HRnetGroup AGM 2021 Highlights

Good morning once more to all our stakeholders who have taken the time to join us today. Over the next few minutes, I want to give you a flavour of what is going on in HRNetGroup within both our physical and virtual walls. 2021 is a good year for us. For our business, for our share price, for our lives. For our business, we are in a very, very different environment now, almost diametrically opposite, 180 degrees from this time last year. Then we were learning to navigate a slippery slope down. Today, The skies are clear and blue. For our share price, we have gone from a low of 40.5 cents last year to the 67 cents we closed at yesterday. And so for those of you who doubled down and put in $10,000 last year, it would now be worth $16,500. And when you add the dividends received, you would actually receive a return of 72% within just a year. I like to think it is because the pandemic has brought rationality back. If you have a company solidly paying dividends out of net profits every year with owner-operators passionate about what they do, this is definitely one boat you want to be on, and there aren't many like that out in the world. We are building our following, and over the past 3 years, our shareholder base has grown 40%. For our lives, there's now hope. Hope that we will overcome any challenges thrown our way, as we have just walked through a very turbulent time and come out faster, higher, and stronger. For it. Our business continuity plans have been thoroughly tested and proven to withstand Movement Control, Circuit Breakers, lockdowns, and multiple waves. For the benefit of our new shareholders, and as an update to loyal shareholders who have seen the days when we were vehement that we are not a technology company, Let me spend a few minutes going into what we do now and why we do it. So HRNetGroup has two core engines. One is professional recruitment and two, flexible staffing. Think of professional recruitment as having a trusted expert to find you just the team or person you need. Matchmaking talents with companies. If you think that process is simple and can be done by anyone with a phone or can be easily replicated by bots, a good example I can give you is allowing a robot, or for that matter, a golfing buddy to pick a helper for your mom. I can feel some of you cringing. And, and that's for something where the helper technically does not need any official qualifications or experience in order to do her job. The bottom line is that recruitment requires both deep technical expertise and the use of intuition and other human skills. Our recruiters spend the 10,000 hours needed to be really fluent in the talent landscape of their respective practice areas, maximise the utility of multiple tech tools to arrive at the best outcomes, and bring in their stomach brain when assessing which candidates have the highest probability of succeeding in the unique context of each client. Actually, Now, more than ever before, the differences between companies are showing up. One easy example many of you would be familiar with is the debate over returning to physically working from the office. The permutations between companies within departments actually is tremendous. You have those where the default is a mobile workforce, and you have to explain why you require someone to return to the office. Then you have the companies where there's 100% return to the office. I don't know how they do that. And then you have those where it really looks to the needs of the individuals and a customized model has been developed. So our job is to find the candidate with the required skills and qualifications who does best for each organization's culture. You can imagine the complexity of it all. It's like deciding which family to marry into. Helping the candidate weigh up all the factors which can be taken into account before deciding on a role, then working with the client on a win-win offer takes people skills. Robots are not yet at the stage where they can cook your favourite hokkien mee. Much less negotiate to bring on board talents who will bring your company to the next level. Having said that, I'm a great advocate for the use of technology, but just like the debate between working from home and working from the office, we think the best outcomes for recruitment and staffing will come from a blended model. Humans making use of various technology tools to place the best hire. Our second core engine is flexible staffing, and here's where companies who need 100 people tomorrow or have thousands of headcount to manage focus on what they do best whilst we take responsibility for the manpower which powers them. We hire the talent deploy them to our clients, and do whatever it takes to ensure that the client is staffed on demand. When the client wants to release the talents, it takes just one WhatsApp, one WeChat message, and we take over from there. Especially in a period of high uncertainty and many unknowns, companies love the the fact that they can leave the issue of staffing to us. So we know that speed and convenience are two key benefits we must offer. Then there's also the recognition that asynchronicity is the new reality. Asynchronicity simply means people want to do their thing at their own time. The suite of tools in our digital toolbox provides for just that. Clients can choose to white label our platform and trigger hundreds of employment contracts in an instant. Contractors can then painlessly enter into employment contracts at their convenience, on their phones, from wherever they are. One of our clients recently pointed out that it takes some staffing firms a week or more to onboard temps for them. With us, it's a matter of hours. In our corporate memory, each time we emerged from a crisis, we leveled up. Our profits climbed to a different level. With our deep engagement with the market and strong intent to evolve and grow. We have, over the past year, positioned ourselves well to benefit from the K recovery curve seen by the economies across the region. And this is why the theme for our annual report and for this AGM is Faster, Higher, Stronger. This is a time when some will soar whilst others fade. And for us, it is very clear which direction we are going in. Jennifer will soon be going into more detail about our numbers, but what I will mention is that in the COVID year of 2020, in the ultimate test of business continuity readiness, our doors remained open in all the 13 cities that we operate in. It proved that our people are on top of their game, that our systems and processes are truly robust. We have cracked the code on how to succeed. In the vaccination year of 2021, we will only be doing better. Thank you.

