KFC HOLDINGS (MALAYSIA) BHD 65787-T - Pocketzila

1KFC Holdings (Malaysia) BHd (65787-T)

annual Report 2011

annual Report 2011KFC HOLDINGS (MALAYSIA) BHD 65787-T


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.


annual Report 2011

Shareholders’ OverviewFinancial Highlights 6

notice of annual general Meeting 9statement accompanying notice of annual general Meeting 14

Our Performance in 2011Corporate statement 18Review of operations 32

Reliable Corporate CitizenCorporate social Responsibility 48

The Corporation Board of directors 60

Top Management Committee 76Head of division 77

shariah advisory Council 80Corporate information 81

group structure 82

AccountabilityCorporate governance statement 84

audit Committee Report 93statement on internal Control 97

additional Compliance information 100

Financial Statementsdirectors’ Report 127

statements of Financial Position 131statements of Comprehensive income 132

Consolidated statement of Changes in Equity 133statement of Changes in Equity 135

statements of Cash Flows 137notes to the Financial statements 139

statement by directors 204statutory declaration 204

independent auditors’ Report 205list of Properties Held 207

analysis of shareholdings 220analysis of Warrant Holdings 223

Form of Proxy

Contents

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.


annual Report 2011

2007 2008 2009 2010 2011

RM ’000 RM ’000 RM ’000 RM ’000 RM ’000

REVENUE

KFC Malaysia 1,043,438 1,284,429 1,365,542 1,496,907 1,655,340

KFC singapore 280,200 330,771 342,666 368,586 409,126

KFC Brunei 11,679 13,676 15,469 16,347 20,424

KFC india - - - 6,232 19,813

integrated Poultry 316,985 445,018 484,132 533,397 586,706

Education - - - 1,068 4,725

ancillary 78,069 105,894 89,622 99,821 102,646

Total 1,730,371 2,179,788 2,297,431 2,522,358 2,798,780

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

net Profit attributable to

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

Total assets 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

Return on shareholders’

Equity (%) 17.32 17.13 16.47 15.84 13.41

Return on Total assets (%) 10.36 10.27 10.11 9.91 7.83

gearing Ratio (net debts/

shareholders’ Equity) (%) - 6.22 - 2.10 14.08

Basic Earnings Per share (sen) 13.15 14.95 16.44 19.78 18.18

net assets Per share (RM) 0.76 0.87 1.00 1.25 1.36

gross dividend Per share (sen) 20 22 24 15.5 3

share Price as at 31 december (RM) 6.40 7.45 7.40 3.82 3.84

NO. OF RESTAURANTS

KFC Malaysia 403 436 475 515 539

KFC singapore 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

RasaMas Brunei - 2 3 3 2

521 578 639 699 746

Financial Highlights


annual Report 2011


2011

1000

2000

3000

500

1500

2500

0

2010

2009

2008

2007 1,730

2,180

2,297

2,799

2,522

REVENUERM (Million)

2011

2010

2009

2008

2007 151

167

190

215

222

0 50 100

150

200

250

PROFIT BEFORE TAxRM (Million)

2011

2010

2009

2008

2007 1,006

1,154

1,290

1,838

1,583

0 400

800

1200

1600

2000

TOTAL ASSETSRM (Million)

2011

2010

2009

2008

2007 602

692

792

1,074

990

0 250

500

750

1000

1250

SHAREHOLDERS’ EqUITYRM (Million)


annual Report 2011

2007 40369

7

2007 2022

2008 43673

8

2008 2534

2

2010 51577

97

2010 4939

3

3

2011 53980

1213

2011 7525

2

2009 47577

9

2009 3540

0 100

200

300

400

600

500

0 15 30 45 60 9075

TOTAL KFC RESTAURANTSno. of Restaurants

TOTAL AYAMAS OUTLETSno. of outlets

KFC Malaysia

KFC singapore

KFC Brunei

KFC india

Kedai ayamas

RasaMas Malaysia

RasaMas Brunei



annual Report 2011

Notice of Annual General Meeting

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.

2. To approve the payment of directors’ fees in respect of the financial year ended

31 december 2011.

3. (a) To re-elect the following directors retiring pursuant to article 89 of the Company’s

articles of association:

(i) ahamad bin Mohamad

(ii) datuk ismee bin ismail

(iii) Hassim bin Baba

(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

4. To re-appoint Messrs KPMg as auditors of the Company and to authorize the directors

to fix their remuneration.

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 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

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:-


annual Report 2011


(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.” Resolution 9


annual Report 2011


(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


annual Report 2011

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.


annual Report 2011

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.



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.


annual Report 2011

we bring

Cheery Smiles...


annual Report 2011


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.


annual Report 2011


annual Report 2011

Corporate Statement

The Group Continuously Achieves Spectacular Growth

CONSOLIDATING ACHIEVEMENTS

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.

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.

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.


annual Report 2011

From left to Right :

aHaMad Bin MoHaMadDeputy Chairman

KaMaRUZZaMan BinaBU KassiMChairman

JaMalUdin Bin Md aliManaging Director

Corporate Statement

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.


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.

DELIVERING RESULTS

against this background, although all the group’s

business segments experienced inflationary

pressures with higher food, commodity and energy

costs, KFCH once again achieved commendable

sales growth. Total revenue for the year increased to

a record high of RM2,798.8 million, up 11% on the

RM2,522.4 million achieved in 2010.

not surprisingly however, given the strategic

decision to make major capital investments, profit

before tax (PBT) dipped 2.8% to RM215.5 million

from RM221.8 million the year before. specifically,

the group invested some RM104.2 million during the

year in vital supply chain facilities, while its operations

in KFC india and KFCH international College incurred

initial start-up cost as they build the critical mass that

will soon carry them from break-even to profit.

in addition, the 2010 profit included a net surplus

from revaluation of properties of RM6.7 million. on

a comparable basis, the group’s PBT therefore

improved slightly by 0.2% or RM 0.4 million against

the prior year.

2011 Key Financial Highlights:

• Revenue of all KFC restaurants of the Group

climbed 11.5% to RM2,104.7 million

• RevenueatKFCMalaysiahitRM1,655.3million,

10.6% up on last year, and achieved same store

sales growth of 4.6%

• KFCSingaporeachieved11%revenuegrowthto

RM409.1 million

• KFC Brunei advanced its revenue to RM20.5

million, a 25% increase on 2010’s figure

• KFCIndiageneratedRM19.8millionofrevenue,

217.9% higher than the previous year

• KFCMarketingSdnBhd(KFCMarketing)posted

a 23.3% jump in revenue to RM273.1 million

• KedaiAyamassales shotup41.1% toRM77.7

million

• KFC Events Sdn Bhd (KFC Events) reported

RM4.1 million in revenue arising from commission

generated from RM41 million sales, contributed

by catering, site selling and voucher marketing of

KFC, Pizza Hut, RasaMas and Kedai ayamas to

various corporate clients

• Revenue (including intercompany sales) at the

group’s integrated Poultry segment improved to

RM1,472 million, a 13.8% gain on 2010


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.

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.

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.


annual Report 2011

Corporate Statement

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

Kedai Ayamas Commenced its East Malaysian Operations in Tawau in April 2011. There are Currently Three Kedai Ayamas Outlets in Sabah.


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 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.

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.

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.

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 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

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.

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.


annual Report 2011

Corporate Statement

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.

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.

in future, the College will act as a crucially important conduit to provide KFCH with a reliable source of skillful manpower.

RESTRUCTURING THE BUSINESS

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%.

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:

• RM4.00perordinaryshareof KFCHofRM0.50each multiplied by the total outstanding KFCH shares (less treasury shares, if any) at a date to be determined later; and

• RM1.00perKFCHwarrantmultipliedbythetotaloutstanding number of KFCH warrants in issue at a date to be determined later.


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!).

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

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.


annual Report 2011

Corporate Statement

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.

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.

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.

BOOSTING qUALITY

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.

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.


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.

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.

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.

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

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.

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.

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).


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.

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.

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.

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.

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.

a staff competition will also be held, which will recognise and reward the best cooks and cashiers.


annual Report 2011

Corporate Statement

other initiatives will also be effected to address the

challenges of 2012. To reaffirm product superiority

against all its competitors, KFC will leverage its

strengths – Chicken on Bone (CoB), freshly prepared

in-store meals, signature recipes, and products

tailored for different times of day, namely breakfast,

lunch, snacking and dinner.

Meanwhile, KFCH is looking into the viability of a

KFC home delivery service. if this proves promising,

the service will begin in the third quarter of 2012.

Overseas Expansion

overseas expansion is high on KFCH’s agenda. in

singapore, the group plans to leverage on product

excellence and a series of imaginative campaigns

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.

Upstream Business

To meet the ever-growing demands of KFCH

restaurants, the group will continue to grow its

upstream business by investing in plants and

increasing product capacity.

as well as catering to its internal market, the

group will be growing its external market share.

KFC Marketing now aims to introduce a variety of

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

deals with such brands as Kewpie, divella, leggo’s,

Mission and simplot and is continually pursuing

additional businesses in the domestic, asian and

Middle Eastern markets.


annual Report 2011

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 air-conditioned 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.

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.

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.

Corporate Statement


annual Report 2011

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.

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.

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.

all in all, the Board is confident of maintaining the group’s current growth for the year.

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.

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.

KAMARUZZAMAN BIN ABU KASSIM

Chairman

AHAMAD BIN MOHAMAD

deputy Chairman

JAMALUDIN BIN MD ALI

Managing director

Corporate Statement


annual Report 2011

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.

Review of Operations

JAMALUDIN BIN MD ALIManaging Director


annual Report 2011


The division initiated three projects during the year

to increase operational efficiency. a new Kitchen

display system (Kds) had its trial run at Wisma

KFC. The Kds is effectively a packing monitor, and

its use has resulted in much improved service time,

especially during lunch and dinner time. Having

packers at each cash counter during peak periods

have meant shorter queues and higher transaction

counts. in early 2012, the Kds will be rolled out to

our high sales volume restaurants in Malaysia.

KFC also installed a self-order service Kiosk on a

trial basis at Wisma KFC, which further cuts queue

time by allowing customers to use the kiosk to place

their orders, then collect their food and pay at the

counter. initial results have been encouraging.

The group’s third quality initiative was the

development of two customer service ‘squads’.

This concept clarified managerial roles in the

restaurants by establishing the Customer Mania


annual Report 2011


squad, involving cashiers and dining staff, and the

Product Champion squad for the cooks and backup

staff. Each manager is accountable for recruiting,

training, engaging and energising his or her squad

to deliver the most effective service. The goal is to

achieve higher training levels and a better working

environment in the restaurants.

To keep the menu vibrant, eight new items were

introduced throughout the year, each product

launch celebrated with a well-advertised promotion.

offerings such as the Fish donut, Chicken Chop

with Mushroom gravy, Quarter Chicken with Black

Pepper sauce, olè Pocketful, Tom yum Crunch,

double Zinger Burger and Krushers with new flavours

enticed customers eager for variety.

The group implemented a comprehensive marketing

programme in 2011. The large number of promotions

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

was a very successful limited time offer, accounting

for about 10% of the total sales for the promotional

period.

in april 2011, the spotlight shone on the new ‘so

good’ tagline. But this is not just a tagline – the

objective is for customers to be so delighted with

KFC’s food and service that they cannot help but

exclaim that it is ‘so good’! The marketing team

pitched a 5-star campaign to spread the word, and

a new Chicken Chop with Mushroom gravy was the

anchor product.

The group also focused its attention on breakfast,

offering customers a different experience during

the morning hours by providing a Breakfast Corner

with free coffee refills, daily newspaper and radio

playing in the background. The breakfast menu

was rejuvenated by the introduction of the new a.m.


annual Report 2011


Cheezy Egg Bun Combo, an improved a.m. Chicken

Porridge Combo, and an a.m. Riser Combo.

KFC Malaysia honoured the fasting month of

Ramadan and the Hari Raya holidays in July and

august 2011 by offering a delectable Quarter

Chicken with Black Pepper sauce.

in november, the team kicked off a season of kids’

marketing efforts and got into the spirit of the Happy

Feet 2 movie release. as parents and children flocked

to the cinemas, they also celebrated the beginning of

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

Ben 10 and PowerPuff girls Chicky Meals. Both of

these offerings included movie-themed buckets and

collectible figurines.

Reflecting the commitment to provide customers

a fresh and inviting dining ambience, the group

renovated 18 restaurants during the year. 24 new

outlets expanded the network’s reach further, and

KFC aimed to better accommodate the needs of

busy customers by increasing the number of outlets

offering drive-thru service.

With 539 restaurants in total – 455 in Peninsular

Malaysia and 84 in East Malaysia – the group

retained its market dominance. KFC remains

Malaysia’s largest restaurant chain. another 15 new

restaurants are planned in 2012.

KFC SINGAPORE

singapore’s economic growth, especially in early

2011, and an increased store count led KFC

singapore to achieve record sales of RM409.1

million, up RM40.5 million (or 11%) on 2010.

To celebrate Chinese new year, the menu featured

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.


annual Report 2011


2011 was a year of exceptional product innovation.

Blueberry Pancakes injected novelty and renewed

interest in the KFC breakfast menu. The Ultimate

Boxes were introduced in January 2011, and in

april, the box meal range was expanded to include

the Ultimate Roasta Box. in conjunction with the

highly anticipated Transformers 3 – dark of the Moon

movie, the team launched a new ‘big eat’ targeting

Transformers fans with hearty appetites. a series of

collectible action figures and a limited edition beach

mat added to the campaign’s popular appeal. in

July, chicken and two cheeses merged to create

the Cheesy Crunch, which was received with great

enthusiasm.

in august, the group focused on publicity for the

KFC a.m. breakfast offerings. singaporeans have

embraced online media, and they responded warmly

to the ‘i a.m.’ campaign, which invited them to share

via Facebook how KFC a.m. touches their lives. The

four most inspiring stories were made into three-

minute ‘webisodes’ and shown online and on TV.

The new KFC singapore Facebook page now has

over 130,000 fans and counting! during this period,

customers were delighted by the double Chocolate

Egg Tart boasting the perfect blend of egg tart with

dark and milk chocolate.

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.

in 2011, KFC singapore collected RM336,380 for

victims of the continuing famine in the Horn of africa,

a 12% increase over 2010.

The final campaign of 2011 returned to the ‘so

good’ tagline, using television and digital media

to convey the warm emotional connection that

singaporeans have with KFC, sharing authentic

customer testimonials.

KFC singapore was the proud recipient of the Caring

Employer award from singapore Compact CsR and

the leader award from Enabling Employers network,

as well as four Markies awards from Marketing

Magazine.

2011 ends with a count of 80 stores, which includes

six new openings or relocations, offset by three

closures.

The group predicts that 2012 will present challenges

in the area of employment, as singapore’s

unemployment hit a low of 2% in 2011. Competition

for market share will also increase as new restaurant

chains open outlets on the island. as always, the

staff will respond to challenges positively and are

confident that a programme of imaginative campaigns

and products will continue to draw singaporeans to

KFC.


annual Report 2011


KFC BRUNEI

KFC Brunei expanded from nine to 12 restaurants in 2011, and total revenue surged 25% to RM20.5 million.

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. Expansion plans for 2012 include two new in-line 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 cricket-themed Fan Bucket.

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.

Currently, KFC india has 16 outlets, of which three were opened in early 2012.

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.


annual Report 2011

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


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.


annual Report 2011

popular auspicious and spicy siam roasters on

a limited-time basis during the festive seasons. in

addition, corporate partners digi and Bank Rakyat

helped publicise two other innovative special offers.

INTEGRATED POULTRY 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.

ayamas Food Corporation sdn Bhd (aFCsB)

processing plants contributed greatly to the increase,

up by 8.5% on 2010 levels. The group’s expanding

restaurant chains and stores – KFC, RasaMas and

Kedai ayamas – continue to increase their order

volumes, thus boosting internal sales figures.

2011 was not without challenges, as rising chicken

prices made an impact upon the group’s

performance. demand for chicken products,

however – especially processed foods such as

sausage, nuggets, etc. – continues to rise steadily,

so this subsidiary took steps toward greater self-

sufficiency and expansion into niche markets.

Under the group’s Breeder Farm and Hatchery

division, the breeder farms produce eggs which

are sent to hatcheries to be hatched into day-old-

Chicks (doC). in 2011, the division produced 38.6

million doCs with a value of RM48.8 million.

KFC Marketing

KFC Marketing sdn Bhd (KFC Marketing) was

incorporated in 2001 as a sales, marketing and

trading arm for KFC Holdings (Malaysia) Bhd

(KFCH) and external markets, both domestically

and internationally. With a vision to be the preferred

distributor of superior quality halal brands, the

subsidiary performed exceptionally well in 2011, with

sales growing by 23.3% to reach RM273.1 million.

sales to the domestic open market increased once

again, and open market export sales also jumped to

RM15.9 million in 2011.

in addition to the group’s own products, KFC

Marketing distributes third-party international brands

such as simplot, divella, Mission, Kewpie and

leggo’s. datuk Redzuawan bin ismail, better known

as Chef Wan, now acts as brand ambassador for

KFC Marketing, further strengthening the company’s

position.



annual Report 2011

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.

looking forward, ayamazz has collaborated with Jati

Bestari sdn Bhd and other companies to expand

its business by more aggressively marketing and

promoting the programme and by establishing more

ayamazz Roti impit kiosks nationwide, including in

sabah and sarawak. The business model has also

grown to include kiosks, flip-counters, and hawker

vans, and the goal for 2012 is to add 100 new open

market outlets by the end of the year.

