AN

NU

AL R

EP

OR

T 2018

Five years Financial highlights Other inFOrmatiOn02 28

cOrpOrate inFOrmatiOn statement On risk management and internal cOntrOl04 33

cOrpOrate structure audit cOmmittee repOrt05 37

chairman’s statement & management discussiOn and analysis Financial statements06 40

prOFile OF BOard OF directOrs list OF prOperties 11 122

prOFile OF key seniOr management sharehOlding statistics15 125

sustainaBility statement nOtice OF annual general meeting16 128

cOrpOrate gOvernance statement prOxy FOrm18 133

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

2

revenue 288,759 261,556 237,065 222,925 202,226

Profit before tax 42,304 29,688 36,317 39,527 25,230

Profit after tax 30,133 20,064 27,918 29,373 17,091

Profit attributable to Owners of the Company 30,350 20,382 27,594 28,968 16,492

Paid up share capital 145,261 141,136 134,668 134,600 133,043

Equity attributable to Owners of the Company 315,051 289,514 274,407 258,743 235,105

Total equity 321,003 295,696 279,931 263,918 239,925

Borrowings 39,655 19,848 21,805 19,560 22,029

Basic earnings per share (sen) 22.05 15.01 20.49 21.65 12.40

Net dividend per share (sen) 8.5** 7.0 8.5** 8.0* 6.5

Net assets per share (RM) 2.28 2.12 2.04 1.92 1.77

Gearing (%) 12.35 6.71 7.79 7.41 9.18

Return on shareholders’ equity(%) 9.63 7.04 10.06 11.20 7.01

* Comprising a final ordinary dividend (single tier) of 6.5 sen and a final special dividend (single tier) of 1.5 sen per ordinary share.

** Comprising a final ordinary dividend (single tier) of 7.0 sen and a final special dividend (single tier) of 1.5 sen per ordinary share.

AN

NU

AL R

EP

OR

T 2018

3

202,2

26

222,9

25

237,0

65

261,5

56

288,7

59

42,30

4

25,23

0

39,52

7

36,31

7

29,68

8

16,49

2

28,96

8

27,59

4

20,38

2

30,35

0 8.5

6.5 8.0 8.5 7.0

235,1

05

258,7

43

274,4

07

289,5

14

315,0

51

1.77

1.92

2.04

2.12

2.28

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

4

Board of directorschairman (independent Non-executive director)Datuk Dr. Anis Bin Ahmad

President / Group Managing directorDato’ Dr. Lee Fang Hsin

Non-independent Non-executive directorDr. Lee Fang Chuan @ Lee Fang ChenLee Ling Chin

independent Non-executive directorDatuk Koay Soon EngTu Shu YaoChin Chew Mun (Appointed on 1 October 2018)

Hasnah Binti Ismail (Appointed on 1 October 2018)

audit coMMittee

NoMiNatioN coMMittee

reMuNeratioN coMMittee

coMPaNy secretaries

Datuk Koay Soon Eng - ChairmanDatuk Dr. Anis Bin AhmadTu Shu YaoChin Chew MunHasnah Binti Ismail

Tu Shu Yao - ChairmanDatuk Dr. Anis Bin AhmadDatuk Koay Soon Eng Dr. Lee Fang Chuan @ Lee Fang Chen Lee Ling Chin

Datuk Dr. Anis Bin Ahmad - ChairmanDatuk Koay Soon Eng Tu Shu Yao

reGistered office aNd PriNciPal Place of BusiNess

Level 22, Menara LGB,No. 1, Jalan Wan Kadir,Taman Tun Dr. Ismail, 60000 Kuala Lumpur.Tel : 03-7727 6390Fax : 03-7727 6701Email : yspsah@yspsah.comWebsite : www.yspsah.com

reGistrar

auditors

PriNciPal BaNkers

stock exchaNGe listiNG

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

KPMG PLT (LLP0010081-LCA & AF 0758) Level 10, KPMG Tower, 8, First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan.Tel : 03-7721 3388 Fax : 03-7721 3399

Malayan Banking BerhadHSBC Bank Malaysia Berhad

Main Market of Bursa Malaysia Securities BerhadStock Code: 7178

Lim Seck Wah (MAICSA 0799845)Kong Mei Kee (MAICSA 7039391)

AN

NU

AL R

EP

OR

T 2018

5

y.s.P. iNdustries (M) sdN. Bhd.

y.s.P.sah iNVestMeNt Pte. ltd.- 95% - Y.S.P. INDUSTRIES VIETNAM CO., LTD.- 85% - PT. YSP INDUSTRIES INDONESIA

suN teN southeast asia holdiNG Pte. ltd.- 100% SUN TEN PHARMACEUTICAL MFG (M) SDN. BHD.- 100% SUN TEN (SINGAPORE) PTE. LTD.

kuMPulaN y.s.P. (Malaysia) sdN. Bhd.

yuNG shiN PharMaceutical (siNGaPore) Pte. ltd.

yuNG shiN (PhiliPPiNes), iNc.

MyaNMar yuNG shiN PharMa ltd.

y.s.P. (caMBodia) Pte. ltd.

Pt. yuNG shiN PharMaceutical iNdoNesia

y.s.P. sah PharMaceutical (B) sdN. Bhd.

alPha actiVe iNdustries sdN. Bhd.

y.s.P. (thailaNd) co., ltd.

GloBecare tradiNG (shaNGhai) co., ltd.

100%

100%

100%

99.99%

99.4%

100%

100%

99.71%

99%

60%

60%

48.56%

40%

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

6

Dear Shareholders,

It is again my pleasure to present to you the Annual Report of Y.S.P. Southeast Asia Holding Berhad, this time for the year ended 31 December 2018. It has been a year in which we continued to face challenges in both the domestic and international fronts. But despite the trying circumstances, we still managed to fare well both in business and financial performance.

AN

NU

AL R

EP

OR

T 2018

7

On the domestic front, we found ourselves operating in a market environment that continued to be competitive with more locally-produced generic drugs getting into the market. The domestic pharmaceutical market as a whole has been valued at RM7.5 billion as at the third quarter of 2018 by the Malaysian Pharmaceutical Association of Malaysia. Generic drugs garnered a 21 per cent share of the market; over-the-counter (OTC) medicines, 24 per cent; and originator drugs, the lion share of 55 per cent. Market growth has been relatively fast, at between 8 and 10 per cent annually in the last decade. Rising incidences of medical conditions commonly associated with urbanisation, such as non-communicable diseases (NCD) created a vibrant consumer market for health products. Increasing health literacy also fueled concern over the threats of chronic diseases. This, coupled with rising disposable income, resulted in a noticeable growth in the consumption of self-care products and the demand is expected to continue growing.

Amidst this scenario, imported drugs continued its hold in the Malaysian market and with its dominance, local pharmaceutical manufacturing companies found it a formidable task to even collectively grow their market share beyond 30 per cent. Operating in such a tight market sphere, it was rather challenging for Y.S.P.SAH to expand its market share. Notwithstanding that, the preceding years’ groundwork and efforts to develop our business ahead of time did prepare us well and place us in good stead to thrive in the competitive environment.

On the international front, we found ourselves up against a host of external factors that were beyond our control. It would have been expected that the continued strengthening of the US dollar would be favourable for our export business but this was negated by a combination of other factors, resulting in a somewhat curtailed growth.

Dominant among these factors were the increasing regulatory requirements for imported drugs to be registered in some of export markets. Additionally, the increased political tensions in the Middle East region posed as roadblocks for the Group to penetrate those emerging export markets with high potential.

It is noteworthy that our Group managed to surmount these challenges and post creditable results in the business operations and financial numbers. Much of this was due to the credit of the management and its foresight through sustained pro-activeness that gave it the agility to respond favourably to challenging circumstances.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

8

creditable financial Performance

Amidst the prevailing circumstances, Y.S.P.SAH managed to end the year with a creditable set of financial results.

Group revenue grew by 10.4 per cent to RM288.76 million. This was as a result of increase in contributions by domestic market operations as well as exports.

Cost efficiencies led the group to make a commendable 14.7 per cent gain in profit before tax to RM42.30 million.

The Group’s financial health remained good. Cash and bank balances continued to improve to RM76.64 million from the previous year’s RM75.20 million.

Continued upgrading of manufacturing facilities and purchases of property, plant and equipment saw continued increase in capital expenditure that amounted to RM32.32 million.

This has resulted in an increase of loans and borrowings from RM19.85 million previously to RM39.66 million on the back of higher financing for upgrades of manufacturing facilities.

operation and Business review

All business segments posted an all-round increase in contribution that led to the improvement in Group revenue.

The biggest contribution came from the General Practitioners segment with both Pharmacist and Clinic categories respectively registering an 8.2 per cent and 5.7 per cent growth over the previous year.

The Hospital segment of both government and private hospitals grew by 15 per cent and 5.1 per cent respectively.

Other segments, except for Traditional Chinese Medicine, turned in creditable growths. Over-the-Counter segment recorded a 10.4 per cent growth while Veterinary and Aquatic grew by 7.5 per cent. Food supplement, being a new segment operational in August 2017 also performed well.

The year under review saw an increase in newly registered products to 67 from 27 in the previous year. This comprised 61 pharmaceutical products and 6 veterinary products. This augurs well for the Group as the successful product registration means more Y.S.P.SAH range of products can be made available in the domestic market.

The total registered products that Y.S.P.SAH ballooned to 464 (420 in the previous year) and they are made up of 355 pharmaceutical products and 109 veterinary products.

Export licences held by the Group totalled 1,232 and they consisted of pharmaceutical, veterinary and aquatic, cosmetic, and Traditional Chinese Medicine (TCM) products as well as medical devices.

Road shows to raise awareness of product range as well as to connect with consumers were stepped up throughout the country. In addition to this and product seminars, online promotions involving product sampling were introduced as new touch points to reach out to a segment of the population that are increasingly gravitating to online sourcing and purchasing of health products.

Manufacturing

Routine inspections of our cGMP (current Good Manufacturing Practice) plant in Bangi, Selangor, Malaysia were carried out to ensure the quality system and operation practices conform to the latest regulatory requirements of cGMP and MS ISO:13485 as well as good delivery practice for medical device (GDPMD).

In the effort to reduce cost and enhance productivity, oral solid dosage productivity was improved with new add-on machineries to boost the production capacity. New tablet press machines, new high-speed packing machines, and packaging material automatic counting and folding machines were added to improve and optimise processes.

New automatic visual inspection machine to perform 100 per cent visual inspection on sterile products was also introduced. Secondary packing weighing practices for oral solid dosage products and semi-solid products were also acquired as part of product quality improvement efforts.

AN

NU

AL R

EP

OR

T 2018

9

In terms of manufacturing for export, the Group has successfully registered a pharmaceutical product in Senegal in August 2018. The Group also passed an audit by the Yemen Ministry of Health’s Pharmacy Department which enabled the Group to relaunch its products in Yemen after it was halted due to war.

One of the highlights for production operation was the opening of, a new Research and Development Centre in Plant III in August 2018. The operation of a new research and development analytical laboratory and the formulation laboratory also commenced in the third quarter of the year under review.

In the operations of Alpha Active Industries Sdn. Bhd. (AAI), which was acquired in 2017, its GMP food factory was expanded to accommodate the increased order quantity from domestic and export demand. AAI manufactures a range of more than 100 products that include food, health supplements and traditional herb products under Halal compliance requirements. A new liquid-filling facility in-liquid process line were added to enhance the production capacity. A new analytical testing laboratory was also established to conduct testing of incoming material and finished goods.

In the international manufacturing operations, our pharmaceutical and veterinary factory in Nhon Trach 3 Industrial Zone in Dong Nai province, Vietnam, has added a new production line – Beta-lactam production line. This was completed and granted GMP status in mid-2018.

89 new products were registered in Vietnam in the year under review. Of this, 63 are for local manufacturing and 26 for products imported by Y.S.P. Industries Vietnam Co., Ltd..

For greater market penetration in Vietnam, efforts were stepped up to supply veterinary products to animal feed mills. Market coverage for aquatic products was extended from south to middle and northern Vietnam and the sales force was beefed up with the appointment of a key technical consultant supervisor for better sales support.

In Indonesia, PT. YSP Industries Indonesia (PTYSPII) pharmaceutical plant successfully submitted 3 products for registration. The plant also produced another 5 products and stability studies will be initiated for submission of product registration in 2019. PTYSPII will embark on adding a new Solid Line in the new financial year in the effort to increase its product line to include tablets and capsules.

In terms of export sales of the Group, this grew by 32 per cent from the previous year and this was partly contributed by the Government tenders in ASEAN and Africa region as well as launching of veterinary products in Thailand and the Philippines; launching of medical devices in Iraq, Rwanda and Madagascar; and the advent of Alpha Active Functional Food products in Singapore and Myanmar.

In the ASEAN region, the Group has increased the product range to include Shine Health Supplement, functional food and Medical Devices. In the Middle East and North Africa (MENA) region, the Group had also successfully submitted products dossiers to Gulf Cooperation Countries (GCC). In Africa, the Group has added new agents and successfully launched new pharmaceutical products including semi-solid range of products in East Africa.

dividends

I am pleased to announce that in view of the creditable financial results, the Board of Directors is recommending a final dividend of 7.0 sen per ordinary share and a final special dividend of 1.5 sen per ordinary share for the year ended 31 December 2018.

the year ahead

With the expected long haul of challenging times in 2019, the business environment in the new financial year will not likely be a major departure from the preceding years. And as our time tested strategies have borne positive results to brace and be on top of these challenges, there too will not be major departures from continuing our focus on improving operational efficiency, increasing our product offerings in the markets through concerted efforts in product registration, and effective marketing, promotional and sales initiatives to gain a more extensive market penetration and to improve our market share.

One significant strategic operational efficiency initiative in the pipeline is the expansion of the plant in Bangi, Selangor, which will result in the oral solid dosage manufacturing capacity being doubled. The utilisation capacity has reached 70 per cent in current round-the-clock operation.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

10

This expansion of the manufacturing capacity of oral solid dose in tablets and capsules will provide business growth opportunities as well as be in compliance with the local authority requirements to separate production areas of steroid/antibiotic and others.

Plans are also afoot to increase the storage capacity of the raw material warehouse as well as the introduction of “online” pre-packing to reduce manual human operation resulting in greater cost savings.

Technological advancement in manufacturing will be another area that will be given due attention to improve operational efficiency. A new process technology is likely to be embarked on and this will involve the production of pellets as a new dosage form.

This venture into technological advanced manufacturing process will be in collaboration with local institution.

In the endeavour to be well-placed to meet market challenges, efforts will be channeled towards further expansion of product portfolio from pharmaceutical to veterinary, Over-the-Counter, medical devices and food supplements. Simultaneously, efforts to increase brand and product awareness will be initiated by partnering local partners for marketing, advertisement and promotion. In tandem with an aggressive blitz in brand exposure, we will target to have a more pronounced online presence in product marketing and sales.

In the area of exports, the plan is to increase participation in Government tenders in ASEAN and African countries and also to advance into developed and regulated markets such as Canada, Australia, and New Zealand.

Against this backdrop of challenging times and the positive developments in mind, we are cautiously optimistic of maintaining our financial performance in the year ahead.

conclusion

Y.S.P.SAH has been able to post favourable results in business and financials also on account of the support that it has been receiving over the years from our distributors, retailers, suppliers, and our valued customers who have been loyal to our brands and products. Our gratitude goes out too to our shareholders, whom we could always count on for their support.

On behalf of the Board of Directors and Management, I would like to take this opportunity to record our appreciation to all these stakeholders and last but not least, our staff members, who have been key contributors towards the Group’s accomplishments and success.

Thank you.

Datuk Dr. Anis Bin AhmadChairman

Profile of Board of directors

AN

NU

AL R

EP

OR

T 2018

11

datuk dr. anis Bin ahmad

Aged 73, male, a Malaysian, was appointed to the Board of Directors of Y.S.P.SAH as an Independent Non-Executive Director on 16 September 2002 and subsequently appointed Independent Non-Executive Chairman on 17 November 2003. Datuk Dr. Anis graduated with a Bachelor of Pharmacy from the University of Singapore, a Master of Science in Pharmaceutical Technology from the University of London and a Ph.D. in Pharmacology from the University of Bath, United Kingdom in 1968.

Datuk Dr. Anis started his career as a Pharmaceutical Officer/Pharmacist with the Ministry of Health (“MOH”) for 6 years. He continued his career as a Lecturer and Head of the Department of Pharmacology in Universiti 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 was a former director of New Hoong Fatt Holdings Bhd.

Datuk Dr. Anis has no family relationship with other directors or major shareholders of Y.S.P.SAH.

dato’ dr. lee fang hsin

Aged 59, male, a Malaysian, was appointed to the Board of Directors of Y.S.P.SAH as President/Group Managing Director on 17 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 Ph.D. from Pacific Western University, USA.

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 World Taiwanese Chamber of Commerce, Honorary President of The Council of Taiwanese Chambers of Commerce in Asia and Honorary President of Taipei Investors’ Association in Malaysia.

Dato’ Dr. Lee is a sibling to Dr. Lee Fang Chuan @ Lee Fang Chen and Madam Lee Ling Chin.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

12

dr. lee fang chuan @ lee fang chen

Aged 63, male, 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 is currently 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 Ph.D. in Medicinal Chemistry from University of Minnesota, USA.

Dr. Lee started his career in 1983 with YSP(Taiwan) in Taiwan as a Research Associate in the Research and Development (“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 Ind. Co., Ltd. (“YZC”) as the President for his connection to the Food and Drug Administration (“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 Ind. (KunShan) Co., Ltd. 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 a member of the Nomination Committee of Y.S.P.SAH and he is a sibling to Dato’ Dr. Lee Fang Hsin and Madam Lee Ling Chin.

lee ling chin

Aged 70, female, a Taiwanese, was appointed to the Board of Directors of Y.S.P.SAH as a Non-Independent Non-Executive Director on 16 February 2005. She is currently the Vice Chairperson of Yung Shin Global Holding Corporation and the Vice Chairperson and President of YSP(Taiwan) in Taiwan. She graduated with Family Business Management from Shih Chien University, Taiwan R.O.C in 1971.

Madam Lee 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.

Presently, Madam 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.

AN

NU

AL R

EP

OR

T 2018

13

Datuk Koay Soon Eng

Aged 72, male, a Malaysian, was appointed to the Board of Directors of Y.S.P.SAH as an Independent Non-Executive Director and Chairman of the Audit Committee of Y.S.P.SAH on 16 September 2002 and 17 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 (FCA) of the Institute of Chartered Accountants Australia and New Zealand and a Fellow Certified Practising Accountant of CPA Australia.

Datuk Koay has more than 40 years in public practice since 1973 as an Accountant, Approved Company Auditor, Tax Agent and Business Consultant under the practicing firms of Hew & Tan and Moores Rowland. He is a Trustee of Yayasan Munarah and a former director of Bangkok Bank Berhad.

Datuk Koay was awarded the honour of D.S.S.A. (which carries the title of ‘Dato’) in 2001 by D.Y.M.M. Sultan Selangor Darul Ehsan and D.S.T.M. (which carries the title of ‘Datuk’) in 2012 by D.Y.M.M. Yang Di-Pertuan Besar Negeri Sembilan Darul Khusus.

Presently, Datuk Koay is the Chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee of Y.S.P.SAH. He has no family relationship with other directors or major shareholders of Y.S.P.SAH.

Tu Shu Yao

Aged 69, male, a Taiwanese, was appointed to the Board of Directors of Y.S.P.SAH as an Independent Non-Executive Director on 17 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 the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of Y.S.P.SAH. He has no family relationship with other directors or major shareholders of Y.S.P.SAH.

Chin Chew Mun

Aged 48, male, a Malaysian, was appointed to the Board of Directors of Y.S.P.SAH as an Independent Non-Executive Director on 1 October 2018. He is a member of Chartered Accountants of Australia and New Zealand, Malaysian Institute of Accountants and Chartered Tax Institute of Malaysia. He holds a Bachelor of Commerce degree from the University of Auckland, New Zealand. He was attached to international accounting firms in Malaysia and China for more than 13 years and he was involved in statutory and special audits of public listed companies, multinational corporations and private companies of different industries. He has participated in various initial public offers in Malaysia and China as Reporting Accountants. He is presently in public practice as Chartered Accountant.

He is also a board member of Prolexus Berhad.

Mr. Chin is a member of the Audit Committee of Y.S.P.SAH. He has no family relationship with other directors or major shareholders of Y.S.P.SAH.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

14

Hasnah Binti Ismail

Aged 67, female, a Malaysian, was appointed to the Board of Directors of Y.S.P.SAH as an Independent Non-Executive Director of Y.S.P.SAH on 1 October 2018. She graduated with a Masters in Pharmaceutical Science from the University of Aston in 1985 and Bachelor of Pharmacy (Honours) in Sarjana Farmasi in 1977. She is a member of Malaysian Pharmaceutical Society since 1990.

Pn. Hasnah has more than 40 years of experience in the field of pharmacy. She is presently a Principal Lecturer of Faculty of Pharmacy in Universiti Teknologi MARA (UiTM) since 2015.

Pn. Hasnah is a member of the Audit Committee of Y.S.P.SAH. She has no family relationship with other directors or major 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 five (5) years (other than traffic offences, if any) particularly of any public sanction or penalty imposed by the relevant regulatory bodies during the financial year and they do not have any conflict of interest with the Company.

AN

NU

AL R

EP

OR

T 2018

15

Yap Yen Mee

Aged 52, female, a Malaysian, was appointed as Vice President of Y.S.P.SAH on 1 January 2007. Madam Yap graduated from National Taiwan University in 1989 with a Bachelor of Science in Pharmacy. She joined the subsidiary of Y.S.P.SAH, Y.S.P. Industries (M) Sdn. Bhd. (“YSPI”) in 1990 as a Project Executive and participated in setting up YSPI’s manufacturing plant in Bangi. She held positions as Head of Manufacturing Section and Assistant Factory Manager prior to being promoted to Vice President in YSPI to oversee the entire operation of Production Division and Services Division in year 2003. She is currently responsible for R&D Department and Service Division in YSPI.

Madam Yap was appointed as Director of YSPI since 1994.

Madam Yap is a member of the Pharmaceutical Society of Malaysia and she has no family relationship with other directors or major shareholders of Y.S.P.SAH.

Sia Pik Nee

Aged 53, male, a Malaysian, is the General Manager of YSPI, PT Yung Shin Pharmaceutical Indonesia (“PTYSPI”) and PT YSP Industries Indonesia (“PTYSPII”). Mr. Sia graduated with Honours in Bachelor of Pharmacy from Universiti Sains Malaysia in 1989. He joined YSPI in 1990 as a Pharmacist based in Kuching Branch and was later promoted to Area Manager in 1993 to be responsible over the marketing in East Malaysia. Mr. Sia was transferred to Kuala Lumpur’s head office in year 2000 to lead the export team. Mr. Sia is currently the General Manager of International Business Division in YSPI and he is also responsible over entire operation in PTYSPI and PTYSPII including Production Department, Marketing Department and Services Department.

Mr. Sia was appointed as Director of PTYSPI in year 2004 and was later appointed as Director of PTYSPII in year 2012.

Mr. Sia is a member of the Pharmaceutical Society of Malaysia and he has no family relationship with other directors or major shareholders of Y.S.P.SAH.

