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Dear Valued Stakeholders,

Welcome and thank you for visiting the Top Glove website. We invite you to explore this portal to learn more about what we have to offer you.

The Top Glove journey began in 1991 as a local enterprise with only 1 factory, 1 glove production line and 100 employees. Today, we have transformed into an international business attaining 26% of the world market share for rubber gloves with production bases in Malaysia, China, Thailand and marketing offices in these countries as well as Germany, USA and Brazil. As the world’s largest glove manufacturer, we presently have 44 factories, 700 production lines and a production capacity of 73.8 billion pieces of gloves per annum.

Only 29 years of age in 2020, we remain a young and dynamic company with a Vision to be your world class partner in gloves and healthcare products. Our continued focus on innovation, digitalisation and improvements in our production processes and services continue to bear fruit as we deliver an impressive performance year after year. Our CAGR for revenue and profit are 21.7% and 19% respectively, while our shareholder return since 2001 is 10,269% (as at 20 March 2020). More detailed reports on our financial performance can be found here: https://www.topglove.com/ir-home/

Prospects for both Top Glove and the glove industry continue to remain promising. The global demand for gloves is growing steadily, both in emerging and developed regions, driven by strong market fundamentals. Accordingly, Top Glove’s aim is to continue expanding our operations to ensure we are positioned to cater to the robust demand which is set to grow at 10% to 12% per annum. For this, we are consistently on the lookout for M&A opportunities with good valuations as well as diversification exercises to expand our product range.

Additionally, at Top Glove, we believe sustainability cannot be separated from business and continues to rank high on our corporate agenda. In demonstration of our commitment, we established a Board Sustainability Committee, entrusted with championing efforts and enabling us to make meaningful strides in this increasingly important space. We continue to step up our endeavours, particularly in terms of creating a safe and healthy work environment, over and above requirements of local labour laws. Learn more about our sustainability initiatives here: https://www.topglove.com/sustainability/

Our milestones could have only been accomplished with the help of our 18,000 strong workforce. Our employees play an integral part in managing our business well and we are ever grateful to be working alongside our committed people, who daily show us what can be attained through the power of teamwork.

In all we do, we are guided by our core values which include foremost, working based on our Business Ethics of Honesty, Integrity and Transparency and bonded by our Corporate Values Respect, Integrity, Value, Empowerment and Relationship, represented by the acronym RIVER, which serves to guide us in our pursuit of an ambitious business agenda whilst instilling a healthy and inclusive culture conducive for growth. We believe that health truly is wealth, to which end we practise Top Glove’s 5 Quality Wells Clean Well, Eat Well, Work Well, Exercise Well and Sleep Well daily, so we remain fit and well-positioned to contribute positively and compete effectively. This will enable us to live out our motto "Work is our hobby, Exercise is our duty, Health is Wealth".

Our journey towards excellence doesn’t stop here. In fact, it has only just begun. We have set our sights even higher going forward. We aim to capture 30% of the world market by year end 2020 and to ultimately become a Fortune Global 500 company by 2040. These may be ambitious, but we do not set goals which are easy to attain; we set goals which are good for our business and good for our people. While the road towards success may be challenging, we believe that as we continue to work harder, faster and smarter with integrity and leveraging on advanced technologies, we will be able to overcome challenges and continue delivering the performance you have come to expect of Top Glove.

Top Glove Delivers Better 2Q Performance Ahead of Stronger Financial Quarters

We are pleased to report a positive financial performance for 2QFY2020, for which we delivered healthy figures amidst a softer quarter, while looking forward to a robust 2HFY2020.

For 2QFY2020, Top Glove achieved Sales Revenue of RM1.23 billion, an increase of 6% compared with 2QFY19 and 1.7% versus 1QFY2020. This was attributed to steady Sales Volume (Quantity Sold) growth, with particularly strong growth in the nitrile glove segment, where there was a 14% increase in Sales Volume versus 2QFY19. Sales Volume for natural rubber gloves was softer by 6% against 2QFY19, while margins were impacted by a 19% surge in natural rubber latex concentrate prices which the corresponding increase in average selling prices (ASP) was not sufficient to offset. Meanwhile, quarter-on-quarter Sales Volume for natural rubber gloves improved by 11% as we recovered market share through aggressive marketing strategies and production utilisation also increased.

