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2020 Social Responsibility Report of APPOTRONICS

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Appotronics Corporation Limited

2020 Social Responsibility Report

Content

06

01

About this Report[.......................................................................................................................................................................04]

Economic Issues[.........................................................................................................................................................................24] 1. Performance pressure amid the epidemic.............................................................................................................................................24 2. Intellectual property ...............................................................................................................................................................................28

02

Message about Responsibility[...................................................................................................................................06] 1. Appotronics’s concept of responsibility...........................................................................................................................................06 2. User foremost and technology for good .............................................................................................................................................06 3. Green, low-carbon, and healthy development...................................................................................................................................07 4. Embrace regulation to achieve transparent governance..................................................................................................................07 5. Put people first by the management mechanism.............................................................................................................................08 6. Scientific prevention and control measures against COVID-19.......................................................................................................08

03

Company Profle........................................................................................................................................................................10 1. Appotronics - inventor of the ALPD ®laser display technology.........................................................................................................10
2. What is the ALPD ®technology................................................................................................................................................................11
3. Route of ALPD ®laser display ..................................................................................................................................................................12
4. Core values ...............................................................................................................................................................................................13

04

Stakeholder Analysis[............................................................................................................................................................14] 1. Stakeholder analysis...............................................................................................................................................................................14 2. Substantive issues ..................................................................................................................................................................................16 3. Social responsibility management process system..........................................................................................................................17

05

Social Responsibility Management[......................................................................................................................18] 1. Employee benefits ..................................................................................................................................................................................18 2. Customer benefits ...................................................................................................................................................................................21 3. Investor relationship ....................................................................................................................................................................................22 4. Government relationship .......................................................................................................................................................................23

07

Environment Issues[ ...............................................................................................................................................................30] 1. Concept of sustainable development .................................................................................................................................................30 2. Energy-saving and environmentally friendly products.....................................................................................................................30 3. Energy consumption and key environment indicators in 2020........................................................................................................33

08

Social Issues[....................................................................................................................................................................................34] 1. Healthcare for employees in prevention of COVID-19.......................................................................................................................34 2. Take the lead in resume production to facilitate economy recovery..............................................................................................34 3. Donate materials to empower scientific epidemic prevention and controlling............................................................................35 4. Care eyes with laser display to protect the vision of teenagers.......................................................................................................36 5. Innovate application scenarios for laser display to care about the mental health of children...................................................36 6. Establish a system to support social welfare as normal activities....................................................................................................37 7. Be awarded as the “Most Socially Responsible Listed Company”..............................................................................................37

09

Corporate Governance[........................................................................................................................................................38] 1. Corporate governance structure...........................................................................................................................................................38 2. General meeting, board of directors, and board of supervisors......................................................................................................39 3. Internal control.........................................................................................................................................................................................41

10

Sustainable Development Plan[.................................................................................................................................44] 1. Fulfill corporate environment responsibility to contribute to carbon neutrality..........................................................................44 2. Take lead in healthy development by making innovation................................................................................................................45 3. Pursue a better Appotronics..................................................................................................................................................................46

Appotronics Corporation Limited

2020 Social Responsibility Report About this Report

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Part I 01 About this Report

Coverage

In principle, this Report covers Appotronics and its subsidiaries unless specifically noted otherwise. For the convenience of expression, “Appotronics”, “the Company”, and “we” in this Report refer to “Appotronics Corporation Limited”.

Time range

January 1 to December 31, 2020. To enhance the comparability and completeness, this Report traces back to past years or extends to 2021 in certain parts.

Date of release

April 23, 2021

Principle of disclosure

This 2020 Social Responsibility Report of Appotronics Corporation Limited (hereinafter referred to as “Appotronics”, stock code: 688007.SH) is the second social responsibility report of the Company since its listing.

On the principles of being objective, standard, transparent, and comprehensive, this Report, released together with the annual report, disclosed the practices and performance of Appotronics in operation, environment, society, and other responsibility fields in 2020.

For any questions, you can reach Appotronics by its social responsibility email at: [email protected].

When selecting the content for this Report, we followed the principles of materiality and completeness in the guidelines of the Global Reporting Initiative (GRI) (G4) to present statements in economic, social, and environment aspects, with a focus on Appotronics’s sustainable development responsibilities in products, environment, employees, business partners, and government authorities. Indicators in this Report cover all entities of the Company that may have material effects on its financial and operating policies, which coverage is same as the annual report.

Data collection

In this Report, the data and information related to financial indicators comes from the audited annual report of Appotronics, while the data and information related to non-financial indicators comes from the daily management statistics of relevant departments of the Company. In case of any discrepancy between the disclosed financial data and the data in the annual report, the latter shall prevail. Appotronics guarantees that this Report is free from any false disclosure, misleading statements, or material omissions.

Reference standards

This Report was prepared with reference to the G4 Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) and the Guidelines on Corporate Social Responsibility Reporting for Chinese Enterprises (CASS-CSR 4.0).

Appotronics Corporation Limited

2020 Social Responsibility Report Message about Responsibility

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Part II 02 Message about Responsibility 1. Appotronics’s concept of responsibility

The year 2020 is a year for Appotronics to take our initiative in addressing the crisis and challenge - the spread of COVID-19 throughout the world caused in-depth impact on the world, and the complicated international conditions also brought more uncertainties. As we were moving forward under pressure, Appotronics actively fulfilled its responsibilities as a corporate social citizen by optimizing the corporate governance, continuously making disruptive innovations, implementing green and low-carbon development, and actively performing its environment responsibilities and social responsibilities.

Appotronics considers social responsibilities as proper obligations of a corporate citizen to guarantee the sustainable development of the enterprise. The compliance with laws, regulations, and social rules, the provision of technically advanced products for society, the win-win development with customers, and the creation of returns to shareholders are important embodiment of the value of the Company; to promote technical advancement, to focus on the protection of intellectual property rights, and to care about the benefits and development of employees are inevitable responsibilities of the Company; and social welfare activities, like the support provided in response to COVID-19, reflect our wish for making contribution to society and promote the stability and prosperity of society.

2. User foremost and technology for good

Appotronics believes that, by making unremitting efforts in technical innovations, we will create value for the society, provide better services to the public, and effectively fulfill the social responsibilities as a corporate citizen. With our persistence on value creation, technology innovation, and long-term development, we will continuously make disruptive technology innovations in the chosen track to create a better life for people with scientific innovation. In 2020, we released the smart video and audio operating system Feng OS, the new laser household cinema D30, the world’s first 100-inch flexible Fresnel anti-light screen, Fengmi laser TV 4K Cinema pro, laser micro projector vogue pro, S series large venue projectors, and many other new products, enabling us to take the lead in the technology development of the industry, provide high-level support for large venues, create fascinating immersive light and video spaces, and provide consumers with interactive entertainment experience with portable large screens to enrich application scenarios.

3. Green, low-carbon, and healthy development

In essence, as a green industry featuring lower energy consumption, less pollution, and higher energy efficiency, the technology industry matches with the pursuit of ecology and environment protection in the post-industrial civilization. Technology enterprises can employ their strong innovative capabilities to make use of cutting-edge technologies to transform the mode of energy utilization and reform the industrial chain and system, hence reducing carbon emission during industrial production.