Yap Li Chen

Aged 50, female, a Malaysian, is the General Manager of subsidiary Y.S.P. Industries Vietnam Co., Ltd. (“YSPIV”). Ms. Yap graduated from National Taiwan University with Bachelor of Science in Pharmacy in year 1991. She joined YSPI in year 1991 as Purchasing Executive and was later promoted to Business Development Section Manager in 1997 and involved in setting up oversea branches in Thailand, Vietnam, Cambodia and the Philippines. Before she was transferred to YSPIV in 2010 she held the positions as Senior Manager in Service Division, Production Division of YSPI before she was promoted to oversee entire operation in YSPIV including Production Department, Marketing Department and Services Department.

Ms. Yap was appointed as Director of YSPIV since 2008.

Ms. Yap is a member of the Pharmaceutical Society of Malaysia and she has no family relationship with other directors or major shareholders of Y.S.P.SAH.

Yap Siew Wai

Aged 49, female, a Malaysian, is the Senior Manager of YSPI. Ms. Yap graduated from National Taiwan University with Bachelor of Science in Pharmacy in year 1993. She joined YSPI in year 1997 as Marketing Executive and provided training and technical support to sales team and was later promoted to Hospital Manager in 1999, of which the role was to be in charge of government and private Hospital Sector businesses in Malaysia. In year 2006, Ms. Yap was promoted to Marketing Manager and was responsible over sourcing, planning and launching of new products, prior to being promoted to Senior Marketing Manager in year 2011 to be in charge of Malaysia and Singapore markets. Ms. Yap is currently the Senior Plant Manager and responsible over entire plant operation in YSPI.

Ms. Yap is a member of the Pharmaceutical Society of Malaysia and she has no family relationship with other directors or major shareholders of Y.S.P.SAH.

All the above-named Key Senior Management of Y.S.P.SAH group have not been convicted of any offences within the past five (5) years (other than traffic offences, if any) and they do not have any conflict of interest with the Company.

PROFILE OF KEY SENIOR MANAGEMENT

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

16

SUSTAINABILITY STATEMENTY.S.P.SAH is committed to the sustainability of its business and as a pledge to our stakeholders, we are motivated to ceaselessly improve our business with credible sustainability practices.

The Group is in the business to improve health and it is our business to operate responsibly and with integrity for business sustainability to deliver value to our stakeholders.

Responsibility and integrity are the underlying values upon which practices in three core areas of impact — environment, social, and governance issues and risks — are shaped for business to be conducted ethically to ensure enhanced benefits and viability.

Economic

Y.S.P.SAH focused on the following in a strategic approach to create sustainable economic value and viability:

� Intellectual Capital Expansion Each year, it is ensured that products launched for each therapeutic category meet the highest standards of

quality, safety, and efficacy for greater growth of product range and better market accessibility. The product range has been broadened through diversification. This could be seen through Y.S.P.SAH’s venture from producing pharmaceutical drugs into the manufacturing and sale of cosmeceutical, food supplement, and biotechnology and health products. From tablets and capsules, the Group has also commenced production of medicine in ampoule and other forms that include sterile products like eye drops and small volume injectable products.

� Technology and Innovation Digital transformation is one of the key undertakings of the Group in its continuous efforts to leverage on

technology and innovation for greater operational efficiency. Digital Quality Management System (eQMS) has been implemented for quality-related matters to be handled in a more structured and sustainable way. The Group has also recently ventured into e-commerce marketing as a proactive response to customers’ changing needs and purchasing behaviours.

Research and development (R&D) is vital in ensuring business sustainability. In this context, the Group continuously directs it efforts to expand and focus on developing new products and ensuring these are well managed. Overcoming technical barriers and meeting regulatory requirement are given great attention during the development and registration of products. Expansion of laboratory and pilot site too are also embarked upon to ensure adequate resources are available for the team to provide the essential support of the needs of the Group and overseas’ business partners.

� Ethics and Transparency Integrity and transparency are two values that Y.S.P.SAH recognises as important to uphold to strengthen

its corporate reputation. A Code of Ethics serves as a values compass and this together with best practices in corporate governance ensure that high standards of integrity and conduct are always maintained in our business.

Transparency, integrity, accountability and corporate social responsibility are emphasised in this Code of Ethics, thus enhancing the standard of corporate governance and ensuring a standard of ethical conduct and the spirit of social responsibility and ethical conduct are always maintained.

Environment

We recognise that preservation of the environment is equally important in sustaining the business. This is achieved via efficient utilisation of scarce resources and minimising our environmental footprint in all aspects of our operation. For sustainable management of resources, the Department of Environment Guidelines are closely adhered as follows:

� Energy Saving Our new utility has been innovatively designed to save energy as part of the Group’s environment-conscious

approach to fulfil our responsibility towards Mother Earth.

� Waste Treatment Waste water is one of the by-products of manufacturing and it is treated in two stages – chemically and biologically

– to ensure no contamination. The water treatment is also to prevent eutrophication when water becomes overly enriched with nutrients and minerals that induce excessive growth of plants and algae and offset the balance of the environment.

AN

NU

AL R

EP

OR

T 2018

17

Besides water, the Group manages airborne waste in manufacturing by tackling matters pertaining to dust, fine powder, and vapour. A dust collector and a scrubber have been incorporated into the air pollution treatment system to treat and prevent fine powder, and organic solvent vapour from being released irresponsibly back to the environment.

� Natural Resources Besides reducing waste, recycling and reusing wastes are encouraged and practised. Everyday trash and

packaging of raw material throughout the Group is segregated and classified for recycling purposes.

Social

The Group’s social responsibility is best exemplified in our commitment to build human capital through programmes and processes that continuously improve the knowledge, competency and quality of employees.

� Human Resource Equal Opportunities It is vital to promote equality in employment and emphasis is given to create an environment for employees to feel

valued and thrive in.

Periodical reviews of employee’s remuneration package, especially by adopting minimum wage policy and other HR policies announced by relevant government agencies, is the primary task of HR. Additionally, relevant legislation practices such as the Personal Data Protection Act and the Anti-bribery Act are adhered to. Non-gender and non-race discriminatory practices combine to also foster a working environment that is conducive. A non-child labour practice too ensures non exploitation in employment.

� Occupational, Safety and Health A safe working environment is yet another commitment of the Group to its employees. Compliance with health and

safety laws and regulations as well as procedures have been put in place to reduce and eliminate hazards and danger in the workplace. Fire and disaster rescue and first-aid teams made up of employees have been formed as part of emergency response initiatives. Evacuation and rescue drills are conducted annually for employees to familiarise with procedures for their safety in the event of emergencies.

� Human Resource Development Investment in training reflects the Group’s strong belief that our employees need to be developed and nurtured

for talents and potentials to be realised. The Group organised regular trainings for existing and new employees to ensure they are well-trained and educated in current practices and the right skill sets; thus bridging current performance with their potentials.

The Group has been actively participating in job fairs to expose the Company to graduates. A structured internship programme for pharmaceutical and IT-related graduates has been introduced to serve as a screening and training programme in recruiting potential talents. This programme has been proven to sustain talents.

Our social responsibility to the community we operate in is upheld through Corporation Social Responsibility Programmes. A common thread that runs through our CSR Programmes is the “We Value Life” guiding principle. Our employees demonstrate this guiding principle by involving themselves to make things better and bring cheer to the residents of charitable homes and institutions. These engagement activities are complemented by the donation of our range of health products that contribute to the well-being and better health of the underprivileged. In the year under review, our employees visited and sponsored products to nine charitable organisations.

Conclusion

Y.S.P.SAH’s priority has to be its business and it is thus equally important that its business is carried out in a sustainable and responsible manner to ensure future business viability. Sustainable considerations underpin the Group’s strategies and are integrated into the way business is done. The areas of sustainability implemented by Y.S.P.SAH provide the framework to aptly respond to the environmental, social and governance issues and risks that are relevant to our stakeholders. This is our commitment to responsibly hold the Group steadfast in the long-term continuity and growth of business.

The Board of Directors considers business sustainability primarily as important as living up to its responsibility of steering the Group with the right corporate strategy, suitable corporate plan and appropriate corporate direction.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

18

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.

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 three (3) principles set out in the Malaysian Code on Corporate Governance (“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 A – BOARD LEADERSHIP AND EFFECTIVENESS

I BOARD RESPONSIBILITIES

The Board is responsible for formulating and reviewing the strategic plans and key policies of the Company, and charting the course of the Group’s business operations whilst providing effective oversight of Management’s performance, risk assessment and controls over business operations.

The Group is led and controlled by an effective Board which 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 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 delegates and confers some of its authorities and discretions to the Chairman, Executive Director (the Managing Director), and Management as well as the properly constituted Board Committees comprising mainly/exclusively Non-Executive Directors.

There is a clear division of responsibilities between the Chairman of the Board and the Managing Director. The Chairman leads strategic planning at the Board level, while the Managing Director is responsible for the implementation of the policies laid down and execute the decision-making.

The role of Management is to support the Managing Director and implements the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board.

In general, the Non-Executive Directors are independent of Management. Their roles are to constructively challenge Management and monitor the success of Management in delivering the approved targets and business plans within the risk appetite set by the Board. They have free and open contact with Management at all levels, and they engage with the external and internal auditors to address matters concerning Management and oversight of the Company’s business and operations.

Key matters reserved for the Board’s approval include the financial statements, annual budget, declaration of dividends, business continuity plan, issuance of new securities, corporate restructuring plan, material acquisition and disposal of assets.

CORPORATE GOVERNANCE STATEMENT

AN

NU

AL R

EP

OR

T 2018

19

The Board has established and delegated specific responsibilities to three (3) 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.

(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.

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 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. The Board Charter was last reviewed by the Board on 18 March 2019 and is made publicly available on the Company’s website at www.yspsah.com in line with Practice 2.1 of the Code.

Code of Ethics

The Company’s Code of Ethics encompasses transparency, integrity, accountability and corporate social responsibility. The Board, in discharging its duties and responsibilities, is guided by the Code of Ethics.

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. The Code of Ethics is made publicly available on the Company’s website at www.yspsah.com in line with Practice 3.1 of the Code.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

20

Whistle Blowing Policy

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 and balanced allocation of resources 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. The Group acknowledges its responsibility to all the lives it touches either directly or indirectly, and is committed to making a positive impact in the many communities where it has a presence while further strengthening its corporate reputation via upholding a culture of integrity and transparency.

Over the years, the Group’s approach towards corporate social responsibility (“CSR”) has contributed to greater health awareness and well being to the community. This is in line with the Group’s credo: “We Value Life”. The Group has in place other internal policies and procedures to address corporate sustainability. The Group is also very much aware that, given the nature of the businesses it is involved in, it 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.

All Board members have access to the advice/opinion of the Company Secretary. They are also entitled to and may avail themselves of any further professional advice by requesting the Management to make the necessary arrangements at the expense of the Company.

Company Secretary

The Board is regularly updated and apprised by the Company Secretary on new or changes in company and securities law, regulation and compliance requirements issued by the regulatory authorities. The Company Secretaries are MAICSA members, experienced and competent on statutory and regulatory requirements.

The Company Secretary attends all Board and Board Committee meetings and ensures that all meetings are properly convened and that accurate and proper records of the proceedings and resolutions passed are taken and maintained in the statutory register of the Company.

The Company Secretary works closely with Management to ensure that there are timely and appropriate information flows within and to the Board and Board Committees.

The appointment and removal of Company Secretary is at the purview of the Board.

AN

NU

AL R

EP

OR

T 2018

21

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 and responsibilities, ensure a balance of power and authority, such that no one individual has unfettered powers of decision making. This crucial partnership is essential for 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.

Foster Commitment

To ensure that the Directors have the time to focus and fulfil their roles and responsibilities effectively, the Directors must not hold directorships in more than five (5) public listed companies and shall notify the Chairman before accepting any new directorship. The notification should include an indication of time that will be spent on the new appointment.

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 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 2018, with details of Directors’ attendance set out below:

Director Position No. of meetings attended1. Datuk Dr. Anis Bin Ahmad Chairman/Independent

Non-Executive Director5/5

2. Dato’ Dr. Lee Fang Hsin President/Group Managing Director 5/53. Datuk Koay Soon Eng Independent

Non-Executive Director5/5

4. Mr. Tu Shu Yao IndependentNon-Executive Director

5/5

5. Madam Lee Ling Chin Non-IndependentNon-Executive Director

5/5

6. Dr. Lee Fang Chuan @ Lee Fang Chen Non -IndependentNon-Executive Director

5/5

7. Chin Chew Mun IndependentNon-Executive Director

1/1

8. Hasnah Binti Ismail IndependentNon-Executive Director

1/1

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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

22

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.

The Nomination Committee would review the Board assessment and note the area of strength and weakness. The Nomination Committee would recommend at least one education program to fit all Board members in a year. In addition to that, Board members may request the Board for other suitable and beneficial training programmes.

All Directors have attended training during the financial year ended 31 December 2018 as they deemed necessary. They have also collectively attended the specific programme arranged by the Group namely: “Update on Corporate Governance Guide 3rd Edition and Risk Management Principles and Practices” conducted by NGL Tricor Governance Sdn. Bhd. on 19 November 2018. 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. 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 2016 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 2018, 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 2016.

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.

II BOARD COMPOSITION

The success of the Board in fulfilling its oversight responsibility depends on its size, composition and leadership qualities of its members. Currently, the Board consists of eight (8) members, comprising one (1) Executive Director (the President/Group Managing Director), five (5) Independent Non-Executive Directors (including the Chairman) and two (2) Non-Independent Non-Executive Directors. The profile of each Director is presented separately in the Annual Report.

AN

NU

AL R

EP

OR

T 2018

23

The Company is in compliance with Paragraph 15.02 of MMLR and the recommendation of the Code whereby half of its Board members are independent directors. In the event of any vacancy in the Board resulting in non-compliance with Rule 15.02 (1), the Company must fill the vacancy within 3 months.

The appointment of 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. Active participation of independent directors in Board deliberations also mitigate risks arising from conflict of interest or undue influence from major shareholders and other interested parties.

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.

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.

The Board has reviewed and assessed the independence of all the Independent Directors, namely, Datuk Dr. Anis Bin Ahmad, Datuk Koay Soon Eng and Mr. Tu Shu Yao, who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than twelve (12) 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, 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 does not in any way interfere with their independent judgement and ability to act in the best interest of the Group. Hence, the Board recommends that the Independent Directors continue to be designated as independent directors of the Company.

The Board is supportive of gender diversity in the boardroom as recommended by the Code. There are presently two female directors on the Board. The Non-Independent Non-Executive Director Madam Lee Ling Chin and Independent Non-Executive Director Puan Hasnah Binti Ismail were both active participants of the Board. In view of its relatively small Board, the Company has not, as yet, adopted a specific policy on boardroom gender diversity. It may however be noted that women represent a majority in the Company’s senior management team.

Nomination Committee – Selection and Assessment of Directors

A Nomination Committee, chaired by an Independent Director, has been established with specific terms of reference by the Board, comprising a majority of Independent Non-Executive Directors, as follows:-

(a) Tu Shu Yao - Chairman (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) Dr. Lee Fang Chuan @ Lee Fang Chen - Member (Non-Independent Non-Executive Director)(e) Lee Ling Chin - Member (Non-Independent Non-Executive Director)

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

24

Terms of Reference

The Terms of Reference of the Nomination Committee is made publicly available on the Company’s website at www.yspsah.com in line with Paragraph 15.08A(2) of MMLR.

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 Directors 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.

In assessing and evaluating the suitability of candidates for recommendation to the Board for appointment, the Nomination Committee will consider, inter alia, the background, education, knowledge, integrity, competency, experience, commitment and potential contribution to the Group.

The final decision on the appointment of a candidate recommended by Nomination Committee rests with the Board or, on the recommendation of the Board, the shareholders in general meeting, as the case may be. 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 of the Directors including the Managing Director, shall retire from office, and all Directors 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, Mdm. Lee Ling Chin and Datuk Koay Soon Eng will retire by rotation pursuant to Article 85 of the Company’s Articles of Association whereas Pn. Hasnah Binti Ismail and Mr. Chin Chew Mun will retire by rotation pursuant to Article 92 of the Company’s Articles of Association. All of them, being eligible, offer themselves for re-election.

During the financial year ended 31 December 2018, the Nomination Committee has assessed the balance composition of Board members, Directors’ contribution, Board effectiveness, Audit Committee and each of its members.

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.

Pn. Hasnah Binti Ismail and Mr. Chin Chew Mun were appointed as new Board members during the year.

III DIRECTORS’ REMUNERATION

The Board has established a Remuneration Committee consisting of all Independent Non-Executive Directors.

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) Datuk Koay Soon Eng - Member (Independent Non-Executive 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 run 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.

The Terms of Reference of the Remuneration Committee is made publicly available on the Company’s website at www.yspsah.com in line with Practice 6.2 of the Code.

AN

NU

AL R

EP

OR

T 2018

25

The remuneration for the Executive Director links rewards to corporate and individual performances. This is done in the form of basic salary, benefits in kind and incentive emoluments which are recommended by the Remuneration Committee. 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 2018 is set out below: -

In RM’000 Group

Director Fees Salaries BonusesOther

EmolumentsBenefitsIn Kind Total

Group Managing DirectorDato’ Dr. Lee Fang Hsin 78 678 283 125 33 1,197Independent Non-ExecutiveDatuk Dr. Anis Bin Ahmad 84 - - 8 - 92Datuk Koay Soon Eng 84 - - 8 - 92Mr. Tu Shu Yao 78 - - 8 - 86Mr. Chin Chew Mun 20 - - 2 - 22Puan Hasnah Binti Ismail 20 - - 2 - 22Non-Independent Non-ExecutiveMadam Lee Ling Chin 78 - - 7 - 85Dr. Lee Fang Chuan @ Lee Fang Chen 78 - - 8 - 86Total 520 678 283 168 33 1,682

In RM’000 Company

Director Fees Salaries BonusesOther

EmolumentsBenefitsIn Kind Total

Group Managing DirectorDato’ Dr. Lee Fang Hsin 78 - - - - 78Independent Non-ExecutiveDatuk Dr. Anis Bin Ahmad 84 - - 8 - 92Datuk Koay Soon Eng 84 - - 8 - 92Mr. Tu Shu Yao 78 - - 8 - 86Mr. Chin Chew Mun 20 - - 2 - 22Puan Hasnah Binti Ismail 20 - - 2 - 22Non-Independent Non-ExecutiveMadam Lee Ling Chin 78 - - 7 - 85Dr. Lee Fang Chuan @ Lee Fang Chen 78 - - 8 - 86Total 520 - - 43 - 563

Note: 1. Puan Hasnah Binti Ismail and Mr. Chin Chew Mun were appointed on 1 October 2018.2. Group = listed issuer + its subsidiaries

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

26

PRINCIPLE B – EFFECTIVE AUDIT AND RISK MANAGEMENT

I 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.

The Audit Committee consists of five (5) Independent Non-Executive Directors. The Audit Committee meets as and when required, and at least four (4) 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 2018, 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.

The Audit Committee would assess and review the auditors based on the following:-

1) Quality of their services 2) Their professionalism and ethics3) Independence and objectivity4) Sufficiency and commitment of resources

Report of The Audit Committee is set out in later part of this Annual Report.

II RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

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.

The Statement On Risk Management And Internal Control is set out in later part of this Annual Report.

AN

NU

AL R

EP

OR

T 2018

27

PRINCIPLE C - INTEGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

I COMMUNICATION WITH STAKEHOLDERS

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.

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.

II CONDUCT OF GENERAL MEETING

Shareholders are encouraged to attend the AGM and any other general meetings of the company where shareholders are afforded 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.

Paragraph 8.29A of the MMLR provides that all resolutions set out in the notice of any general meeting shall be voted by poll where every one share has one vote. It also provides that a scrutineer independent of the polling process shall be appointed to validate the votes cast. The outcome of the AGM and any other general meetings of the shareholders are 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.

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. The Board is committed and will continue to enhance compliance with the Code within the Company and the Group.

This Statement on Corporate Governance has been approved by the Board of Y.S.P.SAH on 18 March 2019.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

28

OTHER INFORMATIONUtilisation of proceeds

No proceeds were raised from any corporate proposal during the financial year.

Employees’ Share Option Scheme

During the financial year under review, a total of 3,000,000 option shares under the Employees’ Share Option Scheme was granted to the eligible employees. A total of 1,555,000 option shares were exercised during the year.

Option shares granted to the Directors during the financial year under review:-

No. DirectorNo. of Options

Granted Exercised Expired/Forfeited1. Datuk Dr. Anis Bin Ahmad 120,000 - -2. Dato’ Dr. Lee Fang Hsin 200,000 (200,000) -3. Dr. Lee Fang Chuan @ Lee Fang Chen 120,000 (110,000) -4. Madam Lee Ling Chin 120,000 (110,000) -5. Datuk Koay Soon Eng 120,000 - -6. Mr. Tu Shu Yao 120,000 (260,000) -

The cumulative option shares granted to the Directors as at 31 December 2018 were as follows:-

No. DirectorNo. of Options

Granted Exercised Expired/Forfeited Outstanding1. Datuk Dr. Anis Bin Ahmad 440,000 (210,000) - 230,0002. Dato’ Dr. Lee Fang Hsin 845,000 (645,000) - 200,0003. Dr. Lee Fang Chuan @ Lee Fang Chen 440,000 (320,000) - 120,0004. Madam Lee Ling Chin 440,000 (320,000) - 120,0005. Datuk Koay Soon Eng 440,000 (210,000) - 230,0006. Mr. Tu Shu Yao 440,000 (320,000) - 120,000

Audit Fee and Non-Audit Fee

Details of statutory audit, audit-related and non-audit fees paid/payable in the financial year ended 31 December 2018 to the external auditors are set out below: -

Description Fees paid/payable to KPMG PLT (RM)

Company Subsidiaries TotalAudit Fees 75,000 125,000 200,000Non-Audit Fees 36,000 80,000 116,000Total 111,000 205,000 316,000

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.

AN

NU

AL R

EP

OR

T 2018

29

Corporate Social Responsibilities

Y.S.P.SAH’s guiding principle of We value life was lived up in various ways by the Group through its Corporate Social Responsibility programmes that extended beyond sponsorship of products and visits to charitable homes to uplift and bring cheer to the underprivileged.

The Group shined by walking the extra mile in valuing life through enhancing quality of life through incorporating health education especially in young minds and less informed segments of the community.

In the first of such engaging CSR projects undertaken in the year under review, a visit to Rumah Warga Tua Air Panas by members of the staff in April 2018 included health awareness briefing essential for those in the golden years.

Awareness on spinal bone health was raised through Elgucare Talks conducted in Kuala Lumpur and Penang for the members of the public in July 2018. Free spine checks and bone density tests were also provided for attendees of these public talks.

In the same month of July, a health briefing tailored for the orang asli community was conducted during a visit to the Semoa Farm Orang Asli Education Centre. Through sponsorship of RM6,500 worth of Y.S.P.SAH products, the orang asli community there received Shine series of Multivitamins, functional food and Anti-Mosquito product.

Our staff members took to cleaning up the children homes in Kajang and Semenyih namely Rumah Anak Yatim Sg Kantan, Pusat Jagaan Al-Fikrah Malaysia, Pusat Jagaan Siti Nor Aini and Pusat Jagaan Mahudah Malaysia in August. In addition, the children of these homes received sponsorship of Shine series of probiotics, functional food and Anti-Mosquito products that totalled RM37,000.

