CA Cultural Technology Group Limited — Environmental & Social Information 2017

Oct 27, 2017

China Animation Characters Company Limited Environmental, Social and Governance Report 2017

– 1 –

Contents

1.	OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
2.	REPORTING PRINCIPLES AND REFERENCE STANDARDS . . . . . . . . . . . . . .	4
3.	REPORTING SCOPE AND KEY SECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
4.	EMPLOYMENT AND LABOUR PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
5.	OPERATING PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
6.	ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
7.	COMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
8.	CSR PERFORMANCE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11

– 2 –

1. OVERVIEW

This is the first Environmental, Social and Governance Report published by China Animation Characters Company Limited (“ China Animation ” or the “ Company ”). This report is prepared with reference to the Environmental, Social and Governance Reporting Guide (hereinafter referred to as the “ Guide ”) as set out in Appendix 27 of the Rules Governing the Listing of Securities (hereinafter referred to as the “ Listing Rules ”) on Hong Kong Exchanges and Clearing Limited (hereinafter referred to as “ HKEx ”).

In accordance with the Consultation Conclusions on Review of the Environmental, Social and Governance Reporting Guide issued by HKEx on 21 December 2015, an issuer should comply with the “comply or explain” provisions for general disclosures in the report for the financial year beginning on or after 1 January 2016, where the key performance indicators under the “environment” area should be generally disclosed for the financial year beginning on or after 1 January 2017.

China Animation understands the vital importance of the environment, society and governance to the Company’s future, and recognises the far-reaching influence caused by the business model of China Animation on the environment and society. The publication of this report upon the upgrade of the Guide to “comply or explain” by HKEx and the disclosure of key performance indicators which are applicable to China Animation not only represents the consistent practice of China Animation in complying with the governing rules, but also indicates the Company’s dedication and commitment to the integration of its grave concerns on environment and society into its daily operations.

This report gives a brief overview of the environmental, social and governance concepts of China Animation, the overall performance and work highlights of the Company’s core business in respect of economy, environment and society, as well as plans and goals to be achieved in the short and long run.

This report is designed to enable the shareholders, investors (including potential investors) and the public to have a more comprehensive understanding of the Company’s corporate governance and culture. The Company is willing to take up more social responsibilities in order to maintain the balance between the interest of shareholders and social benefits. Data contained in this report is derived from the Company’s official documents and statistical reports, as well as summary and statistical data provided by companies under the Company in accordance with relevant company rules and regulations.

– 3 –

2. REPORTING PRINCIPLES AND REFERENCE STANDARDS

This report is prepared mainly with reference to the Environmental, Social and Governance Reporting Guide issued by HKEx, in order to disclose ESG-related information under the general industry and international standards.

The reporting principles emphasize the following four areas:

• Materiality: the threshold at which environmental, social and governance issues become sufficiently important to investors and other stakeholders is the core content of this report.

• Measurability: the key performance indicators involved in the effectiveness of environmental, social and governance policies and management systems may be presented in the form of quantitative data accompanied by a narrative, explaining its purposes and impacts.

• Balance: this report provides objective presentation of the Company’s performance to avoid selections, omissions, or through presentation formats that may inappropriately influence report readers’ decisions or judgments.

• Integrity: comprehensive description of the substance contained in this report is given, in order to avoid omission of any details important to stakeholders.

3. REPORTING SCOPE AND KEY SECTORS

This report includes the environmental, social and governance performance of China Animation and its major subsidiaries, including Shenzhen Wald Animation Technology Company Ltd. ( 深圳華爾德動漫科技有限公司 , “ Shenzhen Wald ”) and Huajiatai (Shanghai) Indoor Amusement Co., Ltd. ( 華嘉泰（上海）兒童室內游樂有限公司 , “ Shanghai Huajiatai ”) in their principal places of operation, namely Hong Kong and mainland China.

This report covers the period from 1 April 2016 to 31 March 2017.

By analyzing the relevance of the stakeholders’ concerns on environmental, social and governance matters and the Company’s businesses, product responsibility under the operating practices and development and training under the employment and labour practices have been a major concern of the Company and its stakeholders recently. As its work related to the environment, society and governance is further enhanced and refined and data collection becomes more mature, China Animation will continuously optimise and improve the indicators disclosed in the report and gradually cover the recommended disclosure.

