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A Wonderland of Taste

annual report 2010

a wonderland of taste

Great flavours, eye catching ads and cool promotions are a few of the ingredients to the Group's success. But the secret to QSR's popularity is simple: Fun. We make a visit to our stores an enjoyable experience for every generation. Meal times should be exciting and that is why we go all out to create a place where people can enjoy ­ the food, the decor and each other! Whether it is kids celebrating their birthdays, teenagers hanging out after school, workers take a well earned break from the office or families tucking into dinner ­ the atmosphere is just right, each and every time.

Contents

sHareHolders' oVerVIew FINANCIAL HIGHLIGHTS 002 NOTICE OF ANNUAL GENERAL MEETING 004 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 009 oUr PerforManCe In 2010 CORPORATE STATEMENT 012 REVIEW OF OPERATIONS 026 relIaBle CorPorate CItIZen CORPORATE SOCIAL RESPONSIBILITY 038 tHe CorPoratIon BOARD OF DIRECTORS 046 TOP MANAGEMENT COMMITTEE 060 HEAD OF DIVISION 061 SHARIAH ADVISORY COUNCIL 065 CORPORATE INFORMATION 068 GROUP STRUCTURE 070 aCCoUntaBIlItY CORPORATE GOVERNANCE STATEMENT 074 AUDIT COMMITTEE REPORT 086 STATEMENT ON INTERNAL CONTROL 090 ADDITIONAL COMPLIANCE INFORMATION 093 fInanCIal stateMents DIRECTORS' REPORT 104 STATEMENTS OF FINANCIAL POSITION 108 STATEMENTS OF COMPREHENSIVE INCOME 109 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 110 STATEMENT OF CHANGES IN EQUITY 111 STATEMENTS OF CASH FLOWS 112 NOTES TO THE FINANCIAL STATEMENTS 114 STATEMENTS BY DIRECTORS 170 STATUTORY DECLARATION 170 INDEPENDENT AUDITORS' REPORT 171 ANALYSIS OF SHAREHOLDINGS 173 ANALYSIS OF WARRANT HOLDINGS 176 LIST OF PROPERTIES HELD 178 FORM OF PROXY

fInanCIal HIgHlIgHts

2006 RM'000 Revenue Pizza Hut Malaysia Pizza Hut Singapore KFC Cambodia KFC Group Total Profit Before Tax Total Assets Shareholders' Equity Gross Dividend per share (Sen) Share Price as at 31 December (RM) nO. OF ReSTAuRAnTS Pizza Hut Malaysia Pizza Hut Singapore KFC Cambodia KFC Malaysia KFC Singapore KFC Brunei KFC India Kedai Ayamas RasaMas Malaysia RasaMas Brunei

2007 RM'000

2008 RM'000

2009 RM'000

2010 RM'000

267,892 160,651 ­ ­ 428,543 65,832 699,511 425,880 9 3.36

301,015 165,364 ­ ­ 466,379 80,186 801,772 476,517 9 3.20

351,719 176,169 4,864 ­ 532,752 97,739 903,097 633,682 11 2.43

369,778 165,990 9,009 2,215,508 2,760,285 230,261 2,092,791 687,144 13 3.31

411,612 179,895 11,412 2,432,908 3,035,827 266,859 2,410,095 852,369 14 5.06

qSR BRAndS Bhd AnnuAl RepORT 2010

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151 38 ­ 368 68 7 ­ 19 15 ­ 666

168 40 ­ 403 69 7 ­ 20 22 ­ 729

187 45 2 436 73 8 ­ 25 34 2 812

208 50 7 475 77 9 ­ 35 40 3 904

220 49 10 515 77 9 7 49 39 3 978

Revenue (RM'000)

pROFiT BeFORe TAx (RM'000)

10 3,035,827 09 2,760,285 08 532,752 07 466,379 06 428,543 65,832 80,186 97,739 230,261 266,859

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09

08

07

TOTAl ASSeTS (RM'000)

ShARehOldeRS' equiTy (RM'000)

10 2,410,095 09 2,092,791 08 903,097 07 801,772 06 699,511 425,880 476,517 633,682 687,144 852,369

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09

08

07

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qSR BRAndS Bhd AnnuAl RepORT 2010

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notICe of annUal general MeetIng

nOTiCe iS heReBy Given ThAT The 8Th AnnuAl GeneRAl MeeTinG OF qSR BRAndS Bhd will Be held AT level 3, wiSMA KFC, nO 17 JAlAn SulTAn iSMAil, 50250 KuAlA luMpuR On wedneSdAy, 27 ApRil 2011 AT 3:30 pM. FOR The FOllOwinG puRpOSeS: 5 As special business: To consider and, if thought fit, to pass the following resolutions: a Ordinary Resolution - Authority to allot and issue shares pursuant to Section 132D of the Companies Act 1965 (the "Act") "THAT subject always to the Act, Articles of Association of the Company and approvals from the Bursa Malaysia Securities Berhad and other governmental or regulatory authorities, where such approvals shall be necessary, full authority be and is hereby given to the Directors pursuant to Section 132D of the Act from time to time to issue and allot ordinary shares from the unissued share capital of the Company upon such terms and conditions and at such times as may be determined by the Directors of the Company to be in the interest of the Company provided always that the aggregate number of shares to be issued pursuant to this Resolution shall not exceed 10 percent of the issued share capital for the time being of the Company."

agenda

1 To receive and adopt the Audited Financial Statements of the Company for the year ended 31 December 2010 and the Reports of the Directors and Auditors thereon.

Resolution 1

qSR BRAndS Bhd AnnuAl RepORT 2010

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To approve the payment of Directors' fees in respect of the financial year ended 31 December 2010.

Resolution 2

3 a To re-elect the following Directors retiring pursuant to Article 89 of the Company's Articles of Association: i ii b Kua Hwee Sim Sheik Sharufuddin bin Sheik Mohd

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Resolution 3 Resolution 4

To re-elect the following Director retiring pursuant to Article 96 of the Company's Articles of Association: b i Kamaruzzaman bin Abu Kassim

Resolution 7

Ordinary Resolution - Proposed Renewal of Share BuyBack Authority "THAT subject to the Companies Act 1965 (the "Act"), rules, regulations and orders made pursuant to the Act, provisions of the Company's Memorandum and Articles of Association and the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities") and any other relevant authorities, the Company be and is hereby authorized to purchase and/or hold such amount of ordinary shares of RM1.00 each in the Company's issued and paid-up share capital ("Proposed Share Buy-Back Authority") through Bursa Securities upon such terms and conditions as the Directors may deem fit in the interest of the Company provided that:

Resolution 5

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To re-appoint Messrs KPMG as Auditors of the Company and to authorize the Directors to fix their remuneration.

Resolution 6

a

the aggregate number of shares so purchased and/or held pursuant to this ordinary resolution ("Purchased Shares") does not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at any one time; and the maximum amount of funds to be allocated for the Purchased Shares shall not exceed the aggregate of the retained profits and/or share premium of the Company."

b

"AND THAT the Directors be and are hereby authorized to decide at their discretion either to retain the Purchased Shares as treasury shares (as defined in Section 67A of the Act) and/or cancel the Purchased Shares and/or to retain the Purchased Shares as treasury shares for distribution as share dividends to the shareholders of the Company and/or be resold through Bursa Securities in accordance with the relevant rules of Bursa Securities and/or cancelled subsequently and/ or to retain part of the Purchased Shares as treasury shares and/or cancel the remainder and to deal with Purchased Shares in such other manner as may be permitted by the Act, rules, regulations, guidelines, requirements and/or orders of Bursa Securities and any other relevant authorities for the time being in force." "AND THAT the Directors be and are hereby empowered to do all acts and things (including the opening and maintaining of a central depositories account(s) under the Securities Industry (Central Depositories) Act, 1991) and to take such steps and to enter into and execute all commitments, transactions, deeds, agreements, arrangements, undertakings, indemnities, transfers, assignments, and/or guarantees as they may deem fit, necessary, expedient and/or appropriate in the best interest of the Company in order to implement, finalise and give full effect to the Proposed Share Buy-Back Authority with full powers to assent to any conditions, modifications, variations (if any) as may be imposed by the relevant authorities."

"AND FURTHER THAT the authority conferred by this ordinary resolution shall be effective immediately upon passing of this ordinary resolution and shall continue in force until the conclusion of the next Annual General Meeting ("AGM") of the Company or the expiry of the period within which the next AGM of the Company is required by law to be held (whichever is earlier), unless earlier revoked or varied by ordinary resolution of the shareholders of the Company in general meeting, but shall not prejudice the completion of purchase(s) by the Company before that aforesaid expiry date and in any event in accordance with provisions of the Listing Requirements and other relevant authorities."

qSR BRAndS Bhd AnnuAl RepORT 2010

Resolution 8

c Ordinary Resolution - Proposed Renewal of Existing Shareholders' Mandate and additional mandate for QSR Brands Bhd ("QSR") and its subsidiaries ("QSR Group") to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature with Related Parties ("Proposed Shareholders' Mandate") "THAT authority be and is hereby given in line with Paragraph 10.09 of the Listing Requirements of the Bursa Malaysia Securities Berhad ("Bursa Securities"), for the Company, its subsidiaries or any of them to enter into any of the transactions falling within the types of the Recurrent Related Party Transaction, particulars of which are set out in the Circular to Shareholders dated 4 April 2011, with the Related Parties as described therein, provided that such transactions are of revenue and/or trading nature, which are necessary for the dayto-day operations of the Company and/or its subsidiaries, within the ordinary course of business of the Company and/or its subsidiaries, made on an arm's length basis and on normal commercial terms which those generally available to the public and are not detrimental to the minority shareholders of the Company;

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notICe of annUal general MeetIng

AND THAT such authority shall commence immediately upon the passing of this Ordinary Resolution until: i the conclusion of the next Annual General Meeting ("AGM") of the Company following the general meeting at which the ordinary resolution for the Proposed Shareholders' Mandate for the Recurrent Related Party Transactions is passed, at which time it shall lapse, unless the authority is renewed by a resolution passed at the next AGM; or the expiration of the period within which the next AGM after the date it is required by law to be held; or revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting of the Company, d Special Resolution ­ Proposed Amendments to the Company's Articles of Association "THAT the Articles of Association of the Company be and are hereby amended in the manner as set out in Part C of the Circular to Shareholders dated 4 April 2011 AND THAT the Directors of the Company be and are hereby authorized to give effect to the said amendments, alteration, modification and deletion to the Articles of Association of the Company as may be required by any relevant authorities as they deem fit, necessary or expedient in order to give full effect to the Proposed Amendments to the Company's Articles of Association."

ii

qSR BRAndS Bhd AnnuAl RepORT 2010

iii

Resolution 10

6 To transact any other ordinary business of which due notice shall have been given.

whichever is earlier. AND FURTHER THAT the Directors of the Company be authorized to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Shareholders' Mandate."

