KFC HOLDINGS (MALAYSIA) BHD (65787-T) Annual

Transcription

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KFC HOLDINGS (MALAYSIA) BHD (65787-T) Annual Report 2007
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Annual Report 2007 KFC HOLDINGS (MALAYSIA) BHD (65787-T)
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Contents
02
Highlights
04
Notice of Annual General Meeting
07
Notice of Dividend Entitlement
09
Statement Accompanying
12
Corporate Statement
22
Review of Operations
34
Corporate Information
36
Board of Directors
44
Senior Management
45
Head of Division
48
Group Structure
52
Corporate Governance Statement
58
Nomination and Remuneration Committee
62
Audit Committee Report
67
Statement on Internal Control
70
Additional Compliance Information
71
Financial Statements
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Financial Highlights
20032004200520062007
RM000
RM000
RM000
RM000
RM000
TOTAL REVENUE 1,380,564 1,410,933 1,456,547 1,523,839 1,730, 371
OPERATING PROFIT
50,102
43,354
123,784
142,304 150, 624
PROFIT BEFORE TAX 66,056 65,736 5,563 142,304 150,624
PROFIT/(LOSS) ATTRIBUTABLE
TO EQUITY HOLDERS
40,264
48,094
(32,459) 98,280
104, 269
1,128,464 1,061,722 925,672 974,078 1,006,128
442,700 468,125 437,043 528,476 602, 021
20.5 24.3
(16.4)
49.6 52.6
12
14
16
18
20
4.42
3.58
4.10
5.40
6.40
NO OF RESTAURANTS
KFC MALAYSIA
336 350 350 375 KFC SINGAPORE 68 70 68 68 410
69
TOTAL ASSETS SHAREHOLDERS’ EQUITY BASIC EARNINGS/(LOSS)
PER SHARE (SEN)
GROSS DIVIDEND PER SHARE (SEN)
SHARE PRICE AS AT 31 DECEMBER (RM)
KEDAI AYAMAS AYAMAS DEPOTS
RASAMAS 404 420 418 443 479
55 11
27 58 11
31 35 10
14 19 4
15
20
3
22
0
Group Financial Highlights
151
142
1,730
1,524
1,128
66
1,457
1,062
1,006
974
66
926
1,411
1,381
Revenue
(RM Million)
PROFIT BEFORE TAX
(RM Million)
350
7
45
336
31
27
437
22
TOTAL KFC RESTAURANTS
(No. of Restaurants)
07
15
20
2005
7
200
3
14
2006
69
200
68
2006
68
2005
3
200
7
200
2006
2005
2004
SHAREHOLDERS’ EQUITY
(RM Million)
2004
70
69
23
23
2004
443
3
200
69
66
468
200
2006
410
602
528
2005
TOTAL ASSETS
(RM Million)
375
350
2004
3
200
7
200
2006
2005
2004
3
200
7
200
2006
2005
2004
200
3
6
TOTAL AYAMAS OUTLETS
(No. of Outlets)
KFC MALAYSIA
KEDAI AYAMAS (including depots)
KFC SINGAPORE
RASAMAS
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NOTICE IS HEREBY GIVEN that the 28th 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 Wednesday, 30 April 2008 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
2007 and the Reports of the Directors and Auditors thereon.
Resolution 1
2. To approve the payment of a final dividend of 12 sen less 26% Malaysian income tax per share.
Resolution 2
3. To approve the payment of Directors’ fees in respect of the financial year ended 31 December 2007.
Resolution 3
4.
5.
To re-elect the following Directors retiring pursuant to Article 89 of the Company’s Articles of Association:
(i) Hassim bin Baba
(ii) Kua Hwee Sim
Resolution 4
Resolution 5
To re-appoint Messrs Ernst & Young as Auditors of the Company and authorize the Directors to fix their
remuneration.
