Breadtalk AR 2011

THE NEXT LEAP FORWARD
BREADTALK GROUP LIMITED
2012
ANNUAL REPORT
CREATIVE RATIONALE
The Next Leap Forward With 10 successful years under its belt, BreadTalk is well poised to take on its next stage of growth. Moving forward with the times means to first take stock of the present and build on past achievements before we can look ahead to a brighter, greater future. As we look back on the momentum that we have built steadily and carefully over the years, we are certain that we have amassed the critical force we need to steer confidently ahead. Through consolidating our present means and strategically planning for the future, we move forward more prepared than ever before. With our stable of seven brands well-loved by many consumers, we look forward to the next 10 years as the next great leap for us to surmount. Heres to growing and advancing together in The Next Leap Forward, towards the future and beyond.
CONTENT
CORPORATE PROFILE
Founded in 2000, and listed on the SGX since 2003, BreadTalk transformed the face of the humble bun with innovative avours and a distinctive identity. Our endeavours to surprise and delight customers have earned us numerous awards and growing popularity among consumers. Focused on our vision of becoming an international, trendsetting lifestyle company, BreadTalk Group Limited has become a distinctive F&B brand with acclaimed bakery, restaurant and food atrium footprints. Our proprietary brands are BreadTalk, Toast Box, Food Republic, RamenPlay and The Icing Room. We also manage franchises from Taiwans Michelin Star recipient Din Tai Fung and USAs Carls Jr.
01 02 04 07 09 10 12 14 16 16 20 24 29 45 145 146
Corporate Prole Financial Highlights Chairmans Statement Board of Directors Senior Management Brand Accolades Group Structure Geographical Reach Business Review Bakery Restaurant Food Atrium Corporate Governance Financial Statement Statistics of Shareholdings Notice of Annual General Meeting
In just a decade, the Group has expanded into a network of 16 countries, including Singapore, Mainland China, Hong Kong and Indonesia. Supported by our global staff of 6000, we manage over 500 F&B outlets.
F Our signatureore losss bun has sold mobalth.an 50 million gl ly
Revenue ($ Million)
2007 2008 2009 2010 2011
Prot Before Tax ($ Million)

2007
156.6 212.2 246.5 302.9 365.9
11.2 12.0 15.6 16.7 17.1
2008 2009 2010 2011
Revenue Mix By Geographical Segment
FY2011
Rest of World 6% Mainland China 32.1% Singapore 52.3%
FINANCIAL HIGHLIGHTS
Hong Kong 9.6%
Revenue Mix By Business Segment
FY2011
Restaurant 21.0% Food Atrium 25.8% Bakery 53.2%
FINANCIAL HIGHLIGHTS
BreadTalk Group Limited & Its Subsidiaries - Group Financial Highlights
Financial Results ($000)

REVENUE OPERATING PROFIT PROFIT BEFORE TAX PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
FY2007
156,610 12,150 11,228 7,319
FY2008
212,249 13,227 12,001 7,770
FY2009
246,493 16,253 15,615 11,092
FY2010
302,888 16,564 16,688 11,266
FY2011
365,904 16,995 17,127 11,592
Financial Positions ($000)

PROPERTY, PLANT AND EQUIPMENT INVESTMENT IN ASSOCIATE / JOINT VENTURES INTANGIBLE ASSETS OTHER NON-CURRENT ASSETS CURRENT ASSETS CURRENT LIABILITIES NON-CURRENT LIABILITIES MINORITY INTERESTS SHAREHOLDERS EQUITY
FY2007
44,893 1,333 9,665 710 59,089 (62,996) (5,428) (3,170) 44,096
FY2008
58,156 422 9,205 2, 026 77,348 (82,866) (8,158) (3,623) 52,510
FY2009
64,352 284 9,097 3,890 94,462 (97,197) (8,722) (5,504) 60,662
FY2010
73,306 446 9,142 14,424 106,879 (118,254) (10,860) (6,521) 68,562
FY2011
88,898 422 9,214 15,178 148,593 (151,484) (25,353) (7,498) 77,970
Ratios
EARNINGS PER SHARE (CENTS) - BASIC(1) EARNINGS PER SHARE (CENTS) - DILUTED(1) NET ASSET PER SHARE (CENTS)(2) NET TANGIBLE ASSET PER SHARE (CENTS)(2) GEARING (TIMES)(3) RETURN ON SHAREHOLDERS FUND (%)(4)
FY2007
2.69 2.69 15.64 12.21 0.25 20.9
FY2008
2.76 2.76 18.63 15.36 0.30 16.1
FY2009
3.95 3.94 21.61 18.37 0.24 19.6
FY2010
4.01 3.99 24.37 21.12 0.26 18.0
FY2011
4.12 4.10 27.78 24.50 0.47 15.82
(1)
The basic and diluted earnings per ordinary share for FY2011 are computed based on the weighted average number of ordinary shares (excluding treasury shares) in issue during the year 281,197,676 and 282,392,002 respectively. The comparative gures for FY2007 to FY2009 have been restated taking into account the Companys bonus share issue on 30 March 2010. Net assets per share and net tangible assets per share as at end of nancial year 2011 are computed based on the share capital of 280,655,548 ordinary shares, representing shares issued and fully paid (excluding treasury shares) as at end of the year. The comparative gures for FY2007 to FY2009 have been restated taking into account the Companys bonus share issued on 30 March 2010. Gearing is computed based on total borrowings divided by total equity. Return on shareholders funds is the prot after taxation and minority interests expressed as a percentage of the average shareholders funds.
(2)
(3)
(4)
CHAIRMANS STATEMENT
2011: Promising Start to a New Decade

Despite the global uncertainty in 2011, the Group turned in a credible performance. By focusing on delivering innovative and exciting culinary experiences to our customers, we managed to deliver another year of record results to our shareholders. We nished the year with a total of 534 outlets and restaurants, an increase of 86 over the previous year, while delivering a credible double-digit growth of 20.8% in sales turnover to S$365.9 million. Excluding gain from disposal of property in FY2010, the Groups net prot attributable to shareholders for FY2011 improved by 63.1% over the previous year to S$11.6 million. In Mainland China, our Bakery outlets are found in 43 cities an increase of ve over the previous year. Capitalising on the excellent prospects for Mainland China, we have invested in a centralised frozen dough factory which was opened in Shanghai in January 2012. This is a joint venture with Japanese Ajinomoto Bakery Co., Ltd, a leading player in the eld of bakery dough products. Our Restaurant Division further added three Din Tai Fung restaurants, and notable Din Tai Fung openings included the long-awaited 7,200 sq ft outlet at Central World Mall (Bangkok), a duplex restaurant at 112 Katong shopping mall and at the iconic Marina Bay Sands. The Food Atrium Division added ve outlets, including two in Taiwan. We are the rst foreign food atrium brand to enter the highly competitive Taiwan market.
art, Right from theeastcreative we set out to infus products difference in our is as our and embraced thsophy. business philo k George Que
Our Foundation
We had a modest but auspicious beginning. Our maiden BreadTalk outlet in Bugis Junction in 2000 attracted long queues with its signature Flosss bun. Two years later, BreadTalk had expanded to 20 outlets in Singapore. It became a listed company in 2003 and its rst overseas outlet was opened in Jakarta, Indonesia the same year. Since then, the brand has grown steadily, overcoming serious challenges posed by SARS in 2003 and the 2008 global nancial crisis. The Groups ability to keep up the pounding pace of growth can be attributed to our passion for creating and delivering exciting, innovative experiences. This stems from our intent to always instill creative differentiation in the concepts that are built. More than a place to refuel for food, our outlets have become social destinations much talked about by consumers and at friendly prices.
Going Forward: The Next Decade Begins

We started our second decade with 448 outlets and restaurants spanning 13 diverse countries in Asia and the Middle East. Our target consumers are fast growing with rising purchasing power and an appetite for new food experiences. This augurs well for the Group as our team strives continuously to lead the way for exciting dining concepts. Our continued growth will come from sustained development of our proprietary brands, franchises and our nascent property investments to diversify our revenue streams. We will continue to nurture established relationships and build new ones. More than half of our bakery outlets are franchisee-operated, underscoring the importance of having the right downstream business partners to help us achieve our global expansion goals. By executing our multi-pronged strategy, I am condent that we can be a 1,000-outlet Group in two to three years, with revenue in excess of S$1 billion in ve years.
New International Headquarters

With condence in the future, we commenced construction of our lnternational Headquarters (IHQ) in Singapore. The 10-storey building, scheduled for completion in 2013, will cost approximately S$64.1 million. Betting the Groups emphasis on air and creativity, the building will stand out in the Paya Lebar iPark with its innovative design. The architectural concept takes its cue from the many delicate layers of a Danish pastry and alludes to the dynamic and multi-faceted BreadTalk Group. Our IHQ will house the Groups main ofce cum retail, Research & Development, training, logistics and central kitchen facilities, all under one roof. Bringing these diverse departments together will accelerate our ability to create fresh culinary delights, fast-track them through production and to the outlets. The BreadTalk Group Training Academy will standardise preparation and delivery, and will also train overseas franchise staff to support our expansion plans. The Central Kitchen will cater to the Groups operations in Southeast Asia. An enhanced R&D facility will continue to focus on creating trendsetting and alluring concepts and products to ensure the Groups international competitiveness.
will forge BreadTalk Groups IHQ ity. With co an exciting creativeels mmun 2, it will be a an L retail concepts onhuevfor1Payda Lebars destination b essionals. ofce prof
Property Investments
Our pioneering property investment via a stake in the new 112 Katong Shopping Mall has begun to yield results. With its strategic location in the heart of Katong, the mall has quickly gained a solid following from residents of District 15. Besides looking forward to a good return on our investment, we have secured vantage locations for our brands at the mall, strategically fronting the mall with strong presence of our concepts. In recognition of our track record in conceptualisation and design development, as well as our extensive experience in F&B operations, we have been invited to participate in the revamping of the heritage CHIJMES site into a vibrant F&B destination for locals and tourists in the heart of downtown Singapore. Going forward, the Group will carefully evaluate investment opportunities that are strategic to upstream integration along the retail supply chain.
Managing for Rapid Growth

The Group has further strengthened our management bench with the hiring of our new CFO, Mr Lawrence Yeo. He comes with more than 20 years of experience, including 10 years in Group CFO capacities in SGX-listed companies in the retail and F&B sectors. Our ambitious growth plans require us to open a dozen new outlets every month. But unlike making more buns, adding more territories, outlets and restaurants, the formula for growth requires more complex recipes. We have to evolve a multi-dimensional approach customised to the nature of the brand and product, the ownership structure, the country and even province concerned; the peculiarities of each site and the ability to exploit economies of scale among others. We are fortunate to have dedicated and experienced professionals within our team; and partners such as franchisees and property developers who work with us to see to the sustainable expansion of our network. The biggest challenge facing us in the immediate future continues to be ination and rising costs. Over the years, BreadTalk has successfully controlled our operational costs with a robust procurement system, and by paying close attention to raising productivity and cutting wastage. It is only possible if we take a conscientious approach towards how we operate our business. Our operating models will need to evolve to be complementary to the business climates that we face.
Dividend
The Board of Directors has proposed an ordinary dividend of 1.0 cents per share and a special dividend of 0.5 cents per share, subject to shareholders approval at the AGM.
In Appreciation
We have grown from a company with just a handful of staff to a Group with a global staff strength of 6000 running over 500 outlets in 11 years. This enormous achievement calls for the dedication of many. I am grateful to our directors, management, staff, business partners, and shareholders for sharing in our vision. Their unstinting support is the key ingredient in our success and with their continued partnership, we will continue to make our mark.
George Quek
Chairman
BOARD OF DIRECTORS
LEFT TO RIGHT: Tan Khee Giap Katherine Lee Lih Leng George Quek Meng Tong Ong Kian Min Chan Soo Sen
George Quek Meng Tong

Chairman George, founder of the Group, was appointed to the Board on 6 March 2003 and last re-elected on 27 April 2010. Having led and grown the Company to its current empire, George continues to drive our strategic direction and development into the future. George started his food and beverage business in Taiwan in 1982, successfully growing it into a chain of 21 Southeast Asian food outlets within a mere decade. Returning to Singapore in 1992, he then founded Topwin Singapore and subsequently Megabite China in 1996, establishing the food court businesses. In 2000, he started the bakery business with BreadTalk Pte Ltd and eventually brought it to list on the SGX in 2003 while creating a household name. George is a Brand Champion who has positioned the companys brand portfolio into innovative concepts now widely accepted in Asia and throughout the world. His keen interest in the arts, creative talent and acute sense of anticipating consumer demands have led the BreadTalk Group to always position itself as an inspiring company that delights consumers time and again. George holds a Doctorate in Business Administration (Honorary) from Wisconsin International University, USA. Amongst other awards, he won the Ernst & Young Entrepreneur of the Year 2006 (Emerging Entrepreneur Category) and the Entrepreneur of the Year Award 2002 organised by the Assocation of Small and Medium Entreprises and The Rotary Club of Singapore.
Katherine Lee Lih Leng

Deputy Chairman Katherine was appointed to the Board on 6 March 2003 and last re-elected on 26 April 2011. She oversees the Groups research and development, as well as pioneers new ideas and concepts. Responsible for concept creation, product development and enhancement of our various brands both locally and globally, Katherine also formulates product training and technical skill upgrade programmes to ensure proper transfer of knowledge and skills to our franchisees in line with our local operations so as to sustain product quality. In addition, Katherine spearheads product costing, which is an integral part of our product strategy. Katherine has more than 15 years of experience in the industry. She was previously the Finance Director of Topwin Singapore prior to which she was in charge of the human resource and operations of more than 20 food and beverage outlets in Taiwan.
Dr Tan Khee Giap

Independent Director Khee Giap was appointed to the Board on 26 April 2011. He is a member of the Audit Committee. Khee Giap is currently Co-Director of Asia Competitiveness Institute and an Associate Professor of Public Policy at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is also the Chair of Singapore National Committee for Pacic Economic Cooperation. He holds directorships in a few listed companies in Singapore. Khee Giap graduated with a Ph.D from the University of East Anglia in 1987. He has consulted extensively with various government ministries, statutory boards and government-linked companies of the Singapore government. Khee Giap has served as a member of the Resource Panel of the Government Parliamentary Committee for Transport and Government Parliamentary Committee for Finance and Trade since 2007.
Ong Kian Min

Independent Director Kian Min was appointed to the Board on 30 April 2003 and last re-elected on 27 April 2010. He is the Lead Independent Director, Chairman of the Audit Committee and Nominating Committee, and member of the Remuneration Committee of the Company. He was called to the Bar of England and Wales in 1988 and to the Singapore Bar the following year. In his 22 years of legal practice, he focused on corporate and commercial law, such as, mergers and acquisitions, joint ventures, and restructuring and corporate nance. In addition to practising as a consultant with Drew & Napier LLC, a leading Singapore law rm, he is a senior adviser of Alpha Advisory Pte. Ltd. (a corporate advisory rm) and CEO of Kanesaka Sushi Private Limited, which owns and operates Japanese ne-dining restaurants in the region. He is also non-executive chairman of Hupsteel Ltd and serves as non-executive director of several other Singapore-listed companies. Kian Min was awarded the Presidents Scholarship and Police Force Scholarship in 1979. He holds a Bachelor of Laws (Honours) external degree from the University of London and a Bachelor of Science (Honours) Degree from the Imperial College of Science and Technology in England. He was a Member of Parliament of Singapore from January 1997 to April 2011.
Chan Soo Sen

Independent Director Soo Sen was appointed to the Board on 14 August 2006 and last re-elected 26 April 2011. He is the Chairman of the Remuneration Committee, as well as member of the Audit Committee and Nominating Committee of the Company. Soo Sen was a Member of Parliament for Joo Chiat Constituency from 1997 to 2011. He was a Minister of State and had served in several ministries including the Ministry of Community Development, Youth and Sports, Ministry of Education, and Ministry of Trade and Industry. Before entering politics, he was involved in the starting up of the China-Singapore Suzhou Industrial Park as its founding Chief Executive Ofcer in 1994, laying the foundation and framework for infrastructure and utilities development for the industrial park. He holds a Master in Management Science from the University of Stanford, USA. After leaving public service in 2006, Mr Chan joined Keppel Corporation Ltd as Director, Chairmans Ofce. In 2009, he joined Singbridge International Singapore Pte Ltd, a company fully owned by Temasek Holdings to undertake major international projects, as Executive Vice President. Mr Chan is now advising a few investment companies on their China Projects. He is also an Independent Director in a few listed companies.
SENIOR MANAGEMENT
Oh Eng Lock
Group Chief Executive Ofcer Eng Lock was appointed Group CEO on 1 January 2011. As Group CEO, he oversees the Groups global operations, focusing on strategic planning and business development. Eng Lock has a keen grasp on the Groups business operations, since joining the company on 1 June 2010 as Group Managing Director. Prior to his appointment as CEO, Eng Lock was Regional Managing Director with Merrill Lynch Asia Pacic Ltd. in Hong Kong, overseeing their North Asia businesses. He has also garnered vast senior executive and management experience at DBS Bank and United Overseas Bank growing their regional franchises in Taiwan, China and the USA. Eng Lock holds a Bachelor of Arts degree from the University of Singapore.
Henry Chu Heng Hwee

CEO - Bakery Division
BreadTalk Toast
Box Jr. The Icing Room Bread Society

Carls
Jenson Ong Chin Hock

CEO - Food Atrium Division
Food
Republic
Cheng William
CEO - Restaurant Division
Din
Tai Fung
RamenPlay
Frankie Quek Swee Heng

CEO - China Region
James Quek Seng Hwa

CEO - Asean Region
Lawrence Yeo
Group Chief Financial Ofcer Lawrence assumed duties as Group Chief Financial Ofcer on 10 October 2011. He has more than 20 years of nancial management experience in various roles and capacities including more than 10 years as Group CFO of SGX-listed companies. With his extensive nancial expertise and handson experience in retail operations, he will add depth to BreadTalks management bench. Mr Yeo holds an MBA from the University of Strathclyde and a Bachelor of Accountancy degree from the National University of Singapore. He is also a FCPA of the Institute of Certied Public Accountants of Singapore and a member of Singapore Institute of Directors.
Goh Tong Pak

President - Chairmans Ofce Special Projects
BRAND ACCOLADES
BreadTalk Group Limited

Sales/Turnover Growth Excellence (Hospitality/Food & Beverage) Award 2009/2010
BreadTalk & Food Republic

Listed by Brand Finance as one of Top 100 Brands in Singapore, 2010
BreadTalk
Finalist, World Retail Awards 2009 Emerging Market Retailer of the Year Category
BreadTalk Five Star Diamond Brand Award 2006

Five Star Diamond Brand Shanghai, PRC
Our consistent and dedicated efforts to brand management have placed our brands on both local and international platforms.
BreadTalk Regional Brand Award 2006

Singapore Promising Brand Award Association of Small and Medium Enterprises (ASME) and Lianhe Zaobao
BreadTalk
Overall Winner, Regional Brands Category Winner, Most Popular Brand, Singapore Prestige Brand Award 2011
BreadTalk Most Promising Brand 2002 To 2005

Most Popular Brand 2002/2005 Most Distinctive Brand 2003 to 2005 Silver Award 2004 Gold Award 2005 Singapore Promising Brand Award - ASME and Lianhe Zaobao
BreadTalk Design for Asia Award 2004

Hong Kong Design Centre
10
BreadTalk Finalist Franchisor Of The Year Award 2005

Franchising and Licensing Association of Singapore (FLA)
BreadTalk Superbrand Status

Singapore version 2002/2003 Singapore Superbrands Council
BreadTalk Ranked Number 1

Enterprise 50 Start Up Award 2002 Accenture and The Business Times
Food Republic
Overall Winner, Promising Brands Category Singapore Prestige Brand Award 2008
BreadTalk Group Limited Most Transparent

Company Award (SIAS) 2004 and 2005 - Sesdaq Category Runner-Up 2007 - Sesdaq Category Winner 2008 - Catalist Category Runner-Up 2011 - Mainboard award, Runner up
Toast Box
Overall Winner, Promising Brands Category Singapore Prestige Brand Award 2009
George Quek
Entrepreneur of the Year 2002 ASME and The Rotary Club
George Quek
Entrepreneur of the Year 2006 Emerging Entrepreneur Category Ernst & Young
11
BreadTalk Group Ltd

100% 100%
100%
100%
Imagine Properties Pte Ltd
BreadTalk Pte Ltd
Together Inc. Pte Ltd
BreadTalk International Pte Ltd
70%
Taster Food Pte Ltd
Ramen Play Pte Ltd
100%
60%
Shanghai BreadTalk Co. Ltd
90%
BREADTALK GROUP LIMITED SUBSIDIARIES
Taster Food International Pte Ltd
30% 100%
Group Structure As At 31 December 2011
49%
Taster Food (Thailand) Co. Limited
Shanghai BreadTalk Gourmet Co. Ltd
100% 75%
Charcoal Pte Ltd
Beijing BreadTalk Restaurant Management Co. Ltd
100%
Beijing BreadTalk Co. Ltd
49%
BreadTalk (Thailand) Company Limited
90%
ML BreadWorks Sdn Bhd
25%
Hong Kong BreadTalk Ltd
12
100%
60%
100%
Shanghai Star Food F&B Management Co., Ltd
Topwin Investment Holding Pte Ltd
Star Food Pte Ltd Beijing Star Food F&B Management Co., Ltd
100%
Food Republic (Shanghai) Co., Ltd
100%
Chongqing Food Republic Food & Beverage Co., Ltd Shanghai Hong Bu Rang Food & Beverage Management Co., Ltd Food Republic Hangzhou F&B Co., Ltd
100%
30%
Shanghai Ramen Play Co., Ltd
50%
100%
85%
Beijing Da Shi Dai Food & Beverage Co., Ltd
100% 100%
BreadTalk Concept Hong Kong Limited
Megabite Hong Kong Limited
75%
Food Republic Guangzhou F&B Management Co. Ltd
100%
Food Republic Shenzhen F&B Management Co.,Ltd
100%
Food Republic Pte Ltd
Food Art Pte Ltd
100%
50%
Street Food Pte Ltd
100%
Megabite (S) Pte Ltd
MWA Pte Ltd
100% 100%
Megabite Eatery (M) Sdn Bhd
90%
Food Republic Taiwan Co., Ltd
49%
FR (Thailand) Co., Ltd
50%
Apex Excellent Sdn Bhd
30%
Out Of The Box Pte Ltd
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Peoples Republic of China
GEOGRAPHICAL REACH
Bakery
Food Atrium
Restaurant
Kuwait Jordan Bahrain Oman
Number of Outlets Worldwide

Bakery PRC 230 Indonesia 79 Singapore 81 Philippines 21 Malaysia 9 Hong Kong 12 India 8 Jordan 1 Kuwait 5 Thailand 14 Korea 2 Bahrain 3 Oman 1 Vietnam 5 Food Atrium PRC 21 Singapore 7 Taiwan 2 Malaysia 2 Hong Kong 5 Restaurant Singapore 17 PRC 8 Thailand 1
43 Cities in PRC
(excluding Hong Kong)
Beijing Changsha Changzhou Chengdu Chongqing Dalian Fuzhou Guangzhou Guiyang Hangzhou Harbin Hefei Huzhou Jiaxin Jinan Jinhua Kunming Nanjing Nantong Ningbo Quanzhou Shanghai Shaoxing Shenyang Shenzhen Shijiazhuang Suzhou TaiYuan Taizhou ( Taizhou ( Tianjin Urumuqi Wenzhou Wuhan Wuxi Xiamen Xian Xuzhou Yancheng Yangzhou Zhengzhou Zhenjiang Zhuzhou )
Spread across 16 countries in Asia and the Middle East, the BreadTalk Groups creative concepts engage and excite consumers.
14
Korea
Thailand India
Hong Kong
Taiwan
Philippines Vietnam Malaysia
Singapore
Indonesia
15
BUSINESS REVIEW BAKERY
Financial Performance
In 2011, the Bakery Division opened 76 new outlets bringing the total number of outlets to 471: 24 outlets are owned and 52 are franchised. This contributed 53.2% to overall Group revenue, recording 23.0% growth to S$194.4 million. Excluding gain from disposal of property in 2010, operating prot rose by 73.0 % to S$8.6 million. The prot growth was mainly attributed to higher prot contribution from Singapore and Mainland China bakery units on the back of higher revenue as well as smaller losses from the Malaysia bakery unit.
BreadTalks innovative product team launched an exciting Mid-Autumn collection to suit the premium Mainland Chinese market.
4.4% 53.2% 471
On the Ground
Our Bakery Division continued to grow from strength to strength, especially in our key markets of Singapore, Mainland China and Hong Kong. As of end 2011, we have a total of 471 bakery outlets, an increase of 76 over the previous year. We expanded into Jordan in 2011, bringing the total number of countries with our presence to 16. To grow more rapidly, we have aggressively pushed the BreadTalk Transit concept which was rst introduced in Singapore in 2010. With smaller footprints than the regular outlets, we are able to access new locations like educational institutions, transit access points and other non-mall areas with high trafc count. Implementation lead times are much shorter and fewer skilled workers are needed per outlet. Results have been encouraging and we have already rolled this concept out to Mainland China and Hong Kong.
Operation Margin for FY11
Contribution to FY11 revenue
Outlets as of 31 Dec 2011
S re in Transit actoss s BireadTalk easy rs,ceofferito Thi ngha promotes icke ng Sha ucts for busy city slfavourites for od ety of bakery pr ri a va ers on the go. custom
16
In Mainland China, our Bakery outlets are found in 43 cities, an increase of eleven. We added ve more cities to our network in 2011, namely Zheng Zhou, Tai Yuan, Ji Nan, Yan Cheng and Tian Jin. To meet demands of our increasing outlets, together with Ajinomoto Bakery Co., Ltd of Japan, a joint venture Frozen Dough Factory - AB Pan was set up in Shanghai to supply frozen dough to fulll the capacity of 200 outlets in Mainland China. This move has created many operational advantages such as improved consistency and quality of products, and reduced equipment needs per store, improving the outlets productivity. Toast Box, now in seven countries, continues to develop and grow and can be found in Singapores most prestigious locations like Resorts World Sentosa and Marina Bay Sands. The Toast Box concept is that of a comfortable, modern rustic environment, offering simple but appealing Asian dishes with Nanyang Kopi and thick toasts as our signatures. In 2011, we successfully introduced this Southeast Asian concept to Taiwan via our Food Republic atrium in Taipei.
A Pan Frozen Dough Factory supplies top quality B dough products to 200 stores in Mainland China.
BAKERY
ues to now en bentries, contin Toast Box,growin sevcancou found in Singapores ntosa develop and ous and ions like Resorts World Se loc most prestigi Bay at nds. and Marina Sa
Our signature Nanya ng Kopi is a among thehotfavourite of ce crowd.

