Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Workplace Quality
• Operating Practices
• Community Investment

Environmental Achievements

• Introduced a wastewater treatment and reuse system, reducing fresh water consumption by 50%
• Successfully launched the UGe850 all-electric plastic injection moulding machine, boosting energy efficiency
• Recycled 639,350 kg of scrap metal, 16,980 kg of waste oil, 24,820 kg of packaging materials, and 84,730 kg of other materials in 2015

Social Achievements

• Established the ‘Home of Staff’, providing recreational facilities for employees
• Organised various training modules on occupational health and safety (OHS)
• Allocated annual training budgets for employees’ all-round training programmes (4,517 total training hours)
• Implemented innovative training modes, requiring department heads to act as trainers
• Improved workforce’s technical capabilities and work efficiency
• Optimized career steps for staff promotion
• Adopted a flattened management structure and streamlined functional departments
• Optimized system platforms for information sharing to enhance operational efficiency
• Achieved the initial target of a paperless office

Governance Achievements

• Established clear staff policies and management controls, respecting equal opportunities, eliminating sexual harassment, providing grievance mechanisms, promoting anti-corruption, and ensuring personal data confidentiality
• Fully compliant with labour legislations and applicable codes of practice on employment terms
• No violation of labour law was recorded in the reporting period
• Established policies and guidelines associated with product health and safety, advertisement labelling, customer privacy protection, anti-corruption, and intellectual property rights

Climate Goals & Targets

Environmental Challenges

• Sluggish global economy, especially in China
• Weak US economy, stagnant European market, recession in Japan
• Downward pressure on the Chinese economy, strong exchange rate, increased labor costs
• Difficulties in financing for mainland SMEs
• Devaluation of the RMB and Japanese Yen
• Economic downturn and overcapacity in mainland China
• Government policies favoring import equipment
• Ferocious price competition in the PCB processing industry
• Increasing domestic production costs in the PRC
• Transfer of customer production lines to Southeast Asia or Japan

Mitigation Strategies

• Prudent business strategy and maintaining a healthy financial base
• Exploring new markets and optimizing production processes
• Cutting operating costs and maintaining prudent credit terms
• Increased investment in research and development
• Streamlining structure, adjusting production scale, and optimizing production processes to reduce costs
• Incorporating the production line of optical products into the injection moulding plant in Dongguan
• Vigorously adjusting production and reviewing facilities in the PCB business
• Establishing a new team for process management and preparing a complete operation manual
• Establishing a new sales department to focus on developing new customers
• Focusing on the promotion of high-end products in environmental protection, energy conservation, and automated production facilities

Supply Chain Management

Responsible Procurement

• Selecting responsible suppliers
• Advocating green procurement
• Ensuring suppliers meet standards in environmental protection and social responsibility

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Hong Kong Exchanges and Clearing Limited’s ESG Reporting Guide

Certifications: ISO 9001 (Dong Hua Machinery Ltd.)

Sustainable Products & Innovation

• UGe850 all-electric plastic injection moulding machine

Awards & Recognition

• Hong Kong Industrial Design Award (automated rubber track moulding machine)
• Top Ten Enterprise of 2015 Chinese Plastic Extrusion Industry
• Caring Company Logo (8th consecutive year)

Environmental Metrics

ESG Focus Areas

• Waste recovery and recycling
• Air quality
• Policies and initiatives to mitigate impacts on the environment and natural resources
• Staff remuneration and benefits
• Occupational health and safety
• Staff development and training
• Compliance with labour standards and regulations
• Supply chain management
• Product responsibility
• Anti-corruption
• Community care

Environmental Achievements

• Implemented environmental management systems compliant with ISO 14001
• Introduced waste water treatment and reuse system, enabling around 45% of the waste water to be reused
• Partnered with Hong Kong Productivity Council to introduce a European treatment technology, significantly reducing chemical oxygen demand of industrial waste water discharge

Social Achievements

• Attained the “5 Years Plus Caring Company Logo” from the Caring Company Scheme
• Established a code of conduct for employees and enhanced internal policies and guidelines to ensure health and safety, encourage equal opportunity, eliminate sexual harassment, prohibit child or forced labour, promote anti-corruption, secure personal data confidentiality, and facilitate communication channels and grievance mechanisms
• Provided resources to encourage a work-life balance, including recreational facilities and activities
• Organised complimentary annual medical check-ups for staff

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Slowdown of economy in Mainland China with a slump in the manufacturing sector
• Restructuring of certain business operations in the plastic products and processing segment and machinery manufacturing segment
• Increasing manufacturing costs and overcapacity in the PRC
• Currency fluctuation of Renminbi, Euro and Japanese Yen
• Intense market competition and overall stagnant global economy

