Year 2013 - YSP Industries (M) Sdn. Bhd.

Transcription

A N N U A L R E P O R T 2 01 3
A Quality
Life for All
Our Continuous
Journey in Enhancing
CONTENTS
2
Five-Years Financial Highlights
4
Corporate Information
5
Corporate Structure
6
Chairman’s Statement
11
Board of Directors’ Profile
14
Corporate Governance Statement
23
Other Information
27
Statement on Risk Management and Internal Control
31
Audit Committee Report
34
Financial Statements
98
List of Properties
102
Shareholding Statistics
105
Notice of Annual General Meeting
111
Form of Proxy
Y.S.P. SOUTHEAST ASIA HOLDING BERHAD 552781 X
FIVE-YEARS
FINANCIAL HIGHLIGHTS
YEAR ENDED 31 DECEMBER
2009
2010
2011
2012
2013
RESULTS (RM’000)
Revenue
130,775
138,483
156,773
180,610
190,827
Profit before tax
16,103
16,936
18,666
20,151
22,019
Profit after tax
12,218
12,448
15,727
13,571
16,648
Net profit attributable to shareholders
12,060
12,157
15,380
13,628
16,191
Paid up share capital
97,191
98,588
133,043
133,043
133,043
Shareholders’ equity
152,525
168,985
213,290
218,470
226,093
Total equity
153,087
171,528
216,479
222,234
230,314
Borrowings
21,697
35,952
28,530
41,345
32,451
14.13
12.16
13.52
10.24
12.17
6.0
6.0
6.0
6.5
6.5
1.57
1.71
1.60
1.64
1.70
14.17
20.96
13.18
18.60
14.09
7.91
7.19
7.21
6.24
7.16
EQUITY & LIABILITIES (RM’000)
FINANCIAL STATISTICS
Net dividend per share (sen)
Net assets per share (RM)
Return on shareholders’ equity (%)
2012
2013
2009
2010
2011
2012
16,191
2011
22,019
2010
20,151
2009
18,666
2013
16,936
2012
16,103
190,827
2011
180,610
138,483
2010
156,773
130,775
2009
13,628
Net Profit Attributable
to Shareholders
(RM’000)
Profit Before Tax
(RM’000)
15,380
Revenue
(RM’000)
12,157
Gearing (%)
12,060
Basic earnings per share (sen)
2013
ANNUAL REPORT 2013
Five-Years Financial Highlights
1.70
2009
1.64
2013
1.60
2012
1.71
2011
1.57
2010
6.5
2009
Net Assets Per Share
(RM)
6.5
2013
6.0
2012
6.0
2011
6.0
226,093
2010
218,470
168,985
2009
Net Dividend Per Share
(sen)
213,290
152,525
Shareholders’s Equity
(RM’000)
2010
2011
2012
2013
CORPORATE
INFORMATION
BOARD OF DIRECTORS
COMPANY SECRETARIES
Chairman (Independent Non-Executive)
Datuk Dr. Anis Bin Ahmad
Lim Seck Wah (MAICSA 0799845)
Kong Mei Kee (MAICSA 7039391)
President/Group Managing Director
Dato’ Dr. Lee Fang Hsin
REGISTERED OFFICE AND PRINCIPAL
PLACE OF BUSINESS
Non-Independent Non-Executive Director
Dr. Lee Fang Chuan@Lee Fang Chen
Lee Ling Chin
Tuan Haji Adi Azuan Bin Abdul Ghani
Level 22, Menara LGB, No. 1, Jalan Wan Kadir,
Taman Tun Dr. Ismail, 60000 Kuala Lumpur.
Tel
: 03 7727 6390
Fax
: 03 7727 6701
Email
: [email protected]
Website : www.yspsah.com
Independent Non-Executive Director
Datuk Koay Soon Eng
Tu Shu Yao
REGISTRAR
AUDIT COMMITTEE
Datuk Koay Soon Eng - Chairman
Tu Shu Yao
NOMINATION COMMITTEE
Dr. Lee Fang Chuan@Lee Fang Chen - Chairman
Datuk Koay Soon Eng
Tu Shu Yao
Lee Ling Chin
REMUNERATION COMMITTEE
Datuk Dr. Anis Bin Ahmad - Chairman
Tu Shu Yao
Mega Corporate Services Sdn Bhd (187984-H)
Level 15-2, Bangunan Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur.
Tel
: 03 2692 4271
Fax
: 03 2732 5388
AUDITORS
Messrs KPMG (AF 0758)
Level 10, KPMG Tower,
8, First Avenue, Bandar Utama,
47800 Petaling Jaya, Selangor Darul Ehsan.
PRINCIPAL BANKERS
Malayan Banking Berhad
HSBC Bank Malaysia Berhad
AmBank (M) Berhad
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
Stock Code: 7178
ANNUAL REPORT 2013
Corporate Structure
CORPORATE
STRUCTURE
As at 30 April 2014
Y.S.P. SOUTHEAST ASIA HOLDING BERHAD ( 552781-X )
100%
Y.S.P. INDUSTRIES (M) SDN BHD
- RESIDENT REPRESENTATIVE OFFICE OF Y.S.P. INDUSTRIES (M) SDN. BHD
100%
KUMPULAN Y.S.P. (MALAYSIA) SDN BHD
100%
YUNG SHIN PHARMACEUTICAL (SINGAPORE) PTE LTD
99.99%
99.4%
YUNG SHIN (PHILIPPINES), INC
MYANMAR YUNG SHIN PHARMA LTD
100%
Y.S.P. (CAMBODIA) PTE LTD
100%
Y.S.P. SAH INVESTMENT PTE LTD
100%
99.71%
95% - Y.S.P. INDUSTRIES VIETNAM CO., LTD
75% - PT. YSP INDUSTRIES INDONESIA
Y.S.P. SAH (VIETNAM) CO., LTD
P.T. YUNG SHIN PHARMACEUTICAL INDONESIA
99%
Y.S.P. SAH PAHRMACEUTICAL (B) SDN BHD
60%
SUN TEN SOUTHEAST ASIA HOLDING PTE LTD
- 100% SUN TEN PHARMACEUTICAL MFG (M) SDN BHD
48.56%
- 100% SUN TEN (SINGAPORE) PTE LTD
Y.S.P. (THAILAND) CO., LTD
CHAIRMAN’S
STATEMENT
Chairman
ANNUAL REPORT 2013
Dear Shareholders,
I am pleased to present to you the Annual Report of Y.S.P. Southeast Asia
Holding Berhad for the financial year ended 31 December 2013, which was
a year of good growth for the pharmaceutical industry in Malaysia.
The pharmaceutical industry is envisaged to maintain the
momentum of annual growth, which has consistently been
within the 8-10 per cent band in the past few years.
Being a key component of the healthcare sector, the
pharmaceutical subsector has a creditable growth track
record and demonstrated its potential in both the domestic
and export markets with its distinction of strength in the
production of generic drugs.
The upbeat growth potential is reinforced by Frost &
Sullivan pegging the pharmaceutical industry in Malaysia
to be worth about US$1.8 billion in 2013. This has lent
an air of greater optimism surrounding the domestic
pharmaceutical industry and buoyed prospects of better
outlook going into 2014.
The Malaysian Government’s Budget 2014 allocation for
the health sector and the pharmaceutical subsector further
adds to the optimistic outlook. Government allocation for
expenditure on healthcare was announced to amount to
RM2.28 billion in 2014, up 14.5 per cent from 2013. This will
inevitably cascade down to result in better uptake for the
pharmaceutical subsector.
Malaysia’s transformation effort to grow its home
pharmaceutical industry through expansion of its
manufacturing and export of generic drugs is resulting in
more and more positive developments that augur well for
the industry. The Performance Management & Delivery
Unit (PEMANDU) steering the Government Transformation
Programme and Economic Transformation Programme
has introduced initiatives such as the off-take procurement
system for new locally manufactured pharmaceuticals
and fast-tracked registration for new products. All these
measures will gradually contribute to spurring growth of
the industry.
Improved Financial Performance
Concurrent with the growth performance of the
pharmaceutical industry, profitability in the company grew
in the year under review. Group pre-tax profit amounted to
RM22.02 million, an increase of 9.3 per cent from RM20.15
million in 2012. Revenue improved by 5.7 per cent to
RM190.83 million from RM180.61 million in the previous
financial year.
Domestic sales grew by 4.9 per cent to RM151.24 million in
the year under review and General Practitioner and Clinic
segment continued to be top performer in terms of sales
revenue. It registered a 3.4 per cent growth over the previous
year. Five new items which included Analgesics, Antibiotics,
and Dyslipidaemic Agents were launched. In addition, eye
drops in a new dosage form and two new items of Antiinfectives Agents were also introduced into the market.
But notable star performer in terms of sales growth was
Sun Ten Traditional Chinese Medicine segment with a 23.1
per cent increase compared with 2012. The Veterinary and
Aquatic segment also returned with a commendable 9.2
per cent growth.
The Over-The-Counter segment, which also posted
substantially high sales revenue, grew by 12.8 per cent.
The Hospital segment continued to chalk up significant
sales revenue even though reported slight decline of 2.0
per cents in FY2013.
Malaysia continued to be the main market for Y.S.P.SAHmanufactured pharmaceutical products. Share of exports
continued to be at 2012 levels. However, there were notable
increases in contributions towards revenue from sales by
our overseas subsidiaries in Singapore and exports to
Vietnam, the Philippines and Cambodia. It is also notable
that compared with 2012, exports to Indonesia was 2.7
times higher. Vietnam came second with a 63.2 per cent
growth while the Philippines, Singapore and Cambodia, in
that order, trailed behind.
With population growth and great affluence that bode well for the
pharmaceutical industry domestically, our group will focus on launching
new products to garner greater market share.
Licenses, New Products & Operations
Wholly-owned subsidiary Y.S.P. Industries (M) Sdn Bhd,
which is our import and export arm, currently holds 330
product licenses and they cover Prescription and Over-TheCounter drugs, Traditional Chinese Medicine and Cosmetic
products. The number of product licences for veterinary
products has also increased to 44 from 36 previously.
Y.S.P. Industries (M) Sdn Bhd also successfully registered
14 pharmaceutical products in 2013. It was also granted
eight new product licenses for veterinary products
The company has decided to focus on new product
development going forward especially in the areas of
meeting latest regulatory requirements on product
registration. One pertinent regulatory requirement relevant
to the company is BE (Bioequivalence) Studies for products
in oral dosage form. In line with this, the company will be
making additional capital expenditure for Research and
Development facilities for pilot manufacturing in new
product development.
For our operations abroad, the new manufacturing plant
in Lippo Cikarang, Jawa Barat, Indonesia is on schedule to
Y.S.P Industries Vietnam Co Ltd, our wholly-owned commence operation to produce oral solid dosage products
subsidiary in Vietnam, has 52 product licenses to locally and cream and suppository products in the new financial
produce veterinary products and 23 licenses for the export year. Approval of the HVAC (heating, ventilation, and air
conditioning) System has been received from Indonesia’s
of the veterinary products.
Food and Drugs Monitoring Agency (BPOM). Interior
Y.S.P.SAH, as a whole, owns 951 export licenses as at renovation work in the production area is in progress and
31 December 2013, of which 928 are held by Y.S.P. Industries is expected to be completed by mid-2014.
(M) Sdn Bhd and 23 by Y.S.P Industries Vietnam Co Ltd.
Our cGMP (current Good Manufacturing Practice) certified
plant in Bangi, Selangor, is expected to launch production
of two new injectable items in early 2014 following
approval of the new product registration. Production of six
more injectable items are expected to be added gradually
in the new financial year with the registration of the new
products already submitted.
Outlook
The company is optimistic of heightened prospects in its
business with our focus on new product development
and expected successful registration of new products
with the regulatory authority in Malaysia. The favourable
outlook for the domestic pharmaceutical industry buoyed
by the greater potential for generics with ongoing patent
expiration of branded drugs further adds to the optimism.
ANNUAL REPORT 2013
There are currently 25 pharmaceutical products and
30 veterinary products which are pending registration
approval and are expected to be granted in the new fiscal
year until 2015.
In line with this, the company is preparing itself to bring
onstream 10 new Pharmaceutical, Over-The-Counter and
Veterinary products in the new fiscal year. Efforts will also
be channeled to build brand equity for the “HOMECARE”
brand of medicated products to further grow the OverThe-Counter segment. Small chain pharmacies will be
developed as a new channel for greater market reach for
“SHINE” products. Greater promotional activities will be
carried out in collaboration with pharmacies to expand
the market share of “SHINE”, “NUVIT” and “Celloceutica”
range of products.
In conclusion, I would like to take this opportunity to
thank our shareholders for your support to the company.
We would also like to thank our distributors, retailers
and suppliers who have continuously supported us.
And most of all, our thanks also go out to our customers
and consumers who have steadfastly been loyal to our
brand and products.
On behalf of the Board of Directors and Management,
I would also like to express our gratitude to our staff
members for their dedication and commitment which
contributed significantly to the company’s growth
and success.
Against this backdrop of positive developments, we
are confident that we have ahead of us another year of
satisfactory financial results.
The last financial year’s creditable performance has enabled
us to maintain our dividend payout to shareholders. I am
pleased to announce that the Board of Directors is
recommending a first and final dividend of 6.5 sen per ordinary Datuk Dr. Anis Bin Ahmad
Chairman
share for the financial year ended 31 December 2013.
ANNUAL REPORT 2013
Board of Directors' Profile
BOARD OF DIRECTORS' PROFILE
Aged 68, 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 appointed Non-Executive
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.
Aged 54, 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.
Dato’ Dr. Lee currently sits on the boards of several private
limited companies in Malaysia including subsidiaries of
Y.S.P.SAH group. He also sits on the board of Yung Shin Global
Holding Corporation and Yung Shin Pharmaceutical Industries
Co. Ltd. [“YSP(Taiwan)”] in Taiwan. He obtained diploma in
Finance and Taxation from Tamsui Oxford College, Masters
in Business Administration and PhD from Pacific Western
University, USA.
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 National Pharmaceutical Control Bureau (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 Drug Control Authority of MOH 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 is presently the Chairman of the Remuneration
Committee and a member of the Audit Committee and
Nomination Committee of Y.S.P.SAH. Datuk Dr. Anis also serves
on the board of New Hoong Fatt Holdings Bhd.
Datuk Dr. Anis has no family relationship with other directors or
substantial shareholders of Y.S.P.SAH.
Dato’ Dr. Lee started his career in 1985 with YSP(Taiwan), as a
Marketing Executive. In the same year, he was transferred to
Japan to conduct marketing surveys for YSP(Taiwan) until 1987.
In 1987, Dato’ Dr. Lee was appointed as the Representative in
charge of YSP(Taiwan)’s branch in Malaysia, which eventually
resulted in the establishment in Kumpulan Y.S.P. (Malaysia)
Sdn. Bhd.
Dato’ Dr. Lee has been honoured with the following titles and
awards:-
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
Dato’ 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.
Dato’ Dr. Lee is presently a member of Remuneration
Committee of Y.S.P.SAH.
Dato’ Dr. Lee is a sibling to Dr. Lee Fang Chuan @ Lee Fang
Chen and Mdm Lee Ling Chin.
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Dr. Lee Fang Chuan @ Lee Fang Chen
Lee Ling Chin
Aged 58, a Taiwanese, was appointed to the Board of Directors
of Y.S.P.SAH as a Non-Independent Non-Executive Director on
27 February 2006. Dr. Lee currently is the Chairman of the
Board of Directors of Yung Shin Global Holding Corporation,
one of the major stakeholders of Y.S.P.SAH. Dr. Lee sits on
the Boards of several subsidiary companies of Y.S.P.SAH. Dr.
Lee possesses BS in Pharmacy from Taipei Medical University,
Master in Pharmaceutical Chemistry from National Taiwan
University, MBA from Tunghai University, Master of Laws from
National Chiao Tung University and PhD in Medicinal Chemistry
from University of Minnesota, USA.
Aged 65, Taiwanese, was appointed to the Board of Directors
of Y.S.P.SAH as a Non-Independent Non-Executive Director on
16th February 2005. She is currently the Vice Chairperson of
Yung Shin Global Holding Corporation and the Vice Chairperson
and President of Yung Shin Pharmaceutical Industries Co.
Ltd. [“YSP(Taiwan)”] in Taiwan. She graduated with Family
Business Management from Shih Chien University, Taiwan
R.O.C in 1971.
Dr. Lee started his career in 1983 with Yung Shin Pharmaceutical
Industries Co. Ltd. [“YSP(Taiwan)”] in Taiwan 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
promoted to 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 assigned
to China in 1996 as the President to Yung Shin Pharmaceutical
(KunShan) and worked with other expatriates to build the facility
to meet SFDA’s cGMP standard. In 2001, Dr. Lee returned to
Taiwan and continued his leaderships in YZC and was soon
elected as Chairman to the Board. In 2004, he was elected
as Director of YSP(Taiwan) and subsequently, Chairman of the
Board on 23 November 2005.
Dr. Lee also holds certificate granted by Ministry of Education
at Taiwan as an Associate Professor. Dr. Lee is active in many
organizations in Taiwan, such as Chinese Pharmaceutical
Manufacturing and Development Association and Chinese
Medical and Pharmaceutical Technology Development Center
where he was elected as Chairman of the Board in April 2005.
Dr. Lee was a Director of Taiwan Pharmaceutical Association
since 2009. Dr. Lee is also actively participating in Federation
of Asian Pharmaceutical Associations (FAPA) and was elected
as the Chair of the Section of Industrial Pharmacy since 2011.
Presently, Dr. Lee is the Chairman of the Nomination Committee
of Y.S.P.SAH and he is a sibling to Dato’ Dr. Lee Fang Hsin and
Mdm Lee Ling Chin.
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She started her career in 1971 with YSP(Taiwan) 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.
In year 1991, 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(Taiwan),
“BioTrust International Corporation”, a company dealing with
plasma products business, as President. She was involved
in pushing the development of biological industry in Taiwan
R.O.C. and had succeeded in implementing a new legislation
of “Blood Products Act” in Taiwan R.O.C. She is currently the
Vice Chairman of BioTrust International Corporation.
Mdm Lee currently serves as a member of the Board of several
subsidiary companies of Y.S.P.SAH in Malaysia.
Presently, Mdm Lee is a member of the Nomination Committee
of Y.S.P.SAH and she is a sibling to Dato’ Dr. Lee Fang Hsin and
Dr. Lee Fang Chuan @ Lee Fang Chen.
ANNUAL REPORT 2013
Board of Directors' Profile
of Y.S.P.SAH as a Non-Independent Non-Executive Director
since 1st December 2004. He graduated with UK BSc (Honours)
Accounting from Queen's University of Belfast, UK. He is now
a Fellow Member of the ACCA (FCCA) and also a member of
the Malaysian Institute of Accountants (MIA).
Tuan Haji started his professional career in the auditing and
accounting fields with PricewaterhouseCoopers, Kuala Lumpur
in year 1996. He was 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, Tuan Haji is the Deputy Group Chief Financial Officer
of Lembaga Tabung Haji. Tuan Haji currently represents Lembaga
Tabung Haji in Theta Edge Berhad and High-5 Conglomerate
Berhad (formerly known as Silver Bird Group Berhad) as a NonIndependent Non-Executive Director.
Tuan Haji is presently a member of the Audit Committee of
Y.S.P.SAH. He has no family relationship with other directors or
substantial shareholders of Y.S.P.SAH.
Datuk Koay Soon Eng
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. Datuk Koay is also
a Fellow of the Institute of Chartered Accountants in Australia
and a Certified Practising Accountant of the Society of Certified
Practising Accountants, Australia.
Datuk Koay has more than 40 years in public practice since 1973
as an Accountant, Auditor, Tax Agent and Business Consultant.
Presently, Datuk Koay is the Chairman of the Audit Committee
and a member of the Nomination Committee of Y.S.P.SAH. He
has no family relationship with other directors or substantial
shareholders of Y.S.P.SAH.
Tu Shu Yao
Aged 64, a Taiwanese, was appointed to the Board of Directors
of Y.S.P.SAH as an Independent Non-Executive Director of
Y.S.P.SAH on 17th November 2003. He 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. Presently, Mr Tu is the
Honorary President of 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 a member of the Audit Committee, Remuneration
Committee and Nomination Committee of Y.S.P.SAH. He
has no family relationship with other directors or substantial
shareholders of Y.S.P.SAH.
* All the above-named Directors of Y.S.P.SAH have not been convicted of any
offences within the past ten years (other than ordinary traffic offences, if any)
and they do not have any conflict of interest with the Company.
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CORPORATE GOVERNANCE STATEMENT
Good governance provides a solid foundation for a company to achieve sustainable growth as well as engenders trust and infuses
confidence among its shareholders and other stakeholders. Strong business ethics, sound policies and procedures and effective
internal control systems with proper checks and balances are the ingredients of good corporate governance.
As such, the Board of Directors of Y.S.P. Southeast Asia Holding Berhad (“the Company”) (“the Board”) remains committed
towards governing, guiding and monitoring the direction of the Company with the objective of enhancing long term sustainable
value creation aligned to the interests of shareholders and other stakeholders. The Board strives and advocates good corporate
governance and views this as a fundamental part of discharging its roles and responsibilities. Observance of good corporate
governance is also critical to safeguard against unethical conduct, mismanagement and fraudulent activities. Hence, the Board
continues to implement the eight (8) principles set out in the Malaysian Code on Corporate Governance 2012 (“the Code”) to its
particular circumstances, having regard to the recommendations stated under each principle.