17
BUSINESS REVIEW BAKERY
The Icing Room is a highly participative and engaging concept offering aspiring chefs Design-It-Yourself (DIY) cake personalisation services and a beautiful selection of pastry delights. With dcor accessories and colourful icing provided, customers enjoy expressing their creativity for a one-of-a-kind creation that unequivocally conveys their love to someone special. To engage the young and foster family bonding, we also conduct weekly TIR Junior Chef Workshops, inculcating design and creative fun in our young customers. The Icing Room has grown to six outlets in Singapore and has a strong fan base among its target audience. We plan to bring this concept to Shanghai in 2012, together with our niche bakery brand, Bread Society. Bread Society is designed to offer artisanal European-inspired breads, mixed and baked on site, to ensure the freshest and best premium taste experience possible. Recipes are grounded on back-to-basics goodness. This is ensured by having the whole process of bread making done on site and helmed by our highly experienced Japanese head chef. Our rst outlet is in Singapores iconic ION Orchard. As this is a niche brand concept, we will be selective about expanding this brand only to major cities.
ect m ovides the perf The Icing Rrooexerprsing ones culinary platform fothrougci its unique DIY creativitypersonalhisation service. cake
ead ty is an artisanal br read Societhat emphasizes the B ept conc cs good ss of premium ck-to-basiingrediene s. ba nt
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The Next Leap Forward

Through relentless innovation and incisive strategic initiatives, the Group has built world-class brands that are acclaimed as trendsetters in the local and international F&B industry. While we wish to aggressively add sites and expand to more countries, we are mindful that we must do so purposefully, with the right discipline and preparation. To support the guiding vision of our Chairman, our management team must be inspired to think out of the box, to challenge the status quo and be empowered to act. Teamwork, good morale and sharing of best practices are essential. To achieve these, we practise close and constant communications all round. Two examples are our Bakery CEO Forum and our Franchisee Forum whereby leaders and owners gather to share the best practices developed for each market as well as to strengthen the team spirit. We are always mindful of rising costs, be they rental, raw materials or manpower, and will spare no effort to improve efciency and productivity. Productivity improvement must come from working smarter. Thus, strategic initiatives like our frozen dough factory joint venture in Shanghai is expected to provide greater efciency throughout for Mainland China outlets, with better staff productivity.
the platform for the sharing ranchisee Forum providesthe BreadTalkbrand. Our Annual F en partners operating of ideas betwe
cities in Spread across 43dTalkdelights land China, Brea consumers with Main Ch upwardly mobileceptineseres in strategic ative con stoons. its cre mall locati
19
BUSINESS REVIEW RESTAURANT
Din T F Tai Fu South East Asia atngs rst duplex in apore. 112 Katong, Sing
Revenue from the restaurant segment rose strongly by 36.8% to S$77.0 million. Due to a strong performance in the 4th quarter, operating prot for the year also grew by 38.0% to S$3.9 million. Contributing to this creditable performance was the rst Din Tai Fung restaurant in Bangkok, higher prot contribution from Din Tai Fung operations in Singapore and smaller losses from RamenPlay outlets in Mainland China and Singapore and Carls Jr. in Mainland China.
5% 21% 26
Our signature Xiao Long Bao is a classic favourite among discerning connoisseurs.
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Din Tai Fungs rst outlet in Bangkok.

On the Ground
Din Tai Fung, awarded one Michelin Star and ranked as one of the worlds Top Ten Best Restaurants by The New York Times, has its roots dating back to Taiwan close to 40 years ago. We have the franchise rights for this celebrated brand for Singapore and Thailand. Our rst Din Tai Fung restaurant in Thailand opened in May with a lot of fanfare. This is a 7,200 sq ft outlet at Central World Mall. The opening party was prominently featured across all main media as Bangkoks Whos Who turned up in droves. The response has been so overwhelming that the outlet is already protable. This has encouraged us to step up our expansion plans for Thailand. We also opened our rst duplex level Din Tai Fung at the newly opened 112 Katong Mall, fronting the mall faade with strong street level visibility. Its world-renowned reputation is further cemented with its presence at the iconic Marina Bay Sands property, serving an international clientele. The teams dedication to deliver an exciting culinary experience sees close collaboration with our Taiwanese principal, serving up new dishes frequently, to the delight of its loyal customers.
Mr George Quek & Mr Yang Ji-Hua, owner of Din Tai Fung Taiwan at the restaurants Grand Opening celebrations in Thailand.
Entering the iconic Marina Bay Sands location d cements Din Tai Fung as a worl class brand name with its enduring appeal to discerning diners.
21
BUSINESS REVIEW RESTAURANT
RamenPlay is a collaboration with Japans Sanpou Co., Ltd which has had decades of experience in the Japanese F&B industry. At RamenPlay, we offer authentic Japanese ramen delights, with premium ingredients in an upbeat and lively setting at our eight outlets in Singapore and Shanghai. Our Japanese chefs push the creative envelope to create new avours and concepts to enhance customers dining experience. With this innovative culture, we introduced 40 new menu items to draw in a younger clientele with a wider range of Japanese dishes while retaining our focus on ramen and rice dishes.
thentic w menu featuring au n extensivedneramen, premium Nigataosrice A sage fo hand masand delectable side dishes e!r th e dishes who love Japanese cuisin
22
Carls Jr. at Metro City, Xujiahui, Shanghai

Having secured the rights to selected cities in Mainland China, the positioning of Carls Jr. as a premium fast food brand has been well received by young working adults who relish the sumptuous taste of charbroiled burgers. Its positioning as a lifestyle brand has been one of exciting product and promotional initiatives that drive young consumers to our stores.

We will stay focused on creating and delivering fresh, innovative experiences and great taste in food. We will continually refresh our restaurants to keep pace with todays afuent consumers and their demanding lifestyles while offering meals that remain friendly to the pockets.
23
BUSINESS REVIEW FOOD ATRIUM
Two outlets were opened consecutively in Taiwan in December 2011. The nostalgic 1950s style old Taiwanese food streets have redened the arena of the competitive food court scene.
4.9% 25.8% 37
The Food Atrium Division continued to grow, adding ve new outlets. Revenue from our food atrium rose S$6.0 million or 6.8% to S$94.5 million. Operating prot rose 6.5% to S$4.7 million mainly contributed by higher prot from Mainland China and Singapore, offset by the start-up costs incurred in new outlets in Guangzhou, Taiwan and Thailand.
24
Food Republic 112 Katong presents the theme of a Professional Chefs Kitchen. This outlet draws its inspiration from the rich Peranakan culture of Katong and reinforces the culinary heritage of the location with its strong lineup of well-known hawkers. On the Ground
The unique positioning of Food Republic with its thematic concepts and strong network of Asian and local food partners give us the exceptional advantage to win over property owners. Food Republic brings its exciting concepts to property developers, establishing the mall as a strong destination point. We opened two outlets in Taiwan in December 2011 in Taipei and Taizhong. As the rst international food atrium player invited to enter Taiwan, we redened the concept of a food court. The two food atriums have been set up beautifully, taking customers back to the 1940s and 50s of Taiwans food streets with original memorabilia and heritage local street eats (famous Taiwanese Xiao Chi), creating a unique mood and ambience which has never been seen previously in Taiwanese food courts. Results have been excellent. In Mainland China, DaShiDai ( ) is a forerunner since 1997. As the country is geographically vast and diverse, it portends great opportunities for us to hone unique concepts that complement the different cities which have fast improving purchasing power. We set up in the rst outlet in Guangzhou at KK Mall at Taikoo Hui.
25
BUSINESS REVIEW FOOD ATRIUM
epub i KK Mallll he Th Food Ru hobllics delectable GuangZhofromstall over China. local delights
In Hong Kong, the renovation at City Plaza - Taikoo Sing, themed A Touch of Luxury, has been very well received by our target customers. Incorporating art sculptures juxtaposed with elegant furniture classics, this revamp to Hong Kongs very rst outlet lends a refreshing feel to the upmarket mall. We will stay focused on targeting discerning consumers and meeting their lifestyle aspirations. Our strategy of developing unique and creative themes for our food atrium, in addition to distinctive, affordable quality and heartwarming food, are key differentiators for the Food Republic brand.
The newly-refurbished Food Republic City Plaza at Hong Kongs Taikoo Sing brings a Touch of Luxury to working professionals who enjoy local delights set in a restaurant ambience.
26
Dine under the stars at St. James Beer Garden. Enjoy great local food and down a refreshing beer!

As a Group, BreadTalk has forged strong relationships with landlords. Food Republic is a major tenant that enjoys signicant pull and negotiating muscle when sourcing for premier space in strategic locations. It is also a lead brand that allows for the other brands to be discussed in tandem during real estate negotiations. This is highly advantageous to our Group as we continuously look out for premier locations which present strong opportunities for our family of brands. Asia will continue to be a strong region for Food Republics expansion. New markets such as Taiwan and Thailand will be key considerations in 2012. In Mainland China, Hong Kong, Malaysia and Singapore, we will continuously forge our base for stronger market penetration, to bolster our brand presence.
Food Republics strong network of Asias top hawker brands is our competitive advantage as we bring great street eats ( ) to excite consumers tastebuds across different countries.
27
Board of Directors
Company Secretary
Tan Cher Liang
Principal Bankers
DBS
CORPORATE INFORMATION
George Quek Meng Tong

Chairman
Katherine Lee Lih Leng

Deputy Chairman
Registered Ofce
171 Kampong Ampat #05-05 KA FoodLink Singapore 368330 Tel: (65) 6285 6116 Fax: (65) 6285 1661
Ong Kian Min

Independent Director
Bank Limited Bank Malayan Banking Berhad Overseas-Chinese Banking Corporation Limited Standard Chartered Bank United Overseas Bank Limited
HSBC
Investor Relations
Spin Capital Asia 22 Malacca Street #11-03 Royal Brothers Building Singapore 048980 Tel: [65] 6 227 7790 Michael Tan Email: michael@spin.com.sg
Tan Khee Giap

Share Registrar
Boardroom Corporate & Advisory Services Private Limited 50 Rafes Place #32-01 Singapore Land Tower Singapore 048623
Chan Soo Sen

Auditors
Ernst & Young LLP Public Accountants and Certied Public Accountants One Rafes Quay North Tower Level 18 Singapore 048583 Partner-in-Charge: Ang Chuen Beng (appointed since nancial year ended 31 December 2011)
28
CORPORATE GOVERNANCE
This report sets out BreadTalk Group Limiteds corporate governance processes and structures that were in place throughout the nancial year ended 31 December 2011, with specic reference made to the principles and guidelines of the Code and the Best Practice Guide issued by the Singapore Exchange Securities Trading Limited (the SGX-ST). The Board of Directors (the Board) is pleased to conrm that for the nancial year ended 31 December 2011, the Company has generally adhered to the framework as outlined in the Singapore Code of Corporate Governance 2005 (the Code) and the amendments to the listing manual which came into effect on 29 September 2011 as announced by SGX-ST to strengthen corporate governance practices and foster greater corporate governance disclosure, where it is applicable and practical to the Company. Where there are deviations from the Code, the reasons for which deviation are explained accordingly.
A. BOARD MATTERS Boards Conduct of its Affairs

Principle 1: Every company should be headed by an effective board to lead and control the company. The board is collectively responsible for the success of the company. The board works with management to achieve this and the management remains accountable to the board. The primary function of the Board is to protect and enhance long-term value and returns for its Shareholders. Besides carrying out its statutory responsibilities, the Boards roles include:1. 2. 3. Providing entrepreneurial leadership, set strategic directions and overall corporate policies of the Group; Supervising and monitoring the performance of the management team; Ensuring the adequacy of internal controls, risk management and periodic reviews of the Groups nancial performance and compliance; Setting the Companys values and standards, ensuring that the necessary human resources are in place; Approving annual budget, major investments and divestment proposals; Assuming responsibility for good corporate governance practices; and Approving corporate or nancial restructuring, share issuance, dividends and other returns to Shareholders, Interested Person Transactions of a material nature and release of the Groups results for the rst 3 quarters and full year results.
Guideline 1.1 of the Code: The Boards role
4. 5. 6. 7.
29
To assist in the execution of its responsibilities, the Board has established three (3) Board committees, namely the Audit Committee (AC), Nominating Committee (NC) and Remuneration Committee (RC), to which the Board has delegated decisions on certain Board matters to the specialised Board committees. The Board met four (4) times during the nancial year to discuss the key activities and business strategies of the Group. All Directors were furnished with relevant information beforehand in order to enable them to obtain further explanation where necessary, and be adequately briefed prior to the respective meetings. Minutes of the meetings are also available to the respective Board members. Ad-hoc and non-scheduled meetings are convened by Board members to deliberate on urgent and substantive matters. The Companys Articles of Association provides for telephone, videoconferencing, audio-visual or other electronic means of communication to facilitate meetings of the Board. Details of Directors attendance at Board and Board Committee meetings held during the nancial year ended 31 December 2011 is summarised as follows:
Guideline 1.3 of the Code: Disclosure on delegation of authority by Board to Board Committees Guideline 1.4 of the Code: Board to meet regularly
ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS

Name of Director Number of Meetings Board 4 Audit Committee 4 Nominating Committee 1 Remuneration Committee 1
Attendance
George Quek Meng Tong Katherine Lee Lih Leng Ong Kian Min Chan Soo Sen Tan Khee Giap 4 4 4 3 3 NA NA 4 3 3 NA NA 1 NA NA 1 1 1
Matters that are specically reserved to the Board for approval are: (a) matters involving a conict of interest for a substantial Shareholder or Director; (b) material acquisitions and disposal of assets; (c) corporate or nancial restructuring; (d) share issuances, dividends and other returns to Shareholders; (e) matters which require Board approval as specied in the Companys Interested Person Transactions policy; and (f) substantial expenditures exceeding a prescribed limit.
Guideline 1.5 of the Code: Matters requiring Board approval
30
All Directors are appointed to the Board by way of a formal letter of appointment indicating the amount of time commitment required and scope of duties. The Company provides a comprehensive orientation programme to familiarise new Directors with the Companys businesses and governance practices, as well as the Groups history, core values, strategic direction and industry-specic knowledge so as to assimilate them into their new roles. Directors also have the opportunity of visiting the Groups operational facilities and meet with the management team to gain a better understanding of the Groups business operations. Each Director is provided with an annually updated manual containing Board and Company policies relating to the disclosure of interests in securities and conicts of interests in transactions involving the Company, prohibition on dealings in the Companys securities, as well as restrictions on the disclosure of price sensitive information. Board members are encouraged to attend seminars and receive training to improve themselves in the discharge of their duties as Directors. In addition, the Company works closely with professionals to provide Directors with updates on risk management and key changes to relevant regulatory requirements and accounting standards.
Guideline 1.7 of the Code: Formal appointment letter Guidelines 1.6 and 1.8 of the Code: Directors to receive appropriate training
Board Composition and Guidance

Principle 2: There should be a strong and independent element on the board, which is able to exercise objective Judgement on corporate affairs independently, in particular, from management. No individual or small group of individuals should be allowed to dominate the boards decisionmaking. The Board comprises ve (5) members with majority of independent Directors: three (3) Independent non-executive Directors and two (2) Executive Directors. They are as follows: Dr George Quek Meng Tong (Chairman) Ms Katherine Lee Lih Leng (Deputy Chairman) Mr Ong Kian Min (Lead Independent Non-Executive Director) Mr Chan Soo Sen (Independent Non-Executive Director) Dr Tan Khee Giap (Independent Non-Executive Director) The Board has three (3) Independent Directors whose independence is reviewed by the NC annually. The NC considers an independent Director as one who has no relationship with the Company, its related companies or its ofcers that could interfere or be reasonably perceived to interfere, with the exercise of the Directors independent judgement of the conduct of the Groups affairs, and is not a substantial Shareholder, or a partner (with 5% or more stake) or an executive ofcer, or a director of any for prot business organisation to which the Company or any of its subsidiaries has made or received signicant payments (aggregated in excess of S$200,000 per year) in the current or immediate past nancial year. Moreover, the Chairman of the NC is not associated, directly or indirectly, with a substantial Shareholder to enhance an independent view to the best interests of the Company. As a result of the NCs review for nancial year ended 31 December 2011, the NC is of the view that the Independent Directors are independent of the Companys management as contemplated by the Code.
Guideline 2.1 of the Code: Independence of Board
Guideline 2.2 of the Code: Independent Directors
31
The Board, in view of the nature and scope of business operations, considers that though small, the present Board size and composition facilitate efcient and effective decision-making with a strong independent element. Each Director has been appointed on the strength of his calibre, experience, grasp of corporate strategy and potential to contribute to the Company and its businesses. As each of the Directors brings valuable insights from different perspectives vital to the strategic interests of the Company, the Board considers that the Directors possess the necessary competencies to provide Management with a diverse and objective perspective on issues so as to lead and govern the Company effectively.
Guideline 2.3 of the Code: Appropriate Board size
Guideline 2.4 of the Code: Board to comprise Directors with core competencies
32
Once a year, a formal session is arranged for the Non-Executive Directors (NEDs) to meet without the presence of Management or executive Directors to discuss any matters that must be raised privately. The session is chaired by Mr Ong Kian Min, the Lead Independent Non-Executive Director, who is also the chairman of the AC and NC.
Guidelines 2.5 and 2.6 of the Code: Role of NEDs and regular meetings of NEDs
Chairman and Chief Executive Ofcer

Principle 3: There should be a clear division of responsibilities at the top of the company the working of the board and the executive responsibility of the companys business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The Company adopts a dual leadership structure whereby the positions of chairman and chief executive ofcer are separated. There is a clear division of responsibilities between the Companys executive Chairman and Group Chief Executive Ofcer, which provides a balance of power and authority. As Chairman, Dr George Quek Meng Tong is responsible for ensuring Board effectiveness and conduct, as well as strategic development of the Group in addition to which, he shall assume duties and responsibilities as may be required from time to time. The Group Chief Executive Ofcer, Mr Oh Eng Lock has overall responsibility of the Groups operations, organisational effectiveness and implementation of Board policies and decisions. Notwithstanding the above, the Non-Executive and Independent Directors fulll a pivotal role in corporate accountability. Their presence is particularly important as they provide unbiased and independent views, advice and judgement to take care of the interests, not only of the Company but also of Shareholders, employees, customers, suppliers and the many communities in which the Company conducts business with. The Board had on 14 August 2006 appointed Mr Ong Kian Min as the Lead Independent Non-Executive Director to act as an additional channel available to Shareholders.
Guideline 3.1 of the Code: Chairman and chief executive ofcer should be separate persons Guideline 3.2 of the Code: Chairmans role
Guideline 3.3 of the Code: Appointment of Lead Independent Director
Board Membership and Board Performance

Principle 4: There should be a formal and transparent process for the appointment of new directors to the board. As a principle of good corporate governance, all directors should be required to submit themselves for re-nomination and re-election at regular intervals. Principle 5: There should be a formal assessment of the effectiveness of the board as a whole and the contribution by each director to the effectiveness of the board. The NC comprises the three (3) Independent non-executive Directors who have been tasked with the authority and responsibility to devise an appropriate process to review and evaluate the performance of the Board as a whole as well as each individual Director on the Board. The chairman of the NC is an Independent non-executive Director, and is not a substantial Shareholder or directly associated with a substantial Shareholder. The composition of the NC is as follows: Mr Ong Kian Min Chairman Mr Chan Soo Sen Member Dr Tan Khee Giap Member At least one-third (1/3) of the Board shall retire from ofce by rotation and be subject to re-election at every Company annual general meeting, and the primary responsibilities of the NC are:
Guidelines 4.2 to 4.6 of the Code: Duties of the NC Guideline 4.1 of the Code: NC composition
33
1. To make recommendations to the Board on the appointment of new Executive and Non-Executive Directors, including making recommendations on the composition of the Board generally and the balance between Executive and Non-Executive Directors appointed to the Board, as well as ensuring there are procedures in place for the selection and appointment of NEDs. 2. To regularly review the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary. 3. To be responsible for assessing nominees or candidates for appointment or election to the Board, determining whether or not such nominees have the requisite qualications and whether or not they are independent. 4. To make plans for succession, in particular for the Chairman, Group Chief Executive Ofcer and other key executives. 5. To determine, on an annual basis, if a Director is independent. If the NC determines that a Director, who has one or more of the relationships mentioned under the Code is in fact independent, the NC would disclose in full, the nature of the Directors relationship and bear responsibility for explaining why he should be considered independent. 6. To recommend Directors who are retiring by rotation to be put forward for re-election. 7. To decide whether or not a Director is able to and has been adequately carrying out his duties as a Director of the Company, particularly when he has multiple board representations. 8. To be responsible for assessing the effectiveness of the Board as a whole and for assessing the contribution of each individual Director to the effectiveness of the Board and disclosing annually, this assessment process. For the year under review, with the Boards approval, the NC has decided on how the Boards performance is to be evaluated as a whole and proposed objective performance criteria including Board composition, size and expertise, Board information and timeliness, as well as Board commitment and accountability. In assessing each individual Directors contribution and performance to the effectiveness of the Board, the NC takes into consideration factors such as attendance, preparedness, participation and candour. The NC has met once during the nancial year under review on 24 February 2011. Each member of the NC shall abstain from voting on any resolution in respect of the assessment of his performance or renomination as a Director. Details of Board members qualications and experience including the year of initial appointment are presented in this Annual Report under the heading Board of Directors.
Guidelines 5.1 to 5.4 of the Code: Assessing the Boards effectiveness
Access to Information
Principle 6: In order to fulll their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.
34
The Board receives complete and adequate information on an on-going basis. The Management provides the Chairman and Deputy Chairman with monthly management accounts and the rest of the Board members with quarterly management accounts. The agenda for Board meetings is prepared in consultation with the Chairman and it will be circulated at least one (1) week in advance to Board members of each meeting. Furthermore, the Board has separate and independent access to the Company Secretary and senior executives, and there is no restriction of access to the senior Management team of the Company or Group at all times in carrying out its duties. The Company Secretary or his agent attends all formal Board meetings to respond to the queries of any Director and ensures that Board procedures are followed and that all applicable rules and regulations are complied with. Where decisions to be taken by the Board require specialised knowledge or expert opinion, the Board takes independent professional advice as and when necessary to enable it or the Independent Directors to discharge the responsibilities effectively.
Guidelines 6.1 and 6.2 of the Code: Information to the Board
Guideline 6.3 of the Code: Access to and role of the Company Secretary
Guideline 6.5 of the Code: Access to independent professional advice
B. REMUNERATION MATTERS Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration. The RC, established for the purpose of ensuring that there is a formal and transparent procedure for xing the remuneration packages of individual Directors, comprises three (3) Independent Non-Executive Directors. The chairman of the RC is an Independent Non-Executive Director. The RC comprises the following: Mr Chan Soo Sen Chairman Dr Tan Khee Giap Member Mr Ong Kian Min Member The overriding principle is that no Director should be involved in deciding his own remuneration. The RC has adopted a written term of reference that denes its membership, roles, functions and administration. During the nancial year under review, the RC had held one (1) meeting on 8 February 2011. The primary responsibilities of the RC are as follows: 1. To review and recommend to the Board in consultation with the Chairman of the Board, a framework of remuneration and to determine the specic remuneration packages and terms of employment for each of the executive Directors and senior executives or divisional Directors (those reporting directly to the Chairman or Group Chief Executive Ofcer) and those employees related to the Executive Directors and controlling Shareholders of the Group. To review and recommend to the Board in consultation with the Chairman of the Board, any long term incentive schemes which may be set up from time to time and to do all acts necessary in connection therewith. To administer the BreadTalk Group Limited Employees Share Option Scheme (the Scheme) and shall have all the powers as set out in the Rules of the Scheme. To administer the BreadTalk Group Limited Restricted Share Grant Plan (the RSG Plan) and shall have all the powers as set out in the Rules of the RSG Plan.
Guideline 7.2 of the Code: RCs responsibilities Guideline 7.1 of the Code: RC to consist entirely of NEDs and majority, including RC chairman, must be independent
2.
3. 4.
35
5.
To carry out its duties in the manner that it deems expedient, subject always to any regulations or restrictions that may be imposed upon the RC by the Board from time to time. As part of its review, the RC shall ensure that: (i) all aspects of remuneration including but not limited to Directors fees, salaries, allowances, bonuses, options and benets-in-kind should be covered. the remuneration packages should be comparable within the industry and comparable companies and shall include a performance-related element coupled with appropriate and meaningful measures of assessing individual executive Directors and senior executives or divisional Directors performance.
6.
(ii)
(iii) the remuneration package of employees related to Executive Directors and controlling Shareholders are in line with the Groups staff remuneration guidelines and commensurate with their respective job scopes and levels of responsibility.
Level and Mix of Remuneration

