PowerPoint Template

Hartalega Holdings Berhad

Corporate Presentation 2013

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About UsEstablished in year 1988Principal activity is manufacturing of rubber examination glovesProducts are 100% exported to countries like USA, Europe, Japan and ChinaWorlds largest nitrile glove producer6 plants located in Bestari Jaya, Selangor, MalaysiaInstalled capacity of 13.6 billion pieces per annum to-dateTotal workforce of about 4,100 where 35% are skilled workersSales revenue exceeding RM1 billion per annum (FY2013)Listed on the main board of Bursa Malaysia in year 2008 Market capitalisation above RM4 billion since May 20139 years CAGR (FY05-FY13) for sales & profit of 32% and 44% respectivelyMost profitable glove manufacturer in the world2 YOUR LOGOHartalegas Background

Products mainly sold to quality demanding markets such as USA, Japan and Germany81% of sales to healthcare and food industries where demand remains robust

Market Segments3 YOUR LOGO3Forbes AsiaKPMGAsia Money 200 Best Under A Billion (year 2010, 2011 & 2012)Industrial Markets Sector Best and Overall Ranked 8th for Shareholders Value Return (2011) Best Managed Small Cap Company in Malaysia (year 2010)Best Managed Mid Cap Company in Malaysia (year 2012)Hartalegas BackgroundAccolades

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Worlds Largest Producer of Nitrile Gloves

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2010 Worlds largest nitrile glove producer 18% share of US nitrile glove market Natural rubber price reached record RM10.30 Nitrile glove is 30% cheaper 2008 Nitrile glove production increased by 30 folds Nations largest and worlds 2nd largest nitrile glove producer Worlds largest OEM nitrile glove producer About 20% share of the US synthetic glove market2007 Competitor launched a 4.2g nitrile glove Responded with the worlds first 3.7g nitrile glove, Developed at the same time with the 4.7g glove but kept in the war chest2003 Commenced R&D on production technology Focus on effective and low cost nitrile glove production Operation of the worlds first double former production line in end of year 2004 28,000 pcs/hr of nitrile gloves2002 Commenced R&D on elastic thin nitrile gloveOvercome technology, pricing and intellectual property barriers Introduce to users a nitrile glove that mimics the softness and stretchiness of natural rubber glove2005 Launched first in the world 4.7gnitrile glove Mimics the stretchiness and softness of natural rubber gloves without protein allergy risks Competitively priced Outside the Tillotsons patentChanged the Landscape of Global Glove Market

Inventor of worlds first light weight nitrile glove6 YOUR LOGO69,300% Increase in Sales of Nitrile GlovesCreated a new demand for light weight nitrile glovesCaused a switching phenomenon of users into nitrile glovesSale of nitrile gloves increased by 93 times in 9 yearsShare of USA nitrile glove market increased from 2% to 18% in 7 yearsSale of nitrile gloves to Europe increased by 52 times in 7 years

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Most Efficient Glove Producer

YOUR LOGO8The Most Efficient Glove ManufacturerDesigned for Higher OutputSpeed of production lines installed are consistently higher than industrys averageContinually strive for higher output per production lineBenefits of economies of scaleLower overhead cost per glove

9 YOUR LOGO9Sales per employee is expected to increase to RM366,000 in FY2015; 2.9 times of FY2005From FY2005 to FY2013 sales per employee increased by 2.2 times despite reduction in product selling priceImperatively due to productivity improvements and automationCorrespondingly, profit per employee increased by 3.9 times for the period from FY2005 to FY2013Most Efficient Glove ProducerProductivity as a vehicle of growth

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Staff cost reduced from 14.4% in FY2002 to 7.3% in FY2013Achieved through cutback of workers in the unskilled category through automationHigher skilled workforce is required for development and management of more sophisticated technologyFor the period from FY2006 to FY2013, ratio of Technical and Management staff to total workforce increased from 21% to 35%Higher skilled workforce

Technical & ManagementOthersFY 2006FY 2013Most Efficient Glove ProducerHighly automated production processesYOUR LOGO11**Revenue / Worker / Year280,000280,000050,000100,000150,000200,000250,000300,00019982003200820132018RMGlove IndustryHartalega

**Industry average is provided by MARGMA; average of all registered MARGMA membersKey Efficiency Indicators Industry ComparisonIndustry AverageHartalega*Industry average is the average of two of the top 3 listed glove manufacturers extracted from their latest financial reports; Hartalegas average line capacity is adjusted to the said manufacturers method of quantifying one double former line as two lines10 years ahead!***Industry average is the average of the top three listed glove manufacturersMost Efficient Glove ProducerYOUR LOGO12Innovation based technological advancementHigh productivity operations Operating profit per employee more than double industrys average

