y.s.p. southeast asia holding berhad · 2007-08-04 · 02 y.s.p. southeast asia holding berhad...

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

2005

annual report

Contents

A Tribute 02 Corporate Information 03 Corporate Structure 03 Chairman’s Statement 04 Group

Managing Director’s Operation Review 06 Group Financial Highlights 08 Directors’ Profile 09 Corporate

Governance Statement 12 Other Information 17 Statement of Internal Control 18 Audit Committee 19

Financial Statements 21 List of Properties 60 Shareholding Statistics 62 Notice of Annual

General Meeting 64 Statement Accompanying Notice of Annual General Meeting 66 Proxy Form

“Providing the

best quality

products and

improving human

health”

Y.S.P. Southeast Asia Holding Berhad 552781-X Annual Report 200502

A Tribute to the Memory

of The Corporate Founder

of YSP Group

The Honourable

Dr. Lee Tien Te

A remarkable man and visionary who rose

from a humble upbringing during an era of

hardship to become a major and influential

corporate leader in the pharmaceutical

industry. His philosophy, profound thinking

and charismatic leadership had impressed

and inspired many who had the opportunity

to meet him. His passing is undoubtedly a

great loss to the YSP organizations

worldwide.

The Late Hon Dr. Lee Tien Te was the

founder of YSP Group with more than fifty

years experience in the pharmaceutical

field. He graduated from Japan Osaka

Business School in Japan as a Business

Specialist. He began his career with the

Tachia Town Administrative Council in

Tachia, Taiwan, Republic of China in health

management. In 1952, he set up Yung

Shin Pharmacy in Taiwan as a distributor of

pharmaceuticals. In 1965, he established

Yung Shin Pharma Co Ltd (YSP (TW)) to

manufacture and distribute pharmaceutical

products, first locally and later into several

overseas markets including Southeast Asia

countries, USA and China. YSP (TW) was

listed on the Main Board of the Taiwan

Stock Exchange in 1993 and Y.S.P.SAH

was listed on the Second Board of Bursa

Malaysia Securities Berhad in 2004.

His entrepreneurship, vision, foresight and

wealth of expertise in the pharmaceutical

industry had propelled YSP (TW) from

strength to strength to reach great heights

and worldwide recognition over the years.

The Late Hon. Dr Lee Tien Tee actively

supported many charitable, welfare and

benevolent causes during his lifetime.

He was also the Chairman of the Yung Shin

Social Welfare Foundation of Taiwan

R.O.C. and Yung Shin Lee Tien Te Medical

Trust Fund.

Chairman’s Statement

Annual Report 2005 Y.S.P. Southeast Asia Holding Berhad 552781-X 03

Corporate information

BOARD OF DIRECTORS

Datuk Dr. Anis Bin Ahmad

Chairman

Independent Non-Executive Director

Dr. Lee Fang Hsin

President/Group Managing Director

En. Adi Azuan Bin Abdul Ghani

Non-Independent Non-Executive Director

Madam Lee Ling Chin


(Appointed on 16 February 2005)

Dr. Lee Fang Chuan @

Lee Fang Chen


(Appointed on 27 February 2006)

Dr. Lee Fang Yu


(Resigned on 6 February 2006)

Dato’ Koay Soon Eng


Mr. Tu Shu Yao


COMPANY SECRETARIES

Lim Seck Wah

(MAICSA 0799845)

M. Chandrasegaran

A/L S. Murugasu

(MAICSA 0781031)

REGISTERED OFFICE AND

PRINCIPAL PLACE OF

BUSINESS

16th Floor, Plaza IBM,

No. 1, Jalan Tun Mohd Fuad,

Taman Tun Dr. Ismail,

60000 Kuala Lumpur.

Tel : 03-7727 6390

Fax : 03-7727 6701

Email : [email protected]

Website : www.yspsah.com.my

REGISTRAR

Mega Corporate Services Sdn Bhd

(187984-H)

Level 15-2, Faber Imperial Court,

Jalan Sultan Ismail,

50250 Kuala Lumpur.

Tel : 603-2692 4271

Fax : 603-2732 5388

AUDITORS

Shamsir Jasani Grant Thornton

(AF0737)

(Member of Grant Thornton

International)

Level 11-1, Faber Imperial Court,

Jalan Sultan Ismail,

50250 Kuala Lumpur.

Tel : 603-2692 4022

Fax : 603-2691 5229

PRINCIPAL BANKERS

Malayan Banking Berhad (3813 K)

No. 2, Lorong Rahim Kajai 14,

Taman Tun Dr. Ismail,

60000 Kuala Lumpur.

Tel : 03-7729 3671

HSBC Bank Malaysia Berhad

Level 1 Annexe, Menara Milenium,

Jalan Damanlela,

Pusat Bandar Damansara,

Damansara Heights,

50490 Kuala Lumpur.

Cathay United Bank (970064C)

Licensed Offshore Bank,

Level 3(C), Main Office Tower,

Financial Park Labuan Complex.

STOCK EXCHANGE LISTING

Second Board of

Bursa Malaysia Securities Berhad

100%Y.S.P. Industries

(Malaysia) Sdn Bhd

Y.S.P. Southeast Asia Holding Berhad552781-X

Resident Representative

Office of Y.S.P. Industries

(Malaysia) Sdn Bhd

100%Kumpulan Y.S.P.

(M) Sdn Bhd

99.80%Myanmar Yung Shin

Pharma.Ltd.

100%

Y.S.P. (Cambodia)

Pte. Ltd.

100%Yung Shin Pharm.

(Singapore) Pte. Ltd.

99.99%Yung Shin Pharm.

(Philippines) Inc.

100%P.T. Yung Shin Pharmaceutical

Indonesia

Chairman’s statement


2005 was a year of performance and

challenge for the Group as a whole.

Performance was manifested in our overall

growth, and challenges in the form of

growing competition, both domestically and

regionally in the pharmaceutical industry.

However benefactors will be pleased to

know that the Group has moved in the right

direction towards establishing itself as a

serious regional player, amidst raising

expectations and confidence amongst

clients and shareholders alike. One such

development is the proposed transfer of

listing of the Group from its current second

board status to main board status. A move

when completed will better reflect the

stature of Y.S.P.SAH and its subsidiaries,

giving the Group better recognition and

acceptance amongst investors, in particular

institutional investors.

INDUSTRY, MARKET &DEVELOPMENT OVERVIEW

The Malaysian economy expanded at a

strong annual rate of 5.2% in the fourth

quarter of 2005, and this strong turnover

continued into the first quarter of 2006

with expectancies raising high for the rest

of the financial year. The pharmaceutical

industry in Malaysia has experienced an

increase of 10%-15% growth annually for

the last decade. This trend continued in

the year of 2005, and its is expected to

continue to soar barring any unforeseen

changes with a potential revenue estimated

at USD208 million in 2007. This upward

robust development is heavily influenced by

several factors, such as the Government's

pursuit in improving the overall wellness of

Malaysians and, in particular Malaysia's

acceptance as a Member of the

Pharmaceutical Inspection Co-operation

Scheme (PICS), which recognizes

Malaysian manufactured pharmaceutical

products as having global standards for

quality. These factors have encouraged the

local pharmaceutical players as they have

intensified their R&D efforts, in particular

the area of generic and herbal remedies,

whilst establishing themselves as a reputed

manufacturer and exporter with market

segments across the Asian and African

regions. Another growing trend that has

caught on in the Malaysia and the Asia

Pacific region is the demand and growth of

the “Wellness Revolution”. Under this

wave, people everywhere are living or

striving towards healthier lifestyles, this has

somewhat increased the demand for, in

particular herbal and other food supplements

that are cheaper yet of high quality.

FINANCIAL PERFORMANCE

For YSP, I am pleased to announce that the

year was characterized by good sales

growth, productivity with continued

investment in innovation. In line with

strong economic fundamentals and the

growing demand for pharmaceutical and

healthcare products, the Group recorded an

increase of 15% in sales turnover amounting

to RM86.38 million in FYE 2005 which

spells a net profit after tax of RM9.51

million in contrast of the previous turnover

of RM74.96 million and Profit After Tax

RM8.48 million.

The increase is largely attributed to the

Group's continuous efforts on our expanded

product variety and aggressive marketing

strategies to promote sales both locally and

overseas, particularly in the Southeast Asia

region whilst expanding production capacity

and warehouses to further enhance revenue

growth for the Group. While we are proud of

the 12% increase in net profit, we do not

intend to rest on our laurel as efforts to

improve turnaround time and business

efficiency, and achieving economies of

scale in all operations is constantly pursued.

Datuk Dr. Anis Bin AhmadChairman


“Once again it is with great optimism, pleasure and honour

that I present to you the Annual Reports and Financial

Highlights of the Group and its subsidiaries for the financial

year ending 31st December 2005.”


DIVIDEND

Whilst we are mindful of the increase in profits in

FYE2005, we are also aware of the needs to be

prudent and investments in the future of the

Company. The principles and strategies of the

Company demand that further commitment be put

into manufacturing, logistics and housing, coupled

with extensive R&D will secure the future of the

Group. Therefore no dividend is proposed for the

year under review.

OUTLOOK

As we step into another year, the Board is

confident of the Company's future outlook. With

the strength of our ever recovering economy, the

Group is well positioned for the opportunities that

might prove lucrative. For starters we foresee the

coming 9th Malaysian Plan (9MP) to have a

significant impact on the Malaysian healthcare

sector. The thrust of the healthcare sector in the

9MP is “Towards Achieving Greater Health

Through Consolidation Of Services” of which one

of its primary goals is the prevention and

reduction of disease burden. The Government's

announcement to allocate of about RM1.3 billion

for development expenditure to the Ministry of

Health further strengthens its commitment

towards healthcare in the nation. The healthcare

sector itself is estimated to be valued between

USD70 million - USD80 million in 2004, with the

pharmaceutical industry representing of about 1/3

of the overall volume of USD0.4 billion, and of

which only 20% - 30% being produced

domestically. These facts coupled with the impact

of the 9MP represent the huge untapped potential

in the pharmaceutical industry.

Investments in R&D is essential to our success

strategy. Our research team is constantly

developing and testing new products for further

market penetration. As a result, Y.S.P.SAH will

launch a series of new products in the year 2006

whilst aggressively stepping up A&P for its current

stable of products in particular its “SHINE” range.

Regionally our subsidiaries in South East Asia

continue to add value to our growing portfolio of

products and profits, with exceptional growth mainly

in Singapore, Vietnam and Philippines, whilst

Thailand, Cambodia, Myanmar, Sri Lanka, Indonesia

and Laos continue to show increased potential.

In conclusion, the Board believes the Group is

well positioned to anticipate the market demands

locally and regionally. Sound management

principle, facilities, excellent distribution network,

experienced management team along with an

extensive portfolio of products give the group the

edge in this ever growing competitive industry.

With the anticipated positive outcome of the 9MP,

coupled with our proposed transfer of listing to the

main board, YSP's stature will increase in folds as

investors and competitors alike take note.

ACKNOWLEDGEMENT

On behalf of the Board, I wish to extend our

condolences to the family of the late honorary

Dr. Lee Tien Te, our corporate founder. He will be

greatly missed and fondly remembered as a

mentor whose leadership, vision and wisdom has

brought the Group to a position of strength today.

We welcome Lee Fang Chuan to the Board and bid

farewell to Lee Fang Fu along with our sincere

gratitude for his dedication which has been of

great value to the Group. The Board also extends

its appreciation to the management and staff of

the Group for their dedication and commitment.

Finally, our gratitude and sincere thanks to the

various government authorities, shareholders,

partners, clients, suppliers and regulatory authorities

for their invaluable support and assistance, and

look forward to their continued support.

Datuk Dr. Anis Bin AhmadChairman


Over the last 10 years the pharmaceutical industry

across South East Asian countries have grown

steadily at an average annual rate of 10%-12%.

As the Government Authority across this region

continues to play more proactive role in their

country's healthcare sector, the demand for

cheaper generic alternatives continue to rise and

has become a major investment field. Some

countries such as Indonesia and Thailand are

imposing generic substitution as mandatory. It is

also anticipated that over 40 blockbuster drugs

will lose its patent exclusivity over the coming

years, raising expectations of a huge increase in

market share for generic manufacturers. Based on

these factors, the generic market, in particular the

Malaysian market is expected to increase by

another 30% to the tune of almost USD400

million in 2009. Hence the pharmaceutical

players in the south eastern region, in particular

generic manufacturers stand to gain a substantial

increase in demand and profits.

SALES PERFORMANCE REVIEW

In Malaysia, the sale of medicinal products to GPs

in the private sector increased by 8.68% (RM3.11

million). We have successfully registered and

launched 6 new products and 3 additional pack

sizes. Hospital sales increased by 46.36%

(RM2.87 million) in 2005, largely due to the

increased sales to government hospitals whilst

sales to private hospitals has returned to positive

results. Over The Counter (OTC) products registered

a 13.88% growth compared to the previous year.

This significant rise is largely attributed to the

Group's aggressive A&P activities towards building

the “SHINE” range, with constant advertising,

exhibitions, launch conferences and road shows

across the country. Veterinary sales declined by

0.16%, due largely to the feed miller reducing

cost in animal feed causing a decrease in expenditure

for drugs and premix. Wide spread bird flu

outbreaks has caused a major reduction in poultry

supply. The Group's counter measure strategies

include investing into pro-biotic and anti-septic

products to fulfill the gaps in this division.

As for the year 2006, Y.S.P.SAH has planned to

launch several medicinal products to general

practitioners and private hospitals alike. The

significant increase in government hospital sales has

propelled us to move in that direction with more

participation in government tenders anticipated.

The Group's “SHINE” range of products continues

to register increasing sales. Other than aggressive

A&P activities, the Group plans to increase its

range of products under the “SHINE” brand

catering to a wider section of the community.

Regionally, Y.S.P.SAH's export sales has increased

by 33.68% for the FYE2005 with Singapore,

Vietnam and the Philippines as the primary export

contributors. Our export to Thai, Cambodia,

Myanmar, Sri Lanka, Indonesia and Laos have also

made progressive strides in their respective areas.

The development of the pharmaceutical industry

in this part of the region is still in its growth

stage. As such the Group's first step was to

establish a distribution network in each corner of

the South East Asian market. Our confidence in

this region is upheld by our close relationships

with the distributors and respective authorities

which has enabled us to listen to the needs of the

people and supply good quality products according

to these needs. To date we have obtained a

substantial number of product licenses in this

region with more anticipated in the coming year.

With launches and registrations and Y.S.P.SAH's

role as license holders, we are setting up one of

the most secured foundations in this region.

CORPORATE DEVELOPMENT

The Board believes that over the years Y.S.P.SAH

has focused strongly on achieving its near and

long term goals mainly by launching of new

products, advancing pipeline of products and

viable foreign investments. The group has made

good progress towards these goals. However, the

long term success of the Group will depend mainly

on its products. Our products are vital and we

continue to ensure upkeeping of its quality and

Group Managing Director’s operations review


efficacy in the years to come, and most

importantly they play an important role in the

quality of life.

RESEARCH & DEVELOPMENT

The Group's R&D is focused mainly on generics,

lifestyle and OTC drugs. Armed with an

experienced and dedicated team of R&D

researchers, Y.S.P.SAH has been improving and

developing quality pharmaceutical products in

these division, which matches the current market

demands and constitutes a significant contribution

to the revenue of the Group.

