enriching lives - tmc lifejalan sultan ismail 50250 kuala lumpur tel : 603-2144 2333 fax: 603-2142...

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A N N U A L R E P O R T

2 0Enriching lives

TMC Life Sciences Berhad (624409-A)

Investment Holding Company of Damansara Fertility Centre and Damansara Women’s Specialist Centre

Damansara Utama (Headquarters):

Kepong:

55, Jalan SS21/56B,Damansara Utama,47400 Petaling JayaSelangor Darul Ehsan

Tel : 603-7729 3199Fax : 603-7727 8066

8, Jalan Prima,Metro Prima, Kepong 52100 Kuala LumpurWilayah Persekutuan

Tel : 603-6258 0000Fax : 603-6258 0000

Johor Bahru: Sibu:Unit 18, Level 1, City Plaza,21, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Takzim

Tel : 607-278 0088 Fax : 607-278 0808

52A-F, Block 3, STLD, Jalan Brooke Drive, 96000 Sibu, Sarawak.

Tel : 6012-613 0066Fax : 603-6258 0000

www.tmclife.com

At TMC Life Sciences, our focus is on enabling infertile couples to have hope in conceiving their own babies; bringing joy and enriching their lives. This is why we place great emphasis on delivering a comprehensive range of world-class fertility treatment services to every patient we attend to. Mindful of our valued shareholders, we endeavour to continue creating value for our investors. And we trust that they will remain positive on the Group’s growth prospects in the long term.

Enriching lives

2006

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01 CORPORATE INFORMATION02 CORPORATE PROFILE 04 FINANCIAL HIGHLIGHTS07 FROM THE INVESTING COMMUNITY08 A WORD FROM THE CHAIRMAN 12 MANAGING DIRECTOR’S MESSAGE16 DIRECTORS’ PROFILE20 KEY MANAGEMENT22 CALENDAR OF EVENTS26 CORPORATE GOVERNANCE 32 AUDIT COMMITTEE REPORT37 STATEMENT OF INTERNAL CONTROL40 DIRECTORS’ REPORT44 STATEMENT BY DIRECTORS

44 STATUTORY DECLARATION45 REPORT OF THE AUDITORS46 INCOME STATEMENT 47 BALANCE SHEET48 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY48 COMPANY STATEMENT OF CHANGES IN EQUITY49 CONSOLIDATED CASH FLOW STATEMENT51 NOTES TO THE FINANCIAL STATEMENTS76 LIST OF PROPERTIES78 SHAREHOLDING STATISTICS79 STATEMENT OF SHAREHOLDING80 NOTICE OF THE FOURTH ANNUAL GENERAL MEETING

PROXY FORM

Enriching lives

1

Board of D irectors


TMC Life Sciences Berhad

(624409-A)

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PROFESSOR EMERITUS DATO’ DR. KHALID

BIN ABDUL KADIR Independent Non-Executive Chairman

DR. COLIN LEE SOON SOO Managing Director

MR. AMOS SIEW BOON YEONG Executive Director DR. WONG PAK SENGExecutive Director

MS. WENDDI-ANNE CHONG WAI YENGExecutive Director

YB DATO’ DR. TAN KEE KWONG Independent Non-Executive Director

MR. LEE SOON SWEENon-Independent Non-Executive Director

DR. YAP TECK LONG Independent Non-Executive Director

DR. FRANCIS LISA MUGA Independent Non-Executive Director

DR. SURINDER SINGH A/L RANBIR SINGH Alternate Director to Dr. Wong Pak Seng

Company S ecretar iesSEOW FEI SAN(MAICSA 7009732)WONG SIEW YEEN(MAICSA 7018749)

Audit CommitteeYB DATO’ DR. TAN KEE KWONG(Chairman)MR. AMOS SIEW BOON YEONG DR. YAP TECK LONGDR. FRANCIS LISA MUGA

Nominat ing CommitteeDR. YAP TECK LONG(Chairman) YB DATO’ DR. TAN KEE KWONGDR. FRANCIS LISA MUGAMR. LEE SOON SWEE

Remunerat ion CommitteeDR. FRANCIS LISA MUGA(Chairman)YB DATO’ DR. TAN KEE KWONGDR. COLIN LEE SOON SOO

RegistrarEpsilon Registration Services Sdn Bhd312, 3rd fl oor Block C, Kelana Square17 Jalan SS 7/2647301 Petaling JayaSelangor Darul EhsanTel : 603-7803 2116Fax : 603-7806 1261

AuditorsErnst & Young (AF 0039)4th Floor, Kompleks AntarabangsaJalan Sultan Ismail 50250 Kuala LumpurTel : 603-2144 2333Fax: 603-2142 3420

S ponsorAmInvestment Bank Berhad (23742-V)(formerly known as AmMerchant Bank Berhad)22nd Floor, Bangunan AmBank Group 55 Jalan Raja Chulan50200 Kuala Lumpur Tel : 603-2078 2633Fax : 603-2078 2842

P rinc ipa l B ankerAlliance Bank Malaysia BerhadUnit 102 & 103, Level 1, Uptown 22, Jalan SS21/37Damansara Uptown47400 Petaling JayaSelangor Darul EhsanTel : 603-7660 9798Fax: 603-7660 9799

Registered O ff ice312, 3rd fl oor, Block C, Kelana Square,17 Jalan SS 7/2647301 Petaling JayaSelangor Darul EhsanTel : 603-7803 1126Fax : 603-7806 1387

Headquar ters55, Jalan SS21/56BDamansara Utama47400 Petaling JayaSelangor Darul EhsanTel : 603-7729 3199Fax : 603-7727 8066

B ranchesJohor Bahru:Unit 18, Level 1, City Plaza21, Jalan Tebrau80300 Johor BahruJohor Darul Takzim

Kepong:8, Jalan PrimaMetro Prima, Kepong52100 Kuala LumpurWilayah Persekutuan

Sibu:52A-F, Block 3, STLDJalan Brooke Drive 96000 SibuSarawak

S tock I nformat ionBursa Malaysia Securities Berhad – MESDAQ MarketBursa Malaysia Code: 0101Reuters Code: TMCN.KLBloomberg Code: TMCL MK

Website: www.tmclife.comInvestor Relations Channel: http://ir.wallstraits.net/tmc

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VisionTo consistently provide the best medical expertise with appropriate

state-of-the-art technology to maximise each individual couple’s chances

of realising their dream of having their own children

M iss ion• To ensure highly trained experts including doctors, embryologists and nurses in the areas of

fertility

• To provide the optimum set-up, facilities and state-of-the-art technology to enable the achievement of our goals

• To promote public awareness on issues related to fertility including educating them on the availability and appropriateness of current treatment options

• To make accessible to the public world-class state-of-the-art technologies and expertise in the fi elds of fertility and women’s health

• To promote and champion the basic reproductive rights of all couples and individuals to decide freely and responsibly the number, spacing and timing of their children

TMC Life Sciences Berhad is the investment holding company of renowned fertility specialist Damasara Women’s Specialist Centre Sdn Bhd and Damansara Fertility Centre Sdn Bhd, also known as TMC Fertility Centre.

Established in 1994, the Group provides fertility treatment and general Obstetrics and Gynaecology (“O&G”) services to a growing base of local and foreign patients. The Group is one of the very few centres in the region to provide a comprehensive range of fertility services today.

The Group believes it is a market leader in Assisted Reproductive Technologies (“ART”), accounting for about one-third of all test-tube babies produced in Malaysia. Its pregnancy success rates, are comparable to top In-Vitro Fertilisation (“IVF”) centres in United Kingdom and United States of America.


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A N N U A L R E P O R T 2 00 6

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100% Fertility Treatment

Services

100% Cord blood banking,

stem cell therapies and consultancy services

TMC Stemcells Sdn. Bhd.



(624409-A)

2 00 6

Investment Holding CompanyTMC Life Sciences Berhad

Damansara Women’sSpecialist Centre Sdn. Bhd.


Services

IVF TechnologiesSdn. Bhd.

100% Research & Development

in Life Sciences

Damansara Fertility Centre Sdn. Bhd.


Services

TMC Fertility (Penang) Sdn. Bhd.

