ANNUAL REPORT 2011 2011 was the year in which Carlsberg Malaysia moved boldly forward. With the successful execution of the new global positioning and bold new packaging, we reinforced the leading position of our fl agship brand, Carlsberg Green Label, and strengthened our extensive premium beer range to emerge as a stronger multi-brand portfolio company. Through enhancing operational effi ciencies and advancing people empowerment efforts, we made great strides forward on the operational front and delivered profi table, sustainable growth. moving boldly... forward We strive to become the preferred partner of our customers and the preferred choice of our consumers by offering a dynamic portfolio of beverage brands Annual Report 2011 1 What’s Inside 2 Carlsberg Malaysia Group of Companies 3 2011 Achievements 4 Chairman’s Address 12 Review of Operations by Managing Director 18 Review of Carlsberg Singapore’s Operations 20 Management Team 22 Management Team Profi le 24 Brand Portfolio 52 Financial Summary 58 Directors’ Profi le 61 Statement of Corporate Governance 68 Statement of Internal Control and Corporate Risk Management 71 Audit Committee Report 76 Responsibility Statement by the Board of Directors 77 Financial Statements 136 Carlsberg Malaysia’s Sales Offi ces 137 Particulars of Group Properties 138 Analysis of Shareholdings 140 Material Contracts 141 List of Recurrent Related Party Transactions 142 Notice of 42nd Annual General Meeting Form of Proxy 151 Corporate Information 2 Carlsberg Brewery Malaysia Berhad (9210-K) Carlsberg Malaysia Group* Manufacturing of beer, stout and other Sales and distribution of beer, stout, Singapore malt related beverages: wines, spirits and other beverage products Carlsberg Singapore Pte Ltd are done via the following subsidiaries: CARLSBERG BREWERY Shareholding: 100% MALAYSIA BERHAD Malaysia KEY BRANDS: Carlsberg Green Label, Carlsberg Gold, Danish Royal Stout, KEY BRANDS MANUFACTURED (INCLUDING Carlsberg Marketing Sdn Bhd • Kronenbourg 1664, Kronenbourg Blanc, LICENSED PRODUCTS): Carlsberg Green Shareholding: 100% Label, Carlsberg Gold, Carlsberg Special SKOL, Corona Extra. KEY BRANDS: Carlsberg Green Label, Brew, Danish Royal Stout, SKOL, SKOL Carlsberg Gold, Carlsberg Special Super, Connor’s Stout, Asahi Super Dry, Presence in Sri Lanka market via the Brew, Danish Royal Stout, SKOL, Jolly Shandy, Nutrimalt. following associated company: SKOL Super, Connor’s Stout, Kronenbourg 1664, Kronenbourg Sri Lanka Blanc, Corona Extra, Asahi Super Dry, Lion Brewery (Ceylon) PLC Jolly Shandy, Nutrimalt. Shareholding: 24.6% KEY BRANDS MANUFACTURED, Luen Heng F & B Sdn Bhd • SOLD AND DISTRIBUTED: Carlsberg Green Shareholding: 70% Label, Lion Lager, Lion Stout, Carlsberg KEY BRANDS: Hoegaarden, Stella Special Brew, Lion Strong Beer. Artois, Budweiser, Foster’s, Erdinger, Leffe, Beck’s, Savanna, and numerous other wine and spirit brands. * “Carlsberg Malaysia” or “The Group” Annual Report 2011 3 2011 Achievements First ever Carlsberg Group Carlsberg Group Award for Asia Responsible Cash Race Prize for Asia Community Engagement Entrepreneurship Awards For the very fi rst time for an Asian Carlsberg Malaysia was named winner (AREA) 2011 market, Carlsberg Malaysia won the of the Carlsberg Group’s ‘We are Counted among the top three Carlsberg Group’s Cash Race Prize. Engaged with Society’ Award at the exemplary companies in Asia, Carlsberg The prize was a result of the signifi cant CEO Conference in Kiev, Ukraine in June Malaysia received the Asia Responsible improvements delivered by Carlsberg 2011. Carlsberg Malaysia won this award Entrepreneurship Awards (AREA) 2011 in Malaysia following a renewed focus on for impacting hundreds of schools, the category of Social Empowerment. capital management in the Asian region. institutions and communities through its education fundraising platforms. Second Gold at the Putra Brand Awards 2011 Thirteenth Gold Award Carlsberg for the second consecutive year at the Reader’s Digest won Gold at the Putra Brand Awards Trusted Brand Awards 2011 - Alcoholic Beverage category. Organised The Carlsberg brand was voted the Gold in association with the Malaysia’s winner at the Reader’s Digest Trusted Most Valuable Brands, the Putra Brand Brand Awards for the 13th consecutive Awards is a brand valuation exercise that year. Recognised as one of the most recognises brands that are near and dear representative and objective branding to the hearts of Malaysians. surveys in the region, the Reader’s Digest survey was carried out in eight markets across South East Asia. Carlsberg came up as the preferred brew. 4 Carlsberg Brewery Malaysia Berhad (9210-K) Annual Report 2011 5 Chairman’s Address The Group turned in a profi t after tax of RM167.4 million, a 24.8% growth in comparison to