This statement sets out the extent of how the Company and its group of companies (“the Group”) have applied and complied
with the principles and recommendations of the Code and the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad (“Bursa Malaysia”) (“MMLR”).
Principle 1 - Establish Clear Roles and Responsibilities
The Board’s role is to govern and set the strategic direction of the Company, whilst the Management manages the Company and
the Group in accordance with the strategic direction and delegations of the Board. The responsibility of the Board is to oversee
the activities of the Management in carrying out these delegated duties.
The Group is led and controlled by an effective Board where it assumes, amongst others, the following principal responsibilities
in discharging its stewardship role and fiduciary and leadership functions:
• Reviewing and adopting a strategic plan for the Company and the Group, and subsequently monitoring the implementation of
the strategic plan by the Management to ensure sustainable growth of the Company and the Group;
• Overseeing the conduct of the Company and the Group’s business;
• Evaluating principal risks of the Company and the Group and ensuring the implementation of appropriate risk management
and internal control systems to manage these risks;
• Reviewing the adequacy and the effectiveness of the Company and the Group’s risk management and internal control
systems;
• Succession planning of the Company; and
• Reviewing the adequacy and the integrity of the management information of the Company and the Group.
The Board has established and delegated specific responsibilities to five (5) committees of the Board, which operate within
clearly defined written terms of reference. The Board reviews the Board Committees’ authority and terms of reference from
time to time to ensure their relevance. The Board Committees deliberate the issues on a broad and in-depth basis before putting
up any recommendation to the Board for approval. The ultimate responsibility for decision making lies with the Board.
The Board Committees are:
(a) Audit Committee
• The Audit Committee plays an active role in assisting the Board in discharging its governance responsibilities, which include
maintaining a sound risk management, internal control and governance system.
• The full details of the composition, terms of reference and summary of the activities of the Audit Committee during the
year are set out in the Audit Committee Report in this Annual Report.
(b) Remuneration Committee
• The Remuneration Committee is primarily responsible for determining and recommending to the Board the remuneration
packages of the Executive Director of the Company.
14
ANNUAL REPORT 2013
(c) Nomination Committee
• The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking
into consideration the Board structure, size, composition and the required mix of expertise and experience which
the Director should bring to the Board. It assesses the effectiveness of the Board as a whole, the committees of
the Board and the contribution of each Director, including non-executive directors, as well as the President/Group
Managing Director.
(d) Tender Board Committee
(e) Executive Committee
Board Charter
The Board has established a Board Charter to provide clarity and guidance in the roles and responsibilities to the Board members
and management.
The Board Charter addresses, among others, the following matters:• Objectives
• Role of the Board
• Independent Non-Executive Chairman and President/Group Managing Director
• Board Committees
• General Meetings
• Investor Relations and Shareholder Communication
• Relationship with other Stakeholders
• Company Secretary
The Board Charter, which serves as a referencing point for Board’s activities to enable Directors to carry out their stewardship
role and discharge their fiduciary duties towards the Company, also seeks to include a formal schedule of matters reserved to the
Board for deliberation and decision so that the control and direction of the Company are in its hands. The Charter is made publicly
available on the Company’s website at www.yspsah.com in line with Recommendation 1.7 of the MCCG 2012.
The Board Charter is reviewed periodically to ensure its relevance and compliance.
Code of Ethics
In discharging its duties and responsibilities, the Board is guided by the Code of Ethics of the Company.
The Code of Ethics is formulated to enhance the standard of corporate governance and behaviour with a view to achieve the
following objectives:• To establish standard of ethical conduct for directors based on acceptable belief and values that one upholds.
• To uphold the spirit of social responsibility and accountability of the Company in line with the legislations, regulations and
guidelines governing it.
The Board is committed to adhering to best practices in corporate governance and observing the highest standards of integrity and
behaviour in all activities conducted by the Company and the Group, including the interaction with its shareholders, employees,
creditors, customers and within the community and environment in which the Company and the Group operate.
15
Whistle Blowing Policy
To address this concern, the Group has formalised and established a Whistle Blower Policy. This is to provide an avenue for all
employees and stakeholders to raise genuine concerns about unethical behaviour, malpractices, illegal acts or failure to comply
with regulatory requirements without fear of reprisal should they act in good faith when reporting such concerns.
The Whistle Blower Policy is subject to periodic assessment and review to ensure that it remains relevant to the Group’s changing
business circumstances.
Sustainability of Business
The Board is cognisant of the importance of business sustainability by setting the mission and vision and having a good allocation
for pharmaceutical research and development with the aim of helping the community to improve health. In managing the
Group’s business, appropriate steps are taken to consider its impact on the environment and society in general. Balancing the
environment, social and governance aspects with the interest of various stakeholders is essential to enhancing investor and
public trust. We acknowledge our responsibility to all the lives we touch either directly or indirectly, and are committed to making
a positive impact in the many communities where we have a presence while further strengthening our corporate reputation via
upholding a culture of integrity and transparency.
Over the years, our approach towards corporate social responsibility (“CSR”) is to contribute greater health awareness and well
being to the community. This is to be in line with our credo: “We Value Life”. The Group has in place other internal policies and
procedures to address corporate sustainability. We also realise that, given the nature of the businesses we are involved in, we can
make a positive impact on the environment.
Supply of, and Access to, Information
Every Director has full and unrestricted access to information within the Group. Where required, the Board and its Committees are
provided with independent professional advice, the cost of which is borne by the Company. The Board may also seek advice from the
Management or request further explanation, information or update on any aspect of the Group’s operations or business concerns.
The Board is supplied with quality and timely information, which allows it to discharge its responsibilities effectively and efficiently.
The agenda for each meeting together with a set of comprehensive Board Papers for each agenda item are delivered to each
Director in advance of meetings, to afford the Board sufficient time to review the matters to be deliberated for effective discussion
and decision making during the meeting, and where necessary, to obtain supplementary information before the meeting.
Company Secretary
The Board regularly consults the Company Secretary on procedural and regulatory requirements. The Company Secretary who
is a qualified chartered secretary, plays an important role in advising and supporting the Board by ensuring adherence to board
policies and procedures.
Principle 2 – Strengthen Composition
The success of the Board in fulfilling its oversight responsibility depends on its size, composition and leadership qualities.
During the financial year under review, the Board consisted of seven (7) members, comprising one (1) Executive Director (the
President/Group Managing Director), three (3) Independent Non-Executive Directors (including the Chairman) and three (3) NonIndependent Non-Executive Directors. The profile of each Director is presented separately in the Annual Report.
The Company is in compliance with Paragraph 15.02 of MMLR whereby at least one-third (1/3) of its Board members are
independent directors.
16
ANNUAL REPORT 2013
The appointment of the independent directors is to ensure that the Board includes directors who can effectively exercise their
best judgment objectively for the exclusive benefit of the Company and the Group. The composition of the Board reflects a
diversity of backgrounds, skills and experiences in the areas of business, economics, finance, general management and strategy
that contributes effectively in leading and directing the management and affairs of the Group. Given the calibre and integrity of its
members and the objectivity and independent judgment brought by the Independent Directors, the Board is of the opinion that
its current size and balanced mixed skills composition contribute to an effective Board.
In the opinion of the Board, the appointment of a Senior Independent Non-Executive Director to whom any concerns should be
conveyed is not necessary. The Board operates in an open environment in which opinions and information are freely exchanged
and in these circumstances any concerns need not be focused on a single director as all members of the Board fulfill this role
individually and collectively.
The Board is supportive of gender diversity in the boardroom as recommended by the Code. The Non-Independent Non-Executive
Director, Madam Lee Ling Chin is participating on the Board. She is representation of women in the composition of the Board.
Nomination Committee – Selection and Assessment of Directors
A Nomination Committee has been established with specific terms of reference by the Board, comprising a majority of
Independent Non-Executive Directors, as follows:
(a) Dr. Lee Fang Chuan @ Lee Fang Chen - Chairman (Non-Independent Non-Executive Director)
(b) Datuk Dr. Anis Bin Ahmad - Member (Independent Non-Executive Chairman)
(c) Datuk Koay Soon Eng - Member (Independent Non-Executive Director)
(d) Tu Shu Yao- Member (Independent Non-Executive Director)
(e) Lee Ling Chin - Member (Non-Independent Non-Executive Director)
The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking into
consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should
bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of each
Director, including Non-Executive Directors.
The final decision on the appointment of a candidate recommended by Nomination Committee rests with the whole Board. The
Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon
obtaining all necessary information from the Directors.
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.
At the forthcoming Annual General Meeting, Datuk Koay Soon Eng and Mr. Tu Shu Yao will retire by rotation pursuant to Article
85. Both of them being eligible, offer themselves for re-election.
During the financial year ended 31 December 2013, the Nomination Committee has assessed the balance composition of Board
members based on merits, Directors’ contribution and Board effectiveness.
The Nomination Committee concluded that each Board member had been competent and committed in discharging his/her duties
and responsibilities. All assessments and evaluations carried out by the Nomination Committee were properly documented.
The Board through the Nomination Committee’s annual appraisal believes that the current composition of the Board brings the
required mix of skills and core competencies required for the Board to discharge its duties effectively.
There was no appointment of new Board member during the year.
17
Directors’ Remuneration
The Board has established a Remuneration Committee consisting of two (2) Independent Non-Executive Directors and the Group
Managing Director.
The members of the Remuneration Committee are as follows:(a) Datuk Dr. Anis Bin Ahmad - Chairman (Independent Non-Executive Chairman)
(b) Tu Shu Yao- Member (Independent Non-Executive Director)
(c) Dato’ Dr. Lee Fang Hsin - Member (President/Group Managing Director)
The Remuneration Committee has been entrusted by the Board to determine that the levels of remuneration are sufficient to
attract and retain Directors of quality required to manage the business of the Group. The Remuneration Committee is entrusted
under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the Executive
Directors. In the case of Non-Executive Directors, the level of remuneration shall reflect the experience and level of responsibilities
undertaken by the Non-Executive Directors concerned. In all instances, the deliberations are conducted, with the Directors
concerned abstaining from discussions on their individual remuneration.
The remuneration of the Directors of the Company for the financial year ended 31 December 2013 is set out below:Salaries, bonus &
Other emoluments
RM’000
Fees
RM’000
Total
RM’000
1,095
52
1,147
69
309
378
Executive Directors
Non-Executive Directors
Number of Directors whose remuneration falls in bands of RM50,000 is tabulated below:Remuneration Band
Executive Directors
Non-Executive Directors
Below 50,000
-
-
RM50,000 - RM100,000
-
6
RM1,100,000 – RM1,150,000
1
-
Successive band between RM100,000 and RM1,100,000 is not shown as it is not applicable.
Principle 3 – Reinforce Independence
The role of the Chairman of the Board (“the Chairman”) and the President/Group Managing Director (“the GMD”) are separated
with each having a clear scope of duties and responsibilities. The distinct and separate roles of the Chairman and the GMD, with
a clear division of functions responsibilities, ensure a balance of power and authority, such that no one individual has unfettered
powers of decision making. This crucial partnership dictates the long term success of the Company and the Group.
The Chairman plays a crucial and pivotal leadership role in ensuring that the Board works effectively, whilst the GMD has the
overall responsibility for the operational and business units, organisational effectiveness and implementation of Board policies,
directives, strategies and decisions.
The Independent Directors make up 43% approximately of the Board composition. The appointment of the independent directors
is to ensure that the Board includes directors who can effectively exercise their independent and objective judgment to the Board
deliberations and to mitigate risks arising from conflict of interest or undue influence from interested parties.
The Company does not have term limits for both Executive Directors and Independent Non-Executive Directors as the Board
believes that continued contribution by Directors provides benefits to the Board and the Group as a whole. The integrity of
Independent Directors is not compromised by the long period of serving.
18
ANNUAL REPORT 2013
The Nomination Committee has reviewed and assessed the independence of all the Independent Directors, namely, Datuk
Dr. Anis Bin Ahmad, Datuk Koay Soon Eng and Tu Shu Yao, who have served as Independent Non-Executive Directors of the
Company for a cumulative term of more than nine (9) years, and recommended them to continue as Independent Non-Executive
Directors of the Company based on the following justifications:(a) They uphold integrity and are able to function as check and balance, provide a broader view and bring an element of
objectivity to the Board.
(b) Their vast experiences in their respective fields enable them to provide the Board with a diverse set of experiences, expertise
and independent judgments.
(c) They have performed their duties diligently and in the best interest of the Company and provide a broader view, independent
and balanced assessment of proposals from the management.
(d) They uphold independent decision and challenge the management objectively.
Following an assessment conducted by the Board through the Nomination Committee, the Board opined that the
independence of directors cannot be assessed only based on the quantitative aspect as stated in the MMLR, but the
true independence emanates from intellectual honesty, manifested through a genuine commitment to serve the best
interests of the Company. The Independent Directors can still continue to remain objective and independent in expressing
their respective views and in participating in deliberations and decision making of the Board and the Board Committees.
The Board is further of the view that the length of service of the Independent Directors on the Board do not in any way interfere
with their independent judgment and ability to act in the best interest of the Group. Hence, based on the recommendation by
the Nomination Committee, the Board recommends that the Independent Directors continue to be designated as independent
directors of the Company.
Principle 4 – Foster Commitment
The Board ordinarily meets at least five (5) times a year, scheduled well in advance to facilitate the Directors in planning
their meeting schedule. Additional meetings are convened when urgent and important decisions need to be made between
scheduled meetings. Board and Board Committee papers which are prepared by the management, provide the relevant facts
and analysis for the convenience of Directors. The meeting agenda, the relevant reports and Board papers are furnished
to Directors and Board Committee members well before the meeting to allow the Directors sufficient time to peruse for
effective discussion and decision making during meetings. At the quarterly Board meetings, the Board reviews the business
performance of the Group and discusses major operational and financial issues.
The Chairman of the Audit Committee informs the Directors at each Board meetings of any salient matters noted by the Audit
Committee and which require the Board’s attention or direction. All pertinent issues discussed at Board meetings in arriving at
the decisions and conclusions are properly recorded by the Company Secretary by way of minutes of meetings.
Board Meetings
There were five (5) Board meetings held during the financial year ended 31 December 2013, with details of Directors’ attendance
set out below:
Directors
1.
Position
No. of meetings attended
Chairman/Independent Non-Executive Director
5/5
2. Dato’ Dr. Lee Fang Hsin
President/Group Managing Director
5/5
3. Datuk Koay Soon Eng
5/5
4. Mr. Tu Shu Yao
5/5
5. Tuan Haji Adi Azuan Bin Abdul Ghani
5/5
6. Madam Lee Ling Chin
5/5
7.
Non -Independent Non-Executive Director
5/5
19
The Board complied with Paragraph 15.06 of the MMLR on the restriction on the number of directorships in listed companies
held by the Directors. The Board is satisfied that the external directorships of the Board members have not impaired their ability
to devote sufficient time in discharging their roles and responsibilities effectively as well as regularly updating and enhancing
their knowledge and skills.
The Board is also satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities
as Directors of the Company. This is evidenced by the attendance record of the Directors at Board meetings.
Directors’ Training – Continuing Education Programmes
All Directors have attended the Mandatory Accreditation Programme as required under the MMLR. To remain relevant in the
rapidly changing and complex modern business environment, the Directors are committed to continuing education and lifelong
learning to fulfill their responsibilities to the Company and enhance their contributions to board deliberations.
All Directors have attended training during the financial year ended 31 December 2013, the training programmes and courses
attended by the Directors individually or collectively were as follows:
• Risk Awareness Training 2013 conducted by Messrs. Ernst & Young
• Business Management conducted by Securities & Futures Institute in Taiwan, Republic of China
Apart from attending the training programmes, and courses organised by the relevant regulatory authorities and professional
bodies, the Directors also continuously received the briefings and updates on regulatory and industry development, including
information on the Group’s businesses and operations, risk management activities and other initiatives undertaken by the Group.
Principle 5 – Uphold Integrity in Financial Reporting
It is the Board’s commitment to present a balanced and meaningful assessment of the Group’s financial performance and prospects
at the end of each reporting period and financial year, primarily through the quarterly announcement of Group’s results to Bursa, the
annual financial statements of the Group and Company as well as the Chairman’s statement and review of the Group’s operations in
the Annual Report, where relevant. A statement by the Directors of their responsibilities in the preparation of financial statements is
set out in the ensuing paragraph.
Statement of Directors’ Responsibility for Preparing Financial Statements
The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the
Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the
Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2013, the Group
has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that
all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any
material departures being disclosed and explained in the notes to the financial statements. The financial statements have been
prepared on the going concern basis.
The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable
accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the
Companies Act, 1965.
In discharging its fiduciary responsibility, the Board is assisted by the Audit Committee to oversee the financial reporting processes
and the quality of the Group’s financial statements.
Audit Committee
The primary objective of the Audit Committee is to assist the Board to review the adequacy and integrity of the Group’s financial
administration and reporting, internal control and risk management systems, including the management information system and
systems for compliance with applicable laws, regulations, rules, directives and guidelines.
20
ANNUAL REPORT 2013
The Audit Committee consists of three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive
Director. The Audit Committee meets as and when required, and at least five (5) times during the financial year.
The Board, through the Audit Committee maintains an appropriate, formal and transparent relationship with the Group’s internal
and external auditors. The Audit Committee has explicit authority to communicate directly with the Group’s internal and external
auditors and vice versa the Group’s internal and external auditors also have direct access to the Audit Committee to highlight
any issues of concern at any time. Further, the Audit Committee meets the external auditors without the presence of Executive
Directors or the Management whenever necessary. Meetings are held to further discuss the Group’s audit plans, audit findings,
financial statements, as well as to seek their professional advice on other related matters.
The Audit Committee is also tasked by the Board, amongst other, to consider the appointment of the external auditors, the
audit fee and any questions of resignation or dismissal as well as all non-audit services to be provided by the external auditors
to the Company with a view to auditor independence and to provide its recommendations thereon to the Board. The Audit
Committee has received confirmation from the external auditors that for the audit of the financial statements of the Group and
Company for the financial year ended 31 December 2013, they have maintained their independence in accordance with their firm’s
requirements and with the provisions of the By-Laws on Professional Independence of the Malaysian Institute of Accountants and
they have reviewed the non-audit services provided to the Group during the financial period in accordance with the independence
requirements and are not aware of any non-audit services that have compromised their independence as external auditors of the
Group. The external auditors also reaffirmed their independence at the completion of the audit.
Principle 6 – Recognise and Manage Risks
The Board firmly believes in maintaining a sound risk management framework and internal control system with a view to
safeguard shareholders’ investment and the assets of the Group. The expanding size and geographical spread of the Group
involves exposure to a wide variety of risks, where the nature of these risks means that events may occur which could give rise
to unanticipated or unavoidable losses.
In establishing and reviewing the risk management and internal control systems, the Board recognises that such systems can
provide only reasonable, but not absolute, assurance against the occurrence of any material misstatement or loss. The Audit
Committee meets on a regular basis to ensure that there is clear accountability for managing significant identified risks and
that identified risks are satisfactorily addressed on an ongoing basis. In addition, the adequacy and effectiveness of the risk
management and internal control systems is also periodically reviewed by the Audit Committee.
Regular assessments on the adequacy and integrity of the internal controls and monitoring of compliance with policies and
procedures are also carried out through internal audits. The Group has outsourced the activities and function of the internal audit
to a professional service provider who reports directly to the Audit Committee. The internal audit plan that covers internal audit
coverage and scope of work is presented to the Audit Committee and the Board for their respective consideration and approval
annually. Internal audit reports encompassing the audit findings together with recommendations thereon are presented to the
Audit Committee during its quarterly meetings. Senior and functional line management are tasked to ensure management action
plans are carried out effectively and regular follow-up audits are performed to monitor the continued compliance.
Principle 7 – Ensure Timely and High Quality Disclosure
The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and
timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders. On
this basis, the Board will not only comply with the disclosure requirements as stipulated in the MMLR, but is also responsible to
disclose material information to regulators, shareholders and stakeholders.
The Group also maintains a corporate website, www.yspsah.com. to disseminate information and enhance its investor relations.
All timely disclosures, material information and announcements made to Bursa Malaysia are published on the website shortly
after the same is released by the Company.
21
Principle 8 – Strengthen Relationship between Company and Shareholders
Shareholder participation at general meetings
Shareholders are encouraged to attend the AGM and any other general meetings of the shareholders where it provides shareholders
the opportunity to raise questions or concerns with regards to the Group as a whole. Such meetings also serve as a platform for
shareholders to have direct access to the Board.
The Company at all times dispatched its notices of the AGM and any other general meetings of the shareholders, Annual Report and
related circulars to shareholders at least twenty one (21) days before the AGM and any other general meetings of the shareholders,
unless otherwise required by laws, in order to provide sufficient time to shareholders to understand and evaluate the matters
involved as well as to make necessary arrangements to attend, participate and vote either in person, by corporate representative,
by proxy or by attorney, to exercise their ownership rights on an informed basis during the AGM and any other general meetings of
the shareholders. Where special business items are to be transacted, a full explanation is provided in the notice of the AGM and any
general meetings of the shareholders or the related circulars to shareholders in order to assist the shareholders’ understanding of
the matters and the implication of their decision in voting for or against a resolution.