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Resolution 9

BY ORDER OF THE BOARD MOhd ZAM Bin MuSTAMAn (LS 0009020) idhAM JihAdi Bin ABu BAKAR, ACiS (MAICSA 7007381) Company Secretaries

Kuala Lumpur 4 April 2011

notes:

qSR BRAndS Bhd AnnuAl RepORT 2010

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A member of the Company entitled to attend and vote at the above Annual General Meeting ("AGM") may appoint a Proxy to attend and vote in his stead. A Proxy may but need not be a member of the Company. If the proxy is not a member of the Company, the proxy shall be an advocate or an approved company auditor or person approved by the Companies Commission of Malaysia. If the member is a corporation, the Proxy Form must be executed under its common seal or the hand of its duly authorized officer or attorney. If the Proxy Form is signed under the hand of an officer duly authorized, it should be accompanied by a statement reading "signed as authorized officer under an Authorisation Document which is still in force, no notice of revocation having been received". If the Proxy Form is signed under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading "signed under a Power of Attorney which is still in force, no notice of revocation having been received". A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with the Proxy Form. A member of the Company may appoint more than two (2) proxies to attend the AGM. Where a member of the Company appoints two (2) or more proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholdings to be represented by each proxy. Any alteration made in this form should be initialed by the person who signs it. The Proxy Form and the Power of Attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of authority must be deposited at Tricor Investor Services Sdn Bhd, Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

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notICe of annUal general MeetIng

exPlanatorY notes on sPeCIal BUsIness

1 Resolution pursuant to Section 132d of the Companies Act 1965 The Ordinary Resolution proposed under item 5(a), if passed, will give the Directors of the Company, from the date of the above General Meeting, authority to issue and allot ordinary shares from the unissued share capital of the Company being for such purposes as the Directors consider would be in the interest of the Company. This authority will, unless revoked or varied at a General Meeting, expire at the conclusion of the next Annual General Meeting of the Company. The Company had, at the 7th Annual General Meeting held on 29 April 2010, obtained its shareholders' approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 ("the Act"). The Company did not issue any new shares pursuant to this mandate obtained as at the date of this notice. The Ordinary Resolution 7 proposed under item 5(a) of the Agenda is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Act. At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is obtained, the Company will make an announcement in respect of the purpose and utilisation of proceeds arising from such issue. The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions. 2 Resolution pursuant to the proposed Renewal of Share Buy-Back Authority This resolution proposed under item 5(b) will empower the Directors of the Company to purchase the Company's shares up to ten percent (10%) of the issued and paidup share capital of the Company by utilizing the funds allocated which shall not exceed the total retained earnings and share premium of the Company. This authority will, unless revoked or varied at a General Meeting, expire at the conclusion of the next Annual General Meeting of the Company. Further information on the Proposed Renewal of the Share Buy-Back Authority are set out in the Circular to Shareholders of the Company which is dispatched together with the Company's Annual Report for the year ended 2010. 3 Resolution pursuant to the proposed Shareholders' Mandate This resolution proposed under item 5(c) will enable QSR Group to enter into any recurrent transactions of a revenue or trading nature which are necessary for the QSR Group's day-to-day operations, subject to the transactions being in the ordinary course of business, made at arm's length and on normal commercial terms and are not to the detriment of the minority shareholders of the Company. Further information on the Proposed Shareholders' Mandate are set out in the Circular to Shareholders of the Company which is dispatched together with the Company's Annual Report for the year ended 2010. 4 Resolution pursuant to the proposed Amendments to the Company's Articles of Association The Special Resolution proposed under item 5(d), if passed, will give authority to the Directors to amend the Company's Articles of Association in order to be in line with the new Listing Requirements of Bursa Malaysia Securities Berhad, prevailing statutory and regulatory requirements as well as to update the Articles of Association of the Company. Further explanatory notes on Resolution 10 are set out in the Circular to Shareholders dated 4 April 2011 attached to the Annual Report for the year ended 31 December 2010.

qSR BRAndS Bhd AnnuAl RepORT 2010

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stateMent aCCoMPanYIng notICe of annUal general MeetIng

1 diReCTORS whO ARe STAndinG FOR Re-eleCTiOn AT The AnnuAl GeneRAl MeeTinG a The Directors retiring by rotation pursuant to Article 89 of the Articles of Association are: i ii b Kua Hwee Sim Sheik Sharufuddin bin Sheik Mohd 2 deTAilS OF ATTendAnCe AT BOARd MeeTinGS held in The FinAnCiAl yeAR ended 31 deCeMBeR 2010 There were six (6) Board Meetings held during the financial year ended 31 December 2010 and the following are the details of the Board attendance:

nO OF MeeTinGS ATTended

The Director retiring by rotation pursuant to Article 96 of the Articles of Association is: i Kamaruzzaman bin Abu Kassim

nAMe OF diReCTOR

1

Kamaruzzaman bin Abu Kassim (appointed on 12 January 2011) Ahamad bin Mohamad Jamaludin bin Md Ali Dato' Dr Ridzuan bin Mohd Akil YAM Dato' Seri Syed Amir Abidin Jamalullail ibni Almarhum Tuanku Syed Putra Jamalullail Kua Hwee Sim Sheik Sharufuddin bin Sheik Mohd Datin Paduka Siti Sa'diah binti Sheikh Bakir

qSR BRAndS Bhd AnnuAl RepORT 2010

The details of the directors seeking re-election are set out in the Directors' Profiles which appear on pages 48-56 of the Annual Report.

2 3 4 5

5/6 6/6 6/6 5/6

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6 7 8

6/6 6/6 6/6

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The 8Th AnnuAl GeneRAl MeeTinG will Be held AT level 3, wiSMA KFC, nO 17 JAlAn SulTAn iSMAil, 50250 KuAlA luMpuR On wedneSdAy, 27 ApRil 2011 AT 3.30 pM.

TrendseTTers Welcome

Hanging out at our place just got even cooler. More and more young adults are catching up with friends, sharing a meal and enjoying good times at our reimaged restaurants.

CorPorate stateMent

deAR ShARehOldeRS 2010 was a year of exceptional achievements, with the Group recording outstanding financial results driven by a variety of highly effective strategic initiatives. Despite the turbulence of the world's economic crisis, QSR is now in a position of considerable strength. This healthy start to a new decade in the Group's growth story was underpinned by the ever-growing popularity of the Group's products combined with the rigorous cost controls implemented the previous year, which together now provide a stable platform for future advances. Against this background, it gives us great pleasure to present the Corporate Statement of QSR Brands Bhd (QSR) for the financial year ended 31 December 2010.

qSR BRAndS Bhd AnnuAl RepORT 2010

froM left to rIgHt

AhAmAd bin mohAmAd DEPUTY CHAIRMAN KAmAruzzAmAn bin Abu KAssim CHAIRMAN JAmAludin bin md Ali MANAGING DIRECTOR

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ReGiOnAl eCOnOMiC Review Economic conditions during the year under review have been generally positive for the Group. According to the International Monetary Fund (IMF), the world economy is in a two-speed recovery phase. Advanced economies are subject to subdued growth while in emerging economies, activities are buoyant and recovery is strong. Malaysia's economy registered strong annual growth of 7.2% as it shed the effects of the global economic crisis. A 6.5% increase in private consumption in the Q4 was indicative of the year as a whole as positive consumer confidence, higher income levels and favourable labour market conditions led to increased spending. A sizeable portion of 2010's growth was provided by two of the largest sectors of the economy, services and manufacturing, which grew 6.8% and 11.4% respectively. Across the causeway, Singapore was the fastest growing Asian economy in 2010 with 14.5% growth for the year, rebounding strongly from a 2% contraction in the previous year. By September 2010, overall unemployment had fallen a percentage point lower than the 2009 annual average of 3%. The opening of two major integrated resorts early in the year was said to have boosted the services sector which in turn contributed to the strong GDP. The Indian economy performed well during 2010 with annual GDP growth of 8.3%. Economists credited the Government's welltimed macroeconomic policies for softening the effects of the global economic downturn. However, food inflation stayed high throughout the year, reaching 14.6% in August 2010, despite good spring harvests and healthy Government food stocks.

Cambodia's GDP growth rate surpassed the World Bank and IMF forecasts to reach 5.5% for the year. Attributive factors included growth in tourism, agriculture and garment manufacturing. 2010 FinAnCiAl hiGhliGhTS 2010 was a great year for QSR, evidenced in a 10% increase in revenue to RM3,035.8 million from RM2,760.3 million in 2009. The improved financial performance can be attributed to the continued growth in the public's enthusiasm for our products as well as to prudent cost control methods put in place to counter the previous year's negative economic conditions. The consistent upward trend in revenue growth over the past five years has led to parallel growth in the Group's operating profit, resulting in a compounded annual growth rate (CAGR) of 10.6%, excluding KFC Holdings (Malaysia) Bhd (KFCH) results. Factors such as revenue growth and lower costs of raw materials resulted in higher profit before tax of RM266.9 million, a 15.9% jump on the previous year's figure. The profit before tax included a net surplus of RM6.7 million arising from the revaluation of its properties.

qSR BRAndS Bhd AnnuAl RepORT 2010

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CorPorate stateMent

The key financial highlights for 2010 included: · · · · · · · · RevenueatPizzaHutMalaysiagrewby11.3%toRM411.6millionfromRM369.8millionin2009. P izza Hut Singapore recorded revenue growth of 8.4% to RM179.9 million against RM166 million for the previous financial year. RevenueatKFCRestaurantssegment(region-wide)reachedRM1,899.5million,a9.6%increaseover2009'sfigures. KFCMalaysiaachievedarevenueofRM1,496.9million,a9.6%increaseonRM1,365.5inthepreviousyear. KFCSingapore'srevenueclimbedtoRM368.6million,a7.6%,RM25.9millionincreasefrom2009. AnencouragingfirstyearofoperationsforKFCIndiageneratedRM6.2millionofrevenue. R evenuefortheIntegratedPoultrysegmentclimbed10%toRM505.7million. R evenue at KFC Marketing Sdn Bhd (KFC Marketing) increased by RM21.4 million to RM221.4 million from RM200 million in 2009.

qSR BRAndS Bhd AnnuAl RepORT 2010

SynOpSiS OF iMpROveMenTS 2010's strong performance was led by a number of operational improvements: · Q SR expanded its network by opening 12 new Pizza Hut restaurants in Malaysia bringing the total number to 220 stores country-wide.