Usahawan Bistari Ayamas

Usahawan Bistari ayamas sdn Bhd (UBasB) is a

wholly-owned subsidiary of KFC Marketing, and is

a key element in the group’s CsR commitment to

assist those in need. UBasB was established in

2009 to bring the ayamas brand to the lower-income

market sector.

UBasB’s business model engages housewives,

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



annual Report 2011

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.


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.


annual Report 2011

Bakery & Commissary

in 2011, the Bakery division recorded sales of RM31.2

million. it also achieved a 7.7% increase in bun

production and introduced the Butter scotch Bun to

the KFC product line. The rectangular Butter scotch

Bun has a rich butter caramel and milk flavour and is

already proving a popular addition to the KFC menu.

Meanwhile, a new pizza dough line – a 700 square

metre facility providing dough for 42 PHd outlets to

date – began operations in February 2011.

The renewal of the Bakery’s HaCCP (Hazard

analysis Critical Control Point) and iso 9001:2008

certifications demonstrated its continued high

production standards. in compliance with HaCCP

requirements, the Bakery completed a flooring

upgrade in november 2011.

The Commissary division generated sales of RM1.7

million plus a 4.3% increase in coleslaw production,

amounting to over two million packets in total. The

coleslaw facilities also received flooring upgrades in

april and May 2011 to meet yum! requirements.

in addition to continuing upgrades to existing

equipment in 2012, the Bakery division will initiate

the planning phase of a new bakery line to support

KFC and Pizza Hut business expansion. likewise,

the Commissary’s ongoing improvements will

include primary and secondary wash and spin-dry

equipment, which will both enhance quality and

reduce costs.

Tepak Marketing

Tepak Marketing sdn Bhd (Tepak), a wholly owned

subsidiary of KFCH produces, markets, and sells

beverages and nutritional drinks for the domestic and

export markets. in addition to various tea products

sold in packets, pot bags and sachets, Tepak also

manufactures carbonated drinks in PET bottles and

aluminium cans.

Tepak’s revenue declined by 5.4% to RM23.6 million

in 2011, mainly due to the restructuring of production

and delivery by Unilever, one of the company’s largest

customers.



annual Report 2011

GROUP LOGISTICS DIVISION

The logistics division under KFC Manufacturing

sdn Bhd expanded its dry stock storage capacity in

2011 in line with the growing number of restaurants

and stores. The group’s original 45,000 square foot

warehouse was in glenmarie. 2011 saw it shift to

a new double-storey warehouse complex offering

300,000 square feet at Jalan gerudi, Port Klang.

The new facility offers 16 loading bays, five receiving

bays, space for nearly 17,000 pallets, and new

heavy equipment. The transition went smoothly,

and the new warehouse was fully operational on

1 november 2011. it now serves over 921 stores

and restaurants in Malaysia, Brunei and Cambodia.

in future, the logistics division plans to extend its

facilities and services to third parties, thus becoming

a profit centre.

KFCH INTERNATIONAL COLLEGE

The KFCH international College now spans two

campuses in Puchong and Johor Bahru. at present,

over 800 students are enrolled in nine diploma

programmes, including a variety of hospitality-

related disciplines, as well as Early Childhood

Education, Business administration, and information

Technology.

during the year, the College achieved a revenue of

RM4.3 million from its diploma programmes and a

further RM325,675 from short courses.

HUMAN CAPITAL DEVELOPMENT

KFCH currently employs over 28,000 people in

Malaysia, singapore, Brunei and india, making it

one of the largest food sector employers in the

region. The group’s active and holistic approach to

employee recruitment, training, and retention reflects

the value it places on its staff.

during 2011, KFCH used a variety of recruitment

methods to fill vacant and newly-created positions.

The group participated in numerous job fairs and

advertised its requirements in newspapers, leaflet

and email campaigns, flyers and restaurant postings.

it also offered referral incentives to current staff.

KFCH is committed to retaining valued employees,

and thus offers a variety of training, advancement

and recognition opportunities, including organised

activities and sports tournaments, conventions, and

award ceremonies.

The group invested RM7.2 million in training and

development programmes in 2011. This figure is

equivalent to 5.25% of total employee compensation

and illustrates the importance of training to the

organisation.

on average, KFCH’s full-time employees received

67 hours of training over the year, and nearly 8,000

staff participated in training. opportunities included

in-house soft skills training, and public programmes

on a range of topics designed to build technical,

financial, business and management abilities.



annual Report 2011

Furthermore, 40 students were sponsored in full-

time diploma courses at the two KFCH international

College campuses and 23 more in various part-time

programmes offered by other institutions.

yum! learning Zone offers an additional training

medium for KFC employees. Through this new

initiative, managers and team members at the

restaurants have access to web-based training,

including ‘virtual’ classrooms, online meetings, and

electronic assessments, tests and surveys.

The group continues to place great emphasis on

occupational safety and Health (osH) training, and

four particular activities dominated 2011’s efforts.

a proactive Hazard identification, Risk assessment

and Risk Control (HiRaRC) exercise was conducted

for the restaurant operations, poultry farm and

office-based employees in Wisma KFC. a new,

comprehensive safety and Health Manual was

published for the Farm and Hatchery division, and

the Procedures for Reporting of accidents in the

Workplace were enhanced. The new procedures

cover not only reporting and documenting accidents

but also aspects of investigation for the purpose of

preventing recurrence. Finally, the department of

safety and Health (JKKP) audit Kit for the restaurant

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.

at the annual long service awards, KFCH recognises

employees who have served the company and its

customers for ten years or more with awards of Bsn

savings bonds of RM500-RM1000 each. in 2011,

the group distributed some RM160,000 in savings

bonds to 257 long-term employees.

in 2012, the osH unit will begin a general osHa

1994 Compliance audit. all operating units will be

subject to the audit, which is in preparation for the

full JKKP audit. as part of the group’s unflagging

efforts to improve workplace safety, the accident

Prevention Programme will also be revamped in the

coming year.

HALAL COMMITMENT

KFCH guarantees full halal compliance in all of

the group’s markets. Every aspect of our food

manufacturing processes, including raw materials

procurement, preparation, packaging, storage

and utensils follow strict controls. The group

pays keen attention to any products acquired

from foreign suppliers, requiring that they be halal

certified within the source country and accepts only

certificates recognized by the department of islamic

development Malaysia (JaKiM).



annual Report 2011

Esteemed scholars from islamic institutions

comprise the KFCH shariah advisory Council, which

inspects every stage of the food production chain.

The Council examines equipment, ingredients, and

preparation methods, touring all of the group’s

facilities, restaurants and factories. once the internal

Council is satisfied, JaKiM is requested to repeat

the entire inspection process. after that, all of the

group’s products bear the official JaKiM stamp

indicating full halal compliance.

KFCH’s internal shariah and Halal department

reports directly to the shariah advisory Council.

The department plays a vital role in the group’s

halal commitment, creating a deeper understanding

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.

LOOKING FORWARD

KFCH continues to prosper as families and friends

get together to relish the group’s products in ever

increasing numbers. Whether eating out or at home,

customers of all ages demonstrate their delight with

the menus. superb service has won their loyalty, and

the group’s commitment to corporate responsibility

has strengthened the bond with the communities in

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

achieve them. in 2012, all the group’s stakeholders

can be confident of celebrating yet another year of

success.



annual Report 2011

we bring

Balance to a Healthy Lifestyle...


annual Report 2011


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.


annual Report 2011


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.


annual Report 2011


COMMUNITY

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.

KFC’S Feeding Programme

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.

Tabung Penyayang KFC

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.

‘Be the Movement’ Charity Walk

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 famine-stricken around the world as well as local charities.


annual Report 2011

KFC Hearing Impaired Community Care Stores

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 speech- and 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).

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.


Football Association of 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.


annual Report 2011

International Kite Festival

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.


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.


annual Report 2011


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.

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

and procedures adhering to halal requirements, and employees are devoted to maintaining the most rigorous standards.

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.


annual Report 2011

WORKPLACE

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.


Restaurant Managers’ Convention

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.


annual Report 2011


National Ayamas Challenge

in 2011, Kedai ayamas and RasaMas introduced a

nationwide initiative for staff with the aim of setting

and maintaining superior standards in customer

service by way of a fun-filled competition. More than

60 employees in 16 teams took part in the inaugural

competition. The finals were held in december at

Wisma KFC, and the winning teams and individuals

won a range of trophies and prizes.

Champs Challenges

The 2011 national Champs Challenge took place

from 26-27 april at the KFC subang 2 drive-Thru.

11 teams competed: nine teams from Peninsular

Malaysia and one team each from sabah and

sarawak. at the end of the event, the five best team

members and manager were chosen to represent

Malaysia in the Regional Champs Challenge in

Jakarta, indonesia in november 2011. Ten teams

competed at this event, and the Malaysian team

came home with five individual and executional

awards.


annual Report 2011

Hari Mekar – Quality Day

The group’s holding company, QsR organises its

popular annual event, Quality day or better known as

Hari Mekar. Every december, Hari Mekar brings teams

of employees together for one day to compete in

quality-related contests. it is a vibrant forum in which

employees present their ideas for new methods and

projects to increase productivity and reduce costs.

The winners of the QsR Hari Mekar proceed to the

JCorp Hari Mekar, where they compete against

teams from JCorp and all its subsidiaries. They also

go on to represent QsR at the Malaysia Productivity

Corporation (MPC) awards. The overall winner at the

JCorp Hari Mekar for the fifth consecutive year was

KFCH’s holding company, QsR.

Bank Negara Malaysia GP2000

in 2011, Bank negara Malaysia organised the

gP2000 programme. The programme’s objective is

for participating companies to provide training and

employment opportunities for 200 recent graduates

from low-income backgrounds. KFCH joined the

programme in 2011, and as of 1 June, had selected

four candidates. By the end of the training period,

all four candidates were accepted as permanent

employees.


Gerak Kemas

KFCH introduced its own 5 sigma (5s) initiative at

Wisma KFC in 2009. The goal of this programme,

known as Gerak Kemas (gK), is to ensure office

cleanliness by discarding unwanted items like empty

boxes and obsolete documents. gK has since

become an annual ‘spring cleaning’ event at Wisma

KFC. in 2010, staff successfully incorporated the

Hazard Hunt as part of the gK programme, whereby

employees identify potential hazards in the office

environment. This in turn raised the endeavour from

5s to 6 sigma (6s).

in 2011, the 6s audit was launched, involving all

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

inculcate the 6s culture amongst all staff and to

promote a sense of mutual responsibility for safety

and cleanliness in their office environment.

THE ENVIRONMENT

KFCH is concerned with the impact that its

operations have upon the environment. The group

consistently aims to find ways to deploy ecologically

sound practices whilst maintaining its high levels of

product quality and shareholder value.


annual Report 2011


Ayamas Port Klang

since 1998, ayamas Port Klang has operated its own

waste water treatment facility. The final discharge

earns the Malaysian department of Environment

(doE) rating of standard B. The group has since

invested approximately RM5 million in upgrading

the facility a number of times. The facility uses two

different waste water processes, a Continuous

Processor and a sequential Batch Reactor (sBR)

process. at present, the plant treats approximately

2,000 cubic metres of waste water discharge per

day.

Ayamas Bandar Tenggara, Johor

in 2009, the group opened its second waste water

treatment facility at ayamas Bandar Tenggara, Johor.

This facility’s final discharge is in compliance with the

doE standard a. Built at a cost of RM2 million, this

waste water facility uses only the sBR process, and it

treats 800 cubic metres of final discharge waste water

per day.

Bakery & Commissary

The Bakery and Commissary divisions, based at

Kompleks KFC glenmarie, also operate their own

waste water treatment plant. Releasing treated water

which meets the doE standard B rating, it employs

a Biological Treatment system, which consists of

an Up-Flow anaerobic sludge Bed (UasB) and

alternative intermittent Cyclic Reactor (aiCaR).

Region Food Industries

in 2004, Region Food industries sdn Bhd (RFi), the

group’s sauce manufacturing division, deployed its

own waste water treatment plant. The final discharge

meets the doE’s standard B rating, and the plant

treats about 250 cubic metres of waste water per

day using a continuous biological and chemical

process. in 2009, to reduce its environmental impact,

RFi also upgraded its burner to enable its production

machinery to use natural gas instead of diesel.


annual Report 2011

LOOKING AHEAD

in partnership with its holding company, QsR, KFCH

has set up the yayasan amal Bistari (yaB) to form the

framework and oversee funding of all CsR initiatives

by both QsR and KFCH. Under the yaB umbrella,

it has succeeded in boosting the effectiveness and

organisation of its CsR endeavours by creating

awareness of the group’s activities.


in the years ahead, KFCH will continue to fulfill its

role as a responsible corporate citizen by working

in close cooperation with the communities in which

it operates – because, in the final analysis, the most

effective way to enhance the lives and environments of

those communities is through the direct involvement

of the group and its people.


annual Report 2011

we bring

Freshness and Quality to your Dining Experience...


annual Report 2011


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.


annual Report 2011


annual Report 2011


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

Board of Directors


annual Report 2011

Board of Directors


KaMaRUZZaMan Bin aBU KassiM

JaMalUdin Bin Md ali

KUa HWEE siM

Tan sRi daTo’ dR yaHya Bin aWang


annual Report 2011

Profile of Directors


annual Report 2011

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 an-

nur 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.

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.

KAMARUzzAMAN BIN ABU KASSIMChairmanNon IndependentNon Executive Director



annual Report 2011


Ahamad bin Mohamad, Malaysian, aged 58, is a

non independent non Executive director and the

deputy Chairman of KFC Holdings (Malaysia) Bhd

(“KFCH”). He was appointed to the Board on 27 June

2006 and as deputy Chairman on 2 July 2006.

He graduated with a Bachelor of Economics

(Honours) degree in 1976 from the University of

Malaya. He joined Johor Corporation (“JCorp”) in

June 1979 as a Company secretary for various

companies within the JCorp group. He was involved

in many of JCorp’s projects; among others are the

Johor specialist Hospital, prefabricated housing

project and the Kotaraya Complex in Johor Bahru. He

is presently the Managing director of Kulim (Malaysia)

Berhad, a member of the Board of directors of KPJ

Healthcare Berhad and new Britain Palm oil limited

(Papua new guinea). He was appointed as a director

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.

AHAMAD BIN MOHAMADDeputy ChairmanNon Independent Non Executive Director

He is the Chairman of the Executive Committee

of KFCH. He is also the director of Waqaf an-

nur Corporation Berhad, an islamic endowment

institution that spearheads JCorp group’s CsR

programmes, including the unique Corporate Waqaf

Concept initiated by JCorp.

He is a member 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. He has not been

convicted for any offences.



31 december 2011.


annual Report 2011

Jamaludin bin Md Ali, Malaysian, aged 54, is the

Managing director of KFC Holdings (Malaysia) Bhd

(“KFCH”). He was appointed to the Board on 27 June

2006 and as Managing director on 2 July 2006.

He graduated with a Bachelor of Economics

(Honours) degree from University of Malaya in

1982 and Master of Business administration from

University of strathclyde, glasgow scotland in

1987. He started his career with Malayan Banking

Berhad as Trainee officer in 1982 and later served as

international Fund Manager in Permodalan nasional

Berhad in 1991. He joined Johor Corporation

(“JCorp”) in 1992 and was appointed the Managing

director of Johor Capital Holdings sdn Bhd in

1998. Before his appointment as the Managing

director of KFCH, he was the group Chief operating

officer of JCorp since 2001. He sits on the board of

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.

He is a member of the Executive Committee of

KFCH. He is also active as the director of Waqaf

an-nur Corporation Berhad, an islamic endowment

institution that spearheads JCorp group’s CsR

programmes, including the unique Corporate Waqaf

Concept initiated by JCorp.

He is a member 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. He has not been

convicted for any offences.



31 december 2011.


JAMALUDIN BIN MD ALIManaging Director


annual Report 2011

Kua Hwee Sim, Malaysian, aged 59, was appointed

to the Board of KFC Holdings (Malaysia) Bhd (“KFCH”)

on 27 June 2006. she is currently an independent

non Executive director of KFCH.

she is a Fellow of the association of Chartered

Certified accountant (UK) and a Registered

accountant of Malaysia and singapore. she has

more than thirty five years of corporate and financial

experience in several industries within Malaysia

and overseas. she is currently a director of Kulim

(Malaysia) Berhad, which is of the Johor Corporation’s

subsidiaries listed on the Main Board of the Bursa

Malaysia securities Berhad. she was appointed as

a director of QsR Brands Bhd (“QsR”) on 7 June

2006. she is the Chairman of audit Committee of

QsR and a member of audit Committee of Kulim

(Malaysia) Berhad. as a professional accountant she

also provides financial training for companies within

Malaysia.

she is also the Chairman of the audit Committee of

KFCH. 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


she has not been convicted for any offences.

she attended all six (6) Board Meetings of the


31 december 2011.


KUA HWEE SIMIndependent Non Executive Director


annual Report 2011


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 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.

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.

