Model Nestlé bukan sahaja mengenai
pertumbuhan semata-mata; tetapi ia adalah
mengenai pertumbuhan yang menjana
keuntungan secara mampan. Nestlé berjaya
mempertingkatkan keuntungannya tahun
kebelakangan ini, namun ia masih mempunyai
potensi yang besar.
Kami masih mempercayai bahawa peluang terbaik
untuk mewujudkan nilai bagi para pemegang
saham kami ialah menerusi transformasi
perniagaan Makanan dan Minuman kami
www.nestle.com.my
kepada penawaran Pemakanan, Kesihatan dan
Kesejahteraan, di samping terus memperbaiki
Growing Together
with Malaysia
M a j u B e r s a m a M a l ay s i a
prestasi kami. Kami mempercayai bahawa
kami mempunyai strategi dan inisiatif-inisiatif
yang sesuai untuk mencapai matlamat ini.
Peter Brabeck-Letmathe
Pengerusi & Ketua Pegawai Eksekutif, Nestlé S.A.
Nestlé (Malaysia) Berhad 110925-W
Nestlé House, No. 4, Lorong Persiaran Barat
46200 Petaling Jaya, Selangor, Malaysia
Tel: +603 7965 6000
Fax: +603 7965 6767
Nestlé Consumer Services
Free Phone: 1-800-88-3433
07
Annual Report
L aporan Tahunan
The Nestlé Model is not just about growth;
it is about sustainable profitable growth.
Nestlé has made strides in improving
its profitability over recent years,
but remains rich with potential.
We continue to believe that our greatest
opportunity to create value for our
shareholders is through further transforming
our Food and Beverages business into
a Nutrition, Health and Wellness offering
Dear Shareholder,
Nestlé (Malaysia) Berhad’s 2007 Annual Report
comprises the following:
• Corporate Report
• Financial Report
• Creating Shared Value Report
Both the English and Bahasa Malaysia versions
of the Financial Report are presented in print format.
For the Bahasa Malaysia version of the Corporate Report
and Creating Shared Value Report, kindly refer to
the CD-ROM provided.
For further information, please contact
Group Corporate Affairs (+603 7965 6000)
or visit our website at www.nestle.com.my.
and by improving its performance further.
We believe we have the right strategy
and initiatives in place to achieve this.
Para Pemegang Saham,
Laporan Tahunan 2007 Nestlé (Malaysia) Berhad
mengandungi:
Peter Brabeck-Letmathe
• Laporan Korporat
• Laporan Kewangan
• Laporan Ciptaan Nilai Berkongsi
Chairman & Chief Executive Officer, Nestlé S.A.
Laporan Kewangan versi Bahasa Inggeris dan Bahasa Malaysia
disampaikan dalam format bercetak. Bagi Laporan Korporat dan
Laporan Ciptaan Nilai Berkongsi dalam versi Bahasa Malaysia pula,
sila rujuk kepada CD-ROM yang disediakan.
Untuk maklumat lanjut, sila hubungi Kumpulan Hal Ehwal Korporat
(+603 7965 6000) atau layari laman web kami di www.nestle.com.my.
Growing Together
with Malaysia
07
Corporate Report
Generations of Goodness
Our focus on Nutrition, Health and Wellness is not only a response
to market and consumer needs but also to meet our corporate responsibility
obligations as a trusted food company.
Since its inception more than 140 years ago, the Nestlé Group has demonstrated its ability to adapt to changing
political, economic and social environments to maintain its position as the world’s leading food and beverage company.
At the beginning of this century, Nestlé made the strategic decision to transform the Company from a successful food
and beverage company into a respected and trusted Food, Nutrition, Health and Wellness company. The focus on
Nutrition, Health and Wellness is not only a response to market and consumer needs but also to meet our corporate
responsibility obligations as a trusted food company.
With this strategic transformation, Nestlé has realigned its business operations, strengthened its R&D and developed
better excellence in consumer insights to provide more nutritious and value-added products to consumers without
compromising taste and quality.
In Malaysia, generations of consumers have enjoyed the range of Nestlé’s products on offer, making household
brand names of MILO, NESCAFÉ, MAGGI, NESPRAY, KIT KAT and many more. These branded products are also
undergoing constant transformation through innovation and renovation to bring better value and nutritional benefits
to consumers.
“Goodness” does not only feature in our brands and products but also through Nestlé services and activities to
consumers and the community. Keeping our focus on nutrition, health, education and sports, Nestlé continues to
fulfill its corporate responsibility to the community.
This year marks Nestlé Malaysia’s 95th anniversary. We remain committed to Nourish Malaysia and will continue to
progress with the nation.
Contents
Chairman’s Statement
12
Business Review
16
New Products
Highlights 2007
28
Corporate Responsibility at Nestlé Malaysia
Corporate Data
40
Profile of Board of Directors
Corporate Governance Statement
Audit Committee Report
56
48
41
24
32
Management Team
Statement on Internal Control
54
Terms of Reference of the Audit Committee
Notice of Annual General Meeting
59
Proxy Form
45
58
As Malaysia celebrates 50 years of nationhood in “One Golden Celebration”,
Nestlé is proud to be a part of this historic occasion. Growing together with Malaysia
since 1912 has been a privilege for Nestlé as we have prospered and developed
over the years while nourishing generations of Malaysians. Nestlé will continue
to strengthen the bond with our consumers and fulfill our corporate responsibility
obligations in years to come.
As classmates more than 40 years ago,
Ahmad, Madi and Chan reminisce about
the good old days when they eagerly
queued up for a cold cup of MILO
during their school sports day.
Today, they share the same MILO
goodness with their grandchildren
Annaz, Arveen and Ashley.
The “kopitiam” (local café) of yesteryears was a favourite “hang out” place
to catch up and enjoy a specially prepared cup of coffee with some hot “kaya” toast.
Young adults today enjoy more independence than their forefathers. There is more social
interaction and networking with friends at cafés and food stalls, or more often than not,
they have a laptop for company. On campus, they have little time to fuss about food
preparation and prefer to opt for anything that is fast or instant.
College mates, Hani, Faridz, Fairuza and Vinoraj
at a group study session, enjoying some
NESTLÉ BLISS yogurt drink, NESCAFÉ and KIT KAT
to sustain them till meal time.
Good to know:
The NESCAFÉ 3in1 BODY PARTNER Breakfast
is added with calcium and vitamins
to help kickstart the day.
Breakfast is the most important meal of the day.
Little Keira and Irfan are developing good habits
at an early age, thanks to Mum’s good example of
having a nourishing breakfast
at the start of the day.
Good to know:
The new NESTUM Sarapan Berkhasiat
is high in protein, calcium,
iron as well as vitamins A & C.
It is a great source of fibre,
folic acids, iodine and zinc.
Remember the old Indian bread man who came door-to-door to deliver our daily bread?
He brought service and convenience to households and not only sold bread but a host
of other snacks too.
A UKM study on the eating habits and nutritional knowledge of primary schoolchildren
commissioned by Nestlé has shown that more than 30% of our schoolchildren skip breakfast
regularly. This is a dilemma that busy mothers face as they try to juggle family and career,
while ensuring that they provide nourishing meals for their children. Nestlé offers healthy
solutions for a quick and nourishing breakfast with our range of cereals and beverages.
Travelling used to be an arduous task, particularly by rail. During the good old days,
travelling a few hundred kilometres could take up more than a day, but now it takes
only several hours.
Enjoying food at a leisurely pace has now become a luxury, particularly in urban areas.
The fast-paced lifestyle today has placed great demands for convenient and “on-the-go”
foods to be more nutritious. Busy executives must ensure that they get a balanced diet
to meet the needs of their hectic lifestyles.
Satpal’s “on-the-go” lifestyle as a busy executive
means irregular meal times especially when travelling.
For a quick “pick-me-up”, he takes along a handy bar
of KIT KAT to enjoy a break and to keep hunger pangs at bay.
Good to know:
A 17g bar of KIT KAT provides 4%
of the recommended calorie intake per day.
(Based on the average 2000 kcal a day intake for adults).
Sharing a passion for cooking, Jaya and Praveen often entertain
family and friends at home. With our range of easy-to-prepare
MAGGI products available in supermarkets, they can whip up
a nutritious meal without any fuss.
Good to know:
The MAGGI TASTYLITE range of instant noodles
is manufactured using breakthrough technology
that reduces 60%-80% of its total fat content
as compared to fried noodle cake.
Gone are the days when our grandmothers used “batu giling” or “lesung” to grind spices.
Cooking a “rendang” dish may require hours of toiling over the open fire, stirring the
mixture of spices arduously in a pot.
The modern kitchen of today is well-equipped with high technology appliances
to bring more pleasure and convenience to cooking. For those finding an alternative to
dining out, home cooking can prove to be a pleasurable experience and can encourage
healthy eating and bonding among family and friends.
12
Nestlé (Malaysia) Berhad 110925-W
Chairman’s
The profit margin before tax increased to 11.6%, improving by 50bps over 2006,
thanks to the Group’s continuous drive for Operational Excellence coupled
with a vast programme of internal savings across the entire value chain.
R E S U LTS / P E R FO R M A N C E
On behalf of the Board of Directors, I am pleased to present the Annual
Report of Nestlé (Malaysia) Berhad for the financial year ended 31
December 2007.
While the year under review was peppered with uncertainty and change,
it is comforting to see that the strategic direction of the Group was able to
deliver on its objectives. I am pleased to say that for the 2007 financial year,
we achieved a turnover of RM3.4 billion; representing a 4.3% increase
from the previous financial period.
The year under review has clearly been one of renewal and innovation.
We implemented the divestiture of the canned liquid milks, launched
several new and appealing products based on our strong R&D network,
optimised our working capital and cash flow management, invested in
more capacity in our factories and leveraged further on our Halal expertise
in both Malaysia and many of our export markets. I am pleased to report
that our exports have grown more than 40% over the previous year.
This is underpinned by our commitment to responsible growth, based on
our Halal, convenient, innovative and high quality products; while meeting
the expectations of our shareholders. The results are impressive seeing
that the business climate in which they were delivered has become
increasingly complex and more testing. High prices across a range of
commodities, penalising the whole food and beverage industry, have
affected us in a manner not seen in the past two or three decades. What
we have done, to a large extent, is control internally how we respond to
this sharp and simultaneous price increases to further enhance our value.
The unprecedented upsurge in the prices of major raw materials (mainly
milk solids, palm oil, coffee beans and wheat flour) has affected the Group’s
ability to maintain the gross profit margin. The price of milk solids has
more than doubled from the 2006 average, while prices for palm oil were
about 50% higher and about 20% higher for coffee beans. Compared with
last year, however, the gross profit margin dropped by 80bps, partly offset
by the right timing of the divestiture of the Canned Liquid Milk business in
the early part of the year.
The profit margin before tax increased to 11.6%, improving by 50bps over
2006, thanks to the Group’s continuous drive for Operational Excellence
coupled with a vast programme of internal savings across the entire value
chain. Initiatives included optimising promotional expenses, marketing
and other general expenses in order to mitigate the gross profit margin
erosion due to higher input costs.
Statement
General (Rtd) Tan Sri Dato’ Mohd Ghazali Seth
Chairman
14
Nestlé (Malaysia) Berhad 110925-W
Chairman’s Statement
We will continue on our path to grow profitably, through innovation
and renovation, brand building, consumer communication,
efficient operations and distribution penetration.
Many innovative, convenient, affordable and nutritious new products were
introduced during the period under review, such as our NESCAFÉ BODY
PARTNER range of coffee mixes which offers great taste and quality
to consumers. Another recent innovation was the MAGGI TASTYLITE
“air dried” instant noodles, offering a reduction of 60% to 80% of the
fat content when compared to the “fried” instant noodle. Substantial
investments were made in capital and human resources at the Batu Tiga
factory to bring this nutritious innovation to the local as well as Australian
and New Zealand markets.
In the Growing Up Milks category, meanwhile, we were the first company
to launch - under the NESPRAY brand - a product that provides greater
immunity through a new and Halal formula containing DHA, SA, ARA fortified
with our proprietary Lactobacillus PROTECTUS “ACTIVEPROTECTION”
PREBIO3.
While our brands have performed well, we are also conscious that we
cannot afford to have a myopic concentration on the short term. Our
strength lies in the way we have balanced optimising current market
conditions with delivering new products that meet or exceed the demands
of consumers who are increasingly looking for products which are
nutritious, healthy and convenient. This bodes well for the Group as we
continue on our wellness journey. We will continue on our path to grow
profitably, through innovation and renovation, brand building, consumer
communication, efficient operations and distribution penetration.
The Nestlé brands have, over the decades, become an essential part of
Malaysian households and we have achieved this by building trust and
offering Halal products of quality, nutritional value with great taste; which
comes from understanding and responding to our consumers.
This has been, and will continue to be, our competitive advantage and we
will continue to fortify our core base. We will also continue to grow through
new business opportunities, while focusing on protecting and gaining
market shares of key brands such as MILO, NESCAFÉ, MAGGI, NESPRAY,
NESVITA and BLISS through more convenient offerings, better consumer
understanding and communication as well as improved distribution and
promotional activities. We will strive to keep our product messages clear,
our packaging more nutritionally informative and simple to read and keep
our brands at the top of consumers’ minds.
As part of the world’s leading food company, Nestlé S.A., with the largest
private nutrition research facility based in Switzerland, and a RM6 billion
investment annually on R&D, we have an advantage over the competition
in providing superior products which offer consumers great taste with
nutritional and health benefits at an affordable price.
The exports sector will also continue to be one of the drivers of growth as
it contributes toward boosting volume and economies of scale, and Nestlé
Malaysia is currently the highest exporter among other Nestlé markets
in the region. In 2006, 16% of the turnover was derived from exports
and in 2007 this stood at 22%. We will step up efforts to drive exports
of our Halal products to new markets such as Western Europe and will
contribute further to the development of the local Halal food industry visà-vis the Government’s vision of turning Malaysia into a Halal hub.
Nestlé (Malaysia) Berhad 110925-W
15
Chairman’s Statement
As a leading food manufacturer in Malaysia, Nestlé shares its knowledge
and experience through the Nestlé “SME Food Industry Mentoring
Programme” with local small and medium enterprises to help them tap
the global Halal market, while working closely with the Halal Industry
Development Corporation (HDC) and the newly-established International
Halal Integrity Alliance. In recognition of its contribution, Nestlé Malaysia
was awarded at the inaugural Halal Journal Award for “Best Corporate
Social Responsibility Project” in 2007 at the World Halal Forum. Nestlé
Malaysia is also among the 32 Malaysian public-listed companies as
part of the internationally recognised Dow Jones-RHB Islamic Malaysia
Index; testament to the compliance of our business practices with Islamic
investment guidelines.
Nestlé Malaysia, led by its Finance division, recently partnered with
American Express and Maybank for a newly-created ‘Distribution Card
Programme’ to outsource collection and payment processes to the experts,
enabling us to focus on our core strengths in sales and distribution while
reducing our receivables level.
To further leverage on the GLOBE platform through shared services
for transactions, the Group also began its preparation for a transfer of
Financial and Employee services to the newly-created “Nestlé Business
Services-AOA”, based in the Philippines, which will be fully implemented
by mid-2008.
Equally important is the work we do for society. I am pleased to report that
our first stand-alone report on our Corporate Responsibility commitment
last year received good response and we have already published a second
report which outlines our work in education, community development, the
environment, global partnerships as well as employee engagement.
Our efforts to engage our stakeholders more effectively and gather their
understanding and expectations of our long term Corporate Responsibility
concept of “Shared Value Creation” culminated in a one-day dialogue
session by senior representatives from local and international NGOs - one
of three similar dialogues commissioned by Nestlé S.A. and conducted
by a UK-based independent third party consultancy, AccountAbility, which
also took place in Washington (USA) and Geneva (Switzerland).
DIVIDENDS
In view of our sustained strong performance in 2007, the Board of
Directors has recommended a final net dividend of 78.81 sen per share,
giving a total net dividend proposed and declared for the financial year of
113.81 sen per share; a 13.8% increase from 2006 and the highest ever
in the Group’s history.
P R O S P EC TS
2008 will continue to be a very challenging year as the high prices
of commodities remain a concern. Palm oil and wheat flour have now
more than doubled from early 2007, whilst coffee beans and cocoa are
anticipated to remain at high and unprecedented levels for quite a while;
although milk prices are only expected to soften slightly in the second half
of the year. The Group will keep pursuing its initiatives to further optimise
its operations and mitigate as much as possible the impact of higher input
costs. The Group will also constantly strive for higher sales and continue
to protect and grow market share from its competitors. Major investments
based upon our strong Halal R&D capabilities have been planned in 2008
to introduce new products as well as to increase the capacity to meet the
rising demand in the country as well as for the export markets. Innovation
and Renovation will remain key to offering consumers new, exciting,
convenient, affordable and nutritious products. The Group will strive to
ensure that its on-going yearly profitability level will be protected moving
forward. As already highlighted, 2008 will be marked by more volatile
quarterly readings than in previous years.