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Damansara Utama, Petaling Jaya

Johor Bahru, Johor

Kepong, Kuala Lumpur Sibu, Sarawak

To date, the Group has four centres in Malaysia:

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5-yrs CAGR* 29.1%

Turnover (RM’000)

2000 2001 2002 2003 2004 2005 20060

5,000

10,000

15,000

20,000

25,000

30,000

Profit Before Tax (RM’000l)

2000 2001 2002 2003 2004 2005 20060

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Net Profit (RM’000)

2000 2001 2002 2003 2004 2005 20060

2,000

4,000

6,000

8,000

10,000

12,000

14,000

5-yrs CAGR* 57.1%

5-yrs CAGR* 57.0%

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SUMMARISED GROUP INCOME STATEMENTS Proforma

Year Ended 31 December (RM’000) 2005 2006Tumover 21,481 24,904EBITDA# 11,576 13,690Profi t Before Tax 11,023 12,599Net Profi t 7,802 8,935

SUMMARISED GROUP BALANCE SHEETSAs At 31 December (RM’000) 2005 2006Property, Plant and Equipment 3,871 20,080Prepaid Land Lease Payments 19,600 19,396Project Development Costs 4,403 6,914Total Non-current Assets 27,874 46,390Current Assets 19,206 14,262TOTAL ASSETS 47,080 60,652

Share Capital 16,833 16,833Share Premium 10,325 10,325Retained Profi ts 13,853 21,808Shareholders’ Equity 41,010 48,965

Net Current Liabilities 3,250 3,191Current Liabilities 2,819 8,496TOTAL EQUITY AND LIABILITIES 47,080 60,652

SUMMARISED GROUP CASH FLOWS Proforma

As At 31 December (RM’000) 2005 2006Operating Profi t Before Working Capital Changes

7,110 13,217

Net Cash Flows From Operating Activities 5,873 12,678Net Cash Flows From Investing Activities (16,173) (16,796)Net Cash Flows From Financing Activities 27,520 (1,212)Net Increase / (Decrease) in Cash and Cash Equivalents

17,220 (5,330)

Cash and Cash Equivalents at Beginning of Year 0 17,220Cash and Cash Equivalents at End of Year 17,220 11,890

# EBITDA = Earnings Before Interest, Taxation, Depreciation and Amortization* CAGR = Compounded Annual Growth Rate

Shareholders’ Equity (RM’000)

2004 2005 20060

10,000

20,000

30,000

40,000

50,000

60,000Total Assets (RM’000)

2004 2005 20060

10,000

20,000

30,000

40,000

50,000

60,000

70,000

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QUARTERLY ANALYSIS Proforma

Year Ended 31 December (RM’000) 2005 2006 % ChgTumover1st Quarter 5,185 5,957 14.9%2nd Quarter 4,927 6,212 26.1%3rd Quarter 5,240 6,302 20.3%4th Quarter 6,130 6,434 5.0%

21,481 24,904 15.9%

Net Profi t 1st Quarter 1,979 2,299 16.2%2nd Quarter 1,927 2,301 19.4%3rd Quarter 1,737 2,006 15.5%4th Quarter 2,159 2,328 7.9%

7,802 8,935 14.5%

Turnover By Segments Proforma

Year Ended 31 December (RM’000) 2005 2006 % Chg

Local 19,204 20,895 8.8%Foreign 2,277 4,010 76.1%

21,481 24,904 15.9%

FINANCIAL ANALYSIS Proforma

2005 2006GrowthTurnover Growth 29.6% 15.9%EBITDA Growth 38.4% 18.3%Profi t Before Tax Growth 40.4% 14.3%Net Profi t Growth 38.0% 14.5%

Profi tabilityOperating Profi t Margin 53.9% 55.0%Pre-tax Profi t Margin 51.3% 50.6%Net Profi t Margin 36.3% 35.9%Return on Average Shareholders’ Equity 26.9% 19.9%Return on Average Total Assets 20.3% 16.6%

Per Share StatisticsNet Earnings Per Share (Sen) 4.63 5.31Gross Dividend Per Share (Sen) 1.00 1.00NTA Per Share (Sen) 21.75 24.98

OthersGearing (Net of Cash) Net Cash Net CashDividend Payout Rate 15.5% 13.6%Effective Tax Rate 29.2% 29.1%

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1,000

2,000

3,000

4,000

5,000

6,000

7,000Turnover By Quarter (RM’000)

Net Profit By Quarter (RM’000)

Turnover by Segments

1st Q 2nd Q 3rd Q 4th Q

1st Q 2nd Q 3rd Q 4th Q0

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1,000

1,500

2,000

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2005 2006

FY2005ProformaRevenue:

RM21.65mil

FY2006Revenue:

RM24.90mil

Foreign11%

Foreign16%

Local89%

Local84%

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2005 2006

Share Price (sen) (at year end) 90 84

EPS (sen) 4.63 5.31

PE Multiple 19.4 15.8

Market Valuation (18 May 2007)

Market Capitalization (RM’mil) 176.75

PE Multiple 19.8

Price/Book Ratio 4.20

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Period High

RM1.29 (22 Jan 2007)Period CloseRM1.05

(18 May 2007)

Period Low

RM0.75 (4 Dec 2006)

Stock Pr ice Performance ( 1 Jan 2006 - 18 May 2007 )

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In 2007, TMC Life Sciences emerged sixth in the Top Ten List of OSK’s Top 100 Malaysian Small Cap Stocks.

“Outlook for FY07 still strong with an expected 11.6% growth. We still believe TMC Life Sciences’ can deliver a healthy amount of growth in FY07 due to (1) its increased presence in a largely untapped northern region and (2) healthy infl ow from Indonesia on its expansion strategy... TMC Life Sciences’ topline growth is likely to still be strong on the back of its new centres and strong track record in the facility science arena…”

(“Banking on Foreign Growth and Geographical Expansion”, JF Apex Securities Sdn. Bhd., 8 March 2007)

Excerpts from the investors’ reports

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“Our investment rationale on TMC Life Sciences remains in its high growth, strong margin business and, in our opinion, the opportunity to invest in a niche healthcare segment. Coupled with its strong record of medical successes, we believe that TMC Life Sciences could be re-rated to regional or at least Singapore’s PE-level …”

(“Journey to Health”, HLG Research, 12 January 2007)

“Soaring to greater heights…With 52 clinics in the hospital and strategically located in an affl uent area, (Tropicana Medical Centre) is poised to become the most advanced and comprehensive fertility centre in the region…”

(“Creating the Next Generation”, OSK Top 100 Malaysian Small Cap Stocks, 17 April 2007)

PROFESSOR EMERITUS DATO’ DR. KHALID ABDUL KADIR,Independent Non-Executive Chairman

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Dear Shareholders,On behalf of the Board of Directors of TMC Life Sciences Berhad (“TMC Life Sciences”),

it gives me great pleasure to share with you the fi nancial performance of the Group and the

Company for the year ended 31 December 2006 (“FY2006”).

Our second year as a public-listed entity saw the Group registering respectable growth

all-round. We witnessed not only the increasing number of patients coming to our centres,

but also the increase of the Group’s centres in Malaysia from three to four. Also, the Group

achieved better fi nancial performance for the year and recorded signifi cant medical fi ndings in

the global fertility industry.

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“We witnessed not only the increasing number of patients coming to our centres, but also the increase of the Group’s centres in Malaysia from three to four… coupled with proactive marketing efforts since 2002, foreign patients have become a signifi cant component of our patient mix… stamping a seal of approval on the viability and effectiveness of our ongoing health tourism initiatives…”



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To begin with, FY2006 group revenues amounted to RM24.9 million, and group profi t before tax stood at RM12.6 million, versus RM13.3 million and RM6.9 million respectively in the previous year.

On a proforma basis, including the pre-acquisition fi nancials before 27 May 2006, FY2006 group revenues grew 15.9% from proforma group revenues of RM21.5 million in the previous year, while group profi ts before tax grew 14.3% to RM12.6 million from proforma RM11.0 million in FY2005.

The topline growth led to group net profi ts rising 14.5% to RM8.9 million in the year under review, compared to RM7.8 million achieved the year before. Further analysis reveals that net margins remained at healthy 35.9% in FY2006, versus 36.3% previously.

As one of the most comprehensive providers of fertility treatment services with high pregnancy success rates in the region, it is little wonder that the Group’s fertility centres welcome a rising number of local as well as foreign patients.

Coupled with proactive marketing efforts since 2002, foreign patients have become a signifi cant component of our patient mix, coming from regional countries such as Indonesia, Singapore and Philippines, to as far as Japan and Europe.

This not only stamps a seal of approval on the viability and effectiveness of our ongoing health tourism initiatives, but also demonstrates the Group’s ability to attract patients from all over the world.

The revenue trend of the Group is commendable, growing at a compounded annual growth rate (“CAGR”) of 29.1% from 2001 to 2006. Group net profi ts showed a similar trend, recording CAGR of 57.0% in the same period.

Shareholders’ equity stood at RM49.0 million as at end-2006, compared to RM41.0 million in the previous year. The Group maintained high returns on average shareholders’ equity of almost 20% in FY2006, versus 26.9% in 2005 during which our average share capital base was lower.

In line with the Group’s commitment to deliver value to our shareholders, the Board is pleased to declare a fi rst and fi nal dividend of 10% less tax of 27% for the year ended 31 December 2006, subject to the approval of shareholders at the upcoming Annual General Meeting. To this end, the Board wishes to express its appreciation to our valued shareholders for their trust and support rendered to the Group, both in the present as well as the future.