Appotronics insists on the idea of sustainable development to actively promote energy saving and environment protection. In 2020, we were in conformity with standards in all key environment indicators - reduced the average water consumption per device by 35.2% and average electricity consumption by 22.5% year on year, and increased the productivity by 31% and reduced the working hours by 15% while greatly reducing the energy and resource consumption.

4. Embrace regulation to achieve transparent governance

Healthy development also means that we are willing to operate as a transparent and healthy public company - to embrace regulation, make sufficient information disclosure, accept supervision from market participants in an honest and open manner, and improve the level of corporate governance.

We have defined specific duties and responsibilities for the general meeting, board of directors, board of supervisors, and independent directors, and established the Strategy Committee, Nomination Committee, Compensation and Performance Assessment Committee, and Audit Committee under the board of directors. The Audit Department, a permanent body under the Audit Committee, carries out internal business audit and supervision in an independent and objective manner under the leadership of the Audit Committee, and keeps in routine communication with the Audit Committee to promptly report audit and regulatory information to the board of directors and ensure the effective operation of internal control of the Company.

In 2020, we disclosed 4 true, accurate, and complete regular reports, promptly disclosed 147 interim announcements on the resolutions of the general meeting and use of offering proceeds, and performed the information disclosure obligations in accordance with law to promptly notify investors of significant operating updates of the Company and progress of major matters, hence protecting the legitimate rights of investors.

Appotronics Corporation Limited

2020 Social Responsibility Report Message about Responsibility

5. Put people first by the management mecha-

nism

We uphold the core values of “respect customers, guided by performance, live up to one’s words, criticism and self-criticism”, and are committed to the mission of “new light, new life” to “become the pioneer in the display industry through disruptive technical innovations and differential mode covering the entire value chain”. We held video competition of corporate culture, elected the corporate cultural ambassador, organized all employees to learn and understand the corporate culture, promoted the implementation of corporate documents, and upheld the corporate culture as guidelines for daily activities, hence driving internal innovation and reform by culture to motivate and employees at all levels to make innovations.

Meanwhile, we formulated incentive programs corresponding to the operating conditions, objective achievement, and business characteristics, and provided a large platform for employees to make full play of their talents and achieve personal growth by improving the internal and external training mechanism, providing diversified promotion routs, and continuously expanding the scope of employee benefits, hence allowing all “Appotronics people” to benefit from the development of the Company.

6. Scientific prevention and control measures against COVID-19

At the beginning of COVID-19, we made quick judgement to establish the “Epidemic-fighting Panel” to implement preventive measures such as environment sterilization, issuance of facial masks, etc. With the prevention measures implemented immediately, none of our employees was verified or suspected of being infected. We implemented comprehensive control and prevention measures on an ongoing basis as normal activities, so as to provide employees with prevention instructions, materials, and mental care to safeguard the health and lives of all employees. Appotronics duly resumed production on February 10 as one of the first high-tech enterprises resuming production in Shenzhen, hence setting an exemplary role in resuming production and promoting economy recovery with safety guaranteed.

After the occurrence of the epidemic, we immediately offered our support to the front line by providing large laser display screens to Shenzhen Disease Control Center to facilitate visualization of medical data. Furthermore, we donated customized laser smart projectors equipped with keyboards and mouse for interaction to medical teams went to Wuhan, and supported in online education to help children of those went to Wuhan take “online lessons” in a safe way, solving the concerns of the medical staff so that they may focus on fighting COVID-19 without worrying about their home.

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2020 Social Responsibility Report Company Profile

Appotronics Corporation Limited

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Part III 03 Company Profile

1. Appotronics - inventor of the ALPD® laser display technology

Appotronics is a global laser display technology enterprise holding globally leading innovative technologies and core patents and capable of developing and manufacturing core devices. Our products are widely used in cinema, TV, business education, entertainment, large venue, presentation, government, and other display fields.

® Released the world’s first commercial laser light source technology in 2007 (registered trademark ALPD ) One of the first enterprises listed on the SSE STAR Market - the first in Guangdong Province and in the laser display industry on the A-shares market

Included in the first batch of stocks for the “STAR 50”

Leader in the laser display industry with technology industrialization achieved throughout the world

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2. What is the ALPD® technology

The brightest artificial light source with the purest colors on the world by now

Laser display is considered as the next generation display technology following LCD and OLED

The ALPD® technology combines the industry basis of semiconductor laser lighting with China’s advantages in rare earth resources After four upgrades, the ALPD® technology has repeatedly broken and created brightness and performance records in the industry to achieve the brightest semiconductor laser light source developed and manufactured independently by Appotronics

2020 Social Responsibility Report Company Profile

Appotronics Corporation Limited

3. Route of ALPD® laser display

Released the world’s first 100-inch ALFA flexible 2020 Fresnel anti-light screen Got listed on the SSE STAR Market in the first batch - the first in Guangdong Province and in the laser display industry on the A-shares market, stock 2019 code: 688007.SH

4. Core values

Vision

To become the pioneer in the display industry through disruptive technical innovations and differential mode covering the entire value chain

Created the brand “CINIONIC” in Hong Kong in cooperation with CFGC, Barco, and CITIC, commit2018 ted to providing “global high-end cinema solutions”

Mission

Won the first prize in “Science and Technology Award” granted by China Society of Motion Pic2017 ture and Television Engineers Released the world’s first 700 ANSI lumens 2016 high-brightness laser smart mini projector Established the first ALPD® laser cinema in China Film International Cinema in the Happy Mall, Shen2014 zhen Released the world’s first 100-inch TV, which won the highest award at Consumer Electronics Show 2013 (CES) 2013 - Product of the Future Invented the disruptive ALPD® laser display tech2007 nology Established in 2006, committed to developing next generation semiconductor light sources with 2006 higher brightness, better performance, and longer service life

New Light, New Life

Persist on the track of light, focus on the display industry, and make use of technology innovation

to create value for users with better visual experience

Core values

Respect customers

Guided by performance

Live up to our words

Criticism and self-criticism

Appotronics Corporation Limited

2020 Social Responsibility Report Stakeholder Analysis

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Part IV 04 Stakeholder analysis

Stakeholder analysis is intended to analyze all individuals (and organizations) interested in the Company to advise the Company of impacts on major stakeholders in the formulation of strategies.

