January, 2014

To our stakeholders:

As we draw end to 2013, dawn brings 2014 a fresh new year ahead with plenty to learn from and think about and even more to plan ahead and look forward to.

Voted Top Specialty Chemicals Singapore Company 2013 by Frost & Sullivan, coming in first runner up at the Young CSR Leaders Awards 2013 by CDL & Singapore Compact at the 5th CSR Summit and being invited to speak at IPI's TechInnovation 2013 are just but some of the colorful highlights of the group's 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.

Sincerely yours,

Dro Tan Guan Liang
Executive Director

Globalisation, technological change and changing family structures are redefining the way organisations engage their employees. Amidst tighter labour market and increase in cost, Matex like many organisations see the need for a supportive work environment to attract, retain and motivate talent who are looking beyond the pay package, but for greater work flexibility to fulfill both their work and family aspirations.

Matex continues to review and update its own Employee Handbook, which 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 comply to the handbook.

The Code of 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 revises 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.

Matex, in its labor contract, maintains a culture of openness, honesty and transparency. Staff is 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 commit to resolve the issues is 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.

On Work Life Strategy, we have continue to progressively develop programmes and infrastructures to support.
Themed “Workplace Success: Embracing Family as a Business Strategy” some items were taken from the shared http://www.employeralliance.sg/toolkit/index.html

We have also started to look closer at http://www.tafep.sg/ which takes aim at fair employment practises to avoid discrimination at work, which is not condone. Adopting fair employment practices allows Matex as much as possible to recruit and treat employees on the basis of merit, such as skills, experience or ability to perform the job and also look at the reemployment possibilities of our aging work force, by retraining them and repositioning them suitably.

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 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 allow effective communication between top management and the staff.

Human Resources and senior management work in hand to ensure that all employees are given access to the same common resources and treated 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 brandname. 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 2013, 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.

Examples can be:

- Windows shut when using air conditioning;
- Turn off lights, air conditioning, computer equipment, including desktops, upon leaving the office;
- Paper in printing documents;
- Reusable kitchenware;
- Use public transport, instead of taxis or Company cars, whenever possible to attend external meetings.

Further to that, the company makes a point to invest 10-15% 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 likes of Li & Fung, Kohl's, brands, retailers and industrial partners.etc, Matex shares these ideas to gain market ideas, feedback and acceptance.

Matex continues to support international competitions that promotes the theme of sustainability. With SDC, as in 2011, 2012, 2013 saw

"Harajuku Style"
SDC International Competition Singapore Winner Ms Goh Jen Boon battles on in Mumbai for the Grand Final.

Ms Goh Jen Boon who took first place at the Singapore heat of the International Design Competition with her design ‘ Harajuku Style’. 40 students from Singapore participated in the successful event which was jointly organised and sponsored by both the Textile & Fashion Federation Training Centre and Matex, judging held on 10th October at Central Plaza and with the awards ceremony held at SCAPE Singapore on the 17th October.

Matex clinched 2013 Singapore Specialty Chemicals Company of the Year
Singapore's Best Recognised at Inaugural 2013 Frost & Sullivan Singapore Excellence Awards

Mr. Manoj Menon, Partner & Asia Pacific Managing Director, Frost & Sullivan said that the Awards seek to
recognise best practices and outstanding performance by companies in Singapore market.

"Through this event, it gives us great joy to celebrate the top companies in Singapore whom have
demonstrated outstanding achievement and superior performance in areas such as leadership,
technological innovation, customer service, and strategic product development," he added.

Matex & Team Springboards (National University of Singapore) first runner up to Young CSR Leaders Award
CDL - Singapore Compact Young CSR Leaders Competition 2013

Project C2: MAKING THE DIFFERENCE:

Innovation, Best Practises, Ideas

organised by Singapore Compact & City Developments Limited at the 5th International Singapore Compact CSR Summit.

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 depts, 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 segragation 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 bottomlines. 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.