承董事會命 譚木匠控股有限公司* 主席 譚傳華 CARPENTER TAN HOLDINGS LIMITED 譚木匠控股有限公司 * （於開曼群島註冊成立之有限公司） （股份代號：837） 董事會會議通告 譚木匠控股有限公司*（「本公司」，及其附屬公司，統稱「本集團」）之董事（「董 事」）會（「董事會」）茲通告，謹定於二零二五年八月二十八日星期四舉行董事會會 議，目的為審議並批准本集團截至二零二五年六月三十日止六個月之未經審計中 期業績及建議派付中期股息（如有），並處理任何其他事項。 香港交易及結算所有限公司及香港聯合交易所有限公司對本通告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示概不就因本通告全部或任何部分內容而產生或因倚賴 該等內容而引致的任何損失承擔任何責任。 香港，二零二五年八月十四日 於本通告日期，董事會包括五位執行董事，即譚傳華先生、譚棣夫先生、羅洪平先生、譚力子 先生及劉珂佳女士；以及三位獨立非執行董事，分別為劉麗婷女士、楊天南先生及周錦榮先 生。 * 僅供識別 ...

Overview - The bull horn comb, once a luxury item for the elite, has become a popular daily use product among the general public due to increased production and rising living standards. The demand for natural health products has surged, with the market for bull horn combs expected to reach 1.028 billion yuan in 2024, with a demand of 18.6225 million units [1][10]. Development Background - The Chinese government has been promoting cultural industries and traditional crafts as important carriers of cultural heritage, providing policy support for the development of the bull horn comb industry. The increasing consumer focus on health and preference for natural materials have further driven market growth [4]. Industry Chain - The bull horn comb industry consists of upstream sectors such as cattle farming (water buffalo and yellow cattle), production equipment, and packaging materials. The midstream involves the production and manufacturing of bull horn combs, while the downstream includes various sales channels like specialty stores, supermarkets, and e-commerce platforms [6][8]. Current Development - The bull horn comb industry has seen a shift from a luxury item to a widely used product. The demand for natural health products has increased significantly, with the market projected to reach 1.028 billion yuan and a demand of 18.6225 million units in 2024 [10]. Competitive Landscape - The bull horn comb market is fragmented with numerous participants. Key players include Tan Mu Jiang, Zhang Xiao Quan, and several other companies specializing in traditional crafts. Tan Mu Jiang is noted for its high-quality wooden products and has a strong market presence [12][14]. Company Analysis - Tan Mu Jiang Holdings Limited reported a revenue of 505 million yuan in 2024, with a gross profit of 305 million yuan and a gross margin of 60.38% [14]. - Zhangjiajie Drill Bull Horn Crafts Co., Ltd. focuses on quality and has obtained over 80 national patents, establishing itself as a leading brand in the industry [17]. Future Trends - The bull horn comb industry is expected to integrate modern technology, developing smart combs with health monitoring features. There will be an emphasis on enhancing health benefits and establishing a raw material traceability system to ensure sustainable supply and improve product quality [19].

Core Viewpoint - The financial performance of the woodworking brand Tan Mu Jiang (00837) has shown a significant slowdown in growth for the fiscal year 2024, with a slight increase in revenue but a decline in profit [1][2]. Financial Summary - For the fiscal year ending December 31, 2024, the company reported revenue of 505.44 million RMB, a year-on-year increase of 1.2% [2]. - The profit attributable to the company's owners was 171.37 million RMB, down 1.4% from the previous year [2]. - The gross profit increased by 1.4% to 305.20 million RMB, while the pre-tax profit rose by 1.5% to 212.93 million RMB [2]. - Basic earnings per share decreased by 1.4% to 68.90 RMB cents [2]. - The final dividend per share was 36.63 HKD cents, a decrease of 5.2% compared to the previous year [2]. Business Performance - The offline business showed relative stability, with a 2.7% increase in revenue, although direct store revenue fell by 4.3% to 4.46 million RMB [1]. - Online sales faced challenges, with a 0.9% decline to 210 million RMB, attributed to overlapping holiday seasons and lack of participation in major sales events [1][3]. - The company executed 13 marketing campaigns in 2024, but sales during the Valentine's Day campaign dropped significantly by 61.07% year-on-year, indicating a need for adjustment in marketing strategies [3]. Market Position - The company's high-end pricing strategy is under market scrutiny, with some consumers perceiving its products as overpriced compared to ordinary brands [3]. - Despite some recognition for product durability, overall market feedback has been mixed, suggesting a need for improved value perception [3]. - As of April 17, 2025, the stock price was 5.71 HKD per share, down from a peak of 6.78 HKD per share on March 27, 2025, with a total market capitalization of 1.42 billion HKD [3].

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 505,436,000, representing a 1.2% increase from RMB 499,688,000 in 2023[9] - Gross profit for the same period was RMB 305,202,000, reflecting a 1.4% increase compared to RMB 300,877,000 in 2023[9] - Profit attributable to owners of the company decreased by 1.4% to RMB 171,366,000 from RMB 173,734,000 in 2023[9] - Basic earnings per share for 2024 was RMB 68.90, down from RMB 69.85 in 2023, a decrease of 1.4%[9] - The proposed final dividend per share is HKD 36.63, a decrease of 5.2% from HKD 38.64 in 2023[9] - Other income and net gains for the year were approximately RMB 42,456,000, an increase of about RMB 1,246,000 or 3.0% compared to RMB 41,210,000 last year[76] - The company's annual profit for the fiscal year was approximately RMB 171,479,000, a decrease of about RMB 2,295,000 or 1.3% from RMB 173,774,000 in the previous year[80] - The income tax expense for the year was approximately RMB 41,455,000, an increase of about RMB 5,538,000 or 15.4% compared to RMB 35,917,000 last year, primarily due to an increase in pre-tax profit[79] Market Expansion and Strategy - The company plans to expand its presence in overseas markets, including flagship stores in Hong Kong and Singapore, and establish a local service warehouse in North America[16] - The company aims to enhance brand image and service quality while avoiding price wars, focusing on long-term brand value[16] - The company will continue to develop new products and improve technical efficiency as part of its strategic goals for 2025[22] - The company emphasizes the importance of governance and market expansion as key focus areas for 2025[22] - The company aims to strengthen product competitiveness by developing multiple product lines and filling market gaps[35] - The company plans to enhance store profitability through targeted investments and sales team guidance, focusing on store construction, training, and advertising[35] - The company is committed to building a robust franchise system, aiming for long-term sustainability rather than short-term gains[25] - The company is focusing on expanding its franchise system and increasing enforcement against market infringements[91] Sales and Distribution - Offline business POS sales reached approximately RMB 290.16 million, achieving 131.5% of the target plan, with a year-on-year growth of 2.7%[25] - The total number of stores increased to 1,254, up by 84 stores from 1,170 in the previous year, with shopping mall stores accounting for 70.3%[26] - The membership system registered over 1.19 million members, with 287,567 new members added, representing a growth of 76.77% year-on-year[30] - The company opened 223 new stores, showing a significant recovery and annual growth in the number of specialty stores post-pandemic[25] - The company achieved RMB 19.28 million in sales through its official mini-program, marking a substantial step in developing new retail channels[25] - The online business sales reached approximately RMB 209,636,000, achieving 102.2% of the annual target, but down 0.9% year-on-year due to the overlap of Valentine's Day and Spring Festival affecting sales[36] - A total of 328 stores were renovated during the year, with 274 stores adopting the Morandi image, accounting for 83.5% of the total renovations[34] Product Development and Innovation - The company launched 44 new products during the year, focusing on practical and artistic designs to meet market demand[31] - The company launched 8 new products across different price ranges, including various comb types, to meet online customer demands[32] - The company has developed and tested over 6,000 products using mature materials, resulting in a noticeable decrease in product return rates[58] - The company is committed to continuous product development and optimization, focusing on traditional Chinese culture and market demand[50] - The company is set to launch new products and improve production processes for multi-material structural products[91] Operational Efficiency - The liquidity ratios showed a decline, with the current ratio at 5.48, down 20.3% from 6.88 in 2023, and the quick ratio at 2.50, down 40.8% from 4.22[9] - The automation technology for the wooden combs has improved processing efficiency by 70%, significantly reducing labor intensity[56] - The logistics team produced and delivered 5.352 million items, ensuring market order fulfillment and maintaining appropriate safety stock levels[59] - The company aims to enhance production efficiency through technical upgrades and process improvements, addressing labor protection issues during high-pressure production[71] Corporate Governance - The board consists of six directors, including three executive directors and three independent non-executive directors, ensuring diverse expertise[108] - The company has complied with all applicable provisions of the corporate governance code during the review year[106] - The company has established three committees: Audit Committee, Remuneration Committee, and Nomination Committee, to oversee specific areas of governance[114] - The company aims to ensure a balanced board composition through appropriate diversity measures, including gender diversity[112] - The company has adopted a board diversity policy considering various factors such as gender, age, cultural background, and professional experience[127] Risk Management and Compliance - The company has identified key risks including market risk, currency risk, and operational risk, and has implemented management strategies to mitigate these risks[171][172][175] - The company has established a whistleblowing policy that provides an anonymous reporting channel for employees to express concerns about misconduct[135] - The board believes that the risk management and internal control systems are appropriate and effective, complying with corporate governance codes[140] Employee Engagement and Social Responsibility - The company has increased employment for disabled individuals by 11, with 43 new hires and 32 retirements during the year[68] - The company is promoting employment for people with disabilities and enhancing training programs for employees[95] - The total charitable donations made by the group for the year ended December 31, 2024, were approximately RMB 0, compared to RMB 50,000 in 2023[190] Shareholder Communication and Dividends - The company has adopted a shareholder communication policy to ensure timely and clear information dissemination to shareholders and potential investors[145] - The company reported a final dividend of HKD 0.3663 per share, totaling approximately HKD 91,104,000, which represents 50.0% of the profit attributable to shareholders for the fiscal year ending December 31, 2024[160] - The company has adopted a dividend policy that considers financial performance, cash flow, and overall business conditions when declaring dividends[161]