All the resolutions set out in the notices of the AGM and any other general meetings of the shareholders are put to vote by
show of hands, unless otherwise required by shareholders or by law. The Board encourages and facilitates poll voting where
the chairman of the AGM and any other general meetings will inform shareholders of their right to demand a poll vote at the
commencement of the AGM. The outcome of the AGM and any other general meetings of the shareholders is announced to
Bursa Malaysia on the same day the meeting is held.
The chairman of the AGM and any other general meetings of the shareholders will invite the shareholders to raise questions
pertaining to the Company’s financial performance and other items for adoption at the meeting, before putting a resolution
to vote.
Communication and engagement with shareholders
The Board recognises the importance of being transparent and accountable to the Company’s investors and, as such, has
various channels to maintain communication with them. The various channels of communications are through the quarterly
announcements on financial results to Bursa Malaysia, relevant announcements and circulars, when necessary, the Annual
and Extraordinary General Meetings and through the Group’s website where shareholders can access pertinent information
concerning the Group.
Compliance Statement
The Board is satisfied that the Company had applied most of the principles and best practices of the Code during the financial year.
Henceforth, the Board is committed and will continue to enhance compliance with the Code within the Company and the Group.
22
ANNUAL REPORT 2013
Other Information
OTHER INFORMATION
Status of utilization of proceeds raised from Rights Issue
Proposed
Utilization
RM’000
Actual Utilization
as at 31.12.2013
RM’000
Deviation
RM’000
- Expansion of existing local production facilities
7,000
7,000
-
- Expansion of R&D facilities
5,000
1,248
3,752
- Replacement of absolete machineries and equipments
5,000
2,542
2,458
- Purchase of raw materials, packaging materials and original
equipment manufacturer (“OEM”) finished products
9,500
9,500
-
- Distribution and marketing expenses
2,900
2,900
-
- Production, R&D and administrative expenses
3,400
3,400
-
460
460
-
33,260
27,050
6,210
Purpose
Capital expenditure
Working capital
Estimated expenses in relation to the Rights Issue*
Total
* Expenses relating to the Rights Issue amounting to RM398,000 were lower than estimated. The remaining portion was
reclassified for working capital purposes.
Share Buybacks
During the financial year, there were no share buybacks by the Company.
Option, Warrants and Convertible Securities
During the financial year ended 31 December 2013, the Company established the Employee Share Option Scheme (“ESOS”)
of up to 10% of the issued and paid-up share capital of the Company. The ESOS was approved by the Shareholders at the
Extraordinary General Meeting held on 17 June 2013.
There were no options, warrants or convertible securities issued or exercised during the financial year.
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 Fees
The Group paid RM68,000.00 for taxation services to a company affiliated to the external auditors for the financial year ended
31 December 2013.
Profit Estimate, Forecast or Projection
The Company did not undertake any profit estimate, forecast or projection for the financial year. There was no material variance
between the audited results for the financial year and unaudited results previously announced.
Profit Guarantee
There was no profit guarantee received by the Company during the financial year.
23
Material Contracts
The Company and/or its subsidiary companies had not entered into any material contracts which involved Directors’ and/or major
shareholders interest, either still subsisting at the end of the financial year, or which were entered into since the end of the
previous financial year except for the recurrent related parties transactions as disclosed in this annual report.
Corporate Social Responsibilities (“CSR”)
YSP SAH’s guiding principle of “We Value Life” is the common thread that runs through our Corporate Social Responsibility
undertakings which underscore our commitment to conduct business in a socially and environmentally responsible way, thus
ensuring that the company prospers responsibly for the sustainability of our environment and well being of the community.
Guided by this, we continued the momentum of the previous year and carried out a total of five CSR activities in 2013 to
contribute to greater health awareness and well being.
Our CSR initiatives started with a visit to Pertubuhan Ibu Tunggal Semarak Kasih Selangor in Klang on 30 April 2013 in which we
donated Kawai Kanyu Drop M400 for use of the children in the home.
YSP SAH also donated 100 boxes of Nuvit Rejuva Premier Collagen in support of the blood donation campaign conducted by
Universiti Malaya’s Faculty of Engineering on the 27 September 2013. The blood donation was successful in attracting the good
participation of the students of the university.
Valuing life of the underprivileged, a visit to Home for Special People in Cheras, Kuala Lumpur was made on 26 October 2013. YSP
SAH staff members brought cheer by spending time with the children and residents, engaging them in photo shoots, showering
them with giveaways of balloons and colouring materials, and treating them to lunch and afternoon tea. YSP SAH also donated
health supplements BT Shine Growell, ear thermometers and cash contribution that came up to a total of RM50,000.
The elders of Rumah Orang-Orang Tua Seri Setia in Sungai Way, Petaling Jaya were also included as beneficiaries of YSP SAH
CSR programme. They too were cheered up and also treated to lunch. Health supplements like BT Shine J Care 1300, BX Nuvit
Rejuva Premier Collagen, ear thermometers and cash donations that amounted to a total of RM70,000 were presented to this
old folks home.
YSP SAH also chipped in to help out the victims of Typhoon Haiyan in the Philippines. Medical supplies and aid were very much
needed and YSP SAH was in a position to provide prescription drugs worth RM10,000 on 25 November 2013. This donation was
made through CREST medical team who made sure that the much needed medicine reached the victims.
The wholesome “We Value Life” motivation was a strong driving force that steered the company and the staff members to
embark on these reach-out initiatives and sharing of goodness with the less fortunate.
Recurrent Related Party Transactions of a Revenue Nature (“RRPT”)
Details of RRPT conducted pursuant to the shareholders’ mandate during the financial year ended 31 December 2013.
Nature of relationship
Dato’ Dr. Lee Fang Hsin, Dr. Lee Fang Chuan @ Lee Fang Chen, Lee Ling Chin, Lee Fang Jen, Lee Fang Yu and Lee Ling Fen are
indirect major shareholders of Y.S.P.SAH by virtue of their family members’ substantial shareholdings in Yung Shin Global Holding
Corporation (“YSG HC”) through its 100% owned Yung Shin Pharmaceutical Industries Co. Ltd. [“YSP(Taiwan)”], which in turn
wholly owns the major shareholder of Y.S.P.SAH namely, YSP International Co. Ltd.
24
ANNUAL REPORT 2013
Other Information
(a)
Y.S.P.SAH
Group
Transaction
party
Nature of
Transaction
Interested
Related Party
Y.S.P. Industries
(M) Sdn Bhd
(“YSPI”)
Yung Zip
Chemical Ind.
Co. Ltd. (“YZC”)
Purchase of raw material by YSPI Dato’ Dr. Lee Fang
from YZC
Hsin
Dr. Lee Fang Chuan @
Lee Fang Chen
Lee Ling Chin
Dr. Lee Fang Jen
Lee Fang Yu
Lee Ling Fen
Actual value for
financial year ended
31 December 2013
(RM’000)
226
Dato’ Dr. Lee Fang Hsin is a director of YZC. Dr. Lee Fang Chuan @ Lee Fang Chen and Lee Ling Chin are also directors and
shareholders of YZC each with direct interest in YZC. Dato’ Dr. Lee Fang Hsin, Dr. Lee Fang Chuan @ Lee Fang Chen, Lee Ling
Chin, Dr. Lee Fang Yu, Lee Ling-Fen and Dr. Lee Fang-Jen are deemed as the related parties by virtue of their family members’
substantial direct shareholdings in YZC.
(b)
YSPI
Yung Shin
Pharmaceutical
Industries
Co. Ltd.
(“YSP(Taiwan)”)
Royalties and license fees payable Dato’ Dr. Lee Fang
by YSPI to YSP(Taiwan) in respect Hsin
of Technology Transfer Agreement Dr. Lee Fang Chuan @
Lee Fang Chen
Purchase of pharmaceutical
Lee Ling Chin
products from YSP(Taiwan) by
Dr. Lee Fang Jen
YSPI
Lee Fang Yu
Lee Ling Fen,
Sales of raw materials from YSPI
to YSP(Taiwan)
Royalties and
license fees: 125
Purchase of
pharmaceutical
products:11,708
Sales of raw
materials: Nil
Dato’ Dr. Lee Fang Hsin, Dr. Lee Fang Chuan @ Lee Fang Chen and Lee Ling Chin are directors and shareholders of YSGHC with
direct interest in YSGHC. Dr. Lee Fang Yu, Lee Ling-Fen and Dr. Lee Fang-Jen are also the shareholders of YSGHC with direct
interest. They are deemed interested as the related parties by virtue of their family members’ direct substantial shareholdings
in YSGHC.
(c)
YSPI
Shanghai Yung
Zip Pharm.
Trading Co., Ltd
(“SYZ”)
Purchase of raw material and
other chemicals by YSPI from
SYZ
Dato’ Dr. Lee Fang
Hsin
Lee Fang Chen
Lee Ling Chin
Dr. Lee Fang Jen
Lee Fang Yu
Lee Ling Fen
425
As related parties by virtue of YSGHC having indirect interest of 88.32% in SYZ.
25
(d)
Y.S.P.SAH
Group
Transaction
party
Nature of
Transaction
Interested
Related Party
YSPI
Tien Te (M) Sdn.
Bhd. (“TTSB”)
Rental payable to TTSB by YSPI
for properties known as
(i)718 Kiara Green Townhouse,
Jln Tun Mohd Fuad, Tmn Tun
Dr Ismail 60000 K.L. with an
approximately area of 1,334
sq.ft. at a monthly rental of
RM2,500.
(ii)
66 Tmn Pok Ai,
Persiaran Rainbow, Jln Tun
Admad Zaidi Adruce 93150
Kuching, Sarawak with an
approximately area of 6,000
sq.ft. at a monthly rental of
RM5,000.
Hsin
Lee Fang Chen
Lee Ling Chin
Dr. Lee Fang Yu
Dr. Lee Fang Jen
Actual value for
financial year ended
31 December 2013
(RM’000)
Rental of hostel
90
Dato’ Dr. Lee Fang Hsin is a director of TTSB with substantial direct interest in TTSB. Dr. Lee Fang Chuan @ Lee Fang Chen, Lee
Ling Chin, Dr. Lee Fang Yu and Dr. Lee Fang Jen are also the shareholders of TTSB with substantial direct interest.
(e)
Y.S.P.SAH
Tien Te (M) Sdn.
Bhd. (“TTSB”)
Provision of management
services such as recording of
accounts, other record keeping
and general administration and
clerical support by Y.S.P.SAH to
TTSB
Provision of
Hsin
management services
24
Lee Fang Chen
Lee Ling Chin
Dr. Lee Fang Yu
Dr. Lee Fang Jen
Dato’ Dr. Lee Fang Hsin is a director of TTSB with substantial direct interest in TTSB. Dr. Lee Fang Chuan @ Lee Fang Chen, Lee
Ling Chin, Dr. Lee Fang Yu and Dr. Lee Fang Jen are also the shareholders of TTSB with substantial direct interest.
(f)
YSPI
Selling of Pharmaceutical
Yung Shin
Products by YSPI to YSHK
(HK) Company
Limited (“YSHK”)
Hsin
Lee Ling Chin
59
Dato’ Dr. Lee Fang Hsin and Lee Ling Chin are directors and shareholders of YSHK with direct interest in YSHK.
(g)
YSPI
Quality
Reputation Sdn.
Bhd. (“QRSB”)
Sales of Pharmaceutical
Products by YSPI to QRSB
Datuk Dr. Anis Bin
Ahmad
1,671
Datuk Dr. Anis Bin Ahmad is a director and shareholder in QRSB with direct interest of 49%.
(h)
YSPI
Lembaga Tabung Selling of Pharmaceutical
Haji
Products by YSPI to Lembaga
Tabung Haji.
Lembaga Tabung Haji
19
Lembaga Tabung Haji is a major shareholder of Y.S.P.SAH and is represented by Tuan Haji Adi Azuan Bin Abdul Ghani on the
Board of Y.S.P.SAH.
26
ANNUAL REPORT 2013
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
The Board of Directors is pleased to provide the Statement of Internal Control, outlining the processes and scope of internal
controls adopted for the financial year ended 31 December 2013. The processes in place underscore the Board’s commitment to
maintain a sound system of risk management and internal control in the Group.
Board Responsibility
The Board recognises the importance of a sound system of risk management and internal control and its responsibility of maintaining
such a system to manage key business risks and to safeguard the interest of the shareholders and the Group’s assets.
The Board reviews, as an on-going process, the effectiveness, adequacy and integrity of the control environment and framework
and systems for management information, compliance and operational controls.
The Board recognises that in any system of risk management and internal control, there are inherent limitations and it can only
provide reasonable but not absolute assurance against material misstatement or loss. The system in place can thus manage and
reduce rather than eliminate risks of failure in meeting the Group’s business objectives.
The Board is satisfied that the system of risk management and internal control that the Group has in place is adequate and effective.
Risk Management Framework
Risk management is integral in any business operations. In taking cognisance of this, the Board had retained the services of a
professional firm to guide Management to identify principal risks and controls associated with processes implemented, potential
improvement opportunities, and review the extent of compliance with relevant policies and procedures.
In arriving at an appropriate risk management framework, a current state assessment was carried out by appointed professional
firm in January 2013 and this involved understanding the risk management practices in place, the state of corporate governance,
risk reporting mechanisms and policies and procedures.
An analysis of the Group’s risk management initiatives was carried out to identify potential areas of improvement as well as to
derive risk tolerance parameters.
Based on the assessment carried out, an Enterprise Risk Management (ERM) Policy and Oversight Structure were formalized
in November 2013. A Risk Management Policy and Procedures Manual was developed to put in place a formal risk assessment
process for future risk identification, profiling, assessment and treatment.
The ERM Framework adopted specifically aims at:
• Providing a policy and organisational structure for the management of risks;
• Defining risk management roles and responsibilities within YSP S.A.H and outlining procedures to mitigate risks;
• Ensuring consistent and acceptable management of risks;
• Defining a reporting framework to ensure communication of necessary risk management information to senior management
and personnel engaged in risk management activities;
• Detailing approved methods of risk assessment; and
• Providing a system to enable risk management information to be captured, monitored and reported.
As part of the systems and processes, a Risk Management Structure consisting of three lines of defence namely Daily Risk
Management, Risk Management Function and Independent Assurance was put in place.
27
In the system established for accountability of risk management, a Risk Management Committee led by the Group Managing
Director was established and the Audit Committee, made up of members of the Board to review its performance and
effectiveness on bi-monthly basis.
Other processes instituted were risk identification and tolerance to consider and assess risk implication of all actions; risk
evaluation to assess risks in terms of likelihood and impact and treatment of risk exposures in areas of operations; risk monitoring;
and training and education.
Subsequent to this, high level Risk Awareness Training was conducted for Directors and Management team to formally introduce
the risk management framework, create risk awareness and lay the foundations for risk culture to be inculcated in the Group.
The Board considers the risk management framework in placed is adequate and effective but notwithstanding that, it will seek
to continuously improve the framework, adopting better practices that suit the changing business environment.
Internal Audit Function
The appointed professional firm carried out internal audits during financial year in which it reviewed risks and controls associated
with processes; identified potential for improvement opportunities; and reviewed the extent of compliance with relevant policies
and procedures.
The following were reviewed and assessed in the internal audits:
• Procurement – procurement modes and competitive sourcing, supplier management, and receipt of goods/services
• Production management – production planning, product contamination and quality control, and production monitoring
• Sales and marketing – distribution channel, planning and forecasting, process of monitoring patent expiry and identification
of product pipeline, process of trademark infringement reporting
• Research and development – project planning, product evaluation and monitoring, product registration, and bioequivalence
requirement
Based on the internal audits, the appointed professional firm reported that Management has key internal controls in place and
the heads of respective departments were hands-on in the day-to-day management of operations.
Risk Register Update
The Group’s current Risk Register was reviewed for an assessment of risks it was exposed to and was approved by Audit
Committee on Novermber 2013.
The key tasks undertaken in the review were:
• Comparison of the current Risk Register against the industry’s risk profile
• Identification of risks and areas not covered in the current Risk Register
• Re-confirmation with the Board and Management on risk parameters, existing risks and risk ratings as well as existing controls
• Confirmation of updated Risk Register
• Submission of updated Risk Register
• Comparison of risk with areas covered in 2012-2013 Internal Audit Plan
• Development of 2014 Internal Audit Plan
28
ANNUAL REPORT 2013
Business Continuity Plan
A professional firm was engaged to help Management to set up a Business Continuity Management (BCM) framework, conduct
a Risk Assessment and Business Impact Analysis, develop recovery strategies and conduct BCM training for key personnel.
The British Standard for Business Continuity Manager BS25999 served as the point of reference and guide for the development
of the Business Continuity Plan. The Business Continuity Plan was formulated to improve resiliency of business by effectively
addressing threats and build up responses, recovery and restoration capability in managing crisis or a disaster.
Phase 1 of this initiative, which involved setting up the Programme Management team, the commencement of Risk Analysis and
Business Impact Analysis and the formulation of major plans such as Crisis Management and Incident Plans, Communication
Plans, and Physical and Logistics Plans, has been completed.
Phase 2 involving the development of BCM Strategy and BCM Response is on-going and will be followed by Phase 3 that will be
on BCM Awareness and BCM Training.
Other Key Elements of Internal Control
The key elements instituted include:
• Clearly defined delegation of responsibilities to committees of the Board and business operating units, including authorisation
levels for certain aspects of the business. The committees are namely Audit Committee, Nomination Committee,
Remuneration Committee, ESOS Committee and Tender Committee
• Clearly defined internal policies and procedures that include clear lines of accountability and reporting
• Management meetings held on a monthly basis to identify, discuss and resolve operational, financial and key management
issues
• A detailed budgeting exercise where operating units prepare budgets for the coming financial year. Performance of the
operating units are monitored monthly against approved budget, major variances are highlighted and management action
taken where necessary
• Continuing process of monitoring product safety, purity and efficacy
• Continuous monitoring of compliance with safety and health regulations, environmental requirements and relevant
legislations affecting the group’s operations
• Monthly quality audits at the Bangi manufacturing plant to ensure compliance, consistency and sustainability of quality
system in all manufacturing activities.
• Adoption of CAPA (Corrective Action and Preventive Action) management system in the manufacturing operations to manage
and monitor quality issues for a more proactive approach in addressing quality problems that arise in the manufacturing
process.
• Conducting regular Quality Review meetings to discuss and review the tracking process of CAPA system on the
following:
(i) Change control request
(ii) System incident report
(iii)Product complaint review
• Analysis of stock aging as well as production lead time on a regular basis by operating units
• Monthly overdue reports on long outstanding receivables are generated for management review and action taken where
necessary
• Conducting monthly meetings involving production and marketing divisions to discuss and review supply chain issues with
the aim to minimise stock depletion situations as well as prepare for new product launches
29
During the period under review, there were no significant weaknesses noted which may cause material losses, contingencies or
uncertainties that required disclosure in this Annual Report.
The Board and Management will remain vigilant and will continue to take measures to further strengthen internal controls to
achieve higher standards of corporate governance.
Review of Statement by External Auditors
The external auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the Annual Report
of the Group for the year ended 31 December 2013 in accordance with Recommended Practice Guide (“RPG”) 5 (Revised),
Guidance for Auditors on Engagements to Report on Statement on Risk Management and Internal Control included in the Annual
Report issued by the Malaysian Institute of Accountants and reported to the Board that nothing has come to their attention
that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board
in reviewing the adequacy and effectiveness of the system of internal control. RPG 5 (Revised) does not require the External
Auditors to and they did not consider whether this Statement covers all risks and controls, or to form an opinion on the adequacy
and effectiveness of the Group’s risk management and internal control procedures.
Conclusions
The Board of Directors had received the assurance from the Group Managing Director and Head of Corporate Finance (being
primarily responsible for the management of financial affairs of the Group) that the system is operating adequately and effectively.
Based on inquiry, information and assurance received, the Board is satisfied that the system in place is adequate and effective to
safeguard interests of the shareholders and the assets of the Group.
30
ANNUAL REPORT 2013
AUDIT COMMITTEE REPORT
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 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:Chairman
Datuk Koay Soon Eng
:
Members
Tu Shu Yao
:
:
Tuan Haji Adi Azuan Bin Abdul Ghani :
TERMS OF REFERENCE
Composition
The composition of the Audit Committee is at least three (3) members all of whom must be non-executive directors and the
majority, including the Chairman, must be independent directors.
At least one (1) member of the Committee:(a) Must be a member of the 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 associations of accountants specified in Part II of the 1st Schedule of the Accountants
Act, 1967; or
(iii)Fulfils such other requirements as prescribed or approved by the Exchange.
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.
The terms of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least
once every three (3) years. However, the appointment terminates when a member ceases to be a Director.
Authority
The Committee shall, in accordance with a procedure to be determined by the Board and at the cost of the Company:(a) have authority to investigate any matter within its terms of reference;
(b) have adequate resources and unrestricted access to any information from both internal and external auditors and all
employees of the Group in performing its duties;
(c) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
(d) be able to obtain external legal or other independent professional advices and to invite outsiders with relevant experience to
attend, if necessary; and
(e) be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other
directors and employees of the Company, whenever deemed necessary.
31
Meetings
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.