Resolution 6
6. 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 subject always to the Act, Articles of Association of the Company and approvals from the Bursa
Malaysia Securities Berhad (“Bursa Securities”) and other governmental or regulatory authorities, where
such approvals shall be necessary, full authority be and is hereby given to the Directors pursuant to
Section 132D of the Act from time to time to issue and allot ordinary shares from the unissued share
capital of the Company upon such terms and conditions and at such times as may be determined by
the Directors of the Company to be in the interest of the Company Provided Always that the aggregate
number of shares to be issued pursuant to this Resolution shall not exceed 10 percent of the issued
share capital for the time being of the Company.”
(b) Ordinary Resolution - Proposed 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
and any other relevant authorities, the Company be and is hereby authorized to purchase and/or hold
such amount of ordinary shares of RM1.00 each in the Company’s issued and paid-up share capital
(“Proposed Share Buy-Back Authority”) through Bursa Securities upon such terms and conditions as
Resolution 7
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the Directors may deem fit in the interest of the Company provided that 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 time
AND THAT an amount not exceeding the total retained profits of RM257,611,000 and share premium
account of RM18,721,000 as disclosed in the audited accounts of the Company as at 31 December
2007 otherwise available for dividend for the time being be allocated for the Proposed Share Buy-Back
Authority.”
“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 part of the Purchased Shares and cancel the remainder and/or to
resell the treasury shares or to distribute them as share dividend and/or subsequently cancel them 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 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
Annual General Meeting (“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 the expiry date and in any event in accordance with
provisions of the Listing Requirements and other relevant authorities.”
Resolution 8
(c) Ordinary Resolution - Proposed Renewal of Shareholders’ Mandate and additional mandate for
KFC Holdings (Malaysia) Bhd and its subsidiaries (“KFCH Group”) to enter into Recurrent Related
Party Transactions of a Revenue or Trading Nature with Related Parties (“Proposed Shareholders’
Mandate”)
“THAT authority be and is hereby given in line with Chapter 10.09 of the Listing Requirements of the
Bursa Securities, for the Company, its subsidiaries or any of them to enter into any of the transactions
falling within the types of the Recurrent Related Party Transaction, particulars of which are set out in the
Circular to Shareholders dated 8 April 2008 with the Related Parties as described therein, provided that
such transactions are of revenue 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 with those generally
available to the public and are not detrimental to the minority shareholders of the Company;
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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 at which time the authority shall lapse unless by a
resolution passed at a general meeting, the authority is renewed;
(ii) the expiration of the period within which the next AGM after the date that is required by law to
be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be
allowed pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by a resolution passed by the shareholders of the Company at a general
meeting,
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.”
7. To transact any other ordinary business of which due notice shall have been given.
Resolution 9
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NOTICE IS ALSO HEREBY GIVEN that the final dividend of 12 sen less 26% Malaysian
income tax per share will be paid on 28 May 2008 to depositors who are registered
in the Record of Depositors at the close of business on 7 May 2008 if approved by
members at the 28th Annual General Meeting on 30 April 2008.
A Depositor shall qualify for entitlement only in respect of: (a) Shares transferred into the Depositor’s Securities Account before 4.00pm on 7 May 2008 in respect of the ordinary transfers; and
(b) Shares bought on the Bursa Malaysia Securities Berhad (“Bursa Securities”) on a cum entitlement basis according to the Rules of
the Bursa Securities.
BY ORDER OF THE BOARD
MOHD ZAM BIN MUSTAMAN (LS 0009020)
IDHAM JIHADI BIN ABU BAKAR, ACIS (MAICSA 7007381)
Company Secretaries
Kuala Lumpur
8 April 2008
Notes:
1.
A member of the Company entitled to attend and vote at the above AGM may appoint a Proxy to attend and vote in his stead. A Proxy may but
need not be a member of the Company. If the proxy is not a member of the Company, the proxy shall be an advocate or an approved company
auditor or person approved by the Companies Commission of Malaysia.
2.
If the member is a corporation, this Proxy Form must be executed under its common seal or the hand of its duly authorized officer or attorney. If
this Proxy Form is signed under the hand of an officer duly authorized, it should be accompanied by a statement reading “signed as authorized
officer under an Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed under the
attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under a Power of Attorney which is
still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid
in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.
