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Diethelm Holdings (Malaysia) Berhad

Diethelm Holdings (Malaysia) Berhad (231378-A)

74 Jalan UniversityP. O. Box 77, 46700 Petaling Jaya, Selangor, MalaysiaTel : +60 3 7966 0288 Fax : +60 3 7957 0829www.dksh.com

A N N U A L R E P O R T 2 0 0 4

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Strong RootsIn the 1860’s the pioneering young Swiss entrepreneurs,

Wilhelm Heinrich Diethelm and Edward Anton Keller

ventured to Singapore and the Philippines, while

Hermann Siber headed for Yokohama. Independently, all

three built flourishing trading houses that soon developed

extensive networks connecting Asia, Europe and the

Americas. The Diethelm, Edward Keller and Siber

Hegner companies gained a superior understanding and

knowledge of their markets and customers, which earned

them the respect and trust of local business communities,

as well as international business partners. While

mastering the challenges of the 19th and 20th centuries,

the companies developed into state-of-the-art marketing,

services and distribution specialists.

The FutureIn 2002, the Diethelm Keller Group merged its Asian

service business with the SiberHegner Group to form

DKSH, combining their distinctive strengths. The new

logo contains elements of each partner’s trademarks. The

fan tree represents the Group’s strength, durability and

longevity. Market Intelligence describes DKSH’s core

competency. While maintaining the high-quality

standards and long-term commitment of the Group to

partners, principals, customers and employees, DKSH is

committed to build a global service brand in its areas of

expertise.

The fan tree has been a trademark of the Group for a century.

Hermann SiberJapan, 1865

Edward Anton KellerPhilippines, 1887

Wilhelm Heinrich DiethelmSingapore, 1887

Contents

2 Notice of Annual General Meeting

4 Corporate Information

5 Operating Structure

6 Directors’ Profile

8 To Our Shareholders

10 Corporate Profile

16 Corporate Governance Statement

20 Internal Control Statement

22 Audit Committee

24 Analysis of Shares

26 List of Properties

27 Financial Highlights

27 Statement of Directors’ Responsibility

28 Directors’ Report

33 Consolidated Income Statement

34 Company Income Statement

35 Balance Sheets

37 Consolidated Statement of Changes in Equity

38 Company Statement of Changes in Equity

39 Cash Flow Statements

41 Notes to the Financial Statements

82 Statement by Directors and Statutory Declaration

83 Auditors’ Report

Proxy Form

Notice of Annual General Meeting

Diethelm Holdings (Malaysia) BerhadAnnual Report 200402

NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting of the Company will be held at the Kristal Ballroom 2, First Floor, East Wing, Hilton Petaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan on Thursday, 9 June 2005 at 10.00 a.m. for the purpose of transacting the following business:

AGENDA

As Ordinary Business

1. To receive and adopt the audited financial statements for the year ended 31 December 2004 and the reports of the directors and auditors thereon. Resolution 1

2. To approve the payment of a final dividend of one (1) sen gross per ordinary share less 28%income tax for the year ended 31 December 2004. Resolution 2

3. To approve the payment of directors’ fees for the year ended 31 December 2004. Resolution 3

4. To re-elect the following Directors who retire pursuant to Article 99 of the Company’sArticles of Association and, being eligible, offer themselves for re-election:

(a) Ahmad Fakhrizzaki Abdullah Resolution 4(b) Thon Lek Resolution 5

5. To elect James Armand Menezes who retires pursuant to Article 82 of the Company'sArticles of Association and, being eligible, offers himself for election. Resolution 6

6. To re-appoint PricewaterhouseCoopers as auditors of the Company and to authorise the directors to fix their remuneration. Resolution 7

7. To transact any other business of an Annual General Meeting for which due notice shall have been given.

By Order of the Board

Wendy Chan Choi Kuan, MCCS

Company Secretary (MACS 00728)

Petaling Jaya 18 May 2005

Notes(a) Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place. A proxy need

not be a member of the Company. (b) The Proxy Form must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under seal or

under the hand of an officer or attorney duly authorised. In the case of joint holdings, the signature of the first named holder is sufficient. (c) If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fit.(d) If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy. (e) The Proxy Form must be deposited at the Registered Office of the Company, 3rd Floor, 74 Jalan University, 46200 Petaling Jaya not less than forty-

eight (48) hours before the time of holding the Meeting or any adjournment thereof.

Diethelm Holdings (Malaysia) BerhadAnnual Report 2004 03

1. Details of Attendance of Directors at Board Meetings

A total of four Board Meetings were held during the financial year ended 31 December 2004, details of which are as follows:

Date Time Venue

25 February 2004 5.00 p.m. 74 Jalan University, Petaling Jaya13 May 2004 10.30 a.m. 74 Jalan University, Petaling Jaya20 August 2004 12.00 noon 74 Jalan University, Petaling Jaya26 November 2004 3.30 p.m. 74 Jalan University, Petaling Jaya

Name of Directors Number of Meetings Attended

Michael Lim Hee Kiang 4 of 4Ahmad Fakhrizzaki Abdullah 4 of 4James Armand Menezes (appointed on 19 July 2004) 2 of 2Niels Johan Holm 4 of 4André Eugen Hägi 4 of 4Thon Lek 2 of 4

2. Directors who are Standing for Election and Re-election

• Ahmad Fakhrizzaki Abdullah who retires by rotation pursuant to Article 99 of the Company’s Articles ofAssociation and, being eligible, offers himself for re-election.

• Thon Lek who retires by rotation pursuant to Article 99 of the Company’s Articles of Association and, being eligible, offers himself for re-election.

• James Armand Menezes, who retires pursuant to Article 82 of the Company's Articles of Association and, being eligible, offers himself for election.

Profiles of the Directors standing for election and re-election are disclosed on pages 6 and 7 of the Annual Report.

3. Date, Time and Place of the Thirteenth Annual General Meeting

The Thirteenth Annual General Meeting of Diethelm Holdings (Malaysia) Berhad will be held as follows:

Date : Thursday, 9 June 2005Time : 10.00 a.m. Place : Kristal Ballroom 2, First Floor, East Wing

Hilton Petaling Jaya No. 2, Jalan Barat 46200 Petaling Jaya Selangor Darul Ehsan Malaysia

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING

BOARD OF DIRECTORS

Michael Lim Hee Kiang Independent Non-Executive Chairman

Ahmad Fakhrizzaki Abdullah Non-Independent Non-Executive Director

James Armand Menezes Independent Non-Executive Director

Niels Johan Holm Group Managing Director

André Eugen Hägi Group Finance Director

Thon Lek Executive Director

COMPANY SECRETARY

Wendy Chan Choi Kuan, MCCS(MACS 00728)

REGISTERED ADDRESS

74 Jalan University46200 Petaling JayaSelangor Darul EhsanTelephone : +60 3 7966 0288Facsimile : +60 3 7957 0829

AUDITORS

PricewaterhouseCoopersChartered Accountants

PRINCIPAL BANKERS

Malayan Banking BerhadDeutsche Bank (Malaysia) BerhadPublic Bank BerhadRHB Bank BerhadSouthern Bank Berhad

SOLICITORS

Shearn Delamore & Co

AUDIT COMMITTEE

James Armand Menezes Chairman of Audit Committee

Michael Lim Hee Kiang Member

Ahmad Fakhrizzaki AbdullahMember

SHARE REGISTRARS

Tenaga Koperat Sdn Bhd (118401-V)

20th Floor Plaza Permata (formerly known as IGB Plaza) Jalan Kampar Off Jalan Tun Razak 50400 Kuala Lumpur Telephone : +60 3 4041 6522 Facsimile : +60 3 4042 6352

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad - Main BoardStock Code : 5908Trustee Share Status

Corporate Information



100%

100% Harpers Trading (B) Sdn Bhd100%

100%

100%

100%

100%

100%

51%

Operating Structure


Diethelm Malaysia Sdn Bhd

Harpers Trading (Malaysia) Sdn Bhd

Diethelm Logistics Services Sdn Bhd

Diethelm Central Services Sdn Bhd

Diethelm Chemicals Malaysia Sdn Bhd

The Famous Amos Chocolate ChipCookie Corporation (M) Sdn Bhd

EAC Transport Agencies (Malaysia) Sdn Bhd

DKSH Marketing Services Sdn Bhd(Formerly known as EAC Marketing Services Sdn Bhd)

Directors' Profile


Michael Lim Hee KiangIndependent Non-Executive Chairman, Member of the Audit Committee

Mr Michael Lim Hee Kiang, aged 57, a Malaysian, is an Independent Non-Executive Director and Chairman of Diethelm Holdings (Malaysia) Berhad. He was appointed as Director of Diethelm Holdings (Malaysia) Berhad on 24 December 1991 and as Chairman of the Board on 1 January 1999. He continued to serve as a member of the Audit Committee after he has relinquished his position as Chairman of the Audit Committee on 10 December 2004. Mr Michael Lim is an Advocate and Solicitor and currently practises with Messrs Shearn Delamore & Co. where he has been a partner of the firm for the last 26 years. He graduated with a Bachelor of Laws (Hons.) degree in 1972 and obtained a Master of Laws degree with Distinction from the Victoria University of Wellington, New Zealand in 1973. On returning to Malaysia in 1974, he was admitted to the High Court of Borneo and subsequently to the High Court of Malaya in 1978. Mr Michael Lim was formerly a lecturer at the Law Faculty, University of Malaya for three years from 1975 to 1977. Mr Michael Lim attended all the four Board meetings of the Company held in the financial year ended 31 December 2004. He also sits on the boards of Selangor Properties Berhad, Dijaya Corporation Berhad, Paragon Union Berhad and Major Team Holdings Berhad. Mr Michael Lim does not have any family relationship with any director and/or major shareholder of Diethelm Holdings (Malaysia) Berhad, nor any personal interest in any business arrangement involving the Company with the exception that he is a partner of the Company’s principal solicitors, Messrs Shearn Delamore & Co. He has had no convictions for any offences within the past 10 years.

Ahmad Fakhrizzaki Abdullah Non-Independent Non-Executive Director, Member of the Audit Committee

En Ahmad Fakhrizzaki Abdullah, aged 59, a Malaysian, is a Non-Independent Non-Executive Director of Diethelm Holdings (Malaysia) Berhad. He was appointed to the Board of Diethelm Holdings (Malaysia) Berhad on 9 March 1993. He is also a member of the Audit Committee of the Company. En Ahmad was formerly the Deputy Chief Executive of Lembaga Tabung Angkatan Tentera (LTAT) where his responsibility covered three major areas namely Administration, Finance and Investment. En Ahmad graduated from the University of Malaya with a degree in Economics in 1971 and in 1992 attended the INSEAD International Management Programme at Fountainebleau, France. Prior to joining LTAT in August 1974, he taught at a private academic institution in Kuala Lumpur and later served as a Systems Analyst at Malaysian Airline System. En Ahmad attended all the four Board meetings of the Company held in the financial year ended 31 December 2004. En Ahmad does not have any family relationship with any director and/or major shareholder of Diethelm Holdings (Malaysia) Berhad, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years.

James Armand MenezesIndependent Non-Executive Director, Chairman of the Audit Committee

Mr James Armand Menezes, aged 59, a Malaysian, was appointed as an Independent Non-Executive Director and a member of the Audit Committee of Diethelm Holdings (Malaysia) Berhad on 19 July 2004. He was subsequently appointed as the Chairman of the Audit Committee on 10 December 2004. Mr Menezes, a qualified Certified Public Accountant (CPA) and Chartered Accountant spent 25 years with Ernst & Young of which he was a partner for 13 years. He was the Managing Partner of the Kuala Lumpur Office of Ernst & Whinney (now known as Ernst & Young) for 5 years before he retired from the firm on 30 June 1990. He was also a partner of Ernst & Young, Hong Kong, Singapore, Brunei and Indonesia. Mr Menezes represented those offices in Ernst & Young’s international Technical Committee for 5 years and was also the Chairman of the Far East Technical & Training Committee. During his term of office there, he undertook quality control assignments at Ernst & Young’s offices in other parts of the world. On his retirement from Ernst & Young in 1990, he set up a company under the name of JA Menezes & Associates Sdn Bhd. This Company was dissolved in 2001 when he fully retired from practice. During the 10 years from 1990 to 2000, Mr Menezes held board positions in private and public listed companies in the United Kingdom, Australia, Singapore, Hong Kong and Malaysia. He is presently a director of Sphere Corporation Sdn Bhd and is an active council member and Treasurer, on a voluntary basis, of Hospis


Malaysia, a non-governmental organisation limited by guarantee. Since he was only appointed on 19 July 2004, Mr James Menezes attended only two out of the four Board Meetings of the Company held in the financial year ended 31 December 2004. He does not have any family relationship with any director and/or major shareholder of Diethelm Holdings (Malaysia) Berhad, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years.

Niels Johan HolmGroup Managing Director

Mr Niels Johan Holm, aged 50, a Dane, was appointed as the Group Managing Director of Diethelm Holdings (Malaysia) Berhad on 6 January 2003. He was a member of the Audit Committee from 12 June 2003 to 19 July 2004. Mr Holm is a graduate from EAC/Copenhagen Business School majoring in Economics. He joined the Diethelm Group in March 1997 in Thailand and commands more than 25 years experience in distribution and logistics business in Hong Kong, Malaysia, Taiwan, Singapore and Thailand. Mr Holm attended all the four Board meetings of the Company held in the financial year ended 31 December 2004. He also sits on the boards of the various subsidiaries of Diethelm Holdings (Malaysia) Berhad. He does not have any family relationship with any director and/or major shareholder of Diethelm Holdings (Malaysia) Berhad, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years.

André Eugen Hägi Group Finance Director

Mr André Eugen Hägi, aged 56, a Swiss, was appointed as the Group Finance Director of Diethelm Holdings (Malaysia) Berhad on 12 November 1997. Mr Hägi is a Swiss certified financial controller and obtained a post-graduate degree in Master of Business Administration from Brunel University of London. From 1981 to 1996, he worked with Ciba-Geigy of Switzerland as Head of Finance and Administration of their companies in Iran, Singapore, Turkey, as well as of Ciba Agro International Ltd in Switzerland. From 1996 to 1997 he was with the Swiss watch group SMH before joining Diethelm Holdings (Malaysia) Berhad in November 1997. Mr Hägi attended all the four Board meetings of the Company held in the financial year ended 31 December 2004 and he also sits on the boards of the Diethelm Holdings (Malaysia) Berhad group of companies. Mr Hägi does not have any family relationship with any director and/or major shareholder of Diethelm Holdings (Malaysia) Berhad, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years.

