华宝股份：2025年度环境、社会和公司治理(ESG)报告(英文版)

Huabao Flavours & Fragrances Co., Ltd.

Environmental, Social andGovernance (ESG) Report

2025

CONTENTS

About This Report 01Chairman's Statement 03About Huabao Limited 05

Key Performance 115Index of Indicators 118Reader Feedback 121

Innovative R&D 23International Expansion 29Intellectual Property Protection 32Digital Transformation and IntelligentOperations 33Industry Empowerment 37

Innovation Blueprint：

Technology Leadingthe Global Journey

Corporate Governance 43Investor Relations Management 46Risk Prevention and Control 48Business Ethics 51

GovernanceCornerstone: Buildingthe Foundation for aSustainable Future

Supply Chain Management 59Quality Assurance 62Customer Co-creation 67

Synergistic Win-Win:

Building an Ecosystemof Excellent Quality

Employee Rights and Development 71Employee Health and Safety 78Employee Care and Diversity & Inclusion 85

Talent Engine: IgnitingVibrant OrganizationalInnovation

Environmental Management 91Energy and Resource Utilization 100Waste Management and Circular Economy 102Addressing Climate Change 105

Green Commitments:

Safeguarding thePlanet's EcologicalFuture

Rural Revitalization 111Social Welfare 112

Responsibility forGood: AchievingShared Social Value

About This Report

This report is the third Environmental, Social and Governance (ESG) Report issued by Huabao Flavours & FragrancesCo., Ltd. (hereinafter referred to as "Huabao Limited" or "the Company"). It details the Company's practices andperformance in economic, environmental, social, and corporate governance responsibilities for 2025. The reportaims to facilitate effective communication with all stakeholders and systematically address their expectations andrequirements.Reporting Period

This annual report covers the period from January 1, 2025, to December 31, 2025.Reporting ScopeThis report discloses information on Huabao Limited and its subsidiaries' fulfillment of responsibilities ineconomic, social, environmental, and corporate governance aspects. The relevant case studies are derived from theCompany's affiliated enterprises.Time FrameThe reporting period spans from January 1, 2025, to December 31, 2025. To enhance comparability and forward-looking relevance, certain content extends moderately into preceding and subsequent years.Preparation BasisSSESelf-Regulatory Guidance for Listed Companies No. 17―Sustainability Report (Trial)SSESelf-Regulatory Guidelines for Listed Companies on the ChiNext Market No. 3 ―Preparation ofSustainability ReportsUNSustainable Development Goals (SDGs)ISSBGRI StandardsCASSGuidelines on Corporate Social Responsibility Reporting of Chinese Enterprises (CASS-ESG 6.0)CNISGuidance on Social Responsibility Reporting (GB/T 36001-2015)ISO26000 Guidance on Social Responsibility (2010)

Data DescriptionData sources for this report include the Company's operational raw data, publicly available government data,annual financial data, internal statistical reports, third-party questionnaire surveys, and third-party evaluationinterviews. Financial data in this report are denominated in RMB. In the event of any discrepancy with the financialreports, the financial reports shall prevail.Report Reliability AssuranceThe Company guarantees that the content of this report is true, accurate, and complete, with no false records,misleading statements, or major omissions.

NomenclatureFor ease of reference in this report:

"Huabao Flavours & Fragrances Co., Ltd." is referred to as "Huabao Limited", "the Company", or "we""Huabao International Holdings Limited" is referred to as "Huabao International""Yingtan Huabao Flavours & Fragrances Co., Ltd." is referred to as "Yingtan Huabao""Guangzhou Hua Fang Tobacco Flavours Co., Ltd" is referred to as "Guangzhou Hua Fang""Owada Flavours & Fragrances" is referred to as "Guangzhou Owada""Shanghai H&K Flavors Co., Ltd." is referred to as "H&K Flavor""Jiangxi H&K Food Technology Development Co., Ltd." is referred to as "Jiangxi H&K""Shanghai Yifang Agricultural Technology Co., Ltd." is referred to as "Shanghai Yifang" or "Yifang""Jiangxi Yifang Agricultural Technology Co., Ltd." is referred to as "Jiangxi Yifang""Huabao Asia Pacific Pte. Ltd" is referred to as "Huabao Asia Pacific""PT Huabao Food Technology Indonesia" is referred to as "PT Huabao Food""Xiamen Amber Daily Chemical Technology Co., Ltd." is referred to as "Xiamen Amber""Hunan Fine Taste Biological Technology Development Group Co., Ltd." is referred to as "Fine Taste BiologicalTechnology"Access to the ReportShould you have any comments or suggestions regarding the content of this report or the Company'senvironmental, social, and governance performance, please feel free to contact the Company by phone at 021-67083333 or via email at ir@hbflavor.com.

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2025 Environmental, Social and Governance (ESG) Report of Huabao LimitedAbout This Report

Chairman's Statement

As the seasons change, a new chapter unfolds. In 2025, amidst a complex and volatile internationalenvironment, profound restructuring of global supply chains, and ongoing conflicts and frictions, HuabaoLimited responded to the challenging competitive landscape by adhering to its corporate mission to "Green,Nutritious, Healthy". Driven by technological innovation, supported by international expansion, and guidedby ESG principles, the Company achieved steady development in its core business segments, including edibleflavors, food ingredients, and daily-use fragrances, committing to creating lasting value for consumers andsociety.Currently, growing consumer demand for natural products and the concept of sustainable developmentare accelerating corporate efforts in green raw material R&D and low-carbon process innovation. In 2025,driven by both industry trends and corporate responsibility, Huabao Limited continued to expand intonatural flavors, natural ingredients, and healthy foods, providing the market with diversified natural flavorsolutions. By deeply participating in the formulation of key standards such as Natural Flavors for Food andNatural Processed Foods, the Company co-led the establishment of the "Shanghai Natural Food Center"and became among the first to obtain authoritative naturalness product certification. The release of the newcorporate image video, The Miracle of Nature, marks a strategic shift from product delivery to the promotionof "Symbiosis Between Nature and Technology" values. This evolution transforms the Company from atraditional flavor supplier into a definer and standard-bearer of healthy eating trends, helping establishShanghai as a national hub for natural food innovation and leading the industry's structural leap from "BasicSatisfaction" to "Natural, Healthy, and Functional."

This con?dence stems from the solid R&D capabilities cultivated through relentless dedication. Throughtechnological iteration and process optimization, the Company maintains an industry-leading position inareas such as formulation, encapsulation, popping boba, and functional ingredient extraction. Concurrently,it is accelerating its layout in cutting-edge technologies including synthetic biology, probiotics, sensoryand neuroscience, and AI-powered intelligent spectrum analysis, building a well-structured and dynamicR&D matrix. In 2025, the Company independently published papers in SCI-indexed journals, achieving ahistoric breakthrough. The commercialization of scienti?c research outcomes has accelerated, with the pilot-scale industrialization base for technologically innovative food ingredients and the food-grade poppingboba production line successively completed and commissioned. Construction of the comprehensive foodtechnology base and the grand health industry base in Indonesia is also progressing steadily.This con?dence stems from robust governance built on a commitment to excellence. Actively respondingto the national "Dual Carbon" goals, the Company systematically promotes lean production and deeplyintegrates green, low-carbon concepts, resource circulation, and energy conservation into the entiremanufacturing process. Through e?ective measures such as full-chain cost benchmarking, precision sourcing,and competitive bidding on centralized procurement platforms, the Company's procurement management

has successfully reduced costs and enhanced efficiency. In terms of digital and intelligent transformation,the PLM system, independently upgraded by the Company, has been successfully launched and appliedacross all business segments. The proprietary AI model developed in-house for the automatic analysis of?avor components has achieved industry-leading technical capabilities in resolving overlapping peaks andidentifying natural spices, establishing a high-quality, exclusive spectral database.

This confidence stems from an unwavering commitment to social mission, a responsibility upheldover time. The Company's public welfare student aid brand, the "Flower Growth Program", was furthersystematized and standardized in 2025. Its reach extended across mountains and seas, continuing toilluminate students' futures, serving as a successful model of the Company's branded operation of publicwelfare projects. Simultaneously, in active response to the national rural revitalization strategy, the Companyofficially launched the "Huabao Village Companion Program". Guided by the principles of "continuoussupport, systematic empowerment, and endogenous development", the Company is exploring replicablemodels for rural co-construction. These two core projects vividly embody the Company's founding missionto "grow and progress together with society", ensuring that the warmth and strength of Huabao reach everycorner in need.The year 2026 marks the 30th anniversary of Huabao Limited. With a "Reset" mindset and a "Sprint" attitude,the Company will strive toward even grander goals. It will seize the strategic opportunities presented by thedevelopment of the grand health sector, cultivate new business growth poles, and comprehensively advancecurrent strategies, including technological innovation and internationalization. Simultaneously, the Companywill establish a comprehensive market value management system, systematically clarifying and vigorouslypromoting strategy implementation to effectively enhance its market value management capabilities.The road ahead is long and challenging, but perseverance leads to success. Remaining true to its originalaspiration and upholding its mission, the Company will continue to deepen its ESG practices. Adheringto its corporate vision of being "A Leader in Delicious Living", it will fulfill corporate responsibilities andcreate greater value through stricter standards, more pragmatic actions, and more innovative measures.The Company firmly believes that with the concerted efforts of all Huabao employees, the strong supportof shareholders, and the collaboration of partners, it will continue to write a new chapter in the sustainabledevelopment of Huabao Limited, contributing even more strength to industry progress, social development,and ecological well-being.

XIA LiqunChairmanHuabao Flavours & Fragrances Co., Ltd.

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2025 Environmental, Social and Governance (ESG) Report of Huabao LimitedAbout This Report

About Huabao Limited

Founded in 1996, Huabao Flavours & Fragrances Co., Ltd. was successfully listed on the Shenzhen Stock Exchangein 2018 (Stock Abbreviation: Huabao Limited; Stock Code: 300741). Its subsidiary, Xiamen Amber (833164.NEEQ), islisted on the National Equities Exchange and Quotations (NEEQ). The Company specializes in the R&D, production,sales, and technical services of flavors and food ingredients, dedicated to providing green, nutritious, and healthyflavor solutions to customers worldwide.

Huabao Limited's journey in flavor exploration traces back to 1912 with the establishment of the ContinentalChemical Society, China's first domestic flavor and fragrance enterprise. Today, the Company has established aportfolio of renowned brands including "Huabao", "Peacock", "Yifang", "Jiacui", "Hua Fang", "Xideng", "Owada",and "Amber", enjoying a high reputation in the industry. Over the past two decades, Huabao Limited haschampioned the globalization of national flavor and fragrance brands, seizing opportunities in overseas marketsand advancing its internationalization strategy to build a core integrated industrial chain. Its global layout includesR&D centers in Germany, Singapore, and Indonesia. The Company operates a state-certified enterprise technologycenter, along with multiple enterprise technology centers and laboratories in Hong Kong, Shanghai, Guangdong,Fujian, Jiangxi, and Hunan. Upstream raw material extraction centers cover Guangdong and Botswana, Africa, whileproduction bases are distributed across Guangdong, Jiangxi, Fujian, Hunan, and Hong Kong, achieving full-chaincoverage.

GermanyUSABritish Virgin Islands

Botswana

Singapore

Xizang

Beijing

Shandong

ShanghaiYunnan

Hainan

Guangdong

Jiangxi

Fujian

Hubei

Hunan

Hong Kong

Indonesia

Company Profile

Currently, the Company owns

57 subsidiaries across7 countries worldwide,having grown into a large-scale industrialgroup with both an international visionand modern operational capabilities,continuously driving technologicalinnovation and industrial upgrading.

USA

Germany

Botswana

Singapore

Indonesia

XizangHunan

Shandong

Shanghai

Jiangxi

Hong KongFujian

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

To become a leading listed flavor and

ingredient company in China withinternational influence by leveraging naturaltechnologies as its core to provide globalconsumers with high-quality, cost-effective

flavor and health solutions.