MANUFACTURING & WAREHOUSING

Our certified GMP manufacturing plant provides

an ideal and clean production site for large scale

production of pharmaceuticals. With the support

of high-tech equipment and a dedicated team of

production staffs, Y.S.P.SAH is able to meet the

demands of an ever increasing market. The well-

planned expansion scheme for the production site

and the continuous supply of new manufacturing

equipment will ensure that Y.S.P.SAH lives up to

world's standards and manufacturing quota. To

complement our world class manufacturing plant

is our equally superb warehousing facility. With a

built up area of 5400 sq meters, our warehouse

is capable of housing all our products under one

roof. It is also equipped with Enterprise Resource

Planning (ERP) Information System and Computer

Aided Picking & Packing System (CAPS) designed

to handle 3000 orders daily.

QUALITY ASSURANCE & PROFESSIONALTEAM DEVELOPMENT

This important aspect of pharmaceutical

manufacturing requires detailed documentation

and auditing. Here at Y.S.P.SAH, every single step

of the manufacturing process, starting from the

purchasing of raw materials, is fully documented

and continuously audited. These measures assure

the high quality of our pharmaceutical products.

Pharmacists, nutritionists and veterinarians make

up the professional team of Y.S.P.SAH in order to

provide sophisticated professional service for

customers. This further strengthens our

confidence in our products and services which

stems from our strict demands on quality and the

implementation of regular inspection and audit.

MARKETING & PERSONNEL DEVELOPMENT

Y.S.P.SAH has in place an established and well-

coordinated distribution system for the servicing of

its clientele in the local and regional markets. Our

marketing teams are continuously striving by

researching market needs for the development of

new products. Our marketing teams are also

subject to constant training and seminars that

help develop their marketing skills and product

knowledge to ensure constant customer

satisfaction.

Our aim is to continue to develop new

pharmaceutical, health food and veterinary

products for fulfilling the medicinal needs of our

people and to uphold our corporate philosophy

which is "Providing the Best Quality Products and

Improving Human Health".

ACKNOWLEDGEMENT

I would like to extend my appreciation to my

fellow Board members for their advice and

guidance during the year under review, the

management and staff for their dedication and

sense of ownership of the Group. Their attitude

has been outstanding and I am confident of their

role in the Company's success in the years to

come. And finally to our shareholders, your

continuous support keeps us going as we strive

towards global recognition.

Dr. Frank S. Lee Fang Hsin

President /Group Managing Director

Group financial highlightsfor the year ended 31 December 2005


2003 2004 2005

Turnover (RM’000) 70,369 74,960 86,381

Profit before taxation (RM’000) 11,150 11,579 17,860

Profit after taxation (RM’000) 8,300 8,483 14,601

Earning per share (sen*) 16.91 14.02 24.13

Net tangible assets per share (sen) 1.38 1.44 1.45

* The earning per share for the year 2004 and 2005 has been restated to make into account the effects of

bonus shares issued.

03

TURNOVER

(RM‘000)

04 05

70

,36

9

74

,96

0

86

,38

1

03

PROFIT BEFORE TAXATION

(RM’000)

04 051

1,1

50

11

,57

9

17

,86

0

03

PROFIT AFTER TAXATION

(RM’000)

04 05

8,3

00

8,4

83

14

,60

1

03

EARNING PER SHARE

(SEN)

04 05

16

.91

14

.02

24

.13

03

NET TANGIBLE ASSETS

PER SHARE (SEN)

04 05

1.3

8

1.4

4

1.4

5

Directors’ profile


Datuk Dr. Anis Bin Ahmad Aged 60, a Malaysian,

was appointed to the Board of Directors of

Y.S.P.SAH as an Independent Non-Executive

Director on 16th September 2002 and

subsequently as the Chairman on 17th November

2003. Datuk Dr. Anis graduated with a Bachelor

of Pharmacy from the University of Singapore, a

Master of Science in Pharmaceutical Technology

from the University of London and a Ph.D. in

Pharmacology from the University of Bath, United

Kingdom In 1968.

Datuk Dr. Anis started his career as a

Pharmaceutical Officer/Pharmacist with the MOH

for 6 years. He continued his career as a Lecturer

and Head of the Department of Pharmacology in

University Kebangsaan Malaysia from 1975 to

1979. From his extensive experience in pharmacy,

he served as the Deputy Director of NPCB from

1983 to 1987, and was promoted to Director of

NPCB in 1988 and served in that capacity until

1990. He was also the Secretary of the DCA from

1985 to 1990. In 1991, he held the position of

Deputy Director of Health (Pharmacy) for the

Department of Health, Johor before he was

promoted to Director of Pharmacy of MOH in

1996 where he was attached for 5 years until

2001. Datuk Dr. Anis was awarded the Pingat

Jasa Negara that carries the title “Datuk” by Seri

Paduka Baginda Yang Dipertuan Agong in 2001.

Datuk Dr. Anis also serves on the board of New

Hoong Fatt Holding Bhd.

Datuk Dr. Anis is presently the Chairman of the

Remuneration Committee and a member of

Nomination Committee of Y.S.P.SAH.

Datuk Dr. Anis has no family relationship with

other directors or major shareholders of Y.S.P.SAH.

Datuk Dr. Anis holds 1,412,500 shares in

Y.S.P.SAH.

Dr. Lee Fang Hsin Aged 46, a Taiwanese and a

permanent resident in Malaysia, was appointed to

the Board of Directors of Y.S.P.SAH as

President/Group Managing Director on 17th

November 2003. Dr. Lee currently sits on the

boards of several private limited companies in

Malaysia including subsidiary companies of

Y.S.P.SAH in Malaysia and he also currently sits

on the board of YSP(TW). He possesses a graduate

diploma in Finance and Taxation from Tamsui

Oxford College, a Masters in Business

Administration and PhD from Pacific Western

University. USA

Dr. Lee started his career in 1985 with Yung Shin

Pharmaceutical Industries Co. Ltd. [YSP(TW)], as

a Marketing Executive. In the same year, he was

transferred to Japan to conduct marketing surveys

for YSP(TW) until 1987. In 1987, Dr. Lee was

also appointed as the Representatives in charge of

YSP(TW)'s branch in Malaysia, which eventually

resulted in the establishment in Kumpulan Y.S.P.

(Malaysia) Sdn Bhd.

Dr. Lee has been honoured with the following

titles and awards:-

- “Darjah Seri Melaka” by the Governor of

Malacca in 1998.

- The Asia-Pacific Distinguish General Manager

Award in the Second Annual Professional

Manager Award for Enterprise in Taiwan,

R.O.C. in 1998

- The Model from Overseas Chinese Young

Entrepreneur in Taiwan, R.O.C. in 1998

- The Global Overseas Professional Manager

Award in Taiwan, R.O.C. in 2000

- The Third National Award of Overseas

Taiwanese Enterprises in 2001

Dr. Lee is currently the Honorary President of

Taipei Investors' Association in Malaysia and

Honorary President of The Council of Taiwanese

Chambers of Commerce in Asia.

Dr. Lee is presently a member of Audit Committee

and Remuneration Committee of Y.S.P.SAH.

Dr. Lee is a sibling to Dr. Lee Fang Chuan @ Lee

Fang Chen and Mdm Lee Ling Chin.

Dr. Lee holds 3,121,976 shares in Y.S.P.SAH and

has an indirect interest of 25,663,330 shares in

Y.S.P.SAH by virtue of his spouse interest in

Y.S.P.SAH and his interest in Yung Shin

Pharmaceutical Industries Co. Ltd which wholly

owns YSP International Co. Ltd. in turn wholly

owns YSP Sea Investment Co. Ltd., a substantial

shareholder in Y.S.P.SAH.

Dato' Koay Soon Eng Aged 59, a Malaysian, was

appointed to the Board of Directors of Y.S.P.SAH

as an Independent Non-Executive Director and

Chairman of the Audit Committee of Y.S.P.SAH on

16th September 2002 and 17th November 2003

respectively. He holds a Bachelor of Commerce

from the University of Queensland and is an

Accountant by profession, being a Chartered

Accountant of the Malaysian Institute of

Accountants. Dato' Koay is also the Fellow of the

Institute of Chartered Accountants in Australia

and a Certified Practising Accountant of the

Society of Certified Practising Accountants,

Australia.

Being in public practice for over 30 years since

1973 as an Accountant, Auditor, Tax Agent and

Business Consultant, Dato' Koay is currently the

Executive Chairman of the Moores Rowland Group,

a Malaysian firm of an international practice of

accountants and consultants.

Dato' Koay is presently the Chairman of the Audit

Committee of Y.S.P.SAH and he has no family

relationship with other directors or major

shareholders of Y.S.P.SAH.

Tu Shu Yao Aged 56, a Taiwanese, was appointed

to the Board of Directors of Y.S.P.SAH as an

Independent Non-Executive Director and a

member of the Audit Committee of Y.S.P.SAH on

17th November 2003. Graduated with a Diploma

in Mining & Metallurgical engineering from the

University of National Taipei Technology in 1971,

he embarked on his career in the metal and gas

industry in Nigeria, Africa where he served in

various capacities. He was involved in similar

metal and gas industry in Taiwan from 1986 to

1989.

Mr. Tu is presently the Chairman and Managing

Director of Region group of companies (“RGC”) in

Malaysia, a position which he holds since 1986.

In RGC, Mr. Tu is involved in, amongst others,

overseeing the business operations, devising

strategic plans and business direction as well as

responsible for the overall performance of the

group. As the President of the Chinese Taipei

School (Kuala Lumpur) and President of the

Taipei Investors' Association in Malaysia, Mr. Tu is

also active in providing business advices and

guidance to other associations and social

organisations.

Mr. Tu is presently a member of Audit Committee,

Remuneration Committee and Nomination

Committee of Y.S.P.SAH and he has no family

relationship with other directors or major

shareholders of Y.S.P.SAH.

Mr. Tu holds 550,000 shares in Y.S.P.SAH and

has an indirect interest of 209,000 shares in

Y.S.P.SAH by virtue of his spouse interest in

Y.S.P.SAH.

Lee Ling Chin Aged 56, Taiwanese, was

appointed to the Board of Director of Y.S.P.SAH as

a Non-Independent Non-Executive Director on

16th February 2005. She is currently the Director

and a substantial shareholder of YSP(TW). She

graduated with Family Business Management from

Shih Chien University, Taiwan R.O.C in 1971.

She started her career in 1972 with Yung Shin

Pharmaceutical Industries Co. Ltd YSP(TW) as

Section Manager of Administration Section

responsible for Accounting and General Affairs

and she was also involved in setting up the

company management regulation and SOP. She

was then promoted as Manager to be responsible

for overseas business including Southeast Asia

market research and development. She was later

promoted to the position of Vice President in year

1988 to assist the President in management

operation and assist to expand the sales to general

hospital. At the same year she was elected as

Committee Member of Taiwan Pharmaceutical

Manufacturer's Association as an active

participant in public health activities. In Year

2000, she was transferred to an investment

company of YSP(TW), a company dealing with

plasma products business name “BioTrust

International Corporation”, as President. She was

involved in pushing the development of biological

industry in Taiwan R.O.C. and had succeeded in

implementing a new legistration of “Blood

Products Act” in Taiwan R.O.C. She is currently

the Vice Chairman of BioTrust International

Corporation.

Mdm Lee currently served as a member of the

board of several private limited companies in

Taiwan R.O.C. and the subsidiary companies of

Y.S.P.SAH in Malaysia.

Mdm Lee is presently a member of Nomination

Committee of Y.S.P.SAH and she is a sibling to Dr.

Lee Fang Hsin and Dr. Lee Fang Chuan @ Lee

Fang Chen.

Mdm Lee holds 345,434 shares in Y.S.P.SAH and


Y.S.P.SAH by virtue of her interest in Yung Shin









Adi Azuan Bin Abdul Ghani Aged 36, a

Malaysian, was appointed to the Board of

Directors of Y.S.P.SAH as a Non-Independent Non-

Executive Director of Y.S.P.SAH since 1st

December 2004. Graduated with UK BSc

(Honours) Accounting from Queen's University of

Belfast and ACCA from Emile Woolf College,

London, UK. He is now a Fellow Member of the

ACCA (FCCA) and also a member of Malaysian

Institute of Accountants (MIA).

He started his professional career in the auditing

and accounting fields with PricewaterhouseCoopers,

Kuala Lumpur in year 1996. He was then

promoted to the position of Manager in year 2002

and involved in the provision of audit and

accounting services mainly to banking and

financial institutions before joining Lembaga

Tabung Haji as the Divisional Head of Group

Accounts in July 2002. Presently, he is the Head

of Division in Finance & Accounts and Group

Accounts Divisions.

Encik Adi Azuan Bin Abdul Ghani does not have

any equity interest in Y.S.P.SAH or the subsidiary

companies. He also does not have any family

relationship with any directors or major

shareholders of Y.S.P. SAH. Encik Adi Azuan is a

representative of Lembaga Tabung Haji on the

Board of Y.S.P.SAH.

Dr. Lee Fang Chuan @ Lee Fang Chen Aged 49, a

Taiwanese, was appointed to the Board of

Directors of Y.S.P.SAH on 27 Feb 2006. Dr. Lee

currently holds the Chairman of the Board of

Directors and the President of Yung Shin

Pharmaceutical Ind. Co., Ltd. [YSP (TW)], one of

the major stakeholder of YSP SAH. Dr. Lee also

sits on the boards of several private limited

companies in Malaysia including subsidiary

companies of Y.S.P.SAH in Malaysia as well. Dr.

Lee possesses a BS in Pharmacy from Taipei

Medical University, a Master in Pharmaceutical

Chemistry from National Taiwan University, a MBA

from Tunghai University and a PhD in Medicinal

Chemistry from University of Minnesota, USA. Dr.

Lee is currently pursuing his degree in LLM from

the Institute of Technology Law at National

ChiaoTung University.

Dr. Lee started his career in 1983 with [YSP

(TW)] as a research associate in R&D Division. In

1989, Dr. Lee was appointed as the Director of

Medicinal Chemistry in R&D. Dr. Lee was then

gradually promoted to the Vice-president of R&D.

Dr. Lee was assigned to Yung Zip Chemical (YZC)

as the President for his connection to FDA and he

has successfully organized staff of YZC to upgrade

YZC's cGMP to FDA standard. Dr. Lee was again

assigned to China in 1996 as the President of the

start-up company, namely Yung Shin

Pharmaceutical (KunShan) and he worked

together with other expatriates to build the facility

to meet SFDA's cGMP standard in record time. 1n

2001, Dr. Lee returned to Taiwan and continued

his leaderships in YZC and was soon elected as

the Chairman of the Board. In 2004 he was

elected as Board of Director of [YSP (TW)] and

further nominated as the Chairman of the Board

on November 23, 2005.

Dr. Lee also holds certificate granted by Ministry

of Education at Taiwan as an Associate Professor.

Dr. Lee is active in many organizations at Taiwan,

such as Chinese Pharmaceutical Manufacturing

and Development Association and Chinese

Medical and Pharmaceutical Technology

Development Center where he is the elected

Chairman of the Board since April 2005.

Dr. Lee is presently a member of Nomination

Committee of Y.S.P.SAH and he is sibling to Dr.

Lee Fang Hsin and Mdm Lee Ling Chin.

Dr. Lee holds 463,146 shares in Y.S.P.SAH and


Y.S.P.SAH by virtue of his interest in Yung Shin





All the above-named Directors of Y.S.P.SAH have

not been convicted of any criminal offences (other

than ordinary traffic offences, if any) and they do

not have any conflict of interest with the Company.

The Board of Directors fully acknowledges the

importance of good corporate governance and is

taking steps to evaluate the status of the corporate

governance adopted by the Group as tabulated

below and its compliance with the code of best

practices as set out in Part 1 and 2 of the

Malaysian Code on Corporate Governance pursuant

to Paragraph 15.26 of the Listing Requirements

of Bursa Malaysia Securities Berhad (“Bursa

Securities”).

