Shenguan : Environmental, Social and Governance Report 2023

CONTENTS

About the Report	2
Reporting Standards	2
Reporting Scope	3
Message from the Chairman	4
Summary of Key Environmental, Social and
Governance Performance	5
Professional Certification and Awards	6
Environmental, Social and Governance Structure	8
Stakeholder Engagement	10
Materiality Assessment	11
Industry Optimization	14
Care for Employees	22
Environmental Protection	32
Community Investment	42
Summary of Statistics	44
Index of the Guide	48

2

ABOUT THE REPORT

Shenguan Holdings (Group) Limited (the "Company", together with its subsidiaries, the "Group", "we", "Shenguan Group") is an enterprise established in the Cayman Islands and specialised in utilising collagen. We are committed to the development and application of collagen technologies. We hope that through the annual release of the environmental, social and governance report (the "Report"), we can enable each stakeholder to understand the environmental, social and governance policies, measures and performances of the Group, and continue to maintain good communication with stakeholders, promote and implement the sustainable development vision and strategy to achieve our sustainable development growth strategically.

REPORTING STANDARDS

The Report is prepared based on the Environmental, Social and Governance Reporting Guide (the "Guide") set out in Appendix C2 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

The Report is prepared in accordance with the four major reporting principles stated in the Guide, including materiality, quantitative, balance and consistency, aiming to present true, meaningful and accurate environmental, social and governance information of the Group.

During the year, we conducted a materiality assessment process again to maintain the pertinence and relevance of the key disclosure issues in the Report. We finally determined the disclosure content and reporting scope based on the analysis of the extent of the material

Materiality	impact on the Group's operations or on stakeholders as well as its importance, hoping to
	disclose the relevant information of the Group's environmental, social and governance in
	a more accurate and complete manner. For more details, please refer to the "Materiality
	Assessment" section in the Report.
	The Report, where applicable, presents relevant environmental and social information in a
Quantitative	quantitative approach. Unless otherwise stated, all presentation currency in the Report should
refer to RMB. Apart from ratios and percentages, data was rounded up to integers. For the
	standards, methods and assumptions (if applicable) regarding the calculation of the relevant
	performance data, please refer to the "Summary of Statistics" section in the Report.
	We aim to present our environmental, social and governance achievements and challenges
Balance	in an objective, impartial and truthful manner, so as to enhance operational transparency and
	build stakeholder trust.
	The statistical methods disclosed in the Report are the same as last year, which used the same
Consistency	data statistics and conversion methods. However, we would review and update the relevant
conversion factors annually to present timely and accurate environmental data. The pertinent
	historical data has been disclosed in the Report to enable stakeholders to better understand
	and compare the Group's sustainability performance.

SHENGUAN HOLDINGS (GROUP) LIMITED

3

REPORTING SCOPE

The Report mainly covers our efforts and achievements in terms of environmental, social and governance aspects from 1 January 2023 to 31 December 2023 (the "Year", the "Reporting Period" or "the Year of 2023"), including Industry Optimization, Care for Employees, Environmental Protection and Community Investment. The reporting scope includes the principal business of the manufacturing and sales of edible collagen sausage casings, which represented the main operating income of the Group. The subsidiaries involved include Guangxi Shenguan Collagen Biological Group Co., Ltd. (廣西神冠膠原生物集團有限公司) ("Shenguan Collagen") (formerly known as Wuzhou Shenguan Protein Casing Co., Ltd. (梧州神冠蛋白腸衣有限公司)). As the R&D and production based in Singapore have yet to be officially put into production, therefore, the relevant environmental, social and governance data is not disclosed during the Year.

The Report focuses on the Group's performance on the environmental and social aspects. For more details on corporate governance, please refer to the Corporate Governance Report set out in the latest annual report of the Group.

Environmental, Social and Governance Report 2023

4

Ms. Zhou Yaxian

Chairman of the Board and President of the Company

MESSAGE FROM THE CHAIRMAN

Amidst the uncertainties of the year 2023, Shenguan Group has demonstrated its excellent capabilities to adapt to changes and forward-looking strategies under the tremendous pressure of economic fluctuations and market reforms. In facing the challenges such as shortage of raw materials, escalating energy and transportation costs, and rising labour costs, the Group actively implemented the business policy of "stabilising quality and expanding capacity, developing new products and adjusting structure". Through the concerted efforts of all employees, the Group successfully overcame multiple difficulties in the post-epidemic era and unswervingly pushed forward the strategy of high-quality development.

