TANSH Global Food : 2019 ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) REPORT

Incorporated in the Cayman Islands with limited liability

Stock Code: 3666

ENVIRONMENTAL

SOCIAL AND

GOVERNANCE REPORT

2019

ABOUT THE REPORT

The Report is the fourth Environmental, Social and Governance Report of TANSH Global Food Group Co., Ltd. ("TANSH Global") and its subsidiaries, collectively, the "Group"). The Report is aimed to disclose TANSH Global's environmental and social performances in 2019, including environmental and social issues that stakeholders are mainly concerned with. For key stakeholders' comprehensive understanding of TANSH Global's sustainability philosophy, practices and performances, the Report should be viewed together with the chapter titled "Corporate Governance Report" in this year's Annual Report - page 31 to page 42. The Report is published in Traditional Chinese and in English. Should there be any discrepancies in the Report's content, the Traditional Chinese version shall prevail. The electronic version of the Report may be viewed or downloaded from TANSH Global's official website and SEHK's website.

Unless otherwise stated, the terms mentioned in the Report shall have the following meanings:

• "TANSH Global" TANSH Global Food Group Co., Ltd.
• "Headquarters" Shanghai Headquarters of TANSH Global
• "Company", "the Company", "we/us" Headquarters and restaurants located in Shanghai that are under TANSH Global's direct management
• "SEHK" The Stock Exchange of Hong Kong Limited
• "ESG" Environmental, social and governance
• "ESG Reporting Guide" the Environmental, Social and Governance Reporting Guide in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited published by SEHK
• "the Report" TANSH Global's 2019 Environmental, Social and Governance Report
• "the Reporting Period", "2019" Time period from 1 January 2019 to 31 December 2019
• "China", "PRC" The People's Republic of China
• "SAMR" China's State Administration for Market Regulation
• "CFDA" The former China Food and Drug Administration, which has been integrated into SAMR in April 2018
• "SOP" Standard Operating Procedure, a program designed to help workers carry out complex operations within limited time and resources

TIME SCOPE

This Report details the environmental, social and governance activities, challenges and measures taken by the Group during the year ended December 31, 2019.

ABOUT THE REPORT

REPORTING SCOPE

Unless otherwise indicated, the Report's scope covers Headquarters and restaurants located in mainland China that are under TANSH Global's direct operation and management. Unless otherwise specified, the Group obtains key performance indicators ("KPI") in the ESG aspects through operational control mechanism. The scope of environmental data only covers Headquarters, Shanghai Min and The Dining Room, the restaurants located in Shanghai that are under TANSH Global's direct management, while the social data covers Headquarters and the restaurants directly managed by the Group. For the convenience of reading the Report, Headquarters and restaurants in mainland China are collectively referred to as "Company", "the Company" or "we/us". The detailed scope of specific data disclosed in the Report would be further discussed in the relating chapters. The Group will continuously assess the major ESG aspects of different businesses or its major subsidiaries to determine whether they need to be included in the ESG report.

REPORTING FRAMEWORK

The Report was developed by the Company in compliance with the Environmental, Social and Governance Reporting Guide in Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited published by the Stock Exchange of Hong Kong Limited (the "Listing Rules"). The Report has been prepared in accordance with the reporting principles: materiality, quantitative, balance and consistency and has complied with "comply or explain" disclosure obligations, and has also reported certain social KPIs in the "Recommended Disclosure" section of the Reporting Guide. The Report's compliance with the ESG Reporting Guide is summarized in the "ESG Reporting Guide" chapter.

FEEDBACK

The opinions and suggestions of stakeholders will help the Group to establish a more careful and sound sustainable development strategy in the future. The Group welcomes any questions or suggestions regarding the content and reporting format or its performance in sustainable development. Please contact the Company through the following:

2F, East Bldg., 777 Jiamusi Road, Yangpu District, Shanghai, China (Postal Code: 200433)

Phone: +86 (21) 2525 9999

Fax: +86 (21) 2525 9900

CHAIRMAN'S MESSAGE

2019 was a year of opportunities and challenges for the Chinese food and beverage ("F&B") industry. Leveraging the brand advantage TANSH Global has built in the mid-to-high-end food and beverages market in China over more than three decades, as well as its extensive operating network and market-leading insight, the Group has made great progress in innovating its product line, enhancing customer experience, and optimizing its business presence and brand models during the year. This has helped us to achieve strong improvements in operational efficiency and many other essential business areas.

As a first-class F&B platform with multiple brands in China and around the world, the Group has been facing waves of economic shocks. From the Sino-US trade conflicts to social unrest in Hong Kong to the global outbreak of COVID-19, the overall operating environment of the F&B industry in Hong Kong and China has been severely disrupted. In spite of this difficult environment, we remain firmly committed to our mission statement that "Food is a Primary Necessity. Let people enjoy the happiness of delicious food", in maintaining a sustainable business model and creating a good catering culture and practices for customers, the environment and society, and for establishing a harmonious and happy living environment for the community.

In 2019, the Group operated 55 "Shanghai Min" restaurants, two "Maison De L'Hui" restaurants, 22 "The Dining Room" restaurants, one "ORENO" restaurant, one "Wolfgang Puck" restaurant, one "DOUTOR" Café, one "COCO2NUTS" restaurant and three "AYO MAYA" restaurants in some of the most developed and fastest growing cities in China as well as in Hong Kong. In order to optimize our city coverage and increase operating efficiency, the Group reduced the number of restaurants in 2019 to focus on affluent urban areas. In total we closed 19 restaurants in three cities to turn our operational focus on the three most developed city clusters in China, namely the Yangtze River Delta, the Greater Bay Area, and the Beijing-Tianjin-Hebei Region, with Shanghai, Hong Kong, and Beijing as the centres. The increased density of stores in developed cities will bring great benefits to the Group's operations, supply chain and restaurant management.

As a pioneer in serving exquisite Shanghai cuisine in China, and having now become an operator of a wide range of mid-to-high- end Chinese and Western restaurant brands, our success is not only reflected by our pursuit of the finest color, fragrance and taste for customers, but also our continuous efforts toward achieving innovative and sustainable development under the new economic environment. In pursuit of a higher level of corporate social responsibility, the promotion of green energy-saving and low-carbon emissions as well as the caring for employees and society have become important goals for the Group's short-, medium - and long-term development. This is now a critical strategy for achieving sustainable development under the ever-changing and difficult macroeconomic outlook.

In addition to improving operational efficiency to enhance economic achievements and investor returns, the Group regards the impact of its business on society and the environment as a primary concern. We attach great importance to food quality and health and safety, ranging from meticulous attention to the highest standards of food research and development, menu design, food storage through to the entire process of food production and waste disposal. In addition to product quality, we understand that the interests of our employees are equally important. By cultivating a courageous and dedicated working team, we expect to see a positive impact on the Group's service quality and brand reputation. Therefore, we emphasize highly on health, safety and training of employees, and adhere to the principles of fairness and diversity in hiring in order to cultivate a safe and healthy working environment.

Last but not least, on behalf of the Board of Directors and management, I would like to express my heartfelt thanks to my colleagues, customers, partners, suppliers and professional intermediaries for their support. We rely on the cooperation of all parties to contribute to the sustainable development of business, the environment and society, so that the Group may continuously provide customers with a healthy and satisfying eating experience in challenging times in order to achieve our long-term goals.

