Financial Results

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Unaudited Financial Statements and Dividend Announcement Q3FY2010

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF
QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS

1(a) An income statement (for the group) together with a comparative statement
for the corresponding period of the immediately preceding financial year

1(a) Statement of Comprehensive Income

With effect from annual period beginning or after 1 January 2009, FRS1 Presentation of Financial Statement requires an entity to present all non-owner changes in equity in a Statement of Comprehensive Income. Non-owner changes will include income and expenses recognized directly in equity. This is a change of presentation and does not affect the recognition or measurement of the entity’s transactions. Previously, such non-owner changes were included in the Statement of Changes in Equity.

Notes:
(i) Operating profit is arrived at after charging (crediting) the following:

1(b)(i) A balance sheet (for the issuer and group), together with a comparative
statement as at the end of the immediately preceding financial year

1(b)(ii) Aggregate amount of group’s borrowings and debt securities

Amount repayable in one year or less, or on demand

Amount repayable after one year

Details of any collateral
Nil

1(c) A cash flow statement (for the group), together with a comparative statement
for the corresponding period of the immediately preceding financial year

Note to Consolidated Cash Flow Statement Cash and cash equivalents included in the consolidated statement of cash flows comprise the following balance sheet amounts:

1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii)changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year.

1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue,share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year.

A) Changes in share capital during the financial period

In the quarter ended 31st March 2010, the Company’s issued and paid up capital, excluding treasury shares comprises of 360,960,188 (31st March 2009: 360,435,188) ordinary shares. Movement in the number of the Company’s issued and paid-up capital, excluding treasury shares are as follows:

B) Share Options – Eu Yan Sang Employees Share Option Scheme

Between 1st January 2010 and 31st March 2010, the Company did not issue any ordinary shares under both the Eu Yan Sang Employees Share Option Scheme 2000 (“the 2000 scheme”) and 2006 (“the 2006 scheme”) schemes.

Under the 2000 scheme, options to subscribe for 4,496,250 shares remained outstanding as at 31st March 2010, compared to 4,496,250 as at 31st March 2009.

Under the 2006 scheme, options to subscribe for 11,870,000 shares remained outstanding as at 31st March 2010, compared to 9,065,000 as at 31st March 2009. Movements in the number of the unissued shares of the Company under the 2006 scheme during the third quarter are as follows:

C) Performance Share Plan

At the extraordinary general meeting of the Company held on 25th October 2007, the Company’s shareholders approved the adoption of the Eu Yan Sang Performance Share Plan (“EYS PSP”). As at 31st March 2010, no shares were granted and outstanding under the EYS PSP (31st March 2009: nil).

D) Treasury shares

No treasury shares were held by the Company as at 31st March 2010 and 31st March 2009.

1(d)(iii) To show the total number of issued shares excluding treasury shares at the end of the currentfinancial period and as at the end of the immediately preceding year.

The number of issued shares as at 31st March 2010 is 360,960,188 (30th June 2009: 360,435,188) ordinary shares.

1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on.

Not Applicable.

2. Whether the figures have been audited, or reviewed and in accordance with which auditing standard or practice

The figures have not been audited or reviewed by the auditors.

3. Where the figures have been audited or reviewed, the auditors’ report (including any qualifications or emphasis of matter)

Not applicable

4. Whether the same accounting policies and methods of computation as in the issuer’s most recently audited annual financial statements have been applied

This financial statement has been prepared based on the accounting policies and methods of computation consistent with those adopted in the most recent audited financial statement for the year ended 30 June 2009.

5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change

Not applicable.

6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year

8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group’s business. It must include a discussion of the following:-

a. any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and

b. any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

Overview

Group revenue for the first nine months of financial year 2010 (“9MY10”) increased 9% to S$186.8 million as compared to the same period in last year (“9MFY09”). The increase was mainly attributable to the increased in retail sales in all our 3 core markets. Higher operating profit of S$20.3 million and profit after tax of S$16.0 million outperformed the growth in sales is mainly due to lower operating costs as we were reaping the economies of scale arising from better same store sales.

(A) Revenue

Group revenue for the third quarter ending 31st March 2010 (“Q3FY10”) increased by 11% to S$75.2 million as compared to S$67.6 million achieved in last year same quarter (“Q3FY09”) mainly attributable to the increases in retail sales in all our 3 core markets, namely Hong Kong, Singapore and Malaysia.

Revenue by Activities:

* Traditional Chinese Medicine (“TCM”) - comprising Chinese Proprietary Medicine (“CPM”), Health Foods and Medicinal Herbs.

