With the background of accelerating transformations that have not been seen in a century and profound adjustments in the global economy, enterprises, as crucial drivers of human civilization progress, now face unprecedented opportunities and challenges. We are acutely aware that the era of solely pursuing economic benefits has concluded. An enterprise can build a solid foundation and win a bright future only by integrating environmental responsibility, social accountability, and governance efficiency into the genes of enterprise development. As an enterprise deeply rooted in manufacturing, Kaifa fully recognizes its mission in advancing sustainable development. In 2024, marking the 30th anniversary of its A-share listing, Kaifa embarks on a new journey of relentless endeavor. At this pivotal juncture connecting past achievements with future aspirations, we have gained invaluable insights and accumulated substantial wisdom. Guided by the priority of high-quality development, Kaifa has forged strong consensus across the organization to stabilize its core electronics manufacturing foundation, cultivate new value-creation growth points, and achieve corporate sustainability. Adhering to the sustainability strategy of 'Upholding Integrity and Innovation, Putting People First, Embracing Green and Low-Carbon', Kaifa remains resolute and resilient. All economic and sustainability indicators have been successfully achieved, with the company's overall quality continuously improving and optimizing.

Environmental: Embracing Green & Low-Carbon Practices to Ensure Sustainable Development

The manufacturing sector, as a resource and energy intensive industry, stands as the key focus area for the goals of carbon peaking and carbon neutrality. Kaifa drives green transformation through technological innovation. In 2024, we focused on building green management capabilities by fully implementing a greenhouse gas inventory system based on the ISO14064 international standard, laying the foundation for carbon reduction. Under the leadership of the Energy Conservation and Environmental Protection Leadership Group, we actively promoted environmental initiatives across all subsidiaries, implementing 33 corporate-level energy-saving projects that achieved over 300 tons of CO2 equivalent reductions, making tangible contributions to carbon neutrality.

Through process optimization and equipment upgrades, our electricity consumption intensity decreased by 15.32% and renewable energy usage increased to 10.16%. We established a five-year green factory certification roadmap, with two subsidiaries obtaining green factory certification by 2024. We enhanced waste recycling systems and implemented wastewater reuse measures to reduce natural resource dependency. By integrating environmental standards into procurement agreements with over 50 core suppliers, we extended ESG collaboration across the supply chain.

We firmly believe environmental stewardship enhances competitiveness rather than increasing costs. Kaifa continuously accelerates the transition towards intelligent manufacturing and renewable energy and contributes strength to global climate action.

Social: Putting People First to Build Resilient Organizations

Employees are the foundation of enterprises and the source of innovation. We implement employee equity incentive programs to let value creators share development achievements. We focus on career development and have established a training system based on the Kaifa model, creating a professional growth path for employees to grow together. Prioritizing employee wellbeing, we invested over 16 million RMB in occupational health and safety management and safety management education in 2024, achieving a 30% year-on-year decrease in work-related injuries per million work hours. Building a diverse and equitable workplace, we achieve 32.4% female employees and 10.2% international employees in 2024.

Employment underpins social stability. Kaifa insists on implementing stable employment policies through industrial development and talent cultivation. Through school-enterprise partnerships and specialized recruitment events, we recruit high-caliber professionals from society and academic institutions while absorbing the working-age workforce from central and western China. By coordinating employment across all levels, we integrate the concepts of 'employment powerhouse,' 'training academy,' and 'growth pathway' into our high-quality development practices. Committed to rural revitalization, we fulfill social responsibilities through consumption, assistance, employment support, and talent cultivation initiatives. In 2024, we allocated over 2 million RMB for targeted assistance programs and contributed a cumulative 2.4 million RMB in medical aid donations.

Governance: Upholding Integrity & Innovation to Drive High-quality Operations

Corporate governance serves as the cornerstone of sustainable development. Kaifa pursues balanced governance among stakeholders including shareholders, investors, employees, and society. In 2024, we achieved a milestone in governance restructuring by elevating our original ‘Board of Directors Strategy Committee’ to the 'Board of Directors Strategy and Sustainable Development Committee,' integrating commercial value creation with social responsibility in decision-making. Adhering to scientific governance, law-based governance, and balanced governance, we integrate market logic, prudent operations, and ethical governance practices. Our ESG rating in the Sino-Securities ESG Index increased to AA grade in 2024, and we were honored with the 'Top 20 Green Governance of Companies Listed in the Greater Bay Area in 2024' award, demonstrating continuous enhancement of market competitiveness and brand influence.

Innovation-driven is the intrinsic logic of sustainable development. In 2024, Kaifa concentrated on core competencies, adhered to technological leadership, strived to improve productivity, and cultivated new quality productive forces. We coped with the uncertainty of the external environment with our stability and achieved qualitative enhancement and rational quantitative growth in core businesses. We take innovation as the key variable to break through and accelerate the transformation of scientific and technological achievements into real productivity. In 2024, multiple breakthroughs have been made in advanced packaging technology, energy metering technology, and manufacturing process technology, multiple projects have participated in the formulation of domestic and international standards, and the effects of supply chain security and diversified business strategies were significant. We promote the integration of digitalization and intelligent manufacturing, deepen lean management practices, strengthen system capacity building, and shape new competitive advantages in the market.

2025 Vision: Illuminate the Journey of Progress with the Light of Sustainability

In 2025, Kaifa will mark its 40th anniversary – not just a milestone in corporate development, but proof of the collective dedication of every Kaifa employee. As we reflect on our journey and summarize our experiences and lessons, we look forward to the future with a broader perspective, gather strength with a broader mind, and do well in the present with more practical actions. Guided by our core values of 'Teamwork, People Oriented, Strive for Excellence, Innovation, Integrity & Honesty, Collaborative Growth, Financial Stability, Contribution to Society', we motivate employees with our original aspiration, mission, and spirit, strive for a new journey, and create value for a new era.

Kaifa has drawn a clear ESG development blueprint: achieve a 50% reduction in greenhouse gas emissions by 2035, achieve 60% renewable energy usage by 2050, and achieve carbon neutrality by 2060. We will continue to enhance our ESG management capabilities, strengthen our practices, deepen our actions, and build a worldwide sustainable supply. We are deeply aware that these goals are not only promises of numbers but also a solemn declaration of social responsibility and a community with a shared future for mankind.

ESG is not a multiple-choice question, but a necessary answer for the survival of enterprises. It is not a short-term strategy, but a philosophy of sustainable operation. We will use technology as our pen and responsibility as our ink to jointly write a new chapter of commercial civilization. When every kilowatt hour of electricity shines with green wisdom, every product carries the gene of goodness, and every decision reflects the ingenuity of governance, the value we pursue - 'let technological progress resonate with human well-being, and let commercial success shine with the sustainability of the earth' - can truly be realized.

To better understand stakeholders' demands and expectations, Kaifa identifies, evaluates, and approves material topics from the perspectives of 'financial importance' and 'impact importance' through questionnaire surveys and interviews, providing crucial insights for developing sustainability strategies and taking action. Meanwhile, Kaifa integrates importance assessment into the company's comprehensive risk management (ERM) process. Moving forward, Kaifa will continue to focus on stakeholders, review and update material topics, and accurately comprehend their diverse needs, guiding and directing our operations in environmental, social and governance.