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.
Any alteration made in this form should be initialed by the person who signs it.
5.
This Proxy Form or a notarially certified copy thereof must be deposited at Tenaga Koperat Sdn Bhd, G-01, Ground Floor, Plaza Permata, Jalan
Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the meeting or any adjournment
thereof. KFC HOLDINGS (MALAYSIA) BHD (65787-T) Annual Report 2007
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Explanatory Notes on Special Business
1.
Resolution pursuant to Section 132D of the Companies Act 1965
The Ordinary Resolution proposed under item 6(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.
2.
Resolution pursuant to the Proposed Share Buy-Back Authority
This resolution proposed under item 6(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 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 2007.
3.
Resolution pursuant to the Proposed Shareholders’ Mandate
This resolution proposed under item 6(c) will enable KFCH Group to enter into any recurrent transactions of a revenue or trading nature which are
necessary for the KFCH Group’s 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 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 2007.
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Statement Accompanying
1. DIRECTORS WHO ARE STANDING FOR RE-ELECTION AT THE ANNUAL GENERAL MEETING
The Directors retiring by rotation pursuant to Article 89 of the Company’s Articles of Association are: (i) Hassim bin Baba
(ii) Kua Hwee Sim
The details of the directors seeking re-election are set out in the Directors’ Profiles which appear on pages 40 and 41 of the Annual
Report.
2. DETAILS OF ATTENDANCE AT BOARD MEETINGS HELD IN THE FINANCIAL YEAR ENDED 31 DECEMBER 2007
There were five (5) Board Meetings held during the financial year ended 31 December 2007 and the following are the details of the
Board attendance: -
Name of Director
1. YBhg Tan Sri Dato’ Muhammad Ali bin Hashim
5/5
2. Ahamad bin Mohamad
5/5
3. Jamaludin bin Md Ali
5/5
4. Hassim bin Baba
5/5
5. Kua Hwee Sim
5/5
No of Meetings Attended
3. THE 28TH ANNUAL GENERAL MEETING WILL BE HELD AT LEVEL 3, WISMA KFC, NO 17 JALAN SULTAN ISMAIL,
50250 KUALA LUMPUR ON WEDNESDAY, 30 APRIL 2008 AT 11.30 A.M.
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KFC is by far the most popular restaurant chain in Malaysia, commanding a market share of over 44%.
With over 400 KFC restaurants in Malaysia, 69 in Singapore and 7 in Brunei – plus new restaurants
opening in Cambodia – KFC sees millions of people flocking to its various outlets year in, year out.
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Corporate Statement
Ahamad bin Mohamad
Deputy Chairman
Tan Sri Dato’ Muhammad Ali bin Hashim
Chairman
Jamaludin bin Md Ali
Managing Director
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Corporate Statement
Dear Shareholders,
2007 proved to be another milestone in our corporate growth, being marked by our best
ever financial performance. We believe that the fundamental reason for our success is that
‘Customer Mania’ remained our guiding principle, enabling us consistently to deliver on the
promise we make to our customers of top quality products and service.
To further strengthen and leverage on our market leadership, during the year we expanded
our restaurant network and created an enticing range of new products. In addition, we
enhanced our operational processes, cut costs and further improved our governance.
Mindful of the vital importance of corporate citizenship, we also extended our Corporate
Social Responsibility programmes to effectively reach out to more people.
On behalf of the Board of Directors (the Board), we are happy to present the Corporate
Statement of KFC Holdings (Malaysia) Bhd (‘KFCH’) for the financial year ended
31 December 2007.
LOOKING BACK
In Malaysia, domestic consumption-led growth and the diversification of the
economy continued to facilitate development and strengthen resilience. This
protected the country from the uncertainties arising from global imbalances
and the recent market volatility caused by the U.S. subprime mortgage crisis,
and enabled the nation to achieve a GDP growth of 6.3%.
Meanwhile, the private sector was encouraged to assume a leading role in
economic development. In a series of initiatives, the Government liberalized the
Foreign Investment Committee guidelines, reduced corporate tax to 26% from 2008,
and launched five economic corridors across the country.