1. BOARD OF DIRECTORS

1.1 Composition of the Board of Directors

The Board presently has seven (7)

members and is headed by the

President/Group Managing Director,

Dr. Lee Fang Hsin. The profile of each

Director is presented separately in the

Annual Report.

1.2 Board Balance

The Board has seven (7) members

comprising the following:-

• One (1) Chairman (Independent Non-

Executive)

• One (1) President/Group Managing

Director

• Two (3) Non-Independent Non-

Executive Directors

• Two (2) Independent Non-Executive

Directors

The Company is in compliance with

Paragraph 15.02 of the Listing

Requirements whereby nearest one-third

of its Board members are independent

directors.

All Board members participate fully in

decisions on the key issues involving the

Group. The President/Group Managing

Director has primary responsibilities for

managing the Group's day to day

operations and together with the Non-

Executive Directors to ensure that the

strategies proposed by the management

are fully discussed and examined, and

taking into account the long term

interests of the various stakeholders

including shareholders, employees,

clients, suppliers and the various

communities in which the Group

conducts its business.

The Board is assured of a balanced and

independent view at all Board

deliberations largely due to the presence

of its Non-Executive Directors who are

independent from Management. The

Independent Directors are also free from

any business or other relationships that

could materially interfere with the

exercise of their independent judgment.

The Board is constituted of individuals

who are committed to business integrity

and professionalism in all its activities.

As part of its commitment, the Board

supports the highest standards of

corporate governance and the

development of the best practices for the

Group.

In addition to the role of guidance by the

Independent Non-Executive Directors,

each Director brings independent

judgment to bear on issues of strategy,

performance, resources and standard of

conduct.

1.3 Duties and Responsibilities

The Board retains full and effective

control of the Company and the Group.

This includes responsibility for

determining the Group's overall strategic

direction as well as development and

control of the Group.

1.4 Meetings

The Board met four (4) times during the

financial year ended 31 December 2005.

The members of the Board and their

attendance at the meetings, were as

follows:-

Corporate Governance Statement


Board of Directors No. of meetings attended

Datuk Dr. Anis Bin Ahmad 4/4

Dr. Lee Fang Hsin 4/4

Dato' Koay Soon Eng 4/4

Mr. Tu Shu Yao 4/4

En. Adi Azuan Bin Abdul Ghani 4/4

Madam Lee Ling Chin (Appointed on 16.2.2005) 3/3

Dr. Lee Fang Yu (Resigned on 6.2.2006) 3/4

Dr. Lee Fang Chuan @ Lee Fang Chen (Appointed on 27.2.2006) -

13Annual Report 2005 Y.S.P. Southeast Asia Holding Berhad 552781-X


1.5 Appointments to the Board

The appointment of any additional Director

is made as and when it is deemed necessary

by the existing Board with due consideration

given to the mix of expertise and

experience required for an effective Board.

In compliance with the Listing

Requirements of Bursa Securities, the

Board's Nomination Committee comprises

exclusively Non-Executive Directors.

The Nomination Committee is empowered

by the Board and its terms of reference to

consider and evaluate the appointment of

new Directors and Directors to board

Committees of the Company. The

Nomination Committee will then

recommend the candidates to the Board

for the appointment. The Nomination

Committee also keeps under review the

Board structure, size and composition

and the mix of skills and core

competencies required for the Board to

discharge its duties effectively. In

addition, the Nomination Committee will

deliberate on Board succession plan as

and when appropriate.

The Nomination Committee will also

assess the effectiveness of the Board as a

whole, the Committees of the Board and

the contributions of each individual

Director on at least an annual basis.

The members of the Nomination

Committee are as follows:-

a) Dr. Lee Fang Chuan @

Lee Fang Chen (Chairman)

b) Datuk Dr. Anis Bin Ahmad

c) Mr. Tu Shu Yao

d) Madam Lee Ling Chin

1.6 Retirement and Re-election

Pursuant to the Company's Articles of

Association, one-third (1/3) of the

Directors, including the Managing

Director, shall retire from office, at least

once in three (3) years. Retiring Directors

can offer themselves for re-election.

Directors who are appointed by the Board

during the financial year are subject to re-

election by shareholders at the next

Annual General Meeting held following

their appointment. Directors over seventy

(70) years of age are subject for re-

appointment annually in accordance with

Section 129(6) of the Companies Act,

1965.

1.7 Supply of Information

The agenda and Board papers for each

item as well as minutes of previous

meetings are circulated prior to the Board

meetings to give Directors sufficient time

to deliberate on the issues to be raised at

the Board meetings.

Upon recommendations by the

management / committee members, the

Board will deliberate and discuss on the

matters before any decisions be made. All

proceedings of the Board Meetings are

minuted and signed by the Chairman of

the meeting in accordance with the

provision of Section 156 of the

Companies Act, 1965.

The Board is kept updated on the

Company's and Group's activities and its

operations on a regular basis. The Directors

also have access to reports on the Group's

activities, both financial and operational.

All Directors have access to the advice

and services of the Company Secretary

who is responsible for ensuring that board

procedures are followed and the Board

may also take independent advice, at the

Company's expenses, in the furtherance

of their duties if so required. The Board

also has unlimited access to all information

with regard to the activities of the

Company.

1.8 Relationship of the Board to Management

• Quality of Information

Information plays a key role in the

Board's decision-making and in

setting up the policies and strategies

of the Company. The Board has

unrestricted access to timely and

accurate information, which is not

only confined to qualitative and

quantitative information, but also to

other information deemed suitable

such as customer satisfaction,

products and services quality, market

share and market reaction and macro

economic performance.

• Access to Information

Prior to the board meetings, all

Directors receive an agenda and

Board papers containing information

relevant to the business of the

meeting including information on

major financial, operational and

corporate matters relating to the

activities and performance of the

Group. The Board papers were served

earlier to enable Directors to have

sufficient time to digest the

information and to obtain further

explanation, where necessary, in

order to be properly informed before

the meeting.

• Use of Board Committees

As appropriate, the Board has

delegated certain responsibilities to

Board Committees which operate

within clearly defined terms of

reference. The Committees are as

follows:-

a) Audit Committee

b) Remuneration Committee

c) Nomination Committee

1.9 The Relationship between the Board and

the Shareholders

The principal forum for dialogue with

shareholders is the AGM, during which

shareholders are encouraged to

participate and pose questions to the

Board regarding operational and financial

information. The AGM also allows

shareholders an opportunity to interact

directly with the Board and seek first-

hand information on the above matters.

Extraordinary General Meetings are held

as and when shareholders' approvals are

required on specific matters and

shareholders are notified of such

meetings requirements.

2.0 Directors' Training

In view of the changing laws, regulations

and business environment, the Directors

are encouraged to attend continuous

training to further their knowledge and to

equip them to effectively discharge their

duties as directors.

All members of the Board had attended

the Mandatory Accreditation Programme

(“MAP”) as prescribed by Bursa

Securities Listing Requirements.

The Directors are encouraged to and, in

accordance with their respective needs,

have attended briefings, seminars and

other continuing education programmes

to keep abreast with current

developments in the industry as well as

changes in laws and regulations.

2. DIRECTORS' REMUNERATION

2.1 The Level and Make-Up of Remuneration

(i) The aggregate remuneration of

Directors of the Group for the

financial year ended 31 December

2005 is follows:-

Salaries & Other

Emoluments

RM

Executive Directors 913,727

Non-Executive Directors 196,799

1,110,526



Remuneration Band Executive Directors Non-Executive Directors

Below 50,000 - 8

RM 50,001 - RM100,000 1 -

RM150,001 - RM200,000 2 -

RM400,001 - RM450,000 1 -

2.2 Procedure

In compliance with the Listing

Requirements of Bursa Securities, the

Board has established a Remuneration

Committee consisting of two (2)

Independent Non-Executive Directors and

the Group Managing Director. The

Committee's primary responsibility is to

recommend to the Board, the

remuneration of Directors. However, the

final decision on remuneration for

Directors is a matter for the Board as a

whole and individual directors are

required to abstain from discussion of

their own remuneration.

The members of the Remuneration

Committee are as follows:-

a) Datuk Dr. Anis Bin Ahmad

(Chairman)

b) Mr. Tu Shu Yao

c) Dr. Lee Fang Hsin

3. SHAREHOLDERS

3.1 Dialogue between the Company and

Investors

The Group values dialogue with investors

as a means of effective communication

that enables the Board to convey

information about the Group's

performance, corporate strategy and other

matters affecting shareholders' interests.

The AGM is the principal forum for dialogue

with individual shareholders. It is a crucial

mechanism in shareholder communication

for the Company. At the Company's AGM,

shareholders have direct access to the

Board and are given the opportunity to ask

questions during the open questions and

answers session. The shareholders are

encouraged to ask questions on both the

resolutions being proposed or about the

Group's operations in general.

The Board is also committed to ensure

that shareholders are well informed of

major developments of the Company and

the Group and the information is also

communicated to them through the

following channels:-

a) Annual Report;

b) various disclosures and

announcements made to Bursa

Securities including the quarterly

results and annual results; and

c) the Company's website

www.yspsah.com.my through which

shareholders and the public in

general can gain access to the latest

corporate and product information of

the Group.

3.2 Annual General Meeting (“AGM”)

Notice of AGM and Annual Reports are

sent out to shareholders at least 21 days

before the date of the meeting.

At the AGM, the Board also provides

opportunities for shareholders to raise

questions pertaining to the business

activities of the Group. Directors and

senior management staff are available to

provide responses to shareholders'

questions.

For the re-election of Directors, the Board

will ensure that full information is

disclosed through the notice of meeting

regarding Directors who are retiring and

who are willing to serve if re-elected.

Each item of special business included in

the notice of meeting will be

accompanied by an explanatory statement

for the proposed resolution to facilitate

full understanding and evaluation of

issues involved.

(ii) Number of Directors of the Group whose remuneration falls in bands of RM50,000 is

tabulated below:-



4. ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

The Board is aware of its responsibilities

to shareholders and the requirement to

present a balanced and comprehensive

assessment of the Group's financial

position, by means of the annual and

quarterly reports and other published

information. In this regard, the Board is

primarily responsible for the preparation

of a financial statement to present a fair

and balanced report of the financial state

of affairs of the Group.

Before releasing to Bursa Securities, the

quarterly financial results are reviewed by

the Audit Committee and approved by the

Board of Directors. The details of the

Company's and the Group's financial

positions are included in the Financial

Statements section of the Annual Report.

4.2 Internal Control

The Board acknowledges its responsibility

for maintaining a sound system of

internal control in the Company and the

Group. These controls can only provide

reasonable but not absolute assurance

against material misstatement, loss or

fraud. Information on the Group's internal

control is disclosed in the Statement of

Internal Control section in the Annual

Report.

4.3 Relationship with Auditors

The Company's external auditors, Shamsir

Jasani Grant Thornton report to members

of the Company on their findings which

are included as part of the Company's

financial reports with respects to each

year's audit on the statutory financial

statements. In doing so, the Company has

established a transparent arrangement

with the auditors to meet their

professional requirements. From time to

time, the auditors highlight to the Audit

Committee and Board of Directors on

matters that require the Board's attention.

5. DIRECTOR'S RESPONSIBILITY STATEMENT

IN RESPECT OF FINANCIAL STATEMENTS

The Board of Directors are required under

Paragraph 15.27(a) of the Bursa Securities

Listing Requirements to issue a statement

explaining their responsibilities in the

preparation of the annual financial

statements.

The Directors are required by the Companies

Act, 1965 to prepare financial statements for

each financial year which give a true and fair

view of the state of affairs of the Company

and of the Group as at the end of the

financial year and of the profit and loss of the

Company and of the Group for the financial

year.

In preparing the financial statements, the

Directors are required to:-

a) use appropriate accounting policies and

consistently apply them;

b) make judgments and estimates that are

reasonable and prudent; and

c) ensure all applicable approved accounting

standards have been followed.

The Directors are responsible for keeping

proper accounting records which disclose,

with reasonable accuracy at any time, the

financial position of the Company and of the

Group and to enable them to ensure that the

accounts comply with the Companies Act,

1965.

The Directors are satisfied that in preparing

the financial statements of the Group for the

financial year ended 31 December 2005, the

Group has used the appropriate accounting

policies and applied them consistently and

prudently. The Directors are of the opinion

that all relevant approved accounting

standards have been followed and confirm

that the financial statements have been

prepared on a going concern basis.



SHARE BUYBACKS

During the financial year, there were no share

buybacks by the Company.

OPTION, WARRANTS AND CONVERTIBLE

SECURITIES

The Company has not issued any options, warrants

or convertible securities during the financial year.

American Depository Receipt (“ADR”) / Global

Depository Receipt (“GDR”)

During the financial year, the Company did not

sponsor any ADR or GDR programme.

SANCTIONS AND/OR PENALTIES

There were no sanctions and/or penalties imposed

on the Company and its subsidiaries, Directors or

management staff by the relevant regulatory

bodies during the financial year.

NON-AUDIT FEE

The Group paid RM4,000 to the external auditors

for the financial year ended 31 December 2005,

for the taxation service to the Group.

PROFIT ESTIMATE, FORECAST OR PROJECTION

The Company did not undertake any profit

estimates, forecast or projection for the financial

year. Thus, there is no variance between the

results for the financial year and unaudited results

previously released by the Company.

PROFIT GUARANTEE

There was no profit guarantee given by the

Company during the financial year.

REVALUATION OF LANDED PROPERTIES

The Group's revaluation policy on landed

properties is as set out in the financial

statements.

MATERIAL CONTRACTS

There were no material contracts entered into by

the Group, Directors and major shareholders

during the financial year.

As disclosed Utilisation Utilised

RM'000 RM'000 RM'000

Purchase of Land 4,000 4,000 -

Extension of factory and purchase of machinery 3,546 732 2,814

Repayment of hire purchase creditors 1,971 1,971 -

Working capital 781 660 121

Listing expenses 1,500 1,621 (121)

11,798 8,984 2,814

UTILIZATION OF PROCEEDS

The proceeds from public issue of RM11,798 million are utilized in the following manner:-

Other InformationRequired Pursuant to Part A of the Bursa Malaysia Securities Berhad Listing Requirements


The Board recognized the importance of the

internal audit function and the independent status

required for the audit activities to be carried out

effectively. KPMG Business Advisory Sdn Bhd

(“KPMG”), an independent professional business

advisory firm was appointed during the financial

year to provide internal audit services to the Group

commencing May 2005. This provided the Board

much of the assurance regarding the effectiveness

as well as the adequacy and integrity of the

Group's system of internal control established by

the management.

During the financial year under review, there were

2 cycles of internal audits carried out by KPMG

based on an internal audit plan presented to and

approved by the Audit Committee. The key

internal controls relating to the identified key

processes and focus areas of the business

operations agreed with the management were

addressed in these two cycles.

All internal audit findings and recommendations

for improvement were presented to respective

managers and departments. The Company has set

up an Internal Control Unit to follow-up on the

respective outstanding matters to ensure the

corrective actions and preventive actions are

implemented properly and on a timely basis.

OTHER CONTROL PROCESS

In addition to the KPMG internal audit, the

Company is also subject to the system audit

conducted by the internal auditor from YSP

(Taiwan). The audit was focused in reviewing the

ERP system, authority limits, financial control and

production management.

Apart from the internal audit, the Company also

participates in the Inter-Company Quality

Assurance audit among YSP Group, namely Y.S.P.

