BreadTalk Group Limited

Vibrant Growth
Vibrant Growth

BreadTalk Group Limited

171 Kampong Ampat

#05-01 to 06 KA FoodLink
Singapore 368330
Annual Report 2 0 09

Tel : (65) 6285 6116

Fax: (65) 6285 1661 Annual Report
Website: www.breadtalk.com ~ 2009 ~
Email: enquiry@breadtalk.com
Creative Rationale
It’s been said that good food
ends with good talk, and it is this
optimistic philosophy that saw us
through a year of ups and downs.
Despite changes in the global
economy, we remained confident and
continued to hone in on our expertise
to create greater value for our
customers and shareholders, thereby
reinforcing our growth and success.
The BreadTalk Group Limited
Annual Report 2009 creatively
depicts the idea of “Vibrant Growth”
through an illustrative approach that
“ AsBreadTalk’s
Vi b r a n t G r o w t h
evokes this optimism, and how good
food will always provide comfort even
in challenging times. As a leading
player in Singapore’s food & beverage
industry, BreadTalk’s growing
portfolio of innovative products
and establishments will continue to
inspire and change the way people
think about food. If good food ends
with good talk, then we aspire to
create a world where good food starts
at BreadTalk.
Our Flosssophy
a leading player in the food & beverage industry,
growing portfolio of innovative products and
“
establishments will continue to inspire and change the
way people think about food.
Corporate Profile

Founded in 2000, BreadTalk changed our footprint across 12 countries and

the face of the humble bun with
our innovative flavours and quirky
names. Our endeavour to surprise
and delight customers has earned
us numerous awards and growing
popularity with customers here and
in international markets. In 2003,
BreadTalk Group Limited was listed
on the SGX.
In the short span of a decade,
BreadTalk has left an indelible mark
on Singaporeans as one of Asia’s most
promising brands. We have extended
territories with more than 300 bakery
outlets (including franchises), 33 food
courts and 8 restaurants, supported by
a global staff strength in excess
of 4,000.
BreadTalk holds fast to our shared
vision of becoming an international,
trend-setting, lifestyle brand. To this
end, we have taken bold strides in
introducing new food cultures with
revolutionary changes and ingenious
differentiation.

Contents

1 Corporate Profile / 2 Financial Highlights / 4 At A Glance / 6 Chairman’s Statement / 9 Brand Accolades

10 Board Of Directors / 12 Senior Management / 13 Geographical Reach / 14 Group Structure
16 Bakery / 20 Food Atrium / 24 Restaurant / 28 Corporate Information / 29 Corporate Governance
43 Financial Statements / 127 Statistics of Shareholdings / 129 Notice of Annual General Meeting / Proxy Form

B r e a d Ta l k
Annual Report 2009 1
Financial Highlights

Revenue ($ Million) Profit Before Tax ($ Million)

246.5
250 20

212.2 15.6
200
15
156.6 12.0
150 11.2
123.6
10
95.3
100
6.5
5
50
2.7

0 0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009

Revenue Mix By Business Segment Revenue Mix By Geographical Segment

FY2009 FY2009

44.8% 47.9% 5.6%

7.7%

15.8% 11.8%
31.7% 34.7%

Bakery Franchise Food Atrium Restaurant Singapore Hong Kong People’s Republic of China Others

2 Vi b r a n t G r o w t h
 BreadTalk Group Limited & its Subsidiaries – Group Financial Highlights

Financial Results ($'000) FY2005 FY2006 FY2007 FY2008 FY2009

Revenue 95,297 123,569 156,610 212,249 246,493
Operating profit 3,582 7,394 12,150 13,227 16,253
Profit before tax 2,666 6,466 11,228 12,001 15,615
Profit attributable to equity holders 164 3,476 7,319 7,770 11,092
of the Company

Financial Positions ($'000) FY2005 FY2006 FY2007 FY2008 FY2009

Property, plant and equipment 24,571 34,141 44,893 58,156 64,352
Investment in associate / joint ventures 2,644 2,877 1,333 422 284
Intangible assets 8,881 8,427 9,665 9,205 9,097
Other non-current assets 38 625 710 2,026 3,890
Current assets 28,492 36,833 59,089 77,348 94,462
Current liabilities (35,097) (47,488) (62,996) (82,866) (97,197)
Non-current liabilities (4,793) (6,417) (5,428) (8,158) (8,722)
Minority interests (1,938) (3,058) (3,170) (3,623) (5,504)
Shareholders' equity 22,798 25,940 44,096 52,510 60,662

Ratios FY2005 FY2006 FY2007 FY2008 FY2009

Earnings per share (cents) - Basic (1)
0.09 1.73 3.23 3.31 4.74
Earnings per share (cents) - Diluted (1)
0.09 1.73 3.23 3.31 4.73
Net asset per share (cents) (2)
11.35 12.91 18.77 22.35 25.93
Net tangible asset per share (cents) (2)
6.93 8.72 14.66 18.43 22.04
Gearing (times) (3)
0.39 0.46 0.25 0.30 0.24
Return on shareholders' fund (%) (4)
0.9 14.3 20.9 16.1 19.6

(1) The basic and diluted earnings per ordinary share for FY2009 are computed based on the weighted average number of ordinary shares
(excluding treasury shares) in issue during the year 234,102,107 and 234,702,034 respectively.
(2) Net assets per share and net tangible assets per share as at end of financial year 2009 are computed based on the share capital
of 233,941,034 ordinary shares, representing shares issued and fully paid (excluding treasury shares) as at end of the year.
(3) Gearing is computed based on total borrowings divided by total equity.
(4) Return on shareholders’ funds is the profit after taxation and minority interests expressed as a percentage of the average shareholders’ funds.

B r e a d Ta l k
Annual Report 2009 3
At a Glance

$246.5M $16.3M
Revenue Operating Profit
+ 16.1% over FY2008 + 22.9% over FY2008

Our efforts to create and redefine consumer perceptions
have struck a chord with consumers, enabling us to
achieve double digit revenue growth for the ninth
consecutive year.
During the year, we seized opportunities offered by the
economic downturn to drive costs down. By negotiating
attractive rentals, tightening cost efficiencies and
productivity, as well as capitalising on our growth to reap
economies of scale, we are able to improve on our profit
margins without compromising on quality.

Spreading our Food Prints

We have spread our wings to 12 countries and
territories in Asia and the Middle East. In 2009, wee
awarded the Master Franchise rights to Pan Arabian an
Gourmet to operate BreadTalk across 12 Middle
Eastern countries, including Turkey, Egypt and
Lebanon. In China, we have increased our presence ce
to 28 cities, sharing the BreadTalk experience through
h
134 outlets across cities such as Urumuqi, Shi Jia Zhuang
ng
and Wuhan.

4 Vi b r a n t G r o w t h
 Info Bites

Signature Flosss – 32
million and counting!
BreadTalk’s signature
Flosss have remained
our best-seller to date!
1 Flosss is sold every
10 seconds around the
world… Have you
flosssed today?

Brand Accolades
BreadTalk was a finalist
at the international

19.6%
World Retail Awards
2009, Emerging Market Retailer of the Year
category held in Barcelona, Spain. This brand
oscar recognises retailers for their entrepreneurship
Return on Shareholders’ Fund and originality in retail development.
+ 3.5 Percentage Points over FY2008
On the local front, Toast Box
Our bold strides to establish the BreadTalk Group as was the Overall Winner
a global brand in both new and existing territories in the Promising Brand
have fuelled our rapid growth throughout the region. Award category of the
Singapore Prestige
Through franchises, acquisitions and joint ventures, our
Brand Awards. This
brands are strengthening their market penetration in key
is a strong testament
regional markets, particularly in China. to Toast Box’s brand
potential, triumphing
over 14 other local
brands to clinch this
prestigious accolade.

Brand New Me
The Group is proud to
open the doors to our
first Carl’s Jr. outlet in
Shanghai. Carl’s Jr. is an
exciting premium burger
brand that Shanghainese
have eagerly embraced.

We see the potential of our

latest Japanese ramen store
RamenPlay, specialising in
authentic Japanese ramen
recipes through a joint
parternership with Japanese
F&B group, Sanpou Co Ltd.

B r e a d Ta l k
Annual Report 2009 5
 Chairman’s Statement
“ This is the ninth consecutive year that the Group has achieved
double digit growth.
“
Dear Shareholders
A Year of Growth
I look back on 2009 satisfied with the
Group’s commendable achievements
against a backdrop of challenges that
faced the Food & Beverage (F&B)
industry. We not only survived
but thrived.
Consumers remained cautious in their
spending amidst the backdrop of a global
economy on the slow path to recovery.
However, the mass market F&B saw a
healthy growth in consumer appetites,
partly due to the shift from higher end
dining in a general effort to maintain
more modest lifestyles.
What remained strong was the demand
for more creative F&B concepts as
consumers sought different experiences
to excite the palate. This is where
BreadTalk commands a competitive
edge. By deviating from the typical
run-of-the-mill concepts in all three of
our core divisions – Bakery, Food Atrium
and Restaurant – we continually redefine
perceptions of these traditional businesses
in the F&B sector, hence differentiating
ourselves from our competitors.
Our efforts to surprise and add a touch
of the unexpected have struck a chord
with consumers, evident in the strong
6 Vi b r a n t G r o w t h
performance of the Group for FY 2009.
Despite operating in a year marked
by economic uncertainty, BreadTalk
managed to turn in our best financial
results to date.
Group revenue rose by 16.1% from 2008
to S$246.5 million in 2009, supported
by strong growth across all business
segments. This is the ninth consecutive
year that the Group has achieved double
digit growth. Group operating profit also
surged by 22.9% to reach S$16.3 million.
Net profit attributable to shareholders
leapt by 42.8% to S$11.1 million, on
higher revenue base and improved profit
margins. Earnings per share on fully
diluted basis soared 42.9% to 4.73 cents.
Cementing Our Global Presence
The BreadTalk Group today is a global
entity operating in 12 countries
and territories.
The strategic intent to expand across the
globe was there from the beginning. We
have always aimed to be more than a
local company – we wanted to become
a household name in different parts of
the world, particularly in Asia. Having
established a solid presence in Singapore
and parts of Asia over the past few years,
we are now in an accelerated phase
of expansion where we can replicate
our business success in other countries.
Today, more than half of BreadTalk’s
revenue is generated from operations
outside Singapore.
During the year, we have increased our
focus on the China market. As an early
mover into the China market, we have
the advantage of being able to develop an
extensive network and leverage on our
partners to propel the business forward.
As at 31 December 2009, there were
134 BreadTalk and Toast Box outlets in
China, and this number is set to multiply
substantially by 2012.
A breakthrough was made in the Middle
East when we signed a Master Franchise
Agreement in 2009 with Pan Arabian
Gourmet of Bahrain, allowing them to
sub-franchise BreadTalk outlets to 12
countries in the Middle East, including
Syria, Egypt and Lebanon. This is a
first for BreadTalk and the decision was
derived from our need to leverage on
a partner with a strong network and
established presence in the region, for
more effective penetration into the
market. Pan Arabian Gourmet has
businesses in a diverse scope of industries
in the Middle East, such as leisure,
aviation, retail and real estate. Their
wealth of experience will help anchor the
BreadTalk brand in the region.
Franchises currently contribute 7.7%
to the overall revenue and will be the
preferred route of expansion as they allow
for quick and effective inroads into new
markets. 60 per cent of our bakery outlets
are currently franchised and we intend
to increase this proportion gradually
to 70 per cent. Our sound franchising
teams in charge of sourcing and training
franchisees ensure that the BreadTalk
brand philosophy, Standard Operating
Procedures (SOPs) and system setup are
properly translated on the ground.
On the food atrium front, 2009 saw the
much anticipated opening of Food Opera
at ION Orchard and Food Republic at
313 Somerset, both strategically located
along Orchard Road, Singapore’s
premier shopping belt.
The year ahead will see our food atrium
business make significant forays with
the opening of the Integrated Resorts in
Singapore. Outside of Singapore, we will
continue to expand our operations and
strengthen our presence, particularly
in China.
Our restaurant business successfully rolled
out the first RamenPlay restaurant in
2009. In 2010, more RamenPlay outlets
are expected especially in Singapore and
China. We also successfully established
the first Carl’s Jr outlet in China in 2009.
The roll out plan for Carl’s Jr restaurants
will continue in earnest and pick up
momentum over the immediate few
years. Preparation for the first Din Tai
Fung outlet in Thailand is underway and
will open its door in 2010.
Optimising Cost and
Operational Efficiencies
Being able to capitalise on
opportunities that present themselves
is pivotal in any enterprise. Instead of
lamenting over the economic downturn
in the past year, we seized the opportunity
to drive costs down. Taking advantage
of modest rental rates, we negotiated
for attractive rentals for some of our
properties, contributing to medium-
term cost savings.
Sound procurement practices are also
key in managing costs. The Group’s
procurement department negotiates food
contracts both for our own operations and
our franchisees. Such bulk orders give
us the leverage to negotiate for and lock
in the best prices without compromising
on quality. During the year, we managed
to negotiate favourable food contracts
to curb against rising commodity prices.
This has helped us improve profit margins
as well as enabled us to maintain our retail
prices for the past two years.
An Enterprise Resource Planning (ERP)
system was implemented during the
year as part of our efforts to streamline
processes and improve reporting.
Integration between the supply chain
and financial modules allows for more
effective monitoring of inventory
purchases and consumption.
In 2010, the ERP system will be outfitted
with recipe costing, enabling it to
monitor and assess production efficiency
of the central kitchen with regards to
yields and consumption of raw materials.
When fully operational, the system will
allow for more effective management
and control of food costs.
Dividend
The Board of Directors has proposed
a first and final one-tier dividend of
1.0 cents per ordinary share, subject to
shareholders’ approval at the AGM.
Looking Ahead
We are bracing ourselves for the next
phase of expansion and are optimistic
about the market outlook. We are
making bold strides towards marking
the presence of the brands under the
BreadTalk Group as global brands in both
new and existing territories.
B r e a d Ta l k
Annual Report 2009 7
 Chairman’s Statement
Continued
“ Our investment in people will continue unabated as they represent
the largest key reason behind the Group’s success.
With this perspective, we are ever
mindful of the multitude of risks in each
market. We are acutely aware that
familiarity with new markets is critical
and our expansion plans are always
carefully considered and mapped out.
To sustain future growth, our emphasis
to increase depth in key markets will
strengthen existing brands. With this
focused strategy, we expect to reap
significant economies of scale as the
Group achieves greater scale in each
of the brand’s offerings and stronger
market penetration especially in our key
Greater China markets among others.
The senior management team is stepping
up its involvement in these markets to
provide greater strategic thrusts.
Within Singapore, opportunities for
growth abound, especially in light of the
highly anticipated Integrated Resorts
(IRs) at Marina Bay Sands and
Resorts World Sentosa.
Our investment in people will continue
unabated as they represent the largest key
reason behind the Group’s success. Our
8 Vi b r a n t G r o w t h
“
staff will receive continuous training and On behalf of the Board, I would like to
development so that they are equipped thank our directors, management, staff
to contribute towards BreadTalk’s high and business partners for their advice and
standards of service and quality. The efforts over the past year. Last, but not
construction of a new manufacturing least, the Board is also grateful to our loyal
facility cum training academy at Paya shareholders and customers. We look
Lebar is underway to provide a fully forward to your continued support in the
integrated research, manufacturing, year ahead.
logistic, and training headquarter to cater
to the Group’s expansionary needs for
the next decade.
Our financial performance for FY2009
augurs well for our future as they indicate
that we are on the right track. Moving
George Quek
forward, we expect to reap economies of
scale as we expand our scale and reach. Chairman
We will continue to seek companies and
partners that enhance our core business
through franchises, acquisitions and joint
ventures, as we progress on our journey
of growth.
In Appreciation
In recognition of the continuing support
of our shareholders, and as an expression
of our gratitude, the Company will issue
one (1) bonus share for every five (5)
existing ordinary shares in the capital of
the Company.
Brand Accolades
BreadTalk
Finalist, World Retail Awards 2009
Emerging Market Retailer of the
Year Category
Five Star Diamond Brand
Award 2006
Five Star Diamond Brand
Shanghai, PRC
Regional Brand Award 2006
Singapore Promising
Brand Award
Association of Small and Medium
Enterprises (ASME) and
Lianhe Zaobao
Finalist in Franchisor
of the Year Award 2005
Franchising and Licensing
Association of Singapore (FLA)
Most Promising Brand
2002 to 2005
Most Popular Brand 2002, 2005
Most Distinctive Brand 2003 to 2005
Silver Award 2004
Gold Award 2005
Singapore Promising Brand Award -
ASME and Lianhe Zaobao
Design for Asia Award 2004
Hong Kong Design Centre
Superbrand Status
Singapore version 2002/2003
Singapore Superbrands Council
Ranked Number 1
Enterprise 50 Start Up Award 2002
Accenture and The Business Times
Davey Awards
Silver Winner
Best Annual Report 2007
International Academy of the Visual Arts
Most Transparent
Company Award (SIAS)
2004 and 2005 -
Sesdaq Category Runner-Up
2007 - Sesdaq Category Winner
2008 - Catalist Category Runner-Up
Toast Box
Overall Winner,
Promising Brands Category
Singapore Prestige Brand
Award 2009
Association of Small and Medium
Enterprises (ASME) and Lianhe Zaobao
Food Republic
Overall Winner,
Promising Brands Category
Singapore Prestige Brand
Award 2008
Association of Small and Medium
Enterprises (ASME) and Lianhe Zaobao
George Quek
Entrepreneur of the Year 2006
Emerging Entrepreneur Category
Ernst & Young
George Quek
Entrepreneur of the Year 2002
ASME and The Rotary Club
B r e a d Ta l k
Annual Report 2009 9
Board of Directors

L – R: Chen Kuo Hua Ong Kian Min George Quek Meng Tong Katherine Lee Lih Leng Chan Soo Sen

10 Vi b r a n t G r o w t h
George Quek Meng Tong
Chairman
George, founder of the Group, was
appointed to the Board on 6 March 2003
and re-elected on 28 April 2008. Having
led and grown the Company to its outfit
today, George continues to drive our
strategic direction and development.
George started his food and beverage
business in Taiwan in 1982, successfully
growing it into a chain of 21 Southeast
Asia food outlets within a decade.
Returning to Singapore in 1992,
he founded Topwin Singapore and
subsequently Megabite China in 1996,
establishing the food court businesses.
In 2000, he started the bakery business
with BreadTalk Pte Ltd and eventually
brought it to list on the SGX in 2003. To
facilitate expansion plans, the bakery and
food court businesses were strategically
merged in 2005. A natural progression
from BreadTalk’s bakery expertise, Toast
Box was introduced in Dec 2005 as a local
toast concept that combines nostalgia and
familiar Southeast Asian flavours.
George holds a Doctorate in Business
Administration (Honorary) from
Wisconsin International University,
USA. Amongst other awards, he won the
Ernst & Young “Entrepreneur of the Year
2006” (Emerging Entrepreneur Category)
and “Entrepreneur of the Year 2002”
organised by the Association of Small
and Medium Enterprises and The Rotary
Club of Singapore.
Katherine Lee Lih Leng
Deputy Chairman
Katherine was appointed to the Board
on 6 March 2003 and last re-elected on
30 April 2007. She oversees the Group’s
research and development, as well as
pioneers new ideas and concepts.
 
Responsible for product development
and enhancement of our various brands
both locally and globally, Katherine
also formulates product training and
technical skill upgrade programmes to
ensure proper transfer of knowledge and
skills to our franchisees in line with our
local operations so as to sustain product
quality. In addition, Katherine spearheads
product costing, which is an integral part
of strategic pricing.
 
Katherine has more than 15 years of
experience in the industry. She was
previously the Finance Director of
Topwin Singapore prior to which she
was in charge of the human resource and
operations of more than 20 food and
beverage outlets in Taiwan.
Chen Kuo Hua
Non-Executive Director
Kuo Hua was appointed to the Board
on 30 April 2003 and last re-elected
on 27 April 2006. He sits in the Audit
Committee, Nominating Committee
and Remuneration Committee of the
Company and is also the President of the
Group’s China operations.
Kuo Hua has more than 20 years of industry
experience in providing consultation and
strategic planning in various countries
such as the PRC, Hong Kong, Taiwan
and Singapore. He has held various
senior positions in Topwin Singapore and
Megabite China prior to joining the Group,
whereby the food court businesses were
merged into the Group.
Kuo Hua holds a degree in Drama and
Mass Communication from the Chinese
Culture University, Taipei, Taiwan.
Ong Kian Min
Independent Director
Kian Min was appointed to the Board on
30 April 2003 and last re-elected on 30
April 2007. He is the Lead Independent
Director, Chairman of the Audit
Committee and Nominating Committee,
and member of the Remuneration
Committee of the Company.
He was called to the Bar of England and
Wales in 1988 and to the Singapore
Bar the following year. In addition to
practising as a consultant with Drew
& Napier LLC, a leading Singapore
law firm, he is a senior adviser of Alpha
Advisory Pte. Ltd. (a corporate advisory
firm). He also serves as an independent
director and chairs most of the audit
committees of several other SGX-ST
listed companies.
Kian Min was awarded the President’s
Scholarship and Police Force Scholarship
in 1979. He holds a Bachelor of Laws
(Honours) external degree from the
University of London and a Bachelor
of Science (Honours) Degree from
the Imperial College of Science and
Technology in England. He has been a
Member of Parliament of Singapore since
January 1997.
Chan Soo Sen
Independent Director
Soo Sen was appointed to the Board on
14 August 2006. He is the Chairman of
the Remuneration Committee, as well
as member of the Audit Committee and
Nominating Committee of the Company.
Mr Chan is currently Executive Vice
President of Singbridge International
Singapore Pte Ltd, a company owned by
Temasek Holdings to undertake major
international projects. He also holds
directorships for a few listed companies
in Singapore.
Soo Sen is a Member of Parliament
for Joo Chiat Constituency. He was
previously a Minister of State and had
served in several ministries including the
Ministry of Community Development,
Youth and Sports, Ministry of Education,
and Ministry of Trade and Industry.
Before entering the political scene, he
was involved in the starting up of the
China-Singapore Suzhou Industrial Park
as its founding chief executive officer
in 1994, laying the foundation and
framework for infrastructure and utilities
development for the industrial park. He
holds a Master in Management Science
from the University of Stanford, USA.
B r e a d Ta l k
Annual Report 2009 11
Senior Management
Goh Tong Pak
Chief Executive Officer
Tong Pak joined the Company on
1 January 2008. As Group CEO,
Tong Pak oversees the Group’s global
operations, focusing on strategic
planning and business development.
One of his main roles is to strategise
on systems and talent development.
Prior to joining the Company, Tong
Pak was a well known veteran in the
education sector, having spent
37 years with the Ministry of
Education (MOE). He started out as
a teacher and was promoted through
the ranks to the position of deputy
director for MOE’s school appraisal
branch. With his years of professional
and management experience, Tong
Pak helps to spearhead the Group’s
expansion globally. His background
and expertise in administrating
monitoring systems stand him in
good stead as he works towards
improvement of the Group’s
quality control procedures and
enhancement of the business
operation systems.
Tong Pak who holds an honours
degree in arts from the former
Nanyang University and a post
graduate diploma in education from
the National Institute of Education
(NIE) also lectures part-time for the
Master’s degree course in Education
Administration at NIE, Singapore.
12 Vi b r a n t G r o w t h
Frankie Quek Swee Heng
Chief Operating Officer
Frankie assists the Chairman in
overseeing the development and
growth of the Group, focusing on the
Group’s expansion into China. As
CEO of BreadTalk China, Frankie
has been based in Shanghai since
January 2005 where he oversees the
fast expanding bakery operations in
Shanghai and Beijing. His expertise
has led to the successful export of
the BreadTalk brand name through
a franchise model system run by the
in-house franchise team. Currently,
there are about 140 BreadTalk outlets
in 30 cities in China.
Prior to joining the Group in 2001,
Frankie held various positions in
Topwin Singapore. He holds a
Master of Business Administration
(Honorary) from the American
University of Hawaii, USA.
Catherine Lee Khia Yee
Chief Financial Officer
Catherine oversees Finance,
Corporate Secretarial, Investment,
Risk Management and Investor
Relations.
A non-practicing Certified Public
Accountant by training with
more than 18 years of financial
management experience in various
industries, Catherine is an
experienced banker and investment
professional with a strong corporate
finance and private equity background.
Prior to joining the Group in 2004,
Catherine worked for Transpac
Capital where she managed an
investment portfolio of public-listed
companies and private companies
in the USA, Singapore, Malaysia,
Indonesia and Australia. She was
concurrently financial controller
and business development manager
to companies from a spectrum
of industries. She also sat on the
board of several companies to assist
in implementing good corporate
governance practices and participated
in strategic planning.
Catherine holds a Bachelor of
Accountancy (Honours) degree
from the Nanyang Technological
University, Singapore.
Geographical Reach

Number of Outlets Worldwide

Bakery

PRC 134 / Indonesia 56 / Singapore 52 / Philippines 16 / Malaysia 12

Hong Kong 9 / India 6 / Kuwait 6 / Thailand 4 / Korea 3
Bahrain 2 / Oman 1

Food Atrium

PRC 22 / Singapore 5 / Hong Kong 5 / Malaysia 1

Restaurant
Middle East
Singapore 6 / PRC 2
KUWAIT
BAHRAIN
OMAN

Asia

PRC

HONG KONG
INDIA
THAILAND PHILIPPINES

MALAYSIA
SINGAPORE

INDONESIA

B r e a d Ta l k
Annual Report 2009 13
Group Structure
As At 31 December 2009

BreadTalk Group Limited

100% 100% 100% 100%

Imagine Properties Together Inc. BreadTalk

Pte Ltd BreadTalk Pte Ltd International Pte Ltd
Pte Ltd

70% 60% 100% Shanghai BreadTalk

Taster Food Pte Ltd Ramen Play Pte Ltd
Co. Ltd

75%
Charcoal Pte Ltd
30%

100% Shanghai BreadTalk

Gourmet Co. Ltd

Investment Holding 100% Beijing BreadTalk

Bakery Restaurant Management
Food Court Co. Ltd

Restaurant 100%

Others Beijing BreadTalk

Dormant Co. Ltd

100% BreadTalk (Thailand)

Company Limited

90%
ML BreadWorks
Sdn. Bhd

Hong Kong
25% BreadTalk Ltd

14 Vi b r a n t G r o w t h
 100% 60%

100% Topwin Investment 100%

Shanghai Star Food F&B
Star Food Pte Ltd Management Co., Ltd
Holding Pte Ltd

100% 100% Chongquing

Food Republic Food Republic Beijing Star Food F&B
(Shanghai) Co., Ltd Food & Beverage Management Co., Ltd
100%
Co., Ltd
30%
Shanghai Hong Bu Rang
Shanghai Ramen Play Food & Beverage
Co., Ltd 50% Management Co. Ltd

100%
Beijing Da Shi Dai
Food & Beverage Co., Ltd

85% 100%
Megabite Hong Kong BreadTalk Concept
Limited Hong Kong Limited

100%
Food Republic
Pte Ltd

100% 100%
Megabite (S) Pte Ltd MWA Pte Ltd

100%
Megabite Eateries (M) Food Art Pte Ltd
Sdn Bhd
100%

50%
Apex Excellent
Sdn Bhd

30%
Out Of The Box
Pte Ltd

B r e a d Ta l k
Annual Report 2009 15
 119 52.5 %
Owned Outlets as of Contribution to
31 Dec 09 FY09 revenue

16 Vi b r a n t G r o w t h
Bakery
“ ...we will intensify our
store roll out plans by
securing strategic choiced
locations and work on
operational models that
are highly scalable.
”
In 2009, the Group opened 21 new
outlets, bringing the current count
to 119 outlets. Out of these, 67 are
outside of Singapore. Our number
of bakery franchises also grew by
41 from the previous year to 182 in
2009. Franchised outlets constituted
approximately 60 per cent of total
bakery outlets and the bulk of them
are located in China and Indonesia.