Institutionalizing Corporate Philosophy,Intelligent Management, AssetSecuritization, and Business Globalization

Corporate Culture

Brand Rejuvenation

Corporate Strategy

Huabao Limited deeply aligns with the "Healthy China" national strategy, establishing the grand health industryas a core growth pole for future development. By integrating global scientific research resources, the Company iscommitted to a comprehensive transformation from "Flavor Manufacturing" to "Health Empowerment".

The Company has built a "North-South" collaborativematrix for the grand health industry. Through theorganic linkage of R&D, marketing, and supply chain,it has formed an efficient collaborative model of"Front-End Market Traction + Back-End R&D andManufacturing Support", significantly enhancingoverall service efficiency and operational resilience.? Jinan Northern Base: Focuses on market frontiers

and in-depth customer service, achieving rapidresponse and precise engagement with key clients.

? Yingtan Southern Base: Leveraging its matureindustrial chain foundation, it focuses ondeepening product technology, upgradingproduction capacity, and strengthening the supplychain.

Relying on its state-certified enterprise technologycenter, post-doctoral research station, and globalR&D system, the Company continues to achieve keybreakthroughs in fields such as natural extraction,enzymatic hydrolysis and fermentation, andfunctional encapsulation.? Clean Label: Prioritizes naturally sourced activeingredients and develops low-sugar, low-salt,and reduced-fat formula solutions to help clientscreate healthy and transparent product labels.? Technology Empowerment: Utilizes proprietarytechnologies such as Probio-Protec crystal ballprobiotics to ensure efficient delivery and stablerelease of health ingredients, making "health"scientifically quantifiable and perceptible.

Implementation of the Grand Health Industry Strategy

A Leader in Delicious Living

Innovation, Pragmatism, Loyalty,

Collaboration

Green, Nutritious, Healthy

Ethical, Visionary, Capable, and

Resourceful

Customer First, Value Creation,

Shared Success

To promote continuous progressin education and improvementof people's livelihoods through

sustainable public welfareprojects and charitable funds,thereby earning societal trustand achieving sustainabledevelopment

Vision

Spirit

Mission

TalentPhilosophy

Values

PublicWelfareMission

Brand rejuvenation represents notonly an upgrade in visual identity andcommunication but also a reflectionof the Company's strategic evolution.It integrates technological innovation,product portfolios, global layout, anddigital-intelligent operations into brandexpression to enhance brand awarenessand market influence.

In 2025, the Company officially releasedits new brand image film, The Miracleof Nature, and introduced the corebrand philosophy: "Beginning withthe End in Mind, Decoding the Miracleof Nature", emphasizing a consumer-centric approach driven by technologicalinnovation and sustainable developmentto enhance brand value.

Strategic InitiativesStrategic Positioning

Dual-Core Drive, Nationwide LayoutTechnology-Led, Health-Core

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

1996

Established HuabaoFlavours & Fragrances(Shanghai) Co., Ltd.

History

1912

Continental ChemicalSociety was foundedin Shanghai, laying thefoundation for over acentury of developmentfor Peacock Flavours

1947

Kailong Perfumery Factorywas founded, marking thebirth of the Peacock brand

2018

Huabao Limited wassuccessfully listed on theShenzhen Stock Exchange(SZSE)

2007

Established F&G in Africa

2004

? Acquired "Peacock",

a time-honored flavorand fragrance brand inChina? Huabao (Shanghai)Technology Centerwas recognized as a"National EnterpriseTechnology Center"

2006? Huabao Internationalwas listed on the HongKong Stock Exchange(HKEX)? Established the HuabaoTechnology CenterGermany in Germany

2015

McKinsey & Companydeveloped a strategic planfor the Company, heraldingthe commencement of its"second entrepreneurialjourney"

2016

Shanghai Huabaorelocated to Lhasa, Tibet,and was restructured intoHuabao Limited

2021Established PT HuabaoFood in Indonesia

2022

Acquired Shanghai YifangAgricultural TechnologyCo., Ltd.2020

Established Huabao AsiaPacific in Singapore

2024

? Joined the United Nations

Global Compact (UNGC)? Honored as a "LeadingEnterprise in China'sFragrance, Flavor, andCosmetics Industry"? Participated in thecompilation ofthe Guidelines forSustainable Development(Environmental, Social, andGovernance) for Fragrance,Flavor, and CosmeticsEnterprises

2025? Became the controllingshareholder of FineTaste BiologicalTechnology? Groundbreaking forthe integrated foodtechnology base inIndonesia? Awarded an Wind ESGAA rating, becomingthe only flavor andfragrance enterprise inChina to achieve thisrating

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

Major Honors in 2025

2024 Outstanding Labor Union Organization of

Jiading Industrial Zone2024 Jiading District Worker Pioneer

Demonstration Post

Huabao Limited becomes one of the firstChinese companies to join theIFRA-IOFI JointSustainability Charter

2024 Shanghai Model Worker Innovation Studio

Successfully selected for the 2025 Collection ofSustainable Development (ESG) Practice Cases inChina's Fragrance, Flavor and Cosmetics Industry

Excellent Practice Case of SustainableDevelopment for Listed Companies

2025 Top 10 Enterprises in China's Light Industry

Flavor and Fragrance Sector

Top 100 Science and Technology Enterprises in

China's Light Industry

Achieved an AA rating in the Wind ESG RatingsESG Carbon Neutrality Golden Bull Award

2025 Best Board of Directors Award for Listed

Companies

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

The Company's main product portfolio comprises flavors, food ingredients, and fragrances, serving a diverse rangeof sectors including food and beverage, tobacco, health supplements, catering, daily chemicals, and householdcare.

Industrial Structure

FoodIngredients

Fragrances

Flavors

This segment covers extensive series such as fruit and vegetable,dairy, floral, grains and cereals, tea, texture-enhancing, and meatflavors, which are primarily applied in dairy products, beverages,confectionery, bakery goods, meat products, snacks, and new-styletea drinks.

Food Flavors

This segment includes top notes and casing agents for cut tobacco,alongside flavoring solutions for ancillary products such as filterrods and cigarette paper. Featuring diverse profiles ranging fromfresh and spicy to fruity and roasted, these products ensure a stablesupply for China Tobacco Industrial Companies and renownedinternational clients.

Tobacco FlavorsThis segment serves applications in incense and disinfection,laundry and soap, personal care, home cleaning, perfumesand cosmetics, space fragrances, and pet care by providing awide array of fragrance profiles, including amber floral, fruity,complex floral-fruity, and woody notes.

Fragrances

Food IngredientsThis segment includes natural extracts, fruit and vegetablepowders, flavor sauces, jams, popping boba, crystal spheres,natural colors, functional ingredients, innovative dosageforms, and other specialty flavor products. These offerings areextensively utilized in dairy products, beverages, ice cream,bakery goods, snacks, new-style tea drinks, functional foods,hot pot seasonings, as well as stir-fry and braising sauces for thecatering industry.

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

Huabao Limited has elevated ESG work to a strategic level, establishing a systematic ESG governance structure withunified leadership from the Board of Directors, specific implementation by management, and broad participationfrom all employees. The Company has fully integrated sustainability concepts into all aspects of R&D innovation,product application, corporate governance, production operations, and social-humanistic care. It is committed tobuilding a value ecosystem of co-creation, symbiosis, and win-win outcomes with shareholders, partners, society,and employees.

At the institutional level, the Company has formulated and implemented theWorking Rules for the Strategyand ESG Committee of the Board of Directorsand theESG Management Systemto provide clear guidelines forgovernance. By refining the management structure and institutional framework, the Company is promotingthe deep integration of ESG concepts with business strategy at a higher standard, striving to achieve synergisticdevelopment of economic and social benefits, and providing solid support for sustainable development goals.

ESG Governance

?Huabao Limited's ESG Management Structure

?Materiality Assessment Process

Leadership and Decision-Making Body

Responsible for reviewing the Company's ESG reports and majorESG matters, and reviewing and approving the public disclosureof major information related to the Company's ESG governanceResearch and Guidance BodyResponsible for researching and formulating the Company'sESG governance vision; researching and proposingrecommendations on the Company's ESG goals, strategicplanning, governance structure, and management systems; andreviewing and submitting the Company's ESG reports and majorESG matters to the Board of DirectorsPermanent Management BodyThe Office comprises heads of ESG-related departments, withthe Company's President serving as the head. It is responsiblefor advancing the Company's ESG development strategy,participating in the research and identification of major ESG-related issues, breaking down and implementing ESG goals,and coordinating, managing, supervising, and guiding thecontinuous development of ESG-related workExecutive UnitThe Working Group is led by the Corporate Management andInformation Department and comprises heads of relevantdepartments and subsidiary leaders. It is responsible forimplementing ESG tasks and achieving phased ESG goals inaccordance with the Company's overall plan, and regularlyreporting execution progress to the ESG Management Office

Board ofDirectors

Strategy and ESGCommittee

ESG ManagementOffice

ESG WorkingGroup

Huabao Limited considers stakeholder expectations and requirements as crucial factors in its ESG management.The Company regularly conducts a double materiality assessment to explore the relevance of ESG issues toits business and the significance of their financial impact, analyzing their dual materiality in both businessdevelopment and financial aspects. The Company reviews its materiality assessment annually to ensure that theresults continue to reflect changes in business development and stakeholder concerns.Through extensive and in-depth communication with various stakeholders via multiple channels, the Company has identified the ESG issuesmost relevant to its business and of greatest concern to stakeholders through the following three steps.

Materiality Assessment

Identifying Key Issues

To understand the impact of its2025 operations on the economy,society, environment, and variousstakeholders, the Companyconducted a double materialityassessment. Through policyanalysis, industry research, andpeer benchmarking, the Companyidentified major ESG-relatedtrends. Combining nationalpolicies and key concerns in thecapital market, 24 material issueswere identified.

Comprehensive Analysis of Material

IssuesThe Company analyzed theresults of materiality assessmentquestionnaires from internaland external stakeholders andprioritized these issues to reflecttheir "Importance of Impact on theEconomy, Society, and Environment"and "Financial Importance",generating a materiality assessmentmatrix. The Company's managementreviewed the results to confirmthe key disclosures for this reportand the future work objectivesand implementation plans for ESGmanagement.

Surveying StakeholdersThe Company invitedmultiple stakeholders,including employees,shareholders,government bodies,media, industry partners,and the public, to jointlyassess the importanceof these issues toHuabao Limited and tothemselves.