Health awareness talks on Hand Foot and Mouth Disease were conducted in two kindergartens in Taman Tun Dr Ismail, Kuala Lumpur, and one primary school in Kepong, Kuala Lumpur, in August. The children were taught the right way to wash their hands and guided on how to use sanitary hand wash as preventive measures from contracting Hand Foot and Mouth Disease.

In September, four primary schools in the Klang Valley were the beneficiaries of our Group’s health awareness talks on dengue fever. The schoolchildren were provided insights of dengue fever and its symptoms as well as step-by-step guidance on the use of mosquito repellents. Interactive games made it fun learning for the children.

The Pusat Jagaan Mahmudah Malaysia was the recipient of products to relieve joint and back pain, functional food, beverage and Anti-Mosquito products worth RM26,000 in September also.

The National Council of Senior Citizen Organisation (NASCOM) also received RM108,000 in sponsorship of products for relief of joint and back pain, vitamins and functional food in October. That same month, visits were made to Old Klang Road Old Folk Homes in Kuala Lumpur, Pertubuhan Kebajikan Anak-Anak Yatim and OKU Mesra, Petaling Jaya, and Taman Megah Children Home, Petaling Jaya, where relevant health briefings were conducted for the residents.

The year ended with a CSR biggie in which Y.S.P.SAH organised a Shine Health Run that raised funds for Joy Garden Semenyih, Persatuan Rumah Amal Murni Kajang, and Pertubuhan Kebajikan Astana. The 5km fun run and 10km open run were well participated and the participants had the special opportunity to have bone density tests too.

In addition to these health educational initiatives, visits to charitable homes and sponsorship of health supplement products, the Group also supported third-party projects like the Menara LGB Blood Donation held in May and the Star’s Anak-Anak Malaysia Walk in September through sponsorship of products as giveaways in goodie bags.

All in all, it turned out to be fulfilling year for the Group in doing its bit to be socially responsible and providing a helping hand for a cross-section of the community that matters by cleverly harnessing the potential of its products and the caring passion of its staff members for valuing life through better health.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

30

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 2018.

Nature of relationship

Dato’ Dr. Lee Fang Hsin, Dr. Lee Fang Chuan @ Lee Fang Chen, Lee Ling Chin, Dr. Lee Fang Jen, Dr. 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 (“YSGHC”), which is the ultimate holding company of YSP International Co. Ltd., the major shareholder of Y.S.P.SAH. Yung Shin Pharmaceutical Industries Co., Ltd. [“YSP(Taiwan)”] is a wholly-owned subsidiary of YSGHC.

Y.S.P. SAH

GroupTransaction

party Nature of Transaction Interested

Related Party

Actual value for financial year ended 31st December 2018

(RM’000)

a) Y.S.P. Industries (M) Sdn Bhd (“YSPI”)

Yung Zip Chemical Ind. Co. Ltd.(“YZC”)

Purchase of raw material by YSPI from YZC

Dato’ Dr. Lee Fang HsinDr. Lee Fang Chuan @ Lee Fang ChenLee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

337

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 by YSPI to YSP(Taiwan) in respect of Technology Transfer Agreement

Purchase of pharmaceutical products from YSP(Taiwan) by YSPI

Sales of raw materials from YSPI to YSP(Taiwan)

Dato’ Dr. Lee Fang HsinDr. Lee Fang Chuan @ Lee Fang ChenLee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

Royalties and license fees38

Purchase of pharmaceutical products

15,033

Sale of raw materialsNil

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 HsinDr. Lee Fang Chuan @ Lee Fang ChenLee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

1,446

As related parties by virtue of YSGHC having indirect interest of 90.74% in SYZ.

AN

NU

AL R

EP

OR

T 2018

31

Y.S.P. SAH

GroupTransaction

party Nature of Transaction Interested

Related Party

Actual value for financial year ended 31st December 2018

(RM’000)

d) YSPI Tien Te (M) Sdn. Bhd.(“TTSB”)

Rental payable to TTSB by YSPI for properties known as i) 718 Kiara Green

Townhouse, Jalan Tun Mohd Fuad, Taman Tun Dr. Ismail 60000 K.L. with an approximate area of 1,334 sq. ft. at a monthly rental of RM2,500

ii) 66 Taman Pok Ai, Persiaran Rainbow, Jalan Tun Admad Zaidi Adruce, 93150 Kuching, Sarawak with an approximately area of 6,000 sq. ft. at a monthly rental of RM5,000

Dato’ Dr. Lee Fang Hsin

Dr. Lee Fang Chuan @ Lee Fang Chen

Lee Ling ChinDr. Lee Fang YuDr. Lee Fang Jen

Rental of hostel90

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) YSPI 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 YSPI to TTSB

Dato’ Dr. Lee Fang HsinDr. Lee Fang Chuan @ Lee Fang ChenLee Ling ChinDr. Lee Fang YuDr. Lee Fang Jen

Provision of management services

23

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 Yung Shin (HK) Company Limited (“YSHK”)

Sale of pharmaceutical products by YSPI to YSHK

Dato’ Dr. Lee Fang Hsin

Lee Ling Chin

160

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”)

Sale of pharmaceutical products by YSPI to QRSB

Datuk Dr. Anis Bin Ahmad

346

Datuk Dr. Anis Bin Ahmad is a director and shareholder in QRSB with direct interest of 40%.

h) YSPI GlobeCare Trading (Shanghai) Co., Ltd. (“GCT”)

Sale of food and health supplement and consumer products by YSPI to GCT

Purchase of Cosmetic, Medical Device and Oral Health products by YSPI from GCT

Dato’ Dr. Lee Fang Hsin

Dr. Lee Fang Chuan @ Lee Fang Chen

Lee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

414

NIL

As related party by virtue of YSGHC, being the ultimate major shareholder of Y.S.P.SAH; is the ultimate holding company of Yung Shin China Holding Co., Ltd. (“YSCH”) whereby YSCH is having 60% interest in the capital of GCT and Y.S.P.SAH is holding the remaining 40% in GCT. Dato’ Dr. Lee Fang Hsin is a director in Y.S.P.SAH, GCT and YSGHC. Dr. Lee Fang Chuan @ Lee Fang Chen and Lee Ling Chin are directors in Y.S.P.SAH, GCT, YSCH and YSGHC.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

32

Y.S.P. SAH

GroupTransaction

party Nature of Transaction Interested

Related Party

Actual value for financial year ended 31st December 2018

(RM’000)

i) YSPI Vetnostrum Animal Healthcare Co. Ltd. (“Vetnostrum”)

Purchase of veterinary pharmaceutical products by YSPI from Vetnostrum

Dato’ Dr. Lee Fang Hsin

Dr. Lee Fang Chuan @ Lee Fang Chen

Lee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

2,621

As related parties by virtue of YSGHC being the ultimate holding company of Vetnostrum and Vetnostrum is a wholly-owned subsidiary of YSP (Taiwan).

j) STM GlobeCare Trading (Shanghai) Co., Ltd. (“GCT”)

Purchase of traditional herbs, cosmetics and oral health care products by STM from GCT

Sale of health food including bird’s nest, fibre beverages, food and beverages, and etc. by STM to GCT

Dato’ Dr. Lee Fang HsinDr. Lee Fang Chuan @

Lee Fang ChenLee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

18

NIL

As related party by virtue of YSGHC, being the ultimate major shareholder of Y.S.P.SAH; is the ultimate holding company of Yung Shin China Holding Co., Ltd. (“YSCH”) whereby YSCH is having 60% interest in the capital of GCT and Y.S.P.SAH is holding the remaining 40% in GCT. Dato’ Dr. Lee Fang Hsin is a director in Y.S.P.SAH, GCT and YSGHC. Dr. Lee Fang Chuan @ Lee Fang Chen and Lee Ling Chin are directors in Y.S.P.SAH, GCT, YSCH and YSGHC.

k) AAI GlobeCare Trading (Shanghai) Co., Ltd. (“GCT”)

Sales of OEM or contract manufacturing products including fibre series, beverage series and food supplement products from AAI to GCT

Dato’ Dr. Lee Fang Hsin

Dr. Lee Fang Chuan @ Lee Fang Chen

Lee Ling ChinDr. Lee Fang JenDr. Lee Fang YuLee Ling Fen

70

As related party by virtue of YSGHC, being the ultimate major shareholder of Y.S.P.SAH; is the ultimate holding company of Yung Shin China Holding Co., Ltd. (“YSCH”) whereby YSCH is having 60% interest in the capital of GCT and Y.S.P.SAH is holding the remaining 40% in GCT. Dato’ Dr. Lee Fang Hsin is a director in Y.S.P.SAH, GCT and YSGHC. Dr. Lee Fang Chuan @ Lee Fang Chen and Lee Ling Chin are directors in Y.S.P.SAH, GCT, YSCH and YSGHC. AAl is a 60% owned subsidiary of Y.S.P.SAH.

AN

NU

AL R

EP

OR

T 2018

33

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLThe Board of Directors is pleased to provide the Statement on Risk Management and Internal Control for the financial year ended 31 December 2018, in which the processes and scope of internal controls adopted and implemented for the year under review are outlined. This Statement therefore underscores the Board’s commitment to maintaining a sound system of risk management and internal control in the Group. [“Group” herein does not include our Associate Companies for purposes of applying the Statement on Risk Management and Internal Control (Guidelines for Directors of Listed Issuers)].

Board Responsibility

The Board affirms the importance of a sound system of risk management and internal control to continuously deal with principal business and operational risk in safeguarding shareholders’ investments and the Group’s assets.

Emphasis was placed on the effectiveness of identifying principal risks, ensuring the implementation of appropriate systems to manage key business risks, reviewing and reassessing the adequacy, and integrity of internal control and management of information systems in compliance with the applicable directives and guidelines.

The Board acknowledges the inherent limitations in any system of risk management and internal control. At best, any risk and control system adopted can only provide reasonable and not absolute assurance against material misstatement or loss. Thus, it must be recognised that the system of risk management and internal control functions aim to manage and mitigate rather than to eliminate risks of failure in meeting the Group’s business objectives.

In view of this, the Board strives to establish an adequate and effective system of risk management and internal control within the Group.

Risk Management Framework

New technologies, shifting demographics, evolving regulations, increased stakeholders’ expectations, and a plethora of other factors contributed to making the industry landscape increasingly complex and competitive. These laden the industry with equally complex and interrelated risks.

Ineffective management of these risks could result in strategic missteps, non-compliance of increasing Government regulations, and even operating losses that significantly impact the organisation.

With this awareness, the Board of Directors closely examined the effectiveness of risk management activities across the Group with the aim of embedding a comprehensive risk management framework that would help to continuously deal with principal business and operational risks in a structured and effective manner.

A Risk Management Policy adopted served as the starting point in the enterprise risk management framework for risk management practices to be consistent across the Group. It prescribed a comprehensive risk management approach, broad guidelines and parameters to identify and assess risks, and support a risk management system for controlling, monitoring and reporting risks in the Group’s operations at all levels in the organisation.

A professional firm was engaged to reassess the Group’s risk and update the Corporate Risk Profile. It adopted the approach to identify additional risk considerations and assess if additional items needed to be considered. It also involved Group stakeholders in updating the risk profile based on identified additional risk areas and revised risk descriptions and engaged heads of departments (HOD) through a risk profile updating workshop.

The Enterprise Risk Management (ERM) Framework to support the Group’s Vision and Mission was formulated with the following objectives of:

� providing a policy and organisational structure for the management of risks;� defining risk management roles and responsibilities and outlining procedures to mitigate risks;� ensuring consistent and acceptable management of risks throughout the organisation;� defining a reporting framework to ensure communication of necessary risk management information to senior

management and personnel engaged in risk management activities;� detailing the approved methods of risk assessment; and� providing a system to enable risk management information to be recorded, monitored, and reported.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

34

The ERM processes instituted were as follows:

� RiskIdentification which involved assessments on risk implications of all actions in relation to existing and proposed activities, projects, investments, systems, and procedures. All risks identified were categorised under Strategic, Financial, Operations, or Compliance for focused efforts to ensure that controls and treatment plans were effectively addressing risks.

� RiskEvaluation which assessed risks by considering their likelihood and impact to determine significance to the business and the effectiveness of current treatments and controls.

� RiskTreatment/Mitigation which involved identifying, assessing, preparing, and implementing actions plans to treat and mitigate risks.

� RiskMonitoring which involved reviewing the performance of risk management processes and monitoring the status of risks, the effectiveness of risk treatment plans, strategies and mechanism set up to control implementations.

� TrainingandEducation which involved regular updating of risk assessment capabilities of key risk management personnel in risk management functions.

A Risk Oversight Structure (ROS) was established to monitor the effectiveness of risk management. This ROS comprised the Risk Management Committee (RMC) and Audit Committee (AC). The RMC, led by the President, assisted the AC to review the performance and effectiveness of risk management.

The Board of Directors and senior management assumed the task of monitoring the effectiveness of risk management activities across the Group to ensure that they supported the Group’s mission, vision, and strategic objectives.

The ROS specified three lines of defence:

� 1stlineofdefence:DailyRiskManagement Operations departments were given the primary responsibility for risk management at the operational level,

whereas, Risk Owners/HODs were entrusted to identify and escalate key risks in the departments to their respective HODs. HODs were to facilitate and organise the risk management processes and coordinate with the RMC.

� 2ndlineofdefence:RiskManagementFunction RMC reporting to the AC, assumed responsibilities for risk management. Its primary roles were to provide the

framework and guidance in which the operation units can operate, identify, and report on risks Group-wide.

� 3rdlineofdefence:IndependentAssurance The Board of Directors, supported by the President, was responsible for ensuring the risk management process was

appropriate and functioning as designed.

Accountability for Risk Management

The Board of Directors, being overall responsible for identifying principal risks and ensuring the implementation of appropriate systems to manage risks, tasked the AC, supported by the RMC, with ensuring the risk management framework operated effectively based on the Board-approved risk management policies.

The AC submitted half yearly reports to the Board of Directors on Group’s Risk Profile and Enterprise Risk Management Framework as well as carried out annual review on risk ranking criteria/parameters and make recommendations for approval.

The AC entrusted upon the President the responsibility of overseeing the Group’s risk management activities and making certain the effective implementation and maintenance of the Risk Management Policy.

� The RMC, chaired by the President, was tasked to assist the AC in carrying out its risk management responsibilities which included:o ensuring risk management was adequately carried out as part of the responsibility in evaluating and making key

strategic and operational decisionso enhancing risk policies and procedures as necessaryo consolidating risk information and monitoring the Group’s risk management activitieso providing ongoing support to AC

The Board considered the Risk Management Framework as adequate and effective. It will, however, continuously improve the framework and adopt better practices that suit the changing business environment.

AN

NU

AL R

EP

OR

T 2018

35

Internal Audit Function

The services of a professional firm was retained for Internal Audits to provide an independent assurance that the Group’s control, risk management, and governance processes were present in all material respects and functioning effectively. This independent audit was to ensure the Group’s compliance with applicable laws and regulations, reliability and integrity of information, safeguarding of assets, and operational effectiveness and efficiency.

The services provided were:

� developing and submitting risk-based annual Internal Audit Plan (IA Plan) for the approval of the Audit Committee� performing internal audits on selected business units/divisions/departments/functions/processes according to the

IA Plan identifying deficiencies in controls, duplicative effort, or unnecessary spending, lack of compliance with laws and regulations, if any

� providing recommendations for strengthening internal controls, risk management and governance process to lower identified risks of the Group

Key approaches taken by the firm in accordance with the approved IA Plan were executed in three phases.

1. Review the Internal Audit Function Set-up This included communicating expectations and establishing consensus with the AC, updating the internal audit

charter, and determining the internal audit execution methodology with the AC.

2. Review High-level Risk and Control A high-level review and gap analysis of the first and second line of internal controls and management assurance

processes and procedures were carried out for the development of the IA Plan.

3. Execute Internal Audit Projects Projects executed were in accordance with the requirements of the AC and they included:

� Cybersecurity� Treasury – Managing Foreign Currency Risk� Supply Chain – Procurement, Inbound Logistics and Production Planning� Human Resources

The professional firm reported directly to the AC, providing reports on Internal Audit and ERM/risk reassessment updates. The AC determined the scope and frequency of the Internal Audit activities and evaluated the adequacy of the audit procedures, the resultant findings, recommendations, and the corrective/remedial actions taken by Management.

Review of Statement by External Auditors

The External Auditors have reviewed the Statement on Risk Management and Internal Control pursuant to the scope set out in AuditandAssurancePracticeGuide3(“AAPG3”) , GuidanceforAuditorsonEngagementstoReportontheStatementonRiskManagementand InternalControl included in theAnnualReport issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the year ended 31 December 2018.

The External Auditors reported to the Board that nothing has come to their attention that caused them to believe that the statement in all material respects:

(a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or

(b) is factually inaccurate.

AAPG 3 did not require the External Auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and management and thereon.

The auditors were not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the Annual Report will, in fact, remedy the problem.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

36

Conclusion

The Board of Directors has reviewed the system of risk management and internal control. It has also 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.

The Board is satisfied that the system of risk management and internal control in place is adequately and effectively safeguarding interests of the shareholders and the assets of the Group. No significant weaknesses which may cause material losses, contingencies, or uncertainties were detected for the period under review.

The Board of Directors and Management will remain vigilant and continue to take measures to further strengthen internal controls to achieve higher standards of corporate governance.

This Statement was made in accordance with a resolution of the Board dated 18 March 2019.

AN

NU

AL R

EP

OR

T 2018

37

AUDIT COMMITTEE REPORTThe 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:-

ChairmanDatuk Koay Soon Eng : Independent Non-Executive Director

MembersTu Shu Yao : Independent Non-Executive DirectorDatuk Dr. Anis Bin Ahmad : Independent Non-Executive DirectorHasnah Binti Ismail(appointed on 19 November 2018)

: Independent Non-Executive Director

Chin Chew Mun(appointed on 19 November 2018)

: Independent Non-Executive Director

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”); orb) 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; orii) must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the

Accountants Act, 1967; orc) 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 three (3) members, the vacancy shall be filled within three (3) months.

The review of the terms of office and performance of the Audit Committee and each of its members will be carried out by the Nomination Committee annually. However, the appointment terminates when a member ceases to be a Director.

TERMS OF REFERENCE

The Terms of Reference of the Audit Committee is made publicly available on the Company’s website at www.yspsah.com in line with Paragraph 15.11 of MMLR.

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 authorised by the Chairman of the Audit Committee.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

38

There were five (5) Audit Committee meetings held during the year 2018. The details of attendance of Committee members are as follows:-

Name of Committee Members AttendanceDatuk Koay Soon Eng (Chairman) 5/5Mr. Tu Shu Yao 5/5Datuk Dr. Anis Bin Ahmad 5/5Pn. Hasnah Binti Ismail 1/1Mr. Chin Chew Mun 1/1

SUMMARY OF WORK OF THE AUDIT COMMITTEE

In line with the terms of reference of the Audit Committee, the following work were carried out by the Audit Committee during the financial year ended 31 December 2018 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 risk management framework and risk management policy.

h) Reviewed the quarterly unaudited financial results announcements before recommending them for the Board’s approval.

i) 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 2016 and the applicable Malaysian Financial Reporting Standards (“MFRS”).

j) 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.

k) Reviewed recurrent related party transactions entered into by the Group to ensure they are not detrimental to the minority.

l) Verified the allocation of options pursuant to the Employees’ Share Option Scheme (“ESOS”) to ensure the basis of allocation is in accordance with the ESOS By-Laws.

AN

NU

AL R

EP

OR

T 2018

39

INTERNAL AUDIT FUNCTION

The Group has outsourced its internal audit function 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 internal audit function reports directly to the Audit Committee.

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 2018 was RM89,000.

The details of internal audit function during the financial year under review are stated in the Statement on Risk Management and Internal Control of this Annual Report.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

40

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

40

Directors’ report41

statements of financial position47

statements of profit or loss anD other comprehensive income48

consoliDateD statement of changes in equity49

inDepenDent auDitors’ report118

statement of changes in equity51

statements of cash flows52

notes to the financial statements55

statement by Directors anD statutory Declaration117

AN

NU

AL R

EP

OR

T 2018

41

ANNUAL REPORT 2017

41

Directors’ report for the year ended 31 December 2018

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 2018.

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.

subsidiaries

The details of the Company’s subsidiaries are disclosed in note 6 to the financial statements.

results

Group company rM’000 rM’000Profit for the year attributable to: owners of the company 30,350 10,320 non-controlling interests (217) - 30,133 10,320reserves 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 final dividend of 7.0 sen per ordinary share of approximately of RM9,658,000 in respect of the financial year ended 31 December 2017 as reported in the Directors’ Report of that year was paid on 25 July 2018.

On 18 March 2019, the Directors recommended a final dividend of 7.0 sen per ordinary share and a special dividend of 1.5 sen per ordinary share totaling approximately RM11,757,000 in respect of the year ended 31 December 2018.

The said dividend will be recognised in the financial year ending 31 December 2019 upon approval by the shareholders at the forthcoming annual general meeting of the company.

Directors of the company

Directors who served during the financial year until the date of this report are:

Datuk Dr. anis bin ahmad (chairman)Dato’ Dr. lee fang hsinDatuk Koay soon engDr. lee fang chuan @ lee fang chenlee ling chintu shu yaohasnah bt. ismail (appointed on 1 october 2018)chin chew mun (appointed on 1 october 2018)

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

42

Directors of subsidiaries

The Directors who served in the subsidiaries during the financial year until the date of this report are:

Datuk Dr. anis bin ahmad (chairman)Dato’ Dr. lee fang hsinDatuk Koay soon engDr. lee fang chuan @ lee fang chenlee ling chintu shu yaoyap yen meesia pik neegan swee pohwang hsueh linchuang wu-changong hengZuliyana binti hassanchong Kak sionglai chen chunyap li chenreynato m. Directochristopher presto

Directors’ interests

the interests and deemed interests in the ordinary shares and options over the ordinary shares of the company and of its related corporations (other than wholly-owned 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:

Number of ordinary sharesAt At

1.1.2018 Bought sold 31.12.2018

interests in the company:Datuk Dr. anis bin ahmad 1,210,000 - - 1,210,000Dato’ Dr. lee fang hsin- own 13,733,422 200,000 - 13,933,422- others 329,765 - - 329,765Datuk Koay soon eng 867,000 - - 867,000Dr. lee fang chuan @ lee fang chen 1,972,097 110,000 - 2,082,097lee ling chin 1,730,394 110,000 - 1,840,394tu shu yao- own 458,300 307,000 - 765,300- others 434,000 - - 434,000

Deemed interests in the company:Dato’ Dr. lee fang hsin 52,365,605 - - 52,365,605Dr. lee fang chuan @ lee fang chen 52,365,605 - - 52,365,605lee ling chin 52,365,605 - - 52,365,605

AN

NU

AL R

EP

OR

T 2018

43

Number of options over ordinary sharesAt At

1.1.2018 Granted exercised 31.12.2018

interests in the company:Datuk Dr. Anis Bin Ahmad 110,000 120,000 - 230,000Dato’ Dr. Lee Fang Hsin 200,000 200,000 (200,000) 200,000Datuk Koay Soon Eng 110,000 120,000 - 230,000Dr. Lee Fang Chuan @ Lee Fang Chen 110,000 120,000 (110,000) 120,000Lee Ling Chin 110,000 120,000 (110,000) 120,000Tu Shu Yao 260,000 120,000 (260,000) 120,000

Number of ordinary shares peso10 eachAt At

1.1.2018 Bought sold 31.12.2018

interests in yung shin (philippines) inc.:Dato’ Dr. Lee Fang Hsin 1 - - 1Dr. Lee Fang Chuan @ Lee Fang Chen 1 - - 1

Number of ordinary shares rp92,250 eachAt At

1.1.2018 Bought sold 31.12.2018

interests in pt. yung shin pharmaceutical indonesia:

Dato’ Dr. Lee Fang Hsin 100 - - 100

Number of ordinary shares K1,000 eachAt At

1.1.2018 Bought sold 31.12.2018interests in myanmar yung shin pharma ltd.:Dato’ Dr. Lee Fang Hsin 1 - - 1Dr. Lee Fang Chuan @ Lee Fang Chen 1 - - 1

Number of ordinary shares B$1.00 eachAt At

1.1.2018 Bought sold 31.12.2018interests in y.s.p. sah pharmaceutical

(b) sdn. bhd.:Dato’ Dr. Lee Fang Hsin 200 - - 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 as at 31 December 2018 had any interest in the ordinary shares at the Company and its related corporations during the financial year.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

44

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 those fees and other benefits included in the aggregate amount of remuneration 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 substantial financial interests in companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 30 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 employees share option scheme issued by the company.

issue of shares and debentures

During the financial year, the Company:

i) issued 60,000 new ordinary shares of RM1 each for cash arising from the exercise of employees share options at rm1.49 per ordinary share.

ii) issued 558,000 new ordinary shares of RM1 each for cash arising from the exercise of employees share options at rm1.89 per ordinary share.

iii) issued 937,000 new ordinary shares of RM1 each for cash arising from the exercise of employees share options at rm2.40 per ordinary share.

