Environmental,Social and - OZNERir.ozner.net/cms/html/client/oznerwater/attachment/... ·...

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Environmental, Social and

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（於開曼群島註冊成立之有限公司）（股份代號：）

環環境境、社社會會及及

管管治治報報告告22001177管治報告2017

環環環環環境境境境境境、社社社社社會會會會會會及及及及及及及及及及及及管管管管管治治治治治治報報報報報告告告告2200001111177777777管管管管治治治治治報報報報告告告告

Contents

ABOUT THIS REPORT

ABOUT US

Message from the ChairmanCompany ProfileCorporate CultureAffiliated AssociationsMajor Awards and AccreditationStakeholder Identification and

Communication

CARE FOR THE ENVIRONMENT, SAVE ENERGY AND REDUCE CARBON EMISSIONS, AND PROMOTE THE GREEN ARTISTRY

Clean ProductionStrictly Control the Three WastesGreen OfficeResource Conservation

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3477811

13131617

CARING FOR EMPLOYEES, RESPONSIBLE FOR PRODUCTION SAFETY, AND TO BUILD A PEOPLE-ORIENTED OZNER

Employment and Talent AllocationDemocracy and Employee RightsEmployees’ Safety and HealthTraining and Staff Development

FOCUS ON PRODUCTS, PROMOTE INNOVATION, AND FACILITATE WIN-WIN COLLABORATION

Supplier ManagementProduct LiabilityAnti-corruption

CARING FOR THE COMMUNITY, BENEVOLENCE RELIEF TO THE PUBLIC, BUILDING A HARMONIOUS SOCIETY

Engage in Environmental Protection and Preserve the Nature

Immerse into the Community and Return to the Society

APPENDIX — ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTENT INDEX

20222324

272831

33

37

39

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Ozner Water International Holding Limited

About this Report

This report is an Environmental, Social and Governance (“ESG”) report issued by Ozner Water International Holdings Limited (“Ozner” or the “Company” or “Group” or “We”). This report accounts for the Group’s policies, measures and performance in protecting the environment, strengthening employer and employee relations and serving social communities for the year ended 31 December 2017.

Preparation Basis for the Report

The ESG Report is prepared in accordance with the “Environmental, Social and Governance Reporting Guidelines” contained in Appendix 27 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). During the year ended 31 December 2017, the Group has complied with the “comply or explain” provisions contained in the Environmental, Social and Governance Reporting Guidelines.

The ESG reporting data are all derived from the Group’s internal database and other relevant statistical data.

Scope of the Report

This report summarizes the Group’s efforts to implement corporate social responsibility and promote sustainable development during the period from 1 January 2017 to 31 December 2017, covering areas such as “green Ozner”, “people-oriented Ozner”, “cooperative Ozner” and “harmonious Ozner”. The entities contained in this report include the Group’s headquarters and many major subsidiaries, namely, Shanghai Haoze Water Purification Technology Development Co., Ltd., Shaanxi Haoze Environmental Technology Development Co., Ltd. (“Shaanxi Haoze”), Foshan Lepuda Motor Co., Ltd. (“Foshan Lepuda”), Shanghai Haoze Comfort Environment and Science Co., Ltd., Guangdong Bili Drinking Water Equipment Co., Ltd. (“Guangdong Bili”) and Small Dragon (Shanghai) Lease & Finance Co. Ltd..

Access to the Report

The electronic version of this report is available on the official website of the Group at www.ozner.net and the website of the Stock Exchange at www.hkexnews.hk.

This report is published in traditional Chinese and English. For any misunderstanding caused by language, the Chinese version shall prevail.

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Environmental, Social and Governance Report 2017

About Us

Message from the Chairman

The year 2017 has been the second year that Ozner undertook to publish its ESG report. We would like to take advantage of this communication platform to elaborate and report to the stakeholders on the performance of the Group in fulfilling its ESG responsibilities and are readily committed to shoulder more obligations in the future.

In the past year, we steadfastly adhered to our social responsibilities, along with creating economic values, and implemented our corporate mission of “targeting above expectation, catering to the interests of end-users, partners and all collective parties”. In 2017, we actively rolled out new policies and by means of strategic integration, we completed major acquisitions of Guangdong Bili, a leading brand and supplier of water dispensers in China’s campus and education sector, and Foshan Lepuda, a leader in micro-motor products, while accelerating the making of the ecological layout of the entire industrial chain. The acquisitions have created synergies and realized complementary comparative advantages in the use of resources, as well as to enhance long-term growth potential. Meanwhile, we will leverage on our own responsibilities and obligations, through scientific research and technological innovations, business model upgrades, among others, to be the pioneer in the industrial development and to share the results from development with the industrial peers and our collaborative partners; we will widely apply energy-saving and emission reduction technologies to achieve green production and operations; we will regard all our employees as one of our most valuable assets, to facilitate our employees to achieve both personal growth and career advancement; at the same time, the implementation of partnership as a business model has eventually begun to mature and consolidate; we primarily focus on community development, extensively to initiate public charitable activities and promotional environment-conscious education, to provide care and support for the disadvantaged sector, and to raise the environmental awareness of the general public at large.

Mr. Xiao Shu, the Chairman, Executive Director and Chief Executive Officer

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About Us (Continued)

Along with the scale-up support for environmental protection industry of the central government and the increasing public awareness on health, we are strongly convinced that domestic water purification equipment and air purifiers embrace infinite market potential. Looking into future, we will continue to seek after every emerging opportunity in the market, as well as being innovative in developing new business models, continuously optimizing on resource allocation; we will correspond to the market trend by actively participating in the market competition, while fundamentally promoting both environmental protection and social development; we also strive to provide high-quality purification products and services for more prospective customers and to create the greatest corporate values.

Company Profile

Ozner Water International Holding Limited was successfully listed on the Main Board of the Stock Exchange on 17 June 2014 (stock code: 02014.HK).

Ozner is a large-scale comprehensive environmental protection enterprise and an entity which is a congregation of technological research, production and marketing, and featured by high-technology, diversification and internationalization. The Company’s headquarter is situated at Pudong, Shanghai, the People’s Republic of China (the “PRC”) or (“China”), and its subsidiaries primarily focus on terminal-end water purification and air purification businesses.

Ozner has always been dedicated to independent and self-initiated research and development (“R&D”) and owns a R&D center for water purification products, covering nearly 1,000 square meters. Our Company has established a joint research laboratory in cooperation with the Hong Kong Polytechnic University and Zhejiang University, and has independently developed Absorbing Purification Ozone (“APO+”), a safe water purification technology in compliance with leading international standard, and featured by “Cloud Water Purification Technology” that has the function of dynamically monitoring of safe water quality and dynamically up-to-date display of consumption values of consumables and filter elements.

In 2017, Ozner adhered to the market strategy themed, “Vertical Integration, Saturation Attack”, which involves a comprehensive upgrade on products’ quality, marketing, channel selling and management. In terms of products’ technological innovation, Ozner has announced the smart water single-chip solution technology in April 2017; in terms of provision of services, Ozner has upgraded into Internet of Things (“IoT”), cloud computing platform and big data technologies; in terms of channels, Ozner has successfully accomplished three-dimensional portfolio, benefiting from both online and offline portals. We will continue to improve the smart water ecosystem, thereby, laying a consolidated foundation to enable our long-term development; in terms of management, which covers various aspects, namely, talents and institutional structure, Ozner will optimize the internal management to increase efficiency, targeting to transform into a technological management platform; in terms of capital market, Ozner has completed major acquisitions of Guangdong Bili and Foshan Lepuda; meanwhile, Ozner has achieved a considerable increase in sales regarding its existing business. All the aforesaid achievements have testified the forward-looking and appropriateness of the Group’s strategic planning.

All the major merger and acquisitions that were completed this year have carried significant implications for the Group’s ESG. Guangdong Bili, one of the leading brands on provision of campus drinking water, focuses on the implementation of artisan craftsmanship on public drinking water provision, by taking full advantages of Ozner’s unique innovative commercial operative model, technical comparative advantages and ecological service advantages in the sector of environmental water purification services. Guangdong Bili has fully integrated with Ozner’s operative system and team, to provide its customers with industry-leading smart cloud computing services. Both parties will undertake strategic and comprehensive cooperation in market channel expansion and service resource sharing, among others, while conjointly developing a new operation model in the respective ”Internet + water purification” market.