Appotronics identified the following stakeholders by sending questionnaires to customers of our products, management questionnaire and interview, and interview with investors, relevant government authorities, and the media:

1. Stakeholder analysis

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Stakeholder Related social responsibility matters
Investors recognize the investment value and de- Protecting and promoting the in-
velopment prospect of the Company, and promote terests of investors
Investors
the Company to give back to society as a corporate Risk management
citizen Right to know
As our customers are mainly product users, it’s
the Company’s mission to bring advanced prod-
Provide advanced products and
Product cus- ucts to customers. Meanwhile, the Company and
solutions
tomers and its partners have established a community with
Provide efficient and high-quality
partners shared interests, growing together and sharing
services
success, as to strive to maintain the healthy devel-
opment of the industry
Safeguarding basic rights and in-
As a science and technology innovation compa- terests of employees
ny, the Company believes that it is important for Giving employees competitive re-
Employees the Company to protect the rights, interests, and
munerations, welfare and benefits
welfare of employees since talents are its valuable Providing employees with large
wealth and resources room for development and pro-
motion in career
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Stakeholder Related social responsibility matters
Complying with laws, regulations,
and industry specifications
Paying taxes in accordance with
Government authorities, as defenders of market law
Government order, are regulators to determine whether the Protecting and promoting em-
authorities Company’s products have conformed to market ployment
disciplines Promoting the development of
advanced technology
Focusing on intellectual property
protection
The Company’s sustainable development is More energy-saving and environ-
inseparable from taking priority to ecological en- mental-friendly products
vironment. During the operation, the Company Environmental-friendly produc-
Environment adheres to the principle that an enterprise, besides tion process
assuming primary responsibility for environmental Energy saving and emission re-
protection, should also actively participate in envi-
duction in terms of office environ-
ronmental protection ment
Donating materials to empower
The Company has paid great attention to the com- epidemic prevention and con-
munity as a harmony and stability relationship with trolling
Community
the community and society can affect the market Taking the lead in resume produc-
and society
environment and the sustainable development of tion to facilitate economy recovery
an enterprise Participating in major events, such
as the Winter Olympics
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Appotronics Corporation Limited

2020 Social Responsibility Report Stakeholder Analysis

2. Substantive issues

Considering the core competitiveness, product attributes, product value chain structure, industry characteristics, and other factors of the Company, as well ass the material matters identified in the interview feedback information of core stakeholders, the Company believes that Appotronics’s substantive issues of implementing its social responsibility include:

3. Social responsibility management process system

The social responsibility management process system consists of several mutually interconnected, mutually independent, and mutually supplementary social responsibility indicators. It is mainly intended to provide a whole set of comprehensive and systematic tools and standards to promote the social responsibility management of the Company, enhance communication with stakeholders, and assess the performance in corporate social responsibility.

The Chairman of Appotronics, as the highest responsible person of the social responsibility management system, leads the orderly and healthy development of social responsibility tasks from a strategic perspective.

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Win together with
Investors’rights customers
and interests
Employee
rights, inter-
ests, and devel-
Appotronics opment
substantive issues
in social responsibility
Sustainable devel-
opment concept Company’s con-
of the Company tribution to
technological
progress
Intellectual property
protection
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Appotronics believes that it is of great importance to identify the stakeholders of production and operation, pay attention to the communication with stakeholders, integrate the demands of stakeholders to the overall strategy of production and operation, and guarantee the legitimate rights and reasonable requirements of stakeholders during its fulfillment of corporate social responsibility. To achieve good results in fulfilling its corporate social responsibility, Appotronics should focus on substantive social responsibility issues identified by all stakeholders. The Company is looking forward to working with all walks of life, and persists in the original intention of creating a better world for people.

Appotronics Corporation Limited

2020 Social Responsibility Report Stakeholder Analysis

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Part V So cial Responsibility Man- 05 agement

1. Employee benefits

1.1 Employee structure

At the end of 2020, we have a total of 1,100 employees at the average age of 32, including 456 employees below 30, representing 44% of the total employees. The ratio of male to female employees is 7:3. Male employees are slightly more than female employees, which is in line with the characteristics of the technology industry.

44% 7:3 of the employees are below 30 Ratio of male to with the average age of 32 female employees

The Company has 369 R&D persons, accounting for 32% of the total number of employees. 32% R&D persons hold a master or doctor degree, while nearly 90% R&D persons hold a bachelor’s or higher degree. The core R&D team is led by the internationally leading talent in the laser display field, and attracted R&D staff graduated from wellknown domestic and foreign universities covering optical, electronics, materials, physics, mechanical designing, fine manufacturing, etc.

32% 32% 90% ratio of masters ratio of employees holding a ratio of R&D staff in total employees and doctors bachelor’s or higher degree

1.2 Compensation and benefits of employees

Based on the development objective and talent policy of Appotronics, we regulate the remuneration management on the basic idea of “matching the market environment, reflecting the value of talents, and achieving incentive effects”. We combine guaranteed benefits with incentives in balanced consideration of internal fairness and market competitiveness to achieve “consistency between responsibilities and rights, consistency between capabilities and value, and consistency between performance and benefits” in the allotment of employee remunerations.

With reference to the operating conditions, objective achievement, and business characteristics of the Company, we have formulated a corresponding incentive plan focusing on performance to inspire teams and individuals with outstanding performance, containing profit sharing bonus, patent rewards, major innovation rewards, sales commissions, sales rewards, ranking rewards (outstanding employee, quarterly/annual honor awards), and talent spotter rewards.

1.3 Career development of employees

We classified all positions into 5 position groups according to the position contribution, nature of work, and the professional knowledge and skills required - management group, technology group, professional group, marketing group, and operation group, set separate career development channels for different position groups, and formulated the Provisions on Employee Promotion Management to provide effective guidelines for the development of employees.

Meanwhile, we make every effort for resource building, helping talents to achieve rapid development on the Appotronics platform. After the efforts for years, we have gradually established a sound talent training system: the “Star Light Program” for the development of college graduates, the “Sharp Light Program” for the development of grassroots managers, and the “Polar Light Program” for the development of middle managers. The continuous talent input and intensive culture inheritance in the training at both the primary and middle level effectively support the stable development of the Company.

Senior OffiPolar Light cer Training Star Light Sharp Light Program Growth and Program development Program As a training program As a training program for middle managers, it programs for senior As a training program for grassroots is intended to empower officers for college graduates, managers, it is trainees with multipleit is intended to help intended to help business and multiplethem rapidly join promote business team management the Company as a backbones and knowledge and skills qualified employee. technology backbones through advanced This is the source of to management management training, talent building and hence serving as a link foundation of the posts as a qualified between the senior grassroots manager. talent hierarchy. level and grassroots.

Appotronics Corporation Limited

2020 Social Responsibility Report Stakeholder Analysis

1.4 Diversified training mechanisms

We comprehensively implement the three-level training management system - training programs at the Company level, universal capability training at the central level, and field-specific capability training at the department level. The layered and multiple-perspective trainings provide a learning and exchange platform for employees, hence cultivating all-round talents required by our business and achieving win-win results of corporate development and personal development. In 2020, we organized 608 training sessions for a total of 16,500 training hours, which effectively meet the demands for employee personal capability development and organization capability improvement, which received the employee satisfaction of 9 out of 10 scores.

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1.5 Other employee benefits

1.5.1 Elect employee representatives to participate in the governance of the Company

The trade union started the registration of representative candidates for the “Second Meeting of Employee Representatives” on April 29, 2020 and carried out the election on May 7, 2020 to elect 100 employee representatives and 27 representative candidates. During the term of three years, employee representatives exercise democratic management rights and participate in the review of policies and rules involving employee interests. All regular employees are qualified for the election.

