Strengthen the construction of internal control and promote the sustainable development of the Company — Huabao held the launch meeting for internal control system construction project and the special training on internal control

In December 2023, the Ministry of Finance of the People’s Republic of China and the China Securities Regulatory Commission thoroughly implemented the Opinions of the State Council for Further Improving the Quality of Listed Companies, and jointly issued the Notice on Strengthening the Internal Control Construction of Listed Companies and Enterprises to be Listed and Promoting Internal Control Evaluation and Audit, deciding to promote listed companies to strengthen internal control construction, carry out internal control evaluation, and engage an accounting firm to conduct an audit of internal control over financial reporting.

In order to strengthen the construction of the internal control system ofHuabao Flavours & Fragrances Co., Ltd. (“Huabao” or“Company”), continuously optimize the internal control system, improve the risk assessment mechanism,enhance the effectiveness of internal control, and promote the sustainable development of theCompany, Huabaoengaged a professional internal control consulting team to provide diagnosis and consulting services on our existing internal control system.On September 11,2024,theCompany’s internal control project leading group and project team cooperated with the intermediary agency to organize the Huabao launch meeting for internal control system construction project and the special training on internal control. Mr. XU Sheng, partner of Deloitte Consulting (Shanghai) Co., Ltd. provided a vivid professional training on internal control for theCompany.

Mr. XU Sheng gave a detailed introduction to in aspects. i.e. the basic concepts of internal control and risk management, as well as the work plan for the construction of Huabao’s internal control system. The training and presentation were conducted from the basic concept of internal control, the sharing of internal control cases, the definition and classification of risks, the management methods and processes of core risks, the cooperation mechanism of project implementation, the scope of internal control system construction and the project schedule, etc., which improved our understanding of internal control management.

Ms. YUAN Xiaoqin, Member of the Board of Directors and President of Huabao, delivered a speech and put forward three requirements: first, it is a requirement for listed companies to strengthen internal control system construction, which is also a requirement for Huabao to implement corporate strategy and achieve long-term sustainable development. We hope everyone pay attention to it; second, with the development of the internal control project, the Company's personnel at all levels of various departments should identify their responsibilities in the internal control system; third, we should optimize and improve the internal control system on the basis of Huabao’s original internal control system, thus promoting the positive-going operation of our entire internal control system.

The Company’s internal control system construction is a long-term work. Under the guidance of the ESG development strategy, the Company will continue to improve the internal control system, strengthen the risk assessment mechanism, and constantly optimize the internal management process, improve management efficiency, and reduce operational risks from the perspective of corporate governance, so as to achieve healthy and sustainable development of the Company, and create greater value for shareholders, employees, society and other stakeholders.