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CONTENTSAt AMWAY , success begins with your own barehands. It is that simple. Flourish as an individualand enjoy fulfilling result as you reach out in thequest for hope, freedom, family, and reward.2Quarterly Performance41Independent Auditors’ Report35-Year Financial Highlights42Statements of Comprehensive Income4Chairman’s Statement43Statements of Financial Position8Kenyataan Pengerusi44Statements of Changes In Equity12Board of Directors46Statements of Cash Flows12Corporate Information48Notes to the Financial Statements14Profile of Directors18Operations Review71Particulars of Properties22Corporate Responsibility72Group’s Physical Presence24Statement on Corporate Governance73Disclosure of RecurrentRelated Party Transactions30Audit Committee Report34Internal Control Statement75Notice of Annual General Meeting36Compliance with Main MarketListing Requirements of BursaMalaysia Securities Berhad77Analysis of Shareholdings8037Directors’ ReportInformation for Shareholderson Eighteenth AnnualGeneral Meeting40Statement by Directors40Statutory DeclarationProxy Form
DRIVINGSUCCESSTHROUGHTHE NEWGENERATION
QUARTERLYPERFORMANCE20121st Quarter2nd Quarter3rd Quarter4th QuarterFull Year179.2188.7224.2205.4797.5Profit Before Taxation(RM Million)29.034.235.638.3137.1Net Profit(RM Million)21.625.326.626.299.7Net Earnings Per Share(Sen)13.115.416.215.960.6Net Dividend Per Share(Sen)10.010.010.032.562.51st Quarter2nd Quarter3rd Quarter4th QuarterFull Year172.8169.1211.5182.4735.8Profit Before Taxation(RM Million)27.425.634.433.6121.0Net Profit(RM Million)20.319.025.824.990.0Net Earnings Per Share(Sen)12.311.615.715.154.7Net Dividend Per Share(Sen)9.09.039.09.066.0Sales Revenue(RM Million)2011Sales Revenue(RM Million)AMWAY (MALAYSIA) HOLDINGS BERHADANNUAL REPORT 2012(340354-U)2
VENUE200100(RM Million)‘08‘09‘10 ‘11 ‘12137.1PROFITBEFORETAXATION604020‘08‘09 ‘10 ‘11‘124090.072.56078.38095.1100NETPROFIT20(RM Million)5 –YEARFINANCIALHIGHLIGHTS‘08 ‘09 ‘10 ‘11 ‘1270NETEARNINGSPER SHARE3047.64044.15057.860‘08 ‘09‘1060.6(RM (Sen)‘11 ‘12180195221210208230232244240150120906030(In Thousand)2010(Sen)‘08 ‘09 ‘10 ‘11 ‘12(340354-U)COREDISTRIBUTORFORCE30AMWAY (MALAYSIA) HOLDINGS BERHADANNUAL REPORT 2012NETDIVIDENDPER SHARE48.04041.85062.566.06066.070‘08 ‘09‘10 ‘11 ‘123
CHAIRMAN’SSTATEMENTDEAR SHAREHOLDERS,OVERVIEWWe ended 2012 much better than expectedgiven the slow momentum we experiencedin the first half of the year. 2012 markedthe 33rd year of record sales out of 36 yearsof operation. This is indeed a remarkableachievement. In 2012 sales grew by 8.4%and profit before tax grew 13.3% compared to2011. This outstanding performance againstthe backdrop of a challenging and competitiveoperating environment is a reflection of both thesolid execution of our operating plan and thetenacity of our dedicated Distributor force.FINANCIAL PERFORMANCEAMWAY recorded sales revenue of RM797.5million for the year in review compared toRM735.8 million in 2011. This translates to an8.4% increase over 2011. Profit before tax grewto RM137.1 million from RM121.0 million in2011, representing an increase of 13.3%. Profitafter tax also increased 10.8% from last year toRM99.7 million. The increase in profitability isdue to better absorption of operating overheadsas a result of higher sales revenue.AMWAY (MALAYSIA) HOLDINGS BERHADANNUAL REPORT 2012(340354-U)4DATO’ AB. HALIM BIN MOHYIDDINChairman
DIVIDENDOn 15 February 2012, the Board of Directorsadopted a dividend policy of returning no lessthan 80% of the current year’s net earnings toshareholders. This policy is consistent with ourcommitment to enhance shareholder value.In line with this policy, the Board of Directors,subsequent to year end, approved a 4th interimsingle tier dividend of 10.0 sen net per share,and a special interim single tier dividend of22.5 sen net per share. These dividends weresubsequently paid on 29 March 2013.The total dividend for the financial year ended31 December 2012, amounting to 62.5 sen netper share, was equivalent to a total net dividendpayout of RM102.7 million, representing103% of 2012 net earnings.ARTISTRY Creme L/X Eye, one of the breakthrough productslaunched in 2012for our Distributors and employees to play theirroles, empowering them with the right skills,knowledge and tools is imperative. In 2012,AMWAY embarked on several key initiatives asoutlined below:Focus on DistributorsIn 2012 AMWAY maintained its focus ontwo segments of Distributors identified withthe highest potential for growth — adultsunder 35 years of age (AU35) and the Malaysegment. We implemented year-long targetedprogrammes, all with the singular purposeof making the AMWAY Business Opportunityresonate well with these two