Strategies and Initiatives

Innovative offerings are what set

BreadTalk apart from our competitors.
In 2009, we continued to build on these
strengths. New products are launched
Financial Performance at our bakeries twice yearly, keeping the
refreshing and surprising essence that
The Bakery business and franchisees symbolises the BreadTalk brand.
maintained its anchor position in
the Group, contributing 52.5% to To extend our market reach, we
overall revenue. It enjoyed another launched a newly-created cafe called
profitable year, registering sales of the Tea Loft at Ion Orchard. The Tea
S$129.4 million (including S$19.0 Loft is a sub-brand of Toast Box, in a
million from franchise income), up creative twist to marry the tradition of
16.7% from 2008. Operating profit English afternoon tea with local tastes.
escalated by 83.2% to S$7.9 million.
Quality remains one of the key
The healthy growth can be attributed hallmarks of BreadTalk. Significant
to increase in transactions and the
opening of new outlets. Expansion
6.1 % in Singapore and Hong Kong
led the growth figures, offset by
Operation Margin
deconsolidation of bakery sales from
for FY09
J.Co Donuts following its disposal in
January 2009.

B r e a d Ta l k
Annual Report 2009 17
Bakery
Continued
quality initiatives were undertaken
during the year, including re-training
and re-certifying all our bakers,
conducting quality checks at our
outlets, and re-calibrating our quality,
service and cleanliness standards for
all our outlets.
Targeting the discerning customer
who enjoys her daily bread, Bread
Society was a new bread boutique
conceptualised with its range of
premium dough creations. Its Euro-
inspired recipes boasts of a team of
Japanese Masterchefs behind more
than 100 unique recipes.
The Icing Room – The first Design-It-Yourself patisserie allows creative
customers to personalise their own cake creations
18 Vi b r a n t G r o w t h
The Icing Room – the first-ever
Design-It-Yourself patisserie was also
expanded. Its delectable range of
pastries and unique service inspiring
customers to create their own cake
décor will change the way customers
express themselves.
Looking Ahead
The bakery industry is extremely
competitive with low barriers to
entry. For the Group to stay ahead
of our competitors, we will intensify
our store roll out plans by securing
strategic choiced locations and work
on operational models that are highly
scalable. We are in the process of
beefing up our real estate efforts as
well as upgrading and expanding our
manufacturing facilities in Singapore
and China. Meanwhile, R&D efforts
will also need to keep up with the
business. In this regard, we hope to
leverage on the various incentives
under the new Productivity
and Innovation Credit Scheme
announced in the Singapore Budget
2010 where possible.
BreadTalk brings its innovative creations to
12 countries and territories worldwide

Bread Society at ION Orchard boasts a premium

Euro-inspired range of delectable dough creations

B r e a d Ta l k
Annual Report 2009 19
 33 31.7 %
Owned Outlets as of Contribution to
31 Dec 09 FY09 revenue

20 Vi b r a n t G r o w t h
Food Atrium
“ The Group sees abundant
Financial Performance
During the year, the Food Atrium
business recorded a 12.9% increase
in sales revenue from S$69.2 million
in 2008 to S$78.2 million in 2009,
representing 31.7% of Group
revenue. This increase can be
attributed to contributions from new
outlets regionally and improved food
6.1 % court operations in Hong Kong.
Operation Margin
for FY09 However, operating profit fell by
20.0% to S$4.9 million due to
underperformance of the food
courts in China as well as start-
business opportunity in
its existing key markets
in Singapore, Hong Kong
and China.
”
up losses from the new food court
at 313@Somerset and temporary
closure of our largest food court in
Beijing for renovations. Meanwhile,
we succeeded in turning around
the Hong Kong operations which
recorded creditable results.
As of end 2009, the Group operated
five food courts in Singapore and 28
outlets in the rest of Asia, of which
22 are located in China.
Strategies and Initiatives
Food Republic anchors the Group’s
Food Atrium business, setting itself
apart from other food courts with
its distinctive flavours, creative
presentations and conducive dining
ambience. Not merely a random
gathering of hawkers under one roof,
Food Republic brings a deliberate
selection of local and street food to
excite consumers in this traditionally
functional business.
Our marketing teams scoured
Singapore, Malaysia, Hong Kong and
China to hand pick operators based
on the authenticity of their recipes,
traditional flavours and track records.
B r e a d Ta l k
Annual Report 2009 21
Food Atrium
Continued
Food Republic introduces the world’s 1st Ice-Mobile
at 313@Somerset, Singapore, serving beverages to
diners in a stylish and efficient manner
Food Opera at ION Orchard, Singapore elevates
hawker fare to premium status
22 Vi b r a n t G r o w t h
The most eagerly anticipated
developments for the business were
the opening of Food Opera at ION
Orchard and Food Republic at 313
Somerset, entrenching our presence
in the heart of Singapore’s premier
shopping district.
During the year, we upgraded our
largest food court in Beijing to inject
large
more vibrant food offerings and
interesting dining experience for our
inter
customers. Although the closure for
custo
upgrading had inadvertently affected
upgra d to strengthen the local team and
the financial performance, we view
this aas a necessary strategic move to
conti
continually keep the competitive
edge of Food Republic.
Looking Ahead
Look
The ccoming year will be heralded by
the oopening of the Integrated Resorts
(IRs) in Singapore. The Food Republicc
outlet there will cement our reputation
outle
in thi
this business as a premier player in
the fo
food atrium business. Once again
packaged with a difference, Food
Republic at the IR will wow both
locals and tourists with its innovative
flavours, consistent quality and
excellent customer service.
Outside of Singapore, we will
continue to expand our operations
and strengthen our presence,
particularly in China. Recognizing
the underperformance of the food
court business in China in 2009,
measures are being put in place
increase competitiveness. A thorough
review on the retail portfolio and
tenant offerings will be conducted
to benchmark Food Republic against
the other players in the competitive
landscape.
The Group sees abundant business
opportunity in its existing key
markets in Singapore, Hong Kong
and China. We will consolidate our
n resources and focus on growing our
roots in these markets to reap the
economies of scale of the business.
Food Republic spreads its wings to Asia, bringing a new level of thematic
dining to consumers

B r e a d Ta l k
Annual Report 2009 23
2
 8 15.8 %
Owned Outlet as of Contribution to
31 Dec 09 FY09 revenue

24 Vi b r a n t G r o w t h
Restaurant

“ Inwillthecontinue
coming year, we
to explore
opportunities to grow the
Group’s market share in
the restaurant business.
”
Strategies and Initiatives

For many years, the restaurant

business has been driven by the Din
Tai Fung brand alone. We focused
on growing this brand in Singapore
where its franchise territory belongs
from one outlet in 2003 to six in
2009. We successfully develop a chain
store strategy for Din Tai Fung. With
this commitment and track record,
we won another territory in Thailand,
opening up a whole new market for us
to replicate our success there.

Financial Performance Not contented with just with one

franchised restaurant brand, we
The Restaurant business turned in secured another world class brand,
a sterling performance for the year, Carl’s Jr. for the biggest potential
registering S$39.0 million in sales, a
21.1% increase from the previous
year’s S$32.2 million. This represented
15.8% of the Group’s total revenue.
Operating profit grew 2.1% to $3.1
million, driven by profit growth from
the Din Tai Fung restaurants, but
were offset by start-up losses from
RamenPlay and Carl’s Jr.

As of end 2009, the Group operated six

7.9 % Din Tai Fung restaurants in Singapore,
one Carl’s Jr. restaurant and one
Operation Margin
for FY09 RamenPlay restaurant in China.
World-renowned Din Tai Fung Taiwan received
a Michelin-star accolade, ranking it one of the
world’s best!

B r e a d Ta l k
Annual Report 2009 25
Restaurant
Continued

market – China. The attractiveness Looking Ahead

of Carl’s Jr. lies not just in its vast
China market potential but also In the coming year, we will continue
its scalability and strong franchise to explore opportunities to grow the
support from its American franchisor. Group’s market share in the restaurant
business. We will focus on the existing
L
Lastly, our aspiration to create our own three brands to create critical mass.
restaurant label was fulfilled through
re Our newly launched brands – Carl’s Jr.
a joint venture with an experienced and RamenPlay – will be progressively
Japanese F&B player. RamenPlay,
Ja rolled out in 2010.
a brand owned by the joint venture
company was born by marrying
co Apart from opening more outlets in
authentic Japanese ramen recipes with
au Singapore, we have set our sights on
oour team’s strength in retail and brand China as our next engine of growth.
management. The concept was first
m The Group aims to have at least 100
launched in Shanghai and Singapore
la Carl’s Jr. restaurants in China by
in 2009. While there is no territory 2016, spanning Beijing, Shanghai,
re
restriction in developing RamenPlay, Tianjin and the provinces of Zhejiang
w
we choose to build our base in China and Jiangsu. Plans are also underway
aand Singapore first before expanding to to launch our first Din Tai Fung
oother markets. outlet in Thailand in 2010.

Din Tai Fung’s delicious varie

va
variety
riety
ty of exquisite dian
xin and dishes are true comfort food that will warm
your soul

26 Vi b r a n t G r o w t h
 RamenPlay – A joint venture that will see the
proliferation of Japanese ramen culture in Asia

Our signature Sanpou Tonkatsu Ramen is a

delicious soup brew of yummy noodles and
braised meats

We launched the first Carl’s Jr. franchise in

Shanghai, exciting consumers with its range of
premium burgers

B r e a d Ta l k
Annual Report 2009 27
Corporate Information

Board Of Directors Company Secretary Principal Bankers

George Quek Meng Tong Tan Cher Liang DBS Bank Limited
Chairman
Malayan Banking Berhad
Katherine Lee Lih Leng Registered Office
Deputy Chairman Overseas-Chinese Banking
171 Kampong Ampat Corporation Limited
Chen Kuo Hua #05-05 KA FoodLink
Non-Executive Director Singapore 368330 Standard Chartered Bank
Tel : (65) 6285 6116
Fax: (65) 6285 1661 United Overseas Bank Limited
Ong Kian Min
Independent Director

Share Registrar Investor Relations

Chan Soo Sen
Independent Director
Boardroom Corporate & Advisory Spin Capital Asia
Services Private Limited 22 Malacca Street
50 Raffles Place #11-03 Royal Brothers Building
#32-01 Singapore Land Tower Singapore 048980
Singapore 048623 Tel: (65) 6 227 7790

Michael Tan
Auditors Email : michael@spin.com.sg

Ernst & Young LLP Dawn Soo

Public Accountants and Email : dawn@spin.com.sg
Certified Public Accountants
One Raffles Quay
North Tower Level 18
Singapore 048583

Partner-in-charge :
Philip Ling
(appointed since financial year ended
31 December 2006)

28 Vi b r a n t G r o w t h
Corporate Governance

This report sets out BreadTalk Group Limited’s corporate governance processes and structures that
were in place throughout the financial year ended 31 December 2009, with specific reference made
to the principles and guidelines of the Code and the Best Practice Guide issued by the Singapore
Exchange Securities Trading Limited (the “SGX-ST”).

The Board of Directors (the “Board”) is pleased to confirm that for the financial year ended
31 December 2009, the Company has generally adhered to the framework as outlined in the
Singapore Code of Corporate Governance 2005 (the “Code”) and where there are deviations
from the Code, the reasons for which deviation are explained accordingly.

A. Board Matters

Board’s Conduct of its Affairs

Principle 1: Every company should be headed by an effective board to lead and control the company. The
board is collectively responsible for the success of the company. The board works with management to achieve
this and the management remains accountable to the board.

The primary function of the Board is to protect and enhance long-term value and returns for its Guideline 1.1 of the Code:
Shareholders. Besides carrying out its statutory responsibilities, the Board’s roles include: The Board’s role

1. Providing entrepreneurial leadership, set strategic directions and overall corporate policies of
the Group;
2. Supervising and monitoring the performance of the management team;
3. Ensuring the adequacy of internal controls, risk management and periodic reviews of the
Group’s financial performance and compliance;
4. Setting the Company’s values and standards, ensuring that the necessary human resources are
in place;
5. Approving annual budget, major investments and divestment proposals;
6. Assuming responsibility for good corporate governance practices; and
7. Approving corporate or financial restructuring, share issuance, dividends and other returns to
Shareholders, Interested Person Transactions of a material nature and release of the Group’s
results for the first 3 quarters and full year results.

To assist in the execution of its responsibilities, the Board has established three (3) Board committees, Guideline 1.3 of the Code:
namely the Audit Committee (“AC”), Nominating Committee (“NC”) and Remuneration Disclosure on delegation of
Committee (“RC”), to which the Board has delegated decisions on certain Board matters to the authority by Board to Board
specialised Board committees. Committees

The Board met four (4) times during the fi nancial year to discuss the key activities and business Guideline 1.4 of the Code:
strategies of the Group. All Directors were furnished with relevant information beforehand in order Board to meet regularly
to enable them to obtain further explanation where necessary, and be adequately briefed prior to the
respective meetings. Minutes of the meetings are also available to the respective Board members.
Ad-hoc and non-scheduled meetings are convened by Board members to deliberate on urgent and
substantive matters.

The Company’s Articles of Association provides for telephone, videoconferencing, audio-visual or

other electronic means of communication to facilitate meetings of the Board.

B r e a d Ta l k
Annual Report 2009 29
Corporate Governance

Details of Directors’ attendance at Board and Board Committee meetings held during the fi nancial year ended 31
December 2009 are summarised as follows:

Attendance At Board And Board Committee Meetings

Name of Director Board Audit Committee Nominating Committee Remuneration

Committee
Number of Meetings Held 4 4 1 1
Attendance
George Quek Meng Tong 4 NA NA NA
Katherine Lee Lih Leng 3 NA NA NA
Chen Kuo Hua 3 3 1 1
Ong Kian Min 4 4 1 1
Chan Soo Sen 3 4 1 1

Matters that are specifically reserved to the Board for approval are: Guideline 1.5 of the Code:
Matters requiring Board
(a) matters involving a conflict of interest for a substantial Shareholder or Director; approval
(b) material acquisitions and disposal of assets;
(c) corporate or financial restructuring;
(d) share issuances, dividends and other returns to Shareholders;
(e) matters which require Board approval as specifi ed in the Company’s Interested Person
Transactions policy; and
(f) substantial expenditures exceeding a prescribed limit.

All Directors are appointed to the Board by way of a formal letter of appointment indicating the Guideline 1.7 of the Code:
amount of time commitment required and scope of duties. Formal appointment letter

The Company provides a comprehensive orientation programme to familiarise new Directors with Guidelines 1.6 and 1.8 of the
the Company’s businesses and governance practices, as well as the Group’s history, core values, Code: Directors to receive
strategic direction and industry-specific knowledge so as to assimilate them into their new roles. appropriate training

Directors also have the opportunity to visit the Group’s operational facilities and meet with the
management team to gain a better understanding of the Group’s business operations. Each Director
is provided with an annually updated manual containing Board and Company policies relating to the
disclosure of interests in securities and conflicts of interests in transactions involving the Company,
prohibition on dealings in the Company’s securities, as well as restrictions on the disclosure of price
sensitive information.

Board members are encouraged to attend seminars and receive training to improve themselves in
the discharge of their duties as Directors. In addition, the Company works closely with professionals
to provide Directors with updates on risk management and key changes to relevant regulatory
requirements and accounting standards.

30 Vi b r a n t G r o w t h
Corporate Governance

Board Composition and Guidance

Principle 2: There should be a strong and independent element on the board, which is able to exercise
objective judgement on corporate affairs independently, in particular, from management. No individual or
small group of individuals should be allowed to dominate the board’s decision-making.

The Board comprises five (5) members with more than one third majority of independent Directors: Guideline 2.1 of the Code:

two (2) Independent Directors, one (1) Non-executive Director and two (2) Executive Directors. Independence of Board

They are as follows:

Dr George Quek Meng Tong (Chairman)

Ms Katherine Lee Lih Leng (Deputy Chairman)
Mr Chen Kuo Hua (Non-executive Director)
Mr Ong Kian Min (Lead Independent Director)
Mr Chan Soo Sen (Independent Director)

The Board has two (2) Independent Directors whose independence is reviewed by the NC annually. Guideline 2.2 of the Code:
The NC considers an “independent” Director as one who has no relationship with the Company, Independent Directors
its related companies or its officers that could interfere or be reasonably perceived to interfere, with
the exercise of the Director’s independent judgement of the conduct of the Group’s affairs, and is
not a substantial Shareholder, or a partner (with 5% or more stake) or an executive offi cer, or a
director of any for profi t business organisation to which the Company or any of its subsidiaries has
made or received signifi cant payments (aggregated in excess of S$200,000 per year) in the current
or immediate past financial year. Moreover, the Chairman of the NC is not associated, directly or
indirectly, with a substantial Shareholder to enhance an independent view to the best interests of
the Company. As a result of the NC’s review for fi nancial year 2009, the NC is of the view that
the Independent Directors are independent of the Company’s management as contemplated by the
Code.

The Board, in view of the nature and scope of business operations, considers that though small, the Guideline 2.3 of the Code:
present Board size and composition facilitate effi cient and effective decision-making with a strong Appropriate Board size
independent element.

Each Director has been appointed on the strength of his calibre, experience, grasp of corporate Guideline 2.4 of the Code:
strategy and potential to contribute to the Company and its businesses. As each of the Directors Board to comprise Directors
brings valuable insights from different perspectives vital to the strategic interests of the Company, the with core competencies
Board considers that the Directors possess the necessary competencies to provide Management with
a diverse and objective perspective on issues so as to lead and govern the Company effectively.

Once a year, a formal session is arranged for the Non-executive Director and Independent Directors Guidelines 2.5 and 2.6 of
to meet without the presence of Management or executive Directors to review any matters that must the Code: Role of NEDs and
be raised privately. The session is chaired by the Lead Independent Director, Mr Ong Kian Min, who regular meetings of NEDs
is also the chairman of the NC and AC.

B r e a d Ta l k
Annual Report 2009 31
Corporate Governance

Chairman and Chief Executive Officer

Principle 3: There should be a clear division of responsibilities at the top of the company – the working of
the board and the executive responsibility of the company’s business – which will ensure a balance of power
and authority, such that no one individual represents a considerable concentration of power.

The Company adopts a dual leadership structure whereby the positions of chairman and chief Guideline 3.1 of the Code:
executive offi cer are separated. There is a clear division of responsibilities between the Company’s Chairman and chief executive
executive Chairman and Group Chief Executive Offi cer, which provides a balance of power and officer should be separate
authority. persons

As Chairman, Dr George Quek Meng Tong is responsible for ensuring Board effectiveness and Guideline 3.2 of the Code:
conduct, as well as strategic development of the Group in addition to which, he shall assume duties Chairman’s role
and responsibilities as may be required from time to time. The Group Chief Executive Offi cer, Mr
Goh Tong Pak, has overall responsibility of the Group’s operations, organisational effectiveness and
implementation of Board policies and decisions.

Notwithstanding the above, the Independent Directors fulfi ll a pivotal role in corporate Guideline 3.3 of the Code:
accountability. Their presence is particularly important as they provide unbiased and independent Appointment of Lead
views, advice and judgement to take care of the interests, not only of the Company but also of Independent Director
Shareholders, employees, customers, suppliers and the many communities in which the Company
conducts business. The Board had on 14 August 2006 appointed Mr Ong Kian Min as the Lead
Independent Director to act as an additional channel available to Shareholders.

Board Membership and Board Performance

Principle 4: There should be a formal and transparent process for the appointment of new directors to the
board. As a principle of good corporate governance, all directors should be required to submit themselves for
re-nomination and re-election at regular intervals.

Principle 5: There should be a formal assessment of the effectiveness of the board as a whole and the
contribution by each director to the effectiveness of the board.

The NC comprises the two (2) Independent Directors and the Non-executive Director who have Guideline 4.1 of the Code:
been tasked with the authority and responsibility to devise an appropriate process to review and NC composition
evaluate the performance of the Board as a whole as well as each individual Director on the Board.
The chairman of the NC is an Independent Director, and is not a substantial Shareholder or directly
associated with a substantial Shareholder.

The composition of the NC is as follows:

Mr Ong Kian Min – chairman

Mr Chen Kuo Hua – member
Mr Chan Soo Sen – member

32 Vi b r a n t G r o w t h
Corporate Governance

At least one-third (1/3) of the Board shall retire from office by rotation and be subject to re-election Guidelines 4.2 to 4.6 of the
at every Company annual general meeting, and the primary responsibilities of the NC are: Code: Duties of the NC

1. To make recommendations to the Board on the appointment of new Executive Directors and
Non-executive Directors (“NED”), including making recommendations on the composition
of the Board generally and the balance between Executive and Non-executive Directors
appointed to the Board, as well as ensuring there are procedures in place for the selection and
appointment of NEDs.

2. To regularly review the Board structure, size and composition and make recommendations to
the Board with regards to any adjustments that are deemed necessary.

3. To be responsible for assessing nominees or candidates for appointment or election to the

Board, determining whether or not such nominees have the requisite qualifi cations and
whether or not they are independent.

4. To make plans for succession, in particular for the Chairman and key executives.

5. To determine, on an annual basis, if a Director is independent. If the NC determines that

a Director, who has one or more of the relationships mentioned under the Code is in fact
independent, the NC would disclose in full, the nature of the Director’s relationship and bear
responsibility for explaining why he should be considered independent.

6. To recommend Directors who are retiring by rotation to be put forward for re-election.

7. To decide whether or not a Director is able to and has been adequately carrying out his duties
as a Director of the Company, particularly when he has multiple board representations.

8. To be responsible for assessing the effectiveness of the Board as a whole and for assessing the
contribution of each individual Director to the effectiveness of the Board and disclosing
annually, this assessment process.

For the year under review, with the Board’s approval, the NC has decided on how the Board’s Guidelines 5.1 to 5.4 of the
performance is to be evaluated as a whole and proposed objective performance criteria including Board Code: Assessing the Board’s
composition, size and expertise, Board information and timeliness, as well as Board commitment effectiveness
and accountability. In assessing each individual Director’s contribution and performance to the
effectiveness of the Board, the NC takes into consideration factors such as attendance, preparedness,
participation and candour.

The NC has met once during the financial year under review on 26 February 2009. Each
member of the NC shall abstain from voting on any resolution in respect of the assessment of
his performance or re-nomination as a Director. Details of Board members’ qualifications and
experience including the year of initial appointment are presented in this Annual Report under
the heading “Board of Directors”.

B r e a d Ta l k
Annual Report 2009 33
Corporate Governance

Access to Information

Principle 6: In order to fulfi l their responsibilities, board members should be provided with complete,
adequate and timely information prior to board meetings and on an on-going basis.

The Board receives complete and adequate information on an on-going basis. The Management Guidelines 6.1 and 6.2 of
provides the Chairman and Deputy Chairman with monthly management accounts and the rest of the Code: Information to
the Board members with quarterly management accounts. The agenda for Board meetings is prepared the Board
in consultation with the Chairman and it will be circulated at least one (1) week in advance to
Board members of each meeting.

Furthermore, the Board has separate and independent access to the Company Secretary and senior Guideline 6.3 of the Code:
executives, and there is no restriction of access to the senior Management team of the Company or Access to and role of the
Group at all times in carrying out its duties. Company Secretary

The Company Secretary attends all formal Board meetings to respond to the queries of any Director
and ensures that Board procedures are followed and that all applicable rules and regulations are
complied with.

Where decisions to be taken by the Board require specialised knowledge or expert opinion, the Guideline 6.5 of the Code:
Board takes independent professional advice as and when necessary to enable it or the Independent Access to independent
Directors to discharge their responsibilities effectively. professional advice

B. Remuneration Matters

Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual directors. No director should be involved
in deciding his own remuneration.

The RC, established for the purpose of ensuring that there is a formal and transparent procedure Guideline 7.1 of the Code:
for fi xing the remuneration packages of individual Directors, comprises the two (2) Independent RC to consist entirely
Directors and the Non-executive Director. The chairman of the RC is an Independent Director. of NEDs and majority,
including RC chairman, must
The RC comprises the following: be independent

Mr Chan Soo Sen – chairman

Mr Chen Kuo Hua – member
Mr Ong Kian Min – member

The overriding principle is that no Director should be involved in deciding his own remuneration.
The RC has adopted a written term of reference that defines its membership, roles, functions
and administration.

34 Vi b r a n t G r o w t h
Corporate Governance

During the financial year under review, the RC had held one (1) meeting. The primary responsibilities Guideline 7.2 of the Code:
of the RC are as follows: RC’s responsibilities

1. To review and recommend to the Board in consultation with the Chairman of the Board, a
framework of remuneration and to determine the specific remuneration packages and terms of
employment for each of the executive Directors and senior executives or divisional Directors
(those reporting directly to the Chairman or Group Chief Executive Offi cer) and those
employees related to the Executive Directors and controlling Shareholders of the Group.

