Lai Si : 2019 Environmental, Social and Governance Report

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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CONTENTS

ABOUT THE GROUP	2
ABOUT THIS REPORT	3
MESSAGE FROM THE MANAGEMENT	5
GOVERNANCE STRUCTURE	6
STAKEHOLDER ENGAGEMENT	8
PEOPLE-ORIENTED COMMITMENTS	12
PURSUITS OF OUTSTANDING QUALITY	16
GREEN DEVELOPMENT	20
COMMUNITY DEVELOPMENT	24
APPENDIX: GENERAL DISCLOSURE	25
APPENDIX: KEY PERFORMANCE INDICATORS SUMMARY	27
APPENDIX: ESG REPORTING GUIDE CONTENT INDEX	30

2	LAI SI ENTERPRISE HOLDING LIMITED

ABOUT THE GROUP

Lai Si Enterprise Holding Limited ("Lai Si Enterprise" or the "Company", together with its subsidiaries, the "Group") has over 30 years of experience in the fitting-out and construction industry in Macau, mainly providing services of fitting-out works, construction works and repair and maintenance works. During the Year ended 31 December 2019, the Group completed 32 projects and was awarded 38 projects. The Group's revenue increased by 51.3% compared to the year 2018. Apart from its usual business area, the Group developed its restaurant business in October 2019 to diversify its business areas.

Due to the slowing economic growth in the first half of 2019 and the issues brought by new term of government in the second half of the same year, the Group has reduced the local construction work initiated in Macau. Meanwhile, we still hoped to expand our business into other Southeast Asian countries in 2020, establishing branches and initiating different projects. Furthermore, the development of Guangdong-HongKong-Macau Greater Bay Area ("Greater Bay Area") serves as an important opportunity for the Group. As illustrated in the "Regulations for the recognition of practising qualifications for Hong Kong and Macao construction and related engineering consultation enterprises and professionals in the Zhuhai Hengqin New Area" published in December 2019, qualified construction companies in Hong Kong and Macau can be exempted from the restrictions on qualification to bid for and undertake construction projects in Hengqin. The establishment of this guideline will facilitate the Group in participating in the development of Greater Bay Area. The Group will also further practice the principle of sustainability in the construction process and build a sustainable construction environment.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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ABOUT THIS REPORT

This is the fourth Environmental, Social and Governance Report (the "Report") published by Lai Si Enterprise. By reporting the policies, measures and performances of the Group in environmental, social and governance ("ESG") aspects, the Report fulfils the Group's commitment and allows stakeholders to better understand the progress of the Group. The Report is prepared in both Chinese and English, and is available on the website of the Stock Exchange of Hong Kong Limited ("SEHK") and the Company's website (www.lai-si.com).

REPORTING BOUNDARY

The Report reviews the Group's ESG performance during the period from 1 January 2019 to 31 December 2019 (the "Year"). In consistency with the reports published in the past, the Report covers the operations of the Group's fitting-out, alteration and addition works, construction works and repair and maintenance works in the Macau headquarters.

REPORTING STANDARDS

The Report is prepared in accordance with the Environmental, Social and Governance Reporting Guide (the "ESG Reporting Guide") contained in Appendix 27 of the Rules Governing the Listing of Securities on the SEHK. The four reporting principles (i.e. Materiality, Quantitative, Balance and Consistency) form the backbone of this Report. The reporting also draws upon selected "recommended disclosures" in the ESG Reporting Guide. To ensure the accuracy of the reporting content and key performance indicators ("KPI"), the Group commissioned a professional consultant, Carbon Care Asia ("CCA"), to conduct a carbon assessment. A complete index is included in the last section hereof for reader's reference.

4	LAI SI ENTERPRISE HOLDING LIMITED

ABOUT THIS REPORT

Reporting Principles	Definition
Materiality	F o c u s i n g o n r e p o r t i n g t h e
	ESG issues that are sufficiently
	important to the Group and its
	different stakeholders.

Applicability to this Report

The Group understood the concerns of different stakeholders about sustainable issues this Year through online questionnaire survey, from which 11 material topics were selected. The assessment process is detailed in the section on "Stakeholder Engagement".

Quantitative	Data on key performance should be
	measurable and comparable where
	appropriate.

The Group's raw data on social KPIs was provided by the statistics of relevant departments. To ensure the accuracy of environmental KPIs, carbon assessment is conducted in accordance to both local and international standards, such as Guidance for Accounting and Reporting Corporate GHG Emissions and the international standard ISO 14064-1.

Balance	The issuer should report the
	Group's ESG performance in an
	objective and authentic manner.
Consistency	Report disclosure should use
	consistent methodologies to allow
	for comparisons of ESG-related
	KPIs, so as to understand business
	performance.
OPINION AND FEEDBACK

When preparing this Report, the Group did not only focus on presenting the ESG results, but also described the difficulties encountered and solutions.

Unless otherwise specified, compilation of all data disclosed in the Report adopted the same methodologies as last year. Please refer to the section "Appendix: Key Performance Indicators Summary" for more detail.

The Group values the opinions of stakeholders. If you have any questions or suggestions regarding the content or format of the Report, please contact the Group through the following channels:

Address: Lai Si Enterprise Centre, Rua Da Ribeira Do Patane No. 54, Macau

Tel: [phone]

Fax: [phone]

Email: [e-mail]

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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MESSAGE FROM THE MANAGEMENT

Nowadays, the world has been increasingly concerned about the environmental and social issues, whereas regulating institutions have been establishing more stringent environmental and social standards on corporates' daily operation. This will impose a higher requirement for the business operation. The Group fully considers the factors of sustainable development in operation, with an ESG Concern Group being responsible for relevant issues to enhance the Group's sustainability performance comprehensively.

