GCCP Resources : Annual Report 2021

VISION

In 2021, the expansion to marble industry has commenced and we strive to be the leading marble producer in Asia and we are still offering a sustainable supply of high quality calcium carbonate to meet Malaysia's domestic and international market demand.

COMMITMENT

We are committed to delivering beyond the expectations of our customers through the supply of high-quality products and the relentless pursuit of best-in- class mining and manufacturing capabilities. We are also committed to creating a safe and rewarding working environment for our dedicated team; fulfilling our social responsibility to the community and environment by observing and surpassing relevant domestic and international standards; and generating long term, sustainable value for our shareholders.

CORPORATE PROFILE

GCCP Resources Limited ("GCCP") and, together with its subsidiaries, (the "Group") is primarily engaged in the quarrying and the processing of calcium carbonate. The Group owns one of the biggest reserves of ground calcium carbonate ("GCC") in Malaysia. The Group's quarries, namely GCCP Gridland Quarry and GCCP Marble Quarries are located in Ipoh, in the state of Perak. Collectively, the quarries hold about 248 million tons of precipitated calcium carbonate ("PCC") and GCC-grade calcium carbonate resources and 26 million tons of PCC and GCC-grade calcium carbonate reserves. Both quarries have cleared the Environmental Impact Assessment (EIA) and are operated in compliance with Malaysia government-approved Environmental Management Plan. GCCP was listed on the Catalist of the Singapore Exchange Securities Trading Limited on 30 April 2015.

This annual report has been reviewed by the Company's sponsor, Evolve Capital Advisory Private Limited ("Sponsor"), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ("SGX-ST"). The Sponsor has not independently verified the contents of this announcement.

This annual report has not been examined by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement.

The details of the contact person for the Sponsor are -

Name: Mr. Jerry Chua (Registered Professional, Evolve Capital Advisory Private Limited)

Address: 138 Robinson Road, Oxley Tower, #13-02, Singapore 068906

Tel: [phone]

Table of Contents

CORPORATE PROFILE

IFC

CHAIRMAN'S STATEMENT 1

BOARD OF DIRECTORS 4

EXECUTIVE OFFICERS 7

CORPORATE INFORMATION 8

OPERATION REVIEW 9

CORPORATE GOVERNANCE REPORT 14

ADDITIONAL INFORMATION ON DIRECTORS PROPOSED FOR RE-ELECTION 46

SUSTAINABILITY REPORT 55

FINANCIAL CONTENTS

DIRECTORS' STATEMENT 66

INDEPENDENT AUDITOR'S REPORT 68

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 71

STATEMENTS OF FINANCIAL POSITION 72

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 73

STATEMENT OF CHANGES IN EQUITY 74

CONSOLIDATED STATEMENT OF CASHFLOW 75

NOTES TO THE FINANCIAL STATEMENTS 76

STATISITIC OF SHAREHOLDING 116

NOTICE OF ANNUAL GENERAL MEETING 118

CHAIRMAN'S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report for the year ended 31 December 2021 ("FY2021"). It was a pleasure to have the opportunity to share the progress of the Company throughout FY2021 even though it was still a challenging year for the world and the Company due to the continuous outbreak of Covid-19 with new variants.

In FY2021, Malaysia government has imposed another Full Movement Control Order (FMCO) on all economic sections, from 1 June to 24 July 2021, where only essential economic activities are allowed during that period. As a result, the production and sales volume did not achieve as what we were targeting.

Financial Review

During the year, the Company has raised MYR9 million from a share placement exercise for the purchase of new machineries for the marble block business and general working capital purposes. The placement has enhanced the Company's financial strength and helped the Company to continue the development of GCCP Marble Quarries smoothly.

In FY2021, Group's revenue recorded an increase of 6% to MYR5.9 million as compared to MYR5.6 million in the financial year ended 31 December 2020 ("FY2020").

Similarly, the Group's cost of sales also recorded an increase of 6% to MYR5.7 million for FY2021 from MYR5.4 million of previous year, which was in line with the higher sales and the fixed costs of the operation in FY2021.

Along with the above increments, this resulted in a minor increase of gross profit of MYR33,000 for FY2021, which was mainly attributed to the pick-up of sales momentum during the fourth quarter of FY2021.

General and administrative expenses recorded an 9% increase to MYR7.9 million from MYR7.2 million a year ago. However, selling and distribution expenses reduced drastically as a result of zero export activities for FY2021 due to the pandemic.

The Group recorded a lower finance cost of MYR0.6 million compared to MYR0.8 million a year ago as a result of reduction in borrowing commitments. Correspondingly, interest income decreased because of the lower interest rate earned in FY2021.

The Group's recorded a lower net loss attributable to shareholders of MYR8.1 million in

FY2021, compared to a net loss of MYR9.1 million in FY2020.

The Group's property, plant and equipment stood at MYR76.0 million as at 31 December 2021, compared to MYR79.3 million as at 31 December 2020. The difference is mainly due to the depreciation of property, plant and equipment amounted to MYR4.9 million, and offset by the acquisition of new property, plant and equipment for the marble operation, amounted to MYR1.6 million.

Inventories reported MYR1.3 million lower than last financial year and was MYR0.8 million as at 31 December 2021. The reduction was mainly due to the increase of sales in FY2021, coupled with the reduction in production during the MCO period. Trade and other receivables reported an increase of MYR0.8 million to MYR2.1 million as at 31 December 2021 as a result of sales improvement during the fourth quarter of FY2021.

As at 31 December 2021, there was a decrease of MYR2.8 million in trade and other payables as a result of prompt settlement of outstanding debt, and repayment to directors and other payables. There was a reduction in borrowings (both short- and long-term tenure) of MYR1.8 million. Total borrowings were MYR9.6 million as at 31 December 2021.

The Group recorded a higher net cash inflow of MYR1.8 million for FY2021. This was attributed mainly from the proceeds from the share placement exercise and offset by the net cash utilized in (a) operating activities amounted MYR3.7 million, and (b) purchase of equipment amounted to MYR1.6 million.

Operations Review

Compared to FY2020, production and sales at GCCP Gridland Quarry have picked up towards the later quarter of FY2021 after adapting the new normal with several new standard of procedures imposed by the Malaysia government due to the pandemic. Due to the lockdown between borders, sales in FY2021 mainly focused on the domestic market. The Group will continue to strengthen the sales of limestone in the domestic market and endeavour to reboot the overseas supplies once the borders are opened.

At GCCP Marble Quarries, the progress of road development was slower than expected mainly due to the FMCO imposed by Malaysia government from June 2021 to July 2021.

Despite the challenges encountered, the company managed to fix the road gradient to a better level, and further development shall be continued in FY2022.

Future Prospects

In FY2021, the world economy remains badly affected by the COVID-19, where most industries, including the Group, are struggling from the impact of this pandemic. Although it was a challenging year for the Group, we believe that the Group will overcome all the challenges in the coming year, with the resumption of global economy activities.

Moving forward to FY2022, the focus will be the extraction of marble blocks from GCCP Marble Quarries. The Group has engaged a new Quarry Master to advise and work on the extraction of marble block, including the area and method of extracting the blocks. The Group expects to conduct its first sale of the marble blocks in the second half of FY2022. The Group will reboot its overseas efforts to market its PCC products from the GCCP Gridland Quarry once international borders are opened to complement its domestic market.

A Word of Appreciation

The Group appreciates the support and guidance from its Board of Directors during this challenging year. I would also like to thank our management team for their consistency to meet ongoing challenges and demands during FY2021.