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

Financial materialityLow

High

High

The Company places great importance on communication with its stakeholders and has established a regularstakeholder communication mechanism to identify and actively respond to the ESG issues they are concernedabout. This year, the Company's main communications with stakeholders are as follows:

Stakeholder Engagement

Key stakeholdersTopics of concernCommunication methods and channels?Lawful and compliant operation?Standardized operation of a listed company?Tax contribution?Environmental management?Employment promotion?Energy consumption and carbon emissions?Water resource management?Corporate governance?Value creation?Investor relations?Business ethics?Customer management?Product quality and safety?R&D and innovation?Information security and privacy protection?Chemical safety?Product quality and safety?Responsible supply chain

?Industry communication and cooperation?Business ethics?Occupational health and safety?Career training and development?Employee compensation and benefits?Employment management?Hazardous waste and emissions?Addressing climate change?Renewable and clean energy?Fulfilling social responsibilities?Supporting rural revitalization?Valuing local community development

?Seminars?Official correspondence?Information disclosure and submission?Regular visits?Tax payment?Shareholders' Meeting?Investor communication meetings?Investor hotline?Company visits and research? Stock exchange announcements and official website?WeChat official account?Customer satisfaction surveys?Email and daily phone communication?Customer mailbox?Responding to customer complaints?Customer visits?Quality management system

?Company website?Social media and response?Charitable donations and volunteer services?Community activities

?Supplier management system?Public bidding?Procurement process

?Regular communication with business partners?Industry seminars?Company intranet?Training and onboarding?Email and suggestion box?Regular meetings?Employee performance appraisals?Employee activities

Governmentdepartments andregulatory agencies

Customers

Other Business

Partners

Employees

Society and the Public

Suppliers

Materiality Matrix

Environmentalcompliance managementClimate change responseEnergy utilizationWater resource utilizationPollutant emissionsWaste managementEcosystem andbiodiversity conservationCircular economy

Environmental

Innovation-drivendevelopmentProduct qualityCustomer serviceInformation securityPrivacy protectionSupply chain securityFair treatment of SMEsEmployee rights anddevelopmentOccupational health andwelfareSocial contributionRural revitalization

Social

Due diligenceStakeholder engagementAnti-bribery and anti-corruptionAnti-unfair competitionIntellectual propertyprotection

Governance

Shareholders andInvestors

Impact materiality

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About Huabao LimitedHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

Against the backdrop of a lack of unified industry standards in the natural flavor sector, Huabao Limited has activelyresponded to industry changes and continued to advance its "Natural, Functional, and Healthy" strategic layout.The Company has extended its R&D investment and business expansion into natural flavors, natural ingredients,and healthy foods. By synergistically advancing technological innovation and product upgrades, the Companycontinuously enhances its capabilities in providing natural flavor solutions, offering greener, healthier, and moretrustworthy product choices for customers and consumers.

The Company continues to advance the R&D of key processes for natural flavors, improving the utilization efficiencyof natural raw materials through technological pathways such as precision extraction, biological enzymatichydrolysis, and bio-fermentation. This enhances flavor stability and functionality while maintaining naturalattributes. Leveraging technological innovations, the Company continuously enriches its natural flavor productsystem, providing diversified natural flavor solutions to the market.

While continuously advancing technological innovation and standard-setting, the Company actively participatesin the construction of industry collaboration platforms. In August 2025, the "Shanghai Natural Food Center" wasofficially inaugurated. Co-initiated by government departments, industry associations, and related enterprises,this platform aims to integrate industrial resources, promote technical exchanges and the transformation ofachievements, and help Shanghai become an innovation hub for the natural food industry. The Company activelyparticipates in related technical exchanges and industrial synergy to promote the development of the natural foodstandard system.

Based on its continuous accumulation in technological R&D, product systems, and industry standard-setting, theCompany has further strengthened its brand communication and public education. During the reporting period, theCompany released its brand image film,The Miracle of Nature, to showcase the technical principles and productionprocesses of natural flavors in a more intuitive and transparent manner, making the scientific logic behind naturalflavors more visual and understandable.

The development of natural flavors is not only a key direction for product innovation but also an important pathto promote the green and healthy upgrading of the food industry. In the future, Huabao Limited will continueto deepen its research on natural flavor technology, improve its product system, and promote the synergisticdevelopment of the natural food industry, creating a greener, healthier, and more sustainable flavor experience forconsumers.

Building on its continuous accumulation of technical capabilities, theCompany actively participates in standard-setting and further promotesthe construction of its certification system. During the reporting period, theCompany's subsidiary, H&K Flavors, was awarded theProduct Certification forNaturalness of Food Ingredientsby the China Quality Certification Centre (CQC).Several products have passed the naturalness certification, further enhancingthe transparency and traceability of their natural attributes. This providescustomers and consumers with clearer and more reliable quality assurance andsets a positive example for the standardized development of the industry.

?H&K Flavors' productcerti?cation for naturalness of

food ingredients

?Company Products

?Unveiling Ceremony of the Shanghai Natural Food Center?Shanghai Natural Food Center

? Promotional FilmThe Miracle of Nature

Special Topic: Decoding the Miracle of Nature,Leading the Upgrade of Natural Flavors

Special

Topic

Technological Breakthrough: Unleashing Natural Valuethrough Process Innovation

Standard Leadership: Promoting the StandardizedDevelopment of Natural Flavors

Industrial Synergy: Co-Building an Innovative Ecosystem ForNatural Foods

Brand Communication: Making Nature Visible

1920

Innovation Blueprint

Technology Leading the GlobalJourney

Innovative R&D /23International Expansion /29Intellectual Property Protection /32Digital Transformation and IntelligentOperations /33Industry Empowerment /37

Huabao Limited adheres to technological innovation asits core driver, building a full-chain innovation systemthat integrates R&D, production, marketing, and industrycollaboration. Through continuous innovative R&D, globalexpansion, intellectual property management, digital andintelligent operations, and industry empowerment, theCompany promotes the constant upgrading of its productsand technologies to enhance its global competitiveness.In this process, the Company not only strengthens itsindependent innovation capabilities and technologicalaccumulation but also promotes the healthy development ofthe industrial ecosystem through open cooperation, cross-disciplinary collaboration, and the establishment of industrystandards. It aims to achieve comprehensive leadership fromtechnological breakthroughs to commercial value, providingsolid support for the Company's sustainable developmentand the high-quality development of the industry.

Innovative R&DHuabao Limited insists on driving corporate development through technological innovation, continuouslyconducting cutting-edge research and application development centered on its core business. By establishing asystematic R&D framework, improving innovation management systems and project management mechanisms,and integrating global R&D resources, the Company promotes efficient synergy among basic research, applicationdevelopment, and the commercialization of results. On this basis, the Company constantly optimizes its R&Dprocesses and incentivizes innovative talent to enhance its product innovation capabilities and technologicalcompetitiveness, laying a solid foundation for high-quality development and global market expansion.

Leveraging its Technology and Innovation Center, the Company has established innovation platforms led by coretechnical experts. Among them, the Flavored Food Ingredients Innovation Studio, headed by Dr. Hongqiang Wang,Vice President of the Company's Technology and Innovation Center, conducts systematic R&D practices focusedon flavor upgrades and healthy food ingredients, and in 2025, the team, was honored as the"2024 Shanghai ModelWorker Innovation Studio", reflecting the Company's achievements in building innovative organizations andcultivating research teams.At the institutional level, the Company has formulated management systems such as theMeasures for Managementof Science and Technology Projects,Implementation Rules for Rewards and Penalties in Science and TechnologyProjects, Implementation Rules for Patent Management, and Management Measures for Group Special R&D Projects.These provide institutional guarantees for the initiation, execution, assessment, and incentivization of R&D projects.Relying on a comprehensive organization and system, the Company continuously promotes the standardization ofR&D work, the refinement of project management, and the efficiency of results commercialization. The recognitionof the team as a municipal-level Model Worker Studio reflects the team's professional capabilities and contributionsin technological R&D and innovative practices, further motivating the research team to continuously enhance itsinnovation level.

?Organizational structure of the Technology and Innovation Center

?Identified Risks Related to R&D and Innovation

Strategy

In the Company's three-year development plan, technological innovation is clearly defined as a corestrategic direction. The Company adheres to a "Dual-Wheel Drive" innovation model, guided by marketdemand and supported by technological R&D. It focuses on areas such as flavor upgrades and healthy foodingredients, coordinating the advancement of new product development, technology upgrades, and thecommercialization of R&D results.Simultaneously, the Company systematically identifies risks and opportunities in the technologicalinnovation process by considering ongoing projects, market changes, and technological trends. This providesa reference for R&D decision-making and resource allocation, enhancing the R&D system's responsiveness tomarket changes.Based on existing R&D projects, market dynamics, and technological trends, the Company also identifiespotential risks and opportunities in the technological innovation process. This analysis of risks andopportunities provides an important reference for the Company's technological innovation strategy, guidingR&D decisions and resource allocation.

Transition RisksSpeci?c Risk Description

Impact on Business

Model

Response Measures and Strategic

ResponsePolicy and Legal

Risks

Mismatch between R&Ddirection and futureregulations (e.g., selectedproducts in the biosynthesisdirection may not be usablein food for an extendedperiod or may requireapplication).

Sunk R&D costs;products fail tolaunch or gainmarket access.

Strengthen pre-emptive compliancereview: Establish a compliance pre-assessment mechanism for R&D projectinitiation, tracking global food safetystandards and biotechnology regulationsin real-time; adopt a "Diversi?ed R&DPath" to mitigate policy access risks ofsingle products.Technology Risks

Competition and disruptionfrom technological paths(competitors or newtechnology routes achievebreakthroughs, renderingthe Company's R&D pathobsolete).

Loss of technologicaladvantage, erosionof market share;weakening of thebusiness model'svalue proposition.

Build an open innovation system:

Increase R&D investment in cutting-edgetechnologies; acquire technology reservesthrough university-enterprise cooperationor industrial chain mergers andacquisitions to maintain a technologicalgeneration gap advantage.Market Risks

Shifts in customerpreferences and marketdemand.

Low marketacceptance of R&Doutcomes; weakproduct premiumpricing power;damage to brandreputation.

Deepen the "End-to-End" R&D model:

Strengthen market insight analysis,feeding big data on consumer preferencesdirectly to the front end of the R&D chain.

Reputation Risks

Negative ESG controversiesin R&D activities (e.g., useof controversial biologicalmaterials, data privacyissues, excessive carbonemissions).

Public boycott,damage to brandvalue.

Practice the green R&D philosophy:

Establish an ESG evaluation system for theR&D process, strictly screen raw materialsuppliers; promote the construction oflow-carbon laboratories, and conductethical reviews and transparent disclosureof biotechnology R&D.

Governance

The Company strictly regulates the management of technological innovation, establishing a soundorganizational structure and institutional framework to ensure that R&D activities are conductedscientifically and in an orderly manner. The Technology and Innovation Center comprises five departments:

the Basic Research Center, Tobacco Technology Center, Analysis and Testing Center, Food Innovation Center,and Technology Management Department. Each department has clearly defined responsibilities andcollaborates efficiently.

Technology and Innovation Center

Tobacco TechnologyCenter

Food InnovationCenter

Analysis and TestingCenter

Basic ResearchCenter

Technology ManagementDepartment

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Huabao Limited 2025 Environmental, Social and Governance (ESG) ReportInnovation Blueprint: Technology Leading the Global Journey

Opportunity

Category

Speci?c OpportunityDescription

Impact on Business

Model

Response Measures

E?ciency and Cost

Develop more energy-e?cient and low-carbonR&D processes.

Reduce R&D operatingcosts; form greenintellectual property;enhance ESGperformance in theR&D phase.

Green transformation of processes:

Promote the application of low-carbon production processes suchas enzyme catalysis and supercriticalextraction; reduce the frequency ofphysical experiments through digitalsimulation, lowering R&D energy andmaterial consumption.

Products and

Services

Create innovative productsthat meet market demand(e.g., sugar-reduced, salt-reduced, and clean-labelproducts).

Open up new markettracks; gain a leadingedge; establishindustry standards.

Focus on the "Health + Natural" engine:

Continue to invest in the R&D of natural?avors and functional ingredientsto capture the bene?ts of the healthconsumption upgrade; meet the needsof niche markets (such as vegetarian,speci?c populations) through adi?erentiated product matrix.

Market and Brand

Lead industry standardsand regulatory frameworks.

Become a rule-setter,build competitivebarriers; enhanceindustry in?uenceand brand leadership.

Enhance industry voice: Activelyparticipate in domestic andinternational industry associations andthe drafting of national standards toestablish brand status.

ResilienceEnhancement

Accelerate product iterationthrough digital andintelligent technologiessuch as AI-powered ?avorcreation.

Accelerate the speedof R&D iteration;reduce reliance onsubjective humanfactors.

Drive digital and intelligent R&Dtransformation: Apply AI algorithms toassist in ?avor creation and formulaoptimization; achieve remote R&Dcollaboration through digital platformsto enhance R&D continuity duringsupply chain disruptions.