Baixuan Tiffany Wang

Chairman

ABOUT TANSH GLOBAL

TANSH Global has over 30 years history of operation in China and has been listed on the main board of the SEHK since 2012. The Group process a number of advantages in brands integration, standardized supply chain, talent and organizational competitiveness, and invest and operate a wide range of F&B business ranging from Chinese food, western food, casual dining to beverages, including "Shanghai Min", "The Dining Room", "Mainson De L'Hui", "ORENO", "Wolfgang Puck", "DOUTOR", "COCO2NUTS" and "AYO MAYA"

SUSTAINABILITY MANAGEMENT

BOARD'S RESPONSIBILITY

By evaluating the Company's ESG-related risks and opportunities, the Board of Directors of the Company formulates ESG management approach, strategies, priorities and objectives, and defines the reporting scope of the Report. Meanwhile, the Board ensures that TANSH Global sets appropriate and effective risk management and internal monitoring and control systems, reviews the disclosure content of the Report and assumes overall responsibility for TANSH Global's ESG strategy and reporting.

ESG WORKING GROUP

In order to optimize the management of the Company's sustainable development related matters, the Company refers to SEHK's "How to Prepare an ESG Report" and established an ESG management team to report to the Board of Directors on ESG work. On the basis of planning and coordinating the preparation of this report, the ESG Working Group organized a stakeholder survey and materiality assessment, and was also responsible for collecting relevant ESG information. The working group will also check and evaluate the Company's performance in different aspects, such as environment, health and safety, labor standards, product liability, within the scope of ESG, to help identifying and evaluating the Group's ESG risks and effectiveness of internal control mechanisms.

STAKEHOLDER PARTICIPATION

Understanding the expectations of various stakeholders is very important for the sustainable development of the Group. TANSH Global values the stakeholders and their feedback on its business and ESG issues, and expects to listen to the voices of different stakeholders (including groups and individuals that have a significant impact on its business or may be affected by its business) to help the Group assess the impact of its own ESG decisions and internal control mechanisms and adjust its own development direction, while truly understanding, widely considering and promptly responding to the needs of different stakeholders. The main stakeholders of the Group include investors and shareholders, governments and regulatory agencies, employees, customers, suppliers and partners, media and communities.

The Group maintains good communications with stakeholders through diversified channels and platforms to understand the main issues that it needs to pay attention to in the process of sustainable development. The channels of communication between the Group and its major stakeholders and their expectations and considerations on the sustainable development of the Group are as follows:

SUSTAINABILITY MANAGEMENT

When formulating operational strategies and ESG measures, the Group will take into account the expectations of stakeholders and work with each other to enable the Group to continuously improve its performance and create greater value for the society.

MATERIALITY ASSESSMENT

In order to understand the concerns of stakeholders, identify current or future issues critical to the business, and formulate sustainable development strategies and guidelines, the Group invited various stakeholders to participate in the materiality assessment of this report in the form of an online questionnaire survey. Participants include the Company's decision-makers, employees, customers, shareholders or investors, suppliers, partners, public, media, and government or regulatory agencies.

SUSTAINABILITY MANAGEMENT

Referring to the ESG Reporting Guide and considering the characteristics of the F&B industry, we identified 21 ESG issues related to TANSH Global and classified the 21 issues according to the ESG Reporting Guide's framework and our industry's characteristics into four aspects, namely, environmental responsibilities, operational responsibilities, labor responsibilities and others. In the questionnaire survey, we invited participants to rank the issues under each aspect from perspectives of "Influence on stakeholder assessments and decisions" and "Significance of economic, environmental and social impacts". The Group's materiality matrix for the Reporting Period is as follows:

Influence on stakeholder assessments and decisions

Significance of economic, environmental and social impacts

SUSTAINABILITY MANAGEMENT

According to the importance of stakeholders in the two dimensions of "Significance of economic, environmental and social impacts" and "Influence on stakeholder assessments and decisions" at various levels, the Group is aware of the relative concerns of the stakeholders towards the following ESG issues:

Based on the above materiality assessment results, this Report will focus on disclosing the Company's strategies and performance related to various material issues during the Reporting Period in the following chapters. During the Reporting Period, the Group confirmed that it established appropriate and effective management policies and internal control systems for ESG issues, and confirmed that the disclosures met the requirements of the ESG Reporting Guide.

SAFETY FIRST

FOOD SAFETY AND HYGIENE

As always, food safety is still the most important issue concerned by the stakeholders of the Company in 2019, and it is also the stable cornerstone for the long-term development of F&B corporations. The Company has set up a food safety management leading group and related policies and procedures, strictly controls the quality and safety of the food, and provides customers with high quality and healthy food.

The Company strictly abides by the relevant national laws, administrative regulations and local regulations in the places where it operates, including but not limited to the "Food Safety Law of the People's Republic of China", the "Regulation on the Implementation of the Food Safety Law of the People's Republic of China", the "Administrative Measures for Food Recall", the "The Operating Rules on Food Safety in Catering Services", the "Guiding Opinions on See-through Kitchen Work in Catering Services", the "Measures for the Supervision and Administration of Food Safety in Online Catering Services", the "Shanghai Food Safety Regulations", and the "Shanghai Administrative Measures for Food Safety Information Traceability", etc. During the Reporting Period, the Company did not find any major violations of food safety related laws and regulations.

Food Safety Management Leading Group

In order to strengthen operation management and implement the safety production responsibility system, the Company has set up a food safety management leading group with the Chief Executive Officer as the team leader and heads of various departments as the team members, responsible for directing and coordinating the work of the Company's food safety management system. Its main responsibilities are as follows:

• Hold regular meetings to discuss and formulate food safety policies that the Company should adopt and to follow up on the progress of each department's projects;
• Investigate, sort out and research the Company's existing major ingredients, minor ingredients and packaging materials; strictly eliminate materials that may endanger food safety in the daily work of procurement, production, cooking at restaurants and quality control;
• Analyze and evaluate unsafe food raw materials appearing in specific food safety incidents from a professional perspective and a public perspective and discuss the risks and impacts that the incident may have on the Company, in order to establish corresponding monitoring mechanisms and countermeasures;
• Cooperate with the regulatory authorities to supervise the Company's daily food safety business; implement the national laws and regulations on food safety; pay close attention to food safety incidents reflected by restaurants and media, and timely control and formulate coping strategies; and
• Participate in the development of the food safety strategy and regularly evaluate the operation performance of the food safety management system of the Company.

SAFETY FIRST

In addition, the food safety management leading group is also responsible for establishing and maintaining communication with external parties, including but not limited to telephones, emails, meetings, documents, faxes, letters, seminars, forums, etc. to understand the potential risks and known hazards under the control of other organizations in the food supply chain and pass on new laws and regulations, new knowledge on emergent or new food safety threats and their coping methods. External parties that maintain communication with the food safety management leading group include suppliers, customers, regulatory authorities, and other organizations. The communication content includes (i) Information on major ingredients, minor ingredients and packaging materials;

1. Product information inquiry and customer feedback, product and service demand information, product and service effect evaluation information (including customer complaints, etc.); (iii) Technology development information, changes in laws and regulations, food safety incident information; and (vi) Communicate relevant information with other organizations that affect or will be affected by the effectiveness or update of the food safety management system.

While maintaining effective external communication, the Company has also established an effective internal communication mechanism to encourage employees in different positions to carry out adequate internal communication on how to achieve management goals and work coordination, pass on new laws, regulations and new knowledge of new food safety hazards and their treatment.

