SUMMARY REPORT

Q3/2013

2

Supplier Uptake Progress

On-Boarding Progress in 2012 On-Boarding Progress in 2013 (by Sept. 30)

Overview of Supplier On-boarding Status by Brands

Program Dell HP Philips Apple Nokia

TOTAL 49 11 10 14 11 3

Contract signed

(Move to

implementation)

37 9 6 13 8 1

Pending 3 0 3 0 0 0

EPA in

implementation 7 0 1 1 3 2

EPA in preparation

(newly onboard) 3 2 1 0 0 0

0

2

4

6

8

5 54

2

1 4

2

2012 Q4

2012 Q3

2012 Q1-20

5

10

De

ll

HP

Phili

ps

Apple

No

kia

1 1 21 1

93

2

42

1

2

1

2013Q3

2013Q2

2013Q1

3

Geographic Location by Brands

Program Dell HP Philips Apple Nokia

TOTAL 49 11 10 14 11 3

Guangdong Area 39 10 9 8 9 3

Shanghai Area 9 1 1 5 2 0

Other 1 0 0 1 0 0

Total Factories on board (by Sept. 30) Geographic location, total factories (by Sept.30)

11

10

14

113

Total=49

Dell HP Philips Apple Nokia

38

101

Total=49

South Shanghai Area Other

4

Program KPI’s

Trend Analysis

Data Tracked Back To Number of Suppliers

January 2012 11 June 2012 1

January 2013 1 March 2013 4

June 2013 16

September 2013 10

Worker Turnover (%) Program trend is flat, but the underlying worker turnover, excluding seasonal peaks at CNY and summer workers, is declining.

0%

5%

10%

15%

20%

25%

30%

35%

Jan,2012

Feb,2012

Mar,2012

Apr,2012

May,2012

Jun,2012

Jul,2012

Aug,2012

Sep,2012

Oct,2012

Nov,2012

Dec,2012

Jan,2013

Feb,2013

Mar,2013

Apr,2013

May,2013

Jun,2013

Jul,2013

Aug,2013

Sep,2013

Program Average Program Leader Linear (Program Average)

Rework Rate (%) Program trend is reducing, with some peaks related to specific factories, possibly related to production shifts and worker turnover.

0%

1%

1%

2%

2%

3%

3%

Jan,2012

Feb,2012

Mar,2012

Apr,2012

May,2012

Jun,2012

Jul,2012

Aug,2012

Sep,2012

Oct,2012

Nov,2012

Dec,2012

Jan,2013

Feb,2013

Mar,2013

Apr,2013

May,2013

Jun,2013

Jul,2013

Aug,2013

Sep,2013

Program Average Program Leader Linear (Program Average)

5

Average Monthly Net Wages (RMB)

Program trend is increasing as minimum wages increases are applied. The seasonal low at CNY is due to lower hours and workers leaving.

Average Weekly Working Hour (Hours)

Program working hours are showing a marginally increasing trend, with seasonal lows at CNY. Average working hours are up approximately 5% YoY. This needs to be reviewed further.

1,300

1,800

2,300

2,800

3,300

3,800

4,300

Jan,2012

Feb,2012

Mar,2012

Apr,2012

May,2012

Jun,2012

Jul,2012

Aug,2012

Sep,2012

Oct,2012

Nov,2012

Dec,2012

Jan,2013

Feb,2013

Mar,2013

Apr,2013

May,2013

Jun,2013

Jul,2013

Aug,2013

Sep,2013

Program Average Program Leader Linear (Program Average)

0

10

20

30

40

50

60

Jan,2012

Feb,2012

Mar,2012

Apr,2012

May,2012

Jun,2012

Jul,2012

Aug,2012

Sep,2012

Oct,2012

Nov,2012

Dec,2012

Jan,2013

Feb,2013

Mar,2013

Apr,2013

May,2013

Jun,2013

Jul,2013

Aug,2013

Sep,2013

Program Average Program Leader Linear (Program Average)