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signicant proportion of remuneration, especially that of executive directors, should be structured so as to link rewards to corporate and individual performance. The Company advocates a performance based remuneration system for executive Directors and key executives that is exible and responsive to the market, comprising a base salary and other xed allowances, as well as variable performance bonus and participation in an employee share award or scheme based on the Companys performance and linking it to the individuals performance. In determining such remuneration packages, the RC will ensure that they are adequate by considering, in consultation with the Chairman or Group Chief Executive Ofcer amongst other things, the respective individuals responsibilities, skills, expertise and contribution to the Companys performance, and whether they are competitive and sufcient to ensure that the Company is able to attract and retain the best available executive talent, meanwhile keeping tabs that they are not excessive. At an Extraordinary General Meeting held on 28 April 2008, the shareholders of the Company had approved the adoption of the RSG Plan. Under the RSG Plan and any other share based schemes of the Company, the aggregate number of shares to be issued shall not exceed fteen per cent. (15%) of the total issued share capital excluding treasury shares of the Company and will be in force for a maximum period of 10 years commencing from 28 April 2008.
Guidelines 8.1 to 8.5 of the Code: RC to recommend remuneration of Directors and review remuneration of key executives
36
The award of shares under RSG Plan can be either performance based awards or time based awards. For performance based awards, entitled participant will be allotted fully paid shares upon satisfactory achievement of pre-determined performance targets. As for time-based awards, entitled participant will be allotted fully paid shares upon satisfactory completion of time based service conditions that is, after the participant has served the Company or as the case may be, the relevant associated company, for a specied duration, as may be determined by the RC. The adoption of RSG Plan is consistent with the continuing efforts of the existing Scheme in rewarding, retaining and motivating employees to achieve superior performance standards and afford the Company greater exibility to align the interests of employees with those of the shareholders. To date, the Company has issued 1,516,310 shares under its RSG Plan. The RC has adopted a framework which consists of a base fee to remunerate Non-Executive Directors based on their appointments and roles in the respective Committees, as well as the fees paid in comparable companies. Fees for the Non-Executive Directors will be tabled at the forthcoming Annual General Meeting to be held on 25 April 2012 (the AGM) for Shareholders approval. The notice periods in the service agreements of the Executive Directors and key executives of the Group are set at a period of not more than 6 months. The Company conrms that there is no onerous removal clause in any of the service agreements.
Guideline 8.6 of the Code: Notice periods in service contracts to be six (6) months or less
37
Disclosure on Remuneration
Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedures for setting remuneration in the companys annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. A breakdown showing the level and mix of each Directors and key Executives remuneration for the year ended 31 December 2011 is set out below:
Guidelines 9.1 to 9.3 of the Code: Directors, key executives and related employees remuneration
REMUNERATION OF DIRECTORS AND KEY EXECUTIVES

Name of Director Salary(1) Bonus / Prot Sharing % 39 Shared-based Benets-In- Directors Compensation Kind Fee2 % 3 % 2 % Total
S$700,000 to below S$800,000 George Quek Meng Tong S$500,000 to below S$600,000 Katherine Lee Lih Leng Below S$100,000 Ong Kian Min Chan Soo Sen Tan Khee Giap
% 55
%
100
63
32
100
100 100 100
100 100 100
38
Name of Key Executives (who are not Directors) S$500,000 to S$750,000 Oh Eng Lock
Designation
Salary(1) %
Bonus / ProtSharing % 33
Sharedbased Compensation % 7
BenetsInKind % -
Total
% 100
Group Chief Executive Ofcer
60
S$250,000 to S$500,000 Goh Tong Pak President (Chairmans Ofce) Chief Executive Ofcer (Bakery Division) CEO, China CEO, Food Atrium Division CEO, ASEAN CEO, Restaurant Division 85 12 3
100
Henry Chu Heng Hwee
66
28
100
Frankie Quek Swee Heng(3) Jenson Ong Chin Hock James Quek Seng Hwa(4) Cheng William(5) Below S$250,000 Lawrence Yeo Kia Yeow (6)
85 63 52 54
13 31 39 37
2 6 9 9
100 100 100 100
Group Chief Financial Ofcer
32
68
100
Notes: (1) (2) Salary is inclusive of xed allowance and CPF contribution. Directors fees will be paid after approval is obtained from Shareholders at the forthcoming AGM to be held on 25 April 2012. Mr Frankie Quek is the brother of Dr George Quek. Mr James Quek Seng Hwa has been appointed as CEO Asean with effect from 1 March 2011. Mr Cheng William has been appointed as CEO Restaurant Division with effect from 1 January 2011. Mr Lawrence Yeo Kia Yeow has been appointed as Group CFO with effect from 10 October 2011.
(3) (4) (5) (6)
Save as disclosed, no other employee whose remuneration exceeded S$150,000 during the year is an immediate family member of any of the members of the Board.
39
C. ACCOUNTABILITY AND AUDIT
Accountability
Principle 10: The board is accountable to the shareholders while the management is accountable to the board. The board should present a balanced and understandable assessment of the companys performance, position and prospects. For all announcements (including nancial performance reporting) made to the public via SGXNET and the annual report to Shareholders, as required by the SGX-ST, the Board has a responsibility to present a fair assessment of the Groups position, including the prospects of the Group. To enable effective monitoring and decision-making by the Board, Management provides the Board with a continual ow of relevant information on a timely basis as well as quarterly management accounts of the Group. Particularly, prior to the release of quarterly and full year results to the public, Management will present the Groups nancial performance together with explanatory details of its operations to the AC, which will review and recommend the same to the Board for approval and authorisation for the release of the results.
Guideline 10.1 of the Code: Boards responsibility to the public
Guideline 10.2 of the Code: Managements responsibility to the Board
Audit Committee
Principle 11: The board should establish an audit committee with written terms of reference, which clearly set out its authority and duties. The role of the AC is to assist the Board in the execution of its corporate governance responsibilities within the established Boards references and requirements. The nancial statements, accounting policies and system of internal accounting controls are responsibilities that fall under the ambit of the AC. The AC has its set of written terms of reference dening its scope of authority and further details of its major functions are set out below and also in the Report of the Directors. The AC comprises three (3) members who are all Independent nonexecutive Directors. The chairman of the AC is an Independent nonexecutive Director. The members of the AC are: Mr Ong Kian Min Chairman Mr Chan Soo Sen Member Dr Tan Khee Giap Member The members of the AC collectively have expertise or experience in nancial management, and are qualied to discharge the ACs responsibilities. In performing its functions, the AC conrms that it has explicit authority to investigate any matter within its terms of reference, full access to and co-operation from the Management, and has been given full discretion to invite any Director or executive ofcer to attend its meetings, as well as reasonable resources to enable it to discharge its functions properly.
Guideline 11.3 of the Code: ACs authority Guidelines 11.1, 11.2 and 11.8 of the Code: Board to establish AC and composition of AC
40
The main functions of the AC are as follows: 1. 2 3. Review the audit plan of the Companys external auditors and adequacy of the system of internal accounting control; Discuss and review external auditors reports; Review signicant nancial reporting issues and judgements so as to ensure the integrity of the nancial statements and any formal announcements relating to the Companys or Groups nancial performance; Review and recommend the nomination of the external auditors for appointment or reappointment; Review the Interested Person Transactions; Review the scope and result of the internal audit procedures; and Review the remuneration packages of the employees who are related to the Directors or substantial Shareholders.
Guideline 11.4 of the Code: Duties of AC
4. 5. 6. 7.
The AC held four (4) meetings during the nancial year under review. It has reviewed the nancial statements of the Group for the purpose of the rst 3 quarters and annual results release before they were submitted to the Board for approval. It has also met with the Companys internal and external auditors to review their audit plans and results, and has separate and independent access to the auditors. The AC had reviewed the non-audit services provided by the external auditors, Messrs Ernst & Young LLP and is of the opinion that the provision of such services does not affect their independence. The fees payable to auditors is set out on page 94 of this Annual Report. The Group has complied with Rule 712 and Rules 715 or 716 of the Listing Manual issued by Singapore Exchange Securities Trading Limited in relation to its auditors. As required by Rule 716 of the Listing Manual, the Audit Committee and the Board of Directors of the Company has satised themselves that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Group. Where there is any suspected fraud or irregularity, or failure of internal controls, or infringement of any Singapore law, rule or regulation which has a material impact on the Companys operating results, the AC will commission and review the ndings of internal investigations into the matters. Endorsed by the AC, the Company has in place a whistle-blowing framework which provides an avenue for staff of the Company to access the AC chairman to raise concerns about improprieties and independent investigation of such matters by the AC. Contact details of AC have been made available to all staff.
Guidelines 11.5 and 11.6 of the Code: Meeting with auditors and review of their independence
Guideline 11.7 of the Code: Whistle-blowing arrangements
Internal Control
Principle 12: The board should ensure that the management maintains a sound system of internal controls to safeguard the shareholders investments and the companys assets. The Internal Auditors carried out internal audit on the system of internal controls and report the ndings to the AC. The Groups External Auditors, Ernst & Young LLP have also carried out, in the course of their statutory audit, a review of the Groups material internal controls. Material non-compliance and internal control weaknesses and recommendations for improvements noted during their audit are reported to the AC. The AC has reviewed the effectiveness of the actions taken by the management on the recommendations made by the Internal and External Auditors in this respect. For the nancial year ended 31 December 2011, the Board believes that in the absence of any evidence to the contrary, the system of internal controls maintained by the Groups management that was in place throughout the nancial period up to the date of this report, provides reasonable, but not absolute assurance against material nancial misstatements or loss. The Board notes that no system of internal control could provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human errors, losses, fraud or other irregularities. Based on the aforesaid, the AC and the Board are satised that there are adequate internal controls in the Group in addressing the Groups nancial, operational and compliance risks.
Guideline 12.1 of the Code: AC to review adequacy of the nancial, operational and compliance controls and risk management policies. Guideline 12.2 of the Code: AC to comment on the adequacy of internal controls
41
Internal Audit
Principle 13: The company should establish an internal audit function that is independent of the activities it audits. Since 2006, the Group had outsourced its internal audit function to RSM Ethos Pte Ltd, a merged entity of Stone Forest Consulting Pte Ltd and Ethos Advisory Pte Ltd (formerly known as Stone Forest Consulting Pte Ltd). The Internal Auditor is guided by the Standards for Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The Internal Auditors report directly to the Chairman of the AC. The AC reviews the scope of internal audit function, internal audit ndings and the internal audit plan.
Guidelines 13.1 to 13.4 of the Code: IA to report to AC chairman
Communication with Shareholders

Principle 14: A company should engage in regular, effective and fair communication with its shareholders. Principle 15: A company should encourage greater shareholder participation at annual general meetings and allow its shareholders the opportunity to communicate their views on various matters affecting the company. The Board has adopted a policy of openness and transparency in the conduct of the Companys affairs while preserving the commercial interests of the Company. Financial results and other price sensitive information are disseminated to Shareholders via SGXNET, press releases, the Companys website, and through media and analyst briengs. The Board strives to ensure that all material information is disclosed to the shareholders on an adequate and timely basis. The Board informs and communicates with shareholders through annual reports, announcement released through SGXNET, press releases, advertisements of notice of general meetings in local newspapers. Notices of general meetings are despatched to shareholders, together with the annual report or circulars within the time notice period as prescribed by the regulations. At general meetings, shareholders are given opportunities to voice their views and direct their questions to directors or management regarding the Company. The chairman of the AC, NC and/or RC are present and available to address questions at general meetings. The External Auditors are also present to assist the Board. In preparation for the annual general meeting, shareholders are encouraged to refer to SGXs investor guides, namely An Investors Guide To Reading Annual Reports and An Investors Guide To Preparing For Annual General Meetings. The guides, in both English and Chinese versions are available at the SGX website via this link : http://www.sgx. com/wps/portal/marketplace/mp-en/investor_centre/investor_guide The Company has in place an investor relations programme to keep investors informed of material developments in the Companys business and affairs beyond that which is prescribed, but without prejudicing the business interests of the Company. The Companys Articles of Association do not restrict the number of proxy a shareholder can appoint to attend and vote on his/her behalf at all general meetings. There are separate resolutions at the general meetings for each distinct issue. The Board and Management are on hand at general meetings to address questions by shareholders.
Guideline 15.1-15.2 and 15.4 of the Code: Shareholders should be allowed to vote in absentia, avoid bundling of resolutions and limit on proxy. Guidelines 14.1 to 14.2 of the Code: Regular, effective and fair communications with shareholders
Guideline 15.3 of the Code: Chairman and external auditors present at general meetings
42
Minutes of general meetings are prepared and made available to shareholders upon their requests by the Company Secretary.
Guideline 15.5 of the Code: Minutes of general meetings
Dealing in Securities
The Company has adopted and implemented an Insider Trading (Prevention) Policy (the Policy). The Policy is to ensure that the Companys Directors, ofcers, employees of the Group as well as consultants or contractors to the Group (collectively the Covered Persons) and immediate family members of Covered Persons are aware of their legal obligations in relation to the dealing of securities in the Company. Covered Persons who are in possession of unpublished material price sensitive information and use such information for their own material gain in relation to those securities is an offence. The Company, while having provided the window periods for dealing in the Companys securities, has its own internal compliance code in providing guidance to its ofcers with regards to dealing in the Companys securities including reminders that the law on insider trading is applicable at all the times. On 28 May 2009, a Disciplinary Committee (DC) was formed to conduct inquiry on a possible breach of the Policy. The role of the DC is to report its nding to the Board and make recommendation as to the penalty if applicable. The Board will decide based on the DCs recommendation. The DC comprises three (3) members, a majority of whom are Independent Non-Executive Directors. The chairman of the DC is an Independent Non-Executive Director. The DC consists of: Mr Ong Kian Min Chairman Dr George Quek Meng Tong Member Mr Chan Soo Sen Member
Interested Person Transactions

When a potential conict arises, the Directors concerned do not participate in discussions and refrains from exercising any inuence over other members of the Board. The AC has reviewed the Interested Person Transactions (IPT) entered into during the nancial year by the Group and the aggregate value of IPT entered during the nancial year ended 31 December 2011 is as follows:
Aggregate value (S$000) of all IPTs during the nancial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) Aggregate value of all IPTs conducted during the nancial year under review under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000)
Name of Interested Person
(1) Monewell Enterprise - Purchase of Chinese New Year Cookies (2) Kung Fu Kitchen - Food court rental income/ miscellaneous charges
75.3
221.4
Not applicable - the Company does not have a shareholders mandate under Rule 920
(3) Sky One Art Investment Pte Ltd - Purchase of furniture and ttings
194.3
43
44
Material Contracts
Except as disclosed in Interested Person Transactions, there is no material contract or loan entered into by the Company or any of its subsidiaries involving interests of any Director or controlling shareholder during the nancial year ended 31 December 2011.
Risk Management
The Group regularly reviews and improves its business and operational activities to identify areas of signicant business risks as well as taking appropriate measures to control and mitigate these risks. The Group reviews all signicant control policies and procedures and highlights all signicant matters to the AC and the Board. During the last quarter of the nancial year ended 31 December 2011, the AC and the Board had commissioned Management to seek quotations from several professional rms specialising in enterprise risk management in order to further enhance the robustness of overall risk management within the Group. The evaluation exercise is still ongoing and no candidate has been shortlisted yet. The existing nancial risk management objectives and policies are outlined in the nancial statements.
GENERAL INFORMATION
Index
Page Directors Report 46
Statement by Directors
53
Independent Auditors Report
54
Consolidated Statement of Comprehensive Income
56
Balance Sheets
57
Statements of Changes in Equity
59
Consolidated Cash Flow Statement
62
Notes to the Financial Statements
65
45
DIRECTORS REPORT
The directors are pleased to present their report to the members together with the audited nancial statements of BreadTalk Group Limited (the Company) and its subsidiaries (collectively, the Group) and the balance sheet and statement of changes in equity of the Company for the nancial year ended 31 December 2011.
Directors
The directors of the Company in ofce at the date of this report are: George Quek Meng Tong Katherine Lee Lih Leng Ong Kian Min Chan Soo Sen Tan Khee Giap (Chairman) (Deputy Chairman)
Arrangements to enable directors to acquire shares and debentures

Except as disclosed in this report, neither at the end of nor at any time during the nancial year was the Company a party to any arrangement whose objects are, or one of whose object is, to enable the directors of the Company to acquire benets by means of the acquisition of shares or debentures of the Company or any other body corporate.
Directors interests in shares and debentures

The following directors, who held ofce at the end of the nancial year, had, according to the register of directors shareholdings required to be kept under section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company as stated below:
Name of director The Company (Ordinary shares) George Quek Meng Tong Katherine Lee Lih Leng Ong Kian Min Tan Khee Giap
As at 1 January 2011
Direct interest As at 31 December 2011
Deemed interest As at 31 As at 21 December January 2012 2011
95,538,556 52,282,800 120,000
95,583,952 52,319,880 120,000
95,583,952 52,319,880 120,000
52,282,800 95,538,556 20,000
52,319,880 95,583,952 20,000
52,319,880 95,583,952 20,000
(Conditional award of restricted shares) George Quek Meng Tong Katherine Lee Lih Leng 111,104 94,220 125,708 117,140 125,708 117,140 94,220 111,104 117,140 125,708 117,140 125,708
46
Directors interests in shares and debentures (contd)

By virtue of Section 7 of the Companies Act, Cap. 50, George Quek Meng Tong and Katherine Lee Lih Leng are deemed to be interested in the shares held by the Company in its subsidiaries. Except as disclosed in this report, no other director who held ofce at the end of the nancial year had interest in shares or debentures of the Company, or of related corporations, either at the beginning of the nancial year, date of appointment or the end of the nancial year or on 21 January 2012.
Directors contractual benets

Except as disclosed in the nancial statements, since the end of previous nancial year, no director of the Company has received or become entitled to receive a benet by reason of a contract made by the Company or a related corporation with the director, or with a rm of which the director is a member, or with a company in which the director has a substantial nancial interest.
Share Option and Share Plans

The Company has a Share Option Scheme and a Restricted Share Grant Plan which are administered by the Remuneration Committee comprising three Directors namely Messrs Chan Soo Sen (Chairman), Ong Kian Min (Member) and Tan Khee Giap (Member). Details of the Share Option Scheme and the Restricted Share Grant Plan are as follows:
(a) The BreadTalk Group Limited Employees Share Option Scheme

The BreadTalk Group Limited Employees Share Option Scheme (ESOS) was approved at an Extraordinary General Meeting held on 30 April 2003. The following persons are eligible to participate in the ESOS at the absolute discretion of the Remuneration Committee: (i) Employees and Directors Employees, Executive directors and Non-Executive directors of the Group who are not on probation and have attained the age of 21 years on or before the Offering Date. (ii) Controlling Shareholders and their Associates Controlling Shareholders or their Associates whose participation and actual number of shares issued to them must be approved by independent shareholders in general meeting.
47
DIRECTORS REPORT
48
Share Option and Share Plans (contd) (a) The BreadTalk Group Limited Employees Share Option Scheme (contd)
Size of ESOS The total number of new shares over which options may be granted pursuant to the ESOS shall not exceed fteen per cent (15%) of the issued share capital of the Company on the date preceding the grant of an option. The aggregate number of Shares available to eligible Controlling Shareholders and their Associates under the ESOS shall not exceed twenty ve per cent (25%) of the Shares available under the ESOS. In addition, the number of Shares available to each Controlling Shareholder or his Associate shall not exceed ten per cent (10%) of the Shares available under the ESOS. Grant of ESOS Options may be granted from time to time during the year when the ESOS is in force, except that options shall be granted on or after the second market day on which an announcement of any matter involving unpublished price sensitive information is released. Acceptance of ESOS The grant of an option shall be accepted not more than 30 days from the offering date of that option and accompanied by payment to the Company of a nominal consideration of $1 or such other amount as required by the Remuneration Committee. Since the commencement of the ESOS up to the end of the nancial year, there were no options granted to any person. Any options granted under the ESOS do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any share issue of any other company.
(b) The BreadTalk Restricted Share Grant Plan

The BreadTalk Restricted Share Grant Plan (RSG Plan) was approved at an Extraordinary General Meeting held on 28 April 2008. The RSG Plan is centred on the accomplishment of specic pre-determined performance objectives and service conditions, which is the prerequisite for the contingent award of fully paid Shares (Award). The reward structure allows the Company to target specic performance objectives and incentivise the Participants to put in their best efforts to achieve these targets.
Share Option and Share Plans (contd) (b) The BreadTalk Restricted Share Grant Plan (contd)
Eligibility The following persons shall be eligible to participate in the RSG Plan subject to the absolute discretion of the Remuneration Committee: (i) Employees Employees who are conrmed in their employment with the Company or any subsidiary, or employees of associated companies who hold such rank as may be designated by the Committee from time to time and who, in the opinion of the Committee, have contributed or will contribute to the success of the Group; and (ii) Directors Executive and non-executive directors of the Company and its subsidiaries, provided always that any of the aforesaid persons: have attained the age of twenty-one (21) years on or before the Award Date; and not undischarged bankrupts.
Controlling Shareholders and their Associates within the above categories are eligible to participate in the RSG Plan. Participation in the RSG Plan by Controlling Shareholders or their Associates must be approved by the independent shareholders. A separate resolution shall be passed for each such Participant and to approve the number of Shares to be awarded to the Participant and the terms of such Award. There shall be no restriction on the eligibility of any Participant to participate in any other share option or share incentive schemes implemented or to be implemented by the Company or another company within the Group. Size of RSG Plan The aggregate number of Shares available to eligible Controlling Shareholders and their Associates under the RSG Plan shall not exceed twenty ve per cent (25%) of the Shares available under the RSG Plan. In addition, the number of Shares available to each Controlling Shareholder or his Associate shall not exceed ten per cent (10%) of the Shares available under the RSG Plan. The aggregate number of Shares to be awarded pursuant to the RSG Plan when added to the number of Shares issued and issuable in respect of such other Shares issued and/or issuable under such other share-based incentive schemes of the Company, including but not limited to the ESOS, shall not exceed fteen per cent (15%) of the total issued share capital excluding treasury shares of the Company on the day preceding the relevant Award Date.
49
DIRECTORS REPORT
Share Option and Share Plans (contd) (b) The BreadTalk Restricted Share Grant Plan (contd)
Grant of RSG Plan The grant of Awards under the RSG Plan may be made from time to time during the year when the RSG Plan is in force. While Awards may be granted at any time in the year, it is anticipated that Awards under the RSG Plan would be made once a year, after the Companys annual general meeting. It will be administered by the Remuneration Committee. Share Awards and Vesting The nal number of restricted shares awarded will depend on the achievement of predetermined targets over a one year period. On meeting the performance conditions for the performance period, one-third of the restricted shares will vest. The balance will vest equally over the subsequent two years with fullment of service requirements. The details of the restricted shares awarded under the RSG Plan since its commencement up to 31 December 2011 are as follows:
Aggregate conditional restricted shares Aggregate vested and conditional released since restricted shares commencement outstanding at of the Plan end of the year
Name of Participant
Conditional restricted shares granted during the year
Aggregate conditional restricted shares awarded since commencement of the Plan
Aggregate Aggregate conditional conditional restricted shares restricted lapsed since shares vested commencement and released of the Plan during the year
Directors of the Company George Quek Meng Tong (1) Katherine Lee Lih Leng (1) Associate of a Controlling Shareholder Frankie Quek Swee Heng (2) 25,000 106,000 26,880 48,660 57,340 65,000 65,000 201,200 176,000 45,396 37,080 75,492 58,860 125,708 117,140
50
Share Option and Share Plans (contd)

