CALENDAR OF EVENTS. 11 July ,000 IVF Babies Celebration

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1 CALENDAR OF EVENTS 11 July ,000 IVF Babies Celebration TMC Fertility Centre held a 2,000 IVF Babies Celebration on 11 July 2009 to mark 2,000 babies born through In-Vito Fertilization in TMC Fertility Centre since The number represents over one-third of all IVF babies in Malaysia and is also the largest number of IVF births attributed to a single fertility centre in Malaysia. Malaysia s Minister of Health Dato Dr. Liow Tiong Lai officiated the celebration event. 10 September First Half 2009 Financial Results Investors Briefing The management of TMC continued to update the investing community of the Group s corporate developments at an investors briefing on 10 September September Official Opening Ceremony of Tropicana Medical Centre 24 Tropicana Medical Centre was officially opened by the Sultan of Selangor, Sultan Sharafuddin Idris Shah, on 30 September His Royal Highness later went on a guided tour of the multi-disciplinary tertiary hospital. 4 October Inaugural Continuous Professional Development (CPD) Programme for General Practitioners Tropicana Medical Centre conducted its inaugural CPD Programme: Office Orthopaedics Course and Hands-On Workshop for General Practitioners on 4 October More than 120 GPs under our GP Plus programme attended the event, aimed at fostering healthy interaction while keeping abreast of latest developments in the medical field.

2 CALENDAR OF EVENTS (CONT D) October Occupational Health and Safety Campaign in Astro All Asia Networks Headquarters Tropicana Medical Centre undertook an Occupational Health and Safety Campaign in Astro All Asia Networks headquarters in Bukit Jalil, Kuala Lumpur on 26 and 27 October Besides providing health screening services, we presented 2 talks on diabetes and cardiovascular disease for Astro employees November CPD: Cardiovascular Symposium Tropicana Medical Centre held a Cardiovascular Symposium as a second instalment to the CPD programme, on 8 November The event attracted more than 135 GPs.

3 CALENDAR OF EVENTS (CONT D) November Love Your Joints Campaign Tropicana Medical Centre supported the Love Your Joints campaign at the Community Hall in Sri Gombak in November TMC provided health screening services for the senior citizens of Sri Gombak January Wellness Exhibition StemTech International participated in the Wellness Exhibition at the Danga Expo in Johor Bahru, educating the public on the benefits of storing stem cells April Public Health Forum in Kota Damansara In reaching out to the community in our vicinity, Tropicana Medical Centre organized a public health forum at a mosque in Kota Damansara on 4 April 2010, where we educated them on basic CPR techniques and fire safety prevention measures.

4 MMA CALENDAR OF EVENTS (CONT D) 10 March Financial Year 2009 Investors Briefing Being committed to maintaining communication to analysts and fund managers on the Group s progress as a whole, the management of TMC conducted an investors briefing on 10 March 2010 to inform them of the Group s prospects ahead. 28 February CPD: Systematic Lupus Erythematosus Tropicana Medical Centre continued its CPD programme with a talk on Systematic Lupus Erythematosus: Connecting Primary and Tertiary Care Management on 28 February The talk attracted more than 120 GPs. 18 April CPD: Haemorrhoids Tropicana Medical Centre spoke on Haemorrhoids: The Silent Killer on 18 April 2010 as part of its CPD programme. + 2 CPD POINTS 27 HAEMORRHOIDS The Silent Stigma Presented to you by Malaysia Medical Association Selangor & Tropicana Medical Centre Date : Sunday, 18th April 2010 Venue : Tropicana Medical Centre Organised by : SELANGOR 12 April Talks on stem cells Educational corporate seminar for Trinity Group partners and management on the importance and benefits of Adult Peripheral (Circulating) Blood Stem Cells Banking.

