CH RTING the future the future Fraser and Neave, Limited Fraser and Neave, Limited #21-00 Alexandra Point 438 Alexandra Road Annual Report 2008 Singapore 119958 Tel: (65) 6318 9393 Fax: (65) 6271 0811 www.fraserandneave.com (Company Registration No. 189800001R) (Incorporated in the Republic of Singapore) Pte Ltd, part of LloydNorthover by Su Yeang Design and production ANNUAL REPORT 2008 CH RTING 1986 1999 2006 A 50-50 joint venture, Asia Pacific Investment Pte Ltd, Under new strategic direction, F&N Coca Cola F&N embarked on its asset-light strategy with the years ago, two visionaries set up was formed to manage Malayan Breweries and other Pte Ltd was divested. launch of its retail REIT, Frasers Centrepoint Trust. 125 brewery investments in the Asia Pacific region. 1932 A 20.1% stake in Times Publishing was acquired F&N acquired Nestle’s canned and liquid milk a modest company to produce carbonated Tiger Beer, and subsequently a takeover offer was launched business in Malaysia and Thailand, providing the Singapore’s for the company. platform for growth in markets like Malaysia, soft drinks. This company would eventually best loved Singapore, Thailand and Brunei. homegrown beer, become one of the food and beverage giants was launched. in the region – Fraser and Neave. Today, F&N is a multi-sector conglomerate with a promising future, built on a legacy of trust, dynamism and quality. 1936 The franchise for Coca-Cola 1990 2007 was secured for The dairies and property interests (Centrepoint Tiger beer became the first foreign beer brand to Singapore and Properties) of Cold Storage Holdings Ltd were acquired. be brewed in Mongolia. Malaysia. 1992 A 27% stake was acquired in Hektar Real Estate F&N Coca Cola Pte Ltd was formed as an anchor bottler Investment Trust, Malaysia’s only pure retail REIT for Coca-Cola in Singapore, Malaysia, Brunei, Vietnam, listed on Bursa Malaysia Securities Berhad. Cambodia, Sri Lanka, Nepal and Pakistan. 1994 F&N’s inaugural residential projects in Singapore – The Anchorage and Valley Park – were launched. 1959 A sweetened condensed milk plant 2000 was built in Petaling Jaya, Malaysia, F&N entered the hospitality management business, 1883 with Beatrice Foods of Chicago. consolidating its presence in the properties sector. John Fraser and David Chalmers Neave established The Singapore and Straits 1968 2004 Aerated Water Company to produce Dairy production commenced in A 29.5% stake was acquired in China Dairy Group, carbonated soft drinks. Singapore. the holding company for the Silver Bridge Group, which is ranked amongst the top dairy companies 1972 in north western China. 1898 2008 An equity interest was taken in The Singapore and Straits Aerated Water An 18.3% stake was acquired in Allco Commercial Malaya Glass Factory Bhd. 2005 Company went public under Fraser and Neave, REIT and 100% of the REIT manager, Allco Frasers Centrepoint Ltd, formerly known as Limited, a household name in F&B today. (Singapore) Limited. The REIT was renamed Frasers Centrepoint Properties Ltd, increased its stakes in 1984-85 Commercial Trust with a portfolio worth S$2 billion. Heineken Beer was launched in Singapore and Frasers Property (China) Limited, to about 55% of 1931 1998 Malayan Breweries Limited was formed in a joint venture Malaysia. Breweries and soft drinks plants were its issued share capital. Fraser Suites and Fraser Place serviced residences APB expanded its regional footprint with increased with Dutch company, Heineken to produce beer. relocated in Singapore in line with the modernisation opened for business in Singapore. capacity in Vietnam and new greenfield breweries of facilities and the plan to free up sites for a new in Laos and India. core business in properties. Fraser and Neave, Limited (F&NL) had its origins more than a century ago, in the spirited decisions of two enterprising young men, John Fraser and David Neave, who diversified from their printing business to pioneer the aerated water business in Southeast Asia in 1883. From a soft drinks base, F&NL ventured into the business of brewing in 1931, dairies in 1959, glass the future bottle manufacturing in 1972, property development and management in 1990 and publishing & printing in 2000. Having been around for 125 years, F&NL has not only stood the test of time but has grown from strength to strength to be a leading Pan-Asian Consumer Group with expertise and dominant standing in the Food & In an economy characterised by volatility, the success of an Beverage, Property, and Publishing & Printing industries. Leveraging on its enterprise depends on its ability to prepare for the future strengths in marketing and distribution; research and development; brands while remaining rooted in its core values. and financial management; as