kfc holdings (malaysia) bhd 65787-t

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kfc holdings (malaysia) bhd 65787-t
KFC HOLDINGS (MALAYSIA)
1 BHD 65787-T
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Annual Report 2011
After 38 years of ‘Finger Lickin’ Good’, we have changed
our tagline to simply ‘So Good’. ‘So Good’ reflects our
commitment to product, place, people, price and promotion.
‘So Good’ is that great experience of a good meal shared
between family and friends. At KFC, it is all about building a
brand that brings people together and creates that ‘So Good’
moments. Thus, the choice of the cover illustrates ‘So Good’
which is what the brand is all about.
2
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Contents
Shareholders’Overview
Financial Highlights 6
Notice of Annual General Meeting 9
Statement Accompanying Notice of Annual General Meeting 14
Our Performance in 2011
Corporate Statement 18
Review of Operations 32
Reliable Corporate Citizen
Corporate Social Responsibility 48
The Corporation
Board of Directors 60
Top Management Committee 76
Head of Division 77
Shariah Advisory Council 80
Corporate Information 81
Group Structure 82
Accountability
Corporate Governance Statement 84
Audit Committee Report 93
Statement on Internal Control 97
Additional Compliance Information 100
Financial Statements
Directors’ Report 127
Statements of Financial Position 131
Statements of Comprehensive Income 132
Consolidated Statement of Changes in Equity 133
Statement of Changes in Equity 135
Statements of Cash Flows 137
Notes to the Financial Statements 139
Statement by Directors 204
Statutory Declaration 204
Independent Auditors’ Report 205
List of Properties Held 207
Analysis of Shareholdings 220
Analysis of Warrant Holdings 223
Form of Proxy
2
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
What We Bring To The Table...
we bring
a So Good
Family Meal...
...with a side of
Happiness.
Bringing families together is at the heart of everything that we do.
We take great pride in knowing that enjoying a sumptuous meal
together not only opens line of communications, but in addition
is a healthy and complete feast for the entire family to enjoy.
We ensure the quality of all our food, taking great care in each
step of the way to deliver wholesome, delicious and healthy
products for all.
Financial Highlights
2007 2008 2009 2010 2011
RM ’000 RM ’000 RM ’000 RM ’000 RM ’000
REVENUE
KFC Malaysia
KFC Singapore
1,043,438 1,284,429 1,365,542 1,496,907 1,655,340
280,200 330,771 342,666 368,586 409,126
11,679 13,676 15,469 16,347 20,424
KFC Brunei
KFC India
Integrated Poultry
-
-
-
6,232 19,813
316,985 445,018 484,132 533,397 586,706
Education
-
-
-
1,068 4,725
78,069 105,894 89,622 99,821 102,646
1,730,371 2,179,788 2,297,431 2,522,358 2,798,780
Ancillary
Total
Profit Before Tax
150,624 167,457 190,015 221,833 215,493
Profit After Tax
105,543 120,350 132,797 159,702 146,571
Owners of the Company
104,269 118,535 130,403 156,848 144,005
EBITDA
224,160 241,986 281,326 312,785 330,606
Property, Plant and Equipment
593,599 678,900 773,241 999,984 1,228,459
1,006,128 1,154,407 1,290,470 1,583,032 1,838,226
Total Borrowings
122,987 141,055 116,436 152,547 254,249
Share Capital (Number)
793,099 793,099 793,099 793,231 793,266
Shareholders’ Equity
602,021 692,158 791,757 990,247 1,074,215
17.32 17.13 16.47 15.84 13.41
10.36 10.27 10.11 9.91 7.83
-
6.22 -
2.10 14.08
13.15 14.95 16.44 19.78 18.18
0.76 0.87 1.00 1.25 1.36
20 22 24 15.5 3
6.40 7.45 7.40 3.82 3.84
Net Profit Attributable to
Total Assets
Return on Shareholders’
Equity (%)
Return on Total Assets (%)
Gearing Ratio (Net Debts/
Shareholders’ Equity) (%)
Basic Earnings Per Share (Sen)
Net Assets Per Share (RM)
Gross Dividend Per Share (Sen)
Share Price as at 31 December (RM)
NO. OF RESTAURANTS
KFC Malaysia
403 436 475 515 539
69 73 77 77 80
KFC Brunei
7
8
9
9
12
KFC India
-
-
-
7
13
Kedai Ayamas
20 25 35 49 75
RasaMas Malaysia
22 34 40 39 25
-
2
3
3
2
521 578 639 699 746
KFC Singapore
RasaMas Brunei
6
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Financial Highlights
Revenue
RM (Million)
Profit Before Tax
RM (Million)
1,730
2007
151
2007
2008
2,180
2008
2009
2,297
2009
2,522
2010
2,799
2011
167
190
2010
222
2011
215
250
200
150
100
50
0
3000
2500
2000
1500
1000
500
0
Total Assets
RM (Million)
Shareholders’ Equity
RM (Million)
1,006
2007
1,154
2008
990
2010
1,838
2011
792
2009
1,583
2010
692
2008
1,290
2009
602
2007
1,074
2011
1250
1000
750
500
250
0
2000
1600
1200
800
400
0
7
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Financial Highlights
Total KFC Restaurants
No. of Restaurants
2007
403
69
7
2008
436
73
8
2009
475
77
9
2010
515
77
9
7
2011
539
80
12
13
KFC Malaysia
KFC Singapore
KFC Brunei
KFC India
600
500
400
300
200
100
0
Total Ayamas OutletS
No. of Outlets
2007
20
22
2008
25
34
2
2009
35
40
3
2010
49
39
3
2011
75
Kedai Ayamas
25
RasaMas Malaysia
2
RasaMas Brunei
90
75
60
45
30
15
0
8
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the 32nd Annual General Meeting of KFC Holdings (Malaysia) Bhd will be
held at Level 3, Wisma KFC, No 17, Jalan Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 22 May 2012 at
11:30 a.m. for the following purposes:AGENDA
1. To receive and adopt the Audited Financial Statements of the Company for the year
ended 31 December 2011 and the Reports of the Directors and Auditors thereon.
Resolution 1
2. To approve the payment of Directors’ fees in respect of the financial year ended
31 December 2011.
Resolution 2
3. (a)To re-elect the following Directors retiring pursuant to Article 89 of the Company’s
Articles of Association:
(i)Ahamad bin Mohamad
Resolution 3
(ii)Datuk Ismee bin Ismail
Resolution 4
(iii)Hassim bin Baba
Resolution 5
(b)To re-elect the following Director retiring pursuant to Article 96 of the Company’s
Articles of Association:
(i)YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz
Shah Alhaj
Resolution 6
4. To re-appoint Messrs KPMG as Auditors of the Company and to authorize the Directors
to fix their remuneration.
Resolution 7
5.As special business:
To consider and, if thought fit, to pass the following resolutions: -
(a)Ordinary Resolution - Authority to allot and issue shares pursuant to Section
132D of the Companies Act 1965 (the “Act”)
“THAT pursuant to Section 132D of the Act, full authority be and is hereby given to
the Directors to issue shares of the Company from time to time upon such terms and
conditions and for such purposes as the Directors may in their absolute discretion
deem fit provided that the aggregate number of shares to be issued pursuant to
this resolution does not exceed ten percent (10%) of the issued share capital of the
Company and that such authority shall continue in force until the conclusion of the
next Annual General Meeting (“AGM”) of the Company, and that the Directors be
and are hereby empowered to obtain the approval of the Bursa Malaysia Securities
Berhad (“Bursa Securities”) for the listing and quotation for the new shares to be
issued.”
Resolution 8
9
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notice of Annual General Meeting
(b)Ordinary Resolution - Proposed Renewal of the Share Buy-Back Authority
“THAT subject to the Act, rules, regulations and orders made pursuant to the Act,
provisions of the Company’s Memorandum and Articles of Association and the
Listing Requirements of Bursa Securities (“Listing Requirements”) and any other
relevant authority, the Company be and is hereby authorized to purchase and/or
hold such amount of ordinary shares of RM0.50 each in the Company’s issued and
paid-up share capital (“Proposed Renewal of the Share Buy-Back Authority”) through
Bursa Securities upon such terms and conditions as the Directors may deem fit in the
interest of the Company provided that:-
(a)the aggregate number of shares so purchased and/or held pursuant to this
ordinary resolution (“Purchased Shares”) does not exceed ten percent (10%) of
the total issued and paid-up share capital of the Company at any one time; and
(b)the maximum amount of funds to be allocated for the Purchased Shares shall
not exceed the aggregate of the retained profits and/or share premium of the
Company;
AND THAT the Directors be and are hereby authorized to decide at their discretion
either to retain the Purchased Shares as treasury shares (as defined in Section 67A
of the Act) and/or cancel the Purchased Shares and/or to retain the Purchased
Shares as treasury shares for distribution as share dividends to the shareholders
of the Company and/or be resold through Bursa Securities in accordance with the
relevant rules of Bursa Securities and/or cancelled subsequently and/or to retain part
of the Purchased Shares as treasury shares and/or cancel the remainder and to deal
with Purchased Shares in such other manner as may be permitted by the Act, rules,
regulations, guidelines, requirements and/or orders of Bursa Securities and any other
relevant authorities for the time being in force;
AND THAT the Directors be and are hereby empowered to do all acts and things
(including the opening and maintaining of a central depositories account(s) under
the Securities Industry (Central Depositories) Act, 1991) and to take such steps
and to enter into and execute all commitments, transactions, deeds, agreements,
arrangements, undertakings, indemnities, transfers, assignments, and/or guarantees
as they may deem fit, necessary, expedient and/or appropriate in the best interest
of the Company in order to implement, finalise and give full effect to the Proposed
Renewal of the Share Buy-Back Authority with full powers to assent to any conditions,
modifications, variations (if any) as may be imposed by the relevant authorities;
AND FURTHER THAT the authority conferred by this ordinary resolution shall be
effective immediately upon passing of this ordinary resolution and shall continue in
force until the conclusion of the next AGM of the Company or the expiry of the period
within which the next AGM of the Company is required by law to be held (whichever is
earlier), unless earlier revoked or varied by ordinary resolution of the shareholders of
the Company in general meeting, but shall not prejudice the completion of purchase(s)
by the Company before that aforesaid expiry date and in any event in accordance
with provisions of the Listing Requirements and other relevant authorities.”
10
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Resolution 9
Notice of Annual General Meeting
(c)Ordinary Resolution - Proposed Renewal of Existing Shareholders’ Mandate
for Recurrent Related Party Transactions (“RRPT”) of a Revenue and/or
Trading Nature and New Mandate for Additional RRPT of a Revenue and/or
Trading Nature (“Proposed Shareholders’ Mandate for RRPT”)
“THAT authority be and is hereby given in line with Paragraph 10.09 of the Listing
Requirements, for the Company, its subsidiaries or any of them to enter into any of the
transactions falling within the types of the RRPT, particulars of which are set out in the
Circular to Shareholders dated 27 April 2012 (“the Circular”), with the Related Parties
as described in the Circular, provided that such transactions are of revenue and/or
trading nature, which are necessary for the day-to-day operations of the Company
and/or its subsidiaries, within the ordinary course of business of the Company and/
or its subsidiaries, made on an arm’s length basis and on normal commercial terms
which those generally available to the public and are not detrimental to the minority
shareholders of the Company;
AND THAT such authority shall commence immediately upon the passing of this
Ordinary Resolution until:
(i) the conclusion of the next AGM of the Company following the general meeting
at which the ordinary resolution for the Proposed Shareholders’ Mandate for the
RRPT is passed, at which time it shall lapse, unless the authority is renewed by a
resolution passed at the next AGM; or
(ii) the expiration of the period within which the next AGM after the date it is required
by law to be held; or
(iii)revoked or varied by ordinary resolution passed by the shareholders of the
Company at a general meeting of the Company,
whichever is earlier.
AND FURTHER THAT the Directors of the Company be authorized to complete
and do all such acts and things (including executing all such documents as may be
required) as they may consider expedient or necessary to give effect to the Proposed
Shareholders’ Mandate for RRPT.”
Resolution 10
11
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notice of Annual General Meeting
6. To transact any other ordinary business of which due notice shall have been given.
FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member
who shall be entitled to attend this 32nd AGM, the Company shall be requesting Bursa
Malaysia Depository Sdn Bhd in accordance with Article 64 of the Company’s Articles of
Association and Paragraph 7.16 of the Listing Requirements to issue a General Meeting
Record of Depositors (“ROD”) as at 14 May 2012. Depositors whose names appear on the
ROD as at 14 May 2012 are entitled to attend, speak and vote at the said meeting.
BY ORDER OF THE BOARD
IDHAM JIHADI BIN ABU BAKAR, ACIS (MAICSA 7007381)
HENG AI LENG (MAICSA 7017245)
Company Secretaries
Kuala Lumpur
27 April 2012
Notes:
1.A member of the Company entitled to be present and vote at the above AGM may appoint a proxy or proxies to be present and
vote instead of him. A Proxy may but need not be a member of the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorized in writing or
if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised.
3.A member of the Company may appoint more than two (2) proxies to attend the AGM. Where a member of the Company appoints
two (2) or more proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholdings to be
represented by each proxy.
4. Where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depositories) Act,
1991, he may appoint at least one (1) proxy in respect of each securities account he holds with ordinary shares of the Company
standing to the credit of the said securities account.
5. Where a member of the Company is an exempt authorized nominee as defined under the Securities Industry (Central Depositories)
Act, 1991, there will be no limit to the number of proxies which the exempt authorized nominee may appoint.
6.Any alteration made in this form should be initialed by the person who signs it.
7. The Proxy Form and the Power of Attorney or other authority, if any, under which it is signed or a notarially certified copy of that
power of authority must be deposited at Tricor Investor Services Sdn Bhd, Level 17, The Gardens North Tower, Mid Valley City,
Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any
adjournment thereof.
12
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notice of Annual General Meeting
Explanatory Notes on Special Business
1. Resolution Pursuant to Section 132D of the Companies Act 1965
The Ordinary Resolution proposed under item 5(a), if passed, will give the Directors of the Company, from the date of the above
General Meeting, authority to issue and allot ordinary shares from the unissued share capital of the Company being for such
purposes as the Directors consider would be in the interest of the Company. This authority will, unless revoked or varied at a
General Meeting, expire at the conclusion of the next AGM of the Company.
The Company had, at the 31st AGM held on 27 April 2011, obtained its shareholders’ approval for the general mandate for
issuance of shares pursuant to Section 132D of the Act. The Company did not issue any new shares pursuant to this mandate
obtained as at the date of this notice. The Ordinary Resolution 8 proposed under item 5(a) of the Agenda is a renewal of the general
mandate for issuance of shares by the Company under Section 132D of the Act. At this juncture, there is no decision to issue
new shares. If there should be a decision to issue new shares after the general mandate is obtained, the Company will make an
announcement in respect of the purpose and utilisation of proceeds arising from such issue.
The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing
of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.
2. Resolution pursuant to the Proposed Renewal of the Share Buy-Back Authority
This resolution proposed under item 5(b) will empower the Directors of the Company to purchase the Company’s shares up to
ten percent (10%) of the issued and paid-up share capital of the Company by utilizing the funds allocated which shall not exceed
the total retained earnings and share premium of the Company. This authority will, unless revoked or varied at a General Meeting,
expire at the conclusion of the next AGM of the Company.
Further information on the Proposed Renewal of the Share Buy-Back Authority are set out in the Circular to Shareholders of the
Company which is dispatched together with the Company’s Annual Report for the year ended 2011.
3. Resolution pursuant to the Proposed Shareholders’ Mandate for RRPT
This resolution proposed under item 5(c) will enable the Company, its subsidiaries or any one of them to enter into any recurrent
transactions of a revenue or trading nature which are necessary for the Company and/or its subsidiaries day-to-day operations,
subject to the transactions being in the ordinary course of business, made at arm’s length and on normal commercial terms and
are not to the detriment of the minority shareholders of the Company.
Further information on the Proposed Shareholders’ Mandate for RRPT are set out in the Circular to Shareholders of the Company
which is dispatched together with the Company’s Annual Report for the year ended 2011.
13
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Statement Accompanying Notice of
Annual General Meeting
1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION AT THE ANNUAL GENERAL MEETING
(a)The Directors retiring by rotation pursuant to Article 89 of the Articles of Association are:-
(i)Ahamad bin Mohamad
(ii)Datuk Ismee bin Ismail
(iii)Hassim bin Baba
(b)The Director retiring by rotation pursuant to Article 96 of the Articles of Association is:-
(i)YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj
The details of the directors seeking re-election are set out in the Directors’ Profiles which appear on pages
62 to 71 of the Annual Report.
2. DETAILS OF ATTENDANCE AT BOARD MEETINGS HELD IN THE FINANCIAL YEAR ENDED
31 DECEMBER 2011
There were six (6) Board Meetings held during the financial year ended 31 December 2011 and the following
are the details of the Board attendance:-
Name of Directors
No of Meetings Attended
1. Kamaruzzaman bin Abu Kassim
6/6
2.Ahamad bin Mohamad
6/6
3. Jamaludin bin Md Ali
6/6
4. Hassim bin Baba
6/6
5. Kua Hwee Sim
6/6
6. Tan Sri Dato’ Dr Yahya bin Awang
6/6
7.Datuk Ismee bin Ismail
3/6
8.Datin Paduka Siti Sa’diah binti Sheikh Bakir
4/6
9.YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum 3/4
Sultan Salahuddin Abdul Aziz Shah Alhaj
(Appointed on 1 June 2011)
3. THE 32ND ANNUAL GENERAL MEETING WILL BE HELD AT LEVEL 3, WISMA KFC, NO 17, JALAN
SULTAN ISMAIL, 50250 KUALA LUMPUR ON TUESDAY, 22 MAY 2012 AT 11.30 A.M.
14
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
we bring
Cheery Smiles...
16
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
17
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
...with a splash of
Mouth-watering
Varieties.
At our restaurants, we are proud to provide our customers with only
the best value everyday. From our meals for one, to meals shared
with family and friends, you will find a delicious meal that suits you
at a great price.
18
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
19
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
The Group Continuously
Achieves Spectacular
Growth
CONSOLIDATING ACHIEVEMENTS
Against this background, 2011 was yet another year of
outstanding achievement for KFCH. Most importantly,
a fundamentally stellar financial performance has
enabled the Group to continue making major capital
investments that will secure the future of the Group
for years to come, while maintaining a healthy bottom
line for the period under review.
Fellow stakeholders,
The growth achieved by the KFC Holdings (Malaysia)
Bhd (KFCH) Group between 2006 and 2010 was
phenomenal. In just five years, the number of KFC
outlets increased from 443 to more than 600, as
the Group not only entrenched its leadership of
the Malaysian food service sector but expanded
its network in Singapore, Brunei and into India.
Moreover, this massive increase in outlets was
matched by a consistent and spectacular growth in
both revenues and profits.
In short, for KFCH, after five years of remarkable
growth, 2011 was a story of consolidation that has
positioned the Group to take the next leap forward in
2012 and beyond.
18
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
From Left to Right :
AHAMAD BIN MOHAMAD
Deputy Chairman
KAMARUZZAMAN BIN
ABU KASSIM
Chairman
jamaludin BIN md alI
Managing Director
ECONOMIC BACKGROUND
The global economy remained fragile throughout
2011. The still unfolding financial turmoil in Europe
began to impact developing and other high-income
countries. In certain parts of the world, this effectively
depressed stock markets and pushed up borrowing
costs, while capital flows to developing nations fell
sharply.
Towards the year end, these conditions dampened
Southeast Asia’s growth outlook and started to
weigh down on the near-term prospects for the
Malaysian economy.
19
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
Nevertheless, in 2011 the Malaysian economy
remained resilient, achieving GDP growth of 5.1%,
underpinned by strong domestic demand and an
improvement in the external sector arising from firm
regional demand.
However, growth moderated in the last quarter on
account of external developments, while towards the
year end both manufacturing sector sentiment and
consumer sentiment declined, albeit slightly.
In Singapore, GDP stood at 4.9%, with a healthy
7.6% growth in the manufacturing sector offsetting
a contraction in the electronics cluster and slower
growth in the precision engineering and chemicals
clusters. The Accommodation & Food Services and
Other Services industries grew by 5.8% and 6.7%
respectively on the back of healthy visitor inflows.
GDP growth in India fell to around 7% in 2011, with
the economy hampered by a mix of domestic and
global events, including the Eurozone crisis, a rising
fiscal deficit, high inflation and a lack of policy reforms
to help industry and agriculture.
2011 Key Financial Highlights:
DELIVERING RESULTS
• Revenue of all KFC restaurants of the Group
Against this background, although all the Group’s
• Revenue at KFC Malaysia hit RM1,655.3 million,
climbed 11.5% to RM2,104.7 million
business
segments
experienced
inflationary
10.6% up on last year, and achieved Same Store
pressures with higher food, commodity and energy
Sales Growth of 4.6%
costs, KFCH once again achieved commendable
• KFC Singapore achieved 11% revenue growth to
sales growth. Total revenue for the year increased to
RM409.1 million
a record high of RM2,798.8 million, up 11% on the
• KFC Brunei advanced its revenue to RM20.5
RM2,522.4 million achieved in 2010.
million, a 25% increase on 2010’s figure
• KFC India generated RM19.8 million of revenue,
Not surprisingly however, given the strategic
217.9% higher than the previous year
decision to make major capital investments, profit
• KFC Marketing Sdn Bhd (KFC Marketing) posted
before tax (PBT) dipped 2.8% to RM215.5 million
a 23.3% jump in revenue to RM273.1 million
from RM221.8 million the year before. Specifically,
• Kedai Ayamas sales shot up 41.1% to RM77.7
the Group invested some RM104.2 million during the
million
year in vital supply chain facilities, while its operations
• KFC Events Sdn Bhd (KFC Events) reported
in KFC India and KFCH International College incurred
RM4.1 million in revenue arising from commission
initial start-up cost as they build the critical mass that
generated from RM41 million sales, contributed
will soon carry them from break-even to profit.
by catering, site selling and voucher marketing of
In addition, the 2010 profit included a net surplus
various corporate clients
KFC, Pizza Hut, RasaMas and Kedai Ayamas to
from revaluation of properties of RM6.7 million. On
• Revenue (including intercompany sales) at the
a comparable basis, the Group’s PBT therefore
Group’s Integrated Poultry segment improved to
improved slightly by 0.2% or RM 0.4 million against
RM1,472 million, a 13.8% gain on 2010
the prior year.
20
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
Dividends
The Group declared a total interim dividend of 3 sen
less tax of 25% per ordinary share for the financial
year ended 31 December 2011. No final dividend
was proposed for the financial year 2011.
INVESTING IN STRONG FOUNDATIONS
KFCH’s expansion in 2011 was dedicated to three
vital aspects of the Group’s operations: regional
expansion; people and supply chain.
Major Initiatives
Implemented During
the Year Included the
Construction of Nine
Drive-Thru Outlets in
Peninsular Malaysia,
and the Penetration of
KFC into Small Towns
Especially in the East
Coast of Peninsular
Malaysia, Sabah and
Sarawak.
Investing in Expansion
2011 saw KFC’s Malaysian network expand by
another 24 outlets. With the rapid growth of the KFC
restaurant chain in Malaysia, our nation can now
boast one of the highest ratios of KFC restaurants
per capita in the world.
Major initiatives implemented during the year
included the construction of nine drive-thru outlets in
Peninsular Malaysia, and the penetration of KFC into
small towns especially in the east coast of Peninsular
Malaysia, Sabah and Sarawak.
Two new outlets were opened in Kelantan, in
Kota Bharu and Koh Lanas. Other small towns in
Peninsular Malaysia that welcomed KFC included
Padang Serai, Pekan Changlun and Kuala Nerang
in Kedah and Sabak Bernam in Selangor. Meanwhile
three new outlets were launched in Sabah and
Sarawak in Kota Kinabalu, Kunak and Betong.
Meanwhile, KFCH has built a strong presence in
Singapore and Brunei, and in 2011 increased its
network by three outlets in each country.
But the biggest opportunities lie with the Group’s
more recent venture into India, where in 2011 the
number of outlets grew to 13. The potential of the
Indian market is tremendous, but this is a volume
game and it will need more than 50 outlets before the
Indian operations achieve profitability. KFCH’s 2011
investment of RM12.9 million in its Indian network
therefore represents the foundation of a long-term
plan for ongoing, aggressive expansion that before
long will start to pay dividends in the future.
21
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
Kedai Ayamas
Commenced
its East Malaysian
Operations in Tawau
in April 2011.
There are Currently
Three Kedai Ayamas
Outlets in Sabah.
KFCH’s subsidiaries are also poised for continual
expansion. Ayamas Shoppe Sdn Bhd entered into a
joint venture agreement with Rastamas Trading Sdn
Bhd (Rastamas) to form a joint venture company,
Ayamas Shoppe (Sabah) Sdn Bhd to kick-start
Kedai Ayamas operations in Sabah. Rastamas is the
biggest poultry integrator in Sabah. The first Kedai
Ayamas commenced its East Malaysia operations in
Tawau in April 2011. There are currently three Kedai
Ayamas outlets in Sabah.
Investing in the Supply Chain
The rapid growth of KFCH’s restaurant business in
Malaysia has resulted in an increasing demand for
chicken related products. To meet this demand, in
2011 the Group continued to invest RM104.2 million
in facilities to increase the capacity of its upstream
operations. This will stand KFCH in good stead as
even more people flock to its restaurants.
In August 2011, the Group invested RM25 million in a
breeder farm and hatchery in Sidam Kiri, Kedah. The
19-hectare breeder farm will produce 25% of the total
Day-Old-Chicks (DOC) generated by the Group’s five
company-owned farms. The new hatchery has the
capacity to produce one million DOC per month.
Combined with the other company-owned hatchery
in Salak Tinggi which produces three million DOC per
month, total output of DOC will rise to four million per
month, making KFCH self-sufficient in DOC supply.
The Group has also built new broiler farms in
Sedenak. The first phase, completed in 2010, has a
capacity of 400,000 broilers per cycle. The second
22
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
phase was completed in mid 2011, with a capacity of
600,000 broilers per cycle, increasing the combined
capacity of both phases to one million broilers per
cycle. The total investment cost for the two phases
came to RM22 million.
The Logistics division opened its new warehouse
in Port Klang in November 2011. The new RM7.5
million facility, at 300,000 square feet, is nearly seven
times the size of its previous warehouse in Glenmarie,
Shah Alam.
The KFCH-owned broiler farms in Sedenak and
Mantin currently supplies broilers to the Group’s
processing plants in Port Klang, Bukit Mertajam
and Johor. They supply 16% of the Group’s total
broiler requirements by producing 580,000 broilers
per month, with the remaining 84% coming from
contract farms. In 2011, the Group also invested in
new broiler houses using a ‘cages’ system, which
will increase capacity by a further two million broilers
per year.
The Group also purchased a site at the Bukit Minyak
Industrial Area in Penang and plans to relocate its IPI
Plant there from its present location in Bukit Mertajam.
Once approval has been granted by the Land Office,
construction will take approximately two and a half
years. The new plant will be able to process 40,000
birds per day, which, when added to the existing two
plants, will bring the Group’s processing capacities
to 160,000 birds per day.
Investing in People
In addition, end of April 2012 saw the commissioning
of a new RM27.7 million sausage plant which
increases the output of sausage production from
430 metric tonnes to 800 metric tonnes per month.
It is essential for KFCH to constantly deliver, maintain
and enhance its customer service. But delivering
consistent customer service depends on recruiting
quality staff – a task that in recent years has become
increasingly challenging.
Meanwhile, Region Food Industries Sdn Bhd (RFI)
invested RM2.4 million to boost production capacity
of its sachet line to meet current demand. This raises
the maximum sachet production capacity from 325
metric tonnes per month to 650 metric tonnes per
month.
To tackle this issue, in 2010 the Group acquired
Paramount International College in Puchong and
set about transforming it into what is now known
as KFCH International College. In 2011, the Group
purchased a 4.5-hectare parcel of land within the
Bandar Dato’ Onn township in Johor for the College’s
second campus. The Johor campus located in the
Iskandar Development Region will be developed in
phases, with completion due in 2017, at which time
its intake capacity will be 12,000 students per year.
The first phase of the development of the Bandar
Dato’ Onn campus which was completed in March
2011 and the upgrading of its Puchong campus
facilities incurred a total investment cost of RM25
million. As a result, the two campuses now provide
a conducive learning environment for students,
with state-of-the-art teaching and learning facilities,
including kitchen labs, a demo kitchen, a pastry lab,
a sensory lab, a computer lab, an English language
lab, a modern library and an auditorium.
As of December 2011, the total enrolment at the
Puchong and Johor campuses was 681 students.
The Group’s vision for KFCH International College is
for it to be Malaysia’s premier educational institution
specialising in the hospitality and food services
industries, particularly restaurant management,
culinary arts, hotel management, tourism
management and event management.
23
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
RESTRUCTURING THE BUSINESS
The College has obtained full Malaysian Qualifications
Agency (MQA) accreditation for its Diploma in
Business Administration, Diploma in Information
Technology and Diploma in Hotel Management, plus
provisional accreditation for its Diploma in Restaurant
Management, Diploma in Culinary Arts, Diploma
in Event Management and Diploma in Tourism
Management. The College is now preparing the MQA
documentation for two new additional programmes,
namely Diploma in Food Science & Technology and
Diploma in Halal Toyyibban & Food Safety.
On 14 December 2011, Johor Corporation (JCorp),
the Group’s ultimate holding corporation, in
partnership with CVC Capital Partners Asia III Limited
(CVC), made a formal offer via a special purpose
vehicle, Massive Equity Sdn Bhd (MESB), to acquire
substantially all the business and undertakings of the
Group’s holding company, QSR Brands Bhd (QSR),
and the entire business and undertaking of KFCH.
JCorp holds 51% equity interest in MESB while CVC
owns the balance 49%.
The curriculum is expanding as well. The College
has offered its first three-month Halal Executive
Program, completion of which earns a certificate
from the Halal Industry Development Corporation
(HDC). The College is currently collaborating with
HDC to develop a comprehensive programme in this
subject.
At present, JCorp holds a 55% equity interest in
Kulim (Malaysia) Berhad, which controls 56% of
QSR, which in turn owns 51% of KFCH.
The conditional offer by MESB to acquire the entire
KFCH’s businesses and undertakings, including
all assets and liabilities, is for an aggregate cash
consideration equivalent to:
In future, the College will act as a crucially important
conduit to provide KFCH with a reliable source of
skillful manpower.
• RM4.00 per ordinary share of KFCH of RM0.50
each multiplied by the total outstanding KFCH
shares (less treasury shares, if any) at a date to be
determined later; and
• RM1.00 per KFCH warrant multiplied by the total
outstanding number of KFCH warrants in issue at
a date to be determined later.
24
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
The proposed acquisitions of QSR and KFCH are
inter-conditional, and subject to the execution of
the Sale & Purchase Agreement. The proposed
acquisition offer is also subject to approval by both
KFCH shareholders and Yum! Brands, Inc. (Yum!).
require improvement and provide a basis to develop
programmes to improve operations. The Balanced
Score Card also helps management to align strategic
goals across the whole enterprise and thus maintain
a more unified focus, allowing separate business units
to align towards improving the Group’s performance.
Upon completion of the exercise, the Board intends
to return the cash proceeds to all KFCH shareholders
and warrantholders via a capital repayment
exercise.
ACCELERATING PERFORMANCE EXCELLENCE
Performance goals must be measurable if they are
to be met, and thus KFCH has defined a framework
of Key Performance Indicators (KPIs) to establish
goals, monitor progress, and boost performance.
Every organisational unit and each staff member
has an appropriate set of KPIs against which to
measure achievement, and there are also indicators
to establish guidance for less concrete values such
as service quality and leadership skill. The KPI
system has given the Group a supremely useful
tool for analysing and quantifying new processes
and procedures, and modifying them for greater
efficiency if necessary.
The Balanced Score Card methodology for the
management’s control of its restaurant operations
complements the KPI framework. This is another
tool that the Group uses to identify areas that
25
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
BOOSTING QUALITY
The Group’s holding company, QSR organises a
popular annual event, Quality Day or better known as
Hari Mekar. Hari Mekar brings teams of employees
together for one day every December to take part in
competitions. It is a vibrant forum in which staff pitch
their best ideas for new methods and projects to
increase productivity and reduce costs. The winners
of the QSR Hari Mekar then progress to the JCorp
Hari Mekar, where they compete against teams
from JCorp and all its subsidiaries. They also go on
to represent the Group at the Malaysia Productivity
Corporation (MPC) Awards.
KFCH undertakes a range of initiatives to identify
areas that are not operating at optimal levels. Teams
convene and collaborate to find ways to standardise
procedures, implement new methods and tools, and
adopt industry-standard best practices to achieve
peak efficiency.
For the period of 2007-2011, these efforts generated
significant collective cost savings for the Group which
includes savings realized from the Best Practices
project. The cost savings for projects that began
in 2011 proved to be positive and is expected to
produce higher savings when the projects are rolled
out to other business areas and outlets.
At the JCorp Hari Mekar, these teams vie for prizes
in three categories: Innovative Creative Circle (ICC),
Poster Design, and Cempaka (Suggestions & Ideas)
and in 2011 three KFCH teams emerged as winners.
Optimus Prime won for the ICC Cross Functional
category, Golden Dream won for ICC Technical,
while Eagle won for the Cempaka category. The
overall winner at the JCorp Hari Mekar for the fifth
consecutive year was KFCH’s holding company,
QSR.
IMPROVING GOVERNANCE
KFCH’s success depends on the integrity and conduct
of its people, and the Group is totally committed to
conducting business in a responsible, accountable
and ethical manner. In 2011, further efforts were
dedicated to improving stewardship and governance
processes for the benefit of stakeholders.
Subsequently, at the MPC Awards, Optimus Prime
achieved second place in the Service Sector
category at national level.
In 2011, KFC employees participated in a series of
workshops organised by Yum! in areas including
Marketing, Finance, Restaurant Excellence, and
Human Resource. These sessions provided an
opportunity for personnel in all the Yum! markets
regionwide to share best practices and improvements
to operational efficiency.
26
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
For several years, the Group participated in the
JCorp Remuneration and Nomination Committee
which ensured transparency both to staff and to
external stakeholders. In 2011, KFCH formed its
own Remuneration and Nomination Committee with
a more specific and focused mandate.
To empower staff at every level of the organisation
to address governance issues, the Group continued
to implement the Work Ethics Declaration Form, by
which employees can safely and anonymously report
suspected ethical violations.
Further, KFCH has two additional mechanisms in
place to allow personnel to raise concerns with the
higher management. The Voice of Champions and
Voice of Managers surveys allow team members
and managers to express what they feel about their
working environment, and their feedback provides
insights on what needs to be done to make the
restaurant a better place to work. Both surveys are
carried out in a confidential manner, and the survey
results are distributed to the Operations Leaders
who then develop constructive actions to address
employees’ concerns.
pillars – championing the halal cause, improving
educational standards, encouraging entrepreneurial
development, promoting a healthy lifestyle, fostering a
sense of national unity, and helping the less fortunate
– YAB conducts a wide range of initiatives to benefit
both stakeholders and the wider community.
Multi-directional annual performance appraisals
are another area in which the Group incorporates
transparency and encourages constructive feedback.
Traditionally, managers write unilateral evaluations
of the employees reporting to them. In contrast,
KFCH employees at every level participate in peer
performance appraisals, and reverse appraisals give
staff an opportunity to evaluate the managers to
whom they report.
One of the Group’s most successful CSR campaigns
in 2011 raised RM2.1 million for the famine-stricken
around the world. To mark its fifth year of participation
in the World Hunger Relief Programme, a joint effort
with Yum! and the United Nations’ World Food
Program, KFCH together with its holding company
QSR, organised a 5km charity walk in Putrajaya, and
over 10,000 people took part.
TAKING SOCIAL RESPONSIBILITY TO HEART
KFCH has always believed that with success
comes responsibility. This is why Corporate Social
Responsibility (CSR) remains a Group priority. From
enhancing products and services to reaching out
to the communities in which it operates, KFCH
continues to seek ways to enrich the lives of those
around us.
ACHIEVING RECOGNITION
2011 was a year of significant recognition for KFCH
and its subsidiaries.
KFC received the 2010/2011 BrandLaureate Award
for the Best Brand in Brand Strategy. KFC also
won a series of Yum!’s 2011 Franchise Awards
for Development Excellence (KFC Malaysia) and
Advertising Excellence (KFC Singapore).
In 2010, KFCH and its holding company,
QSR, established Yayasan Amal Bistari (YAB),
a nongovernmental, non-profit foundation that
coordinates all QSR and KFCH’s CSR activities,
endeavours and programmes. Based on six CSR
27
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
Ayamas had an outstanding year as well. The
Malaysia Women’s Weekly magazine recognised
two Ayamas products in their Domestic Diva Awards
2011. The Breaded Drummets & Midwings won the
“Straight from the Fridge: Best Ready-to-Fry-Frozen
Meat” category, and Ayamas QuikBurger took the
prize for the “Best Processed Meat”. BrandLaureate
selected Ayamas as their winner of the 2010/2011
Best Brand in Consumer – Chicken-Based Products
Award. The Ayamas Chicken Satay emerged at the
top of the MIFT Product Innovation Platinum Award
2011 Competition in Malaysia.
In 2012, KFC is launching a vigorous programme of
initiatives to boost its market leadership position. Of
these strategies, the overall driver is the ‘So Good’
campaign, designed to bring the Group ever closer
to achieving its vision to be the leading integrated
food services group in the Asia Pacific region, based
on consistent quality products and exceptional
customer-focused service.
Launched in April 2012, the ‘So Good’ campaign
aims to deliver an experience that is so loved by
customers that they describe it as ‘So Good’. It
also provides an opportunity to relaunch the brand,
refocus on the basics, generate internal pride, and
strengthen the relationship between the brand and
its customers.
STRATEGISING 2012
Operational Excellence
In the years ahead KFCH will be further expanding
its network of restaurants, focusing especially
on opening new drive-thru outlets, which offer
exceptional convenience to people leading busy
lives who need a quick and tasty meal. At the same
time, the Group will be enhancing its restaurant
ambiance to provide a more contemporary feel and
create a pleasant place for families and friends to
get together. KFCH will also be expanding into small
towns to increase its market coverage.
With the systematic improvements that the customers
will experience, the campaign will enhance the total
customer experience at the restaurants in terms
of the ‘Five Ps’: product, place, people, price and
promotion.
Meanwhile, to improve customer service, all
managers and staff will be recertified, and staff will
go through the Learning Zone. The new Learning
Zone initiative gives Restaurant Managers and
team members access to web-based training. This
provides a ‘virtual’ classroom and online meetings as
well as online assessments, tests and surveys.
In tandem with its network expansion, the Group
will be improving its KFC restaurants’ service quality
and speed by investing in new IT Infrastructure. A
new Kitchen Display System (KDS), which positions
packers at each cashier counter and cuts service time,
especially during peak periods, will be introduced at
high sales volume restaurants in Malaysia in early
2012. A self-service order kiosk is currently being
tested to further reduce queue time.
A staff competition will also be held, which will
recognise and reward the best cooks and cashiers.
28
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
Other initiatives will also be effected to address the
Upstream Business
challenges of 2012. To reaffirm product superiority
against all its competitors, KFC will leverage its
To meet the ever-growing demands of KFCH
strengths – Chicken On Bone (COB), freshly prepared
restaurants, the Group will continue to grow its
in-store meals, signature recipes, and products
upstream business by investing in plants and
tailored for different times of day, namely breakfast,
increasing product capacity.
lunch, snacking and dinner.
As well as catering to its internal market, the
Meanwhile, KFCH is looking into the viability of a
Group will be growing its external market share.
KFC home delivery service. If this proves promising,
KFC Marketing now aims to introduce a variety of
the service will begin in the third quarter of 2012.
renowned international brands to Malaysia so as to
become one of the nation’s biggest trading houses.
To this end, in 2011 it clinched a number of exclusive
Overseas Expansion
deals with such brands as Kewpie, Divella, Leggo’s,
Overseas expansion is high on KFCH’s agenda. In
Mission and Simplot and is continually pursuing
Singapore, the Group plans to leverage on product
additional businesses in the domestic, Asian and
excellence and a series of imaginative campaigns
Middle Eastern markets.
and menu enhancements to bolster the market
share. In Brunei, the Group will be opening two new
in-line restaurants and two drive-thrus, as well as
refreshing the image of the KFC Berakas facilities.
But the biggest opportunities lie in the vast Indian
market where KFCH aims to get closer to achieving
critical mass by opening 16 new outlets in 2012. By
offering an appealing range of vegetarian options
alongside its traditional menu, the Group is confident
that it will quickly make KFC one of Mumbai and
Pune’s most popular restaurant chains. The long-term
prospects for the Indian venture are outstanding.
