Message from the Chairman and the President

Dear friends and supporters of sustainability at LITEON

The global economy and industry faced many challenges in 2020. Nevertheless, the diligent efforts of everyone at LITEON made it possible for LITEON to report a global consolidated revenue of NTD 157.13 billion and operating profits of NTD 10.21 billion, up 9% YoY. The net profits were NTD 10.02 billion with EPS of NTD 4.31, up 7% YoY, posting record high annual profit margins and EPS. The achievement demonstrates LITEON's ongoing success in developing core competencies, creating stronger operations, and increasing profitability.

In terms of operations, LITEON continues to develop products in cloud computing, 5G/AIoT, opto-electronic, automotive electronic and other key products. We also continue to fulfill our promises and commitments to the environmental, green and low carbon products. We implement the Science Based Targets (SBTs) and voluntary carbon setting at 39.3% reduction per unit of revenue in 2025 compared to 2014 as the base year. We also set an improvement target to increase energy conversion efficiency of power supply products by 2% by 2023 compared to 2016 as the base year.

In 2020, energy conversion efficiency for LITEON power supply products increased by 4.56% compared to the base year. The 2% improvement target was reached ahead of schedule. The improvement helps users worldwide save about 466 GWh in total electricity consumption and reduce carbon emissions by 237,000 tonnes CO2e per year. At the same time, automotive LED lighting modules passed carbon footprint verification. Networking modules, cloud computing power systems, computer peripherals and other information technology products are also being optimized on an ongoing basis. In terms of manufacturing, we not only make continuous process and equipment improvements to achieve green and low carbon manufacturing, but also implement an energy recycling system (ERS) that recycles and reuses power consumed by accelerated aging testing. The system enables us to reduce power consumption by 5.8 GWh per year, which is the equivalent of reducing 4,853 tonnes of carbon emissions.

Meanwhile, LITEON fulfills its environmental promise to recycle and reuse raw materials through the SEA HOPE Project. LITEON started hosting a series of "creative coastal cleanup" in 2018. We work with domestic social enterprises that process Styrofoam marine waste, the Penghu County Government, and the Industrial Technology Research Institute to modify recycled Styrofoam marine waste into recycled plastics. In 2020, LITEON went on to sponsor the Penghu County Government and the Kinmen County Government in getting the world's first containers that could be processed on site and significantly reduce the transportation volume of Styrofoam marine waste. LITEON also succeeded in using modified recycled plastics in LITEON's own keyboard and mouse products and production lines, batch pans and packaging materials. LITEON is the world's first company to put Styrofoam marine waste in electronic products. Furthermore, LITEON obtained certification of 76% use of post-consumer recycled content and certification of origin. We plan to extend the use to other products and domains with the aim to reduce the use of fossil fuel derived plastics.

In terms of governance, the Corporate Sustainability Committee (CSR Committee) reports directly to the board of directors. LITEON Chairman Tom Soong has been the committee chairman since November 2020. The committee chairman leads the committee in setting LITEON's ESGs and overseeing their progress and makes regular reports on the plans and results to the board of directors. In addition, LITEON passed the establishment of the Nomination Committee in February 2021. The committee is responsible for devising the criteria for directors and executive officers and seeking and nominating candidates based on these criteria in order to assist the board of directors in strengthening management mechanisms and corporate governance.

For the purpose of recruiting younger generations, LITEON launched the Plain Jade Project in 2020. Campus offices were created in northern, central and southern Taiwan to offer students opportunities to apply their strengths and gain workplace experience through short-term (summer) internships, medium-term (cooperative) programs, and long-term (inter-university) partnerships. In 2020, the RD camp was offered in addition to help interns build up practical skills. The program connected the industry and academic institutions and helped young talent enter the workforce. Students with outstanding performance during their internship are offered priority in applying to join LITEON. In terms of social inclusion, LITEON works with Step30 on the "Light of the World" project. The project focuses on collecting used shoes and sending them to Africa. Containers used to ship used shoes will be converted onsite into classrooms. Donations will be used exclusively to improve public health conditions and the learning environment for African children.

LITEON has been listed as a member of the Dow Jones Sustainability Index (DJSI) for ten years in a row since 2011 and has had a place on the MSCI ESG Leaders Index for seven years in a row. LITEON is also ranked Bronze Class in the S&P Global Sustainability Yearbook 2021 and named to the 2020 CDP Supplier Engagement (SER) Leaderboard. In Taiwan, LITEON was included in the FTSE4Good TIP Taiwan ESG Index. The company won first prize in the electronic technology category of the Global Views Corporate Social Responsibility Survey 2021, and received the Commonwealth Magazine's Corporate Citizen 2020 Award in the large enterprise category for the 14th time. It was also ranked in the 2020 TCSA Taiwan Top 10 Sustainable Companies.

Given deteriorating conditions of the global environment and other issues such as climate change and social transformation, LITEON, following the vision where business activities and environmental sustainability coexist and create mutual benefits, had seen the future twenty years ago and started implementing international industry standards and other environmental and corporate governance regulations. Examples include the Responsible Business Alliance (RBA) Code of Conduct, the Social Accountability (SA) 8000, internationally recognized human rights standards, and greenhouse gas inventory. In addition, LITEON participates in carbon reducing SBTs, supports the Task Force on Climate-related Financial Disclosures (TCFD) and the Carbon Disclosure Project (CDP), and joins the Commit to Action initiative by We Mean Business Coalition. Going forward, we will uphold the same values and extend the reach of LITEON's positive influence in the industry and in the community. We will work with all stakeholders to make our contributions to social and environmental sustainability.

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LITE-ON Sustainability ▸

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