Singapore’s economy also made good progress during the year, growing by 7.7%.
Financial services and tourism performed strongly, driven in part by buoyant economies
throughout the sub-region. Construction activity surged too, supported by a boom in
high-end apartments building as well as new office cum retail projects and two large
entertainment resorts.
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Corporate Statement
ENHANCING RESULTS
Against this background in 2007, Group revenue surged to RM1,730.4 million, up 13.6%
over prior year’s RM1,523.8 million, while profit before tax gained by 5.8%, from RM142.3
million in 2006 to RM150.6 million. As a result, earnings per share climbed 6.1% from
49.57 sen as at 31 December 2006 to 52.59 sen as at 31 December 2007.
Revenue from the KFC Restaurants Business segment accounted for approximately
77% of the Group’s total turnover with the balance of 18% and 5% contributed by our
Integrated Poultry Businesses and Ancillary Businesses respectively.
The year’s financial highlights included:
•
•
•
A 14.7% growth in revenue by KFC Restaurants to RM1,335.3 milllion from
RM1,164.1 million in 2006
A 9.4% growth in revenue by the Integrated Poultry Businesses segment to RM317.0
million from RM289.6 million in 2006
An 11.4% growth in revenue by the Ancillary Businesses segment to RM78.1 million
from RM70.1 million in 2006
Strategic Initiatives
The Group’s positive growth in revenue and profitability was driven by a series of
initiatives:
• Effective brand building and marketing promotions
• New product launches such as Colonel Rice combo, Alaskan Fish Burger, Black
Pepper Chicken Chop, Chicken Poppers, Half-Half Meltz, Variety Bucket with Fish
Fingers, and new X-meal combos
• The launch of KFC’s new “Colonel” logo, plus new staff uniform and product
packaging
• Strong expansion of the KFC network, with 39 new stores being opened during the
year in Malaysia and nine in Singapore
• Remodelling of 26 existing stores to enhance their ambience and attract more
customers
• The extension of operating hours at 73 of our restaurants, which now open 24 hours
a day
• The introduction of credit card facilities at our restaurants in the Klang Valley, Johor
and Penang
• The launch by KFC Singapore of a dedicated KFC Delivery phone number
• The expansion and upgrading of our processing plants
• The launch by Ayamas of a variety of new offerings including Hot & Spicy Chicken
Fingers and Premium Popcorn Bites as well as a range of shelf-stable products
• The opening of ten new Rasamas Restaurants
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Corporate Statement
Dividends
KFCH is committed to providing worthwhile returns for its investors. Given the Group’s
sterling performance and strong fundamentals, the Board of Directors has recommended
a total dividend of 20 sen per share (comprising an interim dividend of 8 sen and a final
dividend of 12 sen) in comparison to 18 sen for 2006.
Asset Management
The Board and Management of KFCH are dedicated to the effective and efficient
management of the Group’s assets and liabilities. During the year, surplus cash generated
from our operations was invested in income-accretive assets and also to prepay loan
commitments to lower Group borrowings.
Total borrowings dropped from RM200.4 million as at 31 December 2006 to RM123.0
million as at 31 December 2007 following the prepayment of the last instalment of the
KFCH bonds and the scheduled repayment of various loans. As a result, the Group was
in a net cash position as at 31 December 2007.
The positive impact of these measures was clearly demonstrated by the 25% drop in the
Group’s financing cost which declined to RM11.3 million from RM15.0 million previously.
STRENGTHENING THE BUSINESS
In October 2007, KFCH entered into a Share Sale Agreement to purchase
from Sindora Berhad a 55% equity stake in Tepak Marketing Sdn Bhd
(“Tepak”) for RM2.97 million. Tepak’s main activities are the contract
packing of tea, tea trading, and the sales and marketing of carbonated
drinks under its own brand name “Zippie”.
