a n n u a l 2 0 0 4 r e p o r t - yspsah.comNo.2, Lorong Rahim Kajai 14, Taman Tun Dr. Ismail, 60000 Kuala Lumpur. Tel : 03-7729 3671 HSBC Bank Malaysia Berhad Level 1 Annexe, Menara

We Value Life

a n n u a l 2 0 0 4 r e p o r t

Y.S.P. SOUTHEAST ASIA HOLDING BERHAD552781-X

At the forefront of the Malaysian pharmaceuticalindustry, Y.S.P.SAH, over the years hascontinuously improved and supported the nation'shealthcare. Through groundbreaking research anddevelopment, the group has established world-class recognition in the fields of human andveterinary pharmaceuticals. Expansion withinSouth East Asia has further strengthened thegroup's commitment and dedication towardshealthier living.

C O N T E N T SCorporate Information 2Corporate Structure 3Chairman’s Statement 4Group Managing Director’s Operations Review 6Group Financial Highlights 8Board of Directors’ Profile 9Corporate Governance Statement 12Additional Information Provided 17Statement of Internal Control 18Audit Committee 19Financial Statements 21Landed Properties 56Shareholding Statistics 58Notice of Annual General Meeting 60Statement Accompanying Notice of Annual General Meeting 63Proxy Form qualityproducts

Board of DIrectorsChairmanIndependent Non-Executive DirectorDatuk Dr. Anis Bin AhmadPresident/Group Managing DirectorDr. Lee Fang HsinNon-Independent Non-Executive DirectorsDr. Lee Fang YuEn. Adi Azuan Bin Abdul Ghani [Appointed on 1.12.2004]Madam Lee Ling Chin [Appointed on 16.2.2005]Mr. Lee Tien Te [Resigned on 16.2.2005]Independent Non-Executive DirectorsDato’ Koay Soon EngMr. Tu Shu Yao

Company SecretariesMs. Lim Seck Wah (MAICSA 0799845)Mr. M. Chandrasegaran A/L S. Murugasu(MAICSA 0781031)

Registered Office and Principal Place of Business16th Floor, Plaza IBM,No. 1, Jalan Tun Mohd Fuad,Taman Tun Dr. Ismail, 60000 Kuala Lumpur.Tel : 03-7727 6390Fax : 03-7727 6701Email : [email protected] : www.yspsah.com.my

RegistrarMega Corporate Services Sdn Bhd (187984-H)Level 15-2, Faber Imperial Court,Jalan Sultan Ismail, 50250 Kuala Lumpur.Tel : 03-2692 4271Fax : 03-2732 5388

AuditorsShamsir Jasani Grant Thornton (AF 0737)(Member of Grant Thornton International)Level 11-1, Faber Imperial Court,Jalan Sultan Ismail, 50250 Kuala Lumpur.Tel : 03-2692 4022Fax : 03-2691 5229

Principal BankersMalayan Banking Berhad (3813 K)No.2, Lorong Rahim Kajai 14,Taman Tun Dr. Ismail,60000 Kuala Lumpur.Tel : 03-7729 3671HSBC Bank Malaysia BerhadLevel 1 Annexe, Menara Milenium,Jalan Damanlela, Pusat Bandar Damansara,Damansara Heights,50490 Kuala Lumpur.Cathay United Bank (970064C)Licensed Offshore Bank,Level 3(C), Main Office Tower,Financial Park Labuan Complex.

Stock Exchange ListingSecond Board of Bursa Malaysia Securities Berhad

2 Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (552781-X)

corporate information

Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (552781-X) 3

corporate structure

Y.S.P. Industries (Malaysia) Sdn BhdResident Representative Office ofY.S.P. Industries (Malaysia) Sdn Bhd

Kumpulan Y.S.P. (M) Sdn Bhd

Yung Shin Pharm. (Singapore) Pte. Ltd.

Yung Shin (Philippines) Inc.

Myanmar Yung Shin Pharma. Ltd.

Y.S.P. (Cambodia) Pte. Ltd.

P.T. Yung Shin PharmaceuticalIndonesia

100%

100%

100%

99.99%

100%

100%

100%

chairman’s statement

On behalf of the Board of Directors, it is with great pleasure and pride I present to you Y.S.P SouthEast Asia Berhad’s inaugural Annual Report and Financial Highlights of the Group and it’s subsidiariesfor the year ending 31st December, 2004.Overall for the year 2004, Y.S.P.SAH has enjoyed significant improvements both domestically andregionally with profits on the rise. With our proposed listing on the Second Board finally comingthrough on the 12th of January, 2004, the Group is poised for further success in 2005 armed withstronger corporate values, partnerships and vested interests in Research & Development (R&D).Recent Industry DevelopmentThe Malaysian economy as a whole took a step forward in the year 2005 as it maintained itspredicted growth of 6.8% against a 4.5% prediction in the year 2003. In particular, thepharmaceutical industry experienced significant growth with an estimated Compound AnnualGrowth Rate (CAGR) of 12.5% with potential revenues reaching USD207.7 million by 2007. Thisencouraging pattern is largely due to several factors such as the Government’s commitment towardsimproving the local pharmaceutical scene in its efforts to improve the overall healthcare standards ofall Malaysians. Local pharmaceutical manufacturers are also intensifying their R&D efforts, in

Datuk Dr. Anis Bin AhmadChairman

Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (552781-X)4

particular the area of innovation andimprovement in generic medicines. Thepharmaceutical industry is also rapidly gainingreputation as an export earner with exports toother Asean countries as well as Africa andMiddle East.

Financial PerformanceIn view of the current scenario, Y.S.P.SAH hastaken advantage of the growth particularly inSouth East Asian countries to return betterperformance and results. For the financial yearunder review, the Group has posted a turnover ofRM75.0 million, an increase of 6.5% comparedto 2003, and a consolidated profit before tax ofRM11.6 million compared to RM11.2 million in2003. In total, Y.S.P.SAH Group sales touchedRM75.0 million with RM63.5 million generatedby local sales and RM11.5 million from overseassubsidiaries and export sales.

DividendsIn view of the significant growth opportunity inthe pharmaceutical industry, the Group iscommitted to further investment andexpansion in the manufacturing andwarehousing capacities as well as R&D.Therefore no dividend is proposed for the yearunder review.

OutlookAs the Malaysian economy is expected to growby another 5.4% in 2005, the Group plans tocapitalize by further investing in A&P and R&Dactivities. With good support from R&D andproduction, the Group plans to introduce newpharmaceutical products into the market. The

Group also plans to invest in brand building the"SHINE" range of product.The Directors of Y.S.P.SAH believe the Group iswell positioned in the regional genericpharmaceutical market, with its competitiveedge lying in its comprehensive product portfolio, sound R&D capabilities, GMP accreditedmanufacturing plant, established distributionnetwork and experienced management team.In conclusion, as the market is still in its growthstages, we aim to penetrate new markets whileincreasing our presence in the existing market inorder to establish YSP as a major pharmaceutical,veterinary and aquatic manufacturer, supplierand distributor in the region.

AcknowledgementOn behalf of the Board, I wish to welcomeMdm. Lee Ling Chin and En. Adi Azuan binAbdul Ghani to the Board and bid farewell toMr. Lee Tien-Te whose contributions has beenof great value. The Board also extends itsappreciation to the management and staff ofthe Group for their dedication andcommitment.Finally, our gratitude and sincere thanks to thevarious government authorities, shareholders,partners, clients, suppliers and regulatoryauthorities for their invaluable support andassistance, and look forward to their continuedsupport.

Datuk Dr. Anis Bin AhmadChairman


chairman’s statement (cont’d)


On the whole, the generic pharmaceuticalmarket in this region is in the growth stage.Prospects in general are bright as governmentsacross the region are looking to find alternativesto reduce healthcare spending, includingreducing drug reimbursement rates. In addition,with the patent expiration of many blockbusterdrugs within the next 5 years, it will definitelyprovide opportunities for generic manufacturersto capture a bigger share of the market. Hencethe stage is set and right for genericmanufacturers across the region. However, weneed to be cautious and acknowledge thatfactors such as the economic and politicalinstabilities, regulatory requirements that mayfavor local manufacturers, epidemic factor suchas bird flu, natural disasters, could challengeour growth.

Sales Performance ReviewFor local sales in Malaysia, general practitionersin private sector accounted for a growth of10.77% in 2004 over the prior year and14.84% growth was achieved for privatehospital over year 2003. Sales for Veterinarywas declined by 3.3% compared to 2003 dueto two major factors. Increments of the cost ofanimal feed caused farmer to reduce theirbudget on drugs. Secondly, impact of bird-fluoutbreak caused the industries to reduce theirproduction of poultry supply. YSP plans to havemore competitive products and pro-bioticproducts to fulfill market requirement.There was significant increase in salespropelled by the tandem growth of "SHINE"series healthcare products posting a 22%growth increase of over the counter products.The group had taken positive measurestowards building the "SHINE" brand withaggressive A&P activities with the intention of

re-launching a new image for GINCARE,HEPAVITE and other healthcare products. Regionally Y.S.P.SAH’s main strategic plan is touse its strong foothold in the Malaysian marketas a base to further enlarge its market coveragein the South East Asia region. To realize ourregional expansion plans, the Group hasestablished marketing networks in Singapore,Vietnam, Philippines, Myanmar and Cambodiavia the establishment of various foreignsubsidiary companies and representative offices.Recently, the Group incorporated anothersubsidiary in Indonesia, namely P.T. Yung ShinPharmaceutical Indonesia to add to its stable.Over the years, we have developed the marketin the region through registering andmarketing more products, working closely withour distributors to create a competitive marketand continue in providing good qualityproducts to enhance and improve health andquality of life. At the close of the year 2004,we have successfully obtained 366pharmaceutical product licenses and 52veterinary product licenses in the region. Wewill continue to seek more products to beregistered with the respective Ministries ofHealth across the region. Some of the highlights of 2004 included, theemphasis of Over the Counter (OTC) productsin Singapore with very encouraging response,the Distributors Conference in the Philippines,the Company and Product Launching inCambodia, besides aggressive new productlaunches and promotions in these countriesincluding Vietnam and Myanmar.

Group managing director’s operations review


Corporate DevelopmentThe Directors of Y.S.P.SAH believe that theGroup’s broad spectrum of products is a keycompetitive advantage for the Y.S.P.SAHGroup. To this end, the Group is constantlylooking into new methods and areas toincrease its competitiveness.ProductionIn April 2004, the extension of the currentmanufacturing plant in Bangi was completedfocusing mainly on production of solid dosageform products i.e. tablets and capsules. Withthe completion, the plant’s production capacityis expected to increase by 35% withanticipated overtime and shift work if the needarises.New WarehouseWith the acquisition of 13,939 square metersof industrial land from PKNS located at TamanIKS, Bandar Baru Bangi in 2003, a newcentralized temperature controlled warehousefacility has successfully commenced operationsin April 2005. With a built-up area of 5400m2,the Group will be able to house all its finishedproducts under one warehouse with athreefold increase in storage capacityaccommodating 2500 pallets and over 400picking racks. Equipped with EnterpriseResource Planning (ERP) Information Systemand planning to have Computer Aided PickingAnd Packing System (CAPS), it is designed toachieve 3000 orders processing capability daily,reaching new levels in logistics professionalismand ultimately customer satisfaction.Good Corporate GovernanceThe Group has engaged KPMG BusinessAdvisory Sdn. Bhd. to provide internal auditservices effective 1 May 2005. The objective ofthe internal audit services is to assist Y.S.P.SAH

to independently assess the system of internalcontrol established by the management forselected areas. The Board is glad to welcome Encik Adi Azuanbin Abdul Ghani and Mdm Lee Ling Chin asnew directors in 2005. With these newappointments, the Board believe it will furtherenhance the Board capability in strengtheningthe risk management, internal control andgovernance systems. Staff DevelopmentThe Group’s sales team is given constantproduct training to ensure product knowledgeand hence customer satisfaction. Producttraining seminars are conducted regularly toensure the team is well informed andmotivated. Customers are also kept abreastwith the latest developments through "YSPMedical Bulletin".

AcknowledgementI would like to record my thanks andappreciation to my fellow Board Members fortheir advice and counsel during the year. I alsoextend thanks to the management and stafffor their unceasing commitment anddedication. The teamwork demonstrated byeach of you in dispensing your duties andresponsibilities will carry the Company throughas we take on new challenges ahead.And to our shareholders, your continuedsupport and confidence in the Company is verymuch appreciated and we look forward torewarding you for your trust in future.

Dr. Frank S. Lee Fang HsinPresident / Group Managing Director

2003 2004RM’000 RM’000Turnover 70,369 74,960Profit before taxation 11,150 11,579Profit after taxation 8,300 8,483Earnings per share (sen) * 18.6 15.46Net tangible assets per share (sen) 1.38 1.44* The earnings per share has been calculated based on Group’s profit after taxation and minority interest ofRM8,482,833 and the weighted average number of shares issued during the financial year of 54,864,754.


group financial highlightsfor the year ended 31 December 2004

2004 74,960

70,3692003

TURNOVER(RM'000)

0 20,000 40,000 60,000 80,000

2004 11,579

11,1502003

0 5,000 10,000 15,000

PROFIT BEFORE TAX(RM'000)

2004 15.46

18.62003

0 5 10 15 20

EARNING PER SHARE(SEN)

2004 8,483

8,3002003

0 2,000 4,000 6,000 8,000 10,000

PROFIT AFTER TAX(RM'000)

2004 1.44

1.382003

0 0.5 1 1.5

NET TANGIBLE ASSETS PER SHARE(SEN)


board of directors’ profile

Datuk Dr. Anis Bin AhmadAged 60, a Malaysian, wasappointed to the Board ofDirectors of Y.S.P.SAH as theIndependent Non-ExecutiveDirector on 16th September2002 and subsequently as theChairman on 17th November2003. Datuk Dr. Anis graduatedwith a Bachelor of Pharmacyfrom the University of Singapore,a Master of Science inPharmaceutical Technology fromthe University of London and aPh.D. in Pharmacology from theUniversity of Bath, UnitedKingdom in 1968.Datuk Dr, Anis started his careeras a PharmaceuticalOfficer/Pharmacist with the MOHfor 6 years. He continued hiscareer as a Lecturer and Head ofthe Department of Pharmacologyin University KebangsaanMalaysia from 1975 to 1979.From his extensive experience inpharmacy, he served as theDeputy Director of NPCB from1983 to 1987, and waspromoted to Director of NPCB in1988 and served in that capacityuntil 1990. He was also theSecretary of the DCA from 1985to 1990. In 1991, he held theposition of Deputy Director ofHealth (Pharmacy) for theDepartment of Health, Johorbefore he was promoted toDirector of Pharmacy of MoH in1996 where he was attached for5 years until 2001. Datuk Dr. Aniswas awarded the Pingat JasaNegara that carries the title“Datuk” by Seri Paduka BagindaYang Dipertuan Agong in 2001.

Datuk Dr. Anis is presently theChairman of the RemunerationCommittee and a member ofNomination Committee ofY.S.P.SAH.He has no family relationshipwith other directors or majorshareholders of Y.S.P.SAH.