Conditional restricted shares granted during the year Aggregate conditional restricted shares awarded since commencement of the Plan Aggregate Aggregate conditional conditional restricted shares restricted lapsed since shares vested commencement and released of the Plan during the year Aggregate conditional restricted shares vested and released since commencement of the Plan
Name of Participant
Aggregate conditional restricted shares outstanding at end of the year
Participants who received 5% or more of the total grants available Oh Eng Lock (3) Goh Tong Pak Catherine Lee Khia Yee Cheng William James Quek Other participants
(4)
103,000 25,000 51,000 34,000 107,000 206,000 681,000
933,666 298,200 187,600 204,200 166,800 611,400 2,885,066
51,000 84,420 135,420
16,660 91,016 45,508 56,776 20,044 93,532 432,892
798,326 152,792 76,396 92,812 29,548 183,424 1,516,310
135,340 145,408 60,204 111,388 137,252 343,556 1,233,336
(1) (2) (3)
(4)
Also a controlling shareholder of the Company. Associate of George Quek Meng Tong, a controlling shareholder of the Company. This includes a total of 781,666 shares that were released via the issuance of treasury shares in relation to a sign-on bonus granted to Mr. Oh Eng Lock. Ms Catherine Lee resigned as Group CFO with effect from 7 September 2011.
With the Remuneration Committees approval on the achievement of the performance targets for the performance period FY2009 and FY2010, a total of 432,892 restricted shares were released via the issuance of treasury shares. Audit Committee The Audit Committee performed the functions specied in the Companies Act. The functions performed are detailed in the Report on Corporate Governance.
51
DIRECTORS REPORT
52
Auditors
Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.
On behalf of the board of directors:
George Quek Meng Tong Director
Katherine Lee Lih Leng Director
Singapore 23 March 2012
STATEMENT BY DIRECTORS
We, George Quek Meng Tong and Katherine Lee Lih Leng, being two of the directors of BreadTalk Group Limited, do hereby state that, in the opinion of the directors, (i) the accompanying balance sheets, consolidated statement of comprehensive income, statements of changes in equity, and consolidated cash ow statement together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results of the business, changes in equity and cash ows of the Group and the changes in equity of the Company for the year ended on that date, and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(ii)
On behalf of the board of directors:
George Quek Meng Tong Director
Katherine Lee Lih Leng Director
Singapore 23 March 2012
53
INDEPENDENT AUDITORS REPORT

54
To the members of BreadTalk Group Limited
Report on the nancial statements

We have audited the accompanying consolidated nancial statements of BreadTalk Group Limited (the Company) and its subsidiaries (the Group) set out on pages 56 to 144, which comprise the balance sheets of the Group and the Company as at 31 December 2011, the statements of changes in equity of the Group and the Company, the statement of comprehensive income and cash ow statement of the Group for the year then ended, and a summary of signicant accounting policies and other explanatory information.
Managements responsibility for the nancial statements

Management is responsible for the preparation of nancial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufcient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair prot and loss accounts and balance sheets and to maintain accountability of assets.
Auditors responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of the nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated nancial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and the results, changes in equity and cash ows of the Group and the changes in equity of the Company for the year ended on that date.
Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Ernst & Young LLP Public Accountants and Certied Public Accountants Singapore 23 March 2012
55
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2011

Notes 2011 $000 Revenue Cost of sales Gross prot Other operating income Interest income Distribution and selling expenses Administrative expenses Interest expense 4 5 3 365,904 (165,846) 200,058 7,495 824 (145,520) (45,038) (785) 2010 $000 302,888 (137,646) 165,242 14,188 601 (120,994) (41,872) (635)
Prot before taxation and share of results of joint ventures Share of results of joint ventures Prot before taxation Taxation Prot for the year Prot attributable to: Equity holders of the Company Non-controlling interests 6 8
17,034 93 17,127 (5,370) 11,757
16,530 158 16,688 (5,520) 11,168
11,592 165 11,757
11,266 (98) 11,168
Other comprehensive income: Net loss on available-for-sale nancial assets Foreign currency translation gain/(loss) Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income attributable to: Equity holders of the Company Non-controlling interests
911 911 12,668
(574) (859) (1,433) 9,735
12,503 165 12,668
9,833 (98) 9,735 4.01 3.99
Earnings per share (cents) Basic Diluted
9 9
4.12 4.10
The accompanying accounting policies and explanatory notes form an integral part of the nancial statements.
56
BALANCE SHEETS
As at 31 December 2011
Group Notes 2011 $000 Non-current assets Property, plant and equipment Intangible assets Investment securities Investment in subsidiaries Investment in associates Investment in joint ventures Other receivables Deferred tax assets 10 11 12 13 14 15 17 8 88,898 9,214 11,669 422 1,389 2,120 113,712 Current assets Inventories Trade and other receivables Prepayments Tax recoverable Amounts due from subsidiaries (non-trade) Amounts due from joint ventures (non-trade) Amounts due from minority shareholders of subsidiaries (non-trade) Cash and cash equivalents 16 17 18 18 18 19 7,397 46,800 5,389 230 1,297 420 87,060 148,593 Current liabilities Trade and other payables Other liabilities Provision Amounts due to subsidiaries (non-trade) Amounts due to joint ventures (non-trade) Finance lease obligations, secured Loan from a minority shareholder of a subsidiary Short-term loans Current portion of long-term loans Tax payable 20 21 21 18 18 23 22 24 25 74,074 41,124 5,871 395 37 200 15,764 8,396 5,623 151,484 2010 $000 73,306 9,142 11,669 446 857 1,898 97,318 6,114 25,345 3,306 9 506 455 71,144 106,879 60,846 32,387 3,536 140 54 200 4,698 6,232 4,402 112,495 Company 2011 $000 7,222 40,476 30 47,728 36 15,335 2,698 18,069 250 2,115 7,394 12,000 21,759 2010 $000 5,766 39,166 12 44,944 26 83 5,748 2,947 8,804 489 1,845 8,762 80 11,176
57
BALANCE SHEETS
As at 31 December 2011 (contd)

Group Notes 2011 $000 Net current liabilities Non-current liabilities Long-term loans Finance lease obligations, secured Loans from minority shareholders of subsidiaries Other payables Other liabilities Deferred tax liabilities Net assets Equity attributable to equity holders of the Company Share capital Treasury shares Accumulated prots Other reserves Non-controlling interests Total Equity 25 23 22 20 21 8 15,156 882 7,039 2,276 25,353 85,468 8,117 37 59 5,759 2,647 16,619 75,083 3,989 3,989 40,049 3,989 3,989 38,583 (2,891) 2010 $000 (5,616) Company 2011 $000 (3,690) 2010 $000 (2,372)
26 26 27 27
33,303 (609) 41,558 3,178 77,970 7,498 85,468
33,303 (199) 33,090 2,368 68,562 6,521 75,083
33,303 (609) 6,812 543 40,049 40,049
33,303 (199) 5,064 415 38,583 38,583
58
Statements of Changes in Equity for the year ended 31 December 2011

Attributable to equity holders of the Company
2010 Group Total $000 $000
Share capital $000 $000 (Note 27) 1,178 90 (Note 27) (Note 27) 60,662 11,266 5,504 (98) (Note 27) 24,782 11,266 1,455 137 (Note 27) (Note 27) $000 $000 $000 $000 $000
Share based Fair value Treasury Accumulated Statutory Translation adjustment compensation Capital reserve shares reserve prots reserve fund reserve reserve
Non-controlling Total interests equity $000
$000
(Note 26) (Note 26) (283)
At 1 January 2010
33,303
66,166 11,168
Prot for the year
Other comprehensive income Net loss on fair value changes of available-for-sale nancial assets (574) (574) 11,266 (859) (859) (859) (574)
(574) (859) (1,433) 9,833
(98)
(574) (859) (1,433) 9,735
Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year
Transactions with equity holders 343 (259) - (2,342) (616) 616 668 (511) 168 668 (2,342) (259) (820) 1,935 668 (2,342) (820) (259) 1,935
Share-based payments Dividends paid (Note 34) Dividend payable (Note 20) Transfer to statutory reserve Treasury shares transferred on vesting of restricted share grant Purchase of treasury shares Issuance of new shares to minority shareholders (199) 33,090 2,071
At 31 December 2010
33,303
(722)
604
247
168
68,562
6,521
75,083
59
60
Statements of Changes in Equity for the year ended 31 December 2011 (contd)
Attributable to equity holders of the Company Non-controlling interests $000
2011 Group Share based compensation Capital reserve reserve Total $000 $000 $000 (Note 27) 168 68,562 11,592 6,521 165 (Note 27) 247
Share capital $000 $000 $000 $000 (Note 27) 604 (Note 27) (722) (Note 27) 2,071 (Note 27) 33,090 11,592 $000
Fair value Treasury Accumulated Statutory Translation adjustment shares prots reserve fund reserve reserve
Total equity $000
$000
(Note 26) (Note 26) (199)
At 1 January 2011
33,303
75,083 11,757
Prot for the year
Other comprehensive income 911 911 911 11,592 911 911 12,503 165 911 911 12,668
Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year
Transactions with equity holders 148 (558) (609) 41,558 2,382 189 (2,813) (311) 311 604 276 (166) 357 18 186 276 (2,813) (588) 77,970 812 7,498 276 (2,813) (558) 812 85,468
Share-based payments Dividends paid (Note 34) Transfer to statutory reserve Treasury shares transferred on vesting of restricted share grant Purchase of treasury shares Issuance of new shares to minority shareholders
At 31 December 2011
33,303
Statements of Changes in Equity for the year ended 31 December 2011 (contd)
Share based Accumulated compensation reserve prots $000 $000 (Note 27) (Note 27)
Share capital $000 (Note 26) 2010 Company 1 January 2010 Prot for the year Total comprehensive income for the year Transactions with equity holders Share-based payments Treasury shares transferred on vesting of restricted share grant Purchase of treasury shares Dividends paid (Note 34) At 31 December 2010 2011 Company 1 January 2011 Prot for the year Total comprehensive income for the year Transactions with equity holders Share-based payments Treasury shares transferred on vesting of restricted share grant Purchase of treasury shares Dividends paid (Note 34) At 31 December 2011 33,303 33,303 33,303 33,303
Treasury shares $000 (Note 26)
Capital reserve $000 (Note 27)
Total equity $000
(283)
4,253 3,153
90
37,363 3,153
3,153
3,153
343 (259) (199)
(2,342) 5,064
157 247
168 168
157 511 (259) (2,342) 38,583
(199)
5,064 4,561
247
168
38,583 4,561
4,561
4,561
148 (558) (609)
(2,813) 6,812
276 (166) 357
18 186
276 (558) (2,813) 40,049
61
Consolidated Cash Flow Statement for the year ended 31 December 2011
Notes
2011 $000
2010 $000
Cash ows from operating activities Prot before taxation Adjustments for: Amortisation of intangible assets Depreciation of property, plant and equipment Impairment loss on intangible assets Impairment loss on property, plant and equipment Interest expense Interest income Property, plant and equipment written off Gain on disposal of property, plant and equipment Share based payment expenses Share of results of joint ventures Translation difference Write-off of inventories Write-down of inventories Impairment/(write back of impairment) of trade receivables Impairment of other receivables Impairment of an amount due from an associate (non-trade) Operating cash ows before working capital changes (Increase)/decrease in: Inventories Trade receivables Other receivables and deposits Prepayments Increase / (decrease) in: Trade payables Other payables and other liabilities
17,127 11 10 11 10 442 23,920 125 289 785 (824) 1,219 (20) 277 (93) (358) 31 25 253 64 43,262 (1,416) (2,842) (6,616) (2,083) 4,782 18,712
16,688 408 21,190 19 761 635 (601) 2,285 (4,568) 668 (158) 563 23 (5) 3 30 37,941 (1,299) (1,330) (179) (983) 4,070 11,404
Cash ows generated from operations Tax paid Net cash ows from operating activities
53,799 (4,933) 48,866
49,594 (4,152) 45,472
62
Notes
2011 $000
2010 $000
Cash ows from investing activities Interest income received Purchase of property, plant and equipment Additions to intangible assets Subscription of junior bonds Cash paid for reinstatement expenses Proceeds from disposal of property, plant and equipment Deposit for subscription of junior bonds Amount due from joint ventures(non-trade) Amount due to joint ventures (non-trade) Amount due from an associate (non-trade) Loan to a joint venture Investment in a joint venture Dividends received from a joint venture Net cash ows used in investing activities Cash ows from nancing activities Interest paid Dividends paid to shareholders of the Company Dividends paid to minority shareholders of a subsidiary Purchase of treasury shares Proceeds from long-term loans Repayment of long-term loans Proceeds from short-term loans Repayment of short-term loans Capital injection from minority shareholders of subsidiaries Repayment of nance lease obligations Loans from minority shareholders of subsidiaries Repayment of amount due to landlord Net cash ows from nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year
17
305 (37,077) (616) (126) 225 (12,000) (291) 255 (500) (100) 200 (49,725)
143 (36,485) (499) (5,750) (61) 9,082 (37) 35 (30) (33,602)
(761) (2,813) (820) (558) 15,764 (6,625) 21,227 (10,196) 812 (54) 882 (83) 16,775 15,916 71,144 19 87,060
(611) (2,342) (1,312) (259) 8,828 (4,837) 8,780 (8,695) 1,480 (298) 200 (86) 848 12,718 58,426 71,144
63
Note A. Purchase of property, plant and equipment During the year, the Group acquired property, plant and equipment with an aggregate cost of approximately $40,033,000 (2010: $39,168,000). The additions were by way of cash payments of $27,214,000 (2010: $28,769,000), increase in provision for reinstatement costs of $2,461,000 (2010: $536,000) and amount payable to other creditors of $10,358,000 (2010: $9,863,000). Cash outow for the year also include payments in respect of property, plant and equipment acquired in the previous years of $9,863,000 (2010: $7,716,000).
64
NOTES TO THE FINANCIAL STATEMENTS
1.
General
1.1 Corporate information BreadTalk Group Limited (the Company) is a limited liability company, which is incorporated and domiciled in the Republic of Singapore and listed on the Singapore Exchange Securities Trading Ltd. The registered ofce and principal place of business of the Company is located at 171 Kampong Ampat, #05-05 KA FoodLink, Singapore 368330. The principal activity of the Company is that of investment holding and provision of management services. The principal activities of the subsidiaries are shown in Note 13 to the nancial statements. 1.2 Fundamental accounting assumption The nancial statements of the Group have been prepared on a going concern basis. The Groups net current liabilities position as at 31 December 2011 was $2,891,000 (2010: $5,616,000). Included in current liabilities are deposits from food court tenants and franchisees and stored value card deposits of $12,866,000 (2010: $12,516,000), provision for reinstatement costs of $5,871,000 (2010: $3,536,000) and deferred revenue of $14,496,000 (2010: $9,916,000) respectively. Deferred revenue relates to the unutilised value on the food court stored value cards, unredeemed cash vouchers sold and unearned franchise fees received. These current liabilities, because of their nature, are not expected to result in signicant cash outow from the Group within the next 12 months. In addition, the Group has unutilised banking facilities available for future use. The directors are condent that the Group will be able to pay its debts as and when they fall due. 2. Summary of signicant accounting policies
2.1 Basis of preparation The consolidated nancial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The nancial statements have been prepared on the historical cost basis, except as disclosed in the accounting policies below. The nancial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand ($000) except when otherwise indicated.
65
2.2
Changes in accounting policies The accounting policies adopted are consistent with those of the previous nancial year except in the current nancial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 January 2011. The adoption of these standards and interpretations did not have any effect on the nancial performance or position of the Group and the Company.
2.3
Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Effective for annual periods beginning on or after 1 July 2011 1 January 2012 1 July 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013
Description Amendments to FRS 107 Disclosures Transfers of Financial Assets Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets Amendments to FRS 1: Presentations of Items of Other Comprehensive Income Amendments to FRS 19 Employee Benets FRS 27 Separate Financial Statements FRS 28 Investments in Associates and Joint Ventures FRS 110 Consolidated Financial Statements FRS 111 Joint Arrangements FRS 112 Disclosure of Interest in Other Entities FRS 113 Fair Value Measurements
Except for FRS 27 and FRS 110, the directors expect that the adoption of the standards and interpretations above will have no material impact on the nancial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 27 and FRS 110 is described below. FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements. FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12 Consolidation Special Purpose Entities. FRS 110 denes the principle of control and establishes control as the basis for determining which entities are consolidated in the consolidated nancial statements. It also provides more extensive application guidance on assessing control based on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate nancial statements. FRS 110 will take effect from nancial years beginning on or after 1 January 2013, with full retrospective application. When the Group adopts FRS 110, entities it currently consolidates may not qualify for consolidation, and entities it currently does not consolidate may qualify for consolidation. The Group is currently estimating the effects of FRS 110 on its investments in the period of initial adoption.
66
2.4
Signicant accounting estimates and judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the nancial statements. They affect the application of the Groups accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. Judgments made in applying accounting policies In the process of applying the Groups accounting policies, management has made the following judgments, apart from those involving estimations, which have the most signicant effect on the amounts recognised in the consolidated nancial statements: (i) Impairment of available-for-sale investments and held-to-maturity investments The Group records impairment charges on available-for-sale equity investments when there has been a signicant or prolonged decline in the fair value below their cost. The determination of what is signicant or prolonged requires judgment. In making this judgment, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost. The Group assesses whether there is an indication that held-to-maturity investments may be impaired. In the assessment, the Group evaluates, among other factors, the cash ow projections and value of the related secured property.
67
2.4
Signicant accounting estimates and judgements (contd) (ii) Income taxes The Group has exposure to income taxes in numerous jurisdictions. Signicant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the nal tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Groups tax payable and deferred tax liabilities at 31 December 2011 were approximately $5,623,000 (2010: $4,402,000) and $2,276,000 (2010: $2,647,000) respectively. The carrying amount of the Groups tax recoverable and deferred tax assets at 31 December 2011 was $230,000 (2010: $9,000) and $2,120,000 (2010: $1,898,000) respectively. A subsidiary, BreadTalk Pte Ltd obtained the Development and Expansion Incentive (DEI) which entitles the qualifying income of the company earned up to the nancial year ended 31 December 2012 to be subject to the concessionary tax rate of 10%. Judgment is involved when determining the amount of qualifying income for the year. Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signicant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial year are discussed below.
(i)
Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash ows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash ows. The carrying amount of the Groups goodwill at 31 December 2011 was $6,048,000 (2010: $6,173,000). More details are given in Note 11.
68
2.4
Signicant accounting estimates and judgements (contd) (ii) Valuation and estimated useful life of brand value arising from acquisition of a subsidiary, Topwin Investment Holding Pte Ltd (Topwin) Brand value arising from the acquisition of Topwin was separately identied and recognised by management using the relief from royalty method. The premise of this valuation method is the assumption that the Group would be compelled to pay the rightful owner of the brand name if the Group did not have the legal right to utilise the brand name. The ownership of the brand therefore relieves the Group from making such royalty payments. This requires an estimation of the royalty payments including initial fees and continuing royalty payments based on a percentage of projected revenue. The basis used to determine the revenue projections is the revenue for each food court of Topwin achieved in the nancial year ended 31 December 2004 projected into the future. The useful life of the brand value is estimated by the directors to be 15 years as this is the length of time that they expect the benets of the brand to ow to the Group. Amortisation of the brand amounted to $213,000 (2010: $213,000) for the nancial year ended 31 December 2011 and the carrying amount of the brand value at 31 December 2011 was $1,706,000 (2010: $1,919,000). More details are given in Note 11. (iii) Useful lives of property, plant and equipment Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 2 to 20 years. The carrying amount of the Groups property, plant and equipment as at 31 December 2011 was $88,898,000 (2010: $73,306,000). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. In particular, renovation costs incurred and capitalised for bakery outlets, food courts and restaurants may be subject to immediate impairment upon their unforeseen closure due to unfavourable operations. (iv) Impairment of loans and receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a nancial asset is impaired. To determine whether there is objective evidence of impairment, the Company considers factors such as the probability of insolvency or signicant nancial difculties of the debtor and default or signicant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash ows are estimated based on historical loss experience of assets with similar credit risk characteristics. The carrying amount of the Companys loans and receivables at balance sheet date is disclosed in Note 31 to the nancial statements.
69
2.5
Foreign currency (a) Functional currency The Groups consolidated nancial statements are presented in Singapore Dollars, which is also the parent companys functional currency. Each entity in the Group determines its own functional currency and items included in the nancial statements of each entity are measured using that functional currency. (b) Transactions and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet are recognised in prot or loss except for exchange differences arising on monetary items that form part of the Groups net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under translation reserve in equity. The translation reserve is reclassied from equity to prot or loss of the Group on disposal of the foreign operation. (c) Consolidated nancial statements For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their prot or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in prot or loss. In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in prot or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassied to prot or loss.
70
2.6
Related parties A related party is dened as follows: (a) A person or a close member of that persons family is related to the Group and Company if that person: (i) (ii) (iii) (b) Has control or joint control over the Company; Has signicant inuence over the Company; or Is a member of the key management personnel of the Group or Company or of a parent of the Company.
An entity is related to the Group and the Company if any of the following conditions applies: (i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third party. The entity is a post-employment benet plan for the benet of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company; The entity is controlled or jointly controlled by a person identied in (a); A person identied in (a) (i) has signicant inuence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
(ii)
(iii) (iv) (v)
(vi) (vii)
71
2.7
Subsidiaries, basis of consolidation and non-controlling interests (a) Subsidiaries A subsidiary is an entity over which the Group has the power to govern the nancial and operating policies so as to obtain benets from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors. In the Companys separate nancial statements, investments in subsidiaries are accounted for at cost less any impairment losses. (b) Basis of consolidation and business combinations (A) Basis of consolidation Basis of consolidation from 1 January 2010 The consolidated nancial statements comprise the nancial statements of the Company and its subsidiaries as at the end of the reporting period. The nancial statements of the subsidiaries used in the preparation of the consolidated nancial statements are prepared for the same reporting date as the parent company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a decit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost; De-recognises the carrying amount of any non-controlling interest; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or decit in prot or loss; Re-classies the Groups share of components previously recognised in other comprehensive income to prot or loss or retained earnings, as appropriate.
72
2.7
Subsidiaries, basis of consolidation and non-controlling interests (contd) (b) Basis of consolidation and business combinations (contd) (A) Basis of consolidation (contd) Basis of consolidation prior to 1 January 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: Acquisition of non-controlling interests, prior to 1 January 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill. Losses incurred by the Group were attributed to the noncontrolling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the noncontrolling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the owners of the Company. Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 January 2010 has not been restated.
(B)
Business combinations Business consolidation from 1 January 2010 Business combinations are accounted by applying the acquisition method. Identiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assesses the nancial assets and liabilities assumed for appropriate classication and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
73
2.7
Subsidiaries, basis of consolidation and non-controlling interests (contd) (B) Business combinations (contd) Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in prot or loss or as change to other comprehensive income. If the contingent consideration is classied as equity, it is not to be remeasured until it is nally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in prot or loss. The Group elects for each individual business combination, whether noncontrolling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interests proportionate share of the acquiree identiable net assets. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Groups previously held equity interest in the acquiree (if any), over the net fair value of the acquirees identiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.11(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in prot or loss on the acquisition date. Business combinations prior to 1 January 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquirees identiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill.
74
2.7
Subsidiaries, basis of consolidation and non-controlling interests (contd) (B) Business combinations (contd) When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that signicantly modied the cash ows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill. (c) Transactions with non-controlling interests Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated balance sheet, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and noncontrolling interests are adjusted to reect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributable to owners of the Company.
2.8
Associates An associate is an entity, not being a subsidiary or a joint venture, in which the Group has signicant inuence. This generally coincides with the Group having 20% or more of the voting power, or has representation on the board of directors. An associate is equity accounted for from the date the Group obtains signicant inuence until the date the Group ceases to have signicant inuence over the associate. The Groups investment in associates is accounted for using the equity method. Under the equity method, the investment in associates is carried in the balance sheet at cost plus post-acquisition changes in the Groups share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment. Any excess of the Groups share of the net fair value of the associates identiable assets, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Groups share of results of the associate in the period in which the investment is acquired.
75