6

Comment on Progress

Over the last three months, the program has continued to make progress with 37 suppliers implementing Work Plans and 10 suppliers conducting/preparing EPA. There are currently 49 suppliers in total in the program. On Boarding Phase Two Supplier Kickoff Events were held this year, one in Shenzhen (March) and one in Shanghai (May). A total of 26 suppliers joined the Program in Q2 and Q3 after the Kick-off event, including 9 from the Shanghai area and 15 from South China. Among them, 10 suppliers are in the process of conducting EPA. Work Plan Implementation Phase After the EPA, suppliers move into execution of their Work Plan, which is customized for each factory. Worker-Management Dialogue training is the first activity to roll out at this stage. In the first quarter of 2013, Work Plans for suppliers from the first uptake were reviewed and revised to incorporate the Dialogue structure and link the implementation modules to the improvement areas. Dialogue Core Curriculum resumed in Q3 after the revision of the training content by the Coaching Organization. The enhancement of the Continuous Improvement Team (CIT) establishment and short-term action plan development, will be facilitated by service providers. By Oct. 31, the suppliers received a total of 31 CC1, 18 CC2 and 6 CC3. We cannot understate the impact of the brand’s support and encouragement, which also helps to engage suppliers in worker-management dialogue, especially at the early stages. Additional non-dialogue modules have been lined up for implementation during Q3. The 2nd round of Frontline-supervisor ToT rolled out in July, and it has been scheduled in November for the suppliers in Shanghai area. This module is being well received by the factories and generally well supported. The Canteen Improvement Project and EHS Intensive Training were rolled out to suppliers in July. As was previously noted in the supervisor ToT sessions, suppliers who had been pro-active in training preparation and participation have shown better progress, getting more impact. This should also be noted and pro-actively supported by the brands. To reduce the ‘per supplier’ participation cost, group training was organized again in Q3. However, due to the number of suppliers requesting the same topic, it was limited in the current pool of suppliers, and progress was slowed down. This situation will be improved as more suppliers come onboard and we increase capacity. Key Learning Points: 1) To reach the target of 75 suppliers by December 2013, the Fast Track has been proposed and

confirmed by SC. This will be launched in Q4 and start at the beginning of 2014. 2) Factory management commitment and active participation from workers is key to a dynamic

dialogue and overall impact. The project team is encouraged to explore different ways to

7

ensure better commitment from factory management, as well as ways to build up the workers’ confidence, capacity and capability to participate in dialogue with management.

3) Group training, with advantages in reduced costs, and bringing in more participants for wider discussion and interaction, will be continued to be offered in the future. With more suppliers onboard this process is expected to run quicker. Meanwhile, more individual modules will be offered to suppliers to suit their Work Plan implementation schedule at a different pace.