The construction industry is closely associated to the environmental and social issues. The Group is committed to achieving business growth while investing more resources into enhancing corporate sustainability performance. We promote green development and ensure employee safety. To date, we have been awarded with the ISO14001:2015 and OHSAS 18001:2007 system certification to recognize the Group's effective management in the environment and employees' occupational health. The Group also actively helps to improve the livelihood and education conditions of the disabled people and underprivileged students.

On the other hand, stakeholder engagement is one of the Group's important channels to practice sustainability. To further understand the comments and suggestions of stakeholders, the Group invited different external and internal stakeholders to participate in various engagement activities this Year. We also commissioned an independent external consultant to conduct materiality assessment and analysis of the engagement results. According to the results, stakeholders were most concerned with issues in the subject areas of employment and labour practices as well as operating practices, among which employment and anti-corruption are the most material issues in their subject areas. In terms of the employment system, the Group has formulated a series of policies to protect labour rights of employees. In terms of anti-corruption, the Group encourages employees to report corruption cases on reasonable grounds to the Human Resources and Administration Department or Directors of the Board.

In future, the Group will continue to integrate the mission of sustainable development into the business system and incorporate the policies on climate change and sustainable development goals into our action plan, so as to fulfil the requirements of the regulating institutions and optimize the Group's environmental and social management system.

Lai Si Enterprise Holding Limited

Chief Executive officer and Executive Director

Lai Meng San

6	LAI SI ENTERPRISE HOLDING LIMITED

GOVERNANCE STRUCTURE

The Board is responsible for maintaining effective risk management and internal control systems in Lai Si Enterprise. During the Year, the Board engaged the Audit Committee and an external independent consultant to conduct a review of the effectiveness and adequacy of the risk management and internal control systems and confirmed that the relevant systems have been put in place effectively. The Audit Committee is also responsible for reporting important findings related to risk management and internal control issues to the Board, as well as suggesting solutions.

ESG RISK MANAGEMENT

The Company has established risk management procedures to identify, assess and manage significant risks. The Board and senior management team conducted risk assessment, taking into account the severity of impacts on the Company's business performance brought by the risk and the probability of the risk. Based on the results of risk assessment, the Company should manage risks in the following ways:

1. Risk elimination: the senior management of the Company implements certain business alternations and monitoring measures to eliminate the risk completely;
2. Risk reduction: the senior management of the Company implements a risk reduction plan to lower the possibility, rate and severity of the risk to an acceptable level; and
3. Risk maintenance: in the circumstances that the senior management of the Company confirm the low rating of the risk, and that the risk is at an acceptable level of the Company when no mitigation measures are necessary, the Company should continue monitoring the risk as part of the risk management plan and prevent the risk from escalating to an unacceptable level.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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GOVERNANCE STRUCTURE

This Year, the Company identified the following sustainability risks through the risk management procedures and formulated corresponding measures.

Types of risks	Risk description
Industrial safety risk	Some workers lack awareness on labour
	safety and knowledge about labour
	ordinances. They are also unwilling to
	comply with the guidelines in the ordinances
	and guidance of safety managers, causing
	risks of non-compliance with laws and
	loopholes in industrial safety control.
	Some workers ignore the safety regulations
	and guidance as they speed up the
	construction progress, which increases the
	risk of industrial accidents.
Human resources risk	It may be difficult to employ professional
	management and operation staff, such as
	designer, surveyor and technical foreign
	workers.

Corresponding measures

The Group appoints safety officers to conduct Toolbox Talk Training at construction sites regularly. All construction workers are required to attend and receive the training. Furthermore, the Group also puts up posters to raise awareness on construction sites safety.

E m p l o y e e p e r f o r m a n c e a s s e s s m e n t is conducted annually to assist the management or department heads to assess the performance of employees and allow employees to understand the Group's level of satisfaction with their work performance. T h e a s s e s s m e n t c a n e n h a n c e t h e communication between the management staff and the employees, reducing the staff turnover rate.

The responsible unit fails to estimate the number of workers accurately, which affects the construction progress and increases labour cost.

Labour ordinances risk Accelerating construction process may exploit the employees' rights on normal rest days.

The management staff communicates closely with clients about the progress to arrange and deploy the number of construction workers needed in each construction site.

The management staff communicates closely with clients about the progress to arrange and deploy the number of construction workers needed in each construction site. Furthermore, in accordance with the actual situation, the Group employs additional construction workers or outsources some work to contractors.

8	LAI SI ENTERPRISE HOLDING LIMITED

STAKEHOLDER ENGAGEMENT

The Group constantly values stakeholder1 engagement. In the Year, the Group organized different activities to understand stakeholders' comments and suggestions on the Group's sustainable development. The Group believes that stakeholder engagement can help identify different risks and opportunities in sustainability, facilitating the Group to formulate more comprehensive management policies and measures.

There were no significant changes in the Group's business and ESG-related policies in the Year, so the Group adopted the previous form of stakeholder engagement. The detail was illustrated as follows.

Internal stakeholders		External stakeholders
Employees	Customers	Suppliers	Communities
Establish an employee	Handle customer	Inform suppliers of the	Support the community
engagement system to	feedback in a timely	Group's environmental	development through
understand the comments	manner to enhance	and social standards	participating in
and suggestions of employees.	customer satisfaction.	through the supplier	voluntary services and
Engage employees through	The Group will	selection and assessment	making charitable
emails and regular meetings in	invite customers to	mechanism.	donations. Enable
day-to-day operations.	complete the customer		the community to
	satisfaction survey.		understand the Group's
			development through
			the company website.

