ANNUAL REPORT 2019 TABLE OF 06 2019 MILESTONES CONTENTS

02 Carlsberg Group at a Glance 04 Our Winning Portfolio of Brands 06 2019 Milestones 08 2019 Brand Highlights 28 Chairman’s Address 32 Managing Director’s Message and MANAGING DIRECTOR’S Management Discussion & Analysis 32 MESSAGE AND MANAGEMENT 46 Sustainability Statement DISCUSSION & ANALYSIS 72 Management Team COVER RATIONALE 74 Profile of Management Team FINANCIAL 76 Profile of the Directors 104 STATEMENTS Carlsberg’s founder J.C. Jacobsen set forth 80 Corporate Governance Overview Statement a visionary ambition in his Golden Words, advocating a “constant pursuit of better ”. 96 Statement on Risk Management & Internal Control More than 150 years after, we continue to 100 Audit & Risk Management pursue perfection every day in our products, Committee Report people and performance. We Brew for a 103 Responsibility Statement by the Board Better Today & Tomorrow, not settling for of Directors immediate gain when we can create a better tomorrow for all of us. 104 Financial Statements 201 Carlsberg Malaysia’s Sales Offices In 2019, we built upon positive momentum for revenue, net profit, and earnings per 202 Particulars of Group Properties 2019 BRAND share to create satisfactory shareholder 203 Analysis of Shareholdings 08 HIGHLIGHTS value. We clinched six major accolades in the 205 Material Contracts year, a testament to our efforts in running a sustainable business. 206 List of Recurrent Related Party Transactions Corporate Information Just like our flagship Carlsberg brand, we “Just Keep Getting Better”!

CHAIRMAN’S SUSTAINABILITY The cover of this report is printed on 28 ADDRESS 46 STATEMENT environmentally friendly paper. CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019 CARLSBERG MALAYSIA GROUP AT A GLANCE

ESTABLISHED IN 1969, CARLSBERG BREWERY MALAYSIA BERHAD (CARLSBERG MALAYSIA GROUP / THE GROUP) IS PART OF CARLSBERG BREWERIES A/S (CARLSBERG GROUP), ONE OF THE WORLD’S MALAYSIA LEADING BREWERS WITH STRONG MARKET POSITIONS ACROSS ASIA AND EUROPE. 100% Ownership We are a dynamic brewer with At Carlsberg Malaysia Group, we Carlsberg Marketing operations in Malaysia and Singapore, are constantly guided by the Golden Sdn. Bhd. with stakes in a brewery in Sri Lanka. Words of our founder J.C. Jacobsen We also have a regional presence to pursue perfection in all that we via exports and intercompany sales do, each and every day. This sets the to regional markets such as , foundation of our Purpose: , Cambodia, Laos, , Sri Lanka, Timor Leste, Papua New Guinea, Maldives, and Guam. FOR A BETTER Our international portfolio of brands +15.9% features our flagship Carlsberg Danish TODAY AND Revenue in 2019 – Probably the Best Beer in RM1.64 bil the World, Carlsberg Smooth Draught TOMORROW. – Probably the Smoothest Beer in the +7.8% +13.8% World, and Carlsberg Special Brew – Segment Profit Probably the Best Strong Beer in the in 2019 REVENUE World. RM274.6 mil RM2.26 bil This Carlsberg trio is complemented by a comprehensive range of international premium brews including France’s premium wheat beer Kronenbourg 1664 Blanc, ’s No.1 premium beer Asahi Super Dry, European cider Somersby, Connor’s +5.0% Stout Porter that’s “Just Made Right”, Share of Profits NET PROFIT* US award-winning craft beer Brooklyn RM16.3 mil Brewery as well as Corona Extra, in 2019 vs. +8.6% RM291.0 mil the imported premium Mexican beer RM21.0 mil in 2018 brand. Revenue in 2019 RM618.1 mil Our value power brands include the international award-winning Royal Stout, refreshing SKOL, Jolly Shandy +8.3% Segment Profit and Nutrimalt. in 2019 RM100.5 mil +5.0% Carlsberg Malaysia Group’s seven- year corporate strategy, SAIL’22, is EARNINGS our roadmap towards fulfilling our SINGAPORE ambition of becoming a successful, PER SHARE professional and attractive brewer in 100% Ownership Carlsberg Singapore Pte. Ltd. 95.18 sen in 2019 all the markets we operate in. SRI LANKA 25% Ownership 51% Ownership Lion Brewery (Ceylon) PLC MayBev Pte. Ltd.

* Within this Annual Report, net profit refers to Group’s profit attributable to Owners of the Company

2 3 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019 OUR WINNING

Scan for the full portfolio PORTFOLIO OF BRANDS Carlsberg of Probably the Best , Danish Pilsner Stouts and Ciders Carlsberg Probably The Best Beer in The World 1664 Blanc Smooth Draught Taste the French Way Now You Can POP of Life Connor’s a Draught Anywhere! Brooklyn Brewery Stout Porter The Leading US Draught Stout that’s International Craft Brand “Just Made Right”

Somersby Asahi Super Dry No. 1 Cider in Malaysia Japan’s No. 1 Premium Beer & Singapore

4 5 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

+13.8% +5.0% +5.0% REVENUE NET PROFIT EARNINGS RM2.26 billion in 2019 RM291.0 million in 2019 PER SHARE 95.18 sen in 2019 770 CONSECUTIVE DAYS 6 AWARDS AND WITHOUT LOST- RECOGNITIONS TIME ACCIDENTS for brand, corporate, and sustainability as of 31 Dec 2019 excellence in 2019 Building on Probably the Best Year in 2018, Carlsberg Malaysia Group just kept getting better in 2019 with strong financial performance, sustainable shareholder value, recognition of our brands and sustainability milestones, and an unwavering focus on our employees’ safety and well-being.

6 7 BEER FANS LOVED IT Carlsberg Danish Pilsner JUST KEEPS VOLUME GREW GETTING BETTER! +5% IN 2019

WHAT ARE CARLSBERG’S NEW BETTERMENTS? FRESHER A new, modern look and practical betterments We created a cleverly-designed Fresh inspired by Carlsberg’s constant Cap that removes oxygen from the Scan QR Code headspace in Carlsberg bottles. You ‘PURSUIT OF BETTER’ to watch get a fresher taste for 5x longer! to deliver an even better beer enjoyment experience.

BETTER New Carlsberg stem glasses come engraved with a hop leaf-shaped Danish-inspired brand identity balancing nucleation stamp at the bottom which generates 25% better foam, SIMPLICITY WITH helping to retain aroma for longer. CONTEMPORARY DESIGN applied across products, packaging, communications, visibilities and amenities. EASIER Carlsberg 6-can packs come with an Easy to More Open feature, allowing ENVIRONMENTALLY-FRIENDLY you to open a pack in inks on labels and a special coating no time! on refillable glass bottles to double circulation lifetimes.

8,000 SINGAPOREANS experienced Carlsberg’s new betterments at city centre pop-up store. POPPING TO A VIBRANT & PROSPEROUS NEW YEAR

Vibrantly coloured, LIMITED-EDITION Carlsberg bottle caps and cans symbolising Chinese festive wishes.

7.4 MILLION consumers reached with OVER 4,100 WINNERS rewarded through nationwide campaigns in Malaysia and Singapore.

Scan QR Code to watch Widely-shared zodiac predictions by FENG SHUI MASTER JOEY YAP based on Carlsberg’s themes of Prosperity, Happiness, Wealth and Good Luck. YOU SHOP, CARLSBERG PAYS! 3RD CONSECUTIVE YEAR SPECIAL-EDITION for Probably The Best CNY Shopping Chinese New Year festive pack size Experience with 103 activations in Singapore was a hit among nationwide. consumers. Scan QR Code to watch CARLSBERG & LIVERPOOL FC Apart from the bottle, label and cap, the beer itself is a JUST KEEP WINNING CRIMSON RED The day Carlsberg went all red for the Reds brewed from a barley variety Carlsberg Red Barley – a visually stunning specially curated and bred by the beer created to commemorate Carlsberg’s Carlsberg Research Laboratory. record-breaking sponsorship of Liverpool FC to an extended 31 consecutive seasons – THE LONGEST PARTNERSHIP IN PREMIER LEAGUE HISTORY

ONLY 2,500 BOTTLES given away as prizes at pubs, bistros and football viewing parties including Liverpool FC’s iconic league win Scan QR Code against Tottenham Hotspur in June. to watch Now you can #PopADraught anywhere, even on the green! JUST KEEPS POPPING!

Celebrated a bountiful KAAMATAN & HARI GAWAI with activations and promotions. Carlsberg Smooth Draught is Carlsberg’s fastest growing brand in Sabah and Sarawak!

MORE THAN 3,700 avid golfers popped a draught on the green at CARLSBERG GOLF CLASSIC Malaysia’s biggest and longest-running amateur golf series.

Malaysian consumers rewarded with 10,000 samples given out to Singaporeans with LIMITED- engaging video content EDITION collaboration. Bluetooth headsets, speakers and earphones inspired by the tuneful Scan QR Code sound of the iconic pull-off to watch POP Cap. Fastest growing premium brand in Malaysia and Singapore with TASTE THE FRENCH WAY 39% VOLUME OF LIFE GROWTH in 2019.

Scan QR Code LIMITED-EDITION to watch FASHION MERCHANDISE Appreciating finer moments with 1664 Blanc premiums.

ELEVATING DINING EXPERIENCES WITH DINNER IN BLUE 96,000 consumers enjoyed complimentary glasses of 1664 Blanc in Malaysia.

1664 TERRACE ICONIC BLUE BOTTLE Street takeover in Singapore Scan QR Code transformed into illuminated centrepieces for with more than 2,500 to watch consumers during the Christmas season. consumers reached. THE PREMIUM DRAUGHT STOUT THAT’S JUST MADE RIGHT

Over 30,000 STOUT DRINKERS poured a perfect pint and learned about Connor’s quality ingredients at 216 ACTIVATIONS in Malaysia.

GOLD for Best Use of SILVER Experiential/Live Marketing for Best Customer SILVER Experience for Best Use of Direct Marketing

98% Clinched of stout drinkers surveyed loved 3 WINS the taste of Connor’s which is Scan QR Code at the Loyalty and Engagement Awards 2019 by Marketing Magazine in Singapore. to watch ‘JUST MADE RIGHT’ JAPAN’S NO.1 BEER

SAKURA KARAKUCHI EXPERIENCE Rewarded contest winners with an exclusive beer COLLECTIBLES pairing dinner featuring Asahi’s karakuchi taste with Reward consumers and MICHELIN-STAR fans with limited-edition CHEF YUICHI KAMIMURA glassware, merchandise and trip to Japan. INCREASED AVAILABILITY with over 1,600 outlets in Malaysia and 660 in Singapore. SEASONAL VARIANTS 4 in Singapore SOMERSBY SPARKLING WHITE A semi-sweet cider inspired by white wine, the newest addition to the Sparkling range. THE NO.1 CIDER IN Malaysia and Singapore are the first to launch in Asia after Europe. MALAYSIA AND SINGAPORE. THAT’S WONDERFUL.

A bubbly, youthful NEW LOOK with the same great taste!

New Somersby Iconic SOMERSBY KOMBIS offered the taste of Somersby to over Blackberry recipe with 122,000 CONSUMERS better, more delicious berry taste.

CNY FESTIVE VIDEO with Malaysian artistes. Exclusive Somersby Sparkling White Scan QR Code and Sparkling Rosé to watch FESTIVE PACK as Christmas promotion.

Scan QR Code to watch SUMMER ALE Return of seasonal variant in Singapore and BROOKLYN BREWERY introduced in Malaysia for the first time The Leading US International Craft Brand with all the spirit and freedom of a Brooklyn summer – LIGHT AND REFRESHING BROOKLYN VARIETY PACK A limited edition sampler pack to introduce Brooklyn Brewery’s great craft brews launched at 14 PREMIUM SUPERMARKETS in Malaysia.

BROOKLYN BEER ON TAP in more outlets in Malaysia and Singapore.

EXPANDED RETAIL PRESENCE Now available on more e-commerce platforms in Malaysia and Singapore and 20 PREMIUM SUPERMARKETS AND HYPERMARKETS in Singapore! Scan QR Code to watch TOP TEN CHARITY CAMPAIGN Probably The Best Fundraising Platform RM547.2 MILLION in total proceeds since 1987 to 2019.

Rising star JERYL LEE RM26.4 MILLION joined veteran Top Ten raised in 2019 vs. RM18.7 million in artistes to deliver an previous year. unforgettable show.

Perlis RM800,000 Kedah RM18,600,850

Kelantan RM6,517,388 Sabah Perak RM15,148,020 RM78,294,281 Terengganu RM3,629,836 Penang RM25,251,062

Selangor Pahang RM110,278,791 RM35,642,045 Ordinary school halls

Wilayah Persekutuan Sarawak TRANSFORMED RM103,326,283 RM4,147,211 into world-class stage productions with spectacular performances and choreography inspired by Carlsberg’s constant pursuit of better. Negeri Sembilan RM21,724,768

Melaka RM26,627,138 Scan QR code for Johor artiste testimonials RM97,251,822 Refer to pages 70 to 71 for more information on the Top Ten Charity Campaign under “Committing Towards A Responsible Business’ in the Sustainability Statement. CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019 CHAIRMAN’S Chairman’s Address ADDRESS

DEAR SHAREHOLDERS, FIVE DECADES OF EXCELLENCE True to our Purpose of Brewing for a Better Today & Tomorrow, we lived ON BEHALF OF THE BOARD OF DIRECTORS, I AM PLEASED our founder J.C. Jacobsen’s Golden’s words in the way we operated TO PRESENT THE ANNUAL REPORT AND AUDITED FINANCIAL throughout our value chain while STATEMENTS OF CARLSBERG BREWERY MALAYSIA BERHAD keeping our sustainability priorities high on our agenda. (CARLSBERG MALAYSIA GROUP / THE GROUP) FOR THE FINANCIAL Since the first locally-brewed Carlsberg YEAR ENDED 31 DECEMBER 2019. beer rolled off our Shah Alam brewery in 1972, we have continued to focus on 2019 was a special year for us as we quality and innovation whilst stepping celebrated 50 years of operations up our sustainability efforts. here in Malaysia – a truly golden anniversary. It was a landmark year Our pride and dedication to our not merely in terms of our longevity “pursuit of better” allows us to brew and service to Malaysian society and and offer Probably The Best Portfolio the economy, but also of our continued of Beers, Stouts and Ciders anywhere transformation as a business, where in the country, winning the hearts and we implemented the third year of our loyalty of generations of consumers SAIL’22 strategy. all over Malaysia and Singapore.

I am proud and deeply grateful to It is especially apt that our fiftieth you, our shareholders, for allowing me anniversary also coincided with At The Edge Billion Ringgit Club (“F4GBM”) Index effective 24 June to oversee this key milestone in my the refreshed look and enhanced (BRC) Awards, the Putra Brand 2019 and the MSCI Global Standard second year as Chairman of the board. enjoyment of our flagship brand, Awards, the World Beer Awards and Index (MSCI) effective 28 February Carlsberg Danish Pilsner, as it delivers the International Beer Challenge 2019, 2020. This is testament to our strong Our SAIL’22 strategy enabled us on its quest of “Just Keeps Getting independent industry professionals environmental, social and governance to post yet another strong year as Better”, the theme of our 2019 and consumers awarded Carlsberg (ESG) practices, and at the time of both our Malaysia and Singapore Annual Report. Malaysia and three of our brands – the respective listings, we sat among operations executed the strategic Carlsberg, Somersby and Royal Stout 71 leading Malaysian public-listed priorities effectively with a level of Over a five-decade span, we have – five prestigious awards in recognition companies on the F4GBM index and quality and innovation that I am proud become an established brewer in of our commitments to business a mere 40 constituents on the MSCI to say “just keeps getting better”. Malaysia with a significant footprint sustainability and product innovation. index. in Singapore and a regional presence We began the year riding a wave in Sri Lanka. These are considerable Notably, bagging the Best Corporate At the prestigious annual Putra Brand of positive momentum thanks to a milestones we’ve achieved, which Responsibility Award for public- Awards, Carlsberg and Somersby record financial year in 2018 and we bring to life our purpose, products listed companies under RM10 were awarded Silver and Bronze kept that winning momentum going and performance while delivering billion in market capitalisation at respectively, the tenth-consecutive win throughout 2019. sustainable value to our shareholders. the BRC awards was our second for Carlsberg and a third-consecutive success following our maiden win in win for Somersby, outperforming We don’t just say we Keep Getting 2014. This accolade recognised our other ciders in the category. Better – we make it happen too. sustainability efforts and performance of our Together Towards ZERO In addition, Royal Stout bagged two AWARDS & RECOGNITION ambitions. More details are available international beer awards: a ‘Silver’ In 2019, our efforts in sustainability, in our Sustainability Statement on in the Stout/Porters category at the branding and corporate responsibility pages 46 to 71. International Beer Challenge 2019, were recognised in receiving several while the World Beer Awards judged prestigious accolades, making We are proud to be the only brewer DATUK TOH AH WAH us the Winner for Malaysia under the our golden anniversary a year to Chairman in Malaysia listed on the FTSE taste category. Carlsberg Malaysia Group remember. Russell FTSE4Good Bursa Malaysia

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Chairman’s Address Chairman’s Address

SOLID FINANCIALS crippled the economy with numerous designed to minimise the impact to I am glad to say that all our The Group delivered a solid financial industries closely linked to ours such as the businesses and the rakyat and in management transitions were performance for 2019, growing revenue manufacturing, F&B, travel and leisure keeping our country afloat during this conducted smoothly and with by 13.8% to RM2.26 billion on a year- THE BOARD IS PLEASED TO DECLARE AND PROPOSE having the biggest negative impact. very difficult and challenging period. maximum efficacy – clear testament on-year basis. Net profit increased by TOTAL DIVIDENDS OF 100.0 SEN PER ORDINARY SHARE, to the sound strategic direction and 5.0% to RM291.0 million. Earnings per Our operations also faced tremendous We aim to and look forward to business operational cohesiveness instilled in EQUIVALENT TO A 105.1% PAYMENT OF THE GROUP’S NET share was 95.18 sen, up 5.0% compared uncertainties and challenges as a recovery as our organisation is agile to our business. with 90.65 sen a year earlier. PROFIT IN 2019. result of the Movement Control Order adapt to new norms in the way of working (MCO) in Malaysia since it commenced and doing business going forward. More importantly, I would like to The Group’s performance within each on 18 March 2020 and Singapore’s thank our senior management for of the strategic levers of “Strengthen “circuit breaker” (CB) measures which NEW SAILS IN SENIOR their tenacity and dedication in the the Core”, “Position for Growth” and This is in line with the Group’s We continue to battle the contraband began on 7 April 2020. Our production, MANAGEMENT development and implementation of “Create a Winning Culture” will be dividend policy to declare interim market via a close partnership with the distribution, sales and exports are I would also like to take this opportunity the COVID-19 business recovery plan covered in the Managing Director’s dividends on a quarterly basis, where Confederation of Malaysia Brewers hardest hit under the restrictions to welcome some new faces to the and continuing to lead our employees Statement and Management the target payout is at least 75% of the Berhad (CMBB) and the Ministry of imposed. We are not allowed to team, including our new Managing through this very difficult transition to Discussion and Analysis on Group’s quarterly net profit with the Finance, Royal Malaysian Customs manufacture or distribute as our Director, Stefano Clini, who took over a new way of working and thinking pages 32 to 45. remaining dividend declared in the last and other government agencies, with business is categorised as non-essential from Ted Akiskalos effective 26 October during extraordinary times. quarter. visible and commendable results. services and the management has 2019. Ted Akiskalos succeeded former BUILDING SHAREHOLDER VALUE activated the Group’s risk management Managing Director Lars Lehmann And once again, a big “thank you” to In line with our commitment to We now stand tall among our Singapore and contingency plans. who was promoted to the Executive both Ted Akiskalos and his predecessor, “Deliver Value to Shareholders”, as peers, especially with our inclusion We are pleased to note that the EU- Committee (ExCom) of the Carlsberg Lars Lehmann, who played a significant outlined in our SAIL’22 strategy, on on the MSCI Global Standard Singapore Free Trade Agreement was Our key priorities under the MCO and Group as Executive Vice President of role in the Group’s performance to- 14 February 2018 we announced a Index recognising good corporate only implemented on 21 November CB are the health and safety of our Eastern Europe and also as CEO of date, for all their contributions in 2019. dividend policy targeting a payout stewardship, stock performance and 2019, thus posing little impact on our employees and our business partners, Baltika, Carlsberg Group’s company in of 100% of our annual Group sustainable shareholder value. business at the close of the year. preserving our manufacturing processes Russia effective 1 May 2019. GRATITUDE consolidated net profit. As always, and protecting the commercial and In appreciation, I would like to thank all the policy remains subject to our Inclusion on these global indexes, However, we continue to closely financial health of our business. Stefano joined us from Carlsberg Carlsberg Malaysia Group employees ongoing business prospects, capital including F4GBM, leads to enhanced monitor any impact from the Singapore Throughout the MCO and CB period, Vietnam Breweries Ltd., where he for their hard work in ensuring the requirements, expansion strategy and investor confidence in our business government’s decision to reduce the we kept our employees informed and built his own winning momentum, Group Just Keeps Getting Better. other factors considered relevant by and greater visibility among global duty-free allowance for alcohol, which engaged of the business developments successfully turning around the the Board. fund managers in our business moving took effect on 1 April 2019. and were in constant contact with our business and posting record growth To our friends and colleagues in the forward. business partners in anticipation of in both revenues and profits. Having government, let us enjoy another year As such, the Group has declared a I would also like to take this opportunity business resumptions after the lifting had prior experiences and insights in of close partnership and collaboration, fourth single-tier interim dividend of MARKET SUMMARIES to thank the Malaysia and Singapore of the movement restrictions. the Malaysia and Singapore markets especially in the area of combating 17.0 sen per ordinary share. In addition Governments for not imposing further from his previous role as MD of illicit beer, so that we may bring our to this, the Group has also proposed Malaysia increases on excise duties in their Suffice to say, the full impact of an international tobacco company country ever closer to our development a final single-tier dividend of 23.6 sen Malaysian excise duties for beer remain Budget 2020 announcements on COVID-19 on our financial and based in Kuala Lumpur, I appreciate goals. per ordinary share plus a special single- extremely elevated, the third highest in 11 October 2019 and on 18 February operating performance cannot be Stefano’s leadership as he tackles tier dividend of 4.8 sen per ordinary the world after Norway and Singapore. 2020 respectively. estimated at this time due to the this unprecedented situation which is To my shareholders, you have my share. The proposed final and special current business uncertainty posed by difficult and challenging in his first six utmost gratitude for the trust you have dividends are subject to shareholders’ However, it bears mentioning that COVID-19: UNEXPECTED AND COVID-19 and the MCO. However, the months on the job. placed in me, at the helm of this great approval at the forthcoming 50th Malaysia’s Gross Domestic Product UNPRECEDENTED Board has confidence in the business organisation, even as we look towards Annual General Meeting. (GDP) on a nominal per-capita basis is The 2019 novel coronavirus pandemic, contingency and recovery plan I would also like to welcome Pauline the horizon of recovery in the aftermath merely a seventh that of Norway’s and or COVID-19, has emerged as the most spearheaded by senior management Lim, our new Human Resource of COVID-19. Together with the interim single-tier a sixth that of Singapore’s. significant threat in 2020 with mega and fully committed by every Director, who replaced Felicia dividends declared for the first nine impacts to both the local and global employee in the business, even while Teh on 25 November 2019, Peter Thank you. months of FY19 amounting to 54.6 This materially contributes to the economy. working-from-home or by work-force Wachenschwanz, our new Senior sen, the total declared and proposed prevalence of contraband alcoholic segregation. Supply Chain Director who replaced dividends for FY19 is 100.0 sen per beverages in the market, resulting in an The fast escalating rate of outbreak Piotr Zajac on 1 February 2020, and Datuk Toh Ah Wah ordinary share, equivalent to a 105.1% estimated RM1.5 billion annual loss to worldwide, coupled with the stringent At the same time, I applaud the Koh Poi San, the new Legal Director Chairman payment of the Group’s FY19 net profit. government coffers. measures taken by respective Government’s multiple economic & Company Secretary who joined the Shah Alam governments to contain its spread, has stimulus measures and packages Group on 17 February 2020. 9 April 2020