76
2.8
Associates (contd) The prot or loss reects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates. The Groups share of the prot or loss of its associates is shown on the face of prot or loss after tax and non-controlling interests in the subsidiaries of associates. When the Groups share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Groups investment in its associates. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in prot or loss. The nancial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of signicant inuence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of signicant inuence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in prot or loss.
2.9
Joint ventures A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic nancial and operating decisions relating to the activity require the unanimous consent of the parties sharing control and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. The Groups investment in joint ventures is accounted for using the equity method. Under the equity method, the investment in joint ventures is carried in the balance sheet at cost plus post-acquisition changes in the Groups share of net assets of the joint venture. The Groups share of prot or loss of the joint venture is recognised in prot or loss. Where there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of such changes. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Groups net investment in the joint venture. The joint venture is equity accounted for from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.
2.9
Joint ventures (contd) Adjustments are made in the Groups consolidated nancial statements to eliminate the Groups share of intragroup balances, income and expenses and unrealised gains and losses on such transactions between the Group and its jointly controlled entity. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss. The nancial statements of the joint venture are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of joint control, the Group measures any retained investment at its fair value. Any difference between the carrying amount of the former jointly controlled entity upon loss of joint control and the aggregate of the fair value of the retained investment and proceeds from disposal is recognised in prot or loss.
2.10 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 2.18. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benets associated with the item will ow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. When signicant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specic useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satised. All other repair and maintenance costs are recognised in prot or loss as incurred. Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful life of the asset as follows: Leasehold property Machinery and equipment Electrical works Furniture and ttings Ofce equipment Renovation Motor vehicles 20 years 5 - 6 years 5 - 6 years 5 - 6 years 3 - 6 years 2 - 6 years 5 - 6 years
77
2.10 Property, plant and equipment (contd) Construction-in-progress is stated at cost. No depreciation is provided for constructionin-progress as these assets are not yet available for use. Leasehold land represents the lease of land from Jurong Town Corporation and is intended for the construction of ofce building and development of manufacturing facilities in Singapore. Leasehold land will be depreciated over the remaining lease term upon completion of the construction of the building. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual values, useful life and depreciation method are reviewed at each nancial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benets embodied in the items of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benets are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in prot or loss in the year the asset is derecognised.
2.11 Intangible assets (a) Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Groups cash-generating units that are expected to benet from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cashgenerating unit is less than the carrying amount, an impairment loss is recognised in prot or loss.
78
2.11 Intangible assets (contd) (a) Goodwill (contd) Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.5. Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the rates prevailing at the date of acquisition. (b) Other intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either nite or indenite. Intangible assets with nite lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each nancial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benets embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with nite useful lives is recognised in prot or loss in the expense category consistent with the function of the intangible asset. Intangible assets with indenite useful lives or not yet available for use are tested for impairment annually or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indenite life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indenite to nite is made on a prospective basis.
79
2.11 Intangible assets (contd) (b) Other intangible assets (contd) Gain or loss arising from derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in prot or loss when the asset is derecognised. (i) Trade mark Costs relating to trade mark are capitalised and amortised on a straightline basis over its estimated nite useful life of 5 years. (ii) Franchise rights Costs relating to master franchise fees paid are capitalised and amortised on a straight-line basis over the lease/franchise period ranging from 4 to 20 years. Costs relating to territory reservation fees are capitalised. The costs were previously amortised by a xed amount as and when a new outlet starts operation. Based on a review performed for the year, the Group changed the amortisation method to straight line basis over the remaining useful life of 6 years. The change in estimate resulted in an annual amortisation expense of $102,000 and increased the amortisation expense for the year by $89,000. (iii) Location premium Consideration paid to previous tenants to vacate premises in order to secure the lease arrangement are amortised on a straight-line basis over the new lease agreement period of 4 years. (iv) Brand value Brand value was acquired through a business combination. The useful life of the brand is assessed to be nite and estimated to be 15 years because this is the length of time that the management expects the economic benets of the brand to ow to the Group. Brand value is amortised on a straight-line basis over its estimated economic useful life.
80
2.12
Impairment of non-nancial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash ows expected to be generated by the asset are discounted to their present value using a pretax discount rate that reects current market assessments of the time value of money and the risks specic to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identied, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Groups cashgenerating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of ve years. For longer periods, a long-term growth rate is calculated and applied to project future cash ows after the fth year. Impairment losses of continuing operations are recognised in prot or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or cash-generating units recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in prot or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase, in which case the reversal is treated as a revaluation increase.
81
2.13 Financial assets Initial recognition and measurement Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the nancial instrument. The Group determines the classication of its nancial assets at initial recognition. When nancial assets are recognised initially, they are measured at fair value, plus, in the case of nancial assets not at fair value through prot or loss, directly attributable transaction costs. Subsequent measurement The subsequent measurement of nancial assets depends on their classication as follows: (a) Loans and receivables Non-derivative nancial assets with xed or determinable payments that are not quoted in an active market are classied as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in prot or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Held-to-maturity investments Non-derivative nancial assets with xed or determinable payments and xed maturity are classied as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in prot or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process. (c) Available-for-sale nancial assets Available-for-sale nancial assets include equity and debt securities. Equity investments classied as available-for-sale are those, which are neither classied as held for trading nor designated at fair value through prot or loss. Debt securities in this category are those which are intended to be held for an indenite period of time and which may be sold in response to needs for liquidity or in response to changes in market conditions. After initial recognition, available-for-sale nancial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the nancial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in prot or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassied from equity to prot or loss as a reclassication adjustment when the nancial asset is derecognised. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.
(b)
82
2.13
Financial assets (contd) Derecognition A nancial asset is derecognised where the contractual right to receive cash ows from the asset has expired. On derecognition of a nancial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in prot or loss. All regular way purchases and sales of nancial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of nancial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.
2.14
Impairment of nancial assets The Group assesses at each balance sheet date whether there is any objective evidence that a nancial asset is impaired. (a) Financial assets carried at amortised cost For nancial assets carried at amortised cost, the Group rst assesses whether objective evidence of impairment exists individually for nancial assets that are individually signicant, or collectively for nancial assets that are not individually signicant. If the Group determines that no objective evidence of impairment exists for an individually assessed nancial asset, whether signicant or not, it includes the asset in a group of nancial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on nancial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash ows (excluding future credit losses that have not been incurred) discounted at the nancial assets original effective interest rate (i.e. the effective interest rate computed at initial recognition). If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in prot or loss. When the asset becomes uncollectible, the carrying amount of impaired nancial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the nancial asset. To determine whether there is objective evidence that an impairment loss on nancial assets has been incurred, the Group considers factors such as the probability of insolvency or signicant nancial difculties of the debtor and default or signicant delay in payments.
83
2.14
Impairment of nancial assets (contd) (a) Financial assets carried at amortised cost (contd) If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in prot or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. (b) Financial assets carried at cost If there is objective evidence (such as signicant adverse changes in the business environment where the issuer operates, probability of insolvency or signicant nancial difculties of the issuer) that an impairment loss on a nancial asset carried at cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash ows discounted at the current market rate of return for a similar nancial asset. Such impairment losses are not reversed in subsequent periods. (c) Available-for-sale nancial assets In the case of equity instruments classied as available-for sale, objective evidence of impairment include (i) signicant nancial difculty of the issuer or obligor, (ii) information about signicant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a signicant or prolonged decline in the fair value of the investment below its costs. Signicant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. If an available-for-sale nancial asset is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in prot or loss, is transferred from other comprehensive income and recognised in prot or loss. Reversals of impairment losses in respect of equity instruments are not recognised in prot or loss; increase in their fair value after impairment are recognised directly in other comprehensive income.
84
2.15
Cash and cash equivalents Cash and cash equivalents comprise cash on hand and at bank, unpledged xed deposits and short-term highly liquid investments which are readily convertible to known amounts of cash and which are subject to insignicant risk of changes in value.
2.16
Inventories Inventories comprise raw materials, consumables, semi-nished goods, nished goods and base inventory. Inventories are valued at the lower of cost and net realisable value. Costs comprise purchase costs accounted for on a weighted average cost basis. In the case of semi-nished goods, costs also include an appropriate share of production overheads based on normal operating capacity. Base inventory, comprising mainly cutlery and dining utensils, are written down to 50% of the original cost and all further replacement costs incurred in maintaining the base inventory is expensed. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
2.17
Financial liabilities Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the nancial instrument. The Group determines the classication of its nancial liabilities at initial recognition. All nancial liabilities are recognised initially at fair value plus in the case of nancial liabilities not at fair value through prot or loss, directly attributable transaction costs. Subsequent measurement After initial recognition, nancial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in prot or loss when the liabilities are derecognised and through the amortisation process. Derecognition A nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modied, such an exchange or modication is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in prot or loss.
85
2.18
Borrowing costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
2.19
Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outow of resources embodying economic benets will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each balance sheet date and adjusted to reect the current best estimate. If it is no longer probable that an outow of resources embodying economic benets will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reects, where appropriate, the risks specic to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a nance cost.
2.20
Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fullment of the arrangement is dependent on the use of a specic asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specied in an arrangement. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the nance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to prot or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in prot or loss on a straight-line basis over the lease term. The aggregate benet of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
86
2.21
Employee benets (a) Dened contribution plans The Group participates in the national pension schemes as dened by the laws of the countries in which it has operations. Contributions to national pension schemes are recognised as an expense in the period in which the related services are performed. Singapore The Group makes contributions to the Central Provident Fund (CPF) scheme in Singapore, a dened contribution pension scheme. The Group makes monthly contributions based on stipulated contribution rates. Peoples Republic of China (PRC) Subsidiaries incorporated and operating in the PRC are required to provide certain staff pension benets to their employees under existing PRC regulations. Contributions are provided at rates stipulated by PRC regulations and are contributed to a pension fund managed by government agencies, which are responsible for administering these amounts for the subsidiaries PRC employees. Hong Kong Subsidiaries incorporated and operating in Hong Kong pay contributions to publicly or privately administered pension insurance plans on a mandatory basis. The subsidiaries have no further payment obligations once the contributions have been paid. The contributions are not reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (b) Employee leave entitlement Employee entitlements to annual leave are recognised when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to balance sheet date.
87
2.21
Employee benets (contd) (c) The BreadTalk Restricted Share Grant Plan (RSG Plan) Employees receive remuneration under the RSG Plan in the form of fully-paid shares (Awards) of the Company as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the Awards at the date on which the Awards are granted. The cumulative expense recognised at each reporting date until the vesting date reects the Companys best estimate of the number of Awards that will ultimately vest. The charge or credit to prot or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. In the Companys separate nancial statements, the fair value of the Awards granted to employees of its subsidiaries is recognised as an increase in the cost of the Companys investment in subsidiaries, with a corresponding increase in equity.
2.22
Revenue Revenue is recognised to the extent that it is probable that the economic benets will ow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually dened terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specic recognition criteria must also be met before revenue is recognised: (a) Bakery sales, restaurant sales and sales to franchisee Revenue from the sale of goods is recognised upon the transfer of signicant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are signicant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (b) Franchise income Initial franchise income is recognised upon the grant of rights, completion of the designated phases of the franchise setup and transfer of know-how to the franchisee in accordance with the terms stated in the franchise agreement. Recurring franchise income is recognised on a periodic basis as a percentage of the franchisees revenue in accordance with terms as stated in the franchise agreement. (c) Food court revenue Fixed rental income from the sub-lease of food courts is recognised as income in prot or loss on a straight line basis over the lease term. The variable portion of the rental income which is computed based on a percentage of the food court tenants gross sales is recognised when such sales are earned. Revenue from the sale of food and beverage is recognised upon delivery and acceptance by customers, net of sale discounts.
88
2.22
Income recognition (contd) (d) (e) Management fee Management fee is recognised on an accrual basis. Interest income Interest income is recognised as interest accrued (using the effective interest method) unless collectibility is in doubt. (f) Dividend income Dividend income is recognised when the Groups right to receive payment is established.
2.23
Government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised in prot or loss over the period necessary to match them on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to prot or loss over the expected useful life of the relevant asset by equal annual instalments.
2.24
Income taxes (a) Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date, in the countries where the Group operates and generates taxable income. Current taxes are recognised in prot or loss except to the extent that the tax relates to items recognised outside prot or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
89
2.24
Income taxes (contd) (b) Deferred tax Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for nancial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting prot nor taxable prot or loss; and In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable prot will be available against which the deductible temporary diffrences, and the carry forward of unused tax credits and unused tax losses can be utilised except: Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting prot nor taxable prot or loss; and In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable prot will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufcient taxable prot will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable prot will allow the deferred tax asset to be utilised.
90
2.24
Income taxes (contd) (b) Deferred tax (contd) Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax is recognised in prot or loss. Deferred income tax relating to items recognised outside prot or loss is recognised outside prot or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Tax benets acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about the facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurement period or in prot or loss. (c) Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except: Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. 2.25 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 33, including the factors used to identify the reportable segments and the measurement basis of segment information.
91
2.26
Share capital and share issue expenses Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.
2.27
Treasury shares The Groups own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in prot or loss on the purchase, sale, issue or cancellation of the Groups own equity instruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullied for the Group and no dividends are allocated to them respectively.
2.28
Contingencies A contingent liability is: (a) a possible obligation that arises from past events and whose existence will be conrmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or a present obligation that arises from past events but is not recognised because: (i) (ii) It is not probable that an outow of resources embodying economic benets will be required to settle the obligation; or The amount of the obligation cannot be measured with sufcient reliability.
(b)
A contingent asset is a possible asset that arises from past events and whose existence will be conrmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined. Group 2011 $000 169,395 76,969 15,231 9,807 94,502 365,904 2010 $000 137,019 56,253 12,600 8,512 88,504 302,888
Revenue
Bakery sales Restaurant sales Sales to franchisee Franchise income Food court income
92
Other operating income Group 2011 $000 2010 $000 4,642 1,014 356 111 436 221 1,721 226 4,568 893 14,188
Management fee income Government grant (1) Grant income from Jobs Credit Scheme (2) Income from expired food court stored value cards Sponsorship income Sundry sales Compensation from landlord Rental income Agency commission Gain on disposal of property, plant and equipment Miscellaneous income
4,332 840 139 651 67 339 39 20 1,068 7,495
(1)
Government grant in relation to business expansion activities undertaken by certain subsidiaries in the PRC. During the nancial year ended 31 December 2009, the Singapore Finance Minister announced the introduction of a Jobs Credit Scheme (Scheme). Under this Scheme, the Group received a 12% cash grant on the rst $2,500 of each months wages for each employee on their Central Provident Fund payroll. The Government extended the Scheme with another two payments at stepped-down rates of 6% and 3% in March and June 2010 respectively. During the nancial year ended 31 December 2010, the Group received grant income of $356,000 under the Scheme.
(2)
Interest income and interest expense Group 2011 $000 2010 $000
Interest income from: - Loans and receivables - Held-to-maturity nancial assets
304 520 824
143 458 601
Interest expense on: - Term loans - Finance lease obligations - Others
(754) (3) (28) (785)
(603) (8) (24) (635)
93
Prot before taxation This is determined after charging/(crediting) the following: Group 2011 $000 Audit fees to: 307 - Auditors of the Company 269 - Other auditors Non-audit fees to: 124 - Auditors of the Company 62 - Other auditors 442 Amortisation of intangible assets (Note 11) Impairment/(write back of impairment) of loans and receivables 253 - Trade receivables (Note 17) 64 - Other receivables (Note 17) - Amount due from an associate (non-trade) 168 Directors fees 23,920 Depreciation of property, plant and equipment (Note 10) 102,284 Employee benets (Note 7) (58) Foreign exchange (gain)/loss, net Loss from misappropriation of funds (1) Operating lease expenses 67,340 - Fixed portion 7,395 - Variable portion 1,219 Property, plant and equipment written off 125 Impairment loss on intangible assets (Note 11) 289 Impairment loss on property, plant and equipment (Note 10) 25 Write-down of inventories (Note 16) 31 Write-off of inventories (Note 16)
(1)
2010 $000 225 235 112 59 408 (5) 3 30 124 21,190 84,338 368 622 57,253 6,776 2,285 19 761 23
This relates to loss as a result of misappropriation of funds by an employee of a subsidiary.
Employee benets Group 2011 $000 2010 $000
Staff costs (including directors) Salaries and bonuses Central Provident Fund and other pension contributions Sales incentives and commission Share-based payment (RSG Plan) Other personnel benets
76,060 7,811 2,357 279 15,777 102,284
64,122 6,990 2,533 665 10,028 84,338
94
Employee benets (contd) RSG Plan Under the RSG Plan, directors and employees receive remuneration in the form of fullypaid shares of the Company as consideration for services rendered. Restricted shares are granted conditionally and the nal number of restricted shares awarded will depend on the achievement of pre-determined targets over a one year period. On meeting the performance conditions for the performance period, one-third of the restricted shares will vest. The balance will vest equally over the subsequent two years with the fullment of service requirements. The fair value of the restricted shares granted is estimated based on the market price of the shares on grant date less the present value of expected future dividends during the vesting period. During the year, 681,000 (2010: 1,356,539) restricted shares were granted. The number of restricted shares outstanding at year end is 1,233,336 (2010: 1,105,763) shares.
Taxation Major components of income tax expense were:
Group 2011 $000 Current tax - Current year - (Over)/under provision in prior year Deferred tax - Origination and reversal of temporary differences - Under/(over) provision in prior year Witholding tax Taxation expense 2010 $000
5,280 (129)
5,596 (503)
(269) (156) 644 5,370
(93) 205 315 5,520
95
Taxation (Contd) A reconciliation between the tax expense and the product of accounting prot multiplied by the applicable tax rate for the year ended 31 December is as follows: Group 2011 2010 $000 $000 Prot before taxation Tax at the domestic rates applicable to prots in the countries where the Group operates (1) Tax effect of: Expenses not deductible for tax purposes Income not subject to taxation Share of associates and joint ventures tax Tax savings arising from development and expansionincentive (2) (Over)/under provision in prior years - Current tax - Deferred tax Withholding tax expense Effect of partial tax exemption and tax relief Deferred tax assets not recognised Benets from previously unrecognised deferred tax assets Tax savings from enhanced deductions (3) Others 17,127 16,688
2,821
2,853
1,592 (37) 68 (222)
1,249 (64) (70) (189)
(129) (156) 644 (93) 1,829 (434) (483) (30)
(503) 205 315 (62) 1,967 (64) (78) (39)
Taxation expense
5,370
5,520
(1)
This is prepared by aggregating separate reconciliations for each national jurisdiction. In February 2004, the Economic Development Board granted the Development and Expansion Incentive under the International Headquarters (IHQ-DEI) Award to a subsidiary. Subject to certain conditions, the subsidiary enjoys a concessionary tax rate of 10% on its qualifying income for a period of 5 years commencing 1 January 2003. On 24 January 2008, the subsidiary was granted an extension of the DEI for another 5 years commencing 1 January 2008. In Budget 2010, the Minister for Finance of Singapore introduced a new broad-based tax scheme to encourage businesses to invest in productivity and innovation. The scheme enhances existing tax measures that encourage productivity and innovative activities and consolidates them into a single scheme, known as the Productivity and Innovation scheme (PIC). The PIC is available for Year of Assessment (YA) 2011 to YA 2015.
(2)
(3)
96
Taxation (contd) Deferred income tax as at 31 December relates to the following: Group Balance sheet Prot or loss 2011 2010 2011 2010 $000 $000 $000 $000 Deferred tax liabilities: Differences in depreciation for tax purposes Provisions Dividend income Other items Company Balance sheet 2010 2011 $000 $000
(1,941) (2,383) (168) (186) (167) (78) (2,276) (2,647)
(442) (17) 89
1,035 43 81 78
Deferred tax assets: Provisions Differences in depreciation for tax purposes Unutilised tax losses Other items
1,426 640 54 2,120
920 693 265 20 1,898
(342) 57 264 (34)
(444) (388) (273) (20)
(4) (14) (18)
12 12
Deferred income tax
(425)
112
Unrecognised tax losses, capital allowances and other temporary differences
As at 31 December 2011, the Group has tax losses of approximately $19,634,000 (2010: $12,721,000), unutilised capital allowances of approximately $198,000 (2010: $410,000) and other temporary differences of approximately $3,546,000 (2010: $2,714,000) that are available for offset against future taxable prots, for which no deferred tax assets are recognised on these amounts due to uncertainty of their utilisation. The utilisation of the tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. As at 31 December 2011, $13,872,000 (2010: $8,765,000) of the unrecognised tax losses will expire between 1 and 10 years.
Tax consequences of proposed dividends
There are no income tax consequences attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the nancial statements (Note 34). 9 Earnings per share Basic earnings per share is calculated by dividing the Groups prot for the year attributable to ordinary equity holders of the Company of $11,592,000 (2010: $11,266,000) by the weighted average number of ordinary shares, excluding treasury shares, of 281,197,676 (2010: 281,052,253) in issue during the year. Diluted earnings per share is calculated by dividing the Groups prot for the year attributable to ordinary equity holders of the Company of $11,592,000 (2010: $11,266,000) by the weighted average number of ordinary shares, excluding treasury shares, in issue during the year plus the weighted average number of restricted shares granted conditionally under the BreadTalk Restricted Share Grant Plan of 282,392,002 (2010: 282,153,201).
97
10
Property, plant and equipment Leasehold Leasehold property land $000 $000 8,391 (4,925) (278) 4,462 685(2) Machinery Electrical Furniture Ofce and works and ttings equipment equipment $000 $000 $000 $000 21,869 6,168 1,007 (734) (287) (512) 16,072 5,514 (334) (499) 19,496 5,412 (383) (15) (981) 5,040 1,120 157 (113) (8) (140)
Group Cost As at 1.1.2010 Additions Reclassications Write offs Disposals Translation difference As at 31.12.2010 and 1.1.2011 Additions Reclassications Write offs Disposals Translation difference As at 31.12.2011 Accumulated depreciation and impairment losses As at 1.1.2010 Charge for the year Reclassications Write offs Disposals Impairment loss for the year Translation difference As at 31.12.2010 and 1.1.2011 Charge for the year Reclassications Write offs Disposals Impairment loss for the year Translation difference As at 31.12.2011 Net carrying amount As at 31.12.2010 As at 31.12.2011
3,188 140 3,328
5,147 5,147
27,511 5,210 (87) (830) (272) 349 31,881
20,753 4,960 63 (1,437) (73) 67 24,333
23,529 4,732 (63) (2,334) (10) 135 25,989
6,056 1,431 365 (633) (26) 110 7,303
1,613 375 (1,071) (61)
10,626 3,685 (49) (512) (174) 112 (181)
7,134 3,272 (307) 42 (241)
8,211 3,955 (255) (7) 196 (461)
2,752 982 53 (99) (3) (81) 3,604 1,139 3 (573) (16) 47 4,204
856 145 45 1,046
13,507 4,338 (4) (703) (190) 109 129 17,186
9,900 4,008 3 (1,307) (9) 105 37 12,737
11,639 4,346 (8) (2,130) (1) 7 64 13,917
2,332 2,282
5,147 5,147
14,004 14,695
10,853 11,596
11,890 12,072
2,452 3,099
98
10
Property, plant and equipment (contd)