5 CORPORATE DIRECTORY TROPICANA MEDICAL CENTRE No. 11 Jalan Teknologi Taman Sains Selangor 1 PJU 5, Kota Damansara Petaling Jaya Selangor Tel: Fax: TROPICANA MEDICAL CENTRE PENANG (formerly known as Srigim Medical Centre Sdn. Bhd.) 12A, Jalan Masjid Negeri Penang Tel: Fax: TMC FERTILITY CENTRE (formerly known as Damansara Fertility Centre) Headquarters: No. 11, Jalan Teknologi, Taman Sains Selangor 1 PJU 5, Kota Damansara Petaling Jaya Selangor Tel: Fax: Kepong: 8, Jalan Prima Metro Prima, Kepong Kuala Lumpur Tel: Fax: Johor Bahru: Kuantan: Puchong: 28 Unit 18, Level 1, City Plaza 21, Jalan Tebrau Johor Bahru Johor Tel: Fax: STEMTECH INTERNATIONAL Block E & F, Lot 1, UM-PKNS Innotech Park Jalan Teknologi 3/4, Taman Sains Selangor 1 Seksyen 3, Kota Damansara Petaling Jaya Selangor Tel: Fax: Hour Hotline: B-14, Lorong Tun Ismail 8, Sri Dagangan 2, Kuantan, Pahang Tel: Fax: , Jalan Merbah 3, Bandar Puchong Jaya, Puchong, Selangor Tel: Fax:

6 The Board of Directors of TMC Life Sciences Berhad fully appreciates the importance of exercising high standards of corporate governance in the conduct of the Group s business and affairs through transparency, accountability and corporate performance. The Board is pleased to report to the shareholders on the manner the Group has applied the Principles and Best Practices set out in the Malaysian Code of Corporate Governance ( the Code ) and the extent to which it has complied with the principles and best practices set out in the Code. (A) BOARD OF DIRECTORS The Company is led by an experienced Board comprising members whose skills, expertise and experience ranges from medical practitioners, to entreprenuers and accountants. This wide spectrum of skills and experience ensures that the Board is effective and competent in leading and directing the Group s business operations. The Board effectively controls the direction and provides leadership for the Group by setting appropriate objectives and strategic directions. In carrying out its function, the Board is assisted by several Board Committees, namely, the Audit Committee, Nominating Committee and Remuneration Committee. The roles of the Chairman and the Managing Director are held by 2 individuals and there is a clear division of responsibilities between the Chairman and the Managing Director to ensure balance of power and authority, so that no one individual has unfettered powers of decision. The Board operates within a robust set of governance as set out below: Composition of the Board The Board comprises three (3) Executive Directors, two (2) Non-Independent Non-Executive Directors, three (3) Independent Non-Executive Directors and an alternate Director. The Board composition is in line with Bursa Malaysia Securities Berhad s Main Market Listing Requirements that requires one-third (1/3) of the Board members to be independent directors. The profile of the Board members are as set out on pages 19 to 22 of this Annual Report. 29 Board Meeting The Board met five (5) times during the last financial year to review the Group s quarterly and annual financial statements, its operations and to discuss new policies and strategies. The Board has a formal schedule of matters reserved specifically for its decision. The Board is given sufficient notice for all the Board Meetings which are conducted in accordance to a structured agenda. The Board is supplied with information in a timely fashion and appropriate quality to enable them to discharge their duties and due notice is given to Directors with regard to issues to be discussed. All resolutions are recorded and thereafter circulated to the Directors for comments before minutes of proceedings are finalised and confirmed. The Company Secretary organises and attends all Board Meetings to ensure proper records of the proceedings. Directors are also given access to any information within the Company and are free to seek independent professional advice at the Company s expense, if necessary, in furtherance of their duties. Towards this end, there is an agreed procedure in place for Directors to acquire independent professional advice to ensure the Board functions effectively. All Directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures are met and advises the Board on compliance issues. The attendance of the Directors at the Board meetings is set out in the Directors Profile which appears on pages 19 to 22 of this Annual Report.