30 31 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

Managing Director’s Message and MANAGING DIRECTOR’S MESSAGE Management Discussion & Analysis AND MANAGEMENT DISCUSSION & ANALYSIS 50 YEARS OF BREWING FOR DEAR SHAREHOLDERS, A BETTER TODAY & TOMORROW FIRST OF ALL, I WOULD LIKE TO SAY A VERY WARM ‘THANK YOU’, OR ‘GRAZIE’, IN MY NATIVE ITALIAN, FOR THE OPPORTUNITY TO SERVE YOU AND TO CONTINUE DELIVERING VALUE FOR THE CARLSBERG MALAYSIA GROUP.

This is my second stint in Malaysia, having already obtained some valuable local insights and experience from my time as managing director of a leading international tobacco company between 2013 and 2016.

My gratitude to my predecessors, Ted Akiskalos and Lars Lehmann, for the strong and stable ship they passed on to me, and my appreciation towards the Board of Directors for their confidence in my appointment. PEOPLE, BRANDS AND COMPANY industry accolades at the Putra Brand And of course, these milestones were th I truly admire the passion, dedication JUST KEEP GETTING BETTER Awards, the World Beer Awards and the a perfect complement to our 50 and winning mindset of our business, Our performance in Malaysia and International Beer Challenge 2019. anniversary in Malaysia, since we have which made 2019 a year that “Just Keeps Singapore improved whilst we gained always kept true to our Purpose of Getting Better” for the Group. further momentum in our quest Our health and safety team set a record Brewing for a Better Today & Tomorrow. of Brewing for a Better Today and for zero accidents in the workplace with As you are aware, 2019 marked the third Tomorrow, as recognised by our industry 770 days without lost-time accidents A PURPOSE-DRIVEN COMPANY full year of the implementation of our peers and key stakeholders. at our Shah Alam brewery, our second- In 2019, Carlsberg Brewery Malaysia SAIL’22 strategy both in Malaysia and consecutive year of no mishaps. To-date, Berhad turned 50. Singapore, a transformation journey we In 2019, we were named to the FTSE we have surpassed 830 days and are undertook to deliver on our ambition Russell FTSE4Good Bursa Malaysia moving to the next milestone of 1,000 This grand anniversary reminded us of of becoming the most successful, (“F4GBM”) Index, received a prestigious accident-free days. our heritage spanning more than 170 professional and attractive brewer in all corporate award at The Edge Billion years and our founder J.C. Jacobsen’s the markets we operate in. Ringgit Club (BRC) Awards and won unwavering belief in quality, perfection and the importance of continuously Taking over the helm of the Group at perfecting the art of brewing. His the end October 2019, I am very happy pioneering spirit, passion for brewing and to report that both our Malaysia and desire to always contribute and give back Singapore operations delivered on our to society have made us who we are. SAIL’22 priorities with yet another stellar performance. We closed the year with our It is the driving force that focuses all our 8th consecutive corresponding quarter-on- ability and resources on our brands and quarter growth in top and bottom-line. the art of brewing them so that we may always offer our consumers Probably the Best Brews while continuously striving to improve in everything we do.

These improvements are a reflection of our Purpose: BREWING FOR A BETTER STEFANO CLINI TODAY AND TOMORROW. Managing Director Carlsberg Malaysia Group

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Managing Director’s Message and Managing Director’s Message and Management Discussion & Analysis Management Discussion & Analysis

SETTING SAIL Our SAIL’22 corporate strategy, launched in March 2016, guides us toward our ambition of becoming a successful, Since then, SAIL’22 has been successfully embedded in our Malaysia and Singapore operations. To recap, the strategy professional and attractive brewer in our markets. We define this by delivering sustainable organic top- and bottom-line consists of three levers: Strengthen the Core, Position for Growth, and Deliver Value for Shareholders. growth, being the preferred supplier to our consumers and customers and continuously delivering value for shareholders, employees and society alike.

CORPORATE STRATEGY, SAIL’22 OUR THREE STRATEGIC LEVERS OUR SEVEN STRATEGIC PRIORITIES OUR TWO ENABLERS

OUR PURPOSE: Some companies have to dig deep to find ‘Grow in Mainstream’ with Carlsberg Danish their purpose. For us, it has always been there Pilsner and Carlsberg Smooth Draught – Brewing for a Better Today & Tomorrow. Inspired by our founder J.C. Jacobsen’s Golden Words, we constantly pursue operational improvement, focus on our consumer via ‘Win in Store’ with better in-store execution brewing quality and innovation while driving sustainability and contributions to society. STRENGTHEN THE CORE ‘Fund the Journey’ by delivering efficiencies in Our policy is to not settle for immediate gain operating expenses, value management and the when there are opportunities to create a better supply chain tomorrow for all of us.

Create a Winning Culture OUR AMBITION: To be a successful, professional and attractive ‘Go Big in Premium’ with Kronenbourg 1664 brewer in the markets we operate in. We Blanc, Somersby cider, Asahi Super Dry and measure success by delivering sustainable Connor’s Stout Porter organic top- and bottom-line growth, by being the preferred supplier to our customers and delivering value for shareholders, employees ‘Build New Revenue Streams’ with and society. POSITION FOR innovations GROWTH

Defend our License OUR STRATEGY: Our seven-year strategy, SAIL’22, consists of to Operate three levers: Strengthen the Core, Position for Achieve ‘Growth in Net Profit’ Growth, and Deliver Value for Shareholders. These three levers are further cascaded down into seven strategic priorities. Underpinning these are the two enablers: Create a Winning DELIVER Deliver ‘High and Stable Dividend Yield’ for Culture and Defend our License to Operate. VALUE FOR shareholders SHAREHOLDERS

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Managing Director’s Message and Managing Director’s Message and Management Discussion & Analysis Management Discussion & Analysis

STRENGTHEN THE CORE

Meanwhile, we saw increased traction in our Singapore market, with higher reach in terms of marketing touchpoints. I am proud to report GROW IN MAINSTREAM that Carlsberg is now the leading beer brand in supermarkets and convenience stores in Singapore for Our mainstream brands saw steady the second year in a row. growth in 2019, as combined volumes for Carlsberg Danish Pilsner and Carlsberg Smooth Draught increased by 7% year-on-year. Carlsberg Danish Pilsner volumes increased by 5% WIN IN STORE whilst Carlsberg Smooth Draught gained an impressive 24%. Improved in-store execution remains an Carlsberg, our flagship brand and important strategic priority of SAIL’22. crown jewel, received a facelift in July 2019. Its new and modern look and In 2019, we saw improved in-store feel completely refreshed its shelf distribution and presentation of our and trade presence while enhanced brands across Malaysia and Singapore. practical improvements delivered Both operations reported across-the- an even more satisfying drinking board increases both by channel as experience. well as region.

We put a new Fresh Cap on our Certified™ silver ink, wholly produced our “Prosperity Begins With A POP!” Soon after that we kicked off the success, with hundreds of consumers To improve consumer experience Carlsberg Danish Pilsner bottles, which via renewable energy sources while promotion. Four vibrant coloured annual Carlsberg Golf Classic golf enjoying our full portfolio of beers, and brand visibility, we implemented removes oxygen from the headspace improving its recyclability. caps and cans in red, pink, green and tournament, the biggest and longest- ciders and stouts. stricter internal benchmarks for trade in the bottle for a fresher taste up to blue were launched as limited-edition running amateur golf tournament in merchandising, updating our 2020 five times longer than before. Malaysia was also the first Carlsberg festive packaging while consumers Malaysia. Held at 34 exclusive golf We also took this opportunity to focus by renaming this strategic market globally to use a new wax won exciting CNY prizes. clubs nationwide (including Sabah encourage consumers to drink priority as Win in EACH Store, We introduced new designs for our emulsion coating on our refillable & Sarawak), it was a successful responsibly by activating our annual emphasising all-round excellence glasses for a more premium feel, glass bottles. The new coating doubles Making another successful return was 26th edition with over 3,700 avid #CelebrateResponsibly campaign in implementation and customer smoother pour and a hop leaf-shaped the lifetime usage of each bottle our “Probably The Best CNY Shopping golfers participating and over to educate consumers on the legal relationships. nucleation stamp at its bottom to while looking new and scratch-free Experience – You Shop, Carlsberg RM2.6 million in prizes and blood alcohol content (BAC) limit generate more bubbles to replenish for longer, thus cutting the number of Pays” promotion in Malaysia, while sponsorships. to drive while offering free rides the foam and retain the aroma for a new bottles in circulation. a 48-can trolley bag promotion with our e-hailing partners Grab and better beer experience. in Singapore continued to excite Come October, come Oktoberfest! The Riding Pink. While science took care of these shoppers and boosted hypermarket celebrations just kept getting better FUND THE JOURNEY For can-loving consumers, we innovations, we ensured that our sales. with nearly 350 outlets nationwide Our other mainstream brand, introduced Easy-to-Open perforated customers continued to enjoy running the limited-edition Carlsberg Carlsberg Smooth Draught, also shrink wrap, allowing easy, hassle- valuable and rewarding activities In May, we went all red for the 500ml Oktoberfest beer stein performed well with increased The success of Fund the Journey in free access to Probably the Best Beer during key events and celebrations Reds with the global launch of the promotion. Our inaugural partnership distribution and demand especially 2018 allowed us to further invest in anywhere in the country. during the year. limited-edition Carlsberg Red Barley, with Resorts World Genting to run in East Malaysia, supported by great our people, products and processes. commemorating our record-breaking a month-long Probably The Best activations at the local Gawai and In 2019, our focus on operational And, we further reduced the carbon We traditionally begin the year with sponsorship of Liverpool FC to 31 Oktoberfest celebration at the Kaamatan festivities and nationwide efficiency, tighter cost management footprint of Carlsberg Danish Pilsner our biggest consumer campaign, consecutive seasons, the longest Starlight Carnival was an enormous consumer promotions. and better cash flow remained, without by switching to Cradle-to-Cradle Chinese New Year (CNY), and we had partnership in Premier League history. any compromise in our growth targets.

36 37 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

Managing Director’s Message and Managing Director’s Message and Management Discussion & Analysis Management Discussion & Analysis

POSITION FOR GROWTH

“That’s Wonderful”, with a simple and Blackberry, Elderflower Lime, Sparkling Adding excitement to the craft Meanwhile, our online sales growth clean refreshed logo and packaging Rose and Sparkling White variants, category, we imported Brooklyn beat our targets, with more retailers design. reaching over 122,000 consumers at Summer Ale to Malaysia for the first coming on board, further expanding events and activations nationwide. BUILD NEW REVENUE time to great success, as consumers our e-retailing presence. GO BIG IN PREMIUM Wine lovers were spoilt for choice with STREAMS took to its seasonal appeal. We also the introduction of Somersby Sparkling Asahi Super Dry, the no. 1 beer in Japan had a limited-edition Brooklyn Variety Given an encouraging performance last White, the latest addition to the and the top-selling Japanese beer Pack, which was introduced in 14 year, our focus for 2020 will be to update Premiumisation continues to be a Somersby Sparkling series, while fans of in Malaysia and Singapore, hosted Building on our 2017 launch of premium retailers as a trial. this strategic priority to ‘Innovate to strategic focus for growing value and Somersby Blackberry were introduced a Michelin-star gastronomic dinner Brooklyn Brewery, the no. 1 export Grow’, reflecting a broadened focus volumes, especially as our market to a new and improved recipe with a on top of expansion and promotions craft beer from the United States, In Singapore, we expanded Brooklyn on product and consumer experience continues to diversify and our drinkers more berry-flavoured taste. in Malaysian and Singaporean F&B we elevated the craft beer drinking Brewery’s bottled beers onto innovation to grow top-line revenue. grow in sophistication. outlets. Its uniquely dry and refreshing experience by making the award- e-commerce platforms and 20 Back for the third-consecutive year, karakuchi taste profile makes it the winning Brooklyn Lager and Brooklyn premium supermarkets, while seeing Our premium brands – Kronenbourg our summery Somersby Kombis perfect pairing for food, offering a East IPA more widely available in good growth in on-trade availability. 1664 Blanc, Somersby cider, Connor’s toured the country giving out free crisp palate and a clean, non-bitter draught form, via kegs air-freighted in Stout Porter and Asahi Super Dry – samples of Somersby cider in Apple, aftertaste. controlled temperatures all the way recorded a combined growth of 13% from New York City. for both Malaysia and Singapore, with 1664 Blanc and Connor’s expanding in Brooklyn soared in 2019, growing 58% strong double-digit terms. in combined volumes for Malaysia and Singapore. France’s No.1 Premium Wheat Beer Kronenbourg 1664 Blanc shared good taste via our flagship consumer campaign Dinner in Blue, while holding haute events celebrating fashion and good taste. Through this, 1664 Blanc underlined its status in high society among lovers of fine taste and creativity as the official beer of KL Fashion Week.

Connor’s, our premium draught stout porter, brought back the Connor’s Perfect Pour Challenge with over 200 activations throughout Malaysia reaching over 30,000 young urban stout drinkers. Our surveys showed 98% of consumers loved its rich, crafted taste that’s “Just Made Right”, leading to increased brand awareness and volume in 2019.

Somersby, the no. 1 cider in Malaysia and Singapore, had an eventful 2019 where we saw a new global brand identity and theme of

38 39 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

Managing Director’s Message and Managing Director’s Message and Management Discussion & Analysis Management Discussion & Analysis

DELIVER VALUE FOR SHAREHOLDERS

For Malaysia, organic revenue Analysis of 2019 REVENUE (RM million) increased by 10.8% after adjusting for Analysis of 2019 Analysis of 2019 Total Liabilities the impact of SST. Segment profit rose Group Revenue Total Assets & Shareholders’ GROWTH IN 7.8% to RM274.6 million year-on-year. Equity 2019 2,256.6 NET PROFIT Carlsberg Singapore Pte. Ltd. 2018 1,982.3 (“CSPL”) saw higher revenue growth The Group once again delivered a of 8.6% to RM618.1 million and strong result in 2019 due to better sales improved segment profit by 8.3% to 2017 1,730.0^ and our premiumisation strategy in RM100.5 million. our two main Malaysia and Singapore 500 1,000 1,500 2,000 2,500 EXCISE & PROPERTY, PLANT & EQUIPMENT SHARE markets, thanks to a solid execution of For our associate company Lion ^Adjusted 2017 Revenue had the Group CUSTOMS DUTIES AND RIGHT-OF-USE ASSETS CAPITAL applied MFRS 15. our SAIL’22 strategy. Brewery (Ceylon) PLC (“LBCP”) in 2019 2018 2019 2018 2019 2018 Sri Lanka, the Group registered a NET PROFIT (RM million) 47.4% 47.3% 32.5% 28.3% 22.0% 21.9% Revenue grew by a solid 13.8% to lower share of profits by 22.3% to RM2.26 billion. Adjusting for the RM16.3 million in FY19. This came SALES, DISTRIBUTION, impact of the Sales and Services despite a better performance due 2019 291.0 INVENTORIES RESERVES Tax (“SST”) regime, which came to insurance compensation received ADMINISTRATION & OTHER COSTS into effect on 1 September 2018, the in FY18 and non-cash impairment 2018 277.2 2019 2018 2019 2018 2019 2018 Group’s organic revenue for FY19 grew losses on intangible assets of 19.3% 16.0% 9.8% 14.2% -0.1% 2.9% by 10.2%. RM3.0 million on its Miller Brewery 2017 221.2 Limited brands in FY19. PROFIT AFTER RECEIVABLES, DEPOSITS MINORITY Overall, net profit for the year 50 100 150 200 250 300 TAXATION AND PREPAYMENTS INTEREST increased by 5.0% to RM291.0 million 2019 2018 2019 2018 2019 2018 from 2018. Earnings per share was EARNINGS PER ORDINARY 95.18 sen, up 5.0% compared with SHARE (sen) 13.3% 14.5% 32.0% 30.4% 1.2% 1.7% 90.65 sen a year earlier. HIGH AND STABLE DIVIDEND YIELD RAW & PACKAGING CASH AND CASH PAYABLES Profit before tax (PBT) was RM382.2 2019 95.18 MATERIALS COSTS EQUIVALENTS AND ACCRUALS million, up 5.8% from RM361.3 million 2019 2018 2019 2018 2019 2018 in 2018. Profit for the financial year We continued to return regular, 2018 90.65 7.3% 8.1% 11.6% 14.1% 55.9% 55.6% was RM300.4 million, higher by 4.7% consistent and sustainable dividends, from RM286.8 million in 2018. true to our commitment to “Deliver 2017 72.34 LOANS & BORROWINGS Value to Shareholders”. STAFF COSTS INVESTMENTS AND LEASE LIABILITIES Our balance sheet remained stable 0 25 50 75 100 125 with cash and cash equivalents of In-line with the Group’s dividend 2019 2018 2019 2018 2019 2018 RETURN ON SHAREHOLDERS’ RM78.6 million versus total debt of policy for a target payout of 100% of FUND (%) 7.2% 8.2% 12.5% 10.7% 12.2% 11.0% RM75.0 million. the Group’s annual consolidated net profit, we declared total and proposed TAXATION INTANGIBLE ASSETS CURRENT TAX LIABILITIES Total assets amounted to RM679.4 dividends of 100.0 sen per ordinary 2019 189.2 million (2018: RM682.5 million). share, equivalent to a 105.1% payment 2019 2018 2019 2018 2019 2018 of the Group’s FY19 net profit. 2018 122.5 3.6% 3.8% 1.2% 0.5% 5.1% 4.6% Net cash generated from operating activities was RM379.0 million, on par 2017 DEPRECIATION OTHER ASSETS DEFERRED TAX LIABILITIES with last year. 74.9 2019 2018 2019 2018 2019 2018 50 100 150 200 1.9% 2.1% 0.4% 1.8% 3.7% 2.3%

40 41 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

Managing Director’s Message and Managing Director’s Message and Management Discussion & Analysis Management Discussion & Analysis

STATEMENTS OF COMPREHENSIVE INCOME (RM MILLION) FIVE YEAR DIVIDEND

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Revenue 1,368.2 1,489.4 1,584.8 1,555.1 1,635.1 1,659.9 1,679.5 1,730.0* 1,982.3 2,256.6 Group’s Net Profit (RM million) 215.9 205.0 221.2 277.2 291.0 Profit Before Taxation 176.5 220.4 245.7 236.4 274.2 283.6 283.8 294.8 361.3 382.2 Dividend Amount Declared and Proposed Taxation 42.4 53.0 51.9 49.8 57.3 63.4 73.2 62.4 74.5 81.8 for the year (RM million) 220.1 220.1 266.0 305.7 305.7 Profit for the Financial Year 134.1 167.4 193.8 186.6 216.9 220.2 210.6 232.4 286.8 300.4 Dividend as % of Net Profit 102.0% 107.4% 120.3% 110.3% 105.1%

