CHAPTER 3: THE COMPANY

3.1 Company Overview

Spritzer Berhad (Spritzer) is an investment holding company operates in the manufacturing of natural mineral water, carbonated flavored water, distilled water, drinking water and non-carbonated flavored water. It is engaged in the sale of bottled water and other consumer products. The company classifies its business operations into three reportable segments namely, manufacturing, trading and others. Spritzer also provides water dispenser and water issues services to its customers. The company operates through its six whollyowned subsidiaries namely, Chuan Sin Sdn. Bhd., Golden PET Industries Sdn. Bhd., Chuan Sin Cactus Sdn. Bhd., PET Master Sdn. Bhd., Angenet Sdn. Bhd., and HidroDinamik Sdn. Bhd. The company is headquartered in Ipoh Perak Darul Ridzuan, Malaysia. The brand, SPRITZER, Malaysia best selling natural mineral water is produced and bottled out of a vast 300 acre site with plentiful natural mineral water resources in an environmentally friendly site surrounded by lush tropical rainforests greenery, away from pollution.Their production lines are completely automated and equipped with the state-of-the-art bottling technologies. The plant is manned by highly qualified professionals such as food technologists, chemists, microbiologists and engineers. 3.2 Business Description Spritzer Berhad operates in the bottled and canned soft drinks sector. Spritzer Bhd is a Malaysiabased investment holding company. The Company operates in three business segments: manufacturing, which includes the production of natural mineral water, carbonated flavored water, distilled water, drinking water, noncarbonated flavored water, polyethylene terephthalate (PET) pre-forms, PET bottles, caps and toothbrushes; trading, which includes the sale of bottled water and other consumer products, and others, which includes investment and properties holding. Its subsidiaries include Chuan Sin Sdn. Bhd., which is engaged in the production of natural mineral water, carbonated flavored water, distilled water, drinking water and noncarbonated flavored water; Golden PET Industries Sdn. Bhd., which is engaged in manufacturing and selling of pre-forms, PET bottles, caps, toothbrushes and other plastic products, and Chuan Sin Cactus Sdn. Bhd., which is engaged in the distribution of bottled water and other consumer products. 3.3 Company History Spritzer Group is the most integrated and largest bottled water producer in Malaysia. From its humble beginning in a small set-up in Taiping, Perak, in the late 1980s, the Spritzer Group of Companies today comprises five subsidiaries which are involved in the manufacturing and distribution of natural mineral water, sparkling natural mineral water, distilled drinking water, carbonated fruit flavoured drink, non-carbonated fruit flavoured drink, functional drink, toothbrushes, preforms and packaging bottles. Group Managing Director, Mr Lim A Heng @ Lim Kok Cheong, JP, holds a 50.4% stake in Spritzer Bhd. He has more than 39 years of experience in the consumer products industry. He is also a substantial shareholder and one of the founders of Yee Lee Corporation Bhd (YLC), a company listed on the Main Board of Bursa Malaysia. The YLC Group is mainly involved in the production of edible oils and other consumer products. The company was admitted to the Second Board of Bursa Malaysia in September 2000. The company was subsequently transferred to the Main Board. In 2001, the company acquired Angenet. In the same year, the company and its subsidiary Angenet entered into a sale and purchase agreement with Desa Mineral Water. Later in that year, the company acquired 51% of Starfresh. Spritzer acquired the entire issued and paid-up share capital of Hidro Dinamik in 2003. In

2007, the company's wholly-owned subsidiary, Chuan Sin Sdn acquired agricultural land situated in Mukim Tupai. 3.4 Key People Board of Directors Non-Independent Non-Executive Chairman Dato Lim A Heng @ Lim Kok Cheong, JSM, DPMP, JP Managing Director Lim Kok Boon Executive Directors Dr. Chuah Chaw Teo Lam Sang Non-Independent Non-Executive Director ChokHooa @ Chok Yin Fatt, PMP Independent Non-Executive Directors Dato Ir. NikMohamad Pena bin Nik Mustapha, DIMP Y.B Mohd. Adhian bin Kechik, SMK KuanKhianLeng

3.5 Location and Subsidiaries Headquarter address: Lot 85, Jalan Portland, Tasek Industrial Estate, 31400 Ipoh, Perak Darul Ridzuan. Tel: +605 801 2663 Fax: +605 8012118 Email: info@spritzer.com.my Name of Company Chuan Sin Sdn. Bhd. Golden PET Industries Sdn. Bhd. Chuan Sin Cactus Sdn. Bhd. PET Masters Sdn. Bhd. Angenet Sdn. Bhd. HidroDinamik Sdn. Bhd. Principal Activities Production of natural mineral water, carbonated flavoured water, distilled water and drinking water. Manufacturing and sales of performs, PET bottles, caps, toothbrushes and plastic household goods. Distribution of mineral water, drinking water, distilled water and carbonated water. Manufacturing and selling of PET bottles, PP cups and PET performs. Manufacturing and selling of bottled water. Dormant.