Financial Performance - Revenue increased by 1.2% to approximately RMB 505,436,000 (2023: RMB 499,688,000) [2] - Gross profit rose by 1.4% to approximately RMB 305,202,000 (2023: RMB 300,877,000) [2] - Gross profit margin improved by 0.2 percentage points to 60.4% (2023: 60.2%) [2] - Profit attributable to owners decreased by 1.4% to approximately RMB 171,366,000 (2023: RMB 173,734,000) [2] - Earnings per share decreased by 1.4% to approximately RMB 0.6890 (2023: RMB 0.6985) [2] - Total revenue for the year ending December 31, 2024, was RMB 505,436,000, compared to RMB 499,688,000 in 2023, reflecting a growth of approximately 1.5% [18] - Online sales revenue decreased to RMB 209,636,000 in 2024 from RMB 211,468,000 in 2023, a decline of about 0.9% [18] - Offline sales revenue increased to RMB 290,161,000 in 2024 from RMB 282,441,000 in 2023, representing a growth of approximately 2.6% [18] - Franchise fee income rose to RMB 1,179,000 in 2024 from RMB 1,118,000 in 2023, an increase of about 5.5% [18] - Direct sales from retail stores generated RMB 4,460,000 in 2024, slightly down from RMB 4,661,000 in 2023, indicating a decrease of around 4.3% [18] Assets and Liabilities - Total assets less current liabilities increased to RMB 911,063,000 (2023: RMB 837,583,000) [5] - Non-current assets increased to RMB 471,312,000 (2023: RMB 289,458,000) [5] - Cash and cash equivalents decreased to RMB 41,714,000 (2023: RMB 67,381,000) [5] - Total equity attributable to owners increased to RMB 883,959,000 (2023: RMB 808,484,000) [6] - Total inventory increased to RMB 292,498,000 in 2024 from RMB 248,136,000 in 2023, with raw materials rising to RMB 230,711,000 [37] - Trade receivables increased to RMB 7,153,000 in 2024 from RMB 6,808,000 in 2023, with a provision for losses rising to RMB 69,000 [39][41] - Trade payables increased to RMB 9,507,000 in 2024 from RMB 6,856,000 in 2023, with significant increases in the 31-60 days category [42] Expenses and Profitability - Employee benefits expenses increased to RMB 107,047,000 in 2024 from RMB 101,746,000 in 2023, reflecting a rise in salaries and retirement contributions [21] - Pre-tax profit rose to RMB 212,934,000 in 2024 compared to RMB 209,691,000 in 2023 [25] - Total tax expense increased to RMB 41,455,000 in 2024 from RMB 35,917,000 in 2023, influenced by various tax incentives and adjustments [25] - The company reported a net loss from the fair value change of investment properties of RMB 7,470,000 in 2024, compared to a loss of RMB 5,550,000 in 2023 [20] - The total cost of sales increased to RMB 197,383,000 in 2024 from RMB 196,738,000 in 2023, indicating a slight rise in inventory costs [21] Dividends - Proposed final dividend per share is HKD 0.3663 (2023: HKD 0.3864), subject to shareholder approval [2] - Proposed final dividend per share for 2024 is HKD 36.63, equivalent to RMB 34.43, compared to HKD 38.64 (RMB 34.98) in 2023, totaling RMB 85,632,000 [27] - Approved final dividend for the fiscal year ending December 31, 2023, is HKD 38.64 per share, equivalent to RMB 36.18, up from HKD 25.03 (RMB 22.86) in 2022, totaling RMB 89,996,000 [28] Business Operations and Strategy - The company plans to focus on governance, performance targets, market expansion, new product development, and brand building in 2024 [43] - The company has no significant revenue from any single external customer exceeding 10% of total revenue [33] - Over 90% of the company's revenue and assets are derived from the manufacturing and distribution of wooden crafts and ornaments [32] - The company has no significant business activities outside of China, with all major assets located within the country [32] - The offline business achieved POS sales of 131.47% of the target plan, with a year-on-year growth of 4.88% [46] - A total of 223 new stores were opened, with the number of specialty stores increasing significantly post-pandemic, reaching 1,254 stores by December 31, 2024, up from 1,170 stores in 2023 [47][48] - The company launched 44 new products during the year, focusing on practicality and artistic design, enhancing consumer choice and experience [51] - The membership system registered over 1.19 million members, with a 76.77% increase in new members and an 87.99% increase in processed redemption orders compared to the previous year [50] Marketing and Sales - The brand's advertising and promotion efforts included diverse channels such as LED screens and subway ads, enhancing brand exposure and market penetration [49] - The company generated RMB 19.28 million in sales through its official mini-program, marking a significant step in developing new retail channels [46] - Online sales reached RMB 235 million, achieving 102.17% of the annual target, but down 0.84% year-on-year due to the overlap of Valentine's Day and Spring Festival affecting February sales [56] - The marketing activities executed during the year included 13 campaigns, with significant sales increases such as a 24.86% year-on-year growth during the Women's Day event [60] - The Douyin channel promotion resulted in 320 videos published, reaching over 6.23 million total exposures and 143.2 thousand interactions [59] Innovation and Development - The company is committed to continuous innovation in product design and cultural exploration to enhance brand development [53] - The company completed the design and development of 16 new product projects and launched 44 regular new products, achieving a success rate of 79.4% for products that passed trial sales [71] - The company has implemented advanced design software and technologies, such as AI-assisted design, to improve design efficiency and quality [75] - The new product series inspired by traditional Chinese culture includes several limited edition items, showcasing a blend of tradition and modern fashion [52] Governance and Compliance - The company has adopted the corporate governance code and has complied with all applicable provisions during the review year [129] - The audit committee held two meetings during the review year to review the audited consolidated financial statements for the year ending December 31, 2023, and the unaudited interim financial statements for the six months ending June 30, 2024 [132] - The audit committee also monitored the effectiveness of the internal control measures and reviewed the independence of the external auditors [133] Future Outlook - The focus for 2025 includes market expansion and operational management, emphasizing brand integrity and avoiding price wars [116] - The company plans to enhance its brand image and marketing strategies, including 4-6 promotional events and a design competition to celebrate its 10th anniversary [118] - The company aims to establish a direct store in Singapore by 2025 as part of its international expansion strategy [70]

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 263,082,000, representing a 2.5% increase from RMB 256,773,000 in the same period of 2023[8]. - Gross profit increased to RMB 162,245,000, up 4.8% from RMB 154,885,000, with a gross margin of 61.7%, compared to 60.3% in the previous year[8]. - Profit attributable to owners of the company was RMB 96,288,000, a 2.6% increase from RMB 93,880,000 in the prior year[8]. - Basic earnings per share rose to RMB 38.7, up 2.7% from RMB 37.7 in the same period last year[8]. - Operating profit for the six months ended June 30, 2024, was approximately RMB 119,491,000, a decrease of about RMB 2,017,000 or 1.7% compared to RMB 121,508,000 in 2023[47]. - The net profit for the six months ending June 30, 2024, was approximately RMB 96,288,000, an increase of about RMB 2,340,000 or 2.5% compared to RMB 93,948,000 for the same period in 2023[51]. - Total comprehensive income for the period was RMB 94,383,000, slightly down from RMB 94,743,000 in the previous year, indicating a decrease of about 0.4%[86]. - The effective tax rate for the six months ended June 30, 2024, was 19.2%, a decrease of 3.3 percentage points from 22.5% in the same period of 2023[50]. Financial Position - As of June 30, 2024, the group had cash and bank balances of RMB 104,304,000, up from RMB 67,381,000 on December 31, 2023, primarily sourced from operating income[52]. - The company's non-current assets increased to RMB 517,466,000 as of June 30, 2024, up from RMB 289,458,000 at the end of 2023, reflecting a significant growth of approximately 78.7%[87]. - Current assets decreased to RMB 403,625,000 from RMB 641,319,000, showing a decline of about 37.1%[87]. - The net current asset value was RMB 326,549,000, down from RMB 548,125,000, indicating a decrease of approximately 40.3%[87]. - The company's total equity increased to RMB 811,423,000 as of June 30, 2024, compared to RMB 808,484,000 at the end of 2023, reflecting a marginal increase of about 0.2%[87]. - The group has no bank loans or interest-bearing debts as of June 30, 2024, indicating a debt-free capital structure[54][55]. Operational Highlights - The company aims to enhance internal governance and expand external market opportunities despite challenges such as currency depreciation and rising raw material costs[11]. - The company remains committed to its core values of quality branding and customer service amidst a competitive market environment[11]. - The management acknowledges the need for continued efforts to meet annual growth targets in the second half of 2024[11]. - The company is preparing to seize new market opportunities despite current economic challenges[11]. - The total number of stores increased to 1,199 as of June 30, 2024, up from 1,170 on December 31, 2023, representing a net increase of 29 stores[16]. - The company opened a record 102 new stores during the reporting period, with 98.0% of these located in shopping centers[18]. - The membership base grew by over 120,000, surpassing one million total members, with a 128.0% increase in processed member redemption orders compared to the previous year[21]. - The company is committed to expanding its market presence in new first-tier cities and revitalizing the Northeast market, which has become a significant growth contributor[15]. Marketing and Sales Strategy - The company plans to enhance its brand image in overseas markets while focusing on developing quality offline channels and platforms[13]. - The company aims to improve service quality and value-added services in its stores, optimizing product categorization and inventory management[13]. - The company is actively exploring new retail business models and increasing advertising efforts around its stores to drive sales[15]. - The e-commerce team achieved sales of RMB 122.7 million, reaching 104.0% of the semi-annual target, with a year-on-year decline of 0.2%[26]. - The online content promotion led to a 27.7% increase in sales compared to the same period last year, significantly outpacing overall platform sales growth[26]. Product Development and Innovation - During the reporting period, the company launched a total of 25 new products, including 5 Mother's Day products and 13 summer products, enhancing its product lineup[22]. - The company identified four potential blockbuster products for online sales, with "Hair Care Comb Cui Ping" and "Lacquer Art Comb Bear" emerging as top performers by the end of June[28]. - The company is focusing on optimizing its online store's visual presentation and product materials to enhance brand consistency[29]. - The company is promoting the development of new technologies, including automated polishing and intelligent robotic production, to enhance product quality and reduce returns[64]. Employee and Community Engagement - The total compensation paid to employees was approximately RMB 51,346,000, compared to RMB 47,673,000 for the same period in 2023, reflecting an increase of about 3.8%[65]. - The company added 27 new disabled employees while retiring 12, achieving a net increase of 15 disabled employees[38]. - The company participated in exhibitions showcasing handicrafts created by disabled women, promoting social awareness and cultural exchange[35]. - A cooperation agreement was signed with the Central Academy of Fine Arts to provide professional training for over 300 disabled employees, enhancing their artistic potential[35]. Legal and Compliance - The company has initiated legal actions against 40 cases of violations, with 4 cases concluded, resulting in compensation of 79,000 yuan[38]. - The company maintained compliance with corporate governance codes and standards throughout the reporting period[76]. Future Outlook - The company plans to enhance its online member system to convert customer traffic into retained members, aiming to create a long-term brand asset[29]. - The company aims to complete a comprehensive upgrade of its overseas online platform pages by August 2024, considering local market aesthetics and consumption habits[30]. - The company plans to enhance its marketing efforts in domestic and overseas markets, focusing on brand image and optimizing core business channels[62].