Dr. Lee Fang HsinAged 45, a Taiwanese and apermanent resident in Malaysia,was appointed to the Board ofDirectors of Y.S.P.SAH asPresident/Group ManagingDirector on 17th November2003. Dr. Lee currently sits on theboards of several private limitedcompanies in Malaysia includingsubsidiary companies of Y.S.P.SAHin Malaysia and he also currentlysits on the board of YSP(TW). Hepossesses a graduate diploma inFinance and Taxation from TamsuiOxford College, a Masters inBusiness Administration and PhDfrom Pacific Western University, USA.Dr. Lee started his career in 1985with Yung Shin PharmaceuticalIndustries Co. Ltd. [YSP(TW)], as aMarketing Executive. In the sameyear, he was transferred to Japanto conduct marketing surveys forYSP(TW) until 1987. In 1987, Dr. Lee was also appointed as theRepresentatives in charge ofYSP(TW)’s branch in Malaysia,which eventually resulted in theestablishment in Kumpulan Y.S.P.(Malaysia) Sdn Bhd. Dr. Lee has been honoured withthe following titles and awards:

“Darjah Seri Melaka” by theGovernor of Malacca in 1998The Asia-Pacific DistinguishGeneral manager Award in theSecond Annual ProfessionalManager Award for Enterprise inTaiwan, R.O.C. in 1998.The Model from OverseasChinese Young Entrepreneur inTaiwan, R.O.C. in 1998.The Global Overseas ProfessionalManager Award in Taiwan,R.O.C. in 2000.The Third National Award ofOverseas Taiwanese Enterprises in 2001.Dr. Lee is currently the NationalPresident of Taipei Investors’Association in Malaysia andPresident of The Council ofTaiwanese Chambers ofCommerce in Asia.Dr. Lee is presently a member ofAudit Committee and RemunerationCommittee of Y.S.P.SAH. He is asibling to Dr. Lee Fang Yu andMdm Lee Ling Chin.

Dr. Lee Fang-YuAged 53, a Taiwanese, wasappointed to the Board ofDirectors of Y.S.P.SAH as a Non-Independent Non-ExecutiveDirector on 17th November2003. He is currently theChairman and a substantialshareholder of YSP(TW). Hegraduated with a Bachelor ofScience in Pharmacy from ChinaMedical College, Taiwan R.O.C.in 1980. Dr. Lee subsequentlyobtained a Master of Science anda Ph.D from the China Medical


College in 1990 and 1997respectively. He is also theChairman of Yung Zip ChemicalInd. Co. Ltd. Taiwan, R.O.C. andis a member of the IndustryPharmacy Committee, ThePharmaceutical Society of theTaiwan, R.O.C. He is a ClinicalProfessor in the School ofPharmacy, National DefenceCentre and Assistant Professor inChina Medical College.Dr. Lee began his career as anAssistant Technician in 1972 atYSP(TW)’s R&D Section,responsible for drug analysisapproaches. In 1974, he wastransferred to the ProductionDivision where he was responsiblefor the approaches to the analysisof drugs and bulk materials.Promoted in the same year, Dr.Lee was the Administrator ofYSP(TW)’s R&D Sectionresponsible for the analysis ofdrugs, bulk materials andformulation. In 1977, he waspromoted as Manager forYSP(TW)’s Production Divisionwhere he dealt with productionmanagement, Dr Lee waspromoted to Manager of the R&DDivision in 1978, as Vice Presidentof the R&D Division and theProduction Division in 1979 and1982 respectively. In 1987, Dr. Leewas appointed Executive VicePresident of YSP(TW), followed bythe position of President in 1991.Dr. Lee was appointed Chairmanof YSP(TW) in 2004.He led YSP(TW) to 2 Excellence inBiotechnological DevelopmentAwards and established YSP(TW)as the largest supplier ofpharmaceutical products in

Taiwan R.O.C. in 1996. AsPresident, he also finished thedesign and construction ofYSP(TW)’s GMP plants in the USAand China to complete theYSP(TW) global productionsystem in 2000.Dr. Lee is a member of thePolymeric Biomaterials ScienceAssociation, Taiwan R.O.C. andhas contributed substantially tothe pharmaceutical industry. Oneof his many accomplishmentsincludes the production of YC-1,a chemical which functions as animportant and unique tool forcardiovascular pharmacologicalstudies.Dr. Lee currently sits on the boardof several private limitedcompanies in Taiwan, R.O.C. andthe subsidiary companies ofY.S.P.SAH in Malaysia.Dr. Lee is presently the ChairmanNomination Committee of Y.S.P.SAHand he is a sibling to Dr. Lee FangHsin and Mdm Lee Ling Chin.

Dato’ Koay Soon EngAged 58, a Malaysian, wasappointed to the Board ofDirectors of Y.S.P.SAH as anIndependent Non-ExecutiveDirector and Chairman of theAudit Committee of Y.S.P.SAH on16th September 2002 and 17thNovember 2003 respectively. Heholds a Bachelor of Commercefrom the University ofQueensland and is an Accountantby profession, being a CharteredAccountant of the MalaysianInstitute of Accountants. Dato’Koay is also the Fellow of the

Institute of CharteredAccountants in Australia and aCertified Practising Accountant ofthe Society of Certified PractisingAccountants, Australia.Being in public practice for over30 years since 1973 as anAccountant, Auditor, Tax Agentand Business Consultant, Dato’Koay is currently the ExecutiveChairman of the MooresRowland Group, a Malaysian firmof an international practice ofaccountants and consultants.Dato’ Koay is presently theChairman of the AuditCommittee of Y.S.P.SAH and hehas no family relationship withother directors or majorshareholders of Y.S.P.SAH.

Tu Shu YaoAged 55, a Taiwanese, wasappointed to the Board ofDirectors of Y.S.P.SAH as anIndependent Non-ExecutiveDirector and a member of theAudit Committee of Y.S.P.SAH on17th November 2003. Graduatedwith a Diploma in Mining &Metallurgical engineering fromthe University of National TaipeiTechnology in 1971, heembarked on his career in themetal and gas industry in Nigeria,Africa where he served in variouscapacities. He was involved insimilar metal and gas industry inTaiwan from 1986 to 1989.Mr. Tu is presently the Chairmanand Managing Director of Regiongroup of companies (“RGC”) inMalaysia, a position which heholds since 1986. In RGC, Mr. Tu

board of directors’ profile (cont’d)

is involved in, amongst others,overseeing the businessoperations, devising strategicplans and business direction aswell as responsible for the overallperformance of the group, As thePresident of the Chinese TaipeiSchool (Kuala Lumpur) andPresident of the Taipei Investors’Association in Malaysia, Mr. Tu isalso active in providing businessadvices and guidance to otherassociations and social organisations.Mr. Tu is presently a member ofAudit Committee, RemunerationCommittee and NominationCommittee of Y.S.P.SAH and hehas no family relationship withother directors or majorshareholders of Y.S.P.SAH.

Lee Ling ChinAged 56, Taiwanese, wasappointed to the Board ofDirector of Y.S.P.SAH as a Non-Independent Non-ExecutiveDirector on 16th February 2005.She is currently the Director anda substantial shareholder ofYSP(TW). She graduated withFamily Business Managementfrom Shih Chien UniversityTaiwan R.O.C. in 1971.She started her career in 1972,with Yung Shin PharmaceuticalIndustries Co. Ltd [YSP (TW)] asSection Manager ofAdministration Sectionresponsible for Accounting andGeneral Affairs and she also wasinvolved in setting up thecompany management regulationand SOP. She was then promotedas Manager, to be responsible foroverseas business including

Southeast Asia market researchand development. She was laterpromoted to the position of VicePresident in year 1988 to assistthe President in managementoperation and assist to expandthe sales to general hospital. Atthe same year she was elected asCommittee Member of TaiwanPharmaceutical Manufacturer’sAssociation as an activeparticipant in public healthactivities. In year 2000, she wastransferred to an investmentcompany of YSP(TW), a companydealing with plasma productsbusiness name “BioTrustInternational Corporation”, asPresident. She was involved inpushing the development ofbiological industry in TaiwanR.O.C. and had success inimplementing a new legislationof “Blood Products Act” inTaiwan R.O.C. She is currently theVice Chairman of BioTrustInternational Corporation.Mdm Lee currently serves as amember of the board of severalprivate limited companies inTaiwan R.O.C. and the subsidiarycompanies of Y.S.P.SAH inMalaysia.Mdm Lee is presently a memberof Nomination Committee ofY.S.P.SAH and she is a sibling toDr. Lee Fang Hsin and Dr. LeeFang Yu.

Adi Azuan Bin AbdulGhaniAged 34, a Malaysian, wasappointed to the Board ofDirectors of Y.S.P.SAH as a Non-Independent Non-Executive

Director of Y.S.P.SAH since 1stDecember 2004. Graduated withUK BSc (Honours) Accountingfrom Queen's University ofBelfast and ACCA from EmileWoolf College, London, UK. He isnow a Fellow Member of theACCA (FCCA) and also amember of Malaysian Institute ofAccountants (MIA).He started his professional careerin the auditing and accountingfields withPricewaterhouseCoopers, KualaLumpur in year 1996. He wasthen promoted to the position ofManager in year 2002 andinvolved in the provision of auditand accounting services mainly tobanking and financial institutionsbefore joining Lembaga TabungHaji as the Divisional Head ofGroup Accounts in July 2002.Presently, he is the Head ofDivision in Finance & Accountsand Group Accounts Divisions.Encik Adi Azuan Bin Abdul Ghanidoes not have any equity interestin Y.S.P.SAH or the subsidiarycompanies. He also does nothave any family relationship withany directors or majorshareholders of Y.S.P.SAH. EncikAdi Azuan is a representative ofLembaga Tabung Haji on theBoard of Y.S.P.SAH.

* All the above-named Directorsof Y.S.P.SAH have not beenconvicted of any criminaloffences (other than ordinarytraffic offences, if any) andthey do not have any conflictof interest with the Company.


board of directors’ profile (cont’d)

board of directors

The Board of Directors fully acknowledges theimportance of good corporate governance and istaking steps to evaluate the status of the corporategovernance adopted by the Group as tabulatedbelow and its compliance with the code of bestpractices as set out in Part 1 and 2 of the MalaysianCode on Corporate Governance pursuant toParagraph 15.26 of the Listing Requirements ofBursa Malaysia Securities Berhad (“Bursa Securities”).1. BOARD OF DIRECTORS1.1 Composition of the Board of Directors

The Board presently has seven (7) membersand is headed by the President/GroupManaging Director, Dr. Lee Fang Hsin. Theprofile of each Director is presented separatelyin the Annual Report.1.2 Board Balance

The Board has seven (7) members comprisingthe following:-• One (1) Chairman• One (1) President/Group Managing Director• Two (3) Non-Independent Non-ExecutiveDirectors• Two (2) Independent Non-Executive DirectorsThe Company is in compliance with Paragraph15.02 of the Listing Requirements wherebynearest one-third of its Board members areindependent directors.All Board members participate fully indecisions on the key issues involving theGroup. The President/Group ManagingDirector has primary responsibilities formanaging the Group’s day to day operationsand together with the Non-Executive Directorsto ensure that the strategies proposed by themanagement are fully discussed and

examined, and taking into account the longterm interests of the various stakeholdersincluding shareholders, employees, clients,suppliers and the various communities inwhich the Group conducts its business.The Board is assured of a balanced andindependent view at all Board deliberationslargely due to the presence of its Non-Executive Directors who are independent fromManagement. The Independent Directors arealso free from any business or otherrelationships that could materially interferewith the exercise of their independentjudgment. The Board is constituted ofindividuals who are committed to businessintegrity and professionalism in all theiractivities.As part of its commitment, the Board supportsthe highest standards of corporate governanceand the development of the best practices forthe Group.In addition to the role of guidance by theIndependent Non-Executive Directors, eachDirector brings independent judgment to bearon issues of strategy, performance, resourcesand standard of conduct.

1.3 Duties and ResponsibilitiesThe Board retains full and effective control ofthe Company and the Group. This includesresponsibility for determining the Group’soverall strategic direction as well asdevelopment and control of the Group.

1.4 MeetingsThe Board met four (4) times during thefinancial year ended 31 December 2004. Themembers of the Board and their attendance atthe meetings, were as follows:-

corporate governance statement

Board of Directors No. of meetings attendedDatuk Dr. Anis Bin Ahmad 4/4Dr. Lee Fang Hsin 4/4Dr. Lee Fang Yu 2/4Dato’ Koay Soon Eng 4/4Mr. Tu Shu Yao 4/4En. Adi Azuan Bin Abdul Ghani (Appointed on 1.12.2004) -Madam Lee Ling Chin (Appointed on 16.2.2005) -Mr. Lee Tien Te (Resigned on 16.2.2005) 2/4


1.5 Appointments to the BoardThe appointment of any additional Director ismade as and when it is deemed necessary bythe existing Board with due considerationgiven to the mix of expertise and experiencerequired for an effective Board.In compliance with the Listing Requirements ofBursa Securities, the Board’s NominationCommittee comprises two (2) independentNon-Executive Directors.The Nomination Committee is empowered bythe Board and its terms of reference toconsider and evaluate the appointment of newDirectors and Directors to board Committeesof the Company. The Nomination Committeewill then recommend the candidates to theBoard for the appointment. The NominationCommittee also keeps under review the Boardstructure, size and composition and the mix ofskills and core competencies required for theBoard to discharge its duties effectively. Inaddition, the Nomination Committee willdeliberate on Board succession plan as andwhen appropriate.The Nomination Committee will also assessthe effectiveness of the Board as a whole, theCommittees of the Board and thecontributions of each individual Director on atleast an annual basis.The members of the Nomination Committeeare as follows:-a) Dr. Lee Fang Yu (Chairman)b) Datuk Dr. Anis Bin Ahmadc) Mr. Tu Shu Yaod) Madam Lee Ling Chin

1.6 Retirement and Re-electionPursuant to the Company’s Articles ofAssociation, one-third (1/3) of the Directors,including the Managing Director, shall retirefrom office, at least once in three (3) years.Retiring directors can offer themselves for re-election. Directors who are appointed by theBoard during the financial year are subject tore-election by shareholders at the next AnnualGeneral Meeting held following their

appointment. Directors over seventy (70) yearsof age are subject for re-appointment annuallyin accordance with Section 129(6) of theCompanies Act, 1965.1.7 Supply of Information

The agenda and Board papers for each item aswell as minutes of previous meetings arecirculated prior to the Board meetings to giveDirectors sufficient time to deliberate on theissues to be raised at the Board meetings.In arriving at any decision onrecommendations by the Management,thorough deliberation and discussion by theBoard is a pre-requisite. All proceedings of theBoard Meetings are minuted and signed bythe Chairman of the meeting in accordancewith the provision of Section 156 of theCompanies Act, 1965.The Board is kept updated on the Company’sand Group’s activities and its operations on aregular basis. The directors also have access toreports on the Group’s activities, both financialand operational.All directors have access to the advice andservices of the Company Secretary who isresponsible for ensuring that board proceduresare followed and the Board may also takeindependent advice, at the Company’sexpenses, in the furtherance of their duties ifso required. The Board also has unlimitedaccess to all information with regard to theactivities of the Company.

1.8 Relationship of the Board to Management• Quality of InformationInformation plays a key role in the Board’sdecision-making and in setting up the policiesand strategies of the Company. The Board hasunrestricted access to timely and accurateinformation, which is not only confined toqualitative and quantitative information, butalso to other information deemed suitablesuch as customer satisfaction, products andservices quality, market share and marketreaction and macro economic performance.

Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (552781-X)

corporate governance statement (cont’d)

13

• Access to InformationPrior to the board meetings, all Directorsreceive an agenda and Board paperscontaining information relevant to thebusiness of the meeting including informationon major financial, operational and corporatematters relating to the activities andperformance of the Group. This is issued insufficient time to enable Directors to obtainfurther explanation, where necessary, in orderto be properly informed before the meeting.• Use of Board CommitteesAs appropriate, the Board has delegatedcertain responsibilities to Board Committeeswhich operate within clearly defined terms ofreference. The Committees are as follows:-a) Audit Committeeb) Remuneration Committeec) Nomination Committee

1.9 The Relationship between the Board andthe ShareholdersThe principal forum for dialogue withshareholders is the AGM, during whichshareholders are encouraged to participateand pose questions to the Board regardingoperational and financial information. TheAGM also allows shareholders an opportunity

to interact directly with the Board and seekfirst-hand information on the above matters.Extraordinary General Meetings are held asand when shareholders’ approvals are requiredon specific matters and shareholders arenotified of such meetings requirements.2.0 Directors’ Training

In compliance with the Bursa Securities ListingRequirements, all existing members havecompleted the Mandatory AccreditationProgramme.

