Tingyi Cayman Islands : Master Kong Sustainability Report 2020

19	25	35
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	Endeavors
	build

CONTENTS

01 STATEMENT OF CHAIRMAN

02 ABOUT THE REPORT

03 ABOUT MASTER KONG

04 Corporate Governance

05 Anti-pandemic Contributions

06 Commitment to Good Quality

07 Brand Promotion

08 Green Operation

09 Digital Transformation

10 Employee Care

11 Continuous Return

12 SUSTAINABLE DEVELOPMENT CONCEPT AND ACTION OF MASTER KONG

12 Sustainability Concept of Master Kong

12 Sustainable Development Governance Structure

14 Implementation of Sustainable Development Goals

16 Stakeholder Communication and Materiality Assessment of Key Issues

19

FIGHT THE PANDEMIC, HEALTH IS A BLESSING, ENSURING "LIFE + DELICACY"

1. Resuming Work and Production Timely to Ensure Supply

1. Striving to Protect the Health and Safety of Employees
2. Fulfilling Social Responsibilities to Carry Out Anti-pandemic Support Actions

25

FOOD SAFETY POSITIONED AT CORE; NUTRITION SERVED AS FIRST PRIORITY; ENJOY "LIFE + DELICACY"

1. Food Safety Management and Control Mechanism

1. Construction of Food Safety System

1. Nutrition Product Development and Expansion

32 Collaborative Development of Industry, Research and Learning

35

TOGETHER WITH INTEGRITY AND COOPERATION, SHARE "LIFE + DELICACY"

1. Advertising and Intellectual Property Management

1. Serving Consumers
2. Supplier ESG Management
3. Procurement of Sustainable Raw Materials
4. Anti-corruptionManagement and Professional Ethics
5. Brand Breakthrough

45

IMPLEMENT ENVIRONMENTAL PROTECTION AND MANAGEMENT AND ENJOY "LIFE + DELICACY"

1. Energy Conservation Management

1. Water Conservation Management

1. Low Carbon and Emission Management

1. Reduce the Use of Packaging Materials
2. Digital Production Management

1. Tackle Climate Change
2. The Key Environmental Performance Indicators

57

CARE FOR EMPLOYEES AND PROMOTE CULTURE AS ITS SOUL, ENDEAVORS TO BUILD "LIFE + DELICACY"

1. Deeply Develop Human Resources and Create a Better Workplace
2. Protect the Health and Safety of Employees and Create a Safe Workplace
3. Promote Growth and Development of Employees and Create an Intelligent Workplace

62 Build Corporate Culture and Create a Better Workplace

65

SHOULDER FOR RESPONSIBILITIES, DONATE FOR CHARITY AND SHARE "LIFE + DELICACY"

1. Key Performance Indicators of Community Investment
2. Promotion and Dissemination of the Concept of Sustainable Development
3. Food Safety Science Popularization

1. Education on Water

1. Sports Charity Events

1. Focus on Social Services

1. Immediate Aid

1. Education Projects

1. Support for Agricultural Development
2. Reinforced School-Enterprise Cooperation

1. APPENDIX 1: HONOURS AND AWARDS
2. APPENDIX 2: INDEX TABLE OF GRI STANDARDS

1. APPENDIX 3: TEN PRINCIPLES OF THE UN GLOBAL COMPACT
2. APPENDIX 4: INDEX TABLE OF ISO26000: GUIDANCE ON SOCIAL RESPONSIBILITY (2010)

2020 MASTER KONG SUSTAINABILITY REPORT

01

STATEMENT

OF CHAIRMAN

upholding the sustainable development concept

of "Keep Our Nature Green"

2020 is an extraordinary year for Master Kong. Through joint efforts of every Master Kong people, we provided supplies for front-lineanti-pandemic medical staff nationwide while ensuring pandemic prevention safety and the resumption of work and production. We stay committed to quality and food safety, and actively contributed to the community through public welfare activities, doing what we can to help our nation and its people through the difficulties.

In 2020, upholding the sustainable development concept of "Keep Our Nature Green", we carried out a series of work on food safety, nutrition and health, and environmental protection and carbon reduction, while following the state's "New Development Concept" and the "14th Five-Year Plan" and with "Healthy China", "Food Safety" and "Sustainable Development" as our main focuses. We hold strong beliefs in that "a good development is sustainable development" and upgraded

the former CSR Committee to Sustainable Development Committee in early 2021 in a manner to promote sustainable development and management improvement.

