ANNUAL REPORT

Member, Independent Non-Executive Director) (Appointed to the Committee on April 15, 2021) YBhg Datuk Tay Puay Chuan. Tan Ah Lai was appointed independent non-executive director of Guan Chong Berhad on October 26, 2007 and redesignated as independent non-executive chairman on April 15, 2021.

DIRECTORS’ PROFILE

He is the nephew of Tay How Sik @ Tay How Sick, an Executive Director and shareholder of the Company. She will be appointed as the chairman of the remuneration committee and the member of the audit committee and nomination committee of the company on 15 April 2021.

DIRECTORS’ PROFILE (CONT’D)

Tay How Yeh was appointed as the Director of Guan Chong Cocoa Manufacturer Sdn Bhd in January 2003. Bhd., she was actively involved in the trading of cocoa beans and the sales and marketing of cocoa products.

PROFILE OF KEY SENIOR MANAGEMENT (CONT’D)

In 2005, he was promoted to the position of Operations Manager and in 2010 to the position of Group Operations Manager overseeing the production of Guan Chong Cocoa Manufacturer Sdn. He then worked for Cocoa Services LLC as a Production Manager in 2013 and was promoted to Plant Manager in 2016.

Dear Shareholders,

These new acquisitions give us direct access to Europe, the largest chocolate consuming market in the world. The factory will boast an initial annual grinding capacity of 60,000 MT, and is expected to be completed in the first quarter of 2022.

Despite a tumultuous year amidst the prolonged effects of the COVID19 pandemic, Guan Chong Berhad (GCB or the Group) posted

The Group also recorded a 2.2% higher net profit attributable to shareholders of RM222.7 million in FY2020, compared to RM217.9 million in the previous year. At the same time, GCB's cash and bank balances improved to RM78.2 million from RM46.8 million in the previous year.

SUSTAINABILITY REPORT

This report refers to the performance and sustainability progress of Guan Chong Berhad (GCB or the Group) for the period from 1 January 2020 to 31 December 2020 (the FY2020 reporting period), unless otherwise stated. In developing our current year's approach to sustainability reporting, we have maintained an internal assurance methodology for the disclosure of this year's Sustainability Report.

SUSTAINABILITY REPORT (CONT’D)

As GCB continues to grow and expand, we recognize the importance of administering an increasingly robust sustainability framework that recognizes the impact of our business activities, prioritizes the interests of our various stakeholders and takes a proactive approach to identifying potential risks within the cocoa industry . Using our extensive experience in the industry, we have developed and implemented the highest standards of safety and quality assurance in all our business operations and we consistently undertake assessments to ensure compliance with international industry best practices.

Dear Stakeholders,

As a top player in global cocoa production for many years now, we are aware of the increasing importance of sustainability within the industry. At GCB, we believe it is important to remain mindful of the broader context of sustainability within the global cocoa sector.

We are delighted to present to you GCB’s fifth Sustainability Report in line with the Bursa Malaysia Requirements and our first Sustainability

Identification
Shortlisting
Prioritisation
Validation

The Sustainability Steering Committee (SSC) supports the Group's sustainability program and is responsible for overseeing the process of integrating sustainable practices into the business processes of each of the Group's subsidiaries in accordance with the Board of Directors' guidelines. For further details, see the Group's economic performance in the Financial Highlights section of this report.

ENERGY CONSUMED PER COCOA BEAN PROCESSED (KWH/MT)*

In the coming years, we will see significant improvement in our net energy consumption as we implement greater use of solar and biomass machines in all entities within the Group. At the fundamental level, our approach to effluent and waste prioritizes full compliance with all relevant statutory bodies that oversee waste management in the regions where we operate.

WORKFORCE HEADCOUNT, NEW HIRES AND EMPLOYEE TURNOVER IN 2020 BY ENTITY (NUMBER)

For 2020, recognizing the complexity that has arisen as a result of the COVID-19 pandemic, special measures were adopted throughout the Group to protect our employees and their interests. Employees who worked from home, on the other hand, were offered refunds on their Internet bills as compensation for the extra connection requirements they were charged.

NEW HIRES RATE IN 2020 BY AGE GROUP AND GENDER

EMPLOYEE TURNOVER RATE IN 2020 BY AGE GROUP AND GENDER

Finally, we recognize the importance of continuous review and improvement in maintaining our health and safety. In line with these objectives, our occupational health and safety performance in the 2020 financial year is detailed below.

