Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

1ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

ABOUT THIS REPORT

This report marks the first sustainability report issued by Yunnan Baiyao Group Co. Ltd. We have previously published

corporate social responsibility (CSR)/ESG reports for 18 consecutive years. It gives stakeholders information on Yunnan

Baiyao’s social responsibility practices and performance in the areas of management environment society and public

welfare in accordance with the principles of standardization transparency objectivity and comprehensiveness.Reference Standards

This report is prepared in accordance with Self-Regulatory Guidelines No. 17 for Companies Listed on Shenzhen Stock

Exchange—Sustainability Report (For Trial Implementation) and with reference to the reporting standards such as the Global

Reporting Initiative (GRI) Core Option standard of the Global Sustainability Standards Board (GSSB) and the Chinese

Academy of Social Sciences’ China Enterprise CSR Reporting Guidelines (CASS-CSR4.0).Report Scope

The report covers Yunnan Baiyao Group Co. Ltd. as well as its subsidiaries and branches.Report Period

The report covers the period from January 1 2024 to December 31 2024 and serves as the annual report.Data Sources

Unless otherwise specified the financial data in this report comes from the annual financial data of Yunnan Baiyao Group BOARD SUSTAINABILITY STATEMENT

Co. Ltd. and its subsidiaries. Other data is sourced from internal statistics and manual compilation. Unless otherwise

specified the currency type and amount mentioned in this report are denominated in RMB.Yunnan Baiyao highly recognizes the importance of sustainability for its long-term and stable operation and actively

undertakes corporate social responsibility. The Company and the Board of Directors follow the requirements of the China

Report Reliability Assurance Securities Regulatory Commission’s Guidelines for Corporate Governance of Listed Companies and the Self-Regulatory

Guidelines No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial Implementation) andestablish a three-layer ESG (Environmental Social and Governance) governance structure “decision-making supervisoryThis report was put together by Yunnan Baiyao Group Co. Ltd.’s Social Responsibility Management Team and was reviewed and execution layers” with clear powers and responsibilities. The Board of Directors of Yunnan Baiyao has incorporated

and approved by the Company’s Board of Directors (the “Board”) and the Supervisory Committee. The Board of Directors the concept of sustainability into the consideration and decision-making process of the Company’s major matters and has

and all the directors guarantee that this report contains no false records misleading statements or significant omissions gradually established and improved sustainability management and governance mechanisms to promote the Company’s

and they accept individual and joint responsibility for its truthfulness accuracy and completeness. high-quality and sustainable development.Yunnan Baiyao values the opinions and suggestions of all stakeholders continues to identify and evaluate materiality

Statement Explanation issues and engages in exchanges and communications with stakeholders in various forms including information disclosure

and media communications. We strictly comply with the relevant requirements of regulatory authorities closely follow

For the sake of simplicity and readability “Yunnan Baiyao Group Co. Ltd.” is referred to as “Yunnan Baiyao” “Baiyao” “the the development trends of industry policies and professional fields and rank the material sustainability-related issues inCompany” or “we” in this report. combination with the focus of rating agencies. In 2024 we have included the significant financial impacts arising from

the sustainability issues related to the enterprise or those expected to affect the enterprise into our considerations of the

materiality of these issues as a key reference for sustainability information disclosure to continually improve our sustainable

Report Format development.This report provides a detailed disclosure of the progress and effectiveness of the Company’s sustainability efforts in 2024

This report is available in both printed and online versions. The online version is available for viewing and can be and was considered and approved at the 2025 first session of the Tenth Board of Directors and the 2025 first session of the

downloaded at www.yunnanbaiyao.com.cn and the Juchao Information website (www.cninfo.com.cn). Tenth Supervisory Committee of Yunnan Baiyao on March 31 2025.

01 02ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

MESSAGE FROM THE CHAIRMAN

As a Chinese poem goes “The river is wide at full tide; a strong wind sends the sail surging forward.” The year

2024 is a crucial year for fully implementing the spirit of the 20th National Congress of the Communist Party of China

and advancing the construction of Chinese-style modernization. It is also an important year for Yunnan Baiyao

as it strives for high-quality development and takes significant steps forward. Guided by Xi Jinping’s Thought

on Socialism with Chinese Characteristics for a New Era we have diligently studied and implemented General

Secretary Xi Jinping’s important statements on the development of TCM and his significant speeches during his

visit to Yunnan. Following the directive from the Yunnan Provincial Committee of the Communist Party of China and

the Yunnan provincial government to “cultivate Yunnan’s TCM industry into a world-class modern industry” we will Zhang Wenxue

unwaveringly pursue the path of protecting and inheriting TCM uniting our efforts to create a Yunnan “model” for

high-quality development in the TCM industry. Party Committee Secretary and

Chairman of Yunnan Baiyao Group

Over the past year amid an ever-changing external and corporate governance and deepens the construction of quality traceability system covering planting processing and chain system and contribute to achieving the “dual-carbon”

environment Yunnan Baiyao has steadfastly pursued progress the modern enterprise system with Chinese characteristics circulation. We have established three major systems namely goal. At the same time we will join hands with shareholders

while ensuring stability leveraging opportunities to advance to support the sustainable development of the Company. “Baiyao Preferred” “Baiyao Certified” and “Baiyao Owned” customers employees and all sectors of society to march

in a coordinated manner across business development Guided by Xi Jinping’s Thought on Socialism with Chinese to promote the development of standardization scaling towards a green and low-carbon future.technological innovation ecological conservation and Characteristics for a New Era we always adhere to the Party’s branding and digitalization of the TCM industry. We have built

rural revitalization. We deeply understand the concept of leadership and strengthen the Party building improve our an industrial internet platform for the TCM industry a new TCM A journey of a thousand miles starts with shared commitments.sustainable development adhere to strategic guidance and internal control systems and risk management mechanisms origin trading market and a sound industrial service ecosystem The year 2024 is a year of practical action and perseverance

promote the coordinated development of the century-old under the leadership of the Party to ensure the compliance to gradually form an industrial cluster involving various entities for Yunnan Baiyao marked by overcoming challenges and

Baiyao in terms of scale quality and structure. The Company and soundness of the Company’s operations and safeguard participating in planting processing circulation and other steady progress. Guided by the sustainability concept

will shoulder the responsibilities of a “chain leader” by the high-quality development of Yunnan Baiyao through our activities and enhance the synergy of all links in the industrial Yunnan Baiyao has partnered with all stakeholders to actively

promoting coordinated development across the industry chain leadership in high-quality Party building. At the same time chain. Looking ahead Yunnan Baiyao will continue to cultivate fulfill its environmental social and corporate governance

refining its focus on core areas expanding the leadership of we focus on improving sustainability management gradually the industrial chain of TCM underpinning the sustainable responsibilities. We focus on “improving quality and efficiency”

advantageous products and accelerating the construction construct a sound sustainability governance system integrate development of the ecological and industrial chain through across the industrial chain value chain and production factors

of the industrial system. Centered on the principles of sustainability concepts into the Company’s strategic planning technological empowerment and full-chain coordination. to promote the construction of an excellent operation system.“strengthening principal businesses stabilizing growth and establish a win-win sustainable development model with all We are concerned about environmental issues and globalensuring sustainability” we aim to create a comprehensive stakeholders and transform governance efficiency into a lasting Practicing Low-Carbon Development climate change persist in biodiversity conservation and

industrial chain for Yunnan-branded TCM materials. We will driving force for sustainable development thus supporting the practice the concept of green development. We consolidate

Guided by the national “dual-carbon” strategic goal Yunnan

focus on expanding the long-term potential of pharmaceuticals century-old Baiyao to elevate from “excellence” to “outstanding” product quality build a sustainable supply chain and are

Baiyao actively responds to the challenges of climate change

health products TCM resources and commercial logistics with excellent governance. committed to providing customers with high-quality safe

accelerates its low-carbon transformation builds a green

thus achieving self-driven leapfrog development. By 2025 the reliable and environmentally friendly products and services. We

development model and makes efforts to achieve harmonious

Company will further establish an R&D innovation system and Strengthening the Foundation of the Industry care about the well-being of our employees attach importance

coexistence between humanity and nature. Leveraging

operational management capabilities that align with Baiyao’s to the cultivation and development of our employees and

Yunnan Baiyao as the “chain leader” in the high-quality Yunnan’s unique ecological advantages and taking biodiversity

strategic development phase. We will balance TCM and build an outstanding talent team. We will continue to improve

development of the Yunnan TCM industry leverages the conservation as the principle we shape a vision for sustainable

innovative drugs focus on inheritance and innovation while our corporate governance and enhance our risk response

resource and geographical advantages of Yunnan Province development of TCM from the cultivation of medicinal

actively developing TCM and ethnic medicines and adopt capabilities to safeguard the long-term sound development of

pragmatically promotes the coordinated development of seedlings to the green upgrading of the entire industrial chain

a differentiated approach to develop more competitive and the enterprise.policies resources and capital builds a large cluster in the through digital empowerment and technological innovation.promising innovative drugs. We will continuously explore the

TCM industry and supports “excellent TCM products” by We launched a pilot project for carbon management target

integration of modern technology with traditional medicine Stars guide the dreamers and time honors the strivers. The

“excellent Yunnan TCM resources.” The Company aligns itself planning and system and platform construction within the

driving development through innovation and earning trust year 2025 is a crucial year for Yunnan Baiyao’s “2+3” strategy

with contemporary trends centering its efforts on developing Health Products Business Group established commitments

through quality. and marks the launch of a three-year action plan for the high-

a “Seed Chip” while wholeheartedly working to strengthen the to address climate change developed a robust carbon quality development of the Yunnan TCM industry. In the comingPursuing Excellence in Governance foundation of the TCM industry. The Company has taken on management system built a carbon emission monitoring year Yunnan Baiyao will uphold the mission of “to guardsignificant responsibilities responds to the national action for platform covering the entire production process and promoted life and health” respond to the call of the national strategy

Yunnan Baiyao str ives for strategic and high-quali ty the revitalization of the seed industry and vigorously promotes low-carbon transformation in four aspects: product design fulfill its corporate social responsibilities pursue excellence

development through robust Party building continues to the cultivation of superior TCM materials and the development raw material procurement manufacturing and logistics thus in governance strengthen the industrial foundation lead a

explore more reasonable and efficient operational models of germplasm resources to provide solid guarantee for the forming a comprehensive low-carbon sustainable development green future and contribute to social harmony and sustainable

management systems and business mechanisms insists industrial development. Yunnan Baiyao always puts the strategy. Moving forward Yunnan Baiyao will incorporate development with the strength of Baiyao.on promoting the comprehensive leadership of the Party quality of its products first and ensures the authenticity green concepts into its corporate development advocate

and the in-depth integration of the sustainability concept and medication safety of medicinal materials through a low-carbon green office and production build a green supply

03 04ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

About Yunnan Baiyao Yunnan Baiyao adopts a dual approach of “intensive and extensive growth” to deliver its strategic objectives in an orderly manner.Strategic Path of Yunnan Baiyao

Company Yunnan Baiyao Group Co. Ltd. was formerly known as Yunnan Baiyao Factory. As a

122-year-old national brand in China Yunnan Baiyao is dedicated to its corporate mission of

Profile “to guard life and health” integrates TCM into modern life and continually innovates to meet

the growing health needs of consumers.Extensive growth

Business Yunnan Baiyao formulated four strategic positions based on the Company’s strategic Two-phase

objectives which were divided into four segments. “2+3” strategy To emphasize foresight and

Presence To ensure a stable promote the continuous

scientific and orderly optimization of the Company’s

achievement of strategic industrial portfolio.goals with the “two-phase approach.”

TCM Resources Pharmaceuticals Intensive growth Management model

The “chain leader” with The “leading” brand of pain To focus on steady To build collaborative

high-quality development management in the field of development and stabilize capabilities for a

of Yunnan TCM traumatology the principal businesses “unified strategy” with

by increasing potential

resources a customer-centric Business and efficiency. approach.Segment and

Strategic

Positioning

Health Products Pharmaceutical Business

In addition the Company will continue to develop the strategic management capability system in five dimensions: strategic

The “leading” tier of high- The “leading” enterprise management group management and control effective operation innovation management and professional business.quality health lifestyle in pharmaceutical

products distribution and Strategic Management Group Management and Control Excellent Operation

innovative services

To promote the Company’s strategic To construct a strategic management To construct a lean operation

management capability system and control capability system for a system and operation capabilities

continuously improve the strategic multi-industry cross-region large- matching the Company’s scale

closed-loop management system scale modern pharmaceutical achieve a refined management

Yunnan Baiyao leverages three curves to deliver Mission and Vision and lead the Company to achieve industrial group to effectively support across the industry chain value

Strategic three-layered connotations of Yunnan Baiyao its long-term strategic objectives. the Company’s strategic objectives. chain and production factors and

improve the Company’s operational

Planning efficiency and competitiveness.Enhancing health through the rejuvenation of TCM and

the innovation of new technologies thus reducing the Mission

burden of disease and extending healthy lifespans.To guard life and

health Capability Guarantee of Yunnan Baiyao

Improving quality of life with “Big Health” solutions

for oral care bone injuries and more elevating living

standards and creating joyful moments. Vision

To be a leading Innovation Management Professional Business

provider of

comprehensive To focus on the construction of the R&D and capability To strengthen professional business capabilities

Radiating beauty with “Big Health” solutions for skin pharmaceutical system to support sustainable development and in solidifying segments such as medicine and “Bigcare and women’s health satisfying the desire for and healthcare provide competitive advantages by effective business Health” as well as functional capabilities such as

beauty and helping individuals shine inside and out. solutions development empowered through digital intelligence. finance risk brand and market value management to

ensure high-quality implementation of strategies.

05 06ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Honors and Awards Materiality Assessments

Fortune’s top 500 Chinese companies for 15 consecutive years

Fortune Dual In current complex and ever-changing socio-economic development environment sustainability

factors have become the core indicators for assessing corporate sustainability and market

Materiality competitiveness and the principle of dual materiality plays a pivotal role in this system. Yunnan

Top 25 Most Valuable Global Analysis Baiyao adheres to the concept of sustainable development deeply analyzes and balances the 2024 Future Healthcare 100 Innovation Pharmaceutical Brands

Awards · Annual Leading Enterprise factors affecting both impact materiality and financial materiality as key bases for formulating

Brand Finance the leading international corporate strategic plans and decision-making.Sina Finance brand value consultancy

Yunnan Baiyao incorporates the demands and expectations of stakeholders regarding

corporate management and development into its comprehensive considerations to meet the

No. 2 in the Brand Influence List of compliance requirements on dual materiality as outlined in the Self-Regulatory Guidelines

TCM Enterprises in 2024 No. 17 for Companies Listed on Shenzhen Stock Exchange—Sustainability Report (For Trial

No. 45 in China’s Best Brands

2024 Healthy China Communication Forum jointly Implementation) and will conduct the identification and assessment of dual materiality issues for

Interbrand a global strategic brand organized by the China Health Culture Association and the first time in 2025.management consulting and design company the China Health TeleVision (CHTV) of the National

Health Commission of the People’s Republic of China Based on the industry characteristics of our pharmaceutical sector and the professional features

of our business field we conduct researches in accordance with the three-step process of

“identification research and analysis” to fully understand the impact materiality and financial

materiality of ESG-related issues on the Company. We have actively responded to the newThe case of “Yunnan Baiyao Toothpaste IntelligentFactory - A Century-old Brand Practicing Industry 4.0” requirements of regulators for disclosure of issues and identified 27 material issues from theSelected into the “China ESG Listed was selected as one of the outstanding cases in the perspectives of both companies and stakeholders. We were actively conducting stakeholderCompany Pioneer 100” list Scenario Innovation Dimension of the Best Practice researches to determine the priority of issues by impact materiality in 2024. After communication

Cases of Digital Transformation of China Association

China Media Group Finance Program Center for Public Companies in 2024 and discussion with competent departments closely related to sustainable development issues

China Association for Public Companies (CAPCO) as well as investigation into the data performance of each issue in the past financial years

and the plans in the future financial years the Company arrives at a determination of financial

materiality and finalizes the 2024 dual materiality matrix of Yunnan Baiyao. This matrix can“Application Practice Project of Data Elements intuitively help the Company achieve overall improvements in various aspects including strategicNo.5 in “Top 100 TCM Enterprises in China” Promoting the Development of New Quality goal planning efficient corporate governance accurate information disclosure stronger marketProductivity” won the Best Practice Award of competition and stakeholder communication which provides a reference for the management

China National Pharmaceutical Industry Information Data Governance

Center (CPIIC) and operation of the Company’s sustainable development related affairs thereby advancing

2024 DAMA China Data Management Summit towards a higher level and more sustainable development prospects.

Won the “Tianma Award for Investor Relations Chinese Public Company”

for the fourth consecutive time

Securities TimesRanked 71st in the Kantar “2024 Excellent Practice Case of the Board Awarded an A-level ESG ratingBrandZ Top 100 Most of Directors among Listed Companies” by MSCI ESG Ratings for theValuable Chinese Brands and fourth consecutive time“Best Practice Cases for Sustainable

1st in the healthcare industry Development among Listed Companies” Morgan Stanley Capital

International (MSCI) the world’s

Kantar Company China Association for Public

Companies (CAPCO) leading index compiler

07 08ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Impact We have built a multi-dimensional and multi-faceted analysis system to identify the impact materiality. Communication Yunnan Baiyao attaches importance to the demands of stakeholders and maintains

Materiality Based on the connection between business and macro policies we conducted an in-depth analysis over communication with them through various channels. Based on the nature of Company

the all-round impact of macro policies in China and at the business locations on the overall operation with industry trends and the Company’s own development we identify key stakeholders including

and conduct researches on employees customers suppliers and other stakeholders online or offline Stakeholders shareholders and investor organizations customers and consumers employees business

in accordance with the specific laws and regulations related to the industry and its own business partners government departments and regulators the media and the public communities

characteristics so as to gather feedback and expectations from all parties on the operations of the and NGOs and proactively meet their demands and expectations.Company and to comprehensively measure the impact of issues on different stakeholders including its

depth breadth and duration and then summarize the impact materiality for each issue in this year to

provide a solid basis for the Company’s strategic adjustment and the formulation of action plans. Stakeholders Key Communication Topics Communication Channels

● Information disclosure

●

To analyze negative impacts (scale scope irremediability likelihood) ● Standardized operation On-site communication and report at

Information disclosure shareholders’ meetingsAnalysis of factors and positive impacts (scale scope likelihood) and quantify or ●

for assessing impact ● qualitatively measure the degree of impact. Shareholder and ● Risk control On-site phone email interactive platform and

materiality investor institutions other other forms of research

● Reasonable return on investment

● Steadily increasing performance and stable

dividends

To collect opinions from key stakeholders through questionnaires

and symposiums to assess the scale scope and likelihood of ● Consumer rights protection ● Involvement of key Customer satisfaction surveyimpacts.stakeholders ● Guarantee of product quality and safety ● Product recall system

Clients and ● Customer privacy protection ● Integrated customer service system

consumers

● Intellectual property protection ● Product service and quality assurance

To set appropriate thresholds for assessing whether actual and

Setting a threshold to potential impacts are significant and prioritize them based on the ● Standardized management and

determine the impact impact materiality. implementation of contracts and

materiality ● Integrity in business

● agreements

● Supply chain sustainability

●

Business partners Regular conferences and networking eventsBased on the research results and the threshold the conclusion ● Timely communication ● Strict implementation of the bidding system

on impact materiality is drawn. The material issues of industry

Conclusion on impact ● Collaboration in social responsibility

materiality assessment consensus can be directly identified.● Workers’ congress

Financial As the capital market pays increasing attention to sustainable development elements the correlation ● Good working environment ● Training lectures salons and other

Materiality between the Company’s issues and financial performance has become increasingly obvious and ● Welfare and benefits communication activities

the assessment of financial materiality has become a core consideration in the Company’s strategic Employees ● Career development ● Thematic networking activities

planning and resource allocation. To this end Yunnan Baiyao’s social responsibility management team ● Employee feedback from work summary

systematically reviews and organizes data clues in the Company’s financial records that are closely

related to sustainable development issues. We conducted an in-depth analysis of the actual role of ● Information disclosure

sustainable development issues in the Company’s financial structure during this year aiming to provide

● Fulfilling all obligations in accordance with

reliable guidelines for the development of corporate financial strategies and business planning related ● Compliance with laws and regulations laws and regulations

to sustainability. ● Compliance operationGovernmental ● Undertaking government projects

departments/ ● Paying taxes in accordance with the law ● Reporting the Company’s business

regulators ● Joint development performance on a regular basis

● Association activities and communications

Analysis of factors for assessing Setting a threshold to determine Conclusion on financial materiality

financial materiality financial materiality assessment ● Financial performance

● Press releases and publications

● Enterprise management

To analyze the continuity of resource To set thresholds through qualitative To compare the results of the Media and ● Media interviews

use dependencies (e.g. supplier (high/medium/low) or quantitative assessment with the thresholds to community public ● Information disclosure

customer relationships) based on the (monetary value or percentage) determine whether the issue is of

likelihood of risks and opportunities methods to determine the impact financial materiality.● Volunteer service

and the degree of the financial impact materiality. ● Community relations

to assess the potential impact on the ● Community activitiesCommunities and ● Promoting health knowledge

financial statements. NGOs ● Exchanges and interviews

09 10ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Conclusion on 2024 Sustainability Dual Materiality Matrix of Yunnan Baiyao

Materiality Analysis High materiality

Compliant operation Safety and quality of

Business ethics products and services

Environmental compliance management

Promoting industry progress

Corporate governance Innovation Energy utilization

Rural revitalization Employee rights and benefits driven

Circular economy Sustainable value chain

Issues of both financial Intellectual property protection Responsible marketingEnergy utilization Inclusive healthcare

and impact materiality Data security and Employee equality and diversity

customer privacy Social contribution Ecosystem and biodiversity protection

Safety and quality of products and services protection Addressing climate change

Employee training and development

Inclusive healthcare Employee training and developmentWater resource utilization

Innovation driven

Risk management

Sustainable value chain

Equal treatment for small and medium-sized enterprises Economic contribution

Emission management

Ecosystem and biodiversity protection Environmental

Social

Governance

Issues of impact Environmental compliance management Rural revitalization Low materiality Financial materiality to the Company High materiality

materiality but without

financial materiality Addressing climate change Compliant operation

Employee equality and diversity Corporate governance 2024 Material Issues of Yunnan Baiyao

Employee rights and benefits Circular economy Emission management Energy utilization

Employee training and development Data security and customer privacy protection Environmental compliance management Ecosystem and biodiversity protection

Environmental Circular economy Addressing climate change

Occupational health and safety Intellectual property protection

Water resource utilization

Social contribution Promoting industry progress

● Safety and quality of products and services ● Responsible marketing Business ethics Employee training and development

● Innovation driven ● Equal treatment for small and medium-sized

● Occupational health and safety enterprises

●

Issues of financial ● Employee equality and diversity

Responsible marketing

Emissions management ●

materiality but without Social ● Data security and customer privacy

Inclusive healthcare

●

impact materiality protection Promoting industry progress Risk management

● Employee rights and benefits ● Social contribution

Economic contribution ● Sustainable value chain ● Rural revitalization

● Compliant operation ● Corporate governance

Issues without Water resource utilization ● Business ethics ● Economic contribution

financial materiality Governance ● Risk management ● Intellectual property protection

and impact materiality Equal treatment for small and medium-sized enterprises

1112

Impact materiality to ESGABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Sustainability Management Sustainability To follow the external sustainability development trend as well as to enhance the Company’s Training overall sustainability knowledge and practice Yunnan Baiyao has actively carried out

sustainability-specific training. In 2024 we organized a special training and sharing session

focused on key topics such as the interpretation of the latest sustainable development

policies trends in sustainable development within the TCM industry and the assessment and

Yunnan Baiyao has always been committed to long-term healthy development continues

improvement of current sustainability management practices so as to enhance the capabilities

to optimize and upgrade sustainability strategies and management systems and promotes

of employees at all levels in implementing and practicing sustainability thereby ensuring the

the improvement of the Company’s sustainability governance efficiency thereby effectively

orderly development of the Company’s sustainability initiatives.implementing sustainability-related tasks and promoting the Company’s sustainable

development.ESG Annual Training Pragmatic Sustainability Management for Sustainable Development of

a Century-Old Brand of Yunnan Baiyao

Sustainability To improve the Company’s sustainability management capabilities Yunnan Baiyao has built

a scientific and efficient ESG management system with well-defined levels clear power and To continuously improve the sustainability management

Governance responsibilities in accordance with the latest requirements from regulatory authorities and capability at all levels and departments of the Company in

industry standards and the Company’s actual business operations. 2024 Yunnan Baiyao carried out the training of Pragmatic

Sustainability Management for Sustainable Development

of a Century-Old Brand for the Board of Directors

management heads of departments and business groups

ESG Yunnan Baiyao has established a three-tier ESG governance structure with the ESG Leading and key personnel. The training promoted sustainability-

Management Team as the leading body the ESG Promotion Office as the core management institution related concepts sustainability status and development

System and ESG working teams as the main force for execution which provides effective support for trends in the global and pharmaceutical industries as well the Company’s sustainability efforts. as Yunnan Baiyao’s sustainability highlights and future

efforts to continuously optimize sustainability governance

and system construction reinforcing the blueprint for

Yunnan Baiyao’s green healthy and long-term development On-site Sustainability Training of Yunnan Baiyao

under the auspices of sustainability concepts.ESG Governance Structure of Yunnan Baiyao

Personnel Composition:

The vice chairman and the president lead the team with the Chief Financial Officer

and Secretary of the Board of Directors serving as vice directors and the top managers

of functional departments and business groups as team members to jointly lead and

be responsible for the Company’s ESG efforts. Personnel Composition:

ESG Leading

Team Main Responsibilities: The working teams include external coordination information disclosure overall

Leadership promotion financial support legal and patent affairs risk control management brand

Responsible for establishing the ESG management structure reviewing ESG promotion quality control employee care supply chain ecosystem construction green

strategies policies and objectives and ensuring the effective ESG risk management environmental protection coordination and strategic planning.and internal control system of the Company. On this basis the leading team ESG Work

implements strategic planning and system building identifies management risks and Teams Main Responsibilities:

opportunities and conducts performance evaluation and goal planning. Execution

Responsible for the implementation and promotion of ESG specific projects and

Personnel Composition: work including but not limited to meeting organization information in time report

preparation information disclosure external communication image maintenance and

Composed of professionals from the ESG-related departments serving as the central consulting services selection and control to ensure efficient and orderly ESG practices

ESG management team for the Company’s ESG efforts. and enhance the Company’s transparency and image.Promotion Main Responsibilities:

Management Office

Covering the overall coordination strategic guidance organizational arrangements

coordination and promotion of ESG-related tasks as well as the promotion of

development and ensuring that safeguards are in place.