1.5.2 Safeguarding the travel safety at night

We have enabled the Didi corporate version so that all employees may call for cars free of charge by using the Didi corporate version; this solves the safety concerns of employees after overtime work at night. To ensure equal benefits for employees driving to work, the Company negotiated with the property management company to provide employees leaving at night with the benefit of free parking for the day.

1.5.3 Annual physical examination for all employees

We cooperate with physical examination institutions to provide all employees with health physical examination. In 2020, the physical examination was postponed under the impact of COVID-19. With the achievement in epidemic prevention throughout China, the physical examination of all employees is planned between the middle of December to the middle of March 2021. All employees who have joined the Company for three months are qualified for this benefit.

1.5.4 Free dinner

We provide free dinners for all employees. Employees may claim for a dinner ticket after 6:30 in the evening to take the free dinner at the designated dining hall with the ticket.

2. Customer benefits

2.1 Implement strict quality control to ensure quality output

We are committed to providing the customers with high-quality products through strict quality control. Our production base has passed ISO9001 quality management system certification. The contracts executed by us with the customers generally contain quality assurance clauses, pursuant to which we have the obligation to repair the products sold by us that are found to have quality problems during the warranty period (which is 1-3 years generally) free of charge.

2.2. Continuously optimize services to improve customer experience

Our service team implements the service idea of “customer foremost” and abides by the national standard Evaluation System for After-sales Service of Commodity and our internal after-sales service management requirements to carryout internal inspection and management review, constantly optimize the service procedure, enhance monitoring and management, and continuously improve the service system. We safeguard the legitimate rights and interests of the suppliers, customers and consumers through the measures stated above.

2.3. Innovate the service mode to support customers in reducing costs and improving efficiency

For the cinema projector market, we took the lead in releasing “Laser as a Service” for cinema laser light sources in the industry. The cinemas just need to pay rents according to the length of use, without needing to purchase light sources, which will help the cinemas not only effectively reduce equipment purchase costs, labor costs and maintenance costs, but also improve their market competitiveness through the high luminance, wide color gamut, high contrast and good picture quality and other technical advantages provided by the laser light source of Appotronics.

Appotronics Corporation Limited

2020 Social Responsibility Report Stakeholder Analysis

3. Investor relationship

3.1 Embrace regulations and make compliant disclosure to respond to concerns of shareholders

The Board Secretary of the Company is responsible for external information disclosure. The Company has designated Shanghai Securities News, China Securities Journal, Securities Times, and Securities Daily as the newspaper and website for information disclosure. During the reporting period, we have always duly performed our obligation of information disclosure in accordance with the Rules Governing the Listing of Stocks on the Sci-tech Innovation Board of the Shanghai Stock Exchange, the Guidelines on the Application of Self-Regulation Rules for Companies Listed on the STAR Market No. 1 - Regulated Operation and other applicable laws and regulations, and our Information Disclosure Policy, to ensure that all shareholders and other stakeholders have equal access to the information of the Company. In 2020, we disclosed 4 true, accurate, and complete regular reports; promptly disclosed 147 interim announcements on the resolutions of the general meeting and use of offering proceeds, and voluntarily disclosed the English version of our regular reports, announcement on the recovery of the cinema business, and social responsibility report. We performed the information disclosure obligations in accordance with law to promptly notify investors of significant operating updates of the Company and progress of major matters, hence protecting the legitimate rights of investors.

We held performance briefings via video or telephone for the annual report, semiannual report, and third quarter report to build the bridge for communication between the management of the Company and the capital market.

We communicated with and answered the queries of 190+ investors via the investor hotline. We received 30+ queries in SSE E-Interaction, and replied to all the queries. Meanwhile, in consideration of the video dissemination, we opened a WeChat video account to deliver performance interpretation, business progress, management interview, and other updates of the Company to investors more vividly.

3.3 Improve the profit distribution policy and enhance the mecha-nism of returns to investors

The Company reviews the shareholder returns plan at least once every three years, makes appropriate and necessary amendments to its profit distribution policy and decides on the shareholder returns plan for the giving period according to the opinions of the shareholders (in particular, holders of public shares), the independent directors and supervisors, subject to the applicable laws, rules, regulations and normative documents.

4. Government relationship

4.1 Good faith in operation

3.2 Innovate channels for communicating with investors to deliver the investment value of the company from multiple perspectives

In 2020, we made 30+ roadshows in the form of strategy meetings with securities companies, on-site reception at the Company, teleconferences, online Q&A, etc., and communicated with 110+ buyer and seller institutions in over 240 person-times.

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30+
30+ roadshows
110+ 240
communicated with person-times
110+ buyer and for a total of 240
seller institutions person-times
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We insist on good faith in our operation. During the reporting period, neither the Company nor any director, supervisor, or senior officer was subject to investigation by a competent authority, enforcement by a judicial or disciplinary authority, or transferred to judicial authority or investigated for criminal liabilities.

4.2 Actively perform the duties as a corporate citizen

4.2.1 Compliant operation and tax payment

We abide by the relevant national laws and regulations, operate in compliance with requirements, obey the management of the local government, accept the supervision of local regulatory authorities, and strictly fulfill our obligations as a taxpayer.

4.2.2 Continuously promote employment

We strictly abide by relevant provisions of the Labor Law and the Labor Contract Law, attach importance to the protection of employee rights and interests, follow the principles of equality, voluntariness, and coordination to provide employees with equal employment opportunities in accordance with law, so as to establish a regulated and orderly, mutually beneficial, harmonious and stable relationship to make our contributions for the national objective of “stable employment”.

Appotronics Corporation Limited

2020 Social Responsibility Report Economic Issues

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06 Part VI Economic Issues

1. Performance pressure amid the epidemic

1.1 Positive trend despite the performance pressure

In 2020, our operating income was RMB 1.949 billion, leading to the net profit attributable to the Parent Company of RMB 114 million; the total assets of the Company at the end of the reporting period was RMB 3.226 billion, up by 4.09% from the beginning of the reporting period; and the equity attributable to owners of the Parent Company was RMB 2.092 billion, up by 5.93% from the beginning of the reporting period.

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On a quarterly basis, our operating income was RMB 710 million in Q4, up by 13.25% year on year; the net profit attributable to the Parent Company was RMB 69.7096 million, up by 11.85% year on year, and the net profit attributable to the Parent Company after deduction of non-recurring profit or loss was RMB 52.1120 million, up by 18.27% year on year. This revealed accelerated recovery of the quarterly performance.

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Appotronics Corporation Limited

2020 Social Responsibility Report Economic Issues

1.2 Continuously increasing R&D expenses

In 2020, we invested a total of RMB 204 million in R&D, representing 10.49% of the operating income achieved in 2020 and the continuous increase in R&D expenses.