Table 3.5 List of Spritzer Berhad Subsidiaries

3.6 Brands, Major Products and Services The full range of Spritzer bottled water including natural mineral water, sparkling natural mineral water, distilled drinking water, carbonated fruit flavoured drink, non-carbonated fruit flavoured drink and functional water. Spritzer advocates, "Not all bottled waters are the same." For the protection of customers and in line with the Malaysian Food Act and Regulation, Spritzer bottled waters are clearly distinguished by their caps white for drinking water and assorted colored for natural mineral water. The group comprises five active subsidiaries, two of which, Chuan Sin Sdn Bhd and Angenet Sdn Bhd, are principally engaged in the manufacturing of natural mineral water, distilled water, drinking water and carbonated flavored water. Chuan Sin Cactus Sdn Bhd (CSC) primarily sells and distributes bottled water products under the Cactus brand. Golden PET Industries Sdn Bhd (GPI) produces polyethylene terephthalate (PET) bottles for cooking oil and mineral water, pre-forms (raw material for manufacturing of PET bottles) for PET bottles, toothbrushes and other plastic household products. PET Master Sdn Bhd (PM) is involved in the manufacture and sales of PET bottles and polypropylene (PP) cups. The company's key products and brands include the following: Natural mineral water Spritzer Natural Mineral Water Spritzer Spirky Fun Pet Spritzer Love

Sparkling natural mineral water Spritzer Sparkling

Distilled drinking water Spritzer Distilled Drinking Water Cactus

Carbonated fruit flavored drink Spritzer POP

Non-carbonated fruit flavored drink Spritzer Tinge Spritzer +Fibre

Toothbrushes MorningKiss

3.7 Corporate Vision Their vision is to be recognized and respected as the premier and best bottled mineral water producer; it adopts a stringent process where each step is closely monitored. Its production lines are completely automated and equipped with state-of-the-art bottling technologies. From the source to the bottle, the whole process is untouched by hand. 3.8 Corporate Mission Go Nature, Go Spritzer! Their corporate mission is to establish a pollution-free environment for tomorrows generation. In its support to climate change issues and to reduce carbon dioxide output, the Company has planted 4407 trees on its 290 acres of land in the year 2007 to protect the natural ecosystem. This land is maintained in the form of rainforest to be free of any commercial activity.

3.9 Companys Current Promotional Strategy

2008
TVC SPRITZER POP CHINESE NEW YEAR Edition Walk the talk, Feel the pop~!! A new-age refreshment for the new generation Spritzer POP, a lightly carbonated pop drink with a difference. Natural fruit flavours - Apple, Orange, Lemon, Berries and Lychee - with the fizz to go. Absolutely no artificial colourings or flavourings. Feel the Fruit. Feel the POP! SPRITZER POP RAYA Edition Walk the talk, Feel the pop~!! A new-age refreshment for the new generation Spritzer POP, a lightly carbonated pop drink with a difference. Natural fruit flavours - Apple, Orange, Lemon, Berries and Lychee - with the fizz to go. Absolutely no artificial colourings or flavourings. Feel the Fruit. Feel the POP! SPRITZER First Love SPRITZER, Malaysia best-selling natural mineral water was incorporated with a vision of being recognized and respected as the premier and best bottled water producer. To this end, Spritzer has focused on achieving customer satisfaction through its highest quality bottled water for the healthy consumption by all.

On Ground Brand Activation SPRITZER TINGE NEW PACKAGING LAUNCH Launching of Spritzer TINGE New Packaging with Rynn Lim and Marsha. SPRITZER TINGE WORLD WATER DAY MUSIC FESTIVAL Celebration of World Water Day with TINGEs Rynn Lim and Marsha.

2009
Contest My No. 1 Moment Photo Contest It is a contest to celebrate SPRITZERS 20th Anniversary. Consumers are required to send in their My No. 1 Moment photo (e.g. my graduation, my 1st baby, my 1st car, my wedding &etc) through email. The judges will shorlist 4 of the best photos weekly. The contest was conducted from October 15 to November 18, 2009.

2010
TVC SPRITZER - 45 Sec Pop in English Introducing the brand NEW LOOK for Spritzer POP ~ Have a peep into it!! SPRITZER - 30 sec Tinge in English Wow... Its Cool, its Fun, its TINGE's brand new ambassador - Gary & Shila. Its Great~!!

Contest Tinge In You Tinge In You Best Photo Contest Capture your best moments with Tinge.