– 4 –

4. EMPLOYMENT AND LABOUR PRACTICES

Employees are the most valuable treasure of China Animation and the core of the Company’s development, success and value creation. The Company has formulated numerous policies on human resources management to protect employees’ basic rights and enable employees to grow along with the Company and build up a strong sense of belonging and security to be a member of the Company.

Development and Training

China Animation cherishes every employee and believes that they will grow along with the Company’s business expansion. It provides targeted, systematic and forward-looking training for its employees, to ensure that employees can quickly meet the needs of the relevant positions while exploring the potentials of employees to support the Company’s sustainable development.

The Company provides every new recruit with induction and basic trainings, covering the Company’s vision and corporate culture training, the Company’s fundamental rules and regulations, staff manual and introduction of the reward and punishment system. The Company’s subsidiary, Shanghai Huajiatai, arranges a fundamental training for all newly or recently recruited employees every month. Such training is conducted by lecturers authorized by CA Sega Joypolis Ltd. (“ SEGA ”) in order to enhance their understanding of the Company and its operating approaches. At the same time, different departments will arrange position training and conduct assessments for staff employed in different positions. Some key positions require employment with permits for ensuring operational safety and standardization. For management personnel, the Company also organizes management skills and leadership enhancement training. As of now, all employees have received more than 6,600 hours of job training, and the average hours of job training per employee is 32 hours.

In light of the Company’s continuous development and in order to ensure the continuous enhancement of the quality of its team, the Company will enrich the forms and increase the frequency of training provided to its employees, as well as review and improve training courses on a continuous basis so as to complement its business operation and employees’ needs.

==> picture [219 x 165] intentionally omitted <==

==> picture [220 x 165] intentionally omitted <==

– 5 –

Health and Safety

China Animation pays great attention to the relationship between the Company and its employees, and strives to continuously enhance its safety performance. Adhering to the service philosophies of safety, smile, passion, services and hygiene, China Animation continues to improve occupational health and safety system, and provides staff with comprehensive protection measures as far as possible, to eliminate all kinds of potential health and safety risks. During the reporting period, there was no non-compliance with relevant national laws and regulations in respect of safe working environment by the Company.

Shanghai Huajiatai encourages employees to travel in a green manner, and prohibits employees from using electric vehicles to commute to and from workplace, with a view to eliminating its possible risks. Since the commencement of operation at the beginning of this year, Shanghai Huajiatai has not experienced any work-related injuries. Meanwhile, the Company also provides dormitories for night-shift employees to minimize safety risks associated with commuting during nighttime.

Employment

China Animation is devoted to creating a good working environment for all employees. The Company has been recruiting pursuant to the principles of openness, fairness, competition and meritocracy. Recruitment is conducted in such a way that top priority is given to internal employee transfer before considering external recruitment. It encourages reasonable mobilization of employees within the Company, thereby providing more promotion and learning opportunities for employees. As of now, the Company has a total of 223 employees. The Company will continue to improve measures in respects of attracting and retaining talents, provide career development opportunities for employees to complement its business development, and maintain the employee turnover rate at a normal level.

The Company strictly observes national and local labour laws and regulations. To comply with national and local policies, the Company established an incentive and discipline mechanism in which employees’ salaries are tied with their respective position with performance, and maintained remuneration packages at a competitive and reasonable level in the market. The Company is committed to gender equality and adopts identical standard, structure and basis in determining remuneration of both male and female employees.

Besides, Shanghai Huajiatai has set seven job ranks in each department. Employees are fully aware of their respective promotion path and conditions, and hence can develop the abilities and skills required for their own career development in a focused manner.

– 6 –

Labour Standards

China Animation strictly complies with national laws and regulations. None of the businesses of the Company employ child labour or forced labour. Currently, the minimum age requirement of all employees of the Company is 18. During the reporting period, the Company did not receive any reported cases. The Company strictly complies with the laws regarding working hours and holidays in the places where its businesses are located. Personnel at the back offices implement five- or six-day work week with eight or seven working hours per day, while on-site operators work in shifts based on the actual conditions.

