Contents
1 Notice of Annual General Meeting 3 Statement Accompanying Notice of Annual General Meeting 4 Financial Highlights of the Group 5 Five-Year Summary 6 Corporate Information 7 Board of Directors 8 Directors’ Profile 15 Chairman’s Statement 21 Perutusan Pengerusi 26 Statement on Corporate Governance 33 Statement On Internal Control 35 Audit Committee Report 39 Statement on Directors’ Responsibilities 40 SOYRICH High Protein Soy Milk 42 YEO’S Green Tea 44 CINTAN Instant Noodles 46 Financial Statements 81 Group Property Particulars 83 Statement of Shareholdings Proxy Form Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Twenty-Ninth Annual General Meeting of Yeo Hiap Seng (Malaysia) Berhad will be held at the Registered Office of The Company, No. 7, Jalan Tandang, 46050 Petaling Jaya, Selangor Darul Ehsan, Malaysia, on Thursday 22 May 2003 at 2.00 p.m. for the following purposes:
AGENDA
1. To receive the Directors’ Report and Financial Statements ended 31 December 2002 Ordinary and the Auditors’ report thereon. Resolution 1
2. To approve the payment of a Final Dividend of 6.5% tax exempt for the financial year Ordinary ended 31 December 2002. Resolution 2
3. To approve the Directors’ remuneration of RM53,583 for the financial year ended 31 Ordinary December 2002. Resolution 3
4. To re-elect the following Directors who retire in accordance with the Articles of Ordinary Association of the Company: Resolution 4 a) Mr Tan Teow Choon pursuant to Article 75 4a b) (i) Mr Philip Ng Chee Tat 4b(i) (ii) Mr Tjong Yik Min 4b(ii) (iii) Mr Chan Wai Ming 4b(iii) (iv) En. Mohamed Nizam bin Abdul Razak 4b(iv) pursuant to Article 80;
5. To propose a resolution that pursuant to Section 129(6) of the Companies Act, 1965, Ordinary Raja Dato’ Hj. Redzwa bin Raja Tun Uda be reappointed a Director of the Company Resolution 5 to hold office until the next Annual General Meeting of the Company.
6. To appoint Auditors and to authorise the Directors to fix their remuneration. Ordinary Resolution 6
7. As special business to consider and, if thought fit, to pass the following resolution as Special a special resolution:- Resolution 7 AMENDMENT TO ARTICLE 86 OF THE ARTICLES OF ASSOCIATION OF THE COMPANY THAT the deletions, alterations, modifications, variations and additions to the Articles of Association of the Company as set out in Appendix 1 of the Circular to Shareholders dated 30 April 2003 be and are hereby approved.
8. To transact any other business of which due notice has been given.
YEO HIAP SENG (MALAYSIA) BHD 1 Notice of Dividend Entitlement and Payment
NOTICE IS HEREBY GIVEN that a final dividend of 6.5% tax exempt in respect of the financial year ended 31 December 2002, if approved by members at the Annual General Meeting to be held on Thursday 22 May 2003, will be paid on 18 July 2003. The entitlement date for the dividend payment is 23 June 2003.
A depositor shall qualify for entitlement only in respect of:-
a) Securities transferred into the Depositor’s Securities Account before 4.00p.m. on 23 June 2003 in respect of ordinary transfers; and
b) Securities deposited into the Depositor’s Securities Account before 12.30p.m. on 19 June 2003 in respect of securities exempted from mandatory deposit; and
c) Securities bought on Kuala Lumpur Stock Exchange on a cum entitlement basis according to the rules of the Kuala Lumpur Stock Exchange.
By order of the Board
Christine Ann Goon FCIS Group Company Secretary (MAICSA 0753399)
Petaling Jaya Date: 30 April 2003
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. 2. The instrument of appointing a proxy, in the case of an individual, shall be signed by the appointor or by his attorney duly authorised in writing, and in the case of a corporation, shall be either given under its common seal or 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.
2 YEO HIAP SENG (MALAYSIA) BHD Statement Accompanying Notice of Annual General Meeting
1) The Directors who are offering themselves for re-election/re-appointment at the Twenty-Ninth Annual General Meeting of the Company are as follows :- a) Mr Tan Teow Choon pursuant to Article 75 of the Articles of Association of the Company b) (i) Mr Philip Ng Chee Tat (ii) Mr Tjong Yik Min (iii) Mr Chan Wai Ming (iv) En Mohamed Nizam bin Abdul Razak pursuant to Article 80 of the Articles of Association of the Company
2) Details of Attendance of Directors at Board meetings The attendance record of Directors at Board meetings held during the financial year ended 31 December, 2002 are as follows :- Name of Directors Attendance 1. Philip Ng Chee Tat 2/2 * 2. Raja Dato’ Hj. Redzwa Bin Raja Tun Uda 4/4 3. Brig. Gen (R) Dato’ Yahya Bin Yusof 4/4 4. Tan Teow Choon 4/4 5. Tjong Yik Min 2/2 * 6. Chan Wai Ming 2/2 7. Mohamed Nizam Bin Abdul Razak 1/1 * * Applicable to Directors appointed during the year and number of meetings held subsequent to their appointment.
3) Place, date and time of meetings of the Board of Directors Particulars of Board Meetings held during the year are as follows :
Date Time Place 27 February 2002 10.00 am 7 Jalan Tandang, 46050 Petaling Jaya 23 May 2002 10.00 am Sheraton Subang Hotel and Towers 22 August 2002 10.00 am 7 Jalan Tandang, 46050 Petaling Jaya 3 December 2002 10.00 am 7 Jalan Tandang, 46050 Petaling Jaya
4) Details on Directors who are standing for re-election/re-appointment 4.1 Particular of Directors Please refer to pages 8 to 14 on Directors’ Profile for required information.
4.2 Other Information of Directors who are standing for election:
Conflict of Interest None of the directors above have any family relations with other directors of the Company.
Securities Holdings Mr. Philip Ng Chee Tat has an indirect interest through Yeo Hiap Seng Limited, the ultimate holding company of the Company. Mr. Tan Teow Choon has a direct interest of 102,000 shares and an indirect interest of 5,000 shares.
None of the other Directors standing for re-election/re-appointment hold any shares in the Company.
Convictions of Offences None of the directors above have been convicted for offences within the past 10 years.
YEO HIAP SENG (MALAYSIA) BHD 3 Financial Highlights of the Group
2002 2001 Financial Calendar RM ’000 RM ’000 Results of operations 2001 Final Dividend Sales 449,342 466,188 19 July 2002 Pre-tax profit 16,485 21,404 After-tax profit 14,108 16,257 2002 Interim Dividend Paid 15 October 2002
Financial Position Financial Year-End Working capital 141,759 121,611 31 December 2002 Net tangible assets 287,648 279,416 Total tangible assets 363,674 383,041 Announcement of Paid-up capital 128,096 128,096 Year-End Results Shareholders’ equity 312,071 305,147 27 February 2003
Despatch of Annual Report Dividends 30 April 2003 Interim 1,845 2,767 * Final (Proposed) 8,326 * 8,326 * Annual General Meeting Cover (Times) 1.39 1.47 22 May 2003
Per share (in sen) 2002 Final Dividend Payment Date Net tangible assets (in RM) 2.25 2.18 18 July 2003 Earning before tax 12.9 21.7 * Earning after tax 11.0 16.5 Dividend - Interim (net) 1.44 2.2 - Final (Proposed) (net) 6.5 * 6.5 *
*Tax exempt dividend
4 YEO HIAP SENG (MALAYSIA) BHD Five-Year Summary
1998 1999 2000 2001 2002 RM’000 RM’000 RM’000 RM’000 RM’000
Group Sales 484,642 481,263 446,379 466,188 449,342
Pre-tax Profit/(loss) 7,727 (4,597)* 18,690 21,404 16,485
Net Tangible Assets 221,324 213,942 221,774 279,416 287,648
Total Dividends ** 2,413 2,413 5,397 11,093 10,171
* After taking into account exceptional items of RM15.7 million for discontinued farm operations and relocation of manufacturing facilities. ** Includes proposed dividend.
Net Tangible Assets (RM’000) Group Sales (RM’000) 287,648 279,416 221,774 221,324 213,942 484,642 481,263 466,188 449,342 446,379
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
Total Dividends (RM’000) Pre-Tax Profit (RM’000) 11,093 10,171 21,404 5,397 18,690 16,485 7,727 2,413 2,413 (4,597)
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
YEO HIAP SENG (MALAYSIA) BHD 5 Corporate Information
DIRECTORS
Philip Ng Chee Tat (Chairman)
Tjong Yik Min (Deputy Chairman)
Tan Teow Choon (Managing Director) AUDITORS Raja Dato’ Hj. Redzwa bin Raja Tun Uda Deloitte KassimChan Brigadier General (R) Dato’ Yahya bin Yusof
Mohamed Nizam bin Abdul Razak BANKERS
Chan Wai Ming Alliance Bank Berhad Citibank Berhad Malayan Banking Berhad AUDIT COMMITTEE Public Bank Berhad Raja’ Dato’ Hj. Redzwa bin Raja Tun Uda (Chairman) Standard Chartered Bank Malaysia Berhad United Overseas Bank (Malaysia) Berhad Brigadier General (R) Dato’ Yahya bin Yusof
Mohamed Nizam bin Abdul Razak SOLICITORS
Tan Teow Choon Raja, Darryl & Loh
Chan Wai Ming REGISTRARS
REMUNERATION COMMITTEE PFA Registration Services Sdn Bhd 1301, Level 13, Uptown 1, Mohamed Nizam bin Abdul Razak (Chairman) No 1, Jalan SS 21/58, Raja Dato’ Hj. Redzwa bin Raja Tun Uda Damansara Uptown, 47400 Petaling Jaya Brigadier General (R) Dato’ Yahya bin Yusof Selangor Darul Ehsan Tjong Yik Min REGISTERED OFFICE
NOMINATION COMMITTEE 7, Jalan Tandang, 46050 Petaling Jaya, Selangor Brigadier General (R) Dato’ Yahya bin Yusof Tel: (603) 7787 3888 (Chairman) Fax: (603) 7782 2730 Raja Dato’ Hj. Redzwa bin Raja Tun Uda (603) 7781 3509 Email: [email protected] Mohamed Nizam bin Abdul Razak Website: wwwy.yeos.com.my Tjong Yik Min STOCK EXCHANGE LISTING GROUP COMPANY SECRETARY Main Board of the Kuala Lumpur Stock Exchange Christine Ann Goon FCIS
6 YEO HIAP SENG (MALAYSIA) BHD Board of Directors
1. Mr Philip Ng Chee Tat
2. Mr Tjong Yik Min 2 3 4 3. Mr Tan Teow Choon 6 1 7 5 4. Mr Chan Wai Ming
5. Encik Mohamed Nizam bin Abdul Razak
6. Raja Dato’ Hj. Redzwa bin Raja Tun Uda
7. Brigadier General (R) Dato’ Yahya bin Yusof
YEO HIAP SENG (MALAYSIA) BHD 7 Directors’ Profile
MR PHILIP NG CHEE TAT
Chairman Non-Independent/Non-Executive Age: 45 years
Mr Ng is a Singapore citizen and was appointed to the Board as a Director 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 Group, Hong Kong, engaging in real estate activities in Hong Kong and China. In 1991, he was appointed Chief Executive of Far East Organization, Singapore.
Mr Ng was appointed as Deputy Chairman and Director of Yeo Hiap Seng Limited on 20 June 1996 and Chairman and Director of Orchard Parade Holdings Limited and Far East Finance Organization Limited on 25 June 1993 and 1July 1993 respectively.
Since his appointment to the Board, Mr Ng has attended 2 out of the 2 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 ultimate 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.
8 YEO HIAP SENG (MALAYSIA) BHD Directors’ Profile (cont’d)
MR TJONG YIK MIN
Deputy Chairman Non Independent & Non Executive Age: 51 years
Mr Tjong Yik Min is a Singapore citizen and he was appointed to the Board as a Director on 22 July 2002 and as Deputy Chairman on 23 January 2003.
He holds a Bachelor of Engineering (Hons) (Class 1) (Industrial Engineering) degree from the University of Newcastle, Australia, a Bachelor of Commerce (Economics) degree from the University of Newcastle, Australia and a Masters in Science (Industrial Engineering) degree from the University of Singapore.
Mr Tjong currently holds the position of President and Chief Operating Officer of Yeo Hiap Seng Limited ("YHSL"), Singapore. Prior to joining YHSL, he held the position of Executive Director & Group President, Singapore Press Holdings from 1 November 1995 to 15 June 2002. Before his appointment at Singapore Press Holdings, Mr Tjong was employed in various capacities in the Singapore Civil Service.
Mr Tjong sits on the Remuneration and Nomination Committees.
Since his appointment to the Board, Mr Tjong has attended 2 out of the 2 meetings held in the year.
He has no family relationship with any other director/ major shareholders of the Company and has no conflict of interest with the Company.
He has not been convicted for offences within the past 10 years.
YEO HIAP SENG (MALAYSIA) BHD 9 Directors’ Profile (cont’d)
MR TAN TEOW CHOON
Managing Director Non-Independent/Executive Age: 46 years
Mr Tan Teow Choon is a Malaysian citizen and he was appointed to the Board on 31 March 2000.
He holds a Bachelor of Science in Business Adminstration from Thomas A.Edison State College of New Jersey and a Master of Science in Business Administration from Boston University, USA.
Mr Tan is the Managing Director of the Company and also holds the position of Executive Vice President (Food & Beverage) in Yeo Hiap Seng Limited, Singapore.
Prior to joining the Company, Mr Tan was the Managing Director of New Zealand Milk (M) Sdn Bhd, a subsidiary of New Zealand Dairy Board, Wellington, New Zealand. Before his appointment at New Zealand Milk, he worked for Glaxo Welcome Malaysia.
Mr Tan is also an Audit Committee member.
Mr Tan attended 4 out of the 4 board meetings held in the year.
He has no family relationship with any other director/major shareholders of the Company and has no conflict of interest with the Company.
He has not been convicted for offences within the past 10 years.
10 YEO HIAP SENG (MALAYSIA) BHD Directors’ Profile (cont’d)
RAJA DATO' HJ. REDZWA BIN RAJA TUN UDA
Director Independent & Non Executive Chairman Audit Committee Age: 74 years
Raja Dato' Hj. Redzwa bin Raja Tun Uda is a Malaysian citizen and he was appointed to the board on 25 March 1985.
He holds a Diploma in Business Management.
Raja Dato's last appointment before his retirement was as Managing Director of Malaysian Can Company & Metal Box Berhad. In January 1996 he was appointed as Orang Besar Daerah Sepang by the Sultan of Selangor and he has been a member of the Sepang District Council since 1996. Raja Dato' is also a member of the Majlis Dewan Di-Raja (Council of the Royal Court) since 1 January 1981.
He is the Chairman of the Audit Committee and is a member of the Remuneration and Nomination Committees.
Raja Dato' attended 4 out of the 4 board meetings held in the year.
He has no family relationship with any other director/ major shareholders of the Company and has no conflict of interest with the Company.
He has not been convicted for offences within the past 10 years.
YEO HIAP SENG (MALAYSIA) BHD 11 Directors’ Profile (cont’d)
BRIGADIER GENERAL (R) DATO' YAHYA BIN YUSOF
Director Independent & Non Executive Chairman Nomination Committee Age: 67 years
Brigadier General (R) Dato' Yahya bin Yusof is a Malaysian citizen and he was appointed to the Board on 22 August 1991.
He graduated from Royal Military Academy Sandhurst, United Kingdom; Defence Services Staff College, Wellington, India; Joints Services Staff College, Canberra, Australia and Senior International Defence Management Course at USS Navy Post Graduate College, USA Montery, California.
BG Dato' Yahya joined the army in 1955 and during his 36 years in service he held many appointments in the military, police and civilian positions. He served as a Defense Services Military Attache' in the Philippines from 1972 to 1974. His last position before retirement was as Commander of the 11th Brigade in Kuala Lumpur.