Thon LekExecutive Director

Mr Thon Lek, aged 57, a Malaysian, was appointed to the Board of Diethelm Holdings (Malaysia) Berhad on 3 January 2002. He holds a Bachelor of Economics Degree majoring in Applied Economics from the University of Malaya. Mr Thon started his career with Harpers Trading (Malaysia) Sdn Bhd in 1971 holding various managerial positions until he was appointed as Managing Director in 1995. In recognition of his extensive experience in the fields of marketing, sales, administration, logistics and warehousing for close to three decades, in 1999, Mr Thon was appointed as Chief Operating Officer, Consumer Product Operations of Diethelm Holdings (Malaysia) Berhad where he oversees all consumer product operations of Diethelm Malaysia Sdn Bhd and Harpers Trading (Malaysia) Sdn Bhd. He retired from this position in the middle of 2004 and remained on the Board as Executive Director to handle a number of special projects for the Company. Mr Thon attended two out of the four Board Meetings of the Company held in the financial year ended 31 December 2004 and he also sits on the boards of the Diethelm Holdings (Malaysia) Berhad group of companies. Mr Thon does not have any family relationship with any director and/or major shareholder of Diethelm Holdings (Malaysia) Berhad, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years.

REVIEW OF RESULTS

The results of 2004 showed a satisfactory improvement over 2003 and they underline our commitment to rapidly grow and expand Diethelm Holdings (Malaysia) Berhad as the leading distribution service provider in Malaysia. Total sales reached RM 2,773 million, representing a growth rate of 16.9% from the 2003 revenue of RM 2,371 million, while Group profit before tax increased by 21.5% from RM 13.9 million to RM 16.9 million.

TRADING SEGMENT

This largest segment comprises our Consumer and Healthcare distribution services. 2004 turnover amounted to RM 2,711 million, an increase of 17.1% from the RM 2,315 million in 2003. This principal activity of our Group comprises a wide range of services, which we are able to provide to over 130 brand-owners who require an efficient and reliable distribution of their products in West and East Malaysia as well as Brunei. At the core of our operation is our ability to physically move large and small, cheap and expensive, ambient and temperature-sensitive goods within predetermined time frames to the right locations in West and East Malaysia as well as Brunei. We operate from two distribution centres near Kuala Lumpur and we also maintain warehouses in the major East Malaysian towns and in Bandar Seri Begawan. Our largest site is in Bukit Kemuning near Klang where the distribution centre covers an area of 138,000 m2 and provides 46,000 pallets for both ambient and temperature-controlled storage. 400 staff moved about 120,000 tons in 2004. While we proudly provide services to large Malaysian and multinational corporations, we also make available exactly the same quality and attention to service to small brand-owners who need market access for the first time. Our largest principal has an annual volume of more than RM 500 million while many smaller accounts generate just a few hundred thousand Ringgit. 2004 was marked by strong competitive pressure and growth in lower-margin activities. Focal points in 2004 were improvements to key performance indicators, particularly market coverage, delivery time, pick accuracy. We devoted attention to receivable and inventory management because of their crucial impact on our performance. In both areas, significant changes were instituted to ensure that our corporate assets are optimally managed. New agencies in 2004 included Tiger Balm, Frito-Lay, L’Oreal, 3M, Sze Keang and Timex. The Trading Segment also benefited from the completed acquisition of EAC Transport Agencies (Malaysia) Sdn Bhd, a well-known and respected forwarding services provider, which enables us to provide forwarding and husbanding services and customs clearances, an important part in the supply chain.

Segmental results improved from 2003 by 37% to RM 25.7 million. This achievement reflects a combination of larger volumes handled, system improvements and synergies, but also strong growth in lower-margin businesses and considerable competitive pressure.

CHEMICALS SEGMENT

The Chemicals Segment is a small but focused activity of the Group. Sales in 2004 amounted to RM 40 million, an increase of 1.7% from the RM 39 million in 2003 but the segmental result remained on the level of the previous year. Our activities are in two different sectors: in one, we are focused on supplying a wide range of chemical products to processing and exporting industries and we are representing 30 principals with very strong positions in these markets, notably Ciba Specialty Chemicals, Crompton, Goldschmidt, LG International and Tesa. Sales are subject to the economic cycle and the competitive stand of the Malaysian export sector, which did not have an outstanding year in 2004. The second line is in animal health and feed, where we represent among others Alltech and Provimi. Sales are easily affected by health issues, which directly impact breeders’ income and in 2004 the bird flu issue was a considerable negative factor.

FOOD SEGMENT

The consistently growing Food Segment reported another good year. 2004 sales reached RM 22 million, an increase of 26.5% from the RM 17 million in 2003. The driving force is the Famous Amos chain, which now operates 31 outlets and kiosks in West and East Malaysia. Just over 140 staff demonstrate how a well-managed and creative cookie and hamper business could become a well-appreciated and successful part of the Malaysian retail environment. The big challenge for Famous Amos is the identification of new locations for outlets at high-traffic locations, where the colourful and appealing outlets can prosper and where the ‘free smells’ attract customers. The chain is now well-established in the airports of Kuala Lumpur, Kuching, Miri and Kota Kinabalu and it is our firm intention to continue expanding into all parts of Malaysia to build this well-known brand. The Food Ingredient business, which is also part of the Food Segment, requires a considerable effort to establish a foothold in this promising market. Unfortunately, the expected break-through was not achieved in 2004 and we shall devote focus and resources to improve in 2005. The segmental results improved by 32% to RM 2 million, justifying the expansion initiated in 2003.


To Our Shareholders

On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report and the Audited Accounts of the Group and the Company for the financial year ended 31 December 2004.

CORPORATE EXERCISE

In 2004, the Company completed a comprehensive corporate exercise, which consisted of an alteration of the Articles of Association of the Company to extend the tenure of the redeemable cumulative preference shares to ten years from the date of issue, an extension of the tenure and subsequent redemption of the existing redeemable cumulative preference shares, an increase of the authorised share capital of the Company from RM 100 million to RM 500 million; and a restricted issue of 75 million new ordinary shares of RM 1.00 each representing approximately 47.6% of the enlarged issued and paid-up share capital of the Company.

On 5 November 2004, the Company redeemed the existing redeemable cumulative preference shares of RM 82 million issued to Dihoma Sdn Bhd. On the same date, the Company allotted and issued 75 million new ordinary shares of RM 1.00 each to Dihoma Sdn Bhd at an issue price of RM 1.00 per ordinary share. The new ordinary shares, which rank pari passu in all respects with the existing issued and paid-up ordinary shares of RM 1.00 each in the Company were listed and quoted on the Main Board of the Bursa Malaysia Securities Berhad on 19 November 2004.

This exercise has strengthened the capital base of the Company and this will facilitate obtaining funding for the rapid expansion of the Group.

DIVIDEND

The accumulated losses carried in our Balance Sheet were again reduced in 2004, however, they still significantly reduce equity. The Board of Directors is of the opinion that the dividend amount should not be increased before these retained losses are eliminated. Therefore, the Board of Directors recommends again a final dividend of one (1) sen gross per ordinary share for the year ended 31 December 2004.

ACKNOWLEDGMENT

I am pleased to announce the appointment of Mr James Armand Menezes, a qualified CPA, as an independent, non-executive director with effect from 19 July 2004 and as Chairman of the Audit Committee on 10 December 2004.

The Directors recognise the contribution of management and staff of Diethelm Holdings (Malaysia) Berhad in achieving the again improved results and they would like to express their thanks.

Michael Lim Hee KiangChairman

OUTLOOK

A lot of productive ground work was done in 2004. The Group devoted considerable efforts to standardising procedures in related business streams to achieve synergy. Unfortunately, the full integration of DKSH Marketing Services Sdn Bhd, formerly EAC Marketing Services Sdn Bhd acquired in 2003, could not be completed until the first quarter of 2005 because the planned premises were not available on time. In the course of the year, we analysed critical processes in a concentrated business process re-engineering exercise and redefined our approach to logistics, trade practices and branch operations. Areas of particular concern are current asset management, especially receivables. We identified this as a priority and considerably strengthened our infrastructure in 2004. In addition, we are leveraging the total size of our Group to achieve timely payments within agreed terms.

A large group of our management staff agreed to compensation packages, which are directly influenced by their and the Group’s performance. We believe this move will enhance our response to business issues.

All of these efforts are expected to improve our performance not only in 2005 but in the years to come.

Diethelm Holdings (Malaysia) Berhad is part of the DKSH Group of companies based in Switzerland. Since its establishment in 2002, the holding company has significantly enhanced inter-group communication and sharing of know-how. We were particularly pleased to note that the new Corporate Shared Services Centre for Information Technology was established in Technology Park Kuala Lumpur. This operation will provide SAP, Lotus Notes and Business Solution services to the entire DKSH Group and we shall benefit as one of the first companies within the DKSH Group to utilise these services. Our Group is now well positioned to rapidly expand in the dynamic Malaysian market and to extend services to more brand-owners who need a reliable service provider with clear performance standards and cost-effective deliverables. We were justified in our optimism for 2004 and we maintain the same sentiments for 2005. Subject to unforeseen circumstances, we expect to improve our performance.

Niels Johan HolmGroup Managing Director


(now known as Bursa Malaysia Securities Berhad) on 13 December 1994. Lembaga Tabung Angkatan Tentera (LTAT) has been Diethelm’s Bumiputera partner since 1992 and remains a substantial shareholder of the Company with a 16% participation.

INTERNATIONAL

Diethelm Holdings (Malaysia) Berhad is majority-owned by the DKSH Group of Switzerland. DKSH is a leading international solution provider and knowledge broker. Its expertise is in sourcing, marketing, logistics and distribution, fulfillment and after-sales services. Founded and deeply rooted in Asia, DKSH controls the flows of goods and information through a supply and demand matrix. Bridging the complex markets within and between Asia Pacific, Europe and the Americas has led to its core competency: Market Intelligence. This combines and uses market information, leading-edge product and application expertise, sophisticated marketing and logistics skills with unique cultural and personal insights accumulated over a corporate history covering nearly one and a half centuries.

HISTORY

Diethelm has known Malaysia for more than a hundred years. The roots of the Group were established in the late 1860s, when two young Swiss pioneers, Wilhelm Heinrich Diethelm and Edward Anton Keller ventured to the Far East. Diethelm settled down in Singapore and Keller chose the Philippines as his new home. In 1887, Edward Anton Keller took over his employer, Lutz & Co., Manila and Wilhelm Heinrich Diethelm acquired the majority of his employer, Hooglandt & Co, Singapore. A branch was opened in Penang in 1923 and the Kuala Lumpur office in 1935.

Although the cooperation between the two families and their companies dates back to the beginning of the 20th century, the establishment of the Diethelm Keller Group did not take place until 100 years later, in July 2000. Today, the Group is managed by the fourth generation of the founder and owner families.

The DKSH Group was formed in June 2002 by the merger of Diethelm Keller Services Asia Ltd with SiberHegner Holding Ltd, founded in 1865 in Yokohama by Hermann Siber.

Diethelm Holdings (Malaysia) Berhad was incorporated on 24 December 1991. On 1 March 1994, the Company became a public company and it was listed on the Main Board of The Kuala Lumpur Stock Exchange

Corporate Profile

HOLDING COMPANY

Diethelm Holdings (Malaysia) Berhad is an investment holding company and its companies form a leading marketing, sales, warehousing and distribution organisation in Malaysia offering a wide range of distribution services to manufacturers and brand owners.

BUSINESS SEGMENTS

Trading Segment

The largest segment of the Group is entirely dedicated to providing distribution services to more than 130 international and Malaysian manufacturers and brand owners of consumer goods and healthcare products. Among our largest agencies are (alphabetically) Abbott, Adams, Altana, AMO, Aventis, Ayam, Beiersdorf, Boehringer Ingelheim, Boh Tea, Brand’s, Bristol Myers-Squibb, Cadbury, Effem, Eisai, Ferrero, Gallo Wines, Gervas, Gillette, GlaxoSmithKline, Heinz, Indocafe, Kellogg’s, Kraft, Leo Pharma, Maestro Swiss, Marlboro, Mattel, Maxis, Mead Johnson, Nabisco, Novartis, Novo Nordisk, Ovaltine, Pfizer, Quaker, Region Food, Roche, SSL Healthcare, Sri Nona, UCB, Unicharm, Wen Ken, Wrigley and Wyeth.

The Group’s key strength is market-access through a comprehensive network of 14 branches and four sales offices in the key towns of West and East Malaysia as well as through the ProNet™ system linking selected wholesalers supplying the lower trade. Local sales and distribution teams ensure that products in our care are widely and comprehensively available in hypermarkets, supermarkets, shops, kiosks, pharmacies and hospitals throughout the whole country. Branches are connected with our head office in Petaling Jaya through a nationwide dedicated network and orders are either processed in call centres or in many cases directly by the sales personnel through pocket computers while they are with customers.

We centrally distribute consumer goods in West Malaysia from our warehouse complex in Bukit Kemuning near Klang. This centre has a capacity of 46,000 pallet storage slots for handling ambient, air-conditioned, chilled and even frozen products. Healthcare products are stored and distributed from a dedicated warehouse at Jalan University in Petaling Jaya, in the heart of the Klang Valley. Both distribution centres operate with the SAP Warehouse Management System. Four of our West Malaysian and two of our East Malaysian branches also maintain local pharmaceutical warehouses to ensure the fastest possible delivery of vital drugs. All of our seven East Malaysian branches and Brunei have their own consumer goods warehouses.



The consolidation and integration of DKSH Marketing Services Sdn Bhd continued throughout 2004. In July 2004, the supply chain and distribution operations were relocated from their previous warehouse in Nilai to the Group’s distribution centre in Bukit Kemuning. The entire sales and administration offices of DKSH Marketing Services Sdn Bhd will move to the Group’s Head Office in Petaling Jaya in the course of 2005.

In August 2004, a part of our Trading Segment involved in healthcare distribution in Petaling Jaya achieved the ISO 9001:2000 certification from SGS UK.

On 29 September 2004, the Group acquired 51% of the issued and paid-up capital of EAC Transport Agencies (Malaysia) Sdn Bhd., which is now part of the Trading Segment. This company is principally engaged in forwarding and husbanding activities and its acquisition allows the Group to control an important element of the supply chain.


Chemicals Segment

This business segment markets, sells and distributes life sciences products, specialties chemicals, industrial supplies and polymers. It serves a wide range of industrial customers, such as manufacturers of paint and ink, vinyl, rubber gloves, toiletries, pharmaceuticals, health food, herbal extracts, food packaging, automotive and auto parts, metal stampers, printers, plastic moulders and compounders. It also produces UV and white master-batches for shopping bags and white polyethylene containers through its manufacturing facilities with Diethelm Chemicals Malaysia Sdn Bhd. Apart from industrial supplies, the Chemicals segment also cater to the animal care industry, where customers are mainly poultry and animal farmers as well as feed millers. Experienced industry experts are on call to successfully promote brand-owner products and to professionally service manufacturers. An efficient logistics and order processing system supports the marketing and sales team.