During the initial stage of operation of Shanghai Huajiatai (from February to March 2016), some operators worked overtime on a voluntary basis with compensatory time off or overtime pay. Employees’ weekly overtime hours are strictly controlled in order not to exceed the limitation under local regulatory requirements.

The Company provides personal leave, sick leave, marital leave, compassionate leave, maternity leave, work injury leave, home leave and annual leave to help employees to achieve work-life balance.

5. OPERATING PRACTICES

The management system established and management measures implemented for suppliers and customers (clients) demonstrate China Animation’s effective management of and control over the environmental and social impacts directly caused by its operation. Based on its sound internal compliance management, China Animation strives to eliminate all forms of corruption. It gradually improved its supply chain management to regulate the tender process and division of power and responsibilities, and enlarged the scope of supplier assessment. In addition, it strengthened the communication with its customers and actively responded to their demands by raising service quality and effectiveness in order to maximize its role in promoting the corporate’s sustainable development.

Product Responsibility

China Animation attaches great importance to product quality and corporate credibility. Through the strict management of product quality inspection, it ensures that it provides quality products to customers. During the reporting period, there was no non-compliance with relevant national laws and regulations in respect of health and safety of its products and services by the Company.

China Animation undertakes product quality testing work of its toy products through Shenzhen Wald. Through measures such as process guidance and inspection at suppliers’ production sites, and product quality random inspection, it undertakes strict control of product quality in accordance with standards such as ISO9001, Disneyland’s COC and Bandai’s quality inspection standards.

– 7 –

As the first licensed JOYPOLIS operator of SEGA in China, Shanghai Huajiatai strictly abides by inspection standards of SEGA in park management and ensures providing customers with a safe and comfortable entertainment venue through effective operational management.

The Company requests operators of large-scale equipment to receive pre-job assessment. Professional personnel are placed to conduct on-site management for all park facilities and equipment and to provide explanations to customers in regard to the facility and points to note. In addition, a number of signs are put up at the entrances of facilities to demonstrate the points to note in accordance with the operational regulations and standard of SEGA. At the same time, the Company strictly implemented equipment inspection, conducted daily testing and inspection on all indicators of every facility, and recorded the reasons for and handled abnormal situations on a timely basis. If the reason for such abnormal situations cannot be identified, the operation of the facility will be halted in order to ensure customer safety. The Company formulated a comprehensive emergencies response plan to cope with emergency situation caused by power failure, earthquake, fire and customers. Operators conduct drills under the emergencies response plan regularly and are examined by specialists to ensure that they are able to handle emergency. Since the commencement of operation of the parks, no casualty accident has occurred.

China Animation and its subsidiaries participate in fire and safety drills in where they operate (leased commercial buildings or offices) regularly to ensure their employees are capable in handling fire incidents.

==> picture [195 x 260] intentionally omitted <==

==> picture [91 x 131] intentionally omitted <==

==> picture [95 x 127] intentionally omitted <==

==> picture [129 x 129] intentionally omitted <==

– 8 –

Supply Chain Management

The Company selects major suppliers through bidding. Regarding the business of toys trading of China Animation, it ensures that all selected suppliers have fulfilled the required qualifications, for example ISO9001, Disneyland’s COC, Japan Bandai certification, etc, so that products meet international standards.

Anti-corruption

China Animation has put in place relevant internal policies and formulated Moral Code of Conduct which stipulates its management’s scope of responsibility about anticorruption and supervision was strengthened. At the same time, China Animation undertakes daily work inspection through conducting internal audit work and formulates inspection work through Internal Audit Methods. In its daily work, the Company sets up suggestion boxes and whistle-blowing hotlines and mailboxes to strengthen the supervision over its management, and promotes an anti-corruption work ethic inside the Company to create a clean and honest working environment. With regard to procurement business, procurement personnel will sign integrity protocols. During the reporting period, there was no corruption case involving the Company or its employees. It also strictly follows relevant national legal requirements about anti-bribe, extortion, fraud and money laundering. Along with its business development, the Company will further improve its supervision system so as to provide effective protection for its sustainable development.

6. ENVIRONMENT

The Company proactively advocates the concepts of “reduce”, “reuse” and “recycle”, and is committed to protecting the environment and contributing to the society by promoting these concepts. The Company always keeps pace with the development of international environmental protection legislation and ensures that the implementation of its environmental policy is in compliance with the international standards and is in the same pace as its global peers.

