Directors' Profile

DIRECTORS’ PROFILE

Philip Ng Chee Tat Chairman Non-Independent / Non-Executive - 50 years

Philip Ng Chee Tat is a Singaporean and he was appointed to the Board on 1 June 2002 and as Chairman of the Company on 1 December 2002.

He has a Degree in Civil Engineering, King’s College, London University, a Master of Science in Technology and Policy and Master in City Planning, Massachusetts Institute of Technology.

Since 1986, Mr Ng has been a Director of Sino Land, Hong Kong, engaging in real estate activities in Hong Kong and China. In 1991, he was appointed Chief Executive Officer of Far East Organization, Singapore. Currently, Mr Ng is the Chairman & Chief Executive Officer of Yeo Hiap Seng Limited and Chairman of Orchard Parade Holdings Limited. In addition, he sits on various committees and statutory boards in Singapore. He is also Singapore’s Non-resident Ambassador to The Republic of Chile.

Mr Ng attended all 5 Board Meetings held in the year.

Mr Ng is the son of Mr Ng Teng Fong and Madam Tan Kim Choo, substantial shareholders of Yeo Hiap Seng Limited, the penultimate holding company of the Company.

Mr Ng has no conflict of interest with the Company and has not been convicted for offences within the past 10 years.

Yeo Hiap Seng (Malaysia) Berhad (3405-X)|17 DIRECTORS’ PROFILE DIRECTORS’ PROFILE

Ow Tin Nyap Dato’ Mohamed Nizam bin Managing Director & Chief Executive Officer Abdul Razak Non-Independent / Executive Director - 55 years Independent / Non-Executive - 50 years Ow Tin Nyap is a Malaysian and he was appointed to the Board as Managing Director and Chief Executive Dato’ Mohamed Nizam bin Abdul Razak is a Officer on 1 June 2005. Malaysian and he was appointed to the Board on 5 November 2002. Mr Ow holds the Malaysian Certificate of Education. In an illustrious and sterling career spanning 37 years, He graduated with a Bachelor of Arts (Oxon) degree Mr Ow brings with him strategic broad-based in Politics, Philosophy and Economics from the Oxford Tjong Yik Min experience and many years of international University, United Kingdom. Brigadier General (R) exposure in the areas of business re-engineering, Deputy Chairman mergers and acquisitions, sales and marketing, Dato’ Nizam was attached to Bumiputra Merchant Dato’ Yahya bin Yusof Non-Independent / Non-Executive logistics and manufacturing. Mr Ow’s extensive Bankers Berhad from 1981 to 1984 and to PB Securities Director - 56 years knowledge and experience stems from starting at Sdn Bhd from 1984 to 1998. He presently sits on the Independent / Non-Executive rank and file positions to various senior management board of Mamee-Double Decker (M) Berhad, - 73 years appointments in fast-moving consumer goods Tjong Yik Min is a Singaporean and he was appointed Delloyd Ventures Berhad, Hiap Teck Venture Berhad, (FMCG) market. Synergy Track Berhad and Deutsche Bank (M) to the Board as a Director on 22 July 2002 and as Brigadier General (R) Dato’ Yahya bin Yusof is a Berhad. He also serves on the board of several Deputy Chairman on 23 January 2003. Malaysian and he was appointed to the Board on 22 Mr Ow currently also holds the position of Deputy private limited companies engaged in a wide range President & Executive Director of Yeo Hiap Seng August 1991. He holds a Bachelor of Engineering (Hons) (Class 1) of activities and is actively involved in several Limited Singapore and Executive Director of Far East (Industrial Engineering) degree from the University of charitable foundations. Organization. Prior to this, Mr Ow has spent 8 years He graduated from Royal Military Academy Newcastle, Australia, a Bachelor of Commerce with the Danone Group; working to grow Danone’s Sandhurst, United Kingdom; Defence Services Staff (Economics) degree from the University of Newcastle, Dato’ Nizam is the Chairman of the Audit and ASEAN portfolio and strategic market leadership. Mr College, Wellington, India; Joints Services Staff Australia and a Masters in Science (Industrial Investment Committees and a member of the Ow spent the last 5 years in Indonesia as President College, Canberra, Australia and Senior International Engineering) degree from the University of Singapore. Remuneration Committee. Director of Danone Group of Companies and as Defence Management Course at USS Navy Post Chairman of Danone Group of Companies in the Graduate College, USA Montery, California. Mr Tjong currently holds the position of President & Dato’ Nizam attended all 5 Board meetings held in ASEAN Region for Water/Beverages, Dairy and Chief Operating Officer of Yeo Hiap Seng Limited, the year. Biscuits from 2004. He was also a member of the Asia BG Dato’ Yahya joined the army in 1955 and during Singapore. Prior to this, he was the Executive Director Pacific Matrix and he sat on the International his 36 years in service he held many appointments in and Group President of Singapore Press Holdings He has no family relationship with any other Committee of Danone Group in Paris. Mr Ow has also the military, police and civilian positions. He served as Limited. Mr Tjong has also served in various capacities directors/major shareholders of the Company and previously held positions as President of Sara Lee the Defence Services Military Attaché in the in the Singapore Civil Service. has no conflict of interest with the Company. Corporation (SEA), overseeing the market of Philippines from 1972 to 1974. His last position before Malaysia, Singapore and Indo China and General retirement was as Commander of 11th Brigade in Mr Tjong sits on the Remuneration, Nomination and He has not been convicted for offences within the Manager of Boustead Trading (M) Sdn Bhd. Kuala Lumpur. Investment Committees. past 10 years. Mr Ow attended all 5 Board meetings held in the He is the Chairman of the Remuneration Committee Mr Tjong attended all 5 Board meetings held in the year. and a member of the Audit and Nomination year. Committees. He has no family relationship with any other He has no family relationship with any other directors/major shareholders of the Company and BG Dato’ Yahya attended all 5 Board meetings held directors/major shareholders of the Company and has no conflict of interest with the Company. in the year. has no conflict of interest with the Company. He has not been convicted for offences within the He has no family relationship with any other He has not been convicted for offences within the past 10 years. directors/major shareholders of the Company and past 10 years. has no conflict of interest with the Company.

He has not been convicted for offences within the past 10 years.

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He has not been convicted for offences within the past 10 years.

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Razman Hafidz bin Abu Zarim Pearl Foong Lye Fong Director Director Independent / Non-Executive Non-Independent / Non-Executive - 53 years - 43 years

Razman Hafidz bin Abu Zarim is a Malaysian and he Pearl Foong Lye Fong is a Singaporean and she was was appointed to the Board on 1 March 2005. appointed to the Board on 26 July 2005.

Dato’ N. Sadasivan a/l Encik Razman Hafidz graduated with a Joint-Honours She graduated from National University of Singapore Koh Boon Hwee N.N. Pillay degree in Economics and Accounting, BSc (Econ), in 1989 with a Bachelor of Accountancy Degree. Director from University College, Cardiff, University of Wales. Non-Independent / Non-Executive Director He is a Fellow of the Institute of Chartered Ms Pearl Foong worked in Price Waterhouse as Independent / Non-Executive Accountants in England and Wales and a member of Assistant Manager of Audit and Business Services from - 58 years - 69 years the Malaysian Institute of Accountants. 1993 to 1995. From 1995 to February 1999, she was promoted to Manager of Assurance/Business Koh Boon Hwee is a Singaporean, and he was He started his career with Touche Ross & Co., Advisory Services. In February 2000, she left Dato’ N. Sadasivan is a Malaysian and he was appointed to the Board on 20 January 2009. Chartered Accountants, London, England and later PricewaterhouseCoopers as Senior Manager of appointed to the Board on 13 August 2004. joined Hacker Young, Chartered Accountants, Assurance/Business Advisory Services. He graduated from the Imperial College, University of London, England, where he was admitted as an Dato’ N. Sadasivan graduated with a Bachelor of London in 1972, with a Bachelor of Science Audit Partner. She was appointed as Group Financial Controller of Arts (Hons) in Economics from the University of (Mechanical Engineering) First Class Honours in 1976, Tuan Sing Holdings Limited and SP Corporation Ltd, Malaya in 1963. He began his career as an he obtained a Masters in Business Administration with In 1989, he returned to Malaysia as an Audit Partner Singapore from March 2000 to October 2002. Economist with the Economic Development Board, Distinction, from Harvard Business School. of Price Waterhouse (“PW”) and later Partner-in- Subsequently, she worked with Gul Technologies Singapore in 1963 and was subsequently promoted Charge of PW’s Management Consulting Practice Singapore Ltd as Vice President of Finance and to the position of Chief of the Industrial Facilities Mr Koh started his career in 1977 at Hewlett Packard and became an Executive Committee member. In Accounting from November 2002 to 14 June 2005. Division in 1965. and rose to become its Managing Director in 1994, he established Norush Sdn Bhd, an investing Singapore, a post he held from 1985 to 1990. From and business advisory firm, where he remains as Ms Pearl Foong is a member of the Audit Committee. In 1968, he joined the Malaysian Industrial 1991 to 2000, he was Executive Chairman of the Chairman. Development Authority (MIDA) and served as the Wuthelam Group. He was also the Chairman of the Ms Pearl Foong attended all 5 Board meetings held in Deputy Director General from 1976 to 1983. From Singapore Telecom Group (“SingTel”) and its He sits on the boards of Toyochem Corporation the year. 1984 until his retirement in 1995, he was the predecessor organisations from 1986 to 2001. Mr Koh Berhad, eBworx Berhad, Mithril Berhad, JP Morgan Director-General of MIDA. was appointed Chairman of Singapore Airlines Chase Bank Berhad, Malaysian Oxygen Berhad and She has no family relationship with any other Limited in July 2001, a post which he held until 31 Panasonic Manufacturing Malaysia Berhad. He also directors/major shareholders of the Company and He presently sits on the board of several private and December 2005. holds directorships in several private limited has no conflict of interest with the Company. public listed companies namely Chemical Company companies. of Malaysia Berhad, Petronas Gas Berhad, APM On 1 January 2006, he became Chairman of DBS She has not been convicted for offences within the Automotive Holdings Berhad, Leader Universal Bank Ltd (“DBS”). He joined DBS as a Director on 15 Encik Razman Hafidz is a member of the Audit, past 10 years. Holdings Berhad and Malaysian Airline System June 2005. Mr Koh is also Executive Director of Nomination and Investment Committees. Berhad. He is also a director of Bank Negara MediaRing Ltd and Chairman and CEO of Malaysia. Sunningdale Tech Ltd. He serves on the boards of Encik Razman Hafidz attended all 5 Board meetings Temasek Holdings Pte Ltd and Agilent Technologies, held in the year. Dato’ N. Sadasivan is the Chairman of the Inc. in the United States. He also contributes actively Nomination Committee and a member of the Audit to non-profit organisations, and is the current He has no family relationship with any other directors/ and Investment Committees. Chairman of the Board of Trustees of Nanyang major shareholders of the Company and has no Technological University, a Director of the Singapore conflict of interest with the Company. Dato’ N. Sadasivan attended 4 out of the 5 Board Harvard Foundation and the Hewlett Foundation in meetings held in the year. the United States. He has not been convicted for offences within the past 10 years. He has no family relationship with any other He has no family relationship with any other directors/major shareholders of the Company and directors/major shareholders of the Company and has no conflict of interest with the Company. has no conflict of interest with the Company.

He has not been convicted for offences within the He has not been convicted for offences within the past 10 years. past 10 years.

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Razman Hafidz bin Abu Zarim Pearl Foong Lye Fong Director Director Independent / Non-Executive Non-Independent / Non-Executive - 53 years - 43 years

Razman Hafidz bin Abu Zarim is a Malaysian and he Pearl Foong Lye Fong is a Singaporean and she was was appointed to the Board on 1 March 2005. appointed to the Board on 26 July 2005.

He has not been convicted for offences within the He has not been convicted for offences within the past 10 years. past 10 years.

2 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 2 1 Highlights Highlights

Strategic Alliance with Boh Plantations - Boh Teh O Ais Strategic Alliance with Boh Plantations - Boh Teh O Ais Interactive Activity with Consumer during Crime Prevention Campaign Yeo’s Crime Prevention Campaign - “Stay Safe with Yeo’s” Press Conference

CNY Celebration with “Yeo’s God of Prosperity” Freedom Hip with the Youth Drink Healthy and F ly to Canada Contest - Grand Prize Winner Yeo's - Canada Brand Co-Branding Partnership

34th Annual General Meeting Fund Raising Drive for Eurasian Community

Birthday Celebration with Little Chee Factory Tour Visit for Teacher Association Highlights Highlights

CNY Celebration with “Yeo’s God of Prosperity” Freedom Hip with the Youth Drink Healthy and F ly to Canada Contest - Grand Prize Winner Yeo's - Canada Brand Co-Branding Partnership

34th Annual General Meeting Fund Raising Drive for Eurasian Community

Birthday Celebration with Little Chee Factory Tour Visit for Teacher Association Highlights Highlights

Employees Long Service Award Presentation Students thrilled with La Fruit Juice during La Roadshow OIC delegates Visited Yeo's in conjunction with forum on “Halal Conformance Infrastructure for OIC countries” People power during CNY “Yellow Storm”

Chef Wan sharing his Cintan Recipe Cinta itu Cintan, Cintan itu Cinta Contest - Grand Prize Winner Gotong-royong for a better workplace Roadshow with Smart Kids

Old Folks Home Visitation - Seri Kenangan Product Sponsorship for Walkathon In-House Blood Donation Drive Christmas Cheers to Wisma Harapan's Children with RTM2 Highlights Highlights

Chef Wan sharing his Cintan Recipe Cinta itu Cintan, Cintan itu Cinta Contest - Grand Prize Winner Gotong-royong for a better workplace Roadshow with Smart Kids

Old Folks Home Visitation - Seri Kenangan Product Sponsorship for Walkathon In-House Blood Donation Drive Christmas Cheers to Wisma Harapan's Children with RTM2 Corporate Responsibility

In addition to the above community programmes, YHS has also consistently contributed to other State ment various causes, such as sponsorship to charity organizations, orphanage, old folks home and Yeo Hiap Seng (Malaysia) Berhad (“YHS”) is always ever mindful of its responsibility as a educational institutions. Factory educational visit is another initiative by the Company to help corporate citizen towards the community, environment, employees, shareholders, school children and university/college students in enhancing their knowledge on food and consumers and other stakeholders. beverage manufacturing process.

YHS understands that CR initiatives are strategic to create and maintain sustainability. As an environmentally responsible corporate citizen, YHS undertook several initiatives in A corporation that is responsible will inevitably heighten the awareness of the brand to preserving the environment including the utilization of resources in a sustainable manner, higher market valuations while simultaneously increasing competitiveness. whereby the packaging used are recyclable. The Group has also upgraded its IT infrastructure as Corporations working on CR initiatives would consequentially encourage the public to an effort in moving towards a paperless environment through electronic communication and support the growth and development of the community. Fundamentally, this process filing system. It has been YHS’s practice to passionately sponsor environmental programmes and would eliminate practices that would cause harm to the general public. activities such as Raptor Watch organized by Malaysian Nature Society and beach cleaning activities. To play the role of a responsible corporate organisation towards the community’s welfare, YHS has embarked on a crime prevention campaign, “Stay Safe with Yeo’s” to YHS is conscious of its obligations at the work place and encourage Malaysians to be more conscientious in playing an active role to curb consistently promotes quality work environment and healthy & crime. The “Stay Safe with Yeo’s” campaign is aimed at encouraging members of the safety workplace through various awareness campaigns public to join Rakan Cop to fight crime by encouraging them to report the crime by which are in line with the established Occupational Safety and calling Rakan Cop’s designated hotline numbers. To facilitate this campaign, YHS has Healthy Policy; and various continuous learning and training included a printed message on the back panel of the tetra brik pack within the Yeo’s programmes as part of human capital development. Asian Drink beverage range. This message also carries safety tips to educate the public on how to handle various situations they may face. In addition to that, YHS also recognizes the value of the invaluable services of its long servicing employees by rewarding them the Long Service Award as a recognition for their dedication and commitment towards the development and growth of the Group. The fact that every year there are long service recipients who have served the Group for more than 35 years indicates the employees’ trust, loyalty and confidence in the Group.

In response to global issues such as poverty and hunger, YHS had joined in the march with World Vision Malaysia movement. The 30-Hour Famine Programme was aimed at encouraging the public not only to experience the hunger of children and families in need, but to raise funds to transform their hunger into hope. Meanwhile, in aid of disaster relief operations, YHS made it possible to supply canned food and beverages to reach out Over the year, YHS has continued to reach out to smaller communities. A collaboration to the victims of the Myanmar Cyclone Nargis and the flood with the Selangor & Federal Territory Eurasian Association (SAFTEA), saw YHS lending a victims in East Coast, Malaysia. hand at SAFTEA’s Annual Heritage Bazaar to raise funds for the association’s building fund. On the other hand, a reach-out to FELDA’s community programme gave YHS an YHS pays great attention in implementing good business opportunity to promote awareness for its products amongst the rural folks. conduct within the organization and towards its stakeholders. It places great emphasis on stringent quality where all its food In 2008, YHS made several strategic collaborations with the media. This was especially and beverage products are manufactured under hygiene significant with the ntv7 programme “Finding Angel”, as YHS signed a three year special standard using freshest ingredients. YHS is also committed to education sponsorship agreement to a five-year-old-boy who has learning difficulties. A continuous research and development to keep abreast of further notable contribution was with the “Lava Kids” programme on RTM. YHS had market trends. worked with them to bring Christmas cheer to the mentally challenged children from Wisma Harapan Brickfields, Kuala Lumpur. Corporate Responsibility

