Financial Results

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Unaudited Financial Statement and Dividend Announcement

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) Consolidated Statement of Comprehensive Income

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

* During the financial year, the group acquired property, plant and equipment with an aggregate cost of $1.13 million through acquisition of business by a subsidiary.

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

As at 30th June 2011, the Company’s issued and paid up capital, excluding treasury shares comprises of 441,415,217 (30th June 2010: 362,105,188) 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 April 2011 and 30th June 2011, the Company issued zero ordinary share under the Eu Yan Sang Employees Share Option Scheme 2000 (“the 2000 scheme”) and 368,000 ordinary shares under the Eu Yan Sang Employees Share Option Scheme 2006 (“the 2006 scheme”).

Under the 2000 scheme, options to subscribe for 3,872,500 shares remained outstanding as at 30th June 2011, compared to 4,496,250 as at 30th June 2010. Movements in the number of the unissued shares of the Company under the 2000 scheme during the year are as follows:

Under the 2006 scheme, options to subscribe for 9,697,000 shares remained outstanding as at 30th June 2011, compared to 10,195,000 as at 30th June 2010. Movements in the number of the unissued shares of the Company under the 2006 scheme during the year 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 30th June 2011, no shares were granted and outstanding under the EYS PSP (30th June 2010: nil).

D) Treasury shares

No treasury shares were held by the Company as at 30th June 2011 and 30th June 2010

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

The number of issued shares as at 30th June 2011 is 441,415,217(30th June 2010: 362,105,188) 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 2010.

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 year ended 30th June 2011 (“FY11”) increased 9% to S$266.3 million as compared to the same period in last year (“FY10”). The increase was mainly attributable to the increase in retail sales in all our 3 core markets. Operating profit increased 35% to S$31.4 million while profit for the year, net of tax, attributed to Owners of the parent increased 30% to S$24.9 million.

(A) Revenue

Group revenue for FY11 increased by 9% to S$266.3 million as compared to S$244.7 million achieved in FY10. The increase was mainly attributable to the increase in retail sales in all our 3 core markets, namely Hong Kong, Malaysia and Singapore.

Revenue by Activities:

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

Retail – TCM revenue achieved in FY11 was 11% higher than FY10. Retail activities were relatively resilient at our outlets throughout the regional markets as consumers continue to recognise our premium brand and accept TCM as an alternative to western medicine and health supplements. The Group’s top selling products such as Bottled Bird’s Nest (“BBN”), Bo Ying Compound (“BYC”), Bak Foong Pills (“BFP”), Lingzhi Cracked Spores Capsules (“LCS”) and Essence of Chicken (“EOC”) continue to be our top selling products.

Wholesale – TCM revenue decreased by 10% to S$28 million in FY11, the decrease was mainly due to slower stock replenishment by wholesalers.

Clinic – TCM revenue increased by 11% to S$16 million in FY11, mainly due to recognition of TCM as an alternative to western medicine.

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

Turnover by Geographical Locations:

Hong Kong market led our growth by 14% to HK$662 million, Singapore market grew 13% to S$76.6 million while Malaysia market increased by 10% to MYR190 million. These revenue growth in our core countries signified robust demand for our products as we continue to fulfill our vision to our customer.

(B) FY2010 Retail Outlets & Clinics

In FY11, the Group added 26 outlets and 4 clinics. The establishment of these new outlets and clinic will contribute positively to the improvement of our Group turnover.

(C) Profitability

In line with the higher revenue in FY11, Gross Profit increased by 8% to S$135 million compared to S$124.5 million achieved in FY10. Gross Profit margin was stable at 50.7%. Operating Profit increased by 35% to S$31.4 million as compared to FY10 was mainly due higher revenue growth in FY11.

Profit for the year, net of tax, attributable to Owners of the parent for FY11 increased by 30% to S$24.9 million as compared to S$19.2 million in FY10 was mainly due to higher revenue, other income and fair value gain on investment properties.

(D) Other operating income

The increase in other operating income was mainly due to government grants and membership fees subscription received in FY11.

(E) Distribution and selling expenses

In FY11, distribution and selling expenses increased 5% to S$83.0 million as compared to FY10. The higher distribution and selling expenses were mainly due to higher salaries and rental expenses.