There were no other changes in the 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

other than as disclosed below, no options were granted to any person to take up unissued shares of the company during the financial year.

the company’s employees share option scheme (“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 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

AN

NU

AL R

EP

OR

T 2018

45

options granted over unissued shares (continued)

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.

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 options offered to take up unissued ordinary shares of RM1 each and the exercise price are as follows:

Number of options over ordinary shares exercise At At

Date of offer price 1.1.2018 Granted exercised Forfeited 31.12.2018

1 august 2014 rm1.49 227,000 - (60,000) (4,000) 163,0007 september 2016 rm1.89 1,830,000 - (558,000) (76,000) 1,196,0006 December 2017 rm2.40 2,500,000 - (937,000) (65,000) 1,498,00030 november 2018 rm2.55 - 3,000,000 - - 3,000,000

The options offered to take up unissued ordinary shares of the Company has an expiry date of 31 October 2020.

the company has obtained approval from the companies commission of malaysia for relief from the requirements of Section 255(1) of Companies Act 2016 in Malaysia. Under the relief, the Company is exempted from disclosure of number of options over ordinary shares granted to an individual not exceeding 100,000 ordinary shares.

Other than those exempted from disclosure under Section 255(1) of the Companies Act 2016, the options are offered to the following management personnel, other than the Directors:-

Number of options over ordinary shares At At

interests in the company: 1.1.2018 Granted exercised Forfeited 31.12.2018

yap yen mee 240,000 100,000 (130,000) - 210,000sia pik nee 230,000 100,000 (100,000) - 230,000lai chen chun 180,000 100,000 (50,000) - 230,000yap siew wai 100,000 100,000 (50,000) - 150,000yap li chen 140,000 100,000 (50,000) - 190,000

indemnity and insurance costs

There were no insurance effected and indemnity given to the Directors, officers or auditors of the Company during the financial year.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

46

other statutory information

Before financial statements 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 2018 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, Kpmg plt, have indicated their willingness to accept re-appointment.

The auditors’ remuneration is disclosed in Note 21 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………………Datuk Dr. Anis Bin Ahmad Director

…………………………………………………………Dato’ Dr. Lee Fang HsinDirector

Kuala lumpur,

Date: 18 March 2019

AN

NU

AL R

EP

OR

T 2018

47

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Assets property, plant and equipment 3 138,244 117,000 - -land use rights 4 6,065 6,182 - -intangible assets 5 4,963 4,895 21 21investments in subsidiaries 6 - - 128,986 87,581investments in associates 7 3,163 3,789 2,183 4,388Deferred tax assets 8 303 495 - -amounts due from subsidiaries 9 - - 12,094 52,996

total non-current assets 152,738 132,361 143,284 144,986 inventories 10 100,274 86,468 - -trade and other receivables 11 71,179 66,670 35 22prepayment and other assets 12 10,276 8,405 - -Amounts due from affiliated companies 13 252 284 - -amounts due from an associate 7 518 321 - -amounts due from subsidiaries 9 - - 19,876 17,228Current tax assets 533 300 - -cash and cash equivalents 14 76,641 75,198 24,713 17,248

total current assets 259,673 237,646 44,624 34,498

total assets 412,411 370,007 187,908 179,484

equity share capital 145,261 141,136 145,261 141,136other reserves 3,049 8,497 2,742 8,326retained earnings 166,741 139,881 28,954 22,124

total equity attributable to owners of the company 315,051 289,514 176,957 171,586

non-controlling interests 5,952 6,182 - -

total equity 15 321,003 295,696 176,957 171,586

Liabilities Deferred tax liabilities 8 9,103 8,458 - -loans and borrowings 16 32,282 13,377 7,102 4,081Post-employment benefits 17 226 197 - -other payables 18 - 1,000 - 1,000

total non-current liabilities 41,611 23,032 7,102 5,081

loans and borrowings 16 7,373 6,471 48 23trade and other payables 18 33,192 34,163 1,096 64refund liability 19 1,521 1,410 - -amounts due to subsidiaries 9 - - 2,705 2,730Amounts due to affiliated companies 13 5,819 6,523 - -Current tax liabilities 1,892 2,712 - -

total current liabilities 49,797 51,279 3,849 2,817

total liabilities 91,408 74,311 10,951 7,898

total equity and liabilities 412,411 370,007 187,908 179,484

The notes on pages 55 to 116 are an integral part of these financial statements.

stAteMeNts oF FiNANciAL positioN as at 31 December 2018

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

48

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

revenue 20 288,759 261,556 16,426 16,476cost of sales (153,322) (142,930) - -

Gross profit 135,437 118,626 16,426 16,476other income 2,207 3,627 500 -Distribution expenses (64,432) (59,794) - -Administrative expenses (26,337) (24,798) (1,156) (1,176)Other expenses (3,515) (7,865) (8,216) (5,384)

results from operating activities 43,360 29,796 7,554 9,916finance income 1,302 1,492 3,197 2,938finance costs (1,731) (1,140) (198) (137)Share of loss from associates, net of tax (627) (460) - -

Profit before tax 21 42,304 29,688 10,553 12,717Tax expense 23 (12,171) (9,624) (233) (215)

Profit for the year 30,133 20,064 10,320 12,502 other comprehensive income, net of taxItems that may be reclassified subsequently to profit or lossforeign currency translations differences for foreign operations 124 1,287 - -share of (gain)/loss of equity-accounted associates (1) 1 - -

total other comprehensive income for the year 123 1,288 - -total comprehensive income for the year 30,256 21,352 10,320 12,502 Profit attributable to: owners of the company 30,350 20,382 10,320 12,502 non-controlling interests (217) (318) - -

Profit for the year 30,133 20,064 10,320 12,502

total comprehensive income attributable to: owners of the company 30,486 21,689 10,320 12,502 non-controlling interests (230) (337) - -

total comprehensive income for the year 30,256 21,352 10,320 12,502 Basic earnings per ordinary share (sen): 24 22.05 15.01 Diluted earnings per ordinary share (sen): 24 21.86 14.82

The notes on pages 55 to 116 are an integral part of these financial statements.

stAteMeNts oF proFit or Loss AND otHer coMpreHeNsive iNcoMe for the year ended 31 December 2018

AN

NU

AL R

EP

OR

T 2018

49

A

ttrib

utab

le to

ow

ners

of t

he c

ompa

ny

Non

-dist

ribut

able

Dist

ribut

able

ex

chan

ge

shar

e

N

on-

Shar

e Sh

are

Cap

ital

fluct

uatio

n op

tion

Reta

ined

cont

rolli

ng

Tota

l

ca

pita

l pr

emiu

m

rese

rve

rese

rve

rese

rve

earn

ings

to

tal

inte

rest

s eq

uity

N

ote

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

Gro

up

A

t 1 J

anua

ry 2

017

13

4,66

8 1,

516

6,16

8 (1

,136

) 2,

092

131,

099

274,

407

5,52

4 27

9,93

1fo

reig

n cu

rrenc

y tra

nsla

tion

diff

eren

ces f

or fo

reig

n op

erat

ions

- -

- 1,

307

- -

1,30

7 (1

9)

1,28

8

tota

l oth

er c

ompr

ehen

sive

inc

ome

for t

he y

ear

-

- -

1,30

7 -

- 1,

307

(19)

1,

288

Profi

t for

the

year

- -

- -

- 20

,382

20

,382

(3

18)

20,0

64

tota

l com

preh

ensiv

e in

com

e f

or th

e ye

ar

-

- -

1,30

7 -

20,3

82

21,6

89

(337

) 21

,352

Con

tribu

tions

by

and

dist

ribut

ions

t

o ow

ners

of t

he G

roup

Div

iden

ds t

o ow

ners

of

the

com

pany

25

-

- -

- -

(11,

600)

(1

1,60

0)

- (1

1,60

0)iss

uanc

e of

shar

es p

ursu

ant

to

eso

s 17

.2

3,90

9 -

- -

- -

3,90

9 -

3,90

9sh

are

base

d p

aym

ent

tra

nsac

tion

17.2

-

- -

- 1,

109

- 1,

109

- 1,

109

subs

crip

tion

of sh

ares

in a

s

ubsid

iary

by

non-

cont

rollin

g i

nter

ests

- -

- -

- -

- 40

0 40

0

3,90

9 -

- -

1,10

9 (1

1,60

0)

(6,5

82)

400

(6,1

82)

acq

uisit

ion

of su

bsid

iary

- -

- -

- -

- 59

5 59

5

tota

l tra

nsac

tions

with

o

wne

rs o

f the

Gro

up

3,

909

- -

- 1,

109

(11,

600)

(6

,582

) 99

5 (5

,587

)tr

ansf

er to

shar

e ca

pita

l f

or sh

are

optio

ns e

xerc

ised

1,04

3 -

- -

(1,0

43)

- -

- -

tran

sfer

in a

ccor

dan

ce w

ith

sec

tion

618(

2) o

f the

c

ompa

nies

act

201

6

1,51

6 (1

,516

) -

- -

- -

- -

At 3

1 De

cem

ber 2

017

14

1,13

6 -

6,16

8 17

1 2,

158

139,

881

289,

514

6,18

2 29

5,69

6

The

note

s on

page

s 55

to 1

16 a

re a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

coNsoLiDAteD stAteMeNt oF cHANGes iN equity for the year ended 31 December 2018

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

50

A

ttrib

utab

le to

ow

ners

of t

he c

ompa

ny

Non

-dist

ribut

able

Dist

ribut

able

ex

chan

ge

shar

e

N

on-

Shar

e Sh

are

Cap

ital

fluct

uatio

n op

tion

Reta

ined

cont

rolli

ng

Tota

l

ca

pita

l pr

emiu

m

rese

rve

rese

rve

rese

rve

earn

ings

to

tal

inte

rest

s eq

uity

N

ote

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

Gro

up

A

t 1 J

anua

ry 2

018

14

1,13

6

- 6,

168

171

2,15

8 13

9,88

1 28

9,51

4 6,

182

295,

696

fore

ign

curre

ncy

trans

latio

n d

iffer

ence

s for

fore

ign

oper

atio

ns

-

- -

136

- -

136

(13)

12

3

tota

l oth

er c

ompr

ehen

sive

inc

ome

for t

he y

ear

-

- -

136

- -

136

(13)

12

3Pr

ofit f

or th

e ye

ar

-

- -

- -

30,3

50

30,3

50

(217

) 30

,133

tota

l com

preh

ensiv

e in

com

e f

or th

e ye

ar

-

- -

136

- 30

,350

30

,486

(2

30)

30,2

56C

ontri

butio

ns b

y an

d d

istrib

utio

ns

to

owne

rs o

f the

Gro

up

D

ivid

end

s to

owne

rs o

f t

he c

ompa

ny

25

- -

- -

- (9

,658

)

(9

,658

) -

(9,6

58)

issua

nce

of sh

ares

pur

suan

t t

o es

os

17.2

3,

390

- -

- -

- 3,

390

- 3,

390

shar

e ba

sed

pay

men

t t

rans

actio

n 17

.2

- -

- -

1,31

9 -

1,31

9 -

1,31

9

tota

l tra

nsac

tions

with

o

wne

rs o

f the

Gro

up

3,

390

- -

- 1,

319

(9,6

58)

(4,9

49)

- (4

,949

)tr

ansf

er to

shar

e ca

pita

l for

shar

e o

ptio

ns e

xerc

ised

735

- -

- (7

35)

- -

- -

tran

sfer

to re

tain

ed e

arni

ngs

15.2

-

- (6

,168

) -

- 6,

168

- -

-

A

t 31

Dece

mbe

r 201

8

145,

261

- -

307

2,74

2 16

6,74

1 31

5,05

1 5,

952

321,

003

The

note

s on

page

s 55

to 1

16 a

re a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.

coNsoLiDAteD stAteMeNt oF cHANGes iN equity (continued) for the year ended 31 December 2018

AN

NU

AL R

EP

OR

T 2018

51

Attributable to owners of the company Non-distributable Distributable share share share capital option retained total Note capital premium reserve reserve earnings equity rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

company At 1 January 2017 134,668 1,516 6,168 2,092 21,222 165,666Profit and total comprehensive income for the year - - - - 12,502 12,502Contributions by and distributions to owners of the Company Dividends to owners of the company 25 - - - - (11,600) (11,600)issuance of shares pursuant to esos 17.2 3,909 - - - - 3,909share-based payment transaction 17.2 - - - 1,109 - 1,109total transactions with owners of the company 3,909 - - 1,109 (11,600) (6,582)transfer to share premium for share options exercised 1,043 - - (1,043) - -transfer in accordance with section 618(2) of the companies act 2016 1,516 (1,516) - - - -

At 31 December 2017/ 1 January 2018 141,136 - 6,168 2,158 22,124 171,586Profit and total comprehensive income for the year - - - - 10,320 10,320Contributions by and distributions to owners of the Company Dividends to owners of the company 25 - - - - (9,658) (9,658)issuance of shares pursuant to esos 17.2 3,390 - - - - 3,390share-based payment transaction 17.2 - - - 1,319 - 1,319total transactions with owners of the company 3,390 - - 1,319 (9,658) (4,949)transfer to share capital for share options exercised 735 - - (735) - -transfer to retained earnings 15.2 - - (6,168) - 6,168 -

At 31 December 2018 145,261 - - 2,742 28,954 176,957

The notes on pages 55 to 116 are an integral part of these financial statements.

stAteMeNt oF cHANGes iN equity for the year ended 31 December 2018

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

52

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Cash flows from operating activities Profit before tax 42,304 29,688 10,553 12,717Adjustments for: amortisation of land use rights 80 85 - - amortisation of intangible assets 79 69 - - bad debts written off 126 11 - - bad debts recovered (20) (4) - - Damaged goods written off 1,418 125 - - Dividend income - - (16,426) (16,476) Depreciation on property, plant and equipment 10,379 10,020 - - gain on disposal of property, plant and equipment (68) (27) - - Impairment loss on: - trade receivables, net 1,290 (81) - - - amounts due from subsidiaries - - - 2,143 - investments in subsidiaries - - 6,010 12 - investments in associates - - 2,205 - Interest expenses from loans and borrowings 1,731 1,140 198 137 interest income (1,302) (1,492) (3,197) (2,938) Loss/(Gain) on foreign exchange - unrealised 114 6,601 (498) 2,783 property, plant and equipment written off 21 331 - - Provision for retirement benefit 28 66 - - share-based payments transaction 1,319 1,109 300 304 share of loss from associates 627 460 - - writedown to net realisable value 310 1,014 - - Operating profit/(loss) before changes in working capital 58,436 49,115 (855) (1,318)

The notes on pages 55 to 116 are an integral part of these financial statements.

stAteMeNts oF cAsH FLows for the year ended 31 December 2018

AN

NU

AL R

EP

OR

T 2018

53

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Operating profit/(loss) before changes in working capital 58,436 49,115 (855) (1,318)Changes in working capital: inventories (15,534) (9,446) - - trade and other receivables, prepayments and other assets (6,230) (13,851) (13) (25) trade and other payables (4,704) 9,594 7 (984) refund liability 121 (199) - - related parties, net 503 1,419 (1,993) (340)

cash generated from/ (used in) operations 32,592 36,632 (2,854) (2,667)Income tax paid (12,387) (9,031) (233) (215)

Net cash generated from/ (used in) operating activities 20,205 27,601 (3,087) (2,882) Cash flows from investing activities acquisition of subsidiary, net of cash and cash equivalents acquired - (4,218) - (4,400) Acquisition of: - property, plant and equipment (i) (28,851) (9,343) - - - land use rights (119) - - - additions to intangible assets (147) (52) - (10) Dividends received - - 14,426 13,476 increase in investment in a subsidiary - - - (600) interest received 1,302 1,492 3,197 2,938 loan to subsidiary - - (3,846) (646) proceeds from disposal of property, plant and equipment 149 52 - -

Net cash (used in)/generated from investing activities (27,666) (12,069) 13,777 10,758

The notes on pages 55 to 116 are an integral part of these financial statements.

stAteMeNts oF cAsH FLows (continued) for the year ended 31 December 2018

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

54

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Cash flows from financing activities Drawdown/(Payment) of: - term loans 18,065 937 3,241 - - finance lease liabilities (2,730) (4,144) - - - revolving credit 1,000 - - - Dividends paid (9,658) (11,600) (9,658) (11,600) interest paid (1,731) (1,129) (198) (137) Proceed from issuance of shares: - under esos 3,390 3,909 3,390 3,909 - to non-controlling interest - 400 - - Net cash from/(used in) financing activities 8,336 (11,627) (3,225) (7,828) net increase in cash and cash equivalents 875 3,905 7,465 48Effect of exchange rate fluctuations on cash held 568 3,966 - -cash and cash equivalents at 1 January 75,198 67,327 17,248 17,200

cash and cash equivalents at 31 December 14 76,641 75,198 24,713 17,248

Notes to statements of cash flows

i) Acquisition of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM32,323,000 (2017: RM10,844,000), of which RM3,472,000 (2017: RM1,501,000) was acquired by means of finance lease.

The notes on pages 55 to 116 are an integral part of these financial statements.

stAteMeNts oF cAsH FLows (continued) for the year ended 31 December 2018

AN

NU

AL R

EP

OR

T 2018

55

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 officelevel 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 2018 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 2018 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 18 March 2019.

1. Basis of preparation

(a) statement of compliance

The financial statements of the Company have been prepared in accordance with Malaysian Financial reporting standards (“mfrss”), international financial reporting standards and the requirements of the companies act 2016 in malaysia.

the following are accounting standards, amendments and interpretations that have been issued by the malaysian accounting standards board (“masb”) but have not been adopted by the group and the Company:

MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2019

� mfrs 16, Leases� ic interpretation 23, Uncertainty over Income Tax Treatments� amendments to mfrs 3, Business Combinations (Annual Improvements to MFRS Standards 2015-2017

Cycle)� amendments to mfrs 9, Financial Instruments – Prepayment Features with Negative Compensation *� amendments to mfrs 11, Joint Arrangements (Annual Improvements to MFRS Standards 2015-2017

Cycle) *� amendments to mfrs 112, Income Taxes (Annual Improvements to MFRS Standards 2015-2017 Cycle)� amendments to mfrs 119, Employee Benefits – Plan Amendment, Curtailment or Settlement� amendments to mfrs 123, Borrowing Costs (Annual Improvements to MFRS Standards 2015-2017 Cycle)� amendments to mfrs 128, Investments in Associates and Joint Ventures – Long-term Interests in Associates

and Joint Ventures

MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2020

� amendments to mfrs 3, Business Combinations – Definition of a Business � amendments to mfrs 101, Presentation of Financial Statements and mfrs 108, Accounting Policies,

Changes in Accounting Estimates and Errors – Definition of Material

MFRSs, interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed

� amendments to mfrs 10, Consolidated Financial Statements and mfrs 128, Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Notes to tHe FiNANciAL stAteMeNts

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

56

1. Basis of preparation (continued)

(a) statement of compliance (continued)

the group and the company plan to apply the abovementioned accounting standards, amendments and interpretations:

� from the annual period beginning on 1 January 2019 for those accounting standard, amendments and interpretation that are effective for annual periods beginning on or after 1 January 2019, except for amendments and interpretations marked as [“*”] which are not applicable to the group and the company.

� from the annual period beginning on 1 January 2020 for those accounting standard, amendments and interpretation that are effective for annual periods beginning on or after 1 January 2020.

The initial application of the accounting standards, interpretations or amendments is not expected to have any material financial impact to the current period and prior period financial statements of the Group and the Company except as mentioned below:

MFrs 16, Leases

mfrs 16 replaces the guidance in mfrs 117, Leases, ic interpretation 4, Determining whether an Arrangement contains a Lease, ic interpretation 115, Operating Leases – Incentives and ic interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

mfrs 16 introduces a single, on-balance sheet lease accounting model for lessees. a lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease.

The Group has completed the assessment of the impact of MFRS 16 on its financial statements.

at 1 January 2019, the group recognised lease liabilities and right-of-use of assets which resulted in an increase of 10% of total liabilities and an increase of 2% of total assets. The difference is recognised in retained earnings and deferred tax assets accordingly. No significant impact is expected on the Company’s financial statements.

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) Functional and presentation currency

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.

AN

NU

AL R

EP

OR

T 2018

57

1. Basis of preparation (continued)

(d) use of estimates and judgements (continued)

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 other than those disclosed in the following notes:

� note 3 - the measurement of recoverable amounts of cash-generating units� note 6 - investments in subsidiaries� note 7 - investments in associates� note 27.4 - the recoverability of debts owing by certain subsidiaries to the company

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.

arising from the adoption of mfrs 15, Revenue from Contracts with Customer and mfrs 9, Financial Instruments, there are changes to the accounting policies of:i) revenue recognition; ii) financial instruments; andiii) impairment losses of financial instrumentsas compared to those adopted in the previous financial statements. There is no material impact arising from the adoption of these new accounting standards.

(a) Basis of consolidation

(i) subsidiaries

Subsidiaries are entities, including structured 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 controls an entity when it 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. potential voting rights are considered when assessing control only when such rights are substantive. the group also 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.

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.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

58

2. Significant accounting policies (continued)

(a) Basis of consolidation (continued)

(ii) Business combinations (continued)

for each business combination, the group elects whether it measures the non-controlling interests in the acquiree 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

the 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 a 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.

AN

NU

AL R

EP

OR

T 2018

59

2. Significant accounting policies (continued)

(a) Basis of consolidation (continued)

(vi) Non-controlling interests

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 total 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.

(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 which 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 equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

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 foreign currency translation reserve (“fctr”) in equity.

(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 are translated to RM at exchange rates at the dates of the transactions.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

60

2. Significant accounting policies (continued)

(b) Foreign currency (continued)

(ii) operations denominated in functional currencies other than ringgit Malaysia (“rM”) (continued)

foreign currency differences are recognised in other comprehensive income and accumulated in the 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.

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.