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KFCHexpandeditsKFCnetworkbyopening40newstoresacrossMalaysiaandseveninIndia. N ewproductsatPizzaHutMalaysiasuchastheGoldenFortuneCheesyCrownPizza,ChunkyLoadedPizzaandExtreme Cheesy Lava 6 Pizza drove restaurant sales and transactions. · FC Malaysia launched a major thematic campaign supported by tactical initiatives to strengthen the brand and drive K transactions. · xtendedhoursandbreakfastwereintroducedin197storesoftheKFCnetworkleadingtonetincrementalsalesofRM6.8 E million for the year. · ajorcorporateclientsengagedKFCEventsSdnBhd(KFCEvents)forsitesellingandvouchermarketing,contributingnearly M RM35 million in sales. · FCH constructed modern broiler farms in Johor with a total capacity of one million birds per cycle, or six million birds K per year. · KedaiAyamasopened14newestablishmentsinMalaysia.

· ·

develOpMenTS TO enhAnCe OpeRATiOnS Pizza Hut Malaysia introduced a number of successful new products into the market during the year. Among these was the Chunky Loaded Pizza. This gigantic feast was made up of savoury sauces, cheese, tortilla strips, nutritious vegetables, juicy meat and a double crust in a ten layer "masterpiece of taste". The pizza could be enjoyed with a Super Supreme, Island Supreme, Pepperoni or Hawaiian Chicken topping. Later in the year cheese lovers were treated to the Extreme Cheesy Lava 6, with its six varieties of cheese on top and a sensational crust stuffed with three types of delicious cheese. During the year QSR incorporated PHD Delivery Sdn Bhd (PHD), a wholly owned subsidiary, to drive its new PHD sub-brand, which supports the Pizza Hut network. PHD is a new type of delivery service that promises greater speed (30 minutes guarantee) and better value to our customers. PHD has its own menu, a new logo, free delivery and nett prices. Customers are also able to enjoy a newly developed Traditional Crust, which is made from a special type of dough only available at PHD. The PHD sub-brand offers QSR the opportunity to quickly grow its network of delivery centres. The reason for this is that only a relatively small investment is required compared to a fully fitted out Pizza Hut restaurant. PHD branches are equipped with high speed ovens, teams of kitchen staff and delivery riders to prepare and send out the orders. The first PHD was opened in Equine Park, Kuala Lumpur in early 2011.

It was a satisfying year all round for Pizza Hut Singapore, especially so at the Dine-In level. The Soft Shell Crabbiatta Pasta promotion which was launched on 1 March was a big hit with customers. Fusing the nation's favourite dish ­ chilli crab ­ with authentic Italian spaghetti, the delightful pasta dish won many fans. The previous roll out of KFC Malaysia's regionalisation programme across Northern Region and East Malaysia Region was a success. The regionalisation programme now encompasses the Southern Region, East Coast Region, and two Central Regions. Each of these regions now operates as a decentralised unit, which makes them agile and responsive to changes in market conditions, among other benefits. Derived advantages include improved cost control benefits, increased operational efficiency and more career enhancement opportunities. A new thematic campaign was launched by KFC Malaysia in March 2010. The theme "New Discoveries, Classic Taste" was created to build KFC brand's top-of-mind and to further differentiate it from competitors while enhancing its strong positioning. The Colonel's Royal Briyani Combo was launched as a parallel tactical campaign to increase transactions. From May to June 2010, KFC Singapore created a product and marketing campaign called Ole Ole Box and Ole Ole Feast to coincide with the FIFA World Cup. Aimed at football-loving males, half-time advertising spots were used to attract attention and late night delivery was instigated in the latter stages of the competition.

qSR BRAndS Bhd AnnuAl RepORT 2010

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CorPorate stateMent

In Brunei, the KFC brand was strengthened through a series of site selling activities. Our products ­ and brand paraphernalia ­ were present at expos, forums, concerts, sporting occasions and other events. A year of successful new product launches also helped to raise sales and drive up awareness; these included the Black Pepper Crunch, Jom Jimat Afternoon Cravers and Shrimp Hearties. Prospects for future growth are encouraging as Brunei's high per capita disposable income mitigates its relatively small population size. KFC India, too, had a year of solid growth and expansion. By December 2010, seven restaurants were opened for business, welcoming Indian customers with new flavours and products. The distribution spread included five stores opened in Mumbai, Pune and Aurangabad. Two other restaurants in Pune were brought under KFC India's control through the acquisition of Kernel Foods Pvt Ltd for a total investment of RM2.5 million. A little under half the Indian population are vegetarian so the Group's product marketing teams worked hard to cater to this market, introducing eight varieties of vegetarian products including the Veggie Feast, Veg Zinger and Corn On The Cob. Despite it being just a year old, having been launched in 2009, KFC Events ­ the voucher, catering and site-selling subsidiary company of KFCH ­ had a very promising year. Significant corporate clients engaged KFC Events through the year to cater and/or provide vouchers as part of their sales and marketing activities. 2010 has been a successful year for KFCH International College (KFCH College) (previously

known as Paramount College). KFCH College's aim is to own a segment of Malaysia's growing education industry by making the college one of the best private educational institutions in Asia, specialising in hospitality programmes, such as restaurant management, culinary arts, hotel management, tourism management and event management. The Group is currently awaiting approval for the college's new hospitality curriculum from the Malaysian Qualifications Agency (MQA). RM25 million would be invested for the acquisition and refurbishment of the existing campus in Puchong as well as for initial renovations of the new campus in Bandar Dato' Onn. The Johor campus will be located within the new Bandar Dato' Onn township, a RM3.5 billion commercial and residential development strategically located near the heart of Johor Bahru. The campus will be built in three phases and is scheduled for completion in 2015. Once fully operational, the Johor campus will have an intake capacity of 12,000 students per year. In line with the Government's New Economic Model (NEM), which asserts that Malaysia's economic growth be driven primarily by the private sector, the Group entered into a Memorandum of Understanding (MOU) with Federal Land and Development Authority (FELDA) and Majlis Belia Felda Malaysia on 7 January 2011 regarding the development of human capital and entrepreneurship. The Group is also seeking to collaborate with other governmental and private institutions to further increase the student body of KFCH College and consequently tap into a more reliable labour source.

Usahawan Bistari Ayamas Sdn Bhd (UBASB), a subsidiary of KFC Marketing, has made solid progress launching the Ayamas Pek Jimat brand, which is designed to penetrate the lower income segment of Malaysia's market. UBASB gives operators the opportunity of selling Ayamas Pek Jimat products from their homes, in the process generating income for themselves and their families. As of December 2010 there were 249 operators of the initiative, with UBASB providing training in Point-of-Sales (POS) support, supervision and equipment upkeep. By the end of 2011, UBASB expects to have 2,000 trained and equipped operators. The strong Corporate Social Responsibility (CSR) elements associated with UBASB have led the Ministry of International Trade & Industry (MITI) to allocate a grant worth RM260,000 for 49 of the most needy operators. Our subsidiary Ayamazz Sdn Bhd has been identifying and training budding entrepreneurs within college campuses to manage "Ayamazz Roti Impit" hot dog carts. The carts are stocked with nutritious, healthy and value for money Ayamas products that make ideal snacks for the student community. Each trainee is given up to three months training before they begin their operations. As of December 2010, 60 Roti Impit carts were operating in universities, colleges and polytechnics in the country. Another 53 Roti Impit carts are expected to roll out by the end of Q2 2011. The expansion of Kedai Ayamas will soon spread regionally. In Sabah, the Group has signed a Joint Venture (JV) with Rastamas Sdn Bhd (Rastamas), one of the state's leading poultry processors. Rastamas will be the key supplier of Kedai Ayamas poultry products sold in Sabah, which will be supplied to retail outlets, hotels, restaurants and the open market. Sixty-five percent of the JV will be owned by the Group, with the remaining 35% owned by Rastamas.

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Kedai Ayamas stores will also be opened in Singapore and Brunei under the names "Ayamas Shoppe" and "Kedai Ayamas", respectively. This strategic decision was taken after research revealed no similar competitors exist in these markets. CORpORATe ReSTRuCTuRinG ­ iMpROvinG liquidiTy OF KFCh ShAReS On 24 August 2010 the shareholders of KFCH agreed to split KFCH's shares by subdividing each ordinary share of RM1.00 into two ordinary shares of RM0.50 each. In conjunction with this exercise, a one for one bonus issue was effected whereby 396,549,364 new ordinary shares of RM0.50 each were issued. In addition 31,723,949 new free warrants were also issued on the basis of one free warrant for every 25 existing ordinary shares of RM0.50 each held after share split and bonus issue. The purpose of the split was to enhance the liquidity and marketability of KFCH shares and to encourage a wider uptake by public shareholders in the Group. The issued and paid-up share capital of the Group was previously RM198,274,682 comprising 198,274,682 ordinary shares of RM1.00 each, and as at 31 December 2010 the issued and paid-up share capital was RM396,615,492 comprising 793,230,984 shares of RM0.50 each. dividendS The Group has declared a total interim dividend of 14 sen (2009; 13 sen less tax of 25%) per ordinary share for the financial year ended 31 December 2010. No final dividend was proposed for the current financial year 2010.