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 263,082,000, representing a 2.5% increase from RMB 256,773,000 in the same period of 2023[1] - Gross profit increased to RMB 162,245,000, up 4.8% from RMB 154,885,000, with a gross margin of 61.7%, an increase of 1.4 percentage points compared to 60.3% in 2023[1] - Profit for the period attributable to owners of the company was RMB 96,288,000, a 2.6% increase from RMB 93,880,000 in the previous year[1] - Basic earnings per share rose to RMB 38.7, up 2.7% from RMB 37.7 in the prior year[1] - Total comprehensive income for the period was RMB 94,383,000, slightly down from RMB 94,743,000 in the same period last year[3] - Profit before tax for the six months ended June 30, 2024, was RMB 96,288,000, compared to RMB 93,880,000 in 2023, reflecting a growth of 2.6%[22] - Net profit for the period increased by 2.5% to RMB 96,288,000 from RMB 93,948,000[65] Assets and Liabilities - Non-current assets increased to RMB 517,466,000 from RMB 289,458,000 as of December 31, 2023, reflecting significant growth in property, plant, and equipment[4] - Inventory as of June 30, 2024, was RMB 264,078,000, compared to RMB 248,136,000 at the end of 2023, indicating a rise in stock levels[4] - Current liabilities decreased to RMB 77,076,000 from RMB 93,194,000, showing improved liquidity management[4] - The company's net assets attributable to owners increased to RMB 811,423,000 from RMB 804,385,000, indicating a stable financial position[4] - Cash and bank balances as of June 30, 2024, were RMB 104,304,000, significantly up from RMB 67,381,000 as of December 31, 2023[66] Revenue Recognition and Accounting Policies - All revenue from customer contracts is recognized at a point in time, reflecting the group's revenue recognition policy[17] - The group has not applied any new standards or amendments that are not yet effective during the accounting period, and the revised Hong Kong Financial Reporting Standards did not have a significant impact on the financial position and performance for the period[10] - The group has made significant accounting policy changes regarding long service payments due to the abolition of the offset mechanism for mandatory provident fund contributions, with no major impact on the financial statements for the year ended December 31, 2023[11] - The revised Hong Kong Accounting Standards provide clarification on the classification of liabilities as current or non-current, which may affect future financial reporting[10] Sales and Marketing - Over 90% of the group's revenue, performance, and assets are derived from the manufacturing and sales of wooden crafts and ornaments, indicating a single operating segment[14] - The group's sales are generally affected by seasonal factors, with higher sales in March-April and September-December, attributed to retail peaks around holidays[16] - The company aims to enhance its marketing efforts by optimizing domestic market channels and expanding overseas market presence, particularly through new store openings and brand exposure[76] - The company is actively promoting its brand through various offline marketing activities, including advertising in shopping centers and major tourist areas[35] Store Operations and Expansion - The total number of stores increased to 1,199 as of June 30, 2024, up by 29 stores from 1,170 on December 31, 2023, with shopping center stores accounting for 68.1%[33] - The company opened a record 102 new stores during the reporting period, with shopping center stores making up 98.0% of this total[34] - The company achieved 130.3% of its POS sales target for the first half of the year, with a year-on-year growth of 4.7% compared to the same period in 2023[32] Employee Engagement and Corporate Culture - The company received a total of 301 improvement suggestions from employees in the first half of the year, with 123 adopted and 80 implemented, indicating active employee engagement in innovation[51] - The group emphasizes maintaining a strong corporate culture and employee development through various training programs[78] - The company has added 27 new employees with disabilities and has a net increase of 15 disabled employees during the reporting period, reflecting its commitment to promoting employment for disabled individuals[52] Product Development and Innovation - A total of 25 new products were launched during the reporting period, including 5 Mother's Day products and 13 summer products[37] - The company plans to enhance product gross margin by optimizing existing designs and exploring new materials and processes[46] - The group plans to continue product development through IP collaborations and the launch of new products, including traditional craftsmanship enhancements[77] Online Sales and E-commerce - Online sales reached RMB 1.227 billion, achieving 104.0% of the semi-annual target, but down 0.2% year-on-year[40] - The online business team launched new promotional modules, contributing approximately 11.8% to total sales[41] - The brand's live streaming on Tmall lasted 182 hours, with a 32% increase in sales compared to the previous year[42] Governance and Compliance - The company has adopted corporate governance measures in line with local and international standards to enhance internal control systems[88] - All directors have confirmed compliance with the securities trading standard code as of June 30, 2024[89] Dividends - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the previous year[29] - The company approved a final dividend of RMB 38.64 per share for the fiscal year ended December 31, 2023, totaling RMB 87,000,000[29]

Financial Performance - The total revenue for the year ended December 31, 2023, was RMB 41,210,000, compared to RMB 35,364,000 in 2022, representing an increase of approximately 16.5%[4] - The pre-tax profit for 2023 was RMB 209,691,000, a significant increase from RMB 133,363,000 in 2022, reflecting a growth of approximately 57.1%[17] - The income tax expense for 2023 was RMB 35,917,000, compared to RMB 26,105,000 in 2022, which is an increase of around 37.3%[17] - The company reported a total comprehensive income of RMB 82,776,000 for the year, which includes a profit of RMB 79,384,000[113] - The company reported a net loss of RMB 508,000 for the year, compared to a loss of RMB 1,891,000 in the previous year, indicating an improvement in financial performance[92] Government Support - Government subsidies received amounted to RMB 2,908,000 in 2023, up from RMB 2,497,000 in 2022, indicating a growth of about 16.5%[4] - The company continues to benefit from tax incentives, with a significant portion of its income tax expenses influenced by preferential tax rates and deductions[11] Employee Costs - The total employee costs, including salaries and other benefits, rose to RMB 101,746,000 in 2023 from RMB 81,456,000 in 2022, an increase of about 24.9%[6] - The total remuneration for the highest-paid individuals in 2023 was RMB 1,974,000, a decrease of 6.9% from RMB 2,121,000 in 2022[24] Investment Properties - The net rental income from investment properties decreased to RMB (4,189,000) in 2023 from RMB (5,162,000) in 2022, indicating a decline of approximately 18.7%[6] - The fair value changes of investment properties resulted in a loss of RMB (5,550,000) in 2023, compared to a loss of RMB (2,020,000) in 2022, reflecting a worsening of approximately 174.3%[4] Shareholder Information - The proposed final dividend for 2023 is HKD 38.64 per share, equivalent to RMB 34.98, totaling RMB 87,000,000, compared to RMB 54,991,000 in 2022[29] - The company has not reflected the proposed dividend in the financial statements as it is subject to shareholder approval at the annual general meeting scheduled for May 23, 2024[29] - The company declared a dividend of RMB 27,508,000 for the current year, down from RMB 55,215,000 from the previous year[113] Assets and Liabilities - The carrying value of a property located in Jiangsu Province as of December 31, 2023, was approximately RMB 24,682,000, down from RMB 25,981,000 in 2022[38] - The carrying value of the land use rights in Chongqing as of December 31, 2023, was approximately RMB 5,578,000, down from RMB 5,739,000 in 2022[44] - The company's total liabilities as of December 31, 2023, were RMB 66,351,000, reflecting an increase from RMB 61,849,000 in the previous year[152] Store Operations - As of December 31, 2023, the company had a total of 1,170 stores, an increase of 75 stores compared to 1,095 stores as of December 31, 2022[179] - The number of new stores opened during the year reached 215, achieving 165.38% of the annual target, marking a historical high[182] - The proportion of shopping mall stores reached 66.7% in 2023, up from 62.1% in 2022[180] Product Development and Sales - The online sales team successfully launched three new products, with "萌熊" ranking first in both sales volume and revenue, while "心想事橙" and "大橘大利" ranked fifth and twelfth in sales volume, respectively[73] - Launched 45 new products during key festivals, with 12 functional products as the main type for 2023[186] - Increased sales in 2023 compared to 2022, with monthly sales growth rates fluctuating between -10% to 54.7%[190] Marketing and Customer Engagement - The group plans to enhance its membership system by providing better rewards and services to meet customer needs, utilizing various platforms for user feedback[71] - Expanded into new platforms, including Kuaishou and Jingxi, to enhance brand exposure[191] - Engaged in overseas social media content production to drive traffic to the website[198] Financial Management - The company has not utilized any derivative contracts to hedge against interest rate risks, but management will consider hedging when necessary[143] - The company’s financial risk management policies include monitoring cash flow and maintaining sufficient cash levels to mitigate liquidity risks[151] Compliance and Corporate Governance - The company has not granted any share options during the fiscal year ending December 31, 2023, in compliance with the listing rules[122] - The company is required to transfer 10% of its after-tax profits to statutory surplus reserves until the reserve balance reaches 50% of registered capital[130]

Financial Performance - Revenue increased by 43.6% to approximately RMB 499,688,000 (2022: RMB 348,002,000) [2] - Gross profit rose by 46.6% to approximately RMB 300,877,000 (2022: RMB 205,248,000) [2] - Profit attributable to owners increased by 62.0% to approximately RMB 173,734,000 (2022: RMB 107,250,000) [2] - Earnings per share increased by 62.0% to approximately RMB 69.85 (2022: RMB 43.12) [2] - Total comprehensive income for the year was RMB 173,483,000, compared to RMB 102,155,000 in the previous year [9] - Operating profit increased to RMB 210,272,000, up from RMB 133,990,000 in the previous year [3] - The group's annual profit for the year was approximately RMB 173,774,000, an increase of about RMB 66,516,000 or 62.0% compared to RMB 107,258,000 for the previous year [139] - The group's gross profit for the year was approximately RMB 300,877,000, an increase of about RMB 95,629,000 or 46.6% from RMB 205,248,000 last year, with a gross margin rising from 59.0% to 60.2% [132] Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.3864 per share, equivalent to RMB 34.98 per share, totaling RMB 87,000,000, subject to shareholder approval [19] - The company reported a proposed final dividend of 38.64 HKD cents per share, amounting to approximately RMB 87 million, compared to RMB 54.991 million in the previous year [45] Store Expansion and Retail Performance - The company opened a total of 329 stores during the year, with 253 stores completed, including 209 new stores, 24 relocated stores, and 20 renovated stores [37] - The number and quality of specialty stores have significantly increased, contributing to market expansion [31] - The company reported a significant increase in retail performance, exceeding expectations and showing substantial growth [31] - As of December 31, 2023, the total number of stores increased to 1,161, up from 1,088 in 2022, representing a growth of 6.7% [59] Online and Offline Business Performance - Online sales reached approximately RMB 237 million, achieving 112.9% of the annual target and a year-on-year growth of 25.72% [65] - Offline business revenue was approximately RMB 282,441,000, up about RMB 104,199,000 or 58.5% from RMB 178,242,000 last year [129] - Online business revenue reached approximately RMB 211,468,000, an increase of about RMB 45,059,000 or 27.1% compared to RMB 166,409,000 last year [129] Marketing and Brand Development - The company launched 1 offline pop-up event, 3 brand train promotional activities, and participated in 12 government-led brand exhibitions throughout the year [35] - The online business team