The Company has always adhered to innovation-driven development, committed to deeply cultivating the healthyliving sector through cutting-edge technology. Relying on its profound technological expertise in formulation,encapsulation, popping boba, and flavor, the Company has successfully developed the functional nutrientproducts. By deeply integrating active ingredients with sensory experiences, it precisely meets the diverse needsof consumers for health management and daily nutritional supplementation. In the development of jam products,the Company achieves outstanding product stability by finely controlling physical properties while preservingnatural flavors to the greatest extent. Currently, these innovative achievements have been delivered on a largecommercial scale, with product quality consistently benchmarked against international client standards. This notonly strengthens the Company's technological barriers but also provides global consumers with taste solutions ofgreater health value.

Multi-Dimensional Product Matrix Empowering a Healthy Life

?Innovative product achievements?Capsule, flavor, and concentrate products

Through precise encapsulation technology,functional ingredients and rich flavors areloaded into tiny spheres. The products notonly meet consumers' needs for oral healthmanagement and deep nutrition butalso enable efficient loading and instantrelease of flavor components for diverseconsumption scenarios such as sausages,spicy strips, and chewing gum.

Nutrient and Food-Grade Popping Boba

By precisely controlling physical properties,natural flavors are preserved to themaximum extent. Commercial deliveryhas exceeded 26 tonnes, with qualityconsistently meeting international clientstandards.

Jam Product Innovation? Identified Opportunities Related to R&D and Innovation

Impact, Risk, and Opportunity Management

The Company deeply recognizes the industry opportunities brought by the sensory consumptionupgrade. Through continuous technological innovation and R&D investment, it integrates the concepts of"Environmental Friendliness" and "Health and Nutrition" into the core of its products, effectively respondingto the risks posed by shifting market preferences. The Company is committed to developing nutritious,environmentally friendly, and resource-efficient products, building a core moat in sensory technologythrough the constant iteration of its core technologies.

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Total number of R&D personnelwith bachelor's degrees

130 persons

Proportion of R&D personnel with master's degrees or above

17.5%

Proportion of R&D personnel with bachelor's degrees43%

Total number of R&D personnel302 persons

Total number of R&D personnel with master's degrees or above53 persons

R&D investment

147.53 million

Ratio of total R&D expenditure to operating revenue

11.03%

The Company recognizes that talent and systems are the twin engines driving innovation. By establishing andimproving an incentive system that covers the entire R&D lifecycle, it effectively mitigates the risk of insufficientR&D motivation and seizes opportunities to lead the industry.

Building on the continuous advancement of technologicalR&D and system construction, the professional capabilitiesand innovative achievements of the Company's R&D teamhave gained authoritative recognition within the industry.In May 2025, the H&K Flavors Technology Center teamwas awarded the title of "Outstanding R&D Team" at the2025 China Fragrance and Flavor Science and TechnologyConference & China Natural Aromatic Raw MaterialsInnovation and Development Conference, reflecting theCompany's R&D strength and technological influence.

In 2025, the Company initiated 12 science and technology projects. As of the end of the reporting period, a total of19 various science and technology projects were in progress, with 9 projects successfully concluded.

Outstanding R&D team?

Breakthroughs in Cutting-Edge Key Technologies

Improving Innovation Incentive Mechanisms

The Company has successfully broken through microsphere encapsulation technology,achieving a core flavor load of 20-30% with an encapsulation rate stably above 90%.This technology exhibits excellent heat resistance (withstanding 180℃ for 20 minutes)and enables sustained release in the oral cavity for over 30 minutes, significantlyenhancing product flavor stability and resource utilization efficiency. Currently, thistechnology is widely applied in fields such as baking, extrusion puffing, and soft drinks.

Sustained-releasemicrocapsuletechnology

The Company has formulated and implemented theMeasures for Management ofScience and Technology Projects, Implementation Rules for Rewards and Penalties inScience and Technology Projects, and Management Measures for Special R&D Projects(Trial).These documents clarify the full-cycle management process for science andtechnology projects, from initiation, implementation, and acceptance to rewards,penalties, and intellectual property protection.StrengtheningInstitutionalGuarantees and

StandardizedManagement

To build a reserve of cutting-edge industry technologies, the Company has specificallyintroduced the Incentive Plan for the Construction of the Flavor Module Library (Trial). Ithas established three types of special awards―development, application, and library-building―to directly incentivize the successful inclusion of new modules into the libraryand their application effectiveness. This has greatly stimulated the team's enthusiasmfor research on foundational flavor raw materials. This incentive-oriented approachnot only solidifies the technological foundation of sensory science but also lays a firminstitutional basis for the Company to build an intelligent and modular R&D system.

PreciseIncentivesDriving CoreBreakthroughs

Metrics and Targets

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International Expansion

As a representative enterprise in the flavor and food ingredients industry with a global presence, Huabao Limitedadheres to a global development strategy. Focusing on a full-chain international layout, it coordinates rawmaterials, R&D, production, and sales to enhance its global market competitiveness and operational efficiency.Through the construction of overseas production bases, global collaboration in its R&D system, and a regionalizedsales network, the Company is accelerating its international market expansion, ensuring that its products andtechnologies can precisely meet the needs of different regions and providing solid support for sustained globalbusiness growth.

In November 2025, the Company's subsidiaries, PT Huabao Food and Huabao Asia Pacific, jointlyparticipated in SIAL Interfood 2025 in Indonesia. During the exhibition, the Company integrated the strengthsof its multiple brands for the first time, delivering systematic solutions from flavor profile design to productimplementation, helping local brands shorten their development cycles. Relying on a responsive model of"Global R&D + Localized Service", the Company's products have been successfully introduced into numerouswell-known hotels, food service, and bakery channels in Indonesia, marking a new stage of high-qualitydevelopment for the Company's localization strategy in the core Southeast Asian market.

?SIAL Interfood in Indonesia

The Company adheres to a full-chain globalization strategy, building a global supply chain and market networkthrough the synergistic layout of raw materials, production, and sales. Relying on overseas raw material bases,international R&D, and regional production facilities, the Company can quickly respond to different marketdemands, enhance supply chain resilience and operational efficiency, and form a full-chain competitive advantagefrom source to end-user, providing strong support for international business expansion and sustainable growth.

Global Layout: Building a Full-Chain Competitive Advantage

Rooted Overseas for Raw

Materials

Since 2007, the Company hasestablished a raw material processing

base in Botswana. Leveraging localnatural resources, it has deeplycultivated extraction processes toensure the stability of the global

supply chain from the source,effectively mitigating the risks ofinternational trade fluctuations andsupporting business development inAfrica and other overseas markets.

Steady Progress in ProductionAs a strategic location in SoutheastAsia, the comprehensive foodtechnology base in Indonesia brokeground in May 2025. It aims to achievelocalized production in SoutheastAsia and shorten the supply chain

response cycle.

Full-Coverage in Sales

The Company has established aglobal sales system covering Europe,the Middle East, Southeast Asia, andAfrica, forming a mature operationalstructure of "Global Coordination +

Regional Cultivation".

The Company has built an open R&D system based on the principle of "Global Wisdom for Global Service". With itsstate-certified enterprise technology center and post-doctoral research station as core hubs, it has formed a globalcollaborative network covering overseas R&D centers and bases in Germany, Singapore, Indonesia, and otherlocations. At the same time, the Company has multiple enterprise technology centers and laboratories in HongKong, Shanghai, Jiangxi, Guangdong, Fujian, and Hunan, China, achieving integrated coordination of domestic andinternational R&D resources. This system not only supports regional R&D and innovation but also keenly capturescutting-edge global technologies and market demands, creating a synergistic force for collaborative innovation andproviding continuous technical support for its international business.

Overseas R&D System: Technological Innovation EmpoweringLocalized Development

The Holzminden R&DCenter in Germanyboasts nearly 20years of technologicalexpertise, focusing on thedevelopment of tobaccoflavors and heated-not-burn (HNB) tobacco flavorsolutions, providingtechnical support for theglobal market.

The Singapore Asia-Pacific R&D Centerfocuses on food R&D,conducting regional flavorcustomization, regulatorysystem development,and digital R&D projectsto meet the needs of theASEAN and Asia-Pacificmarkets.

Leveraging its globalcollaborative R&Dsystem, the Company hasaccumulated a certainlevel of technology andpatents. In the future,the Company will focuson advancing R&D andapplications in cutting-edge fields such assynthetic biology, sensoryand neuroscience, and"AI+", continuouslystrengthening thetechnological foundationfor its internationaldevelopment.

European R&D OutpostAsia-Pacific Innovation HubGlobal R&D Collaboration

Case: Debuting at SIAL Interfood 2025 in Indonesia to Deepen Localized Services in Southeast Asia

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In June 2025, the Botswana Investment and Trade Centre (BITC), along with a delegation of 13 mainstreammedia representatives, conducted an in-depth visit to F&G in Africa. As the Company's strategic fulcrumin a core global raw material region, F&G Africa has, since its establishment in 2007, driven the upgradingof the local supporting industrial chain by exporting advanced intelligent manufacturing equipment andstandardized quality inspection systems. In terms of localized operations, the localization rate of theCompany's management has reached 90%, and outstanding employees are regularly selected for exchangeand study at the China headquarters, effectively enhancing the skill levels of local professional talent.Furthermore, F&G Africa actively fulfills its social responsibilities by creating employment, increasing exportearnings, and organizing China-Botswana cultural exchange activities. It has vividly established a positiveimage of a Chinese enterprise operating steadily overseas and promoting people-to-people bonds, laying asolid foundation for the Company's in-depth expansion into African and global markets.

?The Delegation Visits F&G in Africa

In May 2025, the groundbreaking ceremony for the PT Huabao Food integrated base was officially held inJakarta, marking the substantive construction phase of the Company's localized presence in SoutheastAsia. This base integrates production, R&D, and office functions, aiming to significantly enhance theCompany's product delivery efficiency and comprehensive service response capabilities in the Southeast

?The Groundbreaking Ceremony

Case: Groundbreaking of the Indonesian Integrated Base, Opening a New Chapter inGlobal Expansion

Intellectual Property ProtectionThe Company strictly complies with national laws and standards such as thePatent Law of the People's Republic ofChina, theCopyright Law of the People's Republic of China, and theEnterprise Intellectual Property ManagementSpecification. It has also formulated internal regulations, including theMeasures for the Publication of Papersand Application for Patents of Huabao Flavours & Fragrances Co., Ltd. and theImplementing Rules for PatentManagement of Huabao Flavours & Fragrances Co., Ltd., to further refine and clarify the creation, protection, andutilization of intellectual property.

Number of Patents Held202320242025

Count256268331

Key Performance

In 2025, the Company published1 SCI paper.

As of the end of the reportingperiod, the Company holds331patents

including

180 invention patents

utility model patents

design patents

? Strategic layout across 8 countries

and 6 categories

? Completed registration of 31 overseas

trademarks

Overseas trademark registration

? Introduced an intelligent compliancemanagement platform

? Integrated a dynamic regulatory databasecovering 20+ major global markets

Compliance management

Case: Rooted in Botswana, Building a Model of China-Africa Economic and Trade Cooperation

Asian market. The event received widespread attention andpositive coverage from authoritative domestic media suchas Xinhua Finance and ifeng.com, as well as local Indonesianmedia including Antaranews and Foodreview. As anothermilestone in the Company's deep participation in the high-quality co-construction of the "Belt and Road" initiative, theconstruction of the Indonesian base has not only won thetrust of the local political and business communities andcustomers but also reflects Huabao Limited's ambition tobuild a full-chain global network covering "Raw Materials-R&D-Production-Sales" and to realize the vision of "ChineseFlavours Captivating the World".