Industries in Malaysia, YSP (Taiwan), YSP (China),

Carlsbad Technology Inc. (USA) and Yung Zip

Chemical. The manufacturing facilities and

logistic warehouse of the Company has been

audited in July 2005 to assure the conformance

with cGMP (Current Good Manufacturing Practice)

compliance. The Company has taken positive

measures in ensuring CAPA (Corrective Action and

Preventive Action) system is implemented properly

against all observation.

The management of the Company assists and

supports the Board in the discharge of internal

audits duties and responsibilities. The Audit

Committee considers reports from internal audit

and from management, before reporting and

making recommendations to the Board in

strengthening the risk management, internal

control and governance systems.

Statement of Internal Control


The primary objective of the Audit Committee is to

assist the Board in the effective discharge of its

fiduciary responsibilities for corporate governance,

financial reporting to shareholders and the public

and the internal control.

The Audit Committee will adopt practices aimed

at maintaining appropriate standards of

responsibility, integrity and accountability to all

the Company's shareholders.

MEMBERSHIP

The Audit Committee is appointed by the Board

and comprises the following members:-

1. Dato' Koay Soon Eng (Chairman)


2. Tu Shu Yao


3. Dr. Lee Fang Hsin

President/Group Managing Director

TERMS OF REFERENCE

COMPOSITION

The composition of the Audit Committee is at

least three (3) members of whom the majority,

including the Chairman, must be independent

directors.

At least one (1) member of the Committee must:-

a) be a member of Malaysian Institute of

Accountants (“MIA:); or

b) have at least 3 years' working experience and:-

i) must have passed the examinations

specified in Part I of the 1st schedule of

the Accountants Act, 1967; or

ii) must be a member of one of the

associates of accountants specified in

Part II of the 1st Schedule of the

Accountants Act, 1967.

No alternate director shall be appointed as a

member of the Committee.

In the event that the Audit Committee is reduced

to less than (3) members, the vacancy shall be

filled within 3 months.

AUTHORITY

The Audit Committee is authorized by the Board

to investigate any activity of the Company and its

subsidiaries within its terms of reference

determined by the Board of Directors and all

employees shall be directed to co-operate as and

when required by the Audit Committee.

The Audit Committee shall have direct

communication channels with the external

auditors and person(s) carrying out the internal

audit function or activity (if any).

The Audit Committee is authorized at the cost of

the Company to take such independent

professional advice as it considers necessary.

MEETINGS

The Committee shall meet a least four (4) times

as year and such additional meetings as the

Chairman shall decide in order to fulfill its duties.

In addition, the Chairman may call a meeting of

the Audit Committee if a request is made by any

committee member, any Executive Director, or the

external auditors.

In order to form a quorum, the majority of

members present must be independent directors.

The Company Secretary shall act as Secretary of

the Audit Committee or in her/his absence,

another person authorized by the Chairman of the

Audit Committee.

There were five (5) Audit Committee meetings

held during the year 2005. The details of

attendance of Committee members are as follows:-

Name of Committee Members Attendance

Dato' Koay Soon Eng ( Chairman) 5/5

Mr. Tu Shu Yao 5/5


RESPONSIBILITIES AND DUTIES OF THECOMMITTEE

The duties and responsibilities of the Committee

shall include:-

1) To consider the appointment of the external

auditors, the audit fees, and any questions of

resignation and dismissal.

Audit Committee



2) To review and report the following to the

Board of Directors:-

i) The quarterly results and year end

financial statements, prior to approval by

the Board focusing particularly on:-

a) changes in or implementation of

major accounting policy;

b) significant and unusual events;

c) compliances with accounting

standards, listing and other relevant

legal and regulatory requirements.

ii) The audit report, audit plan with the

external auditors and their evaluation of

the system of internal controls;

iii) 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.

3) To review the adequacy of the scope,

functions and resources on the internal audit

functions and that it has the necessary

authority to carry out its work.

4) To review the internal audit programme,

processes, the results of the internal audit

programme, processes or investigation

undertaken and whether or not appropriate

action is taken on the recommendations of

the internal audit function.

5) Other functions as may be agreed to by the

Audit Committee and the Board of Directors.

6) To verify the allocation of options to the

eligible employees pursuant to the Company's

Employee Share Option Scheme at the end of

each financial year.

SUMMARY OF ACTIVITIES OF THE AUDITCOMMITTEE

In line with the terms of reference of the Audit

Committee, the following activities were carried

out by the Audit Committee during the financial

year ended 31 December 2005 in the discharge

of its functions and duties:-

a) Reviewed the scope of work of the external

auditors and audit plans for the year.

b) Reviewed with the external auditors the

results of the audit, the audit report and the

management letter, including management's

response.

c) To consider and recommend to the Board for

approval of the audit fees payable to the

external auditors.

d) Reviewed the internal auditors' scope of work.

e) Checked with the internal auditors on any

findings which require the committee's

attention.

f) Reviewed the internal control policy and

internal control system.

g) Reviewed the quarterly unaudited financial

results announcements before recommending

them for the Board's approval.

h) Reviewed the audited Financial Statements of

the Group and the Company prior to

submission to the Board for their

consideration and approval. The review was to

ensure that the audited Financial Statements

were drawn up in accordance with the

provisions of the Companies Act, 1965 and

the applicable accounting standards approved

by the Malaysian Accounting standard Board

(“MASB”).

i) Reviewed the Company's compliance in

particular the quarterly and year end financial

statements with the Listing Requirements of

the Bursa Securities, accounting policy and

other legal and regulatory requirements.

j) Reviewed any related party transactions

entered into by the Group.

INTERNAL AUDIT FUNCTIONS

The Company has outsourced its Independent

Internal Audit Division to Messrs KPMG to ensure

the internal audit functions are carried out

effectively and professionally.

The role of the internal audit functions is to

undertake independent regular and systematic

reviews of the system of internal controls so as to

provide reasonable assurance that such systems

continue to operate satisfactorily and effectively.

The internal audits cover the review of the

adequacy of risk management, operational

controls, compliance with established procedures,

guidelines and statutory requirements.

ADDITIONAL INFORMATION

The Company did not establish any Employee

Share Option Scheme (“ESOS”) in the financial

year ended 31 December 2005.

Audit Committee

Financial Statements

Directors’ Report 22 Statement by Directors 26 Statutory Declaration 26 Report of the Auditors 27

Balance Sheets 28 Income Statements 30 Statements of Changes in Equity 31

Cash Flow Statements 33 Notes to the Financial Statements 36

The Directors have pleasure in submitting their report together with the audited financial statements of the

Group and of the Company for the financial year ended 31 December 2005.

PRINCIPAL ACTIVITIES

The principal activities of the Company consists of investment holding and provision of management

services.

The principal activities of the subsidiary companies are as disclosed in Note 12 to the Financial

Statements.

There have been no significant changes in the nature of these activities of the Company and its subsidiary

companies during the financial year.

FINANCIAL RESULTSGroup Company

RM RM

Net profit for the year 14,601,007 12,605,962

Unappropriated profit/(Accumulated loss) at beginning of year 7,353,190 (9,732)

Unappropriated profit at end of year 21,954,197 12,596,230

DIVIDENDS

There were no dividends paid or declared by the Company since the end of the previous financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year except as stated

in the financial statements and the notes thereto.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the following shares were issued:-

Date of Purpose of Class of Number of shares Term of

issue issue share at RM1.00 per share Issue

09.08.2005 Bonus issue Ordinary 5,500,000 Capitalisation from

share premium

The bonus issue was allotted and issued on the basis of one new ordinary share for every ten existing ordinary

share held on 2 August 2005.

There were no debentures issued during the financial year.

Directors’ Report


INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and of the Company were made out, the Directors took

reasonable steps:-

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of

allowance for doubtful debts and satisfied themselves that all known bad debts had been written off

and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business

including their value as shown in the accounting records of the Group and of the Company have been

written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:-

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful

debts in the financial statements of the Group and of the Company inadequate to any substantial

extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and

of 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.

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 affect

the ability of the Group and of the Company to meet its obligations as and when they fall due.

At the date of this report, there does not exist:-

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the

financial year 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.

OTHER STATUTORY INFORMATION

The Directors state that:-

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or

the financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:-

(a) the results of the Group’s and of the Company’s operations during the financial year were not

substantially affected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any

item, transaction or event of a material and unusual nature likely to affect substantially the results of

the operations of the Group and of the Company for the current financial year in which this report is

made.

Directors’ report


DIRECTORS

The Directors in office since the date of the last report are:-

Datuk Dr. Anis Bin Ahmad (Chairman)

Lee Fang Hsin

Dato’ Koay Soon Eng

Tu Shu Yao

Adi Azuan Bin Abdul Ghani

Lee Ling Chin

Lee Fang Chuan@Lee Fang Chen (Appointed on 27 February 2006)

Lee Fang Yu (Resigned on 6 February 2006)

The shareholdings in the Company and its related corporations of those who were Directors at the end of the

financial year are as follows:-

At At

1.1.2005 Bought Sold 31.12.2005

Company

Ordinary shares of RM1 each

Direct shareholding

Datuk Dr. Anis Bin Ahmad 1,975,000 137,500 700,000 1,412,500

Lee Fang Hsin 2,745,160 376,816 - 3,121,976

Lee Fang Yu 526,052 52,605 - 578,657

Lee Ling Chin 314,031 31,403 - 345,434

Tu Shu Yao - 550,000 - 550,000

Ultimate holding company

- Yung Shin Pharmaceutical

Industries Co. Ltd. (Taiwan)

Ordinary shares of NTD 10 each

Direct shareholding

Lee Fang Hsin 10,213,907 510,695 - 10,724,602

Lee Fang Yu 6,342,438 273,121 - 6,615,559

Lee Ling Chin 6,795,377 339,768 - 7,135,145

Subsidiary company

- Yung Shin (Philippines) Inc

Ordinary shares of PESO 10 each

Direct shareholding

Lee Fang Hsin 1 - - 1

Lee Fang Yu 1 - - 1

By virtue of Mr. Lee Fang Hsin, Mr. Lee Fang Yu and Ms. Lee Ling Chin’s interest in shares of the ultimate

holding company, they are deemed to have interest in the Company and its related companies under Section

6A of the Companies Act, 1965 to the extent the ultimate holding company has an interest.

No other Directors in office at end of the financial year held any interest in shares of the Company and its

related corporations during the financial year.

Directors’ report


DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with

the object or objects of enabling the Directors of the Company to acquire benefits by means of the acquisition

of shares in 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

benefit (except as disclosed in Notes 20 and 23 to the Financial Statements) by reason of a contract made

by the Company or a related corporation with the 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.

ULTIMATE HOLDING COMPANY AND IMMEDIATE HOLDING COMPANY

The Directors regard Yung Shin Pharmaceutical Industries Co. Ltd., a company incorporated in Taiwan,

Republic of China as the ultimate holding company and YSP SEA Investment Co. Ltd., a company

incorporated in British Virgin Island, United Kingdom, as the immediate holding company.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year of the Company are disclosed in Note 24 to the Financial

Statements.

AUDITORS

Messrs Shamsir Jasani Grant Thornton has expressed their willingness to continue in office.

On behalf of the Board

)

DATUK DR. ANIS BIN AHMAD )

)

)

) DIRECTORS

)

)

)

LEE FANG HSIN )

Kuala Lumpur

27 February 2006

Directors’ report


In the opinion of the Directors, the financial statements set out on pages 28 to 59 are drawn up in

accordance with the provisions of the Companies Act, 1965 and 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 at

31 December 2005 and of the results and cash flows of the Group and of the Company for the financial year

then ended.

On behalf of the Board

DATUK DR. ANIS BIN AHMAD LEE FANG HSIN

Kuala Lumpur

27 February 2006

I, Lee Fang Hsin, being the Director responsible for the financial management of Y.S.P. Southeast Asia

Holding Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial

statements set out on pages 28 to 59 are 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 at Kuala Lumpur in )

the Federal Territory this day of )

27 February 2006 )

LEE FANG HSIN

Before me:

Commissioner for Oaths

Statement by Directors

Statutory Declaration


We have audited the financial statements of the Group and of the Company set out on pages 28 to 59 of

Y.S.P Southeast Asia Holding Berhad.

These financial statements are the responsibility of the Company’s Directors.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. These

standards require that we plan and perform the audit to obtain all the information and explanations, which

we consider necessary to provide us with sufficient evidence to give reasonable assurance that the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant

to the amounts and disclosures in the financial statements. An audit includes an assessment of 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 have been properly drawn up in accordance with the provisions of the

Companies Act, 1965 and 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 of the Company as at 31 December 2005 and of the results

and cash flows of the Group and of the Company for the financial year ended on that date; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial

statements of the Group and of the Company;

and

b) the accounting and other records and the registers required by the Companies Act, 1965 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 said Act.

We have considered the financial statements and auditors’ reports thereon of the subsidiary companies of

which we have not acted as auditors, as indicated in Note 12 to the Financial Statements.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with

the Company’s financial statements 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 required by us for those 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 Subsection (3) of Section 174 of the Act.

SHAMSIR JASANI GRANT THORNTON

(NO. AF: 0737)

CHARTERED ACCOUNTANTS

DATO’ N.K. JASANI

CHARTERED ACCOUNTANT

(NO.: 708/03/06(J/PH))

PARTNER

Kuala Lumpur

27 February 2006

Report of the Auditors to the members of Y.S.P. Southeast Asia Holding Berhad and its Subsidiary Companies


Balance Sheets as at 31 December 2005


Group Company

Note 2005 2004 2005 2004

RM RM RM RM

SHARE CAPITAL 5 60,500,000 55,000,000 60,500,000 55,000,000

SHARE PREMIUM 1,983,829 7,534,681 1,983,829 7,534,681

EXCHANGE FLUCTUATION

RESERVE 6 206,051 189,945 - -

RESERVE ON CONSOLIDATION 7 3,241,737 8,934,710 - -

UNAPPROPRIATED PROFIT/

(ACCUMULATED LOSS) 21,954,197 7,353,190 12,596,230 (9,732)

Total shareholders' equity 87,885,814 79,012,526 75,080,059 62,524,949

MINORITY INTERESTS 278 298 - -

NON-CURRENT LIABILITIES

Deferred taxation 8 2,871,000 2,871,000 - -

Term loans 9 5,483,216 3,340,632 - -

Finance creditors 10 24,844 37,223 - -

96,265,152 85,261,679 75,080,059 62,524,949

Represented by:-

NON-CURRENT ASSETS

PROPERTY, PLANT

AND EQUIPMENT 11 48,878,878 44,842,298 - -

INVESTMENT IN

SUBSIDIARY COMPANIES 12 - - 66,228,818 115,653,422

AMOUNT DUE FROM

SUBSIDIARY COMPANIES 12 - - 7,720,000 4,000,000

INTANGIBLE ASSETS 2,504 1,201 - -

48,881,382 44,843,499 73,948,818 119,653,422

CURRENT ASSETS

Inventories 13 24,781,041 23,733,900 - -

Trade receivables 14 29,280,297 25,911,808 - -

Other receivables 15 3,608,092 4,034,438 2,243 249,657

Amount due from

related companies 16 67,593 30,708 - -

Amount due from

subsidiary companies 12 - - 4,117,006 6,217,345

Tax recoverable - 835,532 - -

Fixed deposits with

licensed banks 3,724,349 3,273,102 550,000 250,000

Cash and bank balances 7,442,577 6,777,383 375,006 1,257,692

Total current assets 68,903,949 64,596,871 5,044,255 7,974,694

Balance sheets


Group Company

Note 2005 2004 2005 2004

RM RM RM RM

LESS: CURRENT LIABILITIES

Trade payables 1,176,625 3,610,426 - -

Other payables 17 11,639,964 10,282,910 44,870 321,876

Amount due to ultimate

holding company 16 2,937,442 3,676,474 - -

Amount due to

subsidiary companies 12 - - 3,868,144 64,781,291

Amount due to

related companies 16 - 24,766 - -

Bank borrowings 18 3,929,711 5,221,497 - -

Term loans 9 1,210,935 1,251,988 - -

Tax payable 625,502 110,630 - -

Total current liabilities 21,520,179 24,178,691 3,913,014 65,103,167

NET CURRENT

ASSETS/(LIABILITIES) 47,383,770 40,418,180 1,131,241 (57,128,473)