published 314 videos on their own account, achieving a total exposure of over 140 million and 2.516 million interactions [40] - The company has successfully improved brand recognition and competitiveness through optimized market layout and expansion into better channels and shopping areas [56] - The company participated in the Malaysia Cultural Expo, showcasing its brand and attracting significant audience engagement [71] Product Development and Innovation - The company completed the design and development of large set packaging, enhancing the perceived value of high-end products [74] - The company launched 36 new regular products and successfully transitioned 22 out of 25 trial products to regular status, achieving a success rate of 88% [106] - The company has developed and optimized functional products to increase product value and control costs, continuously pushing for innovation [107] Operational Efficiency and Supply Chain Management - The production team improved efficiency through technology upgrades and self-developed equipment, ensuring supply amidst increased market demand [77] - The company has implemented a new human resources performance system to enhance employee motivation and align individual goals with company objectives [150] - The company is committed to enhancing its operational efficiency through the improvement of existing facilities while expanding its production capabilities [180] - The company has upgraded its automatic rounding processing technology, effectively reducing labor intensity and improving operational efficiency [111] Financial Position and Assets - Non-current assets totaled RMB 289,458,000 as of December 31, 2023, compared to RMB 280,367,000 as of December 31, 2022 [192] - Current assets increased to RMB 641,319,000 as of December 31, 2023, from RMB 525,190,000 in the previous year [192] - The company's cash and bank balances increased to RMB 67,381,000 as of December 31, 2023, from RMB 27,160,000 in the previous year [192] - The group's inventory as of December 31, 2023, was approximately RMB 248,136,000, an increase of about RMB 3,706,000 or 1.5% from RMB 244,430,000 last year [141] Legal and Compliance Matters - The company is currently in litigation regarding three patent infringement cases, with one case scheduled for trial in February 2024 [153] - The company has strengthened internal governance, addressing six cases of violations of company conduct standards during the year [149] Social Responsibility and Community Engagement - The company received the "International Rehabilitation Centennial Contribution Award" for its contributions to the rehabilitation industry, recognizing its commitment to social responsibility [119] - The company has implemented a special development fund to support employment for people with disabilities and organized the first sports meeting for disabled employees [94] Membership and Customer Engagement - The company plans to enhance its membership system by offering better rewards and services to meet customer needs [38] - The company aims to enhance its online membership system to convert traffic into loyal customers, creating long-term brand value [70]

[Company Information](index=4&type=section&id=Company%20Information) Provides essential corporate details including board members, registered office, stock information, auditors, legal advisors, and banking relationships [Directors and Company Secretary](index=4&type=section&id=Directors%20and%20Company%20Secretary) Details the composition of the Board of Directors, including executive and independent non-executive directors, and the company secretary - Mr. Luo Hongping was appointed Executive Director on **February 1, 2023**[47](index=47&type=chunk)[264](index=264&type=chunk) [Registered Office and Principal Place of Business](index=4&type=section&id=Registered%20Office%20and%20Principal%20Place%20of%20Business) Specifies the company's registered office in the Cayman Islands and its primary operational location in Chongqing, China - The company is registered in the Cayman Islands with its main operations in Chongqing, China[47](index=47&type=chunk)[275](index=275&type=chunk) [Principal Share Registrar and Stock Code](index=5&type=section&id=Principal%20Share%20Registrar%20and%20Stock%20Code) Identifies the company's stock code and the locations of its principal and Hong Kong share registrars - The company's stock code is **837**, and its Hong Kong share registrar is Tricor Investor Services Limited[44](index=44&type=chunk)[52](index=52&type=chunk) [Auditor and Legal Advisor](index=5&type=section&id=Auditor%20and%20Legal%20Advisor) Lists the company's auditor as Crowe (HK) CPA Limited and its legal advisor as Hastings & Co - The auditor is Crowe (HK) CPA Limited, and the legal advisor is Hastings & Co[52](index=52&type=chunk)[78](index=78&type=chunk) [Principal Bankers and Company Website](index=5&type=section&id=Principal%20Bankers%20and%20Company%20Website) Provides the company's main banking partners and its official website address - The company's principal bankers include China Construction Bank and Agricultural Bank of China, and its website is www.ctans.com[52](index=52&type=chunk)[78](index=78&type=chunk) [Financial Highlights](index=7&type=section&id=Financial%20Highlights) Presents a concise overview of the company's key financial performance and liquidity metrics for the period ended June 30, 2023 [Financial Highlights Overview](index=7&type=section&id=Financial%20Highlights%20Overview) Summarizes significant financial performance metrics for the six months ended June 30, 2023, including revenue, profit, EPS, and gross margin Financial Highlights for the Six Months Ended June 30, 2023 | Indicator | 2023 (RMB '000) | 2022 (RMB '000) | Percentage Change | | :--- | :--- | :--- | :--- | | Revenue | 256,773 | 167,086 | 53.7% | | Cost of Sales | (101,888) | (66,890) | 52.3% | | Gross Profit | 154,885 | 100,196 | 54.6% | | Gross Margin | 60.3% | 60.0% | 0.3 percentage points | | Profit Before Tax | 121,234 | 70,387 | 72.2% | | Profit for the Period | 93,948 | 55,047 | 70.7% | | Profit Attributable to Owners of the Company | 93,880 | 55,028 | 70.6% | | Basic Earnings Per Share (RMB cents) | 37.7 | 22.1 | 70.6% | Liquidity and Gearing | Indicator | June 30, 2023 | December 31, 2022 | Percentage Change | | :--- | :--- | :--- | :--- | | Current Ratio | 6.36 | 7.22 | (11.9)% | | Quick Ratio | 3.91 | 4.54 | (13.9)% | | Gearing Ratio | Not applicable | Not applicable | Not applicable | - The company had no interest-bearing bank borrowings as of June 30, 2023, and December 31, 2022, rendering the gearing ratio inapplicable[55](index=55&type=chunk) [Chairman's Statement](index=8&type=section&id=Chairman's%20Statement) The Chairman's statement addresses shareholders, reflecting on post-pandemic recovery, market strategies, and expressing gratitude to stakeholders [To Shareholders](index=9&type=section&id=To%20Shareholders) The Chairman's address to shareholders, covering business recovery post-pandemic, brand and market efforts, and acknowledgments - Post-pandemic, the company's production and operations rapidly normalized, with marketing performance showing steady improvement[84](index=84&type=chunk)[85](index=85&type=chunk) - The company will celebrate its **30th anniversary**, planning to award long-serving employees and franchisees[60](index=60&type=chunk) [Company Development Review](index=9&type=section&id=Company%20Development%20Review) Reviews the group's adherence to its three-year development plan and annual work initiatives, emphasizing quality and brand reputation amidst market recovery - The company strictly implemented its third three-year development plan and annual key work initiatives, maintaining its overall direction and goals[59](index=59&type=chunk) - Emphasizes quality and brand awareness, requiring all departments to prioritize brand reputation and control defective products[67](index=67&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) Provides an in-depth review of the company's operational and financial performance, strategic initiatives, and future outlook [Management Review](index=11&type=section&id=Management%20Review) Reviews the first half of 2023, highlighting positive market retail and marketing performance, channel expansion, and a focus on product quality and brand reputation - In the first half of 2023, market retail and company marketing performance showed positive trends, with good progress in online and offline expansion[65](index=65&type=chunk) - The company emphasized the need to "do product quality better, and then build the brand," stressing quality as the brand's guarantee[67](index=67&type=chunk) - The H1 work review meeting objectively summarized work, proposed specific improvement projects and key directions for H2, emphasizing rationality and awareness of shortcomings[92](index=92&type=chunk)[93](index=93&type=chunk) [Business Review](index=13&type=section&id=Business%20Review) Comprehensive review of business segments, including offline and online sales, international expansion, product innovation, production, logistics, brand building, and human resources [Offline Business](index=13&type=section&id=Offline%20Business) Reports a 50.91% increase in offline POS sales and an addition of 31 stores, alongside efforts to enhance member services, group purchases, and store image - As of June 30, 2023, Tan Mujiang had **1,126 stores**, an increase of **31** from the end of 2022[69](index=69&type=chunk) - Offline business POS sales achieved **71.84%** of the annual target, with a **50.91% year-on-year increase**[95](index=95&type=chunk) Store Count Distribution | Type | June 30, 2023 (Franchised Stores) | June 30, 2023 (Directly Operated Stores) | December 31, 2022 (Franchised Stores) | December 31, 2022 (Directly Operated Stores) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 1,119 | 1 | 1,088 | 1 | | Hong Kong | – | 2 | – | 2 | | Other Countries and Regions | 4 | – | 4 | – | | **Total** | **1,123** | **3** | **1,092** | **3** | - Member redemption orders increased by **123.56% year-on-year**, indicating significant growth in member activity[72](index=72&type=chunk) - Group purchase business gained momentum, with **RMB 3.9 million** (35% year-on-year increase) directly from the group and **RMB 21.77 million** from specialty stores[98](index=98&type=chunk) - **21 new products** were launched during the reporting period, including **12 functional new products**, enriching the product line[130](index=130&type=chunk) - **119 stores** were renovated, with **103 new stores**, **70%** of which adopted the Morandi style[132](index=132&type=chunk) - **29 repair stations** operated efficiently, completing **107,043 repair items**, enhancing the professionalism of repair services[132](index=132&type=chunk) [Online Business](index=16&type=section&id=Online%20Business) Online sales reached RMB 122.9 million, a 39% increase, driven by new platforms and promotional strategies, with plans for further platform management and marketing - The e-commerce team's H1 sales reached **RMB 122.9 million**, completing **115.4%** of the semi-annual target, a **39% year-on-year increase**, marking the highest growth rate in history[133](index=133&type=chunk) - New channels and promotional models generated **RMB 11.2 million** in revenue, accounting for **9.1%** of total business volume[105](index=105&type=chunk) - Newly entered Kuaishou and Jingxi platforms, collaborated with Dongfang Zhenxuan for Douyin live streams, accumulating **76.5356 million exposures** and **RMB 0.705 million** in revenue[134](index=134&type=chunk)[136](index=136&type=chunk) - In H2, the company will continue to strengthen platform management, explore business potential, and plan marketing activities for Qixi Festival, Teacher's Day, wedding season, and Double Eleven[137](index=137&type=chunk) [Overseas Business](index=18&type=section&id=Overseas%20Business) Overseas offline shipments, cross-border e-commerce, and Hong Kong direct store sales all grew, with plans for new store expansion and market penetration Overseas Business Sales Growth | Indicator | H1 2023 (RMB/HKD) | Year-on-Year Growth | | :--- | :--- | :--- | | Overseas Offline Shipments | Approx. RMB 2.23 million | 42.95% | | Cross-border E-commerce Platform Sales | Approx. RMB 0.35 million | 34.48% | | Hong Kong Direct Store Sales | Approx. HKD 2.14 million | 52.89% | - The first Morandi-style new store in Toronto, Canada, is set to open, with new stores in Miami, Thailand, and Malaysia currently being scouted[139](index=139&type=chunk) - Plans to participate in the Malaysia Cultural Expo in November and has reached preliminary cooperation with HAIR CORNER, a renowned hair salon in Festival Walk, Hong Kong[139](index=139&type=chunk) [Creative R&D](index=18&type=section&id=Creative%20R%26D) The