Internal control of food safety

The Group regards food safety as the lifeline of an enterprise, and it is the Group's mission to provide consumers with healthy and safe food. The Company has established clear operational and management rules under the themes of resource management, supply chain food safety management, restaurants food safety management, food safety supervision, unqualified product recall and food safety traceability. Among them, resource management includes personnel training and assessment, new store decoration standards, restaurants facility maintenance and repair plans; food safety management covers key process control from procurement, acceptance, preparation to tableware disinfection, etc., and requires all processes to be documented in order to supervise the implementation; the unqualified product call includes effective measures such as return of food ingredients and complaints. In addition, in accordance with the requirements of the "Administrative Measures for Food Safety Information Traceability" of the Shanghai Municipal People's Government, the company has developed a "Food Safety Traceability SOP" and has a dedicated online platform for the responsible personnel of each restaurant to record the source information, specifications, production date, production batch number and other information on real time basis during stock in and stock out processes, and the specific implementation plan and operation process of product traceability are standardized to respond to unexpected situations. The Group also has a complete food safety incident emergency response system, which regulates the classification, handling and reporting of food safety incidents. At the same time, the Company has set up a "Plan for Emergency Response to Food Safety Accidents" and organizes emergency drills for food safety incidents every year. Through emergency drills, the commanding ability of the food safety management leading group and the ability of various departments to deal with and respond to sudden food safety accidents are strengthened.

By regularly revising the "List of Food Safety Regulations", the Company keeps abreast of and follows up on the trends in the supervision of food safety and quality in national laws, administrative regulations, and local regulations. The Company constantly reviews and optimizes company policies and management models related to food safety. The Company has integrated and optimized the existing food safety management regulations of the company according to the "GB/T 27306-2008 Food Safety Management System Catering Industry Requirements" and the "DB31/2015-2013 Food Safety Local Standard Catering Service Unit Food Safety Management Guidelines", and revised the "Food Safety Management Manual", and used it as the company's food safety management system guidelines and operating guidelines. The "Food Safety Management Manual" contains a series of systematic files to carry out unified and orderly risk management and control of the corresponding aspects of food safety, company branches and partners.

SAFETY FIRST

The Company organizes annual food safety management system reviews to evaluate the opportunities for improvement and changes in the food safety management system to ensure the adaptability, sufficiency and effectiveness of the food safety management system. The Company summarizes the evaluation results into a "Management Evaluation Report" and distributes it to various departments for work review and improvement. During the Reporting Period, there were no cases in which the Company sold or shipped products that had to be recycled for safety and health reasons.

Case: "See Through Kitchen" Program

The Company actively responds to the "See Through Kitchen" program advocated by CFDA. We install camera equipment in the processing and cooking area, special operation area, cleaning and disinfection area, etc., and monitor the whole process in real time through video transmission technology. We accept the supervision from consumers and regulatory authorities to ensure the quality and safety of the food provided.

EMPLOYEES' OCCUPATIONAL HEALTH AND SAFETY

The Group attaches great importance to the health and safety of employees and firmly believes that the health of employees is also an indispensable element in ensuring food safety. During the Reporting Period, the Company strictly complied with the "Labor Law of the People's Republic of China", the "Work Safety Law of the People's Republic of China", the "Law on the Prevention and Control of Occupational Diseases of the People's Republic of China", the "Regulations on the Workplace Occupational Health Supervision and Administration", and the "Fire Protection Law of the People's Republic of China", and other relevant national and local laws and regulations to provide employees with a safe and reliable working environment. During the Reporting Period, the Group has not found any violations of laws and regulations related to providing a safe working environment and protecting employees from occupational hazards to major issues, nor has there been any accidents due to work and work days lost due to work-related injuries.

The Group holds fire drills in office premises and restaurants every year to ensure that employees have the ability to respond to emergencies. The Company regularly conducts safety awareness training for employees in accordance with company policies such as the "Restaurant Personnel Health Management System". During normal work, it also actively promotes healthy lifestyles to avoid occupational hazards.

Health and Sanitation Management

The Group's "Restaurant Personnel Health Management System" requires all restaurants' staff to develop good hygiene habits and stipulate the cleaning frequency of work clothing. New employees must undergo a health check and obtain a health certificate before starting work. Each restaurant must establish a "personal health certificate management account", and conduct a health check before the start of daily work, to grasp the employees' own health and safety status, and to further ensure food safety. In addition to the health management system, the Company also stipulates the corresponding operating specifications and storage areas for the operation of the kitchen appliances in all restaurants to ensure the daily work safety of employees. In addition, the company is equipped with fire-fighting equipment in all business and work places, and posted instructions and publicized emergency escape techniques in conspicuous places.

Health Management and Occupational Safety Training

The Company strictly complies with local policies and regulations of Shanghai. New employees must take training and be presented with certification of relevant examinations on laws and regulations about food safety and its related knowledge for being on position. Additionally, each restaurant needs to organize at least two food safety trainings (food safety related knowledge, code of ethics or legal education) per month with a total training hour not less than 40 hours per year. At the same time, the head chef takes responsibility to establish the "Profile of Training about Food Safety Related Knowledges for Employee", which has documented and recorded training hours, training content and training outcomes for future revision.

QUALITY ORIENTED

FOOD R&D AND QUALITY

The Group focuses on the R&D of new products, and has a dedicated R&D department to consider the quality and safety risks of dishes and develop new dishes from the perspectives of raw material characteristics, SOPs, and operating permits of restaurant on a regular basis. In addition, in order to ensure that the food and services provided by the Group meet the requirements of quality management, the Company also has a detailed "Food Safety Management Program" to regulate food processing, safety inspection, complaint handling and recall processes, so as to avoid all levels and various occurrence of food safety accidents.

Inspection Policies

In order to ensure the quality and safety of the food in receiving process and prevent unqualified products from entering the restaurants, the Company has established the "Quality Acceptance Process for Raw Materials and Ingredients in the Material Center" and the "Quality Acceptance Standard for Raw Materials" for various raw materials, which are used to guide the acceptance, daily supervision and quality verification of departments in charge of acceptance and usage. For raw materials with a large amount of purchases, the Group entrusts a third party to inspect the material's processing and production procedures.

In addition to the source control, TANSH Global's restaurants also insist on taking multiple measures with rigorous attitude to ensure that the products provided are of high quality and safety. In the daily inspection, we inspect the quality of food in accordance with the "Inspection and Acceptance Standard of Raw Materials at Restaurants", "Procedures for Pilot Examination of Food Safety", etc. The "Procedures for Pilot Examination of Food Safety" stipulates that the food safety management leading team shall conduct on-site food safety inspection and random food sampling inspection at restaurants kitchen by means of pilot inspection. Pilot examination methods are classified into on-site inspection and dish sampling inspection. The on-site inspection is mainly carried out through inspections on the sanitation and hygiene of employees, operation, environment, facilities and equipment at restaurants; the dish sampling inspection and transports dish samples to the entrusted third-party inspection agency according to the sampling plan.

The food safety management leading team conducts monthly and annual summary analysis of the inspection results of all restaurant kitchens, collectively formulates food safety analysis reports. The implementation of respective food safety laws, regulations and policies of each restaurants can be reflected by the objective and fair results, and the food safety awareness and management at the restaurant kitchen can be continuously improved.

Product Recall

The Company has developed response policies for external and internal recalls of unqualified products. For external recalls (recalls from relevant government departments or suppliers), the Food Safety Department and the Purchasing Department shall coordinate and arrange the execution of the recall; for internal recalls (customers find unqualified products during the meal or after the purchase), the restaurant shall assess the scope of the impact according to the complaint's situation and, if necessary, implement the corresponding recall operation procedures in accordance with the "Material and Product Recall Program". In addition, in recall processes we require all departments to keep recall forms and recall documents and label and store the recalled products, ensuring that all procedures of recall are properly recorded by the Company and suppliers.