CorPorate stateMent

ACCeleRATinG peRFORMAnCe exCellenCe QSR adopts proven methods to ensure the ongoing improvement of the Group, team and individual performance. A long-standing commitment to up-skilling the Group's workforce and developing talent has borne fruit. The financial health of the Group and its companies is a testament to this. To facilitate open lines of communication and strengthen unity, the Group organised an annual event adopted from Johor Corporation (JCorp) known as Pedoman, for restaurant managers and associated guests, senior management and directors. The event is designed to provide guidance in matters of business and strategy, to reward individuals and teams for exceptional performance and to highlight areas in which improvements are to be made. The coming together of individuals from the length and breadth of QSR's network also helps bind them into a cohesive and motivated unit. QSR is a strong proponent of Key Performance Indicators (KPIs). The Group's staff and teams are judged against sets of KPIs in order to gauge effectiveness. There are two key facets to the Group's KPIs; first, they allow management to assess the performance of individuals and organisational units; second, they give management teams the tools they need to monitor the effectiveness of a new strategy or process that is introduced into the Group. QSR's use of KPIs is an ongoing exercise and a valuable management tool. The Balanced Score Card is another performance measurement framework the Group uses across the organisation, particularly at the restaurants segment. Its usage provides the Group with feedback around both internal business processes and external

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outcomes, allowing continuous improvements in strategic performance and results. This tool is linked to an incentive scheme that encourages and rewards strong performance amongst staff members. In December 2010, JCorp's annual Hari Mekar event took place (Hari Mekar is an acronym for Mengejar Kecemerlangan Dalam Kualiti, or the Pursuit of Excellence in Quality). Hari Mekar is an internally developed quality event that is used to improve the overall performance of JCorp and its Group of companies. Discussions, lectures and training sessions are conducted in order to share information and attain buy-in from participants. Topics include methods to minimise costs, improve sales and profitability and further increase efficiency. A total of 14 teams from QSR attended the event in 2010. Hari Mekar has a competitive edge to it as well. Teams of staff compete across the disciplines of Innovative Creative Circle (ICC), Cempaka (Suggestions & Ideas) and Poster Design. 48 teams took part in ICC events, 17 in Cempaka and a whopping 214 in Poster Design. The Group is very proud to report that QSR was the overall champion of the event for the fourth year in a row. Over RM7.3 million was spent on training and development initiatives within the Group in 2010. This figure includes about RM134,000 from a total of RM1 million set aside by the Group for its Educational Sponsorship Grant. Total training hours across the Group averaged 54 hours per person for the year. Activities included education sponsorship, of MBA programmes; management associate training; and occupational health and safety initiatives, amongst others. The Group's human capital development programmes cover each and every level of the business from executive management to kitchen and service staff.

iMpROvinG GOveRnAnCe Good corporate governance has helped QSR achieve a well balanced accountability framework based on clear communication and organisational understanding. In the beginning of 2011, the Group set up a Remuneration & Nomination committee to provide transparency to employees and the wider stakeholder community. QSR's mission to continuously enhance corporate governance is evidenced in the Group's good market reputation and attractiveness to investors. Efforts to continuously improve internal standards will be undertaken, as will the strengthening of existing high-quality services and procedures. COMMiTTed TO CORpORATe SOCiAl ReSpOnSiBiliTy QSR has established Yayasan Amal Bistari (YAB), a corporate foundation which centralises all CSR programmes under the Group. The YAB foundation enables the Group to streamline and build upon existing programmes. In 2010 the YAB foundation organised a layered programme of CSR initiatives designed to make a positive impact on society. The YAB foundation will always seek out causes from across the spectrum where the Group feels it can make a contribution, and to this end the initiatives in 2010 are as varied and worthwhile as always. As a gesture of thanks to the local community around the Group's Bandar Tenggara poultry processing plant, AFCSB hosted a Majlis Berbuka Puasa (breaking of fast) for about 2,500 guests on 17 August 2010. The participants celebrated the occasion with

a hearty selection of food and drinks provided by QSR companies. Among the attendees were over 220 underprivileged children and their custodians from several homes and orphanages located in Bandar Tenggara, Kluang and Kulai, Johor. Over the Chinese New Year, the team at Pizza Hut Malaysia delivered over 1,900 pizzas and festive cheer to 7,500 orphans, disabled people and old folks in almost 100 charity homes nationwide. This was in conjunction with Pizza Hut's annual Nationwide Charity Delivery programme. Christmas in 2010 was extra special for 42 children of the Precious Children's Home and Praise Emmanuel Children's Home in Petaling Jaya, as Pizza Hut Malaysia and Media Prima Berhad jointly hosted a huge Christmas Party for them. During the event children were entertained by clown shows, magic shows, games and balloon sculpting. They later tucked into a feast of pizza, pasta and Christmas cake. For more than 14 years Pizza Hut Malaysia has partnered with The Star newspaper in the Newspaper in Education (NiE) programme. This year, a nationwide competition was held that led to more than 40,000 entries pouring in from teams eager to take part. The three-month Mag Inc contest titled "A Better Life" invited teams to create a magazine that explored ideas and topics which can improve quality of life and make the world a better place.

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CorPorate stateMent

The Group once again worked together with Yum! Brands Inc. and the World Food Programme (WFP) to raise funds to fight hunger the world over. At Pizza Hut, a World Hunger Hut's Power Meal was put on the menu at every restaurant nationwide. Customers of KFC were able to purchase exclusively designed note pads and pens at KFC outlets throughout the country. Later in the year, 5,000 people, including the Group's employees, their families and members of the public, participated in the "Be The Movement" charity walk. QSR and its staff contributed to raising over RM1.5 million for the World Hunger Relief Fund over the course of the campaign. The major share of the money raised was passed on to WFP to strengthen the hunger relief programmes in famine-stricken parts of Asia and Africa while the remainder was distributed to selected local charities. KFC Malaysia made a big contribution to the Group's CSR initiatives in 2010 by carrying out its 46th-49th Projek Penyayang programmes. More than 12,800 less fortunate members of society, in over 150 charity homes across the country were provided with food and festive cheer. A special event to mark the occasion was organised and attended by over 200 residents from various homes. Staff were on hand to distribute goodie bags to the special guests while KFC donated money to the homes from its Tabung Penyayang Fund. Extra cheer was also brought to the annual International Children's Day event as KFC Malaysia sponsored 3,200 set meals and goodie bags for the event's young participants.

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KFC Brunei was honoured to participate in a CSR initiative in conjunction with His Majesty the Sultan of Brunei's birthday on 14 July. The team visited the Pusat Ehsan children's centre bearing finger lickin' chicken treats for the resident children. They also presented a charitable donation of B$3,000 to the centre's management team. The Group's annual Catur Bistari Challenge was held for the third time in 2010 with playoffs taking place in various states throughout October and November. The Catur Bistari Challenge is a board game competition that tests players in a challenging cycle of asset and wealth accumulation tasks. Players are rewarded for entrepreneurial flair and the game is designed to encourage and cultivate an interest in business among youngsters. AwARdS & ReCOGniTiOn 2010 was a banner year for the QSR Group of companies, particularly so for Pizza Hut, KFC and Ayamas, all of which received a wide range of industry recognition and awards for their products and performance. Pizza Hut continued its run of fine success by collecting the Asia Franchise Franchisee of the Year (Dine-In channel) 2010, Asia Franchise Development Excellence 2010 and Asia Franchise Marketing Excellence 2010 awards from Yum! Asia Franchise Pte Ltd (Yum! Asia) at the Champions Club event held in Singapore from 8 ­ 11 March 2011.

It also picked up the "Reader's Digest Most Trusted Brands" from Reader's Digest, the "Yum! Overall Best Marketing" award and the "Yum! Reel Advertising Excellence Award (`Neighbours')" from Yum! Asia. PepsiCo bestowed the "Mocktail Innovation Award" and the "Above & Beyond Award" on the chain. Putra Brand Awards Association of Accredited Advertising Agents recognised Pizza Hut with the "Bronze Award"; and finally at the BrandLaureate awards 2009/2010 they won "Best Brand in the Food & Beverage ­ Pizzas Category". KFC received the "Yum! Reel Advertising Excellence Award (`New Discoveries')" from Yum! Asia and the "Reader's Digest Most Trusted Brands" award from Reader's Digest. It was also honoured with the "Silver Award" from Putra Brand Awards Association of Accredited Advertising Agents Malaysia and "Best Brand in the Food & Beverage ­ Fried Chicken" 2009/2010 award from BrandLaureate. Ayamas shared the spotlight when it received the prestigious 2009/2010 BrandLaureate award for "Best Brands Product Branding ­ Consumer Chicken Based Products" category. They were also the proud recipients of two awards from the Malaysia Women's Weekly magazine's Domestic Diva Awards 2010 Best in Home & Food. Ayamas Golden Nuggets won "Straight From The Fridge: Best Ready-To-Fry-Frozen Meat", and Ayamas Premium Cheese Chicken Frankfurters won under the "Best Processed Meat" category.

2011 enhAnCeMenTS pReview The global economy is recovering. Gradual improvement is being felt in most advanced economies, despite some turbulence, while improvement is moving at a more rapid pace in emerging and developing economies. The IMF projects world economic growth of about 4.25% in 2011. In Malaysia economic growth is projected to moderate to 5.2% according to the Malaysian Institute of Economic Research (MIER), due in part to structural impediments in net exports. On the plus side domestic demand is likely to stay strong due to supportive Government policy measures. The Group's macro strategy will be guided by a five-year plan approved by the Board. The plan represents a road-map that will guide QSR towards becoming the leading integrated food services group in the Asia-Pacific region. The plan includes, amongst a number of other stipulations, a focus on providing consistently good quality products and exceptional service. The delivery enhanced within Pizza Hut is poised for further growth. With its new PHD unit, the Group expects to increase delivery segment transactions throughout Malaysia and Singapore. PHD network expansion will be a feature of 2011 performance.

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CorPorate stateMent

Product teams have been tasked with developing delicious, mouth watering meals that appeal to the widest possible audience. Advertising and marketing teams will have an increased budget at their disposal in order to promote new products as well as to keep our brands at the forefront of consumers' minds. The Group's commitment to brand building is an ongoing process and one in which we strive for excellence. The Group will continue to enhance its customer's experience at the restaurant level with the expansion of QSR's interior and exterior reimaging programme. The Group estimates a minimum of 60 restaurants will be reimaged in 2011, enhancing their appearance and functionality for our increasingly sophisticated customer base. More value meals will be offered throughout the Pizza Hut and KFC networks following the excellent performance of its Sensasi Delight and Jom Jimat range. The Group is also exploring the prospect of a KFC delivery service. Increasing numbers of customers want the convenience of delivery and we predict a further capture of market share should we proceed with the initiative. The year ahead will also see greater emphasis being placed on reaching out to teens and youths. Many of our promotions and new products will be directed towards the youth market, where growth opportunities are abundant. Restaurant expansion will be ramped-up in the years to come. Openings will be initiated in all existing operating countries including India, where a successful first year has been extremely encouraging for future prospects. The Group intends to offer customers the convenience of one or more restaurants from Pizza Hut, KFC and Kedai Ayamas in as many cities and major towns as possible. Moreover, the Group will monitor new markets and territories for viable opportunities for expansion.

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Upstream activities will be strengthened by the expansion of AFCSB's sausage production line. At present, capacity is 440MT/ month; this will be increased to 800MT/month to meet an increasing demand for sausages from across the Group, particularly from Ayamas. The upgrade will be completed in Q1 2012. AFCSB will also pursue opportunities to boost its Hatchery and Breeding Farms activities to meet the increasing demand for chicken products, especially from KFC, RasaMas and Kedai Ayamas. Intake levels at KFCH College will increase across the two campuses. By the end of 2011, it is expected that 1500 students will be receiving an international-class education at our Bandar Dato' Onn campus, while capacity at our Puchong campus is expected to increase to 800 students. The Group is encouraged by the strong financial results achieved in 2010 and is optimistic about 2011's results. The main challenge that needs to be tackled is the rise in commodity prices caused by supply pressures brought about by drought and flooding in some of the world's major commodity-producing nations. To counter this, the Group will develop and introduce new excellent-value products to drive transactions across the Group's entire chain of outlets. QSR is therefore confident that the outlook for the Group remains bright and that the Group can look forward to yet another year of high performance.

