Polytec Asset : 2016 Environmental, Social and Governance Report

POLYTEC ASSET HOLDINGS LIMITED

1¥ ,1J iiii;t Jrx fi B11a.J

(Stock Code: 208)

Environmental,

Sotial and Governante Report

1. Introduction 2

2. Letter to Stakeholders 3

3. Environmental 5

4. Social 9

5. People 9

6. Operating Practices 12

7. Community 14

8. POLYTEC ASSET HOLDINGS LIMITED

   Environmental, Social and Governance Report 2016

   2
9. INTRODUCTION CORPORATE PROFILE

   Polytec Asset Holdings Limited (the "Company") (Stock Code: 208) and its subsidiaries (collectively the "Group") currently focus on the property markets in Macau, the ice and cold storage business in Hong Kong and the oil production and exploration business in Kazakhstan.

   Macau Property

   The Group owns an 80% interest in two property development projects located at Lote P (Pearl Horizon) and Lotes T+T1 (La Marina) in Macau. Both properties are located in the Orient Pearl District, adjacent to the future Hong Kong-Zhuhai-Macau Bridge, with total attributable gross floor area exceeding 700,000 square metres. The Group also owns a 50% interest in an investment property in the central district of Macau, The Macau Square, with total rental income attributable to the Group over HK$70 million in 2016.

   Ice and Cold Storage

   The ice and cold storage business of the Group has been serving the Hong Kong community for 120 years. The Hong Kong Ice & Cold Storage Company Limited ("HKICS") currently owns four ice plants which are located in Aberdeen, Yau Tong Bay, Castle Peak and Tai Po, with total daily production capacity of 1,600 tonnes. Regarding the edible ice operation, it comprises of sanitary manufacturing and packaging systems, with daily production capacity of 200 tonnes and is equipped with 25 reefer trucks (as at 31 December 2016) to support its direct sales and distribution. Besides, our direct sales and distribution of ice for the concrete industry represent approximately 85% market share in Hong Kong. In addition, the cold storage facility situated beside the ice plant in Aberdeen has a storage capacity of 9,500 tonnes or 8,100 pallets space, serving its markets jointly with our reefer trucks.

   Energy

   The Group has been engaged in energy business since it acquired 100% interest in Caspi Neft TME, an oil production and exploration company in Kazakhstan, in 2010. Currently, its wholly-owned oilfield is located in the southwest of the Alibekmola Block in the Pre-Caspian Basin in Kazakhstan. A production contract for operation of the oilfield for 25 years with the Ministry of Energy of the Republic of Kazakhstan has become effective since December 2006.

   ABOUT THIS REPORT

   This Environmental, Social and Governance ("ESG") report is prepared in compliance with the ESG Reporting Guide as set out in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

   The purpose of this report is not only to provide stakeholders with our management approach and performance, but also to comprehensively introduce our ongoing sustainable development activities directed towards the community and environment in which we operate. The Group considers sustainability essential to its long-term development.

   REPORTING PERIOD AND SCOPE

   This is the first ESG Report of the Company which covers the reporting year from 1 January to 31 December 2016, supplementing the Company's Annual Report 2016 in respect of our ESG responsibility. For governance section, please refer to pages 15 to 27 of the Annual Report 2016. Subsequently our ESG report will be issued on an annual basis.

   This year, the scope of our ESG report covers the Company and its subsidiaries operating in the ice and cold storage business in Hong Kong and the oil business in Kazakhstan.

   FEEDBACK

   We highly value any feedback regarding our ESG Report. Please feel free to direct your feedback and comments to: enquiry@polytec.com.hk

   POLYTEC ASSET HOLDINGS LIMITED

   Environmental, Social and Governance Report 2016

   3

10. LETTER TO STAKEHOLDERS

Dear Stakeholders,

I would like to take this opportunity to express my gratitude to all stakeholders for supporting the Group in the year of 2016. As one of the leaders in the ice manufacturing and cold storage industry in Hong Kong and an oil producer and explorer in Kazakhstan, the Group is highly committed to managing its operations responsibly, honestly and ethically and to complying with the laws and regulations in all locations where we operate. We believe that the true value of the Group is also determined by its level of environmental awareness, respect for people, fair and transparent conduct in commercial relationships and positive contribution to local communities.

Although 2016 was the first year that we issued our ESG report, the Group had commenced measuring certain key performance indicators since 2015. We have made steady progress in subject areas regarding environmental protection, occupational health and safety, employment and labour practices and supply chain management.

HONG KONG

As the first licenced food factory granted by the Food and Environmental Hygiene Department for manufacturing and distribution of edible ice for immediate consumption, the Group is committed to the highest product quality, water pollution control and employees' occupational health and safety. We endeavour to maximise food safety by producing the edible ice under a concealed environment with strict sanitary conditions. For the year under review, we fully complied with the Water Pollution Control Ordinance for the discharge of industrial effluent, pledging to limit the environmental footprint from our operations. Specialised trainings are also provided to ensure the health and safety of all our employees.