Tingyi Cayman Islands : Master Kong Sustainability Report 2021

STATEMENT BY

CHAIRMAN

OF THE COMPANY AND THE SUSTAINABLE DEVELOPMENT COMMITTEE

• Keep the original aspiration, Keep 」 moving forward

Facing heightened volatility of economic, social and natural environment in 2021, Master Kong upholds the sustainable development concept of "Keep Our Nature Green" to accelerate digital and low-carbon transformation and integrate sustainable development practice in depth. We are committed to good quality. While bringing health and nutrition to our consumers, we have carried out a series of activities focusing on food safety, nutrition and health, energy saving and emission reduction, talent development and social investment.

We undertake our long-term commitment of sustainable development, strive to improve the Company's environmental, social and governance (ESG) standards, endeavour to improve the Company's ESG capabilities, and respond to concerns of stakeholders in all aspects. In May 2021, Master Kong joined the United Nations Global Compact (UNGC) as a member company, committing to the ten principles of the Global Compact that are based on the United Nations conventions and cover the areas of human rights, labour standards, environment and anti- corruption, to further expand the Company's sustainable development impact. This highlights the effectiveness of our work in sustainable development over the years, and will inspire us to keep up with our original aspiration and to make continuous progress. We are very honoured to share with you some of the key sustainable achievements of Master Kong in 2021:

Support "Carbon Neutrality"

Master Kong actively responds to China's "Carbon Peaking and Carbon Neutrality" goal and pushing forward the progress of the goal by performing duties on carbon and emission reduction step by step. In 2021, we conducted the first Comprehensive Carbon Inventory Project among domestic food and beverage companies, covering Scope 1, Scope 2 and Scope 3 of carbon emission, and set environmental targets related to energy consumption, water consumption, greenhouse gas emissions and waste emissions in conjunction with the results of the carbon inventory. Meanwhile, we actively identify the risks opportunities posed by climate change, thereby contributing to mitigating the impact of climate change.

Commitment to Good Quality

Master Kong adheres to the bottom line of food safety and continuously increases the investment in food safety. In 2021, we focused on digitalization, talents training, food safety promotions, external cooperation and etc., constantly improving food safety quality. Meanwhile, we continued to practise the diversified product strategy, and fittingly fed the thirst for healthy of consumers. We have released various low-sugar and sugar-free new products, thus satisfying consumers' needs for quality life and giving impetus to the overall progress of the food and beverage industry.

Green operation

Constant efforts will also be directed at the comprehensive implementation of the green sustainable development philosophy, which involves advancing digital and intelligent transformation, improving operation efficiency, promoting energy conservation, water conservation, plastic reduction and carbon reduction, releasing label-free beverages, and

reducing wastes, thus doing its bit to realize the goal of keeping our nature evergreen. In 2021, we have achieved continuous improvement of the environment management level, enhanced employees awareness of green operation, thereby winning the recognition and trust of the society.

Digital Transformation

All along, Master Kong actively makes effective plan for the upgrade of digital transformation, and continuously improves the Company's management. In 2021, we carried out digital transformation focusing on food safety, production and management and HR, so as to empower sessions involving production, storage, logistics and sales with digitalization technology. At the same time, we are committed to working together with our supply chain partners to promote digitalization and win-win cooperation in the industry, as well as to advance the sustainable development of the industry.

People-oriented

In line with the philosophy of "People-oriented", Master Kong values the contribution and development of employees, unswervingly protects the interests and well-being of employees, shape the all-round talents with "Diligence, Integrity and Competence", and create an excellent, harmonious, smart, reassuring workplace, therefore enhancing physical and mental health of employees.

Giving back to the society

As the leading enterprise of the food and beverage industry, while developing the Company, Master Kong has always been committed to actively giving back to the society.

In 2021, we continued to invest heavily in community investment. We carried out public welfare activities in various areas such as food safety science popularization and water

education. We supported for "Healthy China 2030", actively promoting the Chinese winter sports. We timely provided assistance in emergency and devastating events including pandemic prevention and control and natural disasters. We supported the rural reconstruction, and deepened cooperation between schools and enterprises. By such methods, we undertook social responsibility and fulfilled our corporate citizenship obligations.

Looking forward to 2022，"the Year of Master Kong's 30s", we are well poised to constantly work together and create. By complying with the trend of consumption segmentation and channel diversification, we continue to sustain our efforts in concentrating on major flagship products as well as accelerating product mix adjustment. By doing so, we push ourselves to satisfy diversified consumer needs and to enhance the brand reputation. Through win-win cooperation with partners, we are committed to create "LIFE + DELICACY" and to turn a new page of Master Kong's development hand in hand.