In July 2020, Master Kong was selected in the Private Sector Awareness of the Sustainable Development Goals by the United Nations Development Programme (UNDP), giving us the opportunity to showcase the impact of Chinese enterprises with regard to sustainable development on a broader stage. This is a recognition of our continuous efforts in sustainable development field over the years, also an encouragement and inspiration for us to forge ahead. We are very honoured to share with you some of the key achievements in sustainable development of Master Kong in 2020:

social responsibilities through practical actions. In response to the state's call for "Ensuring Price, Quality and Supply", our branches across the country acted quickly to formulate anti-pandemic emergency plans and resumed to work and production. We launched social responsibility emergency plan soon after the COVID-19 breakout, and gathered volunteer teams to take anti-pandemic actions of "Helping with COVID-19, Health is a Blessing". We provide anti-pandemic material aid together with caring to the front-line medical staffs from 837 medical units in 299 cities of 26 provinces.

Commitment to Good Quality

Food safety has always been the cornerstone of corporate success. As a leading enterprise in the industry, Master Kong made years of efforts in improving food safety and quality and increasing its contribution in food safety. In 2020, on the basis of food safety, we continued to launch more nutritious and healthy products, and lead the upstream and downstream industrial chains to work together to drive the overall development of the industry.

Digital Transformation

As the world is marching into the digital era, Master Kong is deeply aware of the significance of digital transformation to sustainable development of an enterprise. In 2020, we promoted digital transformation practices in various areas such as human resources, production supply chain, logistics and transportation management, while worked together with industrial chain partners to build "Full Link Digitisation" to help Master Kong and our partners in digital transformation.

Green Operation

Master Kong actively follows the green development path, continuously optimises our facilities and adopts intelligent management, in the aim to build a low-carbon, energy- saving and water-saving green company. We further refined production processes to improve environmental benefits, and the unit energy consumption and emissions continuously reduced; Master Kong actively responded to the national environmental protection policy, willing to make contributions to the national goals of "carbon emission peak" and "carbon neutrality".

Stick to the "People-oriented" Belief

We have always believed that the development of an enterprise is inseparable from the support and efforts of every individual employee. Therefore, with adherence of people orientation, we consider every employee with "Diligence, Integrity and Ability" as our most valuable asset. To this end, Master Kong attaches great importance to the development and well-being of employees and strives to promote corporate culture, in pursuit of mutual development between employees and Master Kong.

Continuous Giveback

Master Kong always pays attention to the needs of community and actively gives back to the society through public welfare involvement. We have been holding food safety science popularisation for years. In 2020, we further explored innovative

ways to enhance the knowledge system of "aerospace + food safety". "Education on Water" has become a regular part of Master Kong's public welfare activities, and its "interest-based science popularisation" program teaches kids with fun and implicitly bringing them awareness of water-saving before they know it. Meanwhile, we keep lifting people at the frontline in the affected areas out of danger through our well-established disaster relief system. Also, fully leveraging on our strengths and resources, we are committed to talent cultivation for the society through scholarship program and collaborations with universities and research institutions on scientific researches.

Now that Master Kong is close to its 30s, we will keep our initial vision in mind and stick to the path of sustainable development. In the future, we hope that, together with all our customers, employees and partners, we can all enjoy "Life + Delicacy"!

Wei Hong-Ming

Chairman

Anti-pandemic Contributions

Faced with the outbreak of COVID-19 in early 2020, Master Kong actively organised the resumption of work and production in an orderly manner with employees' health and safety guaranteed, to secure supply of our products and shoulder

Green Operation

	Commitment to Good Quality
Stick to the "People-oriented" Belief	Digital Transformation
Continuous Giveback	Anti-pandemic Contributions

ABOUT

THE REPORT

2020 MASTER KONG SUSTAINABILITY REPORT

03

ABOUT

MASTER KONG

Tingyi (Cayman Islands) Holding Corp. ("Tingyi", "Master Kong","the Group", "the Company" or "us") refers to "the Global Reporting Initiative (GRI) sustainable development reporting Standards (GRI Standards)" and "the International Organization for Standardization (ISO) " ISO26000: Guidance on Social Responsibility Guide (2010)", comprehensively sort out the management status of its own sustainable development, and took the initiative to evaluate the sustainable development issues concerned by major internal and external major stakeholders, and reviewed, evaluated and reported the progress of its corporate sustainable development work in 2020 based on the company's development strategy.

This report underpins Master Kong's actions to implement the Sustainable Development Goals (SDGs) of the United Nations as the main line, presenting Master Kong's sustained efforts and achievements in the field of sustainable development. As a leading company in China's food and beverage industry, Master Kong shoulders the mission of "Promoting Chinese Food

Reporting Scope

Reporting Organizational Scope:

The major office sites and factories with normal operation in China of Tingyi (Cayman Islands) Holding Corp.

Reporting Period:

From 1 January 2020 to 31 December 2020. For the sake of the completeness of the report, it also covers some relevant contents occured in 2021.

Reporting Standards for Preparation

This report mainly refers to the Sustainable Reporting Standards of the Global Reporting Initiative ("GRI Standards") and ISO26000: Guidance on Social Responsibility (2010) of the International Organisation for Standardisation ("ISO26000").