He is the Chairman of the Nomination Committee and is a member of the Audit and Remuneration Committees.
BG Dato' Yahya attended 4 out of the 4 board meetings held in the year.
He has no family relationship with any other director/ major shareholders of the Company and has no conflict of interest with the Company.
He has not been convicted for offences within the past 10 years.
12 YEO HIAP SENG (MALAYSIA) BHD Directors’ Profile (cont’d)
ENCIK MOHAMED NIZAM BIN ABDUL RAZAK
Director Independent & Non Executive Chairman Remuneration Committee Age: 45 years
Encik Mohamed Nizam bin Abdul Razak is a Malaysian citizen and he was appointed to the Board on 5 November 2002.
He graduated with a Bachelor of Arts (Oxon) degree in Politics, Philosophy and Economics from the Oxford University, United Kingdom.
Encik Nizam was attached to Bumiputra Merchant Bankers Bhd from 1981 to 1984 and to PB Securities Sdn Bhd from 1984 to 1998. He serves on the boards of several public companies engaged in a wide range of activities and is actively involved in several charitable foundations.
Encik Nizam is the Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees.
Encik Nizam attended the Board meeting held in the year subsequent to his appointment.
He has no family relationship with any other director/major shareholders of the Company and has no conflict of interest with the Company.
He has not been convicted for offences within the past 10 years.
YEO HIAP SENG (MALAYSIA) BHD 13 Directors’ Profile (cont’d)
MR CHAN WAI MING
Director Non-Independent/Non-Executive Age: 49 years
Mr Chan Wai Ming is a British citizen and was appointed to the Board on 22 July 2002.
He is a Fellow member of the Association of Chartered Certified Accountants, UK and of the Hong Kong Society of Accountants.
He is currently the Executive Vice-President-Finance of the Yeo Hiap Seng Group and oversees finance and treasury functions of the Group and is an Alternate director on the board of Yeo Hiap Seng Limited.
Prior to joining the Yeo Hiap Seng Group, Mr. Chan was a director with Jardine Fleming Group, headquartered in Hong Kong from 1987 to 1997 and with KPMG and Price Waterhouse Coopers from 1972 to 1987. Since July 1999, he was with the Sino Land Group based in Hong Kong, before secondment to the Yeo Hiap Seng Group in July 2002.
Mr Chan is a member of the Audit Committee.
Since his appointment to the Board, Mr Chan has attended 2 out of the 2 meetings held in the year.
He has no family relationship with any other director/ major shareholders of the Company and has no conflict of interest with the Company.
He has not been convicted for offences within the past 10 years.
14 YEO HIAP SENG (MALAYSIA) BHD Chairman’s Statement
I am pleased to report that Yeo Hiap Seng (Malaysia) Berhad (“YHSM”) continued to be profitable in Financial Year 2002 despite the uncertain economic condition “and competitive market place. ”
PHILIP NG Chairman Chairman’s Statement (cont’d)
Financial Performance I am pleased to report that Yeo Hiap Seng (Malaysia) Berhad (“YHSM”) continued to be profitable in Financial Year 2002 despite the uncertain economic condition and competitive market place.
Group turnover decreased by 3.6% from RM466.18 million in Financial Year 2001 to RM449.34 million in Financial Year 2002, attributed mainly to the termination of non-core agency products such as GOODMAID and EVIAN mineral water.
Net Profit after tax for Financial Year 2002 was RM14.10 million, a drop of 13% from RM16.25 million for Financial Year 2001. The decrease was mainly due to reduced operating profits before tax from RM21.40 million in Financial Year 2001 to RM16.48 million in Financial Year 2002, offset by savings on tax. The Group disposed of its entire shareholding in Sarawak Coconut Enterprise Sdn Bhd with a gain of RM686,000.
EPS is 11 sen per share in Financial Year 2002 compared to 16.5 sen per share in Financial Year 2001.
16 YEO HIAP SENG (MALAYSIA) BHD Chairman’s Statement (cont’d)
During the year, the Group paid out an interim dividend of 1.44 sen net of Malaysian income tax per ordinary share. The Board is recommending a final dividend (tax-exempt) of 6.50 sen, making a total of 7.94 sen for Financial Year 2002.
Operational Review Manufacturing efficiency, time to market and high product quality are essential to the business of the Group.
With improved technology and workflow, we have been able to achieve higher throughout and with less wastage. We continue to strive for “Zero Defects” in order to ensure product integrity and high product quality.
The Group changed to a closed distributorship system to better manage our logistics and distribution processes. The result is an improvement in response time to meet consumer orders at lower costs.
We are upgrading our information technology systems to integrate the financial, manufacturing and distribution systems in order to serve our customers better.
Brand Building and New Products YHSM’s brand building and marketing efforts are aimed at bringing our products closer to our consumers, and building consumer loyalty and brand affinity at the same time.
YEO HIAP SENG (MALAYSIA) BHD 17 Chairman’s Statement (cont’d)
During the year, we carried out advertising and promotions activities for our core products: YEO’S Soy Milk, tea beverages and canned food, and CINTAN High Protein Instant Noodles. We introduced several new value-added products: SOYRICH No Sugar High Protein Soy Milk, SOYRICH Vitaminised A and E High Protein Soy Milk as well as ISOGAIN Isotonic Drink.
In order to serve our customers better, the Group regularly conducts market research to understand their changing needs and buying habits. Research and Development efforts are on-going to create new and value-added products which our customers want. In the international arena, the Group is tapping the fast-growing HALAL market by expanding our distribution network in the Middle East and Indonesia.
Human Resource Our staff are our most important assets and Human Resource development remains one of our top priorities. We conducted courses and training workshops throughout the year to enhance the knowledge and skills of our workforce to prepare them for the challenges ahead.
In 2002, a Voluntary Separation Scheme was amicably carried out as we changed to a closed distribution system.
18 YEO HIAP SENG (MALAYSIA) BHD Chairman’s Statement (cont’d)
Corporate Governance Good corporate governance plays a key role in the Group’s growth and development. We will continue to improve on transparency and corporate governance processes in the interest of our shareholders.
Prospects Despite a weak global and regional economic condition, the Group will press on with our mission of being a forerunner in the Food & Beverage industry in Malaysia.
We will continue to upgrade and improve our production competencies with new equipment, processes and training in order to derive greater efficiency and margins. Now that we have reorganised our sales and distribution operations, we will strive to bring our products closer and quicker to our consumers to meet their growing needs.
In the current year, the Group expects to see an increase in capital expenditure as we continue to invest in equipment and technology.
Barring unforeseen circumstances, the Group will continue to be profitable in the Financial Year 2003.
YEO HIAP SENG (MALAYSIA) BHD 19 Board of Directors A number of changes occurred at the Board. I am pleased to announce the appointment of Mr Tjong Yik Min as Director and Deputy Chairman. Encik Mohamed Nizam bin Abdul Razak has joined us as an Independent Director. Mr Chan Wai Ming, an executive of the Group, has also been appointed to the Board. The wealth of experience of our new directors will help to steer us towards achieving our goals.
During the year, Dato’ Borhan bin Kuntom resigned as Chairman of the Group for health reasons. I would like to express my sincere gratitude for his invaluable contribution to the Group over the years. I was appointed Chairman of the Board with effect 1 December 2002 after Mr Robert Ng Chee Siong relinquished the position due to his heavy work commitments in Hong Kong. I must also thank the other outgoing directors from the previous Board, namely Mr Chew Eng Chai, Mr Donald Reginald Gadsden, Mr Leong Horn Kee, Mr Jacob Gan Nga Kok and Mr Lim Keng Teck for their contributions to the Group.
Acknowledgements On behalf of the Board, I would like to extend a hearty note of thanks to our shareholders for their support and belief in us. I would also like to thank our staff for their dedication, commitment and hard work.
Philip Ng Chairman
20 YEO HIAP SENG (MALAYSIA) BHD PerutusanPerutusan Pengerusi (sambungan) Pengerusi
Saya dengan sukacitanya membentangkan Laporan Tahunan Yeo Hiap Seng (Malaysia) Berhad ("YHSM") bagi Tahun Kewangan 2002, dan ingin melaporkan bahawa sungguhpun dengan suasana ketidaktentuan dan ekonomi yang sukar, “kita berjaya mencatatkan keuntungan bagi Tahun Kewangan 2002.
Prestasi Kewangan Saya dengan sukacitanya membentangkan Laporan Tahunan Yeo Hiap Seng (Malaysia) Berhad ("YHSM") bagi Tahun Kewangan 2002, dan” ingin melaporkan bahawa sungguhpun dengan suasana ketidaktentuan dan ekonomi yang sukar, kita berjaya mencatatkan keuntungan bagi Tahun Kewangan 2002.
Pusing ganti Kumpulan berkurangan sebanyak 3.6% kepada RM449.34 juta dalam Tahun Kewangan 2002 dari RM466.18 juta pada Tahun Kewangan 2001 akibat penamatan bersama produk agensi seperti GOODMAID dan air mineral EVIAN.
Keuntungan bersih selepas cukai untuk Tahun Kewangan 2002 adalah RM14.10 juta, berbanding RM16.25 juta pada Tahun Kewangan 2001 iaitu penurunan sebanyak 13%. Pengurangan disumbangkan oleh penurunan keuntungan operasi sebelum cukai dari RM21.40 juta dalam tahun kewangan 2001 ke RM16.48 juta bagi tahun kewangan 2002, diimbangi oleh penjimatan ke atas cukai. Syarikat juga telah menjual keseluruhan pemegangan saham Sarawak Coconut Enterprise Sdn Bhd yang menghasilkan pemerolehan sebanyak RM686,000.
YEO HIAP SENG (MALAYSIA) BHD 21 Perutusan Pengerusi (sambungan)
EPS adalah 11 sen sesaham dalam Tahun Kewangan 2002 berbanding 16.5 sen sesaham pada Tahun Kewangan 2001.
Dalam tahun kajian, Kumpulan membayar dividen interim sebanyak 1.44 sen sesaham biasa setelah dikecualikan cukai pendapatan Kerajaan Malaysia. Lembaga mencadangkan dividen akhir (dikecualikan cukai) sebanyak 6.50 sen, menjadikan jumlah 7.94 sen untuk Tahun Kewangan berakhir 31 Disember 2002.
Kajian Operasi Operasi pengeluaran yang efisien, pemasaran pada waktu tepat dan produk yang berkualiti adalah amat penting terhadap perniagaan Kumpulan. Dengan mengemaskini sistem teknologi dan pengendalian kerja dengan cekap, kami memperolehi kejayaan yang memuaskan dengan pengurangan produk yang hampas. Kami akan berusaha untuk mencapai “Kerosakan Sifar” demi menjamin kesempurnaan dan kualiti produk.
Untuk pengurusan logistik dan proses pengedaran yang lebih baik, Kumpulan telah membuat penyesuaian dengan melaksanakan sistem pengedaran tertutup. Sistem ini berjaya mempercepatkan masa untuk membalas pesanan pengguna pada kadar kos yang lebih rendah.
Dalam usaha untuk meningkatkan mutu perkhidmatan pelanggan, kami telah memperbaiki sistem teknologi maklumat yang sedia ada, dengan menggabungkan sistem kewangan, pengeluaran dan pengedaran.
22 YEO HIAP SENG (MALAYSIA) BHD Pembinaan Jenama dan Produk Baru YHSM memberikan penekanan kepada pembinaan jenama dan pemasaran untuk mendekatkan produk kepada pengguna dan pada masa yang sama, membina kesetiaan dan meningkatkan tahap jenama.
Dalam tahun kajian, kami melaksanakan aktiviti-aktiviti pengiklanan dan promosi untuk produk asas kami, seperti Susu Soya YEO’S, minuman teh, makanan dalam tin dan Mee Segera Berprotin Tinggi CINTAN. Kami memperkenalkan beberapa produk baru yang lebih nilai seperti Susu Soya Berprotin Tinggi Tanpa Gula SOYRICH, Susu Soya Berprotin Tinggi dan Bervitamin A dan E SOYRICH serta Minuman Isotonik ISOGAIN.
Demi memperbaiki perkhidmatan pelanggan kami, Kumpulan sentiasa mengendalikan kajian pasaran pengguna untuk memahami keperluan pengguna yang sentiasa berubah dan tabiat pembelian pengguna. Penekanan terhadap Penyelidikan dan Pembangunan akan berterusan untuk mencipta produk baru dan lebih nilai yang mana adalah merupakan keperluan pengguna kami. Dalam arena antarabangsa, Kumpulan mangambil peluang untuk menyelami pasaran HALAL yang luas dengan meluaskan rangkaian pengedaran di bahagian Timur Tengah dan Indonesia.
YEO HIAP SENG (MALAYSIA) BHD 23 Perutusan Pengerusi (sambungan)
Sumber Manusia Pekerja YHSM adalah aset utama Kumpulan dan pembangunan sumber manusia kekal sebagai tumpuan yang paling penting. Dalam menyediakan tenaga kerja kita untuk operasi dan proses teknologi yang bermatlamat, kursus dan bengkel latihan telah dijalankan sepanjang tahun bagi meningkatkan pengetahuan dan kemahiran mereka dalam menghadapi cabaran akan datang.
Dalam Tahun Kewangan 2002, ‘Skim Perletakan Jawatan Sukarela’ telah dijalankan sebagai sebahagian usaha Kumpulan untuk melaksanakan sistem pengedaran tertutup.
Tadbir Urus Korporat Tadbir Urus Korporat yang berkesan memainkan peranan utama dalam menentukan perkembangan dan kemajuan Kumpulan. Kami akan berusaha meningkatkan tahap ketelusan dan proses tadbir urus korporat demi menjaga kepentingan para pemegang saham kami.
Prospek Sungguhpun dengan suasana ekonomi global dan tempatan yang lembap, Kumpulan akan terus gigih melaksanakan misi kami ke arah matlamat sebagai peneraju dalam industri Makanan & Minuman di Malaysia.
Kami akan meneruskan usaha meningkatkan dan memperbaiki kadar daya saing produk kami melalui kelengkapan baru, proses cekap dan latihan yang bermatlamat untuk mencapai kecekatan dan keuntungan berterusan. Dalam pada masa kini, setelah penyelarasan semula operasi penjualan dan pengedaran, kami akan berusaha mempercepatkan dan mendekatkan produk kami kepada pengguna untuk memenuhi keperluan mereka yang bertambah.
Dalam tahun semasa, Kumpulan menjangka peningkatan dalam perbelanjaan modal disebabkan pelaburan dalam peralatan dan teknologi yang akan berterusan.
Kecuali berlaku keadaan-keadaan yang tidak dapat diduga, Kumpulan berpendapat bahawa ia akan terus memperolehi keuntungan dalam Tahun Kewangan 2003.
24 YEO HIAP SENG (MALAYSIA) BHD Perutusan Pengerusi (sambungan)
Lembaga Pengarah Lembaga pengarah mengalami beberapa perubahan. Saya dengan sukacitanya mengumumkan pelantikan Encik Tjong Yik Min sebagai Timbalan Pengerusi. Encik Mohamed Nizam bin Abdul Razak telah menyertai Kumpulan sebagai Pengarah Bebas. Encik Chan Wai Ming, ahli eksekutif Kumpulan, juga dilantik dalam Lembaga Pengarah. Pengalaman yang dimiliki oleh pengarah-pengarah baru akan dapat membantu ke arah mencapai matlamat kami.
