FY2019 Summary Report from the Sustainability Committee.

For the past decades, Frontken Group has been committed to health, safety, environmental and corporate responsibility and sustainability development. We are focused on providing our customers around the world with products, services and technologies that helps to improve and achieve the Society 5.0 and make an explicit and positive contribution to the challenges of the Sustainable Development Goals today.

In financial year 2019 ("FY2019"), we have strengthened the Frontken Group’s commitments to various aspects of sustainability development. Our sustainability report covers our accomplishments in FY2019 during which time we took important steps to strengthen and integrate our sustainability vision, which is key to long-term sustainable growth, development and profitability of the Frontken Group. We have dedicated additional resources to fully control and integrate our sustainability initiatives. These initiatives are aimed to recognise opportunities for profitability, continuous improvement, build enterprise value, all of which preserves business integrity and protects our reputation.

At Frontken Group, we build advanced technology to help our customers to develop sustainable products and services that make their critical parts last longer, perform better and look beautiful and recyclable in their critical processes. In short, we research, develop and build advanced technology to support and extend the critical processes for our customers’ businesses. Frontken technology help customers to (a) PROTECT the surfaces of their critical parts used in everyday production; (b) PRESERVE their critical parts materials, so that they last longer in everyday production; (c) PROVIDE for a sustainable future via recycling, repairing, refurbishment and re-coating.

We continue to develop business opportunities in alignment with our Sustainable Development Goals that are most relevant for Frontken Group by re-engineering more shared values from fewer resources and turning societal concerns and environmental challenges into our product and services innovations for our global customers. We believe in delivering both shareholder and social values for the long-term growth by building excellence corporate governance that will contribute positively to the society and the environment. We have spent considerable time and resources in shifting the business models of our businesses towards becoming more sustainable. We have also focused on identifying new opportunities, as evidenced by our investments in for example the re-engineering of our water usage and conservation systems as well as our waste treatment and discharge systems, that have become the leader in terms of semiconductor parts processing support technology as well as in environmental sustainability.

The Frontken Board and Management, through our internal and external stakeholder engagement and materiality assessment of our business, had earlier identified key trends and topics that are critical to the continued success of our business, such as reducing emissions to environmental, reducing energy use and waste and improving safety and productivity, creating an inclusive social platform and good corporate governance, business continuity plan, etc. We have always and constantly reviewed such risks as important opportunities to strengthen our risk management, and create long-term value and sustainable growth for our group. The assessing and improving of our operational sustainability have been integrated as part of the Frontken Group’s strategic formulation. The Board will continue to provide oversight with the support of the Sustainability Management Committee and Risk Management Committee where these materials environmental, social and governance, etc are reviewed and implemented.

In FY2019, Frontken Group continue to strengthen and focus on the five “Core Areas for Action on Sustainability’’, these five dimensions of sustainability development are (a) responsible management; (b) responsible innovation and service; (c) responsible green production; (d) responsible workplace; and (e) inclusive society and communities. Based on the material issues we identified, we have laid out a set of strategies and long-term goals in this report as our “Frontken 2025 Vision”. In the long-term vision, we aim to benchmark our sustainability development with the GRI Framework and United Nations Sustainable Development Goals by continuing to make efforts in the economic, environmental, and social dimensions of our business, and make a contribution towards resolving environmental and social issues.

We continuously improve and equip our engineers and employees to ensure they are able to continuously contribute to our sustainability development vision. For example, every engineer and employee responsibilities are included in their personal objectives and incentives, and is linked to our business operational requirements:

(a) Innovative Value Creation through product and service portfolios – designed to bring tangible benefits to our customers with competitive advantage and deliver positive social and environmental impact for sustainability development.

(b) Maximizing Resource Productivity through operations – designed to optimize all resources productivity in our production, operations and supply chain including critical materials used, eliminating waste and reducing variable cost. So as to makes us more competitive and sustainable.

Some of our highlights of our achievements are summarised as follows, with more details within our Frontken Group Sustainability Report FY2019, which the Group measure and report its sustainability performance.

2.1. FY2019 Achievement of Sustainability Goals

2.1.1. Responsible Management

Frontken views the sustainable development of its management team characters and capabilities as a key part of its corporate social responsibility. We focus on financial prudence, discipline and integrity with strong risk management. We are committed to high standards of corporate governance to sustain growth and performance, and to safeguard stakeholders’ interest and maximise long-term shareholder value. Our guiding principles are summarised as follows:

(a) Our management activities and practices embrace triple bottom line optimization which include positive triple bottom line that protects, creates, and sustains social, environmental, and economic business value.