QUALITY ORIENTED

SUSTAINABLE SUPPLY CHAIN MANAGEMENT

Supplier Management

The Group attaches great importance to the management of potential environmental and social risks in the supply chain, and is also committed to developing mutually beneficial cooperative relationships with suppliers. The Group continues to carry out more active R&D cooperation, SOP specifications and procurement supply services with source suppliers, and to examine suppliers' performance on legal and regulatory compliance and business ethics. This aims to effectively control the cost of the supply chain on the basis of comprehensive protection of food safety and quality, and minimize the potential environmental and social risks in the supply chain.

The Group also reviews the sustainability of suppliers, the environmental compliance of workers and materials, and requires suppliers to have corresponding food production and operation licenses and permits. During the Reporting Period, the Group had more than 300 long-term cooperative suppliers, mainly located in Shanghai. The Company actively promotes the rapid flow of upstream and downstream information in the supply chain to reduce the "bullwhip effect" in the supply chain, reducing the overall inventory level of the entire supply chain, thereby reducing energy, water resources, refrigerants and other materials of the Company and along the upstream supply chain used in inventory management in order to save resources, reduce direct and indirect pollutants and greenhouse gas emissions caused by energy production and the use of refrigerant.

During the Reporting Period, the Group newly added 30 cooperative R&D suppliers and completed dish upgrades for 300 SKU (stock keeping unit, minimum stock unit), and achieved full coverage of the standard supply chain for its main brand in mainland China. The deepening development of the standard supply chain has provided speed-up services for the company's "brand integration" strategy in terms of restaurant expansion, takeaway expansion, and retail pipeline development.

In order to establish a safe and stable supplier team and ensure normal operation, the Group has a "Supplier Incentive Management Program" to clarify supplier audit requirements and assessment processes. First, the program grades the food safety risks and purchasing amounts of the raw materials supplied by the supplier, formulates and regularly updates the "Supplier Classification Table", and then evaluates and rates the cooperative suppliers from different dimensions. The scoring items cover different dimension, such as the supplier's HACCP1 plan management, quality management system, factory environment, production control, sanitation control and personnel management. Based on the scoring results, the Group implements the reward policy in the "Supplier Incentive Management Measures" for outstanding suppliers, and rectify or replace unqualified suppliers within a limited time. The incentive methods implemented include but are not limited to:

• Counseling suppliers to establish a quality and safety management system to improve product quality;
• Priority cooperation: Priority to sign the next year's procurement contract;
• Expand cooperation: increase the share of procurement and supply more regions or restaurants; and
• Long-termcooperation: long-term supply cooperation and establishment of strategic alliances.

QUALITY ORIENTED

Procurement measures

The procurement process of the Group strictly follows the relevant provisions of the "Tendering and Bidding Law of the People's Republic of China" and is conducted under open, fair and just conditions. It will not discriminate against any suppliers, and will not allow any corruption or bribery. Employees and other individuals having any conflict of interest with suppliers will not be allowed to participate in related procurement activities. The Group clarified the requirements for the procurement of raw and auxiliary materials in the "Food Safety Management Program". In addition to making food safety one of the primary conditions, the Company also pays attention to the integrity of suppliers and partners. During the Reporting Period, the Group did not have any suppliers or partners that have material violation on regulations or business ethics.

Brand image

The Group aims to provide consumers with a high-quality and warm service experience through a good dining environment, diverse cuisine selections, and high level of privacy for customer. The Group's "Food Safety Management Program" stipulates that all staff must be strictly hygienic, and facilities, equipment and appliances must be cleaned and disinfected in restaurants as required to avoid abnormalities and affect the normal operation of the Group. In addition, the Group strictly abides by the laws and regulations related to confidentiality and privacy, which including but not limited to the "Law of the People's Republic of China on the Protection of Consumer Rights and Interests". The Group also has internal policies to implement a high level of security and confidentiality standards to protect the privacy of customer data, and to strictly abide by the regulatory requirements regarding data privacy to collect personal data from data subjects and process such data. The Group will not use personal data for promotional use or provide personal data to anyone for such purposes unless it is agreed in writing by the customer.

During the Reporting Period, the Company strictly complied with the "Trademark Law of the People's Republic of China", the "Patent Law of the People's Republic of China", the "Advertising Law of the People's Republic of China" and the "Law of the People's Republic of China on the Protection of Consumer Rights and Interests" and did not find any major violations of laws and regulations related to intellectual property, advertising and labeling.

Intellectual property

The Company reasonably regulates intellectual property rights, and in accordance with the relevant regulations of the "Trademark Law of the People's Republic of China" and the "Patent Law of the People's Republic of China", entrusts third-party professional institutions to conduct unified management of the company's patents, trademarks and intellectual property rights, and formulates "Trademark Overview Comprehensive Edition" to regulate the management and use of trademarks. On this basis, the Company signed a cooperation agreement with a third-party professional law firm to track down and protect the rights of infringement of the company's intellectual property rights.

CUSTOMER SERVICE

Customer complaints and handling

In order to provide an excellent customer service experience, the Company believes that maintaining good communication with customers is a very important part. Through various communication platforms such as hotline, communication platform (such as WeChat public account), third-party feedback (such as Dianping, Meituan Dianping etc.), the Company actively conducts questionnaire surveys and customer satisfaction surveys to understand customers' suggestions for products and services and satisfaction level. The Company stipulates that if a complaint occurs, the designated personnel of each restaurant or department will be responsible for receiving and handling customer complaints. During the Reporting Period, the Company did not receive major complaints from customers regarding products and services.

QUALITY ORIENTED

ADVERTISING MANAGEMENT

The Group attaches great importance to the risks of advertising promotion, and therefore will formulate relevant systems for product advertising in accordance with the relevant regulations of the "Advertising Law of the People's Republic of China", and will strictly regulate and inspect product information to ensure the description and information on product advertising and labels is consistent with the actual situation of the product. The Company also requires employees to provide accurate and complete information to customers.

The Group's "Corporate Integrity Management System" stipulates that fair dealing with customers, suppliers and competitors is the obligation of all employees. Employees must work with the company to conduct fair, just and honest advertising and marketing. Employees must not refuse to sell, serve, or repair products made by the Company to customers because they have purchased products from other suppliers; they must not entertain customers beyond the scope of reasonable and business management; nor should they provide customers with entertainment or other benefits that may be considered to induce or reward customers to make purchasing decisions. Employees should avoid illegal behaviors such as the "Anti-monopoly Law of the People's Republic of China" and other competition control laws, including misappropriation and/or misuse of competitors' confidential information and false reporting of competitors' business and business conditions.

OPERATIONAL COMPLIANCE

INTEGRITY AND HONESTY

Honesty is the most basic code of conduct of the employees of the Group. Honesty is also the foundation of the Company's business ethics to customers, partners and investors. Therefore, the Group integrates existing internal policies and establishes the "Group Integrity Management System" to guide employees to follow laws and regulations and business ethics in their work, prevent bribery, extortion, fraud, money laundering, improper publicity, violation of laws and regulations such as harassment and discrimination. The system clearly stipulates that employees must take the initiative to report situations that are likely to cause conflicts of interest to supervisors and human resources department, and clearly defines various benefits to support the morality of the Group's integrity. In addition, the system further stipulates that the relationship between the Company and its suppliers is based on factors such as price, quality, service, and reputation. Employees must not accept or demand benefits from suppliers or potential suppliers, thereby maintaining objectivity towards suppliers.

The Company strictly abides by the laws and regulations related to the prevention of bribery, extortion, fraud, and money laundering, which including but not limited to the "Criminal Law of the People's Republic of China", the "Anti-Money Laundering Law of the People's Republic of China", and the "Company Law of the People's Republic of China". During the Reporting Period, the Company did not find any major violations of laws and regulations related to the prevention of bribery, extortion, fraud and money laundering, nor any corruption lawsuits filed against the company or its employees that have been concluded.