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Foshan Lepuda is endowed with global leading technology advantages in the field of micro-motors. Ozner and Foshan Lepuda will commence comprehensive strategic cooperation in areas such as environmental-friendly household appliance industry chain, supply chain, and channel resource integration, among others, as well as to speed up the layout making of the whole industrial chain ecosystem, so as to bring about win-win collaborative benefits for both parties, through boosting brand competitiveness and impact.

At the same time, not only that Ozner will singly comply with the environmental standards in production, the Company will also specially request both Guangdong Bili and Foshan Lepuda, to the greatest extent, to minimize energy consumption, to reduce emissions, and to infuse environmental friendly features into their end products through technological applications and innovation in the production process; besides, both Ozner’s service system and team will provide strong supporting service pillars for Guangdong Bili and Foshan Lepuda. The Group will leverage on the synergies between upstream and downstream partners in the industry chain in areas such as technology, R&D, management, and innovation. Ozner is committed to becoming an innovator and a pioneer in building a full industrial chain ecosystem with focus on water purification services.

Water Purification Business

Ozner has maintained a leading position in China’s water purification facility market. The Group independently developed the APO+ safety water purification technology with leading international standards, and applies ozone technology to enable water source sterilization. It, to the greatest extent, minimizes the hazardous impact of ozone on the human body along with sterilization through the application of the precise amount of ozone to control and balance the two dimensional objectives, water purification and health.

The Group develops the “Cloud Water Purification” technology to test the safety cycle of water quality and monitor the content of impurities including dissolved solids. The system dynamically traces the consumption value of consumables and filter elements that affect water quality safety, and convert the data collected into intuitive numeric information and automatically report to Ozone “Cloud Service Center” for data feedback so that users will have access to the convenient intelligent services.

Meanwhile, Ozner has steadfastly focused on R&D and innovation, along with continually releasing new patented technologies, including Black Technology-related smart water single-chips, intelligent vertical commercial direct drinking water purifiers, and intelligent water purification dishwashers.

The Group is actively promoting the transformation on sales model of water purifiers. Based on the Internet technology, Ozner Pure Home mobile application is created to enhance customer experience in an Online To Offline portal. The Group has set up a self-established direct sales service team and warehousing logistics to provide high quality and convenient water purification services. In 2017, the Group had approximately 444,000 water purification facilities installed.

Air Purification Business

The Group is committed to providing customers in the field of medical, food, electronics with air purification solutions and services, participating in projects for various medical institutions, Intensive Care Unit and aerospace engineering for more than a decade. As the earth-based purification provider of “Chang’e Flying to the Moon”, the Group provides air purification facilities and technical supports, dedicating to promote diversified development of air purification business.

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Supply Chain Business

Foshan Lepuda, acquired by our Group in 2017, is one of the world’s leading technological micro-motor manufacturers. Foshan Lepuda operates primarily in three pillar electrical industries, namely, cross-flow fans, mobile air conditioner motors and drainage pumps for central air conditioning, which have become the benchmark standard in the industry. In addition, Foshan Lepuda owned a number of core technologies; Foshan Lepuda’s products are well-received domestically and overseas, as well as winning wide acclaim in countries such as the United States, Russia, Italy, Belgium and Asia, among others. After the acquisition, the number of newly manufactured micro-motors of Foshan Lepuda has reached approximately 9,350 thousand sets.

Pioneer in Creating a Sharing Economy

With the advent of the IoT, shared water purifier, as a brand new industrial pattern and model, brings about transformation in the lifestyles of the general public. The shared water purifier is a typical and large-scale application scenario for the application of IoT, with the essence of which is the intelligentization of traditional water purifier by means of installing intelligent computer board on the traditional water purifier to materialize cloud-based network monitoring.

Ozner is currently poised at the forefront of the sharing economy with the Company’s impressive forward-looking attribute. Regarding Ozner’s products, the Company’s unique APO+ technology is ranked at the leading position in the industry. In addition, Ozner, as early as the beginning of the Group’s inception period, established a lease model that distinguished the Group from its traditional peers in water purification industry. The then lease model operates in close similarity to the current sharing economy, where the customers do not need to make immediate payment upon the purchase of the machine, instead they need to subscribe for service fees in form of installments on yearly basis. Not only that this payment model provides dealers with stable and continuous income, the Ozner “Home Service” application also provides real-time monitoring in water quality and filter condition. In case the filter has been used beyond its expiration date or failed, the cloud platform will initiate an alert signal. Ozner’s self-established after-sales service team attained perfect convergence with the Group’s customers through its application portal, complemented with mobile warehousing and other ancillary measures to comprehensively enhance the users’ experience.

The clean water ecological chain created by Ozner not only brings about the rapid growth in existing businesses, but also lays a solid foundation for the creation of a prosperous businesses in the future. As we have advocated previously, “All industries will necessarily evolve towards service orientation in the future”.

ESG Responsibilities

As one of the industrial leading brands, Ozner is persistent in undertaking the obligations in aspects such as environment, product quality and social responsibility.

During the process of production, the Group has always given high regard to environmental protection and safety. It will also continue, with stepped-up effort, to develop the Company into a proactive contributor in the field of environmental protection and safety in the industry.

The Group adheres to the fulfillment of the responsibilities and commitments to the society and community, develops an feasible growth channel for the employees, as well as refinement on training, assessment and rewards and punishment mechanism. In addition, the Group is committed to public welfare practices, through taking an active role in protecting the source of the Yangtze River, and participating in community services, amongst other charitable activities.

Please refer to the Annual Report 2017 of Ozner for more about its business operation and financial situation:

http://ir.ozner.net/s/ir_report.php

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Corporate Culture

Prompt to speak and ready to act;Quantitative directives and quantitative report;Quality service is crucial for success;Operators of subsequent production stage are customers for previous;The one who takes charge shall bear the responsibility;The one who shoulders responsibility shall be in charge.

Corporate Values

Surpass expectation, and stay focus:maximize customer’s interests,partner’s interests,collective interests.

Enterprise Mission

Environmentally friendly science and technology and humanity united hand in hand

Affiliated Associations

January 2017

Ozner was elected as the deputy president of the China International Science and Technology Institute for Promoting Water and Air Purification Technology

June 2016

Ozner was elected as the managing unit in Water Purification Committee of Membrane Industry Association of China

March 2014

Ozner was elected as the vice managing director unit in the China Association for Air and Water Purification Equipment Quality Inspection

2009

Ozner was awarded the deputy director’s unit of Water Appliances Professional Committee of Shanghai Household Electric Appliance Professional Association

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Major Awards and Accreditation

2017 China’s Top 10 Water Purification Enterprises 2017 Most Entrusted Brand for Parents

2017 Most Preferred Supplier in Green Building of National 100 selected Hospitals in Water Purification Sector

2017 Investors’ Power Picks in Water Purification and Air Purification Sectors

2017 Leading Brand in China’s Water Quality Industry 2017 Most Valuable Investment Award2017 Business Model Leadership Award

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“2017 Most Influential Brand in National Water Purification/Air Purification Industry” of Jinding Prize Section; “Most Innovative Product in National Water Purification Industry”, “Best-selling Brand in the

National Air Purification Industry”, among others

2017 Thales Certificate of Product Excellence Awards 2017 Distinguished Employer

2017 Product Innovation Award Water Purifier of the Year 2017 of Zhixing Prize Selection

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Leading Brand in Commercial Water Purification Sector Excellent and Influential Brand

2017 Guangdong’s Star Enterprise Satisfactory Service Award

Comparative Advantageous Benchmarked Enterprises in Guangdong Water Purification Industry

2017 “Synchronizing with the World and Western Networking - CFCE Empowered Enterprise Award

2017 Top 100 Enterprises on Small Household Electrical Appliances

2017 Entrusted Quality Brand

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Stakeholder Identification and Communication

The Group, based on the business nature and operation features, identifies its major stakeholders as government/regulatory authorities, shareholders/investors, employees, customers, suppliers/collaborative partners, creditors and community/the public; the Group, through collecting various feedbacks, acknowledges its shareholders’ expectations, and implements social responsibilities undertaking in a way that balances the interests of the Group and its stakeholders.