13 14ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Sustainability Strategy

Yunnan Baiyao closely follows the national “14th Five-Year Plan” attaches great importance The Company continuously promotes sustainability-related risk assessment of each

to its corporate responsibility in the environmental social and governance aspects and is business line location and thoroughly identifies potential risk points. In addition the Company

committed to achieving coordinated development and deeply integrates the sustainability has gradually integrated sustainability risks into its investment analysis and decision-making

concept into the development strategy. With the highest mission of “to guard life and health” process to avoid potentially high-risk investments and to ensure the safety and sustainability

we embrace inheritance and innovation surpass ourselves to embark on a new journey and of the Company’s investments thereby enhancing the Company’s overall effectiveness of

elevate the century-old Baiyao from “excellence” to “outstanding.” Yunnan Baiyao regards risk management and the quality of its investment decisions. In 2024 the Company updated

intensive and extensive growth as equally important and promotes them in a synergistic its assessment results for emerging risks and developed corresponding countermeasures.manner. While strengthening its internal strength Yunnan Baiyao remains committed to

exploring new avenues for growth externally. This dual-driven model not only ensures the

stability and sustainability of our operations but also enables us to respond flexibly to market Emerging Risk Assessment

changes. The Company flexibly adjusts the proportion between these two aspects according

to its own development stage and market environment to ensure continuous exploration of

new growth opportunities while maintaining core competitiveness thereby promoting the long- Risks Risk Description Potential Impact Countermeasures

term development of the Company.Improper To strengthen

planning and

Sustainability Risks technology transformation is management of

difficult to meet digital transformation

With its in-depth exploration and practical experience in risk management Yunnan Baiyao ● Increased

the actual needs improve data security

has established a set of risk identification assessment and response mechanisms tailored to Digital operating costs

of the Company; management system

the Company’s operational characteristics and has systematically incorporated sustainability- Transformation ● Data breach and continuously

related risks. In terms of governance structure the Company has established a multi-level Risks Enterprise carry out data

management system covering the Company and its subsidiaries to ensure the comprehensive ● Compliance riskdata leakage security training for

and in-depth implementation of sustainability-related risk management. is caused by employees to cope

data security with the risk of IT

vulnerabilities. innovation.To focus on sustainability-related risks in the Company's

Risk daily operations and include these related risks in the ● Increased

Identification Company's risk database and maintain and update the Climate change production costs To establish

database annually. may lead to ● diversified supply

Climate Change Decline in product

instability in the quality channels and improve

Risks

supply of TCM Impact on market the sustainable ●

materials. share and brand supply chain system.image

Based on the actual situations and prospective risks faced

by various departments in the Company's production

Risk and operations to select certain sustainability-related

Assessment risks assess these risks according to their likelihood of

occurrence impact level and the effectiveness of internal

controls and combine methods such as interviews and

process analysis to formulate the assessment results. To carry out

The Company ● Financial losses intellectual property

may face the risk ●

Intellectual Brand image

risk checks identify

of intellectual damage and reveal potential

Property Risks

Primarily based on the results of the risk assessment to property Market order risks in all aspects of ●

Risk Response identify the key risks that the Company needs to focus infringement. damage intellectual property

on and implement corresponding risk management management.strategies.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Sustainability Objectives

Corporate Governance

ESG Strategic Objectives of Yunnan Baiyao

Business ethics

Environmental Objective Progress in 2024

Climate change Signing of the Commitment to Integrity Practice by Completed

managers and employees in key positions

Objective Progress in 2024 Compliance management

To launch a pilot project within the Health Products In progress

BG. The BG has set the dual-carbon strategic goals of Objective Progress in 2024“achieving carbon peak by 2028; operational carbonneutrality and a 100% renewable energy usage ratio Compliance training covers all employees Completedby 2030; and value chain carbon neutrality by 2050.”

Equal treatment for small and medium-sized enterprises

Pollutant emissions

Objective Progress in 2024

Objective Progress in 2024 To strictly control the project payment cycle and do not Completed

delay payments

100% compliance with pollutant discharge standards Completed

Pollution incident

Products

Objective Progress in 2024

Promoting radiopharmaceutical business

0 occurrence of environmental pollution incident Completed

Objective Progress in 2024

To tap into the radiopharmaceutical field and The Phase I/IIa clinical trial of INR101 therapeutic

establish the innovative drug R&D system led by radiopharmaceutical Injection for diagnosis has

radiopharmaceuticals

Social successfully been completed about 1 month ahead of schedule. The IIT study of the INR102 therapeutic

radiopharmaceutical project has been completed

Rural revitalization and 10 subjects were enrolled with their first cycle of

dosing completed.Objective Progress in 2024 Innovation and breakthrough of R&D platform

To continually carry out rural revitalization-related activities Multiple measures to promote rural revitalization Objective Progress in 2024

To define the positioning of the four existing R&D The high-throughput computing center was put into use

Safe production centers and drive the Company’s innovation and on January 10 2024 the Tianjin Radiopharmaceutical

breakthrough in R&D with platform innovation R&D Center was put into use on November 18 2024

Objective Progress in 2024 and the Kunming Center was put into operation on

November 19 2024.To identify safety risk points achieve safety and Investigated and rectified 2755 potential safety

reduce safety accidents hazards Innovative R&D of transdermal preparations

Objective Progress in 2024

Talent team

To continuously explore and study the In terms of transdermal preparations there are

transdermal preparations and the trauma field currently 5 varieties under research with 1 variety Objective Progress in 2024 under clinical trials and 1 variety under application

To build a team of high-quality talents Orderly promoted such activities as building the talent for clinical trials which will bring patients a more

team and attracting and training employees convenient and comfortable treatment experience.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Highlights of Sustainable Development Performance Explored the path to cope with climate change and launched a pilot project for carbon

Green management target planning and system construction within the Health Products Business Group.Development Shouldered the responsibilities as a chain leader guided and drove the construction of larger-scale GAP bases with more varieties across the Yunnan province and incorporating key varieties

for Deepening such as Panax notoginseng Paris polyphylla Poria and Dolomiaea costus into a high-standard planting ecosystem facilitated the coordinated development across the industry chain and the

Ecological refined management from cultivation to processing and sales providing a more efficient and

Steady Progress Held 5 shareholders’ meetings Civilization healthy ecosystem for the entire industry chain.with Legacy of 12 Board meetings Established planting standards and specifications vigorously built the top ten standardized Yunnan medicinal planting demonstration bases created a rational layout for authentic production

Baiyao and 6 Supervisory Committee meetings. areas and filed for 12 new TCM varieties and 3 superior asexual strains promoting the planting

of over 150000 mu of authentic Yunnan TCM materials.Held 4 performance briefings received 52 investor surveys and more than The germplasm resource nursery for Paris polyphylla had collected 23 species including 54

200 person-times and responded to 156 inquiries at irm.cninfo.com.cn variants or populations of Paris polyphylla plants and the Northwest Yunnan TCM Resource

with a response ratio of 100%. Nursery for Yunnan Provincial Medicinal Plants had collected over 150 medicinal plant species

and showcased the cultivation of more than 20 specialty medicinal materials.Conducted nearly 9 training sessions on diversified topics and compliance 100% of exhaust gas wastewater and waste are discharged in compliance with the

training with a total of thousands of participants and 100% coverage standards.of key personnel. Comprehensive annual energy consumption is 24351.00 tons of standard coal equivalent (tce).The amount of reclaimed water is 25950 tons.Innovation-driven The Pharmaceutical Business Group underwent a total of 5 audits by the drug The proportion of female employees in Yunnan Baiyao is 45.15% and that of ethnic

Exploration of New regulatory authorities with 100% completion and approval of rectifications. People First for minorities is 14.57%.Horizons in TCM Strengthening The total cost of training at the Company’s headquarters is about RMB 8.8312 million.the Foundation

R&D investment amounted to about RMB 348 million. of Talent Total investment in safety amounted to approximately RMB 8.4857 million. A total of 210

safety inspections were carried out identifying 2755 potential hazards achieving a 100%

Conducted research on the process about formula granules of 100 rectification rate.varieties and successfully completed experiments on 100 varieties.In the model of “company + base + farmer” technical guidance is provided in the process and

Cultivating assistance activities for TCM planting industry are carried out in poverty alleviation areas such as Weixi and Fugong so as to promote rural employment achieve industrial prosperity and become a

The Phase II clinical trial of Pan-Panax notoginseng Tablets is progressing new income growth driver for farmers in remote mountainous areas.smoothly. Virtue and

Implemented a model of collaboration with farmers and helped increase farmers’ incomes with

As of the end of the Reporting Period a total of 578 participants had been Embracing diverse measures such as industrial empowerment technology transfer and order cooperation

82% Responsibilities ensuring the quality and supply of TCM materials and supporting the sustainable development of the enrolled achieving of the enrollment target. industry.

Total input of RMB 800000 for the Party building and grassroots government services.Total external donations amounted to RMB 4.589 million.Conducted free clinic activities provided 109 item/time health tests and served more than

400 patients.

19 20ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Creating a “Seed Chip”

for the Full-Chain Ecosystem of

Topic

the TCM Industry

Amid the vigorous development of the TCM industry the significance of the To enhance the technological level of the seed industry Yunnan Baiyao continues to

TCM seed industry as the foundation of the industry is becoming increasingly Research increase investment in scientific research. It established Yunnan Baiyao Group Seed Industryprominent. Yunnan Baiyao resolutely implements the new objectives and Empowerment: Technology Co. Ltd. and built an integrated modern seed innovation system of “breedingrequirements for the high-quality development of the TCM industry put forward Enhancing propagation and promotion.” We cooperated with Higentec to carry out Panax notoginseng

by the Sixth Plenary Session of the Eleventh Yunnan Provincial Committee of Technological molecular selection and achieved rapid directional breeding with modern biotechnology.the Communist Party of China focusing on the five objectives of “developing Level of the We introduced advanced breeding technologies and equipment from home and abroad the seed industry from a high starting point advancing cultivation with high established an experimental R&D center at the headquarters and equipped it with seedstandards enhancing processing with high energy levels expanding the market Seed Industry production workshops to promote the transformation of TCM breeding from reliance onat a high level and building the brand with a high stance.” With profound traditional experience to a model based on scientific precision. We also established a

industry expertise and forward-looking strategic vision Yunnan Baiyao places testing platform for TCM seeds and seedlings to comprehensively verify and assess theirgreat emphasis on the TCM seed industry and makes every effort to create a “Seed authenticity and quality providing assurance for high-standard planting in the seed industry.Chip” invigorates the construction of the full-chain ecosystem of TCM industry

and drives high-quality development of the industry to new heights.Yunnan known as the “Kingdom of Plants” is rich in TCM material resources and hosts

Dilemma a diverse array of TCM ingredients holding a significant position in the country. However

of the Seed for a long time the TCM seed industry in Yunnan has faced many challenges: uneven

Industry and provenance quality self-cultivation and self-collection of farmers scattered transactions

Responsibilities and a lack of quality testing which make it difficult to guarantee the quality of planting and

of Baiyao seriously restrict industrial upgrading. In this context Yunnan Baiyao bravely participates in the construction of the TCM seed industry striving to break through development

bottlenecks.Seed and Seedling Testing Laboratory

Yunnan Baiyao attaches great importance to the protection and development of germplasm

Germplasm resources of TCM materials. After years of efforts we have successfully overcome the In terms of variety breeding Yunnan Baiyao

Resources: Variety problem of Yunnan Paris polyphylla from wild to artificial large-scale planting collected 23 has achieved fruitful results. Six superior

Balancing Paris polyphylla varieties across China and established the world’s largest Paris polyphylla Breeding: varieties of Paris polyphylla were bred and

Protection and living germplasm resource nursery laying a solid foundation for the protection of rare Fruitful

the cultivated Paris polyphylla seedlings are

Development1 germplasm resources and the sustainable development of the Paris polyphylla industry. Results

excellent in quality and strong adaptability

At the same time we have completed the cultivation of several high-quality varieties such which effectively improved the planting yield

as Dolomiaea costus Aconitum vilmorinianum and Fritillaria cirrhosa built a germplasm and quality. We have also made important

resource nursery that preserves 105 kinds of authentic medicinal materials in northwest progress in select ion and breeding of

Yunnan conducted the breeding research of multiple varieties continuously enriched the Fritillaria cirrhosa Yunnan Angelica sinensis

germplasm resource reserve and provided abundant “chip” materials for the development of Dolomiaea costus and other varieties and Medicinal Material Planting and

the seed industry. established harvesting bases and nursery Domestication Base of Yunnan Baiyao

bases for a number of superior varieties to

1 For details see the section “Biodiversity.” provide a high-quality provenance guarantee

for industrial development.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Yunnan Baiyao explores innovative operating models takes varieties as the core builds a

Operation model of “one variety + one expert team + one variety manager + 3 to 5 partners” integrates

Innovation: scientific research resources to form a base cluster for seed collection seedling and

Exploring New demonstration planting. We cooperated with Yunnan Academy of Agricultural Sciences

Development Southwest Forestry University and other scientific research institutions to jointly carry out

Model breed selection and technical research accelerate the transformation and application of scientific research results and enhance the collaborative innovation capacity of the industry.Washing Process of TCM Materials TCM R&D Laboratory of Yunnan Baiyao

The development of seed industry is not only related to the enterprise itself but also closely

Benefiting related to the interests of planting enterprises and farmers. Yunnan Baiyao focuses on

the People: serving the GAP system across the Yunnan province and self-built planting bases promotes Looking ahead Yunnan Baiyao will continue to deepen its efforts in the TCM seed industry and consistently

Sharing the the selection and breeding of seedlings and integrates the entire process of “seedling- improve the technological content of the “Seed Chip” and enrich the variety reserves. We will continuouslyResults of planting-harvesting” into the digital planting system to achieve full traceability and closed- improve the construction of the full-chain ecosystem strengthen the collaborative innovation across all

loop production management. We should strictly measure the yield and inspect the quality stages and promote the standardization scaling branding and digitalization of the TCM industry. We will Seed Industry verify the planting benefits promote the formation of high-quality seedling base clusters and made more efforts to support farmers and agriculture promote rural revitalization and contribute to the high-

Development guarantee the profitability of planting enterprises and farmers. quality development of the TCM industry in Yunnan and even across China while promoting the TCM culture.Full-Chain As the foundation the seed industry provides strong support for Yunnan Baiyao Group to

Construction: build a full-chain ecosystem.Consolidating

the Foundation R&D and

of Industrial Marketing Branding

Development

Process Process

●●

Planting To build a specialized service-oriented market of To invest resources to build a public platform for Processing origin and build a new specialized TCM market scientific research of TCM and conduct innovative

pattern of “1 + 1 + N”; R&D of diversified TCM products;

●

Process Process To create a digital platform for the Yunnan TCM

● To build a multi-level brand system for Yunnan

industry and provide public services for the upstream medicines and establish a full-chain standard system

and downstream of the industrial chain; in collaboration with relevant parties;

● To promote standardized cultivation with high-quality provenance ● To establish Wenshan Sanqi Digital Industry Platform and

and advanced cultivation techniques Lijiang Digital TCM Industry Platform; ● To focus on the main production areas of Yunnan ● To adopt digital means for precision marketing.● To translate GAP2 specifications into easy-to-understand and medicine build a new specialized market of origin ● To adopt the fresh processing model to clean select and

easy-to-use standards; slice the medicinal materials as needed when they are and integrate the resources and processing capacity of origin; Results

● To promote the order planting model and maintain stable fresh.cooperative relationships with farmers. ● To take advantage of Wenshan Tianbao and other ● Carried out Phase II clinical studies on Pan-Panax

ports to expand international import and export trade.Results notoginseng Tablets an innovative drug in the Class Results 1.1 TCM and advanced Phase III clinical design and

● Self-built co-built and shared over 4000 mu GAP base preparation of Fuqi Guben Ointment a new TCM as

● Drove more farmers to participate in standardized planting and ● Shortened the supply chain and production chain and Results well as the secondary development of 20 varieties

improved the management level and economic benefits of the improved the utilization of raw materials such as several core products and Gongxuening

●

planting end Enhanced market influence Capsule.● Avoided cost increases and quality losses caused by

● Ensured the supply and quality of medicinal materials and traditional multi-step processing and improved product ● Formed a complete industrial closed-loop ● Improved the quality of TCM and the online presence

increase farmers’ income quality and market competitiveness of the Yunyao brand.

2 GAP: Good Agricultural Practice.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

01

Steady Progress

with Legacy of

Baiyao

Yunnan Baiyao insists on integrating the Party’s leadership

with sustainability principles into its corporate governance

treating corporate governance as a key task for achieving

high-quality development. Guided by risk management

the Company has built an organizational structure with

clear responsibilities strengthened anti-corruption efforts

implemented robust internal controls and continuously

enhanced operational efficiency.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Leadership in Party Building

Guided by Xi Jinping’s Thought on Socialism with Chinese Characteristics for a

New Era Yunnan Baiyao Group’s Party Committee has thoroughly studied and Strengthening Ideological Education and Theoretical Empowerment

implemented the spirit of the 20th National Congress of the Communist Party of

China and the Third Plenary Session of the 20th Central Committee. The Company In 2024 Yunnan Baiyao rigorously implemented

consistently upholds the Party’s leadership strengthens Party building emphasizes the Learning System of Party Committeeits leadership in Party building and focuses on deepening “integration and Theoretical Learning Center Group and theinclusion.” The overall approach to Party building is defined in the “1346” strategy “First Topic” Learning System guiding all Party

which includes: “One Goal” “Three Major Projects” “Four-Dimensional Integration” members and cadres to deeply comprehend the

and “Promoting Six Key Developments.” Through these initiatives the Company Party’s principles guidelines and policies. This

seeks to transform the political advantages of Party building into a competitive edge aimed to enhance the political and theoretical

for guiding key operations uniting the workforce and driving corporate growth. High- knowledge of Party members and cadres.quality Party building serves as the foundation for Yunnan Baiyao’s high-quality As of the end of the Reporting Period Party

development. committees at all levels had conducted over 40 Study Meeting of Party Committee Theoretical Learning

centralized study sessions for the center group Center Group of Yunnan Baiyao Group

while Party organizations at all levels held more

Yunnan Baiyao held a meeting to discuss Party building and than 520 “First Topic” and theoretical learning

the construction of Party discipline signing the 2024 Statement sessions.of Party Building Work Objectives and the Statement of Party

Strategic Discipline Construction. The Company also formulated and

Planning issued “two handbooks and four lists” to guide the year’s work Rotational Training for Party Affairs Personnel to Improve the Quality of Party Building

establishing a system for implementing responsibilities.The Company conducted a comprehensive review identification In April 2024 Yunnan Baiyao organized specialized rotational training to enhance the overall capabilities of grassroots

and updating of its existing regulations. Forty-two systems were Party organizations. The training aimed to guide Party organization secretaries and Party affairs personnel at the

developed and issued in such areas as Party building discipline grassroots level in deeply studying and consciously implementing Xi Jinping’s Thought on Socialism with Chinese

System inspection supervisions and publicity including the Opinions Characteristics for a New Era in a bid to strengthen their ideological foundation guide their practical work and drive Construction

on Strengthening and Improving Party Building Work at Yunnan organizational progress. The goal was to significantly improve their political awareness theoretical knowledge and

Baiyao Group Co. Ltd. (Trial). professional competencies. As of the end of the Reporting Period over 530 Party affairs personnel had participated in

the rotational training resulting in a notable improvement in the quality and efficiency of Party building efforts.A Party building work system was established including a

“task list responsibility list and evaluation list” which ensures

Work

Implementation systematic management and effective implementation of goals

through “overall planning arrangement and assessment.”

During the Reporting Period Yunnan Baiyao exerted all efforts to enhance the

overall capability of grassroots organizations. Through self-registration unit

recommendations comprehensive assessments and organizational reviews

60 outstanding cadres were selected and added to the talent pool. Following theprinciple of “nurturing business backbones into Party members and Party membersinto business backbones” 95 Party members were developed. As of the end of

the Reporting Period there were 1610 registered Party members over 150 active

applicants for membership and more than 300 applicants for Party membership.To strengthen the cohesion and leadership of the Company’s Party organization

Yunnan Baiyao actively conducted Party building training. The training focused on

Party theory covering key Party thoughts policies and regulations. Through in-

depth and systematic instruction employees were able to better understand the core On-site Training for Party Organization Secretaries and Party Affairs Cadres

principles of the Party providing a solid ideological foundation and strong spiritual

support for the Company’s development.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Operation of the Board of Directors Board of Yunnan Baiyao actively promotes the standardized and efficient operation of the Board of Directors Directors in strict accordance with the relevant provisions of the Articles of Association the

Rules of Procedure for Board of Directors and the Work System for Independent Directors.Yunnan Baiyao continuously improves its corporate governance system establishing a well- Directors of the Company are elected or replaced by the shareholders’ meeting and may

defined governance structure with distinct roles and responsibilities. In accordance with legal be removed from office by the shareholders’ meeting before the end of their term. The term

regulations and internal procedures the Company convenes the general meetings meetings of office for directors is three years and they may be re-elected and re-appointed upon the

of Board of Directors and meetings of Supervisory Committee ensuring efficient operations expiration of their term. At the same time we implement a top-down governance approach

scientific decision-making and effective supervision to guarantee the Company’s high- with the Board of Directors overseeing the Strategy Committee Remuneration and Appraisal

quality development. Committee Nomination Committee and Audit Committee. We have established detailed

implementation rules for each committee’s role in corporate governance ensuring that

Corporate Yunnan Baiyao strictly adheres to the

As of the end of the

Company Law of the People’s Republic of China the they perform their duties strictly within their defined authority. The Company regularly holds

Reporting Period the

Securities Law of the People’s Republic of China the Guidelines for Corporate Governance the Board meetings to facilitate collective decision-making on governance and strategic

Governance of Listed Companies and other relevant laws and regulations complies with regulatory Company had development. During the Reporting Period the Company held 12 Board meetings with a

requirements and thus establishes a comprehensive corporate governance structure based 100% attendance rate among directors.on the Company’s current development status. The shareholders’ general meetings the 11 directors

Board of Directors the Supervisory Committee and the management each exercise their Yunnan Baiyao upholds the independence of the Board of Directors as a key principle of

respective rights of decision-making business management and supervision ensuring a corporate governance. The Board oversees the management team and ensures the effective

clear governance hierarchy that facilitates the full realization of both the Company’s and with independent directors implementation of Board resolutions protecting shareholders’ interests and promoting the

investors’ interests. making up Company’s long-term sustainable development. As of the end of the Reporting Period

the Company had 11 directors including 7 non-independent directors and 4 independent

36% of the total directors with independent directors making up 36% of the total.