(b) Our management decisions and practices embrace risk management, ethical decision making and create moral excellence in both process and outcome.

2.1.2. Responsible Innovation and Service

Frontken has long been the trusted technology partner and service provider to the global semiconductor industry. We are a leader in providing next generations of precision cleaning and coating technology to our customers. We help customers quickly enter into production with our precision cleaning and coating capabilities and provide them with competitive advantage in their products and yield performance. In 2019, we led the advanced precision cleaning and coating in the 5nm process technology in Taiwan. We also led the most advanced precision cleaning and coating for the next generation memory wafer process in Singapore. In FY2019, our R&D team researched and developed more environmentally friendly methods for our coating and cleaning processes, we improved our production process flow and productivity by 16% and reduced the manpower by 1.3 hours per kit, and most importantly we replace the dangerous steps and processes that are not conducive to the physical and mental health of employees and the environment.

2.1.3. Responsible Green Production

Frontken Group has continued to improve its green production method to meet the operational challenges that global warming may bring by making progress through innovation. In FY2019, our production capacity has increased while processes continue to grow more complex, but through our efforts, unit production average power usage is 11.20 kWh per part produced; the unit production average water usage is 0.12 cubic meter per part; and unit production average waste produced is 0.00037 ton (0.37kg) per part.

In FY2019, we further optimized our green power to 384,128 KW (an increase from FY2018 of 268,242 KW), directly supporting renewable energy. We continue to adhere to strict waste classification at the source, we have introduced new methods to perform internal recycling of waste water, enabling them to become reusable resources and lowering reliance on outsourcing. In FY2019, we implemented two major waste reduction projects which have resulted a total benefit of 54,443 ton of water saved and 54 ton of waste recycled. As a result of our implementation waste recycling projects, the total water consumption was further reduced in 2019 by 5.8%. We are committed to complying with or exceeding all relevant regulatory requirements, to prevention of pollution and to continual improvement in the environmental, health and safety performance of its operations, processes and products.

2.1.4. Responsible Workplace

Frontken group recruits and employs people based on their talents, without regard to their nationality around the world in a fair, open, and just fashion. Frontken strive to groom and retain a diverse and robust talent pool to support and drive our growth through continuous training and development and instilling a strong culture of safety and excellence, whilst encouraging work-life balance. These are implemented through talent development, groom leaders, knowledge training and exchange, health & safety, employee wellness, etc. We employ people based on their talents, without regard to their nationality. We offer good terms of compensation above the industry average, leave and benefits that meet employees’ needs, a variety of training courses, and do our utmost to create a safe and healthy work environment.

In FY2019, Frontken employee Retention Rate is 98.94%.

Frontken contributed or invested more than 9,664 hours to train employees.

We have a very low health and safety recordable injury rate of 0.01 hour per 100 Employees.

2.1.5. Inclusive Society and Communities

Frontken aims to be proactive in corporate social responsibility to create a total inclusive society and communities. Through the caring for education of the underprivileged, providing education opportunities, and promoting sports, arts and culture, we encourage employees to participate in public service in reading, guiding, ecology and conservation, and caring for the underprivileged and elderly.

In FY2019, Frontken and its volunteers contributed for a total of 5,282 hours.

We have been supporting schools and non-profit organizations to benefit a total of 9 people.

2.2. Conclusion

Our report highlights Frontken Group products and services that contribute to our customers’ sustainability goals, such as precision recycle cleaning, refurbishment, re-coatings for critical parts that extend the parts life, products that prevent corrosion and conserve natural resources and other products and services that support the enhanced performance of wafer manufacturing processes. We also report on our efforts to ensure we conduct our business in a socially responsible manner along our entire value chain, from the materials we buy and the production method in which our products and services are used.

Frontken engineers and employees are continuously developing and producing products and services and/or working together with our customers enabling them to optimize the use of our technology. Our employees are critical to our sustained success. Our report explains our efforts to ensure the health and safety of our employees, and at the same time support their development and job satisfaction. We also recognise the important work we do to protect the communities where our employees live and work by ensuring that our production facilities adhered to rigorous environmental standards.

On behalf of the Board and Management of Frontken Group, we would like to thank all our staff, partners and stakeholders who have been with us throughout our sustainability journey. We look forward to your continued engagement, partnership and support. On behalf of all of us at Frontken, we hope this report provides you with new insights into our business and the ways in which we embrace sustainability. Thank you for your time.