Corporate governance and systems

In order to promote the Company's sustainable development and the needs of employees' personal development, the Company follows its values and corporate culture and has established an employee handbook "Xiao Nan Guo and You" to clearly state the Company's expectations for employees and the requirements of the code of conduct. These include, but are not limited to, confidentiality systems, anti-fraud policies, business ethics codes, principles and procedures for conformity of rules and disciplinary actions, as well as classification of wrong behavior. The Company hopes that the employee's behavior will be consistent with the Company's principles and maintain business ethics of integrity, responsibility, and cooperation.

CONFIDENTIALITY AND SAFETY OF PRIVACY

The Group protects the privacy of personal data by implementing high security and confidentiality standards. The "Group Integrity Management Policy" stipulates that the Company prohibits all manipulation, concealment and abuse of privileged information and misrepresentation of important facts or other violations of laws and regulations related to confidentiality and privacy. Employees should comply with the following requirements (including but not limited to):

• When a customer applies for membership, the relevant departments and restaurants would retain the customer's contact information and personal information. The Company requires the responsible employee related to the handling of relevant information to sign a confidentiality agreement to promise to properly manage and protect the customer's personal information, and must not to disclose or provide it to unrelated personnel;
• The Company's operations, sales, strategies, products and personal information, bonus schemes, options plans, training materials and operating manuals are confidential information, and employees must not discuss with or disclose to others during or after their employment. In case of violation, violators shall bear relevant legal and economic responsibilities; and
• All copies of communication documents, records, publications, customer business cards, faxes, manuals and training materials written by employees and published within the Company are properties of the Company and may not be owned privately or used without authorization during or after employees' employment period.

OPERATIONAL COMPLIANCE

During the Reporting Period, the Company has complied with the following laws and regulations related to confidentiality and privacy: (Including but not limited to) the "Law of the People's Republic of China on the Protection of Consumer Rights and Interests", and has not identified any material non-compliance issue with related laws and regulations.

Whistleblowing and monitoring

On the basis of formulating and implementing compliance operation management policies, the Company has established an appropriate and effective reporting procedure to encourage employees to expose non-compliant behaviors. The "Group Integrity Management Policy" stipulates that employees can report violations of the law or the Company's system to the direct supervisor and the human resources department by email, letter, telephone, or direct report. The object of reporting may include full-time employees, part- time employees, third-party labor personnel, consultants, and members of the Company's Board of Directors. The whistleblower is responsible for collaborating with the Company's authorized investigators after making the report and doing its utmost to provide evidence and specific information about the reported matter to support the company in conducting the necessary investigations and judgments before carrying out anti-violation actions. The Company is committed to protecting the whistleblowers' personal information and rewarding whistleblowers who provide important clues and important collaborations.

TALENT MANAGEMENT

EMPLOYMENT POLICY MANAGEMENT

In order to ensure the fairness and impartiality of the Company's employment policy and its relevant implementation processes with high efficiency, standardization and systematization, the Company strictly abides by the laws and regulations related to employment, including but not limited to the "Labor Law of the People's Republic of China", the "Labor Contract Law of the People's Republic of China", the "Law of the People's Republic of China on the Protection of Minors", and the "Provisions on the Prohibition of the Use of Child Labor". During the Reporting Period, the Company did not find any major issues that violated the laws and regulations related to human resources, nor did it find any major issues that violated the laws and regulations related to preventing child labor and forced labor.

On the basis of complying with relevant laws and regulations, the Company strictly implements the "Recruitment Process" to continuously promote the healthy growth of the organizational structure and the good development of the business. This process regulates in details the systems and management responsibilities that the functional departments of the Headquarters and all restaurants must abide by in terms of recruitment needs application, recruitment channel selection, applicant assessment and evaluation process, etc. During the Reporting Period, the Company organized the human resources and administrative departments to refer to the "Recruitment Process" to perform annual preparation management, restaurant preparation management, review and revision of the existing recruitment process, and so on.

In addition to this, the Company has formulated "Restaurant Employee Onboarding, Probation and Resignation Process" and "Office Employee Onboarding, Probation and Resignation Process" for restaurant personnel and office personnel, respectively. Among them, the following contents are emphasized in the induction, probationary period and resignation management:

Onboarding

Employees must provide identification and resume documents to the Company before they formally report duty, confirming that they are older than 16 years old to comply with the related laws and regulations in relation to the prohibition of child labor such as the "Labor Law of the People's Republic of China" and the "Provisions on the Prohibition of the Use of Child Labor". The Company implements labor contract system for officially hired employees, sign a written contract with employees and perform both parties' obligations in accordance with the contract. Once there is any suspected child labor or forced labor, the Company will immediately carry out relevant investigations, and once it involves violations of the law, it will be transferred to the relevant judicial authorities for processing. After reviewing identity information, employees are required to sign labor contracts, confidentiality agreements and other relevant regulations. In addition, the company arranges induction for new employees, including company profiles, company policies, employee responsibilities, and benefits, to help new employees to quickly integrate into their jobs.

Probation

According to the labor contract, the probationary period for new employees is 3 months or 6 months. During the probation period, the employee's immediate superior needs to evaluate the employee's probation period performance and complete the "Probation Period Evaluation Form", and the employee must also conduct a self-evaluation. Before the end of the probation period, according to the evaluation results and decisions of both parties, the human resources and administrative departments will go through formalization procedures or contract termination procedures for employees.

Resignation

Employees in the probation period should submit their resignation application in writing and indicate the effective date of resignation three days in advance, and regular employees 30 days in advance. After the employee's direct superior agrees to the resignation employee's resignation, and signs and confirms in the resignation application file and the file is transferred to the human resources and administrative department. For the resignation of employees above a certain rank, the Company needs to carry out the exit interview and resignation signoffs before the employees' departure, execute transfer of items listed in the "Employee Resignation Signoff List" and have the list signed by relevant responsible personnel. Employees must also complete their paid vacation before the effective date of resignation, or cash out the vacation in accordance with the company's vacation policy.

TALENT MANAGEMENT

Dismissal

When the Company decides to dismiss an employee, the human resources department must review the reasons that give rise to the decision of the Company to ensure that the termination of the employment relationship complies with the relevant provisions of the national labor laws and regulations and company policies. The Company will handle the resignation procedures for employees according to the corresponding process of resignation, to ensure that the legal rights and interests of employees and the safety of company information and assets are guaranteed.

As of 31 December 2019, the Company had a total of 1,805 employees in mainland China and Hong Kong, including 1,607 restaurants employees and 198 Hong Kong and Shanghai office employees. The total number of employees by gender, age group and employment type are as follows:

EMPLOYEES' RIGHTS PROTECTION

The Company values the real rights and interests of employees and hopes that each employee can fully understand their specific rights and interests as a member of TANSH Group, and how to respect and protect the rights and interests of colleagues, customers, suppliers, and partners. Therefore, the Company specially compiled the salary policy, welfare policy, working hours, vacation system, performance management principles, training, code of conduct and discipline into the employee manual of "Xiao Nan Guo and You", and ensured that all employees received the manual and understood and followed the content of the manual.

TANSH Global hopes to provide each employee with reasonable and equal salary and promotion opportunities, and help potential employees achieve their career aspirations. The Company has established clear promotion conditions and transparent and open promotion systems for employees of the restaurant, kitchen employees, and employees in different departments and positions in the office, and explained the promotion standards and career development path in the employee manual of "Xiao Nan Guo and You". For employees who have excellent work performance and ability to meet requirements of higher-level positions, after passing the assessment and evaluation, the Company will arrange promotion plans according to job requirements.