29
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
Looking ahead, the demand for raw chicken,
chicken parts and further processed chicken
(such as nuggets, sausages, etc.) will continue to
be boosted by Kedai Ayamas. Kedai Ayamas is
the pioneer brand in Malaysia to sell chicken and
chicken-based products through a network of airconditioned stores, and the first to offer an array of
chicken roasters and light, chicken-based snacks.
The Kedai Ayamas chain markets high quality, halal,
branded chicken that is hygienically processed and
packed in the company’s own plants.
In 2011, SKU numbers increased to 902 from 507 the
year before, and in 2012, the target is to reach 1060.
Kedai Ayamas also launched its delivery service in
December 2010, which is now available at 40 outlets
in the Klang Valley as well as most stores in Johor
and Melaka. In 2012, the service will be extended
to Seremban and selected stores in Penang, Ipoh
and Kedah. By the year end the total number of
outlets offering delivery is expected to have risen to
67. Kedai Ayamas will also be making further inroads
into Brunei in the coming year.
KFCH International College
By capitalising on its state-of-the-art facilities and
outstanding academic foundation, the Group aims to
grow the number of students at KFCH International
College from 681 in 2011 to 2000 in 2012, at which
point the College will break even. 40 agents have
been appointed to facilitate growth by recruiting
students both locally and internationally. In addition,
an international marketing office has been set up
to boost recruitment of international students. The
College will be offering a number of new courses
by collaborating with other accredited local and
overseas universities. KFCH International College
aims to achieve University College Status by 2015.
LOOKING AHEAD
The global economic outlook still appears uncertain
in view of the lingering debt crisis in Europe, although
there are nascent signs of recovery in the US economy
judging by the improving job market and corporate
earnings released thus far. The positive data from
US appears to outweigh concerns in Europe at this
moment and, if sustainable, will be pivotal to win
back investors’ and consumers’ confidence in the
global economy.
Profit Centres
Although consolidation is a priority, the Group is also
aiming to turn its Logistics division into a profit centre
in the future. The new double-storey warehouse
facility in Port Klang, with its vast square footage,
16 loading bays and advanced equipment, currently
serves 921 of the Group’s restaurants and outlets
but has the capacity to serve third parties as well as
the other Group’s subsidiaries.
30
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Statement
The Malaysian economy will be sustained by the
implementation of projects under the Government’s
ETP as well as private capital spending. Together with
the incentives announced during the 2012 Budget,
this is expected to boost consumer confidence and
stimulate domestic demand, and GDP growth of
5% is expected in 2012.
EXPRESSING GRATITUDE
In 2011, KFCH once again consistently delivered top
quality products and customer service. On behalf of
the Board, we offer each of our employees heartfelt
congratulations and gratitude.
We also profoundly appreciate the support we
received from customers, investors, financiers,
suppliers and various governmental and regulatory
authorities. We are equally grateful to Yum! for their
continued confidence and for the guidance received
from them throughout the year.
The economies of the other markets where the Group
operates, namely Brunei and India, are still robust
with relatively healthy GDP growth. The Singapore
economy on the other hand is expected to grow
between 1%-3%. The Group plans to continue
growing in these markets through the sustained
development and refurbishment of stores and the
delivery of operational excellence.
Finally, on a personal note, we would like to
thank our colleagues on the Board and the entire
management team for their outstanding contribution.
Their commitment to the long term growth of the
business has again produced results the Group
can be proud of. The KFCH Board of Directors
grew from eight members to nine last year, and
we offer a warm welcome to the newest member,
YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum
Sultan Salahuddin Abdul Aziz Shah Alhaj, whose
appointment took effect on 1 June 2011.
The food sector is relatively healthy but faces
inflationary cost pressures. The Group expects profit
margins to be tight and it plans to generate earnings
growth by continuing to drive topline aggressively
through new and repeat customer purchases. It
will strive to develop and introduce new winning
products, launch successful promotions that provide
value for its consumers, invest in new facilities and
refurbish existing ones, and improve customer service
and experience. The Group is also continuously
seeking better cost efficiencies as well as improving
productivity in all its business segments.
While the operating costs of the KFCH International
College remain high, the College is confidently
expected to break even in 2012, and the Group
anticipates starting to reap the rewards of its recent
major capital investments in the coming years.
KAMARUZZAMAN BIN ABU KASSIM
Chairman
All in all, the Board is confident of maintaining the
Group’s current growth for the year.
AHAMAD BIN MOHAMAD
Deputy Chairman
JAMALUDIN BIN MD ALI
Managing Director
31
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
Customers Remain
the Group’s
Number One Priority
INTRODUCTION
Groupwide, 2011 was a year of commendable
achievement. The KFC network continued to expand
in Malaysia, Singapore, Brunei as well as India, and
an imaginative programme of enticing new menu
items, irresistible special promotions and appealing
outlet enhancements continued to draw ever larger
crowds.
Subsidiaries also made considerable progress,
particularly the Integrated Poultry Operations and
Ancillary Operations, while the KFCH International
College has already attracted more than 800
students to date, many of whom are expected to join
the Group as staff members in due course.
KFC MALAYSIA
In 2011, KFC Malaysia revenue jumped to RM
1,655.3 million, 10.6% up on the RM1,496.9 million
recorded the year before.
The Malaysian team achieved this success with a
combination of compelling marketing and promotional
campaigns and irresistible new products to draw
customers into the outlets. Simultaneously, a range
of service enhancements and facilities upgrades
improved comfort and efficiency, whether customers
are eating in, taking away or driving through.
jamaludin bin md alI
Managing Director
32
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
The division initiated three projects during the year
KFC also installed a Self-Order Service Kiosk on a
to increase operational efficiency. A new Kitchen
trial basis at Wisma KFC, which further cuts queue
Display System (KDS) had its trial run at Wisma
time by allowing customers to use the kiosk to place
KFC. The KDS is effectively a packing monitor, and
their orders, then collect their food and pay at the
its use has resulted in much improved service time,
counter. Initial results have been encouraging.
especially during lunch and dinner time. Having
packers at each cash counter during peak periods
The
have meant shorter queues and higher transaction
development of two customer service ‘squads’.
counts. In early 2012, the KDS will be rolled out to
This concept clarified managerial roles in the
our high sales volume restaurants in Malaysia.
restaurants by establishing the Customer Mania
33
Group’s
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
third
quality
initiative
was
the
Review of Operations
Squad, involving cashiers and dining staff, and the
was a very successful limited time offer, accounting
Product Champion Squad for the cooks and backup
for about 10% of the total sales for the promotional
staff. Each manager is accountable for recruiting,
period.
training, engaging and energising his or her squad
to deliver the most effective service. The goal is to
In April 2011, the spotlight shone on the new ‘So
achieve higher training levels and a better working
Good’ tagline. But this is not just a tagline – the
environment in the restaurants.
objective is for customers to be so delighted with
KFC’s food and service that they cannot help but
To keep the menu vibrant, eight new items were
exclaim that it is ‘So Good’! The marketing team
introduced throughout the year, each product
pitched a 5-star campaign to spread the word, and
launch celebrated with a well-advertised promotion.
a new Chicken Chop with Mushroom Gravy was the
Offerings such as the Fish Donut, Chicken Chop
anchor product.
with Mushroom Gravy, Quarter Chicken with Black
Pepper Sauce, Olè Pocketful, Tom Yum Crunch,
The Group also focused its attention on breakfast,
Double Zinger Burger and Krushers with new flavours
offering customers a different experience during
enticed customers eager for variety.
the morning hours by providing a Breakfast Corner
with free coffee refills, daily newspaper and radio
The Group implemented a comprehensive marketing
playing in the background. The breakfast menu
programme in 2011. The large number of promotions
was rejuvenated by the introduction of the new a.m.
throughout the year meant that customers could
always find something exciting happening at KFC,
and via several channels, customers were informed
of the latest events. The year kicked off with a
celebration to mark the opening of KFC’s 500th
restaurant. As an expression of gratitude to loyal
customers, KFC Malaysia offered a Celebration
Combo, which came with a limited edition 24-karat
gold-inscribed Celebration Mug.
Chinese New Year followed soon after, and the
outlets introduced the Fish Donut, either a la carte
or in a combo meal with two pieces of chicken. This
34
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
Cheezy Egg Bun Combo, an improved a.m. Chicken
renovated 18 restaurants during the year. 24 new
Porridge Combo, and an a.m. Riser Combo.
outlets expanded the network’s reach further, and
KFC aimed to better accommodate the needs of
KFC Malaysia honoured the fasting month of
busy customers by increasing the number of outlets
Ramadan and the Hari Raya holidays in July and
offering drive-thru service.
August 2011 by offering a delectable Quarter
With 539 restaurants in total – 455 in Peninsular
Chicken with Black Pepper Sauce.
Malaysia and 84 in East Malaysia – the Group
In November, the team kicked off a season of kids’
retained its market dominance. KFC remains
marketing efforts and got into the spirit of the Happy
Malaysia’s largest restaurant chain. Another 15 new
Feet 2 movie release. As parents and children flocked
restaurants are planned in 2012.
to the cinemas, they also celebrated the beginning of
KFC SINGAPORE
the school holidays by feasting on the KFC Happy
Feet 2 Combo. In mid-December, promotional offers
continued to entice parents and children with the
Singapore’s economic growth, especially in early
Ben 10 and PowerPuff Girls Chicky Meals. Both of
2011, and an increased store count led KFC
these offerings included movie-themed buckets and
Singapore to achieve record sales of RM409.1
collectible figurines.
million, up RM40.5 million (or 11%) on 2010.
Reflecting the commitment to provide customers
To celebrate Chinese New Year, the menu featured
a fresh and inviting dining ambience, the Group
the new KFC Fortune Feast – signature food in a
collectible bucket with complementary cushion
covers. The Egg Tart (first launched in 2010) made
another appearance, this time transformed for the
festive season. The Mandarin Orange Egg Tarts were
sold individually and in colourful boxes of six.
KFC Singapore officially launched its ‘So Good’
tagline in February. This campaign highlighted fresh
preparation techniques that sets KFC apart from
its competitors. All KFC’s cooks were recertified
to ensure consistently excellent quality. Special
promotions and a ‘So Good’ photo contest engaged
Singaporeans in the celebration.
35
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
2011 was a year of exceptional product innovation.
In 2011, KFC Singapore collected RM336,380 for
Blueberry Pancakes injected novelty and renewed
victims of the continuing famine in the Horn of Africa,
interest in the KFC breakfast menu. The Ultimate
a 12% increase over 2010.
Boxes were introduced in January 2011, and in
April, the box meal range was expanded to include
The final campaign of 2011 returned to the ‘So
the Ultimate Roasta Box. In conjunction with the
Good’ tagline, using television and digital media
highly anticipated Transformers 3 – Dark of the Moon
to convey the warm emotional connection that
movie, the team launched a new ‘big eat’ targeting
Singaporeans have with KFC, sharing authentic
Transformers fans with hearty appetites. A series of
customer testimonials.
collectible action figures and a limited edition beach
mat added to the campaign’s popular appeal. In
KFC Singapore was the proud recipient of the Caring
July, chicken and two cheeses merged to create
Employer Award from Singapore Compact CSR and
the Cheesy Crunch, which was received with great
the Leader Award from Enabling Employers Network,
enthusiasm.
as well as four Markies awards from Marketing
Magazine.
In August, the Group focused on publicity for the
KFC a.m. breakfast offerings. Singaporeans have
2011 ends with a count of 80 stores, which includes
embraced online media, and they responded warmly
six new openings or relocations, offset by three
to the ‘I a.m.’ campaign, which invited them to share
closures.
via Facebook how KFC a.m. touches their lives. The
four most inspiring stories were made into three-
The Group predicts that 2012 will present challenges
minute ‘webisodes’ and shown online and on TV.
in the area of employment, as Singapore’s
The new KFC Singapore Facebook page now has
unemployment hit a low of 2% in 2011. Competition
over 130,000 fans and counting! During this period,
for market share will also increase as new restaurant
customers were delighted by the Double Chocolate
chains open outlets on the island. As always, the
Egg Tart boasting the perfect blend of egg tart with
staff will respond to challenges positively and are
dark and milk chocolate.
confident that a programme of imaginative campaigns
and products will continue to draw Singaporeans to
KFC.
In October, KFC added a seventh wonder to its range
of six Snackers – a pasta shrimp flavour. For every
Snackers and meal coupon purchase, RM0.48 was
donated to the World Hunger Relief Programme.
36
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
In June, customers stayed cool with a new range
of Kafeccino iced coffee drinks. The Frappe, Iced
Kapuccino and Iced Mochaccino start with a base of
strong, cold coffee then gain extra allure from vanilla
cookie crumble, whipped cream, and chocolate.
Catering to the 40% of Indians who are vegetarian,
KFC India launched two new meatless combos in
August. The Veg Rizo Meal comprises of flavourful
rice and spicy gravy, served with three veg strips and
a regular Pepsi. The Veg Zing Kong Box contained
a spicy, crunchy Veg Zinger, three veg strips, regular
fries, a regular Pepsi and a chocolate.
Targeting young working adults, the September
launch of the Fiery Grilled featured a unique
combination of KFC’s signature spices grilled with
the ‘steam roast’ technology in a combi oven. This
offering accounted for 15% of total sales during the
launch period.
KFC BRUNEI
KFC Brunei expanded from nine to 12 restaurants
in 2011, and total revenue surged 25% to RM20.5
million.
Currently, KFC India has 16 outlets, of which three
were opened in early 2012.
The Brunei team came up with a full calendar of
new product releases, activities, and premiums to
keep KFC in the public eye. Seven intriguing new
products such as the Fish Donut and Tom Yum
Chicken successfully caught popular attention, and
the team joined corporate marketing partners for ten
assorted month-long activities and promotions. KFC
Brunei also pursued a very energetic programme of
in-house training, with staff attending nine different
seminars.
RASAMAS & KEDAI AYAMAS
RasaMas reduced the number of outlets in Malaysia
and Brunei from 42 to 27 during 2011. With fewer
restaurants in service, 2011’s sales of RM19 million
were 23% down on 2010.
Expansion plans for 2012 include two new inline restaurants, two drive-thrus, and image
enhancements for the KFC Berakas facilities.
KFC INDIA
In its second year of operations, KFC India reported
revenue of RM19.8 million, an impressive increase
on 2010 sales of RM13.6 million.
To capitalise on the Indian passion for Cricket, KFC
India was an Official Partner in the 2011 ICC World
Cup. The staff got into the spirit by wearing special
tournament t-shirts, and customers took advantage
of the limited time offer of meals served in a cricketthemed Fan Bucket.
37
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
The Integrated
Poultry Operations
Segment Saw
Another Year of
Growth in 2011.
Revenue Including
Intercompany Sales
Advanced 13.8%
from 2010, Climbing
to RM1,472 Million.
More positively, vigorous marketing campaigns used
varied media and creative tactics to reach consumers
throughout 2011. RasaMas devised a new menu in
February, and in April commenced a campaign to
celebrate the brand’s ‘Typically Malaysian’ identity.
The redesigned website came online in April,
and by July, the visitor count exceeded 10,000.
The marketing team maximized the use of social
media – Twitter, Facebook, blog and website – as
well as e-mail and SMS to publicise 16 promotions
throughout the year, including Chinese New Year and
Ramadan specials, new product announcements as
well as coupon offers.
Meanwhile, Kedai Ayamas sales jumped by 41.1%
to RM77.7 million, and the new Kedai Ayamas
(Sabah) contributed an additional RM743,000 to the
2011 revenue stream. The store count increased
from 49 at the beginning of 2011 to 75 at the end
of the year.
40 outlets now offer delivery services, and August
saw the installation of e-pay terminals in the
branches to give customers yet another level of
convenience. 2011’s new products included the
Percik Roaster, and Ayamas re-launched the highly
38
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
popular Auspicious and Spicy Siam roasters on
Under the Group’s Breeder Farm and Hatchery
a limited-time basis during the festive seasons. In
division, the breeder farms produce eggs which
addition, corporate partners Digi and Bank Rakyat
are sent to hatcheries to be hatched into Day-Old-
helped publicise two other innovative special offers.
Chicks (DOC). In 2011, the division produced 38.6
million DOCs with a value of RM48.8 million.
INTEGRATED POULTRY OPERATIONS
KFC Marketing
The Integrated Poultry Operations segment saw
another year of growth in 2011. Revenue including
KFC Marketing Sdn Bhd (KFC Marketing) was
intercompany sales advanced 13.8% from 2010,
incorporated in 2001 as a sales, marketing and
climbing to RM1,472 million.
trading arm for KFC Holdings (Malaysia) Bhd
(KFCH) and external markets, both domestically
Ayamas Food Corporation Sdn Bhd (AFCSB)
and internationally. With a vision to be the preferred
processing plants contributed greatly to the increase,
distributor of superior quality halal brands, the
up by 8.5% on 2010 levels. The Group’s expanding
subsidiary performed exceptionally well in 2011, with
restaurant chains and stores – KFC, RasaMas and
sales growing by 23.3% to reach RM273.1 million.
Kedai Ayamas – continue to increase their order
Sales to the domestic open market increased once
volumes, thus boosting internal sales figures.
again, and open market export sales also jumped to
RM15.9 million in 2011.
2011 was not without challenges, as rising chicken
Group’s
In addition to the Group’s own products, KFC
products,
Marketing distributes third-party international brands
however – especially processed foods such as
such as Simplot, Divella, Mission, Kewpie and
sausage, nuggets, etc. – continues to rise steadily,
Leggo’s. Datuk Redzuawan bin Ismail, better known
so this subsidiary took steps toward greater self-
as Chef Wan, now acts as brand ambassador for
sufficiency and expansion into niche markets.
KFC Marketing, further strengthening the company’s
prices
made
performance.
an
impact
Demand
for
upon
the
chicken
position.
39
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
Ayamazz Roti Impit
Ayamazz Sdn Bhd was established in 2009 as a
wholly owned subsidiary of KFCH. It began by selling
quick, affordable chicken dishes from push-carts
in Malaysia’s college, university and polytechnic
campuses.
Each
push-cart
is
independently
operated, and the Ministry of Higher Education
has recognised the Ayamazz Roti Impit business
model as a successful means of nurturing young
entrepreneurs.
2011 was the second year that Ayamazz Roti Impit
hot dog carts have plied Peninsular Malaysia’s
higher education campuses, and there was a
commendable 330.4% rise in gross sales, which
reached RM581,000.
Usahawan Bistari Ayamas
Looking forward, Ayamazz has collaborated with Jati
Usahawan Bistari Ayamas Sdn Bhd (UBASB) is a
Bestari Sdn Bhd and other companies to expand
wholly-owned subsidiary of KFC Marketing, and is
its business by more aggressively marketing and
a key element in the Group’s CSR commitment to
promoting the programme and by establishing more
assist those in need. UBASB was established in
Ayamazz Roti Impit kiosks nationwide, including in
2009 to bring the Ayamas brand to the lower-income
Sabah and Sarawak. The business model has also
market sector.
grown to include kiosks, flip-counters, and hawker
vans, and the goal for 2012 is to add 100 new open
UBASB’s business model engages housewives,
market outlets by the end of the year.
single mothers and other lower income individuals
who are interested in business to become Sudut
Ayamas operators. Parallel objectives are to provide
an opportunity for the operators to generate extra
income and to inculcate entrepreneurship among
their children and family members. The Sudut
Ayamas operators are the front-line stocking and
sales agents for the UBASB products. Although they
are packaged differently and sold at lower prices, the
products all maintain Ayamas’ hygiene, quality and
halal certification.
The pilot project was introduced in Pasir Gudang,
Johor in collaboration with the local city council and
Johor Corporation’s Waqaf Dana Niaga. At the end
of 2011, there were 819 Sudut Ayamas operators all
over Malaysia.
UBASB’s success has attracted the attention and
support of several Government agencies such as
Majlis Agama Islam Negeri, Majlis Amanah Rakyat
(MARA), Jabatan Tenaga Kerja (JTK), Jabatan
Kebajikan Masyarakat (JKM), the Ministry of
40
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
2011 was the Second
Year that Ayamazz Roti
Impit Hot Dog Carts
have Plied Peninsular
Malaysia’s Higher
Education Campuses,
and there was a
Commendable 330.4%
Rise in Sales, which
Reached RM581,000.
International Trade and Industry (MITI), Yayasan
Pembangunan Keluarga (YPK), FELDA and also
Pusat Pemulihan Dalam Komuniti (PDK). With
the support of these partners, UBASB expects to
continue on its rapid growth curve.
Feedmill Division
The Feedmill operations made good progress in
the past year. Sales revenue for 2011 rose 8.6% to
RM208 million. Increased broiler production to meet
the Group’s chicken requirements translated to
137,000 metric tonnes of feed milled, an increase
of 1,000 metric tonnes over the previous year’s
production.
Estimates
of
broiler
requirements
for 2012 are higher still, and feed volume is also
expected to grow.
Breeder Farms & Hatchery
In 2011, the revenue achieved by the Breeder
Farms and Hatchery division rose to RM93.8 million.
Meanwhile, the division considerably boosted its
production by investing in additional facilities.
ANCILLARY OPERATIONS
During the year under review, the Group’s ancillary
operations made further commendable progress.
Sauce Manufacturing
Region Food Industries Sdn Bhd (RFI), which
manufactures sauces both for the Group and for
external markets under the brand name ‘Life’,
reported an impressive sales growth of 12.5% from
RM89.9 million to RM101.1 million in 2011.
At RM46.2 million, internal sales accounted for
45.8% of the revenue, a rise of 9% over the previous
year. Meanwhile, external domestic sales of RM38.6
million and export sales of RM16.3 million contributed
38.1% and 16.1% of the revenue respectively.
41
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
In addition to continuing upgrades to existing
Bakery & Commissary
equipment in 2012, the Bakery division will initiate
In 2011, the Bakery division recorded sales of RM31.2
the planning phase of a new bakery line to support
million. It also achieved a 7.7% increase in bun
KFC and Pizza Hut business expansion. Likewise,
production and introduced the Butter Scotch Bun to
the
the KFC product line. The rectangular Butter Scotch
include primary and secondary wash and spin-dry
Bun has a rich butter caramel and milk flavour and is
equipment, which will both enhance quality and
already proving a popular addition to the KFC menu.
reduce costs.
Commissary’s
ongoing
improvements
will
Meanwhile, a new pizza dough line – a 700 square
metre facility providing dough for 42 PHD outlets to
Tepak Marketing
date – began operations in February 2011.
Tepak Marketing Sdn Bhd (Tepak), a wholly owned
The renewal of the Bakery’s HACCP (Hazard
subsidiary of KFCH produces, markets, and sells
Analysis Critical Control Point) and ISO 9001:2008
beverages and nutritional drinks for the domestic and
certifications demonstrated its continued high
export markets. In addition to various tea products
production standards. In compliance with HACCP
sold in packets, pot bags and sachets, Tepak also
requirements, the Bakery completed a flooring
manufactures carbonated drinks in PET bottles and
upgrade in November 2011.
aluminium cans.
The Commissary division generated sales of RM1.7
Tepak’s revenue declined by 5.4% to RM23.6 million
million plus a 4.3% increase in coleslaw production,
in 2011, mainly due to the restructuring of production
amounting to over two million packets in total. The
and delivery by Unilever, one of the company’s largest
coleslaw facilities also received flooring upgrades in
customers.
April and May 2011 to meet Yum! requirements.
42
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Review of Operations
GROUP LOGISTICS DIVISION
HUMAN CAPITAL DEVELOPMENT
The Logistics division under KFC Manufacturing
KFCH currently employs over 28,000 people in
Sdn Bhd expanded its dry stock storage capacity in
Malaysia, Singapore, Brunei and India, making it
2011 in line with the growing number of restaurants
one of the largest food sector employers in the
and stores. The Group’s original 45,000 square foot
region. The Group’s active and holistic approach to
warehouse was in Glenmarie. 2011 saw it shift to
employee recruitment, training, and retention reflects
a new double-storey warehouse complex offering
the value it places on its staff.
300,000 square feet at Jalan Gerudi, Port Klang.
During 2011, KFCH used a variety of recruitment
The new facility offers 16 loading bays, five receiving
methods to fill vacant and newly-created positions.
bays, space for nearly 17,000 pallets, and new
The Group participated in numerous job fairs and
heavy equipment. The transition went smoothly,
advertised its requirements in newspapers, leaflet
and the new warehouse was fully operational on
and email campaigns, flyers and restaurant postings.
1 November 2011. It now serves over 921 stores
It also offered referral incentives to current staff.
and restaurants in Malaysia, Brunei and Cambodia.
In future, the Logistics division plans to extend its
KFCH is committed to retaining valued employees,
facilities and services to third parties, thus becoming
and thus offers a variety of training, advancement
a profit centre.
and recognition opportunities, including organised
activities and sports tournaments, conventions, and
KFCH INTERNATIONAL COLLEGE
award ceremonies.
The KFCH International College now spans two
The Group invested RM7.2 million in training and
campuses in Puchong and Johor Bahru. At present,
development programmes in 2011. This figure is
over 800 students are enrolled in nine diploma
equivalent to 5.25% of total employee compensation
programmes, including a variety of hospitality-
and illustrates the importance of training to the
related disciplines, as well as Early Childhood
organisation.
Education, Business Administration, and Information
On average, KFCH’s full-time employees received
Technology.
67 hours of training over the year, and nearly 8,000
During the year, the College achieved a revenue of
staff participated in training. Opportunities included
RM4.3 million from its diploma programmes and a
in-house soft skills training, and public programmes
further RM325,675 from short courses.
on a range of topics designed to build technical,
financial,
43
business
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
and
management
abilities.
Review of Operations
Furthermore, 40 students were sponsored in full-
At the Annual Long Service Awards, KFCH recognises
time diploma courses at the two KFCH International
employees who have served the company and its
College campuses and 23 more in various part-time
customers for ten years or more with awards of BSN
programmes offered by other institutions.
savings bonds of RM500-RM1000 each. In 2011,
the Group distributed some RM160,000 in savings
bonds to 257 long-term employees.
Yum! Learning Zone offers an additional training
medium for KFC employees. Through this new
initiative, managers and team members at the
In 2012, the OSH unit will begin a General OSHA
restaurants have access to web-based training,
1994 Compliance Audit. All operating units will be
including ‘virtual’ classrooms, online meetings, and
subject to the audit, which is in preparation for the
full JKKP Audit. As part of the Group’s unflagging
electronic assessments, tests and surveys.
efforts to improve workplace safety, the Accident
The Group continues to place great emphasis on
Prevention Programme will also be revamped in the
Occupational Safety and Health (OSH) training, and
coming year.
four particular activities dominated 2011’s efforts.
HALAL COMMITMENT
A proactive Hazard Identification, Risk Assessment
and Risk Control (HIRARC) exercise was conducted
for the restaurant operations, poultry farm and
KFCH guarantees full halal compliance in all of
office-based employees in Wisma KFC. A new,
the Group’s markets. Every aspect of our food
comprehensive Safety and Health Manual was
manufacturing processes, including raw materials
published for the Farm and Hatchery division, and
procurement,
the Procedures for Reporting of Accidents in the
and utensils follow strict controls. The Group
Workplace were enhanced. The new procedures
pays keen attention to any products acquired
cover not only reporting and documenting accidents
from foreign suppliers, requiring that they be halal
but also aspects of investigation for the purpose of
certified within the source country and accepts only
preventing recurrence. Finally, the Department of
certificates recognized by the Department of Islamic
Safety and Health (JKKP) Audit Kit for the restaurant
Development Malaysia (JAKIM).
division was improved to assist employees as they
prepare for the OSHA 1994 compliance audit.
Effective organisations perform regular employee
appraisals to identify areas for growth and to
recognise successful achievements. KFCH updated
its evaluation forms last year to include reverse peer
appraisals.
44
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
preparation,
packaging,
storage
Review of Operations
Esteemed
scholars
from
Islamic
LOOKING FORWARD
institutions
comprise the KFCH Shariah Advisory Council, which
inspects every stage of the food production chain.
KFCH continues to prosper as families and friends
The Council examines equipment, ingredients, and
get together to relish the Group’s products in ever
preparation methods, touring all of the Group’s
increasing numbers. Whether eating out or at home,
facilities, restaurants and factories. Once the internal
customers of all ages demonstrate their delight with
Council is satisfied, JAKIM is requested to repeat
the menus. Superb service has won their loyalty, and
the entire inspection process. After that, all of the
the Group’s commitment to corporate responsibility
Group’s products bear the official JAKIM stamp
has strengthened the bond with the communities in
indicating full halal compliance.
which it operates across the region. KFCH moves
forward upon a solid financial foundation, with a clear
vision of future goals as well as the determination to
KFCH’s internal Shariah and Halal Department
reports directly to the Shariah Advisory Council.
achieve them. In 2012, all the Group’s stakeholders
The department plays a vital role in the Group’s
can be confident of celebrating yet another year of
halal commitment, creating a deeper understanding
success.
of halal principles for all stakeholders both within
KFCH and beyond via training exercises and media
campaigns. The department strives to develop
mutually beneficial relationships with relevant NGOs,
and it acts as the first response unit for the Group’s
Shariah Advisory Council.
45
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
we bring
Balance
to a Healthy
Lifestyle...
46
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
47
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
...with a spoonful of
Responsibility.
There is more to KFCH than just great food. We take action
to strengthen communities, develop employees’ potential, offer
greater opportunities for employment and education and help
preserve our environment. It is our belief that each decision affects
the greater community at large. As such, we take our Corporate
Social Responsibilities to heart and are passionate about effecting a
change for the good.
48
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
49
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
Corporate Social
Responsibility (CSR)
Plays an Increasingly
Important Role in the
Malaysian Business
Arena, and KFC
Holdings (Malaysia)
Bhd (KFCH) has Made
it an Integral Part of the
Group’s Culture.
As part of the Group’s commitment to
contributing to the wellbeing of the
communities in which it operates, KFCH
embraces its responsibility through
extensive activities within the region.The
Group also never loses sight of the fact
that each decision has an impact on both
employees and customers.
The Group takes CSR very much to heart.
As a corporation, KFCH realises the
impact it makes within its community
and the vital role in sharing and
promoting its CSR principles.As KFCH
takes action to strengthen communities,
develop employees’ potential, offer
greater opportunities for employment
and education, as well as preserve the
environment, it is with the belief that the
benefits extend to everyone involved.
48
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
COMMUNITY
Tabung Penyayang KFC
KFCH has always striven to build strong relationships
with the communities in which it operates, and the
CSR initiatives in this area highlight the Group’s
dedication. In certain cases, aid takes the form of
purely philanthropic donations to organisations
such as the Kiwanis Down Syndrome Foundation,
the Cancerlink Foundation, Rumah KFC – Bakti
Semantan, and the Kuala Lumpur Society of the
Deaf, now known as the Malaysian Federation of the
Deaf. On other occasions, the Group joins community
members by sponsoring and participating in a variety
of events and activities.
Established in 1997, Tabung Penyayang KFC is a
vehicle for the Group’s various CSR programmes to
help the needy. Funds are collected for these initiatives
in two ways. First, KFC donates to the fund ten cents
from every Chicky Meal sold. Second, collection
boxes are placed at strategic locations in every
KFC restaurant in Malaysia, thereby encouraging
customers to add their own contributions. In 2011,
Tabung Penyayang made regular contributions to a
variety of charities.
KFC’S Feeding Programme
2011 marks the fifth year that KFC and Pizza Hut
participated in the World Hunger Relief Programme.
On 29 October, the Group organised the Step Out,
Stop Hunger 5km charity walk in Putrajaya. Over
10,000 people joined this event, which also featured
a games carnival, musical concerts and various
contests as well as other activities. Over RM2.1
million was collected and distributed to the faminestricken around the world as well as local charities.
‘Be the Movement’ Charity Walk
KFC’s Projek Penyayang, one of the Group’s most
rewarding and beneficial initiatives, is now in its
18th year. Organised four times a year, usually in
conjunction with festive seasons, this programme
sees the distribution of free meals to various charity
homes. In 2011, 150 homes with over 12,000 less
fortunate residents throughout Malaysia benefited
from this programme. By the end of the year, over
48,000 KFC meals were shared.
49
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
KFC Hearing Impaired Community Care Stores
Football Association of Johor
26 years ago, KFC launched a pioneering effort
of which it is still immensely proud of. Indeed, the
Hearing Impaired Community Care Stores have
attracted worldwide recognition. Malaysia now
boasts four KFC restaurants run entirely by speechand hearing-impaired staff, offering 60 members of
this community independence and empowerment.
KFC’s Hearing-Impaired Community Care Stores
are located in Sentul Raya (Kuala Lumpur), Tanjung
Aru (Sabah), Saujana (Sarawak) and Taman Masai
(Johor).
In 2011, KFC commenced sponsorship of this
sporting association, joining the team’s royal
patron, DYMM Sultan Ibrahim Ibni Almarhum Sultan
Iskandar, Sultan of Johor, in supporting the team as
it represented the state in national competitions.
International Children’s Day
KFC’s involvement with International Children’s
Day began in 1994. On 22 October, the Group
contributed to the 2011 celebration, which was held
at Sri Pentas. YB Dato’ Sri Shahrizat binti Abdul
Jalil, Minister of Women, Family and Community
Development officiated at the event, where over
6,000 children enjoyed the Kids’ Parade, board
games, cake decorating competition, colouring
contests and more.
Buka Puasa with Orphans
On 10 August 2011, KFC Malaysia contributed
duit raya, KFC vouchers and food to a buka puasa
gathering in Batu Pahat, Johor. DYMM Sultan
Ibrahim Ibni Almarhum Sultan Iskandar, Sultan of
Johor, officiated at the event which brought joy to
over 200 orphans from the surrounding areas.
50
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
International Kite Festival
Utusan Sepaktakraw
For the second year in a row, KFC sponsored the
KFC-Utusan Sepaktakraw tournament. The Grand
Finale, held at The Curve, Petaling Jaya, was
attended by YB Dato’ Ahmad Shabery bin Cheek,
Minister of Youth and Sports.
KFC Malaysia was the main sponsor of the
International Kite Festival, organised by the Pasir
Gudang (Johor) City Council in February 2011.
As visitors enjoyed the colourful kites in the sky,
they were also able to sample KFC, RasaMas and
Ayamazz Roti Impit meals at the venue.
51
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
and procedures adhering to halal requirements, and
employees are devoted to maintaining the most
rigorous standards.
Malaysian Yacht Association
Since 2007, KFC has been very active in Malaysian
yachting, contributing every year to the Malaysian
Yacht Association. In 2011, the Association held
regattas around Malaysia’s coasts and islands,
including Langkawi, Penang and Terengganu.
The regattas attracted international participation
with entrants from countries such as Australia,
New Zealand, Brazil, Mexico, USA, South Korea,
Cambodia, Sri Lanka, India and Hong Kong.
The Halal Food Standards Realisation (HAFSTAR)
programme was developed by the Halal Development
Corporation (HDC) and the Department of Standards
(SIRIM) to promote Malaysian halal standards. KFCH
is an active participant in the programme’s events
which occur all over Malaysia and provide a forum
for discussion and education.
In April 2011, KFCH set up an exhibitor’s booth at
the Malaysian International Halal Showcase (MIHAS),
Malaysia’s largest food and beverage exhibition. The
fair drew over 16,000 people and gave the Group an
excellent opportunity to share its halal-certified foods
and services with an international audience.
MARKETPLACE
Halal Initiatives
One of the most essential aspects of the Group’s
continued success is its insistence upon strict halal
compliance. Customers rely upon all KFCH products
52
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
WORKPLACE
Restaurant Managers’ Convention
KFCH is currently one of the largest employers in
the food sector industry in the region, with a team
of over 24,000. The Group acknowledges the
substantial role personnel have played in its success,
and to reward the hard work and fuel the personal
and professional development of its staff, various
events are organised throughout the year. The Group
believes that each individual plays an important role
in contributing to the success of the company. To
reward its staff for their dedication, commitment and
hard work, various activities were organised.
The KFC Restaurant Managers Convention was held
at Nexus Karambunai Resort in Sabah. For their roles
in ‘Making KFC So Good’ (which was the theme of
the 2011 convention), the managers celebrated
each other’s accomplishments at award ceremonies
and enjoyed some well-earned relaxation on outings
to the Mount Kinabalu foothills and nearby Mamutik
Island.
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
National Ayamas Challenge
Champs Challenges
In 2011, Kedai Ayamas and RasaMas introduced a
The 2011 National Champs Challenge took place
nationwide initiative for staff with the aim of setting
from 26-27 April at the KFC Subang 2 Drive-Thru.
and maintaining superior standards in customer
11 teams competed: nine teams from Peninsular
service by way of a fun-filled competition. More than
Malaysia and one team each from Sabah and
60 employees in 16 teams took part in the inaugural
Sarawak. At the end of the event, the five best team
competition. The finals were held in December at
members and manager were chosen to represent
Wisma KFC, and the winning teams and individuals
Malaysia in the Regional Champs Challenge in
won a range of trophies and prizes.
Jakarta, Indonesia in November 2011. Ten teams
competed at this event, and the Malaysian team
came home with five individual and executional
awards.
54
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
Hari Mekar – Quality Day
Gerak Kemas
The Group’s holding company, QSR organises its
KFCH introduced its own 5 Sigma (5S) initiative at
popular annual event, Quality Day or better known as
Wisma KFC in 2009. The goal of this programme,
Hari Mekar. Every December, Hari Mekar brings teams
known as Gerak Kemas (GK), is to ensure office
of employees together for one day to compete in
cleanliness by discarding unwanted items like empty
quality-related contests. It is a vibrant forum in which
boxes and obsolete documents. GK has since
employees present their ideas for new methods and
become an annual ‘spring cleaning’ event at Wisma
projects to increase productivity and reduce costs.
KFC. In 2010, staff successfully incorporated the
The winners of the QSR Hari Mekar proceed to the
Hazard Hunt as part of the GK programme, whereby
JCorp Hari Mekar, where they compete against
employees identify potential hazards in the office
teams from JCorp and all its subsidiaries. They also
environment. This in turn raised the endeavour from
go on to represent QSR at the Malaysia Productivity
5S to 6 Sigma (6S).
Corporation (MPC) Awards. The overall winner at the
JCorp Hari Mekar for the fifth consecutive year was
In 2011, the 6S audit was launched, involving all
KFCH’s holding company, QSR.
personnel in Wisma KFC. The Gerak Kemas Audit
Committee carried out two separate audit sessions
during the year. The aim of these exercises is to
Bank Negara Malaysia GP2000
inculcate the 6S culture amongst all staff and to
In 2011, Bank Negara Malaysia organised the
promote a sense of mutual responsibility for safety
GP2000 programme. The programme’s objective is
and cleanliness in their office environment.
for participating companies to provide training and
employment opportunities for 200 recent graduates
THE ENVIRONMENT
from low-income backgrounds. KFCH joined the
programme in 2011, and as of 1 June, had selected
KFCH is concerned with the impact that its
four candidates. By the end of the training period,
operations have upon the environment. The Group
all four candidates were accepted as permanent
consistently aims to find ways to deploy ecologically
employees.
sound practices whilst maintaining its high levels of
product quality and shareholder value.
55
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
Ayamas Port Klang
Bakery & Commissary
Since 1998, Ayamas Port Klang has operated its own
The Bakery and Commissary divisions, based at
waste water treatment facility. The final discharge
Kompleks KFC Glenmarie, also operate their own
earns the Malaysian Department of Environment
waste water treatment plant. Releasing treated water
(DOE) rating of Standard B. The Group has since
which meets the DOE Standard B rating, it employs
invested approximately RM5 million in upgrading
a Biological Treatment System, which consists of
the facility a number of times. The facility uses two
an Up-Flow Anaerobic Sludge Bed (UASB) and
different waste water processes, a Continuous
Alternative Intermittent Cyclic Reactor (AICAR).
Processor and a Sequential Batch Reactor (SBR)
process. At present, the plant treats approximately
Region Food Industries
2,000 cubic metres of waste water discharge per
In 2004, Region Food Industries Sdn Bhd (RFI), the
day.
Group’s sauce manufacturing division, deployed its
own waste water treatment plant. The final discharge
Ayamas Bandar Tenggara, Johor
meets the DOE’s Standard B rating, and the plant
In 2009, the Group opened its second waste water
treats about 250 cubic metres of waste water per
treatment facility at Ayamas Bandar Tenggara, Johor.
day using a continuous biological and chemical
This facility’s final discharge is in compliance with the
process. In 2009, to reduce its environmental impact,
DOE Standard A. Built at a cost of RM2 million, this
RFI also upgraded its burner to enable its production
waste water facility uses only the SBR process, and it
machinery to use natural gas instead of diesel.
treats 800 cubic metres of final discharge waste water
per day.
