2024

Environmental Social

and Governance

Report

Stock Code：603883Contents Words from the Chairman About This Report About LBX Pharmacy Digital 2024

Words from the Chairman

It is a great honor for me to share with you the efforts and practices of LBX LBX Pharmacy is committed to becoming a company that spans centuries

Pharmacy in environmental social and governance (ESG). The year 2025 marks yet this is far more than a mere accumulation of numbers. Genuine "century-

the 24th anniversary of the establishment of LBX Pharmacy as well as the 10th long" success is rooted in a century-old adherence to our original mission a

anniversary of our public listing. Along the way we have built on public health as century-long pursuit of values and a century-long balance of contradictions.our cornerstone adhered to solid industry practices and continuously created Between "speed" and "slowness" we embrace the digital intelligence wave

history while achieving growth. I have kept asking myself: as witnesses and while maintaining the wisdom of "slowness" — slowness in the rigorous

participants in China’s pharmaceutical retail industry how should we continue to quality inspection of every medicine slowness in the careful care of each

be part of this dynamic era The answer is already embedded in our company’s patient. Between "large" and "small" we strive for scale efficiency but deeply

name — with the warmth of serving "ordinary people" we bring business back to respect the power of "small" — small as the dosage instructions on every

the essence of humanity. medicine package small as the trembling gratitude of the elderly during

community health services. Between "change" and "unchanging" we bravely

The "Thousand Counties Ten Thousand Stores" initiative represents our steadfast embrace transformation while guarding the "unchanging" foundation — the

footsteps toward promoting accessibility to healthcare in counties and towns. unchanging vow of "everything is done for the people" and the unchanging

With over 15000 stores covering 18 provincial markets across the country the light

awe for the sanctity of life.of health reaches every corner of cities and rural areas. Empowering healthcare

services with AI and digital intelligence is yet another attempt by us to embrace Looking to the future we deeply understand that foresight is not about the

technology and innovate services. The full application of online and offline all- accumulation of technologies but about insight into human needs. True smart

chain information systems and digital tools allows the warmth of technology health should let technology remain behind the scenes while care becomes

to benefit more people. Furthermore the establishment and operation of the easily accessible. In the future LBX Pharmacy will actively deploy AI technology

public welfare organization "LBX Love Association" stand as solid evidence of across various business scenarios expanding its applications in intelligent

our commitment to social responsibility. To date we have joined forces with consultations chronic disease management and health monitoring. We will

partners to donate funds and supplies worth of more than RMB 100 million for further deepen the use of DeepSeek and other technologies in supply chain

disaster relief pandemic prevention poverty alleviation education support management operations management and employee training to drive cost

rural revitalization community health and other social welfare initiatives reduction and efficiency improvements across the value chain. Through self-

demonstrating our dedication and compassion with practical actions. developed algorithm optimization integration with third-party technologies

and strategic collaboration with leading enterprises we will enhance health

However becoming a better enterprise means we need to address more of

data governance and AI model interaction capabilities thus continuously

society’s common challenges. This is an era of technological acceleration and

improving the service quality.value restructuring. As artificial intelligence redefines healthcare as climate

change threatens human well-being and as the urban-rural healthcare gap Health is the simplest aspiration of humanity; Responsibility is the most noble

persists we resolutely choose to move forward with responsibility. In moments badge of an enterprise. LBX Pharmacy is willing to be a humble light alongside

of urgent medication needs we strive to be "faster" as the value of life cannot over 50000 "LBX employees" to illuminate the journey toward a healthy

Xie Zilong tolerate any delay. Behind the pricing of every medicine we insist on being Founder and Chairman of LBX Pharmacy China with altruism and protect the tranquility of countless households with

"lower" as the right to health should not be constrained by numbers. Across professionalism.every inch of urban and rural land we choose to go "deeper" as the value of

inclusiveness requires patient and meticulous cultivation. These decisions may not

bring immediate returns but we firmly believe that the advancement of business

civilization is precisely born from transcending utilitarianism.

0 2Contents Words from the Chairman About This Report About LBX Pharmacy Digital 2024

About This Report

Data Sources and Information Descriptions

The Environmental Social and Governance (ESG) Report 2024 of LBX Pharmacy Chain Joint Stock

Company (hereinafter referred to as "this Report") is the tenth ESG report that has been issued by LBX The data and information disclosed in this Report are mainly obtained as follows:

Pharmacy Chain Joint Stock Company (hereinafter referred to as "LBX Pharmacy" "the Company" "the Internal statistical reports of the Company

Group" "we") since its listing (the reports issued from 2015 to 2022 are social responsibility reports and Practical ESG cases daily sorted out and summarized

those issued from 2023 to 2024 are ESG reports). This Report objectively transparently and completely

Qualitative and quantitative information collection based on reporting frameworks

discloses the Company's ESG concept practice and performance in 2024 in a standardized manner.All operating data disclosed in this announcement is from the Company's annual report 2024. Unless otherwise

Reporting Scope stated all monetary amounts in the report are denominated in RMB.This is an annual report released to the outside every year.The main body and reporting period of this Report are the same as those of the Company's annual report 2024.The reporting period extended from January 1 2024 to December 31 2024. To enhance the integrity of the

report contents some contents or explanations are appropriately extended forward or backward in time. Deliberative Process

Unless otherwise stated the scope of disclosure in this Report is consistent with that of the Company's financial

report and consolidated statements 2024. The environmental performance covers the self-owned pharmacies This Report was approved upon deliberation at the nineth meeting of the 5th Board of Directors of the Company

and released.medical centers and traditional Chinese medicine factories as well as logistics centers employee canteens and

offices that LBX Pharmacy has the right to control their operations and operated throughout 2024.Basis for Compilation

Acquisition of and Response to This Report

This Report has been compiled mainly with reference to the standards below:

Instructions No. 14 of Shanghai Stock Exchange for Self-Regulation of. Listed Companies - Sustainability You can obtain more ESG information from LBX Pharmacy or download the electronic copy of This Report

Report (Trial) (hereinafter referred to as "SSE Sustainability Reporting Instructions") through the following methods:

Guidelines No. 4 of Shanghai Stock Exchange for Self-Regulation of Listed Companies – Sustainability Report (The electronic texts include Chinese and English versions. In case of any discrepancy between the two language

Preparation (hereinafter referred to as "SSE Sustainability Reporting Instructions") texts the Chinese version shall prevail)

Enterprise Sustainable Disclosure Guidelines - Basic Guidelines (Trial Implementation) issued by the Ministry Official website of LBX Pharmacy: https://www.lbxdrugs.com

of Finance of the People's Republic of China Official website of Shanghai Stock Exchange: http://www.sse.com.cn

GRI Standards 2021 of The Global Sustainability Standards Board (GSSB) If you want to obtain a paper version of this Report or have any comments or suggestions about this Report you

Guidelines No. 2 International Financial Reporting Sustainability Disclosure Standard – Climate-Related can contact us as follows:

Disclosures (IFRS S2) published by International Sustainability Standards Board (ISSB) Address: Securities Affairs Department 808 Luohu Road Kaifu District Changsha Hunan Province

Tel: 0731-84035189

We have also compared this Report with the SSE Sustainability Reporting Instructions and GRI Standards Your comments and suggestions are important basis for us to continuously promote sustainability management

2021 as detailed in the Appendices. and practice.

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About LBX Pharmacy

Brands Stock Code：603883About the Company

LBX Pharmacy (a company listed on the main board of At the same time of its rapid development LBX

Shanghai Stock Exchange; stock symbol: 603883) is a Pharmacy has actively participated in public welfare

leading enterprise in China's pharmaceutical retail industry undertakings conveying social love and warmth with

a top 100 champion in comprehensive competitiveness actions. So far the Company has donated more than

among China's pharmaceutical retail enterprises a top RMB 100 million to social welfare such as disaster relief

500 enterprise in China's service industry and a top 100 epidemic prevention poverty alleviation and education

enterprise in Hunan Province. assistance and rural revitalization in collaboration

with its partners. The Company has been successively

Since its establishment in 2001 the Company has

granted several honors including national honor as

successfully developed 18 provincial markets in Hunan

"Advanced Group Making Contributions to Complete

Jiangsu Anhui and Gansu etc. It has more than 15000

Construction of a Moderately Prosperous Society"

stores and approximately 60000 employees (including

Super Brands in China TOP100 Champion in Overall

franchisees). In 2004 its operating revenues RMB 22.358

Competitive Strengths among Chinese Drug Retail

billion; its total assets approximately amounted to RMB

Enterprises (for 12 times) and United Nations Global

21.045 billion and its taxes RMB 976 million .

Compact.Having been deeply ingrained in the health industry for

Committed to the health undertakings it aims to

more than 20 years LBX Pharmacy always maintains Corporate Culture

create century-old stores. Orienting towards the future

its strategic intent. Consistently adhering to its original

LBX Pharmacy will be deeply ingrained in the health

intention of "doing everything for ordinary people" it is

industry firmly build a technology-driven health service

committed to providing professional and warm health

platform provide more professional smarter and more

management services for the ordinary people. In the

altruistic services for ordinary people in the silver-

past few years the Company has continuously made

haired economy with a more correct healthy lifestyle

breakthroughs and innovations constantly deepened its

and help build a "healthy China".digital and intelligent transformation and driven rapid

business development. It has accurately empowered small

and medium-sized chain and single pharmacies vigorously

built a "large-scale ecosystem" for pharmaceutical

retail vigorously developed the industry's high-standard

pharmacy franchise model alliance model professional

DTP pharmacies tradition Chinese medicine clinic chains

and other business patterns promoted the full-time global

and full-product integration of new retail and made every

effort to build a technology-driven health service platform.At present the Company owns subsidiaries such as LBX

Health Pharmacy (franchise) Easydrug (alliance) MYLH

(wholesale) BXT TMC Clinics and Fengwoda Logistics

forming a complete pharmaceutical industry ecosystem.

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Digital 2024

ESG Key Performance Regulating Corporate Governance Benefiting Ordinary People's Health

in 2024 19 proposals deliberated at 4 general meetings The Company has a total of 15277 stores which cover 18 provincial markets

and 150+ prefectural cities. The stores at the prefectural level and below

Organize and participate in 260 investor exchanges account for

Revenue 77%

The coverage ratio of anti-corruption and anti-bribery More than 18120000 members with chronic diseases have cumulatively

RMB 22.358 billion training among the employees is 100 % been archived and self-examination services have cumulatively been provided

The coverage ratio of information security training among for more than 99230000 people

the employees is 100 % The satisfaction ratio of the customer service hotline is 99%

Net profit attributable to parent company For quality management 1333 suppliers were evaluated in aggregate and 54 high-risk suppliers were evaluated

RMB 519 million Driving Industry Development The coverage ratio of quality training among the employees is 100%

Digital intelligence empowers the supply chain and the

days sales of inventory are 94 with a year-on-year decrease

Tax of 4 days Jointly Building a Green Ecosystem

"Health Pharmacy" focuses on expanding -tier cities with

RMB 976 million 3-5a total of 5296 franchise stores The total annual photovoltaic electricity consumption is equivalent to saving

standard coal by about 624.39 t

"Easydrug" particularly aimed at 12 provinces and cities

owns a total of 19900 franchise stores (excluded from the Greenhouse gas emissions are reduced by 1821 tons of carbon dioxide

total number of the Company's stores) equivalents

The use of cyclic logistics vehicles cumulatively reduces the purchase of

cartons by 11700t

Empowering Employee Development The ratio new energy logistics vehicles used for delivery increases to 29% and the ratio of electric forklifts on site is 100%

The Company has a total of 40132 employees among whom

the female employees account for 89.27% while the female

mid-to-senior management accounts for 47%

Creating a Community with a Shared Future

The annual class hours per employee are up to 245 and

16313 employees receive on-the-job talent training online Cumulatively donate more than RMB 100 million in collaboration with partners

2649 employees are promoted throughout the year Annually carry out 100+ public welfare activities

Annually support 68 employees with difficulties with a

cumulative amount of RMB 1555852 Annually and cumulatively support farmers' sales of more than RMB 4 million

0 significant and above safety incident Cumulatively donated materials of more than RMB 378000 to floods of Yueyang and Chenzhou Hunan Province

Franchising-supported entrepreneurship has cumulatively provided 17000+

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ESG Recognition 2024

ESG rating agency

Wind ESG CHINA SECURITIES INDEX ESG SynTao Green Finance CCXGF

Rating in 2024

(As of 12/31/2024) A A B+ A

Included in CHINA

SECURITIES INDEX 500ESG

Leading Index

Best ESG Award New ESG Benchmark Social Responsibility Report

Enterprise Award Release Certificate

7th Excellent IR Stockstar Hunan Federation of Enterprises

and Industrial Economy

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Development with a Shared Future

01

Sustainability Management

Contents of This Section

ESG Management Strategy

Stakeholder Communication

Assessment of Materiality Issues

Responses to Sustainable Development Goals (SDGs)

LBX Pharmacy consistently upholds "doing everything for ordinary

people" as its business purpose. We constantly improve our ESG

mechanism actively respond to stakeholder demands share

development results make every effort to improve the sustainable

development capabilities and performance of enterprises and make

unremitting efforts to create a resilient sustainable business society

and ecology of the earth.

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

ESG Management Strategy ESG Structure

LBX Pharmacy attaches great importance to sustainable development In 2024 LBX Pharmacy adjusted the "Strategic Development Committee" a former special committee under the Board of Directors to the "Strategy

actively integrates environmental social and governance (ESG) into its core and ESG Committee" and added corresponding ESG management responsibilities based on the original responsibilities. In accordance with the

strategies and daily operations and continuously constructs its ESG system. Administrative Measures for Independent Directors of Listed Companies and other relevant regulations the Rules of Procedure for the Strategy and ESG

The Company promptly understands analyzes and grasps international Committee of the Board of Directors of LBX Pharmacy Chain Joint Stock Company (hereinafter referred to as the "Rules of Procedure") were formulated

and domestic sustainability-related policies keeps informative about the to lay a solid foundation for the Company's sustainable development actions.latest developments in ESG judges the potential impacts of ESG matters on

As of the date of this report LBX Pharmacy has initially established a governance structure at three levels namely "decision-making - management -

the Company's business model and performs preliminary sustainable risk

execution" with clear responsibilities at each level in order to ensure that the potential impacts risks and opportunities of environmental social and

control with a view to moving forward along a fixed path and with tenacity

corporate governance factors are fully considered in the business decision-making process and promote the integration of ESG into every link of the

amid changes and challenges in the industry environment.value chain.In 2024 the ESG management strategy of LBX Pharmacy focused on six

major areas namely standardizing corporate governance benefiting

ordinary people's health driving industrial development jointly building

green ecology empowering employee development and creating a

community with a shared future.

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

During the Reporting Period LBX Pharmacy continuously improved its Information Reporting Mechanism and Supervision Mechanism

sustainability governance capabilities. In 2024 the Company's senior

managers and members of the ESG execution team actively participated

The Company has established a top-down ESG supervision mechanism. The Board of Directors is responsible for supervising different ESG governance

in thematic ESG learning or exchange with Shanghai Stock Exchange and

work including risk review strategy and goal formulation especially the Strategy and ESG Committee and the ESG Management Committee. The ESG

external parties. The Company also engaged a third-party professional

organization to conduct special training internally to continuously improve Management Committee is responsible for daily overseeing the ESG Working Group.its internal ESG awareness and management. The third-party professional The Company has scientifically established performance indicators in six major ESG areas including but not limited to commodity and quality

organization conducted field research on all departments and affiliates management customer satisfaction human capital development and information security. We link these ESG performance indicators with the

of the Company issued ESG management optimization plans and made performance pay and evaluation of relevant senior executives and business leaders.suggestions on the Company's ESG work. The ESG execution team visited

According to the Company's internal ESG information reporting mechanism reports shall be made from bottom to top and level by level. The ESG

the departments and affiliates of the Company to publicize and implement

Working Group reports work progress and specific ESG practices of the Company to the ESG Management Committee from time to time. The ESG

the ESG concept and continuously improved internal recognition of the

Management Committee annually reports to the Strategy and ESG Committee and the Board of Directors on the achievement of ESG objectives and

ESG concept and ability to execute the concept.performance.LBX Pharmacy attaches great importance to the demands of stakeholders

LBX Pharmacy is committed to openly and transparently reporting the Company's ESG concepts practices and performance to the stakeholders through

actively participates in ESG research or exchange activities of industry

the publication of annual ESG reports. According to the latest sustainability reporting directives and guidelines issued by Shanghai Stock Exchange the

associations and partners and works with the stakeholders to promote

Company adjusted and added relevant issues and segmented indicators based on its own situation continuously standardized the criteria for report

ESG development in the industry. The Company attaches great importance

disclosure and improved the information disclosure.to external ESG ratings and pays attention to more than 20 domestic

and foreign ESG rating systems. Our ESG execution team identifies our

weaknesses in corporate ESG work through the underlying data of rating

agencies and regularly reports to the superior to check for omissions and

fill gaps to improve ESG management and information disclosure.For the past few years the pharmaceutical industry has paid

more and more attention to ESG. On July 16 2024 China

Association of Pharmaceutical Commerce hosted China

Retail Pharmacy Innovation and Development Forum. LBX

Pharmacy was invited to participate in the forum and deliver

a thematic ESG speech titled Altruistic Cure and Exploration

of a Sustainable Health Industry Development Path to share

experience and practice on corporate ESG creation.

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

Stakeholder Communication

Complete effective stakeholder communication is essential to the Company's business decisions and growth. LBX Pharmacy attaches great importance to its stakeholders continuously improves its efficient and diversified

communication mechanism actively listens to and responds to the expectations and demands of its key stakeholders including government and regulatory agencies customers shareholders and investors customers employees

suppliers and business partners communities the public and the natural environment which is taken as an important consideration for optimizing our ESG management strategies and practices. ‘

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

Assessment of Materiality Issues

Issue Analysis Procedures

Preparation of a list of issues

Based on the 21 issues in the "Table of Index to the Issues of the Instructions" attached to the Guidelines of The Company preliminarily analyzes the risks and opportunities of 24 issues and compiles a List of Issues

Shanghai Stock Exchange 20 issues are identified based on the actual situation of the Company among which the based on the situation of affected stakeholders. In the future the Company will be committed to continuously

Company is not involved in the "science and technology ethics" for the time being. Based on the actual situation deepening its ability to identify and monitor potential risks and opportunities in different issues ensuring strict

and business activities of the Company another 4 material issues are identified. Hence there were 24 issues in management of relevant risks and proactively seizing every favorable opportunity to promote the long-term

total. sustainable development of the Company.

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

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Development with a Shared Future

ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

Responses to Sustainable Development

Goals (SDGs)

NO POVERTY GOOD HEALTH AND WELL-BEING

Corresponding section Countermeasure Corresponding section Countermeasure

Benefiting Ordinary People's Health Make high-quality medicines available in remote areas in Benefiting Ordinary People's Health Control quality to provide high-quality goods and services

Driving Industry Development towns and villages. Empowering Employee Development Provide professional pharmaceutical services chronic disease

Creating a Community with a Shared Future Develop franchise and alliance business; support individual management and disease care to promote health accessibilityentrepreneurship and empower single small and medium- Jointly Building a Green Ecosystem

sized chain pharmacies to increase their efficiency and Creating a Community with a Shared Future Improve remunerations and benefits; pay attention to employee

revenue. health and safety

Support rural revitalization and carry out charitable Promote green operations providing green work and

donations. consumption environments

QUALITY EDUCATION GENDER EQUALITY

Corresponding section Countermeasure Corresponding section Countermeasure

Empowering Employee Development Provide abundant training and learning for the employees Empowering Employee Development Put an end to sex discrimination in the workplace

Creating a Community with a Shared Future Implement an incentive plan for the college entrance Value the power of women

examinations of the employees' children Respect and protect the employees' reproductive rights

Provide charity support for students and interests

Carry out various health science popularization and patient

education activities

CLEAN WATER AND SANITATION AFFORDABLE AND CLEAN ENERGY

Corresponding section Countermeasure Corresponding section Countermeasure

Jointly Building a Green Ecosystem Standardize the use of water resources and advocate water Jointly Building a Green Ecosystem Optimize resource utilization and management

conservation Enable photovoltaic power generation on the roofs of buildings

Discharge sewage and wastewater in compliance with in the park to improve the use of clean energy

regulations to prevent water pollution

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ESG Management Strategy Stakeholder Communication Assessment of Materiality Issues Responses to Sustainable Development Goals (SDGs)

DECENT WORK AND ECONOMIC GROWTH INDUSTRY INNOVATION AND INFRASTRUCTURE

Corresponding section Countermeasure Corresponding section Countermeasure

Empowering Employee Development Diverse recruitment Driving Industry Development Build or upgrade regional logistics centers

Driving Industry Development Protect laborer rights and interests improve employee Continuously improve supply chain management

Creating a Community with a Shared Future remunerations and benefits Create a high-quality pharmaceutical supply network covering 18 provinces

Implement personnel promotion retention and motivation and 150 prefecture-level cities

Promoting regional social and economic development Build an industry ecosystem to promote mutual benefits within the industry

REDUCED INEQUALITIES SUSTAINABLE CITIES AND COMMUNITIES

Corresponding section Countermeasure Corresponding section Countermeasure

Regulating Corporate Governance Engage in fair competitions and safeguard orderliness of the Jointly Building a Green Ecosystem Standardize waste discharge and develop green logistics

Empowering Employee Development market economy Benefiting Ordinary People's Health Advocate green office and green consumption

Driving Industry Development Equal treatment of small and medium-sized enterprises Creating a Community with a Shared Future Over 15000 stores have become community health service stations

Establish an investigation and whistleblowing system

Make barrier-free facilities and services available in stores

Combat all forms of discrimination

Provide rescue and care for groups suffering from natural disasters

Promote diversity and equal development

RESPONSIBLE CONSUMPTION AND PRODUCTION CLIMATE ACTION

Corresponding section Countermeasure Corresponding section Countermeasure

Benefiting Ordinary People's Health Strictly control quality Jointly Building a Green Ecosystem Analyze climate risks and opportunities; adopt relevant mitigation and

Driving Industry Development Perform green digital and intelligent supply chain management adaptation measures

Attach importance to customer feedback on goods and services Continue to promote green actions across the entire value chain (e.g. green logistics and operations)

LIFE ON LAND PEACE JUSTICE AND STRONG INSTITUTIONS

Corresponding section Countermeasure Corresponding section Countermeasure

Jointly Building a Green Ecosystem Actively respond to "plastic reduction" and reduce the use Regulating Corporate Governance Create an effective and responsible management structure to continuously

of plastic bags improve corporate governance

Protect biodiversity in park construction Comprehensively promote the rule of law construction

Practise business ethics and strengthen anti-corruption compliance

management

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Development with a Shared Future

02

Regulating Corporate Governance

Contents of This Section

Governance

Compliance Operation

Data Security and Privacy Protection

Party Building Work

Desirable corporate governance is a cornerstone for long-term

steady development of enterprises and a basic prerequisite for

comprehensive risk prevention. The Company strictly abides by

laws regulations and regulatory requirements of the places where

its businesses are conducted and relevant organizations. We obey

business ethics continuously improve our corporate governance

create fair clean business environment with our stakeholders and

share our development results with our shareholders and investors.Responses to SDGs in This Section

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Development with a Shared Future

Governance Compliance Operation Data Security and Privacy Protection Party Building Work

Governance General Meeting of the Company Board of Directors of the Company

The general meeting of the Company enjoys the decision- In the Company the Board of Directors is accountable

The Company has established a corporate governance structure featured by definite powers and

making rights stipulated under the laws the regulations to the general meeting. Except for the Chairman

responsibilities coordinated operation effective checks and balances which consists of the general meeting

and the Articles of Association. It exercises the decision- other directors don't hold management positions

the Board of Directors the Board of Supervisors and senior management of the Company. We strictly comply

making power on major matters such as the Company's in the Company thus realizing the separation of

with the Company Law of the People's Republic of China the Securities Law of the People's Republic of China

business policies financing investment and profit governance and management. In 2024 the Company

the Code of Corporate Governance for Listed Companies the Articles of Association other laws regulations

distribution in accordance with the laws. In 2024 the held 7 meetings of the Board of Directors and

and requirements in order to promote the continuous growth of enterprise value.Company held 4 general meetings and reviewed 19 reviewed 52 proposals. The fifth Board of Directors

proposals. At the meetings on-site and online voting was of the Company consisted of 9 directors including 1

Governance Structure performed in combination to fully discuss and vote on female director. Under the Board of Directors three

various proposals to ensure that all shareholders were professional committees namely the Strategy and ESG

treated equally and effectively safeguard the interests Committee the Audit Committee and the Nomination

General Meeting

of all shareholders especially small and medium Remuneration and Evaluation Committee have been

Board of Supervisors shareholders. established. In 2024 the professional committees held

10 meetings and reviewed 26 proposals.

Board of Directors

Strategy and ESG Committee Board of Supervisors of the Company

Management of the Company

Audit Committee In the Company the Board of Supervisors is accountable

Chairman

Chairman's Office to the general meeting. It exercises functions and powers Responsible for the operations management of the

Nomination Remuneration and such as inspecting the Company's financial affairs

Evaluation Committee Company the management of the Company organizes

Supervision and supervising the conducts of directors and senior

Department the implementation of the resolutions of the Board

executives in performing their duties in accordance with of Directors annual plans and investment proposals

Audit Department CEO the laws. In addition it strengthens its supervision over of the Company. They formulate specific rules of the

all its subsidiaries' businesses by organizing inspections Company and the Articles of Association or perform

Business Cluster Supply Chain Cluster Service Cluster of the subsidiaries to safeguard the interests of the other functions and powers granted by the Board

Company its shareholders and employees. The fifth of Directors. In 2024 the Company had 10 statutory

Board of Supervisors of the Company consisted of executives including 4 female executives to guarantee

three supervisors including one supervisor who was an its efficient and stable development.employee representative and one female supervisor.In 2024 the Company held 6 meetings of the Board of

Supervisors and reviewed 24 proposals.