Stakeholders Major Objectives Communication Method

Government/regulatory authorities

Legal and regulatory complianceTax ComplianceBusiness and economic developmentSocial contributionEnvironmental Protection Awareness and

Green Operations

Compliance report and information disclosureEmployment of external intermediary institutions to

provide professional servicesVoluntary tax complianceResponse to national policiesActive communication and negotiation with the

government

Shareholders/investors Protection of rights and interests of shareholders

Satisfactory returns on investmentInformation disclosureCompliance operation and management

General meeting of shareholders and the articles of association

Press releases and public announcementsTimely disclosure on operation informationMaintain good and mutual trustworthy relationship

with investors

Employees Protection of rights and interests of employees

Diversified career development Wages and welfareEqual employment opportunityOccupational health and safetyDemocratic management and humanitarian

care

Labour contract360-degree performance assessment mechanismEstablishment of labour union for enhanced

communicationRefinement on remuneration systemOpen recruitmentFound Ozner College to facilitate training and

educationOrganize culture and sports events, help the

employees in need

Customers Product and service qualityCustomer health and safetyInformation transparencyPrivacy protectionCustomer feedback

Daily operation and interactionProduct quality controlInformation disclosureInformationization and refinement of after-sales

service systemEffective channels for complaints, opinions and

feedback

Suppliers/Collaborative Partners

Integrous ImplementationQuality firstShared resourcesMutual growth and developmentWin-win cooperation

Long-term strategic cooperationProcurement quality controlResponsible procurement and integrous procurement

provided with regular inspectionTo provide fair and just procurement guidanceManagement-level visits and business training

Creditors Integrity and fulfillment of promisesControl for operation risk

Regular negotiationProceed with due diligence investigation

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Stakeholders Major Objectives Communication Method

Community/the public Eco-friendly and going greenCommunity public welfare and charitiesPromote development of public services in

communities

Long-term environmental protection projectsHumanitarian donation and benevolent disaster reliefTo publish popular science readings and promote the

motto of environmental friendliness and public welfare

Promote Social investments such as introduction of water purifiers into schools

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Care for the Environment,Save Energy and Reduce Carbon Emissions,

and Promote the Green ArtistryClean Production

The production process itself has always been a contributing factor that causes negative impact on the environment. In the production process, we will invariably consume energy such as electricity and water. We shoulder the corporate mission of “Environmental friendly, science and technology and humanity unified hand in hand”. We have persistently adhered to the principle of using the least resources to complete the obligatory production tasks, vigorously promoted the goal of “energy saving, consumption economy, pollution reduction, and efficiency enhancement” and endeavoured to reduce the negative environmental impact from daily production activities. While complying with the “Energy Conservation and Emission Reduction Management Measures”, “Ambient Air Quality Standards”, and “Integrated Emission Standards for Air Pollutants”, and other related laws and regulations, we attach great importance to the management of emissions during the operative procedures and shift our focus regarding pollution control from end-of-pipe pollution control towards whole process control, so as to minimize both the production and emission of pollutants, thereby, reducing their respective negative impact on the environment and employees.

Clean Technology

The Group adopts relatively high-level automatic production and assembling technologies, including whole machine assembling, molding, fusion welding, silk screening, amongst others. Meanwhile, the Group adopts high intelligent gas detection and inspection technology, and implements pollution control over the whole process of production to reduce emission of pollutants and to ensure the high pass rates of end products.

Utilization of Clean Energy

The Group indirectly discharges greenhouse gases into the air. Electricity is regarded as the primary resources consumed in the Group’s production process. Compared with coals, electrical energy is considered as a kind of clean energy and generates less emission, so it causes less pollutants to the air.

Strictly Control the Three Wastes

The Group highly regards reducing waste discharge as one of the most important tasks in undertaking its corporate commitment to environmental protection. The Group has continuously strived to minimize the impact of emissions on the environment, society, and the livelihood of residents in vicinity through strengthening employees’ awareness of environmental protection and integrating ever-advancing technology and management methods. The Group has always placed great emphasis on the management of emissions from pollutants and waste discharged during its operations. While strictly abode by relevant laws and regulations, the Group formulated the “Administrative Measures for Energy Conservation and Emission Reduction”.

The waste and noise pollution generated during all the different stages of production process for Shaanxi Haoze, the acquired Guangdong Bili and Foshan Lepuda have been analyzed, with the primary concern on the analysis on the sources of pollution. The Group will strictly comply with the environmental assessment requirements to implement preventive measures so as to lower pollution and its impact on the residents in neighbourhood. As no hazardous waste has been generated from its business operation, the Group has not established relevant rules and regulations. As for non-hazardous wastes, the Group takes precautionary measures that begins from the source, and embarks on various recycling activities while the wastes collected will be centrally processed. This is the second year that our Group has released the ESG report. During the year, we steadfastly controlled and began to record the emission level of non-hazardous waste, so as to materialize classified collection of waste, as well as waste disposal in compliance with regulations.

Shaanxi Haoze undertook an environmental assessment in August 2017. According to the environmental monitoring report released by the Qianxian County Environmental Monitoring Station, the chemical oxygen demand and ammonia nitrogen in the wastewater from Shaanxi Haoze are in compliance with the “Integrated Wastewater Discharge Standard for the Yellow River Basin (Shaanxi Section)” (DB61/224–2011), secondary standard in Table 2.

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Care for the Environment,

Save Energy and Reduce Carbon Emissions,

and Promote the Green Artistry (Continued)

Guangdong Bili undertook to monitor the amount of pollutant emissions during the Company’s operation in February 2017. According to the environmental monitoring report issued by Guangzhou Zhongzheng Environmental Monitoring Service Co., Ltd., the monitoring program of Guangdong Bili’s Volatility Organic Compounds (“VOCs”) from exhaust stream complies with the Guangdong Province’s “Emission Standard of Volatile Organic Compounds for Furniture Manufacturing Operations“ (DB 44/814-2010), Phase II standard.

Foshan Lepuda undertook to monitor the amount of pollutant emissions during the Company’s operation in March 2017. According to the environmental monitoring report issued by Hainan Shenhongya Environmental Protection Technology Co., Ltd., a small amount of VOCs will be produced during the manufacturing procedures such as injection molding, filling in sealant and applying anti-rust paint. Such emissions level can meet the emission standards for “Maximum Depth Limit of Air Pollutant Emission in Guangdong Province” (DB44/27–2001), the second phase of emission standard for various emissions, and therefore they only carry insignificant impact on the surrounding atmospheric environment.

Category of Emissions Sources of Pollution Prevention and Controlling Measures

Exhaust Gas Direct emission: small volume of discharge (the undergoing water purifier production process is assembling, no greenhouse gas emissions found; electrical motor production releases small volume of VOCs

Indirect emission: mainly due to consumption of purchased electricity

• Improve energy usage efficiency and strictly control power consumption

Waste Water Rainwater Wastewater in employees’ living quarters

• Separation of rainwater and waste, where the processed rainwater will be discharged into the nearby water drain through the rain rill in the water treatment plant

• Domestic wastewater will be pretreated in the grease trap and anaerobic tank before discharged into the sewage treatment plant through the municipal sewage pipe network; the domestic wastewater after treatment meets the inflow water quality requirements of sewage treatment plant

Solid Waste Domestic wastes: plastic bags, waste paper, etc.