Salary principles

The overall principles of the Company's remuneration comply with the two principles of "external comparability" and "internal fairness". The Company is willing to provide competitive compensation and benefits within the same industry and region to attract, motivate and retain excellent talents to achieve the Company's business development goals, while constantly matching the Company's remuneration structure with professional compensation reports and maintaining a fair and reasonable structure and maintains competitiveness. In addition, the Company implements a post-level salary system based on employees' individual work performance. Employee performance and job performance will be reflected in salary, that is, under the premise that the current salary level is the same, the better the work performance rating, the greater the salary increase that can be obtained.

TALENT MANAGEMENT

Vacation system

In order to actively attract new employees to join the Company, the Company's employees enjoy the vacation system includes national public holidays, annual leave, sick leave, personal leave, marriage leave, maternity leave, nursing leave, breastfeeding leave, funeral leave, work injury leave, etc. However, in order to provide customers with efficient and high-quality catering services during holidays, restaurant employees may need to work on statutory holidays. The "Vacation and Overtime Regulations" stipulates that the relevant management personnel should reasonably arrange people to work according to the turnover of the restaurant. Before the 25th of the month before the statutory holiday month, the restaurant manager and the chef need to submit the statutory holiday schedule to the Company's regional operations manager for review to ensure that the schedule plan takes into account the labor costs while complying with legal requirements and overall work/rest schedule of all employees. According to the "Labor Law of the People's Republic of China", the Company pays employees who are approved to work on statutory holidays three times their basic salary. If employees have to apply for leave in special circumstances, employees must abide by the provisions of the "Vacation and Overtime Regulations" on the date of application, certificate, and length of leave.

For office employees, the Company complies with the provisions of the "Labor Law of the People's Republic of China" on working hours and rest and vacations, and implements the "Headquarters Employee Attendance Management Trial System" to record employees' commuting hours. The Company's daily working hours are 8 hours. The "Vacation and Overtime Regulations" also state that the Company does not encourage employees to work overtime, so employees must have sufficient reasons for overtime work and obtain the written approval of the department head in advance. The Company will compensate employees for overtime work by means of off duty shifts.

Employee Benefits

The Company provides employees with a series of social insurances stipulated by national laws, including pension insurance, unemployment insurance, maternity insurance, work injury insurance, medical insurance, and housing provident fund. On top of the basic insurance, employees also enjoy commercial insurance such as employer liability insurance, group accident insurance, and supplementary medical insurance provided by the Company. To help employees understand their physical conditions in a timely manner, the Company arranges annual medical examinations for office employees and health certificates for restaurant employees.

At the same time, office employees can enjoy the Company's free lunch, and restaurant employees can also enjoy free working meals and supper during working hours. In addition, since 2019, the Company has been sending cakes to employees in their birthday months to enhance employees' satisfactions. The Company also organizes various employees activities which echo with the themes of showcasing employee talents, enhancing employees communication, and promoting employees' physical and mental health to encourage employees to strike a balance between work and life. Detailed benefits are specified in the employee manual "Xiao Nan Guo and You" for employees to consult at any time.

TALENT MANAGEMENT

Case: Celebrating birthday with employees

In order to show the Company's care for employees and to thank employees for their contributions to the Company, employees will receive birthday cakes from the Company in their birthday months, to celebrate with other colleagues, thereby to create more communication opportunities for employees in order to achieve work-life balance and increase their sense of belonging.

Case: Happy Dragon Boat Festival

On special holidays, the Company will prepare related benefits for employees. During the Dragon Boat Festival, the Company prepared delicious dumplings for employees, so that employees can enjoy the fun of the holiday in the busy work.

TALENT MANAGEMENT

Case: The Arrival of Chef

In order to enrich the entertainment life of restaurant employees, promote communication between colleagues, enhance team cohesion, and enhance employees' sense of identity and belonging to the Company and restaurants, the monthly "Arrival of Chef" restaurant event has become one of the Company's cultures. During the event, the head chef of each restaurant will prepare delicious food for the employees' working in the restaurant every month, so that the employees can enjoy the fun of group activities after their busy work.

Case: The restaurant manager visiting the employee's dormitories

In order to strengthen the communication between management and employees, and to put the care for employees of the Group into practice, in order to provide a warm family to the employees, the head of restaurant always consoles the staff quarters from time to time to understand and collect their feedback on work and life to enhance the sense of belonging of employees.

Case: Staff Book Corner

The Company is committed to providing employees with more benefits and access to knowledge in different forms. The Company's book corner has been officially opened, and the "Book Borrowing System" has also been launched. Employees can borrow a wide variety of professional skills books through the online book management system to enrich their knowledge.

TALENT MANAGEMENT

Employee Code of Conduct

While understanding and reasonably enjoying its own rights and interests, the Company requires employees to acknowledge and protect the rights and interests of other colleagues, customers and partners. Therefore, the "Xiao Nan Guo and You" also stated the disciplines and codes that the employees of the Company must abide by, and explained the consequences of various violations. Relevant behaviors that violate the principles of equal opportunities, diversity, and anti-discrimination must be penalized by the company. The penalties depend on the severity of the circumstances and are divided into verbal warnings, written warnings, and termination of labor contracts.

STAFF TRAINING AND DEVELOPMENT

TANSH Global pays attention to the growth and development of every employee and also understands that excellent business performance and high-quality customer service depend on excellent employees. Therefore, employee training is one of the Company's important investments. The Company provides fair training and development opportunities and relevant educational resources for all employees, so that employees can maintain excellent working standards while being competitive.

Training system

The Company has a complete set of training and promotion systems designed to help potential employees achieve their career aspirations and to support the Company's sustainable development. The training system covers the training content of employees of different functions and different ranks and is transparent with open information of promotion conditions and paths, including but not limited to employees of the restaurant, kitchen employees, and employees in different departments and positions of the office. The training content is mainly divided into three categories, namely new employee induction training, job skills training and management ability training. The Company regularly arranges corresponding training according to the different work needs of employees and managers at all levels to help upgrade skills and realize their full potential. In addition, the Company also conducts annual work performance evaluations of employees from the two major aspects of business results and personal core capabilities to help formulate performance goals and corresponding action plans for the next year. If for some reason, the employee's performance is "not in line with expectations", the Company will arrange his supervisor under the "Performance Improvement Plan" to help him overcome difficulties and improve work efficiency. On the contrary, if the employee has excellent work performance and the ability meets the requirements of higher-level positions, the Company will arrange a promotion plan according to the needs of the position after assessment and evaluation.

Case: New employee induction training

New employee induction training is an important channel to help new employees understand and integrate into the company. In September 2019, the Company further expanded the breadth and depth of on-the-job training for new employees. The training content not only covers the Company's corporate culture, human resources and other policies, but also provides an in-depth interpretation of the F&B industry's food safety standards and regulations, and contents related to the company's anti-bribing, internal audit and control, etc, so that employees can understand the Company's requirements and development goals.

Case: Basic quality and management training

In November 2019, the Company carried out promotion training for corporate employees for existing vacancies. During the training, employees participate in corresponding courses according to their ranks. The content of the course involves the basic quality training and management training for corporate employees. Employees who complete the course training and have achieved excellent results in performance evaluation will be promoted.

GREEN DEVELOPMENT

The Group values good environmental management and strives to protect the environment in order to fulfill its social responsibilities. The Group strictly abides by the "Environmental Protection Law of the People's Republic of China", the "Water Pollution Prevention and Control Law of the People's Republic of China", the "Law of the People's Republic of China on the Prevention and Control of Environmental Pollution by Solid Wastes" and other laws and regulations related to environmental protection. During the Reporting Period, the Company did not have any violations of relevant environmental laws and regulations that have a significant impact on air and greenhouse gases, emissions, water, and hazardous and non-hazardous waste.

