ANNUAL REPORT 2016 ANNUAL Looking forward to 2017... OLDTOWN BERHAD OLDTOWN Join us: Follow us: (797771-M) www.oldtown.com.my OLDTOWN BERHAD Copyright©2016 Oldtown Berhad (797771-M). All Rights Reserved. (797771-M) OLDTOWN BERHAD797771-M Incorporated In Malaysia In the midst of our busy and hectic lives, some long for the good old days that we grew up in. When everything was simple and life was peaceful. At OLDTOWN™ White Coffee,we strive to recreate charming memories of good old days. So come and rekindle unique memories of a time worth remembering. Come and enjoy the Aroma Of Good Times with OLDTOWN™ White Coffee. OLDTOWN BERHAD797771-M Incorporated In Malaysia Contents 2 Our Legacy – 27 Corporate Responsibility Vision, Mission Statement & Business Overview 29 Corporate Governance Statement 4 Group Structure 37 Audit Committee Report 5 Corporate Information 40 Statement On Risk Management & Internal Control 6 Board of Directors’ Profile 42 Additional Compliance Information 10 Chairman’s Statement 49 Financial Statements 14 Group Managing Director’s Review of Operations 136 List of Properties Owned by Oldtown Group 22 Financial Highlights 141 Analysis of Shareholdings 23 Sustainability & Corporate Responsibility 145 Notice of Annual General Meeting Proxy Form OLDTOWN BERHAD797771-M Incorporated In Malaysia Our Legacy From the day our proprietary OLDTOWN™ White Coffee blend was formulated, it has been steadfastly carried down over the years to this day. Our white coffee are roasted and prepared according to the original method to ensure that every cup of OLDTOWN™ White Coffee imparts the same full- bodied taste, texture and aroma year after year. Our commitment to maintain the true essence of our heritage has helped us to create a one-of-its-kind brand that is renowned the world over. To date, our white coffee products are exported to more than 14 countries worldwide. Our business also includes the OLDTOWN™ White Coffee chain of café outlets. Carrying the charm of a traditional Ipoh coffee shop, we serve a variety of Malaysian delicacies from white coffee to toasts, rice and noodles. To date, we have more than 200 café outlets throughout Asia. 2 ANNUAL REPORT 2016 OLDTOWN BERHAD797771-M Incorporated In Malaysia Vision Business Overview To be Asia Pacific’s Leading White Coffee Brand The business activities of Oldtown Group can be divided into three broad categories as follows: Mission Statement Operation of Cafe Chain OUR PEOPLE : • Own Cafe Outlets* We Believe That Our People Are Our Assets • Franchised Outlets • Food Processing We acknowledge and appreciate our people as those who grow with us and for their full dedication. We value them for their Manufacturing of coffee and other beverages effort and what they are able to bring to the company, hence we constantly provide a platform and opportunities for career • Instant Coffee Mix growth and enrichment of knowledge. We cultivate the passion of • Roasted Coffee Powder delighting our consumers into all our staffs to bring forth the best • Instant Milk Tea Mix experience possible. • Instant Chocolate Mix Community : Marketing and sales of coffee and other beverages We Nurture The Community • Instant Coffee Mix We are aware and committed to our community hence we operate • Roasted Coffee Powder our business in a manner that does not compromise the wellness • Instant Milk Tea Mix of our future generations. We are passionate about our corporate • Instant Chocolate Mix responsibilities and do our best to provide for the community • Ready-to-drink coffee in different ways, from doing our part for the earth we live in to *Own cafe outlets include those that are fully and partially owned. providing underprivileged children with better homes. We will not look lightly upon our social responsibilities as we believe in giving back to the community as part of the effort towards a better future. Our Consumers : We Delight Our Consumers with Our Products We are consumer centric and are always focused on consumer needs. Hence we are dedicated to delighting our consumers with all our product offerings, by committing ourselves in sourcing the finest ingredients through ethical ways to provide them with the best quality products. We hold strongly to our origins in order to bring to consumers the authentic experience that they expect to enjoy. MOTHER EARTH : We Do Our Part in Saving Mother Earth We are attuned with the growing needs to nurture our mother earth and to do our part in caring for the environment. With this, we share and grow the passion and knowledge of caring for the environment with our partners and consumers for them to live this together with us as part of our corporate values. INVESTORS : We Focus on Prospering Our Investors We are dedicated to growing and maximising the financial rewards of our investors as we see it as a platform for our company to continue to provide to our consumers and the community. ANNUAL REPORT 