Motor vehicles Construction -in-progress
Group Cost As at 1.1.2010 Additions Reclassications Write offs Disposals Translation difference As at 31.12.2010 and 1.1.2011 Additions Reclassications Write offs Disposals Translation difference As at 31.12.2011 Accumulated depreciation and impairment losses As at 1.1.2010 Charge for the year Reclassications Write offs Disposals Impairment loss for the year Translation difference As at 31.12.2010 and 1.1.2011 Charge for the year Reclassications Write offs Disposals Impairment loss for the year Translation difference As at 31.12.2011 Net carrying amount As at 31.12.2010 As at 31.12.2011
(1)
Renovation (1) $000 39,127 15,941 124 (5,322) (1,773) (1,198)
Total
$000 1,656 498 (1) (836) (31)
$000 3,302 53 (1,288) (2) (5) (107)
$000 114,953 39,168 685 (6,889) (7,849) (3,746)
46,899 13,431 134 (5,038) (79) 1,192 56,539
1,286 125 (39) 25 1,397
1,953 10,144 (497) (42) 160 11,718
136,322 40,033 (85) (10,314) (499) 2,178 167,635
19,346 8,642 (4) (3,431) (1,475) 411 (554)
919 279 (605) (18)
50,601 21,190 (4,604) (3,335) 761 (1,597)
22,935 9,735 (3) (4,382) (44) 68 571 28,880
575 209 (34) 17 767
63,016 23,920 (9) (9,095) (294) 289 910 78,737
23,964 27,659
711 630
1,953 11,718
73,306 88,898
Additions in renovation for the year include provision for reinstatement costs of $2,461,000 (2010: $536,000). The advance payment of land premium in 2009 was reclassied from prepayment during 2010.
(2)
99
10
Property, plant and equipment (contd)
Assets held under nance leases As at 31 December 2011, the net carrying amount of property, plant and equipment acquired under nance leases are as follows: Group 2011 $000 Machinery and equipment 106 2010 $000 152
Leased assets are pledged as security for the related nance lease liabilities.
Assets written off Property, plant and equipment written off during the year arose mainly due to the refurbishment/closure of certain bakery outlets and food courts. The amount written off represents the total carrying value of the property, plant and equipment attributable to the bakery outlets and food courts at the date of refurbishment/ closure. The residual value of these assets has been assessed as nil. Assets pledged as security In addition to assets held under nance leases, the Groups leasehold land with a carrying amount of $5,147,000 (2010: $5,147,000) is pledged to secure the Companys bank loan (Note 25). Impairment of assets The impairment loss of $289,000 (2010:$761,000) recognised in administrative expenses in prot or loss during the year comprised impairment loss on property, plant and equipment of certain food stalls which have been persistently incurring losses.
100
10
Property, plant and equipment (contd) Furniture and Electircal Ofce Leasehold Constructionland in-progress Total ttings works equipment $000 $000 $000 $000 $000 $000 Company Cost As at 1.1.2010 Additions Reclassication 1 127 23 4,462 685(2) 35 539 163 5,024 685
As at 31.12.2010 and 1.1.2011 Additions Write off As at 31.12.2011
1 15 16
3 3
150 23 173
5,147 5,147
574 1,488 (35) 2,027
5,872 1,529 (35) 7,366
Accumulated depreciation As at 1.1.2010 Charge for the year As at 31.12.2010 and 1.1.2011 Charge for the year As at 31.12.2011 1 62 43 62 44
1 6 7
1 1
105 31 136
106 38 144
Net carrying amount As at 31.12.2010 As at 31.12.2011
45 37
5,147 5,147
574 2,027
5,766 7,222
101
11
Intangible assets Group Brand value $000 3,209 3,209 3,209 Trade mark $000 790 22 812 2 Franchise rights $000 1,182 477 (29) 1,630 614 (71) 28 2,201 Location premium $000 505 505 505
Goodwill $000 Cost As at 1.1.2010 Additions Translation difference As at 31.12.2010 and 1.1.2011 Additions Write off Translation difference As at 31.12.2011 Accumulated amortisation and impairment losses As at 1.1.2010 Amortisation Impairment loss Translation difference As at 31.12.2010 and 1.1.2011 Amortisation Impairment loss Write off Translation difference As at 31.12.2011 Net carrying amount As at 31.12.2010 As at 31.12.2011 6,173 6,173 6,173
Total $000 11,859 499 (29) 12,329 616 (71) 28 12,902
814
1,077 213
627 79
553 116 19 (2)
505
2,762 408 19 (2)
125 125
1,290 213 1,503
706 52
686 177 (71) 5 797
505 505
3,187 442 125 (71) 5 3,688
758
6,173 6,048
1,919 1,706
106 56
944 1,404
9,142 9,214
Brand value, trade mark, franchise rights and location premium are determined to have nite useful lives and are amortised on a straight-line basis over their respective estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. Brand value, trade mark and franchise rights have remaining useful lives of 8 years (2010: 9 years), 1 to 5 years (2010: 1 to 5 years) and 1 to 5 years (2010: 1 to 5 years) as at 31 December 2011 respectively. In the previous year, a subsidiary impaired its intangible assets of $19,000 as it had ceased operations. Amortisation expense is included in administrative expenses in prot of loss.
102
11
Intangible assets (contd) Impairment testing of goodwill Goodwill arising from the acquisition of Topwin Investment Holding Pte Ltd and its subsidiaries in 2005 was allocated to 2 cash-generating units (CGU), which represent the 2 geographical segments (i.e. Shanghai and Beijing segments) in which the acquired food courts are located. The food courts located in the same geographical segment are managed by the same management team. Goodwill arising from the acquisition of ML Breadworks Sdn Bhd in 2007 was allocated to the legal entity acquired which represents the CGU. Meanwhile, goodwill on the acquisition of MWA Pte Ltd in December 2007 was primarily attributable to the food court operations at Wisma Atria, Singapore. The carrying amounts of goodwill allocated to each CGU are as follows:
Carrying amount as at 31 Dec 2011 $000 Shanghai segment Beijing segment ML Breadworks Sdn Bhd Food court operation at Wisma Atria, Singapore
Carrying amount as at 31 Dec 2010 $000
Pre-tax discount rate 2011
Pre-tax discount rate 2010
3,569 1,009 202 1,268 6,048
3,569 1,009 327 1,268 6,173
11.5% 11.5% 8.5% 8.5%
10.6% 10.6% 10.6% 10.6%
The recoverable amount is determined based on a value in use calculation using the cash ow projections based on nancial budgets approved by management covering a three-year period. The discount rates applied to the cash ow projections are derived from cost of capital plus a reasonable risk premium at the date of assessment of the respective cash generating units. The calculations of value in use for the CGUs are most sensitive to the following assumptions: Budgeted gross margins Gross margins are based on budget approved by management.
103
11
Intangible assets (contd)
Pre-tax discount rates Discount rates represent the current market assessment of the risks specic to each CGU, regarding the time value of money and individual risks of the underlying assets which have not been incorporated in the cash ow estimates. The discount rate calculation is based on the specic circumstances of the Group and its cash-generating units and derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Groups investors. The cost of debt is based on the interest bearing borrowings the Group is obliged to service. Segmentspecic risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.
Impairment loss on goodwill of $125,000 (2010: $Nil) on ML Breadworks Sdn Bhd was recognised in administrative expenses in prot or loss for the nancial year ended 31 December 2011 as the recoverable amount was less than the carrying value. 12 Investment securities
Group 2011 $000 Available-for-sale nancial assets - Equity instruments (quoted) - Redeemable preference shares (unquoted) Held-to-maturity investments - 8% SGD junior bonds due on 29 January 2015 919 * 2010 $000 919 *
10,750 11,669
10,750 11,669
* less than $1,000
Junior bonds and redeemable preference shares On 27 January 2010, the subsidiary, Imagine Properties Pte Ltd (IPPL) together with other investors, entered into a subscription agreement with PRE 1 Investments Pte Ltd (PRE 1) for the subscription of junior bonds and attached redeemable preference shares in the capital of PRE 1. IPPLs subscription was $10,750,000 in principal amount of junior bonds together with 43 preference shares at $0.10 per share, representing approximately 6.98% of the total aggregate value of the junior bonds and the preference shares issued by PRE 1. PRE 1 is the sole unitholder of the Perennial Katong Retail Trust which had acquired the Katong Mall (property).
104
12
Investment securities (contd) The junior bonds are secured by a mortgage over the property, assignment of rental proceeds of the property and debentures. The payments of the principal and interest on the junior bonds are subordinated to the payments of principal and interest on the bank borrowings obtained for the purchase of the Katong Mall. The junior bonds mature in 2015 and will bear interest, payable semi-annually in arrears, at 8% per annum from 29 January 2012 to but excluding the maturity date of the junior bonds, subject to the extinguishment of unpaid interest.
13
Investment in subsidiaries Company 2011 $000 Unquoted equity shares at cost Loans to subsidiaries Share based compensation reserve 28,289 11,950 237 40,476 2010 $000 28,289 10,750 127 39,166
Loans to subsidiaries are quasi-capital in nature, non-interest bearing and have no xed terms of repayment. Details of the subsidiaries are as follows:
Name Held by the Company BreadTalk Pte Ltd (1)
Country of incorporation
Principal activities
Singapore
Proportion of ownership interest 2011 2010 % % 100 100
Bakers and manufacturers of and dealers in bread, our and biscuits Investment holding
BreadTalk International Pte Ltd (1) Topwin Investment Holding Pte Ltd (1) Star Food Pte Ltd (1) Imagine Properties Pte Ltd (1) Together Inc. Pte Ltd (8)
Singapore
100
100
Singapore
Investment holding
100
100
Singapore Singapore
Investment holding Investment holding
60 100
60 100
Singapore
Investment holding
100
100
105
13
Investment in subsidiaries (contd) Name Country of incorporation Principal activities Proportion of ownership interest 2011 2010 % % 70 70
Held through subsidiaries Taster Food Pte Ltd (1) Singapore Operators of food and drinks outlets, eating houses and restaurants Dormant
Charcoal Pte Ltd (1)
Singapore
75
75
Shanghai BreadTalk Co., Ltd (2)
Peoples Republic of China Peoples Republic of China
Bakers and manufacturers of and dealers in bread, our and biscuits Management of food and beverage, manufacture and retail of bakery, confectionery products Management of food and beverage, manufacture and retail of bakery, confectionery products Manufacture and sale of bakery and confectionery products Food court operator
100
100
Shanghai BreadTalk Gourmet Co., Ltd (2)
100
100
Beijing BreadTalk Restaurant Management Co., Ltd (2)
100
100
Beijing BreadTalk Co.,Ltd (2)
100
100
Food Republic (Shanghai) Co., Peoples Republic of Ltd (2) China Beijing Da Shi Dai Food and Beverage Co., Ltd (2) Peoples Republic of China Peoples Republic of China
100
100
Food court operator
100
100
Chongqing Food Republic Food & Beverage Co., Ltd (3)
Food court operator
100
100
106
13
Investment in subsidiaries (contd) Name Country of incorporation Principal activities Proportion of ownership interest 2011 2010 % %
Held through subsidiaries (contd) Megabite Hong Kong Limited (4) Megabite (S) Pte Ltd (1) Food Republic Pte Ltd (1) Hong Kong Food court operator
85
85
Singapore Singapore
Investment holding Food court operator
100 100
100 100
BreadTalk (Thailand) Company Limited (5)(14)
Thailand
Management of food and beverage, manufacture and retail of bakery, confectionery products Operator of food and beverage outlets Management of food and beverage, manufacture and retail of bakery, confectionery products Bakers and manufacturers of and dealers in bread, our and biscuits Dormant Operators of food and beverage outlets Operators of restaurants
49
49
Megabite Eatery (M) Sdn Bhd (6) BreadTalk Concept Hong Kong Limited (4)
Malaysia
100
100
Hong Kong
85
85
ML Breadworks Sdn Bhd (7)
Malaysia
90
90
MWA Pte Ltd (1) Food Art Pte Ltd (1)
Singapore Singapore
100 100
100 100
Shanghai Star Food F&B Management Co., Ltd (2) (Note (a))
60
60
Beijing Star Food F&B Management Co., Ltd (9)
Peoples Republic of China Singapore
Operators of restaurants
60
60
Ramen Play Pte Ltd (8)
60
60
Shanghai Ramen Play Co., Ltd (3) (Note (a))
60
60
107
13 Name
Investment in subsidiaries (contd) Country of incorporation Principal activities Proportion of ownership interest 2011 2010 % %
Held through subsidiaries (contd) Taster Food International Pte Ltd (8) Taster Food (Thailand) Co. Limited (11)(14) Singapore Investment holding
63
63
Thailand
Operators of restaurants 31 Food court operator
31
Food Republic Hangzhou F&B Peoples Republic of Co.,Ltd (3) China Food Republic Shenzhen F&B Peoples Republic of Management Co.,Ltd (10) China Food Republic Guangzhou F&B Peoples Management Co., Ltd (13) (Note Republic of China (a)) Food Republic Taiwan Co., Ltd Taiwan (12) (Note (a)) FR (Thailand) Co., Ltd (11) (Note Thailand (a))
100
100
Food court operator
85
85
Food court operator
64
Food court operator
90
Food court operator
49
(1). (2) (3)
(4) (5) (6) (7) (8) (9)
(10) (11) (12) (13) (14)
Audited by Ernst & Young LLP Singapore , Audited by member rms of Ernst & Young Global in the respective countries Audited by Shanghai Xin Gao Xin Certied Public Accountants Co., Ltd, Peoples Republic of China Audited by S.F. Kwok & Co. Certied Public Accountants, Hong Kong Audited by CNN & S Co., Ltd, Thailand Audited by RSM Robert Teo, Kuan & Co., Malaysia Audited by C L Chong & Co., Malaysia Audited by Trustnet Alliance, Singapore Audited by Beijing Daxing Certied Public Accountants Co., Ltd, Peoples Republic of China Audited by Shenzhen Zhigong Certied Public Accountants, Peoples Republic of China Audited by Phattarakit Aupliting Ofce Co.,Ltd, Thailand Audited by KPMG, Taiwan Audited by Guangzhou Dagong Certied Public Accountants, Peoples Republic of China Considered a subsidiary of the Company as the Company has voting control at general meetings and Board meetings
108
13
Investment in subsidiaries (contd) (a) New subsidiaries and additional investments Shanghai Star Food F&B Management Co., Ltd (Shanghai Star Food) During the year, Star Food Pte Ltd, a 60% owned subsidiary of the Group, subscribed for the additional share capital of its wholly owned subsidiary, Shanghai Star Food, of 1,600,000 new ordinary shares for a cash consideration of US$1,600,000 ($1,937,000). Food Republic Taiwan Co., Ltd (Food Republic Taiwan) Food Republic Taiwan was incorporated as a 90% owned subsidiary of Topwin Investment Holding Pte Ltd (Topwin), a wholly-owned subsidiary of the Group in March 2011 with a registered capital and paid up capital of NT$5,000,000 ($215,000).
Shanghai Ramen Play Co., Ltd (Shanghai Ramen Play) During the year, Shanghai BreadTalk Co., Ltd and Food Republic (Shanghai) Co., Ltd, subscribed for 30% each of the additional share capital issued by Shanghai Ramen Play for a total cash consideration of US$750,000 ($969,000). The Company retains an effective interest of 60% in Shanghai Ramen Play. Food Republic Guangzhou F&B Management Co., Ltd (Food Republic Guangzhou) Food Republic Guangzhou was incorporated as a 75% owned subsidiary of Megabite Hong Kong Limited, a 85% owned subsidiary of the Group, in June 2011 with a registered and paid up capital of HK$1,000,000 ($157,000). FR (Thailand) Co, Ltd (FR Thailand) During the year, Topwin subscribed for a 49% interest in FR Thailand for a cash consideration of THB 2,450,000 ($104,000). FR Thailand was incorporated in July 2011 with a paid up capital of THB 5,000,000 ($210,000). FR Thailand has not commenced operations as at 31 December 2011. FR Thailand is consolidated as a subsidiary as the Company has voting control at general meetings and Board meetings.
109
14
Investment in associates 2011 $000 Investment in shares, unquoted Shares, at cost Impairment loss Loan to an associate Share of post-acquisition results of associates 1,252 (385) 614 (1,481)
Group 2010 $000 1,252 (385) 614 (1,481)
At end of year
Loan to an associate is quasi-capital in nature, non-interest bearing and has no xed terms of repayment. Details of the associates are as follows: Name Country of incorporation Principal activities Proportion of ownership interest 2011 2010 % % 25 25 30 30
Held through subsidiaries Hong Kong BreadTalk Ltd (HKBT) (1) Out of The Box Pte Ltd (OOTB) (1) Hong Kong Singapore Dormant Dormant
(1)
Not a signicant associate and unaudited nancial statements have been used for the preparation of the consolidated nancial statements of the Group.
The Group has not recognised losses relating to HKBT and OOTB where its share of losses exceeds the Groups interest in these associates. The Groups cumulative share of unrecognised losses as at 31 December 2011 was $375,000 (2010: $402,000). The Group has no obligation in respect of these losses.
110
14
Investment in associates (contd) The summarised nancial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows: Group 2011 $000 Assets and liabilities Total assets Total liabilities Results Net prot/(loss) for the year 88 (69) 188 3,486 105 3,435 2010 $000
15
Investment in joint ventures 2011 $000 Investment in shares, unquoted Shares, at cost Share of post-acquisition results of joint ventures Exchange difference 434 18 (30) 422
Group 2010 $000
334 125 (13) 446
111
15
Investment in joint ventures (contd) Details of the joint ventures are as follows: Name Country of incorporation Principal activities Proportion of ownership interest 2011 2010 % % 50 50
Held through subsidiaries Shanghai Hong Bu Rang Peoples Republic Dormant Food & Beverage Management of China Co., Ltd (1) Food court operator Food court operator
Apex Excellent Sdn Bhd (2) Street Food Pte Ltd (3)
(1)
Malaysia Singapore
50 50
50 50
Audited by Shanghai Xin Gao Xin Certied Public Accountants Co., Ltd, Peoples Republic of China (2) Audited by RSM Robert Teo, Kuan & Co., Malaysia (3) Audited by Ernst & Young LLP Singapore , Additional investment During the year, a wholly owned subsidiary, Food Republic Pte Ltd., increased its shareholding in Street Food Pte Ltd (Street Food) by subscribing for additional 99,999 new ordinary shares of $1.00 each. The consideration for the new ordinary shares was satised by capitalizing part of the existing shareholders loan owing by Street Food to the shareholders. The aggregate amounts of each of the current assets, non-current assets, current liabilities, noncurrent liabilities, income and expenses, adjusted for the proportion of ownership interest held by the Group in the joint ventures, are as follows: Group 2011 $000 Assets and liabilities Current assets Non-current assets Total assets 2,000 827 2,827 1,751 150 1,901 2010 $000
112
15
Investment in joint ventures (contd) Group 2011 $000 2010 $000
Current liabilities Non-current liabilities Total liabilities Results Revenue Other income Expenses Prot for the year
2,431 2 2,433
1,481 1,481
2,579 459 (2,945) 93
2,265 324 (2,472) 117
The Group has not recognised losses relating to Shanghai Hong Bu Rang where its share of losses exceeds the Groups interest in this joint venture. The Groups cumulative share of unrecognised losses as at 31 December 2011 was $153,000 (2010: $153,000). The Group has no obligation in respect of these losses.
16
Inventories 2011 $000 Balance sheet: Raw materials and consumables, at cost Semi-nished goods Finished goods Base inventories (1) Total inventories at lower of cost and net realisable value 6,252 648 300 197 7,397
Group 2010 $000
5,392 444 137 141 6,114
(1)
This is stated after writing down 50% of the original cost of base inventories. Group 2011 $000 2010 $000
Prot or loss: Inventories recognised as an expense in cost of sales Inclusive of the following charge: - Write-down of inventories - Write-off of inventories 106,417 25 31 85,492 23
113
17
Trade and other receivables Group 2011 $000 Trade and other receivables (current): Trade receivables Other receivables Deposits 7,730 7,369 31,701 46,800 5,203 3,930 16,212 25,345 26 26 2010 $000 Company 2011 2010 $000 $000
Other receivables (non-current): Other receivables 1,389 857 -
Trade receivables Trade receivables are non-interest bearing and are generally on 15 to 60 days terms (2010: 30 to 90 days). They are recognised at their original invoice amounts which represents their fair values on initial recognition. Trade receivables denominated in foreign currencies at 31 December are as follows:Group 2011 $000 United States Dollar Euro 638 17 655 2010 $000 339 25 364
114
17
Trade and other receivables (contd) Receivables that are past due but not impaired The Group has trade receivables amounting to $3,661,000 (2010: $1,385,000) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows: Group 2011 $000 Trade receivables past due: Lesser than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days 2,076 456 390 79 660 3,661 495 256 205 89 340 1,385 2010 $000
Receivables that are impaired / partially impaired The Groups trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows: Group Individually impaired 2011 $000 Trade receivables nominal amounts Less: Allowance for impairment 361 (361) Movement in allowance accounts: At 1 January Charge/(write back) during the year Written off during the year Translation difference At 31 December 120 253 (13) 1 361 125 (5) 120 2010 $000 167 (120) 47
Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in nancial difculties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
115
17
Trade and other receivables (contd) Other receivables
Other receivables (current) are non-interest bearing and are generally on 0 to 60 days terms (2010: 30 to 180 days). Other receivables that are past due but not impaired The Group has other receivables amounting to $2,307,000 (2010: $1,169,000) that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows: Group 2011 $000 Other receivables past due: Lesser than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days 2010 $000
1,246 58 159 4 840 2,307
366 313 303 41 146 1,169
Other receivables that are impaired / partially impaired The Groups other receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows: Group 2011 $000 Other receivables - nominal amounts Less: Allowance for impairment 82 (82) Movement in allowance accounts: At 1 January Charge during the year Written off during the year Translation difference At 31 December 275 64 (259) 2 82 272 3 275 2010 $000 277 (275) 2
Deposits Deposits include an amount of $12,000,000 (2010: $Nil) for the subscription of junior bonds relating to the Groups investment in a retail property trust in Singapore.
116
18.
Amounts due from/to subsidiaries, joint ventures and minority shareholders of subsidiaries (non-trade) The amounts due from/to subsidiaries and joint ventures are unsecured, non-interest bearing and generally on 30 to 60 days term except for: (i) (ii) (iii) loans to subsidiaries of $20,000 (2010: $1,881,000) which are repayable on demand; loans from subsidiaries of $7,378,000 (2010: $8,750,000). $7,000,000 and $378,000 are unsecured and repayable on demand. loan to a subsidiary of $12,000,000 (2010: Nil) which bears an effective interest rate of 2.06% (2010: Nil) per annum and is repayable on demand
Amounts due from subsidiaries include dividend receivable of $2,200,000 (2010: $3,000,000). The amounts due from minority shareholders of subsidiaries are unsecured, noninterest bearing and repayable on demand. Group Receivables that are past due but not impaired
Amount due from joint ventures (non-trade)
Group 2011 $000 Lesser than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days Total as at 31 December Company Receivables that are past due but not impaired
Amounts due from subsidiaries (non-trade)
2010 $000 47 15 15 _ 77
125 38 24 26 975 1,188
Group 2011 $000 Lesser than 30 days 30 to 60 days 61 to 90 days 91 to 120 days More than 120 days Total as at 31 December 8 4 30 114 2010 $000 7 3 27 37
117
19
Cash and cash equivalents Group 2011 $000 2010 $000 2011 $000 Company 2010 $000
Fixed deposits Cash on hand and at bank
7,295 79,765 87,060
784 70,360 71,144
2,000 698 2,698
2,947 2,947
Fixed deposits of the Group and the Company have varying maturity periods between 1 week to 1 month (2010: 12 months) with effective interest rates ranging from 0.11% to 0.88% (2010: 1.71% to 2.25%) per annum. Cash and cash equivalents denominated in foreign currencies at 31 December are as follows: Group 2011 $000 United States Dollar 1,193 2010 $000 1,455 2011 $000 34 Company 2010 $000 35
20
Trade and other payables Group 2011 $000 Trade and other payables (current): Trade payables Other payables Sales collection on behalf of tenants Amount due to landlord (non-trade) 22,896 38,699 12,392 87 74,074 Other payables (non-current): Amount due to landlord (non-trade) 59 18,114 32,549 10,100 83 60,846 250 250 489 489 2010 $000 2011 $000 Company 2010 $000
118
20
Trade and other payables (contd) Trade payable/other payables These amounts are non-interest bearing. Trade payables are normally settled on 0 to 60 days terms (2010: 30 to 90 days terms) while other payables have an average term of 0 to 90 days term (2010: 30 to 90 days terms), except for retention sums which have repayment terms of up to 1 year. Other payables of the Group include food court tenant and stored value card deposits of $12,866,000 (2010: $12,516,000), amount payable for the purchase of property, plant and equipment of $10,358,000 (2010: $9,863,000) and dividend payable to minority shareholders of a subsidiary of $Nil (2010: $820,000). Amount due to landlord (non-trade) The balance is payable to a landlord, who paid renovation costs on behalf of a subsidiary. This amount is unsecured and non-interest bearing. Trade payables denominated in foreign currencies as at 31 December are as follows: Group 2011 $000 United States Dollar Others 241 17 258 2010 $000 232 35 267
21
Other liabilities and provision
Group 2011 $000 Other liabilities: Current Accrued operating expenses Deferred revenue Deferred rent 25,318 14,496 1,310 41,124 Non-current Deferred rent 21,579 9,916 892 32,387 2010 $000
Company 2011 $000 2010 $000
2,115 2,115
1,845 1,845
7,039
5,759
119
21
Other liabilities and provision (contd) Provision: Provision for reinstatement costs At 1 January Additions Utilisation Total as at 31 December 2011 $000 3,536 2,461 (126) 5,871 Group 2010 $000 3,061 536 (61) 3,536
22
Loans from minority shareholders of subsidiaries The loans from minority shareholders of subsidiaries are unsecured, non-interest bearing and repayable on demand except for loans of $882,000 (2010: Nil) which are not expected to be repaid on the next twelve months.
23
Finance lease obligations, secured The Group has nance leases for certain items of machinery and equipment (Note 10). Future minimum lease payments under nance leases together with the present value of the net minimum lease payments are as follows: Group Total minimum lease payments 2011 $000 Not later than one year Later than one year but not later than ve years Total minimum lease payments Less: amounts representing nance charges Present value of minimum lease payments 38 Present value of payments 2011 $000 37 Total minimum lease payments 2010 $000 56 38 Present value of payments 2010 $000 54 37
38 (1) 37
37 37
94 (3) 91
91 91
The leases have options to purchase at the end of the lease term. The effective interest rates of the leases are 2.20% (2010: 2.20%) per annum. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing.
120
24
Short-term loans Group 2011 $000 Bank loans - SGD - USD - HKD - RMB - RM - NTD 12,000 1,505 1,409 203 647 15,764 2010 $000 778 2,157 1,763 4,698 Company 2011 $000 12,000 12,000 2010 $000
The effective interests on these short-term loans range from 1.13% to 6.71% (2010: 1.86% to 7.72%) per annum. The interest rates of these oating rate loans are repriced from time to time at the discretion of the respective banks. The bank loans are revolving term loans of 3 to 12 months (2010: 3 to 6 months). Short term loans of $1,320,000 (2010: $1,945,000) are secured by continuing guarantees by the Company and certain subsidiaries of the Group. All other short term loans except for a loan of $12,000,000 (2010: Nil) are secured by continuing guarantees by the Company.
25
Long-term loans Group Term loans Maturity 2011 $000 5,261 3,989 738 1,403 2,965 1,830 182 3,517 3,667 23,552 2010 $000 4,238 3,989 1,366 1,849 1,959 176 286 486 14,349 Company 2011 $000 3,989 3,989 2010 $000 3,989 3,989
SGD loans SGD loan HKD loans HKD loans RMB loans RM loan RM loan THB loans NTD loan
2012 - 2014 Note 1 2012 - 2015 2012 2015 (Note 3) 2012 2015 (Note 3) 2012 - 2014 Note 2 2012 - 2016 2015
Current Non-current
8,396 15,156 23,552
6,232 8,117 14,349
3,989 3,989
3,989 3,989
121
25. Long-term loans (contd) Note 1 The loan will be converted to a 15-year term loan within 3 months of the Temporary Occupation Permit (TOP) of the Groups operations Headquarters or 30 April 2012, whichever is earlier. Note 2 The loan is repayable by 36 monthly instalments upon full drawdown of the loan to a specied sum. All the loans are oating rate loans with effective interest rates ranging from 1.25% to 7.29% (2010: 1.63% to 6.11%) per annum. The interest rates of these floating rate loans are repriced from time to time at the discretion of the respective banks. Securities Note 1 Term loan of $3,989,000 (2010: $3,989,000) is secured by a charge over the Companys leasehold land. Note 3 Term loans of $4,368,000 (2010: $3,808,000) are secured by continuing guarantees by the Company and certain subsidiaries of the Group. All other term loans are secured by continuing guarantees by the Company. 26. Share capital and treasury shares (a) Share capital Group and Company 2011 Number of shares Issued and fully paid ordinary shares At beginning of the year Allotment of bonus shares At end of the year $000 2010 Number of shares $000
281,893,238
33,303
234,911,034 46,982,204
33,303
281,893,238
33,303
281,893,238
33,303
The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value. On 30 March 2010, the Company issued bonus shares on the basis of one bonus share for every ve existing ordinary shares.
122
26. Share capital and treasury shares (contd) (b) Treasury shares Group and Company 2011 Number of shares At beginning of the year Acquired during the nancial year Allotment of bonus shares Treasury shares transferred on vesting of restricted share grant At end of the year 580,582 1,090,000 $000 (199) (558) Number of shares 970,000 500,000 194,000 2010 $000 (283) (259) -
432,892 1,237,690
148 (609)
(1,083,418) 580,582
343 (199)
Treasury shares relate to ordinary shares of the Company that is held by the Company. The Company acquired 1,090,000 (2010: 500,000) shares in the Company through purchases on the Singapore Exchange during the nancial year. The total amount paid to acquire the shares was $558,000 (2010: $259,000) and this was presented as a component within shareholders equity. The Company reissued 432,892 (2010: 1,083,418) treasury shares pursuant to its restricted share grant at a weighted average share price of approximately $0.32 (2010: $0.32) each.
123
27. Accumulated prots and other reserves Accumulated prots Included in the Groups accumulated prots is an amount of $1,432,000 (2010: $1,432,000) which is not distributable by way of dividends. The amount arose from the waiver of inter-company debt in the subsidiary, Beijing BreadTalk Restaurant Management Co., Ltd, which was recognised as capital reserve in accordance with local accounting convention. Other reserves
Note
Group 2011 $000
2010 $000 2,071 (722) 604 247 168 2,368
Company 2011 $000 357 186 543
2010 $000 247 168 415
Statutory reserve fund Translation reserve Fair value adjustment reserve Share-based compensation reserve Capital reserve
(a) (b) (c) (d)
2,382 189 604 357 186 3,178
(a) Statutory reserve fund In accordance with the Foreign Enterprise Law applicable to subsidiaries in the Peoples Republic of China (PRC), the subsidiaries are required to make appropriation to a Statutory Reserve Fund (SRF). At least 10% of the statutory after tax prots as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiaries registered capital. Subject to the approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital of the subsidiaries. The SRF is not available for dividend distribution to shareholders. (b) Translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the nancial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency.
124
27.
Accumulated prots and other reserves (contd) (c) Fair value adjustment reserve Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale nancial assets until they are disposed of or impaired. Group 2011 $000 Net loss on available-for-sale nancial assets: - Net loss on fair value changes during the nancial year 2010 $000
574
(d)
Capital reserve Capital reserve mainly arises from the gain or loss arising from purchase, sale, issue or cancellation of treasury shares. No dividend may be paid and no other distribution (whether in cash or otherwise) of the Companys assets (including any distribution of assets to members on a winding up) may be made in respect of this reserve.
28. (a)
Commitments and contingencies Commitments Expenditure contracted for as at the balance sheet date but not recognised in the nancial statements is as follows: Group 2011 $000 Commitment in respect of property, plant and equipment Commitment in respect of investment securities Commitment for capital contribution in a joint venture Shareholders loan to a joint venture 2010 $000 Company 2011 2010 $000 $000
49,355
1,952
47,324
1,834
6,000
2,372
600
125
28.
Commitments and contingencies (contd) (b) Contracted operating lease commitments The Group has various operating lease agreements for equipment, ofce, central kitchen, food court and retail outlet premises. These non-cancellable leases have remaining non-cancellable lease terms of between less than 1 year and 9 years. Most leases contain renewable options. Some of the leases contain escalation clauses and provide for contingent rentals based on percentages of sales derived from assets held under operating leases. Lease terms do not contain restrictions on the Groups activities concerning dividends, additional debt or further leasing. Future minimum lease payments payable under non-cancellable operating leases as at 31 December are as follows: Group 2011 $000 Not later than one year Later than one year but not later than ve years Later than ve years 73,524 170,789 17,231 261,544 (c) Operating lease The Group has entered into non-cancellable operating leases to sublease its food court and retail outlet premises. Sublease rental receivable as at 31 December is as follows: Group 2011 $000 Not later than one year Later than one year but not later than ve years 30,889 21,189 52,078 (d) Letters of guarantees, secured As at 31 December 2011, the banks issued letters of guarantees on behalf of the Group to lessors of premises amounting to approximately $9,352,000 (2010: $8,097,000). 2010 $000 29,458 18,866 48,324 2010 $000 61,052 139,395 11,325 211,772
126
28.
Commitments and contingencies (contd) (e) Corporate guarantees As at 31 December 2011, the Company has given corporate guarantees to nancial institutions in connection with banking facilities provided to its subsidiaries of which $44,716,000 (2010:$23,246,000) of the banking facilities have been utilised as at year end. (f) Undertakings In conjunction with the investment in junior bonds by the subsidiary, Imagine Properties Pte Ltd (IPPL) (Note 12), the Company, together with the other investors of the junior bonds, had executed a Sponsors Undertaking on 29 January 2010 whereby the Company undertakes to pay IPPLs proportion of all cost overruns in connection to the additions and alterations works to be undertaken on the Katong Mall. As at 31 December 2011, there were no contingent liabilities resulting from the aforesaid undertaking. (g) Leasehold land In November 2009, the Company accepted an offer from Jurong Town Corporation (JTC) to acquire a leasehold land located at Paya Lebar iPark, Tai Seng Street, Singapore. The Company also signed a Building Agreement with JTC in October 2010. Under the lease arrangement, the Company will construct a multi-storey building on the land. The building will serve as the Groups manufacturing facility and operations Headquarters. Upon completion of the building and fullment of other terms and conditions in the Building Agreement, the land together with the building erected thereon will be leased to the Company for a term of 30 years from 1 February 2010.
127
29.
Related party disclosures (a) Sale and purchase of goods and services In addition to those related party information disclosed elsewhere in the nancial statements, the following signicant transactions between the Group and related parties took place during the year on terms agreed between the parties:
Group 2011 $000 Income Management fee income from a joint venture Rental and miscellaneous income from a party related to a director of the Company Dividend income from a joint venture Expenses Rental expense to a joint venture Royalty fees to minority shareholders Purchase of goods from a party related to a director of the Company Others Franchise fee to minority shareholders Purchase of furniture and tting from a company related to a director of the Company Design fee to a company related to a director of a subsidiary Purchase of lightings and ttings from a company related to a director of a subsidiary 52 194 228 38 79 25 84 80 73 1,654 97 273 1,282 59 327 221 200 142 58 2010 $000
Company 2011 2010 $000 Income Management fee income from a subsidiary Dividend income from subsidiaries Training fee income from subsidiaries Expense Facilities fee to a subsidiary 22 22 7,247 4,672 155 6,399 4,680 $000
128
29.
Related party disclosures (contd) (b) Compensation of key management personnel Group 2011 $000 Salaries and bonus Central Provident Fund contributions and other pension contributions Share-based payment (RSG Plan) Directors fees Other personnel expenses Total compensation paid to key management personnel 6,428 259 120 168 622 2010 $000 6,017 172 570 124 509
7,597
7,392
Comprise amounts paid to: Directors of the Company Directors of a subsidiary Other key management personnel 1,418 344 5,835 7,597 1,479 575 5,388 7,392
30.
Financial risk management objectives and policies The Group and the Company is exposed to nancial risks arising from its operations and the use of nancial instruments. The key nancial risks include interest rate risk, foreign currency risk, credit risk, liquidity risk and market price risk. The Audit Committee provides independent oversight to the effectiveness of the risk management process. The Groups and Companys principal nancial instruments comprise bank loans, nance leases and cash and short term deposits. The main purpose of these nancial instruments is to raise nance for the Groups and Companys operations. The Group and Company has various other nancial assets and liabilities such as trade and other receivables, trade and other payables and related company balances, which arise directly from its operations. It is, and has been throughout the current and previous nancial year, the Groups and Companys policy that no trading in derivative nancial instruments shall be undertaken.
129
30.
Financial risk management objective and policies (contd) The following sections provide details regarding the Groups and Companys exposure to the above-mentioned nancial risks and the objectives, policies and processes for the management of these risks. (a) Interest rate risk Interest rate risk is the risk that the fair value or future cash ows of the Groups and the Companys financial instruments will fluctuate because of changes in market interest rates. The Groups and the Companys exposure to interest rates risk arises primarily from its investment portfolio in xed deposits and its debt obligations. The Group does not use derivative nancial instruments to hedge its investment portfolio. The Group obtains additional nancing through bank borrowings and leasing arrangements. The Groups policy is to obtain the most favourable interest rates available without increasing its foreign exchange exposure. Surplus funds are placed with reputable banks. Sensitivity analysis for interest rate risk Group Effect on prot net of tax 100 basis points increase $000 2011 Singapore dollar Renminbi Hong Kong dollar New Taiwan dollar Ringgit Malaysia Thai Baht (128) (40) (33) (30) (22) (31) 128 40 33 30 22 31 100 basis points decrease $000
130
30.
Financial risk management objective and policies (contd) (a) Interest rate risk (contd) Group Effect on prot net of tax 100 basis points increase $000 2010 Singapore dollar Renminbi Hong Kong dollar US dollar Ringgit Malaysia Thai Baht (68) (30) (45) (6) (5) (4) 68 30 45 6 5 4 100 basis points decrease $000
(b)
Foreign currency risk The Group has transactional currency exposures arising from sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, Renminbi (RMB) and Hong Kong Dollar (HKD). The foreign currencies in which these transactions are denominated are mainly US dollars (USD), HKD, RMB and SGD. Currently, the Chinese government imposes control over foreign currency. RMB, the ofcial currency in the Peoples Republic of China (PRC), is not freely convertible. Enterprises operating in the PRC can enter into exchange transactions through the Peoples Bank of China or other authorised nancial institutions. Payments for imported materials or services and remittance of earnings outside of the PRC are subject to the availability of foreign currency which depends on the foreign currency denominated earnings of the enterprises, or exchanges of RMB for foreign currency must be arranged through the Peoples Bank of China or other authorised nancial institutions. Approval for exchanges at the Peoples Bank of China or other authorised nancial institutions is granted to enterprises in the PRC for valid reasons such as purchase of imported materials and remittance of earnings. While conversion of RMB into Singapore dollars or other currencies can generally be effected at the Peoples Bank of China or other authorised nancial institutions, there is no guarantee that it can be effected at all times. The Group is also exposed to currency translation risk arising from its net investments in foreign operations, in Malaysia, the PRC, Hong Kong and Thailand. The Groups net investments in these countries are not hedged as currency positions in Ringgit Malaysia, RMB, Hong Kong Dollar and Thai Baht are considered to be long-term in nature. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups prot net of tax to a reasonably possible change in the USD, HKD, RMB and SGD exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.
131
30.
Financial risk management objectives and policies (contd) Group Effect on prot net of tax 2011 $000 Against SGD: USD - strengthened 6% (2010: 6%) - weakened 6% (2010: 6%) RMB - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%) Against RMB: USD - strengthened 6% (2010: 6%) - weakened 6% (2010: 6%) SGD - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%) Against HKD: SGD - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%) USD - strengthened 6% (2010: 6%) - weakened 6% (2010: 6%) RMB - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%) Against Ringgit Malaysia SGD - strengthened 5% (2010: 5%) - weakened 5% (2010: 5%) (c) Credit risk Credit risk is the risk of loss that may arise on outstanding nancial instruments should a counterparty default on its obligations. The Groups and the Companys exposure to credit risk arises primarily from trade and other receivables. For other nancial assets (including investment securities, cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Group trades only with recognised and creditworthy third parties. It is the Groups policy that all customers who wish to trade on credit terms are subject to credit verication procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Groups exposure to bad debts is not signicant. (56) 56 (5) 5 (1) 1 (8) 8 (52) 52 (2) 2 (4) 4 (34) 34 (3) 3 (3) 3 (43) 43 (2) 2 63 (63) 169 (169) 78 (78) (6) 6 2010 $000
132
30.
Financial risk management objectives and policies (contd) (c) Credit risk (contd) Exposure to credit risk At the balance sheet date, the Groups and the Companys maximum exposure to credit risk is represented by: the carrying amount of each class of nancial assets recognised in the balance sheets; and an amount of $32,716,000 (2010: $23,246,000) relating to corporate guarantees provided by the Company to nancial institutions on its subsidiaries borrowings and other banking facilities.
Credit risk concentration prole The Group determines concentrations of credit risk by monitoring the country prole of its trade receivables on an on-going basis. The credit risk concentration prole of the Groups trade receivables at the balance sheet date is as follows: Group 2011 $000 By country: Singapore Peoples Republic of China Indonesia The Phillippines Thailand Taiwan Others 93 3,949 1,153 1,114 342 702 377 7,730 1% 51% 15% 15% 4% 9% 5% 100% 66 3,485 471 617 145 226 193 5,203 1% 67% 9% 12% 3% 4% 4% 100% % of total $000 2010 % of total
Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents are placed with or entered into with reputable nancial institutions or companies with high credit ratings and no history of default. Financial assets that are either past due or impaired Information regarding nancial assets that are either past due or impaired is disclosed in Notes 17 and 18 above.
133
30.
Financial risk management objectives and policies (contd) (d) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difculty in meeting nancial obligations due to shortage of funds. The Groups and the Companys exposure to liquidity risk arises primarily from mismatches of the maturities of nancial assets and liabilities. The Groups and the Companys objective is to maintain a balance between continuity of funding and exibility through the use of stand-by credit facilities. The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to nance the operations of the Group. Short-term funding may be obtained from short-term loans where necessary.
134
30.
Financial risk management objectives and policies (contd)
The table below summarises the maturity prole of the Groups and the Companys nancial assets and nancial liabilities at the balance sheet date based on contractual undiscounted payments:
1 year or less $000 Total $000 14,249 48,189 1,297 420 87,060 151,215 74,074 25,318 395 41,933 141,720 455 71,144 97,450 60,846 21,579 140 11,308 93,873 25,345 506 14,249 857 15,106 59 8,227 8,286 1 year or less $000 46,800 1,297 14,249 1,389 15,638 16,911 16,911 420 87,060 135,577 74,074 25,318 395 25,022 124,809
2011 1 to 5 years $000 2010 1 to 5 years $000
Total $000 14,249 26,202 506 455 71,144 112,556 60,905 21,579 140 19,535 102,159
Group Financial assets : Investment securites Trade and other receivables Amounts due from joint ventures (non-trade) Amounts due from minority shareholders of subsidiaries (non-trade) Cash and short term deposits
Financial Liabilities : Trade and other payables Accrued operating expenses (Note 21) Amounts due to joint ventures Loans and borrowings
Company Financial assets : Other receivables Amounts due from subsidiaries Cash on hand and at bank 15,335 2,698 18,033 250 2,115 7,394 12,301 22,060
4,042 4,042
15,335 2,698 18,033 250 2,115 7,394 16,343 26,102
26 5,748 2,947 8,721 489 1,845 8,762 56 11,152
4,044 4,044
26 5,748 2,947 8,721 489 1,845 8,762 4,100 15,196
Financial liabilities : Other payables Accrued operating expenses (Note 21) Amounts due to subsidiaries Loans and borrowings
135
136
30.
Financial risk management objectives and policies (contd)
The table below shows the contractual expiry by maturity of the Companys contingent liabilities. The maximum amount of the nancial guarantee contracts are allocated to the earliest period in which the guarantee could be called.
Company $000 34,375 16,029 50,404 $000 $000
1 year or less Total $000
2011 1 to 5 years 1 year or less
2010 1 to 5 years $000
Total $000
Financial guarantees
19,498
8,134
27,632
30. (e)
Financial risk management objectives and policies (contd) Market price risk Market price risk is that the fair value or future cash ows of the Groups nancial instruments will uctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instrument. This instrument is quoted on the SGXST in Singapore and is classied as available-for-sale nancial asset. The Group does not have exposure to commodity price risk. Sensitivity analysis for equity price risk At the balance sheet date, if the share price had been 15% (2010: 15%) higher/ lower with all other variables held constant, the Groups Fair Value Adjustment Reserve in equity would have been $138,000 (2010: $138,000) higher/lower, arising as a result of an increase/decrease in the fair value equity instruments classied as available-for-sale.
31. (a)
Financial instruments Financial assets and liabilities The carrying amount by category of nancial assets and liabilities are as follows: Group 2011 $000 Loans and receivables Trade and other receivables Amounts due from joint-ventures (non-trade) Amounts due from minority shareholders of subsidiaries (non-trade) Cash and xed deposits Total Available-for-sale nancial assets Investment securities Held-to-maturity investments Investment sercurities Financial liabilities carried at amortised cost Trade and other payables Accrued operating expenses (Note 21) Amounts due to joint-ventures (non-trade) Short term loans (Note 24) Long term loans (Note 25) Loans from minority shareholders of subsidiaries Total 46,800 1,297 420 87,060 135,577 2010 $000 25,345 506 455 71,144 97,450
919 10,750 74,074 25,318 395 15,764 23,552 1,082 140,185
919 10,750 60,486 21,579 140 4,698 14,349 200 101,452
137
31.
Financial instruments (contd) (b) Fair values Financial instruments carried at fair value. The fair value of quoted investment securities is determined by reference to the published market bid price at the balance sheet date. Financial instruments whose carrying amount approximate fair value Management has determined that the carrying amounts of unquoted investment securities, cash and bank balances, xed deposits, trade and other receivables, trade and other payables, related company balances and oating rate bank loans, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature or are repriced frequently. Financial instruments carried at other than fair value. Set out below is a comparison of the carrying amount and fair value of the nancial instrument that is carried in the nancial statements at other than fair value as at 31 December. Carrying amount 2011 2010 $000 $000 1,389 10,750 857 10,750 Fair value 2011 2010 $000 $000 1,019 11,315 839 11,362
Financial assets: Other receivables Investment in junior bonds (Note 12)
Financial liabilities: Obligations under nance leases
37
91
37
89
Fair value is estimated by discounting expected future cash ows at market incremental lending rate for similar types of borrowing or leasing arrangements at the balance sheet date. No disclosure of fair values are made for the Groups quasi-capital loan to an associate, loans from minority shareholders of subsidiaries and long-term amount due to landlord, and the Companys quasi-capital loans to subsidiaries as it is not practical to determine their fair values with sufcient reliability since the balances have no xed terms of repayment.
138
32.
Capital management The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year ended 31 December 2011 and 2010. As disclosed in Note 27, subsidiaries of the Group operating in the PRC are required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the respective subsidiaries for the nancial year ended 31 December 2011 and 2010. The Group monitors capital using gearing ratio (which is total borrowings divided by total equity) and net gearing ratio (which is total borrowings less cash and cash equivalents divided by total equity). Group 2011 $000 Total borrowings (1) Less: Cash and cash equivalents Net cash Total equity Gearing ratio (times) Net gearing 40,435 (87,060) (46,625) 85,468 0.47 Net cash 2010 $000 19,338 (71,144) (51,806) 75,083 0.26 Net cash
(1)
Including bank loans, nance lease obligations and loans from minority shareholders of subsidiaries.
139
33.
Segment information For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows: (a) (b) (c) The bakery segment is in the business of manufacturing and retailing of all kinds of food, bakery and confectionary products including franchising. The food court segment is involved in the management and operation of food courts and operation of food and drinks outlets within the food courts. The restaurant segment is in the business of operating food and drinks outlets, eating houses and restaurants.

