YEO's_AR (corporate).indd - I3investor

Yeo Hiap Seng (Malaysia) Berhad(Co. No. 3405-X)

Incorporated in Malaysia

annual report 2005

the who l e s ome g o odne s s

financial highlights of the group 2

five-year summary 2

corporate information 4

directors’ profile 5

chairman’s statement 10

penyata pengerusi 12

events of the year 14

statement on corporate governance 16

statement on internal control 25

audit committee report 27

statement on directors’ responsibilities 30

financial statements 32

group property particulars 75

analysis of shareholdings 77

notice of annual general meeting 80

statement accompanying notice

of thirty-second annual general meeting 84

proxy form

contents

1 annual report ’05

directors’ profile

trusted choice,natural goodness

financial highlights of the group

Yeo Hiap Seng (Malaysia) Berhad 2

2005 2004 RM’000 RM’000 Results of operationSales 438,226 373,244Pre-tax profit 16,116 17,378After-tax profit 12,507 11,453

Financial PositionWorking capital 157,012 160,826Net tangible assets 293,632 295,064Total tangible assets 399,598 365,485Paid-up capital 128,096 128,096 Shareholders’ equity 314,129 316,870

DividendsInterim 6,404 6,404 Final (Proposed) 8,301 8,301Cover (Times) 0.85 0.78

Per shareNet tangible assets (in RM) 2.29 2.30 Earnings before tax (in sen) 12.58 13.57Earnings after tax (in sen) 9.76 8.94 Dividend - Interim (net - in sen) 5.00 * 5.00 * - Final (net - in sen) 6.48 6.48

* Tax exempt dividend.

2001 2002 2003 2004 2005 RM’000 RM’000 RM’000 RM’000 RM’000 Group Sales 466,188 446,196 408,629 373,244 438,226 After-Tax Profit 16,257 14,108 18,099 11,453 12,507Net Tangible Assets 279,416 287,648 295,100 295,064 293,632Total Dividends * 11,093 10,171 12,912 14,705 14,705

* Includes proposed dividend.

five-year summary

five-year summary (cont’d)


financial calendar

‘058 June 1 September 31 December 2004 Final 2005 Interim Financial Dividend Paid Dividend Paid Year-End

‘0621 February 3 April 25 April 9 June Announcement Despatch of Annual General 2005 Final of Year-End Annual Report Meeting DividendResults Payment Date

‘01

279,416

‘02

287,648

‘03

295,100

‘04

295,064

‘05

293,632

Net Tangible Assets (RM’000)

‘01

466,188

‘02

446,196

‘03

408,629

‘04

373,244

‘05

438,226

Group Sales (RM’000)

‘01

11,093

‘02

10,171

‘03

12,912

‘04

14,705

‘05

14,705

Total Dividends (RM’000)

‘01

16,257

‘02

14,108

‘03

18,099

‘04

11,453

‘05

12,507

After-Tax Profit (RM’000)

4

Directors

Philip Ng Chee Tat (Chairman)Tjong Yik Min (Deputy Chairman)Ow Tin Nyap (Managing Director & Chief Executive Officer)Brigadier General (R) Dato’ Yahya bin YusofDato’ Mohamed Nizam bin Abdul RazakDato’ N. Sadasivan A/L N.N. PillayRazman Hafidz bin Abu ZarimPearl Foong Lye Fong

Audit Committee

Dato’ Mohamed Nizam bin Abdul Razak (Chairman)Brigadier General (R) Dato’ Yahya bin Yusof Dato’ N. Sadasivan A/L N.N. PillayRazman Hafidz bin Abu ZarimPearl Foong Lye Fong

Remuneration Committee

Brigadier General (R) Dato’ Yahya bin Yusof (Chairman) Dato’ Mohamed Nizam bin Abdul Razak Tjong Yik Min

Nomination Committee

Dato’ N. Sadasivan A/L N.N. Pillay (Chairman)Brigadier General (R) Dato’ Yahya bin Yusof Razman Hafidz bin Abu ZarimTjong Yik Min

Investment Committee

Dato’ Mohamed Nizam bin Abdul Razak (Chairman)Dato’ N. Sadasivan A/L N.N. PillayRazman Hafidz bin Abu ZarimTjong Yik Min

Company Secretary

Sau Ean Nee

4

Auditors

PricewaterhouseCoopers

Bankers

Citibank BerhadStandard Chartered Bank Malaysia BerhadMalayan Banking Berhad

Solicitors

Raja, Darryl & Loh

Registrars

PFA Registration Services Sdn BhdLevel 13, Uptown 1, No.1, Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan

Registered Office

7, Jalan Tandang,46050 Petaling Jaya,Selangor Darul EhsanTel : (603) 7787 3888Fax : (603) 7781 3509 (603) 7781 4242Email : [email protected] : www.yeos.com

Stock Exchange Listing

Main Board of the Bursa MalaysiaSecurities Berhad

corporate information

Yeo Hiap Seng (Malaysia) Berhad

Mr Philip Ng Chee TatChairmanNon-Independent / Non-ExecutiveAge: 47 years

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

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

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

Mr Ng attended 6 out of the 6 Board meetings held in the year.