Corporate Governance Structure of Yunnan Baiyao In the selection of Board candidates and the appointment of directors we consider various

factors such as age industry experience and professional capabilities to fully evaluate

the candidates’ diverse skills. The members of the Company’s Board of Directors possess

expertise and experience in multiple areas including business management law finance

auditing risk control investment and mergers R&D and healthcare reform ensuring the

Board makes scientific decisions.Shareholders’ Meeting Supervisory Yunnan Baiyao elects supervisors and conducts activities of Supervisory Committee

Committee in accordance with the Company Law of the People’s Republic of China the Articles

of Association the Rules of Procedure for Supervisory Committee and other relevant

Supervisory Committee laws regulations and internal systems of the Company. The Company stipulates that

the Supervisory Committee must include shareholder representatives and an appropriate

proportion of employee representatives with employee representatives accounting for

no less than one-third elected democratically by the Company’s employees through the

employee representative congress. The Supervisory Committee has established rules of

procedure outlining the decision-making and voting processes and holds at least one

meeting every six months to effectively carry out its supervisory functions. As of the end of

Board of Directors the Reporting Period the Company had 3 supervisors including 2 employee representatives

and 1 shareholder representative and held 6 meetings of Supervisory Committee.Strategy Committee Audit Committee Nomination Committee Remuneration and Appraisal Committee

Investor Yunnan Baiyao strictly adheres to the relevant regulations of regulatory authorities and

Management has established a regular communication mechanism to create a comprehensive investor

Communication communication platform. The Company continuously organizes investor research activities

to engage with investors and communicate the Company’s operational status. During the

Reporting Period the Company held 4 performance briefings conducted 52 investor research

Shareholders’ Yunnan Baiyao adheres to the provisions of the Articles of Association and the Rules of sessions both online and offline received over 200 investor visits responded to 156 inquiries

Meetings Procedure for Shareholders’ Meetings effectively exercising the decision-making power at irm.cninfo.com.cn with a response ratio of 100% ensuring that communication channels

of the shareholders’ meeting on major matters of the Company. The Company follows between the Company shareholders and investors remain open and effective.principles of fairness transparency and rationality in convening conducting and voting at

shareholders’ meetings protecting shareholders’ rights to information participation and

supervision and ensuring equal treatment for all shareholders. In 2024 the Company held

five shareholders’ meetings.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Risk Management Employee Compliance Training Course “Risk Management and Professional Practice”In 2024 the Company created and launched the employee compliance training course titled “Compliance First andYunnan Baiyao regards strengthening risk management and Always” on the Baiyao Academy platform. The course covers five key modules: Compliance Contracts Intellectual

internal control systems as a key focus and actively carries out risk Property Anti-Bribery in the Pharmaceutical Industry and Company Law and Governance. With a total duration of

management audits and training. The Company is also advancing 479 minutes the training is aimed at all employees below middle management and relevant members of the Legal

sustainability-related risk identification efforts to ensure sustainable and Compliance teams. Since its launch the course has effectively equipped employees with legal and compliance

business operations. knowledge enhancing their ability to operate in compliance with business practices.Risk Management System

The Board of Directors serves as the principal decision-making body

for comprehensive risk management bearing ultimate responsibility

in this regard. The Audit Committee of the Board oversees the

implementation of the Company’s risk management activities. It

delegates specific internal control evaluation and risk management

tasks to the Audit Department and provides specialized reports to the

Board of Directors.Yunnan Baiyao adheres to a prudent operational philosophy

and in accordance with norms such as the Comprehensive Risk

Management System continuously optimizes its risk management

measures. The Company regularly identifies internal risks and

compiles an annual risk list. It evaluates and identifies key risks

based on multiple factors develops response plans and monitors

them dynamically forming a closed-loop risk management system.Additionally we incorporate the effectiveness of the risk control

system’s construction and implementation into performance

evaluations aiming to motivate employees to actively engage in risk

control and enhance overall risk awareness across the Company.Yunnan Baiyao conducts risk control training for all employees

using both online and offline methods. The Company offers relevant

course videos on the Baiyao Academy platform making risk control Employee Compliance Training Course “Compliance First and Always”

learning more accessible. Furthermore offline training activities

such as seminars and workshops are organized to enhance learning

outcomes through interactive sessions. We encourage trained Internal Audit Yunnan Baiyao in accordance with the Internal Control Manual and the Internal Audit System

employees to actively identify and report potential risks. Employees entrusts the Audit Department with independently performing internal audits fully exercising and Internal

can report risk information through various channels including its internal supervisory authority. The aim is to ensure the Company’s operations are healthy

“Baiyao Ding” email and phone cultivating a corporate culture Control and compliant through supervision evaluation and service functions. During the Reporting

of risk management that encourages voluntary participation and Period the Company updated and optimized internal audit systems such as the Economic

proactive Responsibility Audit Management Measures and the Management Measures for Rectifying Audit

Issues to improve the efficiency and accuracy of auditing and effectively prevent potential new

risks that may arise during the audit process. The Company has established a professional risk

control team that regularly conducts internal control evaluations and ensures comprehensive

audit coverage of all business entities by combining general and specialized audits. Special

emphasis is placed on targeted supervision of key areas critical funding major projects and

Yunnan Baiyao conducts risk control the implementation of the Company’s major strategies and decisions.training for all employees using both

online and offline methods In response to risk factors identified during the audit Yunnan Baiyao requires the relevant

departments to immediately implement corrective actions with the Audit Department

continuously monitoring the progress. The Company adopts a result-oriented registration and

write-off management mechanism to ensure that all identified risk factors are swiftly eliminated.

31 32ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Business Ethics Integrity Yunnan Baiyao has implemented integrity education regularly and organizes various trainingactivities for all employees such as expert-led seminars on “Key Issues and Prevention inYunnan Baiyao continuously improves its business ethics management system placing great Awareness Medical Anti-Corruption” training sessions on integrity in the workplace and anti-commercial

emphasis on cultivating integrity awareness. The Company drives the ongoing update of its Cultivation bribery and integrity-related knowledge competitions further enhancing the integrity and whistleblowing management system firmly opposes unfair competition upholds business integrity

and practices ethical business conduct. compliance awareness of both management and staff. In 2024 the Company conducted 10

anti-corruption training sessions for managers and key personnel with over 600 participants

Governance Yunnan Baiyao follows the laws and regulations such as the Company Law of the People’s Republic of and 100% coverage for key positions.China the Law of the People’s Republic of China Against Unfair Competition and the Anti-Monopoly

System of Law of the People’s Republic of China as guiding principles. The Company adheres to internal anti-

Business corruption policies such as the Work System of Discipline Inspection Commission the Work System of Anti-Unfair Yunnan Baiyao strictly complies with the requirements of the Law of the People’s Republic Letters and Visits the Measures for Integrity Risk Control and the Responsibility System for the Work of China Against Unfair Competition and firmly opposes unfair competition practices such as

Ethics of Clean and Honest Party Building and strengthens the implementation of 15 operational systems Competition false advertising monopolistic behavior and infringement of trade secrets. The Company is

including the Opinions on Strengthening and Improving Discipline Inspection of Yunnan Baiyao Group committed to maintaining a fair transparent and healthy market competition environment

Co. Ltd. (for Trial Implementation). In 2024 the Company also established 12 inspection systems ensuring the authenticity and accuracy of market information protecting intellectual property

including the Implementation Measures for Inspection Work (Trial) to ensure effective supervision and and promoting fair competition to contribute to the sustainable development of the industry.accountability mechanisms regulate business ethics management requirements and strengthen the As of the end of the Reporting Period the Company itself had not engaged in any unfair

Company’s integrity defense line in all aspects.competition and had not suffered any financial losses due to unfair competition or other

Yunnan Baiyao continues to improve its supervisory mechanisms promoting the formation of an violations.“overall supervision” framework with coordinated efforts from supervisory bodies. The Company has

established a work mechanism where the Party Committee provides unified leadership grassroots Party Building and Party Discipline Work Meeting

Party organizations are responsible at different levels inspection agencies organize implementation

the Discipline Inspection Department and Organizational Department assist relevant functional

departments cooperate inspected Party organizations comply and employees and the public In January 2024 Yunnan Baiyao held a Party building and

participate. This system ensures the effective supervision of Party discipline and clean government Party discipline work meeting. The meeting conveyed the

at all levels. In 2024 Yunnan Baiyao continued to enforce the Code of Conduct for Business Ethics3 key speeches of General Secretary Xi Jinping and the

strictly prohibiting all employees (including non-regular employees) from engaging in unethical spirit of important meetings at the central and provincialbusiness practices such as corruption bribery unfair competition and conflicts of interest with a “zero levels with five grassroots Party organizations sharingtolerance” approach to violations ensuring the Company’s compliant operations. their work experiences. The Group’s Discipline Inspection

We integrate the requirements of integrity practice into the management and assessment of key Commission Secretary summarized the work of 2023

positions. Each year according to their management authority we require managers and employees and outlined tasks for 2024. The Party Committee signed

in key positions to sign the Commitment to Integrity Practice ensuring that employees strictly comply responsibility statements with secondary units. The meeting

with integrity regulations consciously accept supervision from relevant departments and clearly emphasized that Party building leads the high-quality

define the primary responsibilities of leaders at all levels in managing business ethics. development of Yunnan Baiyao calling for adherence to

Party leadership focusing on “integration and inclusion”

and deeply understanding the connection between strict Party Building and Party Discipline Work Meeting

Reporting Yunnan Baiyao places great importance on the critical role of supervision and whistleblowing Party governance and corporate development. Under

in promoting business ethics. In accordance with national laws and regulations the Company

Management the guidance of Xi Jinping’s Thought on Socialism with continuously improves its mechanisms for whistleblowing and handling issue leads handling each Chinese Characteristics for a New Era Yunnan Baiyao will

whistleblowing report and issue leads according to procedures and continuously enhancing the

standardization and rule of law of the whistleblowing process. We make reporting channels public implement the requirement to promote development through

and encourage employees users and other stakeholders to supervise and report any violations of Party building and drive the Company to new heights.regulations discipline or laws.The Company focuses on protecting the legitimate rights of whistleblowers and enforces the

whistleblower protection clauses in the Work System of Discipline Inspection Commission strictly

adhering to confidentiality requirements. Without the whistleblower’s consent we do not disclose any

personal information or the contents of the report in any form. We strictly implement mechanisms for

confidentiality avoidance of conflicts of interest and accountability in whistleblowing fully protecting

whistleblowers and preventing any form of retaliation.Business Ethics Reporting Channels of Yunnan Baiyao

Address: Yunnan Baiyao Discipline Inspection Tel: 0871-66203262

Commission 3686 Yunnan Baiyao Street Chenggong Website: http://www.yunnanbaiyao.com.cn/

District Kunming City

Email: byxfjb@ynby.cn

3 Code of Conduct for Business Ethics: https://www.yunnanbaiyao.com.cn/view/ynbyPc/1/46/view/5897.html

33 34ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

02

Innovation-driven

Exploration of

New Horizons in

TCM

Yunnan Baiyao has always inherited the culture of TCM

closely following the development trends of the industry

and focusing on product quality and innovation. We center

our efforts on customer needs promote inclusive healthcare

development collaborate with suppliers and build a

sustainable supply chain to support the long-term healthy

growth of the Company.

35 36ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Quality Risk In 2024 Yunnan Baiyao continued to strengthen its quality risk management efforts closely

Product Quality Management monitoring potential quality risks in processes and adopting proactive or retrospective approaches for effective control. At the same time the Company regularly conducts internal

testing and preventive testing for potential risks formulating risk mitigation measures for

business development as needed to fully ensure the safety and effectiveness of products.Yunnan Baiyao attaches great importance to the quality and safety of its products always

considering them as the core foundation of the Company’s development. We are always During the Reporting Period the Company performed comprehensive assessments of the

committed to providing consumers with high-quality safe and reliable products. possibility and impact of quality risks determining their risk levels. Based on these risk

levels we took appropriate control measures and evaluated the effectiveness of these

measures continuously until the risks were reduced to an acceptable range.Risk Level Control Measures

“Very Low” or “Normal” To maintain the current risk management level

and continue to monitor the risk

Policy Mission “High” “Very High” or To communicate with relevant parties in a timely

and Vision of Product Quality “Extreme” manner and propose targeted risk control measures

such as reducing avoiding or transferring the risk

Inherent risks that cannot To develop emergency or preventive measures and

be resolved implement them with approval from department

Making Quality a Part of Yunnan Baiyao Employees’ DNA heads and quality managers

Vision

Quality Yunnan Baiyao strictly adheres to relevant laws and regulations such as the Drug Quality Audits In 2024 Yunnan Baiyao’s business groups conducted quality audits to ensure the continued

Administration Law of the People’s Republic of China the Regulations on the Supervision effectiveness of quality risk management.Control and Administration of Medical Devices the Supervision and Administration of Drug

Manufacturing and the Good Clinical Practice (GCP). In 2024 the Company revised 52

existing regulatory documents for drugs medical devices and other business categories.New internal systems were also added such as the Annual Report Management Procedures The Pharmaceutical Business Group underwent regular quality management system

for Drug Marketing Authorization Holders the Management Procedures for Drug Production inspections by the drug regulatory authority every year. In 2024 the BG underwent 5

Sites and the Risk Assessment Operation Procedures for Drug Marketing Authorization audits by the regulatory authority successfully completing all rectifications and passing

Holders ensuring that product quality remains compliant with market demands and industry the audits.standards. Pharmaceutical

In 2024 Yunnan Baiyao Business Group

invested approximately The Company has established a quality management system that spans the entire industry The Health Products Business Group conducted inspections based on the Inspection

chain covering product R&D production sales and other stages. This ensures that the Points and Judgment Principles for Cosmetics Production Quality Management

RMB 579100 quality and safety of our products are controlled throughout their lifecycles. Moreover Specifications and the Code of Practice for Quality Management in the Production of we have formed a dedicated technical quality management committee to enhance the Health Cosmetics. It conducted a thorough review over the quality management systems at

in quality improvement quality and safety responsibilities across all business groups and promote the systematic Products its manufacturing sites for compliance integrity adequacy and effectiveness. Also the

projects advancement of technical quality efforts in every business group thereby ensuring the Business Health Products Business Group organized department managers to review the quality

efficient implementation of our industry-wide quality management system. In 2024 Yunnan Group objectives from the previous audit cycle and set new quality objectives for the next cycle.Baiyao invested approximately RMB 579100 in quality improvement projects4. During the audit 11 non-compliance items were found all of which have been rectified.In 2024 the Pharmaceutical Business Group of Yunnan Baiyao formed a “5P (GAP GLPGMP GSP and GVP)” integrated quality management model based on the entire industry Yunnan In 2024 Yunnan Pharma conducted 5 internal quality audits including both

chain to improve the industry’s quality ecosystem. In June 2024 the GLP center of the Pharma comprehensive and specialized internal audits focusing on various elements of the

Yunnan Baiyao Institute of Materia Medica successfully passed the regular review by the Company’s quality management system. The audits identified 5 deficiencies all of which

National Medical Products Administration (NMPA) meeting the requirements of the quality have been rectified on time. Furthermore the Company underwent 9 external audits 4

management system. of which were regulatory audits and 5 were conducted by business partners. During the

regulatory audits 16 deficiencies were identified all of which have been rectified.

4 This data covered the Yunnan Baiyao Pharmaceutical Business Group and the Yunnan Pharma.

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anABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Quality Yunnan Baiyao considers quality awareness and culture construction as one of its core tasks. Pharmacovigilance Yunnan Baiyao conducts pharmacovigilance through two main channels to promote

Culture In the new employee orientation training the Company has added a mandatory course on rational drug use among the public. In addition the Company organizes activities like

Construction quality culture to cultivate quality awareness from the onboarding and help new employees the “Drug Safety Ensured by Laws” campaign to educate consumers on how to read deeply understand the critical role of quality in the Company’s development. Throughout the drug instructions and use medications safely and introduces the “Jingjie Xiao’an”

year the Pharmaceutical Business Group Health Products Business Group and Yunnan app to spread medication safety concepts. The Company also participates in the

Pharma organized a total of 395 quality training sessions effectively improving employees’ public awareness campaign themed “Join ‘Seven Entries’ to Build Defense Together”

understanding of the importance of quality and their practical capabilities. Yunnan Pharma informing community residents about adverse drug reactions medical device adverse

also actively organized employees to participate in the “Speak Out Your Voice on Quality” events and preventing drug abuse while also standardizing the disposal of expired

theme activity during Quality Month encouraging employees to share their views on quality household medicines to prevent drug abuse and environmental contamination.in the Baiyao Forum thereby stimulating employees’ enthusiasm for participating in quality

management.Activity of Household Expired Medicine Collection and Rational Medication

Quality and Safety TrainingDuring the 47 th National “QualityMonth” in September 2024 inAnnual Employee Quality Training Sessions response to the “Theme Activity of

2024 Household Expired Medicine

Yunnan Pharma Pharmaceutical BG Health Products BG Collection and Rational Medication

Environmental Protection in Yunnan

13 220 162 Province” jointly organized by the Times Times Times Medical Products Administration of

Yunnan Province the Department

of Ecology and Environment of

Yunnan Province and the Health

Commission of Yunnan Province

Annual Employee Quality Training Attendees Yunnan Baiyao’s 13 stores totally

collected more than 300 boxes of

Yunnan Pharma Pharmaceutical BG Health Products BG expired household medicines at Expired Medicine Collection Activity

offline event sites contributing to the

1252 5324 7121 spread of drug knowledge.

Person-times Person-times Person-times

Product Yunnan Baiyao strictly follows the Drug Administration Law of the People’s Republic of

China the Measures for the Administration of Drug Recall and other relevant laws and

Annual Employee Quality Training Hours Recall regulations. The Company developed the product recall management systems such as

the Drug Recall Management Procedure and the Disposal Management of Drug Safety

Incidents. We categorized and graded the reasons for product recalls and developed

detailed recall plans accordingly. Then appropriate measures were taken for the recalled

Yunnan Pharma Pharmaceutical BG Health Products BG products. Yunnan Baiyao also regularly conducts product recall drills to ensure that

employees are familiar with the recall process and evaluate its effectiveness ensuring that

190.5 6517.03 253.7 in the event of an actual recall the process is completed in a timely and orderly manner. Hours Hours Hours During the Reporting Period Yunnan Baiyao did not initiate any product recalls.

In 2024 the Company’s Pharmaceutical Business Group regularly organized mock recall

drills which helped employees become familiar with the recall process and assessed its

effectiveness. This ensured that in the event of an actual recall the relevant work could be

completed accurately efficiently and in an orderly manner. During the Reporting Period

we conducted a mock recall drill of Pudilan Anti-inflammatory Tablets and the assessment

results were satisfactory. We also conducted a mock recall drill selecting two types of

products: a batch of toothpaste (Yunnan Baiyao Toothpaste - Spearmint Type) and a batch

of cosmetics (Yangyuanqing Anti-hair Loss Shampoo). The recall team developed a recall

plan based on investigation and evaluation and by checking sales records confirmed the

expected quantity for recall and notified distributors to stop selling and shipping. After the

recall report from distributors was submitted the recall team compared it to the expected

quantity and successfully completed the mock recall.

39 40ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Positioning of the Four Existing R&D Centers

R&D Innovation

In 2024 Yunnan Baiyao regards R&D innovation as the core driving force for sustainable

development continuously expands into cutting-edge technological fields closely follows Kunming R&D Center focuses on the R&D of TCM materials

global pharmaceutical R&D trends and deepens its innovative layout. We continue and natural drugs striving to build an integrated R&D

to improve our product R&D pipeline and strengthen intellectual property protection platform that combines internal research and external Kunming R&D

empowering health with science and technology and relentlessly working to protect life and Center sharing. The GLP center passed national re-inspection

health. and successfully carried out various validations and trial

operations providing strong support for steady project

advancement and normal operations.R&D Yunnan Baiyao always focuses on closely integrating R&D management with practical

R&D activities and continuously improving its unique R&D management system. The

Innovation Company has implemented six core management systems including the Specification on

Management Management of Entrusted Scientific Research Project Funds the Management Measures

for Internal Entrusted Research in Yunnan Baiyao Group’s R&D Projects and the Measures

for Management of R&D-type Governmental Projects in Yunnan Baiyao Group’s Central

Research Institute to promote the efficient management and collaborative operation of R&D

projects. In 2024 the Company invested approximately RMB 348 million in R&D. Tianjin R&D Center focuses on the R&D and transformation

of radiopharmaceuticals working to improve radiopharma-

ceutical R&D efficiency and build its own R&D capabilities.R&D Platform In 2024 Yunnan Baiyao built a differentiated R&D platform steadily advancing the work of Tianjin R&D Center The center completed its relocation and officially started

Development major centers. The Company further clarified the roles of its existing four R&D centers and operation in 2024 providing new technical support and R&D

actively promoted the construction of the Wuxi and U.S. R&D centers. These platforms drive platforms for innovation in the radiopharmaceutical field.continuous innovation and breakthroughs of the Company in R&D.R&D Talent Yunnan Baiyao has taken a number of measures in terms of R&D talents and actively built

Introduction an innovative R&D system that is compatible with the Company’s strategic development.During the Reporting Period Yunnan Baiyao further increased its efforts in building a team

of high-level R&D personnel specializing in TCM and innovative drugs with the aim of

continuously attracting and cultivating top-notch R&D talents in the pharmaceutical field

injecting a continuous stream of impetus into the company's innovative development. In Shanghai R&D Center specializes in innovative drugs

2024 Yunnan Baiyao had a total of 619 R&D personnel accounting for 6.67%. (chemical and biological drugs) establishing a specialized

Shanghai R&D R&D experimental center with early-stage R&D and small-

Center scale process development as its core capabilities. This

center is expected to start operations in the first half of 2025

providing strong support for the R&D of innovative drugs.Education Background Structure of R&D Talents

Below Undergraduate Master’s degree Above master’s

undergraduate degree

level

44 322 220 33 Launched in 2024 Beijing Center for High-Throughput

Computing uses big data and AI computational power to

Beijing Center for build a target discovery and drug optimization platform. The

High-Throughput center continuously improves the target discovery process

R&D Innovation Yunnan Baiyao strengthens R&D investment and talent development continuously enhances Computing and supports drug design and optimization. It has integrated

Practice core competitiveness and drives both technological innovation and product development by a comprehensive set of public and internal databases and

adopting a diversified model including independent R&D and cooperative development. created the world’s largest single-cell transcriptomic dataset.Technological Yunnan Baiyao’s technological innovation projects span drug design clinical trials drug

Innovation safety assessments and more aiming to accelerate the R&D process and improve success

rates.

41 42ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Key Technological Innovation Initiatives of Yunnan Baiyao R&D of Innovative TCM

Quickly screen key Complete the Add the extract of Continuously promote In 2024 we further advanced a series of innovative drug projects such as Pan-Panax notoginseng Tablets Fuqi Guiben

technology projects experiment for the Yunnan Baiyao to collaborative projects Ointment and classic large-scale varieties like Gongxuening and Qixuekang. These drugs have significantly improved in

to prepare for the process research on the list of toothpaste on skin-beautifying and terms of efficacy and safety providing patients with more high-quality treatment options.announcement formula granules ingredients anti-aging technologies

Pan-Panax Notoginseng Tablets

● The Company ● The Company ● The Company ● The Company

is committed to conducted the conducted research completed two Pan-Panax notoginseng Tablets are a new TCM syndrome-based drug with

constructing a key process research on the project titled research projects the Company’s own intellectual property rights. The Phase II clinical trial oftechnology project on formula granules “Add the extract of including the Pan-Panax notoginseng Tablets is progressing smoothly. As of the end of thefor high-throughput of 100 varieties Yunnan Baiyao to study of anti-aging Reporting Period a total of 578 participants had been enrolled achieving 82%

analysis of natural successfully the list of toothpaste effects of natural of the enrollment target.small molecules completed the ingredients” plant extracts and

from Yunnan’s experimental work providing technical the molecular Fuqi Guben Ointment

unique plants and on all 100 varieties support for the mechanism

AI-assisted rapid and prepared Group’s product research of Fuqi Guben Ointment is the first syndrome-based new drug. The Company

drug screening. The related research innovation in the Paris fargesii officially launched the Phase III clinical trial of Fuqi Guben Ointment in 2024.project is currently reports. health products extracts which It also completed the preliminary preparation and review of materials for the

prepared for the field. further advanced Phase III clinical trial submitted communication materials to the Center for

announcement the Company’s Drug Evaluation (CDE) and advanced the project steadily.helping enhance the technological Innovative TCM

Company’s industry innovation in the and Secondary

visibility. realms of skin Development Projects

beauty and anti- Qixuekang Oral Liquid

aging.The Company has achieved significant clinical research results in the field of

cardiac and vascular health. Data from 109 participants showed that Qixuekang

Oral Liquid can effectively improve endothelial function and hypertension.The research findings have been presented at professional conferences and

published in SCI journals.Gongxuening Capsule

Currently Yunnan Baiyao has completed the closing meeting for its multicenter

Product In the field of TCM modernization Yunnan Baiyao actively promotes the deep integration of clinical study on reducing post-abortion bleeding. The Company has initiated

Innovation TCM and modern technology. By employing advanced scientific and technological methods a clinical study on reducing vaginal bleeding after medical abortion and has

the Company undertakes in-depth research and development of TCM products. enrolled 65 subjects. Furthermore the Company has completed 12 studies

on the safety and toxicology of animal pharmacokinetics pharmacology and

toxicology.