2. To review and recommend to the Board in consultation with the Chairman of the Board,
any long term incentive schemes which may be set up from time to time and to do all acts
necessary in connection therewith.

3. To administer the BreadTalk Group Limited Employees’ Share Option Scheme (the
“Scheme”) and shall have all the powers as set out in the Rules of the Scheme.

4. To administer the BreadTalk Group Limited Restricted Share Grant Plan (the “RSG Plan”)
and shall have all the powers as set out in the Rules of the RSG Plan.

5. To carry out its duties in the manner that it deems expedient, subject always to any regulations
or restrictions that may be imposed upon the RC by the Board from time to time.

6. As part of its review, the RC shall ensure that:

(i) all aspects of remuneration including but not limited to Directors’ fees, salaries,
allowances, bonuses, options and benefits-in-kind should be covered.

(ii) the remuneration packages should be comparable within the industry and comparable
companies and shall include a performance-related element coupled with appropriate
and meaningful measures of assessing individual executive Directors’ and senior
executives’ or divisional Directors’ performance.

(iii) the remuneration package of employees related to the Directors or controlling

Shareholders are in line with the Group’s staff remuneration guidelines and
commensurate with their respective job scopes and levels of responsibility.

Level and Mix of Remuneration

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors
needed to run the company successfully but companies should avoid paying more than is necessary for this
purpose. A significant proportion of remuneration, especially that of executive directors, should be structured
so as to link rewards to corporate and individual performance.

The Company advocates a performance based remuneration system for executive Directors and key Guidelines 8.1 to 8.5 of the
executives that is fl exible and responsive to the market, comprising a base salary and other fi xed Code: RC to recommend
allowances, as well as variable performance bonus and participation in an employee share award or remuneration of Directors
Scheme based on the Company’s performance and linking it to the individual’s performance. and review remuneration of
key executives

B r e a d Ta l k
Annual Report 2009 35
Corporate Governance

In determining such remuneration packages, the RC will ensure that they are adequate by considering,
in consultation with the Chairman or Group Chief Executive Officer amongst other things, the
respective individuals’ responsibilities, skills, expertise and contribution to the Company’s performance,
and whether they are competitive and sufficient to ensure that the Company is able to attract and
retain the best available executive talent, meanwhile keeping tabs that they are not excessive.

At an Extraordinary General Meeting held on 28 April 2008, the shareholders of the Company
had approved the adoption of the RSG Plan. Under the RSG Plan, the aggregate number of shares
to be issued shall not exceed fifteen per cent (15%) of the total issued share capital excluding
treasury shares of the Company and will be in force for a maximum period of 10 years commencing
from 28 April 2008.

The award of shares under the RSG Plan can be either performance-based awards or time-based
awards. For performance based awards, entitled participant will be allotted fully paid shares upon
satisfactory achievement of pre-determined performance targets. As for time-based awards, entitled
participant will be allotted fully paid shares upon satisfactory completion of time-based service
conditions that is, after the participant has served the Company or as the case may be, the relevant
associated company, for a specified duration, as may be determined by the RC.

The adoption of the RSG Plan is consistent with the continuing efforts of the existing Scheme in
rewarding, retaining and motivating employees to achieve superior performance standards and afford
the Company greater flexibility to align the interests of employees with those of the shareholders. To
date, the Company has not issued any shares under its RSG Plan.

The RC has adopted a framework which consists of a base fee to remunerate non-executive Directors
based on their appointments and roles in the respective Committees, as well as the fees paid in
comparable companies. Fees for the non-executive Directors will be tabled at the forthcoming
Annual General Meeting to be held on 27 April 2010 (the “AGM”) for Shareholders’ approval.

The Company has entered into a service agreement with the Chairman, Dr George Quek Meng Tong, Guideline 8.6 of the Code:
for an initial period of three (3) years commencing 2003 and renewable thereafter unless otherwise Notice periods in service
terminated by either party by giving six (6) months’ notice in writing. The RC has reviewed the contracts to be six (6) months
existing terms and conditions of all service agreements and recommended to the Board any changes or less
to such terms and conditions at the expiry of such service agreements.

All recommendations by the RC are submitted for endorsement by the entire Board. The Company
confirms that there is no onerous removal clause in any of the service contracts.

Disclosure on Remuneration

Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of
remuneration, and the procedures for setting remuneration in the company’s annual report. It should
provide disclosure in relation to its remuneration policies to enable investors to understand the link between
remuneration paid to directors and key executives, and performance.

A breakdown showing the level and mix of each Director’s and key Executives remuneration for the Guidelines 9.1 to 9.3 of
year ended 31 December 2009 is set out below: the Code: Directors’, key
executives’ and related
employees’
remuneration

36 Vi b r a n t G r o w t h
Corporate Governance

Remuneration Of Directors And Key Executives

Bonus / Share-based Benefits-

Name of Director Salary(1) Profit-Sharing Compensation(3) In-Kind Directors’ Fees(2) Total
S$600,000 to below % % % % % %
S$700,000
George Quek Meng Tong 47 44 2 7 0 100
S$500,000 to below
S$600,000
Katherine Lee Lih Leng 55 43 2 0 0 100
S$400,000 to below
S$500,000
Chen Kuo Hua 90 10 0 0 0 100
Below S$100,000
Ong Kian Min 0 0 0 0 100 100
Chan Soo Sen 0 0 0 0 100 100

Name of Key Executives Bonus / Share-based Benefits-

(who are not Directors) Designation Salary(1) Profit-Sharing Compensation(3) In-Kind Total
S$500,000 to below % % % % %
S$600,000
Goh Tong Pak Chief Executive 51 45 4 0 100
Officer
S$250,000 to below
S$500,000
Frankie Quek Swee Chief Operating 64 34 2 0 100
Heng(4) Officer
Catherine Lee Khia Yee Chief Financial 62 35 3 0 100
Officer
Chen Poh On Chief Executive 94 6 0 0 100
Officer, Megabite
China
Jenson Ong Chin Hock Managing Director, 89 8 0 3 100
Megabite Hong Kong

Notes:
(1) Salary is inclusive of fixed allowance and CPF contribution.
(2) Directors’ fees are only payable after approval by Shareholders at the AGM.
(3) Share-based compensation is based on fair value of the restricted shares granted conditionally under the RSG
Plan in 2009 which is estimated based on the market price of the shares on grant date less the present value
of expected future dividends during the vesting period.
(4) Frankie Quek is the brother of Dr George Quek.

No other employee whose remuneration exceeded S$150,000 during the year is the immediate family of any of the
members of the Board.

B r e a d Ta l k
Annual Report 2009 37
Corporate Governance

C. Accountability And Audit

Accountability

Principle 10: The board is accountable to the shareholders while the management is accountable to the
board. The board should present a balanced and understandable assessment of the company’s performance,
position and prospects.

For all announcements (including financial performance reporting) made to the public via SGXNET Guideline 10.1 of the Code:
and the annual report to Shareholders, as required by the SGX-ST, the Board has a responsibility to Board’s responsibility to the
present a fair assessment of the Group’s position, including the prospects of the Group. public

To enable effective monitoring and decision-making by the Board, Management provides the Board Guideline 10.2 of the Code:
with a continual fl ow of relevant information on a timely basis as well as quarterly management Management’s responsibility
accounts of the Group. Particularly, prior to the release of quarterly and full year results to the public, to the Board
Management will present the Group’s financial performance together with explanatory details of its
operations to the AC, which will review and recommend the same to the Board for approval and
authorisation for the release of the results.

Audit Committee

Principle 11: The board should establish an audit committee with written terms of reference, which clearly
set out its authority and duties.

The role of the AC is to assist the Board in the execution of its corporate governance responsibilities Guidelines 11.1, 11.2 and
within the established Board’s references and requirements. The fi nancial statements, accounting 11.8 of the Code: Board to
policies and system of internal accounting controls are responsibilities that fall under the ambit of establish AC and composition
the AC. The AC has its set of written terms of reference defining its scope of authority and further of AC
details of its major functions are set out below and also in the Report of the Directors.

The AC comprises three (3) members who are all Non-executive Directors, two (2) of whom are
also independent. The chairman of the AC is an Independent Director.

The members of the AC are:

Mr Ong Kian Min – chairman

Mr Chen Kuo Hua – member
Mr Chan Soo Sen – member

The members of the AC collectively have expertise or experience in financial management, and are
qualified to discharge the AC’s responsibilities.

In performing its functions, the AC confirms that it has explicit authority to investigate any matter Guideline 11.3 of the Code:
within its terms of reference, full access to and co-operation from the Management, and has been AC’s authority
given full discretion to invite any Director or executive offi cer to attend its meetings, as well as
reasonable resources to enable it to discharge its functions properly.

38 Vi b r a n t G r o w t h
Corporate Governance

The main functions of the AC are as follows: Guideline 11.4 of the Code:
Duties of AC
1. Review the audit plan of the Company’s external auditors and adequacy of the system of
internal accounting control;
2. Discuss and review external auditors’ reports;
3. Review signifi cant fi nancial reporting issues and judgements so as to ensure the integrity
of the fi nancial statements and any formal announcements relating to the Company’s or
Group’s financial performance;
4. Review and recommend the nomination of the external auditors for appointment or re-
appointment;
5. Review the Interested Person Transactions; and
6. Review the scope and result of the internal audit procedures.

The AC held four (4) meetings during the financial year under review. It has reviewed the financial Guidelines 11.5 and 11.6
statements of the Group for the purpose of the first 3 quarters and annual results release before they of the Code: Meeting with
were submitted to the Board for approval. It has also met with the Company’s internal and external auditors and review of their
auditors to review their audit plans and results, and has separate and independent access to the independence
auditors. Upon reviewing the non-audit services provided by the external auditors which comprise
tax services, the AC is satisfied that the independence of the external auditors is not impaired.

Where there is any suspected fraud or irregularity, or failure of internal controls, or infringement Guideline 11.7 of the Code:
of any Singapore law, rule or regulation which has a material impact on the Company’s operating Whistle-blowing arrangements
results, the AC will commission and review the findings of internal investigations into the matters.
Endorsed by the AC, the Company has in place a whistle-blowing framework which provides an
avenue for staff of the Company to access the AC chairman to raise concerns about improprieties
and independent investigation of such matters by the AC. Contact details of AC have been made
available to all staff.

Internal Control

Principle 12: The board should ensure that the management maintains a sound system of internal controls
to safeguard the shareholders’ investments and the company’s assets.

The Internal Auditors carried out internal audit on the system of internal controls and report the Guideline 12.1 of the Code:
fi ndings to the AC. The Group’s External Auditors, Ernst & Young LLP have also carried out, in AC to review adequacy of
the course of their statutory audit, a review of the Group’s material internal controls. Material non- the financial, operational and
compliance and internal control weaknesses and recommendations for improvements noted during compliance controls and risk
their audit are reported to the AC. The AC has reviewed the effectiveness of the actions taken management policies.
by the management on the recommendations made by the Internal and External Auditors in this
respect.

For the fi nancial year ended 31 December 2009, the Board believes that in the absence of any Guideline 12.2 of the Code:
evidence to the contrary, the system of internal controls maintained by the Group’s management AC to comment on the
that was in place throughout the financial period up to the date of this report, provides reasonable, adequacy of internal controls
but not absolute assurance against material financial misstatements or loss.

The Board notes that no system of internal control could provide absolute assurance against the
occurrence of material errors, poor judgement in decision-making, human errors, losses, fraud or
other irregularities.

B r e a d Ta l k
Annual Report 2009 39
Corporate Governance

Internal Audit

Principle 13: The company should establish an internal audit function that is independent of the activities it audits.

The Group outsourced its internal audit function to Stone Forest Consulting Pte Ltd since 2006. Guidelines 13.1 to 13.4 of

The Internal Auditor adopted the Standards for Professional Practice of Internal Auditing set by the the Code: IA to report to AC

Institute of Internal Auditors. The Internal Auditors report directly to the Chairman of the AC. The chairman

AC reviews the scope of internal audit function, internal audit findings and the internal audit plan.

Communication with Shareholders

Principle 14: A company should engage in regular, effective and fair communication with its shareholders. Guidelines 14.1 to 14.2 of
the Code: Regular, effective
Principle 15: A company should encourage greater shareholder participation at annual general meetings and and fair communications with
allow its shareholders the opportunity to communicate their views on various matters affecting the company. shareholders

The Board has adopted a policy of openness and transparency in the conduct of the Company’s Guideline 15.3 of the Code:
affairs while preserving the commercial interests of the Company. Financial results and other price Chairman and external
sensitive information are disseminated to Shareholders via SGXNET, press releases, the Company’s auditors present at general
website, and through media and analyst briefings. meetings

The Board strives to ensure that all material information is disclosed to the shareholders on an
adequate and timely basis. The Board informs and communicates with shareholders through annual
reports, announcement released through SGXNET, press releases, advertisements of notice of general
meetings in local newspapers.

Notices of general meetings are despatched to shareholders, together with the annual report or circulars
within the time notice period as prescribed by the regulations. At general meetings, shareholders
are given opportunities to voice their views and direct their questions to directors or management
regarding the Company. The chairman of the AC, NC and/or RC are present and available to address
questions at general meetings. The External Auditors are also present to assist the Board.

In preparation for the annual general meeting, shareholders are encouraged to refer to SGX’s
investor guides, namely ‘An Investor’s Guide To Reading Annual Reports’ and ‘An Investor’s Guide
To Preparing For Annual General Meetings’. The guides, in both English and Chinese versions
are available at the SGX website via this link : http://www.sgx.com/wps/portal/marketplace/mp-en/
investor_centre/investor_guide

The Company has in place an investor relations programme to keep investors informed of material
developments in the Company’s business and affairs beyond that which is prescribed, but without
prejudicing the business interests of the Company.

The Company’s Articles of Association do not restrict the number of proxy a shareholder can Guideline 15.1-15.2
appoint to attend and vote on his/her behalf at all general meetings. There are separate resolutions and 15.4 of the Code:
at the general meetings for each distinct issue. The Board and Management are on hand at general Shareholders should be
meetings to address questions by shareholders. allowed to vote in absentia,
avoid bundling of resolutions
and limit on proxy.

40 Vi b r a n t G r o w t h
Corporate Governance

Minutes of general meetings are prepared and made available to shareholders upon their requests by Guideline 15.5 of the Code:
the Company Secretary. Minutes of general meetings

Dealing in Securities

The Company has adopted and implemented an Insider Trading (Prevention) Policy (the “Policy”).
The Policy is to ensure that the Company’s Directors, offi cers, employee of the Group as well
as consultants or contractors to the Group (collectively the “Covered Persons”) and immediate
family members of Covered Persons are aware of their legal obligations in relation to the dealing
of securities in the Company. Covered Persons who are in possession of unpublished material price
sensitive information and use such information for their own material gain in relation to those
securities is an offence. The Company, while having provided the window periods for dealing in the
Company’s securities, has its own internal compliance code in providing guidance to its officers with
regards to dealing in the Company’s securities including reminders that the law on insider trading is
applicable at all the times.

The Company has on 28 May 2009 formed a Disciplinary Committee (“DC”) to conduct inquiry
on possible breach of the Policy. The role of the DC is to report its fi nding to the Board and
make recommendation as to the penalty if applicable. The Board will decide based on the DC’s
recommendation.

The DC comprises three (3) members, a majority of whom are Independent Directors. The chairman
of the DC is an Independent Director.

The DC consists of:

Mr Ong Kian Min – chairman

Dr George Quek Meng Tong – member
Mr Chan Soo Sen – member

Interested Person Transactions

When a potential confl ict arises, the Directors concerned do not participate in discussions and
refrains from exercising any influence over other members of the Board.

The AC has reviewed the Interested Person Transactions (“IPT”) entered into during the financial
year by the Group and the aggregate value of IPT entered during the fi nancial year ended 31
December 2009 is as follows:

B r e a d Ta l k
Annual Report 2009 41
Corporate Governance

Aggregate value of all IPTs conducted

during the financial year under review
under shareholders’ mandate pursuant
Aggregate value (S$’000) of all IPTs to Rule 920 (excluding transactions
Name of Interested Person during the financial year under review less than S$100,000)

Sky One Art Investment Pte Ltd Not applicable - the Company does not
- Purchase of Furniture and have a shareholders’ mandate under
Fittings 71 Rule 920

Material Contracts

Except as disclosed in Interested Person Transactions, there is no material contract or loan entered between the Company
and any of its subsidiaries involving interests of any Director or controlling shareholder during the fi nancial year ended
31 December 2009.

Risk Management

The Group regularly reviews and improves its business and operational activities to identify areas of significant business
risks as well as taking appropriate measures to control and mitigate these risks. The Group reviews all significant control
policies and procedures and highlights all signifi cant matters to the AC and the Board. The fi nancial risk management
objectives and policies are outlined in the financial statements.

Use of Proceeds from Share Placement

The Company refers to the net proceeds raised in April 2007 from the share placement of 34,000,000 new ordinary shares
in the capital of the Company at an issue price of S$0.36 per share.

As at 31 December 2009, the Company has utilised the net proceeds as follows:

Intended Use Amount allocated Amount utilised Balance

S$’000 S$’000 S$’000

(a) Food and beverage outlet expansion 5,000 4,600 400

(b) New market development 2,000 3,871 (1,871)
(c) Repayment of bank loans 500 500 –
(d) Working capital 1,290 1,198 92
(e) Upgrading of factory 3,000 500 2,500
Total 11,790 10,669 1,121

42 Vi b r a n t G r o w t h
Financial Statements

44 Directors’ Report / 49 Statement By Directors / 50 Independent Auditors’ Report

51 Consolidated Statement of Comprehensive Income / 52 Balance Sheets
54 Statements of Changes in Equity / 56 Consolidated Cash Flow Statement
59 Notes To The Financial Statements / 127 Statistics of Shareholdings
129 Notice of Annual General Meeting / Proxy Form

B r e a d Ta l k
Annual Report 2009 43
Directors’ Report

The directors are pleased to present their report to the members together with the audited fi nancial statements of
BreadTalk Group Limited (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and
statement of changes in equity of the Company for the financial year ended 31 December 2009.

Directors

The directors of the Company in office at the date of this report are:

George Quek Meng Tong (Chairman)

Katherine Lee Lih Leng (Deputy Chairman)
Chen Kuo Hua (Non-Executive Director)
Ong Kian Min (Independent Director)
Chan Soo Sen (Independent Director)

Arrangements to enable directors to acquire shares and debentures

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

Directors’ interests in shares and debentures

The following directors, who held office at the end of the financial year, had, according to the register of directors’
shareholdings required to be kept under section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the
Company as stated below:

Direct interest Deemed interest

As at As at As at As at As at As at
1 January 31 December 21 January 1 January 31 December 21 January
Name of director 2009 2009 2010 2009 2009 2010

The Company
(Ordinary shares)

George Quek Meng Tong 79,590,384 79,590,384 79,590,384 43,550,850 43,550,850 43,550,850
Katherine Lee Lih Leng 43,550,850 43,550,850 43,550,850 79,590,384 79,590,384 79,590,384
Chen Kuo Hua 11,443,100 9,689,100 9,539,100 – – –
Ong Kian Min 100,000 100,000 100,000 – – –

(Conditional award of restricted shares)

George Quek Meng Tong – 82,000 82,000 – 55,000 55,000

Katherine Lee Lih Leng – 55,000 55,000 – 82,000 82,000
Chen Kuo Hua – 83,000 83,000 – – –

44 Vi b r a n t G r o w t h
Directors’ Report

Directors’ interests in shares and debentures (cont’d)

By virtue of Section 7 of the Companies Act, Cap. 50, George Quek Meng Tong and Katherine Lee Lih Leng are deemed
to be interested in the shares held by the Company in its subsidiaries.

Except as disclosed in this report, no other director who held office at the end of the financial year had interest in shares
or debentures of the Company, or of related corporations, either at the beginning or the end of the fi nancial year or on
21 January 2010.

Directors’ contractual benefits

Except as disclosed in the financial statements, since the end of previous financial year, no director of the Company has
received or become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation
with the director, or with a fi rm of which the director is a member, or with a company in which the director has a
substantial financial interest.

Share Option and Share Plans

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

(a) The BreadTalk Group Limited Employees’ Share Option Scheme

The BreadTalk Group Limited Employees’ Share Option Scheme (“ESOS”) was approved at an Extraordinary
General Meeting held on 30 April 2003. The following persons are eligible to participate in the ESOS at the
absolute discretion of the Remuneration Committee:

(i) Employees and Directors

Employees, executive directors and non-executive directors of the Group who are not on probation and
have attained the age of 21 years on or before the Offering Date.

(ii) Controlling Shareholders and their Associates

Controlling Shareholders or their Associates whose participation and actual number of shares issued to
them must be approved by independent shareholders in general meeting.

Size of ESOS

The total number of new shares over which options may be granted pursuant to the ESOS shall not exceed fifteen
per cent (15%) of the issued share capital of the Company on the date preceding the grant of an option.

The aggregate number of Shares available to eligible Controlling Shareholders and their Associates under the
ESOS shall not exceed twenty fi ve per cent (25%) of the Shares available under the ESOS. In addition, the
number of Shares available to each Controlling Shareholder or his Associate shall not exceed ten per cent (10%)
of the Shares available under the ESOS.

B r e a d Ta l k
Annual Report 2009 45
Directors’ Report

Share Option and Share Plans (cont’d)

(a) The BreadTalk Group Limited Employees’ Share Option Scheme (cont’d)

Grant of ESOS

Options may be granted from time to time during the year when the ESOS is in force, except that options shall be
granted on or after the second market day on which an announcement of any matter involving unpublished price
sensitive information is released.

Acceptance of ESOS

The grant of an option shall be accepted not more than 30 days from the offering date of that option and
accompanied by payment to the Company of a nominal consideration of $1 or such other amount as required by
the Remuneration Committee.

Since the commencement of the ESOS up to the end of the financial year, there were no options granted to any
person. Any options granted under the ESOS do not entitle the holders of the options, by virtue of such holdings,
to any right to participate in any share issue of any other company.

(b) The BreadTalk Restricted Share Grant Plan

The BreadTalk Restricted Share Grant Plan (“RSG Plan”) was approved at an Extraordinary General Meeting
held on 28 April 2008.

The RSG Plan is centred on the accomplishment of specifi c pre-determined performance objectives and service
conditions, which is the prerequisite for the contingent award of fully paid Shares (“Award”). The reward structure
allows the Company to target specific performance objectives and incentivise the Participants to put in their best
efforts to achieve these targets.

The following persons shall be eligible to participate in the RSG Plan subject to the absolute discretion of
the Remuneration Committee:

(i) Employees

Employees who are confi rmed in their employment with the Company or any subsidiary, or employees of
associated companies who hold such rank as may be designated by the Committee from time to time and
who, in the opinion of the Committee, have contributed or will contribute to the success of the Group;
and

(ii) Directors

Executive and non-executive directors of the Company and its subsidiaries, provided always that any
of the aforesaid persons:

– have attained the age of twenty-one (21) years on or before the Award Date; and
– not undischarged bankrupts.

46 Vi b r a n t G r o w t h
Directors’ Report

Share Option and Share Plans (cont’d)

(b) The BreadTalk Restricted Share Grant Plan (cont’d)

Controlling Shareholders and their Associates within the above categories are eligible to participate in the RSG
Plan. Participation in the RSG Plan by Controlling Shareholders or their Associates must be approved by the
independent shareholders. A separate resolution shall be passed for each such Participant and to approve the
number of Shares to be awarded to the Participant and the terms of such Award.

There shall be no restriction on the eligibility of any Participant to participate in any other share option or share
incentive schemes implemented or to be implemented by the Company or another company within the Group.

Size of RSG Plan

The aggregate number of Shares available to eligible Controlling Shareholders and their Associates under the
RSG Plan shall not exceed twenty five per cent (25%) of the Shares available under the RSG Plan. In addition,
the number of Shares available to each Controlling Shareholder or his Associate shall not exceed ten per cent
(10%) of the Shares available under the RSG Plan.

The aggregate number of Shares to be awarded pursuant to the RSG Plan when added to the number of
Shares issued and issuable in respect of such other Shares issued and/or issuable under such other share-based
incentive schemes of the Company, including but not limited to the ESOS, shall not exceed fifteen per cent
(15%) of the total issued share capital excluding treasury shares of the Company on the day preceding the
relevant Award Date.

Grant of RSG Plan

The grant of Awards under the RSG Plan may be made from time to time during the year when the RSG Plan is
in force.

While Awards may be granted at any time in the year, it is anticipated that Awards under the RSG Plan
would be made once a year, after the Company’s annual general meeting. It will be administered by the
Remuneration Committee.

Acceptance of RSG Plan

On 15 May 2009, 899,000 restricted shares were granted conditionally under the RSG Plan. The final number of
restricted shares awarded will depend on the achievement of pre-determined targets over a one year period. On
meeting the performance conditions for the performance period, one-third of the restricted shares will vest. The
balance will vest equally over the subsequent two years with fulfilment of service requirements.

The details of the shares awarded under the RSG Plan since its commencement are as follows:

Balance at
Date of grant At date of grant Vested Cancelled 31 December 2009

15 May 2009 899,000 – – 899,000

B r e a d Ta l k
Annual Report 2009 47
Directors’ Report

Share Option and Share Plans (cont’d)

(b) The BreadTalk Restricted Share Grant Plan (cont’d)

The details of restricted shares granted to participants (who are Directors of the Company, Controlling Shareholders
and their Associates) of the Company are as follows:

Conditional awards Aggregate awards not

granted during Awards released released at end of
the financial year during the financial the financial year
Name of Participant under review year under review under review

George Quek Meng Tong * 82,000 – 82,000

Katherine Lee Lih Leng * 55,000 – 55,000
Chen Kuo Hua 83,000 – 83,000
Frankie Quek Swee Heng** 55,000 – 55,000

* Director and controlling shareholder

** Associate of George Quek Meng Tong

Audit Committee

The Audit Committee performed the functions specified in the Companies Act. The functions performed are detailed in
the Report on Corporate Governance.

Auditors

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.