Production wastes: scrap materials and packaging boxes

• Municipal solid waste such as office waste is sent to designated locations of the environmental hygiene department for proper disposal; catering residues generated in kitchens and restaurants, in accordance with regulations, are provided with covered collection bins and swill buckets, and are subject to removal and disposal

• The plant will recycle the scrap from the production process as much as possible to avoid wasting resources; defective products will be returned to the supplier, and the rest will be collected for centralized removal and disposal

• Sign waste recycling service contract with a third-party recycling company for proper treatment of waste disposal, which in turn will either be recycled or reserved for secondary use

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Category of Emissions Sources of Pollution Prevention and Controlling Measures

Noise Noise from equipment: equipment noise in the plant, such as noise caused by belt transportation system, packaging equipment, air compressor, and forklift, etc. Noise Pollution from logistics

• Adoption of low-noise assembling, transportation, and cutting equipment

• Sound absorption treatment at the ceiling and on the plant wall

• Installation of sound proof window and sound proof door, and installation of in-wall sound absorption facility in the machine room

• Compliance with traffic laws and regulations, prohibiting vehicle horning in urban areas or dense populated area, reducing noise pollution from logistics

Other Emissions Cooking fumes • Installation of oil fume purifier, and then discharge of the cooking fumes through specialized flue above the roof level

• Utilization of clean energy to reduce the negative impact on the environment

Emission Data for Ozner and Guangdong Bili

Greenhouse gasesFor the year ended31 December 2017

Range 1 (vehicle fuel consumption) Kg* 290,225.72Range 2 (electricity purchased) Kg* 3,756,204.10

Total 4,046,429.82

Density (for each 1 kg/unit, calculated in accordance with the number of installed water purification machines in the current year) 9.11

WasteFor the year ended31 December 2017

Total hazardous waste NilTotal non-hazardous waste Ton 19.3

Density ( for each 1 ton/unit, calculated in accordance with the number of installed water purification machines in the current year) 0.000043

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Emission Data for Foshan Lepuda

Greenhouse gasesFor the year ended31 December 2017

Range 1 (vehicle fuel consumption) Kg* 91,039.49Range 2 (electricity purchased) Kg* 1,484,560.98

Total 1,575,600.47

Density (for each 1 kg/unit, calculated in accordance with the number of manufactured micro-motors after acquisition) 0.17

WasteFor the year ended31 December 2017

Total hazardous waste Nil

Total non-hazardous waste Ton 13.35

Density (for each 1 ton/unit, calculated in accordance with the number of manufactured micro-motors after acquisition) 0.000001

* calculated in accordance with “Environmental, Social and Governance Reporting Guidelines”

Green Office

The Group realizes sustainable development by continuously promoting the application of energy-efficient technologies and minimizing the energy consumption in the production and operation process. The Group also organizes training courses to enhance employees’ awareness of environmental protection, advocates “Green Office”, and strives to reduce the impact of management and operation of the Group on the environment. Most of the Group’s employees, play a fair role in environmental protection, support the “Green Office” initiative by practising it in their daily routine works. The Group recognizes that it can only improve its performance in environmental protection by applying quantitative data and conducting thorough analysis of the impact of business operation on the environment.

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Resource Conservation

The sources of water adopted by the Group were acquired through legitimate means. In the process of seeking applicable water sources, the Group has not encountered any problems. The Group strictly complies with the policies and regulations on resource conservation and actively responds to government-led environmental protection and resource conservation measures. The Group’s major types of energy consumption includes:

The Group is committed to incorporating environmental friendly features into traditional water purification technologies so as to bring technological innovations to the water purification industry. In April 2017, Ozner introduced a new domestic water purifier equipped with innovative and integrated water chip design. The unique feature of this chip is that it saves more than 80% uses of waterway connectors and PE water pipes and can greatly reduce the risk of water leakage.

Powering off before close of business

Encouraginglow-carbon travelling

Setting air-conditioner at justifable temperature

level

Sensible using of water dispenser

Green office environment

Attentive to energy mode of computer-in-use

Advocating paperless office

Garbage classification

Using energy-efficient lamps

Economizing onoffice supplies

Using single-row of lightsin the plant zone

Using power-save-mode for copying machine

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Since April 2014, the Group has gradually adopted nitrogen and hydrogen gas detection method instead of traditional water testing method for product testing. The new method offers higher efficiency and accuracy level, no test residue produced in the process and reduces water consumption, and is, therefore, more conducive to water conservation and user experience improvement. It is expected that in the near future nitrogen and hydrogen gas detection method will entirely replace other water testing method.

In 2017, the two acquired companies by the Group, Guangdong Bili and Foshan Lepuda, are both committed to incorporating environmental friendly features into production technologies and products, among which, Guangdong Bili’s patented RO water-saving technology can recover 100% of the wastewater discharged by the motors, and the patented dual-energy progressive re-heating technology for water boilers can effectively save electricity by 54.8%. Foshan Lepuda’s special design on the motor pump body allows a noise reduction by 2 to 3dB in comparison to other similar products.

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Energy consumption of Ozner and Guangdong Bili:

EnergyFor the year ended31 December 2017

Electricity Consumption Degree 5,962,228.73Density (for each degree/unit, calculated in accordance with the number of

installed water purification machines in the current year) 13.43

Water Consumption Ton 110,655.96Density (for each ton/unit, calculated in accordance with the number of


Gasoline Consumption Litre 111,027.44Density (for each litre/unit, calculated in accordance with the number of


Packaging Material Consumption Ton 876.15Density (for each litre/unit, calculated in accordance with the number of


Energy consumption of Foshan Lepuda:

EnergyFor the year ended31 December 2017

Electricity Consumption Degree 2,356,446.00Density (for each degree/unit, calculated in accordance with the number of

manufactured micro-motos since acquisition) 0.25

Water Consumption Ton 35,172.00Density (for each ton/unit, calculated in accordance with the number of


Gasoline Consumption Litre 34,827.66Density (for each litre/unit, calculated in accordance with the number of


Packaging Material Consumption Ton 5.6Density (for each litre/unit, calculated in accordance with the number of


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Caring for Employees, Responsible for Production Safety, and to Build

a People-oriented OznerEmployment and Talents Allocation

General Employment Overview

The Group always adheres to a people-centered approach and regards employees as one of the Company’s most valuable assets. The Group firmly believes that the development of the Group provides opportunities for the employees’ personal development, and the career advancement of the employees, which also boosts the development of the Group. The year 2017 is the year when Group and its employees, in a collaborative effort, mutually nurture and grow. The Group has achieved a framework upgrade and has initially launched an operative model, featured with president office and Ozner Institute of Technology, and eight service centers (the financial management center for water purifying business, the capital financial management center, the financial management center for strategic affiliated business, the strategic development center, the procurement management center, the brand management center, the informatization management center, and the manpower administrative center), which provides service staff with horizontal and vertical multi-channel development path within the Group, along with boosting the Group’s talent pool and echelon building process. Meanwhile, the Group has released a new edition of “Human Resources Control System”, which regulates various major modules in human resources such as key areas of management and supervisory responsibilities. The guideline is committed to providing employees with an enhanced development platform and a satisfactorily fair working condition.

In line with the employment principle of “legitimacy, fairness, voluntariness, and negotiation and consensus”, the Group has consistently adhere to the rationale of non-discrimination regarding age, gender, marital status, or race in recruitment and promotion and will take deliberate steps for implementation. By internal transfer or reassignment and external recruitment, etc., the Group encourages justifiable mobility of the employees within the Group, while taking in external talents. As of the end of 2017, the Group had a total of approximately 4,241 employees in service, mainly stationed in the Shanghai headquarters, Shaanxi production base and the Company’s sub-brands (of which 352 employees were from Guangdong Bili and 846 employees from Foshan Lepuda).

Working Hours

Ozner generally implements a 5 days, 8 hours work schedule. The working hours are from 9:00 a.m. to 12:00 noon and 1:00 p.m. to 6:00 p.m.; special work scheduled devised to best fit job requirements of certain specific positions.

Guangdong Bili and Foshan Lepuda generally implement a 6 days and 8 hours work schedule. The working hours are from 8:00 a.m. to 12:00 noon and 1:30 p.m. to 5:30 p.m.; special work scheduled devised to best fit job requirements of certain specific positions.

Vocation

In order to boost employees’ work incentive of and improve their sense of well-being regarding leave, apart from statutory public holidays, all employees of the Group are entitled to marriage, maternity leave, paternity leave, bereavement leave, annual leave, work-related injury leave, sick leave, among others; the exact number of holiday days will be based on relevant national and local regulations; all employees in service are entitled to the basic salary during paid holidays.

21


Caring for Employees, Responsible for

Production Safety, and to Build

a People-oriented Ozner (Continued)

The dispatched labour accounted for 38%

The contract labour of the Group accounted for 62%

1,348

2,893

Female employees account for 32%

Female

Male

Employees’ period of service (Unit: number of person)

49

279

1,253

1,312 730

509

85

24

FemaleMale

10 years or above

5－10 years

1－5 years

Less than 1 year

GenderUndergraduate

or aboveBelow

undergraduate Total

Male 535 2,358 2,893

Female 235 1,113 1,348

Total 770 3,471 4,241

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Remuneration and Benefits Management

The Group has established a competitive and comprehensive remuneration and benefits plan with medium to long-term incentive mechanism. Apart from regular remuneration and benefits, the Group will incorporate work-life balance (overtime work and rest day re-assignment, increase the number of days of annual leave), career advancement (job rotation, training opportunities), and intrinsic remumeration (degree of amusement and challenges, sense of responsibility, sense of achievement, engagement, etc.) as part of the overall compensation package, to increase employees’ incentive-to-work, mobilize employees’ initiative and creativity, strengthen employees’ sense of mission and belonging, so that employees are able to achieve higher level of Happiness Index, to realize mutual growth with the Group, and to benefit from the Company’s accomplishments.