43 44ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

In the field of radiopharmaceutical R&D Yunnan Baiyao keeps up with international technological advancements and actively

develops new targets in nanobody and cyclic peptide radiopharmaceutical pipelines quickly advancing radiopharmaceutical Development of New Medical Devices

research projects.In 2024 Yunnan Baiyao launched 10 new

INR101 Injection Diagnostic Radiopharmaceutical Project products including five micro-innovation

products (such as the Acupoint Stimulator

The chemical Class 1.1 innovative radiopharmaceutical diagnostic drug 3C/3E Pain Relief Instrument 2C/2E and

for PET imaging of PSMA-positive lesions in prostate cancer patients has Therapeutic Electrodes with Enhanced

successfully completed its Phase I/IIa clinical trial finishing about 1 month Functions) and five new products (such as

ahead of schedule. Clinical results have demonstrated its excellent stability the Fuyang Juanbi Pack Mid-frequency

Radiopharmaceutical and safety. Pulse Therapy Device 2 types and two

R&D new versions of the simulated massage

INR102 Therapeutic Radiopharmaceutical Project device for neck and waist). The launch of

these products highlights the Company’s

The Company started non-clinical research for INR102 two months ahead ongoing efforts to continuously innovate

of schedule successfully completing pre-IND communications and officially and optimize its product line driving the Development Matrix for New Medical Devices

starting IND preparation. Also the IIT study was completed with 10 subjects deep integration of technology and market

enrolled and the first dosing cycle completed. demand.Promoting In 2024 Yunnan Baiyao actively promoted the integration of industry academia and

research aiming to foster close cooperation within the industry and enhance technological

Transdermal preparations are a type of topical medication that delivers drug components through the skin. Yunnan Baiyao Industry innovation capabilities. Through high-level expert exchange activities and strengthening

currently has five transdermal formulations under R&D with one entering clinical trials and another to be filed for clinical Progress cross-disciplinary strategic cooperation the Company has achieved significant results in trials. These would offer patients a more convenient and comfortable therapeutic experience. driving pharmaceutical R&D innovation while expanding its presence in the industry.Flurbiprofen Cataplasms Initiatives Related to Industry Development

The Company has successfully obtained the clinical trial approval and

initiated the clinical study which has also completed the preclinical trial phase. In 2024 Yunnan Baiyao successfully hosted

Significant progress has been made in the development of transdermal

Transdermal six sessions of the “Huanzhang Forum” formulations with the formal clinical trial expected to commence in 2025.Preparations inviting top Chinese and international experts

R&D including Kong Fanpu former Director of the

Loxoprofen Sodium Cataplasms CDE to discuss cutting-edge areas such as

pharmaceutical evaluation medical devices

The preclinical research has been completed and the Company plans to TCM and radiopharmaceutical R&D. The

start clinical trials in 2025. It is expected to provide a new treatment option for “Huanzhang “Huanzhang Forum” serves as an importantpatients with pain. Forum” platform for Yunnan Baiyao’s medical research “Huanzhang Forum” Exchange Session

exchanges offering opportunities to learn about

frontier scientific innovations and introduce

breakthrough technologies and projects.Yunnan Baiyao has launched a series of medical

devices related to medical treatments including the

Medical Device R&D smart non-invasive electroacupuncture instrument and

stroke rehabilitation treatment device. The Company Yu n n a n B a i y a o ’ s s u b s i d i a r y Yu n h e

has completed the first registration/filing of four medical Pharmaceutical (Tianjin) Co. Ltd. joined

devices and continued registration for eight medical the Radiopharmaceutical Branch of China

devices supporting the processes of diagnosis Isotope & Radiation Association and serves

treatment and rehabilitation. as a vice-chairman unit. Yunnan Baiyao also

Industry joined the Pharmaceutical Affairs Management

Associations Professional Commit tee of the Chinese First Board Meeting of

Pharmaceutical Association and established Radiopharmaceutical Branch of China

close cooperation with the China Association of Isotope & Radiation Association

Gerontology and Geriatrics.

45 46ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Intellectual Yunnan Baiyao recognizes that intellectual

property protection is the core support for the

Yunnan Baiyao collaborates with the Property Company’s long-term competitiveness. The

Academy of Military Medical Sciences

and Qinghai University to conduct clinical Protection Company adheres to international standards and complies with relevant laws such as

studies on the high-altitude adaptability the Patent Law of the People’s Republic of

of Qixuekang. The trials conducted in China and the Trademark Law of the People’s

locations such as Golmud Nagqu and Republic of China continuously improving its

Baingoin demonstrated that Qixuekang Completion of Clinical Trial on

“Qixuekang Oral Liquid’s Acute intellectual property management system. In significantly improved the high-altitude High-Altitude Adaptability” 2024 the Company formulated the Intellectual

response of participants. Property Management System which clearly

University-

Enterprise defines the application process maintenance

Cooperation measures utilization strategies and protection On September 5 2024 Yunnan Baiyao’s national drug standard revision for Panax mechanisms for the Company’s intellectual Certificate of the CQM Intellectual

notoginseng achieved significant progress marking the announcement of the draft revision Property Management System for property. Aside from that the Company’s

to the Pharmacopoeia Standard for Panax notoginseng. Through collaborations with Medical Devices BU of Yunnan BaiyaoMedical Devices BU completed the CQM

institutions such as the Yunnan Provincial Institute for Food and Drug Administration intellectual property management system

Kunming University of Science and Technology and Yunnan Hongxiang Chinese Medicine certification in 2024.Technology Co. Ltd. Yunnan Baiyao strengthened its leadership in standards and quality

promoting in-depth research and standardization of Panax notoginseng cultivation At the same time in response to 25 trademark applications that are similar to the Company's

harvesting and processing. trademarks "Yunnan Baiyao" and "Yangyuanqing" Yunnan Baiyao actively took legal action.A total of 40 trademark cases were successfully concluded within the year with a success

rate of 77.5%. As of the end of the Reporting Period Yunnan Baiyao had obtained a total of

73 software copyrights.

Ethics in Yunnan Baiyao strictly adheres to a series of scientific ethics standards to ensure that all

research activities comply with ethical standards. These include but are not limited to the

Medical Drug Administration Law of the People’s Republic of China the International Council for During the Reporting Period

Technology Harmonisation’s E8 (R1): General Considerations for Clinical Studies ICH-GCP the Drug

Clinical Trial Management Regulations the World Medical Association’s Declaration of

Helsinki the Technology Ethics Review Measures (Trial) the Opinions on Strengthening the

Governance of Scientific and Technological Ethics and the Ethical Review Measures for Life

Sciences and Medical Research Involving Human Subjects. Invention patents Utility model patents Design patents

33184

Training on GCP Basic Knowledge and Ethical Regulations

On November 13 2024 the Shanghai Center of

the Central Research Institute of Yunnan Baiyao During the Reporting Period

organized a training session on GCP basic

knowledge and key ethical regulations to enhance no violations of scientific Intellectual Property Related Data

employees’ understanding and application of ethics occurred.scientific ethics standards. Indicators Unit 2024 Data

Invention Patents Patents 55

Patent Application Quantity Utility Model Patents Patents 39

Design Patents Patents 4

Invention Patents Patents 33

Patent Authorization Quantity Utility Model Patents Patents 18

Design Patents Patents 4

Expenses from Intellectual Property Declaration RMB 1789669

Expenses from Intellectual Property Disputes and Arbitration RMB 1300000

47 48ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Customer Yunnan Baiyao’s customer satisfaction efforts focus on both medical institutions and

Customer Service Satisfaction manufacturers. For medical institutions we conduct satisfaction surveys through questionnaires face-to-face meetings and phone interviews. The survey covers areas such as order response

product variety fulfillment delivery timeliness and accuracy and customer service quality. During

the investigation process we select the subjects and communicate with the relevant functional

Yunnan Baiyao always places the customer first safeguards their legal rights and strives departments develop and implement an investigation plan. After collecting the issues we

to provide an excellent service experience. Through strengthening customer service coordinate solutions with all parties involved. Finally we provide feedback to the customers

management practicing responsible marketing ensuring customer privacy and security and follow up through revisit. For manufacturers we periodically select strategic or potential

and other measures the Company continually optimizes its service quality. Also we work to manufacturers and assess their satisfaction through the form of questionnaire surveys. Feedback

improve healthcare accessibility striving to ensure all customers have access to high-quality mainly focuses on supplier needs authorization cooperation and retail store service with overall

and affordable medical services. positive feedback.Responsible In 2024 Yunnan Baiyao implemented the Marketing Service Procurement Management

Customer Yunnan Baiyao follows the Customer Response Management System to standardize Measures of Yunnan Baiyao Group (Provisional) and the Brand Trademark Authorization and Use

the process for handling customer complaints ensuring that customer complaints are Marketing Management Details of Yunnan Baiyao Group (Trial) to internally regulate responsible marketing

Relationship followed up and resolved effectively. In accordance with the Internal Communication and ensuring that marketing procurement projects follow established systems reducing operational

Management Handling Mechanism for New Product Complaints of Yunnan Baiyao the Company speeds risks of the Company and ensuring compliant procurement activities. The Company also adjusted

up the resolution of customer complaints actively responding to customer feedback and revised the endorsement and authorization process for five brand trademarks to reduce

and continuously improving service quality. In 2024 Yunnan Baiyao provided a variety operational risks and ensure compliance and responsibility in marketing activities.of communication channels for customers. During the Reporting Period all customer

complaints have been effectively resolved. Yunnan Baiyao’s advertising compliance approval process includes brand material consultation

internal advertising release applications WeChat brand zone release applications etc. ensuring

all advertising activities comply with industry regulations. To ensure marketing activities align with

Customer Complaint Channels industry norms and policy requirements the Company organized multiple industry-related policy

training sessions during the Reporting Period. These sessions covered topics such as regulatory

requirements in the pharmaceutical sales sector medical insurance fraud cases and more

helping employees stay informed about industry trends. In 2024 the Pharmaceutical Business

Group organized 17 training sessions on marketing compliance for management personnel new

Pharmaceutical Customers Health Product Customers employees and key positions with nearly 1800 participants reinforcing compliance awareness

among marketing staff. In accordance with the Company’s tiered talent training strategy and talent

development plan the Pharmaceutical Business Group has carried out a series of responsible

● Customer Response Center Portal Website ● Including Customer Service Department Sales marketing trainings in the development of a talent capability model to provide high-quality services

WeChat Official Account National 12315 Department Staff Contracted Manufacturers to customers and to ensure that employees are well-versed in marketing standards terminology

Internet Platform and ODR Business Medical Institutions etc. or via consumer and product knowledge related to quality business ethics and responsible marketing.Processing Channels. hotline letters faxes and the internet. During

the Reporting Period all customer complaints In addition the Company pays close attention to trademark registration issues to prevent unfair

have been effectively resolved. competition due to trademark infringement. Yunnan Baiyao actively defends its interests and

ensures fair competition taking a “zero-tolerance” approach to infringement of its trademarks. In

2024 the Company filed lawsuits against several online stores for infringing on its trademarks

with 88 cases concluded totaling RMB 10 million in litigation costs.Customer Complaint Handling Process Customer Type Processes Target and Outcome

Customer Type Processes Target and Outcome To timely reassure the manufacturers and if necessary

transfer the matter to the relevant departments. To

Receive complaints record analyze

Manufacturers contact the manufacturers within 24 hours and in process and reply summarize and file.To establish dedicated teams special circumstances complete the handling within

a maximum of 3 days. To ensure that the complaint

Receive complaints classify maintain complete records documents are fully archived.and evaluate investigate conduct rapid categorization and

Medical formulate solutions respond assessment conduct objective Institutions ●

to the customer summarize investigations and develop Service-related complaints: receive

reassure record investigate Medicines are non-returnable and non-exchangeable

and file follow up. feasible solutions and implement apologize discipline and file. once sold (except in cases of quality issues). Price tracking and revisit to ensure the Retail Store complaints require verification of market basis and

satisfaction of medical institutions. Customers ● Price and refund-related complaints: returns and refunds will be considered for those that

receive reassure record process meet the criteria.and file.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Information Yunnan Baiyao continues to enhance its information security management capabilities effectively Privacy Yunnan Baiyao understands that protecting user privacy is the foundation of establishing

Security prevents information leaks and privacy risks and safeguards customer trust and security. Protection trust with customers. The Company strictly adheres to the Personal Information Protection Law of the People's Republic of China and other relevant laws and industry standards and

and Privacy developed the Explanation on the Protection of Privacy of User Data. We are committed to

Protection respecting and protecting user rights including access correction deletion sharing transfer of personal information and modification of consent ensuring that user privacy is fully

protected.Information The Company strictly adheres to all relevant laws and regulations regarding information and data

Security security in the regions where we operate. These include the Cybersecurity Law of the People’s Emergency Response Steps for Customer Privacy Breach Events

Republic of China the Personal Information Protection Law the Data Security Law and the Law

of the People’s Republic of China on the Protection of Consumers’ Rights and Interests. In 2024

we developed the Data Security Management Measures of Yunnan Baiyao Group Co. Ltd. (Trial)

and the Management Measures for Personal Information Security of Yunnan Baiyao Group Co.Ltd. (Trial) which clearly outline the security management requirements for critical processes such

as data classification storage transmission and access ensuring that data processing activities To record the detailed To assess the potential To report the event To inform the affected

comply with laws and regulations as well as internal corporate policies to prevent the occurrence of information of the impact of the event information in a timely individuals via email

data security incidents. event including but not take necessary control manner according to the letter phone call

limited to: the person measures to contain Emergency Response push notification

Information Security Governance Structure who discovered the its development and Plan for Cybersecurity etc. If individual

event time location eliminate potential risks. Incidents including the notification is not

Name of the Institution Functional Position Responsibilities type and quantity of type quantity content feasible reasonable

personal information and nature of the and effective public

involved system name personal information alerts should be

of the event impact involved the impact of issued.Data Governance and

Leading body Overall planning coordination demand on other connected the event measures Security Management

Taskforce management inspection and evaluation etc. systems and whether already taken or

law enforcement and planned and contact

relevant departments information of relevant

Responsible for reporting on digital security have been contacted. personnel.management to the Company’s office meeting

Digital Security Control Body

Professional Group and conducting the Company’s digital security

management work in accordance with the Information Security and Customer Privacy Training

decisions made.Responsible for implementing the relevant

Digital Security Yunnan Baiyao has built a strong information Execution Body

Execution Group decisions and work arrangements of the security defense through systematic trainingGroup. adopting the “Specialized Training + FlexibleModel” approach. The Company organized four

The team is composed of members from the specialized training sessions during the year

Digital Security Permanent Virtual Digital Security Execution Group according to training 768 employees in total. Each session lasted

Response Team Organization actual needs. Its main responsibilities are to for 8 hours ensuring depth and thoroughness. The

respond to analyze and handle information training aimed to improve awareness of information

security incidents. security and customer privacy while working

closely with the cybersecurity team to integrate

security culture through practical case studies

Yunnan Baiyao developed an emergency response plan and measures for information security creating a solid “human defense” barrier for the

incidents and outlined communication and reporting processes to respond effectively to Company’s information security.unexpected events. In 2024 the Company did not receive any complaints regarding user

information security.During the Reporting Period Yunnan Baiyao regularly conducted information security tests and The Company organized training

inspections identified issues in advance and took management and technical measures to

reduce information security risks. In 2024 the Company conducted 30 information security risk specialized training

assessments including 26 penetration tests 3 network attack-defense drills and 1 level protection 4 768

evaluation identifying and rectifying 97 security risks. sessions during the year person-times in total

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Healthcare Yunnan Baiyao always regards safeguarding the health of patients as the core mission of Supply Assurance Initiatives and Performance of Various Medicines

the Company. We are dedicated to improving healthcare accessibility and view promoting

Accessibility inclusive healthcare as an important social responsibility. We focus on the health needs

of various patients and through innovative marketing channels and the establishment

of a modern warehouse logistics system we ensure the supply of medical resources in We have implemented a dynamic monitoring and timely

cities rural areas and remote regions across China. Meanwhile we actively explore smart updating mechanism to ensure that the management of

healthcare solutions providing more convenient and efficient medical services to a wide Drug national and provincial shortage drug lists reaches an

range of patients. Shortages efficiency rate of 99% and 90% respectively. In case that immunoglobulin supply is tight we have established solid

partnerships with 15 manufacturers successfully increasing

Strategic Planning for Healthcare Accessibility the 2024 purchase volume by 26.6%.Scientific Based on the healthcare needs of regional endpoints the Company ensures

Planning that medical resources are reasonably distributed among regions avoiding

This category includes 35 varieties and 51 specifications

Drugs Subject

over-concentration in some areas and shortages in others. including narcotic drugs Class 1 psychotropic drugs and to Special controlled chemicals. We have achieved a near 100% supply

Administration rate within 24 hours through an efficient supply guarantee

system.The Company strengthens the close cooperation and efficient linkage between

Cooperation various terminal medical institutions establishes and improves the cooperation Yunnan Baiyao has established a comprehensive inventory

and Win-Win mechanism and promotes the sharing of resources and the complementarity of management and emergency response mechanism to

strengths. ensure rapid resource allocation in emergencies. In 2024

Emergency the Company successfully completed 16 special demand

Medications orders. In the case of peritoneal dialysis liquid supply we

collaborated with manufacturers to offer home delivery

The Company is dedicated to establishing chronic disease management services providing services to nearly 1800 patients with a

centers cancer prevention and treatment centers and kidney disease patient quarterly cumulative delivery of 35000 items.management initiatives. By leveraging advanced information systems we aim to

significantly enhance patient health management and support the development

Efficient of related centers across numerous counties and cities thereby expanding

Management the reach of medical services and elevating their quality. Also we are actively The Company actively responds to customer urgent needs providing efficient emergencypromoting the effective implementation of the “Intelligence Platform for Dian Yi Pharmaceutical distribution services to medical institutions at all levels across the Yunnan province. InBao County Medical Community Grassroots Management” at the grassroots Distribution 2024 Yunnan Baiyao successfully completed 2531 emergency deliveries. To improve the

level assisting nearly 317 grassroots medical institutions in advancing their efficiency of emergency deliveries the Company optimized several aspects:

information management capabilities.To ensure the safety and efficiency of the drug supply chain the Company

continually improves the drug traceability management system drug operation

Supply management platform and SPD logistics system ensuring the timely supply To ensure sufficient

Optimization accuracy and safety of drugs which effectively reduces medical risks and staff are on hand to

promotes the continuous improvement of overall healthcare services. execute emergency To implement multi- To develop a To integrate our own fleet third-party

orders on a 7×24- warehouse collaboration transfer process to delivery services and public transportation

hour basis. so that when the central support multimodal (such as subways high-speed trains

warehouse has insufficient transportation and airplanes) and provide sufficient

inventory or is unable to

Pharmaceutical Yunnan Baiyao is always committed to ensuring that orders transportation resources for emergency operate due to anomalies

Supply Guarantee ensuring the supply of medicines with are fully traceable orders. As of the end of the Reporting the sub-warehouses can

a particular focus on the stability of throughout the Period the Company had completed 102 promptly take over the

key varieties such as drug shortages delivery process. high-speed train deliveries a year-on-emergency tasks.drugs subject to special administration year increase of 152.1%. Compared with

and emergency medications. full-truckload emergency direct delivery

services the cost was reduced by 60%

and the timeliness was improved by 40%.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Supply Chain Management

Yunnan Baiyao is committed to building a responsible and sustainable supply chain system. Through

a comprehensive supplier lifecycle management system the Company clearly defines suppliers’

responsibilities in environmental protection labor management data security and business ethics

steadily advancing high-quality development in the value chain to achieve a win-win situation for all

parties involved.Supplier Yunnan Baiyao strictly adheres to relevant laws and regulations such as the Product Quality Law of

the People’s Republic of China the Tendering and Bidding Law of the People’s Republic of China the

Management Drug Administration Law the Measures for the Supervision and Administration of Drug Manufacturing

System the Code of Practice for Quality Management in the Production of Cosmetics and the Measures for

Cosmetics Registration and Filing Management. The Company continues to update various supplier

management and procurement-related rules and regulations such as the Procurement Management

Manual of Yunnan Baiyao Group (Trial) the Procurement and Bidding Implementation Details of To strengthen management and awareness regarding integrity within supplier partnerships

Health Products Business Group of Yunnan Baiyao Group (Trial) and the Legal and Compliance the Company has added integrity clauses to procurement contracts requiring all new

Daily Procurement Management Rules (Version 2024). The Company has also successfully launched suppliers to sign contracts with procurement regulations. At the same time the Company

a group procurement platform and supplier management portal systems to fully digitize processes ensures the protection of small and medium-sized enterprise investors’ rights strictly

including supplier access bidding evaluation and performance management. controlling the project payment cycles and ensuring that there are no overdue payments in

In 2024 Yunnan Baiyao driven by project management delved deeply into several key areas such as business transactions. As of the end of the Reporting Period 100% of supplier procurement

supplier management process optimization carbon emission control introduction of new technologies contracts had been signed.and materials and risk management. The Company introduced the PILOT Leading Model5 combined

with the actual operational conditions at present and accurately focused on five core directions: Number of Suppliers for Yunnan Baiyao

procurement inventory operations logistics and technology. It formulated and refined management

strategies and performance evaluation indicators that match these areas thereby laying a solid Indicators Unit 2024

foundation for the efficient operation and sustainable development of supply chain management.Total Suppliers Quantity 287

Supplier Management System

Suppliers in Yunnan Province Quantity 41

The Company develops corresponding supplier access requirements according to Suppliers (in other provinces and regions in Chinese Quantity 244

Supplier Access and business needs across six major procurement committees including production daily

Mainland except Yunnan Province)

Classification operations branding digital pharmaceutical materials and engineering. Suppliers are Overseas Suppliers (including Hong Kong Macau Taiwan) Quantity 2

selected based on quality cost delivery and service criteria. Key Suppliers Quantity 138

The Company conducts semi-annual and annual supplier evaluations and a

comprehensive performance evaluation from dimensions such as quality cost service

after-sales technology and innovation. Suppliers with poor performance are urged to In 2024 Yunnan Baiyao focused on upstream supply chain innovation upgrading its supplier

Supplier 6make rectifications and track the effectiveness until the rectifications are completed. portal and developing a new SRM system. Through visualized interaction it facilitates

Assessment and information sharing and integrates big data and AI technologies to build price forecasting

Evaluation Meanwhile an efficient appeal mechanism has been established. If suppliers have models. The Company introduced item-specific traceability and connected the production

any objections to the assessment results they may submit their concerns through the system to advance quality control significantly enhancing production efficiency resource

designated appeal channels. Upon receipt we will process the appeal promptly and utilization and sustainable development capabilities.provide feedback.Sustainable Yunnan Baiyao places great importance on the environmental and social risks associated The Company conducts work in accordance with the supplier audit plan. Based on with its suppliers. During the Reporting Period the Company drafted the Supplier ESG

the audit results it jointly compiles the Supplier On-site Audit Assessment Report with Supply Chain Management Manual which systematically outlines the background expected outcomes

the suppliers to analyze the main issues and propose corrective actions. It also urges objectives and evaluation methods of the supplier ESG assessment project. Through these

suppliers to complete the rectifications on time to meet compliance requirements.Supplier Audits evaluations the Company encourages suppliers to improve their ESG performance thus

As of the end of the Reporting Period Yunnan Baiyao has completed on-site audits of enhancing the overall sustainability and competitiveness of Yunnan Baiyao’s supply chain.

30 suppliers in the pharmaceutical category 17 in the health product category and 4 in As of the end of the Reporting Period 80% of the products procured by the Company were

the TCM resources category. certified according to third-party environmental or social standards.

6 Supplier Relationship Management.

5 Refers to Performance Innovation Lean Operational Excellence Technology Enablement.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

ESG Management System of Suppliers

Annual Supplier Conference of Yunnan Baiyao Group

Energy ● To develop and implement energy-saving plans to improve energy efficiency.Management In January 2024 Yunnan Baiyao held its Annual Supplier Conference with over ● To prioritize the use of renewable energy or clean energy.