Most Efficient Glove ProducerHighest Operating Profit Per Staff(Company, 2012)Profits from high productivity13 YOUR LOGO13Our innovation and our focus in productivity in productiry improvements have resulted in Hartalega having the highest operating profit per employee in the industry

Most Technologically Advanced Glove ProducerYOUR LOGO14Most Technologically Advanced Glove Producer1st successful double former production line in the worldPatentedHighest production capacity in the world above 40,000 pcs/hrSophisticated process controlsTouch screen human machine interfaceConsistent qualityInventions

High Capacity Production Lines

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1st automated mechanical stripping system in the industry able to remove nitrile gloves off hand mouldsProprietary technology in use since 1995Performance is still unrivalled even until todayRemoving nitrile gloves off the moulds at above 40,000pcs/hrAt that rate, it is humanly impossible

Glove Removal SystemInventionsMost Technologically Advanced Glove Producer16 YOUR LOGO16

Industrys firstPatent pending designPull gloves off hand mould Stack onto packing conveyorGloves layered in dispenser boxEasy dispensingGlove Stacking Device

InventionsMost Technologically Advanced Glove Producer17 YOUR LOGO17Dipping SimulatorRobotic technologyFully automaticPrecise simulation of unlimited parametersAccurate repeatabilityReduced product time to market

InventionsMost Technologically Advanced Glove Producer18 YOUR LOGO18Most Profitable Glove Producer

YOUR LOGO19Most Profitable Glove ProducerThe most efficient glove maker in the world through engineering innovationExcellent track record of superior operating margins relative to peersOperating margin more than double industrys average

(DBS Vickers, 2012)Highest operating margin in the sector

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YOUR LOGOAgain because our innovation, our focus in productivity improvements and our superior products, Hartalega is the most efficieint glove maker delivering the highest return among its peers.

MSWG asked us whether we should be concerned about over capacity? Yes we acknowledge that all gloves makers are now coming into the Nitrile segment and therefore more competition. However, we have fully sold all our new Plant 5 capacity that we have added throughout 2010 and now we need additional capacity to support our customers aggressive growth which is expect to continue into 2013 and beyond. Our superior technology delivers higher quality product at a significantly lower cost, comparing with our peers. To protect and secure our leadership position, we will continue to grow, leveraging on our competitive cost advantage.

20OPERATIONSFY2008FY2009FY2010FY2011FY2012FY2013Revenue (RM mil)282.62443.20571.89734.92931.081032.03Operating profit (RM mil)47.4497.91181.31235.09260.32300.71Profit before tax (RM mil)46.5995.48177.94243.28258.58305.88Tax rate (%)15.0811.4719.4821.8022.0123.15Net profit (RM mil)39.5784.53143.25190.21201.64235.05Basic EPS (sen)15.9717.4419.6626.18*27.65*32.05Gross dividend (sen/share)N/A6.0010.0010.50*12.50*14.50PERFORMANCE INDICATORSEBITDA margin (%)20.4725.6035.6036.8331.0732.9Operating profit margin (%)16.8022.0931.7032.0227.9529.13Net profit margin (%)14.0119.0725.0525.8821.6522.77Return on equity (%)21.8533.2240.4338.4832.5030.27Return on capital employed (%)21.4230.4144.2244.2038.7037.35Return on assets (%)14.6422.5530.0630.1326.8125.10Net gearing0.230.23cashcashcashcashInventory turnover (days)35.7525.5726.0036.8047.0345.94Total cash7.0138.2674.66116.98163.21182.41Most Profitable Glove Producer

Highest Profitability Ratios in the SectorHighestReturnsin the Industry!

*EPS and DPS on enlarged share of 733.308 million shares after bonus issue21 YOUR LOGO21Most Profitable Glove ProducerRevenue and Profit Revenue (RM mil)Profit After Tax (RM mil)CAGR for revenue from FY2005 to FY2013 of 32%CAGR for PAT from FY2005 to FY2013 of 44%Net margin improved from 12% in FY2005 to 22% in FY2013Sales and PAT for FY2013 of RM1032 mil and RM235 milFY2013 EPS of 32.05 sen (post-bonus issue)Dividend policy of at least 45% payout ratioDividends are historically paid in 4 tranches per yearHighest profit margin in the industryHighest profit in the industryHighest dividend yield among Malaysias rubber glove producers

