The Company wishes to announce that as part of its 5-Year Strategic Plan which aims to reinforce business resilience and long-term sustainability, it is undertaking a series of operational rationalisation measures to improve its competitiveness in view of the current challenging operating landscape. In line with this, the Company will be decommissioning its Bestari Jaya facility (“BB”) and consolidating operations at its Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang. BB currently consists of 4 production plants with 40 production lines, some of which have been operational since 2004. The decommissioning exercise is expected to be completed by end-2023.

This is a difficult yet necessary decision to ensure that Hartalega will be able to weather the tough market landscape. Throughout this exercise, the Company is committed to treating its employees fairly and with respect. With a period of approximately six months for the decommissioning to be completed, the Company has put in place measures to support affected employees, which include but are not limited to:

• The opportunity for redeployment to the NGC facility for relevant roles
• Competitive severance packages
• Engaging with affected employees to provide outplacement support during the six-month period
• HR Helpdesk to address any employee concerns and queries
• HR assistance and counselling for affected employees

Given the competitive business environment, the Company is of the view that it is more strategic and viable in the long term to consolidate operations at the NGC facility. Compared with its state-of-the-art production lines at the NGC facility, the Bestari Jaya facility is less efficient and restricted by older technology, as well as generating higher energy and labour cost, in addition to higher maintenance costs due to the age of the facility. Hence, once the decommissioning is completed, the Company expects a reduction in operating cost and depreciation, which will have a direct benefit on its bottom line.

Taking a longer-term view, the NGC facility also has the capacity for future expansion, as the Group continues to progress strategically in line with prevailing market supply and demand dynamics.

Following the decommissioning exercise, the Company expects to recognise an impairment loss of RM347 million for FY2023, and further provision for retrenchment costs and contract obligation expenses amounting to a total of approximately RM70 million for FY2024.

This announcement is dated 8 May 2023.