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

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

Mr Tjong Yik MinDeputy ChairmanNon-Independent / Non-ExecutiveAge: 53 years

Mr Tjong Yik Min is a Singaporean and he was appointed to the Board on 22 July 2002 and as Deputy Chairman on 23 January 2003.

He holds a Bachelor of Engineering (Hons) (Class 1) (Industrial Engineering) degree from the University of Newcastle, Australia, a Bachelor of Commerce (Economics) degree from the University of Newcastle, Australia and a Masters in Science (Industrial Engineering) degree from the University of Singapore.

Mr Tjong currently holds the position of President and Chief Operating Officer of Yeo Hiap Seng Limited, Singapore. Prior to this, he was the Executive Director and Group President of Singapore Press Holdings. Mr Tjong has also served in various capacities in the Singapore Civil Service.

Mr Tjong sits on the Remuneration, Nomination and Investment Committees.

Mr Tjong attended 6 out of the 6 Board meetings held in the year.

He has no family relationship with any other directors/major shareholders of the Company and has no conflict of interest with the Company.

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


directors’ profile

Dato’ Mohamed Nizam bin Abdul RazakDirectorIndependent / Non-ExecutiveAge: 47 years

Dato’ Mohamed Nizam bin Abdul Razak is a Malaysian and he was appointed to the Board on 5 November 2002.

He graduated with a Bachelor of Arts (Oxon) degree in Politics, Philosophy and Economics from the Oxford University, United Kingdom.

Dato’ Nizam was attached to Bumiputra Merchant Bankers Berhad from 1981 to 1984 and to PB Securities Sdn Bhd from 1984 to 1998. He presently sits on the board of Mamee-Double Decker (M) Berhad, Delloyd Ventures Berhad, Hiap Teck Venture Berhad, Kamdar Group (M) Berhad and Deutsche Bank (M) Berhad. He also serves on the board of several private limited companies engaged in a wide range of activities and is actively involved in several charitable foundations.

Dato’ Nizam is the Chairman of the Audit and Investment Committees and a member of the Remuneration Committee.

Dato’ Nizam attended 6 out of the 6 Board meetings held in the year.



Ow Tin NyapManaging Director and Chief Executive Officer Non-Independent / ExecutiveAge: 52 years

Mr Ow Tin Nyap is a Malaysian and he was appointed to the Board as Managing Director and Chief Executive Officer on 1 June 2005.

Mr Ow holds the Malaysian Certificate of Education. In an illustrious and sterling career spanning 32 years, Mr Ow brings with him strategic broad-based experience and many years of international exposure in the areas of business re-engineering, mergers and acquisitions, sales and marketing, logistics and manufacturing. Mr Ow’s extensive knowledge and experience stems from starting at rank and file positions to various senior management appointments in fast-moving consumer goods (FMCG) market.

Prior to this appointment, he has spent 7 years with the Danone Group; working to grow Danone’s ASEAN portfolio and strategic market leadership. Mr Ow spent the last 5 years in Indonesia as Chairman of Danone Group Indonesia and President Director of Danone Group of Companies in the ASEAN Region for Water/Beverages, Dairy and Biscuits in 2004. Mr Ow has also previously held senior management positions in Sara Lee Asia and Boustead Holdings Berhad.

Mr Ow attended 3 out of the 3 Board meetings held since his appointment.



6Yeo Hiap Seng (Malaysia) Berhad

directors’ profile (cont’d)

annual report ’057

Dato’ N. Sadasivan A/L N.N. PillayDirectorIndependent / Non-ExecutiveAge: 66 years

Dato’ N. Sadasivan is a Malaysian and he was appointed to the Board on 13 August 2004.

Dato’ N. Sadasivan, graduated with a Bachelor of Arts (Hons) in Economics from the University of Malaya in 1963. He began his career as an Economist with the Economic Development Board, Singapore in 1963 and was subsequently promoted to the position of Chief of the Industrial Facilities Division in 1965.

