Fu Yu : Sustainability Report (Fu-Yu-Sustainability-Report-2023)

Sustainability Report extracted from

16 FU YU CORPORATION LIMITED Annual Report 2022

SUSTAINABILITY REPORT

1.1 Board Statement

On behalf of the Board of Directors (the "Board") of Fu Yu Corporation Limited ("Fu Yu" or the "Company", together with its subsidiaries, the "Group"), I am pleased to present the Sustainability Report for the financial year ended 31 December 2023 ("FY2023").

As a leading provider of vertically integrated services in the design and manufacturing of precision plastic components and commodities supply chain management services, we acknowledge the significance of measuring, monitoring, and managing the Group's performance in Economic, Environment, Social, and Governance ("EESG") factors. In our commitment to sustainability, we understand the importance of comprehending and addressing the impacts of climate change. To this end, in FY2023, we conducted the evaluation of our business operations in line with the recommendations of the Taskforce for Climate-related Financial Disclosures ("TCFD").

The Board is firmly committed to sustainable business practices, which are in line with the Group's mission to redefine the standards of precision engineering for our customers, through innovation and excellence.

In the FY2023 Sustainability Report, we continue to report on the Group's sustainability efforts on Economic Performance, Protecting the Environment, Developing Our Workforce and Practicing Good Governance. The sustainability report highlights our business principles and approach, and how we are meeting the demand for energy in an economically, environmentally and socially responsible way. While we strive to make continual progress, there are always opportunities for improvement. We will also continue to track the key commitments for each area of our sustainability strategy to ensure that we have a robust sustainability programme in place.

Fu Yu is a member of the Carbon Pricing Leadership Coalition ("CPLC") in Singapore. CPLC brings together leaders from government, private sector, academia, and civil society to share experience working with carbon pricing and to expand the evidence base for the most effective carbon pricing systems and policies.

The Group also recognises the importance of setting targets on material topics to enable us to identify areas of improvement and provide a clear direction for the Group to work towards improving our sustainability efforts. Dedicated to a Science Based Targets Initiative ("SBTi"), our organisation is developing our road map to limit global warming to 1.5 degrees Celsius ("°C"). Strengthening our sustainability disclosures would increase transparency, enhance stakeholders' trust and support their sustainability efforts.

Lastly, we wish to confirm that the Board has considered sustainability issues as part of its strategic formulation. The Board has determined and overseen the management in monitoring these material EESG factors.

On behalf of the Board

Mr Christopher Huang

Independent Non-Executive Chairman

27 March 2024

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2.1 Our Business

Fu Yu is a strategic hub for advanced precision engineering and technological expertise that has a significant history dating back to 1978. Since its inception, the Group has grown to become one of the largest manufacturers of high- precision plastic parts and moulds in Asia. Today, the Group has established a strong presence in the region with manufacturing facilities located in Singapore, Malaysia and China. The Group was listed on the Main Board of the Singapore Exchange Securities Trading Limited ("SGX-ST") on 14 June 1995.

The Group offers a One-Stop Solution to customers through its vertically integrated services to build value, enhance customer experience and build mutually beneficial long-term partnerships.

Product Design:

Fu Yu provides New Production Introduction ("NPI") and Material Selection services. Our skilled engineers collaborate with customers to propose design enhancements that optimise manufacturability and performance. In addition, we also partner with customers on transition to eco-friendly alternatives, such as low-carbon or bio-natural resins.

Tooling Design & Fabrication:

Fu Yu provides Innovative Expertise and Export Tooling services. Our team of experienced engineers leverages decades of tool-making expertise to create customised tools that improve efficiency, quality, and manufacturability. We also empower our customers by providing access to their customised moulds, with an option to purchase.

Production:

• Plastic Injection Moulding: Our expertise enables us to expertly mould molten plastic into intricately crafted products across a variety of applications and materials.
• Metal Injection Moulding: Our unique capability, suitable for producing high- precision metal components in large volumes, allows us to shape metal into intricately crafted products, delivering top-notch quality, cost-efficiency, and precision-crafted products to our customers.
• Metal Stamping: Our process of Progressive Metal Stamping, offers swift and continuous processing of precision metal components, particularly focusing on micro-stamped parts, demonstrating our commitment to efficiency and precision.

Box Build Assembly:

Fu Yu provides comprehensive Secondary Processes and Product Assembly services, tailored to support your complete box-build requirements. Our extensive range of secondary processes is designed to seamlessly integrate with your project, ensuring a complete and efficient assembly solution.

Supply Chain Solutions:

Fu Yu Supply Chain Solutions Pte Ltd, a wholly-owned subsidiary of the Company, is engaged in the business of providing supply chain management services for commodity raw materials. The primary activities involve sourcing, shipping, and supplying commodities not only within the Fu Yu Group but also to customers across the region.