A minimum of two members present shall form a quorum provided both of whom present are independent directors. The
Committee shall meet with the external auditors and the internal auditors without executive board members, whenever deemed
necessary. 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 six (6) Audit Committee meetings held during the year 2013. The details of attendance of Committee members are
as follows:Name of Committee Members
Attendance
Datuk Koay Soon Eng (Chairman)
Mr. Tu Shu Yao
Datuk Dr. Anis Bin Ahmad Tuan Haji Adi Azuan Bin Abdul Ghani 6/6
6/6
6/6
6/6
Responsibilities and Duties of the Audit Committee
The duties and responsibilities of the Committee shall include:(a) To review and recommend the appointment of external auditors, the audit fee and any questions of resignation or dismissal
including the nomination of person or persons as external auditors;
(b) To review with the external auditors, the audit plan and audit report;
(c) To review with the external auditors, their evaluation of the system of internal controls;
(d) To review the assistance and cooperation given by the employees of the Company to the external auditors;
(e) To review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the
necessary authority to carry out its work;
(f) To review the internal audit programme, processes and the results and findings of the internal audit processes or investigation
undertaken and whether or not appropriate corrective actions are taken on the recommendations of the internal audit
function;
(g) To review the quarterly results and year end financial statements, prior to their submission for consideration and approval by
the board of directors, focusing particularly on:(i) changes in or implementation of major new or revised accounting policies;
(ii) significant and unusual events; and
(iii)compliance with accounting standards and other legal and regulatory requirements;
(h) To review any related party transaction and conflict of interest situation that may arise within the Company or Group including
any transaction, procedure or course of conduct that raises questions of management integrity;
(i) To review whether there are reasons (supported by grounds) to believe that the Company’s external auditors are not suitable
for re-appointment; and
(j) To verify the allocation of options pursuant to a share scheme for employees at the end of each financial year.
32
ANNUAL REPORT 2013
Summary of Activities of the Audit Committee
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 2013 in discharging 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) Evaluate the professionalism and capability of the external auditors, its scope of service and the audit fees.
(d) Reviewed the internal auditors’ scope of work.
(e) Checked with the internal auditors and external auditors on any findings which may require the Committee’s attention.
(f) Reviewed the adequacy of 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 their submission for consideration and
approval by the Board. 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 Malaysian Financial Reporting Standards (“MFRS”).
(i) Reviewed the Company’s compliance in particular the quarterly and year end financial statements with the Listing Requirements
of the Bursa Securities, applicable approved accounting standards and other legal and regulatory requirements.
(j) Reviewed recurrent related party transactions entered into by the Group to ensure they are not detrimental to the minority.
Internal Audit Function
The Group has outsourced its internal audit funcion to an independent professional consulting firm to assist the Audit Committee
in discharging its responsibilities and duties. The role of the internal audit function 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 and compliance with established
procedures, guidelines and statutory requirements.
The fee (inclusive of service tax) paid to a professional firm in respect of the internal audit function for the financial year ended
31 December 2013 was RM95,000.00.
The detail of internal audit function during the financial year under review is stated in the Statement on Risk Management and
Internal Control of this Annual Report.
33
FINANCIAL
STATEMENTS
35
Directors’ Report
40
Statements of Financial Position
42
Statements of Profit or Loss and Other Comprehensive Income
43
Consolidated Statement of Changes in Equity
45
Statement of Changes in Equity
46
Statements of Cash Flows
49
Notes to the Financial Statements
95
Statement by Directors and Statutory Declaration
96
Independent Auditors’ Report
A N N U A L REPORT 2 0 1 3
Directors’ Report
Directors’ Report
For the year ended 31 December 2013
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company
for the year ended 31 December 2013.
PRINCIPAL ACTIVITIES
The Company is principally engaged in investment holding and provision of management services whilst the principal activities
of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in the nature of
these activities during the financial year.
RESULTS
Group
RM’000
Company
RM’000
Profit for the year attributable to:
Owners of the Company
Non-controlling interests
16,191
457
11,737
-
16,648
11,737
RESERVES AND PROVISIONS
There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed
in the financial statements.
DIVIDENDS
Since the end of the previous financial year, the Company paid a final single tier dividend of 6.5 sen per ordinary share totalling
RM8,647,794 in respect of the financial year ended 31 December 2012 on 5 August 2013.
A final single tier dividend recommended by the Directors in respect of the year ended 31 December 2013 is 6.5 sen per
ordinary share totalling RM8,647,794, which is subject to the approval of members at the forthcoming Annual General Meeting
of the Company. This dividend will be accounted for during the financial year ending 31 December 2014.
DIRECTORS OF THE COMPANY
Directors who served since the date of the last report are:
Datuk Dr. Anis Bin Ahmad (Chairman)
Dato’ Koay Soon Eng
Lee Ling Chin
Tu Shu Yao
Adi Azuan Bin Abdul Ghani
35
DIRECTORS’ INTERESTS IN SHARES
The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than whollyowned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the
Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as
follows:
Interests in the Company:
- own
At 1.1.2013
Number of Ordinary Shares of RM1 Each
Bought
Sold
At 31.12.2013
1,187,000
-
11,004,209
329,765
280,000
-
657,000
-
-
657,000
- own
1,762,097
-
-
1,762,097
Lee Ling Chin
- own
1,520,394
-
-
1,520,394
282,300
434,000
-
-
- -
282,300
434,000
- own
52,365,605
-
- 52,365,605
- own
52,365,605
-
- 52,365,605
Lee Ling Chin
- own
52,365,605
-
- 52,365,605
- own
- others
Dato’ Koay Soon Eng
- own
Tu Shu Yao
- own
- others
-
1,187,000
-
- 11,284,209
329,765
Deemed interests in the Company:
Interests in Yung Shin (Philippines), Inc.:
At 1.1.2013
Number of Ordinary Shares of PESO10 Each
Bought
Sold
At 31.12.2013
- own
1
-
-
1
- own
1
-
-
1
36
Directors’ Report
DIRECTORS’ INTERESTS IN SHARES (CONTINUED)
Interests in P.T. Yung Shin
Pharmaceutical Indonesia:
- own
Interests in Myanmar Yung Shin
Pharma Ltd:
At 1.1.2013
100
At 1.1.2013
Number of Ordinary Shares of Rp92,250 Each
Bought
Sold
At 31.12.2013
- - 100
Number of Ordinary Shares of K1,000 Each
Bought
Sold
At 31.12.2013
- own
1
- - 1
- own
1
- - 1
Interests in YSP SAH
Pharmaceutical (B) Sdn. Bhd.:
- own
At 1.1.2013
200
Number of Ordinary Shares of B$1.00 Each
Bought
Sold
At 31.12.2013
- - 200
By virtue of their aforesaid interests in the shares of the Company, Dato’ Dr. Lee Fang Hsin, Dr. Lee Fang Chuan @ Lee Fang
Chen and Lee Ling Chin are also deemed interested in the shares of the subsidiaries during the financial year to the extent that
Y.S.P. Southeast Asia Holding Berhad has an interest.
None of the other Directors holding office at 31 December 2013 had any interest in the ordinary shares and options over shares
of the Company and of its related corporations during the financial year.
37
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit
(other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in
the financial statements of the Company or of related corporations) 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, other than certain Directors who have significant financial interests in corporations which traded
with certain companies in the Group in the ordinary course of business as disclosed in Note 31 to the financial statements.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate apart from the issue of the Employees Share Option Scheme.
ISSUE OF SHARES AND DEBENTURES
There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.
There were no debentures issued during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issue
of options pursuant to the Employees Share Option Scheme (“ESOS”).
The Company’s ESOS is governed by the by-laws approved by the shareholders at the Extraordinary General Meeting held on
17 June 2013. The ESOS was implemented on 1 November 2013 and is to be in force for a period of 7 years from the date of
implementation.
The salient features of the ESOS scheme are, inter alia, as follows:
(i) Subject to the discretion of the Options Committee, eligible employees are those who are at least 18 years of age and
is employed full-time by and on the payroll of a company in the Group and/ or its subsidiaries, which are not dormant
and confirmed in writing as a full time employees and have served as full time employees for at least six (6) months of
continuous service prior to and up to the date of offer which include service during the probation period. Eligible Directors
are those who are at least 18 years of age and have been appointed as a Director of a company in the Group and/ or its
subsidiaries, which are not dormant, for a period of at least three (3) months and should have their entitlements under the
Scheme approved by the shareholders of the Company in a general meeting.
(ii) The aggregate number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the total issued and
paid-up share capital of the Company.
(iii) The Scheme shall be in force for a period of seven (7) years from the effective date.
(iv) The option price shall be fixed based on the higher of the following:
(a) the 5-day weighted average market price of the shares of the Company immediately preceding the date of offer
with a discount of not more than 10%; or
(b) the par value of the Company’s shares
(v) The maximum number of new Company’s shares to be issued pursuant to the exercise of the options which may be granted
under the Scheme shall not exceed 10% of the total issued and paid-up ordinary share capital of the Company at any point
of time during the tenure of the ESOS and out of which not more than 50% of the shares shall be allocated, in aggregate,
to Directors and senior management of the Group. In addition, not more than 10% of the shares available under the ESOS
shall be allocated to any individual eligible employees who, either singly or collectively through persons connected with the
eligible employees, hold 20% or more in the issued and paid-up ordinary share capital of the Company.
(vi) The new Company’s shares to be allotted and issued upon any exercise of the options will upon allotment and issuance,
rank pari passu in all respects with the then existing issued and paid-up ordinary shares of the Company, save and except
that the new Company’s shares so issued will not be entitled to rights arising on a liquidation of the Company and dividend,
right, allotment and/or other distribution where the entitlement date precedes the date of allotment of the new Company’s
shares and will be subject to all the provisions of the Articles relating to transfer, transmission or otherwise of the
Company’s shares.
38
Directors’ Report
OPTIONS GRANTED OVER UNISSUED SHARES (Continued)
(vii) All options to the extent that have not been exercised upon the expiry of the option period shall automatically lapse and
become null and void and have no further effect.
The Company has yet to grant the options to the eligible Directors, executives and employees as at 31 December 2013.
OTHER STATUTORY INFORMATION
Before financial statement of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
(i) all known bad debts have been written off and adequate provision made for doubtful debts, and
(ii) any current assets which were unlikely to be realised in the ordinary course of business 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:
(i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and
in the Company inadequate to any substantial extent, or
(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate, or
(iv) not otherwise dealt with in this report or the financial statements that would render any amount stated in the financial
statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable
within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may
substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the year ended 31 December
2013 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such
item, transaction or event occurred in the interval between the end of that financial year and the date of this report.
AUDITORS
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Kuala Lumpur,
Date: 26 March 2014
39
As at 31 December 2013
Note
ASSETS
Property,plant and equipment
Prepaid land lease payments
Intangible assets
Investment in subsidiaries
Investment in an associate
Deferred tax assets
Amounts due from subsidiaries
Total non-current assets
3 4
5
6
8
15
7
Inventories
9
Trade and other receivables 10
Prepayments and other assets
11
Amounts due from
affiliated companies 12
Amounts due from
subsidiaries 7
Amounts due from
an associate
8
Current tax assets
Cash and cash equivalents
13
Group
2013
2012
RM’000
RM’000
114,418
4,740
675
-
330
378 - 118,105
6,973 428
-
-
-
- 120,541
Company
2013
2012
RM’000
RM’000
-
-
-
88,775
224
-
35,132
89,992
31,068
125,506
124,131
121,060
62,125
49,720
7,216
68,633
43,576
6,368
-
13
-
17
-
135
416
-
-
-
-
9,256
11,203
196
47
59,519
304
70
50,838
-
-
17,749
-
-
17,629
Total current assets
178,958
170,205
27,018
28,849
TOTAL ASSETS 299,499
295,711
151,149
149,909
EQUITY
Share capital
Share premium
Other reserves
Retained earnings
133,043 137
6,683
86,230
133,043
207
6,533
78,687
133,043
137
6,168
8,979
133,043
207
6,168
5,890
Total equity attributable to
owners of the Company
226,093
4,221
218,470
3,764
148,327
-
145,308
-
14
230,314
222,234
148,327
145,308
TOTAL EQUITY
40
Statements of Financial Position (CONTINUED)
Note
LIABILITIES
Deferred taxation
Loans and borrowings
Finance lease liabilities
Group
2013
2012
RM’000
RM’000
Company
2013
2012
RM’000
RM’000
15 16
17
7,923
13,073
2,239
7,743
16,555
4,207
-
-
-
-
23,235
28,505
-
-
Trade and other payables
20
Provisions
19
17
Amounts due to subsidiaries
7
Amounts due to affiliated
companies
12
16
Current tax liabilities
22,374
1,310
3,120
-
17,320
2,481
3,185
-
60
-
-
2,762
50
-
2,770
4,247
14,019
880
2,897
17,398
1,691
-
-
-
1,781
-
Total non-current liabilities
Total current liabilities
45,950
44,972
2,822
4,601
TOTAL LIABILITIES
69,185
73,477
2,822
4,601
TOTAL EQUITY AND LIABILITIES
299,499
295,711
151,149
149,909
The notes on pages 49 to 94 are an integral part of these financial statements.
41
Statements of Profit or Loss
and Other Comprehensive Income
Note
2013
RM’000
Group
2012
RM’000
2013
RM’000
Company
2012
RM’000
Revenue
21
Cost of sales
190,827
(106,135)
180,610
(98,363)
12,425
-
12,075
-
Gross profit
Other income
Distribution expenses
Administrative expenses
Other expenses
84,692
4,955
(47,812)
(16,469)
(2,766)
82,247
3,000
(44,989)
(16,088)
(3,111)
12,425
1,751
-
(736)
(2,107)
12,075
1
(698)
(3,704)
Results from operating activities
Finance income
Finance costs
Share of profit from
associates, net of tax
22,600
1,042
(1,756)
21,059
910
(1,818)
11,333
1,987
(8)
7,674
2,247
(318)
133
-
22,019
(5,371)
20,151
(6,580)
13,312
(1,575)
9,603
(3,135)
16,648
13,571
11,737
6,468
150
(458)
-
-
income/(expense) for the year
150
(458)
-
-
Total comprehensive income
for the year
16,798
13,113
11,737
6,468
Profit attributable to:
16,191
457
13,628
(57)
11,737
-
6,468
-
Profit for the year
16,648
13,571
11,737
6,468
attributable to:
16,341
13,170
457
(57)
11,737
-
6,468
-
for the year
11,737
6,468
Basic earnings per ordinary
share (sen):
25
Profit before tax
Tax expense
22
24
Profit for the year
Other comprehensive income, net of tax
Items that may be reclassified
subsequently to profit or loss
Foreign currency translations
differences for foreign operations
-
-
Total other comprehensive
16,798
12.17
42
13,113
10.24
-
- Total transactions with owners of the Company Additional investment in partly owned subsidiary
At 31 December 2012133,043
of warrants
- - Warrants expenses
Transfer to capital reserve upon expiry
- 26
207
-
- -
-
6,168
6,168 - -
- - -
-
-
-
-
365
- -
-
- - (458)
-
(458)
(458)
823
-
-
- -
- - -
-
- - -
-
(6,168) - (8)
(8) - -
-
- - 6,176
- - (7,990)
(8) (7,982)
13,170
78,687 218,470
- -
(7,982)
- (7,982)
13,628
-
632
(7,990)
(8)
(7,982)
13,113
13,571
(458)
3,764 222,234
- 632 -
-
- (57)
(57)
(458)- (458)
3,189 216,479
(458)- 13,628 13,628
- - 73,041 213,290
Total
Equity
RM’000
Dividends to owners of the Company
of the Company
- -
-
Total comprehensive income for the year
Contributions by and distributions to owners
-
-
Profit for the year
- - - - 207
for the year
Total other comprehensive expense
Foreign currency translation
At 1 January 2012133,043
GROUP
Attributable to owners of the Company
Non-Distributable
Distributable
Exchange
Share
Non Share
Share
Capital Fluctuation Option Warrants Retained Controlling
Note CapitalPremium Reserve
Reserve Reserve Reserve Earnings
Total Interests
RM’000 RM’000 RM’000
RM’000 RM’000 RM’000 RM’000 RM’000
RM’000
Consolidated Statement of Changes in Equity
Consolidated Statement
of Changes in Equity
43
44
-
-
-
-
Profit for the year
Total comprehensive income for the year
(70)
137
-
-
Share issuance expenses
Total transactions with owners of the Company At 31 December 2013133,043
(70)
-
26
Dividends to owners of the Company
of the Company
-
-
-
Total other comprehensive income for the year
Contributions by and distributions to owners
-
-
207
Foreign currency translation
At 1 January 2013133,043
GROUP
6,168
-
-
-
-
-
-
-
6,168
515
-
-
-
150
-
150
150
365
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,718)
(70)
(8,648)
16,341
16,191
150
150
86,230 226,093
(8,648)
-
(8,648)
16,191
16,191
-
-
78,687 218,470
Total
Equity
RM’000
(8,718)
(70)
(8,648)
16,798
16,648
150
150
4,221 230,314
-
-
-
457
457
-
-
3,764 222,234
Non-Distributable
Distributable
Exchange
Share
Non Share
Share
Capital Fluctuation Option Warrants Retained Controlling
Note CapitalPremium Reserve
Reserve Reserve Reserve Earnings
Total Interests
RM’000 RM’000 RM’000
RM’000 RM’000 RM’000 RM’000 RM’000
RM’000
Consolidated Statement of Changes in Equity (CONTINUED)
Non-Distributable
Distributable
Share
Share
Share Capital
Option Warrants Retained
Total
Note Capital Premium Reserve Reserve Reserve Earnings Equity
RM’000 RM’000 RM’000 RM’000 RM’000
RM’000 RM’000
Company
At 1 January 2012
Profit and total comprehensive
income for the year
Contributions by and distributions
to owners of the Company
Dividends to owners
26
of the Company
Warrant expenses
Total transactions with
owners of the Company
Transfer to capital reserve
upon expiry of warrants 133,043
-
-
6,176
7,404 146,830
- - - - -
6,468
6,468
-
-
-
-
-
- -
- -
(8)
(7,982)
-
(7,982)
(8)
-
-
-
-
(8)
(7,982)
(7,990)
-
-
6,168
-
(6,168)
-
207
6,168
-
-
5,890 145,308
-
-
-
-
11,737
11,737
-
-
-
-
-
-
-
(70)
-
-
-
-
-
- (8,648)
-
(8,648)
(70)
(70)
-
-
-
(8,648)
(8,718)
137
6,168
-
-
At 31 December 2012/
1 January 2013
133,043
Profit and total comprehensive
income for the year
- Contributions by and distributions
to owners of the Company - Dividends to owners
26
-
of the Company
Share issuance expenses
-
Total transactions with owners
of the Company
-
At 31 December 2013
207
133,043
-
8,979 148,327
45
Statements of Cash Flows
Note
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
22,019
20,151
13,312
9,603
647
(187)
-
-
-
111
-
101
2,107
- 3,011
-
115
300
324
117 602
79 - - - -
8,975
7,954
- -
(12)
(7)
- -
(653)
-
1,756
(1,042)
-
-
1,818
(910)
- (12,295)
8
(1,987)
(475)
-
123
(71)
(1,525)
-
693
-
(198)
-
(224)
-
CASH FLOWS FROM
OPERATING ACTIVITIES
Profit before tax
Adjustments for:
Impairment loss on trade receivables, net
Impairment loss on investments
in subsidiaries
Amortisation of intangible assets
Amortisation of prepaid land lease
payments
Damaged goods written off
Writedown on inventories
Depreciation on property, plant
and equipment
Gain on disposal of property,
plant and equipment
Gain on disposal of prepaid
interest in leased land
Dividend income
Interest expenses
Interest income
(Gain)/Loss on foreign exchange
- unrealised
Reversal of writedown on inventories
Reversal of impairment loss on
investment in associate
Property, plant and equipment
written off
Reversal of provision for onerous contracts
Provision for sales returns, net
Share of profit of equity accounted associate
Bad debts written off
Operating profit before changes
in working capital
Change in inventories
Change in trade and other receivables,
prepayments and other financial assets
Change in trade and other payables
Change in intercompany balances, net
20
(1,082)
(89)
(133)
144
7
(448)
1,399
-
103 - -
-
- - (11,901)
318
(2,247)
- -
-
30,727
5,884
30,831
(3,733)
(5,328)
3,427
1,668
(971)
(3,228)
(1,156)
4
34
25
23
(20)
(551)
Cash generated from/(used in) operations
Income tax paid
36,378
(6,356)
21,743
(5,160)
(541)
(243)
(1,071)
(502)
Net cash from/(used in) operating activities
30,022
16,583
(784)
(1,573)
46
(604)
-
(523)
-
Statement of Cash Flows
STATEMENTS OF CASH FLOWS (CONTINUED)
Note
CASH FLOWS FROM
INVESTING ACTIVITIES
Dividends received
Interest received
Proceeds from disposal of property,
plant and equipment
Proceeds from disposal of
prepaid interest in leased land
Acquisition of property, plant
and equipment(i)
Purchase of intangible assets
Investment in subsidiaries
Loan to subsidiary
Acquisition of prepaid land lease payments
Net cash (used in)/ generated
from investing activities
Group
2013
RM’000
- 1,042
Company
2012
RM’000
- 910
2013
RM’000
2012
RM’000
12,262
1,139
5,234
1,489
14
7
-
-
2,780
-
-
-
(4,776)
(358)
-
-
(30)
(17,679)
(108)
-
-
(2,173)
-
-
(891)
(1,076)
-
(4,377)
(5,200)
-
(1,328)
(19,043)
11,434
(2,854)
(1,772)
(70)
(1,867)
-
(8)
(70)
(350)
-
-
(8,648)
632 (7,982)
-
(8,648)
(7,982)
CASH FLOWS FROM
FINANCING ACTIVITIES
Interest paid
ESOS expenses paid
Proceeds from issuance of
share capital to minority shareholders
Dividends paid
Refinance of property, plant and
equipment under finance lease
(Repayment)/Drawdown of short
term revolving credit
Net repayment of term loans
Payment of finance lease liabilities
Repayment of bankers’ acceptances
Warrants expenses
Net cash used in
financing activities
1,496
-
-
-
(1,000)
(4,752)
(3,537)
(1,480)
-
16,200
(10,496)
(2,745)
1,480
(8)
-
(1,804)
-
-
-
(7,993)
(8)
(19,763)
(4,786)
(10,530)
(16,333)
(20,760)
Net increase/(decrease) in cash
and cash equivalents
Effect of exchange rate fluctuations
on cash held
Cash and cash equivalents at 1 January
8,931
(7,246)
120
(250)
50,838
(169)
58,253
-
17,629
38,389
CASH AND CASH EQUIVALENTS
AT 31 DECEMBER
59,519
50,838
17,749
17,629
(ii)
47
STATEMENTS OF CASH FLOWS (CONTINUED)
(i) Acquisition of property, plant and equipment
During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM4,776,000 (2012:
RM26,197,000), of which Nil (2012: RM8,518,000) was acquired by means of finance lease.