On behalf of the Board, I would also like to express my deepest appreciation
to the management and staff for their dedication, commitment and
untiring contributions and to our distributors and customers for their
continued support and loyalty to the brands and to the Company. I also
wish to put on record my sincere gratitude to my fellow Directors for their
counsel and support.
16
Nestlé (Malaysia) Berhad 110925-W
Business Review
Backed by strong fundamentals and established brands, Nestlé Malaysia
faced all the challenges posed during the year under review to deliver
a commendable performance.
OVERVIEW
The Group stood up to the test of a very challenging 2007. Backed by
strong fundamentals and established brands, Nestlé Malaysia faced all the
challenges posed during the year under review to deliver a commendable
performance. The Group’s turnover increased by 4.3% to RM3.4 billion, up
from the RM3.3 billion recorded previously. On comparable basis, taking
into consideration the divestiture of the Canned Liquid Milks business, the
Group recorded a double digit growth of 14.9%. Equally important have
been the sound and strategic business decisions which were executed
flawlessly throughout the entire value chain. The key pillars of the Group’s
strategy - Operational Efficiency, Innovation and Renovation, Consumer
Communication and Product Availability – have been continuously acted
upon, which helped contribute towards the year’s performance.
As part of its portfolio optimisation strategy, effective from 1 February 2007,
the Group ceased to sell and market Canned Liquid Milk products. The
Group, however, has been appointed as a distribution agent by the buyer
to provide “Route-to-Market” agency services for a minimum transitional
period of two years. The restructuring has allowed the Group to focus and
grow the key strategic categories to strengthen Nestlé’s position of being
the leading Nutrition, Health and Wellness Company in Malaysia.
The unprecedented upsurge in the prices of major raw materials (i.e.
milk solids, palm oil, coffee beans and wheat flour) since the beginning
of the year has nudged the Group into managing its business even more
efficiently at every point of the value chain. This has affected the Group’s
ability to maintain the gross profit margin, which dropped by 80bps against
2006. The Group’s continuous drive for Operational Excellence coupled
with a vast programme of internal savings across the value chain helped
ease some of the input cost pressures, and resulted in the Group’s profit
margin before tax improving by 50bps to 11.6% of the turnover.
Two major investments relating to Innovation and Renovation were
made by the Group to produce low fat noodles under the brand MAGGI
TASTYLITE and a chocolate-malt drink in the “growing up milk” category
under the MILO JUNIOR brand. Several other products were launched
during the year which took into account consumers’ changing lifestyles and
preferences such as NESCAFÉ BODY PARTNER Tongkat Ali & Ginseng,
YOCO cultured milk drink and NESPRAY ACTIVEPROTECTION to name a
few. Offering better value, nutritional benefits and high quality, the new
products launches have been very well received by the consumers.
Nestlé (Malaysia) Berhad 110925-W
17
Business Review
FINANCE AND CONTROL
COFFEE & BEVERAGES
Finance and Control continued to drive discipline, performance and
transparency via an efficient and dynamic planning system, enabling the
various businesses to anticipate and take proactive management decisions
to achieve the Group’s objectives and targets.
The strong performance of MILO and NESCAFÉ beverages continued in
2007 with both brands growing well in terms of sales, despite strong costprice pressures.
In order to further leverage on the GLOBE platform through shared
services for transactions, the Group has started its preparation for a
transfer of Financial and Employee services to a newly-created “Nestlé
Business Services-AOA”, based in Manila, Philippines. The expected full
implementation is planned for the middle of 2008.
To improve the management of working capital, the Group has signed
a Memorandum of Understanding with Malayan Banking Berhad and
American Express to implement the AMEX Distributor Card Programme.
This cashless transaction system will progressively replace manual
collections as well as manual updates of payments received from
customers. Sales transacted under this programme will be collected by the
next day, thus significantly reducing the outstanding receivables days.
SALES
Distribution and ensuring availability of our range of products at all the
distribution channels remained the key focus for the sales operations team.
At the front-end of the sales operation, continuous use of Hand-held
Terminals by the sales force has transformed Sales IT initiative into a way
of life. This has improved the field sales execution especially with regards
to sales coverage and customer service.
Complementing this, continuous improvements in the Distributor
Management Best Practices provided optimal support and service to the
front-end to meet the expectations of the trade.
The year under review was especially significant for MILO as the brand
celebrated the nation’s 50th Merdeka with Malaysians of all ages and
walks of life, from all corners of the country. The MILO brand was present
in a big way at the major 50th Merdeka parades, sharing cups of the hugely
popular beverage with participants as well as the crowds. A large number
of Nestlé staff volunteered to be personally involved for this service during
the parades.
The MILO brand also continued to play a strong role in the daily life of
Malaysians throughout the year by providing nutrition, energy and great
taste to children by supporting junior sports as well as Malaysian teams in
international events such as the SEA Games. The remarkable performance
of the Malaysian contingent during the SEA Games in Thailand was the
perfect tribute to end a memorable year by the nation’s athletes. The MILO
brand was proud to play its part by being the Official Nutritious Chocolate
Malt Drink of the Malaysian SEA Games contingent, leading a campaign
that resulted in 2.3 million signatures in support of the contingent before
their departure. Several of these athletes have spent their foundation years
at various MILO events and in 2007 the brand was once again involved in
more than 200 sporting events ranging from grassroot activities all the
way to international competitions.
Several exciting new products were offered under the MILO umbrella
with the most significant being:
•
MILO JUNIOR 3-4-5, a growing up milk which is tailor-made for the
nutritional requirements of children between 3-5 years.
18
Nestlé (Malaysia) Berhad 110925-W
Business Review
During the year, the presence of NESCAFÉ in the community was further
strengthened by developing additional KICK-START events which are
aimed at inspiring young Malaysians to achieve their career goals and
fulfill their dreams.
•
MILO FUZE AIS KOOL, a cold soluble drink aimed for those who want
the nutrition of MILO drink but prefer to drink it cold.
•
MILO FUZE 3in1 with Oats, which offers the great taste of MILO
combined with the goodness of oats.
•
An improved MILO UHT featuring great taste and strong nutritional
values with lower sugar content.
All these initiatives have started well and will continue contributing to the
dynamic growth and future performance of MILO.
NESCAFÉ started 2007 with the relaunch of the NESCAFÉ 3in1 with
an improved recipe and the introduction of NESCAFÉ BODY PARTNER
Tongkat Ali & Ginseng. With these initiatives, the coffee mixes business
continued to deliver strong growth and gained significant market share.
The BODY PARTNER range continues to develop well through its promise
of great-tasting coffee products with extra goodness. At the same time
NESCAFÉ CLASSIC continued to be the strongest player in the pure
soluble segment in terms of market share.
During the year, the presence of NESCAFÉ in the community was further
strengthened by developing additional KICK-START events which are
aimed at inspiring young Malaysians to achieve their career goals and fulfill
their dreams. The brand was also involved in a safety driving campaign
and reached out to rural Malays through “Pujaan Muzik” entertainment
activities. In East Malaysia, the brand was proud to be a part of Gawai and
Kaamatan celebrations.
FO O D S
The beginning of the year under review saw the unveiling of the MAGGI
Masak-masak Studio and the launch of many new and renovated products
that offer a balance of taste and nutrition; providing even more options for
Malaysian consumers who have made MAGGI part of their daily lives.
The year was very challenging for the instant noodle business with the
simultaneous and sharp increase in the price of wheat flour and palm oil,
coupled with heightened competition. The challenges notwithstanding, the
brand persevered; with the newly-launched extra hot MAGGI Kari LETUP
being very well received and the popularity of the MAGGI Mi Goreng Pluz
helping the brand gain additional market share.
Nestlé (Malaysia) Berhad 110925-W
19
Business Review
In line with Nestlé’s Nutrition, Health, and Wellness direction, the new
MAGGI TASTYLITE noodles were launched. The breakthrough technology,
which air dries the noodles instead of frying them, can reduce fat content
by more than 60% to 80%, depending on the recipe. Sodium content is
also significantly reduced by approximately 25%. This innovation in noodlemaking will provide consumers with healthier instant noodle options which
are in line with Nestlé’s Nutrition, Health and Wellness direction as well as
complement the Government’s efforts to encourage a healthier lifestyle
for all Malaysians. A very significant investment was made for this air-dried
noodle technology, and similar products will be exported to Singapore,
Australia and New Zealand.
There were also significant strides made on the Cooking Aids front, with
the new all-in-one MAGGI CUKUPRASA Seasoning and Nasi Goreng range
launched. To introduce these new offerings, cooking demonstrations were
held for homemakers and food operators at the state-of-the art MAGGI
Masak-masak Studio – which were very well received.
To further entrench the MAGGI brand in the hearts and minds of
consumers, MAGGI was actively involved in grassroot activities during the
Chinese New Year, Pesta Gawai, Tadau Kaamatan and Ramadan as well
as events like the Merdeka celebrations, Visit Malaysia Year events and
TV3’s popular Jom Heboh carnivals. The popular brand was present at all
major celebrations and events throughout the year; further strengthening
its presence in the market.
MILKS
In line with the Group’s strategy to focus on fewer, bigger brands in valueadded segments, as well as Nestlé’s evolution into a Nutrition, Health and
Wellness company, 2007 saw the successful divestment of the Canned
Liquid Milks business. The exercise further helped the Group to channel
its focus and resources on strategic segments where Nestlé can add value
for long term, sustainable and profitable growth.
The unprecedented increase in the price of milk solids due to a variety of
factors compounded by surging demand from China and adverse weather
conditions in Australia had a big impact on the Milks business. Despite best
efforts to improve operational efficiencies, the Group was forced to pass on
some of this cost increase to the consumer in the form of higher prices.
However, the Group continued to invest in key brands including NESTLÉ
OMEGA PLUS with ACTICOL (helps lower cholesterol) and NESVITA
3in1 (START RIGHT. DO MORE). The Innovation and Renovation
was spearheaded by the successful re-launch of NESPRAY
ACTIVEPROTECTION, NESVITA 3in1 Chocolate and NESTUM Sarapan
Berkhasiat all-family cereal.
C H O C O L AT E & C O N F EC T I O N E R Y
Significant growth was recorded for key brands such as KIT KAT and
MILO. The performance of KIT KAT is attributed to continued investment
in communication which builds on the relevance of the product and the
light eating format to today’s young adults who are very conscious of their
dietary intake.
The growth for MILO was based around the new smaller packs, which
makes the product more accessible and affordable for consumers.
20
Nestlé (Malaysia) Berhad 110925-W
Business Review
The exports sector grew substantially during the period under review;
recording more than 40% growth over the previous corresponding period.
The business represents 22% of Nestlé Malaysia’s total turnover.
NUTRITION
Innovation and Renovation drove Infant Nutrition, in line with the
commitment to provide science-based and nutritionally superior benefits
though products that offer specific nutritional needs to consumers. The
launch of NESTLÉ GOLD Infant Cereals is the first in Malaysia, which has
been enhanced with Nestlé’s proprietary BL BIFIDUS probiotic culture;
a beneficial bacterium that can help to enhance the immune status and
reduce the incidence of diarrhoea in babies. In addition, NAN 3 was
launched specifically for children above 1 year old. These have helped to
further strengthen the Group’s position as the market leader in Infant
Nutrition.
HealthCare Nutrition was driven by Diabetes Nutrition and Critical Care
platforms in both the retail and medical channels. This was achieved
by focusing on continuous education to the consumer and medical
professionals, sampling activities, consumer promotions and recruitment
campaigns.
With more Malaysians maintaining a healthier and active lifestyle through
regular exercise and sports activities, POWERBAR (for Performance
Nutrition) is the trusted and preferred brand in helping to enhance
the health and wellness of active individuals by providing convenient
nutritional products. Three new variants (POWERBAR Gel Green Apple,
POWERBAR Gel Double Latte and POWERBAR Endurance Beverage
System Fruit Punch) were introduced to meet the nutrition and energy
needs of elite athletes and individuals seeking to optimise their sports
performance.
CHILLED DAIRY
Chilled Dairy achieved a strong growth both in the Yogurt and Yogurt Drink
categories. The marketing campaign done for the BLISS Yogurt Drink
has helped to nurture stronger consumer awareness. The introduction
of the BLISS 0% Fat range has further strengthened the Group’s market
leadership in this category. YOCO cultured milk drink is another successful
innovation which was launched in 2007. The introduction of the YOCO
character and strong proposition of calcium for stronger bones has
provided Nestlé a strong entry point into the cultured milk drink market.
ICE CREAM
During the year under review, Ice Cream has further consolidated its
leadership position by recording double digit growth in Modern Trade and
out-of-home channels. It has also become a supplier to most major Quick
Service Restaurants (QSR) in the country. Strong emphasis in Innovation
and Renovation has enabled the business to develop many new and
successful products such as DRUMSTICK SPIRO, SPIDERMAN and MAT
KOOL WHOOSH. Whilst in the premium tub category, the LA CREMERIA
range was the choice of consumers and emerged as the market leader.
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21
Business Review
N E ST L É P R O F E S S I O N A L
C A P I TA L E X P E N D I T U R E
Eating out of home is a way of life for Malaysians and this segment
represents a very important market for Nestlé Malaysia. The Malaysian
foodservice market is multi-faceted and very exciting, and is dominated
by three main national food cuisines – Malay, Chinese and Indian. There
has also been a strong upsurge in the Western, fast food and the café
culture with the hawker business maintaining its place as the mainstay of
the market.
Total capital expenditure for the period under review was RM103.3
million, up from the RM87.4 million registered in the previous financial
year, consisting of Manufacturing as well as Sales and Distribution. The
capital investments were in line with the increased market demand and
the growing demand for export volumes.
Generally Malaysians are becoming more health conscious and at the same
time more adventurous in their attitudes towards new food concepts and
food products. These two trends are inter-linked and Nestlé Professional
is exploring this growing segment further by looking at new trends and
building further on its Innovation and Renovation pipelines to help deliver
creative solutions to food operators. Among the new product ranges
introduced during the period under review include the MAGGI Rendang
Paste, MAGGI White Sauce and NESCAFÉ Tongkat Ali & Ginseng.
Additionally, most of the investments made during the financial period
under review were related to innovation. New processes to produce low
fat noodles and a dedicated production line to produce chocolate-malt drink
in the “growing up” category were successfully commissioned and fully
operational. Investments were also made in areas of quality assurance and
cost saving initiatives.
HUMAN RESOURCES
E X P O R TS
The year under review saw the continuation of the Group’s efforts to
achieve its vision of being ‘A GREAT Place to Perform – The Best Brand For
Your Career’ supported by the 3 Employee Value Propositions - Rewarding
Career, Enriching Development and Balanced Quality Work Life.
The exports sector grew substantially during the period under review;
recording more than 40% growth over the previous corresponding
period. The business represents 22% of Nestlé Malaysia’s total turnover
and the strong growth was the result of major developments and
new launches in various product categories for which the Group has a
competitive advantage such as Milk Powders, Culinary (MAGGI), MILO,
Infant Cereals, Liquid Beverages and air-dried noodles towards the end
of 2007.
Using GREAT as enablers (Growing Talent, Resourcing Organisation,
Engaging Workforce, Aligning Company’s Objective, Transforming Work
Culture), the Group’s initiatives centered around the evolving structure of
the Businesses. The highlights during the year to strengthen the capabilities
and knowledge of the workforce included more focused training and
development plans aimed at continuously upgrading the personnel’s skills
and competencies.
There was notable volume growth of Milk Powder exports into existing
importing markets within the Middle East, aided by the new Milk product
range that the region started to source from Malaysia. In addition, new
markets in Northern and Central West Africa were also being developed in
the later part of 2007, which further added to the growth volume.
The Human Resource department continued to seek and acquire the
best fit and high calibre talents especially for mid-career hires as well as
Management Trainees. Talent Management continues to be the main
focus in ensuring continuity in the Group’s business leadership. Various
initiatives have been rolled out to reinforce Nestlé’s employer branding.
22
Nestlé (Malaysia) Berhad 110925-W
Business Review
To transform the work culture, we focus on initiatives that promote
and encourage inspiring leadership, which will lead the Group to becoming
an even more innovative, dynamic and agile organisation.
To ensure that it keeps Engaging the Workforce, Nestlé strives to
continue reinforcing the performance culture and unleash the potential
of its personnel towards more value-added deliverables in support of the
Group’s results.
To keep all its strategies and plans aligned with the Group’s objectives, HR
continues to work closely with the respective Businesses and functions
in ensuring timely recruitment of staff, focused talent management,
implement succession and development plans, while a creative retention
strategy through performance-based remuneration has been extended to
the management and non-management personnel.
To transform the Work Culture, HR focuses on initiatives that promote and
encourage inspiring leadership, which will lead the Group to becoming an
even more innovative, dynamic and agile organisation.