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 an-nur 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 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 was a Board member of MaTRadE from 1999 to 2010 and an independent non-Executive director of Bursa Malaysia from 2004 to april 2012.

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.

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.

she attended four (4) out of six (6) Board Meetings of the Company held during the financial year ended 31 december 2011.

DATIN PADUKA SITI SA’DIAH BINTI SHEIKH BAKIRNon Independent Non Executive Director


annual Report 2011


Datuk Ismee bin Ismail, Malaysian, aged 47, was

appointed to the Board of KFC Holdings (Malaysia)

Bhd (“KFCH”) on 1 March 2009 as a non independent

non Executive director. He is a Fellow member of the

Chartered institute of Management accountants and

a member of the Malaysian institute of accountants.

datuk ismee is presently the group Managing

director and Chief Executive officer of lembaga

Tabung Haji. Prior to that, he was the Chief Executive

officer of ECM libra securities and a director of ECM

libra Capital sdn Bhd. He has also served several

organisations namely as senior general Manager of

Finance, lembaga Tabung Haji; Chief accountant at

Pengurusan danaharta nasional Berhad; general

Manager of Business development at arab Malaysian

development Berhad and has held several finance-

related positions at shell Malaysia.

datuk ismee is a director of BiMB Holdings Berhad,

syarikat Takaful Malaysia Berhad and TH Plantations

Berhad. He is a member of the nomination and

assessment Committee and Remuneration

Committee of BiMB Holdings Berhad. He was

appointed as a director of Johor Corporation on 1

november 2010.






He attended three (3) out of six (6) Board Meetings

of the Company held during the financial year ended

31 december 2011.

DATUK ISMEE BIN ISMAILNon Independent Non Executive Director


annual Report 2011

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.

yaM Tengku sulaiman shah has completed Wellingborough Primary & secondary school at northamptonshire, United Kingdom and at greylands College Bembridge, isle of Wright.

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 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

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 was formerly a director of Malaysian Resources Corporation Berhad, samanda Holdings Berhad, MCB Holdings Berhad, siME UEP Properties Berhad and Bina goodyear Berhad.

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.

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.

YAM TENGKU SULAIMAN SHAH ALHAJ IBNI ALMARHUM SULTAN SALAHUDDIN ABDUL AzIz SHAH ALHAJIndependent Non Executive Director



annual Report 2011


Tan Sri Dato’ Dr Yahya bin Awang, Malaysia, aged

62 was appointed to the Board of KFC Holdings

(Malaysia) Bhd (“KFCH”) on 2 May 2008 as an

independent non Executive director.

one of the Colombo Plan scholars, Tan sri graduated

from Monash University in australia with a Bachelor of

Medicine and Bachelor of surgery (“MBBs”) degree

in 1974. in 1980, Tan sri was appointed as a Fellow

of the Royal College of surgeons and Physicians of

glasgow (“FRCs”).

Moving to london in 1981, Tan sri worked as surgical

Registrar in the department of Cardiothoracic surgery

at Brampton Hospital before returning to Malaysia

to take up the role of Cardiothoracic surgeon at

general Hospital. in 1985, he was appointed Head

and senior Consultant Cardiothoracic surgeon at

general Hospital.

From 1992 until 2002, Tan sri held the position

of Head and senior Consultant Cardiothoracic

surgeon at Malaysia’s national Heart institute, and

from 1998 to 2002, he was also Medical director of

the institute.

Tan sri’s many professional achievements include

performing open-heart surgery on Tun dr Mahathir

Mohamad in 1989; pioneering the establishment

of The national Heart institute of Malaysia in 1992;

and performing the first heart transplant in Malaysia

in 1998. Tan sri is author of many scholarly and

professional articles and has made numerous

presentations to professional audiences.

Tan sri is currently the Consultant Cardiothoracic

surgeon at damansara Heart Centre, damansara

specialist Hospital. He is also Chairman of the

national Transplant Registry and a council member

of the association of Thoracic and Cardiovascular

surgeons of asia.

He is a member of the audit Committee and a member

of the nomination and Remuneration Committee of

KFCH. other than as disclosed, he does not have

any family relationship with any director and/or major






31 december 2011.

TAN SRI DATO’ DR YAHYA BIN AWANG Independent Non Executive Director


annual Report 2011


Hassim bin Baba, Malaysian, aged 66, was

appointed as an independent non Executive

director of KFC Holdings (Malaysia) Bhd (“KFCH”)

on 29 april 2005. He graduated with a diploma

in Business administration from the then MaRa

institute of Technology (“MiT”), Malaysia and

passed the securities institute of australia and

london Chartered institute of Company secretaries

examinations and qualified as an australia securities

analyst and Chartered Company secretary.

He is a member of the audit Committee of KFCH.



shareholder of the Company. save as disclosed, he

has no personal interest in any business arrangement

involving KFCH. He has not been convicted for any

offences.



31 december 2011.

HASSIM BIN BABAIndependent Non Executive Director


annual Report 2011

Board of Directors Kentucky Fried Chicken Management Pvt Ltd (KFC Singapore)

AHAMAD BIN MOHAMAD

Chairman


Director

MICHAEL GIAN

Chief Executive Officer


annual Report 2011

Board of Directors Mumbai Chicken Pvt Ltd Pune Chicken Restaurants Pvt Ltd (KFC India)

AHAMAD BIN MOHAMAD

Chairman


Director

MOHD zAM BIN MUSTAMAN

Director

MOHAMMAD BIN ALWI

Director


annual Report 2011

Board of Directors KFC (B) Sdn Bhd(KFC Brunei Darussalam)

AHAMAD BIN MOHAMAD

Deputy Chairman

NELKY GOH

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


annual Report 2011


Director

DATUK TAN CHENG KIAT

Director

GOH THIAM FATT

Director

Board of Directors KFC (B) Sdn Bhd (KFC Brunei Darussalam)


annual Report 2011

Top Management Committee

1. JAMALUDIN BIN MD ALI

Managing Director

3. AzIzAH BINTI ABDUL RAHMAN

Director

Integrated Poultry & Food

Manufacturing

5. ALAN AU

Deputy President,

KFC Peninsular Malaysia

7. EDMUND LOONG

Senior General Manager,

Group Finance

2. SHEIK SHARUFUDDIN BIN

SHEIK MOHD

Executive Director

4. MOHD zAM BIN MUSTAMAN

Director

Legal Advisory, Development

& Corporate Services

6. MJ LING

Senior Vice President

Pizza Hut Malaysia & KFC

East Malaysia

1

4

7

2

5

3

6


annual Report 2011

Head of Division

1. FOO PENG PENG

Managing Director

KFC Marketing Sdn Bhd

2. DR KOOI ENG TIONG

President

Poultry Integration

1

4

2

5

3

5. ROSNIzA BINTI BAHARUM

General Manager

Group Corporate Communications

4. MOHD IzANI BIN HASSAN

Senior General Manager

Group Properties, Technical &

Maintenance

3. AzAMI BIN MUSTAPHA

Vice President

Ayamas Food Corporation


annual Report 2011

Head of Division

6. MOHD ROSLAN BIN MOHD SALUDIN

General Manager

Shariah & Halal Compliance

6 7 8

7. SHARIFAH MUSAINAH BINTI SYED ALWI

General Manager

Group Human Resources

8. zAITON BINTI IBRAHIM


KFCH International College

9. HISHAMUDDIN BIN HAMIDON

General Manager

Kedai Ayamas & RasaMas

9


annual Report 2011

Head of Division

10. MICHEAL GIAN


KFC & Pizza Hut Singapore

12. NELKY GOH

Managing Director

KFC Brunei

11. MOHAMMAD BIN ALWI


KFC India

10 11 12


annual Report 2011

1. KAMARUzzAMAN BIN ABU KASSIM

2. AHAMAD BIN MOHAMAD

3. TAN SRI DATO’ ABDUL KADER BIN TALIP

4. DATO’ HAJI NOOH BIN GADOT

5. PROF. DATUK DR. SIDEK BIN BABA

6. JAMALUDIN BIN MD ALI

7. MOHD ROSLAN BIN MOHD SALUDIN

Shariah Advisory Council

1

4

7

2

5

3

6


annual Report 2011

Corporate Information

BOARD OF DIRECTORS

1. Kamaruzzaman bin Abu Kassim Chairman Non Independent Non Executive Director

2. Ahamad bin Mohamad Deputy Chairman Non Independent Non Executive Director

3. Jamaludin bin Md Ali Managing Director/Chief Executive Officer

4. Kua Hwee Sim Independent Non Executive Director

5. Datin Paduka Siti Sa’diah binti Sheikh Bakir Non Independent Non Executive Director

6. Datuk Ismee bin Ismail Non Independent Non Executive Director

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

9. Hassim bin Baba Independent Non Executive Director

ExECUTIVE COMMITTEE

1. Ahamad bin Mohamad Chairman

2. Jamaludin bin Md Ali Member

3. Sheik Sharufuddin bin Sheik Mohd Member

SHARIAH ADVISORY COUNCIL

Kamaruzzaman bin Abu KassimAhamad bin MohamadTan Sri Dato’ Abdul Kader bin TalipDato’ Haji Nooh bin GadotProf. Datuk Dr. Sidek bin BabaJamaludin bin Md AliMohd Roslan bin Mohd Saludin (Secretary)

AUDIT COMMITTEE

1. Kua Hwee Sim Chairman

2. Tan Sri Dato’ Dr Yahya bin Awang Member

3. Hassim bin Baba Member

COMPANY SECRETARIES

Idham Jihadi bin Abu Bakar(MAICSA 7007381)

Heng Ai Leng(MAICSA 7017245)

AUDITORS

KPMG, Chartered Accountantslevel 10, KPMg Tower, 8 First avenueBandar Utama, 47800 Petaling Jayaselangor

PRINCIPAL BANKERS

affin islamic Bank Berhadamislamic Bank BerhadBank Muamalat Malaysia BerhadCiMB Bank BerhaddBs Bank ltdHsBC amanah Malaysia BerhadMalayan Banking Berhad

SOLICITORS

M/s azmi & associatesM/s Kadir, andri & PartnersM/s Zainal abidin & Co

REGISTERED OFFICE

level 11, Menara JCorp, no 249 Jalan Tun Razak 50400 Kuala lumpurTel no: 03-2787 2787 Fax no: 03-2787 2777

REGISTRAR & TRANSFER OFFICE

Pro Corporate Management services sdn Bhdsuite 12B, Tingkat 12Menara ansarno 65 Jalan Trus80000 Johor Bahru, JohorTel no: 07-226 7476Fax no: 07-222 3044

STOCK ExCHANGE LISTING

Bursa Malaysia securities Berhad, Main Board


annual Report 2011

Group Structure

100%Kentucky Fried Chicken (Malaysia) Sdn Bhd- KFC restaurants

100%KFC (Peninsular Malaysia) Sdn Bhd- KFC restaurants- Commissary

100% KFC (Sarawak) Sdn Bhd- KFC restaurants

90% KFC (Sabah) Sdn Bhd - KFC restaurants

100%KFC Events Sdn Bhd- sales of food products vouchers

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

KFC Holdings (Malaysia) Bhd

89.2%Rasamas Tebrau Sdn Bhd- Restaurant (intrapreneur)

89.1%Rasamas Taman Universiti Sdn Bhd- Restaurant (intrapreneur)

100%SPM Restaurants Sdn Bhd- Meals on wheels- Property holding

51%KFC (B) Sdn Bhd- KFC restaurants

100%Rasamas Sdn Bhd (Brunei)- Restaurants


annual Report 2011

100%Ladang Ternakan Putihekar (N.S.) Sdn Bhd- Breeder farm

100%MH Integrated Farm Berhad- Property holding

Group Structure

100%WQSR Holdings (S) Pte Ltd- investment holding

100%KFC India Holdings Sdn Bhd- investment holding

100%Integrated Poultry Industry Sdn Bhd- Poultry processing plant

100% Ayamas Integrated Poultry Industry Sdn Bhd- Breeder and broiler farms- Hatchery- Feedmill

100%Rasamas Holdings Sdn Bhd- Restaurants

100%Ayamas Shoppe Sdn Bhd- Convenience food store

100%KFC Manufacturing Sdn Bhd- Trading- Bakery

100%Ayamas Food Corporation Sdn Bhd- Poultry processing & further processing plants

100%Kentucky Fried Chicken Management Pte Ltd - KFC restaurants

100%Kernel Foods Private Limited- KFC restaurants

100%KFCH Restaurants Private Limited- KFC restaurants

100%Pune Chicken Restaurants Private Limited- KFC restaurants

100%Mauritius Food Corporation Pvt Ltd - investment holding

65%Ayamas Shoppe (Sabah) Sdn Bhd- Convenience food store

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


annual Report 2011

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)ExecutiveDirector

• Four(4)NonIndependentNonExecutiveDirector

• Four(4)IndependentNonExecutiveDirector

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 non-independent 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.

Corporate Governance Statement


annual Report 2011

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.



annual Report 2011

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 decision-making 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.



annual Report 2011

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 non-Executive directors are remunerated based on fixed annual fees approved by the shareholders of the Company.



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The details on the remuneration of the directors are as follows:

Fees/ Allowances/ Basic Other Benefits Salary Emoluments Bonus -in-kind Total RM RM RM RM RM

ExECUTIVE DIRECTOR Jamaludin bin Md ali 621,156 178,348 298,080 131,141 1,228,725 NON-ExECUTIVE DIRECTORS Kamaruzzaman bin abu Kassim - 115,000 - - 115,000ahamad bin Mohamad - 84,000 - 26,867 110,867yaM Tengku sulaiman shah alhaj ibni almarhum sultan salahuddin abdul aziz shah alhaj - 33,667 - - 33,667Kua Hwee sim - 69,000 - - 69,000datin Paduka siti sa’diah binti sheikh Bakir - 56,000 - - 56,000Tan sri dato’ dr yahya bin awang - 65,000 - - 65,000datuk ismee bin ismail - 54,500 - - 54,500Hassim bin Baba - 65,000 - - 65,000*Tan sri dato’ Muhammad ali bin Hashim - 4,167 - - 4,167

Total 621,156 724,682 298,080 158,008 1,801,926

* 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



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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:

• Arefairlyrewardedfortheirindividualcontributiontooverallperformance; • ArecompensatedreasonablyinlightoftheCompany’sobjectives;and • Arecompensatedsimilartoothercompanies.

2. Establish the Managing director/Chief Executive officer’s goals and objectives; and3. Review the Managing director/Chief Executive officer’s performance against the goals and

objectives set.



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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:

• Createahigh-levelriskstrategy(policy)alignedwithGroup’sstrategicbusinessobjectives;• Communicateboardvision,strategy,policy,responsibilities,andreportinglinestoallemployees

across the group;• IdentifyandcommunicatetotheBoardthecriticalrisks(presentorpotential)theGroupfaces,

their changes, and the management action plans to manage the risks; • Performriskoversightandreviewriskprofilesandorganisationalperformance;

• Aggregating theGroup’s riskpositionandyearly reporting to theBoardontherisksituation/status;

• SetperformancemeasuresfortheGroup;and• Provideguidance to thebusinessunitson theGroup’sandbusinessunit’s riskappetiteand

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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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.



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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.



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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:

Date of Meetings

Audit Committee Members 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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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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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:

• Compliancewithaccountingstandardsandotherlegalrequirements. • Anychangesintheaccountingpoliciesandpractices. • Significantissuesarisingfromtheaudit. • Thegoingconcernassumption.

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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• Reviewtheadequacyofscope,function,competencyandresourcesoftheinternalauditfunctionandthat it has the necessary authority to carry out its work.

• Reviewtheinternalauditprogrammeandtheresultsofauditworkandwherenecessaryensurethatappropriate action is taken on the recommendations of the internal auditors.

• Reviewthecoordinationofexternalauditandinternalaudit.

• ReviewanymajordiscoveriesofauditinvestigationsandManagement’sresponse.

• Approve the appointment of senior staff members of internal audit function, review performanceappraisals 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 SIMChairperson



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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.


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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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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 JAMALUDIN BIN MD ALIChairman Managing Director



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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:-

RM’000 KPMg 38 KPMg Tax services sdn Bhd 22 Total 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.

Additional Compliance Information


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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

•PizzaHutRestaurants sdn Bhd (“PHR”)

•KampucheaFood Corporation Co ltd (“Kampuchea”)

•PizzaHutsingapore Pte ltd (“PH singapore”)

•PHDDeliverysdn 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

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.

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.

Relationship of KFCH Group with related parties

Interested DirectorsKamaruzzaman 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 ShareholdersQsR/QsR Ventures sdn Bhd (“QsR Ventures”)

Kulim

JCorp

Aggregate Value of

TransactionRM’000

35,166

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: -


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KFC Manufacturing sdn Bhd (“KFCM”)


•PHR

•Kampuchea

•PHD


KFCM sale of packaging materials, spare parts and bakery products to PHR, Kampuchea and PHd


PHR is a wholly owned subsidiary of QsR.





Interested Major ShareholdersQsR/QsR Ventures

Kulim

JCorp

Aggregate Value of

TransactionRM’000

62,466

937KFC (Peninsular Malaysia) sdn Bhd (“KFCPM”)

•PHR

•Kampuchea

•PHD

KFCPM sale of vegetables, salad and coleslaw to PHR, Kampuchea and PHd






Kulim

JCorp


annual Report 2011



Region Food industries sdn Bhd (“RFisB”)


•PHSingapore

•PHR


RFisB sale of chilli and tomato sauces to PH singapore and PHR


PH singapore is a wholly owned subsidiary of Multibrand QsR Holdings Pte ltd which is wholly owned by QsR.