On behalf of the board of directors:

George Quek Meng Tong

Director

Katherine Lee Lih Leng

Director

Singapore
18 March 2010

48 Vi b r a n t G r o w t h
Statement by Directors

We, George Quek Meng Tong and Katherine Lee Lih Leng, being two of the directors of BreadTalk Group Limited, do
hereby state that, in the opinion of the directors,

(i) the accompanying balance sheets, consolidated statement of comprehensive income, statements of changes in
equity, and consolidated cash flow statement together with notes thereto are drawn up so as to give a true and fair
view of the state of affairs of the Group and of the Company as at 31 December 2009 and the results of the business,
changes in equity and cash fl ows of the Group and the changes in equity of the Company for the year ended on
that date, and

(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they fall due.

On behalf of the board of directors:

George Quek Meng Tong

Director

Katherine Lee Lih Leng

Director

Singapore
18 March 2010

B r e a d Ta l k
Annual Report 2009 49
Independent Auditors’ Report
To the members of BreadTalk Group Limited

We have audited the accompanying financial statements of BreadTalk Group Limited (the “Company”) and its
subsidiaries (the “Group”) set out on pages 51 to 126, which comprise the balance sheets of the Group and the
Company as at 31 December 2009, the statements of changes in equity of the Group and the Company, the statement
of comprehensive income and cash flow statement of the Group for the year then ended, and a summary of significant
accounting policies and other explanatory notes.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with
the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards.
This responsibility includes devising and maintaining a system of internal accounting controls suffi cient to provide a
reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are
properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account
and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion,

(i) the consolidated fi nancial statements of the Group, and the balance sheet and statement of changes in equity
of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial
Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at
31 December 2009 and the results, changes in equity and cash flows of the Group and the changes in equity of the
Company for the year ended on that date; and

(ii) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries
incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions
of the Act.

Ernst & Young LLP

Public Accountants and Certified Public Accountants
Singapore
18 March 2010

50 Vi b r a n t G r o w t h
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2009

Notes 2009 2008

$’000 $’000

Revenue 3 246,493 212,249

Cost of sales (112,334) (96,803)

Gross profit 134,159 115,446

Other operating income 4 9,760 7,784
Distribution and selling expenses (93,468) (77,942)
Administrative expenses (34,198) (32,061)

Profit from operations 5 16,253 13,227

Interest income 7 89 167
Interest expense 7 (592) (851)

Financial expenses, net (503) (684)

Profit before taxation and share of results of associates and joint ventures 15,750 12,543
Share of results of associates (200) (496)
Share of results of joint ventures 65 (46)

Profit before taxation 15,615 12,001

Taxation 8 (3,975) (3,643)

Profit for the year 11,640 8,358

Other comprehensive income/(loss):

Net gain on available-for-sale financial assets – 1,178
Foreign currency translation (408) 758
Share based compensation reserve 90 –

Other comprehensive (loss)/income for the year, net of tax (318) 1,936

Total comprehensive income for the year 11,322 10,294

Profit attributable to:

Equity holders of the Company 11,092 7,770
Minority interests 548 588

11,640 8,358

Total comprehensive income attributable to:

Equity holders of the Company 10,774 9,706
Minority interests 548 588

11,322 10,294

Earnings per share (cents)

Basic 9 4.74 3.31

Diluted 9 4.73 3.31

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

B r e a d Ta l k
Annual Report 2009 51
Balance Sheets
As at 31 December 2009

Notes Group Company

2009 2008 2009 2008
$’000 $’000 $’000 $’000
Non-current assets
Property, plant and equipment 10 64,352 58,156 101 69
Intangible assets 11 9,097 9,205 – –
Investment securities 12 1,494 1,494 – –
Investment in subsidiaries 13 – – 26,522 23,739
Investment in associates 14 – 200 – –
Investment in joint ventures 15 284 222 – –
Other receivables 18 839 – – –
Prepayments 19 685 – 685 –
Deferred tax assets 8 872 532 – –

77,623 69,809 27,308 23,808

Current assets

Inventories 16 4,838 3,925 – –

Trade receivables 17 3,868 4,761 – –
Other receivables and deposits 18 24,526 17,884 321 9
Prepayments 2,323 2,558 23 24
Tax recoverable 12 – – –
Amount due from subsidiaries (non-trade) 20 – – 10,738 7,853
Amount due from joint ventures (non-
trade) 20 469 343 – –
Cash and cash equivalents 21 58,426 47,877 3,020 6,459

94,462 77,348 14,102 14,345

Current liabilities
Trade payables 22 14,044 11,630 – –
Other payables 23 37,919 34,898 224 149
Other liabilities 23 29,817 21,072 1,764 1,475
Provision for reinstatement costs 23 3,061 1,809 – –
Amount due to subsidiaries (non-trade) 20 – – 2,027 8
Amount due to joint ventures (non-trade) 20 105 99 – –
Amount due to landlord (non-trade) 28 88 90 – –
Finance lease obligations, secured 25 173 191 – –
Loans from minority shareholders of
subsidiaries 24 – 276 – –
Short-term loans, secured 26 4,959 4,855 – –
Current portion of long-term loans, secured 27 3,815 4,844 – –
Tax payable 3,216 3,102 32 45
97,197 82,866 4,047 1,677

Net current (liabilities)/assets (2,735) (5,518) 10,055 12,668

52 Vi b r a n t G r o w t h
Balance Sheets
As at 31 December 2009

Notes Group Company

2009 2008 2009 2008
$’000 $’000 $’000 $’000

Non-current liabilities
Long-term loans, secured 27 6,968 6,407 – –
Finance lease obligations, secured 25 216 430 – –
Amount due to landlord (non-trade) 28 127 197 – –
Deferred tax liabilities 8 1,411 1,124 – –

8,722 8,158 – –

Net assets 66,166 56,133 37,363 36,476

Equity attributable to equity holders of the

Company
Share capital 29 33,303 33,303 33,303 33,303
Treasury shares 29 (283) – (283) –
Accumulated profits 30 24,782 16,408 4,253 3,173
Statutory reserve fund 30 1,455 1,076 – –
Translation reserve 30 137 545 – –
Fair value adjustment reserve 30 1,178 1,178 – –
Share based compensation reserve 90 – 90 –

60,662 52,510 37,363 36,476

Minority interests 5,504 3,623 – –

Total Equity 66,166 56,133 37,363 36,476

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

B r e a d Ta l k
Annual Report 2009 53
Statements of Changes in Equity
For the year ended 31 December 2009

Attributable to equity holders of the Company

Statutory Fair value Share based

2008 Share Treasury Accumulated reserve Translation adjustment compensation Minority Total
Group capital shares profits fund reserve reserve reserve Total interests equity
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
(Note 29) (Note 29) (Note 30) (Note 30) (Note 30) (Note 30)

At 1 January 2008 33,303 – 10,394 612 (213) – – 44,096 3,170 47,266

Profit for the year – – 7,770 – – – – 7,770 588 8,358

Other comprehensive income
for the year – – – – 758 1,178 – 1,936 – 1,936

Total comprehensive income

for the year – – 7,770 – 758 1,178 – 9,706 588 10,294
Dividends paid (Note 37) – – (1,292) – – – – (1,292) (985) (2,277)
Transfer to statutory reserve – – (464) 464 – – – – – –
Issuance of new shares to
minority shareholders – – – – – – – – 850 850
At 31 December 2008 33,303 – 16,408 1,076 545 1,178 – 52,510 3,623 56,133

Attributable to equity holders of the Company

Statutory Fair value Share based

2009 Share Treasury Accumulated reserve Translation adjustment compensation Minority Total
Group capital shares profits fund reserve reserve reserve Total interests equity
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
(Note 29) (Note 29) (Note 30) (Note 30) (Note 30) (Note 30)

At 1 January 2009 33,303 – 16,408 1,076 545 1,178 – 52,510 3,623 56,133

Profit for the year – – 11,092 – – – – 11,092 548 11,640

Other comprehensive (loss)/
income for the year – – – – (408) – 90 (318) – (318)

Total comprehensive income/

(loss) for the year – – 11,092 – (408) – 90 10,774 548 11,322
Dividends paid (Note 37) – – (2,339) – – – – (2,339) (1,312) (3,651)
Transfer to statutory reserve – – (379) 379 – – – – – –
Disposal of a subsidiary – – – – – – – – (193) (193)
Purchase of treasury shares – (283) – – – – – (283) – (283)
Issuance of new shares to
minority shareholders – – – – – – – – 2,838 2,838

At 31 December 2009 33,303 (283) 24,782 1,455 137 1,178 90 60,662 5,504 66,166

54 Vi b r a n t G r o w t h
Statements of Changes in Equity
For the year ended 31 December 2009

Share based
Treasury Accumulated compensation
Share capital shares profits reserve Total equity
$’000 $’000 $’000 $’000 $’000
(Note 29) (Note 29)

2008
Company

1 January 2008 33,303 – 2,219 – 35,522

Profit for the year – – 2,246 – 2,246

Total comprehensive income for the

year – – 2,246 – 2,246
Dividends paid (Note 37) – – (1,292) – (1,292)

At 31 December 2008 33,303 – 3,173 – 36,476

2009
Company

1 January 2009 33,303 – 3,173 – 36,476

Profit for the year – – 3,419 – 3,419

Other comprehensive income for the
year – – – 90 90

Total comprehensive income for the

year – – 3,419 90 3,509
Purchase of treasury shares – (283) – – (283)
Dividends paid (Note 37) – – (2,339) – (2,339)

At 31 December 2009 33,303 (283) 4,253 90 37,363

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

B r e a d Ta l k
Annual Report 2009 55
Consolidated Cash Flow Statement
For the year ended 31 December 2009

Notes 2009 2008

$’000 $’000

Cash flows from operating activities

Profit before taxation 15,615 12,001
Adjustments for:
Depreciation of property, plant and equipment 10 16,178 13,147
Amortisation of intangible assets 11 523 582
Impairment of property, plant and equipment 10 419 465
Intangible assets written off – 7
(Gain)/loss on disposal of property, plant and equipment (9) 19
Property, plant and equipment written off 435 799
Share of results of associates 200 496
Share of results of joint ventures (65) 46
Interest expense 592 851
Interest income (89) (167)
Write-down of inventories 10 –
Write-off of inventories 13 –
Impairment/(write back) of trade receivables 86 (10)
Impairment of other receivables 298 13
Write back of amount due from associates (non-trade) – (107)
Impairment of investment in associate – 385
Bad debts written off 577 –
Loss on disposal of a subsidiary 61 –
Loss on liquidation of an associate – 32
Share based payment expenses 90 –
Unrealised foreign exchange gain – (57)
Translation difference 344 (426)

Operating profit before working capital changes 35,278 28,076

(Increase)/decrease in:
Inventories (1,224) (1,419)
Trade receivables 752 (1,724)
Other receivables and deposits (2,583) (4,831)
Prepayments 234 (760)
Amount due from associates (non-trade) – 114
Amount due from joint ventures (trade) – 64
Amount due from joint ventures (non-trade) (126) (106)
Increase/(decrease) in:
Trade payables 2,588 2,769
Other payables and other liabilities 11,646 13,849
Amount due to associates (trade) – (5)
Amount due to joint ventures (non-trade) 6 88

Cash flows generated from operations 46,571 36,115

Tax paid (3,945) (3,372)

Net cash flows from operating activities 42,626 32,743

56 Vi b r a n t G r o w t h
Consolidated Cash Flow Statement
For the year ended 31 December 2009

Notes 2009 2008

$’000 $’000

Cash flows from investing activities

Interest income received 89 167
Purchase of property, plant and equipment A (24,119) (25,603)
Acquisition of intangible assets (449) (129)
Deposits for subscription of junior bonds 18 (5,000) –
Proceeds from sale of property, plant and equipment 128 135
Advance payment for land premium (685) –
Net cash inflow on disposal of a subsidiary B 125 –

Net cash flows used in investing activities (29,911) (25,430)

Cash flows from financing activities

Interest paid (568) (826)
Dividends paid to shareholders of the Company (2,339) (1,292)
Dividends paid to minority shareholders of subsidiaries (1,312) (985)
Purchase of treasury shares (283) –
Proceeds from long-term loans 5,897 7,531
Repayment of long-term loans (6,187) (4,214)
Proceeds from short-term loans 9,784 6,994
Repayment of short-term loans (9,540) (5,527)
Capital injection from minority shareholders of subsidiaries 2,661 850
Repayment of finance lease obligations (232) (266)
Loans from minority shareholders of subsidiaries 44 150
Decrease in fixed deposits pledged – 107
Repayment of amount due to landlord (91) (196)

Net cash flows (used in)/from financing activities (2,166) 2,326

Net increase in cash and cash equivalents 10,549 9,639

Cash and cash equivalents at the beginning of the year 47,877 38,238

Cash and cash equivalents at the end of the year 21 58,426 47,877

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

B r e a d Ta l k
Annual Report 2009 57
Consolidated Cash Flow Statement
For the year ended 31 December 2009

Note A. Purchase of property, plant and equipment

During the year, the Group acquired property, plant and equipment with an aggregate cost of approximately $25,399,000
(2008: $26,201,000). The additions were by way of cash payments of $24,119,000 (2008: $25,603,000), finance leases of
$Nil (2008: $276,000) and increase in provision for reinstatement costs of $1,280,000 (2008: $322,000).

Note B. Disposal of a subsidiary

Disposal of a subsidiary, Twin Peaks Venture Singapore Pte Ltd

With effect from 1 January 2009, BreadTalk Pte Ltd (“BTPL”), a wholly-owned subsidiary of the Company, disposed
of its 70% shareholding interest in Twin Peaks Venture Singapore Pte Ltd (“Twin Peaks”) for a cash consideration
of $390,000.

The value of assets and liabilities of Twin Peaks recorded in the consolidated financial statements as at 31 December 2008
and the cash flow effect of the disposal were:

$’000

Property, plant and equipment 1,018

Franchise rights 20
Inventories 289
Trade receivables 12
Deposits 236
Prepayments 2
Cash on hand and at bank 265
Trade payables (174)
Other payables and other liabilities (414)
Provision for reinstatement costs (28)
Amount due to holding company (432)
Loan from a minority shareholder (150)

Carrying value of net assets 644

Less: Minority interest (193)

Carrying value of net assets disposed 451

Total consideration 390

Less: Cash on hand and at bank of the subsidiary (265)

Net cash inflow on disposal of a subsidiary 125

58 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

1. General

1.1 Corporate information

BreadTalk Group Limited (the “Company”) is a limited liability company, which is incorporated in the Republic
of Singapore and listed on the Singapore Exchange Securities Trading Ltd.

The registered offi ce and principal place of business of the Company is located at 171 Kampong Ampat, #05-05
KA FoodLink, Singapore 368330.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries
are shown in Note 13 to the financial statements.

1.2 Fundamental accounting assumption

The fi nancial statements of the Group have been prepared on a going concern basis. The Group’s net current
liabilities position as at 31 December 2009 was $2,735,000 (2008: $5,518,000).

Included in current liabilities are food court tenant and stored value card deposits of $8,539,000 (2008: $7,141,000)
and deferred revenue of $8,161,000 (2008: $3,589,000) respectively. Deferred revenue relates to the unutilised
value on the food court stored value cards, unredeemed cash vouchers sold and unearned franchise fees received.
These current liabilities, because of their nature, are not expected to result in signifi cant cash outfl ow from the
Group within the next 12 months.

In addition, the Group has unutilised banking facilities available for future use. The directors are confi dent that
the Group will be able to pay its debts as and when they fall due.

2. Summary of significant accounting policies

2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of
the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The fi nancial statements have been prepared on a historical cost basis, except as disclosed in the accounting
policies below.

The financial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest
thousand ($’000) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2009, the Group adopted the following standards and interpretations mandatory for annual financial
periods beginning on or after 1 January 2009:

B r e a d Ta l k
Annual Report 2009 59
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

• FRS 1 Presentation of Financial Statements (Revised)

• Amendments to FRS 23 Borrowing Costs
• Amendments to FRS 107 Financial Instruments: Disclosures
• FRS 108 Operating Segments
• Improvements to FRSs issued in 2008

Adoption of these standards and interpretations did not have any effect on the financial performance or
position of the Group. They did however give rise to additional disclosures, including, in some cases, revisions
to accounting policies.

The principal effects of these changes are as follows:

FRS 1 Presentation of Financial Statements – Revised presentation

The revised FRS 1 separates owner and non-owner changes in equity. The statement of changes in equity includes
only details of transactions with owners, with all non-owner changes in equity presented in the statement of
other comprehensive income. In addition, the Standard introduces the statement of comprehensive income which
presents income and expense recognised in the period. This statement may be presented in one single statement,
or two linked statements. The Group has elected to present this statement as one single statement.

Amendments to FRS 23 Borrowing Costs

FRS 23 has been revised to require capitalisation of borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset. The Group’s previous policy was to expense borrowing costs as
they were incurred. The Group has amended its accounting policy based on the revised FRS 23. In accordance
with the transitional provisions of the Standard, the Group has adopted this as a prospective change. Therefore,
borrowing costs will be capitalised on qualifying assets with a commencement date on or after 1 January 2009.
No changes have been made for borrowing costs incurred prior to this date that have been expensed. During the
financial year, no borrowing cost has been capitalised on property, plant and equipment.

Amendments to FRS 107 Financial Instruments: Disclosures

The amendments to FRS 107 require additional disclosure about fair value measurement and liquidity risk. Fair value
measurements are to be disclosed by source of inputs using a three hierarchy for each class of financial instrument.
In addition, reconciliation between the beginning and ending balance for Level 3 fair value measurements is
now required, as well as significant transfer between Level 1 and Level 2 fair value measurements. The fair value
measurement disclosures and liquidity risk disclosures are presented in Note 34 and Note 33 to the fi nancial
statements respectively.

FRS 108 Operating Segments

FRS 108 requires disclosure of information about the Group’s operating segments and replaces the requirement
to determine primary and secondary reporting segments of the Group. The Group determined that the
reportable operating segments are the same as the business segments previously identified under FRS 14
Segment Reporting. Additional disclosures about each of the segments are shown in Note 36, including revised
comparative information.

60 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.3 Future changes in accounting policies

The Group has not adopted the following FRS and INT FRS that have been issued but not yet effective:

Effective for
annual periods
beginning on
Description or after

Amendments to FRS 27 Consolidated and Separate Financial Statements 1 July 2009

Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Eligible 1 July 2009
Hedged Item
Revised FRS 103 Business Combinations 1 July 2009
Amendments to FRS 105 Non-current Assets Held for Sale and Discontinued Operations 1 July 2009
INT FRS 117 Distributions of Non-cash Assets to Owners 1 July 2009
Improvements to FRSs issued in 2009:
– Amendments to FRS 38 Intangible Assets 1 July 2009
– Amendments to FRS 102 Share-based Payment 1 July 2009
– Amendments to FRS 108 Operating Segments 1 July 2009
– Amendments to INT FRS 109 Reassessment of Embedded Derivatives 1 July 2009
– Amendments to INT FRS 116 Hedges of a Net Investment in a Foreign Operation 1 July 2009
– Amendments to FRS 1 Presentation of Financial Statements 1 January 2010
– Amendments to FRS 7 Statement of Cash Flows 1 January 2010
– Amendments to FRS 17 Leases 1 January 2010
– Amendments to FRS 36 Impairment of Assets 1 January 2010
– FRS 39 Financial Instruments: Recognition and Measurement 1 January 2010
– Amendments to FRS 105 Non-current Assets Held for Sale and Discontinued Operations 1 January 2010
– Amendments to FRS 108 Operating Segments 1 January 2010
– Amendment to FRS 32 – Classification of Rights Issues 1 February 2010
– INT FRS 119 – Extinguishing Financial Liabilities with Equity Instruments 1 July 2010
– Amendments to FRS 24 – Related Party Disclosures 1 January 2011
– Amendments to INT FRS 114 – Prepayments of a Minimum Funding Requirement 1 January 2011

Except for the revised FRS 103 and the amendments to FRS 27, the directors expect that the adoption of the
other standards and interpretations above will have no material impact on the financial statements in the period
of initial application. The nature of the impending changes in accounting policy on adoption of the revised FRS
103 and amendments to FRS 27 are described below.

B r e a d Ta l k
Annual Report 2009 61
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.3 Future changes in accounting policies (cont’d)

Revised FRS 103 Business Combinations and Amendments to FRS 27 Consolidated and Separate Financial
Statements

The revised standards are effective for annual periods beginning on or after 1 July 2009. The revised FRS 103
introduces a number of changes in the accounting for business combinations occurring after 1 July 2009. These
changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition
occurs, and future reported results. The Amendments to FRS 27 require that a change in the ownership interest
of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions
will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard
changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. Other
consequential amendments were made to FRS 7 Statement of Cash Flows, FRS 12 Income Taxes, FRS 21 The
Effects of Changes in Foreign Exchange Rates, FRS 28 Investments in Associates and FRS 31 Interests in Joint
Ventures. The changes from revised FRS 103 and Amendments to FRS 27 will affect future acquisitions or loss of
control and transactions with minority interests. The standards may be early applied. However, the Group does
not intend to early adopt.

2.4 Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the fina ncial statements.
They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and
expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant
factors, including expectations of future events that are believed to be reasonable under the circumstances.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.

(i) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the value in use of the cash-generating units to which the goodwill are allocated. Estimating the value in
use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit
and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The
carrying amount of the Group’s goodwill at 31 December 2009 was $6,173,000 (2008: $6,173,000). More
details are given in Note 11.

62 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.4 Significant accounting estimates and judgements (cont’d)

(ii) Valuation and estimated useful life of brand value arising from acquisition of a subsidiary, Topwin Investment
Holding Pte Ltd (“Topwin”)

Brand value arising from the acquisition of Topwin was separately identified and recognised by management
using the “relief from royalty method”. The premise of this valuation method is the assumption that the
Group would be compelled to pay the rightful owner of the brand name if the Group did not have the legal
right to utilise the brand name. The ownership of the brand therefore relieves the Group from making such
royalty payments. This requires an estimation of the royalty payments including initial fees and continuing
royalty payments based on a percentage of projected revenue. The basis used to determine the revenue
projections is the revenue for each food court of Topwin achieved in the financial year ended 31 December
2004 projected into the future. The useful life of the brand value is estimated by the directors to be 15 years
as this is the length of time that they expect the benefits of the brand to flow to the Group. Amortisation of
the brand amounted to $213,000 (2008: $213,000) for the financial year ended 31 December 2009 and the
carrying amount of the brand value at 31 December 2009 was $2,132,000 (2008: $2,345,000). More details
are given in Note 11.

(iii) Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Signifi cant judgement is involved in
determining the Group-wide provision for income taxes. There are certain transactions and computations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were initially recognised,
such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made. The carrying amount of the Group’s tax payable and deferred tax liabilities at 31
December 2009 were approximately $3,216,000 (2008: $3,102,000) and $1,411,000 (2008: $1,124,000)
respectively. The carrying amount of the Group’s tax recoverable and deferred tax assets at 31 December
2009 was $12,000 (2008: $Nil) and $872,000 (2008: $532,000) respectively.

A subsidiary, BreadTalk Pte Ltd (“BTPL”) obtained the Development and Expansion Incentive (“DEI”)
which entitles the qualifying income of the company earned during the financial years ended 31 December
2003 to 2007 to be subject to the concessionary tax rate of 10%, subject to certain conditions to be met by
year 2007. On 15 August 2006, the company was granted approval by the Economic Development Board
(“EDB”) on the amendment of certain conditions laid down in its DEI award letter dated 19 February 2004.
In view of the amendments, the company has met all qualifying conditions laid down by the EDB for the
DEI incentive by 2007. Accordingly, income from the qualifying DEI activities has been brought to tax at
the concessionary tax rate of 10%.

On 24 January 2008, BTPL was granted an extension of the DEI for a period of another 5 years commencing
1 January 2008.

B r e a d Ta l k
Annual Report 2009 63
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.4 Significant accounting estimates and judgements (cont’d)

(iv) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives.
Management estimates the useful lives of these assets to be within 2 to 20 years. The carrying amount of
the Group’s property, plant and equipment as at 31 December 2009 was $64,352,000 (2008: $58,156,000).
Changes in the expected level of usage and technological developments could impact the economic useful
lives and the residual values of these assets, therefore future depreciation charges could be revised. In
particular, renovation costs incurred and capitalised for bakery outlets, food courts and restaurants may be
subject to immediate impairment upon their unforeseen closure due to unfavourable operations.

2.5 Functional and foreign currency

(a) Functional currency

The management has determined the currency of the primary economic environment in which the
Company operates i.e. functional currency, to be SGD. Sales prices and major costs of providing goods and
services including major operating expenses are primarily influenced by fluctuations in SGD.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company
and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates
approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary
items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the
balance sheet are recognised in profi t or loss except for exchange differences arising on monetary items
that form part of the Group’s net investment in foreign operations, which are recognised initially in other
comprehensive income and accumulated under translation reserve in equity. The translation reserve is
reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

64 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.5 Functional and foreign currency (cont’d)

(c) Foreign currency translation

The results and financial position of foreign operations are translated into SGD using the following procedures:

• Assets and liabilities for each balance sheet presented are translated at the closing exchange rate
ruling at that balance sheet date; and

• Income and expenses for each income statement are translated at average exchange rates for the
year, which approximates the exchange rates at the dates of the transactions.

All resulting exchange differences are taken directly to other comprehensive income.

On disposal of a foreign operation, the cumulative amount of exchange differences recognised in other
comprehensive income relating to that particular foreign operation is recognised in profit or loss.

2.6 Related party

An entity or individual is considered a related party of the Group for the purposes of the fi nancial statements
if: i) it possesses the ability (directly or indirectly) to control or exercise signifi cant infl uence over the operating
and fi nancial decisions of the Group or vice versa; or ii) it is subject to common control or common signifi cant
influence.

2.7 Subsidiaries, principles of consolidation and minority interests

(a) Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating
policies so as to obtain benefits from its activities. The Group generally has such power when it directly
or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting
power, or controls the composition of the board of directors.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost
less any impairment losses.

(b) Principles of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries
as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting
date as the parent company. Consistent accounting policies are applied for like transactions and events in
similar circumstances.

All intra-group balances, transactions, income and expenses and profi ts and losses resulting from intra-
group transactions that are recognised in assets, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that such control ceases.

B r e a d Ta l k
Annual Report 2009 65
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.7 Subsidiaries, minority interests and principles of consolidation (cont’d)

(b) Principles of consolidation (cont’d)

Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date, irrespective of the extent of any minority interest.

Adjustments to those fair values relating to previously held interests are treated as a revaluation and
recognised in equity.