Food Segment

The Famous Amos Chocolate Chip Cookie Corporation (M) Sdn Bhd currently operates 31 outlets in shopping malls in West and East Malaysia. They sell chocolate chip cookies as well as muffins, drinks, ice cream and an extensive range of confectionery items. The chain is constantly expanding and now has outlets at Kuala Lumpur International Airport and the airports of Kuching, Miri and Kota Kinabalu.

The Food Ingredients unit caters to manufacturers of beverage, confectionery and biscuits and fast food establishments. A dedicated team provides customers with expert advice and technical training. A food application laboratory was set up to enhance technical support.

KLIA outlet


SUPPORT SERVICES

Management Services

The Group operates a central back-office for services, which is more economically and efficiently provided by one unit instead of multiple setups. This comprises Information Technology, Finance & Administration, Branch Administration, Internal Audit and Corporate Support.

Information Technology is the central provider of computer and communication solutions for the Group and operates, maintains and develops the SAP R/3 application as well as the nation-wide network linking branches. Information Technology also provides project management and technical expertise for software and hardware requirements of the operating units.

Finance and Administration comprises Group Control, Group Treasury as well as service units for Estate Management and Purchasing. Finally, Branch Administration coordinates branch back-offices to ensure uniform procedures and standards.

Corporate Governance Statement


The Board of Directors ensures high standards of corporate governance throughout the Diethelm Holdings (Malaysia) Berhad Group. The Board monitors the comprehensive application of all the Principles in Part 1 of the Malaysian Code on Corporate Governance and compliance with the best practices as recommended in Part 2 of the Code.

Below are our statements of compliance/non-compliance with the best practices outlined in Part 2 of the Malaysian Code on Corporate Governance. Declarations to Part 1 of the same Code are also integrated under the respective headings in order to avoid duplication.

DIRECTORS

I Principal Responsibilities: As in previous years, the Board has not covered two of the six responsibilities listed here. The Board is of the opinion that no action is required for these because of the following reasons: • ‘Succession planning’: Diethelm Holdings (Malaysia) Berhad is majority-owned by the international DKSH

Group, which practises their own management development programme covering succession planning. • ‘Investor relations’: The quarterly releases to Bursa Malaysia Securities Berhad (Bursa Malaysia) provide all relevant

information for shareholders.

II Chairman and CEO: The functions of the Chairman and of the CEO are separated.

III Board Balance: The Board consists of six directors. Three are executive directors nominated by the majority shareholder. One non-executive director was nominated by - but does not represent - the largest minority shareholder. He is not considered an independent director. The second non-executive director, who also acts as Chairman, is an independent lawyer. He is considered an independent director. In 2004, the Board nominated a third independent director, who is a Certified Public Accountant without any previous relationship to the company or its shareholders. Therefore, the Board composition complies with the requirement of one third independent directors.

IV Size of Non-Executive Board Participation: The Board is of the opinion that its current composition reflects in a proper manner the investments in the Company.

V Largest Shareholder is a Majority Shareholder: The largest shareholder holds the majority of the shares in the Company.

VI Independent Directors: Please refer to Point III.

VII Ombudsman: The non-executive Chairman, an independent director, continues in his previous function as Ombudsman.

VIII Appointments to the Board: The Board is responsible for the appointment of directors. At each annual general meeting, one third of the directors retire and offer themselves for re-election. Every director will stand for re-election at least once every two to three years. The Board is of the opinion that its small size does not require a separate nomination committee.



IX/X Quality and Effectiveness of the Board: As in the past year, Diethelm Holdings (Malaysia) Berhad is managed by an experienced Board comprising members with a wide range of experience in the relevant fields, such as legal, marketing, sales, accounting, finance and business administration. Together, the directors bring a broad range of proven skills. Each director has more than 20 years of relevant experience and knowledge required to successfully manage, direct and supervise the Company’s business activities.

X1 Services of the Company Secretary: Directors have unrestricted access to the Company Secretary for advice and services at all times.

XII Size of the Board: At present, the Board consists of six members. The Board will only consider an increase in the number of directors if this is required by statutory terms and/or business developments.

XIII Directors’ Training:

The directors attend the prescribed training programmes.

XIV Board Structure and Procedures:The agenda and issues to be discussed are prepared and circulated before each Board meeting. The Company Secretary maintains the Minutes of Board meetings. During the financial year ended 31 December 2004, the Board met a total of four (4) times. Details of the attendance were as follows:

Board Meetings Director Status attended %

Michael Lim Hee Kiang Independent Non-Executive 4 of 4 100%Ahmad Fakhrizzaki Abdullah Non-Independent Non-Executive 4 of 4 100%James Armand Menezes Independent Non-Executive 2 of 2 100% (Appointed on 19 July 2004) Niels Johan Holm Executive, Group Managing Director 4 of 4 100%André Eugen Hägi Executive, Group Finance Director 4 of 4 100%Thon Lek Executive 2 of 4 50%

XV Board Prerogatives: : The formal schedule of matters specifically reserved for the Board’s decision is forwarded to Board members prior to Board meetings.

XVI Relationship of the Board to Management: Diethelm Holdings (Malaysia) Berhad has formal Limits of Authority for the management, which are applied by all companies of the Group.

XVII Quality of Information:

The Board is regularly presented with detailed historical and outlook information to arrive at its conclusions.

XVIII Agenda for Board Meetings:The Chairman and the Group Managing Director are jointly responsible for organising information necessary for the Board to deal with the agenda.



XIX/ XX Access to Information and Advice:

Directors have access to information within the Group and to advice of independent professional advisors and internal/external auditors at the Company’s expense.

XXI Access to Company Secretary:

Please refer to Point XI.

XXII Quality of Company Secretary: The position is filled with a Certified Company Secretary with 18 years experience in this field.

XXIII Use of Board Committees:

The Board established the Audit Committee in 1994. Its Terms of Reference together with the Audit Committee Report are disclosed on pages 22 and 23 of this Annual Report.

XXIV Remuneration Committee: The Board is of the opinion that a remuneration committee is not required because Diethelm Holdings (Malaysia) Berhad is majority-owned by the international DKSH Group, which establishes its own world-wide remuneration policy, applicable for the remuneration of executive directors. The Board determined the fees payable to non-executive directors subject to approval by the shareholders at the annual general meeting. During the financial year ended 31 December 2004, the remuneration of the executive and non-executive directors were as follows:

Amount - RM Executive Directors Non-Executive Directors

50,000 and below 3450,001 to 500,000 1 1,300,001 to 1,350,000 1 1,600,001 to 1,650,000 1

ADDITIONAL STATEMENTS REQUIRED IN PART 1 BUT NOT COVERED IN PART 2 OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE.

ACCOUNTABILITY AND AUDIT

DI Financial Reporting: The Board is responsible for ensuring that the financial statements of the Company give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2004. The Board discusses and approves quarterly and annual assessments of the Group’s position and prospects which are released to Bursa Malaysia in a timely manner.

DII Internal Controls: Please see the detailed Statement of Internal Control on pages 20 and 21.

DIII Relationship with the Auditors: The Audit Committee reviews and discusses the annual findings with the external auditors, PricewaterhouseCoopers. In doing so, the Company has a transparent procedure with the auditors to meet the auditors’ professional requirements. From time to time, the auditors highlight to the Audit Committee matters which require the Board’s attention.



SHAREHOLDERS

CI Dialogue with Investors: Recognising the importance of timely dissemination of information to shareholders and other stakeholders, the Board ensures that they are well-informed of major developments in the Group. Information is communicated to them through the Annual Report and the various disclosures and announcements made to Bursa Malaysia, including quarterly and annual results.

CII Annual General Meeting: The Company’s Annual General Meetings serve as a principal forum for dialogue with shareholders. Extraordinary General Meetings are held as and when required.

OTHER INFORMATION

Sanctions and/or Penalties Imposed: There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies.

Non-Audit Fees: The non-audit fees paid to the external auditors of the Company are disclosed in Note 9 on Page 55 of the Annual Report.

American Depository Receipts (ADR) / Global Depository Receipts (GDR): During the year under review, the Company did not sponsor any ADR or GDR programmes.

Share Buy-Back: During the year under review, the Company did not have any share buy-back exercise.

Options, Warrants or Convertible Securities: During the year under review, the Company did not have any exercise on options, warrants or convertible securities.

Variation in Results: In 2004, there were no differences of 10% or more to any announcements made.

Profit Guarantees: The Company does not have any profit guarantees.

Material Contracts: The directors are not aware of any material contracts between the Company and its directors and shareholders.

Employees' Share Option Scheme (ESOS)During the year under review, the Company did not have any Employees' Share Option Scheme.

Internal Control Statement


INTRODUCTION

The Board considers internal controls an essential requirement for the operation of every company of the Group. Internal controls are an on-going process to ensure that the assets of the Group are well managed and protected.

RESPONSIBILITY

The Board confirms that it is responsible for the Group’s system of internal controls. However, it should be noted that such systems are geared towards managing and minimising rather than eliminating risks. Any system can provide only reasonable but not absolute assurances against material misstatement or loss.

The Group has an ongoing process for identifying, evaluating and managing significant risks throughout the year. The process is regularly reviewed by the Board.

RISK MANAGEMENT FRAMEWORK

The Board has established the organisational structure of the Group with clearly defined lines of accountability and transparent Limits of Authority as part of its risk management framework. Business risk assessments are an integral part of the annual strategic planning cycle.

KEY ELEMENTS OF INTERNAL CONTROLS

- Transparent and unambiguous Limits of Authority are available for each managerial position in Diethelm Holdings (Malaysia) Berhad.

- Major procedures have been documented and are regularly reviewed and updated to reflect best corporate practices.

- The internal audit department, reporting to the Audit Committee of the Board, checks on operational units and branches and conducts ad-hoc investigations of incidents.

- Management receives regular and prompt financial information as well as overviews of their Key Performance Indicators.

- A central Group Treasury receives and settles all monetary transactions of the Group.

- Controlling units are attached to all operational divisions to ensure that all business decisions properly reflect financial considerations and that the administrative processing is timely and efficient.

- The Central Warehouse in Bukit Kemuning has its own loss prevention organisation with professional management.

- All companies and units of the Group apply the same standardised business processes on SAP R/3, which are centrally managed and customised.

- Management regularly visits branches throughout Malaysia.

Internal Control Statement


- Diethelm Holdings (Malaysia) Berhad forms part of the DKSH Group. Executive management from Corporate Centre as well as world-wide heads of business units regularly visit Malaysia to obtain current and detailed information on the performance of the businesses.

- On a monthly basis, comprehensive financial reports have to be sent to the Corporate Centre, which exercises strict control over financial matters of the Group.

- Corporate Centre is closely involved in the annual strategic planning cycle and the target setting.

- Corporate Centre also coordinates and supervises the annual review and extension of the Medium Term Business Plans for the principal units.

- DKSH Regional Audit was in Malaysia in March 2004 and conducted a three-week review of Malaysian activities according to a programme decided by the Corporate Centre.

WEAKNESSES IN INTERNAL CONTROLS THAT RESULT IN MATERIAL LOSSES

As in 2003, a number of internal control weaknesses were identified in 2004. All of them were investigated by the Internal Audit Department and follow-up actions were decided and implemented. None of the weaknesses has resulted in material losses, contingencies or uncertainties which would require a mentioning in this Annual Report.

Audit Committee


The Audit Committee of Diethelm Holdings (Malaysia) Berhad was established by the Board of Directors in September 1994.

COMPOSITION The Audit Committee comprises three directors. Two amongst them are independent non-executive directors whilst the remaining one is a non-independent non-executive director.

MEMBERS

Members of the Board who also served on the Audit Committee in 2004 are listed below:

James Armand Menezes Independent Non-Executive Director(Appointed as member on 19 July 2004 and as Chairman of the Audit Committee on 10 December 2004)

Michael Lim Hee Kiang Independent Non-Executive Director(Relinquished position as Chairman of the Audit Committee on 10 December 2004 and continued to serveas member of the Audit Committee)

Ahmad Fakhrizzaki Abdullah Non-Independent Non-Executive Director(Member)

Niels Johan Holm Group Managing Director(Resigned as member of the Audit Committee on 19 July 2004)

MEETINGS For the financial year under review, the Audit Committee met a total of four times. The Audit Committee meetings were held on 25 February, 13 May, 20 August and 26 November 2004. Details of the attendance were as follows:

Audit Committee Meetings Attended

Number %Members James Armand Menezes (Appointed as member on 19 July 2004) 2 of 2 100Michael Lim Hee Kiang 4 of 4 100Ahmad Fakhrizzaki Abdullah 4 of 4 100Niels Johan Holm (Resigned as member on 19 July 2004) 4 of 4 100

Non-Members Group Finance Director 4 of 4 100Executive Director 2 of 4 50Head of Internal Audit 4 of 4 100Internal Audit Manager 4 of 4 100

ACTIVITIES

During the financial year, the Audit Committee conducted its activities in line with its existing Terms of Reference, which include quarterly meetings to review the quarterly results, discussions on the internal audit reports to assess the effectiveness of the system of internal controls in the areas audited, and discussions and approval of the internal annual Audit Plan for 2004. The Audit Committee also discussed the annual audited financial statements with the external auditors, as well as its findings and recommendations.

Audit Committee


INTERNAL AUDIT FUNCTIONS

The Company has an Internal Audit Department whose principal responsibility is regular and systematic reviews of the systems of controls, to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in the Company and the Group. The Internal Audit Department is adequately resourced and has appropriate standing within the Company and its subsidiaries to carry out its duties.

The Internal Audit Department also involves itself in facilitating the improvement of business processes within the Company and subsidiary companies.

TERMS OF REFERENCE

The overall objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices and to ensure the required standard of corporate disclosure to Bursa Malaysia. The Terms of Reference of the Audit Committee are as follows:

(a) Membership The Audit Committee shall be appointed by the Board of Directors from amongst its number and shall consist of notless than three members, a majority of whom shall be independent directors and at least one shall be in compliance with Article 15.10 (1)(c) of the listing requirements of Bursa Malaysia. The Chairman of the Audit Committee shall be an independent non-executive director appointed by the Board.

(b) Meetings and Minutes

Meetings shall be held not less than four times a year, including at least one meeting with the external auditors. Group Finance Director, a representative of Internal Audit Department and a representative of the external auditors shall normally be invited to attend the meetings. Other members of the Board may attend the meetings upon invitation by the Audit Committee. A quorum shall be two members, a majority of whom must be independent directors. The Company Secretary shall act as the Secretary of the Audit Committee. The Secretary of the Audit Committee shall keep and maintain proper records of the minutes of meetings of the Audit Committee and be responsible for circulating the minutes to all members of the Board of Directors.