ENERGY CONSUMPTION AND ENERGY SAVING MANAGEMENT

Due to the nature of business, the main resources consumed by the restaurants of Company are water, electricity and natural gas used by the restaurants in daily operations. During the Reporting Period, the Company's restaurants implemented corresponding energy and resource conservation policies, and cooperated with the implementation of water and energy conservation measures, while reasonably controlling operating costs, and reducing the consumption and impact of natural resources during the operation process.

Greenhouse gas emission management

The Company's main greenhouse gas emissions are the direct greenhouse gas emissions (Scope 1) caused by gasoline and diesel fuel consumed by transportation and natural gas consumed during cooking and energy indirect greenhouse gas emissions (Scope 2) caused by purchased electricity. The Company is committed to reducing emissions and carbon, saving electricity and using electricity effectively, and actively encouraging employees to take responsibility for energy-saving management. The Company has formulated and implemented the following measures:

• Reduce the number of business trips through electronic communication methods such as video conferences and WeChat conferences;
• Clearly mark the partitions and functions of lighting and air-conditioning switches to facilitate partition operation and management during different passenger flow periods and avoid unnecessary power consumption;
• Reasonable and appropriate centralized arrangement of customers' dining areas during daily low peak hours to reduce the use of electrical equipment; and
• Post energy-saving signs near power switches and air-conditioning control panels to encourage employees and customers to properly adjust air-conditioning temperature.

GREEN DEVELOPMENT

In addition, due to the nature of the Company's business, the main resources it consumes are water, electricity, and natural gas used by each restaurant in daily operations. During the Reporting Period, the Company's restaurants implemented corresponding energy and resource conservation policies, in order to reasonably control operating costs, and meanwhile to reduce the consumption of and impact on natural resources in the operation process. The relevant specific measures are as follows:

• Reasonably arrange the number of steamers according to the business of lunch and evening, concentrate on processed dishes to save natural gas without affecting the quality of dishes and speed of service;
• Appoint responsible persons for low-value consumables in restaurants, responsible for keeping purchases and records. Each department conducts an daily inventory of the use of low-value consumables, summarizes the weekly usage, and replenishes stock according to the inventory; and
• Encourage employees to use double-sided printing.

Water resources management

The Company mainly consumes domestic water for cooking and cleaning. The locations of the Company's business are not within water shortage area, and the Company's headquarters and restaurants use water from the municipal pipe network, therefore it is not a problem to obtain suitable water source. Even so, the Company actively encourages all employees and customers to develop the habit of consciously saving water, and cooperate with the implementation of water saving and energy saving instructions. The specific measures are as follows:

• Under the condition of ensuring normal use, arrange engineering staff to adjust water tap of water flow rate;
• Recycle use of water and clean the floor with vegetable washing water;
• Arrange a cascading water flow and to defrost a variety of foods; and
• Post water-saving signs and water-saving case study promotion near water-using areas to remind employees to develop water- saving habits.

GREEN DEVELOPMENT

COOKING OIL FUME EMISSION MANAGEMENT

The Company's main emissions include cooking fumes from various restaurants, greenhouse gases produced by the combustion of natural gas from cooking and atmospheric pollutants. During the Reporting Period, the Company has complied with the "Environmental Protection Law of the People's Republic of China", the "Law of the People's Republic of China on the Prevention and Control of Environmental Pollution of Solid Wastes", the "Law of the People's Republic of China on Air Pollution Control", the "Water Law of the People's Republic of China", etc and other laws and regulations related to emissions. In addition, the Company strictly follows the requirements of the "Shanghai Air Pollution Control Regulations" and the "Shanghai Fume Industry Fume Emission Standards", installs catering fume purification facilities in all restaurants, and tests the fume pollutants before the official opening to ensure compliance with relevant national and local standards. At the same time, the Company hires a third party with relevant qualifications to clean the smoke collection hood and oil fume pipes of all restaurants every three months; to carry out maintenance works on the exhaust fans, purifiers and electrostatic deodorizers. The Company regularly receives tests from relevant regulatory authorities to ensure compliance while minimizing cooking fumes and odor emissions to avoid affecting neighboring residents.

DISPOSAL AND RECYCLING OF HAZARDOUS AND NON-HAZARDOUS WASTE

The Company adheres to the principle of waste management and is committed to the treatment and disposal of all waste generated by business activities in accordance with the principle of sustainable development and reduction, reuse, recycling and replacement. In addition to controlling atmospheric emissions, the Company also adopts relevant measures to manage kitchen sewage and waste. The Company installs oil-water separators that do not require power, no energy consumption, and low operating costs in each restaurant to separate oil and water from kitchen sewage to ensure that the oil content of the treated sewage meets the third level of the "Comprehensive Wastewater Discharge Standard" (GB8978-1996). The Company has formulated and implemented the "Kitchen Oil Management System" to regulate the use of cooking oil. The "Kitchen Oil Management System" stipulates that restaurant kitchens must collect waste oil in a dedicated recycling bin, and be recycled by a professionally qualified waste oil recycler, and recorded in the food traceability system. In addition, set up garbage bins of different colors in the back kitchen of the restaurant to separate the kitchen garbage and household garbage for recycling management.

In view of the nature of the Company's business, it does not produce significant hazardous waste, the waste generated is only waste light bulbs, and the Company has also developed guidelines for the management and disposal of related hazardous waste.

GREEN DEVELOPMENT

In order to cultivate employees' awareness and knowledge of sustainable development, the Company requires employees to promote appropriate ordering, limiting wastage and appropriate ordering and dining habits to customers in restaurants, and to make a good example of themselves to further encourage customers to take actions to reduce food waste.

PRODUCT PACKAGING AND TAKEAWAY ACCESSORIES

In recent years, with the development of new business trends such as e-commerce, express delivery, and takeaway, the consumption of plastic tableware has increased rapidly. The Company is committed to reduce the pressure created by plastic products on the environment and natural resources on the basis of the principle sustainable development. Since October 2018, the Ele.me (餓了 麼) takeaway ordering platform released the "Blue Planet Merchant Standard", to set a sustainable packaging material standard for takeaway in the catering industry. As a standard co-sponsor, Shanghai Min is committed to following the three initiatives of the "Blue Planet Merchant Standard":

1. Reduce excessive packaging and use of disposable tableware;
2. Improve the reusability of existing packaging materials; and
3. Promote the use of alternative materials in overall takeaway packaging solutions.

During the Reporting Period, the Company consumed approximately 79.08 tonnes of packaging materials with a consumption of approximately 23.50 grams per capita (based on the number of customers served).

Environmental performance

During the Reporting Period, the Company strengthened management of its environmental performance by recording, calculating and analyzing various emissions and resource usage data of the Company's headquarters and restaurants. During the Reporting Period, the Company successfully collected and calculated environmental performance data for the headquarters, 7 "The Dining Room" in Shanghai, and 28 "Shanghai Min" in Shanghai. The statistic coverage of restaurants has expanded from the previous year. In the future, the Company will keep a steady pace in promoting environmental performance management.

During the Reporting Period, within the scope of this Report, the electricity consumption of "The Dining Room" restaurants have decreased compared to the previous year, the per capita water consumption and natural gas consumption calculated by customer flow have increased compared to the previous year; the per capita natural gas consumption by customer flow of "Shanghai Min" restaurants have decreased, electricity consumption and the per capita water consumption calculated by customer flow have increased compared to the previous year. In addition, within the scope of this Report, "The Dining Room" restaurants' and "Shanghai Min" restaurants' per capita greenhouse gas emissions and cooking oil generated have both increased.