creative design center launched 17 new products with a 90% success rate, focusing on children's combs, massage combs, and new craft products - Completed design and development of **5 new product projects**, launching a total of **17 new products**, with a trial sales success rate of **90%**[113](index=113&type=chunk) - Key projects include children's comb category (**3 new products**), Zhi series functional new products (**5 handled massage combs**), improved combing function for inlaid tooth combs (**4 new products**), and new craft product development such as lacquerware, colored mother-of-pearl inlay, and cloisonné[111](index=111&type=chunk)[112](index=112&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - In H2, the company will continue to launch functional products, enhance design conversion capabilities, upgrade product elimination plans, and create online and offline bestsellers[114](index=114&type=chunk) [Production Technology](index=20&type=section&id=Production%20Technology) Wanxian factory produced 2.29 million units, with advancements in automated production for hair combs, wooden combs, and research into anti-cracking technologies - Wanxian factory produced **2.29 million units** in H1, an increase of **0.24 million units year-on-year**[114](index=114&type=chunk) - The automatic tooth insertion project for hair comb rubber pads has been fully put into production, with a processing efficiency of **52 sheets/hour**[115](index=115&type=chunk) - The automatic sanding prototype for wooden comb teeth has entered the pilot production stage, and key unit verification for automatic gluing and automatic profiling of wooden combs has been completed[145](index=145&type=chunk)[116](index=116&type=chunk)[146](index=146&type=chunk) - Research is underway on anti-cracking surface treatment technology for comb teeth roots to enhance product adaptability to environmental climate conditions[117](index=117&type=chunk) [Logistics and Distribution](index=21&type=section&id=Logistics%20and%20Distribution) The logistics center dispatched 2.62 million units, ensuring timely delivery and strengthening quality control processes - The logistics center dispatched approximately **2.62 million units** in H1, completing distribution tasks on time[148](index=148&type=chunk) - Continuously strengthened product quality supervision and management, implementing stricter quality control processes[148](index=148&type=chunk) [Brand Building](index=21&type=section&id=Brand%20Building) The company received the "Rehabilitation International Centennial Contribution Award," was recognized for brand value, and organized a design competition, with plans for 30th-anniversary celebrations and new media promotions - The company received the **"Rehabilitation International Centennial Contribution Award"**, recognizing its contributions to rehabilitation and employment for people with disabilities[175](index=175&type=chunk) - The company was selected for the **"2021-2022 Chongqing Cultural and Tourism Enterprise Brand Value List"**, becoming a "role model"[150](index=150&type=chunk) - Jointly organized the "Beauty of Comb and Ornament" design competition with "Chinese Handicraft" magazine, receiving **289 pieces/sets of works**[151](index=151&type=chunk) - The company plans to hold its **30th-anniversary celebration** in H2 2023, reviewing its development history[123](index=123&type=chunk) - In the future, it will continue to promote the brand through new media channels and offline brand activities, primarily focusing on wooden comb DIY experiences[152](index=152&type=chunk) [Human Resources and Comprehensive Governance](index=24&type=section&id=Human%20Resources%20and%20Comprehensive%20Governance) Focuses on optimizing HR and performance systems, promoting employment for people with disabilities, and strengthening governance to combat irregularities - The company re-established its human resource and compensation performance system to motivate employees and drive company development[124](index=124&type=chunk) - The company is committed to promoting employment for people with disabilities, setting up a special development fund, and improving rehabilitation facilities and equipment[181](index=181&type=chunk) - In H1, **four non-compliant stores** were investigated, with **RMB 0.055 million** in fines confiscated; **20 cases of counterfeit brands** were documented and litigated, with **two cases concluded** and **RMB 0.06 million** recovered[125](index=125&type=chunk) - Internal management issues such as violations of prohibited words on online platforms, marketing personnel professional ethics issues, inadequate review of exhibition materials, and delayed follow-up on abnormal deductions from e-commerce platforms were criticized[153](index=153&type=chunk) - The logistics center and financial management center were commended for effectively reducing costs in packaging material procurement price negotiations[153](index=153&type=chunk) - The company faces issues such as unclear optimization effects of its product portfolio strategy and increased inventory of high-end materials, leading to material resource waste and increased costs[155](index=155&type=chunk) [Financial Review](index=26&type=section&id=Financial%20Review) Reviews the financial performance for the six months ended June 30, 2023, including revenue growth, profit, liquidity, capital expenditure, and risk factors [Revenue](index=26&type=section&id=Revenue) Revenue increased by 53.7% to RMB 256.773 million, driven by market recovery, with gift sets being the primary income source - Revenue increased by **53.7%** to **RMB 256.773 million**, primarily due to market demand recovery after the lifting of pandemic control measures[156](index=156&type=chunk) Revenue Breakdown by Product Category | Sales Category | 2023 (RMB '000) | Share (%) | 2022 (RMB '000) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Combs | 25,284 | 9.8 | 24,001 | 14.4 | | Mirrors | 306 | 0.1 | 132 | - | | Gift Sets | 228,692 | 89.1 | 141,070 | 84.4 | | Other Ornaments | 2,072 | 0.8 | 1,802 | - | | Franchise Fee Income | 420 | 0.2 | 80 | - | | **Total** | **256,773** | **100.0** | **167,086** | **100.0** | [Cost of Sales](index=26&type=section&id=Cost%20of%20Sales) Cost of sales increased by 52.3% to RMB 101.888 million, mainly due to higher sales volume and raw material costs - Cost of sales increased by **52.3%** to **RMB 101.888 million**, primarily due to increased sales volume and raw material costs[183](index=183&type=chunk) [Gross Profit and Gross Margin](index=26&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased by 54.6% to RMB 154.885 million, with gross margin rising to 60.3%, attributed to a higher proportion of high-margin products in the sales mix - Gross profit increased by **54.6%** to **RMB 154.885 million**[183](index=183&type=chunk) - Gross margin increased from **60.0%** in 2022 to **60.3%** in 2023, mainly due to an increased proportion of higher-margin products in the sales mix[183](index=183&type=chunk) [Other Income](index=26&type=section&id=Other%20Income) Other income increased by 36.6% to RMB 25.082 million, driven by VAT refunds and bank interest, partially offset by reduced fair value gains on financial assets - Other income increased by **36.6%** to **RMB 25.082 million**[184](index=184&type=chunk) - The main growth came from China's VAT preferential refunds and bank interest income, partially offset by a decrease in fair value gains on financial assets measured at fair value through profit or loss[184](index=184&type=chunk) Other Income Details | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Government Subsidies | 404 | 969 | | Bank Interest Income | 6,857 | 202 | | Fair Value Gains | 883 | 2,698 | | VAT Preferential Refunds | 13,772 | 10,696 | | Investment Property Rental Income | 2,529 | 3,297 | | Net Exchange Gains | 2 | 5 | | Reversal of Trade Receivables Loss Provision | 7 | 52 | | Others | 628 | 442 | | **Total** | **25,082** | **18,361** | [Selling and Distribution Expenses](index=27&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased by 28.0% to RMB 39.715 million, mainly due to higher transportation and travel costs - Selling and distribution expenses increased by **28.0%** to **RMB 39.715 million**, mainly due to increased transportation and travel expenses[160](index=160&type=chunk) [Administrative Expenses](index=27&type=section&id=Administrative%20Expenses) Administrative expenses increased by 6.8% to RMB 15.543 million, primarily due to higher staff costs - Administrative expenses increased by **6.8%** to **RMB 15.543 million**, primarily due to increased staff costs[161](index=161&type=chunk) [Operating Profit](index=27&type=section&id=Operating%20Profit) Operating profit increased by 71.8% to RMB 121.508 million, driven by higher gross profit and other income, partially offset by increased selling, distribution, and administrative expenses - Operating profit increased by **71.8%** to **RMB 121.508 million**[162](index=162&type=chunk) - The increase was mainly attributable to a **RMB 54.689 million** increase in gross profit and a **RMB 6.802 million** increase in other income, partially offset by an **RMB 8.681 million** increase in selling and distribution expenses and an **RMB 1.078 million** increase in administrative expenses[162](index=162&type=chunk) [Finance Costs](index=27&type=section&id=Finance%20Costs) Finance costs were RMB 0.274 million, primarily from HKFRS 16-related expenses, with no bank loan interest - The company had no bank loans during the period, and finance costs of **RMB 0.274 million** primarily arose from finance costs under HKFRS 16[162](index=162&type=chunk) [Profit Before Tax](index=27&type=section&id=Profit%20Before%20Tax) Profit before tax increased by 72.2% to RMB 121.234 million, mainly due to higher operating profit - Profit before tax increased by **72.2%** to **RMB 121.234 million**, primarily due to increased operating profit[163](index=163&type=chunk) [Income Tax Expense](index=27&type=section&id=Income%20Tax%20Expense) Income tax expense increased by 77.9% to RMB 27.286 million, driven by higher profit before tax, with the effective tax rate rising to 22.5% - Income tax expense increased by **77.9%** to **RMB 27.286 million**, primarily due to increased profit before tax[164](index=164&type=chunk) - The effective tax rate increased by **0.7 percentage points** from **21.8%** in the same period of 2022 to **22.5%**[188](index=188&type=chunk) [Profit for the Period](index=27&type=section&id=Profit%20for%20the%20Period) Profit for the period increased by 70.7% to RMB 93.948 million - Profit for the period increased by **70.7%** to **RMB 93.948 million**[189](index=189&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with RMB 64.504 million in cash and no bank loans, ensuring sufficient working capital for the next twelve months - Cash and bank balances were **RMB 64.504 million** (end of 2022: RMB 27.160 million)[190](index=190&type=chunk) - The company has no bank loans and sufficient working capital to meet funding needs for at least the next twelve months[167](index=167&type=chunk)[192](index=192&type=chunk) [Cash Flow](index=28&type=section&id=Cash%20Flow) Cash and cash equivalents increased by RMB 37.344 million, primarily from operating activities, with net cash outflows from investing and financing activities - Cash and cash equivalents increased by **RMB 37.344 million**[191](index=191&type=chunk) Cash Flow Components | Item | Amount (RMB '000) | | :--- | :--- | | Net Cash from Operating Activities | 115,873 | | Net Cash Used in Investing Activities | (21,675) | | Net Cash Used in Financing Activities | (57,642) | | Net Effect of Exchange Rate Changes | 788 | [Capital Structure](index=28&type=section&id=Capital%20Structure) The gearing ratio is not applicable as the company has no interest-bearing bank loans - The company has no interest-bearing bank loans, so the gearing ratio is not applicable[213](index=213&type=chunk) [Pledge of Assets](index=28&type=section&id=Pledge%20of%20Assets) The company pledged RMB 3 million in bank deposits to secure financial guarantees for distributors - The company pledged **RMB 3 million** in bank deposits to obtain financial guarantees issued by banks to distribution agents[169](index=169&type=chunk) [Exchange Rate Risk](index=28&type=section&id=Exchange%20Rate%20Risk) The company's primary functional and operating currencies are RMB and HKD, exposing it to related exchange rate risks, but no significant risks from other currency fluctuations - The company's primary functional and operating currencies are RMB and HKD, exposing it to related exchange rate risks, but there are no significant risks from other exchange rate fluctuations[214](index=214&type=chunk) [Contingent Liabilities, Legal and Potential