Use of Resources

Effective use of resources requires a perfect management system, while the implementation of the relevant policies relies on cooperation and support from the employees. Through “Earth Hour”, National Energy Saving Publicity Week and National Low Carbon Day, the Company endeavors to create a corporate culture of valuing resources, increases employees’ awareness of environmental protection, and encourages them to actively take part in and practise commitments to environmental protection. It also posts promotional slogans such as “Save energy by turning off lights”, “Energy saving is everyone’s duty”, “Save every drop of water”, “Treasure forests by using both sides of papers”, etc next to lights, air-conditioners, washrooms and photocopiers.

– 9 –

Emissions

The Company attaches great importance to the management of waste produced from operation. As a multimedia animation entertainment provider, the Company’s operation does not involve industrial production, and hence no hazardous waste, such as chemical waste, will be produced in the course of operation. As such, it is not particularly necessary to formulate a set of general codes regarding hazardous waste. During the reporting period, there was no non-compliance with relevant national laws and regulations in respect of emissions by the Company.

For non-hazardous waste such as used paper, the Company avoids production of waste at source by such means as promoting paperless office to reduce the use of paper and promoting the reduction of use of bottled water. Recycling of non-hazardous waste produced by the Company and its subsidiaries is centrally processed at the premises where they are located at the cost of the Company included in rental or property management fees.

Company promotes green travels. Its subsidiary, Shanghai Huajiatai, provides dormitories, located close to its place of operation, for night-shift employees to provide conveniences to its employees and reduce the greenhouse gases emitted from commuting vehicles.

The Company commits to fulfill and comply with national and regional environmental protection regulations and has developed self-regulation accordingly. Awareness of environmental protection of all employees is enhanced through environmental protection activities, training program and promotion. The Company always keeps pace with the development of international environmental protection legislation and ensures that the implementation of its environmental policy is in compliance with international standards and is in the same pace as its global peers.

The Environment and Natural Resources

The business nature of the Company does not have significant impacts on the environment and natural resources (e.g. biodiversity). But the Company will constantly pay attention to possible impacts on the environment. Should there be matters which have impacts on the environment and natural resources, it will formulate targeted measures to mitigate possible risks.

– 10 –

7. COMMUNITY

The Company takes the initiatives to fulfill corporate citizenship and encourages the staff to participate in charitable activities.

Community Investment

As a key cultural enterprise in Shenzhen, Guangdong Province, China and a “Culture + Tourism” demonstration base of Shenzhen, China Animation, through the twelfth Cultural Industry Fair, showcased the latest achievements of “Innovation + Technology” and the novelty of multi-dimensional development of the animation industry, promoting the rapid development of cultural industry and undertakings of Longcheng Jiedao.

==> picture [226 x 151] intentionally omitted <==

==> picture [204 x 153] intentionally omitted <==

8. CSR PERFORMANCE SUMMARY

A. Environmental

Policies/name of Aspect indicators

Indicator values/comply or explain

A1 Emissions Policies

Owing to its business nature, China Animation is not involved in material emissions of exhaust gas, exhaust water and hazardous waste. Greenhouse gas emission caused by the use of electricity transformed from fossil fuels during its operation process constitutes its material gas emission. For concrete policies of the Company on energy saving please refer to A2.1

I n f o r m a t i o n o n compliance with the relevant laws and regulations that have a significant impact on the issuer

During the reporting period, there was no non-compliance with relevant national laws and regulations in respect of emissions by the Company.

– 11 –

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
A1.1	Types of emissions	Owing to the business nature of China
	and respective data	Animation, Shenzhen Wald and Shanghai
		Huajiatai, its operation process only
		involves greenhouse gas emission and does
		not involve pollutants regulated by national
		laws and regulations.
A1.2	Total greenhouse	E=Q*EF=1,045.72 tonnes
	g a s e m i s s i o n s
	(emitted through	where E represents total greenhouse gas
	e l e c t r i c i t y	emissions produced by electricity use;
	consumption)	Q represents electricity consumption of
		the Company, electricity consumption
		of Huajiatai being 1,265,026Kw.h, and
		electricity consumption of Shenzhen
		Wald being 26,780Kw.h; EF represents
		emission coefficients, based on local
		standards respectively. Reference standard
		of Huajiatai is 2014 China Regional Grid
		Baseline Emission Factor released by
		the National Development and Reform
		Commission; Reference standard of
		Shenzhen Wald is published as part of the
		sustainable development report of CLP
		Power.