56
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Social Responsibility
LOOKING AHEAD
In the years ahead, KFCH will continue to fulfill its
role as a responsible corporate citizen by working
In partnership with its holding company, QSR, KFCH
in close cooperation with the communities in which
has set up the Yayasan Amal Bistari (YAB) to form the
it operates – because, in the final analysis, the most
framework and oversee funding of all CSR initiatives
effective way to enhance the lives and environments of
by both QSR and KFCH. Under the YAB umbrella,
those communities is through the direct involvement
it has succeeded in boosting the effectiveness and
of the Group and its people.
organisation of its CSR endeavours by creating
awareness of the Group’s activities.
57
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
we bring
Freshness
and Quality
to your Dining
Experience...
58
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
59
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
...with a dash of
Tender
Loving Care.
At our restaurants, we have one mission: To serve only the best
food. We start with the finest ingredients that is delivered fresh from
our farms all the way onto your plate. Easy? No. But it only takes
one bite to remember why all that extra effort is worthwhile. Because
fresh tastes better.
60
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
61
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Board of Directors
From Left to Right :
HASSIM BIN BABA
DATIN PADUKA SITI SA’DIAH BINTI SHEIKH BAKIR
YAM TENGKU SULAIMAN SHAH ALHAJ IBNI ALMARHUM
SULTAN SALAHUDDIN ABDUL AZIZ SHAH ALHAJ
DATUK ISMEE BIN ISMAIL
AHAMAD BIN MOHAMAD
60
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Board of Directors
From Left to Right :
KAMARUZZAMAN BIN ABU KASSIM
JAMALUDIN BIN MD ALI
KUA HWEE SIM
TAN SRI DATO’ DR YAHYA BIN AWANG
61
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
62
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
Kamaruzzaman bin Abu Kassim, Malaysian, aged
48, is a Non Independent Non Executive Director and
Chairman of KFC Holdings (Malaysia) Bhd (“KFCH”).
He was appointed to the Board and Chairman of
the Company on 12 January 2011. He is currently
the President & Chief Executive Officer of Johor
Corporation (“JCorp”).
He graduated with a Bachelor of Commerce
majoring in Accountancy from the University of
Wollongong, New South Wales, Australia in 1987.
He embarked on his career as an Audit Assistant
with Messrs K.E Chen & Associates in May 1988
and later joined Coopers & Lybrand (currently known
as PricewaterhouseCoopers) in Johor Bahru. In
December 1992, he left the firm to join JCorp as
Deputy Manager, Corporate Finance Department.
He was later promoted to become the Executive
Director at Damansara Realty Berhad (a company of
which JCorp is the majority shareholder) in 1999 until
September 2006. He was appointed as the Chief
Operating Officer of JCorp on 1 August 2006 and
was later appointed as the Senior Vice President of
JCorp on 1 January 2009. He was appointed as the
President & Chief Executive Officer of JCorp on 1
December 2010.
He is also the Chairman of Damansara Realty
Berhad, Kulim (Malaysia) Berhad, KPJ Healthcare
Berhad, QSR Brands Bhd and Director of Waqaf AnNur Corporation Berhad. He also sits as Chairman
and Director of several other JCorp Group of
Companies.
He is the Chairman of the Nomination and
Remuneration
Committee
of
the
Company.
Other than as disclosed, he does not have any
family relationship with any director and/or major
shareholder of the Company. He has no personal
interest in any business arrangement involving KFCH.
Kamaruzzaman bin Abu Kassim
Chairman
Non Independent
Non Executive Director
He has not been convicted for any offences.
He attended all six (6) Board Meetings of the
Company held during the financial year ended
31 December 2011.
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
AHAMAD BIN MOHAMAD
Deputy Chairman
Non Independent Non Executive Director
Ahamad bin Mohamad, Malaysian, aged 58, is a
He is the Chairman of the Executive Committee
Non Independent Non Executive Director and the
of KFCH. He is also the Director of Waqaf An-
Deputy Chairman of KFC Holdings (Malaysia) Bhd
Nur Corporation Berhad, an Islamic endowment
(“KFCH”). He was appointed to the Board on 27 June
institution that spearheads JCorp Group’s CSR
2006 and as Deputy Chairman on 2 July 2006.
programmes, including the unique Corporate Waqaf
Concept initiated by JCorp.
He graduated with a Bachelor of Economics
(Honours) degree in 1976 from the University of
He is a member of the Nomination and Remuneration
Malaya. He joined Johor Corporation (“JCorp”) in
Committee of the Company. Other than as disclosed,
June 1979 as a Company Secretary for various
he does not have any family relationship with any
companies within the JCorp Group. He was involved
director and/or major shareholder of the Company.
in many of JCorp’s projects; among others are the
He has no personal interest in any business
Johor Specialist Hospital, prefabricated housing
arrangement involving KFCH. He has not been
project and the Kotaraya Complex in Johor Bahru. He
convicted for any offences.
is presently the Managing Director of Kulim (Malaysia)
Berhad, a member of the Board of Directors of KPJ
He attended all six (6) Board Meetings of the
Healthcare Berhad and New Britain Palm Oil Limited
Company held during the financial year ended
(Papua New Guinea). He was appointed as a Director
31 December 2011.
of QSR Brands Bhd (“QSR”) on 7 June 2006 and
as the Deputy Chairman of QSR on 8 June 2006.
He is also a Chairman and Director of several other
companies within the JCorp Group.
64
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
JAMALUDIN BIN MD ALI
Managing Director
Jamaludin bin Md Ali, Malaysian, aged 54, is the
He is a member of the Executive Committee of
Managing Director of KFC Holdings (Malaysia) Bhd
KFCH. He is also active as the Director of Waqaf
(“KFCH”). He was appointed to the Board on 27 June
An-Nur Corporation Berhad, an Islamic endowment
2006 and as Managing Director on 2 July 2006.
institution that spearheads JCorp Group’s CSR
programmes, including the unique Corporate Waqaf
Concept initiated by JCorp.
He graduated with a Bachelor of Economics
(Honours) degree from University of Malaya in
1982 and Master of Business Administration from
He is a member of the Nomination and Remuneration
University of Strathclyde, Glasgow Scotland in
Committee of the Company. Other than as disclosed,
1987. He started his career with Malayan Banking
he does not have any family relationship with any
Berhad as Trainee Officer in 1982 and later served as
director and/or major shareholder of the Company.
International Fund Manager in Permodalan Nasional
He has no personal interest in any business
Berhad in 1991. He joined Johor Corporation
arrangement involving KFCH. He has not been
(“JCorp”) in 1992 and was appointed the Managing
convicted for any offences.
Director of Johor Capital Holdings Sdn Bhd in
1998. Before his appointment as the Managing
He attended all six (6) Board Meetings of the
Director of KFCH, he was the Group Chief Operating
Company held during the financial year ended
Officer of JCorp since 2001. He sits on the board of
31 December 2011.
various companies within the JCorp Group. He was
appointed as a Director of QSR Brands Bhd (“QSR”)
on 7 June 2006 and was appointed the Managing
Director of QSR on 8 June 2006. He is also the Chief
Executive Officer of KFCH.
65
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
KUA HWEE SIM
Independent Non Executive Director
Kua Hwee Sim, Malaysian, aged 59, was appointed
QSR and a member of Audit Committee of Kulim
to the Board of KFC Holdings (Malaysia) Bhd (“KFCH”)
(Malaysia) Berhad. As a professional Accountant she
on 27 June 2006. She is currently an Independent
also provides financial training for companies within
Non Executive Director of KFCH.
Malaysia.
She is a Fellow of the Association of Chartered
She is also the Chairman of the Audit Committee of
Certified
Registered
KFCH. Other than as disclosed, she does not have
Accountant of Malaysia and Singapore. She has
any family relationship with any director and/or major
more than thirty five years of corporate and financial
shareholder of the Company. She has no personal
experience in several industries within Malaysia
interest in any business arrangement involving KFCH.
and overseas. She is currently a Director of Kulim
She has not been convicted for any offences.
Accountant
(UK)
and
a
(Malaysia) Berhad, which is of the Johor Corporation’s
subsidiaries listed on the Main Board of the Bursa
She attended all six (6) Board Meetings of the
Malaysia Securities Berhad. She was appointed as
Company held during the financial year ended
a Director of QSR Brands Bhd (“QSR”) on 7 June
31 December 2011.
2006. She is the Chairman of Audit Committee of
66
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
DATIN PADUKA SITI SA’DIAH BINTI
SHEIKH BAKIR
Non Independent Non Executive Director
She is a member of the Malaysia Productivity Council
(MPC) Consultative Panel on Healthcare since 2001
and a member of the National Patient Safety Council,
Ministry of Health since 2003. In 2009, she was
appointed as a member of the Malaysian Healthcare
Travel Council, Ministry of Health.
Datin Paduka Siti Sa’diah binti Sheikh Bakir,
Malaysian, aged 59 was appointed to the Board of KFC
Holdings (Malaysia) Bhd (“KFCH”) on 1 January 2010
as a Non Independent Non Executive Director. Datin
Paduka was also appointed as a Non Independent Non
Executive Director of QSR Brands Bhd on 1 January
2010.
Datin Paduka was a Board member of MATRADE from
1999 to 2010 and an Independent Non-Executive
Director of Bursa Malaysia from 2004 to April 2012.
Datin Paduka has served as the Managing Director of
KPJ Healthcare Berhad (KPJ) since 1 March 1993. She
graduated with a Bachelor of Economics from University
of Malaya in 1974, and holds an MBA from Henley
Management College, University Reading, London,
United Kingdom.
In 2010, Datin Paduka was named the ‘CEO of The
Year 2009’ by The New Straits Times Press and the
American Express. In 2011, Datin Paduka achieved
three more awards, namely the ‘Asia Leading Woman
CEO of The Year’ at the Women in Leadership (WIL)
Forum Asia, the “Masterclass Woman CEO of The
Year” by the Global Leadership Awards and the
“BrandLaureate Transformational Corporate Leader
Brand iCon Leadership Awards 2011” from The Asia
Pacific Brands Foundation.
Her career with Johor Corporation (JCorp) commenced
in 1974 and she is directly involved with JCorp’s
Healthcare Division since 1978. Datin Paduka was
appointed as the Chief Executive of Kumpulan
Perubatan (Johor) Sdn Bhd (KPJSB) from 1989 until the
listing of KPJ in November 1994.
Other than as disclosed, she does not have any family
relationship with any director and/or major shareholder
of the Company. She has no personal interest in any
business arrangement involving KFCH. She has not
been convicted of any offences.
Datin Paduka is the Chairman of various hospitals
and companies in the KPJ Group, as well as MIT
Insurance Brokers Sdn Bhd. She is a Non Independent,
Non Executive Director of Kulim (Malaysia) Bhd, QSR
Brands Bhd (QSR), and Damansara REIT Managers
Sdn Bhd. Datin Paduka is also a Director of Waqaf AnNur Corporation Bhd, a non-governmental organisation
dedicated to the provision of healthcare services to the
less fortunate.
Committed to promoting excellence in healthcare, Datin
Paduka is the President of the Malaysian Society for
Quality in Health (MSQH), elected since its inception in
1997 to date.
She attended four (4) out of six (6) Board Meetings
of the Company held during the financial year ended
31 December 2011.
67
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
DATUK ISMEE BIN ISMAIL
Non Independent Non Executive Director
Datuk Ismee bin Ismail, Malaysian, aged 47, was
Datuk Ismee is a director of BIMB Holdings Berhad,
appointed to the Board of KFC Holdings (Malaysia)
Syarikat Takaful Malaysia Berhad and TH Plantations
Bhd (“KFCH”) on 1 March 2009 as a Non Independent
Berhad. He is a member of the Nomination and
Non Executive Director. He is a Fellow member of the
Assessment
Chartered Institute of Management Accountants and
Committee of BIMB Holdings Berhad. He was
a member of the Malaysian Institute of Accountants.
appointed as a Director of Johor Corporation on 1
Committee
and
Remuneration
November 2010.
Datuk Ismee is presently the Group Managing
Director and Chief Executive Officer of Lembaga
Other than as disclosed, he does not have any
Tabung Haji. Prior to that, he was the Chief Executive
family relationship with any director and/or major
Officer of ECM Libra Securities and a Director of ECM
shareholder of the Company. He has no personal
Libra Capital Sdn Bhd. He has also served several
interest in any business arrangement involving KFCH.
organisations namely as Senior General Manager of
He has not been convicted for any offences.
Finance, Lembaga Tabung Haji; Chief Accountant at
Pengurusan Danaharta Nasional Berhad; General
He attended three (3) out of six (6) Board Meetings
Manager of Business Development at Arab Malaysian
of the Company held during the financial year ended
Development Berhad and has held several finance-
31 December 2011.
related positions at Shell Malaysia.
68
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
YAM Tengku Sulaiman Shah
Alhaj Ibni Almarhum Sultan
Salahuddin Abdul Aziz Shah
Alhaj
Independent Non Executive Director
YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum
Sultan Salahuddin Abdul Aziz Shah Alhaj,
Malaysian, aged 62 was appointed to the Board of
KFC Holdings (Malaysia) Bhd (“KFCH”) on 1 June
2011 as an Independent Non Executive Director.
YAM Tengku Sulaiman Shah was also appointed
as an Independent Non Executive Director of QSR
Brands Bhd on 1 June 2011.
Securities Berhad. In 1997, he relinquished his
position in SP Setia Berhad. YAM Tengku Sulaiman
Shah was also appointed as the Chief of Ceremony
for the State of Selangor by his late father H.R.H.
The Sultan of Selangor in 1978 which carries the
title ‘Y.A.M. Tengku Panglima DiRaja Selangor’, he is
also a member of The Council of the Royal Court of
Selangor (Dewan DiRaja).
YAM Tengku Sulaiman Shah has completed
Wellingborough Primary & Secondary School at
Northamptonshire, United Kingdom and at Greylands
College Bembridge, Isle of Wright.
YAM Tengku Sulaiman Shah was formerly a Director
of Malaysian Resources Corporation Berhad,
Samanda Holdings Berhad, MCB Holdings Berhad,
SIME UEP Properties Berhad and Bina Goodyear
Berhad.
Since 1970, YAM Tengku Sulaiman Shah became
actively involved in business particularly in the
building construction and housing development. He
started his career with a world known advertising
company called Ogilvy & Mather. Throughout his
stint from 1971-1975, he gained wide knowledge in
the advertising and branding industry. His motivation
drives him to be more enterprising and the ultimate
goal is to be a major player in the construction
industry.
YAM Tengku Sulaiman Shah is currently a Director
of Cosway Corporation Bhd and Baneng Holdings
Berhad.
Other than as disclosed, he does not have any
family relationship with any director and/or major
shareholder of the Company. He has no personal
interest in any business arrangement involving KFCH.
He has not been convicted for any offences.
YAM Tengku Sulaiman Shah with his other partners
formed Syarikat Pembinaan Setia Sdn Bhd which
is now known as SP Setia Berhad a public listed
company in the Main Board of Bursa Malaysia
He attended three (3) out of four (4) Board Meetings
convened subsequent to his appointment as a
Director of the Company on 1 June 2011, out of a
total of six (6) Board Meetings of the Company held
during the financial year ended 31 December 2011.
69
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
Tan Sri Dato’ Dr Yahya bin Awang
Independent Non Executive Director
Tan Sri Dato’ Dr Yahya bin Awang, Malaysia, aged
Tan Sri’s many professional achievements include
62 was appointed to the Board of KFC Holdings
performing open-heart surgery on Tun Dr Mahathir
(Malaysia) Bhd (“KFCH”) on 2 May 2008 as an
Mohamad in 1989; pioneering the establishment
Independent Non Executive Director.
of The National Heart Institute of Malaysia in 1992;
and performing the first heart transplant in Malaysia
One of the Colombo Plan Scholars, Tan Sri graduated
in 1998. Tan Sri is author of many scholarly and
from Monash University in Australia with a Bachelor of
professional articles and has made numerous
Medicine and Bachelor of Surgery (“MBBS”) degree
presentations to professional audiences.
in 1974. In 1980, Tan Sri was appointed as a Fellow
of the Royal College of Surgeons and Physicians of
Tan Sri is currently the Consultant Cardiothoracic
Glasgow (“FRCS”).
Surgeon at Damansara Heart Centre, Damansara
Specialist Hospital. He is also Chairman of the
Moving to London in 1981, Tan Sri worked as Surgical
National Transplant Registry and a council member
Registrar in the Department of Cardiothoracic Surgery
of the Association of Thoracic and Cardiovascular
at Brampton Hospital before returning to Malaysia
Surgeons of Asia.
to take up the role of Cardiothoracic Surgeon at
General Hospital. In 1985, he was appointed Head
He is a member of the Audit Committee and a member
and Senior Consultant Cardiothoracic Surgeon at
of the Nomination and Remuneration Committee of
General Hospital.
KFCH. Other than as disclosed, he does not have
any family relationship with any director and/or major
From 1992 until 2002, Tan Sri held the position
shareholder of the Company. He has no personal
of Head and Senior Consultant Cardiothoracic
interest in any business arrangement involving KFCH.
Surgeon at Malaysia’s National Heart Institute, and
He has not been convicted for any offences.
from 1998 to 2002, he was also Medical Director of
He attended all six (6) Board Meetings of the
the Institute.
Company held during the financial year ended
31 December 2011.
70
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Profile of Directors
Hassim bin Baba
Independent Non Executive Director
Hassim bin Baba, Malaysian, aged 66, was
shareholder of the Company. Save as disclosed, he
appointed as an Independent Non Executive
has no personal interest in any business arrangement
Director of KFC Holdings (Malaysia) Bhd (“KFCH”)
involving KFCH. He has not been convicted for any
on 29 April 2005. He graduated with a Diploma
offences.
in Business Administration from the then MARA
Institute of Technology (“MIT”), Malaysia and
He attended all six (6) Board Meetings of the
passed the Securities Institute of Australia and
Company held during the financial year ended
London Chartered Institute of Company Secretaries
31 December 2011.
examinations and qualified as an Australia Securities
Analyst and Chartered Company Secretary.
He is a member of the Audit Committee of KFCH.
Other than as disclosed, he does not have any
family relationship with any director and/or major
71
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Board of Directors Kentucky Fried Chicken
Management Pvt Ltd (Kfc Singapore)
AHAMAD BIN MOHAMAD
JAMALUDIN BIN MD ALI
MICHAEL GIAN
Chairman
Director
Chief Executive Officer
72
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Board of Directors Mumbai Chicken Pvt Ltd
Pune Chicken Restaurants Pvt Ltd (Kfc India)
AHAMAD BIN MOHAMAD
Chairman
JAMALUDIN BIN MD ALI
Director
MOHD ZAM BIN MUSTAMAN
Director
MOHAMMAD BIN ALWI
Director
73
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Board of Directors KFC (B) Sdn Bhd
(Kfc Brunei Darussalam)
AHAMAD BIN MOHAMAD
NELKY GOH
Deputy Chairman
Managing Director
YANG TERAMAT MULIA
PADUKA SERI PENGIRAN
ANAK PUTERI HAJAH AMAL
JEFRIAH BINTI ALMARHUM
SULTAN HAJI ‘OMAR’ ALI
SAIFUDDIEN SA’ADUL KHAIRI
WADDIEN
Director
74
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Board of Directors KFC (B) Sdn Bhd (KFC Brunei Darussalam)
JAMALUDIN BIN MD ALI
DATUK TAN CHENG KIAT
GOH THIAM FATT
Director
Director
Director
75
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Top Management Committee
1
2
3
4
5
6
7
1. JAMALUDIN BIN MD ALI
2. SHEIK SHARUFUDDINBIN
SHEIK MOHD
Managing Director
Executive Director
3. AZIZAH BINTI ABDUL
RAHMAN
4. MOHD ZAM BIN
MUSTAMAN
Director
Director
Integrated Poultry & Food
Manufacturing
Legal Advisory, Development
& Corporate Services
6. MJ LING
5. ALAN AU
Deputy President,
Senior Vice President
KFC Peninsular Malaysia
Pizza Hut Malaysia & KFC
East Malaysia
7. EDMUND LOONG
Senior General Manager,
Group Finance
76
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Head of Division
1
2
4
5
1. FOO PENG PENG
2. DR KOOI ENG TIONG
3. AZAMI BIN MUSTAPHA
Managing Director
President
Vice President
KFC Marketing Sdn Bhd
Poultry Integration
Ayamas Food Corporation
4. MOHD IZANI BIN HASSAN
5. ROSNIZA BINTI BAHARUM
Senior General Manager
3
Group Properties, Technical &
General Manager
Group Corporate Communications
Maintenance
77
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Head of Division
6
7
8
9
6. MOHD ROSLAN BIN
MOHD SALUDIN
7. SHARIFAH MUSAINAH
BINTI SYED ALWI
General Manager
General Manager
Shariah & Halal Compliance
Group Human Resources
9. HISHAMUDDIN BIN
HAMIDON
General Manager
Kedai Ayamas & RasaMas
78
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
8.ZAITON BINTI IBRAHIM
Chief Executive Officer
KFCH International College
Head of Division
10
11
10.MICHEAL GIAN
12
11.MOHAMMAD BIN ALWI
12.NELKY GOH
Chief Executive Officer
Chief Executive Officer
Managing Director
KFC & Pizza Hut Singapore
KFC India
KFC Brunei
79
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Shariah Advisory Council
1
2
3
4
5
6
7
1. KAMARUZZAMAN
BIN ABU KASSIM
5. PROF. DATUK DR. SIDEK
BIN BABA
2. AHAMAD BIN MOHAMAD
6. JAMALUDIN BIN MD ALI
3. TAN SRI DATO’ ABDUL
KADER BIN TALIP
7. MOHD ROSLAN
BIN MOHD SALUDIN
4. DATO’ HAJI NOOH
BIN GADOT
80
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Information
Board of Directors
Company Secretaries
1. Kamaruzzaman bin Abu Kassim
Chairman
Non Independent Non Executive Director
Idham Jihadi bin Abu Bakar
(MAICSA 7007381)
Heng Ai Leng
(MAICSA 7017245)
2. Ahamad bin Mohamad
Deputy Chairman
Non Independent Non Executive Director
Auditors
3. Jamaludin bin Md Ali
Managing Director/Chief Executive Officer
KPMG, Chartered Accountants
Level 10, KPMG Tower, 8 First Avenue
Bandar Utama, 47800 Petaling Jaya
Selangor
4. Kua Hwee Sim
Independent Non Executive Director
5. Datin Paduka Siti Sa’diah binti Sheikh Bakir
Non Independent Non Executive Director
Principal Bankers
6. Datuk Ismee bin Ismail
Non Independent Non Executive Director
Affin Islamic Bank Berhad
AmIslamic Bank Berhad
Bank Muamalat Malaysia Berhad
CIMB Bank Berhad
DBS Bank Ltd
HSBC Amanah Malaysia Berhad
Malayan Banking Berhad
7. YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum
Sultan Salahuddin Abdul Aziz Shah Alhaj
Independent Non Executive Director
8. Tan Sri Dato’ Dr Yahya bin Awang
Independent Non Executive Director
Solicitors
9. Hassim bin Baba
Independent Non Executive Director
Executive Committee
M/s Azmi & Associates
M/s Kadir, Andri & Partners
M/s Zainal Abidin & Co
1. Ahamad bin Mohamad
Chairman
Registered Office
2. Jamaludin bin Md Ali
Member
3. Sheik Sharufuddin bin Sheik Mohd
Member
Level 11, Menara JCorp, No 249 Jalan Tun Razak
50400 Kuala Lumpur
Tel No: 03-2787 2787
Fax No: 03-2787 2777
SHariah Advisory Council
Registrar & Transfer Office
Kamaruzzaman bin Abu Kassim
Ahamad bin Mohamad
Tan Sri Dato’ Abdul Kader bin Talip
Dato’ Haji Nooh bin Gadot
Prof. Datuk Dr. Sidek bin Baba
Jamaludin bin Md Ali
Mohd Roslan bin Mohd Saludin (Secretary)
Pro Corporate Management Services Sdn Bhd
Suite 12B, Tingkat 12
Menara Ansar
No 65 Jalan Trus
80000 Johor Bahru, Johor
Tel No: 07-226 7476
Fax No: 07-222 3044
Audit Committee
Stock Exchange Listing
1. Kua Hwee Sim
Chairman
Bursa Malaysia Securities Berhad, Main Board
2. Tan Sri Dato’ Dr Yahya bin Awang
Member
3. Hassim bin Baba
Member
81
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Group Structure
100%
Kentucky Fried
Chicken (Malaysia)
Sdn Bhd
- KFC restaurants
100%
KFC (Peninsular
Malaysia) Sdn Bhd
- KFC restaurants
- Commissary
100%
SPM Restaurants
Sdn Bhd
- Meals on wheels
- Property holding
100%
KFC (Sarawak) Sdn Bhd
- KFC restaurants
90%
KFC (Sabah) Sdn Bhd
KFC Holdings (Malaysia) Bhd
51%
KFC (B) Sdn Bhd
- KFC restaurants
- KFC restaurants
100%
KFC Events Sdn Bhd
100%
Rasamas Sdn Bhd
(Brunei)
-Sales of food products
vouchers
- Restaurants
100%
Cilik Bistari Sdn Bhd
-Sale of board games
70%
Yayasan Amal Bistari
- Corporate foundation
100%
KFCH Education (M)
Sdn Bhd
- College/Learning institute
100%
KFCIC Assets Sdn Bhd
- Property holding
100%
Roaster’s Chicken
Sdn Bhd
-Investment holding
55%
Tepak Marketing
Sdn Bhd
- Contract packing
100%
Region Food
Industries Sdn Bhd
-Sauce manufacturing
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
89.2%
Rasamas Tebrau
Sdn Bhd
- Restaurant (Intrapreneur)
89.1%
Rasamas Taman
Universiti Sdn Bhd
- Restaurant (Intrapreneur)
Group Structure
100%
WQSR Holdings (S)
Pte Ltd
100%
Kentucky Fried
Chicken Management
Pte Ltd
-Investment holding
- KFC restaurants
100%
KFC India Holdings
Sdn Bhd
-Investment holding
100%
Mauritius Food
Corporation Pvt Ltd
100%
KFCH Restaurants
Private Limited
-Investment holding
- KFC restaurants
100%
Integrated Poultry
Industry Sdn Bhd
100%
Pune Chicken
Restaurants Private
Limited
- Poultry processing plant
- KFC restaurants
100%
Ayamas Integrated
Poultry Industry Sdn
Bhd
- Property holding
- Restaurants
65%
Ayamas Shoppe
(Sabah) Sdn Bhd
- Convenience food store
100%
KFC Manufacturing
Sdn Bhd
- Trading
- Bakery
100%
Ayamas Food
Corporation Sdn Bhd
- Poultry processing &
further processing plants
100%
Ladang Ternakan
Putihekar (N.S.)
Sdn Bhd
100%
MH Integrated Farm
Berhad
100%
Rasamas Holdings
Sdn Bhd
- Convenience food store
- KFC restaurants
- Breeder farm
- Breeder and broiler farms
- Hatchery
- Feedmill
100%
Ayamas Shoppe
Sdn Bhd
100%
Kernel Foods Private
Limited
100%
Pintas Tiara Sdn Bhd
- Property holding
100%
KFC Marketing Sdn Bhd
-Sales & marketing of
food products
90%
Ayamazz Sdn Bhd
- Push Cart
100%
Usahawan Bistari
Ayamas Sdn Bhd
-Sudut Ayamas
83
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Governance Statement
1. INTRODUCTION
The Board of Directors (the “Board”) of KFC Holdings (Malaysia) Bhd (“KFCH” or the “Company”)
subscribes to and supports the Malaysian Code on Corporate Governance (Revised 2007) (“the Code”) as
a minimum basis for practices on corporate governance. The Board further recognizes that the principles
of integrity, transparency and professionalism are key components for the Group’s continued growth and
success. These will not only safeguard and enhance shareholders value but will at the same time ensure
that the interests of other stakeholders are protected.
The Board is pleased to report to the shareholders in particular and other stakeholders in general on the
manner the Company has applied the principles of corporate governance as set out in Part 1 of the Code
as well as the extent of its compliance with the Best Practices as set out in Part 2 of the Code.
2. THE BOARD OF DIRECTORS
2.1 Composition, Size and Effectiveness of the Board
The Board is led and managed by an experienced and effective Board with a wide range of knowledge
and expertise. The Board is primarily assigned for charting the strategic direction of the Group.
On 1 June 2011, the Company welcomed the appointment of YAM Tengku Sulaiman Shah Alhaj Ibni
Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj as our new Independent Non Executive Director.
With the changes, the Board currently has 9 members comprising the following:•
One (1) Executive Director
•
Four (4) Non Independent Non Executive Director
•
Four (4) Independent Non Executive Director
The Company is in compliance with the Bursa Malaysia Securities Berhad’s Listing Requirements
which require at least two directors or one-third of the total number of Directors, whichever is higher, to
be Independent Directors. The Board retains full and effective control of the Company. The Managing
Director has direct responsibilities for business operations whilst non-executive directors have the
necessary skill and experience to bring independent judgments to bear on the issues relating to
strategy, performance and resources. Key matters, such as approval of annual and interim results,
acquisitions and disposals, material agreements, major capital expenditures, budgets and long term
plans would require Board’s approval.
The Board views that the number and composition of the current Board members are sufficient and
well-balanced for the Company to carry out its duties effectively, whilst providing assurance that no
individual or small group of individuals can dominate Board’s decision making.
To ensure that there is balance of power and authority, the roles of the Chairman/Deputy Chairman
and Managing Director are separated and clearly defined. The Chairman/Deputy Chairman is
primarily responsible for the orderly conduct and effectiveness of the Board, including but not
limited to organizing information necessary for the Board to deal with the agenda of meetings,
whilst the Managing Director’s primary task is to report, communicate and recommend key strategic
and operational matters and proposals to the Board for decision making purposes as well as to
implement policies and decisions approved by the Board. The Independent Directors and NonIndependent Non Executive Directors are from varied business and professional backgrounds and
bring with them a wealth of experience that is brought to bear favourably in board decisions and
policy formations. Together, the Directors bring a wide range of business and financial experience
relevant to the direction of the expanding Group.
Other than the Chairman and the Managing Director, the shareholders or stakeholders may convey any
concerns that they may have to the Chairperson of the Audit Committee who is also an Independent
Non Executive Director.
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KFC Holdings (Malaysia) BHD (65787-T)
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Corporate Governance Statement
2.2 Principal Duties and Responsibilities
The Board assumes six principal stewardship’s responsibilities:a. Reviewing and adopting a strategic plan for the Company.
The Board will review and approve the 5-year strategic plan for the Group.
The strategic and business plan for the period 2012 – 2016 was tabled, discussed and approved
by the Board at its meeting held on 14 December 2011.
Additionally, on an ongoing basis as the need arises, the Board will assess whether projects,
purchases and sale of equity as well as other strategic consideration being proposed at Board
meetings during the year are in line with the objectives and broad outline of the adopted strategic
plans.
b.Overseeing the conduct of the Company’s business to evaluate whether the business is being
properly managed.
At Board meetings, all key operations matters will be discussed and expert advice will be sought
if necessary.
The performances of the various companies and operating units within the Group represent
the major element of the Board agenda. Where and when available, data are compared against
national trends and performance of similar companies.
The Group uses Key Performance Indicator (“KPI”) system as the primary driver and anchor to
its performance management system, of which is continually refined and enhanced to reflect the
changing business circumstances.
The Organisational Chart and the Group Authority Limits and Guidelines define, amongst others,
the limits to management responsibilities. At the end of each financial year the Board will set KPI
that should be achieved by the management for the next financial year.
c.Identifying principal risks and ensure the implementation of appropriate systems to manage
these risks.
The Group has set up a Risk Management Committee for this purpose to assist the Board.
The principal objectives of the Enterprise Risk Management are, amongst others, to meet the
strategies, goal and objectives of the Group; to safeguard financial and non-financial assets of
the Group; to allocate and optimize the use of resources and to comply with policies, procedures,
guidelines, laws and regulations. For further information of the Risk Management Committee,
please refer to page 90 of the Annual Report.
d.Succession planning, including appointing, training, fixing the compensation of and where
appropriate, replacing senior management.
The Board’s responsibility in this aspect is being closely supported by the Group Human
Resource division. More importantly, after several years of continuous efforts in emphasizing
and communicating the importance of succession planning, the subject has now become an
ongoing agenda being reviewed at various high-level management and operational meetings of
the Group.
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Governance Statement
e.Developing and implementing an investor relations programme or shareholder communications
policy for the Company.
Various strategies and approaches are employed by the Group so as to ensure that investors
and shareholders are well-informed about the Group affairs and developments.
f.
Reviewing the adequacy and the integrity of the Company’s internal controls and management
information systems, including compliance with applicable laws, regulations, rules, directives
and guidelines.
The Board’s function as regard to fulfilling the above responsibility is supported and reinforced
through the various Committees established at both the Board and Management’s level. Aided
by an independent function of the Group Internal Audit Division, the active functioning of these
Committees through their regular meetings and discussions would provide a strong check and
balance and reasonable assurance on the adequacy of the Group’s internal controls. Details on
the Group Internal Audit functions are further discussed in the Internal Control Statement and
Audit Committee Report in this Annual Report.
At the same time, the Board also ensures the sustenance of a dynamic and robust corporate
climate focused on strong ethical values. This emphasizes active participation and dialogues on a
structured basis involving key people at all levels, as well as ensuring accessibility to information and
transparency on all executive action. The Group has established a formal avenue for all employees
to report directly to the Managing Director of any misconduct or unethical behaviour conducted by
any employees of the Group. The corporate climate is also continuously nourished by value-centred
programmes for team-building and active subscription to core values.
2.3 Board Meetings and Supply Of Information
Operations Meetings are held once a month during which the Managing Director and Divisional
Directors will be briefed by management on all operational aspects of the Group. During the
meetings, they will be furnished with information on the progress of the operating units i.e. activities,
performance, planned projects and problems arising so as to enable the former to participate in
problem solving and decision-making process. The Group has also established a Top Management
Committee wherein Divisional Directors and Top Senior Executives will meet weekly to, amongst
others, set the management direction of the Group and provide the general management and
corporate leadership. The Top Management Committee is also to facilitate collective decisionmaking at the top management level of the Company’s stratum. The terms of reference of the Top
Management Committee is set out on page 76.
All Board meetings for the ensuing year are scheduled by December in the year before so as to
allow Directors to plan ahead. Board Meetings are held at least 4 times a year. Apart from the regular
scheduled meetings, additional meetings are convened as and when necessary to deliberate and
approve ad-hoc, urgent and important issues.
The specific agendas tabled for the Board’s deliberation are the key financial and operational results
and performances of the Group, Company and its subsidiaries, strategic and corporate initiatives
such as approval of corporate plans and budgets, acquisitions and disposals of material assets,
major investments and changes to management and control structure of the Group, including key
policies, procedures and authority limits. The total number of Board Meetings held during the financial
year was six (6) and all Directors have complied with the minimum 50% attendance as required
by Paragraph 15.05 of the Listing Requirements. The Directors are provided with adequate Board
Papers together with the agenda and minutes of the previous meeting on a timely manner prior to the
Board Meeting so as to give the Directors time to deliberate on the issues to be raised at the meeting.
All deliberations and conclusions of the Board meetings are duly recorded and minutes kept by the
Company Secretary.
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KFC Holdings (Malaysia) BHD (65787-T)
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Corporate Governance Statement
The Board recognizes the importance of providing timely, relevant and up-to-date information in
ensuring an effective decision making process by the Board. In this regard, the Board is provided
with not just quantitative information but also those of qualitative nature that is pertinent and of a
quality necessary to allow the Board to effectively deal with matters that are tabled in the meeting.
All Directors have access to information within the Company and to the advice and services of the
Company Secretaries. The Directors may also obtain independent professional advice, in furtherance
of their duties.
In between meetings, the Managing Director meets regularly with the Chairman and other Board
members (where necessary) to keep them abreast of current development. Circular Resolutions are
used for determination of matters arising in between meetings.
2.4 Appointment and re-election of Directors
The number and composition of Board membership are reviewed on a regular basis appropriate to
the prevailing size, nature and complexity of the Group’s business operations so as to ensure the
relevance and effectiveness of the Board.
The Board is responsible to the shareholders. All Directors appointed during the financial year retire
at the Annual General Meeting (“AGM”) of the Company in the period of appointment and are eligible
for re-election. In compliance with Paragraph 7.26(2) of the Listing Requirements, all directors shall
retire once at least in every 3 years.
In accordance with Article 89 of the Articles of Association of the Company, the following directors
retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for
re-election:
(i)Ahamad bin Mohamad
(ii)Datuk Ismee bin Ismail
(iii) Hassim bin Baba
In accordance with Article 96 of the Articles of Association of the Company, YAM Tengku
Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj retires at the
forthcoming Annual General Meeting and being eligible, offers himself for re-election.
2.5 Directors’ Remuneration
The Board believes that the levels of remuneration offered by the Group are sufficient to attract
Directors of calibre and with sufficient experience and talents to contribute to the performance of the
Group. The remuneration framework for Executive Director has an underlying objective of attracting
and retaining director needed to run the Company successfully. Remuneration packages of Executive
Director are structured to commensurate with corporate and individual’s performance. The NonExecutive Directors are remunerated based on fixed annual fees approved by the shareholders of the
Company.
87
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Governance Statement
The details on the remuneration of the directors are as follows:
Fees/
Allowances/
Basic
Other
SalaryEmoluments Bonus
RM
RM
RM
Executive Director Jamaludin bin Md Ali
Non-Executive
Directors Kamaruzzaman bin Abu
Kassim
Ahamad bin Mohamad
YAM Tengku Sulaiman Shah
Alhaj Ibni Almarhum Sultan
Salahuddin Abdul Aziz
Shah Alhaj
Kua Hwee Sim
Datin Paduka Siti Sa’diah
binti Sheikh Bakir
Tan Sri Dato’ Dr Yahya bin
Awang
Datuk Ismee bin Ismail
Hassim bin Baba
*Tan Sri Dato’ Muhammad Ali
bin Hashim
Total
Benefits
-in-kind
RM
Total
RM
131,141
1,228,725
621,156
178,348 298,080
-
-
115,000
84,000
-
-
-
26,867
115,000
110,867
-
-
33,667
69,000
-
-
-
-
33,667
69,000
-
56,000
-
-
56,000
-
-
-
65,000
54,500
65,000
-
-
-
-
-
-
65,000
54,500
65,000
-
4,167
-
-
4,167
724,682 298,080
158,008
1,801,926
621,156
* Resigned with effect from 12 January 2011
2.6 Directors’ Training
The Company complies with the requirements set out in the amendments to the Listing Requirements
in that it regularly assess the training needs of its directors to ensure that they are equipped with the
requisite knowledge and competencies to make effective contribution to the board’s functioning. All
Directors have successfully completed the Mandatory Accreditation Programme (“MAP”) prescribed
by Bursa Malaysia. The Continuous Education Programme (“CEP”) was repealed by Bursa Malaysia
with effect from 1 January 2005 and Directors who are required to fulfill this programme complied
with the deadline before due date. Nevertheless the Directors are encouraged to continue attending
various training programmes that are relevant to the discharge of their responsibilities.
Among the training programmes, seminars and briefings attended during the year are as follows:
1. Updates of FRS 2010/2011 New & Revised FRSs, Amendments, Interpretations and the New
Bursa Listing Requirements
2. Budget 2012 Proposals & Recent Development
3. Johor Corporation Directors’ Conference 2011
4. MSWG & ICGN Dialogue Session
5. Corporate Governance Program - Assessing the Risk and Control Environment
88
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Governance Statement
Apart from this requirement, all new directors who are appointed from among the Group’s Senior
Executives must attend an internally-administered directors’ course and pass the examination set
prior to being eligible for appointment to the Board. All new directors will be given comprehensive
briefing of the Group’s history, operations and financial control systems in order to provide them
with first-hand knowledge of the Group’s operations. In the light of increasing complexities in global
markets as well as within the industry, in financial reporting and in shareholders’ expectations, training
is an ongoing process in an effort to help Directors stay abreast of relevant new developments.
3. Board And Management Committees
The Group has formed several committees to facilitate the operations of the Group. Each committee
has written terms of reference defining their scope, powers and responsibilities. The list of committees
includes, amongst others:Board Committees:
i.Audit Committee
Pursuant to paragraph 15.15 of the Listing Requirements of Bursa Securities, the Audit Committee
Report for the financial year, which sets out the composition, terms of reference and a summary of
activities of the Audit Committee, is contained on pages 93 to 96 of this Annual Report.
ii.Nomination and Remuneration Committee (“NRC”)
The Board has on 21 February 2011 resolved to establish its own NRC. With the establishment of the
Company’s NRC, the functions and responsibilities previously vested with JCorp Group NRC are now
assumed by the Company’s NRC. The Board is of the view that the composition of the NRC meets
the objectives and principles of the corporate governance.