As the Group regularly procures tea products for its restaurant chains,
the acquisition will enable KFCH to participate in a profitable business
that complements its existing operations. It will also guarantee our
restaurants a level of price stability and ensure a consistent
supply of quality tea. In addition, Tepak has considerable
growth potential both from its contract manufacturing
activities (which include Unilever’s Lipton Tea) and from
the distribution of Zippie soft drinks. It will thus provide
KFCH with an alternative platform for expansion, diversify
its earnings base, and reinforce its foundation as a food
conglomerate.
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Corporate Statement
DRIVING PERFORMANCE
KFCH employs a rigorous set of Key Performance Indicators (KPIs)
to build a performance culture and to help us define and gauge
the progress we are making towards our organizational goals. Our
KPIs are used to measure achievement and also form the basis for
recognizing, rewarding and promoting
employees. In this way, they enhance
motivation and build momentum.
One of our most powerful tools in
building a performance-driven business
is the annual exercise known as
Pedoman. Pedoman is a Group-wide
interactive session that institutionalizes
open dialogue and provides a fully
transparent interface for those in
leadership positions, including all
our restaurant managers and the
Chairman himself.
As well as enhancing open communication and
giving everyone the chance to voice their ideas and
concerns, Pedoman reinforces our strong corporate
culture and strengthens Group bonding between all levels.
In so doing, it gives a powerful new meaning to our principle of
“People First”.
As our businesses grow and expand, Pedoman also helps us
combat the dangers posed by size, as well as external change,
shifts and uncertainties. All too often, in large organizations,
creativity and entrepreneurship are stifled by bureaucracy and
hierarchy. By its very openness and informality, Pedoman cuts
through such breaks in progress, and enables us to maintain
dynamism and focus. In addition, changes and shifts in the
external environment can affect the internal climate as well,
especially if an organization lacks strong, lasting bonds and
common values that can override external
pressures arising from uncertainty.
Pedoman facilitates open dialogue, and
acts as a transparent interface for our
entire management team. By providing a
forum in which everyone can voice their
ideas and concerns and similarly giving
the leadership an opportunity to quickly
respond, provide solutions and articulate
strategic issues, it significantly enhances
open communication and facilitates fast and
effective dissemination of strong, positive
values.
Most important of all, Pedoman enhances
mutual trust, faith and confidence – all of which are vital to
delivering success in a challenging and rapid changing market
place.
Another initiative aimed at driving performance is Hari Mekar, an
acronym for Mengejar Kecemerlangan Dalam Kualiti or Pursuit
of Excellence in Quality. This quality movement initiated by Johor
Corporation (our ultimate holding corporation) in 1995 brings
together representatives from all the companies under Johor
Corporation in a forum where they share and compare best
practices and compete with the most effective ideas to enhance
productivity, improve efficiency and cut costs.
In October 2007, KFCH participated in Hari Mekar for the first
time, and we are delighted to record that we won the Overall
Champion’s Trophy. KFCH has set up a quality council with the
objective to make the Group a quality focused organization. In
addition, several teams have been formed to propel this quality
movement, including suggestion scheme teams, innovative and
creative circle teams and cross functional teams.
KFCH will co-host a Group-wide Hari Mekar with QSR in 2008.
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Corporate Statement
Other than embedding halal practices into our processes,
the company is also committed to sponsoring the World Halal
Forum and the Malaysia International Halal Showcase, at which
we also promote our products. We participate on a similar basis
in Halal Food Standards Realization MS 15500:2004 seminars,
a programme to promote Malaysian Halal Standards; and also
place advertisements and articles in the Halal Journal, which has
a worldwide readership.
We are active in promoting healthy, active lifestyles and supporting
local sports. KFCH is the official sponsor of the Johor FC football
team and sponsors billboards in most football stadiums throughout
the country. In addition, we sponsor both sailing and futsal, with
the aim of encouraging young Malaysians to pursue them both
as popular sports and as activities that offer opportunities for the
most talented to be recognized up to the international level.
IMPROVING GOVERNANCE
KFCH believes in the fundamental principles of disclosure and
transparency. This means not only following best practices but
also being open about the way we run our business. In everything
we do, we seek to balance our economic and social goals, aligning
as nearly as possible the varying interests of all our stakeholders.