2. DIRECTORS’ REMUNERATION\2.1 The Level and Make-Up of Remuneration

(i) The aggregate remuneration of Directorsfor the financial year ended 31 December2004 is as shown below:-2.2 Procedure

In compliance with the Listing Requirements ofBursa Securities, the Board has established aRemuneration Committee comprising two (2)Independent Non-Executive Directors and theGroup Managing Director. The Committee’sprimary responsibility is to recommend to theBoard, the remuneration of Directors.



Salaries & OtherEmoluments (RM)Executive Directors 780,723Non-Executive Directors 157,148

937,871(ii) Number of Directors whose remuneration falls in bands of RM50,000 is tabulated below:-

Executive Non-ExecutiveRemuneration Band Directors DirectorsBelow 50,000 - 7RM50,001 - RM100,000 1 -RM100,001 - RM150,000 2 -RM150,001 - RM200,000 - -RM200,001 - RM250,000 - -RM250,001 - RM300,000 - -RM300,001 - RM350,000 1 -

However, the final decision on remunerationfor Directors is a matter for the Board as awhole and individual directors are required toabstain from discussion of their ownremuneration.The members of the Remuneration Committeeare as follows:-a) Datuk Dr. Anis Bin Ahmad (Chairman)b) Mr. Tu Shu Yaoc) Dr. Lee Fang Hsin

3. SHAREHOLDERS3.1 Dialogue between the Company andInvestors

The Group values dialogue with investors as ameans of effective communication thatenables the Board to convey informationabout the Group’s performance, corporatestrategy and other matters affectingshareholders’ interests.The AGM is the principal forum for dialoguewith individual shareholders. It is a crucialmechanism in shareholder communication forthe Company. At the Company’s AGM,shareholders have direct access to the Boardand are given the opportunity to ask questionsduring the open questions and answerssection. The shareholders are encouraged toask questions on both the resolutions beingproposed or about the Group’s operations ingeneral.The Board is also committed to ensure thatshareholders are well informed of majordevelopments of the Company and the Groupand the information is also communicated tothem through the following channels:-a) Annual Report;b) various disclosures and announcementsmade to Bursa Securities including thequarterly results and annual results; andc) the Company’s websitewww.yspsah.com.my through whichshareholders and the public in generalcan gain access to the latest corporateand product information of the Group.

3.2 Annual General Meeting (“AGM”)Notice of AGM and annual reports are sentout to shareholders at least 21 days before thedate of the meeting.

At the AGM, the Board also providesopportunities for shareholders to raisequestions pertaining to the business activitiesof the Group. Directors and seniormanagement staff are available to provideresponses to shareholders’ questions.For the re-election of Directors, the Board willensure that full information is disclosedthrough the notice of meeting regardingDirectors who are retiring and who are willingto serve if re-elected.Each item of special business included in thenotice of meeting will be accompanied by anexplanatory statement for the proposedresolution to facilitate full understanding andevaluation of issues involved.

4. ACCOUNTABILITY AND AUDIT 4.1 Financial Reporting

The Board is aware of its responsibilities toshareholders and the requirement to present abalanced and comprehensive assessment ofthe Group’s financial position, by means of theannual and quarterly reports and otherpublished information. In this regard, theBoard is primarily responsible for thepreparation of a financial statement to presenta fair and balanced report of the financialstate of affairs of the Group.Before releasing to Bursa Securities, thequarterly financial results are reviewed by theAudit Committee and approved by the Boardof Directors. The details of the Company’s andthe Group’s financial positions are included inthe Financial Statements section of the AnnualReport.



15

4.2 Internal ControlThe Board acknowledges its responsibility formaintaining a sound system of internal controlin the Company and the Group. Thesecontrols can only provide reasonable but notassurance against material misstatement, lossor fraud. Information on the Group’s internalcontrol is disclosed in the Statement ofInternal Control section in the Annual Report.

4.3 Relationship with AuditorsThe Company’s external auditors, ShamsirJasani Grant Thornton report to members ofthe Company on their findings which areincluded as part of the Company’s financialreports with respects to each year’s audit onthe statutory financial statements. In doing so,the Company has established a transparentarrangement with the auditors to meet theirprofessional requirements. From time to time,the auditors highlight to the Audit Committeeand Board of Directors on matters that requirethe Board’s attention.

5. DIRECTORS’ RESPONSIBILITY STATEMENTIN RESPECT OF FINANCIAL STATEMENTSThe Board of Directors are required underParagraph 15.27(a) of the Bursa SecuritiesListing Requirements to issue a statementexplaining their responsibilities in thepreparation of the annual financial statements.The Directors are required by the CompaniesAct, 1965 to prepare financial statements foreach financial year which give a true and fairview of the state of affairs of the Companyand of the Group as at the end of the financialyear and of the profit and loss of the Companyand of the Group for the financial year.

In preparing the financial statements, theDirectors are required to:-a) use appropriate accounting policies andconsistently apply them;b) make judgments and estimates that arereasonable and prudent; andc) ensure all applicable approved accountingstandards have been followed. The Directors are responsible for keepingproper accounting records which disclose, withreasonable accuracy at any time, the financialposition of the Company and of the Groupand to enable them to ensure that theaccounts comply with the Companies Act,1965.The Directors are satisfied that in preparingthe financial statements of the Group for thefinancial year ended 31 December 2004, theGroup has used the appropriate accountingpolicies and applied them consistently andprudently. The Directors are of the opinionthat all relevant approved accountingstandards have been followed and confirmthat the financial statements have beenprepared on a going concern basis.



Utilisation of ProceedsThe proceeds from public issue of RM11.798 million are utilised in the following manner:

Share BuybacksDuring the financial year, there were no sharebuybacks by the Company.

Option, Warrants and Convertible SecuritiesThe Company has not issued any options, warrantsor convertible securities during the financial year.

American Depository Receipt (“ADR”) / GlobalDepository Receipt (“GDR”)During the financial year, the Company did notsponsor any ADR or GDR programme.

Sanctions and/or PenaltiesThere were no sanctions and/or penalties imposedon the Company and its subsidiaries, Directors ormanagement staff by the relevant regulatory bodiesduring the financial year.

Non-Audit FeeThere was no non-audit fees paid to the externalauditors by the Group for the financial year ended31 December 2004, except for RM15,787 paid forthe taxation service of the Group.

Profit Estimate, Forecast or ProjectionThe Company did not undertake any profitestimates, forecast or projection for the financialyear. Thus, there is no variance between the resultsfor the financial year and unaudited resultspreviously released by the Company.

Profit GuaranteeThere was no profit guarantee given by theCompany during the financial year.

Revaluation of Landed PropertiesThe Group’s revaluation policy on landed propertiesis as set out in the financial statements.

Material ContractsThere were no material contracts except for thecontract dated 08 April 2004 signed between SQAand YSPI for the construction of 2-storeywarehouse measuring approximately 59,227 squarefeet building on Lot 1 and 2, Section9, Bandar BaruBangi , Kawasan Perindustri PKNS, Bangi, Selangorentered into by the Group, directors and majorshareholders during the financial year at anestimated cost of RM5.596 million.


additional information providedpursuant to Part A of the Bursa Malaysia Securities Berhad Listing Requirements

As disclosed Utilisation UnutilisedRM’000 RM’000 RM’000Purchase of land 4,000 4,000 -Extension of factory and purchase of machinery 3,546 376 3,170Repayment of hire purchase creditors 1,971 1,971 -Working capital 781 660 121Listing expenses 1,500 1,621 (121)

11,798 8,628 3,170


statement of internal control

The Board of Directors is committed to maintain asound system of internal control in the Group and ispleased to provide the following Statement ofInternal Control which outlines the nature and scopeof internal control of the Group during the yearpursuant to paragraph 15.27(b) of the Bursa MalaysiaSecurities Berhad Listing Requirements.1. INTERNAL CONTROL

The Board through its Audit Committee isultimately responsibility for the Group’s systemof internal control and for reviewing itseffectiveness. While acknowledging theirresponsibilities for the system of internal control,the Directors are aware that such a system isdesigned to reduce as far as possible rather thaneliminate the risk of failure to achieve businessobjectives and can provide only a reasonableand not an absolute assurance against risk. Thesystem of internal controls covers financial,organizational, operational and compliancecontrols and risk management to safeguardshareholders’ investment and the Group.The Group has in place on-going processes inidentifying, evaluating and managing significantrisks faced by the Group for the year and up tothe date of approval of the annual report andfinancial statements.

2. INTERNAL AUDIT FUNCTIONSSubsequent to the end of the financial yearunder review, the Group has outsourced theInternal Audited Function in May 2005 which isindependent of the activities or operations ofthe subsidiaries it audits. The Group’s InternalAudit Function will perform its duties withimpartiality; proficiency and due professionalcare and to provide the Audit Committee andthe Board with the assurance it requiresregarding the adequacy and integrity of thesystem of internal control.Even though the Group did not have anIndependent Internal Audit Division during thefinancial year under review, senior managementstaff assisted the Audit Committee in the dischargeof internal audit duties and responsibilities.The Group has appointed KPMG BusinessAdvisory Sdn. Bhd. as internal auditor, whichprovides the Board with much of the assuranceregarding the adequacy and effectiveness of riskmanagement, internal control and governancesystems. The internal audit function meets therequirements of the Guidelines on the Internal

Audit Function released by the industry taskforce in May 2005.Internal audit independently reviews the riskidentification procedures and control processesimplemented by the management, and reportsto the Audit Committee on a quarterly basis.Internal audit also reviews the internal controlsin the key activities of the Group’s businesses onthe basis of a rolling three years internal auditstrategy and a detailed annual internal auditplan presented to the Audit Committee forapproval. The internal audit function adopts arisk based approach and prepares its auditstrategy and plan based on the risk profiles ofthe major business units of the Group.Internal audit also undertakes a review of thecompany’s compliance with the principles andbest practices of the Code. The results and anycorrective action which may be necessary arereported directly to the Audit Committee.The Audit Committee reviews the riskmonitoring and compliance procedures,ensuring that an appropriate mix of techniquesis used to obtain the level of assurance requiredby the Board. The Audit Committee considersreports from internal audit and frommanagement, before reporting and makingrecommendations to the Board in strengtheningthe risk management, internal control andgovernance systems. The Committee presents itsfindings to the Board on a quarterly basis orearlier as appropriate.Other control processApart from internal audit, the Company has putin place an Inter-Company Quality Assuranceaudit among manufacturing facilities of YSPGroup, which include YSP (TW), YSP (M), YSP(C),Carlsbad Technology Inc. and Yung Zip Chemical.An prescheduled audit will be performed onyearly basis by the auditors from different plant.These quality system audit has commenced inMarch 2005 and YSP (M) will be audited in July2005. The process mainly focus on thecompliance of current Good ManufacturingPractice (cGMP), which provides a degree ofassurance as to operations and validity of qualitysystem in manufacturing facility. A process ofhierarchical reporting has been established whichprovide for a documented and verifiable trailafter each audit. Planned corrective actions aremonitored for timely completion.

The primary objective of the Audit Committee is toassist the Board in the effective discharge of itsfiduciary responsibilities for corporate governance,financial reporting to shareholders and the publicand the internal control.The Audit Committee will adopt practices aimed atmaintaining appropriate standards of responsibility,integrity and accountability to all the Company’sshareholders.

MEMBERSHIPThe Audit Committee is appointed by the Board andcomprises the following members:-1. Dato’ Koay Soon Eng (Chairman)- Independent Non-Executive Director2. Tu Shu Yao- Independent Non-Executive Director3. Dr. Lee Fang Hsin- President/Group Managing Director

TERMS OF REFERENCECOMPOSITIONThe composition of the Audit Committee is at leastthree (3) members of whom the majority, includingthe Chairman, must be independent directors.At least one (1) member of the Committee must:-a) be a member of Malaysian Institute ofAccountants (“MIA”); orb) have at least 3 years’ working experience and:-

i) must have passed the examinationsspecified in Part I of the 1st schedule ofthe Accountants Act, 1967; orii) must be a member of one of theassociates of accountants specified in PartII of the 1st Schedule of the AccountantsAct, 1967.

No alternate director shall be appointed as amember of the Committee.In the event that the Audit Committee is reduced toless than (3) members, the vacancy shall be filledwithin 3 months.

AUTHORITYThe Audit Committee is authorized by the Board toinvestigate any activity of the Company and itssubsidiaries within its terms of reference determinedby the Board of Directors and all employees shall bedirected to co-operate as and when required by theAudit Committee.The Audit Committee shall have directcommunication channels with the external auditorsand person(s) carrying out the internal auditfunction or activity (if any).The Audit Committee is authorized at the cost ofthe Company to take such independent professionaladvice as it considers necessary.

MEETINGSThe Committee shall meet a least four (4) times as yearand such additional meetings as the Chairman shalldecide in order to fulfill its duties. In addition, theChairman may call a meeting of the Audit Committeeif a request is made by any committee member, anyExecutive Director, or the external auditors.In order to form a quorum, the majority of memberspresent must be independent directors. TheCompany Secretary shall act as Secretary of the AuditCommittee or in her/his absence, another personauthorized by the Chairman of the Audit Committee.There were four (4) Audit Committee meetings heldduring the year 2004. The details of attendance ofCommittee members are as follows:-Name of Committee Members AttendanceDato’ Koay Soon Eng (Chairman) 4/4Mr. Tu Shu Yao 4/4Dr. Lee Fang Hsin 4/4

RESPONSIBILITIES AND DUTIES OF THECOMMITTEEThe duties and responsibilities of the Committeeshall include:-1) To consider the appointment of the externalauditors, the audit fees, and any questions ofresignation and dismissal.


audit committee

2) To review and report the following to theBoard of Directors:-i) The quarterly results and year endfinancial statements, prior to approval bythe Board focusing particularly on:-

a) changes in or implementation ofmajor accounting policy;b) significant and unusual events;c) compliances with accountingstandards, listing and other relevantlegal and regulatory requirements.

ii) The audit report, audit plan and theexternal auditors’ evaluation of the systemof internal controls;iii) Any related party transaction and conflictof interest situation that may arise withinthe Company or Group including anytransaction, procedure or course ofconduct that raises questions ofmanagement integrity.

3) To review the adequacy of the scope, functionsand resources on the internal audit functionsand that it has the necessary authority to carryout its work.4) To review the internal audit programme,processes, the results of the internal auditprogramme, processes or investigationundertaken and whether or not appropriateaction is taken on the recommendations of theinternal audit function.5) Other functions as may be agreed to by theAudit Committee and the Board of Directors.

SUMMARY OF ACTIVITIES OF THE AUDITCOMMITTEEIn line with the terms of reference of the AuditCommittee, the following activities were carried outby the Audit Committee during the financial periodended 31 December 2004 in the discharge of itsfunctions and duties:-

a) Reviewed the external auditors’ scope of workand audit plans for the period. Prior to theaudit, representatives from the externalauditors, presented their audit strategy andplan.b) Reviewed with the external auditors the resultsof the audit, the audit report and themanagement letter, including management’sresponse.c) Consideration and recommendation to theBoard for approval of the audit fees payable tothe external auditors.d) Reviewed the quarterly unaudited financialresults announcements before recommendingthem for the Board’s approval.e) Reviewed the audited Financial Statements ofthe Group and the Company prior tosubmission to the Board for their considerationand approval. The review was to ensure thatthe audited Financial Statements were drawnup in accordance with the provisions of theCompanies Act, 1965 and the applicableaccounting standards approved by theMalaysian Accounting standard Board(“MASB”).f) Reviewed the Company’s compliance inparticular the quarterly and year end financialstatements with the Listing Requirements ofthe Bursa Securities, MASB and other legal andregulatory requirements.g) Reviewed any related party transactionsentered into by the Group.