ACKnOwledGeMenTS We mark a new decade with a set of record-breaking results and for this we owe a debt of gratitude to all those who have contributed to our success. Heartfelt appreciation and thanks to the Group's previous Chairman, YBhg Tan Sri Dato' Muhammad Ali Hashim. Under his stewardship significant and consistent growth was achieved. The Group wishes him great success in all his future endeavours. We thank each and every employee for their efforts during the year. Their performance has been exceptional. Thank you to the stakeholder community ­ the commitment, loyalty and warmth of the Group's shareholders, suppliers, financiers, governmental and regulatory agencies, and customers is truly appreciated. A final word of thanks goes to our colleagues on the Board of Directors and the senior management team.

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KAMARuZZAMAn Bin ABu KASSiM CHAIRMAN

AhAMAd Bin MOhAMAd DEPUTY CHAIRMAN

JAMAludin Bin Md Ali MANAGING DIRECTOR

Family Friendly

Variety and value are the two most enduring guarantees we offer families, which is why new products are launched every year to provide choice, while value favourites like Sensasi Delight and Jom Jimat are always featured on our menus.

reVIew of oPeratIons

All the Group's brands were strengthened in 2010. Restaurant chains were expanded. More customers were served with an even wider range of products. Further initiatives were undertaken to boost revenue and generate cost savings. And behind everything the Group achieved was a motivated and highlyskilled workforce, ready and eager to rise to the challenges of a new decade.

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JAmAludin bin md Ali MANAGING DIRECTOR

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FiRM FOundATiOnS QSR's success is built on the foundations of restaurant expansion, customer satisfaction and human capital development. Every year, these foundations are reinforced, strengthening them as our Group grows in size. A more cautious approach to restaurant expansion was taken in 2010 due to the relative fragility of the region's economic recovery. However, this trend was bucked in Malaysia where Pizza Hut announced the opening of its' 200th restaurant while the KFC Malaysia team proudly reached and moved past the milestone of 500 restaurants nationwide. This is a fantastic achievement and one that the Group hopes to replicate in other countries. In India, the Group was operating seven restaurants by the end of 2010. These were spread across the cities of Pune, Mumbai and Aurangabad. The total included two acquired KFC restaurants in Pune. Improvements to customer satisfaction are made through friendly service, new products and promotions, better in-store ambiance and greater convenience through more stores. This year the Group worked hard to improve all these areas. To keep on growing, the Group must remain relevant to our customers, and our brands must connect with and stimulate them. The Group's reward is their continued patronage. The most essential resource of any company is its people. And that is why human capital development, the practice of training and empowering the Group's staff with knowledge, continued apace. As investments are made in this area we see a growing number of skilled and talented people rising through the ranks of the Group.

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piZZA huT MAlAySiA 2010 was a positive year for Pizza Hut Malaysia. Revenue grew by 11.3% to RM411.6 million from RM369.8 million in 2009. Growth can be attributed to an improving economy, the introduction of new products and effective promotional campaigns. The Group's product and marketing teams were faced with a conundrum in 2010: how to improve upon the previous year's promotional calendar? They answered with a really successful collection of products that drove customer numbers upwards and created a lot of buzz in the media. The year started with a whole new Dine-In menu that offered a new set of delicious appetisers, pastas, desserts and drinks. To get the word out, a series of TV commercials and press adverts were run, supported by in-store POS materials. Celebrating Chinese New Year has always been a tradition at Pizza Hut Malaysia so the Group turned to a crowd-pleasing favourite ­ the Golden Fortune Cheesy Crown Pizza ­ to commemorate this auspicious time of year. The pizza was generously topped with eight tempura prawns, 32 golden crowns of cheese and juicy pineapples. Needless to say it was a big hit. Customer numbers grew and the merits of the pizza became a favourite topic for food bloggers. Fresh onto restaurant tables in March and April was the Chunky Loaded Pizza. This gigantic feast was made up of savoury sauces, cheese, tortilla strips, nutritious vegetables, juicy meat and a double crust in a 10 layer `masterpiece of taste'. From May to June the Group launched the Fish King Pizza with its tagline of `Big on fish! Bigger on value!' The thick pan pizza was topped with eight Alaskan Pollack fish fingers, big juicy pineapple slices and succulent crabsticks.

reVIew of oPeratIons

Malaysian meat lovers had a treat between July and September with the Meaty Deluxe Pizza. Customers could choose from either chicken or beef meatballs which adorned the crust of this carnivores' favourite. All meat was premium grade and had been marinated in aromatic Italian herbs. Other successful promotions that were held during the year included the Cheesy Lava Crust Pizza, Extreme Cheesy 6 and Citarasa Ramadhan. The promotional calendar was interspersed with two new Sensasi Delight waves (Wave 10 and 11). Sensasi Delight is a range of value meals that typically target lower to lower-middle income groups. Wave 10 was `Inspired by Mum's Cooking' and introduced four new flavours, namely Ayam Masak Merah Pizza, Garlic Butter Chicken Pizza, Chicken Carbonara Spaghetti and Ayam Masak Merah Rice. During Wave 11 the Group offered pizzas and pastas with 25% extra cheese at no additional cost. 12 new outlets were added to the chain's store portfolio in 2010 bringing the total number of Pizza Hut restaurants operating nationwide to 220.

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piZZA huT SinGApORe Pizza Hut Singapore achieved revenue growth of 8.4% to RM179.9 million from RM166 million from the previous financial year. This favourable performance was evidenced by an upswing in both the Dine-In and Delivery business segments. Success factors included the recovering economy, which led to higher discretionary spending among consumers, coupled with highly successful promotion strategies. The Group's product and marketing teams had a great year. Their creativity led to a promotional calendar that was a big hit with Singapore's residents and visitors. The year's first promotion was arguably the most important: the Cherry Blossoms Pizza. Chinese New Year (CNY) is one of the most widely celebrated festivals of the year and Singapore's residents love to dine out during the festivities so there is a lot of pressure to get our CNY promotion right. The Cherry Blossom Pizza was lovingly created to bring joy and prosperity to our customers. Six petals formed the pizza, each with its own golden crust stuffed with three flavours of cheese and covered with crispy breadcrumbs topped with diced BBQ chicken, chicken floss and juicy pineapples. It was a great success. Another highlight was the June launch of the Goooal! Splitzza to coincide with the FIFA World Cup. The male-oriented creation had two different topping flavours on a rectangular field-like deep pan pizza base. The Group also extended its delivery hours so that football fans could enjoy the pizza past midnight.

Other great promotions during the year included the Soft Shell Crabbiatta Pasta which combined Singapore's unofficial national dish, chilli crab, with authentic Italian pasta. From September to November the Group launched the Cheesy 7 Pizza, the successor to the hugely popular Cheesy 6 Pizza. The Cheesy 7 came with a unique blend of Mozzarella, Cheddar, Parmesan, Romano, Monterey Jack, Provolone and Cream Cheese. Since its launch in 2009, the Hot Dot delivery mechanism has performed well. So much so that the Group put its money where its mouth was to raise awareness of our Hot Dot delivery by offering customers an entire year's worth of free pizza, instead of the usual one, if the pizza they ordered was not hot on arrival. The HOT Guarantee Challenge also served to strengthen consumer confidence in the Group's promise of always-hot-on-delivery pizzas. In addition to external advertising to promote the campaign, internal rallies were held to excite and motivate team members to KEEP IT HOT. As of 31 December 2010, Pizza Hut Singapore opened two new stores with three closures, bringing the total to 49 operating restaurants.

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KFC CAMBOdiA The Group is particularly proud of KFC Cambodia's performance as it took in revenues of RM11.4 million, a 26.7% increase over the previous financial year. This was despite a still uncertain economy and heavy flooding that affected a number of KFC restaurants.

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Performance was driven by a concerted effort to increase awareness of KFC among the public. In-store games and colouring contests were held to drive traffic; activity stalls were built in malls to attract attention; and KFC-branded concerts were organised to get the message out that KFC was an `in' place for youth to hang out. In terms of product marketing and promotions, Combos were a big hit in 2010. The Pop Combo, Waikiki Combo and Value Meal Combo all proved popular among the general public. The big winner was the Khmer New Year Combo, which achieved a total sales mix of 23% and sales of USD$114,000. As of 31 December 2010, KFC Cambodia had opened three new stores for the year, bringing the total store count to 10 nationwide. KFC hOldinGS (MAlAySiA) Bhd (KFCh) The economic stability enjoyed by KFCH during the year has resulted in a 9.8% rise in revenue to RM2,522 million, up from RM2,297.4 million in 2009. The KFC Restaurants segment registered growth of 9.5% to RM1,888.1 million, attributable to a wider store network, effective marketing and promotion activities. The Integrated Poultry segment achieved a revenue of RM533.4 million, a 10.2% increase on the previous year.

reVIew of oPeratIons

KFC MAlAySiA KFC Malaysia reported record amounts of revenue in 2010 at RM1,496.9 million, a 9.6% increase from 2009. The revenue would have been slightly higher had it not been for 47 outlets being temporarily closed for image enhancements. The Group's product and marketing teams launched some great new promotions during the year. The first three activities were designed to capture a larger segment of Malaysia's youth market (teens and young adults). It began with the re-launch of the Zinger Tower on 4 January. Already a popular meal choice, the Zinger Tower was given a special twist by adding a new chilli lime sauce to appeal to a younger market. A second quarter promotion called KFC Showtime Box Meal ­ Iron Man also boosted our brand with the younger segment, which identified with the major Hollywood movie that was a big hit in Malaysia. In July the Group launched the KFC Toasted Pocketful, another winner with the youth segment. The Toasted Pocketful was an attractive innovation that contained a chicken fillet, tortilla chips, salad and a crispy piece of chicken crisp all bundled up in a toasted tortilla wrap. In March a major thematic campaign was launched to further build top-of-mind brand recall. The new theme, "New Discoveries, Classic Taste" touched on the "New Discoveries" in KFC while customers were still familiar with the Colonel's 11 herbs and spices. Secondary benefits of the campaign were the differentiation of KFC from competitor brands and the enhancement of KFC's brand position as Malaysia's premier quick service restaurant. The Group introduced Colonel's Royal Briyani Combo in conjunction with the thematic campaign as a tactical initiative to drive transactions.