The Board of Directors of Yeo Hiap Seng (Malaysia) Berhad (“the Company”) remains such to facilitate highest attendance at the Board operate within clearly defined terms of reference as meetings. set out below. The Board Committee evaluates committed to maintain a high standard of corporate governance throughout the matters and reports to the Board of their findings and Group. The Board recognises the principles of corporate governance as a During the year, five (5) Board Meetings were held recommendation thereon. The responsibility for the and the Directors attended the following numbers of final decision on all matters discussed and recommended fundamental part of discharging its responsibilities to protect and enhance meetings:- by the Committee, however, lies with the Board. Number of shareholders’ value and the financial performance of the Group; whilst taking into Name of Directors Meetings Attended a) Audit Committee account the interest of other stakeholders. Philip Ng Chee Tat 5/5 The Audit Committee reviews issues of accounting Tjong Yik Min 5/5 policy and presentation for external financial Ow Tin Nyap 5/5 reporting, monitors the work of the internal audit The Board has the overall responsibility for corporate governance, establishing goals, Dato’ Mohamed Nizam 5/5 function and ensures an objective and professional bin Abdul Razak relationship is maintained with the external auditors. strategic direction and overseeing the conduct of the Company’s business. The Board Brigadier General (R) Dato’ 5/5 The Committee has full access to both the internal is fully committed to ensure that such responsibility is discharged through compliance Yahya bin Yusof and external auditors who, in turn, have access at all Dato’ N. Sadasivan a/l N.N. Pillay 4/5 times to the Chairman of the Committee. with relevant rules, law, regulations and guidelines in addition to adopting the best Razman Hafidz bin Abu Zarim 5/5 The composition and terms of reference to the Audit practice in the Malaysian Code of Corporate Governance (“the Code”). Pearl Foong Lye Fong 5/5 Koh Boon Hwee N/A Committee may be found on pages 37 to 38. (Appointed on 20 January 2009) b) Nomination Committee The following describe the manner in which the Group has applied the principles set Supply of Information The Nomination Committee recommends the out in the Code and the extent of its compliance with the best practice of the Code appointment of the Board Directors. The terms of The Directors have full and unrestricted access to all reference of the Nomination Committee (“NC”) throughout the year ended 31 December 2008. information pertaining to the Group’s business and adopted by the Board are as follows: affairs to enable them to discharge their duties. All • To recommend appropriate candidates to the Board. Directors are provided with reports and other relevant information on a timely manner, covering various • To determine annually whether or not a director is THE BOARD OF DIRECTORS There is Board balance with the presence of four independent. Independent Non-Executive Directors of caliber and aspects of the Group’s operations and performance. • To decide whether or not a director is able and has Composition and Board Balance collectively bring wide and varied commercial They are also provided with an agenda and a set of been adequately carrying out his/her duties based experience to Board and Committee deliberations. board papers pertaining to agenda items prior to The Board currently has nine members, comprising on the following criteria: Non-Executive Directors play key supporting roles, Board meetings for consideration and where one Executive Director and eight Non-Executive - Attendance contributing their knowledge and experience appropriate, for decision. This is issued in sufficient Directors. Of the eight Non-Executive Directors, four - Preparedness towards the formulation of policies and in the decision time to enable the Directors to consider the matter to are independent, satisfying the requirement of the - Participation Code for Independent Non-Executive Directors to -making process. They also serve the important be deliberated and to obtain further explanation, • To evaluate and propose objective performance make up at least one third of the Board membership. function of advising the management on strategy where necessary, in order to be briefed properly development and ensuring that the Board maintains before the meeting. In addition, the Board has access criteria for the Board. Performance criteria that may be used include return on assets (ROA), return on The role of the Chairman is separate from that of the high standards of financial and other reporting as to the advice and services of the Company Secretary equity (ROE), economic value added (EVA), return Managing Director & Chief Executive Officer. The well as providing adequate checks and balances for and senior management. The Company Secretary on sales, return on investment and etc. Chairman is responsible for leadership of the Board safeguarding the interests of shareholders and the attends all Board meetings and ensures that accurate and monitoring its effectiveness. He facilitates both Group as a whole. Where a potential conflict of and adequate records of the proceedings of the • To review the Board required mix of skills and the contribution of the Non-Executive Directors and interest may arise, it is mandatory practice for the Board meetings and decisions made are properly experience and other qualities that Directors should constructive relations between the Executive and director concerned to declare his interest and recorded. Senior Management officers may be bring to the Board. Non-Executive Directors. The Managing Director & abstain from the decision-making process. invited to attend Board meetings when necessary, to Chief Executive Officer is responsible for managing provide the Board with clarifications and comments on The present members of the Nomination Committee the Group’s business, including the formulating and A brief profile of each Director is set out on pages 17 the relevant agenda tabled at the Board meetings. The as at the date of this statement are as follows: implementation of major strategies and initiatives to 21 of this Annual Report. Board may seek independent professional advice adopted by the Board. from external consultants at the Company’s Member Status expense, if required, in furtherance of their duties. Board Attendance Dato’ N. Sadasivan a/l (Chairman) Non-Executive / The Directors are from diverse professional N.N. Pillay Independent backgrounds with a wide range of expertise which The Board meets at least once every quarter on a Board Committees Brigadier General (R) Non-Executive / Independent brings an independent judgment and considerable scheduled basis and additional meetings will be Dato’ Yahya bin Yusof knowledge to the Board’s discussion. The mix of skills convened as and when required. Board meetings for The Board currently has four committees, majority Razman Hafidz bin Non-Executive / Independent and experience is vital for the successful the following financial year are scheduled before the members of which are Independent Non-Executive Abu Zarim performance of the Board. end of the current financial year to allow the Directors. The Board has delegated certain Directors to plan their appointments ahead and as responsibilities to these four Board committees which Tjong Yik Min Non-Executive / Non-Independent

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c) Remuneration Committee The Investment Committee comprises the following members: Directors’ Training Programme The Remuneration Committee reviews and recommends Member Status The Directors are mindful that they should receive appropriate continuous training. During the year, they have remuneration framework for Executive Directors. The Dato’ Mohamed Nizam (Chairman) Non-Executive / attended seminars and briefings to keep abreast with developments in the market place as well as the new terms of reference of the Remuneration Committee bin Abdul Razak Independent statutory and regulatory requirements. Apart from the following training programmes attended by the respective (“RC”) are as follows: Dato’ N. Sadasivan a/l Non-Executive / Independent directors of their own accord, all the directors have attended the directors’ training course on “Risk Management” N.N. Pillay organized by the Company on 23 October 2008. • Made up of a composition of Non-Executive Razman Hafidz bin Abu Non-Executive / Independent Directors, the majority of whom are independent Zarim Details of training attended by the following Directors for the financial year ended 31 December 2008 are as follows:- of management and free from any business or other Tjong Yik Min Non-Executive / Non-Independent relationship, which may materially interfere with the Name of Directors Training Programmes exercise of their independent judgment. This ensures Appointments and Re-Election Philip Ng Chee Tat • Far East Organization Leadership Talk Series on 28 May 2008 transparency in the development of the remuneration • Far East Organization Leadership Talk Series on 5 September 2008 framework and minimizes the risk of any potential Procedures relating to the appointment and re-election • Far East Organization Leadership Talk Series on 21 October 2008 conflict of interest. of directors are set-out in the Company’s Articles of Tjong Yik Min • The 6th World Instant Noodles Summit, Osaka from 8 to 10 April 2008 • Chaired by an Independent Non-Executive Director. Association. All newly appointed Directors will be subject • Far East Organization Leadership Talk Series on 28 May 2008 to retirement and re-election by shareholders at the • Far East Organization In Essence Workshop on 18 August 2008 • RC’s recommendations are made in consultation first Annual General Meeting (“AGM”) subsequent to • From compliance to performance - The Art of Effective Business by PricewaterhouseCoopers with the Chairman of the Board and submitted for their appointment. In addition, one-third (or the on 18 August 2008 endorsement by the entire Board. number nearest to one-third) of the remaining Directors, • Far East Organization Leadership Talk Series on 5 September 2008 • RC recommends to the Board a framework of including the Managing Director & Chief Executive • Investing in Vietnam : Some Consideration by Allen & Gledhill on 25 November 2008 remuneration for the Board and key executives and Officer, shall retire from office and being eligible for Ow Tin Nyap • Far East Organization Leadership Talk Series on 28 May 2008 determines specific remuneration packages for re-election at each subsequent Annual General • Far East Organization Leadership Talk Series on 5 September 2008 each Executive Director and the CEO if the CEO is Meeting, provided always, all directors, including the Brigadier General (R) Dato’ • Prevention of Fraud, Anti-Money Laundering and Board Effectiveness on 14 April 2008 not an Executive Director. Managing Director & Chief Executive Officer, shall Yahya bin Yusof retire from office once at least in each three years • The determination of remuneration packages of Pearl Foong Lye Fong • China Tax – Updates on China’s Corporation Income Tax Law on 2 April 2008 but shall be eligible for re-election. • Investing in Vietnam : Some Consideration by Allen & Gledhill on 25 November 2008 Non-Executive Directors is the matter of the Board and individuals concerned should abstain from The NC recommends candidates for directorship to Directors’ Remuneration discussion of their own remuneration. be filled by the shareholders or the Board. In making • No Director should be involved in deciding his own its recommendations, the NC will focus on the skills The RC is responsible for reviewing and recommending the policy framework on the remuneration of Executive remuneration. and personal qualities of the candidate as well as Director with the aim to attract, motivate and retain Directors of right caliber needed to run the Company business experience the candidate possess to enhance successfully. The determination of the remuneration of the Non-Executive Directors is a matter for the Board as a • The RC covers all aspects of remuneration, including the Board’s decision making and management of the whole. Directors do not participate in decisions regarding their own remuneration package. Directors’ fees are but not limited to Director’s fees, salary, allowances, business and affairs of the Company. During the year subject to shareholders’ approval at the Annual General Meeting. bonus, option and benefits-in-kind. under review, the NC has recommended to the Board the appointment of Mr Koh Boon Hwee as an additional The Independent Non-Executive Directors are paid attendance allowances for Board and Audit Committee The Remuneration Committee comprises the following director of the Company. Mr Koh was appointed by meetings that they attended as well as allowances for serving as Board Committee member. members: the Board as a Non-Independent Non-Executive Member Status Director on 20 January 2009. For the year ended 31 December 2008, the aggregate remuneration of the Directors are as follows:- Brigadier General (R) (Chairman) Non-Executive / Dato’ Yahya bin Yusof Independent The NC carried out annual assessment and evaluation Directors’ Benefits-In- Other Fees Salaries Bonus Kind Emoluments Total Dato’ Mohamed Non-Executive /Independent on the effectiveness of the Board as a whole and the (RM) (RM) (RM) (RM) (RM) (RM) Nizam bin Abdul Razak contribution of each of the individual director, including Executive - 850,316 73,909 37,175 27,683 989,083 Tjong Yik Min Non-Executive / Non-Independent Independent Non-Executive Directors, as well as the Chief Executive Officer. All assessments carried out Non-Executive 100,000 - - - 239,000 339,000 by the NC are documented. 100,000 850,316 73,909 37,175 266,683 1,328,083 d) Investment Committee Pursuant to Section 129 of the Companies Act, 1965, The term of reference of the Investment Committee The number of Directors whose total remuneration fall within the following bands are as follows: (“IC”) is to manage the Company’s portfolio of all directors who are over seventy years of age are required to submit for re-appointment annually. securities, reviewing and evaluating proposals for joint NUMBER OF DIRECTORS venture, mergers and acquisitions. The NC also recommends the re-appointment and Range of Remuneration Executive Non-Executive re-election of Directors who are seeking for re-appointment RM0 - 3 and re-election at the AGM. The names of Directors RM50,001 to RM100,000 - 4 who are standing for re-appointment and re-election at RM950,000 to RM1,000,000 1 - the Thirty-Fifth AGM of the Company to be held on 22 April 2009 are contained in the Notice of AGM.

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RELATIONSHIP WITH SHAREHOLDERS financial statements are prepared in accordance • To perform a risk assessment of the Group to identify the business processes within the Group that the management with the provisions of the Companies Act, 1965 and should focus on. The Internal Audit Plan and, accordingly, the work of the internal auditors is designed Investors Relations and Shareholders the MASB Approved Accounting Standards in based on the analysis of the risks faced by the Group in meeting its business objectives and takes into Communication Malaysia for entities other than private entities. consideration the concerns of management. The Internal Audit Plan is reviewed and approved by the Audit Committee. The Audit Committee provides necessary support to the internal auditors and management The Group recognises the importance of establishing A statement by Directors of their responsibility in to ensure all major issues highlighted by the internal auditors are deliberated and satisfactorily resolved. a direct line of communication with shareholders and preparing the financial statements is set out on page investors through timely and thorough dissemination 34 of this Annual Report. The head of internal audit reports directly to the Audit Committee of their findings, the Audit Committee in turn will of information on the Group’s performance and review their findings with the management on quarterly basis. The internal auditors will subsequently follow-up to major developments via appropriate channels of Internal Control determine the extent of their recommendations that have been implemented. As such, the internal audit function communication. provides assurance to the Board on the Group’s system of internal controls. The Board recognises the importance of sound Dissemination of information includes the distribution system of internal control and acknowledges its of Annual Report and relevant circulars, issuance of ultimate responsibilities in maintaining the same, Relationship with External Auditors press release inclusive of quarterly financial which includes the establishment of an appropriate Messrs. PricewaterhouseCoopers is the Company’s external auditors. The Board through the establishment of an performance of the Group to Bursa Malaysia control environment and framework as well as Audit Committee maintains a formal and transparent arrangement with the external auditors. Securities Berhad (“Bursa Securities”) and the public reviewing its adequacy and integrity. The internal as well as press conferences. control system covers all levels of personnel and The role of the Audit Committee in relation to the external auditors is described in the Audit Committee Report on business processes and is designed to safeguard the pages 37 to 38 of this Annual Report. To further enhance the transparency and Company’s assets and shareholders’ interest. The communication with the shareholders and all Board is satisfied with the design of the existing concerned, the Company maintains a website at internal control system, which would continue to be www.yeos.com.my and customer service hotline at improved, reviewed and updated in line with ADDITIONAL COMPLIANCE INFORMATION 1-300-80-2828, which shareholders and the public changes in the operating environment. Share Buy-Back may access for information on the Company. All announcements released to the Bursa Securities are The information of the Group’s internal control is The Company had at its Thirty-Fourth Annual General Meeting held on 22 April 2008 obtained the approval of the also available on Bursa Securities website at presented in the Statement on Internal Control set shareholders in relation to the Share Buy-Back authority, whereby the Directors are authorised to purchase and/or www.bursamalaysia.com. out on pages 35 to 36 of this Annual Report. hold at any point of time up to ten per cent (10%) of the issued and paid-up share capital of the Company for the time being quoted on the Bursa Securities. Annual General Meeting (“AGM”) Internal Audit Function For the financial year ended 31 December 2008, the Company purchased a total of 2,000 shares, all of which are The Chairman and the Board encourage shareholders During the year under review, an in-house internal audit retained as treasury shares. None of the shares purchased has been sold or cancelled. Details of the shares bought to attend and participate in the AGM held annually. department was established to perform regular review back is set out below:- The AGM is the principal forum for dialogue and of the effectiveness of the risk management, internal No. of Minimum price paid Maximum price paid Average price paid* Consideration* interaction with individual shareholders and investors control and governance processes within the Group. Date Ordinary Shares (RM) (RM) (RM) (RM) where they may seek clarifications and comment on During the initial set-up, the in-house internal audit 28/4/2008 1,000 1.620 1.620 1.662 1,662.49 the Group’s businesses and financial performance department was supported by an independent audit from the Board as well as the senior management. firm. It is envisaged that the in-house internal audit 30/10/2008 1,000 1.130 1.130 1.172 1,172.34 department will be in full force by end of year 2009. 2,000 2,834.83 * Includes transaction cost ACCOUNTABILITY AND AUDIT Among the responsibilities of the internal auditors are Material Contracts Financial Reporting as follows: • To advise executive and operational management During the financial period, there were no material contracts entered into by the Company and its subsidiary In addition to providing the financial report on an on areas for improvement; companies which involve directors’ and major shareholders’ interests. annual basis, the Company also presents the Group’s financial results on a quarterly basis via public • To review the adequacy, integrity and effectiveness announcements. Through the Audit Committee, the of the Group’s internal control system for the Board Non-Audit Fees Directors ensure the integrity of financial information to make an accurate Statement on Internal Control The details of the non-audit fees paid/payable to the external auditors, PricewaterhouseCoopers for the financial and the effectiveness of the financial controls, in the annual report; year ended 31 December 2008 are set out below: internal control and risk management systems. The RM Audit Committee assists the Board in reviewing the • To support the Audit Committee in evaluating the information disclosed to ensure accuracy, adequacy effectiveness of the existing internal control system, Review of Interim Financial Information for Quarter 1, Quarter 2 & Quarter 3 of 2008 and other services 70,000 and completeness of all annual and quarterly identify future requirements and recommend a reports, audited or unaudited, and approved by the prioritized action plan to further enhance the Board before releasing to the Bursa Securities. internal control system; and

The Directors are also responsible for ensuring that all

3 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 3 STATEMENT ON CORPORATE GOVERNANCE STATEMENT ON CORPORATE GOVERNANCE

The Directors are also responsible for ensuring that all

3 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 3 STATEMENT ON CORPORATE GOVERNANCE STATEMENT ON INTERNAL CONTROL

Recurrent Related Party Transactions The Board of Directors of Yeo Hiap Seng (Malaysia) Berhad (“YHS”) acknowledges The Company had also at the Thirty-Fourth Annual General Meeting obtained the shareholders’ mandate to enter that it has a responsibility in maintaining a sound and effective system of internal into recurrent related party transactions of a revenue nature, which are necessary for the day-to-day operations on the term not more favourable to the related party than those available to the public and not to the detriment of controls and risk management practices within the YHS Group to safeguard the minority shareholders. shareholders’ investment and assets of the Group. For the financial year ended 31 The breakdown of the aggregate value and type of recurrent related party transactions conducted pursuant to the December 2008, the management of YHS Group continued to assist the Board in the shareholders’ mandate for the financial year ended 31 December 2008 is set out below:- implementation of the Board’s policies and procedures in maintaining a sound system Interested Directors/Major Aggregate Value of internal controls and risk management. The Audit Committee and the Internal Related Parties Nature of Transactions Shareholders/Person Connected (RM’000) YHS (Singapore) (i) Purchase of finished (i) Yeo Hiap Seng Limited (“YHSL”), the penultimate 205 Auditors continued to review and evaluate its effectiveness in order to meet the Pte. Ltd.(“YHSPL”), goods by Yeo Hiap holding company of the Company through its Company’s business objectives. a major Seng Trading Sdn Bhd 100% shareholding in YHSPL shareholder of (”YHST”), a wholly-owned (ii) Philip Ng Chee Tat, a common director of YHSL the Company subsidiary of Yeo Hiap and YHSM The Board of Directors of YHS is pleased to provide the following statement on the state with direct Seng (Malaysia) Berhad (iii) Tjong Yik Min, a common director of YHSL, YHSPL interest of (”YHSM”) from YHSPL and YHSM of internal control of the YHS Group in accordance with “Statement on Internal 61.145% as at (ii) Rental of equipments by (iv) Ow Tin Nyap, a common director of YHSL, YHSPL, 1,178 12 March 2009 YHSPL from YHSM YHSM and YHST Control: Guidance for Directors of Public Listed Companies” for the financial year (iii) IT services provided by (v) Pearl Foong Lye Fong, Group Financial Controller 208 ended 31 December 2008. YHSPL to YHSM of YHSL and common director of YHSM and YHST

This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors Internal Control dated 17 February 2009. The Board recognises the importance of a sound The Group’s system of internal controls comprises the system of internal controls and acknowledges its following key elements: ultimate responsibilities in maintaining the same, which includes the establishment of an appropriate • Board Committees control environment and framework as well as Clear definitions of functions and responsibilities of STATEMENT ON DIRECTORS’ RESPONSIBILITIES reviewing, monitoring and ensuring its adequacy and the various committees of the Board of Directors. integrity. YHS Group has a system of internal control designed to address the following areas, in order to • Control Procedures The Directors are required by the Companies Act, 1965 (“the Act”) to prepare financial statements for each achieve its strategic goals and business objectives, financial year, which give a true and fair view of the state of affairs of the Group and of the Company at the end Well-established policies, procedures and whilst safeguarding its assets and the shareholders’ practices are in place to ensure clear of the financial year and the results and cash flows of the Group and of the Company for the financial year. As interest:- required by the Act and the Listing Requirements of Bursa Malaysia Securities Berhad, the financial statements have accountabilities and control procedures for all been prepared in accordance with the Companies Act, 1965 and the MASB Approved Accounting Standards in business units. The policies and procedures are (i) Governance available and accessible by all employees. Malaysia for entities other than private entities. (ii) Regulations Compliance (iii) Efficient and Effective Operation • Organizational Structure and Accountability Levels The Directors affirm that in preparing the financial statements for the year ended 31 December 2008 set out on (iv) Assets Protection and Safeguarding The Group has a well-defined organizational pages 49 to 93, the Group has used certain critical accounting estimates and assumptions that affect the reported (v) Timely and Accurate Reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial structure with clear lines of accountability. The delegation of authority is properly documented statements, and the reported amounts of revenues and expenses during the reported financial year. Although The nature of risks means that events may occur and sets out the decisions that need to be taken these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual which would give rise to unanticipated or and the appropriate authority levels of results may differ, the Directors have exercised their judgment in the process of applying the Company’s unavoidable losses and because of the limitation management, including matters that require accounting policies. that are inherent in any system of internal controls, Board approval. the Board recognizes that such systems of internal control are designed to manage and control, rather • Information System than eliminate the risk of failure to achieve its business The Group maintained a comprehensive objective. Accordingly, it should be noted that the information system which enabled transactions to system of internal controls could therefore only be captured, compiled and reported in an provide reasonable and not absolute assurance organised manner. The SAP system provided the against the risk of material errors, misstatement, fraud management with exception reports to identify risk or losses. areas for appropriate actions.