Proceedings](index=29&type=section&id=Contingent%20Liabilities%2C%20Legal%20and%20Potential%20Proceedings) No significant contingent liabilities or legal proceedings, except for an outstanding property ownership certificate issue in Jurong City, Jiangsu Province - The company has no significant contingent liabilities, legal proceedings, or potential lawsuits, but the ownership certificate for a property in Jurong City, Jiangsu Province, has not yet been obtained, and the developer has entered liquidation, with management assessing that the liquidator will continue to execute the sale and purchase agreement[172](index=172&type=chunk)[215](index=215&type=chunk) [Material Acquisitions and Disposals](index=29&type=section&id=Material%20Acquisitions%20and%20Disposals) There were no material acquisitions or disposals during the reporting period - There were no material acquisitions or disposals during the reporting period[216](index=216&type=chunk) [Significant Investments Held](index=29&type=section&id=Significant%20Investments%20Held) Investment properties had a carrying value of approximately RMB 97.120 million, with no revaluation during the period, and directors believe the carrying amount is not materially different from fair value - Investment properties had a carrying value of approximately **RMB 97.120 million**, were not revalued during the period, and directors believe the carrying amount is not materially different from fair value[217](index=217&type=chunk) [Going Concern](index=29&type=section&id=Going%20Concern) The company has sufficient financial resources and will continue to prepare financial statements on a going concern basis - The company has sufficient financial resources to continue operations and prepares financial statements on a going concern basis[196](index=196&type=chunk) [Future Outlook](index=30&type=section&id=Future%20Outlook) The company plans to uphold its values, optimize market channels, secure raw material supply, enhance production efficiency, innovate products, strengthen brand, and improve cost accounting - Deeply practice corporate values, optimize domestic and international market channels, expand new resources, and ensure raw material reserves and market order supply[199](index=199&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Improve work efficiency, strengthen independent development and external introduction of process equipment technology, and fully utilize the new factory's South District to alleviate capacity shortages[200](index=200&type=chunk) - Continuously optimize the product system, improve the material supply structure, increase product gross margin, and launch IP collaborations, co-branded products, bestsellers, and traditional handcrafted products[201](index=201&type=chunk)[221](index=221&type=chunk) - Strengthen brand building and communication, deepen human resource and compensation performance system development, purify the market environment, and enhance credibility[202](index=202&type=chunk)[222](index=222&type=chunk) - Deepen single-product cost accounting to provide decision-making basis for market strategies and product system optimization[223](index=223&type=chunk) [Other Information](index=31&type=section&id=Other%20Information) Covers additional corporate information including principal business, directors' interests, shareholdings, option schemes, capital commitments, public float, and corporate governance [Principal Business](index=31&type=section&id=Principal%20Business) The group primarily designs, manufactures, and distributes traditional Chinese cultural wooden ornaments made from natural wood, sold through franchised stores, distribution networks, and direct-operated stores under the "Tan Mujiang" brand - The principal business involves designing, manufacturing, and distributing small wooden ornaments with traditional Chinese cultural characteristics made from natural wood, with products mainly categorized into wooden/horn combs, pocket wooden mirrors, other wooden ornaments, and gift sets[205](index=205&type=chunk) - Products are primarily sold through franchised stores, distribution networks, and direct-operated stores under the brand "Tan Mujiang"[205](index=205&type=chunk) [Directors' Interests in Competing Businesses](index=31&type=section&id=Directors'%20Interests%20in%20Competing%20Businesses) As of June 30, 2023, no directors held interests in any business directly or indirectly competing with the group - No directors held any interests in any business directly or indirectly competing with the Group[206](index=206&type=chunk) [Directors' Interests in Securities](index=31&type=section&id=Directors'%20Interests%20in%20Securities) As of June 30, 2023, Mr. Tan Chuanhua held 67.43% of shares through controlled entities, and Mr. Yang Tiannan beneficially owned 0.99% of shares Directors' Interests in the Company's Shares | Director Name | Capacity/Nature of Interest | Number of Securities | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Tan Chuanhua | Interest in controlled corporation | 167,700,000 | 67.43% | | Yang Tiannan | Beneficial owner | 2,480,000 | 0.99% | Directors' Interests in Shares of Associated Corporations | Director Name | Name of Associated Corporation | Capacity/Nature of Interest | Approximate Percentage of Interest in Associated Corporation | | :--- | :--- | :--- | :--- | | Tan Chuanhua | Lingchang | Beneficial owner | 51% | [Major Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=32&type=section&id=Major%20Shareholders'%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2023, Mr. Tan Chuanhua, Ms. Fan Chengqin, and Lingchang Investment Limited were major shareholders, each holding a 67.43% long position in the company's shares Major Shareholders' Interests in Shares and Underlying Shares of the Company | Name | Capacity/Nature of Interest | Number of Shares | Type | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | | Tan Chuanhua | Interest in controlled corporation | 167,700,000 | Long position | 67.43% | | Fan Chengqin | Interest in controlled corporation | 167,700,000 | Long position | 67.43% | | Lingchang | Beneficial owner | 167,700,000 | Long position | 67.43% | - Tan Chuanhua holds a **51%** interest in Lingchang, and Fan Chengqin holds a **49%** interest in Lingchang; both are deemed to have an interest in the shares held by Lingchang[225](index=225&type=chunk)[227](index=227&type=chunk) [Share Option Scheme](index=32&type=section&id=Share%20Option%20Scheme) The share option scheme adopted in 2009 expired on December 28, 2019. As of June 30, 2023, 400,000 unexercised share options were granted to Ms. Jian Kejia and Mr. Luo Hongping - The share option scheme was adopted in 2009 and expired on **December 28, 2019**[228](index=228&type=chunk) - As of June 30, 2023, **400,000 unexercised share options** were granted to Ms. Jian Kejia, Vice President, and Mr. Luo Hongping, Executive Director, with an exercise price of **HKD 4.896**[229](index=229&type=chunk)[253](index=253&type=chunk) [Capital Commitments](index=33&type=section&id=Capital%20Commitments) As of June 30, 2023, the group had contracted but unprovided capital commitments of approximately RMB 50.399 million for property, plant, and equipment acquisition, a significant increase from the end of 2022 - As of June 30, 2023, contracted but unprovided capital commitments amounted to approximately **RMB 50.399 million**[230](index=230&type=chunk) - This amount significantly increased from **RMB 16.279 million** as of December 31, 2022[33](index=33&type=chunk) [Public Float](index=33&type=section&id=Public%20Float) As of the reporting date, at least 25% of the company's issued share capital was held by public shareholders - At least **25%** of the company's issued share capital is held by public shareholders[211](index=211&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=34&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of its listed securities - During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[257](index=257&type=chunk) [Use of Proceeds from Listing](index=34&type=section&id=Use%20of%20Proceeds%20from%20Listing) The net proceeds from listing were approximately RMB 116.8 million, with RMB 89 million utilized by June 30, 2023, leaving an unused balance of RMB 27.8 million, mainly for upgrading production machinery and the logistics center - Net proceeds from listing were approximately **RMB 116.8 million**[257](index=257&type=chunk) - As of June 30, 2023, approximately **RMB 89.0 million** of the net proceeds had been utilized, with an unused balance of approximately **RMB 27.8 million**[233](index=233&type=chunk) Use of Listing Proceeds and Utilization Status | Purpose | Planned Use Amount (RMB millions) | Actual Amount Used as of June 30, 2023 (RMB millions) | Unused Amount as of June 30, 2023 (RMB millions) | Estimated Use Time | | :--- | :--- | :--- | :--- | :--- | | Enhance design and product development capabilities, improve operational efficiency | 25.5 | 25.5 | – | Not applicable | | Construct new factory, logistics center, purchase production machinery and equipment | 27.5 | 27.5 | – | Not applicable | | Expand sales network and sales support services | 16.5 | 16.5 | – | Not applicable | | General working capital | 12.2 | 12.2 | – | Not applicable | | Upgrade production machinery and environmental protection infrastructure | 18.0 | 5.3 | 12.7 | January 2024 | | Upgrade logistics center | 17.1 | 2.0 | 15.1 | March 2024 | | **Total** | **116.8** | **89.0** | **27.8** | | [Corporate Governance Practices](index=35&type=section&id=Corporate%20Governance%20Practices) The Board is committed to complying with the Corporate Governance Code, implementing measures to strengthen internal controls and director training to maintain high standards - The Board is committed to complying with the Corporate Governance Code and has adopted measures to strengthen internal control systems and director professional training[235](index=235&type=chunk) - During the reporting period, the company consistently complied with all applicable code provisions of the Corporate Governance Code[235](index=235&type=chunk) [Standard Code for Securities Transactions](index=35&type=section&id=Standard%20Code%20for%20Securities%20Transactions) The company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, providing written guidelines to ensure compliance - The company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers and provided written guidelines to directors and senior management[236](index=236&type=chunk) - Each director confirmed compliance with the Standard Code throughout the reporting period, with no instances of staff violating the written guidelines[236](index=236&type=chunk) [Audit Committee](index=35&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, reviewed the interim report's financial information, confirming compliance with accounting standards and listing rules - The Audit Committee consists of **three independent non-executive directors**, with Mr. Zhou Jinrong, the chairman, possessing recognized accounting professional qualifications[262](index=262&type=chunk) - The committee reviewed the financial information in this interim report, agreed with the accounting methods adopted by the company, and confirmed that the financial statements comply with accounting standards and listing rules[237](index=237&type=chunk) [Appointment of Executive Director](index=36&type=section&id=Appointment%20of%20Executive%20Director) The Board approved the appointment of Mr. Luo Hongping as an Executive Director, effective February 1, 2023 - Mr. Luo Hongping was appointed Executive Director of the company on **February 1, 2023**[264](index=264&type=chunk) [Dividends](index=36&type=section&id=Dividends) The Board resolved not to declare an interim dividend for the six months ended June 30, 2023, having paid a final dividend for the year ended December 31, 2022 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2023[238](index=238&type=chunk) - The company paid a final dividend of **HKD 25.03 cents per share** for the year ended December 31, 2022, totaling approximately **HKD 62.253 million** (approximately **RMB 54.991 million**) on June 30, 2023[265](index=265&type=chunk) [Events After Reporting Period](index=36&type=section&id=Events%20After%20Reporting%20Period) There were no significant events after the reporting period up to the date of this report - As of the date of this report, there were no significant events after the reporting period[239](index=239&type=chunk) [Information Disclosure](index=36&type=section&id=Information%20Disclosure) The interim report will be dispatched to shareholders and published on the HKEX and company websites - The interim report will be dispatched to shareholders and published on the HKEX website (http://www.hkexnews.hk) and the company website (http://www.ctans.com)[240](index=240&type=chunk) [Condensed Consolidated Statement of Profit or Loss](index=37&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) Presents the company's condensed consolidated statement of profit or loss for the six months ended June 30, 2023, detailing revenue, costs, and profit [Overview of Condensed Consolidated Statement of Profit or Loss](index=37&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) Provides a summary of the condensed consolidated statement of profit or loss for the six months ended June 30, 2023, including revenue, gross profit, profit for the period, and basic and diluted EPS Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended June 30, 2023) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Revenue | 256,773 | 167,086 | | Cost of Sales | (101,888) | (66,890) | | Gross Profit | 154,885 | 100,196 | | Other Income | 25,082 | 18,361 | | Selling and Distribution Expenses | (39,715) | (31,034) | | Administrative Expenses | (15,543) | (14,549) | | Other Operating Expenses | (3,201) | (2,259) | | Operating Profit | 121,508 | 70,715 | | Finance Costs | (274) | (328) | | Profit Before Tax | 121,234 | 70,387 | | Income Tax | (27,286) | (15,340) | | Profit for the Period | 93,948 | 55,047 | | Profit Attributable to Owners of the Company | 93,880 | 55,028 | | Non-controlling Interests | 68 | 19 | | Basic and Diluted Earnings Per Share | RMB 37.7 cents | RMB 22.1 cents | [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=38&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Presents the company's condensed consolidated statement of profit or loss and other comprehensive income for the six months ended June 30, 2023 [Overview of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=38&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) Summarizes the condensed consolidated statement of profit or loss and other comprehensive income for the six months ended June 30, 2023, showing profit for the period and total comprehensive income Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the Six Months Ended June 30, 2023) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Profit for the Period | 93,948 | 55,047 | | **Other Comprehensive Income for the Period** | | | | Exchange differences on translation from functional currency to presentation currency | 3,429 | 1,939 | | Exchange differences arising from translation of overseas operations | (2,634) | (1,914) | | **Other Comprehensive Income for the Period, Net of Tax of Zero** | **795** | **25** | | **Total Comprehensive Income for the Period** | **94,743** | **55,072** | | **Attributable to:** | | | | Owners of the Company | 94,675 | 55,053 | | Non-controlling Interests | 68 | 19 | | **Total Comprehensive Income for the Period** | **94,743** | **55,072** | [Condensed Consolidated Statement of Financial Position](index=39&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Presents the company's condensed consolidated statement of financial position as of June 30, 2023, detailing assets, liabilities, and equity [Overview of Condensed Consolidated Statement of Financial Position](index=39&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Provides a summary of the condensed consolidated statement of financial position as of June 30, 2023, highlighting total assets less current liabilities, net assets, and key asset components Condensed Consolidated Statement of Financial Position (As of June 30, 2023) | Item | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 102,222 | 91,370 | | Right-of-use Assets | 36,477 | 38,110 | | Investment Properties | 97,120 | 97,120 | | Unpledged Fixed Bank Deposits | 53,000 | 53,000 | | Other Receivables, Deposits and Prepayments | 206 | 767 | | **Total Non-current Assets** | **289,025** | **280,367** | | **Current Assets** | | | | Inventories | 220,421 | 244,430 | | Trade Receivables | 5,101 | 5,349 | | Other Receivables, Deposits and Prepayments | 31,737 | 7,539 | | Financial Assets at Fair Value Through Profit or Loss | – | 57,710 | | Unpledged Fixed Bank Deposits (maturing > 3 months but < 1 year) | 250,000 | 180,000 | | Cash and Bank Balances | 64,504 | 27,160 | | Pledged Bank Deposits | – | 3,000 | | **Total Current Assets** | **571,763** | **525,190** | | **Current Liabilities** | | | | Trade Payables | 8,492 | 4,764 | | Other Payables and Accruals | 52,078 | 44,759 | | Income Tax Payable | 30,665 | 28,522 | | Lease Liabilities | 1,452 | 1,939 | | **Total Current Liabilities** | **(92,687)** | **(79,984)** | | **Net Current Assets** | **479,076** | **445,206** | | **Total Assets Less Current Liabilities** | **768,101** | **725,573** | | **Non-current Liabilities** | | | | Deferred Tax Liabilities | 28,418 | 23,779 | | Deferred Income | 519 | 530 | | Lease Liabilities | 9,420 | 9,385 | | **Total Non-current Liabilities** | **(38,357)** | **(33,694)** | | **Net Assets** | **729,744** | **691,879** | | **Equity and Reserves** | | | | Share Capital | 2,189 | 2,189 | | Reserves | 723,428 | 685,631 | | Equity Attributable to Owners of the Company | 725,617 | 687,820 | | Non-controlling Interests | 4,127 | 4,059 | | **Total Equity** | **729,744** | **691,879** | [Condensed Consolidated Statement of Changes in Equity](index=40&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Presents the company's condensed consolidated statement of changes in equity for the six months ended June 30, 2023, showing movements in total equity [Overview of Condensed Consolidated Statement of Changes in Equity](index=40&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Summarizes the condensed consolidated statement of changes in equity for the six months ended June 30, 2023, showing the increase in total equity driven by profit and exchange differences Condensed Consolidated Statement of Changes in Equity (For the Six Months Ended June 30, 2023) | Item | Share Capital (RMB '000) | Share Premium (RMB '000) | Capital Reserve (RMB '000) | Overall Revaluation Reserve (RMB '000) | Other Reserves (RMB '000) | Property Revaluation Reserve (RMB '000) | Share-based Payment Reserve (RMB '000) | Foreign Currency Translation Reserve (RMB '000) | Retained Profits (RMB '000) | Non-controlling Interests (RMB '000) | Total Equity (RMB '000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | January 1, 2022 | 2,189 | 110,503 | 10,275 | 58,450 | 17,542 | 12,245 | 406 | (16,085) | 472,871 | 4,051 | 672,447 | | Profit for the Period | - | - | - | - | - | - | - | - | 55,028 | 19 | 55,047 | | Exchange Differences | - | - | - | - | - | - | - | 25 | - | - | 25 | | Total Comprehensive Income for the Period | - | - | - | - | - | - | - | 25 | 55,028 | 19 | 55,072 | | Dividends | - | - | - | - | - | - | - | - | (55,215) | - | (55,215) | | Transfer to Retained Profits | - | - | - | - | - | - | (144) | - | 144 | - | - | | June 30, 2022 | 2,189 | 110,503 | 10,275 | 58,450 | 17,542 | 12,245 | 262 | (16,060) | 472,828 | 4,070 | 672,304 | | January 1, 2023 | 2,189 | 110,503 | 10,275 | 58,512 | 17,542 | 12,245 | 262 | (21,188) | 497,480 | 4,059 | 691,879 | | Profit for the Period | - | - | - | - | - | - | - | - | 93,880 | 68 | 93,948 | | Exchange Differences | - | - | - | - | - | - | - | 795 | - | - | 795 | | Total Comprehensive Income for the Period | - | - | - | - | - | - | - | 795 | 93,880 | 68 | 94,743 | | Dividends | - | - | - | - | - | - | - | - | (56,878) | - | (56,878) | | June 30, 2023 | 2,189 | 110,503 | 10,275 | 58,512 | 17,542 | 12,245 | 262 | (20,393) | 534,482 | 4,127 | 729,744 | [Condensed Consolidated Statement of Cash Flows](index=41&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Presents the company's condensed consolidated statement of cash flows for the six months ended June 30, 2023, detailing cash movements from operating, investing, and financing activities [Overview of Condensed Consolidated Statement of Cash Flows](index=41&type=section&id=Overview%20of%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Summarizes the condensed consolidated statement of cash flows for the six months ended June 30, 2023, showing the net increase in cash and cash equivalents and contributions from various activities Condensed Consolidated Statement of Cash Flows (For the Six Months Ended June 30, 2023) | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | **Operating Activities** | | | | Cash Generated from Operations | 129,518 | 48,578 | | Interest Received | 6,857 | 202 | | Income Tax Paid | (17,753) | (7,447) | | Withholding Tax Paid | (2,749) | (2,761) | | **Net Cash from Operating Activities** | **115,873** | **38,572** | | **Investing Activities** | | | | Payments for Purchase of Property, Plant and Equipment | (13,313) | (9,033) | | Proceeds from Disposal of Property, Plant and Equipment | 45 | 58 | | Payments for Purchase of Financial Assets at Fair Value Through Profit or Loss | (109,800) | (139,110) | | Proceeds from Disposal of Financial Assets at Fair Value Through Profit or Loss | 168,393 | 239,058 | | Placement of Unpledged Fixed Bank Deposits | (70,000) | (68,000) | | Withdrawal of Pledged Bank Deposits | 3,000 | – | | **Net Cash (Used in)/from Investing Activities** | **(21,675)** | **22,973** | | **Financing Activities** | | | | Dividends Paid to Owners of the Company | (56,878) | (55,215) | | Payments for Principal Portion of Lease Liabilities | (490) | (389) | | Interest Paid | (274) | (328) | | **Net Cash Used in Financing Activities** | **(57,642)** | **(55,932)** | | **Net Increase in Cash and Cash Equivalents** | **36,556** | **5,613** | | Cash and Cash Equivalents at January 1 | 27,160 | 35,795 | | Net Effect of Foreign Exchange Rate Changes | 788 | (86) | | **Cash and Cash Equivalents at June 30** | **64,504** | **41,322** | [Notes to the Unaudited Interim Financial Report](index=42&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) Provides detailed notes to the unaudited interim financial report, covering general information, accounting policies, judgments, segment reporting, and financial instrument details [General Information](index=42&type=section&id=General%20Information) Provides general information about Tan Mujiang Holdings Limited, including its incorporation in the Cayman Islands and listing on the HKEX - Tan Mujiang Holdings Limited was incorporated in the Cayman Islands on **June 20, 2006**, and its shares are listed on the Main Board of the Hong Kong Stock Exchange[275](index=275&type=chunk) - The principal place of business is located in A-type factory building, Longbao Shuanghekou Light Industrial Park, Wanzhou District, Chongqing, China[275](index=275&type=chunk) [Basis of Preparation and Significant Accounting Policies Information](index=42&type=section&id=Basis%20of%20Preparation%20and%20Significant%20Accounting%20Policies%20Information) Details the basis of preparation for the interim financial report, compliance with HKAS 34 and Listing Rules, and the impact of new HKFRS standards [Statement of Compliance](index=42&type=section&id=Statement%20of%20Compliance) The interim financial statements are unaudited but have been reviewed by the company's review committee - The interim financial statements are unaudited but have been reviewed by the company's review committee[276](index=276&type=chunk) [Basis of Preparation of Financial Statements](index=42&type=section&id=Basis%20of%20Preparation%20of%20Financial%20Statements) The condensed consolidated interim financial statements are prepared on a historical cost basis, in accordance with HKAS 34 and Listing Rules disclosure requirements - The condensed consolidated interim financial statements are prepared on a historical cost basis and in accordance with HKAS 34 and the disclosure requirements of Appendix 16 to the Listing Rules[298](index=298&type=chunk) [Significant Accounting Policies Information](index=43&type=section&id=Significant%20Accounting%20Policies%20Information) Outlines the first-time application of new and revised HKFRS standards, noting no significant impact on the condensed consolidated interim financial statements - This period marks the first-time application of HKFRS 17 and related amendments, HKAS 1 and HKFRS Practice Statement 2 (Amendments) Disclosure of Accounting Policies, HKAS 8 (Amendments) Definition of Accounting Estimates, and HKAS 12 (Amendments) Deferred Tax related to Assets and Liabilities arising from a Single Transaction[300](index=300&type=chunk) - These amendments have no significant impact on the Group's condensed consolidated interim financial statements[304](index=304&type=chunk)[305](index=305&type=chunk) [Accounting Judgments and Estimation Uncertainty](index=45&type=section&id=Accounting%20Judgments%20and%20Estimation%20Uncertainty) The significant accounting judgments and sources of estimation uncertainty remain consistent with those described in the previous year's consolidated financial statements - The significant accounting