profi t after tax of RM134.1 million in 2010. Dear Shareholders, A Weaker Operating Robust Financial Performance Carlsberg Malaysia delivered another Environment Against this backdrop, the Carlsberg year of strong growth on the back of The year 2011 saw the global economy Malaysia Group continued to grow in line commendable fi nancial and operational registering a relatively weaker with the market to take a healthy market performance in 2011. In line with our performance as compared to the share in the premium segment. In 2011, annual report theme “Moving Boldly preceding year. The slower growth was Carlsberg Malaysia generated revenue Forward”, the entire organisation worked attributable to unprecedented political amounting to RM1.5 billion, an 8.9% diligently to reinforce the leading position turmoil in the Middle East and North increase over the preceding year’s RM1.4 of our jewel in the crown, Carlsberg Africa, a series of massive natural billion. The Group turned in a profi t after Green Label, whilst strengthening our disasters around the globe, and the tax of RM167.4 million, a 24.8% growth in extensive premium beer range. Today, crises that hit the advanced economies. comparison to profi t after tax of RM134.1 having emerged as a multi-brand On the Malaysian front, domestic million in 2010. Our strong performance portfolio company focused on delivering demand remained resilient in 2011, came on the back of the successful roll sustainable revenue and earnings growth, with private consumption remaining out of 2011’s global Carlsberg brand Carlsberg Malaysia is a much stronger robust, underpinned by a healthy labour packaging revamp and innovative contender in the Malt Liquor Market. market and fi rm commodity prices. consumer promotions under a new global The Government’s fi scal and monetary brand tagline, “That Calls for a Carlsberg”. On behalf of the Board of Directors, it policies remained accommodative and is my pleasure and privilege to present supported growth during the year. the Annual Report and Audited Financial Malaysia registered lower GDP growth of Statements of Carlsberg Brewery 5.1% in 2011 as compared to GDP growth Malaysia Berhad for the fi nancial year of 7.2% registered the year before. ended 31 December 2011. 6 Carlsberg Brewery Malaysia Berhad (9210-K) Chairman’s Address Our subsidiary Carlsberg Singapore Pte Raising the Bar The Group continues to prioritise Ltd (CSPL) and associate company, on Performance effi ciency improvements and people Lion Brewery Ceylon PLC, too delivered During 2011, we took many initiatives development efforts. In 2011, we double digit growth in revenue and to improve performance. On the continued to optimise our cost structure earnings for 2011. The Group also made consumer and customer fronts, our teams and asset base by leveraging both global strong inroads into the premium beer worked hard to reinforce and promote and local initiatives as well as the strong segment by leveraging the strengths of the Carlsberg brand via exclusive and operational synergies between our subsidiary Luen Heng F & B Sdn Bhd engaging brand experiences. Carlsberg’s Malaysian and Singapore businesses. (LHFB) and its impressive super premium position as Malaysia’s leading beer brand The establishment of a Continuous beer range. Additionally, cost effi ciencies was reaffi rmed when it was selected Improvement (CI)-LEAN Programme were optimised with strong operational for the coveted Gold Award at the 2011 empowered shop fl oor employees to synergies between our Malaysian and Putra Awards. We were also accorded the improve the way things were done Singaporean businesses. Most Trusted Brand by Reader’s Digest and deliver respectable effi ciency readers in Malaysia and Asia for the 13th improvements and cost savings. On the Shareholder Value Creation consecutive year, the only brand in the people front, we set out to inculcate a performance culture and leadership In line with our commitment to beer category to receive this. culture based on trust, ownership and delivering value to our shareholders and diversity. All these efforts led to renewed after considering the Group’s funding To reaffi rm our position at the forefront employee confi dence in Carlsberg requirements, the Board of Directors is of product innovation, we focused our Malaysia as a company. pleased to propose the distribution of efforts on driving our beer brands. 100% of the Group’s 2011 profi ts. We brought new drinking experiences to The Board of Directors is recommending our consumers and pursued beverage Responsible Corporate a fi nal and special dividend of 65.5 opportunities that reinforced our core Practices sen per ordinary share of RM0.50 less competencies and infrastructure. We Carlsberg Malaysia remains committed Malaysian