(c) Authority and Accessibility The Audit Committee shall have the general authority to do all things necessary to fulfill its responsibilities as vested upon it by virtue of its appointment by the Board of Directors and such other special authority specifically vested by the Board of Directors from time to time. It can obtain from all employees any information required and can consult independent experts when and where it considers it necessary to carry out its duties.

(d) Functions and Responsibilities The main functions and responsibilities of the Audit Committee are: - to satisfy themselves with the nature and scope of the external audit; - to review the audit report prepared by the external auditors; - to recommend the appointment of the external auditors and their terms of engagement; - to review the quarterly interim results and annual financial statements of the Company and the Group before submission

to the Board of Directors for approval, and to ensure that they are prepared in a timely and accurate manner, complying with all accounting and regulatory requirements;

- to review the effectiveness of the internal control systems; - to review and approve the internal audit annual plan; - to review any related party transactions and conflict of interest situations that may arise within the Company and

the Group, including any transaction, procedure or course of conduct that raises questions of management integrity; - to consider other issues as defined by the Board of Directors.


Analysis of Sharesas at 18 April 2005

Authorised Share Capital : RM 500,000,000 Issued and Paid-Up Capital : RM 157,658,076 Voting Rights : 1 vote per ordinary share

CLASS OF SHARES

Ordinary share of RM 1.00 each fully paid up : RM 157,658,076

DISTRIBUTION OF SHAREHOLDERS

No. of % of No. of % ofSize of Holdings Shareholders/ Shareholders/ Shares Held Issued Capital

Depositors Depositors

1 - 99 0 0.00 0 0.00100 - 1,000 1,662 56.95 1,645,850 1.041,001 - 10,000 1,135 38.90 4,148,950 2.6310,001 - 100,000 108 3.70 2,640,200 1.67100,001 - 7,882,903 11 0.38 6,771,000 4.297,882,904 and above 2 0.07 142,452,076 90.37

Total 2,918 100 157,658,076 100

SUBSTANTIAL SHAREHOLDERS

No. of % of Name Shares Held Issued Capital

1. Dihoma Sendirian Berhad 117,155,076 74.30962. Lembaga Tabung Angkatan Tentera 25,297,000 16.0455

DIRECTORS’ INTERESTS IN SHARES IN THE COMPANY (as per the Register of Directors' Shareholdings)

Direct

No. of % of Name Shares Held Issued Capital

1. Michael Lim Hee Kiang 10,000 0.00632. Ahmad Fakhrizzaki Abdullah 10,000 0.00633. James Armand Menezes - -4. Niels Johan Holm - -5. André Eugen Hägi - -6. Thon Lek 5,000 0.0032


Analysis of Sharesas at 18 April 2005

30 LARGEST SHAREHOLDERS

Name No. of Shares Held % of Issued Capital

1 Dihoma Sendirian Berhad 117,155,076 74.312 Lembaga Tabung Angkatan Tentera 25,297,000 16.053 Permodalan Nasional Berhad 3,440,000 2.184 Cartaban Nominees (Asing) Sdn Bhd 1,306,000 0.83

Bank of Tokyo Mitsubishi Luxemboug S.A. forOsterreichische Volksbanken AG

5 Mrs Lienau @ Nee Tan Eileen 425,000 0.276 Foh Chong & Sons Sdn Bhd 370,000 0.237 Sumur Ventures Sdn Bhd 340,000 0.228 Wong Kem Chen 252,000 0.169 Egon Arthur Heldner 202,000 0.13

10 McLaren Saksama (Malaysia) Sdn Bhd 196,000 0.1211 HDM Nominees (Asing) Sdn Bhd 111,000 0.0712 Teh Chee Ch’ng 106,000 0.0713 Lim Hiang Chiap 103,000 0.0714 Teh Teik Lim & Brothers Sdn Bhd 90,000 0.0615 Gulam Rasul Ebrahim Nalla 76,000 0.0516 Lim Pow Toon 63,000 0.0417 OSK Nominees (Tempatan) Sdn Berhad - 61,600 0.04

Pledged securities account for Tan Gaik Suan18 Goo Kiyo 60,000 0.0419 Menteri Kewangan Malaysia 52,000 0.03

Section 29 (SICDA)20 Koh Kee Hooi 50,000 0.0321 Lim Bee Hong 50,000 0.0322 Lim Chai Kee @ Lim Gaik Kee 50,000 0.0323 RHB Nominees (Tempatan) Sdn Bhd - 49,800 0.03

Pledged securities account for Sleuths Holdings Sdn Bhd24 Mayban Nominees (Tempatan) Sdn Bhd - 49,000 0.03

Pledged securities account for Huan Dee Lam (08319AQ0112)

25 Ng Chin Tiong 45,000 0.0326 Yoong Hoi Yen 42,900 0.0327 Lee Kim Keong 42,000 0.0328 Mayban Securities Nominees (Tempatan) Sdn Bhd - 42,000 0.03

Pledged securities account for Khaw Chin Hong (STF)29 Hiew Woon Chow 41,000 0.0330 Juliana Chan 40,000 0.03

Total 150,207,376 95.27


List of Propertiesas at 31 December 2004

ApproximateLocation & Description Net Book Value Approximate Area Age of Building

(RM’000) (Sq. feet) (No. of years)

Lot 52, Section 13, Petaling Jaya 32,776 258,746 42Selangor Darul Ehsan Warehouse, factory and officecomplex situated on leasehold landexpiring in 2061. * The last revaluation was in 1997

Lot 7, Section 13, Petaling Jaya 10,233 83,171 44Selangor Darul Ehsan Office and warehouse situated on leasehold land expiring in 2058. * The last revaluation was in 1997

* The Group’s Revaluation Policy is disclosed in Note 3(c) on Page 43 of the Annual Report.


2000 2001 2002 2003 2004RM’000 RM’000 RM’000 RM’000 RM’000

Turnover 1,146,669 1,281,619 1,484,397 2,371,116@ 2,772,607Profit before tax 13,741 5,605 8,552 13,919@ 16,913

Net profit attributableto shareholders 11,703 5,134 8,704 # 10,537 13,107

Total assets employed 493,879 567,850 620,302 827,242 1,004,771 Shareholders’ equity 104,246 105,833 31,522*# 41,464* 125,024

* The Redeemable Cumulative Preference Shares is classified as a financial liability in the financial year ended 31 December 2002 and 31 December 2003 in accordance with MASB 24 "Financial Instruments: Disclosure and Presentation".

# The figures for 2002 were adjusted due to change in accounting policy.

@ The figures for 2003 were reclassified to conform with current year's presentation for the purpose of fairer presentation. Please refer to Note 36 on page 80 for further explanation.

Statement of Directors’ Responsibilityin respect of the Audited Financial Statements

The Directors are required by the Companies Act, 1965 ("the Act") to prepare financial statements for each financial year which give a true and fair view of the statement of affairs of the Company and the Group at the end of the financial year and the profit or loss of the Company and the Group for the financial year. As required by the Act and the Listing Requirements of Bursa Malaysia, the financial statements have been prepared in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Act.

The Directors consider that in preparing the financial statements for the year ended 31 December 2004, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group which enable them to ensure that the financial statements comply with the applicable approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965. The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Financial HighlightsConsolidated Results of Diethelm Holdings (Malaysia) Berhad Group


Directors’ Report

The Directors are pleased to submit their report together with the audited financial statements of the Group and Company for the financial year ended 31 December 2004.

PRINCIPAL ACTIVITIES

The Company is principally an investment holding company. The principal activities of the Group consist of general trading, warehousing and distribution of consumer, pharmaceutical, bio-medical, chemical and industrial products and also sale of Famous Amos chocolate chip cookies. There have been no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS Group CompanyRM’000 RM’000

Net profit for the financial year 13,107 5

DIVIDENDS

The dividends on ordinary shares paid or declared by the Company since 31 December 2003 were as follows:

RM’000

In respect of the financial year ended 31 December 2003,final gross dividends of 1 sen per share, less income tax

of 28%, as shown in the Directors’ report of that year, dividends on 82,658,076 shares, paid on 11 August 2004 595

The Directors now recommend the payment of a final gross dividend of 1 sen per share on 157,658,076 ordinary shares, less income tax of 28%, amounting to RM1,135,138 which is subject to the approval of members at the forthcoming Annual General Meeting of the Company.

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

INCREASE OF AUTHORISED SHARE CAPITAL

On 10 June 2004, the Company increased its authorised share capital from RM100,000,000 comprising 99,180,000 ordinary shares of RM1.00 each and 82,000,000 Redeemable Cumulative Preference Shares ("RCPS") of RM0.01 each, to RM500,000,000 comprising 499,180,000 ordinary shares of RM1.00 each and 82,000,000 RCPS of RM0.01 each by the creation of 400,000,000 new ordinary shares of RM1.00 each.


Directors’ Report

ISSUE OF SHARES

On 5 November 2004, the Company allotted and issued 75,000,000 new ordinary shares of RM1.00 each ("Restricted Issue Shares") to Dihoma Sendirian Berhad for cash, at an issue price of RM1.00 per share. The purpose of this Restricted Issue was to raise funds, to enable the Company to redeem the 82,000,000 RCPS which were due for redemption on 17 December 2004.

The Restricted Issue Shares, which rank pari passu in all respects with the existing ordinary shares of RM1.00 each in the Company, were listed and quoted on the Main Board of the Bursa Malaysia Securities Berhad on 19 November 2004.

DIRECTORS

The Directors who have held office during the period since the date of the last report are as follows:

Niels Johan HolmMichael Lim Hee KiangAhmad Fakhrizzaki AbdullahAndré Eugen HägiThon LekJames Armand Menezes (appointed on 19 July 2004)

In accordance with Article 82 of the Company’s Articles of Association, James Armand Menezes who was appointed during the financial year, retires at the forthcoming Annual General Meeting and being eligible, offers himself for election.

In accordance with Article 86 of the Company’s Articles of Association, Niels Johan Holm, being the Group Managing Director of the Company, is not subject to retirement by rotation.

In accordance with Article 99 of the Company's Articles of Association, Ahmad Fakhrizzaki Abdullah and Thon Lek will retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.

DIRECTORS’ BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects 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.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors’ remuneration and benefits as disclosed in Note 8 to the financial statements) 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 except that certain Directors received remuneration from the Company’s related corporations.


Directors’ Report

DIRECTORS’ INTERESTS According to the register of Directors' shareholdings, particulars of interests of Directors who held office at the end of the financial year in shares in the Company are as follows:

Number of ordinary shares of RM1 each in the Company

At Bought Sold At1.1.2004 31.12.2004

Michael Lim Hee Kiang 10,000 0 0 10,000Ahmad Fakhrizzaki Abdullah 10,000 0 0 10,000Thon Lek 5,000 0 0 5,000

Other than as disclosed above, according to the register of Directors’ shareholdings, the Directors in office at the end of the financial year did not hold any interest in shares in or debentures of the Company or its related corporations during thefinancial year.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 29 September 2004, the Company completed its acquisition of 51% equity interest in EAC Transport Agencies (Malaysia) Sdn. Bhd. ("EACTA"). The purchase consideration of RM5,939,998 was settled in cash.

(b) On 5 November 2004, the Company redeemed in full the 82,000,000 RCPS at RM0.01 each in the Company, at a premium of RM0.99 each. The gross proceeds arising from the Restricted Issue of RM75,000,000 was used to redeem a substantial portion of the 82,000,000 RCPS in issue. The remaining RM7,000,000 which was required to fully redeem the RCPS was funded from internally generated funds of the Company.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the income statements and balance sheets 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 debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and Company had 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:

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

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


Directors’ Report

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)

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

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 affect the ability of the Group or Company to meet their obligations when they fall due.

At the date of this report, there does not exist:

(a) any charge on the assets of the Group or 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 or Company which has arisen since the end of the financial year.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group's and Company's operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and Company for the financial year in which this report is made.

ULTIMATE HOLDING COMPANY

The Directors regard Diethelm Keller Holding AG, a company incorporated in Switzerland, as the ultimate holding company of the Company.


GENERAL INFORMATION

The number of employees (including Executive Directors) of the Group at the end of the financial year was 2,510(2003: 2,258).

The Company do not have any employees at the end of the financial year as the operations of the Company are managed by a subsidiary.

The immediate and intermediate holding companies of the Company are Dihoma Sendirian Berhad and Diethelm Holdings (Asia) Sendirian Berhad respectively, both of which are incorporated in Malaysia.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Board of the Bursa Malaysia Securities Berhad.

The address of the registered office of the Company is as follows:

74, Jalan University46200 Petaling JayaSelangor Darul Ehsan

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution dated 15 April 2005.