High growth and good dividend yield22 YOUR LOGOYoY Quarter PAT expanded by 24% on the back of QoQ sales revenue increase of 12% due to easing of raw material pricing & improved productivityYoY Quarter Net Profit Margin improved from 20.8% (4Q2012) to 23.1% (4Q2013)Declared 3rd interim dividend of 3.5 sen per share ex-bonus payable on 20th June 2013Implemented a 1 for 1 bonus issue of up to 371,654,940 ordinary shares on 28th May 2012Implemented a 1 for 5 free warrants issue of up to 74,330,988 free warrants with tenure of 3 yearsEach free warrant is entitled for subscription of 1 new share at the exercise price of RM4.14, from 1st anniversary of the listing date of 5th June 2012 to expiry date on 29th May 2015Proceeds from exercise of free warrants will be used to fund future capital expenditure investments

FY2013 4th Quarter ResultsOPERATIONS3rd Quarter 2013Ended 31 Dec 20124th Quarter 2013Ended 31 Mar 2013Corresponding Quarter Ended 31 Mar 2012Current Year-To-Date 31 Mar 2013CorrespondingYear-To-Date 31 Mar 2012Revenue (RM mil)259,565269,772240,2171,032,034931,081Operating profit (RM mil)76,01579,69062,655300,709260,320Profit before tax (RM mil)78,36881,31864,460305,882258,583Tax rate (%)22.6%23.2%22.3%23.2%22.01%Net profit (RM mil)60,62162,42250,066235,053201,646Most Profitable Glove Producer23 YOUR LOGO23Our Strategy

YOUR LOGO24Our Strategy

Growth plans in a nutshellBuild new capacity Continue to InnovateIncrease export to developed markets such as US and EUOwn brand distribution channels in emerging markets such as China and IndiaFour-pronged Growth StrategySustainable and ProfitableTechnology LeveragingOrganic GrowthProductivity ImprovementHigh Value Added ProductsLeverage on technical know howVia capacity building by construction of new production facilitiesDeveloped MarketsLeverage on first mover advantage on nitrile glovesEmerging MarketsIncrease presence in emerging marketsevolve25 YOUR LOGOOur Strategy

Plant 6 commenced construction in Jan 2012Commissioned the 1st production line in Sept 2012Completion by middle of year 201310 lines for nitrile glove production45,000 pieces per hourAdditional 3.94 bil pieces per annumRM212 mil capexFinanced by internally generated fundsOrganic growth via capacity expansion (plant 6)New Production Facilities Plant 626 YOUR LOGO

Unlocking PotentialsNext Generation Integrated Glove Manufacturing Complex (NGC)

YOUR LOGO27Unlocking PotentialsBuilding a Foundation for Sustainable GrowthImplemented performance management system based on Kaplans Balanced Score Card in year 2011Improved accountability and performanceProductivity improved by 7% in year 2011Initiated talent development programsInitiated learning and development programsInitiated Succession planning programsRevised salary structure based on database from global HR consulting firm (year 2012)GrowthManagement SystemsHuman CapitalSustainability

Next Generation Integrated Glove Manufacturing Complex (NGC)RM 1.9 billion investment8 years master growth plan starting from year 2013We are ready!

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Next Generation Integrated Glove Manufacturing Complex (NGC) RM1.9 billion investment72 high tech production lines2 phases over duration of 8 yearsTotal installed capacity of 28.5 billion pcs/yearSales revenue of RM2.38 bil per annum, proceeds in US$GNI contribution of RM760 million per annumEstimated 112 acres land size requiredRequired workforce size of 4,600 workersIntegrated glove manufacturing facilitiesR&D Centre (Centre of Excellence)Renewable Energy Complex (palm waste)Training and Development Centre (open to public)Sports and Recreational Complex (open to public)Eco-friendly Workers QuartersInvestment Brief* Sales projection are calculated using assumption of average selling price of RM95 per 1,000 pcs and shall not be used as a sales or profit guidance* Sales projection are only for NGC, contribution from operations of plant 1 to 6 is excludedYOUR LOGOThe project is a RM1.5 billion and consisting of 70 new high tech production The project will be housed within a new site of about 112 acresThe HNGC project will be spread over two 4-year phases and employ about 4,600 workers:First Phase (2013 to 2017) 40 production lines with total annual capacity of 14 billionSecond Phase (2017 to 2021) 30 production lines with total annual capacity of 10.5 billionOn completion the total capacity of the group is 38 billion pcs / annumThe project will also house -Research & Development Centre-Learning & Development Centre-Biomass plant- Worker Quarters-Sports and Recreation CentreNext Generation Integrated Glove Manufacturing Complex (NGC) Location of Manufacturing FacilitiesInstalled Capacity (bil pcs / annum)Bestari Jaya14.0NGC28.5Total42.510 YearsCAGR of14%