1"Stakeholders", also known as "interested parties", refers to groups or individuals who have a significant influence on the Group's business, or those who are materially affected by the Group's business, including the internal Board, management team, administrative and general staff, as well as external shareholders, business partners, clients, government and regulatory authorities, banks and investors, community organizations, etc.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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STAKEHOLDER ENGAGEMENT

MATERIAL SUSTAINABILITY ISSUES

This year, to understand stakeholders' awareness and vision on ESG, the Group appointed an independent consultancy CCA to conduct a materiality assessment through a survey. The survey invited both internal and external stakeholders to give ratings to different issues of four subject areas, namely environmental protection, employment and labour practices, operating practices and community investment, so as to understand stakeholders' level of concerns on various issues. Through analyzing the survey results, the Group has identified 11 material issues from the 22 relevant issues (see the top right area above the curve in the diagram below).

Lai Si's Materiality Matrix

Importance to Stakeholders

Lai Si's Impact on Environment, Social and Governance

10	LAI SI ENTERPRISE HOLDING LIMITED

STAKEHOLDER ENGAGEMENT

Among the 11 identified material issues, detail was as follows (arranged according to the descending order of importance):

Issues

Subject Areas

1. Lai Si Enterprise establishes a comprehensive employment system to inform employees of the employment arrangements (including recruitment and promotion procedures, compensation and dismissal system, working hours and holidays)

1. Lai Si Enterprise identifies corresponding risks of occupational diseases and adopts suitable measures to ensure the occupational safety of employees, contractors

and sub-contractors in their daily work (for instance, provide suitable personal	Employment and
protective equipment, organise safety trainings, and formulate emergency planning	labour practices
system)

1. Lai Si Enterprise offers an equal and diverse employment environment and avoids workplace discrimination or sexual harassment behaviour (for example, employ employees of different ethnicities and religions; establish suitable engagement channels to reflect improper behaviours)

1. Lai Si Enterprise establishes precautionary measures and internal monitoring system to prevent corruption, bribery, extortion, fraudulence, money laundering,

etc.		Operating practices
18)	Lai Si Enterprise protects clients' interests (such as clients' personal information
and privacy).
13)	Lai Si Enterprise adopts measures to prevent forced labour (such as to ensure all
employees are voluntary labour, cannot mandate employees to work outside normal	Employment and
working hours, conduct spot checks to ensure that there are no cases of forced	labour practices
labour)
5) Lai Si Enterprise implements natural environment protection measures, such
as to establish standards for the procurement of fitting-out materials and to select	Environmental
construction materials that bring less impact to the ecological environment and	protection
biodiversity.
20)	Lai Si Enterprise establishes anti-corruption reporting channels and mechanism.	Operating practices
10)	Lai Si Enterprise offers activities which enhance employee wellness and reduce	Employment and
their stress at work (such as psychological counselling, team building activities,
labour practices
health checks, etc.)
14)	Lai Si Enterprise analyzes the environmental and social risks in the supply
chain and identifies high risk areas (such as waste disposal by suppliers; intellectual
property rights or integrity policies of suppliers, etc.)	Operating practices
17)	Lai Si Enterprise is accountable for the products and services they provide

(such as promoting the construction quality standard monitoring and control, and establishing customer feedback system).

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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STAKEHOLDER ENGAGEMENT

Other 11 non-material issues are arranged according to the descending order of importance as follows:

Issue	Scope
11) Lai Si Enterprise provides trainings for employees.	Employment and
	labour ordinances
15) Lai Si Enterprise incorporates the environmental and social indicators as one of	Operating practices
the standards in its tender for products and services supplier.
12) Lai Si Enterprise adopts measures to prevent child labour.	Employment and
	labour ordinances
16) Lai Si Enterprise protects intellectual property rights.	Operating practices
21) Lai Si Enterprise understands the needs of the communities where it operates to
ensure that its business will consider community interests.	Community investment
22) Lai Si Enterprise invests resources in different aspects to promote community
development.
6) Lai Si Enterprise conducts risk assessment and formulates preventive and
mitigation measures to reduce the business risks brought by climate change.
1) Lai Si Enterprise manages and monitors the emissions of air pollutants and
greenhouse gases, as well as implements energy-saving and carbon reduction policies	Environmental
locally.
protection
4) Lai Si Enterprise adopts measures to enhance energy efficiency.
3) Lai Si Enterprise adopts measures to use water resources efficiently.
2) Lai Si Enterprise manages and monitors wastewater discharge and waste
treatment to reduce the negative environmental impacts brought by its business.

In view of the material issues identified by stakeholders, the Group is committed to further manage them through standardized systems and comprehensive policies, which will be explained in more details in the following sections. The Group will also remain constantly concerned about the issues with temporarily lower rating. As usual, the Group will continue to establish diverse, transparent, reliable and accurate engagement channels to serve as an important backbone for the Group's ESG strategy.

12	LAI SI ENTERPRISE HOLDING LIMITED

PEOPLE-ORIENTED COMMITMENTS

The Group believes that a good employment environment is one of the important elements in achieving corporate sustainability. The Group emphasizes on creating an equal, diverse and healthy working environment for our employees, as well as to help employees establish a sound career development path, making them feel respected and motivated.

GOOD EMPLOYMENT ENVIRONMENT

The Group has formulated corresponding management systems and standards in different aspects of employment, including the Staff Handbook, Human Resources and Payroll Policy, The Management System for the Ban on Forced Labour, Management Regulations on the Ban on Using Child Labour and Underage Workers and employment contract, etc. The Group is committed to enhancing its management efficiency in different aspects of employment. The key highlights of the relevant systems were as follows.

Compensation and Dismissal

Compensation of the Group's employees is composed of basic salary and year-end bonus.

If employees have committed serious misconduct or criminal offences, the Group will dismiss the relevant employees immediately.