INTERNAL AUDIT FUNCTIONSThe Group did not have an Independent InternalAudit Division in the financial year 2004. SeniorManagement staff were allocated the task to assistthe Audit Committee in discharging its duties andresponsibilities. However, in 2005, the Company hasoutsourced the Independent Internal Audit Divisionto ensure the internal audit functions are carried outeffectively and professionally.


audit committee (cont’d)

F I N A N C I A L S T A T E M E N T SDirectors’ Report 22Statement by Directors 26Statutory Declaration 26Report of the Auditors 27Balance Sheets 28Income Statements 29Statements of Changes in Equity 30Cash Flow Statements 32Notes to the Financial Statements 35

The Directors have pleasure in submitting their report together with the audited financial statements of the Group and ofthe Company for the financial year ended 31 December 2004. PRINCIPAL ACTIVITIESThe principal activity of the Company consists of investment holding.The principal activities of the subsidiary companies are as disclosed in Note 12 to the Financial Statements.There have been no significant changes in the nature of these activities of the Company and its subsidiary companiesduring the financial year.FINANCIAL RESULTS Group CompanyRM RMNet profit for the year 8,482,833 3,300,177Unappropriated profit/(Accumulated loss) at beginning of year 2,170,357 (9,909)Profit available for appropriation 10,653,190 3,290,268First and final dividend of 6% per share, tax exempted (3,300,000) (3,300,000)Unappropriated profit/(Accumulated loss) at end of year 7,353,190 (9,732)DIVIDENDSThe amount of dividends declared and paid since the end of the previous financial year were as follows:-

RMIn respect of the financial year ended 31 December 2003:-First and final dividend of 6% per share, tax exempted paid on 8 September 2004 3,300,000The Directors do not recommend the payment of any dividend for the financial year ended 31 December 2004.RESERVES AND PROVISIONSThere were no material transfers to or from reserves or provisions during the financial year except as stated in the financialstatements and the notes thereto.ISSUE OF SHARES AND DEBENTURES During the financial year, the following shares were issued:-Date of Purpose of Class of Number of shares Term ofissue issue share at RM1.00 per share issue06.01.2004 Working capital Ordinary 8,250,000 CashThere were no debentures issued during the financial year.


directors’ report

INFORMATION ON THE FINANCIAL STATEMENTSBefore the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:-(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance fordoubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowancehad been made for doubtful debts; and(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including theirvalue as shown in the accounting records of the Group and of the Company have been written down to an amountwhich they might be expected so to realise.At the date of this report, the Directors are not aware of any circumstances:-(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in thefinancial statements of the Group and of the Company inadequate to any substantial extent; or(b) which would render the values attributed to current assets in the financial statements of the Group and of theCompany misleading; or(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Groupand of the Company misleading or inappropriate.No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Groupand of the Company to meet its obligations as and when they fall due.At the date of this report, there does not exist:-(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year whichsecures the liability of any other person; or(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.OTHER STATUTORY INFORMATIONThe Directors state that:-At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financialstatements which would render any amount stated in the financial statements misleading.In the opinion of the Directors:-(a) the results of the Group’s and of the Company’s operations during the financial year were not substantially affectedby any item, transaction or event of a material and unusual nature; and(b) there has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely to affect substantially the results of the operations of theGroup and of the Company for the current financial year in which this report is made.


directors’ report (cont’d)

DIRECTORSThe Directors in office since the date of the last report are :-Datuk Dr. Anis Bin Ahmad (Chairman)Lee Fang HsinLee Fang YuDato’ Koay Soon EngTu Shu YaoAdi Azuan Bin Abdul Ghani (Appointed on 1 December 2004)Lee Ling Chin (Appointed on 16 February 2005)Lee Tien Te (Resigned on 16 February 2005)The shareholdings in the Company and its related corporations of those who were Directors at the end of the financial yearare as follows:-

At At1.1.2004 Bought Sold 31.12.2004 Company Ordinary shares of RM1 eachDirect shareholdingDatuk Dr. Anis bin Ahmad 300 1,974,700 - 1,975,000Lee Fang Hsin 2,503,237 241,923 - 2,745,160Lee Tien Te 854,095 - 301,040 553,055Lee Fang Yu 813,500 - 287,448 526,052Ultimate holding company- Yung Shin Pharmaceutical Industries Co. Ltd. (Taiwan) Ordinary shares of NTD 10 eachDirect shareholdingLee Fang Hsin 10,172,907 41,000 - 10,213,907Lee Tien Te 15,245,541 - - 15,245,541Lee Fang Yu 6,342,438 - - 6,342,438Subsidiary company- Yung Shin (Philippines) Inc Ordinary shares of PESO 10 eachDirect shareholdingLee Fang Hsin 1 - - 1Lee Tien Te 1 - - 1By virtue of Mr. Lee Fang Hsin, Mr. Lee Tien Te and Mr. Lee Fang Yu’s interest in shares of the ultimate holding company,they are deemed to have interest in the Company and its related companies under Section 6A of the Companies Act, 1965to the extent the ultimate holding company has an interest.No other Directors in office at end of the financial year held any interest in shares of the Company and its relatedcorporations during the financial year.DIRECTORS’ BENEFITSDuring and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objector objects of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in theCompany or any other body corporate.



DIRECTORS’ BENEFITS (CONT’D)Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (except asdisclosed in Notes 20 and 23 to the Financial Statements) by reason of a contract made by the Company or a relatedcorporation with the Director or with a firm of which the Director is a member, or with a company in which the Directorhas a substantial financial interest.ULTIMATE HOLDING COMPANY AND IMMEDIATE HOLDING COMPANYThe Directors regard Yung Shin Pharmaceutical Industries Co. Ltd., a company incorporated in Taiwan, Republic of Chinaas the ultimate holding company and YSP SEA Investment Co. Ltd., a company incorporated in British Virgin Island, UnitedKingdom, as the immediate holding company.SIGNIFICANT EVENTS DURING THE FINANCIAL YEARThe significant events during the financial year of the Company are disclosed in Note 24 to the Financial Statements.AUDITORSMessrs Shamsir Jasani Grant Thornton have expressed their willingness to continue in office.

On behalf of the Board

)DATUK DR. ANIS BIN AHMAD )))))) DIRECTORS)))))LEE FANG HSIN )

Kuala Lumpur16 February 2005



In the opinion of the Directors, the financial statements set out on pages 28 to 55 are drawn up in accordance with theprovisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true andfair view of the state of affairs of the Group and of the Company as at 31 December 2004 and of the results and cashflows of the Group and of the Company for the financial year then ended.On behalf of the Board

DATUK DR. ANIS BIN AHMAD LEE FANG HSINKuala Lumpur16 February 2005

I, Lee Fang Hsin, being the Director responsible for the financial management of Y.S.P. Southeast Asia Holding Berhad, dosolemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 28to 55 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of theprovisions of the Statutory Declarations Act, 1960.Subscribed and solemnly declared by )the abovenamed at Kuala Lumpur in )the Federal Territory this day of ) LEE FANG HSIN16 February 2005 )

Before me:Commissioner for Oaths


statement by directors

statutory declaration

We have audited the financial statements of the Group and of the Company set out on pages 28 to 55. These financialstatements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on the financialstatements based on our audit.We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that weplan and perform the audit to obtain all the information and explanations, which we consider necessary to provide us withsufficient evidence to give reasonable assurance that the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An auditincludes an assessment of the accounting principles used and significant estimates made by the Directors as well asevaluating the overall adequacy of the presentation of information in the financial statements. We believe that our auditprovides a reasonable basis for our opinion.In our opinion:a) the financial statements which have been prepared under the historical cost convention, as modified by therevaluation of certain assets, are properly drawn up in accordance with the provisions of the Companies Act, 1965and applicable approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statementsof the Group and of the Company; and(ii) the state of affairs of the Group and of the Company as at 31 December 2004, results of the operations andcash flows of the Group and of the Company for the financial year ended on that date;and

b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Companyand by the subsidiary companies of which we have acted as auditors have been properly kept in accordance with theprovisions of the said Act.We have considered the financial statements and auditors’ reports thereon of the subsidiary companies of which we havenot acted as auditors, as indicated in Note 12 to the Financial Statements.We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’sfinancial statements are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements and we have received satisfactory information and explanations required by us for thosepurposes.The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and didnot include any comment made under Subsection (3) of Section 174 of the Act.

SHAMSIR JASANI GRANT THORNTON(NO. AF : 0737)CHARTERED ACCOUNTANTS

DATO’ N.K. JASANICHARTERED ACCOUNTANT(NO: 708/03/06(J/PH))PARTNERKuala Lumpur16 February 2005


report of the auditors to the members of Y.S.P. Southeast Asia Holding Berhad and its subsidiary companies


balance sheetsas at 31 December 2004

Group CompanyNote 2004 2003 2004 2003RM RM RM RMSHARE CAPITAL 5 55,000,000 46,750,000 55,000,000 46,750,000 SHARE PREMIUM 7,534,681 5,614,264 7,534,681 5,614,264 EXCHANGE FLUCTUATION RESERVE 6 189,945 43,149 - - RESERVE ON CONSOLIDATION 7 8,934,710 9,927,455 - - UNAPPROPRIATED PROFIT/ (ACCUMULATED LOSS) 7,353,190 2,170,357 (9,732) (9,909)Total shareholders' equity 79,012,526 64,505,225 62,524,949 52,354,355 MINORITY INTERESTS 298 5 - - NON-CURRENT LIABILITIESDeferred taxation 8 2,871,000 1,918,000 - - Term loans 9 3,340,632 1,121,430 - - Finance creditors 10 37,223 48,737 - -

85,261,679 67,593,397 62,524,949 52,354,355 Represented by:-NON-CURRENT ASSETSPROPERTY, PLANT AND EQUIPMENT 11 44,842,298 28,118,695 - - INVESTMENT IN SUBSIDIARY COMPANIES 12 - - 115,653,422 49,424,604 AMOUNT DUE FROM SUBSIDIARY COMPANIES 12 - - 4,000,000 - INTANGIBLE ASSETS 1,201 1,242 - -

44,843,499 28,119,937 119,653,422 49,424,604 CURRENT ASSETSInventories 13 23,733,900 20,072,866 - - Trade receivables 14 25,911,808 23,749,221 - - Other receivables 15 4,034,438 5,787,112 249,657 2,860 Amount due from related companies 16 30,708 49,794 - - Amount due from subsidiary companies 12 - - 6,217,345 2,688,660 Tax recoverable 835,532 - - - Fixed deposits with licensed banks 3,273,102 2,066,440 250,000 - Cash and bank balances 6,777,383 4,120,807 1,257,692 250,921

Total current assets 64,596,871 55,846,240 7,974,694 2,942,441 LESS: CURRENT LIABILITIESTrade payables 3,610,426 2,593,472 - - Other payables 17 10,282,910 5,897,835 321,876 12,690 Amount due to ultimate holding company 16 3,676,474 3,433,029 - - Amount due to subsidiary companies 12 - - 64,781,291 - Amount due to related companies 16 24,766 295,154 - - Bank borrowings 18 5,221,497 612,856 - - Term loans 9 1,251,988 3,091,288 - - Tax payable 110,630 449,146 - -

Total current liabilities 24,178,691 16,372,780 65,103,167 12,690 NET CURRENT ASSETS/(LIABILITIES) 40,418,180 39,473,460 (57,128,473) 2,929,751

85,261,679 67,593,397 62,524,949 52,354,355 The accompanying notes form an integral part of the financial statements.


income statementsfor the financial year ended 31 December 2004

Group CompanyNote 2004 2003 2004 2003RM RM RM RMRevenue 19 74,960,015 70,369,446 3,300,000 - Cost of goods sold (38,021,590) (34,736,762) - - Gross profit 36,938,425 35,632,684 3,300,000 - Other operating income 1,875,823 670,700 328,597 974 Distribution cost (18,849,350) (17,988,841) - - Administration expenses (7,073,428) (6,088,593) - - Other operating expenses (838,024) (759,146) (283,825) (6,979)Profit/(Loss) from operations 12,053,446 11,466,804 3,344,772 (6,005)Finance cost (474,141) (315,845) - - Profit/(Loss) before taxation 20 11,579,305 11,150,959 3,344,772 (6,005)Taxation 21 (3,096,482) (2,850,792) (44,595) - Profit/(Loss) after taxation 8,482,823 8,300,167 3,300,177 (6,005)Pre-acquisition profit - (6,125,905) - - Minority interests 10 (1) - - Net profit/(loss) for the year 8,482,833 2,174,261 3,300,177 (6,005)Earnings per share- Basic 22 15.46 sen 18.60 sen - -

The accompanying notes form an integral part of the financial statements.

(Accumu

lated

Exchan

geRes

erve

loss)/

Share

Share

fluctua

tionon

Unappr

opriate

dcap

italpre

mium

reserve

consoli

dation

profit

Total

Group

RMRM

RMRM

RMRM

Balance

at 1 Jan

uary 200

31,00

0 -

- -

(3,904)

(2,904)

Issue of

share c

apital

46,749,0

00 5,61

4,264

- -

- 52,3

63,264

Currenc

y transla

tion diff

erence

- -

43,149

- -

43,149

Acquisit

ion of s

ubsidiar

y compa

nies-

- -

9,927,45

5 -

9,927,45

5 Net

profit fo

r the ye

ar-

- -

- 2,17

4,261

2,174,26

1 Bala

nce at 3

1 Decem

ber 200

346,7

50,000

5,614,26

4 43,1

49 9,92

7,455

2,170,35

7 64,5

05,225

Issue of

share c

apital

8,250,00

0 3,54

7,500

- -

- 11,7

97,500

Amortisa

tion of

reserve

on cons

olidatio

n-

- -

(992,745

)-

(992,745

)Cur

rency tra

nslation

differen

ce-

- 146

,796

- -

146,796

Net

profit fo

r the ye

ar-

- -

- 8,48

2,833

8,482,83

3 Listi

ng expen

ses-

(1,627,0

83)-

- -

(1,627,0

83)First

and fina

l dividen

d of 6%

per sha

re, tax e

xempted

- -

- -

(3,300,0

00)(3,3

00,000)

Balance

at 31 D

ecember

2004

55,000,0

00 7,53

4,681

189,945

8,93

4,710

7,353,19

0 79,0

12,526


statements of changes in equityfor the financial year ended 31 December 2004

(Accumu

lated

Exchan

geRes

erve

loss)/

Share

Share

fluctua

tionon

Unappr

opriate

dcap

italpre

mium

reserve

consoli

dation

profit

Total

Compan

yRM

RMRM

RMRM

RMBala

nce at 1

January

2003

1,000

- -

- (3,9

04)(2,9

04)Issu

e of sha

re capit

al46,7

49,000

5,614,26

4 -

- -

52,363,2

64 Net

loss for

the yea

r-

- -

- (6,0

05)(6,0

05)Bala

nce at 3

1 Decem

ber 200

346,7

50,000

5,614,26

4 -

- (9,9

09)52,3

54,355

Issue of

share c

apital

8,250,00

0 3,54

7,500

- -

- 11,7

97,500

Net prof

it for th

e year

- -

- -

3,300,17

7 3,30

0,177

Listing e

xpenses

- (1,6

27,083)

- -

- (1,6

27,083)

First and

final div

idend of

6% per

share, t

ax exem

pted-

- -

- (3,3

00,000)

(3,300,0

00)Bala

nce at 3

1 Decem

ber 200

455,0

00,000

7,534,68

1 -

- (9,7

32)62,5

24,949

The acc

ompanyi

ng notes

form a

n integr

al part o

f the fin

ancial st

atements

.


statements of changes in equity for the financial year ended 31 December 2004 (cont’d)


cash flow statementsfor the financial year ended 31 December 2004

Group CompanyNote 2004 2003 2004 2003RM RM RM RMCASH FLOWS FROM OPERATING ACTIVITIESProfit/(Loss) before taxation 11,579,305 11,150,959 3,344,772 (6,005)Adjustments for:-