* Adjusted 2017 Revenue had the Group applied MFRS 15. Dividend per Ordinary Share (sen) 72.0 72.0 87.0 100.0 100.0

STATEMENTS OF FINANCIAL POSITION (RM MILLION)

Restated 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 CREATE A WINNING CULTURE

Issued and Paid-up Share Capital 142.0 142.0 142.0 142.0 142.0 142.0 142.0 149.4 149.4 149.4 Retained Earnings 91.5 130.4 148.7 140.0 165.1 163.9 148.8 133.7 17.3 (6.2) While products and performance are Call and Put Option Reserve - - - (20.1) (10.6) - - - - - key catalysts for growth, none of what Non-Distributable Reserves 11.8 13.0 8.3 11.8 15.7 29.7 30.9 15.9 2.4 5.3 we achieved in 2019 would have been possible without our people bringing Shareholders’ Fund 245.3 285.4 299.0 273.7 312.2 335.6 321.7 299.0 169.1 148.5 our winning culture to life. Deferred Taxation 16.5 18.3 19.8 17.1 13.5 10.2 12.1 16.6 12.4 24.9 Net Non-Current Liabilities ------1.7 0.3 0.3 6.2 I am therefore glad to report that our Minority Interest 2.7 3.9 7.8 10.5 19.0 7.0 8.4 13.4 11.9 8.2 efforts to up employee engagement 264.5 307.6 326.6 301.3 344.7 352.8 343.9 329.3 193.7 187.8 were successful, with an increase of 5 percentage points in Malaysia Property, Plant and Equipment, compared to the benchmark global Right-of-use Assets employee survey in 2017 whilst and Intangible Assets Singapore saw an increase of 10 (Net Book Value) 152.3 158.6 168.2 174.3 164.4 167.5 176.6 181.2 196.2 229.2 percentage points within 2019. Investment in an Associate 26.3 33.4 34.7 40.9 58.2 80.2 73.1 64.3 73.0 84.7 Net Current Assets/(Liabilities) 85.9 115.6 123.7 86.1 122.1 105.1 94.2 83.8 (75.5) (126.1) Similar to previous years, we provided 264.5 307.6 326.6 301.3 344.7 352.8 343.9 329.3 193.7 187.8 regular updates on corporate developments and results to keep Embedding a winning culture into doing) better: a policy that extends FINANCIAL RATIO our employees fully engaged while our employee benefits, we continued beyond our brews and results to our remaining aware of their personal to practice a pay-for-performance people. Restated contribution toward SAIL’22 targets. reward philosophy. High performers 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 are entitled to a special bonus on top Last year, we also launched a new We gave due recognition to staff of their contractual and performance- diversity and inclusion policy aimed Earnings per Ordinary Share (sen)* 43.58 54.35 62.68 60.16 69.2 70.62 67.04 72.34 90.65 95.18 who went above and beyond based bonuses. at developing a diversely talented Net Assets Backing their individual calls of duty by workforce with a global mindset per Ordinary Share (RM)* 0.80 0.93 0.98 0.90 1.02 1.10 1.05 0.98 0.55 0.49 demonstrating a ‘3A’ way of working – In October 2019, we rolled out a new who are given equal opportunities Return on Shareholders’ Fund (%)+ 35.3 63.1 66.3 65.2 74.0 68.0 64.1 74.9 122.5 189.2 Alignment, Accountability and Action. global employer branding campaign, and access to a driven and inclusive Company-wide recognition, which titled “Something’s Brewing”, focusing leadership. Current Ratio 1.3 1.5 1.5 1.3 1.4 1.3 1.3 1.3 0.8 0.7 we call the SAIL’22 awards, were on the three all-important pillars of Bursa Securities Price at presented alongside cash rewards Purpose, Pride and Performance. More details on our efforts towards 31 December (RM) 6.32 8.54 12.52 12.18 11.74 11.70 13.92 15.30 19.68 29.40 during monthly and quarterly town Creating a Winning Culture can be halls, driving a further sense of pride As part of a globally reputable brewer, read at the Sustainability Statement Net Dividend Yield (%)^ 3.0 4.9 4.5 5.2 5.2 6.1 5.2 5.0 6.5 3.5 and ownership among our people. I am a strong advocate of being (and on pages 66 to 69 of this report. * Computed based on total number of shares net of Treasury shares. Treasury shares were cancelled on 17 May 2017. + Return on Shareholders’ Fund was computed based on Group’s Profit for the Financial Year over average Group’s Shareholders’ Fund ^ Net dividend yield was computed based on dividend paid out and declared during the year divided by the share price at year end.

42 43 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

Managing Director’s Message and Managing Director’s Message and Management Discussion & Analysis Management Discussion & Analysis

We are, however, confident in the commitment towards value creation DEFEND OUR LICENSE TO OPERATE that we share with our stakeholders, especially our business partners, customers and consumers, to bring TOGETHER TOWARDS ZERO Contributing to a better society Our 2019 performance and progress meaning to our continued Purpose Whether climate change, water wherever our beers are brewed and sold towards our targets can be found in of Brewing for a Better Today & scarcity, public health concerns or is also central to our purpose, which we the Sustainability Statement from Tomorrow. a myriad other globally impactful believe is the right thing to do. pages 46 to 71. events, these truly are challenging ZERO IN APPRECIATION times we live in. Our efforts to defend our licence to CARBON In closing, I truly am proud to say operate also extend to the training of FOOTPRINT that after half a century of dedicating This is why our Together Towards ZERO enforcement officers, enabling them ourselves to brewing innovation and sustainability programme expresses to accurately identify illicit products ZERO against infection risks. Regretfully, schools enjoy safe and infection-free excellence, we are now as much a our vision for a better tomorrow. while also supplying information to WATER this approval was rescinded on learning environments when classes proudly Malaysian brand as we are a Royal Malaysian Customs on retail WASTE 6 April 2020 and at the time of resume after the MCO. Danish one! It consists of four ambitions, outlets selling such products. writing supply and distribution of our underpinned by individual and ZERO IRRESPONSIBLE products remains impeded during this This effort echoes the Carlsberg I would also like to thank all our measurable targets leading up to 2022 I am glad to say that these efforts DRINKING extended MCO period. Group’s initiatives in response to customers and consumers for your and 2030: ZERO Carbon Footprint, have paid off, with visible reductions the global COVID-19 crisis including support. Your support and loyalty to ZERO Water Waste, ZERO Irresponsible in contraband available in the market. ZERO The immediate effects of the a RM60 million donation by the the Carlsberg brand is an invaluable Drinking, and ZERO Accidents Culture. ACCIDENTS lockdown are also keenly felt by Carlsberg Foundation, the New encouragement in our constant CULTURE our distributors, customers and Carlsberg Foundation and the Tuborg innovation and quality. It truly is the consumers, with both stock scarcity Foundation via extraordinary grants hallmark of our status as the maker and dampened consumer sentiment in support of scientific, economic of Probably the Best Portfolio of BUSINESS RISKS discussions with the authorities on OUTLOOK & PROSPECTS expected to impact overall sales. and human efforts at a time when Beers, Stouts and Ciders, one that we With regards to the two bills of this matter. As such, no provisions We entered 2020 with the looming Singapore implemented its “circuit society is challenged by the epidemic, will strive to uphold even as we look demand for sales tax and excise have been recognised for the year threat of COVID-19, which has since breaker” social distancing measures with recipients including three ahead to recovery and rebuilding in duties amounting to RM56.3 million ended 31 December 2019. grown into a global pandemic with far- on 7 April 2020. internationally-recognised coronavirus the months ahead after COVID-19. issued by the Selangor State Director reaching consequences to Carlsberg research teams. of the Royal Malaysian Customs on On the subject of contraband, Malaysia Group’s operations in We have activated a business I would also like to thank all our 17 September 2014, I am pleased to we applaud the Royal Malaysian Malaysia and Singapore as well as continuity plan which calls for Moving forward, we recognise the leaders, managers and employees report some good news. Customs and the efforts of other law our exports markets and in Sri Lanka additional cost optimisation initiatives unavoidable shifts in consumer for their hard work and unwavering enforcement agencies to further curb where our associated company is to mitigate earnings impact of lost behaviour as the world faces a new commitment to achieving 2019’s On 13 February 2020, we received illegal alcoholic beverages. I should operating in. volume during this time. However, reality created by COVID-19. We will results and a smooth leadership a letter from the Selangor State also like to take this opportunity to the health, safety and welfare of our need to be agile in adapting to new transition. Their continued dedication Director of Royal Malaysian Customs thank and applaud the Government’s Since the start of the Malaysian people remain our top priority. Staff demand spaces, sales channels, and resilience even during this confirming that its bill of demand call to not raise excise duties on beer. government’s Movement Control under our direct employment work marketing activities, and consumption global challenge is nothing short of for sales tax amounting to RM13.76 Order (MCO) on 18 March 2020, we from home and have their full salary patterns, while staying true to our astounding. million and the penalty amounting In our Singapore operations, we have been in full compliance through paid during the lockdown period in focuses on quality, innovation and to RM6.88 million for the period of foresee that the implementation of the suspension of both our production Malaysia and Singapore. efficiency as part of the SAIL’22 And lastly, a warm “thank you” to all 1 July 2011 to 14 January 2014 had the EU-Singapore Trade Agreement and distribution operations, as beer strategy. our shareholders for your confidence been cancelled, effective 15 January might pose tougher competition from was not included within the list of Extraordinary times call for in us, and for your belief and hope 2020. imports. essential consumer items. extraordinary measures and we While we cannot predict the impact that we will “Just Keep Getting Better”. have stepped up to assist our of the current pandemic given the The Group has not agreed to the We also welcome the Singapore On 5 April 2020, we received local communities through the uncertainties, our priority in the demand for excise duties amounting to government’s decision to maintain Government approval to resume Safer Schools initiative, providing coming months is to get operations Stefano Clini RM35.7 million. Based on legal advice excise duties on alcohol, further to operations, which was subject contactless thermometers and and distribution back up to speed, Managing Director sought, there are reasonable grounds its Budget 2020 announcement on to conditions including limiting disinfection services to ensure although we acknowledge that it will Shah Alam to object the basis of the bill of 18 February 2020. production with minimal personnel thousands of primary schoolchildren take time. 9 April 2020 demand and we remain in constant and undertaking full precautions in Chinese and Tamil vernacular

44 45 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019 SUSTAINABILITY SUSTAINABILITY STATEMENT STATEMENT

GOVERNANCE The statement also corresponds RECOGNITION Oversight of Carlsberg Brewery with Bursa Malaysia Securities The Group is proud to be listed BREWING FOR A BETTER Malaysia Berhad’s (Carlsberg Berhad’s (Bursa Malaysia) economic, among the constituents in the FTSE Malaysia Group / the Group) environmental and social (EES) Russell FTSE4Good Bursa Malaysia sustainability programme rests with pillars recommended by the national (“F4GBM”) index, following Bursa TODAY AND TOMORROW the management team, led by the exchange’s sustainability framework, Malaysia Berhad’s bi-annual review Managing Director with endorsement which are also covered under the which was concluded in June 2019 at Our Global Purpose, Brought To Life by the Board of Directors. following sections: the time of listing.

OUR FOUNDER, J.C. JACOBSEN, UNDERSTOOD THE IMPORTANCE OF BETTER BREWING FOR SOCIETY The Together Towards ZERO • Economic: Brewing Economic The inclusion ranks us among leading MORE THAN A CENTURY AND A HALF AGO. HIS VISION WAS ENCAPSULATED IN HIS GOLDEN WORDS sustainability agenda is spearheaded Growth Malaysian public-listed companies ADVOCATING A “CONSTANT PURSUIT OF BETTER” WHICH IS THE INSPIRATION FOR THE CARLSBERG by a corporate social responsibility • Environment: ZERO Carbon which have demonstrated class- (CSR) champion, which for Carlsberg Footprint & ZERO Water Waste leading commitment to responsible GROUP’S PURPOSE OF BREWING FOR A BETTER TODAY AND TOMORROW. Malaysia Group is the Corporate • Social: ZERO Irresponsible business practices and inclusive Communications and CSR Director. Drinking, ZERO Accidents Culture disclosure on environmental, social Our Purpose drives us to pursue communities we operate in. We are License to Operate’ that directly and Committing Towards a and governance (ESG) matters. perfection every day as we strive committed to creating sustainable address operational sustainability Operationally, a network of managers Responsible Business to brew better beers with quality, performance today while striving to for people and the planet on top of and policy owners across functions We are the only brewer and one of innovation and pride that stand at the combat global challenges for a better profits. are appointed for their scope of The statement will cover key three fast-moving consumer goods heart of moments that bring people world tomorrow. work, responsibilities and people sustainability initiatives and updates (FMCG) companies included in the together. Driven by this Purpose-driven goal, it management that have direct impact within our Malaysia and Singapore F4GBM index. It is indeed a humbling Within our SAIL’22 strategy, our is our ambition to create impacts on towards stated goals. All functions as operations from 1 January to 31 encouragement of our ongoing efforts More importantly, we do not focus Purpose’s overarching call for the key sustainability priorities under diverse as supply chain operations, December 2019. Initiatives by Lion toward responsible business practices. merely on short-term gains but a sustainable brewing is most visible our Together Towards ZERO ambition corporate communications, marketing, Brewery (Ceylon) PLC, our associate sustainable future for our business, in the underlying enablers of ‘Create in Malaysia and Singapore. sales, human resources and health, company, will not be included We are grateful for the endorsement stakeholders, environment and a Winning Culture’ and ‘Defend Our safety & security contribute towards given that the Group does not have from the investment community sustainability performance. management control. that acknowledges our efforts in sustainability and sound corporate Key performance indicators are Key indicators are extracted from governance. reported and monitored via the Enablon, operational reporting, and Enablon online sustainability audited financial statements. This reporting platform, the same system report should be read in conjunction used by the Carlsberg Group’s markets with Carlsberg Brewery Malaysia globally. Reporting is done on all Berhad’s 2019 annual report, which policy areas on a quarterly, half-yearly highlights other financial and non- and annual basis, providing visibility financial aspects of the Group. on a local and Group-wide level on Together Towards ZERO progress.

SCOPE OF STATEMENT This sustainability statement for 2019 will cover progress made in the ZERO ZERO ZERO ZERO year for the Together Towards ZERO CARBON WATER IRRESPONSIBLE ACCIDENTS sustainability agenda with additional FOOTPRINT WASTE insights on the Group’s economic contributions, employee development, ethics and compliance, and community engagement and support. 6.8% 1.2% 76,400 consumers 770 days reduction in carbon reduction in water used reached via 5 years of without lost-time emissions vs. 2018 in production vs. 2018 #CelebrateResponsibly accidents as of activations 31 Dec 2019

46 47 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT

UNITED NATIONS’ SUSTAINABLE DEVELOPMENT GOALS TOGETHER THAT CUT ACROSS OUR OPERATIONS TOWARDS ZERO A Global Sustainability Ambition With Local Goals

WE CALL OUR SUSTAINABILITY AMBITION TOGETHER TOWARDS ZERO, A SUSTAINABILITY ROADMAP WHICH IS SHARED WITH ALL MARKETS WITHIN THE CARLSBERG GROUP. FOOTPRINT CARBON ZERO

ZERO ZERO CARBON WATER FOOTPRINT WASTE

ZERO ZERO 3.5 8.8 13.1 Strengthen the prevention and Protect labour rights and promote Strengthen resilience and adaptive IRRESPONSIBLE ACCIDENTS treatment of substance abuse, safe and secure working environments capacity to climate-related hazards DRINKING CULTURE including harmful use of alcohol. for all workers. and natural disasters.

3.6 12.2 13.3 By 2020, halve the number of global By 2030, achieve the sustainable Improve education, awareness- Together Towards ZERO is the environmental sustainability while business, considering both risks and deaths and injuries from road traffic management and efficient use of raising and capacity on climate accidents. natural resources. change mitigation, adaptation, Carlsberg Group’s response to pressing the other two involve people – our opportunities. impact reduction and early warning. global issues of climate change, water consumers and employees. Each of 6.4 12.5 scarcity and public health & safety – these is underpinned by individual The Carlsberg Group plans to provide By 2030, substantially increase By 2030, substantially reduce waste 17.16 areas most material to our business and measurable targets, leading up to an updated materiality assessment water-use efficiency and ensure generation through prevention, Enhance the global partnership sustainability and which we have the milestones in 2022 and 2030. in 2020 to include input from sustainable withdrawals and supply of reduction, recycling and reuse. for sustainable development, capability to effect positive change. initiatives such as the Task Force for freshwater to address water scarcity. complemented by multi-stakeholder Together Towards ZERO was designed Climate Related Financial Disclosures 12.9 partnerships. The programme is closely linked following a global stakeholder (TCFD) and the United Nation’s 6.5 Support developing countries to to the United Nations’ Sustainable engagement process spanning social, Intergovernmental Panel on Climate By 2030, implement integrated water strengthen their scientific and 17.17 Development Goals (UN SDGs) environmental and economic experts Change (IPCC). resources management at all levels. technological capacity to move Encourage and promote effective covering seven of its goals. and a materiality assessment that the towards more sustainable patterns of public, public-private and civil society 7.2 consumption and production. partnerships. Carlsberg Group carried out in 2016 In this report, Carlsberg Malaysia By 2030, increase substantially the It consists of four ambitions: ZERO with Business for Social Responsibility. Group’s progress for Together Towards share of renewable energy in the Carbon Footprint, ZERO Water ZERO milestones are covered from global energy mix. Waste, ZERO Irresponsible Drinking The assessment represents an pages 52 to 65. and a ZERO Accidents Culture. overview of the topics that have the 7.3 Two of these ambitions focus on biggest influence on society and our By 2030, double the global rate of improvement in energy efficiency.

48 49 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

SUSTAINABILITY STATEMENT

No. of people employed BREWING 2,023 ECONOMIC GROWTH Direct: 593 employees in Malaysia and 73 employees in Singapore INCORPORATED IN 1969, CARLSBERG MALAYSIA GROUP CELEBRATED ITS 50TH ANNIVERSARY OF BREWING EXCELLENCE AND CONTRIBUTION TO THE LOCAL ECONOMY IN 2019. Indirect: 1,119 sales promoters in Malaysia and The Group currently operates 16 sales In Malaysia alone, the Confederation total beer sales volume in Peninsular 238 sales promoters in Singapore offices across Peninsular Malaysia, of Malaysian Brewers Berhad (CMBB) Malaysia and Sabah & Sarawak Sabah and Sarawak on top of our – of which Carlsberg Malaysia Group respectively. vs. 2,027 in 2018 Singapore operations based in is one of the members – estimates Zhongshan Park. Carlsberg Singapore that the brewing industry in Malaysia As such, we applaud the Malaysian Pte. Ltd. also owns a 51% equity supports 61,000 people in direct or and Singapore governments’ decision share in Singapore importer MayBev indirect employment while taxes, to not raise excise duties on alcohol for Pte. Ltd. (MayBev), which distributes salaries and profits are equal to 0.3% the next fiscal year, where the excise Direct taxes Japanese premium alcohol brands of gross domestic product. duty rate for both countries are only especially Asahi Super Dry, the best- second to Norway for the highest in selling beer brand in Japan. Within the Malaysian context, the the world. It is important to note that RM70 mil biggest challenge for the Group Malaysia’s gross domestic product in corporate taxes with RM52 million for Our economic contribution is twofold; remains the prevalence of illicit beer (GDP) per capita is seven times lower our operations create value for the which is estimated at more than than Norway and six times lower than Malaysia and RM18 million for Singapore local workforce through employment 1 million hectolitres, posing a threat to Singapore. -9% in 2019 vs 2018 opportunities while contributing to the national tax revenue, local consumers national economies of Malaysia and via the risk of contraband beer, and Through our Malaysian and Singapore via direct and indirect taxes, economic betterment to legitimate Singaporean operations, we excise duties, and support of the local businesses. Illicit beer represents an contribute to SDG targets 8.1 and 8.2 Indirect taxes F&B marketplace. estimated RM1.5 billion loss to the by supporting economic prosperity, Malaysian government’s tax revenue higher productivity and innovation by by occupying around 20% and 80% of providing decent work and economic RM106 mil growth in the markets we operate in. in SST & GST paid/collected on behalf of the Malaysia and Singapore governments +RM47 mil in 2019 vs 2018 Excise duties RM1.07 bil Amount spent on human paid on our products brewed capital development and sold in both Malaysia and Singapore RM665,000 spent on training activities for employees in +14% in 2019 vs 2018 Malaysia and Singapore +2% in 2019 vs 2018

50 51 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT ZERO CARBON FOOTPRINT