7 Directors Training The Directors were encouraged to determine their own training requirements as they consider necessary or deem fit and expedient to enhance their knowledge in new rules and regulations as well as undertaking of the Group s business and operations and to keep abreast with current developments in the market place. For the financial year ended 31 December 2009 and as at the date of the Annual Report 2009, the Directors have attended the following seminars/training: Director Date Name of Seminars/Training programmes attended Professor Emeritus Dato August 2009 Delivered the 7th Tunku Abdul Rahman Oration at Dr. Khalid bin Abdul Kadir the Academy of Medicine Congress. October th Diabetes Congress National Diabetes Institute Malaysia. 17 to 20 October th International Diabetes Federation Congress, Montreal Canada as invited speaker. Dato Dr. Colin Lee Soon Soo 25 October 2009 Energy-based Devices, Surgeon Master Class in Coviden Clinical Institute, Shanghai, China. Mr. Amos Siew Boon Yeong 12 to 13 January 2009 Building Financial Model for Decision Making by Malaysian Institute of Accountants. 28 April 2009 MIT Seminar on Understanding the Latest Changes on Transfer Pricing by Chartered Tax Institute of Malaysia. 6 to 7 July 2009 Annual Conference 2009 Shaping Future Corporate Professional by the Malaysia Institute of Chartered Secretaries and Administrators. 4 to 5 August 2009 National Tax Conference to 14 October 2009 The National Accountants Conference October 2009 National Seminar on Taxation October Budget & Tax Planning Seminar by Horwath. 30 Ms Wenddi-Anne Chong 23 July 2009 APHM/ASQua/ISQua International Healthcare Wai Yeng Conference to 12 October 2009 Program : Up to Your Business 2020 Seminar by Hill Yow 17 to 18 November 2009 Marketing Plan 2010 by MarkPlus & Co Consultancy Sdn. Bhd. 14 April 2010 Productivity Driven-Sales Force by MarkPlus & Co Consultancy Sdn. Bhd. Dato Dr. Tan Kee Kwong May 2009 Directorship: Things to Look Out For. Dr. Yap Teck Long Between 1 January 2009 Various CME programmes in his profession as till 26 May 2010 primary care physician. Dato Robin Tan Yeong Ching 11 May 2009 High Level Forum for Directors of Listed Issuers in Enhancing Corporate Governance. 9 November 2009 Seminar for Non-Financial Institutions Financial Instruments: Recognition, Measurement, Presentation and Disclosure. Mr. Freddie Pang Hock Cheng 19 October 2009 Governance Expectation of International Fund Managers organized by Bursa Malaysia Securities Berhad. 16 September 2009 Incentive & Equity based Compensation Design Issues organized by Singapore Institute of Directors and SGX. Mr. Yeoh Cheng Lee 17 to 18 March 2010 Mandatory Accreditation Programme. (Alternate Director to Dato Robin Tan Yeong Ching)

8 Directors Appointment and Re-election In accordance with the Company s Articles of Association, at every Annual General Meeting, one-third (1/3) of the Directors are subject to retirement by rotation such that each Director shall retire from office once in every three (3) years or, if their number is not three (3) or a multiple of three (3), the number nearest to one third shall retire from office such that each Director shall retire from office once in every three (3) years and if there is only one (1) Director who is subject to retirement by rotation, he shall retire. All Directors who retire from office shall be eligible for reelection. Further, pursuant to Section 129(6) of the Companies Act, 1965, Directors over the age of 70 are required to offer themselves for re-election at every Annual General Meeting. Directors Remuneration The determination of remuneration packages of the Executive Directors are matters for the Board as a whole. The levels of remuneration of the Executive Directors are structured to attract and retain their services taking into consideration the prevailing market pay and employment conditions within the industry. Whilst the Non-Executive are paid reasonable allowances and fees to commensurate with their experience and skills. On the recommendation of the Remuneration Committee, the Board reviews the remuneration of the Executive Directors whereby the respective Executive Directors abstained from discussions and decisions on their own remuneration. The remuneration of Non-Executive Directors is decided by the Board. The aggregate remuneration of the Directors for the financial year ended 31 December 2009 is as follows: Executive 5,621,640 Non-Executive 164,940 The number of Directors who served during the financial year whose remuneration falls into the following bands: (B) Number of Directors Range of Remuneration Executive Non-Executive < 100, , , , , ,001 1,000, ,000,001 2,000, ,000,001 3,000, ,000,001 4,000, ,000,001 5,000, Total: 3 5 BOARD COMMITTEES The Board has established the following committees: Audit Committee The Audit Committee is responsible in assisting the Board to review the adequacy and integrity of the Group s internal control systems and all financial statements before their submission to the Board for approval. The detail roles, functions and responsibilities are as set out in the Audit Committee Report on pages 35 to 38 of this Annual Report. 31