Recruitment

Different departments of the Group will complete the personnel requisition forms in accordance with their employment needs and submit the forms to the department heads for approval. If it falls within the headcount budget, the human resources department will be responsible for publishing recruitment advertisement, while it will also work with the relevant department to arrange interviews.

Promotion

The Group will make decisions on promotion after the end of each financial year. Department heads will assess the work performance of employees in their departments and employees who are promoted will receive a notice from the human resources department.

Rest periods

Equal opportunity and anti-discrimination Diversity

The Group offers leaves to its employees, including annual leave, sick leave, deduction leave, marriage leave, compassionate leave, etc.

The Group dedicates itself to offering equal employment opportunities to its employees and eliminating workplace discrimination, including but not limited to the following factors: disability, marital status, age, family condition, sexual orientation and race. If employees suffer from unequal treatment or discrimination, they may lodge a complaint to the relevant department.

The Group emphasizes on creating

1. diverse working environment. It established the Board Diversity Policy to encourage the recruitment of Board directors of different genders, ages, cultural and educational backgrounds. In future, the Group will practice the principle of diversity in the recruitment work of general staff.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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PEOPLE-ORIENTED COMMITMENTS

Working hours

The working hours of the Group's employees are stated clearly in the employment contract. Normally, the Group adopts the system of working 5.5 days, 44 hours per week.

Prevent misusing child labour

The Group promises not to employ minors aged less than 15 years old. The human resources department should review the candidates' identification documents in the recruitment process strictly. If the age of the candidate has not met the standard, they should appoint personnel to send the candidate to the police station or place of residence immediately.

Prevent forced labour

The Group encourages all employees to work voluntarily. Any departments or individuals are prohibited from receiving collaterals in cash or in kind from new employees in the recruitment process. They are also not allowed to detain their identification documents to coerce them into working.

ENHANCEMENT OF HEALTH AND SAFETY

As a construction company, employees' health and safety at workplace is always the focus of the Group's work. The Group hopes to standardize safety management measures and reduce occupational risks faced by employees at work through systematic work procedures. Currently, the Group has developed policies such as the Industrial Safety Management Policy, Inhouse OSH Guidelines and Personal Protective Equipment Working Instruction, etc. The Group has also achieved the OHSAS 18001:2007 system certification.

14	LAI SI ENTERPRISE HOLDING LIMITED

PEOPLE-ORIENTED COMMITMENTS

Industrial Safety

Inhouse OSH Guidelines

Management Policy

Personal Protective Equipment

Working Instruction

The Group will invite an independent third-party institution to conduct a corporate safety audit and monitor the safety performance of different construction sites. Furthermore, to raise the safety awareness

of all employees working at construction sites, the Group also organizes safety training workshops regularly, such as basic safety knowledge and site safety practice, etc.

Once employees are found injured at work, they should be sent to hospital for treatment immediately. At the same time, safety supervisors should also begin investigation and prepare

1. Work-RelatedAccident Report to be submitted to the Labour Affairs Bureau.

The Group has clearly outlined the responses towards the potential safety risks at work in the policy, such as,

• all employees should wear a safety helmet when entering construction sites;
• wear safety harnesses whenever working at height or on the ground;
• prohibited to drink alcoholic drinks at workplace; and
• sufficient first aid supplies should be available at construction sites or offices

The Group has provided different personal protective equipment for employees working at construction sites and explained clearly the uses of different equipment.

• Goggles: employees should wear them when handling chemicals or carrying out welding work;
• Earplugs/earmuffs: it is mandatory for employees to wear hearing protectors when the equivalent sound level exceeds 85dBA; and
• Gloves: employees should wear gloves when carrying out dissembling works, operating machines or engaging in dangerous work.

During the Year, there were a total of four cases of work-related injuries in the Group. All the injured employees were sent to hospital immediately for diagnosis and treatment and were settled properly in accordance with relevant regulations. Currently, all employees have recovered and returned to work.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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PEOPLE-ORIENTED COMMITMENTS

PROVISION OF DEVELOPMENT AND TRAINING OPPORTUNITIES

The Group understands that enhancement of employees' job skills can help them widen their future career development path. In view of this, the Group has developed the Integrated Management System Handbook to outline the detailed guidelines for employee training. The training activities of this Year were as follows.

During the year, the Group has provided occupational safety and health

Training activities training programme, anti-money laundering course and Integrated Management Systems Internal Auditor Course to its staff.

The Group conducts a staff performance review annually, the result

Performance review of the review is used as the basis for future promotion, transfer and training.

The details of the composition of trained employees in the Group this Year were as follows.

The total number and percentage

of employees trained by

employee category

2.4% 1.2%

3.5%

The percentage of trained employees

47.89%

119.69%	53.31%	C-level executives	Senior management
		Middle management	General employees
		The total number and percentage of
		employees trained by gender
Trained Staff	Untrained staff
		17.32%	36.68%

Male

Female

16	LAI SI ENTERPRISE HOLDING LIMITED

PURSUITS OF OUTSTANDING QUALITY

The Group maintains business ethics and corporate brand through supply chain management, enhancement of construction quality and implementation of anti-corruption measures in its operations. To regulate operational behaviour, the Group has formulated a list of measures.

INTEGRITY IN CONDUCTING BUSINESSES

Sustainable corporate development should prohibit any forms of corruption. The Group has developed the Staff Handbook to honour the commitment of anti-corruption. All employees are abided by the Staff Handbook to prevent legalising unlawful gains for anti-money laundering. For any enquiries regarding the financial resources, employees can raise concerns to the Chief Financial Officer for a prompt follow-up. While handling the relationship with customers and suppliers, employees are prohibited from soliciting or accepting any advantages, including but not limited to money, loans, gifts or other benefits. Employees can report to the Human Resources and Administrative Department or the Directors of the Board for any complaints about corrupt behaviours. The Group promises to carry out prompt and fair investigation and seek suitable legal advice. During the year, the Group has provided anti-money laundering courses to clerks and procurement engineering staff to help them enhance the awareness of anti-corruption.