GREEN DEVELOPMENT

GREEN DEVELOPMENT

2019 Environmental Performance of The Dining Room Restaurants6

GREEN DEVELOPMENT

2019 Environmental Performance of Shanghai Min Restaurants11

GREEN DEVELOPMENT

Remarks:

1. Air pollution emissions come from the exhaust gases of vehicles owned and controlled by the company and the pollutant emissions caused by natural gas combustion. References to calculation methods include, but are not limited to, "The First National Pollution Source Census Manual on Urban Living Sources and Discharge Coefficients" and the "How to Prepare an ESG Report - Appendix 2: Reporting Guidance on Environmental KPIs" issued by the SEHK.
2. Scope 1 greenhouse gas emissions come from the exhaust gases of vehicles owned and controlled by the company and greenhouse gas emissions caused by natural gas combustion. References for calculation methods include, but are not limited to, "Greenhouse Gas Protocol: Corporate Accounting and Reporting Standards" published by the World Resources Institute and the World Business Council for Sustainable Development, "Greenhouse Gas Emission Accounting Methods and Reporting Guidelines for Industrial and Other Industry Enterprises ((Trial)" published by the Chinese government, the "How to Prepare an ESG Report - Appendix 2: Reporting Guidance on Environmental KPIs" issued by the SEHK, and the "Global Warming Potential Values" from the IPCC Fifth Assessment Report (AR5) issued by the Intergovernmental Panel on Climate Change;
3. Scope 2 greenhouse gas emissions come from indirect greenhouse gas emissions generated during the production process of the Company's purchased electricity. References for calculation methods include, but are not limited to, "Greenhouse Gas Protocol: Corporate Accounting and Reporting Standards" published by the World Resources Institute and the World Business Council for Sustainable Development and the "2017 Baseline Emission Factor of China Regional Power Grid for Emission Reduction Projects";
4. The actual natural gas consumption is about 6,666.00 cubic meters;
5. The actual gasoline consumption is about 8,037.00 liters;
6. This table summarizes the environmental performance of the seven "The Dining Room" restaurants in Shanghai;
7. Air pollution emissions come from the pollutant emissions from natural gas used in restaurants during the combustion process. Calculation methods include, but are not limited to, "The First National Pollutant Source Census Manual of Urban Living Source Discharge Coefficients";
8. Scope 1 greenhouse gas emissions come from the greenhouse gas emissions generated during the combustion of natural gas used by restaurants within the statistical scope. Calculation methods include but are not limited to "Greenhouse Gas Protocol: Corporate Accounting and Reporting Standards" published by the World Resources Institute and the World Business Council for Sustainable Development, and the "How to Prepare an ESG Report - Appendix 2: Reporting Guidance on Environmental KPIs" issued by the SEHK,"Greenhouse Gas Emission Accounting Methods and Reporting Guidelines for Industrial and Other Industry Enterprises (Trial)" published by the Chinese government, and the "Global Warming Potential Values" from the IPCC Fifth Assessment Report (AR5) issued by the Intergovernmental Panel on Climate Change;
9. Scope 2 greenhouse gas emissions come from indirect greenhouse gas emissions during the production process of electricity purchased from restaurants within the statistical scope. References for calculation methods include, but are not limited to, "Greenhouse Gas Protocol: Corporate Accounting and Reporting Standards" published by the World Resources Institute and the World Business Council for Sustainable Development and the "2017 Baseline Emission Factor of China Regional Power Grid for Emission Reduction Projects";
10. The actual natural gas consumption is about 272,082.08 cubic meters;
11. This table summarizes the environmental performance of the Company's 28 "Shanghai Min" restaurants in Shanghai;
12. Air pollution emissions come from the emissions of natural gas used in restaurants during the combustion process. References to calculation methods include, but are not limited to, "The First National Pollutant Source Census Manual of Urban Living Source Discharge Coefficients";

GREEN DEVELOPMENT

1. Scope 1 greenhouse gas emissions come from the greenhouse gas emissions generated during the combustion of natural gas used by restaurants within the statistical scope. References for calculation methods include, but are not limited to, "Greenhouse Gas Protocol: Corporate Accounting and Reporting Standards" published by the World Resources Institute and the World Business Council for Sustainable Development, and "Greenhouse Gas Emission Accounting Methods and Reporting Guidelines for Industrial and Other Industry Enterprises (Trial)" published by the Chinese government, the "How to Prepare an ESG Report - Appendix 2: Reporting Guidance on Environmental KPIs" issued by the SEHK and the "Global Warming Potential Values" from the IPCC Fifth Assessment Report (AR5) issued by the Intergovernmental Panel on Climate Change;
2. Scope 2 greenhouse gas emissions come from indirect greenhouse gas emissions during the production process of electricity purchased from restaurants within the statistical scope. References for calculation methods include, but are not limited to, "Greenhouse Gas Protocol: Corporate Accounting and Reporting Standards" published by the World Resources Institute and the World Business Council for Sustainable Development and the "2017 Baseline Emission Factor of China Regional Power Grid for Emission Reduction Projects"; and
3. The actual natural gas consumption is approximately 1,435,629.20 cubic meters.

PARTICIPATION IN ENVIRONMENTAL PROTECTION ACTIVITIES

During the Reporting Period, the Company continued to cooperate with partners to organize and participate in various activities related to environmental protection, encouraging customers and employees to choose green and environmentally friendly transportation modes for low-carbon travel and mitigating climate change. For specific activities, please see the "Promote Industry Development" chapter.

RESULTS SHARING

PROMOTE INDUSTRY DEVELOPMENT

The Company actively participates in various industry associations, strives to broaden its own information acquisition channels, deepen communication with partners and suppliers and other stakeholders, and to contribute to the development of the industry. TANSH Global participates in industry associations including:

• China Culinary Association;
• World Federation of Chinese Restaurant Industry;
• Shanghai Food and Beverage Industry Association;
• Shanghai Food Safety Federation;
• China Hotel Association;
• New Shanghai Business Association; and
• Shanghai Yangpu District Foreign Investment Enterprise Association.

At the same time, to encourage customers and employees to choose green lifestyles and mitigate climate change, the Company continues to cooperate with partners to organize and participate in various activities related to environmental protection.

PARTICIPATE IN COMMUNITY AND CHARITY ACTIVITIES

Education and talent training have always been the focus of attention in the community and F&B industry. TANSH Global uses its own industry characteristics and advantages to focus on investment and promote the development of education. During the Reporting Period, the Company continued the "school-enterprise cooperation" model, exchanged and cooperated with cooperative schools in Guangxi, Yunnan and other places to promote the sharing of resources and information between schools and enterprises. This move will help cultivate talents for the F&B industry and create employment opportunities for the community. It can also plan and reserve talent resources for TANSH Group to achieve mutually beneficial cooperation results.

RESULTS SHARING

Case: TANSH Group Campus Trip

In May and October 2019, TANSH Group Human Resources Service Manager visited two high schools in Guangxi Province (Behai Secondary Vocational and Technical School and Nanning Trading School) and two high schools at Yunnan Province (Kunming School of Tourism and Qujing Industry and Commerce Vocational Technical School) respectively and carried out campus publicity activities.

During the activities, the representatives of the Company explained the development characteristics of the F&B industry, job requirements and introduced the future development vision, development path and talent belief of TANSH Group to the students. At the same time, the representatives of the Company listened to and recorded the expectation of student representatives' towards work positions, and patiently answered various questions raised by graduates and students. Through such activities, the Company expands new areas and channels for school-enterprise cooperation and provides students with high-quality openings and job opportunities.

ESG REPORTING GUIDE

ESG REPORTING GUIDE

Aspect A3: The Environment and Natural Resources

ESG REPORTING GUIDE

ESG REPORTING GUIDE

ESG REPORTING GUIDE