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Environmental, Social and Governance Report

REPORTING ON SOCIAL ASPECTS (CONTINUED)

Employment and Labour Practices (Continued)

4. Labour Standards (Continued)

During the Reporting Period, the Group had no child labour or forced labour, nor had any case of
discrimination relating to ethnic group, religion, age, disability, etc.

Operating Practices

5. Supply Chain Management

The Group endeavours to maintain an appropriate and legitimate supply chain management to promote
sound practices in our supply chain. We have a set of supplier management procedures and supplier
evaluation standards which are from time to time perform site inspection at suppliers’ premises in order
to evaluate and maintain the quality of the suppliers.

We maintain a long-term business relationship with our suppliers. China-based suppliers are preferred
due to cost advantage in transportation. However, we make strict assessment of our suppliers on
cost, quality, and delivery performance as required to fulfill their responsibilities under the procurement
contracts. Our goal is to maintain a healthy balance of suppliers on a comparable platform so that they
can compete each other and ultimately providing benefits to our company.

We also stress the importance of integrity of our suppliers and business partners. Procurement
processes are done in accordance with internal guidelines to prevent suppliers or business partners
from securing contracts through any form of transfer of interest.

We also maintain close communications with our suppliers to align them with the Group’s standards on
legal compliance, labour standards, work safety and health, environmental protection and other aspects.
We will evaluate internally any suppliers who do not meet our requirements or fail to fulfill contract
liability. These suppliers will be replaced immediately and compensate any losses arising from their
failure to fulfill contract liability.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2017 27