Dalam tahun kajian, Dato' Borhan bin Kuntom telah meletakkan jawatan sebagai Pengerusi Kumpulan atas sebab-sebab kesihatan. Saya ingin mengucapkan penghargaan yang tulus ikhlas di atas sumbangan beliau yang tidak ternilai. Bermulaan 1 Disember 2002, saya telah dilantik sebagai Pengerusi setelah Encik Robert Ng Chee Siong meletakkan jawatannya berikutan beban kerja beliau yang semakin bertambah di Hong Kong. Saya juga ingin mengucapkan terima kasih kepada pengarah daripada Lembaga terdahulu, iaitu Encik Chew Eng Chai, Encik Ronald Reginald Gadsen, Encik Leong Horn Kee, Encik Jacob Gan Nga Kok dan Encik Lim Kheng Teik di atas dedikasi, nasihat dan sumbangan mereka terhadap Kumpulan.
Penghargaan Bagi pihak Lembaga, saya ingin mengucapkan terima kasih kepada pemegang saham di atas sokongan dan keyakinan mereka terhadap kami. Ucapan terima kasih juga ingin saya rakamkan kepada semua kakitangan syarikat diatas dedikasi, komitmen dan usaha mereka sepanjang tahun.
Philip Ng Pengerusi
YEO HIAP SENG (MALAYSIA) BHD 25 Statement on Corporate Governance
INTRODUCTION
The Company has complied with the Best Practices in Corporate Governance as set out in Part 2 of the Code and the ensuing paragraphs clarify how the Company has applied the principles as set out in Part 1 of the Code.
The Code
In March 2000, the Finance Committee on Corporate Governance issued the Malaysian Code on Corporate Governance ("the Code"). The code lays down the principles and best practices of corporate governance over the structures and processes companies may use in their operations towards achieving the optimal governance framework.
The Board of Yeo Hiap Seng (Malaysia) Berhad ("The Company") is committed to ensuring that the highest standards of corporate governance are practised throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholder value and the financial performance of the Company.
The Board of Directors
The Board has the overall responsibility for corporate governance, establishing goals, strategic direction and overseeing the investments of the Company.
The Board, led by a Non-Executive Chairman, is made up of seven members, comprising one Executive Non-Independent Directors, three Non-Executive Non-Independent and three Non-Executive Independent Directors. The Board's composition represents a mix of knowledge, skills and expertise relevant to the activities of the Group. A brief profile of each Director is presented on pages to 8 to 14.
The role of the Chairman and the Group Managing Director are distinct and separated with responsibilities clearly drawn out to ensure a balance of power and authority. Generally the Executive Directors are responsible for making and implementing operational and corporate decisions. Non-Executive Directors play key supporting roles, contributing their knowledge and experience towards the formulation of policies and in the decision-making process. Where a potential conflict of interest may arise, it is mandatory practice for the director concerned to declare his interest and abstain from the decision-making process.
The functions and Responsibilities of Members of the Board adopted at the Directors' Meeting of 27 November 2001 are as follows:
Function and Responsibilities of Members of the Board of Directors:
• To formulate group strategies.
• To approve group policies, procedures and systems.
• To delegate responsibilities and authority.
• To provide proactive support to subsidiaries.
• To ensure adequate systems for communicating objectives.
• To ensure the adequacy and integrity of the internal control systems.
• To decide and approve on entry into new business ventures.
• To decide and approve on any disposals of business ventures.
• To approve significant financial transactions/assets acquisition undertaken by the organization.
• To evaluate and approve major agreements or contracts.
• Hiring of senior staff in the organization.
26 YEO HIAP SENG (MALAYSIA) BHD Statement on Corporate Governance (cont’d)
The Board meets on a scheduled basis, at least four times a year. Additional meetings will be convened as and when required. The summary of attendance to each of the board meetings held during the financial year under review is as follows:
Directors' Record of Attendance:
Name of Directors Number Of Meetings Attended
1. Philip Ng Chee Tat (appointed: Director 1/6/2002 Chairman 1/12/2002) 2/2
2. Raja Dato' Hj. Redzwa Bin Raja Tun Uda 4/4
3. Brig. Gen (R) Dato' Yahya Bin Yusof 4/4
4. Tan Teow Choon 4/4
5. Tjong Yik Min (appointed: 22/7/2002) 2/2
6. Chan Wai Ming (appointed: 22/7/2002) 2/2
7. Mohamed Nizam Bin Abdul Razak (appointed: 5/11/2002) 1/1
Record of Attendance of Directors who resigned during the year
Name of Directors Number Of Meetings Attended
a. Dato' Borhan Bin Kuntom (resigned: 23/05/2002) 1/2
b. Gan Nga Kok Jacob (resigned: 5/11/2002) 3/3
c. Robert Ng Chee Siong (resigned: 1/12/2002) -
d. Lim Keng Teck (resigned: 1/06/2002) 1/2
e. Donald Reginald Gadsden (resigned: 30/06/2002) 1/2
f. Leong Horn Kee (resigned: 22/07/2002) 2/2
g. Chew Eng Chai (resigned: 15/07/2002) 1/2
YEO HIAP SENG (MALAYSIA) BHD 27 Statement on Corporate Governance (cont’d)
Supply of Information
All Directors are provided with reports and other relevant information on a timely manner, covering various aspects of the Group's operations and performance. The Board has unrestricted access to all staff for any information pertaining to the Group's affairs. In addition, the Board has access to the advice and services of the Company Secretary and may seek independent advice should the need arise.
Board Committees
The Board is assisted by an Audit Committee, whose role and function is as set out in the ensuing pages. Two other committees, namely the Nomination Committee and the Remuneration Committee have also been formed during the last financial year.
Audit Committee
The Audit Committee reviews issues of accounting policy and presentation for external financial reporting, monitors the work of the internal audit function and ensures an objective and professional relationship is maintained with the external auditors. The committee has full access to both the internal and external auditors who, in turn, have access at all times to the Chairman of the Committee.
The Composition and terms of reference of the Audit Committee may be found on pages 35 to 38.
The Nomination Committee:
The terms of reference of the Nomination Committee (NC) adopted by the Board are as follows:
Terms of Reference of the Nomination Committee:
• To recommend appropriate candidates to the board.
• To determine annually whether or not a director is independent.
• To decide whether or not a director is able and has been adequately carrying out his/her duties based on the following criteria: - Attendance - Preparedness - Participation
• To evaluate and propose objective performance criteria for the board. Performance criteria that may be used include return on assets (ROA), return on equity (ROE), economic value added (EVA), return on sales, return on investment and etc.
• To review the board required mix of skills and experience and other qualities that directors should bring to the board.
The Nomination Committee comprises the following members:
Member Status
BG (R) Dato' Yahya bin Yusof (Chairman) Non-Executive/Independent
Raja Dato' Hj. Redzwa bin Raja Tun Uda Non-Executive/Independent
Mohamed Nizam bin Abdul Razak Non-Executive/Independent
Tjong Yik Min Non-Executive/Non-Independent
28 YEO HIAP SENG (MALAYSIA) BHD Statement on Corporate Governance (cont’d)
The Remuneration Committee
The Terms of Reference of the Remuneration Committee (RC) are:
1. Made up of a composition of Non-Executive directors, the majority of whom are independent of Management and free from any business or other relationship, which may materially interfere with the exercise of their independent judgment. This ensures transparency in the development of the remuneration framework and minimizes the risk of any potential conflict of interest.
2. Chaired by an Independent Non-Executive Director.
3. RC's recommendations are made in consultation with the Chairman of the Board and submitted for endorsement by the entire Board.
4. RC recommends to the Board a framework of remuneration for the Board and key executives and determines specific remuneration packages for each Executive Director and the CEO if the CEO is not an Executive Director.
5. The determination of remuneration packages of Non-Executive Directors is the matter of the Board and individuals concerned should abstain from discussion of their own remuneration.
6. No Director should be involved in deciding his own remuneration.
7. The RC covers all aspects of remuneration, including but not limited to Director's fees, salaries, allowances, bonuses, options and benefits in kind.
The Remuneration Committee comprises the following members:
Member Status
Mohamed Nizam bin Abdul Razak (Chairman) Non-Executive/Independent
Raja Dato' Hj. Redzwa bin Raja Tun Uda Non-Executive/Independent
BG (R) Dato' Yahya bin Yusof Non-Executive/Independent
Tjong Yik Min Non-Executive/Non-Independent
Directors' Mandatory Accreditation Programme ("MAP")
All Directors of the board including directors appointed during the year have successfully completed the MAP programme organized by the Research Institute of Investment Analysts Malaysia (RIIAM), an affiliate of the Kuala Lumpur Stock Exchange. The Directors will continue to undergo other relevant training programmes to further enhance their knowledge in the latest statutory and regulatory developments to enable them to discharge their responsibilities more effectively.
YEO HIAP SENG (MALAYSIA) BHD 29 Statement on Corporate Governance (cont’d)
Re-Election of the Directors
In accordance with the Company's Articles of Association all Directors who are appointed by the Board are subject to election by shareholders at the first Annual General Meeting subsequent to their appointment. The Articles also require that in every subsequent year, one-third of the remaining Directors or the number nearest one-third, shall submit themselves for re-election by rotation at each Annual General Meeting.
Directors over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.
DIRECTORS' REMUNERATION
Directors' Benefits Other Fees Salaries Bonuses -In-Kind Emoluments Total (RM) (RM) (RM) (RM) (RM) (RM)
Executive - 593,733 162,282 29,690 1,769,850 2,555,555
Non-Executive 53,583 - - - 12,009 65,592
The number of Directors whose total remuneration fall within the following bands:
Number of Directors Range of Remuneration Executive Non-Executive
Below RM50,000 - 5
RM50,001 to RM650,000 - -
RM700,001 to RM750,000 1 -
RM750,001 to RM1,750,000 - -
RM1,800,001 to RM1,850,000 1 -
30 YEO HIAP SENG (MALAYSIA) BHD Statement on Corporate Governance (cont’d)
RELATIONSHIP WITH SHAREHOLDERS
Relationship with Shareholders and Investors
The Group recognizes the importance of establishing a direct line of communication with shareholders and investors through timely dissemination of information on the Group's performance and major developments via appropriate channels of communication.
Dissemination of information includes the distribution of Annual Report and relevant circulars, issuance of press release inclusive of quarterly financial performance of the Group to KLSE and the public as well as press conferences.
To further enhance the transparency and communication with the shareholders and all concerned, the Company maintains a website at www.yeos.com.my which shareholders and the public are invited to access for information on the company. All announcements released to the Kuala Lumpur Stock Exchange are also available on the KLSE website at www.klse.com.my
Annual General Meeting (AGM)
The Chairman and the Board encourage shareholders to attend and participate in the AGM held annually. The shareholders are given the opportunity to seek clarification on any matters pertaining to the business and financial performance of the Company.
ACCOUNTABILITY AND AUDIT
Financial Reporting
In addition to providing the financial report on an annual basis, the Company also presents the Group's financial results on a quarterly basis via public announcements. The Audit Committee assists the Board to ensure accuracy and adequacy of all information for disclosure.
The Directors are also responsible for ensuring that all financial statements are prepared in accordance with the Companies Act, 1965 and the applicable approved accounting standards board in Malaysia (MASB).
A Directors' Responsibility Statement is set out on page 39.
Internal Control
The Board of Directors is responsible for the Company's overall system of internal control and risk management. The internal control system covers all business processes and is designed to safeguard the Company's assets and shareholders' interest. The Board is satisfied with the design of the existing internal control system, which would continue to be improved, reviewed and updated in line with changes in operating environment.
A statement on Internal Control is set out on pages 33 and 34 of the Annual Report.
Relationship with Auditors
The Board through the establishment of an Audit Committee maintains a formal and transparent arrangement with the Company's auditors.
YEO HIAP SENG (MALAYSIA) BHD 31 Statement on Corporate Governance (cont’d)
ADDITIONAL COMPLIANCE INFORMATION
1 Material Contracts There were no material contracts entered into by the Company and its subsidiary companies which involve directors' and major shareholders' interests subsisting at the end of the financial year ended 31 December 2002 or entered into since the end of the previous financial year.
2 Share Buyback The Company does not have a share buyback programme in place.
3 Options, warrants or convertible securities There were no options, warrants or convertible securities exercised in respect of the financial year.
4 American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme The Company does not have an ADR or GDR programme in place.
5 Imposition of sanctions/penalties There were sanctions/penalties imposed on the Company or its subsidiaries, Directors or management by the relevant regulatory bodies.
6 Non-audit fee There were no non-audit fees paid to external auditors in the financial year.
7 Profit estimates, forecast or projection There were no profit estimates, forecast or projections or unaudited results released, which differ by 10 per cent or more from the audited results.
8 Profit Guarantees There were no profit guarantees given in respect of the Company.
9 Recurrent related party transactions statement The Company did not enter into any recurrent related party transactions of a revenue or trading nature during the financial year ended December 2002.
10 Revaluation policy on landed properties The Company did not have a revaluation policy on landed properties.
32 YEO HIAP SENG (MALAYSIA) BHD Statement on Internal Control
The Board of Directors recognises the importance of maintaining a sound system of internal control and risk management practices to safeguard the shareholders' investments and the Group's assets.
The Board has undertaken the overall responsibilities for reviewing the adequacy and integrity of the Group's internal control and management information systems including financial, operational, compliance and risk management.
The systems are designed to meet the Group's overall business objectives and to manage significant risks identified by involving the key management of each division.
The Group has in place an on-going process as part of the business cultures, which provides effective framework for review and identifying, monitoring and managing the risks in a proactive manner.
However, it should be noted that there are limitations that are inherent in any system of internal control and that such systems are designed to manage and control risks appropriately rather than to eliminate it. Accordingly, it should be noted that these systems could provide only reasonable, and not absolute assurance against material misstatement or loss or the occurrence of unforeseeable circumstances. The concept of reasonable assurance also recognises that the cost of control procedures should not exceed the expected benefits.
Policies and Procedures and Guideline Manual
The Group has long established policies, procedures and guideline manuals, which address most of the specific business risks and the types of control checks that must be in place. The manuals enable tasks to be carried out within a set of flexible rules with minimal supervision.
It also clearly delineates authorisation levels and proper segregation of duties within the defined organisation structure.
Code of Business Conduct
The Company has in place a Code of Business Conduct, which is communicated to and acknowledged by all employees and compliance to this Code is mandatory.
Risk Management Framework
The Group has also established a network of support areas with senior management to provide an infrastructure that would enable top management to review the following areas:
(i) the progress of the above policies and procedures; and
(ii) the assessment of any significant risks associated with respective areas of operation through the framework of the Executive Committee which comprises the Managing Director, Executive Vice President - Finance and the Senior Management Officers for corrective action and decision making.
YEO HIAP SENG (MALAYSIA) BHD 33 Statement on Internal Control (cont’d)
The Executive Committee conducts weekly meetings to review and monitor operations and other relevant matters associated with business and decision-making. The Executive Committee has encouraged and called for effective communications among all levels of staff and departments to address any problems arising for discussion and decision- making. Its review covers matters such as responses to significant risks identified, output from monitoring processes and changes made to the internal control systems.
The audit and compliance team is given the responsibility of overseeing the implementation of the policies and procedures adopted by the Board and provides an effective framework for monitoring and assists in managing the risks in a proactive manner in a checklist form. The management undertakes the process with the assistance of Internal Audit and a written report is submitted to the Audit Committee on a periodic basis.
The Board regularly receives and reviews reports on internal control on a quarterly basis, reviews the adequacy and integrity of internal controls based on the information and assurances provided to the Board. The Executive Committee is accountable to the Board for monitoring the Company's internal control systems and for providing assurances to the Board.
Financial Reporting
Monitoring of results against budgets with major variances are conducted on a monthly basis and the appropriate management action is undertaken. The Managing Director and Executive Vice President - Finance reviews the management accounts covering financial performance, key business indicators and cash flow performance on a weekly and monthly basis.
Internal Audit
The Internal Audit Department ("IAD") has laid down regulations and procedures to identify, govern and verify business weaknesses and risks within the Group. The internal audit function is carried out systematically across the Group, with regular visits and reviews conducted on the areas of risks and furnishes reports on compliance with internal control and procedures.
IAD also ensures that all applicable recommendations to improve control are followed through by the management at all levels. The Audit Committee is fully committed to ensure that corrective action, where necessary, is taken in a timely manner.