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3 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 5 STATEMENT ON INTERNAL CONTROL AUDIT COMMITTEE REPORT

• Reporting and Review directly to the Audit Committee of their findings, MEMBERS OF THE AUDIT COMMITTEE 2. Objectives the Audit Committee in turn will review their findings There is a strategic planning, annual budgeting CHAIRMAN: The primary objectives of the Audit Committee are: and target setting process formulated by the with the management on quarterly basis. The Dato’ Mohamed Nizam bin Abdul Razak a. To assist the Board in discharging its responsibilities management team, which comprises the internal audit team will subsequently follow-up to (Independent / Non-Executive) relating to the Group and the Company’s Managing Director & Chief Executive Officer and determine the extent of their recommendations management of principal risks, internal controls, the senior management officers (known as “The that have been implemented. As such, the internal MEMBERS: financial reporting and compliance of statutory Matrix”). audit function provides assurance to the Board on the Group’s system of internal controls. Brigadier General (R) Dato’ Yahya bin Yusof and legal requirements. (Independent / Non-Executive) b. To maintain through regularly scheduled meetings, Actual sales performance compared to budget is a line of communication between the Board of reported to the Matrix on daily basis and the Matrix The Audit Committee reports to the Board of Dato’ N. Sadasivan a/l N.N. Pillay Directors, senior management, internal auditors carries out regular meetings to review financial Directors the activities of the internal audit function, (Independent / Non-Executive) and external auditors. results and forecasts for all business units within the significant findings and the necessary Razman Hafidz bin Abu Zarim Group, including performance against the recommendations in relation to the adequacy (Independent / Non-Executive) operating plans and annual budgets. The Matrix and effectiveness of the system of internal controls Pearl Foong Lye Fong 3. Duties and Responsibilities and accounting control procedures of the Group. also reviews and monitors operational, financial (Non-Independent / Non-Executive) The duties and responsibilities of the Audit Committee performance and considers business development shall be: as well as to formulate action plans to address any • Risk Management TERMS OF REFERENCE: • With the External Auditors: areas of concern. In addition, quarterly business The Group’s operations involve management of a a. To review their audit plans; review and financial results are prepared and 1. Terms of Membership wide range of risks. The Matrix is responsible for b. To review their evaluation of the systems of internal tabled at the Board meetings for review. identifying business risks and in ensuring the An independent Audit Committee exists to implement controls; implementation of appropriate systems to and support the functions of the Board. The Audit c. To review their audit reports; • Internal Audit and Audit Committee Committee is appointed by the Board of Directors manage these risks. The Matrix meets regularly to d. To consider the nomination of a person or persons from amongst the Directors of the Company and During the year under review, an in-house internal discuss, review and monitor strategic and as auditors; audit department was established to perform operational matters. consists of at least three members, all of whom must e. To review any letter of resignation from the external regular review of the effectiveness of the risk be non-executive directors. The majority of members auditors of the Company; and management, internal control, and governance must be independent directors and at least one f. To review the assistance given by the employees of processes within the Group. The internal audit Conclusion member of the committee; manager advises executive and operational a. must be a member of the Malaysian Institute of the Company to the external auditors. management on the effectiveness of system of The Board is of the view that there is a continuous Accountants (MIA); or process in evaluating and managing significant risks • With the Internal Auditors: internal control and areas for improvement. During b. has at least three years’ working experience and faced by the Group. Because of the changing a. To review the adequacy of the scope, functions the initial set-up, the in-house internal audit i. has passed the examinations specified in Part I of circumstances and conditions, the effectiveness of and resources of the internal audit functions and department was supported by an independent the 1st Schedule of the Accountants Act 1967; or an internal control system may vary over time. The that it has the necessary authority to carry out its audit firm. It is envisaged that the in-house internal ii. is a member of one of the associations of accountants Board continually evaluates and takes measures to work; and audit department will be in full force by end of specified in Part II of the 1st schedule of the strengthen the control environment. year 2009. The head of internal audit reports Accountants Act 1967; or b. To review the internal audit programme, processes, the results of the internal audit programme, c. fulfills such other requirements as prescribed by processes or investigations undertaken and Bursa Malaysia Securities Berhad. This Statement on Internal Control is made in accordance with the resolution of the Board of Directors dated 17 whether or not appropriate actions are taken on February 2009. the recommendations of the internal audit function. No Alternate Director has been appointed as a member of the Audit Committee. The Chairman of • On Financial Reporting: the Audit Committee is elected among the members To review the quarterly results and year-end and is an independent non-executive director. If a financial statements, prior to the approval by the member of the Audit Committee resigns, dies or for Board of Directors, focusing particularly on: any reason ceases to be a member with the result i. Changes in or implementation of major accounting that the number of members is reduced to below policies and practices; three, the Board of Directors shall, within three months ii. Significant and unusual events; of that event, appoint such number of new members iii. Significant adjustments arising from the audit; as may be required to make up the minimum number iv.The going concern assumption; and of three members. v. Compliance with accounting standards and other legal requirements. The terms of office and performance of the Audit Committee shall be reviewed by the Board of • On Related Party Transactions: Directors at least once in every three years to Any related party transactions that may arise determine whether the Audit Committee and within the Company or the Group. members have carried out their duties in accordance with their terms of reference.

3 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 7 STATEMENT ON INTERNAL CONTROL AUDIT COMMITTEE REPORT

3 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 7 AUDIT COMMITTEE REPORT GROUP PROPERTY PARTICULARS

• Other matters: 6. Meetings and Minutes Listed below are the particulars of the properties referred to in Notes 14, 15 and 20 to the Financial Statements: To review such other functions as may be agreed Approximate Approximate Net Book Value a. Audit Committee meetings are held not fewer by the Audit Committee and the Board of Directors. Location Brief Land Area Date of Age of Building as at 31/12/2008 than four times a year and the internal auditors of Property Description (sq. ft.) Tenure Acquisition (years)* (RM’000) 4. Authority and external auditors will attend the meetings. Other members of the Board may attend the 1. Lots 24, 29-31 MIEL Trading 85,895 99 years lease 29.9.1972 & 31 360 Industrial Estate Prai Depot expiring in year 20.3.1978 The Audit Committee shall: meetings upon the invitation of the Committee. 2071 a. Have authority to investigate any matter within its b. At least twice a year, the Committee shall meet 2. Farming 11,288,138 17 lots 5.11.1985 34 659 terms of reference; the external auditors without presence of any Mukim of Ulu Kinta and Sungei Raja, Lands freehold, 3 lots executive directors and management of the b. Have the resources which are required to perform Perak with 60 years its duties; Company. There is a continuous engagement, lease expiring c. Have full and unrestricted access to any information both formally and informally between the in year 2045 pertaining to the Company and the Group; Chairman of the Audit Committee and the 3. Lot 66134, District of Factory and 264,209 60 years lease 9.1.1989 37 d. Have direct communication channels with the General Manager Finance of the Company, as Kinta, Perak Trading expiring in year well as the external auditors, in order for the Audit Depot 2033 external auditors and person(s) carrying out the 809 internal function activity; Committee to be kept informed of matters 4. Lot 154475, District Factory and 52,554 60 years lease 30.11.1988 37 affecting the Company. of Kinta, Perak Trading expiring in year e. Be able to obtain external professional advice; and Depot 2048 } c. To form a quorum, a majority of members present f. Be able to convene meetings with the external must be independent directors. 5. Lot 65644, District of Factory and 218,876 60 years lease 11.4.1994 37 auditors, excluding the attendance of the executive d. Minutes of each meeting shall be kept and Kinta, Perak Trading expiring in year members of the Audit Committee, whenever Depot 2033 distributed to each member of the Committee. 1,267 deemed necessary. 6. Lot 154474, District Factory and 65,659 60 years lease 12.1.1996 37 e. The Chairman of the Committee shall report on of Kinta, Perak Trading expiring in year each meeting to the Board. Depot 2048 } 5. Activities of the Audit Committee f. The Secretary to the Committee shall be the 7. Lot 6843 (PT 2987), Industrial 2,178,000 99 years lease 15.3.1996 - In line with the terms of reference, the Committee Company Secretary. Mukim Bidor, Land expiring in year during the year ended 31 December 2008:- g. Detailed audit reports by the internal auditors and Daerah Batang 2094 a. reviewed the audit plans of the Company and the respective management responses are Padang, Perak 6,748 the Group for the year which were prepared by circulated to the members of the Committee 8. PT 2988, Mukim Bidor Industrial 2,093,930 99 years lease 29.6.1996 - both the external and internal auditors; before each meeting of the Committee at which Daerah Batang Land expiring in year } Padang, Perak 2094 b. reviewed the audit reports for the Company and the said reports are tabled. the Group prepared by the external and internal 9. 7, Jalan Tandang, Corporate 125,235 99 years lease 8.9.1977 49 4,600 Petaling Jaya, Office, expiring in year auditors, the major findings by the auditors and 7. Members Record of Attendance During Selangor Factory and 2058 the management’s responses thereto; the Year Ended 31 December 2008 Trading c. reviewed the quarterly and annual reports of the Number of Depot Company and the Group and thereafter submitting Name of Directors Meetings Attended 10. Lots 191 & 121, Shah Factory and 428,140 99 years lease 5.11.1981 & 27 4,790 them to the Board for consideration and approval; Dato’ Mohamed Nizam bin 5/5 Alam Industrial Trading expiring in year 27.12.1983 d. reviewed the findings of investigations conducted Abdul Razak (Chairman) Estate, Shah Alam Depot 2074 and 2073 during the year and the management’s responses Brigadier General (R) Dato’ 5/5 respectively thereto; Yahya bin Yusof 11. Lot PT 645-650, Trading 52,830 66 years lease 3.11.1993 13 882 e. reviewed the related party transactions; and Dato’ N. Sadasivan a/l 5/5 Mukim Panchor, Depot expiring in year N.N. Pillay Daerah Kemumin 2048 f. considered and recommended to the Board for Kota Bharu, Razman Hafidz bin Abu Zarim 5/5 approval of the audit fees payable to the internal Kelantan Pearl Foong Lye Fong 5/5 and external auditors. 12. Lot 147A, Kawasan Trading 209,611 66 years lease 4.11.1980 26 571 Perindustrian Depot expiring in year Semambu, Kuantan, 2046 Pahang 13. Lots K-70 & 71, Trading 43,560 Freehold Land 25.9.1995 12 854 Temerluh Industrial Depot Park (Phase One) Mentakab 14. H.S. (M) 2458 Factory and 298,769 Interest in 6.12.1990 38 8,900 (formerly known as Trading perpetuity Lot 1151-1154), Depot subject to Mukim of Plentong, payment of Johor annual rent * The approximate age of building denotes the age of the oldest building.

3 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 9 AUDIT COMMITTEE REPORT GROUP PROPERTY PARTICULARS

3 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 3 9 GROUP PROPERTY PARTICULARS ANALYSIS OF SHAREHOLDINGS AS AT 12 MARCH 2009

Approximate Approximate Net Book Value No. of Shareholders : 4,811 Location Brief Land Area Date of Age of Building as at 31/12/2008 Class of Shares : Ordinary shares of RM1.00 each Tenure of Property Description (sq. ft.) Acquisition (years)* (RM’000) Voting Rights : 1 vote per ordinary share 15. District of Kluang, Industrial 4,523,096 Interest in 10.11.1994 - 7,054 Mukim Sungai Benut Land perpetuity Johor DISTRIBUTION OF SHAREHOLDINGS 16. Lot 2050 (formerly Factory and 144,550 60 years lease 12.11.1984 23 1,117 No. of Holders Holdings Total Holdings % known as Lots Trading expiring in year 1340-1346) Sec.66, Depot 2027 195 1 - 99 4,055 0.002 Kuching, Sarawak 454 100 - 1,000 257,372 0.168 17. Lot 1347, Sec.66, Industrial 213,836 60 years lease 7.9.1996 11 3,509 1,001 - 10,000 10,566,627 6.919 Kuching, Sarawak Land expiring in year 596 10,001 - 100,000 14,648,429 9.592 2027 3,172 56 100,001 - 7,635,367 33,857,637 22.171 18. Lot 1348, Sec.66, Industrial 102,279 60 years lease 7.9.1996 12 1 7,635,368 and above 93,373,249 61.145 Kuching, Sarawak Land expiring in year Total 4,811 152,707,369# 100.00 2027 } 19. Lot 30, Block 19, Trading 65,732 60 years lease 4.4.1979 28 212 Seduan Land Depot expiring in year # Total Holdings is based on the issued and paid-up share capital less 839,900 Treasury Shares as at 12 March 2009. District, Sibu, 2039 Sarawak 20. Lot 4183 (formerly Trading 95,347 60 years lease 29.8.1994 13 1,674 STATEMENT OF DIRECTORS’ INTEREST known 1732-1750) Depot expiring in year DIRECT INTEREST DEEMED INTEREST Block 5, Lambir Land 2054 No. Name No. of Shares Held % No. of Shares Held % District, Miri, Sarawak 1. Philip Ng Chee Tat Nil Nil Nil Nil 21. Lot 1632, Kemena Industrial 60,084 60 years lease 8.7.1998 - 369 2. Tjong Yik Min Nil Nil Nil Nil Land District, Bintulu, Land expiring in year 3. Ow Tin Nyap 18,000 Negligible *24,000 Negligible Sarawak 2058 4. Brig. Gen. (R) Dato’ Yahya Bin Yusof Nil Nil Nil Nil 22. Lot 71, Sedco Trading 56,350 60 years lease 20.9.1990 17 737 5. Dato’ Mohamed Nizam bin Abdul Razak Nil Nil Nil Nil Industrial Estate, Depot expiring in year 6. Dato’ N. Sadasivan a/l N.N. Pillay Nil Nil Nil Nil Kota Kinabalu, 2034 7. Razman Hafidz Bin Abu Zarim Nil Nil Nil Nil Sabah 8. Koh Boon Hwee Nil Nil Nil Nil Total 44,775 9. Pearl Foong Lye Fong Nil Nil Nil Nil

* The approximate age of building denotes the age of the oldest building. * Deemed Interest by virtue of shares held by spouse.

SUBSTANTIAL SHAREHOLDER (AS PER REGISTER OF SUBSTANTIAL SHAREHOLDERS) No. Name No. of Shares Held % of Shareholdings 1. YHS (Singapore) Pte. Ltd. 93,373,249 61.145 2. Yeo Hiap Seng Limited *93,373,249 61.145

* Deemed Interest through YHS (Singapore) Pte. Ltd.

4 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 1 GROUP PROPERTY PARTICULARS ANALYSIS OF SHAREHOLDINGS AS AT 12 MARCH 2009

* The approximate age of building denotes the age of the oldest building. * Deemed Interest by virtue of shares held by spouse.

* Deemed Interest through YHS (Singapore) Pte. Ltd.

4 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 1 ANALYSIS OF SHAREHOLDINGS ANALYSIS OF SHAREHOLDINGS AS AT 12 MARCH 2009 AS AT 12 MARCH 2009

LIST OF 30 LARGEST SHAREHOLDERS LIST OF 30 LARGEST SHAREHOLDERS (CONTINUED)

No. Name No. of Shares Held % of Shareholdings No. Name No. of Shares Held % of Shareholdings 1. YHS (Singapore) Pte. Ltd. 93,373,249 61.145 24. Tan Jin Tuan 229,600 0.150

2. Lembaga Tabung Angkatan Tentera 6,584,400 4.311 25. Chong Cheong Leong 223,600 0.146

3. Cartaban Nominees (Asing) Sdn Bhd 6,105,240 3.997 26. Dato' Borhan Bin Kuntom 180,000 0.117 SCBHK for Platinum Broking Company Limited-Client A/C 27. Meng Hin Holdings Sdn Bhd 163,900 0.107 4. Lembaga Tabung Haji 4,663,400 3.053 28. HDM Nominees (Asing) Sdn Bhd 158,200 0.103 5. Amanah Raya Nominees (Tempatan) Sdn Bhd 1,885,680 1.234 UOB Kay Hian Pte Ltd For Liew Kheng Eng @ Lim Kheng Eng Amanah Saham Malaysia 29. Malaysian Reinsurance Berhad 152,400 0.099 6. Alliancegroup Nominees (Tempatan) Sdn Bhd 1,147,200 0.751 Pheim Asset Management Sdn Bhd for Employees Provident Fund 30. Citigroup Nominees (Tempatan) Sdn Bhd 150,800 0.098 Exempt An For OCBC Securities Private Limited 7. Hamzah Bin Bakar 1,018,300 0.666 (Client A/c-R ES) 123,948,274 81.150 8. HSBC Nominees (Tempatan) Sdn Bhd 988,520 0.647 HSBC (M) Trustee Bhd For Maakl Al-Fauzan (5170)

9. Permodalan Nasional Berhad 946,680 0.619

10. Shoptra Jaya (M) Sdn Bhd 804,000 0.526

11. Cimsec Nominees (Asing) Sdn Bhd 567,600 0.371 Exempt An For CIMB-GK Securities Pte Ltd (Retail Clients)

12. Citigroup Nominees (Asing) Sdn Bhd 567,225 0.371 Exempt An For OCBC Securities Private Limited (Client A/c-NR)

13. Malaysian Reinsurance Berhad 566,600 0.371

14. Amsec Nominees (Asing) Sdn Bhd 520,000 0.340 Amfraser Securities Pte. Ltd. for Lee Kim Chong (125703)

15. Affin Nominees (Asing) Sdn Bhd 505,200 0.330 UOB Kay Hian Pte Ltd for Goi Seng Hui

16. Tan Jin Tuan 436,400 0.285

17. Citigroup Nominees (Asing) Sdn Bhd 355,320 0.232 CBNY for DFA Emerging Markets Fund

18. Zulkifli Bin Hussain 324,000 0.212

19. HSBC Nominees (Asing) Sdn Bhd 307,200 0.201 HPBN for Hartlane Enterprises Inc

20. Citigroup Nominees (Asing) Sdn Bhd 282,000 0.184 Exempt An for Merrill Lynch Pierce Fenner & Smith Incorporated (Foreign)

21. Soo Ah Han @ Soo Tong Min 275,000 0.180

22. Woo Yu Chee 234,960 0.153

23. HDM Nominees (Asing) Sdn Bhd 231,600 0.151 UOB Kay Hian Pte Ltd for Khoo Beng Hock Michael

4 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 3 ANALYSIS OF SHAREHOLDINGS ANALYSIS OF SHAREHOLDINGS AS AT 12 MARCH 2009 AS AT 12 MARCH 2009

LIST OF 30 LARGEST SHAREHOLDERS LIST OF 30 LARGEST SHAREHOLDERS (CONTINUED)

No. Name No. of Shares Held % of Shareholdings No. Name No. of Shares Held % of Shareholdings 1. YHS (Singapore) Pte. Ltd. 93,373,249 61.145 24. Tan Jin Tuan 229,600 0.150