P U R C H A S I N G , P R O D U C T I O N A N D S U P P LY C H A I N
Moving in tandem with the rapid evolution of the business coupled with
heightened competition in the market, greater focus was placed on
ensuring the highest level of service to domestic and export customers,
and maintaining or increasing the market share lead of key product
categories. An important factor in ensuring customer satisfaction is the
provision of supply of products at the right quantity, time, quality and taste,
freshness, convenience and cost. To ensure these objectives, the Finance
& Control, Production and Supply Chain Divisions adopted an integrated
approach to teamwork and projects related to customers, ensuring
reliable and constant customer service which would exceed the demands
of all customers. From the second half of the period under review, an
“Operations” concept was implemented to identify common projects
which will unlock the maximum benefits of the “value chain”.
Meanwhile, in the area of Quality, the Group has covered the entire chain
right up to the retailers. All third party warehouses are in compliance with
Nestlé’s quality standards. This also applies and extends to the area of
Safety, where the Company significantly increased the level of awareness;
thus reducing the number of incidents in the Supply Chain area.
Nestlé’s “Operational Excellence” programme covering Purchasing,
Production and Supply Chain has generated savings beyond the projections,
allowing the Company to partly mitigate the tremendous increases it faced
in the light of burgeoning raw material prices and has helped the Group
contain the quantum of increases for its product pricing.
Nestlé (Malaysia) Berhad 110925-W
23
Business Review
On the Purchasing side, the Nestlé team has pursued its drive towards
sourcing high quality raw and packaging materials, while implementing
more efficient sourcing for Services and other Materials. The Team has
further enhanced relationships with key suppliers, providing them with
means to innovate or renovate their offerings. A lot of attention has
been placed on working capital management as well, in the light of the
unprecedented high cost environment. These efforts have allowed all
Business Units to benefit from additional value to their final products,
including the various materials used when selling in the trade. Purchasing
will continue its full integration in the “Operations concept”, which is key
to further improving efficiencies from an end-to-end perspective.
On the Production side, Nestlé has continued its people development
initiatives. The graduation of the first “batch” of First Line Managers will
be in March 2008, when they will each receive an Executive Diploma in
Manufacturing Management. The “Technical Operators” programme was
also very successful, leading to nearly 150 operators being promoted to
a higher-skill level. Nestlé’s journey towards becoming a “World Class
Manufacturer” is well underway and will be further strengthened in the
short to medium term.
The Supply Chain group focused on customer service levels, ensuring on
time supply and operations savings; meeting or exceeding most of their
targets. New initiatives launched included a Task Force to reduce market
returns and manage factory waste in 2008, Safety, Health and Environment
improvements in warehousing and transportation and the integration of
planning teams within the Business Units.
P R O S P EC TS
The new year will be very challenging as we are faced with an operating
landscape where the prices of commodities, palm oil and wheat flour
have more than doubled from early 2007 while coffee beans and cocoa
rose sharply too. These prices are expected to remain at high and
unprecedented levels for quite a while, although the price of milk solids is
expected to soften slightly in the second half of the year. The Group will
keep pursuing its initiatives to further optimise its operations to mitigate
as much as possible the impact of higher input costs.
The Group will also constantly drive for higher sales and continue to protect
and grow its market share. Major investments based upon our strong
Halal R&D capabilities have been planned for 2008, to introduce new
products as well as to increase the capacity to meet the rising demand in
the country as well as for exports. Innovation and Renovation will remain
key to offering consumers new, exciting, convenient, affordable and
nutritious products. The Group will strive to ensure that its on-going yearly
profitability level will be protected moving forward. As already indicated
earlier, 2008 will be marked by more volatile quarterly readings than in
previous years, but the Group will strive for sustainable, capital efficient
and profitable growth and will take all the necessary measures and steps
to ensure that the Company’s progress remains on track.
New
Products
24
1. MAGGI TASTYLITE
Introducing MAGGI TASTYLITE Curry
and MAGGI TASTYLITE Chicken
instant noodles; with lower fat content
and no added MSG – a healthy and
tasty treat for your family.
3. NESCAFÉ BODY PARTNER
Tongkat Ali & Ginseng
An aromatic and invigorating cup
– added with the traditionally trusted
benefits of Tongkat Ali and Ginseng
herbs.
2. MILO JUNIOR Growing Up Milk
700g & 1.1kg
MILO JUNIOR is a Growing Up Milk
with the great MILO taste specially
formulated for children aged 3 to 5
years old. Packs in all the goodness
of milk nutrition – DHA, SA, vitamins
and minerals – plus the energy of
MILO and ACTIGEN-E to meet the
growing and development needs of
children aged 3 to 5.
4. NESTLÉ YOCO
NESTLÉ YOCO – the new Cultured
Milk Drink with calcium and live
culture. It offers the goodness of
calcium for children to strengthen
their bones and their intake of good
bacteria. Comes in 4 scrumptious
flavours – Strawberry, Blackcurrant,
Mixed Fruits and Orange!
Nestlé (Malaysia) Berhad 110925-W
5. DRUMSTICK KIT KAT Café Latte
– Limited Edition
A whole café latte-flavoured KIT
KAT chocolate wafer embedded in
smooth creamy vanilla-flavoured ice
cream. Combination of two wellknown international brands – NESTLÉ
DRUMSTICK and NESTLÉ KIT KAT.
6. NESPRAY ACTIVEPROTECTION
1+, 3+ and 5+
New NESPRAY ACTIVEPROTECTION
1+, 3+ and 5+ now has Lactobacillus
PROTECTUS, which is a Nestlé
proprietary good bacteria. It also has
DHA, ARA and SA, plus 15 essential
vitamins and minerals to give your
little ones the foundation to help them
optimise their learning capabilities.
Nestlé (Malaysia) Berhad 110925-W
25
New Products
7. NESTLÉ SMARTIES Ice Cream
1L Tub
Every scoop of NESTLÉ SMARTIES
Ice Cream comes with lots and lots
of crunchy and colourful SMARTIES
chocolate, swirled in premium and
delicious vanilla and chocolate ice
cream.
8. NESTLÉ KOKO KRUNCH DUO
Delicious, new white chocolate
flakes have been mixed with the
yummy original chocolatey flakes of
NESTLÉ KOKO KRUNCH, resulting
in the Ultimate 2-in-1 Chocolatey
Combination that is NESTLÉ KOKO
KRUNCH DUO.
9. MAGGI NATURE’S TREAT
MAGGI NATURE’S TREAT combines
herbal gifts from nature with fine
rice porridge recipes. Available in 5
delicious flavours – Ikan Bilis with
Pegaga Extract, Chicken and Ginger
with Pegaga Extract, Chicken and Red
Dates with Kei Chi Extract, Chicken
and Mushroom with Kei Chi Extract
and Vegetable with Kei Chi Extract.
10. MAGGI Kari LETUP Noodles
MAGGI Kari LETUP Noodles is the
familiar great tasting 2-minute curry
flavour noodles but with a stronger
curry and spicier taste.
11. NESTLÉ BLISS 0% Fat & Cholesterol
Yogurt Drink 750g
Keep your body in shape the delicious
way with NESTLÉ BLISS 0% Fat &
Cholesterol Yogurt Drink 750g, with
three delicious flavours – StrawberryBanana, Orange-Mango and KiwiApple.
12. NESPRAY UHT 125ml
The goodness of NESPRAY milk now
comes with a tasty, fruity twist of
strawberry or orange. The first and
only UHT milk with real fruit juice –
high in calcium and Vitamin C, plus 6
essential vitamins and minerals. Enjoy
the goodness of milk and real fruits!
13. NESTLÉ GOLD Infant Cereals
NESTLÉ GOLD Infant Cereals is
made with natural ingredients and
Nestlé’s
proprietary
enhanced
nutrient formulations such as BL
BIFIDUS, a friendly active live culture;
and PREBIO, a special blend of plant
fibres for healthy digestive system.
It is available in three delicious variants
– Rice with Apple & Cranberry, Oats
with Prune and Brown Rice with
Yogurt & Raspberry.
26
Nestlé (Malaysia) Berhad 110925-W
New Products
14. New Improved MILO UHT
Pack Extra Nutrition with improved
MILO UHT. It’s action-packed with
Natural Goodness (malt, skimmed
milk and cocoa), ACTIGEN-E and
PROTOMALT. It now also comes with
reduced sugar.
16. MAGGI Mi Goreng Pluz
MAGGI Mi Goreng Pluz comes in 2
variants – Asli and Asli Pedas. Each
packet comes with 5 sachets of
tastemaker – chilli sauce, soy sauce,
flavoured oil, seasoning and fried
onions.
15. DRUMSTICK SPIRO
Combination of two popular flavours –
vanilla and mocha-flavoured ice cream
twirled together from top to bottom
to create a hypnotic feel, topped with
generous amount of chocolate chips
and peanuts in the chocolate nugget
at the tip.
17. NESVITA 3in1 Chocolate
Cereal beverage NESVITA 3in1
Chocolate, is wholegrain and fortified
with 14 vitamins and minerals which
will provide you with fibre, nutrients
and the convenience for you to start
your day right.
18. NESTLÉ MAT KOOL WHOOSH
NESTLÉ MAT KOOL WHOOSH
comes in Cola and Grape flavours –
refreshing cola or grape ice confection
with vanilla frozen confection. They
are also high in Vitamin C.
21. POWERBAR C2MAX
POWERBAR C2MAX features a 2:1
carbohydrate blend of glucose to
fructose which optimises carb blend,
taking performance to a whole new
level.
19. NESTLÉ Extra Creamy & Fruity
Fantasy Paradise Yogurt
The new NESTLÉ Extra Creamy &
Fruity Fantasy Paradise yogurt –
delightful fruits in creamy goodness,
yet low in fat and your daily source of
calcium.
22. NESCAFÉ ENERGO
NESCAFÉ ENERGO 250ml is offered
in two variants – Guarana and Tongkat
Ali. Guarana, a herb, is blended with
Vitamins B1 and B2 to help release
energy in your body while Tongkat
Ali, the traditional herb trusted for
generations, is blended with Vitamins
B1 and B2 to give you the extra
goodness you need.
20. KIT KAT Café Latte
Aromatic café latte-flavoured chocolate
wrapped around a crisp wafer finger.
Nestlé (Malaysia) Berhad 110925-W
27
New Products
23. MAGGI Nasi Goreng Mixes
MAGGI Nasi Goreng Mixes enable
you to cook hawker-style favourites
at home! The six MAGGI Nasi Goreng
Mixes (with No-Added MSG) offerings
are MAGGI Nasi Goreng Tom Yam,
MAGGI Nasi Goreng Padprik, MAGGI
Nasi Goreng Briyani, MAGGI Nasi
Goreng Kampung, MAGGI Nasi
Goreng Lada Hitam and MAGGI Nasi
Goreng Cina.
24. SMARTIES New Recipe
SMARTIES chocolate taste better now
with a More Chocolatey recipe, which
was developed based on Consumer
Preference Tests. The chocolate
centres are now made with real
milk chocolate.
25. NESTLÉ LA CREMERIA LOADED
NESTLÉ LA CREMERIA 800ml is now
LOADED with whole nuts dipped in
chocolate. It is available in 4 delicious
flavours – Chocolate Vanilla, Pecan
Nut, Cappuccino Chocolate and
Peanut Butter Chocolate flavours.
26. MILO FUZE AIS KOOL and MILO
FUZE 3in1 with Oats
New MILO FUZE AIS KOOL is cold
water soluble so you can enjoy your
icy-cold cup of MILO within seconds.
MILO FUZE 3in1 with Oats combines
the nutrition of MILO with the added
goodness of oats.
27. MAGGI CUKUPRASA
All-in-One Seasoning with the perfect
blend of ingredients (salt, flavour
enhancer, ‘tumis’ ingredients) to
give the right balance of taste to all
cooking.
28. NESTUM Sarapan Berkhasiat
NESTUM Sarapan Berkhasiat is a
new NESTUM variant that has the
combination of wheat and skimmed
milk powder to give you a complete
breakfast. Providing a good source of
protein, iron, calcium and Vitamins A,
C, D and folic acid, you can now enjoy
a healthy breakfast which comes with
a great taste.
29. MAGGI Rendang Paste
MAGGI Rendang Paste replaces
the traditional, labour intensive and
time consuming preparation method
therefore providing convenience to
the food operators. It also addresses
consistency, shelf life and food safety
concerns.
30. MAGGI White Sauce Mix
A versatile product suitable as a base
for various sauces in Western cuisines,
namely to prepare cream and cheese
sauces for pasta and lasagne, and as
a starting base for any cream soups.
2007
28
Highlights
1 . L AU N C H O F A I R - D R I E D N O O D L E L I N E AT B AT U T I G A FAC TO R Y
The Air-Dried Noodle Line at Nestlé’s production complex at Batu Tiga factory
in Shah Alam was launched in July by Deputy Minister of the Ministry of
International Trade & Industry Mr Ng Lip Yong and Chairman and Chief
Executive Officer Mr Peter Brabeck-Letmathe who was in Malaysia for a
visit, together with Executive Vice-President for Zone Asia, Oceania, Africa
and Middle East; Dato’ Frits van Dijk. Also present at the event was Datuk
Karunakaran, Director General of the Malaysian Industrial Development
Authority. The proprietary equipment was the first of its kind ever deployed
to enhance the taste and nutrition levels of MAGGI noodles. The technology,
which air-dries the noodles instead of frying them, can reduce fat content
by 60% to 80% as well as lowering sodium level by 25%. This innovation in
noodle-making will provide consumers with healthier instant noodle options
which is in line with our Nutrition, Health and Wellness direction as well as
complement the Government’s efforts to encourage a healthier lifestyle for
all Malaysians. The new line will cater to the domestic and export markets
such as Singapore, Thailand, Indonesia and the Philippines as well as
Australia and New Zealand.
1
2 . NE STLÉ MAL AYSIA GIVEN RECOGNITION AT WO R L D H A L A L FO R U M
The World Halal Forum kicked off in Malaysia in May, as the country moves
to become a global leader in production and distribution of the strictly defined
certification. At this second annual gathering which attracted delegates from
around the world, industry leader Nestlé Malaysia, was once again invited
to present at the forum; in recognition of our commitment to Halal. Nestlé
Malaysia’s Halal Committee Chairman, Mr Othman Md Yusoff presented
a paper on “Developing Halal Protocols for Multinational Corporations”.
To strengthen this recognition, the Company was awarded the Halal
Journal Award for “Best Corporate Social Responsibility Project” 2007 at the
Gala Dinner which was graced by Their Majesties the King and Queen.
2
Nestlé (Malaysia) Berhad 110925-W
Nestlé (Malaysia) Berhad 110925-W
29
Highlights 2007
3 . MO V I N G B E YO N D T H E S H O R E S O F M A L AYS I A
The Ministry of Domestic Trade and Consumer Affairs organised the Taste of Malaysia and Halal
Food Promotions in London and Paris, in collaboration with two hypermarket chains respectively.
Both Fairs were launched by the Minister, Datuk Mohd Shafie Hj Apdal. The key aim of the fairs
was to promote Halal Malaysian F&B products from Small and Medium Enterprises (SMEs) and
Malaysian cuisine to the growing segment of Muslim consumers in the United Kingdom and
France. Nestlé Malaysia was invited to participate based on our experience in exports promotion,
especially on Halal F&B products worldwide. A range of MAGGI products were selected to be
introduced in the Fair and Nestlé’s Chef Muluk was there on both occasions to represent Nestlé
Malaysia. He took charge of the cooking demonstrations, sampling and preparation of the VIP
luncheons during the launches.
4 . C R E AT I N G O P P O R T U N I T I E S FO R FA R M E R S I N S A R A W A K
Local farmers in Sarawak have been given the opportunity to be part of Nestlé’s supply chain via a
full contract farming scheme aimed at creating shared value for all parties involved in the project.
The project was launched by Deputy Chief Minister Tan Sri Dr. George Chan Hong Nam, also
the Minister of Agriculture for Sarawak, at the field-planting site in Serikin in October. Through
this scheme, an initial 112 farmers from Serikin and Sekuduk Cupak have been given the task
to plant and produce traditional red rice, a key raw material needed for the manufacture of one
of Nestlé’s range of infant cereals which is produced for the ASEAN region. The project strives
to improve the standard of living and livelihood of the farmers in a sustainable manner, create
opportunities and boost income levels. It exposes the farmers to Good Agricultural Practices and
helps them be self-reliant.
3
4
30
Highlights 2007
5 . T H E S EC O N D N E ST L É , N O U R I S H I N G M A L AYS I A S H O WC A S E
Following the inaugural Nestlé, Nourishing Malaysia Showcase which was held at Carcosa Seri
Negara last year, the second Nestlé, Nourishing Malaysia Showcase was held from 6 – 8 July
at the MidValley Exhibition Centre. The showcase which exhibited Nestlé Malaysia’s products,
services and activities was also open to the public on 7 & 8 July. Apart from inviting representatives
and officials from various government agencies, business partners and associates, dealers and
distributors, related NGOs, investors, diplomatic corps, nutritionists and the media, this year’s
showcase also included exports, supply chain and human resource booths along with research
and development, Nestlé Singapore and Nestlé’s associated companies such as Cereal Partners,
Nespresso, Alcon and Galderma in an effort to reflect the total Nestlé business. With over 5,500
visitors throughout the 3-day event, we received many positive feedback from employees, key
contacts, Dear Nestlé members, consumers and our family members. They were delighted to
sample many new products which have been nutritionally-enhanced in line with our journey
towards Nutrition, Health and Wellness.