96,265,152 85,261,679 75,080,059 62,524,949

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

Income Statements for the financial year ended 31 December 2005


Group Company

Note 2005 2004 2005 2004

RM RM RM RM

Revenue 19 86,380,714 74,960,015 360,000 3,300,000

Cost of goods sold (43,676,711) (38,021,590) - -

Gross profit 42,704,003 36,938,425 360,000 3,300,000

Other operating income 1,908,495 1,875,823 392,863 328,597

Gain on voluntary winding up

of a subsidiary company 5,091,913 - 12,538,543 -

Distribution cost (22,113,152) (18,849,350) - -

Administration expenses (7,325,872) (7,073,428) - -

Other operating expenses (1,670,772) (838,024) (433,108) (283,825)

Profit from operations 18,594,615 12,053,446 12,858,298 3,344,772

Finance cost (734,689) (474,141) - -

Profit before taxation 20 17,859,926 11,579,305 12,858,298 3,344,772

Taxation 21 (3,258,939) (3,096,482) (252,336) (44,595)

Profit after taxation 14,600,987 8,482,823 12,605,962 3,300,177

Minority interests 20 10 - -

Net profit for the year 14,601,007 8,482,833 12,605,962 3,300,177

Earnings per share

- Basic 22 24.13 sen 14.02 sen - -


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Statements of Changes in Equityfor the financial year ended 31 December 2005


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Statements of changes in equity


Cash Flow Statementsfor the financial year ended 31 December 2005


Group Company

Note 2005 2004 2005 2004

RM RM RM RM

CASH FLOWS FROM

OPERATING ACTIVITIES

Profit before taxation 17,859,926 11,579,305 12,858,298 3,344,772

Adjustments for:-

Allowance for doubtful debts

no longer required (873,142) (402,655) - -

Allowance for doubtful debts 682,764 422,555 - -

Amortisation of intangible assets 1,242 685 - -

Amortisation of reserve

on consolidation (601,060) (992,745) - -

Bad debts written off 669,405 373,228 - -

Damaged goods written off 374,323 273,310 - -

Depreciation 3,308,388 2,240,086 - -

Gain on disposal of property,

plant and equipment - (114,563) - -

Gain on voluntary winding up

of a subsidiary company (5,091,913) - (12,538,543) -

Interest expenses 497,936 183,559 - -

Interest income (105,378) (108,072) (392,863) (328,562)

Loss/(gain) on foreign exchange

- unrealised (19,448) 4,316 - -

Loss on revaluation of property,

plant and equipment - 102,350 - -

Property, plant and equipment

written off - 3,577 - -

Operating profit/(loss) before

working capital changes 16,703,043 13,564,936 (73,108) 3,016,210

Changes in working capital:-

Inventories (1,421,464) (3,934,344) - -

Receivables (3,441,254) (859,945) 247,414 (246,797)

Payables (837,745) 5,454,559 (277,006) 301,200

Ultimate holding company (739,032) 243,445 - -

Subsidiary companies - - (569,661) (8,596,451)

Related companies (61,651) (251,302) - -

Cash generated from/

(used in) operations 10,201,897 14,217,349 (672,361) (5,525,838)

Interest paid (497,936) (183,559) - -

Tax paid (1,908,535) (3,317,530) (252,336) (44,595)

Interest received 105,378 108,072 392,863 328,562

Net cash from/(used in)

operating activities 7,900,804 10,824,332 (531,834) (5,241,871)

Cash flow statements


Group Company

Note 2005 2004 2005 2004

RM RM RM RM

CASH FLOWS FROM

INVESTING ACTIVITIES

Acquisition of subsidiary

company, net of cash A - - - (379,761)

Proceeds from disposal of

property, plant and equipment - 272,000 - -

Purchase of property,

plant and equipment B (4,896,795) (17,534,909) - -

Purchase of intangible assets (2,545) (644) - -

Net cash used in

investing activities (4,899,340) (17,263,553) - (379,761)

CASH FLOWS FROM

FINANCING ACTIVITIES

Proceed from issuance of shares - 11,797,500 - 11,797,500

Listing expenses paid - (1,627,083) - (1,627,083)

Share issue expenses paid (50,852) - (50,852) -

Repayment of finance creditors (2,681,423) (1,676,625) - -

Repayment of term loans (57,509) (3,045,472) - -

Drawdown of short term

revolving credit 2,000,000 1,000,000 - -

Drawdown of term loans 2,159,040 3,425,374 - -

Dividend paid - (3,292,014) - (3,292,014)

Net cash from/(used in)

financing activities 1,369,256 6,581,680 (50,852) 6,878,403

CASH AND CASH EQUIVALENTS

Effect on foreign exchange

rate changes 37,507 112,138 - -

Net increase/(decrease) 4,370,720 142,459 (582,686) 1,256,771

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

Carried forward C 10,237,215 5,828,988 925,006 1,507,692

Cash flow statements


NOTES TO THE CASH FLOW STATEMENTS

A. ACQUISITION OF SUBSIDIARY COMPANIES

On 30 November 2004, the Company subscribed for the newly issued and fully paid-up share capital

of PT Yung Shin Pharmaceutical Indonesia comprising 922,500,000 ordinary shares of RP1 each for

a total purchase consideration of RM379,761 satisfied by way of cash.

B. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

The Group acquired property, plant and equipment with an aggregate cost of RM7,346,285 (2004:

RM19,135,188) of which RM2,449,490 (2004: RM1,600,279) was acquired by means of hire

purchase. Cash payment of RM4,896,795 (2004: RM17,534,909) was made to purchase the

property, plant and equipment.

C. CASH AND CASH EQUIVALENTS

Group Company

2005 2004 2005 2004

RM RM RM RM

Bank overdraft (Note 18) (929,711) (4,221,497) - -

Fixed deposits with licensed banks 3,724,349 3,273,102 550,000 250,000

Cash and bank balances 7,442,577 6,777,383 375,006 1,257,692

10,237,215 5,828,988 925,006 1,507,692


1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared in accordance with the

provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

2. FINANCIAL RISK MANAGEMENT POLICIES

The Group’s and the Company’s financial risk management policies seek to ensure that adequate financial

resources are available for the development of the Group’s and the Company’s business whilst managing

its risks. The Group and the Company operates within clearly defined guidelines that are approved by the

Board and the Group’s and the Company’s policies are not to engage in speculative transactions.

The main areas of the financial risks faced by the Group and the Company and the policies in respect

of the major areas of treasury activity are set out as follows:-

(a) Foreign currency risk

The Group and the Company are exposed to foreign currency risk as a result of its normal trading

or operating activities, both external and intra-Group where the currency denomination differs

from the local currency, Ringgit Malaysia(RM). The Group’s and the Company’s policy is to

minimise the exposure of overseas operating subsidiaries or activities to transaction risk by

matching local currency income against local currency costs.

(b) Interest rate risk

The Group’s and the Company’s policy is to borrow principally on the floating rate basis but to

retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate

borrowings are set to reduce the impact of an upward change in interest rates while enabling

benefits to be enjoyed if interest rates fall.

(c) Credit risk

The credit risk is controlled by the application of credit approvals, limits and monitoring

procedures. This is done through reference to published credit ratings by prime financial

institutions. In the absence of published ratings, an internal credit review is conducted if the

credit risk is material.

(d) Market risk

For key product purchases, the Group establishes floating and fixed price levels that the Group

considers acceptable and enters into physical supply agreements, where necessary, to achieve

these levels. The Group does not face significant exposure from the risk from changes in debt and

equity prices.

(e) Liquidity and cash flow risks

The Group and the Company seeks to achieve a balance between certainty of funding even in

difficult times for the markets or the Group and the Company and a flexible, cost-effective

borrowing structure. This is to ensure that at the minimum, all projected net borrowing needs are

covered by committed facilities. Also, the objective for debt maturity is to ensure that the amount

of debt maturing in any one year is not beyond the Group’s and the Company’s means to repay

and refinance.

Notes to the Financial Statements- 31 December 2005


3. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting convention

The financial statements of the Group and of the Company have been prepared under historical

cost convention unless otherwise indicated in the other significant accounting policies.

(b) Basis on consolidation

The consolidated financial statements incorporate the audited financial statements of the

Company and its subsidiary companies made up to 31 December 2005, except for Y.S.P.

(Cambodia) Pte. Ltd. and PT Yung Shin Pharmaceutical Indonesia which are based on unaudited

management financial statements made up to 31 December 2005. All significant inter-company

transactions are eliminated on consolidation and the consolidated financial statements reflect

external transactions only.

The results of the subsidiary companies acquired are included in the consolidated income

statement from the date of acquisition.

Any difference between the cost of investment and the net worth at the date of acquisition is

included in the consolidated balance sheet as reserve/goodwill arising on consolidation. Goodwill

arising on consolidation is retained in the consolidated balance sheet. Where an indication of

impairment exists, the carrying amount of the goodwill is assessed and written down immediately

to their recoverable amount.

Reserve arising on consolidation represents the excess of the Group’s interest in the fair value of

the identifiable assets and liabilities of a subsidiary company at the date of acquisition over the

cost of acquisition.

The amount of reserve arising on consolidation not exceeding the fair values of acquired

identifiable non-monetary assets should be recognised as income on a systematic basis over the

remaining weighted average useful life of the identifiable acquired depreciable or amortisable

assets. A period of ten (10) years is used for this purpose.

(c) Investment in subsidiary companies

A subsidiary company is a company in which the Group or the Company has a long term equity

interest of more than 50 per cent where there is management participation through Board

representation.

Investments in subsidiary companies are stated at cost. Where an indication of impairment exists,

the carrying amount of the investment in subsidiary companies are assessed and written down

immediately to their recoverable amount.

(d) Minority interests

Minority interests are measured at the minorities’ share of the post acquisition fair values of the

identifiable assets and liabilities of the acquiree as at acquisition date and the minorities’ share

of movements in the acquiree’s equity since then. Separate disclosure is made for minority

interests.

Notes to the financial statements




3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(e) Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and

accumulated impairment loss. Freehold land is not depreciated. Depreciation on other property, plant

and equipment is calculated to write off the cost or valuation of the property, plant and equipment on

a straight line basis over the estimated useful lives of the property, plant and equipment concerned.

The principal annual depreciation rates used are as follows:-

Freehold building 2%

Long leasehold building 2%

Furniture and fittings 10%

Office equipment 10%

Plant and machinery 10%

Motor vehicles 20%

Laboratory equipment 10%

Long leasehold land over the remaining term of lease of 83 years

The Group revalues its properties comprising land and buildings every 5 years or at shorter intervals

whenever the fair value of the revalued assets is expected to differ materially from their carrying value.

Surplus arising from revaluation are dealt with in the revaluation reserve account. Any deficit

arising is offset against the revaluation reserve to the extent of a previous increase for the same

property. In all other cases, a decrease in carrying amount will be charged to the income statement.

Restoration cost relating to an item of property, plant and equipment is capitalised only if such

expenditure is expected to increase the future benefits from the existing asset beyond its

previously assessed standard of performance.

Property, plant and equipment are written down to recoverable amount if, in the opinion of the

Directors, it is less than their carrying value. Recoverable amount is the net selling price of the

property, plant and equipment i.e. the amount obtainable from the sale of an asset at arm’s length

transaction between knowledgeable, willing parties, less the costs of disposal.

(f) Foreign currency translation

Foreign currencies translation has been translated into Malaysian Ringgit at the rates of exchange

ruling on the transaction dates. All foreign currency assets and liabilities at the balance sheet

date are translated into Malaysian Ringgit at approximate exchange rates ruling at that date. All

exchange gains and losses are dealt with in the income statements.

For the purposes of consolidation, net assets of the foreign subsidiary companies are translated

into Ringgit Malaysia at the exchange rate ruling at the balance sheet date while the income

statement is translated into Malaysian Ringgit at the average exchange rate for the financial year.

Exchange differences arising from such transaction are taken to exchange fluctuation reserve. The

Directors regard all the foreign subsidiary companies as foreign entity.

The closing rates of foreign currencies used in translation were as follows:-

2005 2004

RM RM

New Taiwan Dollar 0.1150 0.1187

Peso 0.0729 0.0677

Singapore Dollar 2.2925 2.3185

US Dollar 3.7510 3.7956


(g) Intangible assets

Expenditure on acquired patents, trademarks and licenses is capital and amortised using the

straight line method over their useful lives or 20 years, which ever is shorter. Intangible assets

are not revalued.

(h) Inventories

Inventories are stated at lower of cost and net realisable value. Cost of finished goods and work

in progress are determined using the weighted average method. Cost of raw material and

packaging material is determined using the First-In-First-Out method. Cost includes all expenses

incurred in bringing the inventories to their present location and condition. Finished goods

include cost of raw materials, labour and an appropriate proportion of manufacturing overheads.

(i) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in

which they identified. An estimate is made for doubtful debts based on a review of all outstanding

amounts at the financial year end.

(j) Deferred tax liabilities and assets

Deferred tax liabilities and assets are provided for under the liability method at the current tax rate

in respect of all temporary differences between the carrying amount of an asset or liability in the

balance sheet and its tax base including unabsorbed tax losses and unutilised capital allowances.

Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be

available against which the deductible temporary differences can be utilised. The carrying

amount of deferred tax assets is reviewed at each balance sheet date. If it is no longer probable

that sufficient taxable profit will be available to allow the benefit of part or that entire deferred

tax assets to be utilised, the carrying amount of the deferred tax assets will be reduced

accordingly. When it becomes probable that sufficient taxable profit will be available, such

reductions will be reversed to the extent of the taxable profit.

(k) Assets acquired under hire-purchase and lease agreements

The cost of property, plant and equipment acquired under hire purchase and finance lease

arrangements which transferred substantially all the risks and rewards of ownership to the Group

are capitalised. The depreciation policy on these assets is similar to that of the Group’s property,

plant and equipment depreciation policy. Outstanding obligations due under hire purchase and

finance lease arrangements after deducting finance expenses are included as liabilities in the

financial statements. Finance charges on hire purchase and finance lease arrangements are

allocated to income statements over the period of the respective agreements.

(l) Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of

a past event, when it is probable that an outflow of resources embodying economic benefits will

be required to settle the obligation and a reliable estimate can be made of the amount of the

obligation.




(m) Payables

Payables are stated at cost which the fair value of the consideration to be paid in the future for

goods and services received.

(n) Revenue recognition

Group

Revenues are recognised upon delivery of products to customer, net of sales tax and trade discounts.

Company

Investment income is recognised when the right to receive payment is established. Management

income is recognised upon the rendering of services.

(o) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, balance with banks, demand deposits and

highly liquid investments which are readily convertible to known amount of cash and which are

subject to an insignificant risk of changes in value.

(p) Impairment of assets

The carrying values of assets are reviewed for impairment when there is an indication that the

assets might be impaired. Impairment is measured by comparing the carrying values of the assets

with their recoverable amounts. The recoverable amount is the higher of net realisable value and

value in use, which is measured by reference to discounted future cash flows. Recoverable

amounts are estimated for individual assets, or if it is not possible, for the cash generating unit.