170 supplier partners in attendance. During the conference Yunnan Baiyao and

E Resource ● To promote resource recycling and reuse to reduce waste. its suppliers jointly issued a “Commitment on Sunshine and Green Procurement” promising to jointly practice transparent procurement ensure fair transactions Management ● To manage water resources rationally to reduce water consumption and pollution. prioritize environmentally friendly and sustainable products and services reduce

Environmental environmental impact and embrace the concept of sustainable development.Greenhouse ● To measure and report greenhouse gas emissions.Gas Emissions ● To set emission reduction goals and action plans.Environmental ● To ensure that production and operations comply with environmental

Compliance regulations and rectify violations in a timely manner.● To comply with labor laws and regulations to protect workers’ rights including

Labor Rights work hours wages benefits and safety.● To prohibit the use of child labor and forced labor.S ● To provide a safe working environment and establish a sound occupational Health and health and safety management system.Safety

● To regularly train employees on health and safety.Social

● To respect and protect the human rights of employees and prohibit any form

Human Rights of discrimination and harassment.● To support employees’ freedom of association and collective bargaining.Annual Supplier Conference of Yunnan Baiyao

Community ● To actively participate in the development and public welfare activities of the

Engagement local community to promote its sustainable development.ESG Training and Exchange to Build a Path to Sustainable Development

Business ● To adhere to the code of business ethics and prohibit any form of corruption

Ethics fraud and unfair competition. From May to October 2024 Yunnan Baiyao successfully organized on-site ESG

G training and exchange activities for six core suppliers in Kunming covering 33% of Corporate ● To establish a sound corporate governance structure including clear the mainstream suppliers. This activity aimed to deepen suppliers’ understanding Governance responsibilities of the board of directors and decision-making mechanisms. and practice of ESG concepts share best practice cases through face-to-face Structure ● To conduct regular internal audits and risk assessments. interactions and discuss how to effectively integrate ESG principles into daily

Governance operations contributing to the overall sustainable development of the supply chain.● To effectively manage the supply chain ensuring that suppliers also meet

Supply Chain ESG requirements.Management

● To establish a supplier evaluation and supervision mechanism.In 2024 Yunnan Baiyao conducted ESG evaluations for major suppliers with significant procurement amounts in both

pharmaceuticals and health products. With the evaluation we identified and mitigated environmental social and governance

risks within the supply chain ensuring supply chain stability. We regularly collect ESG data and reports from suppliers

track and analyze performance and provide feedback and improvement suggestions to suppliers based on the evaluation

results. Outstanding suppliers are recognized and rewarded while those who continuously fail to meet standards may have

their orders reduced or face termination of cooperation. This encourages continuous optimization of the supply chain. In

addition Yunnan Baiyao continuously optimizes the content and methods of training to ensure that the outcomes of the

training can effectively be translated into ESG improvement measures in suppliers’ actual operations thus helping create a

greener more equitable and more sustainable supply chain ecosystem. During the Reporting Period Yunnan Baiyao did not ESG Exchange Session with Suppliers

experience any time or financial losses due to the impact of suppliers.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

03

Green Development

for Deepening

Ecological

Civilization

Yunnan Baiyao always adheres to the concept of green

development integrating ecological civilization construction into the

Company’s development strategy. By actively addressing climate

change implementing biodiversity conservation projects optimizing

environmental management systems and rationally utilizing

natural resources the Company continues to deepen its green

development path and contribute to building a sustainable future

where humans and nature coexist in harmony.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Addressing Climate Change Climate-related Risks and Countermeasures of Yunnan Baiyao

Yunnan Baiyao recognizes the profound impact of climate change on the global ecological Risk Type Risk Description Countermeasuresenvironment and human health. As such the Company has made “addressing climatechange” a cornerstone of its sustainable development strategy. In alignment with the national Frequent occurrence of extreme weather such as

“dual-carbon” goals and its unique characteristics Yunnan Baiyao adheres to relevant floods high temperatures and typhoons which will ● To pay close attention to weather

international agreements including the United Nations Framework Convention on Climate lead to: forecasts and get extreme weather

Change and the Paris Agreement. Furthermore the Company references the framework 1. Power supply and water supply risks increasing information in time.and suggestions in the IFRS Sustainable Disclosure Standard No. 2 (IFRS S2) on Climate- the uncertainty of stable production and operation ● To make a comprehensive

related Disclosure issued by the International Sustainability Standards Board (ISSB). of Yunnan Baiyao. consideration of retail and large

Starting from four aspects i.e. governance strategy risk management metrics and goals 2. The supply risk of TCM materials which may suppliers in the selection of

we continuously improve the climate change governance system. We actively engage in lead to the difficult harvest of raw materials on suppliers so as to ensure supply

the identification of risks and opportunities related to climate change and strive to meet the schedule and the rise of drug prices. stability.challenges posed by climate change. While enhancing the Company’s adaptability to climate Acute risks ● To enhance the Company’s

change we also contribute to the fulfilment of global climate goals. 3. Transportation risks causing delays or disruptions in transportation which in turn affect emergency response capabilities for

the upstream and downstream operations of the extreme weather conditions conduct

Climate Yunnan Baiyao attaches great importance to climate change governance continuously Company. emergency drills and improve

strengthening the management and monitoring of climate change issues and gradually employee safety awareness.Governance 4. Employee health and safety risks which may undertaking tasks such as climate change strategy development risk management indicator pose a threat to the health and safety of operating

monitoring and information disclosure. We also continue to enhance the supervision and employees.support of climate change response efforts allocate resources reasonably and improve the Physical risk

Company’s climate change governance. The gradual global warming and rising sea levels ● To stay tuned for reports on warming

which will cause: trends take actions to address

Climate Yunnan Baiyao fully understands the impact of climate change on the Company’s business 1. The change of the growing environment of TCM climate change and enhance the

strategy and finances. The Company is actively promoting the transition to a green and

Strategy materials which may affect the quality and efficacy

Company’s resilience to climate

low-carbon business model intensifying efforts to reduce carbon emissions and enhancing of TCM materials change..resilience to climate change. ● 2. Global water quality changes and the emergence To conduct conservation research

Considering the Company’s operational situation the characteristics of the TCM industry of new pollutants affecting normal production and

on the important medicinal materials

involved in the Company’s business

and the concerns of stakeholders from economic compliance reputational and operational operations.Chronic understand their suitable growth

perspectives the Company actively identifies evaluates and manages the risks and risks 3. High temperatures are more frequent in the conditions carry out artificial

opportunities that climate change may bring laying the foundation for achieving climate summer requiring more energy to regulate the cultivation base experiments and

change-related goals. temperature for production and operations which ensure the quality of TCM materials.leads to increased operating costs.● To implement energy-saving

4. The risks of heatwaves droughts and fires are technological transformation projects

on the rise which may lead to major accidents and to improve the efficiency of energy

disruptions in company operations. systems.● To continuously monitor changes in

Chinese and international regulatory authorities external policies and plan for climate

are imposing increasingly stringent requirements change response actions.on the management of the Company’s greenhouse

gas emissions with continuously rising standards ● To promote the Company’s low-

for carbon emission control. This poses climate carbon transformation and strive to

change-related legal risks for the Company. achieve green operations and lean

Transition management.risks Policy and

legal risks ● To carry out the substitution research

The increasingly tight regulatory requirements for of medicinal materials to reduce the

wild animals and plants at home and abroad will probability of drugs being affected.lead to restrictions on the use of TCM materials ● To plan for reservation and

and the normal supply of products. processing of key TCM materials in

advance.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Climate-related Opportunities for Yunnan Baiyao

Risk Type Risk Description Countermeasures

Carbon trading carbon tax ● To develop and utilize clean energy sources Opportunity Type Opportunity Description

environmental protection tax such as photovoltaic power generation and

and other policies are gradually other green electricity applications. With the continuous introduction of low-carbon technologies Yunnan

implemented. The Company will

●

face increasingly higher costs in the To prioritize low-energy consumption and

Opportunities to improve Baiyao can use emerging energy-saving processes to improve the

new energy equipment when purchasing energy efficiency efficiency of resource and energy use in its production and operations carbon market which requires the new equipment. effectively reducing operational costs.Company to continuously increase

its efforts in energy conservation ● To conduct energy saving renovation of the Energy Supply China is advancing the construction of a new energy system and has

and emission reduction. existing equipment. formulated incentive policies and measures to support enterprises in

Opportunities in Clean strengthening the use of clean energy. Yunnan Baiyao can respond to the

● To enhance the Company’s digital Energy Utilization national energy strategy by actively deploying the use of clean energy

Policy and Regulators have higher management and strengthen its capabilities thereby reducing the costs associated with the Company’s low-carbon

legal risks requirements for the accuracy of in data collection and analysis. transformation.environmental data declared by The growing concern and preference for green products and eco-friendly

●

enterprises increasing the pressure To monitor important environmental Products and Opportunities in industry factories by both the government and consumers present an opportunity

of environmental information indicators in the process of production and Services development for Yunnan Baiyao to enhance its market competitiveness by promoting its

statistics and compliance risks of operation. commitment to sustainability.Yunnan Baiyao. ● To make information disclosure in strict

accordance with compliance requirements.“Biomass Gasification Gas and Natural Gas” Dual-Energy Centralized Intelligent Heating Project

at Qidian Raw Material Center

●

As the government pays more To continuously promote the transformation

attention to low-carbon matters to low-carbon and energy-saving In 2024 the Qidian Raw Material Center constructed two 25-ton biomass gasification heating systems. The newly

Transition and requires enterprises to adopt technologies. established centralized intelligent heating platform allows the coupling of biomass gasification gas and natural gas to

risks energy-efficient equipment clean ● To reduce low-carbon input costs through supply heat. After the completion of the project it is expected to save energy costs by RMB 8 to 10 million per year. It

energy and low-carbon production optimizing business processes and recycling will efficiently utilize about 53400 tons of agricultural and forestry residues annually reduce the use of standard coal by

Technical technologies Yunnan Baiyao needs resources. 26700 tons cut carbon dioxide emissions by 69000 tons sulfur dioxide emissions by 226 tons and nitrogen oxides

risks to invest more costs in low-carbon

● To select more energy efficient raw materials emissions by 197 tons significantly reducing the total greenhouse gas emissions from the Raw Material Center.production and operation. and suppliers.The market has presented more ● To study and judge the market trend timely

preference for low-carbon and adjust the business deployment.energy-saving companies and

products increasing the pressure ● To carry out lightweight transformation of

Market on Yunnan Baiyao’s low-carbon packaging materials to show the Company’s

risks production and operation. green awareness to consumers.● To enhance communication with

Stakeholders are paying closer stakeholders to fully understand their

attention to how companies respond opinions and suggestions on the Company’s Biomass Gasification Gas Heating System at Qidian Raw Material Center

to climate change. If Yunnan Baiyao climate change-related work.fails to address such concerns in a ● To disclose the Company’s progress

Reputational timely and effective manner it may actively and transparently in addressing

lead to a decline in the Company’s Climate Risk Yunnan Baiyao places great importance on the risks posed by climate change particularly risks climate change such as green packaging the potential impact on the TCM supply chain. The Company identifies assesses and

reputation and impact its value. sustainable procurement and circular Management manages climate risks. The Company implements climate risk management requirements

economy. in its daily operations continuously monitors climate risks that may be faced in the planting

harvesting and storage of TCM materials formulates preventive strategies and response

measures and urges all functional departments and subsidiaries to implement the relevant

work. Moving forward we will continue to improve our climate risk management system

While actively identifying and addressing climate change-related risks Yunnan Baiyao also pays attention to the build a management framework and enhance the collection and analysis of greenhouse

development opportunities that climate change may bring. The Company strives to seize these opportunities to blaze new gas emissions data. Based on these analyses we will adjust our climate risk management

trails for its sustainable development. strategies and work mechanisms to ensure the sustainability of key operational areas

including the supply of TCM materials and pharmaceutical production.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Climate To effectively supervise and continuously strengthen the governance of climate change and

enhance emission reduction efforts the Company has launched a pilot project for carbon

Indicators and In 2024 Yunnan Baiyao actively explored climate change response pathways with the management target planning and system construction within the Health Products Business Low-Carbon Health Products Business Group serving as a pilot to develop carbon management targets

Goals Group as part of the overall Yunnan Baiyao Carbon Management Target Planning and Empowerment systems and platforms. The Company’s climate change response commitments carbon

System Construction. Based on its current carbon emission status and future development for a Green management systems and carbon reduction actions are being enhanced to improve the plans the Health Products Business Group has set the dual-carbon strategic goals7 of Company’s overall climate change governance and create a comprehensive low-carbon and“achieving carbon peak by 2028; operational carbon neutrality and a 100% renewable Journey sustainable development strategy.energy usage ratio by 2030; and value chain carbon neutrality by 2050.” The BG has

established clear indicators for responding to climate change and tracks key indicators Climate The Health Products Business Group developed the following climate change commitments

annually to review and assess the Company’s progress in achieving its “dual-carbon” goals. Commitment providing a clear framework for implementing the Company’s dual-carbon strategy:

Commitment Related to Climate Change:

Based on risk and opportunity assessments to

Peak Year

Operational To regularly identify climate develop special response plans integrate climate

Base Year Carbon change risks and opportunities risk management into the Company’s overall risk

Neutrality scientifically assess their management system and ensure systematic and

impact on suppliers and create scientific management.Value a list of climate risks and

Chain

Carbon opportunities.Neutrality

24

2022202820302050

13

Dual-Carbon Strategic Goals of Health Products BG of Yunnan Baiyao

At the same time the Company has been carrying out multiple carbon reduction measures

including energy conservation emissions management and the use of low-carbon raw To regularly calculate greenhouse gas To consider the impact of climate

materials. The Company continues to increase its investments in these areas identifies emissions establish carbon reduction targets change on human health and identify

further carbon reduction potential and contributes to achieving the national “dual-carbon” and continually improve climate change ways the Company can mitigate or

goals. Yunnan Baiyao will further strengthen its climate indicators and goal management management and carbon reduction disclosures. proactively address related issues.collaborate with upstream and downstream partners in the value chain to explore low-carbon

emission reduction pathways and jointly achieve a green low-carbon transformation. Management To achieve climate commitments and improve carbon management the Health Products

System Business Group implements the PDCA (Plan-Do-Check-Act) management concept. The

BG has developed the Carbon Management Manual of Yunnan Baiyao Health Products

Business Group which clearly defines the carbon management organizational structure

2024 Greenhouse Gas Emissions of Yunnan Baiyao and responsibility distribution standardizes carbon emission data management processes

continuously improves carbon management performance and climate performance and

support the Health Products Business Group in continuously achieving the goal of carbon

Direct Greenhouse Gas Emissions (Scope 1) Indirect Greenhouse Gas Emissions (Scope 2) emission reduction.

15079.39 63424.31 Carbon Management Organizational StructureTons of CO2 equivalent Tons of CO2 equivalent

Carbon Management Steering Group

Total Greenhouse Gas Emissions Greenhouse Gas Emissions Density Carbon Management Execution Group

78503.70 Tons of CO2 equivalent 0.020 Tons of CO2 equivalent/ Manufacturing Safety Finance and Health

Operating revenue of Supply Chain and Environmental Economic Operation Center Management Manufacturing RMB 10000 Operation Center Department Center

Health Financial Health Human

7 Basis for Selecting the Base Year and Target Year for Carbon Emission Reduction Goals: The year 2022 is defined as the base year for carbon target Health Product Health Market Management Resources

setting as it is the first year in which the Health Products Business Group has complete and accurate carbon emission accounting data. In conjunction Innovation Center Operation Center Department Department

with the national dual-carbon goals timeline and decarbonization pathway planning the short-term target year is set for 2030 and the long-term target

year is set for 2050.

65 66ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Carbon Management Responsibility Distribution Key Processes for Carbon Management

Organizational Carbon Accounting

Carbon ● Responsible for discussing the overall strategy and development goals of carbon management and

Management conveying the Company’s carbon management goals and strategic requirements for development.Steering Process

Group ● Responsible for guiding and making decisions on carbon management and establishing

collaborative communication mechanisms and rules of procedure for working groups. Establish a base Define organizational Identify carbon Calculate carbon

year for inventory boundaries emission sources emissions

Select accounting Define accounting Collect activity Generate inventory and

standards scope data reports

● Responsible for establishing and improving the carbon management system and formulating and

issuing relevant procedures and implementation details for carbon management. Significance

Carbon ● Responsible for developing the overall plan goals and indicators for carbon management

●

Management setting emission reduction goals and assessment mechanisms and supervising and auditing the To understand the impact of our own operations on climate change.Execution implementation of carbon reduction goals by various business departments. ●

Group To provide data support for identifying significant emission sources and setting carbon reduction targets.● Responsible for coordinating the collection statistics and accounting of carbon management-

related data and supporting the aggregation and organization of carbon emission information in

the Company’s ESG report.Product Carbon Footprint Accounting

Process

Functional ● Responsible for implementing carbon management requirements in all business processes

Departments

and Business including assessing carbon emission policies collecting and analyzing carbon emission data Select accounting Define accounting Calculate carbon Identify carbon

Centers advancing energy-saving and technological renovation projects strengthening the management of standards scope emissions reduction potential

waste (solid waste wastewater and waste gas) and developing low-carbon products.Define product Data collection and Data quality Generate carbon

functional units allocation analysis footprint report

The Health Products Business Group is continuously upgrading its personalized carbon management system to achieve Significance

end-to-end carbon management across the entire value chain. The system is comprehensive and standardized including ● To understand the carbon emissions of different product lines.seven core modules: organizational carbon management product carbon management supply chain carbon management

carbon reduction management factor library management dual-carbon knowledge repository and dashboard monitoring. ● To provide data references for low-carbon design and low-carbon procurement of products.Thus the Company conducts refined management and scientific analysis of relevant data and information. Among them

the organizational carbon and product carbon management modules comply with international standards such as the GHG

Protocol ISO 16064 and ISO 14067 and have passed the conformity assessment by Intertek.Carbon Target Setting and Reduction Management

Apart from that we have formulated control procedures for the four key aspects of carbon management: organizational Process

carbon accounting product carbon footprint accounting carbon target setting and emission reduction management and

supply chain carbon management. These procedures clarify the relevant workflows and enhance the standardization and

efficiency of the Company’s carbon management. Assessment of

current carbon Benchmarking industry Selection of carbon Choice of baseline and Setting of carbon

emissions carbon targets target indicators target years reduction targets

Change of carbon Carbon performance Assessment of carbon Evaluation of carbon Decomposition of

targets evaluation and reduction indicators reduction projects carbon reduction

reward/punishment indicators

mechanisms

Significance

● To refine the Company’s carbon emission reduction strategy clarify the pathways for emission

reduction and effectively promote the low-carbon transition.

67 68ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Supply Chain Carbon Management Actions The Health Products Business Group actively implements carbon reduction measures in

four key areas: product low-carbon design raw material low-carbon procurement green

manufacturing and low-carbon logistics.Process

Low-Carbon Product Design

Carbon emission baseline Carbon target

survey by suppliers setting by suppliers

● To continuously promote product ● To reduce the residual rate of products

Carbon management Carbon performance lightweighting during their lifecycle

system by suppliers evaluation by suppliers Main actions

● To select low-carbon and ● To introduce product carbon footprint

environmentally friendly raw materials assessment in new product development

Digital carbon management Improvement

by suppliers empowerment by suppliers

Accounting model Accounting model Accounting model

of material end of production end of logistics end

Low-Carbon Toothpaste Ingredient

Material end Yunnan Baiyao conducted a low-cost technology R&D project to transform the production process of anhydrous

72% To output supplier calcium hydrogen phosphate a key ingredient in toothpaste. By switching from a thermal phosphoric acid method to a

Suppliers product carbon wet phosphoric acid method the Company reduced energy consumption and carbon emissions during the production

regularly submit Production end footprint calculation

data and process. It is estimated that this transformation will save 1.064 tons of CO2 equivalent per ton of calcium hydrogen

information in 65%

results and complete

component carbon phosphate produced.the system emission comparison

Logistics end analysis Comparison of Two Production Processes

80%

Thermal 1400°C

phosphoric Phosphate rock High-temperature High-purity yellow Thermal phosphoric

Level D Level C Level B Level A acid electric furnace phosphorus acid

Crushing Purification

Wet phosphoric Crude phosphoric

acid Phosphate rock Phosphate powder acid Wet phosphoric acid

Significance

● To enhance the carbon management capabilities of suppliers to support the low-carbon transition Sulfuric acid

and sustainable development of the value chain.

69 70ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Low-Carbon Sourcing of Raw Materials Low-Carbon Logistics and Transportation

● To conduct a survey on carbon ● To promote the use of low-carbon and ● To shift from road to rail transport and ● To use recyclable packaging and

emissions in the supply chain environmentally friendly raw materials among optimize logistics transportation links transportation equipment

To encourage suppliers to increase the suppliers● ● To increase the proportion of new energy

proportion of renewable energy use ● To introduce carbon performance assessment transport vehicles

Main actions for suppliers Main actions

Conducting Supplier Carbon Performance Evaluation

Recycling of Transit Cardboard Boxes

Based on indicators such as the carbon targets set by suppliers the results of carbon accounting carbon reduction

measures and the proportion of clean energy applications the Company evaluates the current state of suppliers’ carbon

management capabilities and completes the scoring of carbon performance evaluations. The focus is on comparing For the cardboard boxes used in our operations we have implemented a system where semi-finished cardboard boxes

the carbon performance evaluation results of different suppliers within the same procurement category identifying are produced in coordination with downstream contract manufacturing facilities enabling the recycling of transit boxes

supplier partners with outstanding performance in low-carbon and sustainable management and supporting low-carbon within the production process. In collaboration with upstream suppliers based on the cardboard boxes we purchase we

procurement decisions for key projects. have achieved a recycling loop for packaging material boxes with suppliers. In 2024 our cardboard box procurement

volume decreased by 75% reducing the consumption of 1.2 million cardboard boxes.Green Production and Manufacturing

● Utilization of renewable energy ● Establishment of environmental and

● Continuous advancement of energy-saving energy management systems

and technological renovation projects ● Low-carbon commuting and business

Main actions ● Waste minimization

travel for employees

Toothpaste Pipeline Recovery

Recycling of Transit Cardboard Boxes

By employing toothpaste recovery technology within pipelines the

Company uses a Pigging System to recover toothpaste from the finished

product pipelines which saves 122.4 tons of toothpaste annually and

avoids the wastewater treatment issues associated with cleaning the

toothpaste pipelines thereby significantly reducing the difficulty of

wastewater treatment.Toothpaste Pipeline Recovery System

71 72ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Biodiversity Protection Germplasm Resource Nursery for Paris Polyphylla

Initiated by Tai’an Company at the planting end of TCM materials the resource nursery covers most of

Yunnan Baiyao as a successor of TCM regards TCM materials as valuable the Paris polyphylla species distributed in China and has planned a comprehensive seed preservation

resources placing high importance on the protection of TCM materials and other mechanism integrating live species gene preservation and propagation which provides a good platform

biological resources. By leveraging the Company’s platform advantage in plant for resource preservation scientific research popularization of science and industrial development of

research and conservation Yunnan Baiyao has initiated multiple biodiversity Paris polyphylla.protection efforts striving to achieve harmonious development between the

Company’s production operations and the natural environment. In 2024 based on years of accumulated seed preservation the Company precisely selected and

bred three specialized superior Paris polyphylla strains. Seed orchards seedling breeding bases and

The Company strictly adheres to laws and regulations such as the Wildlife demonstration planting bases were established for each achieving a correspondence between field

Protection Law of the People’s Republic of China the Regulations of the planting and the production of specialized products making a significant contribution to maintaining the

People’s Republic of China on Wild Plants Protection the Regulations for the genetic advantages of Paris polyphylla. The successful breeding of superior Paris polyphylla strains

Implementation of the Drug Administration Law of the People’s Republic of China represents a major advancement in the research of Paris polyphylla breeding and has effectively driven

the Measures for the Administration of Drug Registration of the People’s Republic the development of the Paris polyphylla industry. As of the end of the Reporting Period the resource

of China and the Law of the People’s Republic of China on TCM. During its nursery had collected 23 species including 54 variants or populations of Paris polyphylla plants making

business activities including the layout of medicinal materials drug processing it the largest and most diverse live germplasm resource nursery for Paris polyphylla in the world.and production the Company always follows the principles of authenticity

and regional distribution characteristics of medicinal materials continuously

strengthening the protection and management of authentic medicinal resources.We implement ecological and economic cyclic cultivation and harvesting methods

for medicinal materials minimizing the negative impact caused by the Company’s

operations on the local ecosystem. At the same time we actively take measures

to protect endangered and rare medicinal materials contributing to the protection

of biodiversity at the sites where we operate while improving the quality and

supply capacity of medicinal materials.Building a Treasury of TCM Materials

We place great importance on the protection and development of TCM material Germplasm Resource Nursery for Paris polyphylla

resources. Yunnan is known for its high-quality medicinal varieties such as

Dolomiaea costus Angelica sinensis Panax notoginseng and Yunnan Paris

polyphylla which have been prioritized as key varieties for the development of

Yunnan medicine. We are actively engaged in protecting TCM resources and Northwest Yunnan TCM Resource Nursery for Yunnan Provincial

reducing the risk of species endangerment. Leveraging the Company’s extensive Medicinal Plants

experience and resources in the TCM industry we are committed to conducting

research collection and protection of TCM materials. In 2024 the Company The Company referencing the national medicine monograph Yulong Materia Medica established a

carried out field research on wild resources such as Fritillaria cirrhosa Rodgersia provincial-level medicinal plant germplasm resource nursery in Tai’an Township Lijiang covering an

sambucifolia Hemsley and Onosma paniculatum. Moreover we continued area of 180 mu. The nursery includes a field display area for medicinal plants a cold-resistant variety

research on the cultivation processing output and testing of major species planting area and a greenhouse area. It had collected over 150 medicinal plant species and showcased

like Licorice Astragalus Pinellia ternata Scutellaria baicalensis Saposhnikovia the cultivation of more than 20 specialty medicinal materials laying a solid material foundation for the

divaricata and Yam in cultivated varieties. The Company has long been inheritance of ethnic medicinal culture and the protection of species resources.dedicated to the introduction domestication and cultivation technology research

as well as the breeding of superior strains and planting promotion of authentic

TCM materials in Yunnan. We conduct in-depth research on resource-specific

varieties in the field overcoming technical bottlenecks and solving technical

challenges to improve per-mu yield thus ensuring the smooth development

of the industry. Over the years the Company has carried out research on the

domestication and cultivation of rare resources and the construction of cultivation

bases. We have successfully achieved artificial cultivation and domestication as

well as large-scale production of varieties such as Yunnan Paris polyphylla and

Onosma paniculatum. Additionally we have established several local medicinal

plant species resource nurseries to reduce the risk of species endangerment and

ensure the sustainable development and utilization of wild resources. Northwest Yunnan Resource Nursery for Yunnan Provincial Medicinal Plants

73 74ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Upholding the Yunnan Baiyao has been dedicated to the research Shared Ecological Circle of TCM Resources

of Yunnan’s authentic medicinal materials for over

Breeding of 20 years consistently conducting foundational

Superior TCM research on the breeding of new medicinal material varieties to effectively address the challenges in the

Varieties to development of medicinal materials. The Company

continues to accelerate the breeding process of

Create Shared superior medicinal materials focusing on solving

Ecological issues such as severe degradation of varieties poor uniformity and a lack of superior strains. As of the

Circle end of the Reporting Period the Company had filed

for 12 new TCM varieties and 3 superior asexual

strains promoting the planting of over 150000 mu

of authentic Yunnan TCM materials. Superior Variety Certificate for

Farmers Industrial

Dolomiaea costus EnterprisesMedicinal Material

Varieties in Medicinal

Yunnan Baiyao has built a digital platform “Digital Cloud Medicine” for the TCM material industry based on its 1+1+N strategy Material Bases

(i.e. one industry internet trading platform + one product one production area layout + multiple replication of production area

projects). The platform will provide services to planting partners including tender procurement contract farming cooperation

shared processing shared warehousing land leasing testing logistics finance and insurance. On one hand farmers can achieve

a “worry-free sales better prices and sustainable” profit cycle ensuring the benefits and stable development of the entire planting

cycle. On the other hand the platform will provide consumers with high-quality products and services forming a traceable industrial

chain that drives the collaborative development of the entire upstream and downstream supply chain. This will help create a Research Government

mutually beneficial and shared ecological circle centered on medicinal material bases and varieties with the participation of farmers Institutions Departments

businesses governments and research institutions. We focus on base construction as the starting point technical support as the

entry point long-term mutual benefit development as the principle and continuous resource security as the goal. We aim to cultivate

superior varieties strengthen the construction of local medicinal material bases establish technical standards and improve quality

standards while implementing the strategic guidelines of “storing medicines in the warehouse in the land and through technology.”