Good morning, shareholders. Board of Directors, fellow colleagues, shàng w�� hǎo. Some of my friends whispered to me that they attended courses on stock analysis where HRNetGroup has been used as a model stock to look at indicators of a defensive stock. I'd like to add that the global crisis is also a good seed for quality stocks. In Chinese, we say 真金不怕火火。Real gold is not afraid of the burning furnace. Warren Buffett also said that only when the tide goes out do you discover who's been swimming naked. Today it is my privilege to report to you about this company that you have invested. It is certainly not swimming naked. But one that is an extraordinary and unique bar of gold. Along the way, I will point you to the strategic intent underlying the financial outcomes of 2020 that we announced on the 26th of February this year. Now, how is it that we can report good dividends of $25 million, a strong cash position of $332 million, with zero bank borrowings and solid profits of $50 million in a year of an unprecedented global crisis. Surely we must have the right people doing the right things at the right time and in the right places. Tian Shi Di Li Ren He is not a coincidence. Focus. We have a laser-sharp focus. It is better to be the best tailor in a particular street than to be the best tailor in the world. We choose to do the people business, and specifically recruitment, as our principal operating focus. We choose to operate in Asia where we live and breathe. Diversification. Through our 32 business units operating in 13 cities, we recruit people to meet temporary and permanent needs of our customers. We serve more than 10 key sectors ranging from the government, where there is zero credit risk, healthcare, the hottest sector right now, logistics, retail and consumer, smart vehicles, and so on. And in each sector, we have specializations. In each specialization, we find the areas that are highest in demand at that particular point in time. We are not reliant on any particular sector nor clients. Our number one client contributed only 4% of our total revenue. Our top 10 clients contributed 14.8%. This business is very safe because of our focus and diversification. A revenue of $433 million is not big. Actually, it is only half of Benjamin Graham's bench of $700 million US dollars. To qualify as a big company. By the way, Uncle Graham is the author of The Intelligent Investor, a book that Warren Buffett says is by far the best investing book ever written. Last year, we grew by $10 million in revenue, but to us, it is not as important as the $50 million of profits earned right in the midst of a global, global pandemic. We intend to keep it up with our profitability track and maintain the clean record of no earnings deficit throughout the last 28 years, except for an $18,000 loss in 1998's Asian financial crisis. It is said that a defensive stock should have more than 2.9% growth in the last 10 years. You would be pleased to know that the profit CAGR of HRNetGroup has been 9% in the last 10 years. As a company run by 200+ co-owners, we will not pursue high revenues in order to just gain market share. Rather, our top priority is profits. In the world today, There are many recruitment companies with big revenue numbers but single-digit percentage in profit margins and little or no dividend payout to shareholders. A double-digit profit margin of 11.8% like ours is a rare find. If we look at the listed recruitment companies across the UK, The US, Europe, China, Hong Kong, Japan. I can count double-digit profit companies with 5 fingers. HRNetGroup sits on my thumb. We don't pay people commission. We pay people profit sharing incentive, PSI. Gross profit is the key performance measure for our 700+ consultants who are rewarded with monthly or quarterly incentives based on gross profit numbers, subject to the pool of operating profits in the respective business units they belong to. As long as they are able to bring in gross profits in excess of 3 times their payroll cost,, they will receive their PSI. And the sky is the limit to the PSI. We have no capping on PSI. And this is the lever which we can pull at any part of the economic cycle. In good times, high gross profit and operating profits, people enjoy high PSI. In challenging times, lower PSI. And as for those flexible staffing units that did very well last year, our consultants received higher amounts of PSI. We are a performance-based organisation. The growth— the GDP growth numbers in the geographies that we operate and invest in clearly show a V-shaped economic outlook in sight. Singapore just reported a 0.2% GDP growth for Q1 2021, while China registered an 18.3% growth rebounding from the 6.8% contraction in the same period last year. Asia is clearly the right place to be in at this time. We already have a strong foothold in Singapore with about 20% market share, strong profitability, and a powerful sales force of 264 registered recruiters here. Greater China is a great force to be reckoned with, and we have 350 consultants covering Shanghai. Beijing, Guangzhou, Shenzhen, Suzhou, Hong Kong, and Taipei. We continue to invest more to extend and deepen our reach. The strategic intent is that Singapore must continue to grow while the contribution of North Asia will be led principally by mainland China to surpass 50%. With strategic foresight