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Huabao Limited 2025 Environmental, Social and Governance (ESG) ReportInnovation Blueprint: Technology Leading the Global Journey

Digital Transformation and Intelligent OperationsHuabao Limited regards digital transformation as a core measure to drive high-quality development and enhanceoperational resilience. The Company is committed to empowering the entire business chain with information andintelligent technologies to achieve deep collaboration in areas such as R&D, production operations, supply chainmanagement, finance, and human resources. By leveraging a unified management platform, specialized systems,and artificial intelligence applications, the Company has built an intelligent operation system covering R&Dinnovation, manufacturing, and business operations. This has not only improved business efficiency and resourceutilization but also strengthened risk control and information security management, providing solid support for theCompany's sustainable development.

Through the collaborative construction and integrated application of the above systems, the Company has achieveddata sharing and business synergy, continuously improving operational efficiency, resource allocation capabilities,and management refinement. As digital systems are continuously optimized and intelligent applications areprogressively deepened, the Company's digital transformation will further empower business development,enhancing overall operational resilience and industry competitiveness.

With the goals of improving operational management efficiency, strengthening risk control capabilities, andsupporting high-quality development, the Company systematically promotes digital transformation andcontinuously refines its digital management system around core business processes. Based on a unified businessmanagement platform, combined with specialized business systems and intelligent applications, the Company hasgradually established a digital operation system covering R&D, production, supply chain, finance and capital, andhuman resources management.The Company uses the SAP system as its core enterprise resource planning platform, integrating key businessmodules such as supply chain, production operations, sales, and finance. It unifies business processes and datastandards to achieve collaborative management of the end-to-end business value chain, providing stable andreliable data support for business analysis and management decision-making. On this basis, the Company hasintroduced multiple specialized management systems for different business scenarios to deepen the verticalmanagement of core business areas.

Huabao Limited continues to deepen the integration of digital technology with its core business, acceleratingthe "AI + Manufacturing" transformation and upgrade. The Company is making simultaneous efforts in bothR&D innovation and production manufacturing to shift its business model from "Manufacturing" to "IntelligentManufacturing".In terms of R&D and product innovation, the Company is vigorously developing "AI+" intelligent flavor creationapplications. Its independently developed artificial intelligence flavorist, Arobot, has been put into use. TheCompany continues to expand the application of artificial intelligence technology throughout the entire valuechain, including fragrance creation and R&D, flavor analysis, formula structure optimization, market trend analysis,and consumer insights. By building a foundational database of flavor chromatograms, the Company achieves high-precision identification and analysis of flavor components, providing data support for product innovation andquality safety, enhancing R&D efficiency and innovation capabilities, and driving the R&D model towards data-driven and intelligent decision-making.

In production and manufacturing, the Company has designated Jiangxi H&K as a demonstration unit to advancethe construction of smart factories. Relying on the SAP ERP system and automated equipment, it systematicallyintegrates and optimizes processes in production planning, workshop operations, warehousing and logistics,and finished product packaging, achieving digital, automated, and lean management of the production process.By strengthening the synergy between production planning and material supply, ensuring precise control ofkey processes, and connecting automated packaging with logistics, the smart factory has effectively improvedproduction efficiency, product quality stability, and resource utilization.

Digital and Intelligent Operations

Digital and Intelligent Empowerment

?Artificial intelligence flavorist Arobot

?The Company's digital operation system

Finance and Capital Management

Launched the BPC system to optimize consolidatedreporting and analysis processes, achieving automatedprocessing of financial data; established a unifiedcapital management platform to enhance capitalcoordination and improve allocation efficiencyand transparency through bank-enterprise directconnections and forecasting models.

Supply Chain and Production OperationsSupply Chain and Production Operations:

Implemented a procurement management platformto leverage the advantages of large-scale procurementand enhance supply chain collaboration;deployed a barcode management system andseamlessly integrated it with the SAP system to enablereal-time data collection and full-process transparenttraceability of materials and production progress.

R&D and Innovation ManagementR&D and Innovation Management: Leveraged the PLM

R&D management platform to achieve collaborativeR&D and data sharing across business segments suchas flavors and food ingredients; actively exploredintelligent applications and developed an AI flavorcreation and intelligent analysis system, using deeplearning technology to empower precise product

innovation.

Compliance and Internal OperationsCompliance and Internal Operations: Establisheda contract management system to create a closed-loop risk control and compliance review mechanism,

integrating it with SAP and capital systems;implemented an EHR system to promote thedigitalization and standardization of humanresources management in areas such as organization,

compensation, and recruitment.

Using the SAP System as the Core Enterprise Resource

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Huabao Limited 2025 Environmental, Social and Governance (ESG) ReportInnovation Blueprint: Technology Leading the Global Journey

?Overview of the advantages of the Jiangxi H&K intelligent factory

?L6 certification for the digital development level of the

manufacturing industry in Jiangxi Province

The Company places great importance on information security and data privacy protection, building a strongdefense for its digital assets through a rigorous management structure and a comprehensive system of regulations.At the structural level, the Corporate Management and Information Department coordinates overall efforts,while dedicated administrators in each subsidiary handle daily maintenance, data backup and recovery, andsecurity incident response, forming a collaborative defense mechanism of "Centralized Coordination and LocalImplementation". At the institutional level, the Company has formulated and strictly enforces the InformationSecurity Management Regulations, which comprehensively regulate physical, network, system, and data security.These regulations cover a full range of scenarios, from employees' daily conduct guidelines to emergency responsesfor natural disasters, ensuring that information security work is well-documented and rule-based.In addition, the Company has established a regular security audit mechanism. Annual audits are conducted eachyear, including internal audits of IT infrastructure and the information security management system. Throughin-depth annual assessments of the effectiveness of existing security measures, it continuously optimizesmanagement processes. This not only enhances system stability but also significantly raises the informationsecurity awareness of all employees, ensuring that security work is evidence-based and evolves in a closed-loopmanner.

Information security protection

Key performance

In 2025, the Company hadno information security incidents and no incidents of customer

privacy breaches.

By applying artificial intelligence to R&D andinnovation and supporting large-scale productionwith digital and intelligent factory construction,the Company has progressively built an intelligentoperational system that integrates R&D andmanufacturing. This promotes human-machinecollaboration and upgrades the refined managementmodel, laying a solid foundation for enhancingcore competitiveness and achieving high-quality,sustainable development.In June 2025, Jiangxi H&K obtained the L6 certificationfor the digital development level of the manufacturingindustry in Jiangxi Province, marking a milestonein the Company's efforts to digitize manufacturingprocesses, refine management, and enhanceoperational collaboration, providing strong supportfor high-quality, sustainable development.

Productionplanningand materialmanagementWorkshopproduction andquality controlAutomatedpackaging andlogisticsIntelligent andintegrated processflowPerfect integrationof manual andautomatedoperations

The SAP MRP system provides unified coordination for production plans and materialrequirements, enabling automated scheduling and inventory optimization, therebyimproving production efficiency and resource utilization.The intelligent barcode system supports precise material feeding and process control,reducing production errors and waste, and enhancing production stability and productquality.Automated packaging lines and logistics systems enable rapid conveying, filling,capping, and palletizing of finished products, reducing manual labor intensity whileimproving operational efficiency and product consistency.Real-time data collection and analysis across all production stages providemanagement with visual monitoring and decision-making support, optimizingproduction processes and inventory management.Highly automated equipment frees up the workforce while retaining space for manualintervention, supporting flexible adjustments and quality control to achieve human-machine collaborative management.

?The Company's information security protection measures

Hierarchical and classified authorization: Strictlyadhering to the principle of "Least Privilege", accessrights are assigned based on job requirements toensure that core R&D data and financial secrets areaccessible only to authorized personnel.

Core area access control: Unauthorized personnel are

strictly prohibited from entering key physical areassuch as server rooms, which are equipped with 24-hourmonitoring as well as fire, lightning, and anti-staticprotection facilities.

Regular backup policy:

Core business systems arebacked up regularly, with backup media stored securelyoff-site. Regular recovery drills are conducted to ensuredata restorability.

Offboarding data desensitization:

When an employeeleaves the Company, all system accounts and accesspermissions must be immediately deactivated, anda dedicated person is responsible for cleaning andhanding over relevant business data.Multi-layered network protection: Firewalls, anti-virussystems, and intrusion detection devices are deployed.Regular vulnerability scanning and patch updates areconducted to effectively mitigate risks from Trojans,viruses, and cyber fraud (such as phishing emails).

Emergency response plan: For emergencies such ashardware failures, hacker attacks, or natural disasters,the Company has established a detailed emergencyresponse process to restore network systems in theshortest possible time, ensuring business continuityand minimizing potential losses.

Full-lifecycle data security management

Strict physical and network defenses

Comprehensive backup and emergency recovery mechanisms

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Huabao Limited 2025 Environmental, Social and Governance (ESG) ReportInnovation Blueprint: Technology Leading the Global Journey

Industry EmpowermentHuabao Limited adheres to the concept of open cooperation, continuously promoting the high-quality developmentand sustainable innovation of the fragrance and flavor industry. The Company actively participates in industryexchanges and technical seminars, collaborating with industry, academia, and research institutions to foster thedeep integration of cutting-edge technologies, talent cultivation, and science popularization. At the same time,through the development of industry standards and cross-sector collaboration, it enhances industry transparencyand public trust, committed to creating an intelligent, green, and international industry ecosystem and driving theentire industry chain toward high-value-added and sustainable development.

The Company actively participates in high-level industry forums and technical exchanges, driving the overallfragrance and flavor industry toward high-quality development by sharing experiences, showcasing innovativeachievements, and discussing industry trends.

Industry Exchange and Value Advocacy

In August 2025, the Company attended the 2025 11th National Fragrance and Flavor Technology ExchangeConference, where it chaired an Artificial Intelligence (AI) symposium and delivered multiple technicalpresentations. The Company engaged in in-depth discussions with academicians from the Chinese Academy ofEngineering and industry experts on cutting-edge topics such as biosynthesis, microcapsule sustained-releasetechnology, and enzymatic hydrolysis and fermentation. While showcasing its innovative achievements, theCompany's team also conducted extensive tasting exchanges and on-site inspections with enterprises from bothupstream and downstream of the industrial chain. Through cross-sector collaboration and resource sharing, theCompany is committed to jointly building an intelligent R&D system and green sensory evaluation standards,promoting the industry's high-quality development toward high-value-added and sustainable goals.

?The conference venue?Dr. Wang Hongqiang, Vice President of Huabao Limited's

Technology and Innovation Center, chairing the AI symposium

Case: Attending the 11th National Fragrance and Flavor Technology ExchangeConference

In December 2025, the Company provided deep support and participation in the "2025 China Fragrance andFlavor Industry Science Communication Forum", hosted by the China Association of Fragrance Flavour andCosmetic Industries. By sponsoring the "Huabao Cup ? 2025 National University Student 'Flavor Elf' SciencePopularization Video Contest", the Company collaborated with nearly 20 universities to tap into the creativepower of Generation Z, breaking down public misconceptions about the industry. The Company not onlydispatched experts to share cutting-edge product commercialization practices, such as black truffle flavoranalysis, but also jointly launched the new year's science popularization talent training program with theindustry association. Through industry-education integration and science popularization, it continues toenhance industry transparency, contributing to the healthy development and talent pipeline construction ofChina's fragrance and flavor industry.

?2025 China Fragrance and Flavor Industry Science

Communication Forum

?The award ceremony for the "Flavor Elves"

popular science video competition

Case: Collaborating with industry, academia, and research to innovate industryscience popularization and talent incubation models

The Company actively participates in the formulation of group standards and the development of internationalsustainable development rules, leading the industry's progress through regulations and standards and promotingthe fragrance and flavor industry toward standardization, green development, and sustainability.

Co-construction of Industry Standards

In September 2025, the Company participatedin the formulation of the industry's first groupstandard, theGuidelines for SustainableDevelopment Information Disclosure forFragrance, Flavor and Cosmetics Enterprises.

