January, 2016

To our stakeholders:

2015: Challenging Times Ahead!

The past financial year witnessed considerable global market uncertainty and currency volatility.
The Greek crisis, coupled with the Chinese economic slowdown, impacted the world economy and Singapore too.

France chaired and hosted the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21/CMP11), from 30 November to 11 December 2015. The conference is crucial because the expected outcome is a new international agreement on climate change, applicable to all, to keep global warming below 2°C.

The conference negotiated the Paris Agreement, a global agreement on the reduction of climate change, the text of which represented a consensus of the representatives of the 196 parties attending it. The agreement will become legally binding if joined by at least 55 countries which together represent at least 55 percent of global greenhouse emissions. Such parties will need to sign the agreement in New York between 22 April 2016 and 21 April 2017, and also adopt it within their own legal systems (through ratification, acceptance, approval, or accession).

According to the organizing committee at the outset of the talks, the expected key result was an agreement to set a goal of limiting global warming to less than 2 degrees Celsius (°C) compared to pre-industrial levels. The agreement calls for zero net anthropogenic greenhouse gas emissions to be reached during the second half of the 21st century. In the adopted version of the Paris Agreement, the parties will also "pursue efforts to" limit the temperature increase to 1.5 °C. The 1.5 °C goal will require zero emissions sometime between 2030 and 2050, according to some scientists.

Prior to the conference, 146 national climate panels publicly presented draft national climate contributions (called "Intended Nationally Determined Contributions", INDCs). These suggested commitments were estimated to limit global warming to 2.7 degrees Celsius by 2100. For example, the EU suggested INDC is a commitment to a 40 percent reduction in emissions by 2030 compared to 1990. The agreement establishes a "global stocktake" which revisits the national goals to "update and enhance" them every 5 years beginning 2023. However, no detailed timetable or country-specific goals for emissions were incorporated into the Paris Agreement - as opposed to the previous Kyoto protocol.

Another global trend is the idea of "Industry 4.0" the brainchild of the German government, and describes the next phase in manufacturing -- a so-called fourth industrial revolution. The phases consist of the following:
Industry 1.0: Water/steam power.
Industry 2.0: Electric power.
Industry 3.0: Computing power.

Industry 4.0, Industrie 4.0 or the fourth industrial revolution, is a collective term embracing a number of contemporary automation, data exchange and manufacturing technologies. It had been defined as 'a collective term for technologies and concepts of value chain organization' which draws together Cyber-Physical Systems, the Internet of Things and the Internet of Services.

Industry 4.0 facilitates the vision and execution of a "Smart Factory". Within the modular structured Smart Factories of Industry 4.0, cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make decentralized decisions. Over the Internet of Things, cyber-physical systems communicate and cooperate with each other and with humans in real time, and via the Internet of Services, both internal and cross-organizational services are offered and utilized by participants of the value chain.

The first industrial revolution mobilised the mechanization of production using water and steam power. The second industrial revolution then introduced mass production with the help of electric power, followed by the digital revolution and the use of electronics and IT to further automate production.

The fourth industrial revolution will affect many areas. A number of key impact areas emerge:

Services and Business Models
Reliability and continuous productivity
IT security
Machine safety
Product lifecycles
Industry value chain
Workers
Socio-economic

With these impending challenges already taking or about to take place in the foreground, we like very much to give a big thank you to all for your support, trust and confidence. Sincere appreciation to our staff around the world for your continued dedicated contributions.

Matex continues to have to grow and be sustainable. To deliver and strive harder for credible, balanced and profitable business growth.

Listed on the Singapore Stock Exchange Main board (SGX-ST) in 2004, Matex is a leading global clean color science technology, material and specialty chemical company committed to innovation, world-class quality standards, high service levels technical support, cost-efficiency and sustainability.

As a solution provider, the Group offers a comprehensive range of colorants, auxiliaries and services with a reliable and long term commitment to develop new product solutions, application development, process technologies and services which delivers enhanced sustainability performance, introduces significant cost savings, and reduces raw material cost.

Established and headquartered in Singapore since 1989, Matex has its global sales presence, offices, centers of excellence, agencies and production plants in over 40 countries. With more than 500 employees worldwide armed with a collaborative culture and active engagement of people, this forms the driving force to achieve success in culture and commitment to shape the businesses of today and the world of tomorrow.

Encouraged by its credible successes, Matex remains grounded and adheres to the values of clean ethical business practices, technology upgrades, consistent learning, selfless environmental concerns, and all this while keeping the customer and his needs at the centre of all that we do.

Our never-ending exploration and proactiveness for innovation within our interest areas makes us an ideal one stop strategic partner of choice.

Lifestyle, Products, Performance Value Add – “Living the culture of Colour !”.

Our Vision
To be a world-class integrated service provider in CLEAN COLOUR SCIENCE TECHNOLOGIES the WORLD seeks, with our Center of Excellence in Singapore for PEOPLE, INNOVATIONS, PRODUCTS, SERVICES, TECHNOLOGIES and SOLUTIONS to our Markets.