Tingyi (Cayman Islands) Holding Corp. are principally engaged in the production and distribution of instant noodles and beverages in the People's Republic of China ("PRC"). It was listed on the Main Board of the Stock Exchange of Hong Kong in February 1996, with its headquarters in Shanghai, China.

Market capitalisation as of 31 December 2020 was US$9.6 billion. The Company is a constituent stock of Morgan Stanley Capital International ("MSCI") China Index and Hang Seng China (Hong Kong listed) 100 Index.

As a popular brand in China, Master Kong has been well received and supported by Chinese consumers after years of hard work and accumulation. At present, the Group's three main categories of products highlight the predominant position in Chinese food and beverage market. Nielsen data in December 2020 shows, on the basis of sales volume, the Group has achieved market shares in instant noodles and instant tea (including milk tea) of 43.7% and 43.6% respectively in 2020, winning invariably the leading position of the market. In the overall juice drink market, the Group has gained a market share of 17.3% in the drink market, ranking the second place. According to GlobalData December 2020 data, the Group's carbonated drinks had 33.4% market share and held a second position.

43.7%

Instant Noodles

Market Share

43.6%

Ready-to-Drink Teas (incl. milktea)

Market Share

17.3%

• Beverage Culture", adheres to the vision of "Being the Most Respected Food & Beverage Company", and upholds the sustainable development concept of "Keep Our Nature Green" when staying closely with stakeholders and actively fulfilling social responsibilities. We deeply understand the impact of our operations to different elements
  of economy, environment and society, and the importance of "a good development is sustainable development". We continue to explore and improve our performance in sustainable development. The Company dedicates to sharing corporate values with stakeholders, enhancing social welfare and enjoying "Life + Delicacy" with them.

Forms of Report Distribution

This report is published in both printed and electronic forms. Electronic reports can be found on our website www. masterkong.com.cn.

If you have any comments on our sustainability performance and this report, please send an email to sustainability@ masterkong.com.cn. This report is published in both Chinese and English versions. In case of any inconsistency between the two versions, the Chinese version shall prevail.

Being a leading brand in the fast-moving consumer goods industry, Master Kong holds the industry responsibility of food safety and quality guarantee. Through constantly building and improving management system, establishing risk prevention management system and implementing robust control over food safety, Master Kong makes extensive efforts to ensure product quality and safety, and provide consumers with safe, tasty and healthy products.

In the future, the Group will still lay its focus on the production and distinction of food and beverages, keep close connection with stakeholders and actively fulfil social responsibilities with the mission of "Promoting Chinese Food & Beverage Culture", the vision of "Being the Most Respected Food & Beverage Company", and the sustainable development concept of "Keep Our Nature Green".

Overall Juice Drink

Market Share

33.4%

Pepsi Carbonated Drinks

Market Share

We expect to introduce and demonstrate our true performance and achievements in sustainable development to all sectors of the society through the preparation and release of this report and highlight our contribution to the society in this field.

$9.6 marketcapitalisationasof Billion 31December2020

2020 MASTER KONG SUSTAINABILITY REPORT

05

CORPORATE

GOVERNANCE

Master Kong is committed to establishing and maintaining sound corporate governance to benefit our consumers and stakeholders, including shareholders, employees, partners and communities.

As of

2020.12.31

the Group has been carrying out self-assessment of internal control, and has established a rigorous and effective self-examination and self-inspection system, achieving full coverage of self-assessment in management cycle.

ANTI-PANDEMIC CONTRIBUTIONS

Helping with COVID-19, Health is a Blessing

Catering Industry Helps National Fight against the Pandemic

Governance Framework

The Group's Board of Directors ("the Board"), chaired by Mr. Wei Hong-Ming, is fully responsible for the Company's overall business operations, including leading the collaboration among

Risk Management and Internal Control

different departments, through efforts in guidance and monitoring, the advance and development of the functions of the departments.

The Board has an Audit Committee and a Remuneration and Nominating Committee. The Audit Committee is responsible for assisting the Board of Directors of the Company to ensure the objectivity and credibility of the financial statements. The principal duties of the Audit Committee include the review and supervision of the Group's financial reporting system, the preparation of financial statements, annual and interim reports and integrity of accounts, risk management and internal control systems, as well as maintaining good corporate governance standards and practices. It also acts as an important link between the Board and the Company's auditor in matters within the scope of the group audit. The Audit Committee is provided

with sufficient resources to perform its duties and will meet regularly with management, internal auditors and external auditors, as well as review their reports. The Remuneration and Nomination Committee was set up to review the structure, size and diversity of the Board, identify individuals suitably qualified to become Board members, assess the independence of the independent non-executive directors, advise the Board on the remuneration of individual executive directors and senior management, and consider and approve the remuneration packages of the Directors and senior management of the Group, including the terms of salary and bonus schemes and other long-term incentive schemes. The Committee also reviews the structure, size and composition of the Board from time to time, assess the performance of the Executive Directors and approve the terms of the Executive Directors' and recommends to the Board on appointments of Directors and the succession planning for Directors, and

to ensure that the appointment and re-appointment of Directors are in accordance with fair and transparent principles. In the fiscal year, the Committee is in charge of reviewing the structure, size and composition of the Board; reviewing and making recommendations on the diversity of the existing Board members; checking resumes of director candidates and making recommendations to the Board on the re-appointment of Directors; making recommendations to the Board on remuneration packages of senior management.