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Innovation based high tech manufacturing technology Product innovation High productivity Environmentally sustainableHigh level productivity leading to increased GNI contribution and affordability in high paying jobsThe VisionHuman capitalInnovationHigh IncomeHigh paying jobsHuman resource focusHigh technologyAdopting world class HR best practicesHolistic talent development and management programsNext Generation Integrated Glove Manufacturing Complex (NGC)

31 YOUR LOGONext Generation Integrated Glove Manufacturing Complex (NGC) Roadmap to achieving the vision

RM441,710 per worker New production line technology High capacity 45,000 pieces per hour With similar number of line operatorsRM306,227 per worker Average line capacity of 28,000 pieces per hourSales per employee (RM/worker/year)

RM516,354 per worker Proprietary technology currently in development Reduce reliance on manual unskilled labour in back-end processesNext Generation Integrated Glove Manufacturing Complex (NGC)Existing operationRM470,141 per worker Proprietary technology currently in development Reduce reliance on manual unskilled labour in quality control32 YOUR LOGO32Next Generation Integrated Glove Manufacturing Complex (NGC) Sectors average sales per employee in year 2008 (MARGMAs survey)

Highest productivity sales per employee (Hartalega vs sector average)Hartalegas sales per employee in year 2008

RM280,000

47%RM306,227Hartalegas sales per employee in year 2011

61%RM516,354NGCs sales per employee

171%RM190,00033 YOUR LOGO33

UnskilledCurrentNGCSkilled

NGC requires a workforce size of 4,600Expect output per employee for NGC to be 62% higher than existing operationsReliance on foreign workers to reduce by 76%Ratio of skilled workers over total workforce to increase by 16% to 51% due to utilisation of more advanced technologiesStaff cost (% of sales) to reduce by 2.2%, about RM52 million savings per annum more allocation for investment in human capital development

Output per EmployeeReduction in manual labour and foreign workers

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Natural Gas ConsumptionReduction in natural gas consumption Employing Green Technology

Renewable energyNatural gas-17%Energy source for NGCNatural gas consumption of NGC in Sm3 per 1000 pieces of gloves produced will be 17% lower than existing plantsThis is achieved by more energy efficient production lines and also utilisation of biomass based renewable energyBiomass renewable energy plants with total capacity of 58MW will be installed22% of NGC energy needs will be supported by biomass renewable energy Existing 26MW biomass renewable energy plant is the first and only 100% EFB fiber based energy plant in the sector and the first to be registered to Kyoto Protocol35 YOUR LOGO35

Next Generation Integrated Glove Manufacturing Complex (NGC) Towards High Income Economy

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Project StatusIncorporated Hartalega NGC Sdn Bhd 100% owned subsidiary of Hartalega Holdings Berhad and carrier of NGC projectAccorded EPP status under Malaysian Governments Economic Transformation ProgrammeRecognised as a high impact project under the Rubber National Key Economic Area testimony of Hartalegas leadership in innovation and productivity112 acres land has been identifiedSeeking approvals from relevant state authoritiesCommenced recruitment of management level workforce for NGCConstruction to begin in year 2013Next Generation Integrated Glove Manufacturing Complex (NGC) YOUR LOGO37

High productivityHighest capacity production lines in the world45,000 pcs/hr production linesSales per employee of RM541,480 per year185% higher than industry average

Efficiency GainsHigh ProductivityHigh-TechWorlds Largest

Next Generation Integrated Glove Manufacturing Complex (NGC) Key TakeawayReduction in unskilled labourStaff cost expected to reduce from 6.7% to 4.5%Gas consumption per glove produced to reduce by 17%Efficiency gain from economies of scaleReinforce position as the worlds largest nitrile glove producer

State of the art proprietary production technologyTwo new technologies currently in development24% reduction in manual labourAll production lines are interchangeable to produce nitrile and natural rubber gloves without required modification

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Sustainability

YOUR LOGO39SustainabilitySalient PointsWorld demand for rubber gloves grows at about 8%Malaysia is the largest supplier of rubber gloves for the worldMalaysia commands about 62% of the global marketWorld demand will remain resilient due to emergence of diseases such SARS, H1N1Increase affluence and health awareness of the world population also drives demand Recession proof industry as glove is a consumable necessity regardless of economic conditionDemand for glove is inelastic