2030 GLOBAL TARGETS THE UNITED NATION’S INTERGOVERNMENTAL PANEL AMBITION plus eliminating coal as an energy SUPPORTING THE GLOBAL GOALS ON CLIMATE CHANGE (IPCC) REPORTS THAT TO Our Together Towards ZERO carbon source. The Carlsberg Group also aims footprint ambition is to reduce to reduce our beer-in-hand carbon RELIABLY PREVENT GLOBAL TEMPERATURES FROM emissions in line with international footprint by 15%, have 100% low- SDG 7 TARGETS ZERO goals to limit global temperature rise impact cooling, and to establish 30 CARBON EMISSIONS RISING 2°C ABOVE PRE-INDUSTRIAL LEVELS, GLOBAL to 1.5°C above pre-industrial levels. global partnerships with suppliers by 7.2: AT OUR BREWERIES CARBON EMISSIONS NEED TO BE CUT BY 25% WITHIN 2022, leading to a reduction of our By 2030, substantially increase the THE DECADE AND REACH ZERO BY 2070. GLOBAL share of renewable energy in the In 2019, the Carlsberg Group signed shared carbon footprint. global energy mix. 30% WARMING HAS SERIOUS CONSEQUENCES TO CROP the UN Global Compact’s Business REDUCTION IN BEER-IN-HAND HARVESTS, ECOSYSTEMS, AND RISING SEA LEVELS Ambition for 1.5°C Pledge in Madrid, In line with these ambitions, Carlsberg 7.3: By 2030, double the global rate of CARBON FOOTPRINT reconfirming our commitment to Malaysia Group targets a 5% AMONG OTHER SERIOUS DANGERS THAT CAN HAVE fighting climate change and pursuing reduction in thermal and electricity improvement in energy efficiency. SOCIAL, GEOPOLITICAL AND ECONOMIC IMPACTS. science-based targets that align our usage year-on-year and a complete Examples of our actions 2022 GLOBAL TARGETS business with the more ambitious level replacement of R22 – a high-climate- Meanwhile, the International Energy Agency (IEA) reported that of the Paris Agreement. impact refrigerant gas – by 2022 • Increasing ratio of renewable energy in total energy usage. global carbon dioxide emissions in 2019 were maintained at 33 in stages. • Improving energy efficiency. 50% billion metric tons versus the previous year, even with worldwide In doing so, we are also guided by REDUCTION IN economic expansion of 3%. While this was attributed to the the Carlsberg Group’s participation Our focus remains on energy efficiency CARBON EMISSIONS expanding role of renewable energy and the usage of fuels with in the Task Force for Climate Related in brewing, an area we directly control SDG 12 TARGETS AT OUR BREWERIES lower carbon footprints, the Carlsberg Group recognises that a Financial Disclosures (TCFD) and the and maintain within our ISO 14001:2015 12.9: holistic approach above and beyond renewable energy usage is key Intergovernmental Panel on Climate certification. The biggest challenge we Help developing countries to to reducing our environmental impact. Change (IPCC). face to meet the Carlsberg Group’s strengthen their scientific and 100% ambitions is on renewable electricity, technological capacity in their move ELECTRICITY FROM RENEWABLE Since the implementation and adoption of science-based targets TARGETS as our only available source of towards more sustainable patterns of SOURCES AT OUR BREWERIES towards a zero-carbon footprint, the Carlsberg Group has mapped The Carlsberg Group’s aim is to achieve electricity is from the local grid which consumption and production. the carbon footprint contribution from the point of harvest to ZERO carbon emissions at all breweries relies mostly on fossil fuels. the point of consumption. We call this our “beer-in-hand” carbon by 2030 with a 30% reduction in “beer- Examples of our actions ZERO footprint which covers the entire supply chain from raw materials, in-hand” emissions by 2030. We continue to work with our • Using research to improve every COAL AT OUR BREWERIES brewing, packaging, logistics and outlet operations. Globally, partners on a long-term basis to element of our production process. we have identified packaging as the main contributor towards Its next milestone in 2022 includes address carbon-reducing measures in • Increasing operational efficiency at our carbon footprint, followed by our raw ingredients, brewing a 50% reduction in emissions and a packaging, raw materials, logistics, our brewery. 15% and distribution. switch to 100% renewable electricity, and outlet operations (e.g. low-impact SDG 13 TARGETS REDUCTION IN BEER-IN-HAND refrigeration). CARBON FOOTPRINT In Carlsberg Malaysia Group, the Senior Supply Chain Director and 13.1: management team oversees implementation of the ZERO Carbon Strengthen resilience and adaptive Footprint sustainability roadmap. In line with the Carlsberg Group’s capacity to climate-related hazards and 100% goals, our Malaysia operations have set annual targets based on natural disasters. LOW-CLIMATE- the Group’s ambition of ZERO carbon emissions at our brewery in IMPACT COOLING Shah Alam, Selangor. 6.8% 4.7% 13.3: reduction reduction in Improve education, awareness-raising in carbon total energy Our iconic Shah Alam brewery entered its 48th year since and capacity on climate change 30 footprint vs. usage vs. 2018 mitigation, adaptation, impact commissioning. The production plant still retains most of the GLOBAL PARTNERSHIPS 2018 reduction and early warning. TO REDUCE SHARED original structure with upgrades to some facilities to deliver optimum CARBON FOOTPRINT capacity. However, we encountered challenges to our operation Examples of our actions efficiency when demand and complexity over our portfolio of • Setting tough yet science-based brands grew. targets. • Act as agents of change by raising Regardless, we are committed to constant reinvestments to awareness of the need for action on meet demand while reducing carbon footprint impact including climate change. optimising equipment and operations, ongoing product innovation, • Cooperate with stakeholders in research and development (R&D) and increasing efficiencies within our value chain and other related industries to reduce carbon emissions. our capacity.

52 53 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT

THERMAL ENERGY The main challenge towards reducing Recognising that R22 is a high climate- NATURAL GAS USAGE (kWh/hl) CHEMICAL OXYGEN DEMAND TOTAL ENERGY USAGE In 2019, brewing operations used electricity consumption within our brewery impact refrigerant gas, it is in our CAPEX (COD) IN WASTE WATER AFTER (THERMAL + ELECTRICITY) IN (kWh/hl) 21.70 kilowatt hours of thermal operations was from our cooling plant budget in 2020 that we convert to alternative TREATMENT (kg/hl) energy per hectolitre (kWh/hl) versus where a scheduled replacement of an refrigerants and compatible equipment. We 23.17 kWh/hl in 2018. This represents a 2019 17.21 aging condenser unit was delayed, and plan to phase out R22 refrigerants by 2022 2019 31.68 reduction of 6.3%, exceeding the year-on- the expected energy savings from this and replace outgoing chillers at outlets with year reduction target of 5%. 2018 18.86 optimisation exercise was not realised 2019 0.019 high-efficiency models. within the fiscal year. 2018 33.24 In our efforts to prioritise renewable energy 2018 0.017 2017 19.40 sources, natural gas usage decreased to Globally, the Carlsberg Group’s goal is 100% REDUCE, REUSE, RECYCLE & RETHINK 2017 33.61 17.21 kWh/hl compared to 18.86 kWh/ electricity usage from renewable sources in (4Rs) PROGRAMME 2017 hl in 2018, while biogas usage increased 15 16 17 18 19 20 all breweries. As the Shah Alam brewery 0.033 We continued to encourage the reuse 31 32 33 34 35 to 4.49 kWh/hl versus 4.31 kWh/hl in the relies on the local electricity provider (the of packaging materials – which 30 previous year. This raises the ratio of BIOGAS (RENEWABLE ENERGY) sole source for Peninsular Malaysia) for its 0.005 0.010 0.015 0.020 0.025 0.030 represents the highest contributor to our biogas to natural gas usage within our USAGE (kWh/hl) grid supply, our electricity provenance still beer-in-hand carbon footprint – via the 2022 GOALS = 28.20 kwh/hl thermal energy mix to 20.7% from 18.6% depends on the power generation mix of ongoing system of returnable glass bottles previously. said provider which still relies on a large kegs and crates via an incentive scheme percentage of non-renewable sources for CHEMICAL OXYGEN DEMAND (COD) 2019 4.49 supported by our distributors and on-trade CARBON EMISSIONS - kgCO2/hl The improvements for thermal energy the foreseeable future. IN WASTEWATER AFTER TREATMENT customers. In 2019, our collection rate of were due to continued progress in the hot Beyond energy efficiency initiatives, we also 2018 4.31 returnable glass bottles surpassed our target. insulation improvement project covering Feasibility studies have been conducted measure waste management from brewing all hot surfaces such as piping and boiler from proposals submitted from third- operations in our efforts to reduce our carbon 2019 10.07 stations. Carrying on from the previous party vendors of solar power generation, Carlsberg Malaysia Group is the first 2017 3.83 footprint. year, the installation of an online flue gas spurred by government incentives for green Carlsberg market in the world to pioneer the monitoring system led to better boiler technology. Initial estimates based on use of a new wax emulsion coating on its 2018 10.80 0 1 2 3 4 5 Compared to 2018, the chemical oxygen efficiency control. the placement of solar panels on existing refillable glass bottles which helps to double demand (COD) in treated wastewater structures indicate only potential single- its lifetime. The coating reduces scuffing 2017 10.91 TOTAL THERMAL ENERGY increased slightly to 0.019 kg/hl compared to Operational efficiency also improved digit offsets of our current electricity usage which extends the bottles’ longevity, allowing thermal performance with a proper USAGE (kWh/hl) which is insufficient to drive long-term 0.017 kg/hl in 2018. While still a significant them to look new and scratch-free for longer, 2 4 6 8 10 12 shutdown procedure implemented when transformation. improvement versus 0.033 kg/hl recorded in reducing bottles taken out of circulation for bringing the production online or offline, 2017, it is important to note that the 0.019 kg/ recycling. Only 40mg of concentrate is used with a reduction in heat consumption 2019 21.70 Therefore, our current priority remains hl recorded in 2019 translates to 63 milligrams 2022 GOALS = 9.25 kgCO2/hl per bottle, meaning 60kg of concentrate can during line idling or non-production times. reducing energy wastage while increasing per litre (mg/l), which is still well within the treat 1.5 million bottles. 2018 23.17 efficiency for both our brewing and legal limit for wastewater discharge of 200 A further measure was to optimise bottle- operational electricity requirements, mg/l. We aim to hit our 2022 target of 0.015 washer efficiency, all while meeting or which include capital expenditure (CAPEX) The success of this innovation has been 2017 kg/hl, which is the maximum operational exceeding the hygiene and product quality 23.23 investments in more efficient equipment emulated in other Carlsberg markets as limit for our wastewater treatment plant, standards overseen by the in-house Quality and power-saving measures. part of the Carlsberg brand’s new identity within the next two years. Assurance laboratory. 20 21 22 23 24 25 campaign, which delivered practical and environmental “betterments”. In line with year-on-year targets, we aim to REFRIGERANT USAGE (R22) IN KG/CO2 reduce total thermal energy usage to 19.70 EQUIVALENTS ELECTRICITY USAGE (kWh/hl) TOTAL ELECTRICITY USAGE (kWh/hl) The Carlsberg brand is also going greener kWh/hl by 2022. In 2019, we recorded a higher usage of R22 *for production only; not including with its switch to Cradle-to-Cradle Certified™ refrigerant usage of 299.2 kg/CO2 versus administration or other operations silver ink that is produced using renewable ELECTRICITY 2019 9.98 202.3 kg/CO2 in 2018. Total electricity usage for 2019 saw energy across its bottle labels. The ink helps marginal efficiency improvements, clocking improve the recyclability of the labels. This was due to replacement works in 9.98 kWh/hl versus 10.07 kWh/hl 2019 9.23 2018 10.07 of a significant number of aging split in 2018. However, electricity usage for Working together with packaging vendors, air conditioning units coupled with production alone, which does not include 2018 9.23 2017 we also introduced thinner-gauge walls for 10.37 major servicing of the chiller for the consumption within our administrative and our recyclable aluminium cans since 2016 sales operations regional offices, remained centralised air conditioning system in our 2017 2 4 6 8 10 12 without compromising on structural integrity. the same at 9.23 kWh/hl compared to the 9.38 administrative office. last fiscal year. 5 6 7 8 9 10

54 55 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019 ZERO SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT WATER WASTE

2030 GLOBAL TARGETS CLEAN, DRINKABLE WATER IS NOT ONLY THE AMBITION WATER USAGE • Improved shutdown procedure CORNERSTONE TO QUALITY BREWING – OF WHICH Water is essential to the brewing Aligned with the Carlsberg Group’s during idling or non-production process. But with climate change, reporting standards, water usage for time in packaging lines, similar BEER CONSISTS OF MORE THAN 90% THEREOF – BUT IS drought will become more widespread, production (which covers operations to our efforts to reduce thermal 50% ALSO ESSENTIAL TO THE WELLBEING AND ECONOMIC reducing the quality and availability of at our brewery) has been restated energy waste. REDUCTION IN WATER USAGE AT water. to include water treatment losses. • Optimisation of water usage in OUR BREWERIES DEVELOPMENT OF URBAN CENTRES SUCH AS THE ONE Thus, water usage for 2018 has been packaging lines with a focus on OUR SHAH ALAM BREWERY IS SITUATED IN. We are committed to eliminating water recalculated as 4.83 hl/hl (production bottle-washing machinery. waste from brewing through world- only) versus the 3.64 hl/hl reported PARTNER TO SAFEGUARD SHARED Malaysia’s high water usage per capita and water disruption class efficiency and safeguarding in 2018. WATER USAGE – WATER RESOURCES IN HIGH-RISK track record poses concerns and significant materiality towards shared water resources in high-risk PRODUCTION ONLY (hl/hl) AREAS water waste as a priority concern. areas. Thus, the water usage of 4.77 hl/hl recorded in 2019 for A 2016 news report estimates that an average Malaysian uses TARGETS production decreased 1.24% as 2022 GLOBAL TARGETS up to 300 litres of water a day, almost double that of the United 2019 4.77 Globally, we aim to reduce water compared to 2018. This was driven Nation’s estimated daily requirement of 165 litres per person per usage at our brewery by 25% in by optimisation of water usage in day and which is more than some developed countries. 2018 4.83 25% 2022 and 50% in 2030, benchmarked our packaging lines, the replacement against 2016 performance which is of older piping to prevent leaks and REDUCTION IN In 2019, there were no less than 10 scheduled and unscheduled now restated for the 2019 report to improve water losses, and better 2017 5.23 WATER USAGE AT OUR BREWERIES water disruptions including one which affected 120,000 household include wastewater treatment usage – metering and regular leakage audits in 177 areas in the Klang Valley, where Carlsberg Malaysia’s a more holistic measurement of water to identify and fix leaks immediately. 0 1 2 3 4 5 EXPLORE GOING BELOW 2.0 HL/HL brewing operations are located. utilisation in accordance to Carlsberg AT ALL HIGH-RISK BREWERIES Group’s more stringent global That said, total water usage continues 2022 GOALS = 3.95 hl/hl To mitigate potential disruptions that can affect production, our measurements. to grow for every hectolitre produced, water source relies partly on a groundwater tube well located in at 5.19 hl/hl versus 5.04 hl/hl, an the brewery, on top of council water supply. SUPPORTING THE GLOBAL GOALS increase of 3.0%. TOTAL WATER USAGE (hl/hl) As with our ZERO Carbon Footprint ambitions, the Senior Supply Internal studies have estimated that Chain Director and management team oversees implementation SDG 6 TARGETS we can bring usage below 3 hl/hl of the ZERO Water Waste sustainability roadmap. (lower than our 2022 target) with 2019 5.19 6.4: 100% reliance on council-supplied By 2030, substantially increase water; however, this introduces 2018 5.04 WATER USAGE IN 2019 water-use efficiency and ensure sustainable withdrawals and operational and financial risks from supply of fresh water to address supply disruptions. 2017 4.93 1.2% water scarcity. reduction for production Being fully aware of the increased gap 0 1 2 3 4 5 6.5: between 2019 performance and our By 2030, implement integrated 2022 goals, we have or will undertake 2022 GOALS = 4.08 hl/hl water resources management at the following measures to reduce all levels. water usage in 2020:

Examples of our actions • Improve water recovery from the • Continuous water use reduction reverse osmosis water treatment in our operations. process to reduce losses. • Water reuse/recycling • Recycle and reuse water losses strategies to reduce water from the reverse osmosis and wastage. back-wash process in our water 3.0% treatment plant. increase • Recycling of final discharge from overall wastewater treatment plant to be repurposed for non-production usage.

56 57 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

ZERO SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT IRRESPONSIBLE DRINKING #CELEBRATERESPONSIBLY

2030 GLOBAL TARGETS THE CARLSBERG GROUP HAS SET A BOLD VISION FOR A SOCIETY WITHOUT IRRESPONSIBLE DRINKING. 100% BY 2030, IT AIMS TO SEE A CONTINUOUS REDUCTION OF OUR MARKETS IMPROVE ON OF KEY RESPONSIBLE DRINKING STATISTICS IN ALL OF RESPONSIBLE DRINKING YEAR ITS MARKETS IN SUPPORT OF THE WORLD HEALTH ON YEAR ORGANISATION’S (WHO) OBJECTIVE TO REDUCE HARMFUL USE OF ALCOHOL, AS WELL AS THE 2022 GLOBAL TARGETS UN SUSTAINABLE DEVELOPMENT GOAL 3 TO ENSURE HEALTHY LIVES AND PROMOTE WELL-BEING FOR ALL AGES.

In Malaysia, the public is aware of the legal consequences of AVAILABILITY OF driving under the influence but compliance is underwhelming, ALCOHOL-FREE BREWS (AFB) even as the rate of fatal road accidents in Malaysia is among the highest in the region. OUR AMBITION OUR TARGETS SUPPORTING THE GLOBAL GOALS 100% Recent high-profile fatal accidents in end-2019 and early 2020 Our ZERO Irresponsible Drinking Our approach consists of enabling, RESPONSIBLE DRINKING met with public outcry and the government has proposed the ambition is crucial as it sends a clear informing and encouraging responsible SDG 3 TARGETS MESSAGING THROUGH possibility of lowering the legal blood alcohol concentration signal to consumers, encouraging choices. As a category, beer itself is PACKAGING AND BRAND (BAC) limit alongside harsher punitive deterrents. responsible and moderate consumption. a low-alcohol choice for responsible In the same way our beers, stouts and enjoyment. 3.5: ACTIVATIONS Strengthen the prevention and Malaysian law currently puts the legal BAC limit to drive at ciders are brewed with pride, we want treatment of substance abuse, 0.08% (80 milligrams per 100 millilitres), with imprisonment consumers to enjoy our products in We also recognise growing occasions including harmful use of alcohol. up to ten years and fines of up to RM20,000 upon conviction. appreciation of good taste, quality and where consumers seek options that do 100% 3.6: OF OUR MARKETS RUN The government is currently exploring to reduce the BAC limit to natural ingredients as opposed to the not contain alcohol. Alcohol-free brews 0.05% as recommended by WHO and increasing imprisonment intoxicating effects of overconsumption. (AFB) are a fast-growing category within By 2020, halve the number of global PARTNERSHIPS TO SUPPORT deaths and injuries from road traffic to 20 years with a maximum fine of RM100,000. the Carlsberg Group which already offer RESPONSIBLE CONSUMPTION accidents. Globally, we are committed alongside many quality products to those who Therefore, curbing drink-driving is our top priority in advocating other industry players to ensure our choose not to consume alcohol such as Examples of our actions responsible drinking through our main consumer-facing campaign marketing communications reach the those who are driving, are pregnant, or • Disclosure of pertinent product #CelebrateResponsibly. right audience in adherence to the who abstain as part of a lifestyle choice. information, such as alcohol Digital Guiding Principles for responsible content by volume (ABV) and advertising and promotion on digital Our target remains to provide quality natural ingredients, on packaging platforms as well as our membership alcohol-free brews as part of our and our website. in the International Alliance for portfolio by 2022 that will give • Activate #CelebrateResponsibly ZERO campaign during consumer-facing IRRESPONSIBLE Responsible Driving. additional alcohol-free choices whether DRINKING consumers enjoy our brews in pubs, events to raise awareness of 0.08% responsible consumption. #CELEBRATERESPONSIBLY Locally, our efforts are aligned and bistros and restaurants, or at home by BAC • Collaborate with e-hailing service contribute towards defending our themselves or in the company of friends. providers to offer alternative rides licence to operate in a highly regulated 21+ to discourage drink driving when environment. All our packaging and online platforms one’s blood alcohol concentration contain responsible drinking messages. exceeds national legal limits. Although we cannot ultimately control In addition, we also collaborate with • Implementation of health warning how people consume our products, we relevant stakeholders for targeted labelling and symbols on primary can market our brands responsibly and interventions, whether it is at point-of- and secondary packaging of our inform consumers better. We believe that sale, during consumption or across all products in compliance with local we have an important and influential our marketing communications. legislation and Carlsberg Group role to play in Malaysia and Singapore. mandates.