9 Nominating Committee The Nominating Committee comprises the following members: Dato Robin Tan Yeong Ching Chairman (Non-Independent Non-Executive Director) Dato Dr. Tan Kee Kwong - Member (Independent Non-Executive Director) Dr. Yap Teck Long - Member (Independent Non-Executive Director) The functions of the Nominating Committee are: (a) (b) (c) (d) (e) (f) recommend the nomination of a person or persons for all directorships to be filled by the shareholders or the board; Consider, in making its recommendations, candidates for directorships proposed by the Managing Director and, within the bounds of practicability, by any other senior executive or any director or shareholder; recommend to the board, directors to fill the seats on board committees; identify, evaluate and recommend candidates for appointment as Company Secretary; assess annually the effectiveness of the board as a whole, the committees of the board and the contribution of each existing individual director and thereafter, recommend its findings to the board; and review annually the required mix of skills and experience and other qualities, including core competencies which non-executive directors should bring to the board and thereafter, recommend its findings to the board. Remuneration Committee The Remuneration Committee comprises the following members: Dr. Yap Teck Long - Chairman (Independent Non-Executive Director) Dato Dr. Tan Kee Kwong Member (Independent Non-Executive Director) Dato Dr. Colin Lee Soon Soo Member (Managing Director) Dato Robin Tan Yeong Ching Member (Non-Independent Non-Executive Director) 32 The function of the Remuneration Committee is to recommend to the board, the remuneration packages of Managing Director and Executive Directors of the Group in all its forms, drawing from outside advice as necessary. (C) SHAREHOLDERS Relationship with Shareholders The Board recognizes the importance of keeping the shareholders and investors informed of the Group s business and corporate developments. Apart from the various announcements made during the year, the timely release of financial results and Annual Report, the Company s Executive Director and Senior Management also held regular dialogues and meetings with both local and overseas institutional investors, fund managers, analysts, research houses and members of the press to brief them and to keep them updated on the various announcements relating to the Group s financial performance, major corporate proposals and pertinent issues. The Annual General Meeting is also the principal forum for dialogue and interaction with the shareholders of the Company. The Company values feedback from its shareholders and encourages them to actively participate in discussion and deliberations. The Board will ensure that each item of special business included in the notices of the general meetings is accompanied by a full explanation of the effects of any proposed resolution.

10 The Chairman and Board of Directors are present at the Annual General Meeting and are prepared to respond to all queries and undertake to provide sufficient clarification on issues and concerns raised by the shareholders. The External Auditors are also present to provide their professional and independent clarification, if required, on issues highlighted by the shareholders. This would provide the shareholders with the opportunity to have a better understanding of the Company s business and development. The latest updates and development of the Group can also be found at its corporate websites and (D) ACCOUNTABILITY & AUDIT Financial Reporting The Board is responsible to present a balanced, clear and comprehensive assessment of the Group s financial performance and prospects through the quarterly and annual financial statements to shareholders. The Board with the assistance of the Audit Committee has to ensure that the financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. In presenting the financial statements, the Board has reviewed and ensured that appropriate accounting policies have been used, consistently applied and supported by reasonable judgments and estimates. Relationship with the Auditors The Board has maintained a professional and transparent relationship with the External Auditors through the Company s Audit Committee in ensuring compliance with the applicable accounting standards in Malaysia. Internal Control The Board acknowledges its overall responsibility for maintaining a sound system of internal control and the need to review the effectiveness regularly in order to safeguard the Group s assets and therefore shareholders investments in the Group. This system, by its nature, can only provide reasonable but not absolute assurance against material misstatements, fraud or loss. 33 (E) A Statement of Internal Control of the Company is set out on page 39 of this Annual Report. RESPONSIBILITY STATEMENT BY DIRECTORS The Board is responsible to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Company and of the results and cash flow of the Group and the Company for the financial year then ended. In preparing the financial statements, the Directors have:- i) adopted the appropriate accounting policies and applied them consistently; ii) made judgments and estimates that are reasonable and prudent; iii) ensure applicable approved accounting standards have been followed, and any material departures have been disclosed and explained in the financial statements; and iv) ensure the financial statements have been prepared on a going concern basis.

11 The Board is responsible for keeping proper accounting records of the Group and Company, which disclose with reasonable accuracy the financial position of the Group and the Company, and which will enable them to ensure the financial statements have complied with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. The Board is also responsible for taking reasonable steps to safeguard the assets of the Company to prevent and detect fraud and other irregularities. (F) STATEMENT ON MATERIAL CONTRACTS INVOLVING DIRECTORS INTEREST There were no material contracts involving the Directors interest during the financial year ended 31 December (G) COMPLIANCE WITH THE CODE The Board strives to ensure that the Company complies with the Principles and Best Practices of the Code. The Board will endeavour to improve and enhance the procedures from time to time. 34

