Chairman's Statement

2003 was a challenging year for the Group. The war in Iraq and the outbreak of SARS took a toll on consumer spending in general. Due to clarity of goals and a growth strategy aimed at focusing on core products and improving margins through effective cost control measures, I am pleased to report that the Group turned in an improved operating profit in 2003.

>>Financial Performance

High product quality, manufacturing efficiency and speed to market are essential to our business. With improved technology, new machinery and better workflow, we have been able to achieve higher productivity and less wastage. We will continue to strive for high quality standards, improve our distribution and management information system in order to better serve our customers.

>> Brand Building and New Products

In the year 2003, we set ourselves a mission to rejuvenate the YEO'S brand and reach out to the younger consumers.

Extensive market research and product development resulted in a bold new range of "refreshingly different " drinks. Our YEO'S JUSTEA and YEO S BLACK SOY come with exciting flavours, refreshing taste profiles, vibrant packaging designs and a new YEO'S logo that is hip, fun and friendly. JUSTEA Green Tea with Lemon in particular, has garnered many ardent consumers. To capitalise on this trend, JUSTEA Green Tea with Peach and JUSTEA Ice Tea with Lemon were launched in the last quarter. More variants will be launched in year 2004.

We will continue to launch new drinks under the classic range, which remains a favourite in Malaysian households. Plans are also in the pipeline to introduce new exciting products in food and sauces.

>> Human Resource Our staff are our most important assets and Human Resource development remains one of our top priorities. "Continuous Learning" programs were conducted throughout the year to enhance the knowledge and skills of our staff to prepare them for the challenges ahead. >> Corporate Governance We recognise that good corporate governance will play a key role in the Group's growth and development. In the current year, we will continue in our efforts to ensure disclosure and transparency in all segments of the Group's activities.

>> Dividend

During the year, the Group paid out an interim dividend of 2 sen and a special dividend of 3 sen. The Board is recommending a final dividend of 9 sen, making a total of 14 sen per share for 2003.

>> Prospects

The food and beverage business will rem ain highly competitive. Our sales, selling prices and market share will continue to come under pressure . The success of new product launches, particularly 'JUSTEA', will enhance our leadership position. More new products will be launched to ride on the momentum. The group will focus on brand building activities, and continue to manage cost and improve efficiency. The Group is confident that performance will continue to improve.

>> The Board Some changes occurred at the Board. I am pleased to announce the appointment of Mr. Winston Y.K. Mah as Executive Director and Chief Executive Officer of YHSM. During the year, Mr. Tan Teow Choon resigned as Managing Director of the Group to pursue his own business. In addition, Mr. Chan Wai Ming, who is due to retire by rotation at the forthcoming Annual General Meeting, has indicated that he does not wish to seek for re-election. I thank both gentlemen for their contributions to the Group over the years. >> Acknowledgements On behalf of the Board, I would like to extend our thanks to our customers, business associates and shareholders for their support. I would also want to thank our staff for their dedication, commitment and hard work.

Ng Chee Tat Philip
Chairman