Our Mission
To EXCEL as a global Competent SOLUTIONS PROVIDER with Pools of INNOVATIVE TALENTS ready to Explore BUSINESS Opportunities and to deliver credible and sustainable business growth.

Our Values
We Are CUSTOMER-FOCUSED for full SATISFACTION and we aim TO BE ON-TARGET to the RIGHT NEEDS, provide on time DELIVERY on-demand for the HIGHEST AND CONSISTENT QUALITY at AFFORDABLE PRICEs.

Our Promise
To meet the needs of our customers we value add through competitive and innovative VIABLE SOLUTIONS. The needs of our EMPLOYEES – with our CORPORATE VALUES. The needs of our STAKEHOLDERS – with HEALTHY RETURNS. And the needs of our ENVIRONMENT – by BEING SUSTAINABLE.

Key events and activities throughout the year further encourages the group's efforts in its growing success and its passion to continue to embrace innovation, leading best practises and ideas, to differentiate and make meaningful contributions and differences.

Matex International Limited's unwaveringly 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 will further 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, wherever possible.
Sincere appreciation

On behalf of the Board, we wish once again to extend our deepest gratitude and heartfelt thanks to all our valued customers, clients, business partners, associates, suppliers and shareholders, for your unwavering trust, support and confidence.

People continue to be the greatest assets of the Group. To our fellow board members, management and all staff around the world, we say a very big thank you for your loyalty, contributions, dedication, hard work and high level of commitment.

Wishing one and all a great new year ahead with many a good tidings!

Sincerely yours,
Dro Tan Guan Liang
Executive Director

Amidst tighter labour markets and increases in cost, Matex understands the need for a supportive work environment to attract, retain and motivate talents who are looking beyond the pay package, but for greater work flexibility to fulfill both their work and family aspirations. Globalisation, technological change and changing family structures are redefining the way organizations have to engage their employees.

Matex continues to review and update its own Employee Handbook, which is in accordance with the Universal Declaration of Human Rights, details employees’ rights and resources within the organization. Employees are invited to give suggestions and once adopted as Code of Conduct, comply to the handbook.

The Code includes guidelines related to professional ethics, best management practices as well as other clauses that aim to protect employees and external parties in the conduct of daily operations.

The Company revisits this document on a progressive basis, to ensure that it follows the organization’s growth path, reflects encountered experiences and issues and contains timely and accurate provisions for the protection of its stakeholders.
As a next step the group has pledged its commitment to implementing fair and merit-based employment practices being that it makes good business sense and is also the right thing to do.

Matex, in its labor contract, maintains a culture of openness, honesty and transparency. Its staff are encouraged to discuss issues encountered in the work place so as to find adequate solutions and prevent similar situations from happening in the future.

The Human Resources department is responsible for receiving employees’ issues and suggestions to improve the overall quality of the work environment, while respecting privacy.

HR will then be committed to resolve the issues until they are resolved in conformity with the country’s laws and Universal Human Rights principles.

Further incentive systems are looked at to encourage more proactive and reward good ideas.

To date, Matex has not encountered major incidents of Human Rights violation, due to its senior management frequently reassessing the Company’s policies and ensuring that its employees and stakeholders are treated fairly and equally helped by its in house IA and its external IA Internal Audit teams.

Matex also encourages its external partners to follow its steps and act ethically in the work place which contributes to a healthier business environment and fewer cases of violation.

Some indicators that were developed to monitor and evaluate to show performance were
A) Increased Employee Productivity, KPI scores and company business growth
B) Lower Absenteeism
C) Lower Sick Leave
D) Higher levels of engagement
E) Higher retention of talent
F) Increase ability to attract talent

Maintaining the mindset that People are our assets, capital and not cost.
Matex recognizes the importance to provide an organizational culture based on respect and trust. As a result, the Company benefits in terms of productivity and growth.

The Employee Handbook clearly states employee rights and responsibilities and their career path and benefits. At company gatherings, management takes the opportunity to further inculcate the importance of this aspect.

Within the coming year, Matex aims to continue to incorporate and communicate in its compensation packages a wider range of employee’s benefits and foster a greater sense of ownership within the organization and a common spirit of esprit de corps.

Matex has written guidelines to ensure that Labor Rights are respected and in case of violation, resolved with the best interest of the neglected party at heart. Below are a few examples of implementation measures taken by the Company:

- Employees are aware of their rights and responsibilities;
- Complaint/suggestion system is in place to allow effective communications between top management and the staff.

Human Resources and senior management work hand in hand to ensure that all employees are given access to common resources and treated possibly as best, equally in the work place.

Matex is proud to encourage freedom of speech and diversity in the work place, having employees from different nationality, religious and educational backgrounds.

Matex also encourages its external partners to follow its steps and act ethically in the work place which contributes to a healthier business environment.