An impairment loss is charged to the income statements immediately, unless the asset is carried

at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease

to the extent of previously recognised revaluation surplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous

impairment loss and is recognised to the extent of the carrying amount of the asset that would

have been determined (net of amortisation and depreciation) had no impairment loss been

recognised. The reversal is recognised in the income statements immediately, unless the asset is

carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited

directly to revaluation surplus. However, to the extent that an impairment loss on the same

revalued asset was previously recognised as an expense in the income statements, a reversal of

that impairment loss is recognised as income in the income statements.

(q) Segmental results

Segment revenues and expenses are those directly attributable to the segments and include any

joint revenue and expenses where a reasonable basis of allocation exists. Segments assets include

all assets used by a segment and consist principally of cash, receivables, inventories, intangibles

and property, plant and equipment, net of provision and accumulated depreciation and

amortisation. Segments liabilities include all liabilities incurred by a segment and consist

principally of payables and borrowings. Segment assets and liabilities include items directly

attributable to the segments as well as those that can be allocated on a reasonable basis.

Unallocated items mainly comprise tax recoverable, tax payable and deferred taxation.




(r) Intersegment transfer

Segment revenues, expenses and results include transfers between segments. The prices charged

on intersegment transactions are the same as those charged for similar goods to parties outside of

the economic entity at an arm’s length transactions. These transfers are eliminated on consolidation.

(s) Employees benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in

the year in which the associated services are rendered by employees of the Group. Short

term accumulating compensated absences such as paid annual leave are recognised when

services are rendered by employees that increase their entitlement to future compensated

absences, and short term non-accumulating compensated absences such as sick leave are

recognised when the absences occur.

(ii) Defined contribution plan

The Group’s contributions to defined contribution plans are charged to the income

statement in the period to which they are related.

(t) Borrowings

Interest bearing bank loans and overdrafts are recorded at the amount of proceeds received, net

of transaction costs.

(u) Financial instruments

Financial instruments carried on the balance sheet include cash and bank balances, fixed deposits

with licensed banks, receivables, payables and borrowings. The particular recognition methods

adopted are disclosed in the individual accounting policy statement associated with each item.

Financial instruments are classified as liabilities or equity in accordance with the substance of the

contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument

classified as liability are reported as expense or income. Distributions to holders of financial

instruments classified as equity are charged directly to equity. Financial instruments are offset when

the Group and the Company has a legally enforceable right to set off the recognised amounts and

intends either to settle on a net basis, or to realise the assets and settle the liability simultaneously.

4. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

The principal activity of the Company consists of investment holding and provision of management

services.

The principal activities of the subsidiary companies are as mentioned in Note 12 to the Financial

Statements.

There have been no significant changes in the nature of these activities of the Company and its

subsidiary companies during the financial year.





4. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION (CONT’D)

The Company is a public limited company, incorporated and domiciled in Malaysia. The registered

office and principal place of business is located at 16th Floor, Plaza IBM, No.1, Jalan Tun Mohd Fuad,

Taman Tun Dr. Ismail, 60000 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a

resolution of the Directors passed on 27 February 2006.

5. SHARE CAPITALGroup and Company

2005 2004

RM RM

Authorised:-

Ordinary shares of RM1.00 each

At beginning and end of year 100,000,000 100,000,000

Issued and fully paid:-

Ordinary shares of RM1.00 each

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

Issued during the year 5,500,000 8,250,000

At end of year 60,500,000 55,000,000

6. EXCHANGE FLUCTUATION RESERVEGroup

2005 2004

RM RM

At beginning of year 189,945 43,149

Translation of foreign subsidiary companies 16,106 146,796

At end of year 206,051 189,945

The above reserve is not available for distribution as dividends.

7. RESERVE ON CONSOLIDATIONGroup

2005 2004

RM RM


Less: Accumulated amortisation (810,433) (992,745)

At end of year 3,241,737 8,934,710

The above reserve is not available for distribution as dividends.



8. DEFERRED TAXATIONGroup

2005 2004

RM RM


Transferred from income statement - 953,000

At end of year 2,871,000 2,871,000

The balance in the deferred taxation is made up of temporary differences arising from:-

Group

2005 2004

RM RM

Carrying amount of property, plant and equipment in excess of

their tax base 2,137,000 2,100,000

Revaluation on land and buildings 734,000 771,000

2,871,000 2,871,000

9. TERM LOANSGroup

2005 2004

RM RM

Secured:-

Payable within 12 months

Term loan (1) 41,265 82,318

(2) 1,169,670 1,169,670

1,210,935 1,251,988

Payable after 12 months

Term loan (1) 1,068,472 1,084,928

(2) 4,414,744 2,255,704

5,483,216 3,340,632

Total term loans 6,694,151 4,592,620

Term loan (1)

The term loan bears interest at rate of 3.00% (2004: 3.00%) per annum and is repayable by 240

monthly instalments commencing on 1 October 2003. It is secured by fresh first legal all monies

mortgage on the subsidiary company’s leasehold properties.



9. TERM LOANS (CONT’D)

Term loan (2)

The term loan of the subsidiary company is secured by:-

(i) An “all monies” First Party Sixth (6th) Legal Charge as subsidiary instrument (to be ranked after

Malayan Banking Berhad’s four existing legal charges) over land and building, with an unlimited

covenant to pay on the part of the subsidiary company to secure USD3,000,000, whereby the

Sixth (6th) Legal Charge shall rank pari-passu with the Fifth (5th) Legal Charge to be created by

the subsidiary company in favour of the HSBC Bank Malaysia Berhad for RM7,000,000;

(ii) An “all monies” First Party Second Legal Charge as subsidiary instrument over the land and

building, with an unlimited covenant to pay on the part of the subsidiary company to secure

USD3,000,000 whereby the Second Legal Charge shall rank pari-passu with the First Legal

Charge to be created by the subsidiary company in favour of HSBC Bank Malaysia Berhad for

RM7,000,000;

(iii) Corporate Guarantee from the Company; and

(iv) Letter of undertaking from the Company;

The term loan bears interest at rate of 0.75% (2004: nil) per annum above the London Interbank Offer

Rate (LIBOR) and is repayable in 10 quarterly installments commencing not later than 3 months after

the moratorium period.

10. FINANCE CREDITORSGroup

2005 2004

RM RM

Minimum lease payments

- within 1 year 1,107,020 1,334,485

- after 1 year but not later than 5 years 27,583 43,374

1,134,603 1,377,859

Less : Interest-in-suspense (17,884) (29,207)

Present value of finance creditors 1,116,719 1,348,652

Present value of finance creditors

- within 1 year 1,091,875 1,311,429

- after 1 year but not later than 5 years 24,844 37,223

1,116,719 1,348,652

The amount payable within 1 year has been included in other payables.



11

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Cost

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RM

RM

RM

RM

RM

RM

At

begin

nin

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30

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9,9

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16

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9,6

84

1,3

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57

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4,6

41

56

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2,9

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37

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7,7

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Addit

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2,8

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82

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4,4

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5,7

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1,5

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4,2

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7,9

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56

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2,9

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ted d

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tion

At

begin

nin

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f ye

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1,3

24

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97

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0,6

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64

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49

1,8

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1,2

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29

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3,6

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86

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1,8

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4,5

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2

Net

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31

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05

3

1,2

08

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81

0,4

28

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39

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46

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1,8

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8,8

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31

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2

8,9

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69

75

8,3

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5,8

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2-

44

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2,2

98

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Cost

1

7,8

45

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81

9,2

74

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11

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4,8

50

9,2

70

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24

8,1

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14

0,8

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2,8

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52

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5,2

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33

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8,7

18

19

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4,2

21

1,7

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09

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63

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7,9

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56

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2,9

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1.1

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44

55

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9,7

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4,5

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55

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11

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11

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-

Long

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Fre

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RM

RM

RM

RM

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At

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5,8

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14

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53

3,0

98

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83

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59

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At

begin

nin

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13

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2,5

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24

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9

Net

book v

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31

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05

8

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8,9

19

1,8

70

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04

86

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88

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5,7

19

31

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8,5

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-

31

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04

5,8

20

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61

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57

6,6

32

8,8

91

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41

1,7

76

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9-

28

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5,6

91

Repre

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d b

y:-

Cost

8,6

48

,91

9-

17

8,4

30

4,5

49

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44

,46

9,1

95

17

,84

5,8

68

15

,00

7,0

60

Valu

ati

on

-1

,87

0,0

00

53

0,0

00

4,5

65

,00

08

,28

7,8

50

15

,25

2,8

50

15

,25

2,8

50

8,6

48

,91

91

,87

0,0

00

70

8,4

30

9,1

14

,32

41

2,7

57

,04

53

3,0

98

,71

83

0,2

59

,91

0

Depre

cia

tion c

harg

e f

or

the y

ear

ended 3

1.1

2.2

00

4-

-9

5,9

58

61

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22

98

,01

4-

45

5,3

84



11. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Included in property, plant and equipment is net book value of assets of the subsidiary companies held

under hire purchase arrangements of RM2,053,857 (2004: RM1,637,396).

Freehold and leasehold properties of certain subsidiary companies were revalued by Directors in year

2001 and 2000 based on an independent professional valuations using the open market basis and

incorporated into financial statements in the same year.

Long leasehold land and building have been pledged to a licensed bank as collateral for credit facilities

granted to a subsidiary company.

The subsidiary company’s leasehold property was revalued by the Directors based on an independent

professional valuation on 11 June 2004 by Kelvin Ng (BSc. (Est) Mgt) from Colliers International

Consultancy and Valuation (S) Pte. Ltd.. Valuation was made on the basis of open market value on an

existing use bases. The deficit on revaluation was charged to the income statement.

Had the land and buildings been carried at historical cost less accumulated depreciation, the net book

value of the revalued assets at the end of the financial year are as follows:-

Group

2005 2004

RM RM

Freehold land and buildings 1,076,186 1,076,186

Long leasehold land 947,838 960,585

Long leasehold building 9,866,982 10,122,169

12. SUBSIDIARY COMPANIESCompany

2005 2004

RM RM

Unquoted shares, at cost

- in Malaysia 61,082,415 110,507,019

- outside Malaysia 5,146,403 5,146,403

66,228,818 115,653,422

Details of the subsidiary companies are as follows:-

Effective

Place of equity interest

Subsidiary companies incorporation 2005 2004 Principal activities

% %

Yung Shin South East Asia Malaysia - 100 Investment holding and

Sdn. Bhd. (“YSSEA”) disposed off during the current

financial year

Y.S.P. Industries (M) Sdn. Bhd. Malaysia 100 100 Importer and manufacturer of

pharmaceutical and veterinary

products, pharmaceutical fine

chemicals and provision of

management services



12. SUBSIDIARY COMPANIES (CONT’D)

Details of the subsidiary companies are as follows:- (Cont’d)

Effective

Place of equity interest

Subsidiary companies incorporation 2005 2004 Principal activities

% %

Yung Shin (Philippines), Inc. # Philippines 99.99 99.99 Manufacturing, importing,

exporting, buying and selling of

pharmaceuticals and other

related products

Myanmar Yung Shin Myanmar 99.80 99.80 Trading in pharmaceutical

Pharma Limited # products

Kumpulan Y.S.P. Malaysia 100 100 Importer, distributor of

(Malaysia) Sdn. Bhd. pharmaceutical and veterinary

products and pharmaceutical

fine chemicals

Yung Shin Pharmaceutical Singapore 100 100 Importer and exporters and

(Singapore) Pte. Ltd. # trading in all kinds of

pharmaceutical products

Y.S.P. Cambodia Pte. Ltd.# Cambodia 100 100 Trading in pharmaceutical

products

PT Yung Shin Pharmaceutical Indonesia 99.92 99.92 Trading in pharmaceutical

Indonesia # products

# Subsidiary companies not audited by Shamsir Jasani Grant Thornton

In the previous financial year, included in the amount due from subsidiary companies is

RM10,000,000 which is unsecured, bear interest at the rate of 3.50% per annum and repayable in

20 installments on a monthly basis commencing on January 2005. However, the repayment term and

condition have been revised during the financial year.

In the current financial year, included in the amount due from subsidiary companies are

RM10,000,000 and RM1,680,000 which are unsecured, bear interest at the rate of 3.50% per annum

and repayable in 40 and 24 installments on a monthly basis commencing on January 2006 and on

September 2005 respectively.

The other amounts due from/to subsidiary companies are unsecured, interest free and have no fixed

terms of repayment.

13. INVENTORIESGroup

2005 2004

RM RM

At cost:-

Raw materials 5,265,051 5,923,991

Finished goods 13,246,764 12,867,655

Work-in-progress 4,108,447 3,221,194

Packaging 2,160,779 1,721,060

24,781,041 23,733,900



14. TRADE RECEIVABLESGroup

2005 2004

RM RM

Trade receivables 29,778,399 26,600,288

Less: Allowance for doubtful debts (498,102) (688,480)

29,280,297 25,911,808

15. OTHER RECEIVABLESGroup Company

2005 2004 2005 2004

RM RM RM RM

Non-trade receivables 232,745 553,151 2,243 249,657

Deposits 216,029 236,166 - -

Down payment - plant and machinery 426,952 438,921 - -

Prepayments

- finance creditors 627,175 566,965 - -

- others 2,105,191 2,239,235 - -

3,608,092 4,034,438 2,243 249,657

16. ULTIMATE HOLDING COMPANY, IMMEDIATE HOLDING COMPANY AND RELATEDCOMPANY

The Directors regard Yung Shin Pharmaceutical Industries Co. Ltd., a company incorporated in Taiwan,

Republic of China as the ultimate holding company and YSP SEA Investment Co. Ltd., a company

incorporated in British Virgin Island, United Kingdom, as the immediate holding company.

Related companies refer to Yung Shin Pharmaceutical Industries Co. Ltd’s group of companies.

Amounts due from/to related companies and ultimate holding company are unsecured, interest free and

has no fixed term of repayment.

17. OTHER PAYABLESGroup Company

2005 2004 2005 2004

RM RM RM RM

Finance creditors 1,091,875 1,311,429 - -

Guarantee deposits payables 98,710 864 - -

Non-trade payables 4,293,370 2,681,245 - 256,800

Accrual of expenses 6,151,989 6,281,386 40,850 57,090

Dividend payable 4,020 7,986 4,020 7,986

11,639,964 10,282,910 44,870 321,876



18. BANK BORROWINGSGroup

2005 2004

RM RM

Secured:-

Bank overdraft 929,711 4,221,497

Short term revolving credit 3,000,000 1,000,000

3,929,711 5,221,497

The bank borrowings are secured by:-

(i) The existing 1st, 2nd, 3rd and 4th legal charges totaling RM13,500,000 over land and building;

(ii) An “all monies” First Party Fifth (5th) legal charge as subsidiary instrument (to be ranked after

Malayan Banking Berhad’s four existing legal charges) over land and building, whereby the Fifth

(5th) Legal Charge shall rank pari-passu with the Sixth (6th) Legal Charge to be created by the

subsidiary company in favour of The Hongkong and Shanghai Banking Corporation Ltd, Offshore

Banking Unit Labuan USD3,000,000;

(iii) An “all monies” First Party First Legal Charge as subsidiary instrument over the land and

building, with an unlimited covenant to pay on the part of the subsidiary company to secure

RM7,000,000 whereby the First Legal Charge shall rank pari-passu with the Second Legal Charge

to be created by the subsidiary company in favour of The Hongkong and Shanghai Banking

Corporation Ltd, Offshore Banking Unit Labuan for USD3,000,000;

(iv) Corporate Guarantee from the Company; and

(v) Trade Finance General Agreement and Islamic Trade Finance General Agreement;

The bank overdraft and short term revolving credit bear interest at rates ranging from 0.50% to 0.75%

(2004: 0.50% to 0.75%) above the bank’s base lending rate and cost of fund respectively.