Kulim

JCorp

Aggregate Value of

TransactionRM’000

1,126


annual Report 2011



- sPM Restaurants sdn Bhd (“sPM”)

- Kentucky Fried Chicken (Malaysia) sdn Bhd (“KFC(M)”)

- KFCPM


PHR


Payment of monthly rental by PHR to sPM, KFC(M) and KFCPM for the following properties:-

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.






Kulim

JCorp

Aggregate Value of

TransactionRM’000

1,090


annual Report 2011



- KFCH

- KFCM

- KFC(M)

- KFCPM

- 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.

Interested DirectorsKamaruzzaman 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 ShareholderJCorp


JKing sdn Bhd(“JKing”)


KFCH, KFCM, KFC(M) and KFCPM purchase of apparels from JKing


JKing is a subsidiary of Johor Franchise development sdn Bhd which in turn is a wholly owned subsidiary of JCorp.

Relatioship of KFCH Group with related parties



Aggregate Value of

TransactionRM’000

43

6,891


annual Report 2011


- RFisB

- KFCM

- Tepak Marketing sdn Bhd (“Tepak”)

- KFC Marketing

- Tepak

Hotel selesa JB sdn Bhd (“Hotel selesa JB”)

KFC Marketing and Tepak sale of chicken products and Zippie products to Hotel selesa JB

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.




Rajaudang


RFisB, KFCM and Tepak sale of sauce, deli Pai, sardine Roll and Zippie drinks to Rajaudang






Aggregate Value of

TransactionRM’000

nil

14



annual Report 2011


KFCH


Metro Parking (M) sdn Bhd (“Metro Parking”)


KFCH’s payment of season parking fees to Metro Parking at Wisma KFC. The parking facility at Wisma KFC is managed by Metro Parking


Metro Parking is a subsidiary of sindora Berhad (“sindora”). sindora is a wholly owned subsidiary of Kulim.


Interested DirectorsKamaruzzaman bin abu Kassim, ahamad bin Mohamad, Jamaludin bin Md ali, Kua Hwee sim, datinPaduka siti sa’diah binti sheikh Bakir and datuk ismee bin ismail

Interested Major ShareholdersKulim

JCorp

Aggregate Value of

TransactionRM’000

138

210KFCH 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 Major ShareholdersKulimJCorp



annual Report 2011

- 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.





KFCH group


Pro Corporate Management services sdn Bhd (“Pro Corporate’)


KFCH group’s payment of share registrar and secretarial services fees to Pro Corporate


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.

Relationhip of KFCH Group with related parties



Aggregate Value of

TransactionRM’000

541

312


annual Report 2011


KFCH group


JCorp


KFCH group’s payment to JCorp for the transportation, administrative and secretarial services


JCorp is the holding corporation of QsR via its direct and indirect shareholdings (through Kulim).


Interested DirectorsKamaruzzaman 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 ShareholderJCorp

Aggregate Value of

TransactionRM’000

268

1,246- 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




annual Report 2011

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.




- RFisB

- ayamas


Pro Communication sdn Bhd ( “ProCommunication”)


RFisB and ayamas purchase of signboard from Pro Communication


Pro Communication is a subsidiary of Johor Franchise development sdn Bhd which in turn is a wholly owned subsidiary of JCorp.




Aggregate Value of

TransactionRM’000

55

124



annual Report 2011



KFCH group


Pro office solutions sdn Bhd (“Pro office”)


KFCH group’s payment to Pro office for the provision of courier and mailing room services


Pro office is a subsidiary of sindora.




JCorp

Aggregate Value of

TransactionRM’000

1,926

69- 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 Major Shareholders Kulim

JCorp


annual Report 2011



- KFC(M)

- KFCM

- Kay


Tepak


Tepak sale of tea and Zippie drinks to KFC(M), KFCM and Kay


Tepak is a subsidiary of KFCH. sindora owns 20% whilst JCorp owns 19.99%.




Kulim

JCorp

Aggregate Value of

TransactionRM’000

182

786KFC Events sdn Bhd (“KFC Events”)

PHR Payment of commissions by PHR to KFC Events for the sale of vouchers




Kulim

JCorp


annual Report 2011


KFCPM


Metro Parking


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)


Metro Parking is a subsidiary of sindora.




JCorp

Aggregate Value of

TransactionRM’000

6

20KFC 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.





annual Report 2011


- KFCPM

- KFC Marketing

- KFC Marketing


Tepak

Tepak


Tepak sale of tea and packing service to KFCPM and KFC Marketing

KFC Marketing’s payment to Tepak for transportation services






Kulim

JCorp

Aggregate Value of

TransactionRM’000

56

30

138KFCPM 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)

Tenancy agreement for the above property is for a period of 3 years.

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.





annual Report 2011


KFC Marketing


Puteri Hotels


KFC Marketing sale of chicken products to Puteri Hotels


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.




Aggregate Value of

TransactionRM’000

97

120- 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.





annual Report 2011


Rasamas Holdings


- damansara assets

- TPM Management sdn Bhd (“TPM”)


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)

Tenancy agreements for the above properties are for a period of 3 years.


- damansara assets is a wholly owned subsidiary of JCorp.

- TPM is a related company to JCorp. JCorp owned 0.61% through its subsidiary.




Aggregate Value of

TransactionRM’000

43

80



annual Report 2011


- RFisB

- KFCM


Tepak


Tepak sale of lemon grass to RFisB. Tepak’s provision of packing services of KFC’s condiment to KFCM.






Kulim

JCorp

Aggregate Value of

TransactionRM’000

nil

8KFC 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.





annual Report 2011


Kay


Rajaudang


Kay sale of chicken products to Rajaudang.






Aggregate Value of

TransactionRM’000

607

nilRasamas Holdings

iPPJ Rasamas Holdings sale of its variant chicken products to iPPJ

iPPJ is a subsidiary of JCorp.





annual Report 2011


KFCH


akademi JCorp sdn Bhd (“akademi JCorp”)


KFCH’s payment to akademi JCorp for the provision of training and seminars


akademi JCorp is a subsidiary of JCorp.




Aggregate Value of

TransactionRM’000

133

6

115

- KFCPM

- KFCM

The secret of secret garden sdn Bhd (“Tssg”)

KFCPM’s purchase of Tssg products (toiletries) for souvenirs.

KFCM’s purchase of Tssg products as inventory for re-sale

Tssg is a wholly owned subsidiary of Kulim.



JCorp



annual Report 2011


Usahawan Bistari ayamas sdn Bhd (“Usahawan Bistari”)


Pro Communication


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.




Aggregate Value of

TransactionRM’000

18

1,028- KFCPM

- KFCM

- Kay

Rajaudang KFCPM, KFCM and Kay sale of used cooking oil to Rajaudang






annual Report 2011


KFCH Education (M) sdn Bhd (formerly known as Paramount Holdings (M) sdn Bhd) (“KFC College/Education”)


1. Pro Biz solution sdn Bhd (“Pro Biz solution”)

2. Pro Communi- cation


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

2. KFCH Education’s payment of promotion and advertising fees (printed marketing materials like billboards, signages, banners and poster etc) to Pro Communi-

cation


1. Pro Biz solution is a subsidiary of damansara assets.

2. Pro Communi-

cation is a subsidiary of Johor Franchise development sdn Bhd which in turn is a wholly owned subsidiary of JCorp.




JCorp

Aggregate Value of

TransactionRM’000

33

36



annual Report 2011



3. Pro office

4. sovereign Multimedia Resources sdn Bhd (“sovereign”)

5. Tssg


3. KFCH Education’s payment to Pro office for the provision of courier and mailing room services.

4. KFCH Education’s payment of rental cost of computers to sovereign

5. KFCH Education’s purchase of souvenir and gifts from Tssg


3. Pro office is a subsidiary of sindora.

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.

5. Tssg is a wholly owned subsidiary of Kulim


Aggregate Value of

TransactionRM’000

nil

133

2



annual Report 2011


MH integrated Berhad (“MH int”)


1. EPa Manage-

ment sdn Bhd (“EPa”)

2. Extreme Edge sdn Bhd (“Extreme Edge”)

3. Edaran Badang sdn Bhd (“Edaran”)

4. Kulim nursery sdn Bhd (“Kulim nursery”)


1. MH int payment of manage-ment and admini-strative services for the palm oil businesses and palm oil estate manage-

ment to EPa

2. MH int purchase of computer equipments from Extreme Edge. MH int payment for the computer services provided by Extreme Edge

3. MH int purchase of hardwares, spare parts for motor vehicles and furniture from Edaran

4. MH int purchase of oil palm seedling and bio compost from Kulim nursery


1. EPa is a wholly owned subsidiary of Kulim.

2. Extreme Edge is a wholly owned subsidiary of EPa.

3. Edaran is a subsidiary of EPa.

4. Kulim nursery is a subsidiary of Kulim.




JCorp

Aggregate Value of

TransactionRM’000

70

nil

109

12



annual Report 2011


sPM

Tepak


damansara assets

Bistari young


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

Tenancy agreement for the above property is for a period of 3 years.

Payment to Tepak for packing services


damansara assets is a wholly owned subsidiary of 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.






Aggregate Value of

TransactionRM’000

1,918

19

Total 118,427



annual Report 2011

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 Highest purchase purchase Average Date of No of shares price price purchase Purchasepurchase purchased (RM) (RM) price (RM) Consideration (RM) 3 May 2011 128,200 3.68 3.71 3.6989 475,963.844 May 2011 130,000 3.66 3.73 3.7027 483,139.465 May 2011 40,000 3.69 3.72 3.7010 148,677.546 May 2011 116,400 3.69 3.71 3.7013 432,453.069 May 2011 57,800 3.70 3.72 3.7123 215,479.0310 May 2011 178,400 3.74 3.70 3.7201 666,055.9411 May 2011 77,400 3.72 3.75 3.7333 290,110.9812 May 2011 51,800 3.73 3.80 3.7613 195,673.3113 May 2011 22,000 3.84 3.85 3.8429 85,161.4318 July 2011 220,000 3.84 3.94 3.8752 855,557.4019 July 2011 175,000 3.83 3.90 3.8691 679,526.9120 July 2011 105,000 3.87 3.90 3.8933 410,345.5326 July 2011 186,000 3.88 3.94 3.9102 729,897.2827 July 2011 67,300 3.93 3.98 3.9620 267,722.5328 July 2011 14,500 3.93 3.97 3.9521 57,724.4829 July 2011 40,000 3.94 3.95 3.9450 158,478.741 august 2011 73,000 3.95 3.99 3.9851 292,072.322 august 2011 79,000 3.95 3.98 3.9684 314,738.173 august 2011 40,200 3.87 3.88 3.8725 156,344.238 august 2011 205,000 3.60 3.68 3.6390 748,656.799 august 2011 10,000 3.48 3.48 3.4800 35,054.2411 august 2011 16,000 3.69 3.69 3.6900 59,471.9612 august 2011 10,000 3.78 3.78 3.7800 38,076.1417 august 2011 25,000 3.90 3.94 3.9196 98,705.3419 august 2011 10,000 3.83 3.83 3.8300 38,580.29

Total 2,078,000 7,933,666.94


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

Financial Statements

127KFC HoLDINgS (MALAySIA) BHD (65787-T)

Annual Report 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

Group company rM’000 rM’000

Profit attributable to: owners of the Company 144,005 95,621 Non-controlling interests 2,566 -

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 (Chairman)Ahamad bin Mohamad (Deputy Chairman)yAM Tengku Sulaiman Shah Alhaj ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Alhaj (Appointed on 1 June 2011)Jamaludin bin Md Ali (Managing Director/Chief Executive officer)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

Directors’ Reportfor the year ended 31 December 2011


Annual Report 2011


directors’ interests

The interests in the shares and warrants of the Company and of its related corporations (other than wholly-owned 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 at at 1.1.2011 acquired disposed 31.12.2011

direct interestcompanyAhamad bin Mohamad 172,000 - (172,000) - Hassim bin Baba 400 - - 400


immediate holding companyQsr Brands BhdDatin Paduka Siti Sa’diah binti Sh Bakir 1,000 - - 1,000Hassim bin Baba 32 - - 32


intermediate holding companyKulim (Malaysia) BerhadAhamad bin Mohamad 229,600 733,800 - 963,400Datin Paduka Siti Sa’diah binti Sh Bakir 69,500 208,500 - 278,000

number of warrants at at 1.1.2011 acquired disposed 31.12.2011

companyHassim bin Baba 16 - - 16

immediate holding companyQsr Brands BhdHassim bin Baba 32 - - 32

intermediate holding companyKulim (Malaysia) BerhadAhamad bin Mohamad - 114,800 (114,800) -Datin Paduka Siti Sa’diah binti Sh Bakir - 34,750 - 34,750

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.


Annual Report 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


Annual Report 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 aliManaging Director/Chief Executive officer

Kuala Lumpur

Date: 7 March 2012


Annual Report 2011

Group company 2011 2010 2011 2010 note rM’000 rM’000 rM’000 rM’000

assets Property, plant and equipment 3 1,228,459 999,984 24,687 24,106Intangible assets 4 74,034 73,596 - -Investment properties 5 910 910 - -Investments in subsidiaries 6 - - 513,260 395,072other investments 7 24,282 22,400 24,282 22,400

total non-current assets 1,327,685 1,096,890 562,229 441,578

Inventories 8 234,322 200,797 - -Trade and other receivables 9 173,270 153,633 171,713 170,362Cash and cash equivalents 10 102,949 131,712 1,812 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

equityShare capital 11 396,633 396,615 396,633 396,615Reserves 11 101,562 111,406 3,892 11,309Retained earnings 11 576,020 482,226 222,370 177,099

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

liabilitiesLoans and borrowings 12 188,504 105,845 46,400 - Deferred tax liabilities 13 74,022 51,795 1,255 779Employee benefits 14 2,700 2,913 - -

total non-current liabilities 265,226 160,553 47,655 779

Trade and other payables 15 400,848 357,164 62,204 10,113Current tax liabilities 14,626 12,697 - -Loans and borrowings 12 65,745 46,702 3,000 20,000Employee benefits 14 301 644 - -

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

Statements of Financial Positionas at 31 December 2011

The notes on pages 139 to 202 are an integral part of these financial statements.


Annual Report 2011

Group company 2011 2010 2011 2010 note rM’000 rM’000 rM’000 rM’000 revenue 16 2,798,780 2,522,358 115,867 51,337Cost of sales (1,310,546) (1,167,928) - -

Gross profit 1,488,234 1,354,430 115,867 51,337other income 26,613 24,905 33,213 40,644 Administrative expenses (145,736) (127,365) (33,830) (38,569)Selling and marketing expenses (1,140,157) (1,017,561) - -other expenses (6,759) (8,212) (382) -

results from operating activities 222,195 226,197 114,868 53,412Finance costs 17 (6,702) (4,364) (969) (994)

Profit before tax 18 215,493 221,833 113,899 52,418Income tax expense 20 (68,922) (62,131) (18,278) (10,389)

Profit for the year 146,571 159,702 95,621 42,029

other comprehensive (expense)/income, net of taxForeign currency translation differences

for foreign operations (2,529) (947) - - Fair value of available-for-sale financial assets 599 1,521 599 1,521Net surplus arising from revaluation

of properties - 89,843 - 2,252

total other comprehensive (expense)/ income for the year (1,930) 90,417 599 3,773

total comprehensive income for the year 144,641 250,119 96,220 45,802 Profit attributable to:

owners of the Company 144,005 156,848 95,621 42,029Non-controlling interests 2,566 2,854 - -

Profit for the year 146,571 159,702 95,621 42,029

total comprehensive income attributable to: owners of the Company 142,075 247,265 96,220 45,802 Non-controlling interests 2,566 2,854 - -

total comprehensive income for the year 144,641 250,119 96,220 45,802

Basic earnings per ordinary share (sen) 21 18.18 19.78

diluted earnings per ordinary share (sen) 21 18.05 19.64

Statements of Comprehensive Incomefor the year ended 31 December 2011



Annual Report 2011

Consolidated Statement of Changes in Equity for the year ended 31 December 2011

A

ttri

bu

tab

le t

o o

wn

ers

of

the

Co

mp

any

N

on

-dis

trib

uta

ble

D

istr

ibu

tab

le

n

on-

s

hare

s

hare

W

arra

nts

fai

r va

lue

tran

slat

ion

rev

alua

tio

n tr

easu

ry

ret

aine

d

co

ntro

lling

to

tal

cap

ital

p

rem

ium

re

serv

e re

serv

e re

serv

e re

serv

e sh

ares

ea

rnin

gs

tota

l in

tere

sts

equi

tyG

roup

n

ote

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

at

1 Ja

nuar

y 20

10

198,

275

18,7

36

- -

2,07

2 25

,169

-

547,

505

791,

757

12,4

91

804,

248

Fore

ign

curr

ency

tra

nsla

tion

diffe

renc

es fo

r fo

reig

n op

erat

ions

-

-

-

-

(947

) -

-

-

(947

) -

(9

47)