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Other promotions through the year included KFC Hot & Spicy Shrimp, a tasty alternative source of protein that was introduced to drive transactions during the usually quiet period of Ramadhan; the Cheesy Zinger Crunch, released to capture a larger share of the burger market segment; and the ever popular Jom Jimat ­ Low Price Point ­ Snack Box targeted at consumers looking for affordable, value-for-money meals. To better serve the Group's bottom line, sauce dispensers were introduced across 152 restaurants in the Klang Valley as well as major towns and cities in the states of Penang, Johor Bahru, Kuantan and Perak. The cost-controlling initiative was rolled out in Q4 2010 and has resulted in a noticeable reduction in cost. Plans for a nationwide rollout are being devised. The Group's ongoing restaurant image-enhancement programme continued with 47 restaurants being upgraded to improve ambiance. The programme is in line with the Group's commitment to provide the best possible brand experience for the Group's customers. As of 31 December 2010, KFC Malaysia had opened 40 new outlets bringing the total to 515 restaurants nationwide. KFC SinGApORe Singapore's improving economy and increased levels of consumer spending helped KFC Singapore to achieve a record high revenue of RM368.6 million, a 7.6% or RM25.9 million increase on the previous year. However, the economic recovery also resulted in a reduction in the Government's Jobs Credit Scheme cash grant and the cessation of rental rebates, worth a total of RM5 million.

This year's strong performance was helped by rising consumer awareness and uptake of our breakfast segment, where sales jumped 41.3%. Our delivery service also picked up markedly with a RM5.5 million increase in sales, about 11.5% rise from 2009. Day part segment achieved sales figures of RM13.7 million during the year, helped by the promotion of oven baked products (Egg Tarts and Roasta Burger). At the beginning of the year, when economic recovery was still uncertain, the KFC Singapore team launched a three week campaign to promote the Ultimate Value Box. Each box meal came with a combination of a piece of chicken, a choice of one of KFC's signature burgers (Zinger, Shrooms Burger and O.R. Fillet Burger), a regular Mashed Potato and a refreshing Pepsi. This value proposition also helped consumers as it fell between the Christmas and Chinese New Year festive seasons when discretionary spending is limited. During Chinese New Year, KFC Singapore launched the KFC Egg Tart, freshly baked Portuguese egg tarts that proved to be a big hit with customers. It was also a landmark for KFC Singapore as it marked the first step into the non-fried arena. Each box of six egg tarts was decorated with traditional Chinese New Year motifs and was often given out by consumers as gifts for families, friends and office mates. So popular was the promotion that the KFC Egg Tart has since become a permanent menu item. Another one for the history books was the October launch of the KFC Roasta Burger, a tender chicken burger that came with a specially-marinated oven-roasted chicken fillet topped with a signature sauce, crunchy lettuce, and tangy tomatoes in an oat-bran dusted bun. KFC's first ever oven-roasted burger was launched to address the issue of declining visit frequency to KFC and was launched in 67 of our 77 stores. Supporting the launch was a multipronged media campaign involving TVCs, press ads, truck displays, social media and even holograms.

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Other product and promotional highlights included a "Win a pair of return Air tickets to Bangkok daily" competition used to promote the breakfast and delivery segments; the Ole Ole Box and Ole Ole Feast, two types of packs that were marketed to football fans during the FIFA World Cup; and later in the year the return of an old favourite: KFC Black Pepper Chicken. As of 31 December 2010, KFC Singapore had opened 3 new restaurants with three closures, bringing the total number of stores across the island at 77. KFC BRunei In line with Brunei's improving economy KFC Brunei's year-end revenue increased to RM16.3 million, a 5.7% growth on 2009's figure. A successful year of promotions including Hot & Spicy Shrimps, Jom Jimat Afternoon Cravers and the Megamix Crunch helped to draw in additional revenue in 2010. KFC Brunei also worked hard to drive sales through site selling at a variety of events and in-store parties. Sales from parties and catering had improved while voucher sales dipped slightly after the Brunei Government's new credit card regulations were introduced. As of 31 December 2010, the store count in Brunei remained consistent with previous year at 9 restaurants nationwide.

reVIew of oPeratIons

KFC indiA The Group is encouraged by the results of the first year of operations of KFC India. A total of RM6.2 million in revenue was generated from KFC restaurants operating in the cities of Mumbai, Pune and Aurangabad. Expanding the Group's restaurant chain in India presents the Group with an opportunity to capitalise on a lucrative revenue stream. The country's sizeable population density, especially within cities, coupled with a growing middle class eager to frequent Western restaurants, makes the Group venture into India particularly relevant to the Group's future growth. One of the challenges the Group met during the year was to provide a wide selection of choices for vegetarians, who make up more than 40% of the population. The products the Group offered for this market segment included the Veggie Feast, Veg Thali, Chana Snacker, Veg Fingers, Veg Zinger and Rizo-Rice. Moreover, all the Group's vegetarian products are prepared in separate kitchens to assure customers that meals will contain no traces of meat. These efforts were well received and the perception of KFC is shifting towards a more vegetarian-friendly restaurant chain.

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As of 31 December 2010, KFC India had opened 5 new outlets; 3 in Mumbai and one each in Pune and Aurangabad, with another 2 acquired outlets in Pune, resulting in a total of 7 operating restaurants. RASAMAS & KedAi AyAMAS Reversing the trend of the previous year, revenue at RasaMas grew to RM24.9 million in 2010 a 7% increase on the previous year.

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RasaMas launched a range of new products and promotions during the year including the Roaster Lada, the Warisan Roaster and the RasaMas Muhibah Roaster. These three popular roasters all featured on the Syoknya RasaMas competition held on TV3 in the previous year. As of 31 December 2010, a total of 42 RasaMas stores were operating across Malaysia and Brunei. Kedai Ayamas also had a positive year in terms of revenue, resulting in a 36% increase to RM55.1 million, up from RM40.5 million in previous year. The increase in revenue was driven by network expansion and an aggressive programme of product releases. Many new offerings were launched onto the market including Poppers, Chicken Donut, Premium Jumbo Drummets and Chicken Satay with Peanut Sauce. The new releases were in line with the Ayamas strategy for their products to become ubiquitous in fridges and freezers across the country. As of 31 December 2010, 14 new Kedai Ayamas stores were opened bringing the total to 49 across Malaysia. inTeGRATed pOulTRy OpeRATiOnS An impressive year for the Group's integrated poultry segment led to a revenue increase of 7% to RM1,294 million, including intercompany sales.

Revenue from AFCSB processing plants totalled RM710.5 million, a 3.5% increase from 2009. The rise was primarily due to higher volumes of orders from its expanding restaurant networks. Turnover for the Feedmill division increased by 8.5% for the year. Manufacturing capacity tonnage also increased to 136,000 metric tonnes against 131,000 metric tonnes in the previous year, due to an increase in the Group's chicken requirements. The positive results were somewhat tampered by a 15%-20% jump in commodity prices in Q4, a development that the Group predicts will continue in 2011 due to unfavourable weather conditions in commodity-producing countries. At the Farm & Hatchery level, production of Day Old Chicks and Hatchable Eggs remained relatively consistent with 2009 levels due to both operating at full capacity. An initiative to upgrade a number of breeder houses from deep litter flooring systems to 2/3 slats flooring was 60% completed during the year, with the balance expected to be completed in 2011. The upgrade will enhance productivity at the breeder houses. KFC Marketing increased its revenue by 10.7% to RM221.4 million for the year. The revenue growth was attributable to higher domestic open market sales of RM16.1 million and higher export sales of RM5.3 million, a 25.9% rise mainly due to increasing demand from Singapore and Brunei. KFC Marketing's "Ayamazz Roti Impit" hot dog kiosk business also contributed positively to the Group, both in revenue and CSR. 60 Roti Impit stalls were opened for business in universities, colleges and polytechnics around Peninsular Malaysia.

The year also saw KFC Marketing diversifying its range of products to hypermarkets and shops. The right to distribute frozen potato products, frozen vegetables, pasta and tomato-based products under Leggo's brand and frozen fish-based products under I&J brand were acquired from the Simplot Company (USA). In addition, KFC Marketing acquired the rights to distribute the popular Pokka of Japan room temperature beverages within the Klang Valley. Four new Bakers' Street products were also launched, namely Premium Chicken Pie, Premium Curry Chicken Pie, Kasturi and Donat. AnCillARy The Group's ancillary operations continued to register turnover growth in the year. SAuCe-MAnuFACTuRinG Region Food Industries Sdn Bhd (RFI), the sauces-manufacturing arm of the Group, reported revenue of RM89.9 million for the year, an increase of 15.8% over the previous year. 20% growth in domestic open market sales accounted for 34.8% of the turnover while the export market grew by 12%. The Group's long term plans for RFI to become one of Asia's leading sauce manufacturers came a step closer to fruition with the production capacity of its plant rising to approximately 20,000 metric tonnes, up from about 17,800 metric tonnes in 2009. A newlyupgraded mayonnaise plant was also completed which will allow RFI to capture a larger share of the growing mayo market.

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reVIew of oPeratIons

BAKeRy & COMMiSSARy Production capacity in the Bakery division was increased to meet demand from the Group's restaurant segment. About 72 million buns were produced in 2010 while 6 new products were launched over the year, with 4 supplied to internal divisions and 2 ordered by external customers. The Bakery's operations were also recertified as Hazard Analysis Critical Control Point (HACCP) compliant. In addition, the Bakery division was awarded the ISO9001-2008 (Quality Management System) certification. At the Commissary division, production of coleslaw saw a slight increase in 2010 to 1.96 million packets, a 5% increase over the previous year. Operational improvements were made at the production plant in November 2010 when the secondary stage of the preprocess floor at the Coleslaw Line was upgraded. KFCh inTeRnATiOnAl COlleGe Currently, approximately 200 students are undertaking studies at the Puchong campus of KFCH College. The college's syllabus covers Hotel Management, Business Administration, Early Childhood Education, Information Technology and Electrical and Electronics Engineering. A number of graduating students will be offered employment within the Group. Upgrading works are underway at the campus which will result in sweeping infrastructural improvements, while a new syllabus more closely tied into the Group's core business is under review from the Malaysian Qualifications Agency (MQA).