476

general meetings meetings of the Board of meetings of the Board of

Directors Supervisors

195224

proposals reviewed proposals reviewed proposals reviewed

Annual General Meeting 2024. Annual Data 2024

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Development with a Shared Future

Governance Compliance Operation Data Security and Privacy Protection Party Building Work

Construction of the Board of Directors

Independence of the Board of Directors

The Company attaches great importance to the

independence of the operation of the Board of

Directors the positions relationships and decision-

making are independent.Diversity and Professionalism of the Board of Directors

Special committees of the Members of the committees Functions and powers of the Duties performed during the

The Company strives to build a diverse professional team of directors and pays attention to the diversity Board of Directors committees reporting period

of the Board of Directors in terms of sex cultural and educational backgrounds professional skills and

Composed of 3 directors Mainly responsible for

other aspects to ensure the scientific decision-making of the Board of Directors. At present the Company namely Mr. Xie Zilong studying and making Two meetings were held in

has 9 directors including 3 independent directors and 1 female director. All members of the Board of Strategy and ESG Mr. Zheng Jiaqi and Mr. suggestions on the Company's 2024 to review 2 proposals

Directors have rich professional backgrounds and diverse professional skills covering pharmaceutical Committee

Wu Lianfeng with the long-term development including the Company's ESG

independent directors' strategies major investment reports and changes in the

business financial investment law accounting digitalization retail management and other fields. involvement; convened by decisions ESG strategies application of raised funds.Mr. Xie Zilong - the Chairman. visions goals and policies etc.

9 3 1 Mainly responsible for formulating the selection

standards and procedures for

directors independent directors female director the directors and the senior

Composed of three directors executives; selecting and 4 meetings were held in

namely Mr. Wu Lianfeng reviewing the selection and 2024 to review 8 proposals

Nomination Ms. Xie Jiaqi and Mr. Ren qualification of the directors including election of the Board

Remuneration Mingchuan among whom Mr. and the senior executives; of Directors remuneration of

and Evaluation Wu Lianfeng is the convener. formulating and assessment the directors the supervisors

Committee The independent directors standards for the directors and the senior executives

account for a majority and and the senior executives and repurchase and cancellation

serve as conveners. evaluating them; formulating of restricted stocks.and reviewing remuneration

policies and plans for the

directors and the senior

executives.Composed of three directors In 2024 four meetings

namely Mr. Ren Mingchuan financial information and were held to consider 16

Mr. Li Zhen and Mr. Xie their disclosure; supervising proposals including periodic

Ziqi among whom Mr. Ren and evaluating the internal reports use of raised funds

Audit Committee Mingchuan is the convener. and external audit work and credit granting guarantees

The independent directors internal control. and appointment of

account for a majority and chief financial officer and

accounting professionals accounting firm.Note: The above data shows the members of the fifth Board of Directors who performed their duties in 2024. serve as conveners.

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Governance Compliance Operation Data Security and Privacy Protection Party Building Work

Effectiveness of the Board of Directors Capital Market Responses

The Company attaches great importance to the effectiveness of the Board of

Directors. Our Board of Directors diligently actively performs its duties and Compliance of Information Disclosure

implements the resolutions of the general meetings in strict compliance with the

Company Law Securities Law Rules Governing the Listing of Stocks on Shanghai The Company actively fulfills its information disclosure obligations in strict accordance with the Rules Governing the Listing of Stocks on Shanghai

Stock Exchange other laws and regulations as well as our Articles of Association Stock Exchange the Instructions of Shanghai Stock Exchange for Self-Regulation of. Listed Companies and other relevant regulations. We carry out

and Rules of Procedure for the Board of Directors In 2024 the average attendance information disclosure work standardize our information disclosure standards and reporting procedures adhere to the principle of "truthfulness

rate of the members of the Board of Directors at the meetings of the Board of accuracy completeness timeliness and fairness" and show our business philosophy and achievements to our investors to effectively protect

Directors reached 100% and the attendance rate of the members of professional their legitimate rights and interests.committees under the Board of Directors at the meetings of the professional

committees was up to 100%. The independent directors of the Company conduct In 2024 the Company issued a total of 154 announcements and related documents and added operation descriptions to its periodic reports so

self-assessment report and disclose the annual Independent Directors' Duty that the investors could truly understand its development through more standardized and transparent information disclosure. To enhance the

Performance Report annually which covers their meeting attendance time and readability of its periodic reports we posted "one picture to understand" or a video for each periodic report and proactively issued documents to

content of on-site work etc. comprehensively interpret major announcements. We published approximately 850 positive reports in mainstream media sources throughout the

year (excluding reprints).The Company continuously pays attention to the directors' term of office and

attaches great importance to the stability of the Board of Directors. Besides we

constantly recruit new directors to enrich the decision-making dimensions of the

Board of Directors and promote the Company to achieve more stable efficient and

sustainable development. As of December 31 2024 the average term of office had

been 3.97 years among the members of the Board of Directors. 154 260 3 3 100%

announcements and investor exchanges performance briefings telephone conferences response rate of

related documents for interpreting periodic E-interactive

Capacity Building of the Board of Directors issued reports

The members of the Board of Directors actively participate in our key business

projects field research of stores and different types of compliance training Annual Data 2024

including digitalization commodity and financial projects to promote the

implementation of our strategies. They participate in training on national

policies securities market laws and regulations operational mechanisms

corporate systems environmental and social issues and effectively enhance their

compliance awareness and functional performance. Securities Times 2024 Excellent IR 2024

In 2024 the Company particularly organized the directors to participate in anti- Investor Relations Management Tianma Best Capital Market

fraud training and training related to the independent directors organized Award for Chinese Listed Companies Communication Award

by Shanghai Stock Exchange Hunan Office of China Securities Regulatory

Commission and China Association for Public Companies. Meanwhile the Articles

of Association the Working System for Independent Directors and other systems

were revised to respond to the requirements of China Securities Regulatory

Commission and promote the reform of the Company's independent director

system as a listed company.

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Diverse Investor Communications In 2024 the Company distributed its interim dividends for the first time distributing total cash dividends of RMB

251 million which accounted for 50.01% of the net profit attributable to the parent company in the first half of

Communication channels 2024. Besides the Company released the Shareholder Return Plan for the Next Three Years (2024-2026) during the

reporting period. On the premise of satisfying the conditions and guaranteeing normal business operations the

annual profit distributed in cash from 2024 to 2026 shall at least account for 50% of the net profit attributable to

Performance Corporate Strategy Collective Media Roadshow Shanghai Email Telephone the parent company in the current year.briefings surveys meetings reception interviews and Stock communications

with day for reverse Exchange

securities investors roadshow E-interactive

firms

Year Total share capital Profit distribution Cash distribution Capital conversion

(shares) plan (tax-inclusive) (RMB) into shares (shares)

The Company attaches great importance to communications and exchanges with investors proactively carries

2015 267000000 Cash dividend of RMB 80100000

out investor relations management and protects the legitimate rights and interests of institutional investors 0.3 per share

individual investors small and medium shareholders and potential investors including their right to know.

2016 Cash dividend of RMB 80100000

We strengthen our communications and exchanges with our investors through multiple channels to help them 267000000 0.30 per share

understand our situation more clearly and conveniently and listen carefully to their feedback and suggestions Cash dividend of

thus improving our daily operations. 2017 284945266 RMB 1 per share 284945266

In 2024 the Company conducted a total of 260 Cash dividend of RMB 0.5 2018 286556365 per share 143278182.50

exchanges with institutional investors covering

1831 institutional investors in total; 3 performance

Conversion into 0.4 shares

briefings and 3 telephone conferences for interpreting

2019 291951495 for each share held and 116780598

our periodic reports. We replied to 20 questions cash dividend of RMB 0.42

122619627.90

per share

from SSE E-interactive with a response rate of 100%

answered 524 calls from our investors answered

2020 408673661 Cash dividend of RMB 0.35 143035781.35

questions and cleared doubts of the investors on the In September 2024 the activity of Shanghai Stock Exchange per share

premise of complying with information disclosure named "I am a shareholder" was carried out in LBX Pharmacy.Conversion into 0.3 shares

rules. During the reporting period the Company 2021 447957309 for each share held and cash 223978654.50 134387193

actively participated in an activity known as "I am a shareholder" and organized by Shanghai Stock Exchange dividend of RMB 0.5 per share

Securities Association of Hunan and China Fortune Securities for the small and medium shareholders to get closer Cash dividend of RMB 0.5

to ordinary people. We also participated in the online collective reception day for investors of listed companies in 2022 584806902 per share 292403451.00

Hunan jurisdiction in 2024. We conducted in-depth exchanges with our investors and continuously built friendly

transparent and active investor relations. Conversion into 0.3 shares

2023 584793211 for each share held and cash dividend of RMB 0.66 per 385963519.26 175437963

share

Stable and Steady Returns for Investors

Interim Cash dividend of RMB

Upholding being "investor-oriented" in the course of development the Company is committed to establishing period of 760231174 0.3307 per share 251408449.24

2024

scientific sustainable and stable dividend distribution and return mechanisms. We have been implementing the

nine new guidelines of China and the action plan of Shanghai Stock Exchange for "improving quality increasing 2024 760095613 Cash dividend of RMB 0.08 60807649.04

efficiency and emphasizing returns". We actively reward our shareholders and share our operating results with (proposal) per share

our investors. Since its listing in 2015 the Company has cumulatively distributed cash dividends of RMB 2.069

billion (including proposal 2024) which accounts for 205% of the net funds raised from the IPO. 2068640580.79 426605754Total

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Development with a Shared Future

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Compliance Operation

Risk and Internal Control Management

Under the complex and ever-changing market environment a solid line of defense for risks is a cornerstone of the Company's stable and long-term development. We continuously establish and improve our risk and internal control

systems comprehensively strengthen our risk warning prevention and control capabilities and build a safety barrier for the sustainable development of the Company. We constantly improve our internal process control to ensure that

all our business activities are carried out in order within the frameworks of laws regulations and internal policies and our systems.Risk Prevention and Control and Internal Control In 2024 the Company continuously optimized the three major lines of defense for risk management increased its

organizational collaboration efficiency and enhanced its risk disposal capabilities. The Company has established

The Company has established and continuously optimized its risk prevention and control and internal control

a high risk control coordination mechanism covering the second line of defense (legal compliance internal

structures compiled and published the Yellow Book of Comprehensive Risk Management the Charter of

control quality and information security etc.) and the third line of defense (supervision and audit etc.) for risk

Comprehensive Risk Management and the Bottom Line Management Standard for the Group's Risk Compliance.management appropriately introduced the business departments of the first line of defense to join regularly

We have continuously improved our risk management system and built a strong line of defense for risk

shared risk information and risk management work plans discussed risk management strategies and response

management and control. Based on our internal control risks and management objectives the Company has

plans regularly followed up on the implementation progress of response plans and improved the "closeness" of

established an internal control system covering all business links in business activities including but not limited

cooperation. We have also continuously explored how to improve the collaborative governance of the three lines

to social responsibility development strategy human resources organizational structure capital activities

of defense for risk management set improvement goals improved our risk management and control processes

procurement R&D.systems and mechanisms based on the global perspectives and continuously promoted our closed-loop

management.Risk Prevention and Control and Internal Control Architecture Three Lines of Defense for Risk Management

Board of Directors

As the final decision-making level for the Company's major risks it is ultimately responsible for the Identify and address

establishment improvement and effective implementation of the internal control system. First line of

defense As the first line of defense the business departments identify and investigate risks

(business into the Company's daily business work report risks in time and appropriately

Audit Committee departments) respond to risks.Supervise and evaluate internal and external audit work; review internal control.Guide and coordinate

Management

Second line of As the second line of defense it is responsible for risk management before and

Decide on and guide daily risk management. defense (Risk Management during the event. The relevant functional departments include Process and Risk

Department) Management Department Quality Management Department Information Security

Team and Securities Affairs Department etc. which comprehensively guide manage

Full-time Risk Prevention and Control and Internal Control Organization and coordinate the Company's daily work of comprehensive risk management.Led by the Process and Risk Management Department it has built three major lines of defense for risk

management responsible for the construction and daily operation of the comprehensive risk management Supervisory evaluation

system. The internal control group organizes and implements daily internal control inspection and internal The Supervision Department and the Audit Department as the third line of defense

control self-evaluation to ensure the effectiveness of internal control. The Internal Control Team organizes Third line of defense (Supervision are responsible for post-event risk management evaluating the rationality integrity

inspection and self-evaluation of daily internal control to guarantee the effectiveness of the internal control. Department) effectiveness and reliability of the Company's risk control discovering existing

problems in time and making suggestions for improving risk control.

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Hierarchical Risk Management

The Company implements a hierarchical management mechanism for risks and judges the risks by levels. Thus 5 6 24 18

we are able to respond to and address various risks more accurately and efficiently. The Company creates and

uses various risk management tools. As of the date this report the Company has prepared a list of risk compliance new core segments new business segments new internal control risk screening and

covered by the covered by the risk cycles covered by the evaluation items

bottom lines for six major business segments clarified the risk redlines based on specific conditions of the major hierarchical risk compliance bottom risk matrix

business segments and increased its employees' awareness of bottom lines. We have established risk matrix and mechanism lines

risk level assessment standards based on our internal control cycle and applied them in key areas such as fund Annual Data 2024

management on a pilot basis to improve our risk identification capabilities. We have built a risk management Audit and Supervision

database to regularly collect and report risk information review historical data analyze common problems and

help business departments improve their risk management capabilities.According to the Charter of Corporate Supervision and Audit the Group's Supervision Department and Audit

Department of LBX Pharmacy independently carry out internal audit and supervision work exercise internal

Process Management supervision power and give full play to their roles in promoting and guaranteeing internal supervision and audit

in strengthening internal control improving the operations management and increasing economic benefits and

In combination with the industry value chain and its own business reality the Company has issued LBX Process laying a solid foundation for the Company's steady sustainable development. When performing their duties the

Framework Group's Process Management Standards Group's System Management Standards and Group's Supervision Department and the Audit Department of the Group work under the direct leadership of the Chairman

Process Operations Management Measures. In 2024 we continuously iterated our process management system of the Board of Directors and his authorized persons to guarantee business independence.optimized our process management work sorted L1-L3 processes of 15 core value chains carried out multiple

business domain process optimization projects constantly improved our process maturity and increased In 2024 the Group's Supervision Department and Audit Department carried out work in respect of the business

our business collaboration efficiency. In addition the Company actively promoted its process audit projects segments according to the annual supervision and audit plan including but not limited to procurement finance

established and implemented its process audit management mechanisms on a trial basis and strengthened our engineering operation and administration. In addition the Company conducted all-round supervision over its

process compliance and transparency. stores through irregular random inspections monthly special regional random inspections store monitoring and

supervision etc. The supervision and audit covered 100% of the direct-sale stores.new and amended systems new and optimized process audit items coverage ratio of training on

procedures new systems and procedures The Company encourages its employees and related parties to report any misconducts that

69 343 6 100 violate business ethics laws or regulations. After receiving a complaint and deciding to accept % it the Supervision Department will strictly investigate and report it in conjunction with relevant

Annual Data 2024 departments and a supervision report shall be prepared for the case filing. The Company has

established an Employee Reward and Punishment System and Implementation Rules of Nine Red

Disciplines for All Employees to punish the internal employees involved according to its internal

rules.

100%13815

direct-sale stores supervision punishment

covered by supervision reports notices issued by

and audit completed the Group

Annual Data 2024

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Compliance Management

Legal Governance

The Company attaches great importance to "legal governance" and abides by laws and regulations which is regarded by us as a cornerstone and code of conduct for our development to ensure the legality of our operations. It

gives full play to the role of legal protection safeguard legitimate rights and interests of its own and its related parties through legal means. We also further improve our legal risk prevention and control mechanism to increase our

employees' legal awareness.Prevention and Control of Legal Risks Intellectual Property Protection

In 2024 the Company continuously optimized its system for preventing and controlling legal risks. Before events we The Company attaches great importance to the cultivation declaration and application of independent

established a pre-litigation legal affairs handling and risk warning memorandum mechanism to file legal affairs with intellectual property and actively takes advantage of the intellectual property to empower its business. We also

greater risks and monitor them in real time to ensure that relevant legal risks were controllable and under control. safeguard our intellectual property through legal means cooperate with relevant departments to severely crack

After events we actively responded to various legal disputes and litigation cases and safeguarded our legitimate down on illegal activities on trademarks patents and other fields and clean up the business environment of

rights and interests through legal means. the market. As of the end of 2024 the Company owned 726 valid trademarks (with trademarks deployed in 10

overseas regions) 143 copyrights (including 102 computer software copyrights) and 46 patents.Contract Management

The Company sticks to the "contract-abiding and credit-honoring" principle. In 2024 we continuously standardized

our contract signing and performance procedures prepared 64 contract templates on procurement sales lease

franchising human resources and store engineering etc. organized our relevant personnel to learn increased our

employees' legal awareness during the contract negotiations further enhanced the effectiveness of contract signing valid trademarks copyrights patents

and performance ensured the legality and compliance of contracts and reduced the risk of contract disputes. In

2024 100% of the Company's contracts passed the legal review. Data as of the End of 2024

Tax payment according to law

Legal popularization Construction

The Company firmly implements tax laws and policies truthfully declares taxes pays taxes on time continuously

Training on legal popularization for all Promotion of grassroots legislative

employees construction strengthens tax compliance control and actively makes its due contributions to social development.In 2024 the Company continuously improved its digital financial and tax management actively promoted

In 2024 the Company carried out compliance In 2024 as the "grassroots legislative contact point" the construction of a tax management system and initially built a digital electronic invoice management

publicity for its employees organized legal designated by the Justice Department of Hunan platform. Meanwhile the Company constantly improved its expense control system achieved refined

knowledge training 5 times regarding four Province the Company extensively collected opinions expense management continuously optimized its organizational construction of the financial sharing center

fields namely advertising law intellectual and suggestions from grassroots people and proposed strengthened its foundation increased its efficiency and empowered itself. Through digital intelligence

property amendments to the Criminal Law a total of more than 20 amendments in the fields empowerment and team building the Company has further stimulated the potential and value of the financial

and the Company Law. We continuously of anti-monopoly supervision over administrative and taxation data strengthened full-process and all-round compliance self-examination and risk prevention

i n c rea s e d o u r e m p l o y e e s ' co m p l i a n ce law enforcement and optimization of the business management and better provided support for its sustainable business development. In 2024 the Company paid

awareness and provided strong support for environment. While popularizing the laws we taxes of RMB 976 million.our compliance management. pooled the wisdom of the masses to promote the

improvement of laws and regulations and contribute

to the construction of a law-bases society.

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Development with a Shared Future

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Practising of Business Ethics

Adherence to business ethics is the foundation for the Company's long-term development and the code of conduct for all acts of the Company. Consistently adhering to the principle of good faith fairness and integrity and LBX

Pharmacy builds trust with the market and the public in reliance upon good business ethics.Fair Competition

The Company strictly abides by the Anti-Unfair Competition Law of the People's Republic of China the Anti-Monopoly Law of the People's

Republic of China the Administrative Measures for Combating Unfair Competitions other relevant laws and regulations. We stick to the

principle of fair competition opposing all acts of unfair competition monopoly or commercial bribery.The Company reflects the "anti-unfair competition clause" in the contract terms concluded with its suppliers sets forth its 24-hour

whistleblowing hotline and includes the "prohibited item" in "Nine Redlines of LBX Pharmacy". We proactively maintain the orderliness

of market competitions encourage healthy competitions among enterprises and help create a clean and upright industry development

environment. In 2024 the Company never committed any act that harmed the legitimate rights and interests of other operators or

disrupted social and economic order.Integrity and Fight against Commercial Corruption

In 2024 the Company gave integrity education lectures for the management trainees.The Company strictly abides by all applicable anti-commercial bribery laws and regulations in its place of business and prohibits bribery

and corruption in order to acquire or retain business or obtain any other illegitimate benefits. Our Chairman has always attached great

During the reporting period the Company continuously publicized integrity and

importance to corporate compliance construction. In the Supervision Department the Chairman directly supervises the integrity and

carried out the sixth "Nine-Redline Day" activities in September 2024 covering all of its

compliance of the entire group. The Chairman publicizes business compliance operations at quarterly management meetings of the Group

employees. The activities included online taking of a course known as "An Introduction

together with the Supervision Department continuously creates a clean upright company environment and vigorously supervises and

to Integrity by Cases" by all employees signing the "Commitment Letter of Never

guarantees the Company's sustainable development.Violating the Nine Redlines" setting the 99 Redline Day computer desktop and the poster

The Company makes unremitting efforts to deeply promote its integrity and anti-commercial corruption work from the perspective of for opening APP "Bai Xing Tong". In addition in 2024 the Company organized 4 offline

system construction special spot checks and cultural construction etc. We have formulated an Integrity Management System to strictly integrity education lectures for management trainees; 1 online integrity education

urge all our employees to be honest and self-disciplined and eliminate corruption. In 2024 the Management System for the Group's program on "Keeping Redlines in Mind and Acting in Compliance"; and published 5

Blacklisted Suppliers was newly issued to standardize the management of blacklisted suppliers and related personnel emphasizing WeChat tweets advocating integrity.compliance and transparency in the process of cooperating with the suppliers.In 2024 the Supervision Department and the Operations Department jointly conducted monthly special spot checks on "Nine Redlines" 100%

in each combat zone to punish and criticize those who violated the rules. The Company actively participated in the "Trust and Integrity 4

Enterprise Alliance" (the first autonomous industry anti-corruption organization for Chinese Internet companies) and promptly uploads of the employees covered by the offline integrity

activities on "Nine Redlines" education lectures

the blacklist of illegal employees to the database of the "Trust and Integrity Enterprise Alliance" as required by the alliance. In 2024 the

Company additionally blacklisted 6 persons. 1 5

thematic program on "Keeping Redlines WeChat tweets

in Mind and Acting in Compliance" advocating integrity

Annual Data 2024

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Whistleblowing Investigation System

We encourage our employees and related parties to report any misconducts that violate business ethics laws or regulations. While keeping the whistleblowers' personal information confidential we strictly crack down on any

retaliation and actively maintain open reporting channels.Whistleblowing Method

No restriction is imposed on whistleblowing and complaining to LBX Pharmacy. Complainants may whistleblow/complain by telephone business WeChat email letter and face to face entrust others to whistleblow/

complain.Whistleblowing Email

jtdcb@lbxdrugs.com

Whistleblowing Hotline

13975122000

Online Whistleblowing

LBX Pharmacy Business WeChat Bench - Joint Integrity Construction - Whistleblowing and Complaint

Visit and Correspondence Address

Supervision Department 15/F LBX Pharmacy Group Building 808 Qingzhuhu Road Kaifu District Changsha Hunan Province 410005

Our Commitments

The Supervision Department of LBX Pharmacy promises to reply to a whistleblower/complainant regarding whether his report/complaint is accepted within 3 business days (for information collection preliminary

verification and supplementation of relevant evidences) after receiving a real-name report/complaint. To reject the report/complaint an explanation will be given to the whistleblower/complainant on the reason. For any

report/complainant not within the jurisdiction inform the competent department or unit and reply to the whistleblower/complainant. If the content whistleblown is true the whistleblower will be given a cash reward.

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Medicare Compliance

The Company attaches great importance to medicare compliance management actively responds to a series of policies such as the Notice on Carrying out Unannounced Inspections of Medical Insurance Funds in 2024 the

Implementation Opinions of the General Office of the State Council on Strengthening Normalized Supervision of the Use of Medical Insurance Funds to consolidate its self-management of medical insurance funds strengthen its

medicare compliance management and improve its internal medicare management system. We actively carry out internal self-examination to protect the patients' medication safety and medical insurance funds.We have formulated the Compilation of the Medical Insurance Management System clearly defining the responsibilities

Improve system

construction of medical insurance staff drug management processes settlement standards and financial management requirements

and providing a solid institutional guarantee for medical insurance work.Establish special The Company has built a special medical insurance team to particularly manage medical insurance compliance matters

organizations and strictly supervise the implementation of compliance requirements in the combat areas.Relying on digital technologies we have independently developed a medical insurance compliance risk control system

Construct a digital to efficiently monitor medical insurance compliance risks and ensure compliance operations through accurate early

intelligence system warning close monitoring during the events and in-depth post-event analysis.Carry out internal The Company attaches great importance to medical insurance compliance and actively carries out internal self-

self-inspection examination. In 2024 we performed spot checks of all medical insurance outlets to ensure that the system is implemented in place.The Company actively conducts monthly special medical insurance training case warning education and training for all

Strengthen its employees conducts in-depth analysis of medical insurance violations ensures that medical insurance compliance

compliance publicity publicity is in place and strengthens the employees' professional skills and compliance awareness through training and

publicity. In 2024 we conducted training on medical insurance compliance 11 times in total.