34 YEO HIAP SENG (MALAYSIA) BHD Audit Committee Report
Membership
The Audit Committee currently comprises the following members:
Chairman : Raja Dato’ Hj Redzwa Bin Raja Tun Uda Independent/Non-Executive
Members : Brig. Gen (R) Dato’ Yahya Bin Yusof Independent/Non-Executive Mohamed Nizam bin Abdul Razak Independent/Non-Executive Tan Teow Choon Non-Independent/ Executive Chan Wai Ming Non-Independent/Non-Executive
TERMS OF REFERENCE:
1) Terms of Membership
An independent Audit Committee exists to implement and support the functions of the Board.
The Audit Committee is appointed by the Board of Directors from amongst the Directors of the Company and consists of at least three members, the majority of whom must be independent directors and at least one member of the committee must be a member of the Malaysian Institute of Accountants (MIA) or has at least three years’ working experience and
i. has passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
ii. is a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountant Act 1967.
No alternate Director has been appointed as a member of the Audit Committee. The Chairman of the Audit Committee is elected among the members and is an Independent Director.
If a member of the Audit Committee resigns, dies or for any reason ceases to be a member with the result that the number of members is reduced to below three, the Board of Directors shall, within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members.
The terms of office and performance of the Audit Committee shall be reviewed by the Board of Directors at least once every three years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.
YEO HIAP SENG (MALAYSIA) BHD 35 Audit Committee Report (cont’d)
2) Objectives
The primary objectives of the Audit Committee are:
1. To assist the Board in discharging its responsibilities relating to the Group and the Company ‘s management of principal risks, internal controls, financial reporting and compliance of statutory and legal requirements.
2. To maintain through regularly scheduled meetings, a line of communication between the Board of Directors, senior management, internal auditors and external auditors.
3) Duties and Responsibilities
The duties and responsibilities of the Audit Committee shall be to review:
1. With the external auditors, their audit plans;
2. With the external auditors, their evaluation of the systems of internal controls;
3. With the external auditors, their audit reports;
4. The assistance given by the employees of the company to the external auditor
5. The adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary authority to carry out its work;
6. The internal audit programme, processes, the results of the internal audit programme, processes or investigations undertaken and whether or not appropriate actions is taken of the recommendations of the internal audit function;
7. The quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on:
a. Changes in implementation of major accounting policy changes;
b. Significant and unusual events; and
c. Compliance with accounting standards and legal requirements;
8. Any related party transactions that may arise within the Company or the Group;
9. Any letter of resignation from the external auditors of the Company; and
10. To consider the nomination of a person or persons as auditors together with such other functions as may be agreed by the Audit Committee and the Board of Directors.
36 YEO HIAP SENG (MALAYSIA) BHD Audit Committee Report (cont’d)
4) Authority
The Audit Committee shall:
1. Have authority to investigate any matter within its terms of reference;
2. Have the resources which are required to perform its duties;
3. Have full and unrestricted access to any information pertaining to the Group and the Company;
4. Have direct communication channels with the external auditors and person(s) carrying out the internal function activity;
5. Be able to obtain professional or other advice; and
6. Be able to convene meetings with the external auditors, excluding the attendance of the executive members of the Audit Committee, whenever deemed necessary.
5) Activities of the Audit Committee
In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the year ended 31 December 2002 in the discharge of its functions and duties:
a. review of the audit plans and audit fees of the Company and the Group for the year which were prepared by both the external and internal auditors;
b. review of the audit reports for the Company and the Group prepared by the external and internal auditors, considered the major findings by the auditors and management’s responses thereto;
c. review of the quarterly and annual reports of the Company and the Group and thereafter submitting them to the Board for consideration and approval;
d. review of findings of investigations conducted during the year and management’s responses thereto;
e. consider and recommend to the Board for approval the audit fees payable to the external auditor.
6) Meetings and minutes
Audit Committee meetings are held not fewer than four times a year and the Internal Audit Manager and External Auditors will attend the meetings. Other members of the Board may attend the meetings upon the invitation of the Committee. At least once a year, the Committee shall meet the external auditors without any executive directors present. To form a quorum, a majority of members present must be independent directors. Minutes of each meeting shall be kept and distributed to each member of the Committee. The Chairman of the Committee shall report on each meeting to the Board. The Secretary to the Committee shall be the Company Secretary. Detailed audit reports by the internal auditor and the respective management responses are circulated to the members of the Committee before each meeting of the Committee at which tha said reports are circulated.
YEO HIAP SENG (MALAYSIA) BHD 37 Audit Committee Report (cont’d)
7) Members Record of Attendance
Name of Directors Number Of Meetings Attended
Raja Dato’ Hj. Redzwa Bin Raja Tun Uda (appointed Chairman 22/08/2002) 4/4
Brig. Gen (R) Dato’ Yahya Bin Yusof 4/4
Mohamed Nizam bin Abdul Razak (appointed 5/11/2002) 1/1
Tan Teow Choon 3/4
Chan Wai Ming (appointed 5/11/2002) 1/1
Dato’ Borhan Bin Kuntom (resigned Chairman with effect from 23/05/2002) 1/2
Chew Eng Chai (resigned with effect from 15/07/2002) 1/2
Gan Nga Kok Jacob (resigned with effect from 5/11/2002) 1/1
38 YEO HIAP SENG (MALAYSIA) BHD Statement On Directors’ Responsibilities
The Directors are required by the Companies Act, 1965 (“the Act”) to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and the Group at the end of the financial year and the profit or loss of the Company and the Group for the financial year. As required by the Act and the Listing Requirements of Kuala Lumpur Stock Exchange the financial statements have been prepared in accordance with the applicable approved accounting standards in Malaysia and comply with the provisions of the Act.
The Directors consider that in preparing the financial statements for the year ended 31 December 2002 set out on pages 52 to 79, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates. The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group which enable them to ensure that the financial statements comply with the Act. The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
YEO HIAP SENG (MALAYSIA) BHD 39 40 YEO HIAP SENG (MALAYSIA) BHD The SOYRICH way to good nutrition
SOYRICH encapsulates nutrition at its best. SOYRICH High Protein Soy Milk is the new soy milk that YEO’S has formulated and it is packed with natural goodness, pure natural ingredients and no artificial preservatives.
SOYRICH comprising a breakthrough formulation of soy bean extract is the ideal alternative to cow’s milk with functional benefits.
SOYRICH is specifically formulated to meet the U.S. Food and Drug Administration (US FDA) per serving daily-recommended intake of soy protein. Each glass (250ml) of SOYRICH High Protein Soy Milk contains soy protein of 6.25g per serving. The US FDA determines that diets with four daily servings (6.25g of Soy Protein per serving) can reduce levels of low density lipoprotein (LDL) or “bad” cholesterol, by as much as 10%.
SOYRICH is highly recommended for individuals who wants to have a healthier heart. SOYRICH is naturally lower in fat compared to cow’s milk and contains no cholesterol and is good for the heart.
SOYRICH HIGH PROTEIN SOY MILK - DRINK TO A HEALTHY HEART
YEO HIAP SENG (MALAYSIA) BHD 41 42 YEO HIAP SENG (MALAYSIA) BHD YEO’S Green Tea
Tea’s soothing and healthful properties is widely known. British statesman William Gladstone once said, “If you are cold, tea will warm you;if you are depressed, it will cheer you, if you are excited, it will calm you.” Had he said today, he would most likely have added the phrase, “If you are ill, it will heal you.” (Source: Dolores Snyder, Saturday Evening Post, July 1999)
Green Tea contains flavonols and polyphenols, substances that have been found to contain significant antioxidant, anti-inflamatory and anti-microbial properties. Compounds in green tea known as polyphenols have been found to be more potent than vitamins C and E, the alleged antioxidant powerhouse.
Antioxidants combat free radicals, which are known to play a role in many diseases. Thus, green tea is not just a beverage,but takes care of one’s body as well.
The health benefits of green tea have recently received widespread publicity. It is almost as if the old saying ‘an apple a day keeps the doctor away’ has been replaced by ‘a cup of green tea a day keeps the doctor away’.
YEO HIAP SENG (MALAYSIA) BHD 43 44 YEO HIAP SENG (MALAYSIA) BHD CINTAN Instant Noodles
The hectic lifestyles people lead has brought about the need to prepare a quick home cooked meal. As a result, it is little wonder that instant noodles have gained popularity especially amongst Asian consumers.
YHSM Berhad has always developed products that satisfy a wide range of consumer’s needs and tastes. There are many variations of CINTAN noodles designed for fast and convenient preparation. From CINTAN Original flavor to our Curry Flavored CINTAN noodles, the variations are designed to feed the masses. Our goal at YHSM is to create instant noodles that could be eaten anywhere, anytime plus the beneficial qualities for our consumers such as CINTAN protein added noodles or our CINTAN High Calcium Noodles.
Like other YEO’S products, CINTAN Instant Noodles are also HALAL and have been authorized by JAKIM (Jabatan Kemajuan Islam Malaysia) which makes it appropriate for all segments of the community.
CINTAN Instant Noodles is also HACCP certified. This means CINTAN noodles follows a preventive system for assuring safety in food manufacturing using technical and scientific principles and accepted norms in food safety management. This is done to ensure consumers get excellent quality noodles.
Renowned for its smooth and springy taste, CINTAN Instant Noodles is making headway as a family favorite.
YEO HIAP SENG (MALAYSIA) BHD 45 FINANCIAL STATEMENTS
47 Directors’ Report 51 Report of The Auditors to the Members of Yeo Hiap Seng (Malaysia) Berhad 52 Income Statements 53 Balance Sheets 54 Statements of Changes in Equity 55 Cash Flow Statements 57 Notes to the Financial Statements 80 Statement By Directors 80 Declaration By The Director Primarily Responsible For The Financial Management of the Company DIRECTORS’ REPORT
The directors of YEO HIAP SENG (MALAYSIA) BERHAD have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31st December, 2002.
PRINCIPAL ACTIVITIES The Company is principally involved in the production, marketing and sale of beverage and food products.
The subsidiary companies are principally involved in the production, marketing and distribution of beverage and food products.
There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year.
RESULTS OF OPERATIONS The results of operations of the Group and of the Company for the current financial year are as follows:
The The Group Company RM'000 RM'000
Profit before tax 16,485 6,747
Income tax expense (2,349) (1,100)
Profit after tax 14,136 5,647
Minority interest (28) -
Net profit for the year 14,108 5,647
In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS A final dividend of 6.5%, tax exempt, amounting to RM8,326,210 proposed in the previous financial year and dealt with in the previous directors’ report were paid by the Company during the current financial year.
An interim dividend of 2% less tax, amounting to RM1,844,576 was paid in respect of the current financial year.
The directors proposed a final dividend of 6.5%, tax exempt, amounting to RM8,326,210 in respect of the current financial year. This dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as liability in the financial statements.
The proposed final dividend for 2002 is payable in respect of all ordinary shares in issue as of the date of the financial statements.
RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the Financial Statements.
YEO HIAP SENG (MALAYSIA) BHD 47 DIRECTORS’ REPORT (Cont’d)
ISSUE OF SHARES AND DEBENTURES The Company has not issued any new shares or debentures during the financial year.
SHARE OPTIONS No options were granted by the Company to any parties during the financial year to take up unissued shares of the Company.
No shares were issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As of the end of the financial year, there were no unissued shares of the Company under options.
OTHER FINANCIAL INFORMATION Before the income statements and the balance sheets of the Group and of the Company 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 receivables and the making of allowance for doubtful receivables, and had satisfied themselves that all known bad receivables had been written off and that adequate allowance had been made for doubtful receivables; and
(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.
At the date of this report, the directors are not aware of any circumstances:
(a) which would render the amount written off for bad receivables or the amount of allowance for doubtful receivables in the financial statements of the Group and of the Company inadequate to any substantial extent;
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or
(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the succeeding financial year.
48 YEO HIAP SENG (MALAYSIA) BHD DIRECTORS’ REPORT (Cont’d)
DIRECTORS The following directors served on the Board of the Company since the date of the last report:
Brigadier Gen (R) Dato’ Yahya bin Yusof Raja Dato’ Hj. Redzwa bin Raja Tun Uda Tan Teow Choon Philip Ng Chee Tat (appointed on 1.6.2002) Tjong Yik Min (appointed on 22.7.2002) Chan Wai Ming (appointed on 22.7.2002) Mohamed Nizam bin Abdul Razak (appointed on 5.11.2002) Dato’ Borhan bin Kuntom (resigned on 23.5.2002) Lim Keng Teck (resigned on 1.6.2002) Donald Reginald Gadsden (resigned on 30.6.2002) Chew Eng Chai (resigned on 15.7.2002) Leong Horn Kee (resigned on 22.7.2002) Gan Nga Kok @ Jacob Gan (resigned on 5.11.2002) Robert Ng Chee Siong (appointed on 1.6.2002; resigned on 1.12.2002)
In accordance with Article 75 of the Company’s Articles of Association, Mr. Tan Teow Choon retires by rotation and being eligible, offers himself for re-election.
Messrs. Philip Ng Chee Tat, Tjong Yik Min, Chan Wai Ming and Mohamed Nizam bin Abdul Razak, who were appointed to the Board since the last Annual General Meeting, retire under Article 80 of the Company’s Articles of Association and, being eligible, offer themselves for re-election.
In accordance with Section 129 of the Companies Act, 1965, Raja Dato’ Hj. Redzwa bin Raja Tun Uda retires and, being eligible, offers himself for re-election.
DIRECTORS’ INTERESTS The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134, are as follows:
Number of ordinary shares of RM1 each Shares in the Company Balance at Balance at 1.1.2002 Bought Sold 31.12.2002 Registered in name of director Tan Teow Choon 102,000 - - 102,000
Number of ordinary shares of RM1 each Shares in the Company Balance at Balance at 1.1.2002 Bought Sold 31.12.2002 Deemed interest Tan Teow Choon 5,000 - - 5,000
None of the other directors hold shares or have any beneficial interest in the shares of the Company or its related companies during the financial year.
YEO HIAP SENG (MALAYSIA) BHD 49 DIRECTORS’ REPORT (Cont’d)
DIRECTORS’ BENEFITS Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefit (other than the benefit included in the aggregate of emoluments received or due and receivable by directors as disclosed in the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.
During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
HOLDING COMPANIES The Company is a subsidiary company of YHS (Singapore) Pte. Ltd. (YHSPL), a company incorporated in Singapore. The directors regard Yeo Hiap Seng Limited (YHSL), a company incorporated in Singapore, as the ultimate holding company.
AUDIT COMMITTEE In compliance with the listing requirement set up by Kuala Lumpur Stock Exchange (KLSE), the audit committee was established on 24th March, 1994 comprising the following directors:
Raja Dato’ Hj. Redzwa bin Raja Tun Uda (Chairman) Brigadier Gen (R) Dato’ Yahya bin Yusof Tan Teow Choon Chan Wai Ming (appointed on 5.11.2002) Mohamed Nizam bin Abdul Razak (appointed on 5.11.2002)
The functions of the audit committee as stipulated in the KLSE listing requirements include discussion and review with management, internal auditors and the auditors of the Company, the scope and results of the internal and statutory audits, financial and operating results, internal controls, accounting policies and other significant matters, including the annual financial statements which accompany this report.
AUDITORS The auditors, Messrs. Deloitte KassimChan, have offered themselves for re-appointment.
Signed on behalf of the Board in accordance with a resolution of the Directors,
RAJA DATO’ HJ. REDZWA BIN RAJA TUN UDA
TAN TEOW CHOON
Petaling Jaya 27th February, 2003
50 YEO HIAP SENG (MALAYSIA) BHD REPORT OF THE AUDITORS TO THE MEMBERS OF YEO HIAP SENG (MALAYSIA) BERHAD
We have audited the accompanying balance sheets as of 31st December, 2002 and the related statements of income, cash flows and changes in equity for the year then ended. These financial statements are the responsibility of the Directors of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.