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huMAn CApiTAl develOpMenT The Group attaches great importance to developing the abilities of its employees. Human Resources teams across the Group and its subsidiaries run a range of programmes to achieve this, and the programmes cover every level of the workforce, from senior management to crew members. In 2010 the Group invested approximately RM7.3 million in training and development. Employees received an average of 54 hours of training per person. As of 31 December 2010 the Group employed about 31,000 staff. To help employees transition upwards within the Group, the Human Resources Department of QSR created the Preparation & Enhancement Programme (PReP). The programme serves to complement an existing initiative, namely Career Progression Training Needs. Employees are trained in Finance & Basic Accounting, Employment Law, Business Communication, Basics on Occupational Safety & Health and Management & Supervisory Skills. Every employee in the 2010 intake successfully completed the programme. Our Group's ongoing Education Sponsorship Programme is designed as a springboard for educational achievement. 17 employees were selected for the programme in 2010, of whom one is pursuing Executive Masters in Business Administration. The other 16 are pursuing Diplomas and Executives in various studies, including short certification courses such as Safety & Health Officer programmes. QSR invested about RM134,000 on the Education Sponsorship Programme over the year, from an annual allocation of RM1 million. Adherence to Occupational Health and Safety (OSH) standards is of paramount concern to the Group. Besides the obvious reason of ensuring workers' safety, OSH reduces business costs, including insurance premiums and business disruption; increases motivation and the commitment of employees to the business; reduces absenteeism and increases the productivity of workers; and enhances our "brand image" and "brand value" as a socially responsible business.

To boost the Group's OSH credentials we carried out a range of training programmes. At the restaurant level, employees underwent our Hazard Identification, Risk Assessment and Risk Control (HIRARC) programme which imparts knowledge in these three areas. Emergency Response Teams (ERT) were drilled on first aid techniques and equipment usage. At the farm and manufacturing level, managers and supervisors underwent stringent chemical handling training. Employees were also trained to identify and react to issues of excessive sound and noise that can seriously damage the hearing of those exposed for prolonged periods. The fourth annual quality convention of JCorp's Hari Mekar 2010, proved as popular as ever with contestants. Hari Mekar is designed to drive performance and efficiency. In order to promote and inculcate a quality culture in the Group, QSR has introduced an incentive scheme for employees in which monetary rewards are given out for identifying possible cost-saving projects. A total of 16 of these projects have been implemented, resulting in cost savings of about RM1.56 million for 12 consecutive months calculated from the date of implementation. Halal COMMiTMenT QSR and its subsidiary companies provide strict halal-compliance guarantees in all our markets. To help the Group achieve compliance, we adhere to a stringent set of controls across the entire chain of our food manufacturing processes, from raw materials procurement and manufacturing to packaging, storage, transportation and utensils. Imported products must be halal-certified within their source country, and foreign suppliers are regularly inspected by officials from the Group's Shariah Advisory Council.

Membership of our Shariah Advisory Council is confined to prominent scholars from Islamic institutions. The council verifies QSR's halal compliance after scrutinising every part of the food chain. Ingredients are checked, equipment inspected, restaurants and factories are toured and processes are reviewed. Only after the council is satisfied will the Department of Islamic Development Malaysia (JAKIM) be called in to repeat the process. Our products are then branded by JAKIM as being fully halal-compliant. Assisting the Shariah Advisory Council at ground level is the Group's internal Shariah & Halal Department. The department is responsible for monitoring all halal operations in accordance with JAKIM's halal certification. Other activities performed by the team include the management of halal certifications, the halal awareness training of internal staff and the monitoring of external suppliers. The Shariah & Halal Department reports all its findings and activities directly to the Shariah Advisory Council. lOOKinG FORwARd At the end of a year of exceptional operational performance across the board, Group morale is high as we look forward with excitement and determination to achieving renewed progress in the year ahead. Given the Group's strong fundamentals and proven track record the Group expects to see further growth throughout our operations and throughout the Group's markets.

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The neW GeneraTion

The Group has strengthened its appeal to the younger generation. New tastes, yummy flavours and colourful promotions make QSR a favourite with youngsters everywhere.

CorPorate soCIal resPonsIBIlItY

wORKinG TOGeTheR FOR A SuSTAinABle FuTuRe The way a business conducts itself as part of the community is always under scrutiny. Companies are required to make real, measurable contributions both to their stakeholders and the community. QSR is aware that a single action can have deep and far-reaching consequences for everyone, and that is why it takes its CSR responsibilities very seriously. In our third CSR report, the Group is proud to say that it has been consistent in sticking to its planned activities, which were in accordance with the framework of the Group's newly-established foundation, Yayasan Amal Bistari (YAB). With the incorporation of the foundation, QSR succeeded in boosting the effectiveness and organisation of our CSR endeavours, as well as creating awareness and understanding of the Group's activities. QSR continued to work on strengthening local communities, promoting equal opportunities in the workplace, developing human capital, enhancing customers' experience and improving the lives of those around us. CSR was once again the hallmark of QSR's business. COMMuniTy The Malaysian community has always been one of our largest beneficiaries as well as one of our greatest fans. Their tremendous support has been a key factor in the development of our CSR commitment. During the year, QSR continued working with the Group's existing partners in the education and sports sectors, with the bulk of our contribution going to the underprivileged. Many orphans, elderly people and single mothers benefited from various programmes and, as always, it is these programmes that form the heart of our CSR initiatives.

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newSpApeR-in-eduCATiOn (nie) Pizza Hut worked with its long-running partner in education, The Star, for the 14th consecutive year, in an effort to improve English language literacy standards among school children in Malaysia through the Newspaper-in-Education (NIE) programme. More than 40,000 entries were received for Mag Inc 2010, of which about 900 were video clips. The three-month contest was divided into primary, lower secondary and upper secondary categories, with the Grand Prize winners receiving pre-university scholarships worth RM100,000 and an all-expenses-paid trip to Cambodia. CATuR BiSTARi ChAllenGe And CATuR BiSTARi d'Tv For the third year running, the KFC Catur Bistari Challenge 2010/2011 garnered an overwhelming response from Malaysians, with the state level playoffs being held throughout Malaysia in October and November and the finals in January 2011. There were more than 1,000 finalists from all walks of life, including participants from the state level Catur Bistari Challenge playoffs, as well as individuals from government agencies, the private sector, higher educational institutions, schools and uniformed bodies. Players competed for the chance to win RM150,000 worth of prizes, the Grand Prize winner receiving a Proton Persona. QSR was also part of the highly rated television game show programme, Catur Bistari D'TV, whose premier season drew huge audiences. BRinGinG CheeR TO The ChildRen Children were very much part of the Group's CSR plans in 2010. The International Children's Day celebrations saw KFC supporting the Children's Safety Campaign and giving out food and goodie bags to more than 3,200 children. Later, during the Christmas season, Pizza Hut worked with the Media Prima team to bring festive joy to 42 children from two homes.

SpORTS Pizza Hut's sponsorship of a four-sided mobile glass court continued for the third year, and the brand was featured prominently during international squash championships such as the Malaysian and KL Opens. Meanwhile, the Group's futsal teams competed with the best in the I-Futsal tournaments organised by Harian Metro. The KFC-sponsored Malaysian Yacht Association continued to hold regattas throughout the country in places such as Langkawi, Penang and Negeri Sembilan. The regattas attracted international participation with entrants from countries such as Australia, New Zealand, Brazil, Mexico, USA, South Korea, Cambodia, Sri Lanka, India and Hong Kong. Other sports-based initiatives were KFC's involvement in the Johor FC football team and QSR's support of the Malaysian Super League. The Group was also a major sponsor of the 13th SUKMA Games held in Melaka. Another highlight of the year occurred when the QSR kite flew high among kites from all over the world at the International Kite Festival in Bandar Dato' Onn, Johor. MuSiC The Group sponsored the Wind Orchestra Competition, the Malaysia National Band Competition, and the Malaysia World Marching Band Competition. These first two competitions saw talented bands from schools around Malaysia challenging each other, while the third competition attracted internationally renowned marching bands.

KFC And piZZA huT'S FeedinG pROGRAMMeS Pizza Hut carried out its nationwide charitable pizza deliveries during Chinese New Year and in the month of Ramadhan, with pizzas delivered each time to more than 7,500 residents of close to 100 orphanages, old folk's homes and charity homes throughout Malaysia. For the last 17 years, KFC's Projek Penyayang has been a major fixture in our CSR calendar. More than 12,800 less fortunate Malaysians in more than 150 homes benefited from this quarterly programme. Of this number over 11,000 were from Peninsular Malaysia with the remainder coming from Sabah and Sarawak. "Be The MOveMenT" ChARiTy wAlK Pizza Hut and KFC Malaysia made significant contributions to a RM1.5 million fund raised during the World Hunger Relief Programme 2010. The nationwide community programme ran from August to September at all KFC and Pizza Hut restaurants throughout Malaysia. To commemorate this fund-raising effort and as a show of support, more than 5,000 people comprising KFC and Pizza Hut employees, family members and members of the public, took part in a "Be The Movement" charity walk, which was held in the heart of the country's administrative centre, Putrajaya. Part of the proceeds went to the World Food Programme with the rest benefiting local charities.

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CorPorate soCIal resPonsIBIlItY

MAlAySiAn ARMed FORCeS The Group continued to support the men and women of the Malaysian military. Working together with the Malaysian Government, we provided food and necessities to more than 14,000 members of the Armed Forces serving within the country and on foreign soil. heARinG iMpAiRed COMMuniTy CARe STOReS KFC Malaysia continued to support the speech and hearing impaired community through its Community Care Stores. In 1986, KFC Malaysia became the first in the world to open and operate a restaurant run entirely by speech and hearing impaired staff, and today there are four such stores throughout the country with the latest being opened in Taman Masai, Johor in November 2010. The project, which has been the pride of KFC for the past 25 years, was undertaken in an effort to give this often neglected group of people the opportunity to be independent, and today has 60 staff under its employment. TABunG penyAyAnG KFC The Tabung Penyayang KFC fund was founded in 1997 for the sole purpose of helping deserving children and the needy through various CSR programmes. Tabung Penyayang KFC's proceeds are generated two ways: ten cents from every Chicky Meal sold are donated to the fund; and since August 1999, collection boxes have been placed in every KFC restaurant nationwide, thereby enabling KFC's patrons to make donations. Tabung Penyayang KFC continued to make regular contributions to local charities or support various CSR programmes.