The NRC is established primarily to:-
A.Nomination
1.Identify and recommend candidates for Board directorship;
2. Recommend directors to fill the seats on Board Committee;
3. Evaluate the effectiveness of the Board and Board Committee (including the size and
composition) and contributions of each individual director;
4. Ensure an appropriate framework and plan for Board succession.
B. Remuneration
1. Provide assistance to the Board in determining the remuneration of executive directors,
senior management and Chief Executive Officer. In fulfilling these responsibilities, the NRC
is to ensure that executive directors and applicable senior management of the Company:
•
•
•
Are fairly rewarded for their individual contribution to overall performance;
Are compensated reasonably in light of the Company’s objectives; and
Are compensated similar to other companies.
2. Establish the Managing Director/Chief Executive Officer’s goals and objectives; and
3. Review the Managing Director/Chief Executive Officer’s performance against the goals and
objectives set.
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Governance Statement
Membership
The NRC shall consist of the following:1. Kamaruzzaman bin Abu Kassim
Chairman
2.Ahamad bin Mohamad
Deputy Chairman
3. Tan Sri Dato’ Dr Yahya bin Awang
Independent Non Executive Director
4. Jamaludin bin Md Ali
Managing Director/Chief Executive Officer
iii. Risk Management Committee
The Board has established the Risk Management Committee (“RMC”) and the Enterprise Risk
Management (“ERM”) framework. The RMC is chaired by the Chief Risk Officer who is also the
Executive Director – Group Finance. The principal objectives of the ERM are, amongst others, to
meet the strategies, goal and objectives of the Group; to allocate and optimize the use of resources
and to comply with policies, procedures, guidelines, laws and regulations.
The Audit Committee will oversee the effectiveness of ERM process across the Group whereby the
Board retains the overall risk management responsibility.
The principal roles and responsibilities of RMC:
•
•
•
•
•
•
•
Create a high-level risk strategy (policy) aligned with Group’s strategic business objectives;
Communicate board vision, strategy, policy, responsibilities, and reporting lines to all employees
across the Group;
Identify and communicate to the Board the critical risks (present or potential) the Group faces,
their changes, and the management action plans to manage the risks;
Perform risk oversight and review risk profiles and organisational performance;
Aggregating the Group’s risk position and yearly reporting to the Board on the risk situation/
status;
Set performance measures for the Group; and
Provide guidance to the business units on the Group’s and business unit’s risk appetite and
capacity, and other criteria which, when exceeded, trigger an obligation to report upward to the
Board.
Management Committees:
i.
Top Management Committee (“TMC”)
1. The terms of reference and objectives of the TMC are as follows:-
(a) Manages the Group in all aspects of business;
(b)Implements strategic business plans and policies as approved by the Board of Directors
(c)Identifies, formulates and prioritizes strategic issues and charts strategic directions for
action by the Management and staff
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Corporate Governance Statement
2. The members of the TMC comprise the following: -
1. Managing Director
2. Executive Director – Group Finance
3.Director – Integrated Poultry & Food Manufacturing
4.Director – Legal Advisory, Corporate Services & Property
5.Deputy President – KFC Peninsular Malaysia
6.Senior General Manager – Group Finance
7.Senior Vice President – Pizza Hut Malaysia & KFC East Malaysia
Decisions taken will be by majority.
Appointment of members is by the Exco.
3. Meetings are to be held on every Thursday or as and when it deems necessary basis.
ii.Agreement Committee
The principal term of reference of the Agreement Committee is to assist the Group in preparing and
reviewing the terms and conditions of legal documents for corporate and/or commercial transactions
to be entered into by the Group.
iii.Asset Committee
The principal term of reference of the Asset Committee is to acquire properties of existing rented
premises as well as procuring/disposing of suitable sites for outlets expansion and other operations
of the Group.
iv. Tender Committee
The principal term of reference of the Tender Committee is to review and evaluate tenders of purchases
and expenditures and to make such appropriate recommendations to the relevant Committees for
approval.
4. SHAREHOLDER RELATIONSHIP
In line with the Group’s commitment to observe the highest level of accountability and transparency to its
stakeholders, the Group continually ensures that it maintains a high level of disclosure and communication
with its shareholders and stakeholders through various practicable and legitimate channels. The Group
is duty-bound to keep the shareholders and investors informed of any major developments and changes
affecting the Group.
The management holds discussions and dialogues with analysts and investors on a regular basis. During
the discussions and dialogues, presentations based on permissible disclosures are made to the analysts
and investors to provide details on the Group i.e. financial performance, any major developments and
future plans. Apart from the mandatory requirement to make public announcements via the Bursa
Securities, the Group also disseminates information through press releases on corporate events, product
launches and any significant developments of the Group.
In addition to the above, the Group has an interactive web-site available at http:www.kfcholdings.com.my
to communicate with investors and the investing public. The web-site is being used as a forum to answer
inquiries and provide information on the activities of the Group.
The Annual General Meeting is the principal forum for dialogue and interaction with the shareholders of
the Company. Besides the usual agenda of the Annual General Meeting, the Board presents the progress
and performance of the business. Thereafter, the shareholders are presented with the opportunity to
participate in question and answer sessions with the Directors. 91
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Annual Report 2011
Corporate Governance Statement
5. ACCOUNTABILITY AND AUDIT
5.1 Financial Reporting
In presenting the annual financial statement and quarterly announcements to the shareholders, the
Board aims to present a balanced and understandable assessment of the Group’s position and
prospects. This also applies to other price-sensitive public reports and reports to regulators. Timely
release of announcements reflects the Board’s commitment to provide up-to-date and transparent
information on the Group’s performance.
In the preparation of the financial statement, the Directors have taken the necessary steps to
ensure that the Group had used all the applicable Financial Reporting Standards, provisions of the
Companies Act, 1965 and relevant provisions of laws and regulations in Malaysia and the respective
countries in which the subsidiaries operate, consistently, and that the policies are supported by
reasonable and prudent judgment and estimates. The Audit Committee assists the Board in ensuring
the accuracy, adequacy and completeness of the information to be disclosed. The Statement by
Directors pursuant to Section 169 of the Companies Act 1965 is set out on page 204 of the Annual
Report.
The quarterly reports, prior to tabling to the Board for approval will be reviewed and approved by the
Audit Committee.
5.2 Internal Control
The Group’s Statement on Internal Control is set out on page 97 of this Annual Report.
5.3 Relationship with the Auditors
The Board through the Audit Committee has maintained a formal procedure of carrying out an
independent review of all quarterly reports, annual audited financial statements, External Auditors’
audit plan, report, internal control issues and procedures. The Audit Committee meets with the
External Auditors without the presence of the Executive Board and Senior Management at least twice
a year. During the year, two meetings have been conducted without the presence of the management.
Representatives from the External Auditors are also invited to attend every Annual General Meeting.
The Group’s internal audit department, reporting to the Audit Committee performs regular reviews
of business processes to assess the effectiveness of internal controls and highlight significant risks
impacting the Group. The Audit Committee conducts annual reviews on the adequacy of the internal
audit department’s scope of work and resources.
The Report of the Audit Committee is set out on pages 93 to 96 of the Annual Report.
5.4 Statement of Directors’ Responsibilities in respect of the Audited Financial Statements
The provisions of the Companies Act, 1965 require the directors to be responsible in preparing the
financial statements for each financial year which gives a true and fair view of the state of affairs of
the Group and the Company at the end of the financial year and of the results and cash flows for
the financial year then ended. In complying with these requirements, the directors are responsible
for ensuring that proper accounting records are maintained and suitable accounting policies are
adopted and applied consistently. In cases whereby judgment and estimates were required, the
directors have ensured that these were made prudently and reasonably.
The Directors also ensured that all applicable accounting standards have been followed and confirmed
that the financial statements have been prepared on a going concern basis.
In addition, the Directors are also responsible for safeguarding the assets of the Company by taking
reasonable steps to prevent and detect fraud and other irregularities.
92
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Audit Committee Report
Members of the Audit Committee
The Audit Committee presently comprises three members who are all independent non-executive directors
as follows:
1. Kua Hwee Sim
2. Tan Sri Dato’ Dr. Yahya bin Awang
3. Hassim bin Baba
Kua Hwee Sim is the Chairperson of the Committee as appointed by the Board.
Attendance of Meetings
The Committee convened four meetings during the financial year ended 31 December 2011 and details of
attendance of each member are as follows:
Audit Committee Members
Date of Meetings
16 Feb
18 May
16 Aug
16 Nov
√
√
√
√
√
√
√
√
√
√
√
√
Kua Hwee Sim
Tan Sri Dato’ Dr. Yahya bin Awang
Hassim bin Baba
√ - attended the meeting
The Managing Director, Divisional Directors, Head of Finance and Head of Internal Audit attended the audit
committee meetings at the invitation of the Committee. The external auditors also attended two of the meetings
where they held private discussion with the Committee without the presence of Management.
SUMMARY OF ACTIVITIES
The Committee carried out the following activities during the financial year in accordance to its terms of
reference:
a. Reviewed the quarterly result announcements prior to the approval of the Board.
b. Reviewed the audited financial statements prior to the approval of the Board.
c. Reviewed the external auditor’s fees, scope of work and audit plan prior to the commencement of audit.
d.Discussed with the external auditors on significant matters arising from their examination of the financial
statements, including compliance with applicable accounting standards.
e. Reviewed the external auditor’s Management Letter and evaluated Management’s response.
f. Reviewed and approved the internal audit plan and the key performance indicators (KPIs) of the internal
audit function for the year.
g. Reviewed and monitor the adequacy of scope, function, competency and resources of the internal audit
function towards the achievement of the internal audit plan and its KPIs.
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Audit Committee Report
h.Deliberated on the key internal audit findings and appraised Management’s response to the observations
and recommendations including following-up on Management’s implementation of the recommendations.
i. Reviewed the related party transactions entered into by the Group.
j. Reviewed the key risks identified in the Enterprise Risk Management report.
k. Reviewed the operation’s report prepared by Management including pertinent matters on taxation, legal
and regulatory compliance.
TERMS OF REFERENCE
Composition
i. The members shall be appointed by the Board from among its numbers and their appointment shall be
concurrent with their tenure on the Board.
ii. The Committee shall comprise not less than three members and all the members must be non-executive
directors with a majority of them being independent directors.
iii.In the event a member retires or ceases to be a member resulting in the number reducing to below three,
the Board shall within three months appoint new members to make up the minimum number of three
members.
iv.At least one member of the Committee must be a member of the Malaysian Institute of Accountants or must
have the necessary experience and recognised qualifications or such other requirements as prescribed or
approved by Bursa Malaysia Securities Berhad.
v.No alternate director shall be appointed as an Audit Committee member.
Chairperson
The Chairperson shall be an independent non-executive director appointed by the Board.
Secretary
The Company Secretary shall act as the Secretary of the Committee.
Review of performance
The term of office and performance of the Committee and each of its members shall be reviewed by the Board
at least once every three years.
Meetings
The Committee shall meet not less than four times a year. Additional meetings may be called at any time at
the discretion of the Chairperson.
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Audit Committee Report
Quorum
The quorum for Audit Committee meetings shall be two members and the majority of the members present
shall be independent non-executive directors.
Attendance
The Head of Finance and Head of Internal Audit would normally attend meetings. Other board members,
senior management and external auditors may attend meetings upon the invitation of the Committee.
Authority
The Committee is empowered by the Board:
i. To have explicit authority to investigate any matter within its terms of reference.
ii. To have full and unrestricted access to all records, information, properties and personnel.
iii. To have direct communication channels with the external and internal auditors.
iv. To be able to obtain independent professional advice and to secure the attendance of outsiders with the
relevant experience and expertise if the Committee considers this necessary.
v. To be able to convene meetings with the external auditors, the internal auditors, or both, excluding the
attendance of other directors and employees, whenever deemed necessary.
Duties and Responsibilities
i. To consider the appointment of the external auditors, their audit fee and any questions of resignation or
dismissal.
ii. To discuss with the external auditors prior to the commencement of audit, the nature and scope of the audit
and ensure co-ordination where more than one audit firm is involved.
iii. To review the quarterly, half-yearly and year-end financial statements prior to the approval of the Board,
focusing on:
•
•
•
•
Compliance with accounting standards and other legal requirements.
Any changes in the accounting policies and practices.
Significant issues arising from the audit.
The going concern assumption.
iv. To discuss problems and reservations arising from the interim and final audits, and any significant matters
the external auditor may wish to discuss (in the absence of Management where necessary).
v. To review the external auditor’s Management Letter and Management’s response.
vi. To do the following with regard to the internal audit function:
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Audit Committee Report
• Review the adequacy of scope, function, competency and resources of the internal audit function and
that it has the necessary authority to carry out its work.
• Review the internal audit programme and the results of audit work and where necessary ensure that
appropriate action is taken on the recommendations of the internal auditors.
• Review the coordination of external audit and internal audit.
• Review any major discoveries of audit investigations and Management’s response.
• Approve the appointment of senior staff members of internal audit function, review performance
appraisals and be informed of resignations and providing the resigning staff an opportunity to submit
his/her reason for resigning.
vii.To review any related party transaction and conflict of interest situation that may arise within the Company
or Group including any transaction, procedure or course of conduct that raises questions of Management’s
integrity.
viii.Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily
resolved resulting in a breach of the Listing Requirements, the Committee shall promptly report such matter
to Bursa Malaysia.
ix. To undertake any other responsibilities as may be agreed by the Committee and the Board.
INTERNAL AUDIT FUNCTION
The internal audit function is undertaken by the Group Internal Audit Department (GIAD). It reports directly to
the Committee and assists the Committee in discharging its duties and responsibilities.
GIAD is adequately staffed by experienced and qualified auditors and it incurred an estimated cost of RM1.8
million during the financial year. GIAD’s scope of work is spelt out in the annual audit plan that is approved
by the Committee. The plan covers all the operating divisions and support functions of the Group including
the foreign operations in Singapore, Brunei and India. GIAD’s performance is measured against the approved
KPIs.
In every audit assignment, GIAD conducted risk assessments, reviewed the adequacy and effectiveness of the
system of internal controls and reviewed the extent of compliance with the Group’s policies and procedures
and regulatory requirements. GIAD also reviewed the key business processes with the objective of improving
the efficiency and effectiveness of the Group’s operations.
During the financial year, GIAD tabled 47 audit reports to the Committee for deliberation and followed-up to
ensure pertinent audit recommendations are implemented by Management.
KUA HWEE SIM
Chairperson
96
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Statement on Internal Control
This Statement on Internal Control has been prepared in compliance with the Listing Requirements of Bursa
Malaysia Securities Berhad (“Bursa Malaysia”) and in accordance with the Guidance for Directors of Public
Listed Companies.
BOARD RESPONSIBILITY
The Board recognises the importance of maintaining a sound system of internal controls and risk management
practices within the Group and affirms its responsibility to review the adequacy and effectiveness of these
systems and processes on a regular basis. The system of internal controls is designed to provide reasonable
assurance on the effectiveness and efficiency of operations, reliability of financial reporting and compliance
with applicable laws and regulations. It is also meant to effectively manage business risks towards the
achievement of objectives so as to enhance the value of shareholders’ investments and to safeguard the
Group’s assets.
However, as in any system of internal control, it is designed to manage rather than eliminate the risk of failure
to achieve business objectives and therefore, it can only provide reasonable and not absolute assurance
against material misstatement or loss.
INTERNAL CONTROL FRAMEWORK
The key components of the Group’s internal control framework are as follows:
Board and Management Committees
The Group has established several committees to assist the Board and Management in discharging their
responsibilities and the objectives of these committees are clearly spelt out in their terms of reference.
The Executive Committee (“Exco”) is established to formulate strategic business plans, directions and
policies for the Group and makes appropriate recommendations for the approval of the Board. The Top
Management Committee (“TMC”) is established to manage all aspects of the Group’s business and to
oversee the implementation of the approved business plans and policies.
Other committees such as Tender Committee, Agreement Committee and Risk Management Committee
are established to ensure that Management abides by approved policies and procedures and best practices
in the evaluation and award of tendered purchases, drafting of legal documentation and implementation of
risk management practices to safeguard the Group’s interests.
Organisation Structure
The Board has established a formal organisation structure for the Group with delineated lines of authority,
responsibility and accountability. It has put in place suitably qualified and experienced management
personnel to head the Group’s diverse operating units into delivering results and their performance are
measured against the Key Performance Indicators that are approved by the Board.
Authority Limits
The Board has established authority limits for approving revenue and capital expenditures for each level of
management and also established cheque signatories for approving payments. Major capital investments,
acquisitions and disposals exceeding a certain threshold must be referred to the Board or relevant committee
for approval.
97
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Statement on Internal Control
Enterprise Risk Management
The Enterprise Risk Management (“ERM”) framework adopted by the Group is a structured and disciplined
approach to align its strategy, processes, people, technology and knowledge in evaluating and managing
business risks. This involves updating of principal risks across all the operating divisions periodically and
timely reporting of these risks to the attention of the Audit Committee and the Board.
At the Group level, Risk Management Committee (“RMC”) is entrusted to deliberate the ERM agendas. It
comprises senior management and is chaired by the Chief Risk Officer (“CRO”) who is also the Executive
Director. RMC functions within the authority of its charter and the risk policy and guidelines approved by
the Board.
RMC is supported by the Risk Management Department. It is responsible for the ongoing development
of the ERM process which includes coordination with the respective risk management units in monitoring
risks, formulating risk treatment plans and conducting risk management trainings and awareness for risk
owners.
During the year, the Group continuously carried out a series of risk assessment exercises via interviews and/
or workshops with senior/line management across the Group to identify priorities, evaluate and rate all key
risks and controls affecting the Group in achieving its business objectives. These risk assessment exercises
also cover foreign operations in Singapore, Brunei and India. The result from these exercises was presented
to the Audit Committee and the Board.
Audit Committee
The Board recognises that the Audit Committee forms an integral part of the Group’s internal control and
risk management framework and in promoting good corporate governance. The Committee performs
an important oversight role in maintaining the integrity of the Group’s system of internal control and risk
management practices. The Committee is assisted by the internal auditors and has access to the external
auditors and the CRO. The activities of the Committee and internal audit function are reported in the Audit
Committee Report on pages 93 to 96.
OTHER KEY ELEMENTS OF INTERNAL CONTROL
Complementing the broad internal control and risk management framework are various control processes
that have been implemented by the Group. Some of the key control processes are as follows:
Budgets
Annual budgets are prepared by each operating division and consolidated by Group Finance Department.
These are thoroughly reviewed before they are tabled to TMC, Exco and the Board for approval.
Performance Monitoring
The Group’s performance is monitored by the Group Finance Department which prepares monthly
management accounts that compares against the approved budget. The monthly management accounts
are reviewed and deliberated by Management in its monthly operation meetings and a copy is extended to
Exco for review.
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Annual Report 2011
Statement on Internal Control
The Board monitors the Group’s performance by reviewing the quarterly results and operations and examines
the announcement made to Bursa Malaysia. These are usually reviewed by the Audit Committee before they
are tabled to the Board.
Human Resource
There are policies and procedures for recruitment, performance appraisals and promotion to ensure that
suitably qualified and competent personnel across all levels of management are hired and retained. The
Group is also dedicated to continuously develop employees with the relevant and appropriate skills by
conducting regular training programmes that are tailored for restaurant excellence as well as corporate and
leadership programmes for the supporting staff.
Procurement
There is a centralised and coordinated procurement function for major purchases of assets and inventory,
project development and maintenance expenditures which enables the Group to leverage on economies of
scale and ensures adherence to authority limits, policies and procedures. Aided by an integrated purchasing,
inventory and accounting system, the Group is capable of keeping track of the accuracy, integrity and
recording of its assets and expenditures. Significant capital and revenue expenditures exceeding a certain
value are subjected to tender procedures and appraised by the Tender Committee before they are approved
by the Board or relevant committee.
Regulatory and Halal Compliance
The Group adheres strictly to health, safety and environmental regulations and complies with halal standards
and is subjected to regular inspections by the relevant authorities. Quality Assurance Department conducts
product safety and quality audits at restaurants and the entire supply chain on an ongoing basis. The Group
has also established a Shariah Advisory and Compliance Department to perform regular halal audits and to
liaise closely with the government agencies on halal related matters.
CONCLUSION
The Board is of the view that the present system of internal control is adequate for the Group to manage its
risks and to achieve its business objectives. The Board is committed in ensuring that the Group continuously
reviews the internal control system so that it is effective in enhancing shareholders’ investments and
safeguarding the Group’s assets.
KAMARUZZAMAN BIN ABU KASSIM
Chairman
99
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
JAMALUDIN BIN MD ALI
Managing Director
Additional Compliance Information
1. NON-AUDIT FEES
The amount of non-audit fees paid and payable to the external auditors and their affiliated company by
the Group for the financial year ended 31 December 2011 is as follows:-
KPMG
KPMG Tax Services Sdn Bhd
Total
RM’000
38
22
60
2. MATERIAL CONTRACTS
Other than those disclosed in the financial statements on pages 198 to 199, there are no material
contract including contracts relating to any loans entered into by the Group and its subsidiaries involving
Directors and major shareholders’ interest.
3. DISCLOSURE OF THE RESTRICTIVE COVENANT CLAUSE IN THE INTERNATIONAL FRANCHISE
AGREEMENTS (“IFA”) GOVERNING KFC FRANCHISE
KFCH group operates KFC restaurants in Malaysia, Singapore and Brunei under the International
Franchise Agreements entered into with the Franchisor. The right to develop KFC restaurants in Malaysia,
Singapore and Brunei is granted to KFCH by the Franchisor under the Development Agreements entered
into with the Franchisor.
Any occurrence of events of default under the International Franchise Agreements may lead to the
termination of the KFC franchise by the Franchisor. The International Franchise Agreements and/or
Development Agreements are also subject to renewal.
The International Franchise Agreements also contain a covenant which requires the consent of the
Franchisor for any direct or indirect acquisition by any third party competitor of QSR and/or KFCH or
any third party holding twenty percent (20%) or more of QSR and/or KFCH, failing which the Franchisor
may terminate the International Franchise Agreements and/or adopt any of the remedies specified in the
International Franchise Agreements. As KFCH is listed on Bursa Securities and the respective shares are
freely traded, any person, whether individually or together with persons acting in concert, could possibly
acquire more than twenty percent (20%) of the voting shares of KFCH without obtaining the consent of
the Franchisor. As such, if the Franchisor does not consent to any such acquisition, the Franchisor may
terminate the International Franchise Agreements or choose not to renew the International Franchise
Agreements upon the expiry. A similar covenant also applies to KFCH Restaurants Private Limited
(formerly known as Mumbai Chicken Private Limited) and Pune Chicken Restaurants Private Limited in
respect of the rights to operate KFC business in Mumbai and Pune, India granted by Yum! Restaurants
(India) Private Limited.
100
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Additional Compliance Information
4. RECURRENT RELATED PARTY TRANSACTIONS OF REVENUE AND/OR TRADING NATURE
(“RRPT”)
The aggregate value of the RRPT conducted pursuant to the shareholders’ mandate during the financial
year under review between the Company and/or its subsidiary companies with related parties are set out
below: -
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
-Ayamas
Food
Corporation
Sdn Bhd
(“Ayamas”)
-KFC
Marketing
Sdn Bhd
(“KFC
Marketing”)
Name of
Related
Parties
•Pizza Hut
Restaurants
Sdn Bhd
(“PHR”)
•Kampuchea
Food
Corporation
Co Ltd
(“Kampuchea”)
•Pizza Hut
Singapore
Pte Ltd (“PH
Singapore”)
•PHD Delivery
Sdn Bhd
(“PHD”)
Nature of
Transactions
Ayamas and
KFC Marketing
sale of prime
cut chicken
and further
processed
products
to PHR,
Kampuchea,
PH Singapore
and PHD
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
PHR is a
wholly owned
subsidiary of
QSR Brands
Bhd (“QSR”).
QSR is the
holding
company of
KFC Holdings
(Malaysia) Bhd
(“KFCH”). Kulim
(Malaysia)
Berhad
(“Kulim”) is
the holding
company of
QSR. Johor
Corporation
(“JCorp”) is
the holding
corporation of
Kulim.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
35,166
Kampuchea is
a subsidiary of
QSR.
PH Singapore
is a wholly
owned
subsidiary of
Multibrand
QSR Holdings
Pte Ltd which
is wholly owned
by QSR.
PHD is a
wholly owned
subsidiary of
PHR.
101
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Interested
Major
Shareholders
QSR/QSR
Ventures Sdn
Bhd (“QSR
Ventures”)
Kulim
JCorp
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
KFC
Manufacturing
Sdn Bhd
(“KFCM”)
Name of
Related
Parties
•PHR
•Kampuchea
•PHD
Nature of
Transactions
KFCM sale
of packaging
materials,
spare parts
and bakery
products
to PHR,
Kampuchea
and PHD
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
PHR is a
wholly owned
subsidiary of
QSR.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
62,466
Kampuchea is
a subsidiary of
QSR.
PHD is a
wholly owned
subsidiary of
PHR.
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
KFC (Peninsular •PHR
Malaysia) Sdn
Bhd (“KFCPM”) •Kampuchea
•PHD
KFCPM sale
of vegetables,
salad and
coleslaw
to PHR,
Kampuchea
and PHD
PHR is a
wholly owned
subsidiary of
QSR.
Kampuchea is
a subsidiary of
QSR.
PHD is a
wholly owned
subsidiary of
PHR.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
937
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Region Food
Industries Sdn
Bhd (“RFISB”)
Name of
Related
Parties
•PH Singapore
•PHR
Nature of
Transactions
RFISB sale
of chilli and
tomato
sauces to PH
Singapore and
PHR
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
PH Singapore
is a wholly
owned
subsidiary of
Multibrand
QSR Holdings
Pte Ltd which
is wholly owned
by QSR.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
1,126
PHR is a
wholly owned
subsidiary of
QSR.
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
-SPM
Restaurants
Sdn Bhd
(“SPM”)
-Kentucky
Fried Chicken
(Malaysia)
Sdn Bhd
(“KFC(M)”)
-KFCPM
Name of
Related
Parties
PHR
Nature of
Transactions
Payment of
monthly rental
by PHR to
SPM, KFC(M)
and KFCPM for
the following
properties:-
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
PHR is a
wholly owned
subsidiary of
QSR.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
1,090
1. KFCPM
- Lot PT
15144, Jalan
Kepong
Batu, 6 ½,
52100 Kuala
Lumpur
(5,617 sq ft)
2. KFCPM – Lot
PT 6878
Jalan 8/27A,
Wangsa
Maju, 53300
Kuala
Lumpur
(5,793 sq ft)
3.SPM – 9
Jalan Taiping,
41400 Klang
(3,300 sq ft)
4.SPM – 1 &
1.1 Jalan
Niaga, Pusat
Perniagaan,
Jalan Mawai
81900 Kota
Tinggi (2,273
sq ft)
5. KFC(M) –
Lot 14083
Jalan Kuchai
Lama,
58200 Kuala
Lumpur
(4,467 sq ft)
Tenancy
Agreements
for the above
properties are
for a period of 3
years.
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KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
-KFCH
Name of
Related
Parties
JKing Sdn Bhd
(“JKing”)
-KFCM
-KFC(M)
Nature of
Transactions
KFCH, KFCM,
KFC(M) and
KFCPM
purchase of
apparels from
JKing
-KFCPM
Nature of
relationship
with KFCH
Group
Relatioship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
JKing is a
subsidiary
of Johor
Franchise
Development
Sdn Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
43
Interested
Major
Shareholder
JCorp
-Ayamas
-KFCPM
-Rasamas
Holdings
Sdn Bhd
(“Rasamas
Holdings”)
-Ayamas
Shoppe Sdn
Bhd (“KAY”)
Rajaudang
Trading
Sdn Bhd
(“Rajaudang”)
Ayamas,
KFCPM,
Rasamas
Holdings and
KAY purchase
of processed
chicken and
rice from
Rajaudang
Rajaudang is
a subsidiary
of Rajaudang
Aquaculture
Sdn Bhd which
in turn is a
subsidiary of
Johor Ventures
Sdn Bhd.
Johor Ventures
Sdn Bhd is a
wholly owned
subsidiary of
Johor Capital
Holdings Sdn
Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
105
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
6,891
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
-RFISB
Rajaudang
-KFCM
-Tepak
Marketing
Sdn Bhd
(“Tepak”)
- KFC
Marketing
- Tepak
Hotel Selesa
JB Sdn Bhd
(“Hotel Selesa
JB”)
Nature of
Transactions
RFISB, KFCM
and Tepak sale
of sauce, Deli
Pai, Sardine
Roll and Zippie
drinks to
Rajaudang
KFC Marketing
and Tepak
sale of chicken
products and
Zippie products
to Hotel Selesa
JB
Nature of
relationship
with KFCH
Group
Relatioship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Rajaudang is
a subsidiary
of Rajaudang
Aquaculture
Sdn Bhd which
in turn is a
subsidiary of
Johor Ventures
Sdn Bhd.
Johor Ventures
Sdn Bhd is a
wholly owned
subsidiary of
Johor Capital
Holdings Sdn
Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
NIL
Hotel Selesa
JB is a
wholly owned
subsidiary of
JCorp Hotels
and Resorts
Sdn Bhd
(formerly known
as Kumpulan
Penambang
(Johor) Sdn
Bhd) which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
Interested
Major
Shareholder
JCorp
106
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
14
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
KFCH
Name of
Related
Parties
Metro Parking
(M) Sdn
Bhd (“Metro
Parking”)
Nature of
Transactions
KFCH’s
payment of
season parking
fees to Metro
Parking at
Wisma KFC.
The parking
facility at
Wisma KFC is
managed by
Metro Parking
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Metro Parking
is a subsidiary
of Sindora
Berhad
(“Sindora”).
Sindora is a
wholly owned
subsidiary of
Kulim.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
138
Interested
Major
Shareholders
Kulim
JCorp
KFCH
Metro Parking
Monthly rental
received by
KFCH from
Metro Parking
for rental of the
parking lots
located at the
basements and
Levels 4 to 8 of
Wisma KFC
Metro Parking
is a subsidiary
of Sindora.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
Interested
Major
Shareholders
Kulim
JCorp
107
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
210
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
KFCH Group
Name of
Related
Parties
Pro Corporate
Management
Services Sdn
Bhd (“Pro
Corporate’)
Nature of
Transactions
KFCH Group’s
payment of
share registrar
and secretarial
services fees to
Pro Corporate
Nature of
relationship
with KFCH
Group
Relationhip
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Pro Corporate
is a wholly
owned
subsidiary of
JCorp Hotels
and Resorts
Sdn Bhd
(formerly known
as Kumpulan
Penambang
(Johor) Sdn
Bhd) which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
541
Interested
Major
Shareholder
JCorp
-KFCH
-Ayamas
-KFCPM
- Rasamas
Holdings
- KFCH
Education
Teraju Fokus
Sdn Bhd
(“Teraju Fokus”)
KFCH, Ayamas,
Rasamas
Holdings,
KFCH
Education
and KFCPM’s
payment to
Teraju Fokus for
the provision
of security
services by
Teraju Fokus
JCorp owned
30% equity
interest in
Teraju Fokus.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
108
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
312
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
KFCH Group
JCorp
Nature of
Transactions
KFCH Group’s
payment to
JCorp for the
transportation,
administrative
and secretarial
services
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
JCorp is
the holding
corporation
of QSR via
its direct
and indirect
shareholdings
(through Kulim).
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
268
Interested
Major
Shareholder
JCorp
-KFCH
-KFCPM
-Rasamas
Holdings
-TMR
Urusharta
(M) Sdn Bhd
(“TMR”)
KFCH, KFCPM
and Rasamas
Holdings’
payment to
TMR for the
provision of
building and
maintenance
services
TMR is a
subsidiary of
Damansara
Assets
Sdn Bhd
(“Damansara
Assets”) which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
109
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
1,246
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
-RFISB
-Ayamas
Name of
Related
Parties
Pro
Communication
Sdn Bhd ( “Pro
Communication”)
Nature of
Transactions
RFISB and
Ayamas
purchase of
signboard
from Pro
Communication
Nature of
relationship
with KFCH
Group
Relationhip
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Pro
Communication
is a subsidiary
of Johor
Franchise
Development
Sdn Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
55
Interested
Major
Shareholder
JCorp
KFCPM
Bistari Young
Entrepreneur
Sdn Bhd
(“Bistari
Young”)
KFCPM
purchase of
Catur Bistari
board games
from Bistari
Young
Bistari Young,
a subsidiary of
Johor Ventures
Sdn Bhd which
in turn is a
wholly owned
subsidiary of
Johor Capital
Holdings
Sdn Bhd.
Johor Capital
Holdings
Sdn Bhd is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
110
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
124
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
KFCH Group
Name of
Related
Parties
Pro Office
Solutions Sdn
Bhd (“Pro
Office”)
Nature of
Transactions
KFCH Group’s
payment to
Pro Office for
the provision
of courier and
mailing room
services
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Pro Office is a
subsidiary of
Sindora.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
1,926
Interested
Major
Shareholders
Kulim
JCorp
-Ayamas
-Tepak
Epasa Shipping
Agency Sdn
Bhd (“EPASA”)
Ayamas’
and Tepak’s
payment to
EPASA for
the provision
of forwarding
services
EPASA is a
subsidiary of
Sindora
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad
bin Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
Interested
Major
Shareholders
Kulim
JCorp
111
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
69
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
-KFC(M)
Tepak
-KFCM
-KAY
Nature of
Transactions
Tepak sale
of tea and
Zippie drinks to
KFC(M), KFCM
and KAY
Nature of
relationship
with KFCH
Group
Relatioship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Tepak is a
subsidiary of
KFCH. Sindora
owns 20%
whilst JCorp
owns 19.99%.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
182
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
KFC Events
Sdn Bhd (“KFC
Events”)
PHR
Payment of
commissions
by PHR to
KFC Events
for the sale of
vouchers
PHR is a
wholly owned
subsidiary of
QSR.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
112
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
786
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
KFCPM
Metro Parking
Nature of
Transactions
KFCPM’s
monthly rental
payment to
Metro Parking
for storage
space located
at Level 1
(Car Park),
Persada Johor
International
Convention
Centre, Jalan
Abdullah
Ibrahim, 80000
Johor Bahru,
Johor (264
sq ft)
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Metro Parking
is a subsidiary
of Sindora.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
6
Interested
Major
Shareholders
Kulim
JCorp
KFC Marketing
Hotel Selesa
Sdn Bhd
(“Hotel Selesa”)
KFC Marketing
sale of chicken
products to
Hotel Selesa
Hotel Selesa is
a wholly owned
subsidiary of
JCorp Hotels
and Resorts
Sdn Bhd
(formerly known
as Kumpulan
Penambang
(Johor) Sdn
Bhd) which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
113
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
20
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
- KFCPM
Tepak
- KFC
Marketing
Tepak
- KFC
Marketing
Nature of
Transactions
Tepak sale
of tea and
packing service
to KFCPM and
KFC Marketing
Nature of
relationship
with KFCH
Group
Relatioship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Tepak is a
subsidiary of
KFCH. Sindora
owns 20%
whilst JCorp
owns 19.99%.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
56
KFC
Marketing’s
payment to
Tepak for
transportation
services
30
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
KFCPM
Puteri Hotels
Sdn Bhd
(“Puteri Hotels”)
Payment of
monthly rental
by KFCPM
to Puteri
Hotels for the
Exhibition Food
& Beverages,
Level 1,
Persada Johor
International
Convention
Centre, Jalan
Abdullah
Ibrahim,
80000 Johor
Bahru, Johor
(2,660.54 sq ft)
Puteri Hotels is
a wholly owned
subsidiary of
JCorp Hotels
and Resorts
Sdn Bhd
(formerly known
as Kumpulan
Penambang
(Johor) Sdn
Bhd) which
in turn is a
wholly owned
subsidiary of
JCorp.
Tenancy
Agreement
for the above
property is for
a period of 3
years.
114
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
138
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
KFC Marketing
Puteri Hotels
Nature of
Transactions
KFC Marketing
sale of chicken
products to
Puteri Hotels
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Puteri Hotels is
a wholly owned
subsidiary of
JCorp Hotels
and Resorts
Sdn Bhd
(formerly known
as Kumpulan
Penambang
(Johor) Sdn
Bhd) which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
97
Interested
Major
Shareholder
JCorp
- KFCH
- KFCPM
- KFC(M)
- Tepak
IPPJ Sdn Bhd
(“IPPJ”)
KFCH, KFCPM,
KFC(M) and
Tepak’s
payment to
IPPJ for the
provision of
seminars and
trainings
IPPJ is a
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
115
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
120
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
Rasamas
Holdings
- Damansara
Assets
- TPM
Management
Sdn Bhd
(“TPM”)
Nature of
Transactions
Payment of
monthly rental
by Rasamas
Holdings to
Damansara
Assets and
TPM for the
following
properties:1.Damansara
Assets L2-35A,
Aras Lereng
Bukit, Plaza
Kotaraya,
Jalan Trus,
80000 Johor
Bahru,
Johor (784
sq ft)
2. TPM - Lot
5B-03(A),
Ground
Floor,
Terminal
Larkin
Sentral,
81100 Johor
Bahru,
Johor (1,660
sq ft)
Nature of
relationship
with KFCH
Group
Relatioship
of KFCH
Group with
related parties
-Damansara
Assets is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
-TPM is
a related
company to
JCorp. JCorp
owned 0.61%
through its
subsidiary.
Tenancy
Agreements
for the above
properties are
for a period of
3 years.
116
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Aggregate
Value of
Transaction
RM’000
43
Interested
Major
Shareholder
JCorp
80
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
-RFISB
Tepak
-KFCM
Nature of
Transactions
Tepak sale of
lemon grass to
RFISB. Tepak’s
provision
of packing
services
of KFC’s
condiment to
KFCM.
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Tepak is a
subsidiary of
KFCH. Sindora
owns 20%
whilst JCorp
owns 19.99%.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
NIL
Interested
Major
Shareholders
QSR/QSR
Ventures
Kulim
JCorp
KFC Marketing
Tanjung Tuan
Hotel Sdn Bhd
(“Tanjung Tuan
Hotel”)
KFC Marketing
sale of chicken
products to
Tanjung Tuan
Hotel.
Tanjung Tuan
Hotel is a
wholly owned
subsidiary of
JCorp Hotels
and Resorts
Sdn Bhd
(formerly known
as Kumpulan
Penambang
(Johor) Sdn
Bhd) which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
117
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
8
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
KAY
Rajaudang
Rasamas
Holdings
IPPJ
Nature of
Transactions
KAY sale
of chicken
products to
Rajaudang.
Rasamas
Holdings sale
of its variant
chicken
products to
IPPJ
Nature of
relationship
with KFCH
Group
Relationhip
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Rajaudang is
a subsidiary
of Rajaudang
Aquaculture
Sdn Bhd which
in turn is a
subsidiary of
Johor Ventures
Sdn Bhd.
Johor Ventures
Sdn Bhd is a
wholly owned
subsidiary of
Johor Capital
Holdings Sdn
Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
607
IPPJ is a
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
Interested
Major
Shareholder
JCorp
118
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
NIL
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
KFCH
Name of
Related
Parties
Akademi
JCorp Sdn
Bhd (“Akademi
JCorp”)
Nature of
Transactions
KFCH’s
payment to
Akademi
JCorp for the
provision of
training and
seminars
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Akademi JCorp
is a subsidiary
of JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
133
Interested
Major
Shareholder
JCorp
- KFCPM
- KFCM
The Secret of
Secret Garden
Sdn Bhd
(“TSSG”)
KFCPM’s
purchase of
TSSG products
(toiletries) for
souvenirs.
TSSG is a
wholly owned
subsidiary of
Kulim.
KFCM’s
purchase of
TSSG products
as inventory for
re-sale
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
Interested
Major
Shareholders
Kulim
JCorp
119
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
6
115
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Usahawan
Bistari Ayamas
Sdn Bhd
(“Usahawan
Bistari”)
Name of
Related
Parties
Pro
Communication
Nature of
Transactions
Nature of
relationship
with KFCH
Group
Relationhip
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Usahawan
Bistari
purchase of
marketing
materials
(billboards,
signages,
banners,
posters and
etc) from Pro
Communication
Pro
Communication
is a subsidiary
of Johor
Franchise
Development
Sdn Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
18
Interested
Major
Shareholder
JCorp
-KFCPM
-KFCM
-KAY
Rajaudang
KFCPM, KFCM
and KAY
sale of used
cooking oil to
Rajaudang
Rajaudang is
a subsidiary
of Rajaudang
Aquaculture
Sdn Bhd which
in turn is a
subsidiary of
Johor Ventures
Sdn Bhd.
