REPORT OF THE AUDITORS

21. PROVISION FOR RETIREMENT BENEFITS

The Group and the Company have a non-contributory unfunded retirement benefits scheme for those employees who are eligible under a collective bargaining agreement and a contributory funded retirement benefits scheme (known as Yeo Hiap Seng (M) Bhd Retirement Benefit Fund) for those management staff not covered by collective bargaining agreement but who fulfil certain conditions. As of 31st December, 2001, the provision for retirement benefits consists of the following:

(a) Retirement benefits for employees under a collective bargaining agreement, which are estimated and provided for in the financial statements taking into consideration the length of service and basic salary earnings of the eligible employees; and

(b) Retirement benefits for management staff, which are actuarially determined and the charge to operations includes current service costs plus amortisation of past service costs over a period of 5 years. Based on the actuary's valuation report in December 2000, past service costs not yet recognised in the financial statements as of 31st December, 2001, amounted to about RM1,319,000 (RM1,759,000 in 2000).

22. FINANCE LEASES AND HIRE-PURCHASE PAYABLES

The Group's obligations under finance leases and hire-purchase are as follows:

 The interest rates implicit in these obligations are about 4.9% to 5.4% (4.9% to 5.4% in 2000) per annum.

The non-current portion of the obligations is repayable as follows:

23. DEFERRED TAX LIABILITIES

As mentioned in Note 3, the effects of timing differences which would give rise to net deferred tax assets are recognised generally on actual realisation. As of 31st December, 2001, the amount of estimated net deferred tax assets of the Group and
the Company calculated at applicable tax rate which is not recognised in the financial statements, are as follows:

24. SHARE CAPITAL

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 (Note 11).

The resultant premium arising from the shares issued, net of other 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.

25. RESERVES

Distributable reserves are those available for distribution by way of cash dividends. Based on estimated tax credits available and prevailing tax rates applicable to dividends, the unappropriated profit of the Company is available for distribution by way of cash dividends without additional tax liability being incurred.

As of 31st December, 2001, the Group and the Company have claimed reinvestment allowances and investment tax credits amounting to about RM54,229,000 (RM50,443,000 in 2000) and RM39,887,600 (RM35,487,000 in 2000) respectively,
under the Investment Incentive Act, 1968 (revised 1978) and Promotion of Investment Act, 1986. These reinvestment allowances and investment tax credits, if confirmed by the Inland Revenue Board, will enable the Company and its subsidiary
companies to distribute tax exempt dividends up to the same amount. As of 31st December, 2001, the Group and the Company have reinvestment allowances and investment tax credits approved by the tax authorities amounting to about
RM31,274,000 and RM16,938,000 (RM23,539,000 and RM16,380,000 in 2000) respectively.

26. DIVIDENDS

Dividends consist of the following:

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.

27. CONTINGENT LIABILITIES

As of 31st December, 2001, the subsidiary companies have credit and loan facilities amounting to RM200,000 (RM1,950,000 in 2000) obtained from local financial institutions which are guaranteed by the Company. Accordingly, as of 31st December, 2001, the Company is contingently liable to the extent of the amount of the credit and loan facilities utilised by its subsidiary companies. None of the credit and loan facilities is secured against the assets of the Company or of the Group.

28. COMMITMENTS

As at the end of the financial year, the Group and the Company have commitments in respect of the following:

29. BUSINESS SEGMENTS

The segment information by activities for the Company and its subsidiary companies are as follows:

The segments share significant common distribution network and resources and the directors are of the opinion that it is not meaningful and practical to allocate common costs and assets employed to the individual segment. Accordingly, the results and assets employed by activities have not been disclosed as required under International Accounting Standard No. 14.

Information on the Group's operations by geographical segments has not been provided as the Group operates principally in Malaysia.

30. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash flow statements comprise the following balance sheet items:

Previous Page