In terms of product structure adjustment, the Group constantly innovates and our technology is becoming more and more mature. Particularly, the Group made significant advancements in the production of medium and large-sized diameters products and has successfully gained access to the high-end market, thus progressively meeting the needs of the sausages industry in adjusting its product structure. In addition, while enhancing the production capacity of the Group's sausage casings, Shenguan Group has also conducted the re-engineering and standardisation of its production equipment, from the production line to equipment components, they are well planned in every aspect. Such a move not only improved production efficiency but also reduced production costs and maintenance charges, laying a solid foundation for the Group's sustainable development in the future.

Towards sustainable development, Shenguan Group actively fulfills its social responsibility by constantly optimising its technological processes and reducing its impact on the environment. With a series of technological innovations and renovations, the Group has successfully dismantled the old production lines with high energy consumption, low output and high maintenance costs, and carried out expansion and upgrade of the existing ones, increasing the total number of production lines to 300 from 200 at the beginning of the year, which not only increases production capacity, but also improves energy efficiency and product quality.

These initiatives not only demonstrate Shenguan's commitment to its customers but also its concern for the well-being of its employees and its responsibility to protect the environment. Through in-depth cooperation with academic institutions, new products and technologies developed by the Group continue to emerge, which not only bring new growth momentum to the Group but also make positive contributions to the innovation and green growth of the entire bio-industry.

In this ever-changing era full of challenges and opportunities, Shenguan Group's flexible business strategies, innovative technology development, and commitment to social responsibility have proved that if a company wants to secure a firm foothold in the market in the long run, it must constantly reform itself and pursue excellence. Through these efforts, Shenguan Group has not only maintained a steady momentum of development in the post-epidemic era but also laid a solid foundation for achieving its long-term goal of sustainable development.

SHENGUAN HOLDINGS (GROUP) LIMITED

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We would like to express our heartfelt thanks to all colleagues, customers, partners and stakeholders of the Group for their participation and cooperation in assisting Shenguan Group to achieve sustainable operations and fulfil our social responsibility. The environmental, social and governance performance in the Year of 2023 was remarkable. Thanks to everyone for your perseverance and contribution, for continuously providing customers with satisfactory and competitive products and plan for future development blueprints. We look forward to continuing working with you to create a delighted and bright future in the coming year.

SUMMARY OF KEY ENVIRONMENTAL, SOCIAL AND

GOVERNANCE PERFORMANCE

Employees receiving training reached

87.7%

Total training hours for employees reached

34,050 hours

Emissions of particulate matter, sulfur dioxide and nitrogen oxides

↓46.4%

Total electricity generated from solar photovoltaic panels reached

5,305,576

kWh

Amount invested in social welfare reached approximately RMB

640 thousand

Local procurement representing

100%

Emissions of hydrogen chloride

↓3.3%

Electricity consumption intensity

↓7.1%

Environmental, Social and Governance Report 2023

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PROFESSIONAL CERTIFICATION AND AWARDS

The Group is the first enterprise in Mainland China to obtain the patent on the invention of edible collagen sausage casings technology and we have a number of patents on inventions granted by the country. During the Reporting Period, the Group had a total of 78 patents in force and 8 patent applications accepted and pending for approval.1 Our professional achievements have been recognized by government-accredited institutions. Some professional certifications and awards received by the Group are listed below:

Certificate/Professional Qualification

ISO 9001 Quality Management System	ISO 22000 Food Safety Management	ISO 10012 Measuring Management
Accreditation	System Accreditation	System Standard Accreditation
Quality Assurance Centre of China	Quality Assurance Centre of China	China Certification Centre for Metrology
Association for Quality	Association for Quality	and Measurement
ISO 45001 Occupational	ISO 14001 Environmental Management	Re-assessment Accreditation of
Health and Safety Management System	System Certification	Secondary Enterprise for
Certification	Quality Assurance Centre of China	Production Safety Standardisation
Quality Assurance Centre of China	Association for Quality	Department of Emergency Management
Association for Quality		of Guangxi Zhuang Autonomous Region