2. Lembaga Tabung Angkatan Tentera 6,584,400 4.311 25. Chong Cheong Leong 223,600 0.146

9. Permodalan Nasional Berhad 946,680 0.619

10. Shoptra Jaya (M) Sdn Bhd 804,000 0.526

11. Cimsec Nominees (Asing) Sdn Bhd 567,600 0.371 Exempt An For CIMB-GK Securities Pte Ltd (Retail Clients)

12. Citigroup Nominees (Asing) Sdn Bhd 567,225 0.371 Exempt An For OCBC Securities Private Limited (Client A/c-NR)

13. Malaysian Reinsurance Berhad 566,600 0.371

14. Amsec Nominees (Asing) Sdn Bhd 520,000 0.340 Amfraser Securities Pte. Ltd. for Lee Kim Chong (125703)

15. Affin Nominees (Asing) Sdn Bhd 505,200 0.330 UOB Kay Hian Pte Ltd for Goi Seng Hui

16. Tan Jin Tuan 436,400 0.285

17. Citigroup Nominees (Asing) Sdn Bhd 355,320 0.232 CBNY for DFA Emerging Markets Fund

18. Zulkifli Bin Hussain 324,000 0.212

19. HSBC Nominees (Asing) Sdn Bhd 307,200 0.201 HPBN for Hartlane Enterprises Inc

20. Citigroup Nominees (Asing) Sdn Bhd 282,000 0.184 Exempt An for Merrill Lynch Pierce Fenner & Smith Incorporated (Foreign)

21. Soo Ah Han @ Soo Tong Min 275,000 0.180

22. Woo Yu Chee 234,960 0.153

23. HDM Nominees (Asing) Sdn Bhd 231,600 0.151 UOB Kay Hian Pte Ltd for Khoo Beng Hock Michael

4 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 3 NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Thirty-Fifth Annual General Meeting of Yeo Hiap Seng (Malaysia) Berhad (“YHSM”) (c) The authority conferred by this resolution will be effective upon passing of this resolution will be held at Victorian Ballroom, Level 1, Holiday Villa Subang, 9, Jalan SS12/1, 47500 Subang Jaya, Selangor Darul and will continue in force until: Ehsan on Wednesday, the 22nd day of April, 2009 at 2.00 p.m. to transact the following business:- (i) the conclusion of the next Annual General Meeting (“AGM”), at which time the said authority will lapse, unless by an ordinary resolution passed at that meeting, 1. To receive the Audited Financial Statements for the year ended 31 December 2008 the authority is renewed, either unconditionally or subject to conditions; or together with the Reports of the Directors and Auditors thereon; Resolution 1 (ii) the expiration of the period within which the next AGM of the Company after 2. To sanction the declaration of a Final Dividend of 6% gross less 25% Malaysian Income Tax in that date is required to be held pursuant to Section 143(1) of the Act (but shall respect of the financial year ended 31 December 2008; Resolution 2 not extend to such extensions as may be allowed pursuant to Section 143(2) of the Act); or 3. To re-elect the following Directors who retire pursuant to Article 75 of the Company’s Articles

of Association:- (iii) revoked or varied by an ordinary resolution passed by the shareholders in a (i) Mr Philip Ng Chee Tat Resolution 3 general meeting; (ii) Mr Ow Tin Nyap Resolution 4 (iii) Ms Pearl Foong Lye Fong Resolution 5 whichever occurs first;

4. To re-elect Mr Koh Boon Hwee who retires pursuant to Article 80 of the Company’s Articles of (d) Upon completion of the purchase(s) of the shares by the Company, the shares shall Association; Resolution 6 be dealt with in the following manner: (i) cancel the YHSM Shares so purchased; and/or 5. To re-appoint Brigadier General (R) Dato’ Yahya bin Yusof who retires pursuant to Section 129 of the Companies Act, 1965 and to hold office until the next Annual General Meeting; Resolution 7 (ii) retain the YHSM Shares so purchased in treasury, to be distributed as dividend to the shareholders and/or to be resold on the market of the Bursa Securities and/or 6. To approve the payment of Directors’ Fees amounting to RM100,000 for the financial year to be subsequently cancelled; and/or ended 31 December 2008; Resolution 8 (iii) retain part of the YHSM Shares so purchased as treasury shares and cancel the 7. To re-appoint Messrs. PricewaterhouseCoopers as auditors of the Company and to authorise remainder. the Directors to fix their remuneration. Resolution 9 THAT the Directors of the Company be and are hereby authorised to take all such steps 8. As Special Business, to consider and, if thought fit, to pass the following resolutions:- as are necessary and entering into all other agreements, arrangements and guarantees (A) Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, 1965 with any party or parties to implement, finalise and give full effect to the aforesaid purchase with full powers to assent to any conditions, modifications, revaluations, “THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are variations and/or amendments (if any) as may be imposed by the relevant authorities/ hereby authorised to issue shares in the Company at any time until the conclusion of parties from time to time to implement or to effect the purchase of its own shares.” Resolution 11 the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the (C) Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue aggregate number of shares to be issued does not exceed ten per centum (10%) of the or Trading Nature issued and paid-up ordinary share capital of the Company for the time being, subject

always to the approvals of the relevant regulatory authorities.” Resolution 10 “THAT the Company and/or its subsidiaries be and is/are hereby authorised to enter into recurrent related party transactions from time to time with related parties who may (B) Proposed Share Buy-Back be a Director, a major shareholder of the Company and/or its subsidiaries or a person connected with such a Director or a major shareholder, as specified in Section 1.3 of “THAT subject to the Companies Act, 1965, provisions of the Company's Memorandum Part B of the Circular to Shareholders dated 31 March 2009 subject to the following: and Articles of Association and the requirements of Bursa Malaysia Securities Berhad (a) the transactions are of a revenue or trading in nature which are necessary for the (“Bursa Securities”) and any other relevant authorities, and other relevant approvals, day-to-day operations of the Company and/or its subsidiaries and are transacted the Directors of the Company be and are hereby authorised to purchase its own shares on terms consistent or comparable with market or normal trade practices and/or through Bursa Securities subject to the following: based on normal commercial terms not more favourable to the related parties (a) The maximum number of ordinary shares of RM1.00 each in the Company (“YHSM than those generally available to the public and/or will not to the detriment of the Shares”) which may be purchased by the Company shall not exceed ten per minority shareholders; and centum (10%) of the issued and paid-up ordinary share capital of the Company at any point in time; (b) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate together with a breakdown of (b) The maximum fund to be allocated by the Company for the purpose of purchasing the aggregate value of the transactions during the financial year based on the its shares shall not exceed the retained profits and share premium accounts of the type of transactions, names of the related parties and their relationship. Company. As at the latest financial year ended 31 December 2008, the audited retained profits and share premium accounts of the Company stood at RM39,625,004.41 and RM34,445,915.24 respectively;

4 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 5 NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING

THAT the Mandate given by the shareholders of the Company shall only continue to be EXPLANATORY NOTES ON SPECIAL BUSINESS in force until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required to be Ordinary Resolution 10 pertaining to Authority to Allot and Issue Shares Pursuant to Section held pursuant to section 143(1) of the Companies Act, 1965 (the “Act”) (but shall not 132D of the Companies Act, 1965 extend to such extension as may be allowed pursuant to section 143(2) of the Act); The proposed Ordinary Resolution 10, if passed, will authorize the Directors to allot and issue shares up to 10% of the unless revoked or varied by ordinary resolution of the shareholders of the Company in issued and paid-up capital of the Company for the time being for such purposes as the Directors consider would general meeting. be in the best interest of the Company, This would avoid any delay and costs in convening a general meeting to specifically approve such an issue of shares. This authority unless, revoked or varied at a general meeting, will expire AND THAT the Directors of the Company be authorised to complete and do such acts at the next Annual General Meeting of the Company. and things as they may consider expedient or necessary to give full effect to the shareholders’ mandate.” Resolution 12 Ordinary Resolution 11 pertaining to the Proposed Share Buy-Back 9. To transact any other ordinary business of the Company for which due notice shall have The proposed Ordinary Resolution 11, if passed, will empower the Directors of the Company to purchase the been given. Company’s shares up to ten per cent (10%) of the issued and paid-up share capital of the Company by utilizing the funds allocated which shall not exceed the total retained earnings and share premium account of the Company. Further information on the Proposed Share Buy-Back is set out in the Circular to Shareholders dated 31 March 2009, NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT which is despatched together with the Company’s 2008 Annual Report. NOTICE IS HEREBY ALSO GIVEN THAT a final dividend of 6% less 25% Malaysian Income Tax in respect of financial year ended 31 December 2008, if approved by the shareholders at the forthcoming Annual General Meeting, will be Ordinary Resolution 12 pertaining to the Proposed Shareholders’ Mandate for Recurrent paid on 8 July 2009. The entitlement date for the dividend payment is 22 June 2009. Related Party Transactions of a Revenue or Trading Nature

A Depositor shall qualify for entitlement only in respect of:- The proposed Ordinary Resolution 12, if passed, will allow YHSM Group to enter into Recurrent Related Party a) Shares transferred into the Depositor’s Securities Account before 5.00 p.m. on 22 June 2009 in respect of Transactions pursuant to paragraph 10.09 of the Listing Requirements. Further information on the Proposed ordinary transfers; and Shareholders’ Mandate for Recurrent Related Party Transactions is set out in the Circular to Shareholders dated 31 March 2009, which is despatched together with the Company’s 2008 Annual Report. b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By Order of the Board, STATEMENT ACCOMPANYING NOTICE OF THIRTY-FIFTH ANNUAL GENERAL MEETING Sau Ean Nee Secretary FURTHER DETAILS OF DIRECTORS WHO ARE STANDING FOR RE-ELECTION

Petaling Jaya 31 March 2009 Further details of Mr Philip Ng Chee Tat, Mr Ow Tin Nyap, Ms Pearl Foong Lye Fong, Mr Koh Boon Hwee and Brigadier General (R) Dato’ Yahya bin Yusof, who are standing for re-election as Directors are set out in their respective profiles which appear in the Directors’ Profile on pages 17 to 21 of this Annual Report. Save for Mr Ow Tin Nyap, all NOTES: other Directors who are standing for re-election has no interest in the securities of the Company and details of the securities holding of Mr Ow Tin Nyap is disclosed on page 41 of this Annual Report. 1. A member of the Company entitled to attend and vote at the abovementioned meeting is entitled to appoint one proxy to attend and vote in his stead. Such proxy need not be a member of the Company.

2. The instrument of appointing a proxy, in the case of an individual, shall be signed by the appointer or by his attorney duly authorised in writing, and in the case of a corporation, shall be either given under the hand of an officer or attorney of the corporation duly authorised.

3. The instrument appointing the proxy must be deposited at the registered office of the Company at No. 7, Jalan Tandang, 46050 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

4 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 7 NOTICE OF ANNUAL GENERAL MEETING NOTICE OF ANNUAL GENERAL MEETING

By Order of the Board, STATEMENT ACCOMPANYING NOTICE OF THIRTY-FIFTH ANNUAL GENERAL MEETING Sau Ean Nee Secretary FURTHER DETAILS OF DIRECTORS WHO ARE STANDING FOR RE-ELECTION

4 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 4 7 FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

50 DIRECTORS’ REPORT 53 STATEMENT BY DIRECTORS 53 STATUTORY DECLARATION 54 INDEPENDENT AUDITORS’ REPORT 56 INCOME STATEMENTS 57 BALANCE SHEETS 58 STATEMENT OF CHANGES IN EQUITY 60 CASH FLOW STATEMENTS 62 NOTES TO THE FINANCIAL STATEMENTS

Yeo Hiap Seng (Malaysia) Berhad (Yeo’s), a committed responsible corporate citizen, is passionate about environmental conservation. It is the first food and beverage company to introduce its Asian Drink products in Tetra Pak packaging format. All Tetra Pak cartons within Yeo’s range of products are designed to be environmentally friendly. These Tetra Pak cartons are made up of wood in the form of paperboard as well as thin layers of aluminium and polyethylene. The 74% of paperboard comes from a natural and renewable resources which are grown in responsibly managed forests, where more trees are grown than are harvested.

These beverage cartons can be recycled into many products, including bags, toilet paper, notebooks and egg containers (for more information, please visit www.TetraPakandYou.com )

The ensuing financial statements are printed on papers made from recycled Tetra Pak cartons. FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

These beverage cartons can be recycled into many products, including bags, toilet paper, notebooks and egg containers (for more information, please visit www.TetraPakandYou.com )

The ensuing financial statements are printed on papers made from recycled Tetra Pak cartons. DIRECTORS' REPORT DIRECTORS' REPORT

The Directors hereby submit their annual report together with the audited financial statements of the Group and DIRECTORS Company for the financial year ended 31 December 2008. The Directors who have held office during the period since the date of the last report are as follows: PRINCIPAL ACTIVITIES Philip Ng Chee Tat Tjong Yik Min The Company is principally involved in the production, marketing and sale of beverage and food products. Ow Tin Nyap Dato’ Mohamed Nizam bin Abdul Razak The principal activities of the subsidiaries are shown in Note 16 to the financial statements. Brigadier General (R) Dato’ Yahya bin Yusof Dato’ N. Sadasivan a/l N.N. Pillay There have been no significant changes in the nature of these activities of the Group and Company during the Razman Hafidz bin Abu Zarim financial year. Pearl Foong Lye Fong Koh Boon Hwee (Appointed on 20 January 2009) FINANCIAL RESULTS Group Company In accordance with Article 80 of the Company’s Article of Association, Koh Boon Hwee who was appointed during RM'000 RM'000 the period, retires at the forthcoming Annual General Meeting and, being eligible, offers himself for election. Profit/(loss) for the financial year 2,241 (1,463) In accordance with Article 75 of the Company's Articles of Association, Philip Ng Chee Tat, Ow Tin Nyap and Pearl Attributable to: Foong Lye Fong will retire at the forthcoming Annual General Meeting and being eligible, offer themselves for Equity holders of the Company 2,229 (1,463) re-election. Minority interest 12 - 2,241 (1,463) In accordance with Section 129(6) of the Companies Act, 1965, Brigadier General (R) Dato’ Yahya bin Yusof, being over seventy years of age, will retire at the forthcoming Annual General Meeting and being eligible, offers himself DIVIDENDS for re-appointment to hold office until the conclusion of the next Annual General Meeting. The dividends on ordinary shares paid or declared by the Company since 31 December 2007 were as follows: DIRECTORS' BENEFITS RM'000 During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being In respect of the financial year ended 31 December 2007 as shown in the Directors' report of that financial year: arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Final gross dividend of 9 sen per share, less income tax of 26%, paid on 3 July 2008 10,170 Since the end of the previous financial year, no Director has received or become entitled to receive a benefit In respect of the financial year ended 31 December 2008: (other than Directors’ remuneration as disclosed in Note 8 to the financial statements) by reason of a contract Interim gross dividend of 5 sen per share, tax exempt, paid on 15 October 2008 7,635 made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a 17,805 company in which he has a substantial financial interest except that certain Directors received remuneration from the Company’s immediate and penultimate holding companies. The Directors now recommend the payment of a final gross dividend of 6 sen per share on 152,708,000 ordinary shares (less treasury shares), less income tax of 25%, in respect of the financial year ended 31 December 2008, DIRECTORS' INTERESTS IN SHARES amounting to RM6,872,000 which is, subject to the approval of shareholders at the forthcoming Annual General Meeting of the Company. The book closure and the payment dates for the dividend entitlement will be According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end determined at a later date. of the financial year in shares in the Company is as follows: Number of ordinary shares of RM1.00 each in the Company RESERVES AND PROVISIONS At At 1/1/2008 Bought Sold 31/12/2008 All material transfers to or from reserves and provisions during the financial year are shown in the financial Direct interest statements. Ow Tin Nyap 18,000 - - 18,000

TREASURY SHARES Deemed interest Ow Tin Nyap 24,000 - - 24,000 During the financial year, the Company purchased 2,000 of its own shares from the open market on the Bursa Malaysia Securities Berhad for RM2,835. The average price paid for the shares purchased was approximately Other than as disclosed above, according to the register of Directors’ shareholdings, the Directors in office at the RM1.42 per share. end of the financial year did not hold any interest in shares in the Company or shares of its related companies during the financial year. Details of the treasury shares are set out in Note 31(a) to the financial statements. STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the income statements and balance sheets were made out, the Directors took reasonable steps: (a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

5 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 1 DIRECTORS' REPORT DIRECTORS' REPORT

5 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 1 DIRECTORS' REPORT STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED) We, Dato’ Mohamed Nizam bin Abdul Razak and Ow Tin Nyap, two of the Directors of Yeo Hiap Seng (Malaysia) Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 56 to 93 are drawn up (b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of so as to give a true and fair view of the state of affairs of the Group and Company as at 31 December 2008 and of business their values as shown in the accounting records of the Group and Company had been written down the results and cash flows of the Group and Company for the financial year ended on that date in accordance with to an amount which they might be expected so to realise. the provisions of the Companies Act, 1965 and the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities. 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 Signed on behalf of the Board of Directors in accordance with their resolution dated 12 March 2009. in the financial statements of the Group and 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 DATO’ MOHAMED NIZAM BIN ABDUL RAZAK Company misleading; or DIRECTOR (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company misleading or inappropriate. OW TIN NYAP DIRECTOR

No contingent or other liability has become enforceable or is likely to become enforceable within the period of Petaling Jaya twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability 12 March 2009 of the Group or Company to meet their obligations when they fall due.

At the date of this report, there does not exist: (a) any charge on the assets of the Group or Company which has arisen since the end of the financial year STATUTORY DECLARATION which secures the liability of any other person; or PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 (b) any contingent liability of the Group or Company which has arisen since the end of the financial year. I, Ong Chay Seng, the officer primarily responsible for the financial management of Yeo Hiap Seng (Malaysia) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or Berhad, do solemnly and sincerely declare that the financial statements set out on pages 56 to 93 are, in my the financial statements which would render any amount stated in the financial statements misleading. opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. In the opinion of the Directors: (a) the results of the Group’s and Company's operations during the financial year were not substantially affected by 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, ONG CHAY SENG transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and Company for the financial year in which this report is made. Subscribed and solemnly declared by the abovenamed Ong Chay Seng, IMMEDIATE, PENULTIMATE AND ULTIMATE HOLDING COMPANIES Petaling Jaya The Directors regard YHS (Singapore) Pte. Ltd., a company incorporated in Singapore, as the immediate holding company and Yeo Hiap Seng Limited, a company incorporated in Singapore, as the penultimate holding company. 12 March 2009 The Directors regard Far East Organisation Pte. Ltd., a company incorporated in Singapore, as the ultimate holding Before me: company.

AUDITORS A. RATHNASAMY AMN The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. COMMISSIONER FOR OATHS

Signed on behalf of the Board of Directors in accordance with their resolution dated 12 March 2009.

DATO’ MOHAMED NIZAM BIN ABDUL RAZAK DIRECTOR

OW TIN NYAP DIRECTOR

Petaling Jaya 12 March 2009

5 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 3 DIRECTORS' REPORT STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

AUDITORS A. RATHNASAMY AMN The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. COMMISSIONER FOR OATHS

Signed on behalf of the Board of Directors in accordance with their resolution dated 12 March 2009.

DATO’ MOHAMED NIZAM BIN ABDUL RAZAK DIRECTOR

OW TIN NYAP DIRECTOR

Petaling Jaya 12 March 2009

5 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 3 INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF YEO HIAP SENG (MALAYSIA) BERHAD TO THE MEMBERS OF YEO HIAP SENG (MALAYSIA) BERHAD

REPORT ON THE FINANCIAL STATEMENTS OTHER MATTERS We have audited the financial statements of Yeo Hiap Seng (Malaysia) Berhad, which comprise the balance sheets This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the as at 31 December 2008 of the Group and Company, and the income statements, statements of changes in equity Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person and cash flow statements of the Group and Company for the year then ended, and a summary of significant for the content of this report. accounting policies and other explanatory notes, as set out on pages 56 to 93.