Cont inuing Our F inancia l Track Record

Uti l izat ion of IPO Proceeds The Group’s Initial Public Offer (“IPO”) exercise, completed in October 2005, raised approximately RM16.0 million in proceeds, which are expected to be utilised within two years from the listing date. The status of the proceeds is shown below:

As at 30 April 2007 (RM’000)

IPO Proceeds

Transfer(to) / from

Amount Utilised

Balance

R&D Projects 6,000 0 4,509 1,491

To part-fi nance the construction of Tropicana Medical Centre

6,000 0 6,000 0

Local and regional expansion 1,500 0 786

Working capital 498 537 1,035 0

Listing expenses 2,000 537 1,463 0

TOTAL 15,998 0 13,721 2,277

* Balance of unutilised proceeds allocated for listing expenses was approved by the Securities Commission to be converted into working capital.

As stated in our prospectus dated 15 September 2005, the proceeds from the IPO will be utilised within two years from the listing date.

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Professor Dato’ Dr. Abdul Khalid and Dr. Colin Lee giving Dato’ Dr. Chua Soi Lek a walkthrough of Tropicana Medical Centre.


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The demand for fertility treatment services remains high across the South East Asian region, with social trends such as career-focused outlook and delayed marriages exacerbating the inherent biological factors that cause infertility. Moreover, the unavailability of centres with high pregnancy success rates in the region further aggravates the situation. These factors typically drive the demand for fertility treatment services, and enables TMC Life Sciences to stand out amongst its peers.

In addition, the health tourism sector particularly towards the Asian region continues to gain popularity in the year under review, compounded by rising healthcare costs and long waiting periods in developed countries.

According to a report by Abacus International, Asia-Pacifi c’s leading travel facilitator, the medical tourism industry in Asia attracted more than 1.3 million tourists annually to key locations in the South East Asian region including Malaysia. The availability of low-cost yet high-quality healthcare in Asia has led to the rapid growth of the medical tourism sector, which grew 20% to 30% a year, far exceeding the 4% to 6% growth in general travel bookings in 2006. Furthermore, the medical tourism industry in Malaysia, Thailand, Singapore and India, currently worth approximately US$500 million, is projected to be worth at least US$4.4 billion by 2012.

Keenly aware of the opportunities in the health tourism market, both the Malaysian Government ministries and private sectors including TMC Life Sciences have, jointly as well as independently, developed programmes to attract the infl ow of medical tourists in the country.

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We at TMC Life Sciences believe in continual development and improvement of our fertility treatment methodologies, to achieve higher success rates and thus be in the forefront of the global fertility treatment services sector. To this end, the Group continued to undertake Research and Development (“R&D”) activities in FY2006, with RM2.8 million invested in various R&D projects.

Indeed, the Group improved its clinical pregnancy success rates in the year under review (to 55.3% from 54.3% previously and implantation rate to 35.4% from 27.5% previously). These are key indicators that will not only give us a keener competitive edge in the industry, but also enable us to serve our patients better, and attract even more patients from the region.

The Group’s recognition as one of the leading providers in the fertility treatment services industry was further acclaimed, as the Group presented its R&D papers at industry forums of local and global scale, such as the 13th Annual Congress of The Perinatal Society of Malaysia in Kuching, Malaysia in March; the Congress of Asia Pacifi c Initiative of Reproductive Endocrinology (ASPIRE) in Changsha, China in March-April; the Asian Business Forum in Singapore in May, and the Philippines Obstetrics & Gynaecology Society Annual Convention in November 2006.

At TMC Life Sciences, our belief and commitment lie in making accessible to the public world-class state-of-the-art technologies and expertise in the fi elds of fertility treatment and women’s health.

Honing Our Compet i t ive Edge through Research and Development

Eye on the Industr y

The Group has identifi ed three main thrusts for growth: increasing our foreign patient base, setting up synergistic stem cell business and tapping into local demand through organic expansion throughout Malaysia, and through the construction of Tropicana Medical Centre, Malaysia’s fi rst tertiary care specialist centre focused on fertility, women and children’s health.

Cast ing our s ights ahead

Backed by our high pregnancy success rates, strategically located centres around the country, wider reach for foreign patients and Tropicana Medical Centre as the Group’s fl agship centre of excellence in the near future, we believe that the Group will prevail as a leading provider of fertility treatment services in the region, enriching lives and bringing hope to the infertile.



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As a responsible corporate citizen, the Group is well aware of its responsibility of enhancing and positively impacting the society at large. In the year under review, the Group undertook various Corporate Social Responsibility initiatives, including:

• Sponsoring 21 infertile couples under Tunku Azizah Fertility Foundation (TAFF) to undergo fertility treatment at TMC Fertility Centres,

• Donation of RM50,000 to an education fund,• Twin Support Group gathering, and • Counselling sessions for infertile couples at our centres and at public functions.

Corporate Socia l Respons ib i l i ty

Twin Suppor t Group gather ing

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Corporate Governance

The Board believes in the maintenance of the highest standards of corporate governance practices within the Group as a fundamental part of discharging our responsibilities to protect and maximize shareholders’ value and enhance the business prosperity of the Group. The measures implemented to this effect are highlighted in the Corporate Governance Report.

A Word of Appreciat ionOn behalf of the Board of Directors, may I acknowledge the dedication and hard work put in by the management and team of employees of TMC Life Sciences, and in doing so, brought the Group to the heights reached today. I would like to take this opportunity to welcome Ms Wenddi-Anne Chong to the Board.

My gratitude also goes to our stakeholders including our valued shareholders and business associates for their unwavering support, and trust that this partnership will continue well into the years ahead.

Professor Emeritus Dato’ Dr. Khalid Abdul Kadir,Chairman,25 May 2007

Enr ich ing L ives in the Loca l Populat ion

DR. COLIN LEE SOON SOO,Managing Director

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Our TMC Fertility Centres, located in four locations in Malaysia, have attracted patients from the local community as well as foreign countries across the globe.

Apart from our Sibu branch (for which there is no year-on-year comparison as it was established only in January 2006), all of the Group’s branches recorded improved revenue in the year ended 31 December 2006 (“FY2006”) compared to the previous year.

The Group’s headquarters in Damansara Utama, Petaling Jaya – the Group’s fi rst branch established in 1994 and with longstanding reputation – remained the largest contributor to FY2006 group revenues at 84%. Our Johor Bahru branch, the Group’s second full-fl edged centre, retained its contribution to group revenues at 12% and improved its revenue by nearly 20% year-on-year.

Our satellite centres in Kepong and Sibu recorded respectable revenues, with sales from the Kepong branch growing approximately 24% year on year, and the Sibu operations bringing in 1% to FY2006 group revenue within its fi rst year of operations.

From a larger perspective, local patients accounted for up to 84% of group revenue; bringing in approximately RM21.1 million in FY2006 compared to RM19.2 million the year before, and thus registering 9.1% growth annually.

The strong revenue stream derived from local patients attests to the effectiveness of the Group’s ongoing efforts to create awareness of the fertility treatment options offered by TMC Life Sciences, and at the same time the high success rates achieved at our centres. In the year under review, the Group initiated various activities in order to reach a larger group of infertile couples, such as regular public forums.

“The strong revenue stream attests to the effectiveness of the Group’s ongoing efforts to create awareness of the fertility treatment options offered by TMC Life Sciences, and at the same time the high success rates achieved at our centres…”

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One of the Group’s key achievements in the year under review was the notable expansion of the Group’s foreign patient base, with foreign revenue contributing 16% of FY2006 group revenues, compared to 10.6% in the previous year. In absolute terms, foreign revenue grew about 75% year on year to RM4.0 million in FY2006 from RM2.3 million the year before.

The Group welcomed patients from more than 30 countries, from neighbouring South East Asian nations to as far as the European continent. The diverse composition of patients speaks volumes of the Group’s high repute in the global fertility industry, and indicates the success of the Group’s health tourism efforts.

The top six foreign countries that emerged as the Group’s largest contributors to foreign revenue were Indonesia, Japan, Singapore, Australia, United Kingdom and India; accounting for 72% of the Group’s foreign revenue pie.

Indonesia – the Group’s traditional stronghold and the very fi rst foreign market in which the Group promoted its services – retained its position as the Group’s largest contributor to foreign revenue, accounting for approximately 34% of FY2006 foreign revenue, compared to nearly 33% contribution in the previous year.

With medical tourism set to experience tremendous growth on the back of healthy regional economies, availability of affordable travel, and aggressive efforts by the Government ministries and private sector entities to promote the country’s cost-effective and world-class healthcare facilities, we are confi dent that our foreign patient base will become an even-more signifi cant revenue driver for the Group.