We have conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia so as to give a true and fair view of:
(i) the state of affairs of the Group and the Company as of 31st December, 2002 and of the results and the cash flows of the Group and the Company for the year ended on that date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the financial statements and consolidated financial statements; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary companies of which we have acted as auditors, have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and auditors’ report of the subsidiary companies, of which we have not acted as auditors, as mentioned under Note 12 to the Financial Statements, being financial statements that have been included in the consolidated financial statements.
We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements, and we have received satisfactory information and explanations as required by us for these purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made under Sub-section (3) of Section 174 of the Act.
DELOITTE KASSIMCHAN AF 0080 Chartered Accountants
ROSITA TAN 1874/9/04 (J) Partner
27th February, 2003
YEO HIAP SENG (MALAYSIA) BHD 51 INCOME STATEMENTS For the year ended 31st December, 2002
The Group The Company 2002 2001 2002 2001 Note RM'000 RM'000 RM'000 RM'000
Revenue 449,342 466,188 268,714 298,830
Changes in inventories of finished goods and work-in-progress (20,997) (18,538) (2,555) 3,002
Raw materials and consumables used (231,778) (245,268) (175,047) (201,913)
Directors’ remuneration 5 (2,621) (1,170) (2,621) (1,170)
Staff costs (57,659) (60,416) (29,637) (25,132)
Depreciation of property, plant and equipment 11 (16,555) (16,341) (10,150) (9,900)
Amortisation of goodwill (1,308) (436) - -
Other operating expenses (106,733) (108,900) (47,777) (56,725)
Other operating income 5,509 8,131 764 2,348
Profit from operations 6 17,200 23,250 1,691 9,340
Finance costs 7 (163) (518) (128) (459)
Share of loss of associated companies (977) (1,405) - -
Income from other investments 8 425 77 5,184 5,806
Profit before tax 16,485 21,404 6,747 14,687
Income tax expense 9 (2,349) (5,128) (1,100) (1,740)
Profit after tax 14,136 16,276 5,647 12,947
Minority interest (28) (19) - -
Net profit for the year 14,108 16,257 5,647 12,947
Earnings per share 10 11.0 sen 16.5 sen
The accompanying Notes form an integral part of the Financial Statements.
52 YEO HIAP SENG (MALAYSIA) BHD BALANCE SHEETS As of 31st December, 2002
The Group The Company 2002 2001 2002 2001 Note RM'000 RM'000 RM'000 RM'000 Assets Property, plant and equipment 11 151,049 160,813 76,975 82,549 Investment in unquoted subsidiary companies 12 - - 94,844 94,844 Investments in unquoted associated companies 13 4,559 6,094 1,787 8,647 Other investments 14 10 130 9 129 Goodwill on consolidation 15 24,423 25,731 - -
Current Assets Inventories 16 51,345 84,415 25,541 38,559 Trade receivables 17 66,706 65,583 6,122 2,981 Amount owing by associated companies 13 922 2,783 922 2,747 Amount owing by ultimate holding company 18 696 2,721 696 397 Amount owing by immediate holding company 18 24,387 28,723 18,747 28,527 Amount owing by subsidiary companies 18 - - 126,951 71,545 Amount owing by other related companies 18 4,774 4,022 4,774 4,014 Other receivables and prepaid expenses 17 20,291 12,489 11,980 6,214 Cash and bank balances 19 38,935 15,268 32,793 7,629
208,056 216,004 228,526 162,613
Current Liabilities Trade payables 20 40,030 50,656 31,161 38,885 Other payables, accrued expenses and provisions 20 22,571 26,250 10,299 15,030 Amount owing to ultimate holding company 18 3,696 4,214 3,673 4,211 Amount owing to immediate holding company 18 - 273 - - Amount owing to subsidiary companies 18 - - 100,723 18,481 Provision 21 - 13,000 - 13,000
66,297 94,393 145,856 89,607
Net Current Assets 141,759 121,611 82,670 73,006
Long-Term And Deferred Liabilities Provision for retirement benefits 22 9,369 8,745 5,698 4,001 Hire-purchase payables - non-current portion 23 24 297 12 75 Deferred tax liabilities 24 121 - - -
(9,514) (9,042) (5,710) (4,076) Minority Interests (215) (190) - -
Net Assets 312,071 305,147 250,575 255,099
Represented by:
Issued capital 25 128,096 128,096 128,096 128,096 Reserves 26 183,975 177,051 122,479 127,003
Shareholders’ Equity 312,071 305,147 250,575 255,099
The accompanying Notes form an integral part of the Financial Statements.
YEO HIAP SENG (MALAYSIA) BHD 53 STATEMENTS OF CHANGES IN EQUITY For the year ended 31st December, 2002
The Group Non-distributable Reserves Distributable Reserves Foreign Issued Share Capital Exchange General Unappropriated capital Premium Reserves Reserves Reserves Profit Total Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Balance as of 1.1.2001 83,800 31,482 - (40) 10,000 96,532 221,774 Issue of shares 25 & 26 44,296 28,415 - - - - 72,711 Currency translation differences - - - (2,828) - - (2,828) Net profit for the year - - - - - 16,257 16,257 Dividends 27 - - - - - (2,767) (2,767)
Balance as of 31.12.2001 128,096 59,897 - (2,868) 10,000 110,022 305,147
Currency translation differences - - - 2,987 - - 2,987 Net profit for the year - - - - - 14,108 14,108 Dividends 27 - - - - - (10,171) (10,171) Transfer to capital reserve - - 1 - - (1) -
Balance as of 31.12.2002 128,096 59,897 1 119 10,000 113,958 312,071
The Company Distributable Reserves Issued Share General Unappropriated capital Premium Reserves Profit Total Note RM'000 RM'000 RM'000 RM'000 RM'000
Balance as of 1.1.2001 83,800 31,482 10,000 46,926 172,208 Issue of shares 25 & 26 44,296 28,415 - - 72,711 Net profit for the year - - - 12,947 12,947 Dividends 27 - - - (2,767) (2,767)
Balance as of 31.12.2001 128,096 59,897 10,000 57,106 255,099 Net profit for the year - - - 5,647 5,647 Dividends 27 - - - (10,171) (10,171)
Balance as of 31.12.2002 128,096 59,897 10,000 52,582 250,575
The accompanying Notes form an integral part of the Financial Statements.
54 YEO HIAP SENG (MALAYSIA) BHD CASH FLOW STATEMENTS For the year ended 31st December, 2002
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Profit before tax 16,485 21,404 6,747 14,687 Adjustments for: Depreciation of property, plant and equipment 16,555 16,341 10,150 9,900 Property, plant and equipment written off 1,607 240 1,171 219 (Gain)/Loss on disposal of property, plant and equipment (1,797) (3,863) 474 (2,101) Allowance for doubtful receivables: Trade 5,252 - - - Others 464 15 464 - Bad receivables written off 73 310 29 25 Allowance for doubtful receivables no longer required (94) (1,875) - - Bad receivables recovered (7) (64) - (6) Inventories written off 4,271 5,098 1,127 1,181 Allowance for inventories obsolescence 1,249 779 1,153 475 Allowance for inventories obsolescence no longer required (24) - - - Provision for retirement benefits 2,146 1,737 2,444 666 Share of loss of associated companies 977 1,405 - - (Gain)/Loss on disposal of investment in an associated company (686) - 6,174 - Finance costs 163 518 128 459 Allowance for diminution in value of investment 120 - 120 - Dividend income - - (558) (558) Amortisation of goodwill 1,308 436 - - Provision for relocation expenses no longer required (13,000) - (13,000) - Interest income (425) (77) (421) (73) Unrealised (gain)/loss on foreign exchange (340) 647 (340) 392 Currency translation differences - (28) - -
Operating Profit Before Working Capital Changes 34,297 43,023 15,862 25,266 (Increase)/Decrease in: Inventories 27,574 (8,546) 10,738 (7,775) Trade receivables (6,275) 3,802 (3,170) 485 Amount owing by ultimate holding company 2,025 (2,721) (299) (397) Amount owing by immediate holding company 6,273 (28,895) 10,120 (28,919) Amount owing by subsidiary companies - - - 18,516 Amount owing by other related companies (752) (4,022) (760) (4,014) Amount owing by affiliated companies - 33,211 - 30,530 Other receivables and prepaid expenses 570 6,192 592 1,673
(Forward)
YEO HIAP SENG (MALAYSIA) BHD 55 CASH FLOW STATEMENTS (Cont’d) For the year ended 31st December, 2002
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Increase/(Decrease) in: Trade payables (10,626) (1,594) (7,724) 6,172 Amount owing to ultimate holding company (373) 4,214 (538) 4,211 Amount owing to immediate holding company (273) 273 - - Amount owing to subsidiary companies - - 26,836 - Amount owing to affiliated companies - (4,991) - (4,933) Other payables, accrued expenses (1,153) 3,219 (2,255) (287)
Cash Generated From Operations 51,287 43,165 49,402 40,528 Income tax paid (10,600) (4,962) (7,458) (1,740) Retirement benefits paid to Yeo Hiap Seng (M) Bhd Retirement Benefit Fund and retired staff (1,522) (1,504) (747) (729) Interest paid (163) (518) (128) (459)
Net Cash From Operating Activities 39,002 36,181 41,069 37,600
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment 3,822 5,917 920 4,015 (Increase)/Decrease in amount owing by associated companies 1,325 (641) 1,362 (605) Proceeds from disposal of investment in an associated company 686 - 686 - Dividends received from an associated company 558 558 558 558 Interest received 425 77 421 73 Additions to property, plant and equipment (9,180) (17,739) (7,142) (14,833) Payment of acquisition costs - (1,263) - (1,263) Net cash outflow on acquisition of subsidiary companies - - - (203)
Net Cash Used In Investing Activities (2,364) (13,091) (3,195) (12,258)
CASH FLOWS USED IN FINANCING ACTIVITIES Repayment of hire-purchase payables (2,797) (2,646) (2,539) (2,436) Repayment of borrowings - (8,000) - (8,000) Dividends paid (10,171) (6,957) (10,171) (6,957) Dividends paid to minority shareholders (3) (3) - -
Net Cash Used In Financing Activities (12,971) (17,606) (12,710) (17,393)
NET INCREASE IN CASH AND CASH EQUIVALENTS 23,667 5,484 25,164 7,949
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 15,268 9,784 7,629 (320)
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 30) 38,935 15,268 32,793 7,629
The accompanying Notes form an integral part of the Financial Statements.
56 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS
1. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION
The Company is principally involved in the production, marketing and sale of beverage and food products.
The subsidiary companies are principally involved in the production, marketing and distribution of beverage and food products.
There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year.
The total number of employees of the Group and of the Company at year end were 1,692 and 878 (2,455 and 1,102 in 2001) respectively.
The registered office and the principal place of business is located at 7, Jalan Tandang, 46050 Petaling Jaya, Selangor Darul Ehsan.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the Group and of the Company have been approved by the Board of Directors for issuance on 27th February, 2003.
The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards of the Malaysian Accounting Standards Board.
3. SIGNIFICANT ACCOUNTING POLICIES
Accounting Basis The financial statements of the Group and of the Company have been prepared under the historical cost convention modified to include the revaluation of certain property, plant and equipment. The directors have applied the transitional provisions of International Accounting Standard No. 16 (Revised), Property, Plant and Equipment by virtue of which a reporting enterprise which does not adopt a policy of revaluation is allowed to retain revalued amounts on the basis of their previous revaluation (subject to continuity in depreciation policy and the requirement to write an asset down to its recoverable amount.)
Revenue Sales of goods are recognised upon delivery of products and when the risks and rewards of ownership has passed. Revenue of the Group and of the Company represents gross invoiced value of sales less discounts and returns. All significant intercompany sales are eliminated on consolidation. Group sales do not include the applicable share of associated companies’ sales.
Rental and interest income earned by the Group and the Company are recognised on accruals basis and dividend income earned by the Company is recognised when the shareholder’s right to receive payment is established.
Foreign Currency Conversion Foreign currency transactions are converted into Malaysian Ringgit at exchange rates prevailing at the transaction dates or, where settlement has not yet been made at the end of the financial year, at the approximate exchange rates prevailing on that date. All foreign exchange gains or losses are taken up in the income statement.
For the purposes of consolidation, the financial statements of the foreign subsidiary and associated companies, have been translated into Ringgit Malaysia as follows:
Assets and liabilities - at closing rate Share capital and reserves - at historical rate Revenue and expenses - at average rate for the financial year
YEO HIAP SENG (MALAYSIA) BHD 57 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Foreign Currency Conversion (Cont’d) The closing rate per unit of Ringgit Malaysia used in the translation of foreign subsidiary and associated companies’ financial statements are as follows:
2002 2001
Singapore Dollar 0.456 0.487 Thai Baht 11.669 11.862 Bahrain Dinar 0.0990 0.0870
All translation gains or losses are taken up and reflected in the translation reserve account under shareholders’ equity. Such translation gains or losses are recognised as income or expenses in the income statements, in the period in which those companies are disposed of.
Differences in exchange arising from the translation of the results of those companies at the average exchange rate, are taken to translation reserve account.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Company and are translated at the exchange rate ruling at the date of the transaction.
Income Tax The tax effects of transactions are generally recognised, using the ‘liability’ method, when such transactions enter into the determination of net income regardless of when they are recognised for tax purposes. Deferred tax is provided on timing differences arising from differences between book depreciation and tax capital allowances of property, plant and equipment. However, when timing differences would result in net future tax benefits, such benefits are recognised only on actual realisation.
Property, Plant and Equipment and Depreciation Property, plant and equipment are stated at cost or valuation less accumulated depreciation.
Gain or loss arising from the disposal of an asset is determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset, and is recognised in the income statements.
The carrying amounts of property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an item of property, plant and equipment exceeds its recoverable amount. The impairment loss is charged to the income statements unless it reverses a previous revaluation in which case it is treated as a revaluation decrease.
Freehold land and property, plant and equipment under construction are not depreciated. Land under long and short leases are amortised evenly over the term of the lease. Depreciation of all other property, plant and equipment is computed on the straight-line method based on the estimated useful lives of the various assets. The annual depreciation rates are as follows:
%
Land under long and short leases 1.0 – 2.0 Buildings and improvements 2.0 – 10.0 2 1 Machinery and equipment 6 /3 – 33 /3 1 Furniture, fixtures and fittings, and office equipment 10.0 – 33 /3 Vehicles and vehicles under hire-purchase 10.0 – 20.0
Property, Plant and Equipment Acquired Under Hire-Purchase Arrangements Property, plant and equipment acquired under hire-purchase arrangements are capitalised in the financial statements and the corresponding obligations treated as liabilities. Finance charges are allocated to the income statements to give a constant periodic rate of interest on the remaining hire-purchase liabilities.
58 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary companies made up to the end of the financial year. Financial statements of subsidiary companies are consolidated using the acquisition method of accounting. On acquisition, the assets and liabilities of the relevant subsidiary companies are measured at their fair values at the date of acquisition.
The results of subsidiary companies acquired are included in the consolidated financial statements from the effective date of acquisition. All significant inter-company balances and transactions are eliminated on consolidation.
Goodwill arising on consolidation represents the excess of the purchase consideration over the share of fair values of the identifiable net assets of a subsidiary company at the date of acquisition.
Goodwill is recognised as an asset and amortised on a straight-line basis over a period of 20 years commencing in 2001.
Where an indication of impairment exists, the carrying amount of goodwill is assessed and written down immediately to its recoverable amount.
Investments Investments in unquoted subsidiary companies, which are eliminated on consolidation, investment in unquoted associated companies and other investments are stated at cost in the Company’s financial statements. Allowance for diminution in value is made when, in the opinion of the directors, there is a permanent impairment in the value of the investments.
Associated Companies An associated company is non-subsidiary company in which the Company holds not less than 20% of the equity voting rights as long term investment and in which the Company is in a position to exercise significant influence in its management.