In December 2025, the Company participatedin the formulation of the group standardTechnical Guidelines for the Preventionand Control of Volatile Organic Compounds(VOCs) and Odors in the Fragrance and FlavorIndustry.

?The Company participating in the formulationof the group standardGuidelines for SustainableDevelopment Information Disclosure for Fragrance,

Flavor and Cosmetics Enterprises

?Guidelines for the Control of Volatile OrganicCompounds (VOCs) and Odor in the Flavors and

Fragrances Industry

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Huabao Limited 2025 Environmental, Social and Governance (ESG) ReportInnovation Blueprint: Technology Leading the Global Journey

?Signing a memorandum of understanding with the Singapore Polytechnic (SP)

The Company continuously explores the frontiers of technology in the fragrance and flavor sector and deepens thedevelopment of a collaborative innovation ecosystem integrating industry, academia, and research. By leveragingthe academic strengths of renowned universities, it is committed to building a full-chain cooperation model thatspans from basic research and application development to the commercialization of results. Through diversifiedresearch cooperation projects, the Company continues to strengthen its technological moat, drive the continuousupgrading of product flavors and functional ingredients, and lead the industry's transformation toward high-endand scientific development.

Industry-academia-research collaboration

In February 2025, Huabao Asia Pacific signed a memorandum of understanding on industry-academia-research cooperation with the Singapore Polytechnic (SP) to conduct collaborative research and talentcultivation in fragrances, food technology, and related cutting-edge fields. By integrating the university'sresearch advantages with the Company's industrialization experience, both parties are exploring pathwaysto translate research achievements into practical applications, thereby enhancing the Company's R&Dcapabilities in green, nutritious, healthy, and natural ingredients.

Case: Singapore Polytechnic (SP) and Huabao Asia Pacific establish an industry-academia-research cooperation mechanism

In September 2025, the Company participated in the 2025 China Association of Fragrance Flavour andCosmetic Industries (CAME) Annual Conference. At the Entrepreneurs' Forum, it joined renowned domesticand international business leaders to discuss high-quality development paths for the industry. Addressingpain points such as public misconceptions and a lack of brand communication, the Company proposeda consumer-demand-oriented "Beginning with the End in Mind" brand strategy. It also advocated forbreaking social prejudices through the development of new quality productive forces, deep integrationof global resources, and systematic ESG governance. The Company called on industry peers to adhere tolong-termism, work together to reshape industrial value and public trust, and jointly strive to build China'sfragrance and flavor industry into a world-class, admirable industry that is respected by society and trustedby consumers.

?2025 China Association of Fragrance Flavour and Cosmetic Industries (CAME) Annual Conference

Case: Advocating for industry value reshaping and co-building a new world-class industry ecosystem

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Huabao Limited 2025 Environmental, Social and Governance (ESG) ReportInnovation Blueprint: Technology Leading the Global Journey

Governance Cornerstone

Building the Foundation for aSustainable Future

Corporate Governance /43Investor Relations Management /46Risk Prevention and Control /48Business Ethics /51

Huabao Limited insists on solidifying the foundationfor sustainable corporate development through a high-standard, systematic governance framework. It is committedto comprehensively enhancing its management level inareas such as corporate governance, investor relations, riskprevention and control, and business ethics. Through awell-de?ned governance structure, robust internal controland supervision mechanisms, and transparent, fair, andcompliant operational management, the Company not onlyensures stable operations and the protection of shareholderrights but also promotes the continuous ful?llment of itsenvironmental, social, and governance responsibilities,laying a solid foundation for long-term value creation andsustainable development.

Corporate GovernanceHuabao Limited continuously improves its corporate governance system, focusing on enhancing thestandardization, transparency, and operational efficiency of its governance structure. The Company strictly adheresto laws and regulations such as theCompany Law and the Securities Law, and aligns with relevant provisionsincluding theCode of Corporate Governance for Listed Companies, theRules Governing the Listing of Stocks on theChiNext Market of the Shenzhen Stock Exchange, and theSelf-Regulatory Guidance No. 2 for Listed Companies onthe ChiNext Market of the Shenzhen Stock Exchange―Standardized Operation of Listed Companies on the ChiNextMarket, constantly refining and optimizing its corporate governance mechanisms.During the reporting period, in response to the requirements of the newCompany Law, the Companymadesignificant revisions and improvements to 26 systems, including theArticles of Association, the ManagementSystem for Deferred and Exempted Information Disclosure, theManagement System for Raised Funds, theManagement System for Shares of the Company Held by Directors and Senior Management and Their Changes,and theSubsidiary Management Measures. It also introduced theManagement System for the Departure ofDirectors. Furthermore, the Company optimized its governance organizational structure by incorporating its formersupervisory responsibilities into the scope of the Board of Directors' Audit Committee, thereby strengtheningsupervision and checks and balances through the specialized committee mechanism of the Board of Directors.Through this major reform of its corporate governance system, the Company has formed a governance structurecomposed of the Shareholders' Meeting, the Board of Directors, and the Senior Management. While streamlininggovernance levels, this enhances decision-making efficiency and supervisory effectiveness, strengthens the roleof independent directors, provides institutional guarantees for the Company's stable operation and sustainabledevelopment, reduces governance costs, and optimizes the corporate governance structure.

Company organizational chart

Shareholders' Meeting

Board of Directors

Strategy and ESG

CommitteeAudit CommitteeNomination Committee

Marketing Center

Technology and InnovationCenter

Operation Service Center

Procurement Department

Investment andDevelopment Department

Human Resources andAdministration DepartmentCorporate Management andInformation Department

Finance DepartmentRemuneration andAppraisal Committee

AuditDepartmentO?ce of the Board ofDirectors

President

All subsidiaries

The Shareholders' Meeting is the highest authority of the Company. TheCompany convenes Shareholders' Meetings in strict accordance with relevantlaws, regulations, normative documents such as theCompany LawandtheSecurities Law, and the Articles of Association, legally guaranteeingshareholders' rights to be informed, participate, and vote on major corporatematters. By reasonably scheduling meetings and providing diverse participationmethods, the Company facilitates shareholders in exercising their rightsaccording to law, with special attention to protecting the interests of small andmedium-sized shareholders to ensure their legal rights are fully protected.Shareholders'

Meeting

The Company has established a governance structure with clearly defined powers and responsibilities andstandardized operating mechanisms. The Board of Directors has four specialized committees: the Strategy and ESGCommittee, the Audit Committee, the Nomination Committee, and the Remuneration and Appraisal Committee. Tofurther enhance supervisory effectiveness, the Company's Audit Committee of the Board of Directors exercises thepowers of the Board of Supervisors, responsible for the compliance supervision of the Company's finances, majormatters, and the performance of directors and senior executives.The Company clearly defines the division of responsibilities among its governance bodies in terms of decision-making, supervision, and execution. It operates in strict accordance with laws, regulations, and internal policies,continuously enhancing the professionalism of its governance structure to effectively safeguard the legitimaterights and interests of shareholders and other stakeholders.

The members of the Company's Board of Directors possess diverse professional backgrounds and industryexperience, playing an active role in strategic decision-making, operational supervision, and risk management.The Company continuously focuses on the independence and diversity of its Board. Directors and seniormanagement have comprehensive professional capabilities in areas such as industry experience, finance, law,and management, which helps to enhance the overall judgment and risk response capabilities of the Board. Byimproving its governance structure and personnel allocation, the Company constantly enhances the prudence andscientific nature of its decision-making, safeguards the legitimate rights and interests of investors, and elevates theprofessionalism of its corporate governance.

Governance Structure and Operation

Board Independence and Diversity

The Board of Directors is the Company's operational decision-making body. TheCompany strictly adheres to theCompany Law, theSecurities Law, theRulesGoverning the Listing of Stocks on the ChiNext Market of the Shenzhen StockExchange, as well as itsArticles of Association, Rules of Procedure for the Boardof Directors, andWorking System for Independent Directors, to standardizethe operational procedures and decision-making mechanisms of the Board ofDirectors, and to ensure that the Board and all its directors perform their dutieswith diligence and responsibility.Board ofDirectors

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

TypeNameGender

Professional ExpertiseIndustryExperience

RiskManagement

FinancialManagement

ChairmanXia LiqunMale

√√√Non-independentDirector

Lin JiayuMale

√√

Non-independentDirector

Yuan XiaoqinFemale

√√

Non-independentDirector

Gao XuMale

√√

Non-independentDirector

Li XiaojunFemale

√√√

Non-independentDirector

Han PengliangMale

√√

IndependentDirector

Quan ZeMale

√√√Independent

Director

Wu ChangyongMale

√√√

Independent

Director

Yang JinjianMale

√√

Composition of the Board of Directors

Key performance:

In 2025, the Company's Board of Directors consists of9 directors, including 3 independent directors,accounting for33%; and 2 female directors, accounting for 22%.

In 2025, the Company held a total of9 Board of Directors meetings,1 Strategy and ESG Committee meeting, 5 Remuneration and Appraisal Committee meetings,

5 Audit Committee meetings,

and2 Nomination Committee meetings; the average attendance rate of theBoard of Directors was100%.

In 2025, the Company heldtwo Shareholders' Meetings.

Investor Relations ManagementThe Company adheres to the principles of compliance, equality, proactivity, and integrity in investor relationsmanagement, continuously improving its investor relations management system to enhance the standardizationand effectiveness of communication. In strict accordance with theSecurities Law, theGuidelines for InvestorRelations Management of Listed Companies, and other relevant laws, regulations, normative documents, and the

Articles of Association, the Company has formulated and implemented theInvestor Relations Management Systemto standardize information disclosure and investor communication processes, ensuring that disclosed informationis true, accurate, complete, and timely, thereby effectively safeguarding the order of the capital market and thelegitimate rights and interests of investors.

The Company values the fundamental role of information disclosure in the operation of the capital market and theprotection of investor rights. To standardize information disclosure management, the Company has formulated andimplemented theInvestor Relations Management System, which clearly defines the content requirements, workprocesses, and division of responsibilities for information disclosure, ensuring that the information disclosed istrue, accurate, complete, timely, and fair. By improving internal control and supervision mechanisms, the Companycontinuously enhances the standardization, transparency, and overall quality of its information disclosure.

Information Disclosure

Key performance

In 2025, the Company's disclosed information contained no false records, misleading statements,or major omissions; the Company disclosed a total of127 announcementsand related disclosure documents, including4 periodic reports and 49 ad-hoc announcements.

The Company continues to strengthen its investor relations management, maintaining communication withinvestors through various channels and methods, promptly responding to their concerns, and conveying theCompany's operating conditions, development strategies, and related information to the market, therebysafeguarding investors' right to know and communicate. The Company also focuses on protecting the rightsand interests of small and medium-sized investors, ensuring fairness and accessibility in the arrangement ofinvestor communication activities and mechanisms to guarantee consistent information delivery and smoothcommunication channels, preventing selective information disclosure.

Investor Communication

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

While ensuring normal operations and long-term development, the Company protects shareholder rights inaccordance with laws and regulations. It strictly adheres to theCompany Law, theArticles of Association, andrelevant regulatory requirements, implements the cash dividend policy guidelines for listed companies, andformulates and executes reasonable and prudent profit distribution plans based on its own operating conditionsand development plans, ensuring the compliance, fairness, and sustainability of dividend decisions.The Company maintains a stable cash dividend arrangement. Building on this, in 2025, it further promoted thenormalization of interim dividends by formulating and implementing an interim cash dividend plan. The relevantprofit distribution plans have undergone the review procedures of the Board of Directors and the Shareholders'Meeting in accordance with the law. While considering the Company's development needs, these planscontinuously enhance investor returns, ensure that all shareholders enjoy dividend rights fairly based on theirshareholding ratios, and protect the legitimate interests of small and medium-sized investors.