(c) Financial instruments

Unless specifically disclosed below, the Group and the Company generally applied the following accounting policies retrospectively. nevertheless, as permitted by mfrs 9, Financial Instruments, the group and the company have elected not to restate the comparatives.

(i) recognition and initial 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.

Accounting policies applied from 1 January 2018

A financial asset (unless it is a trade receivable without significant financing component) or a financial liability is initially measured at fair value plus or minus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to its acquisition or issuance. a trade receivable without a significant financing component is initially measured at the transaction price.

an embedded derivative is recognised separately from the host contract where the host contract is not a financial asset, and accounted for separately if, and only if, the derivative is not closely related to the economic characteristics and risks of the host contract and the host contract is not measured 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.

Accounting policies applied until 31 December 2017

A financial instrument was recognised initially, at its fair value plus or minus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that were directly attributable to the acquisition or issue of the financial instrument.

an embedded derivative was recognised separately from the host contract and accounted for as a derivative if, and only if, it was not closely related to the economic characteristics and risks of the host contract and the host contract was not categorised as fair value through profit or loss. The host contract, in the event an embedded derivative was recognised separately, was accounted for in accordance with policy applicable to the nature of the host contract.

AN

NU

AL R

EP

OR

T 2018

61

2. Significant accounting policies (continued)

(c) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement

Financial assets

Accounting policies applied from 1 January 2018

Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their initial recognition unless the group or the company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change of the business model.

(a) Amortised cost

Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective interest method. the amortised cost is reduced by impairment losses. interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

interest income is recognised by applying effective interest rate to the gross carrying amount except for credit impaired financial assets (see Note 2(i)(i)) where the effective interest rate is applied to the amortised cost.

(b) Fair value through other comprehensive income

Equity investments

this category comprises investment in equity that is not held for trading, and the group and the company irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. this election is made on an investment-by-investment basis. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of investment. other net gains and losses are recognised in other comprehensive income. on derecognition, gains and losses accumulated in other comprehensive income are not reclassified to profit or loss.

All financial assets, except for equity investments measured at fair value through other comprehensive income, are subject to impairment assessment (see Note 2(i)(i)).

Accounting policies applied until 31 December 2017

In the previous financial year, financial assets of the Group and the Company were classified and measured under mfrs 139, Financial Instruments: Recognition and Measurement as follows:

Loans and receivables

loans and receivables category comprised debt instruments that were not quoted in an active market, trade and other receivables, cash and cash equivalents.

financial assets categorised as loans and receivables were subsequently measured at amortised cost using the effective interest method.

All financial assets, except for those measured at fair value through profit or loss, were subject to review for impairment (see note 2(i)(i)).

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

62

2. Significant accounting policies (continued)

(c) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement (continued)

Financial liabilities

The categories of financial liabilities at initial recognition are as follows:

Amortised cost

financial liabilities are subsequently measured at amortised cost using the effective interest method.

Interest expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.

(iii) Regular way purchase or sale of financial assets

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date or settlement date accounting in the current year.

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.

Settlement date accounting refers to:(a) the recognition of an asset on the day it is received by the group or the company, and(b) derecognition of an asset and recognition of any gain or loss on disposal on the day that is delivered

by the group or the company.

any change in the fair value of the asset to be received during the period between the trade date and the settlement date is accounted in the same way as it accounts for the acquired asset.

generally, the group or the company applies settlement date accounting unless otherwise stated for the specific class of asset.

(iv) 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.

Accounting policies applied from 1 January 2018

financial guarantees issued are initially measured at fair value. subsequently, they are measured at higher of:

• the amount of the loss allowance; and• the amount initially recognised less, when appropriate, the cumulative amount of income recognised

in accordance to the principles of mfrs 15, Revenue from Contracts with Customers.

Liabilities arising from financial guarantees are presented together with other provisions.

Accounting policies applied until 31 December 2017

In the previous financial year, fair value arising from financial guarantee contracts were classified as deferred income and was amortised to profit or loss using a straight-line method over the contractual period or, when there was no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract was probable, an estimate of the obligation was made. If the carrying value of the financial guarantee contract was lower than the obligation, the carrying value was adjusted to the obligation amount and accounted for as a provision.

AN

NU

AL R

EP

OR

T 2018

63

2. Significant accounting policies (continued)

(c) Financial instruments (continued)

(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 gain or loss 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.

(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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

64

2. Significant accounting policies (continued)

(d) property, plant and equipment (continued)

(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 from the date they are available for use. 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 50 years� long term leasehold land 50 - 83 years� plant, machinery and equipment 4 - 10 years� furniture, fittings and renovation 2 - 12 years� motor vehicles 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 or as investment property if held to earn rental income or for capital appreciation or for both.

(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. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

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 land use rights.

AN

NU

AL R

EP

OR

T 2018

65

2. Significant accounting policies (continued)

(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.

(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.

(v) Amortisation

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 based on the cost of an asset less its residual value. 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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

66

2. Significant accounting policies (continued)

(g) inventories

inventories are measured at the lower of cost and net realisable value.

The cost of inventories is measured based on weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing 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

Unless specifically disclosed below, the Group and the Company generally applied the following accounting policies retrospectively. nevertheless, as permitted by mfrs 9, Financial Instruments, the group and the company elected not to restate the comparatives.

Accounting policies applied from 1 January 2018

The Group and the Company recognise loss allowances for expected credit losses on financial assets measured at amortised cost. Expected credit losses are a probability-weighted estimate of credit losses.

The Group and the Company measure loss allowances at an amount equal to lifetime expected credit loss, except for cash and bank balance which are measured at 12-month expected credit loss. Loss allowances for trade receivables, are always measured at an amount equal to lifetime expected credit loss.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Group and the Company consider reasonable and supportable information that is relevant and available without undue cost or effort. this includes both quantitative and qualitative information and analysis, based on the group’s and the Company’s historical experience and informed credit assessment and including forward-looking information, where available.

Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the asset, while 12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within the 12 months after the reporting date. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group and the Company are exposed to credit risk.

The Group and the Company estimate the expected credit losses on trade receivables using a provision matrix with reference to historical credit loss experience.

The Group and the Company estimate the expected credit losses on amounts due from an associate, affiliated companies and subsidiaries using internal information available with reference to historical credit loss experience.

An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the carrying amount of the asset is reduced through the use of an allowance account.

AN

NU

AL R

EP

OR

T 2018

67

2. Significant accounting policies (continued)

(i) impairment (continued)

(i) Financial assets (continued)

Accounting policies applied from 1 January 2018 (continued)

At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there is no realistic prospect of recovery. this is generally the case when the group or the company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s and the Company’s procedures for recovery amounts due.

Accounting policies applied until 31 December 2017

All financial assets (except for investments in subsidiaries and associates) were assessed at each reporting date whether there was 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, were not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost was an objective evidence of impairment. If any such objective evidence exists, then the impairment loss of the financial asset was estimated.

An impairment loss in respect of loans and receivables was recognised in profit or loss and was 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 was reduced through the use of an allowance account.

an impairment loss in respect of unquoted equity instrument that was carried at cost was recognised in profit or loss and was 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 was not reversed through profit or loss.

if, in a subsequent period, the fair value of a debt instrument increases and the increase could be objectively related to an event occurring after impairment loss was recognised in profit or loss, the impairment loss was reversed, to the extent that the asset’s carrying amount did not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment was reversed. The amount of the reversal was 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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

68

2. Significant accounting policies (continued)

(i) impairment (continued)

(ii) other assets (continued)

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 (or a group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (or a 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.

(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.

AN

NU

AL R

EP

OR

T 2018

69

2. Significant accounting policies (continued)

(k) Employee benefits (continued)

(iii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. to calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. the group determines the net interest expense or income on the net defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligations at the beginning of the annual period to the then net defined liability or asset, taking into account any changes in the net defined benefit liability or asset during the period as a result of contributions and benefit payments.

Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) share-based payment transactions

the grant date fair value of share-based payment awards 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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

70

2. Significant accounting policies (continued)

(l) provisions (continued)

(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) refund liability

a refund liability is recognised based on the estimated liabilities arising from the returns of quality issue by the customers. the estimated liabilities are made after taking into consideration the historical trend of sales returns.

(m) revenue and other income

(i) Goods sold

Revenue is measured based on the consideration specified in a contract with a customer in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. the group and the company recognise revenue when (or as) it transfers control over a product or service to customer. an asset is transferred when (or as) the customer obtains control of the asset.

the group and the company transfer control of a good or service at a point in time unless one of the following over time criteria is met:

(a) the customer simultaneously receives and consumes the benefits provided as the Group and the Company perform;

(b) the group’s and the company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

(c) the group’s and the company’s performance does not create an asset with an alternative use and the group or the company have an enforceable right to payment for performance completed to date.

(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 fee income

management fee income is recognised upon rendering the services.

AN

NU

AL R

EP

OR

T 2018

71

2. Significant accounting policies (continued)

(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.

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, 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.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.

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 assets and liabilities 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.

Unutilised reinvestment allowance and income tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax assets to the extent that it is probable that the future taxable profits will be available against which the unutilised tax incentive can be utilised.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

72

2. Significant accounting policies (continued)

(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 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. all operating segments’ operating 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 their performance, and for which discrete financial information is available.

(r) Fair value measurement

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. the measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

when measuring the fair value of an asset or liability, the group uses observable market data as far as possible. fair values are categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:

Level 1: quoted price (unadjusted) in active markets for identical financial assets or liabilities that the entity can access at the measurement date.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly.

Level 3: unobservable inputs for the financial asset and liability.

the group recognises transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

AN

NU

AL R

EP

OR

T 2018

73

3.

prop

erty

, pla

nt a

nd e

quip

men

t

Long

plan

t,

term

mac

hine

ry

Fu

rnitu

re,

cap

ital

Fr

eeho

ld

leas

ehol

d

and

Mot

or

fittin

gs a

nd

wor

k-in

-G

roup

la

nd

land

Bu

ildin

gs

equi

pmen

t ve

hicl

es

reno

vatio

n pr

ogre

ss

tota

l

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00c

ost

at 1

Jan

uary

201

7

4,

675

20,9

67

67,7

43

76,8

84

5,61

9 16

,806

4,

477

197,

171

acq

uisit

ions

thro

ugh

a bu

sines

s com

bina

tion

-

- -

702

190

626

- 1,

518

ad

diti

ons

- -

- 88

4 21

8 1,

995

7,74

7 10

,844

Disp

osal

s

-

- -

- (2

93)

- -

(293

)w

ritte

n of

f

-

- -

(635

) -

(27)

-

(662

)tr

ansf

er

- -

- 4,

884

- 2,

309

(7,1

93)

-Ef

fect

of m

ovem

ents

in e

xcha

nge

rate

s

- -

(1,7

18)

(377

) (6

9)

(73)

(4

46)

(2,6

83)

at 3

1 D

ecem

ber 2

017/

1 Ja

nuar

y 20

18

4,

675

20,9

67

66,0

25

82,3

42

5,66

5 21

,636

4,

585

205,

895

ad

diti

ons

12,5

23

- 1,

053

10,4

14

1,35

3 2,

229

4,75

1 32

,323

Disp

osal

s

-

- -

(1,0

75)

(209

) (1

10)

- (1

,394

)w

ritte

n of

f

-

- -

(287

) -

(355

) -

(642

)tr

ansf

er

- -

175

742

- 84

0 (1

,757

) -

Effe

ct o

f mov

emen

ts in

exc

hang

e ra

tes

-

- (2

89)

(237

) (3

8)

(129

) -

(693

)

at 3

1 D

ecem

ber 2

018

17,1

98

20,9

67

66,9

64

91,8

99

6,77

1 24

,111

7,

579

235,

489

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

74

3.

prop

erty

, pla

nt a

nd e

quip

men

t (co

ntin

ued)

Long

plan

t,

term

mac

hine

ry

Fu

rnitu

re,

cap

ital

Fr

eeho

ld

leas

ehol

d

and

Mot

or

fittin

gs a

nd

wor

k-in

-G

roup

la

nd

land

Bu

ildin

gs

equi

pmen

t ve

hicl

es

reno

vatio

n pr

ogre

ss

tota

l

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00De

prec

iatio

n

at 1

Jan

uary

201

7

-

2,06

4 12

,964

49

,593

4,

183

11,0

25

- 79

,829

acq

uisit

ion

thro

ugh

a bu

sines

s com

bina

tion

- -

- 20

3 16

21

8 -

437

Dep

reci

atio

n fo

r the

yea

r

-

360

2,12

7 5,

502

503

1,52

8 -

10,0

20D

ispos

als

- -

- -

(268

) -

- (2

68)

writ

ten

off

- -

- (3

12)

- (1

9)

- (3

31)

Effe

ct o

f mov

emen

ts in

exc

hang

e ra

tes

-

- (3

87)

(293

) (5

0)

(62)

-

(792

)

at 3

1 D

ecem

ber 2

017/

1 Ja

nuar

y 20

18

-

2,42

4 14

,704

54

,693

4,

384

12,6

90

- 88

,895

Dep

reci

atio

n fo

r the

yea

r

-

360

2,10

6 5,

695

464

1,75

4 -

10,3

79D

ispos

als

- -

- (1

,045

) (1

58)

(110

) -

(1,3

13)

writ

ten

off

- -

- (2

67)

- (3

54)

- (6

21)

Effe

ct o

f mov

emen

ts in

exc

hang

e ra

tes

-

- (5

5)

(1)

(32)

(7

) -

(95)

at 3

1 D

ecem

ber 2

018

- 2,

784

16,7

55

59,0

75

4,65

8 13

,973

-

97,2

45

car

ryin

g am

ount

s

at 3

1 D

ecem

ber 2

017/

1 Ja

nuar

y 20

18

4,

675

18,5

43

51,3

21

27,6

49

1,28

1 8,

946

4,58

5 11

7,00

0

at 3

1 D

ecem

ber 2

018

17,1

98

18,1

83

50,2

09

32,8

24

2,11

3 10

,138

7,

579

138,

244

AN

NU

AL R

EP

OR

T 2018

75

3. property, plant and equipment (continued)

3.1 Freehold land, long term leasehold land and buildings with net carrying amount of RM48,362,000 (2017: rm36,878,000) have been pledged to a licensed bank as collateral for credit facilities granted to the group and the company.

3.2 included in property, plant and equipment is net carrying amount of plant, machinery and equipment, and motor vehicle of the subsidiaries held under finance lease arrangements of RM6,603,000 (2017: RM5,924,000) and RM1,178,000 (2017: RM396,000) respectively.

3.3 for the purpose of impairment testing, the group tested the property, plant and equipment of y.s.p. industries vietnam co., ltd. and pt. yung shin pharmaceutical indonesia amounting to rm14,398,000 (2017: RM14,538,000). The Group has exercised significant judgment in determining the property, plant and equipment’s recoverable amount using fair value less cost of disposal.

fair value less cost of disposal is based on Directors’ estimation having regard to estimated resale value provided by independent external valuer. Fair value less cost of disposal is a level 3 fair value measurement. Direct comparison and cost methods were used in determining the fair value within level 3. Direct comparison model considers the sales of similar substitute properties and related market data, and establishes a value estimated by process involving comparison. Cost method reflects adjustments for physical deterioration as well as functional and economic obsolescence.

the group is of the view that no impairment is deemed required because fair value less cost of disposal is higher than the carrying amount of the cash-generating units.

4. Land use rights

Group 2018 2017 rM’000 rM’000

cost at 1 January 7,015 7,730additions 119 -Effect of movements in exchange rates (154) (715)

at 31 December 6,980 7,015

Accumulated amortisation at 1 January 833 822amortisation charge for the year 80 85Effect of movements in exchange rates 2 (74)

at 31 December 915 833 carrying amount Land use rights with unexpired period of less than 50 years 6,065 6,182

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

76

5. intangible assets

technical License transfer Goodwill fees fees trademarks totalGroup rM’000 rM’000 rM’000 rM’000 rM’000

cost at 1 January 2017 67 682 212 505 1,466acquisition through a business combination 4,507 - - - 4,507additions - 42 - 10 52effect of movements in exchange rates - - - (16) (16)

at 31 December 2017/ 1 January 2018 4,574 724 212 499 6,009additions - 77 70 - 147effect of movements in exchange rates - - - (5) (5)

at 31 December 2018 4,574 801 282 494 6,151 Amortisation at 1 January 2017 - 679 90 294 1,063amortisation for the year - 8 29 32 69effect of movements in exchange rates - - - (18) (18)

at 31 December 2017/ 1 January 2018 - 687 119 308 1,114amortisation for the year - 16 32 31 79effect of movements in exchange rates - - - (5) (5)

at 31 December 2018 - 703 151 334 1,188 carrying amounts At 31 December 2017/ 1 January 2018 4,574 37 93 191 4,895

At 31 December 2018 4,574 98 131 160 4,963

trademarks company rM’000

At 31 December 2017/ 1 January 2018/ 31 December 2018 21

impairment testing for cash-generating units containing goodwill

for the purpose of impairment testing, goodwill is allocated to an individual cash-generating unit within the group - alpha active industries sdn. bhd.(“aai”), which represents the lowest level within the group at which the goodwill is monitored for internal management purposes.

The recoverable amount of AAI was based on its value in use, determined by discounting future cash flows to be generated by aai. the group is of the view that the carrying amount of the unit is lower than its recoverable amount, hence no impairment is necessary.

AN

NU

AL R

EP

OR

T 2018

77

5. intangible assets (continued)

Value in use is determined by discounting the 5 years cash flows generated and is based on the following key assumptions:

(i) Budgeted gross margin

the basis used to determine the values assigned to the budgeted gross margin is the gross margin achieved in the year immediately before the budgeted year and increased for expected efficiency improvements thereafter.

(ii) Growth rate

the growth rate used is consistent with the long term business plan of the subsidiary.

(iii) Discount rate

The discount rate was 8.9% which was estimated based on the Group’s weighted average cost of capital.

6. investments in subsidiaries

company 2018 2017 Note rM’000 rM’000

At cost: unquoted shares 94,059 94,059amounts due from subsidiaries 6.1 47,415 - 141,474 94,059

impairment losses: at beginning of the year (6,478) (6,466)impairment losses for the year 6.2 (6,010) (12)

at end of the year (12,488) (6,478)

carrying amounts 128,986 87,581

6.1 The amounts due from subsidiaries of RM47,415,000 (2017: NIL) bear interest at the rate of 4.00% to 5.50% (2017: NIL) per annum and the repayment is at the discretion of the subsidiaries.

6.2 impairment loss on investment in subsidiaries

The impairment loss during the year amounting to RM6,010,000 (2017: RM12,000) was mainly attributable to an impairment of investment in pt. ysp industries indonesia amounting to rm3,343,000. the subsidiary which is from Manufacturing operating segment recorded a net loss for the year and deficit in shareholders’ equity. This has resulted in the carrying amount to exceed its estimated recoverable amount.

the recoverable amount of pt. ysp industries indonesia amounting to rm6,082,000 was based on the fair value less cost of disposal derived from Directors’ estimation of the fair value of the underlying assets and liabilities of the subsidiary. the key underlying assets comprise of machineries and equipment, of which their fair values were estimated to approximate depreciated book value as recorded in the subsidiary’s financial statements. The fair value of this investment in subsidiary is classified within Level 3 of the fair value hierarchy.

following the impairment loss of the cost of investment in subsidiaries, the recoverable amount is equal to the carrying amount. therefore, any adverse change in the key assumptions may result in further impairment loss.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

78

6. investments in subsidiaries (continued)

6.3 Details of the subsidiaries are as follows:

effectivecountry of ownership interest

Name of subsidiary incorporation principal activities 2018 2017% %

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

y.s.p. sah investment pte. ltd. # singapore investment holding 100 100

sun ten southeast asia holding pte. ltd. #

singapore investment holding 60 60

yung shin pharmaceutical (singapore) pte. ltd. #

singapore Importer, exporter and trading in all kinds of pharmaceutical products

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

pt. yung shin pharmaceutical indonesia #

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 productregistration, trademark registration and national marketing and trading in allkinds of pharmaceuticalproducts

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. #

bruneiDarussalam

Dormant 99 99

alpha active industries sdn. bhd. #

malaysia manufacturer for biotechnology products and health products

60 60

AN

NU

AL R

EP

OR

T 2018

79

6. investments in subsidiaries (continued)

6.3 Details of the subsidiaries are as follows: (continued)

effectivecountry of ownership interest

Name of subsidiary incorporation principal activities 2018 2017% %

Subsidiaries of Y.S.P. SAH Investment Pte. Ltd.

y.s.p. industries vietnam co., ltd. #

vietnam manufacturer for pharmaceutical andveterinary products,pharmaceutical,traditional medicines,food supplements,veterinary, aquatic,and cosmetic products

100 100

pt. ysp industries indonesia # indonesia manufacturing pharmaceutical products

85 85

Subsidiaries of Sun Ten Southeast Asia Holding Pte. Ltd.

sun ten pharmaceutical mfg (m) sdn. bhd.

malaysia trading in traditionalherbal products

60 60

sun ten (singapore) pte. ltd. # singapore Importer, exporter andtrading in all kinds of pharmaceuticalproducts

60 60

# Audited by firms of auditors other than KPMG PLT

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

80

6. investments in subsidiaries (continued)

6.4 non-controlling interests in subsidiaries

The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:

sun ten southeast other Asia Holding Alpha subsidiaries pte. Ltd. Active with and its industries immaterial subsidiaries sdn. Bhd. Nci total rM’000 rM’000 rM’000 rM’000

2018 nci percentage of ownership interest and voting interest 40% 40% carrying amount of nci 5,538 1,389 (975) 5,952

Profit/(Loss) allocated to NCI 47 251 (515) (217) Summarised financial information before intra-group elimination As at 31 December non-current assets 779 3,883 current assets 19,111 4,838 non-current liabilities (609) (3,188) current liabilities (5,436) (2,060)

net assets 13,845 3,473 revenue 18,278 13,196 Profit for the year 124 628 total comprehensive income 118 628 Cash flows from/(used in): - operating activities 1,333 (513) - investing activities 131 (2,840) - financing activities (80) 2,801 net increase/(decrease) in cash and cash equivalents 1,384 (552) Dividends paid to nci - -

AN

NU

AL R

EP

OR

T 2018

81

6. investments in subsidiaries (continued)

6.4 non-controlling interests in subsidiaries (continued)

sun ten southeast other Asia Holding Alpha subsidiaries pte. Ltd. Active with and its industries immaterial subsidiaries sdn. Bhd. Nci total rM’000 rM’000 rM’000 rM’000

2017 nci percentage of ownership interest and voting interest 40% 40% carrying amount of nci 5,491 1,138 (447) 6,182

Profit/(Loss) allocated to NCI 107 142 (586) (337) Summarised financial information before intra-group elimination As at 31 December non-current assets 950 1,311 current assets 19,722 4,215 non-current liabilities (609) (230)current liabilities (6,336) (2,451)

net assets 13,727 2,845 revenue 20,584 4,408Profit for the year 287 356total comprehensive income 268 356 Cash flows (used in)/from: - operating activities (4,593) 607 - investing activities 137 (306)- financing activities (31) 1,017 net (decrease)/increase in cash and cash equivalents (4,487) 1,318 Dividends paid to nci - -

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

82

7. investments in associates/amounts due from an associate

7.1 investments in associates

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

unquoted shares, at cost 4,388 4,388 4,388 4,388share of post-acquisition loss (1,296) (669) - -impairment loss for the year - - (2,205) -Effect of movement in exchange rate 71 70 - - 3,163 3,789 2,183 4,388

At Company level, the impairment loss recognised during the year amounting to RM2,205,000 (2017: NIL) was attributed to the impairment of investment in globecare trading shanghai co., ltd.. the associate recorded a net loss for the year and this has resulted in the carrying amount to exceed its estimated recoverable amount.

the recoverable amount of globecare trading shanghai co., ltd. amounting to rm1,959,000 was based on the fair value less cost of disposal derived from Directors’ estimation of the fair value of the underlying assets and liabilities of the associate. the key underlying assets and liabilities of the associate is the working capital of the associate which approximate their fair value due to the relative short term nature of the assets and liabilities. The fair value of this associate is classified within level 3 of the fair value hierarchy.

following the impairment loss of the cost of investment in associate, the recoverable amount is equal to the carrying amount. therefore, any adverse change in the key assumptions may result in further impairment loss.

