Message to shareholers
Dear Shareholders,
Performance for FY2010
2010 was a year of consolidation for the BreadTalk Group. As an organisation, we strengthened our core
competencies and deepened our penetration into existing markets, particularly China, where we expanded our
footprint into Hangzhou and Shenzhen. In Singapore, we leveraged on the opening of the Integrated Resorts to
entrench our brand presence locally.
Even as the F&B industry faced rapidly rising food and labour costs, BreadTalk turned in a creditable
performance for the year. Group revenue rose by 22.9% from the previous FY to S$302.9 million. Group
operating profit increased by 1.9% over the same period to S$16.6 million. The S$4.2 million gain on property
disposal more than offset the lower profit contribution from the bakery units in China and Singapore, asset write-
off at China food courts, losses from Carl's Jr., RamenPlay and the Malaysian bakery unit. Group net profit
attributable to shareholders for FY2010 was S$11.3 million, up 1.6% from the previous year.
As at end 2010, our network stood at 395 bakery outlets, 21 restaurants and 32 food atria.
Celebrating 10 Years of Innovation
In 2010, we celebrated our 10th anniversary and took stock of our achievements. In many ways, we have been a
trail-blazer in F&B. Right from the start, we set out to infuse a creative difference in our products and embraced
this as our business philosophy. In 2000, we revolutionised the bakery business with our boutique bakery
concept. We were the first to introduce the thematic food atrium, transforming the food court experience from a
nondescript purely pragmatic stop into an exciting destination point where excellent hawker food is found. The
advent of Din Tai Fung heralded a new cultural experience into the enjoyment of xiao long bao. The Icing Room
attracted a buzz from young people yearning to personalise confectionary gifts and express their creativity in a
rapidly impersonal world.
Today, consumers have come to expect exciting dining experiences that stimulate all the senses, not just the palate. This can be attributed in some part to the way BreadTalk has re-defined traditional businesses in the F&B sector over the past ten years. We have, in 10 years, become a leading lifestyle brand that defines trends and inspires customers to think differently.
It was not all sunshine and roses, of course. We encountered some difficult times, such as SARS in 2003 and the global economic crisis in the last two years. However, the challenging periods spurred us to improve the way we operate and organise our businesses more systematically. Better systems and processes were put in place enhancing our reliability.
One of the major strategic decisions for the Group was made in 2008 when we brought Mr Goh Tong Pak on
board to helm the organisation as Group CEO. We strengthened our foundation as a group which enabled us to
expand effectively into the international arena.
In 10 years, we have transformed from a modest Singapore bakery into a leading Asian F&B group.
Consolidating for Long-Term Growth
At BreadTalk, versatility is one of our hallmarks. We embrace change when necessary, to make the most of
evolving times and conditions.
During the year, we underwent a major internal review to pave the way for our future growth. The business was organised into three divisions - Bakery, Restaurants and Food Atrium - and I am happy to welcome onboard three veteran CEOs to helm these divisions. This move will deepen the senior management bench, sharpen our strategic focus and allow us to execute our plans more effectively. All the brands under each segment will now be managed in totality and aligned with the company's objectives, across all territories.
This initiative also provides the platform for each brand to be specially positioned based on its unique brand strategy, especially in view of expansion into the region.
Dividend
The Board of Directors has proposed a first and final one-tier dividend of 1 cent per ordinary share, subject to
shareholders' approval at the AGM.
Moving Forward
In the past ten years, BreadTalk has undergone significant evolvement. We have grown from one single brand to
the current seven, of which BreadTalk, Toast Box, Food Republic, The Icing Room and RamenPlay are self-
owned brands. These are award-winning brands that have made an indelible mark in a notoriously competitive
industry. Our strengths lie in our willingness to challenge existing norms, brand management and ability to create
novel concepts. These are the assets that enabled us to attract world-class partners, and can be seen in our two
franchised brands - Carl's Jr. and Din Tai Fung.
The largest challenge facing us in the immediate future is inflation and rising costs. Over the years, we have been able to successfully maintain our gross margins with a robust procurement system. We buy forward, negotiate contracts in bulk and lock in best prices. Improving on these sound cost management procedures will be critical to optimising our margins in the coming year.
Having fortified our foundation, the next ten years marks a new phase of growth for the Group. Amidst stiffer competition and more challenging operating conditions, we must remain resourceful and adaptable, and build on our strengths if we are to continue to succeed. We do not take our accomplishments for granted - on the contrary these spur us to work harder and smarter.
We will consolidate our portfolio and build on their individual brand equity. Singapore will remain the base by which we pilot new concepts, before launching them to the rest of the world, in our bid to gain larger market share in existing markets and penetrate fresh territories. Our enlarged distribution network forms a solid platform for future growth.
In Appreciation
As part of our succession planning, on 1 January 2011, Mr Oh Eng Lock was appointed Group CEO of BreadTalk
Group Ltd. Mr Oh is a veteran banker with over 28 years of management experience in regional business
operations and international finance. He took over from Mr Goh Tong Pak whom we have retained to lead
special projects in the Chairman's office, due to his extensive experience. I wish to specially thank Mr Goh for his
invaluable contribution during his three-year term as Group CEO.
We also welcome a new director, Dr Tan Khee Giap, and bid farewell to Mr Chen Kuo Hua who stepped down as a director on 30 June 2010. I would like to record my thanks to Mr Chen for his advice and contributions.
I am grateful to our directors, management, staff, business partners and shareholders for believing in us. Without the unstinting support of all these individuals, BreadTalk would not have been able to come as far as we have over the past decade.
George Quek
Chairman