12 The Audit Committee of TMC Life Sciences Berhad is pleased to present the Audit Committee Report for the financial year ended 31 December MEMBERS AND ATTENDANCE There were five (5) Audit Committee Meetings held during the financial year ended 31 December The members of the Audit Committee and their attendance at each Audit Committee Meeting during the financial year ended 31 December 2009 are as follows: Members of the Audit Committee Total Meetings Attended Dato Dr. Tan Kee Kwong - Chairman (Independent Non-Executive Director) 5/5 Dr. Yap Teck Long Member (Independent Non-Executive Director) 5/5 Mr. Freddie Pang Hock Cheng - Member (Non-Independent Non-Executive Director) 5/5 2. TES OF REFERENCE 2.1 Primary Purposes The Audit Committee shall:- (1) provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the corporate accounting and practices for the Company and all its wholly and majority owned subsidiaries ( Group ). (2) improve the Group s business efficiency, the quality of the accounting function, the system of internal controls and audit function and strengthen the confidence of the public in the Group s reported results. (3) maintain through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as the internal auditors. (4) enhance the independence of both the external and internal auditors function through active participation in the audit process. 35 (5) strengthen the role of the independent directors by giving them a greater depth of knowledge as to the operations of the Company and the Group through their participation in the Committee. (6) act upon the Board of Directors request to investigate and report on any issues or concerns in regard to the management of the Group. 2.2 Composition The Audit Committee shall be appointed by the directors from amongst themselves which fulfils the following requirements: - (1) The Audit Committee shall be composed of no fewer than three (3) members; (2) A majority of the Audit Committee must be independent directors; (3) The Chairman of the Audit Committee shall be an independent director; and (4) The Chief Executive Officer or any alternate director shall not be a member of the Audit Committee.

13 2.3 Retirement and Resignation In the event of any vacancy in the Audit Committee, the Company shall fill in the vacancy not later than three (3) months. 2.4 Rights & Authority The Audit Committee shall in accordance with the procedure determined by the Board and at the cost of the Company:- (a) (b) (c) (d) (e) (f) (g) have explicit authority to investigate any matter within its terms of reference; have the resources which are required to perform its duties; have full and unrestricted access to any information pertaining to the Company which it requires in the course of performing its duties; have unrestricted access to the Chief Executive Officer and the Chief Financial Officer; have direct communication channels with the external auditors and person(s) carrying out the internal audit function; be able to obtain independent/external professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary; and be able to convene meetings with the external auditors without the attendance of the executive members of the Board at least twice a year. 2.5 Functions & Duties The functions of the Audit Committee are as follows:- 36 (1) To review the following and report the same to the Board of Directors:- (a) with the external auditor, the audit plan; (b) (c) (d) (e) (f) (g) with the external auditor, his evaluation of the system of internal controls; with the external auditor, his audit report; the assistance given by the employees of the Company to the external auditor; the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; the internal audit programme, processes, the results of the internal audit functions and that it has the necessary authority to carry out its work; the quarterly results and year end financial statements, prior to the approval by the board of directors, focusing particularly on:- (i) (ii) (iii) changes in or implementation of major accounting policy changes; significant and unusual events; and compliance with accounting standards and other legal requirements;

14 (h) (i) (j) any related party transaction and conflict of interest situation that may arise within the Company or group including any transaction, procedure or course of conduct that raises questions of management integrity; any letter of resignation from the external auditors of the Company; and whether there is reason (supported by grounds) to believe that the Company s external auditor is not suitable for re-appointment; and (2) To recommend the nomination of a person or persons as external audtitors. (3) To consider the appointment of the external auditors, the audit fee and any questions of resignation or dismissal and on whether there is reason (supported by grounds) to believe that the Company s external auditors is not suitable for re-appointment. (4) To carry out any other function that may be mutually agreed upon by the Committee and the Board which would be beneficial to the Company and ensure the effective discharge of the Committee s duties and responsibilities. (5) To report to the Board of Directors the Committee s actions with such recommendations as the Committee deemed appropriate. (6) To report to the Bursa Malaysia Securities Berhad on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad. 2.6 Meetings (1) The Committee shall meet at least four (4) times in a year or more frequently as circumstances required with due notice of issues to be discussed and shall record its conclusions in discharging its duties and responsibilities. (2) A minimum of two (2) independent members present shall form the quorum. The quorum of the meeting is by the presence of a majority of independent members. 37 (3) Upon the request of any member of the Committee, the external auditors or the internal auditors, the Chairman of the Committee shall convene a meeting of the Committee to consider matters which should be brought to the attention of the directors or shareholders. (4) The external auditors and internal auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so by the Committee. (5) The Committee may invite any Board member or any member of management or any employee of the Company who the Committee thinks fit to attend its meetings to assist and to provide pertinent information as necessary. (6) The Company must ensure that other directors and employees attend any particular Audit Committee meeting only at the Audit Committee s invitation, specific to the relevant meeting. 2.7 Procedure of Audit Committee The Audit Committee may regulate its own procedures, in particular:- (a) (b) the calling of meetings; the notice to be given of such meetings;