Any excess of the cost of the business combination over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities represents goodwill. The goodwill is accounted for in
accordance with the accounting policy for goodwill stated in Note 2.11 below.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities over the cost of business combination is recognised as income in profi t or loss on the date of
acquisition.

(c) Transactions with minority interests

Minority interests represent the portion of profi t or loss and net assets in subsidiaries not held by the
Group. They are presented in the consolidated balance sheet within equity, separately from the parent
shareholders’ equity, and are separately disclosed in profit or loss of the Group.

On acquisition of minority interests, the difference between the consideration and the book value of the
share of the net assets acquired is recognised in goodwill. Gain or loss on disposal to minority interests
is recognised in profit or loss.

2.8 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence.
This generally coincides with the Group having 20% or more of the voting power, or has representation on the
board of directors.

The Group’s investment in associates is accounted for using the equity method. Under the equity method,
the investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s
share of net assets of the associate. The Group’s share of profit or loss of the associate is recognised in profit or
loss. Where there has been a change recognised directly in the equity of the associate, the Group recognises its
share of such changes. After application of the equity method, the Group determines whether it is necessary to
recognise an additional impairment loss with respect to the Group’s net investment in the associate. If this is
the case, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value and recognises the amount in profit or loss. The associate is equity accounted
for from the date the Group obtains significant influence until the date the Group ceases to have significant
influence over the associate.

66 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.8 Associates (cont’d)

Goodwill relating to an associate is included in the carrying amount of the investment.

Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent
liabilities over the cost of the investment is excluded from the carrying amount of the investment and is, instead
included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which
the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any
other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associate.

The fi nancial statements of the associate are prepared as of the same reporting date as the Company. Where
necessary, adjustments are made to bring the accounting policies into line with those of the Group.

2.9 Joint ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that
is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a
separate entity in which each venturer has an interest.

The Group’s investment in joint ventures is accounted for using the equity method. Under the equity method, the
investment in joint ventures is carried in the balance sheet at cost plus post-acquisition changes in the Group’s
share of net assets of the joint venture. The Group’s share of profit or loss of the joint venture is recognised in profit
or loss. Where there has been a change recognised directly in the equity of the joint venture, the Group recognises
its share of such changes. After application of the equity method, the Group determines whether it is necessary
to recognise any additional impairment loss with respect to the Group’s net investment in the joint venture. The
joint venture is equity accounted for from the date the Group obtains joint control until the date the Group ceases
to have joint control over the joint venture.

Adjustments are made in the Group’s consolidated financial statements to eliminate the Group’s share of intragroup
balances, income and expenses and unrealised gains and losses on transactions between the Group and its jointly
controlled entity. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in
the net realisable value of current assets or an impairment loss.

The financial statements of the joint venture are prepared as of the same reporting date as the Company. Where
necessary, adjustments are made to bring the accounting policies into line with those of the Group.

B r e a d Ta l k
Annual Report 2009 67
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.10 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and
equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property,
plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the
estimated useful life of the asset as follows:

Leasehold property – 20 years

Machinery and equipment – 5 - 6 years
Electrical works – 5 - 6 years
Furniture and fittings – 5 - 6 years
Office equipment – 3 - 6 years
Renovation – 2 - 6 years
Motor vehicles – 5 - 6 years

Construction-in-progress is stated at cost. No depreciation is provided for construction-in-progress as these assets

are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the
amount, method and period of depreciation are consistent with previous estimates and the expected pattern of
consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss
in the year the asset is derecognised.

2.11 Intangible assets

(a) Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of
the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes
in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each
of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from
the synergies of the combination.

68 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.11 Intangible assets (cont’d)

(a) Goodwill (cont’d)

A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested
for impairment annually and whenever there is an indication that the unit may be impaired, by comparing
the carrying amount of the cash-generating unit, including the goodwill, with the recoverable amount of
the cash-generating unit. Where the recoverable amount of the cash-generating unit (or group of cash-
generating units) is less than the carrying amount, an impairment loss is recognised in profit or loss.

Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the
operation within that unit is disposed of, the goodwill associated with the operation disposed of is included
in the carrying amount of the operation when determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured based on the relative fair values of the operation
disposed of and the portion of the cash-generating unit retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January
2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency
of the foreign operations and translated in accordance with the accounting policy set out in Note 2.5.

Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January
2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the rates prevailing
at the date of acquisition.

(b) Other intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. The useful lives of intangible assets are assessed to be either fi nite or indefi nite.
Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful
lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method for an intangible asset with a fi nite useful life are
reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset is accounted by changing the amortisation
period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in profit or loss.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually or
more frequently if the events or changes in circumstances indicate that the carrying value may be impaired
either individually or at the cash-generating unit level. Such intangibles are not amortised. The useful
life of an intangible asset with an indefi nite life is reviewed annually to determine whether the useful life
assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on
a prospective basis.

B r e a d Ta l k
Annual Report 2009 69
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.11 Intangible assets (cont’d)

(b) Other intangible assets (cont’d)

Gain or loss arising from derecognition of an intangible asset is measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in profi t or loss when the asset
is derecognised.

(i) Trade mark

Costs relating to trade mark are capitalised and amortised on a straight-line basis over its estimated
finite useful life of 5 years.

(ii) Franchise rights

Costs relating to master franchise fees paid are capitalised and amortised on a straight-line basis over
the lease/franchise period ranging from 4 to 20 years.

Costs relating to territory reservation fees are capitalised and a fi xed amount is amortised as and
when a new outlet starts operation.

(iii) Location premium

Consideration paid to previous tenants to vacate premises in order to secure the lease arrangement
are amortised on a straight-line basis over the new lease agreement period of 4 years.

(iv) Brand value

Brand value was acquired through a business combination. The useful life of the brand is assessed to
be finite and estimated to be 15 years because this is the length of time that the management expects
the economic benefits of the brand to flow to the Group.

Brand value is amortised on a straight-line basis over its estimated economic useful life.

2.12 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset (i.e. an intangible asset with an indefinite useful
life, an intangible asset not yet available for use, or goodwill acquired in a business combination) is required, the
Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash infl ows that
are largely independent of those from other assets or groups of assets. In assessing value in use, the estimated
future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market
assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses of continuing operations are recognised in profit or loss.

70 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.12 Impairment of non-financial assets (cont’d)

An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses recognised for an asset other than goodwill may no longer exist or may have decreased. If
such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Reversal of an impairment loss
is recognised in profit or loss. After such a reversal, the depreciation charge is adjusted in future periods to allocate
the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

2.13 Financial assets

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the
contractual provisions of the financial instrument.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets
not at fair value through profit or loss, directly attributable transaction costs.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On
derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of the
consideration received and any cumulative gain or loss that has been recognised in other comprehensive income
is recognised in profit or loss.

(a) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. Subsequent to initial recognition, such assets are carried at amortised
cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, as well as through the amortisation process.

(b) Available-for-sale financial assets

The Group classifies its investment securities as available-for-sale financial assets.

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-
for-sale or are not classified in any of the other categories.

After initial recognition, available-for-sale fi nancial assets are measured at fair value. Any gains or losses
from changes in fair value of the financial assets are recognised in other comprehensive income, except that
impairment losses are recognised in profit or loss. The cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the
financial asset is derecognised.

Investments in equity instruments that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured are measured at cost less impairment losses.

B r e a d Ta l k
Annual Report 2009 71
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and at bank, unpledged fi xed deposits and short-term highly
liquid investments which are readily convertible to known amounts of cash and which are subject to insignificant
risk of changes in value.

2.15 Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset or
group of financial assets is impaired.

(a) Assets carried at amortised cost

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash fl ows (excluding future credit losses that have not been incurred)
discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at
initial recognition). The carrying amount of the asset is reduced through the use of an allowance account.
The amount of the loss is recognised in profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly
or if an amount was charged to the allowance account, the amounts charged to the allowance account are
written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been
incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties
of the debtor and default or significant delay in payments.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent
that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(b) Assets carried at cost

If there is objective evidence that an impairment loss on a financial asset carried at cost has been incurred,
the amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash fl ows discounted at the current market rate of return for a similar fi nancial
asset. Such impairment losses are not reversed in subsequent periods.

(c) Available-for-sale financial assets

Signifi cant or prolonged decline in fair value below cost, signifi cant fi nancial diffi culties of the issuer or
obligor, and the disappearance of an active trading market are considerations to determine whether there
is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

72 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.15 Impairment of financial assets (cont’d)

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net
of any principal payment and amortisation) and its current fair value, less any impairment loss previously
recognised in profit or loss, is transferred from equity to profit or loss.

Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss. Reversals
of impairment losses on debt instruments are recognised in profit or loss if the increase in fair value of the
debt instrument can be objectively related to an event occurring after the impairment loss was recognised
in profit or loss.

2.16 Inventories

Inventories comprise raw materials, consumables, semi-finished goods, finished goods and base inventory.

Inventories are valued at the lower of cost and net realisable value. Costs comprise purchase costs accounted for
on a weighted average cost basis. In the case of semi-fi nished goods, costs also include an appropriate share of
production overheads based on normal operating capacity.

Base inventory, comprising mainly cutlery and dining utensils, are written down to 50% of the original cost and all
further replacement costs incurred in maintaining the base inventory is expensed.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.

2.17 Financial liabilities

Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party to
the contractual provisions of the financial instrument. Financial liabilities are initially recognised at fair value of
consideration received plus directly attributable transaction costs and subsequently measured at amortised cost
using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised and through the amortisation
process. The liabilities are derecognised when the obligation under the liability is discharged or cancelled or
expired. When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognised in profit or loss.

2.18 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset.

Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use are in
progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are
substantially completed for their intended use.

B r e a d Ta l k
Annual Report 2009 73
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.19 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a
past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it is no
longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a
current pre-tax rate that refl ects, where appropriate, the risks specifi c to the liability. When discounting is used,
the increase in the provision due to the passage of time is recognised as a finance cost.

2.20 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement
at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset. For arrangements entered into prior to 1 January 2005, the date of
inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the
present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss.
Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term,
if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term.
The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the
lease term on a straight-line basis.

2.21 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defi ned by the laws of the countries in which
it has operations. Contributions to national pension schemes are recognised as an expense in the period in
which the related services are performed.

Singapore

The Group makes contributions to the Central Provident Fund (“CPF”) scheme in Singapore, a
defined contribution pension scheme. The Group makes monthly contributions based on stipulated
contribution rates.

74 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.21 Employee benefits (cont’d)

(a) Defined contribution plans (cont’d)

People’s Republic of China (“PRC”)

Subsidiaries incorporated and operating in the PRC are required to provide certain staff pension benefi ts
to their employees under existing PRC regulations. Contributions are provided at rates stipulated by PRC
regulations and are contributed to a pension fund managed by government agencies, which are responsible
for administering these amounts for the subsidiaries’ PRC employees.

Hong Kong

Subsidiaries incorporated and operating in Hong Kong pay contributions to publicly or privately administered
pension insurance plans on a mandatory basis. The subsidiaries have no further payment obligations once
the contributions have been paid. The contributions are not reduced by contributions forfeited by those
employees who leave the scheme prior to vesting fully in the contributions. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. The estimated
liability for leave is recognised for services rendered by employees up to balance sheet date.

(c) The BreadTalk Restricted Share Grant Plan (“RSG Plan”)

Employees receive remuneration under the RSG Plan in the form of fully-paid shares (“Awards”) of the
Company as consideration for services rendered. The cost of these equity-settled transactions with employees
is measured by reference to the fair value of the Awards at the date on which the Awards are granted. The
cumulative expense recognized at each reporting date until the vesting date refl ects the Company’s best
estimate of the number of Awards that will ultimately vest. The charge or credit to profit or loss for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.

In the Company’s separate financial statements, the fair value of the Awards granted to employees of its
subsidiaries is recognised as an increase in the cost of the Company’s investment in subsidiaries, with a
corresponding increase in equity.

B r e a d Ta l k
Annual Report 2009 75
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.22 Income recognition

Income is recognised to the extent that it is probable that the economic benefits will flow to the Group and the income
can be reliably measured. The following specific recognition criteria must also be met before income is recognised:

(a) Bakery sales, restaurant sales and sales to franchisee

Revenue from the sale of goods is recognised net of goods and services tax and discounts upon the passing
of title to the customer which generally coincides with delivery and acceptance of the goods sold.

(b) Franchise income

Initial franchise income is recognised upon the grant of rights, completion of the designated phases of
the franchise setup and transfer of know-how to the franchisee in accordance with the terms stated in the
franchise agreement. Recurring franchise income is recognised on a periodic basis as a percentage of the
franchisees’ revenue in accordance with terms as stated in the franchise agreement.

(c) Food court revenue

Fixed rental income from the sub-lease of food courts is recognised as income in profit or loss on a straight
line basis over the lease term. The variable portion of the rental income which is computed based on a
percentage of the food court tenants’ gross sales is recognised when such sales are earned.

Revenue from the sale of food and beverage is recognised upon delivery and acceptance by customers, net
of sale discounts.

(d) Management fee

Management fee is recognised on an accrual basis.

(e) Interest income

Interest income is recognised as interest accrues (using the effective interest method) unless collectibility
is in doubt.

(f) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.23 Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. When the grant relates to an expense item, it is
recognised in profi t or loss over the period necessary to match them on a systematic basis to the costs that it is
intended to compensate. Where the grant relates to an asset, the fair value is recognised as deferred capital grant
on the balance sheet and is amortised to profi t or loss over the expected useful life of the relevant asset by equal
annual instalments.

76 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.24 Income taxes

(a) Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the balance sheet date.

Current taxes are recognised in profi t or loss except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance
sheet date between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither accounting profit nor taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates

and interests in joint ventures, where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused
tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised except:

• Where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates

and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet
date and are recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be utilised.

B r e a d Ta l k
Annual Report 2009 77
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.24 Income taxes (cont’d)

(b) Deferred tax (cont’d)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.

Deferred income tax is recognised in profit or loss. Deferred income tax relating to items recognised outside
profi t or loss is recognised outside profi t or loss. Deferred tax items are recognised in correlation to the
underlying transaction either in other comprehensive income or directly in equity and deferred tax arising
from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the balance sheet.

2.25 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services
which are independently managed by the respective segment managers responsible for the performance of the
respective segments under their charge. The segment managers report directly to the management of the Company
who regularly review the segment results in order to allocate resources to the segments and to assess the segment
performance. Additional disclosures on each of these segments are shown in Note 36, including the factors used to
identify the reportable segments and the measurement basis of segment information.

78 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

2. Summary of significant accounting policies (cont’d)

2.26 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly
attributable to the issuance of ordinary shares are deducted against share capital.

2.27 Treasury shares

When shares recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity.
Reacquired shares are classified as treasury shares and presented as deduction from total equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares.

2.28 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control
of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group.

3. Revenue

Group
2009 2008
$’000 $’000

Bakery sales 110,404 94,872

Restaurant sales 38,960 32,173
Sales to franchisee 10,671 8,106
Franchise income 8,297 7,886
Food court income 78,161 69,212

246,493 212,249

B r e a d Ta l k
Annual Report 2009 79
Notes to the Financial Statements
31 December 2009

4. Other operating income

Group
2009 2008
$’000 $’000
Management fee income
- Food court management 4,816 4,779
- Others 306 190
Government grant (1) 1,218 775
Grant income from Jobs Credit Scheme (2) 1,707 –
Income from expired food court stored value cards 278 197
Sponsorship income 227 227
Sundry sales 91 325
Compensation from landlord – 326
Rental income 318 280
Agency commission 103 78
Miscellaneous income 696 607

9,760 7,784

(1)
Government grant in relation to business expansion activities undertaken by certain subsidiaries in
the PRC.

(2)
During the fi nancial year ended 31 December 2009, the Singapore Finance Minister announced the
introduction of a Jobs Credit Scheme (“Scheme”). Under this Scheme, the Group received a 12% cash grant
on the first $2,500 of each month’s wages for each employee on their Central Provident Fund Payroll. The
Group received its grant income of $1,707,000 in four receipts in March, June, September and December
2009. The Scheme has been extended to June 2010 with payouts in March and June 2010 at stepped down
rates of 6% and 3% respectively.

80 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

5. Profit from operations

This is determined after charging/(crediting) the following:

Group
2009 2008
$’000 $’000

Non-audit fees to auditors of the Company 99 139

Amortisation of intangible assets (Note 11) 523 582
Bad trade debts written off 577 –
Impairment/(write back) of loans and receivables
- trade receivables (Note 17) 86 (10)
- other receivables (Note 18) 298 13
- amount due from associates (non-trade) – (107)
Directors’ fees 112 105
Depreciation of property, plant and equipment (Note 10) 16,178 13,147
Employee benefits (Note 6) 68,624 57,277
Foreign exchange loss, net 178 26
(Gain)/loss on disposal of property, plant and equipment (9) 19
Loss on liquidation of an associate – 32
Loss on disposal of a subsidiary 61 –
Operating lease expenses
- fixed portion 46,313 41,460
- variable portion 6,255 4,618
Property, plant and equipment written off 435 799
Intangible assets written off – 7
Impairment of investment in associate – 385
Impairment of property, plant and equipment (Note 10) 419 465
Write-down of inventories (Note 16) 10 –
Write-off of inventories (Note 16) 13 –

B r e a d Ta l k
Annual Report 2009 81
Notes to the Financial Statements
31 December 2009

6. Employee benefits

Group
2009 2008
$’000 $’000

Staff costs (including directors)

Salaries and bonuses 51,331 44,049
Central Provident Fund and other pension contributions 5,288 4,180
Sales incentives and commission 3,020 2,334
Share-based payment (RSG Plan) 90 –
Other personnel benefits 8,895 6,714

68,624 57,277

RSG Plan

Under the RSG Plan, directors and employees receive remuneration in the form of fully-paid shares of the Company
as consideration for services rendered. On 15 May 2009, 899,000 restricted shares were granted conditionally and
the final number of restricted shares awarded will depend on the achievement of pre-determined targets over a one
year period. On meeting the performance conditions for the performance period, one-third of the restricted shares
will vest. The balance will vest equally over the subsequent two years with the fulfilment of service requirements.

The fair value of the restricted shares granted is estimated based on the market price of the shares on grant date
less the present value of expected future dividends during the vesting period.

The number of restricted shares outstanding at year end is 899,000 shares.

82 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

7. Interest income and interest expense

Group
2009 2008
$’000 $’000
Interest income from loans and receivables
- Bank deposits 89 167

Interest expense
- Term loans (540) (792)
- Finance lease obligations (28) (35)
- Others (24) (24)

(592) (851)

8. Taxation

Major components of income tax expense were:

Group
2009 2008
$’000 $’000
Current tax
- Current year 3,628 3,669
- Under/(over) provision in prior year 170 (354)

Deferred tax
- Origination and reversal of temporary differences 70 84
- (Over)/under provision in prior year (149) 85

Withholding tax 256 159

Taxation expense 3,975 3,643

B r e a d Ta l k
Annual Report 2009 83
Notes to the Financial Statements
31 December 2009

8. Taxation (cont’d)

A reconciliation between the tax expense and the product of accounting profi t multiplied by the applicable tax
rate for the year ended 31 December is as follows:

Group
2009 2008
$’000 $’000

Profit before taxation 15,615 12,001

Tax at the domestic rates applicable to profits in the countries where the Group
operates(1) 2,792 2,746

Tax effect of:

Expenses not deductible for tax purposes 1,074 1,161
Income not subject to taxation (330) (4)
Effect of reduction in tax rate (29) 2
Share of associates’ and joint ventures’ tax (83) 33
Tax savings arising from development and expansion incentive (2) (169) (176)
Under/(over) provision in prior years
- Current tax 170 (354)
- Deferred tax (149) 85
Withholding tax expense 256 159
Effect of partial tax exemption and tax relief (603) (514)
Deferred tax assets not recognised 1,302 724
Benefits from previously unrecognised deferred tax assets (296) (201)
Others 40 (18)

Taxation expense 3,975 3,643

(1)
This is prepared by aggregating separate reconciliations for each national jurisdiction.

(2)
In February 2004, the Economic Development Board granted the Development and Expansion Incentive
under the International Headquarters (IHQ-DEI) Award to a subsidiary. Subject to certain conditions,
the subsidiary enjoys a concessionary tax rate of 10% on its qualifying income for a period of 5 years
commencing 1 January 2003. On 24 January 2008, the subsidiary was granted an extension of the DEI for
another 5 years commencing 1 January 2008.

The corporate income tax rate applicable to Singapore companies of the Group was reduced to 17% for the year
of assessment 2010 onwards from 18% for year of assessment 2009. The corporate income tax rate applicable to
Malaysian companies of the Group was reduced from 27% to 26% and 25% for the years of assessment 2008 and
2009 respectively.

84 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

8. Taxation (cont’d)

Deferred income tax as at 31 December relates to the following:

Group
Balance sheet Profit or loss
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Deferred tax liabilities:

Differences in depreciation for tax purposes (1,349) (1,086) 262 136
Provisions 43 17 (26) 88
Dividend income (105) (55) 50 55

(1,411) (1,124)

Deferred tax assets:

Provisions 515 315 (214) 97
Differences in depreciation for tax purposes 357 (20) (391) 20
Unutilised tax losses – 237 240 (227)

872 532

Deferred income tax (79) 169

In accordance with the “Income Tax Law of the PRC for Enterprises with Foreign Investment and Foreign
Enterprises”, Shanghai BreadTalk Co., Ltd (“SHBT”), a wholly-owned subsidiary registered in the PRC, is entitled
to full exemption from Enterprise Income Tax (“EIT”) for the first two years and a 50% reduction in EIT for the
next three years, commencing from the fi rst profi table year after offsetting all tax losses carried forward from the
previous five years. SHBT achieved its fifth profitable year in the current financial year end.

Unrecognised tax losses and capital allowances

As at 31 December 2009, the Group has tax losses of approximately $8,460,000 (2008: $5,495,000) and unutilised
capital allowances of approximately $466,000 (2008: $823,000) that are available for offset against future taxable
profi ts, for which no deferred tax assets are recognised on these amounts due to uncertainty of their utilisation.
The utilisation of the tax losses is subject to the agreement of the tax authorities and compliance with certain
provisions of the tax legislation of the respective countries in which the companies operate.

Tax consequences of proposed dividends

There are no income tax consequences attached to the dividends to the shareholders proposed by the Company
but not recognised as a liability in the financial statements (Note 37).

9. Earnings per share

Basic earnings per share is calculated by dividing the Group’s profi t for the year attributable to ordinary equity
holders of the Company of $11,092,000 (2008: $7,770,000) by the weighted average number of ordinary shares
(excluding treasury shares) of 234,102,701 (2008: 234,911,034) in issue during the year.

Diluted earnings per share is calculated by dividing the Group’s profit for the year attributable to ordinary equity
holders of the Company of $11,092,000 (2008: $7,770,000) by the weighted average number of ordinary shares
(excluding treasury shares) in issue during the year plus the weighted average number of restricted shares granted
conditionally under the “BreadTalk Restricted Share Grant Plan” of 234,702,034 (2008: 234,911,034).
B r e a d Ta l k
Annual Report 2009 85
Notes to the Financial Statements
31 December 2009

10. Property, plant and equipment

Machinery
Leasehold and Electrical Furniture Office
property equipment works and fittings equipment
Group $’000 $’000 $’000 $’000 $’000
Cost
As at 1.1.2008 8,331 12,691 8,591 9,594 3,117
Additions – 4,679 4,341 7,501 930
Reclassifications (269) 93 (38) (671) (97)
Write offs – (221) (337) (212) (77)
Disposals – (124) – (13) (17)
Translation difference 549 188 82 216 74

As at 31.12.2008 and 1.1.2009 8,611 17,306 12,639 16,415 3,930

Additions – 5,831 3,729 3,793 1,319
Reclassifications – 161 359 – 39
Write offs – (612) (342) (241) (117)
Disposals – (126) (3) (18) (24)
Disposal of a subsidiary – (483) (145) (131) (51)
Translation difference (220) (208) (165) (322) (56)

As at 31.12.2009 8,391 21,869 16,072 19,496 5,040

Accumulated depreciation
and impairment losses
As at 1.1.2008 823 6,674 3,339 3,266 1,526
Charge for the year 379 2,195 1,884 2,307 658
Reclassifications (9) (39) (24) (266) (31)
Write offs – (159) (315) (153) (61)
Disposals – (93) – (3) (11)
Impairment loss for the year – 57 131 38 17
Translation difference 69 55 22 47 28

As at 31.12.2008 and 1.1.2009 1,262 8,690 5,037 5,236 2,126

Charge for the year 396 2,636 2,381 3,232 782
Reclassifications – – – 1 (1)
Write offs – (529) (308) (158) (110)
Disposals – (93) (2) (7) (17)
Impairment loss for the year – 72 118 62 14
Disposal of a subsidiary – (76) (23) (23) (12)
Translation difference (45) (74) (69) (132) (30)

As at 31.12.2009 1,613 10,626 7,134 8,211 2,752

Net book value

As at 31.12.2008 7,349 8,616 7,602 11,179 1,804

As at 31.12.2009 6,778 11,243 8,938 11,285 2,288

86 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

10. Property, plant and equipment (cont’d)

Motor Construction
Renovation vehicles -in-progress Total
$’000 $’000 $’000 $’000
Group
Cost
As at 1.1.2008 23,548 1,356 3,914 71,142
Additions 7,478 (1) 321 951 26,201
Reclassifications 1,351 – (369) –
Write offs (1,781) (38) – (2,666)
Disposals (257) (51) – (462)
Translation difference 904 26 283 2,322

As at 31.12.2008 and 1.1.2009 31,243 1,614 4,779 96,537

Additions 9,840 (1) – 887 25,399
Reclassifications 1,597 59 (2,215) –
Write offs (2,271) – (74) (3,657)
Disposals (243) – – (414)
Disposal of a subsidiary (405) – – (1,215)
Translation difference (634) (17) (75) (1,697)

As at 31.12.2009 39,127 1,656 3,302 114,953

Accumulated depreciation
and impairment losses
As at 1.1.2008 10,275 346 – 26,249
Charge for the year 5,426 298 – 13,147
Reclassifications 353 16 – –
Write offs (1,145) (34) – (1,867)
Disposals (171) (30) – (308)
Impairment loss for the year 222 – – 465
Translation difference 465 9 – 695

As at 31.12.2008 and 1.1.2009 15,425 605 – 38,381

Charge for the year 6,428 323 – 16,178
Reclassifications – – – –
Write offs (2,117) – – (3,222)
Disposals (176) – – (295)
Impairment loss for the year 153 – – 419
Disposal of a subsidiary (63) – – (197)
Translation difference (304) (9) – (663)

As at 31.12.2009 19,346 919 – 50,601

Net book value

As at 31.12.2008 15,818 1,009 4,779 58,156

As at 31.12.2009 19,781 737 3,302 64,352

(1)
Amount includes provision for reinstatement costs of $1,280,000 (2008: $322,000).