(ii) Cash and cash equivalents
Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position
amounts:
Note
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
Fixed deposits with licensed banks
37,879
31,304
17,030
17,470
Cash and bank balances
21,640
19,534
719
59,519
50,838
17,749
13
48
159
17,629
Y.S.P. Southeast Asia Holding Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed
on the Main Market of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered office
of the Company is as follows:
Principal Place of Business/ Registered Office
Level 22, Menara LGB,
No. 1 Jalan Wan Kadir,
Taman Tun Dr. Ismail
60000 Kuala Lumpur
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2013 comprise
the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the
Group’s interest in associates. The financial statements of the Company as at and for the year ended 31 December 2013 do
not include other entities.
The Company is principally engaged in investment holding and provision of management services whilst the principal activities
of the subsidiaries are as stated in Note 6 to the financial statements.
These financial statements were authorised for issue by the Board of Directors on 26 March 2014.
1. BASIS OF PREPARATION
(a) Statement of Compliance
The financial statements of the Group have been prepared in accordance with Malaysian Financial Reporting
Standards (“MFRSs”), International Financial Reporting Standards and the requirements of the Companies Act, 1965
in Malaysia.
The following are accounting standards, amendments and interpretations of the MFRS framework that have been
issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Company:
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014
• Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities
• Amendments to MFRS 12, Disclosure of Interest in Other Entities: Investment Entities
• Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities
• Amendments to MFRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and
Financial Liabilities
• Amendments to MFRS 136, Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets
• Amendments to MFRS 139, Financial Instruments: Recognition and Measurement – Novation of Derivatives and Continuation of Hedge Accounting
• IC Interpretation 21, Levies
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014
• Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2011-2013 Cycle)
• Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
• Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
• Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 119, Employee Benefits – Defined Benefit Plans: Employee Contributions
• Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)
• Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)
49
1. BASIS OF PREPARATION (CONTINUED)
(a) Statement of Compliance (Continued)
MFRSs, Interpretations and amendments effective from a date yet to be confirmed
• MFRS 9, Financial Instruments (2009)
• MFRS 9, Financial Instruments (2010)
• MFRS 9, Financial Instruments – Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139
• Amendments to MFRS 7, Financial Instruments: Disclosures – Mandatory Effective Date of MFRS 9 and
Transition Disclosures
The Group plans to apply the above mentioned standards, amendments and interpretations:
• from the annual period beginning on 1 January 2014 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 January 2014 except for IC
Interpretation 21, Levies which is not applicable to the Group and the Company.
• from the annual period beginning on 1 January 2015 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 July 2014.
The initial application of the abovementioned standards, amendments or interpretations are not expected to have any
material impact to the financial statements of the Group and the Company except as mentioned below:
MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification
and measurement of financial assets and financial liabilities, and on hedge accounting.
The adoption of MFRS 9 will result in a change in accounting policy. The Group is currently assessing the financial
impact of adopting MFRS 9.
(b) Basis of measurement
(c) Functional and presentation currency
These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.
These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency.
All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.
(d) Use of estimates and judgements
The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that
have significant effect on the amounts recognised in the financial statements.
50
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to the periods presented in these financial statements
and have been applied consistently by Group entities, unless otherwise stated.
(a) Basis of Consolidation
(i) Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements
of subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases.
The Group adopted MFRS 10, Consolidated Financial Statements in the current financial year. This resulted in
changes to the following policies:
•
Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. In the previous financial year, control
exists when the Group has the ability to exercise its power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
•
Potential voting rights are considered when assessing control only when such rights are substantive. In the
previous financial years, potential voting rights are considered when assessing control when such rights are
presently exercisable.
•
The Group considers it has de facto power over an investee when, despite not having the majority of voting
rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.
In the previous financial years, the Group did not consider de facto power in its assessment of control.
The change in accounting policy has been made retrospectively and in accordance with the transitional provision of
MFRS 10. The adoption of MFRS 10 has no significant impact to the financial statements of the Group.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment
losses, unless the investment is classified as held for sale or distribution. The cost of investments includes
transaction costs.
(ii) Business Combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is the
date on which control is transferred to the Group.
For new acquisitions, the Group measures the costs of goodwill at the acquisition date as:
•
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the
acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
51
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of Consolidation (Continued)
(ii) Business Combinations (Continued)
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the acquire
either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs
in connection with a business combination are expensed as incurred.
(iii) Acquisitions of Non-Controlling Interests
Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity
transactions between the Group and its non-controlling interest holders. Any difference between the Group’s
share of net assets before and after the change, and any consideration received or paid, is adjusted to or against
Group reserves.
(iv) Loss of control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary,
any non-controlling interests and the other components of equity related to the former subsidiary from the
consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised
in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair
value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an
available-for-sale financial asset depending on the level of influence retained.
(v) Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence, but not
control, over the financial and operating policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method
less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment
includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss
and other comprehensive income of the associates, after adjustments if any, to align the accounting policies
with those of the Group, from the date that significant influence commences until the date that significant
influence ceases.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest
including any long-term investments is reduced to zero, and the recognition of further losses is discontinued
except to the extent that the Group has an obligation or has made payments on behalf of the associate.
When the Group ceases to have significant influence over an associate, any retained interest in the former
associate at the date when significant influence is lost is measured at fair value and this amount is regarded
as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest
plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity
method is discontinued is recognised in profit or loss.
When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any
retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in
profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified
proportionately to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the
disposal of the related assets or liabilities.
Investments in associates are measured in the Company’s statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments
includes transaction costs.
52
(a) Basis of Consolidation (Continued) Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable
directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial
position and statement of changes in equity within equity, separately from equity attributable to the owners of
the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement
of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive
income for the year between non-controlling interests and the owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests
even if doing so causes the non-controlling interests to have a deficit balance.
(vi) Non-Controlling Interests
(vii)Transactions Eliminated on Consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity-accounted associates are eliminated against the investment
to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign Currency
(i) Foreign Currency Transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the
reporting period, except for those that are measured at fair value are retranslated to the functional currency at
the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising
on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of
currency risk, which are recognised in other comprehensive income.
(ii) Operations Denominated in Functional Currencies other than Ringgit Malaysia (“RM”)
The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill
and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the
reporting period, except for goodwill and fair value adjustments arising from business combinations before 1
January 2011 (the date when the Group first adopted MFRS) which are treated as assets and liabilities of the
Company. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary
economies, are translated to RM at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign
currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly-owned subsidiary, then
the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When
a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative
amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the profit or loss
on disposal.
53
(b) Foreign Currency (Continued)
(ii) Operations Denominated in Functional Currencies other than Ringgit Malaysia (“RM”) (Continued)
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant
proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of
only part of its investment in an associate that includes a foreign operation while retaining significant influence
or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to
a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses
arising from such a monetary item are considered to form part of a net investment in a foreign operation and are
recognised in other comprehensive income, and are presented in the FCTR in equity.
(c) Financial Instruments
(i) Initial Recognition and Measurement
A financial asset or a financial liability is recognised in the statement of financial position when, and only when,
the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at
fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial instrument.
An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and
only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract
is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is
recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.
(ii) Financial Instrument Categories and Subsequent Measurement
The Group and the Company categorise financial instruments as follows:
Financial Assets
Loans and Receivables
Loans and receivables category comprises debt instruments that are not quoted in an active market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the
effective interest method.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see Note 2(i)(i)).
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value
through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative
that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that
are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted
price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are
measured at cost.
Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values
with the gain or loss recognised in profit or loss.
54
(c) Financial Instruments (Continued)
(iii) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the
original or modified terms of a debt instrument.
When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If
the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted
to the obligation amount and accounted for as a provision.
(iv) Regular Way Purchase or Sale of Financial Assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require
delivery of the asset within the time frame established generally by regulation or convention in the market place
concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade
date accounting. Trade date accounting refers to:
(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a
receivable from the buyer for payment on the trade date.
(v) Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows
from the financial asset expire or the financial asset is transferred to another party without retaining control or
substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between
the carrying amount and the sum of the consideration received (including any new asset obtained less any new
liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit
or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is
discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying
amount of the financial liability extinguished or transferred to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(d) Property, Plant and Equipment
(i) Recognition and Measurement
Items of property, plant and equipment are measured at cost less any accumulated depreciation and any
accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs
directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling
and removing the items and restoring the site on which they are located. The cost of self-constructed assets
also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in
accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any
gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
The gains or losses on disposal of an item of property, plant and equipment is determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within
“other income” or “other expenses” respectively in profit or loss.
55
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Property, Plant and Equipment (Continued)
(ii) Subsequent Costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will
flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced
component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets
are assessed, and if a component has a useful life that is different from the remainder of that asset, then that
component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the
lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end
of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not
depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
•
•
•
•
•
buildings leasehold land
plant, machinery and equipment
furniture, fittings and renovation
motor vehicles
50 years
50 - 83 years
4 - 10 years
2 - 12 years
5 - 10 years
Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and
adjusted as appropriate.
(e) Leased Assets
(i) Finance Lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership
are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the
lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition,
the asset is accounted for in accordance with the accounting policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease
payments are accounted for by revising the minimum lease payments over the remaining term of the lease
when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment.
(ii) Operating Lease
Leases where the Group or the Company does not assume substantially all the risks and rewards of ownership
are classified as operating leases and, except for property interest held under operating lease, the leased assets
are not recognised on the statement of financial position.
56
(e) Leased Assets (Continued)
(ii) Operating Lease (Continued)
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of
the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense,
over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they
are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid land lease payments.
(f) Intangible Assets
(i) Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In
respect of equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of
the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill,
that forms part of the carrying amount of the equity accounted associates.
(ii) Research and Development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge
and understanding, is recognised in profit or loss as incurred.
Expenditure on development activities, whereby the application of research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalised only if development
costs can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable and the Group intends to and has sufficient resources to complete development and to
use or sell the asset.
The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly
attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised in
accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in
profit or loss as incurred.
Capitalised development expenditure is measured at cost less any accumulated amortisation and any
accumulated impairment losses.
(iii) Other Intangible Assets
Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured
at cost less any accumulated amortisation and any accumulated impairment losses.
The fair value of license fees, technical transfer fees and trademarks acquired in a business combination is based
on the discounted estimated royalty payments that have been avoided as a result of the license fee or trademark
being owned. The fair value of other intangible assets is based on the discounted cash flows expected to be
derived from the use and eventual sale of the assets.
(iv) Subsequent Expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognised in profit or loss as incurred.
57
(f) Intangible Assets (Continued)
(v) Amortisation
Amortisation is based on the cost of an asset less its residual value.
Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment
annually and whenever there is an indication that they may be impaired.
Other intangible assets are amortised from the date that they are available for use.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible
assets from the date that they are available for use.
The estimated useful lives for the current and comparative periods are as follows:
• license fees, technical transfer fees and trademarks 7 – 20 years
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and
adjusted, if appropriate.
(g) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is based on weighted average cost formula. The cost of raw materials comprises the original
purchase price plus incidentals in bringing these inventories to their present location and condition. For manufactured
inventories, cost consists of raw materials, direct labour, an appropriate portion of production overheads based on
normal operating capacity and other incidental costs.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and the estimated costs necessary to make the sale.
(h) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments
which have an insignificant risk of changes in fair value with original maturities of three months or less, and are
used by the Group and the Company in the management of their short term commitments. For the purpose of the
statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.
(i) Impairment
(i) Financial Assets
All financial assets (except for investments in subsidiaries and associates) are assessed at each reporting date
whether there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are
not recognised. For an investment in equity instrument, a significant or prolonged decline in the fair value below
its cost is an objective evidence of impairment. If any such objective evidence exists, then the impairment loss
of the financial asset is estimated.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows discounted
at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or
loss and is measured as the difference between the financial asset’s carrying amount and the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available
for sale is not reversed through profit or loss.
58
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Impairment (Continued)
(i) Financial Assets (Continued)
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss
is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would
have been had the impairment not been recognised at the date the impairment is reversed. The amount of the
reversal is recognised in profit or loss.
(ii) Other Assets
The carrying amounts of other assets (except for inventories and deferred tax assets) are reviewed at the end of
each reporting period to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful
lives or that are not yet available for use, the recoverable amount is estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets
or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment
testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which
impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting
purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated
to group of cash-generating units that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds
its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit
(group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cashgenerating unit (group of cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at the end of each reporting period for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals
of impairment losses are credited to profit or loss in the year in which the reversals are recognised.
(j)
Equity Instruments
Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
(i) Issue Expenses
Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity.
(ii) Ordinary Shares
Ordinary shares are classified as equity.
59
(k) Employee Benefits
(i) Short Term Employee Benefits
Short term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave
are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans
if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided
by the employee and the obligation can be estimated reliably.
(ii) State Plans
The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which
they relate. Once the contributions have been paid, the Group has no further payment obligations.
(iii) Share-Based Payment Transactions
The grant date fair value of share-based payment granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees unconditionally become entitled
to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which
the related service and non-market vesting conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between expected and
actual outcomes.
The fair value of employee share options is measured using a Trinomial model. Measurement inputs include
share price on measurement date, exercise price of the instrument, expected volatility (based on weighted
average historic volatility adjusted for changes expected due to publicly available information), weighted average
expected life of the instruments (based on historical experience and general option holder behaviour), expected
dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance
conditions attached to the transactions are not taken into account in determining fair value.
(l) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is
recognised as finance cost.
(i) Onerous Contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from
a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is
measured at the present value of the lower of the expected cost of terminating the contract and the expected
net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment
loss on the assets associated with that contract.
(ii) Sales returns
A provision for sales returns is recognised based on the estimated liabilities arising from the returns of expired
or short expiry, quality issue, recalled and slow moving products by the customers. The estimated liabilities are
made after taking into consideration the historical trend of sales returns.
60
(m) Revenue and Other Income
(i) Goods Sold
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration
received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue is recognised
when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks
and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the
associated costs and possible return of goods can be estimated reliably, and there is no continuing management
involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts
will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of
revenue as the sales are recognised.
(ii) Rental Income
Rental income from subleased property is recognised as other income.
(iii) Dividend Income
Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive
payment is established.
(iv) Interest Income
Interest income is recognised as it accrues using the effective interest method in profit or loss except for
interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining
a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.
(v) Management Income
Management income is recognised upon rendering the services.
(n) Borrowing Costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as
part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the
asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for
its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially
all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
(o) Income Tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of
previous financial years.
61
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (o) Income Tax (Continued)
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts
of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the
following temporary differences: the initial recognition of goodwill, and the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred
tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(p) Earnings Per Ordinary Share
The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential
ordinary shares, which comprise convertible notes and share options granted to employees.
(q) Operating Segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. The operating segment’s business results are reviewed regularly by the chief operating decision
maker, which in this case is the Managing Director of the Group, to make decisions about resources to be allocated to
the segment and assess its performance, and for which discrete financial information is available.
(r) Contingencies
(i) Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence
will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as
contingent liabilities unless the probability of outflow of economic benefits is remote.
(ii) Contingent assets
62
Where it is not probable that there is an inflow of economic benefits, or the amount cannot be estimated reliably,
the asset is not recognised in the statements of financial position and is disclosed as a contingent asset, unless
the probability of inflow of economic benefits is remote. Possible entitlements, whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent
assets unless the probability of inflow of economic benefits is remote.
3. PROPERTY, PLANT AND EQUIPMENT
Buildings Buildings
Plant,Furniture
on
Long
on Machinery Fittings Capital
Freehold Freehold Leasehold Leasehold
and Motor
and Work-In
Group
Land
Land
Land
Land Equipment VehiclesRenovationProgress Total
RM’000 RM’000 RM’000
RM’000
RM’000 RM’000 RM’000 RM’000 RM’000
Cost At 1 January 2012
4,675
Additions
-
Disposals
-
Written off
-
Effect of movements in
-
exchange rates
Reclassification
-
Transfer
-
1 January 2013
Additions
Disposals
Written off
exchange rates
Transfer
At 31 December 2013
1,324
-
-
-
15,872
5,095
-
-
47,604
10,867
-
-
53,839
2,764
-
(273)
-
-
-
-
-
-
(54)
(18)
-
(60)
(32)
5,301
4,675
-
-
-
1,324
-
-
-
20,967
-
-
-
58,399
-
-
-
61,539
2,252
(39)
(111)
-
-
-
-
-
-
403
70
185
26
4,675
1,324
20,967
58,872
63,852
3,226 10,098
1,203
811
(149)
-
-
(53)
(5)
58
-
9
(8)
130
4,333 10,987
180
870
(30)
(4)
-
(317)
37
-
24
10
4,520 11,570
-136,638
5,457 26,197
- (149)
- (326)
-
-
(5,431)
(110)
-
26162,250
1,474 4,776
-
(73)
- (428)
-
(106)
649
-
1,394 167,174
63
3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Buildings Buildings
Plant,Furniture
on
Long
on Machinery Fittings Capital
Freehold Freehold Leasehold Leasehold
and Motor
and Work-In
Group
Land
Land
Land
Land Equipment VehiclesRenovationProgress Total
RM’000 RM’000 RM’000
RM’000
RM’000 RM’000 RM’000 RM’000 RM’000
Depreciation
At 1 January 2012
Depreciation for the year
Disposals
Written off
exchanges rates
-
-
-
-
38
38
-
-
292
332
-
-
3,370
1,420
-
-
24,377
4,790
-
(271)
2,234
419
(149)
-
6,310
955
-
(48)
-
-
-
31
(3)
(1)
11
-
Reclassification
-
-
-
-
(26)
32
(6)
-
-
-
-
-
76
38
-
-
624
360
-
-
4,821
1,717
-
-
28,867
5,386
(38)
(101)
2,535
443
(30)
-
7,222
1,031
(3)
(307)
-
-
-
25
62
7
21
-
114
984
6,563
34,176
2,955
7,964
1 January 2013
4,675
1,248
20,343
53,578
32,672
1,798
3,765
26118,105
At 31 December 2013
4,675
1,210
19,983
52,309
29,676
1,565
3,606
1,394114,418
1 January 2013
Depreciation for the year
Disposals
Written off
exchange rates
At 31 December 2013
Carrying amounts
64
- 36,621
- 7,954
- (149)
- (319)
38
-
- 44,145
- 8,975
-
(71)
- (408)
-
115
- 52,756
3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(a) Included in property, plant and equipment is net carrying amount of assets of the subsidiaries held under finance lease
arrangements of RM10,590,000 (2012: RM10,482,000).
(b) Certain long leasehold land and buildings with net carrying amount of RM43,869,000 (2012: RM30,528,000) have
been pledged to a licensed bank as collateral for credit facilities granted to the Group and the Company.
4. PREPAID LAND LEASE PAYMENTS
Cost
At 1 January Addition
Disposal
Effect of movements in exchange rates
Group
2013
RM’000
2012
RM’000
7,583
30
(2,440)
8
5,534
2,173
(124)
7,583
At 31 December
5,181
Accumulated Amortisation
At 1 January Amortisation charge for the year
Disposal
Effect of movements in exchange rates
610
115
(313)
29
505
117
(12)
441
610
4,740
6,973
At 31 December
Carrying Amount
Leasehold land with unexpired
lease period of less than 50 years
65
5. INTANGIBLE ASSETS
License
Goodwill
Fees
Group
RM’000
RM’000
Cost
At 1 January 2012
Additions
exchange rates
1 January 2013
Technical
Transfer
Fees
Trademarks
Total
RM’000
RM’000
RM’000
67
-
682
-
-
108
159
-
908
108
-
-
-
3
3
67
682
108
162
1,019
-
-
58
300
358
67
682
166
462
1,377
-
-
378
68
-
9
109
24
487
101
-
-
-
3
3
-
-
446
68
9
19
136
24
591
111
-
514
28
160
702
1 January 2012
67
236
99
26
428
At 31 December 2013
67
168
138
302
675
Additions
At 31 December 2013
Amortisation
At 1 January 2012
Amortisation for the year
exchange rates
1 January 2013
Amortisation for the year
At 31 December 2013
Carrying Amounts
6. INVESTMENTS IN SUBSIDIARIES
Company
2013
2012
RM’000
RM’000
At cost:
Unquoted shares
- in Malaysia
71,083
71,083
- outside Malaysia
24,768
23,878
Less: Accumulated impairment losses
(7,076)
(4,969)
66
88,775
89,992
6. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Details of the subsidiaries are as follows:
Name of Subsidiary
Country of
Incorporation
Y.S.P. SAH (Vietnam) Co., Ltd. #
Brunei Darussalam Investment holding
100
100
Y.S.P. SAH Investment Pte. Ltd. #
Singapore
Investment holding
100
100
Sun Ten Southeast Asia Holding Pte. Ltd. #
Singapore
Investment holding
60
60
Y.S.P. Industries (M) Sdn. Bhd.