140
Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating prot or loss. Transactions between operating segments are generally based on terms determined on commercial basis.
33.
Segment information (contd) Bakery operations (1) $000 194,433 304 194,737 8,562 239 (476) 8,325 Restaurant operations $000 76,969 76,969 3,871 11 (94) 3,788 Food court operations $000 94,502 1,394 95,896 4,712 55 (159) 93 4,701
2011 Revenue External sales Inter-segment sales (Note A) Total revenue Results Prot from operations Interest income Interest expense Share of joint ventures results Segment prot Tax expense Prot for the year Assets and liabilities Segment assets (Note A) Deferred tax assets Total assets Segment liabilities (Note A) Tax payable Deferred tax liabilities Total liabilities
Others (2) $000 (150) 519 56 313
Elimination $000 (1,698) (1,698)
Group $000 365,904 365,904 16,995 824 (785) 93 17,127 (5,370) 11,757
90,899
55,590
104,673
35,715
(26,692)
260,185 2,120 262,305
63,006
29,702
80,833
25,405
(30,008)
168,938 5,623 2,276 176,837
Other information Investment in joint ventures Additions to non-current assets (Note B) Depreciation and amortisation Other non-cash (income)/expenses (Note C)
11,683 9,487
9,895 4,297
422 17,754 10,540
1,529 38
422 40,843 24,362
1,231
186
536
311
2,264
141
33.
Segment information (contd) Bakery operations (1) $000 158,131 448 158,579 9,108 104 (214) 8,998 Restaurant operations $000 56,253 56,253 2,805 2 (2) 2,805 Food court operations $000 88,504 2,160 90,664 4,424 37 (375) 158 4,244
2010 Revenue External sales Inter-segment sales (Note A) Total revenue Results Prot from operations Interest income Interest expense Share of joint ventures results Segment prot Tax expense Prot for the year Assets and liabilities Segment assets (Note A) Deferred tax assets Total assets Segment liabilities (Note A) Tax payable Deferred tax liabilities Total liabilities
Others 2) $000 227 458 (44) 641
Elimination $000 (2,608) (2,608)
Group $000 302,888 302,888 16,564 601 (635) 158 16,688 (5,520) 11,168
79,296
41,519
86,986
23,258
(28,760)
202,299 1,898 204,197
53,006
20,727
64,422
15,108
(31,198)
122,065 4,402 2,647 129,114
Other information Investment in joint ventures Additions to non-current assets (Note B) Depreciation and amortisation Other non-cash (income)/expenses (Note C)
12,450 8,235
10,571 2,857
446 11,623 10,463
5,023 43
446 39,667 21,598
(3,844)
(65)
2,458
668
(783)
142
33.
Segment information (contd) Notes: (A) Inter-segment sales, assets and liabilities are eliminated on consolidation. (B) Additions to non-current assets consist of additions to property, plant and equipment and intangible assets. (C) Other non-cash (income)/expenses consist of: impairment/(write-back) of property, plant and equipment, intangible assets, investment in associate, receivables, amount due from associates and inventories; write off of property, plant and equipment, bad debts and inventories; (gain)/loss on disposals of property, plant and equipment; share based payment expenses; and unrealised foreign exchange (gain)/loss.
Geographical information External sales 2011 2010 $000 Singapore Mainland China Hong Kong Rest of the world Total 191,237 117,573 35,204 21,890 365,904 $000 157,503 97,755 33,457 14,173 302,888 Non-current assets (3) 2011 2010 $000 40,552 38,178 6,785 12,597 98,112 $000 38,619 33,408 7,879 2,542 82,448
(1)
(2)
(3)
Bakery operations comprise operation of bakery retail outlets as well as that operated through franchising. The business segment Others comprises the corporate services, treasury functions, investment holding activities and dormant associated company. Non-current assets information presented above consist of property, plant and equipment and intangible assets.
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34.
Dividends
Group and Company 2010 2011 $000 $000 Dividends paid during the year: First and nal exempt (one-tier) dividend for 2010 of 1.0 cent per share (2009: 1.0 cent per share) Proposed but not recognised as a liability as at 31 December: Dividends on ordinary shares, subject to shareholders approval at the Annual General Meeting: First and nal exempt (one-tier) ordinary dividend for 2011 of 1.0 cent per share (2010: 1.0 cent per share) First and nal exempt (one-tier) special dividend for 2011 of 0.5 cent per share (2010: Nil cent per share) 2,813 2,342
2,807 1,403 4,210
2,813 2,813
35.
Events subsequent to the balance sheet date (i) Investment in retail property trust in Singapore On 10 February 2012, the Group announced that the subsidiary, Imagine Properties Pte Ltd (IPPL) had completed the subscription of $18,000,000 in principal amount of junior bonds and was issued 72 ordinary shares of $1.00 per ordinary share in the share capital of Perennial (Chijmes) Pte Ltd in relation to the companys investment in a retail property trust in Singapore. The initial deposit of $12,000,000 (Note 17) was paid during the year and the balance subscription amount of $6,000,072 was paid in January 2012. (ii) Partial redemption of junior bonds On 27 February 2012, IPPL received a partial redemption of $3,526,000 on the junior bonds of $10,750,000 at 31 December 2011.
36.
Authorisation of nancial statements The nancial statements for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 23 March 2012.
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Statistics of Shareholdings As at 20 March 2012