B r e a d Ta l k
Annual Report 2009 87
Notes to the Financial Statements
31 December 2009

10. Property, plant and equipment (cont’d)

Assets held under finance leases

As at 31 December 2009, the net book values of property, plant and equipment acquired under finance leases are
as follows:

Group
2009 2008
$’000 $’000

Machinery and equipment 176 236

Motor vehicles 281 357

Assets written off

Property, plant and equipment written off during the year arose mainly due to the refurbishment/closure of certain
bakery outlets and food courts. The amount written off represents the total carrying value of the property, plant
and equipment attributable to the bakery outlets and food courts at the date of refurbishment/closure.

The residual value of these assets has been assessed as nil.

Assets pledged as security

As at 31 December 2008, in addition to assets held under fi nance leases, the Group’s leasehold property with a
carrying amount of $4,508,000 was pledged to secure the Group’s bank loans (Note 27). The pledge was discharged
during the financial year upon full repayment of the bank loan.

Impairment of assets

During the year, Food Art Pte Ltd, a wholly-owned subsidiary, carried out a review of the recoverable amount
of the property, plant and equipment for a particular food and drinks outlet that has been persistently making
losses. An impairment loss of $419,000 was recognised, which fully impaired the property, plant and equipment
of the outlet.

88 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

10. Property, plant and equipment (cont’d)

Furniture Office Construction-

and fittings equipment in-progress Total
$’000 $’000 $’000 $’000

Company
Cost
As at 1.1.2008 1 19 – 20
Additions – 75 – 75

As at 31.12.2008 and 1.1.2009 1 94 – 95

Additions – 33 35 68

As at 31.12.2009 1 127 35 163

Accumulated depreciation
As at 1.1.2008 – 5 – 5
Charge for the year – 21 – 21

As at 31.12.2008 and 1.1.2009 – 26 – 26

Charge for the year – 36 – 36

As at 31.12.2009 – 62 – 62

Net book value

As at 31.12.2008 1 68 – 69

As at 31.12.2009 1 65 35 101

B r e a d Ta l k
Annual Report 2009 89
Notes to the Financial Statements
31 December 2009

11. Intangible assets

Group
Brand Trade Franchise Location
Goodwill value Mark rights Premium Total
$’000 $’000 $’000 $’000 $’000 $’000

Cost
As at 1.1.2008 6,173 3,209 692 751 505 11,330
Additions – – 72 57 – 129
Write offs – – – (7) – (7)

As at 31.12.2008 and 1.1.2009 6,173 3,209 764 801 505 11,452

Additions – – 26 423 – 449
Disposal of a subsidiary – – – (28) – (28)
Translation difference – – – (14) – (14)

As at 31.12.2009 6,173 3,209 790 1,182 505 11,859

Accumulated amortisation
As at 1.1.2008 – 651 407 339 268 1,665
Amortisation – 213 125 108 136 582
Write offs – – – * – –

As at 31.12.2008 and 1.1.2009 – 864 532 447 404 2,247

Amortisation – 213 95 114 101 523
Disposal of a subsidiary – – – (8) – (8)
Translation difference – – – * – –

As at 31.12.2009 – 1,077 627 553 505 2,762

Net book value

As at 31.12.2008 6,173 2,345 232 354 101 9,205

As at 31.12.2009 6,173 2,132 163 629 – 9,097

* Less than $1,000

Brand value, trade mark, franchise rights and location premium are determined to have finite useful lives and are
amortised on a straight-line basis over their respective estimated economic useful lives and assessed for impairment
whenever there is an indication that the intangible assets may be impaired. Brand value, trade mark and franchise
rights have remaining useful lives of 10 years, 1 to 5 years and 1 to 5 years as at 31 December 2009 respectively.

90 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

11. Intangible assets (cont’d)

Impairment testing of goodwill

Goodwill arising from the acquisition of Topwin Investment Holding Pte Ltd and its subsidiaries in 2005 was
allocated to 2 cash-generating units (“CGU”), which represent the 2 geographical segments (i.e. Shanghai and
Beijing segments) in which the acquired food courts are located. The food courts located in the same geographical
segment are managed by the same management team.

Goodwill arising from the acquisition of ML Breadworks Sdn Bhd in 2007 was allocated to the legal entity acquired
which represents the CGU. Meanwhile, goodwill on the acquisition of MWA Pte Ltd in December 2007 was
primarily attributable to the food court operations at Wisma Atria, Singapore.

Allocated goodwill based on the CGUs is as follows:

Carrying
amount Basis on which
as at 31 recoverable values Pre-tax
December are determined discount rate
$’000

Shanghai segment 3,569 Value in use 10%

Beijing segment 1,009 Value in use 10%

ML Breadworks Sdn Bhd 327 Value in use 8.21%

Food court operation at Wisma Atria, Singapore 1,268 Value in use 8.21%

6,173

The recoverable amount is determined based on a value in use calculation using the cash fl ow projections based
on financial budgets approved by management covering a five-year period. The discount rates applied to the cash
fl ow projections are derived from cost of capital plus a reasonable risk premium at the date of assessment of the
respective cash generating units.

No impairment loss on goodwill was required for the fi nancial year ended 31 December 2009 as the recoverable
amount was in excess of the carrying value.

12. Investment securities

Group
2009 2008
$’000 $’000

Available-for-sale financial assets

- Equity instruments (quoted) 1,494 1,494

B r e a d Ta l k
Annual Report 2009 91
Notes to the Financial Statements
31 December 2009

13. Investment in subsidiaries

Company
2009 2008
$’000 $’000

Unquoted equity shares at cost 26,489 23,739

Share based compensation reserve 33 –
26,522 23,739

Details of the subsidiaries are as follows:

Country of Proportion of
Name incorporation Principal activities ownership interest
2009 2008
% %
Held by the Company

BreadTalk Pte Ltd (1) Singapore Bakers and manufacturers of and 100 100
dealers in bread, flour and biscuits

BreadTalk International Pte Ltd (1) Singapore Investment holding 100 100

Topwin Investment Holding Singapore Investment holding 100 100

Pte Ltd (1)

Star Food Pte Ltd (1) Singapore Investment holding 60 60

(Note (a))

Imagine Properties Pte Ltd (10)(12) Singapore Investment holding 100 –

(Note (a))

Together Inc. Pte Ltd (8) Singapore Investment holding 100 –

(Note (a))

Held through subsidiaries

Taster Food Pte Ltd (1) Singapore Operators of food and drinks 70 70

outlets, eating houses and
restaurants

Charcoal Pte Ltd (1) Singapore Operators of food and drinks 75 75

outlets, eating houses and
restaurants

Shanghai BreadTalk Co., Ltd (2) People’s Republic Bakers and manufacturers of and 100 100
of China dealers in bread, flour and biscuits

92 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

13. Investment in subsidiaries (cont’d)

Country of Proportion of
Name incorporation Principal activities ownership interest
2009 2008
% %
Held through subsidiaries (cont’d)

Shanghai BreadTalk Gourmet People’s Republic Management of food and 100 100
Co., Ltd (2) of China beverage, manufacture and retail
of bakery, confectionery products

Beijing BreadTalk Restaurant People’s Republic Management of food and 100 100
Management Co., Ltd (2) of China beverage, manufacture and retail
of bakery, confectionery products

Beijing BreadTalk Co.,Ltd (2) People’s Republic Manufacture and sale of bakery 100 –
(Note (a)) of China and confectionery products

Food Republic (Shanghai) People’s Republic Food court operator 100 100
Co., Ltd (2) of China

Beijing Da Shi Dai Food and People’s Republic Food court operator 100 100
Beverage Co., Ltd (2) of China

Chongqing Food Republic Food People’s Republic Food court operator 100 100
& Beverage Co., Ltd (3) of China

Megabite Hong Kong Limited (4) Hong Kong Food court operator 85 85

Megabite (S) Pte Ltd (1) Singapore Investment holding and operator 100 100
of food and beverage outlets

Food Republic Pte Ltd (1) Singapore Food court operator 100 100

BreadTalk (Thailand) Company Thailand Management of food and 100 100

Limited (5) beverage, manufacture and retail
of bakery, confectionery products

Megabite Eatery (M) Sdn Bhd (6) Malaysia Operator of food and beverage 100 100
outlets

B r e a d Ta l k
Annual Report 2009 93
Notes to the Financial Statements
31 December 2009

13. Investment in subsidiaries (cont’d)

Country of Proportion of
Name incorporation Principal activities ownership interest
2009 2008
% %
Held through subsidiaries
(cont’d)

BreadTalk Concept Hong Kong Hong Kong Management of food and 85 85

Limited (4) beverage, manufacture and retail
of bakery, confectionery products

ML Breadworks Sdn Bhd (7) Malaysia Bakers and manufacturers of and 90 90

dealers in bread, flour and biscuits

MWA Pte Ltd (1)(11) Singapore Dormant 100 100

Food Art Pte Ltd (1) Singapore Operators of food and beverage 100 100
outlets

Twin Peaks Venture Singapore Singapore Retail of bakery and – 70

Pte Ltd ( Note (b)) confectionery products

Shanghai Star Food F&B People’s Republic Operators of restaurants 60 60

Management Co., Ltd (2) of China

Beijing Star Food F&B People’s Republic Operators of restaurants 60 60

Management Co., Ltd (9) of China

Ramen Play Pte.Ltd. (8) Singapore Operators of restaurants 60 –

(Note (a))

Shanghai Ramen Play Co., People’s Republic Operators of restaurants 60 –

Ltd (3) (Note (a)) of China

(1)
Audited by Ernst & Young LLP, Singapore
(2)
Audited by member firms of Ernst & Young Global in the respective countries
(3)
Audited by Shanghai Xin Gao Xin Certified Public Accountants Co., Ltd, People’s Republic of China
(4)
Audited by S.F. Kwok & Co. Certified Public Accountants, Hong Kong
(5)
Audited by CNN & S Co., Ltd, Thailand
(6)
Audited by RSM Robert Teo, Kuan & Co., Malaysia
(7)
Audited by C L Chong & Co., Malaysia
(8)
Audited by Trustnet Alliance, Singapore
(9)
Audited by Beijing Daxing Certified Public Accountants Co., Ltd, People’s Republic of China
(10)
Cost of investment is $1 (2008: Nil).
(11)
The company’s food court operations at Wisma Atria, Singapore, was transferred to a related company,
Food Republic Pte Ltd as at 1 January 2009. The company has since been dormant.
(12)
The subsidiary was incorporated in November 2009 and an audit is not required for the period ended
31 December 2009.

94 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

13. Investment in subsidiaries (cont’d)

(a) New subsidiaries and additional investments

Imagine Properties Pte Ltd

The Company incorporated the wholly-owned subsidiary in November 2009 with a share capital of $1.

Star Food Pte Ltd

During the year, the Company subscribed for 60% of the additional share capital issued by the subsidiary. The
Company subscribed a total of 1,800,000 new ordinary shares in Star Food Pte Ltd for a cash consideration
of $1,800,000.

Together Inc. Pte Ltd and Ramen Play Pte Ltd

The Company incorporated the wholly-owned subsidiary, Together Inc. Pte Ltd (“Together Inc”) in May
2009 with a share capital of $10, for the purpose of facilitating the Company’s joint investment with
Sanpou Co., Ltd.

Together Inc then incorporated a 60% owned subsidiary, Ramen Play Pte Ltd (“Ramen Play”) in May
2009.

In June 2009, the Company increased the paid up capital of Together Inc from $10 to $950,000 by the
subscription of an additional 949,990 ordinary shares for $949,990 for the purpose of capital injection in
Ramen Play. Subsequently, Together Inc increased its investment in Ramen Play with a subscription of
899,994 ordinary shares for a cash consideration of $899,994.

Beijing BreadTalk Co., Ltd

Beijing BreadTalk Co., Ltd was incorporated as a wholly-owned subsidiary of Beijing BreadTalk Restaurant
Management Co., Ltd in February 2009 with a registered and paid up capital of Rmb 500,000 ($113,000).

Shanghai Ramen Play Co., Ltd (“Shanghai Ramen Play”)

The Company’s wholly-owned subsidiaries, Shanghai BreadTalk Co., Ltd (“Shanghai BreadTalk”) and Food
Republic (Shanghai) Co., Ltd (“Food Republic Shanghai”), subscribed for 30% each of the registered share
capital of Shanghai Ramen Play for a total cash consideration of US$900,000 ($1,280,000). The Company
has an effective interest of 60% in Shanghai Ramen Play.

(b) Disposal of a subsidiary

During the year, BreadTalk Pte Ltd, a wholly-owned subsidiary of the Company, disposed of its 70%
shareholding interest in Twin Peaks Venture Singapore Pte Ltd (“Twin Peaks”) for a cash consideration
of $390,000. The effect on the Group’s cash fl ows arising from the disposal is shown in Note B of the
Consolidated Cash Flow Statement.

B r e a d Ta l k
Annual Report 2009 95
Notes to the Financial Statements
31 December 2009

14. Investment in associates

Group
2009 2008
$’000 $’000

Investment in shares, unquoted

Shares, at cost 1,252 1,252
Impairment loss (385) (385)
Loan to an associate 614 614
Share of post-acquisition results of associates (1,481) (1,281)

At end of year – 200

Loan to an associate is quasi-capital in nature, non-interest bearing and has no fixed terms of repayment.

Details of the associates are as follows:

Country of Proportion of
Name incorporation Principal activities ownership interest
2009 2008
% %
Held through subsidiaries

Hong Kong BreadTalk Ltd Hong Kong Dormant 25 25

(“HKBT”) (1), (2)

Out of The Box Pte Ltd Singapore Marketing and distribution of canned 30 30
(“OOTB”) (1) drinks

(1)
Not a signifi cant associate and unaudited fi nancial statements have been used for the preparation of the
consolidated financial statements of the Group.
(2)
HKBT had effectively ceased operations since September 2007.

The Group has not recognised losses relating to HKBT and OOTB where its share of losses exceeds the Group’s
interest in these associates. The Group’s cumulative share of unrecognised losses as at 31 December 2009 was
$381,000 (2008: $292,000). The Group has no obligation in respect of these losses.

96 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

14. Investment in associates (cont’d)

The summarised financial information of the associates, not adjusted for the proportion of ownership interest held
by the Group, is as follows:

Group
2009 2008
$’000 $’000

Assets and liabilities

Total assets 98 909

Total liabilities 3,647 3,581

Results

Revenue 30 495

Net loss for the year (568) (1,466)

15. Investment in joint ventures

Group
2009 2008
$’000 $’000

Investment in shares, unquoted

Shares, at cost 334 334

Share of post-acquisition results of joint ventures (33) (98)
Exchange difference (17) (14)

284 222

B r e a d Ta l k
Annual Report 2009 97
Notes to the Financial Statements
31 December 2009

15. Investment in joint ventures (cont’d)

Details of the joint ventures are as follows:

Country of Proportion of
Name incorporation Principal activities ownership interest
2009 2008
% %

Held through subsidiaries

Shanghai Hong Bu Rang Food & People’s Republic Operator of food and 50 50
Beverage Management Co., Ltd of China beverage outlets
(“Shanghai Hong Bu Rang”)(1)

Apex Excellent Sdn Bhd (2) Malaysia Food court operator 50 50

(1)
Audited by Shanghai Xin Gao Xin Certified Public Accountants Co., Ltd, People’s Republic of China
(2)
Audited by RSM Robert Teo, Kuan & Co., Malaysia

The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities,
income and expenses, adjusted for the proportion of ownership interest held by the Group in the joint ventures,
are as follows:

Group
2009 2008
$’000 $’000

Assets and liabilities

Current assets 1,321 1,170
Non-current assets 282 268

Total assets 1,603 1,438

Current liabilities 1,431 1,204

Non-current liabilities 9 12

Total liabilities 1,440 1,216

Results
Revenue 2,622 3,150
Other income 433 462
Expenses (3,097) (3,658)

Loss for the year (42) (46)

The Group has not recognised losses relating to Shanghai Hong Bu Rang where its share of losses exceeds the
Group’s interest in this joint venture. The Group’s cumulative share of unrecognised losses as at 31 December
2009 was $112,000 (2008: $5,000). The Group has no obligation in respect of these losses.

98 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

16. Inventories

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000
Balance sheet:

Raw materials and consumables, at cost 4,263 3,350 – –

Semi-finished goods 393 459 – –
Finished goods 68 – – –
Base inventories (1) 114 116 – –

Total inventories at lower of cost and net

realisable value 4,838 3,925 – –

(1)
This is stated after writing down 50% of the original cost of base inventories

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Profit or loss:

Inventories recognised as an expense in cost

of sales 61,230 55,599 – –
Inclusive of the following charge:
- Write-down of inventories 10 – – –
- Write-off of inventories 13 – – –

17. Trade receivables

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Trade receivables 3,868 4,761 – –

Trade receivables are non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their
original invoice amounts which represents their fair values on initial recognition.

B r e a d Ta l k
Annual Report 2009 99
Notes to the Financial Statements
31 December 2009

17. Trade receivables (cont’d)

Receivables that are past due but not impaired

The Group has trade receivables amounting to $716,000 (2008: $1,847,000) that are past due at the balance sheet
date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is
as follows:

Group
2009 2008
$’000 $’000

Trade receivables past due:

Lesser than 30 days 190 622
30 to 60 days 9 716
61 to 90 days 308 202
91 to 120 days 63 33
More than 120 days 146 274

716 1,847

Receivables that are impaired

The Group’s trade receivables that are impaired at the balance sheet date and the movement of the allowance
accounts used to record the impairment are as follows:

Group
Individually impaired
2009 2008
$’000 $’000

Trade receivables – nominal amounts 86 –

Less: Allowance for impairment (86) –

– –

Movement in allowance accounts:

At 1 January – 10
Charge/(write back) during the year 86 (10)

At 31 December 86 –

Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that
are in financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or
credit enhancements.

100 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

18. Other receivables and deposits

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Non-current:
Other receivables 913 – – –
Less: Allowance for impairment (74) – – –

839 – – –

Current:
Other receivables 5,501 5,731 296 9
Less: Allowance for impairment (237) (13) – –

5,264 5,718 296 9

Deposits 19,262 12,166 25 –

24,526 17,884 321 9

Other receivables are non-interest bearing and are generally on 30 to 180 days terms except for an amount of
$913,000 (2008: Nil) which is due after 12 months. Deposits include an amount of $5,000,000 (2008: Nil) for
the subscription of junior bonds relating to the Group’s investment in a retail property trust in Singapore.

Other receivables that are past due but not impaired

The Group has other receivables amounting to $1,378,000 (2008: $762,000) that are past due at the balance sheet
date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is
as follows:

Group
2009 2008
$’000 $’000

Other receivables past due:

Lesser than 30 days 463 297
30 to 60 days 300 124
61 to 90 days 165 58
91 to 120 days 50 86
More than 120 days 400 197

1,378 762

B r e a d Ta l k
Annual Report 2009 101
Notes to the Financial Statements
31 December 2009

18. Other receivables and deposits (cont’d)

Other receivables that are impaired

The Group’s other receivables that are impaired at the balance sheet date and the movement of the allowance
accounts used to record the impairment are as follows:

Group
2009 2008
$’000 $’000

Other receivables – nominal amounts 1,150 13

Less: Allowance for impairment (311) (13)

839 –

Movement in allowance accounts:

At 1 January 13 –
Charge during the year 298 13

At 31 December 311 13

19. Prepayments

This comprises advance payment of land premium for the lease of land from Jurong Town Corporation and related
charges. The land is intended for the construction of office building and development of manufacturing facilities
in Singapore.

20. Amounts due from/to subsidiaries and joint ventures (non-trade)

The amount due from/to subsidiaries and joint ventures are unsecured, non-interest bearing and generally on 30
to 60 days term except for:

(i) loans to subsidiaries of $7,371,000 (2008: $5,481,000) which are repayable on demand;

(ii) a loan to a subsidiary of $600,000 as at 31 December 2008 which earned an interest of 7.5% per annum and
was fully repaid during the financial year; and

(iii) a loan from a subsidiary of $2,000,000 (2008: $Nil) which is repayable on demand.

102 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

20. Amounts due from/to subsidiaries and joint ventures (non-trade) (cont’d)

Group

Receivables that are past due but not impaired

Amount due from joint venture (non-trade)

2009 2008
$’000 $’000

Lesser than 30 days 16 15

30 to 60 days 18 15
61 to 90 days 18 –
91 to 120 days 4 –

Total as at 31 December 56 30

Company

Receivables that are past due but not impaired

Amount due from subsidiaries (non-trade)

2009 2008
$’000 $’000

Lesser than 30 days 13 414

30 to 60 days 2 427
61 to 90 days 10 414
91 to 120 days 11 7
More than 120 days – 1

Total 36 1,263

21. Cash and cash equivalents

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Fixed deposits 557 3,187 – 2,550

Cash on hand and at bank 57,869 44,690 3,020 3,909

58,426 47,877 3,020 6,459

Fixed deposits of the Group and the Company have maturity periods of 12 months (2008: 3 months to 12 months)
with effective interest rates ranging from 0.45% to 2.25% (2008: 0.93% to 4.14%) per annum.

B r e a d Ta l k
Annual Report 2009 103
Notes to the Financial Statements
31 December 2009

22. Trade payables

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Trade payables 14,044 11,630 – –

Trade payables are non-interest bearing and are normally settled on 30 to 90 days terms.

23. Other payables, other liabilities and provision for reinstatement costs

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Other payables 37,919 34,898 224 149

Other liabilities

Accrued operating expenses 21,656 17,483 1,764 1,475

Deferred revenue 8,161 3,589 – –

29,817 21,072 1,764 1,475

Other payables are non-interest bearing and have an average of 30 to 90 days term, except for retention sums
included therein which have repayment terms of up to 1 year. Included in other payables are food court tenant and
stored value card deposits of $8,539,000 (2008: $7,141,000).

Provision for reinstatement costs

2009 2008
$’000 $’000

Group
At 1 January 1,809 1,487
Additions 1,280 322
Disposal of a subsidiary (1) (28) –

Total as at 31 December 3,061 1,809

(1)
Details are in Note B to the Cash Flow Statement

104 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

24. Loans from minority shareholders of subsidiaries

The loans from minority shareholders of subsidiaries are unsecured, non-interest bearing and have no fixed terms
of repayment.

During the year, the loan from minority shareholder of the subsidiary, Megabite Hong Kong Limited (“MBHK”),
amounting to $126,000, was capitalised as equity. The Group’s interest in MBHK remain unchanged at 85%. The
remaining loan from minority shareholder, amounting to $150,000, was deconsolidated with the disposal of the
subsidiary, Twin Peaks Venture Singapore Pte Ltd during the year.

25. Finance lease obligations, secured

The Group has finance leases for certain items of machinery and equipment and motor vehicles (Note 10).

Future minimum lease payments under fi nance leases together with the present value of the net minimum lease
payments are as follows:

Group
Total Total
minimum minimum
lease Present value lease Present value
payments of payments payments of payments
2009 2009 2008 2008
$’000 $’000 $’000 $’000

Not later than one year 188 173 216 191

Later than one year but not later than five years 225 216 458 430

Total minimum lease payments 413 389 674 621

Less: amounts representing finance charges (24) – (53) –

Present value of minimum lease payments 389 389 621 621

The leases have options to purchase at the end of the lease term. The effective interest rates of the leases range
from 4.20% to 6.09% (2008: 4.20% to 6.10%) per annum. Lease terms do not contain restrictions concerning
dividends, additional debt or further leasing.

B r e a d Ta l k
Annual Report 2009 105
Notes to the Financial Statements
31 December 2009

26. Short-term loans, secured

Group
2009 2008
$’000 $’000

Bank loans
- USD 845 868
- HKD 1,268 2,141
- RMB 2,846 846
- SGD – 1,000

4,959 4,855

The effective interests on these short-term loans range from 1.70% to 7.88% (2008: 2.03% to 7.88%) per annum.
The interest rates of these fl oating rate loans are repriced from time to time at the discretion of the respective
banks.

The bank loans are revolving term loans of 3 to 6 months (2008: 3 to 6 months) and are secured by several
continuing guarantees by the Company.

27. Long-term loans, secured

Group
Term loans Maturity 2009 2008
$’000 $’000

SGD loans 2010 - 2012 3,661 2,703

HKD loans 2010 - 2012 4,565 6,934

RMB loans 2012 2,062 1,547

RM loan 2012 306 –

RM loan Note 1 189 67

10,783 11,251

Current 3,815 4,844

Non-current 6,968 6,407

10,783 11,251

Note 1 – the loan is repayable by 36 monthly instalments upon full drawdown of the loan to a specified sum.

106 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

27. Long-term loans, secured (cont’d)

Other than a SGD loan of $222,000 (2008: $889,000) which is a fixed rate loan bearing an interest rate of 4.25%
per annum, all other loans are floating rate loans with effective interest rates ranging from 1.85% to 6.11% (2008:
2.08% to 7.94%) per annum. The interest rates of these fl oating rate loans are repriced from time to time at the
discretion of the respective banks.

Securities

As at 31 December 2008, a term loan of $1,547,000 was secured by a charge over a leasehold property held by
Shanghai BreadTalk Co., Ltd. During the financial year, the loan was fully repaid and accordingly the security was
discharged.

Term loans of $3,520,000 (2008: $2,522,000) are secured by continuing guarantees by the Company and Topwin
Investment Holding Pte Ltd, a wholly-owned subsidiary.

All other term loans are secured by continuing guarantees by the Company.

28. Amount due to landlord (non-trade)

The balance is payable to a landlord, who paid renovation costs on behalf of a subsidiary. This amount is unsecured
and non-interest bearing.

