Water-cooled turbo chiller (heat pump) units, water-cooled screw chiller (heat pump) units, industrial freezing and low-temperature condensing units

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1 McQuay China(Wuhan) Site Report 2016 Location Wuhan, China Site area 80,596 m 2 Established 2003 No. of employees 738 Major products Water-cooled turbo chiller (heat pump) units, water-cooled screw chiller (heat pump) units, industrial freezing and low-temperature condensing units ISO certified May 2004 ISO 9001 certified May 2003 OHSAS certified July 2006 Green Heart Factory certified in January 2014 (Green Heart Factory certified) Environment: Environmentally Conscious Products McQuay China (Wuhan) stopped development and manufacturing use of HCFC refrigerant products from 2014, and plans to completely stop the sale of R22 products in We will continue to focus future development on high-efficiency energy-saving products (inverter type turbo/screw freezers, magnetic bearing turbo freezers, etc.). The energy efficiency of these products developed by McQuay China (Wuhan) all exceed the requirements of grade one (the highest grade) as defined in the GB Chinese energy efficiency standards. We also use falling film evaporators that we invented and patented in our screw freezers, which enable more than a 30% reduction in product refrigerant compared to previous flooded type products. McQuay China (Wuhan) currently sells mostly energy-saving products, with a total of 248 certified energy-saving products as of March 1, 2017, of which 73 (32%) are grade one energy efficient products and 127 (46%) are grade two energy efficient products. 1

2 Environment: Major Efforts to Reduce Environmental Impact Saving energy with LED lighting We switched all the lighting at our plants to LED lights to reduce annual CO 2 emissions by 53 tons. Switching to natural gas to reduce CO 2 emissions We changed our acetylene gas used for switching materials to natural gas to reduce annual CO 2 emissions by 73 tons. Previously our annual usage of acetylene gas was 26 tons, which equated to 88 tons of CO 2 emissions, but switching to natural gas reduced our CO 2 emissions to 15 tons. This also enabled us to save 250,000 yuan (4.3 million yen) in annual costs. Before After Digital imaging flaw detection equipment By adopting new digital imaging flaw detection equipment, we have reduced our use of developer, fixer, and film, reduced waste liquid, and reduced HW16, which is a dangerous waste material, by 350 kg annually. We invested 1.5 million yuan to purchase this digital imaging flaw detection equipment, but reducing developer, fixer, and waste liquid disposal costs enables us to save approximately 600,000 yuan per year. Before After 2

3 Recycling pressurization test water After using the pressurization test water in the container, the water is returned to the pool, the water in the pool is sucked back into the water tank, and the water in the water tank is then used in the pressurization test again. This recycling enables us to save 7,350 tons of water annually. After: Move water in pressurization test pool to water tank Pressurization test pool Water tank Water pressure in container Move water to pool Water in water tank after applying water moves to container via pressure to container a pipe Reducing usage of R22 refrigerant At McQuay China (Wuhan), we stopped the development and use of refrigerant products with an environmental impact from 2014, and plan to stop selling R22 products in Our usage of R22 fell from 78.8 tons in fiscal year 2015 to 66.8 tons in fiscal year 2016, which is a 12 ton reduction. Environment: Examples of Environmental Communications Raising awareness on environmental protection We held activities for raising awareness about environmental protection on Environment Day on June 5, 2016 in conjunction with the Wuhan Economic and Technological Development Zone Environmental Protection Bureau. No Car Day We held a No Car Day on September 22, 2016, where company advocates refrain from driving a car for a day to save energy and reduce air pollution. Environment: Emergency Response Emergency response training At McQuay China (Wuhan), we have formulated Environmental Accident Preventative Measures and Emergency Response Measures (EHS-SOPP-C-021) rules, 3

4 and conducted training to enable an accurate and appropriate response in the event of an emergency. (This training is conducted periodically.) Environment: Environmental Performance Data Greenhouse gas emissions Energy-induced CO 2 Waste Water used VOC emissions 4

5 Human Resources: Training for Employees Environmental system training We provided our employees with training regarding our environmental system. Waste management training We conduct waste management training for our employees to raise awareness about the categorization and storage of waste. Human Resources: Promoting Diversity Human resource diversity Of the total 738 employees at McQuay China (Wuhan), female employees account for 18.6% with 137 employees, and 8 employees are ethnic minorities. Human Resources: Occupational Safety and Health Firefighting training In December 2016, our management received firefighting training by firefighters from the government fire department, which enabled our employees to increase their knowledge and technical skills regarding firefighting. 5

6 Exchanging knowledge on special equipment In October 2016, we invited the technical supervision department of the government to our company to exchange technical information on special equipment and learn knowledge about its safety. Participating in safety events In March 2016, we participated in development zone company/resident safety activities held by the Wuhan Economic and Technological Development Zone Safe Production Supervision Administration. Quality, Customer Satisfaction: Quality Improvement Promoting quality improvement activities McQuay China (Wuhan) actively promotes QCC quality improvement group activities. Our CEO periodically visits the plant each month with the quality improvement evaluation committee, receives reports from employees, and promotes continuous quality improvements upon seeing examples and results of recent quality improvements. Maintaining and improving product quality standards Every month, McQuay China (Wuhan) holds periodic quality meetings, product manufacturing quality meetings, R&D technical quality meetings, and supplier quality meetings to analyze the cause of problems with product quality in manufacturing, design, and materials from various angles, implement corrective measures, and continually improve the quality standards of our products. 6

7 Social Contribution: Environmental Protection Clean-up activities In April 2016, we cleaned up trash in public areas to raise awareness about environmental conservation amongst our employees and local residents. Tree planting In March 2016, we planted trees in the suburbs of Wuhan to raise employee awareness about nature conservation. Social Contribution: Support for Educational Activities Student work experience Local students periodically receive work experience at our Wuhan plant. March 2016: 55 students from Huazhong University of Science and Technology April 2016: 58 students from Wuhan University of Technology June 2016: 62 students from Wuhan Institute of Technology July 2016: 43 students from Wuhan Business University 7