Global glove market will continue to grow40 YOUR LOGO40Year 2010 (mil pairs)Year 2011 (mil pairs)Year 2012 (mil pairs)% changeDestinationLatexNitrileLatexNitrileLatexNitrileLatexNitrileUSA5,7786,8913,6407,6203,4469,649(5.3%)26.6%EU8,5262,4496,3514,4375,8655,352(7.6%)20.6%Japan8669127771,0337371,394(5.1%)34.8%South America3,054902,8681733,1061756.2%1.2%China4032535713254218251.8%37.8%

Majority of major markets registered contraction in importation of Latex glove from MalaysiaAll markets registered growth in importation of nitrile glove from MalaysiaRatio of Latex:Nitrile Malaysia total export- 69:31 (2010); 58:42 (2011); 54:46 (2012)US latex:nitrile ratio - 45:55 (2010); 32:68 (2011); 26:74 (2012) EU latex:nitrile ratio - 78:22 (2010); 59:41 (2011); 52:48 (2012)China latex:nitrile ratio 94:6 (2010); 73:27 (2011); 75:25 (2012)Total export of nitrile glove grew by 26% in year 2012

41 SustainabilityNitrile wave will continueTable: Malaysia Export of Rubber Gloves (source: MREPC)YOUR LOGO41And our answer to this is....

Buyers in USA started to switch even though nitrile gloves were 15% more expensive than natural rubber

Price of Latex glove is5% higher than NBRgloveNitrile material price is adjusted to similar conversion ratio to natural rubberSustainabilityNitrile wave will continueYOUR LOGOSustainabilityFuture growth in emerging marketsClear disparity in per capita consumption of glove between USA and EU with Asia and ChinaChina market could grow to 132 billion pcs per annum assuming consumption level reaches that of EuropeBasing on similar assumption, Asia as a whole has market potential of 369 billion pcs per annum

Opportunities in emerging markets43 YOUR LOGO4344 Overseas Operations80% owned marketing arm Pharmatex USA Inc. in Palm Desert, California, USA 82% owned subsidiary Pharmatex (Australia) Pty Ltd in New South Wales, Australia70% owned subsidiary Yang Cheng Pharmatex Medical Equipment China70% owned subsidiary Pharmatex Healthcare Pte Ltd India

Pharmatex (Aus)47% y-o-y growth for the past 5 financial yearsA 100% Malaysian brand commanding 20% share of the Australian medical glove marketInfluential share of public hospital markets in the states of:New South Wales 12% Victoria 25%South Australia 100%Sustainability

Market Reach and Overseas Operations

YOUR LOGO44SustainabilityCorporate & Product BrandingBranding

Hartalega BrandReinforce image of Hartalega as a quality rubber glove manufacturer with growth prospects & as technological innovatorBuild employer branding branding Hartalega as preferred employer to attract & retain staff

Pharmatex BrandCreate a strong identity of Pharmatex as not only a reputable rubber glove distributor but also healthcare distributorCommunicate Pharmatex as an umbrella brand for all future brands created by Hartalega

GloveOn BrandCreate GloveOn as a principal unified product brand to focus all products under one core brand so as not to dilute our marketing effortsRepresent our culture of commitment to quality & help build track-record of qualityCreate product brand awareness as medium to penetrate emerging markets, the engines of future growth

YOUR LOGOSummary

High Profit MarginProfit margin more than 2 times of industry averageStrong pricing position for entry to new markets and to defend market positionGrowing CompanyTarget earnings growth of 15% for next 10 yearsWith strong pricing and product positioning , there is no problem with uptake of new capacityLeverage on nitrile waveCorporate & Product BrandingMost Efficient Glove ManufacturerProduction efficiency achieved through advanced production technologyAll production technology are in-house developedTechnological edge over competitorsFirst Mover in Nitrile GlovesCreated switching momentum of users from natural rubber to nitrile glovesGrowth of nitrile gloves will remain strongProduction lines are interchangeable between nitrile and natural rubber glove productionSustainability&Profitability46 YOUR LOGO46

?Thank You

Do You Have Any Questions???47 YOUR LOGO47Chart12179

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Staff Cost (% of sales)

Sheet1FY2002FY2003FY2004FY2005FY2006FY2007FY2008FY2009FY2010FY2011FY2012FY2013FY2014fStaff Cost (% of sales)14.4%14.90%12.30%14.30%10.50%8.40%8.50%7.80%7.70%7.2%6.10%7.30%6.10%

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