Huabao Flavours & Fragrances Issued the Annual Report 2019

On the night of March 27, 2020, Huabao Flavours & Fragrances Co., Ltd. (“Company”) issued the Annual Report 2019 and other announcements. In 2019, in the face of market pressure as well as opportunities for development of the industry, and under the vision of “Flavor Your Life”, the Company kept its competitive edge in flavors and food ingredients, it also strengthened R&D in new products, actively developed natural and healthy products, carried out technological upgrade in a timely manner, optimized its product mix, and kept enhancing its competitiveness in flavors and food ingredients. In 2019, the Company won the prizes including Top 100 Science & Technology Enterprises of China Light Industry of 2018" and “Top 10 Flavor Industry Enterprises of China Light Industry of 2018” issued by China National Light Industry Council, China’s Top 100 Enterprises Award issued by China Business Top 100 Forum, “Excellent R&D Team in China Fragrance Flavour and Cosmetic Industries” issued by CAFFCI, the “Excellent Product Prize” awarded by Ice Cream China 2019, as well as the honorary titles of the “Leading Enterprise Prize” issued by China Association of Bakery & Confectionery Industry and “Member Enterprise of Quality Service” issued by the Specialized Committee for Roasted Seeds and Nuts of China National Food Industry Association

In 2019, the Company upgraded its business mode, improved its customer service capacity, and also optimized its production base, i.e., the whole production base of Shanghai H&K Flavours & Fragrances had been relocated to Yingtan, Jiangxi Province, which improved both the production capacity and quality. In 2019, the gross revenue of the Company was RMB 2.185 billion, with a year-on-year increase of 0.75%. Therein, the revenue from food flavors, the Company’s core business, remained stable; the revenue from sales of food ingredients that the Company focused on expanding in 2019 increased by 41.34%; for daily chemical flavors, the Company strengthened the R&D and promotion of liquid microcapsule flavors and expedited LTB additive to be put into production, so by virtue of new products and new clients, the revenue from daily chemical flavors increased by 16.56%. In 2019, the Company’s business performance achieved a year-on-year growth: the total profit reached RMB 1.446 billion, with a year-on-year increase of 1.99%; the net profit attributable to shareholders of the listed company was RMB 1.236 billion, with a year-on-year increase of 5.09%. The basic earnings per share was RMB 2.01, with a year-on-year increase of 3.61%; and the weighted average return on equity reached 15.50%, with a year-on-year increase of 0.93%.

With regards to profit distribution, under the premise of guaranteeing normal operation and long-term development of the Company, in order to continuously give back to the shareholders and to jointly share the operating results with the shareholders, the Board of Directors has proposed to distribute the profit obtained in 2019 as follows: by taking the general capital as of December 31, 2019 as the base, to distribute the cash dividends of RMB 19.80 (tax-inclusive) for every 10 shares to all shareholders, thus the cash dividends to be distributed total RMB 1.219 billion (tax-inclusive). The profit distribution plan needs to be deliberated by shareholders’ meeting.

Looking forward to the future, the Company will continue to fulfill the vision of “Flavor Your Life”, as well as the philosophy of craftsmanship and standard operation, will drive endogenous growth by technological innovation and upgrade in business modes, pay close attention to insights into consumer and customer demands by virtue of its advanced core technical capacity, and provide integrated solutions based on customer demands; it will realize extensive growth via merger, acquisition and industry integration, play the synergistic role of upstream and downstream industry chains, to strengthen and broaden the main business of the Company. Besides, the Company will seize the historic opportunity of domestic consumption upgrading and rapid expansion of the industry, to strive to become the world leading company in the fragrances and flavours industry,