5
6 . C A S H L E S S T R A N S AC T I O N FO R D I ST R I B U TO R S
Nestlé Malaysia embarked on a unique alliance with American Express and Maybank
in December, whereby the ‘Distribution Card Programme’ presents an opportunity for
Nestlé Malaysia to synergise and outsource our collection and payment process to the
experts, thus enabling us to focus on our core strengths in the selling and distribution
area. Besides enhancing our operational efficiency, the implementation of the programme
will optimise our collection and credit management process, enabling our distributors to
enjoy convenient and easy access in managing their account receivables and payments.
6
Nestlé (Malaysia) Berhad 110925-W
Nestlé (Malaysia) Berhad 110925-W
31
Highlights 2007
7 . L AU N C H O F T H E M A L AYS I A N C H A P T E R O F T H E N E ST L É N U T R I T I O N I N ST I T U T E
Nestlé Nutrition’s medical and scientific arm, The Nestlé Nutrition Institute officially launched
its Malaysian Chapter in April in an effort to create a knowledge platform for the benefit of
the Malaysian medical and scientific fraternity. Launched by the Director of the Family Health
Development Division, Department of Public Health, Dr. E.G. Palaniyappan, the Institute is aimed
at providing scientific and nutrition information and education to healthcare professionals to help
them improve the delivery of healthcare to people of all ages in the country. Following the launch,
the NNI also held its inaugural scientific lecture entitled “Neonatal Microbial Flora and Disease
Outcome” which was presented by Prof Allan Walker who is currently the Conrad Taff Professor
of Nutrition and Professor of Pediatrics at the Harvard Medical School.
7
8 . M I L O C E L E B R AT E S 5 0 T H M E R D E K A W I T H T H E N AT I O N
In conjunction with our nation’s 50th Merdeka celebration, MILO showed its support during
the parade on 31 August at Merdeka Square. From as early as 5.30 a.m., a total of 145 Nestlé
Malaysia employees from the Headquarters, KL Branch and the factories served as volunteers.
They distributed a total of 35,000 cups of MILO drinks, 5,000 Jalur Gemilang flags, 10,000
balloons, 10,000 paper hand fans and 10,000 giant hands to the participants of the parade as well
as the public. Syabas to all volunteers for their great involvement and for making the Company
proud.
8
32
Nestlé (Malaysia) Berhad 110925-W
Corporate Responsibility
at Nestlé Malaysia
O U R P R I N C I P L E S A N D VA L U E S
The Nestlé Corporate Business Principles provides the framework for Nestlé
employees around the world to conduct business in an ethical and professional manner.
These principles are based from the origins of our Company and reflect the basic ideas
of fairness, honesty and a general concern for people.
Our corporate values are derived from the *Nestlé Management and Leadership
Principles and Nestlé Corporate Business Principles, and reflect the rationale of
“A Heart for Excellence” which refers to having a caring heart in the pursuit of success,
and this aptly combines corporate responsibility and business performance together.
Trust, Respect, Involvement and Pride are the four key values which all employees
of Nestlé Malaysia embrace. These values are a part of everything we do at Nestlé:
the way we manufacture and market our products; the way we interact with external
parties; the way we treat our employees; and the way we conduct our activities.
The ‘A Heart for Excellence’ logo shows a very special bond where
talent and skill converge, “arms” outstretched
to each other in a picture of unity.
* Both these documents are available at www.nestle.com
T
rust
We earn trust from each
other, consumers and
business partners
with our competence,
honesty and integrity.
R
espect
We respect and care for
our people and their diverse
cultures, religions and
traditions.
I
nvolvement
We are enthusiastically
involved in proactive change
to create sustainable and
profitable growth.
P
ride
We feel proud in passionately
building successful brands
through our people and
the quality of all our activities
and products.
Nestlé (Malaysia) Berhad 110925-W
33
Corporate Responsibility at Nestlé Malaysia
Through creating shared value, Nestlé links its operations to long-term value both for its
business and for society as a whole, and success is defined in terms of internal financial
returns and external social and economic results.
T H E U N G L O B A L C OM PAC T A N D T H E U N M I L L E N N I U M D E V E L O P M E N T G O A L S
C O R P O R AT E R E S P O N S I B I L I T Y I N T H E C O N T E X T
The UN Global Compact’s 10 principles are specifically incorporated in the Nestlé
Corporate Business Principles and are fundamental in guiding our business actions.
The UN Global Compact covers human rights, labour, the environment and corruption.
O F S H A R E D VA L U E C R E AT I O N
Complementary to the Global Compact principles are the UN Millennium Development
Goals which helps us prioritise what is needed to address the most pressing needs of
society. They focus on poverty reduction, education, health for women, children and the
reduction of pandemics such as HIV/AIDS. They address environmental sustainability
and they stress the importance of partnership in order to achieve the desired results.
Nestlé fully supports the UN Millennium Development Goals and refer to them as a
guide to identify appropriate and sustainable programmes for the community.
“
The strength of the Nestlé brand including its performance
in fulfilling its corporate social responsibility, is fundamental to the
success of our Company. It is a result of taking our relationship
with society seriously over many decades, and building a brand
based on Creating Shared Value.
”
PETER BRABECK-LETMATHE
Chairman of the Board and Chief Executive Officer, Nestlé S.A.
Through creating shared value, Nestlé links its operations to long-term value both for its
business and for society as a whole, and success is defined in terms of internal financial
returns and external social and economic results. Our investments must be good, both
for our shareholders and the people of the countries where we operate, as well as
good for the Company. Ultimately, creating shared value acknowledges both the work
that Nestlé needs to do to reduce negative environmental impacts on society and more
fundamentally, how we can be part of progress on global challenges.
C R E AT I N G S H A R E D VA L U E
For our business:
For society, the benefits are:
•
Reliable & high quality sourcing
•
Improved earnings for suppliers
•
Improved regulatory environment
•
Increase in skills & job stability
•
Skilled & loyal workforce
•
Higher quality of life
•
Superior products which are
competitive
•
Greater stability and improved
economic & social development
34
Nestlé (Malaysia) Berhad 110925-W
Corporate Responsibility at Nestlé Malaysia
Here are some examples of Shared Value Creation throughout Nestlé Malaysia’s
value chain:
“
In the simplest form, sustainability in
agriculture is about a win-win-win situation for
People-Planet-Profits (3Ps). Through training
and field demonstrations as well as sharing of
experiences, we have shown our farmers the
inter-dependence between the three Ps. This will
ensure that the farmers continue to produce
profitable, environment-friendly and wholesome
agricultural raw materials that can be produced
into safe and quality finished food products.
”
YONG LEE KENG
Manager, Agricultural Services, Nestlé (Malaysia) Berhad
Working with Farmers
We source our agricultural raw materials, such as coffee, cocoa, vegetables, cereals,
herbs and spices either through trade channels or directly from farmers. Although we
do not control the farms, our agronomists encourage sustainability in the supply of
agricultural raw materials and promote agricultural best practices.
Working with the relevant government agencies and the local farmers’ association,
Nestlé’s contract farming of chillies in Kelantan has provided the much needed
supplementary income for the farmers and helped reduce poverty. The programme
which started in 1995 has yielded positive results for Nestlé in terms of a reliable supply
of good quality chillies for the manufacture of its MAGGI Chilli Sauce.
In recognition of the farmers’ efforts in promoting Good Agricultural Practices, they
received the SALAM accreditation for excellence in Malaysian farming practices. The
SALAM accreditation for produce in the local community is a significant testament
of the quality of the produce as well as a reflection of the agricultural practices in
place and embodies the principles of Total Quality Management from farm to fork.
The chilli farming project also won the Prime Minister’s Award for Socio-economic
Development.
Value for Nestlé
Value for Society
Reliable raw material supply at specified
quality and foreseeable price.
Supplements incomes of farmers,
reduces poverty in rural communities
and reduces reliance on imports.
Nestlé (Malaysia) Berhad 110925-W
35
Corporate Responsibility at Nestlé Malaysia
“
At Nestlé, we assess the nutritional profile
of all our products to ensure that they meet
the nutritional needs of our consumers.
In addition, Nestlé’s commitment to R&D
in food and nutrition is focused on
developing products with health benefits
in the areas of growth and development,
protection (against allergies), gut health,
weight management and healthy ageing.
Developing the SMEs
Through a mentoring programme for the small and medium enterprises (SME) in the
food industry, Nestlé has been proactive in sharing its technical expertise and global
experience to help local SMEs in the food industry to compete in the international
market.
”
The mentoring programme which was launched in 2000 was in response to the
Government’s call for local SMEs to develop their businesses to world class standards
to achieve global competitiveness. Over the last 8 years, more than 1,200 SMEs have
participated in this programme benefiting nearly 2,500 participants.
Value for Nestlé
Value for Society
Potential collaboration with SMEs for
contract manufacturing or sourcing of
ingredients.
Improved food production standards
and consumer confidence in local food
manufacturing.
“
TRACY LEW, MSc in Community Nutrition
Corporate Nutrition Advisor, Nestlé (Malaysia) Berhad
Providing Nutrition, Health and Wellness
Ever since 1867, when our founder Henri Nestlé invented the first infant food, nutrition
has always been our concern. With the largest private R&D facility in the world
dedicated to basic research in food and nutrition, Nestlé ensures that its investment
of approximately RM6 billion a year on research and development continues to bring
benefits to consumers through the innovation and renovation of our products.
Nestlé’s commitment to the mentoring
programme has brought benefits to the
local SMEs in terms of accelerating their
understanding of global Halal food quality
and safety standards as well as implementing
best practices in order to be competitive.
This is very much in line with the National
Agenda which is to make local SMEs more
competitive in the global market.
As a leader in Food, Nutrition, Health and Wellness, Nestlé aims to improve consumers’
understanding of nutrition and to become the consumers’ “nutritional partner”. Great
efforts have been made over the last few years to improve the nutritional benefits and
provide added value to our products. Among the initiatives include reducing sugar, salt
and fats as well as enhancing products with branded active benefits such as the NESTLÉ
OMEGA PLUS with ACTICOL for control of cholesterol or MILO with ACTIGEN-E for
optimal energy release.
LAM AH CHYE, Principal Mentor
(Nestlé’s retired Group Quality Assurance Manager),
Nestlé-NASMEC Food Industry SME Mentoring Programme
We believe that through effective communications, we can help our consumers enjoy
a more balanced diet and a healthier lifestyle, thus reinforcing our belief in Good Food,
Good Life.
”
Value for Nestlé
Value for Society
Profitable growth from high quality and
value added products including Popularly
Positioned Products.
Consumer confidence in products
with value-added health benefits and
improved nutrition.
36
Nestlé (Malaysia) Berhad 110925-W
Corporate Responsibility at Nestlé Malaysia
“
In the framework of Shared Value Creation and
our support for the UN Millennium Development
Goals, Nestlé fosters sustainable development
in partnership with others to respond to
local needs and gather local knowledge and
capabilities which can result in positive
and sustainable change. One example is our
partnership with WWF Malaysia to conserve
the Setiu wetlands and create sustainable
livelihoods for the women folk in the village.
”
TENGKU MARINA TUNKU ANNUAR BADLISHAH
Group Corporate Affairs Manager, Nestlé (Malaysia) Berhad
Conserving the Wetlands in Setiu
Working in partnership with WWF Malaysia, we embarked on a sustainable development
programme to improve the livelihoods of the women in the Setiu Wetlands. Under the
programme, the women will be trained on various entrepreneurial skills to help them
develop a cottage industry as means of improving their income. The programme is
currently in its second year and will deliver the expected outcomes by 2010.
Value for Nestlé
Value for Society
Build goodwill with key stakeholders and Develop sustainable livelihoods through
develop a consumer base.
transfer of knowledge while preserving
the natural habitat.
N E ST L É I N T H E C OM M U N I T Y
Taking the UN Millennium Development Goals as a guide to prioritise our work in the
community, Nestlé has identified 3 broad areas which create shared value:
• Education & empowerment
• Reduction of poverty
• Environmental sustainability
Our aspiration to “Nourish Malaysia” has been the underlying principle which has
guided the Company in the way it interacts with society to ensure that it continues
to nourish the communities, in various forms, be it the body, mind or soul. Perhaps,
the ‘nest’ best describes the caring, nurturing side of Nestlé as the Company takes on
initiatives which can make significant progress and change to the recipients.
These CSR commitments range from the setting up of kindergartens in rural areas;
providing learning resources for the physically and mentally challenged; bridging the
digital divide and promoting the learning of English in rural schools via ICT; mentoring
of SMEs in the food industry; support for single mothers and homeworkers as well
as contract farming opportunities such as that in Bukit Awang in Kelantan for the
marginalised communities among others. We believe that all our projects are equally
successful as they all have their own objectives, target groups and desired outcomes.
Our Nourishing Malaysia campaign for instance, helped change mindsets and educate
the young about the need for proper nutrition and likewise, our projects with single
mothers have helped scores of women be self-reliant and independent.
For further information, please refer to the Creating Shared Value Report or visit
www.nestle.com.my.
Nestlé (Malaysia) Berhad 110925-W
37
Corporate Responsibility at Nestlé Malaysia
Nestlé and the Environment
Nestlé recognises the need to protect the environment in our business activities and
exercising this commitment, which is part of our broader commitment towards the
good of the community, remains central to our business.
The Company continued its integration of sustainable development practices into the
daily business activities, emphasising safety, health and environment as a routine part
of the operations and giving priority to conservation and source reduction over “end-ofpipe” environmental solutions. An important contributor to sustainable development is
our commitment to use local agricultural raw materials where feasible. Associated with
this is our Agricultural Services’ extensive support and guidance for farmers in crop
management and sustainable practices. We also sustained our efforts in Sustainable
Agriculture Initiatives in Malaysia.
Nestlé manages the environmental performance using the Nestlé Environmental
Management System (NEMS) which is completely aligned with the requirements of
the international standard ISO14001:2004. The NEMS is based on the continuous
improvement management cycle.
“
Post consumer waste remains a key concern
for Nestlé. We integrate sustainable packaging
development practices into our business
operations to meet consumer satisfaction on
product quality and safety. Through continuous
improvement, Nestlé has successfully
optimised the content of packaging materials
while maintaining the highest standards of
protection to assure safety and freshness of our
products throughout their shelf life.
LIM SENG HUAT
Manager, Group Packaging Technology
Nestlé (Malaysia) Berhad
”
“
In our pursuit to be “Best-in-Class”
as the safest food company, we focus our
efforts on demonstrating Safety, Health
and Environment proactive leadership
at all levels. To reinforce our commitment
that “Safety is non-negotiable”, we are
working towards external certification
of our factories in pursuit of OHSAS 18001
as well as ISO14001.
”
WILLIAM KUEK
Group Safety, Health & Environment Manager
Nestlé (Malaysia) Berhad
Health and Safety at Work
As a global food company, good hygiene and sanitation is maintained at the highest
levels at all times. These requirements are more stringent with the Halal certification
procedures which not only covers the religious aspects but good manufacturing practice
as well.
Health and safety are also fully integrated into Nestlé’s day-to-day operations and
emphasises a bottom-up change in employee attitudes towards personal safety, while
providing each person the skills to identify hazards and minimise risks both at work
and in their everyday personal lives. Fully integrating this programme with our Mission
Directed Work Teams initiative ensures that safety is treated as an integral part of the
way we work – a critical factor in ensuring the success of any safety programme.
Nestlé Supply Chain has also taken its SHE initiatives
to another level by involving the logistic and third party
warehouse partners in 2007.
38
Nestlé (Malaysia) Berhad 110925-W
Corporate Responsibility at Nestlé Malaysia
Nestlé on Sustainable Agriculture
As a founding member of the Sustainable Agriculture Initiative of the Food Industry (SAI
Platform), Nestle remains committed to the principles of SAI and SAI-N, particularly
with regard to the agricultural practices of red rice, chilli and cocoa primary production.
This ensures sustainable sourcing of agricultural raw materials for the manufacturing
process, aided by the technical expertise and assistance given by Nestlé’s agronomists
to farmers in an effort to improve their yield.
As a result of its on-going commitment and efforts to the development of Halal products,
Nestlé Malaysia has been recognised as the Halal Centre of Excellence for the Nestlé
Group.
Sustainable agriculture:
• Enhances food safety, quality assurance and regulatory compliance
• Helps to address world food needs
• Creates business opportunities and meets consumer expectations
The Nestlé Halal Commitment
Consumers’ trust has always been a priority for Nestlé and we aim to nurture this trust
by offering good quality and safe products with the peace of mind that all products
manufactured and distributed by Nestlé Malaysia are certified Halal.
The Company’s interest in Halal was borne out of social responsibility and respect for
its Muslim employees and consumers, and the Nestlé Halal Policy was first established
in 1992.
