JB Foods : Annual Report 2023

J B F O O D S L I M I T E D

ENHANCING OUR FOCUS & VALUE

ANNUAL REPORT 2023

JB FOODS LIMITED | ANNUAL REPORT 2023

01

TABLE OF CONTENTS

CORPORATE PROFILE	02
OUR BUSINESS	03
OUR PRODUCTS	04
CHAIRMAN'S STATEMENT	05
CEO'S STATEMENT	07
FINANCIAL HIGHLIGHTS	09
OPERATIONS AND FINANCIAL REVIEW	10
BOARD OF DIRECTORS	12
EXECUTIVE OFFICERS	16
SUSTAINABILITY REPORT	17
CORPORATE INFORMATION	59
FINANCIAL CONTENTS	60

02	JB FOODS LIMITED | ANNUAL REPORT 2023

CORPORATE PROFILE

JB Foods Limited ("JB Foods" or the "Group") started as a processor of wet cocoa beans to dry cocoa beans in the 1980s. Today, it has grown to be one of the major cocoa ingredient producers in the world, with a total processing capacity of 180,000 metric tonnes of cocoa beans equivalent per year, with two factories located at the Port of Tanjung Pelepas, a free trade zone in Johor, Malaysia, and in the Maspion Industrial Estates in Gresik, Indonesia, approximately 30 km from the Surabaya port.

The Group's principal activities comprise the production and sale of cocoa ingredient products, namely cocoa mass, cocoa butter and cocoa powder.

JB Foods has been listed on the Mainboard of the Singapore Exchange Securities Trading Limited since 2012.

JB FOODS LIMITED | ANNUAL REPORT 2023

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OUR BUSINESS

PRINCIPAL BUSINESS

JB Foods Limited's core business is in the production and sale of cocoa ingredient products, namely cocoa mass, cocoa butter and cocoa powder.

Over the years, through its strong focus on product quality and development, the Group has honed its capability to develop and customise cocoa ingredient products to meet the varying and exacting requirements of globally diversified customers.

Complying with the highest standards of food safety, the Group ensures that its quality products consistently meet or exceed its customers' expectations. With its technical know-how, product expertise and proprietary blending methods, the Group has gained widespread recognition from its global customers.

The Group's products are sold primarily under the "JB COCOA" brand name to a worldwide customer base ranging from international trade houses to end users such as food and beverage and confectionery manufacturers.

PRODUCTION FACILITIES

MALAYSIA

The Group's first cocoa processing facility is located in the Port of Tanjung Pelepas, a strategic logistics hub within a free trade zone in Johor, Malaysia. This has enabled the Group to significantly reduce land logistics costs, as well as delivery time, while closely monitoring the shipment of its containers.

INDONESIA

In 2014, the Group exercised its call option to acquire an 80% equity interest in PT Jebe Koko, a cocoa bean processing facility. This facility is located in the Maspion Industrial Estate in Gresik, Indonesia, approximately 30 km from the Surabaya port, and focuses on processing raw cocoa beans sourced domestically in Indonesia.

AWARDS AND CERTIFICATIONS AWARDS

• Certification of Excellence, Industry Excellence Award for the consumer product sector 2007/2008
• Malaysian Commodities Industry Award 2011 for Best Processing Plant
• Best Cocoa Grinder Award 2012

CERTIFICATIONS
•	Halal Certificate	•	FSSC 22000
•	Kosher Certificate	•	Fairtrade USA
•	HACCP Certificate	•	Fairtrade International
•	Rainforest Alliance	•	Project Non-GMO

MALAYSIAINDONESIA

120,000 MT	60,000 MT
COCOA BEANS	COCOA BEANS
EQUIVALENT	EQUIVALENT
PER YEAR	PER YEAR

				ESTONIA
				JBC EUROPE OU
				@ Talliun
ESTONIA
USA				CHINA
New York				JB COCOA FOODS
				(CHINA) CO. LTD.
				@ Shanghai
IVORY	MALAYSIA		MALAYSIA
			JB COCOA SDN BHD
COAST	SINGAPORE	@ Gelang Patah
	INDONESIA
		Jakarta
				INDONESIA
				PT JEBE KOKO@
				Surabaya
FACTORIES/WAREHOUSE FACILITIES	SALES OFFICES	SOURCING CENTER

04	JB FOODS LIMITED | ANNUAL REPORT 2023

OUR PRODUCTS

COCOA MASS

We offer various cocoa mass, based on cocoa bean origins to meet customer requirements.