The Company’s investments in associated companies are accounted for by the equity method of accounting based on management or audited financial statements made up to 31st December, 2002. Under this method of accounting, the Company’s interests in the post acquisition profit and reserve of the associated companies are included in the consolidated results while dividends received from associated companies are reflected as a reduction of the investment in the consolidated balance sheet. The carrying values of these investments approximate the underlying equities in net assets of the associated companies.
Inventories Inventories, other than bottles and cases, are valued at the lower of cost (determined principally on the first-in, first-out basis) and net realisable value. The cost of raw materials and other inventories comprises the original cost of purchase plus cost of bringing the inventories to location. The cost of finished goods and work-in-process includes the cost of raw materials, direct labour and a proportion of the manufacturing overheads. Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion.
Bottles and cases are stated at cost less amounts written off in respect of losses arising from obsolescence, breakages and non-return. The cost of bottles and cases is written off on a straight-line basis over a period of five years.
Receivables Trade and other receivables are stated at nominal value as reduced by the appropriate allowance for estimated irrecoverable amounts. Allowance for doubtful receivables is made based on estimates of possible losses which may arise from non-collection of certain receivable accounts.
Provisions Provisions are made when the Group and the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be recognised to settle the obligation, and when a reliable estimate of the amount can be made.
YEO HIAP SENG (MALAYSIA) BHD 59 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Financial Assets The Group’s and the Company’s principal financial assets are short term deposits, cash and bank balances, trade and other receivables, amount owing by related companies and equity investment.
Trade and other receivables and amount owing by related companies are stated at their nominal value as reduced by appropriate allowance for estimated irrecoverable amounts.
Financial Liabilities Significant financial liabilities include trade and other payables, amount owing to related companies and hire-purchase payables are stated at nominal value.
Cash Flow Statement The Group and the Company adopt the indirect method in the preparation of the cash flow statement.
Cash equivalents are short-term, highly liquid investments with maturities of three months or less from the date of acquisition and are readily convertible to cash in value with insignificant risk of changes in value.
4. SEGMENTAL REPORTING
Geographical Segments Malaysia Singapore Others Total RM'000 RM'000 RM'000 RM'000 2002
Revenue 348,856 66,140 34,346 449,342
Results Segment results 10,340 3,927 4,233 18,500
Unallocated expenses (1,300)
Profit from operations 17,200 Finance costs (163) Share of loss from associated companies (977) Interest from other investment 425
Profit before tax 16,485
Income tax expense (2,349)
Profit after tax 14,136
(Forward)
60 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
4. SEGMENTAL REPORTING (Cont’d)
Geographical Segments (Cont’d) Malaysia Singapore Others Total RM'000 RM'000 RM'000 RM'000 2001
Revenue 367,528 75,330 23,330 466,188
Results Segment results 20,040 1,611 2,090 23,741
Unallocated expenses (491)
Profit from operations 23,250 Finance costs (518) Share of loss from associated companies (1,405) Interest from other investment 77
Profit before tax 21,404
Income tax expense (5,128)
Profit after tax 16,276
The segments share significant common distribution network and resources and the directors are of the opinion that it is not meaningful and practical to allocate operating assets and liabilities to the individual segment. Accordingly, segment assets and liabilities have not been disclosed as required under Malaysian Accounting Standard Board No. 22.
Information on the Group’s operations by business segments has not been provided as the Group principally involved in manufacturing and distribution of beverage and food products.
5. DIRECTORS’ REMUNERATION The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Executive directors: Fees - 36 - 36 Other emoluments: Salaries and others 2,526 957 2,526 957 Benefits in-kind 30 34 30 34
2,556 1,027 2,556 1,027 Non-executive directors: Fees 53 143 53 143 Other emoluments 12 - 12 -
2,621 1,170 2,621 1,170
YEO HIAP SENG (MALAYSIA) BHD 61 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
6. PROFIT FROM OPERATIONS
Include in profit from operations are the following: The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 After charging: Allowance for doubtful receivables: Trade 5,252 - - - Others 464 15 464 - Bad receivables written off 73 310 29 25 Inventories written off 4,271 5,098 1,127 1,181 Allowance for inventories obsolescence 1,249 779 1,153 475 Royalty, technical and management fees payable to: Ultimate holding company (Note 18) 3,736 4,211 3,736 4,211 Third party 300 230 300 230 Rental of machinery, equipment and motor vehicles payable to: Third party 2,636 1,025 1,556 706 Subsidiary company (Note 18) - - 2,625 844 Provision for retirement benefits 2,146 1,737 2,444 666 Rental of premises 2,088 2,097 1,756 721 Property, plant and equipment written off 1,607 240 1,171 219 Loss on disposal of property, plant and equipment - - 474 - Audit fee: Auditors of the Company 202 200 90 84 Other auditors 16 13 - - Allowance for diminution in value of investment 120 - 120 - Loss on disposal of investment in an associated company - - 6,174 - Foreign exchange loss: Realised - 1,628 - 1,908 Unrealised - 647 - 392
And crediting: Provision for relocation expenses no longer required: Total provision 13,000 - 13,000 - Less: Termination benefits due to restructuring exercise (4,956) - - - Net 8,044 - 13,000 - Gain on disposal of property, plant and equipment 1,797 3,863 - 2,101 Gain on disposal of investment in an associated company 686 - - - Rental income of machinery and equipment receivable from: Third party 47 540 - - Immediate holding company (Note 18) 607 195 - - Foreign exchange gain: Realised 187 - 56 - Unrealised 340 - 340 - Rental of premises 307 157 270 153 Allowance for doubtful receivables no longer required 94 1,875 - - Allowance for inventories obsolescence no longer required 24 - - - Bad receivables recovered 7 64 - 6
Staff costs include salaries, bonuses, contributions to employees’ provident fund, retirement benefit and all other payroll costs.
62 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
7. FINANCE COSTS The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Interests on: Short-term borrowings and others 12 121 4 109 Hire-purchase 151 397 124 350
163 518 128 459
8. INCOME FROM OTHER INVESTMENTS The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Interest income: Associated companies (Note 13) 136 16 136 16 Short-term deposits 284 53 283 52 Others 5 8 2 5 Income received from subsidiary companies (Note 18) - - 4,205 5,175 Gross dividend from associated company - - 558 558
425 77 5,184 5,806
9. INCOME TAX EXPENSE
Income tax expense of the Group and of the Company are as follows:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Current estimated tax payable 2,810 4,397 1,100 1,740 Deferred tax (Note 24) 121 - - - (Over)/underprovision in prior years (582) 565 - - Share of associated Company’s income tax expense - 166 - -
Tax charge 2,349 5,128 1,100 1,740
The tax charge for the Group in 2002 and 2001 and the Company in 2002 and 2001 reflects an effective rate which is lower than the statutory tax rate due mainly to investment incentives which are available for set off against part of the income that would otherwise be taxable.
YEO HIAP SENG (MALAYSIA) BHD 63 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
10. EARNINGS PER SHARE The Group 2002 2001 RM'000 RM'000 Basic
Net profit attributable to ordinary shareholders 14,108 16,257
Units Units
Weighted average number of ordinary shares in issue 128,095,541 98,565,181
Basic earnings per share (sen) 11.0 16.5
11. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
The Group Land, Land, buildings buildings and and Furniture, improve- improve- fixtures ments ments Machi- and Freehold under under nery fittings, Construc- land and long short and and office tion-in- buildings lease lease equipment equipment Vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 COST/ VALUATION Balance at 1.1.2002 At valuation 4,238 13,936 3,825 - - - - 21,999 At cost 31,770 37,174 20,941 180,527 21,496 15,915 3,542 311,365
36,008 51,110 24,766 180,527 21,496 15,915 3,542 333,364
Additions 240 337 47 3,327 1,062 345 3,822 9,180 Disposals/ write off (125) (1,331) (786) (4,209) (803) (4,826) - (12,080) Reclassification - 1,570 - 205 - - (1,775) - Translation differences - - - 3,002 (6) - - 2,996
Balance at 31.12.2002 At valuation 4,113 13,936 3,275 - - - - 21,324 At cost 32,010 37,750 20,752 182,852 21,749 11,434 5,589 312,136
36,123 51,686 24,027 182,852 21,749 11,434 5,589 333,460
64 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
11. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
The Group Land, Land, buildings buildings and and Furniture, improve- improve- fixtures ments ments Machi- and Freehold under under nery fittings, Construc- land and long short and and office tion-in- buildings lease lease equipment equipment Vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
ACCUMULATED DEPRECIATION Balance at 1.1.2002 11,493 21,988 10,262 97,441 17,371 13,996 - 172,551 Charge for the year 1,012 1,711 786 10,647 1,518 881 - 16,555 Disposals/ write off - (221) (229) (1,227) (656) (4,517) - (6,850) Translation differences - - - 156 (1) - - 155
Balance at 31.12.2002 12,505 23,478 10,819 107,017 18,232 10,360 - 182,411
NET BOOK VALUE At 31.12.2002 23,618 28,208 13,208 75,835 3,517 1,074 5,589 151,049
NET BOOK VALUE At 31.12.2001 24,515 29,122 14,504 83,086 4,125 1,919 3,542 160,813
Depreciation charge for 2001 1,000 1,643 838 8,813 2,083 1,964 - 16,341
YEO HIAP SENG (MALAYSIA) BHD 65 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
11. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
The Company Land, buildings and Furniture, improve- fixtures ments Machi- and Freehold under nery fittings, Construc- land and long and and office tion-in- buildings lease equipment equipment Vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
COST/VALUATION Balance at 1.1.2002 At valuation 2,223 11,327 - - - - 13,550 At cost 24,590 36,613 102,994 11,720 2,278 1,946 180,141
26,813 47,940 102,994 11,720 2,278 1,946 193,691 Additions 240 337 2,008 901 171 3,485 7,142 Disposals/write off - (1,321) (2,450) (165) (484) - (4,420) Reclassification - 1,570 205 - - (1,775) -
Balance at 31.12.2002 At valuation 2,223 11,327 - - - - 13,550 At cost 24,830 37,199 102,757 12,456 1,965 3,656 182,863
27,053 48,526 102,757 12,456 1,965 3,656 196,413
ACCUMULATED DEPRECIATION Balance at 1.1.2002 11,387 20,035 68,180 9,699 1,841 - 111,142 Charge for the year 1,012 1,636 6,267 989 246 - 10,150 Disposals/write off - (210) (1,069) (111) (464) - (1,854)
Balance at 31.12.2002 12,399 21,461 73,378 10,577 1,623 - 119,438
NET BOOK VALUE At 31.12.2002 14,654 27,065 29,379 1,879 342 3,656 76,975
NET BOOK VALUE At 31.12.2001 15,426 27,905 34,814 2,021 437 1,946 82,549
Depreciation charge for 2001 993 1,556 6,254 844 253 - 9,900
66 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
11. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
As of 31st December, 2002, included in property, plant and equipment of the Group, are landed properties with net carrying values totalling about RM9,731,000 (RM9,890,000 in 2001) which are currently not in active use.
The land and buildings were revalued in the respective years based on the valuation reports of independent firms of professional valuers. The valuations of these properties were based on fair market values as follows:-
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Freehold land and buildings: At 1980 Valuation 3,873 3,873 2,223 2,223 At 1974 and 1977 Valuation 240 365 - -
Land, buildings and improvements under long lease: At 1980 Valuation 11,327 11,327 11,327 11,327 At 1977 Valuation 2,609 2,609 - -
Land, buildings and improvements under short lease: At 1981 Valuation 1,210 1,760 - - At 1980 Valuation 2,065 2,065 - -
21,324 21,999 13,550 13,550
The historical costs and carrying values of the revalued land and buildings are as follows:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Cost: Freehold land and buildings: At 1980 Valuation 857 857 837 837 At 1974 and 1977 Valuation 240 365 - -
Land and buildings improvements under long lease: At 1980 Valuation 7,482 7,482 7,482 7,482 At 1977 Valuation 1,387 1,387 - -
Land, buildings and improvements under short lease: At 1981 Valuation 433 481 - - At 1980 Valuation 1,160 1,160 - -
11,559 11,732 8,319 8,319 Accumulated Depreciation: Freehold land and buildings: At 1980 Valuation 104 104 104 104
Land and buildings improvements under long lease: At 1980 Valuation 5,633 5,633 5,633 5,633 At 1977 Valuation 1,090 1,090 - -
Land, buildings and improvements under short lease: At 1981 Valuation 300 305 - - At 1980 Valuation 910 910 - -
8,037 8,042 5,737 5,737
Net Book Values 3,522 3,690 2,582 2,582
YEO HIAP SENG (MALAYSIA) BHD 67 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
11. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
The net book values of property, plant and equipment under hire-purchase arrangements are as follows:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Vehicles 462 746 217 237 Machinery and equipment - 5,621 - 5,621
462 6,367 217 5,858
Included in property, plant and equipment of the Group and of the Company are fully depreciated plant and machinery which are still in use, with cost amounting to approximately RM83,271,000 (RM79,068,000 in 2001).
12. INVESTMENTS IN UNQUOTED SUBSIDIARY COMPANIES
These consist of unquoted shares in subsidiary companies at cost.
The subsidiary companies, which are all incorporated in Malaysia (except where indicated), are as follows:
Direct Subsidiary Effective Companies Equity Interest Principal Activities 2002 2001 %%
Bestcan Food Technological 99.42 99.42 Production of instant noodles Industry Sendirian Berhad
Esin Canning Industry Sendirian Berhad 100 100 Ceased operations
YHS Manufacturing Berhad 100 100 Orchard and fish farming
Yeo Hiap Seng (Sarawak) 100 100 Production of sauces and Sendirian Berhad non-alcoholic beverages
Yeo Hiap Seng Trading 100 100 Distribution of food and beverages Sendirian Berhad and other non-food products
Yeo Hiap Seng (Malacca) 100 100 In members’ voluntary liquidation Sendirian Berhad
Yeo Hiap Seng (Perak) 100 100 Dormant Sendirian Berhad
Yeo Hiap Seng (Sabah) 100 100 In members’ voluntary liquidation Sendirian Berhad
Yeo Hiap Seng (Middle East) Co. Ltd. E.C. * 100 100 Marketing of Yeo’s products (Incorporated in Bahrain)
YHS Beverage (International) Pte. Ltd. (YHSBI)* 100 100 Contract manufacturer of (Incorporated in Singapore) beverage and food products
Indirect Subsidiary Company
Wahtai Realty Sendirian Berhad 100 100 Dormant
* The financial statements of these companies were examined by auditors other than the auditors of the Company.
68 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
12. INVESTMENTS IN UNQUOTED SUBSIDIARY COMPANIES (Cont’d)
On 27th April, 2001, the Company entered into a supplementary conditional agreement with YHS (Singapore) Pte. Ltd. (YHSPL) to acquire the entire issued and paid-up share capital of YHSBI, consisting of 128,000 ordinary shares of SGD1.00 each, for a purchase consideration of SGD33,917,264 (equivalent to RM73,973,553) to be satisfied by an issue of 44,295,541 new ordinary shares of the Company at an issue price of RM1.67 per share. At an Extraordinary General Meeting held on 11th July, 2001, the proposed acquisition of YHSBI was duly approved by the shareholders of the Company and on 21st August, 2001, the Company allotted the new ordinary shares to YHSPL (Note 25).
On 13th May, 2001, the Company set up a new subsidiary company, Yeo Hiap Seng (Middle East) Co. Ltd. E. C., at Bahrain with cost amounting to RM202,600.