19. REVENUE

Group

Revenue for the Group represents sales of goods outside the Group net of discounts, returns and sales tax.

Company

Revenue represents dividend income declared or received from subsidiary companies. Management

income represents the management services rendered to its subsidiary companies.



20. PROFIT BEFORE TAXATION

Profit before taxation has been determined after charging/(crediting) amongst other items the

following:-

Group Company

2005 2004 2005 2004

RM RM RM RM

Auditors’ remuneration

- statutory 40,799 38,458 3,000 2,000

- others 4,000 4,000 4,000 4,000

Bad debts written off 669,405 373,228 - -

Damaged goods written off 374,323 273,310 - -

Depreciation 3,308,388 2,240,086 - -

Directors’ remuneration

- fee 229,754 197,159 212,500 180,000

- other emoluments 880,772 740,712 10,800 3,900

Allowance for doubtful debts 682,764 422,555 - -

Amortisation of intangible assets 1,242 685 - -

Interest expenses

- bankers’ acceptance 33,634 61,506 - -

- hire purchase 53,905 21,202 - -

- term loan 410,397 100,851 - -

Loss on foreign exchange

- realised - - 2,590 7,555

- unrealised - 4,316 - -

Loss on revaluation of property,

plant and equipment - 102,350 - -

Property, plant and equipment

written off - 3,577 - -

Rental of premises 793,566 985,199 - -

Allowance for doubtful debts

no longer required (873,142) (402,655) - -

Amortisation of reserve

on consolidation (601,060) (992,745) - -

Gain on foreign exchange

- realised (164,119) (123,428) - -

- unrealised (19,448) - - -

Gain on disposal of property,

plant and equipment - (114,563) - -

Gain on voluntary winding-up of

a subsidiary company (5,091,913) - (12,538,543) -

Interest income (105,378) (108,072) (392,863) (328,562)

Rental income (31,440) (64,157) - -

The estimated monetary value of benefit provided to Directors of the Group during the financial year

amounted to RM214,675 (2004: RM135,658).



21. TAXATION Group Company

2005 2004 2005 2004

RM RM RM RM

In Malaysia

Current year’s taxation 2,906,000 1,737,400 206,000 44,400

Transferred to deferred taxation - 953,000 - -

Underprovision in prior year 54,151 249,867 46,336 195

Outside Malaysia

Current taxation 309,833 143,821 - -

(Over)/Underprovision in prior year (11,045) 12,394 - -

Total 3,258,939 3,096,482 252,336 44,595

Provision for taxation is determined by applying the current Malaysian tax rate on chargeable income.

The Company has sufficient tax credit under Section 108 of the Income Tax Act,1967 to frank the

payment of dividends to the extent of approximately RM749,000 (2004 : Nil) out of its unappropriated

profit as at 31 December 2005.

A reconciliation of income tax expenses on profit before taxation with the applicable statutory income

tax rate is as follows:-

Group Company

2005 2004 2005 2004

% % % %

Tax at applicable tax rate 28.0 28.0 28.0 28.0

Income not subject to tax (8.9) (3.0) (27.3) (27.7)

Non-allowable expenses 1.9 6.5 0.9 1.0

Tax effect on the utilisation of

reinvestment allowances (2.7) (6.1) - -

Underprovision in prior year 0.3 2.3 0.4 -

Tax effect on different tax rate (0.4) (1.0) - -

Average effective tax rate 18.2 26.7 2.0 1.3

However, the above amounts are subject to approval of the Inland Revenue Board of Malaysia.

22. EARNINGS PER SHARE

Group

The earnings per share has been calculated based on Group’s profit after taxation and minority interest

of RM 14,601,007 (2004: RM8,482,833) and the weighted average number of shares issued during

the financial year of 60,500,000 (2004: Revised : 60,500,000).



23. RELATED PARTY TRANSACTIONS

Significant related party transactions during the financial year were as follows:-

Group Company

2005 2004 2005 2004

RM RM RM RM

Purchases from related companies 360,259 645,955 - -

Purchases from ultimate

holding company 7,010,838 5,621,947 - -

Purchases from companies in which

certain Directors, namely Lee Fang

Hsin and Tu Shu Yao have interest 71,100 11,904 - -

Sales to related companies 46,748 47,256 - -

Consultancy fees charged by

ultimate holding company 547,913 947,690 - -

Transactions with a company in which

certain Directors namely, Lee Fang

Hsin and Lee Fang Yu have interest

- management fee received 24,000 24,000 - -

- rental paid 90,000 90,000 - -

Interest income from

subsidiary company - - 371,986 283,402

Dividend income from

subsidiary company - - - 3,300,000

The Directors of the Group and of the Company are of the opinion that the terms of the above

transactions were entered on a negotiated basis.

24. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year were as follows:-

a) On 11 May 2005, the Company has dissolved Yung Shin South East Asia Sdn. Bhd., a wholly

owned subsidiary company through members' voluntary winding-up.

The exercise has resulted in a gain of RM12,538,543 and RM5,091,913 at Company and Group

level respectively.

b) On 6 June 2005, K & N Kenanga Bhd on behalf of the Board of Directors of the Company

proposed bonus issue of 5,500,000 new ordinary shares of RM1.00 each through the

capitalisation of share premium to be credited as fully paid-up to the shareholders of Y.S.P.

Southeast Asia Holding Berhad on the basis of one(1) new share for every ten(10) existing shares

held (Proposed Bonus Issue).

The Proposed Bonus Issue was duly approved by the members at the Extraordinary General

Meeting held on 29 June 2005. The 5,500,000 new ordinary shares arising from the Bonus Issue

were duly issued and allotted on 9 August 2005.

25. FINANCIAL INSTRUMENTS

(a) Interest rate risk

The interest rate risk that financial instruments’ values will fluctuation as a result of changes in

market interest rates, and the effective weighted average interest rates on classes of financial

assets and financial liabilities, were as follows:-

Effective weighted

Less than 1 to 5 average interest rates

1 year years Total during the year

Group RM RM RM

2005

Financial asset

Fixed deposits with

licensed banks 3,724,349 - 3,724,349 0.70% - 3.10%

Financial liabilities

Bank overdraft 929,711 - 929,711 6.50% - 6.75%

Short term revolving credit 3,000,000 - 3,000,000 4.40%

Term loans 1,210,935 5,483,216 6,694,151 2.78% - 3.50%

Finance creditors 1,091,875 24,844 1,116,719 1.75% – 5.25%

2004

Financial asset

Fixed deposits with

licensed banks 3,273,102 - 3,273,102 0.70% - 3.00%

Financial liabilities

Bank overdraft 4,221,497 - 4,221,497 6.50% - 6.75%

Short term revolving credit 1,000,000 - 1,000,000 4.40%

Term loans 1,251,988 3,340,632 4,592,620 3.00% - 3.12%

Finance creditors 1,311,429 37,223 1,348,652 1.75% - 5.25%

Company

2005

Financial assets

Fixed deposits with

licensed banks 550,000 - 550,000 2.50%

Amount due from

subsidiary company 3,960,000 7,720,000 11,680,000 3.50%

2004

Financial assets

Fixed deposits with

licensed banks 250,000 - 250,000 2.50%

Amount due from

subsidiary company 6,000,000 4,000,000 10,000,000 3.50%

(b) Credit risk

The maximum credit risk associated with recognised financial assets is the carrying amount

shown in the balance sheet.

The Group has no significant concentration of credit risk with any single counterparty. In respect

of investment in cash, the policy is to transact with financial institutions that have at least a short

term counterparty rate.





26. EMPLOYEES INFORMATIONGroup

2005 2004

RM RM

Staff costs 19,606,801 16,663,596

The number of employees of the Group at the end of the financial year was 519 (2004: 470) persons.

The Company has not employed any staff since the date of its incorporation.

27. CAPITAL COMMITMENTS

Capital commitments expenditure in respect of the following are not provided for in the financial

statements:-

Group

2005 2004

RM RM

Authorised and contracted for:-

- Buildings in progress 392,950 1,714,509

- Buildings - 908,100

- Plant and machinery 1,037,963 655,074

1,430,913 3,277,683

28. CONTINGENT LIABILITIESCompany

2005 2004

USD USD

Corporate guarantee given to licensed bank for facilities granted

to a subsidiary company 3,000,000 3,000,000

29. SEGMENTAL REPORTING

(i) Primary segmental reporting – Business Segment

The Group is organised based on three major business segments as follows:-

Business segments Business activities

Trading Import, export and trading in various kinds of pharmaceutical products.

Manufacturing Manufacturing of various kind of pharmaceutical products.

Investment holding Investment holding

29. SEGMENTAL REPORTING (CONT’D)

(i) Primary segmental reporting – Business Segment (Cont’d)

Investment

Year ended Trading Manufacturing holding Eliminations Consolidated

31 December 2005 RM RM RM RM RM

Revenue

External 12,465,653 73,915,061 - - 86,380,714

Intersegment - 4,141,269 360,000 (4,501,269) -

Total revenue 12,465,653 78,056,330 360,000 (4,501,269) 86,380,714

Results

Segment results 1,302,231 11,338,676 12,465,435 (6,617,105) 18,489,237

Interest income 17,541 66,960 392,863 (371,986) 105,378

Profit from

operations 1,319,772 11,405,636 12,858,298 (6,989,091) 18,594,615

Finance cost (734,689)

Profit from

ordinary activities

before taxation 17,859,926

Taxation (3,258,939)

Net profit for

the year 14,600,987

Other

Information

Segment assets 11,598,126 105,259,956 927,249 - 117,785,331

Consolidated

assets 11,598,126 105,259,956 927,249 - 117,785,331

Segment liabilities 3,170,935 23,186,932 44,870 - 26,402,737

Tax payable 252,706 372,796 - - 625,502

Deferred taxation - 2,871,000 - - 2,871,000

Consolidated

liabilities 3,423,641 26,430,728 44,870 - 29,899,239

Capital expenditure

on property, plant

and equipment 42,635 7,303,650 - - 7,346,285

Depreciation 167,680 3,140,708 - - 3,308,388

Amortisation 1,242 - - - 1,242




(i) Primary segmental reporting – Business Segment (Cont’d)

Investment

Year ended Trading Manufacturing holding Eliminations Consolidated

31 December 2004 RM RM RM RM RM

Revenue

External 10,650,780 64,309,235 - - 74,960,015

Intersegment - 4,105,009 3,300,000 (7,405,009) -

Total revenue 10,650,780 68,414,244 3,300,000 (7,405,009) 74,960,015

Results

Segment results 467,221 11,154,789 33,940,899 (33,633,591) 11,929,318

Interest income 29,537 21,004 356,989 (283,402) 124,128

Profit from

operations 496,758 11,175,793 34,297,888 (33,916,993) 12,053,446

Finance cost (474,141)

Profit from

ordinary activities

before taxation 11,579,305

Taxation (3,096,482)

Net profit for

the year 8,482,823

Other

Information

Segment assets 10,695,481 96,987,540 1,757,349 - 109,440,370

Consolidated

assets 10,695,481 96,987,540 1,757,349 - 109,440,370

Segment liabilities 3,316,759 23,806,081 323,076 - 27,445,916

Tax payable 110,630 - - - 110,630

Deferred taxation - 2,871,000 - - 2,871,000

Consolidated

liabilities 3,427,389 26,677,081 323,076 - 30,427,546

Capital expenditure

on property, plant

and equipment 616,220 18,518,968 - - 19,135,188

Depreciation 135,633 2,104,453 - - 2,240,086

Amortisation 685 - - - 685




(ii) Secondary segmental reporting – Geographical segment

The Group’s operations are operates in the following geographical areas:-

Geographical segments Business activities

Malaysia Mainly manufacturing in various kind of pharmaceutical products

Philippines Mainly import, export and trading in various kind of pharmaceutical

products

Myanmar Mainly import, export and trading in various kind of pharmaceutical

products

Singapore Mainly import, export and trading in various kind of pharmaceutical

products

Vietnam Mainly import, export and trading in various kind of pharmaceutical

products

Cambodia Mainly import, export and trading in various kind of pharmaceutical

products

Indonesia Mainly import, export and trading in various kind of pharmaceutical

products

Year ended

31 December 2005

Revenue Total assets Capital expenditure

RM RM RM

Malaysia 68,473,014 106,187,782 7,303,652

Philippines 3,466,400 2,735,681 3,612

Myanmar - 29,039 -

Singapore 8,192,983 8,039,749 36,267

Vietnam 4,239,193 - -

Cambodia 806,270 440,922 -

Indonesia - 352,158 2,754

Others 1,202,854 - -

86,380,714 117,785,331 7,346,285




(ii) Secondary segmental reporting – Geographical segment (Cont’d)

Year ended

31 December 2004

Revenue Total assets Capital expenditure

RM RM RM

Malaysia 60,753,283 98,748,504 18,518,968

Philippines 3,703,360 2,982,686 312,950

Myanmar - 17,604 -

Singapore 6,259,282 6,834,974 290,828

Vietnam 2,783,772 - -

Cambodia 688,138 478,482 12,442

Indonesia 378,120 - -

Others 772,180 - -

74,960,015 109,440,370 19,135,188

30. FAIR VALUES

The carrying amounts of financial assets and liabilities of the Group and of the Company at the balance

sheet date approximated their fair values except for investment in subsidiary companies, which is

stated at cost, as it is not practical to estimate the fair value without incurring excessive costs.