Growing Our Foreign Pat ient Base

Sett ing performance mi lestones Armed with our unwavering commitment to excellence, we at TMC Life Sciences make every effort to increase our patients’ chances of having their own baby. To this end, we are proud to state that the year 2006 saw the Group achieving higher pregnancy rates, which have been submitted to / accepted for presentation and publication at international symposiums:

In-Vitro Fertilisation

(IVF)*

Intra-Cytoplasmic Sperm Injection

(ICSI)*

Pre-Implantation Genetic Diagnosis

(PGD)**

Clinical Pregnancy Rate Per Embryo Transfer

55.3% 47.3% 51.0%

Delivery Rate / On-going Pregnancy Rate

46.1% 39.1% 43.1%

Implantation Rate 35.4% 25.6% 44.0%

* Submitted for presentation and publication at International Symposium of In-Vitro Fertilization (ISIVF), Montreal, Canada, 2007

** Accepted for presentation and publication at Pre-Implantation Genetic Diagnosis International Symposium (PGDIS), Melbourne, Australia, 2007

Furthermore, as a testament to our persistent efforts in Research and Development (“R&D”), our International Advisory Panel (“IAP”) comprising in-house and visiting consultants met in Changsha, China in March 2006 to discuss the Group’s R&D projects to maintain our leading position in the fertility treatment industry. As a result of these persistent efforts, our R&D team generated at least 12 papers for submission / acceptance for publication in 2007.

The year under review also saw the Group organizing its fi rst International IVF Symposium on 27 March 2006, where global fertility experts presented their respective lectures to Obstetrics and Gynaecologists from South East Asia.

All said, we believe that these R&D initiatives and international activities aptly position the Group in the forefront of the fertility treatment industry in the region.

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Moving forward

Having achieved excellent performance year after year, the Group looks forward to attaining greater heights in 2007 and onward. To this end, not only have we identifi ed three drivers to propel the Group forward, but also have begun preparing the groundwork for the successful execution of these strategies.

Firstly, the Group will seek to attract more foreign patients to our centres by actively promoting health tourism packages through exhibitions and tourism fairs, as well as via online initiatives. The current year will see us developing a more signifi cant presence in our traditional market of Indonesia, where we are setting up a representative offi ce in Samarinda to implement targeted marketing efforts and facilitate patients’ travel arrangements to and from our fertility centres.

At the same time, we will not neglect targeting patients and medical tourists from all over the world, including Japan, Australia and United Kingdom.

Secondly, the Group will venture into other fertility-related sectors to complement the Group’s fertility treatment services. To this end, we have incorporated a wholly-owned subsidiary, TMC Stemcells Sdn Bhd (“TMC Stemcells”), that will be primarily dedicated to harvesting, processing and cryo-preservation (storage) of umbilical cord blood stem cells and adult peripheral blood stem cells, as well as provision of stem cell therapy services for the treatment for blood disorders, cancers, heart disease and other diseases.

We believe that the set up of TMC Stemcells is timely, as it enables the Group to tap into growing demand for stem cell banking and therapy in Malaysia and the region.

Thirdly, we will endeavour to grow our presence throughout Malaysia by increasing the number of centres in the country to further tap into local demand. Currently, our branches are situated in four key locations in East and West Malaysia: Petaling Jaya in Selangor, Kepong in Kuala Lumpur, Johor Bahru in Johor and Sibu in Sarawak. Talks are underway to open two additional centres, possibly in the Northern and Eastern regions of Peninsular Malaysia by 2007.

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In the meantime, the construction of the Group’s fl agship hospital, Tropicana Medical Centre, is progressing smoothly, and is on track for completion by end-2007 and thereafter to commence operations in 2008.

Moving forward (cont ’d)

With a built-up area of 220,000 sq ft, Tropicana Medical Centre will comprise approximately 150 in-patient and daycare beds, and 55 in-house specialists focused on fertility treatment, downstream Obstetrics and Gynaecology (“O&G”) services as well as complementary premium disciplines such as cardiology, plastic surgery, aesthetics, stem cell therapy and so on. With these specialist disciplines supported by a strong support system and dedication to premium quality, Tropicana Medical Centre will be a centre of excellence to enrich the lives of patients from Malaysia and the region.

In a nutshell, an exciting future beckons for TMC Life Sciences, and we look forward in anticipation to greater successes ahead.

Dr. Colin Lee Soon Soo,Managing Director,25 May 2007

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Artist’s impression of Tropicana Medical Centre.

Construction site of Tropicana Medical Centre as at May 2007.

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1. PROFESSOR EMERITUS DATO’ DR. KHALID BIN ABDUL KADIR

Independent Non-Executive Chairman

2. DR. COLIN LEE SOON SOO Founder & Managing Director

3. MR. AMOS SIEW BOON YEONG Executive Director

4. DR. WONG PAK SENG Executive Director

5. MS. WENDDI-ANNE CHONG WAI YENG Executive Director

6. MR. LEE SOON SWEE Non-Independent Non-Executive Director

7. YB DATO’ DR. TAN KEE KWONG Independent Non-Executive Director

8. DR. YAP TECK LONG Independent Non-Executive Director

9. DR. FRANCIS LISA MUGA Independent Non-Executive Director

10. DR. SURINDER SINGH A/L RANBIR SINGH Alternate Director to Dr. Wong Pak Seng

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PROFESSOR EMERITUS DATO’ DR. KHALID BIN ABDUL KADIR

Independent Non-Executive ChairmanMalaysian, aged 58

Professor Dato’ Dr. Khalid Bin Abdul Kadir was appointed to the Board on 7 October 2004. He graduated with fi rst-class honours in B.Med. Sc.(1973) and fi rst class honours in MBBS from Monash University, Australia in 1975 and PhD in 1982, He was awarded the FRACP (Australia) and FRCP’s from Edinburgh, Glasgow, Ireland, and London.

He joined Universiti Kebangsaan Malaysia (“UKM”) as a lecturer in 1982, promoted to Associate Professor in 1984, became Head of Department of Medicine in 1985, and Dean of the Medical Faculty and Professor in 1990. In 1997, he was appointed Director of the new Hospital Universiti Kebangsaan Malaysia (“HUKM”) with the task of building up HUKM until September 2000 when he resigned to concentrate on clinical medicine and research. He was awarded the title of Professor Emeritus of UKM upon his retirement in 2004. He is currently the Professor of Medicine and Head of the Clinical School of Monash University in Johor.

He was in the Malaysia Medical Council from 1986 - 2001, President of the Persatuan Diabetes Malaysia for 1985 – 1990, President of the Malaysia Endocrine Society from 1995 – 2001, member of Council, International Diabetes Federation 2001-2002 representing Western Pacifi c Region, and is presently the Master of The Academy of Medicine of Malaysia.

He is very active in research and has published more than 270 papers in international and national peer reviewed journals. He was awarded The National Science Award in 1997 and The Asia Pacifi c Nutrition Award in 1996.

Professor Dato’ Dr. Khalid Bin Abdul Kadir is also a shareholder of the Company. He has attended all of the fi ve (5) Board meetings held during the fi nancial year. He has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

Dr. Colin Lee Soon Soo was appointed to the Board on 3 June 2005. He graduated with MBBS (University of New South Wales, Australia) in 1982, MRCOG (England) in 1991 and MMED O&G (National University of Singapore) in 1991. He is also a substantial shareholder of the Company.

He is a founder and well as Directors of the Company, Damansara Women’s Specialist Centre Sdn. Bhd., Damansara Fertility Centre Sdn. Bhd., IVF Technology Sdn. Bhd., TMC Fertility (Penang) Sdn. Bhd. and TMC Stemcells Sdn. Bhd. Dr. Colin Lee has been in the medical practice for 25 years and is currently a Consultant Obstetrician and Gynaecologist, specializing in the fi elds of fertility and laparoscopic surgery.

Dr. Colin Lee is a fellow of the International College of Surgeons, and Past President of Malaysian Society of Assisted Reproductive Technology (“MSART”), Treasurer and Board Member of Asia Pacifi c Initiative on Reproductive Endocrinology (“ASPIRE”) and Committee Member of Organon Asia Pacifi c Fertility Advisory Board.

Dr. Colin Lee has attended all of the fi ve (5) Board meetings held during the fi nancial year. He is the brother of Lee Soon Swee a Director of the Company. He has no convictions of any offences within the past ten years.

DR. COLIN LEE SOON SOOFounder and Managing Director

Member of Remuneration CommitteeMalaysian, aged 49

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Amos Siew Boon Yeong was appointed to the Board on 3 June 2005. He is also a shareholder of the Company.

He is a Certifi ed Public Accountant by profession and is a member of the Malaysian Institute of Certifi ed Public Accountants, a Chartered Accountant with the Malaysian Institute of Accountants and an associate member of the Malaysian Institute of Taxation. He is a Certifi ed Financial Planner and a member of the Financial Planning Association of Malaysia.

He started his auditing career and professional training with Coopers & Lybrand in 1978. He has vast experience in audit, tax planning, corporate fi nance and fi nancial planning and has been involved in numerous mergers and acquisitions, debt restructuring and liquidation.

He is also an Independent Non-Executive Director of SEG International Berhad, EcoFirst Consolidated Berhad and Petra Energy Berhad.

