A Legacy Built on Passion A Milestone for Celebration FRASER AND NEAVE, LIMITED annual report 2013 01 A Legacy Built on Passion, A Milestone for Celebration 02 Looking back on 130 years 06 Performance at a Glance 08 Corporate Profile Investor Relations 63 Treasury Highlights 64 09 Group Financial Performance Corporate Social Responsibility Giving Back to the Community 66 Conserving our Environment 70 Delivering Product Excellence 72 10 Global Presence Human Capital Management 73 Contents Enterprise-wide Risk Management 76 Corporate Governance Report 77 Index to Financial Report 96 12 Message from the Chairman 18 Board of Directors 26 Corporate Information 27 Corporate Structure 42 Properties CEO Business Review 28 Food & Beverage 52 Publishing & Printing A Legacy Built on Passion A Milestone for Celebration Behind F&N’s every great success story is a great vision and a partnership – a partnership between a company and its people – that stands the test of time. Starting with two visionary men, John Fraser and David Chalmers Neave, to its current community of 10,000 employees, F&N’s legacy of a pioneering spirit and entrepreneurial fervour has led it to boldly venture beyond the shores of Singapore to the rest of Asia. It is through the character of F&N’s People that F&N has successfully become the giant that it is today. One can still fi nd the same commitment, inspiration and passion that have driven F&N’s People for more than a century emanating from every corner of our organisation today. That’s what makes being part of our great organisation so special. Our People not only genuinely care about getting the job done, they also take great pride in their work, every single day. It is undoubtedly their talent, knowledge, experience and zeal that have made our company what it is today. On this anniversary, we can look back at our accomplishments with pride and joy. In 130 years, we have evolved into a leading conglomerate with strong brands that have touched and enriched lives for generations. All this, of course, would have been impossible without the drive, perseverance and teamwork of our People. As we celebrate our 130th anniversary this year, we want to thank all those who have accompanied us through our journey, and who have made the F&N legacy a tale of ingenuity, devotion and passion. 01 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 Looking back on 130 years 1898 The Singapore and Straits Aerated Water Company becomes Fraser and Neave, Limited (F&N) upon issuing its shares to the public. 1931 The company enters into a joint venture with Heineken N.V. of Holland to form Malayan Breweries Limited 1883 to produce beer. Tiger Beer is born as Singapore’s fi rst Scotsmen John Fraser and homegrown beer a year later. David Chalmers Neave establish The Singapore and Straits Aerated Water Company, alongside their 1936 printing press, to produce carbonated soft drinks. F&N is awarded the Coca-Cola bottling franchise for Singapore and Malaysia. 02 A Legacy Built on Passion A Milestone for Celebration 1959 The region’s fi rst sweetened condensed milk plant is built in Petaling Jaya, Malaysia, under a joint venture with Beatrice Foods of Chicago. The facility opens in 1961. 1987 F&N, with Goodman Felders Watties, takes control of Cold Storage Holdings. 1974 In July, F&N launches the F&N corporate logo to better refl ect its 1983 growing group of businesses and international expansion. F&N marks its centennial; 100PLUS, a carbonated isotonic sports drink, A state-of-the-art ice-cream is launched to commemorate manufacturing plant is built the milestone. in Singapore. 1990 Restructuring of Cold Storage 1985 Holdings – Centrepoint Properties F&N’s breweries and soft drinks becomes a member of F&N, and the plant in Singapore are relocated Group acquires Cold Storage Holdings’ for the vacated lands to be dairy operations in Singapore. developed by F&N as it enters the property business. Malayan Breweries Limited is renamed Asia Pacifi c Breweries Limited (APB). 03 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 Looking back on 130 years 1999 F&N acquires a 20.1% 1995 stake in Times Publishing Group. F&N sets up Myanmar Brewery Limited to register a foothold in the country’s developing beer market. 1996 2002 Fraser & Neave Holdings Bhd F&N delists Times Publishing and comes into being following the Centrepoint Properties through restructuring of the Group’s two voluntary conditional cash Malaysian soft drinks, dairies and offers in 2001. glass businesses, in compliance with Malaysia’s New Economic Policy. F&N returns capital of $0.80 per share to shareholders and cancels 1 ordinary share for every 2000 10 ordinary shares held. A third core business is established when F&N assumes majority control of the Times Publishing Group. 