We are also working to share and co-build bases outside Yunnan province promoting the domestication of wild resources such as

Atractylodes lancea and Saposhnikovia to prevent local residents from overharvesting wild resources and causing environmental

damage thus effectively protecting the ecological environment of multiple areas.Maintaining Yunnan Baiyao is leading guiding and driving the construction of larger-scale GAP bases with ●

more varieties across the Yunnan province and incorporating key varieties such as Panax To establish strict ecological environment standards and conduct regular monitoring over the quality

Ecological notoginseng Paris polyphylla Poria and Dolomiaea costus into a high-standard planting Base Site of air soil irrigation water and processing water to ensure compliance with national environmental

Sustainability of ecosystem. We further promote the high-quality development of Yunnan’s TCM material industry Selection

quality standards providing a healthy ecological environment for the growth of TCM materials.establish planting standards and specifications vigorously build the top ten standardized Yunnan

the TCM Material medicinal planting demonstration bases and create a rational layout for authentic production

areas. The promotion of GAP standards has facilitated the coordinated development across the ● To reasonably plan planting areas promote high-standard planting techniques for TCM materials

Industry Chain industry chain and the refined management from cultivation to processing and sales providing a increase yield efficiently utilize and protect natural resources.to Create Shared more efficient and healthy ecosystem for the entire industry chain. ● To ban the use of highly toxic pesticides nitrate nitrogen fertilizers and unregistered fertilizers

Ecological In terms of seedling cultivation we start from the cultivation of raw medicinal materials’ seeds

promote green plant protection techniques combine agricultural biological and physical control

and strictly control every link of the entire industry chain with the aim of building a high-quality methods to effectively reduce the use of chemical fertilizers and pesticides minimizing the damage to

Circle management system that is traceable throughout the entire process. With regional planning of soil and ecosystems.TCM materials and optimization of planting techniques as well as high-standard GAP cultivation Planting ● When chemical control is necessary use the minimum effective dosage and select highly efficient

we ensure the high quality of these materials and enhance the production efficiency of each low-toxicity and low-residue pesticides to minimize environmental impact.base. In the field of production and processing we actively build the Lijiang Digital TCM Industry

●

Platform to meet the needs of different stages including the supply of raw medicinal materials To implement crop rotation and deep plowing to optimize soil structure reduce the occurrence of

production and processing packaging and storage and digital traceability. This enables diversified pests and diseases promote natural balance between crops restore soil nutrients and biodiversity

customization and provides customers with high-quality TCM products. and protect the stability of farmland ecosystems.Ecological Environment Management of the TCM Material Industry Chain

● To use domesticated varieties instead of wild ones as raw materials for medicinal production and

Production strictly implement biodiversity protection for wild and protected species.● To study seed sources and soilless cultivation with genetic engineering enhance disease

resistance and growth rates of TCM materials select suitable environmental conditions and

Breeding breeding techniques effectively cultivate high-quality TCM materials and significantly reduce

reliance on wild resources to achieve ecological protection. ● To promote fresh processing techniques to reduce resource waste and environmental pollution

Processing caused by repeated drying and reprocessing of medicinal materials.

75 76ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Environmental Management In 2024 to enhance the systematic and professional nature of environmental management the Company established an environmental management structure with well-defined rights and responsibilities. The Technology and Safety Management

Department was designated as the department in charge of the Company’s environmental protection affairs. Moreover all

units were required to set up a dedicated environmental management department as needed to appoint full-time or part-

Yunnan Baiyao adheres to the concept of green development continuously optimizing its time environmental personnel and to coordinate and promote the environmental protection within their respective units.environmental management mechanisms. By establishing a comprehensive environmental

management system and implementing environmental protection measures the Company effectively Environment Management Structure

strengthens the prevention and control of pollution from exhaust gas wastewater and solid waste

as well as their emission management and continuously enhances the Company’s ability to To enforce national environmental protection laws regulations and policies and organize the

manage and mitigate environmental risks striving to achieve a harmonious unity of economic and Company’s environmental law publicity education and training.environmental benefits. In doing so Yunnan Baiyao sets an example for the sustainable development To take the lead in formulating the Company’s environmental protection strategy and goals and

of the TCM industry. coordinate and guide the environmental protection by all units.To develop and improve the Company’s environmental protection management system and

Environmental Yunnan Baiyao pays close attention to the relevant policies and strategic developments of national regulations and strengthen the management of environmental protection comprehensively.environmental protection. It strictly complies with laws and regulations such as the Environmental To carry out the classification of the Company’s environmental protection risks and establish a

Management Protection Law of the People’s Republic of China the Air Pollution Prevention and Control Law of the mechanism for graded control of environmental risks.System People’s Republic of China the Water Pollution Prevention and Control Law of the People’s Republic To conduct investigations into environmental protection risks and hidden dangers urge all units of China and the Noise Pollution Prevention Law of the People’s Republic of China to ensure that its Technology to rectify environmental risks and hidden dangers and continuously improve the Company’s

business operations are in line with environmental management requirements. Within the Company and Safety environmental risk management.a series of management systems have been established including the Environmental Protection Management To organize major environmental protection technology discussions promote the resolution of

Management System the Environmental Risk Grading Method and the Environmental Risk Department significant environmental protection technical issues within the Company and empower the

Hidden Trouble Inspection Investigation and Management Method. These systems strengthen the environmental protection work of all units.implementation of environmental protection responsibilities clarify the duties of environmental work To conduct statistical analysis of the Company’s environmental protection data and evaluate the

define the scope and boundaries of environmental responsibilities enhance emergency management work reporting the status and suggestions about environmental protection to the Company’s

of environmental risks and management of environmental protection facilities and strengthen the leaders in charge.management of pollutant emissions. Environmental protection responsibilities are assigned to each

business unit with environmental target responsibility agreements signed requiring all production To develop its own environmental protection management system and operating procedures in

units to implement environmental protection in accordance with the law. The Company has also accordance with national and corporate environmental protection requirements.developed an Emergency Response Plan for Environmental Incidents which has been filed with the To implement the Company’s environmental protection strategy goals and responsibility

local environmental protection department to assess and prevent significant environmental impacts. requirements to prevent environmental pollution and ecological damage.To organize learning of environmental protection policies and laws and training to enhance

In 2024 Yunnan Baiyao’s Pharmaceutical Business Groups and Health Products Business Group operational skills within the unit.actively responded to the Company’s requirement to further enhance environmental protection To conduct self-inspection activities for environmental protection risks and hidden dangers within

management established environmental management systems tailored to the characteristics of their the unit and promote rectification and feedback of results.respective businesses and strengthened the improvement of the Company’s overall environmental To strengthen the operation and maintenance management of environmental protection facilities Each Unit

management system. and equipment to ensure that pollutants are discharged up to standard.To carry out pollutant emission monitoring within the unit and ensure the authenticity and accuracy

of environmental materials and data.Environmental Management System of Yunnan Baiyao To actively respond to national policies fully carry out energy conservation and emission reduction

work and reduce the generation and emission of pollutants.● Considered and approved the Environmental Management Measures for the Pharmaceutical Emergency Response Drill and Training for Environmental Incidents at Yuhua Preparation Center

Business Group (Trial) which clearly defines the organizational structure and responsibilities

for environmental protection as well as the tasks and requirements. The management content On November 28 2024 to enhance employees’ emergency response capabilities when facing sudden incidents during

includes prevention of new pollution sources management of pollution sources environmental operations the Yuhua Preparation Center organized training and emergency drills focused on the emergency handling of

approval management emergency management publicity education and training and day-to-day sewage pipeline blockages at the wastewater treatment station. The activities included learning about emergency rescue

management. knowledge for sewage pipeline blockages identifying the causes of such incidents and effectively strengthening employees’

Pharmaceuticals

● Developed the other secondary management systems such as the Management Details for professional knowledge and skills in dealing with environmental incidents.Environmental Online Monitoring Equipment of the Pharmaceutical Business Group and

the Management Details for Emergency Response Plan for Environmental Incidents of the

Pharmaceutical Business Group to enhance environmental risk control and urge all responsible

entities to fulfill their duties.● Developed the Clean Production Regulations to strengthen the clean production.Health Products

Emergency Response Drill and Training for Environmental Incidents at Yuhua Preparation Center

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Yunnan Baiyao’s 2024 Environmental Protection Work Conference and Environmental Exhaust Gas The exhaust gas of Yunnan Baiyao mainly consists of sulfur dioxide nitrogen oxide and Protection Promotion Meeting

Management particulate matter produced in the production process. The Company strictly complies with national laws regulations and standards such as the Air Pollution Prevention and Control Law

On October 31 2024 Yunnan Baiyao held its 2024 Environmental Protection Work Conference and Environmental of the People’s Republic of China the Comprehensive Emission Standard for Air Pollutants the

Protection Promotion Meeting. Over 40 participants attended the meeting including the heads of units involved in Emission Control Standard for Volatile Organic Compounds from Industrial Enterprises and the

pollutant emissions and environmental management personnel. At the meeting the current environmental protection Emission Standard for Air Pollutants from the Pharmaceutical Industry. Each business unit is

situation had been analyzed the Company’s environmental status reported and all units were required to strengthen

The Company achieved a required to fully equip the corresponding environmental protection facilities for all exhaust gas

the management of environmental baseline data promote the investigation of risks and hidden dangers and emission links set monitoring indicators and regularly inspect the tail gas emission outlets.address environmental issues through technological innovation. Furthermore the meeting promoted the Company’s

environmental management system clarified the environmental responsibilities of each unit and deployed the 100% End-of-pipe treatment facilities are installed at locations with larger emission volumes and professional third-party companies are engaged to conduct regular inspections. This ensures the environmental work for 2025. It proposed to achieve the goals of lawful and compliant environmental operations stable and compliant emission of all types of exhaust gases and eliminates fugitive emissions. To

and pollutant emissions up to standard through measures such as consolidating the foundation implementing compliance rate for reduce the volume of exhaust gas emissions the Company continuously optimizes production

responsibilities rectifying hidden dangers and upgrading technology. exhaust gas emissions processes and uses clean fuels effectively reducing the environmental impact of exhaust gas

emissions. In 2024 the Company achieved a 100% compliance rate for exhaust gas emissions.Introduction of Ethanol Condensation and Recovery Device at

Yuhua Preparation Center

In 2024 Yuhua Preparation Center of Yunnan

Baiyao made significant progress in the introduction

of environmental protection technologies by

complet ing the acceptance o f an e thanol

condensation and recovery device. This device

is used for the distillation of ethanol waste liquid

Meeting Site

such as residual liquid and substandard products

generated in the production line in the recovery

As of the end of the Reporting Period Yunnan Baiyao has not tower. The recovered ethanol concentration

experienced any significant incidents of litigation or corresponding can reach 85%-90% which can be reused for

penalties due to violations of environmental regulations. There disinfection of equipment floors and pipelines in

have been no instances where pollutant emissions have the production workshop. After calculation this Ethanol Recovery Device for

adversely affected the local community residents. The Company device has reduced the emission of volatile organic th Acceptanceand its nine subsidiaries that are subject to environmental compounds by more than 20 tons during the “14protection administrative licensing have all obtained the Five-Year Plan” period greatly promoting the

necessary discharge permits in accordance with regulations. Company’s exhaust gas reduction.In compliance with the requirements of their discharge permits

they have engaged third-party testing units with CMA certification Exhaust Gas Emission of Yunnan Baiyao in 20248

to regularly monitor wastewater exhaust gas and noise levels

ensuring that all indicators are within the required limits. Besides

after inviting a qualified third-party assessment unit for evaluation Environmental Management System Certification Indicators Unit 2024

Yunnan Pharma has passed the certification audit of the ISO of Yunnan Pharma

Total exhaust gas emission 10000m3 52868.87

14001 Environmental Management System.

Particulate matter Ton(s) 0.27

Achievement of Environmental Goals by Yunnan Baiyao in 2024 NOx Ton(s) 7.36

SOx Ton(s) 0.02

Environmental goals Achievement in 2024

Volatile Organic Compounds (VOCs) Ton(s) 24.03

100% compliance with pollutant discharge standards Achieved Exhaust gas emission density 10000m3/Operating revenue of RMB 10000 0.013

0 occurrence of environmental pollution incident Achieved

8 D ue to the increase in the statistic standards exhaust gas emission increased in 2024 compared to that in 2023. As specified by the Company’s

environmental protection management system the exhaust gas emission data statistics in 2024 covered all production areas under the Company’s

environmental protection management.

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REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Upgrade and Transformation of Qidian Wastewater Treatment Tank

In 2024 the Company carried out an upgrade and transformation of the wastewater treatment tank in the Qidian

Industrial Zone. This involved cleaning anti-corrosion treatment and replacement of facilities in multiple ponds

including the thickening tank and the regulating tank which effectively prevented wastewater leakage extended the

service life of the tanks and reduced maintenance and replacement costs. The upgrade of the wastewater treatment

tank enhanced the operational efficiency of the wastewater treatment station and further ensured the compliant

discharge of wastewater in the Qidian Industrial Zone.Wastewater Yunnan Baiyao’s wastewater mainly comes from discharges generated from the production

of pharmaceuticals and health products and domestic sewage. The Company strictly

Management adheres to national and regional management requirements such as the Water Pollution

Prevention and Control Law of the People’s Republic of China in carrying out wastewater

treatment. It enhances its internal wastewater management through multiple means

including establishing internal regulations like the Management Details for Wastewater

Treatment Stations and the Inspection Management Details for Rainwater and Wastewater

Facilities assigning dedicated teams for wastewater management standardizing

environmental protection records and engaging in environmental technology exchanges

with neighboring enterprises and units in the field of wastewater treatment. We have set up

dedicated wastewater treatment tanks at the end of the production process. These ponds

reduce pollutant concentrations through sedimentation filtration microbial degradation

and adsorption. Online monitoring equipment is used to ensure that the treated wastewater

meets the required standards before it is discharged as stipulated.Wastewater Prevention and Control of Yunnan Baiyao Upgrade and Transformation of Qidian Wastewater Treatment Tank

Building a comprehensive water pollution governance system

In 2024 the Company has monitored and uploaded key water quality indicators in accordance with the requirements of the

● To implement multi-stage treatment processes and degrade various types of pollutants through continuous higher-level environmental protection authorities ensuring compliant discharge and avoiding impacts on rivers and soil.multiple treatment stages.● To install automated online monitoring systems for water pollution sources and connect them to national

provincial and municipal regulatory platforms to transmit monitoring data in real-time and engage third-party Wastewater Discharge of Yunnan Baiyao in 20249

units for regular maintenance and management to ensure the stable operation of the online systems.● To conduct regular maintenance upgrades and transformation of wastewater treatment facilities to ensure their

long-term efficient and stable operation. Indicators Unit 2024

Total wastewater discharge Ton(s) 1012618.24

Reducing wastewater pollutant concentration

Chemical Oxygen Demand (COD) Ton(s) 84.83

● To strengthen source control optimize production processes and reduce the generation of pollutants at the

source. Ammonia nitrogen Ton(s) 2.00

● To intensify end-of-pipe treatment select appropriate treatment technologies based on the characteristics of the

wastewater and treatment objectives and ensure stable and reliable treatment outcomes. Reclaimed water Ton(s) 25950

Wastewater discharge density Ton(s) / Operating revenue of

Improving water usage processes RMB10000

0.25

● To promote water recycling technologies and enhance measures for the reuse of treated wastewater (such as 9 D ue to the increase in the statistic standards wastewater discharge increased in 2024 compared to that in 2023. As specified by the Company’s

reclaimed water) to reduce the volume of wastewater generated. environmental protection management system the wastewater discharge data statistics in 2024 covered all production areas under the Company’s

environmental protection management.

81 82ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Solid Waste Yunnan Baiyao’s solid waste includes hazardous waste and non-hazardous waste. Waste Discharge of Yunnan Baiyao in 202410

Hazardous waste includes waste drugs medicines and experimental waste liquids etc; non-

Management hazardous waste mainly consists of medicine residue and sludge generated in the production

process. The Company strictly complies with laws and regulations such as the Law of the

People’s Republic of China on the Prevention and Control of Environment Pollution Caused Indicators Unit 2024

by Solid Wastes the National Catalogue of Hazardous Wastes (2016) and industry waste

disposal standards. It has established internal regulations like the Management Details for Hazardous waste discharge

Solid Waste Environmental Protection to classify and manage various types of solid waste

and strictly differentiate between hazardous and non-hazardous waste. Adhering to the

principles of reduction resource utilization and harmlessness the Company continuously Waste drugs drugs HW03 Ton(s) 139.14

strengthens the standardized management and resourceful use of solid waste. In 2024 the

Company achieved a 100% compliance rate in the disposal of hazardous waste. Experimental liquid waste HW49 Ton(s) 28.94

Measures for Solid Waste Treatment and Resource Utilization Other hazardous waste Ton(s) 25.38

Total amount of hazardous waste Ton(s) 193.47

● General waste including household waste is collected and transported to the

Intensity of hazardous waste Kilogram(s) / Operating revenue of sanitation station for incineration. RMB10000 0.048

Non-hazardous ● General solid waste with recyclable value such as discarded TCM materials

waste fragments of medicinal materials dust and packaging cardboard boxes is Non-hazardous waste discharge

collected and regularly sold to recycling companies for recycling. For example

sludge after fermentation is used for soil improvement in landscaping and

medicinal residues after fermentation are used to produce organic fertilizers. Drug residue sludge Ton(s) 26207.34

Household waste Ton(s) 856.80

Total amount of non-hazardous waste Ton(s) 27064.14

● Hazardous waste generated in production workshops is managed by designated

personnel. Accounts are established and clear labels and signs are used. It is Intensity of non-hazardous waste Ton(s) / Operating revenue of 0.0068

stored in designated areas and collected by categories before being handed over RMB10000

to a third party for disposal.Total

Hazardous ● For laboratory hazardous waste we have formulated the Laboratory Hazardous

waste Waste Prevention and Control Responsibility System and the Laboratory

Environmental Control Procedures to clarify and strictly implement the laboratory Total amount of solid waste Ton(s) 27257.61waste treatment standards. Following the principle of “Unified Collection ClassifiedDisposal and Elimination of Hidden Dangers” hazardous waste is managed

exclusively accounts are established and disposal is carried out by third-party Discharge intensity of solid waste Ton(s) / Operating revenue of 0.0068

professional disposal companies. RMB10000

10 D ue to the increase in the statistic standards waste discharge increased in 2024 compared to that in 2023. As specified by the Company’s

environmental protection management system the waste discharge data statistics in 2024 covered all production areas under the Company’s

environmental protection management.