Mitigation Strategies

• Streamlined organization structure and strengthened cost control over the supply chain
• Restructuring certain operations of the plastic products and processing and machinery manufacturing business segments, including the scale down of Dongguan MS Plastic Products Company Limited and Dongguan Cosmos CNC Machinery Limited
• Targeting to improve the returns on the assets employed in these business segments through assets relocation and optimization, organizational restructuring and production efficiency enhancement
• Continuous adjustment of sales strategy by focusing on higher-margin products and associated customers, and strengthening control over production costs
• Optimizing production capacities in its Dongguan manufacturing plant by focusing on the development and manufacturing of industry-specific plastic injection moulding machines and increase utilization of idle production capacities in its Wuxi manufacturing plant
• Product diversification and developing the automotive markets, especially the electric automobile sector
• Expanding the product portfolio with increasing penetration into the existing extensive sales network
• Focusing on developing high-potential industrial customers engaging in manufacturing of LED bonding machines, telecommunication facilities, robotic arms, medical equipment and auto-parts

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supply chain management policies and procedures to guide the selection for new suppliers, green procurement practices, and supplier performance assessment

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: ESG Guide

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• UGe850 all-electric plastic injection moulding machine
• SD330BD all-electric servo CNC punching machine
• FS1032 servo bending machine

Awards & Recognition

• 5 Years Plus Caring Company Logo

Environmental Metrics

ESG Focus Areas

• Waste recovery and recycling
• Air quality
• Policies and initiatives to mitigate impacts on the environment and natural resources
• Staff remuneration and benefits
• Occupational health and safety
• Staff development and training
• Compliance with labour standards and regulations
• Supply chain management
• Product responsibility
• Anti-corruption
• Community care

Environmental Achievements

• Installed active carbon filters, central exhaust systems and water spray devices in Dongguan to reduce airborne pollutants
• Gainbase invested over HKD10 million to establish a wastewater treatment and reuse system, reusing around 38% of wastewater
• Implemented source reduction and recycling measures to minimise solid waste generation
• Replaced traditional industrial and mining lamps with high-efficiency LED mining lights, reducing electricity consumption by around 10%
• Started using an inverter air compressor, reducing electricity consumption by around 20%
• Installed a provincial motor in the power distribution room, reducing electricity consumption by around 5-7%

Social Achievements

• Awarded the “10 Year Plus Caring Company Logo” by the Hong Kong Council of Social Service
• Organised a complimentary annual health screening for staff in Dongguan
• Dong Hua was invited to join the “2017 Dongguan Safety Production Engagement Day”
• Offered training and career development programmes in English language, technical knowledge, ISO 9001:2015 internal auditor training, business management and enterprise resource planning
• Staff volunteer team participated in charitable events and gathered donations and supplies for those in need

Governance Achievements

• Complied with the CG Code during the financial year ended 31 December 2017, except for the deviation from code provision A.6.7

Climate Goals & Targets

Environmental Challenges

• Increase in price of raw materials
• Fluctuations in currencies
• Difficulties in operation for the small-to-medium enterprises customers
• Challenges of destructive impact caused by Typhoon “Hato” on the Zhuhai production plant
• Highly-competitive market condition and the continuous price increase of deposition boards
• Shortage of supply of precision components exported to China, affecting delivery schedule
• Continuous increasing of manufacturing costs (in particular the raw materials cost)
• Shorter life cycle of consumer products
• Volatile capital market and currency fluctuations
• Low visibility of sales orders

Mitigation Strategies

• Implementation of optimization measures in organization structure, supply chain, inventory and accounts receivable management
• Adjustment of sales strategy by focusing on higher-margin products and associated customers
• Restructuring its plastic products and processing segment and machinery manufacturing segment
• Zhuhai production plant upgraded its manufacturing workshops and purchased new machineries and equipment
• Transformation and upgrade of its product portfolio, shifting from double-sided circuit boards to multi-layer board and HDI circuit boards
• Use of bundle-sales strategy to increase sales in the Mainland
• Drastically reduced slow-moving inventory and tightened control over accounts receivables
• Widening the spectrum of applications for the existing manufacturing segments and developing new products with innovative material science technology
• Adjusting sales strategies to niche markets and high-margin customers
• Aligning with the government’s strategy by focusing on business opportunities arising from certain industries

Supply Chain Management

Responsible Procurement

• Green procurement guidelines

Climate-Related Risks & Opportunities

Physical Risks

• Typhoon damage

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: ESG Guide

Certifications: ISO 14001

Sustainable Products & Innovation

• Energy-efficient machine models

Awards & Recognition

• “10 Year Plus Caring Company Logo”

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced water consumption by 7.18% in Hong Kong Headquarters compared to 2020.
• Replaced an old diesel forklift with an electric forklift, leading to a potential reduction of GHG emissions per year.
• Use waterborne paint instead of solvent-borne paint to reduce VOCs.