Allowance for doubtful debts no longer required (402,655) (52,265) - - Allowance for doubtful debts 422,555 99,012 - - Amortisation of intangible assets 685 69 - - Amortisation of reserve on consolidation (992,745) - - - Bad debts written off 373,228 405,449 - - Damaged goods written off 273,310 97,672 - - Depreciation 2,240,086 432,435 - - Gain on disposal of property, plant and equipment (114,563) - - - Interest expenses 183,559 23,456 - - Interest income (108,072) (26,449) (328,562) - Loss/(Gain) on foreign exchange - unrealised 4,316 (12,727) - - Loss on revaluation of property, plant and equipment 102,350 - - - Pre-acquisition profit - (6,125,905) - - Property, plant and equipment written off 3,577 - - - Operating profit/(loss) before working capital changes 13,564,936 5,991,706 3,016,210 (6,005)

Changes in working capital:-Inventories (3,934,344) - - - Receivables (859,945) (3,127,921) (246,797) (2,860)Payables 5,454,559 (2,047,004) 301,200 6,806 Ultimate holding company 243,445 2,559,359 - - Subsidiary companies - - (8,596,451) (2,688,660)Related companies (251,302) 309,353 - - Cash generated from/(used in) operations 14,217,349 3,685,493 (5,525,838) (2,690,719)Interest paid (183,559) (23,456) - - Tax paid (3,317,530) (2,365,097) (44,595) - Interest received 108,072 26,449 328,562 -

Net cash from/(used in) operating activities 10,824,332 1,323,389 (5,241,871) (2,690,719)CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of subsidiary companies, net of cash acquired A - 9,188,819 (379,761) - Additional investment in subsidiary company - - - (49,424,604)Proceeds from disposal of property, plant and equipment 272,000 - - - Purchase of property, plant and equipment B (17,534,909) (4,907,194) - - Purchase of intangible assets (644) - - - Net cash (used in)/from investing activities (17,263,553) 4,281,625 (379,761) (49,424,604)


cash flow statements for the financial year ended 31 December 2004 (cont’d)

Group CompanyNote 2004 2003 2004 2003RM RM RM RMCASH FLOWS FROM FINANCING ACTIVITIESProceed from issuance of shares 11,797,500 - 11,797,500 52,363,264 Listing expenses (1,627,083) - (1,627,083) - Repayment of finance creditors (1,676,625) (443,403) - - Repayment of term loans (3,045,472) (755,133) - - Drawdown of short term revolving credit 1,000,000 - - - Drawdown of term loans 3,425,374 1,157,851 - - Dividend paid (3,292,014) - (3,292,014) - Net cash from/(used in) financing activities 6,581,680 (40,685) 6,878,403 52,363,264 CASH AND CASH EQUIVALENTSEffect on foreign exchange rate changes 112,138 7,082 - - Net increase 142,459 5,564,329 1,256,771 247,941 Brought forward 5,574,391 2,980 250,921 2,980

Carried forward C 5,828,988 5,574,391 1,507,692 250,921 NOTES TO THE CASH FLOW STATEMENTSA ACQUISITION OF SUBSIDIARY COMPANIES

The fair value of assets acquired and liabilities assumed of the subsidiary companies acquired during the financial yearwere as follows:- Group2004 2003RM RMProperty, plant and equipment - 23,634,790 Intangible asset - 1,324 Inventories - 19,316,313 Receivables - 27,675,172 Related companies - 63,992 Tax recoverable - 210,710 Payables - (9,156,164)Ultimate holding company - (873,670)Holding company - (2,938,660)Tax payable - (174,161)Bank borrowings - (5,678,401)Deferred taxation - (1,918,000)Minority interest - (5)Cash and cash equivalents - 9,188,819 Share of net assets acquired - 59,352,059 Reserve on consolidation - (9,927,455)

- 49,424,604 Total purchase consideration through issuance of shares - (49,424,604)Company's cash flow on acquisition - - Cash and cash equivalents acquired - 9,188,819 Group's cash flow on acquisition, net of cash and cash equivalents acquired - 9,188,819 On 30 November 2004, the Company subscribed for the newly issued and fully paid-up share capital of PT Yung ShinPharmaceutical Indonesia comprising 922,500,000 ordinary shares of RP1 each for a total purchase consideration ofRM379,761 satisfied by way of cash.


cash flow statements for the financial year ended 31 December 2004 (cont’d)

B. PURCHASE OF PROPERTY, PLANT AND EQUIPMENTThe Group acquired property, plant and equipment with an aggregate cost of RM19,135,188 (2003: RM4,907,194)of which RM1,600,279 (2003: Nil) was acquired by means of hire purchase. Cash payment of RM17,534,909 (2003:RM4,907,194) was made to purchase the property, plant and equipment.

C. CASH AND CASH EQUIVALENTS Group Company2004 2003 2004 2003RM RM RM RMBank overdraft (4,221,497) (612,856) - - Fixed deposits with licensed banks 3,273,102 2,066,440 250,000 - Cash and bank balances 6,777,383 4,120,807 1,257,692 250,921

5,828,988 5,574,391 1,507,692 250,921

The accompanying notes form an integral part of the financial statements.

1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTSThe financial statements of the Group and of the Company have been prepared in accordance with the provisionsof the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

2. FINANCIAL RISK MANAGEMENT POLICIESThe Group’s and the Company’s financial risk management policies seek to ensure that adequate financial resourcesare available for the development of the Group’s and the Company’s business whilst managing its risks. The Groupand the Company operates within clearly defined guidelines that are approved by the Board and the Group’s and theCompany’s policies are not to engage in speculative transactions.The main areas of the financial risks faced by the Group and the Company and the policies in respect of the majorareas of treasury activity are set out as follows:-(a) Foreign currency risk

The Group and the Company are exposed to foreign currency risk as a result of its normal trading or operatingactivities, both external and intra-Group where the currency denomination differs from the local currency,Ringgit Malaysia(RM). The Group’s and the Company’s policy is to minimise the exposure of overseas operatingsubsidiaries or activities to transaction risk by matching local currency income against local currency costs.(b) Interest rate risk

The Group’s and the Company’s policy is to borrow principally on the floating rate basis but to retain a proportionof fixed rate debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce theimpact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.(c) Credit risk

The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. This is donethrough reference to published credit ratings by prime financial institutions. In the absence of published ratings,an internal credit review is conducted if the credit risk is material.(d) Market risk

For key product purchases, the Group establishes floating and fixed price levels that the Group considersacceptable and enters into physical supply agreements, where necessary, to achieve these levels. The Groupdoes not face significant exposure from the risk from changes in debt and equity prices.(e) Liquidity and cash flow risks

The Group and the Company seeks to achieve a balance between certainty of funding even in difficult timesfor the markets or the Group and the Company and a flexible, cost-effective borrowing structure. This is toensure that at the minimum, all projected net borrowing needs are covered by committed facilities. Also, theobjective for debt maturity is to ensure that the amount of debt maturing in any one year is not beyond theGroup’s and the Company’s means to repay and refinance.3. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting convention The financial statements of the Group and of the Company have been prepared under historical costconvention unless otherwise indicated in the other significant accounting policies.


notes to the financial statements- 31 December 2004

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)(b) Basis on consolidation

The consolidated financial statements incorporate the audited financial statements of the Company and itssubsidiary companies made up to 31 December 2004, except for Y.S.P. (Cambodia) Pte. Ltd. and PT Yung ShinPharmaceutical Indonesia which are based on unaudited management financial statements made up to 31 December 2004. All significant inter-company transactions are eliminated on consolidation and theconsolidated financial statements reflect external transactions only.The results of the subsidiary companies acquired are included in the consolidated income statement from thedate of acquisition. Any difference between the cost of investment and the net worth at the date of acquisition is included in theconsolidated balance sheet as reserve/goodwill arising on consolidation. Goodwill arising on consolidation isretained in the consolidated balance sheet. Where an indication of impairment exists, the carrying amount ofthe goodwill is assessed and written down immediately to their recoverable amount.Reserve arising on consolidation represents the excess of the Group’s interest in the fair value of the identifiableassets and liabilities of a subsidiary company at the date of acquisition over the cost of acquisition.The amount of reserve arising on consolidation not exceeding the fair values of acquired identifiable non-monetaryassets should be recognised as income on a systematic basis over the remaining weighted average useful life of theidentifiable acquired depreciable or amortisable assets. A period of ten (10) years is used for this purpose.

(c) Investment in subsidiary companiesA subsidiary company is a company in which the Group or the Company has a long term equity interest ofmore than 50 per cent where there is management participation through Board representation.Investment in subsidiary companies are stated at cost. Where an indication of impairment exists, the carryingamount of the investment in subsidiary companies are assessed and written down immediately to theirrecoverable amount.

(d) Minority interestsMinority interests are measured at the minorities’ share of the post acquisition fair values of the identifiableassets and liabilities of the acquiree as at acquisition date and the minorities’ share of movements in theacquiree’s equity since then. Separate disclosure is made for minority interests.

(e) Property, plant and equipment and depreciationProperty, plant and equipment are stated at cost or valuation less accumulated depreciation and accumulatedimpairment loss. Freehold land is not depreciated. Depreciation on other property, plant and equipment iscalculated to write off the cost or valuation of the property, plant and equipment on a straight line basis overthe estimated useful lives of the property, plant and equipment concerned.The principal annual depreciation rates used are as follows:-Freehold building 2%Long leasehold building 2%Furniture and fittings 10%Office equipment 10%Plant and machinery 10%Motor vehicles 20%Laboratory equipment 10%Long leasehold land over the remaining term of lease of 83 years


notes to the financial statements (cont’d)



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)(e) Property, plant and equipment and depreciation (Cont’d)

The Group revalues its properties comprising land and buildings every 5 years or at shorter intervals wheneverthe fair value of the revalued assets is expected to differ materially from their carrying value.Surplus arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offsetagainst the revaluation reserve to the extent of a previous increase for the same property. In all other cases, adecrease in carrying amount will be charged to the income statement.Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure isexpected to increase the future benefits from the existing asset beyond its previously assessed standard ofperformance.Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it isless than their carrying value. Recoverable amount is the net selling price of the property, plant and equipmenti.e. the amount obtainable from the sale of an asset in arm’s length transaction between knowledgeable,willing parties, less the costs of disposal.

(f) Foreign currency translationForeign currencies translation have been translated into Malaysian Ringgit at the rates of exchange ruling onthe transaction dates. All foreign currency assets and liabilities at the balance sheet date are translated intoMalaysian Ringgit at approximate exchange rates ruling at that date. Unrealised gains and losses arising fromthe translation of current assets and liabilities are dealt with in the income statement.For the purposes of consolidation, net assets of the foreign subsidiary companies are translated into RinggitMalaysia at the exchange rate ruling at the balance sheet date while the income statement is translated intoMalaysian Ringgit at the average exchange rate for the financial year. Exchange differences arising from suchtransaction are taken to exchange fluctuation reserve. The Directors regard all the foreign subsidiary companiesas foreign entity.The closing rates of foreign currencies used in translation were as follows:-

2004 2003RM RMNew Taiwan Dollar 0.1187 0.1112Peso 0.0677 0.0686Singapore Dollar 2.3185 2.2263US Dollar 3.7956 3.7919

(g) Intangible assetsExpenditure on acquired patents, trademarks and licences is capital and amortised using the straight linemethod over their useful lives or 20 years, which ever is shorter. Intangible assets are not revalued.

(h) Inventoriesa Inventories are stated at lower of cost and net realisable value. Cost of finished goods and work in progressare determined using the weighted average method. Cost of raw material and packaging material isdetermined using the First-In-First-Out method. Cost includes all expenses incurred in bringing the inventoriesto their present location and condition. Finished goods includes cost of raw materials, labour and anappropriate proportion of manufacturing overheads.

3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)(i) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which theyidentified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the financialyear end.(j) Deferred tax liabilities and assets

Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in respectof all temporary differences between the carrying amount of an asset or liability in the balance sheet and itstax base including unabsorbed tax losses and unutilised capital allowances.Deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences can be utilised. The carrying amount of deferred tax asset isreviewed at each balance sheet date. If it is no longer probable that sufficient taxable profit will be availableto allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferredtax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available,such reductions will be reversed to the extent of the taxable profit.

(k) Assets acquired under hire-purchase and lease agreementsThe cost of property, plant and equipment acquired under hire purchase and finance lease arrangements whichtransfer substantially all the risks and rewards of ownership to the Group are capitalised. The depreciationpolicy on these assets is similar to that of the Group’s property, plant and equipment depreciation policy.Outstanding obligations due under hire purchase and finance lease arrangements after deducting financeexpenses are included as liabilities in the financial statements. Finance charges on hire purchase and financelease arrangements are allocated to income statement over the period of the respective agreements.

(l) ProvisionsProvisions are recognised when there is a present obligation, legal or constructive, as a result of a past event,when it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation and a reliable estimate can be made of the amount of the obligation.

(m) PayablesTrade payables are stated at cost which the fair value of the consideration to be paid in the future for goodsand services received.

(n) Revenue recognitionGroupRevenue are recognised upon delivery of products to customer, net of sales tax and trade discounts.CompanyInvestment income is recognised when the right to receive payment is established.

(o) Cash and cash equivalentsCash and cash equivalents comprise cash in hand, balance with banks, demand deposits and highly liquidinvestments which are readily convertible to known amount of cash and which are subject to an insignificantrisk of changes in value.



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)(p) Impairment of assets

The carrying values of assets are reviewed for impairment when there is an indication that the assets might beimpaired. Impairment is measured by comparing the carrying values of the assets with their recoverableamounts. The recoverable amount is the higher of net realisable value and value in use, which is measured byreference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it isnot possible, for the cash generating unit.An impairment loss is charged to the income statement immediately, unless the asset is carried at revaluedamount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previouslyrecognised revaluation surplus for the same asset.Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairmentloss and is recognised to the extent of the carrying amount of the asset that would have been determined (netof amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in theincome statement immediately, unless the asset is carried at revalued amount. A reversal of an impairment losson a revalued asset is credited directly to revaluation surplus. However, to the extent that an impairment losson the same revalued asset was previously recognised as an expense in the income statement, a reversal of thatimpairment loss is recognised as income in the income statement.

(q) Segmental resultsSegment revenues and expenses are those directly attributable to the segments and include any joint revenueand expenses where a reasonable basis of allocation exists. Segments assets include all asset used by a segmentand consist principally of cash, receivables, inventories, intangibles and property, plant and equipment, net ofprovision and accumulated depreciation and amortisation. While most such assets can be directly attributed tothe segments on a reasonable basis. Segment assets and liabilities do not include deferred income taxes.

(r) Intersegment transferSegment revenues, expenses and results include transfers between segments. The prices charged onintersegment transactions are the same as those charged for similar goods to parties outside of the economicentity at an arm’s length transactions. These transfers are eliminated on consolidation.

(s) Financial instrumentsFinancial instruments carried on the balance sheet include cash and bank balances, investments, fixed depositswith licensed bank, receivables, payables and borrowings. The particular recognition methods adopted aredisclosed in the individual accounting policy statement associated with each item.Financial instruments are classified as liabilities or equity in accordance with the substance of the contractualarrangement. Interest, dividends, gains and losses relating to a financial instrument classified as liability arereported as expense or income. Distributions to holders of financial instruments classified as equity are chargeddirectly to equity. Financial instruments are offset when the Group and the Company has a legally enforceableright to set off the recognised amounts and intends either to settle on a net basis, or to realise the assets andsettle the liability simultaneously.

(t) BorrowingsInterest bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs.

(u) Employees benefits(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year inwhich the associated services are rendered by employees of the Group. Short term accumulatingcompensated absences such as paid annual leave are recognised when services are rendered byemployees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.





3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)(u) Employees benefits (Cont’d)

(ii) Defined contribution planThe Group’s contributions to defined contribution plans are charged to the income statement in theperiod to which they are related.