58 59 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT

Scan to watch POINT-OF-SALE AND MARKETING opportunity to learn about our brewing to consume alcohol excessively during “THROUGH CONSUMER ENGAGEMENT IN PREVIOUS COMMUNICATIONS process, natural ingredients and our the course of their work, even among Currently, all our primary packaging portfolio of beers, stouts and ciders. external stakeholders such as our trade #CELEBRATERESPONSIBLY ACTIVATIONS, MORE THAN HALF SURVEYED includes the “#CelebrateResponsibly” partners, customers or consumers. WERE UNAWARE OF THE LEGAL BLOOD ALCOHOL CONTENT (BAC) LIMIT campaign message apart from the Visitors were provided with subsidised IN MALAYSIA OF 0.08%, WHICH IF EXCEEDED CAN LEAD TO SERIOUS mandatory government health warning Grab rides to and from the brewery, In the year, we regret to report that an LEGAL AND LIFE-THREATENING CONSEQUENCES OF DRIVING WHILE label (“MEMINUM ARAK BOLEH bottled drinking water and the employee in Singapore was found by DRUNK. AT CARLSBERG, OUR BEERS, STOUTS AND CIDERS STAND AT MEMBAHAYAKAN KESIHATAN”). opportunity to use provided breathalysers authorities to be driving over the legal THE HEART OF SPECIAL OCCASIONS THAT BRING PEOPLE TOGETHER, to test their BAC level. BAC limit. The employee, which had an “#CelebrateResponsibly” also appears excellent performance track record in BUT WE ALSO FIRMLY ADVOCATE RESPONSIBLE CONSUMPTION TO KEEP on our advertisements and point-of- At the #CelebrateResponsibly activation the company, was summarily dismissed CELEBRATIONS FULL OF CHEER AND NOT REGRET.” sale material, such as banners, buntings, at Oktoberfest, we enlisted almost following confirmation from the police posters and counter-top standees. 30 employee volunteers to educate report, underscoring our seriousness in consumers on the 0.08% BAC legal enforcing the policy. PEARL LAI Around 65% of our alcoholic products limit, conducted free breathalyser tests, Corporate Communications and CSR Director also carry a responsible drinking symbol encouraged consumers not to drink and All customer- and consumer-facing (no drink-driving) on packaging. We drive if over the limit, and encouraged employees, such as our sales and #CelebrateResponsibly consumers after a night of drinking – consumers where the service is most intend to increase this to 100% by consumers to pledge their support by marketing colleagues, are equipped with #CelebrateResponsibly is Carlsberg a reminder and incentive to not drink available. 2022 via upcoming artwork changes signing up as #CelebrateResponsibly breathalysers to use following market Malaysia Group’s initiative in support of and drive – just by using the promo for primary packaging and applicable ambassadors themselves. visits or work-related occasions where Global Be(er) Responsible Day (GBRD) code #CelebrateResponsibly to and Our long-standing partnership with secondary packaging. they may consume alcoholic beverages. – a worldwide initiative among major from almost 350 bars and restaurants Grab since 2017 continued last year. We In 2020, we intend to mobilise all Employees are strongly encouraged to brewers to promote the responsible throughout Malaysia. offered 1,000 free rides worth RM20 Our observation shows that our trade employees to be #CelebrateResponsibly make alternative arrangements such as enjoyment of beer. each during the Oktoberfest month and partners and retailers are in compliance ambassadors at various consumer taxis or e-hailing services which can be Riding Pink is a unique, female-only all were redeemed versus more than 650 with the increased legal purchasing age touchpoints such as brand campaign reimbursed. The key message of the 2019 annual service with female drivers for female in 2018. to 21 years effective 1 December 2017. launches, brewery tours, festive campaign directly supports our ZERO riders, giving additional peace of mind Public access to consumer promotions celebrations and activations, as well Our Singaporean operations saw an Irresponsible Drinking focus: don’t drink for consumers who have concerns over Besides Oktoberfest, we extended and activities is also strictly limited to as Oktoberfest and trade partner increase in employee engagement for and drive if your BAC is over the legal limit their privacy and personal safety. This subsidised Grab rides throughout the non-Muslims above the age of 21 only. promotional campaigns. responsible drinking, with an estimated of 0.08%. This is the fifth consecutive partnership ran for its second year year to encourage no drink-driving: 300 subsidised rides redeemed for work- year of the campaign since it kicked-off in 2019 and focused on Klang Valley • Probably the Best Kollywood Party Consumers can also learn more On the operational front, we are related activations and events in support in 2015, with key consumer activations in January, the finale of a local about our products and initiatives for proud to report ZERO drink-driving of no drink-driving. held in conjunction with Carlsberg’s consumer promotion which rewarded responsible drinking on our website accidents in Malaysia and Singapore annual Oktoberfest promotions. loyal Carlsberg fans in Ipoh. www.carlsbergmalaysia.com.my. throughout 2019. Carlsberg Singapore also participated in • The Kuching Festival & Food Fair a campaign by the Singapore Alliance Held over 12 days of activations in July and August, where 390 EMPLOYEES AS RESPONSIBLE Carlsberg Malaysia Group has a strict for Responsible Drinking (SARD). Named during Carlsberg Malaysia’s flagship Grab rides of up to RM5 each were DRINKING AMBASSADORS zero-tolerance policy: conviction of drink- #HowMuchIsTooMuch, the campaign Oktoberfest celebrations, the campaign redeemed to and from the venue. At our brewery in Shah Alam, we host driving of any employee, regardless of was held between December 2018 reached an estimated 9,500 consumers • Brand campaign launches and Probably the Best Brewery Tour almost whether an accident occurred, will lead and February 2019 garnering 1,089 via direct engagement. Including an regional media engagement activities every weeknight, giving consumers the to immediate dismissal. At no point unique entries from more than 550,000 estimated 14,600 reached via social in Peninsular Malaysia, Sabah and are our employees required or obliged consumers reached. media, the campaign reached 24,100 Sarawak. consumers in 2019, bringing the total • Probably the Best Brewery Tour since the campaign’s inception to an hosted at Carlsberg Malaysia’s Shah estimated 76,400 consumers since 2015. Alam brewery and lounge.

We continued to partner with Scan to register for Including the 1,000 rides in Oktoberfest, e-hailing providers Grab and Riding Probably the Best close to 1,800 subsidised Grab rides were Pink to provide subsidised rides for Brewery Tour redeemed throughout 2019.

24,100 consumers 76,400 consumers Close to 1,800 ENABLE INFORM ENCOURAGE reached through on-ground activations reached through on-ground activations free and subsidised rides redeemed Offer a wider set of alcohol-free Inform positive drinking choices Encourage consumers to make positive and online communications during and online communications since the throughout the year choices in the near future that by providing responsible drinking drinking choices through dialogue and Oktoberfest in 2019 #CelebrateResponsibly campaign began in 2015 consumers can turn to on different information on packaging and online. engagement. drinking occasions.

60 61 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019 ZERO SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT ACCIDENTS CULTURE

2030 GLOBAL TARGETS OF ALL THE VARIOUS CAPITALS ESSENTIAL TO THE While four of the five LSRs are most OUR TARGETS Visibility on our health & safety targets, CARLSBERG GROUP’S EFFORTS TO CREATE VALUE, pertinent to supply chain operations, we Per the Carlsberg Group’s targets, we aim which reports safety concerns and near- believe that the inclusion of traffic rules to reduce the number of accidents year- misses upwards to fatalities, is presented OUR PEOPLE ARE THE FOREMOST PRIORITY AS THEY remains a key focus to reducing accidents on-year with the aspiration to reach ZERO as the first item of the agenda at every ZERO REPRESENT THE TALENT AND AMBITION THAT DRIVE among other functions, where on-the-road lost-time accidents by 2030. bi-weekly management meeting and OUR GLOBAL PURPOSE OF BREWING FOR A BETTER accidents continue to warrant significant is likewise cascaded at the monthly LOST-TIME Group focus. In support of this, we aim to increase the employee town halls. TODAY AND TOMORROW. efficacy of near-miss and safety concern ACCIDENTS Their wellbeing and safety are and will always be our primary The recent global coronavirus (Covid-2019) reporting. This is based on the simple SUPPORTING THE GLOBAL GOALS outbreak at the end of 2019 highlights ethos of the more risks reported, the less focus, embodied by our Together Towards ZERO Accidents additional concerns to our business and chances of serious accidents resulting in Culture sustainability ambition. employee wellbeing, further testing lost-time and fatalities. SDG 8 TARGETS 2022 GLOBAL TARGETS the Group’s preparedness for external The key risks of our ZERO Accidents Culture ambition are twofold health and safety risks. We are pleased ZERO LOST-TIME ACCIDENTS 8.8: – accidents occurring in our supply chain operations covering to report that our compliance to Good We are proud to record 770 consecutive Protect labour rights and promote REDUCTION on-site production and facilities, and on-the-road accidents Manufacturing Practice (GMP), health days without lost-time accidents at the safe and secure working environments among our sales colleagues who drive company vehicles. and safety regulations on top of the brewery as of 31 December 2019, beating for all workers. IN ACCIDENT Group’s standard operating procedures has the previous record of 405 days in 2018. The Carlsberg Group’s five Life-Saving Rules (LSRs) are: allowed us to develop a comprehensive As of March 2020, we have surpassed 830 Examples of our actions framework safeguarding our Shah Alam days with an expectation to achieve the • Embedding a ZERO accidents RATE YEAR brewing operations against potential next milestone of 1,000 days before the culture in employees contamination. end of 2020. and contractors through ON YEAR LIFE communication and initiatives. OUR AMBITION Our Singapore operations also reported • Management is committed We aspire to a ZERO Accidents Culture zero on-the-job accidents within Carlsberg to model desired behaviours, SAVING communicate consistently and where all employees, regardless of Singapore’s direct reports or from our function or location, play an active role in warehousing and logistics partners. engage with teams on health RULES creating a safe working environment for all MayBev Pte. Ltd., in which Carlsberg has & safety. • Our Shah Alam brewery is OHSAS while ensuring compliance with operating a controlling stake, is aligned with and 18001 certified. and legal requirements. committed to the same health and safety standards as our warehousing operations. We aim for a workforce that knowledgably and practically upholds safety rules and procedures and are empowered to identify risks and propose solutions, in a timely manner and to relevant channels, that enable us to reduce safety risks before they pose disruptions to our people, operations, and business sustainability. ZERO The Enablon Safety app lost-time provides instantaneous accidents in reporting of safety concerns the brewery

LSR 1: Always follow LSR 4: Always follow work- 1 4 traffic rules at-height procedures

LSR 2: Always follow LSR 5: Always follow confined 2 5 lockout/tagout procedures space entry procedures

LSR 3: Never remove, bypass or 3 impair safeguards or interlocks

62 63 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

SUSTAINABILITY STATEMENT SUSTAINABILITY STATEMENT

driving company vehicles. The installation estimated to be completed over the next two of these dashcams are mandatory and serve to three years. the following functions, among others: Handrail and Stairway HEALTH & SAFETY (H&S) INITIATIVES Improvement • Incident reporting and investigation in the IN MALAYSIA event of an accident. Employees are required to don In accordance to LSR 4: Always follow • Ensure compliance to road safety and high-visibility safety vests when entering work-at-height procedures, additional the brewery or logistics areas within road traffic rules including no mobile handrails have been installed in higher- the Shah Alam brewery. This applies to REDUCING TRAFFIC ACCIDENTS phone usage while driving. The Security, risk elevated work areas alongside stair administrative staff as well as visitors, improvements for safe access in said In 2019, employees of our Malaysia Health & Safety Manager and security where first-time contractors are required areas. operations met with 28 on-the-road accidents team are empowered to enforce random to attend a safety briefing detailing on-site involving company vehicles throughout the spot checks. safety regulations before entering. course of their work. This accident rate is on • All employees with company vehicles par to what was recorded in 2018. are provided with personal breathalysers In 2019, we introduced the Enablon Safety which they must use and record the App to all employees. This provides easy, instantaneous reporting access for While the severity of accidents was less readings via the internal camera before Mandatory online and classroom trainings operating procedure which are addressed in protective equipment (PPE) and fire-fighting near-misses and safety concerns – the than the previous year, the total number of operating their vehicle. on LSR awareness and integration for our ongoing safety measures and personnel techniques were found to be informative and cornerstone of accident prevention. It accidents still raises concerns on the safety all employees were conducted in 2019, training. relevant to our employees. replaces manual submissions of safety of our employees – especially in sales – who Following a pilot session in 2019, it is our comprising e-Learning for sales and concerns. form the majority of incidents recorded. plan to roll out defensive driving training administrative employees as well as practical For 2019, all line managers were enrolled Following the threat of H1N1 and Covid-2019 training for Supply Chain employees. Other in mandatory safety leadership training infections from December 2019, non-contact for all sales employees in Malaysia driving In 2020, it is our target for each employee workplace-related H&S training included towards zero accidents, which was conducted infrared thermometers were deployed to During the 2020 National Conference in company vehicles from 2020. Scheduled to to submit at least two near-miss incidents fire-fighting training, first-aid response, and via online training modules and personal check the body temperature of all employees, December 2019, we distributed dual-camera be run in phases, training for the entire fleet or safety concerns throughout the year, chemical spillage and hazardous material training by the security, health and safety contractors and visitors entering the Shah dashcams to all employees in Malaysia comprising sales and marketing employees is regardless of function or location. (HAZMAT) training. manager. Alam brewery. Individuals exceeding the body temperature of 38°C are denied entry The top three occupational safety and health (OSH) initiatives in the brewery in 2019 were: Two key audits were conducted during the On 20 November 2019, we hosted the annual into the brewery and are directed to the year comprising an internal audit in July by Safety Day at our Shah Alam brewery to nearest clinic for a medical check-up to the head of environment, safety and health reinforce compliance of the Life-Saving prevent the spread of contagions within Lock Out, Tag Out of Carlsberg’s Asia region and an external Rules and to share practical examples of brewery premises. (LOTO) and Machine audit for our OHSAS 18001 standards in safety risks including life-changing stories Guarding Project December. and educational presentations. Sharing on A standard response procedure is in place defensive driving tips, vehicle tyre inspection for the unlikely event that any employee is In support of LSR 2: Always follow lock out Findings from both audits suggested and safety, first-aid and cardio-pulmonary suspected to have contracted an epidemic- / tag out procedures, LOTO procedures were improvements to be made for LOTO, machine resuscitation (CPR) procedures, personal level contagion. updated whereby personal LOTO locks were guarding, traffic safety and confined space provided to all equipment operators and maintenance personnel with each individual’s name, staff ID and phone number. LOTO locks are now standardised according to ADDITIONAL SECURITY MEASURES AT CARLSBERG MALAYSIA IN 2019 personnel, differentiating between operators, maintenance crew, and contractors.

CCTV Collaboration with Site Office (Closed-circuit Local Police Improvements television) Safety Visualisation Extension of camera coverage along Agreement with local police force Weigh-bridge upgraded for traffic the brewery perimeter to include the for increased patrol at our brewery; control and CCTV monitoring; Pipe labels within the brewery have been central sales depot building; CCTV regular meetings involving police extension of similar security control updated with the latest Group and global system has also been upgraded to in conjunction with the Malaysian measure to main gate of central sales standards, making it easier to identify a fully digital system with better International Chamber of Commerce depot building. hazardous pipe relays especially caustic protection from power surges and & Industry and the Federation of Malaysian Manufacturers. and hot gases and liquids. risks of sabotage.

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COMMITTING TOWARDS SOMETHING’S BREWING: CARLSBERG’S NEW EMPLOYER BRANDING A STRONG EMPLOYER BRAND ENGAGES EXISTING EMPLOYEES AND ATTRACTS NEW TALENTS. DURING OUR 2020 NATIONAL CONFERENCE ON 9 DECEMBER 2019, WE LAUNCHED OUR NEW EMPLOYER A RESPONSIBLE BUSINESS BRANDING WITH THE CORE POSITIONING STATEMENT OF “LOCAL HEART, GLOBAL STRENGTH”. THIS INITIATIVE DRIVEN BY THE GROUP SHOWCASES WHO WE ARE AS AN EMPLOYER AND HOW IT IS LIKE TO WORK IN CARLSBERG. WITHIN OUR MALAYSIAN AND SINGAPORE OPERATIONS, WE RECOGNISE THAT OUR CORPORATE SOCIAL RESPONSIBILITY EXTENDS FURTHER THAN THE COMPREHENSIVE SCOPE COVERED BY OUR Number of people directly employed: TOGETHER TOWARDS ZERO SUSTAINABILITY AMBITIONS AND ECONOMIC CONTRIBUTIONS TO THE LOCAL ECONOMY. OUR ROLE AS A RESPONSIBLE BUSINESS ALSO INCLUDES, BUT IS NOT LIMITED TO, Malaysia: 593 Singapore: 73 THREE ADDITIONAL AREAS NAMELY THE DEVELOPMENT OF OUR PEOPLE ASSETS, THE COMMUNITIES 666 WE OPERATE WITHIN, AND A ROBUST BUSINESS ETHICS FRAMEWORK TOWARDS REGULATORY COMPLIANCE. Indirect employment (sales promoters): BUILDING A HIGH-PERFORMING CULTURE Driving a high-performing culture is 1,357 a continuous pursuit of the Carlsberg Malaysia: 1,119 Singapore: 238 Malaysia Group in line with SAIL’22. Under the key strategic pillars of ‘Performance Management’, ‘Reward & Recognise High Performance’ and Training and development for Malaysia and Singapore: ‘Right People on the Team’, we delivered people-centric initiatives to create a Our new employer branding will winning team in 2019. RM665,000 What differentiates be communicated through various channels, such as recruitment Our forward aspirations are to build Carlsberg as an employer collaterals and social media platforms strong employer branding gravitating are three core pillars: Total hours of training for such as LinkedIn, job portals, and our towards “Local Heart, Global Strength” Malaysia and Singapore: Purpose, Pride, and career website. and create a diverse and inclusive Performance Production: organisation, where we can pride As part of continued efforts in ourselves in a global mindset, a diverse key performance indicator (KPI) alignment SAIL’22 Awards are given to recognise 3A promoting employer branding, 2,631 hours talent base, equal opportunity, and sessions among functions to create further champions. Nominees are chosen by their Carlsberg Malaysia participated in inclusive leadership. inter-department synergy while breaking own peers, who then undergo evaluation Purpose career fairs and collaborated closely Logistics: down operational silos. Visibility and by the senior management team for We look back to move forward with universities to extend internship PERFORMANCE MANAGEMENT clarity of corporate targets and strategic winning merit. Winning employees and employment opportunities to In 2019, we relaunched the 3A (Alignment, priorities are communicated via the embody the three elements of the 1,010 hours students approaching the end of their Accountability, Action) framework to monthly employee town halls and the 3A framework. studies. reiterate this critical enabler to accelerate annual national conference. Pride Sales & Marketing: as ‘one team’. The sharpened 3A descriptors A total of 58 employees received SAIL’22 We proudly trust our brands Almost 1,300 students were engaged with more practical examples of day-to- REWARD AND RECOGNISE Awards within the year, comprising 5,322 hours in three universities including a day implementation were cascaded to all PERFORMANCE individual and team categories. graduate recruitment workshop which employees through monthly town halls, The Group continues to adopt a pay- prepared attendees for job interviews Corporate Functions: online training and various communication for-performance philosophy, recognising Within the year, we also recognised Performance with real-world insights from our HR platforms. high performers with career growth employee loyalty through the Group’s We go above and beyond recruitment team. 2,164 hours opportunities and remunerative incentives long-service awards, where 39 employees To drive further alignment within the while underperformers are coached for were lauded for 5, 10, and 25-year tenures. Group, the HR team also embarked on improvements.

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RIGHT PEOPLE ON THE TEAM TRAINING: Carlsberg Malaysia prides ourselves in developing and accelerating career growth of our talent. To facilitate accelerated development, priority is given to internal talent to fill job vacancies. In 2019, 45% of job vacancies were filled by existing employees. Learning and development 92 programmes

Internal development 57 programmes

I HAVE BEEN GIVEN OPPORTUNITIES TO TAKE ON THREE DIFFERENT ROLES IN A External and overseas SPAN OF LESS THAN THREE YEARS, GETTING AN OVERVIEW OF THE BUSINESS 30 trainings NOT JUST ON LOCAL SCALE BUT ON A GLOBAL SCALE AS WELL. 5 Lunch & Learn sessions

55 NATIONWIDE HR ROADSHOWS:

FANG QING YAO - LEAD Fundamental workshops • Senior Manager, Channel Marketing (2019) - MyVoice focus groups • Senior Brand Manager (2018) • Manager, Business Development (2017) We continued to develop our people holistically via the 70/20/10 learning principle, while need-based learning was implemented year-long to build employees’ capabilities. IN 2019, I WAS PROMOTED TO ASSISTANT MANAGER IN CHARGE OF THE BREWERY’S CANNING LINE, AND ALSO ASSIGNED TO LEAD THE FORKLIFT TEAM In our endeavours to grow future IN PACKAGING OPERATIONS. THESE CAREER MOVES HELPED ME TO GAIN MORE EXPERIENCE IN LEADERSHIP AS A MANAGER. leaders, 17 employees across functions embarked on the LEAD Business Diploma, a six-month programme with eight core business modules aimed at building business THANASEKARAN A/L NAVARATHANAM PILLAY acumen. Participants graduated at the end of the year after a final • Assistant Manager, Line Operations (2019) project presentation to Carlsberg in Malaysia rose five percentage Carlsberg Malaysia is not all work • Shift Manager (2013) Malaysia’s leadership team. • Team Leader (2011) points from 2017 to 75% in 2019. and no play! Through the Sports & Recreation Club (SRC), employees We continued to build a pipeline The increased scores underline can build interpersonal and of young talent through our the Group’s efforts in translating inter-functional relationships through Management Trainee Programme. employee feedback into actionable festive celebrations during Chinese I’VE GAINED A WIDE SPAN OF EXPERIENCE AS A BUSINESS PARTNER TO OUR From the current pool, 25% of our initiatives and processes, creating a New Year and Deepavali, sports SALES PROMOTERS AND I WAS ABLE TO FOSTER A STRONGER RELATIONSHIP management trainees have accepted two-way conversation in the spirit of tournaments and weekly activities, WITH THEM. A YEAR LATER, I WAS GIVEN THE OPPORTUNITY TO BE A BUSINESS permanent roles within the Group alignment. the annual weekend treasure hunt, PARTNER TO THE SALES TEAM. THE SCOPE IS MORE CHALLENGING, BUT IT while 37% will embark on regional and movie nights. KEEPS ME MOTIVATED TO KNOW THAT THERE IS SO MUCH MORE TO LEARN IN assignments in 2020. Carlsberg Our part-time sales promoters, who THE COMING YEARS. Malaysia is seeking to recruit number over 1,300 across Malaysia We also celebrated employee more management trainees in the and Singapore and are the backbone diversity during the International WOO YI LEI 2020 intake. of beer sales in restaurants and Women’s Day, International Men’s coffeeshops throughout our markets, Day, and prioritised a healthy • Assistant Manager, Business HR (2020) EMPLOYEE ENGAGEMENT were also engaged in roadshows, workplace and personal wellbeing • Senior Executive, Business HR (2018) Through the biennial MyVoice through activities in conjunction with • HR Specialist (2018) personal presentation and grooming • HR Specialist (Contract, 2017) employee survey, employee courses, appreciation dinners and World Health Day. engagement and satisfaction scores brewery visits.