8

APPENDIX

Progress Status

No. By Brand

Status EPA Implementation Starting Point

Work Plan KPI Collection

Involving WMD SPs

1 D1

On Track Completed Jan-13 On Track NOT SUBMITTED

TUV, TIMELINE

2 D2

On Track Completed Jan-13 On Track April and May sent

TIME LINE

3 D3

On Track Completed Jan-13 On Track NOT SUBMITTED

CLSN, TIMELINE

4 D4

On Track Completed Jan-13 On Track Submitted by July 2013

TIMELINE

5 D5

On Track Completed Jan-13 On Track Submitted by July 2013

LESN, TIMELINE

6 D6

On Track Completed Mar-13 On Track Submitted by Sep 2013

TIMELINE

7 D7

New starter Completed Oct-13 On Track - TIMELINE

8 D8

On boarding

Completed - - - TBD

9 D9

On boarding

In progress - - - TBD

10 D10

On boarding

Scheduling - - - TBD

11 D11

On boarding

Scheduling - - - TBD

12 H1

On Track Completed Jan-13 On Track Submitted by July 2013

TUV

13 H2

On Track Completed Jan-13 On Track Submitted by July 2013

Timeline

14 H3

Suspended Completed - - - TUV

15 H4

Resumed Completed Sep-13 On tract - CLSN

16 H5

On Track Completed Jun-12 On track - TUV

17 H6

Suspended Completed - - - ERI

18 H7

Pending Completed - - - ERI

19 H8

New starter Completed Oct-13 - - TUV

9

20 H9

On boarding

In progress - - - TBD

21 H10

On boarding

TBD

22 P3

Re-joined Completed Aug-13 On Track - TAOS

23 P5

On Track Completed Jan-13 On Track Submitted by August 2013

Timeline

24 P6

On Track Completed Mar-13 On Track Submitted by August 2013

TUV

25 P7

On Track Completed Mar-13 On Track Submitted by July 2013

TUV

26 P8

On Track Completed Mar-13 On Track Submitted by July 2013

LESN

27 P14

New starter Completed Nov-13 - - TBD

28 P15

New starter Completed Oct-13 On Track - Timeline

29 P16

New starter Completed Oct-13 On Track - TAOS

30 P9

New starter Completed Sep-13 On Track - TUV

31 P10

New starter Completed Oct-13 On Track Scheduled in Nov

TUV

32 P11

New starter Completed Oct-12 On Track Scheduled in Nov

SUSA

33 P12

New starter Completed Oct-13 On Track Scheduled in Nov

TUV

34 P13

New starter Completed Oct-13 On Track Scheduled in Nov

SUSA

35 P17

New starter Completed Pending - - TBD

36 A1

On Track Completed Mar-13 On Track Submitted by August 2013

LESN

37 A2

On Track Completed Mar-13 On Track Submitted by August 2013

LESN

38 A3

On Track Completed Mar-13 On Track Submitted by August 2013

CLSN

39 A4

On Track Completed Mar-13 On Track Submitted by September 2013

LESN

40 A5

New starter Completed Aug-13 On Track Submitted by August 2013

TAOS

41 A6

New starter Completed Oct-13 On Track - Timeline

10

42 A7

New starter Completed Oct-13 On Track - Timeline

43 A8

New starter Completed - - To finalize the contract

TBD

44 A9

New starter Completed Oct-13 On Track - Taos

45 A10

On boarding

Completed - - - TBD

46 A11

On boarding

Completed - - - TBD

47 N1

Phase I completed

Completed Completed Approve - TBD

48 N2

Phase I in progress

Completed Completed Approve - TBD

49 N3

Phase I in progress

Completed Completed Approve - TBD

11

Program Status Overview: Work Plan Completion VS Work Plan Timeline

0% 10% 20% 30% 40% 50% 60%

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

WP Timeline

WP Completion

P8

P7

P6

P5

D6

D5

D4

D3

D2

D1

A7

A6

A5

A4

A3

A2

A1

H8

H4

H5

H2

H1

Ph

ilip

sD

ell

Ap

ple

HP

W-M Dialogue Non-Dialogue Check & Act WP Timeline

12

KEY PERFORMANCE INDICATORS – Comparative Analysis

*Compared to last quarter data in bracket Program

In 3rd Quarter (July 2013 to Sept. 2013) Average Leader

Worker-Management Dialogue

Worker-Management Dialogue Benchmarks in EPA - -

- -

Worker Satisfaction

Worker Satisfaction Indicator from EPA

Working Condition

# of work-related injuries 1.38 0.00

# of days lost due to work-related injuries 4.77 0.00

Average weekly working hours in the calendar month 51.15 41.02

Average # of rest days 4.95 7.15

Total monthly working hours in the calendar month 649866 N/A

% of workers working more than 60h in the week 20% 0%

Average monthly net wage (RMB) 2789 3254

Average monthly gross wage (RMB) 2998 3586

Ratio of OT Premium to Gross Wages 41% N/A

1st quartile of monthly net wage (RMB) 1978 2747

2nd quartile of monthly net wage (RMB) 2561 3141

1st quartile of monthly gross wage (RMB) 2144 2984

2nd quartile of monthly gross wage (RMB) 2764 3450

Environmental Condition

Kilowatts used per product unit 2.12 1.68

Business Impact

Unit Produced Per Hour (UPPH) 11.95 0.03

Rework Rate (%) 2% 0%

Turnover (%) 19% 11%

13