Performance assessment

The Group has established a 360-degree comprehensive performance appraisal mechanism (i.e., superiors’ evaluation of subordinates, subordinates’ evaluation of superiors, peers’ evaluations, and customer evaluations), and will adopt performance appraisal results as a reference indicator for employees’ promotion, and adjustment of salaries and benefits. In 2017, the Group further expanded the targeted candidates for the performance appraisal from the management cadres in 2016 to all employees. The Group has ascertained that all employees understood the departmental strategy, encouraged all employees to set both their short-term and long-term career goals. The Group, through regular communication mechanisms to undertake objective execution and review, helps employees to achieve personal growth, which, in turn, forms an indicator-driven design, including process management, assessment, feedback and the eventual use of results application at the end of the loop.

Democracy and Employee Rights

Labor standards

The Group strictly abides by national and regional laws and regulations, including but not limited to the “Labour Contract” and “Banning on the Use of Child Labor” regulations. The Group has independently compiled and continuously improved the “Labor Standards”, “Labor Contract Management System” and “Employee Handbook”. For each employee serving for the Group, the Group has signed employee contracts with each of them in accordance with law and regulations to protect employees’ various legal rights and interests.

In 2017, the Group did not violate any relevant national labour laws and regulations, including laws and regulations on child labour and compulsory labor laws and regulations.

Democratic Communication

The Group has actively carried out democratic management, broadened staff participation channels and safeguarded employees’ democratic rights. Every year, the Group will consult employees on various aspects including corporate operation, management and training of the Company. The Group will hold staff meetings from time to time, set up opinions boxes and establish complaints and reporting mechanisms to enable open communication channels between the employees and the Company and solve the focal problems that employees are concerned about.

360-degree Execution Evaluation

Peer Evaluation (3 persons)

Customer Evaluation (5 persons)

Supervisor Evaluation (1 person)

Subordinate Evaluation (3 persons)

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Employees’ Safety and Health

The Group attaches great importance to the safety and health of employees and strictly abides by the employment laws and regulations such as the “Law of the People’s Republic of China on Production Safety”, “Measures for the Administration of Contingency Plans for Production Safety Incidents”, the “Law on Prevention and Control of Occupational Diseases”. The Group has taken deliberate steps for the initiation of the work safety and occupational health management.

Production Safety

The Group strictly abides by the relevant national laws and regulations concerning safety in production, pursuant to which the Group has formulated a set of work safety management systems, including the Ozner’s “Work Safety Management System”, the “Fire Safety Management System” and the “Safety Emergency Plan”, among others, in an effort to build a safe, healthy and green working environment for all the employees. In 2017, there were no work-related deaths recorded.

• Institutional Precautionary MeasuresThe Group has adhered to the implementation of “Safety Management System” and formulated systems such as the “Production Safety Management System”, the “Fire Safety Management System”, the “Safety Team Working Standards”, etc. and presented concrete specifications and requirements for production safety management of the respective plants. Guangdong Bili formulated and implemented the “Production Safety System”, clarified the responsibility system for safety at various levels, adhered to various principles of safe production including, “the person-in-charge accepts full responsibility”, and “the person-in-charge for production accepts responsibility for safety”, which all aimed to assign the obligations and responsibility for work safety to a pre-designed person-in-charge, so as to create a corporate culture benefited by safety. Foshan Lepuda has also formulated the “Safe Operation Regulations for Equipment”, which contains a clear guideline for safe equipment operations, as well as to provide directives to equipment operators through regulations at institutional level.

• Emergency Contingency PlanningThe Group has strengthened the standardized communication mechanism during emergencies, implemented the responsibility system for workplace accidents. The Group has formulated the “Emergency Contingency Plan”, based on the principles of “prevention first; self-rescue as primary, external aid as secondary; centralized directives, and contingency rescue”. The Group not only provides centralized directives but also coordinates contingency response and rescue for all types of immediate occurrence of major accidents. The administrative department will organize, on regular basis, emergency drills targeted for all types of emergencies to improve the staff’s contingency response capacity, to ensure timely understanding of all types of safety-related contingencies, and to report and resolve them properly.

• Inspection MechanismFor the front-line production positions of the Group, the production condition and equipment are inspected on a daily and weekly basis;

Undertook regular inspection, maintenance and renewal of daily safety facilities;

Accepted and received regular safety-related inspections by the local safety supervision bureau and the inspection results were satisfactory.

• Culture Building on Production SafetyThe Group has corresponded to the corporate safety rationale by regularly organizing safety and technical training and giving training sessions for employees in key and special positions.

In 2017, 4 fire drills have taken place with 1,311 participants.

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Occupational Health

Ozner, together with Guangdong Bili and Foshan Lepuda, adhere to the “Policies on Prevention and Control and Occupational Diseases”, formulates the Ozner’s “Occupational Health Management System”, appoints a third-party institution to issue the “Evaluation Report on the Effectiveness of Occupational Disease Hazard Control” for Guangdong Bili and Shaanxi Factory, identifies and analyzes possible hazardous factors for occupational diseases, assesses and develops the plan on prevention and control of occupational disease and the related implementation plan, in an effort to control and eliminate occupational disease hazards and prevent occupational diseases that are bred from the source of the hazards. For the hazardous factors of occupational diseases and the consequences, the Group has taken precautionary and control measures, including on refinement on safety facilities for dust and noise control in factories, strengthening the detection and management of all the greenhouse gases, dust and noise at workplaces, regularly monitoring the workplaces, as well as posting warning signs of occupational disease hazards and Chinese instructions, to the greatest extent possible to create safety, healthy and comfortable working environment and effectively prevent the occupational diseases.

Training and Staff Development

Talent is considered as one of the most important assets and comparative advantages for enterprises to achieve its strategic goals and sustainable development. The Group always adheres to the strategy of “Talent Thriving Enterprise” and focuses on internal talent nurture and growth. Therefore, the Group has established an internal talent pool, serving as a talent reserve, which provides a solid talent supply for the materialization of the Company’s vision and strategic objectives.

The Group has compiled the “Training Management System” and the Ozner College was founded in 2015. With the establishment of Ozner College as the carrier, the Group has leveraged on all the internal and social well-acclaimed training resources, carried out training-related demand survey for the Company’s staff at various levels, carefully selected the training instructors and organized and initiated various trainings for service staff as well as developed diversified and extensive training programs and special context based courses that meet the differentiated training requirements of a variety of serving staff, contributing to the nurturing of comprehensive talent pool for the Group. The Group’s staff training activities are divided into three categories: prerequisite position-specific training courses, elective courses, as well as online and offline shared platform training courses.

Prerequisite position-specific training courses Elective courses

Online and offline shared platform training

2 days of training for each month; all employees are required to participate in position-specific trainings. The content of the training depends on the specific position of the respective employee. The Group provides its staff with information on explicit career path through continuous position-specific trainings, as well as to enable respective service staff to reflect and conclude on the results of each stage of works; the results of respective trainings was found satisfactory and were overwhelmingly supported by the management team and actively participated by the Group’s serving staff.

An elective course entitled “Ozner Lecture Hall” is held once a month. The content of the elective course is largely based on the feedback of the previous year’s course-demand survey, a thorough implementation the Group’s people-oriented doctrine and in-depth understanding of employees’ needs. The content of 2017 training has been expanded from the previous solely skills training to image etiquette training. The enrichment of training content was well received by all service staff.

In 2017, the number of participants in offline training reached 2,715. The training content mainly included:fundamental skills training, business knowledge training, enhancement on management and leadership skills, new staff orientation, management training and so on. In addition to off-line training, the Ozner Online E-LEARNING system provides service staff with an alternatively fast and convenient channel of training. In 2017, a total of 1,824 staff members received online training.

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Proportion of trained employees by functions

Proportion of trained employees by gender

57%

43%

64%

36%

Operation Male FemaleAdministration, Human Resources

and Finance

Standard training

Provide staff with enriched and diversified training content, receptive to staff’s feedback, understand staff’s needs, expanded content, from previous professional skills training to image etiquette training and other related content that can be of interest to the staff.