68 69 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

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LIVE BY OUR COMPASS concerns directly to their HR business It is a clear requirement that all partner, the Group’s legal counsel, employees must comply with head of internal audit or directly to Carlsberg’s Code of Ethics and Conduct the VP of Compliance of the global as any non-compliance will pose Carlsberg Group. serious reputation risks and financial consequences to the Group. Employees can also escalate concerns via email to a Speak Up mailbox, This fundamental work ethic is a secured web-based complaint represented within Live by Our platform, or a telephone line with a Compass, a Group-wide programme designated access code that is hosted that provides detailed guidance on by a third-party service provider. in Malaysia since 1987, benefiting ethical behaviour and emphasises thousands of students with better the importance of integrity as part of SUPPORTING LOCAL COMMUNITIES school infrastructure and sports Creating a Winning Culture. Our flagship community programme, facilities. The campaign also holds the Top Ten Charity Campaign, just two records in the Malaysia Book For 2019, the Group identified three kept getting better in 2019, concluding of Records as the longest-running key priorities in legal compliance more than 30 years of fundraising Chinese charity concert with the with direct consequences to business with another humbling success! highest funds raised. more donations on top of the ticket rapport we have with the Chinese seek partnerships for value co-creation operations. They were competition price. During the lead-up to the concert, education fraternity, and we pledge to in the areas we operate in. We welcome law, anti-bribery and corruption, and Top Ten Charity campaign fundraising The Top Ten Charity Campaign is schools also appeal to supporters, continue spearheading this fundraising proposals from local communities and data protection. concerts were held across Peninsular unique as a CSR model; it involves parents, and the local community for campaign in the years to come. NGOs seeking to emulate or enhance Malaysia and Sabah, including four strong partnerships between Carlsberg funding. The concert then becomes a our corporate social responsibility Over 400 employees were identified in Selangor, two each in Perak and Malaysia, its media partners, the local rallying point for fundraising from the Carlsberg Malaysia welcomes efforts. for mandatory training under one or Johor, and in Sabah, Kedah, Negeri entertainment industry and artistes, community. It is a pioneering platform applications from schools for the more of these modules, which was Sembilan, Penang and Melaka, raising government stakeholders, and the that brings schools and communities campaign’s upcoming charity concerts In doing so, we retain our ambition done over 21 face-to-face sessions, RM26.4 million for 13 schools in our boards, parent-teacher associations, together year after year, contributing starting from end-June to November of becoming the most successful, remote calls and e-learning – all with constant pursuit of better for Chinese teachers, and supporters of the towards the success of Chinese 2020. For more information on the professional and attractive brewer in our a 100% completion rate. education. beneficiary schools. The ecosystem education for the long-term benefit of Top Ten Charity Campaign, visit markets moving into 2020 and beyond. created within the Top Ten Charity future generations. www.toptencharity.com.my. The Carlsberg Group has a The successful 2019 run has brought Campaign and the continued whistleblower system that enables the campaign’s running tally to over commitment by Carlsberg and its Top Ten Charity was a key driver MOVING FORWARD employees to report activities that RM547 million to date benefitting partners are a winning combination in Carlsberg Malaysia’s win for The Inspired by our founder’s Golden Words may involve criminal conduct or more than 640 schools – a feat still for the sustainability of an established, Edge’s Billion Ringgit Club Best and brand betterments, Carlsberg violations of the Carlsberg Group’s unmatched in Malaysia! successful campaign. Corporate Responsibility Award last Malaysia Group is in a constant pursuit This statement was approved by Board policies and guidelines. We embrace year and was a point of pride for of better in our economic, environmental, Resolution dated 9 April 2020 an ‘open-door’ culture and all Acclaimed as Probably The Best The schools raise funds by selling our inclusion in the FTSE Russell and social priorities underscored by our employees are encouraged to talk Fundraising Platform for Chinese tickets to the concerts and sit-down FTSE4Good Bursa Malaysia index. Together Towards ZERO ambition. to their managers, or manager’s education, the Top Ten Charity dinners, with stage performances and manager, if they believe there has Campaign has been championing the promotional activities led by Carlsberg We are grateful for the support of Instead of pure sponsorships, which are been a breach. They can escalate their development of Chinese education Malaysia. Attendees can also pledge the Chinese community and the close only beneficial in the short term, we

70 71 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

From left to right: MANAGEMENT 1. Lim Chee Keat 2. Pauline Lim Maan Heong 3. Lew Yoong Fah TEAM 4. Caroline Moreau 5. Koh Poi San 6. Olivier Dubost 7. Gary Tan Sim Huan 8. Pearl Lai Ming Choo 9. Stefano Clini 10. Peter Wachenschwanz

72 73 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

PROFILE OF PROFILE OF MANAGEMENT TEAM MANAGEMENT TEAM

STEFANO CLINI LIM CHEE KEAT GARY TAN SIM HUAN CAROLINE MOREAU PETER PAULINE LIM PEARL LAI LEW YOONG FAH KOH POI SAN OLIVIER DUBOST Managing Director Chief Financial Officer Sales Director Marketing Director WACHENSCHWANZ MAAN HEONG MING CHOO Government Affairs and Legal Director and General Manager, Senior Supply Chain Human Resources Corporate Duty-Free Director Company Secretary Carlsberg Singapore Director Director Communications and Pte. Ltd. CSR Director

Date of Appointment Date of Appointment Date of Appointment Date of Appointment Date of Appointment Date of Appointment Date of Appointment Date of Appointment Date of Appointment Date of Appointment 26 October 2019 12 February 2018 17 August 2009 7 January 2019 1 February 2020 25 November 2019 1 July 2014 6 February 2017 17 February 2020 6 February 2018

Age Age Age Age Age Age Age Age Age Age 53 48 49 45 34 42 39 51 44 46

Academic/Professional Academic/Professional Academic/Professional Academic/Professional Academic/Professional Academic/Professional Academic/Professional Academic/Professional Academic/Professional Academic/Professional Qualification(s) Qualification(s) Qualification(s) Qualification(s) Qualification(s) Qualification(s) Qualification(s) Qualification(s) Qualification(s) Qualification(s) - Bachelor’s Degree - Member of the - BA (Hons) - Master’s degree - Master Brewer - BA (Hons) in - Bachelor of Social - MBA, University of - LLB (Hons), - MBA, ESCP, in Business and Malaysian Institute Economics, University (ESCP-EAP), PSB and State-certified Human Resource Science (Hons) Malaya University of London, Management Economics, of Certified Public of Malaya Paris School of Production Manager Management & Communication - Fellowship of Business School of Libera Università Accountants (MICPA) Business, France for Brewing and Marketing, Middlesex Studies, University Association of - Certificate in Legal Paris Internazionale degli - Member of the Beverage Technology, University Malaysia Sarawak Chartered Certified Practice Studi Sociali Guido Malaysian Institute Work Experience Doemens Akademie, - Master’s degree in Accountants (ACCA) - Diploma in Carli (LUISS) of Accountants (MIA) Mr. Tan oversees the Work Experience Germany HR Management & - Member of Investment Analysis, Work Experience - Bachelor of sales and distribution Ms. Caroline oversees Industrial Relations, Work Experience Malaysian Institute of Research Institute of Mr. Dubost is responsible Accounting, University of Accountants (MIA) Investment Analysis functions of the duty- the brand and channel Ms. Lai first joined for the business, people Work Experience (Honours), University Newcastle, Malaysia & Royal paid business within the marketing, market Work Experience the Company in and sustainability of Malaya Melbourne Institute Mr. Clini has overall Malaysia operations. research, market Mr. Wachenschwanz is September 2005, and development functions of Work Experience of Technology responsibility for the intelligence and business responsible for leading is currently responsible the Singapore operations. Work Experience - Licensed Secretary Carlsberg Malaysia development functions. Supply Chain operations for strengthening the Mr. Lew joined the Work Experience Mr. Tan has more than under Section 20(G) Group, covering our in both Malaysia and Ms. Lim is responsible overall reputation of Company on 5 January 20 years of experience of the Companies He also represents the operations in Malaysia Mr. Lim is responsible Singapore. for HR operations, the Carlsberg Malaysia 2010 as Chief Financial in the Fast-Moving She has been with the Commission of Company in handling and Singapore, and for the finance, investor talent management Group through purpose- Officer and was re- Consumer Goods Carlsberg Group since Malaysia Act 2001 matters pertaining to oversees Carlsberg’s relations, as well as IT and organisation driven profiling via designated in 2017 to (FMCG) business. 2007 where her last He first joined government affairs. investment in Sri Lanka. functions. development for the internal communications, manage all matters role was as Commercial Carlsberg in 2008 and Malaysia operations. external affairs, relating to government Director of Global Craft Work Experience Prior to joining the subsequently held She also oversees the affairs, duty free and Since joining the He joined the Carlsberg Prior to joining the and Specialty Beer. sustainability Company, he was the various roles in Europe HR function of the export activities as Ms. Koh is responsible Carlsberg Group in 2011, Group in September Company, he was the She has more than 20 developments, marketing Customer Development and Asia within Supply Singapore operations. well as security for the for legal and compliance Mr. Dubost had held 2017 as the Managing Director and CFO of a years of international activation and the Director of Unilever Chain. Malaysia operations. for both Carlsberg the position of Vice Director of Carlsberg telecommunications experience in the Fast- brewery visit experience Malaysia. Malaysia and Singapore President of Marketing at Vietnam Breweries Ltd. company based in Moving Consumer Goods Ms. Lim brings with within the Malaysian as well as helming the Brasseries Kronenbourg and was previously Jakarta. (FMCG) industry. Prior to joining the her almost 20 years operations. He also represents debt recovery function in in France from 2011 to Managing Director Company, he was of experience in HR the Company on Malaysia. April 2016, a company of British American Director, Global management in diverse the committee of She also oversees key owned by the Group. Tobacco Malaysia from Manufacturing Process industries, including the Confederation of communications and Prior to helming 2013 to 2016. for the Carlsberg Group. locally listed and multi- Malaysian Brewers She has more than 19 sustainability priorities Carlsberg Singapore, national organisations. Berhad (CMBB). years of experience in the Singapore he was Vice President as a partner of a law He has 30 years of He has 15 years’ operations. Commercial of Carlsberg firm and in her last experience in the global experience in the Asia from 2016 to 2018. role as Vice President, consumer goods industry brewing industry, being Legal Compliance & with leadership and involved in initiatives in Land Management and He has 25 years’ commercial roles in Italy, over 40 manufacturing Company Secretary for experience in global Belgium, Switzerland sites across 15 countries. an established company consumer goods in Spain, and Turkey. in the cement industry. UK, France and Asia.

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PROFILE OF PROFILE OF THE DIRECTORS THE DIRECTORS

AC Audit Committee

Nomination & NRC Remuneration Committee

Risk Management RMC Committee

Chairman

Member

GENDER RATIO

Age Age Age DATUK TOH AH WAH 62 STEFANO CLINI 53 CHEW HOY PING 62

P.M.W. Independent 71%: Male 29%: Female Independent Non-Executive Chairman AC NRC RMC Managing Director RMC Non-Executive Director AC NRC RMC

BOARD TENURE Date of Appointment Date of Appointment Date of Appointment 17 May 2017 26 October 2019 23 May 2014

3 Length of service (as of 24 March 2020) Length of Service (as of 24 March 2020) Length of Service (as of 24 March 2020) 5 months 5 years 9 months 1 2 years 10 months (Chairman since 12 April 2018) Date of last Re-election Date of last Re-election N/A Re-elected 10 April 2019 Date of last Re-election Re-elected 12 April 2018 Academic/Professional Qualification(s) Academic/Professional Qualification(s) - Bachelor’s Degree in Business and Economics, Libera Università - Member of the Malaysian Institute of Accountants Internazionale degli Studi Sociali Guido Carli (LUISS) - Member of the Malaysian Institute of Certified Public Accountants 3 Academic/Professional Qualification(s) - Bachelor of Commerce from Concordia University of Montreal, Work Experience and Present Directorship(s) Work Experience and Present Directorship(s) Mr. Stefano Clini is responsible for Carlsberg’s Southeast Asia sub- Mr. Chew Hoy Ping spent 30 years of his career with Less than 1 year Work Experience and Present Directorship(s) region comprising Malaysia and Singapore and oversees the Group’s PricewaterhouseCoopers (PwC) in various positions since joining in investment in Sri Lanka. 1976, including 15 years as a partner of the firm. 1-3 years Datuk Toh Ah Wah joined Rothmans of Pall Mall (Malaysia) Berhad in July 1981 and stayed with this organisation throughout his professional career – this included 3 years above Prior to his current appointment, Mr. Clini was Managing Director of Whilst at PwC, he was involved in a diverse range of professional being merged into the British American Tobacco (Malaysia) Berhad in 1999 and Carlsberg Vietnam Breweries Ltd from 2017 to 2019 where he led a services including auditing, corporate finance and business recovery. retiring from BAT Malaysia at the end of June 2013. successful turnaround with record growth in both top- and bottom- He held several leadership roles in PwC including Asia Pacific line. He was previously Managing Director of the British American Chairman of Financial Advisory Services, Risk Management & Other information on directors: Tobacco Malaysia from 2013 to 2016, overseeing operations in Independence Leader, Deputy Chairman of the Governance Board, • Each director does not have any family Datuk Toh spent the first 10 years in Sales and Marketing in Malaysia. He Malaysia and Singapore. and a member of the Country Management Team. Mr. Chew was also relationships with any directors and/or major subsequently began a succession of increasingly challenging line roles throughout with PwC Houston, Texas (1982-1984) and Bank Negara Malaysia shareholders of the Company. the Asia-Pacific region including China, Hong Kong, Taiwan, , South He has 30 years of experience in the global consumer goods industry (1986-1988). After PwC, he was the Chief Financial Officer for and had held various senior leadership and commercial roles within Southern Bank Berhad (subsequently acquired by CIMB) for about • Each director does not have any conflict of Asia and Southeast Asia. H.J. Heinz in Italy from 2005 to 2013 and Procter and Gamble (P&G) a year until mid-2006. interest with the Company. in Italy, Belgium, Switzerland and Turkey from 1990 to 2005. • Each director does not have any convictions This culminated in his appointment as Managing Director of BAT Malaysia in Mr. Chew is currently an Independent Non-Executive Director of for offences within the past five years and October 2009, the first and only Malaysian to have ever held this position. Mr. Clini is currently the Chairman of Carlsberg Singapore Pte. Mulpha International Berhad (MIB) and Mudajaya Group Berhad imposed any public sanction or penalty by Ltd. He is also on the Board of Carlsberg Marketing Sdn. Bhd., a (MSC) where he is the chair of their respective Audit Committees. He the relevant regulatory bodies during the wholly owned subsidiary of Carlsberg Brewery Malaysia Berhad, also sits on the Board of Ge-Shen Corporation Berhad where he is a financial year 2019 other than traffic offences, Datuk Toh also sits on the board of Petronas Chemicals Group Berhad and is a the Malaysian Danish Business Council and Maybev Pte. Ltd., a 51% member of its Audit Committee. owned subsidiary by Carlsberg Singapore Pte. Ltd., Lion Brewery if any. trustee of CHOICE Foundation. (Ceylon) PLC and Ceylon Beverage Holdings PLC. • Details of the Directors’ attendance at Board meetings are set out in the Corporate He is also a member of the Governing Council of the Confederation Governance Overview Statement on of Malaysian Brewers Berhad. pages 80 to 95 of this Annual Report.

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PROFILE OF PROFILE OF THE DIRECTORS THE DIRECTORS

Age Age Age Age GRAHAM JAMES 52 ROLAND ARTHUR 61 MICHELLE TANYA 48 CHOW LEE PENG 51 FEWKES LAWRENCE ACHUTHAN AC RMC Non-Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director

Date of Appointment Date of Appointment Date of Appointment Date of Appointment Re-appointed to the Board on 26 February 2016 28 August 2012 30 November 2017 16 August 2018

Length of Service (as of 24 March 2020) Length of Service (as of 24 March 2020) Length of Service (as of 24 March 2020) Length of Service (as of 24 March 2020) 4 years (served on the Board previously from 7 years 6 months 2 years 3 months 1 year 7 months 12 March 2009 to 23 May 2014) Date of last Re-election Date of last Re-election Date of last Re-election Date of last Re-election Re-elected 12 April 2018 Re-elected 12 April 2018 10 April 2019 Re-elected 12 April 2018 Academic/Professional Qualification(s) Academic/Professional Qualification(s) Academic/Professional Qualification(s) Academic/Professional Qualification(s) - Fellow Certified Practicing Accountant (FCPA) in - Certified professional coach accredited by the - Graduate of the University of New South Wales, - BA (Hons) History, University of York, United Kingdom Australia International Coach Federation (ICF) Australia - Master of Enterprise, Melbourne University - Certified Neuro Linguistics Programming practitioner - Qualified accountant Work Experience and Present Directorship(s) - Postgraduate Diploma, Business, Deakin University, accredited by the Association of Neuro Linguistics - Qualified lawyer admitted to practise law in Malaysia Mr. Graham Fewkes was previously a Board member of the Australia Programming (ANLP) and Hong Kong Company from 12 March 2009 to 23 May 2014. - BA (Hons), National University of Singapore Work Experience and Present Directorship(s) Work Experience and Present Directorship(s) Mr. Fewkes is currently the Executive Vice President, Asia Work Experience and Present Directorship(s) Ms. Michelle Achuthan has close to three decades of Ms. Chow Lee Peng has practised law in private practice and of Carlsberg Breweries A/S with management responsibility Mr. Lawrence is currently the Vice President Finance, Asia of experience in the advertising industry, last serving as as an in-house counsel for more than 25 years in Malaysia, for the Group’s Asia and Africa operations. Carlsberg Breweries A/S. Managing Director of Wavemaker following a merger of Hong Kong, Singapore, and Mainland China. She is currently GroupM’s MEC and Maxus agencies. She was previously Vice President - Legal, Asia of Carlsberg. Mr. Fewkes has worked in a range of commercial and senior He is also Chairman of Chongqing Brewery Company Managing Director of MEC from 2015. management roles for international companies such as Limited, and holds directorships in Carlsberg Vietnam Prior to joining Carlsberg, Ms. Chow was the Mainland Grand Metropolitan PLC, Fosters Group and Scottish and Breweries Limited, Carlsberg India Private Limited, Gorkha Prior to that, she spent over a decade at BBDO Malaysia China Head of Legal of Diageo during which she served as Newcastle PLC, where he served as Commercial Director Brewery Private Limited, Carlsberg Asia Pte. Ltd., Carlsberg in various positions before leaving as its Managing Director. the Chairman of the Supervisory Board of Shuijingfang, a in the BBH joint venture in Russia and Eastern European Brewery Hong Kong Limited, Lao Brewery Co. Ltd., and Ms. Achuthan also has experience within industry stalwarts Chinese white spirit company listed on the Shanghai Stock markets. Myanmar Carlsberg Co. Ltd. JWT and Saatchi & Saatchi overseeing diverse business Exchange. sectors including airlines, FMCG, tourism, luxury goods, He joined the Carlsberg Group in October 2008 and returned He was previously SVP and CFO Walmart (China) between finance, telecommunications, retail and F&B. She has extensive experience in M&A, corporate and to Asia after serving as the Carlsberg Group’s Global Chief 2008 and 2011 in China. In Australia, he worked mainly for compliance affairs. Commercial Officer based in Copenhagen. He also sits on the Coles Myer Group. His roles included being the General the Board of several private companies within the Carlsberg Manager, Group Planning & Finance, Coles Group and Group. General Manager, Finance, Coles Supermarkets.