1998 Fraser Suites Singapore and Fraser Place Robertson Walk open for business as the fi rst of F&N’s serviced residence properties. 04 A Legacy Built on Passion A Milestone for Celebration 2013 F&N becomes a part of Thailand’s TCC Group, which is engaged in food 2008 and beverage, real estate, industrial trading and consumer products, The Group acquires a 17.7% stake insurance and agriculture. in SGX-ST listed Allco Commercial REIT, now known as Frasers F&N distributes $3.28 per share in Commercial Trust. cash to shareholders, an aggregate amount of $4.73 billion, which is substantially the Company’s gain from the APB sale. 2012 F&N celebrates its 130th anniversary. F&N divests its entire interest in APB, which has grown to become one of the key players in the beer industry in the Asia Pacifi c region. 2006 F&N launches its retail REIT, Frasers Centrepoint Trust. F&N announces the acquisition of Nestle’s canned and liquid milk business in Malaysia and Thailand, and becomes the largest canned milk producer in Southeast Asia following its completion in February 2007. 05 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 Performance at a Glance Revenue ($M) Profit Before Interest & Taxation4 ($M) Attributable Profit4 ($M) $4,344M $786M $545M • F&B and Properties contributed • F&B and Properties earnings each • 10-year compounded annual strongly to topline growth jumped more than twofolds growth rate of 8% 10-year CAGR 6% 10-year CAGR 7% 10-year CAGR 8% 5,543 952 545 5,146 411 472 1,974 799 786 462 1,234 4,344 62 152 3,802 167 597 295 400 3,022 929 3,912 3,569 502 131 632 273 48 320 698 84 541 30 247 2,873 466 2,324 418 243 FY03 FY06 FY09 FY12 FY13 FY03 FY06 FY09 FY12 FY13 FY03 FY06 FY09 FY12 FY13 87%3 88%3 124%3 Increase from FY2003’s $2,324M Increase from FY2003’s $418M Increase from FY2003’s $243M Total Assets ($M) Market Capitalisation5 ($M) Distribution $14,145M $8,361M 15.5¢ • Properties accounted for around • Comprising a proposed final dividend 71% of Group’s total assets of 12.0 cents and interim dividend of 3.5 cents paid earlier 10-year CAGR 8% 10-year CAGR 12%6 • Dividend payout ratio remains in line with Group’s dividend policy 14,651 13,355 • The Group distributed some $4.7b 13,868 14,145 13,089 1,686 ($3.28 per share) to shareholders in 1,258 4,728 a capital reduction exercise 12,610 12,965 9,667 977 7,131 8,690 8,361 55% 728 5,231 5,408 Increase from FY2003’s 10.0 cents 6,403 2,628 Discontinued operations (APB/APIPL) Capital distribution of $4.7b to shareholders FY03 FY06 FY09 FY12 FY13 FY03 FY06 FY09 FY12 FY13 121%3 218% Increase from FY2003’s $6,403M Increase from FY2003’s $2,628M Note: 1 FY2003, FY2006 and FY2009: As previously reported; FY2012: Restated for amendments to FRS12 and to comply with FY2013’s presentation 2 FY2003 - FY2012 includes the Group’s share of Asia Pacific Breweries Limited/Asia Pacific Investment Pte Ltd (“APB/APIPL”) results. APB/APIPL FY2012 results were presented separately as discontinued operations in the Group Financial Statements 3 Excludes discontinued operations of APB/APIPL 4 Before fair value adjustment and exceptional items 5 Based on issued shares at close of business on the first trading day after preliminary announcement of results 6 Based on post-capital distribution market capitalisation of $8,361m 06 A Legacy Built on Passion A Milestone for Celebration Profit Before Interest and Taxation Share of Profit Before By Business Segment ($M) Interest and Taxation (%) $786M $29M 3% Others & Discontinued Operations1 $187M 30% 24% Commercial Property $502M 22% $150M $379M Development Property 48% $109M 29% $9M Publishing & Printing 1% $146M $60M 8% Dairies 5% $27M 4% $19M $122M Beverages 16% $51M 10% FY2003 FY2013 FY2003 FY2013 Note: 1 Discontinued operations refer to the Group’s share of APB/APIPL results Share Price ($) LHS: Straits Times Index RHS: Fraser and Neave, Limited $4,000 $3,167 $10.00 $8.00 $3,000 $1,707 $6.00 $2,000 Nov-13 $5.80 $4.00 $1,000 $2.00 Oct-03 $2.46 $0 $0 Cumulative Total Shareholder Return (Oct 2003 - Nov 2013): 511% 600% 511% 400% 200% 0% Oct 2003 Nov 2004 Nov 2005 Nov 2006 Nov 2007 Nov 2008 Nov 2009 Nov 2010 Nov 2011 Nov 2012 Nov 2013 07 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 Corporate Profi le Our Vision To be a world-class multinational enterprise with an Asian base, providing superior returns with a focus on Food & Beverage, Properties and Publishing & Printing businesses.