As part of our commitment to good governance, our management
and staff are expected to demonstrate diligence, responsibility
and absolute integrity in all their business dealings.
Measures taken in 2007 to enhance governance included requiring
all our senior management to declare their assets, and all staff to
sign a Work Ethics Declaration Form.
INVESTING IN COMMUNITIES
KFCH believes in giving back to the community. In the past, we
have focused mainly on reaching out to the less fortunate members
of society, especially orphans, single mothers, the elderly, the
homeless, the needy, and the disabled. Recently, however,
we have implemented a new CSR structure that considerably
broadens the scope of our CSR activities and the causes that
they promote.
Since halal compliance is central to our business interests, we
have recognized it as our core corporate social responsibility.
The future prosperity of our nation lies in the hands of tomorrow’s
entrepreneurs and, as a responsible corporate entity, we have
decided to play our part to help develop entrepreneurial skills,
especially among young Malaysians who are excluded from
the business sector. In this regard, we collaborate with Johor
Corporation to build the success of the Corporation’s Tunas Bistari,
Didik Bistari and Siswa Bistari programmes. These programmes
are aimed at familiarizing uninitiated young Malaysians with
commercial value orientation and the basics of business practices
that are needed to turn them into future business practitioners
and entrepreneurs.
To promote national unity and highlight how our brands have
become an integral part of the lives of many Malaysians, we
participate in both the annual Floral Float Parade organized by the
Ministry of Tourism and the International Kite Festival; and also
produce patriotic public service announcements and corporate
advertisements.
Meanwhile, we continue to extend our help for the less fortunate.
In addition to the many CSR programmes we have long been
running, KFCH now sponsors three episodes per year of Tijarah
Ramadhan – a television programme that highlights the plight
of the less fortunate and poverty-stricken families and features
companies donating to the underprivileged. In addition, in
October 2007, we rolled out a hunger relief campaign nationwide
to raise awareness and funds for the United Nations’ World Food
Programme.
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Corporate Statement
WINNING RECOGNITION
We were deeply honoured to receive a number of awards in 2007, chief among which
were the following.
In October, Ayamas garnered the Malaysian Livestock Industry Award for
Outstanding Meat Processor at the Livestock Asia Expo & Forum 2007 held at
the KL Convention Centre. The forum was hosted by the Ministry of Agriculture &
Agro Based Industries, and attracted over 514 companies from 35 countries.
In March 2008, the Yum! Franchise Business Partner luncheon was held at the
Grand Hyatt, Bangkok. During the luncheon, awards were given to the region’s
franchisees for their achievements in year 2007. The most prestigious of all awards
is the Franchisee of the Year Award and we are proud to report that KFC Malaysia was
voted the Best Operator in the region and was awarded the Franchisee of the Year Award
2007.
LOOKING FORWARD
Recent years have witnessed a shift in the Malaysian economy towards domestic
demand, which in the immediate to mid term will be driven by the ongoing implementation
of development projects under the Ninth Malaysia Plan. These include the Iskandar
Development Region (a large logistics and tourism project in southern Peninsular
Malaysia), the Northern Corridor Economic Region (involving Perlis, Kedah, Penang and
the north of Perak), the East Coast Economic Corridor, and the the Sabah and Sarawak
Development Corridors.
In addition, the extension of Visit Malaysia tourism-related activities to 2008 should
continue to boost the local consumption of goods and services.
Despite the ongoing credit crunch in the US, a rise in Malaysian exports is forecast for
2008, particularly of electrical products, and the national economy is predicted to grow
by 6%. In Singapore, the economic slowdown in the US could lead to somewhat lower
growth in 2008. However, robust domestic demand and a projected improvement
in the export of electrical goods are expected to sustain the island state’s
economic momentum.
Inflationary pressures on the global economy from the rising
prices of oil, food and commodities are expected to continue.
Malaysia’s inflation rate in 2008 is forecast to exceed the 2%
registered in 2007, and Singapore is expected to also revise its
inflation forecast in response to rising costs.