Fair

valu

e of

ava

ilabl

e-fo

r-sa

le

finan

cial

ass

ets

-

-

- 1,

521

-

-

- -

1,

521

-

1,52

1N

et s

urpl

us a

risin

g fro

m

re

valu

atio

n of

pro

pert

ies

-

-

- -

-

89

,843

-

-

89,8

43

-

89,8

43

Tota

l oth

er c

ompr

ehen

sive

inco

me/

(e

xpen

se) f

or t

he y

ear

-

-

- 1,

521

(947

) 89

,843

-

-

90,4

17

-

90,4

17P

rofit

for

the

year

-

-

-

-

-

-

- 15

6,84

8 15

6,84

8 2,

854

159,

702

tota

l co

mp

rehe

nsiv

e in

com

e

for

the

year

-

-

-

1,52

1 (9

47)

89,8

43

- 15

6,84

8 24

7,26

5 2,

854

250,

119

Def

erre

d ta

x on

rev

alua

tion

su

rplu

s 13

-

- -

- -

(10,

508)

-

- (1

0,50

8)

-

(10,

508)

Tran

sfer

from

rev

alua

tion

re

serv

e

- -

- -

- (2

14)

- 21

4 -

-

-

Incr

ease

in n

on-c

ontr

ollin

g

inte

rest

s

- -

- -

- -

- -

-

96

96

Issu

ance

of s

hare

cap

ital

- bo

nus

issu

e 11

19

8,27

4 (1

8,72

1)

- -

- -

- (1

79,5

53)

- -

- -

conv

ersi

on o

f war

rant

s 11

66

34

8 (1

7)

- -

- -

- 39

7 -

397

Issu

ance

of w

arra

nts

-

-

4,

124

- -

-

- (4

,124

) -

- -

Div

iden

ds t

o sh

areh

olde

rs

22

-

-

- -

- -

- (3

8,66

4)

(38,

664)

-

(38,

664)

Div

iden

ds o

f sub

sidi

arie

s

-

-

- -

-

- -

-

-

(416

) (4

16)

tota

l co

ntri

but

ion

fro

m/

(d

istr

ibut

ion

to) o

wne

rs

19

8,34

0 (1

8,37

3)

4,10

7 -

-

(10,

722)

-

(222

,127

) (4

8,77

5)

(320

) (4

9,09

5)

at

31 d

ecem

ber

201

0

396,

615

363

4,10

7 1,

521

1,12

5 10

4,29

0 -

482,

226

990,

247

15,0

25

1,00

5,27

2


Annual Report 2011

A

ttri

bu

tab

le t

o o

wn

ers

of

the

Co

mp

any

N

on

-dis

trib

uta

ble

D

istr

ibu

tab

le

n

on-

s

hare

s

hare

W

arra

nts

fai

r va

lue

tran

slat

ion

rev

alua

tio

n tr

easu

ry

ret

aine

d

co

ntro

lling

to

tal

cap

ital

p

rem

ium

re

serv

e re

serv

e re

serv

e re

serv

e sh

ares

ea

rnin

gs

tota

l in

tere

sts

equi

tyG

roup

n

ote

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

at

1 Ja

nuar

y 20

11

39

6,61

5 36

3 4,

107

1,52

1 1,

125

104,

290

-

482,

226

990,

247

15,0

25

1,00

5,27

2

Fore

ign

curr

ency

tra

nsla

tion

di

ffere

nces

for

fore

ign

oper

atio

ns

-

-

-

-

(2,5

29)

-

-

-

(2,5

29)

-

(2,5

29)

Fair

valu

e of

ava

ilabl

e-fo

r-sa

le

fin

anci

al a

sset

s

-

-

-

599

-

-

-

-

599

-

599

Tota

l oth

er c

ompr

ehen

sive

inco

me/

(e

xpen

se) f

or t

he y

ear

-

-

-

59

9 (2

,529

) -

-

-

(1

,930

) -

(1

,930

)P

rofit

for

the

year

-

-

-

-

-

-

-

144,

005

144,

005

2,56

6 14

6,57

1

tota

l co

mp

rehe

nsiv

e in

com

e fo

r th

e ye

ar

-

-

-

59

9 (2

,529

) -

-

14

4,00

5 14

2,07

5 2,

566

144,

641

Tran

sfer

from

rev

alua

tion

re

serv

e

-

-

-

-

-

(313

) -

31

3 -

-

-

Rev

ersa

l of d

efer

red

tax

13

-

-

-

-

-

245

-

-

245

-

24

5

Incr

ease

in n

on-c

ontr

ollin

g

inte

rest

s

-

-

-

-

-

-

-

-

-

619

619

Issu

ance

of s

hare

cap

ital

- co

nver

sion

of w

arra

nts

11

18

92

(5)

-

-

-

-

-

105

-

105

Trea

sury

sha

res

acqu

ired

-

-

-

-

-

-

(7

,933

) -

(7

,933

) -

(7

,933

)D

ivid

ends

to

shar

ehol

ders

22

-

-

-

-

-

-

-

(5

0,52

4)

(50,

524)

-

(5

0,52

4)D

ivid

ends

of s

ubsi

diar

ies

-

-

-

-

-

-

-

-

-

(945

) (9

45)

tota

l co

ntri

but

ion

fro

m/

(d

istr

ibut

ion

to) o

wne

rs

18

92

(5

) -

-

(6

8)

(7,9

33)

(50,

211)

(5

8,10

7)

(326

) (5

8,43

3)

at

31 d

ecem

ber

201

1

396,

633

455

4,10

2 2,

120

(1,4

04)

104,

222

(7,9

33)

576,

020

1,07

4,21

5 17

,265

1,

091,

480

Consolidated Statement of Changes in Equity for the year ended 31 December 2011


Annual Report 2011

Statement of Changes in Equity for the year ended 31 December 2011

N

on

-dis

trib

uta

ble

D

istr

ibu

tab

le

s

hare

s

hare

W

arra

nts

fai

r va

lue

rev

alua

tio

n tr

easu

ry

ret

aine

d

tota

l

ca

pit

al

pre

miu

m

rese

rve

rese

rve

rese

rve

shar

es

earn

ing

s eq

uity

co

mp

any

no

te

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

at

1 Ja

nuar

y 20

10

19

8,27

5 18

,721

-

-

3,

352

- 35

7,21

6 57

7,56

4

Fair

valu

e of

ava

ilabl

e-fo

r-sa

le fi

nanc

ial a

sset

s

-

-

-

1,52

1 -

-

-

1,52

1N

et s

urpl

us a

risin

g fro

m r

eval

uatio

n of

pro

pert

ies

-

-

-

-

2,

252

- -

2,

252

Tota

l oth

er c

ompr

ehen

sive

inco

me

for

the

year

-

-

-

1,52

1 2,

252

- -

3,

773

Pro

fit fo

r th

e ye

ar

-

-

-

-

-

-

42,0

29

42,0

29

tota

l co

mp

rehe

nsiv

e in

com

e fo

r th

e ye

ar

-

-

-

1,

521

2,25

2 -

42,0

29

45,8

02

Def

erre

d ta

x on

rev

alua

tion

surp

lus

13

-

-

-

-

(76)

-

-

(76)

Tran

sfer

from

rev

alua

tion

rese

rve

-

-

-

-

(1

95)

- 19

5 -

Is

suan

ce o

f sha

re c

apita

l-

bonu

s is

sue

11

198,

274

(18,

721)

-

-

-

-

(179

,553

) -

-

conv

ersi

on o

f war

rant

s 11

66

34

8 (1

7)

-

-

- -

39

7Is

suan

ce o

f war

rant

s

-

-

4,12

4 -

-

-

(4,1

24)

-

Div

iden

ds t

o sh

areh

olde

rs

22

-

-

-

-

-

- (3

8,66

4)

(38,

664)

tota

l co

ntri

but

ion

fro

m/(

dis

trib

utio

n to

) ow

ners

198,

340

(18,

373)

4,

107

-

(271

) -

(2

22,1

46)

(38,

343)

at

31 d

ecem

ber

201

0

396,

615

348

4,10

7 1,

521

5,33

3 -

177,

099

585,

023


Annual Report 2011

N

on

-dis

trib

uta

ble

D

istr

ibu

tab

le

s

hare

s

hare

W

arra

nts

fai

r va

lue

rev

alua

tio

n tr

easu

ry

ret

aine

d

tota

l

ca

pit

al

pre

miu

m

rese

rve

rese

rve

rese

rve

shar

es

earn

ing

s eq

uity

co

mp

any

no

te

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

at

1 Ja

nuar

y 20

11

39

6,61

5 34

8 4,

107

1,52

1 5,

333

- 17

7,09

9 58

5,02

3

Fair

valu

e of

ava

ilabl

e-fo

r-sa

le fi

nanc

ial a

sset

s

-

-

-

599

-

- -

59

9 P

rofit

for

the

year

-

-

-

-

-

- 95

,621

95

,621

tota

l co

mp

rehe

nsiv

e in

com

e fo

r th

e ye

ar

-

-

-

59

9 -

-

95,6

21

96,2

20

Tran

sfer

from

rev

alua

tion

rese

rve

-

-

-

-

(1

74)

- 17

4 -

Rev

ersa

l of d

efer

red

tax

13

-

-

-

-

4 -

-

4

Issu

ance

of s

hare

cap

ital

- co

nver

sion

of w

arra

nts

11

18

92

(5)

-

-

- -

10

5Tr

easu

ry s

hare

s ac

quire

d

-

-

-

-

-

(7,9

33)

-

(7,9

33)

Div

iden

ds t

o sh

areh

olde

rs

22

-

-

-

-

-

- (5

0,52

4)

(50,

524)

tota

l co

ntri

but

ion

fro

m/(

dis

trib

utio

n to

) ow

ners

18

92

(5)

-

(170

) (7

,933

) (5

0,35

0)

(58,

348)

at

31 d

ecem

ber

201

1

396,

633

440

4,10

2 2,

120

5,16

3 (7

,933

) 22

2,37

0 62

2,89

5

Statement of Changes in Equity for the year ended 31 December 2011

The

note

s on

pag

es 1

39 t

o 20

2 ar

e an

inte

gral

par

t of

the

se fi

nanc

ial s

tate

men

ts.


Annual Report 2011


cash flows from operating activities

Profit before tax 215,493 221,833 113,899 52,418Adjustments for: Amortisation of franchise fees 4 5,061 6,736 - - Depreciation of property, plant and

equipment 3 103,350 86,590 1,890 1,536 Finance costs 17 6,702 4,364 969 994 Loss/(gain) on disposal of property,

plant and equipment 5,008 3,920 382 (118) Dividend income from subsidiaries - - (114,115) (50,938) Interest income (441) (402) (6,380) (5,997) Impairment loss on:

goodwill on consolidation - 17 - - Property, plant and equipment - 10,913 - -

Reversal on impairment loss of property, plant and equipment - (17,651) - -

operating profit/(loss) before changes in working capital 335,173 316,320 (3,355) (2,105)Changes in working capital: Inventories (32,764) (28,349) - - Trade and other payables 42,480 35,380 (3,898) 1,902 Employee benefits (556) 57 - - Trade and other receivables (12,098) (12,953) (1,195) 1,051 Subsidiaries - - (10,689) 75,142 Related companies (5,980) 8,401 (32) -

Cash generated from/(used in) operations 326,255 318,856 (19,169) 75,990Interest paid (6,702) (4,364) (969) (994)Taxes paid (45,990) (49,979) (1,557) (473)

net cash generated from/(used in) operating activities 273,563 264,513 (21,695) 74,523

cash flows from investing activities

Purchase of property, plant and equipment 3 (338,706) (220,085) (4,337) (1,885)Proceeds from disposal of property, plant and equipment 2,307 2,390 1,238 960Purchase of other investments (1,283) (20,879) (1,283) (20,879)Acquisition of subsidiaries, net of cash acquired 30 136 (9,513) - (14,000)Additional investment in subsidiaries - - (50,429) (25,522)Franchise fees 4 (4,681) (5,039) - - Interest received 441 402 6,380 5,997Dividends received from subsidiaries - - 96,915 42,683

net cash (used in)/generated from investing activities (341,786) (252,724) 48,484 (12,646)

Statements of Cash Flows for the year ended 31 December 2011


Annual Report 2011


cash flows from financing activities Issuance of shares 105 397 105 397Purchase of treasury shares 11 (7,933) - (7,933) - Proceeds from bank borrowings 150,143 68,193 49,400 - Repayment of bank borrowings (48,441) (33,105) (20,000) (20,000)Dividends paid to shareholders of the Company 22 (50,524) (38,664) (50,524) (38,664)Dividends paid to non-controlling interests of subsidiaries (945) (416) - -

net cash generated from/(used in) financing activities 42,405 (3,595) (28,952) (58,267)

Net (decrease)/increase in cash and cash equivalents (25,818) 8,194 (2,163) 3,610

Effect of exchange rate fluctuation oncash held (2,945) 69 - -

Cash and cash equivalents at 1 January 131,712 123,449 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 offinancial position amounts:

Group company note 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Deposits placed with licensed banks 10 23,446 52,893 177 125Cash and bank balances 10 79,503 78,819 1,635 3,850

102,949 131,712 1,812 3,975

Statements of Cash Flowsfor the year ended 31 December 2011



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 businessLevel 17 Wisma KFCNo. 17 Jalan Sultan Ismail50250 Kuala Lumpur

registered officeLevel 11 Menara JCorpNo. 249 Jalan Tun Razak50400 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

• ICInterpretation19,Extinguishing Financial Liabilities with Equity Instruments• AmendmentstoICInterpretation14, Prepayments of a Minimum Funding Requirement

frss, interpretations and amendments effective for annual periods beginning on or after 1 January 2012

• FRS124,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• AmendmentstoFRS7,Financial Instruments: Disclosures – Transfers of Financial Assets• AmendmentstoFRS112,Income Taxes – Deferred Tax: Recovery of Underlying Assets

frss, interpretations and amendments effective for annual periods beginning on or after 1 July 2012

• Amendments toFRS101,Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income


Annual Report 2011

1. Basis of PreParation (cont’d)

(a) statement of compliance (cont’d)


• FRS10,Consolidated Financial Statements• FRS11,Joint Arrangements• FRS12,Disclosure of Interests in Other Entities• FRS13,Fair Value Measurement• FRS119,Employee Benefits (2011)• FRS127, Separate Financial Statements (2011)• FRS128,Investments in Associates and Joint Ventures (2011)• ICInterpretation20,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


• Amendments toFRS132, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities


• FRS9, Financial Instruments (2009)• FRS9, 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:

• Note2(c)–Financialinstruments• Note2(d)–Property,plantandequipment• Note2(g)–Investmentproperties

(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.



Annual Report 2011

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:

• Note4 -measurementofrecoverableamountsofcash-generatingunits• Note5 -valuationofinvestmentproperties• Note13 -recognitionofunutilisedtaxlossesandcapitalallowances• Note14 -employeebenefits• Note28 -contingentliabilities

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:

• thefairvalueoftheconsiderationtransferred;plus• therecognisedamountofanynon-controllinginterestsintheacquiree;plus• if the business combination is achieved in stages, the fair value of the existing equity

interest in the acquiree; less• thenet recognisedamount (generally fairvalue)of the identifiableassetsacquiredand

liabilities assumed.



Annual Report 2011

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 pre-existing 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 non-controlling 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.



Annual Report 2011


(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 non-wholly-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.



Annual Report 2011


(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.



Annual Report 2011


(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 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.

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.



Annual Report 2011


(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 20-50years• Leaseholdland 45-999years• Leaseholdimprovementsandrenovation 10years• Plantandmachinery 10years• Motorvehicles 5years• Restaurantandofficeequipment 5-10years

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.



Annual Report 2011


(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.



Annual Report 2011


(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.



Annual Report 2011


(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.



Annual Report 2011


(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 cash-generating 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 cash-generating 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.



Annual Report 2011


(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.



Annual Report 2011


(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.



Annual Report 2011


(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.



Annual Report 2011


(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.



Annual Report 2011

3.