Distributorsegments.OPERATIONAL REVIEWAMWAY has always believed that “people” arecentral to our business. Our strategies havealways been governed by this tenet. This waseven more apparent in 2012 where nurturingand motivating our people to strive towardsgreater heights formed the core thrust of ourstrategies and plans.BrandingOur brand building efforts continue to focus onthe Health and Beauty business. For 2012, weshifted our emphasis from traditional mediachannels, such as broadcast and print, toexperimenting in the digital media arena. Theproliferation of smart devices such as smartphones and tablets, and the widespread useof social media have created a sizeable digitalplayground for brands to be seen and heard.Seizing this opportunity, AMWAY venturedonto the digital platform, increasing our digitalfootprint and presence in 2012. This enabledAMWAY to connect and engage with not justour Distributors, but also the public at large.AMWAY became more accessible, especially tothose under age 35, via our Facebook pagesfor AMWAY and our flagship brands, NUTRILITEand ARTISTRY.(340354-U)AMWAY is a people business. Our Distributorsand employees are our core assets, eachhaving distinct and equally important roles incontributing to our business growth. In orderEqually successful were our efforts in growingthe Malay segment. The percentage of newsign-ups from the Malay market increased19.5% while the Core Distributor Force for thissegment grew by 9%. In addition to increasingthe number of new Malay Distributors, 2012also saw growth in the Malay leadership poolacross the various leadership pin levels. We had3 new Malay Diamond Distributorships and 1new Malay Founders Diamond Distributorship.We also had a 33% increase in new MalayPlatinum Distributorship qualification. Suchachievements are commendable as we hadnot seen such good growth for the past decade.Focus on EmployeesOur employees are also a significant engine ofgrowth for the business. We intensified effortsduring the year to improve their competenciesand skills. In 2012, AMWAY conducted atotal of 55 training programmes for all levelsof employees. Initiatives were also put inplace to enhance service and support, furtherstrengthening their pride in their work. We gavegreater attention to the importance of corporatesocial responsibility (CSR) by encouragingour employees to participate in such activitiesundertaken by the company.AMWAY (MALAYSIA) HOLDINGS BERHADANNUAL REPORT 2012Our brand’s strong credibility amongst consumers is a resultof our commitment to deliver products of exceptional qualityAMWAY made significant progress in the AU35segment. In 2012, 56.4% of new Distributorswho joined the business were from thissegment. We established Facebook pagesfor the company and our 2 flagship brandsof NUTRILITE and ARTISTRY . QR codeswere introduced and incorporated into varioustouch points including our monthly magazine,AMAGRAM , and we created new retailingtools in the form of mobile apps. This strategyof using the digital platform to reach this targetgroup has yielded positive results.Print advertisements in major newspapers are part ofour 2012 brand building efforts that focused on ourHealth business5
AMWAY brands are recognised and awarded for theirhigh-quality productsNew ProductsTo support the growth of our ARTISTRY beautycategory of skin care and cosmetics, weembarked on an aggressive new productintroduction plan. In 2012, we launched eightnew products. Among these, a new addition tothe luxury skin care range, Creme L/X Eye – alavish treatment cream that reduces the signsof aging around the eyes. The launch of CremeL/X Eye further stamped ARTISTRY’s mark in theluxury skin care market. Another major launchfor ARTISTRY in 2012 was the introduction of anew collection of anti-aging skin care products– YOUTH XTEND . This ground-breakingrange contains a formula that delivers thebreakthrough promise of reprogramming skinback to youthfulness after just one week of use.AMWAY (MALAYSIA) HOLDINGS BERHADANNUAL REPORT 2012(340354-U)6Under the NUTRILITE brand, we launchedthe Shape Up Programme — a programmeto help consumers better manage their weightby identifying the right combination of dietplan, supplements and exercise based onindividual somatotypes. Another key launch forNUTRILITE is ClearGuard , a natural solutionthat uniquely combines botanical ingredients tohelp promote clear nasal passages and overallwell-being.AMWAY legacy home care products alsowitnessed rebranding under the AMWAYHOME brand. Far from a simple transition toa new brand identity, this exercise involved areformulation of top-selling household cleaningproducts, such as L.O.C. Multi-PurposeCleaner and SA8 Detergent. As a result ofthis reformulation with our patented BIOQUESTFORMULA