Social Achievements

• Awarded the 15 Years Plus Caring Company Logo by the Hong Kong Council of Social Service’s Caring Company Scheme.
• Awarded “Happy Company” by Promoting Happiness Index Foundation.
• Organized activities to promote team spirit and enhance cohesion.

Governance Achievements

• Complied with all the principles and applicable code provisions of the CG Code during the year ended 31 December 2021, except for deviation from code provision A.6.7.
• Established various board committees to manage particular aspects of the Company’s affairs and aid in sharing the responsibilities of the Board.
• Adopted a Board diversity policy.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic and related policies affecting business performance and inducing pressure of market conditions on demand.
• Global supply chain disruptions, supply-demand imbalances, and a severe global pandemic.
• Continuous surges in prices of various raw materials and energy, shortage of imported materials, key components and chips, multiple increases in freight and shipping costs due to shipment disruption and shortage of freight containers, uneven supply of parts and components from subcontractors and rising RMB exchange rate.
• Unexpected difficulty in recruiting workers after the Chinese New Year holiday.
• Wider curbs on electricity in the third quarter of the year.
• Slowdown in international demand in the latter part of the year.
• Rising and volatile costs in terms of raw materials, parts and components, labour, and shipment.
• Uneven pace of domestic and global economic recovery, raw materials price volatility, fluctuating foreign currency rates and overseas shipment costs.

Mitigation Strategies

• Implemented penetration strategies on customers and product portfolios through internal development and business model adjustment to improve businesses’ competitiveness and agility from slow economic recovery and to reduce the dependency on specific customer segments.
• Implemented cost-effective solutions and key performance indicators to enhance productivity and efficiency.
• Implemented a series of measures to ensure orderly production and align with national carbon reduction strategies.
• Adjusted selling prices slightly upwards.
• Worked closely with suppliers to ensure timely delivery of raw materials and components.
• Promoted higher-end customized models.
• Installed new machining centres and production equipment.
• Switched to water-based spray painting lines.
• Implemented prudent financial policies and enhance the capability to improve cash flows.
• Actively encouraging subsidiaries to invest in research, development and innovation, and using new technologies to improve the quality of services and products.
• Upgrading the production equipment to address the new market requirements.
• Strengthening employees’ training.

Supply Chain Management

Responsible Procurement

• Established strictly procedures in procurement management system, which manage the verification of suppliers and purchased products.
• An evaluation procedure is in place to ensure the suppliers and supplies quality fit our production requirement.
• Mainly procure locally or in nearby places rather than overseas so as to reduce carbon emissions from transport or shipping.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather such as storms and floods may result in financial loss and cause physical damage to infrastructure of our plants.

Transition Risks

• National carbon neutrality policy and low-carbon approach especially on manufacturing enterprises to control the extensive use of fossil fuels i.e. electricity.

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 of the Listing Rules)

Certifications: ISO 9001

Awards & Recognition

• 15 Years Plus Caring Company Logo
• Happy Company

Environmental Metrics

ESG Focus Areas

• Climate Change
• Employment
• Occupational Health and Safety
• Supply Chain Management
• Product Responsibility
• Anti-corruption

Environmental Achievements

• Installed solar panels in Wuxi factory producing approximately 1,600,000 Kwh of electricity per year.
• Renovated No. 2 workshop at Donghua Machinery, built a processing center, and purchased 16 energy-efficient inverter electric fans.
• Renovated staff dormitory at Dekuma.
• Total water consumption of Hong Kong Headquarters decreased by 7.73% compared to 2021.
• Implemented water recycling system in industrial paint booths at Donghua Machinery and Jiangsu Machinery.

Social Achievements

• Awarded the 15 Years Plus Caring Company Logo and “Happy Company” by Promoting Happiness Index Foundation.
• Organized the “Best Staff Award in 2022”.
• Introduced vaccination leave for employees at Hong Kong Headquarters.
• Implemented flexible working hours arrangement.
• Renovated staff dormitory at Dekuma.

Governance Achievements

• Adopted a revised board diversity policy.
• Adopted a revised whistleblowing policy.
• Adopted an anti-corruption and bribery policy.

