Natural Cool : Sustainability Report 2018

ENERGISED FOR WIDER GROWTH

SUSTAINABILITY REPORT FY 2018

1 ABOUT THIS REPORT

Natural Cool Holdings Limited ("Natural Cool" or the "Company", and together with its subsidiaries, the "Group") are pleased to present the sustainability report covering the Group's sustainability efforts in the financial year ended 31 December 2018 ("FY2018"). This report is set out on a "comply or explain" basis in accordance with Rule 711B and Practice Note 7F of the Listing Manual (Section B: Rules of Catalist) of the Singapore Exchange Securities Trading Limited ("SGX-ST").

As one of the leading air-conditioning specialists in Singapore, we are motivated by the prospect of being a benchmark creator of sustainable value for our shareholders and customers. We are committed to applying best practices in sustainability reporting and transparency to our various stakeholders.

Reporting Scope and Period

This sustainability report provides an overview of Natural Cool's sustainability performance as well as its strategies and practices, while highlighting the economic, environmental, and social impact of the Company's activities and developments. Further information on corporate governance, which is part of our sustainability, can be found under the section of "Corporate Governance" on page 103 to 130 of the Group's FY2018 Annual Report which was published on the SGXNET on 11 April 2019.

To reaffirm our commitment towards sustainability, our sustainability report will be published no later than 31 May on an annual basis from our financial year ended 31 December. This report covers the Group's sustainability practice for FY2018 from 1 January 2018 to 31 December 2018.

Reporting Process

In each reporting cycle, Natural Cool's Sustainability Reporting Committee (the "SR Committee") reviews the content of the report to determine its relevance to our business as well as to ensure that the current and emerging material issues of significance pertaining to sustainability and the interests of our stakeholders are addressed. The SR Committee includes the Chief Executive Officer, Managing Director, Chief Investment Officer, and the management personnel of all our business functions.

GRI Guidelines

We would like to inform our stakeholders that we are benchmarking our sustainability efforts in accordance with the Global Reporting Initiative ("GRI") Standards.

The GRI Sustainability Reporting Guidelines provide a globally recognised framework for companies to measure and communicate their environmental, economic, social and governance performance. We have prepared our report in accordance with the GRI Standards - Core option.

Feedback

We value feedback from our stakeholders as it allows us to continually improve our sustainability policies, processes and performance. Kindly address all feedback to the SR Committee at report.sr@natcool.com. Your feedback is important to us so that we can improve on our future reporting.

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2 STATEMENT FROM BOARD

At Natural Cool, we recognise the importance of creating long-term value for our stakeholders and believe that it can be achieved through sustainable business practices and our commitment to be a responsible corporate citizen.

The Board strives to align the Group's policies and practices with internationally recognised standards in the Environmental, Social and Governance ("ESG") themes, thus allowing us to achieve a balance between financial results, social engagement and environmental initiatives whilst ensuring the strategic growth of the Group.

The Group established an SR Committee under the guidance of the Board and conducted a formal materiality assessment to better manage non-financial risks such as environmental compliance, employment, employee health and safety and corporate governance. The SR Committee have identified four of the highest ranked material factors for reporting. The SR Committee reports directly to the Board, which has considered sustainability issues as part of its strategic formulation, determined the material Environmental, Social and Governance ("ESG") factors and overseen the management and monitoring of these factors.

With this sustainability report, which will be published annually, we would therefore like to reinforce our support and management of these newly prioritised matters through active engagement with senior management who will lead the Group's sustainability efforts.

Moving forward, we urge our stakeholders to share our commitment to sustainability and work towards a common goal of improving the economic, environmental and social well- being of the communities we operate in.

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3 OVERVIEW OF THE GROUP

Corporate Profile

Natural Cool Holdings Limited was founded in 1989. The Group is an investment holding company that trades in air-conditioners,air-conditioning components, systems and units in Singapore, Malaysia and internationally.

Widely regarded as one of Singapore's leading air-conditioning and switchgear specialist, the Group is the first to integrate both the switchgear and air-conditioning business segments in the power management and temperature-control of both commercial and residential properties.

The Group currently operates primarily in the business of air-conditioning. The Group through its subsidiaries - Natural Cool Airconditioning & Engineering Pte Ltd offers consulting, implementation, repair and maintenance services for retail, commercial, government and industrial customers. The Group also has a trading department that provides air- conditioners, related accessories and professional services to customers.

Besides engaging in trading and supplying air-conditioners parts, Natural Cool is also involved in properties investment holding, manufacturing and trading of paint and basic chemicals. Natural Cool divested its Switchgear business segment in 2015.

Vision

Natural Cool strives to be considered as the preferred choice in building solutions.

Mission

Natural Cool enhances the strength and trust in our brand name through:

• Safe, Superior, Reliable Products and Services;
• Strategic Planning.

Employee Information

As of 31 December 2018, Natural Cool has a total of 356 (2017: 298) staff. Embracing strength in diversity, we employ from a wide age group and from both genders.

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