technology, these products offerbetter cleaning performance and are moreenvironmentally friendly.Shops and the Brand Experience CentreIn 2010, we started transitioning RegionalDistribution Centres (RDCs) to Shops to furtherincrease accessibility to our brands andproducts. We continued this transition in 2012,as the Shop strategy has proven successful.AMWAY Shops recorded a 14% increase insales revenue in 2012. We also expandedour network of Shops with a new shop in NusaBestari, Johor in August. The Nusa BestariShop is bigger in size and is the first to sportour next generation shop design. It has cosierinteriors and has a more conducive ambiencefor Distributors to network and engage inretailing and sponsoring activities.Another aspect that remains a prominentfeature in Distributors’ sponsoring efforts is theAMWAY Headquarters (HQ). The HQ’s strikinginteriors and cutting edge yet environmentallyfriendly facilities represent an unshakeable voteof confidence for the potential of the AMWAYbusiness, which Distributors can easily sharewith their prospects and downlines.The Brand Experience Centre (BEC) too,continues to be a focal point for Distributorson their visit to the HQ. In 2012, nearly 4,000Distributors took part in the Health and Beautyassessments conducted by experiencedconsultants at the BEC and benefited frombetter understanding of their personal wellbeing.CORPORATE GOVERNANCEIntegrity, accountability, compliance andethical conduct – these are the principlesAMWAY is committed to upholding in ourendeavour to make good corporate governancean integral part of our business dealings. TheBoard of Directors recognises the importance ofenhancing shareholders’ value, and thereforepaid particular attention that high standardsof corporate governance at all levels weremaintained.To ensure the Board’s accountability andresponsibility towards shareholders is beyonddoubt, the Board in 2012 enhanced thecompany’s existing Board Charter, Code ofEthics and Whistle-blower Policy in line withthe Malaysian Code on Corporate Governance2012. Details of this can be found in ourCorporate Governance statement on pages 24to 29.The AMWAY-Hands Percussion partnership provideschildren in small towns and villages with opportunities tolearn and appreciate music using percussion instrumentsCORPORATE RESPONSIBILITYAMWAY has always placed high emphasison being a good corporate citizen. This isreflected in the conscientious manner in whichwe do business and in the focused initiativesthat we undertake. In 2012, we completedand handed over the 11th refurbished ward toHospital Melaka’s Paediatric Day Care Centreunder our Happy Healthy Wards project,which aims to create a more conduciveand cheerful environment in governmenthospitals for recovering children. Last yearalone, we invested in excess of RM80,000in this project, bringing our total investmentsince 2006 to RM660,000.The past year also saw us sponsoringperforming arts group, Hands Percussion’sBalik Kampung Series, our third project underthe One By One Campaign. This project,to which we have committed RM270,000,continues our focus on children by using thearts as a platform to discover and nurturetheir talents. Our sponsorship enabled HandsPercussion to reach out to children in fivelocations in Bukit Tinggi (Pahang), ParitJawa (Johor), Semabok (Melaka), Kuching(Sarawak) and Pulau Ketam (Selangor),and culminated in a carnival where childrenfrom the various locations visited by theHands Percussion troop were invited toKuala Lumpur in December for a full-daycelebration.Our corporate responsibility also extendsto environmental stewardship. Apart fromsupporting Earth Day and Earth Hour,we further stressed on conservationby regulating the temperatures of airconditioners at our headquarters to reduceenergy consumption. We encourage theuse of recyclable bags at all AMWAY Shopsand launched our very own reusable bagto further reiterate the “no plastics” practice
amongst Distributors. The migration of ourtrusted line of home cleaning products to theAMWAY HOME brand further emphasises ourcommitment to this cause. Already known fortheir concentrated formulas, which promoteenvironmental sustainability, the AMWAYrange of household cleaning products havebecome an even safer choice for both thefamily and the environment, now that theyare formulated with BIOQUEST FORMULA.A testament to this is the US
At AMWAY , success begins . across the various leadership pin levels. We had 3 new Malay Diamond Distributorships and 1 new Malay Founders Diamond Distributorship. We also had a 33% increase in new Malay Platinum Distributorship qualifi cation. Such achievements are commendable as we had not seen such good growth for the past decade. Focus on Employees Our employees are also