Amos Siew has attended all of the fi ve (5) Board meetings held during the fi nancial year. He has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

MR. AMOS SIEW BOON YEONGExecutive DirectorMember of Audit Committee Malaysian, aged 48

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d) DR. WONG PAK SENGExecutive Director

Malaysian, aged 38

MS. WENDDI-ANNE CHONG WAI YENGExecutive Director

Singaporean, aged 44

YB DATO’ DR. TAN KEE KWONGIndependent Non-Executive Director

Chairman of Audit CommitteeNominating and Remuneration

CommitteesMalaysian, aged 60

YB Dato’ Dr. Tan Kee Kwong was appointed to the Board as Independent Non-Executive Director on 3 June 2005. He is also a shareholder of the Company.

He graduated with an MBBS from the Faculty of Medicine, University of Malaya in 1973 and joined the Government service as a medical offi cer until 1977. Thereafter, he served as a medical offi cer with the British National Health Service until 1980. From 1981 to 1983, he was a volunteer rural health offi cer in Southern Sudan, Africa. In 1985, he commenced private medical general practice until 1999, when he was made a Deputy Minister in the Ministry of Land and Cooperative Development, a post he held until 2004.

He has been a Member of Parliament for Segambut, Kuala Lumpur since 1995 and was conferred Datukship in 2004. He is currently the Chairman of the Board of Governers of Sekolah Menengah Laki-Laki Methodist, Sentul; Chairman of Pusat Bantuan Sentul; Chairman of the Management Committee of Wesley Methodist School and Chairman of the Board of Management of Methodist College Kuala Lumpur. YB Dato’ Dr. Tan is also a Director of Malayan United Industries Berhad.

YB Dato’ Dr. Tan has attended all fi ve (5) Board meetings held during the fi nancial year. He has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

Dr. Wong Pak Seng was appointed to the Board as Executive Director on 3 June 2005. He is also a shareholder of the Company.

He graduated from Universiti Kebangsaan Malaysia in 1994 and commenced obstetrics and gynaecology training in 1996. He spent one year as a specialist registrar in O&G in Edinburgh, Scotland. He obtained the Membership of the MRCOG in 2000 and the Master Medicine in O&G (M. Med) from University of Malaya in 2001.

He was a clinical specialist in Kuantan General Hospital from 2001 to 2002. Subsequently he underwent subspecialty training in Infertility and Reproductive Medicine at London Fertility Centre, London for a year. At the same time, he also underwent clinical attachment in Minimal Access Surgery at the Royal Free Hospital, London, gaining valuable exposure in laparoscopic and hysteroscopic work. He joined TMC Fertility Centre as a Consultant in Obstetrics, Gynaecology and Infertility upon his return from London in 2003.

Dr. Wong has attended all of the fi ve (5) Board meetings held during the fi nancial year. He has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

Ms. Wenddi-Anne Chong was appointed to the Board as Executive Director on 16 April 2007. She is also a shareholder of the Company.

She has been with the Group since 1995 and is involved in the development of many areas in the group especially the Administrative, Business Development, Public Relations & Communications and the Finance Department. She is spearheading the Stem Cell Banking and Therapy arm of the Company.

She had undergone various healthcare trainings as well as contributed to various scientifi c publications of the Group over the last 12 years. She was responsible in implementing various operational, staff and work policies which have given rise to a very dynamic work culture in the Group. She represents the Group in overseeing the Administrative, Public Relations and Business Development Departments.

Over the last 12 years, she has established a wide network with both international and local Medical Practitioners, Medical Administrative personnel, Scientists as well as business partners both locally and internationally. With her networking, she spearheaded the promotion of Health Tourism projects for the group in collaboration with the Ministry of Health, Malaysia Tourism Board, Matrade and the Association of Private Hospitals in health tourism promotional activities in both the international and local markets which resulted in many foreign patients seeking treatment from the Fertility Centre. She has also been invited as an international speaker on Health Tourism. She also sits in various advisory committees in the Ministry of Health and the Association of Private Hospitals.

Among her various awards in Malaysia, she has been accorded the award as one of the 8 Malaysian Women’s Weekly and Loreal Women of Excellence.

She has no family relationship with any Director and/or major shareholder of the Company. She has no convictions of any offences within the past ten years.



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Lee Soon Swee was appointed to the Board on 3 June 2005. He is also a shareholder of the Company.

He graduated with degrees in Aerospace and Mechanical Engineering from Wichita State University, USA. He has over 9 years experience in R&D, process and laboratory testing in the specialty materials industry with multi national corporations. He was a faculty member of the National Institute of Aviation Research (USA) for more than a year.

With his expertise in laboratory and contamination control, he brings to the Group an understanding of the requirements for developing the Group’s medical technology in achieving higher clinical yields. His experience in materials and semiconductor technology will help guide the Group’s intention to invent and develop equipment designed to enhance fertility outcome. Lee Soon Swee is currently attached to a multinational company as Technical Manager.

Lee has attended four (4) out of fi ve (5) Board meetings held during the fi nancial year. He is the brother of Dr. Colin Lee, the Managing Director and a major shareholder of the Company. He has no convictions of any offences within the past ten years.

Dr. Yap Teck Long was appointed to the Board on 3 June 2005. He is also a shareholder of the Company.

Dr. Yap graduated with an MBBS from University of New South Wales, Australia in 1981. He is a primary care doctor and runs his own practice (Klinik Uni-Med) in Kuala Lumpur. He brings with him expertise in securing contracts to widen the referral base of the Group.

Dr. Yap has attended all fi ve (5) Board meetings held during the fi nancial year. He has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

Dr. Surinder Singh was appointed to the Board as Alternate Director to Dr. Wong Pak Seng on 3 June 2005. He is also a shareholder of the Company.

Dr. Surinder is a Consultant Obstetrician and Gynaecologist who subspecialises in Reproductive Endocrinology and Laparoscopic surgery. He has been in medical practice for the past thirteen years. He graduated with MBBS (Manipal) and MMED O&G (Malaysia) in 1994 and 2001 respectively and has worked in two local universities in Malaysia, namely Universiti Sains Malaysia and Universiti Kebangsaan Malaysia before joining the Group in October 2003. During his tenure with the Group, he has been involved in the management of more than 1000 IVF cycles, including ICSI and blastocyst transfers. At present, he is the Medical Director of the Group’s fi rst regional branch in Johor Bahru, where he and his team of scientists, nurses and other support staff work both independently and cohesively with TMC Fertility Centre Kuala Lumpur, in the fi eld of test-tube baby technologies.

Under Dr. Surinder’s leadership, the Group’s Johor Bahru branch successfully elevated local ART pregnancy rates to those comparable to top centres worldwide, with clinical pregnancy rates of 45% per embryo transfer. They also introduced innovative techniques in the state and produced Johor Bahru’s fi rst blastocyst-transfer baby, amongst others.

Dr. Surinder has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

LEE SOON SWEENon-Independent Non-Executive Director

Malaysian, aged 36

DR. YAP TECK LONGIndependent Non-Executive DirectorChairman of Nominating Committee

Member of Audit CommitteeMalaysian, aged 52

DR. FRANCIS LISA MUGAIndependent Non-Executive Director

Chairman of Remuneration CommitteeMember of Audit and Nominating Committees

Malaysian, aged 50

DR. SURINDER SINGH A/L RANBIR SINGH

Alternate Director to Dr. Wong Pak SengMalaysian, aged 38

Dr. Francis Lisa Muga was appointed to the Board on 3 June 2005. He is also a shareholder of the Company.

Dr. Francis graduated with a Bachelor’s Degree in Medicine and Surgery from University of Malaya in 1983. He is currently in general practice, especially general medicine and family medicine, and has been doing so for over 20 years. He is also a partner and medical practitioner in Kumpulan Medic clinics, under the Qualitas Medical Group.

Dr. Francis has attended all fi ve (5) Board meetings held during the fi nancial year. He has no family relationship with any Director and/or major shareholder of the Company. He has no convictions of any offences within the past ten years.

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BRYAN LINChief Executive Offi cer,

Tropicana Medical Centre

DR. WONG PAK SENG Consultant Obstetrician &

Gynaecologist

DR. SURINDER SINGH A/L RANBIR SINGH

Consultant Obstetrician & Gynaecologist

DR. DEV MENONConsultant Obstetrician &

Gynaecologist

DR. JOHN KEITHVisiting Consultant Embryologist

CAROL LEE Matron (Headquarters)

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DR. COLIN LEE SOON SOO Founder & Managing Director

MR. AMOS SIEW BOON YEONG

Executive Director

MS. WENDDI-ANNE CHONG WAI YENGExecutive Director,

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ASOHAN A.NAIRAdministrator,

People Capital Division

CHOW CHOON FOONG Operating Theatre Sister

YOGISWARAN K.Senior Project Manager,

Tropicana Medical Centre

GRACE KHOOHead of Embryology

(Headquarters)

LOW SIN YEEHead of Embryology

(Johor Bahru)

RYAN TAN CHEE KINPGD Scientist

V. LOUISAHuman Resource Manager

ESTHER ONG Branch Manager (Johor Bahru)

TAN SOK KUANBranch Manager (Kepong)

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Dr. John Keith speaking on “Criteria in selecting fertility treatment” at TMC’s fi rst International Public Forum.