Wei Hong-Ming

Chairman

STATEMENT BY

CEO

AND VICE CHAIRMAN OF THE SUSTAINABLE DEVELOPMENT COMMITTEE

• NatureKeepGreenOur 」

As a member of the United Nations Global Compact, Master Kong actively implements new development concepts, internalizes sustainable development practices such as environmental friendliness and digital transformation as an important part of corporate strategy. We deeply integrate the fundamental demands of stakeholders with our own industry characteristics , adhere to the good quality of "delicious, nutritious and healthy", actively promote the green development and transformation of the industrial chain, and continue to practice "Keep Our Nature Green".

As a national brand with social responsibility, Master Kong takes food safety as foundation. We actively respond to the "Healthy China" strategy, continuously study the core of dietary nutrition, protect national health with aerospace-grade quality and the tongue with strict food safety management. We serve consumers with healthy, delicious and diverse dietary products and delivers the taste of China.

In the health protection system, we have successively invested RMB 500 million to establish an International- level Food Safety Testing Center. The food safety management team of nearly 2,000 people conducts more than 3.5 million inspections every year. We strive to achieve strict monitoring and traceability management of the entire industry chain through procedures such as supplier management, raw material incoming inspection, and production process control, so that people can enjoy happy meals.

With the upgrading of consumers' concept, Master

K E E P O U R N AT U R E G R E E N

Kong is also constantly exploring new technologies, new methods and new systems that can ensure product quality and food safety. We continue to launch a series of healthy upgrades and innovative products, and carry out research work on sugar reduction, salt reduction, and lipid reduction to meet the diversified needs of the consumer market. From "farm to table", we work together to develop nutritious meals that meet Chinese tastes and dining habits, and create each product with ingenuity. In 2021, under the background of "carbon peak" and "carbon neutrality", low-carbon has become a national consensus, and the concept of sustainable development has gradually become a new consumption

fashion and trend. As a well-known national brand in China, Master Kong actively practices the way of green development, promotes green consumption with green production and green operation, and protects the homeland with a low-carbon and environmentally friendly development model.

Master Kong actively responds to the plastic reduction initiative. On the premise of meeting product quality requirements, we are accelerating the reduction of plastics in multiple links including bottle body, label, and outer packaging, and conducting research on recyclable green design and recycling. In 2021, we handed over the recycled waste PET to a qualified third-party factory to make polyester fabrics, packaging plastics and other recycled products, reducing the generation of more than 900 tons of waste plastics. At the beginning of 2022, we released the first "unlabeled" beverage product to try to remove the bottle label and sell it in the form of a full box of multi-entry packaging as the smallest sales unit, which is more convenient for recycling and reuse. We have taken the lead in completing a comprehensive carbon inventory, formulated environmental goals for 2025, and continued to implement a number of energy-saving technological transformation projects.

We always believed that the practice of sustainable development requires the joint efforts of all sectors of society, and requires companies and consumers to explore together. Over the years, Master Kong has continued to carry out public welfare activities in food safety science popularization, education on water and green consumption, creating social value and improving

public scientific literacy. In 2021, we placed PET empty bottle recycling machines in Shanghai Disney Resort, so that young people can understand the importance of PET recycling through learning and use, practice the concept of environmental protection with practical actions, and establish the value of protecting nature.

In the future, Master Kong will adhere to the pursuit and responsibility of inheriting Chinese food culture, and explore higher quality, advanced technology and healthier products. At the same time, we will also continue to actively undertake the responsibility of protecting the environment, integrate the low-carbon green concept into the entire supply chain system, continue to innovate on the road of embracing the "double carbon", and strive to open up new ideas for sustainable high-quality development, New space to better serve consumers.

Richard Chen

Chief Executive Officer

ABOUT

THE REPORT

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 2021 based on the company's development strategy. For information regarding the governance section, please refer to the Corporate Governance Report as incorporated in this annual report.

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

• 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.

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.

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 2021 to 31 December 2021. For the sake of the completeness of the report, it also covers some relevant contents occured in 2022.

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").

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.

$11.6billion

Market capitalisation as of 31 December 2021

Leadship

in the market

45.7%

Instant Noodles

Market Share

43.4%

Ready-to-Drink Teas (incl. milktea) Market Share

Second position in the market

18.9%

Overall Juice

Drink

Market Share

33.1%

Pepsi Carbonated

Drinks

Market Share

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 2021 was US$11.6 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 2021 shows, on the basis of sales volume, the Group has achieved market shares

in instant noodles and instant tea (including milk tea) of 45.7% and 43.4% respectively in 2021, winning invariably the leading position of the market. In the overall juice drink market, the Group has gained a market share of 18.9% in the drink market, ranking the second place. According to Global Data December 2021 data, Pepsi carbonated soft drinks had 33.1% market share and held a second position.

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".