2011
Roadshows/On Ground Brand Activation SPRITZER TWIST & RECYCLE Roadshow 2011 Spritzer Twist to Recycle visited the neighborhood last October 2011 and gave Eco-friendly tips to everyone. Our GREEN Van visited 12 places in the neighborhood, everyone has participated, they drink Spritzer TWIST and then RECYLE it! A lot of FUN, exciting GAMES, painting activities and PRIZES are given away! Spritzer +Fibre sampling activities in Fitness First Outlets and Celebrity Fitness Outlets (14th Nov 20th Dec 2011)

Contest Spritzer +Fibre Treadmill Challenge @Fitness First (May 2011) Tinge Going Gary Tinge is giving TINGE fans the golden opportunity to win premium tickets to groove with Gary up close & awesomely personal! Love Tinge Love Fun This photo contest is all about showcasing Spritzer Tinge fans having refreshing fun at our Love Tinge Love Fun Mobile Fun Roadshow. Misi ImPOPsible Help Spriky and his friends by freeing them and gain as many points as you can! Everyday is a + Photo Contest (July August 2011) Time to get Fun, Fresh &Fibre-licious! Flaunt your fit & fab self and win a prize in our Everyday is a + Mobile Fun Roadshow! Seriously too easy! Just STRIKE A POSE, SNAP A PHOTO and you could WIN A GRAND PRIZE worth RM1,000! 5 Grand Prizes up for Grabs! Ifeel girl Challenge (October 2011) The Sparkling Sparkler (15th November to 10th December 2011) Be the glorious Spritzer Sparkling master mixer and gain fame among culinary expert!

3.10 Product Sales History

Figure 3.10 Spritzer Financial Performance for the year 2006 to 2011 2006 2007 2008 2009 2010 2011 Spritzer Group managed to reach of RM69.24 million in their sales. Their revenue increased from RM69.24 million to RM76.77 million. Spritzer has reached a new high in 2008 with an increase of 28.6% from 76.77 million in 2007 to RM98.75 million in 2008. Their revenue then continued to increase to RM108.25 million, representing a healthy growth of 9.6%. Spritzer has recorded revenue of RM132 million for the financial year which ended on 31st May 2010. The demand for bottle water products has remained strong throughout the financial year under review therefore, Spritzer managed to achieve another double digit growth in their sales and recorded a new high revenue of RM148 million. It is an increase of 12% over last years revenue.

3.11 Current Marketing Objective Short Term Objective INVESTING FOR THE FUTURE Spritzer Group is the largest and most integrated bottled water producer in Malaysia. To further strengthen their leading role in the bottled water industry and to cater for the anticipated volume growth, they have taken various steps to enhance our production capability and capacity. As approved by their shareholders at the AGM held on 26 November 2009, the Group has acquired a factory building in Shah Alam for total cash considerations of RM32.5 million. They now have, to date, installed two fully automated and high speed bottling lines in our Shah Alam plant to cater for large bottled water market in the Klang Valley and its surrounding areas. They also have, on 27 July 2010 entered into a form of contract with Sidel SpA for the supply and installation at their Taiping mineral water plant, of a high speed and fully automated PET Combi line for a total sum of Euros 2.5 million (RM10.5 million). We expect this production line to be commissioned by early 2011. (Source: Datamonitor, 2010)

Long Term Objective OUTLOOK AND PROSPECTS The domestic economy is expected to continue its positive growth and this should translate into stronger consumer spending for their products. They anticipate that the domestic retail sales will further improve in tandem with the improving economy. With their continuous efforts to promote their various brands and coupled with the enhancement of our production capability, they remain confident that the volumes of our bottled water products will continue to grow. Notwithstanding the competitive environment and the aggressive marketing efforts of some of the other bigger bottled water suppliers, the directors are cautiously optimistic that the Group's revenues will be further increased. With the anticipated increase in production output at Shah Alam plant, the volume growth of our lower margin drinking water products will be higher than the volume growth of our mineral water and other bottled water products. Consequently, the overall profit margin of the Group would fall. While our short term results may also be affected by the steeper financial and marketing expenses relating to our expansion plan, their long term prospects remain positive. (Source: Datamonitor, 2010) 3.12 Media Expenditure Spritzer uses both traditional media and digital media as part of their promotional activities. From 2008 onwards, they had aired various television and radio commercials to promote their new range of products for example Spritzer Tinge, and also to advertise their existing product like Spritzer Pop. As for the year 2011, it is the year to drive distribution, hence, the brand team believes on ground activities and in store promotion will be the more effective way to reach up the target market with lower budget which is one of the reason why Spritzer +Fibre was not advertised via television commercial. Besides from website, they are also promoting via social networking sites. Each of their product range has a Facebook fan page and also twitter page. That is the place where consumers can get an instant updates on the latest news of the products. The key is to connect directly with their consumers who will be driving the future growth of their brand.