R&D investments in 2020 RMB 204,443,369.10

RMB 1,948,884,176.83 of total operating income

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R&D ratio
10.49%
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ALPD® technology architecture has been upgraded to the fourth generation. The performance of each generation of architecture platform has been improved in an all-round way as compared to the previous generation, thereby enabling us to maintain the technical and performance advantages in the industry. We have a group of high-quality R&D personnel, including a lot of doctors graduated from famous domestic and foreign universities. Our R&D team has taken the lead in the research of laser display technology in the industry.

1.3 “Constant” technical innovation

The ALPD® technology, as the mainstream technology in the laser display industry, has promising prospect for continuous development. This is the first time for China to take the lead in display technology. With the laser optical engine as the core, upstream and downstream industrial chains are connected to create a new technology innovation layout in the industry, hence promoting technology advancement and development in the display industry. The increasing R&D investments guarantee a high technical barrier for the Company to continuously lead the industry. In consideration of long-term development and meeting the new demands for information display, the Company established the AR Business Division for AR layout to explore more hardcore drive technologies, and achieved preliminary development of ALPD5.0 and ALPD6.0 technologies for next-generation technology around performance promotion and independent development of an image display chip.

1.4 Frequent release of new products

In 2020, we released the smart video and audio operating system Feng OS, the new laser household cinema D30, the world’s first 100-inch flexible Fresnel anti-light screen, Fengmi

laser TV 4K Cinema pro, laser micro projector vogue pro, S series large venue projectors, and many other new products, enabling us to take the lead in the technology development of the industry.

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The world’s first 100-inch flexible Fresnel anti-light screen

FengOS smart video and audio operating system

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Fengmi 4K Cinema Pro

Laser TV 4K Max

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New laser household cinema D30

Fengmi Vogue Pro

Appotronics Corporation Limited

2020 Social Responsibility Report Economic Issues

2. Intellectual property

2.1 Appotronics’s understanding of intellectual property rights

Innovation is the first driver for development, while intellectual property rights are intended to protect innovation. As a globally leading laser display technology enterprise with innovative technologies, core patents, and capability of developing and manufacturing core devices, Appotronics has always persisted on the strategic development idea of “technology-oriented corporate development” since its establishment in 2006, and practiced the understanding of “innovation is the first driver for development, while intellectual property rights are intended to protect innovation” by focusing on R&D innovation and protection of intellectual property rights.

2.2 Establishment of the intellectual property team

Appotronics has always attached great attention to R&D and intellectual property rights. It has established the Intellectual Property Rights and Legal Department to support the R&D system. The department is responsible for patent application, protection of intellectual property rights, and tracking of technology development trends, so as to transform the R&D achievements of the Company into an intellectual property barrier and protect the intellectual property rights of the Company from infringement.

er hand, we realized product innovation through constant technical upgrade, which result in new patents in an attempt to maintain the high profit margin of core devices, support the sustainable development of intensive and high-amount investment in R&D innovation, and drive the development of the entire industry by our leading core devices.

2.4 Promote the development of the industry

Based on technology innovation and intellectual property rights, Appotronics is committed to applying its core patented technologies to various scenarios and taking the lead in achieving industrialization of laser display technologies. From the laser projection halls at cinemas to laser household cinemas, from business education laser projectors for classrooms and meeting rooms to large venue laser projectors, the technical innovation achievements of our advanced laser display technology are benefiting all the public.

Based on technology innovation and intellectual property rights, Appotronics is open for cooperation with partners, and focuses on dual-drivers of “core devices + core patents” in exploration of the operation mode of intellectual property rights.

2.5 Take lead in the industry

As of December 31, 2020, Appotronics has over 2,000 patents granted and filed around the world, ranking the first in the field of phosphor laser display; its patent for the core fundamental architecture has been directly cited over 600 times by globally well-known enterprises.

2.3 Main measures for the protection of intellectual property rights

2.3.1 Establish and improve the system of intellectual property rules

We have established measures intended for intellectual property rights, including the Measures of Patent Management, Measures for the Assessment of Patent Applications, Measures of Trademark Management, etc., to guarantee scientific management, reasonable allocation of duties, and smooth implementation for the intellectual property department.

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2.3.2 Implement global patent layout

Through the global patent layout, we proactively safeguarded our rights in patents and explored patent-based ecology operation modes to seek and realize our patent value. On one hand, we protected our investment in R&D by safeguarding our rights in patents; on the oth-

Appotronics Corporation Limited

2020 Social Responsibility Report Environment Issues

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Part VII 07 Environment Issues 1. Concept of sustainable development

To promote energy saving, improve energy utilization, reduce operating costs while improving economic efficiency, and create green products and services for society under the management ideas of energy saving, environment protection, green, and low carbon. We actively responded to relevant laws and regulations and the call for energy saving and emission reduction by formulating the Energy and Resources Control Procedure, Environment and Substance Control Procedure, and Waste Disposal Control Procedure, and implementing energy-saving and emission-reducing measures at various production stages to reduce our energy consumption and improve the value per unit of energy consumption.

2. Energy-saving and environmentally friendly products

2.1 Environmental-friendly production process

We continuously implemented the ISO 14001 environment management system and implemented strict environment protection requirements for all production stages and the overall supply chain with a focus on environment protection. In 2020, our environment management system passed the certification by China Quality Certification Center consecutively.

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At all stages, including product designing, material procurement, and manufacturing process, we fully implemented the idea of green and environment protection to enhance control over hazardous substances, and continuously implemented the IEC QC080000 hazardous material control system, so as to achieve international standards in all-round green designing, green procurement, and green manufacturing.

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During production, Appotronics constantly makes improvement for “energy saving and emission reduction”. We have independently developed and implemented the waste water recovery and reuse system, implemented the project for central air-conditioning system, air compressors, and UV purifier systems, project for product ageing and energy consumption reduction, and project for energy saving on production equipment to minimize the consumption of energy and impact on the environment.

2.2 Constantly optimize main production processes

With great attention paid to the improvement of efficiency for the supply chain, we have optimized all production processes, including investing in the smart line consisting of automatic equipment with a larger scale, which lead to an increase by 31% in production while a decrease by 15% in production hours in 2020.

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Item 2019 2020 % Growth
Production volume 115,400 sets 150,800 sets 31%
Production hours 799,000 hours 678,000 hours -15%
About 158,000 hours were saved in 2020 on the production lines under equivalent produc-
tion volumes compared with 2019
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Appotronics Corporation Limited

2020 Social Responsibility Report Environment Issues

2.3 The new supply chain base is officially put into operation

The Changzhou factory was officially put into operation in 2020. This will greatly support the development of the Company in all business fields, especially in the production of whole laser cinema projectors (such as C5 laser cinema projectors) and the production capacity of household products (such as flexible screen products released in 2020). The production efficiency and capacity will be greatly improved.

3. Energy consumption and key environment indicators in 2020

In 2020, we reduced the average water consumption per device by 35.2% and average electricity consumption by 22.5% year on year.