NIELS JOHAN HOLM ANDRÉ EUGEN HÄGIGROUP MANAGING DIRECTOR GROUP FINANCE DIRECTOR

Directors’ Report


Note 2004 2003RM'000 RM'000

Revenue 6 2,772,607 2,371,116Other operating income 10,110 14,515Changes in inventories of work-in-progress and finished goods 45,186 33,465Finished goods purchased (2,544,839) (2,168,277)Staff costs 7 (112,576) (103,201)Warehousing and logistics expenses (30,791) (29,663)Allowance for doubtful debts (10,960) (4,857)Rental (19,591) (18,379)Depreciation of property, plant and equipment 14 (9,564) (11,953)Travelling and entertainment expenses (12,632) (11,731)IT and communication expenses (8,959) (9,723)Utilities, upkeep, repairs and maintenance costs (9,830) (9,762)Office expenses (3,009) (7,464)Other selling, advertising and promotional expenses (25,725) (15,731)Other operating expenses (9,606) (5,934)

Profit from operations 9 29,821 22,421Finance cost 10 (12,908) (8,502)

Profit from ordinary activities before tax 16,913 13,919Tax 11 (2,204) (3,382)

Profit from ordinary activities after tax 14,709 10,537Minority interest (1,602) 0

Net profit for the financial year 13,107 10,537

Earnings per share- basic (sen) 12 13.77 12.75

Dividends per ordinary share in respect of the financial year (sen) 13 1.0 1.0

Consolidated Income Statementfor the financial year ended 31 December 2004


Company Income Statementfor the financial year ended 31 December 2004

Note 2004 2003RM'000 RM'000

Revenue 6 4,542 3,951

Other operating income 46 36

Advances to subsidiaries written off 0 (138)

Other operating expenses (371) (116)

Profit from operations 9 4,217 3,733

Finance cost 10 (2,978) (2,982)

Profit from ordinary activities before tax 1,239 751

Tax 11 (1,234) (1,226)

Net profit/(loss) for the financial year 5 (475)

Dividends per ordinary share in respect of the financial year (sen) 13 1.0 1.0


Group CompanyNote 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

NON-CURRENT ASSETS

Property, plant and equipment 14 60,512 60,109 0 0Interests in subsidiaries- investments 15 0 0 90,049 84,109- advances 15 0 0 110,376 106,043Goodwill on consolidation 16 4,283 768 0 0Advance to a fellow subsidiary 17 56 54 56 54Other investment 18 490 490 0 0Deferred tax assets 19 6,295 0 0 0

71,636 61,421 200,481 190,206CURRENT ASSETS

Short term investments 20 0 0 0 0Inventories 21 255,584 210,398 0 0Receivables- trade and other receivables 22 574,130 482,143 428 100- amount receivable from subsidiaries 22 0 0 4,,835 2,261Tax recoverable 1,014 583 0 0Deposit, bank and cash balances 29 102,407 72,697 1,552 13

933,135 765,821 6,815 2,374

LESS: CURRENT LIABILITIES

Payables 23 506,435 475,578 76 185Borrowings (unsecured)- bank overdrafts 24 3,189 4,981 0 148- others 24 205,385 114,458 0 0Current tax liabilities 820 2,930 184 2,101

715,829 597,947 260 2,434

NET CURRENT ASSETS/(LIABILITIES) 217,306 167,874 6,555 (60)

LESS: NON-CURRENT LIABILITIES

Post-employment benefits obligation 25 7,540 6,963 0 0Borrowings (unsecured) 24 143,984 97,899 24,760 0Deferred tax liabilities 19 8,928 969 0 0Redeemable cumulative preference shares 26 0 82,000 0 82,000

160,452 187,831 24,760 82,000

128,490 41,464 182,276 108,146

Balance Sheetsas at 31 December 2004



RM'000 RM'000 RM'000 RM'000

CAPITAL AND RESERVES

Share capital 27 157,658 82,658 157,658 82,658

Share premium 24,514 24,794 24,514 24,794

Revaluation reserve 12,291 15,963 0 0

(Accumulated losses)/retained earnings (69,439) (81,951) 104 694

Shareholders’ equity 125,024 41,464 182,276 108,146

MINORITY INTERESTS 3,466 0 0 0

128,490 41,464 182,276 108,146

Balance Sheetsas at 31 December 2004 (Continued)


Issued and fully paidordinary shares of

RM1 each Share

premium on Number Nominal ordinary Revaluation Accumulated

Note of shares value shares reserve losses Total'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2003 82,658 82,658 24,794 15,963 (91,893) 31,522

Net profit for the financial year 0 0 0 0 10,537 10,537Dividends for financial year ended:- 31 December 2002 (paid) 13 0 0 0 0 (595) (595)

At 31 December 2003 82,658 82,658 24,794 15,963 (81,951) 41,464

At 1 January 2004 82,658 82,658 24,794 15,963 (81,951) 41,464

Issue of shares:- restricted issue 27 75,000 75,000 0 0 0 75,000- share issue cost 0 0 (280) 0 0 (280)

75,000 75,000 (280) 0 0 74,720

Deferred tax liability on revaluation reserve 19 0 0 0 (3,672) 0 (3,672)

Net loss not recognised in income statement 0 0 0 (3,672) 0 (3,672)Net profit for the financial year 0 0 0 0 13,107 13,107Dividends for financial year ended:- 31 December 2003 (paid) 13 0 0 0 0 (595) (595)

At 31 December 2004 157,658 157,658 24,514 12,291 (69,439) 125,024

Consolidated Statement of Changes in Equityfor the financial year ended 31 December 2004


Company Statement of Changes in Equityfor the financial year ended 31 December 2004

Issued and fully paidordinary shares of Non-

RM1 each distributable Distributable Share

premium on Number Nominal ordinary Retained

Note of shares value shares earnings Total'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2003 82,658 82,658 24,794 1,764 109,216

Net loss for the financial year 0 0 0 (475) (475)Dividends for financial year ended:- 31 December 2002 (paid) 13 0 0 0 (595) (595)

At 31 December 2003 82,658 82,658 24,794 694 108,146

At 1 January 2004 82,658 82,658 24,794 694 108,146

Issue of shares:- restricted issue 27 75,000 75,000 0 0 75,000- share issue cost 0 0 (280) 0 (280)

75,000 75,000 (280) 0 74,720

Net profit for the financial year 0 0 0 5 5Dividends for financial year ended:- 31 December 2003 (paid) 13 0 0 0 (595) (595)

At 31 December 2004 157,658 157,658 24,514 104 182,276


Cash Flow Statementsfor the financial year ended 31 December 2004


RM'000 RM'000 RM'000 RM'000

CASH FLOWS FROM OPERATINGACTIVITIES

Net profit/(loss) for the financial year 13,107 10,537 5 (475)

Adjustments for non-cash items:

Property, plant and equipment: - depreciation 9,564 11,953 0 0 - write-offs 129 7 0 0 - gain on disposal (852) (1,345) 0 0

Inventories: - write-offs 10,692 10,863 0 0 - allowance for obsolescence 395 5,412 0 0 Allowance for doubtful debts 10,960 4,857 0 0 Allowance for diminution in value

of short term investments 0 49 0 0 Interest expense 12,908 8,502 2,978 2,982 Interest income (185) (36) (4,059) (3,416) Net unrealised exchange losses/(gains) 67 (63) 0 0 Tax expense 2,204 3,382 1,234 1,226 Minority interests 1,602 0 0 0 Advance to a subsidiary written off 0 0 0 138 Dividend income 0 (92) 0 0 Accruals for post-employment benefits obligation 824 1,445 0 0 Amortisation of goodwill 485 85 0 0 Loss on liquidation of subsidiaries 0 158 0 0

61,900 55,714 158 455Changes in working capital:

Inventories (56,146) (13,823) 0 0 Receivables (81,884) (129,961) (159) (1,313) Payables 21,423 55,089 (110) (288)

Cash flow from operations (54,707) (32,981) (111) (1,146)

Dividend received 0 92 0 0 Interest paid (11,186) (14,019) (2,978) (8,886) Interest received 185 36 1,317 3,161 Tax paid (7,094) (2,159) (3,151) (941) Post-employment benefit obligation paid (247) (246) 0 0

Net cash flow from operating activities (73,049) (49,277) (4,923) (7,812)


Cash Flow Statementsfor the financial year ended 31 December 2004 (Continued)


RM'000 RM'000 RM'000 RM'000

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of a subsidiary 5 (2,359) (853) (5,940) (8,909)Acquisition of other investment 0 (490) 0 0Advances to subsidiaries 0 0 (4,333) 19,360Receipts on advances to a related company 0 0 0 2,810Proceeds from disposal of

property, plant and equipment 1,145 2,559 0 0Purchase of property, plant and equipment (9,640) (8,811) 0 0Subscription of additional shares in a subsidiary 0 0 0 (5,000)

Net cash flow from investing activities (10,854) (7,595) (10,273) 8,261

CASH FLOWS FROM FINANCING ACTIVITIES

Issue of shares:- restricted issue 27 75,000 0 75,000 0- share issue cost (280) 0 (280) 0Redemption of RCPS 26 (82,000) 0 (82,000) 0Dividends paid (14,272) (595) (595) (595)Proceeds from short term borrowings 90,927 16,519 0 0Proceeds from term loan 30,000 70,000 0 0Advance from intermediate holding company 2,943 3,831 0 0Advance from immediate holding company 13,142 3,820 0 0Advance to a fellow subsidiary (2) (1) (2) 0Advances from subsidiaries 0 0 24,760 0

Net cash flow from financing activities 115,458 93,574 16,883 (595)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 31,555 36,702 1,687 (146)

CURRENCY TRANSLATION DIFFERENCES (53) (10) 0 0

CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR 67,716 31,024 (135) 11

CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 29 99,218 67,716 1,552 (135)


Notes to the Financial Statements31 December 2004

1 PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding and the principal activities of the Group consist of general trading, warehousing and distribution of consumer, pharmaceutical, bio-medical, chemical and industrial products and also sale of Famous Amos chocolate chip cookies.

2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and Company have been prepared under the historical cost convention (as modified by the revaluation of land and buildings), unless otherwise indicated in the individual policy statements in Note 3 to the financial statements.

The financial statements comply with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act 1965.

The preparation of financial statements in conformity with the provisions of the Companies Act 1965 and the applicable approved accounting standards in Malaysia requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported financial year. Although these estimates are based on the Directors’ best knowledge of current events and actions, actual results may differ from those estimates.

3 SIGNIFICANT ACCOUNTING POLICIES

(a) Subsidiaries

Subsidiaries are entities in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities.

Investments in subsidiaries are stated at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note (e) on impairment of assets.

When control is intended to be temporary, the subsidiaries are classified as current asset and carried at lower of cost and net realisable value.



3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Subsidiaries (continued)

Subsidiaries are consolidated using the acquisition method. Under the acquisition method of accounting, subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The cost of an acquisition is the amount of cash paid and the fair value at the date of acquisition of other purchase consideration given by the acquirer, together with directly attributable expenses of the acquisition. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The difference between the cost of acquisition over the Group’s share of the fair value of the identifiable net assets of the subsidiary acquired at the date of acquisition is reflected as goodwill or negative goodwill. See accounting policy Note (b) on goodwill.

Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree. Separate disclosure is made of minority interest.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets together with any unamortised balance of goodwill on acquisition.

(b) Goodwill on consolidation

Goodwill represents the excess of the cost of acquisition of subsidiaries over the Group’s share of the fair value of their identifiable net assets at the date of acquisition.

Goodwill on acquisition of subsidiaries occurring on or after 1 January 2003 are included in the balance sheet as intangible assets. Capitalised goodwill is amortised using the straight line method over its estimated useful life or over 10 years, whichever is shorter. Goodwill on acquisition that occurred prior to 1 January 2003 was written off against retained earnings in the financial year of acquisition; such goodwill has not been retrospectively capitalised and amortised as it was impractical to reinstate.

At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note (e) on impairment of assets.

The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity disposed of or, for pre 1 January 2003 acquisitions, the goodwill previously written off against retained earnings.




(c) Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, with the exception of certain land and buildings which are stated at valuation less subsequent depreciation and impairment losses. The subsidiaries’ assets stated at valuation were last revalued by the Directors in 1997 based on open market valuations carried out by independent firms of professional valuers. For those property, plant and equipment that are stated at valuation, all subsequent additions are stated at cost. The Directors have applied the transitional provisions of International Accounting Standards No. 16 (Revised) Property, Plant and Equipment as adopted by the Malaysian Accounting Standard Board which allows the land and buildings to be stated at their last revalued amounts less subsequent depreciation. Accordingly, these valuations have not been updated.

Surpluses arising on revaluation are credited to revaluation reserve. Any deficit arising from revaluation is charged against revaluation reserve to the extent of a previous surplus held in revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to income statement.

Depreciation of other property, plant and equipment is calculated on a straight line basis to write off the cost of each asset, or its revalued amount, to its residual value over its estimated useful life. The principal annual rates of depreciation in use are as follows:

Long leasehold land Straight line over the term of the lease of 99 years or 2%, whichever is shorter Buildings and renovations 2.86% - 33 1/3% Plant and machinery 10% - 33 1/3% Furniture, fittings and equipment 20% - 33 1/3% Motor vehicles 20%

At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note (e) on impairment of assets.

Fully depreciated property, plant and equipment are retained in the accounting records until they are no longer in use and no further charge for depreciation is made in respect of these assets.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit/(loss) from operations. On disposal of revalued assets, amounts in revaluation reserve relating to those assets are transferred to retained earnings.

Repairs and maintenance are charged to the income statement during the financial year in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.




(d) Other investment

Other non-current investment is shown at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy Note (e) on impairment of assets.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged/credited to the income statement.

(e) Impairment of assets

Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows.

The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.

(f) Inventories

Inventories comprise raw materials, work in progress and finished goods. Inventories are stated at the lower of cost and net realisable value.

Cost is principally determined on a weighted average basis and comprises cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.

(g) Trade receivables

Trade receivables are carried at invoice amount less an allowance for doubtful debts. The allowance is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of allowance is the difference between the carrying amount and the recoverable amount.

Bad debts are written off in the financial year in which they are identified.




(h) Foreign currencies

Reporting currency

The financial statements are presented in Ringgit Malaysia.

Foreign operations

Financial statements of foreign operations that are integral to the operations of the Group are translated using procedures in the following paragraph as if the transactions of the foreign operations had been those of the Group.

Foreign currency transactions and balances

Foreign currency transactions in Group companies are accounted for at exchange rates prevailing at the transaction dates, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Foreign currency monetary assets and liabilities are translated at exchange rates prevailing at the balance sheet date, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in the income statement.

The principal closing rates used in translation of foreign currency amounts were as follows:

2004 2003Foreign currency RM RM

1 Euro 5.182 4.759 1 US Dollar 3.800 3.800 1 Brunei Dollar 2.307 2.228 1 Singapore Dollar 2.326 2.228 1 Swiss Francs 3.346 N/A

(i) Income taxes

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and includes all taxes based upon the taxable profits, including real property gains taxes payable on disposal of properties.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.




(j) Employee benefits

(i) Short term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the financial year in which the associated services are rendered by employees of the Group.

(ii) Post-employment benefits obligation

Group companies incorporated in Malaysia contribute to the Employees Provident Fund, the national defined contribution plan. Once the contributions have been paid, the Group has no further payment obligations.

Defined contribution plan

The Group’s liability in respect of the defined contribution plan are charged to the income statement in the financial year to which they relate. Once the contributions have been accrued, the Group has no further liabilities.

(k) Cash and cash equivalents

For the purpose of the cash flow statements, cash and cash equivalents comprise cash on hand, deposits held at call with banks, short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet.

(l) Dividends

Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of retained earnings and recognised as liabilities when declared.

(m) Operating lease

Leases of assets where a significant portion of the risks and benefits of ownership are retained by the lessor are classified as operating leases. Payments made under operating lease are charged to the income statement on the straight line basis over the lease period. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.

(n) Revenue recognition

Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyers, net of sales taxes and discounts, and after eliminating sales within the Group.

Revenue from rendering of services is recognised upon performance.Other revenue earned by the Group is recognised on the following basis:Interest and rental income - as it accrues unless collectibility is in doubt.Dividend income - when the Group’s right to receive payment is established.




(o) Share capital

Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument.

Distribution to holders of a financial instrument classified as an equity instrument is charged directly to equity.

Incremental external costs directly attributable to the issue of new shares are shown as a deduction from the share premium account.

(p) Contingent liabilities

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.

(q) Financial instruments

(i) Description

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.

(ii) Financial instruments recognised on the balance sheet

The particular recognition methods adopted for financial instruments recognised on the balance sheet are disclosed in the individual policy statements associated with each item.

