The directors of YEO HIAP SENG (MALAYSIA) BERHAD have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31st December, 2001.

PRINCIPAL ACTIVITIES
The Company is principally involved in the production, marketing and sale of beverage and food products.

The subsidiary companies are principally involved in the production, marketing and distribution of beverage and food products.

There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year.

RESULTS OF OPERATIONS
The results of operations of the Group and of the Company for the current financial year are as follows:

In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS
A final dividend of 5%, tax exempt, amounting to RM4,190,000 proposed in the previous financial year and dealt with in the previous directors' report were paid by the Company during the current financial year.

An interim dividend of 3%, less tax, amounting to RM2,766,864 was paid in respect of the current financial year. The directors proposed a final dividend of 6.5%, tax exempt, amounting to RM8,326,210 in respect of the current financial year. This dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as liability in the financial statements.

The proposed final dividend for 2001 is payable in respect of all ordinary shares in issue as at the date of the financial statements.

RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the Financial Statements.

ISSUE OF SHARES AND DEBENTURES
As approved by the shareholders at the Extraordinary General Meeting held on 11th July, 2001, the authorised share capital of the Company was increased from RM100,000,000 to RM300,000,000 during the financial year by the creation of an additional 200,000,000 ordinary shares of RM1 each.

As approved by the shareholders at the Extraordinary General Meeting held on 21st August, 2001, the issued and paid-up share capital of the Company was increased from RM83,800,000 to RM128,095,541 by the issue of 44,295,541 ordinary shares of RM1 each at RM1.67 per share, to effect the acquisition of the entire equity interest in YHS Beverage (International) Pte Ltd, a company incorporated in Singapore, from Yeo Hiap Seng (Singapore) Pte Ltd.

The resultant premium arising from the shares issued, net of acquisition costs, of RM28,415,274 has been credited to the share premium account.

The new ordinary shares issued rank parri passu with the then existing ordinary shares of the Company.

The Company has not issued any debentures during the financial year.

SHARE OPTIONS
No options were granted by the Company to any parties during the financial year to take up unissued shares of the Company.

No shares were issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As of the end of the financial year, there were no unissued shares of the Company under options.

OTHER FINANCIAL INFORMATION
Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad receivables and the making of allowance for doubtful receivables, and had satisfied themselves that all known bad receivables had been written off and that adequate allowance had been made for doubtful receivables; and

(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

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

(a) which render the amount written off for bad receivables or the amount of allowance for doubtful receivables in the financial statements of the Group and of the Company inadequate to any substantial extent;

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

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or

(d) not otherwise dealt with in this report or financial statements which 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:

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may 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, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the succeeding financial year.

DIRECTORS
The following directors served on the Board of the Company since the date of the last report:

Dato' Borhan bin Kuntom
Brigadier General (R) Dato' Yahya bin Yusof
Chew Eng Chai
Leong Horn Kee
Raja Dato' Hj. Redzwa bin Raja Tun Uda
Donald Reginald Gadsden
Lim Keng Teck
Tan Teow Choon
Gan Nga Kok @ Jacob Gan

Messrs. Leong Horn Kee and Donald Reginald Gadsden retire in accordance with the Company's Articles of Association and, being eligible, offer themselves for re-election.

In accordance with Section 129 of the Companies Act, 1965, Messrs. Dato' Borhan bin Kuntum and Raja Dato' Haji Redzwa bin Raja Tun Uda retire and, being eligible, offer themselves for re-election.

DIRECTORS' INTERESTS
The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the Register of Directors' Shareholdings kept by the Company under Section 134, are as follows:

None of the other directors hold shares or have any beneficial interest in the shares of the Company or its related companies during the financial year.

DIRECTORS' BENEFITS
Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefit (other than the benefit included in the aggregate of emoluments received or due and receivable by directors as disclosed in the financial statements or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

HOLDING COMPANIES
During the financial year, YHS (Singapore) Pte. Ltd, a company incorporated in Singapore, became the immediate holding company when the latter acquired 60.7% equity interest in the Company. The directors regard Yeo Hiap Seng Limited, a company also incorporated in Singapore, as the ultimate holding company.

AUDIT COMMITTEE
In compliance with the listing requirement set up by Kuala Lumpur Stock Exchange (KLSE), the audit committee was established on 24th March, 1994 comprising the following directors:

Dato' Borhan bin Kuntom (Chairman)
Raja Dato' Hj. Redzwa bin Raja Tun Uda
Brigadier Jeneral (B) Dato' Yahya bin Yusof
Chew Eng Chai
Tan Teow Choon

The functions of the audit committee as stipulated in the KLSE listing requirements include discussion and review with the management, internal auditors and the auditors of the Company, the scope and results of the internal and statutory audits, financial and operating results, internal controls, accounting policies and other significant matters, including the annual financial statements which accompany this report.

AUDITORS
The auditors, Messrs. Deloitte KassimChan, have indicated their willingness to continue in office.

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

____________________________________________
TAN TEOW CHOON
Petaling Jaya
27th February, 2002