15 2.7 Procedure of Audit Committee (Cont d) (c) (d) (e) the voting and proceedings of such meetings; the keeping of minutes; and the custody, production and inspection of such minutes. 2.8 Secretary The Company Secretary or other appropriate senior official shall be the Secretary to the Audit Committee. 3. SUMMARY OF THE ACTIVITIES OF THE AUDIT COMMITTEE The activities undertaken by the Audit Committee during the financial year ended 31 December 2009 included the following: i) Reviewed the External Auditors scope of work and their audit plan. ii) iii) iv) Reviewed with the External Auditors, the results of their audit, the audit report and internal control recommendations in respect of improvements in internal control procedures noted in the course of their audit. Reviewed the Audit Planning Memorandum on both the audit strategy and audit approach and reviewed the adequacy of existing external audit arrangements, with emphasis on the scope and quality of the audit. Reviewed the annual report and the audited financial statements of the Company and the Group prior to submission to the Board for their consideration and approval. v) Reviewed the quarterly unaudited financial statements and its explanatory notes thereon for recommendation to the Board for approval. 38 vi) Reviewed the Company s compliance with the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad and the applicable approved accounting standards issued by Malaysian Accounting Standards Board. vii) Reviewed with the Internal Auditors the Internal Audit Plan, their review and findings and the management s response and actions taken. viii) Reviewed the related party transactions and to ensure that they are not more favourable to the related parties than those generally available to the public and complies with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. 4. INTERNAL AUDIT FUNCTION had outsourced its internal audit functions to a professional services firm, which was tasked with the aim of assisting the Committee to discharge its duties and responsibilities. The cost incurred in relation to the internal audit function during the financial year was 45,000. The Statement on Internal Control can be found on page 39 of the Annual Report, and this provides an overview of the state of internal controls within the Group.

16 Paragraph (b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ) requires the Board of Directors of public listed companies to include in the Annual Report a statement about the state of internal control of the listed issuer as a group. The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following statement which outlines the nature and scope of the system of internal control of the Group operational during the financial year. The Board acknowledges the importance of maintaining a sound system of internal control to safeguard the shareholders investment and the Group s assets. Accordingly, the Board affirms its overall responsibility for the Group s system of internal control and for reviewing its effectiveness, adequacy and integrity. s existing system of internal control includes management, financial, operational and compliance controls. The system is designed to manage the principal risks attributed to the Group s operations and due to the limitations that are inherent in any system of internal control, the Board is cognizance that the system can only provide reasonable but not absolute assurances against material loss, misstatement or unauthorised use rather than to eliminate risk of failure to achieve business objectives. The key elements of the Group s Internal Control System are as follows: (i) (ii) (iii) (iv) the Group has in place an established organization structure with clearly defined lines of key responsibilities and appropriate levels of delegation and authority. the Group has in place internal procedures covering significant areas of operations, such as purchasing of assets required for the operations of the Group, recruitment and selection of employees, training and development of employees and has a clear definition of authorization procedures for purchasing, payment and capital expenditures. regular management meetings are held to review and monitor the business developments, to discuss and resolve operational and management issues and to review the financial performance against the business plans. the Audit Committee reviews the quarterly financial reports and annual financial statements and reports to the Board on its review and findings thereof to ensure effectiveness of the internal financial control environment of the Group. (v) the Board, the Audit Committee and management monitor the effectiveness of the Group s internal control system. has outsourced its internal audit function to an external party which is independent of the activities it audits. The outsourced internal auditors review the audit areas based on the approved internal audit plan which will cover major operating subsidiaries. The internal audit focuses on regular and systematic reviews of the systems of financial and operational control in anticipating potential risk exposures over key business processes and proper conduct of the business of the Group. During the financial year under review, some internal control weaknesses were identified and have been or are being addressed by the Management. None of the weaknesses has resulted in any material loss that would require disclosure in the Group s financial statements. The existing system of internal control had continued to serve the Group well. However, in line with the Board s commitment towards operating a sound system of internal control and the strive for continuous improvement to further enhance the Group s system of internal control, the Board is taking steps to improve the current internal control system. 39

