18 May 2012

To our stakeholders:

I am pleased to confirm that Varitronix Limited reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,

Tony Tsoi
CEO

- Varitronix was pleased to receive the Bronze Award for Manufacturing Enterprises in the "Hong Kong Outstanding Corporate Citizenship Awards" in 2011. Varitronix corporate citizenship measures focus in three main directions. Of these, "Holistic Development of Employees" forms the basic foundation, and "Environmental Conservation" and "Community Service" programs are the tools to create an environment suitable for the wholesome development of our employees.
- Employment contract terms and conditions are in compliance with the loacl labour laws.
- A Discrimination Statement is in place. During the recruitment process , we ensure equal opportunities and hire people based on their abilities, aptitude and knowledge. Candidates are not judged because of their gender, disability, family status, race or age.
- Staff is treated with equity and respect. The Staff Handbook and Code of Conduct are also available to all staff stressing the importance of Human Rights.

- One of Varitronix's mission is to ensure employees enjoy wholesome development and our CSR activities are designed and geared towards this ultimate goal. By means of policy, training and activities, we have successfully created an environment where Varitronix staff members are respected and cared for, and where we expect they can grow with the Company.
- Suggestion box is available. Staff can communicate ideas and/ or grievances through the suggestion box or emailing to HR Department.
- Varitronix has also established a mechanism to facilitate staff and workers to vent any dissatisfaction.

- Different measures are employed to facilitate the development of our employees. Training, work-life balance activities and sports activities are direct measures to this end. Environmental protection and community service are indirect activities to achieve the same goal, and additionally bring with them other beneficial side effects.
- Varitronix is pleased to report that there have not been any incidents of Human Rights violations

- In order to create an ideal environment for employees to grow, we have to ensure in the first place that our staff feels they are respected and that they are comfortable with the company. culture. Varitronix set up a Labour Union in the Production Plant in Heyuan, Guangdong, China. This serves to offer help to needy staff, and also functions as an opinion collection agent and is ready to receive complaints from workers.
- The Company also has a mechanism to facilitate staff and workers to vent any dissatisfaction.
- Employment contracts and Staff Handbook clearly state employee rights and responsibilities and their compensation and benefits.
- As previously mentioned in the Human Rights, Varitronix has a Discrimination Statement. Candidates are not judged because of their gender, disability, family status, race or age

- Varitonix has beed accredited with QC080000 (Elimination of hazardous substances in production process) and OHSAS18000 (Occupational Health & Safety Management System)
- Employees need to receive on-the-job training and must pass the training before they can pass the probationary period.
- Work manuals also stresses the importance of the health and safety and employees follow the guidlines and rules strictly. First-aiders are traineed annually to ensure that the Company has resources to handle accidents that may occur.
- To ensure comparable pay for comparable work, the Company has participated in salary surveys of reputable agencies and will use the survey result as a benchmark when consideration the pay of the employees.
- Forced labour and underage labour are forbidden by the Company.

- External audit for the QC08000 and OHSAS18000 is conducted periodically.
- There have not been any cases of violations of the Global Compact Labour principles reported.

- Varitonix has beed accredited with ISO14001 (Environmental Protection).
- The Company is committed to reducing energy consumption and the Environmental Committee in our Production Plant sets electricity, water and paper comsuption targets every year.
- An Enviornmental Policy is in place and is voiced out to all employees.

- Under the collaboration between the Environmental Committee and Human Resources Department, environmental education programs and activities are organized each year. In 2011, we educated our fellow colleagues abour environmental protection through an Environmental Knowledge Quiz Competition, Environmental Seminar and a tree-planting activity. The Comapny also held different innovative environmental initiatives like an environmental creative slogan competition and a cycling tour in the city of Heyuan, the location of our production plant.
- Comparing 2011 and 2010, electricity consumption was reduced by 6.2%, water consumption was reduced by 1.5%, and paper consumption was reduced by 10%.
- Our engineers design a power-saving LCD product, e.g. BCD.

- External audit for the ISO14001 is conducted periodically.
- The Environmental Committee has meetings to review environmental issues and devise the annual Environmental Training plan for each year.

Varitronix and its subsidiaries (the Group) believe that honesty, integrity and fair play are important company assets in business. All staff has to ensure that the Group’s reputation is not tarnished by dishonesty or corruption. The Code of Conduct sets out the basic standard of conduct expected of all staff and the company policies on acceptance of advantages and declaration of conflict of interest by staff in connection with their official duties. This policy is formulated with reference to the “Prevention of Bribery Ordinance” in Hong Kong and serves as a guideline to staff in Hong Kong, the PRC and the overseas offices.

Training regarding the Code of Conduct is provided for the employees in both Hong Kong and Plant locations.

The Comapny have not received any incidents of corruption.