(iii) Financial instruments not recognised on the balance sheet

Foreign currency forward contracts

The Group commits to foreign currency forward contracts to protect them from movements of exchange rates against the Ringgit Malaysia. This allows them to lock in an exchange rate with which a foreign currency asset or liability will be settled.

Exchange gains and losses arising from such contracts are deferred until the date of their actual realisation when they are included in the measurement of such transactions.




(q) Financial instruments (continued)

(iv) Fair value estimation for disclosure purposes

The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date.

In assessing the fair value of financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at balance sheet date. Comparisons are made to similar instruments that are publicly traded and estimates based on discounted cash flow techniques that are also used. For long term financial liabilities, fair value is estimated by discounting future contractual cash flow at appropriate interest rates.

It is not practical to estimate the fair value of the non-current unquoted investment of the Group due to the lack of indicative market prices and the inability to estimate fair value without incurring excessive costs. However, theGroup believes that the carrying amount represent the recoverable value.

Reported values of financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.

(r) Segment reporting

Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segments provide products or services that are subject to risk and returns that are different from those of other business segments.

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment.

4 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s activities expose it to a variety of financial risks, in the areas of foreign currency exchange risk, interest rate risk, credit risk and liquidity risk. The Group’s overall financial risk management objective is to ensure that the Group is adequately protected. Financial risk management involves risk reviews, internal control systems and adherence to the Diethelm Keller SiberHegner (‘DKSH’) Group financial risk management policies.

(a) Foreign currency exchange risk

The Group’s foreign exchange control policies were established to protect the Group from foreign currency risks. The Group covers all foreign currency payables through foreign currency forward contracts, except in those cases where the suppliers assume the risks.

(b) Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. Interest rate exposures arise from the Group’s borrowings. They are managed through the use of a mixture of fixed and floating rate debts.



4 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(c) Credit risk management

The Group is exposed to credit related risks. With regards to trade receivables, the Group operates several creditmanagement units closely linked to the selling divisions to enable a fast and complete follow-up. Credit is only made available to customers after proper credit reviews and each customer is imposed a credit limit. With regards to foreign currency forward contracts, the Group only enters into such contracts with reputable Malaysian and international banks.

(d) Liquidity risk

The Group policy is to ensure that adequate borrowing facility are available at all times.

5 ACQUISITION OF A SUBSIDIARY

Financial year ended 31 December 2004

The Company managed the operations of EAC Transport Agencies (Malaysia) Sdn. Bhd. ("EACTA") with effect from1 January 2004 and accordingly, the results of EACTA were consolidated from that date.

The effects of this acquisition on the financial results of the Group from the date of acquisition to the end of the financial year is shown below.

2004RM'000

Revenue 12,302

Profit from operations 4,969Finance cost 0Profit from ordinary activities before tax 4,969Tax (1,700)Profit from ordinary activities after tax 3,269Minority interests (1,602)

Net profit for the financial year 1,667

The effects of this acquisition on the financial position of the Group at the end of the financial year is as follows:

2004RM’000

Non-current assets (including goodwill on acquisition of EACTA) 6,321 Current assets 16,849 Current liabilities (12,497)

Net assets 10,673 Minority interests (3,466)

Increase in Group’s net assets 7,207



5 ACQUISITION OF A SUBSIDIARY (CONTINUED)

Details of net assets acquired, goodwill and cash flow arising from the acquisition were as follows:

At date ofacquisition

RM'000

Property, plant and equipment (Note 14) 749Deferred tax assets (Note 19) 297Receivables 21,324

Bank and cash balances 3,585 Payables (7,833) Bank borrowings (unsecured) (4) Current tax liabilities (637) Dividends payable (13,677)

Fair value of total net assets 3,804 Minority interest (1,864)

Fair value of net assets acquired at 1 January 2004 1,940 Goodwill on consolidation 4,000

Cost of acquisition (purchase consideration) 5,940 Less: Cash and cash equivalents of subsidiary acquired (3,581)

Cash outflow of the Group on acquisition 2,359

Cash outflow of the Company on acquisition 5,940

Goodwill arising on the acquisition is amortised on the straight line basis over the estimated useful life of 10 years.





The Company managed the operations of DKSH Marketing Services Sdn Bhd (‘DKSHMS’) (formerly known as EAC Marketing Services Sdn Bhd (‘EMSB’)) with effect from 1 January 2003 and accordingly, the results of DKSHMS were consolidated from that date.

The effects of this acquisition on the financial results of the Group from the date of the acquisition to the end of the financial year is shown below.

2003RM'000

Revenue 655,957

Profit from operations 1,367

Finance cost (1,363)

Profit from ordinary activities before tax 4

Tax (433)

Net loss for the financial year (429)

The effects of this acquisition on the financial position of the Group at the end of the financial year is as follows:

2003RM'000

Non-current assets (including goodwill on acquisition of DKSHMS) 4,142 Current assets 140,848 Current liabilities (124,767) Non-current liabilities (14,799)

Increase in Group net assets 5,424




Details of net assets acquired, goodwill and cash flow arising from this acquisition is as follows:

At date ofacquisition

RM'000

Property, plant and equipment 4,826Inventories 35,873

Receivables 9,309 Payables (50,008)

Fair value of net assets acquired at 1 January 2003 0

Goodwill on consolidation 853

Cost of acquisition (comprising purchase consideration and expenses directly attributable to the acquisition) 853

Purchase consideration discharged by cash 0* Expenses directly attributable to the acquisition, paid in cash 853ˆ Less: Cash and cash equivalents of subsidiary acquired 0*

Cash outflow of the Group and Company on acquisition 853

* The purchase consideration and the cash and cash equivalents of the subsidiary acquired amounted to RM2.

ˆ Included in expenses directly attributable to the acquisition are fees for non-audit services amounting to RM343,000.

Goodwill arising on the acquisition is amortised on the straight line basis over the estimated useful life of 10 years.



6 REVENUEGroup Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000

Sale of goods - continuing operations 2,751,247 1,700,739 0 0

- new acquisition 0 655,957 0 0

2,751,247 2,356,696 0 0 Rendering of services - continuing operations 9,058 14,420 529 571 - new acquisition 12,302 0 0 0

21,360 14,420 529 571

Interest income 0 0 4,013 3,380

2,772,607 2,371,116 4,542 3,951

7 STAFF COSTSGroup

2004 2003RM'000 RM'000

Wages, salaries and bonus 78,106 68,350 Post-employment benefits obligation: - national defined contribution plan 10,996 9,871 - other defined contribution plan (Note 25) 824 1,445 Other employee benefits 22,650 23,535

112,576 103,201

Staff costs include the remuneration of Executive Directors (Note 8).



8 DIRECTORS’ REMUNERATION

The Directors of the Company in office during the financial year were as follows:

Non-executive Directors

Michael Lim Hee Kiang Ahmad Fakhrizzaki Abdullah James Armand Menezes (appointed on 19 July 2004)

Executive Directors

Niels Johan HolmAndré Eugen HägiThon Lek

The aggregate amount of emoluments receivable by Directors of the Company during the financial year was as follows:

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Non-executive Directors:- fees 15 12 9 6- estimated money value of benefits-in-kind 7 0 7 0

22 12 16 6Executive Directors:- salaries and bonus 2,680 3,311 0 0- estimated money value of benefits-in-kind 48 45 0 0- other benefits 721 665 0 0

3,449 4,021 0 0

3,471 4,033 16 6



9 PROFIT FROM OPERATIONS

Group Company2004 2003 2004 2003

Note RM'000 RM'000 RM'000 RM'000

Profit from operations is arrived at after charging/(crediting) the following: Auditors’ remuneration: - fees for statutory audit 394 354 10 9 - fees for other services 122 158 17 11

Property, plant and equipment: - write offs 129 7 0 0 - net gain on disposal (852) (1,345) 0 0 Net exchange (gains)/losses: - realised (911) (1,202) 0 0 - unrealised 67 (63) 0 0 Cost of contract workers 541 654 0 0 Amortisation of goodwill 16 485 85 0 0 Inventories: - write offs 10,692 10,863 0 0 - allowance for obsolescence 395 5,412 0 0 Rental of land and buildings 19,591 18,379 0 0 Rental income (1,782) (3,520) 0 0 Interest income (185) (36) (4,059) (3,416) Allowance for diminution in value of short term investments 0 49 0 0 Dividend income (gross) - unquoted investment 0 (92) 0 0 Loss on liquidation of subsidiaries 0 158 0 0

10 FINANCE COST

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Interest expense: - bank overdrafts 84 169 26 30 - bankers’ acceptances 4,277 2,530 0 0 - promissory notes 366 445 0 0 - term loans 3,985 2,289 0 0

- intercompany advances from holding companies 1,111 0 0 0- others 133 117 0 0

9,956 5,550 26 30Dividend on RCPS 2,952 2,952 2,952 2,952

12,908 8,502 2,978 2,982



11 TAX Group Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000

Current tax: - Malaysian tax 3,915 3,405 1,234 1,226Deferred tax (Note 19) (1,711) (23) 0 0

2,204 3,382 1,234 1,226 Current tax Current year 6,988 7,277 1,327 1,200 Benefit from the utilisation of previously unrecognised tax losses (2,980) (3,943) 0 0 (Over)/under accrual in prior years (net) (93) 71 (93) 26

3,915 3,405 1,234 1,226Deferred tax

Origination and reversal of temporary differences (87) (23) 0 0 Recognition of previously unrecognised

temporary differences (1,624) 0 0 0

(1,711) (23) 0 0

2,204 3,382 1,234 1,226

The explanation of the relationship between tax expense and profit from ordinary activities before tax is as follows:

Group Company 2004 2003 2004 2003

% % % %

Numerical reconciliation between the average effective tax rate and the Malaysian tax rate

Malaysian tax rate 28 28 28 28 Tax effects of: - expenses not deductible for tax purposes 20 19 79 132 - income not subject to tax 0 (7) 0 0

- utilisation of previously unrecognised tax losses 0 (28) 0 0 - recognition of previously unrecognised temporary differences (33) 0 0 0

- unrecognised temporary differences (4) 11 0 0 - unused tax losses 2 0 0 0

13 23 107 160

Under/(over) accrual in prior years (net) 0 1 (7) 3

Average effective tax rate 13 24 100 163



12 EARNINGS PER SHARE - BASIC

The earnings per share is calculated by dividing the net profit for the financial year by the weighted average number of ordinary shares in issue during the financial year.

Group 2004 2003

Net profit for the financial year (RM’000) 13,107 10,537 Weighted average number of ordinary shares in issue ('000) 95,158 82,658 Basic earnings per share (sen) 13.77 12.75

13 DIVIDENDS

Dividends proposed in respect of ordinary shares for the financial year are as follows:

Group and Company2004 2003

Gross Amount of Gross Amount ofdividend dividends, net dividend dividends, netper share of 28% tax per share of 28% tax

Sen RM'000 Sen RM'000

Proposed final dividends: - financial year ended 31 December 2003 0 0 1.0 595

- financial year ended 31 December 2004 1.0 595 0 0

1.0 595 1.0 595

At the forthcoming Annual General Meeting, a final gross dividend of 1 sen per share on 157,658,076 ordinary shares, less income tax of 28%, amounting to RM1,135,138 will be proposed for shareholders’ approval. These financial statements do not reflect this proposed final dividend and the dividend will be accounted for in the financial year ending 31 December 2005 when approved by shareholders.



14 PROPERTY, PLANT AND EQUIPMENT

Long Buildings Furniture, leasehold and Plant and fittings and Motor

land renovations machinery equipment vehicles TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

Net book value at 1 January 2004 30,782 14,060 3,618 9,384 2,265 60,109

Acquisition of a subsidiary (Note 5) 0 0 0 550 199 749Additions 0 4,330 598 4,125 587 9,640Disposals 0 0 0 (265) (28) (293)Write-offs 0 (9) 0 (120) 0 (129)Reclassification 0 0 0 7 (7) 0Depreciation charge (742) (1,712) (787) (5,447) (876) (9,564)

Net book value at 31 December 2004 30,040 16,669 3,429 8,234 2,140 60,512

At 31 December 2004

Cost 0 14,800 11,980 55,381 7,097 89,258Valuation 37,068 20,270 0 0 0 57,338Accumulated depreciation (7,028) (18,401) (8,551) (47,147) (4,957) (86,084)

Net book value 30,040 16,669 3,429 8,234 2,140 60,512

At 31 December 2003

Cost 0 10,717 11,405 58,354 7,640 88,116Valuation 37,068 20,270 0 0 0 57,338Accumulated depreciation (6,286) (16,927) (7,787) (48,970) (5,375) (85,345)

Net book value 30,782 14,060 3,618 9,384 2,265 60,109

The Group’s land and buildings were last revalued in 1997 by independent professional valuers using the open market value basis. The book values of the properties were adjusted to reflect the revaluations and the resultant surpluses were credited to revaluation reserve.

Net book value of revalued land and buildings had these assets been carried at cost less accumulated depreciation, are as follows:

Group2004 2003

RM'000 RM'000

Long leasehold land, buildings and renovations 2,725 2,821

The Group is unable to separately disclose the carrying amounts of revalued land, buildings and renovations, that would have been included in the financial statements, had these assets been carried at cost less accumulated depreciation due to the absence of historical records.



15 INTERESTS IN SUBSIDIARIES

Company2004 2003

RM'000 RM'000

Non-current assets

Unquoted shares at cost 90,849 84,909Accumulated impairment losses (800) (800)

90,049 84,109 Advances to subsidiaries 110,376 106,043

200,425 190,152Current asset

Amounts receivable from subsidiaries (Note 22) 4,835 2,261

Advances to subsidiaries are denominated in Ringgit Malaysia, unsecured and carry interest at rates ranging from 0% - 4% (2003: 0% - 3.75%) per annum. These advances are not intended to be recalled, in full or in part, within the next 12 months from the balance sheet date.

The carrying amounts of these advances at the balance sheet date were not reduced to their estimated fair values of RM106,726,000 (2003: RM101,574,000) as these advances are receivable from profitable wholly-owned subsidiaries and the Directors are of the opinion that the amounts are fully recoverable.



15 INTERESTS IN SUBSIDIARIES (CONTINUED)

The subsidiaries of the Company are detailed below:

Group'sCountry of effective interest %

Name of company incorporation 2004 2003 Principal activities

Diethelm Malaysia Malaysia 100.0 100.0 General trading, warehousing Sendirian Berhad and distribution of consumer,

pharmaceutical, bio-medical, chemical and industrial products and the manufacture of aluminium and stainless steel household products.

Subsidiary of Diethelm Malaysia Sendirian Berhad

- Diethelm (B) Sendirian Negara Brunei 100.0 100.0 In liquidation. Berhad *+ Darussalam

DKSH Marketing Malaysia 100.0 100.0 General trading, warehousing Services Sdn Bhd and distribution agency.