(Kuala Lumpur)

The management of TMC Life Sciences bringing investors up-to-date with the Group’s fi nancial and operations review at the FY2005 investors’ briefi ng.

Dr. Dev Menon delivered a talk on “Assisted Reproductive Techniques” at the 13th Annual Congress of The Perinatal Society of Malaysia.

16-19 Mar 2006 (Kuching , Sarawak)

23 Feb 2006

(Kota Damansara , Se langor)The groundbreaking ceremony for the construction of Tropicana Medical Centre, offi ciated by Dato’ Dr. Chua Soi Lek, Minister of Health Malaysia.

22 Mar 2006 (Kuala Lumpur)

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27 Mar 2006 (Se langor)Fertility experts Professor Roger Gosden of USA and Professor Salim Daya of Canada join TMC’s MD Dr. Colin Lee in the Question & Answer panel at TMC’s inaugural International IVF Symposium on “Frontiers in Assisted Reproductive Technology.”

TMC presented three lectures at the symposium:• Optimising the IVF laboratory• Pre-Implantation Genetic Diagnosis• Designer Babies

2 Apr 2006 (Changsha , China)TMC presented a paper on Ovarian Drilling at the Asia Pacifi c Initiative on Reproductive Endocrinology (ASPIRE)’s Inaugural Congress. The Group also promoted its comprehensive range of fertility treatment services.

1 Jul 2006 ( Johor Bahru)

The offi cial opening of TMC Fertility Centre (Johor Bahru), presided by Tengku Puan Pahang Tunku Azizah Aminah Maimunah Iskandriah binti Sultan Iskandar Al-Haj, Founder & Life President of the Tunku Azizh Fertility Foundation.

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Professor Dato’ Dr. Khalid presented a paper on “Choosing Applicable Metrics of Research & Development Performance Measurements for a specifi c need, context and situation” at the Asia Business Forum.

May 2006 (S ingapore)

8 Apr 2006 (S ingapore)The management of TMC Life Sciences also put forward the Group’s investment merits to the investing community at Philip Securities’ Malaysian Companies’ Road Show.

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8-16 Sep 2006(Sibu, Sarawak)

A visitor at TMC’s Booth at the Borneo Culture Festival Show in Sibu.

5 -10 Nov 2006(Kuala Lumpur Convent ion Centre)

TMC Staff attending to a Medical Delegate at World Congress of Gynaecology & Obstetrics (FIGO).

TMC presented high pregnancy rates achieved at the Johor Bahru branch.

17-19 Nov 2006(S ingapore)

TMC’s Fertility Specialist Dr. Surinder Singh counseling visitors seeking treatment at Discover Malaysia Tourism Fair ‘06.

Booth showcasing our high pregnancy rates, services and achievements at BioMalaysia 2006.

Ryan Tan delivered a presentation on Pre-Implantation Genetic Diagnosis.

6 -8 Dec 2006(Kuala Lumpur Convent ion Centre)

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(Jakar ta , Bandung, Surabaya , Indones ia)To reach out to more patients in Indonesia, TMC’s marketing team promoted the Group’s fertility treatment services and high pregnancy success rates in Jakarta, Bandung and Surabaya, Indonesia in conjunction with the Malaysia Tourism Expo.

“Eery hil gins e ol gain.”~ Henry David Thoreau ~

A N N U A L R E P O R T 2 00 626


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The Board of Directors is pleased to present the following statement on the application of the principles of corporate governance contained in the Malaysian Code on Corporate Governance by the Company.

(A) BOARD OF DIRECTORS

TMC Life Sciences Berhad is led and managed by an effective Board with a wide spectrum of skills, expertise and experience. The Board is responsible for the Group’s overall strategy and objectives, its acquisition and divestment policies, financial policy and major capital expenditure projects and the consideration of significant financial matters. In carrying out its functions, the Board is assisted by several Board Committees, namely, the Audit Committee, Nominating Committee and Remuneration Committee.

The Board of Directors operates within a robust set of governance as set out below:

Composition of the Board

The current Board of Directors consists of the Chairman, the Managing Director, three (3) Executive Directors, one (1) Non-Independent Non-Executive Director, three (3) Independent Non-Executive Directors and one (1) alternate director. The Board composition is in line with the Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements for the MESDAQ Market that requires one-third (1/3) of the Board members to be independent directors.

The profiles of the Board members are as set out on pages 17 to 19 of this Annual Report.

Board Meeting

During the financial year 1 January 2006 to 31 December 2006, the Board met five (5) times mainly to review the Group’s operations and to approve the quarterly and annual financial statements.

The Board has a formal schedule of matters reserved specifically for its decision. The Board is supplied with information in a timely fashion and appropriate quality to enable them to discharge their duties and due notice is given to Directors with regard to issues to be discussed. All resolutions are recorded and thereafter circulated to the Directors for comments before minutes of proceedings are finalised and confirmed.

Directors are given access to any information within the Company and are free to seek independent professional advice at the Company’s expense, if necessary, in furtherance of their duties. Towards this end, there is an agreed procedure in place for Directors to acquire independent professional advice to ensure the Board functions effectively. All Directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures are met and advises the Board on compliance issues.

The attendance of the Directors at the Board meetings is set out in the Directors’ Profile which appeared on pages 17 to 19 of this Annual Report.

Directors’ Training

The Board believes that continuous training for the Directors is important to enable them to discharge their duties effectively. The Directors have attended training programmes and seminars to ensure that they are kept abreast on issues pertaining to the constantly changing environment within which the business of the Group operates.

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Directors’ Appointment and Re-election

The Board has formed a Nominating Committee comprising exclusively of independent non-executive directors with the responsibility of identifying and proposing new candidates for the Board and for assessing the effectiveness of the Board, the committees of the Board, the contribution of each existing individual director and reviewing the required mix of skills and experience and other qualities, including core competencies which non-executive directors should bring to the Board.

In accordance with the Company’s Articles of Association, at every Annual General Meeting one-third of the Directors are subject to retirement by rotation such that each Director shall retire from office once in every three (3) years or, if their number is not three (3) or a multiple of three (3), the number nearest to one third shall retire from office such that each Director shall retire from office once in every three (3) years and if there is only one (1) Director who is subject to retirement by rotation, he shall retire. All Directors who retire from office shall be eligible for re-election.

Further, pursuant to Section 129(6) of the Companies Act, 1965, Directors over the age of 70 are required to offer themselves for re-election at every Annual General Meeting.

Directors’ Remuneration

The Board recognizes that the remuneration of an Executive Director shall always commensurate with the corporate and individual performance. Whilst the remuneration of a Non-Executive Director and an Independent Non-Executive Director are related to their experience and level of contribution. The Board had recently establish a Remuneration Committee to deliberate and decide on the remuneration packages of the Directors.

The aggregate remuneration of the Directors for the financial year 1 January 2006 to 31 December 2006 is as follows:-

RM

Executive 4,339,560Non-Executive 78,000

The number of Directors who served during the financial year whose remuneration falls into the following bands:-

Number of DirectorsRange of Remuneration Executive Non-

ExecutiveRM1 - RM100,000 - 5RM100,001 - RM200,000 - -RM200,001 - RM500,000 2 -RM500,001 - RM1,000,000 1 -RM1,000,001 - RM2,000,000 - -RM2,000,001 - RM3,000,000 1 -Total 4 5

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(B) BOARD COMMITTEES

In discharging its fiduciary duties, the Board has set up various committees.

Audit Committee

The role of the Audit Committee is to oversee the processes for production of the financial data, review the financial reports and the internal control of the Company.

The detail roles, functions and responsibilities are as set out in the Audit Committee Report on pages 32 to 36 of this Annual Report.

Nominating Committee

The Nominating Committee comprises the following members:

Dr. Yap Teck Long (Independent Non-Executive Director) Chairman YB Dato’ Dr. Tan Kee Kwong (Independent Non-Executive Director) Member Dr. Francis Lisa Muga (Independent Non-Executive Director) Member Mr. Lee Soon Swee (Non-Independent Non-Executive Director) Member

The functions of the Nominating Committee are:-i. recommend the nomination of a person or persons for all directorships to be filled by the shareholders

or the board; ii. Consider, in making its recommendations, candidates for directorships proposed by the Managing

Director and, within the bounds of practicability, by any other senior executive or any director or shareholder;

iii. recommend to the board, directors to fill the seats on board committees;iv. identify, evaluate and recommend candidates for appointment as Company Secretary;v. assess annually the effectiveness of the board as a whole, the committees of the board and the

contribution of each existing individual director and thereafter, recommend its findings to the board; and

vi. review annually the required mix of skills and experience and other qualities, including core competencies which non-executive directors should bring to the board and thereafter, recommend its findings to the board.

Remuneration Committee

The Remuneration Committee comprises the following members:

Dr. Francis Lisa Muga (Independent Non-Executive Director) Chairman YB Dato’ Dr. Tan Kee Kwong (Independent Non-Executive Director) Member Dr. Colin Lee Soon Soo (Managing Director) Member

The function of the Remuneration Committee is to recommend to the board, the remuneration packages of managing directors and executive directors of the Group of Companies and the Group in all its forms, drawing from outside advice as necessary. The remuneration packages of non-executive directors should be determined by the Board of Directors as a whole.