83 84ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Resource Utilization Optimization and Retrofit of the Power System at Yuhua Industrial Zone

Yunnan Baiyao always regards resource conservation as a crucial strategy for sustainable In 2024 in response to the long-standing issues in the air compression and vacuum systems of the Yuhua Industrial

development. Adhering to the philosophy of “Efficient Utilization and Green Development” Zone the Company launched a power system retrofit project. By optimizing the configuration of air compressors in the

the Company is committed to promoting a resource-conserving production model. Through workshops to create an energy-saving air supply mode transformations in the air transportation system were achieved.technological innovation process optimization and the scientific allocation of resources the The project also involved purchasing new vacuum pumps replacing cooling towers and installing constant-pressure air

Company continuously improves resource efficiency and reduces the consumption of energy supply control systems to revamp the vacuum system. After the retrofit the air compression system achieved energy

water and raw materials. Meanwhile Yunnan Baiyao actively promotes the circular economy savings of over 15% while the vacuum system realized energy savings of more than 20% yielding notable energy-

model advocates green office practices and drives the resourceful utilization of waste to saving benefits.achieve closed-loop resource management. Looking ahead Yunnan Baiyao will continue

to deepen its resource-conserving practices implement green development concepts and

contribute to the building of a resource-conserving and environmentally friendly society.Energy Yunnan Baiyao adheres to the development policy of energy conservation and consumption

reduction and continuously improves its energy management system to enhance energy

Management utilization efficiency. The Company strictly complies with laws and regulations such as the

Energy Conservation Law of the People’s Republic of China. Internally it has established

the Energy Management Measures and optimized other secondary management systems

and refined other secondary management systems such as the Reward and Punishment

Details for Energy Conservation the Energy Audit and Performance Assessment Details

and the Energy Use Plan Management Details which standardize the energy management

mechanism and processes. The Company requires each manufacturing unit to set up Optimized and Retrofitted Power System

an energy management organization to coordinate energy management efforts clarify

responsibilities implement improvement measures improve the energy management

11

system optimize the construction and operation of energy systems and promote energy- Energy Consumption of Yunnan Baiyao in 2024

saving technologies.Indicators Unit 2024

Energy Management Measures of Pharmaceutical BG of Yunnan Baiyao

Diesel consumption Ton(s) 1.42

● An energy conservation inspection team was established to conduct monthly checks and provide Gasoline consumption Ton(s) 22.21

guidance to energy-consuming units. For energy consumption points with potential for energy savings

the team implements energy-saving project retrofits corrects inefficiencies conducts on-site training

promptly eliminates non-standard energy usage establishes a long-term energy-saving mechanism Natural gas consumption 10000 m3 686.52

enhances energy efficiency and thus reduces production costs and energy waste.● Energy-saving indicators are integrated into the performance evaluation of departments and employees Purchased electricity MWh 64441.65

which motivates all staff to actively participate in environmental management fostering a resource-

conserving enterprise.Purchased steam GJ 213075.17

● The Company has optimized and renewed

key systems such as the air compression

and chilled water systems which help Hydropower kWh 51553317.26

reduce energy consumption improve Usage of clean

the precision and efficiency of energy energy

management and thus effectively control Solar photovoltaic kWh 3274076.00

energy costs and achieve energy-saving

and emission reduction goals.Comprehensive energy consumption Ton(s) of standard coal 24351.00

Comprehensive energy density Ton(s) of standard coal/Operating revenue of RMB10000 0.0061

11 The statistical data follows the reporting standards of the National Bureau of Statistics.

85 86ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Water Resource Yunnan Baiyao places great emphasis on the conservation and protection of water resources

strictly adhering to laws and regulations such as the Water Law of the People’s Republic

Management Water Consumption of Yunnan Baiyao in 2024of China. Internally the Company has established management systems and operational

procedures including the Non-pharmaceutical Water System Management Procedures and the

Safety Standards and Operating Procedures for Secondary Water Supply System Posts which

advocate water conservation across all production and operation departments. The Company also Indicators Unit 2024

undertakes energy-saving technological transformation projects to enhance water use efficiency

and reduce water loss.Water Municipal tap

consumption water Ton(s) 1329515.54

Water Resource Management Measures of Pharmaceutical BG of Yunnan Baiyao

Water consumption density Ton(s)/Operating revenue of 0.33

● The Company has established water resource management RMB10000

systems such as the Water Conservation Management System

the Measurement Management System and the Regular

Inspection and Maintenance Management System for Water Use

Equipment which involve irregular inspections and maintenance Packaging Yunnan Baiyao is committed to optimizing the use and management of packaging materials

of water use points as well as monitoring of water quality and other production resources encouraging each business segment to explore pathways

indicators ensuring the timely identification and resolution of Material for lightweight and reduced packaging based on its own characteristics. The Company

water-related issues resolutely preventing occurrences of water Management has taken a series of measures including optimizing packaging design promoting the leakage overflow dripping and seepage and thereby reducing use of environmentally friendly materials reducing excessive packaging and recycling

water use risks. scrap materials and packaging from the production process to reduce the demand for raw

● The Company developed comprehensive records for water use materials and lower resource consumption and environmental impact. In 2024 the Company

management conducted monthly statistical calculations of water worked with suppliers to carry out several exploratory practices in reducing and recycling

usage at each water consumption point organized and analyzed packaging materials striving to minimize packaging waste.the data and assessed the actual water use. It also made

unified arrangements for water use across business groups and

formulated annual water use plans. Packaging Material Conservation Measures of Yunnan Baiyao

● The Company has integrated water use management into its

performance assessment system and has implemented a system

of rewards for water conservation and penalties for excessive Products Packaging Material Optimization Measures

water use.● In 2024 the Qidian Raw Material Center of the Pharmaceutical Water Balance Test Certificate for

BG passed the water balance test demonstrating its good Qidian Raw Material Center

capability in the scientific and efficient use of water resources. For the printing of toothpaste boxes transfer printing technology

has been adopted to replace the traditional film lamination

printing method. Once fully implemented it is expected to

reduce costs by over 10% saving more than RMB 2.6 million

Waste Heat Recovery Project for Condensate System at Qidian Raw Material Center annually. Coating for Toothpaste

Packaging Paper Box

In 2024 the Qidian Raw Material Center initiated

a waste heat recovery project for its condensate Toothpaste

system to address the issues of energy waste The Company promoted the lightweight toothpaste composite

caused by direct discharge of condensate and soft tubes. The thickness of the 5-gram Ice Lemon Mint

the increased volume of wastewater treatment. toothpaste soft tube has been reduced from 275 microns to 200

The Company developed i ts own treatment microns. Over 400000 of these lighter tubes have been put

device utilizing a plate heat exchanger for the into the market. The reduction in thickness of the toothpaste

heat exchange treatment of condensate. Potable soft tubes can decrease the use of plastic thereby reducing

water was selected as the heat exchange medium.After heat exchange the potable water is used for environmental pollution. Toothpaste Tube

production in the extraction workshop while the

low-temperature condensate serves as makeup

water for the circulating water system. The project The Company has successfully developed a new type of dual-

effectively recovers waste heat and reduces water

consumption. It saves over 2100 tons of steam and core pump packaging for shampoo. This packaging is the first

RMB 585000 in thermal energy costs annually. It in China to achieve a quantitative ratio of 9:1 for shampoo

also reduces the need for potable water makeup Shampoo dispensing. The metal spring inside the pump has been

by 100m3 per day saving about RMB 200000 replaced with a plastic “umbrella-shaped” spring effectively

in water fees and RMB 445000 in wastewater creating a recyclable and environmentally friendly packaging

treatment costs which significantly enhanced both Condensate Heat Recovery System solution. Shampoo Bottle

environmental and economic performance.

87 88ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Yunnan Baiyao integrates the concept of green development into every aspect of its operations

Organizing the “Supply Chain Packaging Innovation Forum” Green Office actively advocates and implements green office practices and is committed to creating a low-

carbon and environmentally friendly working environment. To enhance employees’ awarenessTo promote the upgrade and innovation of product packaging Yunnan Baiyao organized the “Supply Chain Packaging of energy conservation the Company continuously strengthens publicity and education. It postsInnovation Forum” which was attended by the Company’s marketing department R&D department and suppliers. signs in offices and other operational areas to remind staff to turn off lights and water taps when

During the forum experts and representatives from various sectors engaged in in-depth discussions about advanced not in use set air conditioning temperatures and usage times reasonably and encourages the

packaging technologies and cutting-edge packaging materials currently available on the market. They also shared reuse of paper and paperless office practices to cultivate green living and working habits among

the latest industry trends and practical experiences. Through cross-departmental and cross-disciplinary cooperation employees. Meanwhile the Company strengthens daily supervision to ensure that employees

and exchange the Company has made ample technical preparations for future product packaging and laid a solid put the green office concept into practice.foundation for further enhancing the sustainability of packaging materials.Implementation of Multiple Green Office and Production Measures by TCM Resources BG

In 2024 the TCM Resources BG carried out several notable practices in green office and production. Through refined

management the BG effectively advanced the Company’s energy conservation consumption reduction and green

operation processes.Regarding the use of ribbon in coding machines the BG optimized the usage of the ribbon through minor technical

adjustments and employee training. Originally each roll of ribbon (33mm × 450m) was used only once and then

discarded. Now by adjusting the coding position each roll can be reused twice. As a result the ribbon consumption of

each device over 24 hours has been reduced from two rolls to one. With a cost of RMB 120 per roll two devices save

RMB 6000 in consumables per month amounting to an annual savings of about RMB 40000.Supply Chain Packaging Innovation Forum

Packaging Material Consumption of Yunnan Baiyao in 2024

Indicators Unit 2024

Paper Ton(s) 15000

Plastic Ton(s) 4267

Glass Ton(s) 807

Before transformation After transformation

Aluminum Ton(s) 2900

Composite soft package Ton(s) 3632 In terms of paperless office practices the Company actively introduced electronic storage cards which digitally and

accurately record information about goods achieving a complete replacement of traditional paper storage cards. During

Packaging material consumption Ton(s) 26606 the Reporting Period the Company handled a large volume of business shipments and receipts with a total of 46987

batches shipped and received throughout the year. In this process the use of electronic storage cards saved a total of

Density of packaging material Ton(s)/Operating revenue of 0.0067 46987 sheets of paper significantly reducing paper consumption.consumption RMB10000

89 90ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

04

People First for

Strengthening

the Foundation

of Talent

We always adhere to the philosophy of “People First” and

are committed to providing a diversified fair inclusive and

accessible working environment for our employees. Through

a comprehensive compensation system performance

incentives and career development plans we ensure the

basic rights and interests of our employees pay attention to

employee support and care and actively promote employee

growth and well-being. At the same time we strengthen

our occupational health and safety management system

to ensure the physical and mental health and occupational

safety of our employees.

91 92ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Protecting Employees’ Rights and Interests Employment Details in 2024

Employee Employment

Yunnan Baiyao focuses on all employees making the vision tangible so that employees can 209

see it touch it and aspire to it. Yunnan Baiyao effectively safeguards the legitimate rights 1683

and interests of employees adheres to diversified and equal employment and is committed Total number of employees12 Types by total

to building harmonious labor relations creating a workplace environment that is equal employee

count 1202

diverse transparent and gives a sense of belonging.

12371 9277Persons

Complaint Yunnan Baiyao strictly complies with relevant laws and regulations including the Labor

Law of the People’s Republic of China the Labor Contract Law of the People’s Republic

Employment Interns Subcontracting staffof China the Labor Rights Protection Law and the Prohibition of Child Labour Provisions.The Company advocates equal employment policies adheres to compliant recruitment and Labor contract employees Labor dispatch employees

employment practices firmly opposes all forms of child labor and forced labor. At the same

time the Company revised and improved a series of internal rules and regulations including

the Recruitment Management System of Yunnan Baiyao Group Co. Ltd. the Labor Contract

Management System and the Dual-Channel Management Measures for Employee Career 190

Development to ensure the compliance and fairness of recruitment. During the Reporting

Period there were no incidents of illegal use of child labor or forced labor. 531 5433 4189Number of 1034 Number of Number of

employees employees by employees by

The Company is dedicated to building a capable and efficient workforce adhering to the by rank 277 type of work 1276 gender 5088

principles of open recruitment strict selection fair competition and matching people with 8053 1760

the right positions. It clearly defines job positions and staffing requirements setting uppositions based on job needs and hiring personnel for those positions. In the “2024 ChinaBest Employer” selection jointly initiated by Zhaopin.com employer brands and professional Senior Middle Sales staff Technical staff (including R&D staff) Male Female

academic institutions Yunnan Baiyao stood out for its excellent employer brand building and management13 management employees employees

employee experience winning the “Most Innovative Spirit Employer Award.” In the flagship Production staff Financial staff Administrative staffJunior employees

awards organized and reviewed by the HR management think tank HRflag the Company

received the “2024 Flag Award” (OneFLAG AWARDS) demonstrating its outstanding

performance in HR management. 1658

13524728

347

Number of Number of 1 Number of 4

employees 2825 employees by employees by

by age nationality region

79244545

4447

30 and below 31 to 40 Han Ethnic minorities Yunnan Province Hong Kong Macao

Taiwan and overseas

41 to 50 51 (inclusive) and above Overseas employees

Chinese Mainland (excluding Yunnan)

“2024 Flag Award” (OneFLAG AWARDS) 2024 China Best Employer - Most Innovative Spirit

Employer Award

12 T he total employee count includes employees under labor contracts labor dispatch interns and

outsourced personnel.

13 The scope includes individuals holding executive positions within the Company and its business

groups.

93 94ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Talent On the basis of market-oriented employment Yunnan Baiyao has built a community

relationship between the enterprise and talents. It forms a community of shared interests Empowering Talent Development

Attraction with all employees a community of shared endeavors with key employees and a community

of shared destiny with core employees. By creating these three types of communities the

Company attracts and retains talents.Yunnan Baiyao is committed to building a team of dedicated and capable leaders as well

In 2024 to effectively meet the needs of the Company’s strategic planning and continuous as a well-structured talent pool. The Company continuously enhances the professionalism

business development the Company further improved its talent selection and employment career orientation and market competitiveness of its leadership and talent team fosters

mechanism achieving refined management in recruitment classification and procedures. a supportive environment for talent development and strives to cultivate a high-caliber

Through diversified channels and promotional platforms such as social recruitment campus workforce to fuel the Company's growth.recruitment and internal recommendations the Company focused on areas like druginnovation lean manufacturing quality management marketing and internationalization. Talent To meet the needs of the Company’s strategic planning business development and It continuously enriched and expanded career development pathways for employees organizational capability building Yunnan Baiyao has continuously deepened its “internalattracting high-quality versatile and high-level talents to join the Company. This enhanced Development cultivation + external talent introduction” dual-wheel driven talent supply chain mechanism. It

the match between introduced talents and job requirements cultivated and motivated talent insists on focusing on internal cultivation for management cadres and giving equal weight to

development and retained talents through corporate culture and atmosphere. internal cultivation and external introduction for professional talents. Through effective cadre

During the Reporting Period the Company increased its efforts to recruit high-level talents management and talent cultivation mechanisms the Company has cultivated a high-quality

for senior management positions and innovative drug R&D. A total of more than 40 high-level talent pool that meets the future strategic development needs.talents were precisely introduced including 3 senior vice presidents at the group level and In 2024 the Company adhered to the principle of Party management of talent ensuring

10 doctoral students. This provided strong talent support for the high-quality development the correct direction and clear goals of talent cultivation. It optimized and improved the two-

of the TCM industry in Yunnan Province and the Company’s high-quality and sustainable level training system and the three-level management mechanism clarified organizational

development. responsibilities and made task division clear. It also strengthened the systematic

management of talent cultivation and enhanced the effectiveness of empowerment and

Equality Yunnan Baiyao always adheres to the principles of fairness transparency and diversity

development.and opposes all forms of discrimination based on education gender ethnicity religion

Inclusion and region appearance age marital status health and reproductive status. In recruitment the

Diversity Company has established clear anti-discrimination policies to prevent any discrimination Two-Level Training System and Three-Level Management Mechanism

risks.At the same time the Company firmly prohibits any form of harassment including verbal Led by the Company and implemented by the Baiyao

written visual or physical contact. To protect employees' rights and interests the Company Academy with the focus on top-level design and unified plans

has established accessible and effective channels for complaints and whistleblowing as well First-Level Training System and standards developed within this system to cover corporate

as investigation and handling mechanisms. Employees who experience harassment may culture employee quality and leadership training in line with

report it at any time and the Company will respond promptly in accordance with relevant Two-Level Training the Company’s talent development strategy.Yunnan Baiyao had up to regulations while fully safeguarding the privacy of the employee. In 2024 no incidents of System

discrimination or harassment occurred. Led by the Company’s business or platform units this system

45.15% Second-Level Training System focuses on business and job requirements aiming to enhance The Company advocates multiculturalism enhances cultural exchanges and raises employees’ professional skills.

of female employees employees’ awareness and consciousness of anti-discriminatory actions to actively promote

the harmony and progress of the Company’s cultural atmosphere. In 2024 Yunnan Baiyao

had up to 45.15% of female employees and up to 14.57% of employees of ethnic minorities. Responsible for the overall planning of the Group’s training

In 2024 the employee turnover rate of Yunnan Baiyao was 9.16%. strategy the construction of the training system and

HR and Cadre Management mechanisms the management of training resources and

Department operations and leading the development and implementation

of the first-level training system.Three-Level Undertaking projects related to the first-level training system

Management HR Functional Line and being responsible for organizing and managing the

Mechanism second-level training system within the respective business or

platform units.Departments of each Responsible for the planning and implementation of

business/platform unit training related to employees’ job knowledge and skills and

organization of a series of training activities targeting business

operations based on business needs.

95 96ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

In 2024 Yunnan Baiyao continued to optimize and improve its talent development system which is centered around the job Highlights of 2024 Training Programs

qualification system. Focusing on “people” and “professions” the Company concentrated on building management cadres

professional technical talent pools and high-skilled talent pools. By creating a favorable learning and growth environment

and mechanism and adhering to a “learner-centered and practice-based” approach for contextual learning the Companyimplemented a job rotation policy under the guidance of the principle “training aligned with combat integrating training and Yunnan Baiyao Senior Workshop on Exploration and Practice of Intelligent Manufacturing and Digital Transformationcombat” the Company strengthened employees’ peripheral work experience in real combats and built real-world scenarios In 2024 Yunnan Baiyao hosted the “Yunnan Baiyao Senior Workshopand challenges in the learning process. It also emphasized the development of a diversified knowledge system for talents on Exploration and Practice of Intelligent Manufacturing and Digitalachieving a win-win situation between personal value and the Company’s strategic goals. Transformation.” A total of 62 professional technical personnel and

enterprise managers with intermediate and senior titles participated

Talent Cultivation System in the study. Focusing on the core theme of intelligent manufacturing

and digital transformation the program deepened participants’

Employee

Hierarchy Training Plan Training Objectives Progress in 2024 understanding of these areas injecting new momentum into the high- On-site Training of the Senior Workshop quality development of the industry and the transformation of Yunnan’s on Exploration and Practice of Intelligent

To enhance senior management to TCM sector. Manufacturing and Digital Transformation

deeply understand the Company’s overall

Senior strategy and business deployment be The Company organized and

Management more clear about the Company’s long- conducted the first session of the Senior Peking University Senior Workshop of Yunnan Baiyao Group

Training term development plan and be more Management Training Program - the 2024 SeniorProgram deeply understand the Company’s Peking University Senior Workshop of In 2024 the Company collaborated with the Institute of New Structural management vision and mission so as to much more Yunnan Baiyao Group. Economics at Peking University to hold the “Peking University Senioreffectively lead the Company towards Workshop of Yunnan Baiyao Group.” The program covered topics such

achieving its preset goals. as “Macroeconomics and Development Trends of the TCM Industry”

The Company organized and conducted “Corporate Development Strategy and Digital Transformation” and

To promote the middle management’s three sessions of the Middle Management “Leadership.” About 120 members of the Group’s Party committee

strategic thinking and leadership skills Training Program namely the Yunnan directors supervisors senior management and some middle managers On-site Training of the Peking University Senior

Middle deepen their understanding of the University of Chinese Medicine 2024 attended the study further enhancing their strategic innovation Workshop

Management Company’s business and develop their Yunnan Baiyao Group Senior Workshop capabilities and leadership skills.Middle Training decision-making and team management on the Inheritance and Innovation of

management Program skills such that they can become an TCM the Middle Management New Entry

effective backup force for the Company’s Class Training Program and the Middle Middle Management New Entry Training Program

senior management. Management Xuanjia Army Advanced

Training Program. To help newly promoted middle managers quickly adapt to their new

Focusing on the Company’s strategy roles and enhance their management capabilities Yunnan Baiyao

business development and organizational launched the 2024 Middle Management New Entry Training Program.capability requirements the program Aimed at 90 newly promoted middle managers the program focused Middle

Management aims to accelerate the structural and

The Company organized and conducted on strengthening team leadership collaboration and decision-making

qualitative upgrade of the cadre echelon one session of the Middle Management and problem-solving abilities. The training included leadership courses Successor stimulate the internal driving force of the Successor Training Program - 2024 Back-up such as Financial Business Thinking Human Resource Management for Training Middle Management Successor Non-HR Managers Coaching Leadership: How to Coach Subordinates

management Program cadre team and cultivate versatile middle management successors to meet future Development and Assessment Program. and the flipped classroom Outstanding Manager’s Voyage Workshop

management challenges and leadership improving leadership and management skills in various management

scenarios and promoting organizational efficiency. On-site Training of the Middle Management tasks. New Entry Training Program

To help new comers quickly integrate

into the Company culture enhance their The Company organized and conducted

identification with the Company culture two sessions of the New EmployeeNew Employee and deepen their understanding of the Training Program - “New BeginningsMiddle Management Successor Development and Assessment ProgramTraining Company’s core business so as to ensure Growing Hope” Yunnan Baiyao April

Program that they can achieve comprehensive 2024 New Employee Training and the

To effectively motivate successor cadres to seize opportunities face

quality expansion in the early stage “Ambitious Aspirations Shining Future” challenges and strive for success and to stimulate the internal driving New employees

of their career in the Company laying Yunnan Baiyao August 2024 New force of the successor cadre team the Company followed the principles

a solid foundation for their long-term Employee Training. of openness fairness competition and merit selection in 2024.development. Centered around cultivating a cadre and talent team that is politically

conscious courageous in responsibility strong in execution disciplined

and ambitious the Company organized and launched the Middle

Management Successor Development and Assessment Project infusing

new vitality into the Company’s cadre team building. Middle Management Successor Development

and Assessment Program

97 98ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Data of Employee Training in 202414 Promotion Yunnan Baiyao has established fair just transparent and objective evaluation criteria and

further refined its dynamic and efficient job management system providing employees with

Mechanism equal opportunities for promotion. The Company prioritizes internal employees for promotion

opportunities strengthens career development paths and through dynamic adjustments and

alignment with strategic needs offers clear channels for advancement thus achieving the

optimal allocation of human resources and the strategic goal of talent development.Total Number of Participants Total Training Duration Training Duration Per Person Through a dual-wheel driven model of “internal cultivation and external talent introduction”

we have established a scientific and rational job management system job level system job

56448 325839.46 Hours 35.12 Hours qualification system employee evaluation system and a dual-channel career development system to promote continuous talent development help employees understand their current

positioning within the Company clarify career development directions and open up future

career development pathways enhancing the Company’s competitiveness in attracting and

retaining talent. Employees can choose their career development direction based on their

professional knowledge skills and personal characteristics clarify their career development

path within the Company participate in the job level evaluation of their professional group

understand their job level within the group and under the guidance of their superiors

25402

14112 identify areas for personal capability improvement and develop a personal career plan. Job

qualification levels serve as the professional foundation for job level promotion and are

an indispensable criterion for evaluation. Employees can achieve job level promotion by

enhancing their personal capabilities and value contributions.Number of training Number of training 5645

participants by participants by rank

gender 31046 Performance Yunnan Baiyao has established the Performance Management System and developed a

36691 comprehensive performance management framework which emphasizes positive incentive Incentives orientation and drives high-quality growth. Tailored to the functions and key business areas

of each department and in conjunction with employees’ job responsibilities the Company

developed specific performance assessment plans for every employee. These plans cover

differentiated assessment weights clear criteria and rational assessment cycles ensuring

Female employees Male employees Senior management Middle management the effectiveness of performance evaluations. The assessment outcomes are closely linked

to critical decisions such as salary adjustments and promotion opportunities for employees

Junior employees thereby safeguarding the fairness and validity of the evaluation process.Implement Clarify the

improvement purpose of

plans evaluation

Total Annual Training Cost

RMB 8.8312 million

Enhance Establish

feedback evaluation

mechanisms standards

Training Cost Per Person

RMB 951.95 Expand Set evaluation evaluation

dimensions cycles

14 The statistic standard for the employee training data covered only the employees subject to labor contracts. Employee Performance Evaluation System

99 100ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Improving the Well-being of Employees Care for Female The Company strictly enforces policies and regulations regarding the protection of female employees’ labor rights and special interests. It has signed a special collective contract

for the protection of female employees’ rights and interests to safeguard their legal rights

Yunnan Baiyao focuses on value creation and has built a compensation system based on value in accordance with the law. In 2024 to further enhance the care and protection of female

contribution establishing a virtuous cycle of creation and distribution. The Company adheres employees the Company formulated the Special Collective Contract for the Protection

to the principle of valuing contributors continuously optimizes its compensation incentives and of Special Rights and Interests of Female Workers which explicitly stipulates a range of

performance management system. The Company also pays special attention to the needs safeguard measures for female employees and states that the Company should legally

and expectations of female employees and actively organizes a variety of cultural and sports prevent and stop sexual harassment against female employees through verbal written

activities striving to enhance employees’ sense of happiness and belonging. pictorial or physical means. If a female employee encounters sexual harassment at work

and reports or complains to the employer the Company should promptly accept investigate

and handle the case or refer it to the relevant authorities while legally protecting the female

Remuneration In strict compliance with laws and regulations such as the Social Insurance Law of the People’s employee’s personal privacy. Also the Company collaborates with medical examination

Republic of China the Company Law of the People’s Republic of China the Securities Law

and Benefits institutions to conduct lectures on Caring for Women’s Health and offers free physician of the People’s Republic of China the Management Measures for Share Incentives of Listed consultations on medical examination reports to disseminate health knowledge provide

Companies the Rules for the Listing of Stocks on the Shenzhen Stock Exchange and the psychological counselling and enhance the Company’s care for female employees.Guiding Opinions on the Implementation of the Pilot Employee Stock Ownership Plan for Listed

Companies Yunnan Baiyao has established internal management systems and norms including Care on International Women’s Day (March 8) and Benefit Activities for

the Salary Management System of Yunnan Baiyao Group Co. Ltd. Female Employees

The Company has developed a fair just and market-competitive compensation and benefits

system. It implements a diversified wage system and a compensation incentive mechanism On the occasion of the 2024 International Women’s Day (March 8) Yunnan Baiyao

that grows in tandem with the Company’s performance continuously improving employees’ in response to the call of the Women’s Committee of Yunnan Federation of Trade

remuneration and welfare. The Company strictly enforces statutory holidays paid annual Unions jointly carried out the fourth phase of the “Bringing Happiness Together” Caring

leave marriage and bereavement leave maternity leave nursing leave and other holidays as Program for Female Employees in Yunnan Province. A total of 15672 female employee

stipulated by national and local regulations. It provides comprehensive protection for all regular participants from 16 prefectures and cities across Yunnan province participated through

and dispatched employees including pensions medical care unemployment work-related the “Baiyao Life+” online platform for benefit activities. The cumulative number of

injury and maternity insurance as well as housing provident funds to ensure employees’ basic transactions reached 930 with sales amounting to RMB 146400 and the Company

welfare needs. In addition the Company distributes festival gift packages to employees during provided a preferential subsidy of RMB 119800. In addition the Yunnan Baiyao

the “two festivals” (Spring Festival and Mid-Autumn Festival) each year and offers a warm work Group Trade Union in collaboration with the Yunnan Trade Union of Education andenvironment. Health held a “Internal Purchase Activity of March 8th Worker Benefit” at the Workers’

Sanatorium of Yunnan Provine. A total of 14 types of benefit products were displayed

Employee In 2024 Yunnan Baiyao revised the Employee Welfare Management Measures further increasing on-site with 76 transactions made offline generating sales of RMB 5731 of which the

meal allowances and labor protection standards to enhance employee welfare. The Company Company’s subsidy amounted to RMB 4687.Care also introduced a wedding welfare program to encourage employees to actively respond to A total of The Company provided a

the national policies on marriage and childbirth. The supporting service environment and free preferential subsidy of

facilities available to employees were also included in the management measures improving the female employee participants from 16

work experience and perception of corporate care among employees. In addition the Company 15672 RMB

revised and issued the Leave Management Measures adding parental leave and only-child care prefectures and cities across Yunnan province participated 119800

leave in accordance with national policies to further improve employee leave benefits. through the “Baiyao Life+” online platform for benefit activities

During the Reporting Period the Company actively carried out employee hardship assistance

and warmth-giving activities to ensure that warmth was promptly conveyed to every employee. Employee Yunnan Baiyao has effectively advanced the construction of grassroots democratic politics

We conducted a survey of the employees in difficulty formulated the and has always attached great importance to communication with employees. It fully Warmth-Giving Activity Communication

and organized consolation visits for employees in leverages the enthusiasm of its cadres and employees establishes multi-channel and multi-Plan of Yunnan Baiyao Group Trade Union

difficulty and model workers. The Company also continued to conduct activities such as birthday level communication mechanisms to ensure smooth communication listens to employees’

celebrations childbirth condolences and hospital visits for employees delivering care to every voices and fosters a united harmonious and positive organizational atmosphere thus

employee. During major festivals we organized warmth-giving activities and distributed festival maximizing the protection of employees’ legitimate rights and interests.consolation gifts to employees conveying sincere care and blessings. To enhance the convenience and efficiency of communication Yunnan Baiyao further

The Company advocates a balance between work and life for employees implementing enriched and optimized employee feedback channels in 2024. The Company uses such

genuine care and concern. We have created a warm and comfortable working atmosphere for channels as the OA system collaborative document-sharing forms suggestion boxes and

employees continuously improving their job satisfaction dedication and happiness. In 2024 we email to ensure that employees could submit their opinions and suggestions in a timely and

opened sports and cultural facilities such as basketball courts tennis courts and gyms to enrich convenient manner. Employees could provide feedback on system optimization process

employees’ spare time enhance their physical fitness and mental outlook and strengthen team adjustment training satisfaction and registration information among other aspects to help

cohesion. We also partnered with China National Petroleum Corporation to issue fuel cards and the Company continuously improve its internal management and service quality. Through

signed the Cooperation Agreement for Vehicle Annual Inspection Service with several motor these feedback channels employees’ voices can quickly reach the executives enabling the

vehicle inspection agencies to provide convenient door-to-door vehicle pick-up and delivery Company to better respond to employees’ needs and enhance overall work efficiency and

services for employees. The Company provided employees with benefits such as discounted employee satisfaction.swimming cards and appliance discounts which were widely praised.