EAC Transport Malaysia 51.0 0.0 Forwarding and husbanding Agencies (Malaysia) activities.

Sdn Bhd **

Harpers Trading Malaysia 100.0 100.0 General trading, warehousing (Malaysia) Sdn. Berhad and distribution agency.

Subsidiary of Harpers

Trading (Malaysia) Sdn. Berhad

- Harpers Trading (B) Negara Brunei 100.0 100.0 General trading, warehousing Sdn Bhd * Darussalam and distribution agency.

Diethelm Chemicals Malaysia 100.0 100.0 Manufacturing and processing Malaysia Sendirian Berhad of chemicals.

Diethelm Logistics Malaysia 100.0 100.0 Provision of warehousing Services Sdn Bhd and distribution services.



15 INTERESTS IN SUBSIDIARIES (CONTINUED)

Group'sCountry of effective interest %

Name of company incorporation 2004 2003 Principal activities

Diethelm Central Malaysia 100.0 100.0 Dormant. Services Sdn. Bhd.

Diethelm Franchise Malaysia 100.0 100.0 In liquidation. Holdings (M) Sdn Bhd ^

The Famous Amos Malaysia 100.0 100.0 Manufacture and sale of chocolate Chocolate Chip Cookie chip cookies. Corporation (M) Sdn Bhd

Diethelm Transport Malaysia 100.0 100.0 In liquidation. Holdings Sendirian Berhad ^

Subsidiary of Diethelm Transport Holdings Sendirian Berhad

- Diethelm Airtrans Sendirian Berhad ^ Malaysia 100.0 100.0 In liquidation.

* Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers, Malaysia.

** On 1 January 2004, the Company acquired 51% equity interest in EAC Transport Agencies (Malaysia) Sdn. Bhd. (Note 5).

^ These companies were not consolidated since the prior financial year as it was resolved that these subsidiaries be liquidated by way of Members’ Voluntary Winding Up.

+ This company was not consolidated in the current financial year as it was resolved that this subsidiary be liquidated by way of Members’ Voluntary Winding Up on 17 November 2004.



16 GOODWILL ON CONSOLIDATION

Group2004 2003

RM'000 RM'000

At 1 January 768 0

Acquisition of a subsidiary (Note 5) 4,000 853

Amortisation charge (485) (85)

At 31 December 4,283 768

At 31 December

Cost 4,853 853Accumulated amortisation (570) (85)

Net book value 4,283 768

17 ADVANCE TO A FELLOW SUBSIDIARY

Advance to a fellow subsidiary, Olic (Malaysia) Sendirian Berhad, is denominated in Ringgit Malaysia, unsecured, non-interest bearing and is not intended to be recalled, in full or in part, within the next 12 months from the balance sheet date.

The carrying value of the advance at balance sheet date was not reduced to its estimated fair value of RM54,000 (2003: RM52,000) as this advance is receivable from a wholly-owned fellow subsidiary and the Directors are of the opinion that the amount is fully recoverable.

18 OTHER INVESTMENT

Group2004 2003

RM'000 RM'000 Shares at cost in an unquoted corporation 490 490



19 DEFERRED TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheet:

Group2004 2003

RM'000 RM'000

Deferred tax assets - subject to income tax 6,295 0

Deferred tax liabilities - subject to income tax (8,928) 0 - subject to capital gains tax 0 (969)

(8,928) (969)

The movement during the financial year relating to deferred tax are as follows:

Group2004 2003

RM'000 RM'000

At start of financial year (969) (992)(Charged)/credited to income statement (Note 11):

- property, plant and equipment (5,070) 23 - post-employment benefit obligation 1,811 0

- receivables 2,500 0 - inventories 2,257 0 - tax losses 212 0 - others 1 0

1,711 23 Charged to equity: - property, plant and equipment (3,672) 0

Acquisition of a subsidiary (Note 5) 297 0 At end of financial year (2,633) (969)



19 DEFERRED TAX (CONTINUED)Group

2004 2003RM'000 RM'000

Subject to income tax

Deferred tax assets (before offsetting) Post-employment benefit obligation 1,811 0

Receivables 2,649 0 Inventories 2,257 0 Tax losses 212 0 Others 256 0

7,185 0Offsetting (890) 0

Deferred tax assets (after offsetting) 6,295 0

Deferred tax liabilities (before offsetting)Property, plant and equipment (9,818) 0

Offsetting 890 0

Deferred tax liabilities (after offsetting) (8,928) 0

Subject to capital gains tax

Deferred tax liabilitiesProperty, plant and equipment 0 (969)

The amounts of deductible temporary differences and unused tax losses (both of which have no expiry date) for which no deferred tax asset is recognised in the balance sheet are as follows:

Group2004 2003

RM'000 RM'000

Deductible temporary differences 13,855 33,353 Tax losses 27,049 38,398



20 SHORT TERM INVESTMENTSGroup

2004 2003RM'000 RM'000

Unquoted investments, at carrying value 49 49 Allowance for diminution in value of investments (49) (49)

0 0

These subsidiaries were not consolidated since the prior financial year as it was resolved that these companies be liquidated by way of Members’ Voluntary Winding Up. The carrying values of these subsidiaries were fully written down in the prior financial year.

21 INVENTORIESGroup

2004 2003RM'000 RM'000

At cost: Raw materials and packaging materials 1,859 1,700

Work-in-progress 1,980 1,903 Finished goods 248,044 204,562

251,883 208,165At net realisable value:Finished goods 3,701 2,233

255,584 210,398



22 RECEIVABLES Group Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000

Trade receivables 595,274 502,833 0 0

Allowance for doubtful debts (41,984) (28,443) 0 0

553,290 474,390 0 0

Amounts receivable from subsidiaries (Note 15) 0 0 4,835 2,261Advance payment to a supplier 10,207 0 0 0

Deposits 2,420 2,738 0 0 Prepayments 1,075 589 229 0 Other receivables 7,138 4,426 199 100

574,130 482,143 5,263 2,361

The currency exposure profile of receivables is as follows: Group

2004 2003RM'000 RM'000

Trade receivables

Ringgit Malaysia 549,148 470,311 Brunei Dollar 4,142 4,079

553,290 474,390

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Other receivables

Ringgit Malaysia 6,839 3,940 199 100 Brunei Dollar 299 486 0 0

7,138 4,426 199 100

The amounts receivable from subsidiaries are denominated in Ringgit Malaysia. The amounts are non-trade in nature, unsecured, non-interest bearing and have no fixed repayment terms.

Credit terms of trade receivables range from 60 days to 90 days (2003: 60 days to 90 days).

Credit risk management with respect to trade receivables is disclosed in Note 4(c) to the financial statements.



23 PAYABLESGroup Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000

Trade payables 438,651 420,445 0 0 Deposits received from customers 0 1,023 0 0 Amounts payable to: - ultimate holding company 793 38 0 0 - intermediate holding company 432 0 0 0 - immediate holding company 531 0 0 0 - a subsidiary 0 0 5 0 - other related company 2 469 0 0 Trade accruals 46,185 29,767 71 185

Other payables 19,841 19,970 0 0 Payroll liabilities 0 3,866 0 0

506,435 475,578 76 185

The currency exposure profile of payables is as follows: Group

2004 2003RM'000 RM'000

Trade payables

Ringgit Malaysia 346,483 369,113 US Dollar 75,117 41,478

Euro 10,297 3,860 Brunei Dollar 1,801 2,883 Singapore Dollar 4,061 1,651 Others 892 1,460

438,651 420,445

Amounts payable to ultimate holding company

Swiss Francs 629 38 US Dollar 164 0

793 38



23 PAYABLES (CONTINUED) Group Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000

Trade accruals


46,185 29,767 71 185

Group2004 2003

RM'000 RM'000

Other payables Ringgit Malaysia 19,551 19,760

Brunei Dollar 290 210

19,841 19,970

Amounts payable to intermediate and immediate holding companies, a subsidiary, other related company, and payroll liabilities are denominated in Ringgit Malaysia.

The average credit terms of payables are as follows:

Average credit terms 2004 2003

Trade payables 90 days 90 days Other payables 30 days 30 days

Payroll liabilities N/A 30 days

Amounts payable to holding companies, a subsidiary, other related company and trade accruals. No fixed repayment terms

The amounts payable to holding companies, a subsidiary and other related company are non-trade in nature, unsecured and non-interest bearing.



24 BORROWINGS (UNSECURED) Group Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000

Current: Bank overdrafts (Note 29) 3,189 4,981 0 148

Bankers' acceptances 185,984 99,158 0 0 Promissory notes 19,401 15,300 0 0

205,385 114,458 0 0

208,574 19,439 0 148Non-current:

Advances from:- intermediate holding company 17,834 14,891 0 0

- immediate holding company 26,150 13,008 0 0 - subsidiaries 0 0 24,760 0

43,984 27,899 24,760 0 Term loans 100,000 70,000 0 0

143,984 97,899 24,760 0

Total 352,558 217,338 24,760 148

Advances from intermediate and immediate holding companies and subsidiaries are unsecured, carry interest at 3.75% (2003: Nil) per annum and are not repayable within the next 12 months.

Weighted average year end effective interest rates

Group Company 2004 2003 2004 2003

% % % %

Bank overdrafts 6.65 6.65 0 6.65Bankers’ acceptances 3.17 3.18 0 0Promissory notes 3.30 3.36 0 0Term loans 5.47 5.47 0 0



24 BORROWINGS (UNSECURED) (CONTINUED)

Currency exposure profile

Bank overdraftsGroup Company

2004 2003 2004 2003RM'000 RM'000 RM'000 RM'000


3,189 4,981 0 148

All other borrowings are denominated in Ringgit Malaysia.

Maturity structureGroup

2004 2003RM'000 RM'000

Within one year 208,574 119,439Between one and two years 113,984 27,899Between two and five years 30,000 70,000

Total 352,558 217,338

Estimated fair values

Group Company2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Advances from:- intermediate holding company 17,244 14,263 0 0

- immediate holding company 25,285 12,460 0 0 - subsidiaries 0 0 23,941 0 Term loans 108,312 73,207 0 0

150,841 99,930 23,941 0



25 POST-EMPLOYMENT BENEFITS OBLIGATION Group

2004 2003RM'000 RM'000


Non-current:

At 31 December 7,540 6,963

The movements during the financial year in the amounts recognised on the consolidated balance sheet are as follows:

Group2004 2003

RM'000 RM'000

At 1 January 6,963 5,764 Charged to income statement (Note 7) 824 1,445

Contributions paid (247) (246)

At 31 December 7,540 6,963


The Group accrues an additional 4% per annum based on respective eligible employee’s annual gross salary, commencing from the date of employment. The Group also accrues interest on the accumulated balance annually, at the current interest rate for savings accounts plus 1%. These additional contributions are expensed to the income statement in the financial year to which they relate. The post-employment benefits will be paid to eligible employees upon their retirement or resignation, after a minimum of 5 years service. Once the contributions have been accrued, the Group has no further liabilities.

26 REDEEMABLE CUMULATIVE PREFERENCE SHARES (‘RCPS’) Group and Company 2004 2003

RM'000 RM'000Authorised:

82,000,000 RCPS of RM0.01 each, at beginning and end of financial year 820 820

Issued and fully paid:

82,000,000 RCPS with issue price of RM1.00 each

At start of financial year 82,000 82,000Redeemed during the financial year (82,000) 0

0 82,000



26 REDEEMABLE CUMULATIVE PREFERENCE SHARES (‘RCPS’) (CONTINUED) Group and Company 2004 2003

RM'000 RM'000Analysed as follows:

Nominal value of RM0.01 each 0 820Share premium 0 81,180

At 31 December 0 82,000

Details of the RCPS were as follows:

(i) The RCPS carried a fixed cumulative preferential gross dividend at the rate of RM0.05 (five sen) per share per annum.

(ii) The RCPS were not entitled to participate in profits other than the preferential dividend.

(iii) The RCPS carried no voting rights.

(iv) The RCPS could have been redeemed, in whole or in part, from 17 June 2001, at a redemption price of RM1.00 per RCPS together with preferential dividend accrued to the date of redemption on 17 June 2004.

(v) The RCPS were not convertible into fully paid ordinary shares.

On 16 March 2004, the Company announced its proposal to extend the tenure of the RCPS to 17 June 2009. However, the Securities Commission granted an extension to 17 December 2004. Accordingly, on 5 November 2004, the Company redeemed in full the 82,000,000 RCPS of RM0.01 each in the Company, at a premium of RM0.99 per RCPS.

27 SHARE CAPITAL Group and Company

2004 2003Number Nominal Number Nominal of shares Value of shares Value

'000 RM'000 '000 RM'000Authorised

Ordinary shares of RM1.00 each

At start of financial year 99,180 99,180 99,180 99,180

Created during the financial year 400,000 400,000 0 0

At end of financial year 499,180 499,180 99,180 99,180

Increase of authorised share capital

On 10 June 2004, the Company increased its authorised share capital from RM100,000,000 comprising 99,180,000 ordinary shares of RM1.00 each and 82,000,000 Redeemable Cumulative Preference Shares ("RCPS") of RM0.01 each, to RM500,000,000 comprising 499,180,000 ordinary shares of RM1.00 each and 82,000,000 RCPS of RM0.01 each by the creation of 400,000,000 new ordinary shares of RM1.00 each.



27 SHARE CAPITAL (CONTINUED)

Issue of shares

On 5 November 2004, the Company allotted and issued 75,000,000 new ordinary shares of RM1.00 each ("Restricted Issue Shares") to Dihoma Sendirian Berhad for cash, at an issue price of RM1.00 per share. The purpose of this Restricted Issue was to raise funds, to enable the Company to redeem the 82,000,000 RCPS which were due for redemption on17 December 2004 (Note 26).

The Restricted Issue Shares, which rank pari passu in all respects with the existing ordinary shares of RM1.00 each in the Company, were listed and quoted on the Main Board of the Bursa Malaysia Securities Berhad on 19 November 2004.

28 RETAINED EARNINGS

Subject to the agreement of the Inland Revenue Board, the Company has sufficient Malaysian Section 108(6) tax credits to frank all of its retained earnings as at 31 December 2004, if paid out as dividends.

29 CASH AND CASH EQUIVALENTS

Group Company 2004 2003 2004 2003

RM'000 RM'000 RM'000 RM'000

Deposit with a licensed bank 1,500 0 1,500 0 Bank and cash balances 100,907 72,697 52 13

Deposit, bank and cash balances 102,407 72,697 1,552 13 Bank overdrafts (Note 24) (3,189) (4,981) 0 (148)

99,218 67,716 1,552 (135)The currency exposure profile of deposit,

bank and cash balances is as follows:

Ringgit Malaysia 102,368 72,659 1,552 13Brunei Dollar 39 38 0 0

102,407 72,697 1,552 13

Deposit with a licensed bank has a maturity period of 3 days and carry interest at 2.20% per annum.