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CORPORATE GOVERNANCE CORPORATE GOVERNANCE OVERVIEW STATEMENT OVERVIEW STATEMENT

THE BOARD OF DIRECTORS IS FULLY COMMITTED TO ENSURING THAT THE HIGHEST STANDARDS OF A BOARD LEADERSHIP AND EFFECTIVENESS CORPORATE GOVERNANCE (“CG”) INCLUDING ACCOUNTABILITY AND TRANSPARENCY ARE PRACTICED Part I - Board Responsibilities BY THE COMPANY AND THROUGHOUT THE GROUP AS A FUNDAMENTAL PART OF DISCHARGING ITS RESPONSIBILITIES TO PROTECT AND ENHANCE SHAREHOLDER VALUE AND THE FINANCIAL PERFORMANCE OF THE GROUP. 1.2 The Chairman

To this end, the Board continues to implement the principles and practices of the Malaysian Code on Corporate Governance The Chairman holds a Non-Executive position and is primarily responsible for matters pertaining to the (“Code”) towards achieving corporate excellence. Board and the overall conduct of the Group. The Chairman is committed to good CG practices and has been leading the Board towards a high performing culture. The CG Overview Statement is prepared in compliance with Paragraph 15.25(1) of the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad and it is to be read together with the CG Report which comprised the detailed application for each practice as set out in the Code. The CG Report is available on the corporate 1.3 Chairman and Managing Director website: www.carlsbergmalaysia.com.my. The roles and responsibilities of the Chairman and Managing Director are made clearly distinct to The ensuing paragraphs describe the extent of how the Group has applied and complied with the principles and best further enhance the existing balance of power and authority. The Managing Director oversees the practices of the Code for the financial year ended 31 December 2019. day-to-day management and running of the Group and the implementation of the Board’s decisions and policies. A BOARD LEADERSHIP AND EFFECTIVENESS Part I - Board Responsibilities 1.4 Qualified and Competent Company Secretary

1. Board’s Leadership on Objectives and Goals The role of the Company Secretary is currently held by Ms. Koh Poi San, Legal Director and Company Secretary. She was appointed on 19 February 2020 to carry out the responsibilities in providing support 1.1 Strategic Aims, Values and Standards to the Board as follows:

The Board leads and has effective controls over the Group whereby collective decision and/or close monitoring (a) Ensure compliance of listing and related statutory obligations as well as updates on regulatory are conducted on issues relating to strategy, performance, resources, standards of conduct and financial matters. requirements, codes, guidance and relevant legislation; The matters reserved for the collective decision of the Board are listed in the Appendix A of the Board Charter (b) Ensure adherence to board policies and procedures, rules, relevant laws and best practices on CG; which is available on the corporate website - www.carlsbergmalaysia.com.my. (c) Attend Board, Committees and General Meetings, and ensure the proper recording of minutes as well as follow-up on matters arising; The Board has oversight on matters delegated to the Management whereby updates are reported at least on a (d) Ensure proper upkeep of statutory registers and records and maintain a secured retrieval system quarterly basis. The Group adopts a Chart of Authority approved by the Board which the Management has to which stores meeting papers and minutes of meetings; and adhere to in carrying out its day-to-day functions. (e) Assist the Chairman in the preparation for and conduct of meetings in terms of policies and procedures, and updates on regulatory requirements, codes, guidance and relevant legislation. The roles and responsibilities of the Board as set out in the Board Charter are clear and distinct from that of the Managing Director. The Board also facilitates its principal responsibilities which include reviewing and adopting The Company Secretary has the requisite credentials and is qualified to act as company secretary a strategic plan, overseeing the conduct of business, risk management, succession planning, developing and under Section 235(2) of the Companies Act 2016. implementing investor relations and reviewing internal controls. The Board has delegated specific responsibilities to the following committees (“Committees”): The Group also engages the services of Tricor Corporate Services Sdn Bhd, an external consultant, on corporate secretarial matters and compliance to provide additional advice on issues pertaining to compliance and CG.

AUDIT COMMITTEE (“AC”) NOMINATION AND REMUNERATION RISK MANAGEMENT COMMITTEE renamed with effect from COMMITTEE (“NRC”) (“RMC”) 21 February 2020 was established on 21 February 2020

The powers delegated to the Committees are set out in the Terms of Reference of each of the Committees as approved by the Board and set out in the Appendices B, C and D of the Board Charter.

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1.5 Access to Information and Advice

All Directors have full and unrestricted access to the advice and services of the Company Secretary as well as to THE COEC HAS 14 KEY AREAS all information within the Group. There is also a formal procedure sanctioned by the Board of Directors, whether as a full board or in their individual capacity, to take independent professional advice, where necessary and in 1 Compliance with laws and company policies 8 Insider trading and handling of inside information appropriate circumstances, in furtherance of their duties, at the Group’s expense. 2 Anti-corruption and anti-bribery laws 9 Protection and proper use of corporate assets

All Directors are furnished with a comprehensive Board File including the meeting agenda usually not less 3 Trade sanctions and export control laws 10 Confidential and proprietary information than seven (7) days before each Board meeting. Sufficient time is given to enable the Directors to solicit further explanations and/or information, where necessary, so that deliberations at the meeting are focused and 4 Competition law 11 Work environment constructive. 5 Data protection and privacy laws 12 Gifts, meals and entertainment

The Board File includes, amongst others, sales and marketing development and strategies, financial results 6 Responsible drinking 13 Political activities and donations and forecasts, status of major projects, minutes of meetings of the Board and committees and other major operational, financial, compliance and legal issues. In addition, there is a schedule of matters reserved specifically 7 Conflicts of interest 14 Accuracy of books, records and public reports for the Board’s decision. Upon conclusion of the meeting, the minutes are circulated in a timely manner.

A secured online portal has been created to allow the Directors to have online access to the Board File, updates and other relevant documents. This portal enables sharing of updated information and documents with the The COEC is extensive but not exhaustive and the Group expects its employees to exercise sound judgement Directors and amongst the Directors themselves. in their decision-making in order to adhere to the highest ethical standards. The COEC will be reviewed periodically. 2. Demarcation of Responsibilities

2.1 Board Charter In order to bring the COEC to life, employees are trained on the ethical standards set out in the COEC. As part of this training, the Group has implemented an e-learning module that makes employees aware of ethical behaviours that are The Board Charter was adopted by the Board on 27 August 2013. Any subsequent amendment to the Charter meaningful for the Carlsberg Group and need to be followed. In 2019, employees across the Group in higher-risk roles can only be approved by the Board. Apart from setting out the roles and responsibilities of the Board, the Board received face-to-face training on data protection, anti-bribery and corruption and competition law. New joiners are enrolled Charter also outlines the membership guidelines, procedures for Board Meetings, Directors’ remuneration, and in e-learning on competition law and COEC. This will continue in 2020, alongside the roll-out of a new anti-bribery and investor relations and shareholder communication, as well as the matters reserved for collective decision of corruption e-learning course. Training is essential for maintaining awareness of the importance and details of our policies, the Board. and our compliance programme as a whole.

The Board Charter would be periodically reviewed and updated in accordance with the needs of the Group The Group also adopted the Carlsberg Group’s new policy structure which was launched in 2017 to support more effective and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board and ethical business conduct. There are 30 group policies and around 200 manuals supporting the policies which are Charter is available on the corporate website - www.carlsbergmalaysia.com.my. divided into:

3. Good Business Conduct and Corporate Culture

3.1 Code of Ethics & Conduct GOVERNANCE LEGAL AND FINANCIAL OPERATIONAL & STRATEGIC COMPLIANCE RISKS RISKS The Group has embedded the ‘Live by our Compass’ programme in the Group culture by implementing the RISKS RISKS ethical standards for conducting business with integrity valued by the Carlsberg Group. The Group has adopted the ‘Code of Ethics & Conduct’ (the “COEC”), introduced by the Carlsberg Group to help its employees to make the right choices and to act appropriately in response to ethical dilemmas in their daily work. The COEC applies to the Management, employees and contract workers of the Carlsberg Group. The policies aim to mitigate the main the Group risks, protect our brands and highlight what is expected of employees. The policies explain what is expected and supporting manuals explain how the employees should comply to the requirements set.

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3.2 Carlsberg’s Whistleblowing Policy 4.2 Tenure of Independent Director

Carlsberg embraces an ‘open-door’ culture and all employees are encouraged to seek advice from their line The cumulative tenure of each Independent Director of the Company, namely Datuk Toh Ah Wah, Mr. Chew managers, if they believe there is a violation of the COEC. As per the local whistleblowing policy, an employee is Hoy Ping and Ms. Michelle Tanya Achuthan, does not exceed a cumulative term of nine (9) years respectively. required to report any violation to the Legal Director and Company Secretary who is responsible for compliance related matters or the Head of Internal Audit who is functionally independent of the business operations. 4.3 Policy of Independent Director’s Tenure Alternatively, an employee may choose to escalate the violation directly to the VP of Compliance at Carlsberg Group. To do so, the employee could escalate via an email to a Speak Up mailbox ([email protected]), The Board Charter stipulates that the tenure of an Independent Director should not exceed a cumulative term a secured web-based complaint platform (https://www.speakupfeedback.eu/web/wep4br/my) or a telephone of nine (9) years. Upon completion of the nine (9) years, an Independent Director may continue to serve on line (1-800-88-4307) with designated access code that is hosted by a 3rd party service provider. the Board subject to the Director’s redesignation as a Non-Independent Director. Otherwise, the Board must justify and seek shareholders’ approval at the Annual General Meeting in the event it retains the Director as an The Board has adopted the above as the Group’s whistleblowing policy, which encompasses the Speak Up Independent Director. Policy introduced by Carlsberg Group. This whistleblowing policy is also extended to all business partners of the Group. All cases lodged within the framework of this policy will be overseen by the Board, through the 4.4 Diverse Board and Senior Management Team AC Chairman. This applies to all whistleblowing cases including those reported via the channels provided by Carlsberg Group, as there is a policy of mutual communication between the Group and Carlsberg Group. Appointment of Board and senior management are based on objective criteria, merit and besides gender diversity, due regard are placed for diversity in skills, experience, age and cultural background. Please refer to the Profile of the Directors and the Senior Management Team on pages 76 and 74 respectively for further Part II - Board Composition information.

4. Board’s Objectivity 4.5 Gender Diversity

4.1 Composition of the Board The Board is supportive of gender diversity in the Board composition and Senior Management. For the financial year 2019, two out of the seven (29 percent) Board members are women, with one of the female Board Currently, the Board has seven (7) members as set out below: members being an Independent Director. The profiles of the Directors are set out on pages 76 to 79 of this Annual Report. Independent Non-Executive The Board through the Nomination and Remuneration Committee will continue to consider gender diversity as 1. Datuk Toh Ah Wah part of its future selection of female board representation. 2. Stefano Clini 4.6 New Candidates for Board Appointment 3. Roland Arthur Lawrence

4. Chew Hoy Ping The shortlisted candidates whom were not known to the existing Board members, were interviewed by the Nomination and Remuneration Committee and thereafter, met with the Board of Directors for endorsement of 5. Graham James Fewkes appointment. Mr. Stefano Clini was also interviewed by the Nomination and Remuneration Committee before 6. Michelle Tanya Achuthan the Board of Directors endorsed his appointment in October 2019. 7. Chow Lee Peng

3 out of 7 6 out of 7

The three (3) Independent Directors representing approximately 43% of the Board demonstrate independence of judgment and ensure board decisions are made objectively in the best interests of the Group.

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4.7 Nomination & Remuneration Committee The Company Secretary will facilitate an induction and education programme for new Board members, which In 2019, the Board approved the Merger of the two committees of Nomination Committee and includes a visit to the Company’s brewery and discussions with the Managing Director, Department Heads and Remuneration Committee as the Nomination & Remuneration Committee. The Nomination and Key Section Heads to better understand the operations, business and policies of the Group, which will allow Remuneration Committee which is charged with the responsibility of, amongst others, recommending new Board members to contribute effectively from the outset of their appointment. The relevant sections of the appointment of new Directors to the Board, was established on 1 October 2001 and is comprised of the Listing Requirements, particularly in relation to their responsibilities as Directors, are also conveyed to Non-Executive and Independent Directors only. The current members are: them.

• Annual Evaluation of Board Effectiveness and Review of the Board Committees • Datuk Toh Ah Wah (Independent Non-Executive Director) - Chairman • Chew Hoy Ping (Independent Non-Executive Director) – Member The Board undertakes an annual evaluation of the Board’s effectiveness. The Board’s effectiveness was analysed and evaluated and the Board then reviewed and implemented measures against any issues discovered. The assessment for FY2019 was conducted internally and facilitated by the Company Secretary. The Terms of Reference of the Nomination & Remuneration Committee are set out in the Appendix C of the Board Charter and is available on the corporate website - www.carlsbergmalaysia.com.my. The evaluation was carried out using questionnaires which covered the areas of, Board Composition & Structure, Individual Director Effectiveness and the Effectiveness of the Board Committees.

The Nomination Committee will develop, maintain and review the criteria for recruitment and annual assessment of the In carrying out the evaluation, the Board also considered whether the members have adequately refreshed Directors. their skills and knowledge. In this connection, the training undertaken by the Directors is set out below.

The Company will also carry out review of the Board’s Effectiveness using independent consultants on a THE NOMINATION & REMUNERATION COMMITTEE’S KEY RESPONSIBILITIES ARE: periodic basis. • Reviewing the Board composition and recommending new nominees to the Board as well as the Committees and the appointment and resignation of Managing Director and Chief Financial Officer for the Board’s consideration. REMUNERATION

• Assessing the effectiveness of the Board, the Committees and the contribution of each Director (including the The objective of the Group’s remuneration policy is to attract and retain the Directors required to lead and control the Group Independent Non-Executive Directors and Managing Director) and Chief Financial Officer every year, taking effectively. In the case of Executive Directors, the components of the remuneration package are linked to corporate and into consideration the required mix of skills, knowledge, expertise and experience and other requisite qualities individual performance. For Non-Executive Directors, the level of remuneration is reflective of their experience and level of including core competencies contributed by Non-Executive Directors. All assessments and evaluation are responsibilities. documented for proper records. For the current remuneration policy, the remuneration payable to Non-Executive Directors in respect of Directors’ fees • Appointment Process are paid to Independent Non-Executive Directors only and also includes fees for AC Chairman and AC Members of the Company, who are Independent Non-Executive Directors. The remuneration for Non-Executive Directors, who are The Board, through the Committee, is responsible for ensuring that there is an effective and orderly succession Non-Independent and are representatives of the Carlsberg Group in Denmark, are not paid by the Company but are paid planning in the Company. The Committee reviews candidates for key management positions and formulates by the Carlsberg Group. nomination, selection and succession policies for members of the Board. The Board then deliberates on the Committee’s recommendations.

In respect of the appointment of all directors, the Committee considers shortlisted candidates based on their profiles, professional achievements and personality assessments. Appropriate candidates for independent directors are sourced through recruitment firms based on the needs of the Board. The Committee then ensures that the candidates are suitable and of sufficient calibre for recommendation to the Board for approval, by reviewing the profiles of candidates, their professional achievements, and where deemed appropriate, conducting interviews with the shortlisted candidates.

Upon the appointment of independent directors, the director will receive a letter of appointment enclosing the Board Charter which outlines his/her duties and responsibilities.

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REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT

Details of Directors’ Remuneration The remuneration of the Directors of the Company for 2019 is as follows:

The remuneration payable in respect of Directors’ fees for financial year 2019 are categorised as follows: Benefits Others Fees Salaries Allowances -in-kind Emoluments Total 2019 (RM) (RM) (RM) (RM) (RM) (RM) Remuneration for Directors’ fees Amount (RM) per annum Independent Non-Executive Directors Datuk Toh Ah Wah 133,000 - 24,000 1,351 - 158,351 Fees for Chairman of the Company 120,000 Chew Hoy Ping 99,000 - 24,000 554 - 123,554 Fees for each Independent Non-Executive Director 75,000 Michelle Tanya Achuthan 75,000 - 10,500 1,272 - 86,772 Fees for AC Chairman 20,000 Subtotal 307,000 58,500 3,177 368,677 Fees for AC Member 8,000 Executive Director Fees for NRC Chairman 2,500 Stefano Clini Fees for NRC Member 2,000 Appointed on 26 October 2019 - 299,186 119,981 11,220 893,659 1,324,047 Theodoros Akiskalos Fees for RMC Chairman 2,500 Appointed on 1 May 2019 and Fees for RMC Member 2,000 resigned on 25 October 2019 - 778,089 88,604 257,971 70,714 1,195,378 Meeting allowance per meeting 1,500 Lars Lehmann Resigned on 1 May 2019 - 968,372 - 106,648 1,022,814 2,097,834 The Board is proposing the adoption of the same Directors’ fee structure and rates for 2020 and to be paid monthly. Non-Executive Directors The Directors’ fees are subject to the approval of shareholders of the Company. Graham James Fewkes ------Roland Arthur Lawrence ------Chow Lee Peng ------Total

Remuneration of Top Five Senior Management

The remuneration of the top five Senior Management of the Company is as follows:

2019 Range of Remuneration (RM): Top 5 Senior Management 1,150,000 - 1,200,000 1 1,250,000 - 1,350,000 1 1,550,000 - 1,650,000 1 1,650,000 - 1,750,000 1 2,050,000 - 2,150,000 1 Total 5

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5. Overall Board Effectiveness Nomination and Remuneration Committee The Board intends to meet at least four (4) times a year, with additional meetings convened where necessary. Minutes No. of meetings attended of Board meetings are duly recorded by the Company Secretary. During the financial year ended 31 December 2019, Name of Committee Members a total of four (4) Board meetings were held as follows: Datuk Toh Ah Wah – Chairman (Independent Non-Executive Director) 5/5

i. Thursday, 14 February 2019 Chew Hoy Ping (Independent Non-Executive Director) 5/5 ii. Thursday, 16 May 2019 iii. Thursday, 15 August, 2019 iv. Tuesday, 26 November 2019 The Board is satisfied with the time commitment given by the Directors. All of the Directors do not hold more than In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, Board approvals 5 directorships as required under Paragraph 15.06 of the Listing Requirements. If anyone Director wishes to accept are obtained via circular resolutions which are supported with information necessary for an informed decision. To a new directorship, the Chairman will be informed beforehand together with indication of time that will be spent on facilitate the Directors’ planning and time management, an annual meeting calendar is prepared and given to the new appointment. Directors before the beginning of each new financial year. All existing Directors have attended the Mandatory Accreditation Programme (“MAP”) as required by the Listing The following is the record of attendance of the Board members: Requirements. During the course of the year, they have also attended other training programmes for the Directors and seminars on areas such as financial reporting standards, performance reviews, tax and accounting conferences that include the following:

Directors No. of meetings attended Name of Director Training Programmes Attended 1. Datuk Toh Ah Wah (Independent Non-Executive Director) 4/4 Datuk Toh Ah Wah 1. Audit Committee Conference 2019, Malaysian Institute of Accountants (MIA) on 15 April 2019. 2. Stefano Clini (Managing Director) – Appointed on 26.10.2019 1/1 2. 20th Asia Oil & Gas Conference (AOGC) 2019, Petroliam Nasional Berhad (PETRONAS) on 23 – 25 June 2019. 3. Roland Arthur Lawrence (Non-Executive Director) 4/4 3. Demystifying The Diversity Conundrum: The Road to Business Excellence, Bursa 4. Chew Hoy Ping (Independent Non-Executive Director) 4/4 Malaysia on 5 July 2019. 4. The Role of the Board in Risk Management of Legal Issues During Mergers & 5. Graham James Fewkes (Non-Executive Director) 4/4 Acquisitions, Institute of Corporate Directors Malaysia (ICDM) on 5 September 2019. 5. Integrated Reporting: Communicating Value Creation, Bursa Malaysia on 6. Michelle Tanya Achuthan (Independent Non-Executive Director) 4/4 16 October 2019. 6. Plant Visit to BASF – PETRONAS Chemicals Sdn Bhd & PETRONAS Chemicals MTBE 7. Chow Lee Peng (Non-Executive Director) 4/4 Sdn Bhd (PCG) on 22 October 2019. 7. Corporate Governance & Anti-Coruption, Security Commission Malaysia on 31 October 2019. The following are the record of attendance for Board Committees’ Meetings held in 2019: 8. Audit Oversight Board Conversation with Audit Committees, Securities Commission Malaysia, Bukit Kiara on 8 November 2019. Audit & Risk Management Committee 9. MFRS Updates for Public Listed Companies’ Board Audit Committee Members, KPMG Name of Committee Members No. of meetings attended on 3 December 2019. 1. Asia Leadership Conference, Hong Kong on 30-31 October 2019. Chew Hoy Ping – Chairman (Independent Non-Executive Director) 4/4 Stefano Clini 2. Carlsberg Leadership Team Meeting (Top 60), Oslo, Norway on 18-19 December 2019. Datuk Toh Ah Wah (Independent Non-Executive Director) 4/4 3. Asia People Board, Oslo, Norway on 19 December 2019.

Roland Arthur Lawrence (Non-Executive Director) 4/4

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Name of Director Training Programmes Attended 6. Effective and Independent Audit & Risk Management Committee Roland Arthur 1. Asia Leadership Conference, Siem Reap, Cambodia on 6-7 March 2019. Mr. Chew Hoy Ping, an Independent Non-Executive Director is the Chairman of the ARMC. On the composition and Lawrence 2. Carlsberg Leadership Team Meeting, IMD Programme, Lausanne, Switzerland on Terms of Reference of the ARMC, please refer to the ARMC Report on pages 100 to 102 for further information. 27-28 March 2019. 3. Asia Leadership Conference, Beijing, China on 10-11 July 2019. At the 49th AGM held on 10 April 2019, Messrs PricewaterhouseCoopers PLT was re-appointed as external auditors of the Group. The scope of the external auditors is ascertained by the ARMC, with a twice-a-year meeting held between 4. Asia Leadership Conference, Hong Kong on 30-31 October 2019. the ARMC and the external auditors. Further information is found in the ARMC Report at pages 100 to 102. 5. Carlsberg Leadership Team Meeting (Top 60), Oslo, Norway on 18-19 December 2019. Part II - Risk Management and Internal Control Framework Chew Hoy Ping 1. Audit Committee Conference 2019, Malaysian Institute of Accountants (MIA) on 15 April 2019. 7. Effective Risk Management and Internal Control Framework 2. Cyber Security in the Boardroom, Deloitte Risk Advisory on 27 June 2019. The Board is updated on the Group’s internal controls system which encompasses risk management practices as well 3. Introduction to Integrated Reporting, Malaysian Institute of Accountants (MIA) on as financial, operational and compliance controls on a quarterly basis. Ongoing reviews are performed throughout 14 October 2019. the year on quarterly basis to identify, evaluate, monitor and manage significant risks affecting the business and 4. Corporate Liability Under Section 17A of the MACC Act 2018, Malaysian Institute of ensure that adequate and effective controls are in place. Such continuous review processes are conducted by the Accountants (MIA) on 6 November 2019. Group’s independent and sufficiently resourced internal audit function as well as the Company’s management team. 5. Audit Oversight Board: Conversation with the Audit Committee, Securities Commission The findings of the internal audit function are regularly reported to the ARMC. Please refer to the Statement on Risk on 8 November 2019. Management and Internal Control on pages 96 to 99 for further information. Graham James 1. Asia Leadership Conference, Siem Reap, Cambodia on 6-7 March 2019. 8. Effective Governance, Risk Management and Internal Control Fewkes 2. Carlsberg Leadership Team Meeting, IMD Programme, Lausanne, Switzerland on 26-28 March 2019. The Board of Directors has always placed significant emphasis on sound internal controls which are necessary to 3. Asia Commercial Conference, Hong Kong on 6-8 May 2019. safeguard the Group’s assets and shareholders’ investment. To this end, the Board affirms its overall responsibility for the Group’s internal controls system. However, it should be noted that such system, by its nature, manages 4. Asia Leadership Conference, Beijing, China on 10-11 July 2019. but not eliminates risks and therefore can provide only reasonable and not absolute assurance against material misstatement, loss or fraud. 5. Asia Leadership Conference, Hong Kong on 30-31 October 2019.