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Care for Employees’ living

The Group has organized and developed a variety of cultural and physical activities through the platform provided by the trade union in order to enrich employees’ after-work living, as well as to promote sense of belonging and team spirit.

Support the Needy

Assembly employees to participate in small-scaled fund-raising activities for the needy, conveying the featured “people-oriented” corporate culture to all the service staff.

Care for female employees

The Group highly regards the protection of female employees’ rights and interests, strictly implements equal pay for male and female employees serving at the same comparable positions, encertains equal rights to female employees during their career development, concerns the health of female employees, organizes and initiates talk activities, themed on women’s health, so as to achieve healthy and satisfactory work-life balance for the female staff.

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Focus on Products, Promote Innovation, and Facilitate Win-Win Collaboration

Supplier Management

A good supply chain management system constitutes one of the fundamentals of operation risk management. The Group has established a long-term steady cooperative relations with the suppliers and formulated the “Procurement Management Procedures”, which aims to standardize procurement risk and flow management on various tender procedures such as invitation for bidding, tender awarding, contract signing, among others, so as to reduce the potential environmental and social risks in our supply chain.

Suppliers’ screening: The Group has formulated the “Suppliers’ Development and Evaluation Management” system, which aims to conduct comprehensive inspections of potential suppliers and strengthen suppliers’ resource management. Potential suppliers will fill in the “Suppliers’ Survey Form” and “Questionnaire”, all of which will be subjected to evaluation by various departments, namely, the Procurement, Research and Development (R&D), Production, and Quality Control. After evaluation, both the “Suppliers’ On Site Assessment Form” and “Sample Confirmation Report Form” will be filled in to ascertain that the suppliers meet various requirements on areas, including production, service and governance. Each year, the Group updates suppliers’ directory based on the ongoing cooperation status and suppliers’ evaluation results, as well as to incorporate their performance in finance and corporate social responsibility as factors to be considered. Eventually, the Group will select those suppliers who share the same values and focus on corporate social responsibility for perspective close collaboration. As of 2017, the Group had 506 qualified suppliers from the East China, South China, North China and Northwest China.

Distribution of Suppliers

Serial No. Districts Number of Suppliers

1 East China 2652 South China 2303 North China 64 Northwest China 5

Communication: On one hand, the Group maintains continuous mutual communication with suppliers and initiates strategic cooperation with the suppliers in areas such as technology, management and financial support in the daily work schedule. On the other hand, the Group conducts two-way communication at multiple levels and aspects through management-level exchanges and visits, site visits, supplier conference and trade fairs, in an effort to achieve win-win cooperation.

Supplier Supervision: The suppliers are required to sign the “Purchase Contract” and the “Quality Assurance Agreement” with the Group, while the respective procurement persons-in-charge are also required to sign the “Procurement Integrity Agreement”. In addition, the Group evaluates the suppliers on an annual basis and calls for supplier meetings. Those suppliers with unsatisfactory evaluation results will be penalized accordingly.

System Management: The Group, after concluding contracts with various suppliers, will collect information from the suppliers, including their basic corporate information, contract unit price, payment accounts, etc. which will be input into the Suppliers’ Information database of Kingdee System (金蝶系統). At the same time, the user right settings of the system will be protected to safeguard for the successful implementation of procurement activities. Environmental Protection Standards: Priority is given to the suppliers with the certification of ISO14001. All suppliers are required to obtain the accredited qualification in the industry and need to provide related production licenses on drinking water and food-grade materials. For those suppliers in the manufacturing sector, it is required that they must pass the national environmental impact assessment.

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Focus on Products, Promote Innovation,

and Facilitate Win-Win Collaboration (Continued)

Product Liability

The Group is committed to providing customers with safe and quality-proof products and services through agent management, product quality management and service quality management.

Agent Management

New Management Model: The Group has formulated the “Agent Management Policy” and endeavoured to build a new agent management model, distinguishable from the traditional overstock model, featured by of developing channels before delivery to relieve the loading and storage burdens of the agents.

The Group has built the Agent Management system and CRM customer relationship management system, formulating the “Agent Disciplinary Penalty Policies”. The Group, through thorough resources integration with the aid of Internet tools, has vividly clarified various agents’ rights, as well as enhancing informationalized management and supervision.

Communication and Training: The Group has developed the agent communication and evaluation mechanism, devising agent column, establishing agent service division, coordinating and handling matters relating to the project cooperation with various partners, launching “online complaint email ([email protected])”, and encouraging mutual supervision amongst service staff to improve efficiency and service quality. At the end of each year, the business and finance departments, among others, will undertake a comprehensive evaluation for all the serving agents and enlist the termination mechanism.

The Group attaches great importance to agents’ training and provides agents at all levels with a vast variety of training courses on marketing, covering the Group’s operative business model, products and technologies, Ozner’s services and endpoint operations, which all intended to provide a multi-perspective, all-inclusive exposition on the Group’s distinctive operational objectives.

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Product Quality Management

In order to standardize product quality management and build an outstanding brand image, the Group has strictly complied with the “Quality Law” and established the “Inspection and Control Procedures for Testing and Inspection on Finished and Dispatched Products”, the “Control Procedures on Incoming Materials Quality Inspection”, and the “Control Procedures on Process Inspection”. In addition, the Group has established and strictly enforced a quality management system that covers the product full life cycle, including procurement of raw materials, production process control, technology supervision and testing and inspection of finished products. At present, the Shaanxi factory has passed the ISO9001 quality management system certification, and its products have been certified by a number of testing agencies at home and abroad.

Foshan Lepuda, acquired by the Group in 2017, owned a number of patented technologies and R&D advantages, and has passed the China 3C certification, the United States UL certification, the Germany TUV certification, the European Union CE certification and RoHS certification. All of the plant’s products are subjected to strict quality inspection to ensure quality.

Guangdong Bili, also acquired by the Group in 2017, always adheres to the quality perspective, namely, premium, exquisite, excellent; Guangdong Bili has passed the ISO9001 quality system certification, ISO14001 environmental system certification, OHSAS1800 occupational health and safety management system certification, the products of which has passed the 3C certification, CQC certification, energy saving certification, water-saving certification, industrial production license, and health approval documents from the provincial health department and the Ministry of Health have been acquired. At the same time,

Guangdong Bili also highly regards scientific research investment. Currently, the Company owns 78 national patents, 7 invention patents, 43 utility model patents and 28 appearance patents.

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Service Quality

Customers are cornerstone for an enterprise. In order to ensure the service quality, we attempt to proceed from following perspectives to further safeguard the quality of our after-sales service and enhance the customer’s satisfaction for our services.

Institutional Management: The Group has established the “Supervision System”, “Complaint Management System” and “Penalty Procedures for Service System Violations” to safeguard service standards and regulation of complaint penalties. The Group will collect customer feedback on the services through the complaint hotlines and mailbox, among others, and will investigate the root of the complaint, followed by retroactive responsibility processing.

Management of product quality disputes and product returns: The Group is highly concerned with settlement of product quality disputes and product returns management. It has established the “Control Procedures for Non-conforming Products”, which, by regulating the classification and processing of incidents related to product quality, aimed to effectively improve the efficiency of settlement for quality disputes. When the consumer at the terminal-end initiates a recall request concerning the product quality, the after-sales service department will arrange the nearest engineer to arrive for an on-site evaluation, the report of which will be submitted to the technical department for review and evaluation. Basing on the nature of the problem, the Group will conduct retroactive responsibility processing and return the defected products to the factory. In addition, the Group prepares quality inspection reports on monthly basis, which summarizes and analyzes the conditions and problems relating to product quality.

After-sales Service: The customer is the bedrock for the survival of an enterprise. As one of the pioneers in “cloud service” in the water purification industry, the Group owns a self-established service team and is the first in the industry to found a customer service hotline designed for a continuous operation on a 24 hours a day, 365 days a year basis, as well as direct service outlets, covering more than 2,000 counties, towns and providing dealers and customers with artificial intelligence housekeeper services, and online cloud services from time to time. If any mechanical problem occurs, we will offer speedy on-site services; if the mechanical problem affects the normal functioning of the facility, our after-sales service engineers will provide on-site service within 2 hours; in case the problem does not affect the functioning of the facility, it will be repaired within 24 hours. In addition, we conduct regular telephone interviews with customers, track and record problems in the use of products, invite feedback and suggestions, and monitor the service quality of our after-sales service personnel.