Directors’ Responsibility for the Financial Statements PRICEWATERHOUSECOOPERS (No. AF: 1146) The Directors of the Company are responsible for the preparation and fair presentation of these financial Chartered Accountants statements in accordance with the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965. This responsibility includes: designing, implementing and maintaining LEE TUCK HENG internal control relevant to the preparation and fair presentation of financial statements that are free from material (No. 2092/09/10 (J)) misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making Chartered Accountant accounting estimates that are reasonable in the circumstances. Kuala Lumpur Auditors’ Responsibility 12 March 2009 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

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

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

Opinion In our opinion, the financial statements have been properly drawn up in accordance with the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and Company as of 31 December 2008 and of their financial performance and cash flows for the year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ report of all subsidiaries which we have not acted as auditors, which are indicated in Note 16 to the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

5 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 5 INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF YEO HIAP SENG (MALAYSIA) BERHAD TO THE MEMBERS OF YEO HIAP SENG (MALAYSIA) BERHAD

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

(b) We have considered the financial statements and the auditors’ report of all subsidiaries which we have not acted as auditors, which are indicated in Note 16 to the financial statements.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

5 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 5 INCOME STATEMENTS BALANCE SHEETS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 AS AT 31 DECEMBER 2008

GROUP COMPANY GROUP COMPANY 2008 2007* 2008 2007* 2008 2007* 2008 2007* Note RM'000 RM'000 RM'000 RM'000 Note RM'000 RM'000 RM'000 RM'000 Revenue 7 568,836 476,579 285,660 254,390 NON-CURRENT ASSETS Changes in inventories of finished goods Property, plant and equipment 14 88,709 100,453 74,240 81,502 and work-in-progress (1,191) (9,419) 3,611 (14,232) Investment properties 15 11,232 11,636* 2,472 2,740* Raw materials and consumables used (374,699) (311,959) (216,287) (180,954) Investments in subsidiaries 16 - - 93,037 93,037 Staff costs (57,853) (53,979) (29,550) (28,369) Investments in associates 17 - 617 - 560

Depreciation of property, plant and Other investments 18 26,223 27,517 14,494 14,494 equipment 14 (13,607) (13,764) (8,916) (8,956) Intangible asset 19 14,998 16,955 15,971 18,054 Depreciation of investment properties 15 (431) (431)* (295) (295)* Prepaid lease rental 20 14,099 14,472* 9,989 10,206* Amortisation of prepaid lease rental 20 (373) (373)* (217) (217)* Deferred tax assets 21 6,344 6,268 - - Amortisation of intangible asset 19 (1,957) (1,621) (2,083) (2,083) 161,605 177,918 210,203 220,593 Supplies and utilities (10,712) (10,361) (8,985) (8,829) CURRENT ASSETS Repairs and maintenance (10,171) (7,972) (8,655) (6,600) Inventories 22 73,678 73,617 37,423 33,309 Selling and promotional expenses (64,480) (63,887) (3,172) (2,411) Trade and other receivables 23 136,311 107,383 6,676 3,832 Royalty, technical and management fees (6,814) (5,414) (6,677) (4,984) Amount due from immediate holding Other operating expenses (25,058) (24,667) (15,652) (13,491) company 24 12,322 16,252 11,811 15,954 Other operating income 2,421 3,973 10,551 11,083 Amounts due from subsidiaries 24 - - 444,252 376,495 Profit/(loss) from operations 9 3,911 (23,295) (667) (5,948) Amounts due from fellow subsidiaries 24 929 567 929 567 Income from other investments and finance 10 746 1,309 629 42,752 Tax recoverable 1,789 2,591 419 1,268 Share of results of an associate 17 (42) 1,882 - - Deposits, bank and cash balances 25 16,868 45,179 3,642 32,678 Profit/(loss) before tax 4,615 (20,104) (38) 36,804 241,897 245,589 505,152 464,103 Taxation 11 (2,374) 6,507 (1,425) (8,318) Non-current asset held for sale 26 461 846 461 846 Profit/(loss) for the financial year 2,241 (13,597) (1,463) 28,486 242,358 246,435 505,613 464,949 Attributable to: LESS: CURRENT LIABILITIES Equity holders of the Company 2,229 (13,601) (1,463) 28,486 Trade and other payables 27 118,267 124,152 56,354 59,611 Minority interest 12 4 - - Amount due to penultimate holding Profit/(loss) for the financial year 2,241 (13,597) (1,463) 28,486 company 24 330 106 323 101 Basic earnings/(loss) per share (sen) 12 1.5 (8.9) Amounts due to subsidiaries 24 - - 426,671 374,895 Gross dividends per ordinary share (sen) 13 11.00 14.00 11.00 14.00 Tax payable 347 400 - - 118,944 124,658 483,348 434,607 * Restatement through reclassification of amortisation of land under finance lease from depreciation of NET CURRENT ASSETS 123,414 121,777 22,265 30,342 investment properties to amortisation of prepaid lease rental (Note 33(a)). NON-CURRENT LIABILITIES Provision for retirement benefits 28 6,032 5,690 3,482 3,330 Long term payables 29 - 7 - 7 Deferred tax liabilities 21 3,602 3,005 3,215 2,556 9,634 8,702 6,697 5,893 NET ASSETS 275,385 290,993 225,771 245,042 CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY Share capital 31 153,548 153,548 153,548 153,548 Treasury shares 31(a) (1,847) (1,844) (1,847) (1,844) 151,701 151,704 151,701 151,704 Reserves 32 123,459 139,076 74,070 93,338 275,160 290,780 225,771 245,042 MINORITY INTEREST 225 213 - - TOTAL EQUITY 275,385 290,993 225,771 245,042

* Restatement through reclassification of land under finance lease from investment properties to prepaid lease rental (Note 33(b)).

5 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 7 INCOME STATEMENTS BALANCE SHEETS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 AS AT 31 DECEMBER 2008

* Restatement through reclassification of land under finance lease from investment properties to prepaid lease rental (Note 33(b)).

5 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 7 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

NON - ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY DISTRIBUTABLE DISTRIBUTABLE Issued and Foreign Issued and paid-up Share Capital exchange Retained Treasury Minority Total paid-up Share Retained Treasury share capital premium reserve reserves earnings shares Sub-total interest equity share capital premium earnings shares Total Note RM’000 RM’000 RM’000 RM'000 RM’000 RM’000 RM’000 RM’000 RM’000 Note RM’000 RM’000 RM’000 RM’000 RM’000 GROUP COMPANY As at 1 January 2007 128,096 59,897 1 2,441 133,331 (1,349) 322,417 226 322,643 As at 1 January 2007 128,096 59,897 48,077 (1,349) 234,721 Currency translation Profit for the financial year - - 28,486 - 28,486 differences - - - 129 - - 129 - 129 Total recognised income and Income and expense expense for the financial year - - 28,486 - 28,486 recognised directly in Dividends for the financial year equity - - - 129 - - 129 - 129 ended: 13 Loss for the financial - 31 December 2006 (Final) - - (10,033) - (10,033) year - - - - (13,601) - (13,601) 4 (13,597) - 31 December 2007 (Interim) - - (7,637) - (7,637) Total recognised Purchase of treasury shares 31(a) - - - (495) (495) income and expense Bonus issue 25,452 (25,452) - - - for the financial year - - - 129 (13,601) - (13,472) 4 (13,468) As at 31 December 2007 153,548 34,445 58,893 (1,844) 245,042 Dividends for the financial year ended: 13 Loss for the financial year - - (1,463) - (1,463) - 31 December 2006 Total recognised income and (Final) - - - - (10,033) - (10,033) - (10,033) expense for the financial year - - (1,463) - (1,463) - 31 December 2007 Dividends for the financial year (Interim) - - - - (7,637) - (7,637) - (7,637) ended: 13 Dividend attributable - 31 December 2007 (Final) - - (10,170) - (10,170) to minority shareholders ------(17) (17) - 31 December 2008 (Interim) - - (7,635) - (7,635) Purchase of treasury Purchase of treasury shares 31(a) - - - (3) (3) shares 31(a) - - - - - (495) (495) - (495) As at 31 December 2008 153,548 34,445 39,625 (1,847) 225,771 Bonus issue 31(b) 25,452 (25,452) ------As at 31 December 2007 153,548 34,445 1 2,570 102,060 (1,844) 290,780 213 290,993 Currency translation differences - - - (41) - - (41) - (41) Income and expense recognised directly in equity - - - (41) - - (41) - (41) Profit for the financial year - - - - 2,229 - 2,229 12 2,241 Total recognised income and expense for the financial year - - - (41) 2,229 - 2,188 12 2,200 Dividends for the financial year ended: 13 - 31 December 2007 (Final) - - - - (10,170) - (10,170) - (10,170) - 31 December 2008 (Interim) - - - - (7,635) - (7,635) - (7,635) Purchase of treasury shares 31(a) - - - - - (3) (3) - (3) As at 31 December 2008 153,548 34,445 1 2,529 86,484 (1,847) 275,160 225 275,385

5 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 9 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

5 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 5 9 CASH FLOW STATEMENTS CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

GROUP COMPANY GROUP COMPANY 2008 2007 2008 2007 2008 2007 2008 2007 Note RM'000 RM'000 RM'000 RM'000 Note RM'000 RM'000 RM'000 RM'000 CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Profit/(loss) for the financial year 2,241 (13,597) (1,463) 28,486 Property, plant and equipment, Adjustments for non cash items: - proceeds from disposal 48 94 4 45 Property, plant and equipment: - additions (1,978) (4,389) (1,724) (2,140) - depreciation 13,607 13,764 8,916 8,956 Proceeds from disposal of non-current - written off 83 18 64 13 assets held for sale 1,025 155 1,025 155 - (gain)/loss on disposal (42) (89) 2 (43) Investment properties Amortisation of prepaid lease rental 373 373 217 217 - additions (27) - (27) - Gain on disposal of non-current asset held Repayment of long term payables - (3,651) - (3,651) for sale (179) (110) (179) (110) Interest received 710 1,253 691 1,270 Depreciation of investment properties 431 431 295 295 Net dividends received from: Inventories: - subsidiaries - - - 28,838 - written off 4,078 4,151 1,129 2,539 - an associate - 2,093 - 2,093 - net allowance for obsolescence 923 1,598 779 933 - a quoted investment 109 171 - - Net allowance for doubtful receivables – Purchase of quoted investments - (22,172) - (10,360) trade 1,198 528 121 - Purchase of treasury shares (3) (495) (3) (495) Net bad debts written off/(recovered) 312 - (480) - Net cash flows from investing activities (116) (26,941) (34) 15,755 Amortisation of intangible asset 1,957 1,621 2,083 2,083 CASH FLOWS FROM FINANCING ACTIVITIES Share of loss/(profit) of an associate 42 (1,882) - - Dividends paid to: Net provision for retirement benefits 706 9 375 447 - equity holders of the Company (17,805) (17,670) (17,805) (17,670) Interest income (637) (1,138) (629) (1,155) - minority interest - (17) - - Unrealised loss on foreign exchange 2,105 458 4,903 393 Net cash flows from financing activities (17,805) (17,687) (17,805) (17,670) Impairment loss of an associate 114 - 99 - NET DECREASE IN CASH AND CASH Impairment loss of a quoted investment 1,294 - - - EQUIVALENTS (28,494) (24,650) (29,363) (22,055) Gross dividend income from: Currency translation differences 183 (801) 327 - - subsidiaries - - - (39,504) CASH AND CASH EQUIVALENTS AT - an associate - - - (2,093) BEGINNING OF FINANCIAL YEAR 45,179 70,630 32,678 54,733 - a quoted investment (109) (171) - - CASH AND CASH EQUIVALENTS AT END OF Taxation 2,374 (6,507) 1,425 8,318 FINANCIAL YEAR 25 16,868 45,179 3,642 32,678 30,871 (543) 17,657 9,775 Changes in working capital: Inventories (5,068) 7,723 (6,021) 15,116 Trade and other receivables (31,636) 23,948 (3,210) 1,842 Penultimate holding company - 6 (101) 3 Ultimate holding company - - 250 - Immediate holding company 3,633 6,580 4,208 7,775 Subsidiaries - - (21,117) (33,735) Fellow subsidiaries 150 812 (369) 812 Trade and other payables (7,055) (18,988) (2,681) (20,372) Cash flows from operations (9,105) 19,538 (11,384) (18,784) Tax paid (1,674) (2,490) - (1,092) Tax refund 570 3,334 83 - Retirement benefits paid (364) (404) (223) (264) Net cash flows from operating activities (10,573) 19,978 (11,524) (20,140)

6 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 1 CASH FLOW STATEMENTS CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2008

6 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 1 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

1. GENERAL INFORMATION 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) The principal activities of the Company are in the production, marketing and sale of beverage and food products. (a) Standards, amendment to published standard and interpretations that are effective (continued)

The principal activities of the subsidiaries are shown in Note 16 to the financial statements. The new accounting standards, amendment to published standard and interpretations to existing standards effective for the Group’s and Company's financial year ended 31 December 2008 are as The Company is a public limited liability company, incorporated and domiciled in Malaysia. follows: (continued) (ix) IC Interpretation 2 - Members’ Shares in Co-operative Entities and Similar Instruments The ultimate holding company of the Company is Far East Organisation Pte. Ltd., a company incorporated in Singapore. (x) IC Interpretation 5 - Rights to Interests arising from Decommission, Restoration and Environmental Rehabilitation Funds The address of the registered office of the Company and principal place of business is as follows: (xi) IC Interpretation 6 - Liabilities arising from Participating in a Specific Market – Waste Electrical and No. 7, Jalan Tandang Electronic Equipment 46050 Petaling Jaya Selangor Darul Ehsan (xii) IC Interpretation 7 - Applying the Restatement Approach under FRS 129 Financial Reporting in Hyperinflationary Economies 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Group and Company have been prepared in accordance with the provisions (xiii) IC Interpretation 8 - Scope of FRS 2 Share-based payments of the Companies’ Act, 1965 and the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities. All changes in accounting policies have been made in accordance with the transition provisions in the respective standards, amendment to published standard and interpretations. All standards, amendment The financial statements have been prepared under the historical cost convention except as disclosed in this and interpretations adopted by the Group require retrospective application except for IC Interpretation 8 summary of significant accounting policies. which requires retrospective application subject to the transitional provision of FRS 2. FRS 2 requires retrospective application for all equity instruments granted after 31 December 2004 and not vested at The preparation of financial statements in conformity with MASB Approved Accounting Standards in Malaysia commencement date of the first annual period beginning on or after 1 January 2006. for Entities Other Than Private Entities requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the The adoption of FRS 107, FRS 112, FRS 118, FRS 120, FRS 134, FRS137, amendment to FRS 121, IC 1, IC 2, IC 5, date of the financial statements, and the reported amounts of revenues and expenses during the reported IC 6, IC 7 and IC 8 did not have a material impact on the financial statements of the Group and Company. financial year. It also requires Directors to exercise their judgment in the process of applying the Company’s In summary, accounting policies. Although these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual results may differ. (i) FRS 120, IC 1, IC 2, IC 5, IC 6, IC 7 and IC 8 are not relevant to the Group’s and Company’s operations.

The areas involving higher degree of judgement or complexity, or areas where assumptions and estimates are (ii) Amendment to FRS 121, FRS 107, FRS 112, FRS 118, FRS 134 and FRS 137 had no material effect on the significant to the financial statements, are disclosed in Note 5. Group’s and Company’s policies.

(a) Standards, amendment to published standard and interpretations that are effective The Group has adopted tax base method in which has no impact to the financial statements of the Group and Company upon initial application of this revised FRS 112 Income Taxes. The new accounting standards, amendment to published standard and interpretations to existing standards effective for the Group’s and Company's financial year ended 31 December 2008 are as follows: (b) Standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not been early adopted (i) FRS 107 - Cash Flow Statement The new standards and IC interpretations that are applicable to the Group, but which the Group has not (ii) FRS 118 - Revenue early adopted are as follows: (iii) Amendment to FRS 121 - The Effects of Changes in Foreign Exchange Rates – Net Investment in a (i) FRS 8 Operating Segments (effective for annual period beginning on or after 1 July 2009). FRS 8

Foreign Operation replaces FRS 1142004 Segment Reporting. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting (iv) FRS 112 - Income Taxes purposes. The Group will apply this standard from financial years beginning on 1 January 2010.

(v) FRS 120 - Accounting for Government Grants and Disclosure of Government Assistance The adoption of FRS 8 is not expected to have any material impact on the financial statements of the Group and Company upon initial application of this standard as the segment information used (vi) FRS 134 - Interim Financial Reporting in the financial statements is presented on the same basis as that used for internal reporting purposes.

(vii) FRS 137 - Provisions, Contingent Liabilities and Contingent Assets

(viii) IC Interpretation 1 - Changes in Existing Decommissioning, Restoration and Similar Liabilities

6 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 3 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

(vii) FRS 137 - Provisions, Contingent Liabilities and Contingent Assets

(viii) IC Interpretation 1 - Changes in Existing Decommissioning, Restoration and Similar Liabilities

6 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 3 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Standards and interpretations to existing standards that are applicable to the Group but not yet effective (a) Economic entities in the Group (continued) and have not been early adopted (continued) (i) Subsidiaries (continued) The new standards and IC interpretations that are applicable to the Group, but which the Group has not early adopted are as follows: (continued) Minority interest represents that portion of the profit or loss and net assets of a subsidiary attributable (ii) The following standards will be effective for annual period beginning on or after 1 January 2010. The to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. It is Group will apply these standards from financial periods beginning on 1 January 2010. The Group measured at the minorities' share of the fair value of the subsidiaries' identifiable assets and liabilities has applied the transitional provision in the respective standards which exempts entities from at the acquisition date and the minorities' share of changes in the subsidiaries' equity since that date. disclosing the possible impact arising from the initial application of the standard on the financial statements of the Group and Company. Intragroup transactions, balances and unrealised gains on transactions between Group companies - FRS 139 Financial Instruments : Recognition and Measurement are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the - FRS 7 Financial Instruments : Disclosure asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. (iii) IC Interpretation 9 Reassessment of Embedded Derivatives (effective for annual period beginning on or after 1 January 2010). IC Interpretation 9 requires an entity to assess whether an embedded The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the derivative is required to be separated from the host contract and accounted for as a derivative Group’s share of its net assets as of the date of disposal including the cumulative amount of any when the entity first becomes a party to the contract. Subsequent reassessment is prohibited unless exchange differences that relate to the subsidiary is recognised in the consolidated income statement. there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required. The Group will apply this interpretation from financial years beginning on 1 January 2010. (ii) Transactions with minority interests

The adoption of IC 9 is not expected to have any material impact on the financial statements of the The Group applies a policy of treating transactions with minority interests as transactions with equity Group and Company upon initial application of the interpretation. owners of the Group. For purchases from minority interests, the difference between any consideration (iv) IC Interpretation 10 Interim Financial Reporting and Impairment (effective for annual period paid and the relevant share of the carrying value of net assets of the subsidiary acquired is deducted beginning on or after 1 January 2010). The Group has applied the transitional provision in FRS 7 which from equity. Gains or losses on disposals to minority interests are also recorded in equity. For disposals exempts entities from disclosing the possible impact arising from the initial application of this standard to minority interests, differences between any proceeds received and the relevant share of minority on the financial statements of the Group and Company. interests are also recorded in equity. (c) Standard that is not yet effective and not relevant to the Group (iii) Associates FRS 4 Insurance Contracts (effective for annual period beginning on or after 1 January 2010). Associates are companies in which the Group exercises significant influence, but which it does not 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the Unless otherwise stated, the following accounting policies have been used consistently in dealing with items that are associates but not the power to exercise control over those policies. considered material in relation to the financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated. Investments in associates are accounted for using the equity method of accounting and are initially (a) Economic entities in the Group recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. (i) Subsidiaries The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income The consolidated financial statements include the financial statements of the Company and its statement, and its share of post-acquisition movements in reserves is recognised in reserves. The subsidiaries made up to the end of the financial year. Subsidiaries are companies in which the Group cumulative post-acquisition movements are adjusted against the carrying amount of the investment. has power to exercise control over the financial and operating policies so as to obtain benefits from When the Group’s share of losses in an associate equals or exceeds its interest in the associate, their activities, generally accompanying a shareholding of more than half of the voting rights. including any other unsecured receivables, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive Subsidiaries are consolidated using the purchase method of accounting. Under the purchase obligations or made payments on behalf of the associate. method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition Unrealised gains on transactions between the Group and its associates are eliminated to the extent is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction assumed at the date of exchange plus costs directly attributable to the acquisition. provides evidence on impairment of the asset transferred. Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure consistency of Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination accounting policies with those of the Group. are measured initially at their fair values at acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable Dilution gains and losses in associates are recognised in the income statement. net assets acquired at the date of acquisition is reflected as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

6 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 5 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

6 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 5 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Revenue recognition (c) Foreign currencies (continued)

Revenue for the Group comprises the fair value of the consideration received or receivable for the sale (iii) Group companies of goods and rendering of services, net of goods and services tax and discounts, and after eliminating sales within the Group. The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that are translated into the presentation currency as follows: the future economic benefits will flow to the entity and specific criteria have been met as described below. The amount of the revenue is not considered to be reliably measurable until all contingencies - assets and liabilities for each balance sheet presented are translated at the closing rate at the relating to the sale have been resolved. The Group bases its estimates on historical results, taking into date of that balance sheet; consideration the type of customer, the type of transaction and the specifics of each arrangement. - income and expenses for each income statement are translated at average exchange rates (i) Sale of goods (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the Revenue from sale of goods is recognised when a Group entity has delivered the products to the rate on the dates of the transactions); and customer, the customer has accepted the products and collectability of the related receivables is reasonably assured. - all resulting exchange differences are recognised as a separate component of equity.

