat the Directors of the Company and each of them be authorised to do all such acts and things (including, without limitation, to execute all such documents) as they may consider necessary, expedient or in the interests of the Company to give effect to this resolution.”

9. orDinary resolution - proposeD neW sHareHolDers’ ManDate for recurrent relateD party

transactions of a revenue or traDinG nature

“tHat approval be and is hereby given for the Company and/or its subsidiaries (“F&N Group”) to enter into any of the category of recurrent transactions of a revenue or trading nature falling within the types of transactions set out in Section 2.4.2, Part B of the Circular dated 30 December 2013 with the related parties mentioned therein, provided that such transactions are necessary for the day-to-day operations and they are carried out in the ordinary course of business on normal commercial terms which are consistent with the F&N Group’s normal business practices and policies, and on terms not more favourable to the related parties than those extended to the other customers of the F&N Group, and not to the detriment of the minority shareholders anD tHat such approval shall be in force until:

i) the conclusion of the next Annual General Meeting of the Company (“AGM”), at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

ii) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

iii) revoked or varied by the Company in a general meeting,

whichever is the earlier anD tHat the Directors of the Company and each of them be authorised to do all such acts and things (including, without limitation, to execute all such documents) as they may consider necessary, expedient or in the interests of the Company to give effect to this resolution.”

resolution 11

10. orDinary resolution - retention of inDepenDent non-executive cHairMan

“tHat pursuant to Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012, Y.A.M. Tengku Syed Badarudin Jamalullail be and is hereby retained as the Independent Non-Executive Chairman of the Company until the conclusion of the next annual general meeting.”

resolution 12

11. To transact any other business which due notice shall have been given.


notice of DiviDenD payMent

notice is Hereby Given tHat subject to the approval of the shareholders at the Company’s 52nd Annual General Meeting, the proposed payment of a final single tier dividend of 30 sen per share and a special single tier dividend of 10 sen per share for the financial year ended 30 September 2013 will be paid to shareholders on 26 February 2014. The entitlement date for the proposed dividends shall be on 30 January 2014.

A depositor shall qualify for the entitlement to the dividend only in respect of:

a) Shares transferred to the depositor’s securities account before 4:00 p.m. on 30 January 2014 in respect of ordinary transfer; and

b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By Order of the Board

soon WinG cHonGCompany Secretary

Kuala Lumpur, Malaysia

30 December 2013

Notes:

(1) This agenda item is intended for discussion only as under Section 169(1) of the Companies Act, 1965, the Audited Financial Statements do not require formal approval of shareholders. As such, this agenda item will not be put forward for voting.

(2) A member entitled to attend and vote at the above meeting may appoint a proxy or proxies (but not more than two) to attend and vote on his behalf and such proxy or proxies need not be a member or members of the Company.

(3) Where there are two proxies appointed, the number of shares to be represented by each proxy must be stated.

(4) In the case of a corporation, the form of proxy must be executed under seal or under the hand of its attorney duly authorised.

(5) Where a member of the Company is an exempt authorised nominee which holds shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. Each appointment of proxy by an exempt authorised nominee shall be by a separate instrument of proxy which shall specify the proportion of shareholding to be represented by each proxy.

(6) The instrument appointing a proxy or proxies must be deposited with the Company Secretary at the registered office of the Company at Level 8, F&N Point, No. 3, Jalan Metro Pudu 1, Fraser Business Park, Off Jalan Yew, 55100 Kuala Lumpur not less than 48 hours before the meeting.


PG.

194

explanatory notes:

a. In line with Recommendation 3.1 of the Malaysian Code on Corporate Governance 2012, the Board (save for the interested directors) had conducted an assessment on the independence of the Independent Non-Executive Directors including the Independent Directors who are due for re-election and re-appointment. The Board is of the opinion that the Independent Directors constantly provide independent and objective judgement in all Board and Board Committees deliberation.

b. for special business

i) proposed renewal of share buy-back

Resolution 9, if passed, will provide the Company with the authority to buy-back its shares and will allow the Company a further option to utilise its financial resources more efficiently. Additionally, it is intended to stabilise the supply and demand as well as the price of the Company’s shares.

ii) proposed renewal of existing shareholders’ Mandate and proposed new shareholders’ Mandate for recurrent related party transactions of a revenue or trading nature

Resolutions 10 and 11, if passed, will enable the Company and/or its subsidiaries (“F&N Group”) to enter into recurrent transactions with the related parties provided that such transactions are carried out in the ordinary course of business on normal commercial terms which are consistent with the F&N Group’s normal business practices and policies and on terms not more favourable to the related parties than those extended to the other customers of the F&N Group, and not to the detriment of the minority shareholders. Please refer to Circular to Shareholders dated 30 December 2013 for more details.

iii) retention of independent non-executive chairman

The Board of Directors has via the Nominating Committee assessed the independence of Y.A.M. Tengku Syed Badarudin Jamalullail and is of the view that the retention of Tengku as the Independent Non-Executive Chairman of the Company is in the best interest of the Company. The Board recommends that Tengku continues to act as the Independent Non-Executive Chairman of the Company on the following basis:

a) Tengku continues to be able to exercise independent and objective judgement and to act in the interest of the Company;

b) Tengku has detailed knowledge of the business of the Company and has proven commitment, experience and competency to effectively advise and oversee the management of the Company; and

c) Tengku has met the independence guidelines set out in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Members entitled to attend 52nd annual General Meeting