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SUSTAINABILITY REPORT

3.1 About the Report

Scope of the Report

The scope of this report is inclusive of the sustainability aspects related to Fu Yu, emphasising non-financial performance and the associated management approach disclosures. The reporting period covers the timeframe from 1 January 2023 to 31 December 2023, with any exceptions specified. We have included the historical data for FY2021 and FY2022 for comparison where available. The report is strategically crafted to provide a thorough response to stakeholders' concerns regarding sustainability issues stemming from the Group's business operations, which collectively constitute 100% of the Group's revenue. This report describes the Group's commitments, goals, programmes, performance, and challenges across a broad range of global sustainability issues. It includes our headquarters in Singapore, the manufacturing entities in Singapore, Malaysia, and China and the supply chain management services entity in Singapore.

The Group's business operations include the following:

1. Fu Yu Corporation Limited ("FYC")
2. Fu Yu Supply Chain Solutions Pte Ltd ("FYSCS")
3. Classic Advantage Sdn Bhd ("CA")
4. Fu Hao Manufacturing (M) Sdn Bhd ("FHM")
5. Fu Yu Moulding & Tooling (Dongguan) Co., Ltd ("FYDG")
6. Fu Yu Moulding & Tooling (Suzhou) Co., Ltd ("FYSZ")
7. Fu Yu Moulding & Tooling (Zhuhai) Co., Ltd ("FYZH")

For a comprehensive list of entities included in this report, please refer to Appendix A.

Reporting Standards

The report is prepared in compliance with the SGX-ST Section B: Rules of the Mainboard Listing Rule 711A and 711B ("Mainboard Rules") which draws on the guidance set out by the SGX-ST Practice Note 7.6 Sustainability Reporting Guide (the "SR Guide").

In addition to complying with the relevant listing rules, this report is also meticulously crafted with reference to the Global Reporting Initiative ("GRI") Standards which is recognised as a comprehensive and globally accepted framework for sustainability reporting. Our report adheres to the GRI's principles for determining report content and ensuring report quality. This involves a thorough consideration of the Group's activities, their associated impacts, and the significant expectations and interests of our stakeholders. Please refer to Appendix B for the GRI content index.

Furthermore, this report is prepared in accordance with the recommendations of the TCFD. We have adopted a phased approach in alignment with the recommendations in SGX-ST Practice Note 7.6 Sustainability Reporting Guide, focusing on specific areas of climate-related financial disclosures in our reporting. This approach enables us to address key aspects of climate risk and opportunities within the context of our operations and business activities. Please refer to Appendix C for the TCFD content index.

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SUSTAINABILITY REPORT

Restatements

No restatements were made from the previous report.

Independent Verification

The data and information provided within the report have not been verified by an independent third party. We have relied on internal data monitoring and verification to ensure accuracy.

Sustainability Contact

The electronic version of this report can be accessed on the Company's website (https://www.fuyucorp.com/) under the section "Sustainability".

We welcome your views and feedback on our sustainability practices and reporting, please contact [e-mail].

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SUSTAINABILITY REPORT

4.1 Highlights of Achievements

Our Performance

• 32,356 MWh of electricity consumed, indicating a 4.0% decrease compared to FY2022.
• 97,986 m3 of water consumed, indicating a 14.1% decrease compared to
  FY2022.
• 4.3% reduction in hazardous waste produced.

Environment

• Zero forced labour or child labour.
• Zero workplace fatalities.
• 1:1 ratio of male and female employees.

Social

• Zero confirmed incidents of corruption.
• Zero incidents of non-compliance with environmental laws and regulations resulting in significant fines or sanctions.
• Zero incidents of non-compliance with data protection laws.

Governance

Our Business Memberships

Region	Entities	Membership
Singapore	FYC	•	Singapore Institute of Directors
		• Singapore Chinese Chamber of Commerce & Industry
		• Singapore National Employers Federation
		•	Singapore Business Federation
		• Singapore Precision Engineering and Technology Association
		•	SIMTech Innovation Factory
Malaysia	FHM	•	Federation of Malaysian Manufacturers
		• Malaysian Plastics Manufacturers Association
Malaysia	CA	•	Federation of Malaysian Manufacturers
China	FYSZ	•	Chengnan Street, Wuzhong District, Suzhou Chamber of Commerce

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SUSTAINABILITY REPORT

United Nations Development Goals ("UNSDG")

Fu Yu's support for UNSDG underscores its commitment to addressing global challenges. By aligning with these goals, we actively contribute to sustainable development efforts.

UNSDGs

How we support

We contribute to UNSDG Goal 3 - Good Health and Well-beingby prioritising the welfare of individuals within our premises through rigorous health and safety practices. Our commitment extends to emphasising the overall well-beingof our employees and fostering a workplace culture that supports physical and mental health.

We support UNSDG Goal 5 - Gender Equality by eliminating discrimination in our recruitment process and offering equitable promotion opportunities to all genders.

We contribute to the achievement of UNSDG Goal 8 - Decent Work and Economic Growth by generating economic value, resulting in the creation of high-qualityjob opportunities that offer competitive remuneration. This, in turn, supports the overall economic well-beingof our society at the national level.