Total greenhouse 1.24 (tonnes/m[2] ) g a s e m i s s i o n s per sq.m of floor a r e a ( e m i t t e d through electricity consumption)

A1.3 Total amount of Owing to the business nature of China hazardous waste Animation and its subsidiaries, its daily operation does not involve production of hazardous waste.

– 12 –

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
A1.4	Total amount of	Non-hazardous wastes produced by China
	n o n - h a z a r d o u s	Animation and its subsidiaries are mainly
	waste	paper and PET bottles. Because wastes
		produced by China Animation and its
		subsidiaries are centrally processed by
		the buildings/industrial parks where it
		operates, accurate statistical data about
		wastes is yet to be obtained. The following
		data shows amount of bottled water and
		paper purchased by the Company:
		Bottled water: 3,100 L;
		A4 paper: 97,500 sheets
A1.5	M e a s u r e s t o	For the Company’s policies on reducing
	mitigate emissions	emissions through electricity consumption,
	and results achieved	please refer to A2.3
A1.6	M e t h o d s a n d	Wastes produced by China Animation and
	effectiveness of	its subsidiaries are centrally processed
	waste handling	by the buildings/industrial parks where it
		operates
A2 Use of	Policies	Through “Earth Hour”, National Energy
Resources		Saving Publicity Week and National Low
		Carbon Day, China Animation increases
		employees’ awareness of environmental
		protection, and encourages them to actively
		take part in and practise commitments to
		environmental protection. China Animation
		also posts promotional slogans such
		as “Save energy by turning off lights”,
		“Energy saving is everyone’s duty”, “Save
		every drop of water”, “Treasure forests
		by using both sides of papers”, etc next to
		lights, air-conditioners, washrooms and
		photocopiers.

– 13 –

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
A2.1	T o t a l e n e r g y	1,291.81 MWh
	c o n s u m p t i o n
	(electricity only)	The major energy consumption of China
		Animation and its subsidiaries is purchased
		electricity and air-conditioning. Air-
		conditioning consumption and electricity
		consumption of Shenzhen Wald is paid
		together with rents and not calculated
		separately. Operational management
		regards it not feasible to provide usage data
		or separate statements of air-conditioning
		and electricity for individual tenants.
		Hence, it cannot obtain accurate statistical
		data.
	T o t a l e n e r g y	1.59 MWh/sq.m.
	c o n s u m p t i o n
	intensity (electricity
	only)
A2.2	T o t a l w a t e r	Water consumption of China Animation
	consumption and	and its subsidiaries is included in
	intensity	leasing rental of operation venues and
		not accounted for separately. Its water
		consumption and discharge is solely
		controlled by buildings/parks. Operational
		management regards it not feasible to
		provide usage data or separate statements
		of water use and drainage for individual
		tenants. Hence, it cannot obtain accurate
		statistical data for Shenzhen Wald.
A2.3	E n e r g y u s e	Through activities such as “Earth Hour”,
	efficiency initiatives	National Energy Saving Publicity Week
	and results achieved	and National Low Carbon Day, China
		Animation increases employees’ awareness
		o f e n v i r o n m e n t a l p r o t e c t i o n , a n d
		encourages them to actively take part in
		and practise commitments to environmental
		protection. The above plan is continual
		work and no short-term results can be seen.