COCOA BUTTER

We produce natural and deodorised cocoa butter, which is used in the production of chocolates.

COCOA POWDER

We produce a wide range of

cocoa powder of varying PH value, application and fat content, used to make cocoa beverages, as well as flavourings and coatings of food and beverage, and confectionary

products.

JB FOODS LIMITED | ANNUAL REPORT 2023

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CHAIRMAN'S STATEMENT

"We prioritise transparency, integrity, and accountability in all our interactions and decisions, ensuring that the needs and concerns of shareholders, customers, employees, and communities are given due consideration."

• Mr. Chin Koon Yew •

Chairman

IN A NUTSHELL - 2023

Throughout 2023, we witnessed a notable increase in demand for our products, particularly in the cocoa ingredient sector. This robust demand translated into a strong revenue figure of US$595.8 million, underscoring the strength of our market positioning and the quality of our offerings.

Looking ahead, while we acknowledge the challenges we faced in 2023, we remain reliable in our commitment to delivering long-term value to our shareholders. We are actively pursuing strategies to optimise our operations, enhance efficiency, and capitalise on emerging opportunities in the market.

BUSINESS SUSTAINABILITY

For several years now, we have been deeply committed to sustainability efforts, actively engaging with local communities in countries such as Ivory Coast, Ecuador, Nigeria, and Indonesia. Through collaborative initiatives, we have ventured to create positive impact and promote economic development within these communities.

As a member of the World Cocoa Foundation (WCF), and as a signatory of the Cocoa and Forest Initiative (CFI), JB Cocoa has remained steadfast in aligning with the vision of WCF. Our commitment to these initiatives underscores our dedication to creating more sustainable supply chains and mitigating deforestation and forest degradation in our cocoa sourcing regions. Moreover, we actively support cooperatives and cocoa-producing communities in their pursuit of economic empowerment and growth.

Year by year, our sustainability expansion endeavours have been growing consistently. Our collaboration with farmers has seen significant growth as well, expanding from 20,000 farmers in 2022 to 24,800 farmers this year, spanning across Ivory Coast, Nigeria, Ecuador, and Indonesia, offering sustainability programs to our major partners. Through collaboration, we harness collective wisdom and expertise to chart a course towards a more sustainable and responsible future.

As we reflect on these achievements, I am immensely proud of the dedication and commitment demonstrated by our team and our partners. Together, we are making tangible strides towards a more sustainable and resilient cocoa industry, while simultaneously uplifting the livelihoods of the communities we serve.

OUTLOOK & GROWTH STRATEGIES

At JB Cocoa, safeguarding the interests of our stakeholders is a fundamental aspect of our corporate ethos. We prioritise transparency, integrity, and accountability in all our interactions and decisions, ensuring that the needs and concerns of shareholders, customers, employees, and communities are given due consideration. Through our commitment to sustainability, ethical business practices, and strong corporate governance, we aim to create enduring value and foster trust among our stakeholders. By actively engaging with and listening to their feedback, we strive to build lasting relationships based on mutual respect and shared objectives. Ultimately, our goal is to uphold the well-being and prosperity of all our stakeholders while driving sustainable growth and making a positive impact in the communities we serve.

06	JB FOODS LIMITED | ANNUAL REPORT 2023

CHAIRMAN'S STATEMENT

DIVIDEND

The Group has paid out interim dividend of 0.20 Singapore cents per share in September 2023, which represents a pay-out ratio of 25% for FY2023. This is consistent with the pay-out ratio of above 20% for the past five years.

ACKNOWLEDGEMENT

On behalf of the Board, I extend our sincerest appreciation to the Group's leadership for their tireless efforts, dedication, and passion in driving our mission forward. Your hard work and commitment to excellence have been instrumental in achieving our strategic objectives and delivering exceptional results. We are proud of the culture of innovation and collaboration that thrives within our organization, and we recognize the invaluable contributions of each and every staff member. Together, we have navigated challenges and embraced opportunities, strengthening our position as a leader in our industry. Thank you for your unwavering commitment and invaluable contributions to our collective success.