(ii) Contract manufacturing fees On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to ‘Foreign exchange reserve’ in shareholders’ equity. When a foreign Contract manufacturing fees is recognised upon manufacturing of goods and when significant risks operation is partially disposed of or sold, exchange differences that were recorded in equity are and rewards have been transferred to the customer. recognised in the income statement as part of the gain or loss on sale. (iii) Interest income (d) Income taxes Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will Current tax expense is determined according to the tax laws of each jurisdiction in which the Group accrue to the Group. operates and include all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary company or associate on distribution of retained earnings to companies in the Group. (iv) Dividend income Deferred tax is recognised in full, using the liability method, on temporary differences arising between the Dividend income is recognised when the Group’s right to receive payment is established. amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. (v) Rental income Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available Rental income is recognised when the right to receive payment is established. against which the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries and associates (c) Foreign currencies except where timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. (i) Functional and presentation currency Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted Items included in the financial statements of each of the Group’s entities are measured using the by the balance sheet date and are expected to apply when the related deferred tax asset is realised or currency of the primary economic environment in which the entity operates (the “functional the deferred tax liability is settled. currency”). The financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency. (e) Property, plant and equipment (ii) Transactions and balances Property, plant and equipment are stated at historical cost/valuation less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as settlement of such transactions and from the translation at year-end exchange rates of monetary appropriate, only when it is probable that future economic benefits associated with the item will flow to assets and liabilities denominated in foreign currencies are recognised in the income statement. the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

6 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 7 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Revenue recognition (c) Foreign currencies (continued)

6 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 7 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Property, plant and equipment (continued) (g) Leases (continued)

The Directors have applied the transitional provisions of International Accounting Standard No. 16 (Revised) (i) Accounting by lessee (continued) Property, Plant and Equipment as adopted by the Malaysia Accounting Standard Board which allows the land and building to be stated at their valuation less depreciation and does not require the asset to Finance leases (continued) be revalued on a periodic basis. Accordingly, these valuations have not been updated. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the Freehold land is not depreciated as it has an infinite life. Depreciation of all other property, plant and leased property and the present value of the minimum lease payments. Each lease payment is equipment is computed on the straight-line method based on the estimated useful lives of the various allocated between the liability and finance charges so as to achieve a periodic constant rate of assets. The annual depreciation rates are as follows: interest on the balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income % statement over the lease period so as to produce a constant periodic rate of interest on the Buildings and improvements 2.00 – 10.00 remaining balance of the liabiltity for each period. Machinery and equipment 6.67 – 25.00 Furniture, fixtures and fittings and office equipment 10.00 – 20.00 Property, plant and equipment acquired under finance leases is depreciated over the shorter of the Vehicles 20.00 estimated useful life of the asset and the lease term, in accordance with the property, plant and equipment policy in Note 3(e). Depreciation on assets under construction commences when the assets are ready for their intended use. Operating leases Residual values and useful lives of assets are reviewed and adjusted if appropriate, at each balance sheet date. The Group carries out assessment on residual values and useful lives of assets on an annual basis. Leases of assets where a significant portion of the risks and rewards of ownership are retained by the There was no adjustment arising from the assessment performed in the financial year. lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on the straight line basis Gain or loss arising from the disposal of an asset is determined as the difference between the estimated over the lease period. net disposal proceeds and the carrying amount of the asset, and is recognised in the income statement. Leasehold land which was previously classified under property, plant and equipment is now classified At each balance sheet date, the Group assesses whether there is any indication of impairment. If such as prepaid lease rental as non-current asset. indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See The prepaid lease rental’s lease periods range between 60 to 99 years. accounting policy Note 3(j) on impairment of assets. (ii) Accounting by lessor

(f) Investment properties Operating leases

Investment properties, comprising principally land and office buildings, are held for long term rental yields Assets leased out under operating leases are included in property, plant and equipment in the or for capital appreciation or both, and are not occupied by the Group. Investment properties are stated balance sheet. They are depreciated over their expected useful lives on a basis consistent with at cost less any accumulated depreciation and impairment losses. Freehold land is not depreciated. similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) Buildings are depreciated on the straight line basis to write off the cost of the buildings to their residual is recognised on the straight line basis over the lease term. values over their estimated useful lives at annual depreciation rates that range from 2.00% to 10.00%.

On disposal of an investment property, or when it is permanently withdrawn from use and no future (h) Investments economic benefits are expected from its disposal, it shall be derecognised (eliminated from the balance sheet). The difference between the net disposal proceeds and the carrying amount is recognised in profit Investments in subsidiaries and associates are shown at cost. Where an indication of impairment exists, or loss in the period of the retirement or disposal. the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note 3(j) on impairment of assets. (g) Leases Investments in other non-current investments are shown at cost and an allowance for diminution in value (i) Accounting by lessee is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a Finance leases decline is recognised as an expense in the financial year in which the decline is identified.

Leases of property, plant and equipment where the Group assumes substantially all the benefits and On disposal of an investment, the difference between net disposal proceeds and its carrying amount is risks of ownership are classified as finance leases. charged/credited to the income statement.

6 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 9 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(e) Property, plant and equipment (continued) (g) Leases (continued)

(f) Investment properties Operating leases

6 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 6 9 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Intangible asset (o) Share capital Intangible asset represents the rights acquired to manufacture products and is shown at cost. The rights acquired have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is (i) Classification calculated using the straight line method over its estimated useful life of 15 years. Ordinary shares are classified as equity. At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully Distribution to holders of a financial instrument classified as an equity instrument are charged recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See directly to equity. accounting policy Note 3(j) on impairment of assets. (ii) Dividends to shareholders of the Company (j) Impairment of assets Dividends on ordinary shares are recognised as liabilities when declared before the balance Assets that have an indefinite useful life are not subject to amortisation and are tested annually for sheet date. A dividend declared after the balance sheet date, but before the financial impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or statements are authorised for issue, is not recognised as a liability at the balance sheet date. changes in circumstances indicate that the carrying amount may not be recoverable. An impairment Upon the dividend becoming payable, it will be accounted for as a liability. loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. (iii) Purchase of own shares For the purposes of assessing impairment, assets are grouped at the lowest levels for which there is separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an Where the Company or its subsidiaries purchases the Company’s equity share capital, impairment are reviewed for possible reversal of the impairment at each financial year end. the consideration paid, including any attributable incremental external costs, net of tax, is deducted from total shareholders’ equity as treasury shares until they are cancelled, reissued or The impairment loss is charged to the income statement. An impairment loss is reversed only to the extent disposed of. Where such shares are subsequently sold or reissued, any consideration received net of previously recognised impairment losses for the same asset. The reversal is recognised in the income of any directly attributable incremental external cost and the related tax effect, is included in statement. Impairment losses on goodwill once recognised is not reversed. shareholders’ equity.

(k) Inventories (p) Employee benefits

Inventories are stated at the lower of cost (determined using the weighted average cost formula) and (i) Short term employee benefits net realisable value. The cost of raw materials and other inventories comprises the original cost of purchase plus cost of bringing the inventories to their present location. The cost of finished goods and The Group recognises a liability and an expense for bonuses, based on a formula that takes work-in-progress includes the cost of raw materials, direct labour and related manufacturing overheads. into consideration the profit attributable to the Company’s shareholders after certain It excludes borrowing costs. Net realisable value represents the estimated selling price in the ordinary adjustments. The Group recognises a provision where contractually obliged or where there is a course of business, less selling and distribution costs and all other estimated costs to completion. past practice that has created a constructive obligation.

(l) Non-current assets classified as assets held for sale Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group. Non-current assets held for sale are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale (ii) Post-employment benefits transaction rather than through a continuing use. Defined benefit plan (m) Receivables Post employment benefits relate to retirement benefits given to employees and is a Trade and other receivables are stated at invoice amount as reduced by the appropriate allowances non-contributory unfunded retirement benefits scheme for employees who are eligible under a for estimated irrecoverable amounts. Allowance for doubtful receivables is made based on estimates of collective bargaining agreement. possible losses which may arise from non-collection of certain receivable accounts. The liability in respect of a defined benefit plan is the present value of the defined benefit (n) Cash and cash equivalents obligation at the balance sheet date, together with adjustments for actuarial gains/losses and past service cost. The Group determines the present value of the defined benefit obligation every The Group and Company adopt the indirect method in the preparation of the cash flow statement. For 3 years such that the amounts recognised in the financial statements do not differ materially from the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits the amounts that would be determined at the balance sheet date. held at call with banks, other short term, highly liquid investments with original maturities of three months or less. The defined benefit obligation, calculated using the projected unit credit method, is determined by independent actuaries, considering the estimated future cash outflows using market yields at balance sheet date of government securities which have currency and terms to maturity approximating the terms of the related liability.

7 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 1 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

(k) Inventories (p) Employee benefits

7 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 1 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Employee benefits (continued) (q) Financial instruments (continued)

(ii) Post-employment benefits (continued) (iv) Fair value estimation for disclosure purposes

by the corridor method in accordance with FRS 1192004 and is charged or credited to income over The fair values of financial assets (less any estimated credit adjustments) and financial liabilities with the average remaining service lives of the related employees participating in the defined benefit a maturity of less than one year are assumed to approximate their fair values. plan. The fair value of forward foreign exchange contracts is determined using forward exchange Past service costs are recognised immediately in income, unless the changes to the plan are market rates at the balance sheet date. conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight line basis over the vesting period. (r) Segment reporting

Defined contribution plans Segment reporting is presented for enhanced assessment of the Group’s risks and returns. A business segment is a group of assets and operations engaged in providing products or services that are subject A defined contribution plan is a pension plan under which the Group pays fixed contributions into to risk and returns that are different from those of other business segments. A geographical segment is a separate entity (a fund) and will have no legal or constructive obligations to pay further engaged in providing products or services within a particular economic environment that are subject to contributions if the fund does not hold sufficient assets to pay all employees benefits relating to risks and returns that are different from those components operating in other economic environments. employee service in the current and prior periods. The defined contribution plan of the Group relates to the contribution to the Employee Provident Fund, the national defined contribution plan. Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can The Group’s contributions to defined contribution plans are charged to the income statement in be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment the period to which they relate. Once the contributions have been paid, the Group has no further liabilities are determined before intragroup balances and intragroup transactions are eliminated as part payment obligations. of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment. (q) Financial instruments (s) Contingent liabilities and contingent assets (i) Description The Group does not recognise a contingent liability but discloses its existence in the financial statements. A financial instrument is any contract that gives rise to both a financial asset of one enterprise and A contingent liability is a possible obligation that arises from past events whose existence will be a financial liability or equity instrument of another enterprise. confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or present obligation that is not recognised because it is not probable that an A financial asset is any asset that is cash, a contractual right to receive cash or another financial outflow of resources will be required to settle the obligation. A contingent liability also arises in the asset from another enterprise, a contractual right to exchange financial instruments with another extremely rare circumstances where there is a liability that cannot be recognised because it cannot be enterprise under conditions that are potentially favourable, or an equity instrument of another measured reliably. enterprise.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by A financial liability is any liability that is a contractual obligation to deliver cash or another financial the occurrence or non-occurrence of one or more uncertain future events beyond the control of the asset to another enterprise, or to exchange financial instruments with another enterprise under Group. The Group does not recognise contingent assets but discloses its existence where inflows of conditions that are potentially unfavourable. economic benefits are probable, but not virtually certain. (ii) Financial instruments recognised on the balance sheet 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The particular recognition method adopted for financial instruments recognised on the balance sheet is disclosed in the individual policy statement associated with each item. The operations of the Group is subject to a variety of financial risks, including foreign currency exchange risk, interest rate risk, cash flow risk, price risk, credit risk and liquidity risk. The Group has formulated risk management (iii) Financial instruments not recognised on the balance sheet framework whose principal objective is to minimise the Group’s exposure to risk and/or costs associated with financing, investing and operating activities of the Group. The Group is a party to financial instruments which comprise foreign currency forward contracts. The instrument is not recognised in the financial statements on inception. Various risk management policies are made and approved by the Board for observation in the day-to-day operations for the controlling and management of the risks associated with financial instruments. Exchange gains and losses on foreign currency forward contracts are recognised when settled at which time they are included in the measurement of the transaction hedged.

7 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 3 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Employee benefits (continued) (q) Financial instruments (continued)

(ii) Post-employment benefits (continued) (iv) Fair value estimation for disclosure purposes

Defined benefit plan (continued) The fair value of financial liabilities with maturity of more than one year is estimated by discounting the future contractual cash flows at the current market interest rate available to the Company for Actuarial gains and losses arise from experience adjustments and changes in actuarial assumptions. similar financial instruments. The amount of net actuarial gains and losses recognised in the income statement is determined by the corridor method in accordance with FRS 1192004 and is charged or credited to income over The fair values of financial assets (less any estimated credit adjustments) and financial liabilities with the average remaining service lives of the related employees participating in the defined benefit a maturity of less than one year are assumed to approximate their fair values. plan. The fair value of forward foreign exchange contracts is determined using forward exchange Past service costs are recognised immediately in income, unless the changes to the plan are market rates at the balance sheet date. conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight line basis over the vesting period. (r) Segment reporting

7 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 3 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) 5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgments are continually evaluated by the Directors and are based on historical experience (i) Foreign currency exchange risk and other factors, including expectations of future events that are believed to be reasonable under the The Group has a natural hedge for intercompany balances to the extent that payments for foreign circumstances. currency payables is matched against receivables, or whenever possible, by intercompany arrangements and settlements. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key The Group enters into forward foreign currency exchange contracts to limit its exposure on foreign variables that are anticipated to have material impact to the Group’s results and financial position are tested for currency receivables and payables and on cash flows generated from anticipated transactions sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of denominated in foreign currencies. causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below. As at 31 December 2008, the settlement dates on open forward contracts ranged between 3 to 6 (i) Deferred tax assets months (2007:Nil). The foreign currency amounts to be received and contractual exchange rates of the Group’s outstanding contracts were as follows: Deferred tax asset is recognised to the extent that it is probable that future taxable profit will be Currency Currency available against which the temporary differences can be utilised. This involves judgment regarding the Hedged to be received to be paid RM’000 Contractual future financial performance of the particular entity in which the deferred tax asset has been Item from the bank to the bank equivalent rate recognised. At 31 December 2008 Trade receivables: (ii) Depreciation for property, plant and equipment - SGD500,000 RM SGD 1,200 SGD1 = RM2.400 Depreciation of all property, plant and equipment is computed on the straight-line method based on - SGD2,000,000 RM SGD 4,768 SGD1 = RM2.384 the estimated useful lives of the various assets. This involves judgement regarding the useful lives and residual values for each category of property, plant and equipment in which the depreciation charge Future sales of goods over the has been recognised. following 6 months: (iii) Other investments – quoted shares - SGD1,000,000 RM SGD 2,384 SGD1 = RM2.384 - SGD1,000,000 RM SGD 2,403 SGD1 = RM2.403 All long term investments are reviewed for impairment at the end of each quarter. A long term - SGD1,000,000 RM SGD 2,402 SGD1 = RM2.402 investment is deemed to have suffered impairment other than temporary if its market share price is 10% below the carrying value of the long term investment for four consecutive quarters since the previous The net unrecognised loss as at 31 December 2008 on open contracts in respect of hedged impairment. An impairment charge of RM1,294,000 was taken in the third quarter of the current financial anticipated future foreign currency sales and trade receivables amounted to RM109,450 year. In addition, the global economic conditions and other relevant factors would also be taken into (2007:Nil). The net exchange loss is deferred until the related sales are transacted, at which time consideration when determining the need for a provision for impairment. they are included in the measurement of such transactions. (ii) Cash flow risk 6. SEGMENT REPORTING

The Group is exposed to minimal cash flow risk in view of its healthy cash position. (a) Primary segment – Business segments (iii) Price risk The Group is principally involved in one business segment which is the production, marketing and distribution of beverage and food products. As such, no information on the Group’s operations by The Group has in place policies to manage the Group’s exposure to fluctuation in the prices of business segments is provided. the key raw materials and commodities used in the operations. The Group enters into fixed (b) Secondary segment – Geographical segments price contracts to establish determinable prices for raw materials and commodities used. The Group operates in the following geographical areas: (iv) Credit risk REVENUE TOTAL ASSETS CAPITAL EXPENDITURE The Group has no major concentration of credit risk and manage these risks by monitoring credit 2008 2007 2008 2007 2008 2007 ratings and limiting the aggregate financial exposure to any individual counterparty. RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Malaysia 463,109 383,756 334,792 358,732 1,989 4,332 The Group extends credit to its customers based upon careful evaluation of the customer’s Singapore 66,041 61,858 21,839 22,928 - - financial condition and credit history. Indonesia 37,357 28,273 23,570 18,252 16 57 Others 2,329 2,692 15,629 15,582 - - (v) Liquidity risk 568,836 476,579 395,830 415,494 2,005 4,389

The Group practices prudent liquidity risk management to minimise the mismatch of financial In determining the geographical segments of the Group, sales are based on the region in which the assets and liabilities and to maintain sufficient credit facilities for contingent funding requirements of customer is located. Total assets (which excludes deferred tax assets and tax recoverable) and capital its working capital. expenditure are determined based on where the assets are located.