2016 3 OLDTOWN BERHAD797771-M Incorporated In Malaysia Group asStructure at 31 March 2016 4 ANNUAL REPORT 2016 OLDTOWN BERHAD797771-M Incorporated In Malaysia Corporate Information Board of Directors Datuk Dr. Ahmed Tasir Dato’ Wong Guang Seng Chuah Seong Meng Bin Lope Pihie Independent Non-Executive Executive Director PJN, PMP, JSM, FASc Director Independent Non-Executive Clarence D’Silva A/L Leon D’Silva Chairman Tan Chon Ing @ Executive Director Tan Chong Ling Lee Siew Heng Independent Non-Executive Goh Ching Mun Group Managing Director Director Executive Director Tan Say Yap Executive Director Board Committees Audit Committee Remuneration Committee Nomination Committee Dato’ Wong Guang Seng Tan Chon Ing @ Tan Chong Ling Datuk Dr. Ahmed Tasir Chairman Chairman Bin Lope Pihie Chairman Datuk Dr. Ahmed Tasir Datuk Dr. Ahmed Tasir Bin Lope Pihie Bin Lope Pihie Dato’ Wong Guang Seng Tan Chon Ing @ Lee Siew Heng Tan Chon Ing @ Tan Chong Ling Tan Chong Ling Dato’ Wong Guang Seng Goh Ching Mun Company Secretaries Stock Exchange Listing Principal Bankers Wong Wai Foong Main Market of CIMB Bank Berhad (13491-P) (MAICSA 7001358) Bursa Malaysia Securities Berhad HSBC Bank Malaysia Berhad (127776-V) (Listed since 13 July 2011) Tan Hsiao Yuen Stock Name: OLDTOWN Statutory Auditors (MAICSA 7056952) Stock Code: 5201 Messrs. Deloitte (AF0080) Registered Office Chartered Accountants Share Registrar Level 2, Weil Hotel Unit 30-01 Level 30, Tricor Investor & Issuing House 292, Jalan Sultan Idris Shah, Tower A, Vertical Business Suite, Services Sdn Bhd 30000 Ipoh, Perak Darul Ridzuan Avenue 3, Bangsar South, Office: Tel: (605) 254 0288 No 8, Jalan Kerinchi, Unit 32-01, Level 32, Tower A, Fax: (605) 254 7288 59200 Kuala Lumpur. Vertical Business Suite Tel : (603) 2783 9191 Avenue 3, Bangsar South, Fax: (603) 2783 9111 No. 8, Jalan Kerinchi, 59200 Kuala Lumpur. Head Office Tel: (603) 2783 9299 No. 2, Jalan Portland, Fax: (603) 2783 9222 Kawasan Perindustrian Tasek, 31400 Ipoh, Perak. Customer Service Centre: Tel : (605) 541 5511 Unit G-3, Ground Floor, Vertical Podium, Fax: (605) 541 2860 Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, Website 59200 Kuala Lumpur. www.oldtown.com.my ANNUAL REPORT 2016 5 OLDTOWN BERHAD797771-M Incorporated In Malaysia Board of Directors’ Profile Datuk Ahmed Tasir was appointed to the Board on 10 November 2009. He is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee respectively. He holds a Doctor of Philosophy (PhD) in Science and Technology Policy from the University of Manchester, Master of Science in Seed Technology from the University of Edinburgh, Scotland and a Bachelor in Agriculture Science from the University of Malaya. He was with the Malaysian Agricultural Research and Development Institute (MARDI) from 1972 to 1992 and last held the post as a Director before he left the Institute. He was the Chief Executive Officer of the Malaysia Industry-Government Group for High Technology (MIGHT) from 1993 to 2008. He was a Director of Inno Bio Ventures Sdn Bhd and Inno Biologics Sdn Bhd from 2003 to 2015 and acted as President of the companies from 2011 to 2015. He is presently the Chairman of Strand Aerospace Malaysia Sdn Bhd and board member of Mara Aerospace Technologies Sdn Bhd, Universiti Kebangsaan Malaysia (UKM) and several private companies. Datuk Ahmed Tasir is a Council member of Datuk Dr. Ahmed Tasir Bin Lope Pihie Hospital Tuanku Mukriz and a Fellow of The Academy of Science Malaysia. PJN, PMP, JSM, FASc Independent Non-Executive Chairman Aged 65, Male, Malaysian Mr Lee was appointed to the Board on 30 November 2007. He is also a member of the Remuneration Committee. He brings with him invaluable industry experience, having accumulated more than 24 years of experience in the manufacturing and retailing industries, of which more than 14 years is in the coffee beverage industry. He has been instrumental in the growth and development of the Oldtown Group of Companies and has been a key driving force in the expansion of the Group’s beverage manufacturing and cafe chain operation businesses. Upon completion of his secondary education in 1986, he started his career as a Production Manager of Chong Ngai Knitting Factory Sdn Bhd, a garment manufacturer and was later promoted to the position of a General Manager. He left the company in 1997 to become a Director of CN Supplies Sdn Bhd which was trading in hotel supplies. In 2001, he joined White Cafe Marketing Sdn Bhd, a company in the Oldtown Group as a Managing Director and was subsequently re-designated as the Group Managing Director of Oldtown Group in 2009. He holds directorships in several private Lee Siew Heng companies and is currently the Chairman of Old Town International Sdn Bhd, the holding Group Managing Director company of Oldtown Berhad. Aged 50, Male, Malaysian 6 ANNUAL REPORT 2016 OLDTOWN BERHAD797771-M Incorporated In Malaysia Dato’ Wong was appointed to the Board on 1 April 2014.