Pr

oP

er

ty,

Pla

nt

an

d e

Qu

iPM

en

t

le

aseh

old

imp

rove

- P

lant

res

taur

ant

f

reeh

old

le

aseh

old

men

ts a

nd

and

M

oto

r an

d o

ffice

la

nd

land

B

uild

ing

s re

nova

tio

n m

achi

nery

ve

hicl

es

equi

pm

ent

tota

lG

roup

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

co

st/v

alua

tio

n A

t 1

Janu

ary

2010

17

2,75

9 78

,559

22

0,94

3 21

5,15

4 19

1,68

9 36

,685

35

8,58

3 1,

274,

372

Add

ition

s 16

,297

3,

357

2,46

8 74

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24

,612

3,

612

95,1

62

220,

085

Acq

uisi

tion

of s

ubsi

diar

ies

-

-

3,22

7 17

8 -

11

8 2,

018

5,54

1D

ispo

sals

/Writ

e of

f (7

68)

-

(1,2

42)

(10,

943)

(1

,235

) (3

,440

) (1

8,47

0)

(36,

098)

Effe

ct o

f mov

emen

t in

exc

hang

e ra

tes

-

-

(104

) (1

,535

) -

(7

8)

(1,1

91)

(2,9

08)

Rev

alua

tion

surp

lus

38,6

19

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13

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30

-

-

-

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85,5

62

At

31 D

ecem

ber

2010

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anua

ry 2

011

226,

907

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029

244,

122

277,

431

215,

066

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97

436,

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6,55

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dditi

ons

26,5

71

11,9

28

34,7

63

83,8

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55,5

83

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7,74

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8,70

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cqui

sitio

n of

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sidi

arie

s -

-

-

-

11

-

12

23

Dis

posa

ls/W

rite

off

(692

) -

-

(1

3,97

7)

(221

) (7

,952

) (1

5,43

2)

(38,

274)

Effe

ct o

f mov

emen

t in

exc

hang

e ra

tes

-

-

(548

) 1,

342

-

18

770

1,58

2R

ecla

ssifi

catio

n -

-

3,

544

(3,7

78)

-

-

234

-

At

31 D

ecem

ber

2011

25

2,78

6 12

1,95

7 28

1,88

1 34

4,84

5 27

0,43

9 37

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53

9,43

4 1,

848,

591

Rep

rese

ntin

g:A

t co

st

26,5

71

11,9

28

69,8

39

344,

845

270,

439

37,2

49

539,

434

1,30

0,30

5A

t va

luat

ion

226,

215

110,

029

212,

042

- -

-

-

54

8,28

6

At

31 D

ecem

ber

2011

25

2,78

6 12

1,95

7 28

1,88

1 34

4,84

5 27

0,43

9 37

,249

53

9,43

4 1,

848,

591



Annual Report 2011

3.

Pr

oP

er

ty,

Pla

nt

an

d e

Qu

iPM

en

t (c

ont

’d)

le

aseh

old

im

pro

ve-

Pla

nt

r

esta

uran

t

f

reeh

old

le

aseh

old

men

ts a

nd

and

M

oto

r an

d o

ffice

land

la

nd

Bui

ldin

gs

reno

vati

on

mac

hine

ry

vehi

cles

eq

uip

men

t to

tal

G

roup

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

d

epre

ciat

ion

and

imp

airm

ent

loss

At

1 Ja

nuar

y 20

10:

A

ccum

ulat

ed d

epre

ciat

ion

- 3,

376

36,5

98

88,2

24

107,

986

24,8

95

148,

682

409,

761

A

ccum

ulat

ed im

pairm

ent

loss

es

58,7

33

7,27

1 22

,823

1,

276

- -

1,26

7 91

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58,7

33

10,6

47

59,4

21

89,5

00

107,

986

24,8

95

149,

949

501,

131

D

epre

ciat

ion

for

the

year

-

927

5,16

4 22

,894

16

,015

3,

504

38,0

86

86,5

90

Acq

uisi

tion

of s

ubsi

diar

ies

- -

249

64

- 10

0 1,

123

1,53

6

Dis

posa

ls/W

rite

off

- -

(1,2

42)

(9,9

86)

(1,1

67)

(2,9

76)

(14,

417)

(2

9,78

8)

E

ffect

of m

ovem

ent

in e

xcha

nge

rate

s -

- (1

3)

(988

) -

(45)

(8

46)

(1,8

92)

R

ever

sal o

f im

pairm

ent

loss

(2

,265

) (6

,298

) (2

,444

) -

- -

- (1

1,00

7)

A

t 31

Dec

embe

r 20

10:

A

ccum

ulat

ed d

epre

ciat

ion

- 4,

303

40,7

56

101,

484

122,

834

25,4

78

173,

895

468,

750

A

ccum

ulat

ed im

pairm

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loss

es

56,4

68

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79

- -

- -

77,8

20

B

alan

ce c

arrie

d fo

rwar

d 56

,468

5,

276

61,1

35

101,

484

122,

834

25,4

78

173,

895

546,

570



Annual Report 2011

3.

Pr

oP

er

ty,

Pla

nt

an

d e

Qu

iPM

en

t (c

ont

’d)

le

aseh

old

im

pro

ve-

Pla

nt

r

esta

uran

t

f

reeh

old

le

aseh

old

men

ts a

nd

and

M

oto

r an

d o

ffice

land

la

nd

Bui

ldin

gs

reno

vati

on

mac

hine

ry

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cles

eq

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men

t to

tal

G

roup

r

M’0

00

rM

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r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

d

epre

ciat

ion

and

imp

airm

ent

loss

B

alan

ce b

roug

ht fo

rwar

d 56

,468

5,

276

61,1

35

101,

484

122,

834

25,4

78

173,

895

546,

570

D

epre

ciat

ion

for

the

year

-

1,

947

5,37

1 28

,222

17

,380

3,

859

46,5

71

103,

350

A

cqui

sitio

n of

sub

sidi

arie

s -

-

-

-

2

-

3

5

Dis

posa

ls/W

rite

off

-

-

-

(12,

224)

(1

93)

(6,9

62)

(11,

580)

(3

0,95

9)

Effe

ct o

f mov

emen

t in

exc

hang

e ra

tes

-

-

(673

) 1,

075

-

37

727

1,16

6

Rec

lass

ifica

tion

-

-

716

(732

) -

-

16

-

A

t 31

Dec

embe

r 20

11:

A

ccum

ulat

ed d

epre

ciat

ion

-

6,25

0 46

,170

11

7,82

5 14

0,02

3 22

,412

20

9,63

2 54

2,31

2

Acc

umul

ated

impa

irmen

t lo

sses

56

,468

97

3 20

,379

-

-

-

-

77

,820

56,4

68

7,22

3 66

,549

11

7,82

5 14

0,02

3 22

,412

20

9,63

2 62

0,13

2

c

arry

ing

am

oun

ts

At

1 Ja

nuar

y 20

10

114,

026

67,9

12

161,

522

125,

654

83,7

03

11,7

90

208,

634

773,

241

A

t 31

Dec

embe

r 20

10/1

Jan

uary

201

1 17

0,43

9 10

4,75

3 18

2,98

7 17

5,94

7 92

,232

11

,419

26

2,20

7 99

9,98

4

A

t 31

Dec

embe

r 20

11

196,

318

114,

734

215,

332

227,

020

130,

416

14,8

37

329,

802

1,22

8,45

9



Annual Report 2011

3. ProPerty, Plant and eQuiPMent (cont’d) leasehold improve- freehold ments and Motor office

land Buildings renovation vehicles equipment totalcompany rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

cost/valuationAt 1 January 2010 14,647 2,260 558 2,870 4,639 24,974Additions - - 82 499 1,304 1,885Disposals/Write off (769) - - (722) (55) (1,546) Revaluation surplus 1,938 314 - - - 2,252

At 31 December 2010/1 January 2011 15,816 2,574 640 2,647 5,888 27,565Additions - - - 1,125 3,212 4,337Disposals/Write off (692) - - (1,354) (75) (2,121)Transfer to subsidiary - - (82) - (219) (301)

At 31 December 2011 15,124 2,574 558 2,418 8,806 29,480

Representing:At cost - - 558 2,418 8,806 11,782At valuation 15,124 2,574 - - - 17,698

At 31 December 2011 15,124 2,574 558 2,418 8,806 29,480

depreciationAt 1 January 2010 - 212 185 1,019 1,211 2,627Depreciation for the year - 52 65 515 904 1,536Disposals/Write off - - - (662) (42) (704)

At 31 December 2010/1 January 2011 - 264 250 872 2,073 3,459Depreciation for the year - 61 60 392 1,377 1,890Disposals/Write off - - - (429) (72) (501)Transfer to subsidiary - - (16) - (39) (55)

At 31 December 2011 - 325 294 835 3,339 4,793

carrying amountsAt 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



Annual Report 2011

3. ProPerty, Plant and eQuiPMent (cont’d)

3.1 impairment 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.

3.2 security

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 free-hold 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 amountGroup rM’000 rM’000 rM’000

at 31 december 2011Freehold land 158,570 - 158,570Leasehold land 85,365 5,368 79,997Buildings 210,116 56,118 153,998

454,051 61,486 392,565

at 31 december 2010Freehold land 159,184 - 159,184Leasehold land 85,365 3,836 81,529Buildings 210,116 51,466 158,650

454,665 55,302 399,363

companyat 31 december 2011Freehold land 10,287 - 10,287Buildings 2,172 476 1,696

12,459 476 11,983

at 31 december 2010Freehold land 10,901 - 10,901Buildings 2,172 414 1,758

13,073 414 12,659



Annual Report 2011

3. ProPerty, Plant and eQuiPMent (cont’d)

3.4 title deeds

The titles of certain properties are either in process of being transferred to the group and the Com-pany or are pending the issuance of strata titles by the relevant authorities.

3.5 leasehold land

Included in the carrying amounts of leasehold land at 31 December were:

Group 2011 2010 rM’000 rM’000

Leasehold land with unexpired lease period of more than 50 years 113,741 103,507Leasehold land with unexpired lease period of less than 50 years 993 1,246

114,734 104,753

4. intanGiBle assets

Goodwill on franchise consolidation fees totalGroup rM’000 rM’000 rM’000

costAt 1 January 2010 44,965 48,782 93,747Additions 6,636 5,039 11,675Write off - (2,008) (2,008)

At 31 December 2010/1 January 2011 51,601 51,813 103,414Additions 818 4,681 5,499

At 31 December 2011 52,419 56,494 108,913

accumulated amortisationAt 1 January 2010 1,566 23,507 25,073Amortisation for the year - 6,736 6,736Impairment Loss 17 - 17Write off - (2,008) (2,008)

At 31 December 2010/1 January 2011 1,583 28,235 29,818Amortisation for the year - 5,061 5,061

At 31 December 2011 1,583 33,296 34,879

carrying amountsAt 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



Annual Report 2011

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 2010Group rM’000 rM’000 Restaurants 22,658 22,658Integrated poultry 21,115 20,297Ancillary 7,063 7,063

50,836 50,018

The recoverable amounts of the CgUs were determined based on value-in-use calculations using pre-tax 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:

• TherewillbenomaterialchangesinthestructureandprincipalactivitiesoftheGroup.• Rawmaterialpriceinflation-therewillnotbeanysignificantincreaseinthepricesandsupplyof

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 incometaxrate-thetaxrateforMalaysiawas25%andSingapore’staxrate is17%.There will be no material changes in the present legislation or regulations, rates and bases of du-ties, levies and other taxes affecting the group’s activities.

• Interestrates-theinterestratesontheexistingfinancingfacilitieswillprevail.• Foreignexchangerate-theforeignexchangeratewillnotbesubstantiallyandadverselydifferent

from the current rate.• Growthrateusedtoextrapolatesegmentbeyondtheten(10)year-periodis4%whichisinlinewith

the estimated gDP growth rate of the country.• Apre-taxdiscountrateof9.93%wasappliedindeterminingtherecoverableamountoftheunit.

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 carry-ing 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%; andiii. 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.



Annual Report 2011

5. investMent ProPerties

Group 2011 2010 rM’000 rM’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 590 590 Buildings 320 320

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’000 rM’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)

445,501 395,072 Advances receivable 67,759 -

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.



Annual Report 2011

6. investMents in suBsidiaries (cont’d)

Details of the subsidiaries are as follows: effective ownership country of interestname of subsidiaries incorporation Principal activities 2011 2010 % %

held by the company: Ayamas Food Corporation Malaysia Poultry processing 100.0 100.0 Sdn Bhd and further processing

plants Investment holding Ayamas Integrated Poultry Malaysia Breeder and broiler 100.0 100.0 Industry Sdn Bhd farms Hatchery Feedmill Investment holding Ayamas Shoppe Sdn Bhd Malaysia Poultry retail and 100.0 100.0 convenience food store chain Investment holding

Cilik Bistari Sdn Bhd Malaysia Sale of board games 100.0 100.0 Integrated Poultry Industry Malaysia Poultry processing plant 100.0 100.0 Sdn Bhd

Kentucky Fried Chicken Malaysia Restaurants 100.0 100.0 (Malaysia) Sendirian Berhad

KFC Events Sdn Bhd Malaysia Sales of food products 100.0 100.0 vouchers

KFCH Education (M) Sdn Bhd Malaysia College/learning institute 100.0 100.0 (formerly known as Paramount Holdings (M) Sdn Bhd)

KFCIC Assets Sdn Bhd Malaysia Property holding 100.0 100.0 (formerly known as Paramount Management Sdn Bhd)

KFC India Holdings Sdn Bhd Malaysia Investment holding 100.0 100.0

KFC Manufacturing Sdn Bhd Malaysia Bakery 100.0 100.0 Trading in consumables Investment holding



Annual Report 2011


Details of the subsidiaries are as follows (cont’d): effective ownership country of interestname of subsidiaries incorporation Principal activities 2011 2010 % %

held by the company (cont’d): KFC (Peninsular Malaysia) Malaysia Restaurants 100.0 100.0 Sdn Bhd Commissary Investment holding KFC (Sarawak) Sdn Bhd Malaysia Restaurants 100.0 100.0 Rasamas Holdings Sdn Bhd Malaysia Restaurants 100.0 100.0 Region Food Industries Sdn Bhd Malaysia Sauce manufacturing 100.0 100.0 plant

Roaster’s Chicken Sdn Bhd Malaysia Investment holding 100.0 100.0 WP Properties Holdings Sdn Bhd Malaysia Investment holding 100.0 100.0 KFC (Sabah) Sdn Bhd Malaysia Restaurants 90.0 90.0 Tepak Marketing Sdn Bhd Malaysia Contract packing 55.0 55.0 WQSR Holdings (S) Pte Ltd* Singapore Investment holding 100.0 100.0 Asbury’s (Malaysia) Sdn Bhd Malaysia Dormant 100.0 100.0 Bakers’ Street Sdn Bhd Malaysia Dormant 100.0 100.0 Cemerlang Sinergi Sdn Bhd Malaysia Dormant 100.0 100.0 Efinite Revenue Sdn Bhd Malaysia Dormant 100.0 100.0 gratings Solar Sdn Bhd Malaysia Dormant 100.0 100.0

KFC (East Malaysia) Sdn Bhd Malaysia Dormant 100.0 100.0 KFC Restaurants Holdings Malaysia Dormant 100.0 100.0 Sdn Bhd Rangeview Sdn Bhd Malaysia Dormant 100.0 100.0 Restoran Keluarga Sdn Bhd Malaysia Dormant 100.0 100.0 Signature Chef Dining Services Malaysia Dormant 100.0 100.0 Sdn Bhd Signature Chef Foodservice & Malaysia Dormant 100.0 100.0 Catering Sdn Bhd Hiei Food Industries Sdn Bhd Malaysia Dormant 81.0 81.0 yayasan Amal Bistari Malaysia Dormant 70.0 70.0



Annual Report 2011


Details of the subsidiaries are as follows (cont’d): effective ownership country of interestname 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 Malaysia operation of 100.0 100.0 Sdn Bhd “Sudut Ayamas”

Ayamas Farms & Hatchery Malaysia Broiler farm 90.0 90.0 Sdn Bhd Ayamazz Sdn Bhd Malaysia Push-cart selling 90.0 100.0 food and refreshment Southern Poultry Farming Malaysia Broiler farm 90.0 - Sdn Bhd Ventures Poultry Farm Malaysia Broiler farm 90.0 - Sdn Bhd Rasamas Tebrau Sdn Bhd Malaysia Restaurant 89.2 89.2 Rasamas Taman Universiti Malaysia Restaurant 89.1 89.1 Sdn Bhd Ayamas Feedmill Sdn Bhd Malaysia Broiler farm 85.0 85.0 Synergy Poultry Farming Malaysia Broiler farm 84.8 - Sdn Bhd

Semangat Juara Sdn Bhd Malaysia Broiler farm 75.0 75.0 Ayamas Shoppe (Sabah) Malaysia Convenience food store 65.0 - Sdn Bhd Kentucky Fried Chicken Singapore Restaurants 100.0 100.0 Management Pte Ltd* Kernel Foods Private Limited* India Restaurants 100.0 100.0 KFCH Restaurants Private Limited India Restaurants 100.0 100.0 (formerly known as Mumbai Chicken Private Limited)*



Annual Report 2011



held through subsidiaries (cont’d): Mauritius Food Corporation Pvt Ltd* Mauritius Investment holding 100.0 100.0

Pune Chicken Restaurants India Restaurants 100.0 100.0 Private Limited* KFC (B) Sdn Bhd* Brunei Restaurants 45.9 45.9 Darussalam Rasamas Sdn Bhd* Brunei Restaurants 45.9 45.9 Darussalam Agrotech Farm Malaysia Dormant 100.0 - Solutions Sdn Bhd Ayamas Contract Malaysia Dormant 100.0 100.0 Farming Sdn Bhd Ayamas Franchise Sdn Bhd Malaysia Dormant 100.0 100.0 Ayamas Marketing (M) Sdn Bhd Malaysia Dormant 100.0 100.0 Ayamas Selatan Sdn Bhd Malaysia Dormant 100.0 100.0 Chippendales (M) Sdn Bhd Malaysia Dormant 100.0 100.0 Rasamas Bangi Sdn Bhd Malaysia Dormant 100.0 100.0 Rasamas Batu Caves Sdn Bhd Malaysia Dormant 100.0 100.0 Rasamas Endah Parade Sdn Bhd Malaysia Dormant 100.0 100.0 Rasamas Larkin Sdn Bhd Malaysia Dormant 100.0 100.0 Rasamas Mergong Sdn Bhd Malaysia Dormant 100.0 100.0 Restoran Sabang Sdn Bhd Malaysia Dormant 100.0 100.0 Seattle’s Best Coffee Sdn Bhd Malaysia Dormant 100.0 100.0

Wangsa Progresi Sdn Bhd Malaysia Dormant 100.0 100.0 Rasamas BC Sdn Bhd Malaysia Dormant 90.0 90.0 Rasamas Bukit Tinggi Malaysia Dormant 90.0 90.0 Sdn Bhd



Annual Report 2011



held through subsidiaries (cont’d): Rasamas Butterworth Malaysia Dormant 90.0 90.0 Sdn Bhd Rasamas Kota Bharu Malaysia Dormant 90.0 90.0 Sdn Bhd Rasamas Melaka Sdn Bhd Malaysia Dormant 90.0 90.0 Rasamas Nilai Sdn Bhd Malaysia Dormant 90.0 90.0 Rasamas Subang Sdn Bhd Malaysia Dormant 90.0 90.0 Rasamas Wangsa Maju Malaysia Dormant 90.0 90.0 Sdn Bhd Rasamas Terminal Larkin Malaysia Dormant 89.2 89.2 Sdn Bhd yes gelato Sdn Bhd Malaysia Dormant 80.0 80.0 Ayamas Food Corporation Singapore Dormant 100.0 100.0 (S) Pte Ltd* Ayamas Shoppe (S) Pte Ltd* Singapore Dormant 100.0 100.0 Helix Investments Limited Hong Kong Dormant 100.0 100.0 Ayamas Shoppe (Brunei) Brunei Dormant 45.9 45.9 Sendirian Berhad* Darussalam

* 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-organisa-tion 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.