Group
2009 2008
$’000 $’000

Current 88 90
Non-current 127 197

215 287

29. Share capital and treasury shares

(a) Share capital

Group and Company

2009 2008
Number of Number of
shares $’000 shares $’000

Issued and fully paid

At beginning and end of the year 234,911,034 33,303 234,911,034 33,303

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when
declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary
shares have no par value.
B r e a d Ta l k
Annual Report 2009 107
Notes to the Financial Statements
31 December 2009

29. Share capital and treasury shares (cont’d)

(b) Treasury shares

Group and Company

2009 2008
Number of Number of
shares $’000 shares $’000

At beginning of the year – – – –

Acquired during the financial year (970,000) (283) – –

At end of the year (970,000) (283) – –

Treasury shares relate to ordinary shares of the Company that is held by the Company.

The Company acquired 970,000 (2008: Nil) shares in the Company through purchases on the Singapore
Exchange during the financial year. The total amount paid to acquire the shares was $283,000 (2008: $Nil)
and this was presented as a component within shareholders’ equity.

30. Accumulated profits and other reserves

(a) Accumulated profits

Included in the Group’s accumulated profi ts is an amount of $1,432,000 (2008: $1,432,000) which is
not distributable by way of dividends. The amount arose from the waiver of inter-company debt in the
subsidiary, Beijing BreadTalk Restaurant Management Co., Ltd, which was recognised as capital reserve in
accordance with local accounting convention.

(b) Statutory reserve fund

In accordance with the Foreign Enterprise Law applicable to subsidiaries in the People’s Republic of China
(“PRC”), the subsidiaries are required to make appropriation to a Statutory Reserve Fund (“SRF”). At least
10% of the statutory after tax profi ts as determined in accordance with the applicable PRC accounting
standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50%
of the subsidiaries’ registered capital. Subject to the approval from the relevant PRC authorities, the SRF
may be used to offset any accumulated losses or increase the registered capital of the subsidiaries. The SRF
is not available for dividend distribution to shareholders.

(c) Translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation
of the financial statements of foreign operations whose functional currencies are different from that of
the Group’s presentation currency.

108 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

30. Accumulated profits and other reserves (cont’d)

(d) Fair value adjustment reserve

Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale
financial assets until they are disposed of or impaired.

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000
Net gain on available-for-sale financial
assets:
- Net gain on fair value changes during
the financial year – 1,178 – –

31. Commitments and contingencies

(a) Commitments

Expenditure contracted for as at the balance sheet date but not recognised in the financial statements is
as follows:

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000
Commitment in respect of property,
plant and equipment 5,159 168 4,518 87

Commitment for capital contribution

in a subsidiary – – 1,200 3,000

(b) Contracted operating lease commitments

The Group has various operating lease agreements for equipment, offi ce, central kitchen, food court and
retail outlet premises. These non-cancellable leases have remaining non-cancellable lease terms of between
less than 1 year and 9 years. Most leases contain renewable options. Some of the leases contain escalation
clauses and provide for contingent rentals based on percentages of sales derived from assets held under
operating leases. Lease terms do not contain restrictions on the Group’s activities concerning dividends,
additional debt or further leasing.

B r e a d Ta l k
Annual Report 2009 109
Notes to the Financial Statements
31 December 2009

31. Commitments and contingencies (cont’d)

(b) Contracted operating lease commitments (cont’d)

Future minimum lease payments payable under non-cancellable operating leases as at 31 December are
as follows:

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Not later than one year 56,090 39,865 – –

Later than one year but not later than
five years 144,833 78,796 – –
Later than five years 20,512 11,964 – –

221,435 130,625 – –

(c) Operating lease

The Group has entered into non-cancellable operating leases to sublease its food court and retail outlet
premises. Sublease rental receivable as at 31 December is as follows:

Group Company
2009 2008 2009 2008
$’000 $’000 $’000 $’000

Not later than one year 31,275 25,209 – –

Later than one year but not later than
five years 22,582 12,569 – –

53,857 37,778 – –

(d) Letters of guarantees, secured

As at 31 December 2009, the banks issued letters of guarantees on behalf of the Group to lessors of premises
amounting to approximately $5,654,000 (2008: $5,254,000).

(e) Corporate guarantees

The Company has provided corporate guarantees of $21,785,000 (2008: $21,981,000) to fi nancial
institutions on its subsidiaries’ borrowings and other banking facilities.

110 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

32. Related party disclosures

(a) Sale and purchase of goods and services

In addition to those related party information disclosed elsewhere in the financial statements, the following
significant transactions between the Group and related parties took place during the year on terms agreed
between the parties:

Group
2009 2008
$’000 $’000

Income
Sale of goods to associates – 2
Management fee income from a joint venture 306 190
Rental and miscellaneous income from a party related to a director of the Company – 283
Food court income from a company related to a director of a subsidiary 567 636

Expenses
Rental expense to a joint venture 228 103
Rental expense to a minority shareholder – 8
Royalty fees to minority shareholders 1,055 879
Management fee to a minority shareholder – 15
Staff cost recharged by a minority shareholder – 21
Purchase of goods from a company related to a director of a subsidiary 270 196

Others
Franchise fee to minority shareholders 29 29
Purchase of furniture and fittings from a company related to a director of 71 –
the Company

(b) Compensation of key management personnel

Salaries and bonus 5,078 4,940

Central Provident Fund contributions and other pension contributions 176 166
Share-based payment (RSG Plan) 90 –
Directors’ fees 112 105
Other personnel expenses 727 627

Total compensation paid to key management personnel 6,183 5,838

Comprise amounts paid to:

Directors of the Company 1,644 1,539

Directors of subsidiaries 825 1,051
Other key management personnel 3,714 3,248

6,183 5,838

B r e a d Ta l k
Annual Report 2009 111
Notes to the Financial Statements
31 December 2009

33. Financial risk management objectives and policies

The Group and the Company is exposed to fi nancial risks arising from its operations and the use of fi nancial
instruments. The key fi nancial risks include interest rate risk, foreign currency risk, credit risk, liquidity risk
and market price risk. The Audit Committee provides independent oversight to the effectiveness of the risk
management process.

The Group’s and Company’s principal financial instruments comprise bank loans, finance leases and cash and short
term deposits. The main purpose of these financial instruments is to raise finance for the Group’s and Company’s
operations. The Group and Company has various other fi nancial assets and liabilities such as trade and other
receivables, trade and other payables and related company balances, which arise directly from its operations.

It is, and has been throughout the current and previous financial year, the Group’s and Company’s policy that no
trading in derivative financial instruments shall be undertaken.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned
financial risks and the objectives, policies and processes for the management of these risks.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash fl ows of the Group’s and the Company’s
financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rates risk arises primarily from its investment portfolio
in fixed deposits and its debt obligations. The Group does not use derivative financial instruments to hedge
its investment portfolio. The Group obtains additional fi nancing through bank borrowings and leasing
arrangements. The Group’s policy is to obtain the most favourable interest rates available without increasing
its foreign exchange exposure.

Surplus funds are placed with reputable banks.

Sensitivity analysis for interest rate risk

Group
Effect on profit net of tax

100 basis 100 basis

points points
increase decrease
$’000 $’000

2009

- Singapore dollar (28) 28

- Renminbi (36) 36
- Hong Kong dollar (58) 58
- US dollar (6) 6
- Ringgit (5) 5

112 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

33. Financial risk management objectives and policies (cont’d)

(a) Interest rate risk (cont’d)

Group
Effect on profit net of tax

100 basis 100 basis

points points
increase decrease
$’000 $’000
2008

- Singapore dollar (2) 2

- Renminbi (22) 22
- Hong Kong dollar (91) 91
- US dollar (6) 6

(b) Foreign currency risk

The Group has transactional currency exposures arising from sales, purchases and borrowings that are
denominated in a currency other than the respective functional currencies of Group entities, primarily
SGD, Renminbi (RMB) and Hong Kong Dollar (HKD). The foreign currencies in which these transactions
are denominated are mainly US dollars (USD), HKD, RMB and SGD.

Currently, the Chinese government imposes control over foreign currency. RMB, the official currency in the
People’s Republic of China (“PRC”), is not freely convertible. Enterprises operating in the PRC can enter
into exchange transactions through the People’s Bank of China or other authorised financial institutions.
Payments for imported materials or services and remittance of earnings outside of the PRC are subject to
the availability of foreign currency which depends on the foreign currency denominated earnings of the
enterprises, or exchanges of RMB for foreign currency must be arranged through the People’s Bank of China
or other authorised fi nancial institutions. Approval for exchanges at the People’s Bank of China or other
authorised fi nancial institutions is granted to enterprises in the PRC for valid reasons such as purchase of
imported materials and remittance of earnings. While conversion of RMB into Singapore dollars or other
currencies can generally be effected at the People’s Bank of China or other authorised financial institutions,
there is no guarantee that it can be effected at all times.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations,
in Malaysia, the PRC, Hong Kong and Thailand. The Group’s net investments in these countries are not
hedged as currency positions in Ringgit Malaysia, RMB, Hong Kong dollar and Thai Baht are considered
to be long-term in nature.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profi t net of tax to a reasonably possible
change in the USD, HKD, RMB and SGD exchange rates against the respective functional currencies of
the Group entities, with all other variables held constant.

B r e a d Ta l k
Annual Report 2009 113
Notes to the Financial Statements
31 December 2009

33. Financial risk management objectives and policies (cont’d)

(b) Foreign currency risk (cont’d)

Group
Effect on profit net of tax
2009 2008
$’000 $’000

Against SGD:

USD - strengthened 6% (2008: 6%) 130 141

- weakened 6% (2008: 6%) (130) (141)

HKD - strengthened 5% (2008: 5%) 49 64

- weakened 5% (2008: 5%) (49) (64)

RMB - strengthened 5% (2008: 5%) (13) 84

- weakened 5% (2008: 5%) 13 (84)

Against RMB:

USD - strengthened 6% (2008: 6%) 57 (13)

- weakened 6% (2008: 6%) (57) 13

SGD - strengthened 5% (2008: 5%) 42 (9)

- weakened 5% (2008: 5%) (42) 9

Against HKD:

SGD - strengthened 5% (2008: 5%) (309) (67)

- weakened 5% (2008: 5%) 309 67

(c) Credit risk

Credit risk is the risk of loss that may arise on outstanding fi nancial instruments should a counterparty
default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from
trade and other receivables. For other fi nancial assets (including investment securities, cash and cash
equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit
rating counterparties.

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all
customers who wish to trade on credit terms are subject to credit verifi cation procedures. In addition,
receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad
debts is not significant.

114 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

33. Financial risk management objectives and policies (cont’d)

(c) Credit risk (cont’d)

Exposure to credit risk

At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk is represented
by:

– the carrying amount of each class of financial assets recognised in the balance sheets; and

– an amount of $21,785,000 (2008: $21,981,000) relating to corporate guarantees provided by the

Company to financial institutions on its subsidiaries’ borrowings and other banking facilities.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country profile of its trade receivables
on an on-going basis. The credit risk concentration profile of the Group’s trade receivables at the balance
sheet date is as follows:

Group
2009 2008
% of % of
$’000 total $’000 total

By country:
Singapore 209 6% 559 12%
People’s Republic of China 2,946 76% 3,218 68%
Indonesia 55 1% 109 2%
The Philippines 472 12% 753 16%
Thailand 131 3% 94 2%
Kuwait 22 1% 21 –
Others 33 1% 7 –

3,868 100% 4,761 100%

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good
payment record with the Group. Cash and cash equivalents are placed with or entered into with reputable
financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Notes 17, 18 and
20 above.

B r e a d Ta l k
Annual Report 2009 115
Notes to the Financial Statements
31 December 2009

33. Financial risk management objectives and policies (cont’d)

(d) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter diffi culty in meeting fi nancial
obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises
primarily from mismatches of the maturities of fi nancial assets and liabilities. The Group’s and the
Company’s objective is to maintain a balance between continuity of funding and flexibility through the use
of stand-by credit facilities.

The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management
to finance the operations of the Group.

Short-term funding may be obtained from short-term loans where necessary.

The table below summarises the maturity profi le of the Group’s and the Company’s fi nancial assets and
financial liabilities at the balance sheet date based on contractual undiscounted payments:

2009 2008
1 year 1 to 1 year 1 to
or less 5 years Total or less 5 years Total
Group $’000 $’000 $’000 $’000 $’000 $’000
Financial assets :
Investment securities – 1,494 1,494 – 1,494 1,494
Trade receivables 3,868 – 3,868 4,761 – 4,761
Other receivables and deposit 24,526 839 25,365 17,884 – 17,884
Amount due from joint ventures 469 – 469 343 – 343
(non-trade)
Fixed deposits 557 – 557 3,187 – 3,187
Cash on hand and at bank 57,869 – 57,869 44,690 – 44,690

87,289 2,333 89,622 70,865 1,494 72,359

Financial liabilities :
Trade and other payables 51,963 – 51,963 46,528 – 46,528
Accrued operating expenses 21,656 – 21,656 17,483 – 17,483
(Note 23)
Amount due to joint ventures 193 127 320 189 197 386
and landlord
Loans and borrowings 9,315 7,413 16,728 10,219 7,230 17,449

83,127 7,540 90,667 74,419 7,427 81,846

Company
Financial assets :
Other receivables and deposits 321 – 321 9 – 9
Amount due from subsidiaries 10,738 – 10,738 7,853 – 7,853
Fixed deposits – – – 2,550 – 2,550
Cash on hand and at bank 3,020 – 3,020 3,909 – 3,909

14,079 – 14,079 14,321 – 14,321

Financial liabilities :
Trade and other payables 224 – 224 149 – 149
Accrued operating expenses 1,764 – 1,764 1,475 – 1,475
(Note 23)
Amount due to subsidiaries 2,027 – 2,027 8 – 8
4,015 – 4,015 1,632 – 1,632

116 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

33. Financial risk management objectives and policies (cont’d)

(d) Liquidity risk (cont’d)

The table below shows the contractual expiry by maturity of the Company’s contingent liabilities.
The maximum amount of the financial guarantee contracts are allocated to the earliest period in
which the guarantee could be called.

2009 2008
1 year 1 to 5 1 year 1 to 5
or less years Total or less years Total
Company $’000 $’000 $’000 $’000 $’000 $’000

Financial guarantees 14,969 7,413 22,382 15,472 7,230 22,702

(e) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will
fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed
to equity price risk arising from its investment in quoted equity instrument. This instrument is quoted on
the SGX-ST in Singapore and is classifi ed as available-for-sale fi nancial asset. The Group does not have
exposure to commodity price risk.

Sensitivity analysis for equity price risk

At the balance sheet date, if the share price had been 15% (2008: 15%) higher/lower with all other variables
held constant, the Group’s Fair Value Adjustment Reserve in equity would have been $224,000 (2008:
$224,000) higher/lower, arising as a result of an increase/decrease in the fair value of equity instruments
classified as available-for-sale.

B r e a d Ta l k
Annual Report 2009 117
Notes to the Financial Statements
31 December 2009

34. Financial instruments

(a) Financial assets and liabilities

The carrying amount by category of financial assets and liabilities are as follows:

Group
2009 2008
$’000 $’000
Loans and receivables

Trade receivables 3,868 4,761

Other receivables and deposits 25,365 17,884
Amount due from joint-ventures (non-trade) 469 343
Fixed deposits 557 3,187
Cash on hand and at bank 57,869 44,690

Total 88,128 70,865

Available-for-sale financial assets

Investment securities 1,494 1,494

Financial liabilities carried at amortised cost

Trade payables 14,044 11,630

Other payables 37,919 34,898
Accrued operating expenses (Note 23) 21,656 17,483
Amount due to joint-ventures (non-trade) 105 99
Amount due to landlord (non-trade) (Note 28) 215 287
Finance lease obligations, secured (Note 25) 389 621
Short term loans, secured (Note 26) 4,959 4,855
Long term loans, secured (Note 27) 10,783 11,251
Loans from minority shareholders of subsidiaries – 276

Total 90,070 81,400

118 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

34. Financial instruments (cont’d)

(b) Fair values

Financial instruments carried at fair value

The fair value of investment securities is determined by reference to the published market bid price at the
balance sheet date.

Financial instruments whose carrying amount approximate fair value

Management has determined that the carrying amounts of cash and bank balances, fixed deposits, trade and
other receivables, trade and other payables, related company balances, amount due to landlord and floating
rate bank loans, based on their notional amounts, reasonably approximate their fair values because these
are mostly short term in nature or are repriced frequently.

Fixed interest rate term loan of $222,000 (2008: $889,000) approximates fair value based on available
market information on similar loans as at financial year end.

Financial instruments carried at other than fair value

Set out below is a comparison of the carrying amount and fair value of the financial instrument that is
carried in the financial statements at other than fair value as at 31 December.

Carrying amount Fair value

2009 2008 2009 2008
$’000 $’000 $’000 $’000

Financial assets:
Other receivables 839 – 796 –

Financial liabilities:
Obligations under finance leases 389 621 382 606

Fair value is estimated by discounting expected future cash fl ows at market incremental lending rate for
similar types of borrowing or leasing arrangements at the balance sheet date.

No disclosure of fair values are made for the quasi-capital loan to an associate, loans from minority
shareholders of subsidiaries and long-term amount due to landlord as it is not practical to determine their
fair values with sufficient reliability since the balances have no fixed terms of repayment.

B r e a d Ta l k
Annual Report 2009 119
Notes to the Financial Statements
31 December 2009

35. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return
capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during
the year ended 31 December 2009 and 2008.

As disclosed in Note 30, subsidiaries of the Group operating in the PRC are required by the Foreign Enterprise Law
of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to
approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by
the respective subsidiaries for the financial year ended 31 December 2009 and 2008.

The Group monitors capital using gearing ratio (which is total borrowings divided by total equity) and net gearing
ratio (which is total borrowings less cash and cash equivalents divided by total equity).

Group
2009 2008
$’000 $’000

Total borrowings (1) 16,131 17,003

Less: Cash and cash equivalents (58,426) (47,877)

Net cash (42,295) (30,874)

Total equity 66,166 56,133

Gearing ratio (times) 0.24 0.30

Net gearing Net cash Net cash

(1)
including bank loans, finance lease obligations and loans from minority shareholders of subsidiaries

120 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

36. Segment information

For management purposes, the Group is organised into business units based on their products and services, and has
three reportable operating segments as follows:

(a) The bakery segment is in the business of manufacturing and retailing of all kinds of food, bakery and
confectionary products including franchising.

(b) The food court segment is involved in the management and operation of food courts and operation of food
and drinks outlets within the food courts.

(c) The restaurant segment is in the business of operating food and drinks outlets, eating houses and
restaurants.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating
segments.

Management monitors the operating results of its business units separately for the purpose of making decisions
about resource allocation and performance assessment. Segment performance is evaluated based on operating
profit or loss.

Transactions between operating segments are generally based on terms determined on commercial basis.

B r e a d Ta l k
Annual Report 2009 121
Notes to the Financial Statements
31 December 2009

36. Segment information (cont’d)

Food
Bakery Restaurant court
2009 operations (1) operations operations Others (2) Elimination Group
$’000 $’000 $’000 $’000 $’000 $’000
Revenue
External sales 129,372 38,960 78,161 – – 246,493
Inter-segment sales (Note A) 282 – 1,853 – (2,135) –

Total revenue 129,654 38,960 80,014 – (2,135) 246,493

Results
Profit from operations 7,902 3,075 4,882 394 – 16,253
Interest income 47 4 30 22 (14) 89
Interest expense (377) (8) (221) – 14 (592)
Share of associates’ results – – – (200) – (200)
Share of joint ventures’ results – – 65 – – 65

Segment profit 7,572 3,071 4,756 216 – 15,615

Tax expense (3,975)

Profit for the year 11,640

Assets and liabilities

Segment assets (Note A) 64,209 32,457 82,006 13,425 (20,884) 171,213
Deferred tax assets 872

Total assets 172,085

Segment liabilities 42,504 16,216 60,139 4,031 (21,598) 101,292

(Note A)
Tax payable 3,216
Deferred tax liabilities 1,411

Total liabilities 105,919

Other information
Investment in joint ventures – – 284 – – 284
Additions to non-current assets 8,235 4,206 13,337 754 – 26,532
(Note B)
Depreciation and amortisation 6,034 1,955 8,675 37 – 16,701
Other non-cash expenses 500 422 968 90 – 1,980
(Note C)

122 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

36. Segment information (cont’d)

Food
Bakery Restaurant court
2008 operations (1) operations operations Others (2) Elimination Group
$’000 $’000 $’000 $’000 $’000 $’000
Revenue
External sales 110,864 32,173 69,212 – – 212,249
Inter-segment sales (Note A) 225 – 1,361 – (1,586) –

Total revenue 111,089 32,173 70,573 – (1,586) 212,249

Results
Profit from operations 4,313 3,011 6,106 (201) (2) 13,227
Interest income 54 2 70 70 (29) 167
Interest expense (415) (2) (466) – 32 (851)
Share of associates’ results (61) – – (435) – (496)
Share of joint ventures’ results – – (46) – – (46)

Segment profit/(loss) 3,891 3,011 5,664 (566) 1 12,001

Tax expense (3,643)

Profit for the year 8,358

Assets and liabilities

Segment assets (Note A) 53,710 19,544 74,468 14,589 (15,686) 146,625
Deferred tax assets 532

Total assets 147,157

Segment liabilities (Note A) 36,974 8,757 55,115 1,638 (15,686) 86,798

Tax payable 3,102
Deferred tax liabilities 1,124

Total liabilities 91,024

Other information
Investment in associates – – 200 – – 200
Investment in joint ventures – – 222 – – 222
Additions to non-current assets 13,674 1,658 10,923 75 – 26,330
(Note B)
Depreciation and amortisation 4,966 2,115 6,627 21 – 13,729
Other non-cash expenses 221 434 859 32 – 1,546
(Note C)

B r e a d Ta l k
Annual Report 2009 123
Notes to the Financial Statements
31 December 2009

36. Segment information (cont’d)

Notes:

(A) Inter-segment sales, assets and liabilities are eliminated on consolidation.

(B) Additions to non-current assets consist of additions to property, plant and equipment, intangible assets and
advance payment for lease of land (Note 19).

(C) Other non-cash expenses consist of:

• impairment/(write-back) of property, plant and equipment, investment in associate, receivables,

amount due from associates and inventories;

• write off of property, plant and equipment, bad debts and inventories;

• (gain)/loss on disposals of a subsidiary and property, plant and equipment;

• loss on liquidation of an associate;

• share based payment expenses; and

• unrealised foreign exchange gain.

Geographical information

External sales Non-current assets (3)

2009 2008 2009 2008
$’000 $’000 $’000 $’000

Singapore 117,874 103,946 26,961 19,736

PRC 85,619 75,260 34,412 32,833
Hong Kong 29,172 18,981 10,960 12,662
Rest of the world 13,828 14,062 1,801 2,130

Total 246,493 212,249 74,134 67,361

(1)
Bakery operations comprise operation of bakery retail outlets as well as that operated through franchising.
(2)
The business segment “Others” pertains to investment holding activities of the Group and Out of The Box
Pte Ltd, a 30% owned associate which is engaged in the business of marketing and distribution of canned
drinks under the “Anything” and “Whatever” trademarks.
(3)
Non-current assets information presented above consist of property, plant and equipment, intangible assets
and advance payment for lease of land (Note 19).

124 Vi b r a n t G r o w t h
Notes to the Financial Statements
31 December 2009

37. Dividends

Group and Company

2009 2008
$’000 $’000

Dividends paid during the year:

• First and final exempt (one-tier) dividend for 2008 of 1.0 cent per share
(2007: 0.55 per share) 2,339 1,292

Proposed but not recognised as a liability as at 31 December:

Dividends on ordinary shares, subject to shareholders’ approval

at the Annual General Meeting:

• First and final exempt (one-tier) dividend for 2009 of 1.0 cent per share
(2008: 1.0 cent per share) 2,339 2,349

38. Events occurring after the balance sheet date

(i) Investment in Retail Property Trust in Singapore

On 27 January 2010, Imagine Properties Pte. Ltd. (“IPPL”), a wholly-owned subsidiary of the Company,
entered into a subscription agreement with PRE 1 Investment Pte. Ltd. (“PRE 1”), together with three other
investors, whereby IPPL subscribed for $10,750,000 in principal amount of junior bonds to be issued by PRE
1 (the “Junior Bonds”) and the attached 43 redeemable preference shares for $0.10 each in the capital of
PRE 1 (the “Preference Shares”). PRE 1 is the sole unitholder of Perennial Katong Retail Trust, which had
in November 2009 entered into a sale and purchase agreement to purchase Katong Mall. The subscription
of the Junior Bonds and Preference Shares were satisfi ed in part by upfront deposits of $5,000,000 which
IPPL had paid to PRE 1 in the last quarter of 2009 with the remaining $5,750,004.30 fully paid up in
cash on 28 January 2010. The Junior Bonds and Preference Shares were issued and allotted to IPPL on 29
January 2010.

(ii) Proposed Bonus Share Issue

On 25 February 2010, the Company proposed a bonus issue to its shareholders on the basis of one bonus
share for every five existing ordinary shares in the capital of the Company. The bonus shares will be issued
and allotted at nil consideration without capitalisation of the Company’s reserves.

The Company has since received an in-principle approval from the Singapore Exchange Securities Trading
Limited for dealing in, listing of and quotation for the bonus shares. The issuance of bonus shares will be
made pursuant to the Company’s share issue mandate approved by the shareholders at the last annual
general meeting held on 27 April 2009.

B r e a d Ta l k
Annual Report 2009 125
Notes to the Financial Statements
31 December 2009

39. Authorisation of financial statements

The fi nancial statements for the year ended 31 December 2009 were authorised for issue in accordance with a
resolution of the directors on 18 March 2010.