SUPPLY CHAIN MANAGEMENT

As a corporate working on building construction, assessment and selection of supply chain on construction raw materials is an important concern to the Group's business. The Group gives priority to suppliers who comply with the Group's environmental and social standards. To ensure the effectiveness of supply chain management, the Group has formulated the Subcontractor Working Guideline and the Procedure on Management System.

Suppliers of the Group are mainly companies providing construction materials, equipment and services. Staff of the administrative and procurement department are responsible for collecting relevant purchasing information and preparing document for the General Manager's and the Board's approvals. In addition, the General Manager is responsible for assessing the suppliers and completing the Supplier Assessment Record, and carrying out site inspection when necessary.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

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PURSUITS OF OUTSTANDING QUALITY

The Group's environmental and social supplier assessment standards are summarised below:

	•	Prohibited from supplying any material, product or service which fails to
		comply with applicable environmental laws and regulations;
Environmental	•	Avoid supplying products containing hazardous or toxic substances;
•	Comply with environmental laws and regulations related to the products
		provided; and
	•	Gives priority to suppliers who achieved ISO14001 system certification.
	•	Anyone employed by building construction subcontractors should bring along
		the "Construction Industry Safety Training Certificate" with them during
Social		work;
	•	Wear eye protectors when carrying out metal welding or cutting works; and
	•	Give priority to suppliers who achieved OHSAS18001 system certification.

PRODUCT RESPONSIBILITY MAINTENANCE

Product safety and quality assurance

The Group attaches importance to providing safe and efficient services to all customers. Through a sound operating system, the Group is able to execute the commitment to product safety and quality, and to formulate emergency measures.

To ensure the safety and quality of products and services, the Quality Assurance Plan has listed the responsibilities of various personnel and teams.

18	LAI SI ENTERPRISE HOLDING LIMITED

PURSUITS OF OUTSTANDING QUALITY

Position

Responsibilities

Communicate with project manager and foreman regularly and solve any

Project Director controversial issues during construction. Also, monitor and assess the safety issues on site with the safety officer.

	•	Arrange and monitor daily construction progress and guide the working team
		to finish the construction project with respect to the contract's requirements
		on quality and quantity;
Project Manager	•	Compile quality management system document and mandate the working team
		to carry out the construction project with respect to the document; and
	•	Address any non-compliance construction methods and implement follow-up
		measures.
	•	Complete conventional checking after construction to ensure the construction
Project Coordinator		project is in accordance with the contract, construction drawings and relevant
	laws and regulations; and
	•	Identify and record quality issues.
	•	Assess on-site safety regularly;
Safety Officer	•	Provide on-site safety trainings; and
•	Manage on-site safety control documents and ensure the construction is in
		accordance with the safety standards.

As stipulated in the Incident, Non-Conformity Control and Integrated Management System Policy (Quality Policy), person in charge should record, label, return or rectify the non-conformingproducts found during the construction or after the raw material assessment in a timely manner. All non-conformingproducts or services should be reassessed by related personnel after rectification.

Customer Privacy

The Group's Staff Handbook stipulates that all suppliers' and customers' information, including but not limited to contacts and contract terms, are regarded as confidential. All employees are prohibited from disclosing confidential information to any third parties.

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PURSUITS OF OUTSTANDING QUALITY

Customer Complaints

Any mistakes at work resulting in customer dissatisfaction should be handed to relevant department heads for investigation and formulation of corrective measures. And at the same time, reasonable explanations should be given to the customer within prescribed period with record kept.

Rights to Intellectual Property

The Group understands the importance of intellectual property rights and prohibits unauthorised disclosure of information protected by intellectual property rights, including drawings, to any third party. In addition, employees of the Group should not carry out any conducts which may infringe others' intellectual property rights.

Since the Group's businesses at present are not involved with product labelling and advertising, no relevant policies have been established. The Group will formulate relevant policies with regard to the actual situation in future.

20	LAI SI ENTERPRISE HOLDING LIMITED

GREEN DEVELOPMENT

Environmental sustainability is an important aspect in fulfilling corporate social responsibility for the Group. The Group has formulated the Operating Procedures for Internal Environmental Regulations, the Procedures to Identify Environmental Factors and the Integrated Management System Policy to avoid and eliminate environmental risks and impacts from business operations.

EMISSIONS MANAGEMENT

Air Emissions

The construction projects of the Group will produce a certain amount of dust. To this end, the Group has implemented different measures to prevent further air pollution.

• For storage of over 20 bags of cement, they shall be covered entirely by dustproof cloths to prevent the spread of cement particulates;
• Spray water on the surface continuously to reduce the spread of particulates produced during power- driven drilling, cutting and polishing; and
• Build a trough for collecting scarps of construction materials to prevent the spread.

Use of vehicles and welding work also produce certain amount of air pollutants. Therefore, the Group will use lead-free fuel and environment-friendly cutting equipment whenever possible.

During the Year, air pollutants of the Group mainly included nitrogen oxides, sulphur oxides and respirable suspended particulates. Compared to 2018, the emissions of nitrogen oxides, sulphur oxides and respirable suspended particulates had increased by 26.2%, 65.1% and 85.5% respectively. The rise was related to the increasing use of vehicles.