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(C) SHAREHOLDERS

Dialogue between the Company and Investors

The Board recognizes the importance of keeping the shareholders and investors informed of the Group’s business and corporate developments. Such information is disseminated through the following channels: -

• The Annual Report;• The various disclosures and announcement to Bursa Securities including quarterly and annual results; • The websites developed by the Group known as http://ir.wallstraits.net/tmc/; and• Participating in Investor Forum with research analysts, fund managers and investors.

Annual General Meeting

The Annual General Meeting (“AGM”) represents the principal forum for dialogue and interaction with the shareholders of the Company. The Company values feedback from its shareholders and encourages them to actively participate in discussion and deliberations. The Board will ensure that each item of special business included in the notices of the AGM or Extraordinary General Meeting is accompanied by a full explanation of the effects of any proposed resolution.

The Chairman and Board of Directors are prepared to respond to all queries and undertake to provide sufficient clarification on issues and concerns raised by the shareholders. The external auditors are also present to provide their professional and independent clarification, if required, on issues highlighted by the shareholders.

(D) ACCOUNTABILITY & AUDIT

Financial Reporting

The Board of Directors is responsible in ensuring that the financial statements are prepared in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia to give a true and fair view of the state of affairs of the Company. In discharging its responsibilities, the Board is assisted by the Audit Committee to ensure accuracy and adequacy of information to be disclosed.

Relationship with the Auditors

The Board on its own and through the Audit Committee established a formal and transparent independent professional relationship with the Company’s auditors.

Internal Control

The overview of the state of the Group’s internal control is spelled out in the Statement of Internal Control on page 37 of this Annual Report.

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(E) RESPONSIBILITY STATEMENT BY DIRECTORS

The Directors are responsible for ensuring that the annual financial statements of the Company are drawn up in accordance with the requirements of the applicable approved accounting standards in Malaysia, the provisions of the Companies Act, 1965 and the Bursa Securities Listing Requirements for the MESDAQ Market.

They are to ensure that the annual financial statements of the Company 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 results and cash flows for the year then ended.

In preparing the financial statements, the Directors have:

a. applied the appropriate and relevant accounting policies on a consistent basis;b. made judgements and estimates that are reasonable and prudent;c. prepared the financial statements on a going concern basis; andd. ensured that proper accounting records are kept so as to enable the preparation of the financial

statements with reasonable accuracy.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company to prevent and detect fraud and other irregularities.

(F) STATEMENT ON MATERIAL CONTRACTS INVOLVING DIRECTORS’ INTEREST

There were no material contracts involving the Directors’ and major shareholders’ interest during the financial year 1 January 2006 to 31 December 2006.

(G) RECURRENT RELATED PARTY TRANSACTIONS

The recurrent related party transactions of a revenue or trading nature of TMC Life Sciences Berhad transacted during the financial year 1 January 2006 to 31 December 2006 were as follows:

Transacting Party Nature of Transaction

InterestedDirectors, MajorShareholders and Persons Connected

AmountTransacted During the

FinancialYear (RM)

SS Lee Medical Services Sdn. Bhd.(SS Lee)

Renting of Damansara Women’s (DWSC) Specialist Centre Sdn. Bhd.’s premises located at No. 55, Jalan SS21/56B, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan measuring approximately 10,000 sq feet.

Dr. Colin Lee Soon Soo iLim Dee Dek @ Lim Tua Lek iiLee Soon Ai iiiLee Soon Kiang ivLee Soon Swee v Ooi Lay Pheng vi

420,000

Dr. Colin Lee Soon Soo and Lee Soon Yang

Renting of a single story semi-detached house located at 9, Jalan Bandar, Taman Century, 80250 Johor Bahru measuring approximately 3,224 sq feet.

Dr. Colin Lee Soon Soo iLim Dee Dek @ Lim Tua Lek iiLee Soon Swee vLee Soon Yang vii

9,600

Co

rpo

rate

Go

vern

ance

Sta

tem

ent

(co

nt’d

)

31A N N U A L R E P O R T 2 00 6


(624409-A)

(G) RECURRENT RELATED PARTY TRANSACTIONS (CONT’D)

Notes :Nature of Interest

i. Dr. Colin Lee Soon Soo, the Managing Director and a Major Shareholder of TMC, is a Director of DWSC. He is also a director and Major Shareholder of SS Lee.

ii. Mdm Lim Dee Dek @ Lim Tua Lek, the mother of Dr. Colin Lee Soon Soo, Ms Lee Soon Ai, Ms Lee Soon Kiang and Mr. Lee Soon Swee, is a director of DWSC and SS Lee.

iii. Ms Lee Soon Ai, the sister of Dr. Colin Lee Soon Soo, Ms Lee Soon Kiang and Mr. Lee Soon Swee and daughter of Mdm Lim Dee Dek @ Lim Tua Lek, is a director of DWSC and SS Lee.

iv. Ms Lee Soon Kiang, the sister of Dr. Colin Lee Soon Soo, Ms Lee Soon Ai and Mr. Lee Soon Swee and daughter of Mdm Lim Dee Dek @ Lim Tua Lek, is a director of DWSC and SS Lee.

v. Mr. Lee Soon Swee, the brother of Dr. Colin Lee Soon Soo, Ms Lee Soon Ai and Ms Lee Soon Kiang and son of Mdm Lim Dee Dek @ Lim Tua Lek, is a director of TMC.

vi. Ms Ooi Lay Pheng, the spouse of Mr. Lee Soon Swee, is a director of DWSC.

vii. Mr. Lee Soon Yang is the brother of Dr. Colin Lee Soon Soo, Ms Lee Soon Ai, Mr. Lee Soon Swee and Ms Lee Soon Kiang and son

of Madam Lim Dee Dek @ Lim Tua Lek.

COMPLIANCE WITH THE CODE

The Board of Directors strives to ensure that the Company complies with the Principles and Best Practices of the Code. The Board will endeavour to improve and enhance the procedures from time to time.

Co

rporate G

overnance Statem

ent (cont’d)

A N N U A L R E P O R T 2 00 632


(624409-A)

MEMBERS AND ATTENDANCE

A total of five (5) Audit Committee Meetings were held during the financial year 1 January 2006 to 31 December 2006.

Members of the Audit Committee Total Meetings Attended

YB Dato’ Dr. Tan Kee Kwong (Independent Non-Executive Director)Chairman

5

Amos Siew Boon Yeong (Executive Director)Member

5

Dr. Yap Teck Long (Independent Non-Executive Director)Member

4

Dr. Francis Lisa Muga (Independent Non-Executive Director)Member

5

TERMS OF REFERENCE

Primary Purposes

The Audit Committee shall:-

1. provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate accounting and practices for the Company and all its wholly owned subsidiaries (“Group”).

2. improve the Group’s business efficiency, the quality of the accounting function, the system of internal controls and audit function and strengthen the confidence of the public in the Group’s reported results.

3. maintain through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as the internal auditors.

4. enhance the independence of both the external and internal auditors function through active participation in the audit process.

5. enhance the role of the independent Directors by giving them a greater depth of knowledge as to the operations of the Company and the Group through their participation in the Committee.

6. act upon the Board of Directors’ request to investigate and report on any issues or concerns in regard to the management of the Group.

Composition

The Audit Committee shall be appointed by the directors from amongst themselves which fulfils the following requirements: -

1. The Audit Committee shall be composed of no fewer than three (3) members;

2. A majority of the Audit Committee must be independent directors;

3. The Chairman of the Audit Committee shall be an independent director; and

4. The Chief Executive Officer or any alternate director shall not be a member of the Audit Committee.

Aud

it C

om

mit

tee

Rep

ort

33A N N U A L R E P O R T 2 00 6


(624409-A)

Retirement and Resignation

In the event of any vacancy in the Audit Committee, the Company shall fill in the vacancy not later than three (3) months.

Rights & Authority

The Audit Committee shall in accordance with the procedure determined by the Board and at the cost of the Company:-

(a) have explicit authority to investigate any matter within its terms of reference;

(b) have the resources which are required to perform its duties;

(c) have full and unrestricted access to any information pertaining to the Company which it requires in the course of performing its duties;

(d) have unrestricted access to the Chief Executive Officer and the Chief Financial Officer;

(e) have direct communication channels with the external auditors and person(s) carrying out the internal audit function;

(f) be able to obtain independent/external professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary; and

(g) be able to convene meetings with the external auditors excluding the attendance of the executive members of the Company, whenever deemed necessary.