REPRESENTATION WITHIN THE HEALTH AND SAFETY COMMITTEE*

Accordingly, all occupational health and safety matters are discussed at our monthly management meetings in accordance with our monthly safety reporting requirements. Our complaints mechanism also covers health and safety in the workplace, providing all employees with an anonymous channel through which they can express concerns in this area.

GRI CONTENT INDEX

GRI 103-1 Explanation of the material topic and its limits GRI 103-2 Approach to management and its components. GRI 103-1 Explanation of the material topic and its limits GRI 103-2 Management approach and its components GRI 103-3 Evaluation of the management approach.

CORPORATE GOVERNANCE OVERVIEW STATEMENT

Board Composition

The Board of Directors consists of six (6) members, including three (3) executive directors, including the CEO/Chief Executive Officer, and three (3) independent non-executive directors. In addition, there are effective checks and balances on the board, with half (1/2) of the board members being independent non-executive directors.

CORPORATE GOVERNANCE OVERVIEW STATEMENT (CONT’D)

Risk Management and Internal Control Framework Recognise and Manage Risk of the Group

The composition and details of activities carried out by the risk management committee appear in the report of the risk management committee in this annual report. The most important elements of risk management and internal controls are described in the Declaration on risk management and internal control as stated on pages 62 to 67 of this annual report.

Communication with Stakeholders Ensure Timely and High Quality Disclosure

The responsibilities to identify and manage risks are delegated to the respective head of each business unit. A Risk Management Committee was established on 24 August 2020 and is responsible for assisting the Board by taking responsibility for monitoring the effectiveness of the Group's approach to risk management, which function was previously delegated to the Audit Committee.

Conduct of General Meetings Annual Report and General Meetings

The Board is committed to the continuous improvement of internal controls and risk management practices within the Group to meet its business objectives. The Group adopts a decentralized approach to risk management that encompasses strategic and operational risks (including financial and compliance risks).

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D)

AAPG3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the Group's risk management and internal control system. The Audit Committee has been responsible for overseeing the Group's risk management since its inception.

AUDIT COMMITTEE REPORT (CONT’D)

During the financial year under review, the Risk Management Committee performed its functions and duties in accordance with the existing Terms of Reference. The Risk Management Committee is responsible for assisting the Board to monitor the effectiveness of the Group's approach to risk management.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors are pleased to submit their report and audited financial statements of the group and company for the financial year ended 31 December 2020. There has been no material change in the nature of these activities of the group and company during the period. financial year.

DIRECTORS’ REPORT (CONT’D)

In the financial year, no compensation was paid to or insurance for the group's and the company's auditors. OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (I) AS OUTSIDE THE FINANCIAL YEAR.

STATUTORY DECLARATION

In the opinion of the directors, the financial statements set out on pages 83 to 179 have been prepared in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act 2016 in Malaysia so that they give a true and fair view of the financial position of the Group and the Company as of December 31, 2020, as well as the financial performance and cash flows of the Group and the Company for the then ended business year.

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF GUAN CHONG BERHAD (INCORPORATED IN MALAYSIA)

Carrying amount of inventories at lower of cost and net realisable value

We focused on the valuation of inventories, particularly the write-down of finished goods to net realizable value, which is primarily based on management judgment and subject to price volatility, which may result in inventory valuation errors. We have assessed that this is a significant audit matter because the accounting value of inventories may not be calculated at cost price and net realizable value if this is lower.

Recoverability of trade receivables

Other information includes the information included in the annual report, but does not include the group and company financial statements and our auditor's report thereon. Our opinion on the financial statements of the Group and the Company does not include other information and we do not express any form of assurance conclusion about them.

INDEPENDENT AUDITORS’ REPORT (CONT’D) TO THE MEMBERS OF GUAN CHONG BERHAD

If we conclude that there is a material uncertainty, we are required to draw attention in our audit report to the related disclosures in the Group's and the Company's financial statements, or, if such disclosures are inadequate, to adjust our judgment. From the matters communicated with the directors, we determine those matters that were most significant in the audit of the annual accounts of the Group and the Company for the current year and which therefore form the key audit matters.