Issued and fully Paid-up Capital Number of Ordinary Shares in Issue (excluding treasury shares) Number of Treasury Shares held Class of Shares Voting Rights Distribution of Shareholdings Size of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above Total Twenty Largest Shareholders No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Name Katherine Lee Lih Leng Mayban Nominees (S) Pte Ltd Morgan Stanley Asia (Singapore) Securities Pte Ltd United Overseas Bank Nominees Pte Ltd Hong Leong Finance Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd HL Bank Nominees (S) Pte Ltd HSBC (Singapore) Nominees Pte Ltd DBS Nominees Pte Ltd SBS Nominees Pte Ltd Bank of Singapore Nominees Pte Ltd Citibank Consumer Nominees Pte Ltd Oversea-Chinese Bank Nominees Private Limited George Quek Meng Tong BNP Paribas Securities Services Singapore Pte Ltd UOB Kay Hian Pte Ltd Tan Kim Koon BNP Paribas Nominees Singapore Pte Ltd Royal Bank of Canada (Asia) Ltd Liow Siew Pieng Total : No. of Shares 32,447,105 30,500,000 29,379,000 25,522,800 23,905,000 15,836,204 15,180,000 9,549,950 9,408,000 8,000,000 6,562,775 6,369,000 5,872,775 5,231,177 4,323,000 2,118,600 2,100,000 2,055,000 1,591,000 1,399,200 237,350,586 % 11.56 10.87 10.47 9.09 8.52 5.64 5.41 3.40 3.35 2.85 2.34 2.27 2.09 1.86 1.54 0.75 0.75 0.73 0.57 0.50 84.56 No. of Shareholders 55 970 570 25 1,620 % 3.39 59.88 35.19 1.54 100.00 No. of Shares 20,528 4,732,609 32,362,179 243,540,232 280,655,548 % 0.01 1.69 11.53 86.77 100.00 : : : : : S$33,302,916 280,655,548 1,237,690 Ordinary Shares One vote per share
Based on information available to the Company as at 20 March 2012, approximately 35.95% of the Companys shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of SGX-ST. SUBSTANTIAL SHAREHOLDERS (As recorded in the Register of Substantial Shareholders as at 20 March 2012) Name of Substantial Shareholders Direct Interest Number of Shares 95,538,556 52,319,880 30,282,000 % 34.06 18.64 10.79 Direct Interest Number of Shares 52,319,880 95,538,556 30,282,000 (2) 30,282,000 (3) % 18.64 34.06 10.79 10.79
1. George Quek Meng Tong (1) 2. Katherine Lee Lih Leng (1) 3. Keywise Greater China Opportunities Master Fund 4. Keywise Capital Management (HK) Ltd (2) 5. Fang Zheng (3) (1) (2) (3)
Katherine Lee Lih Leng is the spouse of George Quek Meng Tong. Saved as disclosed above, there are no family relationship among our Directors and Substantial Shareholders. Keywise Capital Management (HK) Ltd, as the fund manager, is deemed interested in these shares held by Keywise Greater China Opportunities Master Fund. Fang Zheng is deemed interested in these shares by virtue of him being the sole shareholder of Keywise Capital Management (HK) Ltd.
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of BreadTalk Group Limited (the Company) will be held at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 on Wednesday, 25 April 2012 at 9.30 a.m. for the following purposes:
AS ORDINARY BUSINESS
1. To receive and adopt the Directors Report and the Audited Financial Statements of the Company for the year ended 31 December 2011 together with the Auditors Report thereon. (Resolution 1) To declare a rst and nal dividend of 1.0 cent per share tax exempt (one-tier) and a special dividend of 0.5 cent per share tax exempt (one-tier) for the year ended 31 December 2011 (2010: 1.0 cent). (Resolution 2) To re-elect the following Directors retiring pursuant to Article 104 of the Companys Articles of Association: Mr George Quek Meng Tong Mr Ong Kian Min (Resolution 3) (Resolution 4)
2.
3.
Mr Ong Kian Min will, upon re-election as a Director of the Company, remain as the Lead Independent non-executive Director, Chairman of the Audit and Nominating Committees and a member of the Remuneration Committee. Mr Ong will be considered independent for the purposes of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited. 4. To approve the payment of Directors fees of S$168,000 for the year ended 31 December 2011 (2010: S$124,000). (Resolution 5) To re-appoint Messrs Ernst & Young LLP as the Auditors of the Company and to authorise the Directors of the Company to x their remuneration. (Resolution 6) To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
5.
6.
AS SPECIAL BUSINESS
To consider and if thought t, to pass the following resolutions as Ordinary Resolutions, with or without any modications:
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7.
Authority to issue shares That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST), the Directors of the Company be authorised and empowered to: (a) (i) issue shares in the Company (shares) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem t; and (b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was in force, provided that: (1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); (2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a) new shares arising from the conversion or exercise of any convertible securities (b) new shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this Resolution; and (c) any subsequent bonus issue, consolidation or subdivision of shares; (3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and (4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (i)] (Resolution 7)
147
8. Authority to issue shares under the BreadTalk Group Limited Employees Share Option Scheme That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the prevailing BreadTalk Group Limited Employees Share Option Scheme (the Scheme) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Scheme shall not exceed fteen per centum (15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (ii)] (Resolution 8)
9. Authority to issue shares under the BreadTalk Group Limited Restricted Share Grant Plan That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant awards in accordance with the provisions of the BreadTalk Group Limited Restricted Share Grant Plan (the Plan) and to allot and/or issue from time to time such number of fully-paid shares as may be required to be allotted and/or issued pursuant to the vesting of the awards under the Plan, provided always that the aggregate number of new ordinary shares to be allotted and/or issued pursuant to the Plan, the Scheme and any other share based schemes (if applicable), which the Company may have in place, shall not exceed fteen per centum (15%) of the total issued shares excluding treasury shares in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (iii)] (Resolution 9)
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10. Authority to grant awards to Participants pursuant to the Rules of, and issue shares under, the Plan That, contingent upon the passing of Resolution 9, in order to reward, retain and motivate employees who had met specic performance objectives set by the Company, the Directors of the Company be authorised and empowered to grant awards in accordance with the provisions of the Plan to the following participants of the Plan (the Participants) and to issue shares in the Company to the Participants of awards granted by the Company under the Plan, provided always that the aggregate number of shares available to Controlling Shareholders and their associates under the Plan shall not exceed twenty ve per centum (25%) of all the shares available under the Plan and that the number of shares available to each Controlling Shareholder or his associate shall not exceed ten per centum (10%) of all the shares available under the Plan. Such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the Companys next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. Name of Participants Controlling Shareholders Mr George Quek Meng Tong Ms Katherine Lee Lih Leng Associates of Controlling Shareholders Mr Frankie Quek Swee Heng [See Explanatory Note (iv)] 11. Renewal of Share Purchase Mandate That for the purposes of Sections 76C and 76E of the Companies Act, Cap. 50, the Directors of the Company be and are hereby authorised to make purchases or otherwise acquire issued shares in the capital of the Company from time to time (whether by way of market purchases or off-market purchases on an equal access scheme) of up to ten per centum (10%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as ascertained as at the date of Annual General Meeting of the Company) at the price of up to but not exceeding the Maximum Price as dened in paragraph 3.4 of the Appendix to the Annual Report to Shareholder dated 9 April 2012, in accordance with the terms of the Share Purchase Mandate set out in the Appendix, and this mandate shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (v)] By Order of the Board Tan Cher Liang Company Secretary Singapore 9 April 2012 (Resolution 13) No. of shares to be awarded 65,000 65,000 (Resolution 10) (Resolution 11)
25,000
(Resolution 12)
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150
Explanatory Notes: (i) The Ordinary Resolution 7 in item 7 above, if passed, will empower the Directors of the Company, effective until the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible into shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders. For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares. (ii) The Ordinary Resolution 8 in item 8 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration of the Scheme) 15% of the total number of issued shares excluding treasury shares in the capital of the Company from time to time, and the aggregate number of ordinary shares which may be issued pursuant to the Scheme, the Plan and any other share based schemes (if applicable) is limited to 15% of the total issued share capital of the Company excluding treasury shares from time to time. Resolution 8 is independent from Resolution 9 and the passing of Resolution 8 is not contingent on the passing of Resolution 9.
(iii) Resolution 9 in item 9 above, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual General Meeting, to offer and grant awards under the BreadTalk Group Limited Restricted Share Grant Plan (the Plan) in accordance with the provisions of the Plan and to issue from time to time such number of fully-paid shares as may be required to be issued pursuant to the vesting of the awards under the Plan subject to the maximum number of shares prescribed under the terms and conditions of the Plan. The aggregate number of ordinary shares which may be issued pursuant to the Scheme, the Plan and any other share based schemes (if applicable) is limited to 15% of the total issued share capital of the Company excluding treasury shares from time to time. Resolution 9 is independent from Resolution 8 and the passing of Resolution 9 is not contingent on the passing of Resolution 8.
(iv) Resolutions 10, 11 and 12, in item 10 above, if passed, will empower the Directors of the Company to issue shares in the Company to the Controlling Shareholders and their associates, granted by the Company under the Plan. The resolutions in item 10 are independent from each other and the passing of each such resolution is not contingent on the passing of any of the other resolutions in item 10. Resolution 10 is contingent on the passing of Resolution 3. Shareholders who are eligible to participate in the Plan shall abstain from voting on Resolutions 10, 11 and 12. As at the Latest Practicable Date prior to the printing of this Notice of Annual General Meeting (i.e. 20 March 2012), the number of shares granted in respect of the Plan since its commencement date are as follows:
Name Aggregate Number of Restricted Shares Granted 201,200 176,000 106,000 2,401,866 TOTAL 2,885,066 Aggregate Number of Restricted Shares Vested 75,492 58,860 48,660 1,333,298 1,516,310
George Quek Meng Tong Katherine Lee Lih Leng Frankie Quek Swee Heng Other Participants*
* None of the Other Participants is either a controlling shareholder of the Company or an associate of a controlling shareholder of the Company. The Directors conrm that, as at the Latest Practicable Date (i.e. 20 March 2012): (a) the aggregate number of shares issued under the Plan do not exceed 15% of the total issued shares (excluding treasury shares) in the capital of the Company; (b) the aggregate number of shares granted to Controlling Shareholders and their associates does not exceed 25% of the shares available under the Plan; and (c) number of shares granted to each controlling shareholder or his or her associate respectively does not exceed 10% of the shares available under the Plan. The rationale for Resolution 10 Mr. George Quek Meng Tong (George Quek), if re-elected, will remain as is the Chairman of the Group and he holds an aggregate of 52.70% of the shareholding (direct and deemed interests). He is one of the co-founders of the Group and has been instrumental in the Groups development over the years. He is responsible for overseeing the overall management of the Group and is pivotal in charting the direction and growth of the Group. George Quek has been with the Company since the start in 2000 and has played a pivotal role in steering the growth of the Group in their operations locally and in this region and building up a good track record and reputation for the Group. His knowledge and contacts in the food and beverage industry, of which he has more than 3 decades of experience, are key factors to the success of the Group. His invaluable experience has not only been instrumental in establishing the BreadTalk brand name, but also in setting new F&B trends and redening the Asian food scene. He also played a signicant role in the Companys foray into the food court business in Shanghai and Beijing, Mainland China.
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152
George Quek continues to play an instrumental role in charting our Groups expansion and business development plans. As the Chairman of the Company, he has in-depth knowledge of the needs of the business as it evolved over the years. His ability to anticipate business trend and demand has enabled the Company to grow the business rapidly. The Company believes that George Quek will continue to play a key role in the growth and future development of the Group and there are further potential contributions that he can make. The Company intends to have the exibility to structure his remuneration package to include such Awards in future if it is in the interest of the Company to do so. By extending the Plan to George Quek, the Company will have an additional tool to craft a more balanced and innovative remuneration package that will link his total remuneration to the performance of the Group. The Directors are of the view that the remuneration package of George Quek is fair given his contributions to the Group. The extension of the Plan to George Quek is consistent with the Companys objectives to motivate its employees to achieve and maintain a high level of performance and contribution which is vital to the success of the Company. Although George Quek already has a shareholding interest in the Company, the extension of the Plan to him will ensure that he is equally entitled, with the other employees who are not Controlling Shareholders, to take part in and benet from this system of remuneration, thereby enhancing his long term commitment to the Group. The participation of and grant of the Awards to George Quek under the Plan has been approved in principle by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution 10 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 65,000 shares to George Quek in accordance with the Plan. The rationale for Resolution 11 Ms. Katherine Lee Lih Leng (Katherine Lee) is the Deputy Chairman of the Company and holds an aggregate of 52.70% of the Companys shareholding (direct and deemed interests). She is one of the co-founders of the Group and has been assisting the Chairman, George Quek in the Groups development since its inception. She oversees the Research and Development Department where she is responsible for product development for local and overseas markets. She is also responsible for steering the Groups new concept developments for the various brands, pioneering new ideas and concepts. She has therefore contributed greatly in the increase and development of the range and quality of the Groups products, which is one of its unique strengths and factors for its success. In the areas of training, Katherine Lee has actively organized product training and technical skill upgrades to ensure systematic transfers of knowledge and skills to the franchisees and their operations teams to maintain their competitive edge. The Company believes that Katherine Lee will continue to contribute to the success of the Group. The Company intends to have the exibility to structure her remuneration package to include such Awards in future if it is in the interests of the Company to do so. By allowing her to participate in the Plan, the Company will have an additional tool to craft a more balanced and innovative remuneration package that will link her total remuneration to the performance of the Group. The extension of the Plan to Katherine Lee is consistent with the Companys objectives to motivate its employees to achieve and maintain a high level of performance and contribution which is vital to the success of the Company. Although Katherine Lee already has a shareholding interest in the Company, the extension of the Plan to her will ensure that she is equally entitled, with the other employees who are not Controlling Shareholders, to take part in and benet from this system of remuneration, thereby enhancing her continued commitment to the Group.
The participation of and grant of Awards to Katherine Lee under the Plan has been approved in principle by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution 11 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 65,000 shares to Katherine Lee in accordance with the Plan. The rationale for Resolution 12 Mr. Frankie Quek Swee Heng (Frankie Quek), Chief Executive Ofcer, Mainland China, holds an aggregate of 0.15% of the Companys shareholding (direct and deemed interests). He is involved in the formulation and implementation of the expansion plans of the Group in the Mainland China. With his business acumen and extensive knowledge of the local food and beverage industry, he is assisting the Chairman, George Quek, in overseeing the growth and expansion as well as daily operations of the Group, focusing on the Groups expansion into the Mainland China. Frankie Quek has been based in Shanghai since 2005 where he has been overseeing the growing bakery and food court operations in Shanghai and Beijing. His expertise has further led to the successful expansion of the BreadTalk brand name to many other Mainland China cities through a franchise model system managed by the in house franchise team. The Company therefore believes that he has the potential and ability to contribute to the further success of the Group. By allowing him to participate in the Plan, the Company will have an additional tool to craft a more balanced and innovative remuneration package that will link his total remuneration to the performance of the Group. Frankie Quek will also be able to share in any future appreciation of the Companys share price that is commensurate with the Companys future growth through an increase in his shareholdings to a more signicant level. The Directors are of the view that the remuneration package of Frankie Quek is fair given his contributions to the Group. The extension of the Plan to Frankie Quek is consistent with the Companys objectives to motivate its employees to achieve and maintain a high level of performance and contribution which is vital to the success of the Company. As the Plan serves as recognition of the past contributions of those eligible to participate in the Plan, as well as to secure future contributions for the Company and the Group from them, the Directors consider it important that Frankie Quek should be included in the Plan. The Directors consider it crucial for the Company to provide sufcient incentives which will instill a sense of commitment to the Group. The participation of and grant of Awards to Frankie Quek under the Plan has been approved in principle by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution 12 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 25,000 shares to Frankie Quek in accordance with the Plan. (v) The Ordinary Resolution 13 proposed in item 11 above, if passed, will empower the Directors of the Company effective until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier, to repurchase ordinary shares of the Company by way of market purchases or off-market purchases of up to 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company at the Maximum Price as dened in Paragraph 3.4 to the Appendix. The rationale for, the authority and limitation on, the sources of funds to be used for the purchase or acquisition including the amount of nancing and the nancial effects of the purchase or acquisition of ordinary shares by the Company pursuant to the Share Purchase Mandate on the audited consolidated nancial accounts of the Group for the nancial year ended 31 December 2011 are set out in greater detail in the Appendix. Notes 1. A Member entitled to attend and vote at the Annual General Meeting (the Meeting) is entitled to appoint proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company. 2. The instrument appointing a proxy must be deposited at the Registered Ofce of the Company at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 not less than 48 hours before the time appointed for holding the Meeting.
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IMPORTANT: 1. For investors who have used their CPF monies to buy BreadTalk Group Limiteds shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specied. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specied to enable them to vote on their behalf.
BREADTALK GROUP LIMITED Company Registration No. 200302045G

(Incorporated In Singapore) PROXY FORM (Please see notes overleaf before completing this Form) I/We, of
2.
3.
being a member/members of BREADTALK GROUP LIMITED (the Company), hereby appoint: Name NRIC/Passport No. Proportion of Shareholdings No. of Shares Address %
and/or (delete as appropriate) Name NRIC/Passport No. Proportion of Shareholdings No. of Shares Address %
or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the Meeting) of the Company to be held on Wednesday, 25 April 2012 at 9.30 a.m. at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specic direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/ her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.
(Please indicate your vote For or Against with a tick [] within the box provided.)
No. Resolutions relating to: 1 2 3 4 5 6 7 8 9 Directors Report and Audited Financial Statements for the year ended 31 December 2011. Payment of proposed rst and nal dividend and special dividend. Re-election of Mr George Quek Meng Tong as a Director. Re-election of Mr Ong Kian Min as a Director. Approval of Directors fees amounting to S$168,000 for the year ended 31 December 2011. Re-appointment of Messrs Ernst & Young LLP as Auditors. Authority to issue new shares. Authority to issue shares under the BreadTalk Group Limited Employees Share Option Scheme. Authority to issue shares under the BreadTalk Group Limited Restricted Share Grant Plan (the Plan). Share award under the Plan to Mr George Quek Meng Tong. Share award under the Plan to Ms Katherine Lee Lih Leng. Share award under the Plan to Mr Frankie Quek Swee Heng. Renewal of Share Purchase Mandate. For Against
10 11 12 13
Dated this
day of
2012 Total number of Shares in: No. of Shares
Signature of Shareholder(s) or, Common Seal of Corporate Shareholder
(a) CDP Register (b) Register of Members

155
Notes : 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as dened in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. Where a member appoints more than one proxy, the appointments shall be invalid unless he/she species the proportion of his/her shareholding to be represented by each proxy. If no proportion or number of shares is specied, the rst named proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternate to the rst named. The instrument appointing a proxy or proxies must be deposited at the Registered Ofce of the Company at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 not less than 48 hours before the time appointed for the holding of the Meeting. The instrument appointing a proxy or proxies must be executed under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an ofcer or attorney duly authorised or in such manner as appropriate under applicable laws. Where the original instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the original power of attorney or other authority, if any, under which the instrument of proxy is signed or a duly certied copy of that power of attorney or other authority (failing previous registration with the Company) shall be attached to the original instrument of proxy and must be left at the Registered Ofce, not less than 48 hours before the time appointed for the holding of the Meeting or the adjourned Meeting at which it is to be used failing which the instrument may be treated as invalid. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks t to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore. The Company shall be entitled to treat an original certicate under the seal of the corporation as conclusive evidence of the appointment or revocation of appointment of a representative.
2. 3.
4.
5.
6.
General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specied in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company shall reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding of the Meeting, as certied by The Central Depository (Pte) Limited to the Company.
156

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THE NEXT LEAP FORWARD

BREADTALK GROUP LIMITED

F Our signatureore losss bun has sold mobalth.an 50 million gl ly

Prot Before Tax ($ Million)

156.6 212.2 246.5 302.9 365.9

11.2 12.0 15.6 16.7 17.1

2008 2009 2010 2011

Revenue Mix By Geographical Segment

Hong Kong 9.6%

Revenue Mix By Business Segment

BreadTalk Group Limited & Its Subsidiaries - Group Financial Highlights

Financial Results ($000)

Financial Positions ($000)

2011: Promising Start to a New Decade

Going Forward: The Next Decade Begins

New International Headquarters

Managing for Rapid Growth

George Quek Meng Tong

Katherine Lee Lih Leng

Dr Tan Khee Giap

Ong Kian Min

Chan Soo Sen

Henry Chu Heng Hwee

Box Jr. The Icing Room Bread Society

Jenson Ong Chin Hock

Frankie Quek Swee Heng

James Quek Seng Hwa

Goh Tong Pak

BreadTalk Group Limited

BreadTalk & Food Republic

BreadTalk Five Star Diamond Brand Award 2006

BreadTalk Regional Brand Award 2006

BreadTalk Most Promising Brand 2002 To 2005

BreadTalk Design for Asia Award 2004

BreadTalk Finalist Franchisor Of The Year Award 2005

BreadTalk Superbrand Status

BreadTalk Ranked Number 1

BreadTalk Group Limited Most Transparent

BreadTalk Group Ltd

Imagine Properties Pte Ltd

BreadTalk Pte Ltd

Together Inc. Pte Ltd

BreadTalk International Pte Ltd

Taster Food Pte Ltd

Ramen Play Pte Ltd

Shanghai BreadTalk Co. Ltd

BREADTALK GROUP LIMITED SUBSIDIARIES

Taster Food International Pte Ltd

Group Structure As At 31 December 2011

Shanghai BreadTalk Gourmet Co. Ltd

Beijing BreadTalk Restaurant Management Co. Ltd

BreadTalk (Thailand) Company Limited

ML BreadWorks Sdn Bhd

Hong Kong BreadTalk Ltd

Shanghai Star Food F&B Management Co., Ltd

Topwin Investment Holding Pte Ltd

Food Republic (Shanghai) Co., Ltd

Beijing Da Shi Dai Food & Beverage Co., Ltd

Megabite Hong Kong Limited

Food Republic Shenzhen F&B Management Co.,Ltd

Food Republic Pte Ltd

Food Art Pte Ltd

Megabite (S) Pte Ltd