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Data Security and Privacy Protection

Information Security Organization and Responsibility

In the process of promoting digital and intelligent transformation information security has become an issue that arouses the Company's great concern at the strategic level. We are well aware that the normal operation of the

information security system is our responsibility to our customers employees partners and other stakeholders. It is also the cornerstone for the sustainable development of the Company.The Company strictly complies with relevant laws regulations and industry standards including the Cybersecurity Law of the People's Republic of China the Measures for Hierarchical Protection of Information Security the Data

Security Law of the People's Republic of China the Personal Information Protection Law of the People's Republic of China the Administrative Measures on Internet Information Services. We have established an information security

management organization at three levels "Information Security Committee - Information Security Department - Collaborative Departments" under the guiding framework of ISO 27001 Information Security Management System and

the Measures for Hierarchical Protection of Information Security.Information Security Management Architecture

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In 2024 the Company continuously optimized its information security management system and provided multi-level all-round information protection in five dimensions namely legal compliance organizational guarantee risk

management technical construction and audit training to protect its information assets from various threats and risks.We gradually integrated "information security" into a part of our corporate culture and made continuous publicity among our employees to increase their information security awareness. In 2024 the

Company organized special training for the employees and publicity activities on hot issues of information security. The information security training covered 100% of the Group's employees.Information Security Management System

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Information Security Risk Management Cybersecurity

Effective information security management begins with deep understanding and evaluation As a core component of information security the Company has continuously enhanced its cybersecurity defense capabilities. We have

of potential risks. The Company carries out information security risk prevention and formulated a number of internal systems related to cybersecurity including the Group's Computer Network System Management

control work based on its daily business activities. We have formulated the Vulnerability System to effectively guide cybersecurity management and standardize employee behaviors.Management System the Emergency Response System for Information Security and other In 2024 the Company passed the three-level hierarchical protection certification of five systems including mini program mall "LBX

standardized systems. We have also formulated safe operating procedures for vulnerability Pharmacy" customer relationship management (CRM) system medical insurance platform enterprise resource planning (ERP) platform

management threat intelligence management code leakage management data export and point-of-sale (POS) system. We introduced more than 8 security tools such as web application firewall (WAF) vulnerability scanner

management APT monitoring and Internet exposure management. host-based intrusion detection system (HIDS) external attack surface management (EASM) platform honeypot trap platform and

The Company strictly implements internal rules and security operation mechanisms in software composition analysis (SCA) platform realizing an in-depth security technology stack from application to infrastructure and

its daily operations. Driven by the Information Security Management Committee and the from R&D to release. During the reporting period no major cybersecurity incident occurred in the Company.Information Security Department in 2024 we completed several information security

risk management projects including identifying and fixing more than 600 high-risk

vulnerabilities responding to and handling over 50 emergency incidents assessing and Data Security

responding to more than 1800 pieces of threat intelligence and converging more than 400

Internet exposure risk items. LBX Pharmacy attaches great importance to data security and privacy protection of itself its customers employees partners and other

stakeholders. In 2024 the Company completed the annual revision of the Group's Data Security Management System optimized and

Besides the Company has established an information security emergency organization led summarized the definitions of five data security levels. We added more than 100 sensitive data fields for encrypted storage personal

by the emergency headquarters and organized by the Information Security Department sensitive information fields of over 15 core application systems for desensitization and more than 30 data exchange channels for

where relevant departments is responsible for response and execution. If an emergency asymmetric encryption and transmission transformation etc. with a view to comprehensively protecting privacy.security incident may be quickly addressed and the business operation may be effectively

restored it may guarantee the Company's continuous provisioning of safe and reliable Taking the DSMM framework as a benchmark the Company has continuously prevented leakage of sensitive business

services for the customers. data and protected personal privacy. In terms of data acquisition we classify and grade data by type and sensitivity

and define security specifications for the data lifecycle. For data storage sensitive data fields including core business

information on the businesses personal information of customers and employees are encrypted for storage. Regarding

data exchange sensitive data is subject to irreversible asymmetric encrypted transmission. From the perspective of

600+ 50+ data usage and sharing we strictly define the scope and sharing specifications for different levels of data. We also

Vulnerabilities identified and fixed Emergency incidents responded make privacy compliance declarations and perform irreversible desensitization for the use of the customers' and the

and addressed employees' personal information to fully protect the individuals' rights and interests in privacy. In 2024 the Company

had no major data security incidents.

1800+400+

Pieces of threat intelligence Internet exposure risk items

evaluated and responded converged

Annual Data 2024

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Protection of Customer Privacy

As pharmaceutical retailer we are well aware that privacy security is deeply related to customer trust and one of the sustainability issues that customers All our core systems passed the National

attach great importance to. We have continuously optimized our privacy protection mechanism and taken a series of measures to ensure that our Level 3 Hierarchical Protection

customers' personal privacy is protected. During the reporting period no leakage of customer privacy occurred in the Company.Certification

Privacy policy and access control Data encryption and technical protection 0 0

WeChat mini program "LBX Pharmacy" has formulated a clear The customers' sensitive information is encrypted and encryption major cybersecurity incident major data security incident

privacy policy to inform the customers of how their personal technologies are used to protect data security no matter whether

information is collected used stored and shared. The Company during storage or transmission. The Company utilizes data

strictly controls the personal information authorized by customers anonymization and differential privacy technologies etc. to 0 100 %

strictly limits their use only within the agreed scope and strictly reduce personal privacy risks. We display the customers' sensitive customer privacy leakage coverage ratio of information

controls the access to ensure that no personnel except for those information at different levels strictly control the permission to security training

authorized access the customers' personal information. The view roles and desensitize the key data to reduce the leakage risk

customers have the right to access modify and delete their of the customer privacy. In addition we clarify the responsibilities

personal information. and obligations of third-party partners for protecting the customer 1 100%

privacy and require them to strictly abide by the relevant external third-party compliance rate of data use

requirements in terms of technical measures. information security audit

Data backup and emergency response Employee training and audit supervision

The Information Security Department takes the lead in organizing The Company regularly conducts privacy protection awareness

the Technical Support Department to conduct relevant data backup training for the employees through internal digital learning tools to

and restoration drills simulate the rapid response to exceptions continuously increase their awareness and sense of responsibility

and improve the emergency response capability. for customer privacy protection. We strengthen the system audit

function for customer privacy and transform the data access

logs to make their coverage more comprehensive and timely. We

conduct regular privacy audits effectively check the effectiveness

of privacy protection measures and make improvements and

adjustments according to the audit results.

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Development with a Shared Future

Governance Compliance Operation Data Security and Privacy Protection Party Building Work

Party Building Work

LBX Pharmacy has deeply studied publicized and implemented Xi Jinping thought on socialism with Chinese characteristics for a new era and the spirit of the 20th National Congress of the Communist Party of China comprehensively

implemented the general requirements for Party building in the new era and the Party's organizational path in the new era given full play to its leading role in Party building and continuously promoted the integrated development of

Party building and its operations.As the first privacy pharmacy that established a Party organization in the drug retail industry of China LBX Pharmacy attaches great importance to Party building and incorporates the Party building work into its Articles of Association.We guarantee the Party building work institutionally ideologically and organizationally. We actively explore non-public Party building resolutely perform the main responsibility for comprehensively and strictly governing the Party

and transform the Party's political advantages into our own competitiveness.Enhance Organization Construction

Adhering to the principle of "following the leadership of Cases

the Party and benefiting the ordinary people's health" On June 13 the Party Committee of LBX Pharmacy the Party

LBX Pharmacy sticks to simultaneous planning of its Party Committee for Enterprises of Jinxia Park and Diying Party Branch

building and operation and simultaneous establishment jointly held the Party Day activity of "Learning New Standards and

of Party building and administrative organizations. In 2024 Promoting Development" aiming at helping medical and health

the Company continuously consolidated its organizational enterprises understand and implement the new version of the

foundation for Party building. As of the end of the Good Supplying Practice (GSP) and improve quality management

reporting period we had 1 second-level Party committee of the industry. The activity attracted nearly 70 people from

and 26 party branches under our jurisdiction. All the In June 2024 the Party Committee of LBX Pharmacy was Party branches and quality management leaders of more than 20

secretaries of the party branches under our jurisdiction awarded the title of "Advanced Grassroots Party Organization enterprises in the park.are our middle and senior managers giving full play to the in the Provincial Market Regulation System" issued by the

Comprehensive Committee of Hunan Provincial Non-

Party organizations' roles in ideological leadership and the

Public Economic Organization. On June 28 the Party Committee of LBX Pharmacy organized

Party members' roles as battle bunkers. all Party members for a study tour to Hunan First Normal

University (Chengnan Academy) - a red education base with the

Strengthen Ideological Construction theme of "Celebrating July 1 Recalling the Original Aspiration

Strengthening Party Spirit and Promoting Development".During the reporting period we continuously promoted the standardization of our Party building work

conscientiously implemented the "Several Guidelines on Political Life within the Party under the New Situation"

further improved and improved the systems of democratic life meeting organizational life meeting heart talk and On November 12 to further deepen the creation of the

democratic appraisal of party members formulated and issued party building work plans standardized political "Demonstration Posts for CPC Members" give full play to the

life and made party building work rule-based. vanguard and exemplary roles of the CPC members and lead

In 2024 the Company built a learning-oriented Party organization based on a thematic Party day activity known a majority of the CPC members and employees to strive for

as "One Class One Video and One Practice per Month" to educate and guide the Party members to play their roles excellence based on their posts the Party Committee of LBX

as vanguards and role models and unite a majority of its employees. We distributed more than 1900 volumes of Pharmacy organized November thematic party day activity for

theoretical readings such as "Compilation of Documents of the 20th National Congress of the Communist Party "Setting Benchmarks and Leading Forward" and the unveiling

of China" and Selected Readings of Xi Jinping's Works to the Party members organizing 26 thematic learning ceremony of demonstration posts demonstration teams and

sessions 18 online classes and 36 cloud tutoring sessions with 3200 participants in aggregate. More than 2600 demonstration workshops for the CPC members.articles on their experience and knowledge from these sessions and classes were received.

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Development with a Shared Future

Governance Compliance Operation Data Security and Privacy Protection Party Building Work

Party Building + Public Welfare Conveying Healing Power

The Party Committee of LBX Pharmacy insists on forging the Party spirit in "supporting public welfare" and guides all CPC members to practice the business philosophy of "doing everything for ordinary people". In 2024 the Party

Committee and party branches of LBX Pharmacy actively participated in public welfare undertakings and carried out more than 100 public welfare activities such as poverty alleviation student aid rural revitalization and health

services constantly practising altruistic culture and conveying warmth and healing power.Cases Public Welfare Activity on "Benevolent Free Medical Consultation Famous Doctors' Door-to-door Health Services"

In 2024 Baixingtang Party Branch of LBX Pharmacy launched a Party building and In the summer of 2024 the Party Committee of LBX Pharmacy joined hands On May 19 the Party Committee of LBX Pharmacy

co-construction activity known as "TCM Brainstorming" successively visiting 43 with the Committee and government of Kaifu District to jointly carry out and Hunan Party Branch organized and participated

enterprises 10 banks 5 schools and 4 communities in succession where it organized the public welfare activity on "Sending Free Drinks in Hot Summer". This in the second rural happy jogging activity in

a total of 91 public welfare activities on "Benevolent Free Medical Consultation activity aimed to extend sincere condolences to the traffic police in Kaifu Changsha providing caring medical run-up

Famous Doctors' Door-to-door Health Services". On average free medical District in the front line of road traffic safety management in hot summer materials for runners and all-round health services

consultation was provided for 9 times a month and for 4422 people benefiting more and sent them cool materials to convey the care and warmth of the society. for the players on the spot.than 30000 employees of schools and enterprises. The activity intensively drove the

organic integration of Party building business and making ordinary people healthy.Brand Building for Party Construction

In 2024 the Company optimized the brand building for Party construction and the online Party affairs disclosure platform - "Party Building e-Home" integrated Party member education news reports interactive communications and

other functions. In 2024 "Party Building e-Home" published a total of 34 articles cumulatively with more than 48000 pageviews effectively reaching Party members and employees and widely spreading red positive energy.

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Development with a Shared Future

03

Benefiting Ordinary People's Health

Contents of This Section

Quality Control

Professional Pharmacy

Health Accessibility

Cordial Services

LBX Pharmacy is committed to making everyone healthy. We actively

extend to counties towns and villages to promote balance of regional

medical resources. We have built a complete quality assurance system

in accordance with high standards and strict requirements to ensure

the consumers' medication safety. We continuously optimize our

product categories improve our professional pharmaceutical service

capabilities and take advantage of digital intelligence tools and AI

technologies to help the consumers "buy the right medicines with less

money". Rooted in the concept of "altruism" we do every little thing

well so that every customer who walks into LBX Pharmacy can feel the

warmth and care as if they were at home.Responses to SDGs in This Section

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Quality Control

Quality Objective

No illegal counterfeit or shoddy drugs Acceptance rate 100% Outbound review rate 100% Error rate in outbound review ≤ 1/100000

Construction of a Quality System

The Company follows the quality principle of "quality first customer foremost". In strict compliance with laws and regulations such as the Drug Administration Law Drug Quality Management Standards and Measures for the

Supervision and Administration of Drug Supply we have established and improved our drug business quality management system (including wholesale chain headquarters and stores). We carry out activities on quality planning

quality control quality assurance quality improvement and quality risk management to ensure orderly and stable operation of the quality system quality of drugs in all links of purchase sale and storage and people's medication

safety.The Company has built a leading quality management team with the main person in charge of the Company as team leader. Fully responsible for the daily management of the Company this team ensures that the Quality Management

Department and quality management personnel effectively perform their duties. The quality director of the Company who is fully responsible for drug quality management performs duties independently assures drug quality

and has the right to adjudicate drug quality management within the Company. All our employees participate in quality management. Our personnel in different departments and positions perform their duties correctly and assume

corresponding quality responsibilities.Four Levels of the Quality Management Architecture

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Control over Six Major Links Three Major Quality Assurance Systems

The Company has a professional quality management center which conducts quality supervision from six major links namely initial audit

acceptance inspection maintenance in warehouse outbound review store acceptance and display and store sales and after-sales in order

Modern logistics operation system

to ensure the safety of public medication.Including temperature and humidity monitoring and regulation system and

transportation management system (TMS). The Company has four large-scale

logistics centers equipped with modern logistics facilities and equipment for

Initial audit Acceptance inspection drug warehousing conveying sorting shelving and delivery to efficiently

accommodate the storage and distribution needs for drugs and other

Audit suppliers and product qualifications and Strictly implement a receipt and

control access; perform monthly and annual acceptance inspection system to track commodities. Our cold chain facilities are well-equipped. Our verification

review of suppliers and varieties and dynamic and control the goods to be processed. calibration cold chain management system and emergency plan are perfect.management; conduct on-site inspection of key The goods may be accepted and

suppliers and risk control in advance. warehoused only when they meet the Our temperature control system monitors in real time 24 hours a day. Our

requirements. temperature control monitoring and regulation system ensures the safety of

storage and transportation of drugs and other commodities.Store sales/after-sales Maintenance in warehouse

Provide cordial and professional pharmaceutical Perform real-time monitoring of

services; collect monitor and report adverse temperature and humidity and regular

reactions; strictly implement a recall system maintenance to assure the quality of

handle customer complaints in a timely manner goods in warehouse. Computer management system

and provide appropriate after-sales service to

ensure drug safety. Our computer system consists of SAP MDM system WMS ERP system

POS system CRM system and EPS system etc. which realizes the full

Store acceptance/display Outbound review coverage of procurement inspection warehousing sales distribution

Strictly implement an acceptance and rejection Strictly implement an outbound review

system and perform monthly quality inspection; system and abnormal goods are after-sales and retail links ensuring the quality control and auxiliary

dispose of goods that have expired and with quality prohibited from outbound delivery to

problems according to regulations to assure the assure the quality of outbound goods. business services of the computer system in the whole process of

quality of drugs and other goods at the stores. procurement sale and storage.Note: Initial audit: Audit initial enterprises (i.e. the production or merchandising enterprises that first develop supply-demand relationships with the

Company) and initial varieties (i.e. the commodities purchased by the Company for the first time).Drug traceability system

The Company attaches great importance to the construction of a drug

traceability system. We connect the traceability platform and code

scanning equipment to our computer system to meet the traceability

requirements in order to ensure the traceability of drug quality and

purchase sale and storage information.

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Quality Risk Control

During the reporting period we continuously improved our quality risk prevention and control system to ensure drug quality and drug safety. We formulated the Quality Risk Management System Drug Recall Management System

Supplier Review Management System Supplier Site Inspection and Evaluation Standards and other institutional documents to identify and manage risks in all aspects that might affect the quality.Strict Control over Quality Sources

100%1051333

Manufacturers of traditional Chinese medicine decoction Suppliers subject to annual field investigation Suppliers annually reviewed

pieces subject to field investigation

5462

High-risk suppliers annually eliminated Suppliers cumulative blacklisted

Perform quality risk control in advance. The Company has built an independent and professional quality team to conduct on-site investigations of the suppliers among which 100% manufacturers of traditional Chinese medicine

decoction pieces receive on-site investigations to control drug quality from the sources. In 2024 we investigated 105 suppliers on site and annually reviewed 1333 suppliers. The elimination mechanism was started for the high-risk

suppliers according to the process and 54 suppliers were eliminated annually.We have established the Management System for the Group's Blacklisted Suppliers to dynamically control the suppliers who perform abnormal operations or commit acts that harm the Company's interests during the cooperation

and dynamically control the suppliers who fail to cooperate or whose cooperation has to be terminated. We implement precise control over all links including inclusion management process control removal management publicity

management inspection supervision and assessment management. As of the end of the reporting period a total of 62 suppliers were included in the blacklist of LBX Pharmacy.Risk Model and Standard Disposal Mechanism

The Company analyzes evaluates and identifies quality risks in a forward-looking and retrospective manner. We have built a risk model where risks are divided into high-frequency high-risk risks high-frequency low-risk risks and low-

frequency high-risk risks. We have also established specific management standards prevention and disposal measures to effectively avoid quality risks and ensure the medication safety of the masses.Real-time Monitoring of Commodity Quality Information

The Company has a drug quality information sharing platform and special personnel are responsible for inquiring about the quality information of 118 regulatory websites at all levels across the country for the purpose of daily

inquiry daily transmission and daily processing. The computer systems of more than 10000 stores across the country can be locked to suspend their sales of the varieties with quality risks and remove them from the shelves within 30

minutes.

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Drug Recall Management

According to the Management Measures for Drug Recall issued by the National Medical Products Administration the Company has formulated the Drug Recall Management System divided the drug recall into three levels according

to the severity of drug quality and safety hazards and set different recall time limits. Our subsidiaries and stores in different provinces are required to stop selling immediately after receiving a recall notice recall and recover the

problematic drugs within the time limits and report to the drug supervision and administration department and the marketing authorization holder according to the regulations.The Company tracks guides and monitors the drug recall throughout the process to ensure timely and thorough recall. We subsequently dispose of the recalled drugs according to different results confirmed by the drug supervision

and administration department.Drug Recall System

If the drug use might cause or has caused serious health hazards the stores shall be notified of stopping selling within 1 day and the return

Level 1 Recall shall be started within 3 days;

If the drug use might cause or has caused temporary or reversible health hazards the stores shall be notified of stopping selling within 3

Level 2 Recall days and the return shall be started within 7 days;

The drug use generally doesn't cause health hazards but if the drugs need to be recalled for other reasons the stores shall be notified of

Level 3 Recall stopping selling within 7 days and the return shall be started within 14 days.Expiry Management Definitions of Drug Expiry

The Company strictly performs expiry management and manages nonconforming drugs. We systematically

control the expiry date of goods in the warehouse in the whole process gives warnings on "short-dated drugs" Warned out-of-sale Short-dated drugs Expired drugs

and "warned out-of-sale drugs". Our system automatically intercepts targets and controls the "expired drugs". drugs

Drugs which will expire Drugs which will expire Drugs which have

The Company strictly implements closed-loop expiry management. Expired drugs and other drugs with quality within 2 to 6 months within 1 month expired

problems are managed as nonconforming products. For the management of nonconforming products the

links for identifying reporting and destroying nonconforming products are managed. Entrust a company that

specializes in destruction of hazardous wastes to destroy the nonconforming products without causing any

harm. The Company actively cooperates with regulatory authorities and suppliers to organize public welfare

activities for the recycling of expired drugs from households in order to ensure the medication safety of the

public and prevent the expired drugs from causing environmental pollution or resulting in social harm for

flowing into illegal channels.

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Safe Medication Management Construction of a Quality Culture

Pharmacovigilance Management

The headquarters and stores of the Company appoint specialists to 100%

be responsible for pharmacovigilance timely evaluate and analyze

adverse drug reactions and drug damages collect and monitor them Quality training for all employees achieves a

report them to the national adverse reaction monitoring system and coverage rate

maintain information communications with the drug supervision and

administration department to ensure drug safety.During the reporting period the Company continuously deepened

Reasonable Medication Management the construction of quality culture carefully organized various forms

of quality culture activities and comprehensively enhanced the

We actively employ digital intelligence technologies to strictly control employees' quality awareness. By integrating online and offline high-

high-risk varieties through prescription control quantity restriction quality resources we carried out comprehensive and systematic

on purchase and real-name registration. We have also launched a quality training. The training covered laws regulations professional

reasonable medication system to automatically identify compatibility knowledge and skills quality management system job responsibilities

contraindications have manual reviews performed by licensed and operating procedures etc. In 2024 the monthly quality training for

pharmacists and facilitate automatic interception by cashiers to ensure all employees achieved a coverage rate of 100%.that no compatibility contraindications exist. Besides the Company attaches great importance to building and

developing a professional talent team of licensed pharmacists

Pharmaceutical Service Guidance (pharmacists) actively participates in and organizes certain internal and external activities builds a broad learning and communication platform for licensed

pharmacists (pharmacists) and creates a good atmosphere under which "everyone attaches importance to quality creates quality and enjoys quality".As an important window for the public to obtain drugs and health

services we attach great importance to pharmaceutical service

guidance and establish a unified pharmaceutical service guidance Quality Talent System

system. All pharmacy-related promotional materials are audited by the

Quality Management Department and Legal Department. Our stores The Company has constructed an education system for licensed pharmacists (pharmacists) built a training base for the licensed pharmacists (pharmacists)

are staffed with licensed pharmacists to review prescriptions guide the within the city formulated quality demonstration standards to teach and train new licensed pharmacists (pharmacists) to improve the professional qualities

customers on medication manage chronic diseases popularize science of the licensed pharmacists (pharmacists). We are committed to providing our customers with responsible professional pharmacy services.education and healthcare knowledge advocate rational drug purchase Honored as "People's Star · Pharmacist Star" the Company encourages the pharmacist team to highlight quality management and professional services.and medication and help the customers "buy the right medicines with We have created a promotion channel for the licensed pharmacists (pharmacists) to promote outstanding pharmacist talents to quality management

less money". personnel at our headquarters.

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[Quality Honors]

In July 2024 at the 20th Annual China Retail Pharmacy Conference and the 5th China Professional Pharmacy Development Forum LBX Pharmacy was granted 2 honors for the "Best

Pharmaceutical Service Case" and "Specialty Pharmacy Demonstration Store" respectively.In May 2024 three licensed pharmacists of LBX Pharmacy In October 2024 at the "Jiangsu Provincial Licensed In December 2024 Ma Pan a pharmacist of

including Deng Gengliang were honorably evaluated as Pharmacist Pharmacy Service Scenario Simulation LBX Pharmacy Shaanxi Branch was honorably

"Industry Role Model" by Hunan Drug Circulation Industry Competition" hosted by Jiangsu Medical Products evaluated as "Excellent Pharmacist 2024" by

Association and 8 employees of LBX Pharmacy including Administration and undertaken by Jiangsu Licensed Shaanxi Licensed Pharmacist Association.Liu Qiong were honorably evaluated as "Industry Pharmacist Association our Wanren Pharmacy and

Role Model" by Changsha Drug Circulation Industry Baixinyuan Pharmacy won the first prize.Association.

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Professional Pharmacy

LBX Pharmacy attaches great importance to the improvement of its professional pharmaceutical service capabilities makes multi-dimensional innovations and constantly delves into the industry. We actively undertake prescription

outflow promote stores to obtain medical insurance and outpatient coordination qualifications and increase the convenience and accessibility of medication for patients. We use cutting-edge AI technologies to customize our

personalized health management solutions for the patients and offer health lectures and online consultations to popularize drug knowledge and enhance public health and safety awareness.Promote Outpatient Medical Insurance Access and Actively Improve Professionalism of Pharmacy Services

Undertake Prescription Outflow and Promote National Health

As of the end of the reporting period 93.84% of our direct-sale stores were qualified for being covered by the medical Regarding improving professionalism of pharmacy services as its own mission LBX Pharmacy

insurance and our designated pharmacies with medical insurance were widely distributed providing the consumers with more unswervingly promotes the national health undertaking. We closely follow up on the health needs

economical convenient and safe drug purchase experiences. Besides the Company actively responds to national policies of the public take licensed pharmacists as the cornerstones integrate digital intelligence tools with

regards the outpatient coordination project as the most important strategic project and makes every effort to promote the AI technologies and perform professional health services such as chronic disease management

implementation of outpatient coordination qualifications in the stores. As of the end of the reporting period we had 5487 professional DTP services and multi-disease care in an attempt to become the "capillary" of healthy

coordinated outpatient stores thus significantly increasing medication convenience and accessibility for the public. China.While actively undertaking the prescription outflow LBX Professional Medication Guidance

Pharmacy continuously strengthens its ability to coordinate 93.84%

its store operations and management constantly improves direct-sale stores with medical insurance Licensed pharmacists are important guardians of safe medication and healthy life for the public. LBX

its professional services and is committed to providing the qualification Pharmacy continuously introduces and cultivates a team of high-quality pharmacists. We also realize

customers with better drug purchase experiences. The Company the intelligent upgrade of our pharmacy services through the deep integration of digital intelligence

keeps informative about and promotes the optimization of 5487 tools and AI technologies. Our self-developed digital intelligence tool known as "Intelligent Drug

policies in areas where prescriptions are restricted to facilitate

outpatient coordination stores Recommendation" not only has a built-in comprehensive drug knowledge base covering five

the circulation of prescriptions constantly improve the functions namely single product search disease type/symptom solution pathological inquiry

prescription circulation system of Internet hospitals and further Data as of the End of 2024 expert consultation and newcomer area but can also use AI algorithms to make personalized

expand the medication channels for the patients. drug recommendations including updating according to seasonal changes and the latest medical

In addition LBX Pharmacy also gives full play to its own research results to ensure the timeliness and accuracy of information and greatly enhance the

strengths and takes advantage of digital and intelligent means employees' pharmacy service capabilities.to accurately control the customers' medication and medical

insurance funds to ensure drug safety and compliance. The

Company conducts regular self-examination and self-correction

strictly abides by various rules on the use of medical insurance Disease types/ Symptomatic Pathological

funds ensures that every penny of the medical insurance Symptom solutions medication knowledge query

fund is used wisely and continuously increases its employees' Combination medication Decision support for Disease knowledge base

awareness of medical insurance policies through internal and reasons disease diagnosis and medication

training and business skills to effectively prevent medical

In December 2024 after a strict comprehensive review by the Weinan

insurance violations. Medical Security Bureau of Shaanxi Province many of our stores in

Shaanxi Province were awarded the title as "Weinan Standardized

Management Demonstration Sites for Medical Insurance Funds".