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TiJARAh RAMAdhAn QSR had the privilege of sponsoring three episodes of Tijarah Ramadhan, a television programme dedicated to featuring companies which donate to the underprivileged. Three poverty-stricken families from Sabah, Perak and Melaka were chosen and their plight was highlighted on television. In addition, representatives from KFC, Pizza Hut, RasaMas and Kedai Ayamas visited the families and made donations in both cash and kind. MARKeTplACe Halal iniTiATiveS Halal compliance is integral to the success and continued development of the Group. Hosted by MITI and organised by the Malaysia External Trade Development Corporation (MATRADE) for the seventh consecutive year, the Malaysian International Halal Showcase (MIHAS) draws hundreds of exhibitors. KFCH once again participated in Malaysia's largest food and beverage exhibition and the world's largest international halal trade fair by setting up a booth and promoting our halal-certified products and services to the thousands of visitors from all over the world. QSR has been a constant participant in Halal Food Standards Realisation (HAFSTAR) events organised throughout the country. The HAFSTAR programme has been developed by the Halal Development Corporation (HDC) and the Department of Standards (SIRIM) to promote Malaysian halal standards and to regularise and discuss the standard procedures for handling, processing and storing food based on shariah and Malaysian standards.

enTRepReneuR develOpMenT The entrepreneurial spirit starts with students and QSR works towards fostering this spirit through its Gerak Usahawan Siswa programmes. The goal of this initiative is to foster an interest in business and a passion for entrepreneurship among university students. In 2010, 30 forums were organized in institutes of higher learning, where speakers shared their experience in the world of business and encouraged students to embark on their business journey. The Group also collaborates with Bistari Young Entrepreneur Sdn Bhd in mentorship programmes and educational lectures ­ such as the Tunas Bistari, Didik Bistari and Siswa Bistari Entrepreneur Programmes ­ that help develop young Malaysian entrepreneurial talents. wORKplACe The Group has a constantly expanding workforce. QSR team is made up of individuals who are driven to succeed and dedicated to customer service. Over 31,000 people all over the country go to work every day striving to be the best in the business and the Group owes many of its success stories to them.

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ReSTAuRAnT MAnAGeRS' COnvenTiOnS KFC and Pizza Hut restaurant managers were treated to a well-deserved reward when they attended the annual Manager Conventions held at Club Med, Bintan, Indonesia. Awards and recognitions were given out before participants took time out to enjoy the wonderful weather and various outdoor activities. pedOMAn 2010 QSR's annual Pedoman was once again held at the Persada Johor International Convention Centre, Johor Bahru. The one-day event was attended by Restaurant Managers from KFC, Pizza Hut, RasaMas and Kedai Ayamas, as well as support staff from all over the country. Highlights included presentations on human capital development, financial reviews of the brands and Group, and the signing of KPIs. The Group also took the opportunity to recognise long-serving employees and staff who were being promoted, and to engage in an open dialogue between management and staff.

CorPorate soCIal resPonsIBIlItY

Some of our employees have spent their entire working lives with us. QSR's Long Service Awards, held during Pedoman, recognise their loyalty and reward them with saving bonds from BSN as a sign of our appreciation and gratitude. ChAMpS ChAllenGeS KFC and Pizza Hut organised the National Champs Challenge in Johor Bahru with the best of the best of our Restaurant Managers and staff coming together to compete in the final round and emerge as National Champions. The Group's National Champions went on to represent Malaysia at the Regional Champs Challenge held in Manila, the Philippines, where the Malaysian contingent battled it out against 400 participants from 11 countries in the Asia Pacific region. MAnAGeMenT ASSOCiATeS pROGRAMMe As part of QSR's efforts to train young Malaysians and incorporate them into the Group's work culture, the Group continued with its Management Associate Programme. The aim of this talent management and succession planning initiative is to recruit new graduates to become part of the Group's permanent staff.

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hARi MeKAR ­ quAliTy dAy For the fourth year in a row, QSR was crowned the Overall Champion at the Grand Finals of the Hari Mekar organised by JCorp. The Group was represented by winners of the Group-wide annual QSR Hari Mekar competition held at Port Dickson, Negeri Sembilan.

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The enviROnMenT Sustainable development is a vital aspect of CSR. The world we live in changes day by day and every decision we make has an impact on the environment and on future generations. The essential human need for clean air, water, and food is a collective responsibility, and we must constantly be aware of how our every move can potentially affect the environment. As a dedicated corporate citizen, QSR is committed to exploring ways in which the Group can reduce its environmental impact without compromising operational standards or shareholder value. ReCyClinG pROGRAMMe In 2010, the QSR Group worked with Mutiara Johor Corporation to carry out a recycling programme aimed at educating the local community about the importance of recycling and raising awareness of the importance of healthy lifestyles and habits.

AyAMAS pORT KlAnG The waste water treatment plant at Ayamas Port Klang was set up in 1988 and treats the final waste water discharge in compliance with the Department of Environment Malaysia (DOE) Standard B for discharge. This plant, which has been upgraded numerous times at an approximate cost of RM5 million to date, employs two main waste water treatment processes ­ a Continuous Processor and a Sequential Batch Reactor (SBR) Process. The plant currently treats 2,000 cubic metres of waste water discharge per day. AyAMAS BAndAR TenGGARA, JOhOR This waste water treatment facility, located in Johor, began operations in December 2009 after the opening of the plant. Built at a cost of RM2 million, the system treats the final waste water discharge in compliance with the DOE Standard A for discharge. Using the SBR Process, this plant treats 800 cubic metres of final waste water discharge daily. BAKeRy & COMMiSSARy QSR has set up a waste water treatment plant at Kompleks KFC Glenmarie, which houses the Bakery and Commissary division. The plant uses a Biological Treatment System that treats the final waste water discharge in accordance with the DOE Standard B for discharge by means of an Up-Flow Anaerobic Sludge Bed (UASB) and an Alternative Intermittent Cyclic Reactor (AICAR). The approximate cost of the project was RM1.5 million.

ReGiOn FOOd induSTRieS Commissioned and built in 2004, this waste water treatment plant uses a chemical and biological treatment Continuous Processor complying with the DOE Standard B for discharge to treat final waste water discharges at a rate of 250 cubic metres per day. CORpORATe SOCiAl ReSpOnSiBiliTy FOR The FuTuRe The changing nature of CSR in the region has resulted in a more interactive society and QSR stakeholders now play an important part in its CSR initiatives. Today, Asia Pacific's sustained and rapid economic growth is creating new avenues for programmes at an unprecedented rate. To capitalise on these opportunities, the Group will work with a variety of partners, communicating and collaborating across borders on issues of mutual interest. One thing is certain: under the umbrella of YAB, CSR at QSR will continue to expand to the benefit of all involved.

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BridGinG The GeneraTion Gap

Tastes evolve and that is why our menus are filled with such a wide array of choice. Whether it is one of the great new RasaMas Roasters for grandpa or something savoury for his grandson, we believe in offering everyone in the family something delicious to enjoy.

Board of dIreCtors

qSR BRAndS Bhd AnnuAl RepORT 2010

FROM leFT TO RiGhT STAndinG DATIN PADUKA SITI SA'DIAH BINTI SHEIKH BAKIR DATO' DR RIDZUAN BIN MOHD AKIL KUA HWEE SIM SHEIK SHARUFUDDIN BIN SHEIK MOHD YAM DATO' SERI SYED AMIR ABIDIN JAMALULLAIL IBNI ALMARHUM TUANKU SYED PUTRA JAMALULLAIL SiTTinG AHAMAD BIN MOHAMAD KAMARUZZAMAN BIN ABU KASSIM JAMALUDIN BIN MD ALI

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qSR BRAndS Bhd AnnuAl RepORT 2010

ProfIle of dIreCtors

KaMarUZZaMan BIn aBU KassIM CHaIrMan NON INDEPENDENT NON EXECUTIVE DIRECTOR

Kamaruzzaman bin Abu Kassim, Malaysian, aged 47, is a Non Independent Non Executive Director and Chairman of QSR Brands Bhd ("QSR"). He was appointed to the Board and Chairman of the Company on 12 January 2011. He is currently the President & Chief Executive Officer of Johor Corporation ("JCorp"). He graduated with a Bachelor of Commerce majoring in Accountancy from the University of Wollongong, New South Wales, Australia in 1987. He embarked on his career as an Audit Assistant with Messrs K.E Chen & Associates in May 1988 and later joined Coopers & Lybrand (currently known as PricewaterhouseCoopers) in Johor Bahru. In December 1992, he left the firm to join JCorp as Deputy Manager, Corporate Finance Department. He was later promoted to become the Executive Director at Damansara Realty Berhad (a company of which JCorp is the majority shareholder) in 1999 until September 2006. He was appointed as the Chief Operating Officer of JCorp on 1 August 2006 and was later appointed as the Senior Vice President of JCorp on 1 January 2009. He was appointed as the President & Chief Executive Officer of JCorp on 1 December 2010. He is also the Chairman of Damansara Realty Berhad, Kulim (Malaysia) Berhad, KPJ Healthcare Berhad, KFC Holdings (Malaysia) Bhd, Sindora Berhad and Director of Waqaf An-Nur Corporation Berhad. He also sits as Chairman and Director of several other JCorp Group of Companies.

qSR BRAndS Bhd AnnuAl RepORT 2010

Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving QSR. He has not been convicted for any offences. As Kamaruzzaman was appointed as the Director and Chairman on 12 January 2011, he did not attend any of the Board Meetings of the Company held during the financial year ended 31 December 2010.

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ProfIle of dIreCtors

aHaMad BIn MoHaMad dePUtY CHaIrMan NON INDEPENDENT NON EXECUTIVE DIRECTOR

Ahamad bin Mohamad, Malaysian, aged 57, is a Non Independent Non Executive Director and the Deputy Chairman of QSR Brands Bhd ("QSR"). He was appointed to the Board on 7 June 2006 and as the Deputy Chairman of QSR on 8 June 2006. He graduated with a Bachelor of Economics (Honours) degree in 1976 from the University of Malaya. He joined Johor Corporation ("JCorp") in June 1979 as a Company Secretary for various companies within the JCorp Group. He was involved in many of JCorp's projects; among others are the Johor Specialist Hospital, prefabricated housing project and the Kotaraya Complex in Johor Bahru. At present, he is the Chief Executive of the Palm Oils Division of JCorp. He is presently the Managing Director of Kulim (Malaysia) Berhad, a member of the Board of Directors of KPJ Healthcare Berhad and New Britain Palm Oil Limited (Papua New Guinea). He was appointed as a Director of KFC Holdings (Malaysia) Bhd ("KFCH") on 27 June 2006 and as the Deputy Chairman of KFCH on 2 July 2006. He is also a Chairman and Director of several other companies within the JCorp Group. He is the Chairman of the Executive Committee of QSR. He is also active as the Vice Chairman of the Malaysian Islamic Chamber of Commerce ("MICC") Corporate Bureau, President of the Johor Football Club and Director of Waqaf An-Nur Corporation Berhad, an Islamic endowment institution that spearheads JCorp Group's CSR programmes, including the unique Corporate Waqaf Concept initiated by JCorp. Other than as disclosed, he does not have any family relationship with any director and/or major shareholder of the Company. He has no personal interest in any business arrangement involving QSR. He has not been convicted for any offences. He attended five (5) out of six (6) Board Meetings of the Company held during the financial year ended 31 December 2010.

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