Annual Report 2011

7. other investMents

unquoted Quoted shares shares in total in Malaysia Malaysia Group rM’000 rM’000 rM’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

Representing item: At fair value 24,282 - 24,282

Market value of quoted investments 24,282 - 24,282 2010 non-current Available-for-sale financial assets 22,400 - 22,400 Held-to-maturity investments 4,500 4,500 - Less: Impairment loss (4,500) (4,500) - - - -

22,400 - 22,400


Market value of quoted investments 22,400 - 22,400 company 2011 non-current Available-for-sale financial assets 24,282 - 24,282


Market value of quoted investments 24,282 - 24,282 2010 non-current Available-for-sale financial assets 22,400 - 22,400


Market value of quoted investments 22,400 - 22,400



Annual Report 2011

8. inventories Group 2011 2010 rM’000 rM’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 Group company 2011 2010 2011 2010 note rM’000 rM’000 rM’000 rM’000

trade Trade receivables 65,854 46,450 - -

non-trade Amounts due from subsidiaries 9.1 - - 162,107 163,661 Amounts due from related companies 9.1 12,558 6,578 32 - other receivables 9.2 16,387 16,420 2,476 1,284 Deposits 9.3 67,277 74,534 5,291 5,288 Current tax assets 11,194 9,651 1,807 129

107,416 107,183 171,713 170,362

173,270 153,633 171,713 170,362

9.1 amounts 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.

9.2 other 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.

9.3 deposits

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.



Annual Report 2011

10. cash and cash eQuivalents Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Deposits placed with licensed banks 23,446 52,893 177 125 Cash and bank balances 79,503 78,819 1,635 3,850

102,949 131,712 1,812 3,975 11. share caPital and reserves

11.1 share capital Group and company number number amount of shares amount of shares 2011 2011 2010 2010 rM’000 ’000 rM’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.

11.2 reserves Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

non-distributableShare premium 455 363 440 348Warrants reserve 4,102 4,107 4,102 4,107Fair value reserve 2,120 1,521 2,120 1,521Translation reserve (1,404) 1,125 - - Revaluation reserve 104,222 104,290 5,163 5,333Treasury shares (7,933) - (7,933) -

101,562 111,406 3,892 11,309distributableRetained earnings 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 inequity.



Annual Report 2011

11. share caPital and reserves (cont’d)

11.2 reserves (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 available-for-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.



Annual Report 2011

11. share caPital and reserves (cont’d)

11.2 reserves (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 Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’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 -

65,745 46,702 3,000 20,000 non-current Term loans - secured 46,708 1,610 46,400 - - unsecured 141,796 104,235 - -

188,504 105,845 46,400 -

254,249 152,547 49,400 20,000



Annual Report 2011

12. loans and BorroWinGs (cont’d)

12.1 terms and debt repayment schedule

year of carrying under 1 1-2 2-5 over 5 Maturity amount year years years yearsGroup rM’000 rM’000 rM’000 rM’000 rM’000

2011Term loans- secured 2013 677 369 308 - - - secured 2018 46,400 - 580 13,340 32,480- unsecured 2013 9,093 7,275 1,818 - - - unsecured 2014 49,500 2,000 2,000 45,500 - - unsecured 2015 71,679 14,101 16,802 40,776 - - unsecured 2016 34,900 - 6,970 27,930 - Bankers’ acceptance- unsecured 2012 34,000 34,000 - - - Revolving credit - unsecured 2012 8,000 8,000 - - -

254,249 65,745 28,478 127,546 32,480

2010Term loans- secured 2011 20,154 20,154 - - -- secured 2013 1,046 369 369 308 -- secured 2022 212 13 14 48 137- secured 2031 755 21 23 75 636- unsecured 2013 23,187 9,275 9,275 4,637 -- unsecured 2014 45,000 - - 45,000 -- unsecured 2015 51,511 6,188 10,872 34,451 -Bankers’ acceptance- unsecured 2011 5,682 5,682 - - -Revolving credit- unsecured 2011 5,000 5,000 - - -

152,547 46,702 20,553 84,519 773

company2011Term loans- secured 2018 46,400 - 580 13,340 32,480Revolving credit- unsecured 2012 3,000 3,000 - - - 49,400 3,000 580 13,340 32,480

2010Term loans- secured 2011 20,000 20,000 - - -

12.2 security

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.



Annual Report 2011

13. deferred tax liaBilities

recognised deferred tax liabilities

Deferred tax liabilities are attributable to the following:

assets liabilities net 2011 2010 2011 2010 2011 2010Group rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

deferred tax liabilities Property, plant and equipment - - 70,570 41,300 70,570 41,300Revaluation of land and buildings - - 16,410 16,655 16,410 16,655Employee benefit plans (750) (889) - - (750) (889)Provisions (780) (292) - - (780) (292)Tax losses and capital allowances carry-forward (6,399) (4,979) - - (6,399) (4,979)Unutilised reinvestment allowance (5,029) - - - (5,029) -

Tax (assets)/liabilities (12,958) (6,160) 86,980 57,955 74,022 51,795

companyProperty, plant and equipment - - 1,120 640 1,120 640Revaluation of land and buildings - - 135 139 135 139

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 carry-forward 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’000 rM’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 8,904



Annual Report 2011

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.



Annual Report 2011

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Annual Report 2011

14. eMPloyee Benefits

retirement benefits Group 2011 2010 rM’000 rM’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’000 rM’000

Defined benefit obligations at 1 January 3,557 3,500 Current service costs and interest (see below) 86 270 Benefits paid by the plan (642) (213)

Defined benefit obligations at 31 December 3,001 3,557

expense recognised in profit or loss

Current service costs 126 138Interest on obligation 155 164overprovided in prior years (195) (32)

86 270

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%



Annual Report 2011

15. trade and other PayaBles Group company 2011 2010 2011 2010 note rM’000 rM’000 rM’000 rM’000 trade Trade payables 192,092 154,958 - -

non-trade Amounts due to subsidiaries 15.1 - - 55,989 - other payables 82,237 75,097 936 1,608 Accrued expenses 104,530 110,452 5,279 8,505 Duties and other taxes payables 21,989 16,657 - -

208,756 202,206 62,204 10,113

400,848 357,164 62,204 10,113

15.1 amounts due to subsidiaries

The non-trade payables due to subsidiaries are unsecured, interest free and repayable on demand.

16. revenue

Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’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 Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000 Interest expense of financial liabilities

- loans, bankers’ acceptances and others 6,702 4,225 969 994- related company - 139 - -

6,702 4,364 969 994



Annual Report 2011

18. Profit Before tax

Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Profit before tax is arrived at after charging:Amortisation of franchise fees 5,061 6,736 - - Auditors’ remuneration:

- Statutory audit • KPMGMalaysia 440 352 50 50• KPMGAffiliates 341 254 - -

- other services 60 75 16 40Depreciation of property, plant and

equipment 103,350 86,590 1,890 1,536Impairment 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 3,129Staff 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 297 282 - - gain on disposal of property, plant and

equipment - - - 118Interest receivable

- deposits with licensed banks 433 401 - - - subsidiaries - - 6,380 5,997- others 8 1 - -

Rental income- related company 1,089 814 - - - others 1,224 1,201 837 783

Reversal of impairment loss: - trade receivables 45 32 - - - property, plant and equipment - 17,651 - -



Annual Report 2011

19. Key ManaGeMent Personnel coMPensation

The key management personnel compensation are as follows:

Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’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 Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Major components of income tax expense include:

current income tax expenseMalaysian - current year 57,306 59,680 19,260 11,015 - prior year (11,758) (7,594) (1,462) (872)overseas - current year 3,650 1,729 - - - prior year (2,748) - - -

Total current income tax 46,450 53,815 17,798 10,143

deferred tax expenseorigination of temporary differences 14,008 6,456 480 246Underprovided in prior years 8,464 1,860 - -

Total deferred tax 22,472 8,316 480 246

Total income tax expense 68,922 62,131 18,278 10,389



Annual Report 2011

20. incoMe tax exPense (cont’d)

reconciliation of effective tax expense


Profit before tax 215,493 221,833 113,899 52,418

Tax at Malaysian tax rate of 25% 53,873 55,458 28,475 13,105 Effect of tax rates in foreign jurisdictions (3,568) (2,439) - - Non-deductible expenses 24,179 16,279 2,552 2,636 Income not subject to tax (1,781) (2,860) (11,287) (4,480) Utilisation of previously unrecognised tax

losses, unabsorbed capital allowances and unutilised reinvestment allowances 681 (103) - -

Change in unrecognised temporary differences 1,580 1,530 - -

74,964 67,865 19,740 11,261 overprovided in prior years (6,042) (5,734) (1,462) (872)

Total income tax expense 68,922 62,131 18,278 10,389

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:

Group 2011 2010 Profit for the year attributable to shareholders (RM’000) 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



Annual Report 2011

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:

Group 2011 2010 Profit for the year attributable to shareholders (RM’000) 144,005 156,848

Weighted average number of ordinary shares in issue (’000) 792,184 793,132 Effect of conversion of warrants (‘000) 5,783 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:

sen total per share amount date of 2011 (net of tax) rM’000 payment

Second interim 2010 ordinary 4.1 32,722 31 March 2011 Interim 2011 ordinary 2.3 17,802 7 october 2011

Total amount 50,524

2010 Final 2009 ordinary 12.0 23,793 27 May 2010 First interim 2010 ordinary 7.5 14,871 30 September 2010

Total amount 38,664

The Directors do not propose any final dividend for the year ended 31 December 2011.



Annual Report 2011

23. oPeratinG seGMents

The group has three reportable segments, as described below, which are the group’s strategic busi-ness units. The strategic business units offer different products and services, and are managed sepa-rately 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 - KFC restaurants operation• Integrated Poultry - Breeder and broiler farms, hatchery, feedmill, poultry procesing and

further processing, convenient food store chain and Rasamas restaurants

• Ancillary - 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 per-formance 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 in-

cluded 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.



Annual Report 2011

23.

oP

er

atin

G s

eG

Me

nt

s (c

ont

’d)

r

esta

uran

ts

inte

gra

ted

Po

ultr

y a

ncill

ary

elim

inat

ions

c

ons

olid

ated

2011

20

10

2011

20

10

2011

20

10

2011

20

10

2011

20

10

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

Bus

ines

s se

gm

ents

Tota

l ext

erna

l rev

enue

2,

104,

703

1,88

8,07

2 58

6,70

6 53

3,39

7 10

7,37

1 10

0,88

9 -

- 2,

798,

780

2,52

2,35

8In

ter-

segm

ent

reve

nue

-

-

321

,128

2

87,8

82

293,

870

261,

425

(614

,998

) (5

49,3

07)

- -

tota

l seg

men

t re

venu

e 2,

104,

703

1,88

8,07

2 90

7,83

4 82

1,27

9 40

1,24

1 36

2,31

4 (6

14,9

98)

(549

,307

) 2,

798,

780

2,52

2,35

8

Seg

men

t re

sults

22

2,34

1 20

8,88

2 8,

964

10,3

83

(9,1

10)

6,93

2

22

2,19

5 22

6,19

7

Una

lloca

ted

expe

nses

-

-

res

ults

fro

m o

per

atin

g a

ctiv

itie

s

22

2,19

5 22

6,19

7

Fina

nce

cost

s

(6

,702

) (4

,364

)In

com

e ta

x ex

pens

e

(6

8,92

2)

(62,

131)

Pro

fit f

or

the

year

14

6,57

1 15

9,70

2



Annual Report 2011

23.

oP

er

atin

G s

eG

Me

nt

s (c

ont

’d)

r

esta

uran

ts

inte

gra

ted

Po

ultr

y a

ncill

ary

elim

inat

ions

c

ons

olid

ated

2011

20

10

2011

20

10

2011

20

10

2011

20

10

2011

20

10

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

rM

’000

Bus

ines

s se

gm

ents

Seg

men

t as

sets

87

5,25

2 77

2,75

4 57

1,73

4 45

5,41

5 39

1,24

0 35

4,86

3 -

-

1,83

8,22

6 1,

583,

032

tota

l ass

ets

1,83

8,22

6 1,

583,

032

Seg

men

t lia

bilit

ies

275,

788

234,

151

250,

693

183,

109

146,

243

108,

705

- -

67

2,72

4 52

5,96

5U

nallo

cate

d lia

bilit

ies

74,0

22

51,7

95

tota

l lia

bili

ties

74

6,74

6 57

7,76

0

Cap

ital e

xpen

ditu

re a

nd

fran

chis

e fe

es

180,

350

163,

014

121,

723

47,3

82

41,3

14

14,7

28

- -

34

3,38

7 2

25,1

24

Dep

reci

atio

n/A

mor

tisat

ion

72,6

42

62,7

01

25,1

23

23,1

08

10,6

46

7,51

7 -

-

108,

411

93,3

26

Impa

irmen

t lo

ss

-

4,11

0 -

6,

671

-

149

- -

-

10

,930



Annual Report 2011

23. oPeratinG seGMents (cont’d)

Malaysia foreign consolidated 2011 2010 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000 rM’000 rM’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

24.1 categories 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 amount l&r afs note rM’000 rM’000 rM’000

2011financial assetsGroupother investments 7 24,282 - 24,282Trade and other receivables

(excluding current tax assets) 9 162,076 162,076 - Cash and cash equivalents 10 102,949 102,949 - 289,307 265,025 24,282

companyother investments 7 24,282 - 24,282Trade and other receivables

(excluding current tax assets) 9 169,906 169,906 - Cash and cash equivalents 10 1,812 1,812 -

196,000 171,718 24,282



Annual Report 2011

24. financial instruMents (cont’d)

24.1 categories of financial instruments (cont’d)

carrying amount ol note rM’000 rM’000

2011financial liabilitiesGroupLoans and borrowings 12 254,249 254,249Trade and other payables 15 400,848 400,848

655,097 655,097

companyLoans and borrowings 12 49,400 49,400Trade and other payables 15 62,204 62,204

111,604 111,604

carrying amount l&r afs note rM’000 rM’000 rM’000

2010financial assetsGroupother investments 7 22,400 - 22,400 Trade and other receivables


298,094 275,694 22,400

companyother investments 7 22,400 - 22,400 Trade and other receivables


196,608 174,208 22,400

2010financial liabilitiesGroupLoans and borrowings 12 152,547 152,547Trade and other payables 15 357,164 357,164 509,711 509,711

companyLoans and borrowings 12 20,000 20,000Trade and other payables 15 10,113 10,113

30,113 30,113



Annual Report 2011


24.2 net gains and losses arising from financial instruments

Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000 Net (losses)/gains arising on:Available-for-sale financial assets- recognised in other

comprehensive income 599 1,521 599 1,521Loans 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

24.3 financial risk management

The group has exposure to the following risks from its use of financial instruments:

• Creditrisk• Liquidityrisk• Marketrisk

24.4 credit 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.



Annual Report 2011


24.4 credit 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’000 rM’000 rM’000 2011 Not past due 32,069 - 32,069 Pastdue0–30days 21,876 - 21,876 Pastdue31–120days 10,432 - 10,432 Past due more than 120 days 2,503 (1,026) 1,477

66,880 (1,026) 65,854

2010 Not past due 24,208 - 24,208 Pastdue0–30days 1,005 - 1,005 Pastdue31–120days 20,477 - 20,477 Past due more than 120 days 2,112 (1,352) 760

47,802 (1,352) 46,450

The movements in the allowance for impairment losses of receivables during the financial year were: Group 2011 2010 rM’000 rM’000

At 1 January 1,352 1,639 Impairment loss recognised 198 - Impairment loss reversed (45) (32) Impairment loss written off (479) (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.