While the higher cost of imported raw materials may have a negative impact on
the Group’s cost of production, we believe that this will be mitigated by the strength of the
19
Corporate Statement
Ringgit; and we are therefore confident that the possible slowdown in the world economy
will not prevent the Group from making further progress in the year ahead.
BUILDING THE FUTURE
Despite the uncertain economic outlook, KFCH believes that in 2008 it can further boost
both revenue and profitability by enhancing customer experience, developing attractive
new products, expanding its marketing activities, deriving further cost efficiencies across
all functions, and improving productivity at its restaurants and manufacturing facilities.
We also plan to open a significant number of new restaurants as well as refurbishing
existing ones. The larger expansion of the restaurant network is likely to be in Sabah,
Sarawak and the east coast of Peninsular Malaysia.
In 2008, the key factors driving fast food business in Malaysia will be the introduction of
healthier products, non-carbonated drinks, longer operating hours and the expansion of
Drive-Thru restaurants.
The biggest challenge faced by the fast food industry is to expand its food offerings
into healthier alternatives, to maintain affordability and to educate consumers
on the importance of a balanced diet and regular exercise. KFC has already
introduced Garden Salad into its menu
as a healthier alternative as well as
provided nutritional information for
its products. In addition, we plan to
develop programmes and activities
involving children and teenagers
since, by catching consumers at
a young age, we are able to help
inculcate healthy lifestyles.
We also intend to take advantage of
the increasing appeal of fast food as
a snack among consumers who want
a quick, light, simple and affordable
meal. To encourage higher consumer
visits, towards the end of 2007, KFC
introduced an Afternoon Menu from
3.00pm to 6.00pm. In addition, in
response to price competition from other
fast food operators, KFC has also come
up with affordable meal packages such as
Jom Jimat starting from RM3.50 per set.
20
Corporate Statement
With convenience becoming a necessity when choosing a place
to eat, and with the internet part of today’s lifestyle, KFC is offering
free internet access from 2.00pm to 6.00pm on weekdays. KFC
has also introduced e-craving with an online discount voucher
during certain promotion periods.
Ayamas will now focus its marketing activities on building top-ofmind brand recall, promoting healthy products, further enhancing
its position in the burger take-home category, and capitalizing
on its logistical strengths to expand its exports, especially to
Singapore.
In term of competition, a major challenge is
posed by hawker restaurants and food stalls
(popularly known as Mamak restaurants).
Some of these restaurants already
run 24-hour operations, attracting
consumers of various ages – particularly
teenagers – with their choice of dishes,
simple ambience, table service, and
very affordable products. Meanwhile, the
mushrooming of new shopping malls has
increased the competition from food courts,
which are also very popular with consumers.
KFC is taking on these challenges by introducing
local taste products such as sweet spicy prawn rice for Juadah
Ramadhan and Colonel Rice with satay sauce.
In 2005 to 2006, Kedai Ayamas underwent
a rationalization exercise which saw the
closure of outlets that were poorly located
and the maintenance of 19 units in
niche trading areas. This positive
development made further progress in
2007, which witnessed the turnaround
of the business from a loss in 2006 to a
record level of profit.
The Group also has ambitious plans for its poultry operations,
and is currently constructing its third poultry processing plant at
Bandar Tenggara, Johor at a cost of approximately RM30 million.
This will enhance the supply-sufficiency of the southern region
and deliver major supply chain savings and synergies. It will
also ensure consistency of supply and freshness of products in
southern Malaysia and Singapore.
Ayamas is Malaysia’s number one brand for premium, halal,
chicken-based products. In response to the growing global market
for halal food, we now plan to capitalize on Malaysia’s aspiration
to become an international halal food hub by establishing a new
company, KFC Marketing Sdn Bhd, to focus specifically on sales
and marketing of food products to increase our share of the frozen
food segment.