“
Meeting our Halal obligations is a big
responsibility which Nestlé Malaysia
is firmly committed to. We work in
partnership with the Government and other
relevant bodies to improve Halal practices
and certification as well as to develop the
Halal food industry to ensure Malaysia’s
competitiveness to be a leading Halal hub.
OTHMAN MD YUSOFF
Chairman, Nestlé Halal Committee
& Regulatory Affairs Manager
Nestlé (Malaysia) Berhad
As a leading food manufacturer in Malaysia, Nestlé also shares its knowledge and
experience through the Nestlé SME Food Industry Mentoring Programme with local
small and medium enterprises to help them tap the global Halal market which enables
them to fully understand the potential of the Halal business, both locally and globally.
This effort will directly support the Government’s aspirations to develop Malaysia as a
global Halal hub.
”
Nestlé’s commitment to Halal has entailed further investments in both local and global
manufacturing facilities, research and development, developing people, consumer
insights and communication. In view of our experience and knowledge on Halal
applications, the Nestlé Group has 75 factories and more than 100 manufacturing lines
which have been Halal-certified, and producing Halal products for the Nestlé world.
As Malaysia aspires to be a global Halal hub, Nestlé will continue its efforts to promote
locally manufactured Halal food products through its exports to more than 50 countries
around the world. Nestlé Malaysia is currently the largest Halal food manufacturer for
the Nestlé Group, and in 2007, boosted its investments in the production of Halal airdried instant noodles for markets such as Australia. In addition, Nestlé Malaysia is a
regional producer for infant cereals, MILO beverages and KIT KAT chocolates.
As testament to its commitment to developing the Halal food sector, Nestlé Malaysia
was awarded the inaugural Halal Journal Award for “Best Corporate Social Responsibility
Project” in 2007. The prestigious award was received from His Majesty the King at
the World Halal Forum in May 2007, for being the company which has contributed
significantly to the development of Halal in Malaysia.
A further acknowledgement to the Company’s efforts in Halal, Nestlé Malaysia is among
the 32 public-listed companies in Malaysia to be part of the internationally recognised
Dow Jones-RHB Islamic Malaysia Index, which means that Nestlé Malaysia’s business
practices are compatible with Islamic investment guidelines based on Syariah law.
Nestlé (Malaysia) Berhad 110925-W
39
Corporate Responsibility at Nestlé Malaysia
“
Through our consumer insights, Nestlé
understands that it has to improve nutritional
value, availability, convenience and affordability
of its products. Over the past few years, the
Company has innovated and renovated its range
of products to enhance the nutritional and health
benefits which include reduction of sugar,
fats and salt. Products are also fortified with
iron, vitamins and minerals and use fresh and
natural ingredients such as whole grains. Every
feedback from our consumers counts and we will
continue to have this dialogue with them.
LEONG MING CHEE, Communications Director
and Wellness Champion, Nestlé (Malaysia) Berhad
”
Products and Consumers
Corporate Responsibility is a key factor for Nestlé’s evolution into a Food, Nutrition,
Health and Wellness company, and this global positioning fits in very well with
Malaysia’s National Plan of Action for Nutrition II (NPANII). Together with the Ministry
of Health and other relevant NGOs, Nestlé keeps abreast of the nutritional and health
status of Malaysians and provides healthier options in their choice of Nestlé products
to help them enjoy balanced diets and lead healthier lifestyles.
With Nestlé’s R&D expertise, the Company has had successful launches of new
products with value-added nutritional benefits using traditional Asian herbs such as
ginger, ginseng, Chinese red dates and many more. We are consistently improving our
communication efforts to help consumers improve their understanding of the nutritional
benefits of a product. To realise this initiative, Nestlé is the only food company that
features an on-pack nutritional compass, which is a convenient tool for consumers to
better understand the benefits of a Nestlé product.
To bring Nestlé closer to its consumers and other key stakeholders, the Company
held its second Nourishing Malaysia Showcase in 2007. This large scale event which
attracted some 5,500 visitors was aimed at communicating to the public the latest
product innovations, research and development, health and nutritional benefits of Nestlé
products as well as the opportunity for consumers to experience the various valueadded services and activities available including medical checks, product sampling,
nutritional advice and cooking demonstrations.
As the Company progresses on its journey to becoming the leading Food, Nutrition,
Health and Wellness company, Nestlé has taken proactive steps to internalise what it
hopes to achieve by ensuring that every employee serves as a Corporate Ambassador
and has the necessary skills and aptitude to walk the talk. This will help the Company
realise its long-term strategy as well as bring sustainable benefits to the community
and good returns for our shareholders.
For more on our corporate responsibility initiatives, please refer to our publication,
Creating Shared Value Report or www.nestle.com.my.
The Nutritional Compass
available on every Nestlé
Furthermore, the Nestlé Group is developing Popularly Positioned Products (PPP) in
various markets to ensure the lower income group has access to more affordable food
with high nutritional value. Malaysia has already introduced PPP in the market. This
development in PPP provides access of nutritious foods to all consumers and supports
the Government in their efforts to improve the nutritional health of all Malaysians.
product pack makes it easy
to understand nutrition.
The “Call Us” Free phone
number 1-800-88-3433 invites
consumers to contact our
Consumer Services team.
40
Nestlé (Malaysia) Berhad 110925-W
Corporate Data
B O A R D O F D I R EC TO R S
R EG I ST E R E D O F F I C E
P R I N C I PA L B A N K E R S
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth
Malayan Banking Berhad [3813-K]
Citibank Berhad [297089-M]
Member of the Audit Committee
Nestlé House
4 Lorong Persiaran Barat
46200 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Telephone : +603 7965 6000
Facsimile : +603 7965 6767
Website : www.nestle.com.my
Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff
C OM PA N Y S EC R E TA R Y
Independent, Non-Executive Director
Chairman of the Board of Directors
Chairman of the Audit Committee
Tan Sri Dato’ Ernst Zulliger
Independent, Non-Executive Director
Independent, Non-Executive Director
Independent, Non-Executive Director
Member of the Audit Committee
Mohd. Rafik bin Shah Mohamad
Non-Independent, Non-Executive Director
Dato’ Frits van Dijk
Main Board
Bursa Malaysia Securities Berhad
[635998-W]
AU D I T C OM M I T T E E
Mohd. Shah bin Hashim [LS 0006824]
Member of the Audit Committee
Tan Sri Dato’ Seri Syed Anwar Jamalullail
STO C K E XC H A N G E L I ST I N G
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth
Chairman
S H A R E R EG I ST R A R
Tan Sri Dato’ Ernst Zulliger
Tenaga Koperat Sdn. Bhd. [118401-V]
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
Telephone : +603 4047 3883
Facsimile : +603 4042 6352
Member
AU D I TO R S
Stéphane Alby
Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff
Member
Tan Sri Dato’ Seri Syed Anwar Jamalullail
Member
Non-Independent, Non-Executive Director
Sullivan O’Carroll
Managing Director
Stéphane Alby
Executive Director
[Resigned from the Audit Committee on 28 February 2008]
Magdi Batato
Alternate Director to Dato’ Frits van Dijk
KPMG [Firm No. AF 0758]
Chartered Accountants
Wisma KPMG
Jalan Dungun
Damansara Heights
50490 Kuala Lumpur
Telephone : +603 2095 3388
Facsimile : +603 2095 0971
Member
[Resigned from the Audit Committee on 28 February 2008]
Nestlé (Malaysia) Berhad 110925-W
41
Profile of Board of Directors
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth was appointed as an Independent, Non-Executive Director of the
Company on 6 January 1986. He is the Chairman of the Board of Directors and the Audit Committee. General
[Rtd] Tan Sri Dato’ Mohd Ghazali Seth is a retired General who has had an illustrious career with the Malaysian
Armed Forces for nearly 36 years. Currently he is also a director of ABN-AMRO Bank Berhad and Pacific & Orient
Insurance Co. Berhad. He holds 10,000 shares in the Company, but has no conflict of interest with the Group,
does not have any personal interest in any business arrangement involving the Group, has no family relationship
with any other director and/or major shareholder of the Group and has not been convicted of any offence within
the past 10 years other than traffic offences, if any. General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth has attended all
4 [four] meetings of the Board of Directors held for the financial year ended 31 December 2007.
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth
Independent, Non-Executive Director
Chairman of the Board of Directors
Chairman of the Audit Committee
Malaysian citizen, Age 79 years
Tan Sri Dato’ Ernst Zulliger was appointed as an Independent, Non-Executive Director of the Company on
30 November 1983. He is also a member of the Audit Committee. Tan Sri Dato’ Ernst Zulliger studied Commerce
and Business Administration in Switzerland and has also attended the International Institute for Management
Development [IMD], in Lausanne, Switzerland. He has served the Nestlé group of companies worldwide for a
remarkable 37 years and prior to his retirement, he was the Managing Director of the Company. He does not
own any shares in the Company, has no conflict of interest with the Group, does not have any personal interest
in any business arrangement involving the Group, has no family relationship with any other director and/or major
shareholder of the Group and has not been convicted of any offence within the past 10 years other than traffic
offences, if any. Tan Sri Dato’ Ernst Zulliger has attended 2 [two] meetings of the Board of Directors held for the
financial year ended 31 December 2007.
Tan Sri Dato’ Ernst Zulliger
Independent, Non-Executive Director
Member of the Audit Committee
Swiss nationality, Age 75 years
42
Nestlé (Malaysia) Berhad 110925-W
Profile of Board of Directors
Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff
Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff was appointed as an Independent, Non-Executive Director of the
Company on 30 April 2003. He is also the member of the Audit Committee. Tengku Tan Sri Dr. Mahaleel bin
Tengku Ariff graduated with a Bachelor of Arts [Honours] from the University of Malaya in 1970 and has attended
courses conducted by Harvard, London School of Economics & Manchester Business School on Strategy, Strategic
Management and Marketing. He has had a very diverse career background, having commenced his career in the
Marketing and Sales Department of Nestlé, then in 1974 he joined Shell Malaysia for 20 years before leaving to
serve New Toyo, Mofaz, with his last position as the Group Chief Executive Officer of Proton Holdings Berhad.
Currently he is also the Executive Chairman of Tien Wah Press Holdings Berhad, a visiting Professor of the School
of Management, University Sains Malaysia and a member of the London Business School Regional Advisory
Board. He does not own any shares in the Company, has no conflict of interest with the Group, does not have
any personal interest in any business arrangement involving the Group, has no family relationship with any other
director and/or major shareholder of the Group and has not been convicted of any offence within the past 10 years
other than traffic offences, if any. Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff has attended all 4 [four] meetings
of the Board of Directors held for the financial year ended 31 December 2007.
Independent, Non-Executive Director
Member of the Audit Committee
Malaysian citizen, Age 61 years
Tan Sri Dato’ Seri Syed Anwar Jamalullail
Independent, Non-Executive Director
Member of the Audit Committee
Malaysian citizen, Age 56 years
Tan Sri Dato’ Seri Syed Anwar Jamalullail was appointed as a Non-Independent, Non-Executive Director of the
Company on 25 February 2002, and subsequently reclassified as an Independent, Non-Executive Director on
5 November 2004. He is also the member of the Audit Committee. Tan Sri Dato’ Seri Syed Anwar Jamalullail,
who holds a Bachelor of Arts degree in Accounting from Macquarie University in Sydney, Australia, is a qualified
Chartered Accountant from the Malaysian Institute of Accountant and he is also a Certified Practising Accountant
from the Certified Practising Accountants of Australia, having qualified in 1984. He commenced his career in
1975, with Malaysian Airlines Systems Berhad as the Financial Accountant, before moving on to hold senior
positions in various companies such as Price Waterhouse Australia, Amanah Merchant Bank Berhad, Mega SPJ
Sdn. Bhd., Amanah Capital Partners Berhad and he was also the Investment Panel Chairman of Lembaga Tabung
Haji. Currently he is also a director of DRB-Hicom Berhad, Cahya Mata Sarawak Berhad, EON Capital Berhad, Uni.
Asia General Insurance Berhad and Uni. Asia Life Assurance Berhad. He does not own any shares in the Company,
has no conflict of interest with the Group, does not have any personal interest in any business arrangement
involving the Group, has no family relationship with any other director and/or major shareholder of the Group and
has not been convicted of any offence within the past 10 years other than traffic offences, if any. Tan Sri Dato’
Seri Syed Anwar Jamalullail has attended all 4 [four] meetings of the Board of Directors held for the financial year
ended 31 December 2007.
Nestlé (Malaysia) Berhad 110925-W
43
Profile of Board of Directors
Mohd. Rafik bin Shah Mohamad was appointed as a Non-Independent, Non-Executive Director of the Company
on 1 June 2007. He is a qualified Chartered Accountant from the Malaysian Institute of Accountant and is a
member of the Chartered Association of Certified Accountants, United Kingdom. Mohd. Rafik bin Shah Mohamad
commenced his career as an Analyst with Esso Malaysia Berhad in 1973 and before joining Nestlé in 1981,
he has held senior finance positions in local companies. Mohd. Rafik bin Shah Mohamad has also held various
significant positions in the Nestlé group of companies since 1981, in Malaysia and other countries, with his last
position as the Executive Vice President and Chief Financial Officer of Nestlé Indonesia before retiring in April
2006. Currently he is also a chairman/director of Biotropics Malaysia Berhad and Langkawi Tuna Berhad as well
as director of Malaysian AgriFood Corp. Berhad. He holds 27,000 shares in the Company, but has no conflict of
interest with the Group, does not have any personal interest in any business arrangement involving the Group, has
no family relationship with any other director and/or major shareholder of the Group and has not been convicted
of any offence within the past 10 years other than traffic offences, if any. Mohd. Rafik bin Shah Mohamad has
attended all 2 [two] meetings of the Board of Directors held since his appointment, for the financial year ended
31 December 2007.
Mohd. Rafik bin Shah Mohamad
Non-Independent, Non-Executive Director
Malaysian citizen, Age 57 years
Dato’ Frits van Dijk was appointed as a Non-Independent, Non-Executive Director of the Company on 26 April
2006. He graduated with a Bachelor’s Degree in Economics from the HES [School of Economics] at the University
of Rotterdam, the Netherlands, and has also attended the Executive Development Program at the International
Institute for Management Development [IMD], in Lausanne, Switzerland. Dato’ Frits van Dijk has served the
Nestlé group of companies for the last 38 years, started in 1970 as a Sales Representative of Nestlé UK and
presently, he is the Executive Vice President and Head of Zone Asia, Oceania, Africa and Middle East of Nestlé
S.A. Prior to his current position, he has held various senior positions within the Nestlé group of companies in
various countries, such as India, Philippines, Sri Lanka and Japan. Dato’ Frits van Dijk was also the Chief Operating
Officer and subsequently the Market Head of the Company from 1987 until 1995. He has also served as the
Market Head of Nestlé Japan, the Chairman and Chief Executive Officer of Nestlé Waters. He holds 8,000 shares
in the Company, but has no conflict of interest with the Group, does not have any personal interest in any business
arrangement involving the Group, has no family relationship with any other director and/or major shareholder of
the Group and has not been convicted of any offence within the past 10 years other than traffic offences, if any.
Dato’ Frits van Dijk has attended 3 [three] meetings of the Board of Directors held for the financial year ended
31 December 2007.
Dato’ Frits van Dijk
Non-Independent, Non-Executive Director
Dutch nationality, Age 60 years
44
Nestlé (Malaysia) Berhad 110925-W
Profile of Board of Directors
Sullivan O’Carroll, the Managing Director of the Company, was appointed as a Non-Independent, Executive
Director of the Company on 1 July 2003. He holds a degree in Psychology from the University of South Africa.
He has served the Nestlé group of companies for 35 years, started in 1973 as a Merchandising Trainee in Nestlé
South Africa. Before his current appointment in Malaysia, Sullivan O’Carroll has held various senior positions in
other Nestlé markets, including as the Market Head of Nestlé Poland. He holds 90 shares in Nestlé S.A., but has
no conflict of interest with the Group, does not have any personal interest in any business arrangement involving
the Group and has no family relationship with any other director and/or major shareholder of the Group. He has
not been convicted of any offence within the past 10 years other than traffic offences, if any. Sullivan O’Carroll has
attended 3 [three] meetings of the Board of Directors for the financial year ended 31 December 2007.
Sullivan O’Carroll
Managing Director
South African nationality, Age 58 years
Stéphane Alby, the Executive Director, Finance & Control of the Company, was appointed as a Non-Independent,
Executive Director of the Company on 27 February 2004. He holds a Diploma in Economics and Finance from the
Business School Institut d’Etudes Politiques of Paris, France, a Masters Degree in Law from the University of Paris.