Matex is a manufacturer and formulator of quality specialty chemicals and dyes focused on sustainable, low-carbon and cleantech initiatives.

Targeting to be a world leader and a specialist in clean colour science technologies through its’ dyestuffs and chemicals production. Matex has continue to promote its energy and water saving range of low temperature reactive dyestuffs under the Megapro RE brand name. The company typifies its growing commitment towards sustainability in the global textile industry further with Megapro CF a solution to T/C, CVC blends to increase significant savings and enhanced productivity.

In 2011, via its 3R Reduce, Reuse, Recycle initiative to drive towards Zero Emission, Matex channels funds to its in house team and work extensively with consultants from its partners like Sinochem in China, to make use of renewable energy sources and/or develop ways to transform waste into energy and resources still. For 2012, more than 80% from 70% in 2011 of its products can now be produce with its continuously improving production techniques that employ Flow Chemistry Techniques.

For 2015, a combined of the above efforts allows up to 80% of the plants waste to be recovered or reused with a target to push for zero discharge in the next 3 to 5 years as the pinnacle and its duty to be a leading example to its contemporaries and share the benefits with its global customers.

In addition to business activities being directly involved in fighting climate change, the Company has continue its easy to adopt and simple guidelines to reduce energy consumption in the work place and raise awareness among its stakeholders, rewarding appropriatedly good ideas and best practises of workable schemes. Encouraging and motivating the inventors and stakeholders internally.

Further to that, the company makes a point to invest up to 10% of its revenues/funds into research and development for clean technologies with an aim to provide a world of innovative solutions and practical technologies in sustainable textile processing. Through close collaborative seminars, tradeshows in various countries, advertisement in ATA and related magazines and Matex webpage, wwww.matex.com.sg and with workshops with the brands, retailers and industrial partners etc, Matex shares these ideas to gain market ideas, feedback and acceptance.

Matex continues to support international competitions that promote the theme of sustainability. With SDC, as in last 4 years, 2015’s theme of

"Buy Less, Choose Well"
“Buy less. Choose well. Make it last. Quality not quantity. Everybody is buying far too many clothes.” Dame Vivienne Westwood

Singapore Winner: Sheila Dita Christina, Nanyang Academy of Fine Arts represented at the Grand Final of SDC’s International Design Competition in London.

Matex's business solutions aim to find innovative ways to fight climate change and raise awareness among the population.
and this is by actively participating at the seminars and competition as described earlier.

In addition, energy saving and environment protection guidelines are mentioned in the Company’s Webpage and Employee Handbook.

Matex’s goal, continues to take improving steps to measure its carbon footprint from its day-to-day operations, business travel and events, on a continuous basis. In the coming year, Matex will also look out for right opportunities to partner like minded, environmentally and global compact members to further efforts in saving and caring for the environment.

Via setup guidelines and targets agreed within departments, Matex reviews these regularly, depending on subject matters, can be weekly, monthly and quarterly to measure the targets set against achieved. It also empowers key leaders to come up with creative ideas with its team to further improve on existing plans.

At the office, employees now apply the guidelines stipulated in the Employee Handbook and continuously seek new measures to limit their environmental footprint.

Matex started a programme on carbon and water footprint measures internally with its IA team and hopes to utilise some of these information as part of its sustainable report to complement with its annual report in the near future.

More emphasis will be placed on WEC emissions through help from finance in its segregation of expenses attributing to these areas and by department to find ways to reduce waste and through the universal popular Kaizen system eliminate waste for increase bottom lines. These are plot into graphs and quick charts for trend analysis and actions to follow.

Matex also encourages its external partners to follow its steps and act ethically in the work place which contributes to a healthier business environment.

It continues to work on its prospects for ISO 14064 part 1 & 2 Green House Gas Management System and ISO 50001 Energy Management. Hopefully with the guiding principles of these processes, identify more ways to better monitor and evaluate our environmental impact as baseline and performance as guiding targets.

Matex's headquarter is located in Singapore. As a public listed company it tends to face a higher need to uphold transparency and corporate governance.

In order to avoid such violations, the Company holds a strict zero-tolerance policy for corruption and bribery. The Employee Handbook, available to all employees, contains the Company policy and protocol to follow in the incidence of corruption and bribery violation. In case staff is confronted to situations where corruption and bribery are likely to take place, the Company’s protocol provides guidance on how to react and report this type of violation.

The selection of business partners and opportunities is done through a competitive bidding process, based on transparency and fairness, as to encourage market competitiveness and avoid corruption. Additionally, the Company works with an online platform where employees’ work and responsibilities can be tracked, allowing senior management to closely monitor projects and the way business is conducted with external parties.

Matex also encourages its external partners to follow its steps and act ethically in the work place which contributes to a healthier business environment.

As a result of the Company’s policy, all employees are made aware of consequences related to corruption and bribery violations. Senior management ensures as best that junior and mid level employees are best trained and a open system allows transparency to best reduce possibilities of such undesirable incidents occurring.