Annual Report 2011


24.4 credit risk (cont’d)

inter company balances


The Company provides unsecured loans and advances to subsidiaries. The Company monitorsthe 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 bytheir 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 tothe subsidiaries are not recoverable.

24.5 liquidity 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.



Annual Report 2011

24.

fin

an

cia

l in

st

ru

Me

nt

s (c

ont

’d)

24.5

li

qui

dit

y ri

sk (c

ont

’d)

M

atur

ity a

naly

sis

Th

e ta

ble

belo

w s

umm

aris

es t

he m

atur

ity p

rofil

e of

the

gro

up’s

fina

ncia

l lia

bilit

ies

as a

t th

e en

d of

the

rep

ortin

g pe

riod

base

d on

und

isco

unte

d co

ntra

ctua

l pay

men

ts:

c

arry

ing

c

ont

ract

ual

co

ntra

ctua

l u

nder

1

1 -

2 2

– 5

Mo

re t

han

am

oun

t in

tere

st r

ate

cash

flo

ws

year

ye

ars

year

s 5

year

s

Gro

up

no

te

rM

’000

%

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

20

11

Term

loan

s-

secu

red

12

47,0

77

3.97

71

,249

5,

866

6,20

8 25

,129

34

,046

- un

secu

red

12

165,

172

4.14

18

6,96

2 31

,663

34

,520

12

0,77

9 -

Ban

kers’a

ccep

tanc

e–un

secu

red

12

34,000

3.54

34

,240

34

,240

-

-

-

Rev

olving

credit–un

secu

red

12

8,00

03.72

8,02

48,02

4-

-

-

Tr

ade

and

othe

r pa

yabl

es

15

400,

848

- 40

0,84

8 40

0,84

8 -

-

-

65

5,09

7

701,

323

480,

641

40,7

28

145,

908

34,0

46

c

om

pan

y

2011

Te

rm lo

ans

- se

cure

d 12

46

,400

3.

97

70,4

81

5,44

9 5,

857

25,1

29

34,0

46

Rev

olving

credit–un

secu

red

12

3,00

03.72

3,00

93,00

9-

-

-

Tr

ade

and

othe

r pa

yabl

es

15

62,2

04

- 62

,204

62

,204

-

-

-

11

1,60

4

135,

694

70,6

62

5,85

7 25

,129

34

,046



Annual Report 2011

24.

fin

an

cia

l in

st

ru

Me

nt

s (c

ont

’d)

24.5

li

qui

dit

y ri

sk (c

ont

’d)

M

atur

ity a

naly

sis

(con

t’d

)

c

arry

ing

c

ont

ract

ual

co

ntra

ctua

l u

nder

1

1 -

2 2

– 5

Mo

re t

han

am

oun

t in

tere

st r

ate

cash

flo

ws

year

ye

ars

year

s 5

year

s

Gro

up

no

te

rM

’000

%

r

M’0

00

rM

’000

r

M’0

00

rM

’000

r

M’0

00

20

10

Term

loan

s-

secu

red

12

22,1

67

4.10

22

,988

20

,769

50

2 60

6 1,

111

- un

secu

red

12

119,

698

3.52

14

3,57

3 30

,829

24

,147

88

,597

-

Ban

kers’a

ccep

tanc

e–un

secu

red

12

5,68

23.23

5,86

65,86

6-

-

-

Rev

olving

credit–un

secu

red

12

5,00

03.47

5,01

55,01

5-

-

-

Tr

ade

and

othe

r pa

yabl

es

15

357,

164

- 35

7,16

4 35

7,16

4 -

-

-

50

9,71

1

534,

606

419,

643

24,6

49

89,2

03

1,11

1

c

om

pan

y

2010

Te

rm lo

ans

- se

cure

d 12

20

,000

4.

08

20,0

94

20,0

94

-

-

-

Tr

ade

and

othe

r pa

yabl

es

15

10,1

13

- 10

,113

10

,113

-

-

-

30

,113

30,2

07

30,2

07

-

-

-



Annual Report 2011


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.

24.6.1 currency 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.


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 Group sGd rs B$ usd rM’000 rM’000 rM’000 rM’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 1,064 16 11 - Term loans - unsecured - - - (18,511) Trade and other payables (35,987) (1,622) (935) -

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.



Annual Report 2011


24.6 Market risk (cont’d)

24.6.2 interest 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.


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:


fixed rate instruments Financial assets 23,446 52,893 177 125 Financial liabilities (42,000) (10,682) (3,000) -

(18,554) 42,211 (2,823) 125

floating rate instruments Financial liabilities (212,249) (141,865) (46,400) (20,000)

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’000 rM’000 rM’000 rM’000

Group Floating rate instruments 796 (796) 532 (532)

company Floating rate instruments 174 (174) 75 (75)



Annual Report 2011



24.6 Market risk (cont’d)

24.6.3 other price risk

Equity price risk arises from the group’s investments in equity securities.


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.

24.7 fair 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 carrying fair carrying fair Group amount value amount value note rM’000 rM’000 rM’000 rM’000

Quoted shares- in Malaysia 7 24,282 24,282 22,400 22,400 Term loans - non-current- secured 12 (46,708) (46,708) (1,610) (1,610)- unsecured 12 (141,796) (141,796) (104,235) (104,235)

companyQuoted shares - in Malaysia 7 24,282 24,282 22,400 22,400Term loans - non-current - secured 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.


Annual Report 2011


24.7 fair 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 Loansandborrowings 2.72%-10.75% 2.55%–5.15%

company Loans and borrowings 3.97% 4.08%

24.7.1 fair 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:

• Level1: Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.• Level2: Inputsother thanquotedprices includedwithinLevel1 thatareobservable for the

asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).• Level3: Inputs for the asset or liability that are not based on observable market data

(unobservable inputs).

level 1 level 2 level 3 totalGroup and company rM’000 rM’000 rM’000 rM’000 2011financial assetsQuoted 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.



Annual Report 2011

25. caPital ManaGeMent (cont’d) During 2011, the group’s strategy, which was unchanged from 2010, was to maintain the debt-to-

equity 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’000 rM’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:


Less than one year 94,827 97,729 2,885 2,884 Between one and five years 105,816 120,156 5,769 8,654 More than five years - 632 - -

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.



Annual Report 2011

27. caPital coMMitMents Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’000

Property, plant and equipment Authorised but not contracted for 290,939 284,315 2,556 2,720 Contracted but not provided for 18,920 17,627 922 922

309,859 301,942 3,478 3,642

28. continGent liaBilities company 2011 2010 rM’000 rM’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’000 rM’000 ultimate holding corporation Rendering of services 268 116

holding companies Sale of goods - 3

related companies gross dividends 1,752 399 Sale of goods 100,473 96,836 Purchase of goods 7,654 14,725 Purchase of apparels 43 - Purchase of balloons 8 8 Purchase of printing, publication materials 109 69 Purchase of souvenir and gifts 8 9 Rendering of services 5,027 7,597 Interest payable - 139 Allocation of expenses 6,087 5,831 Management fees income 2,993 4,061 Equipment rental payable 133 224



Annual Report 2011

29. related Parties (cont’d) transaction value for year ended 31 december Group 2011 2010 rM’000 rM’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 312 165 Purchase of goods 524 -

company ultimate holding corporation Rendering of services 103 64

subsidiaries gross dividends 114,115 50,938 Management fees income 22,986 29,670 Interest receivable 6,380 5,997

related companies gross dividends 1,752 399 Management fees income 2,993 4,061 Rendering of services 2,521 2,250 Rental income 210 210 Purchase of souvenir and gifts 5 4 Purchase of equipment 27 -

related parties Rendering of services 35 26

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.



Annual Report 2011

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. 90.0% of the issued and paid-up share capital of Southern Poultry Farming Sdn Bhd;b. 84.8% of the issued and paid-up share capital of Synergy Poultry Farming Sdn Bhd;c. 90.0% of the issued and paid-up share capital of Ventures Poultry Farm Sdn Bhd; and d. 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 294 Intangible assets arising from acquisition 818

Consideration paid, satisfied in cash 1,112 Cash and cash equivalents acquired (1,248)

Net cash inflow (136)



Annual Report 2011

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 4,005Inventories 109Trade and other receivables 549Cash and cash equivalents (bank overdraft) (385)Loans and borrowings (1,023)Deferred tax liabilities (31)Trade and other payables (597)Current tax liabilities (39)Non-controlling interests (96)

Net identifiable assets and liabilities 2,492Intangible assets arising from acquisition 6,636

Consideration paid, satisfied in cash 9,128Cash and cash equivalents acquired (bank overdraft) 385

Net cash outflow 9,513



Annual Report 2011

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 companies vendor rM’000

KFC (Sarawak) Sdn Bhd KFC (East Malaysia) Sdn Bhd 2,198 KFC (Sabah) Sdn Bhd KFC (East Malaysia) Sdn Bhd 4,363 KFC (Peninsular Malaysia) Sdn Bhd KFC Restaurants Holdings Sdn Bhd 9,250 Kentucky Fried Chicken (Malaysia) KFC Restaurants Holdings Sdn Bhd 2,406

Sendirian Berhad Asbury’s (Malaysia) Sdn Bhd KFC Restaurants Holdings Sdn Bhd 1,145 WQSR Holdings (S) Pte Ltd KFC Restaurants Holdings Sdn Bhd 10,000 KFC (East Malaysia) Sdn Bhd KFC Restaurants Holdings Sdn Bhd 6,038 Ayamas Shoppe Sdn Bhd Ayamas Food Corporation Sdn Bhd 1,829 Rasamas Holdings Sdn Bhd Ayamas Food Corporation Sdn Bhd 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.



Annual Report 2011

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:

Group company 2011 2010 2011 2010 rM’000 rM’000 rM’000 rM’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.



Annual Report 2011

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 KassimChairman

Jamaludin bin Md aliManaging Director/Chief Executive officer

Kuala Lumpur

Date: 7 March 2012

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

Statement by Directorspursuant to Section 169(15) of the Companies Act, 1965

Statutory Declarationpursuant to Section 169(16) of the Companies Act, 1965


Annual Report 2011

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.

Independant Auditors’ Reportto the members of KFC Holdings (Malaysia) Bhd


Annual Report 2011

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 Johan idrisFirm Number: AF 0758 Approval Number: 2585/10/12(J)Chartered Accountants Chartered Accountant

Petaling Jaya

Date: 7 March 2012

Independant Auditors’ Reportto the members of KFC Holdings (Malaysia) Bhd


Annual Report 2011

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Annual Report 2011

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Annual Report 2011


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Annual Report 2011

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Annual Report 2011

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Annual Report 2011

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Annual Report 2011

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Annual Report 2011

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Annual Report 2011

Analysis of Shareholdingsas at 2 April 2012

Authorised Share Capital : RM1,000,000,000Issued & Fully Paid-Up Capital : RM396,633,552 less RM1,039,000 Treasury Shares = RM395,594,552Class 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. of no. ofsize of shareholdings shareholders % shares %

Less than 100 8,921 55.37 49,647 0.01100–1000 2,186 13.57 1,714,904 0.221,001–10,000 4,189 26.00 17,081,256 2.1610,001–100,000 689 4.28 19,328,844 2.44100,001 to less than 5% of Issued Capital 123 0.76 169,437,853 21.415% and above of Issued Capital 3 0.02 583,576,600 73.76

TOTAL 16,111 100.00 791,189,104 100.00

SUBSTANTIAL SHAREHOLDERS

direct indirect no. of Kfch no. of Kfch shareholder shares held % shares held %

QSR Brands Bhd 175,719,600 22.21 *i 228,320,000 28.86QSR Ventures Sdn Bhd 228,320,000 28.86 Kulim (Malaysia) Berhad 6,157,800 0.78 *ii404,039,600 51.07Johor Corporation 343,000 0.04 *iii 410,197,400 51.85Lembaga Tabung Haji 181,200,600 22.9 - -

NOTES:*i 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.

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 direct indirectdirector no. of shares % no. of shares % Hassim bin Baba 100 * - -

NOTES* Insignificant


Annual Report 2011

in the immediate holding company – Qsr Brands Bhd

direct indirectdirector no. of shares % no. of shares % Hassim bin Baba 32 * - -Datin Paduka Siti Sa’diah binti Sheikh Bakir 1,000 * - -


in the intermediate holding company – Kulim (Malaysia) Berhad

direct indirectdirector no. 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 %

1 oSK Noms (T) Sdn Bhd - A/C Bank Muamalat Malaysia Berhad for

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

4 Malaysia Noms (T) Sdn Bhd - A/C great Eastern Life Assurance

(Malaysia) Berhad (PAR 1) 22,089,700 2.79

5 AmanahRaya Trustees Berhad - A/C Public Islamic Dividend Fund 14,024,000 1.77

6 Mayban Noms (T) Sdn Bhd - A/C Mayban Trustees Berhad for

Public Ittikal Fund (N14011970240) 11,725,200 1.48

7 AmanahRaya Trustees Berhad - A/C Public Islamic Select

Treasures Fund 9,318,400 1.18

8 DB (Malaysia) Nom (A) Sdn Bhd - A/C Exempt An for Deutsche

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

12 AmanahRaya Trustees Berhad - A/C Public Islamic Select

Enterprises Fund 5,689,700 0.72

13 HSBC Noms (A) Sdn Bhd - A/C Exempt An for Morgan Stanley &

Co. International PLC 3,891,904 0.49

14 AmanahRaya Trustees Berhad - A/C Public Islamic optimal

growth Fund 3,534,000 0.45

Analysis of Shareholdings as at 2 April 2012


Annual Report 2011

list of toP thirty (30) shareholders as at 2 aPril 2012 (cont’d)

Name No. of Shares %

15 Citigroup Noms (T) Sdn Bhd - A/C Exempt An for Eastspring

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

18 HSBC Noms (A) Sdn Bhd - A/C Exempt An for Credit Suisse Securities

(Europe) Limited (CLTAC N-Treaty) 2,588,100 0.33


(Malaysia) Berhad (PAR 2) 2,508,600 0.32

20 Lembaga Tabung Angkatan Tentera 2,253,700 0.28

21 Citigroup Noms (A) Sdn Bhd - A/C CBNy for DFA Emerging Markets

Small Cap Series 2,239,200 0.28


(Malaysia) Berhad (LSF) 2,217,000 0.28

23 HSBC Noms (A) Sdn Bhd - A/C HSBC-FS I for Lim Asia Arbitrage

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

25 CitigroupNoms(A)SdnBhd–A/CGSIforOrventMasterFund

(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

Total 718,881,504 90.86

Analysis of Shareholdings as at 2 April 2012


Annual Report 2011

Analysis of Warrant Holdings as at 2 April 2012

Exercise Price : RM3.00 per ordinary Share Exercise Period : 15 September 2010 up to 14 September 2015

distriBution of Warrant holders

no. of no. of size of Warrantholdings no. of Warrantholders % Warrants %

Less than 100 1,497 37.63 27,283 0.09100–1000 1,322 33.23 425,086 1.351,001–10,000 917 23.05 4,345,127 13.7710,001–100,000 229 5.76 6,136,253 19.45100,001 to less than 5% of Issued Capital 10 0.25 2,825,848 8.955% and above of Issued Capital 3 0.08 17,795,976 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

direct indirectdirector no. of warrants % no. of warrants % Hassim bin Baba 16 * - -


In the immediate holding company – QSR Brands Bhd

direct indirectdirector no. of warrants % no. of warrants % Hassim bin Baba 32 * - -


In the intermediate holding company – Kulim (Malaysia) Berhad

direct indirectdirector no. of warrants % no. of warrants % Datin Paduka Siti Sa’diah binti Sheikh Bakir 34,750 0.02 - -


Annual Report 2011

list of toP thirty (30) Warrant holders as at 2 aPril 2012

Name No. of Warrants %

1 oSK Noms (T) Sdn Bhd - A/C Bank Muamalat Malaysia Berhad for

QSR Ventures Sdn Bhd 9,132,800 28.94

2 QSR Brands Bhd 6,870,476 21.77

3 HSBC Noms (A) Sdn Bhd - Exempt An for Credit Suisse Securities

(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

6 yeow 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

9 goh Tai Meng 135,640 0.43

10 gunasundari 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

15 ong Swee Keng 100,000 0.32

16 DB (Malaysia) Nom (T) Sendirian Berhad - A/C Deutsche Trustees Malaysia

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

23 goh 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

29 oh Chee Wah 65,000 0.21

30 gan Siew Lian 63,000 0.20

Total 21,976,684 69.64

Analysis of Warrant Holdingsas at 2 April 2012


Annual Report 2011

KFC Holdings (Malaysia) Bhd (65787-T)

form of Proxy32nd 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:

(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)

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

Resolution 6 yAM 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

FoR AgAINST

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

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.

TRICOR INVESTOR SERVICES SDN BHDLevel 17, The gardens North Tower Mid Valley City, Lingkaran Syed Putra59200 Kuala Lumpur

AFFIXSTAMPHERE


annual Report 2011

KFC HOLDINGS (MALAYSIA) BHD (65787-T)

level 17, Wisma KFC, no. 17, Jalan sultan ismail, 50250 Kuala lumpurTel : +603 2026 3388 Fax: +603 2078 8088

KFC HOLDINGS (MALAYSIA) BHD 65787-T - Pocketzila

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