He is also a graduate from the Anderson School at UCLA [USA] and from IMD in Lausanne, Switzerland. Stéphane
Alby started his career with the Nestlé group of companies in 1989 as an Auditor at Nestlé France before holding
the post of Treasurer of Nestlé Capital Corporation in United States of America and the Deputy Treasurer of the
Nestlé Group in 1999. Prior to his transfer in Malaysia, he was a Corporate Controller of the Strategic Business
Units in Nestle S.A. He holds 70 shares in Nestlé S.A., but has no conflict of interest with the Group, does not
have any personal interest in any business arrangement involving the Group and has no family relationship with
any other director and/or major shareholder of the Group. He has not been convicted of any offence within the
past 10 years other than traffic offences, if any. Stéphane Alby has attended all 4 [four] meetings of the Board of
Directors held for the financial year ended 31 December 2007.
Stéphane Alby
Executive Director [responsible for Finance & Control]
French nationality, Age 43 years
Nestlé (Malaysia) Berhad 110925-W
45
Management Team
AS AT 1 APRIL 2008
Sullivan O’Carroll
Ariffin bin Buranudeen
Izham Mohamed
Managing Director
Supply Chain Director
Business Executive Manager,
Foods
Stéphane Alby
Rashid Qureshi
Executive Director,
Business Executive Manager,
Antony J. Nelson
Finance & Control
Milks
Country Business Manager,
Infant Nutrition
Magdi Batato
Ajoy Titus
Executive Director,
Business Executive Manager,
Leong Ming Chee
Production
Coffee & Beverages
Marketing Manager,
[Transferred to Nestlé India
Marketing Services Unit
effective 1 March 2008]
& Communications Director
Abdul Wahab bin Abu Bakar
[Effective from 7 March 2008]
Human Resource Director
Don Howat
Business Executive Manager,
Khoo Kar Khoon
Ganesan Ampalavanar
Coffee & Beverages
Marketing Manager,
Sales Director
[Effective from 1 February 2008]
Marketing Services Unit
[Transferred to Nestlé India
& Communications Director
effective 1 March 2008]
[Designate effective
Moataz El-Hout
from 1 February 2008]
Business Executive Manager,
Victor Seah Heng Lim
Ice Cream
Sales Director
Mohd. Ismail Ibrahim
[Effective from 15 January 2008]
GLOBE Director
[Effective from 7 March 2008]
2007
Management Team
SEATED, FROM LEFT:
STANDING, FROM LEFT:
Magdi Batato
Ariffin bin Buranudeen
Antony J. Nelson
Ajoy Titus
Sullivan O’Carroll
Moataz El-Hout
Izham Mohamed
As at 1 April 2008, the following
are included in the Management Team
Abdul Wahab bin Abu Bakar
but not in picture:
Rashid Qureshi
Victor Seah Heng Lim
Ganesan Ampalavanar
Don Howat
Stéphane Alby
Leong Ming Chee
Khoo Kar Khoon
[Designate]
Mohd. Ismail Ibrahim
46
Nestlé (Malaysia) Berhad 110925-W
Nestlé (Malaysia) Berhad 110925-W
47
48
Nestlé (Malaysia) Berhad 110925-W
Corporate Governance Statement
C OM P L I A N C E STAT E M E N T
“
Corporate Governance means every
listed company should be headed
by an effective board which should
”
lead and control the company.
MOHD. SHAH BIN HASHIM
Head, Legal and Secretarial
INTRODUCTION
The Company is committed to very high standards of corporate governance. The
directors are directly accountable to the shareholders, stakeholders and regulators,
for ensuring that very high standards of corporate governance are practised at every
level of the Company’s operations. Being a subsidiary of Nestlé S.A., of Vevey,
Switzerland, the Company has adopted the “Corporate Governance Principles” of its
holding company as the basis of its best practice in corporate governance.
The directors are responsible for the stewardship of the Company. Their responsibilities
include:
•
reviewing and adopting a strategic business plan for the Company;
•
overseeing the conduct of the Company’s business to evaluate whether the
business is being properly managed;
•
identifying principal risks and ensuring the implementation of appropriate systems
to manage these risks;
•
succession planning, including appointing, training, fixing the compensation of and
where appropriate, replacement of senior management;
•
developing and implementing an investor relations programme or shareholder
communications policy for the Company; and
•
reviewing the adequacy and the integrity of the Company’s internal control systems
and management information systems, including systems for compliance with
applicable laws, regulations, rules, directives and guidelines.
As at the date of this Annual Report, the directors have not established a Nomination
and a Remuneration Committee as recommended by the Malaysian Code on Corporate
Governance, for the reasons stated below:
N OM I N AT I O N C OM M I T T E E
The principles of corporate governance as practised by the Company cover mainly,
4 [four] areas, as follows:
•
the rights and responsibilities of shareholders;
•
the equitable treatment of shareholders;
•
the duties and responsibilities of directors; and
•
disclosure and transparency.
These principles are in compliance with Parts 1 and 2 of the Malaysian Code on
Corporate Governance and paragraphs 15.26 and 15.27 of the Listing Requirements of
Bursa Malaysia Securities Berhad.
The directors do not consider it necessary to establish a separate Nomination Committee
as the turn-over of directors is very low and that whenever appropriate, the nomination of
an appointment and the resignation of a director is fully deliberated upon by all directors
at their meeting. In 2007, Nestlé S.A. proposed that Mohd. Rafik bin Shah Mohamad,
who was the Executive Director, Finance of the Company, prior to being appointed as
the Executive Vice President and Chief Financial Officer of Nestlé Indonesia, and who
had served the Nestlé group of companies for over 31 years, to be appointed as a
Non-Independent and Non-Executive Director. The appointment which was deliberated
upon by the Board of Directors, was duly accepted and he was appointed as a NonIndependent, Non-Executive on 1 June 2007. As the composition of directors is very
low with only 8 [eight] persons and that all proposals for appointment and resignation
of directors are fully deliberated, the directors are of the view that the setting up of a
separate Nomination Committee at this point of time, is not necessary.
Nestlé (Malaysia) Berhad 110925-W
49
Corporate Governance Statement
R E M U N E R AT I O N C OM M I T T E E
The directors do not consider it necessary to establish a separate Remuneration
Committee as the Non-Independent, Executive Directors, [namely Sullivan O’Carroll
and Stéphane Alby] and the Non-Independent, Non-Executive Director [namely Dato’
Frits van Dijk], are proposed and appointed by Nestlé S.A. Each of these directors are
employees, based on contracts of expatriation employment and their remuneration
package [consisting of emoluments and benefits in kind] are in accordance with the
remuneration practices of the worldwide Nestlé group of companies as established by
the Human Resource function of Nestlé S.A. in Vevey, Switzerland. Sullivan O’Carroll
and Stéphane Alby are employed directly by the Company, whereas Dato’ Frits van Dijk
is employed by Nestlé S.A.
The fees and benefits paid to the Independent, Non-Executive Directors including the
Independent, Non-Executive Chairman and to the Non-Independent, Non-Executive
Directors are proposed by the Company to the Board of Directors and during the
deliberation on the amount of fees and benefits to be paid to the Non-Executive Directors,
the Non-Executive Directors would abstain from discussing their own remuneration.
For the financial year ended 31 December 2007, apart from the non-establishment
of the Nomination and Remuneration Committees, the reasons for which have been
explained, the directors and the Company adheres strictly with the recommendation
of the Malaysian Code on Corporate Governance in the conduct of its businesses and
operations. The details of the remuneration package of the directors are fully disclosed
in the Annual Report on a yearly basis.
P R I N C I P L E STAT E M E N TS
The following principle statements outline the application of the principles of corporate
governance by the Company:
A . T H E B O A R D O F D I R EC TO R S
Directors Responsibilities and Supply of Information
The directors are committed to establishing long-term shareholder and
stakeholder value. Therefore, all matters with regards to the strategy, business
conduct proposed by the management and the monitoring of the results of
strategies implemented are critically scrutinised and deliberated by the directors
at its meetings. The directors are also responsible for the overall strategy
of the Company, acquisition and divestment policies, capital expenditure approval
and review of the financial and operational performance. Accountability of the
directors for the proper handling and governance of the Company is therefore not
only governed by law but also by the Company’s Articles of Association, processes,
guidelines and standing instructions. All directors, whether independent or otherwise,
have access to any form of independent professional advice and information at the
expense of the Company in the performance of their mandate as directors. During
the meetings of the Board of Directors, there are more than adequate opportunities
for the directors to deliberate on all matters pertaining to the stewardship of the
Company. In addition to the meetings of Board of Directors, each director has full
access to any member of the management team to confer on any aspect of the
operations of the business as each sees fit. The meeting papers to be tabled at the
meeting of the Board of Directors are delivered to each director well in advance of
such meetings, to ensure that the directors are adequately prepared to go through
the meeting agenda and if necessary, to obtain further information on the matters
to be deliberated at the meeting of the Board of Directors.
Meetings of Directors
During the financial year ended 31 December 2007, 4 [four] meetings of directors
took place. The record of attendance of the directors and the alternate director
is as follows:
•
•
•
•
•
•
•
•
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth
Tan Sri Dato’ Ernst Zulliger
Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff
Tan Sri Dato’ Seri Syed Anwar Jamalullail
Mohd. Rafik bin Shah Mohamad
Dato’ Frits van Dijk
Sullivan O’Carroll
Stéphane Alby
4/4 or 100%
2/4 or 50%
4/4 or 100%
4/4 or 100%
2/2 or 100%
3/4 or 75%
3/4 or 75%
4/4 or 100%
50
Nestlé (Malaysia) Berhad 110925-W
Corporate Governance Statement
AU D I T C OM M I T T E E O F T H E B O A R D O F D I R EC TO R S
Mission Statement
The primary purpose of the Audit Committee of the Board of Directors of the Company
is to assist the Board of Directors in fulfilling its responsibility to oversee:
(i) management’s conduct of the Company’s financial reporting process [including
the development and maintenance of systems of internal accounting and financial
controls];
(ii) the integrity of the Company’s financial statements;
(iii) the Company’s compliance with legal and regulatory requirements and ethical
standards;
(iv) significant financial transactions and financial policy and strategy;
(v) the qualifications and independence of the Company’s external auditors;
(vi) the performance of the Company’s internal audit function; and
(vii) the external auditors’ annual audit of the Company’s financial statements.
It is the responsibility of the management team to plan and conduct internal audits and
to ensure that the Company’s financial statements are prepared in accordance with
applicable generally accepted accounting principles.
In line with the Malaysian Code on Corporate Governance [Revised 2007], requiring
all members of the Audit Committee to be non-executive directors, Stéphane Alby,
an Executive Director of the Company, resigned as at 28 February 2008 from the
Audit Committee. With the resignation the Audit Committee has 4 [four] members,
comprising of the 4 [four] Independent, Non-Executive Directors.
During its deliberations, the Audit Committee examined the following:
•
assessment of risk by reviewing evidence of risk assessment activity either by the
management or via a report from the Internal Audit department; and
•
systems of internal control primarily through reviewing the scope of the internal
audit programme and its findings, review of annual and interim financial statements
and a review of the nature and scope of external audit.
The internal audit function in the Company is aligned with the Malaysian Code on
Corporate Governance [Revised 2007]. The internal audit function [called Nestlé Market
Audit] is administered as a department within the Finance & Control function in the
Company but reports functionally to the Nestlé Group Audit in Vevey and the Audit
Committee, thus ensuring its independence.
Strategy
The Company’s strategic direction is subject to regular review at the meeting of the
Board of Directors. The management has in place a process for such reviews. Annual
operating plans and the Market and Business Strategy [MBS] are established and
reviewed as well as the setting of measurable and objective Key Performance Indicators
[KPIs]. The processes to manage and identify key risks are an integral part of the internal
control environment and day-to-day management operations. Such processes, which
are constantly reviewed and benchmarked against best practices, include the long term
planning, controlling and monitoring of performance, capital expenditures, promotional
investments as well as quality, safety and health environment.
Delegation
The management of the financial and long-term objectives of the Company, as resolved
at the meeting of the Board of Directors is delegated to the Managing Director and
the management team, comprising of Executive Directors and senior managers. The
management team is committed to ensure and are accountable for the conduct,
performance and profitability of the Company within the agreed strategy and policies
as resolved at the meeting of the Board of Directors.
Reporting
Businesses and functional units are responsible to report to the Managing Director
within a defined timetable and in compliance with instructions and guidelines.
The management team receives monthly reports on the financial and operational
situation from each business area and function. The quarterly reports and financial
information are based on a standardised process. Such information is discussed at the
meeting of the Board of Directors to ensure adequate level of information, decision on
capital appropriations or other items of relevance are taken up and followed through by
the management team.
Nestlé (Malaysia) Berhad 110925-W
51
Corporate Governance Statement
Principles of Conduct
The Company is committed to high ethical standards and regard them as a key success
factor to the performance of the Company. The “Basic Nestlé Management and
Leadership Principles” and the “Nestlé Corporate Business Principles” issued by Nestlé
S.A., have been applied within the Company and have been communicated to every
employee with respect to his/her function. Furthermore, in order to ensure greater
transparency with third parties, the Company distributes the “Code of Ethics Policy
Statement” and the “Nestlé Principles of Purchasing” to its long-term distributors and
suppliers of goods and services [refer to www.nestle.com].
Composition of Board of Directors
The Board of Directors has 8 [eight] members, comprising a chairman who is an
Independent, Non-Executive Director, 3 [three] Independent, Non-Executive Directors,
2 [two] Non-Independent, Non-Executive Directors, and 2 [two] Executive Directors,
including the Managing Director. The Non-Independent, Non-Executive Directors
represent the interests of Nestlé S.A., as the ultimate holding company. The 2 [two]
Executive Directors, including the Managing Director, are expatriate managers
assigned by Nestlé S.A. under the worldwide Nestlé group of companies’ expatriation
programme.
The experience of the members of the Board of Directors encompasses diverse
professional backgrounds, representing a high level of business, international and
financial knowledge, which is core to the setting of strategies, monitoring of strategy
achievement, ultimately leading to the success of the Company. The Board of Directors
is very well balanced between the number of independent and non-independent
directors and between executive and non-executive directors. The Independent
Non-Executive Directors are able to provide the Board of Directors with independent
unbiased views and advice in its decision making, to ensure that the interest of the
Company, shareholders and employees are protected, whereas the Executive Directors
are responsible to ensure the implementation of the strategies and policies as resolved
by the Board of Directors.
Appointments to the Board of Directors
Appointments to the Board of Directors are on a rotating basis of a maximum of
3 [three] years before retirement and the retiring director is eligible for re-election, to
allow the shareholders the opportunity to renew their mandate. 2 [two] members of
the Board of Directors, being over 70 years of age, namely General [Rtd] Tan Sri Dato’
Mohd Ghazali Seth and Tan Sri Dato’ Ernst Zulliger are re-appointed on a yearly basis at
the Annual General Meeting of the shareholders.
During the financial year ended 31 December 2007, Mohd. Rafik bin Shah Mohamad,
was appointed as a Non-Independent, Non-Executive Director of the Company.
Continuing Education of Directors
Although the Company did not conduct any formal training for the directors during
the financial year ended 31 December 2007, all directors were updated on a timely
basis by the management, by providing them with hard copies of reading materials,
on the latest development on directors’ roles and responsibilities. Mohd. Rafik bin
Shah Mohamad, who was appointed as a director on 1 June 2007, has completed the
Mandatory Accreditation Programme [MAP] in compliance with the requirements of
Bursa Malaysia Securities Berhad.
Direct and Indirect Interest of Directors
As at 29 February 2008, the direct and indirect interest of directors in the Company
were as follows:
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth holds 10,000 shares in the Company;
Mohd. Rafik bin Shah Mohamad holds 27,000 shares in the Company;
Dato’ Frits van Dijk holds 8,000 shares in the Company;
Sullivan O’Carroll holds 90 shares in Nestlé S.A.; and
Stéphane Alby holds 70 shares in Nestlé S.A.
52
Nestlé (Malaysia) Berhad 110925-W
Corporate Governance Statement
Application of MASB Standards
The Company had adopted and applied all new standards issued by the Malaysian
Accounting Standards Board [MASB] and shall continue to do so whenever new
standards are introduced and made mandatory.
Non-Executive Directors
Ranges of
[a] Details of the nature and amount of each major element of the remuneration of
the directors of the Company paid in 2007 are as follows:2007
Executive Directors
Non-Executive Directors
[MYR, in Gross] *
Salaries
Fees
Other Emoluments**
Benefit***
1,304,631
520,208
1,104,161
116,660
52,340
Total
2,929,000
169,000
Numbers are provided before tax.
** Other emoluments include bonuses, incentives, retirement benefits, provision for
leave and allowances.
*** Benefits include rental payments, motor vehicle, club membership and personal
expenses.
2007
Executive Directors
B . D I R EC TO R S ’ R E M U N E R AT I O N
*
[b] For the financial year ended 31 December 2007, the number of directors of the
Company whose total remuneration fell within the following bands for the total
amount paid in 2007 are as follows:-
Remuneration [MYR]
1 – 50,000
50,001 – 100,000
1,050,001 – 1,100,000
1,100,001 – 1,150,000
1,800,001 – 1,850,000
1
1
4
1
-
Total
2
5
Salaries, bonuses and benefits paid to Sullivan O’Carroll and Stéphane Alby are
based on the individual remuneration package of each person as determined by
the Human Resource function of Nestlé S.A. and are also based on individual
performance and the profit achievement of the Company. The other directors
are paid fees and benefits and members of the Audit Committee are paid
attendance fees.