In 1968, he joined the Malaysian Industrial Development Authority (MIDA) and served as the Deputy Director General from 1976 to 1983. From 1984 until his retirement in 1995, he was the Director-General of MIDA.

He presently sits on the board of several private and public listed companies namely Chemical Company of Malaysia Berhad, Petronas Gas Berhad, APM Automotive Holdings Berhad, Leader Universal Holdings Berhad, Malaysian Airline System Berhad and Malaysian Industrial Development Finance Berhad. He is also a director of Bank Negara Malaysia.

Dato’ N. Sadasivan is the Chairman of the Nomination Committee and a member of the Audit and Investment Committees.

Dato’ N. Sadasivan attended 5 out of the 6 Board meetings held in the year.




Brigadier General (R) Dato’ Yahya bin YusofDirectorIndependent / Non-ExecutiveAge: 70 years

Brigadier General (R) Dato’ Yahya bin Yusof is a Malaysian and he was appointed to the Board on 22 August 1991.

He graduated from Royal Military Academy Sandhurst, United Kingdom; Defence Services Staff College, Wellington, India; Joints Services Staff College, Canberra, Australia and Senior International Defence Management Course at USS Navy Post Graduate College, USA Montery, California.

BG Dato’ Yahya joined the army in 1955 and during his 36 years in service he held many appointments in the military, police and civilian positions. He served as the Defence Services Military Attaché in the Philippines from 1972 to 1974. His last position before retirement was as Commander of 11th Brigade in Kuala Lumpur.

He is the Chairman of the Remuneration Committee and a member of the Audit and Nomination Committees.

BG Dato’ Yahya attended 6 out of the 6 Board meetings held in the year.



Encik Razman Hafidz bin Abu ZarimDirectorIndependent / Non-ExecutiveAge: 50 years

Encik Razman Hafidz bin Abu Zarim is a Malaysian and he was appointed to the Board on 1 March 2005.

Encik Razman Hafidz graduated with a Joint-Honours degree in Economics and Accounting, BS (Econ), from University College, Cardiff, University of Wales. He is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Accountants.

He started his career with Touche Ross & Co., Chartered Accountants, London, England and later joined Hacker Young, Chartered Accountants, London, England, where he was admitted as an Audit Partner.

In 1989, he returned to Malaysia as an Audit Partner of Price Waterhouse (“PW”) and later Partner-in-Charge of PW’s Management Consulting Practice and became an Executive Committee member. In 1994, he established Norush Sdn Bhd, an investing and business advisory firm, where he remains as Chairman.

He sits on the board of Courts Mammoth Berhad, Toyochem Corporation Berhad, eBworx Berhad, Mithril Berhad, JP Morgan Chase Bank Berhad, Malaysian Oxygen Berhad and Panasonic Manufacturing Malaysia Berhad (formerly known as Matsushita Electric Company (Malaysia) Berhad). He also holds directorships in several other private limited companies. He was the Chief Executive Officer of Malaysian Assurance Alliance Bhd from May 2000 until June 2002.

Encik Razman Hafidz is a member of the Audit, Nomination and Investment Committees.

Encik Razman attended 4 out of the 4 Board meetings held since his appointment.



Ms Pearl Foong Lye FongDirectorNon-Independent / Non-ExecutiveAge: 40 years

Ms Pearl Foong Lye Fong is a Singaporean and was appointed to the Board on 26 July 2005.

She graduated from National University of Singapore in 1989 with a Bachelor of Accountancy Degree and is a Certified Public Accountant in Singapore.

She started her career with Price Waterhouse, Singapore, and was with the Assurance/Business Advisory Services department for 10 years. In 2000, she joined Tuan Sing Holdings Limited (“Tuan Sing”), a company listed on the Singapore Stock Exchange, and was appointed the Group Financial Controller of Tuan Sing and its listed subsidiary, SPP Limited. In 2002, she took up the position of Vice President of Finance and Accounting at Gul Technologies Singapore Ltd, which was another listed subsidiary of Tuan Sing. On 22 June 2005, she joined Yeo Hiap Seng Limited as Group Financial Controller.

Ms Foong is a member of the Audit Committee.

Ms Foong attended 3 out of the 3 Board meetings held since her appointment.

She has no family relationship with any other directors/ major shareholders of the Company and has no conflict of interest with the Company.