Details of associates are as follows:

effective ownership

interestcountry ofName of entity incorporation Nature of the relationship 2018 2017

% %

globecare trading (shanghai) co., ltd.

republic of china trading of cosmeceuticals, food supplements and healthcare products

40.00 40.00

y.s.p. (thailand) co., ltd. thailand trading of pharmaceutical products and medical equipment

48.56 48.56

All associates are equity accounted based on management accounts and are audited by another firm of accountants.

AN

NU

AL R

EP

OR

T 2018

83

7. investments in associates/amounts due from an associate (continued)

The following table summarises the information of the Group’s material associate, adjusted for any differences in accounting policies and reconciles the information to the carrying amount of the group’s interest in the associate.

2018 Globecare trading y.s.p. (shanghai) (thailand) co., Ltd. co., Ltd. total rM’000 rM’000 rM’000

Group Summarised financial information As at 31 December non-current assets 63 - 63 current assets 5,265 887 6,152 current liabilities (430) (369) (799)

net assets 4,898 518 5,416 year ended 31 December (Loss)/Profit for the year (1,632) 54 (1,578) reconciliation of net assets to carrying amount as at 31 December group’s share of net assets 1,959 252 2,211others 755 197 952

Carrying amount in the statement of financial position 2,714 449 3,163 Group’s share of result for year ended 31 December Group’s share of profit or loss from continuing operations (653) 26 (627) other information Dividends paid - - -

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

84

7. investments in associates/amounts due from an associate (continued)

2017 Globecare trading y.s.p. (shanghai) (thailand) co., Ltd. co., Ltd. total rM’000 rM’000 rM’000

Group Summarised financial information As at 31 December non-current assets 85 - 85 current assets 7,587 666 8,253 current liabilities (974) (217) (1,191)

net assets 6,698 449 7,147

year ended 31 December (Loss)/Profit for the year (1,196) 37 (1,159) reconciliation of net assets to carrying amount as at 31 December group’s share of net assets 2,679 218 2,897others 687 205 892

Carrying amount in the statement of financial position 3,366 423 3,789

Group’s share of result for year ended 31 December Group’s share of profit or loss from continuing operations 478 (18) 460 other information Dividends paid - - -

7.2 amounts due from an associate

The trade amounts due from an associate is unsecured, interest free and has a fixed term of repayment of 120 days (2017: 120 days).

8. Deferred tax assets/(liabilities) recognised deferred tax assets/(liabilities)

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net 2018 2017 2018 2017 2018 2017

Group rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

property, plant and equipment - - (10,358) (9,748) (10,358) (9,748)provisions 1,821 1,728 - - 1,821 1,728Unutilised tax losses - 79 - - - 79other items 158 185 (421) (207) (263) (22)

Tax assets/(liabilities) 1,979 1,992 (10,779) (9,955) (8,800) (7,963)Set off of tax (1,676) (1,497) 1,676 1,497 - -

Net tax assets/(liabilities) 303 495 (9,103) (8,458) (8,800) (7,963)

AN

NU

AL R

EP

OR

T 2018

85

8.

Defe

rred

tax

asse

ts/(

liabi

litie

s) (c

ontin

ued)

M

ovem

ent i

n te

mpo

rary

diff

eren

ces

durin

g th

e ye

ar

reco

gnise

d ef

fect

of

reco

gnise

d ef

fect

of

in p

rofit

m

ovem

ent i

n A

risin

g fro

m

At

in p

rofit

m

ovem

ent i

n

A

t or

loss

ex

chan

ge

busin

ess

31

.12.

2017

/ or

loss

ex

chan

ge

At

1.

1.20

17

(Not

e 23

) ra

te

com

bina

tion

1.1.

2018

(N

ote

23)

rate

31

.12.

2018

Gro

up

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

prop

erty

, pla

nt a

nd e

quip

men

t

(9,7

31)

174

- (1

91)

(9,7

48)

(610

) -

(10,

358)

prov

ision

s

1,

516

217

(5)

- 1,

728

95

(2)

1,82

1Un

utilis

ed ta

x lo

sses

-

79

- -

79

(79)

-

-o

ther

item

s

(5

83)

582

(21)

-

(22)

(2

31)

(10)

(2

63)

(8

,798

) 1,

052

(26)

(1

91)

(7,9

63)

(825

) (1

2)

(8,8

00)

unre

cogn

ised

defe

rred

tax

asse

ts

Def

erre

d ta

x as

sets

hav

e no

t bee

n re

cogn

ised

in re

spec

t of t

he fo

llow

ing

item

s (st

ated

at g

ross

):

G

roup

c

ompa

ny

2018

20

17

2018

20

17

rM’0

00

rM’0

00

rM’0

00

rM’0

00

Unut

ilised

tax

loss

es

25,6

31

22,9

65

- -

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

86

8. Deferred tax assets/(liabilities) (continued)

unrecognised deferred tax assets (continued)

The unutilised tax losses of a subsidiary in Vietnam and subsidiaries in Indonesia of RM12,392,000 (2017: RM15,303,000) and RM12,924,000 (2017: RM7,365,000) respectively will expire over a 5 (2017: 5) years period.

The unutilised tax losses of a subsidiary in Malaysia of RM5,000 will expire over a period of 7 years from Year of assessment 2019.

Deferred tax assets have not been recognised in respect of the unutilised tax losses because it is not probable that future taxable profit will be available against which the Group entities can utilise the benefits there from.

9. Amounts due from/(to) subsidiaries

9.1 amounts due from subsidiaries

company 2018 2017 rM’000 rM’000

non-current 12,094 52,996current 19,876 17,228 31,970 70,224

the amounts due from subsidiaries are non-trade in nature, unsecured, interest free and repayable on demand except for RM17,251,000 (2017: RM62,434,000) which bear interest at 3.57% to 5% (2017: 4% to 5.5%) per annum.

9.2 the amounts due to subsidiaries are non-trade in nature, unsecured, interest free and repayable on demand.

10. inventories

Group 2018 2017 rM’000 rM’000

raw materials 19,815 21,101work-in-progress 11,249 13,054finished goods 63,540 45,530packaging materials 5,670 6,783 100,274 86,468

Recognised in profit or loss: inventories recognised as cost of sales 138,833 125,985 Damaged goods written off 1,418 125 writedown to net realisable value 310 1,014

AN

NU

AL R

EP

OR

T 2018

87

11. trade and other receivables

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

trade trade receivables 11.1 63,742 60,171 - - Non-trade other deposits 1,336 1,403 - -other receivables 6,101 5,096 35 22 7,437 6,499 35 22 71,179 66,670 35 22

11.1 Trade receivables are non-interest bearing and are generally on 90 to 150 days (2017: 90 to 150 days) credit terms.

12. prepayment and other assets

Group Note 2018 2017 rM’000 rM’000

Non-trade Deposits 12.1 7,629 5,554prepayments 2,647 2,851 10,276 8,405

12.1 included in the deposits of the group are deposits paid to suppliers for purchases amounting to rm5,952,000 (2017 : RM3,086,000).

13. Amounts due from/to affiliated companies

Affiliated companies refer to corporations of which certain Directors of the Company have interests.

The trade amounts due from and due to affiliated companies amounting to RM103,000 and RM5,771,000 (2017: rm144,000 and rm6,475,000) respectively are unsecured, interest free and have a repayment term of between 90 to 120 days (2017: 90 to 120 days).

The non-trade amounts due from and due to affiliated companies amounting to RM149,000 to RM48,000 (2017: rm140,000 and rm48,000) respectively are unsecured, interest free and repayable on demand.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

88

14. cash and cash equivalents

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Fixed deposits with licensed banks 44,278 39,364 24,205 16,500cash and bank balances 32,363 35,834 508 748 76,641 75,198 24,713 17,248

15. capital and reserves

15.1 share capital

Group and company Number of Number of Amount shares Amount shares 2018 2018 2017 2017 rM’000 ’000 rM’000 ’000

Ordinary shares, issued and fully paid: at 1 January 141,136 136,747 134,668 134,668issued for cash under esos 3,390 1,555 3,909 2,079Share options exercised 735 - 1,043 -transfer from share premium in accordance with section 618(2) of the companies act 2016 - - 1,516 -

at 31 December 145,261 138,302 141,136 136,747

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.

included in share capital is share premium amounting rm1,516,000 that is available to be utilised in accordance with section 618(3) of companies act 2016 on or before 30 January 2019 (24 months from commencement of section 74 of Companies Act 2016). As at the date of issuance of the financial statements, the company did not utilise the share premium amounting to rm1,516,000.

15.2 capital reserve

During the year, the capital reserve has been transferred to retained earnings as the warrants have expired.

15.3 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 Ringgit Malaysia (“RM”).

15.4 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 capital. When the share options expire, the amount from the share option reserve is transferred to retained earnings.

At the Extraordinary General Meeting held on 17 June 2013, the Company’s shareholders have approved an employees share option scheme, which became effective on 1 november 2013. the details of esos are disclosed in note 17.2.

AN

NU

AL R

EP

OR

T 2018

89

16. Loans and borrowings

Group company Note 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Non-current secured term loans 16.1 29,710 11,873 7,102 4,081finance lease liabilities 16.2 2,572 1,504 - - 32,282 13,377 7,102 4,081 current secured term loans 16.1 2,635 2,409 48 23finance lease liabilities 16.2 2,238 2,562 - -secured revolving credit 16.3 2,500 1,500 - - 7,373 6,471 48 23 39,655 19,848 7,150 4,104

16.1 secured term loans

The secured term loans bear interest at rates ranging from 2.80% to 5.18% (2017: 2.32% to 4.74%) per annum:

These term loans are secured by:i) Freehold land of the Group; ii) Long term leasehold land and buildings of the Group; and iii) corporate guarantees issued by the company and a subsidiary.

16.2 finance lease liabilities

Finance lease liabilities are payable as follows:

present present Future value of Future value of minimum minimum minimum minimum lease lease lease lease payments interest payments payments interest payments 2018 2018 2018 2017 2017 2017 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Group

less than one year 2,444 206 2,238 2,600 38 2,562between one and five years 2,743 171 2,572 1,643 139 1,504 5,187 377 4,810 4,243 177 4,066

16.3 secured revolving credit

the revolving credit is secured by corporate guarantees issued by the company.

The short term revolving credit bears interest at rates ranging from 0.75% to 1.00% (2017: 0.75% to 1.00%) per annum above the bank’s cost of fund.

16.4 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 (2017: 2.0) at all times. One of its subsidiary, y.s.p. industries (m) sdn. bhd. is required to maintain a tangible net worth that is not permitted to fall, at any time, below rm160 million.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

90

16.

Loan

s an

d bo

rrow

ings

(con

tinue

d)

16.5

Rec

onci

liatio

n of

mov

emen

t of l

iabi

litie

s to

cash

flow

s aris

ing

from

fina

ncin

g ac

tiviti

es

c

hang

es

N

et

ar

ising

ch

ange

s

from

fr

om

Add

ition

ob

tain

ing

Fo

reig

n

A

t 1

finan

cing

of

new

co

ntro

l of

Acc

rued

ex

chan

ge

At 3

1

Ja

nuar

y ca

sh fl

ows

leas

e su

bsid

iarie

s in

tere

st

mov

emen

t De

cem

ber

Gro

up

rM

’000

rM

’000

rM

’000

rM

’000

rM

’000

rM

’000

rM

’000

2018

term

loan

s

14,2

82

16,6

10

- -

1,45

5 (2

) 32

,345

fina

nce

leas

e lia

bilit

ies

4,

066

(2,9

24)

3,47

2 -

194

2 4,

810

revo

lvin

g cr

edit

1,

500

918

- -

82

- 2,

500

Tota

l liab

ilitie

s fro

m fi

nanc

ing

activ

ities

19

,848

14

,604

3,

472

- 1,

731

- 39

,655

2017

term

loan

s

13,7

57

166

- -

771

(412

) 14

,282

fina

nce

leas

e lia

bilit

ies

6,

548

(4,4

40)

1,50

1 16

6 29

6 (5

) 4,

066

revo

lvin

g cr

edit

1,

500

(62)

-

- 62

-

1,50

0

Tota

l liab

ilitie

s fro

m fi

nanc

ing

activ

ities

2

1,80

5

(4,3

36)

1,5

01

166

1

,129

(4

17)

19,

848

A

t

Net

31 D

ecem

ber

ch

ange

s

A

t 1

Fore

ign

20

17

fro

m

Fore

ign

At 3

1

Ja

nuar

y

exch

ange

/1

Jan

uary

A

ccru

ed

finan

cing

ex

chan

ge

Dece

mbe

r

20

17

mov

emen

t 20

18

inte

rest

ca

sh fl

ows

mov

emen

t 20

18c

ompa

ny

rM

’000

rM

’000

rM

’000

rM

’000

rM

’000

rM

’000

rM

’000

term

loan

s/to

tal li

abilit

ies f

rom

fi

nanc

ing

activ

ities

4,49

8 (3

94)

4,10

4 19

8 3,

043

(195

) 7,

150

AN

NU

AL R

EP

OR

T 2018

91

17. Employee benefits

17.1 Post-employment benefits

Group 2018 2017 rM’000 rM’000

Present value of unfunded defined benefit obligation at 1 January 197 127Expense recognised in profit or loss 28 66Effect of movements in exchange rate 1 4

at 31 December 226 197

17.2 share-based payment arrangement

The Group granted share options to qualified key management personnel to purchase shares in the company under the employees share option scheme approved by the shareholders of the company on 17 June 2013. the share options were vested on the grant date.

Grant date/employees entitlement date

Number of options

(’000)exercise

price

remaining contractual life of options as at 31 December 2018

1 august 2014 2,000 rm1.49 1.8 years7 september 2016 4,000 rm1.89 1.8 years6 December 2017 2,500 rm2.40 1.8 years30 november 2018 3,000 rm2.55 1.8 years

The number and weighted average exercise prices of share options are as follows:

weighted average

exercise price2018

Number of options

(’000)2018

weighted average exercise

price2017

Number of options

(’000)2017

at 1 January rm2.15 4,557 rm1.86 4,215granted during the year rm2.55 3,000 rm2.40 2,500forfeited during the year rm2.11 (145) rm1.89 (79)Exercised during the year rm2.18 (1,555) rm1.88 (2,079)

at 31 December rm2.35 5,857 rm2.15 4,557

Exercisable at 31 December rm2.35 5,857 rm2.15 4,557

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

92

17. Employee benefits (continued)

17.2 share-based payment arrangement (continued)

the fair value of share options granted during the year was estimated using a trinomial model, taking into account the terms and conditions upon which the options were granted. the fair value of share options was measured at grant date, with the following inputs:

2018 2017fair value at grant date 46.3 sen 46.0 senweighted average share price rm2.55 rm2.40Expected volatility 24.53% 25.31%option life at grant date 1.8 years 2.8 yearsrisk free interest rate 3.20% 3.00%Expected dividend 2.55% 3.33%

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. no other features of the option grant were incorporated into the measurement of fair value.

17.3 Employees benefits expenses

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Included in profit and loss: wages, salaries and others 75,119 66,185 - -Contributions to defined contribution plans 7,931 7,700 - -share-based payments 1,389 1,150 370 345Expenses related to post- employment benefits 28 66 - - 84,467 75,101 370 345

18. trade and other payables

Group company 2018 2017 2018 2017 Note rM’000 rM’000 rM’000 rM’000

Non current other payables 18.1 - 1,000 - 1,000 current Trade trade payables 18.2 16,246 19,162 - - Non-trade accruals 10,098 10,176 64 64other payables 18.1 6,848 4,825 1,032 - 16,946 15,001 1,096 64 33,192 34,163 1,096 64 33,192 35,163 1,096 1,064

AN

NU

AL R

EP

OR

T 2018

93

18. trade and other payables (continued)

18.1 included in other payables of the group and the company is consideration payable to non-controlling interest of RM1,000,000 (2017: RM1,000,000) in relation to the acquisition of a subsidiary which is payable in 2019.

18.2 the normal trade credit terms granted by trade payables to the group range from 30 days to 180 days (2017: 30 days to 180 days).

19. refund liability

Group 2018 2017 rM’000 rM’000

sales returns at 31 December 1,521 1,410

refund liability at the beginning of the period recognised as revenue 790 786

refund liability from customers is with regards to quality issue. the estimated liability is made after taking into consideration the historical trend of refund liability.

20. revenue

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

sales of goods 288,759 261,556 - -Dividends income from subsidiaries (unquoted) - - 16,426 16,476 288,759 261,556 16,426 16,476

Group 2018 2017 rM’000 rM’000

Disaggregation of revenue and primary geographical markets malaysia 210,032 186,567singapore 24,878 27,062vietnam 14,920 16,914philippines 5,620 4,517cambodia 6,482 5,055myanmar 3,689 3,578brunei 3,564 2,020indonesia 2,887 3,181thailand 3,216 2,681africa 7,965 5,940other countries 5,506 4,041 288,759 261,556

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

94

20. revenue (continued)

the group manufactures and sells a ranges of pharmaceutical products, veterinary products and traditional herbs products in domestic and overseas market.

for the pharmaceutical products, veterinary products and traditional herbs products sold in domestic market, the revenue is recognised at a point in time when the goods are delivered and accepted by the customers at their premises. for sales to overseas market, the revenue is recognised at a point in time upon transfer of control in accordance with international commercial terms. the revenue recognised from the sales of goods is net of pricing allowance, other trade discounts and price promotions to the customers. the credit period of the group is at an average of 30 to 120 days (2017: 30 to 120 days) from the date of invoice.

For domestic market, the Group accepts returns for products in good condition with at least six months from the end of its shelf life or products with quality issue which originated from the group and within products shelf life period. for overseas market, the group only accepts returns for products with quality issue which originated from the group and within products shelf life period.

21. Profit before tax

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Profit before tax is arrived at after charging amortisation of land use rights 80 85 - -amortisation of intangible assets 79 69 - -Auditors’ remuneration: - audit fees Kpmg plt 200 185 75 70 other auditors 173 171 - - - non-audit fees KPMG PLT including local affiliates 116 116 36 36 other auditors 41 42 - -bad debts written off 126 11 - -Damaged goods written off 1,418 125 - -Depreciation on property, plant and equipment 10,379 10,020 - -Impairment loss on: - trade receivables 1,696 517 - - - amounts due from subsidiaries - - - 2,143 - investments in subsidiaries - - 6,010 12 - investments in associate - - 2,205 -writedown to net realisable value 310 1,014 - -Interest expense from loans and borrowings 1,731 1,140 198 137Loss on foreign exchange: - realised - - - 442 - unrealised 114 6,601 - 2,783property, plant and equipment written off 21 331 - -rental of premises 3,615 3,285 - -Research and development expenditure 10,711 9,707 - -share based payments 1,319 1,109 300 304

And after crediting: bad debts recovered 20 4 - -Dividend income from subsidiaries (unquoted) - - 16,426 16,476gain on disposal of property, plant and equipment 68 27 - -Gain on foreign exchange: - realised 1,125 1,983 2 - - unrealised - - 498 -Interest income from fixed deposit and loans 1,302 1,492 3,197 2,938reversal of impairment loss on trade receivables 406 598 - -

AN

NU

AL R

EP

OR

T 2018

95

22. Key management personnel compensations

The key management personnel compensations are as follows:

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Directors of the Company: - fees 520 518 520 518 - remuneration 1,162 1,470 43 58 - share-based payments 370 345 370 345 2,052 2,333 933 921

Directors of the Group entities: - fees 19 20 - - - remuneration 3,003 2,670 - - - Short term employee benefits 222 228 - - 3,244 2,918 - - 5,296 5,251 933 921

23. tax expense

23.1 Recognised in profit or loss

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Current tax expense - current year 11,442 10,585 242 250 - (over)/under provision in prior years (96) 91 (9) (35)Deferred tax expense - origination and reversal of temporary differences 689 (1,018) - - - under/(over) provision in prior years 136 (34) - -

total 12,171 9,624 233 215

Provision for taxation for companies incorporated in Malaysia is determined by applying the current Malaysian tax rate on chargeable income. Taxation for entities in other jurisdictions is calculated at the tax rates prevailing in the respective jurisdictions.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

96

23. tax expense (continued)

23.2 Reconciliation of effective tax expense

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Profit for the year 30,133 20,064 10,320 12,502Total income tax expense 12,171 9,624 233 215

Profit excluding tax 42,304 29,688 10,553 12,717 Income tax calculated using Malaysian tax rate of 24% (2017: 24%) 10,153 7,125 2,533 3,052Effect of tax rates in foreign jurisdictions (158) (117) - -Non-deductible expenses 2,970 2,869 2,242 1,572Tax exempt income (364) (263) (4,533) (4,374)Tax incentives (1,110) (182) - -effect of changes in unrecognised deferred tax asset 640 135 - -under/(over) provision in prior years 40 57 (9) (35) 12,171 9,624 233 215

24. earnings per ordinary share

24.1 basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2018 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:

Group 2018 2017

Profit attributable to ordinary shareholders (RM’000) 30,350 20,382

weighted average number of ordinary shares in issue (‘000) 137,642 135,793 basic earnings per ordinary share (sen) 22.05 15.01

AN

NU

AL R

EP

OR

T 2018

97

24. earnings per ordinary share (continued)

24.2 Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary share at 31 December 2018 was based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares calculated as follows:

Group 2018 2017

Profit attributable to ordinary shareholders (RM’000) 30,350 20,382

Weighted average number of ordinary shares (‘000)weighted average number of ordinary shares at 31 December (basic) 137,642 135,793effect of issuance of shares under esos 1,174 1,754

weighted average number of ordinary shares at 31 December (diluted) 138,816 137,547 Diluted earnings per ordinary share (sen) 21.86 14.82

25. Dividends

Dividends recognised by the Company are:

sen total Date of per share amount payment rM’000

2018 Final tax exempted 2017 ordinary 7.0 9,658 25 July 2018 2017 Final tax exempted 2016 ordinary 7.0 9,553Special tax exempted 2016 ordinary 1.5 2,047 11,600 28 July 2017

On 18 March 2019, the Directors recommended a final dividend of 7.0 sen per ordinary share and a special dividend of 1.5 sen per ordinary share totaling approximately RM11,757,000 in respect of the year ended 31 December 2018.

The said dividend will be recognised in the financial year ending 31 December 2019 upon approval by the shareholders at the forthcoming annual general meeting of the company.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

98

26. operating segments

the group has three reportable segments, as described below, which are the group’s strategic business units. the strategic business units offer different products and services, and are managed separately because they require different marketing strategies. the following summary describes the operations in each of the group’s reportable segments:

operating segments Business activities

manufacturing manufacturing of pharmaceutical products

trading Import, export and trading in various kinds of pharmaceutical, traditional herbal and veterinary products

investment holding investment holding

the manufacturing of pharmaceutical products in malaysia, vietnam and indonesia are aggregated to form a reportable segment as manufacturing due to the similar nature and economic characteristics of the production process and distribution method. The level of capital investment for these divisions are significantly higher than the other operating segments. the products manufactured in this segment are based on the local demand from the targeted market and export demand. The basis of segmentation is consistent with the information reported internally to the group managing Director.