judgments and key sources of estimation uncertainty made by management in preparing the interim financial statements are the same as those described in the previous year's consolidated financial statements[307](index=307&type=chunk) [Segment Reporting](index=45&type=section&id=Segment%20Reporting) Segment information is not presented as over 90% of the group's revenue, results, and assets are from a single segment in China, with sales influenced by seasonality - Over **90%** of the Group's revenue, results, and assets are derived from a single segment of manufacturing and selling woodworking crafts and ornaments, thus no segment information is presented[1](index=1&type=chunk) - The company's principal business activities are conducted in China, and overseas operations are not significant, thus no geographical information is provided[283](index=283&type=chunk) - Sales are affected by seasonality, with higher sales in March to April and September to December, and lower sales in July, mainly due to franchised stores stocking up for holiday retail peaks[309](index=309&type=chunk) [Revenue and Other Income](index=46&type=section&id=Revenue%20and%20Other%20Income) The group's revenue primarily from goods sales and franchise fees totaled RMB 256.773 million, while other income, including government subsidies and VAT refunds, totaled RMB 25.082 million Revenue from Contracts with Customers Details | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Sales of Goods | 256,353 | 167,006 | | Franchise Fee Income | 420 | 80 | | **Total** | **256,773** | **167,086** | Other Income Details | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Government Subsidies | 404 | 969 | | Bank Interest Income | 6,857 | 202 | | Fair Value Gains | 883 | 2,698 | | VAT Preferential Refunds | 13,772 | 10,696 | | Investment Property Rental Income | 2,529 | 3,297 | | Net Exchange Gains | 2 | 5 | | Reversal of Trade Receivables Loss Provision | 7 | 52 | | Others | 628 | 442 | | **Total** | **25,082** | **18,361** | - Government subsidies mainly came from the Chongqing Municipal Finance Bureau and Human Resources and Social Security Bureau, providing support funds to encourage overseas market promotion and stable employment[335](index=335&type=chunk) [Profit Before Tax](index=47&type=section&id=Profit%20Before%20Tax) Profit before tax is presented after deducting/including items such as cost of inventories, depreciation, staff costs, and sales return provisions - Cost of inventories includes approximately **RMB 24.754 million** (2022: RMB 20.119 million) related to staff costs and depreciation[288](index=288&type=chunk) Items Deducted/Included in Profit Before Tax | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Carrying Amount of Inventories Sold | 99,837 | 65,779 | | Write-down of Inventories | 2,051 | 1,111 | | Cost of Inventories | 101,888 | 66,890 | | Depreciation – Property, Plant and Equipment | 2,416 | 2,253 | | Depreciation – Right-of-use Assets | 1,671 | 1,895 | | Staff Costs (including Directors' Emoluments) | 47,673 | 34,622 | | Provision for Sales Returns | 504 | 1,091 | | Net Investment Property Rental Income | (1,899) | (2,905) | [Income Tax](index=48&type=section&id=Income%20Tax) Income tax expense for RMB 27.286 million, mainly China corporate income tax and dividend withholding tax, with the company benefiting from preferential tax policies for high-tech enterprises and employment of people with disabilities Income Tax Expense Details | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Current Tax: | | | | China Corporate Income Tax | 19,898 | 12,074 | | Withholding Tax on Dividends – Provision for the Period | 2,749 | 2,761 | | Deferred Tax: | | | | Transferred to Current Tax after Dividend Distribution | (2,749) | (2,761) | | Provision for the Period | 7,388 | 3,266 | | **Total** | **27,286** | **15,340** | - Chongqing Tan Mujiang Handicraft Co., Ltd. enjoys a **15%** preferential corporate income tax rate (statutory rate is **25%**)[8](index=8&type=chunk) - According to the China-Hong Kong double taxation arrangement, the company has enjoyed a **5%** withholding income tax rate since **2019**[10](index=10&type=chunk) - The company is eligible for a **double income tax deduction** and **VAT refund** related to the employment of people with disabilities[316](index=316&type=chunk) [Earnings Per Share](index=49&type=section&id=Earnings%20Per%20Share) Basic earnings per share for the six months ended June 30, 2023, was RMB 37.7 cents. Diluted EPS is the same as basic EPS due to the exercise price of share options being higher than the average share price Basic Earnings Per Share Calculation | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Profit Used for Basic Earnings Per Share Calculation | 93,880 | 55,028 | | Weighted Average Number of Ordinary Shares Issued (thousands) | 248,714 | 248,714 | | **Basic Earnings Per Share** | **RMB 37.7 cents** | **RMB 22.1 cents** | - Diluted earnings per share is the same as basic earnings per share because the exercise price of outstanding share options was higher than the company's average share price[12](index=12&type=chunk) [Fixed Assets](index=50&type=section&id=Fixed%20Assets) The company acquired property, plant, and equipment at a cost of RMB 13.313 million. Investment properties were not revalued, and directors believe their carrying amount is not materially different from fair value - The cost of acquiring property, plant, and equipment was **RMB 13.313 million** (H1 2022: RMB 9.033 million)[343](index=343&type=chunk) - Investment properties were not revalued by independent valuers, and directors believe the carrying amount is not materially different from the fair value at the end of 2022[13](index=13&type=chunk) [Trade Receivables](index=50&type=section&id=Trade%20Receivables) Trade receivables (net of loss allowance) were RMB 5.101 million as of June 30, 2023, with customers generally granted credit terms of up to 30 days Ageing Analysis of Trade Receivables | Ageing | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | 0 to 30 days | 4,100 | 4,944 | | 31 to 60 days | 768 | 52 | | 61 to 90 days | 102 | 4 | | 91 to 180 days | 69 | 26 | | 181 to 365 days | 1 | 207 | | Over 1 year | 61 | 116 | | **Total** | **5,101** | **5,349** | - Customers are generally required to settle orders before product delivery, with reputable customers granted credit terms of up to **30 days**[320](index=320&type=chunk) [Financial Assets at Fair Value Through Profit or Loss](index=51&type=section&id=Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss) As of June 30, 2023, the company had no principal-protected wealth management products measured at fair value through profit or loss, compared to RMB 57.710 million at the end of 2022 Financial Assets at Fair Value Through Profit or Loss | Item | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Principal-protected Wealth Management Products | – | 57,710 | - This amount refers to investments in principal-protected wealth management products issued by licensed banks in China, with an expected annual return rate of **zero** as of June 30, 2023 (end of 2022: **2.54% to 3.30%**)[16](index=16&type=chunk) [Trade Payables](index=51&type=section&id=Trade%20Payables) Trade payables were RMB 8.492 million as of June 30, 2023, with suppliers generally granted credit terms of 30 days Ageing Analysis of Trade Payables | Ageing | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | 0 to 30 days | 7,053 | 2,979 | | 31 to 60 days | 1,134 | 1,133 | | 61 to 90 days | 85 | 415 | | 91 to 180 days | 135 | 43 | | 181 to 365 days | 25 | 110 | | Over 1 year | 60 | 84 | | **Total** | **8,492** | **4,764** | - Suppliers are generally granted credit terms of **30 days**[322](index=322&type=chunk) [Dividends](index=52&type=section&id=Dividends) The Board resolved not to declare an interim dividend for the six months ended June 30, 2023, having approved and paid a final dividend for the fiscal year ended December 31, 2022 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2023[348](index=348&type=chunk) Dividends Approved and Paid | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Final Dividend for the Fiscal Year Ended December 31, 2022 (HKD 25.03 cents per share) | 56,878 | – | | Final Dividend for the Fiscal Year Ended December 31, 2021 (HKD 27.15 cents per share) | – | 55,215 | [Share Capital](index=52&type=section&id=Share%20Capital) As of June 30, 2023, the company's authorized share capital was 10 billion shares, with 248.714 million issued and fully paid shares, each with a par value of HKD 0.01 Share Capital Structure | Item | Number of Shares | Amount (HKD) | Equivalent Amount (RMB) | | :--- | :--- | :--- | :--- | | Authorized Share Capital (par value HKD 0.01 per share) | 10,000,000,000 | 100,000,000 | 87,926,000 | | Issued and Fully Paid Share Capital (par value HKD 0.01 per share) | 248,714,000 | 2,487,140 | 2,189,160 | - Ordinary shareholders are entitled to receive dividends and have one vote per share at company meetings, with all ordinary shares having equal status[324](index=324&type=chunk) [Equity-settled Share-based Transactions](index=53&type=section&id=Equity-settled%20Share-based%20Transactions) The company adopted a share option scheme in 2009, with 400,000 unexercised share options granted, exercisable at HKD 4.896 per share until August 30, 2023 - The company adopted a share option scheme on **December 29, 2009**, with **400,000 unexercised share options** granted at an exercise price of **HKD 4.896 per share**[27](index=27&type=chunk)[326](index=326&type=chunk) - The share options are exercisable from the vesting date until **August 30, 2023**, vesting in three tranches[27](index=27&type=chunk)[325](index=325&type=chunk) - Mr. Luo Hongping's **200,000 unexercised share options** have been reclassified to the Executive Director category[21](index=21&type=chunk) [Fair Value Measurement of Financial Instruments](index=54&type=section&id=Fair%20Value%20Measurement%20of%20Financial%20Instruments) The fair value measurement of financial instruments is categorized into three levels. As of June 30, 2023, financial assets at fair value through profit or loss (principal-protected wealth management products) were zero, with a zero expected return rate for Level 3 measurements - Fair value measurement of financial instruments is categorized into **three levels**: Level 1 (quoted prices in active markets), Level 2 (observable input data), and Level 3 (significant unobservable input data)[352](index=352&type=chunk)[29](index=29&type=chunk)[328](index=328&type=chunk)[22](index=22&type=chunk) Financial Assets at Fair Value Through Profit or Loss (June 30, 2023) | Item | Fair Value (RMB '000) | Level 1 (RMB '000) | Level 2 (RMB '000) | Level 3 (RMB '000) | | :--- | :--- | :--- | :--- | :--- | | Principal-protected Wealth Management Products | – | – | – | – | Changes in Level 3 Fair Value Measurements | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | At Beginning of Period | 57,710 | 317,580 | | Purchases | 109,800 | 139,110 | | Total Gains Recognized | 883 | 2,698 | | Disposals | (168,393) | (239,058) | | At End of Period | – | 220,330 | - The fair value of financial assets at fair value through profit or loss in Level 3 is determined by discounting the contractual pricing of financial assets, with the discount rate (expected return) used as **zero** as of June 30, 2023 (December 31, 2022: **2.54% to 3.30%**)[23](index=23&type=chunk) - The carrying amounts of financial instruments measured at amortized cost do not differ significantly from their fair values[356](index=356&type=chunk) [Contingent Liabilities](index=56&type=section&id=Contingent%20Liabilities) As of June 30, 2023, and December 31, 2022, the group had no significant contingent liabilities - As of June 30, 2023, and December 31, 2022, the Group had no significant contingent liabilities[25](index=25&type=chunk) [Capital Commitments](index=56&type=section&id=Capital%20Commitments) As of June 30, 2023, the group had contracted but unprovided capital commitments of RMB 50.399 million for the acquisition of property, plant, and equipment Capital Commitments | Item | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000) | | :--- | :--- | :--- | | Acquisition of Property, Plant and Equipment | 50,399 | 16,279 | [Related Party Transactions](index=56&type=section&id=Related%20Party%20Transactions) Total compensation for key management personnel during the period was RMB 2.237 million, including short-term employee benefits, post-employment benefits, and termination benefits Key Management Personnel Compensation | Item | 2023 (RMB '000) | 2022 (RMB '000) | | :--- | :--- | :--- | | Short-term Employee Benefits | 2,153 | 2,060 | | Post-employment Benefits | 84 | 74 | | Termination Benefits | – | 623 | | **Total** | **2,237** | **2,757** |