7 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 5 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

7. REVENUE 9. PROFIT/(LOSS) FROM OPERATIONS

GROUP COMPANY The following amounts have been charged/(credited) in arriving at profit/(loss) from operations: 2008 2007 2008 2007 GROUP COMPANY RM'000 RM'000 RM'000 RM'000 2008 2007 2008 2007 Sale of goods 568,695 476,463 285,660 254,390 RM'000 RM'000 RM'000 RM'000 Contract manufacturing fees 141 116 - - Auditors’ remuneration: 568,836 476,579 285,660 254,390 - Auditor of the Company: - statutory audit 335 320 164 157 8. DIRECTORS’ REMUNERATION - others 70 70 70 70 - Other auditors GROUP AND COMPANY - statutory audit 54 79 - - 2008 2007 Directors’ remunerations (Note 8) 1,291 1,786 1,291 1,786 RM'000 RM'000 Property, plant and equipment written off 83 18 64 13 Executive Director: (Gain)/loss on disposal of: Salaries and other allowances 952 1,447 - property, plant and equipment (42) (89) 2 (43) - non-current assets held for sale (179) (110) (179) (110) Impairment loss of a quoted investment 1,294 - - - Non-executive Directors: Impairment loss of an associate 114 - 99 - Fees 100 100 Inventories: Other emoluments 239 239 - written off 4,078 4,151 1,129 2,539 339 339 - net allowance for inventories obsolescence 923 1,598 779 933 Total 1,291 1,786 Net allowance for doubtful receivables - trade 1,198 528 121 - Management fee receivable from subsidiaries The estimated monetary value of benefits provided to an Executive Director during the financial year amounted to (Note 30) - - (7,092) (8,698) approximately RM37,175 (2007: RM37,159). Rental of machinery, equipment and motor vehicles payable 3,275 3,294 1,131 1,592 The Directors of the Company in office during the financial year were as follows: Rental income of machinery and equipment Philip Ng Chee Tat receivable from immediate holding company Tjong Yik Min (Note 30) (1,178) (1,141) (1,178) (1,141) Ow Tin Nyap Rental of premises payable 2,683 2,794 1,827 1,653 Dato’ Mohamed Nizam bin Abdul Razak Rental income of premises receivable from: Brigadier General (R) Dato’ Yahya bin Yusof - third party (607) (446) (527) (436) Dato’ N. Sadasivan a/l N.N. Pillay - a subsidiary (Note 30) - - (435) (320) Razman Hafidz bin Abu Zarim Net provision for retirement benefits (Note 28) 706 9 375 447 Pearl Foong Lye Fong Contributions to Employees’ Provident Fund 4,543 4,640 1,961 2,287 Foreign exchange loss: The number of Directors of the Company whose total remuneration during the financial year fall within the following - realised 525 870 545 917 bands are as follows: - unrealised 2,105 458 4,903 393 Professional fees 1,217 1,371 484 933 NUMBER OF DIRECTORS Quit rent and assessment 854 861 665 671 2008 2007 Travelling expense 1,309 1,265 514 526 RM'000 RM'000 Insurance 703 616 454 413 Executive Director: RM950,000 – RM1,000,000 1 - Staff costs include salaries, bonuses, contributions to Employees’ Provident Fund, retirement benefit, executive RM1,400,001 – RM1,450,000 - 1 directors’ salary and bonus (Note 8), and all other payroll costs.

Non-Executive Directors: RM0 3 3 RM50,001 – RM100,000 4 4

7 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 7 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

7. REVENUE 9. PROFIT/(LOSS) FROM OPERATIONS

Non-Executive Directors: RM0 3 3 RM50,001 – RM100,000 4 4

7 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 7 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

10. INCOME FROM OTHER INVESTMENTS AND FINANCE 12. EARNINGS/(LOSS) PER SHARE GROUP COMPANY Basic earnings/(loss) per share of the Group is calculated by dividing the profit attributable to ordinary equity 2008 2007 2008 2007 holders of the Company for the financial year by the weighted average number of ordinary shares in issue RM'000 RM'000 RM'000 RM'000 during the financial year, excluding ordinary shares purchased by the Company and held as treasury shares Interest income: (Note 31(a)). - Short-term deposits 625 1,138 617 1,138 GROUP - Other investment 12 - 12 17 2008 2007 Gross dividend from subsidiaries - - - 39,504 RM'000 RM'000 Tax exempt dividend from an associate - - - 2,093 Basic Tax exempt dividend from a quoted investment 109 171 - - Profit/(loss) attributable to ordinary equity holders of the Company 2,229 (13,601) 746 1,309 629 42,752 Weighted average number of ordinary shares in issue (‘000) 152,709 152,716 11. TAXATION Basic earnings/(loss) per share (sen) 1.5 (8.9) Tax expenses/(income) of the Group and Company are as follows: GROUP COMPANY 13. DIVIDENDS 2008 2007 2008 2007 Dividends declared or proposed in respect of ordinary shares for the financial year are as follows: RM'000 RM'000 RM'000 RM'000 GROUP AND COMPANY Current tax: 2008 2007 - Malaysian tax (17) 10,855 1,638 766 Amount Amount - Foreign tax - - 215 - Gross of dividend Gross of dividend Deferred tax (Note 21) 521 (6,490) 659 (2,537) per share net of tax per share net of tax 2,374 (6,507) 1,425 8,318 Sen RM’000 Sen RM’000 Current tax Interim dividend paid 5.00 7,635 5.00 7,637 Current financial year 1,186 601 296 10,978 Final dividend proposed/paid 6.00 6,872 9.00 10,170 Under/(over) accrual in prior financial years 667 (618) 470 (123) 11.00 14,507 14.00 17,807 Deferred tax At the forthcoming Annual General Meeting, a final gross dividend in respect of the financial year ended 31 Origination and reversal of temporary differences 2,301 (4,757) 939 (1,021) December 2008 of 6 sen per share (2007: 9 sen per share), less income tax of 25% (2007: 26%) amounting to Over accrual in prior financial years (1,780) (1,733) (280) (1,516) RM6,872,000 (2007: RM10,170,000) will be proposed for shareholders’ approval. These financial statements do 2,374 (6,507) 1,425 8,318 not reflect this final dividend which will be accounted for in the financial year ending 31 December 2009 when approved by shareholders. Tax expense /(income) for the financial year can be reconciled to the profit/(loss) before tax per income statements are as follows: GROUP COMPANY 14. PROPERTY, PLANT AND EQUIPMENT 2008 2007 2008 2007 Property, plant and equipment consist of the following: RM'000 RM'000 RM'000 RM'000 Furniture, fixtures Profit/(loss) before tax 4,615 (20,104) (38) 36,804 Buildings Machinery and fittings Freehold and and and office Construction- GROUP COMPANY land improvements equipment equipment Vehicles in-progress Total 2008 2007 2008 2007 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 (%) (%) (%) (%) GROUP Malaysian tax rate 26 (27) (26) 27 Net book value Tax effects of: At 1 January 2008 1,433 19,951 71,830 4,465 773 2,001 100,453 - different tax rates in other countries 1 - - - Additions - 190 1,058 723 7 - 1,978 - tax rate of 20% applicable to first RM500,000 (2007: RM500,000) of taxable profits of Small and Disposals - - - (6) - - (6) Medium Enterprises (1) - - - Written off - - (54) (19) (3) (7) (83) - expenses not deductible for tax purposes 35 9 6,090 4 Depreciation charge - (2,130) (9,809) (1,451) (217) - (13,607) - income not subject to tax (4) (1) (1,976) (4) Currency translation difference - - - (26) - - (26) - current year’s capital allowances not recognised 16 - - - At 31 December 2008 1,433 18,011 63,025 3,686 560 1,994 88,709 - current year’s unrecognised tax losses 2 - - - - utilisation of reinvestment allowance (4) - (523) - At 31 December 2008 - different tax rate in respect of substantively Cost - 59,355 182,638 24,796 3,754 1,994 272,537 enacted changes in statutory tax rate for YA 2009 Valuation 1,433 6,842 - - - - 8,275 and subsequent years 4 (1) (315) - Accumulated depreciation - (48,186) (119,613) (21,110) (3,194) - (192,103) (Over)/under accrual in prior financial years (24) (12) 500 (4) Net book value 1,433 18,011 63,025 3,686 560 1,994 88,709 Average effective tax rate 51 (32) 3,750 23

7 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 7 9 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Property, plant and equipment consist of the following: (continued) Property, plant and equipment consist of the following: (continued)

Furniture, fixtures Furniture, fixtures Buildings Machinery and fittings Buildings Machinery and fittings Freehold and and and office Construction- Freehold and and and office Construction- land improvements equipment equipment Vehicles in-progress Total land improvements equipment equipment Vehicles in-progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 GROUP COMPANY Net book value Net book value At 1 January 2007 1,433 22,081 77,490 5,669 769 2,442 109,884 At 1 January 2007 1,433 16,950 64,854 4,061 587 448 88,333 Additions - 10 3,774 302 276 27 4,389 Additions - 10 1,854 125 124 27 2,140 Disposals - - (2) (3) - - (5) Disposals - - - (2) - - (2) Written off - - (7) (11) - - (18) Written off - - (3) (10) - - (13) Depreciation charge - (2,140) (9,893) (1,459) (272) - (13,764) Depreciation charge - (1,628) (6,076) (1,013) (239) - (8,956) Currency translation difference - - - (33) - - (33) Reclassification - - 468 - - (468) - Reclassification - - 468 - - (468) - At 31 December 2007 1,433 15,332 61,097 3,161 472 7 81,502 At 31 December 2007 1,433 19,951 71,830 4,465 773 2,001 100,453 At 31 December 2007 At 31 December 2007 Cost - 43,467 155,211 17,154 1,706 7 217,545 Cost - 59,280 182,257 24,889 3,952 2,001 272,379 Valuation 1,433 6,842 - - - - 8,275 Valuation 1,433 6,842 - - - - 8,275 Accumulated depreciation - (34,977) (94,114) (13,993) (1,234) - (144,318) Accumulated depreciation - (46,171) (110,427) (20,424) (3,179) - (180,201) Net book value 1,433 15,332 61,097 3,161 472 7 81,502 Net book value 1,433 19,951 71,830 4,465 773 2,001 100,453

The Directors have applied the transitional provisions of International Accounting Standard No. 16 (Revised) Furniture, fixtures Property, Plant and Equipment as adopted by the Malaysia Accounting Standard Board which allows the land Buildings Machinery and fittings and building to be stated at their valuation less depreciation and does not require the asset to be revalued on Freehold and and and office Construction- a periodic basis. Accordingly, these valuations have not been updated. land improvements equipment equipment Vehicles in-progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Land and buildings were last revalued on 3 December 1980 by Wong Choon Kee, member of Institute of COMPANY Surveyors, Malaysia, a director with C.H. Williams, Talhar & Wong Sdn Bhd. Net book value At 1 January 2008 1,433 15,332 61,097 3,161 472 7 81,502 Net book value of the revalued land and buildings, had these assets been carried at cost less accumulated Additions - 190 953 577 4 - 1,724 depreciation is as follows: Disposals - - - (6) - - (6) Written off - - (49) (7) (1) (7) (64) GROUP COMPANY Depreciation charge - (1,617) (6,122) (1,013) (164) - (8,916) 2008 2007 2008 2007 At 31 December 2008 1,433 13,905 55,879 2,712 311 - 74,240 RM'000 RM'000 RM'000 RM'000 (Restated) (Restated) Net book value At 31 December 2008 Freehold land 458 458 458 458 Cost - 43,542 155,518 17,354 1,705 - 218,119 Buildings - - - - Valuation 1,433 6,842 - - - - 8,275 Accumulated depreciation - (36,479) (99,639) (14,642) (1,394) - (152,154) Included in property, plant and equipment of the Group and Company are fully depreciated plant and Net book value 1,433 13,905 55,879 2,712 311 - 74,240 machinery which are still in use, with cost amounting to approximately RM86,426,000 and RM67,627,000 (2007: RM50,752,000 and RM44,345,000) respectively.

8 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 8 1 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

15. INVESTMENT PROPERTIES 17. INVESTMENTS IN ASSOCIATES/ AMOUNT DUE FROM ASSOCIATES GROUP COMPANY GROUP COMPANY 2008 2007 2008 2007 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 (Restated) (Restated) Unquoted investments, at cost 1,784 1,784 1,784 1,784 Net book value at beginning of financial year 11,636 12,067 2,740 3,035 Share of post acquisition reserves (1,209) (1,167) - - Additions during the year 27 - 27 - 575 617 1,784 1,784 Less: Depreciation charge (431) (431) (295) (295) Less: Accumulated impairment losses (114) - (1,323) (1,224) Net book value at end of financial year 11,232 11,636 2,472 2,740 Less: Reclassfied to non-current assets held for sale (Note 26) (461) - (461) - Cost 20,603 20,576 8,838 8,811 - 617 - 560 Less: Accumulated depreciation (9,371) (8,940) (6,366) (6,071) Net book value at end of financial year 11,232 11,636 2,472 2,740 Share of net assets 461 617 Less: Reclassfied to non-current assets The fair value of the properties was estimated at RM33,705,000 (2007: RM28,275,000) for the Group and held for sale (Note 26) (461) - RM5,435,000 (2007: RM5,545,000) for the Company based on valuation by an independent professionally - 617 qualified valuer. Valuations were based on current prices in an active market for all properties.

The associates, which are all incorporated in Malaysia (except where indicated) are as follows: 16. INVESTMENTS IN SUBSIDIARIES COMPANY EFFECTIVE EQUITY INTEREST 2008 2007 Principal activities 2008 2007 RM'000 RM'000 (%) (%) Unquoted shares, at cost 95,641 95,641 Senawang Edible Oil (Sendirian) Berhad * Ceased operations 23.85 23.85 Less: Accumulated impairment losses (2,604) (2,604) W.Y. Company Limited * Ceased operations 49 49 93,037 93,037 (Incorporated in Thailand) GROUP COMPANY The subsidiaries, which are all incorporated in Malaysia (except where indicated), are as follows: 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 EFFECTIVE EQUITY INTEREST Amount due from an associate 846 846 846 846 Direct subsidiaries Principal activities 2008 2007 Less: Allowance for doubtful debts (846) (846) (846) (846) (%) (%) - - - - Bestcan Food Technological Industry Production of instant noodles 99.42 99.42 Sendirian Berhad * Not audited by PricewaterhouseCoopers, Malaysia. Esin Canning Industry Sendirian Berhad Ceased operations 100 100 YHS Manufacturing Berhad Procurement company 100 100 The amount due from an associate mainly represents expenses paid on behalf. The expenses paid on behalf have been fully provided for. Yeo Hiap Seng (Sarawak) Sdn Bhd Production of sauces and non-alcoholic 100 100 beverages Yeo Hiap Seng Trading Sdn Bhd Distribution of food and beverages 100 100 The Group’s share of revenue, (loss)/profit, assets and liabilities of associates are as follows: Yeo Hiap Seng (Perak) Sendirian Berhad Investment holding 100 100 2008 2007 Yeo Hiap Seng (Middle East) Co. Ltd. E.C.* Dormant 100 100 RM'000 RM'000 (Incorporated in Bahrain) Revenue - - YHS Beverage (International) Pte. Ltd.+ Dormant 100 100 (Loss)/profit after tax (Incorporated in Singapore) (42) 1,882 Wahtai Realty Sdn Bhd Dormant 100 100 Current assets PT YHS Indonesia + Distribution of food and beverages 100 100 487 684 (Incorporated in Indonesia) Current liabilities (26) (67) Net assets 461 617 * Not audited by PricewaterhouseCoopers, Malaysia. The Group’s share of losses in an associate has been recognised to the extent of the carrying amount of the + The financial statements of these companies are audited by a member firm of PricewaterhouseCoopers investment. The cumulative unrecognised share of loss in excess of the carrying amount is RM3,000,000 (2007: International Limited which is a separate and independent legal entity from PricewaterhouseCoopers, RM3,000,000). Malaysia.

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18. OTHER INVESTMENTS 21. DEFERRED TAX Other investments of the Group and Company consist of the following: Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following GROUP COMPANY amounts, determined after appropriate offsetting, are shown in the balance sheet: 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 GROUP COMPANY Quoted shares outside Malaysia, at cost 27,395 27,395 14,373 14,373 2008 2007 2008 2007 Less : Accumulated impairment losses (1,294) - - - RM'000 RM'000 RM'000 RM'000 26,101 27,395 14,373 14,373 Deferred tax (liabilities)/assets Quoted Malaysian Government bonds, at cost 121 121 121 121 Deferred tax assets 6,344 6,268 - - 26,222 27,516 14,494 14,494 Deferred tax liabilities (3,602) (3,005) (3,215) (2,556) Unquoted shares in Malaysia, at cost 1 1 - - 2,742 3,263 (3,215) (2,556) Total 26,223 27,517 14,494 14,494 At beginning of financial year 3,263 (3,227) (2,556) (5,093) Market value on: Charged/(credited) to income statements (Note 11) Quoted Malaysian Government bonds 103 105 103 105 - property, plant and equipment 304 3,164 (717) 2,693 Quoted shares outside Malaysia 16,744 27,561 9,817 15,714 - provision for retirement benefits (230) 25 (10) (1) 16,847 27,666 9,920 15,819 - inventories (565) 639 (415) 267 - tax losses (483) 3,055 - - The Directors having reviewed all available market information are of the view that no additional impairment is - others 453 (393) 483 (422) required as at year end and the Group’s impairment provisioning under Note 5(iii) will continue to apply. (521) 6,490 (659) 2,537 At end of financial year 2,742 3,263 (3,215) (2,556) 19. INTANGIBLE ASSET Group COMPANY Subject to income tax RM'000 RM'000 Deferred tax assets (before offsetting) Net book value - property, plant and equipment 1,352 2,820 - 1,283 At 1 January 2007 18,576 20,137 - provision for retirement benefits 1,499 1,729 870 880 Amortisation charge (1,621) (2,083) - inventories 992 1,557 178 593 At 31 December 2007 16,955 18,054 - tax losses 4,077 4,560 - - Amortisation charge (1,957) (2,083) - others 298 22 296 - At 31 December 2008 14,998 15,971 8,218 10,688 1,344 2,756 Offsetting deferred tax liabilities (1,874) (4,420) (1,344) (2,756) At 31 December 2008 Deferred tax assets (after offsetting) 6,344 6,268 - - Cost 26,167 23,638 Accumulated amortisation (11,169) (7,667) Deferred tax liabilities (before offsetting) Net book value 14,998 15,971 - property, plant and equipment (5,466) (7,238) (4,559) (5,125) - others (10) (187) - (187) At 31 December 2007 (5,476) (7,425) (4,559) (5,312) Cost 26,167 23,638 Offsetting against deferred tax assets 1,874 4,420 1,344 2,756 Accumulated amortisation (9,212) (5,584) Deferred tax liabilities (after offsetting) (3,602) (3,005) (3,215) (2,556) Net book value 16,955 18,054

Intangible asset represents the rights acquired to manufacture products for YHS (Singapore) Pte. Ltd. The amounts of deductible temporary differences, unused tax losses and reinvestment allowance (all of which The remaining amortisation period of the intangible assets at the end of financial year is 7.67 years (2007: 8.67 years). have no expiry date) for which no deferred tax asset is recognised in the balance sheet are as follows:

GROUP COMPANY 20. PREPAID LEASE RENTAL 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 GROUP COMPANY Unutilised capital allowances 2,904 - - - 2008 2007 2008 2007 Tax losses 2,705 2,426 - - RM'000 RM'000 RM'000 RM'000 (Restated) (Restated) Reinvestment allowances 11,192 11,957 11,192 11,957 At beginning of financial year 14,472 14,845 10,206 10,423 Amortisation of prepaid lease rental (373) (373) (217) (217) At end of financial year 14,099 14,472 9,989 10,206

8 4 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 8 5 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