4. PRINCIPAL ACTIVITIES AND GENERAL INFORMATIONThe principal activity of the Company consists of investment holding.The principal activities of the subsidiary companies are as mentioned in Note 12 to the Financial Statements.There have been no significant changes in the nature of these activities of the Company and its subsidiary companiesduring the financial year.The Company is a public limited company, incorporated and domiciled in Malaysia. The registered office and principalplace of business is located at 16th Floor, Plaza IBM, No.1, Jalan Tun Mohd Fuad, Taman Tun Dr. Ismail, 60000 KualaLumpur.The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of theDirectors passed on 16 February 2005.

5. SHARE CAPITAL Group and Company2004 2003RM RMAuthorised:-Ordinary shares of RM1.00 eachAt beginning and end of year 100,000,000 100,000,000Issued and fully paid:-Ordinary shares of RM1.00 eachAt beginning of year 46,750,000 1,000Issued during the year 8,250,000 46,749,000

At end of year 55,000,000 46,750,000

6. EXCHANGE FLUCTUATION RESERVE Group 2004 2003RM RMAt beginning of year 43,149 -Translation of foreign subsidiary companies 146,796 43,149At end of year 189,945 43,149The above reserve is not available for distribution as dividends.



7. RESERVE ON CONSOLIDATION Group 2004 2003RM RMAt beginning of year 9,927,455 -Reserve on consolidation arising from acquisition of a subsidiary company - 9,927,455Less: Accumulated amortisation (992,745) -At end of year 8,934,710 9,927,455The above reserve is not available for distribution as dividends.

8. DEFERRED TAXATION Group 2004 2003RM RMAt beginning of year 1,918,000 -Transferred from income statement 953,000 -Addition through acquisition - 1,918,000At end of year 2,871,000 1,918,000The balance in the deferred taxation is made up of temporary differences arising from:- Group 2004 2003RM RMCarrying amount of property, plant and equipment in excess of their tax base 2,100,000 1,118,000Revaluation on land and buildings 771,000 808,000Receivables – allowances for doubtful debts - (8,000)

2,871,000 1,918,000

9. TERM LOANS Group 2004 2003RM RMSecured:-Payable within 12 months Term loan (1) - 3,048,000(2) 82,318 43,288(3) 1,169,670 -1,251,988 3,091,288

Payable after 12 months Term loan (2) 1,084,928 1,121,430(3) 2,255,704 -3,340,632 1,121,430

Total term loans 4,592,620 4,212,718



9. TERM LOANSTerm loan (1)The term loan is guaranteed by the ultimate holding company and a Director of the Company, bears interest at therate of 1% (2003: 1%) per annum above the London Interbank Offer Rate (LIBOR) and is repayable in 8 quarterlyinstalments of USD200,000 each commencing 10 August 2001 with a final payment of USD400,000. The term loanhad been fully settled during the current financial year.Term loan (2)The term loan bears interest at rate of 3.00% (2003: 3.00%) per annum and is repayable by 240 monthly instalmentscommencing on 1 October 2003. It is secured by fresh first legal all monies mortgage on the subsidiary company’sleasehold properties.Term loan (3)The term loan of the subsidiary company is secured by:-(i) An “all monies” First Party Sixth (6th) Legal Charge as subsidiary instrument (to be ranked after MalayanBanking Berhad’s four existing legal charges) over land and building, with an unlimited covenant to pay on thepart of the subsidiary company to secure USD3,000,000.00, whereby the Sixth (6th) Legal Charge shall rankpari-passu with the Fifth (5th) Legal Charge to be created by the subsidiary company in favour of the HSBCBank Malaysia Berhad for RM7,000,000;(ii) An “all monies” First Party Second Legal Charge as subsidiary instrument over the land and building, with anunlimited covenant to pay on the part of the subsidiary company to secure USD3,000,000 whereby the SecondLegal Charge shall rank pari-passu with the First Legal Charge to be created by the subsidiary company infavour of HSBC Bank Malaysia Berhad for RM7,000,000;(iii) Corporate Guarantee from the Company; and(iv) Letter of undertaking from the Company;The term loan bears interest at rate of 0.75% (2003: nil) per annum above the London Interbank Offer Rate (LIBOR)and is repayable in 10 quarterly instalments commencing not later than 3 months after the moratorium period.

10. FINANCE CREDITORS Group 2004 2003RM RMMinimum lease payments- within 1 year 1,334,485 1,397,866- after 1 year but not later than 5 years 43,374 59,1661,377,859 1,457,032Less : Interest-in-suspense (29,207) (32,034)

Present value of finance creditors 1,348,652 1,424,998Present value of finance creditors- within 1 year 1,311,429 1,376,261- after 1 year but not later than 5 years 37,223 48,737

1,348,652 1,424,998The amount payable within 1 year has been included in other payables.


notes to the financial statements (cont’d)11.

PROPER

TY, PLA

NT AND

EQUIP

MENT

Group

Plant,

machine

ry Fur

niture,

Land an

d and

Motor

fittings

andTota

lTota

lbuil

dings

equipm

entveh

icles

renova

tion200

4 200

3Cos

t or val

uation

RMRM

RMRM

RMRM

At begin

ning of

year22,0

05,331

10,507,5

071,11

6,689

3,788,26

437,4

17,791

-Add

itions th

rough ac

quisition

of sub

sidiary

--

--

-32,4

98,911

Addition

8,304,24

46,27

1,792

628,182

3,930,97

019,1

35,188

4,907,19

4Reva

luation

(139,110

)-

--

(139,110

)-

Written

off-

(93,395

)-

(7,930)

(101,325

)-

Disposal

s-

-(350

,000)

-(350

,000)

-Tran

slation d

ifference

89,445

3,780

3,854

3,337

100,416

11,686

At end o

f year

30,259,9

1016,6

89,684

1,398,72

57,71

4,641

56,062,9

6037,4

17,791

Accumu

lated d

eprecia

tionAt b

eginning

of year

904,014

6,387,90

1658

,0691,34

9,112

9,299,09

6-

Addition

s throug

h acquis

ition of

subsidia

ry-

--

--

8,864,12

1Cha

rge for

the year

455,384

1,059,78

4174

,507550

,4112,24

0,086

432,435

Revaluat

ion(36,

760)

--

-(36,

760)

-Writ

ten off

-(90,

734)

-(7,0

14)(97,

748)

-Disp

osals

--

(192,563

)-

(192,563

)-

Translati

on differ

ence1,58

13,66

4336

2,970

8,551

2,540

At end o

f year

1,324,21

97,36

0,615

640,349

1,895,47

911,2

20,662

9,299,09

6Net

book v

alue31.1

2.2004

28,935,6

919,32

9,069

758,376

5,819,16

244,8

42,298

-31.1

2.2003

21,101,3

174,11

9,606

458,620

2,439,15

2-

28,118,6

95Rep

resented

by:-

Cost

15,007,0

6016,6

89,684

1,398,72

57,71

4,641

40,810,1

1022,1

64,941

Valuatio

n15,2

52,850

--

-15,2

52,850

15,252,8

5030,2

59,910

16,689,6

841,39

8,725

7,714,64

156,0

62,960

37,417,7

91Dep

reciation

charge

for the

year en

ded 31.

12.2003

91,153

188,103

36,091

117,088

-432

,435


notes to the financial statements (cont’d)11.

PROPER

TY, PLA

NT AND

EQUIP

MENT (C

ONT’D)

Analysis

of land

and bui

ldings a

s 31 Dec

ember:-

Long

Long

Building

inFree

hold

Freehold

leaseho

ldleas

ehold

Total

Total

progre

ssland

building

sland

building

s200

4 200

3Cos

t or val

uation

RMRM

RMRM

RMRM

RMAt b

eginning

of year

- Cost

430,496

-163

,7302,05

7,594

4,100,66

16,75

2,481

-- Va

luation

-1,87

0,000

530,000

4,565,00

08,28

7,850

15,252,8

50-

430,496

1,870,00

0693

,7306,62

2,594

12,388,5

1122,0

05,331

-Add

itions th

rough ac

quisition

of sub

sidiary

--

--

--

17,764,4

07Add

ition5,38

9,980

-14,7

002,49

1,730

407,834

8,304,24

44,23

2,682

Revaluat

ion-

--

-(139

,110)

(139,110

)-

Translati

on differ

ence-

--

-89,4

4589,4

458,24

2At e

nd of ye

ar5,82

0,476

1,870,00

0708

,4309,11

4,324

12,746,6

8030,2

59,910

22,005,3

31Acc

umulate

d depr

eciation

At begin

ning of

year-

-35,8

40161

,118707

,056904

,014-

Addition

s throug

h acquis

ition

of subs

idiary

--

--

--

812,493

Charge

for the

year-

-95,9

5861,4

12298

,014455

,38491,1

53Reva

luation

--

--

(36,760

)(36,

760)

-Tran

slation d

ifference

--

--

1,581

1,581

368At e

nd of ye

ar-

-131

,798222

,530969

,8911,32

4,219

904,014

Net bo

ok value

31.12.20

04 5,82

0,476

1,870,00

0576

,6328,89

1,794

11,776,7

8928,9

35,691

-31.1

2.2003

430,496

1,870,00

0657

,8906,46

1,476

11,681,4

55-

21,101,3

17Rep

resented

by:-

Cost

5,820,47

6-

178,430

4,549,32

44,45

8,830

15,007,0

606,75

2,481

Valuatio

n-

1,870,00

0530

,0004,56

5,000

8,287,85

015,2

52,850

15,252,8

505,82

0,476

1,870,00

0708

,4309,11

4,324

12,746,6

8030,2

59,910

22,005,3

31Dep

reciation

charge

for the

year

ended 3

1.12.200

3-

-187

13,179

77,787

-91,1

53

45



11. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Included in property, plant and equipment is net book value of assets of the subsidiary companies held under hirepurchase arrangements of RM1,637,396 (2003: RM74,244).Freehold and leasehold properties of certain subsidiary companies were revalued by Directors in year 2001 and 2000based on an independent professional valuations using the open market basis and incorporated into financialstatements in the same year.Long leasehold land and building have been pledged to a licensed bank as collateral for credit facilities granted to asubsidiary company.The subsidiary company’s leasehold property was revalued by the Directors based on an independent professionalvaluation on 11 June 2004 by Kelvin Ng (BSc. (Est) Mgt) from Colliers International Consultancy and Valuation (S)Pte. Ltd.. Valuation was made on the basis of open market value on an existing use bases. The deficit on revaluationwas charged to the income statement.Had the land and buildings been carried at historical cost less accumulated depreciation, the net book value of therevalued assets at the end of the financial year are as follows :- Group 2004 2003RM RMFreehold land and buildings 1,076,186 1,076,186Long leasehold land 960,585 973,332Long leasehold building 10,122,169 10,377,356

12. SUBSIDIARY COMPANIES Company2004 2003RM RMUnquoted shares at cost- in Malaysia 110,507,019 49,424,604- outside Malaysia 5,146,403 -115,653,422 49,424,604

Details of the subsidiary companies are as follows:-Effective Place of equity interestSubsidiary companies incorporation 2004 2003 Principal activities% %

Yung Shin South East Malaysia 100 100 Investment holdingAsia Sdn. Bhd. (“YSSEA”)Y.S.P. Industries Malaysia 100 100 Importer and manufacturer of(M) Sdn. Bhd. pharmaceutical and veterinary products,pharmaceutical fine chemicals and provisionof management servicesYung Shin (Philippines),Inc. # Philippines 99.99 99.99 Manufacturing, importing, exporting,buying and selling of pharmaceuticals andother related products



12. SUBSIDIARY COMPANIES (CONT’D)Details of the subsidiary companies are as follows:- (Cont’d)

Effective Place of equity interestSubsidiary companies incorporation 2004 2003 Principal activities% %Myanmar Yung Shin Myanmar 100 100 Trading in pharmaceutical productsPharma Limited #Kumpulan Y.S.P. Malaysia 100 100 Importer, distributor of pharmaceutical and (Malaysia) Sdn. Bhd. veterinary products and pharmaceutical finechemicalsYung Shin Pharmaceutical Singapore 100 100 Importer and exporters and trading in all(Singapore) Pte. Ltd. # kinds of pharmaceutical productsY.S.P. Cambodia Pte. Ltd. # Cambodia 100 100 Trading in pharmaceutical productsPT Yung Shin Pharmaceutical Indonesia 99.92 - Trading in pharmaceutical productsIndonesia ## Subsidiary companies not audited by Shamsir Jasani Grant ThorntonIncluded in the amount due from subsidiary companies is RM10,000,000 which is unsecured, bears interest at therate of 3.50% per annum and repayable in 20 installments on a monthly basis commencing on January 2005.The other amounts due from/to subsidiary companies as at balance sheet date are unsecured, interest free and haveno fixed terms of repayment.

13. INVENTORIES Group 2004 2003RM RMAt cost:-Raw materials 5,923,991 5,147,085Finished goods 12,867,655 11,097,575Work-in-progress 3,221,194 2,445,866Packaging 1,721,060 1,382,340

23,733,900 20,072,866

14. TRADE RECEIVABLES Group 2004 2003RM RMTrade receivables 26,600,288 24,417,801Less: Allowance for doubtful debts (688,480) (668,580)

25,911,808 23,749,221



15. OTHER RECEIVABLES Group Company2004 2003 2004 2003RM RM RM RMNon-trade receivables 553,151 189,259 249,657 2,860Deposits 236,166 900,003 - -Prepayments 3,245,121 4,697,850 - -

4,034,438 5,787,112 249,657 2,860

16. ULTIMATE HOLDING COMPANY, IMMEDIATE HOLDING COMPANY AND RELATED COMPANYThe Directors regard Yung Shin Pharmaceutical Industries Co. Ltd., a company incorporated in Taiwan, Republic ofChina as the ultimate holding company and YSP SEA Investment Co. Ltd., a company incorporated in British VirginIsland, United Kingdom, as the immediate holding company.Related companies refer to Yung Shin Pharmaceutical Industries Co. Ltd’s group of companies.Amounts due from/to related companies and ultimate holding company are unsecured, interest free and has no fixedterm of repayment.

17. OTHER PAYABLES Group Company2004 2003 2004 2003RM RM RM RMFinance creditors 1,311,429 1,376,261 - -Guarantee deposits payables 864 78,799 - -Non-trade payables 2,681,245 951,903 256,800 8,090Accrual of expenses 6,281,386 3,490,872 57,090 4,600Dividend payable 7,986 - 7,986 -

10,282,910 5,897,835 321,876 12,690

18. BANK BORROWINGS Group 2004 2003RM RMSecured:-Bank overdraft 4,221,497 612,856Short term revolving credit 1,000,000 -

5,221,497 612,856



18. BANK BORROWINGS (CONT’D)The bank borrowings are secured by:-(i) The existing 1st, 2nd, 3rd and 4th legal charges totaling RM13,500,000 over land and building;(ii) An “all monies” First Party Fifth (5th) legal charge as subsidiary instrument (to be ranked after Malayan BankingBerhad’s four existing legal charges) over land and building, whereby the Fifth (5th) Legal Charge shall rankpari-passu with the Sixth (6th) Legal Charge to be created by the subsidiary company in favour of TheHongkong and Shanghai Banking Corporation Ltd, Offshore Banking Unit Labuan USD3,000,000;(iii) An “all monies” First Party First Legal Charge as subsidiary instrument over the land and building, with anunlimited covenant to pay on the part of the subsidiary company to secure RM7,000,000 whereby the FirstLegal Charge shall rank pari-passu with the Second Legal Charge to be created by the subsidiary company infavour of The Hongkong and Shanghai Banking Corporation Ltd, Offshore Banking Unit Labuan forUSD3,000,000;(iv) Corporate Guarantee from the Company; and(v) Trade Finance General Agreement and Islamic Trade Finance General Agreement;The bank overdraft and short term revolving credit bear interest at rate of 0.75% (2003: 0.75%) above the bank’sbase lending rate and cost of fund respectively.

19. REVENUEGroupRevenue for the Group represents sales of goods outside the Group net of discounts, returns and sales tax.CompanyRevenue represents dividend income declared or received from subsidiary companies.

