ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

OF HENGXIN TECHNOLOGY LTD.

Hengxin Technology Ltd. (the "Company" and together with its subsidiaries, the "Group" or "we") recognises the importance of sustainability in creating long-term values for all of our stakeholders. We manage the business with caution and are committed to providing premier products and services for our customers. By keeping close contact with all stakeholders, including shareholders, customers, employees, suppliers, creditors, regulators and the public, we strive to strike a balance of differing views and interests of all parties concerned to allow the Group and the community to achieve a clear and long-term direction.

The Group hereby presents the environmental, social and governance (the "ESG") report for the financial year ended 31 December 2018 (the "Reporting Period"). This report mainly covers two major operating subsidiaries of the Company, namely, Jiangsu Hengxin Technology Co., Ltd. ("Jiangsu Hengxin") and Jiangsu Hengxin Wireless Technology Co., Ltd.

The senior management has confirmed to the board of directors of the Company (the "Board") that the ESG risk management and internal control systems for the Reporting Period were adequate and effective.

ENVIRONMENTAL

The Group is committed to environmental protection by minimising the environmental impact of its business activities. It supports natural and environmental protection programs and has been in strict compliance with environmental laws, regulations and policies of the government. Currently, the Group occupies a total area of approximately 122,878 square metres, among which approximately 18,144 square metres or approximately 14.7% consist of green landscaping. In 2006, the Company was named Jiangsu Province Environmentally Friendly Enterprise by the Environmental Protection Department of Jiangsu Province. Meanwhile, Jiangsu Hengxin Technology Co., Ltd., a major operating subsidiary of the Group, has consistently passed the certification of ISO14001:2004 environmental management system since 2007.

Emissions

The Group has set forth strict control regulations in relation to, amongst others, operating equipment in workshops, vehicle exhaust emissions, operations of outsourcing units in the Company and regular clearing of other wastes. For example, the Group has entered into the Transportation Agreement with its transportation suppliers and has promulgated the Solid Waste Control Procedures and the Pollutant Emission Control Procedures internally to monitor and regulate pollutant emissions and waste disposal. Specific measures include: (i) all vehicles of the Group must use unleaded gasoline; (ii) the canteens use non-phosphorus detergents; (iii) filters are installed in waste water discharge ports to reduce sewage discharge; (iv) grease trap, fume purification and other equipment has been installed in the canteens, while a qualified third party is commissioned to clean up the equipment regularly; and (v) refrigerators, freezers and central air-conditioners all employ fluorine-free equipment. All these control measures are implemented throughout the manufacturing plant. At the same time, the Group has also installed special purification equipment to treat domestic sewage.

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In addition, the Group commissions relevant municipal environmental protection departments and Jiangsu Levei Testing Co., Ltd. to monitor and inspect the factory premises and its surrounding environment each year.

The Group adhered to the Environmental Protection Law of the People's Republic of China, the Cleaner Production Promotion Law of the People's Republic of China and the Atmospheric Pollution Prevention and Control Law of the People's Republic of China in regulating the emission of exhaust gases generated in our production activities.

The following table lists out the gases and waste discharged by the Group during the Reporting Period:

Volume Per Production Unit (tons)

Emission Type

Emissions

Volume

RF Cable

Accessories

Others

(tons)

(per km)

(per unit)

(per unit)

Hazardous waste

Waste oil

0.15

0.001kg

N/A

N/A

Non-hazardous

Waste oil rags

0.2

0.0013kg

N/A

N/A

  waste

Waste solvent box

2

0.014kg

N/A

N/A

Toner cartridges

0.02

0.0001kg

N/A

N/A

Scrap copper (bronze,

2.8

N/A

0.003kg

N/A

brass), scrap aluminium,

and waste plastic

Waste plastic film, waste

82

0.461kg

N/A

N/A

cartons, and waste paper

Waste wooden material

125

0.13kg

N/A

N/A

Household waste

79

N/A

N/A

N/A

During the Reporting Period, the Group's indirect greenhouse gas emissions from the use of energy amounted to 6,709 tons. Due to the wide variety of products, it is impossible to calculate greenhouse gas emissions per production unit.

In order to reduce greenhouse gas emissions, the Group has formulated efficiency plans (please refer to the efficiency plans for the use of resources and the results achieved during the Reporting Period as set out in the section headed "Use of Resources" in this report) to improve energy efficiency and reduce energy consumption, thereby lowering greenhouse gas emissions.