– 14 –

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
A2.4	Water efficiency	China Animation posts slogans near
	i n i t i a t i v e s a n d	washrooms, such as “Energy saving is
	results achieved	everyone’s duty”, “Save every drop of
		water”, etc. The above plan is continual
		work and no short-term results can be seen.
A2.5	Total packaging	The businesses of China Animation and its
	material used for	subsidiaries do not involve packaging work
	finished products	of finished products and no packaging
		materials are needed.
A3 The	Policies	The business nature of the Company
Environment		does not have significant impacts on
and Natural		the environment and natural resources
Resources		(e.g. biodiversity). But the Company
		will constantly pay attention to possible
		impacts on the environment. Should there
		be matters which have impacts on the
		environment and natural resources, it will
		formulate targeted measures to mitigate
		possible risks.
A3.1	Measures adopted	The business nature of the Company
		does not have significant impacts on
		the environment and natural resources
		(e.g. biodiversity). But the Company
		will constantly pay attention to possible
		impacts on the environment. Should there
		be matters which have impacts on the
		environment and natural resources, it will
		formulate targeted measures to mitigate
		possible hazards.

– 15 –

B Social – Employment and Labour Practices

Policies/name of Aspect indicators Indicator values/comply or explain

B1 Employment Policies

The Company has been recruiting pursuant to the principles of openness, fairness, competition and meritocracy. Recruitment is conducted in such a way that top priority is given to internal employee transfer before considering external recruitment. It encourages reasonable mobilization of employees within the Company, thereby providing more promotion and learning opportunities for employees. The Company has established a human resources management system and strictly abides by relevant local and national regulations.

	I n f o r m a t i o n o n	The Company strictly observes national
	compliance with	and local labour laws and regulations;
	the relevant laws	During the reporting period, there was no
	and regulations that	non-compliance with relevant national laws
	have a significant	and regulations by the Company.
	impact on the issuer
B1.1	Total workforce	223
	Male	108
	Female	115
	Below 30	154
	30-50	63
	Above 50	6
	Mainland China	220
	Hong Kong	3
	Full time	190
	Part time	33
B1.2	Employee turnover	13.57% (39)
	rate

– 16 –

Policies/name of Aspect indicators Indicator values/comply or explain B2 Health and Policies China Animation and its subsidiaries Safety continue to improve occupational health

China Animation and its subsidiaries continue to improve occupational health and safety system, and provide staff with comprehensive protection measures as far as possible, to eliminate all kinds of potential health and safety risks. Shanghai Huajiatai encourages employees to travel in a green manner, and prohibits employees from using electric vehicles to commute to and from workplace, with a view to eliminating its possible risks.

I n f o r m a t i o n o n During the reporting period, there was no compliance with non-compliance with relevant national laws the relevant laws and regulations in respect of safe working and regulations that environment by the Company. have a significant impact on the issuer B2.1 Number and rate 0 o f w o r k - r e l a t e d fatalities B2.2 Lost days due to 0 work injury B2.3 M e a s u r e s a n d Shanghai Huajiatai requests operators of monitoring methods large-scale equipment to receive pre-job for occupational training and pass assessment. Personnel health and safety failing to pass assessments are not allowed to work. In addition, emergency response plans are made and emergency drills of all employees in batches are arranged.

– 17 –

Policies/name of Aspect indicators

Indicator values/comply or explain

B3 Development Policies and Training

China Animation provides targeted, systematic and forward-looking training for its employees, to ensure that employees can quickly meet the needs of the relevant positions while exploring the potentials of employees to support the Company’s sustainable development.

Shanghai Huajiatai provides every new recruit with induction training, and basic training. At the same time, different d e p a r t m e n t s w i l l a r r a n g e p o s i t i o n training and conduct assessments for staff employed in different positions. Some key positions require employment with permits for ensuring operational safety and standardization. For management personnel, the Company also organizes m a n a g e m e n t s k i l l s a n d l e a d e r s h i p enhancement training.

B3.1 The percentage of 208/223=93.3%(208) employees trained B3.2 T h e a v e r a g e 32 hours t r a i n i n g h o u r s c o m p l e t e d b y employee

– 18 –

Policies/name of Aspect indicators Indicator values/comply or explain B4 Labour Policies None of the businesses of the Company Standards

None of the businesses of the Company employ child labour or forced labour, and a human resources management system is in place. The Company has established clear provisions for working hours and overtime compensation.

I n f o r m a t i o n o n China Animation strictly complies with compliance with national laws and regulations. Currently, the relevant laws the minimum age requirement of all and regulations that employees of the Company is 18. During have a significant the reporting period, the Company did not impact on the issuer receive any reported cases.