Shareholder Rights Protection

Risk Prevention and Control

The Company consistently adheres to the principle of "Prevention First, Combined with Control", deeplyembedding risk management into the entire process of corporate governance and daily operations. By buildinga multi-level and comprehensive risk prevention and control system, the Company not only establishes strongdefenses in areas such as internal control and tax compliance, relying on the "Huabao Flavors Co., Ltd. TaxManagement Policy" to ensure that tax filing, payment, and compliance reviews strictly follow legal and regulatoryrequirements, but also enhances its organizational resilience to complex external environments through businesscontinuity planning. The Company is committed to proactively identifying potential challenges through regular riskidentification, assessment, and early warning mechanisms, ensuring steady business growth and sustainable valuecreation in a complex and ever-changing market environment.

The Company strictly complies with regulatory requirements such as the Self-Regulatory Guidance No. 2 forListed Companies on the Shenzhen Stock Exchange―Standardized Operation of Listed Companies on the ChiNextMarket and the Basic Standard for Enterprise Internal Control. Guided by its development strategy, the Companycontinuously optimizes its Comprehensive Risk Management Measures and Internal Control Manual. Leveraging thethree lines of defense model for risk management, the Company has established a "Three-in-One" risk preventionsystem with clear responsibilities and a well-defined division of labor. Through annual risk identification, analysis,assessment, and inspection mechanisms, it ensures that risk control requirements are thoroughly implemented inall business segments.During its operations, the Company dynamically updates its enterprise risk inventory and flexibly adopts responsestrategies such as acceptance, reduction, transfer, and avoidance for identified risks, continuously improvingoperational efficiency and management effectiveness. By building a dynamic, closed-loop risk control system thatcovers the entire business chain, the Company is committed to effectively creating and protecting shareholdervalue, ensuring stable operations in a complex market environment.

Comprehensive Risk Management

?Overall objectives of the Company's comprehensive risk management

? Investor communication channelsKey performanceIn 2025, the Company held a total of3 investor communication meetings,communicating with44 investors,

issued3 announcements on investor relations communication records,and responded to22 investors with a total of 91 replieson the Interactive Easy platform.

Shareholders'

Meeting

Investor hotline

Company visits andresearch

Investorcommunicationmeetings

Interactive EasyQ&A

Stock exchangeannouncementsand officialwebsiteWeChat officialaccount

To keep risks within a tolerable range that is compatible with the Company's developmentstrategy

To ensure the Company's compliance with national laws, regulations, and policies, and toguarantee that its operations are lawful and compliant

To establish a comprehensive risk management system that aligns with the Company's overallobjectives, avoiding major losses due to catastrophic risks or human error

To ensure that the Company's internal and external information communication is true and

reliable

To improve the efficiency and effectiveness of business activities and reduce the uncertainty in

achieving business objectivesCash dividend distribution in 2025Q1 2025RMB30,794,000

Q3 2025RMB30,794,000

Full Year 2025 (Proposed)RMB18,476,400

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

?Specific measures for internal control

?Huabao Limited's business continuity management method

?Huabao Limited's three lines of defense model for risk management

In July 2025, the Company organized the "Special Trainingon Total Risk Management" through an online platform,achieving full employee coverage. The training coveredsystematic knowledge including basic risk managementtheories, the total risk management framework,processes, and management tools. It also provided in-depth interpretations by combining Huabao Limited'srisk management practices with the latest industryinformation. Through this special initiative, the Companyhas integrated a risk prevention and control culture intoits daily operations, enhancing the ability of all employeesto identify, assess, and respond to risks, thereby buildinga solid talent guarantee and awareness defense for theCompany's stable operation.?Training framework

Case: Special Training on Total Risk Management to Enhance Compliance andRisk Control Awareness Among All Employees

The Company is committed to building an internal control network that covers all business processes and runsthrough all stages of decision-making, execution, and supervision. The Company has formulated and issuedtheInternal Control Manual, which, with total risk management at its core, embeds key prevention and controlrequirements such as anti-fraud and anti-bribery into business processes and management systems, solidifying thebottom line and red line to ensure the achievement of overall internal control objectives.

The Audit Department strengthens its riskidentification and assessment functions in dailyaudit work, continuously confirms the effectivenessof internal control operations, and promotes thetransformation of internal control managementfrom "Passive Compliance" to "ProactivePrevention", thereby consolidating the foundationof risk prevention and control.

The Company engages an external audit firm toconduct an independent audit on the effectivenessof its internal control system. The audit firm hasissued an unqualified internal control audit report,fully affirming the reasonableness of the Company'sinternal control design and the effectiveness of itsoperation.

The Company has established and continuously improves its business continuity management system toenhance its ability to recover critical business operations in the event of emergencies or external shocks, therebysafeguarding the fundamental rights and interests of customers and relevant stakeholders. Centered around theBusiness Continuity Plan Management Procedures, the Company has developed supporting policy documents suchas theIncident and Emergency Response Management Regulations,Business Impact Analysis and Risk AssessmentControl Procedures, andBusiness Continuity Strategy Management Procedures, and has formulated correspondingemergency plans for different business scenarios. Through regular emergency drills and business impact analyses,the Company verifies the applicability and effectiveness of its plans and continuously identifies and managespotential risks.

By implementing the business continuity plan, the Company can effectively reduce the impact of unforeseen eventson its business operations, enhance its overall risk resilience, and further ensure its sustainable development andmarket competitiveness.

Internal Control Management

Business Continuity Management and Plan

Internal Audit and EvaluationExternal Independent Audit

Operationalplanning and

control

Business impact analysis (BIA)

and risk assessment (RA)

Business continuitystrategies and solutions

Drills and testing

Business continuity plans

and procedures

Governing body

Accountable to stakeholders and assumes oversight responsibilities

ManagementTake actions (including risk management) to achieve organizational objectives

Internal auditIndependent assurance services

Functions of the governing body: integrity, leadership, transparency

Huabao Limited's three lines of defense model for risk management

Functions of the first lineProvide products/servicesto customers;Manage risks

Accountable and

reporting to图例:Authorize, guide,

provide resources, and

supervise

Maintain consistency,communication,coordination, andmutual collaboration

Functions of the second lineProvide expertise, support,monitoring, and constructive

challenge on risk-related

matters

Functions of the second line

Provide expertise, support,monitoring, and constructivechallenge on risk-related

matters

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

Business EthicsHuabao Limited adheres to the principles of legal compliance and integrity in its business activities, conductingresponsible business practices according to high standards and strictly managing behaviors such as fraud, bribery,and unfair competition. The Company has established a robust business ethics management system and hasobtained ISO 37001 Anti-bribery Management System certification. It has made clear provisions on the complianceobligations of its employees and their relatives, subsidiaries, and business partners in business dealings, requiringthem to strictly abide by laws and regulations related to anti-commercial bribery, anti-corruption, and anti-unfaircompetition. Through institutional constraints and systematic management, the Company continuously preventsthe risks of benefit transfer and improper conduct, maintaining the compliance and transparency of its businessactivities.The Company has always regarded integrity in business as the core of its corporate culture, committed to shapinga "Fair, Transparent, and Compliant" business ecosystem by building a rigorous integrity management system.The Company clearly defines anti-fraud and anti-bribery as the red line for building business ethics, with its corepurpose being to regulate professional conduct, enhance compliance awareness among all employees, andestablish moral standards of integrity, self-discipline, diligence, and dedication. The Company integrates integrityrequirements throughout the entire process of business management and commercial dealings, guiding employeesand external partners to jointly abide by the code of integrity and effectively prevent various compliance risks.The Company places great importance on anti-fraud and anti-bribery control and has established a clearorganizational structure and division of responsibilities at the governance level. The Company has set up an Anti-fraud and Anti-bribery Leading Group led by the Board of Directors, with the President as the group leader, tocoordinate and lead the Company's anti-fraud and anti-bribery related work and to make decisions and provideguidance on major issues. At the same time, the Company has established an Anti-fraud and Anti-bribery WorkingGroup, which is responsible for the specific organization, implementation, supervision, inspection, and handling ofissues related to anti-fraud and anti-bribery work, and for promoting the implementation of relevant managementrequirements in various business units.

Responsible for urging the Company's Anti-fraud and Anti-bribery Leading Group tocreate a company-wide anti-fraud and anti-bribery cultural environment and to establishand improve an internal control systemfor preventing fraud and bribery, and forcontinuously supervising the Company's anti-fraud and anti-bribery work.Responsible for establishing and improvingthe internal control system for anti-fraudand anti-bribery and ensuring continuousresource investment, and for providingnecessary guidance and support for theeffective operation of the anti-fraud and anti-bribery internal control system.

Responsible for the daily specificwork of anti-fraud and anti-bribery for the Company and itssubsidiaries.Responsible for the specificanti-fraud and anti-briberywork of this department/company.

In terms of system building, the Company continuously improves its system around anti-fraud and anti-briberymanagement and has formulated and implemented a number of management systems such as theAnti-fraud, Anti-bribery, andWhistleblowing Management System, Anti-fraud and Anti-bribery Management Measures, WorkingRules for the Anti-fraud and Anti-bribery Working Group, Detailed Rules for Receiving and Giving Gifts, andDetailedRules for Prohibiting Private Agreements. These systems make clear provisions on codes of conduct in businessdealings, prevention of conflicts of interest, management of gifts and entertainment, and reporting, investigation,and handling of violations, providing an institutional guarantee for the standardized and institutionalized operationof anti-fraud and anti-bribery work.

Integrity Building

?Huabao Limited's anti-commercial bribery and anti-fraud management system architecture?Huabao Limited's ISO 37001 Anti-bribery Management System certi?cation

?Achievement of anti-bribery objectives in 2025

Board ofDirectorsAnti-fraud andAnti-briberyLeading GroupThe Company's Anti-fraud and Anti-briberyWorking GroupAll functional departments andsubsidiaries of the Company

Anti-bribery ObjectiveAchievement Status

Comply with all applicable anti-commercial bribery laws andregulations in the locations of business operations, maintain

a "Zero Tolerance" attitude towards corrupt practices, andachieve zero bribery incidents throughout the year.

Achieved

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

The Company considers business ethics training an important part of its anti-fraud and anti-bribery efforts. Byconducting regular thematic training, it guides employees to follow professional ethical standards of integrity,fairness, and probity in their decision-making and actions, strengthens their compliance and self-disciplineawareness, and fosters a corporate culture of integrity and uprightness.

The Company has set clear behavioral boundaries for employee integrity, requiring all employees not to participatein or be involved in bribery, kickbacks, illegal transactions, or other forms of improper benefit transfer. At the sametime, the Company extends the principles of integrity and fairness to the entire process of business cooperation,explicitly requiring all business dealings and partners to follow open and transparent business conduct norms,prevent conflicts of interest, and maintain the independence and impartiality of the decision-making process.Integrity Training

During the reporting period, the Company, utilizing itsenterprise micro-classroom platform, had the AuditDepartment organize an online course titled2025 Anti-fraudand Anti-bribery Training, which was open to all employees.The training content covered the latest typical cases of anti-bribery and interpretations of relevant laws and regulations,a basic theoretical overview of fraud and bribery, and anintroduction to the Company's anti-fraud and anti-briberymanagement requirements and working mechanisms. Afterthe training, the Company also organized an online examto test the learning outcomes, promoting consensus andstandardization of anti-fraud and anti-bribery requirementsat the employee level.