20. PROFIT/(LOSS) BEFORE TAXATIONProfit/(Loss) before taxation has been determined after charging/(crediting) amongst other items the following:-

Group Company2004 2003 2004 2003RM RM RM RMAuditors’ remuneration- statutory 38,458 5,640 2,000 600- others 4,000 7,125 4,000 4,000Bad debts written off 373,228 405,449 - -Damaged goods written off 273,310 97,672 - -Depreciation 2,240,086 432,435 - -Directors’ remuneration- fee 197,159 2,226 180,000 -- other emoluments 740,712 95,557 3,900 -Allowance for doubtful debts 422,555 99,012 - -Amortisation of intangible assets 685 69 - -Interest expenses- bankers’ acceptance 61,506 1,454 - -- hire purchase 21,202 14,514 - -- term loan 100,851 7,488 - -



20. PROFIT/(LOSS) BEFORE TAXATIONProfit/(Loss) before taxation has been determined after charging/(crediting) amongst other items the following:- (Cont’d)

Group Company2004 2003 2004 2003RM RM RM RMLoss on foreign exchange- realised 71,162 - 7,590 -- unrealised 4,316 - - -Loss on revaluation of property, plant and equipment 102,350 - - -Property, plant and equipment written off 3,577 - - -Rental of premises 985,199 169,806 - -Allowance for doubtful debts no longer required (402,655) (52,265) - -Amortisation of reserve on consolidation (992,745) - - -Gain on foreign exchange- realised (194,590) (15,488) (35) (974)- unrealised - (12,727) - -Gain on disposal of property, plant and equipment (114,563) - - -Interest income (108,072) (26,449) (328,562) -Rental income (64,157) - - -The estimated monetary value of benefit provided to Directors of the Group during the financial year amounted toRM149,163 (2003: RM144,000).

21. TAXATION Group Company2004 2003 2004 2003RM RM RM RMIn MalaysiaCurrent year’s taxation 1,737,400 2,680,979 44,400 -Transferred to deferred taxation 953,000 - - -Underprovision in prior year 249,867 - 195 -Outside MalaysiaCurrent taxation 143,821 169,813 - -Underprovision in prior year 12,394 - - -Total 3,096,482 2,850,792 44,595 -Provision for taxation is determined by applying the current Malaysian tax rate on chargeable income. A reconciliation of income tax expenses on profit/(loss) before taxation with the applicable statutory income tax rateis as follows:- Group Company2004 2003 2004 2003% % % %Tax at applicable tax rate 28.0 28.0 28.0 (28.0)Income not subject to tax (3.0) - (27.7) -Non-allowable expenses 6.5 1.0 1.0 28.0Tax exempt income - (1.0) - -Tax effect on the utilisation of reinvestment allowance (6.1) (1.0) - -Underprovision in prior year 2.3 - - -Tax effect on differential tax rate (1.0) (1.0) - -Average effective tax rate 26.7 26.0 1.3 -However, the above amounts are subject to approval of the Inland Revenue Board of Malaysia.



22. EARNINGS PER SHAREGroupThe earnings per share has been calculated based on Group’s profit after taxation, pre-acquisition profit and minorityinterest of RM8,482,833 (2003: RM2,174,261) and the weighted average number of shares issued during thefinancial year of 54,864,754 (2003: 11,688,250).

23. RELATED PARTY TRANSACTIONSSignificant related party transactions during the financial year are as follows:-

Group Company2004 2003 2004 2003RM RM RM RMPurchases from related companies 645,955 1,383,998 - -Purchases from ultimate holding company 5,621,947 5,497,530 - -Sales to related companies 47,256 103,434 - -Consultancy fees charged by ultimate holding company 947,690 843,140 - -Transactions with a company in which certain Directors namely, Lee Fang Hsin, Lee Tien Te and Lee Fang Yu have interest- management fee received 24,000 24,000 - -- rental paid 90,000 90,000 - -Transactions with a Director of the Company, Lee Tien Te- Rental paid 14,784 - - -Interest income from subsidiary company - - 283,402 -Dividend income from subsidiary company - - 3,300,000 -The Directors of the Group and of the Company are of the opinion that the terms of transactions have been enteredon a negotiated basis.

24. SIGNIFICANT EVENTS DURING THE FINANCIAL YEARThe significant events during the financial year were as follows: -(a) On 12 January 2004, the entire issued and paid-up share capital of 55,000,000 shares were admitted to theSecond Board of Bursa Malaysia Securities Berhad.(b) On 31 May 2004, the Company acquired all of the subsidiary companies of Yung Shin South East Asia Sdn.Bhd., a wholly owned subsidiary, for a total purchase consideration of RM65,849,057 satisfied by inter-company advances.(c) On 30 November 2004, the Company subscribed for 99.92% of the issued and fully paid up share capital ofPT Yung Shin Pharmaceutical Indonesia for a total purchase consideration of RM379,161 satisfied by way ofcash.

25. FINANCIAL INSTRUMENTS(a) Interest rate risk

The interest rate risk that financial instruments’ values will fluctuation as a result of changes in market interestrates, and the effective weighted average interest rates on classes of financial assets and financial liabilities,were as follows:- Effective weightedaverageinterest ratesLess than 1 to 5 during1 year years Total the yearGroup RM RM RM2004Financial assetFixed deposits with licensed banks 3,273,102 - 3,273,102 0.70% - 3.00%Financial liabilitiesBank overdraft 4,221,497 - 4,221,497 6.75%Short term revolving credit 1,000,000 - 1,000,000 4.40%Term loans 1,251,988 3,340,632 4,592,620 3.00% - 3.12%Finance creditors 1,311,429 37,223 1,348,652 1.75% - 5.25%2003Financial assetFixed deposits with licensed banks 2,066,440 - 2,066,440 1.10% - 2.20%Financial liabilitiesBank overdraft 612,856 - 612,856 7.15%Term loans 3,091,288 1,121,430 4,212,718 2.78% - 3.50%Finance creditors 1,376,261 48,737 1,424,998 1.75% - 5.25%Company2004Financial assetsFixed deposits with licensed banks 250,000 - 250,000 2.50%Amount due from subsidiary company 6,000,000 4,000,000 10,000,000 3.50%

(b) Credit riskThe maximum credit risk associated with recognised financial assets is the carrying amount shown in thebalance sheet. The Group has no significant concentration of credit risk with any single counterparty. In respect of investmentin cash, the policy is to transact with financial institutions that have at least a short term counterparty rate.





26. EMPLOYEES INFORMATION Group 2004 2003RM RMStaff costs 16,663,596 16,276,128The number of employees of the Group at the end of the year financial was 470 (2003: 439) persons.The Company has not employed any staff since the date of its incorporation.

27. CAPITAL COMMITMENTSCapital commitments expenditure in respect of the following are not provided for in the financial statements:-

Group 2004 2003RM RMAuthorised and contracted for:-- Buildings in progress 1,714,509 10,321,477- Renovation - 132,164- ERP system - 310,069- Water system - 1,212,712- Buildings 908,100 -

2,622,609 11,976,422

28. SEGMENTAL REPORTING(i) Primary segmental reporting – Business Segment

The Group is organised based on three major business segments as follows:-Business segments Business activitiesTrading Import, export and trading in various kind of pharmaceutical products.Manufacturing Manufacturing of various kind of pharmaceutical products.Investment holding Investment holding

28. SEGMENTAL REPORTING (CONT’D)(i) Primary segmental reporting – Business Segment (Cont’d)

InvestmentYear ended Trading Manufacturing holding Eliminations Consolidated31 December 2004 RM RM RM RM RMRevenueExternal 10,650,780 64,309,235 - - 74,960,015Intersegment - 4,105,009 3,300,000 (7,405,009) -Total revenue 10,650,780 68,414,244 3,300,000 (7,405,009) 74,960,015ResultsSegment results 467,221 11,154,789 33,940,899 (33,617,535) 11,945,374Interest income 29,537 21,004 356,989 (299,458) 108,072Profit from operations 496,758 11,175,793 34,297,888 (33,916,993) 12,053,446Finance cost (474,141)Profit from ordinary activities before taxation 11,579,305Taxation (3,096,482)Net profit for the year 8,482,823Other InformationSegment assets 10,695,481 95,914,658 2,830,231 109,440,370Consolidated assets 10,695,481 95,914,658 2,830,231 109,440,370Segment liabilities 3,316,759 23,806,081 323,076 27,445,916Tax payable 110,630 - - 110,630Deferred taxation - 2,871,000 - 2,871,000Consolidated liabilities 3,427,389 26,677,081 323,076 30,427,546Capital expenditure on property, plant and equipment 616,220 18,518,968 - 19,135,188Depreciation 135,633 2,104,453 - 2,240,086Amortisation 685 - - 685



28. SEGMENTAL REPORTING (CONT’D)(i) Primary segmental reporting – Business Segment (Cont’d)

InvestmentYear ended Trading Manufacturing holding Eliminations Consolidated31 December 2003 RM RM RM RM RMRevenueExternal 9,948,687 60,420,759 - - 70,369,446Intersegment - 2,419,323 - (2,419,323) -Total revenue 9,948,687 62,840,082 - (2,419,323) 70,369,446ResultsSegment results 837,433 10,697,896 (13,205) (131,501) 11,390,623Interest income 26,356 21,835 71,994 (44,004) 76,181Profit from operations 863,789 10,719,731 58,789 (175,505) 11,466,804Finance cost (315,845)Profit from ordinaryactivities before taxation 11,150,959Taxation (2,850,792)Net profit for the year 8,300,167Other InformationSegment assets 8,966,592 74,127,158 872,427 83,966,177Consolidated assets 8,966,592 74,127,158 872,427 83,966,177Segment liabilities 2,705,386 14,374,724 13,691 17,093,801Tax payable 170,571 278,575 - 449,146Deferred taxation - 1,918,000 - 1,918,000Consolidated liabilities 2,875,957 16,571,299 13,691 19,460,947Capital expenditure on property, plant and equipment 1,580,862 3,326,332 - 4,907,194Depreciation 21,071 411,364 - 432,435Amortisation 69 - - 69



28. SEGMENTAL REPORTING (CONT’D)(ii) Secondary segmental reporting – Geographical segment

The Group’s operations are operates in the following geographical areas:-Geographical segments Business activitiesMalaysia Mainly manufacturing in various kind of pharmaceutical productsPhilippines Mainly import, export and trading in various kind of pharmaceutical productsMyanmar Mainly import, export and trading in various kind of pharmaceutical productsSingapore Mainly import, export and trading in various kind of pharmaceutical productsVietnam Mainly import, export and trading in various kind of pharmaceutical productsCambodia Mainly import, export and trading in various kind of pharmaceutical productsIndonesia Mainly import, export and trading in various kind of pharmaceutical productsYear ended Capital31 December 2004 Revenue Total Assets ExpenditureRM RM RMMalaysia 60,753,283 98,748,504 18,518,968Philippines 3,703,360 2,982,686 312,950Myanmar - 17,604 -Singapore 6,259,282 6,834,974 290,828Vietnam 2,783,772 - -Cambodia 688,138 478,482 12,442Indonesia - 378,120 -Others 772,180 - -

74,960,015 109,440,370 19,135,18831 December 2003 RM RM RMMalaysia 56,423,953 75,000,392 3,326,332Philippines 3,049,851 2,491,211 -Myanmar 123,187 38,378 -Singapore 6,775,649 6,431,393 1,580,862Vietnam 3,158,768 - -Cambodia - 4,803 -Others 838,038 - -

70,369,446 83,966,177 4,907,194

29. FAIR VALUESThe carrying amounts of financial assets and liabilities of the Group and of the Company at the balance sheet dateapproximated their fair values except for investment in subsidiary companies, which is stated at cost, as it is notpractical to estimate the fair value without incurring excessive costs.




Details on the land and buildings owned by the Y.S.P.SAH Group are as follows:-AuditedLand/ Approximate NBV as at Date of Location Description/ Tenure built-up age of 31.12.04 acquisition or existing use of lease area building RM’000 revaluation*

Lot 3, 5 & 7, Jalan P/7, Three contiguous parcels 99 years 0.4047 12 years 13,759 * January 2001Section 13 of industrial lands with leasehold, hectare Kawasan Perindustrian purpose built industrial all expiring on each,Bandar Baru Bangi buildings for own use 29.09.2086 totalling43000 Kajang consisting of:- 1.2141held under:- hectareH.S.(M) 9635 for (i) 4-storey office /P.T. 11466, Seksyen 13, laboratory buildingH.S.(M) 9636 for (ii) 4 storey production /P.T. 11467 Seksyen 13 laboratory / warehouseand H.S.(M) 9637 for buildingP.T. 11468 Seksyen 13, (iii) 2-storey raw materials /all in the Mukim of packaging buildingKajang, District of (iv) 1-storey maintenance / Hulu Langat, TNB sub-station buildingState of Selangor (v) 1-storey canteen(vi) water treatment plant(vii) guard house

No. 18, Intermediate 3-storey Freehold 163 16 years 1,176 * January 2001Jalan Wan Kadir terrace shop-office squareTaman Tun Dr. Ismail for own use metres60000 Kuala Lumpurheld under Geran 23507 for Lot No. 50965 in Mukim Kuala Lumpur, District of Wilayah Persekutuan State of Wilayah PersekutuanNo. 20, Jalan Wan Kadir Intermediate 3-storey Freehold 164 16 years 1,177 * January 2001Taman Tun Dr. Ismail terrace shop-office square60000 Kuala Lumpur for own use metresheld under Geran 23508 for Lot No. 50966, in Mukim Kuala Lumpur, District of Wilayah Persekutuan State of Wilayah PersekutuanNo.10. Ubi Crescent Flatted factory 60 years 2,250 2 years 790 October 2003#06-57, leasehold, squareSingapore 408564 all expiring feeton 04.07.2057No.10. Ubi Crescent Flatted factory 60 years 2,325 2 years 817 October 2003#06-58, leasehold, squareSingapore 408564 all expiring feeton 04.07.2057

landed properties

AuditedLand/ Approximate NBV as at Date of Location Description/ Tenure built-up age of 31.12.04 acquisition or existing use of lease area building RM’000 revaluation*No 8 2nd storey flatted 60 years 139.0 18 years 456 *June 2004Kaki Bukit Road 2, warehouse within a leasehold square#02-26, 4-storey industries 06.12.2042 metresRuby Warehouse developmentComplex,Singapore 417841124, 3B, LPL Plaza, Condominium Unit Freehold 152.0 20 years 312 November Leviste St., square 2004Salcedo Village, metresMakati City.Lot 2,4 & 6 Jalan 9/7, Six contiguous parcels of 99 years 4.03 New 4542 December Section 9, industrial lands with leasehold, acres 2004Bandar Baru Bangi purpose built industrial all expiringSelangor buildings for own in year 2103use consisting of:-Lot 1 and 3, (i) 2-storey warehouse 5820Jalan 9/8, Section 9, building PKNS IndustrialBandar Baru Bangi, land for factory buildSelangor on Lot 1 & 2 Section 9,Bandar Baru Bangi.Lot 1 & 3, Jalan 9/8, Vacant Land under 99 years 13,939 - 10,362 December Lot 2,4 & 6, development leasehold, square 2004Jalan 9/7, all expiring metresTaman IKS, Section 9, onBandar Baru Bangi43650 Kajangheld under :- H.S.(D) 87699 for P.T. 56932 Seksyen 9, H.S.(D) 87700 for P.T. 56933 Seksyen 9, H.S(D) 87693 for P.T. 56926 Seksyen 9, H.S.(D) 87694 for P.T.56927 Seksyen 9 and H.S.(D) 87695 for P.T. 56928 Seksyen 9, all in theMukim of Kajang, District of Hulu Langat, State of Selangor -


landed properties (cont’d)