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Chronic Disease Services

Case Chronic Disease Knowledge Grand Prix

With the accelerated development of China into an aging society chronic diseases have become major threats to public health. "Prevention

first combination of prevention and treatment" and "hierarchical diagnosis and treatment and grassroots services" have become partial trends Since 2020 LBX Pharmacy has annually organized the Chronic Disease

of national chronic disease management. Among them retail pharmacies as important supplements to grassroots medical treatment play Knowledge Grand Prix to improve its employees' professional service

important roles in national chronic disease management. skills through "contests instead of training" and attract the customers to

Since 2018 LBX Pharmacy has proactively established the "Chronic Disease and Health Management Center" and created an industry-leading participate in cultivating good health management habits. In the Chronic

chronic disease management system. After years of iteration we have been able to perform full-link full-course health management service Disease Knowledge Grand Prix 2024 more than 167000 customers clocked

providing tailor-made professional care for chronically ill members. We deeply integrate digital intelligence with AI technologies. On the premise in for self-examination. During the event LBX pharmacists successfully

of obey the rules of user privacy protection we use AI algorithms to analyze the patients' health data including historical medication records assisted more than 144000 customers in implementing their health

physical examination results and living habits to provide personalized health management solutions for the patients and help achieve their long- management plans.term health goals.As of the end of the reporting period the Company had installed smart Bluetooth equipment for self-examination of chronic diseases such as

blood sugar blood pressure heart rate blood uric acid blood lipids Helicobacter pylori and blood oxygen saturation in thousands of stores

across the country. Besides chronic disease management experts are trained in each store to provide the patients with medication guidance

health self-examination and other services. As of the end of 2024 the Company registered a total of more than 18.12 million members with

chronic diseases cumulatively served more than 99.23 million people for self-examinations and received over 38.53 million return visitors. We

delivered patient education online and offline for more than 29000 sessions. The chronic disease management services that cover all our stores

across the country not only effectively reduce the pressure of grassroots medical institutions but also makes it easier for the patients to enjoy

convenient and continuous chronic disease management services in the communities and at their doorsteps.

18120000+

people cumulatively filed

Professional DTP Services

99230000+ In early 2016 LBX Pharmacy took the lead in establishing a "New Specialty Drug

people cumulatively served Division" in the industry to strengthen its professional service capabilities and

prescribed drug supply system. As of the end of the reporting period the Company

38530000+ had 176 professional DTP pharmacies which had filed more than 300000 critically ill patients and served more than one million people.

people cumulatively receiving follow-up visit

29000+

sessions delivered online and offline for patient education

Data as of the End of 2024

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Service system and professional guarantee Care for Disease Types

Deeply engaged in professional services for multiple diseases LBX Pharmacy

actively participates in the care actions for breast cancer skin diseases hemophilia

Professional DTP pharmacy leukemia lung cancer and other diseases. The Company has created brand new

standardization management Drug safety and security doctor-patient communication service scenarios by caring for different types of

system diseases to promote communications between pharmacists and patients and

between patients thus having constructed an abundant "patient ecosystem".We perform periodic free medical consultation and live science popularization

activities introduce life health topics or salon activities based on follow-up visits

and medicine use. We help the patients and their families build confidence in

Professional pharmacy Value-added services overcoming diseases through continuous professional services.services

Case "Silver" Light Protecting Health - Care for Patients with Psoriasis

176 329 1728 To help patients with psoriasis fully understand the disease scientifically manage the disease condition and improve the quality of life on April 24

2024 the New Specialty Medicine Service Center of our Xiangya Store and

professional DTP pharmacies dual-channel stores outpatient chronic disease stores Dr. Li Fangfang from the Department of Dermatology of Xiangya Hospital of

Data as of the End of 2024 Central South University jointly organized a public welfare activity to care

for patients with psoriasis."Dual-channel" Professional Pharmacies

LBX Pharmacy actively responds to the call of the National Healthcare Security Administration's "dual-channel" policy to benefit people and

actively promote the construction of professional "dual-channel" pharmacies. The Company selects nationally negotiated drugs and drugs for

special diseases to ensure that the drugs are complete and sufficient. We dynamically allocate drugs in short supply at any time and strengthen

professional training of pharmacists covering pharmaceutical knowledge policy understanding and patient education to ensure that the

patients are provided with personalized medication guidance. We organize health lectures establish patient communities convey humanistic

care and provide the patients with health management throughout their lifecycle.As of the end of 2024 329 stores of the Company obtained the "dual-channel designated qualification for medical insurance" covering 64

prefecture-level cities in 13 provinces and 2 municipalities directly under the Central Government including Hunan Guangxi Zhejiang

Henan Shaanxi Anhui Shandong Shanxi Jiangxi Jiangsu Gansu Ningxia Inner Mongolia Shanghai and Tianjin. 1728 stores obtained the

designated qualification for "outpatient diagnosis of chronic and special diseases" fully protecting the rights and interests of the insured in the

medical insurance and improving the medication accessibility for a majority of patients.

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Health Accessibility

Professional services warm people's hearts and health protection is readily available. Focusing on the growing number of diversified health services for the masses we have been optimizing our industrial layout and opened more than

15000 stores in more than 150 cities in 18 provinces across the country to continuously promote health accessibility. We carefully screen out high-quality products that satisfy the public health needs and strive to build an expedient

efficient one-stop shopping service platform. We continuously expand our functional boundaries and ecological map of pharmacies tailoring comprehensive and professional health solutions for customers so that health can always

accompany people's lives.Full-category High-quality Goods

As one of the chain pharmacies with the most complete varieties of drugs in China the Company continuously improves its digital and intelligent management of product management. Relying on nationwide and globalized

procurement links we supply abundant products with high quality favorable prices and complete varieties in order to fully meet the personalized and diversified consumer needs for health services.

25800+72.4%

SKUs Unified purchase and sales

Data as of the End of 2024

As of the end of the reporting period the Company merchandised approximately 25800 SKUs covering more than 600 common and frequent diseases. The drugs included in the medical

Complete insurance catalog accounted for a significant proportion. The stores provide the customers with "special old drug areas" and "rare drug purchase" services. Besides the "one-click search and

Specifications purchase" function of our mini program provides effective support for the stores' out-of-stock scenario and meets the customers' personalized and diversified needs for drug purchase anytime

and anywhere.The Company has reached strategic cooperation with China's and the world's top 100 enterprises of the pharmaceutical industry and joined forces to ensure genuine and good medicines from

High quality the sources. We have also been continuously improving our closed-loop management system of quality risk control throughout the whole process to ensure the safe medication by the masses.The sales of the products from the Company's unified procurement has steadily increased. As of the end of 2024 the sales accounted for approximately 72.4% consolidating bargaining power

Favorable

prices with "a scale up to tens of billions". We have been reducing our outlet prices by continuously optimizing our procurement costs and refining supply chain management so that the customers can

"spend less money".

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Higher Cost-performance Ratio of Self-owned Brands

Based on the development principle of "buying the right medicines with less money" our own brands have been built around scenarios such as "health management health preservation and healthy exercises" to gain in-depth

insight into user needs and reshape user-centered products. The system covers Chinese and Western patent medicines tonic traditional Chinese medicines healthy foods ordinary foods personal care products daily necessities and

other supplies in order to provide the consumers with safe healthy and cost-effective health goods for living. As of the end of the reporting period the Company merchandised more than 700 SKUs of its self-owned brands.We directly and deeply cooperate with the manufacturers without any intermediate links to surrender profits to the consumers. The drugs that have passed the consistency evaluation with quality equivalent to that of original drugs

and cheaper than the original drugs and drugs of domestic top brands are preferred. For dietary supplements we pay much attention to sources of their raw materials formula and content to ensure that the formula compositions

of the products are more advanced and cost-effective than other competitive products in the market. For personal care and life products we create "preferred choices for ordinary people" and our product standards are at least

equivalent to the national standards to carefully choose top-quality products for the consumers' healthy living with safer and more friendly compositions of raw materials.Whole-process quality assurance system for self-owned brands

Early Early Interim Post

introduction development production inspection

Supplier quality Technical Control over Management

management control over outbound of customer

product quality product quality complaints about

product quality

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Deep Cultivation of Lower-tier Markets to Promote Regional Equality in Pharmaceutical Resources

To effectively promote the regional equality in pharmaceutical resources and improve the health accessibility the Company has been intensively opening stores through self-construction M&A franchise and other methods. We have

actively expanded into China's third-fifth-tier prefecture-level cities to provide high-quality pharmaceutical resources and health management services for more residents of counties towns and rural areas.As of the end of the reporting period our stores (excluding alliances) covered 18 provincial markets more than 150 prefecture-level cities and above and 437 county-level administrative districts (excluding municipal districts) across

the country. We had 15277 stores accessible to a population of 226 million. Among all our stores the stores in prefecture-level cities and below accounted for 77% and the stores in counties and towns occupied 45%.

1527718150+437

stores across the country provincial markets covered prefecture-level cities and above covered county-level administrative regions

(including municipal districts) covered

77%45%

and

stores in prefecture-level cities and below of the stores in counties and towns

Data as of the End of 2024 (Excluding Alliances)

Case Deeply Cultivating Lower-tier Markets Safeguarding the Health of Local People

Huichuan Town Weiyuan County Dingxi City Gansu Province is located in the southwestern mountainous area

of Weiyuan County with 1 community and 22 administrative villages under its jurisdiction. The local permanent

population exceeds 44600 and there is also mobile population of more than 3000. There was no professional

pharmacy in the local areas. As a result it was extremely inconvenient for local residents to buy medicines. Since

our Huichuan Pharmacy was settled in Huichuan Town in April 2024 it has brought great convenience to the local

residents with its complete varieties of medicines and professional thoughtful services.

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Case Serving Industrial Parks in Prefecture-level Cities and Facilitating Drug Purchase

Industrial parks are often located on the edge of cities where the living facilities are not abundant

making it difficult to meet the health medication needs of numerous employees in the parks. By opening

pharmacies in the industrial parks expedient drug purchase services will become available for this

group. The opening of pharmacies can improve the supporting facilities of the parks overall services and

living environment of the parks. This is just the case for Automobile Industrial Park in Hanjiang District

Yangzhou City Jiangsu Province. In June 2024 Our New Era Pharmacy was successfully opened in this

park serving more than 16300 permanent residents in the park and providing convenient professional

services for the people within this park.New Retail Empowers New Ecology and Improves Convenient Drug Purchase Experience

LBX Pharmacy actively creates "Internet plus" smart medical and health services. By creating a full-link consumer service system through digital intelligence empowerment we integrate private domains with members and accurately

match patient needs. We fulfill our social responsibilities providing services such as door-to-door drug delivery and nighttime drug sales improving the consumers' convenient drug purchase experience and further increasing the

accessibility of medical resources.O2O stores 24-hour stores

B2C stores Nationwide e-commerce warehouses

Stores in the private mini program mall

Data as of the End of 2024

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Online and Offline Intensive O2O Collaboration Satisfies the Health Needs under 24-hour Emergency Scenarios

In 2024 LBX Pharmacy comprehensively upgraded contract performance services and other indicators of its O2O business. We improve our rules and established a service quality evaluation system to increase our employees' sense of

responsibility and constantly improve our customer satisfaction. We focus on the customer needs strengthen online and offline collaborative deployment and meet the user needs under emergency scenarios at all times. In 2024 LBX

Pharmacy enabled online medical insurance in Shanghai Hefei and other cities to facilitate medical insurance users' payment for medicines online.As of the end of the reporting period the Company had 12659 O2O take-out stores and 694 24-hour stores covering more than 150 prefecture-level cities in 18 provinces which greatly met people's online and offline urgent drug needs

in different regions.B2C Multi-brand and Multi-channel Coverage Satisfies the Regional Drug Demand across the Country

In 2024 LBX Pharmacy completed its construction of digitally intelligent Kanban through system iteration comprehensively upgraded its logistics performance services and increased the 24-hour on-time delivery and collection rate

from 92% to 95%. Our system automatically selected the best express delivery for customers in different provinces and cities across the country covering five major platforms to satisfy the national regional drug demand. We upgraded

the varieties of health products and expanded the general health categories of non-pharmaceutical products. Our online platform provided professional pharmacists with pre-sales guidance on medication as well as pre-sales and

after-sales customer services to satisfy consumer needs for purchasing medicines anytime and anywhere.As of the end of the reporting period the Company had 17 B2C warehouses across the country meeting the timeliness needs of users in different regions across the country. We had more than 100 online B2C stores with the express

delivery services for the goods covering the whole country. In 2024 a total of 8 million orders were closed serving millions of families in terms of healthy medication.Continuously Upgraded Private Domains via Digital Intelligence and Satisfied Diverse User Needs

for Convenient Services

In 2024 the private mini program mall of LBX Pharmacy integrated several mini programs including "Members + New Specialty Medicine and

Drug Consultant" to complete the system upgrading of combining several codes into one. To be specific a user can obtain diversified expedient

services from the private mini program mall by only scanning the code once. After system optimization the fulfillment of private domain orders

has been greatly improved. In 2024 the 48-hour delivery rate of the private domain orders was up to 97%. The nationwise orders could basically

be delivered within 3 days and after-sales service satisfaction rate reached 99%.In 2024 the Company further expanded its varieties including food fresh food medicine food homology 3C electric appliances and life

supplies. We also introduced regional characteristic agricultural products around healthy living scenarios and the number SKUs subject to "

dropshipping" increased to 1500+. All our salespersons supported farmers through "Dai Xiao Man" achieving the sales of more than RMB 4

million.As of the end of the reporting period our private domain cumulatively served more than 23 million users. In order to meet

different shopping needs of the users in different regions across the country our private domain mini program mall launched

9910 stores covering 20 provinces and 84 prefecture-level cities.

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Pharmacies Create Commercial Insurance Scenarios and Supplement the Medical Insurance System to

Improve Residents' Health Protection

Being supplementary to social insurance commercial insurance reduces the financial burden

of victims' families when unforeseen events such as accidents diseases and disasters occur.LBX Pharmacy connects its system to the technical systems of commercial insurance service

organizations and cooperates with insurance companies TPA (Third Party Administrator)

companies Internet hospitals pharmaceutical companies other suppliers and buyers to provide

personalized health management solutions and comprehensive drug protection services for

commercial health insurance customers. In 2024 our 11298 stores enabled the commercial

insurance contract performance services serving 858600 commercial insurance members

throughout the year.In addition the Company also used the store outlets and member management platforms to

promote and publicize commercial health insurance products such as Medicare outpatient LBX Pharmacy joins hands with insurance companies to visit enterprises LBX Pharmacy and Dajia Insurance Group launched a commercial providing their staff with health service and health management insurance product for "expired drugs replacement" to recycle families’

insurance nursing insurance and expired drug replacement in order to guide more customers solutions. expired drugs and provided a 50% replacement subsidy to promote the

green low-carbon development of the society through the commercial

to participate in commercial insurance plans and obtain more health protection and improve insurance.people's living standard and happiness.Focus on Comprehensive Health and Create a Diverse Ecosystem for Pharmacies

In 2024 LBX Pharmacy actively promoted diversified strategic transformation deeply focused on and subdivided the users' diverse healthy living needs in an attempt to become a healthy living expert around the communities and

fully meet the customers' personalized needs in all aspects of healthy living.Personal Care: Protecting Health Internally and Externally Healthy Food: Leading the New Trend of Health Preservation and Nourishing a

Healthy New Life

In addition to displaying traditional medicines we also Keeping up with the cutting-edge concept of medicine food

launch a variety of high-quality personal care products such homology we have further enriched our product categories.as skin care products body care products and cleaning Nowadays our stores not only have nutritional supplements such

products. The customers can get professional advice and as various vitamins and minerals but also promptly "energize"

product recommendations for daily or special care stages people with insufficient nutrient intake in their daily diet. We also

from professional pharmacists based on their past medical have functional foods that facilitate intestinal health and stably

histories. Strict product selection and all-round services help the control blood sugar providing intimate care for the patients with

consumers feel more at ease and rest more assured in pursuit of chronic diseases. In addition we customize energy snacks for fitness

health. enthusiasts injecting vitality into sports anytime.

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Cordial Services

Adhering to the customer-centered service concept LBX Pharmacy is committed to providing high-quality efficient professional and Listening to Customers

warm services. We have constructed a comprehensive customer service system to actively respond to and properly handle customer

feedback and complaints and proactively favor citizens in need to build a harmonious friendly society together. Sticking to the LBX Pharmacy not only pays attention to customers' front-end medicine needs but also

principle of responsible marketing we fully respect and protect the consumer rights and interests and build our brand image as a attaches importance to their after-sales feedback on services and products. Our 400 National

company with integrity and strong sense of responsibility. Customer Service Center is guided by customer needs. Relying on our powerful information

system and R&D capabilities it provides the customers with free voice online and omni-

channel services through BI big data cloud computing MA system customer service system

Customer Service System CC system WeChat official account APP mini programs and other digital intelligence tools.As of the end of the reporting period LBX Pharmacy HAD 1 licensed physician 14 licensed

In strict compliance with the Law of the People's Republic of China on Protecting Consumers' Rights and Interests we have established pharmacists and 41 health consultants in its 400 customer service team. In 2024 our 400

an all-round full-time and whole-process pre-sales sales and after-sales service system to keep informative about customer needs national customer service hotline served a total of 210000 customers with satisfaction

optimize our service mechanisms quickly and properly solve customer problems and provide the customers with accurate effective rate of 99.1%. We served 2520700 customers online providing the customers with

health management solutions dependent upon our professional pharmaceutical service capabilities and "altruistic" heart. comprehensive multi-angle and in-depth professional pharmacist services for physical and

online orders.Store Operation Principles

LBX Pharmacy continuously improves its store operations management capabilities service processes and professional pharmaceutical

service capabilities providing the customers with professional and warm cordial services.Clean and bright Affordable and First In First Out Cordial services

complete

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Quality Control Professional Pharmacy Health Accessibility Cordial Services

Responsibility Marketing Continuous Improvement of Customer Satisfaction

LBX Pharmacy always adhere to the bottom line of drug compliance publicity. Our product The customers' drug purchase experiences and voices are the focuses of our attention. LBX Pharmacy has been advancing

publicity must be true and realistic and our drug information is introduced in strict accordance customer satisfaction surveys to fully understand what the customers truly think and need. In 2024 we collected feedback

with the instructions. False publicity that exaggerates the curative effect or reduces adverse from more than 10 million people cumulatively covering all our direct-sale stores. Our professional team regularly analyzes

reactions is strictly prohibited. On the premise of strictly abiding by the Advertising Law of the and reviews the survey results and continuously improves our services according to the survey results to improve customer

People's Republic of China the Drug Administration Law of the People's Republic of China and satisfaction.the relevant laws of the place where it conducts business the Company has formulated a number

We pay attention to customer complaints constantly improve our services and enhance consumer experiences by controlling

of systems and approval processes including Advertising Review System Key Points for Quality

the service quality of first-line stores and strengthening the handling of customer complaints. In our national customer service

Control over the New Retail Business Management Measures for Precision Marketing Channels

center our staff actively coordinates with the business departments to find out the causes quickly rectify them and pay return

and Management Measures for Precision Reach Channels. In the process of producing promotional

visits to the customers who complained regarding their satisfaction thus handling the complaints in a closed loop. In 2024 our

content for the products the information is strictly controlled and an SOP has been formulated

national customer service center handled 1941 customer complaints and all customer complaints were handled in a closed

for data review. Our Quality Management Department Legal Department and other departments

loop.conduct drug information review and legal compliance review in turn to ensure that the content is

legal and standardized.Case Meticulous "Usage and Dosage Label Stickers"

To satisfy the customers' needs for safe medication give the customers warm care and

continuously consolidate its altruistic services LBX Pharmacy has promoted posting

"Dosage and Administration Label" for the customers in its stores. When the customers

enter the stores to buy medicines (Rx/OTC) and dietary supplements our employees will

take the initiative to post "usage and dosage label stickers" on the packages containing National customer service hotline 400-6252-888

warm reminders such as medication instructions usage and dosage (the stickers will not

Served customers via the hotline with satisfaction rate of

be posted if expressly required so by the customers). The "Dosage and Administration 210000 99.1%

Label" provides standardized medication guidance ensuring both the accuracy of Accepted online consultation from 2520700 customers

patient medication and improved adherence. This thoughtful design has received praise

from many patients. Handled 1941 online complaints

Handled 100% online customer complaints in a closedloop

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Benefiting Customers

As a pharmaceutical retail company directly serving consumers LBX Pharmacy is committed to continuously deepening the

"altruistic" philosophy. All employees embody the spirit of "altruism" to provide customers with more professional and caring Case Elderly-oriented Services Were Commended by CCTV

services.The elderly-oriented warm-hearted service of LBX Pharmacy provide warm and

convenient medication experiences for the elderly competitively reported by CCTV-1/13

Cordial Services "News" "Nightly News" "Live News" CCTV-2 "Global Fortune" CCTV-4 "Global News"

and other authoritative media.Integrating love into its health services LBX Pharmacy provides 5 health self-examination services 3 professional medical services

4 convenient heart-warming 3 silver-haired services and public welfare support for Heimlich emergencies to meet the customers'

emergency needs.To incorporate the concept of "altruism" into daily life in 2024 the Company concentrated on doing "Ten Things of Altruism".Through a range of health services and caring measures benefiting the customers including " launching six self-examination

services" "providing the customers with clean washrooms" we spread "altruistic" cultures throughout the omnichannel to

constantly improve our customer satisfaction and "develop

century-old stores" with professionalism and warmth.In 2024 LBX Pharmacy made convenient printing services

available in thousands of its stores across the country effectively

satisfying the printing needs of 47060 customers. We also

launched free collection and express delivery services to solve

the collection difficulty of over 50000 customers. In addition we

have also made the washrooms of our 3097 stores open to the Case Shared Washrooms Bring Case Heartwarming Care for the

public providing great convenience for the passers-by. In 2024 Convenience to People’s Life Silver-haired

our store assistants used their expertise to provide the first aid

for 37 customers saving their lives at critical moments. To make it convenient for the customers LBX Pharmacy provides convenient and pedestrians to go to toilets LBX services for the silver-haired in all stores

This year 4110 excellent cases of "altruistic" services sprang Pharmacy made the washrooms of across the country including helping the

up in our first-line stores. From solving practical difficulties for its 3097 stores in 68 cities across the elderly take taxis through smart phones

country open to the public providing paying phone bills assisting with their

the customers considerately offering professional medication great convenience for the pedestrians. registration for medical treatment and

guidance helping the customers get rid diseases that had It was also the first chain pharmacy in carefully protecting the silver-haired.disturbed them for years to stepping forward to professionally China that made open and shared its

rescue injured/syncoped customers at critical moments our washrooms.employees explained their deep understanding about the spirit

of "altruism" with practical actions which demonstrated our

social responsibilities.

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Case The Professional Warmth at Front Line of "Altruism" Was Commended

"LBX employees are meticulous and professional just like 120 is available around us!" "You're calm and take the initiative to rescue the injured customers which reflects the professionalism of the pharmacy staff. Let me give

you a thumbs up!" "Thumbs up to you!" …

The employees of LBX Pharmacy always practise the spirit of "altruism" and do every little thing well on a daily basis. Their professional and warm health services has won the praises among the customers. According to

incomplete statistics a total of 4110 excellent cases of "altruistic" services sprang up in 2024. Here below are excerpts of several excellent cases that indirectly reflect the professionalism and love of our employees.Heimlich Maneuver Saved the Day and Won Praise from A 10-day-old Baby Choked on Milk and Heimlich Keenly Identifying Risks and Working together as a

the Society Maneuver Saved His Life Team to Build a Line of Defense for Life

At noon of May 22 2024 a thrilling 20-second first aid for life n the evening of September 11 2024 Wang Liang an employee On February 12 2024 Lu Xiaohong an employee of Fenghuang

occurred at Guangxi Binyang Lakeview Garden Store of LBX of Beichen Delta Store of LBX Pharmacy in Changsha Hunan North Road Store of LBX Pharmacy in Yuncheng Shanxi

Pharmacy. A young woman hurried into the store with her child Province was on duty at the night shift. A flustered man rushed Province discovered that a woman who came to the store to

and shouted loudly "My child gets stuck in the throat with sugar!" into the store with a 10-day-old baby in his arms. The baby shop was not in condition relied on her excellent professional

At that critical moment store clerks Wu Xiaoyu and Chen Liliyu suffocated due to choking on milk. At that critical moment knowledge and keen intuition. After examination she found that

made a decisive decision and immediately did the "Heimlich Wang Liang together with his colleagues Chai Lixia and Liu the woman showed a weak pulse and blue lips accompanied

Maneuver". After 20 seconds of emergency rescue the child spit Suzhen took turns do Heimlich Maneuver with the doctors' by dyspnea and confusion. Lu Xiaohong immediately directed

out a foreign body from his throat and the danger was lifted. guidance on phone by dialing 120. After more than six minutes' the store staff to act quickly and gave the woman first aid like

Xinhuanet health client of People's Daily Hunan Daily and other great efforts the baby finally spit out milk foam and made a oxygen inhalation. Gradually the woman's vital signs gradually

authoritative media reported this incident. The professionalism faint cry before the ambulance arrived. returned to normal.and caring actions of our employees were praised by the public.The health client of People's Daily reported the outstanding first aid deeds of Outstanding deeds of front-line "altruism" have been posted The woman sent a pennant to thank Lu Xiaohong for "her benevolence

our Guangxi employees. on the "wall of likes" for the employees. and wonderful rejuvenation as a doctor".