1 The number of patents disclose the patents owned by Shenguan Collagen and its subsidiaries.

SHENGUAN HOLDINGS (GROUP) LIMITED

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Awards and Recognition

First Batch of	National Intellectual Property	National Green Factory
Chain-leading Enterprises	Demonstration Enterprise	Ministry of Industry and
Department of	China National Intellectual	Information Technology of
Industry and Information Technology of	Property Administration	the People's Republic of China
Guangxi Zhuang Autonomous Region
2023 High Value Patent Cultivation	Advanced Entity Title for	Leading Industrial Enterprise in Guangxi
Centre of the Autonomous Region	Promoting Employment in Guangxi	Department of Industry and
Market Supervision Administration of	Government of Guangxi Zhuang	Information Technology of
Guangxi Zhuang Autonomous Region	Autonomous Region	Guangxi Zhuang Autonomous Region
The Tenth Batch of	Advanced Enterprise of China Meat	2023 Guangxi Top 100 Private Enterprises
Key Foreign Trade Brands to be	Product Industry	in Manufacturing
Cultivated and Developed in Guangxi	China Meat Association	Guangxi Zhuang Autonomous Region
Department of Commerce of		Federation of Industry and Commerce
Guangxi Zhuang Autonomous Region

Environmental, Social and Governance Report 2023

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRUCTURE

The Group takes innovation, quality, safety, energy conservation and environmental protection as its development goals. We have established the environmental, social and governance systems to propel sustainable development. A sound environmental, social and governance structure has established a top-down approach to promote the green enterprise development.

Board

ManagementBoard

Security Supervision

Department, Environmental

Protection Department,

Food SafetyBoardOffice,

Quality Control Department

and Enterprise Management

Department

The Board undertakes the primary responsibility for the environmental, social and governance of the Group, including setting environmental, social and governance direction and objectives, understanding the current situation and risks of the Group, reviewing performance, effectively rectifying problems that may cause significant risks and ensuring the effectiveness of the governance system.

The Board instructs the management to formulate suitable environmental, social and governance policies and measures, and supervises the implementation amongst various departments.

These professional working groups comprise personnel with qualifications in environmental protection, food safety, production safety management, quality management, and enterprise management. They are responsible for the environmental and production safety management under the framework of the Comprehensive Management Manual (《綜合管理手冊》). A sound environmental, social and governance structure has established a top-down approach to promote the green enterprise development.

Comprehensive Management Manual - A guideline established by Enterprise Management Department, covering product quality, food safety, occupational health and safety, environmental safety, surveying management and intellectual property rights.

SHENGUAN HOLDINGS (GROUP) LIMITED

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Environmental, Social and Governance Targets

In order to continuously facilitate the environmental, social and governance development, the Group has set targets related to sustainable development to make continuous progress and contribute to sustainable development. The targets that we have set are as follows:

Category	Target
Emissions	We will monitor the Group's greenhouse gas emissions on an on-going basis, aiming to
	maintain the same emission intensity in 2025 as that of 2019, so as to fulfill our corporate social
	responsibility for sustainable development.
Waste reduction	We will minimise the waste generated by business activities and operations, aiming to maintain
	the same waste intensity in 2025 as that of 2019, so as to reduce the burden of waste disposal
	and landfilling.
Energy use	We will increase investment in energy-conservation and emission-reduction equipment,
efficiency	aiming to maintain the same electricity utilization intensity in 2025 as that of 2019.
Water use	We aim to maintain the same water consumption treated and wastewater intensity in 2025 as
efficiency	that of 2019.

For the steps taken to achieve such targets, please refer to the section headed 03 Environmental Protection.

Preparation Process of Environmental, Social and Governance Report

Kick-off Meeting of the Report Compilation

• The Group identified material environmental, social and governance issues, and review the revised guidelines released by the Stock Exchange
• The Group distributed and collected stakeholders' engagement questionnaires and summarized stakeholders' opinions from usual communication channels

Report Finalization

• The information was reviewed and examined by the senior management of the relevant departments
• The Report was finally submitted to the Board for their approval to ensure the validity and accuracy of the content

Nov-Dec

	Information Collection and Selection
Jan-Feb	• Each department provided relevant
information for report, including
	sustainable development performance
	and targets, and determined the accuracy
	and completeness of the information

Mar

	Publication
	• The Report is published on the same day
Apr	as the annual report

Environmental, Social and Governance Report 2023