Malaysia
Importer, exporter and manufacturer
of pharmaceutical and veterinary
products, pharmaceutical fine
chemicals and provision of
management services
100
100
Yung Shin (Philippines), Inc. #
Philippines
Importing, trading, buying, selling and distributing pharmaceuticals,
veterinary products, raw materials,
fine chemicals, health food products
and medical devices
99.99
99.99
Yung Shin Pharmaceutical Singapore
(Singapore) Pte. Ltd. #
Importer, exporter and trading in all
100
100
kinds of pharmaceutical products
Indonesia
PT. Yung Shin Pharmaceutical Indonesia #
Trading in all kinds of pharmaceutical products
99.71
99.71
Y.S.P. (Cambodia) Pte. Ltd. #
Cambodia
Providing management services in respect of product registration,
trademark registration and national
marketing and trading in all kinds
of pharmaceutical products
100
100
Kumpulan Y.S.P. (Malaysia) Sdn. Bhd. Malaysia
Dormant
100
100
Myanmar Yung Shin Pharma Ltd. # Myanmar
Dormant
99.40
99.40
Y.S.P. SAH Pharmaceutical (B) Sdn. Bhd. #
Brunei Darussalam Dormant
99
99
Subsidiaries of Y.S.P. SAH Investment Pte. Ltd.
Principal
Activities
Effective
Ownership Interest
2012
2013
%
%
Y.S.P. Industries Vietnam Co., Ltd. #
Vietnam
Manufacturing pharmaceutical, 100
100
traditional medicines, food
supplements, veterinary, aquatic,
and cosmetic products
Manufacturing pharmaceutical products
PT. YSP Industries
Indonesia
Indonesia #
75
75
# Audited by firms of auditors other than KPMG
67
6. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Effective
Ownership Interest
Country of
Principal
2013
2012
Incorporation Activities
%
%
Name of Subsidiary
Subsidiaries of Sun Ten Southeast Asia Holding Pte. Ltd.
Malaysia
Sun Ten Pharmaceutical Mfg. (M) Sdn. Bhd.
Sun Ten (Singapore) Pte. Ltd. #
Singapore
Trading in traditional
herbal products
60
60
60
Importer, exporter and 60
trading in all kinds of
pharmaceutical products
# Audited by firms of auditors other than KPMG
7. AMOUNTS DUE FROM/TO SUBSIDIARIES
The amounts due from subsidiaries are non-trade in nature, unsecured, interest free and repayable on demand except for:
(i) RM2,040,000 (2012: RM2,040,000) which is unsecured, bears interest at the rate of 5.00% (2012: 5.00%) per annum
and repayable in 12 instalments on a monthly basis commencing on June 2014.
(ii) RM1,750,000 (2012: RM1,750,000) which is unsecured, bears interest at the rate of 5.00% (2012: 5.00%) per annum
and repayable in 7 instalments on a monthly basis commencing on November 2014.
(iii) RM10,000,000 (2012: RM10,000,000) which is unsecured, bears interest at the rate of 5.00% (2012: 5.00%) per annum
and repayable in 12 instalments on a monthly basis commencing on December 2014.
(iv) RM1,975,000 (2012: RM1,879,000) which is unsecured, bears interest at the rate of 3.50% (2012: 3.50%) per annum
and repayable in 12 instalments on a monthly basis which commenced on December 2012.
(v) RM18,975,000 (2012: RM17,059,000) which is unsecured, bears interest at the rate of 4.00% (2012: 4.00%) per annum
and repayable in 20 instalments on a quarterly basis commencing on July 2015.
(vi) RM1,124,000 (2012: Nil) which is unsecured, bears interest at the rate of 5.00% (2012: Nil) per annum and repayable in
12 instalments on a monthly basis commencing on December 2014.
(vii) RM376,000 (2012: RM323,000) which is unsecured, bears interest at the rate of 3.50% (2012: 3.50%) per annum and
repayable on June 2014.
(viii)RM2,379,000 (2012: RM2,269,000) which is unsecured, bears interest at the rate of 5.00% (2012: 5.00%) per annum
and repayable on July 2015.
(ix) RM1,008,000 (2012: Nil) which is unsecured, bears interest at the rate of 5.00% (2012: Nil) per annum and repayable on
January 2017.
The amounts due to subsidiaries are non-trade in nature, unsecured, interest free and repayable on demand.
8. INVESTMENT IN AN ASSOCIATE/AMOUNT DUE FROM AN ASSOCIATE
At cost:
Unquoted shares
Share of post-acquisition
reserves
Less: Accumulated
impairment losses 68
Group
2013
2012
RM’000
RM’000
Company
2013
RM’000
224
224
106
(26)
-
(198)
-
330
-
224
224
2012
RM’000
224
(224)
-
8. INVESTMENT IN AN ASSOCIATE/AMOUNT DUE FROM AN ASSOCIATE (CONTINUED)
The summary financial information for the associate, not adjusted for the percentage ownership held by the Group,
is as follows:
Effective
Country of Ownership Incorporation
Interest
Revenue (100%)
RM’000
Profit/
(Loss)
(100%)
RM’000
Total
Assets
(100%)
RM’000
Total
Liabilities
(100%)
RM’000
2013
Y.S.P. (Thailand) Co. Ltd
Thailand
48.56%
736
95
506
177
2012
Y.S.P. (Thailand) Co. Ltd
Thailand
48.56%
887
158
240
115
Group
Note
2013
2012
RM’000
RM’000
Amount due from an associate
- Trade
8.1
196
304
8.1 The trade amount due from the associate is unsecured, interest free and has a fixed term of repayment of 120 days
(2012: 120 days).
9. INVENTORIES
2013
RM’000
At cost:
- Raw materials
9,919
- Work-in-progress 6,456
- Finished goods
41,389
- Packaging materials 3,495
At net realisable value:
- Raw materials
499
- Finished goods
119 - Packaging materials 248
62,125
Recognised in profit or loss:
Inventories recognised as cost of sales
96,447
324
300
Reversal of writedown on inventories
-
Group
2012
RM’000
14,035
5,918
43,812
4,367
228
35
238
68,633
88,800
79
602
(71)
69
10. TRADE AND OTHER RECEIVABLES
Note
Group
2013
2012
RM’000
RM’000
Company
2013
2012
RM’000
RM’000
Trade
Trade receivables
10.1
47,649
41,823
-
-
Non-trade
Other deposits
Other receivables
731
1,340
575
1,178
-
13
17
2,071
1,753
13
17
49,720
43,576
13
17
10.1Trade receivables are non-interest bearing and are generally on 90 to 150 days (2012: 90 to 150 days) credit terms. See Note 28.4 for ageing analysis.
11. PREPAYMENTS AND OTHER ASSETS
Group
Note
2013
2012
RM’000
RM’000
Non-trade Deposits
11.1
4,889
4,060
Prepayments
2,327
2,308
7,216
11.1 Included in the deposits of the Group are:
(i) deposits paid for purchase of plant and equipment amounting to RM234,000 (2012: RM242,000); and
6,368
(ii) deposits paid to suppliers for purchases amounting to RM4,655,000 (2012: RM3,818,000).
12. AMOUNTS DUE FROM/TO AFFILIATED COMPANIES
Affiliated companies refer to corporations of which certain directors of the Company have interest.
The amounts due from/to affiliated companies are trade in nature, unsecured, bear no interest and repayable on demand.
13. CASH AND CASH EQUIVALENTS
2013
RM’000
Group
Company
2012
RM’000
2013
RM’000
2012
RM’000
Fixed deposits with licensed banks
37,879
31,304
17,030
Cash and bank balances
21,640
19,534
719
159
59,519
50,838
17,749
17,629
70
17,470 A N N U A L REPORT 2 0 1 3
14. CAPITAL AND RESERVES
Share Capital
Group and Company
Number of
Amount
Shares
Amount
2013
2013
2012
RM’000
’000
RM’000
Authorised:
Ordinary shares of RM1 each
250,000
250,000
250,000
Number of
Shares
2012
’000
250,000
Issued and fully paid classified as
equity instruments:
Ordinary shares of RM1 each
At 1 January/ 31 December
133,043
133,043
133,043
133,043
Ordinary Shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote
per share at meetings of the Company and rank equally with regard to the Company’s residual assets.
Capital reserve
The capital reserve comprises the unexercised warrants which has been transferred from warrant reserve upon the expiry
of the warrants on 5 December 2012.
Exchange Fluctuation Reserve
The exchange fluctuation reserve comprises all foreign currency differences arising from the translation of the financial
statements of the Group entities with functional currencies other than RM.
Share Option Reserve
The share option reserve comprises the cumulative value of employee services received for the issue of share options.
When the option is exercised, the amount from the share option reserve is transferred to share premium. When the share
options expire, the amount from the share option reserve is transferred to retained earnings.
The share options scheme effective on 15 August 2006 had expired on 14 August 2011.
At the Extraordinary General Meeting held on 17 June 2013, the Company’s shareholders have approved a new Employees
Share Option Scheme, which became effective on 1 November 2013.
71
15. DEFERRED TAXATION
Recognised Deferred Tax Assets / (Liabilities)
Deferred tax assets and liabilities are attributable to the following:
AssetsLiabilities Net
2013
2012
2013
2012
2013
2012
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
GROUP
-
-
Provisions
1,303
1,519
Other items
133
36
Tax assets/
(liabilities)
1,555
1,436
Set off of tax
(1,058)
(1,555)
Net tax assets/ (liabilities)
378
-
(8,830)
-
(151)
(9,191) -
(107)
(8,830)
1,303
(18)
(9,191)
1,519
(71)
(8,981)
(1,058)
(9,298)
1,555
(7,545)
-
(7,743)
-
(7,923)
(7,743)
(7,545)
(7,743)
Movement in temporary differences during the year
At
1.1.2012
RM’000
Recognised Recognised
in profit
At
in profit
or loss 31.12.2012/
or loss
At
(Note 24) 1.1.2013 (Note 24) 31.12.2013
RM’000
RM’000
RM’000
RM’000
Group
Provisions
Other items
Reinvestment allowance- unutilised
(7,933)
461
(91)
135
(1,258)
1,058
20
(135)
(9,191)
1,519
(71)
-
361
(216)
53
-
(8,830)
1,303
(18)
-
(7,428)
(315)
(7,743)
198
(7,545)
72
16. LOANS AND BORROWINGS
Non- current
Secured bank loans and financings
Current
Secured bank loans and financings Unsecured bank loan
Secured revolving credit
Secured bankers’ acceptances Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
13,073
16,555
-
-
3,579
4,940
5,500
-
14,019
27,092
4,817
4,601
6,500
1,480
17,398
33,953
-
-
-
-
-
-
1,781
1,781
1,781
Bank loans and financings
Term loan 1 – RM912,000 (2012: RM953,000))
This term loan bears interest at the rate of 1.5 - 2.25% above 3 months cost of fund of 4.75% (2012: 1.5 - 2.25% above 3
months cost of fund of 4.75%) per annum and is repayable by 168 monthly installments commenced on October 2006. It
is secured by first legal mortgage on a subsidiary’s leasehold properties.
Term financing 2 – RM4,875,000 (2012: RM7,438,000)
This term financing is under the principle of Bai Inah Amanah Term Financing - I for Asset Purchase Price of RM12.0
million. The term financing bears profit at RM1,724,797 (2012: RM1,724,797) and is repayable in 57 monthly instalments
commencing 3 months following the date of first disbursement of the Purchase price.
This term loan is supported by a corporate guarantee from the Company.
Term loan 3 – RM4,940,000 (2012: RM4,601,000)
This short term loan amounting to USD1.5 million from First Commercial Bank, Taiwan, bears interest at the rate of
SIBOR + 2.05% - 2.60% (2012: SIBOR + 2.05% - 2.60%) per annum and is repayable after twelve (12) months after first
disbursement of the loan.
This term loan is supported by a letter of undertaking from the holding company.
Term financing 4 – RM10,865,000 (2012: RM11,200,000)
This term loan is secured by a corporate guarantee from the holding company and first party legal charge over the
subject properties.
This term financing is under the principles of Bai’ Bithaman Ajil for Asset Purchase Price of RM11,200,000 and Asset
Sales Price of RM21,961,240 with the profit rate of 12% p.a. or effective profit rate (“EPR”) of 1.5% p.a. above the Bank’s
prevailing Cost of Funds (“i-COF’). The principals are repayable by one hundred sixty seven (167) equal monthly principals
instalments of RM67,000 each and one (1) final instalment of RM11,000 commencing on the 13th month from the date of
first disbursement.
73
16. LOANS AND BORROWINGS (CONTINUED)
Bank Loans and Financing (Continued)
Secured revolving credit – RM5,500,000 (2012: RM6,500,000) and bankers’ acceptances –
RM Nil (2012: RM1,480,000)
Revolving credit and bankers’ acceptances are secured by:-
(i)
(ii)
(iii)
(iv)
(v)
The short term revolving credit bears interest at rates ranging from 0.75% to 1.00% (2012: 0.75% to 1.00%) above cost of
fund and bankers’ acceptances bear interest at rates Nil (2012: 3.18% to 3.58%) and 0.5% acceptance commission.
An “all monies” facilities agreement;
Corporate Guarantee from the Company;
Trade Finance General Agreement and Islamic Trade Finance General Agreement;
Negative pledge; and
Letter of undertaking from the Company.
Significant covenants for certain term loans granted to the Group:
The Group is required to maintain a maximum debt-to-equity ratio of 2.0 at all times.
17. FINANCE LEASE LIABILITIES
Finance lease liabilities are payable as follows:
Present Future
Value Of Future Minimum Minimum
Minimum
Lease
Lease
Lease
Payments
Interest Payments
Payments
Interest
2013
2013
2013
2012
2012
RM’000
RM’000
RM’000
RM’000
RM’000
Less than one year Between one and five years
74
Present
Value Of
Minimum
Lease
Payments
2012
RM’000
3,321
2,321
201
82
3,120
2,239
3,519
4,376
334
169
3,185
4,207
5,642
283
5,359
7,895
503
7,392
18. EMPLOYEE BENEFITS
Employees Benefits Expenses
Group
2013
RM’000 2012
RM’000
47,769
43,398
5,777
5,382
53,546
48,780
Onerous
Contracts
RM’000 Sales
returns RM’000 Total
RM’000
1,530
-
(448)
-
1,399
-
1,530
1,399
(448)
Wages, salaries and others
Contributions to defined contribution plans
19. PROVISIONS
Group
At 1 January 2012
Provisions made during the year
Provisions reversed during the year
At 31 December 2012/1 January 2013
Provisions made during the year
Provisions reversed during the year 1,082
-
(1,082)
1,399
1,078
(1,167)
2,481
1,078
(2,249)
At 31 December 2013 -
1,310
1,310
31 December 2012
Current
31 December 2013
Current 1,082
1,399
2,481
-
1,310
1,310
Onerous contracts
In 2011, the Group entered into a non-cancellable sales contract for which, due to changes in the actual production cost,
the contract incurred losses. The foreseeable loss due to the obligation for the delivery of the remaining contracted sales
quantities has been provided for.
Sales returns
In 2012, the Group set up a formal policy for the provision of sales returns from customers with regards to expired or short
expiry, quality issue, recalled and slow moving products. The estimated liability is made after taking into consideration the
historical trend of sales returns.
75
20. TRADE AND OTHER PAYABLES
2013
RM’000
Group
Company
2012
RM’000
2013
RM’000
2012
RM’000
Trade
Trade payables
10,429
7,212
-
-
Non- Trade
Accruals
Other payables
6,915
5,030
5,867
4,241
57
3
50
-
11,945
10,108
60
50
22,374
17,320
60
50
The normal trade credit terms granted by trade payables to the Company range from 30 days to 180 days (2012: 30 days
to 180 days).
21. REVENUE
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
Sales of goods
Management fee income
Dividends income from subsidiaries
(unquoted)
190,803
24
180,586
24
-
130
-
-
12,295
11,901
190,827
180,610
12,425
12,075
2012
RM’000
2013
RM’000
2012
RM’000
101
-
-
117
-
-
158
109
50
-
63
-
91
25
602
7,954
865
30
-
-
-
-
30
-
-
-
-
2,107
3,011
2012
RM’000
-
174
22. PROFIT BEFORE TAX
Group
2013
RM’000
Profit before tax is arrived at
after charging
Amortisation of intangible assets
111
Amortisation of prepaid land lease
payments
115
Audit fees:
- KPMG
145
122
- other auditors
Non-audit fees:
- KPMG including local affiliates
102
- other auditors
28
300
Depreciation 8,975
Impairment loss on trade receivables 1,017
Impairment loss on investments
in subsidiaries
-
76
Company
22. PROFIT BEFORE TAX (CONTINUED)
2013
RM’000
Group
2012
RM’000
2013
RM’000
2012
RM’000
79
1,818
-
8
-
318
123
-
693
7
1,399
1,408
4,904
103
-
-
-
-
-
-
-
-
-
-
-
12,295
11,901
795
-
1
1,525
1
-
7
-
-
-
910
95
-
1,987
-
2,247
-
1,052
71
-
448
-
-
-
-
-
-
-
-
Profit before tax is arrived at
after charging (Continued)
324
Interest on borrowings 1,756
Loss on foreign exchange:
- unrealised
-
written off
20
Provision for sales returns
1,078
Rental of premises
1,651
Research and development expenditure
5,526
Bad debts written off
169
And after crediting:
Bad debts recovered
25
Dividend income from subsidiaries
(unquoted)
-
Gain on foreign exchange:
- realised
255
- unrealised
475
Gain on disposal of property, plant and
equipment
12
Gain on disposal of prepaid
interest in leased land 653
Interest income
1,042
Rental income
97
Reversal of impairment loss on trade
receivables
370
Reversal of writedown on inventoris
-
Reversal of provision for sales returns 1,167
Reversal of provision for onerous contracts 1,082
Reversal of impairment loss on
investment in associate
198
Company
23. KEY MANAGEMENT PERSONNEL COMPENSATION
The key management personnel compensations are as follows:
2013
RM’000
Group
2012
RM’000
2013
RM’000
Company
2012
RM’000
Directors:
- Fees
- Remunerations
369
2,010
351
2,091
361
69
336
59
2,379
2,442
430
395
77
23. KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)
The key management personnel compensations are as follows:
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
Other key management personnel:
- Short term employee benefits
261
251
-
-
2,640
2,693
430
395
Other key management personnel comprise persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.
The estimated monetary value of Directors’ benefit-in-kind is RM36,000 (2012: RM31,000).
24. TAX EXPENSE
Recognised in Profit or Loss
In Malaysia
Current tax expense- current year
Deferred tax expense
Origination and reversal of
temporary differences
Under provision in prior
years - current tax
Outside Malaysia
Current tax expense- current year
Deferred tax expense
Origination and reversal of
temporary differences
Under provision in prior
years - current tax
Total
78
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
5,850
5,417
1,593
2,967
(113)
343
-
-
(419)
420
(18)
168
213
425
-
-
(85)
(28)
-
-
(75)
3
-
-
5,371
6,580
1,575
3,135
Provision for taxation for companies incorporated in Malaysia is determined by applying the current Malaysian tax rate on
chargeable income. Taxation for other jurisdictions is calculated at the tax rates prevailing in the respective jurisdictions.
24. TAX EXPENSE (CONTINUED)
Reconciliation of Effective Tax Expense
Profit for the year
Total income tax expense
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
16,648
5,371
13,571
6,580
11,737
1,575
6,468
3,135
22,019
20,151
13,312
9,603
5,505
(182)
1,881
(1,137)
(202)
(494)
5,038
(174)
2,710
(616)
(801)
423
3,328
-
380
(2,115)
-
(18)
2,401
1,064
(498)
-
168
5,371
6,580
1,575
3,135
Profit excluding tax Income tax calculated using Malaysian
tax rate of 25% (2012: 25%)
Effect of tax rates in foreign jurisdictions Non-deductible expenses
Tax exempt income
Tax incentives
(Over)/Under provided in prior years
2012
RM’000
25. EARNINGS PER ORDINARY SHARE
Basic Earnings Per Ordinary Share
The calculation of basic earnings per ordinary share at 31 December 2013 was based on the profit attributable to ordinary
shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:
Profit attributable to ordinary shareholders
Profit attributable to ordinary shareholders
Weighted average number of ordinary shares
Group
2013
RM’000
2012
RM’000
16,191
13,628
Group
2013
’000
2012
’000
Weighted average number of ordinary shares at
31 December 133,043
133,043
Basic earnings per ordinary share (sen)
12.17
10.24
Diluted Earnings/(Loss) Per Ordinary Share
The calculation of diluted earnings/(loss) per ordinary share at 31 December 2013 was based on profit/(loss) attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding after adjustment for the effects of all
dilutive potential ordinary shares. As at 31 December 2013, the Company has yet to grant the options to the eligible Directors,
executives and employees under the new Employees Share Option Scheme (“ESOS”) approved by the shareholders at the
Extraordinary General Meeting held on 17 June 2013. Therefore, the ESOS has no dilutive effect to earnings per share as at
31 December 2013.
79
26. DIVIDENDS
Dividends recognised by the Company are:
Sen Per Share Total Amount
RM’000
Date of
Payment
2013
Final tax exempted 2012 ordinary
6.5
8,648
5 August 2013
2012
Final tax exempted 2011 ordinary
6.0
7,982
22 August 2012
At the forthcoming annual general meeting, a final single tier dividend of 6.5 sen per ordinary share totalling RM8,647,794
in respect of the year ended 31 December 2013 will be proposed for approval by the shareholders. The said dividend will
be recognised in subsequent financial period upon approval by the owners of the Company.