Case: Conducting Special Training on Anti-fraud and Anti-bribery

Basic Requirements forEmployee Management

Basic Requirements forBusiness Partner Management

? Huabao Limited's basic anti-fraud and anti-bribery management requirements?Business ethics training performance

IndicatorUnit2025Average duration of anti-commercial bribery andanti-corruption training per person

Minutes60Anti-commercial bribery and anti-corruptiontraining coverage rate

%100%Anti-commercial bribery and anti-corruptiontraining coverage rate for directors

%100%Signing rate of employee anti-commercial briberyand anti-corruption commitment letters

%100%Signing rate of supplier integrity agreements%100%Number of con?rmed corruption incidentsCasesNone

When signing their labor agreements, new employees must also signthe Integrity and Self-Discipline Commitment Letter, which includes apromise to unconditionally cooperate with the Company's investigationsinto anti-fraud, anti-bribery, and other related matters during theiremployment and for 5 years after their resignation/dismissal/retirement;Employees shall not engage in "Fraud" and "Bribery" behaviors as

defined in the Company's Anti-fraud and Anti-bribery ManagementMeasures;When employees resign, the Company conducts special departure

audits for senior management, department heads, or other personneldesignated by the leading group;The Company should mark and conduct targeted background checks

on prospective senior management, department heads, or otherpersonnel designated by the leading group;Employees should regularly undergo integrity assessments within theirdepartments. For department heads or the leadership managementteam, fraud and bribery behaviors within the department or by externalbusiness partners they engage with will be an assessment scoring item.

The Company's relevant departments conduct background checks on

business partners based on different business types and cooperationsituations;Before establishing and while maintaining cooperative relationships

with business partners, the Company's relevant departments shouldconduct compliance evaluations of them, using the results as animportant basis for determining their qualification;When signing business contracts with customers, suppliers, service

providers, contractors, and other business partners, the contractsshould contain clear integrity clauses or a separate integrity agreementshould be signed;The working group organizes the establishment of a dynamic

supervision mechanism for business partners to screen and maintainthem. Relevant departments should fill out the Business PartnerBlack and White List based on background checks and complianceevaluations, and ensure the list is updated in real time;According to the special circumstances or requirements of business

partners, the Company's anti-fraud and anti-bribery commitment lettershould be provided as an attachment to the bid or contract.

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

The Company has formulated and implemented theAnti-fraud, Anti-bribery, and Whistleblowing ManagementSystemto provide standardized and accessible reporting and complaint channels for employees and businesspartners. Relevant parties can report fraud, bribery, or other improper conduct and suspicious matters they discoverin the Company's business activities. The Company explicitly promises in the system to strictly keep the identityand personal information of whistleblowers confidential and clearly prohibits any form of retaliation. Within thescope of its duties and authority, the Company ensures that whistleblowers and investigation participants are notsubjected to discrimination, adversarial measures, or other adverse effects due to their reporting.

The Company considers the business ethics risk audit an important part of its anti-fraud and anti-briberymanagement. By conducting relevant audits periodically or aperiodically, it assesses the operation andeffectiveness of the anti-bribery management system. During the audit process, it focuses on key business linkssuch as procurement, sales, partner management, and financial operations to identify potential compliance risksand management weaknesses. For issues found during the audit, the Company promptly communicates withrelevant departments, analyzes the causes, and promotes the formulation and implementation of correctivemeasures.During the reporting period, the Company conducted internal audits of the anti-bribery management system,compliance function reviews, management reviews, and governance body reviews as scheduled to ensure theachievement of the Company's anti-bribery policy and objectives, and the suitability, adequacy, and effectivenessof the anti-bribery management system. For the issues identified in the audits, the Company has clarified therequirements and deadlines for rectification and continues to track the implementation of corrective actions topromote the continuous improvement of business ethics management requirements.

The Company strictly abides by relevant laws and regulations such as theAnti-Unfair Competition Lawand theAnti-Monopoly Law, adheres to lawful and compliant business operations, and explicitly prohibits obtaining competitiveadvantages through unfair means such as false advertising, commercial bribery, and infringement of trade secrets.In terms of business cooperation management, before establishing cooperative relationships with partners, theCompany clarifies the anti-unfair competition requirements that all parties should follow in the cooperationprocess by signing documents such as theIntegrity Agreement and Integrity Commitment Letterto jointly maintaina fair, just, and transparent market competition order.

Reporting and Protection MechanismBusiness Ethics Risk Audit

Anti-unfair Competition

?Reporting channels for fraud and bribery incidents

Key Performance

In 2025, the Company hadno unfair competition lawsuits or administrative penalties.

Reporting channels

Inform the immediate superior; if the fraud case involvesthe immediate superior, you can bypass them and informa higher-level person

Mailing address: Anti-fraud and Anti-bribery WorkingGroup, Huabao Flavours & Fragrances Co., Ltd., 1299Yecheng Road, Jiading District, Shanghai

Whistleblowing website: Huabao Limitedwebsite - Integrity at Huabao - I want to report(http://180.166.253.249:8006/report.aspx)

Inform the Company's Anti-fraud and Anti-briberyLeading Group or members of the working groupWhistleblowing email: jubao@hbflavor.comWhistleblowing hotline: 021-67083261

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Governance Cornerstone: Building the Foundation for a Sustainable FutureHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

Synergistic Win-Win

Building an Ecosystem ofExcellent Quality

Supply Chain Management /59Quality Assurance /62Customer Co-creation /67

Huabao Limited values partnerships and develops insynergy with its suppliers, striving to build a sustainablesupply chain. The Company is committed to meetingcustomer needs with high-quality products, services,and strong innovation capabilities, forming a green andharmonious industrial ecosystem, and jointly fulfillingcorporate social responsibilities.

Supply Chain ManagementAdhering to the philosophy of "Fairness and Justice, Synergistic Win-Win, and Green and Low-Carbon", HuabaoLimited has built a full-process, standardized supply chain management and control system. Through strict suppliermanagement, green procurement practices, resilience building, and fair cooperation mechanisms, it creates aresponsible, efficient, and sustainable supply chain ecosystem.

The Company incorporates supplier management into its overall corporate development, formulating asupplier management strategy of "Compliance First, Quality-Oriented, Dynamic Optimization, and SynergisticDevelopment". By establishing standardized access, evaluation, and exit mechanisms, it cultivates a group ofhigh-quality core suppliers and promotes synergistic improvement with the Company in areas such as quality,compliance, and ESG. At the same time, the Company strengthens its transparent procurement mechanism,requiring procurement personnel to sign the "Employee Integrity and Self-Discipline Commitment Letter" andsigning an "Integrity Agreement" with suppliers to ensure the fairness and transparency of the procurementprocess. By building long-term and stable strategic partnerships, it ensures the stability and sustainability of thesupply chain.

Supplier Assessment and Management

?Huabao Limited's procurement work?ow

Key Performance

During the reporting period,100% of suppliers signed the Integrity Agreement.

Verify invoices and submit

for payment

Archiving of procurement files

Procurement requirementsSupplier qualification auditSample request and evaluation

Supplier selection and price

negotiationBudget preparationSign contracts and issue

ordersOrder trackingAssist quality control and thewarehouse with goods receipt

The Company practices the concept of green development, integrating environmental protection requirementsthroughout the entire procurement process to promote the green transformation of the supply chain. It givespriority to cooperating with suppliers who are certified with the ISO 14001 environmental management system andhave green production capabilities. In material selection, the Company focuses on promoting the procurement ofenvironmentally friendly and renewable raw materials and prioritizes packaging and storage materials and auxiliarymaterials that are low-pollution and recyclable. This reduces the environmental impact of the procurement processfrom the source. At the same time, the Company conveys the concept of green production to suppliers duringcooperation, encouraging them to optimize production processes, improve energy efficiency, and reduce pollutantemissions. Through collaborative efforts, the Company works to enhance the overall environmental performance ofthe supply chain, contributing to the realization of the "dual carbon"Dual Carbon".

The Company has established a supply chain risk early warning and response mechanism, focusing on keydimensions such as supplier delivery capacity, quality stability, and compliance risks. Through the Record Form forDaily Supplier Abnormalities, it tracks issues like material shortages, quality non-conformance, and delivery delaysin real time. A strict backup supplier development system is implemented. If a supplier is evaluated as unqualified,its qualified supplier status will be revoked, and a backup supplier will be activated or a new supplier will bedeveloped simultaneously to ensure that production and operations are not affected, thereby maintaining thecontinuous and stable operation of the supply chain.The Company has established a multi-dimensional and regular supplier communication mechanism to ensuresmooth and efficient information transmission. For core materials such as additive ingredients, the procurementdepartment organizes technical exchanges between suppliers and user departments to clarify quality requirementsand formulation compatibility standards. During daily cooperation, any problems in the supply process arepromptly recorded and fed back, and suppliers are urged to make corrections within a specified time limit. At theannual evaluation stage, the evaluation results are fully communicated with suppliers to clarify the direction forimprovement and rectification requirements, forming a closed-loop communication mechanism of "ProblemFeedback - Rectification Implementation - Effect Verification". This continuously optimizes cooperation quality andenhances supply chain collaboration efficiency.

The Company specifies the admission criteria for qualified suppliers and has formulated theSupplier Evaluationand Selection Control Procedures. The Company explicitly requires its partners to have complete qualifications, nomajor violation records in the past three years, sound financial status, and to pay taxes in accordance with the law.The materials they supply must comply with national and industry standards, pass the Company's sample testingand evaluation, and meet the requirements for product formulation compatibility, usage safety, and compliance. Ifa supplier is rated as unqualified (score <70) in a routine ad-hoc evaluation or annual evaluation, or is involved in amajor quality and safety incident with significant industry impact, or engages in illegal or non-compliant businesspractices, the Company will revoke its qualified supplier status through the corresponding approval process andpromptly remove it from theList of Qualified Suppliers.The Company integrates ESG requirements into the entire supplier evaluation process, building an evaluationsystem that covers dimensions such as environment and labor practices. It conducts due diligence on all suppliers

Green Procurement

Supply Chain Resilience

to assess their compliance in business operations, quality management, and fulfillment of social responsibilities.In the environmental dimension, priority is given to suppliers certified with an environmental managementsystem, and their energy-saving and emission-reduction measures, waste disposal compliance, and environmentalqualifications are inspected. In the labor practice dimension, the Company verifies suppliers' records of socialsecurity fund payments in accordance with the law to ensure a sound labor management system and protectemployees' legal rights and interests. For Class A core suppliers, a more focused assessment is conducted basedon the"Survey Form for Environment, Occupational Safety and Health, and Labor Rights of Relevant Parties". Thisforms a full-cycle ESG supplier evaluation mechanism covering environmental, social, and governance aspects,achieving a closed-loop management of "admission review - annual tracking - continuous improvement" andpromoting continuous improvement in suppliers' ESG performance.The Company has established a tiered and classified on-site audit mechanism to strengthen on-site control overhigh-risk and core suppliers. The audit content includes production site conditions, configuration of productionand testing equipment, quality control processes, and compliance of operations. After the on-site audit, aSupplierOn-site Evaluation Formis created, which serves as an important basis for supplier classification, partnershipadjustments, and subsequent management, ensuring that the suppliers' actual operations are consistent withcooperation requirements.

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Synergistic Win-Win: Building an Ecosystem of Excellent QualityHuabao Limited 2025 Environmental, Social and Governance (ESG) Report

The Company adheres to the procurement principles of "Fairness, Justice, and Openness", providing equalcompetition opportunities for small and medium-sized enterprises.

Fair Treatment of SMEs

?The Company's measures for fair treatment of SMEs

Key PerformanceDuring the reporting period, the Company hadno overdue payments to small and medium-sizedenterprises (SMEs).

Open Procurement Process

In the search and selectionof suppliers, the Company

adheres to the principleof "Recommendation notDesignation", allowing allqualified small and medium-sized enterprises to participatein bidding and competition.

Equal Competition

OpportunitiesThe Company adoptsdiversified procurementmethods such as inquiry andcompetitive negotiation,treating small and medium-sized enterprises and othersuppliers equally. Partnersare selected based oncomprehensive factors such as

quality, price, and service.

Cooperation Support

On the premise of compliance,the Company providesnecessary technical exchangesand communication supportto small and medium-sizedenterprise suppliers, helpingthem meet procurementrequirements and grow

together.

Quality Assurance