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* Rescuing a Patient Decisively on the Road to Protect the Life of the Elderly * Warm and Caring a Thank-you Letter from a 90-year-old Old Woman

Living Alone

In the early morning of August 6 2024 Gu Jieyun the store

manager of our Huoju Road Store in Wuhan Hubei Province met "I am a 93-year-old woman living alone. I am very grateful to them (LBX Pharmacy)

an old man who had a heart attack on his way to work. Gu Jieyun for their care for the elderly. There are many elderly people living alone nearby.responded quickly helped the elderly sit down dialed 120 and They treat and care for them too." - Excerpted from Mrs. Yang's thank-you letter.bought nitroglycerin for the elderly. Subsequently Gu Jieyun In 2024 Mrs. Yang a 93-year-old woman living alone in Xi'an Shaanxi Province

accompanied the elderly to seek medical treatment and paid the sought help from our Fengdeng Pharmacy in Xi'an Shaanxi Province near her home

medical expenses in advance. Afterwards the family members because of diarrhea and fever. Our pharmacist Lin Fangfang and store manager Gao

of the elderly specially sent a pennant to thank Gu Jieyun for Xiaohong not only provided the old woman medicines but also took good care of

her righteous act and to pay tribute to our cultivation of an her to take the medicines and bought breakfast for her. Afterwards they also asked

outstanding employee. about the old woman's condition by phone several times. Mrs. Yang was deeply

touched by the warmth and care of the pharmacy thus writing a thank-you letter in

person to express her gratitude.* Stepping Forward and Taking the Initiative to Send the Injured Rejected to

Hail for Medical Treatment in Case of Danger

In August 2024 Mr. Sun a door and window installation worker

experienced a glass explosion while working. The aorta in his

right hand was cut off. He was covered in blood all over and was

refused by several taxis. At that critical moment Zhang Hui an

employee of Zeqiang 589 Pharmacy in Tongliao Inner Mongolia

immediately drove Mr. Sun to the hospital. As soon as he arrived

at the hospital Mr. Sun went into shock. Fortunately after

emergency treatment by the hospital and arterial anastomosis

Mr. Sun recovered and was discharged. The first thing he did after

his discharge was to express gratitude to Zhang Hui.

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04

Driving Industry Development

Contents of This Section

Digital Intelligence Empowerment

Cost Reduction and Efficiency Improvement

Supply Chain Management

Industry Symbiosis

The business environment is rapidly evolving amidst technological

innovation and global changes. LBX Pharmacy steadfastly adheres to

its overarching strategy of "building a technology-driven health service

platform" which will leverage intelligent digital technologies and AI

tools to enhance the efficiency of the entire business chain. Besides

LBX Pharmacy strengthens supply chain risk management and actively

pursues creating an efficient and responsible supply chain. Moreover it

vigorously promotes franchising and alliance businesses empowering

small and medium-sized pharmacies as well as independent drugstores.It remains committed to the principle of "treating small and medium-

sized enterprises equally" thereby fostering shared growth across

China's pharmaceutical retail industry chain.Responses to SDGs in This Section

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Digital Intelligence Empowerment Cost Reduction and Efficiency Improvement Supply Chain Management Industry Symbiosis

Digital Intelligence Empowerment

In 2024 the state-of-the-art technologies like AI and green technology drive industrial upgrades making digital transformation a core competitive strength for enterprises. As an intelligent digital pioneer in the industry LBX

Pharmacy continues to strengthen its intelligent digital system construction. Through technology-driven comprehensive business upgrades the company actively builds "new quality productivity" It consistently introduces and trains

professionals specializing in intelligent digital areas to provide intellectual support for the implementation of its digital strategy. By solidifying its digital foundations it enhances data security and governance to ensure data accuracy

completeness and timeliness. LBX Pharmacy also upgrades the digitalization of its supply chain to empower innovative reforms across the entire procurement and logistics chain and improve collaboration and decision-making

efficiency. Additionally leveraging intelligent digital tools helps it empower front-line operations thus enhancing user experience and satisfaction.

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Digital Intelligence Empowerment Cost Reduction and Efficiency Improvement Supply Chain Management Industry Symbiosis

D i g i ta l I n te l l i ge n ce E m p o w e r m e n t o f S u p p l y C h a i n Ex p l o r i n g D i g i ta l I n te l l i ge n ce S ce n a r i o s

Continuously improve the procurement system optimize inventory Conduct intelligent digital exploration combined with business

management provide solid data support for efficient and refined scenarios iteratively develop intelligent digital tools for different

operational decisions and achieve efficient and reliable product supply. scenarios and continuously enhance the consumer shopping

experience.Cu l t i vat i n g D i g i ta l I n te l l i ge n ce Ta l e n t D e e p e n i n g D ata G o v e r n a n ce

Deeply engaged in cultivating tech talent and driving R&D innovation Extensively participate in projects closely aligned with the business

continuously fostering new ideas and solutions to propel technological covering infrastructure governance and application delivery leveraging

iteration and innovative upgrades. the business value of master data governance and label construction to

reduce cost and enhance efficiency.Deepening Supply Chain Empowerment

Better Inventory Identification Optimizes Inventory Management

The company enhances abnormal inventory identification to optimize inventory turnover rates and improve operational and capital utilization efficiency. By introducing alert robots to monitor inventory status and market supply-

demand dynamics in real-time and leveraging iterative sales forecasting and automated adjustment strategies the company achieves refined inventory management.In 2024 the company's inventory turnover days will be reduced to 94 days with a year-on-year decrease of 4 days .Strengthening Internal and External Collaboration to Enhance Decision-Making Efficiency

From a full supply chain perspective the company optimizes management strengthens internal and external collaboration and significantly improves decision-making efficiency. In addition to standardize procurement processes

through a supplier collaboration platform the company also achieves a one-stop full-process workflow from procurement demand to reconciliation. In 2024 the company achieved an increase of over 20% in procurement execution

efficiency. In terms of supply chain planning the company has completed the implementation of digital operational strategies for procurement and allocation which effectively boosted the operational decision-making efficiency. For

contract management it leverages big data computing capabilities to enable the accurate calculation of revenue across various dimensions in numerous scenarios supporting refined operational strategy management. For logistics

by combining full-chain data digitalization with big data computing capabilities the company achieves a closed-loop management system for the logistics fulfillment chain.

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Expanding Digital Intelligence Applications

With the support of digital intelligence technologies LBX Pharmacy deeply delves into customers' health needs providing professional and personalized health services. Meanwhile the company continuously iterates its digital

intelligence platforms and tools to empower various business segments thus enhancing decision-making accuracy and operational efficiency.Building a Membership System to Create a Digital Iterate the Digital Intelligence Platform and Enhance Functional

Intelligence Health Steward Modules of the APP

In compliance with the "Personal Information Protection Law" and related regulations and with the During the reporting period the company upgraded and iterated the self-developed APP "BaixingTong" functional

authorization of member users we establish exclusive health records for members through the information modules to improve frontline employees' work experience and efficiency. Tools such as the "Salary Calculator" and

system to enhance capabilities in CDP (Customer Data Platform) and marketing automation. Leveraging "Store Inspection" with more complete functions have empowered frontline employees in both directly-operated

frontier digital technologies such as big data analysis and artificial intelligence the company gains deep and franchised stores ensuring "every penny of income every minute visible what you see is what you earn"

insights into the characteristics medication habits and health needs of members with chronic diseases while achieving timely motivation for the staff. The "To-Do Tasks Platform" module ensures tasks reach the frontline

leveraging data analytics models the company provides precise forecasts on members' medication needs directly reducing communication layers and minimizing information loss significantly improving operational

and health risks. Additionally by upgrading the social customer relationship management system (SCRM) efficiency. Tools such as the "Points Platform" and "Recognition Cards" strengthen employees' sense of achievement

the company offers one-stop services encompassing disease prevention diagnosis treatment rehabilitation and enthusiasm for work through likes and points rewards.and health management throughout the entire member lifecycle catering to customers' personalized health

needs.Reduce Labor Costs and Improve Efficiency with Automated Process Digitally Empowered New Retail Continuously Improving User Experience

RPA (Robotic Process Automation) technology has helped efficiently handle large volumes of repetitive tasks We actively harness digital intelligence technologies to empower new retail operations including effective data

boosting the efficiency and accuracy across multiple business lines while freeing up manpower and reducing governance across core links and continuous upgrades to fulfillment capabilities. This was achieved through

labor costs. In inventory management the system automatically monitors drug inventory levels and provides the consolidation management of multiple warehouses driving cost reductions and efficiency improvements.timely replenishment alerts to avoid stockouts or overstock. In order processing it enables swift capturing Additionally by late 2024 we took the lead to fully implement exceptional price control on Meituan's O2O platform

input and tracking of order details greatly enhancing processing efficiency. From the financial perspective it ensuring visibility in online price monitoring. On the LBX Pharmacy private domain mini-program platform we

automates reconciliation process accurately matching income and expense data and reducing manual errors. adopted a user-centric approach to further optimize functions unifying multiple codes within the LBX Pharmacy

mini-program to significantly enhance user experience.

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Digital Intelligence Empowerment Cost Reduction and Efficiency Improvement Supply Chain Management Industry Symbiosis

Cost Reduction and Efficiency Improvement

Deepen Lean Management and Optimize Resource Allocation

During the reporting period the company continued to address resource allocation issues from a strategic perspective while emphasizing lean management in daily operations. This approach aims to minimize unnecessary resource

wastage consistently lower operational costs and enhance operational efficiency thus enabling the enterprise to maintain steady progress in the competitive market.Based on the company's overall strategic planning the company identified low-efficiency and limited-growth potential tail-end prefecture-level cities and accordingly reduced investments in these markets during the reporting period.This helped lower overall operational costs while optimizing resource allocation by concentrating premium resources in markets with sustainable development opportunities in the future ultimately fostering the company's long-term

sustainability. Concurrently the company effectively identified revitalized and rationally utilized idle property resources to optimize resource allocation. Through contract negotiations the company secured more reasonable and

mutually beneficial leasing terms to lower overall operational costs.Prioritize Sustainable Development and Strengthen

Financial Controls

During the reporting period the company adopted a sustainable development approach to formulate a series

of key strategies and measures for cost reduction and efficiency improvement based on identifying important

financial issues and associated risk-opportunity factors.Control Financial Expense

The company prioritized green financial products and innovative financial products to obtain financing

aligning with global sustainable development trends. This approach diversifies financing risks and ensures

the company's long-term market competitiveness and stability as well. Additionally the company regularly

conducted in-depth analyses of financial expense structures leveraging digital tools to accurately identify areas

for improvement and eliminate any unreasonable expenditure.Optimize Cash Flow

The company formulated a comprehensive cash flow budget scheme that is aligned with sustainable

development goals. By employing weekly cash flow forecasts rolling forecasts and refined budget management

the company integrated relevant factors affecting cash flow and planned fund allocation in advance. It also

2024 China LBX Photography Competition Works: "The Moment" Photographer: Ma Bin

strictly monitored operating cash inflows and outflows along with budget execution to ensure a stable and

efficient operation of the cash flow system.

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Supply Chain Management

LBX Pharmacy regards "supply chain security" as a topic of significant importance which is committed to building an efficient and responsible supply chain managing suppliers throughout their full lifecycle from selection

cooperation development retention to phasing out. This approach ensures the quality and safety of products and services. Furthermore the company actively collaborates with suppliers to fulfill ESG responsibilities collectively

promoting a green harmonious and efficient supply chain ecosystem.Supply Chain Management Framework Supplier Admission and Evaluation

The company emphasizes the independence and compliance of its supply chain so it adopts independent Supplier Admission

operation in product management and procurement departments while closely collaborating to build a compliant

and efficient supply chain system. Based on the nature of its business the company's commodity procurement Upholding the principles of fairness objectivity and transparency the company has implemented rigorous

and non-commodity procurement sectors operate independently to ensure precise resource alignment in the supplier admission management. In 2024 the company launched a procurement platform during the reporting

procurement process. period realizing the standardization informatization and digitalization of procurement operations continuously

improving supplier management efficiency. Meanwhile during the reporting period the company simultaneously

For commodity procurement the company organizes its business into lines based on the categories of goods.formulated and issued the "Eight Key Principles for Suppliers" clarifying explicit requirements such as "fair

These lines include divisions for pharmaceuticals non-pharmaceuticals specialty drugs and traditional Chinese

competition" "eliminating bribery" and "information confidentiality" to ensure the health and sustainability of

medicine which handle category planning and business cooperation. Additionally specific procurement

the supply chain. The company strictly adheres to the "Blacklisted Suppliers Management System of the Group"

departments are established in some regions and subsidiaries to handle regional procurement execution and

blacklisting suppliers with serious violations and prohibiting their participation in all procurement projects within

meet specific procurement needs. The group headquarters regions and subsidiaries align procurement efforts to

the company's system.collectively achieve efficient high-quality low-cost procurement and digital transformation in the procurement

process. During the supplier admission stage the company conducts due diligence on potential suppliers; when

establishing partnerships the company signs documents such as "Procurement Contract" and "Supplier Quality

For non-commodity procurement the company adopts a centralized management model with the group

Assurance Agreement" with suppliers providing clear guidance and basis for the cooperation.headquarters’ non-commodity procurement department being responsible for oversight. Departments for

business demands non-commodity procurement finance and inspections work together throughout the

procurement process to create an effective mechanism for checks and balances and a layered decision-making Eight Key Principles for Suppliers

system ensuring transparency fairness and compliance in procurement procedures.Principles of Supplier Collaboration

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Supplier Assessment and Management

To ensure a stable and reliable supply chain the company has established an independent quality management team to assess and dynamically manage suppliers and product categories. It has formulated documents such as the

"Quality Risk Management System" "Supplier Review Management System" "Blacklisted Suppliers Management System of the Group" and "On-site Suppliers Inspection and Evaluation Standards." Insisting on proactively controlling

quality risks the company assigns a professional team to conduct quality reviews and on-site inspections of suppliers to ensure the quality of medicines from the source. In 2024 the company assessed a total of 1215 suppliers and

conducted on-site inspections of 105 suppliers achieving on-site inspections for 100% of prepared TCM decoction manufacturers.We adhere to principles of fairness objectivity and impartiality by establishing a supplier performance evaluation system. Various departments collaborate to conduct both regular and irregular inspections of suppliers covering

dimensions such as quality pricing supply conditions qualifications environmental health and safety and service behaviors. Based on the results of annual performance evaluations we classify suppliers for tiered management.Additionally we develop refined supplier management plans tailored to business characteristics including communication frequency with suppliers and the depth of brand co-building. Through upgrades downgrades and

eliminations we ensure supplier quality on an ongoing basis.Supplier Communication and Collaboration

We value communication and collaboration with suppliers actively engage in dialogue to share new technologies and experiences with them. Partnering with suppliers we build a shared industrial ecosystem and enhance public

perception and trust in the professional services and social value of retail pharmacies. We continue to deepen collaboration to foster resilient growth and we aim to build a robust and environmentally friendly supply chain ecosystem

while promoting the sustainable development of the industry.In August 2024 LBX Pharmacy held a strategic supplier conference at the CPEO. In January 2024 LBX Pharmacy and Yangtze River Pharmaceutical convened In December 2024 LBX Pharmacy and Dong'e Ejiao Co. Ltd. jointly

a strategic negotiation meeting for the year 2024. organized a large-scale live media traceability event.In 2024 the company conducted two supplier satisfaction surveys to gain in-depth insights into supplier satisfaction across various stages of the supply procurement and sales process. The results of the survey served as a critical

basis for improving supplier management and optimizing collaboration workflows. During the reporting period the company launched a special initiative to enhance supplier satisfaction forming Supplier Collaboration Teams and

Supplier Settlement Teams to improve efficiency which significantly boosted overall supplier satisfaction with a total score of 9 points in 2024 representing a 5.8% year-on-year increase.

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Supply Chain Safety and Risk Management Launch Torch Project to Optimize Supply Chain

Processes

To strengthen supply chain security we regularly conduct risk identification and reinforce response measures

enhancing the resilience and protective capacity of the supply chain to ensure its continuity and stability.In 2024 the company carried out and continued advancing the Torch Project centering on three key segments:

Meanwhile we leverage digital intelligence technology to optimize procurement logistics inventory and other

"What to Sell" "How to Buy" and "How to Sell." This initiative aims to implement intelligent and lean product

segments minimizing detailed risks in the supply chain. In 2024 the company initiated elimination mechanisms

management. By optimizing the entire supply chain process the company seeks to enhance profitability and

for high-risk suppliers as per established procedures resulting in the removal of 54 suppliers.contribute to sustainable development. In 2024 its gross profit margin was 33.17% showing a year-on-year

increase of 0.62pp.Supply chain risks Response Measures What to Sell

Redefining Starting from the perspective of consumer demand the company

* Risk of disruptions Product will prioritize SKUs with superior performance as its operational

in commodity Regularly review and evaluate suppliers Selection focus provided ensuring comprehensive coverage of product

supply Establish a diversified supplier matrix Logic functionalities hence assisting customers in achieving the goal of "Buying the Right Medicine."

Carry out demand forecasting and early warnings with supplier

* Risk of rising collaboration platform and optimize procurement plans and

procurement costs delivery scheduling

How to Buy

Adopt state-of-the-art logistics technologies to improve delivery Iterating The company will instill the philosophy of "altruism" among

efficiency Marketing front-line employees and continuously refine marketing incentive

* Logistics risks Strategies strategies. It will adjust the sales structure strengthen bargaining Leverage technology to identify abnormal inventory and optimize capabilities for goods and provide robust logistical support for

* Risks of high inventory turnover front-line sales. This strategy aims to handle larger business

inventory levels Encourage technological innovations by suppliers to jointly volumes reduce marginal costs and help customers achieve the goal of "Spending Less."

enhance overall supply chain resilience

How to Sell

* Legal risks Strictly implement supplier due diligence to ensure legality and

compliance Enhancing Front-line stores will extensively adopt intelligent replenishment

* Reputation risks Reassess the partnership and terminate cooperation in cases of Distribution system to boost the efficiency and accuracy of inventor y

significant supplier violations or misconduct Efficiency management. This ensures "Having Products to Sell Having Quality Products to Sell and Selling Products Customers Need."

Integrate ESG factors into the supplier evaluation system assessing

performance in governance social and environmental aspects

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Upgrade Smart Logistics to Ensure Timely and Efficient Delivery

The company is committed to establishing a leading pharmaceutical logistics service system in the industry. It has built a highly efficient distribution network The Changsha Regional Distribution Center of LBX

comprising one national distribution center three regional distribution centers and 18 delivery centers directly supplying to the stores covering a warehouse area Pharmacy has been awarded the title of 'Five-Star

exceeding 320000 square meters. Warehouse' for consecutive years

China General Warehouse Grading Committee China

The company's logistics distribution encompasses three major processes: order management warehouse management and transportation management. Association for Warehousing and Distribution

Advanced technologies—including WMS (Warehouse Management System) TMS (Transportation Management System) WCS (Warehouse Control System) AS/

RS (Automated Storage and Retrieval System) and ERP (Enterprise Resource Planning System)—are employed. Modern logistics technologies and intelligent

equipment such as automated storage and retrieval systems AGV (Automated Guided Vehicle) systems for goods-to-person picking shuttle systems for outbound

storage sorting and verification conveyor systems DPS (Digital Picking Systems) and RF (Radio Frequency) technologies are widely applied. These innovations

enable intelligent product storage and retrieval management significantly improving operational efficiency and delivery timeliness.During the logistics development and construction process the company has introduced automated facilities equipment and technologies to enhance labor

efficiency and reduce labor intensity. For instance the split-order picking at the Yangzhou Regional Distribution Center employs a goods-to-person picking system

with AGV robots and electronic label-applied total sorting technology. The AGV goods-to-person system through the combined application of Kiva (logistics robots)

shelves and seed sorting tables improves labor efficiency by over 80%. The Changsha and Yangzhou Regional Distribution Centers utilize automated stacker cranes

for storage and retrieval enabling unmanned operations and saving labor by 50%.Case Case Case

The company applies a Transportation Management System In January 2024 the Yangzhou Regional Distribution Center of LBX Pharmacy in In 2024 the shuttle storage systems at the

(TMS) for route planning and delivery optimization in terms of Jiangsu (abbreviated as "Jiangsu RDC") was inaugurated. This center integrates Yangzhou and Hefei Regional Distribution Centers

logistics distribution. Based on order information historical data supply chain resources in Jiangsu Zhejiang Shanghai and other regions to enhance will achieve automatic collection of goods

geographic information data and various algorithmic models the company's logistics distribution capability and competitiveness. Jiangsu RDC reducing one operational step doubling the

the system calculates the shortest path from the starting point to boasts smart logistics advantages including a series of intelligent equipment such efficiency of goods collection expanding the

all other points as well as the actual driving distances between as latent robots automatic stacker cranes and shuttle storage systems. It enhances buffer space for outbound goods processing

points. It determines the optimal route avoids detours and logistics efficiency while expanding capacity with a warehouse capacity of over more store orders per wave and enhancing

improves delivery efficiency. 300000 boxes a daily order processing capacity of 150000 lines and an annual single-warehouse flexible capacity.throughput of over 9 million boxes meeting the distribution needs of over 4500

stores and supporting an annual sales scale exceeding RMB 6 billion.

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Industry Symbiosis

In current business environment consumer's demands on health are increasingly diverse. Individual enterprises and single drug sales models can no longer meet market needs. LBX Pharmacy remains committed to the aspiration of

industry co-prosperity. It actively integrates upstream and downstream resources and collaborates widely with partners to establish an end-to-end service chain covering medication sales health management disease prevention and

chronic disease rehabilitation. This approach creates lasting value for users and promote the sustainable development of the pharmaceutical healthcare industry.Facilitation of the Industry Development

LBX Pharmacy plays an active role as a leading enterprise leveraging its extensive store network and more than two decades of

Seven Empowerment Systems Drive High-Quality Industry Development

solid reputation. Guided by the principle of "win-win outcome and altruism" and driven by the operational modes of "franchising"

and "alliances" the company integrates various industry ecosystems. By fostering closer mutually beneficial collaborations

LBX Pharmacy provides comprehensive support—including branding management and supply chain—to its peers in the

pharmaceutical retail sector. Currently the company has established an ecosystem centered on its direct retail business

complemented by its "LBX Health Pharmacy" franchise segment and "Easydrug" alliance segment.Franchising: Seven Empowerment Systems Fuel Growth

LBX Pharmacy is among the pioneers in the industry to heavily invest in developing a franchise model. Its "Health Pharmacy"

franchise business identifies as both a "management expert from headquarters" and an "operational steward for pharmacies."

Focusing on "9+7" regional development it strategically expands into tier-3 to tier-5 markets. By harnessing its strong brand

influence professional operational management capabilities and new retail expertise LBX Pharmacy empowers franchise

stores comprehensively helping small chains and independent drugstores enhance their efficiency and operational quality while

proactively driving industry advancement.By the end of 2024 the "Health Pharmacy" franchise business of the company is set to reach 5296 franchise stores. During the

reporting period the company shared intelligent tools with franchisees such as Smart Ordering and Salary Calculator empowering

them with advanced digital capabilities. LBX Pharmacy remains committed to promoting a more "digitally intelligent" industry

ecosystem.Case Story of Successful Franchisee: small and medium sized Chain with "39 Stores" Achieving Efficient Management

He Jie from Alxa League Inner Mongolia has been operating drugstores locally for nearly 20 years with a total of 39 stores. However the challenges of limited operational

and management capabilities of small and medium sized chains became increasingly evident amid market competition. In 2022 after thorough market investigation He

Jie decided to franchise all 39 stores under "LBX Pharmacy." Leveraging the company's extensive product resources digital supply chain and professional operational

marketing systems He Jie achieved improved overall management efficiency and increased gross margins. By the end of 2024 He Jie's franchise expanded to 45 LBX

Pharmacy stores with continuous expansion and sales scale growth.

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Alliance: Sharing Five Key Resource Advantages

案例 Alliance Cooperation Case: “Prescribing the Right Medicine” to Optimize Product Strategies

The "Easydrug" alliance of LBX Pharmacy is positioned as a "third-party comprehensive and Boost Profit Margins

empowerment service platform" which adheres to the principles of "co-integration co-

creation and sharing." Focusing on pharmaceutical retail market operation services and A pharmacy chain located in Daqing Heilongjiang Province with an annual sales scale of approximately RMB 900 million

product distribution as its core business it provides management consulting and supply faced challenges such as low profit margins and difficulty in increasing gross profit. In October 2023 the company

chain integration services to small and medium sized chain drugstores. By leveraging platform partnered with " Easydrug " and utilized the diagnostic tools for products and operations provided by LBX Pharmacy to

advantages it helps alliance members lacking procurement resources and operational optimize product selection adjust marketing strategies and enhance management efficiency resulting in sustained growth

expertise improve their overall management capabilities. in gross profit margins. By 2024 the gross profit margin had increased by 3.7PP year-on-year.By the end of 2024 the company's "Easydrug" alliance business covered 26 provinces and cities

with a particular focus on 12 provinces totaling over 19900 alliance stores (not included in the

total number of company-owned stores). In 2024 the company initiated the comprehensive

promotion of equity participation model enabling deeper supply chain empowerment for small

and medium sized chain enterprises. As of the end of the reporting period the company had

partnered with 100 equity-participating enterprises corresponding to a retail scale of RMB 6.648

billion. Equal Treatment to SMEs

Sharing Five Major Advantages with Small and Medium-Sized Chain Enterprises LBX Pharmacy takes "altruism equality pragmatism and innovation" as its corporate spirit embedding "integrity and

selflessness"and "treating partners kindly" into its core corporate values and social responsibility outlook. The company actively

implements the concept of "treating SMEs equally" in its daily operations.We understand that SMEs play an essential role in the pharmaceutical industry chain. They are pivotal in driving industry innovation

ensuring drug supply and serving grassroots communities. In daily operations the company advocates for a fair competitive

environment avoids market monopoly practices supports the development of SMEs and works together to achieve a thriving

pharmaceutical ecosystem.It has established a fair and transparent cooperation mechanism to protect the rights of SMEs. The LBX product procurement

platform which implements strict regulatory mechanisms to ensure fair competition and transparent operations during the

cooperation process is open to all suppliers for login registration review and bidding. The company discloses its reporting hotline

email address and mailing address sincerely inviting social supervision over potential improper practices in the cooperation.Meanwhile during the cooperation the company provides reasonable and fair payment terms for all partners to enhance their

competitiveness.Through franchise and alliance business models the company explores cooperative models with SMEs consistently deepens

cooperation content empowers SMEs with its mature operational experience robust supply chain system and professional

pharmaceutical service capabilities. It provides training and technical support covering compliance digital transformation and

marketing promotions to assist them in more effectively connecting with the broader health ecosystem and advancing sustainable

industrial development.

