Annual Report 2014

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Annual Report 2014 HANWELL HOLDINGS LIMITED Company Registration No: 197400888M Incorporated in the Republic of Singapore ANNUAL REPORT 2014 REPORT ANNUAL 348 Jalan Boon Lay Singapore 619529 Tel: +65 6268 4822 Fax: +65 6266 2607 www.hanwell.com.sg HEALTHY, HAPPY HOMES Annual Report 2014 VISION To be a multi-faceted consumer essentials company with strategic investments in the region MISSION Building strong partnerships, growing new markets Fostering an open and creative culture, attracting and nurturing talents Providing innovative products, portfolio building, meeting stakeholders’ needs Achieving operational excellence Building strong financial capabilities CONTENTS 02 Executive Chairman’s Statement 20 Corporate Information 04 Board of Directors 21 Corporate Governance Statement 08 Senior Management 43 Financial Statements 10 Group Financial Summary 131 Supplementary Information 12 Operational Review 135 Shareholding Statistics 19 Corporate Social Responsibility 137 Notice of Annual General Meeting EXECUTIVE CHAIRMAN’S STATEMENT NOTEWORTHY ACHIEVEMENTS IN FY2014 As one of the leaders in the fast moving consumer goods (FMCG) sector in Singapore and Malaysia, we continued to ride on our key strengths – R&D and brand building capabilities, innovation, extensive distribution network and strong partnerships with principals – to grow our Consumer Business. In Singapore, we introduced new products like Fortune Pressed Tofu and a new premium house brand of varied tissue paper products – Ichiryu in FY2014. Uptake of these new products has been encouraging. We look forward to launching Fortune original and almond-flavoured soya beancurd in the second quarter of 2015. DEAR SHAREHOLDERS, The Group also continues to work closely with principals Amidst intense competition, the Group is to offer more third-party branded products. For example, heartened to record continued growth in three (3) variants of Pauls fruit yoghurt were introduced revenue for the full year ended 31 December to the Singapore’s market in the beginning of FY2014. In 2014 (FY2014). Revenue in FY2014 climbed Malaysia, strengthening of our exclusive partnership with 3.7% to S$418.4 million, driven by higher sales Perfetti Van Melle, we rolled out Mentos Cool Chews Tin from our Consumer and Packaging businesses, to augment Mentos’ position as one of the leading and which grew 3.3% and 4.1% to S$193.7 million and popular confectionery brands in Malaysia. For our snacks S$224.5 million respectively. products, we launched healthier choices like the UCA Cassava Chips and a wider range of Nature’s Wonders’ Contributing to the revenue growth of our Consumer premium nuts and dried fruits. Beyond snacks and Business was the rolling out of new agency products, confectionery products, we also launched a new range which were well-received by the Singapore market. Our of men’s toiletries in Malaysia, under the brand names Packaging Business, Tat Seng, also recorded higher Brand Brut and Denim. In Singapore, we widened our sales volume as a result of heightened demand for our distributorship beyond MR CLEAN’s household cleaning corrugated packaging products in China. products to include its automobile cleaning products. Overall the Group’s net profit after tax in FY2014 declined In a bid to widen our distribution network, we achieved by 46.2% to S$6.3 million due to allowance recorded a breakthrough in FY2014 by securing a new distribution by the Consumer Business for stock obsolescence, as channel – Sobe is now available in tertiary institutions and well as a 8.7% dip in profit before net finance costs, hawker centres and this is expected to raise sales of our share of results of associates and tax expense (“PBIT”) soya beverages. to S$15.3 million from our strategic investment in Tat Seng. The decline in Tat Seng’s PBIT was due to higher As part of our brand building efforts, interesting marketing transportation and delivery costs, higher minimum wage programmes were carried out to heighten brand visibility imposed by the China government and allowance for and sales. For example, we invited renowned chefs doubtful receivables. Our Health Solutions Business to conduct cooking workshops, featuring our own narrowed its loss from S$1.9 million in FY2013 to S$0.53 housebrand. These workshops, which were well-received million. by consumers, further strengthened top-of-mind recall for our brands and played a critical role in lifting sales. During the year, we continued to strengthen our war chest with cash and cash equivalents amounting to To complement our distribution efforts, the Group S$116.4 million, up from S$110.3 million a year ago. The started Go2Mart, an up and coming retail concept store stronger cash position will equip us with the financial in Singapore. The trendy convenience store targets young resources to pursue business opportunities as and when shoppers who welcome our extensive range of ready-to- they arise. 