Professional Team: The Group has nearly 16 years of after-sale service qualification in the water purification industry and a distinctively task-specific professional service team to ensure quality service.

Warehousing, Logistics and System Management: The Group adopts a warehouse management model that combines both central warehouse with local warehouses branches. Applying the existing most advanced warehousing management system in China, the Group has enlisted cooperation with few well-known logistics companies for enhanced service efficiency.

Intellectual Property: The Group has formulated the “Intellectual Property Rights Management System”, “Ozner’s Distributors’ Code of Conduct for the Use of Corporate Intellectual Property Rights” and “Measures for Infringement of the Company’s Intellectual Property Rights” and other relevant laws and regulations, to safeguard and protect intellectual property rights.

The R&D department and the after-sales service department will put forward various applications for trademarks, patents, and service system patents. The legal department is responsible for contacting the third-party service agencies for patent appraisal. Upon completion of application, the Legal Department will be responsible for subsequent renewal, updating and maintenance.

31




Customer Privacy: The Group is committed to consumer data protection and privacy management and strictly abides by the relevant laws and regulations relating to consumer privacy protection. The Group has developed the consumer information management and privacy protection policies, including “Regulatory Standards for 400 Customer Service Centers”, “400 Information Confidentiality System”, among others. Through the platform of customer management system, information encryption management, confidentiality agreements, and permission setting protection, among others, we protect the consumer’s personal data and privacy to ensure information security.

Anti-corruption

The Group attaches great importance to the integrity management and anti-corruption construction and strictly abides by the “System for Comprehensive Prevention and Precautions Against Corruption (2013-2017 Work Plan)”. We have always been committed to refining the internal integrity management mechanism, as well as constantly strengthening the code of conduct and creation of anti-corruption system. We incorporate both the prevention and punishment system at both institutional and supervisory levels into corporate management, along with creating a platform of clean enterprise. In 2017, there were no major corruption cases recorded that are related to bribery, fraud, and money laundering within the Group.

Regulations and Norms

The section “Commercial Behavior and Ethics” in the Group’s Employee Handbook provides clear directives on preventing bribery, extortion, fraud and money-laundering and enacting integrity compliance work by the employees.

The Group has formulated the “Supervision System” to elaborate in details the operation process and work-related instructions on internal integrity and implemented the institutionalized and standardized practices in supervision and inspection.

Integrity and Self-discipline

The Group management team signed the “Oath of Declaration on Integrity and Self-discipline for Management Cadre” and the ordinary employees signed the “Agreement on Integrity and Self-discipline”. All employees pledged to remain faithful to their duty undertakings and duly and diligently perform their duties; they strictly abide by the Company’s financial institutional system and will not privately retain or confiscate funds and property; they shall not take advantages of the convenience from their official positions to collect any illegal income.

The Group has always highly concerned with the interests of users, partners, and all the collective interest groups and promote the code of conduct against corruption and on Integrity in the daily work schedule of all employees.

32




Supervision and Management

We have established the “Complaints Management System”, serving as the institutional standards for reporting the any non-compliance with the Company’s rules and regulations and work process by employees which include the Group’s middle-to-senior management personnel, as well as and their particular orientation;

We have formulated the reward and incentive for reporting. Anyone who contributes to accusing and reporting of major offense against regulations or disciplines will be rewarded according to the actual circumstances. We encourage all the employees of the Group to make a timely report of any offense and misconduct.

We have set up the report confidentiality system. The personal data of the whistle blower will be kept confidential before certain facts are ascertained through investigation. The Group has set up the Complaints department that will be responsible for the cases where offenses against regulations or disciplines are reported, follows up the investigation, analysis and handling processes of the complaint case, implements strictly the disciplinary measures for the related liable person in an offense against the code of integrity of the Group, and encourages the Group’s internal staff members to report timely any offense and misconduct.

We have implemented both the work responsibility system and the accountability system to ensure that each section of the work can be concretely segmented. We will continuously refine the highly efficient responsibility-accountability system through exerting a firm hold on the responsibility transmission chain of the responsibility-accountability system. The Group has set up an independent supervision division for supervising the implementation of the Company policies by various departments, while strengthening on internal control, aiming to initiate comprehensive anti-corruption work of the Group. We have strictly followed and executed responsibility accountability, as well as improved the irrationality and non-compliance in the systems and procedures of the Company so as to ascertain that the responsibility investigation and handling are undertaken and corrective measures are effective.

33


Caring for the Community, Benevolence Relief to the Public, Building a Harmonious Society

The Group, while endeavors to strike for a satisfactory financial performance, has never failed to shoulder the social responsibilities for its role as a corporate citizen. The Group continues to embark on ecological and environmental protection undertakings, adheres to green development through deliberate practical actions, and practices corporate social responsibility. The Group also initiates more citizens’ and companies’ participation to join the sector of the ecosystem protection, in order to build a green homeland. We firmly believe that charitable environmental work will contribute to the well-being of the future. The year 2017 was a year when the Group achieved remarkable development and which was attributable to the community at large; it was also a year that the Group actively participated in environmental protection and charities to return to the community. In 2017, the Group invested a total of RMB4.15 million in charity undertakings relating to environmental protection, with the total number of participants of 90. The accumulated amount of time committed to such obligations was approximately 9,500 hours. The charitable undertakings mainly dedicated to environmental protection, community public welfare and airport water purification charity projects. The Group’s subsidiaries also responded positively to the Group’s call for environmental protection and public welfare. Guangdong Bili, in collaboration with the One Foundation, actively participated in public welfare activities on campus. The Company has continuously sponsored local nursing homes every year. In the year of 2017, Guangdong Bili contributed a total of RMB240,000 in charity undertakings.

Engage in Environmental Protection and Preserve the Nature

World Water Day Summit

In March 2017, corresponded with the World Water Day, the Group and China News Agency jointly organized the 2017 China Health Summit with the theme of “Focus on Water Health and Build a New Ecosystem”. The summit focused on the three major themes of “’Water Map’ of China”, “’From Water Safety’ to ‘Water Health’”, and “Drinking Water – ’The Last Mile’” to promote awareness on health benefits of drinking water and to upgrade China’s water safety, targeting for all sectors of the community at large.

34


Caring for the Community, Benevolence Relief

to the Public, Building a Harmonious Society (Continued)

“One Belt and One Road” Initiative

In 2017, the Group continued to implement the “One Belt and One Road” initiative to protect the Yangtze River. “One Belt” refers to the cooperative effort between the central authorities in Yangtze River Economic Belt, China Post and the Green River, stretching from the source of the Yangtze River in neighbourhood to the Lijiang River Bridge to the entrance of the Yangtze River, covering thousands of kilometers and a total of 11 stations for water environment monitoring were built in the respective areas, which provides research data for the inspection and protection of water resources in the Yangtze River in China; “One Road” refers to the Qinghai-Tibet express highway, along which 18 humanitarian stations are built to provide safe drinking water to commuting travellers, while promoting knowledge relating to safe and healthy drinking water.

35




Upgrade and Intensive Maintenance for Ozner water purification house

After five years of operation and transformation, the Green River and the Ozner have accumulated certain amount of experience and have committed their best endeavour in the environmental-friendly water circulation system in the plateau area. After the upgrading of Ozner water purification house, the facility can continue to provide volunteers who participate in the ecological environment protection of the Yangtze River with safe drinking water. The purification house, while achieving its target at environmental-friendly wastewater treatment for the protection stations, has become an exemplar as environmental and safe water consumption facility in the Qinghai-Tibet Plateau.