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

STATEMENTS OF CHANGES IN EQUITY

STATEMENTS OF CHANGES IN EQUITY (CONT’D) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

STATEMENTS OF CASH FLOWS (CONT’D) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

CORPORATE INFORMATION
PRINCIPAL ACTIVITIES
BASIS OF PREPARATION
SIGNIFICANT ACCOUNTING POLICIES 1 Basis of accounting

The main activities and details of subsidiaries are listed in note 12 to the financial statements. Areas involving such judgments, estimates and assumptions are disclosed in note 6 to the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

The consolidated financial statements for the financial year ended 31 December 2020 comprise the Company and its subsidiaries and the Group's interests in associates. The new MFRSs and amendments to MFRSs adopted during the financial year are disclosed in Note 5 to the financial statements.

31 DECEMBER 2020

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2 Basis of consolidation

Business combinations

De facto control exists in situations where the company is practically able to direct the relevant activities of the investee without having a majority of the voting rights. The consolidated annual accounts present the results of the company and its subsidiaries (“the Group”) as if they formed a single entity.

NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 31 DECEMBER 2020

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 3 Business combinations (Cont’d)

Property, plant and equipment and depreciation

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 4 Property, plant and equipment and depreciation (Cont’d)

Leases

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 5 Leases (Cont’d)

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 6 Investment properties

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 7 Investments

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 7 Investments (Cont’d)

Intangible assets (a) Goodwill

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 8 Intangible assets (Cont’d)

Impairment of non-financial assets

When it is not possible to estimate the recoverable amount of the individual asset, the impairment test is performed on the cash-generating unit ("CGU") to which the asset belongs. An impairment loss is recognized in profit or loss when the carrying amount of the asset or CGU, including goodwill or intangible asset, exceeds the recoverable amount of the asset or CGU.

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 9 Impairment of non-financial assets (Cont’d)

Financial instruments

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 11 Financial instruments (Cont’d)

Impairment of financial assets

Financial liabilities are recognized in the statements of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The book value of own shares is offset against equity in the statements of financial position.

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 12 Impairment of financial assets (Cont’d)

Borrowing costs
Income taxes

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 14 Income taxes (Cont’d)

Provisions
Contingent liabilities and contingent assets

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 17 Employee benefits

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 17 Employee benefits (Cont’d)

Foreign currencies

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 18 Foreign currencies (Cont’d)

Revenue recognition

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 19 Revenue recognition (Cont’d)

Operating segments

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 20 Operating segments (Cont’d)

Earnings per share (a) Basic
Fair value measurement

ADOPTION OF NEW MFRS AND AMENDMENTS TO MFRS 5.1 New MFRS adopted during the financial year.

ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs 1 New MFRSs adopted during the financial year

ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (CONT’D)

New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2021

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS 1 Changes in estimates

Critical judgements made in applying accounting policies
Key sources of estimation uncertainty

7. PROPERTY, PLANT AND EQUIPMENT Factory, Factory buildings, machinery, toolsFurniture, |---- and renovation and equipment ----||--- Motor vehicles ---|fittings Capital Freehold LeaseholdRight-of-Right-of-Right- of -and office work-in-landland Owned use assets Owned use assets Owned use asset equipment progress Total Group RMRMRMRMRMRMRMRMRMRM Cost balance per 7.PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Factory buildings Plant, |--- and renovation ----|machinery, |---- Motor vehicles ---|fittings Capital Freehold LeaseholdRight to tools and Right to -and office work- i-landlandOwned use asset equipmentOwned use asset equipment progress Total group RMRMRMRMRMRMRMRMRM Cost balance per 1st of January.

PROPERTY, PLANT AND EQUIPMENT (CONT’D)

8.LEASE LEASE The Group as lessee Right-of-use assets Right-of-use assets relating to leased properties, motor vehicles and plant, machinery and equipment that do not meet the definition of investment property are classified as property, plant and equipment and prepaid lease payments.