in setting up more recruit-first offices in the last 2 years, we readied ourselves to capture even more staffing business in cities like Taipei, Kuala Lumpur, Shanghai, Jakarta that we already have professional recruitment business in. COVID-19 brought us government work healthcare work, and other projects in ways we never expected to ramp up the flexible staffing business so fast, just in one year. Just now, Adeline explained the difference between flexible staffing and professional recruitment businesses. Each has its merits. They serve as our twin engines and mitigate volatility in different points of the economic cycle. Our strategic intent is to strengthen capability building for our people to acquire critical skill sets in digitalization, to build infrastructure, and to augment processes so that our people can be readily deployed whenever and whichever way the market turns. Whether for professional recruitment or flexible staffing. This agility is the hallmark of an entrepreneurial and organised institution. And when we execute capability building, it is organisation-wide, tapping on collective leadership, not on any one single personality, not even our founder. We want it built to last. We have never missed dividends. We have been practicing this 50% payout even before IPO, and for the last 3 years, we have been faithfully paying dividends: $23 million, $28 million, $28 million, and now proposing $25 million. On the day that we announced this 2.5 cents proposed dividend, the yield was 4.5%. That is a good yield indeed. After your vote on Resolution Number 2 today, eligible shareholders shall receive the dividends sometime in early May. Current ratio means Current assets over current liabilities. Benjamin Graham recommended 200% for a defensive stock. We have 403%. A shareholder said he bought our shares at 50 over cents the other day, and he said 33 cents are backed by cash. That's one way to look at it. Coincidentally, 33 cents also happens to be the net asset value per share. With no bank borrowings, you would like to think that I have an easy job. But with interest rates for principal-protected deposits so low now, we are making prudent steps to deploy unutilized cash to save and better yield financial instruments, yet maintaining a good level of liquidity for organic expansion, acquisition, and opportunistic HR investments. We are still looking at M&A opportunities, though the due diligence work takes a very different dimension in social distancing times like this. We invest in listed stocks in the global recruitment industry, which we are familiar in. Through such exposure, we keep ourselves engaged with industry players on emerging trends, best practices in spaces and/or geographies that we do not yet operate in. As of last year-end, we held about $6.9 million worth of HR marketable securities reflected under the current portion of other financial assets. Shown as non-current portion of other financial assets is our stake in Bambooz Healthcare of less than 10%. We also have a 29.95% equity interest in Staffline. The group has no significant influence over Staffline as we do not have a board representation and there is no access to financial information of Staffline. The group has no plans to increase our stake in Staffline at the present moment. The investments in both Staffline and Bambooz are for medium to long-term strategic purposes. For this reason, the movements in fair value of these investments is reflected as other comprehensive income, which does not affect the net profits which we use for computing our general 50% dividend payout. As of yesterday, the year-to-date fair value of these marketable securities in other financial assets have already appreciated by $13.9 million due to positive movements in market prices. Such appreciation would go towards increasing our net asset backing per share. Someone commented that this annual report theme looks like a vitamin C advertisement. It seems like the vaccinations are a good vitamin booster for the economy. There are signs of recovery not just against 2020 but also against pre-COVID 2019. As I come to the end of my presentation, I wish that the wealth creation for our shareholders would be faster, higher, and stronger in 2021.

Resolution 2: Final Tax Exempt One Tier Dividend. We shall now proceed to the second item on the agenda, and that is to approve the declaration of a final tax exempt one tier dividend of Singapore 2.5 cents per ordinary share for the financial year ended 31st December 2020. The scrutineer has verified the poll results and now announced the results. We have 100% of the total valids cast for Resolution 2, and none of the— no percent, 0% of the total valid votes cast against Resolution 2. So based on the results shown on the screen, I declare the motion carried. We have now concluded the business set out in the agenda. No notice has been received for any business that may be transacted at this meeting. I I now declare the AGM closed. Please stay for a moment for Faz to share some final words. Faz, over to you, please.

Thank you, Mr. Sim, for chairing the meeting today. And to everyone who had joined us in this meeting, a very big thank you from all of us at HRNetGroup. We hope you are able to join us again next year. Have a wonderful day ahead, and goodbye from all of us.

Bye-bye. Hey, thank you.