Nestlé (Malaysia) Berhad 110925-W
53
Corporate Governance Statement
C . S H A R E H O L D E R S , I N V E STO R S A N D T H E F I N A N C I A L C OM M U N I T Y
The Company regards regular communication with the public [shareholders,
stakeholders and investing public] as key to build a good reletionship. The Company
performance is reported quarterly to Bursa Malaysia Securities Berhad and on
a yearly basis, in the Annual Report. Dialogue between shareholders and the
Company is fostered at the Annual General Meeting and any other meetings of the
shareholders, including any Extraordinary General Meeting. At such meetings, each
individual shareholder can raise questions or concerns with regards to the Company
as a whole. The Chairman, the Managing Director, the management team and the
Audit Committee members are available to respond to questions during these
meetings of shareholders. As soon as the quarterly results are announced, the
Company will invite the analyst community for a briefing of the Company’s quarterly
performance. A media conference is also held after each Annual General Meeting
or Extraordinary General Meeting. These communication efforts by the Company
comply with the Listing Requirements of Bursa Malaysia Securities Berhad.
The Company’s website also displays the latest information on the performance
of the Company.
D . AC C O U N TA B I L I T Y A N D AU D I T
Directors’ responsibility statement in respect of the preparation of the audited
financial statement
The Board of Directors is responsible for ensuring the accuracy of the profit &
loss statement, the balance sheet, the cash flow statement and all other financial
disclosure. Applicable accounting standards [MASB] and legislation are the basis
for the disclosure of the Company’s affairs. The financial disclosure follows the
principles of true and fair view, prudence and transparency. In addition, and in
line with the accounting policy of the Nestlé group of companies worldwide, the
Company has ensured that its external auditors are fully independent in that they
are not involved in any consulting activity. The Company also requires management
employees involved in book closing activities to certify in writing the accuracy of
their accounts after each reporting period/quarterly.
E . R EC U R R E N T R E L AT E D PA R T Y T R A N S AC T I O N S O F A R E V E N U E
O R T R A D I N G N AT U R E
For the financial year ended 31 December 2007, the particulars of recurrent related
party transactions of revenue or trading nature were as follows:
•
Purchases of raw materials, semi finished and finished food products from
Nestlé affiliated companies amounted to MYR328 million;
•
Payment of royalties for the use of trademarks for the sale of food products to
Nestlé affiliated companies amounted to MYR134 million;
•
Payment of information technology shared services for use and maintenance
of information technology services to Nestlé affiliated companies amounted to
MYR22 million; and
•
Sale of food products to Nestlé affiliated companies amounted to MYR672
million.
F . M AT E R I A L C O N T R AC TS
For the financial year ended 31 December 2007, there were no material contracts
entered into by the Company and its subsidiaries [not being contracts entered into
in the ordinary course of business], involving directors and substantial shareholders,
except for material contracts in respect of the recurrent related party transactions
of a revenue or trading in nature under paragraph E above.
54
Nestlé (Malaysia) Berhad 110925-W
Statement on Internal Control
INTRODUCTION
Nestlé [Malaysia] Berhad [110925-W] and its Directors are committed to a sound
system of internal control and are pleased to provide the following statement on
the scope and nature of internal control of the Group for the financial year ended
31 December 2007.
The Group’s commitment to risk management is demonstrated by a “Pensions,
Insurance, Cash and Risk Management” Department led by a Senior Manager reporting
to the Executive Director, Finance & Control. The Business Assurance function,
responsible for the implementation of Global Business Excellence (GLOBE) has been
fully integrated into the Risk Management Framework since 2005. The Business
Assurance team’s main responsibilities are to ensure that:
BOARD RESPONSIBILIT Y
•
Processes are in line with globally defined best practices;
The Directors and Management are responsible and accountable for the establishment
of internal controls for the Group. Internal control systems are subjected to regular
evaluations on their adequacy and integrity by Management. These systems are
designed to manage, rather than eliminate, the risk of failure arising from nonachievement of the Group’s policies, goals and objectives. Such systems provide
reasonable, rather than absolute assurance against material misstatement or loss. The
Company’s directors have delegated the responsibility of monitoring of these internal
control systems to the management.
•
Access controls (and roles assignments) within the SAP platform are in line with
internal control principles including the upgrade to version 1.5; and
•
System designs support the application of best practices.
Accompanying these regular reviews and evaluations of internal control systems, is
an ongoing process for identifying, evaluating and managing significant risks faced by
the Group. This process is subjected to regular reviews by the directors in accordance
with the “Statement on Internal Controls: Guidance for Directors of Public Listed
Companies” issued by the Institute of Internal Auditors Malaysia.
In addition to the above, the Group commenced its rollout of the Nestlé Self Assessment
Tool (NSAT) which is expected to be fully implemented across the Group by June 2008.
NSAT is Nestlé S.A.’s internally developed Control Self Assessment solution which is used
to measure each unit’s compliance with the minimum internal controls determined by the
Nestlé Group Audit Department. The objective of control self assessment is to help each
unit better identify their own internal control gaps and to develop specific, measurable,
and timely action plans to address these gaps. These results will be monitored at senior
management level as well as by Nestlé S.A. NSAT will also act as a repository for best
in class internal controls which can be shared with other Nestlé units across the world.
I N T E R N A L AU D I T F U N C T I O N
RISK MANAGEMENT FRAMEWORK
The directors and the management fully support the contents of the Internal Control
Guidance. Working closely with the Company’s Internal Audit Department, the
directors and the management have put in place risk management guidelines, control
measures and processes. These are reported to the Audit Committee every quarter
for discussion.
The Nestlé Market Audit Department is responsible for reviewing all processes of the
Group and its relations with third parties. It provides the directors with independent
opinions of processes, risk exposures and system of internal controls of the Group.
The responsibilities of the Audit Department include:
•
Assessing and reporting on the effectiveness of the internal control systems;
•
Assessing and reporting on the reliability of systems and reporting information;
Nestlé (Malaysia) Berhad 110925-W
55
Statement on Internal Control
•
Assessing and reporting on the operational efficiency of various Business Units
and Departments within the Group and identifying saving potentials where it is
practical; and
•
Reviewing compliance with the Group policies, Company Standing Instructions and
guidelines, and applicable laws and regulations.
The annual audit plan for the financial year ending 31 December 2008 was presented to,
and deliberated by, the Audit Committee in the final quarter of 2007. The final plan was
also shared with the Nestlé Group Auditors for presentation to the Audit Committee
of Nestlé S.A.
OT H E R R I S K A N D C O N T R O L P R O C E S S E S
The Audit Department identifies those units to be audited based on risk assessments
performed on [a] the inherent risk of the unit, and [b] the complexity of the end to end
processes.
A matrix which covers the overall audit rating, nature and urgency of the respective
audit issues has been developed as a guide to conduct the follow up on audit issues
raised. The results of audit reviews are reported on a quarterly basis to the Audit
Committee and then via the Chairman to the Board of Directors. The responses from
the management and action plans are regularly reviewed and followed up by the Internal
Audit Department and the Audit Committee.
For the year ended December 2007, the department conducted 13 audits across sales
branches, factories and business units and gained a generally satisfactory opinion of
the operation of these units. Where exceptions were noted, these were not material
and corrective actions have been taken.
Furthermore, Nestlé Group Audit (NGA), the internal auditing arm of the holding company
Nestle S.A., is responsible for assessing the effectiveness of internal control for the
entire Nestlé Group. The NGA conducts reviews of processes, systems and business
excellence on selected business areas/units based on a risk assessment methodology.
The annual audit plan and results of the NGA are reported to Zone Management and
the Audit Committee of Nestlé S.A. For the year ended December 2007, the Nestlé
Group Auditors conducted 7 [seven] audits in addition to the 13 reviewed by the Nestlé
Market Audit department. Where exceptions were noted, these were not material and
corrective actions have been taken.
The structure and the formally defined process [via Company Standing Instructions]
play a major part in risk mitigation. Although the Group is a networked organisation, a
documented and auditable trail of accountability remains. In addition, authority limits
and major Group Policies [health and safety, training and development, equality of
opportunity, staff performance, sexual harassment, and serious misconduct] and the
Nestle S.A. business Principles [available on www.nestle.com] have been disseminated
to the Group’s employees. These procedures have been established across the whole
organisation and help provide assurance to all levels of management, including the
directors. The Nestlé Market Audit function serves to ensure the full application of
these procedures and reporting structures, as well as to verify the system of internal
controls. The Managing Director also reports to the directors on significant changes
in the business and the external environment which affect the operations. Financial
information, key performance and risk indicators are also reported on quarterly basis to
the directors of the Company.
56
Nestlé (Malaysia) Berhad 110925-W
Audit Committee Report
S I Z E , C OM P O S I T I O N & AT T E N D A N C E AT M E E T I N G S
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth
[4/4]
Independent, Non-Executive Director
Chairman
Tan Sri Dato’ Ernst Zulliger
[2/4]
Independent, Non-Executive Director
Member
Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff
[4/4]
Independent, Non-Executive Director
Member
Tan Sri Dato’ Seri Syed Anwar Jamalullail
DUTIES & RESPONSIBILITIES
[4/4]
Independent, Non-Executive Director
Member
[Chartered Accountant of the Australian Society of Certified
Practicing Accountants]
Stéphane Alby
In line with the Listing Requirements of Bursa Malaysia Securities Berhad and the
Malaysian Code on Corporate Governance [Revised 2007], requiring all members of the
Audit Committee to be non-executive directors, Stéphane Alby, an Executive Director
of the Company, resigned as at 28 February 2008 from the Audit Committee. Whilst
he was a member of the Audit Committee, when there is an absence of consensus on
any issue arising in the Audit Committee, he would withdraw his participation in the
decision-making so as to ensure the independence of the other members of the Audit
Committee in the decision-making process.
The Audit Committee acts as a committee of the Board of Directors and was established
on 2 March 1994 under the Terms of Reference as stated in this report.
S U M M A R Y O F AC T I V I T I E S D U R I N G T H E FINANCIAL YEAR
ENDED 31 DECEMBER 2 0 0 7
[4/4]
Executive Director
[Resigned as at 28 February 2008]
The Audit Committee comprises of 4 [four] members who are all independent, nonexecutive directors. A quorum, established by the presence of the Chairman and at
least 2 [two] members, was always met for the Audit Committee meetings.
Activities with regards to external audit:
• review of external audit scope and audit plans based on the external auditors’
presentation of audit strategy and plan; and
•
review of external audit results, audit reports, management letter and the response
from the management.
Activities with regards to internal audit:
• review of internal audit’s resource requirements, scope adequacy and function;
•
review of internal audit’s plan and programmes;
Nestlé (Malaysia) Berhad 110925-W
57
Audit Committee Report
•
review of internal audit reports, recommendations and management responses.
Improvement actions in the areas of internal control, systems and efficiency
enhancements suggested by the internal auditors were discussed together with
the management in a separate forum;
•
review of implementation of these recommendations through follow up audit
reports;
•
suggested additional improvement opportunities in the areas of internal control,
systems and efficiency improvement; and
•
review and take cognisance of the movements of internal audit staff member.
Activities with regards to financial statements:
• review of annual report and the audited financial statements of the Group prior
to submission to the directors for their perusal and approval. This was to ensure
compliance of the financial statements with the provisions of the Companies Act
1965 and the applicable approved accounting standards as per the Malaysian
Accounting Standards Board [MASB];
•
review of the Group’s compliance with the Listing Requirements of Bursa Malaysia
Securities Berhad, MASB and other relevant legal and regulatory requirements with
regards to the quarterly and year-end financial statements; and
•
review of the unaudited financial results announcements before recommending
them for the directors’ approval.
Other activities:
• review of related party transactions, ordinary and extraordinary dividend payments;
and
•
review of compliance with the Malaysian Code on Corporate Governance.
Internal audit function:
The internal audit function in the Company is aligned with the Malaysian Code on
Corporate Governance [Revised 2007]. The internal audit function [called Nestlé Market
Audit] is administered as a department within the Finance & Control function in the
Company but reports functionally to the Nestlé Group Audit in Vevey and the Audit
Committee, thus ensuring its independence. Its main role is to undertake independent
and systematic reviews of the processes and guidelines of the Group and to report on
their application and compliance.
The individual assessments are to be objectively reported to the management and to
the Audit Committee. All meetings of the Audit Committee have been attended by the
Executive Director, Finance & Control, the Internal Audit Manager, the External Auditors
and the Head of Accounting & Consolidation.
58
Nestlé (Malaysia) Berhad 110925-W
Terms of Reference of the Audit Committee
O B J EC T I V E S
The Audit Committee is an independent committee which assists the Board of Directors
in the discharge of its responsibilities for corporate governance, corporate control and
financial reporting. The Audit Committee acts on behalf of the Board of Directors to
ensure that:
• the internal audit function is operating effectively and in accordance with the
Standards for the Professional Practice of Internal Auditing;
• adequate attention is paid to the effectiveness, efficiency and economy of the
Group operations;
• the quarterly results and year end financial statements are reviewed prior to the
approval by the Board of Directors;
• adequate systems of internal control are in operation so as to produce accurate and
meaningful management information; and
• appropriate and timely action is taken by the relevant managers to rectify the major
areas of concern.
The Audit Committee reports to the Board of Directors at every quarter, on matters
falling within the Audit Committee’s terms of reference.
DUTIES AND RESPONSIBILITIES
The Audit Committee is responsible in particular for:
Risk and Control
• evaluate if adequate risk assessment processes and measures are put in place to
minimise any risk exposures, including fraud;
• review and evaluate, with the external and internal auditors, management
procedures, which are designed to provide assurance of compliance with laws,
regulations, policies and codes of practice or conduct;
• monitor systems and procedures, with external and internal auditors, which are
designed to provide a satisfactory and effective level of internal control, asset
protection and management information; and
• monitor the Group’s operations via appropriate Internal Audit reviews, to ascertain if
adequate attention is paid to attributes of efficiency, effectiveness and economy.
Internal audit
• review the internal audit reports of major audits which were undertaken;
• review the extent to which internal audit recommendations are implemented and
the timeliness of responses received;
•
•
review internal audit performance and effectiveness to ensure consistency with
the approved plans, the Internal Audit Charter, and relevant professional standards;
and
review the adequacy of the scope, functions, competency and resources of the
internal audit function.
External Audit
• review managements’ responses to the external auditor's interim reports, annual
report and management letters;
• monitor developments in the external audit field and standards issued by professional
bodies and other regulatory authorities; and
• oversee external audit arrangements in place at the various controlled entities or
subsidiaries.
Reporting
• review the quarterly and annual final draft of the financial statements [prior to
the meeting of Board of Directors to approve the financial statements], receiving
explanations for significant variations from the prior year and from budget, and
referring issues to the Board of Directors, as and when necessary;
• monitor compliance with statutory requirements for financial reporting, with focus
on significant changes in accounting policies and practices, together with significant
adjustments recommended by external audit; and
• review compliance with all related-party disclosures required by the Accounting
Standards.
Others
• review as and when necessary any matters arising from the Group's financial
operations; and
• commission such investigations or reviews relevant to its role as it sees fit.
Authority
The Audit Committee in the course of discharging its duties, is authorised to:
• require any officer of the Group or any subsidiary to supply such information and
explanations as may be needed;
• have discussions with line managers and employees of the Group and subsidiaries
at any reasonable time;
• draw assistance from qualified external party to advise on issues, where the
members require expert input; and
• convene meetings with external auditors, the internal auditors or both, excluding
the attendance of the other directors and employees of the Company, whenever
deemed necessary.
Nestlé (Malaysia) Berhad 110925-W
59
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the 24th [Twenty-Fourth] Annual General Meeting of the Company will be held at the
Kristal Ballroom, First Floor, Petaling Jaya Hilton, 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia on
Thursday, 24 April 2008 at 10.00am for the transaction of the following business:
AGENDA
As Ordinary Business
1. To receive the statutory financial statements for the financial year ended 31
December 2007 and the directors’ and auditors’ reports thereon.
Resolution 1
2. To approve the payment of a final dividend of 106.50 sen per share, less tax [26%],
in respect of the financial year ended 31 December 2007.
Resolution 2
3. To approve the payment of the directors’ fees for the financial year ended 31
December 2007.
Resolution 3
4. To re-elect the following directors retiring in accordance with the Company’s Articles
of Association:
4.1 Under Article 90.1
Tan Sri Dato’ Seri Syed Anwar Jamalullail
Resolution 4
4.2 Under Article 90.1
Sullivan O’Carroll
Resolution 5
4.3 Under Article 97
Mohd Rafik bin Shah Mohamad
Resolution 6
5. To re-appoint KPMG [Firm No. AF 0758] as auditors of the Company and to authorise the
directors to fix their remuneration.