Functions & Duties

The functions of the Audit Committee are as follows:-

(1) To review the following and report the same to the Board of Directors:-

(a) with the external auditors, the audit plan;

(b) with the external auditors, the evaluation of the system of internal controls;

(c) with the external auditors, the audit report;

(d) the assistance given by the employees of the Company to the external auditor;

(e) 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;

(f) the internal audit programme, processes, the results of the internal audit functions and that it has the necessary authority to carry out its work;

Audit C

om

mittee R

eport (co

nt’d)

A N N U A L R E P O R T 2 00 634


(624409-A)

Functions & Duties (cont’d)

(g) the quarterly results and year end financial statements, prior to the approval by the board of directors, focusing particularly on:-

(i) changes in or implementation of major accounting policy changes;

(ii) significant and unusual events; and

(iii) compliance with accounting standards and other legal requirements;

(h) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity;

(i) any letter of resignation from the external auditors of the Company; and

(j) whether there is reason (supported by grounds) to believe that the Company’s external auditor is not suitable for re-appointment; and

(2) Recommend the nomination of a person or persons as external auditors.

(3) To consider the appointment of the external auditors, the audit fee and any questions of resignation or dismissal and on whether there is reason (supported by grounds) to believe that the Company’s external auditors is not suitable for re-appointment.

(4) To carry out any other function that may be mutually agreed upon by the Committee and the Board which would be beneficial to the Company and ensure the effectiveness of the discharge of the Committee’s duties and responsibilities.

(5) The Committee actions shall be reported to the Board of Directors with such recommendations as the Committee deemed appropriate.

(6) To report to the Bursa Securities on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of the Bursa Securities Listing Requirements for the MESDAQ Market.

Meetings

1. The committee shall meet at least four (4) times in a year or more frequently as circumstances required with due notice of issues to be discussed and shall record its conclusions in discharging its duties and responsibilities.

2. A minimum of two (2) independent members present shall form the quorum. The quorum of the meeting is by the presence of a majority of independent members.

3. Upon the request of any member of the Committee, the external auditors or the internal auditors, the Chairman of the Committee shall convene a meeting of the Committee to consider matters which should be brought to the attention of the directors or shareholders.

Aud

it C

om

mit

tee

Rep

ort

(co

nt’d

)

35A N N U A L R E P O R T 2 00 6


(624409-A)

Meetings (cont’d)

4. The external auditors and internal auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so by the Committee.

5. The Committee may invite any Board member or any member of management or any employee of the Company who the Committee thinks fit to attend its meetings to assist and to provide pertinent information as necessary.

6. The Company must ensure that other directors and employees attend any particular Audit Committee meeting only at the Audit Committee’s invitation, specific to the relevant meeting.

Procedure of Audit Committee

The Audit Committee may regulate its own procedures, in particular:-

(a) the calling of meetings;

(b) the notice to be given of such meetings;

(c) the voting and proceedings of such meetings;

(d) the keeping of minutes; and

(e) the custody, production and inspection of such minutes.

Secretary

The Company Secretary or other appropriate senior official shall be the Secretary to the Audit Committee.

SUMMARY OF THE ACTIVITIES OF THE AUDIT COMMITTEE

The activities undertaken by the Audit Committee during the financial year 1 January 2006 to 31 December 2006 included the following:

i. Reviewed the Company’s quarterly financial report prior to submission to the Board for consideration and approval, focusing particularly on significant and unusual events and compliance with accounting standards and other legal requirements.

ii. Reviewed and assessed the adequacy of the scope, functions and resources of the Internal Audit procedures in order to report any weakness or inadequacy to the Board.

iii. Reviewed the External Audit Planning Memorandum on both the audit strategy and audit approach and reviewed the adequacy of existing external audit arrangements, with emphasis on the scope and quality of the audit.

iv. Reviewed effectiveness of the internal control and management information systems.

v. Reviewed the related party transactions and to ensure that they are not more favourable to the related parties than those generally available to the public and complies with the Bursa Securities Listing Requirements for the MESDAQ Market.

Audit C

om

mittee R

eport (co

nt’d)

A N N U A L R E P O R T 2 00 636


(624409-A)

INTERNAL AUDIT FUNCTION

At present, the Group does not have an internal audit division and in the absence of the internal audit division, the Audit Committee assumes the role of discharging the internal audit function. During the year, the Audit Committee relied on discussions with the management and Executive Directors, review of the financial statements and feedback from the external auditors to discharge its duties. Some internal control weaknesses were identified during the financial year under review, all of which have been or are being addressed by the management. None of these weaknesses has resulted in any material loss that would require disclosure in the Group’s financial statements. The Board of Directors is of the opinion that the existing system of internal control is adequate for the current level of operations.

Aud

it C

om

mit

tee

Rep

ort

(co

nt’d

)

37A N N U A L R E P O R T 2 00 6


(624409-A)

The Board affirms its overall responsibility for the Group’s system of internal control which includes reviewing the adequacy and integrity of financial, operational and compliance controls and risk management procedures. In view of the limitations that are inherent in any system of internal control, this system is designed to manage rather that to eliminate risk of failure to achieve business objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatement or loss.

The key process of the Group’s Internal Control System include:

i) the Group has an established organization structure with clearly defined lines of responsibilities and appropriate levels of delegation and authority.

ii) a clear definition of authorization procedures for major operational functions including purchasing, payment and capital expenditures.

iii) regular management meetings to monitor the business developments, to discuss and resolve operational and management issues and to review the financial performance against the business plans.

iv) the Audit Committee would review the effectiveness of the internal financial control environment of the Group.

During the financial year under review, some internal control weaknesses were identified and have been or are being addressed by the management. None of the weaknesses has resulted in any material loss that would require disclosure in the Group’s financial statements.

Statem

ent of Internal C

ontro

l

“Oly hose o nthe yes hildn an ose

hemselves e bject hei onder.”~ Eberhard Arnold ~

40 DIRECTORS’ REPORT44 STATEMENT BY DIRECTORS 44 STATUTORY DECLARATION45 REPORT OF THE AUDITORS46 INCOME STATEMENT47 BALANCE SHEET48 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY48 COMPANY STATEMENT OF CHANGES IN EQUITY49 CONSOLIDATED CASH FLOW STATEMENT51 NOTES TO THE FINANCIAL STATEMENTS


(624409-A)

“Oly hose o nthe yes hildn an ose

hemselves e bject hei onder.”

Financial Statem

ents

A N N U A L R E P O R T 2 00 640


(624409-A)

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2006.

PRINCIPAL ACTIVITY

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are described in Note 9 to the financial statements.

There has been no change in the nature of these activities during the year.

RESULTS Group Company

RM RM

Profit for the year 8,934,602 1,316,523

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statement of changes in equity.

In the opinion of the Directors, the results of the 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

The dividends paid by the Company during the financial year under review were as follows:

RMIn respect of the financial year ended 31 December 2005:

First and final dividend of 10% less 28% taxation, on 168,330,000 ordinary shares,declared on 15 June 2006 and paid on 14 July 2006. 1,211,976

At the forthcoming Annual General Meeting, a first and final dividend in respect of the financial year ended 31 December 2006, of 10% less 27% taxation on 168,330,000 ordinary shares, amounting to a dividend payable of RM1,228,809 (0.73 sen net per ordinary share) will be proposed for shareholders’ approval. The financial statements for the current year do not reflect this proposed dividend.

Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2007.

Dir

ecto

rs’

Rep

ort

A N N U A L R E P O R T 2 00 6 41


(624409-A)

DIRECTORS

The names of the Directors of the Company in office since the date of the last report and at the date of this report are:

Professor Dato’ Dr. Khalid Bin Abdul KadirDr. Lee Soon SooAmos Siew Boon YeongDato’ Dr. Tan Kee KwongDr. Wong Pak SengDr. Yap Teck LongDr. Francis Lisa MugaLee Soon SweeDr. Surinder Singh A/L Ranbir Singh (Alternate to Dr. Wong Pak Seng)

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary of a full-time employee of the Company as shown in Note 6 to the financial statements) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, except as disclosed in Note 24 to the financial statements.

DIRECTORS’ INTERESTS

According to the register of Directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

Number of ordinary shares of RM0.10 each 1.1.2006 Acquired Sold 31.12.2006

The Company

Direct Interest:Professor Dato’ Dr. Khalid Bin Abdul Kadir 20,000 383,000 - 403,000 Dr. Lee Soon Soo 82,773,009 185,000 - 82,958,009 Amos Siew Boon Yeong 3,075,287 - (1,391,987) 1,683,300 Dato’ Dr. Tan Kee Kwong 10,000 - - 10,000 Dr. Wong Pak Seng 1,000,000 100,000 - 1,100,000 Dr. Yap Teck Long - 10,000 - 10,000 Dr. Francis Lisa Muga 2,000 10,000 12,000 Dr. Surinder Singh A/L Ranbir Singh 900,000 - - 900,000 Lee Soon Swee 5,600 374,000 - 379,600

Directo

rs’ Repo

rt (cont’d)

A N N U A L R E P O R T 2 00 642


(624409-A)

OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that p

enriching lives - tmc lifejalan sultan ismail 50250 kuala lumpur tel : 603-2144 2333 fax: 603-2142...

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