02 HANWELL HOLDINGS LIMITED ANNUAL REPORT 2014 eat products and fresh food. From one (1) outlet in end Our investment in Tat Seng Packaging has yielded positive of 2013, there are now four (4) outlets in various parts of results for the Group over the years. We will keep our Singapore. Plans are underway to increase the number ears to the ground for more strategic investments that of outlets in FY2015, and extend the range of products can further add value to the Group. and services. For the year to come, the interest rate increase signaled GOING FORWARD by the US Fed, is expected to be in moderate pace, if To compete more effectively in the increasingly happened. Interest rate will continue to stay low and stock competitive FMCG market, strategic focus will be placed markets will be volatile, despite the US and other major on strengthening and refreshing our popular house brands world stock markets experienced a bull market last year. such as Fortune, Sobe, Royal Umbrella, Golden Peony Hence placing cash surplus in the foreign equity markets and Harmuni. We will step up our brand building efforts for yielding a higher return will be cautiously considered. to heighten top-of-mind recall for these brands. At the same time, the team will continue to expand our range of WORDS OF APPRECIATION house brand products to capture more market segments. I would like to thank the Board of Directors for their advice and invaluable contributions to the growth of Hanwell. To As part of the Group’s ongoing business rationalisation our staff, my heartfelt appreciation goes to each one of exercise, we will constantly review our operations, explore you for your commitment and hard work. The success of ways to optimise synergies between the various sub- Hanwell continues to hinge on the positive and vibrant business units in our Consumer Business Division to reap work culture we have built together over the years. I look cost efficiencies. forward to working hand in hand with you in strengthening this unique teamwork which we share. Special thanks The Group has entered into the sale and purchase also goes out to our business associates for their strong agreement in FY 2014 to dispose and realise its partnerships. investment in a property development project in Sanya, China. The proposed disposal is in line with the Group’s To our shareholders, thank you for your continued support. plan to realise the gain of this investment and unlock the As the Chairman of the Group, let me assure you that we value thereof for its shareholders. China’s property market will give our very best to grow the Company and deliver has been experiencing a downturn since a year and half greater shareholder value. ago, not only in major cities but in lower-tier cities as well. It is expected that the adjustment period for the China property market will continue for the short term, whilst recovery for the medium to long term is optimistic due to its high population and growing GDP. We will also be DR ALLAN YAP looking for investments opportunities in other parts of Executive Chairman the world. HANWELL HOLDINGS LIMITED ANNUAL REPORT 2014 03 BOARD OF DIRECTORS Dr Allan Yap was first appointed to the Board of Hanwell Holdings Limited (the “Company”) on 10 May 2002 as Director, and was last re-elected to the Board at the Company’s AGM held on 25 April 2014. He is currently the Executive Chairman of the Company. He has drawn over 30 years of experience in finance, investment and banking. Dr Yap is also the Executive Chairman of Tat Seng Packaging Group Ltd, a company listed on the Singapore Exchange Securities Trading Limited. He also serves as the Chairman and DR ALLAN YAP, 59 Executive Director of Hanny Holdings Limited, Rosedale Hotel Holdings Limited, and an Executive Chairman Alternate Director of Television Broadcasts Limited, all of which are companies listed on The Stock Exchange of Hong Kong Limited. He is also the Chairman and Chief Executive Officer of China Enterprises Limited whose shares are traded on the OTC Securities Market in the United States of America and Burcon NutraScience Corporation, a company listed on the Toronto Stock Exchange in Canada, NASDAQ Stock Exchange in the United States of America and the Frankfurt Stock Exchange in Germany. Dr Yap is the spouse of Dr Tang Cheuk Chee, the Executive Director of the Company. Dr Yap holds an Honorary Degree of Doctor of Laws from the University of Victoria, Canada. Dr John Chen was first appointed to the Board of the Company on 9 June 2003 as Director and was last re-elected to the Board at the Company’s AGM held on 26 April 2013. He is currently the Deputy Chairman of the Company and a member of the Audit, Nominating and Remuneration Committees of the Company. DR JOHN CHEN Dr Chen was a Member of Parliament from 1988 to 2006 and served as the Assistant SEOW PHUN, 61 Secretary General of the National Trades Union Congress from 1991 to 1997.
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