B4.1 M e a s u r e s f o r China Animation and its subsidiaries only avoiding child and employ employees aged above 18; and a forced labour human resources management system is in place. The Company has established clear provisions for working hours and overtime compensation. B4.2 P r o c e d u r e s f o r With a suggestion box set up in the staff h a n d l i n g n o n - lounge area, feedback collected from its compliance staff will be directly passed to its general manager, who will assign personnel to conduct investigations and verifications about such non-compliance. Punishments will be imposed on non-compliance. The Company has not yet had any case of noncompliance.

– 19 –

B Social – Operating Practices

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
B5 Supply Chain	Policies	The Company selects major suppliers
Management		through bidding. Regarding the business of
		toys trading of China Animation, it ensures
		that all selected suppliers have fulfilled
		the required qualifications, for example
		ISO9001, Disneyland’s COC, Japan
		Bandai’s certification, etc, so that products
		meet international standards.
B6 Product	Policies	China Animation attaches great importance
Responsibility		to product quality and credibility. Through
		the strict management of product quality
		inspection, it ensures that it provides
		quality products to customers. China
		Animation undertakes product quality
		testing work of its toy products through
		Shenzhen Wald. Through measures such
		as process guidance and inspection at
		suppliers’ production sites, and product
		quality random inspection, it undertakes
		strict control over product quality in
		accordance with standards such as
		ISO9001, Disneyland’s COC and Bandai’s.

As the first licensed JOYPOLIS operator of SEGA in China, Shanghai Huajiatai strictly abides by inspection standards of SEGA in park management and ensures providing customers with a safe and comfortable entertainment venue through effective operational management.

I n f o r m a t i o n o n compliance with the relevant laws and regulations that have a significant impact on the issuer

During the reporting period, there was no non-compliance with relevant national laws and regulations in respect of products, services, health and safety by the Company.

– 20 –

• Policies/name of

• Aspect indicators Indicator values/comply or explain B6.1 Number of product 0 recall cases

• B6.2 Methods for dealing Shanghai Huajiatai provides operators with complaints with training in handling complaints, standardizing attitude, methods of treatment and speech skills, etc.

• B6.4 Quality assurance China Animation entrusts Shenzhen Wald process and product for conducting product quality testing recall procedures work. Through measures such as process guidance and inspection at suppliers’ production sites, and product quality random inspection, it undertakes strict control over product quality in accordance w i t h s t a n d a r d s s u c h a s I S O 9 0 0 1 , Disneyland’s COC and Bandai’s. To date, there has been no product recall case.

• B7 AntiPolicies C h i n a A n i m a t i o n h a s p u t i n p l a c e corruption relevant policies and formulated Moral Code of Conduct which stipulates management’s scope of responsibility about anti-corruption and supervision was strengthened. At the same time, China Animation undertakes daily work inspection through internal audit department and learns about progress of inspection work through Internal Audit Methods.

I n f o r m a t i o n o n During the reporting period, there was no compliance with corruption case involving the Company the relevant laws or its employees. It also strictly follows and regulations that relevant national legal requirements about have a significant anti-bribe, extortion, fraud and money impact on the issuer laundering.

– 21 –

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
B7.1	Number of corrupt	0
	cases and outcomes
	of the cases
B7.2	A n t i - c o r r u p t i o n	In its daily work, the Company sets up
	measures	suggestion boxes and whistle-blowing
		hotlines and mailboxes to strengthen the
		supervision over its management, and
		promotes an anti-corruption work ethic
		inside the Company to create a clean and
		honest working environment. With regard
		to procurement business, procurement
		personnel will sign integrity protocols.

B Social – Community

	Policies/name of
Aspect	indicators	Indicator values/comply or explain
B8 Community	Policies	The Company takes the initiatives to fulfill
Investment		corporate citizenship and encourages the
		staff to participate in charitable activities.
B8.1	F o c u s a r e a s o f	As a key cultural enterprise in Shenzhen,
	contribution	Guangdong Province, China and a “Culture
		+ Tourism” demonstration base of
		Shenzhen, China Animation, through the
		twelfth Cultural Industry Fair, showcased
		the latest achievements of “Innovation +
		Technology” and the novelty of multi-
		dimensional development of the animation
		industry, promoting the rapid development
		of cultural industry and undertakings of
		Longcheng Jiedao.

– 22 –