Annual Reports and Related Documents::

STAYING

THE COURSE

LY CORPORATION	SUSTAINABILITY
LIMITED	REPORT 2020

Table of Contents
BOARD STATEMENT.............................................................................................................................	1
ABOUT THIS REPORT...........................................................................................................................	2
KEY HIGHLIGHTS ..................................................................................................................................	3
MANAGING SUSTAINABILITY AT LY CORPORATION .......................................................................	4
STAKEHOLDER ENGAGEMENT...........................................................................................................	6
MATERIALITY ASSESSMENT...............................................................................................................	9
ENVIRONMENTAL ...............................................................................................................................	13
SOCIAL .................................................................................................................................................	15
GOVERNANCE.....................................................................................................................................	22
ECONOMIC...........................................................................................................................................	26
GRI CONTENT INDEX .........................................................................................................................	30

This document has been reviewed by the Company's Sponsor, Xandar Capital Pte. Ltd. It has not been examined or approved by the Singapore Exchange Securities Trading Limited (the "SGX-ST") and the SGX-ST assumes no responsibility for the contents of this report, including the correctness of any of the statements or opinions made or reports contained in this report.

The contact person for the Sponsor is Ms Pauline Sim Poi Lin, Head of Corporate Finance, at 3 Shenton Way #24-02 Shenton House Singapore 068805, telephone [phone].

LY CORPORATION LIMITED

SUSTAINABILITY REPORT 2020

BOARD STATEMENT

Dear Stakeholders,

LY Corporation Limited (the "Company") and its subsidiaries (collectively, the "Group") is pleased to present its sustainability report (this "Report") for the financial year ended 31 December 2020 ("FY2020").

The outbreak of the COVID-19 pandemic has significantly disrupted the global supply chain and businesses worldwide are striving to overcome these challenging times. Nonetheless, the Group remain committed to sail through this crisis and conduct our business in an economically sustainable manner.

Our Board of Directors (the "Board") is dedicated to the Group's sustainability efforts and is responsible for determining and overseeing the Group's material sustainability topics. The Board has considered the sustainability topics as part of its strategy formulation.

Under the guidance of the Board, our Sustainability Steering Committee (which comprises the head of departments of the various departments of the Group) plays an essential role in ensuring the successful implementation of our sustainability initiatives. With the aim of fostering greater transparency and accountability, this report presents our initiatives, progress and targets towards achieving sustainable growth.

In view of the COVID-19 pandemic, we place the protection of the health and safety of our employees as top priority. In order to safeguard the wellbeing of our employees, we have implemented safety measures such as the mandatory wearing of face masks, safe distancing and regular sanitisation at our workplaces and health screening for our employees.

We have also put in place appropriate measures to enhance our operational resilience and maintain our ability to generate returns for our stakeholders amidst the economic uncertainties and operational challenges brought about by the COVID-19 pandemic.

We continue to stay committed to conducting business in a sustainable manner by engaging in environmentally friendly initiatives such as sourcing of sustainable raw materials and recycling of waste materials generated in the course of production. We also embarked on our journey on adopting renewable energy sources to reduce our carbon footprint.

We also recognise that the success of our sustainability journey requires a concerted and continuous effort from all our valued stakeholders. Hence, we would like to take this opportunity to express our utmost gratitude towards the Board, the management of the Group (the "Management") and all our staff for their contribution and unwavering commitment to achieve our sustainability goals.

We are committed to build a sustainable future and deliver greater value to our esteemed stakeholders.

1

LY CORPORATION LIMITED

SUSTAINABILITY REPORT 2020

ABOUT THIS REPORT

This Report provides a summary of the Group's approaches, initiatives and strategies related to sustainability and responsible business practices.

REPORTING FRAMEWORK

This Report has been prepared in accordance with the Global Reporting Initiative ("GRI") Standards: Core option and the Listing Manual (Section B: Rules of Catalist) ("Catalist Rules") of the SGX-ST (namely, Catalist Rules 711A and 711B). The Company has selected the GRI Standards as it is a globally recognised and widely adopted framework, which enables our stakeholders to compare our sustainability performance against our industry peers.

The content of this Report is defined by the four (4) reporting principles under the GRI Standards - Stakeholder Inclusiveness, Sustainability Context, Materiality and Completeness.

SCOPE OF REPORT

The report covers the Group's furniture manufacturing and sale businesses in Malaysia for FY2020, which comprises:

• LY Furniture Sdn. Bhd. and LY Global Hub Sdn. Bhd. (collectively "LY Furniture")
• Leyo Holdings Sdn. Bhd. and its subsidiaries, Leyo Manufacturing Sdn. Bhd. and Titan Hardware Sdn. Bhd. (collectively "LHG")

SUSTAINABILITY GOVERNANCE AND REPORT DEVELOPMENT

The Board provides the oversight of the performance of the Sustainability Steering Committee ("SSC") and the Sustainability Working Committee ("SWC") which are responsible for implementation of sustainability initiatives for the Group.

FEEDBACK

This report forms part of our Annual Report for FY2020 ("2020 Annual Report") and can be viewed or downloaded from https://investor.lyfurniture.com/. As part of our continued efforts to improve our reporting, we welcome our stakeholders to submit their feedback to the following personnel:

• Mr. Tan Yong Chuan, Chief Executive Officer (CEO) at [e-mail]
• Ms. Teo Gin Lian, Chief Financial Officer (CFO) at [e-mail]

2

LY CORPORATION LIMITED

SUSTAINABILITY REPORT 2020

KEY HIGHLIGHTS

Dimensions

Material Areas

FY2020 Achievements

Environmental

Material Use

 Dedicated in attaining PEFC in the financial year

ending 31 December 2022 ("FY2022")

85% of wood from sustainable source (FY2019: 90%)

Social

Training

and

 Attained an average 4.6 training hours per

Development

employee (FY2019: 7.3 training hours)

Workplace

Health

 Achieved zero cases of workplace fatalities (FY2019:

and Safety

zero cases)

Governance

Corporate

 Complied with principles of the Code of Corporate

Governance

Governance and provided explanations where there

are deviations to the Code of Corporate Governance

(FY2019: same as FY2020)

Ethics,

Bribery and

 Achieved zero cases which are unethical, fraudulent

Corruption

or corrupt in nature (FY2019: zero cases)

Regulatory

 Achieved zero significant fines and zero reported

Compliance

cases of non-compliance with all applicable laws,

rules and regulations (FY2019: zero significant fines

and zero reported cases)

Economic

Economic Agility

 Launched nine (9) new products for LY Furniture and

one (1) new product line for LHG (FY2019: 39 new

products for LY Furniture and diversified into

original brand manufacturer business under LHG)

Quality

of

Product

 Invested approximately RM84,000 (FY2019:

and Services

RM44,000) for quality review purpose

 Achieved zero cases of significant chargeback under

LY Furniture and LHG (FY2019: six cases)

Customer

 Achieved an average of 4.1 (over a full score of 5.0)

Satisfaction

across all three (3) aspects for the customer

satisfaction survey (FY2019: 3.7)

3