The composition of the Board reflects the necessary balance of skills and experience desirable for effective leadership of the Company and independence in decision-making. The Board is currently comprised of 9 Directors in total, including 6 Executive Directors and 3 Independent Non-executive Directors.

Enhance Operational

Performance

Enhance Work

Efficiency

Protect Asset

Security

Reliability Of

Financial Reporting

The principal spirit of the internal control and risk management procedures established by the Group is in compliance with five elements in the COSO (The Committee of Sponsoring OrganisationsoftheTreadwayCommission)structure,i.e.control environment, risk assessment, control activities, information and communication, and monitoring. The goal of risk management is to keep the overall risk of the Group within acceptable levels and to lay a good foundation for the Group's long-term development. Meanwhile, it can achieve the goal of defining the management structure and authorisation so as to enhance the operational performance and efficiency as well as asset safety protection, which ensures the reliability of financial reports while complies with the requirements of national regulations.

TheriskmanagementsystemestablishedbytheGroupsets "pursuingsustainabledevelopmentandassumingsocial responsibility"asmanagementobjective.Themanagement processincludesriskidentification,riskassessmentandevaluation, riskcontrolandoverallmonitoring.Firstly,theriskmanagement objectivesaresetthroughasystematicandscientificapproach. Riskidentificationandmanagementframeworkarethen developedbyconductinginterviewswithmanagementand

riskseminars,Thirdly,riskassessmentiscarriedoutwithfull participationfromseniormanagementinthediscussionandthen riskresponsestrategiesareformulated.Finally,riskcontrolactivities andsupervisionareimplementedcontinuously.

Under the supervision of the Board, the Group has established three lines of defence for risk management within its organisation structure, responsibility and authority framework. The Audit Committee will assist the Board to review the design and operation effectiveness of the risk management and internal control system of the Group. As of 31 December 2020, the Group has been carrying out self-assessment of internal control, and has established a rigorous and effective self-examination and self-inspection system, achieving full coverage of self-assessment in management cycle. Meanwhile, the Group further expanded supervision of subsidiaries, prioritised the formulation of management standards for high- risk processes, and on the basis of industry competition and operation needs, established streamlined and feasible approval authority for expenditure and human resources. In addition, the Group has also been focused on proper oversight of compliance with regulations and other work. No material deficiency in risk management or internal control was identified in the internal audit conducted by the Internal Inspection Department.

After the abrupt outbreak of COVID-19 prior to 2020 Spring Festival, Master Kong, on the basis of safeguarding the health and safety of employees, quickly responded through resumption of work and production in an orderly manner to secure market supply of our prpducts and donations of money and supplies, shouldering responsibilities through practical actions.

Master Kong immediately responded to the state's call for "Ensuring Price, Quality and Supply", fully guaranteeing the stability of market supply. Business units of the Group formulated anti-pandemic emergency plans in accordance with local governments' requirements, and followed insturctions on pandemic prevention and control and work resumption as specified by the governments and companies. Adhering to the principle of serving operation and serving market, the Group also communicated with external parties and coordinated safety work at factories in support of timely work resumption.

During the pandemic, Master Kong made every effort to safeguard the health and safety of its employees by setting up special teams for pandemic prevention and control, and formulating and releasing internal management guidelines. To create a healthy and safe working environment, business units reasonably adopted work forms of off-peak working and work- from-home, promptly procured anti-pandemic supplies and provided to employees, and strictly disinfected workplaces on schedule. In addition, we organised employees to attend COVID-19 related online trainings, mitigating impacts of the pandemic on employees' mental health with caring videos.

Master Kong activated the social responsibility emergency plan right after early COVID-19 outbreak to provide medical staff with convenient and nutritious food, taking actions to join the fight against the pandemic. Through nationwide "Helping with COVID-19, Health is a Blessing" anti-pandemic support action, Master Kong called on employees across the country to deliver anti-pandemic supplies, supporting a total of 837 medical units in 299 cities of 26 provinces. Master Kong was awarded the title of Socially Responsible Enterprise of "Catering Industry Helps National Fight against the Pandemic" at the 18th China Food Safety Conference for its outstanding performance in anti- pandemic support action.