Retail – TCM revenue achieved in Q3FY10 was 15% higher than Q3FY09. Retail activities were relatively resilient at our outlets throughout the regional markets as consumers continue to recognize our premium brand and accept TCM as an alternative to western medicine and health supplements. The Group’s top selling products such as Bo Ying Compound (“BYC”), Bak Foong Pills (“BFP”), Bottled Bird’s Nest (“BBN”), Essence of Chicken (“EOC”) and Lingzhi Cracked Spores Capsules (“LCS”) continue to show steady growth.

Wholesale – TCM revenue decreased by 6% to S$8.3 million in Q3FY10 due to slower wholesale stock replenishment activities in Q3FY10.

Clinic – TCM revenue was 5% lower at S$3.5 million in Q3FY10.

Revenue under Others was mainly contributed by food & beverages and rental income.

Turnover by Geographical Locations:

Malaysia market lead our growth by 28% to MYR69.1 million, Hong Kong market grew 10% to HK$155.6 million while Singapore market increased by 9% to S$19.0 million. Higher sales in our core countries were attributed to strong respond to our pre Lunar New Year (“LNY”) promotion.

(B) FY2010 Retail Outlets & Clinics

In the quarter ended 31st Mar 2010, the Group added 3 retail outlets and 1 integrative medical centre. The establishment of these new outlets and medical centre will contribute to the improvement in Group turnover.

(C) Profitability

In line with the higher revenue in Q3FY10, Gross Profit increased by 12% to S$36.0 million compared to S$32.2 million achieved in Q3FY09. Gross Profit margin was stable at 47.8%. Operating Profit increased 40% to S$9.6 million mainly due higher sales and lower growth in operating expenses.

As a result, net Profit for Q3FY10 increased by 100% to S$7.6 million as compared to S$3.8 million in Q3FY09.

(D) Distribution and selling expenses

In Q3FY10, distribution and selling expenses were S$20.8 million or 7% higher than Q3FY09. The higher distribution and selling expenses were mainly due to higher advertising and promotional activities in the quarter gearing toward the Lunar New Year (“LNY”) festive session, and higher rental costs on our existing retail outlets and TCM clinics upon their lease.

(E) Administrative expenses

In Q3FY10, administrative expenses decreased by 2% to S$6.0 million as compared to Q3FY09. The decrease was mainly due to austerity measures we put in place since the financial crisis.

(F) Interest income and Interest expenses

Lower interest income was due to lower fixed deposits interest offered by our principal bankers.

Lower interest expenses were attributable to application of cash to retire interest bearings loans and borrowings.

(G)Taxation

The Group’s effective tax rate was lower in Q3FY10 mainly due to the followings:

(a) lower losses of foreign subsidiaries which cannot be offset against profit within the
group companies as compared to Q3FY09; and

(b) lower tax rate in certain foreign subsidiaries.

(H) Prepayments

Higher prepayments were mainly due insurance premium paid in advance.

(I) Cash and bank balances

Higher cash and bank balances were due to higher retail sales in Q3FY10.

(J) Trade and other payables

Higher trade and other payables were mainly resulted from the replenishment of inventories to meet the demand in the subsequent quarters.

(K) Cash flows

Net cash provided by operating activities was lower at S$22.8 million in 9MFY10 as compared to S$25.8 million achieved in 9MFY09. It was mainly due to the strong Singapore dollar and the increase in inventories in 9MFY10 by S$3.4 million as compared to decrease in inventories by S$4.7 million in 9MFY09.

The Group’s gearing ratio was 27.8% as at 31st March 2010.

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results

The results for the period are in line with the prospect statement contained in the FY2009 full year announcement made on 27th August 2009.

10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months

The overall economies in the region have shown signs of recovery from the financial downturn with improved economic indicators and better employment data. These indicators should provide strong support to the retail businesses in the long run. However, there are worries of asset bubbles together with the introduction of various governments’ impending measures and withdrawing of stimulus programs. These worries will continue to diminish the general consumer sentiment in the short-term.

The general market and business conditions are expected to remain challenging and competitive in the next 12 months. The Group’s strategy is to carefully manage the business risks and ride out this period of uncertainty, while cautiously anticipating new opportunities when the markets recover.

11. Dividend

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on?

None

(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year?

None

(c) Date payable

Not applicable

(d) Books closure date

Not applicable

The Annual General Meeting will be held on 29th October 2009.

12. If no dividend has been declared/recommended, a statement to that effect

Not applicable

13. Board negative assurance confirmation for 3rd Quarter FY10 and 9 months FY10 results

The Board of Eu Yan Sang International Ltd does hereby confirm that to the best of its knowledge, nothing has come to the attention of the Board which may render the 3rd quarter FY10 and 9 months FY10 un-audited financial statements for the period ended 31st March 2010 to be false or misleading in any material aspect.

BY ORDER OF THE BOARD

Danny Heng Hang Siong
Chief Financial Officer & Company Secretary
13^th May 2010