Profit Before Tax for 2QFY2020 came in at RM130.4 million, 3.9% higher than 1QFY2020 as well as 2QFY19 and Profit After Tax was RM116 million, increasing by 8.7% year-on-year and 3.8% quarter-on-quarter, as the Group continued to enjoy tax incentives from its ongoing expansion, as well as unutilised tax allowances from some of its subsidiaries.

For 1HFY2020, we delivered Sales Revenue of RM2.44 billion, an improvement from 1HFY19, as Sales Volume increased marginally from 1HFY19. Meanwhile, Profit After Tax for 1HFY2020 was RM227.8 million, which is higher by 4.4% versus 1HFY19 and amounts to 62% of FY19’s Profit After Tax.

The Group also recorded significant progress in Aspion’s performance arising from enhancement initiatives implemented over the past 2 years, as Sales Volume for Aspion’s surgical gloves grew substantially by 29% both quarter-on-quarter and year-on-year. Improvement efforts will continue to be intensified across Aspion’s operations from Production to Marketing, to ensure we realise Aspion’s full potential and establishes a bigger presence in the surgical glove segment.

Top Glove will continue to expand its operations in line with the growing glove demand globally to ensure it is well-positioned to help protect and save lives, particularly in view of the ongoing outbreak of COVID-19. At the initial stage of the outbreak, sales orders came mainly from China, Hong Kong, Singapore and South Korea. However, we have in recent weeks also received strong sales orders from Europe, US and other countries as well, following its rapid spread to other continents across the globe, which has seen our sales order book double. We anticipate that the declaration of the COVID-19 outbreak as a pandemic by the World Health Organisation (WHO) on 12 March 2020, will eventually result in the healthcare and other sectors requiring more medical supplies such as gloves and other essential items.

With current utilisation levels above 90%, Top Glove is able to further ramp up production close to 100%, to meet the surge in demand. In tandem, the company is embarking on more capacity expansion plans. By December 2021, Top Glove is projected to have a total of 861 production lines and a production capacity of 91.1 billion gloves per annum.

In another development, Top Glove on 2 March 2020 entered into a settlement agreement with Adventa Capital Pte Ltd in relation to all disputes concerning the purchase of Aspion Sdn. Bhd. by its subsidiary Top Care. As part of the agreement, Top Care received a total of RM245 million as full and final settlement of the disputes and all parties are to withdraw their respective legal claims, with no liberty to file fresh proceedings. We believe that settling this dispute amicably is in our best interests as well as that of our stakeholders, enabling us to focus exclusively on growing our respective businesses.

On 23 January 2020, Top Glove was assigned a corporate credit rating of AA by the Malaysia Rating Corporation Berhad (MARC), the highest rating to be accorded to a Malaysian manufacturing company. This indicates Top Glove’s demonstrated strong revenue growth and net profit, positive cash flow generation, with stable working capital management, backed by strong and sustainable glove demand globally. On 27 February 2020, Top Glove also issued RM1.3 billion perpetual Sukuk which will be utilised to refinance existing borrowings as well as for CAPEX purposes. With the restructuring of debts following the Sukuk issuance, coupled with Bank Negara Malaysia (BNM)’s and the US Federal Reserve’s action to reduce interest rates in order to support the economy, the Group expects its interest costs in the coming quarters to reduce significantly. As at 29 February 2020, the net gearing had reduced to 0.24 times, as the perpetual Sukuk is taken up as equity.

Going forward, we envision very solid quarters ahead, having already secured exceptionally large sales orders for the next few months on the back of the COVID-19 outbreak, which saw a surge in orders for gloves, an essential item in the medical sector. Moreover, the interplay of several other factors, which include the recent plunge in oil prices, augur well for Top Glove’s performance for 2HFY2020. Demand for gloves is expected to continue to grow by at least 10% every year, as awareness and usage increases, all the more so with the COVID-19 pandemic. New users who have started using gloves during this period are expected to continue usage even after the outbreak recedes, having gained an appreciation of their importance in protecting lives, as was the case with past outbreaks such as H1N1.

Top Glove is fortunate to be in the healthcare industry which is relatively resilient to economic and political uncertainty. While our sales have surged during this outbreak, we are saddened to see so much sickness and suffering. We will continue to work safely and do our duty to ensure we produce quality gloves to help contain the outbreak, while protecting and saving lives.

Thank you.

TOP GLOVE, TOP QUALITY, TOP EFFICIENCY

GOOD HEALTH, SAFETY FIRST & BE HONEST

Tan Sri Dr Lim Wee Chai
19 March 2020