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18 The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is principally engaged in the business of investment holding whilst the principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS The Company (Loss)/Profit after taxation for the financial year attributable to: Equity holders of the Company (8,803,159) 1,622,848 Minority interests 57,492 - (8,745,667) 1,622,848 DIVIDENDS Since the end of the previous financial year, the Company paid a single-tier interim dividend of 0.3 sen per ordinary share amounting to 1,805,339 in respect of the financial year ended 31 December The directors proposed a final single-tier dividend of 0.3 sen per ordinary share amounting to 1,805,339 in respect of the current financial year. The proposed dividend is subject to the approval of the shareholders at the forthcoming annual general meeting. RESERVES AND PROVISIONS All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements. 41 ISSUES OF SHARES AND DEBENTURES During the financial year, (a) (b) there were no changes in the authorised and issued and paid-up share capital of the Company; there were no issues of debentures by the Company. OPTIONS GRANTED OVER UNISSUED SHARES During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.

19 BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that 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. At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for doubtful debts in the financial statements of the Group and of the Company. CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES The contingent liability is disclosed in Note 44 to the financial statements. At the date of this report, there does not exist:- 42 (i) (ii) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES 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 of the Group and of the Company which would render any amount stated in the financial statements misleading.

20 ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. 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, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year. DIRECTORS The directors who served since the date of the last report are as follows:- PROFESSOR DATO DR. KHALID BIN ABDUL KADIR DATO DR. COLIN LEE SOON SOO AMOS SIEW BOON YEONG DATO DR. TAN KEE KWONG DR. YAP TECK LONG WENDDI-ANNE CHONG WAI YENG DATO ROBIN TAN YEONG CHING FREDDIE PANG HOCK CHENG YEOH CHENG LEE (ALTERNATE DIRECTOR OF DATO ROBIN TAN YEONG CHING) (APPOINTED ON 4 JUNE 2009) DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company during the financial year are as follows:- Number Of Ordinary Shares Of 0.10 Each At At Bought Sold The Company Direct Interests: PROFESSOR DATO DR. KHALID BIN ABDUL KADIR 3,380,000 - (79,500) 3,300,500 DATO DR. COLIN LEE SOON SOO 149,193, , ,332,766 AMOS SIEW BOON YEONG 8,953, ,000-9,103,425 DATO DR. TAN KEE KWONG DR. YAP TECK LONG 910,000 - (576,300) 333,700 WENDDI-ANNE CHONG WAI YENG 10,028,175 10,000-10,038,175 FREDDIE PANG HOCK CHENG 66, ,350 Deemed Interest: PROFESSOR DATO DR. KHALID BIN ABDUL KADIR 975, ,000 By virtue of his interest in shares in the Company, Dato Dr. Colin Lee Soon Soo is deemed to have an interest in the shares in the subsidiaries to the extent of the Company s interest, in accordance with Section 6A of the Companies Act The other directors holding office at the end of the financial year had no interests in shares in the Company or its related corporations during the financial year.

21 DIRECTORS BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with a company in which a director has a substantial financial interest as disclosed in Note 40 to the financial statements. Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR The significant event during the financial year is disclosed in Note 43 to the financial statements. AUDITORS The auditors, Messrs. Crowe Horwath (formerly known as Messrs. Horwath), have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 26 APRIL Dato Dr. Colin Lee Soon Soo Dato Dr. Tan Kee Kwong

22 We, Dato Dr. Colin Lee Soon Soo and Dato Dr. Tan Kee Kwong, being two of the directors of TMC Life Sciences Berhad, state that, in the opinion of the directors, the financial statements set out on pages 48 to 87 are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2009 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 26 APRIL 2010 Dato Dr. Colin Lee Soon Soo Dato Dr. Tan Kee Kwong 45 I, Dato Dr. Colin Lee Soon Soo, being the director primarily responsible for the financial management of TMC Life Sciences Berhad, do solemnly and sincerely declare that the financial statements set out on pages 48 to 87 are, to the best of my knowledge and belief, 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, Subscribed and solemnly declared by Dato Dr. Colin Lee Soon Soo at Kuala Lumpur in the Federal Territory on this 26 April 2010 Before me Mohd Radzi Bin Yasin (No: W327) Commissioner for Oaths Dato Dr. Colin Lee Soon Soo