Authorized Capital : RM100,000,000 divided into 100,000,000 ordinary shares of RM1.00 eachIssued and Paid-Up Capital : RM55,000,000 divided into 55,000,000 ordinary shares of RM1.00 eachClass of Shares : There is only one class of shares in the Company• Ordinary Shares of RM1.00 each fully paidVoting Rights : One vote per ordinary shareDISTRIBUTION OF SHAREHOLDINGSas at 9th May 2005Size of Holdings No. of Shareholders Total Holdings %Less than 100 shares 11 220 0.00100 – 1,000 shares 569 544,080 0.991,001 – 10,000 shares 781 3,236,000 5.8810,001 – 100,000 shares 201 5,997,511 10.91100,001 – below 5% of issued shares 36 16,319,989 29.675% and above of issued shares 2 28,902,200 52.55

1,600 55,000,000 100.00SUBSTANTIAL SHAREHOLDERSas at 9th May 2005No. Shareholders Direct Interest Deemed InterestShares % Shares %1. YSP SEA Investment Co. Ltd. 23,184,300 42.15 - -2. Lembaga Tabung Haji 5,717,900 10.40 - -3. Lee Tien-Te 553,055 1.01 28,376,693 # 51.594. Dr. Lee Fang-Yu 526,052 0.96 23,184,300 * 42.155. Dr. Lee Fang Hsin 2,838,160 5.16 23,310,300 $ 42.386. Dr. Lee Fang-Chen @ Lee Fang-Chuan 421,042 0.77 23,184,300 * 42.157. Dr. Lee Fang-Jen 403,040 0.73 23,184,300 * 42.158. Lee Ling-Chin 314,031 0.57 23,184,300 * 42.159. Lee Ling-Fen 230,023 0.42 23,184,300 * 42.1510. Lee-Chang Yu-Ying 460,045 0.84 28,469,703 # 51.7611. YSP International Co. Ltd. - - 23,184,300 + 42.1512. Yung Shin Pharmaceutical Industries Co. Ltd. - - 23,184,300 ^ 42.15DIRECTORS’ SHAREHOLDINGSas at 9th May 2005No. Shareholders Direct Interest Deemed InterestShares % Shares %1. Datuk Dr. Anis Bin Ahmad 1,375,000 2.50 - -2. Dr. Lee Fang Hsin 2,838,160 5.16 23,310,300 $ 42.383. Lee Ling-Chin 314,031 0.57 23,184,300 # 42.154. Dr. Lee Fang-Yu 526,052 0.96 23,184,300 * 42.155. Dato’ Koay Soon Eng - - - -6. Tu Shu Yao 500,000 0.91 168,000 @ 0.317. Adi Azuan Bin Abdul Ghani - - - -# Deemed interested by virtue of his family members’ direct shareholding in YSPSAH and by virtue of his own together with his familymembers’ shareholding of more than 15% in Yung Shin Pharmaceutical Industries Co. Ltd. which wholly owns YSP International Co.Ltd. in turn wholly owns YSP SEA Investment Co. Ltd.

shareholding statisticsas at 9th May 2005

* Deemed interested by virtue of his interest in Yung Shin Pharmaceutical Industries Co. Ltd. which wholly owns YSP International Co.Ltd. which in turn wholly owns YSP SEA Investment Co. Ltd.$ Deemed interested by virtue of his interest in Yung Shin Pharmaceutical Industries Co. Ltd. which wholly owns YSP International Co.Ltd. which in turn wholly owns YSP SEA Investment Co. Ltd and his spouse’s interest in the Company pursuant to Section 6A of theCompanies Act, 1965.+ Deemed interested by virtue of Section 6A of the Companies Act 1965, through its 100% interest in YSP SEA Investment Co. Ltd.^ Deemed interested by virtue of Section 6A of the Act, through its 100% interest in YSP International Co. Ltd. which in turn whollyowns YSP Sea Investment Co. Ltd.@ Deemed interested by virtue of his spouse shareholding in YSPSAH.THIRTY (30) LARGEST SHAREHOLDERSas at 9th May 2005No. Names No. of Shares held %1 YSP SEA INVESTMENT COMPANY LIMITED 23,184,300 42.152 LEMBAGA TABUNG HAJI 5,717,900 10.403 LEE FANG HSIN 2,838,160 5.164 BHLB TRUSTEE BERHAD °© TA SMALL CAP FUND 2,193,600 3.995 ANIS BIN AHMAD 1,375,000 2.506 PERMODALAN NASIONAL BERHAD 1,064,400 1.937 LEE, TIEN-TE 553,055 1.018 LIN, MIN-JU 529,052 0.969 LIN, MENG-BE 529,052 0.9610 LEE, FANG-YU 526,052 0.9611 TU SHU YAO 500,000 0.9112 BHLB TRUSTEE BERHAD °© TA COMET FUND 485,600 0.8813 LEE CHANG, YU-YING 460,045 0.8414 LEE FANG-CHUAN @ LEE FANG-CHEN 421,042 0.7715 AFFIN-ACF NOMINEES (TEMPATAN) SDN BHD 414,200 0.75PLEDGED SECURITIES ACCOUNT FOR TAN SIEW KHENG16 LEE, FANG-JEN 403,040 0.7317 TAN SIEW KHENG 350,000 0.6418 LEE, LING-CHIN 314,031 0.5719 LEE I-HSIUNG 252,025 0.4620 CHIANG HUNG-WEN 252,025 0.4621 LI, YU-LIN 252,025 0.4622 CHU FONG HEE 247,000 0.4523 LIN BAO-CHENG 230,023 0.4224 LEE, LING-FEN 230,023 0.4225 TU SHU HUA 200,000 0.3626 TASEC NOMINEES (TEMPATAN) SDN BHD 180,000 0.33BHLB TRUSTEE BERHAD FOR NV CARE (BT-NVC)27 TANG, WEI-CHEN 176,013 0.3228 TASEC NOMINEES (TEMPATAN) SDN BHD 150,000 0.27TA SECURITIES (HK) LIMITED FOR TAN KUAY FONG (TAAM)29 TING CHIN LIU 150,000 0.2730 TASEC NOMINEES (TEMPATAN) SDN BHDTA ASSET MANAGEMENT SDN BHD FOR TA FIRST CREDIT SDN BHD (TAFC) 150,000 0.27

44,327,663 80.60


shareholding statistics (cont’d)


AGENDAAS ORDINARY BUSINESS1. To receive the Audited Financial Statements of the Company for the financial year ended 31stDecember 2004 and the Reports of the Directors and the Auditors thereon.2. To approve the payments of Directors’ Fee for the year ended 31st December 2004.3. To re-elect the following Directors retiring in accordance with the Company’s Articles ofAssociation:-i) Dato’ Koay Soon Eng Article 85ii) Mr. Tu Shu Yao Article 85iii) Madam Lee Ling Chin Article 92iv) En. Adi Azuan Bin Abdul Ghani Article 924. To re-appoint Messrs Shamsir Jasani Grant Thornton as Auditors and to authorise the Board ofDirectors to fix their remuneration.AS SPECIAL BUSINESSTo consider and, if thought fit, to pass the following Resolutions:-5. AS ORDINARY RESOLUTION- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals fromthe relevant governmental/regulatory authorities, the Directors be and are hereby empowered toissue shares in the capital of the Company from time to time and upon such terms and conditionsand for such purposes as the Directors may deem fit provided that the aggregate number ofshares issued pursuant to this resolution does not exceed 10% of the issued capital of theCompany for the time being and that such authority shall continue in force until the conclusionof the next annual general meeting of the Company.”6. AS SPECIAL RESOLUTION- ALTERATION TO THE COMPANY’S ARTICLES OF ASSOCIATION

“THAT the existing Article No. 108 of the Company’s Articles of Association be deleted in itsentirety and be replaced by new Article No. 108(a) and Article No. 108(b) accordingly:-Existing Article No. 108The Directors may meet together for the despatch of business, adjourn and otherwise regulatetheir meetings as they think fit. Any Director may at any time and the Secretary shall on therequisition of a Director summon a meeting of the Directors by giving them not less than five (5)days notice thereof unless such requirement is waived by them.Proposed Article to replace the existing Article No. 108:-Article No. 108(a)The directors may meet together for the despatch of business at such time and place, adjournand otherwise regulate their meetings and proceedings as they think fit by serving not less thanfive (5) days notice thereof unless such requirement is waived by all the Board members. Thenotice can be served by post, via facsimile, e-mail, orally or any other electronic means.

(RESOLUTION 1)(RESOLUTION 2)

(RESOLUTION 3)(RESOLUTION 4)(RESOLUTION 5)(RESOLUTION 6)(RESOLUTION 7)

(RESOLUTION 8)

NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting of the Company will be held at the Banquet Hall,Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70B, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Wednesday, 29thJune 2005 at 10:00 a.m. for the following purposes:-

notice of annual general meeting


notice of annual general meeting (cont’d)

Article No. 108(b)The conduct of a meeting of directors or a committee of the directors may include a participationthereat by any director via telephone conferencing and/or video conferencing or any otherinteractive means of audio or audio-visual communications whereby all participating persons areable to hear each other or be heard during the meeting but shall not be counted for the purposeof a quorum. A directors’ participation in the manner as aforesaid shall be deemed to be present atthe meeting. He shall also be entitled to vote thereat. Any meeting held in such manner shall bedeemed to be or have been held such time and place as set out in the notice of the meeting.”7. AS ORDINARY RESOLUTIONPROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTYTRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT1 TO RRPT8

PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTYTRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT9PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTYTRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT10“THAT approval be hereby given to the Company and/or its subsidiaries (“Group”) to enter intothe recurrent related party transactions of a revenue or trading nature as set out in Section 2.3(ii)of the Circular to Shareholders dated 7th June 2005 (“Circular”) which are necessary for theGroup°’s day-to-day operations provided such transactions are in the ordinary course of businessand are on terms not more favourable to the related party than those generally available to thepublic and not detrimental to minority shareholders and such approval shall continue to be inforce until:-(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following thisAGM, at which time it will lapse, unless by a resolution passed at such AGM, such authorityis renewed;(b) the expiration of the period within which the next AGM of the Company is required to beheld pursuant to Section 143(1) of the Act (but shall not extend to such extension as maybe allowed pursuant to Section 143(2) of the Act); or(c) revoked or varied by resolution passed by the shareholders in a general meeting; whicheveris earlier.AND THAT, the Directors of the Company be and hereby authorized to complete and to do allsuch acts and things (including executing all such documents as may be required) as they mayconsider expedient or necessary to give effect to the Proposed Mandate.”

8. To transact any other business which may properly be transacted at an Annual General Meetingfor which due notice shall have been given.By Order of the BoardLIM SECK WAH (MAICSA 0799845)M. CHANDRASEGARAN A/L S. MURUGASU (MAICSA 0781031)Company SecretariesDated this 7th day of June 2005Kuala Lumpur

(RESOLUTION 9)(RESOLUTION 10)(RESOLUTION 11)(RESOLUTION 12)

Notes:1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy/proxies to attend and vote in his/her stead. A proxyneeds not be a member of the Company. 2. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint atleast one (1) proxy in respect of each securities account it holds with ordinary shares of the company standing to the credit of the saidsecurities account.3. Where a member appoints more than one (1) proxy to attend at the same meeting, the appointment shall be invalid unless he/shespecifies the proportions of his/her holdings to be represented by each proxy.4. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its attorney duly authorized.5. The Form of Proxy must be deposited at the Company’s Share Registrar Office at Level 15-2, Faber Imperial Court, Jalan Sultan Ismail,50250 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.6. Explanatory notes on Special Business

6.1 The proposed Resolution 8 is primarily to give flexibility to the Board of Directors to issue and allot shares at any time in theirabsolute discretion and for such purposes as they consider would be in the interest of the Company without convening a generalmeeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of theCompany.6.2 The proposed Resolution 9 on the amendment to the Company’s Article of Association is to facilitate the Board of Directorsconvening meetings by audio-visual communications.6.3 The proposed Resolutions 10 to 12, if passed will mandate the Company to enter into the categories of recurrent transactions ofa revenue or trading nature and with those related parties specified in Section 2.3 of the Circular to Shareholders dated 7th June2005.


notice of annual general meeting (cont’d)


1. DIRECTORS STANDING FOR RE-ELECTIONa) Dato’ Koay Soon Eng - Article 85b) Mr. Tu Shu Yao - Article 85c) En. Adi Azuan Bin Abdul Ghani - Article 92d) Madam Lee Ling Chin - Article 92The particulars of all the above directors have been disclosed in the Directors’ Profile in this Annual Report.

2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGSThe Board met four (4) times during the financial year ended 31 December 2004. The members of the Board andtheir attendance at the meetings, were as follows:-Board of Directors No. of meetings attendedDatuk Dr. Anis Bin Ahmad 4/4Dr. Lee Fang Hsin 4/4Dr. Lee Fang Yu 2/4Dato’ Koay Soon Eng 4/4Mr. Tu Shu Yao 4/4En. Adi Azuan Bin Abdul Ghani (Appointed on 1.12.2004) -Madam Lee Ling Chin (Appointed on 16.2.2005) -Mr. Lee Tien Te (Resigned on 16.2.2005) 2/4

3. PLACE, DATE AND TIME OF THE GENERAL MEETINGThe Fourth Annual General Meeting of the Company will be held as follows:-Place : Banquet Hall,Kuala Lumpur Golf & Country ClubNo. 10, Jalan 1/70BOff Jalan Bukit Kiara60000 Kuala LumpurDate : 29th June 2005Time : 10:00 a.m.

statement accompanying notice of annual general meeting

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(Before completing this form please refer to the notes below)I/WE NRIC No./Passport No./ Company No.(Full name in block letters) CDS. A/C No.of (Full address)being a member/members of Y.S.P. SOUTHEAST ASIA HOLDING BHD. hereby appoint the following person(s):-Name of proxy, NRIC No. & Address No. of shares to berepresented by proxy1.2.or failing him/her, the Chairman of the Meeting as *my/our proxy/proxies to attend and vote for *me/us and on my/ourbehalf at the Fourth Annual General Meeting of the Company to be held at the Banquet Hall, Kuala Lumpur Golf &Country Club, No. 10, Jalan 1/70B, Off Jalan Bukit Kiara, 60000 Kuala Lumpur on Wednesday, 29th June 2005 at10:00a.m. and at every adjournment thereof to vote as indicated below:-

FOR AGAINST FOR AGAINSTOrdinary Resolution 1 Ordinary Resolution 7Ordinary Resolution 2 Ordinary Resolution 8Ordinary Resolution 3 Special Resolution 8Ordinary Resolution 4 Ordinary Resolution 10Ordinary Resolution 5 Ordinary Resolution 11Ordinary Resolution 6 Ordinary Resolution 12

(Please indicate with an “x” in the space provided above on how you wish your vote to be cast. If you do not do so, theproxy will vote or abstain from voting at his/her discretion).In case of a vote taken by a show of hands, the First-named Proxy shall vote on *my/our behalf.As witness my hand this day of 2005

Signature/Common Seal* Strike out whichever is not desired.Notes:-1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy/proxies to attend and vote in his/her stead. A proxyneeds not be a member of the Company. 2. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one(1) proxy in respect of each securities account it holds with ordinary shares of the company standing to the credit of the said securities account.3. A member may appoints more than one (1) proxy to attend at the same meeting, the appointment shall be invalid unless he/shespecifies the proportions of his/her holdings to be represented by each proxy.4. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its attorney duly authorized.5. The Form of Proxy must be deposited at the Company’s Share Registrar Office at Level 15-2, Faber Imperial Court, Jalan Sultan Ismail,50250 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

Y.S.P. SOUTHEAST ASIA HOLDING BHD. (Company No. 552781 X)Incorporated in Malaysia

No. of ordinary shares heldproxy form

The Company SecretaryY.S.P. SOUTHEAST ASIA HOLDING BHDLevel 15-2, Faber Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur

STAMP

Documents

a n n u a l 2 0 0 4 r e p o r t - yspsah.comNo.2, Lorong Rahim Kajai 14, Taman Tun Dr. Ismail, 60000 Kuala Lumpur. Tel : 03-7729 3671 HSBC Bank Malaysia Berhad Level 1 Annexe, Menara