Energy and resources use/consumption in 2020

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Average
Average water
Volume Water consumption Electricity consumption electricity
consumption
(0,000 sets) (ton) (kWh) consumption
(ton/set)
(kWh/set)
Year 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
Quantity 11.50 15.08 22368.0 19012.0 4045752.0 4111249.0 0.19 0.13 35.18 27.26
Decrease in average water consumption Improve efficiency, reduce working hours, optimize the
35.2%
per device in 2020 cleaning process, and recycle waste water
Decrease in average electricity 22.5% Improve efficiency, reduce working hours, optimize the ageing process, and reduce ageing energy consumption of products;
consumption per device in 2020
optimize and air-conditioning and energy saving system
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Key environment indicators in 2020

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No. Item Objective Actual Achievement
Complaint on environment pro-
1 0 0 Achieved
tection by external parties
Reduce the average electricity
2 Over 20% 22.5% Achieved
consumption per device
Reduce the average water con-
3 Over 20% 35.2% Achieved
sumption per device
4 Total volume of hazardous waste Less than 2 tons 1.005 tons Achieved
5 Certification of the environment 100% 100% Achieved
protection system
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Appotronics Corporation Limited

2020 Social Responsibility Report Social Issues

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Part VIII 08 Social Issues 1. Healthcare for employees in prevention of COVID-19

The year 2020 witnessed the break of the epidemic. At the beginning of COVID-19, we made quick judgement to establish the “Epidemic-fighting Panel” to implement preventive measures such as environment sterilization, issuance of facial masks, etc. We implemented comprehensive control and prevention measures on an ongoing basis as normal activities, so as to provide employees with prevention instructions, materials, and mental care to safeguard the health and lives of all employees. None of our employees were verified or suspected of being infected in 2020.

2. Take the lead in resume production to facilitate economy recovery

With a series of prevention measures and preparation made, Appotronics duly resumed production on February 10 as one of the first high-tech enterprises resuming production in Shenzhen, hence setting an exemplary role in resuming production and promoting economy recovery with safety guaranteed. On March 3, 2020, European Pressphoto Agency (EPA) took a picture of Appotronics’s cinema product shop, depicting our employees inspecting products carefully with text description. After being forwarded by Wall Street Journal, the Guardian, Bajapress, Shutters Stock, The Top 10 News, and other authoritative media, this picture was widely disseminated in the western world as the “Chinese power” amid the epidemic.

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3. Donate materials to empower scientific epidemic prevention and controlling

After the occurrence of the epidemic, we immediately offered our support to the front line by providing large laser display screens to Shenzhen Disease Control Center to facilitate visualization of medical data, hence offering our help in releasing epidemic information, patient diagnosis, and tracking of suspected patients and traces in real time, and in video conferences with governments at various levels and medical institutions.

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Meanwhile, we donated customized laser smart projectors equipped with keyboards and mouse for interaction to medical teams went to Wuhan. Such mobile, portable, high-definition, and high-brightness smart mini projectors adopt the principle of reflection display, hence generating no direct lights to eyes and no blue lights to avoid visual fatigue after viewing for a long period of time. During the period of preventing and controlling the epidemic, smart mini projectors may be used as auxiliary devices for online education to help children of those went to Wuhan take “online lessons” in a safe way, solving the concerns of the medical staff so that they may focus on fighting COVID-19 without worrying about their home.

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Appotronics Corporation Limited

2020 Social Responsibility Report Social Issues

4. Care eyes with laser display to protect the vision of teenagers

At the beginning of 2020, student learning never stopped despite the shut down of schools. Parents were worried about the eyes of children since children had to take lessons using display screens. The People’s Daily, Health Times, and many ophthalmology professions and education experts advocated high-definition projector for taking online lessons, and recommended, in order, projectors, liquid crystal TVs, and LED displays. Fengmi, a subsidiary of Appotronics, intensified efforts on smart mini projector products to release Fengmi projector Smart pro, Vogue pro, and other products. Such products have the features of reflection light and diffuse reflection for eyes, hence protecting teenagers from blue light damages from mobile phones, tablet computers, liquid crystal display screens, helping children take lessons effectively while caring for eyes.

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Care for eyes with
laser
Diffuse reflection of
natural light
Effective vision Care for eyes
protection
Interactive tablet Appotronics laser projection
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5. Innovate application scenarios for laser display to care about the mental health of children

In 2020, Appotronics cooperated with Shenzhen Children’s Hospital to build a creative anesthesia induction room with laser display technologies. The integrated solution created a virtual 3D dynamic space for children to achieve the natural and immersive effects, hence realizing “no physical pain” and “no mental hurt” in children anesthesia. Children may be accompanied by their parents through a “underwater world” before entering the operating room and go into sleep step by step. Such drugless anesthesia induction effectively relieves the anxiety of children to protect their mental health.

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6. Establish a system to support social welfare as normal activities

The Company made plans for public welfare and key fields of support with reference to its strategic objectives and the actual demands for social development. We make the plan and budget for social welfare activities every year, which activities will be implemented and organized by the trade union and the Human Resources Department, respectively. Based on its development direction and strategic priorities, the Company has specified the direction for offering support of social welfare to support industry development, environment protection, education grants, charity donation, and employee care.

7. Be awarded as the “Most Socially Responsible Listed Company”

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In November 2020, National Business Daily released the 10th ranking of Chinese listed companies covering companies listed on Chinese mainland, Hong Kong, and US stock markets. Appotronics distinguished itself as the “Most Socially Responsible Listed Company” on the ranking of Chinese listed companies. Moreover, at the Second Social Responsibility Forum of Shenzhen Enterprises & Award Ceremony sponsored by Nanfang Daily, Appotronics was granted the “Award of Social Responsibility”.

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Appotronics Corporation Limited

2020 Social Responsibility Report Corporate Governance

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Part IX 09 Corporate Governance

1. Corporate governance structure

The Company strictly abided by laws and regulations, including the Company Law and the Securities Law, and requirements of the Code of Corporate Governance for Listed Companies to continuously improve corporate governance and improve measures for the general meeting, Board of Directors, and Board of Supervisors. A legal person governance structure featuring specific allocation of duties and obligations, effective check, scientific decision making, and coordinated implementation among the authority body, the decision-making body, the supervision body, and operation and management staff.

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2. General meeting, board of directors, and board of supervisors

In 2020, the Company strictly abided by the requirements of the Company Law, the Securities Law, and the Code of Corporate Governance for Listed Companies to improve the legal person governance structure, regulates its operation activities, actively implement internal control, set up and improve internal control measures, and enhance information disclosure, so as to safeguard the interests of the Company and all shareholders. The general meeting, Board of Directors, Board of Supervisors, board committees, and management all diligently fulfilled their duties in accordance with laws and regulations to promote the secure, stable, healthy, and continuous development of the Company. The actual operation of the Company was in compliance with the requirements on the governance of listed companies released by China Securities Regulatory Commission (CSRC).

In 2020, the Company convened 4 general meetings, 8 meetings of the Board of Directors, 6 meetings of the Board of Supervisors, and 10 meetings of board committees covering the matters on investment in and financing for subsidiaries, related-party transactions, profit distribution, management of offering proceeds, and regular reporting.