6. Carlsberg Leadership Team Meeting (Top 60) in Oslo, Norway on The Group has an established internal audit function led by the Head of Internal Audit who reports directly to the 8-19 December 2019. ARMC at least on a quarterly basis. Further details of the Group’s internal control system and framework is found in the Statement on Risk Management and Internal Control and ARMC Report at pages 100 and 102 respectively. Michelle Tanya 1. Audit Committee Conference 2019, Malaysian Institute of Accountants (MIA) on Achuthan 15 April 2019. In line with the Code, the Board has recently approved for the ARMC to be segregated into a separate Audit Committee 2. PSMB (HRDF) Train The Trainer Certification, The Everly Putrajaya on 15-19 June 2019. (AC) and Risk Management Committee (RMC) on 21 February 2020. Mr. Chew Hoy Ping is the Chairman of the RMC with Datuk Toh Ah Wah, Michelle Tanya Achuthan and Stefano Clini as its members. Chow Lee Peng 1. Asia Leadership Conference, Siem Reap, Cambodia on 6-7 March 2019.

2. Carlsberg Global Legal Conference, Milan on 13-16 May 2019.

3. Asia Leadership Conference, Beijing, China on 10-11 July 2019.

4. Asia Leadership Conference, Hong Kong on 30-31 October 2019.

5. Carlsberg China Legal Conference, Chongqing, China on 21-22 November 2019.

6. Carlsberg Global Legal Team Meeting, Copenhagen, 26-27 November 2019.

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CORPORATE GOVERNANCE CORPORATE GOVERNANCE OVERVIEW STATEMENT OVERVIEW STATEMENT

C INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS C INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS Part I – Communication with Stakeholders Part II – Conduct of General Meetings

9. Continuous Communication between Company and Stakeholders During the year, the Managing Director and/or key management personnel also hold discussions with the press and analysts when necessary, to provide information on the Group’s strategy, performance and major developments. The Board recognises the importance of an effective communication channel between the Board, shareholders and A press briefing is also held after each AGM. general public, and at the same time, full compliance with the disclosure requirements as set out in the Listing Requirements. The annual reports, press releases, quarterly results and any announcements on material corporate Before the commencement of AGM, the Directors and Management will join the shareholders together with a exercises are the primary modes of disseminating information on the Group’s business activities and financial dedicated team of employees to assist the shareholders on the queries they may have. After the Chairman’s address, performance. the Managing Director will give a presentation which includes details on the performance, key developments and financial results for the reporting year and comments on outlook for the following year. The Chairman will share The Managing Director is the designated spokesperson for all matters related to the Group and dedicated personnel the Company’s responses to questions posed by the Minority Shareholders Watchdog Group before engaging the are tasked to prepare and verify material information for timely disclosure upon approval by the Board. shareholders on Questions & Answers session. The Board is satisfied with the current programme at AGM and there have been no major contentious issues noted with shareholders/investors. The Group maintains a website at www.carlsbergmalaysia.com.my for shareholders and the public to access information on, amongst others, the Group’s background and products, financial performance, frequently-asked OTHER INFORMATION questions (FAQs) and updates on its various sponsorships and promotions. Stakeholders can at any time seek clarification or raise queries through the corporate website, by email or phone. Primary contact details are set out at Utilisation of Proceeds the Group’s website. Written communications are attended to within 48 hours from day of receipt. The website also posts all press releases made by the Group together with latest news on the Group and the industry. There were no proceeds raised from any corporate proposal during the financial year ended 31 December 2019.

Part II – Conduct of General Meetings Non-Audit Fees

The non-audit fees paid to external auditors, Messrs PricewaterhouseCoopers PLT by the Group during the financial year 10. Encourage Shareholder Participation at General Meetings ended 31 December 2019 amounted to RM80,321. This amount was incurred in respect of the following services:

The AGM represents the principal forum for dialogue and interaction with shareholders. At every meeting, the Board 1. Retirement Plan for financial year 2018; sets out the progress and performance of the Group since the last meeting held. Shareholders are encouraged 2. Statement on Risk Management and Internal Control; and to participate in the subsequent Question & Answer session wherein the Directors, Company Secretary, Heads of 3. Board Effectiveness Evaluation for financial year 2018. Department as well as the Group’s external auditors are available to respond to the queries raised. In the event that an answer cannot be readily given at the meeting, the Chairman will undertake to provide a written reply to the STATEMENT OF COMPLIANCE shareholder. The Board shall continue to strive for high standards of CG throughout the Group. The Board is of the view that apart from Each item of special business included in the notice of meeting will be accompanied by a full explanation on the the noted departures, the Company has satisfactorily complied with the principles and recommendations of the Code. effects of a proposed resolution. This Statement was approved by the Board on 12 March 2020. The notices of AGM are despatched to shareholders at least 28 days before the AGM, to allow shareholders additional time to go through the Annual Report and make the necessary attendance and voting arrangements.

Details as below:

Date of Issue No. of Days before AGM Date of Annual General Meeting Annual Report 2017 12 March 2018 30 days 12 April 2018 Annual Report 2018 11 March 2019 29 days 10 April 2019

94 95 CARLSBERG BREWERY MALAYSIA BERHAD [196901000792 (9210-K)] ANNUAL REPORT 2019

STATEMENT ON RISK MANAGEMENT STATEMENT ON AND INTERNAL CONTROL RISK MANAGEMENT AND INTERNAL CONTROL INTERNAL CONTROL SYSTEMS

RESPONSIBILITY The key elements of the Group’s internal control systems were described below: The Board is committed to the continuous improvement of risk management and internal controls practice within the Group (excluding associated company) to meet its business objectives. The Board affirmed its overall responsibility for the effectiveness of the Group’s risk management and internal control systems, included the review of the adequacy and integrity of these systems to safeguard shareholders’ investment, customers’ interest and the Group’s assets. In addition, CONTROL ENVIRONMENT CONTROL STRUCTURE the Managing Director and the Chief Financial Officer have assured the Board that the systems were operating adequately and effectively, in all material aspects, based on the risk management and internal control systems of the Group. However, such systems, by their nature, only provided reasonable, but not absolute assurance against material misstatement, loss The importance of a proper control environment was The Board and Management have established an and fraud. These systems were designed to manage, rather than eliminate, the risk of failure to achieve business objectives communicated throughout the organization. Focus was directed organizational structure with clearly defined lines of of the Group. towards the quality and abilities of the Group’s employees accountability and delegated authority. This includes well- with continuing education and training to enhance the skills defined responsibilities of Board committees and various RISK MANAGEMENT FRAMEWORK of employees and reinforce qualities of professionalism and management levels, including authorization levels for all integrity. Such training also included the internal briefings and aspects of the business. The Group adopted a continuous process to identify, evaluate, monitor and manage significant risks affecting the external seminars for selected employees relating to areas achievement of its business objectives. Internal controls and risk management activities were reviewed by the Board of risk management, leadership, selling skills and employee via the Audit & Risk Management Committee Meetings, conducted quarterly during the year. The key elements of management. the Group’s Risk Management Framework are described below:

The key elements of the Group’s control structure are as follows:

1 STRUCTURE & APPROACH 2 CATEGORY OF REPORTED RISKS

The Group adopted a decentralized approach in The Group maintained a database of risks specific MANAGEMENT INTERNAL AUDIT risk management, whereby each function would to the Group together with their corresponding be responsible to identify, assess and report key controls, which was categorised as follows: • Management had introduced well-established standard The IAD provided reasonable assurance to the ARMC and the risks. In turn, the respective head of department operating procedures that cover all key aspects of the Board on the adequacy and integrity of the internal controls took the overall responsibility and accountability • Strategic risks that affect the overall direction of Group’s various business processes. These policies and systems. The IAD was staffed by a total of 4 audit professionals procedures deal with, amongst others, control issues for and led by Mr. Lim Tiong Eng @ Allan Lim as the Head of of the reported risks, ratings and the corresponding the business. financial accounting and reporting, treasury management, Internal Audit. He holds a Bachelor of Commerce (major in risk mitigation plan. A Risk Management Working • Operational risks that impact the delivery of the asset security, information technology, health and safety, accounting) and he is a certified member of both CPA Australia Committee (RMWC) was formed by the Group Group’s products and services. etc. The procedures were subject to regular reviews to cater & the Malaysian Institute of Accountants. to support the risk management objectives and • Financial risks associated with financial for process changes, changing risks or further improvements. initiatives. The committee comprised nominated processes and reporting. • Aside from the standard operating procedures, changes in The IAD was independent of activities related to business representatives from all the functions. The main role • Compliance risks associated in relation to legal, internal control procedures, if any, were also communicated operations and performed its duties in accordance with of the RMWC was to provide updates to the reported statutory and corporate governance. via circulars and internal memos. Such circulars and memos standards set by relevant professional bodies, namely the risks, inform its members about the status of the were properly authorized by the relevant members of senior Institute of Internal Auditors. The responsibilities of IAD included risk mitigation plan and discuss any potentially management. developing the annual audit plan execution and reporting the new risk, via quarterly meetings (4 meetings took • Management adopted a consistent approach in the constant audit results for the Group. For such purposes, the IAD: place in 2019). The Internal Audit Department (IAD) 3 RISK MANAGEMENT PROCESS review of key performance indicators set for various functions being part of the RMWC, coordinated the quarterly within the Group to ensure the efficiency & effectiveness of • Prepared a detailed Annual Audit Plan in consultation Potential risks were identified by the respective operational activities in achieving business objectives. with the Managing Director for submission to the ARMC risk meetings, prepared the minutes and tabled the business functions based on relevant knowledge & • Management also maintained effective communication for approval; risk register with associated updates to the Audit & expertise, publicly available information and advice channels to provide and solicit feedback in relation to • Carried out all activities to conduct the audits in Risk Management Committee (ARMC), also on a from subject matter experts. The potential risks business performance, critical issues and other key business accordance with the audit plan (changes to the plan quarterly basis. The ARMC reported to the Board as were then raised for discussion and deliberation by matters. throughout the year were duly reported to ARMC on and when there were significant changes in key risks the RMWC during the quarterly meetings. All the quarterly basis); and operating environment, with anticipated impact risk owners were responsible to provide periodic • Shared its finding with the auditee upon completion of on the business. updates on the risk mitigating activities and the each audit; and • Submitted quarterly reports to the ARMC. corresponding results. Throughout the year, the risk register was updated by the IAD based on the The ARMC Report set out on pages 100 to 102 of this Annual information provided by risk owners. Report contains further details on the principal responsibilities and activities of IAD in 2019.

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STATEMENT ON RISK MANAGEMENT STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL AND INTERNAL CONTROL

REVIEW OF ADEQUACY OF RISK MANAGEMENT AND INTERNAL CONTROL The Board reviewed and believed that the internal control system was considered appropriate to business operations, and that AUDIT & RISK MANAGEMENT COMMITTEE the risks taken were at an acceptable level within the context of the business environment of the Group.

During the year, deficiencies in internal control were identified during the audit of financial statements and through internal audit The ARMC, on behalf of the Board, reviewed on a quarterly basis the measures undertaken on internal control issues activities. Additional internal controls and corrective actions were implemented to address such deficiencies. identified by the RMWC, internal auditors, external auditors and Management. During the year, 26 reports were issued by IAD to ARMC for their review. This Statement on Risk Management and Internal Control did not deal with the associated company as the Group did not have management control over its operations. The ARMC Report set out on pages 100 to 102 of this Annual Report contains further details on the activities undertaken by ARMC in 2019. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Audit and Assurance Practice Guide 3 (AAPG3) issued by the Malaysian Institute of BOARD Accountants. AAPG3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group. The Board held regular discussions with the ARMC and Management and considered their reports on matters relating to internal controls and deliberated on their recommendations for implementation. Based on the review, the external auditors have reported to the Board that nothing had come to their attention that caused them to believe that the Statement intended to be included in the Annual Report of the Group, in all material respects: • Reporting and Information Strategic plans were prepared by Management and formed the basis for detailed annual budgets. The detailed (a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk budgets were prepared by business operating units, reviewed and approved by Management, the Board and the Management and Internal Control: Guidelines for Directors of Listed Issuers, or holding company. (b) is factually inaccurate. The monitoring of results against budget was conducted every month, with major variances followed up and management action taken, where necessary. The budget was updated every quarter for any changes in the This Statement on Risk Management and Internal Control was made in accordance with the resolution of Board dated business, financial and operating environment. 12 March 2020.

Regular meetings attended by Management, led by the Managing Director, were held to discuss the various aspects of the business, financial and operational performance of the Group. Key matters affecting the Group were brought to the attention of the ARMC by the Managing Director, Chief Financial Officer or Head of Internal Audit and were reported to the Board on a regular basis. Management also ensured that it had the knowledge of key market information in respect of the Group’s products and took pro-active measures, as appropriate, in the best interests of the Group.

• Monitoring and Review There were processes in place to monitor the internal control systems and report any significant weakness together with details of corrective action. The systems were reviewed regularly by the Board (through the ARMC), Management and IAD. The IAD was primarily responsible in the evaluation and reporting on the effectiveness of the internal controls, with the results shared with Management and the ARMC. All heads of department were responsible in the continuous improvement and tightening of the internal controls within their respective business area.

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AUDIT & RISK MANAGEMENT AUDIT & RISK MANAGEMENT COMMITTEE REPORT COMMITTEE REPORT

Audit & Risk Management Committee Report

MEMBERSHIP AND MEETINGS • Assessed the performance, competency and • Reviewed the quarterly unaudited financial results Effective 21 February 2020, ARMC was renamed as AC as the function of Risk Management was assumed by a seperate professionalism demonstrated by the external auditors and Bursa Malaysia Securities Berhad (“Bursa”) Risk Management Committee. during the year. Obtained the assurance on independence announcements before recommending them for the from the external auditors and recommended the audit Board’s approval. The review and discussions were The then Audit & Risk Management Committee (ARMC) held four (4) meetings during the financial year ended fees payable to the Board for approval. conducted with the Managing Director and the Chief 31 December 2019. The members of the ARMC and the record of their attendance are as follows: Financial Officer. • Considered and assessed the independence and objectivity of the external auditors during the year and • Throughout the financial year, the Chairman of the The Managing Director, Chief Financial Officer and Head of Internal Audit also prior to engaging the external auditors for non- ARMC also held frequent discussions with the Chief attended the meetings for the purpose of briefing the ARMC on the activities audit related services. The non-audit fees paid to the Financial Officer relating to any potential material involving their areas of responsibilities. The ARMC was also briefed by the member firms of external auditors in 2019 amounted to issues affecting financial reporting and disclosure. external auditors on the findings of the external audit. RM80,321. This included the Company’s compliance with the Bursa Listing Requirements, MASB and other The external auditors were present at three (3) ARMC meetings during the • Reviewed Internal Audit reports, recommendations relevant legal and regulatory requirements. financial year. At these meetings, the ARMC also held separate sessions with and Management’s response including 2 audit the external auditors without the executive board members present whereby the reports completed and issued by Group Internal Audit • Reviewed pertinent issues of the Group which have ARMC was briefed by the external auditors on their audit findings and any other from Carlsberg Group. Discussed actions taken with a significant impact on the results of the Group observations they may have had during the audit process. Management to improve the internal control system including enhancement and investment in existing based on findings identified by Internal Auditor. The products, cost rationalisation measures and human CHEW HOY PING SUMMARY OF WORK PERFORMED BY AUDIT & Chairman of the ARMC also conducted quarterly one- resource development. Independent Non-Executive Director RISK MANAGEMENT COMMITTEE to-one sessions with the Head of Internal Audit to - Chairman The main activities undertaken by the ARMC during the financial year ended 31 December 2019 were as follows: discuss the operations of the Internal Audit function as • Reviewed the significant related party transactions Meeting Attended well as other relevant matters. entered by the Group. 4/4 • Reviewed the external auditors’ scope of work, audit risks and focus areas, materiality thresholds, audit methodology, key milestones and other relevant • Reviewed the Risk Management Framework and reports • Reviewed the Group’s compliance with the provisions summarizing the findings from work performed on set out under the Malaysian Code on Corporate ROLAND ARTHUR LAWARENCE matters. The Chairman and members of the ARMC periodically held informal the identification and assessment of enterprise-wide Governance for the purpose of the Corporate Non Independent discussions with the external auditors to ensure audit issues are addressed on a Non-Executive Director - Member timely basis. key risks. Governance Overview Statement pursuant to the Bursa Listing Requirements. Meeting Attended • Reviewed the audited financial statements of the 4/4 • Reviewed the results of the external audit, the audit report and the Management representation letter, including Management’s response. Further to that, the Company and the Group prior to submission to the • Reviewed External Audit reports, control ARMC also scrutinized potential key audit matters raised by the external Board for its approval. The review was to ensure that recommendations and discussed actions to be the audited financial statements were drawn up in taken by management to improve the internal DATUK TOH AH WAH auditors and ensured that adequate work had been done to support the audit Independent conclusions and overall impact on the financial statements. The sole key audit accordance with the provisions of the Companies Act control based on the findings identified by the Non-Executive Chairman - Member matter vetted by ARMC (as mentioned in the Independent Auditors’ Report on 2016 and the applicable accounting standards approved External Auditor. by Malaysian Accounting Standards Board (“MASB”). Meeting Attended page 197 to 200 for details) was the accounting for trade discounts and volume 4/4 rebates accruals as part of revenue recognition as this involved the use of critical accounting estimates and management assumptions. As noted by the external auditors, Management accrues the trade discounts and volume rebates based on the estimated sales volume to be achieved multiplied with the agreed rates with the customers. On the ARMC’s part, trade discounts and volume rebates are regularly reviewed as part of the financial reports presented by Management at each quarterly meeting.

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AUDIT & RISK MANAGEMENT COMMITTEE REPORT RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS

Audit & Risk Management Committee Report In the course of preparing the annual financial statements for the Group and the Company, the Directors are collectively responsible for ensuring that these financial statements are drawn up in accordance with the requirements of the applicable SUMMARY OF WORK PERFORMED BY INTERNAL • Reviewed the Group’s state of compliance with Approved Accounting Standards in Malaysia, the provisions of the Companies Act 2016 and the Main Market Listing AUDIT FUNCTION established principles and practices, as well as the Requirements of Bursa Malaysia Securities Berhad. The role of Internal Audit Department (“IAD”) is to carry relevant statutory requirements. out independent reviews of the Group’s internal control It is the responsibility of the Directors to ensure that financial statements for each financial year present a true and fair view system in order to provide reasonable assurance that • Assessed the effectiveness of internal controls put 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 of internal controls are in place and operating effectively. in place by Management to safeguard the Group’s the Group and the Company for the financial year. All internal control related issues identified were reported assets & inventory in the course of executing the to Management and the ARMC by the Head of IAD. Internal Audit plan. In preparing the financial statements for the financial year ended 31 December 2019, the Directors have applied appropriate IAD also worked collaboratively with Risk Management and relevant accounting policies consistently and in accordance with applicable accounting standards and made judgements Working Committee (“RMWC”) in the updates of the risk • Collaborated with Management to promote the and estimates that are reasonable and fair. registers and the reporting of results arising from the risk culture of practicing good internal controls and management process. governance to attain optimal business efficiency The financial statements are prepared on a going concern basis and the Directors have ensured that proper accounting and process effectiveness. records are kept which enable the preparation of the financial statements with reasonable accuracy. Throughout the year, the IAD performed the followings: • Identified business areas that necessitated process • Performed reviews based on the approved annual improvements and put forward recommendations audit plan, in which focus areas were derived from the to minimize financial wastage and to prevent fraud. results of risk assessment conducted on the business Closely monitored the timeliness and effectiveness plan, financial statements and operational processes. of the implementation of corrective actions Apart from such risk-based approach, the internal by Management in addressing reported audit control principles as advocated by the Committee observations. of Sponsoring Organizations of the Treadway Commission, commonly known as COSO framework • The total cost incurred by the IAD in relation was also observed where applicable in the execution to its operation during the financial year ended of internal audit reviews. 31 December 2019 amounted to RM864,409.

• Identified auditable areas and performed reviews based on the risk levels assessed. Consideration was also given to any concerns shared by Management. The areas that were audited including areas covered by Group Internal Audit from Carlsberg Group, comprised trade and commercial, financial, manufacturing, compliance, information technology general controls and related party transactions.

• Carried out special reviews and investigations whenever necessary and reported to the ARMC the outcomes of such engagements. Presented the necessary information and outcomes to the ARMC with regards to any case of whistleblowing.

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