(F) Administrative expenses

In FY11, administrative expenses increased 2% to S$22.2 million as compared to FY10 was mainly due to the extension of cost cutting measures adopted since FY10.

(G) Interest income and Interest expenses

Higher interest income was due to higher fixed deposits interest received from our principal bankers.

Higher interest expenses were attributable to higher interest bearings loans as compared with FY10.

(H)Taxation

Higher tax expenses were mainly due to a settlement of S$1.8 million following a tax investigation by Malaysian tax authority regarding manufacturing rebates given to other Group subsidiaries from 2002 to 2007.

(I) Investment Properties

The increase was due to the purchase of an industrial property in Singapore.

(J) Investment in associate

The increase was due to the purchase of a stake in Healthzone Limited, a company listed on the Australian Stock Exchange.

The stake comprises of the followings:

i) a private placement of 4,560,963 ordinary shares with 3,952,488 detachable warrants in August 2010 for a consideration of A$1.4 million ( approximately S$1.7million);

ii) open market purchase of 7,296,500 ordinary shares in August 2010 for a consideration of A$2.2 million (approximately S$2.7 million); and

iii) a private placement of 7,310,755 ordinary shares with 1,462,151 detachable warrants in June 2011 for a consideration of A$2.8 million approximately S$3.7million.

On acquisition date, the costs of the warrants were reclassified to Derivatives.

(K) Trade receivables and other receivables

Lower trade and other receivables were due to timing differences of payment from our debtors.

(L) Derivatives

The increase was due to detachable warrants from the purchase of Healthzone Limited’s ordinary
shares in FY11 measured at fair value.

The details of the detachable warrants are as follows:

Note:

*The detachable warrants are exercisable on condition that the ordinary share price of Healthzone Limited exceeds A$0.38 at the exercise date.

** The detachable warrants are exercisable on condition that the ordinary share price of Healthzone Limited exceeds A$0.48 at the exercise date.

(M) Prepayments

Lower prepayments were mainly due to the reclassification of the prepaid portion of an industrial property to investment properties upon the completion of the purchase.

(N) Trade and other payables

Lower trade and other payables were due to timing differences of payment to our creditors.

(O) Interest bearing loans and borrowings

Higher interest bearing loans and borrowings were mainly due to the purchase of an industrial property in Singapore.

(P) Tax payable

Higher tax payable was mainly due additional tax expense accrued relating to prior year tax assessment finalized by the tax authority in Malaysia.

(O) Cash flows

Net cash generated from operating activities for FY11 was S$32.6 million. The increase was mainly due to higher profit before tax and non-controlling interests.

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 FY2010 full year announcement made on 26th August 2010.

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 demand for quality healthcare products and services may remain resilient, driven by growing affluence and ageing population. However, sovereign debts problems in the West, coupled with increasing commodity and food prices may erode economic growth and affect consumer sentiments.

With a backdrop of weaker economic outlook, the general market and business conditions are expected to remain challenging and competitive in the next 12 months. The stronger Singapore dollar against Hong Kong dollar may continue to impact our results when expressed in Singapore dollar terms. Moving forward, the Group’s strategy is to continue leveraging on its competency and brand strength to explore opportunities to grow its core business. The Group will continue to manage its business risks prudently and review its business strategy with a view to enhance shareholders’ value.

11. Dividend

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on?

(b) Corresponding Period of the Immediately Preceding Financial Year

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

(c) Date payable

24th November 2011

(d) Books closure date

The Register of Members and Register of Transfers of the Company will be closed at 5.00pm on 9th November 2011 and up to 5.00pm on 10th November 2011 (both days inclusive) for the purpose of determining Shareholders’ entitlements to dividends. Registrable Transfers received by the Company’s Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623, up to 5.00pm on 9th November 2011 will be registered before entitlements to the dividend are determined.

The Annual General Meeting will be held on 28th October 2011.

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

Not applicable

PART II – ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT
(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

13. Segmented revenue and results for business or geographical segments (of the group)
in the form presented in the issuer’s most recently audited annual financial statements, with comparative information for the immediately preceding year

14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments

Please refer to discussion in Note 8 of this announcement.

A breakdown of sales

15. A breakdown of the total annual dividend (in dollar value) for the issuer’s latest full year and its previous full year

BY ORDER OF THE BOARD

Danny Heng Hang Siong
Chief Financial Officer & Company Secretary
25^th August 2011