Exhibition at Qinghai-Tibet Highway and the Qinghai-Tibet Green Station

The Green “Qingdao-Tibet Green Station” is a garbage collection station founded along the Qinghai-Tibet Highway. The station focuses on garbage collection and has become a public welfare sites that provide long-distance truck drivers, self-driving tourists with a short-break resting venue, and remains as a promotional welfare hub for ecological resources and environmental protection. Through the distinctive sceneric features of the Qinghai-Tibet line and free public toilets, free hot water, free internet and other related public services, the geographical area has become popular amongst long-distance freight drivers and self-driving tourists for short-term parking and rest, and the respective drivers will dispatch the garbage from their own vehicles into the garbage bins of the green post station in exchange for various featured promotional souvenirs. Then, facilitated by the convenience of low-cost transportation provided by empty vehicles along the Qinghai-Tibet Highway, the recyclable wastes are transported to Golmud city for centralized disposal, and the degradable wastes are further transported to the landfills in vicinity for disposal, so that the wastes are undergoing “decentralized collection, long-distance transportation, and centralized disposal”. In the first phase construction of the Qinghai-Tibet Green station, 8 stations have been built by the Golmud Government, covering 420-kilometer of the Qinghai-Tibet Highway, extending from Golmud to Tanggulashan Town (Tuotuohe).

36




Couples in Winter

In January 2017, the source of the Yangtze River was distinctively warmer due to the visit of a group of people who were Ozner volunteers for the project, “Couples in Winter — Loving and Benevolent Journey on Protecting the Source of Yangtze River”. The volunteers have earned special New Year’s charitable experience while stationing in the Yangtze River’s water ecology conservancy station. The daily routines of the volunteers included, among other things, meteorological monitoring, water quality testing, garbage classifying, DIY cooking for lunch, wild animal protection-related activities and blogging.

37




Immerse into the Community and Return to the Society

“Jingze Program”, Charitable Journey to Yunnan

On 6 November 2017, the Ozner Group and its subsidiary brand, Guangdong Bili, joined by “China Business Network”, despatched a set of Ozner drinking water purification facility to the Yunnan Nuijing Jiunai Shanwan Elementary School (雲南

怒江舊乃山完小學). This has ended the children’s long history of drinking mountain spring water and thereafter even children in remote mountain areas could have access to clean drinking water every day. The six volunteers from Ozner conducted a series of two-day interactive activities with teachers and students from Jiunai Shanwan Elementary School. Those activities included “A Lecture on Drinking Water for Small Class”, environmental art contest with theme “Blue Sky and Crystal Clear Water”, as well as family visits and donations to the poverty-stricken students.

Guangdong Bili Benevolent Donation

On 29 September 2017, a grand charity event themed “National Day in a Prosperous Era, Love Devotion from Bili” was held. Guangdong Bili donated 100 drinking water facilities to the Fengshun County Education Bureau to provide drinking water for rural students. As one of the leading brands of public drinking water in the campus, Guangdong Bili has always been committed to returning to the community, and the Company is also highly concerned about the health benefits of drinking water for students.

38




Foshan Lepuda’s Filial Piety Event

On 26 October 2017, Foshan Lepuda was invited to participate in the Bijiang Welfare Association’s filial piety banquet hosted by the Bijiang Welfare Association and co-organized by the Bijiang Welfare Committee. Filial piety and nurturing young children have always been regarded as a fine tradition of China and a social foundation for harmony and stability. Every year, members from Foshan Lepuda management team attend the filial piety gathering, contributing to the Bijiang Welfare Association, as well as showing respect and affection for the elderly.

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Appendix — Environmental, Social and Governance Content Index

Levels General disclosures and key performance indicators Ozner Section/Statement

A. Environmental

A1. Emissions General disclosure Information on the policies and 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 wastes

Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Clean Production

A1.1 The types of emissions and corresponding emissions data

Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Clean ProductionCare for the Environment, Save Energy and Reduce Carbon Emissions, and Promote the Green Artistry — Strictly Control the Three Wastes

A1.2 Greenhouse gas emissions in total and, where appropriate, intensity (if applicable)

Care for the Environment, Save Energy and Reduce Carbon Emissions, and Promote the Green Artistry — Strictly Control the Three Wastes

A1.3 Total hazardous waste produced and, where appropriate, intensity (if applicable)

N/A

A1.4 Total non-hazardous waste produced and, where appropriate, intensity (if applicable)

Care for the Environment, Save Energy, and Reduce Carbon Emissions and Promote the Green Artistry — Strictly Control the Three Wastes

A1.5 Description of measures to mitigate emissions and results achieved

Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Strictly Control the Three Wastes

A1.6 Description of how hazardous and non-hazardous wastes are handled, reduction initiatives and results achieved

Care for the Environment, Save Energy and Reduce Carbon Emissions, and Promote the Green Artistry — Strictly Control the Three Wastes

A2. Use of Resources General disclosure Policies on the efficient use of resources, including energy, water and other raw materials

Care for the Environment, Save Energy and Reduce Carbon Emissions, and Promote the Green Artistry — Green Office Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Resource Conservation

A2.1 Direct and/or indirect energy consumption by type in total and intensity

Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Resource Conservation

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Appendix — Environmental, Social and

Governance Content Index (Continued)


A2.2 Water consumption in total and Intensity Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Resource Conservation

A2.3 Description of energy use efficiency initiative and results achieved

Care for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Green OfficeCare for the Environment, Save Energy, and Reduce Carbon Emissions, and Promote the Green Artistry — Resource Conservation

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 materials used for finished products and, if applicable, with reference to per unit produced


A3. The Environment and Natural Resources

General disclosure Policies on minimizing 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


B. Employees

Employment General disclosure Information on the policies and 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

Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Employment and Talent Allocation

B1.1 Total workforce by gender, employment type, age group and geographical region

Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Employment and Talent Allocation

B1.2 Employee turnover rate by gender, age group and geographical region

Plan to be disclosed in the future

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Health and Safety General disclosure Information on the policies and 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

Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Employees’ Safety and Health

B2.1 Number and rate of work-related fatalities Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Employees’ Safety and Health

B2.2 Lost days due to work injury Plan to be disclosed in the future

B2.3 Description of occupational health and safety measures adopted, how they are implemented and monitored

Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Employees’ Safety and Health

Developmentand Training

General disclosure Policies on improving employees’ knowledge and skills for discharging duties at work and description of training activities

Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Training and Staff Development

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


Labour Standards General disclosure Information on the policies and compliance with relevant laws and regulations that have a significant impact on the issuer relating to preventing child or forced labour

Caring for Employees, Responsible for Production Safety, and to Build a People-oriented Ozner — Democracy and Employee Rights

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


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C. Interest Stakeholders

SupplyChain Management

General disclosure Policies on managing environmental and social risks of the supply chain

Focus on Products, Promote Innovation, and Facilitate Win-Win Collaboration — Supply Chain Management

B5.1 Number of suppliers by geographical region Focus on Products, Promote Innovation, and Facilitate Win-Win Collaboration — Supply Chain Management

B5.2 Description of practices relating to engaging suppliers, number of suppliers where the practices are being implemented, how they are implemented and monitored

Focus on Products, Promote Innovation, and Facilitate Win-Win Collaboration — Supply Chain Management

Product Responsibility General disclosure Information on the policies and 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

Focus on Products, Promote Innovation, and Facilitate Win-Win Collaboration — Product Liability

B6.1 Percentage of total products sold or shipped subject to recalls for safety and health reasons

Plan to be disclosed in the future

B6.2 Number of products and service related complaints received and how they are dealt with


B6.3 Description of practices relating to observing and protecting intellectual property rights


B6.4 Description of quality assurance process and recall procedures


B6.5 Description of consumer data protection and privacy policies, how they are implemented and monitored


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Anti-corruption General disclosure Information on the policies and compliance with relevant laws and regulations that have a significant impact on the issuer relating to bribery, extortion, fraud and money laundering

Focus on Products, Promote Innovation, and Facilitate Win-Win Collaboration — Anti-corruption

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


D. Community

Community Investment General disclosure Policies on community engagement to understand the needs of the communities where the issuer operates and to ensure its activities taken into consideration the communities’ interests

Caring for the community, Benevolence Relief to the Public, Building a Harmonious Society — Engage in Environmental Protection and Preserve the Nature; Caring for the Community, Benevolent Relief to the Public, Building a Harmonious Society — Immerse into the Community and Return to the Society

B8.1 Focus on areas of contribution Caring for the community, Benevolence Relief to the Public, Building a Harmonious Society — Engage in Environmental Protection and Preserve the Nature; Caring for the Community, Benevolent Relief to the Public, building a Harmonious Society — Immerse into the Community and Return to the Society

B8.2 Resources contributed to the focus area Caring for the community, Benevolence Relief to the Public, Building a Harmonious Society — Engage in Environmental Protection and Preserve the Nature; Caring for the Community, Benevolent Relief to the Public, building a Harmonious Society — Immerse into the Community and Return to the Society

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