101 102ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

New Employee Safety Training

Protecting Health and Safety

Safety training sessions for new employees of Yunnan Baiyao last about three hours and

Yunnan Baiyao always puts employee health and safety first fully implements the work policy cover essential topics such as basic knowledge of safety production interpretations of

of “safety first prevention foremost and comprehensive management.” The Company has safety laws and regulations guidance on occupational health protection and practical

established a sound safety management system enforces strict safety regulations and actively safety skills exercises. We place particular emphasis on critical areas such as fire

cultivates a comprehensive safety culture all to provide employees with a safe and healthy safety electrical safety and elevator usage. Through case sharing and practical drills

working environment. the training significantly enhances emergency response capabilities and risk prevention

awareness of new employees reinforcing their recognition and implementation of the

Safety Yunnan Baiyao strictly adheres to laws and regulations such as the

safety culture.Work Safety Law of the

People’s Republic of China and the Law of the People’s Republic of China on Prevention and

Management Control of Occupational Diseases. In line with the Company’s actual operations it continuously

System revises and improves a series of internal safety management systems including the Production

Safety Targe Management System the Production Safety Responsibility System and the Safety

Training and Education Management System. For specific scenarios in production we have

formulated targeted systems such as the Safety Management System for Warehouses and Tank

Areas the Fire Prevention Explosion Prevention and Fire Prohibition Management System

the Management System for Hazardous Chemicals and Significant Hazardous Sources and

the Management System for Precursor Chemicals to meticulously manage high-risk areas and On-site Safety Training for New Employees

raw materials used in production so as to more effectively identify prevent and control potential

safety risks. The Company has also established a Work Safety Management Committee to

comprehensively promote the Company’s management in safety-related affairs and ensure the Occupational Yunnan Baiyao strictly adheres to relevant laws and regulations including the Law of the

effective implementation of primary safety responsibilities. People’s Republic of China on Prevention and Control of Occupational Diseases and the

Health Regulations on Occupational Health Management in the Workplace which continuously

By introducing safety facilities such as interlocking devices alarm systems and detection strengthens the prevention and control of occupational health hazards and ensures the

equipment the Company has significantly enhanced its inherent safety and substantially Protection safety and health of its employees. During the Reporting Period a total of 2767 employees

reduced accident risks at production sites. Regular safety inspections are conducted and 62

Related Data on completed occupational disease examinations.safety emergency drills have been organized to strengthen employees’ emergency response

2024 Yunnan Baiyao

capabilities. During the Reporting Period Yunnan Baiyao’s total investment in safety amounted to

Occupational Health

approximately RMB 8.49 million. A total of 210 safety inspections were carried out identifying 2755

potential hazards all of which were rectified achieving a 100% rectification rate.Number of work-related

injuries

During the Reporting Period Yunnan Baiyao’s total A total of

investment in safety amounted to approximately 9 Persons

RMB 8.49 million 210 safety inspections

were carried out

Number of work-related

deaths

identifying achieving a

0 Persons Occupational Health Promotion

2755 potential hazards 100% rectification rate

Lost working hours due to

Safety Culture Yunnan Baiyao continues to advance its safety culture construction always adheres to the First Aid Training for Employeeswork-related injuries

Construction principle of “full participation and comprehensive coverage.” The Company is committed to

promoting the in-depth implementation of its safety system through innovative online and offline

training models. It has meticulously planned and successfully completed 203 safety education 856 Hours In 2024 Yunnan Baiyao held the First Session of Employee First Aid Training Course with 48 employees participating in total. The training featured a special invitation

training sessions with a total of 19652 participants. to a team of instructors from the American Heart Association (AHA) providing a

Injury rate per million work comprehensive curriculum on basic first aid knowledge and practical exercises. The The safety training content includes modules such as quality and safety onboarding for new

hours15 course covered essential life support techniques and detailed the six key chains of employees re-education on quality and safety following job changes in-depth analysis of survival. Through group practice participants mastered practical skills that enabled them

Standard Operating Procedures (SOPs) authoritative interpretations of quality regulations to “dare to save be able to save and know how to save” allowing them to respond

specialized training on laboratory quality and safety and training for those responsible for cosmetic swiftly and effectively in emergencies thereby minimizing harm.quality and safety. These efforts have enhanced employees’ safety awareness and professional 42.94%

skills strengthening the foundation of the Company’s safety culture.

15 The statistic standard for the number of injuries per million hours worked only covered the employees subject to labor contracts and labor dispatch

10310405

Cultivating Virtue

and Embracing

Responsibilities

Yunnan Baiyao actively practices corporate social

responsibility by deeply integrating into the national

rural revitalization strategy and actively engaging in the

development and construction of local communities.Through concrete actions the Company empowers

communities and promotes their prosperous development.We actively carry out charitable activities demonstrating

our commitment to social responsibility in multiple ways.ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Rural Revitalization

Yunnan Baiyao thoroughly implements the decisions and deployments regarding rural revitalization from the Central

Committee of the Communist Party of China the State Council as well as the provincial Party committee and government. Golden Autumn Scholarship to Boost Rural Talent Revitalization

Leveraging the Company’s industrial advantages we have outlined our work strategies developed specific plans and

refined our measures. We adhere to a rural revitalization model that integrates “organizational leadership integration of Yunnan Baiyao firmly believes in the principle that “To revitalize talent education comes first.” The Company activelyParty building technical guidance leading wealth generation talent cultivation and consumer support” which promotes engages in educational assistance for rural areas encourages students to use the knowledge gained during their

a dual-driven development of industrial and talent revitalization fostering sustainable progress in rural economies and higher education to give back to their hometowns thereby bringing fresh blood to the rural revitalization efforts.improving residents’ living standards.In 2024 Yunnan Baiyao conducted a college admission survey across Pantiange Township visiting 86 students who

successfully gained admission to undergraduate and vocational programs. Through the “Golden Autumn Scholarship”

Engagement with Grassroots Communities to Support Rural Harmony and Stability program the Company awarded a total of RMB 153000 in scholarships to these students helping them fulfil their

dreams of attending university.In 2024 Yunnan Baiyao continued to promote the reforms to “delegate power streamline administration and optimizegovernment services” and further enhanced grassroots government service capabilities. The Company optimized

and upgraded relevant facilities in poverty alleviation areas established a liaison office for NPC deputies convenient

health service stations occupational health centers laborer rest stations dispute mediation rooms and community

activity centers to foster rural harmony and stability. The community activity center strengthens the cohesion of

grassroots Party organizations. As of the end of the Reporting Period Yunnan Baiyao had invested a total of

RMB 800000 for assistance sites rural grassroots Party and mass activity facilities and Chazhiluo Village Party

Member Activity Room/prefecture-level exhibition hall for inheritance of peacock dance an intangible cultural heritage.Education Support Activity of Yunnan Baiyao

Expanding Channels to Co-Create the Blueprint for Rural Revitalization

Yunnan Baiyao fully leverages its industrial advantages by procuring TCM materials including Fritillaria cirrhosa

Fritillaria unibracteata fresh Fritillaria and Dolomiaea costus through Shangri-La Tianquan Chuanbei Technology

Liaison Office for NPC Deputies in Chazhiluo Village Pantiange Township Co. Ltd. Hezheng Tibetan Medicine Industry Co. Ltd. and Jingxiang Breeding and Planting Co. Ltd. In total we

procured 36286.4 kilograms of these materials and 1.5863 million seedlings of Dolomiaea costus generating total

sales of RMB 2.316 million. This effectively addressed the sales difficulties faced by local farmers of TCM materials

Technical Guidance to Energize Rural Revitalization broadening their paths to wealth and income growth.Yunnan Baiyao leverages its industrial characteristics and

technical capabilities to actively promote investment breeding

cultivation procurement and promotion of TCM materials.In 2024 we utilized the natural resource advantages and

industrial status of Xinle Village and Chazhiluo Village in

Pantiange Township to develop the Dolomiaea costus Cultivation

Technical Solutions which provides professional guidance on

Dolomiaea costus cultivation techniques. Farmers can apply

these innovative methods to other economic crops ensuring

the sustainable development of their agricultural economies. As

of the end of the Reporting Period Yunnan Baiyao had totally

trained 10 leading wealth creators achieving an innovative yield

of 500 jin (=1/2 kilogram) of corn and 800 jin of Dolomiaea costus Innovative Planting Experimental Field

per mu resulting in an additional income of RMB 3500 per mu

thereby helping farmers to continuously increase their earnings. Supporting Farmers to Enhance Rural Revitalization

107 108ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

In practice Yunnan Baiyao consistently adopts a pragmatic approach truly centering its efforts on the needs of rural

communities and the populace. The “Baiyao Model” for rural revitalization has been developed and refined over the years Social Care

gaining widespread recognition across various sectors of society and receiving multiple awards related to social welfare and

public service.Yunnan Baiyao actively responds to social needs and contributes to social value

During the Reporting Period the by organizing volunteer activities donating materials and participating in social

List of Social Welfare Awards Won by Yunnan Baiyao in 2024 Company actively participated in welfare projects.multiple social welfare projects

and encouraged employees to In 2024 Yunnan Baiyao implemented systematic regulations for public welfare

Best Practice Case for Rural Revitalization: engage in volunteer activities activities and donations in accordance with the Public Welfare Donation

Yunnan Baiyao’s initiative titled Balancing Inheritance and Innovation for Diverse Growth of Specialty resulting in a total of

Management Measures of Yunnan Baiyao Group Co. Ltd. which enhances the

transparency and efficiency of the Company’s charitable actions expanding the

Industries was selected as a Best Practice Case for Rural Revitalization by the China Association for Public influence of its corporate culture. During the Reporting Period the Company

Companies. The Company has received this hornor for the second consecutive year since the association RMB 4.589 million in actively participated in multiple social welfare projects and encouraged employees

first launched its collection of best practice cases in rural revitalization in 2022. external donation. to engage in volunteer activities resulting in a total donation of RMB 1 million in

materials and a total of RMB 4.589 million in external donation.“Healthy Oral 123 Plan”

On World Oral Health Day 2024 Yunnan Baiyao launched the “Healthy Oral 123 Plan” aimed at enhancing public

attention to gum health through simple oral care rules: “1 good toothpaste brush twice a day rinse for 30 seconds.”

The Company also collaborated with the RedNote IP Truth Research Institute to hold the “Healthy Oral Count on 1 2 3”

pop-up event in Shanghai. The event featured interactive elements such as a truth check-in map and gum care tasks

Community Care educating users about gum health while strengthening emotional connections. The online campaign achieved over 490 million topic exposures and 3.35 million interactions significantly raising public awareness of oral health care.Yunnan Baiyao actively fulfills its social responsibility by engaging deeply with local communities and collaborating closely to

conduct a diverse range of community care activities and thus foster community development and enhance the quality of life

for residents.Free Medical Consultation Event at Wenshan Rehabilitation Hospital

In 2024 Yunnan Baiyao’s subsidiary

Hefei Medical Technology Co. Ltd.actively participated in the large med-ical support activity of “HarmoniousSociety Healthy China - Caring forPain Patients” which provided free

on-site examinations assessments

diagnoses and treatments for attend-

ing pain patients. The event attracted

over 400 patients with the medical

team offering health consultations

to 212 elderly individuals. They con-

ducted 109 health screenings and

provided vertebral treatments and

home rehabilitation training guidance

for 89 mobility-impaired seniors.Free Medical Consultation Event at Wenshan Rehabilitation Hospital “Healthy Oral Count on 1 2 3” Pop-up Event

109 110ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

“Let’s Play Basketball” Tournament Appendix

Performance Table

In 2024 Yunnan Baiyao hosted the “Let’s Play Basketball” tournament for college students aiming to connect young

people and promote a healthy lifestyle. We partnered with several pharmacies and health & public welfare team of Dimension Indicators Unit 2024

Keep to start a campus-based initiative that promotes the integration of fitness and health. The tournament took place

in key cities such as Kunming Shanghai Changsha and Guangzhou leveraging both online platforms and offline Business Ethics

interactions to achieve over 300 million online exposures and 4.2 million interactions reaching an audience of 110 Governance Compliance Compliance training sessions Times 9million. Yunnan Baiyao also launched a charitable donation plan encouraging participants to contribute through sports

by synchronizing with Keep’s public welfare running courses and showcasing the Company’s social responsibility. training Compliance training coverage % 100

Addressing Climate Change

Direct greenhouse gas emissions

(Scope 1) Ton(s) of CO2 equivalent 15079.39

Indirect greenhouse gas emissions

(Scope 2) Ton(s) of CO2 equivalent 63424.31GHG emissions

Total greenhouse gas emissions Ton(s) of CO2 equivalent 78503.70

Intensity of greenhouse gas Ton(s) of CO2 equivalent/

emissions Operating revenue of RMB10000 0.020

Environmental Management

Total exhaust gas emissions 10000m3 52868.87

NOx Ton(s) 7.36

Particulate matter Ton(s) 0.27

Exhaust gas

Group Photo of Youth Players from the Basketball Tournament SOx Ton(s) 0.019

VOCs Ton(s) 24.03

Exhaust gas emission density 10000m

3/Operating revenue of

RMB10000 0.013

Sponsorship of Hong Kong-Zhuhai-Macao Bridge (Hong Kong Section) Half Marathon

Total wastewater discharge Ton(s) 1012618.24

Environmental

COD Ton(s) 84.83

On January 5 2024 the Hong Kong-Zhuhai-Macao Bridge (Hong Kong Section) Half Marathon of Bank of China (Hong Wastewater

Kong) successfully took place. The bridge is the longest bridge-cum-tunnel sea crossing in the world. Yunnan Baiyao Ammonia nitrogen Ton(s) 2.00

sponsored the event with HKD 250000 and provided some of its aerosol products for participants. The event attracted management

Reclaimed water Ton(s) 25950

nearly 7000 runners.Wastewater discharge density Ton(s)/Operating revenue of RMB10000 0.25

Waste drugs drugs HW03 Ton(s) 139.14

Experimental liquid waste HW49 Ton(s) 28.94

Other hazardous waste Ton(s) 25.38

Total amount of hazardous waste Ton(s) 193.47

Waste Intensity of hazardous waste Kilogram(s)/Operating revenue of

management RMB10000

0.048

Drug residue sludge Ton(s) 26207.34

Household waste Ton(s) 856.80

Total amount of non-hazardous

waste Ton(s) 27064.14

Hong Kong-Zhuhai-Macao Bridge (Hong Kong Section) Half Marathon Intensity of non-hazardous waste

Ton(s)/Operating revenue of

RMB10000 0.0068

111 112ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Dimension Indicators Unit 2024 Dimension Indicators Unit 2024

Resources Utilization Sales staff Person 5433

Total amount of solid waste Ton(s) 27257.61 Technical staff (including R&D staff) Person 1276Waste

management Discharge intensity of solid waste Ton(s)/Operating revenue of

Number of employees by

Production staff Person 1760

RMB10000 0.0068 type of work

Coal consumption Ton(s) 0 Financial staff Person 277

Administrative staff Person 531

Gasoline consumption Ton(s) 22.21

Number of employees by Male employees Person 5088Diesel consumption Ton(s) 1.42

gender Female employees Person 4189

Natural gas consumption 10000 m3 686.52

30 and below Person 2825

Purchased electricity MWh 64441.65

Energy

Number of employees by 31 to 40 Person 4447management Purchased steam Ton(s) 213075.17

age 41 to 50 Person 1658

Hydropower kWh 51553317.26

51 (inclusive) and above Person 347

Solar photovoltaic kWh 3274076.00

Han Person 7924

Environmental Comprehensive energy

consumption Ton(s) of standard coal equivalent 24351.00 Number of employees by Ethnic minorities Person 1352

Comprehensive energy density Ton(s) of standard coal equivalent/

nationality

Operating revenue of RMB10000 0.0061 Overseas employees Person 1

Water Water consumption Ton(s) 1329515.54 Yunnan Province Person 4545

resources Number of employees by

management Water consumption density

Ton(s)/Operating revenue of 0.33 Chinese Mainland (exclusive Yunnan) Person 4728RMB10000 region

Paper Ton(s) 15000 Social Hong Kong Macao Taiwan and overseas Person 4

Plastic Ton(s) 4267 Employee training

19

Total training duration Hours 325839.46

Aluminum Ton(s) 2900

Packaging Total number of participants Person-times 56448

material Composite soft package Ton(s) 3632

consumption Training duration per person Hours 35.12

Glass material Ton(s) 807

Total annual training cost RMB million 8.8312

Packaging material consumption Ton(s) 26606

Density of packaging material Ton(s)/Operating revenue of Training cost per person RMB 951.95

consumption RMB10000 0.0067

Number of training Male employees Person-times 31046

Employee Employment participants by gender Female employees Person-times 25402

Total employee count16 Person 12371 Senior management Person-times 5645

Labor contract employees Person 9277 Number of training Middle management Person-times 14112

participants by rank

Types by total Labor dispatch employees Person 1202 Junior employees Person-times 36691

employee

Social count Intern Person 209 Health and safety

Subcontracting staff Person 1683 Number of work-related injuries and deaths Person 9

Senior management18 Person 190 Occupational safety Lost working hours due to work-related injuries Hours 856Number of

employees by Middle management Person 1034 performance Number of injuries per million hours worked20 % 42.94

rank17

Junior employees Person 8053 Occupational disease examination participants Person 2767

16 The total employee count includes employees under labor contracts labor dispatch interns and outsourced personnel.

19

17 The employee count by all types includes only employees under labor contracts. The statistic standard for the employee training data covered only the employees subject to labor contracts.

20

18 The scope includes individuals holding executive positions within the Company and its business groups. The statistic standard for the number of injuries per million hours worked only covered the employees subject to labor contracts and labor dispatch.

113 114ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Dimension Indicators Unit 2024 Shenzhen Stock Exchange Index

Safety management Safety investment RMB million 8.49

Safety inspection sessions Sessions 210 Dimension

Series

No. Topic Corresponding Article Corresponding Section

Safety inspection

Number of safety hazard inspected Entries 2755 Addressing climate Green Development for Deepening Ecological 1 Articles 21-28

change Civilization – Addressing Climate Change

Safety emergency drill sessions Sessions 2

Safety training Safety education training sessions Sessions 10 Green Development for Deepening Ecological 2 Pollutant discharge Article 30

Civilization – Environmental Management

Safety training attendances Person-times 19652

Green Development for Deepening Ecological

Product Quality and Safety 3 Waste disposal Article 31 Civilization – Environmental Management

Quality and safety training coverage % 100

Quality and safety training Ecosystem and Green Development for Deepening Ecological

Quality and safety training sessions Times 395 4 biodiversity Article 32 Civilization – Biodiversity Protection

protection

R&D and Innovation Environmental Environmental

Green Development for Deepening Ecological

R&D and Investment RMB million 348 5 compliance Article 33 Civilization – Environmental Management

management

Invention patents Quantity 55

Number of patent Green Development for Deepening Ecological

Utility model patents Quantity 39 6 Energy utilization Article 35

applications Civilization – Resource Utilization

Design patents Quantity 4

Social Water resource Green Development for Deepening Ecological

Invention patents Quantity 33 7 Article 36utilization Civilization – Resource Utilization

Patent authorization

Utility model patents Quantity 18

quantity Green Development for Deepening Ecological

8 Circular economy Article 37

Design patents Quantity 4 Civilization – Resource Utilization

Customer Services Cultivating Virtue and Embracing Responsibilities –

9 Rural revitalization Article 39

Customer complaint resolution rate % 100 Rural Revitalization

Supply Chain Management Cultivating Virtue and Embracing Responsibilities –

10 Social contribution Article 40

Community Care Social Care

Total number of suppliers Quantity 287

Key suppliers Quantity 138 Innovation-driven Exploration of New Horizons in 11 Innovation driven Article 42

TCM - R&D Innovation

Suppliers in the local province Quantity 41

Chinese suppliers Chinese suppliers (other provinces and Innovation-driven Exploration of New Horizons in

regions in Chinese Mainland except the Quantity 244 12 Technology ethics Article 43 TCM - R&D Innovation

local province)

Social

Overseas suppliers (including Hong Kong Macao and Taiwan) Quantity 2 Innovation-driven Exploration of New Horizons in 13 Supply chain safety Article 45

TCM – Supply Chain Management

Public welfare

External donation RMB million 4.589 Equal treatment to Innovation-driven Exploration of New Horizons in 14 Article 46

SMEs TCM – Supply Chain Management

Product and service Innovation-driven Exploration of New Horizons in

15 Article 47

safety and quality TCM – Product Quality

Data safety and

Innovation-driven Exploration of New Horizons in

16 customer privacy Article 48

TCM – Customer Service

protection

People First for Strengthening the Foundation of

17 Employee Article 50

Talent

115 116ABOUT THIS BOARD SUSTAINABILITY MESSAGE FROM About Yunnan Materiality Sustainability Topic Steady Progress with Innovation-driven Exploration Green Development for People First for Strengthening Cultivating Virtue and Appendix Feedback

REPORT STATEMENT THE CHAIRMAN Baiyao Assessments Management Legacy of Baiyao of New Horizons in TCM Deepening Ecological Civilization the Foundation of Talent Embracing Responsibilities Form

Dimension Series No. Topic Corresponding Article Corresponding Section Feedback Form

Steady Progress with Legacy of Baiyao –

18 Due diligence Article 52

Risk Management Dear Readers

Issue’s Materiality Assessment –

Communication with Thank you very much for your attention and support for Yunnan Baiyao’s sustainable development. To provide you with more

19 Article 53 Communication with Issue-related

Sustainability stakeholders professional and valuable information on environmental social and governance aspects and to further enhance the quality Stakeholders

related of our sustainability report we invite you to respond to the relevant questions in the feedback form.governance Anti-commercial bribery Steady Progress with Legacy of Baiyao –

20 Article 55

and anti-corrupt Business Ethics

Steady Progress with Legacy of Baiyao –

21 Anti-unfair competition Article 56

Business Ethics

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