Net Book

Value as at

Land/ Approximate 31 December

Description and Built-up Age of 2005

Location Usage Tenure Area Building (RM’000)

Lot 3, 5 & 7, Jalan P/7, Three contiguous parcels 99 years 0.4047 13 years 13,466

Section 13 of industrial lands with leasehold, hectare

Kawasan Perindustrian purpose built industrial all expiring on each,

Bandar Baru Bangi buildings for own use 29.09.2086 totalling

43000 Kajang consisting of:- 1.2141

Held under:- hectare

H.S.(M) 9635 for (i) 4-storey office /

P.T. 11466, Seksyen 13, laboratory building

H.S.(M) 9636 for (ii) 4 storey production /

P.T. 11467 Seksyen 13 laboratory / warehouse

and H.S.(M) 9637 for building

P.T. 11468 Seksyen 13, (iii) 2-storey raw materials /

all in the Mukim of packaging building

Kajang, District of (iv) 1-storey maintenance /

Hulu Langat, Tenaga Nasional Berhad

State of Selangor sub-station building

(v) 1-storey canteen

(vi) water treatment plant

(vii)guard house

No. 18, Intermediate 3-storey Freehold 163 17 years 1,170

Jalan Wan Kadir terrace shop-office square

Taman Tun Dr. Ismail for own use metres

60000 Kuala Lumpur

Held under Geran:-

23507 for Lot No. 50965

in Mukim Kuala Lumpur,

District of Wilayah

Persekutuan State of

Wilayah Persekutuan

No. 20, Jalan Wan Kadir Intermediate 3-storey Freehold 164 17 years 1,171

Taman Tun Dr. Ismail terrace shop-office square

60000 Kuala Lumpur for own use metres

Held under Geran:-

23508 for Lot No. 50966,

in Mukim Kuala Lumpur,

District of Wilayah

Persekutuan State of

Wilayah Persekutuan

Lot 266, Lot 268 4 units of double storey 99 years 143 Building 714

and Lot 299 under terrace house for leasehold square in progress

PT 55634, PT 55632, own use metres/

PT 55602 and PT 55601 unit

respectively, all in

Seksyen 9, Bandar Baru

Bangi, Mukim Kajang,

Daerah Hulu Langat,

Selangor

List of Propertiesas at 31 December 2005


Net Book

Value as at

Land/ Approximate 31 December

Description and Built-up Age of 2005

Location Usage Tenure Area Building (RM’000)

Lot 1 & 3, Jalan 9/8 Five contiguous parcels 99 years 4.03 1 year 12,386

Lot 2,4 & 6, Jalan 9/7 of industrial lands leasehold, acres/

Taman IKS, Section 9 with purpose built all expiring in 13,939

Bandar Baru Bangi industrial building for year 2103 square

43650 Kajang own use consisting of:- metres

Held under:-

H.S.(D) 87699 for (i) 2-storey

P.T. 56932 Seksyen 9, warehouse

H.S.(D) 87700 for P.T. building PKNS

56933 Seksyen 9, Industrial land

H.S.(D) 87693 for for factory build

P.T. 56926 Seksyen 9, on Lot 1 & 2

H.S.(D) 87694 for Section 9,

P.T.56927 Seksyen 9 Bandar Baru Bangi

and H.S.(D) 87695

for P.T. 56928 Seksyen 9, (ii) Lot 3, 4, & 5

all in the Mukim of Kajang, - vacant land

District of Hulu Langat,

State of Selangor

No.10, Ubi Crescent Flatted factory 60 years 2,250 3 years 766

#06-57, leasehold, square

Singapore 408564 all expiring on feet

04.07.2057

No.10, Ubi Crescent Flatted factory for 60 years 2,325 3 years 792

#06-58, own use leasehold, square

Singapore 408564 all expiring feet

on 04.07.2057

No. 8 2nd storey flatted 60 years 139.0 19 years 440

Kaki Bukit Road 2, warehouse within a leasehold, square

#02-26, 4-storey industries expiring on metres

Ruby Warehouse development. Let 06.12.2042

Complex, out

Singapore 417841

Unit 3-B LPL Plaza Condominium Unit Freehold 152.0 21 years 304

Condominium for own use square

Building metres

No.12

4 L.P Leviste

Street, Salcedo

Village, Makati City

List of Propertiesas at 31 December 2005


Authorized Capital : RM100,000,000 divided into 100,000,000 ordinary shares of RM1.00 each

Issued and Paid-Up Capital : RM60,500,000 divided into 60,500,000 ordinary shares of RM1.00 each

Class of Shares : There is only one class of shares in the Company

• Ordinary Shares of RM1.00 each fully paid

Voting Rights : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS AS AT 4TH MAY 2006

Size of Holdings No. of Shareholders Total Holdings %

Less than 100 shares 25 616 0.00

100 - 1,000 shares 77 42,615 0.07

1,001 - 10,000 shares 1,183 3,456,560 5.71

10,001 - 100,000 shares 274 7,248,521 11.98

100,001 - below 5% of issued shares 39 17,959,268 29.69

5% and above of issued shares 2 31,792,420 52.55

1,600 60,500,000 100.00

SUBSTANTIAL SHAREHOLDERS AS AT 4TH MAY 2006

Direct Interest Deemed Interest

No. Name Shares % Shares %

1. YSP SEA Investment Co. Ltd. 25,502,730 42.15 - -

2. Lembaga Tabung Haji 6,289,690 10.40 - -

3. Lee Tien-Te 608,361 1.01 31,214,362 (a) 51.59

4. Lee-Chang Yu-Ying 506,050 0.84 31,316,673 (a) 51.76

5. Dr. Lee Fang Hsin 3,121,976 5.16 25,663,330 (b) 42.42

6. Dr. Lee Fang-Yu 578,657 0.96 25,502,730 (c) 42.15

7. Dr. Lee Fang-Chen @ Lee Fang-Chuan 463,146 0.76 25,502,730 (c) 42.15

8. Dr. Lee Fang-Jen 443,344 0.73 25,502,730 (c) 42.15

9. Lee Ling-Chin 345,434 0.57 25,502,730 (c) 42.15

10. Lee Ling-Fen 253,025 0.42 25,502,730 (c) 42.15

11. YSP International Co. Ltd. - - 25,502,730 (d) 42.15

12. Yung Shin Pharmaceutical Industries Co. Ltd. - - 25,502,730 (e) 42.15

DIRECTORS' SHAREHOLDINGS AS AT 4TH MAY 2006

Direct Interest Deemed Interest

No. Name Shares % Shares %

1. Datuk Dr. Anis Bin Ahmad 1,412,500 2.33 - -

2. Dr. Lee Fang Hsin 3,121,976 5.16 25,663,330 (b) 42.42

4. Dr. Lee Fang Chuan @ Lee Fang Chen 463,146 0.76 25,502,730 (c) 42.15

3. Lee Ling Chin 345,434 0.57 25,502,730 (c) 42.15

5. Dato' Koay Soon Eng - - - -

6. Tu Shu Yao 550,000 0.91 209,000 (f) 0.35

7. Adi Azuan Bin Abdul Ghani - - - -

Shareholding Statisticsas at 4th May 2006


Note

(a) Deemed interested by virtue of his family members’ direct shareholding in YSPSAH and by virtue of his own togetherwith his family members’ shareholding of more than 15% in Yung Shin Pharmaceutical Industries Co. Ltd. whichwholly owns YSP International Co. Ltd. in turn wholly owns YSP SEA Investment Co. Ltd.

(b) Deemed interested by virtue of his interest in Yung Shin Pharmaceutical Industries Co. Ltd. which wholly owns YSPInternational Co. Ltd. which in turn wholly owns YSP SEA Investment Co. Ltd and his spouse’s interest in the Companypursuant to Section 6A of the Companies Act, 1965.

(c) Deemed interested by virtue of his interest in Yung Shin Pharmaceutical Industries Co. Ltd. which wholly owns YSPInternational Co. Ltd. which in turn wholly owns YSP SEA Investment Co. Ltd.

(d) Deemed interested by virtue of Section 6A of the Companies Act 1965, through its 100% interest in YSP SEAInvestment Co. Ltd.

(e) Deemed interested by virtue of Section 6A of the Act, through its 100% interest in YSP International Co. Ltd. whichin turn wholly owns YSP Sea Investment Co. Ltd.

(f) Deemed interested by virtue of his spouse shareholding in YSPSAH.

THIRTY (30) LARGEST SHAREHOLDERS AS AT 4TH MAY 2006

No. Names No. of Shares held %

1 YSP SEA INVESTMENT COMPANY LIMITED 25,502,730 42.15

2 LEMBAGA TABUNG HAJI 6,289,690 10.40

3 LEE FANG HSIN 3,121,976 5.16

4 BHLB TRUSTEE BERHAD – TA SMALL CAP FUND 2,314,300 3.83

5 ANIS BIN AHMAD 1,412,500 2.33

6 PERMODALAN NASIONAL BERHAD 1,170,840 1.94

7 THE ESTATE OF THE LATE HON. DR LEE, TIEN-TE 608,361 1.01

8 LIN, MIN-JU 581,957 0.96

9 LIN, MENG-BE 581,957 0.96

10 LEE, FANG-YU 578,657 0.96

11 TU SHU YAO 550,000 0.91

12 BHLB TRUSTEE BERHAD – TA COMET FUND 532,400 0.88

13 LEE CHANG, YU-YING 506,050 0.84

14 LEE FANG-CHUAN @ LEE FANG-CHEN 463,146 0.76

15 ABB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN SIEW KHENG 455,620 0.75

16 LEE, FANG-JEN 443,344 0.73

17 PUBLIC NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR TAN KONG HAN 385,000 0.64

18 LEE, LING-CHIN 345,434 0.57

19 TU SHU HUA 310,800 0.51

20 LEE I-HSIUNG 277,228 0.46

21 CHIANG HUNG-WEN 277,228 0.46

22 LI, YU-LIN 277,228 0.46

23 CHU FONG HEE 271,700 0.45

24 LIN BAO-CHENG 253,025 0.42

25 LEE, LING-FEN 253,025 0.42

26 TING CHIN LIU 209,000 0.35

27 LIANG KUO TUNG 200,620 0.33

28 TANG WEI CHEN 193,614 0.32

29 LIAO MIAO JUNG 160,600 0.27

30 FONG AH CHAI 150,000 0.25

48,678,030 80.48

Shareholding Statisticsas at 4th May 2006


NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of the Company will be held at the

Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70B, Off Jalan Bukit Kiara, 60000 Kuala

Lumpur on Friday, 23rd June 2006 at 10:00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements of the Company for the financial

year ended 31st December 2005 and the Reports of the Directors and the

Auditors thereon.

2. To approve the payments of Directors' Fee for the year ended 31st December

2005.

3. To re-elect the following Directors retiring in accordance with the Company's

Articles of Association:-

i) Datuk Dr. Anis Bin Ahmad Article 85

ii) Dr. Lee Fang Hsin Article 85

ii) Dr. Lee Fang Chuan @ Lee Fang Chen Article 92

4. To re-appoint Messrs Shamsir Jasani Grant Thornton as Auditors and to

authorise the Board of Directors to fix their remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Resolutions: -

5. AS ORDINARY RESOLUTION

- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE

COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, and subject to

the approvals from the relevant governmental/regulatory authorities, the

Directors be and are hereby empowered to issue shares in the capital of the

Company from time to time and upon such terms and conditions and for such

purposes as the Directors may deem fit provided that the aggregate number of

shares issued pursuant to this resolution does not exceed 10% of the issued

capital of the Company for the time being excluding the number of ordinary

shares arising from the exercise of Employees Share Option Scheme (“ESOS”)

and that such authority shall continue in force until the conclusion of the next

annual general meeting of the Company.”

6. AS ORDINARY RESOLUTION

PROPOSED SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY

TRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT1 TO

RRPT9

PROPOSED SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY

TRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT10

(RESOLUTION 1)

(RESOLUTION 2)

(RESOLUTION 3)

(RESOLUTION 4)

(RESOLUTION 5)

(RESOLUTION 6)

(RESOLUTION 7)

(RESOLUTION 8)

Notice of Annual General Meeting


“THAT approval be hereby given to the Company and/or its subsidiaries (“Group”) to enter into the

recurrent related party transactions of a revenue or trading nature as set out in Section 2.3(ii) of the

Circular to Shareholders dated 1 June 2006 (“Circular”) which are necessary for the Group's day-to-day

operations provided such transactions are in the ordinary course of business and are on terms not more

favourable to the related party than those generally available to the public and not detrimental to

minority shareholders and such approval shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM, at

which time it will lapse, unless by a resolution passed at such AGM, such authority is renewed;

(b) the expiration of the period within which the next AGM of the Company is required to be held

pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed

pursuant to Section 143(2) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in a general meeting; whichever is earlier.

AND THAT, the Directors of the Company be and hereby authorized to complete and to do all such acts

and things (including executing all such documents as may be required) as they may consider expedient

or necessary to give effect to the Proposed Mandate.”

7. To transact any other business which may properly be transacted at an Annual General Meeting for which

due notice shall have been given.

By Order of the Board

LIM SECK WAH (MAICSA 0799845)

M. CHANDRASEGARAN A/L S. MURUGASU (MAICSA 0781031)

Company Secretaries

Dated this 1st day of June 2006

Kuala Lumpur

Notes:

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy/proxies to attend and

vote in his/her stead. A proxy needs not be a member of the Company.

2. Where a member is an authorised nominee as defined under the Securities Industry (Central

Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it

holds with ordinary shares of the company standing to the credit of the said securities account.

3. Where a member appoints more than one (1) proxy to attend at the same meeting, the appointment shall

be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.

4. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand

of its attorney duly authorized.

5. The Form of Proxy must be deposited at the Company's Share Registrar Office at Level 15-2, Faber

Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time

appointed for holding the meeting or any adjournment thereof.

6. Explanatory notes on Special Business

6.1 The proposed Resolution 6 is primarily to give flexibility to the Board of Directors to issue and allot

shares at any time in their absolute discretion and for such purposes as they consider would be in

the interest of the Company without convening a general meeting. This authority, unless revoked or

varied at a general meeting, will expire at the next annual general meeting of the Company.

6.3 The proposed Resolutions 7 & 8, if passed will mandate the Company to enter into the categories

of recurrent transactions of a revenue or trading nature and with those related parties specified in

Section 2.3 of the Circular to Shareholders dated 1 June 2006.

Notice of Annual General Meeting


1. DIRECTORS STANDING FOR RE-ELECTION

a) Datuk Dr. Anis Bin Ahmad - Article 85

b) Dr. Lee Fang Hsin - Article 85

c) Mr. Lee Fang Chuan @ Lee Fang Chen - Article 92

The particulars of all the above directors have been disclosed in the Directors' Profile in this Annual

Report.

2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

The Board met four (4) times during the financial year ended 31 December 2005. The members of the

Board and their attendance at the meetings, were as follows:-

Board of Directors No. of meetings attended

Datuk Dr. Anis Bin Ahmad 4/4


Dato' Koay Soon Eng 4/4

Mr. Tu Shu Yao 4/4

En. Adi Azuan Bin Abdul Ghani 4/4

Madam Lee Ling Chin (Appointed on 16.02.2006) 3/3

Dr. Lee Fang Yu (Resigned on 06.02.2006) 3/4

Dr. Lee Fang Chuan @ Lee Fang Chen (Appointed on 27.02.2006) -

3. PLACE, DATE AND TIME OF THE GENERAL MEETING

The Fifth Annual General Meeting of the Company will be held as follows:-

Place : Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 1/70B, Off Jalan Bukit Kiara,

60000 Kuala Lumpur

Date : 23 June 2006

Time : 10.00 a.m.

Statement Accompanying Noticeof Annual General Meeting


Proxy Form

(Before completing this form please refer to the notes below)

I/WE NRIC No./Passport No./ Company No.

(Full name in block letters) CDS. A/C No.

of

(Full address)

being a member/members of Y.S.P. SOUTHEAST ASIA HOLDING BHD., hereby appoint the following person(s) or failing him/her, the

Chairman of the meeting as *my/our proxy/proxies to attend and vote for *me/us and on my/our behalf at the Fifth Annual General

Meeting of the Company which will be held at the Banquet Hall, Kuala Lumpur Golf & Country Club, No. 10, Jalan 11/70B, Off Jalan

Bukit Kiara, 60000 Kuala Lumpur, on Friday, 23rd June 2006 at 10:00 a.m. and at every adjournment thereof to vote as indicated below:-

Name of proxy, NRIC No. & Address No. of shares to be

represented by proxy

1.

2.

In the case of a vote taken by way of show of hands, the first-named proxy shall vote on *my/our behalf. In the event of a poll being

demanded, *my/our proxy/proxies shall vote as indicated below:-

FOR AGAINST FOR AGAINST

Ordinary Resolution 1 Ordinary Resolution 5




(Please indicate with an “x” in the space provided above on how you wish your vote to be cast. If you do not do so, the proxy will vote

or abstain from voting at his/her discretion).

In case of a vote taken by a show of hands, the First-named Proxy shall vote on *my/our behalf.

Date this day of 2006.

Signature/Common Seal

* Strike out whichever is not desired.

Notes:-

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his/her stead. A

proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.

2. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1)

proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be

represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or, if the appointer

is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised.

5. The instrument appointing a proxy must be deposited at the Company Secretary's office at Level 15-2, Faber Imperial Court, Jalan Sultan Ismail,

50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

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

No. of ordinary shares held

The Company Secretary

Y.S.P. SOUTHEAST ASIA HOLDING BHD

Level 15-2, Faber Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

STAMP

y.s.p. southeast asia holding berhad · 2007-08-04 · 02 y.s.p. southeast asia holding berhad...

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