2.1 About shareholders and the general meeting

The general meetings were convened and held in compliance with relevant rules in the Articles of Association, Procedural Rules of General Meetings, and Implementation Measures for Online Voting at General Meetings. In 2020, the Company convened 4 general meetings, including 1 annual general meeting and 3 extraordinary general meetings, all of which were voted by combining on-site voting and online voting. The procedures for convening, holding, and decision making at the general meetings were in compliance with the provisions of relevant laws and regulations, including the Company Law, and the Articles of Association. This guaranteed equal voting rights for all shareholders of the Company, especially smalland medium-sized shareholders, to fully exercise their voting rights. At the 4 general meetings, all proposals raised were reviewed and passed. The procedures for convening and

Appotronics Corporation Limited

2020 Social Responsibility Report Corporate Governance

holding the general meetings were in compliance with regulations and witnessed by lawyers on site, who have issued legal opinions to certify the legality and validity of the resolutions at such general meetings. The Board of Directors promptly disclosed announcements on the resolutions at relevant general meetings.

2.2 Directors and the Board of Directors

The Company strictly abided by the provisions of the Company Law and the Articles of Association in the election of 7 directors for the Board of Directors. Meanwhile, in accordance with relevant provisions, the Company has three independent directors, including one financial professional, one economic management professional, and one legal professional. The Board of Directors has the Audit Committee, the Compensation and Performance Assessment Committee, the Strategy Committee, and the Nomination Committee. The number of members for the Board of Directors and board committees are in compliance with the requirements in relevant laws and regulations, and are sufficient to make scientific decisions on the production, operation, and major matters of the Company. All directors abided by the Rules of Procedure of the Board of Directors and other rules to diligent attend board meetings and general meetings, actively participated in the director and supervisor trainings held by CSRC Shanghai Office, familiarized themselves with relevant laws and regulations to learn about their rights, obligations, and responsibilities as a director. In 2020, the Company held 8 board meetings, including 6 teleconferences and 2 meetings combining teleconference and on-site attendance. All directors attended the meetings diligently with no absence, and fully played their roles to provide professional and constructive suggestions and comments on major decisions of the Company, and carefully instructed the work of the management to safeguard the legitimate rights and interests of the Company and all shareholders.

2.3 Supervisors and the Board of Supervisors

The Board of Supervisors of the Company consists of three supervisors, including one employee supervisor. The number of members and composition of the Board of Supervisors are in compliance with the requirements in relevant laws and regulations. The Board of Supervisors strictly abided by the Articles of Association and the Rules of Procedure of the Board of Supervisors in convening and holding meetings of the Board of Supervisors. In 2020, the Company held 6 meetings of the Board of Supervisors. All supervisors diligently fulfilled their duties in a manner responsible to shareholders, performed legality and compliance check on the performance of directors, managers, and other senior officers and on financial matters of the Company, hence fully safeguarding the legitimate rights and interests of the Company and shareholders in a manner responsible to the general meetings.

3. Internal control

With internal control, Appotronics intends to reasonably ensure the legality and compliance in its operation and management, safety of assets, truthfulness and completeness of financial reports and relevant information, to improve operating efficiency and effects, and promote the implementation of its development strategy. To achieve the objectives of internal control, Appotronics designed and implemented an internal control system based on its organizational structure and operation mode. The system, being designed based on the COSO model, covers the control environment, risk assessment, control activities, information and communication, and monitoring, and covers the internal control system for financial reports to ensure the truthfulness, completeness, and accuracy of financial reports.

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Appotronics Corporation Limited

2020 Social Responsibility Report Corporate Governance

3.1 Control environment

The Company strictly abided by the Company Law, the Securities Law, and other laws, regulations, and normative documents to establish a regulated organization structure. We have defined specific duties and responsibilities for the general meeting, board of directors, board of supervisors, and independent directors, and established the Strategy Committee, Nomination Committee, Compensation and Performance Assessment Committee, and Audit Committee under the board of directors. The Audit Department, a permanent body under the Audit Committee, carries out internal business audit and supervision in an independent and objective manner under the leadership of the Audit Committee, and keeps in routine communication with the Audit Committee to promptly report audit and regulatory information to the board of directors and ensure the effective operation of internal control of the Company.

sessed and identified the internal control risks of the Company, and led the fixation of responsibilities and close-loop improvement in respect of the problems with internal control, to give support to the building of business and honest environment in the Company, provide guidance to business management in respect of risk control, improve their capability to proactively identify and manage business risks, and promote effective growth of the Company.

3.5 Anti-corruption by system

The Company has released the Anti-fraud Measures and Measures for Preventing Conflict of Interest, and entered into Partner Integrity Agreements with partners to establish an integrity environment both inside and outside the Company. The internal report channel, investigation mechanism, anti-corruption mechanism, and accountability mechanism further support the implementation of internal monitoring activities.

3.2 Risk assessment

The Board of Directors of the Company has a Strategy Committee responsible for making risk assessment and control on overall operating risks, strategic development risks, and risks in major investments. With the coordination from various departments, the committee collects and studies information about external risk factors, including the economic condition, industry policy, market competition, and supply of resources, and internal risk factors, including the financial conditions, capital availability, assets management, and operation management, and identifies and assesses the risks by applying both qualitative and quantitative methods to provide a basis for the management to respond to such risks.

3.3 Information and communication

The Company is committed to establishing a management system for information security by formulating a series of information security guidelines, policies, and measures to safeguard the security of information assets of the Company. This system is intended to improve the decision making and operation by the management by employing informationization means, optimizing information process, and integrating the information system. The Company attaches attention to communication and dialogue with stakeholders to listen to the comments, concerns, and suggestions of stakeholders on the sustainable development of the Company, and employs a transparent communication mechanism and unified informationization platform to properly incorporate the suggestions and requirements of stakeholders into the formulation and implementation of the Company’s policies, strategies, and plans, hence establishing a healthy, friendly, mutually beneficial, cooperative, and winwin relationship with stakeholders.

3.4 Internal monitoring

Under the leadership of the Audit Committee, the Audit Department has objectively as-

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Appotronics Corporation Limited

2020 Social Responsibility Report Sustainable Development Plan

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Part X 10 Sustainable Development Plan

Given the unprecedented changes in the previous hundred years of the world, China has entered a new era with a new role to play in the global system of climate management. The Chinese government attached great importance to climate change, persistently and actively implemented the national strategy in response to climate change, hence becoming a participant, contributor, and leader in building the global ecology civilization.

At the 75th session of the United Nations General Assembly in 2020, China committed to the world to reach the carbon emission peak by 2030, and achieve carbon neutrality by 2060. In the report on the work of the government submitted to the National People’s Congress and the Chinese People’s Political Consultative Conference held in 2021, it was proposed to carry out solid tasks to reach the objective of carbon emission peak and carbon neutrality.