Air Pollutants	Emissions of the Year	Emissions of 2018	Unit
Nitrogen oxides	208.8	165.40	kg
Sulphur oxides	10.2	6.19	kg
Respirable suspended particulates	4.28	2.31	kg

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GREEN DEVELOPMENT

Greenhouse Gas Emissions

Greenhouse gas ("GHG") emissions is the major cause of climate change. Corporates across many countries have set up carbon reduction measures and targets. During the Year, the Group commissioned an independent consultant CCA to conduct carbon assessment to calculate GHG emissions (or "carbon emission") with reference to the Guidance for Accounting and Reporting Corporate GHG Emissions and the international standard ISO14064-1. The results were as follows:

GHG Emissions	The Year	2018	Unit
Scope 1 Direct Emissions	28.3	21.9
Scope 2 Energy Indirect Emissions	65.8	60.6	Tonne of CO2-e
Scope 3 Other Indirect Emissions	4.3	2.4
Total GHG Emissions	98.4	84.9
GHG Emissions Intensity	2.459	1.888	Tonne of CO2-e/
(by number of employee)	employee

Compared to 2018, the total GHG emissions of the Year had increased by 15.8%, while scope 1, 2 and 3 emissions had increased by 29.1%, 8.6% and 75.3% respectively.

Waste

As stipulated in the Operating Procedures for Internal Environmental Regulations, recycling bins should be placed in the office to reduce waste production and recycle or reuse as far as practicable. For the certain amount of chemical waste or general construction waste produced on site during operation, they should all be handled by certified waste collectors and the Monthly Waste Management Record should be completed. During the Year, the total non-hazardous waste generated by the Group was 0.16 tonnes, including municipal waste, debris and gravels, plastics, metals, woods, etc.

Wastewater

Due to the nature of its business, the Group did not produce a significant amount of wastewater. To prevent wastewater pollution or clogged drains, the Operating Procedures for Internal Environmental Regulations stipulates the prohibition of discharge of waste, sand, sedimentary materials and other materials harmful to the ecosystem into the wastewater.

22	LAI SI ENTERPRISE HOLDING LIMITED

GREEN DEVELOPMENT

USE OF RESOURCES

Energy Consumption

The Group's resources consumption in daily operation is abided by the Operating Procedures for Internal Environmental Regulations. The regulation stipulates that employees should switch off all electrical and electronic appliances, for instance, air conditioners, projectors, ventilation system, lights and fans, in unoccupied rooms in the office. During the operation in the construction site, the "waste prevention" principle should be upheld and different building materials should be used.

During the Year, petrol and purchased electricity were the major sources of energy consumption. The total energy consumption reached 182.2 MWh-e, which had increased by 18.9% compared to 2018. The rise was related to the increasing use of vehicles and additional acetylene consumption of the Year.

Energy Use		Consumption
The Year	2018
Acetylene (MWh-e)	6.7	-
Petrol (MWh-e)	101.0	80.9
Electricity (MWh)	74.5	72.3
Total Energy Consumption	182.2	153.2

Water

During the year, the Group was unable to obtain accurate data of total water consumption of operation sites and therefore could not disclose the data. The Group will improve the completeness of the data collection system and make more comprehensive disclosure in the coming year. The Group had no issue in sourcing water and mainly sourced water from the municipal supply.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

23

GREEN DEVELOPMENT

THE ENVIRONMENT AND NATURAL RESOURCES

The Group values environmental and natural resources protection in daily operations. The Group has already achieved ISO14001:2015 system certification.

The project manager or deputy management representative of the Group are responsible for assessing various factors to determine potential material environmental factors and completing the Register of Environmental Factors. Relevant factors include legislation, scope, severity, probability and public awareness. For any adjustment in the Group's service or product nature, the Group should promptly update the Register of Environmental Factors.

Furthermore, in accordance with the Operating Procedures for Internal Environmental Regulations, the Group is encouraged to purchase environment-friendly products in its operations, including products with environmental labels, products made by environment-friendly materials, or energy-saving and noise-reducing products.

24	LAI SI ENTERPRISE HOLDING LIMITED

COMMUNITY DEVELOPMENT

The Group understands that business growth and community support are inextricably linked. To further regulate investment behaviour, the Group has formulated the Provision on the Community Investment Management, which clearly demonstrates that the Group will actively participate in the local community's development in the area of environment, education, culture and sanitation. At the same time, the Group encourages employees to contribute to the community through participating in volunteer work and charity events.

Under the framework of the Provision on the Community Investment Management, the Group actively donated to charities during the Year, including sponsoring Walk for Millions, Macau Association of the Hearing Impaired, and The Office of Poverty Alleviation and Development in WeiNing Yi, Hui, and Miao Autonomous County, offering convenient living conditions and quality educational resources to disabled people and students. During the Year, the Group donated MOP $2,000 and CNY $20,000.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

25

APPENDIX: GENERAL DISCLOSURE

RELEVANT LAWS AND REGULATIONS COMPLIANCE SUMMARY
Scope	Relevant laws and regulations	Compliance disclosure	Impact
A1 Emissions	Law no. 2/91/M	During the Year, there	Part of the laws and
	Administrative Regulation No. 28/2004: General	was no non-compliance	regulations was updated
	Regulations Governing Public Spaces	case in relation to	this Year but the Group
	Pollution-related crimes prescribed in the Penal	emissions within the	still strictly complied.
	Code	Group.	Relevant updates have
	Decree Law no. 46/96/M		not caused any negative
	Decree Law no. 54/94/M		impacts to the Group's
			operation.
B1 Employment	Law No. 7/2008: Labour Relations Law	During the Year, there	During the Year, content
	Law No. 4/98/M: Framework Law on	was no non-compliance	about maternity leave,
	Employment Policy and Worker's Rights	case in relation to	and remuneration and
		employment within the	allowance in relevant
		Group.	laws was revised, which
			will increase the Group's
			operation cost. The
			Group will proactively
			engage with related
			employees.
B2 Health and Safety	Decree Law No. 37/89/M	During the Year, there	During the Year,
	Decree Law No. 44/91/M	was no non-compliance	relevant laws and
	Decree Law No. 40/95/M: Employees'	case in relation to health	regulations did not have
	Compensation Insurance Ordinance	and safety within the	major revision so the
		Group.	Group will continue
			to adopt the previous
			measures to reduce its
			impact.