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




cool choice,anytime,anywhere

Financial Results

For the financial year ended 31 December 2005, the Group recorded revenue of RM438 million, an increase of 17% compared to RM373 million recorded in the previous financial year. The Group achieved a net profit after taxation and minority interests of RM12.5 million, an increase of 9% compared to RM11.5 million in the previous year. The Group has no borrowings and has a healthy cash balance of RM76.5 million as at the end of the financial year.

The Group continued to maintain its market leadership in the non-carbonated drinks segments and Yeo’s core brand beverages recorded a growth of 11.7%. During the year, the Group entered into a strategic alliance with Allswell Trading Pte Ltd to market and distribute Red Bull, a well known energy drink, which also contributed to the growth in the overall beverage segment. The food segment and exports recorded a healthy growth of 17.4% and 20% respectively.

Net profit for the year was affected by raw material and fuel price increases, adverse forex impact and write off of bad debts. The Group continued to focus on productivity improvement and cost reduction measures to counter increasing cost pressures.

During the year, an interim dividend of 5% (tax exempt) was declared and paid on 1 September 2005. The Board is pleased to recommend for shareholders’ approval, a final dividend of 9% less income tax for the year ended 31 December 2005.

Management Developments

On behalf of the Board, I welcome the appointment of Mr. Ow Tin Nyap, Owen as the Managing Director and Chief Executive Officer of the Company. In his illustrious and sterling career spanning 32 years, Owen brings with him strategic broad-based experience and many years of international exposure in the areas of business engineering, mergers and acquisitions, sales and marketing, logistics and manufacturing. Prior to his appointment, Owen spent 7 years with the Danone Group, working to grow Danone’s ASEAN portfolio and strategic market leadership. Owen has also previously held senior management positions in Sara Lee Asia and Boustead Holdings Berhad.


chairman’s statement

Dear Shareholders,

On behalf of the Board of Directors of Yeo Hiap Seng (Malaysia) Berhad, I am pleased to present the Annual Report and the Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2005.

Strategy For The Future And Prospects

Yeo’s brand has been a household name for many Malaysian since its introduction some 100 years ago. With strong brand name, quality products and extensive distribution networks, the Group is well positioned and will continue its efforts to grow the organization on a more strategic platform.

One important objective would be to prepare the organization to be more competitive and have a change of mindset to aggressively lead in the next wave of growth and profitability. The Group will continue to focus on its leadership in Asian Drinks and selected categories with more extensive research undertaken to better understand the customers. The aim is to be able to reach out and foster closer proximity and strengthen the bond between Yeo’s and the customers. Product innovation and packaging renovation changes are key and integral to protecting and growing market leadership. Product innovation and packaging renovation will be another key area of focus in the immediate future to grow the organization on a more strategic platform.

The Group will lead in the development of new geographical areas in particular Indonesia, Thailand and the Middle East, which will offer new opportunities for growth. This will also bring about higher capacity utilization and efficiencies as the business grows.

The Group Next Wave initiative is a bold and exciting change and I look forward to the support, commitment and dedication of everyone.

Appreciation

On behalf of the Board, I thank all the shareholders, distributors, wholesalers, customers and consumers for their continuing support and confidence for the Group.

I also wish to express the Board’s appreciation to the Management and all employees of the Group for their contribution, dedication and commitment.

Philip Ng Chee TatChairman

chairman’s statement (cont’d)

annual report ’0511

Kepada Pemegang-pemegang Saham,

Bagi pihak Lembaga Pengarah Yeo Hiap Seng (Malaysia) Berhad, saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan yang telah diaudit bagi Kumpulan dan Syarikat untuk tahun kewangan berakhir 31 Disember 2005.


penyata pengerusi

Keputusan Kewangan

Bagi tahun kewangan berakhir 31 Disember 2005, Kumpulan telah mencatatkan perolehan sebanyak RM438 juta, iaitu peningkatan sebanyak 17% berbanding RM373 juta yang dicatatkan pada tahun kewangan sebelumnya. Kumpulan telah mencapai keuntungan bersih selepas cukai dan kepentingan minoriti sebanyak RM12.5 juta, iaitu peningkatan sebanyak 9% berbanding RM11.5 juta pada tahun sebelumnya. Kumpulan tiada pinjaman dan memiliki baki tunai sebanyak RM76.5 juta pada akhir tahun kewangan yang dikaji.

Kumpulan terus mengekalkan kedudukannya sebagai peneraju pasaran dalam segmen minuman tanpa-karbonat. Minuman jenama utama Yeo’s telah mencatatkan pertumbuhan sebanyak 11.7%. Pada tahun tersebut, Kumpulan telah menjalinkan usaha sama strategik dengan Allswell Trading Pte Ltd untuk memasar dan mengedar Red Bull, sejenis minuman tenaga terkemuka, yang turut menyumbang kepada pertumbuhan keseluruhan segmen minuman. Segmen makanan dan eksport telah mencatatkan pertumbuhan yang memberangsangkan iaitu masing-masing 17.4% dan 20%.