As a corporate citizen, Appotronics has taken active measures in contribution to low-carbon society, and cooperated with customers and partners to implement sustainable measures along the entire industry chain and the whole service of our products and solutions, hence creating value for all stakeholders by balancing the demands for society, environment, and economy, empowering low-carbon society, protecting natural resources, and promoting the development of society. The specific measures planned include:

1. Fulfill corporate environment responsibility to contribute to carbon neutrality

On one hand, as a green industry featuring lower energy consumption, less pollution, and higher energy efficiency in essence, the technology industry matches with the pursuit of ecology and environment protection in the post-industrial civilization. On the other hand, technology enterprises can employ their strong innovative capabilities to make use of cutting-edge technologies to transform the mode of energy utilization and reform the industrial chain and system, hence reducing carbon emission during industrial production.

Appotronics will continuously take active measures to save energy and reduce energy consumption in strict compliance with laws and regulations related to energy; provide sufficient information and necessary resources to implement full-functional, whole-process, all-round and whole-life energy management, optimize energy designing, implement requirements on energy saving, so as to ensure the orderly electricity consumption and economic operation of equipment and constantly improve energy efficiency. We will implement production in an environmental friendly manner with scientific management and innovative designing to make Appotronics into an “energy-saving and environmental friendly” high-technology enterprise, hence making our contribution to the national objective of “carbon neutrality” with our practices.

2. Take lead in healthy development by making innovation

Appotronics will actively fulfil its social responsibilities to implement the idea of sustainable development and scientific development, fully care about the mutual benefits of all stakeholders, including employees, creditors, customers, consumers, and the community, while working for the economic interests of the Company and all shareholders, so as to promote the sustainable development of society and economy.

2.1 Innovate application scenarios for laser display to create

a better life

At present, our ALPD® technology has certain demonstration effect in the field of laser display, and its application covers professional market and mass market, and high-end market and low-end market. Our multiple product series can satisfy the demands of various scenar® ios. In addition, we have adopted the differential development strategy and upgraded ALPD technology from multiple angles to satisfy the demands of different market segments and applications. In the future, we will continuously release disruptive innovation and more new products to expand the application scenarios for laser display, hence truly achieving “better technology, better life”.

2.2 Enhance the building of marketing system and improve

profitability

The Company will, based on the current marketing system, give full play to the advantages of the multi-level and all-round marketing mode combining online sales with off-line sales, agent mode with direct sale mode, and sales on the domestic market with exploitation of overseas market, to expand the market layout, and continuously optimize the sales service system and enhance brand influence relying on the advantages of technologies and prod-

Appotronics Corporation Limited

2020 Social Responsibility Report Sustainable Development Plan

ucts, to realize synchronous and sound development of the base and quality of customers. In addition, the Company will actively cultivate and develop overseas market, promote its laser display products with proprietary IP in the world based on its leading technologies and outstanding products, and giving full play to the synergy effect with its strategic partners, to realize the continuous growth of sales and improvement of profitability.

2.3 Enhance internal controls and team building of talents to

promote healthy development

The Company has established relatively sound internal controls and management system, and will continue to improve its management and operation level, revise and improve internal controls, control management and operating risks, and ensure the continuous and effective implementation of internal controls. In addition, the Company will enhance the building of IT system and budget management, control costs and expenses meticulously, improve the use efficiency of funds, and realize reduction of costs and improvement of efficiency. The Company will also continuously improve the compensation and incentive mechanisms, recruit outstanding talents, motivate the employees to the maximum extent, and give full play to the employees’ creative power and maximize their potentials. Through such measures, the Company will improve its management and operational efficiency in an all-round way, and realize long-term, steady and healthy development.

3. Pursue a better Appotronics

For the future, either as a public company with stable and good development or a compliant corporate citizen, Appotronics is capable of taking more social responsibilities and taking more opportunities to implement valuable ideas. For the future, we persist on providing more growth opportunities for every employee to achieve their personal value; for the future, Appotronics will take opportunity to create more value for society, and to create a better future for people with disruptive innovation based on technology and business model.

Appotronics Corporation Limited

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Appotronics Corporation Limited — Environmental & Social Information 2021

58066_rns_2021-05-19_06f6b8bc-4a35-42ea-a9c1-c524067d3a31.PDF

2020 Social Responsibility Report of APPOTRONICS

Content

06

01

02

03

04

05

07

08

09

10

Part I ~~01~~ About this Report

Coverage

Time range

Date of release

Principle of disclosure

Data collection

Reference standards

Part II ~~02~~ Message about Responsibility 1. Appotronics’s concept of responsibility

2. User foremost and technology for good

3. Green, low-carbon, and healthy development

4. Embrace regulation to achieve transparent governance

5. Put people first by the management mecha-

nism

6. Scientific prevention and control measures against COVID-19

Part III ~~03~~ Company Profile

1. Appotronics - inventor of the ALPD® laser display technology

2. What is the ALPD® technology

3. Route of ALPD® laser display

4. Core values

Vision

Part IV ~~04~~ Stakeholder analysis

1. Stakeholder analysis

2. Substantive issues

3. Social responsibility management process system

Part V ~~So~~ cial Responsibility Man- ~~05~~ agement

1. Employee benefits

1.1 Employee structure

1.2 Compensation and benefits of employees

1.3 Career development of employees

1.4 Diversified training mechanisms

1.5 Other employee benefits

1.5.1 Elect employee representatives to participate in the governance of the Company

1.5.2 Safeguarding the travel safety at night

1.5.3 Annual physical examination for all employees

1.5.4 Free dinner

2. Customer benefits

2.1 Implement strict quality control to ensure quality output

2.2. Continuously optimize services to improve customer experience

2.3. Innovate the service mode to support customers in reducing costs and improving efficiency

3. Investor relationship

3.1 Embrace regulations and make compliant disclosure to respond to concerns of shareholders

3.3 Improve the profit distribution policy and enhance the mecha-nism of returns to investors

4. Government relationship

4.1 Good faith in operation

3.2 Innovate channels for communicating with investors to deliver the investment value of the company from multiple perspectives

4.2 Actively perform the duties as a corporate citizen

4.2.1 Compliant operation and tax payment

4.2.2 Continuously promote employment

~~06~~

Part VI Economic Issues

1. Performance pressure amid the epidemic

1.1 Positive trend despite the performance pressure

1.2 Continuously increasing R&D expenses

1.3 “Constant” technical innovation

1.4 Frequent release of new products

2. Intellectual property

2.1 Appotronics’s understanding of intellectual property rights

2.2 Establishment of the intellectual property team

2.4 Promote the development of the industry

2.5 Take lead in the industry

2.3 Main measures for the protection of intellectual property rights

2.3.1 Establish and improve the system of intellectual property rules

2.3.2 Implement global patent layout

Part VII ~~07~~ Environment Issues 1. Concept of sustainable development

2. Energy-saving and environmentally friendly products

Appotronics Corporation Limited Environmental & Social Information 2021

Part I 01 About this Report

Part II 02 Message about Responsibility 1. Appotronics’s concept of responsibility

Part III 03 Company Profile

Part IV 04 Stakeholder analysis

Part V So cial Responsibility Man- 05 agement

06

Part VII 07 Environment Issues 1. Concept of sustainable development

Part VIII 08 Social Issues 1. Healthcare for employees in prevention of COVID-19

Part IX 09 Corporate Governance

Part X 10 Sustainable Development Plan