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The following table sets out the Group's methods of treating hazardous and non-hazardous wastes, measures of reducing waste generation, and results achieved during the Reporting Period:

Emission Type

Emissions

Treatment Methods

Reduction Measures

Achievements

Hazardous waste Waste oil

Hand over to qualified third

parties for centralised

disposal.

Dry paint is used to replace cooling oil for machine tools, and used materials are recycled.

Consumption decreased by 8% as compared with last year.

Non-hazardous

Waste oil rags

Hand over to local third-

waste

party sanitation service

companies for disposal.

Ribbon, waste, solvent

Sort out and recycle by

box, toner cartridges

category under ledgers,

and hand over to

qualified solid waste

treatment companies for

disposal and recycling.

Reduce gas and liquid

Consumption remains

leakage.

more or less the same

with that of 2017.

1 On top of existing

Waste volume decreased.

ribbons, two small

ribbons are added

specifically for label

printing to reduce the

usage of ribbons and

toner cartridges.

2 The templates are

unified for printing

labels of connectors,

arresters and jumpers

to reduce the usage

o f r i b b o n s a n d

cartridges.

Scrap copper (bronze,

Hand over to waste

brass), scrap

recycling personnel for

aluminium, and

recycling.

waste plastic

Waste plastic film,

Hand over to waste

waste cartons, and

recycling personnel for

waste paper

recycling.

Waste wooden

Hand over to local farmers

material

for recycling.

Domestic waste

Hand over to local third-

party sanitation service

companies for disposal.

Improve the utilisation

Waste volume decreased.

rate of materials and use

hot extrusion pieces for

production.

N/A

Waste volume decreased.

N/A

Waste volume decreased.

N/A

Waste volume decreased.

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By implementing projects including the change of chassis without stopping in the coaxial workshops and improving the utilisation rate of raw materials, the Group identifies waste items in its production and business processes and then mitigates or eliminates the waste through project-based control. The Group has reduced the number of runs and scrap materials, thereby reducing the amount of waste generated.

To alleviate the environmental pollution caused by solid waste, the Group specifies a storage location for dangerous waste and general waste by category, sorts them out centrally, and then transfers them to a qualified institution for disposal. The treatment methods are as follows.

The staff on duty places waste oil rags, waste oil, waste solvent boxes, waste chemical containers, and other dangerous waste generated during the production process to the dangerous waste collection location. The Group has entered into the Dangerous Waste Disposal Agreement with Yixing Lingxia Solid Waste Treatment Co., Ltd., a qualified institution, which will centrally manage the waste. At present, the dangerous waste generated by the Group in the course of production includes the following:

  1. For the year ended 31 December 2018, the Group recycled approximately 125 tons of waste wood.
  2. For the year ended 31 December 2018, the Group disposed approximately 79 tons of household waste.

Category of

waste

Type

Storage Location

Treatment Methods

Dangerous waste

Waste batteries, waste

Dangerous waste

Hand over to qualified third

fluorescent lamps,

collection point

parties for centralised

waste bulbs, waste oil

disposal.

rags and waste oil

Waste electronic devices,

cartridges and ribbons

Waste paint barrels and

waste spray paint

bottles

Waste chemical solvent

boxes and waste

saponification solution

General waste

Scrap copper (bronze,

Scrap warehouse

Hand over to waste recycling

brass), scrap

personnel for recycling.

aluminium and waste

plastics

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Category of

waste

Type

Storage Location

Treatment Methods

Waste plastic film, waste

Sundry warehouse

Hand over to waste recycling

cartons and waste

personnel for recycling.

paper

Waste wooden frames

Sundry warehouse

Hand over to local farmers

for recycling.

Domestic waste

Sundry warehouse

Hand over to local third-

party sanitation service

companies for disposal.

Waste sawdust and waste

Woodworking room

Hand over to local farmers

wood blocks

for recycling.

Use of Resources

The Group prescribes specific provisions on the conservation of electricity, raw materials, water resources and paper, educates employees to save resources, and monitors the consumption of energy and resources.

The Company has passed the audit of OHSAS 18000 certification. We effectively monitor and manage the utilisation of and formulate the assessment systems for the utilisation rate of water, electricity and raw materials.

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Hengxin Technology Ltd. published this content on 17 June 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 June 2019 00:58:01 UTC