Johor Ventures
Sdn Bhd is a
wholly owned
subsidiary of
Johor Capital
Holdings Sdn
Bhd which
in turn is a
wholly owned
subsidiary of
JCorp.
120
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
Interested
Major
Shareholder
JCorp
1,028
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
KFCH
Education
(M) Sdn Bhd
(formerly known
as Paramount
Holdings (M)
Sdn Bhd)
(“KFC College/
Education”)
Name of
Related
Parties
1. Pro Biz
Solution
Sdn Bhd
(“Pro Biz
Solution”)
2. Pro
Communi cation
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
1. KFCH
Education’s
payment
of monthly
rental of
office space
located at
Lot 1B,
Podium
Menara
Ansar, No
65 Jalan
Trus, 80000
Johor
Bahru,
Johor (395
sq ft) to Pro
Biz Solution
1. Pro Biz
Solution is a
subsidiary of
Damansara
Assets.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
33
2. KFCH
Education’s
payment of
promotion
and
advertising
fees (printed
marketing
materials like
billboards,
signages,
banners
and poster
etc) to Pro
Communi cation
2. Pro
Communi cation is a
subsidiary
JCorp
of Johor
Franchise
Development
Sdn Bhd
which in turn
is a wholly
owned
subsidiary of
JCorp.
Nature of
Transactions
121
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Interested
Major
Shareholders
Kulim
36
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
Name of
Related
Parties
Nature of
relationship
with KFCH
Group
Nature of
Transactions
Relationhip
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
3. Pro Office
3. KFCH
3. Pro Office is
Education’s
a subsidiary
payment to
of Sindora.
Pro Office
for the
provision of
courier and
mailing room
services.
NIL
4.Sovereign
Multimedia
Resources
Sdn Bhd
(“Sovereign”)
4. KFCH
Education’s
payment
of rental
cost of
computers
to Sovereign
4.Sovereign is
a subsidiary
of Johor
Ventures
Sdn Bhd
which in turn
is a wholly
owned
subsidiary
of Johor
Capital
Holdings
Sdn Bhd.
Johor
Capital
Holdings
Sdn Bhd
is a wholly
owned
subsidiary of
JCorp.
133
5. TSSG
5. KFCH
Education’s
purchase of
souvenir and
gifts from
TSSG
5. TSSG is
a wholly
owned
subsidiary of
Kulim
2
122
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
MH Integrated
Berhad (“MH
Int”)
Name of
Related
Parties
Nature of
Transactions
Nature of
relationship
with KFCH
Group
Relationship
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali,
Kua Hwee Sim,
Datin Paduka
Siti Sa’diah
binti Sheikh
Bakir and
Datuk Ismee
bin Ismail
70
1. EPA
Manage ment Sdn
Bhd (“EPA”)
1. MH Int
payment of
management and
administrative
services for
the palm oil
businesses
and palm
oil estate
manage ment to EPA
1. EPA is
a wholly
owned
subsidiary of
Kulim.
2. Extreme
Edge
Sdn Bhd
(“Extreme
Edge”)
2. MH Int
purchase of
computer
equipments
from
Extreme
Edge. MH
Int payment
for the
computer
services
provided
by Extreme
Edge
2. Extreme
Edge is
a wholly
owned
subsidiary of
EPA.
3. Edaran
Badang
Sdn Bhd
(“Edaran”)
3. MH Int
purchase of
hardwares,
spare parts
for motor
vehicles and
furniture
from Edaran
3. Edaran is a
subsidiary of
EPA.
109
4. Kulim
Nursery Sdn
Bhd (“Kulim
Nursery”)
4. MH Int
purchase
of oil palm
seedling and
bio compost
from Kulim
Nursery
4. Kulim
Nursery is a
subsidiary of
Kulim.
12
NIL
Interested
Major
Shareholders
Kulim
JCorp
123
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Additional Compliance Information
KFCH or
subsidiary
of KFCH
involved in the
Recurrent RPT
SPM
Name of
Related
Parties
Damansara
Assets
Nature of
Transactions
Payment of
monthly rental
by SPM to
Damansara
Assets for the
4 storey office
building located
at HS(D)
484887 PTD
156353, Mukim
Tebrau, District
of Johor Bahru,
Johor (approx
87,178 sq ft)
for the college
Nature of
relationship
with KFCH
Group
Relationhip
of KFCH
Group with
related parties
Aggregate
Value of
Transaction
RM’000
Damansara
Assets is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
1,918
Tenancy
Agreement
for the above
property is for
a period of 3
years.
Tepak
Bistari Young
Payment
to Tepak
for packing
services
Interested
Major
Shareholder
JCorp
Bistari Young,
a subsidiary of
Johor Ventures
Sdn Bhd which
in turn is a
wholly owned
subsidiary of
Johor Capital
Holdings
Sdn Bhd.
Johor Capital
Holdings
Sdn Bhd is a
wholly owned
subsidiary of
JCorp.
Interested
Directors
Kamaruzzaman
bin Abu
Kassim,
Ahamad bin
Mohamad,
Jamaludin bin
Md Ali, Datin
Paduka Siti
Sa’diah binti
Sheikh Bakir
and Datuk
Ismee bin
Ismail
19
Interested
Major
Shareholder
JCorp
Total
124
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
118,427
Additional Compliance Information
5. SHARE BUY-BACK
During the financial year ended 31 December 2011, the Company bought back a total of 2,078,000 of
its own shares for a total consideration of RM7,933,666.94. These shares are presently held as treasury
shares. None of the shares purchased has been resold or cancelled during the financial year.
Details of the shares purchased during the year are as follows:
Lowest
purchase
Date of No of shares
price
purchase
purchased (RM)
3 May 2011
128,200
3.68
4 May 2011
130,000
3.66
5 May 2011
40,000
3.69
6 May 2011
116,400
3.69
9 May 2011
57,800
3.70
10 May 2011
178,400
3.74
11 May 2011
77,400
3.72
12 May 2011
51,800
3.73
13 May 2011
22,000
3.84
18 July 2011
220,000
3.84
19 July 2011
175,000
3.83
20 July 2011
105,000
3.87
26 July 2011
186,000
3.88
27 July 2011
67,300
3.93
28 July 2011
14,500
3.93
29 July 2011
40,000
3.94
1 August 2011
73,000
3.95
2 August 2011
79,000
3.95
3 August 2011
40,200
3.87
8 August 2011
205,000
3.60
9 August 2011
10,000
3.48
11 August 2011
16,000
3.69
12 August 2011
10,000
3.78
17 August 2011
25,000
3.90
19 August 2011
10,000
3.83
Total
Highest
purchase
price
(RM)
3.6989
3.7027
3.7010
3.7013
3.7123
3.7201
3.7333
3.7613
3.8429
3.8752
3.8691
3.8933
3.9102
3.9620
3.9521
3.9450
3.9851
3.9684
3.8725
3.6390
3.4800
3.6900
3.7800
3.9196
3.8300
475,963.84
483,139.46
148,677.54
432,453.06
215,479.03
666,055.94
290,110.98
195,673.31
85,161.43
855,557.40
679,526.91
410,345.53
729,897.28
267,722.53
57,724.48
158,478.74
292,072.32
314,738.17
156,344.23
748,656.79
35,054.24
59,471.96
38,076.14
98,705.34
38,580.29
2,078,000
7,933,666.94
125
3.71
3.73
3.72
3.71
3.72
3.70
3.75
3.80
3.85
3.94
3.90
3.90
3.94
3.98
3.97
3.95
3.99
3.98
3.88
3.68
3.48
3.69
3.78
3.94
3.83
Average
purchase
Purchase
price (RM) Consideration (RM)
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Financial Statements
Directors’ Report 127
Statements of Financial Position 131
Statements of Comprehensive Income 132
Consolidated Statement of Changes in Equity 133
Statement of Changes in Equity 135
Statements of Cash Flows 137
Notes to the Financial Statements 139
Statement by Directors 204
Statutory Declaration 204
Independent Auditors’ Report 205
List of Properties Held 207
Analysis of Shareholdings 220
Analysis of Warrant Holdings 223
Form of Proxy
Directors’ Report
for the year ended 31 December 2011
The Directors have pleasure in submitting their report and the audited financial statements of the Group and
of the Company for the year ended 31 December 2011.
Principal Activities
The Company is principally engaged in investment holding whilst the principal activities of the subsidiaries
are as stated in Note 6 to the financial statements. There has been no significant change in the nature of
these activities during the financial year.
Results
GroupCompany
RM’000RM’000
Profit attributable to:
Owners of the Company
Non-controlling interests
144,005
2,566
95,621
-
146,571
95,621
Reserves And Provisions
There were no material transfers to or from reserves and provisions during the year under review except as
disclosed in the financial statements.
Dividends
Since the end of the previous financial year, the Company paid:
i)
a second interim dividend of 5.5 sen per ordinary share less tax at 25% on 31 March 2011, totalling
RM32,722,000 (4.1 sen net per ordinary share) in respect of the year ended 31 December 2010; and
ii)
an interim dividend of 3.0 sen per ordinary share less tax at 25% on 7 October 2011, totalling
RM17,802,000 (2.3 sen net per ordinary share) in respect of the year ended 31 December 2011.
The Directors do not propose any final dividend for the year ended 31 December 2011.
Directors of the Company
Directors who served since the date of the last report are:
Kamaruzzaman bin Abu Kassim
Ahamad bin Mohamad
YAM Tengku Sulaiman Shah Alhaj ibni Almarhum
Sultan Salahuddin Abdul Aziz Shah Alhaj
Jamaludin bin Md Ali
Kua Hwee Sim
Datin Paduka Siti Sa’diah binti Sh Bakir
Tan Sri Dato’ Dr Yahya bin Awang
Datuk Ismee bin Ismail
Hassim bin Baba
(Chairman)
(Deputy Chairman)
(Appointed on 1 June 2011)
(Managing Director/Chief Executive Officer)
127
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Directors’Report
for the year ended 31 December 2011
Directors’ interests
The interests in the shares and warrants of the Company and of its related corporations (other than whollyowned subsidiaries) of those who were Directors at year end (including the interests of the spouses or
children of the Directors who themselves are not Directors of the Company) as recorded in the Register of
Directors’ Shareholdings are as follows:
Number of ordinary shares of RM0.50 each
AtAt
1.1.2011AcquiredDisposed 31.12.2011
Direct interest
Company
Ahamad bin Mohamad
Hassim bin Baba
172,000
400
-
-
(172,000)
-
400
Number of ordinary shares of RM1.00 each
AtAt
1.1.2011AcquiredDisposed 31.12.2011
Immediate holding company
QSR Brands Bhd
Datin Paduka Siti Sa’diah binti Sh Bakir
Hassim bin Baba
1,000
32
-
-
-
-
1,000
32
Number of ordinary shares of RM0.25 each
AtAt
1.1.2011AcquiredDisposed 31.12.2011
Intermediate holding company
Kulim (Malaysia) Berhad
Ahamad bin Mohamad
Datin Paduka Siti Sa’diah binti Sh Bakir
229,600
69,500
733,800
208,500
-
-
963,400
278,000
Number of warrants
AtAt
1.1.2011AcquiredDisposed 31.12.2011
Company
Hassim bin Baba
16
-
-
16
Immediate holding company
QSR Brands Bhd
Hassim bin Baba
32
-
-
32
-
-
114,800
34,750
(114,800)
-
34,750
Intermediate holding company
Kulim (Malaysia) Berhad
Ahamad bin Mohamad
Datin Paduka Siti Sa’diah binti Sh Bakir
None of the other Directors holding office at 31 December 2011 had any interest in the ordinary shares and
warrants of the Company and of its related corporations during the financial year.
128
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Directors’Report
for the year ended 31 December 2011
Directors’ benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled
to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or
due and receivable by Directors as shown in the financial statements) by reason of a contract made by the
Company or a related corporation with the 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.
There were no arrangements during and at the end of the financial year which had the object of enabling
Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the
Company or any other body corporate.
Issue of shares
During the financial year, the Company increased its issued and paid-up share capital from 793,230,984 to
793,266,104 ordinary shares of RM0.50 each by the issuance of 35,120 new ordinary shares of RM0.50
each upon the conversion of 35,120 warrants at the exercise price of RM3.00 per new ordinary share.
There were no other changes in the authorised, issued and paid-up share capital of the Company during
the financial year.
Treasury shares
During the financial year, the Company repurchased 2,078,000 of its issued ordinary shares from the
open market at an average price of RM3.82 per share. The total consideration paid for the repurchase
including transaction costs was RM7,933,667. The shares repurchased are being held as treasury shares in
accordance with Section 67A of the Companies Act, 1965.
As at 31 December 2011, the Company held as treasury shares a total of 2,078,000 of its 793,266,104
issued ordinary shares. Such treasury shares are held at a carrying amount of RM7,933,667 and further
details are disclosed in Note 11 to the financial statements.
Warrants
The main features of the warrants are disclosed in Note 11 to the financial statements.
Options granted over unissued shares
No options were granted to any person to take up unissued shares of the Company during the year.
Other statutory information
Before the statements of financial position and statements of comprehensive income of the Group and of
the Company were made out, the Directors took reasonable steps to ascertain that:
i)
all known bad debts have been written off and adequate provision made for doubtful debts, and
ii)
any current assets which were unlikely to be realised in the ordinary course of business have been
written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
i)
that would render the amount written off for bad debts, or the amount of the provision for doubtful debt,
in the Group and in the Company inadequate to any substantial extent, or
129
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Directors’Report
for the year ended 31 December 2011
Other statutory information (cont’d)
ii)
that would render the value attributed to the current assets in the financial statements of the Group and
of the Company misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of
the Group and of the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated
in the financial statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
i)
any charge on the assets of the Group or of the Company that has arisen since the end of the financial
year and which secures the liabilities of any other person, or
ii)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the
financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely
to become enforceable within the period of twelve months after the end of the financial year which, in the
opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet
their obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial
year ended 31 December 2011 have not been substantially affected by any item, transaction or event of a
material and unusual nature nor has any such item, transaction or event occurred in the interval between the
end of that financial year and the date of this report.
Significant events
Details of the significant events are disclosed in Note 31 to the financial statements.
Auditors
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Kamaruzzaman bin Abu Kassim
Chairman
Jamaludin bin Md Ali
Managing Director/Chief Executive Officer
Kuala Lumpur
Date: 7 March 2012
130
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Statements of Financial Position
as at 31 December 2011
GroupCompany
2011
2010
2011
2010
NoteRM’000RM’000RM’000RM’000
Assets
Property, plant and equipment
Intangible assets
Investment properties
Investments in subsidiaries
Other investments
3
4
5
6
7
1,228,459
74,034
910
-
24,282
999,984
73,596
910
-
22,400
24,687 -
-
513,260
24,282
24,106
395,072
22,400
Total non-current assets
1,327,685
1,096,890
562,229
441,578
8
9
10
234,322
173,270
102,949
200,797
153,633
131,712
-
171,713
1,812
170,362
3,975
Total current assets
510,541
486,142
173,525
174,337
Total assets
1,838,226
1,583,032
735,754
615,915
11
11
11
396,633
101,562
576,020
396,615
111,406
482,226
396,633
3,892
222,370
396,615
11,309
177,099
Total equity attributable to
owners of the Company
1,074,215
990,247
622,895
585,023
Non-controlling interests
17,265
15,025
-
-
Total equity
1,091,480
1,005,272
622,895
585,023
12
13
14
188,504
74,022
2,700
105,845
51,795
2,913
46,400
1,255
-
779
-
Total non-current liabilities
265,226
160,553
47,655
779
Trade and other payables
15
Current tax liabilities
Loans and borrowings
12
Employee benefits
14
400,848
14,626
65,745
301
357,164
12,697
46,702
644
62,204
-
3,000
-
10,113
20,000
-
Total current liabilities
481,520
417,207
65,204
30,113
Total liabilities
746,746
577,760
112,859
30,892
Total equity and liabilities
1,838,226
1,583,032
735,754
615,915
Inventories
Trade and other receivables
Cash and cash equivalents
Equity
Share capital
Reserves
Retained earnings
Liabilities
Loans and borrowings
Deferred tax liabilities
Employee benefits
The notes on pages 139 to 202 are an integral part of these financial statements.
131
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Statements of Comprehensive Income
for the year ended 31 December 2011
GroupCompany
2011
2010
2011
2010
NoteRM’000RM’000RM’000RM’000
Revenue
16
2,798,780
2,522,358
115,867
51,337
Cost of sales (1,310,546) (1,167,928)
-
Gross profit
Other income
Administrative expenses
Selling and marketing expenses
Other expenses
1,488,234
26,613
(145,736)
(1,140,157)
(6,759)
1,354,430
24,905
(127,365)
(1,017,561)
(8,212)
115,867
33,213
(33,830)
-
(382)
51,337
40,644
(38,569)
-
Results from operating activities
Finance costs
17
222,195
(6,702)
226,197
(4,364)
114,868
(969)
53,412
(994)
18
20
215,493
(68,922)
221,833
(62,131)
113,899
(18,278)
52,418
(10,389)
Profit for the year
146,571
159,702
95,621
42,029
(2,529)
599
(947)
1,521
- 599
1,521
89,843
- 2,252
Profit before tax
Income tax expense
Other comprehensive (expense)/income,
net of tax
Foreign currency translation differences
for foreign operations
Fair value of available-for-sale financial assets
Net surplus arising from revaluation
of properties
Total other comprehensive (expense)/
income for the year
- (1,930)
90,417
599
3,773
Total comprehensive income for the year
Profit attributable to:
Owners of the Company
Non-controlling interests
144,641
250,119
96,220
45,802
144,005
2,566
156,848
2,854
95,621
- 42,029
-
Profit for the year
146,571
159,702
95,621
42,029
Total comprehensive income
attributable to:
Owners of the Company
Non-controlling interests
142,075
2,566
247,265
2,854
96,220
-
45,802
-
Total comprehensive income for the year
144,641
250,119
96,220
45,802
21
18.18
19.78
Diluted earnings per ordinary share (sen) 21
18.05
19.64
Basic earnings per ordinary share (sen)
The notes on pages 139 to 202 are an integral part of these financial statements.
132
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
- - - - - - - Total other comprehensive income/
(expense) for the year
Profit for the year
Total comprehensive income
for the year
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
133
(18,373)
363
198,340
396,615
Total contribution from/
(distribution to) owners
At 31 December 2010
-
-
(18,721)
348
- - - -
-
198,274
66
- - - -
-
Deferred tax on revaluation
surplus
13
Transfer from revaluation
reserve
Increase in non-controlling
interests
Issuance of share capital
- bonus issue
11
- conversion of warrants
11
Issuance of warrants
Dividends to shareholders
22
Dividends of subsidiaries
- - - - 18,736
- 198,275
Foreign currency translation differences for foreign operations
Fair value of available-for-sale
financial assets
Net surplus arising from
revaluation of properties
At 1 January 2010
4,107
4,107
-
(17)
4,124
-
-
-
-
-
-
-
-
-
-
-
-
1,521
-
-
-
-
-
-
-
-
-
1,521
1,521
- - 1,521
- -
1,125
- -
-
- -
- -
-
-
(947)
(947)
- - - (947)
2,072
104,290
(10,722)
-
-
-
-
-
-
(214)
(10,508)
89,843
89,843
- 89,843
- - 25,169
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
482,226
(222,127)
(179,553)
-
(4,124)
(38,664)
- - 214
-
156,848
- 156,848
- - - 547,505
990,247
(48,775)
-
397
-
(38,664)
- - - (10,508)
247,265
90,417
156,848
89,843
1,521
(947)
791,757
1,521
(947)
96
-
15,025 1,005,272
(320) (49,095)
-
-
397
-
- (38,664)
(416)
(416)
96
- - (10,508)
2,854 250,119
- 90,417
2,854 159,702
- 89,843
- - 12,491 804,248
Attributable to owners of the Company
Non-distributable
Distributable
NonShareShare WarrantsFair valueTranslationRevaluationTreasuryRetained controllingTotal
capital
premium
reserve
reserve
reserve
reserve
shares
earningsTotal
interests equity
GroupNoteRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Consolidated Statement of Changes in Equity
for the year ended 31 December 2011
- Total comprehensive income
for the year
-
- KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
134
18 Total contribution from/
(distribution to) owners
396,633
92
-
-
-
18
- - - At 31 December 2011
-
- 455
92
-
-
- - Transfer from revaluation
reserve
Reversal of deferred tax
13
Increase in non-controlling
interests
Issuance of share capital
- conversion of warrants
11
Treasury shares acquired
Dividends to shareholders
22
Dividends of subsidiaries
-
-
-
-
363
- - - 396,615
Foreign currency translation
differences for foreign operations
Fair value of available-for-sale
financial assets
Total other comprehensive income/
(expense) for the year
Profit for the year
At 1 January 2011
4,102
(5)
(5)
- - - - - - - - - - - 4,107
2,120
- -
- - - 599
599
-
599
- 1,521
(1,404)
- -
- - - (2,529)
(2,529)
- - (2,529)
1,125
104,222
(68)
-
- (313)
245
- - - - - 104,290
(7,933)
(7,933)
- (7,933)
- - - - - - - - - - - 576,020
(50,211)
- - (50,524)
- - 313
- 144,005
- 144,005
- - 482,226
1,074,215
(58,107)
105
(7,933)
(50,524)
-
- - 245 142,075
(1,930)
144,005
599
(2,529)
990,247
599
(2,529)
619
245
144,641
(58,433)
17,265 1,091,480
(326)
- 105
- (7,933)
- (50,524)
(945)
(945)
619
- - 2,566
- (1,930)
2,566 146,571
- - 15,025 1,005,272
Attributable to owners of the Company
Non-distributable
Distributable
NonShareShare WarrantsFair valueTranslationRevaluationTreasuryRetainedcontrollingTotal
capital
premium
reserve
reserve
reserve
reserve
shares
earningsTotal interests
equity
GroupNoteRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Consolidated Statement of Changes in Equity
for the year ended 31 December 2011
(18,721)
348
- - (18,373)
348
198,274
66
- - 198,340
396,615
Deferred tax on revaluation surplus
13
Transfer from revaluation reserve
Issuance of share capital
- bonus issue
11
- conversion of warrants
11
Issuance of warrants
Dividends to shareholders
22
Total contribution from/(distribution to) owners
At 31 December 2010
- - - - Total comprehensive income for the year
- - - - - - Total other comprehensive income for the year
Profit for the year
- - 18,721
- - 198,275
Fair value of available-for-sale financial assets
Net surplus arising from revaluation of properties
At 1 January 2010
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
135
4,107
4,107
- (17)
4,124
- - - - - - - - - 1,521
- -
- - 1,521
1,521
- 1,521
- - 5,333
(271)
-
(76)
(195)
2,252
2,252
- - 2,252
3,352
-
-
-
-
-
-
-
-
-
-
-
-
-
-
177,099
(222,146)
(179,553)
- (4,124)
(38,664)
- 195
42,029
- 42,029
- - 357,216
585,023
(38,343)
397
(38,664)
(76)
-
45,802
3,773
42,029
1,521
2,252
577,564
Non-distributable
Distributable
ShareShare
WarrantsFair valueRevaluationTreasuryRetainedTotal
capital
premium
reserve
reserve
reserve
shares
earnings
equity
CompanyNoteRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Statement of Changes in Equity
for the year ended 31 December 2011
- 92
- - 92
440
- - - 18
- - 18
396,633
Total comprehensive income for the year
Transfer from revaluation reserve
Reversal of deferred tax
13 Issuance of share capital
- conversion of warrants
11
Treasury shares acquired
Dividends to shareholders
22
Total contribution from/(distribution to) owners
At 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
136
4,102
(5)
(5)
- - - - - - - 4,107
2,120
- - - - - - 599
599
- 1,521
The notes on pages 139 to 202 are an integral part of these financial statements.
- - - - 348
- - 396,615
Fair value of available-for-sale financial assets
Profit for the year
At 1 January 2011
5,163
(170)
- - - (174)
4
- - - 5,333
(7,933)
(7,933)
-
(7,933)
-
-
-
-
-
-
-
222,370
(50,350)
- - (50,524)
174
- 95,621
- 95,621
177,099
622,895
(58,348)
105
(7,933)
(50,524)
4
96,220
599
95,621
585,023
Non-distributable
Distributable
ShareShare
WarrantsFair valueRevaluationTreasuryRetainedTotal
capital
premium
reserve
reserve
reserve
shares
earnings
equity
CompanyNoteRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Statement of Changes in Equity
for the year ended 31 December 2011
Statements of Cash Flows
for the year ended 31 December 2011
GroupCompany
2011
2010
2011
2010
NoteRM’000RM’000RM’000RM’000
Cash flows from operating activities
Profit before tax
Adjustments for:
Amortisation of franchise fees
4
Depreciation of property, plant and
equipment
3
Finance costs
17
Loss/(Gain) on disposal of property,
plant and equipment
Dividend income from subsidiaries
Interest income
Impairment loss on:
Goodwill on consolidation
Property, plant and equipment
Reversal on impairment loss of property,
plant and equipment
Operating profit/(loss) before changes in
working capital
Changes in working capital:
Inventories
Trade and other payables
Employee benefits
Trade and other receivables
Subsidiaries
Related companies
215,493
221,833
5,061
6,736
103,350
6,702
86,590
4,364
5,008
- (441)
3,920
- (402)
113,899
- 52,418
-
1,890
969
1,536
994
382
(114,115)
(6,380)
(118)
(50,938)
(5,997)
- - 17
10,913
- - -
- (17,651)
- -
335,173
(32,764)
42,480
(556)
(12,098)
- (5,980)
316,320
(28,349)
35,380
57
(12,953)
- 8,401
(3,355)
(2,105)
- (3,898)
- (1,195)
(10,689)
(32)
1,902
1,051
75,142
-
Cash generated from/(used in) operations
Interest paid
Taxes paid
326,255
(6,702)
(45,990)
318,856
(4,364)
(49,979)
(19,169)
(969)
(1,557)
75,990
(994)
(473)
Net cash generated from/(used in)
operating activities
273,563
264,513
(21,695)
74,523
(338,706)
(220,085)
(4,337)
(1,885)
2,307
(1,283)
2,390
(20,879)
1,238
(1,283)
960
(20,879)
- (50,429) - 6,380
96,915
(14,000)
(25,522)
5,997
42,683
48,484
(12,646)
Cash flows from investing activities
Purchase of property, plant and
equipment
3
Proceeds from disposal of property,
plant and equipment
Purchase of other investments
Acquisition of subsidiaries, net of cash
acquired
30
Additional investment in subsidiaries
Franchise fees
4
Interest received
Dividends received from subsidiaries
Net cash (used in)/generated from
investing activities
136
- (4,681)
441
- (341,786)
137
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
(9,513)
- (5,039)
402
- (252,724)
Statements of Cash Flows
for the year ended 31 December 2011
GroupCompany
2011
2010
2011
2010
NoteRM’000RM’000RM’000RM’000
Cash flows from financing activities
Issuance of shares
Purchase of treasury shares
11
Proceeds from bank borrowings
Repayment of bank borrowings
Dividends paid to shareholders of
the Company
22
Dividends paid to non-controlling
interests of subsidiaries
105
(7,933)
150,143
(48,441)
397
- 68,193
(33,105)
105
(7,933)
49,400
(20,000)
397
(20,000)
(50,524)
(38,664)
(50,524)
(38,664)
(945)
(416)
42,405
(3,595)
(28,952)
(58,267)
(25,818)
8,194
(2,163)
3,610
(2,945)
131,712
69
123,449
Net cash generated from/(used in)
financing activities
Net (decrease)/increase in cash and
cash equivalents Effect of exchange rate fluctuation on
cash held
Cash and cash equivalents at 1 January
- - 3,975
-
365
Cash and cash equivalents at
31 December
102,949
131,712
1,812
3,975
Cash and cash equivalents
Cash and cash equivalents included in the statements of cash flows comprise the following statement of
financial position amounts:
GroupCompany
Note
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Deposits placed with licensed banks
Cash and bank balances
10
10
23,446
79,503
52,893
78,819
177
1,635
125
3,850
102,949
131,712
1,812
3,975
The notes on pages 139 to 202 are an integral part of these financial statements.
138
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
KFC Holdings (Malaysia) Bhd is a public limited liability company, incorporated and domiciled in Malaysia
and is listed on the Main Board of Bursa Malaysia Securities Berhad. The addresses of the principal place
of business and registered office of the Company are as follows:
Principal place of business
Level 17 Wisma KFC
No. 17 Jalan Sultan Ismail
50250 Kuala Lumpur
Registered office
Level 11 Menara JCorp
No. 249 Jalan Tun Razak
50400 Kuala Lumpur
The consolidated financial statements of the Company as at and for the year ended 31 December 2011
comprise the Company and its subsidiaries (together referred to as the Group). The financial statements of
the Company as at and for the year ended 31 December 2011 do not include other entities.
The Company is principally engaged in investment holding whilst the principal activities of the subsidiaries
are as stated in Note 6 to the financial statements.
The immediate and intermediate holding companies are QSR Brands Bhd (“QSR”) and Kulim (Malaysia)
Berhad, both are public listed companies listed on the Main Board of Bursa Malaysia Securities Berhad
and the ultimate holding corporation is Johor Corporation, a body corporate established under the Johor
Corporation Enactment Act 1968 (No. 4 of 1968) (as amended by Enactment No. 5 of 1995). All companies
are incorporated in Malaysia.
The financial statements were approved by the Board of Directors on 7 March 2012.
1. Basis of preparation
(a)Statement of compliance
These financial statements of the Group and the Company have been prepared in accordance with
Financial Reporting Standards (FRSs), generally accepted accounting principles and the Companies
Act, 1965 in Malaysia.
The following are accounting standards, amendments and interpretations of the FRS framework
that have been issued by the Malaysian Accounting Standards Board (MASB) but have not been
adopted by the Group and the Company:
FRSs, Interpretations and amendments effective for annual periods beginning on or after
1 July 2011
•
•
IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments
Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement
FRSs, Interpretations and amendments effective for annual periods beginning on or after
1 January 2012
•
•
•
•
FRS 124, Related Party Disclosures (revised)
Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Severe
Hyperinflation and Removal of Fixed Dates for First-time Adopters
Amendments to FRS 7, Financial Instruments: Disclosures – Transfers of Financial Assets
Amendments to FRS 112, Income Taxes – Deferred Tax: Recovery of Underlying Assets
FRSs, Interpretations and amendments effective for annual periods beginning on or after
1 July 2012
•
Amendments to FRS 101, Presentation of Financial Statements – Presentation of Items of
Other Comprehensive Income
139
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
1. Basis of preparation (cont’d)
(a)Statement of compliance (cont’d)
FRSs, Interpretations and amendments effective for annual periods beginning on or after
1 January 2013
•
•
•
•
•
•
•
•
•
FRS 10, Consolidated Financial Statements
FRS 11, Joint Arrangements
FRS 12, Disclosure of Interests in Other Entities
FRS 13, Fair Value Measurement
FRS 119, Employee Benefits (2011)
FRS 127, Separate Financial Statements (2011)
FRS 128, Investments in Associates and Joint Ventures (2011)
IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine
Amendments to FRS 7, Financial Instruments: Disclosures - Mandatory Date of FRS 9
and Transition Disclosures
FRSs, Interpretations and amendments effective for annual periods beginning on or after
1 January 2014
•
Amendments to FRS 132, Financial Instruments: Presentation - Offsetting Financial Assets
and Financial Liabilities
FRSs, Interpretations and amendments effective for annual periods beginning on or after
1 January 2015
•
•
FRS 9, Financial Instruments (2009)
FRS 9, Financial Instruments (2010)
The Group’s and Company’s financial statements for annual period beginning on 1 January 2012
will be prepared in accordance with the Malaysian Financial Reporting Standards (MFRSs) issued
by the MASB and International Financial Reporting Standards (IFRSs). As a result, the Group and
the Company will not be adopting the above FRSs, Interpretations and amendments.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following
assets as explained in their respective accounting policy notes:
•
•
•
Note 2(c) – Financial instruments
Note 2(d) – Property, plant and equipment
Note 2(g) – Investment properties
(c)Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s
functional currency. All financial information is presented in RM and has been rounded to the
nearest thousand, unless otherwise stated.
(d)Use of estimates and judgements
The preparation of financial statements in conformity with FRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods
affected.
140
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
1. Basis of preparation (cont’d)
(d)Use of estimates and judgements (cont’d)
There are no significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have significant effect on the amounts recognised in the financial statements other
than those disclosed in the following notes:
•
•
•
•
•
Note 4 - measurement of recoverable amounts of cash-generating units
Note 5 - valuation of investment properties
Note 13 - recognition of unutilised tax losses and capital allowances
Note 14 - employee benefits
Note 28 - contingent liabilities
2.Significant accounting policies
The accounting policies set out below have been applied consistently to the periods presented in these
financial statements, and have been applied consistently by Group entities, unless otherwise stated.
(a) Basis of consolidation
(i)Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control
exists when the Group has the ability to exercise its power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing control, potential
voting rights that presently are exercisable are taken into account.
Investments in subsidiaries are measured in the Company’s statement of financial position at
cost less impairment losses, unless the investment is held for sale or distribution. The cost of
investments includes transaction costs.
The accounting policies of subsidiaries are changed when necessary to align them with the
policies adopted by the Group.
(ii)Accounting for business combinations
Business combinations are accounted for using the acquisition method from the acquisition
date, which is the date on which control is transferred to the Group.
The Group has changed its accounting policy with respect to accounting for business
combinations.
From 1 January 2011 the Group has applied FRS 3, Business Combinations (revised) in
accounting for business combinations. The change in accounting policy has been applied
prospectively in accordance with the transitional provisions provided by the standard and
does not have impact on earnings per share.
Acquisitions on or after 1 January 2011
For acquisitions on or after 1 January 2011, the Group measures goodwill at the acquisition
date as:
•
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity
interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and
liabilities assumed.
141
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(a) Basis of consolidation (cont’d)
(ii)Accounting for business combinations (cont’d)
Acquisitions on or after 1 January 2011 (cont’d)
When the excess is negative, a bargain purchase gain is recognised immediately in profit or
loss.
The consideration transferred does not include amounts related to the settlement of preexisting relationships. Such amounts are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity
securities, that the Group incurs in connection with a business combination are expensed as
incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If
the contingent consideration is classified as equity, it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in profit or loss.
Acquisitions between 1 January 2006 and 1 January 2011
For acquisitions between 1 January 2006 and 1 January 2011, goodwill represents the excess
of the cost of the acquisition over the Group’s interest in the recognised amount (generally fair
value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the
excess was negative, a bargain purchase gain was recognised immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that
the Group incurred in connection with business combinations were capitalised as part of the
cost of the acquisition.
Acquisitions prior to 1 January 2006
For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of
the acquisition over the Group’s interest in the fair values of the net identifiable assets and
liabilities.
(iii)Accounting for acquisitions of non-controlling interests
The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss
of control as equity transactions between the Group and its non-controlling interest holders.
Any difference between the Group’s share of net assets before and after the change, and any
consideration received or paid, is adjusted to or against Group reserves.
(iv)Non-controlling interests
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary
not attributable directly or indirectly to the equity holders of the Company, are presented in the
consolidated statement of financial position and statement of changes in equity within equity,
separately from equity attributable to the owners of the Company. Non-controlling interests in
the results of the Group is presented in the consolidated statement of comprehensive income
as an allocation of the profit or loss and the comprehensive income for the year between noncontrolling interests and the owners of the Company.
Since the beginning of the reporting period, the Group has applied FRS 127, Consolidated
and Separate Financial Statements (revised) where losses applicable to the non-controlling
interests in a subsidiary are allocated to the non-controlling interests even if doing so causes
the non-controlling interests to have a deficit balance. This change in accounting policy is
applied prospectively in accordance with the transitional provisions of the standard and does
not have impact on earnings per share.
142
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(a) Basis of consolidation (cont’d)
(iv)Non-controlling interests (cont’d)
In the previous financial years, where losses applicable to the non-controlling interests exceed
their interests in the equity of a subsidiary, the excess, and any further losses applicable to
the non-controlling interests, were charged against the Group’s interest except to the extent
that the non-controlling interests had a binding obligation to, and was able to, make additional
investment to cover the losses. If the subsidiary subsequently reported profits, the Group’s
interest was allocated with all such profits until the non-controlling interests’ share of losses
previously absorbed by the Group had been recovered.
(v)Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
(b)Foreign currency
(i)Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of
Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting period are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at
the end of the reporting date except for those that are measured at fair value are retranslated to
the functional currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except
for differences arising on the retranslation of available-for-sale equity instruments or a financial
instrument designated as a cash flow hedge of currency risk, which are recognised in other
comprehensive income.
(ii)Operations denominated in functional currencies other than Ringgit Malaysia
The assets and liabilities of operations in functional currencies other than RM, including
goodwill and fair value adjustments, are translated to RM at exchange rates at the end of
the reporting period, except for goodwill and fair value adjustments arising from business
combinations before 1 January 2006 which are reported using the exchange rates at the dates
of the acquisitions. The income and expenses of foreign operations are translated to RM at
exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated
in the foreign currency translation reserve (FCTR) in equity. However, if the operation is a nonwholly-owned subsidiary, then the relevant proportionate share of the translation difference is
allocated to the non-controlling interests. When a foreign operation is disposed off, in part or
in full, the relevant amount in the FCTR is transferred to profit or loss as part of the profit or
loss on disposal.
In the consolidated financial statements, when settlement of a monetary item receivable from
or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign
exchange gains and losses arising from such a monetary item are considered to form part of a
net investment in a foreign operation and are recognised in other comprehensive income, and
are presented in the FCTR in equity.
143
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(c)Financial instruments
(i)Initial recognition and measurement
A financial instrument is recognised in the statements of financial position when, and only when,
the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial
instrument not at fair value through profit or loss, transaction costs that are directly attributable
to the acquisition or issue of the financial instrument.
An embedded derivative is recognised separately from the host contract and accounted for as
a derivative if, and only if, it is not closely related to the economic characteristics and risks of
the host contract and the host contract is not categorised at fair value through profit or loss.
The host contract, in the event an embedded derivative is recognised separately, is accounted
for in accordance with the policy applicable to the nature of the host contract.
(ii)Financial instrument categories and subsequent measurement
The Group and the Company categorise financial instruments as follows:
Financial assets
(a) Held-to-maturity investments
Held-to-maturity investments category comprises debt instruments that are quoted in an
active market and the Group or the Company has the positive intention and ability to hold
them to maturity.
Financial assets categorised as held-to-maturity investments are subsequently measured
at amortised cost using the effective interest method.
(b) Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an
active market, trade and other receivables and cash and cash equivalents.
Financial assets categorised as loans and receivables are subsequently measured at
amortised cost using the effective interest method.
(c) Available-for-sale financial assets
Available-for-sale category comprises investment in equity and debt securities instruments
that are not held for trading.
Investments in equity instruments that do not have a quoted market price in an active
market and whose fair value cannot be reliably measured are measured at cost. Other
financial assets categorised as available-for-sale are subsequently measured at their
fair values with the gain or loss recognised in other comprehensive income, except for
impairment losses, foreign exchange gains and losses arising from monetary items and
gains and losses of hedged items attributable to hedge risks of fair value hedges which
are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised
in other comprehensive income is reclassified from equity into profit or loss. Interest
calculated for a debt instrument using the effective interest method is recognised in profit
or loss.
All financial assets are subject to review for impairment (see Note 2(j)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost.
144
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(c)Financial instruments (cont’d)
(iii)Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the
cash flows from the financial asset expire or the financial asset is transferred to another party
without retaining control or substantially all risks and rewards of the asset. On derecognition of
a financial asset, the difference between the carrying amount and the sum of the consideration
received (including any new asset obtained less any new liability assumed) and any cumulative
gain or loss that had been recognised in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified
in the contract is discharged or cancelled or expires. On derecognition of a financial liability,
the difference between the carrying amount of the financial liability extinguished or transferred
to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
(d) Property, plant and equipment
(i)Recognition and measurement
Items of property, plant and equipment are stated at cost / valuation less any accumulated
depreciation and any accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and
any other costs directly attributable to bring the asset to working condition for its intended
use, and the costs of dismantling and removing the items and restoring the site on which they
are located. For qualifying assets, borrowing costs are capitalised in accordance with the
accounting policy on borrowing costs.