23 (Incorporated in Malaysia) Report on the Financial Statements We have audited the financial statements of TMC Life Sciences Berhad, which comprise the balance sheets as at 31 December 2009 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 48 to 87. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 46 Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2009 and of their financial performance and cash flows for the financial year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:- (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. We have considered the financial statements and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements. We are satisfied that the accounts 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 financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

24 Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Crowe Horwath Firm No: AF 1018 Chartered Accountants Lee Kok Wai Approval No: 2760/06/10 (J) Chartered Accountant Kuala Lumpur 26 April

25 The Company Note ASSETS NON-CURRENT ASSETS Investments in subsidiaries ,469,006 19,369,006 Investment in an associate 7 216, ,385 - Property, plant and equipment 8 116,429,729 78,538, Prepaid land lease payments 9 18,783,330 18,987, Intangible assets 10 12,528,472 11,977, Goodwill on consolidation 11 3,331,190 3,331, CURRENT ASSETS 151,288, ,834,874 18,684,391 19,369,006 Inventories 12 3,627,209 1,715, Trade receivables 13 6,358,070 2,968, Other receivables, deposits and prepayments 14 2,186,283 25,587,259 3,500 1,500 Amount owing by subsidiaries ,324,414 43,103,639 Short-term investments 16 2,510,682 11, Tax refundable 2,517,119 2,001, , ,804 Deposits with a licensed bank , , Cash and bank balances 4,925,968 24,136, ,906 21,051,786 22,463,214 56,752,709 64,220,118 64,856,729 TOTAL ASSETS 173,752, ,587,583 82,904,509 84,225, EQUITY AND LIABILITIES EQUITY Share capital 18 60,177,975 60,177,975 60,177,975 60,177,975 Share premium 19 21,751,724 21,751,724 21,751,724 21,751,724 Foreign exchange translation reserve 20 (3,217) (23,462) - - Retained profits 21 21,495,335 32,103, , , ,421, ,010,070 82,650,253 82,832,744 Minority interests 114,028 7, SHAREHOLDERS EQUITY 103,535, ,017,726 82,650,253 82,832,744 NON-CURRENT LIABILITIES Long-term borrowings 22 40,731,947 27,700, Deferred taxation 23 3,229,167 3,324, CURRENT LIABILITIES 43,961,114 31,024, Trade payables 24 5,412,385 3,344, Other payables and accruals 25 10,380,197 15,639, , ,911 Amount owing to subsidiaries ,280 Short-term borrowings 26 7,791,167 2,299, Provision for taxation 58 95, ,800 Bank overdraft 27 2,671,290 3,166, ,255,097 24,545, ,256 1,392,991 TOTAL LIABILITIES 70,216,211 55,569, ,256 1,392,991 TOTAL EQUITY AND LIABILITIES 173,752, ,587,583 82,904,509 84,225,735 NET ASSETS PER ORDINARY SHARE () The annexed notes form an integral part of these financial statements.

26 The Company Note REVENUE 31 47,206,122 38,809,936 4,180,000 2,180,000 COST OF SALES (23,972,806) (18,172,501) - - GROSS PROFIT 23,233,316 20,637,435 4,180,000 2,180,000 OTHER INCOME 1,146, ,135 13,999 50,448 24,380,122 20,959,570 4,193,999 2,230,448 ADMINISTRATIVE EXPENSES (26,443,268) (13,742,744) (692,119) (789,504) SELLING AND DISTRIBUTION EXPENSES (517,851) (949,102) (12,826) (72,792) OTHER EXPENSES (4,371,869) (1,707,218) (900,000) - FINANCE COSTS (1,845,865) (512,303) - - SHARE OF PROFIT IN AN ASSOCIATE (LOSS)/PROFIT BEFORE TAXATION 32 (8,797,995) 4,048,203 2,589,054 1,368,152 INCOME TAX EXPENSE 33 52,328 (675,328) (966,206) (566,800) (LOSS)/PROFIT AFTER TAXATION (8,745,667) 3,372,875 1,622, ,352 ATTRIBUTABLE TO: Equity holders of the Company (8,803,159) 3,574,864 1,622, ,352 Minority interests 57,492 (201,989) - - (LOSS)/EARNINGS PER SHARE (SEN) - BASIC 34 (1.46) DILUTED 34 N/A N/A (8,745,667) 3,372,875 1,622, , The annexed notes form an integral part of these financial statements.