26	LAI SI ENTERPRISE HOLDING LIMITED

APPENDIX: GENERAL DISCLOSURE

Scope	Relevant laws and regulations	Compliance disclosure	Impact
B4 Labour Standards	Law no. 7/2008: Labour Relations Law	During the Year, there	Regulations
	Law No. 4/98/M: Framework Law on	was no non-compliance	on compulsory
	Employment Policy and Worker's Rights	case in relation to labour	compensatory leave
		standards within the	and compensation were
		Group.	added to relevant laws,
			which will increase the
			Group's operation cost.
			The Group will arrange
			rotating time-off for
			employees without
			prejudice to the interests
			of the company.

B6 Product	Commercial Code	During the Year, there
Responsibility		was no non-compliance
		case in relation to
		product responsibility,
		including health and
		safety, advertising,
		labelling and privacy
		matters, within the
		Group.

During the Year, relevant laws and regulations did not have major revision so the Group will continue

to adopt the previous measures to reduce its impact.

B7 Anti-corruption	Penal Code
	The law entitled Prevention and Suppression of
	Bribery in the Private Sector

During the Year, there was no corruption litigation case against the Company or its employees within the Group and there was no non-compliance case in relation to laws and regulations that brought significant impacts to the Group.

During the Year, relevant laws and regulations did not have major revision so the Group will continue

to adopt the previous measures to reduce its impact.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

27

APPENDIX: KEY PERFORMANCE INDICATORS SUMMARY

ENVIRONMENTAL PERFORMANCE

Environmental Key Performance Indicators

Air Emission	This Year	2018	Unit
Nitrogen oxides	208.79	165.40	kg
Sulphur oxides	10.22	6.19	kg
Respirable suspended particulates	4.28	2.31	kg
GHG Emission	This Year	2018	Unit
Scope 1-Direct GHG emissions2	28.3	21.9	tonne of CO	2	-e
Scope 2-Energy indirect emissions3	65.8	60.6	tonne of CO	2	-e
Scope 3-Other indirect emissions4	4.3	2.4	tonne of CO	2	-e
Total GHG emissions (Scope 1, 2 & 3)	98.4	84.9	tonne of CO2-e
GHG intensity (by number of employees)	2.459	1.888	tonne of CO2-e/
employee
Waste	This Year	2018	Unit
Total generated hazardous waste	-	0
Hazardous waste intensity (by area)	-	0
Total generated non-hazardous waste	0.2	0.1	tonne
Non-hazardous waste intensity	0.004	0.002	tonne/employee
(by number of employees)
Energy Use	This Year	2018	Unit
Acetylene	6.7	-	MWh-e
Petrol	101.0	80.9	MWh-e
Electricity	74.5	72.3	MWh
Total energy consumption	182.2	153.2	MWh-e
Energy intensity (by number of employees)	4.554	3.405	MWh-e/employee
Water use	This Year	2018	Unit
Total water consumption	1.0	6.7	cubic metre
Water intensity (by number of employees)	0.025	0.149	cubic metre/employee
Packaging material	This Year	2018	Unit
Total packaging material used	Not applicable	Not applicable	Not applicable
Packaging material intensity (by area)	Not applicable	Not applicable	Not applicable

2

3

4

Scope - GHG emissions include emissions from fixed source combustion, mobile source combustion and oxyacetylene combustion. GHG emissions generated mainly by purchasing electricity from third parties.

GHG emissions generated mainly by business travel.

28	LAI SI ENTERPRISE HOLDING LIMITED

APPENDIX: KEY PERFORMANCE INDICATORS SUMMARY

SOCIAL PERFORMANCE
	Statistics		Number of	Number and rate	Number and rate
		employees	of new employees	of employee turnover
Gender			Male	145	81 (55.9%)	77 (53.1%)
		Female	27	11 (40.7%)	6 (22.2%)
			Below 30	18	21 (116.7%)	20 (111.1%)
Age group			30 to 40	44	19 (43.2%)	15 (34.1%)
		41 to 50	59	31 (52.5%)	29 (49.2%)
			Above 50	51	21 (41.2%)	19 (37.3%)
		C-level executives	4	-	-
Employment category	Senior management	5	-	-
Middle management	12	-	-
		General employees	151	-	-
Employment type			Full-time	172	92 (53.5%)	83 (48.3%)
		Part-time	0	0 (0)	0 (0)
		Total		172	92 (53.5%)	83 (48.3%)
				Number of work-	Lost days due	Number of
Number and rate of work-related fatalities	to work-related
related injuries	absent days
				injuries
This Year		2018	2017	4	78	314
0 (0%)		0 (0%)	0 (0%)

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

29

APPENDIX: KEY PERFORMANCE INDICATORS SUMMARY

	Statistics	Number of	Percentage of	Average
	employees trained	trained employees5	training hours6
Gender		Male	36	24.8%	0.6
	Female	17	63.0%	0.7
		C-level executives	2	50%	0.5
Employee category	Senior management	1	20%	0.2
Middle management	3	25%	0.4
		General employees	47	31.1%	0.7
	Region		Number of suppliers	Number of suppliers which
		implement relevant practices7
	Macau		173		171
	Hong Kong		41		30
	Mainland China	92		50
	Overseas		2		0

5

6

7

The percentage of employees trained is calculated by the number of a specific group of employees trained/ total number of employees in that group.