CHIN KOON YEW

Independent Director and Chairman

JB FOODS LIMITED | ANNUAL REPORT 2023

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CEO'S STATEMENT

FY2023 IN REVIEW

During the year in review, the Group achieved higher sales but net profit declined amidst unprecedented sharp volatility in cocoa bean prices.

The Group's revenue increased by USD86.2 million or 16.9% from USD509.6 million to USD595.8 million for the year ending 31 December 2023 ("FYE 2023"), mainly arising from higher shipment volume and increase in the average selling price due to higher cocoa bean prices, which has increased from about USD2,400/MT in January 2023 to about USD4,800/MT as of end of December 2023.

There are fair value mark-to-market losses of USD12.3 million relating to hedging activities, which was recognised in the cost of sales as of year end due to unprecedented sharp price volatility of cocoa bean.

Finance costs increased by USD8.8 million or 131.9% from USD6.7 million to USD15.5 million, mainly due to increase in the trade bills utilisation resulting from higher cocoa bean price, higher financing interest rate, and additional financing costs incurred on the Sukuk and term loan to the construction-in-progress in Ivory Coast factory.

As a result of the above, the Group's profit after tax decreased by USD14.8 million from USD16.7 million to USD1.9 million.

"As I reflect on the year, I am struck by three defining words: Resilience, Collaboration, and Innovation,

which encapsulate our

collective response to the challenges we have faced and the opportunities we have seized."

- Tey How Keong -

Chief Executive Director

MARKET CHALLENGES

Throughout the onset of the year, beginning in January 2023, West Africa experienced a decrease in gross exports of cocoa beans compared to the same period in the previous year. This decline, coupled with adverse weather conditions and disease, signalled supply deficits, and led to elevated cocoa prices. These challenges have posed significant obstacles for cocoa business players globally.

ENHANCING FOCUS & VALUE

As I reflect on the year, I am struck by three defining words: Resilience, Collaboration, and Innovation, which encapsulate our collective response to the challenges we have faced and the opportunities we have seized. Despite the challenges posed by market turbulence, our resilience remains firm. Driven by our optimism, we confidently navigate market volatility that encouraged by rising cocoa prices and increased freight rates. These positive indicators reinforce our determination to persevere and thrive in the ever-changing landscape of the industry.

We remain steadfast in our commitment to fostering collaboration efforts aimed at aligning with consumer trends towards sustainability, governance, and accountability. These principles serve as our guiding light, driving us to innovate and adapt to meet the evolving needs and expectations of our customers and stakeholders.

08	JB FOODS LIMITED | ANNUAL REPORT 2023

CEO'S STATEMENT

Innovation remains pivotal in our quest for progress, as we leverage technological advancements and creative solutions to minimise energy usage in our production operations. Building upon our recent investments in solar panels, machinery efficiency enhancements, and renewable energy adoption, we are primed to explore new avenues for sustainable practices throughout our operations. Embracing a culture of continuous innovation, we are committed to staying at the forefront of industry trends and pioneering solutions that not only meet but exceed the evolving needs and expectations of our customers and stakeholders.

Cocoa bean prices have reached historical highs in recent months, doubling from one year ago, we will cautiously manage our Group's cashflow and will adopt a conservative and prudent stance in our operations or any capital expenditure.

ACKNOWLEDGMENT

I extend my heartfelt gratitude to our stakeholders, whose unwavering support and guidance have been vital in shaping our strategic direction and driving sustainable growth. To our customers, who place their trust in us each day, thank you for your loyalty and commitment. Your feedback and insights inspire us to continually innovate and improve, ensuring that we exceed your expectations and deliver exceptional value.

To our esteemed business partners, I express my sincere appreciation for your collaboration and dedication to our shared success. Your expertise, resources, and commitment to excellence have been instrumental in achieving our goals and advancing our mission.

I wish to express our appreciation to our Board members for their active participation in board deliberations and for their guidance, counsel and advice. Last but not least, to my employees, your innovative ideas, tireless work ethic, and exceptional teamwork, have demonstrated the qualities that make JB Cocoa a beacon of excellence. I am truly honoured to lead such an exceptional team.

TEY HOW KEONG

Chief Executive Officer