27. OPERATING SEGMENTS
The Group is organised based on three major operating segments as described below.
Operating Segments
Business Activities
Trading
Import, export and trading in various kinds of pharmaceutical products
Manufacturing
Manufacturing of pharmaceutical products
Investment holding
Investment holding
The basis of segmentation was based on information reported internally to the Managing Director of the Group.
Performance is measured based on segment profit before tax, depreciation and amortisation as included in the internal
management reports that are reviewed by the Group’s Managing Director. Segment profit is used to measure performance
as management believes that such information is the most relevant in evaluating the results of certain segments relative to
other entities that operate within these industries.
Segment Assets
The total of segment assets are measured based on all assets (including intangible assets) of a segment, as included in
the internal management reports that are reviewed by the Group’s Managing Director. Segment total assets are used to
measure the return of assets of each segment.
Segment Liabilities
The total of segment liabilities are measured based on all liabilities of a segment, as included in the internal management
reports that are reviewed by the Group’s Managing Director.
Segment Capital Expenditure
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and
intangible assets other than goodwill.
80
27. OPERATING SEGMENTS (CONTINUED)
Inter-Segment
Trading
Manufacturing
Investment Holding
Eliminations
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue
External
33,156
Inter-segment 267
29,515 157,647 151,071
428 12,005
9,097
24
12,401
24
-
- 190,827 180,610
12,051 (24,673) (21,576)
-
-
33,423 29,943 169,652 160,168
12,425
12,075 (24,673) (21,576) 190,827 180,610
Results
Profit from
operations 2,185
Interest income 72
2,088
53
19,330
538
19,987
204
10,825
2,009
(2,134)
2,265
(9,740)
(1,577)
1,118
(1,612)
22,600
1,042
21,059
910
(180)
(130)
(3,097)
(2,923)
(56)
(377)
1,577
1,612
(1,756)
(1,818)
-
-
-
-
-
-
133
-
133
-
Profit before tax 2,077
2,011
16,771
17,268
12,778
(246)
(9,607)
1,118
22,019
20,151
Income tax expense
(5,371)
(6,580)
Finance cost
Share of result
of associate
Net profit for the year 16,648 13,571
Other information
Segment
assets
37,244 34,724 258,906 253,789 172,324 172,175 (168,975)(164,977) 299,499 295,711
Consolidated
assets
37,244 34,724 258,906 253,789 172,324 172,175 (168,975)(164,977) 299,499 295,711
Segment
liabilities
14,812
Current tax
liabilities
238
Deferred taxation
-
Consolidated
liabilities
15,050
Capital expenditure
on property, plant
and equipment and
prepaid land lease
payments
387
Depreciation
459
Amortisation
10
Writedown on
inventories
78
Damaged goods
written off
27
12,801 101,980
99,175
16,608
1,189
7,974
-
-
13,070 110,543 108,338
16,608
500
(231)
640
7,923
19,297 (73,018) (67,230) 60,382 64,043
-
-
2
-
2
-
880
7,923
1,691
7,743
19,297 (73,016) (67,228)
69,185
73,477
300
400
23
4,419
8,516
216
28,070
7,554
195
-
-
-
-
-
-
-
-
-
-
-
-
4,806
8,975
226
28,370
7,954
218
42
246
37
-
-
-
-
324
79
11
273
591
-
-
-
-
300
602
81
27. OPERATING SEGMENTS (CONTINUED)
Geographical Segments
In presenting information on the basis of geographical segments, segment revenue is based on geographical location of
customers. Segment assets are based on the geographical location of the assets.
Revenue
Geographical Information
RM’000
Non-Current
Assets
RM’000
2013
Malaysia
Singapore
Philippines
Vietnam
Cambodia
Myanmar
Brunei
Other countries
151,243
18,547
4,951
6,118
2,690
1,372
1,539
4,367
97,742
4,170
1,252
13,355
1
4,021
190,827
120,541
2012
Malaysia
Singapore
Philippines
Vietnam
Cambodia
Myanmar
Brunei
Other countries
144,141
15,947
3,914
3,749
2,607
2,413
2,924
4,915
101,337
3,926
1,219
15,438
1
3,585
180,610
125,506
28. FINANCIAL INSTRUMENTS
28.1 Categories of Financial Instruments
The table below provides an analysis of financial instruments categorised as follows:
(a) Loans and receivables (L&R); and
(b) Financial liabilities measured at amortised cost (FL).
2013
2012
Carrying
amount
RM’000
L&R/
(FL)
RM’000
Carrying
amount
RM’000
L&R/
(FL)
RM’000
Trade and other receivables
Amount due from affiliated companies
Amount due from an associate
49,720
135
196
59,519
49,720
135
196
59,519
43,576
416
304
50,838
43,576
416
304
50,838
109,570
109,570
95,134
95,134
Financial assets
Group
82
28. FINANCIAL INSTRUMENTS (CONTINUED)
28.1 Categories of Financial Instruments (Continued)
2013
Carrying
amount
RM’000
Financial assets
Company
2012
L&R/
(FL)
RM’000
Carrying
amount
RM’000
L&R/
(FL)
RM’000
Other receivables
Amount due from subsidiaries
13
44,388
17,749
13
44,388
17,749
17
42,271
17,629
17
42,271
17,629
62,150
62,150
59,917
59,917
Amount due to affiliated companies
(22,374)
(4,247)
(27,092)
(5,359)
(22,374)
(4,247)
(27,092)
(5,359)
(17,320)
(2,897)
(33,953)
(7,392)
(17,320)
(2,897)
(33,953)
(7,392)
(59,072)
(59,072)
(61,562)
(61,562)
Other payables
Amount due to subsidiaries
(60)
(2,762)
-
(60)
(2,762)
-
(50)
(2,770)
(1,781)
(50)
(2,770)
(1,781)
(2,822)
(2,822)
(4,601)
(4,601)
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
Group
Company
28.2Net gains and Losses Arising from Financial Instruments
Group
Company
Net gains/(losses) arising on:
Loans and receivables
Financial liabilities measured
at amortised cost
2,589
883
3,514
1,555
(3,220)
(933)
(8)
(318)
(631)
(50)
3,506
1,237
83
28.3 Financial Risk Management
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
28.4 Credit Risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from
customers and deposits placed with licensed banks. The Company’s exposure to credit risk arises principally from
loans and advances to subsidiaries, deposits placed with licensed banks and financial guarantees given to banks for
credit facilities granted to subsidiaries.
Receivables
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The credit
risk is controlled by the application of credit approvals, limits and monitoring procedures.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables and deposits
placed with licensed banks is represented by the carrying amounts in the statement of financial position.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are
stated at their realisable values. A significant portion of these receivables are regular customers that have been
transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any
receivables having significant balances more than credit term granted, which are deemed to have higher credit risk,
are monitored individually.
The exposure of credit risk for receivables as at the end of the reporting period by geographic region was:
Company
Group
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
Malaysia
Singapore
Vietnam
Philippines
Others
43,133
3,601
1,950
401
635
38,376
3,226
736
492
746
13
-
-
-
-
17
-
-
-
-
49,720
43,576
13
17
84
28.4 Credit Risk (Continued)
Receivables (Continued)
Impairment losses
The ageing of trade receivables as at the end of the reporting period was:
Gross
Group
RM’000
2013
Not past due Past due 1 – 30 days
Past due 31 – 60 days
Past due more than 120 days
Individual
Impairment Net
RM’000
RM’000
36,433
6,342
2,403
1,118
323
2,725
25
37
10
50
45
1,528
36,408
6,305
2,393
1,068
278
1,197
2012
Not past due
Past due 1 - 30 days
Past due more than 120 days
49,344
1,695
47,649
32,470
6,519
1,608
714
254
1,477
2
-
5
20
11
1,181
32,468
6,519
1,603
694
243
296
43,042
1,219
41,823
The movements in the allowance for impairment losses of receivables during the financial year were:
2013
RM’000
Group
At 1 January
Impairment loss recognised
Impairment loss reversed
Impairment loss written off
1,219
1,017
(370)
(171)
1,519
865
(1,052)
(113)
At 31 December
1,695
1,219
2012
RM’000
85
28.4 Credit Risk (Continued)
Receivables (Continued)
During 2013, a significant individual impairment loss of RM966,000 (2012: RM594,000) relates to long overdue
debts.
The allowance account in respect of receivables is used to record impairment losses. Unless the Group is satisfied
that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable
directly.
Financial Guarantees
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain
subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by
the subsidiaries.
The maximum exposure to credit risk amounts to RM21,240,000 (2012: RM25,138,000) representing the
outstanding banking facilities of the subsidiaries as at the end of the reporting period.
As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
Inter Company Balances
The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the
subsidiaries regularly.
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts
in the statement of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries are not
recoverable. The Company does not specifically monitor the ageing of receivables from the subsidiaries.
28.5 Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group and the Company seek to achieve a balance between certainty of funding even in difficult times
for the markets and a flexible and 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 debts maturity is to
ensure that the amount of debts maturing in any one year is not beyond the Group’s and the Company’s means
to repay or refinance.
86
28.5 Liquidity Risk (Continued)
Maturity analysis
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end
of the reporting period based on undiscounted contractual payments:
Carrying
Amount
RM‘000
Contractual
Interest/
Profit Rate
%
Contractual
Cash Flows
RM’000
Under
1 Year
RM’000
21,592
5,359
5,500
22,374
2.60 - 5.20
3.02 – 4.40
4.24 - 4.75
-
25,812
5,642
5,564
22,374
9,345
3,321
5,564
22,374
7,555
2,287
-
-
8,912
34
-
4,247
-
4,247
4,247
-
-
59,072
63,639
44,851
9,842
8,946
-
-
60
2,762
60
2,762
-
-
-
2,822
2,822
2,822
-
-
1 - 5 More Than
Years
5 Years
RM’000
RM’000
Group
2013
companies
Company
2013
Other payables
Amounts due to subsidiaries
Group
2012
Secured bankers’ acceptances
companies
Company
60
2,762
25,973
7,392
6,500
1,480
17,320
2.60 - 5.20
3.02 - 6.09
4.33 - 4.74
3.74 - 4.07
-
31,004
7,895
6,747
1,480
17,320
10,406
3,519
6,747
1,480
17,320
10,557
4,316
-
-
-
10,041
60 -
-
2,897
-
2,897
2,897
-
-
61,562
67,343
42,369
14,873
10,101
2012
Other payables Amounts due to subsidiaries
1,781
50
2,770
5.12
-
-
1,789
50
2,770
1,789
50
2,770
-
-
-
-
-
4,601
4,609
4,609
-
-
87
28. FINANCIAL INSTRUMENTS (CONTINUED) 28.6 Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices
will affect the Group’s financial position or cash flows.
28.6.1 Currency Risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated
currencies other than the respective functional currencies of Group entities. The currencies giving rise to
this risk are primarily U.S. Dollar (USD), Singapore Dollar (SGD), Philippines PESO (PHP) and Vietnam Dong
(VND).
The Group’s and the Company’s policy is to minimise the exposure of overseas operating subsidiaries or
activities to currency risk by matching local currency income against local currency costs.
Exposure to foreign currency risk
The Group’s and the Company’s exposure to foreign currency (a currency which is other than the functional
currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:
Denominated In
USD
SGD
PHP
RM’000
RM’000
RM’000
Group
2013
Trade receivables
Trade payables
companies
Exposure in the statement
of financial position, net
5,941
635
(4,939)
(8,060)
3,491
6,778
(912)
-
268
2,070
-
-
1,273
3,483
-
(4,111)
-
-
(184)
-
-
-
(10,534)
9,173
2,338
4,756
3,426
2,810
(4,601)
(3,898)
3,179
7,735
(954)
-
292
1,361
-
-
(2,741)
-
-
(252)
-
-
-
(5,004)
9,708
1,653
652
Group
2012
Trade receivables
Trade payables
companies
Exposure in the statement
of financial position, net
88
VND
RM’000
316
336
-
-
28.6 Market Risk (Continued)
28.6.1 Currency Risk (Continued)
Company
Denominated in USD
2013
2012
RM’000
RM’000
Amounts due from subsidiaries
22,450
21,531
Exposure in the statement of financial position
22,450
21,531
Currency risk sensitivity analysis
A 5% (2012: 5%) strengthening of the Ringgit Malaysia (“RM”) against the following currencies at the end
of the reporting period would have increased/(decreased) equity and post-tax profit or loss by the amounts
shown below. This analysis assumes that all other variables, in particular interest rates, remained constant.
Equity
RM’000
2013
Profit or Loss
RM’000
Equity
RM’000
2012
Profit or Loss
RM’000
Group
USD
SGD
PHP
VND
395
(344)
(88)
(178)
395
(344)
(88)
(178)
188
(364)
(62)
(24)
188
(364)
(62)
(24)
Company
USD
(842)
(842)
(807)
(807)
A 5% (2012: 5%) weakening of the Ringgit Malaysia (“RM”) against the above currencies at the end of the
reporting period would have had equal but opposite effect on the above currencies to the amounts shown
above, on the basis that all other variables remained constant.
28.6.2 Interest Rate Risk
The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest
rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in
interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.
The Group’s and the Company’s policy is to borrow both floating rate and fixed rate debts. 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.
89
28.6 Market Risk (Continued)
28.6.2 Interest Rate Risk (Continued)
Exposure to interest rate risk
The interest rate profile of the Group’s and the Company’s significant interest-earning and interest-bearing
financial instruments, based on carrying amounts as at the end of the reporting period was:
Fixed rate instruments
Financial assets
Financial liabilities
37,879
(21,099)
16,780
Floating rate instruments
Financial liabilities
Company
Group
2013
RM’000
(11,351)
2012
RM’000
2013
RM’000
31,304
(27,811)
56,657
-
3,49356,657
(13,535)
-
2012
RM’000
53,613
(1,781)
51,832
-
Interest rate risk sensitivity analysis
(a) Fair value sensitivity analysis for fixed rate instruments
The Group and the company does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair
value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period
would not affect profit or loss.
(b) Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis point (“bp”) in interest rates at the end of the reporting period would have
increased/(decreased) equity and post-tax profit or loss by the amounts shown below. This analysis
assumes that all other variables, in particular foreign currency rates, remained constant.
Equity
Profit or Loss
100 BP
100 BP
increase
decrease
RM’000
RM’000
100 BP
increase
RM’000
100 BP
decrease
RM’000
2013
(85)
85
(85)
85
2012
(102)
102
(102)
102
Group
90
28.7 Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, short term receivables and payables and short-term borrowings
approximate their fair values due to the relatively short term nature of these financial instruments.
The Company provides corporate guarantee to banks for credit facility extended to subsidiaries. The fair value of
such corporate guarantee is not expected to be material as the probability of the subsidiaries defaulting on the credit
payment is remote.
The Group and the Company do not have any financial instruments carried at fair value. The fair values of other
financial assets and liabilities not carried at fair value, together with the carrying amounts shown in the statements
of financial position, are as follows:
Carrying
amount
RM’000
Group
Long term loans and borrowings
Long term finance lease liabilities
Company
-Non-current (13,073)
(2,239)
35,132
2013
2012
Fair
Carrying
value
amount
-Level 3
RM’000 RM’000 Fair
value
-Level 3
RM’000
(12,455)
(2,070)
(16,555)
(4,207)
(15,997)
(3,890)
33,615
31,068
29,381
Policy on transfer between levels
The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.
Level 1 fair value
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date.
Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly.
Transfers between Level 1 and 2 fair values
There has been no transfer between Level 1 and 2 fair values during the financial year. (2012: no transfer in either directions)
Level 3 fair value
Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
91
28.7 Fair Value of Financial Instruments (Continued)
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period.
For finance leases and bank borrowings the market rate of interest is determined by reference to similar
finance lease and borrowing agreements.
Interest rates used to determine fair value
The interest rates used to discount estimated cash flows are as follows:
Group
Company
2013
%
2012
%
2013
%
2012
%
Long term loans and
borrowings
Long term finance leases
-
-
4.51
4.51
5.24 - 6.00
4.00 - 4.39
5.24 - 6.00
4.00 - 4.39
-
-
-
29. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to maintain a strong capital base and safeguard the Group’s ability to
continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development
of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with
debt covenants and regulatory requirements.
The debt-to-equity ratios at 31 December 2013 and at 31 December 2012 were as follows:
2013
RM’000
Group
2012
RM’000
Total borrowings (Note 16 & 17)
32,451
41,345
Total equity
230,314
222,234
Debt-to-equity ratios
0.14
0.19
There were no changes in the Group’s approach to capital management during the financial year.
Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated
shareholders’ equity equal to or not less than the 25% of the issued and paid-up capital and such shareholders’ equity is
not less than RM40 million. The Company has complied with this requirement.
The Group is also required to maintain a maximum debt-to-equity ratio of 2.0 to comply with a bank covenant.
92
30. CAPITAL AND OTHER COMMITMENTS
3,001
-
1,131
234
1,233
-
67
62
Renovation
Authorised and contracted for 2012
RM’000
Capital expenditure commitments
Plant and Equipment
Authorised and contracted for Contracted but not provided for
Group
2013
RM’000
Buildings in progress
Authorised and contracted for 31. RELATED PARTIES
Identity of Related Parties
For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the
Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common
control or common significant influence. Related parties may be individuals or other entities.
Related parties also include key management personnel defined as those persons having authority and responsibility for
planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel
includes all the Directors of the Group, and certain members of senior management of the Group.
Significant related party transactions of the Group and the Company, other than key management personnel compensation
(see Note 23), are as follows:
Group
Company
2013
RM’000
2012
RM’000
2013
RM’000
2012
RM’000
11,708
-
125
13,164
(80)
151
-
-
-
-
-
Companies in which certain Directors
have interest:
Purchases of packaging materials
651
220
Sales of pharmaceutical products (2,113)
(3,771)
Rental paid
90
90
-
-
-
-
-
(24)
(24)
(24)
Subsidiaries:
Interest received
--
Management fee received
-
-
Dividend received
-
-
(1,556)
(106)
(13,862)
(1,595)
(150)
(11,901)
Corporations related to substantial
shareholder:
Purchases of pharmaceutical products
Sales of pharmaceutical products
Consultancy fees payable
Management fee received
(24)
Significant related party balances related to above transactions are disclosed in Note 7 and 12.
93
32. SUPPLEMENTARY FINANCIAL INFORMATION ON THE BREAKDOWN OF REALISED AND
UNREALISED PROFITS OR LOSSES
The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and unrealised
profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:
Group
Company
2013
RM’000
Restated
2012
RM’000
2013
RM’000
Realised
Unrealised
97,754
4,712
93,941
3,211
8,783
196
7,219
(1,329)
Total share of accumulated
losses of associate:
Realised
102,466
97,152
8,979
5,890
106
(26)
-
-
Total realised and unrealised
Less: Consolidated adjustments
102,572
(16,342)
97,126
(18,439)
8,979
-
5,890
-
Total retained earnings
86,230
78,687
8,979
5,890
94
2012
RM’000
The determination of realised and unrealised profits is based on the Guidance onSpecial Matter No.1, Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.
Statement by Directors
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on page 40 to 93 are drawn up in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to
give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and of their financial
performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 32 on page 94 to the financial statements has been compiled in
accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context
of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of
Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Kuala Lumpur,
Date: 26 March 2014
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Dato’ Dr. Lee Fang Hsin, the Director primarily responsible for the financial management of Y.S.P. Southeast Asia Holding
Berhad, do solemnly and sincerely declare that the financial statements set out on pages page 40 to 94 are, to the best of my
knowledge and belief, 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 above named in Kuala Lumpur on 26 March 2014.
Before Me:
Commissioner for Oaths
Kuala Lumpur
95
to the members of Y.S.P. Southeast Asia Holding Berhad
(Company No. 552781 - X)
(Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Y.S.P. Southeast Asia Holding Berhad, which comprise the statements of
financial position as at 31 December 2013 of the Group and of the Company, and the statements of profit or loss and other
comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a
summary of significant accounting policies and other explanatory information, as set out on pages 40 to 93.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of
the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the
entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as
of 31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965
in Malaysia.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Note 6 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements
are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group
and we have received satisfactory information and explanations required by us for those purposes.
(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174(3) of the Act.