The average training hours is calculated by the total training hours of a specific group of employee/ total number of employees in the specific group.

Refers to the Group's screening standards such as the Subcontractor Working Guideline and Procedure on Management System

30	LAI SI ENTERPRISE HOLDING LIMITED

APPENDIX: ESG REPORTING GUIDE CONTENT INDEX

			Page Index/
Material Aspect	Content	Remarks
A Environmental
A1 Emissions
General Disclosure	Information on:	20, 25
	(a)	the policies; and
	(b)	compliance with relevant laws and regulations that have a significant
		impact on the issuer relating to air and greenhouse gas emissions,
		discharges into water and land, and generation of hazardous and non-
		hazardous waste.
A1.1	The types of emissions and respective emissions data.	20, 27
A1.2	Greenhouse gas emissions in total and intensity.	21, 27
A1.3	Total hazardous waste produced and intensity.	21, 27
A1.4	Total non-hazardous waste produced and intensity.	21, 27
A1.5	Description of measures to mitigate emissions and results achieved.	20, 21
A1.6	Description of how hazardous and non-hazardous wastes are handled,	21
	reduction initiatives and results achieved.
A2 Use of Resources

General Disclosure	Policies on the efficient use of resources, including energy, water and other
	raw materials.
A2.1	Direct and/or indirect energy consumption by type in total and intensity.
A2.2	Water consumption in total and intensity.
A2.3	Description of energy use efficiency initiatives and results achieved
A2.4	Description of whether there is any issue in sourcing water that is fit for
	purpose, water efficiency initiatives and results achieved.
A2.5	Total packaging material used for finished products and with reference to
	per unit produced.

A3 The Environment and Natural Resources

22

22, 27 22, 27 22 22

27

General Disclosure	Policies on minimising the issuer's significant impact on the environment
	and natural resources.
A3.1	Description of the significant impacts of activities on the environment and
	natural resources and the actions taken to manage them.

23

23

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

31

APPENDIX: ESG REPORTING GUIDE CONTENT INDEX

Material Aspect	Content
B Social
B1 Employment
General Disclosure	Information on:
	(a)	the policies; and
	(b)	compliance with relevant laws and regulations that have a significant
		impact on the issuer relating to compensation and dismissal,
		recruitment and promotion, working hours, rest periods, equal
		opportunity, diversity, anti-discrimination, and other benefits and
		welfare.
B1.1	Total workforce by gender, employment type, age group and geographical
	region.
B1.2	Employee turnover rate by gender, age group and geographical region.
B2 Health and Safety
General Disclosure	Information on:
	(a)	the policies; and
	(b)	compliance with relevant laws and regulations that have a significant
		impact on the issuer relating to providing a safe working environment
		and protecting employees from occupational hazards.
B2.1	Number and rate of work-related fatalities.
B2.2	Lost days due to work injury.
B2.3	Description of occupational health and safety measures adopted, how they
	are implemented and monitored.
B3 Development and Training
General Disclosure	Policies on improving employees' knowledge and skills for discharging
	duties at work. Description of training activities.
B3.1	The percentage of employees trained by gender and employee category.
B3.2	The average training hours completed per employee by gender and employee
	category.

Page Index/

Remarks

12, 25

28

28

13, 25

28

28

14

15

15, 29

29

32	LAI SI ENTERPRISE HOLDING LIMITED

APPENDIX: ESG REPORTING GUIDE CONTENT INDEX

Material Aspect	Content
B4 Labour Standards
General Disclosure	Information on:
	(a)	the policies; and
	(b)	compliance with relevant laws and regulations that have a significant
		impact on the issuer relating to preventing child and forced labour.
B4.1	Description of measures to review employment practices to avoid child and
	forced labour.
B4.2	Description of steps taken to eliminate such practices when discovered.
B5 Supply Chain Management
General Disclosure	Policies on managing environmental and social risks of the supply chain.
B5.1	Number of suppliers by geographical region.
B5.2	Description of practices relating to engaging suppliers, number of suppliers
	where the practices are being implemented, how they are implemented and
	monitored.
B6 Product Responsibility
General Disclosure	Information on:
	(a)	the policies; and
	(b)	compliance with relevant laws and regulations that have a significant
		impact on the issuer relating to health and safety, advertising,
		labelling and privacy matters relating to products and services
		provided and methods of redress.
B6.2	Number of products and service related complaints received and how they
	are dealt with.
B6.3	Description of practices relating to protecting intellectual property rights.
B6.4	Description of quality assurance process and product recall procedures.
B6.5	Description of consumer data protection and privacy policies, how they are
	implemented and monitored.

Page Index/

Remarks

12, 26

13

13

16

29

16-17

17-19, 26

19

19

18

18

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2019

33

APPENDIX: ESG REPORTING GUIDE CONTENT INDEX

Material Aspect	Content
B7 Anti-corruption
General Disclosure	Information on:
	(a)	the policies; and
	(b)	Compliance with relevant laws and regulations that have a significant
		impact on the issuer relating to bribery, extortion, fraud and money
		laundering.
B7.1	Number of concluded legal cases regarding corrupt practices brought against
	the issuer or its employees during the reporting period and the outcomes of
	the cases.
B7.2	Description of preventive measures and whistle-blowing procedures, how
	they are implemented and monitored.
B8 Community Investment
General Disclosure	Policies on community engagement to understand the needs of the
	communities where the issuer operates and to ensure its activities take into
	consideration the communities' interests.
B8.1	Focus areas of contribution.
B8.2	Resources contributed to the focus area.

Page Index/

Remarks

16, 26

26

16

24

24

24