22. INVENTORIES 2008 2007 24. AMOUNTS DUE FROM/(TO) HOLDING COMPANIES, SUBSIDIARIES AND FELLOW SUBSIDIARIES RM'000 RM'000 Amounts due from/(to) holding companies, subsidiaries and fellow subsidiaries mainly comprise of trade GROUP transactions. Finished goods and trading merchandise 55,088 56,277 Raw materials 6,666 6,361 The amounts due from/(to) holding companies, subsidiaries and fellow subsidiaries are interest free and the Packing materials 9,677 8,435 credit terms range from 90 to 180 days (2007: 90 to 180 days). Work-in-progress 1,023 1,025 Spare parts and consumables 1,224 1,519 The amount due from immediate holding company and amount due to penultimate holding company are denominated in Singapore Dollar. 73,678 73,617 COMPANY The currency exposure profile of amounts due from subsidiaries is as follows: Finished goods 21,112 17,881 Raw materials 5,380 5,452 COMPANY Packing materials 8,522 7,692 2008 2007 Work-in-progress 1,201 821 RM'000 RM'000 Spare parts and consumables 1,208 1,463 - Ringgit Malaysia 412,787 360,724 37,423 33,309 - Indonesia Rupiah 24,279 12,906 - Singapore Dollar 462 456 - US Dollar 6,724 2,409 23. TRADE AND OTHER RECEIVABLES 444,252 376,495 GROUP COMPANY 2008 2007 2008 2007 The currency exposure profile of amounts due from fellow subsidiaries is as follows: RM'000 RM'000 RM'000 RM'000 GROUP AND COMPANY Trade receivables 131,232 103,659 2,973 1,533 2008 2007 Less: Allowance for doubtful receivables (2,763) (2,343) (235) (217) RM'000 RM'000 128,469 101,316 2,738 1,316 - US Dollar 11 11 - Hong Kong Dollar 918 556 Other receivables 6,577 4,260 1,795 2,030 929 567 Less: Allowance for doubtful receivables (116) (116) (116) (116) 6,461 4,144 1,679 1,914 The currency exposure profile of amounts due to subsidiaries is as follows: COMPANY Deposits 1,046 1,378 292 287 2008 2007 Prepayments 335 545 1,967 315 RM'000 RM'000 136,311 107,383 6,676 3,832 - Ringgit Malaysia 359,347 309,070 - Singapore Dollar 64,867 65,755 The currency exposure profile of trade and other - US Dollar 2,457 70 receivables is as follows: 426,671 374,895 - Ringgit Malaysia 111,277 88,264 612 198 - Indonesia Rupiah 18,445 14,975 - 28 25. CASH AND CASH EQUIVALENTS - Singapore Dollar 1,779 1,069 1,779 1,068 - Brunei Dollar 1,824 521 1,768 420 GROUP COMPANY - US Dollar 1,881 1,800 1,881 1,835 2008 2007 2008 2007 - Hong Kong Dollar 609 424 188 (3) RM'000 RM'000 RM'000 RM'000 - Euro Dollar 237 68 237 68 Cash and bank balances 12,394 25,325 722 12,824 - Canadian Dollar 211 217 211 218 Short-term deposits with licensed banks 4,474 19,854 2,920 19,854 - Bahrain Dinar 48 45 - - Deposits, bank and cash balances 16,868 45,179 3,642 32,678 136,311 107,383 6,676 3,832 The weighted average interest rates per annum of short-term deposits with licensed banks of the Group and Company that were effective as at the balance sheet date were 5.23% and 3.5% (2007: 3.27% and 3.27%) The credit terms of trade receivables range from 14 to 90 days (2007: 14 to 90 days). respectively.

The Group generally has no significant concentrations of credit risk. Short-term deposits with licensed banks of the Group and Company have average maturities of 241 days and 365 days (2007: 129 days and 129 days) respectively.

Bank balances are deposits held at call with banks.

8 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 8 7 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

Bank balances are deposits held at call with banks.

8 6 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 8 7 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

25. CASH AND CASH EQUIVALENTS (CONTINUED) 28. PROVISION FOR RETIREMENT BENEFITS

The currency exposure profile of deposits, bank and cash balances is as follows: The movements during the financial year in the amounts recognised in the balance sheet in respect of the Group’s and Company’s lump sum retirement benefit plan are as follows: GROUP COMPANY GROUP COMPANY 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 - Ringgit Malaysia 12,770 35,806 3,225 26,267 At beginning of financial year 5,690 6,085 3,330 3,147 - Singapore Dollar 361 5,832 357 5,828 Net amount charged to income statement (Note 9) 706 9 375 447 - US Dollar 232 747 60 583 Contributions paid to retired staff (364) (404) (223) (264) - Indonesia Rupiah 3,505 2,794 - - At end of financial year 6,032 5,690 3,482 3,330 16,868 45,179 3,642 32,678

The amount recognised in the Group’s and Company’s balance sheet may be analysed as follows: 26. NON-CURRENT ASSETS HELD FOR SALE GROUP COMPANY As at 31 December 2008, non-current asset held for sale comprise investment in an associate, which has been presented as held for sale following the approval of the Board of Directors to dispose of all its shares held in that 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 associate. The completion date for the transaction is expected by end of the next financial year. Present value of unfunded obligations/ GROUP COMPANY Liability in the balance sheet 6,032 5,690 3,482 3,330 2008 2007 2008 2007 The retirement benefit plan of the Group and Company is not funded. There are no plan assets or actual returns RM'000 RM'000 RM'000 RM'000 on plan assets. Leasehold land and buildings - 846 - 846 Investment in an associate (Note 17) 461 - 461 - The current service cost and interest cost recognised in the Group’s income statement in respect of provision 461 846 461 846 for retirement benefits amounted to RM379,000 and RM312,000 (2007: RM367,000 and RM303,000) respectively. The additional amount charged to the Group’s income statement in current financial year is RM15,000. The 27. TRADE AND OTHER PAYABLES unused amount reversed to the Group’s income statement in previous financial year is RM661,000. GROUP COMPANY The current service cost and interest cost recognised in the Company’s income statement in respect of 2008 2007 2008 2007 provision for retirement benefits amounted to RM200,000 and RM175,000 (2007: RM239,000 and RM208,000) RM'000 RM'000 RM'000 RM'000 respectively. Trade payables 63,522 72,019 39,313 38,069 Other payables 13,963 18,020 5,464 11,630 The latest actuarial valuation of the plan was carried out at 31 December 2007. Accrued expenses 40,782 34,113 11,577 9,912 118,267 124,152 56,354 59,611 The principal actuarial assumptions used in respect of the Group’s and Company’s defined plan were discount rate at 5.5% (2007: 5.5%) and expected rate of salary increases at 6.0% (2007: 6.0%). The currency exposure profile of trade and other payables is as follows: GROUP COMPANY The Group and Company have a contributory unfunded retirement benefit scheme for those employees who are eligible under a collective bargaining agreement. 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 - Ringgit Malaysia 108,550 108,454 47,106 48,042 - Indonesia Rupiah 839 3,738 727 - 29. LONG TERM PAYABLES - Singapore Dollar 6,575 9,952 6,568 9,856 This represents the outstanding purchase consideration arising from purchase of machinery and equipment - US Dollar 2,070 1,616 1,755 1,356 under interest free deferred payment schemes, which are repayable between 3 to 4 years. - Canadian Dollar - - - - GROUP AND COMPANY - Others 233 392 198 357 2008 2007 118,267 124,152 56,354 59,611 RM'000 RM'000 Total balance outstanding - 3,658 Included in other payables of the Group and Company were creditors under deferred payment schemes (Note Amount payable within 12 months (Note 27) - (3,651) 29), which were fully settled during the year. Amount payable after 12 months - 7

The credit terms granted to the Group and Company for trade purchases range from 30 days to 60 days (2007: The payable was fully settled during the financial year. The estimated fair values of the amount payable after 60 days). 12 months of the Group and Company as at 31 December 2007 was RM6,000.

8 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 8 9 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

25. CASH AND CASH EQUIVALENTS (CONTINUED) 28. PROVISION FOR RETIREMENT BENEFITS

8 8 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 8 9 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

30. SIGNIFICANT RELATED PARTY TRANSACTIONS 31. SHARE CAPITAL The Company is a subsidiary company of YHS (Singapore) Pte. Ltd. (immediate holding company), a company GROUP AND COMPANY incorporated in Singapore. The Directors regard Yeo Hiap Seng Limited and Far East Organisation Pte. Ltd., No. of shares 2008 No. of shares 2007 both companies incorporated in Singapore, as the penultimate and ultimate holding companies, respectively. '000 RM'000 '000 RM'000 SHARE CAPITAL The shareholders of the Company, by an ordinary resolution passed at the Annual General Meeting held on 22 Authorised: April 2008, approved the Company’s recurrent related party transactions of a revenue or trading nature. Ordinary shares of RM1.00 each Balance at beginning/end of financial year 300,000 300,000 300,000 300,000 The financial statements of the Group and Company reflect the following related party transactions: Issued and paid-up: Ordinary shares of RM1.00 each GROUP COMPANY Balance at beginning of financial year 153,548 153,548 128,096 128,096 2008 2007 2008 2007 RM'000 RM'000 RM'000 RM'000 Issued during the financial year: - bonus issue - - 25,452 25,452 Significant related party transactions: At end of financial year 153,548 153,548 153,548 153,548 (a) Royalty, technical and management fee payable to penultimate holding company 6,814 5,414 6,677 4,984 Less: Treasury shares Balance at beginning of financial year 617 1,349 (b) Information technology services fee payable to 838 1,844 immediate holding company 208 122 208 122 Shares repurchased during the financial year 2 3 221 495 (c) Management fee receivable from subsidiaries At end of financial year 840 1,847 838 1,844 - Bestcan Food Technological Industry Sendirian Berhad - - 1,317 1,004 152,708 151,701 152,710 151,704 - Yeo Hiap Seng (Sarawak) Sdn Bhd - - 550 601 - Yeo Hiap Seng Trading Sdn Bhd - - 4,641 6,582 (a) Treasury shares - PT YHS Indonesia - - 584 511 The shareholders of the Company, by an ordinary resolution passed at the Annual General Meeting held - - 7,092 8,698 on 22 April 2008, approved the Company’s proposal to purchase its own shares. The Directors of the (d) Sales of goods Company are committed to enhancing the value of the Company to its shareholders and believe that Immediate holding company 66,573 62,076 63,407 60,309 the proposed share buy-back can be applied in the best interests of the Company and its shareholders. Subsidiaries - Yeo Hiap Seng Trading Sdn Bhd - - 176,864 168,720 During the financial year, the Company purchased 2,000 (2007: 220,600) ordinary shares of its own shares - PT YHS Indonesia - - 26,147 19,715 from the open market on the Bursa Malaysia Securities Berhad for RM2,835 (2007: RM495,218). The average Fellow subsidiary price paid for the shares purchased was approximately RM1.42 (2007: RM2.24) per share. - YHS Hong Kong (2000) Pte. Ltd. 2,542 2,373 2,542 2,373 (e) Purchase of goods from immediate holding The purchased transactions were financed by internally generated funds. The shares purchased are company 535 481 330 211 being held as treasury shares as allowed under Section 67A of Companies Act, 1965. The Company has (f) Rental income of machinery and equipment the right to reissue these shares at a later date. As treasury shares, the rights attached as to voting, from immediate holding company (Note 9) 1,178 1,141 1,178 1,141 dividends and participation in other distributions are suspended. None of the treasury shares purchased (g) Rental income of premises receivable from a has been sold or cancelled as at 31 December 2008. subsidiary -Yeo Hiap Seng Trading Sdn Bhd - - 435 320 (b) Bonus issue (h) Key management personnel compensation - Short-term employee benefits 3,151 3,907 2,482 3,228 Bursa Malaysia Securities Berhad, via a letter dated 28 March 2007, and the shareholders of the Company, by an ordinary resolution passed at the Extraordinary General Meeting held on 19 April 2007, approved Significant outstanding balances arising from current transactions other than normal trade transactions: the Company’s proposal for a bonus issue. (a) Royalty, technical and management fee payable to penultimate holding company 1,564 1,206 1,564 1,206 On 10 May 2007, a bonus issue of 25,451,728 new ordinary shares of RM1.00 each in the Company by way of capitalisation of share premium has been credited as fully paid up on the basis of one (1) bonus share (b) Management fee receivable from subsidiaries for every five (5) existing shares held by the entitled shareholders. - Bestcan Food Technological Industry Sendirian Berhad - - 1,317 1,004 - Yeo Hiap Seng (Sarawak) Sdn Bhd - - 550 601 As at 31 December 2008, the number of outstanding ordinary shares in issue and which are all fully paid after - Yeo Hiap Seng Trading Sdn Bhd - - 4,641 6,582 setting treasury shares off against equity is 152,708,000 (2007: 152,710,000) shares. - PT YHS Indonesia - - 584 511 - - 7,092 8,698

9 0 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 9 1 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

32. RESERVES 34. CONTINGENT LIABILITIES GROUP COMPANY (a) As of 31 December 2008, a subsidiary of the Company has credit facility amounting to RM200,000 (2007: 2008 2007 2008 2007 RM200,000) obtained from a financial institution, which is guaranteed by the Company. Accordingly, the RM'000 RM'000 RM'000 RM'000 Company is contingently liable to the extent of the amount of the credit facility utilised. The credit facility Retained earnings 86,484 102,060 39,625 58,893 is not secured against the assets of the Company or of the Group. Share premium 34,445 34,445 34,445 34,445 Capital reserve 1 1 - - (b) During the financial year, the Central Jakarta District Court has dismissed the suit in favour of the Company Foreign exchange reserves 2,529 2,570 - - and its subsidiary, PT YHS Indonesia in relation to a suit filed by PT Kharisma Inti Persada (“Plaintiff”) in 123,459 139,076 74,070 93,338 Central Jakarta District Court, claiming for approximately Rupiah 219.90 billion (approximately RM77 million) for an alleged breach of an alleged distribution agreement and an alleged distribution (a) Capital reserve appointment. Subsequently a formal notification on the Plaintiff’s appeal together with the Plaintiff’s memorial of appeal has been served against the Company. The Company will be contesting the appeal In 2002, an amount of Bahrain Dollar 60 equivalent to RM606 of a subsidiary company, Yeo Hiap Seng and based on the advice from the Company’s legal advisor in Indonesia, the Directors are of the opinion (Middle East) Co. Ltd. E.C., was transferred to the capital reserve. The capital reserve arose from the that the claim is without merit and therefore unsustainable. provisions of the Bahrain Commercial Companies Law 1975 (Amended), which required an amount equivalent to 10% of a subsidiary company, Yeo Hiap Seng (Middle East) Co. Ltd. E.C.’s net profit before (c) In 2004, a legal action was initiated against the Company for an alleged infringement of copyright. The appropriation to be transferred to a non-distributable reserve account until such time as a minimum of 25% plaintiff has sought general damages for which the Company has filed a counterclaim against the of the issued share capital had been set aside. plaintiff. During the financial year, both parties have agreed to settle the matter out of court with no (b) Foreign exchange reserves compensation to each other. Both parties have also withdrawn their respective actions with no liberty to file afresh. Exchange differences arising on translation of Group’s net investment in foreign operations are taken to the foreign exchange reserves. 35. CAPITAL COMMITMENTS

33. RECLASSIFICATION OF INCOME STATEMENTS AND BALANCE SHEETS As of the end of the financial year, the Group and Company have commitments in respect of the following: During the financial year the Group and Company have reclassified a piece of land under finance lease from GROUP COMPANY investment properties to prepaid lease rental in the balance sheets, and the annual charge to be reclassified 2008 2007 2008 2007 from depreciation of investment properties to amortisation of prepaid lease rental in the income statements. RM'000 RM'000 RM'000 RM'000 The reclassification of prior year comparatives did not affect the recognition and measurement of the Group’s Property, plant and equipment: and Company’s net assets. Approved and contracted for 2,439 20 2,439 20 Approved but not contracted for 2 12,542 2 8,184 The impact of the reclassification to the Group’s and Company’s income statements and balance sheets are disclosed below: 36. FAIR VALUES (a) Restatement of income statements for the financial year ended 31 December 2007 The carrying amounts of financial assets and liabilities of the Group and Company at the balance sheet date As previously reported Reclassification As restated approximated their fair values except for investment properties (Note 15) and other investments (Note 18). RM'000 RM'000 RM'000 GROUP 37. APPROVAL OF FINANCIAL STATEMENTS Depreciation of investment properties 503 (72) 431 Amortisation of prepaid lease rental 301 72 373 This financial statements have been approved for issue in accordance with a resolution of the Board of Directors 804 - 804 on 12 March 2009. COMPANY Depreciation of investment properties 367 (72) 295 Amortisation of prepaid lease rental 145 72 217 512 - 512

(b) Restatement of balance sheets for the financial year ended 31 December 2007

As previously reported Reclassification As restated RM'000 RM'000 RM'000 GROUP Investment properties 12,629 (993) 11,636 Prepaid lease rental 13,479 993 14,472 26,108 - 26,108 COMPANY Investment properties 3,733 (993) 2,740 Prepaid lease rental 9,213 993 10,206 12,946 - 12,946

9 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 9 3 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2008 31 DECEMBER 2008

(b) Restatement of balance sheets for the financial year ended 31 December 2007

9 2 | Yeo Hiap Seng (Malaysia) Berhad (3405-X) Yeo Hiap Seng (Malaysia) Berhad (3405-X)| 9 3 Yeo Hiap Seng (Malaysia) Berhad (3405-X) (Incorporated in Malaysia) PROXY FORM

I/We (full name as per NRIC/company name in block capitals) NRIC/Company No. Telephone No. (new and old NRIC Nos) CDS Account No. (for nominee companies only) of (full address) being a member of Yeo Hiap Seng (Malaysia) Berhad hereby appoint (full name as per NRIC in block capitals) NRIC. No. (new and old NRIC Nos) of (full address) or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 35th Annual General Meeting of the Company to be held at Victorian Ballroom, Level 1, Holiday Villa Subang, 9, Jalan SS12/1, 47500 Subang Jaya, Selangor Darul Ehsan on Wednesday, 22nd April 2009 at 2.00 p.m. and any adjournment thereof.

My/Our proxy is to vote as indicated below:-

NO. RESOLUTIONS FOR AGAINST 1. Receipt of Reports and Audited Financial Statements 2. Declaration of Final Dividend 3. Re-election of Mr Philip Ng Chee Tat 4. Re-election of Mr Ow Tin Nyap 5. Re-election of Ms Pearl Foong Lye Fong 6. Re-election of Mr Koh Boon Hwee 7. Re-appointment of Brigadier General (R) Dato’ Yahya bin Yusof as Director of the Company who retires pursuant to Section 129 of the Companies Act, 1965 and to hold office until the next Annual General Meeting 8. Approval of the payment of Directors’ Fees 9. Re-appointment of Messrs PricewaterhouseCoopers as Company Auditors 10. Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, 1965 11. Proposed Share Buy-Back 12. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

No. of shares held

Dated this day of , 2009.

Signature of shareholder

NOTES:

1. A member of the Company entitled to attend and vote at the abovementioned meeting is entitled to appoint one proxy to attend and vote in his stead. Such proxy need not be a member of the Company.

The Company Secretary Yeo Hiap Seng (Malaysia) Berhad (3405-X) No.7, Jalan Tandang 46050 Petaling Jaya Selangor Darul Ehsan Affix Stamp

The Company Secretary Yeo Hiap Seng (Malaysia) Berhad (3405-X) No.7, Jalan Tandang 46050 Petaling Jaya Selangor Darul Ehsan Yeo Hiap Seng (Malaysia) Berhad Berhad (Malaysia) Seng Hiap Yeo

SINCE 1900 (3405-X)

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Yeo Hiap Seng (Malaysia) Berhad (3405-X) No. 7, Jalan Tandang, 46050 Petaling Jaya, Selangor, Malaysia. Tel: (603) 7787 3888 Fax: (603) 7782 2730 Customer Service Hotline: 1-300-80-2828 www.yeos.com.my