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Participating in Industry Standard Formulation

LBX Pharmacy actively takes part in the discussion and drafting of group standards offering professional expertise and innovative insights to contribute to the industry's standardized development.Since 2020 LBX Pharmacy has participated in drafting multiple significant standards for the China Association of Pharmaceutical Commerce including the "Service Specifications for Retail Pharmacies Operating Special Disease

Medicines" "Pharmaceutical Service Specifications for Retail Pharmacies Operating Colorectal Cancer Medicines" "Pharmaceutical Service Specifications for Retail Pharmacies Operating Lung Cancer Medicines" "Pharmaceutical

Service Specifications for Retail Pharmacies Operating Breast Cancer Medicines" and "Pharmaceutical Service Specifications for Retail Pharmacies Operating Psoriasis Medicines" and other key projects. In 2024 the company

participated in drafting the group standard "Pharmaceutical Service Specifications for Retail Pharmacies Operating Thyroid Disease Medicines" (TCAPC015-2024). At the same time the company is committed to cultivating a

highly professional team of pharmacists. As of now five pharmacists have passed the examination conducted by the China Association of Pharmaceutical Commerce and have been appointed as inspectors for "Retail Pharmacy

Pharmaceutical Service Group Standards" providing professional support for the implementation of industry standards.The company continues to deepen the development of its healthcare service system being committed to establishing professionalized digitalized and diversified model stores thereby setting a benchmark in the field. During

the reporting period the company's Changsha Xiangya Store received the "Best Pharmaceutical Service Case" award from the China Association of Pharmaceutical Commerce. Additionally the company's Xi'an Beidajie Store and

Shaoyang Hongqi Flagship Store were recognized as “DTP Model Stores” by the association. Guided by these model stores the company has continuously improved the service quality across all its outlets. Moreover through industry

exchanges the company has shared its service philosophies and experiences with peer professionals jointly promoting the advancement of service standards in the pharmaceutical retail industry.Co-construction with the Associations

LBX Pharmacy actively participates in co-construction with industry associations promoting the standardized development of the sector. The Chairman of the Board Xie Zilong serves as the Honorary Chairman of the China Medicine

Materials Association Vice Chairman of the China Association of Pharmaceutical Commerce and Chairman of the Hunan Pharmaceutical Circulation Industry Association. Over the years he has conducted extensive grassroots

research on-site investigations and organized industry association seminars and forums actively contributing ideas and suggestions to the formulation of the industry 's "Self-Discipline Convention" and has taken the lead in

committing to its compliance. This has played a significant role in fostering the healthy and orderly development of the industry and safeguarding consumers'rights. The company's subsidiaries have actively participated in meetings

and activities organized by local industry associations providing recommendations for the formulation and improvement of industry standards reinforcing self-supervision mechanisms and advancing collective industry progress.In June 2024 the Shanghai Pharmaceutical Trade Association in cooperation with LBX Pharmacy Shanghai Company and multiple pharmaceutical retail enterprises jointly launched the "Self-Discipline Initiative for

the Management of Designated Retail Pharmacies under Shanghai Medical Insurance" ensuring the medication needs of the public and fostering a healthy market environment.In June 2024 the Nantong Pharmaceutical Industry Chamber of Commerce held a special meeting for retail pharmacy managers. Nantong Puze Pharmacy Chain Co. Ltd. a subsidiary of LBX Pharmacy participated

and signed the "Public Commitment for Self-Discipline in Standardized Medical Insurance Management at Designated Pharmacies" pledging to effectively perform duties related to medical insurance management

and to resolutely protect the rights and interests of consumers.

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Development with a Shared Future

05

Jointly Building a Green Ecosystem

Contents of This Section

Environmental Compliance Management

Use of Energies and Resources

Climate Change Tackling

Green Operation

Green ecology is an essential cornerstone of global sustainable

development. LBX Pharmacy integrates green and low-carbon practices

into its business strategy embedding the concept of sustainable

development through the entire process of production supply chain

park and store operations. In its daily operations the company

continuously optimizes resource management reduces waste controls

pollution emissions and adheres to green operations contributing to

society's green and coordinated development.Responses to SDGs in This Section

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Environmental Compliance Management

LBX Pharmacy strictly complies with the "Environmental Protection Law of the People's Republic of China" and the "Environmental Impact Assessment Law" etc. The company has established the Environmental and

Sanitation Management System at the production level. For park construction projects it strictly enforces the "Three Simultaneous Policies" (design construction and operation of environmental protection facilities

synchronized with the main project) to establish an environmental management system. During the reporting period the company did not encounter any major administrative penalties or criminal accountability related to

ecological environment incidents by relevant authorities.Environmental Management

Environmental Management System

LBX Pharmacy has established and continuously improved its environmental management system throughout its production and operation processes. It has integrated environmental responsibilities into relevant functional

departments set environmental management goals and continuously enhanced its environmental management capabilities.During the production process YST Pharma a prepared herbal medicine production

enterprise of LBX Pharmacy formed an environmental management committee led by

the general manager to effectively handle environmental management throughout the

production process.During project construction the company established an environmental protection

committee to ensure strict implementation of environmental protection standards before

during and after project construction. The company appointed professional supervisory

units with appropriate qualifications to coordinate and monitor the environmental behaviors

of the project throughout the entire process ensuring safe green and civilized construction.The second phase construction site of the Changsha NDC expansion project

was honored as an "Air Pollution Prevention Grade A Site."

Environmental Risk Response

The company has attached great importance on preventing and responding to sudden environmental incidents. For specific situations such as chemical spills and hazardous waste leaks YST Pharma has formulated the "Hazardous

Waste Emergency Plan" and "Production Safety Accident Emergency Plan" to classify and grade potential incidents specify emergency rescue teams and responsibilities and equip emergency facilities thus effectively ensuring a

prompt response to emergencies.

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Emissions and Waste Management

LBX Pharmacy strictly complies with the "Water Pollution Prevention and Control Law of the People's Republic of China" "Prevention and Control of Air Pollution Law of the People's Republic of China" "Prevention and Control of

Environmental Noise Pollution Law of the People's Republic of China" "Prevention and Control of Environmental Pollution by Solid Waste Law of the People's Republic of China" and other relevant laws and regulations. Adhering to

the principles of "source control efficient collection and scientific treatment" the company adopts waste reduction measures periodically monitors pollutant emissions in strict accordance with the requirements of emission permits

and continuously reduces production-related pollutant emissions through waste reduction initiatives and the application of environmental protection facilities. During the reporting period the company was not subject to any major

administrative penalties or criminal liabilities due to pollutant emissions.Wastewater

The company's wastewater includes domestic sewage construction wastewater BXT TCM Clinic medical wastewater and YST Pharma production wastewater primarily consisting of domestic sewage. All domestic sewage is

discharged into the urban domestic sewage treatment network while other types of wastewater are managed with corresponding measures.The wastewater discharge situation of YST Pharma in 2024 is as follows：

Wastewater Type Solution

Wastewater Type Unit 2024

Domestic Discharged into the urban domestic sewage treatment pipeline network.Sewage

Total wastewater discharge Ton 12687

A temporary three-tier discharge system primarily consisting of drainage pipes ground collection

Construction tanks and open ditches is adopted with assigned personnel carrying out regular maintenance and

Wastewater COD discharge in wastewater Ton 0.15clearing of the temporary drainage facilities.YST Pharma has formulated the "Sewage Treatment System" entrusting a third-party testing Suspended solids (SS) in Ton 0.18

company for periodic sewage testing. The facility is equipped with sewage treatment equipment wastewater

Production designed to meet the national Grade I discharge standards. Various types of sewage and wastewater

Wastewater within the plant are treated to comply with the standards through septic tanks oil separators Ammonia nitrogen discharge in

collection wells and regulation tanks which are then sent to the Changsha Changshanyuan Sewage wastewater Ton 0.08

Treatment Plant via the park's sewage pipeline network.BXT TCM Clinic has established the "Sewage Disinfection Management System" and equipped with

Medical

Sewage automatic medical sewage disinfection devices to ensure compliance before discharging into the

municipal network.

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Waste Gas

The primary sources of the company's waste gas are the boiler emissions and

production dust from YST Pharma. For boiler emissions YST Pharma has been

equipped with waste gas treatment devices. After treatment by these devices the

cleaned gas is discharged directly through a 15-meter chimney. For production

dust YST Pharma employs suction fans and bag-type dust collectors to process the

dust which is then discharged through a 15-meter exhaust pipe in compliance with

standards. YST Pharma's production lines utilize fully automated dust removal

dust recycling equipment and environmentally friendly inkjet coding technology to

reduce exhaust emissions and improve the working environment.The waste gas emissions from YST Pharma's boilers in 2024 are as follows：

Category of Boiler Waste Unit 2024

Gases

Nitrogen Oxides/NOx Ton 0.29

Solid Waste Solid waste emissions (including only the Changsha headquarters park BXT TCM Clinic and YST Pharma) of the company in 2024 are as

follows：

The company's solid waste primarily consists of household garbage with a

small portion comprising construction waste general industrial waste (YST Types of Solid Waste Unit 2024

Pharma) and hazardous waste (YST Pharma and BXT TCM Clinic). In terms of solid

waste management the company adheres to the principles of "harmlessness Total non-hazardous wastes Ton 609.78

minimization and resource utilization" by implementing technological

Non-hazardous waste density

transformations environmental protection campaigns and various measures to Ton/million RMB 0.03

reduce the generation of solid waste.Total hazardous wastes Ton 199.19

Hazardous waste density Ton/million RMB 0.01

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Use of Energies and Resources

Efficient use of energy and resources not only reduces operational costs but also lessens environmental impact aids in combating climate change and fosters economic transformation. LBX Pharmacy upholds the concept of

sustainability by efficiently utilizing energy and resources reducing energy consumption actively adopting clean energy and practicing circular economy principles taking incremental steps to protect the green ecosystem.Energy management

The company continuously strengthens energy management improves energy management systems conducts energy conservation and emission reduction awareness campaigns enhances employee awareness of energy efficiency

and emission reduction consistently deepens energy saving efforts and optimizes resource utilization. The company has developed institutional guidelines such as the "Energy Conservation and Consumption Reduction Operation

Manual" and the "Standard Operating Procedures for Water and Electricity Usage in Stores" which regulate the daily use of resources such as water electricity and gas in stores and office parks in accordance with these guidelines.Stores Case Initiating LED Panel Light Upgrade to Create "Green Stores"

Conduct regular inspections focusing on water and electricity identify high-energy-consumption

equipment and ensure the safe and stable operation of all facilities. In December 2024 the company conducted an energy consumption assessment of the LED panel lights

used in its stores and became a pioneer in the industry by piloting high-efficiency LED panel lights. Testing

More than 4000 smart electricity meters have been installed in directly operated stores (new and and comparisons revealed that the new energy-saving LED panel lights reduced energy consumption by

renovated) enabling real-time monitoring of power consumption and immediate handling of approximately 50% compared to the original panel lights significantly lowering carbon emissions.abnormal electricity usage.Established monthly power consumption logs for store signage in 76 cities. Set switch-on and switch-

off times based on local sunset times in a scientific approach to reduce electricity consumption.Changsha Headquarters Park

Formed a dedicated energy-saving team and assigned specific responsibilities to strictly control the

use of energy and resources within the headquarters park.Actively utilize clean energy by installing photovoltaic devices and providing shuttle services with

new energy vehicles for employee transportation.Installed motion-activated lighting in restrooms and pantries while outdoor pathway lighting is

controlled by artificial intelligence to avoid power wastage.Regular inspections of concealed water pipes and maintenance of water supply facilities by the

property management team to prevent issues such as water leaks drips and wastage.Posted various energy-saving reminders near office lighting and air-conditioning switches in the park

to cultivate an energy-saving and consumption-reduction office atmosphere.Notes:

During park construction projects a dedicated "Energy-Saving Design Manual" is prepared energy

consumption records are maintained and a specialized supervisory team is set up to monitor daily 1. The standard coal coefficient is derived from the "General Rules for Calculation of Comprehensive Energy Consumption of the National Standard of the People's Republic of China" (GB/T2589-2020);

energy consumption operations. 2. The natural gas data is not entirely comprehensive but covers the majority of the company's operational areas (including the use of

natural gas for the boilers of the YST Pharma).

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Usage of Water Resources

LBX Pharmacy strictly adheres to laws and regulations such as the "Water Law of the People's Republic of China" The company's water resource consumption in 2024 is as follows:

upholding the principles of water conservation and environmental protection in its operations. The company Consumption of water resources Unit 2024

employs water-saving equipment enhances equipment maintenance appropriately allocates water usage

recycles circulating water resources and raises awareness among all employees about water conservation to Freshwater consumption Ton 621006.18

build a resource-efficient enterprise. In its operations and production the company's water supply comes entirely Consumption intensity of water resources Ton/million RMB 27.28

from the local municipal supply system and there are no reported challenges in accessing suitable water sources.Clean Energy Utilization

LBX Pharmacy proactively explores the use of clean energy. As of the end of the reporting period the rooftop

photovoltaic (PV) power generation systems have been installed and are operational at the company's

headquarters residential building and logistics warehouse the Jiangsu Yangzhou Logistics Center and the YST

Pharma plant area. These systems operate under the "self-consumption with surplus electricity fed into the grid"

model. By the end of the reporting period the company's total installed PV capacity reached 4528.64 kWp with a

total annual generation of 2483.20 MWh while the company's total electricity consumption was 2076.46 MWh.The company's total annual PV electricity usage equates to saving approximately 624.39 tons of standard coal

per year reducing carbon dioxide (CO2) emissions by approximately 1711 tons sulfur dioxide (SO2) emissions

by about 0.17 tons nitrogen oxides (NOX) by about 0.28 tons and dust emissions by approximately 0.04 tons

(calculation based on the "2023 Annual Development Report of the China Electric Power Industry" published by Photovoltaic Rooftop at the Headquarters Park Photovoltaic Rooftop of Yangzhou Logistics Center

the China Electricity Council) effectively mitigating environmental pollution.The use of renewable and clean energy for 2024 is as follows:

Consumption of Renewable Energy Unit 2024

Renewable energy electricity consumption MWh 2076.46

Renewable energy consumption Tons of standard coal 255.20

Total Energy Savings Tons of standard coal 624.39

Reduction of GHG greenhouse gas emissions Tons of carbon dioxide equivalent 1821.26

Note: The baseline emission factor for the Hunan power grid is based on the "2023 Emission Reduction Projects China Regional Power Grid Baseline Emission Factors" report released by the National Center for Climate Change Strategy and International Cooperation. The

emission factor for the Central China Regional Power Grid is 0.8771 tCO2/MWh.

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Circular Economy

A circular economy can effectively reduce environmental footprints lower carbon emissions and minimize resource wastage. The company actively explores circular economy pathways and embraces green development concepts by

implementing measures such as circular packaging shared logistics vehicles and rainwater harvesting.Circular Packaging

The company promotes the recycling of product outer packaging boxes and the reuse of waste cardboard

boxes. By reclaiming outer packaging boxes used after material packaging and finished product shipments for

production and storage logistics or recycling by third-party companies it helps reduce environmental pollution.In 2024 the company has recycled 3000 tons of waste cardboard boxes.Circular Logistics Vehicles

The company recycles logistics carriers such as pallets and turnover boxes to reduce the resource consumption

required for producing new carriers extend the lifespan of carriers and avoid waste caused by idle self-

purchased carriers.Rainwater Reuse

In some of the company's parks a rainwater and wastewater separation system is adopted where rainwater is collected via the rainwater pipeline network or rainwater recycling equipment and then discharged into the regional

rainwater pipeline network. During project construction we incorporate various Low Impact Development (LID) facilities in sponge city designs such as ecological retention facilities (including rain gardens) and retention-type grass

swales. Rain gardens collect rainwater by adjusting the relationship between pavement greenways and rainwater elevation using sandy soil with geosynthetic materials to ensure water retention capacity and installing permeable

blind pipes in impermeable facility layers. Retention-type grass swales collect convey and treat rainwater by planting vegetation in surface ditches. During the reporting period approximately 3500 tons of rainwater were reused at the

company's headquarters park.

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Climate Change Tackling

Currently addressing climate change has become a common task for all mankind. LBX Pharmacy continues to closely monitor changes in climate-related policies laws and regulations initially identifying "addressing climate change"

as a key topic while focusing on the risks and opportunities associated with this issue. The company formulates reasonable response plans by combining external environmental changes with its internal development status.Climate Risk Management

In 2024 the company proactively responded to climate change by selecting scenarios from the "AR6 Synthesis Report: Climate Change 2023" (AR6) of the Intergovernmental Panel on Climate Change (IPCC)

of the United Nations. These scenarios include a low emission scenario (SSP 1-2.6 where temperature increase does not exceed 2.0℃ ) and a high emission scenario (SSP 5-8.5 where temperature rises

close to or exceeds 4.4℃ ) to assess physical risks. Additionally the company evaluates transition risks and climate-related opportunities based on "Net Zero Emissions by 2050" (NZE temperature increase

not exceeding 1.5℃ ) and "Established Policies Scenario" (STEPS temperature increase exceeding 3℃ ).Risk and Impact Financial Impact Analysis under Different Climate Scenarios

Opportunity Pathway Impact Response Measure

Classification Short Term Mid Term Long Term Short Term Mid Term Long Term

Physical risk SSP1-2.6 SSP5-8.5

Strengthen meteorological monitoring and early warning systems to

promptly notify all regions of extreme weather disasters. Adjust logistics

and transportation routes and arrange alternative suppliers in advance to

The occurrence of ensure a stable supply of medicines.extreme weather such as Increase in

earthquakes typhoons operating costs Develop contingency plans for extreme weather and organize periodic

Acute risk thunderstorms and decline in training or emergency drills for employees to better prepare for such High High High High High High

heavy fog may disrupt or revenue asset conditions.obstruct transportation impairment Stockpile emergency supplies and deploy necessary equipment in advance

making product delivery losses. such as adding centralized heating water tanks (20m3) for cold weather and

challenging. procuring industrial salt and anti-slip bags for rain and snow conditions.Formulate seasonal construction assurance measures based on the climatic

characteristics of each season.Install lightning rods and grounding devices in the park and factory facilities

to prevent damage caused by lightning strikes.Chronic risks such as

extreme high temperatures

Chronic risk droughts rising sea

levels and intensified El Increased Adjust the energy usage structure control the consumption of fossil fuels

Ni?o phenomena impact operational and increase the proportion of clean and renewable energy sources such as Low Medium Medium Medium High High

the health and safety of costs solar power.employees potentially Enhance the insulation capability of buildings such as adding insulating

increasing costs associated materials to cope with extreme cold or scorching hot weather.with utilities equipment

wear and overall

operational expenses.

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Transition Risks and Climate-related Opportunities NZE STEPS

The government's introduction of

policies supporting low-carbon Pay close attention to policy changes comply with laws and

transition and stricter emission regulations and ensure legal and compliant operations; Low Medium Medium Low Low Low

Policy risk reduction measures may increase Increased

R&D costs for green operations operational costs Continue to explore and innovate sustainable operational models.or carbon trading costs of the

company.Suppliers may face increased

operational costs due to carbon

Market risk reduction policies leading to a Profit margins Establish strategic partnerships with premium partners to strengthen Medium Medium High Low Low Medium

rise in raw material prices and declined the ability to respond to supply chain risks.a subsequent decline in the

company's product profit margins.Stakeholders are increasingly

concerned about the company's

performance in addressing climate

Reputation risk change. Without proactive climate

Proactively respond to stakeholders' concerns regarding the company's

Medium Medium High Low Low Medium

action the company might fail to Revenue climate-related actions improve performance and enhance

meet stakeholders' expectations decline information transparency.potentially leading to damage to the

company's image and reputation.The company needs to enhance

the energy efficiency standards

of its operational equipment

due to the implementation of Increased Continuously monitor environmental policies and implement

Technology risk stricter environmental policies operational timely environmental upgrades in line with the company's actual Low Medium High Low Medium Medium

by the government which may costs circumstances.require additional investments for

energy-saving and environmental

protection upgrades.Reputation Actively engage in climate action to Increased Low Medium Medium Medium High High

opportunities enhance the company's reputation revenue Continuously focus on and actively participate in climate action.among society and stakeholders.Through technology R&D the use of

clean energy process optimization

Technological and management upgrades the company comprehensively Lower Conduct timely technology R&D and iterations in alignment with the Low Medium High Medium Medium High

opportunities identifies and explore energy- operating costs company's overall strategy and operational conditions.saving opportunities to improve

energy efficiency.Notes:1. Time dimension: Identified potential impacts of climate change on its business segments across short-term medium-term and long-term time scales;

2. Degree of impact: Using a qualitative assessment to rank those identified risks as 'low' 'medium' or 'high' based on the probability of occurrence impact adaptability and resilience.

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Greenhouse Gas Emissions

The company's greenhouse gas emissions mainly stem from the consumption of energy sources such as electricity natural gas gasoline and diesel among which the use of natural gas and fuel oil is categorized as Scope 1 greenhouse

gas emissions which refers to direct greenhouse gas emissions. Purchased electricity falls under Scope 2 greenhouse gas emissions which refers to indirect greenhouse gas emissions. The greenhouse gas emission data is presented in

terms of carbon dioxide equivalent.Category Unit 2024

Total Greenhouse Gas Emissions (Scope 1) Tons of carbon dioxide equivalent 985.32

Total Greenhouse Gas Emissions (Scope 2) Tons of carbon dioxide equivalent 73690.19

Total greenhouse gas emissions Tons of carbon dioxide equivalent 74675.51

2024 China LBX Photography Competition Works: "The Moment" Photographer: Ma Bin

Notes:

1. The greenhouse gas emissions list includes carbon dioxide methane nitrogen oxides hydrofluorocarbons perfluorocarbons sulfur hexafluoride and nitrogen trifluoride.

2. The electricity emission factor is derived from the average emission factor of the Hunan power grid 0.4900 t CO2/MWH as specified in the "Announcement on the 2022 Electricity Carbon Dioxide Emission Factors" published by the Ministry of Ecology and Environment in

2024.

3. Other calculations are based on the national standard of the People's Republic of China "General Rules for Calculation of Comprehensive Energy Consumption (GB/T 2589-2020)" the Global Warming Potential (GWP) values from the AR6 Synthesis Report: Climate Change

of Intergovernmental Panel on Climate Change (IPCC AR6) and the "IPCC 2006 Guidelines for National Greenhouse Gas Inventories (2019 Revision)."

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Green Operation

LBX Pharmacy has consistently adhered to the concept of green development deeply implementing green operations. Throughout its daily operations the company undertakes various environmental protection initiatives starting

from small details and collaborating with employees customers and stakeholders to promote a green low-carbon and sustainable society. In 2024 the company has invested RMB 1.2314 million in environmental protection.Green Supply Chain

Transportation and warehousing are critical components of the green value chain. LBX Pharmacy actively

engages in green supply chain practices and is committed to building a green and sustainable pharmaceutical

retail model. We have optimized and constructed a green supply chain management system in every aspect

including raw material acquisition production operations material storage packaging transportation and

recycling driving green development within the industry.Green Warehousing Green Distribution

The company has actively established logistics centers in compliance with GSP standards and environmental protection LBX Pharmacy has developed the "Self-owned Vehicle Management Specifications for Delivery

requirements. It has now built one national logistics center three regional logistics centers and eighteen distribution Centers" and "Equipment Inspection and Maintenance Specifications" to standardize the management

centers with a highly efficient delivery network directly supplying to stores. The total national warehouse area exceeds of vehicles owned by the delivery centers reducing operational risks and transportation costs. For

320000 ㎡ . internal transportation the company has ensured that all forklifts operate on electric energy effectively

reducing diesel consumption during internal transport stages. For external transportation the company

Self-built logistics centers adhere to the principles of farmland protection energy conservation and environmental

promotes the use of new energy vehicles and leverages smart tools to optimize transportation routes

protection. They combine multi-story warehouses and automated high-rise warehouses fully utilizing automated storage

further minimizing pollutant emissions during transportation. As of the end of this reporting period the

and retrieval systems to improve storage efficiency and reduce the consumption of land and human resources. The

company's nationwide logistics centers were equipped with a total of 38 electric forklifts.automated high-rise warehouses at the Changsha and Yangzhou logistics centers feature 13-layer shelf units with 20 aisles

and 32000 pallet positions capable of storing 540000 boxes of goods. It has made optimal use of space. Nationwide over 99% of the company's delivery vehicles operate under a shared model

The design and construction of the self-built logistics centers employ insulated brick partition walls and external walls with utilizing differences in transportation schedules and routes across various industries

thermal insulation and decorative materials. Photovoltaic power generation facilities are installed on warehouse rooftops to reduce empty vehicle runs. Additionally the company actively leverages intelligent

saving over 40% of energy during warehouse operations and effectively reducing energy consumption. The company digital systems to optimize transportation routes lowering costs while reducing energy

has formulated the "Logistics Center Energy Saving Operational Guidelines" to standardize the use of air conditioning consumption. As of the end of the reporting period the company used a total of 293 delivery

lighting and office equipment. All warehouse lighting in the logistics centers adopts energy-saving lamps along with vehicles of which 85 were new energy vehicles accounting for 29%. In 2024 35 new energy

centrally controlled air conditioning and temperature-humidity monitoring systems. Temperature and humidity inside vehicles were added further advancing green logistics.the warehouses are reasonably regulated based on GSP temperature requirements. Furthermore the warehouses at the

Yangzhou and Changsha logistics centers have achieved paperless operations effectively reducing the consumption of

paper materials.