LEASES (CONT’D) The Group as lessee (Cont’d)

INVESTMENT PROPERTIES

INVESTMENT PROPERTIES (CONT’D)

PREPAID LEASE PAYMENTS

INTANGIBLE ASSETS

December 2019

INTANGIBLE ASSETS (CONT’D)
INVESTMENTS IN SUBSIDIARIES
INVESTMENTS IN SUBSIDIARIES (CONT’D) (b) The details of the subsidiaries are as follows
INVESTMENTS IN SUBSIDIARIES (CONT’D)
INVESTMENTS IN ASSOCIATES
INVESTMENTS IN ASSOCIATES (CONT’D)
OTHER INVESTMENT
INVENTORIES
INVENTORIES (CONT’D)
TRADE AND OTHER RECEIVABLES
TRADE AND OTHER RECEIVABLES (CONT’D)
DERIVATIVE FINANCIAL ASSETS/(LIABILITIES)
DERIVATIVE FINANCIAL ASSETS/(LIABILITIES) (CONT’D) (b) Cross currency swap contracts (Cont’d)
CASH AND BANK BALANCES
CASH AND BANK BALANCES (CONT’D)
SHARE CAPITAL
TREASURY SHARES
RESERVES
RESERVES (CONT’D)
BORROWINGS
BORROWINGS (CONT’D)
DEFERRED TAX LIABILITIES/(ASSETS)
DEFERRED TAX LIABILITIES/(ASSETS) (CONT’D)
RETIREMENT BENEFITS OBLIGATIONS
RETIREMENT BENEFITS OBLIGATIONS (CONT’D)
TRADE AND OTHER PAYABLES
TRADE AND OTHER PAYABLES (CONT’D)
CAPITAL COMMITMENTS
REVENUE
PROFIT BEFORE TAX
TAX EXPENSE
TAX EXPENSE (CONT’D)
EARNINGS PER ORDINARY SHARE (a) Basic
EARNINGS PER ORDINARY SHARE (CONT’D) (b) Diluted (Cont’d)
DIVIDENDS
EMPLOYEE BENEFITS
DIRECTORS’ REMUNERATION
CONTINGENT LIABILITIES
RELATED PARTY DISCLOSURES (a) Identities of related parties
RELATED PARTY DISCLOSURES (CONT’D) (c) Compensation of key management personnel
OPERATING SEGMENTS
OPERATING SEGMENTS (CONT’D) Major customer
FINANCIAL INSTRUMENTS (a) Capital management
FINANCIAL INSTRUMENTS (CONT’D) (b) Financial instruments
FINANCIAL INSTRUMENTS (CONT’D) (b) Financial instruments (Cont’d)
FINANCIAL INSTRUMENTS (CONT’D)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (i) Credit risk (Cont’d)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (ii) Foreign currency risk (Cont’d)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (iii) Interest rate risk (Cont’d)

The Group's and the Company's foreign exchange swap contracts are as follows: (Continued). A legal charge on certain property, plant and equipment (Note 7(b)) and investment properties (Note 9(d)) of the Group;. iii).

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (iv) Commodity price risk (Cont’d)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (v) Liquidity and cash flow risk (Cont’d)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) (vi)Net investment hedge (Cont’d) The amounts related to items designated as hedged items of the Group were as follows: Change in value used for calculating hedge effectiveness RM
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Consequently, it is included as part of the Group's tangible fixed assets. This transaction has been completed and included as part of the Group's tangible fixed assets.

LIST OF PROPERTIES (CONT’D)

UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS

AUDIT AND NON-AUDIT FEES

Voting rights One vote per ordinary share. of %* of Issued Size of Shareholding Shareholders Shareholders Shares held * Share capital.

ANALYSIS OF SHAREHOLDINGS

AS AT 12 APRIL 2021

Except as disclosed above, the Directors of the Company did not have any other interest in the shares of the Company and its related corporations at the date of the Share Analysis.

ANALYSIS OF SHAREHOLDINGS (CONT’D) AS AT 12 APRIL 2021

Voting rights: The holder of warrants is not entitled to any voting rights. Utilization price per warrant: RM1.65.

ANALYSIS OF WARRANTHOLDINGS (CONT’D) AS AT 12 APRIL 2021

To re-appoint Messrs BDO PLT as auditors of the company and to authorize the directors to fix their remuneration. Authorization to Directors to grant and issue shares in accordance with Section 75 of the Companies Act 2016.

NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

ANNUAL REPORT

A printed copy of the annual report shall be provided to shareholders upon request as soon as possible from the date of receipt of the request. No individual is standing for election as a director at the Company's seventeenth annual meeting.