Like Kedai Ayamas, Rasamas operations
(the brand operated by Rasa Ayamas Sdn
Bhd) was rationalized in 2005 and 2006. In the
process, Rasamas closed outlets that were poorly located and
re-engineered its menu, pricing and operations to meet the
challenges of the market. As a result, in 2007 the business broke
even and is expected to return to profitability in 2008.
A key factor in the ongoing turnaround of Rasamas is our
“Intrapreneur Scheme”. Initiated in 1999 by Johor Corporation, the
aim of the scheme is to institutionalize a performance culture by
creating opportunities for highly talented and committed employees
to start new business ventures or revive existing ones.
A key factor in the success of the scheme is the introduction of a
direct ownership element. Giving intrapreneurs the opportunity to
own an equity stake of up to 25% in the business concerned has
proved to be a powerful motivator.
Under the Ayamas and Life brands, further processed poultry
products and sauces will be the mainstay of the new trading arm,
while other foodstuffs such as seafood, side orders, bakery and
ice cream will be included under different brand names.
Under the Rasamas Intrapreneur Scheme, three Rasamas outlets
are now run by intrapreneurs, who have all initially been given
a 10% stake in their outlet. The selected outlets are Rasamas
Tebrau Sdn Bhd, Rasamas Larkin
Sdn Bhd (both in Johor) and
Rasamas Bangi Sdn Bhd
(in Selangor).
We believe that the new entity will not only boost our frozen food
market share and sales, but also enable us to penetrate new
market segments in which we do not currently have a presence.
At the same time, this move will provide an avenue for Ayamas to
leverage its market expansion, especially in the Middle East.
In future, Rasamas
proposes
to
take
full advantage of the
growing trend for fast
casual concept eateries.
21
Corporate Statement
GIVING THANKS
In January 2008, Ms Rita A/P Benoy Bushon, En Abdul Wahab
bin Jaafar Sidek and En Mohd Zam bin Mustaman resigned their
directorships of KFCH (though En Mohd Zam remains Director of
Legal & Corporate Services). On behalf of the Board and all our
management, staff and shareholders, we would like to thank them
for their insight, contributions and advice.
By their skills, initiative and commitment in 2007, our people once
again delivered top quality products and an outstanding level of
service. On behalf of the Board, we offer each and every one of
them our warmest congratulations and gratitude.
We also deeply appreciate the support we received from our
customers, shareholders, financiers, suppliers and various
governmental and regulatory authorities. We are equally grateful
to YUM! Brands Inc for their continued confidence in us and for
the guidance we received from them throughout the year.
With critical mass, Rasamas plans to embark on above the line
advertising and starts a brand-building process which will further
improve sales and profitability. The aim is to turn Rasamas into
the most successful home grown brand in Malaysia. Rasamas
expects to open a number of new outlets in 2008.
Finally, we would like to thank our colleagues on the Board and
the entire management team for their outstanding contribution.
Their dedication to the business has again produced results we
can be proud of.
Our feedmill operations are faced with the extreme challenge of
rising input costs. In addition, the open market for feed is shrinking
as major livestock producers become more and more integrated
and self sufficient in feed supply. Further rises in corn and soya
bean meal prices are expected to continue through 2008 and
thus threaten margins.
On a positive front, we predict that our LIFE brand sauces,
produced by Region Food, will increasingly close the gap with
its competitors in terms of market share. Meanwhile, the bakery
and commissary will continue to support the needs of the Group
with existing and new products, and the bakery will also look into
venturing into the open market.
In the years ahead, KFCH will continue to pursue its strategy of
seeking out opportunities for growth, both organically and through
acquisition of food-related businesses, so as to fulfil our vision
to be the leading integrated food services group in the ASEAN
region, delivering consistently quality products and excellent
customer-focused service.
Overall, the Board is therefore optimistic that the Group will once
again perform well in 2008, to the benefit of all its stakeholders.
Tan Sri Dato’ Muhammad Ali bin Hashim
Chairman
Ahamad bin Mohamad
Deputy Chairman
Jamaludin bin Md Ali
Managing Director

KFC HOLDINGS (MALAYSIA) BHD (65787-T) Annual

Transcription

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