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Green Production Green Stores

The company adheres to the principle of prioritizing environmental LBX Pharmacy actively invests in the construction of green stores in every process. From design and decoration to operation various eco-friendly

protection and green development actively implementing green initiatives are implemented to promote a philosophy of health environmental protection and sustainable development. These efforts showcase the

production practices. This includes evaluating the environmental company's commitment to environmental responsibility providing consumers with a better and greener service experience.soundness of suppliers' processes strictly controlling the compliance

traceability and safety of raw material sources and adopting eco-friendly

practices throughout the production process. From sourcing to production Stage Measure

and transportation every step is managed to minimize pollution emissions.Store Integrate green concepts by adopting energy-efficient lighting systems and designs such as controlling a row of lights

Design at the entrance separately and segmenting other areas. When natural light is sufficient certain lights can be turned off

Green Raw Materials independently to conserve energy providing a more comfortable lighting effect while reducing energy consumption.Optimize the natural lighting design of stores by reasonably arranging windows and translucent materials to maximize

Pesticide pollution can cause long-term harm to the ecological environment the use of natural light. This reduces the duration of artificial lighting and lowers electricity consumption.and may impact human health through the food chain. YST Pharma

prioritizes suppliers practicing large-scale cultivation and transitions Establish regulations such as the "Store Decoration Engineering Management System" and the "Fifth-Generation

from traditional market acquisition to deep integration with base-level Store Decoration Standards" which stipulate that we shall adhere to principles of minimal disruption to residents

operations and growth cycle monitoring. Full supervision of pesticide bans and zero pollution during renovations with standardized and scientific construction processes and emphasis on

for raw materials is implemented. The company has achieved nationally Store health and environmental protection.advanced levels in applying gas chromatograph-mass spectrometry (GC- Decoration

MS/MS) and liquid chromatograph-mass spectrometry (LC-MS/MS) for Apply advanced eco-friendly materials technologies and techniques to continuously optimize and iterate store

residue testing in traditional Chinese medicine. decoration plans. For instance shelves adjacent to walls are left undecorated to reduce material usage exposed

walls use eco-friendly bamboo and wood fiberboards while low-VOC paints are prioritized.Eco-Friendly Processes Store Adopt biodegradable and recyclable eco-friendly packaging materials to reduce the use of plastic packaging.Operations

We prioritize the use of eco-friendly processes in production. Externally

the company collaborates with suppliers utilizing green energy drying

methods such as electric low-temperature drying instead of traditional

coal drying applied to products like monk fruit and roses. Internally YST

Pharma implemented a jujube sorting production line enabling integrated Case Advocating Plastic Reduction and Actively Using Eco-Friendly Packaging Bags

jujube sorting and packaging production reducing manual handling

turnover and intermediate product storage. In 2024 the company reduced Facing the increasingly severe issue of plastic pollution the company actively promotes green shopping at its clinics and retail outlets.the use of 5258 bags for pre-measured ingredients. Additionally we have gradually upgraded the materials to more eco-friendly biodegradable options introduced photodegradable shopping

bags and biodegradable kraft paper bags and through researching consumers' shopping needs we created smaller-sized bags to reduce raw

material usage. In 2024 all stores (including franchises) replaced traditional plastic bags with eco-friendly photodegradable shopping bags

totaling 32.85 million bags.

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Environmental Compliance Management Use of Energies and Resources Climate Change Tackling Green Operation

Green Office Practices Asset Conservation

LBX Pharmacy has implemented a series of measures to lower the carbon The company has established the "Physical Asset Management System" conducted annual asset inventories with submission of inventory reports and

footprint of its office operations. Starting from small actions like promoting inspected asset management quarterly. It rationally arranges the company's inventory of materials to avoid overstocking or repeating purchases checks

environmental awareness conserving office supplies and reducing travel stock before ordering office supplies and utilizes intelligent systems to digitize the full lifecycle management of assets from procurement to disposal.consumption the company aims to minimize the generation and emission This enhances asset management efficiency and maximizes the recycling rate of company assets.of pollutants during workflow rationally reduce the consumption of office

energy and resources and integrate green concepts into office details Grain Saving

thereby contributing to environmental protection.The company cafeteria features posters advocating grain-saving practices anti-plastic

Green Commuting campaigns and the "Clean Plate" initiative to remind employees to avoid food waste.Considering employees' varied food needs the cafeteria offers both small and large portion

The company provides employees with new energy buses and optimizes options encouraging employees to only take the food they can finish. Dedicated personnel

bus routes based on actual circumstances to lower carbon emissions during stationed at cafeteria recycling points supervise efforts to prevent food waste.their commutes. In 2024 the Group's headquarters has 13 new energy

buses (7 owned and 6 leased) transporting more than 800 employees Biodiversity protection

per day in single trips. Additionally the company actively encourages

employees to purchase new energy vehicles and has installed 18 new Biodiversity is a critical pillar for maintaining the ecological balance of the Earth and promoting the propagation of life as well as a solid foundation

energy vehicle charging stations at its headquarters park. for achieving sustainable development in human society. The company strictly adheres to the "Wild Animal Protection Law of the People's Republic of

China" and the "Regulations on the Protection of Wild Plants of the People's Republic of China."

During the construction process of park projects the company fully considers soil and water conservation and conducts environmental restoration upon

completion of construction thus minimizing adverse impacts on the ecological environment. With the goal of "activating inner courtyard spaces" the

headquarters is committed to creating a more ecological and biodiverse office park allowing employees to enjoy the beauty of nature during leisure.When selecting plants we choose local plant species as much as possible adapting to local conditions while saving costs.Biodiversity conservation measures in the construction of LBX Pharmacy's park projects

Stage Measure

New Energy Buses of the Company Before construction Fully consider soil and water conservation and environmental protection requirements when selecting the project site.Reduced Paper Use Strictly control and manage the operation range of vehicles and machinery to prevent widening soil

disturbance.Set up warning signs to protect the surface and vegetation emphasizing the conservation of ground cover

The company utilizes information systems and tools to actively promote Under construction and vegetation.paperless office practices. Furthermore special office documents must Pay attention to the safety of construction and living fires to prevent wildfires from destroying vegetation.be printed double-sided non-official documents are encouraged to be

printed on reused paper and paper-saving reminders are posted in printing

areas along with providing collection boxes for reused paper. In 2024 the After the site is leveled adopt landscaping and greening measures to meet protection and greening needs.Post construction Strengthen the nurturing and management work after planting trees shrubs and grass ensure proper

company's office paper usage for printing was 375.73 tons. maintenance and guarantee their survival and preservation rates.

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Development with a Shared Future

06

Empowering Employee Development

Contents of This Section

Employment Management

Talent Development

Altruistic Employees

Health and Safety

LBX Pharmacy is committed to building a sustainable workplace. We

actively create a diverse fair and equitable working environment for

our employees fully leveraging talent value and fostering innovation.We respect and value each employee establishing clear career

development pathways and co-creating a learning organization to

empower employees to grow continuously and achieve a better self in a

rapidly changing environment. As guided by the principle of "altruism"

we have long focused on employees' physical and mental health and

safety so as to drive them to better serve customers bring warmth

to the community and move towards a sustainable future with the

company.Responses to SDGs in This Section

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Employment Management Talent Development Altruistic Employees Health and Safety

Employment Management

LBX Pharmacy strictly adheres to national labor laws regulations and international labor standards in employment management to ensure compliance. We uphold principles of diversity and non-discrimination to eliminate all forms

of bias and create an inclusive diverse and vibrant workplace environment that drives sustainable co-development between the company and employees.Employee Structure Respect Human Rights

LBX Pharmacy strictly complies with "Labor Laws" "Labor Contract Law" and other national labor regulations labor protection rules

as well as human rights provisions set out by the International Labour Organization (ILO) and the United Nations Global Compact.During the reporting period no incidents of forced labor or child labor occurred within the company. At the same time employee's

privacy has been strictly protected. According to the group's "Notification Regarding Legal Matters on Providing or Obtaining

Personal Information" and the department's "Data Extraction Application" all individual requests to export mobile numbers identity

information (e.g. ID card) and detailed addresses of the employees are prohibited to prevent intentional or unintentional disclosure of

employee's private information to unauthorized personnel.The company has established the "Management Regulations to Prevent Workplace Sexual Harassment." Malicious incidents such

as sexual harassment and related complaints are handled with seriousness to ensure that employees work in a safe respectful

environment free from harassment and harm.Labor Rights

LBX Pharmacy legally concludes performs modifies terminates or ends labor contracts with employees. All companies within

the group have fully implemented the signing of electronic labor contracts achieving a 100% labor contract signing rate. For labor

relationships involving retired re-hires interns and other personnel corresponding labor agreements are signed.The company strictly complies with national labor laws and regulations ensuring proper and standardized procedures for employee's

onboarding confirmation transfer resignation and handovers. It continuously improves the fundamental standards and processes

of human resources at the group headquarters and its subsidiaries. Salaries are paid on time social insurance and housing fund

contributions are made promptly and updates on labor developments such as retirement maternity and work-related injuries are

timely tracked fully safeguarding employees' legal and reasonable rights.In 2024 the company updated the "Attendance System of the Group"and "Personnel Transfer and Handover Management System of

the Grou" achieving centralized online attendance management and establishing a standardized system for overtime and leave. It also

enhanced the"Resignation Green Card Management System of the Group" encouraging outstanding employees to rejoin the company

after resignation and providing preferential policies in terms of onboarding and seniority calculation.

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Employment Management Talent Development Altruistic Employees Health and Safety

Protection from Labor Union Diversity Inclusiveness and Equity

The company's trade union is independently operated in accordance with the "Trade Union Law of the People's Republic of China" and the "Constitution "Simplicity and Efficiency" "Integrity and Selflessness" "Equality"

of the Chinese Trade Unions". It continues to improve systems such as the staff representative congress and public enterprise affairs for democratic and "Pragmatism" are the DNA of LBX Pharmacy's corporate culture.management. By extensively listening to member voices it plays a critical role in safeguarding employee rights and serves as a "bridge and link" while We are committed to building a diverse talent team and striving to

actively participating in the company's decision-making. In 2024 the company held two staff representative congresses in which it collected over 500 create a diverse equal and inclusive workspace with a warm working

suggestions from grassroots employees achieving a 92% implementation rate of employee feedback by the end of the reporting period. Regular employee atmosphere for employees across the country enabling everyone

skill training sessions are conducted along with member activities to enhance employee care and promote harmonious labor relations. In 2024 Chifeng to better utilize their expertise and strengths. In our work we avoid

LBX Pharmacy a subsidiary of LBX Pharmacy was awarded the "National May Day Labor Medal" and recognized as a "National Advanced Unit for Public discrimination or bias based on age gender nationality race

Enterprise Democratic Management". complexion religion and marital status etc. For subsidiaries located

in different regions nationwide we focus on retaining localized talent

actively developing talent retention plans and pushing forward their

implementation in accordance with the law. We believe that every

"LBX employee" can successfully contribute to our vision of "Devoting

to Healthcare and Establishing a Time-honored Enterprise" through

diligence and collaboration.

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Employment Management Talent Development Altruistic Employees Health and Safety

Talent Acquisition

Sustained development of the workforce is always a crucial foundation for enterprises to cope with external challenges. LBX Pharmacy guided by actual demands keeps enriching its diverse recruitment channels by conducting open

fair and just recruitment activities in a scientific and regulated manner. It introduces specialized talents from various fields at appropriate times to strength its talent pool improving the quality and effectiveness of talent acquisition

and contributing to sustainable corporate development.Management Trainee Program: "Career Makes Your Life Better" Veterans' "Young Poplar Plan"

In 2024 the company further upgraded its "Management Trainee Recruitment Program" by reaching out to top The "Young Poplar Plan" is a long-term talent development initiative set by LBX Pharmacy. Through this plan the

domestic and international universities to recruit outstanding talents hiring a total of 140 individuals which company recruits outstanding veterans and provides them with vast career development opportunities. In 2024

showed a year-on-year increase of 66.67%. the "Young Poplar Plan" conducted one recruitment fair and interviewed 90 individuals 7 of whom were hired.Targeted Recruitment for Tier-3 and Lower Markets Collaboration with Medical and Health Schools

In 2024 the company organized specialized recruitment fairs tailored for tier-3 and lower markets efficiently Focused on the pharmaceutical and healthcare industry the company collaborated with 65 vocational colleges

and broadly reaching talent in these areas. This initiative provided "local" job opportunities to county and specializing in medicine and health such as Hunan Traditional Chinese Medical College and Hunan Food and Drug

township-level job seekers. It has hosted a total of 20 offline dedicated recruitment events interviewing 2000 Vocational College. Through models like modern apprenticeship programs joint employment internship bases

individuals and hiring over 1000. and targeted talent cultivation the company efficiently introduced and nurtured professional talent. In 2024 the

company recruited over 1600 fresh graduates specialized in pharmaceuticals.

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Employment Management Talent Development Altruistic Employees Health and Safety

Talent Development

Talent development is not only critical to individual career growth but also the source of innovation and competitiveness for

enterprises. LBX Pharmacy adheres to the philosophy of "Building a Learning Organization Achieving a Better Version of Self" by

establishing diverse training programs for all employees. The company is committed to offering diverse learning opportunities while

smoothing career progression mechanisms optimizing performance management and ensuring employees to continuously grow

amidst industry changes and company needs thus helping them achieve career development and personal value enhancement.Training and Learning

In the VUCA (Volatility Uncertainty Complexity Ambiguity) era we aim to help employees establish a full-lifecycle career

management system from the perspective of training. By providing clear career paths diverse learning opportunities and flexible

support we assist employees in adapting to rapidly changing environments while enabling the joint growth of individuals and the

organization.After years of development and practice LBX Pharmacy has established a relatively comprehensive talent development system

driven by strategy and business. By focusing on enhancing organizational leadership and management capabilities through key

function-line talent cultivation implementing tiered training for front-line talents to improve execution and service capabilities and

adopting a mentoring model to increase the density of professional pharmacists the company continuously stimulates employees to

exert potential and innovation.

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Employment Management Talent Development Altruistic Employees Health and Safety

Talent Development for Functional Lines

Key Position Talent Development Management Trainee Development

The company emphasizes the sustainable development of talent in key positions. With the support of the "Operations Merchandising and Management trainees are a robust reserve force driving the company's

Procurement Talent Development Program" and the "Backup Talent Program" the company selects candidates for key positions nationwide sustained development and innovation. By providing systematic

annually. By identifying each candidate's strengths and weaknesses in relation to the desired role personal growth plans are created on the learning and training opportunities through activities such as

basis of a combination of role general requirements and individual characteristics. The practice further enhances their capabilities to adapt to centralized training business chain learning frontline practice

the ever-changing market environment. In 2024 the company developed 162 talents for key positions. targeted line-specific hands-on training and discussions with senior

executives the program helps trainees shape cross-functional thinking

and collaboration abilities. This enables them to quickly grow into key

management forces for the future. In 2024 the company cultivated 141

management trainees in total.Management Talent Development

The company builds a layered and categorized leadership development system through various forms such as online learning offline training

camps think-tank forums action-based learning and corporate visits aiming to create a management team with operational ideas. For

junior managers the focus is on enabling role transitions and reshaping their professional and managerial competencies. For mid-level

managers training emphasizes broadening perspectives enhancing holistic and systematic thinking abilities and strengthening operational

capabilities to elevate leadership skills. In 2024 the company cultivated 99 management talents in total.

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Employment Management Talent Development Altruistic Employees Health and Safety

Frontline Talent Development

We offer targeted training programs for frontline employees at different stages of their career development helping them grow progressively. For newly hired staff and reserve store managers training is conducted primarily through a

"mentor-apprentice mode" at top-performing stores certified by the group. This helps them quickly adapt to the environment acquire new knowledge and skills and enhance their systematic understanding of the targetted roles.Frontline Talent Development

On-the-Job Talent Development

To support the continuous growth of on-the-job employees and help them realize their potential we categorize employees based on their roles and adopt an "online +

offline with practical training" approach for development. In 2024 the company conducted a total of 321 centralized training camps which has trained 16313 individuals.Among them 234 sessions that focused on reserve talent development trained 9747 employees and 87 sessions that targeted at on-the-job talent development

cultivated 6566 employees.

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Development with a Shared Future

Employment Management Talent Development Altruistic Employees Health and Safety

Professional Talent Development Altruistic Emergency Training

Licensed Pharmacist Development LBX Pharmacy continues to deepen the "altruism" philosophy by actively conducting employee

emergency skills training. In 2024 online training covered over 50000 participants and more than 2000

As a pharmaceutical retail enterprise professional expertise is key to earning the on-site hands-on practice sessions were organized. Additionally the company conducts a "Finding the

continuous trust of customers. We consistently strengthen the development of Most Beautiful Emergency Pioneer" evaluation every six months to recognize employees who step forward

licensed pharmacists by improving the assistance mechanisms for the pharmacist in critical situations and apply their professional emergency knowledge to help others thus inspiring

certification exams and we established awards such as "Employee Learning and everyone to embody the spirit of "altruism."

Growth Award" "Talent Training Award" and "Special Execution Award" as well as

offered paid leave and full reimbursement for exam fees. These initiatives encourage

employees to actively participate in the national licensed pharmacist qualification

exams thereby strengthening our team of licensed pharmacists. In 2024 a total of

958 employees passed the licensed pharmacist exam with an overall pass rate of

35.4% which is 14.3pp higher than the national average.

Altruistic Training for All Staff

In 2024 the company continued to deeply promote and deliver training on the culture of "altruism." By utilizing "The First Lesson on

Altruism"monthly mandatory lessons on the "BaixingTong" platform and offline intensive training programs the company aims to

continuously nurture employees' altruistic thinking and help them systematically understand and practice altruism.Skills Competition

The Chronic Disease Knowledge Grand Competition is a talent development project

aimed at enhancing professional skills through "training via competition." In 2024

we continued to host the competition in the form of pharmacology/pathology tests

case studies and on-site service evaluations through which we selected 200 chronic

disease experts.

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Development with a Shared Future

Employment Management Talent Development Altruistic Employees Health and Safety

Promotions and Performance

The company is committed to building a fair and transparent talent development system. We have established diversified promotion channels covering management Annual promotion

professional and technical tracks to offer employees clear career development pathways. By setting robust performance assessment standards we ensure that the assessment

process is open and fair motivating employees to continually enhance their professional capabilities and work efficiency fostering mutual growth for both individuals and the

organization. 2649 person-times

Talent Development Channels Performance Management

Since the company places great emphasis on talent development pipelines we have The company updates the "Performance Appraisal Management System of the Group" from time to time to align with strategic development

formulated the "MTP Career Development Pathways and Promotion Management objectives evaluate departmental and employee performance in an objective fair and scientific manner and motivate employees to focus on

System" which includes three tracks—Management Professional and Technology. company operational and management targets to drive constant improvement in work efficiency and quality. This system not only emphasizes

In 2024 a total of 2649 promotion instances were recorded within the company clear rewards and penalties but also ensures level-based protection for frontline employees thereby enhancing the organization's overall

including 61 instances of middle-to-senior level promotions and 539 instances of performance. Meanwhile the company prioritizes performance coaching by providing detailed guidelines on performance interview frequency

grassroots management promotions. format and content to ensure that employees' work stays aligned with organizational strategic goals to enhance their performance during the

assessment and to foster long-term competency.The company continues to enhance its talent assessment system by developing

qualification standards and job certification projects creating standardized

and high-quality talent development criteria identifying key talent as well as

clarifying employee development directions to motivate a vibrant talent ecosystem.Qualification and certification efforts have already covered all frontline stores and

business circles across the country. In 2024 there were 1349 employees promoted

to store managers and 42 promoted to business circle managers.

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Employment Management Talent Development Altruistic Employees Health and Safety

Altruistic Employees

LBX Pharmacy consistently upholds the corporate culture of "caring for employees" which has integrated the philosophy of "altruism toward employees" into daily management. We continuously improve compensation and benefit

systems create a fair and transparent working environment and prioritize employees' physical and mental well-being by organizing regular care activities. Employees are encouraged to convey goodwill and professionalism when

serving customers jointly fulfilling the mission of "Do everything for the people" and fostering mutual growth between the company and its employees.Fair and Competitive Compensation

LBX Pharmacy continuously improves a fair and competitive compensation system to attract retain and motivate

talents supporting sustainable business development. We advocate the philosophy of "sharing success with achievers

and sharing value with value creators" adhering to the principles of fairness flexibility and rewarding hard work.We implement a broad-banded pay system based on qualifications job grade systems personal capabilities and

performance contributions. Through mechanisms like profit-sharing restricted stock programs and an innovative

partnership program as well as benefit-sharing initiatives such as employee compensation reform and the Red Koi

Program the company provides employees with career development opportunities and fair remuneration. It has

established a compensation system that aligns responsibilities authority capabilities and benefits closely.Employee Benefits

The company strictly complies with national and local laws and regulations ensures timely payment of social

insurances and housing funds and guarantees paid leave entitlements such as statutory holidays annual leave

maternity leave paternity leave marriage and bereavement leave breastfeeding leave and home visit leave.Additionally to enhance employees' sense of belonging and happiness the company provides commuting shuttles

employee dormitories staff cafeterias meal benefits libraries gyms and other living services. Various cultural and

recreational activities such as family events birthday parties holiday celebrations and team-building activities are

organized. Furthermore to meet personalized needs the company offers specific care for eligible employees or their

families. This includes rewards for certifications consolation gifts gratitude cash for parents incentives for children's

college entrance achievements and a multi-million hardship assistance fund for difficulties. Additional supplemental

insurance coverage like accidental injury and critical illness insurance is provided for employees in specialized

positions.

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Employment Management Talent Development Altruistic Employees Health and Safety

Improving Employee Satisfaction

The company places great emphasis on enhancing employee satisfaction which always listens to employees' opinions and ensures fluent communication

channels. Each year the company conducts regular employee satisfaction surveys at both its headquarters and stores nationwide aiming to strengthen

employees' team spirit and sense of belonging. In 2024 the company carried out employee satisfaction surveys at the headquarters semi-annually totally two

surveys per year and quarterly at stores nationwide totaling four surveys per year.Comfortable Work Environment

We care about employees'health and vitality striving to provide a healthy safe warm and comfortable work environment with smart and convenient facilities.Significant resources are invested in renovating and upgrading office spaces to ensure spacious bright and well-ventilated environments enhancing employees'

enjoyment of their work and life at the park.Meanwhile the company has equipped the park with a variety of lifestyle facilities such as lounges gyms reading rooms basketball courts yoga rooms and

KTVs so that employees can relax and unwind during their spare time.

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Employment Management Talent Development Altruistic Employees Health and Safety

"Ten Altruistic Actions": Upgrading Dining Areas and Employee Dormitories

In 2024 LBX Pharmacy thoroughly implemented the spirit of "altruism" by focusing on the "Ten Altruistic Actions" to foster an altruistic mindset for all employees. This involves upgrading and renovating dining areas and employee

dormitories in frontline stores.Renovating Employee Dining Areas： Upgrading Employee Dormitories：

Based on the actual space of the stores tailor-made dining areas are created by providing dining essentials such as tables Strict standards for both soft and hard furnishings are established for employee

chairs microwaves and small refrigerators to enhance the dining environment. By 2024 renovations for dining areas in dormitories. Furniture such as tables chairs wardrobes and beds are allocated

more than 4000 stores were completed incrementally. based on the number of occupants while electrical appliances like air conditioners

washing machines water heaters and refrigerators are provided per dormitory

allowing them to feel the warmth of home. In 2024 the company successfully

upgraded and renovated a total of 406 dormitories.

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Development with a Shared Future

Employment Management Talent Development Altruistic Employees Health and Safety

Enriching Humanistic Care

Recognition of LBX Stars Hardship Assistance Fund

To comprehensively showcase LBX employees' style and promote the corporate spirit the company organized In 2024 the company continued its "Multi-Million Hardship Assistance Fund" to provide timely support for

the "LBX Stars Selection" in 2024 recognizing a total of 128 individuals. An award ceremony was held on October employees in need. Throughout the year the fund aided 68 families of employees in distress with total aid

27 2024. Alongside recognizing the employees the company also extended care to employees' families. Parents amounting to RMB 1555852. The highest individual assistance was RMB 100000. Beyond social medical

of those awarded "LBX Star" received a monthly pension of RMB 300 for 12 months. This reflects a warm image insurance the company reimbursed personal expenses at rates as high as 60%.where employees work hard and their parents feel pride and comfort.Incentive Program for Employees' Children Taking College Entrance Exams Special Training on Psychological Resilience

We firmly believe that family is always the driving force behind the hardworking LBX employees. The "Child The sustainable development of the company relies on the healthy physical and emotional growth of its

Development Plan" is one such benefit recognized unanimously by the company's management as a way to employees. In 2024 we launched "Psychological Resilience Training" to help employees maintain a positive

care for employees' families. The company focuses on children of employees sitting for college entrance exams mindset adjust work methods improve stress management capabilities and enhance emotional management

rewarding employees who have served for over three years and whose children achieve excellent results. In 2024 skills enabling them to better tackle challenges and pressures in their work.a total of RMB 703968 was distributed as bonuses benefiting 435 individuals.

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Development with a Shared Future

Employment Management Talent Development Altruistic Employees Health and Safety

The Power of Women

As a company where nearly 90% of employees are women LBX Pharmacy places great emphasis on the power of women. We ensure the protection of female employees' rights strictly complying with relevant laws and regulations

such as the "Law of the People's Republic of China on the Protection of Rights and Interests of Women." Moreover we strengthen protections for female employees during pregnancy maternity leave and breastfeeding. We respect

their equal rights to development and aspirations for career progress encouraging women to utilize their intelligence and potential to excel in various positions.Additionally the company strives to improve welfare benefits for female employees. Beyond statutory holidays special half-day leave is provided on International Women's Day along with gifts. Maternal and child facilities are

established at the headquarters relevant health check-up programs are added for female employees and various fun activities are regularly organized to help women relax and unwind.Case International Women's Day Activities

On March 8 2024 International Women's Day the company headquarters and its regional subsidiaries organized diverse activities. These included inviting medical experts to deliver lectures on women's

health presenting blessings and gifts to female employees and organizing workshops like flower arrangement. These efforts aimed to make female employees feel warmth and love inspiring them to

engage more enthusiastically at work and life.Female Employee Growth Story： He Min - Chronic Disease Specialist at LBX Pharmacy Liuyang Store Female Employee Growth Story: Xie Fengjiao Manager of Fenghuang Tuojiang Branch of Hunan

HunanCompany LBX Huairen Pharmacy Chain Co. Ltd.He Min joined LBX Pharmacy in 2009. Xie Fengjiao earned her Practicing Physician

Through diligent efforts to enhance her Qualification Certificate in 2013 followed

pharmaceutical expertise she actively b y t h e Tr a d i t i o n a l C h i n e s e M e d i c i n e

participated in various internal and external Pharmacist Qualif ication Certif icate in

training sessions and competitions organized 2014 and the Western Medicine Pharmacist

by the company eventually becoming a dual- Qualification Certificate in 2019. With her

certified practicing pharmacist. In her work unwavering passion for the industry and her

she served patients with professionalism recognition of the pharmacist profession

who often visited rural areas to care for she has consistently studied pharmaceutical

elderly people living alone providing free knowledge and communication skills for over

blood pressure and blood sugar checks and giving away medication for free. She developed many ten years continuously improving her professional skills. She has gained the trust and recognition of

cross-generational friendships with chronic disease patients. In 2016 He Min was awarded the title local residents who affectionately call her "Dr. Xie" In 2023 she was awarded the title of "Hunan's Most

of "China's Top 10 Outstanding Pharmacists" and in 2024 she was honored as a "Touching Figure in Beautiful Pharmacist."