well as acquisition experience, it provides key resources and sets strategic directions for its subsidiary companies CH RTING The secret to F&N’s resilience is our steadfastness, as reflected across all three industries. in our resolute commitment towards grooming leadership, and our staunch belief in Asia’s growth potential. Yet, Listed on the Singapore Stock Exchange, F&NL ranks as one of the most steadfastness does not imply inflexibility. On the contrary, established and successful companies in the region with an impressive F&N places a premium on an enterprising spirit, on staying array of renowned brands that enjoy strong market leadership. It has pliable and adaptable in an ever-changing marketplace. shareholders’ funds of over S$5 billion and total assets employed of over S$13 billion. F&NL is present in over 20 countries spanning Asia Pacific, It is this mindset that has propelled F&N to what we are Europe and USA and employs over 18,000 people worldwide. today – an Asian multinational with substantial presence in the F&B, properties, and publishing and printing sectors. Even as the future looks challenging, F&N remains Food & Beverage undaunted. The spirit of innovation, visionary foresight and dynamic leadership are qualities that will hold true both Properties in good times and in bad. In charting the future, we will continue to capitalise on growth opportunities in untapped Publishing & Printing markets and mould our portfolio to maximise results, so that we may deliver sustainable returns to our shareholders – this is our pledge. the future In an economy characterised by volatility, the success of an CONTENTS enterprise depends on its ability to prepare for the future while remaining rooted in its core values. EMBODYING our pioneering spirit ANCHORING our strengths CH RTING The secret to F&N’s resilience is our steadfastness, as reflected DRIVEN by dynamic leadership in our resolute commitment towards grooming leadership, and our staunch belief in Asia’s growth potential. Yet, Group Financial Highlights ............................................. 2 Message from Chairman .............................................. 10 steadfastness does not imply inflexibility. On the contrary, Board of Directors ........................................................ 14 F&N places a premium on an enterprising spirit, on staying Corporate Information ................................................. 18 pliable and adaptable in an ever-changing marketplace. Corporate Structure ..................................................... 19 Group at a Glance ....................................................... 20 It is this mindset that has propelled F&N to what we are Our 3 Core Businesses ................................................. 21 today – an Asian multinational with substantial presence in Our Growth Drivers ...................................................... 22 Group Financial Performance ....................................... 23 the F&B, properties, and publishing and printing sectors. CEO Business Review – Food & Beverage ................................................... 24 Even as the future looks challenging, F&N remains – Properties .............................................................. 34 undaunted. The spirit of innovation, visionary foresight and – Publishing & Printing ............................................. 50 dynamic leadership are qualities that will hold true both Corporate Social Responsibility ..................................... 56 Building and Harnessing Talent .................................... 59 in good times and in bad. We will continue to capitalise Treasury Highlights ....................................................... 62 on growth opportunities in untapped markets and mould Enterprise-wide Risk Management ............................... 64 our portfolio to maximise results, so that we may deliver Total Shareholder Returns ............................................ 65 sustainable returns to our shareholders – this is our pledge. Corporate Governance Report ..................................... 66 Index to Financial Report .............................................. 77 Financial Calendar 2 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2008 1 Group Financial Highlights Revenue Attributable Profit before Fair Value Revenue Revenue (S$ million) Gain and Exceptional Items FY08: S$4,951 million FY08: S$4,951 million (cents per share)* FY07: S$4,731 million FY07: S$4,731 million FY08 4,951 FY08 27.3 FY07 4,731 FY07 28.6 FY08 FY08 1% 30% 9% 60% 15% 7% 20% 21% 37% FY06 3,802 FY06 25.3 FY05 3,488 FY05 23.3 FY07 FY07 FY04 2,724 FY04 22.8 1% 35% 11% 53% 18% 10% 15% 20% 37% Profit before Taxation, Impairment, Profit before Taxation, Impairment, Profit