The cost of property, plant and equipment recognised as a result of a business combination is
based on fair value at acquisition date. The fair value of property is the estimated amount for
which a property could be exchanged between a willing buyer and a willing seller in an arm’s
length transaction wherein the parties had each acted knowledgeably, prudently and without
compulsion. The fair value of other items of plant and equipment is based on the quoted
market prices for similar items and replacement cost where appropriate.
Where significant parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of property, plant and
equipment.
The gains and losses on disposal of an item of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of property, plant and
equipment and are recognised net within “other income” or “other expenses” respectively in
profit or loss. When revalued assets are sold, the amounts included in the revaluation surplus
reserve are transferred to retained earnings.
Property, plant and equipment under the revaluation model
Surplus arising from revaluation are dealt with in profit or loss to the extent of a previous
decrease for the same property and the net surplus is then dealt with in the revaluation reserve
account. Any deficit arising is offset against the revaluation reserve to the extent of a previous
increase for the same property. In all other cases, a decrease in carrying amount is recognised
in profit or loss.
The Group revalues its property comprising land and building every five (5) years and at shorter
intervals whenever the fair value of the revalued assets is expected to differ materially from
their carrying value.
145
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(d) Property, plant and equipment (cont’d)
(ii)Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied within
the part will flow to the Group and its cost can be measured reliably. The carrying amount of
the replaced part is derecognised to profit or loss. The costs of the day-to-day servicing of
property, plant and equipment are recognised in profit or loss as incurred.
(iii)Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other
amount substituted for cost, less its residual value.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment. Leased assets are depreciated
over the shorter of the lease term and their useful lives unless it is reasonably certain that the
Group will obtain ownership by the end of the lease term. Freehold land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
•
•
•
•
•
•
Buildings
Leasehold land
Leasehold improvements and renovation
Plant and machinery
Motor vehicles
Restaurant and office equipment
20 - 50 years
45 - 999 years
10 years
10 years
5 years
5 - 10 years
No depreciation is provided for crockery, cutlery and utensils. Subsequent replacements are
written off to profit or loss as and when incurred.
Depreciation methods, useful lives and residual values are reassessed at the end of the
reporting period.
(e)Leased assets
(i)Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. On initial recognition of the leased
asset is measured at an amount equal to the lower of its fair value and the present value of
the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance
expense and the reduction of the outstanding liability. The finance expense is allocated to
each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability. Contingent lease payments are accounted for by revising the
minimum lease payments over the remaining term of the lease when the lease adjustment is
confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and
equipment.
146
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(e)Leased assets (cont’d)
(ii)Operating lease
Leases, where the Group does not assume substantially all the risks and rewards of ownership
are classified as operating leases and, except for property interest held under operating lease,
the leased assets are not recognised on the statement of financial position. Property interest
held under an operating lease, which is held to earn rental income or for capital appreciation
or both, is classified as investment property.
Payments made under operating leases are recognised in profit or loss on a straight-line basis
over the term of the lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed. Lease incentives
received are recognised in profit or loss as an integral part of the total lease expense, over
the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in
which they are incurred.
(f)Intangible assets
(i) Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated
impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill
is included in the carrying amount of the investment and an impairment loss on such an
investment is not allocated to any asset, including goodwill, that forms part of the carrying
amount of the equity-accounted investee.
(ii)Other intangible assets
Intangible assets, other than goodwill, that are acquired by the Group, which have finite
useful lives, are measured at cost less any accumulated amortisation and any accumulated
impairment losses.
(iii)Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognised in profit or loss as incurred.
(iv)Amortisation
Goodwill with indefinite useful lives are not amortised but are tested for impairment annually
and whenever there is an indication that it may be impaired.
The restaurants’ initial and renewal franchise fees are stated at cost and are amortised on a
straight-line basis over ten (10) years.
Amortisation methods, useful lives and residual values are reviewed at the end of each
reporting period and adjusted, if appropriate.
147
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(g)Investment properties
(i)Investment properties carried at fair value
Investment properties are properties which are owned or held under a leasehold interest to
earn rental income or for capital appreciation or for both, but not for sale in the ordinary
course of business, use in the production or supply of goods or services or for administrative
purposes.
Investment properties are measured initially at cost and subsequently at fair value with any
change therein recognised in profit or loss for the period in which they arise. Where the fair
value of the investment property under construction is not reliably determinable, the investment
property under construction is measured at cost until either its fair value becomes reliably
determinable or construction is complete, whichever is earlier.
Cost includes expenditure that is directly attributable to the acquisition of the investment
property. The cost of self-constructed investment property includes the cost of materials and
direct labour, any other costs directly attributable to bringing the investment property to a
working condition for their intended use and capitalised borrowing costs.
An investment property is derecognised on its disposal, or when it is permanently withdrawn
from use and no future economic benefits are expected from its disposal. The difference
between the net disposal proceeds and the carrying amount is recognised in profit or loss in
the period in which the item is derecognised.
(ii) Reclassification to / from investment property
When an item of property, plant and equipment is transferred to investment property following
a change in its use, any difference arising at the date of transfer between the carrying amount
of the item immediately prior to transfer and its fair value is recognised in other comprehensive
income and accumulated in equity as revaluation reserve. However, if a fair value gain
reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal
of an investment property, any surplus previously recorded in equity is transferred to retained
earnings; the transfer is not made through profit or loss.
When the use of a property changes such that it is reclassified as property, plant and
equipment or inventories, its fair value at the date of reclassification becomes its deemed cost
for subsequent accounting.
(iii)Determination of fair value
An external, independent valuation firm, having appropriate recognised professional
qualifications and recent experience in the location and category of property being valued,
values the Group’s investment property portfolio every twelve (12) months.
The fair values are based on market values, being the estimated amount for which a property
could be exchanged on the date of the valuation between a willing buyer and a willing seller in
an arm’s length transaction wherein the parties had each acted knowledgeably, prudently and
without compulsion.
In the absence of current prices in an active market, the valuations are prepared by considering
the aggregate of the estimated cash flows expected to be received from renting out the
property. A yield that reflects the specific risks inherent in the net cash flows then is applied to
the net annual cash flows to arrive at the property valuation.
Valuations reflect the remaining economic life of the property. When rent reviews or lease
renewals are pending with anticipated reversionary increases, it is assumed that all notices
and where appropriate counter-notices have been served validly and within the appropriate
time.
148
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(h)Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is
based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories
and bringing them to their existing location and condition.
In the case of livestocks, cost includes the original cost of bringing the inventories to its present
location and condition.
In the case of finished goods, cost includes an appropriate share of production overheads based
on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and the estimated costs necessary to make the sale.
The fair value of inventories acquired in a business combination is determined based on its
estimated selling price in the ordinary course of business less the estimated costs of completion
and sale, and a reasonable profit margin based on the effort required to complete and sell the
inventories.
(i)Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks. For
the purpose of the cash flow statement, cash and cash equivalents are presented net of bank
overdrafts and pledged deposits.
(j)Impairment
(i)Financial assets
All financial assets (except for investments in subsidiaries) are assessed at each reporting date
whether there is any objective evidence of impairment as a result of one or more events having
an impact on the estimated future cash flows of the asset. Losses expected as a result of
future events, no matter how likely, are not recognised. For an equity instrument, a significant
or prolonged decline in the fair value below its cost is an objective evidence of impairment.
An impairment loss in respect of loans and receivables and held-to-maturity investments is
recognised in profit or loss and is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows discounted at the asset’s original
effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in the profit
or loss and is measured as the difference between the asset’s acquisition cost (net of any
principal repayment and amortisation) and the asset’s current fair value, less any impairment
loss previously recognised. Where a decline in the fair value of an available-for-sale financial
asset has been recognised in the other comprehensive income, the cumulative loss in other
comprehensive income is reclassified from equity and recognised to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised
in profit or loss and is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows discounted at the current market rate of return for
a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument
classified as available for sale is not reversed through profit or loss.
149
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(j)Impairment (cont’d)
(i)Financial assets (cont’d)
If, in a subsequent period, the fair value of a debt instrument increases and the increase
can be objectively related to an event occurring after the impairment loss was recognised in
profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount
does not exceed what the carrying amount would have been had the impairment not been
recognised at the date the impairment is reversed. The amount of the reversal is recognised in
profit or loss.
(ii)Non-financial assets
The carrying amounts of non-financial assets (except for inventories, deferred tax asset and
assets arising from employee benefits) are reviewed at the end of each reporting period to
determine whether there is any indication of impairment. If any such indication exists, then
the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have
indefinite useful lives or that are not yet available for use, the recoverable amount is estimated
each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group
of assets that generates cash inflows from continuing use that are largely independent of
the cash inflows of other assets (known as cash-generating unit). The goodwill acquired in a
business combination, for the purpose of impairment testing, is allocated to a cash-generating
unit or a group of cash-generating units that are expected to benefit from the synergies of the
combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future cash flows 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 or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cashgenerating unit exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect
of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit or the group of cash-generating units and then to reduce
the carrying amount of the other assets in the cash-generating unit (or a group of cashgenerating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment
losses recognised in prior periods are assessed at the end of each reporting period for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable amount since
the last impairment loss was recognised. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Reversals of impairment losses are credited to profit or loss in the financial year in which the
reversals are recognised.
150
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(k)Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not remeasured
subsequently.
(i)Issue expenses
Costs directly attributable to issue of instruments classified as equity are recognised as a
deduction from equity.
(ii)Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid,
including directly attributable costs, is recognised as a deduction from equity. Repurchased
shares that are not subsequently cancelled are classified as treasury shares and are presented
as a deduction from total equity.
Where treasury shares are distributed as share dividends, the cost of the treasury shares is
applied in the reduction of the share premium account or distributable reserves, or both.
Where 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.
(l) Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of
a qualifying asset are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are capitalised as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when
expenditure for the asset is being incurred, borrowing costs are being incurred and activities that
are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of
borrowing costs is suspended or ceases when substantially all the activities necessary to prepare
the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
(m)Employee benefits
(i)Short-term employee benefits
Short term employee benefit obligations in respect of salaries, annual bonuses, paid annual
leave and sick leave are measured on an undiscounted basis and are expensed as the related
service is provided.
A liability is recognised for the amount expected to be paid under short term cash bonus
or profit-sharing plans if the Group has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the obligation can be
estimated reliably.
The Group’s contributions to statutory pension funds are charged to the profit or loss in the
year to which they relate. Once the contributions have been paid, the Group has no further
payment obligations.
151
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(m)Employee benefits (cont’d)
(ii)Defined benefit plans
The Group’s net obligation in respect of defined benefit retirement plans is calculated separately
for each plan by estimating the amount of future benefit that employees have earned in return
for their service in the current and prior periods; that benefit is discounted to determine the
present value. Any unrecognised past service costs and the fair value of any plan assets are
deducted. The discount rate is the yield at the reporting period on seven (7)-year high quality
corporate bonds that have maturity dates approximating the terms of the Group’s obligations
and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed by a qualified actuary conducted every two (2) years with the
last actuarial report dated 13 January 2012 using the projected unit credit method. When the
calculation results in a benefit to the Group, the recognised asset is limited to the net total of
any unrecognised past service costs and the present value of any future refunds from the plan
or reductions in future contributions to the plan.
In order to calculate the present value of economic benefits, consideration is given to any
minimum funding requirements that apply to any plan in the Group. An economic benefit is
available to the Group if it is realisable during the life of the plan, or any settlement of the plan
liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to past
service by employees is recognised in the profit or loss on a straight-line basis over the average
period until the benefits become vested. To the extent that the benefits vest immediately, the
expense is recognised immediately in profit or loss.
The Group recognises all actuarial gains and losses arising from defined benefit plans in
other comprehensive income and all expenses related to defined benefit plans in personnel
expenses in profit or loss.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit
plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises
any resulting change in the fair value of plan assets, change in the present value of defined
benefit obligation and any related actuarial gains and losses and past service cost that had
not previously been recognised.
(n) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot
be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability
of outflow of economic benefits is remote. Possible obligations, whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as
contingent liabilities unless the probability of outflow of economic benefits is remote.
152
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(o)Revenue and other income
Revenue from the sale of goods is measured at fair value of the consideration received or receivable,
net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when
the significant risks and rewards of ownership have been transferred to the buyer, recovery of the
consideration is probable, the associated costs and possible return of goods can be estimated
reliably, and there is no continuing management involvement with the goods.
The following specific recognition criteria must also be met before revenue is recognised.
(i)Sale of restaurant food and beverages
Sales revenue represents retail sales at the Group’s restaurants and is recognised at the point
of sales. The Group recognises sales revenue net of sales tax and service charge.
(ii)Dividend income
Dividend income is recognised in profit or loss when the right to receive payment is
established.
(iii)Interest income
Interest income is recognised as it accrues, using the effective interest method in profit or loss
except for interest income arising from temporary investment of borrowings taken specifically
for the purpose of obtaining a qualifying asset which is accounted for in accordance with the
accounting policy on borrowing costs.
(p)Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are
recognised in profit or loss except to the extent that it relates to a business combination or items
recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted by the end of the reporting period, and any
adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between
the carrying amounts of assets and liabilities in the statement of financial position and their tax
bases. Deferred tax is not recognised for the following temporary differences: the initial recognition
of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured
at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the end of the reporting
period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which the temporary difference can be utilised. Deferred tax assets are reviewed
at the end of each reporting period and are reduced to the extent that it is no longer probable that
the related tax benefit will be realised.
Unutilised reinvestment allowance and investment tax allowance are treated as tax base of assets
and are recognised as a reduction of tax expense as and when they are utilised.
153
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
2.Significant accounting policies (cont’d)
(q)Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company
by the weighted average number of ordinary shares outstanding during the period, adjusted for
own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares, which comprise convertible notes and share options granted to
employees.
(r)Operating segments
An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that relate
to transactions with any of the Group’s other components. An operating segment’s operating
results are reviewed regularly by the chief operating decision maker, which in this case is the Chief
Executive Officer of the Group, to make decisions about resources to be allocated to the segment
and to assess its performance, and for which discrete financial information is available.
154
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
172,759
16,297
- (768)
- 38,619
226,907
26,571
- (692)
- - 252,786
26,571
226,215
252,786
Cost/Valuation
At 1 January 2010
Additions
Acquisition of subsidiaries
Disposals/Write off
Effect of movement in exchange rates
Revaluation surplus
At 31 December 2010/1 January 2011
Additions
Acquisition of subsidiaries
Disposals/Write off
Effect of movement in exchange rates
Reclassification
At 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
155
Representing:
At cost
At valuation
At 31 December 2011
121,957
11,928
110,029
121,957
110,029
11,928
- - - - 78,559
3,357
- - - 28,113
281,881
69,839
212,042
281,881
244,122
34,763
- - (548)
3,544
220,943
2,468
3,227
(1,242)
(104)
18,830
344,845
344,845
-
344,845
277,431
83,827
- (13,977)
1,342
(3,778)
215,154
74,577
178
(10,943)
(1,535)
- 270,439
270,439
- 270,439
215,066
55,583
11
(221)
- - 191,689
24,612
- (1,235)
- - 37,249
37,249
- 37,249
36,897
8,286
- (7,952)
18
- 36,685
3,612
118
(3,440)
(78)
- 539,434
539,434
- 539,434
436,102
117,748
12
(15,432)
770
234
358,583
95,162
2,018
(18,470)
(1,191)
- 1,848,591
1,300,305
548,286
1,848,591
1,546,554
338,706
23
(38,274)
1,582
-
1,274,372
220,085
5,541
(36,098)
(2,908)
85,562
3. Property, Plant and Equipment
Leasehold
improve-
PlantRestaurant
FreeholdLeasehold ments and
and
Motor
and office
land
land
Buildings renovation
machinery
vehicles equipmentTotal
GroupRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Notes to the Financial Statements
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
156
Balance carried forward
56,468
-
56,468
At 31 December 2010:
Accumulated depreciation
Accumulated impairment losses
5,276
4,303
973
61,135
40,756
20,379
59,421
5,164
249
(1,242)
(13)
(2,444)
58,733
-
-
-
-
(2,265)
Depreciation for the year
Acquisition of subsidiaries
Disposals/Write off
Effect of movement in exchange rates
Reversal of impairment loss
10,647
927
-
-
-
(6,298)
36,598
22,823
Depreciation and impairment loss
At 1 January 2010:
Accumulated depreciation
-
3,376
Accumulated impairment losses
58,733
7,271
101,484
101,484
-
89,500
22,894
64
(9,986)
(988)
-
88,224
1,276
122,834
122,834
-
107,986
16,015
-
(1,167)
-
-
107,986
-
25,478
25,478
-
24,895
3,504
100
(2,976)
(45)
-
24,895
-
173,895
173,895
-
149,949
38,086
1,123
(14,417)
(846)
-
148,682
1,267
546,570
468,750
77,820
501,131
86,590
1,536
(29,788)
(1,892)
(11,007)
409,761
91,370
3. Property, Plant and Equipment (cont’d)
Leasehold
improve-
PlantRestaurant
FreeholdLeasehold ments and
and
Motor
and office
land
land
Buildings renovation
machinery
vehicles equipmentTotal
GroupRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Notes to the Financial Statements
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
157
170,439
At 31 December 2010/1 January 2011
At 31 December 2011
196,318
114,026
Carrying amounts
At 1 January 2010
56,468
- 56,468
At 31 December 2011:
Accumulated depreciation
Accumulated impairment losses
56,468
- - - - - Depreciation and impairment loss
Balance brought forward
Depreciation for the year
Acquisition of subsidiaries
Disposals/Write off
Effect of movement in exchange rates
Reclassification
114,734
104,753
67,912 7,223
6,250
973
5,276
1,947
- - - - 215,332
182,987
161,522
66,549
46,170
20,379
61,135
5,371
- - (673)
716
227,020
175,947
125,654
117,825
117,825
- 101,484
28,222
- (12,224)
1,075
(732)
130,416
92,232
83,703
140,023
140,023
- 122,834
17,380
2 (193)
- - 14,837
11,419
11,790
22,412
22,412
- 25,478
3,859
- (6,962)
37
- 329,802
262,207
208,634
209,632
209,632
- 173,895
46,571
3
(11,580)
727
16
1,228,459
999,984
773,241
620,132
542,312
77,820
546,570
103,350
5
(30,959)
1,166
-
3. Property, Plant and Equipment (cont’d)
Leasehold
improve-
PlantRestaurant
FreeholdLeasehold ments and
and
Motor
and office
land
land
Buildings renovation
machinery
vehicles equipmentTotal
GroupRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Notes to the Financial Statements
Notes to the Financial Statements
3. Property, Plant and Equipment (cont’d)
Leasehold
improve-
Freehold ments and
MotorOffice
land Buildings renovation vehicles equipmentTotal
CompanyRM’000RM’000RM’000RM’000RM’000RM’000
Cost/Valuation
At 1 January 2010
Additions
Disposals/Write off
Revaluation surplus
14,647
- (769)
1,938
2,260
- - 314
558
82 -
-
2,870
499
(722)
- 4,639 24,974
1,304
1,885
(55) (1,546)
- 2,252
At 31 December 2010/
1 January 2011
Additions
Disposals/Write off
Transfer to subsidiary
15,816
- (692)
- 2,574
- - - 640
-
-
(82)
2,647
1,125
(1,354)
- 5,888 27,565
3,212
4,337
(75) (2,121)
(219)
(301)
At 31 December 2011
15,124
2,574
558
2,418
8,806
Representing:
At cost
At valuation
- 15,124
- 2,574
558
-
2,418
- 8,806 11,782
- 17,698
At 31 December 2011
15,124
2,574
558
2,418
8,806
29,480
29,480
Depreciation
At 1 January 2010
Depreciation for the year
Disposals/Write off
- - - 212
52
-
185
65
-
1,019
515
(662)
1,211
904
(42)
2,627
1,536
(704)
At 31 December 2010/
1 January 2011
Depreciation for the year
Disposals/Write off
Transfer to subsidiary
-
264
61
-
-
250
60
-
(16)
872
392
(429)
-
2,073
1,377
(72)
(39)
3,459
1,890
(501)
(55)
At 31 December 2011
- 325
294
835
3,339
4,793
Carrying amounts
At 1 January 2010
14,647
2,048
373
1,851
3,428
22,347
At 31 December 2010/
1 January 2011
15,816
2,310
390
1,775
3,815
24,106
At 31 December 2011
15,124
2,249
264
1,583
5,467
24,687
158
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
3. Property, Plant and Equipment (cont’d)
3.1Impairment loss
In 2010, the Group had recognised impairment loss of RM11,377,000 as a result of the valuation
conducted in that year. Impairment loss of RM10,913,000 had been recognised in other expenses,
while the remaining RM464,000 had been recognised in the revaluation reserve.
3.2Security
At 31 December 2011, properties with a carrying amount of RM45,424,000 (2010: RM85,130,000)
were pledged as securities for term loans (Note 12).
3.3 Property, plant and equipment under the revaluation model
The Group’s freehold land, leasehold land and buildings were revalued on 15 December 2010 by
an independent professional qualified valuer using the open market value method. Had the freehold land, leasehold land and buildings been carried under the cost model, their carrying amounts
would have been included in the financial statements of the Group as at 31 December 2011 as
follows:
Net
Accumulated
carrying
Cost depreciation
amount
GroupRM’000RM’000RM’000
At 31 December 2011
Freehold land
Leasehold land
Buildings
158,570
85,365
210,116
- 5,368
56,118
158,570
79,997
153,998
454,051
61,486
392,565
At 31 December 2010
Freehold land
Leasehold land
Buildings
159,184
85,365
210,116
- 3,836
51,466
159,184
81,529
158,650
454,665
55,302
399,363
Company
At 31 December 2011
Freehold land
Buildings
10,287
2,172
- 476
10,287
1,696
12,459
476
11,983
At 31 December 2010
Freehold land
Buildings
10,901
2,172
- 414
10,901
1,758
13,073
414
12,659
159
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
3. Property, Plant and Equipment (cont’d)
3.4Title deeds
The titles of certain properties are either in process of being transferred to the Group and the Company or are pending the issuance of strata titles by the relevant authorities.
3.5Leasehold Land
Included in the carrying amounts of leasehold land at 31 December were:
Group
2011
2010
RM’000RM’000
Leasehold land with unexpired lease period of more than 50 years
Leasehold land with unexpired lease period of less than 50 years
113,741
993
103,507
1,246
114,734
104,753
4.Intangible assets
Goodwill onFranchise
consolidation
feesTotal
GroupRM’000RM’000RM’000
Cost
At 1 January 2010
Additions
Write off
44,965
6,636
-
48,782
5,039
(2,008)
93,747
11,675
(2,008)
At 31 December 2010/1 January 2011
Additions
51,601
818
51,813
4,681
103,414
5,499
At 31 December 2011
52,419
56,494
108,913
Accumulated amortisation
At 1 January 2010
Amortisation for the year
Impairment Loss
Write off
1,566
- 17
- 23,507
6,736
- (2,008)
25,073
6,736
17
(2,008)
At 31 December 2010/1 January 2011
Amortisation for the year
1,583
- 28,235
5,061
29,818
5,061
At 31 December 2011
1,583
33,296
34,879
Carrying amounts
At 1 January 2010
43,399
25,275
68,674
At 31 December 2010/1 January 2011
50,018
23,578
73,596
At 31 December 2011
50,836
23,198
74,034
160
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
4. Intangible assets (cont’d)
Impairment testing for cash-generating units (CGU) containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which
represent the lowest level within the Group at which the goodwill is monitored for internal management
purposes.
The aggregate carrying amounts of goodwill allocated to each unit are as follows:
2011
2010
GroupRM’000RM’000
Restaurants
22,658
22,658
Integrated poultry
21,115
20,297
Ancillary
7,063
7,063
50,836
50,018
The recoverable amounts of the CGUs were determined based on value-in-use calculations using pretax cash flow projections based on financial budgets approved by management covering a ten (10)-year
period. The growth rate used to extrapolate the cash flows beyond the ten (10)-year period was 4%
(2010: 4%). The growth rate does not exceed the average historical growth rate over the long term for
the industry.
Key assumption and value-in-use calculation
Value in use was determined by discounting the future cash flows generated from the continuing use of
the units and was based on the following assumptions:
•
•
•
•
•
•
•
There will be no material changes in the structure and principal activities of the Group.
Raw material price inflation - there will not be any significant increase in the prices and supply of
raw materials, wages and other related costs, resulting from industrial dispute, adverse changes
in the economic conditions or other abnormal factors, which will adversely affect the operations of
the Group.
Statutory income tax rate - the tax rate for Malaysia was 25% and Singapore’s tax rate is 17%.
There will be no material changes in the present legislation or regulations, rates and bases of duties, levies and other taxes affecting the Group’s activities.
Interest rates - the interest rates on the existing financing facilities will prevail.
Foreign exchange rate - the foreign exchange rate will not be substantially and adversely different
from the current rate.
Growth rate used to extrapolate segment beyond the ten (10) year-period is 4% which is in line with
the estimated GDP growth rate of the country.
A pre-tax discount rate of 9.93% was applied in determining the recoverable amount of the unit.
The discount rate was estimated based on the weighted average cost of capital of the Group.
Based on the assessment above, the recoverable amount was determined to be higher than the carrying amount, thus no impairment loss was recognised.
Sensitivity analysis were performed on the cash flow projections based on the following criteria:
i. 40% decrease of the projected sales growth rate of 4%;
ii. 200 basis points increase on pre-tax discount rate of 9.93%; and
iii. 10% decrease in gross profit margin.
Each sensitivity analysis is used on the basis that all other variables remain constant. The result of the
sensitivity analysis does not have an impact on the carrying amount of goodwill on consolidation.
161
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
5.Investment properties
Group
2011
2010
RM’000RM’000
At 1 January
910
898
Change in fair value recognised in profit or loss
-
12
At 31 December
910
910
Included in the above are:
Leasehold land with unexpired lease period of more than 50 years
Buildings
590
320
590
320
910
910
The rental income earned by the Group for the year ended 31 December 2011 from its investment
properties, all of which are leased out under operating leases, amounted to RM70,500 (2010:
RM69,000). There were no direct operating expenses (including repair and maintenance) arising from
the investment properties.
6.Investments in subsidiaries
Company
2011
2010
RM’000RM’000
At cost:
Unquoted shares
- in Malaysia
474,234
433,805
- outside Malaysia
35,322
25,322
509,556
459,127
Less:Accumulated impairment losses
- in Malaysia
(64,055)
(64,055)
Advances receivable
445,501
67,759
395,072
-
513,260
395,072
The advances receivable from Rasamas Holdings Sdn Bhd and Ayamas Shoppe Sdn Bhd are interest
free and are determined to form part of the Company’s net investments in subsidiaries, as repayment
of these amounts are neither fixed nor expected in the near term.
162
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
6.Investments in subsidiaries (cont’d)
Details of the subsidiaries are as follows:
Effective
ownership
Country ofinterest
Name of subsidiaries
incorporation Principal activities
2011
2010
%
%
Held by the Company:
Ayamas Food Corporation
Malaysia
Poultry processing
Sdn Bhd and further processing
plants
Investment holding
Ayamas Integrated Poultry
Malaysia
Breeder and broiler
Industry Sdn Bhd farms
Hatchery
Feedmill
Investment holding
Ayamas Shoppe Sdn Bhd
Malaysia
Poultry retail and
convenience
food store chain
Investment holding
Cilik Bistari Sdn Bhd
Integrated Poultry Industry
Sdn Bhd
100.0
100.0
100.0
100.0
100.0
100.0
Malaysia
Sale of board games
100.0
100.0
Malaysia
Poultry processing plant
100.0
100.0
Malaysia
Restaurants
100.0
100.0
KFC Events Sdn Bhd
Malaysia
Sales of food products
vouchers
100.0
100.0
KFCH Education (M) Sdn Bhd
(formerly known as
Paramount Holdings (M)
Sdn Bhd)
Malaysia
College/learning institute
100.0
100.0
KFCIC Assets Sdn Bhd (formerly known as
Paramount Management
Sdn Bhd)
Malaysia
Property holding 100.0
100.0
KFC India Holdings Sdn Bhd
Malaysia
Investment holding
100.0
100.0
KFC Manufacturing Sdn Bhd
Malaysia
Bakery
Trading in
consumables
Investment holding
100.0
100.0
Kentucky Fried Chicken
(Malaysia) Sendirian
Berhad
163
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
6.Investments in subsidiaries (cont’d)
Details of the subsidiaries are as follows (cont’d):
Effective
ownership
Country ofinterest
Name of subsidiaries
incorporation Principal activities
2011
2010
%
%
Held by the Company (cont’d):
KFC (Peninsular Malaysia)
Malaysia
Restaurants
Sdn Bhd
Commissary
Investment holding
KFC (Sarawak) Sdn Bhd
Malaysia
Restaurants
Rasamas Holdings Sdn Bhd
Malaysia
Restaurants
Region Food Industries Sdn Bhd
Malaysia
Sauce manufacturing
plant
Roaster’s Chicken Sdn Bhd
Malaysia
Investment holding
WP Properties Holdings Sdn Bhd
Malaysia
Investment holding
KFC (Sabah) Sdn Bhd
Malaysia
Restaurants
Tepak Marketing Sdn Bhd
Malaysia
Contract packing
WQSR Holdings (S) Pte Ltd*
Singapore
Investment holding
Asbury’s (Malaysia) Sdn Bhd
Malaysia
Dormant
Bakers’ Street Sdn Bhd
Malaysia
Dormant
Cemerlang Sinergi Sdn Bhd
Malaysia
Dormant
Efinite Revenue Sdn Bhd
Malaysia
Dormant
Gratings Solar Sdn Bhd
Malaysia
Dormant
KFC (East Malaysia) Sdn Bhd
Malaysia
Dormant
KFC Restaurants Holdings
Malaysia
Dormant
Sdn Bhd
Rangeview Sdn Bhd
Malaysia
Dormant
Restoran Keluarga Sdn Bhd
Malaysia
Dormant
Signature Chef Dining Services
Malaysia
Dormant
Sdn Bhd
Signature Chef Foodservice &
Malaysia
Dormant
Catering Sdn Bhd
Hiei Food Industries Sdn Bhd
Malaysia
Dormant
Yayasan Amal Bistari
Malaysia
Dormant
164
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
90.0
90.0
55.0
55.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
81.0
81.0
70.0
70.0
Notes to the Financial Statements
6.Investments in subsidiaries (cont’d)
Details of the subsidiaries are as follows (cont’d):
Effective
ownership
Country ofinterest
Name of subsidiaries
incorporation Principal activities
2011
2010
%
%
Held through subsidiaries:
KFC Marketing Sdn Bhd
Malaysia
Sales and marketing
100.0
100.0
of food products
Ladang Ternakan Putihekar
Malaysia
Breeder farm
100.0
100.0
(N.S.) Sdn Bhd
MH Integrated Farm Berhad
Malaysia
Property holding
100.0
100.0
Pintas Tiara Sdn Bhd
Malaysia
Property holding
100.0
100.0
SPM Restaurants Sdn Bhd
Malaysia
Meals on wheels
100.0
100.0
Property holding
Usahawan Bistari Ayamas
MalaysiaOperation of 100.0
100.0
Sdn Bhd “Sudut Ayamas”
Ayamas Farms & Hatchery
Malaysia
Broiler farm
Sdn Bhd
Ayamazz Sdn Bhd
Malaysia
Push-cart selling food and refreshment
Southern Poultry Farming
Malaysia
Broiler farm
Sdn Bhd
Ventures Poultry Farm
Malaysia
Broiler farm
Sdn Bhd
Rasamas Tebrau Sdn Bhd
Malaysia
Restaurant
Rasamas Taman Universiti
Malaysia
Restaurant
Sdn Bhd
Ayamas Feedmill Sdn Bhd
Malaysia
Broiler farm
Synergy Poultry Farming
Malaysia
Broiler farm
Sdn Bhd
Semangat Juara Sdn Bhd
Malaysia
Broiler farm
Ayamas Shoppe (Sabah) Malaysia
Convenience food store
Sdn Bhd
Kentucky Fried Chicken Singapore
Restaurants
Management Pte Ltd*
Kernel Foods Private Limited*
India
Restaurants
KFCH Restaurants Private Limited India
Restaurants
(formerly known as
Mumbai Chicken
Private Limited)*
165
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
90.0
90.0
90.0
100.0
90.0
-
90.0
-
89.2
89.2
89.1
89.1
85.0
85.0
84.8
-
75.0
75.0
65.0
-
100.0
100.0
100.0
100.0
100.0
100.0
Notes to the Financial Statements
6.Investments in subsidiaries (cont’d)
Details of the subsidiaries are as follows (cont’d):
Effective
ownership
Country ofinterest
Name of subsidiaries
incorporation Principal activities
2011
2010
%
%
Held through subsidiaries (cont’d):
Mauritius Food Corporation Pvt Ltd* Mauritius
Investment holding
100.0
100.0
Pune Chicken Restaurants
India
Private Limited*
KFC (B) Sdn Bhd*
Brunei
Darussalam
Rasamas Sdn Bhd*
Brunei
Darussalam
Agrotech Farm
Malaysia
Solutions Sdn Bhd
Ayamas Contract
Malaysia
Farming Sdn Bhd
Ayamas Franchise Sdn Bhd
Malaysia
Ayamas Marketing (M) Sdn Bhd
Malaysia
Ayamas Selatan Sdn Bhd
Malaysia
Chippendales (M) Sdn Bhd
Malaysia
Rasamas Bangi Sdn Bhd
Malaysia
Rasamas Batu Caves Sdn Bhd
Malaysia
Rasamas Endah Parade Sdn Bhd
Malaysia
Rasamas Larkin Sdn Bhd
Malaysia
Rasamas Mergong Sdn Bhd
Malaysia
Restoran Sabang Sdn Bhd
Malaysia
Seattle’s Best Coffee Sdn Bhd
Malaysia
Restaurants
100.0
100.0
Restaurants
45.9
45.9
Restaurants
45.9
45.9
Dormant
100.0
-
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Dormant
100.0
100.0
Wangsa Progresi Sdn Bhd
Malaysia
Rasamas BC Sdn Bhd Malaysia
Rasamas Bukit Tinggi Malaysia
Sdn Bhd
Dormant
100.0
100.0
Dormant
90.0
90.0
Dormant
90.0
90.0
166
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
6.Investments in subsidiaries (cont’d)
Details of the subsidiaries are as follows (cont’d):
Effective
ownership
Country ofinterest
Name of subsidiaries
incorporation Principal activities
2011
2010
%
%
Held through subsidiaries (cont’d):
Rasamas Butterworth Malaysia
Dormant
Sdn Bhd
Rasamas Kota Bharu Malaysia
Dormant
Sdn Bhd
Rasamas Melaka Sdn Bhd
Malaysia
Dormant
Rasamas Nilai Sdn Bhd Malaysia
Dormant
Rasamas Subang Sdn Bhd Malaysia
Dormant
Rasamas Wangsa Maju Malaysia
Dormant
Sdn Bhd
Rasamas Terminal Larkin
Malaysia
Dormant
Sdn Bhd
Yes Gelato Sdn Bhd
Malaysia
Dormant
Ayamas Food Corporation
Singapore
Dormant
(S) Pte Ltd*
Ayamas Shoppe (S) Pte Ltd*
Singapore
Dormant
Helix Investments Limited
Hong Kong
Dormant
Ayamas Shoppe (Brunei)
Brunei
Dormant
Sendirian Berhad*
Darussalam
90.0
90.0
90.0
90.0
90.0
90.0
90.0
90.0
90.0
90.0
90.0
90.0
89.2
89.2
80.0
80.0
100.0
100.0
100.0
100.0
100.0
100.0
45.9
45.9
* Audited by other member firms of KPMG International
Acquisition of subsidiaries by the Company
(i)
During the year, the Company had acquired a number of subsidiaries pursuant to the re-organisation of its group structure (refer Note 31(i)).
(ii) During the year, the Company had contributed to Yayasan Amal Bistari’s capital contribution of
RM700,000.
(iii) During the year, the Company had subscribed for an additional 9,500,000 ordinary shares of
RM1.00 each in KFCH Education (M) Sdn Bhd (formerly known as Paramount Holdings (M) Sdn
Bhd) at par.
167
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
7. Other investments
Unquoted
Quoted
shares shares in
Total in Malaysia Malaysia
GroupRM’000RM’000RM’000
2011
Non-current
Available-for-sale financial assets
24,282
-
24,282
Held-to-maturity investment
4,500
4,500
Less: Impairment loss
(4,500)
(4,500)
- -
24,282
-
24,282
24,282
-
24,282
Market value of quoted investments
2010
Non-current
Available-for-sale financial assets
Held-to-maturity investments
Less: Impairment loss
24,282
-
24,282
22,400
-
22,400
4,500
(4,500)
-
-
22,400
-
22,400
22,400
-
22,400
22,400
-
22,400
24,282
-
24,282
24,282
-
24,282
24,282
-
24,282
22,400
-
22,400
Representing item:
At fair value
4,500
(4,500)
- Representing item:
At fair value
Market value of quoted investments
Company
2011
Non-current
Available-for-sale financial assets
Representing item:
At fair value
Market value of quoted investments
2010
Non-current
Available-for-sale financial assets
Representing item:
At fair value
22,400
-
22,400
Market value of quoted investments
22,400
-
22,400
168
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
8.Inventories
Group
2011
2010
RM’000RM’000
At cost:
Raw materials
33,209
39,205
Groceries, poultry and consumables
80,267
66,290
Equipment and spare parts
20,262
21,439
Advertising materials
3,748
2,514
Livestock
17,826
13,458
Finished goods
79,010
57,891
234,322
200,797
9.Trade and other receivables
GroupCompany
2011
2010
2011
2010
Note RM’000RM’000RM’000RM’000
Trade
Trade receivables
65,854
46,450
- Non-trade
Amounts due from subsidiaries
9.1
Amounts due from related companies 9.1
Other receivables
9.2
Deposits
9.3
Current tax assets
- 12,558
16,387
67,277
11,194
- 6,578
16,420
74,534
9,651
162,107
32
2,476
5,291
1,807
163,661
1,284
5,288
129
107,416
107,183
171,713
170,362
173,270
153,633
171,713
170,362
9.1Amounts due from subsidiaries and related companies
The non-trade receivables due from subsidiaries and related companies are unsecured, interest
bearing at 4.13% (2010: 3.79%) per annum and repayable on demand.
9.2Other receivables
Included in the other receivables of the Group are lease considerations paid to related companies
amounting to RM1,943,000 (2010: RM2,029,000) which comprised of the lease of a vacant land
at Terminal Larkin Sentral, Johor Bahru for a term of fifteen (15) years expiring on 16 March
2023 (2011: RM801,000; 2010: RM851,000) and the lease of a portion of a single-storey
building erected in Tg. Leman, Johor for a period of thirty (30) years (2011: RM1,142,000;
2010: RM1,178,000), respectively. Both these leased properties are now occupied with KFC
restaurants.
9.3Deposits
Included in the deposits of the Group and of the Company is a deposit paid to a related company
amounting to RM5,228,000 (2010: RM5,228,000) for purchase of a leasehold industrial land at
Bandar Tenggara, Kulai, Johor Darul Takzim.
169
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
10.Cash and cash equivalents
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Deposits placed with licensed banks
Cash and bank balances
11.Share capital and reserves
23,446
79,503
52,893
78,819
177
1,635
125
3,850
102,949
131,712
1,812
3,975
11.1Share capital
Group and Company
NumberNumber
Amount
of sharesAmount of shares
2011
2011
2010
2010
RM’000
’000RM’000
’000
Ordinary shares of RM0.50 each
Authorised
1,000,000
2,000,000
1,000,000 2,000,000
Issued and fully paid
At 1 January
396,615
793,231
198,275
198,275
Issued during the year
- share split
-
-
-
198,275
- bonus issue
-
-
198,274
396,549
- conversion of warrants
18
35
66
132
At 31 December 396,633
793,266
396,615
793,231
The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company.
11.2Reserves
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Non-distributable
Share premium
455
363
440
348
Warrants reserve
4,102
4,107
4,102
4,107
Fair value reserve
2,120
1,521
2,120
1,521
Translation reserve
(1,404)
1,125
- Revaluation reserve
104,222
104,290
5,163
5,333
Treasury shares
(7,933)
- (7,933)
Distributable
Retained earnings
101,562
111,406
3,892
11,309
576,020
482,226
222,370
177,099
677,582
593,632
226,262
188,408
The movement in each category of the reserves are disclosed in the statements of changes in
equity.
170
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
11.Share capital and reserves (cont’d)
11.2Reserves (cont’d)
The nature and purpose of each category of reserves are as follows:
(a) Share premium
This reserve comprises the premium paid on subscription of shares in the Company over
and above the par value of the shares.