Resolution 7
As Special Business
To consider and if thought fit, to pass the following Ordinary Resolutions:
6. Re-appointment of General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth as a director
pursuant to Section 129[6] of the Companies Act, 1965.
“THAT General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth being over the age of 70 years
and retiring in accordance with Section 129[6] of the Companies Act 1965, be and
is hereby re-appointed a director of the Company to hold office until the conclusion
of the next Annual General Meeting of the Company.”
Resolution 8
7. Re-appointment of Tan Sri Dato’ Ernst Zulliger as a director pursuant to
Section 129[6] of the Companies Act, 1965.
“THAT Tan Sri Dato’ Ernst Zulliger being over the age of 70 years and retiring in
accordance with Section 129[6] of the Companies Act 1965, be and is hereby reappointed a director of the Company to hold office until the conclusion of the next
Annual General Meeting of the Company.”
Resolution 9
8. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party
Transactions of a Revenue or Trading Nature as set out under Section 2.3 of
the Circular to Shareholders dated 1 April 2008.
“THAT the mandate granted by the shareholders of the Company on 26 April
2007 pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia
Securities Berhad, authorising the Company and/or its subsidiaries to enter into the
recurrent transactions of a revenue or trading nature as set out in Section 2.3 of
the Circular to Shareholders dated 1 April 2008 [“Circular”] with the related parties
mentioned therein which are necessary, for the Company and/or its subsidiaries’
day-to-day operations, be and is hereby renewed.
60
Nestlé (Malaysia) Berhad 110925-W
Notice of Annual General Meeting
THAT the Company and/or its subsidiaries be and are hereby authorised to enter
into the recurrent transactions with the related parties mentioned therein provided
that:
8.1 The transactions are in the ordinary course of business and are on terms not
more favourable to the related parties than those generally available to the
public, and the transactions are undertaken on arm’s length basis and are not
to the detriment of the minority shareholders;
To consider and if thought fit, to pass the following Special Resolution:
9.
Proposed Amendments to the Company’s Articles of Association
[i]
THAT a new Article which read as follows be inserted immediately after the
existing Article 42:Transmission of Securities from Foreign Register
42A. Transmission of Securities
Where:
8.2 Such approval shall continue to be in force until the conclusion of the next
Annual General Meeting of the Company, unless earlier revoked or varied by a
resolution passed at a general meeting of the Company, whichever is earlier;
8.3 The directors and/or any of them be and are hereby authorised to complete
and do all such acts and things [including executing such documents as may
be required] to give effect to the transactions contemplated and/or authorised
by this resolution; and
8.4.1 The type of the recurrent related party transactions made; and
AND THAT, the estimates given of the Recurrent Related Party Transactions
specified in Section 2.3 of the Circular being provisional in nature, the directors
of the Company and/or any of them be and are hereby authorised to
agree to the actual amount or amounts thereof provided always that such
amount or amounts comply with the procedures set out in Section 2.5 of the
Circular.”
Resolution 10
the securities of the Company are listed on another stock exchange;
and
b)
the Company is exempted from compliance with Section 14 of the
Central Depository Act or Section 29 of the Securities Industry [Central
Depositories] [Amendment] Act 1998 as the case may be, under the
Rules of the Depository in respect of such securities,
the Company shall upon request of a securities holder, permit a
transmission of securities held by such securities holder from the register
of holders maintained by the registrar of the Company in the jurisdiction
of the other stock exchange, to the register of holder maintained by the
registrar of the Company in Malaysia and vice versa provided that there
shall be on change in the ownership of such securities.
8.4 The disclosure of the aggregate value of the recurrent related party
transactions conducted pursuant to the shareholders’ mandate in the Annual
Report, wherein the Company must provide a breakdown of the aggregate
value of the recurrent related party transactions made during the financial year,
amongst others, based on the following information:
8.4.2 The names of the related parties involved in each type of the recurrent
related party transactions made and their relationship with the Company
and/or any of its subsidiaries.
a)
[ii]
THAT the existing Article 83 of the Articles of Association of the Company
be amended by inserting the words “but not more than two [2] proxies”
after the words “at least one [1] proxy” in line 2 and the amended Article 83
shall read as follows:
83. Where a member of the Company is an authorised nominee as defined
under the Central Depositories Act, it may appoint at least one [1] proxy
but not more than two [2] proxies in respect of each Securities
Account it holds with ordinary shares of the Company standing to the
credit of the said Securities Account.
Resolution 11
Nestlé (Malaysia) Berhad 110925-W
61
Notice of Annual General Meeting
NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders
at the 24th [Twenty-Fourth] Annual General Meeting of the Company, a final dividend
of 106.50 sen per share, less tax [26%], in respect of the financial year ended
31 December 2007 will be paid to the shareholders on 29 May 2008. The entitlement
date for the said dividend shall be 14 May 2008.
Notes:
[i]
A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy
to attend and vote instead of him. A proxy may, but need not be, a member of the Company and the
provision of Section 149[1][b] of the Companies Act 1965, shall not apply to the Company.
[ii]
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney
duly authorised in writing or if the appointor is a corporation either under the corporation’s seal or under
the hand of an officer or attorney duly authorised.
FURTHER NOTICE IS HEREBY GIVEN THAT a depositor shall qualify for entitlement
only in respect of:
[iii] Where a member of the Company is an authorised nominee as defined under the Securities Industry
[Central Depositories] [Amendment] Act 1991, it may appoint at least 1 [one] proxy in respect of each
A. Shares transferred into the Depositors’ Securities Account before 4.00pm on
14 May 2008 in respect of ordinary transfers; and
securities account it holds with ordinary shares of the Company standing to the credit of the said
B. Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis
according to the rules of the Bursa Malaysia Securities Berhad.
[iv] An authorised nominee with more than 1 [one] securities account must submit a separate instrument of
securities account.
proxy for each securities account.
[v] The instrument appointing a proxy and the power of attorney or other authority [if any] under which it is
signed or a notarially certified copy of such power or authority shall be deposited at the Share Registrar
BY ORDER OF THE BOARD
of the Company at Tenaga Koperat Sdn. Bhd., 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun
Razak, 50400 Kuala Lumpur, Malaysia, not less than 48 hours before the time appointed for holding the
meeting or adjourned meeting at which the person named in the instrument proposed to vote, or in the
case of a poll, not less than 24 hours before the time appointed for the taking of the poll, and in default
MOHD. SHAH BIN HASHIM
Company Secretary
[LS 0006824]
Petaling Jaya
1 April 2008
the instrument of proxy shall not be treated as valid.
E X P L A N ATO R Y N OT E S O N S P EC I A L B U S I N E S S : -
Section 129[6] of the Companies Act 1965
Pursuant to Section 129[6] of the Companies Act 1965, the proposed Ordinary Resolutions under items
6 and 7, are to seek shareholders’ approval on the re-appointment of directors who are over the age of
70 years.
Recurrent Related Party Transaction
For further information, please refer to the Circular to Shareholders dated 1 April 2008 accompanying the
Company’s Annual Report for the financial year ended 31 December 2007.
Proposed Amendments to the Company’s Articles of Association
The proposed amendments will bring the Company’s Articles of Association in line with the amendments
to the Listing Requirements of the Bursa Malaysia Securities Berhad, and to enhance administrative
efficiency.
62
Nestlé (Malaysia) Berhad 110925-W
Notice of Annual General Meeting
Details of directors standing for re-election and re-appointment are as follows:
Tan Sri Dato’ Seri Syed Anwar Jamalullail
Independent, Non-Executive Director
Member of the Audit Committee
Malaysian citizen
Age 56 years
Tan Sri Dato’ Seri Syed Anwar Jamalullail was appointed as a Non-Independent, NonExecutive Director of the Company on 25 February 2002, and subsequently reclassified
as an Independent, Non-Executive Director on 5 November 2004. He is also the
member of the Audit Committee. Tan Sri Dato’ Seri Syed Anwar Jamalullail, who holds
a Bachelor of Arts degree in Accounting from Macquarie University in Sydney, Australia,
is a qualified Chartered Accountant from the Malaysian Institute of Accountant and he
is also a Certified Practising Accountant from the Certified Practising Accountants of
Australia, having qualified in 1984. He commenced his career in 1975, with Malaysian
Airlines Systems Berhad as the Financial Accountant, before moving on to hold senior
positions in various companies such as Price Waterhouse Australia, Amanah Merchant
Bank Berhad, Mega SPJ Sdn. Bhd., Amanah Capital Partners Berhad and he was also
the Investment Panel Chairman of Lembaga Tabung Haji. Currently he is also a director
of DRB-Hicom Berhad, Cahya Mata Sarawak Berhad, EON Capital Berhad, Uni. Asia
General Insurance Berhad and Uni. Asia Life Assurance Berhad. He does not own
any shares in the Company, has no conflict of interest with the Group, does not have
any personal interest in any business arrangement involving the Group, has no family
relationship with any other director and/or major shareholder of the Group and has not
been convicted of any offence within the past 10 years other than traffic offences, if
any. Tan Sri Dato’ Seri Syed Anwar Jamalullail has attended all 4 [four] meetings of the
Board of Directors held for the financial year ended 31 December 2007.
Sullivan O’Carroll
Managing Director
South African nationality
Age 58 years
Sullivan O’Carroll, the Managing Director of the Company, was appointed as a NonIndependent, Executive Director of the Company on 1 July 2003. He holds a degree
in Psychology from the University of South Africa. He has served the Nestlé group of
companies for 35 years, started in 1973 as a Merchandising Trainee in Nestlé South
Africa. Before his current appointment in Malaysia, Sullivan O’Carroll has held various
senior positions in other Nestlé markets, including as the Market Head of Nestlé
Poland. He holds 90 shares in Nestlé S.A., but has no conflict of interest with the
Group, does not have any personal interest in any business arrangement involving the
Group and has no family relationship with any other director and/or major shareholder
of the Group. He has not been convicted of any offence within the past 10 years other
than traffic offences, if any. Sullivan O’Carroll has attended 3 [three] meetings of the
Board of Directors for the financial year ended 31 December 2007.
Mohd. Rafik bin Shah Mohamad
Non-Independent, Non-Executive Director
Malaysian citizen
Age 57 years
Mohd. Rafik bin Shah Mohamad was appointed as a Non-Independent, Non-Executive
Director of the Company on 1 June 2007. He is a qualified Chartered Accountant from
the Malaysian Institute of Accountant and is a member of the Chartered Association of
Certified Accountants, United Kingdom. Mohd. Rafik bin Shah Mohamad commenced
his career as an Analyst with Esso Malaysia Berhad in 1973 and before joining Nestlé
in 1981, he has held senior finance positions in local companies. Mohd. Rafik bin Shah
Mohamad has also held various significant positions in the Nestlé group of companies
Nestlé (Malaysia) Berhad 110925-W
63
Notice of Annual General Meeting
since 1981, in Malaysia and other countries, with his last position as the Executive Vice
President and Chief Financial Officer of Nestlé Indonesia before retiring in April 2006.
Currently he is also a chairman/director of Biotropics Malaysia Berhad and Langkawi
Tuna Berhad as well as director of Malaysian AgriFood Corp. Berhad. He holds 27,000
shares in the Company, but has no conflict of interest with the Group, does not have
any personal interest in any business arrangement involving the Group, has no family
relationship with any other director and/or major shareholder of the Group and has not
been convicted of any offence within the past 10 years other than traffic offences, if
any. Mohd. Rafik bin Shah Mohamad has attended all 2 [two] meetings of the Board of
Directors held since his appointment, for the financial year ended 31 December 2007.
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth
Independent, Non-Executive Director
Chairman of the Board of Directors
Chairman of the Audit Committee
Malaysian citizen
Age 79 years
General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth was appointed as an Independent, NonExecutive Director of the Company on 6 January 1986. He is the Chairman of the Board
of Directors and the Audit Committee. General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth is
a retired General who has had an illustrious career with the Malaysian Armed Forces for
nearly 36 years. Currently he is also a director of ABN-AMRO Bank Berhad and Pacific
& Orient Insurance Co. Berhad. He holds 10,000 shares in the Company, but has no
conflict of interest with the Group, does not have any personal interest in any business
arrangement involving the Group, has no family relationship with any other director and/
or major shareholder of the Group and has not been convicted of any offence within
the past 10 years other than traffic offences, if any. General [Rtd] Tan Sri Dato’ Mohd
Ghazali Seth has attended all 4 [four] meetings of the Board of Directors held for the
financial year ended 31 December 2007.
Tan Sri Dato’ Ernst Zulliger
Independent, Non-Executive Director
Member of the Audit Committee
Swiss nationality
Age 75 years
Tan Sri Dato’ Ernst Zulliger was appointed as an Independent, Non-Executive Director of
the Company on 30 November 1983. He is also a member of the Audit Committee. Tan
Sri Dato’ Ernst Zulliger studied Commerce and Business Administration in Switzerland
and has also attended the International Institute for Management Development [IMD],
in Lausanne, Switzerland. He has served the Nestlé group of companies worldwide for
a remarkable 37 years and prior to his retirement, he was the Managing Director of the
Company. He does not own any shares in the Company, has no conflict of interest with
the Group, does not have any personal interest in any business arrangement involving
the Group, has no family relationship with any other director and/or major shareholder
of the Group and has not been convicted of any offence within the past 10 years other
than traffic offences, if any. Tan Sri Dato’ Ernst Zulliger has attended 2 [two] meetings
of the Board of Directors held for the financial year ended 31 December 2007.
NESTLÉ (MALAYSIA) BERHAD
(110925-W) (Incorporated in Malaysia)
Proxy Form
No. of shares held
I / We
NRIC No:
[New]
[Old]
NRIC No:
[New]
[Old]
NRIC No:
[New]
[Old]
of
being a member of Nestlé [Malaysia] Berhad, hereby appoint *the Chairman of the meeting or
of
or failing him/her,
of
as my/our proxy to vote for me/us on my/our behalf at the 24th [Twenty-Fourth] Annual General Meeting of the Company to be held at the Kristal Ballroom, First Floor, Petaling Jaya Hilton, 2, Jalan
Barat, 46200 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Thursday, 24 April 2008 at 10.00am and at any adjournment thereof.
* Delete if not applicable
My/Our proxy is to vote as indicated with an “X” below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his discretion.
No.
Resolutions
For
1.
To receive the statutory financial statements for the financial year ended 31 December 2007 and the directors’ and auditors’ reports thereon.
2.
To approve the payment of a final dividend of 106.50 sen per share, less tax [26%], in respect of the financial year ended 31 December 2007.
3.
To approve the payment of the directors’ fees for the financial year ended 31 December 2007.
4.
To re-elect Tan Sri Dato’ Seri Syed Anwar Jamalullail as a director of the Company.
5.
To re-elect Sullivan O’Carroll as a director of the Company.
6.
To re-elect Mohd. Rafik bin Shah Mohamad as a director of the Company.
7.
To re-appoint KPMG [Firm No. AF 0758] as Auditors of the Company and to authorise the directors to fix their remuneration.
8.
To re-appoint General [Rtd] Tan Sri Dato’ Mohd Ghazali Seth as a director of the Company.
9.
To re-appoint Tan Sri Dato’ Ernst Zulliger as a director of the Company.
10.
Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature as set out under Section 2.3 of
the Circular to Shareholders dated 1 April 2008.
11.
Proposed amendments to the Company’s Articles of Association.
Dated this
day of
Notes:
2008
[i] A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and
vote instead of him. A proxy may, but need not be, a member of the Company and the provision of Section 149[1][b]
of the Companies Act 1965, shall not apply to the Company.
Witnessed by:
[ii] The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly
authorised in writing or if the appointor is a corporation either under the corporation’s seal or under the hand of an
officer or attorney duly authorised.
Signature:
[iii] Where a member of the Company is an authorised nominee as defined under the Securities Industry [Central
Depositories] [Amendment] Act 1991, it may appoint at least 1 [one] proxy in respect of each securities account it holds
with ordinary shares of the Company standing to the credit of the said securities account.
Address:
Company Stamp:
Occupation:
Against
Signature of Shareholder
or Common Seal
[iv] An authorised nominee with more than 1 [one] securities account must submit separate instrument of proxy for each
securities account.
[v] The instrument appointing a proxy and the power of attorney or other authority [if any] under which it is signed
or a notarially certified copy of such power or authority shall be deposited at the Share Registrar of the Company
at Tenaga Koperat Sdn. Bhd., 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur,
Malaysia, not less than 48 hours before the time appointed for holding the meeting or adjourned meeting at which
the person named in the instrument proposed to vote, or in the case of a poll, not less than 24 hours before the time
appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid.
Please fold here to seal
Please fold here to seal
Tenaga Koperat Sdn. Bhd.
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
stamp
Affix postage
www.nestle.com.my
Nestlé (Malaysia) Berhad 110925-W
Nestlé House
4, Lorong Persiaran Barat
46200 Petaling Jaya
Selangor, Malaysia
Tel: (+603) 7965 6000
Fax: (+603) 7965 6767
Nestlé Consumer Services Free Phone: 1-800-88-3433