13. INVESTMENTS IN UNQUOTED ASSOCIATED COMPANIES
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Unquoted shares, at cost - - 1,787 8,647 Share of net tangible assets 4,559 6,094 - -
Total 4,559 6,094 1,787 8,647
The associated companies, which are all incorporated in Malaysia (except where indicated), are as follows:
Effective Equity Interest Principal Activities 2002 2001 %%
Senawang Edible Oil (Sendirian) Berhad 23.85 23.85 Processing and trading of palm oil products
Yakin Aneka Sdn. Bhd. 35 35 Ceased operations
W.Y. Company Limited (Incorporated in Thailand) 49 49 Manufacture of non-carbonated drinks
Sarawak Coconut Enterprise Sdn. Bhd. - 49 Manufacture and distribution of coconut related products
One of the associated companies, Senawang Edible Oil (Sendirian) Berhad, was granted income tax relief under the Investment Incentive Act and, accordingly, was not liable for tax on substantially all its business income earned. The income tax relief period expired in June 1980. As of 31st December, 2002, the Company’s attributable share in the unappropriated tax-exempt profits of this associated company amounted to RM78,000 (RM636,000 in 2001).
YEO HIAP SENG (MALAYSIA) BHD 69 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
13. INVESTMENTS IN UNQUOTED ASSOCIATED COMPANIES (Cont’d)
The amount owing by associated companies mainly represents unsecured loans and expenses paid on behalf. The loans bear interest at rates ranging from 2% to 7.75% (2% to 7.25% in 2001) per annum and have no fixed term of repayment.
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Amount owing by associated companies 1,386 5,355 1,386 4,973 Allowance for doubtful receivables (464) (2,572) (464) (2,226)
Net 922 2,783 922 2,747
During the financial year, interest income received from the associated companies for the Group and the Company amounted to RM136,102 (RM16,466 in 2001).
The Group’s share of losses in two associated companies has been recognised to the extent of the carrying amount of the investment. The cumulative and current year’s unrecognised share of losses in excess of carrying amount is about RM2,233,000 (RM2,189,000 in 2001) and RM29,000 (RM212,000 in 2001) respectively.
14. OTHER INVESTMENTS
Other investments of the Group and the Company consist of the following:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Shares quoted in Malaysia: At cost 129 129 129 129 Allowance for diminution in value (Note 6) (120) - (120) -
Net 9 129 9 129
Unquoted shares: At cost 1 1 - -
Total 10 130 9 129
Market value on quoted shares 9 22 9 22
15. GOODWILL ON CONSOLIDATION The Group 2002 2001 RM'000 RM'000
Arising from acquisition of subsidiary companies 26,167 26,167 Less: Accumulated amortisation (1,744) (436)
Net 24,423 25,731
70 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
16. INVENTORIES
Inventories consist of the following:
The Group 2002 2001 RM'000 RM'000 At cost: Finished goods and trading merchandise 28,009 50,023 Raw materials 12,437 16,119 Packing materials 8,091 13,281 Goods-in-transit 1,783 2,527 Bottles and cases 844 892 Work-in-process 900 1,070 Others 1,426 1,619
53,490 85,531 Allowance for inventories obsolescence (2,145) (1,116)
Net 51,345 84,415
The Company 2002 2001 RM'000 RM'000 At cost: Finished goods 7,837 10,428 Raw materials 9,825 12,447 Packing materials 7,225 11,821 Goods-in-transit 86 2,043 Bottles and cases 844 844 Work-in-process 979 927 Others 667 832
27,463 39,342 Allowance for inventories obsolescence (1,922) (783)
Net 25,541 38,559
17. TRADE RECEIVABLES, OTHER RECEIVABLES AND PREPAID EXPENSES
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 (a) TRADE RECEIVABLES
Trade receivables 74,846 68,565 6,122 2,981 Allowance for doubtful receivables (8,140) (2,982) - -
Net 66,706 65,583 6,122 2,981
The credit period granted on sales of goods ranges from 14 to 90 days (14 to 90 days in 2001). An allowance has been made for estimated doubtful amounts of RM8,140,636 (RM2,981,961 in 2001).
YEO HIAP SENG (MALAYSIA) BHD 71 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
17. TRADE RECEIVABLES, OTHER RECEIVABLES AND PREPAID EXPENSES (Cont’d)
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
(b) OTHER RECEIVABLES AND PREPAID EXPENSES
Other receivables 5,054 6,713 2,146 2,512 Deposits 4,007 2,670 447 424 Prepaid expenses 772 1,075 220 525 Tax recoverable 10,500 2,128 9,167 2,808
20,333 12,586 11,980 6,269 Allowance for doubtful receivables (42) (97) - (55)
Net 20,291 12,489 11,980 6,214
18. HOLDING COMPANIES AND RELATED PARTY TRANSACTIONS
The Company is a subsidiary company of YHS (Singapore) Pte. Ltd. (YHSPL), a company incorporated in Singapore. The directors regard Yeo Hiap Seng Limited (YHSL), a company also incorporated in Singapore as the ultimate holding company.
Amount owing by/to holding companies mainly arose from purchases, sales and other trade transactions.
Amount owing by/to subsidiary companies mainly represents sales and other trade transactions, advances and payments on behalf with the subsidiary companies.
Amount owing by other related companies mainly represents purchases and sales with YHS Trading (USA), Inc. and YHS Hong Kong (2000) Pte. Ltd., subsidiary companies of YHSL.
The amount owing is interest free and has no fixed repayment schedule.
The financial statements of the Group and of the Company reflect the following related party transactions:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Ultimate holding company: Royalty, technical and management fees payable (Note 6) 3,736 4,211 3,736 4,211
Immediate holding company: Sales of goods 66,140 75,643 61,608 71,400 Disposal of property, plant and equipment 1,597 - - - Rental of machinery and equipment (Note 6) 607 195 - - Purchases of goods 528 90 415 52
72 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
18. HOLDING COMPANIES AND RELATED PARTY TRANSACTIONS (Cont’d)
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Subsidiary companies: Sales of goods - - 177,936 196,196 Advertising and promotional expenses recovered - - 14,893 20,049 Income receivable: Gross dividends - - 3,474 3,474 Rental of premises - - 731 1,701
Total (Note 8) - - 4,205 5,175 Rental of machinery, equipment and motor vehicles (Note 6) - - 2,625 844 Service fees payable - - 85 42 Operating expenses reimbursed - - 517 401
Other related companies: Sales of goods 21,447 15,788 21,447 15,788
The Directors of the Group and of the Company are of the opinion that the above transactions have been entered in the normal course of business and have been established under the terms that are no less favourable than those arranged with independent third parties.
19. CASH AND BANK BALANCES The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Cash and bank balances 10,975 10,604 4,833 2,965 Short term deposits with licensed banks 27,960 4,664 27,960 4,664
38,935 15,268 32,793 7,629
20. TRADE PAYABLES, OTHER PAYABLES AND ACCRUED EXPENSES
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit period granted to the Group and the Company for trade purchases is 60 days (60 days in 2001).
Other payables and accrued expenses consist of the following:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Other payables 5,610 8,384 3,199 5,290 Accrued expenses 16,725 15,106 7,000 7,164 Hire-purchase payables (Note 23) 236 2,760 100 2,576
22,571 26,250 10,299 15,030
YEO HIAP SENG (MALAYSIA) BHD 73 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
21. PROVISION FOR RELOCATION OF MANUFACTURING FACILITIES
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
At beginning of year 13,000 13,000 13,000 13,000 Amount no longer required (13,000) - (13,000) -
At end of year - 13,000 - 13,000
The provision for relocation of manufacturing facilities represents the cost for relocating certain plant facilities and related staff cost involved in a detailed rationalisation plan to relocate and reduce the number of its current manufacturing plants in order to decrease logistics costs and increase production efficiency. During the financial year, the rationalisation plan has been abandoned and accordingly, the full provision has been reversed to the income statement.
22. PROVISION FOR RETIREMENT BENEFITS The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Balance at beginning of year 8,745 8,512 4,001 4,064 Allowance during the year (Note 6) 2,146 1,737 2,444 666 Payment for the year (1,115) (1,137) (520) (536) Transfer to Yeo Hiap Seng (M) Bhd Retirement Benefit Fund (407) (367) (227) (193)
Balance at end of year 9,369 8,745 5,698 4,001
The Group and the Company have a non-contributory unfunded retirement benefits scheme for those employees who are eligible under a collective bargaining agreement and a contributory funded retirement benefits scheme (known as Yeo Hiap Seng (M) Bhd Retirement Benefit Fund) for those management staff not covered by collective bargaining agreement but who fulfil certain conditions. As of 31st December, 2002, the provision for retirement benefits consists of the following:
(a) Retirement benefits for employees under a collective bargaining agreement, which are estimated and provided for in the financial statements taking into consideration the length of service and basic salary earnings of the eligible employees; and
(b) Retirement benefits for management staff, which are actuarially determined and the charge to operations includes current service costs plus amortisation of past service costs over a period of 5 years. Based on the actuary’s valuation report in December 2000, past service costs not yet recognised in the financial statements as of 31st December, 2002, amounted to about RM879,000 (RM1,319,000 in 2001).
The Company has proposed to dissolve the scheme for management staff, as at 1st May, 2003, crystallising the liability of the Group and the Company. The accrued benefits for each staff shall be paid into the respective individual Employment Provident Fund Account.
74 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
23. HIRE-PURCHASE PAYABLES
The Group’s obligations under hire-purchase are as follows:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Total outstanding 272 3,222 116 2,772 Less: Interest-in-suspense (12) (165) (4) (121)
Principal outstanding 260 3,057 112 2,651
Less: Amount due within 12 months included under other payables and accrued expenses (Note 20) (236) (2,760) (100) (2,576)
Non-current portion 24 297 12 75
The non-current portion is payable as follows:
Financial year ended 31 December: 2003 - 279 - 75 2004 24 18 12 -
24 297 12 75
The average term of hire purchase is about 3 to 5 years. For the financial year ended 31st December, 2002, the effective borrowing rate was about 4.8% to 5.5% (4.8% to 5.5% in 2001) per annum. Interest rates are fixed at the inception of the hire-purchase arrangements.
24. DEFERRED TAX LIABILITIES The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Balance at beginning of year - - - - Transfer from income statement ( Note 9) 121 - - -
Balance at end of year 121 - - -
YEO HIAP SENG (MALAYSIA) BHD 75 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
24. DEFERRED TAX LIABILITIES (Cont’d)
As of 31st December, 2002, the deferred tax liability of the Group arose mainly from timing differences between book depreciation and tax capital allowances of the property, plant and equipment.
As of 31st December, 2002, the amount of estimated net deferred tax assets of the Group and of the Company calculated at applicable tax rate which is not recognised in the financial statements, are as follows:
Deferred tax liabilities/(assets) The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Tax effects of : Timing differences between book depreciation and tax capital allowances of property, plant and equipment 2,097 2,713 2,038 2,958 Unabsorbed capital allowances and unutilised tax losses (4,222) (2,841) (686) - Others (2,887) (3,325) (1,551) (2,960)
Net (5,012) (3,453) (199) (2)
25. SHARE CAPITAL
The Group and The Company 2002 2001 RM'000 RM'000 Authorised: Ordinary shares of RM1 each: Balance at beginning of year 300,000 100,000 Created during the year - 200,000
Balance at end of year 300,000 300,000
Issued and paid-up: Ordinary shares of RM1 each: Balance at beginning of year 128,096 83,800 Issued during the year (Note 12) - 44,296
Balance at end of year 128,096 128,096
76 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
26. RESERVES The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Distributable reserves: General reserve 10,000 10,000 10,000 10,000 Unappropriated profit 113,958 110,022 52,582 57,106
123,958 120,022 62,582 67,106 Non-distributable reserves: Share premium 59,897 59,897 59,897 59,897 Capital reserve 1 - - - Foreign exchange reserve 119 (2,868) - -
60,017 57,029 59,897 59,897
Total 183,975 177,051 122,479 127,003
Share premium Share premium arose from the following: The Group and The Company 2002 2001 RM'000 RM'000 Special issue of 44,295,541 ordinary shares issued at a premium of RM0.67 per ordinary share in 2001, net of acquisition cost of RM1,262,737 28,415 28,415 Right issue of 10,925,000 ordinary shares issued at a premium of RM1.00 per ordinary share in 1990 10,925 10,925 Special issue of 8,940,000 ordinary shares issued at a premium of RM1.00 per ordinary share in 1990 8,940 8,940 Special issue of 9,310,000 ordinary shares issued at a premium of RM1.30 per ordinary share in 1990 12,103 12,103 Share issue expenses (486) (486)
Total 59,897 59,897
Capital reserve During the financial year, an amount of BD60 equivalent to RM606 of a subsidiary company, Yeo Hiap Seng (Middle East) Co. Ltd. E.C. has been transferred to the capital reserve. The capital reserve arose from the provisions of the Bahrain Commercial Companies Law 1975 (Amended), which represents an amount equivalent to 10% of the company’s net profit before appropriation to be transferred to a non-distributable reserve account until such time as a minimum of 25% of the issued share capital is set aside.
Foreign exchange reserve Exchange differences arising on translation of foreign controlled entities are taken to the foreign exchange reserve.
Unappropriated profit Distributable reserves are those available for distribution by way of cash dividends. Based on estimated tax credits available and prevailing tax rates applicable to dividends, the unappropriated profit of the Company is available for distribution by way of cash dividends without additional tax liability being incurred.
As of 31st December, 2002, the Group and the Company have unutilised reinvestment allowances and investment tax credits amounting to about RM31,210,000 (RM36,872,000 in 2001) and RM22,304,000 (RM27,967,000 in 2001) respectively, under the Investment Incentive Act, 1968 (revised 1978) and Promotion of Investment Act, 1986. These reinvestment allowances and investment tax credits, if confirmed by the Inland Revenue Board, will enable the Company and its subsidiary companies to distribute tax exempt dividends up to the same amount. As of 31st December, 2002, the Group and the Company have reinvestment allowances and investment tax credits approved by the tax authorities amounting to about RM22,473,000 and RM19,640,000 (RM27,292,000 and RM24,459,000 in 2001) respectively.
YEO HIAP SENG (MALAYSIA) BHD 77 NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
27. DIVIDENDS
Dividends consist of the following: The Group and The Company 2002 2001 RM'000 RM'000
Interim dividend paid - 2%, less tax, for 2002; 3%, less tax, for 2001 1,845 2,767 Final dividend paid - 6.5%, tax exempt, for 2001 8,326 -
Total 10,171 2,767
A final dividend of 6.5%, tax exempt, amounting to RM8,326,210 proposed in the previous financial year and dealt with in the previous directors’ report was paid by the Company during the current financial year.
An interim dividend of 2%, less tax, amounting to RM1,844,576 was paid in respect of the current financial year.
The directors proposed a final dividend of 6.5%, tax exempt, amounting to RM8,326,210 in respect of the current financial year. This dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as liability in the financial statements.
The proposed final dividend for 2002 is payable in respect of all ordinary shares in issue as at the date of the financial statements.
28. CONTINGENT LIABILITIES
(a) A legal action for damages of approximately RM6.7 million and interest thereon for an allegad breach of a lease agreement of the land where the Chenderiang mineral water plant was situated, was brought by the lessor against the Company in 2003. The Company is disputing the claim and based on advice received from its legal advisors, the directors are of the opinion that this claim is unsustainable. Accordingly, no provisions for loss has been made in the financial statements. The outcome of the case is not presently known.
(b) In 2002, the subsidiary companies have credit and loan facilities amounting to RM200,000 obtained from local financial institutions, which are guaranteed by the Company. Accordingly, the Company is contingently liable to the extent of the amount of the credit and loan facilities utilised by its subsidiary companies. None of the credit and loan facilities is secured against the assets of the Company or of the Group.
29. COMMITMENTS
As of the end of the financial year, the Group and the Company have commitments in respect of the following:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000 Purchase and construction of property, plant and equipment: Approved and contracted for - 2,522 - 2,457 Approved but not contracted for - 43,701 - 43,701
78 YEO HIAP SENG (MALAYSIA) BHD NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
30. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the cash flow statements comprise the following balance sheet items:
The Group The Company 2002 2001 2002 2001 RM'000 RM'000 RM'000 RM'000
Cash and bank balances 38,935 15,268 32,793 7,629
31. FINANCIAL INSTRUMENTS
Financial Risk Management Objectives and Policies The operations of the Group is subject to a variety of financial risks, including market risk, credit risk, liquidity risk and cash flow risk. The Group has formulated a financial risk management framework whose principal objective is to minimise the Group’s exposure to risk and/or costs associated with the financing, investing and operating activities of the Group.