(b) Warrants 2010/2015
A total of 31,723,949 new free warrants were issued by the Company in conjunction with
the issuance of bonus shares on 15 September 2010. Each warrant entitles the holder the
right to subscribe for a new ordinary share of RM0.50 each in the Company at an exercise
price of RM3.00 per new ordinary share. As at the year end, the number of outstanding
warrants was 31,556,573 (2010: 31,591,693). The warrants will expire on 14 September
2015.
(c) Fair value reserve
The fair value reserve relates to the fair valuation of financial assets categorised as availablefor-sale until the investments are derecognised or impaired.
(d) Translation reserve
The translation reserve is used to record exchange differences arising from the translation
of the financial statements of foreign operations whose functional currencies are different
from that of the Group’s presentation currency. It is also used to record the exchange
differences arising from monetary items which form part of the Group’s net investment in
foreign operations, regardless of the currency of the monetary items.
(e) Revaluation reserve
The revaluation reserve relates to the revaluation of the Group’s land and buildings.
(f) Treasury shares
This amount relates to the acquisition cost of treasury shares net of the proceeds received
on their subsequent sale or issuance.
The shareholders of the Company, by an ordinary resolution passed in a general meeting
held on 27 April 2011 approved the Company’s resolution to repurchase its own ordinary
shares. The Directors of the Company are committed to enhancing the value of the Company
for its shareholders and believe that the repurchase plan can be applied in the best interests
of the Company and its shareholders.
During the financial year, the Company repurchased 2,078,000 of its issued ordinary shares
from the open market at an average price of RM3.82 per share. The total consideration paid
for the repurchase shares were RM7,933,667 which were financed by internally generated
funds. The shares repurchased are being held as treasury shares in accordance with Section
67A of the Companies Act, 1965.
Of the total 793,266,104 (2010: 793,230,984) issued and fully paid ordinary shares as at 31
December 2011, 2,078,000 (2010: Nil) were held as treasury shares by the Company. As at
31 December 2011, the number of outstanding ordinary shares in issue net of the treasury
shares was therefore 791,188,104 ordinary shares of RM0.50 each.
171
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
11.Share capital and reserves (cont’d)
11.2Reserves (cont’d)
(g) Section 108 tax credit
Subject to agreement by the Inland Revenue Board, the Company has Section 108 tax
credit and tax-exempt income to frank all of its distributable reserves at 31 December 2011
if paid out as taxable dividends.
The Finance Act, 2007 introduced a single tier company income tax system with effect from
1 January 2008. As such, the remaining Section 108 tax credit as at 31 December 2011 will
be available to the Company until such time the credit is fully utilised or upon expiry of the
six-year transitional period on 31 December 2013, whichever is earlier.
12.Loans and borrowings
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Current
Term loans
- secured
369
20,557
- 20,000
- unsecured
23,376
15,463
- Bankers’ acceptance - unsecured
34,000
5,682
- Revolving credit - unsecured
8,000
5,000
3,000
Non-current
Term loans - secured
- unsecured
65,745
46,702
3,000
46,708
141,796
1,610
104,235
46,400
- -
188,504
105,845
46,400
-
254,249
152,547
49,400
20,000
172
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
20,000
Notes to the Financial Statements
12.Loans and borrowings (cont’d)
12.1Terms and debt repayment schedule
Year ofCarryingUnder 1
1-2
2-5Over 5
Maturity
amount
year
years
years
years
GroupRM’000RM’000RM’000RM’000RM’000
2011
Term loans
- secured
- secured
- unsecured
- unsecured
- unsecured
- unsecured
Bankers’ acceptance
- unsecured
Revolving credit
- unsecured
2013
2018
2013
2014
2015
2016
677
46,400
9,093
49,500
71,679
34,900
369
- 7,275
2,000
14,101
- 2012
34,000
34,000
- -
-
2012
8,000
8,000
- -
-
254,249
65,745
28,478
127,546
32,480
2011
2013
2022
2031
2013
2014
2015
20,154
1,046
212
755
23,187
45,000
51,511
20,154
369
13
21
9,275
- 6,188
- 369
14
23
9,275
- 10,872
- 308
48
75
4,637
45,000
34,451
137
636
-
2011
5,682
5,682
- - -
2011
5,000
5,000
- - -
152,547
46,702
2010
Term loans
- secured
- secured
- secured
- secured
- unsecured
- unsecured
- unsecured
Bankers’ acceptance
- unsecured
Revolving credit
- unsecured
308
580
1,818
2,000
16,802
6,970
- 13,340
32,480
- 45,500
40,776
27,930
-
20,553
84,519
773
580
13,340
32,480
Company
2011
Term loans
- secured
2018
Revolving credit
- unsecured
2012
3,000
3,000
-
-
-
49,400
3,000
580
13,340
32,480
2010
Term loans
- secured
20,000
20,000
-
-
-
2011
46,400
- 12.2Security
The term loans granted to the Group and the Company are secured by the following:
(a) First and third party charges over certain land and buildings (Note 3);
(b) Corporate guarantee of a related company; and
(c) Debenture on a subsidiary’s assets.
173
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
13.Deferred tax liabilities
Recognised deferred tax liabilities
Deferred tax liabilities are attributable to the following:
AssetsLiabilitiesNet
2011
2010
2011
2010
2011
2010
GroupRM’000RM’000RM’000RM’000RM’000RM’000
Deferred tax liabilities
Property, plant and equipment
Revaluation of land and buildings
Employee benefit plans
Provisions
Tax losses and capital allowances
carry-forward
Unutilised reinvestment allowance
Tax (assets)/liabilities
- - (750)
(780)
- - (889)
(292)
70,570
16,410
- - 41,300
16,655
- - (6,399)
(5,029)
(4,979)
- - - - - (12,958)
(6,160)
86,980
70,570 41,300
16,410 16,655
(750)
(889)
(780)
(292)
(6,399)
(5,029)
(4,979)
-
57,955
74,022
51,795
Company
Property, plant and equipment
Revaluation of land and buildings - - -
-
1,120
135
640
139
1,120
135
640
139
Tax liabilities
- -
1,255
779
1,255
779
In recognising the deferred tax assets attributable to unutilised tax losses carry-forward and unutilised
capital allowances carry-forward, the Directors made an assumption that there will not be any substantial
change (more than 50%) in the shareholders before these assets are utilised. If there is substantial
change in the shareholders, unutilised tax losses carry-forward and unutilised capital allowances carryforward amounting to approximately RM3,948,000 (2010: RM4,365,000) and RM21,648,000 (2010:
RM15,554,000) respectively will not be available to the Group, resulting in an increase in net deferred
tax liabilities of RM6,399,000 (2010: RM4,979,000).
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Group
2011
2010
RM’000RM’000
Tax losses carry-forward
16,550
13,356
Unutilised capital allowances carry-forward
27,747
28,024
Property, plant and equipment
(5,973)
(5,766)
38,324
35,614
At 25%
9,581
174
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
8,904
Notes to the Financial Statements
13.Deferred tax liabilities (cont’d)
Deferred tax assets have not been recognised in respect of these items because it is not probable that
future taxable profit will be available against which the Group can utilise the benefits there from.
Tax losses carry-forward and unabsorbed capital allowance do not expire under current legislation.
Included in tax losses carry-forward and unabsorbed capital allowances are amounts of RM16,550,000
(2010: RM13,356,000) and RM27,747,000 (2010: RM28,024,000), respectively, representing tax losses
carry-forward and unabsorbed capital allowances, pertaining to certain dormant subsidiaries, which will
not be available to the Group if there is a substantial change in shareholders (more than 50%) in these
subsidiaries.
The comparative figures have been restated to reflect the revised taxable temporary differences of the
tax losses carry-forward and unabsorbed capital allowances available to the Group.
175
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
176
394
63
457
32,940
30,200
6,147
(890)
(210)
(2,307)
- Company
Property, plant and equipment
Revaluation of land and buildings
Property, plant and equipment
Revaluation of land and buildings
Employee benefit plans
Provisions
Tax losses and capital allowances carry-forward
Unutilised reinvestment allowance
-
-
-
31
31
- - - - - 246
246
- 8,316
11,069
- 1
(82)
(2,672)
- 76
- 76
10,508
- 10,508
- - - - 779
640
139
51,795
41,300
16,655
(889)
(292)
(4,979)
- 480
480
- 22,472
29,270
- 139
(488)
(1,420)
(5,029)
(4)
-
(4)
(245)
(245)
-
1,255
1,120
135
74,022
70,570
16,410
(750)
(780)
(6,399)
(5,029)
RecognisedRecognised
Acquisition in profit
in profit
At
of
or lossRecognisedAt
or lossRecognisedAt
1.1.2010 subsidiaries
(Note 20)
in equity 31.12.2010
(Note 20)
in equity 31.12.2011
GroupRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Movement in temporary differences during the year
13. Deferred tax liabilities (cont’d)
Notes to the Financial Statements
Notes to the Financial Statements
14.Employee benefits
Retirement benefits
Group
2011
2010
RM’000RM’000
Present value of unfunded obligations
- current
301
644
- non-current
2,700
2,913
3,001
3,557
Certain subsidiaries operate an unfunded, defined Retirement Benefit Scheme (“the Scheme”) for its
eligible employees. Under the Scheme, eligible employees are entitled to retirement benefits calculated
by reference to their length of service and earnings. Provision for retirement benefits was calculated
based on the predetermined rate of basic salaries and length of service.
Movement in the present value of the defined benefit obligations
Group
2011
2010
RM’000RM’000
Defined benefit obligations at 1 January
Current service costs and interest (see below)
Benefits paid by the plan
3,557
86
(642)
3,500
270
(213)
Defined benefit obligations at 31 December
3,001
3,557
126
155
(195)
138
164
(32)
86
270
Expense recognised in profit or loss
Current service costs
Interest on obligation
Overprovided in prior years
The expense was recognised in administrative expenses.
Actuarial assumptions
Principal actuarial assumptions at the end of reporting period (expressed as weighted averages):
Group
2011
2010
Discount rate at 31 December
5.1%
5.6%
Future salary increases
4.0%
4.0%
177
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
15.Trade and other payables
GroupCompany
2011
2010
2011
2010
NoteRM’000RM’000RM’000RM’000
Trade
Trade payables
192,092
154,958
- Non-trade
Amounts due to subsidiaries
15.1
Other payables
Accrued expenses
Duties and other taxes payables
- 82,237
104,530
21,989
- 75,097
110,452
16,657
55,989
936
5,279
- 1,608
8,505
-
208,756
202,206
62,204
10,113
400,848
357,164
62,204
10,113
15.1Amounts due to subsidiaries
The non-trade payables due to subsidiaries are unsecured, interest free and repayable on
demand.
16.Revenue
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Sales of goods
2,797,028
2,521,959
- Gross dividends - subsidiaries - - 114,115
50,938
- others
1,752
399
1,752
399
2,798,780
2,522,358
115,867
51,337
17.Finance costs
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Interest expense of financial liabilities
- loans, bankers’ acceptances and others
6,702
4,225
969
994
- related company
- 139
-
6,702
178
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
4,364
969
994
Notes to the Financial Statements
18. Profit before tax
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Profit before tax is arrived at after charging:
Amortisation of franchise fees
5,061
6,736
- Auditors’ remuneration:
- Statutory audit
• KPMG Malaysia
440
352
50
50
• KPMG Affiliates
341
254
- - - Other services
60
75
16
40
Depreciation of property, plant and
equipment 103,350
86,590
1,890
1,536
Impairment loss on:
- goodwill in consolidation
- 17
- - property, plant and equipment
- 10,913
- - trade receivables
198
- - Loss on disposal of property, plant and
equipment
5,008 3,920
382
Rental of land and buildings
162,390
145,533
2,897
3,129
Staff costs (including key management
personnel)
- Contributions to Employees’ Provident Fund
38,555
34,066
1,712
1,833
- Other employee benefits
136,586
129,262
2,784
4,778
- Retirement benefits
86
270
- - Fees
564
556
508
475
- Salaries and wages 292,884
250,902
13,383
11,296
and after crediting:
Franchise fees income
Gain on disposal of property, plant and
equipment
Interest receivable
- deposits with licensed banks
- subsidiaries
- others
Rental income
- related company
- others
Reversal of impairment loss:
- trade receivables
- property, plant and equipment
297
- -
- - - 118
433
- 8
401
- 1
- 6,380
- 5,997
-
814
1,201
- 837
783
32
17,651
- - -
1,089
1,224
45
- 179
282
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
19. Key management personnel compensation
The key management personnel compensation are as follows:
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Directors:
Fees
564
556
508
475
Remuneration
1,142
1,088
1,136
1,078
Benefits-in-kind
158
220
158
220
Total Directors’ remuneration
1,864
1,864
1,802
1,773
Other key management personnel:
Short-term employee benefits
3,014
2,988
2,095
2,057
Total short-term employee benefits
4,878
4,852
3,897
3,830
Other key management personnel comprises persons other than the Directors of the Group, having
authority and responsibility for planning, directing and controlling the activities of the entity either directly
or indirectly.
20.Income tax expense
Recognised in profit or loss
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Major components of income tax
expense include:
Current income tax expense
Malaysian
- current year
- prior year
Overseas - current year
- prior year
57,306
(11,758)
3,650
(2,748)
59,680
(7,594)
1,729
- 19,260
(1,462)
- - 11,015
(872)
-
Total current income tax
46,450
53,815
17,798
10,143
Deferred tax expense
Origination of temporary differences
Underprovided in prior years
14,008
8,464
6,456
1,860
480 - 246
-
Total deferred tax
22,472
8,316
480
246
Total income tax expense
68,922
62,131
18,278
10,389
180
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
20.Income tax expense (cont’d)
Reconciliation of effective tax expense
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Profit before tax
215,493
221,833
Tax at Malaysian tax rate of 25%
Effect of tax rates in foreign jurisdictions
Non-deductible expenses
Income not subject to tax
Utilisation of previously unrecognised tax
losses, unabsorbed capital allowances
and unutilised reinvestment allowances
Change in unrecognised temporary
differences
53,873
(3,568)
24,179
(1,781)
55,458
(2,439)
16,279
(2,860)
28,475
- 2,552
(11,287)
13,105
2,636
(4,480)
681
(103)
- -
1,580
1,530
- -
Overprovided in prior years
74,964
(6,042)
67,865
(5,734)
19,740
(1,462)
11,261
(872)
68,922
62,131
18,278
10,389
Total income tax expense
113,899
52,418
Tax recognised directly in equity
Revaluation of property, plant and equipment
- 10,508
- 76
21.Earnings per ordinary share
Basic earnings per ordinary share
The calculation of basic earnings per ordinary share at 31 December 2011 was based on the profit
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding
calculated as follows:
Profit for the year attributable to shareholders (RM’000)
2011
2010
144,005
156,848
Weighted average number of ordinary shares in issue (’000)
792,184
793,132
Basic earnings per share (sen)
18.18
19.78
181
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Group
Notes to the Financial Statements
21.Earnings per ordinary share (cont’d)
Diluted earnings per ordinary share
The calculation of diluted earnings per ordinary share at 31 December 2011 was based on the profit
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding
after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:
Profit for the year attributable to shareholders (RM’000)
2011
Group
2010
144,005
156,848
Weighted average number of ordinary shares in issue (’000)
Effect of conversion of warrants (‘000)
792,184
5,783
793,132
5,337
Weighted average number of ordinary shares (diluted) (‘000)
797,967
798,469
Diluted earnings per ordinary share (sen)
18.05
19.64
22.Dividends
Dividends recognised in the current year by the Company were:
SenTotal
per share
amountDate of
2011
(net of tax)RM’000
payment
Second interim 2010 ordinary
Interim 2011 ordinary
4.1
2.3
Total amount
50,524
2010
Final 2009 ordinary
First interim 2010 ordinary
23,793
14,871
Total amount
The Directors do not propose any final dividend for the year ended 31 December 2011.
12.0
7.5
182
32,722
17,802
31 March 2011
7 October 2011
27 May 2010
30 September 2010
38,664
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
23.Operating segments
The Group has three reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic
business units, the Group’s Top Management Committee (“TMC”) reviews internal management reports
on a monthly basis. The following summary describes the operations in each of the Group’s reportable
segments:
•
•
•
Restaurants
-
Integrated Poultry -
Ancillary
-
KFC restaurants operation
Breeder and broiler farms, hatchery, feedmill, poultry procesing and further processing, convenient food store chain and Rasamas restaurants
All other activities other than the above reportable segments
Performance is measured based on segment profit before tax and interest as included in the internal
management reports that are reviewed by the Group’s TMC. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results
of certain segments relative to other entities that operate within these industries.
Segment assets
The total of segment asset is measured based on all assets (including goodwill) of a segment, as included in the internal management reports that are reviewed by the Group’s TMC.
Segment liabilities
The total of segment liability is measured based on all liabilities of a segment, as included in the internal
management reports that are reviewed by the Group’s TMC.
Segment capital expenditure
Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant
and equipment, and intangible assets other than goodwill.
183
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
(4,364)
(62,131)
159,702
(6,702)
(68,922)
146,571
Finance costs
Income tax expense
Profit for the year
226,197
2,522,358
2,522,358
-
226,197
2,798,780
2,798,780
-
222,195
(549,307)
-
(549,307)
Results from operating activities
(614,998)
-
(614,998)
-
(9,110)
362,314
100,889
261,425
-
10,383
401,241
107,371
293,870
Unallocated expenses
8,964
821,279
533,397
287,882
222,195
208,882
907,834
586,706
321,128
6,932
222,341
1,888,072
2,104,703
Total segment revenue
Segment results
1,888,072
-
2,104,703
-
Business segments
Total external revenue
Inter-segment revenue
23.Operating segments (cont’d)
RestaurantsIntegrated PoultryAncillaryEliminationsConsolidated
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Notes to the Financial Statements
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
184
354,863
-
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
185
Impairment loss
Depreciation/Amortisation
-
72,642
4,110
62,701
-
25,123
6,671
23,108
47,382
-
10,646
41,314
149
7,517
14,728
-
-
-
-
-
-
-
108,411
10,930
93,326
225,124
343,387
121,723
Capital expenditure and
franchise fees
163,014
577,760
746,746
Total liabilities
180,350
525,965
51,795
672,724
74,022
183,109
146,243
108,705
-
-
Segment liabilities
275,788
234,151
250,693
Unallocated liabilities
1,583,032
391,240
1,838,226
455,415
Total assets
571,734
1,583,032
772,754
1,838,226
875,252
-
Business segments
Segment assets
23.Operating segments (cont’d)
RestaurantsIntegrated PoultryAncillaryEliminationsConsolidated
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Notes to the Financial Statements
Notes to the Financial Statements
23.Operating segments (cont’d)
MalaysiaForeignConsolidated
2011
2010
2011
2010
2011
2010
RM’000RM’000RM’000RM’000RM’000RM’000
Geographical segments
Revenue from external
customers
2,349,056 2,130,653 449,724 391,705 2,798,780 2,522,358
Non-current assets
1,170,985
967,208 105,864
79,664 1,276,849 1,046,872
Segment assets 1,655,380 1,411,788 182,846
171,244 1,838,226 1,583,032
Capital expenditure and
franchise fees
294,958
190,123
48,429
35,001
343,387
225,124
24.Financial instruments
24.1Categories of financial instruments
The table below provides an analysis of the various categories of financial instruments:
(a) Loans and receivables (L&R);
(b) Available-for-sale financial assets (AFS); and
(c)Other financial liabilities measured at amortised cost (OL).
Carrying
amountL&R AFS
NoteRM’000RM’000RM’000
2011
Financial assets
Group
Other investments
7
Trade and other receivables
(excluding current tax assets)
9
Cash and cash equivalents
10
24,282
-
24,282
162,076
102,949
162,076
102,949
-
289,307
265,025
24,282
7
24,282
-
24,282
9
10
169,906
1,812
169,906
1,812
-
196,000
171,718
24,282
Company
Other investments
Trade and other receivables
(excluding current tax assets)
Cash and cash equivalents
186
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.1Categories of financial instruments (cont’d)
Carrying
amountOL
NoteRM’000RM’000
2011
Financial liabilities
Group
Loans and borrowings
Trade and other payables
12
15
254,249
400,848
254,249
400,848
655,097
655,097
12
15
49,400
62,204
49,400
62,204
111,604
111,604
Company
Loans and borrowings
Trade and other payables
Carrying
amountL&R AFS
NoteRM’000RM’000RM’000
2010
Financial assets
Group
Other investments
Trade and other receivables
(excluding current tax assets)
Cash and cash equivalents
7
22,400
-
9
10
143,982
131,712
143,982
131,712
-
298,094
275,694
22,400
7
22,400
-
9
10
170,233
3,975
170,233
3,975
-
196,608
174,208
22,400
152,547
357,164
152,547
357,164
509,711
509,711
12
15
20,000
10,113
20,000
10,113
30,113
30,113
Company
Other investments
Trade and other receivables
(excluding current tax assets)
Cash and cash equivalents
2010
Financial liabilities
Group
Loans and borrowings
12
Trade and other payables
15
Company
Loans and borrowings
Trade and other payables
187
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
22,400
22,400
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.2Net gains and losses arising from financial instruments
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Net (losses)/gains arising on:
Available-for-sale financial assets
- recognised in other
comprehensive income
599
1,521
599
1,521
Loans and receivables
288
434
6,380
5,997
Financial liabilities measured
at amortised cost
(6,702)
(4,364)
(969)
(994)
(5,815)
(2,409)
6,010
6,524
24.3Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
•
•
•
Credit risk
Liquidity risk
Market risk
24.4Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises
principally from its receivables from customers. The Company’s exposure to credit risk arises
principally from loans and advances to subsidiaries and financial guarantees given to banks for
credit facilities granted to subsidiaries.
Receivables
Risk management objectives, policies and processes for managing the risk
The Group trades only with recognised and trustworthy third parties. It is the Group’s policy that
all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to
bad debt is not significant. For transactions that are not denominated in the functional currency
of the relevant operating unit, the Group does not offer credit terms without the specific approval
of the Head of Credit Control.
Exposure to credit risk, credit quality and collateral
The Group does not have any significant exposure to any individual customer or counterparty
nor does it have any major concentration of credit risk related to any financial instruments.
As the Group’s transactions are substantially on cash basis, its credit risk is minimal.
188
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.4Credit risk (cont’d)
Receivables (cont’d)
The ageing of receivables as at the end of the reporting period was:
Individual
Group
Gross impairment Net
RM’000RM’000RM’000
2011
Not past due
32,069
- 32,069
Past due 0 – 30 days
21,876
- 21,876
Past due 31 – 120 days
10,432
- 10,432
Past due more than 120 days
2,503
(1,026)
1,477
66,880
(1,026)
65,854
24,208
1,005
20,477
2,112
- - - (1,352)
24,208
1,005
20,477
760
47,802
(1,352)
46,450
2010
Not past due
Past due 0 – 30 days
Past due 31 – 120 days
Past due more than 120 days
The movements in the allowance for impairment losses of receivables during the financial year were:
Group
2011
2010
RM’000RM’000
At 1 January
Impairment loss recognised
Impairment loss reversed
Impairment loss written off
1,352
198
(45)
(479)
1,639
(32)
(255)
At 31 December
1,026
1,352
Financial guarantees
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilities
granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the
subsidiaries and repayments made by the subsidiaries.
Exposure to credit risk, credit quality and collateral
The maximum exposure to credit risk amounted to RM231,911,000 (2010: RM141,958,000)
representing the outstanding banking facilities of the subsidiaries as at the end of the reporting
period.
As at the end of the reporting period, there was no indication that any subsidiary would default
on repayment.
The financial guarantees provided were not recognised since the fair value on initial recognition
was not material.
189
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.4Credit risk (cont’d)
Inter company balances
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured loans and advances to subsidiaries. The Company monitors
the results of the subsidiaries regularly.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk was represented by
their carrying amounts in the statement of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to
the subsidiaries are not recoverable.
24.5Liquidity risk
The Group manages its debt maturity profile, operating cash flows and the availability of funding
so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall
prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible
investments to meet its working capital requirements. In addition, the Group strives to maintain
available banking facilities of a reasonable level to its overall debt position. As far as possible,
the Group raises committed funding from both capital markets and financial institutions and
prudently balances its portfolio with some short term funding so as to achieve overall cost
effectiveness.
190
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
The table below summarises the maturity profile of the Group’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments:
2011
Term loans
- secured
- unsecured
Bankers’ acceptance – unsecured
Revolving credit – unsecured
Trade and other payables
12
12
12
12
15
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
191
12
12
15
Company
2011
Term loans
- secured
Revolving credit – unsecured
Trade and other payables
3.97
4.14
3.54
3.72
-
3.97
3.72
-
111,604
46,400
3,000
62,204
655,097
47,077
165,172
34,000
8,000
400,848
135,694
70,481
3,009
62,204
701,323
71,249
186,962
34,240
8,024
400,848
70,662
5,449
3,009
62,204
480,641
5,866
31,663
34,240
8,024
400,848
5,857
5,857
- - 40,728
6,208
34,520
- - - 25,129
25,129
- - 145,908
25,129
120,779
- - - 34,046
34,046
- -
34,046
34,046
- - -
CarryingContractualContractualUnder 1
1 - 2
2 – 5
More than
amount interest rate cash flows
year
years
years
5 years
GroupNoteRM’000
%RM’000RM’000RM’000RM’000RM’000
Maturity analysis
24.5Liquidity risk (cont’d)
24.Financial instruments (cont’d)
Notes to the Financial Statements
Maturity analysis (cont’d)
2010
Term loans
- secured
- unsecured
Bankers’ acceptance – unsecured
Revolving credit – unsecured
Trade and other payables
12
12
12
12
15
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
192
12
15
Company
2010
Term loans
- secured
Trade and other payables
4.10
3.52
3.23
3.47
-
4.08
-
30,113
20,000
10,113
509,711
22,167
119,698
5,682
5,000
357,164
30,207
20,094
10,113
534,606
22,988
143,573
5,866
5,015
357,164
30,207
20,094
10,113
419,643
20,769
30,829
5,866
5,015
357,164
-
-
24,649
502
24,147
- - - -
-
89,203
606
88,597
- - - -
-
1,111
1,111
- - -
CarryingContractualContractualUnder 1
1 - 2
2 – 5
More than
amount interest rate cash flows
year
years
years
5 years
GroupNoteRM’000
%RM’000RM’000RM’000RM’000RM’000
24.5Liquidity risk (cont’d)
24.Financial instruments (cont’d)
Notes to the Financial Statements
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.6 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and other prices which will affect the Group’s financial position or cash flows.
24.6.1Currency risk
The foreign currency risk of the Group arises from subsidiaries operating in foreign countries,
which generate revenue and incur costs denominated in foreign currencies. The currency
exposure is primarily Singapore Dollars (SGD), Indian Rupees (Rs), Brunei Dollars (B$) and US
Dollars (USD).
The Group is exposed to foreign currency risk on purchases that are denominated in a currency
other than the respective functional currencies of Group entities. The currencies giving rise to this
risk are primarily US Dollars.
Risk management objectives, policies and processes for managing the risk
The Group does not enter into any hedging activities. Hence, is not exposed to any hedging
risk.
Exposure to foreign currency risk
The Group’s exposure to foreign currency (a currency which is other than the currency of the
Group entities) risk, based on carrying amounts as at the end of the reporting period was:
Denominated in
GroupSGDRs
B$USD
RM’000RM’000RM’000RM’000
2011
Trade and other receivables
976
382
-
Term loans - unsecured
-
(11,700)
-
(31,779)
Trade and other payables
(37,341)
(742)
(1,017)
Exposure in the statement of
financial position
(36,365)
(12,060)
(1,017)
(31,779)
2010
Trade and other receivables
Term loans - unsecured
Trade and other payables
1,064
-
(35,987)
16
-
(1,622)
11
-
(935)
(18,511)
-
Exposure in the statement of
financial position
(34,923)
(1,606)
(924)
(18,511)
Currency risk sensitivity analysis
The exposure to currency risk of Group entities which functional currency is other than RM is not
material and hence, sensitivity analysis is not presented.
193
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.6 Market risk (cont’d)
24.6.2Interest rate risk
The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at
floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates
expose the Group to fair value interest rate risk.
Risk management objectives, policies and processes for managing the risk
The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate
borrowings.
Exposure to interest rate risk
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial
instruments, based on carrying amounts as at the end of the reporting period was:
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Fixed rate instruments
Financial assets
Financial liabilities
23,446
(42,000)
52,893
(10,682)
177
(3,000)
125
-
(18,554)
42,211
(2,823)
125
(212,249)
(141,865)
(46,400)
(20,000)
Floating rate instruments
Financial liabilities
Interest rate risk sensitivity analysis
(a) Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss, and the Group does not designate derivatives as hedging instruments
under a fair value hedged accounting model. Therefore, a change in interest rates at the end
of the reporting period would not affect profit or loss.
(b) Cash flow sensitivity analysis for variable rate instruments
A change of 50 basis points (bp) in interest rates at the end of the reporting period would
have increased/(decreased) equity and post-tax profit or loss by the amounts shown below.
This analysis assumes that all other variables, in particular foreign currency rates, remained
constant.
Profit or loss
Profit or loss
50 bp
50 bp
50 bp
50 bp
increase decrease
increase decrease
2011
2011
2010
2010
RM’000RM’000RM’000RM’000
Group
Floating rate instruments
796
(796)
532
(532)
Company
Floating rate instruments
174
(174)
75
(75)
194
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.6 Market risk (cont’d)
24.6.3Other price risk
Equity price risk arises from the Group’s investments in equity securities.
Risk management objectives, policies and processes for managing the risk
Management of the Group monitors the equity investments on a portfolio basis. Material
investments within the portfolio are managed on an individual basis and all buy and sell decisions
are approved by the Risk Management Committee of the Group.
24.7Fair value of financial instruments
The carrying amounts of cash and cash equivalents, short term receivables and payables and
short term borrowings approximate fair values due to the relatively short term nature of these
financial instruments.
The fair values of other financial assets and liabilities, together with the carrying amounts shown
in the statement of financial position, were as follows:
2011
2010
CarryingFairCarryingFair
Group
amount
value
amount
value
NoteRM’000RM’000RM’000RM’000
Quoted shares
- in Malaysia
Term loans - non-current
- secured
- unsecured
Company
Quoted shares
- in Malaysia
Term loans - non-current
- secured
7
24,282
24,282
22,400
22,400
12
12
(46,708)
(141,796)
(46,708)
(141,796)
(1,610)
(104,235)
(1,610)
(104,235)
7
24,282
24,282
22,400
22,400
12
(46,400)
(46,400)
-
-
The following summarises the methods used in determining the fair value of financial instruments
reflected in the above table.
Investments in equity securities
The fair values of financial assets that are quoted in an active market are determined by reference
to their quoted closing bid price at the end of the reporting period.
195
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
24.Financial instruments (cont’d)
24.7Fair value of financial instruments (cont’d)
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value
of future principal and interest cash flows, discounted at the market rate of interest at the end of
the reporting period.
Interest rates used to determine fair value
The interest rates used to discount estimated cash flows, where applicable, were as follows:
2011
2010
Group
Loans and borrowings
2.72% - 10.75%
2.55% – 5.15%
Company
Loans and borrowings
3.97%
4.08%
24.7.1Fair value hierarchy
Comparative figures were not presented for 31 December 2010 by virtue of the exemption
provided in paragraph 44G of FRS 7.
The table below analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
• Level 1:
• Level 2:
• Level 3:
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Level 1Level 2Level 3Total
Group and CompanyRM’000RM’000RM’000RM’000
2011
Financial assets
Quoted shares in Malaysia
24,282
-
-
24,282
25.Capital management
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the
Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The Directors monitor and determine to maintain an
optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.
196
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
25.Capital management (cont’d)
During 2011, the Group’s strategy, which was unchanged from 2010, was to maintain the debt-toequity ratio at the lower end range within 0.5:1 to 1:1. The debt-to-equity ratios at 31 December 2011
and at 31 December 2010 were as follows:
Group
2011
2010
RM’000RM’000
Total borrowings (Note 12)
254,249
152,547
Less: Cash and cash equivalents (Note 10)
(102,949) (131,712)
Net debt
151,300
20,835
Total equity attributable to owners of the Company
1,074,215
990,247
Debt-to-equity ratios
0.14
0.02
There were no changes in the Group’s approach to capital management during the financial year.
Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to
maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and
paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million.
The Company had complied with this requirement.
The Group is also required to maintain a maximum debt-to-equity ratio of 2.0 to comply with a bank
covenant, failing which, the bank may call an event of default. The Group has complied with this
covenant.
26.Operating leases
Leases as lessee
Non-cancellable operating lease rentals were payable as follows:
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Less than one year
Between one and five years
More than five years
94,827
105,816
-
97,729
120,156
632
2,885
5,769
-
2,884
8,654
-
200,643
218,517
8,654
11,538
The Group and the Company has entered into non-cancellable operating lease agreements for the
use of land and buildings. These leases have an average term of fifteen (15) years with no renewal or
purchase option included in the contracts. Certain contracts include escalation clauses or contingent
rental arrangements computed based on sales achieved while others include fixed rentals for an average
of three (3) years. There are no restrictions placed upon the Group and the Company by entering into
these leases.
197
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
27.Capital commitments
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Property, plant and equipment
Authorised but not contracted for
Contracted but not provided for
290,939
18,920 284,315
17,627
2,556
922
2,720
922
309,859
301,942
3,478
3,642
28.Contingent liabilities
Company
2011
2010
RM’000RM’000
Unsecured
Corporate guarantees in favour of various financial institutions in respect
of credit facilities extended to and performance by certain subsidiaries
231,911
141,958
29.Related parties
For the purposes of these financial statements, parties are considered to be related to the Group or
the Company if the Group or the Company has the ability, directly or indirectly, to control the party or
exercise significant influence over the party in making financial and operating decisions, or vice versa, or
where the Group or the Company and the party are subject to common control or common significant
influence. Related parties may be individuals or other entities.
Key management personnel are defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group either directly or indirectly. The key management
personnel includes all the Directors of the Group, and certain members of senior management of the
Group.
The significant related party transactions of the Group and the Company, other than key management
personnel compensation (disclosed in Note 19), were as follows:
Transaction value
for year ended
31 December
Group
2011
2010
RM’000RM’000
Ultimate holding corporation
Rendering of services
268
116
Holding companies
Sale of goods
Related companies
Gross dividends
Sale of goods
Purchase of goods
Purchase of apparels
Purchase of balloons
Purchase of printing, publication materials
Purchase of souvenir and gifts
Rendering of services
Interest payable
Allocation of expenses
Management fees income
Equipment rental payable
198
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
-
3
1,752
100,473
7,654
43
8
109
8
5,027
-
6,087
2,993
133
399
96,836
14,725
8
69
9
7,597
139
5,831
4,061
224
Notes to the Financial Statements
29.Related parties (cont’d)
Transaction value
for year ended
31 December
Group
2011
2010
RM’000RM’000
Related companies (cont’d)
Forwarding services payable
69
66
Rental income
1,300
1,235
Rental payable
2,218
340
Commission income
786
767
Purchase of property, plant and equipment
830
202
Sale of used cooking oil
1,028
951
Related parties
Rendering of services
Purchase of goods
312
524
165
-
Company
Ultimate holding corporation
Rendering of services
103
64
114,115
22,986
6,380
50,938
29,670
5,997
1,752
2,993
2,521
210
5
27
399
4,061
2,250
210
4
-
35
26
Subsidiaries
Gross dividends
Management fees income
Interest receivable
Related companies
Gross dividends
Management fees income
Rendering of services
Rental income
Purchase of souvenir and gifts
Purchase of equipment
Related parties
Rendering of services
There were no material outstanding balances as at reporting period other than that disclosed in
Note 9 and Note 15.
There was no impairment loss provided in respect of these balances outstanding at year end.
199
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
30.Acquisitions of subsidiaries by the Group
Acquisition of subsidiaries in 2011
(i)On 1 November 2010, the Company announced that it had via its wholly-owned subsidiary,
Ayamas Food Corporation Sdn Bhd, entered into Sale and Purchase of Shares Agreements for the
acquisition of:
a.
b.
c.
d.
90.0% of the issued and paid-up share capital of Southern Poultry Farming Sdn Bhd;
84.8% of the issued and paid-up share capital of Synergy Poultry Farming Sdn Bhd;
90.0% of the issued and paid-up share capital of Ventures Poultry Farm Sdn Bhd; and
100% of the issued and paid-up share capital of Agrotech Farm Solutions Sdn Bhd
for a total cash consideration of RM1,111,951. These acquisitions were completed on 14 January
2011.
(ii)On 11 March 2011, the Company announced that it had via its wholly-owned subsidiary, Ayamas
Shoppe Sdn Bhd, incorporated a company, ie. Ayamas Shoppe (Sabah) Sdn Bhd pursuant to the
Joint Venture Agreement dated 27 October 2010 with Rastamas Trading Sdn Bhd for the purpose
of operating Kedai Ayamas business in Sabah.
Disposal of interest in subsidiary in 2011
(iii)On 2 August 2011, the Company announced that it had through KFC Marketing Sdn Bhd entered
into a Sale and Purchase of Shares incorporating Shareholders’ Agreement with Ayamazz Sdn Bhd
and Mohamed Hashim bin Mohd Kamil (“Intrapreneur”).
The agreement enables the Intrapreneur to subscribe/purchase ordinary shares representing
up to 25% equity interest in Ayamazz Sdn Bhd arising from the implementation of the Group’s
Intrapreneur Scheme.
During the year, the Group disposed off 10% of its interest in Ayamazz Sdn Bhd for a cash
consideration of RM50,000.
These acquisitions have the following effect on the Group’s assets and liabilities on acquisition date:
Recognised
values on
acquisition
RM’000
Property, plant and equipment
18
Inventories
761
Trade and other receivables
16
Cash and cash equivalents 1,248
Current tax assets
74
Trade and other payables
(1,204)
Non-controlling interests
(619)
Net identifiable assets and liabilities
Intangible assets arising from acquisition
Consideration paid, satisfied in cash
Cash and cash equivalents acquired
Net cash inflow
294
818
1,112
(1,248)
(136)
200
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
30.Acquisitions of subsidiaries by the Group (cont’d)
Book value at the date of these acquisitions were determined based on the applicable FRSs immediately
before these acquisitions. The book value at the date of acquisition of identifiable assets and liabilities
recognised on acquisition approximates the fair values of their carrying amounts. The fair values are
provisional and may be used for a period of 12 months from acquisition. The effect of net profits and
net assets contributed by these companies is not material in relation to the consolidated net profit and
net assets of the Group for the year.
Acquisition of subsidiaries in 2010
(i)On 18 September 2009, the Company announced that it had entered into a Share Sale Agreement for
the acquisition of the entire equity interest in KFCIC Assets Sdn Bhd (formerly known as Paramount
Management Sdn Bhd) and KFCH Education (M) Sdn Bhd (formerly known as Paramount Holdings
(M) Sdn Bhd), comprising 500,000 ordinary shares each and the entire equity interest in Gratings
Solar Sdn Bhd comprising 200,000 ordinary shares, at a total cash consideration of RM6.5 million.
The acquisition was completed on 29 January 2010.
(ii)On 16 July 2010, the Company announced that it had jointly with QSR Brands Bhd established a
non-governmental and non-profitable company, i.e. Yayasan Amal Bistari for the primary purposes
of regulating and driving all Corporate Responsibility endeavours and programmes.
(iii)On 4 October 2010, the Company announced that it had acquired the entire issued and paid-up
share capital of Cemerlang Sinergi Sdn Bhd and Efinite Revenue Sdn Bhd comprising 2 ordinary
shares of RM1.00 each and at a total cash consideration of RM2.00, for each of the companies.
(iv) On 27 October 2010, the Company via its wholly-owned subsidiary, Ayamas Shoppe Sdn Bhd,
acquired the entire issued and paid-up share capital of Ayamas Shoppe (S) Pte Ltd comprising 2
ordinary shares of SGD1.00 each for a total cash consideration of SGD2.00.
(v) On 18 November 2010, the Company announced that it had via its subsidiary, KFC (B) Sdn Bhd,
incorporated a subsidiary in Brunei, i.e. Ayamas Shoppe (Brunei) Sendirian Berhad.
(vi)On 13 December 2010, the Company announced that it had via its subsidiary, Pune Chicken
Restaurants Private Limited, entered into a Share Purchase Agreement for the acquisition of the
entire equity interest in Kernel Foods Private Limited for a cash consideration of Rs. 12,00,000/(Rupees Twelve Lacs only) amounted to approximately RM83,565.