For the purpose of determining a member who shall be entitled to attend the 52nd Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 60(3) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of Depositors as at 13 January 2014. Only a depositor whose name appears on the Record of Depositors as at 13 January 2014 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. annual report 2013

The Company issues to shareholders its Annual Report 2013 in CD-ROM. A full version of the Annual Report in printed form shall be provided to shareholders within four (4) market days from the date of receipt of the verbal or written request. Shareholders who wish to receive the full version of the Annual Report 2013 in printed form and who require assistance with viewing the CD-ROM, kindly contact Ms. Mayeen Wong May Fun or Mr. Soon Wing Chong at telephone number: 03-9235 2288. Alternatively, you may send the duly completed form to the Company’s registered office at Level 8, F&N Point, No. 3, Jalan Metro Pudu 1, Fraser Business Park, Off Jalan Yew, 55100 Kuala Lumpur, Malaysia or fax to 603-9222 7878. You may also send your request by email to [email protected] or [email protected]. The full version of the Annual Report 2013 can also be obtained from the Company’s website at http://www.fn.com.my.



PG.

197


I/We I.C. No./Company No. (full name in block letters)

of (full name in block letters)

being a member/ members of Fraser & Neave Holdings Bhd, hereby appoint (full name in block letters) I.C. No. of

(full address)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf as indicated below, at the 52nd

Annual General Meeting of the Company to be held at the banyan, casuarina & Dillenia, sime Darby convention centre, 1a, Jalan bukit Kiara 1, 60000 Kuala lumpur, Malaysia on thursday, 23 January 2014 at 10:00 a.m. or at any adjournment thereof:

ordinary resolutions no. for against

To approve the payment of a final single tier dividend of 30 sen per share and a special single tier dividend of 10 sen per share for the financial year ended 30 September 2013.

1

To re-elect the following Directors retiring in accordance with Article 97 of the Company’s Articles of Association:

a) Lee Kong Yipb) Anthony Cheong Fook Sengc) Y.Bhg. Dato’ Ng Jui sia

234

To re-appoint Y.Bhg. Dato’ Anwarrudin bin Ahamad Osman as a Director pursuant to Section 129(6) of the Companies Act, 1965.

5

To re-appoint Y.Bhg. Dato’ Jorgen Bornhoft as a Director pursuant to Section 129(6) of the Companies Act, 1965.

6

To approve Directors’ fees of RM920,000 for the financial year ending 30 September 2014 payable monthly in arrears after each month of completed service of the Directors during the financial year.

7

To re-appoint Messrs Ernst & Young, the retiring auditors, as the auditors of the Company for the financial year ending 30 September 2014 and to authorise the Directors to fix their remuneration.

8

To approve the Proposed Renewal of Share Buy-Back. 9To approve the Proposed Renewal of Existing Shareholders’ Mandate for recurrent related party transactions of a revenue or trading nature.

10

To approve the Proposed New Shareholders’ Mandate for recurrent related party transactions of a revenue or trading nature.

11

To approve the retention of Y.A.M. Tengku Syed Badarudin Jamalullail as the Independent Non-Executive Chairman of the Company.

12

Please indicate with an “X” in the spaces above how you wish your vote to be cast. If no specific direction as to voting is given, your proxy will vote or abstain at his/ her discretion.

Dated this ________ day of ___________________20____

PROXY FORMCompany No.: 4205-V, Incorporated in Malaysia

Number of shares held

CDS Account No. Signature(s)/Common Seal of Shareholder(s)

Notes:(1) A member entitled to attend and vote at the above meeting may appoint a proxy or proxies (but not more than two) to attend and vote on his/ her behalf and such proxy or

proxies need not be a member or members of the Company.(2) Where there are two proxies appointed, the number of shares to be represented by each proxy must be stated. (3) In the case of a corporation, the form of proxy must be executed under seal or under the hand of its attorney duly authorised.(4) Where a member of the Company is an exempt authorised nominee which holds shares in the Company for multiple beneficial owners in one securities account (“Omnibus

Account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. Each appointment of proxy by an exempt authorised nominee shall be by a separate instrument of proxy which shall specify the proportion of shareholding to be represented by each proxy.

(5) The instrument appointing a proxy or proxies must be deposited with the Company Secretary at the registered office of the Company at Level 8, F&N Point, No. 3, Jalan Metro Pudu 1, Fraser Business Park, Off Jalan Yew, 55100 Kuala Lumpur not less than 48 hours before the meeting.

FRASER & NEAVE HOLDINGS BHD

Number of shares held

CDS Account No.

fold here

company secretaryfraser & neave HolDinGs bHD 4205-vLevel 8, F&N Point, No. 3, Jalan Metro Pudu 1

Fraser Business Park, Off Jalan Yew55100 Kuala Lumpur

Malaysia

affixstaMp

fold here

fn.com.my

Fraser & neave Holdings Bhd

F&N Point, No. 3, Jalan Metro Pudu 1, Fraser Business Park, Off Jalan Yew, 55100 Kuala Lumpur, Malaysia Tel : (603) 9235 2288 Fax : (603) 9222 7878

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