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.
Market Risk The Group has in place policies to manage the Group’s exposure to fluctuation in the prices of the key raw materials and commodities used in the operations. The Group enters into fixed price contracts to establish determinable prices for raw materials and commodities used.
Credit Risk The Group has no major concentration of credit risk and manage these risks by monitoring credit ratings and limiting the aggregate financial exposure to any individual counterparty.
The Group extends credit to its customers based upon careful evaluation of the customer’s financial condition and credit history.
Liquidity Risk The Group practices prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital.
Cash flow risk The Group reviews its cash flow position regularly to manage its exposure to fluctuations in future cash flows associated with its monetary financial instruments.
Financial Assets The Group’s and the Company’s principal financial assets are short term deposits, cash and bank balances, trade and other receivables, amount owing by related companies and equity investment.
Trade and other receivables and amount owing by related companies are stated at their nominal value as reduced by appropriate allowance for estimated irrecoverable amounts.
Financial Liabilities Significant financial liabilities include trade and other payables, amount owing to related companies and hire-purchase payables are stated at nominal value.
Fair Values The carrying amount and the estimated fair value of the Group’s and the Company’s investment in quoted shares as of 31st December, 2002 is RM9,181.
Cash and cash equivalents, trade and other receivables, inter-company indebtedness and trade and other payables The carrying amount approximate fair value because of the short maturity of these financial assets and liabilities.
YEO HIAP SENG (MALAYSIA) BHD 79 STATEMENT BY DIRECTORS
The directors of YEO HIAP SENG (MALAYSIA) BERHAD state that, in the opinion of the directors, the accompanying balance sheets and statements of income, cash flows and changes in equity are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company as of 31st December, 2002 and of the results of their businesses and cash flows of the Group and of the Company for the year ended on that date.
Signed in accordance with a resolution of the Directors
RAJA DATO’ HJ. REDZWA BIN RAJA TUN UDA
TAN TEOW CHOON
Petaling Jaya 27th February, 2003
DECLARATION BY THE DIRECTOR PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE COMPANY
I, CHAN WAI MING, the Director primarily responsible for the financial management of YEO HIAP SENG (MALAYSIA) BERHAD, do solemnly and sincerely declare that the accompanying balance sheets, statements of income, cash flows and changes in equity are, in my 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.
Subscribed and solemnly declared by the abovenamed CHAN WAI MING at this 27th day of February, 2003.
Before me,
KOK THIAM TET COMMISSIONER FOR OATHS
80 YEO HIAP SENG (MALAYSIA) BHD GROUP PROPERTY PARTICULARS
Listed below are the particulars of the properties referred to in Note 11 to the Financial Statements.
Approximate Net Book Approximate Age of Value as at Land Area Building 31.12.2002 Location of Property Brief Description (sq. ft.) Tenure (years)* (RM'000)
1. Lot 58, Mukim Mergong Trading depot 43,596 99 years lease expiring 9 944 Alor Setar, Kedah in year 2076
2. Lot No. 43; 29-31 Factory and trading 85,895 99 years lease expiring 25 594 MIEL Industrial Estate Prai depot in year 2071
3. Lot 1163 Mukim 12 SWD Industrial site for 153,927 Freehold land - 1,670 Penang future development
4. Mukim of Ulu Kinta Farming lands 11,310,000 17 lots freehold. 3 lots 28 750 and Sungei Raja, Perak with 60 years lease expiring in year 2045
5. Lot No. 66134 Factory and trading 274,865 60 years lease expiring 31 Mukim of Ulu Kinta depot in year 2033 1,432
6. Lot 154475 Factory and trading 52,554 60 years lease expiring 31 District of Kinta, Perak depot in year 2048
7. Lot 65644 Factory and trading 218,876 60 years lease expiring 31 Jalan Jelapang, Ipoh depot in year 2033 1,807
8. Lot 154474 Factory and trading 65,659 60 years lease expiring 31 District of Kinta, Perak depot in year 2048
9. Lot 6843 (PT 2987) Industrial land 2,178,000 99 years lease expiring - Bidor Daerah in year 2094 Batang Padang, Perak 7,646
10. PT 2988 Bidor Daerah Industrial land 2,093,930 99 years lease expiring - Batang Padang, Perak in year 2094
11. 7 Jalan Tandang Corporate office 125,235 99 years lease expiring 43 7,198 Petaling Jaya factory and in year 2058 trading depot
12. Lots 1884 & 2450 Factory and trading 428, 140 99 years lease expiring 21 6,819 Shah Alam Industrial Estate depot in year 2074 and 2073 Shah Alam respectively
13. Lot PT 645-650 Trading depot 52,830 66 years lease expiring 7 1,300 Mukim Panchor in year 2048 Daerah Kemumin Kota Bharu, Kelantan
14. Lot 147A Semambu Factory and trading 217,800 66 years lease expiring 20 1,280 Industrial Estate Kuantan depot in year 2046 Pahang
YEO HIAP SENG (MALAYSIA) BHD 81 GROUP PROPERTY PARTICULARS (Cont’d)
Listed below are the particulars of the properties referred to in Note 11 to the Financial Statements.
Approximate Net Book Approximate Age of Value as at Land Area Building 31.12.2002 Location of Property Brief Description (sq. ft.) Tenure (years)* (RM'000)
15. Lots K-70 & 71 Trading depot 43,560 Freehold land 6 1,146 Temerluh Industrial Park (Phase One) Mentakab
16. Lot 2814 Mukim of Trading depot 1,600 Freehold land 24 45 Mentakab, Pahang
17. Lot 62, Kawasan Industrial Factory and trading 102,236 99 years lease expiring 18 773 Air Keroh, Malacca depot in year 2080
18. H.S. (M) 2458 (formerly Factory and trading 298,769 Interest in perpetuity 32 13,473 known as Lot 1151-1154) depot subject to payment Mukim of Plentong, Johor of annual rent
19. District of Kluang Industrial land 4,523,096 Interest in perpetuity - 7,054 Mukim Sungai Benut Johor
20. Lot 2050 (formerly known Factory and trading 144,550 Leasehold land expiring 17 2,290 as Lots 1340-1346) S66 depot in year 2027 Kuching
21. Lot 1347, Sec. 66 Industrial land 213,836 Leasehold expiring 5 Kuching, Sarawak in year 2027 4,395
22. Lot 1348, Sec. 66 Industrial land 102,279 Leasehold expiring 6 Kuching, Sarawak in year 2027
23. Lot 30 Block 19 Trading depot 65,732 Leasehold with a term 22 432 Sibu, Sarawak of title expiring in year 2039
24. Lot 4183 (formerly Trading depot 95,347 Leasehold with a term 7 2,417 known 1732-1750) expiring in year 2054 Block 5 Lambir Land District, Miri
25. Lot 71, Sedco Industrial Trading depot 56,350 Leasehold with a term 11 1,154 Estate, Kota Kinabalu expiring in year 2034
26. Lot 1632, Kemena Land Land for industrial 60,084 Leasehold 60 years - 415 District, Bintulu purpose expiring in year 2058
Total 65,034
* The approximate age of building denotes the age of the oldest building
82 YEO HIAP SENG (MALAYSIA) BHD STATEMENT OF SHAREHOLDINGS As At April 3, 2003
List of Directors' Shareholdings as at 21 January, 2003
Name Total Shareholdings %
1. Philip Ng Chee Tat Nil Nil
2. Raja Dato' Hj. Redzwa bin Raja Tun Uda Nil Nil
3. Brig. Gen (R) Dato' Yahya bin Yusof Nil Nil
4. Tan Teow Choon 102,000 0.08
5. Tjong Yik Min Nil Nil
6. Mohamed Nizam bin Abdul Razak Nil Nil
7. Chan Wai Ming Nil Nil
Other Shareholders
1. YHS (Singapore) Pte Ltd 77,811,041 60.74
List of Top 30 Shareholders
No. of % of No. Name Share Held Shareholdings
1. YHS (Singapore) Pte Ltd 77,811,041 60.74
2. Lembaga Tabung Angkatan Tentera 5,487,000 4.28
3. F.I.T. Nominees (Asing) Sdn Bhd 1,818,000 1.42 Qualifier: Platinium Broking Co Ltd - Clients A/C Bendic Associates Ltd
4. Mayban Nominees (Tempatan) Sdn Bhd 1,530,000 1.19 Qualifier: Mayban Trustees Berhad For RHB Dynamic Fund (N14011200188)
5. Mayban Securities Nominees (Asing) Sdn Bhd 1,427,000 1.11 Qualifier: Platinum Broking Company Limited For Vansbridge Ltd
6. F.I.T. Nominees (Asing) Sdn Bhd 1,268,000 0.99 Qualifier: Platinum Broking Co Ltd For Culford Holdings Intl Ltd
7. RHB Nominees (Tempatan) Sdn Bhd 1,000,000 0.78 Qualifier: RHB Asset Management Sdn Bhd For Kumpulan Wang Simpanan Pekerja
8. Alliance Group Nominees (Tempatan) Sdn Bhd 939,000 0.73 Qualifier: Pheim Asset Management Sdn Bhd For Employees Provident Fund
9. Employees Provident Fund Board 906,000 0.71
10. Kenanga Nominees (Asing) Sdn Bhd 881,000 0.69 Qualifier: UOB Kay Hian Pte Ltd For Gelas Products Pte Ltd
YEO HIAP SENG (MALAYSIA) BHD 83 STATEMENT OF SHAREHOLDINGS (Cont’d) As At April 3, 2003
List of Top 30 Shareholders (Cont’d) No. of % of No. Name Share Held Shareholdings
11. Asia Life (M) Berhad 754,000 0.59 Qualifier: As Beneficial Owner (Malaysia Life Fund)
12. AMMB Nominees (Tempatan) Sdn Bhd 483,000 0.38 Qualifier: AMTrustee Berhad For BHLB Pacific Dana Al-Ihsan (5/2-7)
13. JF Apex Nominees (Tempatan) Sdn Bhd 469,000 0.37 Qualifier: Pledged Securities Account For Ah Moi @ Teo Hui Bee
14. Universal Trustee (Malaysia) Berhad 431,000 0.34 Qualifier: BHLB Pacific Emerging Companies Growth Fund
15. Affin-UOB Nominees (Asing) Sdn Bhd 421,000 0.33 Qualifier: UOB Kay Hian Pte Ltd For Goi Seng Hui
16. HDM Nominees (Asing) Sdn Bhd 405,000 0.32 Qualifier: DBS Vickers Secs (S) Pte Ltd For Lee Kim Chong
17. F.I.T. Nominees (Asing) Sdn Bhd 372,000 0.29 Qualifier: Platinum Broking Co Ltd For Vansbridge Ltd
18. JF Apex Nominees (Tempatan) Sdn Bhd 368,000 0.29 Qualifier: Pledged Securities Account For Teo Siew Lai
19. Eng Nominees (Asing) Sdn Bhd 329,000 0.26 Qualifier: Kim Eng Ong Asia Securities Pte Ltd For Ho Kok Yin
20. Triple Boutique Sdn Bhd 314,000 0.25
21. Chong Cheong Leong 295,000 0.23
22. HSBC Nominees (Asing) Sdn Bhd 256,000 0.20 Qualifier: Nassau For Hartlane Enterprises Inc
23. Tan Jin Tuan 247,000 0.19
24. HDM Nominees (Asing) Sdn Bhd 238,000 0.19 Qualifier: UOB Kay Hian Pte Ltd For Khoo Beng Hock Michael
25. Eng Nominees (Tempatan) Sdn Bhd 236,000 0.18 Qualifier: Kim Eng Ong Asia Securities Pte Ltd For Lem Kim Wan
26. Amsec Nominees (Asing) Sdn Bhd 225,000 0.18 Qualifier: Fraser Securities Pte Ltd For Tan Eng Chin Holdings (Pte) Limited (1433)
27. Onn Ping Lan 220,000 0.17
28. Amanah Raya Nominees (Tempatan) Sdn Bhd 220,000 0.17 Qualifier: AUTB Progress Fund
29. Lembaga Tabung Haji 219,000 0.17
30. Amanah Raya Nominees (Tempatan) Sdn Bhd 214,000 0.17 Qualifier: Dana Johor
99,783,041 77.90
84 YEO HIAP SENG (MALAYSIA) BHD STATEMENT OF SHAREHOLDINGS (Cont’d) As At April 3, 2003
Shareholders holdings with 5.0% and above
Name Share Held %
YHS (Singapore) Pte Ltd 77,811,041 60.74
77,811,041 60.74
Analysis of Shareholdings
No. of Holders Holdings Total Holdings %
321 1-999 117,123 0.09 5,097 1,000-10,000 13,919,583 10.87 418 10,001-100,000 11,272,895 8.80 50 100,001- 6,404,776 24,974,899 19.50 1 6,404,777 and above 77,811,041 60.74
Total 5,887 128,095,541 100.00
YEO HIAP SENG (MALAYSIA) BHD 85 This page is intentionally left blank. YEO HIAP SENG (MALAYSIA) BERHAD co. no. 3405-X (Incorporated in Malaysia) Proxy Form I/we of being member/members of the abovementioned Company, hereby appoint of or failing him, of as my/our proxy to vote for me/us on my/our behalf at the Twenty-Ninth Annual General Meeting of the Company, to be held on Thursday, 22 May, 2003 at 2.00p.m. and at any adjournment thereof. The proxy is to vote on the business before the meeting as indicated below (if no indications is given, the proxy will vote as he thinks fit or abstain from voting):
(Complete if applicable) For Against
Ordinary To receive the Directors' Report and Financial Statements for the year Resolution 1 ended 31 December 2002 and the Auditors' report thereon Ordinary To approve the payment of a Final Dividend of 6.5% tax exempt for the Resolution 2 financial year ended 31 December 2002. Ordinary To approve the Directors' remuneration of RM53,583 for the financial year Resolution 3 ended 31 December 2002 Ordinary To re-elect the following Directors who retire in accordance with the Articles Resolution 4 of Association of the Company : 4a a) Mr Tan Teow Choon pursuant to Article 75 4b(i) b) (i) Mr Philip Ng Chee Tat 4b(ii) (ii) Mr Tjong Yik Min 4b(iii) (iii) Mr Chan Wai Ming 4b(iv) (iv) En. Mohamed Nizam bin Abdul Razak pursuant to Article 80; Ordinary To propose a resolution that pursuant to Section 129(6) of the Companies Resolution 5 Act, 1965, Raja Dato' Hj. Redzwa bin Raja Tun Uda be reappointed a Director of the Company to hold office until the next Annual General Meeting of the Company. Ordinary To appoint Auditors and to authorise the Directors to fix their remuneration. Resolution 6 Special As special business to consider and, if thought fit, to pass the following Resolution 7 resolution as a special resolution:- AMENDMENT TO ARTICLE 86 OF THE ARTICLES OF ASSOCIATION OF THE COMPANY THAT the deletions, alterations, modifications, variations and additions to the Articles of Association of the Company as set out in Appendix 1 of the Circular to Shareholders dated 30 April 2003 be and are hereby approved.
No. of shares held
Dated this day of 2003
Signature :
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. 2. The instrument appointing a proxy, in the case of an individual, shall be signed by the appointor or by his attorney duly authorised in writing, and in the case of a corporation, shall be either given under its common seal or 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, not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof. xpress multimedia Affix stamp
THE GROUP COMPANY SECRETARY YEO HIAP SENG (MALAYSIA) BERHAD (3405-X) No.7, Jalan Tandang, 46050 Petaling Jaya, Selangor Darul Ehsan.