Chinese Pharmacies."

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Employment Management Talent Development Altruistic Employees Health and Safety

Health and Safety

LBX Pharmacy strictly adheres to the relevant legal and regulatory requirements including the "Work Safety Law of the People's Republic of China" and the "Law on Prevention and Control of Occupational Diseases of the People’s

Republic of China." The company continually improves its health and safety management efforts for employees regularly conducts safety risk assessments and emergency drills strives to create a safe and healthy working environment

for employees and achieves joint development for both the company and its employees. In 2024 no safety production accidents occurred at the company.Safety System

Most of our employees work in stores and parks with a small portion working in logistics and traditional Chinese medicine manufacturing facilities. Adhering to the principle of "people-oriented safety first" the company has

established systems such as the "Safety Target Management System" "Hazardous Source Management System" "Emergency Management System" "Special Equipment Safety Management System" "Fire Safety Management

System" "Logistics Safety Hazard Inspection and Management System" "Warehouse Fire Emergency Handling Plan" "Safety Incident Reporting System" and the "Security Management System of the Group." The company has also

established and improved emergency management mechanisms to ensure timely and effective responses in case of emergencies.Premises Safety

In LBX parks branch offices and store premises we have equipped fire safety

equipment and conduct regular fire safety inspections. Special inspections are Water Quality Testing: In June 2024 a third-party organization conducted comprehensive cleaning disinfection and end-point

organized before major holidays such as May Day National Day and the Spring water sampling inspections of the secondary water supply system in the headquarters park with an inspection report produced.Festival. The headquarters inspects fire equipment configuration of subsidiaries

throughout China via video sessions quarterly (four times annually). In February Power Supply Equipment Maintenance: In November 2024 a partner of the power supply bureau conducted the annual inspection

2024 we conducted fire safety inspections across thousands of stores nationwide and maintenance of primary power distribution facilities and equipment in the headquarters park to ensure system safety and

and identified 493 safety hazards all of which were rectified by May 2024. stability thereby preventing electrical fire incidents. A inspection report was issued.To ensure employee safety and healthy working conditions we regularly engage

Annual Elevator Inspection: Annual inspections of various elevators in the park are conducted to ensure excellent elevator

professional third-party services to perform routine safety inspections on park conditions with annual inspection reports produced.facilities such as water systems power supply systems and elevators and issue

corresponding inspection reports to ensure safe usage.

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We actively collaborate with external professional resources to organize fire evacuation

drills fire equipment operation training emergency rescue drills for elevator accidents

first aid training and other activities for employees continuously enhancing their safety

awareness and skills. Simultaneously we equip the headquarters park with first aid

kits AED devices and other tools to improve professional rescue capabilities during

emergencies.At our logistics center we have established a safety protection team that conducts

daily safety inspections rigorously implementing safety management responsibilities.In 2024 the company optimized and upgraded the "Logistics Center Personnel Access

Management Rules" to ensure separation of pedestrian and logistical traffic and

strengthen access control management. It has reviewed the video surveillance system On September 30 a fire safety drill was conducted at the Changsha headquarters park. On December 3 the LBX Pharmacy Xiangbei Region conducted fire

safety training.upgraded security across the nationwide warehouse network installed access alarm

systems and achieved centralized monitoring at the group level to ensure zero safety

incidents throughout the year at logistics centers.Health Management

The company attaches great importance on occupational health for employees which strictly adheres to relevant laws and regulations such as the "Occupational Disease Prevention and Control Law" "Occupational Health

Examination Management Measures" and "Good Supply Practice for Pharmaceutical Products." Regular health checkups are organized for employees along with occupational health training to promote health awareness and ensure

compliance with occupational health standards for both employees’ health conditions and their work environment. Additionally employees in roles involving direct contact with pharmaceuticals—such as quality control acceptance

maintenance and storage—are required to undergo pre-employment and annual health examinations with health records established for them.Work Injury Management

The company strictly executes the reporting and handling process for work-related injuries. In the event of a work-related injury emergency plans are immediately activated to ensure that the injured

employee receives timely medical attention and work injury recognition applications are submitted in accordance with legal requirements to protect the legitimate rights and interests of employees.Furthermore the company conducts thorough investigations into all work injury incidents to analyze the root causes and takes targeted corrective measures to prevent recurrence.

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Development with a Shared Future

07

Creating a Community with a

Shared Future

Contents of This Section

Rural Revitalization

Public Welfare and Charity

Healthy Community

LBX Pharmacy actively promotes and advocates the culture of

"altruism" which takes proactive measures to fulfill its corporate social

responsibility. The company is committed to contributing to the pursuit

of common prosperity and the construction of a Healthy China. We are

deeply involved in lower-tier markets to promote employment and

economic development thus injecting strong momentum into rural

revitalization. We engage with communities and towns to advocate for

healthy lifestyles serving as guardians of safe medication use. We have

actively participated in public welfare initiatives in collaboration with

our partners with cumulative donations exceeding RMB 100 million

in value. Through heartfelt efforts to disseminate a "healing" culture

we strive to offer warmth and strength to more individuals within the

framework of this healing ethos collectively building a community with

a shared future for humanity.Responses to SDGs in This Section

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Rural Revitalization Public Welfare and Charity Healthy Community

Rural Revitalization

As a pharmaceutical retail enterprise dedicated to serving public health it is our inescapable duty to actively take responsibility and make contributions to rural revitalization. LBX Pharmacy has identified "Advancing into New Rural

Areas" as one of the company's seven core strategies. By promoting store franchise programs to support entrepreneurial ventures in rural areas leveraging e-commerce to enhance agricultural procurement and implementing targeted

assistance to improve rural healthcare facilities we have developed a multi-channel multi-dimensional support strategy to drive comprehensive rural revitalization.Franchises Supporting Rural Entrepreneurship

LBX Pharmacy actively expands into "New Rural Areas" by utilizing franchise business opportunities. With the support of corporate supply chain management digital and intelligent capabilities and innovative business models

the company helps migrant workers return to their hometowns and engage in the healthcare sector. This initiative not only improves local medical and healthcare standards but also fosters comprehensive economic and social

development in rural areas. In 2024 to support franchisees in navigating industry cycle adjustments the company plans to allocate product resources worth of over RMB 6 million as rewards for franchisees aiming to enhance

operational quality while promoting sustainable development for franchise partners.Data as of the End of 2024

Case Returning Home with Love Transitioning from State-owned Enterprise Employee to "Health Guardian"

In 2013 Xiong Bo resigned from a state-owned enterprise in Shenzhen and resolutely returned to his hometown in Hunan to

start a business. After experiencing the trial and error of opening an independent pharmacy and failing Xiong Bo and his wife

joined LBX Pharmacy in 2019 after much research. Now their operations are on track and they've opened a second store.Xiong Bo commented "Choosing wisely is more important than working hard. I am grateful for the support of LBX Pharmacy

and hope that in the future we can steadily grow by adding one store every two years continuing to be guardians of public

health."

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Development with a Shared Future

Rural Revitalization Public Welfare and Charity Healthy Community

Targeted Support to Help Farmers

LBX Pharmacy has been steadfastly advancing rural support efforts participating in national and provincial government-led poverty-relief initiatives numerous times. In 2024 the company held over 100 public welfare activities

including poverty alleviation and rural revitalization projects.These actions aim to improve rural medical conditions and address local livelihood issues further enhancing its role in agriculture and rural assistance.Case Supporting Improvement of Rural Medical Conditions E-commerce Empowerment Fostering

Agricultural Industry Development

In September 2024 LBX Pharmacy donated medical supplies worth

RMB 200000 to Fengning County Hebei Province supporting the LBX Pharmacy has actively worked to integrate upstream and downstream industries

development and construction of 12 rural health clinics in the area while developing unique agricultural products. Leveraging its self-developed

to contribute to Fengning's "Healthy Village" initiatives. Fengning new retail online sales platform the company introduced regionally distinctive

County is a priority contact county under the targeted assistance of agricultural products such as Yongxing Oranges Yanling Yellow Peaches and Baise

the China Democratic National Construction Association. As a member Mangoes from Guangxi fostering agricultural industry growth. By 2024 the number

enterprise of the Hunan Provincial Committee of the association of "direct delivery" goods available on LBX Pharmacy's private app-based mall

LBX Pharmacy has continuously supported the construction of rural reached 1500+SKUs with its "Full Small Bag" initiative boosting agricultural sales to

health clinics in Fengning since 2022 donating urgently needed anti- surpass RMB 4 million.pandemic materials medicines and medical equipment with a total

value nearing RMB 1 million. Case Tracing Livestreaming: Fresh Agricultural Products Journey Out of Remote Mountains

To support high-quality fresh agricultural products in breaking geographical

limitations and stepping out of remote mountains in November 2024 the

assistance procurement team of LBX Pharmacy ventured into the core

planting areas of oranges in Jingui Town of Yongxing County Chenzhou City

Case Donation to Repair Roads Helping Transform Hazardous Routes into Accessible Pathways Hunan Province. Together with the local supply and marketing cooperative

they organized an innovative tracing livestreaming event. Through LBX

Pharmacy's private domain platform on the mini program they facilitated

In June 2024 Jinta Village in the Chenjiatan Township Yuanling

the seamless connection of premium agricultural products from rural fields

County of Huaihua City Hunan Province suffered severe damage to its

to urban dining tables opening up new pathways for increasing farmers'

roads caused by heavy rainfall greatly hindering daily travel for local

income.villagers. Upon learning the news LBX Huairen Pharmacy partnered

with several charitable enterprises to raise over RMB 100000 to repair

the roads in Jinta Village turning hazardous pathways into safe and

reliable roads.

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Public welfare and charity

From disaster relief and charitable help to honoring teachers respecting education and caring for vulnerable groups LBX Pharmacy has always been at the forefront of public welfare spreading warmth and love touching the hearts

of countless individuals.Disaster Relief and Assistance

In July and August 2024 during the summer season heavy rainfall caused flood risks in many areas of Hunan Province. LBX Pharmacy

took swift action donating anti-inflammatory heat-clearing detoxifying and summer-heat prevention medicines and other urgently

needed post-disaster hygiene supplies worth over RMB 378000 to areas including Pingjiang Yueyang Huarong Zixing Chenzhou and

Wuqianxi Town in Yuanling County. These resources supported flood relief efforts and contributed to post-disaster reconstruction.Caring for "Guardians"

A touch of refreshment a dose of care and a gesture of affection. During July and August 2024 under the sweltering summer heat LBX Pharmacy's branches in Hunan Guangxi Shaanxi Anhui Tianjin Huairen Pharmacy Chifeng

Renchuan Pharmacy BXY Pharmacy Baihui Pharmacy HRT Pharmacy and Puzhe Pharmacy delivered cooling supplies to front-line workers enduring the scorching sun. These workers included military training and combat officers

firefighters police traffic officers grassroots village officials bus drivers sanitation workers and food delivery riders. These efforts were a heartfelt tribute and expression of deep gratitude to these unsung "guardians." Furthermore

the stores of LBX Pharmacy nationwide routinely offer resting spots water stations free health self-checks health consultations and other thoughtful services to support these "guardians."

On February 6 2024 LBX Pharmacy's Shaanxi branch together with Xiyi Subdistrict of Xincheng District in Xi'an City Shaanxi Province extended New Year greetings and warm care to the front-line officers of the Shaanxi Provincial

Government Guards Battalion.

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Respect for Teachers and Education

Since ancient times the Chinese nation has maintained an excellent tradition of respecting teachers valuing education and upholding learning and knowledge. Every year during "Teacher's Day" and "College Entrance Exam season"

LBX Pharmacy offers its modest support to inspire students' learning enthusiasm promote the virtue of expressing gratitude towards teachers and support the cause of education through practical actions.Case Commitment to Education: Caring for Teachers' Health with Love Case Love and Support for Exams: Helping Students Realize Their Dream

September 10 2024 was the 40th Teachers' Day in China. LBX Pharmacy Each year during the middle school and college entrance exam seasons it marks a

teamed up with various pharmaceutical industrial enterprises to launch the vital moment for numerous students aiming to achieve their dreams as well as a major

public welfare campaign "Gratitude for Teachers Caring for Their Health public concern for society. On this special occasion in 2024 LBX Pharmacy's provincial

with Love." On this day of reverence and gratitude they paid the highest subsidiaries including LBX Anhui LBX Shaanxi as well as companies such as Chifeng

respect to teachers working diligently on the frontline of education and took Renchuan Pharmacy Tongliao Zeqiang Pharmacy HRT Pharmacy and Baihui Pharmacy

practical actions to protect their physical and mental well-being. launched various exam support actions. These included the "Loving Care Exam Support

Fleet" setting up "Health Service Guarantee Points" and distributing free "Blessing

Pouches" to help students pursue their aspirations.LBX Pharmacy together with the Party Branch of KPC Pharmaceutical Group's Kun

Traditional Chinese Medicine 1381 Division provided charity gift packages worth over

RMB 610000 to 26 schools in Hunan Henan and Anhui provinces. These efforts were a

gesture of respect and gratitude towards teachers working tirelessly at the forefront of

education.LBX Pharmacy joined hands with Guilong Pharmaceutical to conduct public welfare

activities in Shaanxi Henan and other regions regarding the care to teachers. They

visited campuses to present throat health care gift packages to teachers safeguarding the

"voices of illumination."

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Caring for Special Groups

Case Elderly Care: Extending Love and Warmth Case Child Care: Extending Care to Children

On May 15 2024 LBX Pharmacy's Anhui branch delivered warmth and blessings to 11 elderly individuals aged over On May 25 2024 LBX Pharmacy Shaanxi Branch joined hands with Dyne Med and Sunflower

80 living alone or with no family in Anong Community Shushan District Hefei City. The initiative created a happy Pharmaceutical to visit the Shaanxi Huigui Children's Rescue Center (Note: The Shaanxi Huigui

atmosphere and gave them an unforgettable birthday experience. Children's Rescue Center is a private welfare organization relying on society's donations for

funding and supplies offering free care for children in challenging circumstances living at the

On August 2 2024 LBX Tongliao Zeqiang center). They prepared essential medicines summer heat relief supplies and daily necessities

Pharmacy hosted a Silver Age Birthday Party for the children. Since 2005 LBX Pharmacy Shaanxi Branch has shown consistent support for

at the central nursing home in Kulun Banner the center's development and operations continuously donating essential medicines summer

Tongliao Inner Mongolia Autonomous Region. heat relief supplies and day-to-day supplies for more than a decade.They celebrated with elderly residents singing

birthday songs presenting sincere wishes and

bringing vibrant smiles to their faces.On October 11 2024 during the Chongyang

Festival LBX HRT Pharmacy organized the event

"Warmth for Chongyang Caring for Health—LBX

HRT Pharmacy Brings Warmth to Nursing Homes"

visiting elderly residents without family at the Baiyin Social Welfare Institute in Baiyin District Baiyin City Gansu

Province and conveying festive greetings to them.On May 22 2024 LBX Linyi Rende Pharmacy donated portable oxygen respirators worth RMB 280000 to the Linyi

Red Cross Society. These respirators were provided to assist community residents hospitalized patients and

elderly individuals in need of medical aid and oxygen therapy services.Case Providing Assistance and Comfort to People in Need

On February 4 2024 members of the Communist Party branch of LBX Pharmacy in Hunan visited

the Baishantai Community in Changsha City. They delivered New Year materials worth RMB 10000

to disadvantaged individuals in the area offering sincere festive care and greetings.On May 17 2024 LBX Pharmacy Chifeng Renchuan Pharmacy actively responded to the call of

the Chifeng Disabled Persons' Federation in Inner Mongolia Autonomous Region to attend the

celebration of the 34th National Day for Helping Persons with Disabilities for which they donated

love kits worth a total of RMB 20000 to 70 people with disabilities.

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Healthy community

Establishing convenient pharmaceutical service stations

to ensure the "last mile" of health services is seamless

Leveraging digital intelligence to broaden service boundaries LBX Pharmacy is dedicated to providing more professional smarter and altruistic pharmaceutical services. Collaborating with regulatory authorities pharmaceutical

societies and other institutions the company has set up "Convenient Service Stations" and "Health Assistance Stations" to offer free services such as professional guidance on medication and medical devices home delivery of

medicines expired drug disposal and public education on safe medication practices. Additionally it organizes community events that provide free health screenings like blood pressure heart rate blood oxygen levels testing and

offers guidance on topics like daily healthcare prevention of common and infectious diseases common medication usage and dietary precautions thereby enhancing public health awareness.Case "Convenient Medical Insurance Service Station" Streamlines the "Last Mile" Case "Pharmaceutical Workstation" Ensures Healthy Living for Case "Health Assistance Station" Provides Warmth to Couriersthe Community

On April 29 2024 the Medical Insurance Bureau of Hedong In Januar y 2024 BXY Pharmac y under LBX Pharmac y Warm tea comfortable seating emergency medicines... In

District in Tianjin set up a "Convenient Medical Insurance collaborated with the Jiangsu Province Yangzhou Pharmaceutical September 2024 LBX Pharmacy's Tianjin branch launched

Service Station" at the Hedong store of LBX Pharmacy. Acting Association to establish a "Grade A Tertiary Hospital Pharmacist the "Warm 'New' Health Assistance Station" project. Facilities

as an extension of the medical insurance service system Studio" with Jiangsu Province Subei People's Hospital. They were set up in stores to offer "Ten Heartwarming Services" for

at the grassroots level which allows insured residents to regularly invite pharmacists from Grade A Tertiary hospitals to workers in new industries such as couriers and delivery riders.access one-stop services such as medical insurance account join in-store pharmacists to hold lectures on safe medication

inquiries transfer progress checks insurance benefits inquiries practices for the community.hospital changes for specialized medical insurance urban-

rural registration modifications and cross-region medical

documentation—all at their doorstep.

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Development with a Shared Future

Rural Revitalization Public Welfare and Charity Healthy Community

"Drug Safety Protected by Good Laws"—Becoming Guardians of Medication Safety

LBX Pharmacy always adheres to its mission of "Professional services with a touch of warmth to bring health to the people." From strictly ensuring drug quality to sincerely providing professional pharmaceutical services the company

strives to be a solid "guardian" of medication safety for the public.Case Participation in the "National Drug Safety Publicity Week" to Build a Drug Safety Barrier Together Case Renewal of Home Medicine Boxes and Proper Disposal of Expired Medicines

During the National Drug Safety Publicity Week in September To ensure public drug safety and promote green ecological The company implements specialized management and registration

2024 LBX Pharmacy's nationwide stores actively responded development in society LBX Pharmacy consistently invests in for collected expired medicines. It collaborates with upstream

by partnering with local regulatory authorities to enter the recycling and disposal of expired medicines. By working with manufacturers to unify the handling process sending them to

communities and conduct campaigns on "Drug Device and provincial and municipal market regulatory authorities to host professional hazardous waste disposal companies for harmless

Cosmetic Safety". Pharmacists patiently answered residents' "Expired Medicine Recycling" and "Renew Home Medicine Boxes" treatment thereby preventing resale or reentry into society while

questions on-site distributed drug safety brochures and campaigns they promote science-based public education and ensuring environmental safety and public health.brought knowledge about drug safety directly to community interactive experiences such as "Expired Medicine Exchange Rights"

residents. Through various activities drug safety knowledge awareness at stores nationwide. This raises public awareness of the

was popularized to the public fostering a social consensus to risks of expired medicines and encourages proper disposal practices.collectively ensure drug safety.LBX Pharmacy collaborates with market regulatory authorities to conduct

"Expired Medicine Recycling" and "Renew Home Medicine Boxes" campaigns

raising public awareness about properly disposing of expired medicines through

educational outreach.LBX Pharmacy stores promote the concept of "Expired Medicine Replacement" LBX Pharmacy stores promote the concept of "Expired Medicine Replacement"

enhancing public awareness for drug recycling and reducing casual disposal of enhancing public awareness for drug recycling and reducing casual disposal of

expired medications. expired medications.

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Development with a Shared Future

Rural Revitalization Public Welfare and Charity Healthy Community

Public Health Services: Promoting Accessibility to Pharmaceutical Resources

LBX Pharmacy has long been committed to improving access to pharmaceutical resources in underserved and less

developed regions. Over the years the company has actively engaged in grassroots communities and remote areas

through initiatives such as providing medical services delivering medicines organizing diverse health activities

On December 19 2024 LBX Pharmacy Shaanxi

in local communities spreading health awareness and advancing the accessibility of quality pharmaceutical

Branch in collaboration with the Baqiao

resources to contribute towards elevating public health standards.District Medical Insurance Bureau in Xi'an

City held a "Universal Participation for Good

In mid-February 2024 the pharmacist Health" event to promote medical insurance

tea m o f L BX P h a r m a c y C h i fe n g policies and support disadvantaged groups. At

Renchuan Pharmacy visited Fudu the event LBX Pharmacy pharmacists provided

Jiayuan Community in Aohan District health consultations shared knowledge on the

of Chifeng City and Linxi County Social prevention of common diseases and delivered

Welfare Center in Chifeng City to carry professional and considerate services to

out the public welfare activity titled safeguard residents' health."Serving Public Health Caring for

Healthy Living" which is an initiative

aimed to provide health services to

local residents.In September 2024 the Baiyin Municipal

Committee of the China Democratic

N a t i o n a l C o n s t r u c t i o n A s s o c i a t i o n

partnered with LBX HRT Pharmacy to host a

large-scale health consultation campaign in

Zhongshan Village Committee of Wuchuan

Township Baiyin City Gansu Province.On December 19 2024 the Lanzhou Municipal Committee of the Communist Party of

This initiative brought high-quality medical

China (CPC) Political and Legal Affairs Commission together with the Lanzhou Medical

resources to grassroots areas significantly

Insurance Bureau and LBX HRT Pharmacy donated 650 love-filled medical kits worth

enhancing healthcare services in rural

RMB 122300 to residents of Qishan Township Yongdeng County Lanzhou City Gansu

regions. LBX HRT Pharmacy donated

Province. The initiative addressed the daily medical needs of local residents while also

medicines and supplies worth RMB 23000

enhancing their health awareness and self-care capabilities through health lectures

delivering medical and healthcare services

and dissemination of educational materials.directly to the villagers' doorsteps.

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Development with a Shared Future

Rural Revitalization Public Welfare and Charity Healthy Community

Spreading Love and Warmth: Crafting a New Blueprint for a "Healing Culture"

LBX Pharmacy remains steadfast in its mission to promote the development of a "healing culture" integrating humanistic care into health management and contributing to the "Healthy China" initiative through tangible actions. In

2024 we meticulously planned and successfully hosted over 17 cultural dissemination events achieving a total annual brand exposure of 5.62 billion views. Through these efforts we created warm and healthy spaces for healing

encouraging more people to focus on physical and mental wellbeing and share in the benefits of a healthy life.Case Elderly Care: Building Harmonious Communities Together Case Health Education: Enhancing Public Health Literacy

LBX Pharmacy organized a variety of engaging cultural activities targeted As a socially responsible company LBX Pharmacy recognizes the importance of improving public health literacy. We

at senior citizens. For Mother's Day we hosted the "Silver-haired Mom Stars conducted a series of targeted brand campaigns focusing on key issues such as children being prone to colds when starting

Show" inviting the public to witness the confidence and charm of mothers. school and misconceptions about traditional Chinese medicine spreading accurate and correct health knowledge to the

During the Double Ninth Festival we curated the "Healthy Hiking Trail" on public.Mount Yuelu and launched the "Climbing Initiative" encouraging the elderly to

stay fit and enjoy a fulfilling later life. Additionally we organized the "Singing

Citizen Idol" karaoke contest at our stores. These activities not only spread

health awareness but also enriched the leisure pursuits of the community.Double Ninth Festival Healthy Hiking "Singing Citizen Idol" Karaoke "Healthy Illustration: Say No to Colds" Cold Awareness Campaign Springtime Wellness Campaign: Herbal Medicine Knowledge

Event: "Reaching New Heights Embarking Marketplace Event Communication

on New Horizons"

In addition we innovatively built a media matrix

comprising our official WeChat account "LBX

Pharmacy Group" an influencer "Pharmacist

Xiaoying" and staff Key Opinion Consumers

( KO C s ) . T h r o u g h l i v e st r e a m i n g s h o r t

videos and articles we disseminated health

knowledge on medication medical insurance

reimbursements and more to a wider audience.In 2024 this new media matrix generated over

120 million exposures of high-quality original

health education content helping millions Total exposure of 2024 LBX Pharmacy new media matrix science knowledge

solve their health concerns and making health exceeds 120 million times.Mother's Day Event: "Citizen Star Show" information easily accessible.

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Development with a Shared Future

Rural Revitalization Public Welfare and Charity Healthy Community

Case Photography Competition Heals Mind and Body

Co-hosted by the Hunan Photographers Association and Visual China and organized by LBX

Pharmacy and the Xie Zilong Photography Art Museum the "2024 China LBX Photography

Competition" kicked off in February this year and lasted for 189 days. The competition

received over 220000 photographic works from the public showcasing the vibrant and

beautiful life embraced by the Chinese people. This event not only provided a free creative

and expressive space for photography enthusiasts but also conveyed a sense of healing and

positivity for the mind and body.

2024 China LBX Photography Competition Works

Grand Prize Winner: Excerpt from "What Can Be Done at 100 Years Old" (Photo Series) Photography Awards - Gold Collection Award: "Wheat Season" Photographer: Yu Chuanli

Photographer: Xiao Yi

1 1 0Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 1Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 2Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 3Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 4Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 5Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 6Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 7Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 8Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 1 9Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 2 0Contents Sustainability Management Regulating Governance Benefiting Ordinary People's Health Driving Industry Development Jointly Building a Green Ecosystem Empowering Employee Creating a Community Appendixes

Development with a Shared Future

Table of Responsibility Performance Table of Index to Standards List of Laws and Regulations

1 2 1808 Qingzhuhu Road Kaifu District Changsha Hunan Province

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