These acquisitions have the following effect on the Group’s assets and liabilities on acquisition date:
Recognised
values on
acquisition
RM’000
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents (bank overdraft)
Loans and borrowings
Deferred tax liabilities
Trade and other payables
Current tax liabilities
Non-controlling interests
4,005
109
549
(385)
(1,023)
(31)
(597)
(39)
(96)
Net identifiable assets and liabilities
Intangible assets arising from acquisition
2,492
6,636
Consideration paid, satisfied in cash
Cash and cash equivalents acquired (bank overdraft)
9,128
385
Net cash outflow
9,513
201
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
30.Acquisitions of subsidiaries by the Group (cont’d)
Acquisition of subsidiaries in 2010 (cont’d)
The effect of net profits and net assets contributed by these companies is not material in relation to the
consolidated net profit and net assets of the Group for the year.
Acquisition-related costs
The Group’s acquisition-related costs in relation to external legal fees have been included in other
expenses in the Group’s consolidated statement of comprehensive income and are not material to the
Group’s net profit for the year.
31.Significant events
(i)On 19 September 2011, the Company announced the re-organisation of its group structure
resulting in the Company purchasing the following subsidiaries:
Cost
Target CompaniesVendorRM’000
KFC (Sarawak) Sdn Bhd
KFC (Sabah) Sdn Bhd
KFC (Peninsular Malaysia) Sdn Bhd
Kentucky Fried Chicken (Malaysia)
Sendirian Berhad
Asbury’s (Malaysia) Sdn Bhd
WQSR Holdings (S) Pte Ltd
KFC (East Malaysia) Sdn Bhd
Ayamas Shoppe Sdn Bhd
Rasamas Holdings Sdn Bhd
KFC (East Malaysia) Sdn Bhd
KFC (East Malaysia) Sdn Bhd
KFC Restaurants Holdings Sdn Bhd
KFC Restaurants Holdings Sdn Bhd
2,198
4,363
9,250
2,406
KFC Restaurants Holdings Sdn Bhd
KFC Restaurants Holdings Sdn Bhd
KFC Restaurants Holdings Sdn Bhd
Ayamas Food Corporation Sdn Bhd
Ayamas Food Corporation Sdn Bhd
1,145
10,000
6,038
1,829
3,000
40,229
(ii) Reference is made to the announcement made by the Company in relation to the letter of offer by
Massive Equity Sdn Bhd (“MESB”) dated 14 December 2011, wherein MESB stated its intention to
acquire the entire business and undertaking of KFC, including all assets and liabilities of KFC, at an
aggregate cash consideration equivalent to:(a) RM4.00 per ordinary share of RM0.50 each held in KFC (“KFC Share”) multiplied by the total
outstanding KFC Shares (less treasury shares, if any) at a date to be determined later; and
(b) RM1.00 per warrant of KFC (“KFC Warrant”) multiplied by the total outstanding number of KFC
Warrants in issue at a date to be determined later.
(hereinafter referred to as the “KFC Offer”)
MESB had also on even date made an offer to acquire substantially all the business and undertaking
of QSR Brands Bhd (“QSR”), including substantially all of the assets and liabilities of QSR (“QSR
Offer”). The KFC Offer and the QSR Offer are inter-conditional.
The Company had on 21 December 2011 announced that the Board (save for the Interested
Directors under the KFC Offer) had considered, inter-alia, the views of the Main Adviser and
the Independent Adviser and all other relevant aspects of the KFC Offer. Pursuant thereto, the
Independent Directors of KFC had agreed to accept the KFC Offer subject to further negotiations
and mutual agreement on terms and conditions to be incorporated into the definitive sale and
purchase agreement.
The KFC Offer is in the midst of being implemented for Shareholders and Warrantholders approval,
with the details to be announced in due course.
202
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Notes to the Financial Statements
32.Supplementary information on the breakdown of realised and unrealised
profits or losses
Pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, the
breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised
and unrealised profits were as follows:
GroupCompany
2011
2010
2011
2010
RM’000RM’000RM’000RM’000
Total retained earnings of the Company
and its subsidiaries:
- realised
588,019
471,260
223,490
177,739
- unrealised (57,612)
(35,140)
(1,120)
(640)
530,407
436,120
222,370
177,099
Add: Consolidation adjustments
45,613
46,106
-
Total retained earnings
576,020
482,226
222,370
177,099
The determination of realised and unrealised profits is based on the Guidance of 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, issued by Malaysian Institute of Accountants
on 20 December 2010.
203
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Statement by Directors
pursuant to Section 169(15) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 131 to 202 are drawn up in
accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a
true and fair view of the financial position of the Group and of the Company at 31 December 2011 and of
their financial performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 32 to the financial statements has been compiled
in accordance with the Guidance of 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,
issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa
Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Kamaruzzaman bin Abu Kassim
Chairman
Jamaludin bin Md Ali
Managing Director/Chief Executive Officer
Kuala Lumpur
Date: 7 March 2012
Statutory Declaration
pursuant to Section 169(16) of the Companies Act, 1965
I, Sheik Sharufuddin bin Sheik Mohd, being the Officer primarily responsible for the financial management
of KFC Holdings (Malaysia) Bhd, do solemnly and sincerely declare that the financial statements set out on
pages 131 to 203 are, to the best of my knowledge and belief, 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 above named in Kuala Lumpur on 7 March 2012.
Sheik Sharufuddin bin Sheik Mohd
Before me:
Faridah binti Abdul Hamid (W420)
Commissioner for Oaths
204
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Independant Auditors’Report
to the members of KFC Holdings (Malaysia) Bhd
Report on the Financial Statements
We have audited the financial statements of KFC Holdings (Malaysia) Bhd, which comprise the statements
of financial position as at 31 December 2011 of the Group and of the Company, and the statements of
comprehensive income, changes in equity and 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 131 to 202.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true
and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia,
and for such internal control as the Directors determine are 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 judgement, 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 have been properly drawn up in accordance with Financial Reporting
Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial
position of the Group and of the Company as of 31 December 2011 and of their financial performance and
cash flows for the year then ended.
205
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Independant Auditors’Report
to the members of KFC Holdings (Malaysia) Bhd
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 of which we have acted as auditors have been properly kept in
accordance with the provisions of the Act.
b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not
acted as auditors, which are indicated in Note 6 to the financial statements.
c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s
financial statements are in form and content appropriate and proper for the purposes of the preparation
of the financial statements of the Group and we have received satisfactory information and explanations
required by us for those purposes.
d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse
comment made under Section 174(3) of the Act.
Other Reporting Responsibilities
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The
information set out in Note 32 to the financial statements has been compiled by the Company as required
by the Bursa Malaysia Securities Berhad Listing Requirements. We have extended our audit procedures to
report on the process of compilation of such information. In our opinion, the information has been properly
compiled, in all material respects, in accordance with the Guidance of 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, issued by the Malaysian Institute of Accountants and presented based on the
format prescribed by 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.
KPMG
Firm Number: AF 0758 Chartered Accountants
Johan Idris
Approval Number: 2585/10/12(J)
Chartered Accountant
Petaling Jaya
Date: 7 March 2012
206
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
KEDAH
Geran 34780 Lot 1908, Mukim Sidam Kiri
27/11/2011
Daerah Kuala Muda, Kedah
NEGERI SEMBILAN
Geran 22067 Lot 3468, Mukim Linggi
15/12/2010
Daerah Port Dickson
Geran 6348 PT 2149, Mukim Lenggeng
15/12/2010
Daerah Seremban
Lot 559 Mukim Gemencheh, Daerah Tampin 15/12/2010
HS (D) 5977-5980 PT 924-927
15/12/2010
Mukim Titian Bintangor, Daerah Rembau
Freehold
Freehold
Freehold
Freehold
Freehold
9
21
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
207
21
15
-
-
-
-
-
-
20 acres
30,557
20 acres
55 acres
47.28 acres
Vacant land for future expansion
Breeder farm
Breeder farm
Breeder farm
Breeding farm & hatchery
AGRICULTURAL PROPERTIES
SELANGOR
Geran 24766 Lot 1462, Mukim Beranang
15/12/2010
22
Freehold
-
63 acres
Breeder farm
Daerah Hulu Langat
HS (D) 20746 PT153
15/12/2010 13
Leasehold
25/01/2105
32 acres
Breeder farm & hatchery
Bandar Baru Salak Tinggi, District of Sepang
1,362
4,805
2,939
5,222
15,249
9,684
13,043
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
208
COMMERCIAL PROPERTIES
PERLIS
9 Persiaran Putra Timur Satu
15/12/2010
17
Leasehold
25/09/2092
2,660
02000 Kuala Perlis
KEDAH
Lot No 269 Pekan Dindong
15/12/2010
17
Freehold
-
3,260
07000 Kuah Langkawi
368
443
3-storey intermediate shopoffice
for warehouse, commissary and
staff hostel
33,007
44,000
Double-storey intermediate
shophouse for storage and
accommodation
JOHOR
Mukim of Mersing, District of Johor
15/12/2010
-
Freehold
-
855 acres
Vacant land and oil palm estate
Part of Lot land held under PTD 9374
02/11/2011
1
Leasehold
16/08/2081
400 acres
Broiler farms
HSD 14897 Mukim Bukit Batu
Daerah Kulai Jaya, Johor
PM 1026 Lot 2294, Mukim Machap
15/12/2010
16
Leasehold
27/05/2038
6 acres
Contract broiler farming
203
Daerah Alor Gajah
MELAKA
Lots 1375-1397, 1689 and 1706
15/12/2010
21
Freehold
-
151 acres
Breeder farm
9,760
Mukim Ayer Pa’abas, Daerah Alor Gajah
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
475
495
3-storey corner and intermediate shopoffices for restaurant and hostel
2-storey shopoffice for restaurant
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
209
1,512
247
1,683
2,431
2,656
648
Double-storey corner shophouse for restaurant
PULAU PINANG
34 Jalan Mahsuri, 11950 Bandar Bayan Baru 15/12/2010
19
Leasehold
15/05/2090
7,176
Double-storey shophouse
for restaurant
3A-G-18 Blok 3A, Kompleks Bukit Jambul
15/12/2010
15
Freehold
-
2,972Ground floor of a shopping complex Jalan Rumbia, 11900 Pulau Pinang
for restaurant
Unit No G-103 Megamal Pinang
15/12/2010
15
Leasehold
04/07/2094
3,342Ground floor of a shopping complex 2828 Jalan Baru, Bandar Perai Jaya
for restaurant
13600 Seberang Perai Tengah
Parcel No S-C1-05, Pusat Bandar
15/12/2010
8
Freehold
-
2,798
Double-storey intermediate
Nibong Tebal, 14300 Pulau Pinang
shophouse for restaurant
1-5G, 1-6G & 1-9G, Eden Parade
15/12/2010
11
Freehold
-
4,397
3 adjoining ground and mezzanine
Jalan Sungai Emas, 11100 Batu Ferringhi
floors of a shopping complex
for restaurant
45 Arked Pokok Asam, Langkawi Mall
15/12/2010
16
Freehold
-
4,077
07000 Kuah, Langkawi
46 & 47 Lengkok Cempaka 1
15/12/2010
13
Freehold
-
7,220
Persiaran Cempaka, 08000 Amanjaya
No. 5 Bangunan Joota Brothers
10/10/2011
21
Freehold
-
1,240
Jalan Sungai Korok, 06000 Jitra
KEDAH (cont’d)
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
210
Freehold
Freehold
27
-
-
-
43,561
7,542
Vacant land for restaurants
3½-storey shopoffice for restaurant
6-storey commercial building for restaurant and staff hostel
Double-storey intermediate shophouse for restaurant
SELANGOR
18A Ground Floor, Jalan SS6/3
15/12/2010
23
Freehold
-
1,490Ground floor of a 5-storey
Kelana Jaya, 47301 Petaling Jaya
shophouse for retail outlet
158 Jalan Idris, 31900 Kampar
15/12/2010
PTD 217643 Jalan Kuala Kangsar
15/12/2010
Daerah Hulu Kinta, Klebang, Ipoh
PERAK
79 Jalan Dato’ Lau Pak Khuan
15/12/2010
41
Freehold
-
4,980
Ipoh Garden, 31400 Ipoh
65 Jalan Dato’ Onn Jaafar, 30300 Ipoh
15/12/2010
25
Freehold
-
19,375
GF-12A Queensbay Mall
15/12/2010
6
Freehold
-
5,870Ground floor of a shopping complex 100 Persiaran Bayan Indah for restaurant
11900 Bayan Lepas, Pulau Pinang
Geran No. 23532 Lot 599
15/12/2010
-
Freehold
-
30,453
Plot of land with a colonial heritage
Seksyen 5 Bandar Georgetown
bungalow
No.10-A Jln Masjid Negeri
11600 Daerah Timor Laut, Penang
PULAU PINANG (cont’d)
801
6,717
589
1,750
589
9,600
6,848
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
211
Lot PT 5665, Pekan Puchong Perdana
15/12/2010
Daerah Petaling
Blok B Jalan Prima 5/5
15/12/2010
Persiaran Prima Utama, Taman Puchong Prima
47100 Puchong
Leasehold
Freehold
-
9
-
28/05/2108
5,968
5,000
60 & 62 Jalan PJS 11/28A, Bandar Sunway 15/12/2010
16
Leasehold
11/03/2095
15,237
46150 Petaling Jaya
& 28/12/2092
9 Jalan Taiping, 41400 Klang
15/12/2010
31
Freehold
-
12,202
18 & 20 Jalan Sulaiman, 43000 Kajang
15/12/2010
30
Freehold
-
17,088
Lot PT 12209, Mukim Damansara
15/12/2010
-
Leasehold
01/11/2092
95,788
Daerah Petaling
2105 Jalan 3/1, Bandar Baru Sungai Buloh
15/12/2010
22
Leasehold
13/03/2087
2,423
47000 Sungai Buloh
Lot C1-091, Kompleks Galaxy Ampang
15/12/2010
8
Leasehold
20/10/2084
4,108
Jalan Dagang 5, Taman Dagang
68000 Ampang
SELANGOR (cont’d)
4,667
7,902
4-storey shophouse for restaurant
Vacant land for restaurant
4-storey shopoffice
Vacant land for restaurant
Concourse level of shopping centre
for restaurant
4,181
3,959
1,466
639
1,963
4½-storey corner shophouse
for restaurant and staff hostel
Double-storey shophouse for
restaurant
4,719
2 units of 4-storey shopoffice
for restaurant, office and hostel
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
212
3,969
2,488
5-storey corner lot commercial building for restaurant & staff training
4-storey intermediate shophouse for restaurant and staff hostel
2 adjoining units of 4-storey
shophouse for restaurant
2,136
812
3,619
Single-storey building for restaurants 12,738
Double-storey building for restaurants 10,933
6,660
Single-storey building for restaurant
NEGERI SEMBILAN
26 Jalan Dato’ Sheikh Ahmad
15/12/2010
27
Freehold
-
3,000
Double-storey corner shophouse
70000 Seremban
for retail outlet and staff hostel
20 & 21 Jalan Dato’ Sheikh Ahmad
15/12/2010
31
Freehold
-
7,812
2 adjoining units of 4-storey
70000 Seremban
shophouse for restaurant and hostel
Lot PT 6878, Jalan 8/27A Wangsa Maju
15/12/2010
9
Leasehold
19/04/2083
11,768
53300 Kuala Lumpur
No. 23 & 24 Jalan 54, Desa Jaya Kepong
15/12/2010
29
Leasehold
08/03/2081
13,587
52100 Kepong
W.P. KUALA LUMPUR
Lot 14083 Jalan Kuchai Lama
15/12/2010
6
Leasehold
08/02/2064
8,052
58200 Kuala Lumpur
437 Jalan Ipoh, 51200 Kuala Lumpur
15/12/2010
29
Freehold
-
13,294
140 Jalan Raja Laut, 50350 Kuala Lumpur
15/12/2010
39
Freehold
-
6,437
Lot PT 16805, Jalan Prima 1, Metro Prima
15/12/2010
11
Leasehold
28/04/2096
11,000
Off Jalan Kepong, 52100 Kuala Lumpur
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
213
MELAKA
9 Jalan PPM 9, Plaza Pandan Malim
15/12/2010
14
Leasehold
09/06/2095
5,818
75250 Melaka
555 Plaza Melaka, Jalan Hang Tuah
15/12/2010
25
Freehold
-
9,990
75300 Melaka
PM 222 Lot No. 4260, Mukim Bukit Katil
15/12/2010
-
Leasehold
14/09/2077
42,851
Daerah Melaka Tengah
Lot Nos PT 8241 to 8249 & 8262
15/12/2010
-
Freehold
-
119,946
Mukim Rantau, Daerah Seremban
Negeri Sembilan
PT 12172, Jalan BBN 1/1F Putra Point
15/12/2010
15
Freehold
-
5,386
Bandar Baru Nilai, 71800 Nilai
Lot 3363 Mukim Rasah
22/03/2011
-
Freehold
-
43,906
District of Seremban, Negeri Sembilan
NEGERI SEMBILAN (cont’d)
24 & 26 Jalan Bunga Raya 7
15/12/2010
17
Freehold
-
5,456
Pusat Perniagaan Senawang
Taman Tasik Jaya, 70400 Senawang
1 Jalan Mahajaya
15/12/2010
15
Leasehold
31/01/2085
9,164
Kawasan Penambakan Laut
Bandar Port Dickson, 71009 Negeri Sembilan
621
1,182
3,123
4 ½ -storey corner shophouse with mezzanine floor for restaurant
Vacant land for restaurants
2,343
423
3,400
1,126
498
4-storey intermediate shophouse for restaurant and staff hostel
Vacant commercial land
3-storey shophouse for restaurant
Vacant land (for shoplot and commercial complex)
3-storey corner shophouse
for restaurant and staff hostel
2 units of a double-storey
shophouse for restaurant
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
214
910
371
381
Freehold
Leasehold
2
-
No. 3, 3A & 3B Jalan Resam 13
15/12/2010
Taman Bukit Tiram
No. 43 Jalan Sejambak 14, Taman Bukit Dahlia 07/12/2011
81700 Pasir Gudang, Johor
Freehold
2
15/12/2010
No.1 & 1A Jalan Resam 13
Taman Bukit Tiram
30/06/2103
-
-
3,080
4,620
6,987
Vacant land for restaurant
3-storey intermediate shophouse
3-storey corner shophouse
509
528
853
Lot 590 & Lot 591, PTD 171459 Taman Perling 15/12/2010
-
Freehold
-
45,000
Vacant land for restaurant
8,400
Mukim Pulai, 81200 Johor
HS(D) 367670 PTD 104984
15/12/2010
-
Freehold
-
75,229
Vacant commercial land 4,100
Damansara Aliff 2, Mukim Tebrau, Johor Bahru
JOHOR
11 Jalan Sri Perkasa 2/1
15/12/2010
15
Leasehold
13/04/2094
4,620
3-storey intermediate shophouse
Taman Tampoi Utama, 81200 Johor Bahru
for restaurant and staff hostel
1 & 1-1 Jalan Niaga, Pusat Perniagaan
15/12/2010
12
Leasehold
14/05/2085
2,926
Corner unit of double-storey
Jalan Mawai, 81900 Kota Tinggi
shophouse for restaurant
No. 37 Jalan BBP1
04/01/2011
9
Leasehold
28/06/2108
1,389Ground floor of a 2-storey
Taman Batu Berendam Putra
shopoffice for restaurant
75350 Batu Berendam, Melaka
MELAKA (cont’d)
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
215
Single storey building for KFC
and Pizza Hut restaurants
PAHANG
Retail 1 & 2 Ground Floor
15/12/2010
7
Leasehold
29/08/2106
2,878
Bangunan Baru UMNO Pekan, 26600 Pekan
2 contiguous parcels of ground
floor retail lots within a 6-storey
commercial complex
1,146
406
6,171
5,904
1,279
3-storey shopoffice for restaurant
Vacant commercial land
669
3-storey shopoffice for restaurant
TERENGGANU
10 Persiaran Melor, Kijal Beach Resort
15/12/2010
17
Leasehold
25/11/2101
3,300
Double-storey intermediate
24100 Kijal
shophouse for restaurant
JOHOR (cont’d)
No. 2 Jalan Bandar 1
11/11/2011
1
Leasehold
16/07/2101
5,280
Pusat Bandar Baru Ayer Hitam
86100 Ayer Hitam, Johor
No. 1 Jalan Bandar 1
11/11/2011
1
Leasehold
16/07/2101
9,936
Pusat Bandar Baru Ayer Hitam
86100 Ayer Hitam, Johor
Part of PTD 84134, Bandar Dato Onn
16/06/2011
-
Freehold
-
2 acres
Johor Bahru
Part of C9 Taman Damansara Aliff
25/05/2011
1
Freehold
-
41,295
Tampoi, Johor Bahru
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
216
-
Freehold
-
0.494 acres
29 & 31 Lorong IKS, Juru 3, IKS Juru
15/12/2010
15
Freehold
-
5,960
14100 Simpang Ampat
Seberang Perai Selatan
PULAU PINANG
2718 Jalan Seladang Alma
15/12/2010
23
Freehold
-
47,376
14000 Bukit Mertajam
BRUNEI
EDR BD 44812 Lot 51759 17/02/2011
Kampong Sengkurong
Mukim Sengkurong, Brunei
INDUSTRIAL PROPERTIES
SABAH
Lot 25 Block 3 Bornion Centre, Jalan Kolam 15/12/2010
27
Leasehold
15/05/2915
5,710
88300 Kota Kinabalu
SINGAPORE
18 Yung Ho Road, Singapore 618591
15/12/2010
36
Leasehold
16/12/2036
2,912
1,345
2 adjoining units of a 1½-storey
semi-detached factories for
commissary and warehouse
Single-storey factory with double-storey office block
for processing plant
Vacant land for restaurant
1,359
3,744
1,122
Purpose Built single-storey building
5,294
for restaurant
3-storey corner shophouse
for restaurant and hostel
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
-
Freehold
-
8.231 acres
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
217
KEDAH
Mukim of Sungai Petani/Sungai Pasir
15/12/2010
-
Freehold
-
District of Kedah
45,900
square
metres
SELANGOR
Lot 5 Jalan 51A/223, 46675 Petaling Jaya
15/12/2010
24
Leasehold
18/11/2067
27,930
Lot 20153 Jalan Pelabuhan Utara
15/12/2010
25
Leasehold
17/12/2086
124,031
42000 Pelabuhan Klang
17, 19 & 21 Jalan Pemaju U1/15
15/12/2010
14
Freehold
-
169,200
Seksyen U1, HICOM-Glenmarie Industrial Park
40150 Shah Alam
Lot 166 Jalan Pemaju U1/15
15/12/2010
-
Freehold
-
205,603
Seksyen U1, HICOM-Glenmarie Industrial Park
40150 Shah Alam
1, 3 & 6 Lorong Gerudi 1
15/12/2010
17
Leasehold
15/03/2087
312,594
Off Jalan Pelabuhan Utara
42000 Pelabuhan Klang
Lot 1136 Mukim 602, Seberang Perai Tengah 10/02/2011
Penang
PULAU PINANG (cont’d)
21,600
Vacant land for future expansion of industrial complex
Vacant industrial/residential land,
residential and commercial properties
13,124
Single & double-storey warehouse
71,929
buildings and 4-storey office building
39,062
39,511
7,256
8,909
Industrial complex
Land and factory buildings for
primary processing and further
processing plants
Single-storey detached factory
with 4-storey office block
Vacant land for processing plant
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
218
RESIDENTIAL PROPERTIES
W.P. KUALA LUMPUR
90 Pinggir Zaaba, Taman Tun Dr Ismail
15/12/2010
20
Freehold
-
5,388
60000 Kuala Lumpur
NEGERI SEMBILAN
Unit Nos 1D, 1E, 1F, 1G & 2D
15/12/2010
14
Leasehold
27/07/2094
3,251
Marina Bay Admiral Cove, 71000 Port Dickson
Lot 5 Lorong Tembaga Tiga
15/12/2010
11
Leasehold
29/05/2101
18,287
Kawasan MIEL KKIP Selatan
Kota Kinabalu Industrial Park Menggatal
88450 Kota Kinabalu
JOHOR
PLO 398 Kilang Siapbina PKENJ
15/12/2010
21
Leasehold
18/04/2050
24,057
Jalan Perak, Kawasan Perindustrian
Pasir Gudang, 81770 Pasir Gudang
SABAH
Lot 43A Karamunsing Warehouse
15/12/2010
26
Leasehold
22/01/2901
11,832
88000 Kota Kinabalu
2,149
2,978
953
Double-storey detached house
5 units of condominium for staff
training and recreation
1½-storey semi-detached warehouse 1,469
3-storey corner warehouse and office 2,103
Land and factory buildings for contract manufacturing
and warehouse
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
Unit No B1-22 (P)
15/12/2010
17
Freehold
-
2,429
Amber Court Villa D’Genting Resort
69000 Genting Highlands
Unit No B1-16 Level 16
15/12/2010
17
Freehold
-
1,214
Amber Court Villa D’Genting Resort
69000 Genting Highlands
Unit No A7-22 (P)
15/12/2010
17
Freehold
-
2,386
Amber Court Villa D’Genting Resort
69000 Genting Highlands
PAHANG
Unit No 3556 Block B
15/12/2010
24
Freehold
-
1,399
Awana Golf & Country Resort
69000 Genting Highlands
Condominium for staff training and
recreation
Condominium for staff training and
recreation
Condominium for staff training and
recreation
Condominium for staff training and
recreation
141
304
299
318
Date ofAge ofNet Book
Valuation/
buildingValue
LocationAcquisition
(year)TenureExpiry DateArea (sq ft)Description
(RM’000)
List of Properties Held
as at 31 December 2011
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
219
Analysis of Shareholdings
as at 2 April 2012
Authorised Share Capital
: RM1,000,000,000
Issued & Fully Paid-Up Capital : RM396,633,552 less RM1,039,000 Treasury Shares = RM395,594,552
Class of Shares
: Ordinary Share of RM0.50 each
Voting Right of Shareholders
Every member of the Company present in person or by proxy shall have one vote on a show of hand and in
the case of a poll shall have one vote for every share of which he/she is the holder.
DISTRIBUTION OF SHAREHOLDERS
No. ofNo. of
Size of ShareholdingsShareholders
%Shares
Less than 100
100 – 1000
1,001 – 10,000
10,001 – 100,000
100,001 to less than 5% of Issued Capital
5% and above of Issued Capital
TOTAL
%
8,921
2,186
4,189
689
123
3
55.37
13.57
26.00
4.28
0.76
0.02
49,647
1,714,904
17,081,256
19,328,844
169,437,853
583,576,600
0.01
0.22
2.16
2.44
21.41
73.76
16,111
100.00
791,189,104
100.00
SUBSTANTIAL SHAREHOLDERS
DirectIndirect
No. of KFCHNo. of KFCH
ShareholderShares held
%Shares held
QSR Brands Bhd
QSR Ventures Sdn Bhd
Kulim (Malaysia) Berhad
Johor Corporation Lembaga Tabung Haji
175,719,600
228,320,000
6,157,800
343,000
181,200,600
*i
228,320,000
22.21
28.86
*ii
404,039,600
0.78
*iii
410,197,400
0.04
22.9
-
%
28.86
51.07
51.85
-
Notes:
Deemed interested via interest in QSR Ventures Sdn Bhd pursuant to Section 6A of the Companies Act
1965 (the “Act”).
*ii
Deemed interested via interest in QSR Brands Bhd pursuant to Section 6A of the Act.
*iii
Deemed interested via interest in Kulim (Malaysia) Berhad pursuant to Section 6A of the Act.
*i
DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN THE COMPANY AND ITS RELATED
CORPORATIONS
Save as disclosed below, none of the Directors has any interest, direct or indirect, in the Company and its
related corporations.
In the Company
DirectIndirect
DirectorNo. of Shares
%No. of Shares
%
Hassim bin Baba
100
*
-
Notes
* Insignificant
220
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Analysis of Shareholdings
as at 2 April 2012
In the immediate holding company – QSR Brands Bhd
DirectIndirect
DirectorNo. of shares
%No. of shares
%
Hassim bin Baba
32
*
-
Datin Paduka Siti Sa’diah binti Sheikh Bakir
1,000
*
-
Notes
* Insignificant
In the intermediate holding company – Kulim (Malaysia) Berhad
DirectIndirect
DirectorNo. of shares
%No. of shares
%
Ahamad bin Mohamad
963,400
0.08
-
Datin Paduka Siti Sa’diah binti Sheikh Bakir
278,000
0.02
-
LIST OF TOP THIRTY (30) SHAREHOLDERS AS AT 2 APRIL 2012
Name
No. of Shares
%
QSR Ventures Sdn Bhd
228,320,000
28.86
2 Lembaga Tabung Haji
181,200,600
22.90
3 QSR Brands Bhd
174,056,000
22.00
(Malaysia) Berhad (PAR 1)
22,089,700
2.79
5 AmanahRaya Trustees Berhad - A/C Public Islamic Dividend Fund
14,024,000
1.77
11,725,200
1.48
9,318,400
1.18
Bank AG London (Prime Brokerage)
8,906,300
1.13
9 AmanahRaya Trustees Berhad - A/C Amanah Saham Didik
7,889,200
1.00
10 AmanahRaya Trustees Berhad - A/C Public Islamic Equity Fund
6,161,700
0.78
11 Kulim (Malaysia) Berhad
6,157,800
0.78
5,689,700
0.72
3,891,904
0.49
3,534,000
0.45
1OSK Noms (T) Sdn Bhd - A/C Bank Muamalat Malaysia Berhad for
4 Malaysia Noms (T) Sdn Bhd - A/C Great Eastern Life Assurance
6 Mayban Noms (T) Sdn Bhd - A/C Mayban Trustees Berhad for
Public Ittikal Fund (N14011970240)
7 AmanahRaya Trustees Berhad - A/C Public Islamic Select
Treasures Fund
8 DB (Malaysia) Nom (A) Sdn Bhd - A/C Exempt An for Deutsche
12 AmanahRaya Trustees Berhad - A/C Public Islamic Select
Enterprises Fund
13 HSBC Noms (A) Sdn Bhd - A/C Exempt An for Morgan Stanley &
Co. International PLC
14 AmanahRaya Trustees Berhad - A/C Public Islamic Optimal
Growth Fund
221
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Analysis of Shareholdings
as at 2 April 2012
LIST OF TOP THIRTY (30) SHAREHOLDERS AS AT 2 APRIL 2012 (cont’d)
Name
No. of Shares
%
Investments Berhad 3,320,400
0.42
16 CIMB Commerce Trustee Berhad - A/C Public Focus Select Fund
3,093,600
0.39
17 CIMB Group Noms (T) Sdn Bhd - A/C CIMB Bank Berhad (EDP 2)
2,802,100
0.35
2,588,100
0.33
(Malaysia) Berhad (PAR 2)
2,508,600
0.32
20 Lembaga Tabung Angkatan Tentera
2,253,700
0.28
2,239,200
0.28
2,217,000
0.28
Fund Inc.
2,114,200
0.27
24 Mayban Noms (T) Sdn Bhd - A/C Etiqa Takaful Berhad (Family PRF EQ)
2,012,300
0.25
(Bermuda) Ltd.
2,000,000
0.25
26 HSBC Noms (A) Sdn Bhd - A/C DZ PrivatBk for Uniasiapacific
2,000,000
0.25
27 AmanahRaya Trustees Berhad - A/C Public Islamic Sector Select Fund
1,988,000
0.25
28 QSR Brands Bhd
1,663,600
0.21
29 Mayban Noms (T) Sdn Bhd - A/C Etiqa Insurance Berhad (Life Non-Par FD) 1,600,000
0.20
30 DB (M) Nom (A) Sdn Bhd - A/C Deutsche Bank AG London
1,516,200
0.19
718,881,504
90.86
15 Citigroup Noms (T) Sdn Bhd - A/C Exempt An for Eastspring
18 HSBC Noms (A) Sdn Bhd - A/C Exempt An for Credit Suisse Securities
(Europe) Limited (CLTAC N-Treaty)
19 Malaysia Noms (T) Sdn Bhd - A/C Great Eastern Life Assurance
21 Citigroup Noms (A) Sdn Bhd - A/C CBNY for DFA Emerging Markets
Small Cap Series
22 Malaysia Noms (T) Sdn Bhd - A/C Great Eastern Life Assurance
(Malaysia) Berhad (LSF)
23 HSBC Noms (A) Sdn Bhd - A/C HSBC-FS I for Lim Asia Arbitrage
25 Citigroup Noms (A) Sdn Bhd – A/C GSI for Orvent Master Fund
Total
222
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Analysis of Warrant Holdings
as at 2 April 2012
Exercise Price
Exercise Period
: RM3.00 per Ordinary Share
: 15 September 2010 up to 14 September 2015
DISTRIBUTION OF WARRANT HOLDERS
No. ofNo. of
Size of WarrantholdingsNo. of Warrantholders
%
Warrants
%
Less than 100
100 – 1000
1,001 – 10,000
10,001 – 100,000
100,001 to less than 5% of Issued Capital
5% and above of Issued Capital
1,497
1,322
917
229
10
3
37.63
33.23
23.05
5.76
0.25
0.08
27,283
425,086
4,345,127
6,136,253
2,825,848
17,795,976
0.09
1.35
13.77
19.45
8.95
56.39
TOTAL
3,978
100.00
31,555,573
100.00
DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN THE COMPANY AND ITS RELATED
CORPORATIONS
Save as disclosed below, none of the Directors has any interest, direct or indirect, in the Company and its
related corporations.
In the Company
DirectIndirect
DirectorNo. of warrants
%No. of warrants
%
Hassim bin Baba
16
*
-
Notes
* Insignificant
In the immediate holding company – QSR Brands Bhd
DirectIndirect
DirectorNo. of warrants
%No. of warrants
%
Hassim bin Baba
32
*
-
Notes
* Insignificant
In the intermediate holding company – Kulim (Malaysia) Berhad
DirectIndirect
DirectorNo. of warrants
%No. of warrants
%
Datin Paduka Siti Sa’diah
binti Sheikh Bakir
34,750
0.02
-
-
223
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
Analysis of Warrant Holdings
as at 2 April 2012
LIST OF TOP THIRTY (30) WARRANT HOLDERS AS AT 2 APRIL 2012
Name
No. of Warrants
%
QSR Ventures Sdn Bhd 9,132,800
28.94
2 QSR Brands Bhd
6,870,476
21.77
(Europe) Limited (CLTACT N-TREATY)
1,792,700
5.68
4 Lembaga Tabung Haji
1,060,808
3.36
5 Johor Corporation
645,000
2.04
6Yeow Ho Huat
202,800
0.64
7 Lau Sow Chun
145,100
0.46
8 Mayban Secs Noms (T) Sdn Bhd - A/C Ea Chaw Giap
136,900
0.43
9Goh Tai Meng
135,640
0.43
10Gunasundari a/p Muniandy
135,000
0.43
11 Lee Chee Kuen
134,600
0.43
12 Wong Jen Way
120,000
0.38
13 Mayban Noms (T) Sdn Bhd - A/C Wong Yiik Hook
110,000
0.35
14 Sim Beng Moe
100,000
0.32
15Ong Swee Keng
100,000
0.32
Berhad for Eastspring Investments Dana Al-Islah
93,600
0.30
17 CimSec Noms (T) Sdn Bhd - A/C for Toh Lay Fan (Penang-CL)
91,900
0.29
18 Kiew Kuay Fong
90,000
0.29
19 Tay Soo Khoon
88,000
0.28
20 Loh Chee Yau
85,000
0.27
21 Public Noms (T) Sdn Bhd - A/C Choo Hon Leng (E-SPG)
80,000
0.25
22 AIBB Noms (T) Sdn Bhd - A/C Hussin bin Abdol
80,000
0.25
23Goh Yock San @ Goo Yock San
75,040
0.24
24 HLG Nom (T) Sdn Bhd - A/C Hong Leong Bank Bhd for Mah Nyok Ha
73,000
0.23
25 Mayban Noms (T) Sdn Bhd - A/C Etiqa Insurance Berhad (Life Non-Par FD) 70,576
0.22
26 Abdul Aziz bin Abdul Kadir
67,300
0.21
27 QSR Brands Bhd.
66,544
0.21
28 Sentral Bina Jaya Sdn. Bhd.
65,900
0.21
29Oh Chee Wah
65,000
0.21
30Gan Siew Lian
63,000
0.20
21,976,684
69.64
1OSK Noms (T) Sdn Bhd - A/C Bank Muamalat Malaysia Berhad for
3 HSBC Noms (A) Sdn Bhd - Exempt An for Credit Suisse Securities
16 DB (Malaysia) Nom (T) Sendirian Berhad - A/C Deutsche Trustees Malaysia
Total
224
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011
KFC Holdings (Malaysia) Bhd (65787-T)
Form of Proxy
32nd Annual General Meeting
No. of ordinary shares
CDS account no. of authorised
Nominee
I/ We, ...............................................................................................................................................................................
(Full name and NRIC No. / Company No. in capital letters)
of .....................................................................................................................................................................................
(Full address in capital letters and telephone no.)
..................................................................................................................................................................................................................................................
being a member/ members of KFC Holdings (Malaysia) Bhd (“Company”), hereby appoint .................................................
..................................................................................................................................................................................................................................................
(Name of proxy as per NRIC, in capital letters)
NRIC No ........................................................................... (new) ............................................................................. (old)
of .....................................................................................................................................................................................
(Full address in capital letters)
or failing him/her ...............................................................................................................................................................
(Name of proxy as per NRIC, in capital letters)
NRIC No ........................................................................... (new) ............................................................................. (old)
of .....................................................................................................................................................................................
(Full address in capital letters)
or failing him/her, the Chairman of the meeting as my/ our proxy to vote for me/ us and on my/ our behalf at the 32nd
Annual General Meeting (“AGM”) of the Company to be held at Level 3, Wisma KFC, No 17, Jalan Sultan Ismail, 50250
Kuala Lumpur on Tuesday, 22 May 2012 at 11:30 a.m. or any adjournment thereof in respect of my/ our holdings of shares
in the manner indicated below:
FOR
Resolution 1
Financial Statements and Reports
Resolution 2
Payment of Directors’ Fees
Re-election of Directors:-
Resolution 3
Ahamad bin Mohamad
Resolution 4
Datuk Ismee bin Ismail
Resolution 5
Hassim bin Baba
AGAINST
Resolution 6YAM Tengku Sulaiman Shah Alhaj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj
Resolution 7
Re-appointment of Messrs KPMG as Auditors of the Company
Resolution 8
Resolution pursuant to Section 132D of the Companies Act 1965
Resolution 9
Resolution pursuant to the Proposed Renewal of the Share Buy-
Back Authority
Resolution 10
Resolution pursuant to the Proposed Shareholders’ Mandate for the recurrent related party transactions of a revenue or trading nature with related parties
(Please indicate with a (“√”) in the appropriate box whether you wish your vote to be cast for or against the resolution. In the absence of specific direction, your
proxy will vote or abstain as he thinks fit. However, if more than one proxy is appointed, please specify the number of shares represented by each proxy, failing
which the appointment shall be invalid)
....................................................................
Signature(s)/ Common Seal of Shareholder(s)
Dated this ............. day of. ............ 2012
Notes:
1. A member of the Company entitled to be present and vote at the above AGM may appoint a proxy or proxies to be present and vote instead of him.
A Proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 need not be complied
with.
2. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorized in writing or if the appointor is a
corporation, either under its common seal or under the hand of an officer or attorney duly authorised.
3. A member of the Company may appoint more than two (2) proxies to attend the AGM. Where a member of the Company appoints two (2) or more
proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholdings to be represented by each proxy.
4. Where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depositories) Act, 1991, he may appoint
at least one (1) proxy in respect of each securities account he holds with ordinary shares of the Company standing to the credit of the said securities
account.
5. Where a member of the Company is an exempt authorized nominee as defined under the Securities Industry (Central Depositories) Act, 1991, there
will be no limit to the number of proxies which the exempt authorized nominee may appoint.
6. Any alteration made in this form should be initialed by the person who signs it.
7. The Proxy Form and the Power of Attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of authority
225
must be deposited at Tricor Investor Services Sdn Bhd, Level 17, The
Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala
KFC Holdings (Malaysia) BHD (65787-T)
Lumpur not less than forty-eight (48) hours before the time for holding
the meeting
or any adjournment thereof.
Annual Report
2011
AFFIX
STAMP
HERE
TRICOR INVESTOR SERVICES SDN BHD
Level 17, The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
KFC HOLDINGS (MALAYSIA) BHD (65787-T)
Level 17, Wisma KFC, No. 17, Jalan Sultan Ismail, 50250 Kuala Lumpur
Tel : +603 2026 3388
Fax: +603 2078 8088
126
KFC Holdings (Malaysia) BHD (65787-T)
Annual Report 2011