96
INDEPENDENT AUDITORS’ REPORT (CONTINUED)
OTHER REPORTING RESPONSIBILITIES
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information
set out in Note 32 on page 94 to the financial statements has been compiled by the Company as required by the Bursa
Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards. We have
extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has
been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa
Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act,
1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
KPMG
Firm Number: AF 0758
Chartered Accountants
Chin Shoon Chong
Approval Number: 2823/04/15(J)
Chartered Accountant
Petaling Jaya,
Date: 26 March 2014
97
List of Properties
Title / Location
Description
Tenure
Land/Built-up Approximate
& Usage
Area
Age of
sq. metres
Building
Net Book
Value as at
31 December
2013
(RM’000)
Lot 3, 5 & 7, Jln P/7,
Three contiguous parcels of
99 years
Section 13 Kawasan
industrial land with purpose
leasehold, all
Perindustrian Bandar Baru built industrial buildings for
expiring on
Bangi, 43000 Kajang
own use consisting of:
29.09.2086
Held under :
(i) 4-storey office/
- H.S.(M) 9635 for P.T.
laboratory building
11466, Seksyen 13;
(ii) 4-storey production/
- H.S.(M) 9636 for
laboratory/
P.T.11467 Seksyen 13;
warehouse building
27,231
0.4047 hectare 21 years
each, totalling
1.2141 hectare
or 2.861 acres
Land - 11,580
(or 124,646
square feet)
- H.S.(M) 9637 for
(iii) 2-storey raw
P.T. 11468 Seksyen 13
materials/packaging
all in the Mukim of
building
Kajang, District of Hulu
(iv) 1-storey maintenance/
Langat State of Selangor
Tenaga Nasional Berhad
sub-station building
(v) 5-storey canteen/
warehouse/packing area
(vi) water treatment plant
(vii) guard house
Gross Build Up
areas - 22,982.62
No.18 & 20 Jalan Wan
Intermediate 3-storey terrace
Freehold
Kadir, Tmn Tun Dr. Ismail, shop-office for own use
60000 Kuala Lumpur.
Held under Geran :
23507 for Lot No. 50965,
23508 for Lot No. 50966
in Mukim Kuala Lumpur,
District of Wilayah
Persekutuan State of
Wilayah Persekutuan
Land - 327
No. 2A & 8, Jalan 9/9M, 4 units of double storey
99 years
No. 12 & 12A, Jalan 9/9L, terrace house for own use
leasehold
Seksyen 9, Fasa 1,
Bandar Baru Bangi,
Selangor Darul Ehsan.
Held under:
H.S. (D) 81710 for P.T.
55601, Seksyen 9
H.S. (D) 81711 for P.T.
55602, Seksyen 9
H.S. (D) 81741 for P.T.
55632, Seksyen 9
H.S. (D) 81743 for P.T.
55634, Seksyen 9, all
in the Mukim of Kajang,
District of Hulu Langat,
State of Selangor.
98
25 years
5,886
8 years
1,209
Build Up
- 915.656
Land - 143 per unit
Build up 178.189
per unit
List of Properties
LIST OF PROPERTIES (CONTINUED)
Title / Location
Description
Tenure
& Usage
Area
Age of
sq. metres
Building
Net Book
Value as at
31 December
2013
(RM’000)
Lot 1, Jalan 9/8, Lot 2, 4, Five contiguous parcels of
99 years
6 & 8, Jalan 9/7, Taman industrial lands with purpose
leasehold,
IKS, Section 9, Bandar built industrial buildings for
all expiring in
Baru Bangi, 43650 Kajang.own use consisting of:
year 2103
Held under:
(i) 2-storey warehouse
H.S. (D) 87699 for
building PKNS industrial
P.T. 56932 Seksyen 9,
land for factory build on
H.S. (D) 87693 for P.T.
Lot 1 & 2 Section 9,
56926 Seksyen 9,
Bandar Baru Bangi.
H.S. (D) 87694 for
(ii) Lot 4, 6 & 8
P.T. 56927 Seksyen 9 and
- vacant land
H.S. (D) 87695 for
P.T. 56928,
P.T. H.S. (D) 87696 for
No 56929 Seksyen 9,
all in the Mukim of Kajang,
District of Hulu Langat,
State of Selangor
Land - 4.03 acres/ 13,939
square meters
(5 units)
Build up 238,535
9 years
14,405
Lot no 3, Jalan 9/8, - vacant land Taman IKS, Section 9,
Bandar Baru Bangi,
43650 Kajang.
Held under:
- H.S. (D) 87700 for
P.T. 56933, Seksyen 9,
Bandar Baru Bangi,
Daerah Hulu Langat,
Selangor.
2,723.5 NA 1,638
99 years
leasehold,
all expiring
in 2103
99
Title / Location
Description
Tenure
& Usage
Area
Age of
sq. metres
Building
Net Book
Value as at
31 December
2013
(RM’000)
Lot 12, Jln P/7, 3-storey factory
99 years
Section 13 Kawasan annexed with 4½
leasehold,
Perusahaan Bangi,
storey office block
expiring on
43650 Bandar Baru Bangi, 29.09.2086
Selangor Darul Ehsan.
Held under :-
- H.S.(M) 9632 No. PT
11463, Seksyen 13, New
Lot no. 27274
14,073
Lot 14, Jln P/7, 2½ storey Section 13 Kawasan factory building
Perusahaan Bangi, 43650
Bandar Baru Bangi, Selangor Darul Ehsan.
Held under :-
- H.S.(M) 9633 No.
PT 11464, Seksyen 13,
New Lot no. 27275
Land - 4,024
square meters
26 years
Gross floor
area 5,336.00
square meters
Land - 8,291
square meter
Gross floor
area 9,568.00
square meters
all within the Mukim of Kajang, District of Hulu Langat, State of Selangor.
Flatted factory for own use
No.10, Ubi Crescent
# 06-57, Singapore
408564
60 years
leasehold,
expiring on
04.07.2057
209
11 years
1,433
No.10, Ubi Cresent
Flatted factory for own use
# 06-58, Singapore
408564
60 years
leasehold,
expiring on
04.07.2057
216
11 years
1,480
No.8, Kaki Bukit Road 2, #02-26, Ruby Warehouse
Complex, Singapore 417841 60 years
leasehold,
expiring on
06.12.2041
139
28 years
606
100
2nd storey flatted
warehouse within a 4-storey industries
development. Let out.
List of Properties
Title / Location
Description
Tenure
& Usage
Area
Age of
sq. metres
Building
Net Book
Value as at
31 December
2013
(RM’000)
Nhon Trach 3 Industry
Industrial land with
Zone-Phase 2, Dong
a factory
Nai Province
So:112/HDTD.NT3 Land Used Right
Certificate:
So AO 950020 46 years
leasehold,
expiring on
31.12.2053
39,210
3 year
10,867
Unit 3-B LPL Plaza
Condominium Unit for own use Freehold
Condominium Building,
No.124 L.P Leviste Street,
Salcedo Village,Makati City
152
29 years
224
4th Floor Cacho
Gonzales, Building 101
Aguirre St. Corner
Trasierra St. Legaspi
Village, Makati.
Office and warehouse use
Freehold
480
37 years
759
Propinsi Jawa Barat, Kabupaten Bekasi, Kecamatan Cikarang Selatan, Desa Cibatu, Delta Silicon, Lippo
Cikarang at the address
known as Jalan Kapuk,
Blok F20 nomor 016F &
016G.
Industrial land with 2-storey office building and single
storey production building for own use.
Land rights ownership expiring
in year 2027
Land area :
3,134
Building area :
2,000
1 year
3,106
101
As at 5 May 2014
Authorized Capital
: RM250,000,000 divided into 250,000,000 ordinary shares of RM1.00 each
Issued and Paid-Up Capital : RM133,042,985 divided into 133,042,985 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
Voting Rights
: One vote per ordinary share
DISTRIBUTION OF SHAREHOLDINGS
As at 5 May 2014
Size of Holdings
No. of Shareholders
Total Holdings
%
Less than 100 shares
100 – 1,000 shares
1,001 – 10,000 shares
10,001 – 100,000 shares
100,001 – below 5% of issued shares
5% and above of issued shares
337
228
1,152
486
72
2
6,776
118,943
5,221,972
14,656,264
45,149,743
67,889,287
0.00
0.09
3.92
11.02
33.94
51.03
TOTAL
2,277
133,042,985
100.00
SUBSTANTIAL SHAREHOLDERS
As at 5 May 2014
No. Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
102
YSP International Company Limited
Lembaga Tabung Haji
Dr. Lee Fang-Yu
Dr. Lee Fang-Chuan @ Lee Fang-Chen
Dr. Lee Fang-Jen
Madam Lee Ling-Chin
Lee Ling-Fen
Lee-Chang Yu-Ying
Yung Shin Pharmaceutical Industries Co. Ltd.
Yung Shin Global Holding Corporation
Direct Interest Shares
%
52,365,605
15,523,682
11,414,209
1,447,952
1,762,097
1,213,970
1,520,394
519,545
-
-
-
39.36
11.67
8.58
1.09
1.32
0.91
1.14
0.39
-
-
-
Deemed Interest
Shares
%
-
-
52,695,370 (a)
52,365,605 (b)
52,365,605 (b)
52,365,605 (b)
52,365,605 (b)
52,365,605 (b)
69,833,772 (c)
52,365,605 (d)
52,365,605 (e)
39.61
39.36
39.36
39.36
39.36
39.36
52.49
39.36
39.36
SHAREHOLDING STATISTICS (CONTINUED)
DIRECTORS’ SHAREHOLDINGS
As at 5 May 2014
No. Name
1.
2.
3.
4.
5.
6.
7.
Dr. Lee Fang-Chuan @ Lee Fang-Chen
Madam Lee Ling-Chin
Datuk Koay Soon Eng
Tu Shu Yao
Adi Azuan Bin Abdul Ghani
Direct Interest Shares
%
1,187,000
11, 414,209
1,762,097
1,520,394
657,000
282,300
-
0.89
8.58
1.32
1.14
0.49
0.21
-
Deemed Interest
Shares
%
-
52,695,370 (a)
52,365,605 (b)
52,365,605 (b)
-
434,000 (f)
-
39.61
39.36
39.36
0.33
-
NOTES
(a) Deemed interested by virtue of his interest in Yung Shin Global Holding Corporation and his spouse’s interest in the
Company pursuant to Section 6A of the Companies Act, 1965.
(b) Deemed interested by virtue of his/her interest in Yung Shin Global Holding Corporation.
(c) Deemed interested by virtue of her family members’ direct shareholding in Y.S.P.SAH and by virtue of her family
members’ shareholding of more than 15% in Yung Shin Global Holding Corporation.
(d) Deemed interested by virtue of Section 6A of the Companies Act 1965, through its 100% interest in YSP International
Company Limited.
(e) Deemed interested by virtue of Section 6A of the Companies Act 1965, through its 100% interest in Yung Shin
Pharmaceutical Industries Co. Ltd.
(f) Deemed interested by virtue of his spouse’s interest in the Company pursuant to Section 6A of the Companies
Act 1965.
103
SHAREHOLDING STATISTICS (CONTINUED)
THIRTY (30) LARGEST SHAREHOLDERS
As at 5 May 2014
No.
Names
No. of Shares Held
%
1
YSP INTERNATIONAL COMPANY LIMITED
52,365,605
39.36
2
LEMBAGA TABUNG HAJI
15,523,682
11.67
3
DATO’ DR. LEE FANG HSIN
6,320,596
4.75
4
DATO’ DR. LEE FANG HSIN
5,093,613
3.83
5
YAN CHEOK WING
2,323,000
1.75
6
AMBANK (M) BERHAD - PLEDGED SECURITIES ACCOUNT
FOR TAN KONG HAN 2,275,448
1.71
7
DR. LEE FANG-CHUAN @ LEE FANG-CHEN
1,762,097
1.32
8
LEE LING-CHIN
1,520,394
1.14
9
LAI, CHEN-CHUN
1,464,700
1.10
10
DR. LEE, FANG-YU
1,447,952
1.09
11
DR. LEE, FANG-JEN
1,213,970
0.91
12
DATUK DR. ANIS BIN AHMAD
1,187,000
0.89
13
LIAO, MIAO-YI
1,128,600
0.85
14
PUBLIC NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES
ACCOUNT FOR TAN KONG HAN
1,066,600
0.80
15
SIVA KUMAR A/L M JEYAPALAN
941,500
0.71
16
RHB NOMINEES (ASING) SDN BERHAD -
TIEN TE LEE BIOMEDICAL FOUNDATION
892,262
0.67
17
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR CHEN KOOK HUI
806,900
0.61
18
DATUK KOAY SOON ENG
657,000
0.49
19
LIN, MENG-BE
640,153
0.48
20
CHEAH YEE LIN
597,346
0.45
21
PUBLIC NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES
ACCOUNT FOR CHEE SAI MUN 563,800
0.42
22
RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES
ACCOUNT FOR WONG AH CHIEW
552,200
0.42
23
LEE, LING-FEN
519,545
0.39
24
YAP YEN MEE
487,000
0.37
25
HLB NOMINEES (TEMPATAN) SDN BHD - PLEDGED SECURITIES
ACCOUNT FOR CHEE SAI MUN
443,100
0.33
26
CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB BANK FOR CHEAH SENG CHYE
436,000
0.33
27
TING CHIN LIU
434,000
0.33
28
CHIANG HUNG-WEN
426,931
0.32
29
WONG LOK JEE @ ONG LOK JEE
413,000
0.31
30
LI, YU-LIN
406,601
0.31
104
NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting of the Company will be held at the Unity Hall and
Stateroom, Lower Ground Floor, Palace of the Golden Horses, Jalan Kuda Emas, Mines Resort City, 43300 Seri Kembangan,
Selangor on Monday, 23 June 2014 at 9.30 a.m. for the following purposes:AGENDA
AS ORDINARY BUSINESS
1. To receive the Audited Financial Statements of the Company and its Group for the
financial year ended 31 December 2013 and the Reports of the Directors and the
Auditors thereon. (Please refer to Note 1)
2. To approve the payment of Directors’ Fees for the financial year ended 31st December
2013.
(ORDINARY RESOLUTION 1)
3. To approve a first and final single tier dividend of 6.5 sen per ordinary share of RM1.00
each for the financial year ended 31 December 2013.
4. To re-elect the following Directors retiring in accordance with Article 85 of the
Company’s Articles of Association:
(i) Datuk Koay Soon Eng
(ii) Tu Shu Yao
5. To re-appoint Messrs KPMG 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:6. RETENTION OF INDEPENDENT DIRECTORS
(i) “That Datuk Dr. Anis Bin Ahmad be and is hereby retained as Independent
Non-Executive Director pursuant to the Malaysian Code on Corporate
Governance 2012.”
(ii) “That subject to the passing of Ordinary Resolution 3, Datuk Koay Soon Eng
be and is hereby retained as Independent Non-Executive Director pursuant to
the Malaysian Code on Corporate Governance 2012.”
(iii) “That subject to the passing of Ordinary Resolution 4, Tu Shu Yao be and is
hereby retained as Independent Non-Executive Director pursuant to the Malaysian
Code on Corporate Governance 2012.”
105
NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)
7. 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 and
not limited to additional 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.”
8. PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY
TRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT 1 TO RRPT
8 AND RRPT 10
PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY
TRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT 9
PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY
TRANSACTIONS OF A REVENUE OR TRADING NATURE FOR RRPT 11
“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 1.4(ii) of the Circular to Shareholders dated 30 May 2014 (“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 parties 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.
106
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.”
9. 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)
KONG MEI KEE (MAICSA 7039391)
Company Secretaries
Dated this 30th day of May 2014
Kuala Lumpur
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS ALSO HEREBY GIVEN that a first and final single tier dividend of 6.5 sen per ordinary share of RM1.00 each for the
financial year ended 31 December 2013, subject to members’ approval, will be paid on 15 August 2014 to depositors registered
in the Record of Depositors at the close of business on 18 July 2014.
A depositor shall qualify for the entitlement only in respect of:-
(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 18 July 2014 in respect of ordinary transfer;
(b) Shares bought on the Exchange on a cum entitlement basis according to the Rules of the Exchange.
NOTES
1.
Agenda No. 1 is meant for discussion only as the Company’s Articles of Association provides that the audited financial statements
are to be laid in the general meeting.
2.
For the purpose of determining a member who shall be entitled to attend, speak and vote at the Annual General Meeting. The
Company shall be requesting the Record of Depositors as at 17 June 2014. Only a depositor whose name appears on the Record
of Depositors as at 17 June 2014 shall be entitled to attend the said meeting or appoint proxies to attend, speak and vote on his/
her stead.
3. A member entitled to attend, speak and vote at the meeting is entitled to appoint up to two (2) proxies to attend, speak and vote
in his/her stead. A proxy needs not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act,
1965 shall not apply to the Company.
4. Where a member appoints two (2) proxies 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.
5. (i) 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.
(ii) Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple
beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the
exempt authorized nominee may appoint in respect of each omnibus account it holds.
6. 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.
7.
The instrument appointing a proxy must be deposited at the Company Secretary’s office at Level 15-2, Bangunan 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.
107
8.
Explanatory Notes on Special Business
8.1 The proposed Ordinary Resolutions 6 to 8 if passed, will allow the directors namely, Datuk Dr. Anis Bin Ahmad, Datuk Koay
Soon Eng and Tu Shu Yao who have served for more than 9 consecutive years, to continue to act as Independent NonExecutive Directors of the Company for:-
•They uphold integrity and are able to function as check and balance, provide a broader view and bring an element of
objectivity to the Board.
•Their vast experiences in their respective fields enable them to provide the Board with a diverse set of experiences,
expertise and independent judgments.
•They have performed their duties diligently and in the best interest of the Company and provide a broader view,
independent and balanced assessment of proposals from the management.
•They uphold independent decision and challenge the management objectively.
8.2 The proposed Ordinary Resolution 9 is to give mandate to the Board of Directors of the Company the flexibility to issue and
allot new shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for
the time being for such purposes as the Directors consider would be in the interest of the Company. This authority, unless
revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.
The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/ diversification
proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would
have to convene a general meeting to approve the issue of new shares even though the number involved may be less than
10% of the issued capital.
In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus
considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding
in total 10% of the issued share capital of the Company for the time being, for such purposes. The renewed authority for
allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future
investment, working capital and/ or acquisitions.
No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last
Annual General Meeting on 17 June 2013.
8.3The proposed Ordinary Resolutions 10 to 12, if passed will mandate the Company to enter into the categories of recurrent
transactions of a revenue or trading nature with those related parties specified in Section 1.4(ii) of the Circular to Shareholders
dated 30 May 2014.
108
Form of Proxy
(Before completing this form please refer to the notes below)
No. of Ordinary Shares Held
I/We, (Full name in block letters)
of (Full address)
being a member/members of Y.S.P. SOUTHEAST ASIA HOLDING BERHAD hereby appoint the following person(s):
Name of proxy, NRIC No. & Address
No. of shares to be
represented by proxy
1.
2.
or failing him/her, the Chairman of the Meeting as *my/our proxy/proxies to attend, speak and vote for *me/us and on my/our behalf
at the Thirteenth Annual General Meeting of the Company to be held at the Unity Hall and Stateroom, Lower Ground Floor, Palace
of the Golden Horses, Jalan Kuda Emas, Mines Resort City, 43300 Seri Kembangan, Selangor on Monday, 23 June 2014 at 9.30 a.m.
and at every adjournment thereof to vote as indicated below:
FIRST PROXY
ORDINARY RESOLUTIONS FOR
1
To approve the payment of Directors’ Fees for year 2013
2
To approve first and final single tier dividend of 6.5 sen per
ordinary share of RM1.00 each
3
To re-elect the director, Datuk Koay Soon Eng
4
To re-elect the director, Tu Shu Yao
5
To re-appoint the retiring auditors, Messrs KPMG
6
Retention of independent director, Datuk Dr. Anis Bin Ahmad
7
Retention of independent director, Datuk Koay Soon Eng
8
Retention of independent director, Tu Shu Yao
9
Authority to Issue Shares
10
Proposed Shareholders’ Mandate for RRPT 1 to RRPT 8 and
RRPT 10
11
Proposed Shareholders’ Mandate for RRPT 9
12
Proposed Shareholders’ Mandate for RRPT 11
AGAINST
SECOND PROXY
FOR
AGAINST
(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.
As witness my hand this
day of
2014
Signature / Common Seal
*Strike out whichever is not desired.
NOTES:
1. For the purpose of determining a member who shall be entitled to attend, speak and vote at the Annual General Meeting. The Company shall be requesting the
Record of Depositors as at 17 June 2014. Only a depositor whose name appears on the Record of Depositors as at 17 June 2014 shall be entitled to attend the said
meeting or appoint proxies to attend, speak and vote on his/her stead.
2. A member entitled to attend, speak and vote at the meeting is entitled to appoint up to two (2) proxies to attend, speak and vote in his/her stead. A proxy needs not
be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
3. Where a member appoints two (2) proxies 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. (i)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.
(ii) Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.
5. 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.
6. The instrument appointing a proxy must be deposited at the Company Secretary’s office at Level 15-2, Bangunan 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.
fold here for sealing
Affix
stamp
here
The Company Secretary
Y.S.P. SOUTHEAST ASIA HOLDING BHD (552781 X)
Level 15-2, Bangunan Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
fold here
Y.S.P. SOUTHEAST ASIA HOLDING BERHAD 552781-X
Level 22, Menara LGB, No. 1, Jalan Wan Kadir,
Taman Tun Dr. Ismail, 60000 Kuala Lumpur
Tel: 03 7727 6390
Fax: 03 7727 6701
Email: [email protected]
www.yspsah.com

Year 2013 - YSP Industries (M) Sdn. Bhd.

Transcription

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