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 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 assetsthe 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 managing Director. segment total assets are used to measure the return of assets of each segment.

segment liabilitiesthe 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 managing Director.

segment capital expenditureSegment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

AN

NU

AL R

EP

OR

T 2018

99

26.

ope

ratin

g se

gmen

ts (c

ontin

ued)

inte

r-se

gmen

t

Man

ufac

turin

g tr

adin

g in

vest

men

t hol

ding

el

imin

atio

ns

tota

l

2018

20

17

2018

20

17

2018

20

17

2018

20

17

2018

20

17

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

Gro

up

reve

nue

Ex

tern

al

246,

390

215,

542

42,3

69

46,0

14

- -

- -

288,

759

261,

556

inte

r-seg

men

t 32

,149

30

,551

1,

902

1,64

5 16

,426

16

,476

(5

0,47

7)

(48,

672)

-

-

278,

539

246,

093

44,2

71

47,6

59

16,4

26

16,4

76

(50,

477)

(4

8,67

2)

288,

759

261,

556

resu

lts

Pr

ofit f

rom

ope

ratio

ns

43,0

37

30,8

04

500

1,45

5 7,

466

10,6

13

(7,6

43)

(13,

076)

43

,360

29

,796

inte

rest

inco

me

466

795

151

179

3,22

7 2,

970

(2,5

42)

(2,4

52)

1,30

2 1,

492

fina

nce

cost

(3

,563

) (2

,949

) (5

10)

(505

) (1

98)

(137

) 2,

540

2,45

1 (1

,731

) (1

,140

)sh

are

of lo

ss o

f ass

ocia

tes

- -

- -

- -

(627

) (4

60)

(627

) (4

60)

Profi

t bef

ore

tax

39,9

40

28,6

50

141

1,12

9 10

,495

13

,446

(8

,272

) (1

3,53

7)

42,3

04

29,6

88

In

com

e ta

x ex

pens

e

(1

2,17

1)

(9,6

24)

Net

pro

fit fo

r the

yea

r

30

,133

20

,064

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

100

26.

ope

ratin

g se

gmen

ts (c

ontin

ued)

oth

er in

form

atio

n

inte

r-se

gmen

t

Man

ufac

turin

g tr

adin

g in

vest

men

t hol

ding

el

imin

atio

ns

tota

l

2018

20

17

2018

20

17

2018

20

17

2018

20

17

2018

20

17

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

rM’0

00

Gro

up

segm

ent a

sset

s 37

1,23

0 32

8,82

9 53

,239

53

,626

19

7,68

0 18

9,31

4 (2

09,7

38)

(201

,762

) 41

2,41

1 37

0,00

7

con

solid

ated

ass

ets

371,

230

328,

829

53,2

39

53,6

26

197,

680

189,

314

(209

,738

) (2

01,7

62)

412,

411

370,

007

segm

ent l

iabi

litie

s 16

9,79

9 14

1,10

7 30

,123

28

,467

11

,590

8,

537

(131

,099

) (1

14,9

70)

80,4

13

63,1

41D

efer

red

tax

liabi

litie

s 9,

103

8,45

8 -

- -

- -

- 9,

103

8,45

8C

urre

nt ta

x lia

bilit

ies

1,43

1 2,

297

459

413

- -

2 2

1,89

2 2,

712

con

solid

ated

liabi

litie

s 18

0,33

3 15

1,86

2 30

,582

28

,880

11

,590

8,

537

(131

,097

) (1

14,9

68)

91,4

08

74,3

11

C

apita

l exp

end

iture

on

p

rope

rty, p

lant

and

equ

ipm

ent,

land

use

r

ight

s and

inta

ngib

le

ass

ets

32,1

77

11,6

63

412

710

- 10

-

4,10

1 32

,589

16

,484

Dep

reci

atio

n of

pro

perty

, p

lant

and

equ

ipm

ent

9,58

9 9,

162

631

694

- -

159

164

10,3

79

10,0

20a

mor

tisat

ion

of la

nd u

se

rig

hts a

nd in

tang

ible

a

sset

s 15

8 15

3 1

1 -

- -

- 15

9 15

4Im

pairm

ent l

osse

s on:

-

inve

stm

ent i

n co

st

of su

bsid

iarie

s and

as

soci

ates

-

- -

- 8,

215

- (8

,215

) -

- -

- a

mou

nt d

ue fr

om

subs

idia

ries

- -

- -

- 2,

143

- (2

,143

) -

-sh

are

base

d p

aym

ents

88

7 70

0 13

2 10

5 30

0 30

4 -

- 1,

319

1,10

9w

rited

own

to n

et

rea

lisab

le v

alue

28

5 93

3 25

81

-

- -

- 31

0 1,

014

Dam

aged

goo

ds w

ritte

n o

ff 1,

123

120

295

5 -

- -

- 1,

418

125

AN

NU

AL R

EP

OR

T 2018

101

26. operating segments (continued)

Geographical segments

in presenting information on the basis of geographical segments. segment assets are based on the geographical location of the assets.

Non-current Non-current assets assets excluding excluding deferred tax deferred tax assets assets 2018 2017

rM’000 rM’000

Group

Geographical information

malaysia 121,834 100,001indonesia 13,244 14,488vietnam 12,685 12,425singapore 4,415 4,529philippines 254 419cambodia/brunei/myanmar 3 4 152,435 131,866

Major customers

The Group does not have any customers where the Group generates revenue equal or more than 10% of the group’s total revenue.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

102

27. Financial instruments

27.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

2018(a) Amortised cost (“AC”); and(b) financial liabilities measured at amortised cost (“fl”).

2017(a) Loans and receivables (“L&R”); and(b) financial liabilities measured at amortised cost (“fl”).

2018 2017 carrying Ac/ carrying L&r/ amount (FL) amount (FL) rM’000 rM’000 rM’000 rM’000

Financial assets Group trade and other receivables 67,658 67,658 66,670 66,670Amounts due from: - affiliated companies 252 252 284 284 - associates 518 518 321 321cash and cash equivalents 76,641 76,641 75,198 75,198 145,069 145,069 142,473 142,473

company amounts due from subsidiaries 31,970 31,970 70,224 70,224cash and cash equivalents 24,713 24,713 17,248 17,248 56,683 56,683 87,472 87,472

Financial liabilities Group trade and other payables (33,192) (33,192) (34,163) (34,163)Amounts due to affiliated companies (5,819) (5,819) (6,523) (6,523)loans and borrowings (39,655) (39,655) (19,848) (19,848) (78,666) (78,666) (60,534) (60,534)

company other payables (1,096) (1,096) (1,064) (1,064)amounts due to subsidiaries (2,705) (2,705) (2,730) (2,730)loans and borrowings (7,150) (7,150) (4,104) (4,104) (10,951) (10,951) (7,898) (7,898)

AN

NU

AL R

EP

OR

T 2018

103

27. Financial instruments (continued)

27.2 Net gains and losses arising from financial instruments

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Net gains/(losses) arising on: loans and receivables 917 (2,139) 3,697 (2,430)financial liabilities measured at amortised cost (1,731) (2,053) (198) (137) (814) (4,192) 3,499 (2,567)

27.3 financial risk management

The Group has exposure to the following risks from its use of financial instruments:

� credit risk� liquidity risk� market risk

27.4 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, fixed deposits with licensed banks and financial guarantees given to one of its subsidiary, y.s.p. industries (m) sdn. bhd. (“yspim”) for amounts owing by its related corporations.

trade 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.

at each reporting date, the group or the company assesses whether any of the trade receivables are credit impaired.

the gross carrying amounts of credit impaired trade receivables are written off (either partially or full) when there is no realistic prospect of recovery. this is generally the case when the group or the company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. Nevertheless, trade receivables that are written off could still be subject to enforcement activities.

There are no significant changes as compared to previous year.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables are represented by the carrying amounts in the statement of financial position.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

104

27. Financial instruments (continued)

27.4 credit risk (continued)

trade receivables (continued)

Concentration of credit risk

The exposure of credit risk for receivables as at the end of the reporting period by geographic region was:

Group 2018 2017 rM’000 rM’000

malaysia 56,260 50,003singapore 3,998 4,485vietnam 3,344 4,274philippines 216 159others 27 1,394 63,845 60,315

Recognition and measurement of impairment loss

The Group uses an allowance matrix to measure expected credit losses (“ECLs”) of trade receivables for all segments. consistent with the debt recovery process, invoices which are past due 90 days will be considered as credit impaired.

loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to 90 days past due. loss rates are based on actual credit loss experience over the past two years.

The following table provides information about the exposure to credit risk and ECLs for trade receivables as at 31 December 2018 which are grouped together as they are expected to have similar risk nature.

The ageing of trade receivables and trade amounts due from affiliates as at the end of the reporting period was:

individual Group Gross impairment Net

rM’000 rM’000 rM’000

2018 not past due 48,271 (204) 48,067 past due 1 - 30 days 10,149 (166) 9,983 past due 31 - 60 days 3,826 (148) 3,678 past due 61 - 90 days 1,723 (97) 1,626 past due 91 - 120 days 365 (160) 205 past due more than 120 days 902 (637) 265 65,236 (1,412) 63,824 credit impaired individually impaired 705 (684) 21 65,941 (2,096) 63,845 trade receivables 65,941 (2,096) 63,845

AN

NU

AL R

EP

OR

T 2018

105

27. Financial instruments (continued)

27.4 credit risk (continued)

trade receivables (continued)

the movements in the allowance for impairment in respect of trade receivables during the year are shown below:

2018 trade receivables Lifetime credit Group ecL impaired total

rM’000 rM’000 rM’000

Balance at 1 January (MFrs 139) - 1,036 1,036 amounts written off (47) (59) (106)net remeasurement of loss allowance 1,583 (293) 1,290

1,536 684 2,220

Effect of forex (124)

Balance at 31 December (MFrs 9) 2,096

Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement

The aging of trade receivables as at 31 December 2017 was as follows: individualGroup Gross impairment Net

rM’000 rM’000 rM’000

2017 not past due 47,583 - 47,583past due 1 - 30 days 7,180 (4) 7,176past due 31 - 60 days 2,778 - 2,778past due 61 - 90 days 1,662 (36) 1,626past due 91 - 120 days 522 (10) 512past due more than 120 days 1,626 (986) 640 61,351 (1,036) 60,315

The movements in the allowance for impairment losses of receivables during the financial year were:

Group 2017 rM’000

at 1 January 1,199impairment loss recognised 517impairment loss reversed (598)Effect of movements in exchange rates (82)

at 31 December 1,036

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

106

27. Financial instruments (continued)

27.4 credit risk (continued)

trade receivables (continued)

At 31 December 2018, a significant individual impairment loss of RM551,000 (2017: RM551,000) 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.

cash and cash equivalents

The cash and cash equivalents are held with banks and financial institutions. 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.

these deposits and balances with licensed banks have low credit risks. consequently, the group and the company are of the view that no loss allowance is considered necessary.

other receivables

credit risks on other receivables are mainly arising from other non-trade debtors and deposits paid for purchase of plant and machinery to suppliers.

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.

as at the end of the reporting period, the group and the company do not consider it necessary to recognise any allowance for impairment losses.

financial guarantees

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries and unsecured financial guarantee to one of the subsidiaries in respect of amount owing from certain other subsidiaries. the company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

Exposure to credit risk, credit quality and collateral

The maximum exposure to credit risk amounts to RM68,145,000 (2017: RM10,982,000) representing the outstanding banking facilities and intercompany advances of the subsidiaries as at the end of the reporting period. Recognition and measurement of impairment loss

The Company assumes that there is a significant increase in credit risk when a subsidiary’s financial position deteriorates significantly. The Company considers a financial guarantee to be credit impaired when:

• The subsidiary is unlikely to repay its credit obligation to the lenders in full; or• The subsidiary is continuously loss making and is having a deficit in shareholders’ fund.

The Company has not provided expected credit losses on these financial guarantees because there are no indicators that any subsidiaries would default on repayments.

AN

NU

AL R

EP

OR

T 2018

107

27. Financial instruments (continued)

27.4 credit risk (continued)

inter-company loans and advances

Risk management objectives, policies and processes for managing the risk

the company provides unsecured loans and advances to subsidiaries. the company monitors the results of the subsidiaries on an individual basis.

Exposure to credit risk, credit quality and collateral

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.

loans and advances provided are not secured by any collateral or supported by any other credit enhancements.

Recognition and measurement of impairment loss

generally, the company considers loans and advances to subsidiaries have low credit risk. the company assumes that there is a significant increase in credit risk when the subsidiary’s financial positions deteriorate significantly. As the Company is able to determine the timing of payments of the outstanding amounts when they are payable, the company considers the loans and advances to be in default when the subsidiaries are not able to pay when demanded. the company considers a subsidiary’s loan or advance to be credit impaired when:

• The subsidiary is unlikely to repay its amount owed to the Company in full; or• The subsidiary is continuously loss making and are having a deficit in shareholders’ fund.

the company determines the probability of default for these loans and advances individually using internal information available. The Company has not provided expected credit losses on these loans and advances to subsidiaries because there are no indicators that any subsidiaries would default on repayments.

The following table provides information about the exposure to credit risk and ECLs for subsidiaries’ loans and advances as at 31 December 2018.

Gross impairment carrying loss Netcompany amount allowance balance

rM’000 rM’000 rM’000

2018 low credit risk 31,970 - 31,970

the movement in the allowance for impairment in respect of subsidiaries’ loans and advances during the year is as follows:

2018 Lifetime company ecL rM’000

Balance at 1 January per MFrs 139/MFrs 9 4,527capitalised to cost of investment (4,527)

Balance at 31 December -

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

108

27. Financial instruments (continued)

27.4 credit risk (continued)

inter-company loans and advances (continued)

Recognition and measurement of Impairment loss (continued)

Comparative information under MFRS 139, Financial Instruments: Recognition and Measurement

the movements in the allowance for impairment losses of the inter-company loans and advances during the financial year were:

company 2017 rM’000

at 1 January 14,734impairment loss recognised 2,143capitalised to cost of investment (12,350)

at 31 December 4,527

27.5 liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligation 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.

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:

contractual carrying interest/ contractual under More than amount profit rate cash flows 1 year 1 - 5 years 5 years rM’000 % rM’000 rM’000 rM’000 rM’000

Group2018 term loans 32,345 3.03 - 5.28 38,403 8,192 15,012 15,199 finance lease liabilities 4,810 3.02 - 10.42 4,964 2,380 2,584 -revolving credit 2,500 4.64 - 5.17 2,532 2,532 - -trade and other payables 33,192 - 33,192 33,192 - -amounts due to affiliated companies 5,819 - 5,819 5,819 - -

78,666 84,910 52,115 17,596 15,199

AN

NU

AL R

EP

OR

T 2018

109

27. Financial instruments (continued)

27.5 liquidity risk (continued)

Maturity analysis (continued)

contractual carrying interest/ contractual under More than amount profit rate cash flows 1 year 1 - 5 years 5 years rM’000 % rM’000 rM’000 rM’000 rM’000

company 2018 term loans 7,150 2.80 - 3.63 7,559 4,413 3,146 -other payables 1,096 - 1,096 1,096 - -amounts due to subsidiaries 2,705 - 2,705 2,705 - -financial guarantees - - 68,145 68,145 - - 10,951 79,505 76,359 3,146 -

Group2017 term loans 14,282 3.03 - 5.28 16,613 2,933 8,724 4,956finance lease liabilities 4,066 3.02 - 5.22 4,027 2,645 1,382 -revolving credit 1,500 4.62 - 5.26 1,518 1,518 - -trade and other payables 34,163 - 34,163 34,163 - -amounts due to affiliated companies 6,523 - 6,523 6,523 - -

60,534 62,844 47,782 10,106 4,956

company 2017 term loans 4,104 3.03 4,354 124 4,230 -other payables 1,064 - 1,064 64 1,000 -amounts due to subsidiaries 2,730 - 2,730 2,730 - -financial guarantees - - 10,982 10,982 - -

7,898 19,130 13,900 5,230 -

27.6 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.

27.6.1 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), indonesian rupiah (iDr) and vietnam Dong (vnD).

Risk management objectives, policies and processes for managing the risk 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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

110

27. Financial instruments (continued)

27.6 market risk (continued)

27.6.1 currency risk (continued)

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 IDR VND rM’000 rM’000 rM’000 rM’000 rM’000

Group2018 trade receivables 6,589 4,020 216 1,181 4,285cash and cash equivalents 8,780 8,740 1,119 4,262 11,150term loans (7,150) (598) - - -trade payables (9,880) - - - (60)Amounts due to affiliated companies (5,831) - - - -finance lease liabilities - (167) - - -

exposure in the statement of financial position, net (7,492) 11,995 1,335 5,443 15,375

Group2017 trade receivables 4,893 4,485 159 1,380 4,274cash and cash equivalents 6,845 8,335 1,235 3,868 6,598term loans (4,104) (696) - - (55)trade payables (9,051) - - - -amounts due to affiliated companies (6,475) - - - -finance lease liabilities - (67) - - -

exposure in the statement of financial position, net (7,892) 12,057 1,394 5,248 10,817

Denominated in USD 2018 2017 rM’000 rM’000

company

cash and cash equivalents 101 87term loans (7,150) (4,104)amounts due from subsidiaries 7,251 27,541

Exposure in the statement of financial position 202 23,524

AN

NU

AL R

EP

OR

T 2018

111

27. Financial instruments (continued)

27.6 market risk (continued)

27.6.1 currency risk (continued)

Currency risk sensitivity analysis

A 5% (2017: 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.

2018 2017 Profit Profit equity or loss equity or loss rM’000 rM’000 rM’000 rM’000

Group usD 285 285 300 300sgD (456) (456) (458) (458)php (51) (51) (53) (53)iDr (207) (207) (199) (199)vnD (584) (584) (411) (411)

company usD (8) (8) (894) (894)

A 5% (2017: 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.

27.6.2 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.

Risk management objectives, policies and processes for managing the 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.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

112

27. Financial instruments (continued)

27.6 market risk (continued)

27.6.2 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:

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

Fixed rate instruments financial assets 44,278 39,364 41,456 73,549financial liabilities (4,810) (4,066) - - 39,468 35,298 41,456 73,549 Floating rate instruments financial liabilities (34,845) (15,782) (7,150) (4,104)

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group and the Company do 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 points (“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 100bp 100bp 100bp 100bp

increase decrease increase decrease rM’000 rM’000 rM’000 rM’000

Group2018 floating rate instruments (265) 265 (265) 265 2017 floating rate instruments (120) 120 (120) 120

company2018 floating rate instruments (54) 54 (54) 54 2017 floating rate instruments (31) 31 (31) 31

AN

NU

AL R

EP

OR

T 2018

113

27. Financial instruments (continued)

27.7 fair value information

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 and financial guarantee to one of the subsidiaries in respect of amount owing from certain other 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:

2018 2017 Fair Fair carrying value carrying value amount Level 3 amount Level 3 rM’000 rM’000 rM’000 rM’000

Groupnon-current - term loans (29,710) (28,786) (11,873) (11,579)- finance lease liabilities (2,572) (2,457) (1,504) (1,417)

company non-current - term loans (7,102) (6,950) (4,081) (3,990)- amounts due from subsidiaries 12,094 10,972 52,996 52,727

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 Level 2 fair values

There has been no transfer between Level 1 and 2 fair values during the financial year (2017: no transfer between level 1 and 2 fair values).

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

114

27. Financial instruments (continued)

27.7 fair value information (continued)

Level 3 fair value

Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.

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 2018 2017 2018 2017 % % % %

non-current - amounts due from subsidiaries - - 3.57 - 5.00 4.00 - 5.50- term loans 3.03 - 5.28 3.03 - 5.28 3.03 3.03- finance leases 3.02 - 10.42 3.02 - 10.42 - -

28. 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 2018 and at 31 December 2017 were as follows:

Group 2018 2017 rM’000 rM’000

total borrowings (note 16) 39,655 19,848 total equity 321,003 295,696 Debt-to-equity ratios 0.12 0.07

There were no changes in the Group’s approach to capital management during the financial year and the Group is also required to maintain a maximum debt-to-equity ratio of 2.0 (2017: 2.0) to comply with certain bank covenants.

AN

NU

AL R

EP

OR

T 2018

115

29. capital commitments

Group 2018 2017 rM’000 rM’000

capital expenditure commitments plant and equipment contracted but not provided for 2,823 16,241

30. related parties

identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control or jointly 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 compensations (see Note 22), are as follows:

Group company 2018 2017 2018 2017 rM’000 rM’000 rM’000 rM’000

corporations related to a substantial shareholder purchases of pharmaceutical products 15,033 17,545 - -consultancy fees payable 38 48 - - companies in which certain Directors have interest: sales of pharmaceutical products (1,515) (1,094) - -purchases of traditional herbs products 18 - - -management fees received (23) (24) - -purchases of packaging materials 4,404 3,748 - -Rental paid for office 90 90 - - subsidiaries: Dividends received - - (16,426) (16,476)interest received - - (2,511) (2,421)share based payments recharged - - (1,019) (805)

Significant related party balances related to the above transactions are disclosed in Notes 9 and 13.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

116

31. Significant changes in accounting policies

31.1 During the year, the group and the company adopted mfrs 15, Revenue from Contracts with Customers and mfrs 9, Financial Instruments on their financial statements. the group and the company generally applied the requirements of these accounting standards retrospectively with practical expedients and transitional exemptions as allowed by the standards. Nevertheless, as permitted by MFRS 9, the Group and the company has elected not to restate the comparatives. there is no material impact arising from adoption of these new accounting standards.

31.2 In the adoption of MFRS 9, the following transitional exemptions as permitted by the standard have been adopted whereby the group and the company have not restated comparative information for prior periods with respect to classification and measurement (including impairment) requirements. Accordingly, the information presented for 2017 does not generally reflect the requirements of MFRS 9, but rather those of mfrs 139, Financial Instruments: Recognition and Measurement.

There was no financial impact on the financial assets of the Group and the Company as at 1 January 2018 arising from the adoption of mfrs 9.

Trade and other receivables that were classified as “loans and receivables” under MFRS 139 are now reclassified at “amortised cost”.

AN

NU

AL R

EP

OR

T 2018

117

In the opinion of the Directors, the financial statements set out on pages 47 to 116 are drawn up in accordance with malaysian financial reporting standards, international financial reporting standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2018 and of their financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………………Datuk Dr. Anis Bin Ahmad Director

…………………………………………………………Dato’ Dr. Lee Fang HsinDirector

Kuala lumpur,

Date: 18 March 2019

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 47 to 116 are, to the best of my knowledge and belief, correct and i make this solemn declaration conscientiously believing the declaration to be true, and by virtue of the statutory Declarations act, 1960.

subscribed and solemnly declared by the above named Dato’ Dr. lee fang hsin, 600227-89-5013, in Kuala lumpur on 18 march 2019.

……………………………………………….Dato’ Dr. Lee Fang Hsin

Before me:

stAteMeNt By Directors section 251(2) of the companies act 2016

stAtutory DecLArAtioN section 251(1)(b) of the companies act 2016

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

118

report on the Audit of the Financial statements

opinion

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 2018 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 47 to 116.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018, 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 companies act 2016 in malaysia.