We contribute to the achievement of UNSDG Goal 9 - Industry, Innovation and Infrastructure by consistently investing in innovative manufacturing methods. Our Industry

4.0 Smart Factory is equipped with cutting-edge automation which innovatively improves our production efficiency. Additionally, the integration of 3D printing and additive manufacturing technologies ensures the precise utilisation of materials, minimising waste and concurrently enhancing efficiency.

We contribute to the achievement of UNSDG Goal 12 - Responsible Consumption and Production by collaborating with both customers and suppliers, we facilitate the transition of our products to bio-basedmaterials, aiming to minimise environmental impact. Additionally, we proactively explore automation opportunities in our processes to enhance productivity and efficiency.

We contribute to UNSDG Goal 13 - Climate Action by actively mitigating climate change through initiatives such as reducing fuel and electricity consumption, investing in the installation of solar panels to harvest renewable energy, and committing to set science- based targets for a more sustainable and eco-friendly business model.

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Sustainability Task Force ("STF")

The STF is pivotal in driving sustainability initiatives throughout the organisation. It including employees from various departments, ensuring a wide- ranging perspective and expertise in driving sustainability programs.

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SUSTAINABILITY REPORT

5.1 Sustainability Strategy

Sustainability Governance Structure

Incorporating sustainability into our corporate strategy and core values is essential for attaining long-term growth. The values we generate for our stakeholders-our people, the environment, and society at large-significantly impact our financial performance. To align with our sustainability goals and values more effectively, we have established an organisational structure dedicated to advancing these initiatives.

Sustainability Steering

Committee ("SSC")

Led by the senior management team, the SSC is responsible for developing sustainability objectives and strategies, as well as managing the overall sustainability performance,

on behalf of the Board.

Board

The Board provides strategic direction and incorporates sustainability as part of the Group's strategic formulation, including the approval and management of material EESG factors.

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Material EESG Factors

Fu Yu recognises and prioritises EESG factors that are crucial to both the Group and its stakeholders. The following material factors play a significant role in shaping the Group's strategy and decision-making processes:

Economic Performance		Protecting the		Developing Our		Practising Good
		Environment		Workforce		Governance
• Direct economic	•	Energy	•	Employment and Talent	•	Anti-corruption
value generated and	•	Water		Retention	•	Environmental
distributed	•	Effluents and Waste	•	Diversity & Equal		Compliance
				Opportunity	•	Protection of
			•	Training and Education		Confidential Information
			•	Occupational Health &
				Safety
			•	Forced or Compulsory
				Labour
			•	Child Labour

Materiality Assessment Approach

In 2016, the Group initiated its inaugural formal materiality assessment to examine, prioritise, and validate the EESG issues that significantly impact business operations and are of interest to key stakeholders. This assessment process is an ongoing endeavour, with an annual review conducted using a four-step approach to ensure the continued relevance and importance of identified factors.

Upon completing the latest review, it was determined that the EESG factors reported in FY2022 retained their relevance in FY2023. The Group's materiality assessment approach for EESG factors is outlined below:

Identify Material EESG Factors

Relevant EESG factors were indentified by taking reference to

GRI Standards Materiality Principles.

Pioritise Materials EESG Factors

Relevant EESG factors are prioritised by evaluating the EESG impact, based on the importance to the Group and its stakeholders.

Integrate and Validate Materials EESG Factors

Validation of the EESG factors was conducted by the SSC and STF.

Review Materials EESG Factors

The EESG factors are continually reviewed for importance and relevance.

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SUSTAINABILITY REPORT

Stakeholder Engagement

Fu Yu diligently considers the key concerns of its stakeholders when defining the reporting context. The table below provides a concise summary of these stakeholders' primary interests and outlines our strategies for engagement with them.

Stakeholders

Investors

Customers

Engagement

Methods

• Timely updates of financial results and announcements, business developments, press releases, and other relevant disclosures via SGXNet and the Company's website
• Regular results briefing
• Annual General Meeting ("AGM")
• Extraordinary General Meeting ("EGM")
• Customer satisfaction surveys/feedback
• Regular meetings and discussions with respective Project Managers
• Business review / Quality score review
• Regular visits to customers by management
• Regular after-salesfollow-up

Frequency

• Throughout the year

• At least twice a year
• Annually
• When required
• Annually
• Throughout the year
• Annually
• Throughout the year
• Throughout the year

Key Topics of

Interest

• Sustain profitability and enhance shareholder returns
• Transparent reporting
• Sound corporate governance practices
• Active portfolio management

• Delivery of affordable, quality products and services
• Compliance with environmental laws and regulations
• Responsiveness to customers' requests and feedback
• Compliance with EESG material factors along the supply chain
• Protection of confidential information (includes the Personal Data Protection Act)

Responses

• Sustained growth in profit
• Periodic and transparent communication of financial and non- financial information
• Prompt response to feedback and queries

• Yearly assessment by the third- party certification body to achieve certification for the quality standards (i.e. ISO14001, ISO9001, IATF16949, ISO13485, ISCC EU)
• Project Managers respond to their customers promptly and meet their needs and quality standards
• Committed to providing the best quality promptly
• Conduct quality audits on customers' products

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