Climate Goals & Targets

Environmental Challenges

• Weak manufacturing demands in China and globally.
• Supply chain disruptions caused by lockdowns in some China cities.
• Russia-Ukraine conflict worsened market conditions.
• High raw material prices.
• Insufficient capacity utilization.
• Global economic uncertainties and global supply chain disruptions caused by the Russia-Ukraine conflict.
• Shipment delays of critical components imported from Europe.
• Weak global growth and much weakened currencies relative to the US dollar.
• Depressed consumer confidence.
• Intense pricing competition.
• High freight costs and shipment delays.
• Elevated and fluctuating plastic resins prices.
• Lockdowns and strict personnel controls due to outbreaks in Hefei.

Mitigation Strategies

• Implementation of effective cost measures.
• Development of high-end specialized products.
• Upgrading production equipment.
• Improving products’ quality.
• Investment in environmental energy-saving facilities.
• Increased employee training.
• Agile response to supply chain disruptions and understaff situations.
• Investments in digital smart factory technologies.
• Deployment of green energy solutions.
• Talent recruitment, especially in engineering and technical departments and frontline sales teams.
• Successful bidding for new project orders, especially those with export specifications.
• Improvements in production efficiency and cost control measures.
• Reducing inventory levels and operating costs.
• Managing external debts.
• Successful launch of innovative online marketing and knowledge-based content creation on social media platforms.
• Corporate value rebranding campaigns.
• Realignment of outsource orders.
• Reducing frontline headcounts to control direct labour costs.
• Scaling down production capacities.
• Shifting production schedules aiming to save electricity and equipment running costs.

Supply Chain Management

Supplier Audits: Regular rating on existing suppliers.

Responsible Procurement

• Verification of suppliers and purchased products.
• Evaluation procedure for the selection of new suppliers.
• Strict monitoring of the quality of raw materials.
• Mainly procure locally or in nearby places.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather such as storms and floods.
• Power shortages due to scorching heat waves.

Transition Risks

• Governmental carbon neutral policy and low-carbon approach.

Opportunities

• Development of energy-efficient products.

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix 27 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited)

Certifications: 15 Years Plus Caring Company Logo, Happy Company (Promoting Happiness Index Foundation), Hong Kong Green Organization Certification – “Energywi$e Certificate” and “Wastewi$e Certificate”

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• 15 Years Plus Caring Company Logo
• Happy Company (Promoting Happiness Index Foundation)
• Hong Kong Green Organization Certification – “Energywi$e Certificate” and “Wastewi$e Certificate”

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Employee Well-being
• Corporate Governance

Environmental Achievements

• Installed solar photovoltaic systems on the roofs of two plants to achieve self-consumption of electricity.
• Gradually replacing diesel forklifts with electric ones to reduce carbon emissions.
• Built a painting workshop in plant no. 2 to ensure that all emissions discharged from the workshop were in compliance with the standard requirements.

Social Achievements

• Resumed organising a number of employee engagement activities to improve employees' mental and physical health and promote interaction.
• Continued to be awarded the 15 Years Plus Caring Company Logo and “Happy Company” award.
• Organised the Annual Best Staff Award to recognise and commend employees.

Governance Achievements

• Maintained compliance with all applicable code provisions of the CG Code except for one minor deviation.
• Established an effective ESG management mechanism to form an ESG governance structure with clear hierarchy.
• Reviewed and assessed material ESG-related issues.

Climate Goals & Targets

Environmental Challenges

• Stagnant manufacturing demands in China and globally and subdued consumer confidence caused by weak global economic recovery.
• Intense competition within the IMM industry, with market players competing on low pricings and fast deliveries.
• Rising trade protectionism and geopolitical risk disrupting global supply chains.

Mitigation Strategies

• Implemented penetration strategies on customers and product portfolios to improve businesses’ competitiveness and agility.
• Focused on increasing the value of our products and enhancing the quality of our service rather than engaging in price competition.
• Minimized supply chain disruptions with flexible supply chain management, including strictly selecting suppliers and extending sourcing channels.

Supply Chain Management

Supplier Audits: Regular rating on existing suppliers.

Responsible Procurement

• Selection of suppliers based on price, quality, transportation convenience, reputation, financial condition, environmental protection philosophy, and social responsibility.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather such as storms and floods causing financial loss and physical damage to infrastructure.

Reporting Standards

Frameworks Used: ESG Reporting Guide (Appendix C2 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited)

Certifications: ISO 9001

Awards & Recognition

• 15 Years Plus Caring Company Logo
• Happy Company
• Hong Kong Green Organisation Certification – Energywi$e Certificate and Wastewi$e Certificate