Bank and cash balances are non-interest bearing. Bank balances are deposits held at call with banks.



30 COMMITMENTS

(a) Capital commitments

Capital expenditure not provided for in the financial statements are as follows:Group

2004 2003RM'000 RM'000

Authorised by the Directors and contracted for:

- Property, plant and equipment 1,449 2,025

(b) Non-cancellable operating lease commitments

The future minimum lease payments under non-cancellable operating leases are as follows:

Group 2004 2003

RM'000 RM'000

Payable within one year 11,238 13,388 Payable after one year but not later than five years 46,099 46,532 Payable after five years 40,626 53,855

97,963 113,775

31 CONTINGENT LIABILITY - UNSECURED

A subsidiary of the Group received a claim from a principal for an alleged wrongful termination of a proposed exclusive distributorship agreement. The Directors are of the opinion, after consultation with their legal advisers, that the claim is wrong in law and made without legal basis and consequently, any estimate of any potential liability that may arise cannot be made at this stage.



32 SIGNIFICANT RELATED PARTY DISCLOSURES

The immediate and intermediate holding companies of the Group are Dihoma Sendirian Berhad and Diethelm Holdings (Asia) Sendirian Berhad respectively, both of which are incorporated in Malaysia.

The ultimate holding company of the Company is Diethelm Keller Holding AG, a company incorporated in Switzerland.

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. The related party transactions described below were carried out on terms and conditions agreed among the parties.

Group 2004 2003

RM'000 RM'000

Purchases from:(i) DKSH Management Ltd - a related corporation

- management fees 2,892 2,890

(ii) Lembaga Tabung Angkatan Tentera - a substantial shareholder of the Company - rent of land and building 10,476 9,778

(iii) Siber Hegner Ltd - a related corporation- internal audit fee 169 171

Sales to:(iv) Diethelm Singapore Pte Ltd - a related corporation

- IT charges (net) (511) (1,467)

Payment of dividends to:(v) Dihoma Sendirian Berhad

- RCPS dividends (net) 2,952 2,952

Payment of interest to:(vi) Dihoma Sendirian Berhad

- interest on advances 531 0

(vii) Diethelm Holdings (Asia) Sendirian Berhad- interest on advances 580 0

33 SEGMENTAL INFORMATION

The Group is organised into three main business segments:

• Trading and logistics• Chemicals• Food

All the major operations of the Group are carried out in Malaysia.



33 SEGMENTAL INFORMATION (CONTINUED)

(a) Primary reporting format - business segmentsTrading and

logistics Chemicals Food GroupRM'000 RM'000 RM'000 RM'000


RevenueTotal revenue 2,711,112 40,108 21,809 2,773,029 Inter-segment revenue (38) (384) 0 (422)

External revenue 2,711,074 39,724 21,809 2,772,607

ResultsProfit from operations 25,674 2,140 2,007 29,821

Finance cost (12,908) Profit from ordinary activities before tax 16,913 Tax (2,204)

Profit from ordinary activities after tax 14,709 Minority interests (1,602) Net profit for the financial year 13,107

At 31 December 2004

Net assetsSegment assets 845,382 18,849 5,155 869,386 Unallocated assets 135,385

Total assets 1,004,771

Segment liabilities (431,963) (5,927) (761) (438,651)Unallocated liabilities (437,630)

Total liabilities (876,281)


Other informationCapital expenditure 8,960 400 280 9,640 Depreciation of property, plant and equipment (9,009) (142) (413) (9,564)

Amortisation of goodwill (485)

Segment assets consist primarily of property, plant and equipment, inventories and trade receivables. Segment liabilities comprise only trade payables. Capital expenditure comprises additions to property, plant and equipment (Note 14).




(a) Primary reporting format - business segments (Continued)

Trading Chemicals Food GroupRM'000 RM'000 RM'000 RM'000


RevenueTotal revenue 2,315,445 39,456 17,238 2,372,139 Inter-segment revenue (481) (542) 0 (1,023)

External revenue 2,314,964 38,914 17,238 2,371,116

ResultsProfit from operations 18,743 2,157 1,521 22,421 Finance cost (8,502)Profit from ordinary activities before tax 13,919

Tax (3,382)

Net profit for the financial year 10,537

At 31 December 2003

Net assetsSegment assets 721,916 17,992 4,989 744,897 Unallocated assets 82,345

Total assets 827,242

Segment liabilities (414,430) (4,361) (1,654) (420,445)Unallocated liabilities (365,333)

Total liabilities (785,778)


Other informationCapital expenditure 7,964 55 792 8,811

Depreciation of property, plant and equipment (11,489) (133) (331) (11,953)

Amortisation of goodwill (85)

Segment assets consist primarily of property, plant and equipment, inventories and trade receivables. Segment liabilities comprise only trade payables. Capital expenditure comprises additions to property, plant and equipment.




(b) Secondary reporting format - geographical segments

Although the Group has an operation in Negara Brunei Darussalam, there is no disclosure of this operation as a separate geographical segment as the revenue contributed by this foreign company is not material to constitute an independent geographical segment as stipulated under MASB 22.

34 FINANCIAL INSTRUMENTS

Forward foreign exchange contracts

Forward foreign exchange contracts are entered into by subsidiaries in currencies other than their functional currency to manage exposure to fluctuations in foreign currency exchange rates on specific transactions. In general, the Group’s policy is as disclosed in Notes 3 and 4 to the financial statements.

At 31 December 2004, the settlement dates on open forward contracts ranged between 1 and 4 (2003: 1 and 4) months. The foreign currency amounts to be received and contractual exchange rates of the Group’s outstanding contracts are as follows:

Settlement RM’000Hedged item currency equivalent Contractual rate

At 31 December 2004

Trade payables:

EUR 559,000 Euro 2,803 1 EUR = RM5.014AUD 114,000 Australian Dollar 310 1 AUD = RM2.719USD 389,000 US Dollar 1,479 1 USD = RM3.803SGD 924,000 Singapore Dollar 2,133 1 SGD = RM2.308CHF 87,000 Swiss Francs 275 1 CHF = RM3.161

Amount payable to ultimate holding company:

CHF 188,000 Swiss Francs 576 1 CHF = RM3.066

Future purchase of finished goods over the following 3 months:

EUR 120,000 Euro 606 1 EUR = RM5.054SGD 216,000 Singapore Dollar 504 1 SGD = RM2.333



34 FINANCIAL INSTRUMENTS (CONTINUED)

Settlement RM’000Hedged item currency equivalent Contractual rate

At 31 December 2003

Trade payables:

EUR 513,000 Euro 2,328 1 EUR = RM4.538AUD 326,000 Australian Dollar 891 1 AUD = RM2.733USD 1,462,000 US Dollar 5,569 1 USD = RM3.809SGD 673,000 Singapore Dollar 1,499 1 SGD = RM2.227CHF 128,000 Swiss Francs 355 1 CHF = RM2.773

Future purchase of finished goods over the following 3 months:

EUR 241,000 Euro 1,098 1 EUR = RM4.556AUD 70,000 Australian Dollar 193 1 AUD = RM2.757CHF 27,000 Swiss Francs 76 1 CHF = RM2.815

The fair value of outstanding forward contracts of the Group at the balance sheet date was a favourable net position of RM223,000 (2003: RM260,000).

The net unrecognised gains at 31 December 2004 on open contracts which hedge anticipated future foreign currency purchase amounted to RM14,000 (2003: RM66,000). These net exchange gains are deferred until the related purchases are transacted, at which time they are included in the measurement of such transactions.

Future liabilities in foreign currencies are forward-purchased from reputable banks when their amount and due date are known. Forward hedges are exclusively used for bona-fide and documented trade transactions and not for speculative purposes in line with the Group’s policy.

35 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 29 September 2004, the Company completed its acquisition of 51% equity interest in EAC Transport Agencies (Malaysia) Sdn. Bhd. ("EACTA"). The purchase consideration of RM5,939,998 was settled in cash.

(b) On 5 November 2004, the Company redeemed in full the 82,000,000 RCPS at RM0.01 each in the Company, at a premium of RM0.99 each. The gross proceeds arising from the Restricted Issue of RM75,000,000 was used to redeem a substantial portion of the 82,000,000 RCPS in issue. The remaining RM7,000,000 which was required to fully redeem the RCPS was funded from internally generated funds of the Company.



36 COMPARATIVES

Certain comparatives were reclassified to conform with current year’s presentation for the purpose of fairer presentation. These reclassifications have no impact on the net results and net assets of the Group and Company.

As previously Asreported Reclassification restatedRM’000 RM’000 RM’000

Group

INCOME STATEMENT

Revenue 2,357,303 13,813 2,371,116 Other operating income 30,412 (15,897) 14,515 Changes in inventories of

work-in-progress and finished goods (610,691) 644,156 33,465 Finished goods purchased (1,528,144) (640,133) (2,168,277)Rental (20,463) 2,084 (18,379)Other selling, advertising and promotional expenses (9,349) (6,382) (15,731)Other operating expenses (8,293) 2,359 (5,934)Finance cost (9,650) 1,148 (8,502)Tax (2,234) (1,148) (3,382)

198,891 0 198,891

BALANCE SHEET

Property, plant and equipment:Long leasehold landCost 15,306 (15,306) 0 Valuation 21,762 5,306 37,068

37,068 0 37,068

Buildings and renovationsCost 27,544 (16,827) 10,717 Valuation 409 19,861 20,270 Accumulated depreciation (13,976) (2,951) (16,927)

13,977 83 14,060

Furniture, fittings and equipmentCost 61,388 (3,034) 58,354 Accumulated depreciation (51,921) 2,951 (48,970)

9,467 (83) 9,384



36 COMPARATIVES (CONTINUED)

As previously Asreported Reclassification restatedRM’000 RM’000 RM’000

Company

INCOME STATEMENT

Finance cost (4,130) 1,148 (2,982)Tax (78) (1,148) (1,226)

(4,208) 0 (4,208)

37 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 15 April 2005.


Statements by Directors and Statutory Declaration

STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT 1965

We, Niels Johan Holm and André Eugen Hägi, two of the Directors of Diethelm Holdings (Malaysia) Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 33 to 81 are drawn up so as to give a true and fair view of the state of affairs of the Group and Company as at 31 December 2004 and of the results and the cash flows of the Group and Company for the financial year ended on that date in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act 1965.

Signed on behalf of the Board of Directors in accordance with their resolution dated 15 April 2005.

NIELS JOHAN HOLM ANDRÉ EUGEN HÄGIGROUP MANAGING DIRECTOR GROUP FINANCE DIRECTOR

STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT 1965

I, André Eugen Hägi, the Director primarily responsible for the financial management of Diethelm Holdings (Malaysia) Berhad, do solemnly and sincerely declare that the financial statements set out on pages 33 to 81 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1960.

ANDRÉ EUGEN HÄGI

Subscribed and solemnly declared by the abovenamed André Eugen Hägi at Petaling Jaya, Selangor Darul Ehsan in Malaysia on 15 April 2005 before me.

No. B 008E.RADAKRISHNAN, AMN, PPN, PK, PPM, PPA, PKB, PPA, PJP, (Sel)COMMISSIONER FOR OATHS


REPORT OF THE AUDITORS TO THE MEMBERS OF DIETHELM HOLDINGS (MALAYSIA) BERHAD(Company No. 231378 A)

We have audited the financial statements set out on pages 33 to 81. These financial statements are the responsibility of the Company's Directors. It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act 1965 to be dealt with in the financial statements; and

(ii) the state of affairs of the Group and Company as at 31 December 2004 and of the results and cash flows of the Group and Company for the financial year ended on that date;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

The names of the subsidiaries of which we have not acted as auditors are indicated in Note 15 to the financial statements. We have considered the financial statements of these subsidiaries and the auditors' reports thereon.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

PricewaterhouseCoopers(AF 1146)Chartered Accountants11th Floor Wisma Sime DarbyJalan Rja LautP O Box 1019250706 Kuala Lumpur, MalaysiaTelephone +60 (3) 2693 1077Facsimile +60 (3) 2693 0997


REPORT OF THE AUDITORS TO THE MEMBERS OF DIETHELM HOLDINGS (MALAYSIA) BERHAD(Company No. 231378 A) (CONTINUED)

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under subsection 3 of section 174 of the Act.

PRICEWATERHOUSECOOPERS THAYAPARAN A/L S. SANGARAPILLAI(No. AF: 1146) (No. 2085/09/06 (J))Chartered Accountants Partner of the firm

Kuala Lumpur15 April 2005

Proxy Formfor the Thirteenth Annual General Meeting

I / We, ..................................................................................(Company No: / NRIC No:..................................) (Please use block letters)

of......................................................................................................................................................................... (full address)

........................................................................................................................................................................... being a member / members of DIETHELM HOLDINGS (MALAYSIA) BERHAD (231378 - A) hereby appoint .......................................................................................................................NRIC No:...................................)

of.........................................................................................................................................................................(full address)

or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Thirteenth Annual General Meeting of the Company to be held at the Kristal Ballroom 2, First Floor, East Wing, Hilton Petaling Jaya, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan on Thursday, 9 June 2005 at 10.00 a.m. and at any adjournment thereof.

My/Our proxy is to vote as indicated below:

For Against

Ordinary Resolution 1 Adoption of audited financial statements and reports Ordinary Resolution 2 Approval of final dividend Ordinary Resolution 3 Approval of directors’ fees Ordinary Resolution 4 Re-election of Ahmad Fakhrizzaki Abdullah Ordinary Resolution 5 Re-election of Thon Lek Ordinary Resolution 6 Election of James Armand Menezes Ordinary Resolution 7 Re-appointment of PricewaterhouseCoopers as auditors

(Please indicate with an "x" in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.)

Dated this.................................. day of ............................................. 2005

No. of ordinary shares held

Signature of Member ......................................................

Notes(a) Every member is entitled to appoint a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place.

A proxy need not be a member of the Company. (b) The Form of Proxy must be signed by the appointer or his attorney duly authorised in writing or if the appointer is a corporation,

either under seal or under the hand of an officer or attorney duly authorised. In the case of joint holdings, the signature of the first named holder is sufficient.

(c) If the Form of Proxy is returned without any indication as to how proxy shall vote, the proxy will vote or abstain as he thinks fit. (d) If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy. (e) The Form of Proxy must be deposited at 3rd Floor, 74, Jalan University, 46200 Petaling Jaya not less than forty-eight (48) hours before

the time of holding the Meeting or any adjournment thereof, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for taking the poll.


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The Company Secretary Diethelm Holdings (Malaysia) Berhad (231378-A)

74, Jalan University 46200 Petaling Jaya Selangor Darul Ehsan Malaysia

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