Basis for opinion

we conducted our audit in accordance with approved standards on auditing in malaysia and international standards on auditing. our responsibilities under those standards are further described in the auditors’ responsibilities for the audit of the financial statements section of our report. we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

independence and other ethical responsibilities

we are independent of the group and of the company in accordance with the by-laws (on professional ethics, conduct and practice) of the malaysian institute of accountants (“by-laws”) and the international ethics standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the by-laws and the iesba code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

the key audit matter of the Group

Impairment of Property, Plant and Equipment

the group held rm138,244,000 of property, plant and equipment as at 31 December 2018. this impairment of property, plant and equipment has been identified as a key audit matter of the Group because the determination of whether to impair the property, plant and equipment involved significant judgments in determining the recoverable amounts of the property, plant and equipment, being the higher of their fair values less costs of disposal and their value-in-use. Significant judgment is required by the Directors in determining the underlying assumptions used to derive the fair value less costs of disposal.

How the matter was addressed in our audit

Our audit procedures performed over this area included, among others:

� Assessed the methodologies used by the external valuer to determine the appropriateness of the valuation methodology used in estimating fair value less cost of disposal of the properties.

� Evaluated the independent external valuer’s competency, capabilities and objectivity, and assessed the scope of work of the external valuer to determine whether the valuation was appropriate to be applied for financial reporting purposes.

� evaluated the estimate fair value provided by the management to reputable website.

iNDepeNDeNt AuDitors’ report to the members of y.s.p. southeast asia holding berhad (company no. 552781-X) (incorporated in malaysia)

AN

NU

AL R

EP

OR

T 2018

119

the key audit matter of the company

Impairment of Amounts Due from Subsidiaries and Cost of Investments in Subsidiaries and Associates

the company has amounts due from subsidiaries amounting to rm31,970,000, investments in subsidiaries amounting to rm128,986,000 and investments in associates amounting to rm2,183,000 as at 31 December 2018.

This has been identified as a key audit matter for the Company because significant judgement is required in assessing the recoverability of amounts owing by the subsidiaries, return on investments in subsidiaries and associates and whether impairment made is adequate.

How was the matter addressed in the audit:

our audit procedures performed over this area included, among others:

� challenged Directors’ assessment for indications of impairment by considering whether it had factored or considered relevant internal and external information.

� challenged the recoverable amount determined by the Directors by evaluating whether assumptions used were reasonable and supportable.

information other than the Financial statements and Auditors’ report thereon

the Directors of the company are responsible for the other information. the other information comprises the information included in the Annual Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially misstated. if, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. we have nothing to report in this regard.

responsibilities of the Directors for the Financial statements

The Directors of the Company are responsible for the preparation of financial statements of the Group and of the company that give a true and fair view in accordance with malaysian financial reporting standards, international financial reporting standards and the requirements of companies act 2016 in malaysia. the Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the group and of the company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the group and of the company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

120

Auditors’ responsibility for the Audit of the Financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in malaysia and international standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

as part of an audit in accordance with approved standards on auditing in malaysia and international standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

i) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

ii) obtain an understanding of internal controls relevant to the audit 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 internal control of the group and of the company.

iii) evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

iv) conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. however, future events or conditions may cause the group or the company to cease to continue as a going concern.

v) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that gives a true and fair view.

vi) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. we remain solely responsible for our audit opinion.

we communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

we also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. we describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our audit report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

AN

NU

AL R

EP

OR

T 2018

121

report on other Legal and regulatory requirements

in accordance with the requirements of the companies act 2016 in malaysia, we report that the subsidiaries of which we have not acted as auditors are disclosed in Note 6 to the financial statements.

other Matter

this report is made solely to the members of the company, as a body, in accordance with section 266 of the companies act 2016 in malaysia and for no other purpose. we do not assume responsibility to any other person for the content of this report.

KpMG pLt chan Kam chiew(LLP0010081-LCA & AF 0758) Approval Number: 02055/06/2020 Jchartered accountants chartered accountant

petaling Jaya,

Date: 18 March 2019

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

122

title / LocationDescription& usage tenure

Land/Built-up Areasq. metres

ApproximateAge of Building

Net Book value as at 31st December 2018(rM’000)

lot 3, 5 & 7, Jln p/7, section 13 Kawasan perindustrian bandar baru Bangi, 43000 Kajang, selangor, malaysia.

Held under :-- h.s.(m) 9635 for p.t.

11466, Seksyen 13;- h.s.(m) 9636 for

P.T.11467 Seksyen 13; and

- h.s.(m) 9637 for p.t. 11468 seksyen 13

all in the mukim of Kajang, District of Hulu langat state of selangor.

three contiguous parcels of industrial land with purpose built industrial buildings for own use consisting of:-(i) 4-storey office

/ laboratory building

(ii) 4-storey production / laboratory / warehouse building

(iii) 2-storey raw materials / packaging building

(iv) 1-storey maintenance / tenaga nasional berhad sub-station building

(v) 5-storey canteen/ warehouse/ packing area

(vi) water treatment plant

(vii) guard house

99 years leasehold, all expiring on 29.09.2086

0.4047 hectare each, totaling 1.2141 hectare or 2.861 acres

land - 11,580 (or 124,646 square feet)

gross build up areas- 22,982.62

26 years 23,553

no.18 & 20 Jalan wan Kadir, tmn tun Dr. ismail, 60000 Kuala lumpur, malaysia.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.

intermediate 3-storey terrace shop-office for own use

freehold land - 327

build up – 915.656

30 years 5,698

no. 2a & 8, Jalan 9/9m, no. 12 & 12a, Jalan 9/9l, seksyen 9, fasa 1, bandar baru bangi, selangor, malaysia.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.

4 units of double storey terrace house for own use

99 years leasehold

land - 143 per unit

build-up – 178.189 per unit

13 years 1,023

List oF properties as at 31st December 2018

AN

NU

AL R

EP

OR

T 2018

123

List oF properties (continued)

title / LocationDescription& usage tenure

Land/Built-up Areasq. metres

ApproximateAge of Building

Net Book value as at 31st December 2018(rM’000)

lot 1, Jalan 9/8, lot 2,4,6 & 8, Jalan 9/7, taman iKs, section 9, bandar baru Bangi, 43650 Kajang, selangor, malaysia.Held under :-- h.s.(D) 87699 for p.t.

56932 seksyen 9, - h.s.(D) 87693 for p.t.

56926 seksyen 9, - h.s.(D) 87694 for

p.t.56927 seksyen 9, - h.s.(D) 87695 for p.t.

56928 seksyen 9, and - h.s. (D) 87696 for p.t.

56929 seksyen 9, all in the mukim of Kajang, District of hulu langat, state of selangor.

five contiguous parcels of industrial lands with purpose built industrial buildings for own use consisting of :-

(i) 2-storey warehouse building pKns industrial land for factory build on lot 1 & 2 section 9, bandar baru bangi.

(ii) lot 4, 6 & 8 - vacant land

99 years leasehold, all expiring in year 2103

land - 4.03 acres / 13,939 square meters (5 units)

build up – 238,535

14 years 12,449

lot no 3, Jalan 9/8,taman iKs, section 9, bandar baru bangi, 43650 Kajang, Selangor, malaysia.Held under:- h.s.(D) 87700 for p.t.

56933, seksyen 9, bandar baru bangi, Daerah hulu langat, selangor.

vacant land 99 years leasehold, all expiring in year 2103

2,723.5 na 1,546

lot 12, Jln p/7, section 13 Kawasan perusahaan bangi, 43650 bandar baru bangi, selangor, malaysia.Held under :-- 5847, seksyen 13, lot

no. 27274lot 14, Jln p/7, section 13 Kawasan perusahaan bangi, 43650 bandar baru bangi, selangor Darul ehsan.Held under :-- 5846, seksyen 13, lot

no. 27275all within the mukim of Kajang, District of hulu langat, state of selangor.

3-storey factory annexed with 4 ½ storey office block

2 ½ storey factory building

99 years leasehold, expiring on 29.09.2086

land - 4,042 square meter

Gross floor area 5,336.00 square meters

land - 8,291 square meter

Gross floor area 9,568.00 square meters

31 years 12,547

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

124

List oF properties (continued)

title / LocationDescription& usage tenure

Land/Built-up Areasq. metres

ApproximateAge of Building

Net Book value as at 31st December 2018(rM’000)

industrial lot in sendayan techvalley held under hs(D) 223325 pt12687 bandar sri sendayan, District of seremban, state of negeri sembilan Darul Khusus, malaysia.

vacant land freehold a total area of approximately 28,381 square metres (305,490 square feet)

na 12,523

no.10, ubi crescent, # 06-57, singapore 408564.

flatted factory for own use

60 years leasehold, expiring on 04.07.2057

209 16 years 1,488

no.10, ubi cresent, # 06-58, singapore 408564.

flatted factory for own use

60 years leasehold, expiring on 04.07.2057

216 16 years 1,538

no.8, Kaki bukit road 2, #02-26, ruby warehouse Complex, Singapore 417841.

2nd storey flatted warehouse within a 4-storey industries development. let out.

60 years leasehold, expiring on 06.12.2041

139 33 years 584

nhon trach 3industry Zone-phase 2,Dong nai province, vietnam.

So:112/HDTD.NT3land used right Certificate: so ao 950020

industrial land with a factory

46 years leasehold, expiring on 31.12.2053

39,012 8 years 11,244

unit 3-b lpl plazacondominium building,no. 124 l.p leviste street, salcedo village, makati city, philippines.

condominium unit for own use

freehold 152 34 years 36

4th floor cacho gonzales,building 101 aguirre st.corner trasierra st.legaspi village,makati city, philippines.

Office and warehouse use

freehold 480 42 years 159

propinsi Jawa barat, Kabupaten bekasi, Kecamatan cikarang selatan, Desa cibatu, Delta silicon, lippo cikarang, indonesia 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 : 3,136

Building area :2,000

6 years 3,210

foresta business loft 1 no. 31, Jalan bsD raya utama, bsD city, south tangerang, banten, indonesia.

4-storey office building with a sublevel basement for office and warehouse use

land rights ownership expiring in year 2042

Land area : 190

Building area :715.47

4 years 4,057

AN

NU

AL R

EP

OR

T 2018

125

Total Number of Issued Shares : 138,404,985 ordinary shares Class of Shares : There is only one class of shares in the Company � ordinary shares Voting Rights : One vote per ordinary share

DistriButioN oF sHAreHoLDiNGsAs at 29th March 2019

size of Holdings No. of Holders total Holdings %

less than 100 shares 418 6,961 0.00100 – 1,000 shares 473 283,739 0.211,001 – 10,000 shares 1,322 5,812,321 4.20 10,001 – 100,000 shares 493 14,714,266 10.63 100,001 – below 5% of issued shares 81 56,382,284 40.74 5% and above of issued shares 2 61,205,414 44.22

total 2,789 138,404,985 100.00

suBstANtiAL sHAreHoLDersAs at 29th March 2019

No. Name Direct interest Deemed interestshares % shares %

1. ysp international company limited 52,365,605 37.84 - -2. Dato’ Dr. lee fang hsin 13,933,422 10.07 52,695,370(a) 38.073. Dr. lee fang chuan @ lee fang chen 2,082,097 1.50 52,365,605(b) 37.844. lee ling-chin 1,840,394 1.33 52,365,605(b) 37.845. Dr. lee fang-yu 1,447,952 1.05 52,365,605(b) 37.846. Dr. lee fang-Jen 1,213,970 0.88 52,365,605(b) 37.847. lee ling-fen 519,545 0.38 52,365,605(b) 37.848. yung shin formosa holding corporation - - 52,365,605(c) 37.849. yung shin global holding corporation - - 52,365,605(d) 37.84

sHAreHoLDiNG stAtisticsas at 29th march 2019

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

126

Directors’ sHAreHoLDiNGsAs at 29th March 2019

No. Name

Direct interest Deemed interestshares % shares %

1. Datuk Dr. anis bin ahmad 1,210,000 0.87 - -2. Dato’ Dr. lee fang hsin 13,933,422 10.07 52,695,370(a) 38.073. Dr. lee fang chuan @

lee fang chen2,082,097 1.50 52,365,605(b) 37.84

4. lee ling-chin 1,840,394 1.33 52,365,605(b) 37.845. Datuk Koay soon eng 867,000 0.63 - -6. tu shu yao 765,300 0.55 434,000(e) 0.31

note

(a) Deemed interest by virtue of his interest in yung shin global holding corporation and his spouse’s interest in the company pursuant to sections 8 and 59(11)(c) of the companies act 2016 respectively.

(b) Deemed interest by virtue of his/her interest in yung shin global holding corporation.(c) Deemed interest by virtue of Section 8 of the Companies Act 2016, through its 100% interest in YSP International

company limited. (d) Deemed interest by virtue of Section 8 of the Companies Act 2016, through its 100% interest in Yung Shin Formosa

holding corporation. (e) Deemed interest by virtue of his spouse’s interest in the company pursuant to section 59(11)(c) of the companies

act 2016.

AN

NU

AL R

EP

OR

T 2018

127

tHirty (30) LArGest sHAreHoLDers as at 29th March 2019

No. Names No. of shares held %

1 ysp international company limiteD 52,365,605 37.842 Dato’ Dr. lee fang hsin 8,839,809 6.39

3 hsbc nominees (asing) sDn bhD - eXempt an for sKanDinavisKa ensKilDa banKen ab (ucits v sweDish) 6,582,500 4.76

4 Dato’ Dr. lee fang hsin 5,093,613 3.68

5 citigroup nominees (tempatan) sDn bhD - employees proviDent funD boarD 3,775,900 2.73

6 amal pintas sDn bhD 2,381,000 1.72

7 ambanK (m) berhaD - pleDgeD securities account for tan Kong han (smart) 2,275,448 1.64

8 amanahraya trustees berhaD – pb islamic smallcap funD 2,076,100 1.50

9 lee ling-chin 1,840,394 1.33

10 Dr. lee fang chuan @ lee fang chen 1,822,097 1.32

11 Dr. lee fang-yu 1,447,952 1.05

12 Dr. lee fang-Jen 1,213,970 0.88

13 DatuK Dr. anis bin ahmaD 1,210,000 0.87

14 yan Kai yin 1,206,003 0.87

15 wong loK Jee @ ong loK Jee 1,200,000 0.87

16 leong foong fin 1,184,730 0.86

17 liao, miao-yi 1,128,600 0.82

18 hsbc nominees (asing) sDn bhD – eXempt an for creDit suisse (sg br-tst-asing) 1,100,000 0.79

19 public nominees (tempatan) sDn bhD - pleDgeD securities account for tan Kong han (ss2/piv) 1,066,600 0.77

20 hlb nominees (tempatan) sDn bhD - pleDgeD securities account for wong ah chiew 909,400 0.66

21 rhb nominees (asing) sDn bhD - tien te lee biomeDical founDation 892,262 0.64

22 lim Khuan eng 880,000 0.64

23 DatuK Koay soon eng 867,000 0.63

24 wong ah tim @ ong ah tin 800,000 0.58

25 public nominees (tempatan) sDn bhD - pleDgeD securities account for wong yee hui (Klc/Ken) 695,000 0.50

26 tu shu yao 662,300 0.48

27 lin, chi-Jui 640,153 0.46

28 citigroup nominees (tempatan) sDn bhD – Kumpulan wang persaraan (DiperbaDanKan) (amunDi sc eq) 600,000 0.43

29 public nominees (tempatan) sDn bhD - pleDgeD securities account for chee sai mun (e-Klc) 533,800 0.39

30 lee, ling-fen 519,545 0.38

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

128

Notice oF ANNuAL GeNerAL MeetiNGNotice is HereBy GiveN that the eighteenth annual general meeting of the company will be held at grand ballroom, level 3, bangi resort hotel, off persiaran bandar, 43650 bandar baru bangi, selangor, malaysia on tuesday, 28th may 2019 at 9:30 a.m. for the following purposes:-

AGeNDAAs orDiNAry BusiNess

1. to receive the audited financial statements of the company and its group for the financial year ended 31st December 2018 and the Reports of the Directors and the auditors thereon. (please refer to note 1)

2. To approve the payment of Directors’ fees and benefits for the financial year ended 31st December 2018 amounting to rm562,000.00.

(orDiNAry resoLutioN 1)

3. To approve the payment of dividend comprising the following for the financial year ended 31st December 2018:-

i) final ordinary dividend (single tier) of 7.0 sen per ordinary share; andii) final special dividend (single tier) of 1.5 sen per ordinary share

(orDiNAry resoLutioN 2)

4. to re-elect the following Directors retiring in accordance with the company’s articles of Association:-

i) mdm. lee ling chin – article 85

ii) Datuk Koay soon eng – article 85

iii) pn. hasnah binti ismail – article 92

iv) mr. chin chew mun – article 92

(orDiNAry resoLutioN 3)

(orDiNAry resoLutioN 4)

(orDiNAry resoLutioN 5)

(orDiNAry resoLutioN 6)

5 . To re-appoint Messrs. KPMG PLT as Auditors and to authorise the Board of Directors to fix their remuneration.

(orDiNAry resoLutioN 7)

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.”

ii) “THAT subject to passing of Ordinary Resolution 4, Datuk Koay Soon Eng be and is

hereby retained as Independent Non-Executive Director pursuant to the Malaysian code on corporate governance.”

iii) “THAT Mr. Tu Shu Yao be and is hereby retained as Independent Non-Executive

Director pursuant to the malaysian code on corporate governance.”

(orDiNAry resoLutioN 8)

(orDiNAry resoLutioN 9)

(orDiNAry resoLutioN 10)

7. AutHority to ALLot sHAres pursuANt to sectioNs 75 AND 76 oF tHe coMpANies Act 2016

“THAT pursuant to Sections 75 and 76 of the Companies Act 2016, and subject to the approvals from the relevant governmental /regulatory authorities, the Directors be and are hereby empowered to allot shares in 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 allotted pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company at the time of submission and that such authority shall continue in force until the conclusion of the next annual general meeting of the company.”

(orDiNAry resoLutioN 11)

AN

NU

AL R

EP

OR

T 2018

129

8. proposeD sHAreHoLDers’ MANDAte For recurreNt reLAteD pArty trANsActioNs oF A reveNue or trADiNG NAture For rrpt 1 to rrpt 8 AND rrpt 10 to rrpt 15

proposeD sHAreHoLDers’ MANDAte For recurreNt reLAteD pArty trANsActioNs oF A reveNue or trADiNG NAture For rrpt 9

“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 29th april 2019 (“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 340(2) of the Companies Act 2016 (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Companies Act 2016); or

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

anD that, the Directors of the company be and hereby authorized to complete and to do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Mandate.”

(orDiNAry resoLutioN 12)

(orDiNAry resoLutioN 13)

9. proposeD ADoptioN oF New coNstitutioN oF tHe coMpANy

“THAT approval be and is hereby given to revoke the existing Memorandum and Articles of association of the company and in place thereof, the proposed new constitution of the Company as set out in Appendix A to the Annual Report be and is hereby adopted as the constitution of the company, anD that the Directors of the company be and are hereby authorized to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.”

(speciAL resoLutioN 1)

10. 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 29th day of april 2019Kuala lumpur

Y.S

.P. S

OU

TH

EA

ST

AS

IA H

OLD

ING

BE

RH

AD

(552

781-

X)

130

Notice oF DiviDeND eNtitLeMeNt AND pAyMeNt

NOTICE IS ALSO HEREBY GIVEN that subject to the approval of the shareholders, the dividend comprising the following for the financial year ended 31st December 2018 will be paid on 26th July 2019 to depositors registered in the Record of Depositors at the close of business on 28th June 2019:-

i) final ordinary dividend (single tier) of 7.0 sen per ordinary share; and

ii) final special dividend (single tier) of 1.5 sen per ordinary share

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 28th June 2019 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. the audited financial statements are 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 21st may 2019. only a depositor whose name appears on the record of Depositors as at 21st may 2019 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. all voting will be conducted by way of poll.

4. Where a member appoints two (2) proxies to attend at the same meeting, the appointment shall be invalid unless he/she specifies the proportion 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.

8. Explanatory Notes on Special Business

8.1 the proposed ordinary resolutions 8 to 10, if passed, will allow the directors namely, Datuk Dr. anis bin ahmad, Datuk Koay soon eng and mr. tu shu yao who have served for more than 12 consecutive years, to continue to act as Independent Non- Executive 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.

AN

NU

AL R

EP

OR

T 2018

131

8.2 the proposed ordinary resolution 11 is to give mandate to the board of Directors of the company the flexibility to allot new shares in the Company up to an amount not exceeding in total 10% of the total number of issued shares 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 allotment of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the allotment of new shares even though the number involved may be less than 10% of the total number of issued shares.

in order to avoid any delay and costs involved in convening a general meeting to approve such allotment of shares, it is thus considered appropriate that the Directors be empowered to allot shares in the company, up to any amount not exceeding in total 10% of the total number of issued shares of the Company at the time of submission, 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 25th may 2018.

8.3 the proposed ordinary resolutions 12 and 13, 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 29th april 2019.

8.4 The proposed Special Resolution 1 is to revoke the Company’s existing Articles of Association and to adopt a new constitution in place thereof, to be in line with the companies act 2016 and recent amendments to the listing requirements of bursa malaysia securities berhad for main market.

this page is intentionally left blank

ForM oF proXy(before completing this form please refer to the notes below)

No. of shares held :cDs Account No. :

i/we (nric no./passport no./company no.) (full name in block letters)

of (full address)being a member/members of y.s.p. soutHeAst AsiA HoLDiNG BHD. 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 eighteenth annual general meeting of the company to be held at grand ballroom, level 3, bangi resort hotel, off persiaran bandar, 43650 bandar baru bangi, selangor, malaysia on tuesday, 28th may 2019 at 9.30 a.m. and at every adjournment thereof to vote as indicated below:-

orDiNAry resoLutioNsFirst proXy secoND proXy

For AGAiNst For AGAiNst1. To approve the payment of Directors’ fees and benefits for the

financial ended 31 December 20182. To approve final dividend for the financial year ended 31

December 20183. to re-elect the director, mdm. lee ling chin4. to re-elect the director, Datuk Koay soon eng5. to re-elect the director, pn. hasnah binti ismail6. to re-elect the director, mr. chin chew mun7. to re-appoint the retiring auditors, messrs. Kpmg plt8. retention of independent director, Datuk Dr. anis bin ahmad9. retention of independent director, Datuk Koay soon eng

10. retention of independent director, mr. tu shu yao11. authority to allot shares12. proposed shareholders’ mandate for rrpt 1 to rrpt 8 and rrpt

10 to rrpt 1513. proposed shareholders’ mandate for rrpt 9

speciAL resoLutioN1. proposed adoption of new constitution of the company

(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).

as witness my hand this day of 2019 signature/common seal* strike out whichever is not desired.

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 21st may 2019. only a depositor whose name appears on the record of Depositors as at 21st may 2019 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. All voting will be conducted by way of poll.

4. Where a member appoints two (2) proxies to attend at the same meeting, the appointment shall be invalid unless he/she specifies the proportion 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.

the company secretaryy.s.p. soutHeAst AsiA HoLDiNG BHD. (552781-X) level 15-2, bangunan faber imperial courtJalan sultan ismail50250 Kuala lumpur

fold here for sealing

fold here

Affixstamphere

www.yspsah.comEmail: yspsah@yspsah.com