126 Vi b r a n t G r o w t h
Statistics of Shareholdings
As at 18 March 2010

Issued and fully Paid-up Capital : S$33,302,916

Number of Ordinary Shares in Issue (excluding treasury shares) : 233,941,034
Number of Treasury Shares held : 970,000
Class of Shares : Ordinary Shares
Voting rights : One vote per share

Distribution of Shareholdings

No. of
Size of Shareholdings Shareholders % No. of Shares %

1 – 999 2 0.18 21 0.00

1,000 – 10,000 702 63.76 3,864,593 1.65
10,001 – 1,000,000 373 33.88 24,993,689 10.68
1,000,001 and above 24 2.18 205,082,731 87.67
Total 1,101 100.00 233,941,034 100.00

Twenty Largest Shareholders

No. Name No. of Shares %

1 Citibank Nominees Singapore Pte Ltd 30,741,172 13.14

2 Hong Leong Finance Nominees Pte Ltd 27,765,000 11.87
3 United Overseas Bank Nominees Pte Ltd 22,419,000 9.58
4 Mayban Nominees (S) Pte Ltd 19,100,000 8.16
5 Katherine Lee Lih Leng 17,178,075 7.34
6 Morgan Stanley Asia (S’pore) Pte Ltd 14,626,000 6.25
7 HSBC (Singapore) Nominees Pte Ltd 10,615,000 4.54
8 HL Bank Nominees (S) Pte Ltd 10,150,000 4.34
9 George Quek Meng Tong 8,567,609 3.66
10 Citibank Consumer Nominees Pte Ltd 7,500,000 3.21
11 SBS Nominees Pte Ltd 7,000,000 2.99
12 Oversea-Chinese Bank Nominees Private Limited 5,872,775 2.51
13 DBS Nominees Pte Ltd 5,292,000 2.26
14 Raffles Nominees (Pte) Ltd 2,600,000 1.11
15 Pineapples of Malaya Private Limited 2,500,000 1.07
16 Tan Kok Kiong 2,020,000 0.86
17 Chen Kuo Hua 1,719,100 0.73
18 Phillip Securities Pte Ltd 1,542,000 0.66
19 Tan Tiang Yong 1,484,000 0.63
20 Wong Shaw Seng 1,480,000 0.63

Total 200,171,731 85.54

Based on information available to the Company as at 18 March 2010, approximately 31.21% of the Company’s shares are
held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of SGX-ST.

B r e a d Ta l k
Annual Report 2009 127
Statistics of Shareholdings
As at 18 March 2010

Substantial Shareholders
(As recorded in the Register of Substantial Shareholders as at 18 March 2010)

Name of Substantial Shareholders Direct Interest Deemed Interest

Number of Number of
Shares % Shares %

1. George Quek Meng Tong (1) 79,590,384 34.02 43,550,850 18.62

2. Katherine Lee Lih Leng (1) 43,550,850 18.62 79,590,384 34.02
3. Keywise Capital Management (HK) Ltd (2) – – 25,626,000(2) 10.95
4. Fang Zheng (3)
– – 25,626,000(3) 10.95

(1) Katherine Lee Lih Leng is the spouse of George Quek Meng Tong. Saved as disclosed above, there are no family
relationship among our Directors and Substantial Shareholders.

(2) Keywise Capital Management (HK) Ltd, as the fund manager, is deemed interested in these shares held by Keywise
Greater China Master Fund, Keywise Greater China Opportunities Master Fund and Keywise Asia Master Fund.

(3) Fang Zheng is deemed interested in these shares by virtue of being the sole shareholder of Keywise Capital
Management (HK) Ltd.

128 Vi b r a n t G r o w t h
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of BreadTalk Group Limited (“the Company”) will be
held at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 on Tuesday, 27 April 2010 at 9.30 a.m. for the
following purposes:

As Ordinary Business

1. To receive and adopt the Directors’ Report and the Audited Financial Statements of the Company for the year
ended 31 December 2009 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final dividend of 1.0 cent per share tax exempt (one-tier) for the year ended 31 December
2009 (2008: 1.0 cent). (Resolution 2)

3. To re-elect the following Directors retiring pursuant to Article 104 of the Company’s Articles of Association:

Mr George Quek Meng Tong (Resolution 3)

Mr Ong Kian Min (Resolution 4)

Mr Ong Kian Min will, upon re-election as a Director of the Company, remain as the Chairman of the Audit Committee
and Nominating Committee, and a member of the Remuneration Committee. Mr Ong will be considered independent for
the purposes of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited.

4. To approve the payment of Directors’ fees of S$112,000 for the year ended 31 December 2009 (2008:
S$105,000). (Resolution 5)

5. To re-appoint Messrs Ernst & Young LLP as the Auditors of the Company and to authorise the Directors of the
Company to fix their remuneration. (Resolution 6)

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

As Special Business

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:

7. Authority to issue shares

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the
Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company be authorised and
empowered to:

(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require
shares to be issued, including but not limited to the creation and issue of (as well as adjustments
to) options, warrants, debentures or other instruments convertible into shares, at any time and
upon such terms and conditions and for such purposes and to such persons as the Directors of the
Company may in their absolute discretion deem fit; and

B r e a d Ta l k
Annual Report 2009 129
Notice of Annual General Meeting

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in
pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was
in force,

provided that:

(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or
granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fi fty per
centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the
Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of
shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed twenty
per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the
Company (as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the
aggregate number of shares that may be issued under sub-paragraph (1) above, the total number of issued
shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury
shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:

(a) new shares arising from the conversion or exercise of any convertible securities;

(b) new shares arising from exercising share options or vesting of share awards which are outstanding or
subsisting at the time of the passing of this Resolution; and

(c) any subsequent bonus issue, consolidation or subdivision of shares;

(3) (until 31 December 2010 or such other expiration date as may be determined by SGX-ST), the limit on the
aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted
pursuant to this Resolution) of fi fty per centum (50%) of the total number of issued shares (excluding
treasury shares) in the capital of the Company set out in sub-paragraph (1) above, shall be increased to one
hundred per centum (100%), for purposes of enabling the Company to undertake pro-rata renounceable
rights issues;

(4) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of
the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by
the SGX-ST) and the Articles of Association of the Company; and

(5) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until
the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual
General Meeting of the Company is required by law to be held, whichever is earlier.

[See Explanatory Note (i)] (Resolution 7)

130 Vi b r a n t G r o w t h
Notice of Annual General Meeting

8. Authority to issue shares other than on a pro-rata basis pursuant to the aforesaid share issue mandate at
discounts not exceeding twenty per centum (20%) of the weighted average price for trades done on the
SGX-ST

That subject to and pursuant to the aforesaid share issue mandate being obtained, the Directors of the Company
be hereby authorised and empowered to issue shares other than on a pro-rata basis to the shareholders of the
Company at a discount (“the Discount”) not exceeding ten per centum (10%) to the weighted average price (“the
Price”) for trades done on the SGX-ST for the full market day on which the placement or subscription agreement
in relation to such shares is executed (or if not available for a full market day, the weighted average price must be
based on the trades done on the preceding market day up to the time the placement or subscription agreement is
executed), provided that in exercising the authority conferred by this Resolution:-

(a) the Company complies with the provisions of the Listing Manual of the SGX-ST for the time being in force
(unless such compliance has been waived by the SGX-ST); and

(b) the Company may, until 31 December 2010 or such other expiration date as may be determined by SGX-ST
increase the Discount to an amount exceeding ten per centum (10%) but not more than twenty per centum
(20%) of the Price for shares to be issued,

unless revoked or varied by the Company in general meeting, such authority shall continue in force until (a)
the conclusion of the next Annual General Meeting of the Company, or (b) the date by which the next Annual
General Meeting of the Company is required by law to be held whichever is earlier.

[See Explanatory Note (ii)] (Resolution 8)

9. Authority to issue shares under the BreadTalk Group Limited Employees’ Share Option Scheme

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and
empowered to offer and grant options under the BreadTalk Group Limited Employees’ Share Option Scheme (“the
Scheme”) and to issue from time to time such number of shares in the capital of the Company as may be required to
be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during
the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary
shares to be issued pursuant to the Scheme shall not exceed fi fteen per centum (15%) of the total number of
issued shares (excluding treasury shares) in the capital of the Company from time to time and that such authority
shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the
next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the
Company is required by law to be held, whichever is earlier.

[See Explanatory Note (iii)] (Resolution 9)

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Annual Report 2009 131
Notice of Annual General Meeting

10. Authority to issue shares under the BreadTalk Group Limited Restricted Share Grant Plan

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and
empowered to offer and grant awards in accordance with the provisions of the BreadTalk Group Limited Restricted
Share Grant Plan (“the Plan”) and to allot and/or issue from time to time such number of fully-paid shares as may
be required to be allotted and/or issued pursuant to the vesting of the awards under the Plan, provided always that
the aggregate number of new ordinary shares to be allotted and/or issued pursuant to the Plan, the Scheme and
any other share based schemes (if applicable), which the Company may have in place, shall not exceed fifteen per
centum (15%) of the total issued shares excluding treasury shares in the capital of the Company from time to time
and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force
until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual
General Meeting of the Company is required by law to be held, whichever is earlier.

[See Explanatory Note (iv)] (Resolution 10)

11. Authority to grant awards to Participants pursuant to the Rules of, and issue shares under, the Plan

That, contingent upon the passing of Resolution 10, in order to reward, retain and motivate employees who
had met specifi c performance objectives set by the Company, the Directors of the Company be authorised and
empowered to grant awards in accordance with the provisions of the Plan to the following participants of the Plan
(“the Participants”) and to issue shares in the Company to the Participants of awards granted by the Company
under the Plan, provided always that the aggregate number of shares available to Controlling Shareholders and
their associates under the Plan shall not exceed twenty five per centum (25%) of all the shares available under the
Plan and that the number of shares available to each Controlling Shareholder or his associate shall not exceed ten
per centum (10%) of all the shares available under the Plan. Such authority shall, unless revoked or varied by the
Company in a general meeting, continue in force until the conclusion of the Company’s next Annual General
Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held,
whichever is earlier.

Name of Participants No. of shares to be awarded

Controlling Shareholders
Mr George Quek Meng Tong 59,000 (Resolution 11)
Ms Katherine Lee Lih Leng 59,000 (Resolution 12)

Associates of Controlling Shareholders

Mr Frankie Quek Swee Heng 27,000 (Resolution 13)

[See Explanatory Note (v)]

132 Vi b r a n t G r o w t h
Notice of Annual General Meeting

12. Renewal of Share Purchase Mandate

That for the purposes of Sections 76C and 76E of the Companies Act, Cap. 50, the Directors of the Company
be and are hereby authorised to make purchases or otherwise acquire issued shares in the capital of the Company
from time to time (whether by way of market purchases or off-market purchases on an equal access scheme) of
up to ten per centum (10%) of the total number of issued shares (excluding treasury shares) in the capital of the
Company (as ascertained as at the date of Annual General Meeting of the Company) at the price of up to but not
exceeding the Maximum Price as defined in paragraph 3.4 of the Appendix to the Annual Report to Shareholder
dated 10 April 2010, in accordance with the terms of the Share Purchase Mandate set out in the Appendix, and
this mandate shall, unless revoked or varied by the Company in a general meeting, continue in force until the
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
Meeting of the Company is required by law to be held, whichever is earlier.

[See Explanatory Note (vi)] (Resolution 14)

By Order of the Board

Tan Cher Liang

Company Secretary
Singapore
10 April 2010

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Annual Report 2009 133
Notice of Annual General Meeting

Explanatory Notes:

(i) The Ordinary Resolution 7 in item 7 above, if passed, will empower the Directors of the Company, effective until
the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual
General Meeting of the Company is required by law to be held or such authority is varied or revoked by the
Company in a general meeting, whichever is the earlier, to issue shares, make or grant Instruments convertible
into shares and to issue shares pursuant to such Instruments, up to a number not exceeding, in total, 50% of the
total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may
be issued other than on a pro-rata basis to shareholders. The 50% limit referred to in the preceding sentence may
be increased to 100% for the Company to undertake pro-rata renounceable rights issues subject to timeline stated
below.

For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding
treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the
capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from
the conversion or exercise of any convertible securities or share options or vesting of share awards which are
outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue,
consolidation or subdivision of shares.

The 100% renounceable pro-rata rights issue limit is one of the new measures implemented by the SGX-ST as
stated in a press release entitled “SGX introduces further measures to facilitate fund raising” dated 19 February 2009
and which became effective on 20 February 2009 until 31 December 2010. The effectiveness of these measures
will be reviewed by the SGX-ST at the end of the period. It will provide the Directors with an opportunity to
raise funds and avoid prolonged market exposure by reducing the time taken for shareholders’ approval, in the
event the need arises. Minority shareholders’ interests are mitigated as all shareholders have equal opportunities
to participate and can dispose their entitlements through trading of nil-paid rights if they do not wish to subscribe
for their rights shares. It is subject to the condition that the Company makes periodic announcements on the use
of the proceeds as and when the funds are materially disbursed and provides a status report on the use of proceeds
in the annual report.

(ii) The Ordinary Resolution 8 in item 8 above is pursuant to measures implemented by the SGX-ST as stated in a
press release entitled “SGX introduces further measures to facilitate fund raising” dated 19 February 2009 and
which became effective on 20 February 2009 until 31 December 2010. The effectiveness of these measures will
be reviewed by SGX-ST at the end of the period. Under the measures implemented by the SGX-ST, issuers will
be allowed to undertake non pro-rata placements of new shares priced at discounts of up to 20% to the weighted
average price for trades done on the SGX-ST for a full market day on which the placement or subscription
agreement in relation to such shares is executed, subject to the conditions that (a) shareholders’ approval be
obtained in a separate resolution (“the Resolution”) at a general meeting to issue new shares on a non pro-rata
basis at discount exceeding 10% but not more than 20%; and (b) that the resolution seeking a general mandate
from shareholders for issuance of new shares on a non pro-rata basis is not conditional upon the Resolution.

It should be noted that under the Listing Manual of the SGX-ST, shareholders’ approval is not required for
placements of new shares, on a non pro-rata basis pursuant to a general mandate, at a discount of up to 10%
to the weighted average price for trades done on the SGX-ST for a full market day on which the placement or
subscription agreement in relation to such shares is executed.

134 Vi b r a n t G r o w t h
Notice of Annual General Meeting

(iii) The Ordinary Resolution 9 in item 9 above, if passed, will empower the Directors of the Company, from the date
of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual
General Meeting of the Company is required by law to be held or such authority is varied or revoked by the
Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of
options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration
of the Scheme) 15% of the total number of issued shares excluding treasury shares in the capital of the Company
from time to time, and the aggregate number of ordinary shares which may be issued pursuant to the Scheme, the
Plan and any other share based schemes (if applicable) is limited to 15% of the total issued share capital of the
Company excluding treasury shares from time to time. Resolution 9 is independent from Resolution 10 and the
passing of Resolution 9 is not contingent on the passing of Resolution 10.

(iv) Resolution 10 in item 10 above, if passed, will empower the Directors of the Company from the date of the above
Meeting until the next Annual General Meeting, to offer and grant awards under the BreadTalk Group Limited
Restricted Share Grant Plan (“the Plan”) in accordance with the provisions of the Plan and to issue from time to
time such number of fully-paid shares as may be required to be issued pursuant to the vesting of the awards under
the Plan subject to the maximum number of shares prescribed under the terms and conditions of the Plan. The
aggregate number of ordinary shares which may be issued pursuant to the Scheme, the Plan and any other share
based schemes (if applicable) is limited to 15% of the total issued share capital of the Company excluding treasury
shares from time to time. Resolution 10 is independent from Resolution 9 and the passing of Resolution 10 is not
contingent on the passing of Resolution 9.

(v) Resolutions 11, 12 and 13, in item 11 above, if passed, will empower the Directors of the Company to issue
shares in the Company to the Controlling Shareholders and their associates, granted by the Company under the
Plan. The resolutions in item 11 are independent from each other and the passing of each such resolution is not
contingent on the passing of any of the other resolutions in item 11. Resolution 11 is contingent on the passing of
Resolution 3. Shareholders who are eligible to participate in the Plan shall abstain from voting on Resolutions 11,
12 and 13.

The rationale for Resolution 11

Mr. George Quek Meng Tong (George Quek), if re-elected, will remain as the Chairman of the Group and he
holds an aggregate of 52.64% of the shareholding (direct and deemed interests). He is one of the co-founders of
the Group and has been instrumental in the Group’s development over the years. He is responsible for overseeing
the overall management of the Group and is pivotal in charting the direction and growth of the Group.

George Quek has been with the Company since the start in 2000 and has played a pivotal role in steering the growth
of the Group in their operations locally and in this region and building up a good track record and reputation for
the Group.

His knowledge and contacts in the food and beverage industry, of which he has more than 3 decades of experience,
are key factors to the success of the Group. His invaluable experience has not only been instrumental in establishing
the “BreadTalk” brand name, but also in setting new F&B trends and redefi ning the Asian food scene. He also
played a signifi cant role in the Company’s foray into the food court business in Shanghai and Beijing, People’s
Republic of China.

George Quek continues to play an instrumental role in charting our Group’s expansion and business development
plans. As the Chairman of the Company, he has in-depth knowledge of the needs of the business as it evolved
over the years. His ability to anticipate business trend and demand has enabled the Company to grow the
business rapidly.

B r e a d Ta l k
Annual Report 2009 135
Notice of Annual General Meeting

The Company believes that George Quek will continue to play a key role in the growth and future development
of the Group and there are further potential contributions that he can make. The Company intends to have the
fl exibility to structure his remuneration package to include such Awards in future if it is in the interest of the
Company to do so. By extending the Plan to George Quek, the Company will have an additional tool to craft a
more balanced and innovative remuneration package that will link his total remuneration to the performance of
the Group.

The Directors are of the view that the remuneration package of George Quek is fair given his contributions to the
Group. The extension of the Plan to George Quek is consistent with the Company’s objectives to motivate its
employees to achieve and maintain a high level of performance and contribution which is vital to the success of
the Company. Although George Quek already has a shareholding interest in the Company, the extension of the
Plan to him will ensure that he is equally entitled, with the other employees who are not Controlling Shareholders,
to take part in and benefit from this system of remuneration, thereby enhancing his long term commitment to the
Group.

The participation of and grant of the Awards to George Quek under the Plan has been approved in principle
by shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008.
Resolution 11 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 59,000
shares to George Quek in accordance with the Plan.

The rationale for Resolution 12

Ms. Katherine Lee Lih Leng (Katherine Lee) is the Deputy Chairman of the Company and holds an aggregate
of 52.64% of the Company’s shareholding (direct and deemed interests). She is one of the co-founders of the
Group and has been assisting the Chairman, George Quek in the Group’s development since its inception. She
oversees the Research and Development Department where she is responsible for product development for local
and overseas markets. She is also responsible for steering the Group’s new concept developments for the various
brands, pioneering new ideas and concepts. She has therefore contributed greatly in the increase and development
of the range and quality of the Group’s products, which is one of its unique strengths and factors for its success.
In the areas of training, Katherine Lee has actively organized product training and technical skill upgrades to
ensure systematic transfers of knowledge and skills to the franchisees and their operations teams to maintain their
competitive edge.

The Company believes that Katherine Lee will continue to contribute to the success of the Group. The Company
intends to have the flexibility to structure her remuneration package to include such Awards in future if it is in the
interests of the Company to do so. By allowing her to participate in the Plan, the Company will have an additional
tool to craft a more balanced and innovative remuneration package that will link her total remuneration to the
performance of the Group.

The extension of the Plan to Katherine Lee is consistent with the Company’s objectives to motivate its employees
to achieve and maintain a high level of performance and contribution which is vital to the success of the Company.
Although Katherine Lee already has a shareholding interest in the Company, the extension of the Plan to her will
ensure that she is equally entitled, with the other employees who are not Controlling Shareholders, to take part in
and benefit from this system of remuneration, thereby enhancing her continued commitment to the Group.

The participation of and grant of Awards to Katherine Lee under the Plan has been approved in principle by
shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution
12 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 59,000 shares to
Katherine Lee in accordance with the Plan.

136 Vi b r a n t G r o w t h
Notice of Annual General Meeting

The rationale for Resolution 13

Mr. Frankie Quek Swee Heng (Frankie Quek), the Group’s Chief Operating Officer, holds an aggregate of 0.31% of
the Company’s shareholding (direct and deemed interests). He is involved in the formulation and implementation
of the expansion plans of the Group in the PRC. With his business acumen and extensive knowledge of the local
food and beverage industry, he is assisting the Chairman, George Quek, in overseeing the growth and expansion
as well as daily operations of the Group, focusing on the Group’s expansion into the PRC. Frankie Quek has been
based in Shanghai since 2005 where he has been overseeing the growing bakery and food court operations in
Shanghai and Beijing. His expertise has further led to the successful expansion of the BreadTalk brand name to
many other PRC cities through a franchise model system managed by the in house franchise team. The Company
therefore believes that he has the potential and ability to contribute to the further success of the Group.

By allowing him to participate in the Plan, the Company will have an additional tool to craft a more balanced and
innovative remuneration package that will link his total remuneration to the performance of the Group. Frankie
Quek will also be able to share in any future appreciation of the Company’s share price that is commensurate with
the Company’s future growth through an increase in his shareholdings to a more significant level.

The Directors are of the view that the remuneration package of Frankie Quek is fair given his contributions to
the Group. The extension of the Plan to Frankie Quek is consistent with the Company’s objectives to motivate
its employees to achieve and maintain a high level of performance and contribution which is vital to the success
of the Company.

As the Plan serves as recognition of the past contributions of those eligible to participate in the Plan, as well as
to secure future contributions for the Company and the Group from them, the Directors consider it important
that Frankie Quek should be included in the Plan. The Directors consider it crucial for the Company to provide
sufficient incentives which will instill a sense of commitment to the Group.

The participation of and grant of Awards to Frankie Quek under the Plan has been approved in principle by
shareholders when they approved the Plan at the Extraordinary General Meeting held on 28 April 2008. Resolution
13 seeks for the above stated reasons, shareholders approval for the Directors decision to grant 27,000 shares to
Frankie Quek in accordance with the Plan.

(vi) The Ordinary Resolution 14 proposed in item 12 above, if passed, will empower the Directors of the Company
effective until the conclusion of the next Annual General Meeting of the Company or the date by which the next
Annual General Meeting of the Company is required by law to be held, whichever is the earlier, to repurchase
ordinary shares of the Company by way of market purchases or off-market purchases of up to 10% of the total
number of issued shares (excluding treasury shares) in the capital of the Company at the Maximum Price as
defi ned in Paragraph 3.4 to the Appendix. The rationale for, the authority and limitation on, the sources of
funds to be used for the purchase or acquisition including the amount of fi nancing and the fi nancial effects of
the purchase or acquisition of ordinary shares by the Company pursuant to the Share Purchase Mandate on the
audited consolidated financial accounts of the Group for the financial year ended 31 December 2009 are set out in
greater detail in the Appendix.

Notes

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a
proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 171 Kampong
Ampat #05-05, KA FoodLink, Singapore 368330 not less than 48 hours before the time appointed for holding
the Meeting.

B r e a d Ta l k
Annual Report 2009 137
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138 Vi b r a n t G r o w t h
 Breadtalk Group Limited IMPORTANT:
1. For investors who have used their CPF monies to buy BreadTalk Group Limited’s shares, this
Company Registration No. 200302045G Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely
(Incorporated In Singapore) FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents
and purposes if used or purported to be used by them.

Proxy Form 3. CPF investors who wish to attend the Meeting as an observer must submit their requests
through their CPF Approved Nominees within the time frame specifi ed. If they also wish to
(Please see notes overleaf before completing this Form) vote, they must submit their voting instructions to the CPF Approved Nominees within the
time frame specified to enable them to vote on their behalf.

I/We,
of
being a member/members of BREADTALK GROUP LIMITED (the “Company”), hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %
Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings
No. of Shares %
Address

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual
General Meeting (the “Meeting”) of the Company to be held on 27 April 2010 at 9.30 a.m. at 171 Kampong Ampat
#05-05, KA FoodLink, Singapore 368330 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for
or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given
or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote
or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding
a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)

No. Resolutions relating to: For Against

1 Directors’ Report and Audited Financial Statements for the year ended 31 December 2009.
2 Payment of proposed first and final exempt (one-tier) dividend.
3 Re-election of Mr George Quek Meng Tong as a Director.
4 Re-election of Mr Ong Kian Min as a Director.
5 Approval of Directors’ fees amounting to S$112,000 for the year ended 31 December 2009.
6 Re-appointment of Messrs Ernst & Young LLP as Auditors.
7 Authority to issue new shares.
8 Authority to issue new shares up to discount of 20%.
9 Authority to issue shares under the BreadTalk Group Limited Employees’ Share Option
Scheme.
10 Authority to issue shares under the BreadTalk Group Limited Restricted Share Grant Plan.
11 Share award under the Plan to Mr George Quek Meng Tong.
12 Share award under the Plan to Ms Katherine Lee Lih Leng.
13 Share award under the Plan to Mr Frankie Quek Swee Heng.
14 Renewal of Share Purchase Mandate.

Dated this day of 2010

Total number of Shares in: No. of Shares

(a) CDP Register


Signature of Shareholder(s) (b) Register of Members

or, Common Seal of Corporate Shareholder
Notes :

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository
Register (as defi ned in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that
number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that
number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered
in your name in the Register of Members, you should insert the aggregate number of Shares entered against your
name in the Depository Register and registered in your name in the Register of Members. If no number is inserted,
the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint
such number of proxies as required to attend and vote in his/her stead. A proxy need not be a member of the
Company.

3. Where a member appoints more than one proxy, the appointments shall be invalid unless he/she specifi es the
proportion of his/her shareholding to be represented by each proxy. If no proportion or number of shares is specified,
the first named proxy may be treated as representing 100% of the shareholding and any second named proxy as an
alternate to the first named.

4. The instrument appointing a proxy or proxies must be deposited at the Registered Office of the Company
at 171 Kampong Ampat #05-05, KA FoodLink, Singapore 368330 not less than 48 hours before the time
appointed for the holding of the Meeting.

5. The instrument appointing a proxy or proxies must be executed under the hand of the appointor or of his attorney
duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it
must be executed either under its seal or under the hand of an officer or attorney duly authorised or in such manner
as appropriate under applicable laws. Where the original instrument appointing a proxy or proxies is executed by
an attorney on behalf of the appointor, the original power of attorney or other authority, if any, under which the
instrument of proxy is signed or a duly certified copy of that power of attorney or other authority (failing previous
registration with the Company) shall be attached to the original instrument of proxy and must be left at the
Registered Office, not less than 48 hours before the time appointed for the holding of the Meeting or the adjourned
Meeting at which it is to be used failing which the instrument may be treated as invalid.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person
as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act,
Chapter 50 of Singapore. The Company shall be entitled to treat an original certifi cate under the seal of the
corporation as conclusive evidence of the appointment or revocation of appointment of a representative.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly
completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the
appointor specifi ed in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the
Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being
the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the
time appointed for holding of the Meeting, as certified by The Central Depository (Pte) Limited to the Company.