Keuntungan bersih bagi tahun 2005 dipengaruhi oleh kenaikan harga bahan mentah dan minyak, kesan negatif tukaran wang asing dan pelupusan hutang lapuk. Kumpulan terus memberikan tumpuan terhadap peningkatan produktiviti dan langkah pengurangan kos bagi mengimbangi kesan kenaikan kos.

Pada tahun berkenaan, dividen sementara sebanyak 5% (dikecualikan cukai) telah diisytiharkan dan dibayar pada 1 September 2005. Lembaga Pengarah dengan sukacitanya mencadangkan, dengan kelulusan para pemegang saham, dividen akhir sebanyak 9% tolak cukai pendapatan bagi tahun kewangan berakhir 31 Disember 2005.

Perkembangan Pengurusan

Bagi pihak Lembaga Pengarah, saya mengalu-alukan pelantikan Encik Ow Tin Nyap, Owen sebagai Pengarah Urusan dan Ketua Pegawai Eksekutif Syarikat. Sepanjang kerjaya cemerlang beliau selama 32 tahun, Owen membawa bersama pengalaman luas dalam bidang strategik dan pendedahan selama bertahun-tahun di peringkat antarabangsa dalam bidang kejuruteraan perniagaan, penggabungan dan pemerolehan, jualan dan pemasaran, logistik dan pengeluaran. Sebelum menyertai Syarikat, Owen berkhidmat dengan Kumpulan Danone selama 7 tahun, bertanggungjawab mengembangkan portfolio Danone dan peneraju pasaran strategik di rantau ASEAN. Owen juga pernah menyandang jawatan kanan pengurusan di Sara Lee Asia dan Boustead Holdings Berhad.

Strategi Untuk Masa Depan Dan Prospek

Jenama Yeo’s telah menjadi nama seisi rumah bagi kebanyakan rakyat Malaysia sejak diperkenalkan kira-kira 100 tahun lalu. Dengan jenama kukuh, produk berkualiti dan rangkaian pengedaran yang luas, Kumpulan berada pada kedudukan yang mantap dan akan meneruskan usahanya bagi mengembangkan organisasi di atas landasan yang lebih strategik.

Satu matlamat penting ialah menyediakan organisasi agar menjadi lebih berdaya saing dan mempunyai perubahan pendirian supaya menuju kepada pertumbuhan dan keuntungan yang seterusnya. Kumpulan akan terus memberikan tumpuan kepada usaha mengukuhkan kedudukannya sebagai peneraju dalam kategori Minuman Asia dan kategori-kategori terpilih dengan melaksanakan penyelidikan yang lebih meluas agar lebih memahami kehendak pelanggan. Matlamatnya adalah untuk mendekati dan menjalinkan hubungan yang lebih erat antara Yeo’s dan pengguna. Inovasi produk dan perubahan pembungkusan merupakan langkah utama dan bersepadu bagi melindungi dan mengembangkan kedudukan sebagai peneraju pasaran. Inovasi produk dan perubahan pembungkusan akan menjadi satu lagi bidang tumpuan utama dalam masa terdekat ini bagi mengembangkan organisasi di atas landasan yang lebih strategik.

Kumpulan akan menjadi perintis dalam pembangunan kawasan geografi baru khususnya di Indonesia, Thailand dan Timur Tengah, yang akan menawarkan peluang baru untuk pertumbuhan. Langkah ini juga akan membawa kepada peningkatan kapasiti penggunaan dan kecekapan di samping mengembangkan perniagaan.

Usaha Kumpulan yang seterusnya adalah perubahan penting yang menarik dan saya mengharapkan sokongan, komitmen dan dedikasi daripada semua pihak.

Penghargaan

Bagi pihak Lembaga Pengarah, saya ingin mengucapkan terima kasih yang tidak terhingga kepada pemegang saham, pengedar, pemborong, pelanggan dan pengguna atas sokongan dan keyakinan berterusan terhadap Kumpulan. Saya juga ingin menyampaikan penghargaan Lembaga Pengarah kepada pihak Pengurusan dan semua kakitangan Kumpulan atas sumbangan, dedikasi dan komitmen masing-masing.

Philip Ng Chee TatPengerusi

penyata pengerusi (cont’d)


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